Can Programmable Thermostats Be Part of a Cost-Effective Residential Program Portfolio?

Transcription

1 Can Programmable Thermostats Be Part of a Cost-Effective Residential Program Portfolio? Christopher Dyson KEMA Inc. Shahana Samiullah, Southern California Edison Tami Rasmussen, KEMA Inc. John Cavalli, Quantum Consulting ABSTRACT In recent years, California has relied heavily on the promotion of residential programmable thermostats to improve energy efficiency in the residential sector. However, recent California studies suggest that energy efficiency programs should not use rebates to promote the purchase of ENERGY STAR programmable thermostats. This paper presents the results of a 2004 evaluation of the California statewide single-family rebate program, which addressed market and customer behavior related to programmable thermostats. We then review two studies commissioned by Southern California Edison in 2004 and 2005 that examine gross savings estimates for programmable thermostats. Tying these studies together, we find: Increased market penetration of programmable thermostats. Surveys of California HVAC contractors and retailers indicated that programmable thermostats have a dominant share of contractor thermostat installations and represent about half of retail thermostat sales. High levels of free-ridership. One-half to two-thirds of residential customers who received rebates for programmable thermostats said they would have bought the same thermostat at the same time if the rebate had not existed. Evidence that customers are not using programmable thermostats to save energy. o Engineering simulations and statistical analyses of self-reported thermostat setpoints found that customers with programmable thermostats and manual thermostats have similar setpoint behavior for cooling. Both studies also found that customers with programmable thermostats use thermostat setpoints that consume more heating energy than those with manual thermostats. o A survey of purchasers of programmable thermostats found that few were using the factory settings designed to maximize energy savings. After the publication of these studies, California s investor-owned utilities decided to not offer rebates for programmable thermostats in their residential programs. Introduction In recent years, California has relied heavily on the promotion of residential programmable thermostats to improve energy efficiency in the residential sector. Programs such as the Statewide Residential Retrofit Single-Family Home Energy Efficiency Rebate Program and the Statewide Multi- Family Rebate Program have offered rebates to residential customers for programmable thermostats. In 2003 the Residential Retrofit Single-Family program made point-of-sale (POS) rebates available for programmable thermostats statewide, which greatly increased their popularity. However, concerns have been raised about both the gross and net savings attributed to this measure. Concerns about gross savings include (1) uncertainties as to whether people are using the programmable thermostats as designed and (2) whether existing savings estimates, which are based on an assumption of no setback in the base case, are justified. Concerns about net savings include fears that falling programmable

2 thermostat prices and increasing market penetration and consumer acceptability make program rebates unnecessary. This paper presents the results of a 2004 evaluation of the California statewide single-family rebate program, which addressed market and customer behavior related to programmable thermostats. We then review two studies commissioned by Southern California Edison (SCE) in 2004 and 2005 that examine gross savings estimates for programmable thermostats. The first study is the 2004 evaluation of the 2003 SFR program conducted by Quantum Consulting and KEMA Inc. The two SCE-commissioned studies include a 2004 engineering study that was conducted by James J. Hirsch & Associates and a 2005 follow-on statistical analysis of the Hirsch study conducted by Athens Research. The Statewide Residential Retrofit Single-Family Home Energy Efficiency Rebate Program The Statewide Residential Retrofit Single-Family Home Energy Efficiency Rebate (SFR) Program is California s main program for promoting energy-efficient measures in existing residential single-family homes. It is administered by California s four investor-owned utilities (IOUs): SCE, Pacific Gas and Electric Company (PG&E), Southern California Gas Company (SCG), and San Diego Gas and Electric Company (SDG&E). The program was created in 2002 and is the successor to other California IOU residential rebate programs that date back to the 1980s. The SFR program promotes a wide range of energy-efficient measures in the HVAC, home improvement, appliance, and pool pump markets. Most of the program s rebates are paid out in response to mail-in applications that come from installation contractors or residential customers. A number of channels have been used to promote the SFR program. These include: Coordinating marketing and outreach using bill inserts, energy events for consumers, and utility field staff; Working with local retailers, distributors, and manufacturers; and Leveraging other energy efficiency promotional campaigns such as the ENERGY STAR marketing campaigns and California s own Flex Your Power Campaign. The program also provides direct customer support through toll-free phone numbers and utility Web sites. This paper focuses on the SFR program s promotion of ENERGY STAR programmable thermostats. In late 2002 the program made point-of-sale (POS) rebates available for programmable thermostats in a pilot program. In 2003 these POS rebates were made available statewide. The rebates were widely credited for the increase in the number of rebated programmable thermostats from about 40,000 in 2002 to about 68,000 in Marketing efforts by California s Flex Your Power Campaign and the national ENERGY STAR program also contributed to the popularity of this measure in the state. In 2003 the program paid a $20 rebate for these programmable thermostats. In total the program paid out over $1.35 million for thermostats. California used a deemed savings value of 248 kilowatt hours (kwh) and 68 therms for each thermostat. These thermostats accounted for 33 percent of the program s claimed kwh savings and 40 percent of the program s claimed therm savings in The program paid out rebates for programmable thermostats in three different ways: Contractor-installed Cooling and Heating Rebate Application customers submitted a rebate application with a contractor invoice after the contractor had installed a qualifying programmable thermostat; and Point-of-Sale (POS) Rebate customers received an instant discount at the cash register when they purchased a qualifying programmable thermostat from a participating retailer.

3 Do-It-Yourself (DIY) Home Improvement Rebate Application customers submitted a rebate application with a receipt from the purchase of a qualifying programmable thermostat from a participating retailer. The Evaluation of the 2003 SFR Program Objectives The evaluation of the 2003 SFR program focused on three key measures rebated by the program: ENERGY STAR-qualified programmable thermostats, energy-efficient central air conditioning, and high performance windows. This evaluation looked primarily at these measures for a number of reasons. First, the evaluation of the 2002 program had raised questions as to whether rebates for these energyefficient measures should be reduced or even eliminated due to their wider market adoption. Second, there was interest in finding out how effective the POS rebates for programmable thermostats had been. Finally, the budget for evaluating the 2003 program was significantly less (about half) than the budget for evaluating the 2002 program. The measures covered by the evaluation, however, still accounted for about half of the program savings. The evaluation hoped to shed light on a number of issues related to programmable thermostats including: Drivers of programmable thermostat installation why residential customers have programmable thermostats installed and who drives the decision to install them; Market penetration to what degree has the installation and sale of ENERGY STAR programmable thermostats become standard or common practice; Programmable thermostat operation whether customers are programming their new thermostats in ways that would fully capture their energy savings potential; Program attribution the extent to which the SFR program can take credit for the installation of ENERGY STAR programmable thermostats among program participants; and POS rebate effectiveness how effective POS rebates are in encouraging the sale of ENERGY STAR programmable thermostats versus standard mail-in rebates. Methodology The evaluation gathered survey information from three sources: participating end users, HVAC contractors, and retailers. Table 1 shows the distribution of the different rebate types, the time period in which they were offered, and the number of telephone surveys that were completed with both program participants and market actors. All the interviews were conducted in 2004.

4 Table 1. Summary of Participant and Market Actor Interviews # of Programmable Rebate Type Time Period of Rebate Option Thermostat Rebates Purchased/Installed in 2003 Do-It-Yourself Home Improvement Rebate Contractor-Installed Cooling and Heating Q1 Q ,000 Rebate Point-of-sale Rebates Q Present 44,000 Findings # of Completed Evaluation Telephone Surveys Q , participating end users 196 participating end users and 42 HVAC contractors 25 POS participants 1 and 20 retailers Drivers of programmable thermostat installation. The evaluation results indicated two main scenarios that drive programmable thermostat installations. In the Contractor-Driven Scenario, the replacement of an air conditioner or furnace is the main driver of the programmable thermostat installation, and the HVAC contractor is the key decision maker. Sixty-six percent of responding HVAC contractors (N=41) said that they Always replace a thermostat when installing a new central air conditioner and another 29 percent said that they do so Very Often. In a majority of cases, as discussed in the next section, the new thermostats are programmable ones. Ninety-three percent of the residential recipients of the contractor-installed programmable thermostat rebates (N=197) said that they also purchased a new air conditioner or furnace with their new programmable thermostat. Although, in theory, the homeowner still may decide whether to replace the thermostat or what type of new thermostat to install, the survey data indicate that the HVAC contractors are very influential in the replacement decision. When recipients of the contractor-installed rebates were asked how influential their contractors had been in their decision to purchase an ENERGY STAR programmable thermostat, 61 percent said Very Influential and another 25 percent said Somewhat Influential. In the Residential End User-Driven Scenario, the desire to improve thermostat features/ technology is the main reason for getting the programmable thermostat with 43 percent of DIY rebate recipients (N=49) and 44 percent of POS rebate recipients (N=25) citing it. 2 Other main reasons include saving energy (23 percent of DIY rebate recipients, 32 percent of POS rebate recipients) and replacing broken or problematic thermostats (34 percent of DIY rebate recipients and 20 percent of POS rebate recipients). Table 2 summarizes these two programmable thermostat installation scenarios. 1 Only 25 POS rebate recipients were interviewed because the evaluators had no contact information for people who had received only a POS rebate. Rather than totally neglecting this rebate class, the evaluators were able to obtain the names of a few hundred people who had applied for a mail-in rebate but whose application had been rejected because their store receipt indicated that they had already received a POS rebate. The evaluators then conducted a short screening survey to determine whether it was knowledge of the mail-in rebate or the POS rebate that had first motivated them to act. The screening survey identified 25 POS rebate recipients who appeared to have been aware of the mail-in rebate only after they had already received the POS rebate. 2 The actual survey question was, Aside from getting the rebate, what was your main reason for replacing your thermostat? Respondents were not allowed to cite the rebate as a main reason. However, the influence of the rebate was apparently minimal.

5 Table 2. Drivers of Programmable Thermostat Installation Reasons Why Programmable Thermostats Installed Scenario Contractor- Driven Residential End User- Driven Key Decision Maker HVAC contractor Residential End User Primary: Replacement of air conditioner or furnace Primary: Improving thermostat features/ technology Secondary: Saving energy, replacing broken/ problematic thermostat Likely Source of Programmable Thermostats Wholesaler Retailer Primary SFR Program Rebate Received Contractor-Installed Cooling and Heating Rebate Do-It Yourself Home Improvement Rebate Point-of-Sale Rebate One implication of these findings is that any energy efficiency program that wishes to comprehensively promote ENERGY STAR programmable thermostats must reach out to the HVAC contractors. These contractors are very influential decision makers in a high percentage of thermostat replacements. Yet since they generally purchase their thermostats from wholesalers, they are less likely to be influenced by rebate promotions that rely heavily on retail signage. The findings also suggest that the ability to get improved thermostat features may be a more effective selling point for programmable thermostats than energy savings. Market penetration. Surveys of California HVAC contractors (N=42) and retailers (N=20) indicated that programmable thermostats have a dominant share of contractor thermostat installations (88 percent) and represent about half (54 percent) of retail thermostat sales. Contractors reported that 78 percent of their installations were ENERGY STAR programmable thermostats while retailers said that 35 percent of their thermostat sales were ENERGY STAR programmables. However, there is reason to believe that the ENERGY STAR programmable thermostat s actual market share is lower than this. The survey also asked HVAC contractors what percentage of installed programmable thermostats allowed each day of the week to be programmed separately. ENERGY STAR thermostats have seven-day programming capability and this question served as a check on the contractor estimates of ENERGY STAR market share. Contractors estimated that thermostats with seven-day programming capability only accounted for 52 percent of their installations. The HVAC contractors were also asked what types of thermostats they see in the homes they service (i.e., routine maintenance and repair situations, not just replacement of old HVAC equipment). According to contractors, nearly half of residential customers (44 percent) already have some sort of programmable thermostat in their homes. This is somewhat below the 54 percent reported by the 2003 California Residential Appliance Saturation Survey (RASS). 3 However, it is likely that HVAC contractors making service calls were seeing homes with HVAC systems and thermostats that were, on average, somewhat older than those in the RASS sample. Program Attribution. How influential were the SFR program rebates in getting contractors or residential customers to install more energy-efficient thermostats than they otherwise would have? The survey results indicate that the rebates did not influence residential customers to purchase programmable thermostats over manual thermostats. However, there is some evidence that the rebates influenced them 3 California Statewide Residential Appliance Saturation Study, Final Report, prepared for the California Energy Commission by KEMA-XENERGY, Itron, and RoperASW, June 2004.

6 to purchase ENERGY STAR programmable thermostats instead of conventional programmable thermostats and accelerated their purchase of programmable thermostats. Contractor-Driven Installations There was no significant difference in the frequency of ENERGY STAR programmable thermostat installations between those HVAC contractors who were active promoters of the SFR program thermostat rebates and those who were not. HVAC contractors were asked to estimate how much their sales of ENERGY STAR programmable thermostats would have decreased if the SFR program rebates had not been available. On average, they estimated only a 9 percent decrease in ENERGY STAR programmable thermostat sales. Sixty-four percent of recipients of contractor-installed rebates said that the rebate had some influence on their decision to install an ENERGY STAR thermostat (Table 3). However, only 23 percent said that the rebate was very influential. Sixty-three percent of recipients of contractor-installed rebates said that they would have bought the ENERGY STAR programmable thermostat at the same time if the rebate had not existed. However, about a quarter of these respondents said that the absence of the rebate would have caused them to purchase a non-energy STAR programmable thermostat. Table 3. The Influence of SFR Program Rebates in the Purchase Decision How influential was the rebate in your Contractordecision to purchase an ENERGY STAR Installed Rebate thermostat? Recipients DIY Rebate Recipients Very influential 23% 27% 43% Somewhat influential 41% 50% 33% Not at all influential 35% 23% 16% Refused/Don t Know 1% 0% 8% N POS Rebate Recipients Retail End User-Driven Installations Over two-thirds of the recipients of both the DIY rebates and the POS rebates said that the rebate had some influence on their decision to purchase an ENERGY STAR thermostat. POS rebate recipients were the most influenced by the rebate. However, a majority of the DIY rebate recipients and nearly half of the POS rebate recipients said that they would have bought an ENERGY STAR programmable thermostat at the same time if the rebate had not existed. The POS rebate seemed most effective in moving people from a conventional programmable thermostat to an ENERGY STAR model. A handful of retailers all big box stores that were offering POS rebates predicted a significant decrease in sales (35 percent 39 percent) of ENERGY STAR programmable thermostats if the rebates went away.

7 Table 4. What Participants Would Have Purchased in the Absence of the Rebate Contractor- What type of thermostat would you have purchased had the rebate not existed? Installed Rebate Recipients DIY Rebate Recipients POS Rebate Recipients ENERGY STAR programmable now 63% 69% 48% ENERGY STAR programmable later 5% 5% 14% Programmable, non-energy STAR 26% 15% 33% Manual thermostat 4% 0% 0% No thermostat 2% 12% 5% N Programmable Thermostat Operation. ENERGY STAR-qualified programmable thermostats are programmed at the factory to maximize energy savings. The evaluation of the 2003 SFR program, however, found that few customers (11 percent 14 percent depending on rebate type) were using the factory settings. The majority of rebate recipients (52 percent 76 percent depending on rebate type) had the thermostat programmed to their desired settings, whether this was done themselves or by their installation contractor. Estimating Gross Energy Savings for Residential Programmable Thermostats The 2003 Single Family Rebate program used average deemed gross energy savings estimates for programmable thermostats of 238 kwh and 68 therms per thermostat. These savings were based on a 2001 update of California s Database of Energy-Efficient Resources (DEER). 4 The key purpose of this study was to create a common set of cost and energy savings across California s major utilities to improve the consistency of the assumptions used in state energy-efficiency analyses. The 2001 DEER Update Study used DOE-2 simulation models, with varying inputs depending on house vintage and climate zone, to estimate the gross savings for the programmable thermostat. However, it used a base case that assumed only one setpoint with no setback behavior 24 hours, 7 days a week during the heating and cooling seasons (70 F and 78 F respectively). As a result the study found high levels of energy savings for programmable thermostats when compared to this single base case behavior. For singlefamily homes, measure savings were estimated at percent for kwh and percent for therms. The 2004 JJH Thermostat Study In 2004 Southern California Edison (SCE) commissioned a study to reexamine the assumptions about energy savings for programmable thermostats that had been produced by the 2001 DEER Update Study. There was concern that the 2001 estimate represented the maximum savings that would be expected from this measure and that there was a need to calculate the average level of savings across other base case thermostat behaviors. The 2004 study was designed to recalculate the programmable thermostat savings taking into account the variations of occupant behavior with respect to thermostat settings and setback behavior that can affect the measure savings. James J. Hirsch & Associates (JJH) conducted the study. The JJH study started with data from the 2003 California Residential Appliance Saturation Survey (RASS). Respondents to the RASS had provided estimates of their temperatures for morning (6 AM 9 AM), day (9 AM 5 PM), evening (5 PM 9 PM), and night (9 PM 6 AM). The JJH study then mapped DEER Update Study, Final Report, prepared for the California Energy Commission by KEMA-XENERGY, ADM Associates, Partnership for Resource Conservation, and Vacom Technologies, August 2001.

8 these thermostats settings into temperature bins. For example, if a RASS respondent had reported a morning temperature setting for a cooling programmable thermostat of 73 F, then they were assigned to the Very Low temperature bin and a value of 72 F was used in the DOE-2 simulation. If a RASS respondent had reported a morning temperature setting of F, then they were assigned to the Low temperature bin and a value of 75 F was used in the DOE-2 simulation. The JJH study then ran DOE-2 simulations similar to those conducted by the 2001 DEER Update Study. However, the JJH simulations incorporated the RASS-derived temperature setpoint data. For each vintage and climate zone, the simulation was run multiple times, once with each of the set-point schedules derived from the RASS. The resulting energy consumption levels were then averaged according to the prevalence of each schedule in the population, based on the RASS responses and weights. Average consumption was determined in this way separately using the distribution of set-point schedules for homes with programmable and with manual thermostats. The JJH analysis then compared the average energy consumption using the setpoint distributions for those with programmable thermostats versus using the distributions associated with manual thermostats. The JJH study made similar calculations for all 16 California climate zones and then weighted the results by the populations in these climate zones. Based on this analysis, the JJH study concluded that cooling energy use increases by 1 percent with the introduction of programmable thermostats and that there is no overall discernable difference in cooling energy use based on thermostat type. The study made similar calculations for heating situations. The study estimated that across California, programmable thermostat users consumed a weighted average of 18 percent more therms of heating energy than manual thermostat users and 20 percent more kwh. The study therefore concluded the use of programmable thermostats appears to lead to greater heating energy use than standard thermostats in almost all climate zones. Discussion of the 2004 JJH Thermostat Study Results The results from the 2004 JJH Thermostat Study indicate that on average, across all climate zones and house vintages, there is not much of a difference between California customers with programmable thermostats and those with manual thermostats in terms of their setback/setup behavior for cooling. The JJH study also indicates that an average household with programmable thermostats uses setpoints that use more heating energy than an average household with a manual thermostat. However, the JJH study s interpretation of the difference between the manual and programmable consumption estimates as savings due to programmable thermostats should be treated with caution. Contrary to the language in the JJH report, these differences do not show the effect of introducing a programmable thermostat to a home that had a manual one. The simulations are able to show what happens if the physical structure is held fixed, and the setpoint behavior is changed from that typical of manual-thermostat households to that typical of programmable thermostat households. What the analysis does not show is how the setpoint behavior changes when the programmable thermostat is introduced into a household that previously had a manual one. The approach taken was reasonable in the context of the simulation analysis, but does not address this behavioral question. Homes that choose programmable thermostats may tend to choose setpoints that lead to more or less heating or cooling use, regardless of the thermostat. Thus, it is necessary to explore how the type of thermostat affects the setpoints after controlling for household and structural characteristics that affect the choices of both setpoints and thermostat type. This issue was addressed by a second study, described next.

9 The 2005 Athens Research Thermostat Statistical Analysis The engineering approach used in the 2004 JJH Thermostat Study is susceptible to the introduction of bias into the engineering estimates due to omitted variables that are correlated with the presence of programmable and setpoint/setback schedule behavior. Bias could result to the extent that there are differences between dwellings with and without programmable thermostats, and these differences are relevant to setup/setback behavior. To test the effect of compositional differences between households with and without programmable thermostat, Athens Research conducted a separate statistical analysis. 5 The analysis was an attempt to understand: (a) How much the probability of a programmable thermostat installation is related to factors that are also relevant to setback/setup behavior and consumption; (b) The extent to which variability in setback/setup behavior is conceivably is related to having a programmable thermostat, net of other influences; (c) The extent to which setback/setup behavior influences consumption, net of background household/weather characteristics; and (d) The extent to which programmable thermostats influence consumption through setback/setup behavior, since the influence of thermostat technology upon consumption can only occur to the extent that it enables or encourages behavioral differences. Determinants of programmable thermostat installation. This analysis examined factors contributing to the existence of a cooling or heating programmable thermostat. The results indicated that: The likelihood of a programmable thermostat is strongly related to vintage, and regional variations, net of other factors; Multi-family dwellings are less likely to have programmable thermostats; There is a strong positive net effect associated with square footage; There is some evidence for a net lesser probability of programmable thermostats as relevant degreedays increase, and a net greater probability for dwellings with ceiling insulation; and There is minor evidence that seniors and disabled household members are less likely to live in dwellings having/choosing to install programmable thermostats. The Athens study concluded that the results from this regression implied that households with programmable thermostats and those with standard thermostats come from distinctly different populations, with differences relevant to installation also likely to be relevant to consumption. The study recommended that any estimation of the UECs of programmable versus standard thermostats should adjust for these differences. Determinants of hours of setback/setup. This part of the analysis developed regression models for constructed variables that indexed cooling setup and heating setback. The cooling setup variable was based on how many hours the cooling thermostat had either been off or set above 77 F. The heating setback variable was based on how many hours the heating thermostat had been either off or set below 70 F. The regression results for cooling setup indicated a slight net increase in setup time associated with a programmable thermostat (0.76 hours). Somewhat larger impacts were associated with children in 5 Due to space constraints, this paper only provides a high-level summary of the results of this analysis. Readers are referred to the Athens report for detailed cooling and heating regression model results and summary results regarding the causal flows linking installation, setback behavior, and consumption. The analysis summarized in this paper was the third of three Athens analyses conducted as follow ups to the 2004 JJH Thermostat study. The first analysis (Jan 27, 2005) developed standard errors for the JJH study UEC and savings estimates, relying upon bootstrap techniques. The second analysis (issued February 9, 2005) compared UECs from the 2004 JJH Thermostat Study with those from the 2003 RASS study.

10 the dwelling (less cooling thermostat setup), seniors (less setup), and presence of ceiling insulation (more setup). The heating regression showed stronger evidence that programmable thermostats yield a lower level of setback (-0.89 hours). Heating setback was found to be somewhat related to region and vintage, to household size (larger households have less setback), and to the presence of seniors (less setback). These results that programmable thermostats appear to slightly increase setup behavior for cooling and decrease setback behavior for heating, controlling for structural and occupant characteristics give slight support to the 2004 JJH Thermostat Study. The R-squared coefficients of the two regressions, which measure the proportions of total variation in the dependent variables (cooling setup, heating setback) that were explained by the regressions, were quite low (4 percent and 5 percent, respectively). Therefore, the Athens study concluded that we can t explain much of the behavioral variation in setback/setup. Determinants of UEC values. These regressions attempted to estimate the net impact of programmable thermostat installation, the net impact of setback/setup behavior, and the extent to which programmable thermostat installation impacts consumption. The dependent variables were the UEC values that had been estimated in the 2003 RASS study for central air conditioners (CAC) and gas central heat. The regressions revealed that: Square footage, degree-days, and their interaction were powerful determinants in the expected directions Multi-family dwellings were (net) lower consumers as were disabled/seniors. Hours of setback were determinants of both central AC and heating consumption. Every claimed hour of cooling setup reduced annual CAC UEC by 9 kwh. Similarly, every claimed hour of heating setback reduced heating UEC by 3 kwh. The direct effects of the presence of programmable thermostats upon the UECs were essentially zero. The Athens study found this to be reasonable since it s not the thermostat but the setpoint activity that is critical, and the setback hours are included in the regression. Conclusion The Athens Research study concluded that UEC estimates for energy efficiency measures that are derived from simulated engineering approach (as the JJH study did) should always be based on comparisons that are adjusted for consumption-relevant differences in composition between groups that have and don t have the measure in question. The study found that households with programmable thermostats and those with standard thermostats come from distinctly different populations, with differences relevant to installation also likely to be relevant to consumption. The study also found that differences between dwellings with and without programmable thermostats particularly differences in size have much to do with any simple differences in consumption between dwellings with programmable thermostats and those with standard thermostats. Programmable thermostats tend to be found in dwellings that are relatively new, large, single-detached, and have children rather than seniors or handicapped residents. The square footage difference between groups seems to be particularly consequential to energy consumption, not the type of thermostat. Finally, the study found negligible differences between programmable and standard thermostat dwellings in terms of setup/setback behavior. Thus for different reasons, the Athens study supported the findings of the JJH study: that savings from programmable thermostats are minimal.

11 Summary In recent years, California has relied heavily on the promotion of residential programmable thermostats to improve energy efficiency in the residential sector. In 2003 this measure alone accounted for 33 percent of the claimed kwh savings and 40 percent of the claimed therm savings for the Statewide Residential Retrofit Single-Family Home Energy Efficiency Rebate program. Other programs, such as the national ENERGY STAR program, also promote this energy efficiency measure. However, the findings of our 2004 SFR evaluation, together with recent studies on gross savings, suggest that energy efficiency programs should not be using rebates to promote the purchase of programmable thermostats. Some of the key findings of our study include: Increased market penetration of programmable thermostats. Surveys of California HVAC contractors and retailers indicated that programmable thermostats have a dominant share of contractor thermostat installations (88 percent) and represent about half (54 percent) of retail thermostat sales. The survey of HVAC contractors also supported findings from the 2003 RASS study that about half of California homes already have programmable thermostats. High levels of free-ridership. Between 48 percent and 69 percent of residential customers who received a $20 rebate for an ENERGY STAR programmable thermostat said they would have bought the same thermostat at the same time if the rebate had not existed. The levels of reported free-ridership varied with the type of rebate (point-of-sale versus mail-in) with point-of-sale rebates having the lower level (48 percent). Evidence that customers are not using programmable thermostats to save energy. A survey of customers who had purchased ENERGY STAR programmable thermostats found that few of them (11 percent 14 percent) were using the factory settings designed to maximize energy savings. This same survey found that saving energy is only a secondary, rather than a primary. motivation for residential customers to purchase programmable thermostats. Further evidence that customers are not using programmable thermostats to save energy is offered by the energy savings projection studies. The JJH projections using self-reported thermostat setpoints found that customers with programmable thermostats actually use thermostat setpoints that consume more heating energy than those with manual thermostats. The study also found no difference between customers with programmable thermostats and manual thermostats in terms of their setpoint behavior for cooling. The Athens Research statistical analysis of self-reported thermostat setpoints also found that programmable thermostats are associated with slightly higher setup behavior for cooling and decreased setback behavior for heating. The Athens study also showed that customers with manual thermostats and those with programmable thermostats come from distinctly different populations, with differences relevant to installation also likely to be relevant to consumption. Programmable thermostats tend to emerge in dwellings that are relatively new, large, single-detached, and have children rather than seniors or handicapped residents. The square footage difference between groups seems to be particularly consequential not the type of thermostat. This finding suggests that comparisons of the energy consumption of groups with manual thermostats and those with programmable thermostats should always try to adjust for consumption-relevant differences in the two groups. After the publication of these three studies, California investor-owned utilities decided to not offer rebates for programmable thermostats in their single-family and multi-family rebate programs. The decision was based on the growing realization that broad promotions of programmable thermostats as was done with the point-of-sale rebates are prone to free ridership and other problems. Any future promotion of the programmable thermostat in the state will likely be for very targeted

12 segments and situations. Even in these cases, pre- and post-installation determinations of savings will be needed to confirm the cost effectiveness of this measure. References Athens Research Three-Block Regression Analysis Regarding Effects of Programmable Thermostats on Setpoint Behavior and Electric Central Air/Gas Heat UECs. Prepared for Southern California Edison. James J. Hirsch & Associates Programmable Thermostats Installed into Residential Buildings: Predicting Energy Saving Using Occupant Behavior & Simulation. Prepared for Southern California Edison. KEMA-XENERGY, Itron, and RoperASW California Statewide Residential Appliance Saturation Study. Prepared for the California Energy Commission. KEMA-XENERGY, ADM Associates, Partnership for Resource Conservation, and Vacom Technologies DEER Update Study. Prepared for the California Energy Commission. Quantum Consulting Inc. and KEMA-XENERGY Statewide Residential Retrofit Single- Family Home Energy Efficiency Rebate Program Evaluation. Study ID# PGE0204. Prepared for Pacific Gas and Electric Company, San Diego Gas and Electric Company, Southern California Edison Company, and Southern California Gas Company.