PG&E s Residential Water Heater Strategy. Delaina Wilhelm Senior Product Manager - Appliances & Water Heaters
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1 2 PG&E s Residential Water Heater Strategy Delaina Wilhelm Senior Product Manager - Appliances & Water Heaters
2 PG&E s Residential Water Heater Strategy The fundamental issue, that is systemic to the water heater industry, is being able to create a sustainable transition from a commodity/business as usual mindset to one of high efficiency. Price and what s on the truck are referenced as the primary barriers to improving the market penetration for Energy Star Water Heaters. Yet, these are results of barriers not the barriers in and of themselves. The goal is to impact the market by using a comprehensive approach that serves our stakeholders, partners and customers. Success is dependent on working collaboratively toward a long-term goal of changing the market. 3
3 Residential Water Heater Statistics for PG&E Territory Water heater fuel type: 90% natural gas and 10% electric Residential water heaters account for: 49 % of gas use 3 % of electricity use 5.6 million households with annual new WH sales between 390, ,000 units EnergyStar WH market penetration is less than 5%, indicating a huge market opportunity and energy savings potential Residential WH programs since obtained low participation: 1 % - 2 % of new units incented Low uptake, low rebate rates and customer indifference regarding WH 5.6 Million Households Thousand Annual Sales < 5% Energy Star Energy savings goals in PG&E s 2013 and 2014 program rely on energy savings contributions from efficient WH
4 PG&E s Residential Water Heater Portfolio Transition 2012 Sunset Launch Measure Specifications Incentives Natural Gas Storage EF 0.62 and <0.65, Natural Gas Storage EF 0.65 and <0.67 Electric Storage EF >0.93 Sunset Q Energy Star Gas Storage WH EF >0.67, ULNOx $200 Energy Star Electric Heat Pump WH EF >2.0 $500 PG&E is committed to overcoming the barriers that impact improved market penetration and customer awareness of ENERGY STAR water heaters. We currently face low product availability and the task of motivating the industry to transition from a commodity/business as usual mindset to one of high efficiency. Even with obstacles before us, the potential of this new portfolio is greater than the achievements of our past portfolio. So far, our market partners are responding.
5 PG&E s Residential Water Heater Strategy Overview PG&E s 2013 program currently utilizes an integration of activities to offer an improved and compelling rebate program in order to address barriers and encourage market adoption of high efficiency water heaters. Retailers Distributors Third Party Program ET Collaborative program design incorporating a target approach and promotional periods. Extension of mid-stream commercial program to include residential measures. Implementation support including contactor/ plumber training and possible direct install. Projects include water heater system rebate and installation component rebate study. Ongoing In process In process In process Trade Pro EM&V GIS Messaging Technical and customer information training for Trade Alliance/ Contractor Network Forthcoming Current study in process to establish baseline. Project manager dashboard in development. In process Utilization of mapping to inform retailer stocking locations, customer opportunities, leasing prospects and direct messaging targets. Ongoing Create awareness of program, reduce confusion, motivate customers to upgrade and educate customers. Ongoing
6 PG&E s Residential Water Heater Strategy Aspects 2013 Program Aspects: Interaction Attractive pricing of qualified products. Increased rebates amounts for ENERGY STAR qualified water heaters, at the national average, to support sales and encourage stocking practices. Collaborating with retailers to develop a targeted game plan. PG&E is working to place water heater rebates and encourage stocking practices that are representational of our mutual customer needs. This targeted approach is focused on a refined product mix, concentrated retailer store selection, region specific technologies as defined by understanding variables such as customer fuel type usage, climate factors and demographic assessments. Promotional limited time-based rebates coordinated with retailer marketing efforts to spike contractor/customer adoption. Promotional rebates will provide a limited time higher incentive during retailer sales periods. Standard rebate will be available throughout the calendar year. GIS mapping strengthens strategic approach. Utilizing PG&E data in combination with US Census data to pinpoint retailer stocking locations, classify border store risk potential, identify customer opportunities, ascertain water heater leasing prospects and distinguish direct messaging targets. A water heater systems rebate. Designing an inclusive rebate for the purchase of a water heater, pipe wrap, showerhead, faucet aerators and if possible a qualified clothes washer/dishwasher. The intention is to provide PG&E with the opportunity to promote systems based products in the retail/distributor space in support of addressing our larger goals (EUC, ZNE, 2020, etc.) and provide retailers/distributors with the opportunity to cross-promote products and improve sales of high efficiency water heaters.
7 PG&E s Residential Water Heater Strategy Aspects Continued 2013 Program Aspects: Interaction An installation component rebate. As many of the high efficiency water heaters require additional components (wiring, vents, etc.) for installation, a component rebate would facilitate an ease of component selection, reduce confusion, and prompt better water heater technology selection. Provides retailers/distributors with another opportunity to cross-promote products and improve sales. Third Party Program. Will provide implementation support including contactor/plumber training and elements of direct install. Program will complement the Core Program s commitment to successfully overcome water heater industry barriers in order to create significant market impact. Water heater marketing regeneisis. Strategically developed customer focused messaging that improves customer awareness and education while reducing confusion. Objectives include creating awareness of PG&E s water heater rebate program, increasing general awareness of the signs of failure of water heaters, encouraging preemptive replacement, educating customers about the relationship between rebates and achieving energy savings, and motivating targeted PG&E customers to: replace their water heaters with qualifying ENERGY STAR models and take advantage of this rebate program. Energy Efficient Water Heater Replacement Program. Investigating on bill financing.
8 Additional Rebated Technology PG&E s Residential Water Heater Portfolio Aspects - Examples Water Heater Systems Rebate Aspects Working in Concert Technology Energy Star High-Efficiency Gas Storage Water Heater A & B Retailer WH Systems Rebate Channel Y & Z Distributer Installation Component Rebate GIS Pinpointed Customer Segment Education Campaign and Promotion Water Heater Shower head Faucet Aerator Captured Energy Savings Insulation Appliance Advanced Tech. Targeted Limited-Time Promotion Increased Incentive Oct. Nov. Delivery Method Mail-in, On-line & POS Examples are for illustrative purposes only. 9
9 GIS Utilization: Rebate Activity Near Retailer Locations
10 GIS Utilization: L/M/H Billing & Usage Incorporating Utilized Rebates per Zip Code 11
11 PG&E s Residential Water Heater Portfolio Marketing Assets - Examples 12
12 PG&E s Residential Water Heater Portfolio Marketing Assets - Examples 13
13 Appendix 14
14 PG&E s Residential Water Heater Portfolio Aspects Addressing Barriers/Market Problems Barrier Aspects Outcome High Upfront Cost High efficiency water heaters have a higher upfront cost than standard units, and installation adds additional costs Availability - Midstream At retail, at the distributor, or on the plumber s truck, there are few efficient products in stock and available to end users for immediate purchase Availability - Upstream At the manufacturer level, there are few units in production that meet both Energy Star and California s strict NOx emissions requirements End User Awareness End users faced with an emergency replacement may choose a water heater similar to their existing low efficiency unit. End users view water heating as a commodity product and need to be informed of the value of high efficiency to differentiate among products Sale Staff Awareness Sales staff may be unaware of available product, energy savings potential, bill impact savings and other benefits Energy Star Water Heaters can provide customers Increased End User Incentive Targeted Game Plan Collaborative Program Design Water Heater Systems/Installation Component Rebate Promotional Limited Time-Based Rebate Create Market Pull/Demand by utilizing retailer/distributor/customer activities POP materials Promotional Limited Time-Based Rebate Third Party Program Strategic Messaging GIS Targeting Training for sales staff Increased adoption of EnergyStar Water Heaters Increased availability of incented units Increased stocking of incented units Increased promotion of incented units Increased cross-promotion of products and improved sales Improved quantity of qualifying water heaters Buyers made aware of benefits of energy efficient Increased adoption of EnergyStar Water Heaters Improved sales Engaged and informed sales staff
15 GIS Utilization: Customer Demographics w/retailer/distributors per Block 16
16 GIS Utilization: Customer Demographics w/retailer/distributors per County 17
17 Contact Information Delaina Wilhelm Senior Product Manager - Appliances & Water Heaters Office D2WH@pge.com 18
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