LBNL Report Number
One of the largest drivers of growing global energy demand is the increasing market penetration of air conditioners (ACs). The resulting energy consumption can be mitigated by two main policy interventions: regulatory measures, such as minimum energy performance standard (MEPS) or labeling programs, and voluntary measures, such as financial incentives programs. Financial incentives, also known as economic instruments, leverage private investments to pull higher efficiency technologies into the market. This paper focuses on this second policy option. Using detailed case studies of AC energy efficiency incentive programs, the paper explores their global experience, shows their significance and diversity, describes their program designs, and shares lessons learned from their implementation. The paper also describes how incentive programs can be designed to address additional pressing concerns of growing AC use such as the power supply reliability due to increase peak demand and global warming potential (GWP) of refrigerants used in ACs.
For policymakers and program administrators interested in addressing AC energy efficiency and willing to implement AC schemes, the paper provides examples of past and present programs and highlights concerns that need to be considered when making decisions on program design and implementation. After an overview of AC markets highlighting their growth, their savings potential and the typical barriers to the penetration of more efficient models, six AC incentive programs are selected and examined in depth based on evaluation reports and/or interviews with program administrators. Finally, we outline program design features that effectively a) increase penetration of energy efficient ACs, b) increase utility and customer participation in demand response (DR) programs targeted at reducing peak-load impacts on the grid and c) phase out the use of high- GWP refrigerants in ACs. We find that incentive programs are particularly effective when they target emerging technologies that still have a low market penetration.