Karl Pomeroy, President and GM, Motili.
There are a number of changes in HVAC standards and practices coming in January 2023 when the U.S. Department of Energy’s new minimum efficiency standards for air conditioners and heat pumps go into effect. The new standards and mandated practices are likely to have a significant impact on the prices of HVAC products and associated services at that time. Let’s review the upcoming changes along with some strategies that can be undertaken by building owners to mitigate any potential growing pains associated with these federal mandates.
The Changes On The Horizon
Across the board, all existing SEER ratings decrease due to the new M1 test standard, plus a corresponding increase in the minimum efficiency standard for HVAC systems. This means that lower SEER systems cannot be manufactured and/or installed once the calendar flips to 2023. Specifically, the new minimum efficiency standards for air conditioners will follow the regional borders established in 2015: North, Southeast and Southwest. For air conditioners in the North, the minimum efficiency will increase from 13.0 to 14.0 SEER, and in the South from 14.0 to 15.0 SEER.
Additionally, the heat pump minimum efficiency is set to increase from 14.0 to 15.0 SEER. An increase in air-source heat pumps’ efficiency is also required. This is measured by the pump’s heating seasonal performance factor (HSPF). The minimum HSPF will be 8.8 HSPF rather than the current 8.2 HSPF standard.
Four Reasons To Take Action Now
You may be thinking, “It’s still 2021, so I have time to assess my current HVAC and heat pump inventory now through the rest of 2022.” This is true, in a sense, but the impacts of these efficiency changes are already being felt. One of the first is a limited “sell through” timetable. This is a grace period typically allowed when a regulation change takes effect, permitting distributors a window of time to sell off existing inventory. This latest sweep of regulation ensures that new standards are in force as of January 1, 2023, which translates to implementation and changes well before the actual start date.
The second reason is that as we approach the end of the second year after the pandemic, there are significant global supply chain challenges that continue to impact product inventory. Simply put, there is a short supply of surplus HVAC equipment available at this time. Orders and planned work being scheduled now will be completed months from now. The timeline is already several months for equipment acquisition. An order placed in mid- to late-2022 could likely be on a 2023 timetable and be subject to the new requirements that the new year will bring.
Reason number three is that these new regulations and SEER mandates will bring with them an approximate 30% increase in HVAC product price, according to my prediction. It’s important for building owners and managers, even homeowners, to understand that pricing has already been on the increase. So 10-year-old (or older) HVAC systems and heat pumps, if replaced today, will be looking at approximately 30% savings. The time is now for building owners to do an energy analysis and assess the condition of their systems.
Reason four is that the HVAC industry has seen unprecedented growth in the past year. This only adds to the scarcity of product when supply chain challenges are in play.
How Building Owners Can Prepare
The upcoming round of regulation changes will see all existing SEER ratings go down while, at the same time, increasing efficiency standards. As a property owner, first, perform a comprehensive audit to determine which of your units are at the end of their useful life. What might have been a decision for next summer should, if possible, be evaluated sooner. Considerations include the age of the units, their efficiency and overall general condition. Is it time for a replacement? And if so, sooner rather than later is the way to go.
If the energy audit points to needed replacements, building owners that have budgetary flexibility can adjust maintenance budgets to begin the process of replacing units. There is also time to consider additional capital being used for HVAC replacements. Not only could there be long-term tax savings and a lower cost by doing it now, but you can also get the benefit of lower operating costs since today’s units are significantly more efficient than those of 10 years ago.
There are several moving parts that are taking place right now, including the education of the HVAC market and the manufacturing of equipment that will support the higher standard. It is important to note that the regulations do not require the replacement of an older working system.
The new regulations will bring continued energy savings. National appliance standards, on average, save U.S. households about $320 per year on energy bills. The DOE predicts that the increased minimums for SEER will create up to $12.2 billion in energy savings over the next 30 years. That is significant and impactful for the planet.