New York Energy $mart^SM Cool It! Market Research Report

Eric Mendelsohn, Steven Nadel and Sarah Black  

August 2005

Executive Summary

This research was conducted at the end of the New York Energy $mart^SM Cool It! campaign in order to characterize the New York State marketplace for energy-efficient commercial packaged refrigeration equipment.  In 2003, at the beginning of the Cool It! campaign, ACEEE conducted research that established baseline evaluation metrics and an initial depiction of the marketplace (Smith 2003).  This report updates that research, describes some of the changes over the past two years, draws conclusions, and makes recommendations.  As in the earlier study, we focused on three particular types of equipment: commercial icemakers, reach-in solid-door refrigerators and freezers, and refrigerated beverage vending machines.

The retail chain for each type of commercial refrigeration equipment consist primarily of three familiar groups of market actors: the equipment manufacturers, the distributors (who sell to consultants, contractors, and end-users), and the end-users.  In the case of vending machines, there is a fourth actor, arguably the most influential one: the major international beverage companies that write the specifications that govern the purchase of beverage machines for their retail chains nationwide.

We surveyed the targeted market actors to meet the following objectives:

• To identify market actors’
  • awareness of energy-efficient equipment and standards
  • perceptions of energy-efficient reach-in refrigerators and freezers, icemakers, and refrigerated beverage vending machines
  • perceptions of the comparative purchase and operating costs of energy-efficient equipment
• To identify manufacturers’ and distributors’
  • opinions about the current market share of efficient equipment
  • beliefs about the features most attractive to customers/end-users
• To identify the view of customers/end-users about necessary and desirable features
• To identify market actors’ awareness of NYSERDA’s Energy $mart and Cool It! programs

The survey forms varied for the different actors and equipment types and we designed them to reveal respondents’ differing knowledge of energy efficiency standards.

We had good participation rates from equipment manufacturers and beverage companies.  Very few distributors of reach-in refrigerators and beverage vending machines responded to our survey.  End-users of all equipment types and icemaker distributors considered themselves somewhat familiar with energy-efficient equipment, understood as those models that surpass pertaining specifications (like ENERGY STAR® and Consortium for Energy Efficiency [CEE] Tier 1.)  Our respondents reported little price difference between the energy-efficient and standard-efficiency versions.  Across equipment categories, their median estimates of the price increment ranged from 0 to 7%.  However, price, along with availability, was most often cited as the customers’ most important factor when purchasing icemakers and reach-in refrigerators.  Energy efficiency is sometimes mentioned by customers and occasionally it swings a sale, most often when the customer is a university or hotel chain that shops according to in-house specifications and has a purchasing manager to wrangle prices.  Our survey indicated that distributors remain “somewhat familiar” with energy-efficient versions of the equipment lines they represent yet, while some could recognize efficiency specifications, few could mention those specs by name.  The middlemen of the retail chain are today unable or unwilling to highlight energy efficiency and total cost of ownership in their marketing efforts.  Among our recommendations at the end of this report, we suggest a response to this circumstance.

We examined California Energy Commission (CEC) and Air Conditioning and Refrigeration Institute (ARI) databases to count the models that meet current and forthcoming ENERGY STAR and CEE specifications.  We learned that it is easier now than it was two years ago to find energy-efficient icemakers and reach-in freezers because the percentage of units meeting the project’s eligibility criteria has climbed noticeably (see table below.)  In the case of beverage vending machines, our survey respondents offered a different impression than our database work did.  Both the manufacturers and the largest purchasers of vending machines claimed that virtually all such machines purchased in the last year bear the ENERGY STAR logo.  They thought our model counts in the database gave a result that was too low for ENERGY STAR Tier 1 and too high for Tier 2.  We attribute this to the fact that the CEC database contains quite a few models that are no longer being sold yet few listings for the new, ENERGY STAR-labeled models.  There is a lively debate over the prospects of Tier 2 vending machines becoming similarly cost-effective and thus accepted by large purchasers who have enormous market power in this sector.

Table ES-1: Changes in Availability of Energy-Efficient Commercial Refrigeration Equipment

Our analyses lead us to two conclusions as follows:

• Availability, stocking, and sales of efficient packaged refrigeration equipment are on a modest upward trend.  There are numerous instances where availability, stocking, and/or market share have increased and no instances where these metrics have decreased.  However, these trends are not uniform — for example, Tier 2 has not “taken off” for any of the equipment types.
• Distributors and end-users continue to give only limited attention to energy efficiency.  Most of the respondents we talked to were unfamiliar with Cool It!, Energy $mart, and the CEE tiers and, while familiarity with specific names was never an expressed goal of the program, the limited recall is discomforting.  Perhaps the poor retention can be attributed to the fact that the majority of the campaign’s interaction with its audience was via phone and email,

74 pp., 2005, $23.00, A053