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Home Energy Magazine Online January/February 1993
SPECIAL SECTION ON REFRIGERATORS
The Race to Make The Fridge of The Future
CHASING THE GOLDEN CARROT
A group of 25 utilities representing a quarter of the nation's electric
customers has pooled $30.7 million to hasten the commercialization of more
energy-efficient, less-polluting refrigerators. The Super-Efficient
Refrigerator Program (SERP) will provide incentives to a single manufacturer,
to be chosen through competitive bidding, to build and distribute roughly
250,000 refrigerators that are 25-50% more efficient than comparable models
built according to 1993 federal appliance efficiency standards. SERP is the
first so-called Golden Carrot strategy to be launched by the Consortium for
Energy Efficiency, whose founding members include Pacific Gas & Electric
Co. (PG&E), the Natural Resources Defense Council, the American Council for
an Energy-Efficient Economy, and the U.S. Environmental Protection Agency.
The Golden Carrot program complements federal appliance standards by supporting
technological innovation that will yield large and rapid increments of
efficiency exceeding those standards. Perhaps even more importantly, Golden
Carrot incentives are structured to demonstrate that "super efficiency" is not
only technically feasible, but also marketable and competitive. The goal of the
program is to get more efficient refrigerators into stores sooner than would
would otherwise occur, and then to rely on the market to broaden consumer
demand for a superior product. Golden Carrot is designed to show that utilities
can be a potent force in seeding a market transformation without having to
become perpetual investors to sustain that transformation.
SERP intends to achieve this result by dispensing its incentive money, not as
up-front support for research and development, but as payments for each
refrigerator distributed by the manufacturer. The manufacturer is responsible
for getting the super-efficient units into the retail distribution chain in
each utility's service area at prices comparable to conventional units with the
same features.
How much each utility invests depends on its avoided costs, on how much of its
total demand-side management budget it wants to dedicate to this particular
market, and on its estimate of how much saved energy its investment will buy.
This last figure will not become clear until the winning bid is chosen, since
the bid will set the incentive payment for each refrigerator delivered and,
hence, the cost per kWh saved. Utilities are generally investing $1.50-$2.00
per residential account, according to guidelines suggested by SERP.
Each utility investor will receive a number of units proportional to its
investment. The number of incentive payments--that is, of refrigerators
manufactured--covered by this level of investment is estimated to be about
5-10% of total refrigerator sales in each utility's service area for each year
of the program.
To ensure that member utilities get the most for their money and to spur
manufacturers to shoot for big efficiency improvements for the least cost, SERP
has devised a bidding system that rewards bidders for maximizing energy
savings, minimizing incentive payments, and committing to a speedy delivery
schedule. SERP planners anticipate incentive payments of $100-$150 per unit,
amounting to 2.5cents-3.5cents per kWh saved over the life of the unit. Annual
savings could be 200-400 kWh over 1993 refrigerator efficiency standards
Another selection criterion is corporate reliability. Bidders must not only
have experience with the specific technologies proposed and proven ability to
build and ship thousands of units, but also must have a marketing strategy, a
national distribution and service network, in addition to a system for tracking
sales after the super-efficient models reach the retail market.
SERP received 14 bids from manufacturers in mid-October and was scheduled to
announce two semi-finalists in mid-December. (It's important to note that six
major manufacturers produce all but a handful of approximately 80 brand names
of refrigerators sold in the U.S.) These two contenders will then have to
produce prototypes and submit final offers by May 1, 1993. SERP expects to
award a contract on the following July 1. The winning bid will specify the
shipping schedule, which might reasonably be expected to begin in late 1994 and
continue for about two years.
How many Golden Carrot units the incentive fund will buy will depend on the
unit payment established by the winning bid. However, short-term share of
market is not the point. Rather, the Golden Carrot approach aims to accelerate
the introduction of leading-edge technology.
"Golden Carrot is intended to complement utilities' current appliance
efficiency programs," said Gary Fernstrom, acting director of residential
retrofit in PG&E's Energy Efficiency Services Department. "Most current
programs provide moderate incentives in order to effect moderate improvements,"
said Fernstrom, who is also chief financial officer of of SERP. "Golden Carrot
provides larger incentives for larger improvements targeted at a smaller
segment of customers. Its intent is thus to bracket the market not covered by
programs such as customer rebates, dealer incentives, and dealer education."
How much energy consumption and demand SERP saves and at what cost compared to
standard rebates will hinge on the level of incentive payments and the extent
to which manufacturers and retailers succeed in building demand for Golden
Carrot products after utility incentive payments have ceased.
A success here will undoubtedly encourage a similar approach to other major
end-uses. The Consortium is considering other market opportunities, including
commercial rooftop air conditioners, microwave clothes dryers, horizontal-axis
clothes washers (lower water use and higher spin speeds, meaning less drying
time), and office equipment.
Readers interested in the work of the consortium and of SERP should contact Dr.
Richard Harkness executive director, c/o SERP, Inc., 2856 Arden Way, Suite 200,
Sacramento, CA 95825. Tel: (800) 927-3985.
-- Stephen Frantz
Related Articles
"Building an Energy-Efficient Home Office" (Geltz)
"Eliminating CFCs Without Regrets" (Houghton)
"Hauling in the Culprits: Michigan's Bounty Pilot" (Witte and Kushler)
"Home Alone--Living Off the Grid" (Casebolt)
"How Accurate Are Yellow Labels" (Meier)
"Is That Old Refrigerator Worth Saving?" (Meier)
"Leaking Electricity" (Meier)
"Maintenance Doesn't Necessarily Lower Energy Use" (Litt, Megowan, and Meier)
"New Standards Begin, But Will Rebates Continue?" (Morrill)
"Recycling Refrigerators: Whose Responsibility?" (Nelson)
"Refrigerator Replacement in Florida: A Case Study" (Parker and Stedman)
"Remodeling Kitchens: A Smorgasbord of Energy Savings" (Sullivan)
"SMUD's Refrigerator Graveyard--Conditions of the Deceased" (Bos)
"Understanding Power Quality" (De Almeida)
"Waterbed Heating: Uncovering Energy Savings in the Bedroom" (Rieger)
"What Stays On When You Go Out" (Meier)
"What's Wrong with Refrigerator Energy Ratings?" (Proctor)
"Checking Out HUD's Proposed Mobile Home Performance Standards" (Judkoff)
"Making Energy Mortgages Work" (Luboff)
"Managing Large-Scale Duct Programs" (Downey)
"New Group Hunts Bad Ducts" (Obst)
"One Size Fits All: A Thermal Distribution Efficiency Standard" (Modera)
"Telecommuting: An Alternative Route to Work" (Quaid)
"Weatherization Assistance: The Single-Family Study" (Brown and Berry)
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