Evaluation of the Massachusetts ENERGY STAR Residential ... · during this evaluation suggests that the Massachusetts ENERGY STAR Lighting Program, specifically the ITP effort, has

Evaluation of the Massachusetts ENERGY STAR®

Residential Lighting Program

PY 2003

Integrated Report

Submitted June 2004

Submitted by:

Megdal & Associatesand

Opinion Dynamics Corporation

Table of Contents

Volume 1: Integrated Report

Executive Summary ES-1Summary of Evaluator Recommendations for Consideration ES-2

Introduction to Report Structure 11. Description of the Program and Program Theory 12. Methodology 7

Customers: Consumer Survey 7Customers: In-Home Visits 7Retailers and Manufacturers: Store Survey 8Retailers and Manufacturers: Invitation to Participate Findings 8Retailers and Manufacturers: Targeted Retailer Findings 9General: Reviewing Shipping and Sales Data 9

3. The Current Residential Lighting Market 10The Consumer Market 10The Supplier Market 15

4. Market Effects of the Program 19Supply-side Comparisons 21

Increasing Retailer and Manufacturer Participation 21Trends and Comparisons in Amount of Shelf Space 23

Demand-side Comparisons 25Trends in Awareness 25Trends and Comparisons in Product Adoption 25Trends in Opinions 26

Overall Program Effect on Penetration 275. Process Evaluation 30

The Process 30Administration 30Retailer and Manufacturer Participant Satisfaction 31Data Gaps 32

ITP Sales Data 32Stocking Data 35Overall Sales Data 35

6. Findings and Recommendations37Key Findings 37Evaluator Recommendations 37

Executive Summary

This 2003 Market Progress Evaluation Report (MPER) builds on the 2002 evaluation to track changes in the Massachusetts residential lighting market. Specifically, the 2003 MPER seeks to explain and assess the extent of the current transformation of the Massachusetts lighting market as a result of the Massachusetts ENERGY STAR® Lighting Program.

In this study, we assessed consumer behavior through telephone surveys and in-home visits. We also collected information about the program and its effects through in-depth

interviews with retailers, as well as through a review of program databases.

While the Massachusetts ENERGY STAR Lighting Program has historically been primarily a rebate- and catalog-based program, in 2002, the program began a shift towards industry-sponsored initiatives, or what the Massachusetts utilities refer to as the Invitation to Participate (ITP) process. By 2003, the ITP efforts made up the majority of the sales through the program; of all sales through the program, 94% of the bulbs and 74% of the fixtures sold were through ITP efforts.

The ITP efforts have been successful and have become a major component of the program (rather than a pilot effort). According to participating retailers and manufacturers, the ITP process is successful because it reduces the administrative burden on the stores; allows manufacturers and retailers to build relationships through a mutual effort to promote products; allows stores to easily match supply and demand; and allows stores to select a product mix that is right for them. Based on a review of our findings, however, the ITP efforts were built rapidly without the supporting infrastructure, such as sales tracking databases.

Despite a few areas that are in need of improvement, the weight of evidence gathered during this evaluation suggests that the Massachusetts ENERGY STAR Lighting Program, specifically the ITP effort, has had a significant impact on the Massachusetts market for energy efficient lighting. The ITP effort has been successful in increasing retailer participation (from 322 in August 2002 to 838 in March 2004), as well as in the number of products moved through the program. The 2003 program resulted in the sale of nearly 1 million ENERGY STAR CFLs and over 100,000 ENERGY STAR fixtures. This represents a doubling of the number of bulbs sold through the program in 2002, as well as a 4% increase in the number of fixtures.

As of September 2003, approximately 16% of Massachusetts stores that sell lighting products sold ENERGY STAR lighting (and most of these were participating in the program). Furthermore, our findings indicate that as a result of efforts through the program, this percentage has increased: as of March 2004, more than 20% of stores are carrying ENERGY STAR products.

On the consumer side, awareness and use of energy efficient lighting in Massachusetts are increasing; however, perceptions about product characteristics and benefits seem to be lagging behind.

Specifically, consumer awareness of energy efficient bulbs increased significantly between 2002 and 2003: 82% of households were familiar with energy efficient bulbs in 2003, up from 71% in 2002. Awareness of energy efficient fixtures is much lower; less than half of the consumer market (40%) is aware of energy efficient fixtures, with no change occurring between 2002 and 2003.

Overall, opinions of energy efficient lighting are generally positive (with 88% understanding that it is good for the environment); however, there is still a lack of understanding of some of the benefits of energy efficient lighting, such as the fact that it lasts longer and is less expensive in the long run (21% and 31% were unfamiliar with

these benefits, respectively). Although product improvements and selection have increased, consumer perceptions have not kept up.

Along with awareness, use of energy efficient lighting is also increasing: in 2003, 55% of homes interviewed stated that they have at least one CFL in their home, compared to 43% in 2002. These telephone survey findings are supported by our findings from in-home visits (58% of the homes visited had at least one CFL).

Despite the fact that a large percentage of households in Massachusetts (55%) have at least one CFL installed in their home, our findings suggest that there are still many more opportunities to install energy efficient lighting—even in homes that are using CFLs. The average single-family home has 52 sockets in their home, yet the average user has only 6.2 CFLs installed.

We estimate that there are a total of 121.7 million light sockets in Massachusetts (2.34 million households in the Massachusetts investor-owned utility territories with an average of 52 sockets per home); and that approximately 8 million of these sockets are filled with CFLs (55% of all households with an average of 6.2 CFLs per home). Based on these calculations, approximately 7% of sockets are filled with energy efficient CFLs.

Among those sockets that are not already energy efficient, CFL bulbs have a much larger market potential than energy efficient fixtures. Sixty-four percent of all sockets can be retrofitted through simple bulb changes. Of the remaining, 7% of sockets are already filled with CFLs, 9% are “ineligible” due to specialty features (such as colored bulbs or chandelier shapes) that are not currently available in energy efficient alternatives, and 14% are standard fluorescent, which may already be energy efficient. The potential for energy efficient fixtures, therefore, may be as small as 6%.

Summary of Evaluator Recommendations for Consideration

1 It could be quite beneficial for program assessment to upgrade the infrastructure and data collection efforts. The sponsors may want the program to track retailer and manufacturer participation, advertising, stocking and sales. The sponsors may also want to consider changing the incentive structure to encourage the collection of data.

2 The sponsors may wish to consider adapting the ITP efforts to better serve specific portions of the market, such as developing grocery store or mass merchandiser-specific marketing materials to encourage additional participation among grocery stores and mass merchandisers.

3 The sponsors may wish to examine the information provided in this report as it relates to the allocation of incentives between transforming the bulb market versus the fixture markets.

4 The program administrators may wish to review and/or collect hours of use information by room type to determine cost effective applications for CFLs.

5 The sponsors should consider increasing efforts to educate consumers about the benefits of energy efficient lighting and how it has continually improved in quality and selection, as well as about the various applications for this type of

lighting.6 The program could be more effective if ways are found to influence retailers and

manufacturers to participate in the consumer education process, and work to improve marketing and education of ENERGY STAR products.

7 The sponsors may also want to reassess the terms and conditions of the ITP efforts to give participating retailers and manufacturers adequate lead-time and consistent signals.

Introduction to Report Structure

Similar to the 2002 report, this report is structured to provide an overview of the integrated evaluation results for the Massachusetts ENERGY STAR Lighting Program. The main body of this report describes the program, explains the methodology, characterizes the market, discusses market effects or changes in the market, evaluates components of the current ITP process, and then provides recommendations and conclusions.

Much of this report is drawn from detailed findings for the major data collection techniques employed in our research (i.e., customer survey, in-home visits, ITP process, other targeted retailers, etc.). The detailed findings by major task or segment can be found as attachments to this document (see Appendices A through E). In addition, this integrated chapter also draws on the various program databases, which are not summarized in the appendices. Overall, we incorporate these multiple information sources to describe the state of the residential lighting market, and the changes as a result of the Massachusetts Residential ENERGY STAR Lighting Program.

1. Description of the Program and Program Theory

Since the late 1980s, investor-owned utilities in Massachusetts (which currently include Fitchburg Gas and Electric Light Company or Unitil, the Massachusetts Electric Company/ Nantucket Electric Company or National Grid, NSTAR Electric and Gas Corporation, and Western Massachusetts Electric Company) have offered residential energy efficient lighting programs to their customers. In 1998, the Massachusetts utilities joined together to offer a standardized program, and had teamed up with other regional utilities through the Northeast Energy Efficiency Partnerships, Inc. (NEEP).

The early programs focused on consumer rebates through instant rebate coupons at retail stores. They also educated consumers and sold energy efficient lighting through catalogs.

However, in 2002, the program began a shift towards industry-sponsored initiatives, or

what the Massachusetts utilities referred to as the Invitation to Participate (ITP) process. As a pilot program in 2002, the Massachusetts utilities solicited proposals to promote ENERGY STAR lighting from manufacturers and retailers. Through this process, they hoped to encourage greater participation in the program through partnerships. The ITP process offers retailers and manufacturers flexibility in their program participation.

The move to the ITP process was also made with the hope to provide the ability to reach and assist more consumers as the market grew without requiring ever increasing budgets. An overview of the budgets for these efforts for the last few years is provided in Table 1-1 below. In fact, comparing effects with expenditures between the rebate, catalog, and ITP efforts will be an important part of the 2004 evaluation effort.

Table 1-1 Lighting Program Expenditures for the Four Massachusetts Investor-Owned Utilities (in $’000s)

Customer Perf. OtherIn-hs Contr In Contr Incentive In-hs Contr In-hs Contr Inc. Costs

1998

NSTAR & WMECO catalog only 73 - 254 4 1,160 - 44 215 118 91 -

1999

NSTAR, WMECO catalog & Mass Elec 311 111 - 307 5,039 - 680 124 160 807 51

2000 All 386 66 0 1,520 3,676 0 1,108 38 37 988 382001 All 442 55 0 1,139 5,326 26 808 48 123 608 812002 All 424 14 0 763 3,911 213 692 81 245 730 49

Planning & Admin Marketing Implementation Eval & MR

The utilities also developed a lighting showroom stocking fee component for the current program, which offers specialty lighting stores extra incentives for participating in the Massachusetts ENERGY STAR Lighting Program. For example, the utilities offer these stores a “stocking incentive” for each ENERGY STAR product displayed, as well as co-op advertising, sales training, and instant rebate coupons. The purpose of this component of the program is to get lighting showrooms involved with the regular lighting program.

These four components (instant rebate coupons, catalogs, ITPs and the lighting showroom effort) are the vehicles through which the program seeks to increase the awareness and education of energy efficient lighting for residential consumers, thereby increasing the purchase and use of ENERGY STAR lighting.

The Massachusetts ENERGY STAR Lighting Program, as a whole, works to promote efforts that lead to a transformed residential lighting market. Based on discussions with program implementers, the program seeks to:

1 Increase customer awareness of energy efficient lighting2 Improve customer understanding and perceptions of energy efficient lighting3 Increase the use of energy efficient lighting in homes4 Increase future purchases of energy efficient lighting

5 Increase retailer awareness of energy efficient lighting6 Encourage retailers to stock energy efficient lighting: more devoted shelf space

and wider selection7 Encourage retailers to actively market energy efficient lighting8 Encourage more competitive pricing between energy efficient lighting and other

lighting9 Increase future stocking of energy efficient lighting

10 Encourage manufacturer participation

Using these program goals, Megdal & Associates along with Opinion Dynamics developed multiple indicators to help to evaluate the program goals. Tables 1-2 through

1-4 describe the major goals or market indicators, and the data that was (or will be) collected to measure changes in the market. The indicators were discussed with the program implementation and evaluation staff and have been used to form the foundation of our evaluation efforts in 2003 and 2004.

Also note that due to the changing nature of the program, and particularly to its emphasis on the ITP process, which focuses on retailers and manufacturers rather than consumers, it has become difficult to differentiate between participating and non-participating households. Prior program efforts required consumers to fill in their contact information to receive savings at the checkout point, or to give their contact information when submitting their order through a catalog. Through these methods, the Massachusetts ENERGY STAR Lighting Program was able to develop a database of participating households; however, the current approach with the ITP, which offers product buy-downsto retailers and manufacturers, does not collect this type of data. Thus, we are not able to easily determine the customers who have participated in ITP efforts. Thus our evaluation and this report look at market-level changes.

Table 1-2 Indicators: Residential Customers*

��1. Increase customer awareness of energy efficient light ing�Percentage of customers w

��•1 Are very or somewhat��•2 Are very or somewhat familiar with energy ef

ficient fes��•3 Recall seeing POP materials for energy eff

icient or ENERGY STARting��•4 Recall seeing an out-of-store advertisement

for energy efficient or ENERGY STighting��2. Improve customer understanding and perceptions of energy efficie

nt lighting�Percentage of cus

rs who…��Increase customer s atisfaction•5 Are satisfied (give a rating of 4 or 5 on 5-point scale) with their energy effi

t bulbs��•6 Are satisfied (give a rating of 4 or 5 on 5-poscale) with their energy efficie

ixtures��Increase awareness of benefits/ Customers who believe claims a

re credible•7 Strongly or somewhat agree that energy efficient lighting is less expensive in t

o ng run��•8 Strongly or somewhat agree that energy effint lighting has a long life (does not have to be replaced/change

often)��•9 Strongly or somewhat agree that energy effilighting is high quali

i ghting��•10 Strongly or somewhat agree that energy effilighting is good for the

r onment��•11 Strongly or somewhat agree that energy effint lighting emit

ss heat��Reduce barriers and m erceptions •12 Strongly or somewhat agree that energy effilighting is more expensiv

u

Table 1-2 Indicators: Residential Customers* -- Continued•13 Strongly or somewhat agree that energy efficient lighting

does not provide enough light•14 Strongly or somewhat agree that energy efficient lighting

flickers•15 Strongly or somewhat agree that energy efficient lighting

does not fit in fixtures•16 Strongly or somewhat agree that energy-efficient lighting is

difficult to install•17 Strongly or somewhat agree that there is a delay when

energy efficient light comes on•18 Strongly or somewhat agree that energy efficient bulbs are

unattractive•19 Strongly or somewhat agree that energy efficient fixtures

are unattractive•20 Strongly or somewhat agree that the selection of energy

efficient lighting is limited •21 Strongly or somewhat agree that energy efficient

replacement bulbs are not availableIncrease the percentage of customers that use energy efficiency as a decision making tool when selecting lighting

•22 Identify “energy efficiency” as one of the top three things that they look for when selecting lighting (unaided)

•23 Indicate that E-Plus has a strong influence (7 or higher on 10 point scale) on their likelihood to purchase a light bulb or fixture

•24 Indicate that ENERGY STAR has a strong influence (7 or higher on 10 point scale) on their likelihood to purchase a light bulb or fixtu

��•25 Indicate that EnergyMi or higher on 10 point scale) on their likelihood to purchase a light bulb or fixt

��3. Increase the use of energy efficient lighting in hom e

� ��•26 Number of homes that� ��•27 Number of homes that� ��•28 Average number of en

per h� ��•29 Average number of en

per h� ��•30 Ratio of energy efficie

ble socke� ��•31 Percentage of hard-to� ��•32 Percentage of exterior� ��•33 Percentage of photoce

��4. Increase future purchases of energy efficient light ing�Percentage of customers w

��(Bul bs)•34 Would purchase energy efficient bulbs WITH incentive (will ask about specific price points using prior questi

� ��•35 Would purchase energOUT incent

��(Fixtur es)•36 Would purchase energy efficient fixtures WITH incenive (will ask about specific price points using prior questi

� ��•37 Would purchase energOUT incent

e��* Note that only the market effects and indicators relevant to this evaluation (i.e., that can be measured through the methodology we conducted) are presented in the tables. Additional indicators may be part of the long-term research pla

n.

�Table 1-3 Indicators: Retails �

•56 Average number of models of ENERGY STAR fixtures available displayed at stores

•57 Percentage of stores with ENERGY STAR dimmable produc

�� •58 Percentage of sTER SPECIALTY FEATURE (ask implementers which ones, perhaps pin bas

��3. Encourage retailers to actively market energy efficient light ing�Number of retail stores th

� �•59 Participate in so the rebates, ITP process, or lighting showroom compo

��•60 Perform any kior the ENERGY STAR lighting the

l��•61 Perform any kind of out-of-store marketing for the ENERGY STAR lighting t

y

Table 1-3 Indicators: Retailers -- Continued•62 Number of lighting showrooms with ENERGY STAR

educated sales staff who actively promote ENERGY STAR fixtures

4. Encourage more competitive pricing

•63 Price differential between retail price of similar ENERGY STAR and incandescent lighting

o 60 W incandescent versus comparable ENERGY STAR produ

�o 100W incandERGY STAR pro

��o 3-way incanENERGY STAR p

t��o non-energy efficient flood versus comparable ENERGY STAR

uct��o non-energy efficient torchiere versus comparable ENERGY ST

oduct��o non-energy efficient portable versus comparable ENERGY

product��o non-energy efficient portable versus recessed can comparable ENERG

AR product��5. Increase future and coninued stocking of energy effi cient lighting�Percentage of

i l stores…��•64 That are likely to continue to sell ENRGY STAR light bulbs without the u

li

ty program��Table 1-4 Indicators:

ManufacturersNote that these indicators are important only if manufacturer participati

n at the state level is deemed to be an important long-term goal of

he p

��1. Encourage more manufacturers to participate in Massachusetts ENERGY S

T

ghting Program��•65 Number of participating mafacturers (through any

t of the program)��•66 Ratio of participating manufacturers to all E

STAR manufacturers��•67 Changes in proct

mix in Massachusetts��Methodology�As a first step in our evaluation efforts, the Megdal & Assoates and Opinion Dynamics team met with program implementers and evaluators from eac the utilities to discuss and confirm the program goals, and indicators of market success (described in section 1). Once these indicators were finalized, our team developed a methodology for each of the tasks to collect the information necessary to assess the market. (Note: some of the indicators were not prioritized in 2003, but will be explored in our 2004 research efforts.)��Data collection for this evaluation occurred between March 2

effort, the 2003 survey was not broken down by participating customers versus non-participants. Rather, the survey effort focused on looking for changes in the market as a whole. Our random sample of respondents represents both customers who have purchased CFL bulbs and fixtures through the program and those that have not purchased through the program.

The detailed methodology and results from these customer surveys are presented in Appendix A

Customers: In-Home Visits

We conducted on-site visits to 150 single-family homes in Massachusetts to determine the average number of light sockets and to assess the saturation of energy-efficient compact fluorescent lighting (CFL) in the residential market. Of the 150 site visits, 100 were conducted in randomly selected homes that are representative of single-family homes within Massachusetts. An additional 50 site visits were conducted with participants in the rebate and catalog components of the Massachusetts ENERGY STAR Lighting Program to determine if there are differences between the general population and known program participants. ODC site auditors collected information on a hand-heldpersonal digital assistant (PDA) using ODC’s customized EEsiteAuditor program. This method of data collection allowed for consistent reporting of data and eliminated the need for post-visit data entry. It is important to note that for our study single-family homes included detached and attached units so long as there were four or fewer units in the building. Single-family homes that fit this category represent approximately 80% of the homes in Massachusetts.

The detailed methodology and results from these in-home visits are presented in Appendix B.

Retailers and Manufacturers: Store Survey

In 2003, we also conducted a mini-survey of all retailers that sell lighting products. This task was performed to determine the number of points of sale for energy efficient lighting, in advance of collecting stocking data.

One of the indicators of progress in the Massachusetts lighting market is increasing the amount of lighting shelf space devoted to ENERGY STAR lighting. Our 2002 research included stocking data for a small number of stores, and the program implementer (APT) collects stocking information for participating retailers twice a year. Currently, however, APTs data focuses only on shelf space and units of ENERGY STAR products. APT’s data does not look at other CFLs sold, or other non-ENERGY STAR lighting products, so it does not provide information on the percentage of lighting shelf space allocated to ENERGY STAR lighting products. Our program indicator discussion with the sponsors indicated that there is some interest in collecting this type of information; however, as a first step, our team investigated the number of stores that sell light bulbs and fixtures (by retail type, such as hardware or grocery stores), the percentage that sell specialty lighting products, and the percentage that sell ENERGY STAR lighting products.

Using a Dunn and Bradstreet database, we manually reviewed and selected SIC codes that contained stores that appeared to have the potential to sell lighting. We then called all of these stores, with the exception of those that fell under SIC codes related to grocery, convenience or drug stores. Because of the large number of grocery, convenience and drug stores, we elected to call only a representative number of these store types. Responses were then weighted to represent the total number of stores within the SIC code.

Based on this methodology, we attempted to call 4,577 stores that fall within our store types, and 3,600 stores responded to all of our questions.

The detailed memo describing the methodology and findings is presented in Appendix C. Note that this research was conducted in September 2003, when the program had approximately 637 participating retailers. The number of retailers in the program, as well as the number of stores selling ENERGY STAR lighting, has since grown.

Retailers and Manufacturers: Invitation to Participate Findings

We conducted interviews with participating and non-participating retailers and manufacturers specifically concerning the ITP process, since this is a new component of the program that now comprises the majority of program sales.

In support of this effort, our team reviewed all of the 41 memorandums of understanding (MOUs) in Phase I of the 2003 Invitation to Participate (ITP) effort. Because several retailers participated in the ITP effort more than once, many of the MOUs that we reviewed were simply extensions or revisions to previously established ITP agreements, while others may have involved the same store in partnership with various manufacturers.As such, our review identified approximately 20 unique retail participants with a presence in Massachusetts, and seven unique manufacturers. ODC conducted in-depth interviews with eight participating retailers and five participating manufacturers to explore interest in continued participation, perceived barriers to participating, ways to improve the process, and potential new ideas for transforming the CFL bulb and fixture markets.

In addition, we also spoke with non-participants. We interviewed five retailers and four manufacturers that received an Invitation to Participate letter but chose not participate in Phase I of the ITP effort. Note that while these respondents did not participate in the ITP effort, some are participants in the rebate component of the Massachusetts ENERGY STAR Lighting Program.

The detailed methodology and results from these retailer and manufacturer interviews are presented in Appendix D.

Retailers and Manufacturers: Targeted Retailer Findings

We also conducted targeted in-depth interviews with two specific groups of retailers:

lighting showrooms and grocery stores.

We conducted nine in-depth interviews with participating specialty-lighting stores. These lighting showroom respondents are part of the current effort to promote participation among this group of retailers. Our interviews with this group gathered feedback on the benefits and drawbacks of the lighting showroom stocking fee component of the program and its effect on sales of ENERGY STAR lighting in these venues.

We also conducted interviews with representatives of non-participating grocery stores. Through in-depth interviews with 11 decision makers at Massachusetts’ grocery or convenient stores, we explored the barriers to grocery store participation and ways to attract them to the program, or design a component to the program that might work within their constraints. The focus was on non-participants since the program had been having a difficult time drawing this type of store into the program.

The detailed methodology and results from these interviews are presented in Appendix E.

General: Reviewing Shipping and Sales Data

Finally, our team also conducted an analysis of the shipping and sales data collected through the ITP effort. This task was designed to help the utilities have a better understanding of what was currently being collected, and how to gather data on what is shipped and what is billed. This included a preliminary review of all available data, and a more detailed analysis of four large retailers that received over $250,000 to participate in the ITP process. The results of this task were presented to the utilities at APT’s offices on November 8th, 2003 and are summarized under the process evaluation section (Section 5) of this report.3. The Current Residential Lighting Market

This section describes several key indicators, which taken together capture the state of the Massachusetts lighting market in 2003. While this section describes the current state of the market, section 4 relies more heavily on past findings to describe changes in the market over time. In this section, we present findings for residential consumers, followed by findings for retailers and manufacturers.

The Consumer Market

Overall, consumer awareness of the availability of energy efficient lighting has increased, as illustrated in Figure 3-1 below. Eighty-two percent of all respondents report some level of familiarity with CFL bulbs, an increase from last year’s 71%. Moreover, 40% of all respondents say they are ‘very familiar’ with CFL bulbs.

Awareness of energy efficient fixtures is still low compared to CFL bulbs. Only 40% of respondents have some familiarity with energy efficient fixtures; and only 11% are ‘very familiar’ with this technology. Compared to 2002, there is no change in awareness of energy efficient fixtures. Since the program has focused its efforts more on bulbs than

fixtures over the past year, these comparative growth rates suggests that the program may be increasing awareness of CFL bulbs.

Figure 3-1 Familiarity with energy saving compact fluorescent lighting

40%

82%*

40%

71%

0%

20%

40%

60%

80%

100%

CFL Bulbs CFL Fixtures

2003

2002

* Indicates a statistically significant difference between 2003 and 2002 at the 90% confidence level.

Along with awareness, use of energy efficient lighting is also increasing. Whereas in 2002, 43% of households said that they had a CFL bulb installed in their home, in 2003 more than one-half (55%) of residential households said that they use energy efficient light bulbs. These findings from telephone surveys with Massachusetts’ residential customers are further supported by our in-home visits, in which we found that 58% of homes had at least one CFL installed. Furthermore, users expressed a high level of satisfaction with CFL performance.

Based on our telephone interviews, the mean number of energy efficient bulbs per household is approximately 3.1 bulbs per household in 2003, which is comparable to results from 2002. This includes all households surveyed through the telephone survey. Among the 55% of respondents that were users, the number of bulbs per home ranged from 1 to 25, with the average home having a median of 4 CFLs and a mean of 5.6 CFLs per user. Similarly, in-home visits show that homes that use CFL bulbs had a median of 4, and a mean of 5.5 interior CFLs per user. However, our on-site visits show that users of CFLs had a mean of 6.2 CFLs per home when all interior and exterior sockets were included. Since telephone respondents were not specifically asked about exterior sockets, and since telephone responses and in-home data appear to be consistent, we feel that 6.2 CFLs per user is an accurate estimate of the average number of CFLs installed per user.

Table 3-1 Comparison of Telephone and In-Home ResultsCFL Bulbs

Telephone Survey

In-Home Visits

Percentage of respondents that have at least 1 CFL in home

55% 58%

Median number of interior CFLs per user 4 4

Mean number of interior CFLs per user 5.6 5.5

Mean number of CFLs per user (interior and exterior sockets)

NA 6.2

Usage of energy efficient light fixtures is not as widespread as CFL bulbs About one in

five (19%) respondents state they own an energy efficient fixture, and the median number of energy efficient fixtures these respondents own is approximately 3 (or a mean of 4.5 fixtures per user). Nevertheless, this percentage is a slight improvement upon last year’s data, when 15% said they had an energy saving fixture installed in their home. In-home visits, however, show that respondents may overestimate the number of energy efficient fixtures in their homes, since it is sometimes difficult for respondents to distinguish between “energy efficient fixtures” and fixtures with energy efficient bulbs in them. Among the 100 randomly selected homes that we visited, 14% had a pin-based energy efficient fixture. We feel that this is most likely a more accurate estimate of the percentage of homes that would fall within our definition of energy efficient fixtures.

Table 3-2 Comparison of Telephone and In-Home ResultsEnergy Efficient Fixtures

Telephone Survey

In-Home Visits

Percentage of respondents that have at least 1 CFL in home

19% 14%

Median number of energy efficient fixtures per user 3 1

Mean number of energy efficient fixtures per user 4.5 2

While a large percentage of respondents (55%) have at least one CFL installed in their home, these statistics also mean that 45% of Massachusetts’ consumers (or approximately one million households) are not using any CFLs. Furthermore, many homes that are using some energy efficient lighting still present energy saving opportunities since many of the sockets in their homes may not be filled with energy saving bulbs.

In Massachusetts, there are approximately 2.34 million households within the investor-owned utility territories. Based on our in-home visits, we estimate that there are 52 bulbs operating in 36 fixtures in the average Massachusetts single-family home. (It is important to note that for our study single-family homes included detached and attached units so long as there were four or fewer units in the building. According to U.S. Census Data, this accounts for approximately 80% of the housing units in Massachusetts.) While not all homes are single-family homes, if we assume that there are 52 bulbs per household multiplied by the 2.34 million households within the sponsors’ territory, there are potentially 121.7 million light bulbs in use in Massachusetts. Assuming an average of 36 fixtures per household, these 121.7 million bulbs reside in approximately 84.2 million fixtures.

Given that approximately 55% of Massachusetts households use at least one CFL bulb, and an average of 6.2 CFLs per user (including indoor and outdoor sockets), we estimate that there are approximately 8 million CFL bulbs in place in Massachusetts - (2.34 million IOU customers times 55% times 6.2 CFL bulbs per household). Using our earlier estimate that there are 121.7 million sockets, this represents a saturation rate of approximately 7%.

CFLs, therefore, make up approximately 7% of the total lighting found in homes. Thus, the overwhelming majority of the lighting found in a typical home is not energy efficient. See Figure 3-2.

Figure 3-2 Types of Bulbs, among the random group

Standard fluorescent

14%Other

2%

Energy efficient compact fluorescent

7%

Incandescent72%

Halogen5%

Energy efficient compact fluorescent

Incandescent

Standard fluorescent

Halogen

Other

The majority of CFLs are found in bedrooms, living rooms, and kitchens; however, saturation rates (i.e., the percent of sockets filled with CFLS) for these room types is only slightly higher than average, 8% to 9%. (See Table 3-3.) According national data on hours of use, living rooms and kitchens are also some of the most frequently lit spaces. Kitchen lights are in operation for 3.0 hours a day, while living room lights are on for approximately 2.5 hours a day. In terms of actual electricity usage, kitchens and living rooms use the most kWh/year, while bathroom and outdoor fixtures also have high electricity usage, due to the relatively high wattages typically found in these types of lighting applications.

CFLs are also more likely to be placed in sockets of portable fixtures than in hardwired fixtures (23% of portable sockets are filled with CFLs and only 12% of hardwired sockets). Nevertheless, since there are a larger number of hardwired to portable sockets, the actual number of CFLs in hardwired sockets is approximately two times as large as the number of CFLs installed in portable sockets.

The existing 7% saturation rate of CFLs means that there is a substantial opportunity to further impact the residential lighting market. Aside from the 7% of sockets where CFLs are currently installed, more than one-half of sockets that currently use a non-efficient bulb are prime for conversion, since they are simple bulb retrofits. Forty percent of all sockets have a standard-shape, standard-size, A-type incandescent bulb, for which there are numerous CFL alternatives. This 40% represents the easiest potential conversions. Other screw-based bulbs without any special features such as frosted or clear bulbs represent an additional 24% of all sockets and may also be easily replaced given the large selection of bulb shapes and types currently offered by CFL manufacturers. The two red areas in Figure 3-3 represent these easy screw-in bulb retrofits. While this estimate takes size and shape of the bulb into account (odd sizes or shapes for which there were not

alternatives were deemed “ineligible” for CFL replacement); we did not look at illumination or availability to the customer. It is possible, therefore, that the customer may not be able to find a bulb as bright as they want and/or may not know where to purchase the correct CFL replacement. Thus, this figure should be seen as an upper limit.

Table 3-3 Locations of CFLs, and Saturation by Room Type^

Percentage of CFLs by Room Type

Percentage of sockets in room type filled with

CFLs

Bedroom 18% 8%Living room/family room 17% 8%

Kitchen 17% 9%Basement 11% 6%Other 9% DNCHallway/stair 9% DNCExterior 6% 7%Bathroom 5% 3%Office 3% 8%Dining room 3% 3%Garage 2% DNC

^ These percentages are from ODC's recent inventory of CFLs in 100 randomly selected Massachusetts homes.DNC= Did not calculate.

Figure 3-3 The Overall Market For Energy Efficient Bulbs

Bulbs (n=5202)Halogen5%

CFL7%

Other pin-based bulbs1%

Std. fluorescent14%

Specialty feature incandescent bulbs

9%

Other screw-in bulbs24%

Standard incandescent bulbs

40%

CFL

Standard incandescent bulbs

Other screw-in bulbs

Specialty feature incandescentbulbsStd. fluorescent

Halogen

Other pin-based bulbs

Of the remaining sockets, 14% are currently standard fluorescent, which may either already be energy efficient or may need a retrofit via a fixture replacement. If they are not already efficient, these standard fluorescents—as well as the 5% of sockets that are in halogen lamps and the 1% of sockets that are pin-based (but not CFLs)—would require more than a simple screwing and unscrewing of a light bulb. For these sockets, an energy efficient change would be more extensive and often may necessitate replacing the fixtures themselves.

These findings vary by room type. For example, in dining rooms, a much higher

percentage of sockets (30) are ineligible due to specialty features; while 59% of sockets in basements are standard fluorescent. These variations mean that the potential for CFL retrofits is much smaller in these two room types.

Overall, therefore, CFL bulbs have a large market potential than fixtures. As shown in Figure 3-3, 64% of all sockets can be retrofitted through bulb changes, while the potential for energy efficient fixtures may be as small as 6% of the market. This does not take into account hours of use for the various applications, so all applications may not be cost-effective. Additional site visits and information on hours of use of the various types of bulbs, by room type, will further the understanding of this market and will allow us to determine the percentage of bulbs that would be cost-effective to replace.

The Supplier Market

Each year residential customers purchase replacement (or new) light bulbs and fixtures from a variety of different retail channels. Understanding where consumers purchase lighting products for their homes is an important step in transforming the market since ENERGY STAR lighting needs to be available in the retail outlets where consumers shop for lighting products or the consumers would need to be directed to where ENERGY STAR lighting is sold.

Based on 2003 data, home improvement stores are increasingly the retail channel that meets consumer needs for lighting – for both light bulbs and fixtures. Forty-three percent of all respondents say they purchase the majority of their fixtures at a home improvement store and 29% say they purchase most of their bulbs from there as well. Home improvement stores have gained a significant portion of the market in the area of fixtures (the next store type cited is mass merchandisers at 18%), and they are slightly strengthening their foothold in the bulb market against the shares held by groceries (23%) and mass merchandisers (21%).

Respondents were significantly more likely than last year to name home improvement stores both for purchasing bulbs (29% versus 23%) and fixtures (43% versus 31%). The number of customers that primarily purchase bulbs at grocery stores has dwindled from 29% in 2002 to 23% in 2003; however, grocery stores and mass merchandisers remain important points of purchase. See Table 3-4.

Table 3-4 Stores Where Consumers Typically Purchase Light Bulbs and Fixtures

nd Fix tures��ixtur

es��d Fix

tures��and F

ixtures�

d Fixture

BULBS �FIX TURES ��003�(n=40 0)�2 002 (n= 803003�(n=400)�2002�(n=803)^��Ho rove ment �29 %*�23%*�31%�� G rocer y 23%�2%�2%��Ma ss mer cha ndidiscount department �21 %�2 3% 18%��Hardware�10%�14%*�6%�1 ��P ric e c lub�4�2%�--��Drug / co nve nie nce4%�2%�1%��Spec ial ty lig ht

Other 2% 6% 2% 7%Don’t know 2% -- 8% 14%Haven’t needed to purchase any -- -- 2% --

* Indicates a statistically significant difference between the comparison groups.^ Data is weighted. For bulb-specific comparisons, the 2002 data is weighted

such that participants’ share is 13% and non-participants comprise 87%. Fixture-specific data in 2002 is reported with a 0.5 participant and 0.95 non-participant weighting.

Note that, while these numbers reflect where purchases are made, they are not necessarily proportional to overall sales through these channels because the number of bulbs or fixtures purchased by individuals may vary. That is, respondents who purchase bulbs from grocery stores may tend to purchase more bulbs per year than respondents who purchase bulbs at a home improvement store, or vice versa. Other draft reports indicate that sales data through grocery stores and mass merchandisers may be larger than sales through home improvement stores.

Among these nine store types, we estimate that there are approximately 4,000 stores that sell lighting products. Our estimate of the number of stores in Massachusetts by store type is provided in Table 3-5.

Overall, of the 7,049 stores that fall within the defined categories, approximately 55% sell bulbs and 17% sell fixtures. (See Tables 3-5 and 3-6.) A much smaller percentage ofstores sell ENERGY STAR bulbs or fixtures. Note that we collected this data in the fall of 2003. Since that time, the program has added a number of stores, which increased the number of stores that sell ENERGY STAR lighting products.

Table 3-5 Massachusetts Stores that Sell Light Bulbs, By Store TypeStore Types Total Number

of StoresPercentage of

Stores that Sell Light Bulbs

Percentage That Sell Specialty

Bulbs*

Percentage That Sell ENERGY STAR Bulbs

Price Club 26 86% 33% 33%Home Improvement 55 87% 73% 71%Hardware 804 49% 31% 22%General Merchandise/Mass Merchandise

337 39% 23% 14%

Specialty Lighting/Electrical 83 63% 36% 17%Furniture/Home Furnishings 876 6% 2% 1%Electronics/Appliance 445 13% 3% 2%Grocery/Drug/Convenience 4,420 71% 19% 8%Other 3 0% 0% 0%

Total Number of Stores and Overall Percentages

7,049 55% 18% 9%

* Stores were asked if they sell light bulbs for a chandelier, and if not, whether they carry any type of specialty lighting. This question was asked to distinguish between stores that carry only basic incandescent bulbs and those that sell a larger variety of lighting products.

For the most part, price clubs and home improvement stores are equally as likely to sell specialty bulbs as ENERGY STAR lighting. Some store types such as hardware, mass merchandisers, and grocery stores, however, appear more likely to carry a variety of bulbs than to carry ENERGY STAR products.

Table 3-6 Massachusetts Stores that Sell Light Fixtures, By Store Type (as of September 2003)

Store Types Total Number of Stores

Percentage of Stores that Sell Light Fixtures

Percentage That Sell ENERGY STAR Fixtures

Price Club 26 52% 5%Home Improvement 55 76% 49%Hardware 804 18% 9%General Merchandise/Mass Merchandise

337 43% 7%

Specialty Lighting/Electrical 83 64% 16%Furniture/Home Furnishings 876 51% 4%Electronics/Appliance 445 5% 1%Grocery/Drug/Convenience 4,420 8% 0%Other 3 33% 0%Total Number of Stores and

Overall Percentages7,049 17% 3%

We estimate that there are a total of 4,436 stores in Massachusetts that sold bulbs and/or fixtures at the time of our survey (September 2003). As shown in Table 3-7, approximately 16% of these sell ENERGY STAR products.

Table 3-7 Stores that Sell Bulbs or FixturesVersus ENERGY STAR Bulbs and Fixtures

Store Types Total Number of Stores That Sell

Bulbs or Fixtures

Total Number of Stores That Sell ENERGY

STAR bulbs and fixtures

Stores That Sell ENERGY STAR as a Percentage of All Stores That Sell Bulbs

or Fixtures

Price Club 25 9 35%Home Improvement 49 39 80%Hardware 405 182 45%General Merchandise/Mass Merchandise

192 51 27%

Specialty Lighting/Electrical 67 19 28%Furniture/Home Furnishings 462 38 8%Electronics/Appliance* 71 11 16%Grocery/Drug/Convenience 3,164 366 12%Other 1 0 0%Total Number of Stores and Overall Percentages

4,436 715 16%

Most of these stores that sell ENERGY STAR lighting are participating in the Massachusetts lighting program. (That is, the total number that sell ENERGY STAR bulbs in September 2003, and the total number participating at that time were relatively closely matched.) Moreover, our findings suggest that the program has increased the number of stores that sell ENERGY STAR lighting from 16% in 2003, to over 20% in March 2004. This is primarily due to the ITP efforts and the increasing number of grocery and mass merchandisers that are currently participating in an ITP effort. The following section describes the program effects.

4. Market Effects of the Program

The 2003 program ultimately was responsible for moving nearly 1 million ENERGY STAR CFLs and over 100,000 ENERGY STAR fixtures. The number of bulbs and fixtures distributed through the program represents a dramatic increase over earlier years. (See Table 4-1.) It is important to note, however, that while data prior to 2003 represents sales, since the addition of the ITP component of the program, the utilities have used shipping data in place of sales data to estimate program effects. Ideally, shipments would ultimately translate into sales. However, no information on how these two diverge was available at the time of this study. Additional sales data for the ITP efforts will be collected in future years.

Table 4-1 Sales of Bulbs and Fixtures Through the Massachusetts ENERGY STAR Lighting Program

1998 1999 2000 2001 2002 2003*Bulbs sold through the program

157,937 286,713 255,585 507,013 455,373 969,928**

Fixtures sold through the program***

46,566 117,101 51,494 89,965 97,706 100,866

* 2002 Based on draft data that separate out lighting products moved through the program by sales channel provided by Angela Li, National Grid, March 10, 2004.

** Does not include replacement bulbs and kits.*** Includes both torchieres and fixtures.

Growth of CFLs through the program nearly doubled between 2000 and 2001, then dropped approximately 10% in 2002, and more than doubled again in 2003 with the inclusion of the ITP efforts

through the program, it should be noted that the increase in units moved through the program does not necessarily translate to an increase in overall sales of these products. Prior to 2003, some customers elected to receive a rebate for qualifying ENERGY STAR bulbs and fixtures, but presumably, some customers who may have been influenced by the program to make the purchase and yet did not want to bother with the rebate. As such, these units would not have been counted in total sales within the program. With the ITP component of the program, however, it is in the retailer and manufacturer’s best interest to claim all eligible units under the program. Thus it may be that overall sales have not increased as much as indicated by this doubling of units shown in the table above.

To put the data from the table above into context, the first doubling occurred at a time when sales of CFLs in New England nearly tripled, and CFL sales throughout the U.S. more than tripled. (See Table 4-2.) Then like CFL sales in Massachusetts, CFL sales in both New England and the U.S. slowed between 2001 and 2002. Interestingly, however, sales through the Massachusetts program actually dropped slightly in 2002, while CFL sales in New England continued to grow.

Table 4-2 Growth of Bulbs Sales Through the Massachusetts ENERGY STAR Lighting Program Compared to Growth of Overall Residential Sales of Medium

Screw-Based CFLs in the U.S. (from Draft Itron Data)2000 2001 2002 2003

Growth of all bulbs sold through the program

Base Year 98% -10% 113%

New England growth of medium screw-based CFLs (from Draft Itron data)

Base Year 173% 51% Not available

U.S. growth of medium screw-based CFLs (from Draft Itron data)

Base Year 227% 22% Not available

Based on Table 4-3, in 2003, it appears that the majority of sales through the program (94% of bulbs and 74% of fixtures) were through industry-sponsored initiatives. The rebate coupons accounted for a much larger percentage of fixtures sales (20%) than bulb sales (4%). Catalog sales accounted for only 6% of fixtures sales and 2% of bulb sales.

Table 4-3 also shows a clear drop off of bulbs and fixtures sold through the rebate and catalog components of the program, as retailers switched from these aspects of the program to industry-sponsored initiatives.

Table 4-3 Percentage of Program Sales of Bulbs and Fixtures by Retail Channel1998 1999 2000 2001 2002 2003*

Coupon sales of bulbs 125,531 237,833 209,725 450,252 141,591 37,688

Mail/catalog sales of bulbs

32,406 48,880 45,860 56,761 20,451 19,739

Industry-sponsored initiatives

-- -- -- -- 293,331 912,501

Coupon sales of fixtures 41,235 105,895 36,348 68,659 18,259 20,795Mail/catalog sales of fixtures

5,331 11,206 15,146 21,306 6,799 5,922

Industry-sponsored -- -- -- -- 72,648 74,149

payment for fixtures is $15 to $20, the allocation of funds is more evenly distributed. If we assume that bulbs are subsidized an average of $2.50 per bulb, and fixtures are subsidized an average of $17.50 per fixture, approximately 58% of the incentives are put towards bulb purchases while 42% are spent on fixtures. This raises an issue about the amount of funds that should be spent on energy efficient fixtures versus bulbs, particularly since findings in section 3 suggest that the potential market for CFL bulbs is much greater than for energy efficient fixtures.

Table 4-4 Products Moved By Retail Channel, 2003Industry-sponsored

initiatives salesCoupon sales Mail/catalog OVERALL

Bulbs 912,50192%

37,68864%

19,73977%

969,92891%

Fixtures 74,1498%

20,79536%

5,92223%

100,8669%

TOTAL 986,650100%

58,483100%

25,661100%

1,070,794100%

* Based on draft data that separate out lighting products rebated by sales channel provided by Angela Li, National Grid, March 10, 2004.

Among fixtures, the focus is more heavily on indoor fixtures, followed by torchieres. A much smaller percentage of exterior and portable fixtures are sold through the program.

Table 4-5 Percentage of Program Sales of Fixtures, 2003 2003 sales* Percentage

Interior fixtures 59,948 59%Torchieres 23,967 24%Exterior fixtures 8,902 9%Portable fixtures 8,049 8%

TOTAL 100,866 100%* Based on files that separate out lighting products rebated by sales channel provided by

Angela Li, National Grid, March 10, 2004.

Supply-side Comparisons

On the supply side, the number of retailers selling ENERGY STAR products, as well as overall sales of ENERGY STAR lighting is increasing, representing positive changes in the market.

Increasing Retailer and Manufacturer ParticipationInterviews with both participating retailers and participating manufacturers suggest that efforts to reach out to retailers through the ITP effort have been effective. According to the APT database, as of August 2002 there were approximately 322 participating retailers in the program. Approximately 18 months later, the program had approximately 838 stores participating, including a remarkably large number of grocery and retail stores and mass merchandisers. (See Table 4-6.) This represents substantial progress by the program, since a large percentage of bulbs are purchased through these retail channels. While many of these stores are part of retail chains, each individual store represent an additional location at which consumers are able to purchase energy efficient products.

While the table below includes individual stores participating in at least one component of the program, a review of the unique retailers participating in the ITP effort also supports the finding that the ITP has been effective in increasing participation. In early 2003, 22 unique retailers were participating in the ITP process, while by early 2004, 45 unique retailers were participating in ITP efforts. (Several of these 45 unique retailers are chain stores.) In total, these 45 retailers account for 514 individual stores, representing 61% of the 838 stores participating as of March 2004.

Table 4-6 Growth of Participating Stores*, By Store Type(including all program components—rebate, ITP and lighting showroom efforts)

Store Type August 2002** September 2003(one year later)

March 2004(six months

later)

Grocery/Drug Stores 4 165 303Hardware Stores 172 183 189Home Furnishing -- 1 1Home Improvement 36 52 54Mass Merchandisers 70 172 220Other 5 3 3Price Clubs 1 17 18Specialty Lighting 34 43 47DK -- 1 3

Total 322 637 838* Many of these stores are part of the same retail chain. The numbers here are for

individual stores, not unique retailers.** Note that the time periods are not equally spaced.

Furthermore, the ITP component of the program has increased manufacturer involvement. Manufacturers were not targeted through the rebate program. The catalog component allowed for some interaction with manufacturers since EFI worked with manufacturers to promote new products through the catalogs; but the number and types of ENERGY STAR bulbs and fixtures in the program were primarily based on the products that were stocked by retail stores, rather than on partnerships with manufacturers. Through the ITP process, however, more manufacturers are becoming involved in the program. These manufacturer partnerships provide a direct link to retailers, and resources to support the promotion of ENERGY STAR lighting products. Through the Phase I 2003 ITP efforts, nine manufacturers were actively participating in the program and more proposed to participate in late 2003 and early 2004.

The lighting showroom stocking fee component also appears to have had an impact on increasing participation among specialty lighting stores. According to lighting showroom participants, the stocking incentive has had a definitely positive impact on their stocking practices, considering all of the retailers are stocking more ENERGY STAR products than prior to program participation. In fact, half of the retailers did not sell any ENERGY STAR products before program participation. However, the impact on sales is marginal since these retailers are not selling high volumes of ENERGY STAR products relative to other products sold. Most retailers, therefore, have not seen a significant increase in overall sales nor is the program attracting more customers to showrooms. This is not surprising considering most of these lighting showrooms are not marketing ENERGY STAR products through materials outside the store.

Trends and Comparisons in Amount of Shelf SpaceWhen we looked at stocking information collected by APT, it appears that the total number of units on the shelf wax and wane. This may be due, in part, to the number of stores visited, or the particular day (or season) in which APT visited the store. Since the total number of stores participating in the program is growing, we would expect to see the total number of stores for which data was gathered, and the total quantity of ENERGY STAR bulbs on shelf to be growing; however, no clear pattern emerges from this limited data.

Table 4-7 Stocking of ENERGY STAR Light Bulbs at Participating Retail Stores

2001A 2001B 2002A 2002B 2003

Total stores for which data was gathered (participating stores at time of surveying)

140 210 245 247 208

Quantity of ENERGY STAR bulbs on shelf

20,720 53,042 36,287 28,536 33,021

Average ENERGY STAR bulbs on display per participating store

148 253 148 116 159

When we look at stocking of ENERGY STAR bulbs by store type, hardware stores clearly are making the most strides. The patterns among the other store types, however, are a bit troubling—perhaps only because APT’s store data collection favored certain store types over others.

Figure 4-1 Units of ENERGY STAR Light Bulbs Stocked at Participating Retail Stores

0

5000

10000

15000

20000

25000

30000

2001A 2001B 2002A 2002B 2003

Uni

ts

Home Improvement

Hardw are Stores

Mass Merchandisers

Price Clubs

Specialty Lighting

Grocery Stores

Stocking of ENERGY STAR fixtures and torchieres show more consistency across data collection periods.

Table 4-8 Stocking of ENERGY STAR Light Fixtures and Torchieres at Participating Retail Stores2001A 2001B 2002A 2002B 2003

Total stores for which data was gathered

99 116 129 122 103

Quantity of ENERGY STAR fixtures on shelf

7,334 5,244 7,477 7,325 6,977

Average fixtures on display per participating store

74 45 58 60 68

Figure 4-2 Units of ENERGY STAR Fixtures and Torchieres Stocked at Participating Retail Stores

0

1000

2000

3000

4000

5000

6000

2001A 2001B 2002A 2002B 2003

Uni

ts

Home Improvement

Hardw are Stores

Mass Merchandisers

Price Clubs

Specialty Lighting

Grocery Stores

A clear trend emerges, however, through discussions with participating retailers and manufacturers. Based on qualitative information collected from in-depth interviews with retailers and manufacturers, the ITP efforts have increased marketing efforts, increased the range of ENERGY STAR products offered, and increased sales of ENERGY STAR products. This is further supported by the data presented in Table 4-1 at the beginning of this section. All retailers that sold ENERGY STAR lighting products prior to participating in the ITP effort indicated that sales of these products increased as a result of the product buy-downs. Furthermore, all of the manufacturers that we spoke with reported an increase in total shipments of bulbs and fixtures offered to retailers through the ITP effort and that the majority of these increases were directly attributable to product buy-down incentives. Manufacturers not only increased shipments of ENERGY STAR lighting to retailers with whom they had existing business relationships but in many cases also increased the number of retailers carrying their energy efficient products.

Most retailers felt that the program did not attract new customers to their stores (although it appears to be leading to more customers purchasing ENERGY STAR lighting products once they are there). Retailers reported that customers did spend more time reviewing the in-store displays and product packaging but felt that the discounted price was primarily responsible for the increased sales (rather than education or marketing).

Demand-side Comparisons

On the demand side, customer awareness and use of CFL products show positive changes in the market. Gains in the positive perceptions of CFL products, however, are lagging.

Trends in Awareness As mentioned above, consumer awareness of the availability of energy efficient lighting has increased, as illustrated in Figure 3-1 in section 3. Eighty-two percent of all respondents report some level of familiarity with CFL bulbs, an increase from last year’s

71%. Moreover, 40% of all respondents say they are ‘very familiar’ with CFL bulbs.

Awareness of energy efficient fixtures is still low compared to CFL bulbs. Only 40% of respondents have some familiarity with energy efficient fixtures; and only 11% are ‘very familiar’ with this technology. Compared to 2002, there is no change in awareness of energy efficient fixtures.

Trends and Comparisons in Product AdoptionUse of energy efficient lighting is also increasing. Whereas in 2002, 43% said a CFL bulb was installed in their home, in 2003 more than one-half (55%) use energy efficient light bulbs.

Usage of energy efficient light fixtures is not as widespread as CFL bulbs. This is probably due to the higher replacement barriers for fixtures, which we explore later in this report. About one in five (19%) respondents state they own an energy efficient fixture. Nevertheless, this percentage is a slight improvement upon last year’s data, when 15% said they had an energy saving fixture installed in their home.

Figure 4-3 Energy Efficient Lighting Users

15%19%*

55%*

43%

0%

20%

40%

60%

80%

100%

CFL Bulbs CFL Fixtures

2003

2002

* Indicates a statistically significant difference between 2003 and 2002 at the 90% confidence level.

In-home visits also indicate that participants tend to have more CFLs and energy efficient fixtures than randomly selected homes. The average participant home had approximately 16 CFLs, while the average randomly selected home had an average of four CFLs.

Furthermore, 14% of randomly selected homes had pin-based CFL fixtures (or energy efficient fixtures) while 50% of the participant homes had pin-based CFL fixtures.

Similarly, only 5% of randomly selected homes had CFL torchieres, while 34% of the participant homes had CFL torchieres.

These data indicate that the program has encouraged participants to use more CFL bulbs and fixtures.

Trends in OpinionsOpinions about the benefits of energy efficient lighting among the general population in 2003 appear to be consistent with responses from 2002. The only statistical difference is that a much larger percentage of respondents from 2003 feel that the upfront cost of energy efficient lighting is much higher than other lighting, despite the fact that the ITP process buys down the price of ENERGY STAR lighting.

Overall understanding of the benefits of energy efficient lighting was relatively high; however, there is still a need for increasing customer understanding of the benefits associated with ENERGY STAR lighting products. Over one-fifth of respondents are still unaware that ENERGY STAR bulbs are less expensive in the long run. Thirty-one percent do not recognize that they last longer and can be changed less often. Furthermore, as the quality of energy efficient products increase, there may be a need to reeducate consumers. Currently, only two-thirds think energy efficient lighting is of high quality and over 40% still think that there is a delay when turned on, they have a limited selection, and they are less attractive.

Interestingly, the 2003 data, like the 2002 findings, seem to indicate that users of CFLs tend to be more aware of both the benefits and the drawbacks of energy efficient lighting. (These are presented in Table 4-9.)

Table 4-9 Opinions on the Benefits and Drawbacks of Energy Efficient Lighting:

Percentage of Respondents Who Strongly or Somewhat Agree With Statements…� 2003 VERSUS 2002

FINDINGS2003

USERS VERSUS NON-USERS2003 (n=400) 2002 ^^

(n=803)2003

CFL User(n=220)

2003CFL Non-user

(n=180)is good for the environment 88% 88% 89% 87%is less expensive in the long run than non-energy efficient lighting

79% 78% 83% 74%

does not have to be replaced or changed as often as non-energy efficient lighting

69% 68% 76%^ 61%

provides high quality lighting 66% 62% 75%^ 55%fixtures use up to two-thirds less energy than incandescent lighting

66% Added in 2003 68% 64%

emits less heat than incandescent lighting

56% 60% 65%^ 46%

is more expensive upfront than non-energy efficient lighting

85%* 63% 88%^ 82%

limited in selection 50% Added in 2003 54%^ 44%light bulbs are unattractive 42% Added in 2003 45% 37%Causes a delay when the light comes on

41% 38% 54%^ 25%

bulbs do not fit inside traditional light fixtures

31% 30% 36%^ 25%

does not provide enough light 29% 28% 32% 26%fixtures are unattractive 24% Added in 2003 26% 21%Flickers 20% 19% 22% 18%replacement bulbs are not available

17% Added in 2003 19% 15%

is not durable or reliable 15% Added in 2003 15% 16%i diffi lt t i t ll 10% 7% 9% 11%^

Ultimately, the program is seeking to increase the purchase and use of ENERGY STAR lighting. Considering customer awareness, use, and perceptions of benefits and drawbacks of energy efficient lighting together helps clarify the picture of the residential consumer in regards to lighting decisions.

To gauge respondents’ likelihood to purchase energy efficient lighting, survey respondents were given a hypothetical situation and their decision-making process was observed. Told that a regular incandescent bulb was priced at $1 and the energy efficient bulb was priced at $6 but that it would save $5 in energy savings within two years, 58% of respondents said they would purchase the energy efficient bulb. These people represent the “transformed market” – those who would make the energy efficient choice even without the program. The remaining consumers were then asked to choose between the two again, this time knowing that there is a $3 instant rebate on the ENERGY STAR bulb. An additional 16% chose the CFL this time around, which represents a “resource acquisition stage”, or people who still need some type of incentive to address the higher initial cost. The remaining 17% are unlikely to purchase the energy efficient bulb without additional incentives.

Similarly, respondents were asked to choose between a regular $15 fixture and a $35 ENERGY STAR fixture that would save more than $20 over the next five years. One-half were willing to pay more for the energy efficient fixture that would save more over the long run. When a $10 rebate was incorporated into the scenario, an additional 13%, or a total of two-thirds wanted the ENERGY STAR fixture.

Based on responses to these questions, the market does not appear to have changed much between 2002 and 2003. The resource acquisition stage illustrates that there still is a need for financial incentives for many consumers, to overcome the barrier of a higher upfront cost. Doing so will ideally allow more consumers to try energy efficient lighting. This would make them more likely to purchase the products on their own without needing the rebate, and thus enter the transformed market segment. Figure 4-4 below depicts the current state of the market.

However, it should be noted that other key demand-side indicators, such as the percentage of residences with any CFLs, have changed significantly. Thus this suggests that the percentage of the market that has reached the resource acquisition and transformed market stages may actually have grown between 2002 and 2003, contrary to the findings of these survey questions.

When respondents who were familiar with ENERGY STAR were asked directly about their likelihood to purchase energy efficient lighting such as ENERGY STAR in the future, consumers said they were pretty likely to purchase both bulbs and fixtures, with users being significantly more likely than their non-user counterparts. Given a scale of 1 to 5, where 1 is not likely at all and 5 is very likely, respondents rated their likelihood to purchase a CFL bulb at 4.1 and a CFL fixture at 3.7, which are significantly higher than 2002 ratings of 3.6 and 3.5, respectively. (See Table 4-10.) Given this finding and the fact that incentives alone can not move approximately 15-16% of the market, education about the benefits of energy efficient lighting will also be important.

Figure 4-4 Future Purchases of Energy Efficient Lighting, in Stages

* Statistically significant difference between the comparison groups at the 90% confidence level.

Table 4-10 Likelihood to purchase energy efficient lighting in the future(mean and percentage giving a ranking of 4 or 5 on a 5 point scale where 5 is very

likely to purchase in the future)Familiar with

ENERGY STARMEAN 4 5

Bulbs 2003 (n=257) 4.1* 16% 53%*

Bulbs 2002 (n=191) 3.6 24%*

27%

Fixtures 2003 (n=257) 3.7* 17% 40%*

Fixtures 2002 (n=191) 3.5 25%*

24%

* Statistically significant difference between years at the 90% confidence level.

5. Process Evaluation

Although our 2002 evaluation focused heavily on the program process, this was not a major task for our 2003 evaluation efforts. The process of implementing the rebate coupon and catalog components of the program did not change significantly between 2002 and 2003, and therefore did not necessitate additional evaluation efforts. Furthermore, the program has shifted away from these components and toward the ITP effort. As a result, the process has also shifted almost entirely away from the consumer. The ITP buydown process targets the retailer and manufacturer. The consumer is no longer necessarily aware of the program’s involvement.

Given these factors, in 2003, the majority of our process evaluation findings are related to the ITP effort, and the interactions with retailers and manufacturers. The information to support these findings was obtained through our in-depth interviews with retailers and manufacturers that are participating in the ITP effort.

We also provide some findings based on our preliminary analysis of program databases and tracking data.

The Process

Our 2002 findings found that initially, the ITP process was confusing since most retailers are not accustomed to the bidding and proposal process. However in 2003, the ITP process, which invites retailers and manufacturers to create their own promotional effort—exerting flexibility, became a product buydown effort with limited creativity or money spent on marketing. Although more standardized than originally intended, the ITP efforts do offer the chance for increased participation from both retailers and manufacturers because they fit much more closely into retailer and manufacturer day to day operations. Based on comments made by manufacturers and retailers, it is not so much the flexibility of the ITP, but rather the reduced requirements, that encourage participation. Several stores struggled with handling the coupons properly and dropped out but are now back in the program because of the ITP process, which they feel is a lot easier. Of note, the ITP process appears to be successful at encouraging participation by stores that would not otherwise have participated, such as grocery stores.

The lighting showroom stocking fee component shows a similar trend—it has encouraged participation although not being fully utilized to its potential. Based on our conversations with participants, no lighting showrooms had taken advantage of the cooperative advertising option to draw more customers to their stores; however, the stocking fee encouraged them to display ENERGY STAR products.

Administration

Participating retailers and manufacturers alike report that APT has been responsive and effective in providing all support that was requested of them. The frequency and purpose of interactions with APT vary. Two retailers reported having very little interaction with program implementers or product vendors after the initial set up. In one such case, the

retailer reported that aside from training, there is no interaction with APT. Other participating retailers reported more frequent interaction with both APT and product vendors. In these cases, APT worked with retailers to plan promotions, provide signage and other materials, and to provide support in developing a customized ENERGY STAR

lighting promotion for their store. In contrast, manufacturers reported having frequent, in some cases daily contact with APT regarding issues such as availability of funds, logistics, and identifying retailers interested in doing more through the effort. In all cases, regardless of the frequency or nature of their interactions with program implementers, all participating retailers and manufacturers were highly complimentary of the support provided by APT.

Participating lighting showrooms mirror these sentiments and feel they are receiving adequate support from the program and APT. Generally, they are very satisfied with the administrative processes and feel that the concepts and terms are clear.

Retailer and Manufacturer Involvement

As mentioned earlier, manufacturer partnerships provide a direct link to retailers and additional resources to support promotion of the ENERGY STAR lighting products. Manufacturer involvement is one of the reasons why the ITP efforts have been so successful. Offering unique partnerships with manufacturers, however, will also necessitate that the sponsors be fair-handed to all qualifying manufacturers that choose to participate in the program. The utilities should work to ensure that the ITP efforts do not favor the products of particular manufacturers over those of other qualifying manufacturers’ products of equal quality.

Retailer and Manufacturer Participant Satisfaction

From the retailer’s perspective, the largest advantage of the ITP effort is that it significantly reduces the program implementation burden. Retailer’s principal reason for agreeing to participate in the ITP efforts is the ease of participation due to the lessening of program logistics. All participating retailers interviewed indicate that it is substantially easier to implement the buy-down effort because, compared to previous efforts, there is significantly less data collection and paperwork burden on the retailer. In fact, one retailer reported that the buy-down approach has lessened the program management burden to the store by hundreds of hours.

In all, there is a combination of factors that retailers and manufacturers identify as contributing to the success of the ITP effort. These are:

1. Reduced administrative burden on retailers.2. The ability to allow manufacturers and retailers to build relationships through a

mutual effort to promote products.3. The ability for quantities of demand and supply to be matched (no limit on

purchases or running out of rebate coupons). This in turn enables them to more actively promote products.

4. The ability for stores to easily select a product mix that is right for them.

However, participants also mentioned the following drawbacks:1. The lead times are short. Once the MOU is signed, it needs to be implemented

quickly given the short-term nature of the effort, leaving no time for promotional efforts.

2. The ITPs are a short-term promotional effort and do not offer year-to-year consistency.

3. The terms and conditions do not always fit the needs of large-scale retailers with a national presence.

Participating lighting showrooms are also satisfied with the lighting showroom stocking fee component of the program, indicating that the stocking incentive motivates them to participate. For these stores, however, space limitations and the fact that ENERGY STAR fixtures do not cater to their customers’ expensive preferences pose the largest drawbacks. However, for this category of store, most of the drawbacks appear to be product- rather than process-related.

As mentioned above, the ITP process also may be a good way to get grocery stores involved. Through our in-depth interviews, however, grocers suggested the following to increase grocery store involvement:

1. Prove that the public wants ENERGY STAR products;2. Solicit grocery distributors instead of individual grocery stores;3. Increase program awareness;4. Help grocers market ENERGY STAR products;5. Educate consumers on the product benefits;6. Work with manufacturers to offer grocers a small scale start up where grocers can

start by stocking only a small quantity of ENERGY STAR rather than investing in large shipments that may never sell, since they are unsure of customer demand; and

7. Educate the businessman.

Overall, it appears that retailer and manufacturers are willing and interested to participate in these initiatives in the future.

Data Gaps

Findings from our evaluation indicate that the ITP efforts have been successful and have become a major component of the program (rather than a pilot effort). The ITP efforts, however, were built rapidly without the supporting infrastructure. This has created a situation where data gaps have developed. These data issues are described below.

ITP Sales Data

One important process-related issue is the shift to using shipping data, rather than sales data, for payment to retailers and to document program effects. While it is currently the most convenient method for documenting products moved through the market as a result of the program, it does not necessarily assure that the products are being sold to residential customers in Massachusetts.

Based on the signed MOUs, sales data is required by the participating retailers. APT is (and has been) collecting some sales data from ITP participants. In 2003, however, this process was extremely flexible. The timing of reporting was flexible and varied by retailer, the reporting format was flexible as determined by the retailer, and hard copies of the data were accumulated but not examined or entered into a database. Based on our initial analysis of the 41 Phase I MOUs:

1 Sales data was available for only one-half of the businesses who signed MOUs2 Sales data was not always provided by explicit product or SKU, and often did

not match up with MOU information3 The time periods for the sales data were often unclear (dates were not always

provided; In addition there were delays in timing between MOU dates and sales data dates, which made it difficult to link sales data with the specific MOU.)

All retailers agreed that the data reporting and collection process was simple. (Note, our interviews were conducted prior to implementing more stringent reporting requirements but even given slightly more stringent reporting requirements, we do not feel that reporting sales of ITP products will be a significant issue for retailers.)

To understand the sales data collection process, the evaluation team worked with APT and EFI to obtain detailed shipping and sales information from the largest four retailers participating in the ITP. (Data for these retailers is shown in Table 5-1 below.) These four retailers all received over $250,000 in support of the ITP effort.

Table 5-1 Shipping and Sales Data forThe Top Four Retailers Participating in the ITP Effort

% OF PRODUCT SOLD

(SOLD/SHIPPED)DESCRIPT

QUANTITY SHIPPED IN

MA

QUANTITY SOLD IN MA

Retailer 1 $927,498(Data as of 11/08/03)

157% Bulbs (LOA) 77,850 122,51262% Bulbs (Harmony) 162,396 100,29916% Fixtures (LOA) 3,240 515

Retailer 2 $784,955(Data from 12/29/02 thru 12/2/03)

163% Bulbs (Maxlight) 12,500 20,419122% Fixtures (LOA) 6,203 7,591121% Bulbs (LOA) 152,136 184,055107% Torchieres (LOA) 4,803 5,14870% Fixtures (Maxlight) 1,680 1,176

Retailer 3 $563,900 (Dates not given but data faxed on 12/09/03)

149% Bulbs (Harmony) 25,342 37,63593% Fixtures (Maxlight) 4,265 3,95883% Torchieres (Maxlight) 500 41568% Bulbs (Maxlight) 19,797 13,531

Retailer 4 $470,235(Data from 3/01/03-12/01/03)

90% Bulbs (Maxlight) 60,620 54,57482% Bulbs (Harmony) 3,092 2,54570% Fixtures (Maxlight) 17,696 12,43668% Torchieres (Maxlight) 3,492 2,39266% Fixtures (Harmony) 1,207 802

As shown in the table, there are several cases—particularly for fixtures—where it appears that the amount sold within the timeframe of the ITP effort was less than the amount shipped. In these cases, the current data does not provide enough information to confirm that the products were sold within Massachusetts. It is possible, however, that the remaining product was sold in the specified Massachusetts stores subsequent to the specified timeline.

In addition, the current data does not provide enough information to determine that the products were sold to residential households. Requiring transactional data would allow the sponsors of the program to ensure that full palettes of bulbs or fixtures are not being sold to developers, or being moved to other stores.

This information was presented to program implementers in early November 2003. As a result, the team of implementers agreed to the following:

1 Participating stores will be required to show sales data by month (or similar 30-45 day period). It is not necessary that the data be broken down by calendar month as long as it is reported on a well-defined and consistent time period that is approximately 30 days in length.

2 Reporting should occur on a regular pre-determined cycle. 3 Sales data should be reported by SKU number and the retailer should provide

APT/EFI with a description by SKU number. If the retailer chooses to provide a report that is already generated through their system, it is fine if there are additional products in the data that is reported to APT/EFI.

4 All sales data should be explicitly reported by store location, rather than in the aggregate.

5 There is no need for a standardized report. Reports can be generated by the current system used by the store as long as they include all of the required information.

6 Utilities should determine a two-tiered reporting system. Reporting for retailers with funding >$250,000 should include the number of transactions or reporting at the customer level (e.g., by zip). This is not necessary for smaller stores.

APT and EFI are currently working towards changing reporting systems and requirements, and should be encouraged to implement the above resolutions.

Stocking Data

According to the sponsors, APT collects stocking information for all participating

retailers. The databases reviewed as part of this evaluation do not appear, however, to fully support this belief. From our review of the stocking data provided to us, APT collected data for 200 to 250 stores in the later half of 2002 and early 2003. Yet, the participant database indicates that they had upwards of 322 retailers participating during these time periods. A review of additional APT data should be conducted to explore whether APT compiled data for each store, and, if not, why this was not done.

Overall Sales Data

While there has been a clear increase in the number of CFLs sold through the program, it is difficult to determine program effects since overall sales data are not available. A preliminary draft of a sales data report for Massachusetts provides some positive indications of gains in CFL sales. A laudable effort has been, and continues to be pursued, in obtaining sales data for lighting in Massachusetts. At the same time, there are a few methodological issues that can make examining trends in estimates of Massachusetts CFL sales difficult to properly interpret.

The most severe interpretation issue involves examining trends in CFL sales penetration for Massachusetts. Given sample sizes and confidentiality constraints, the data source for lighting sales from food stores, drug stores, and mass merchandisers can only provide data for New England. The developer of the Massachusetts 2002 Lighting Report, Itron, then makes an estimate for Massachusetts sales based upon the proportion of New England’s population that is located in Massachusetts. This is a fairly defensible way to get a point-estimate for the approximate Massachusetts lighting sales. Nevertheless, examining the trend in penetration is a much finer exam than a point-estimate approximation. The CFL penetration is relatively small and wouldn’t be expected to change by orders of magnitude year-to-year. Using this same proportioning technique over time means each year is approximately the same proportion of the total New England estimate. This results in the trend year-to-year actually just being the trend for New England. If the programs, the proportional investment, and the timing of efficiency efforts were identical across the New England states, then trying to use trends to see program effects might be fairly accurate. But these elements are not the same.

The method for obtaining the Massachusetts estimates for hardware and home improvement stores is not detailed in the draft Massachusetts 2002 Lighting Report. There is a comment that some of the work was based on scaling. This could imply that the same problem noted for food stores, drug stores, and mass merchandisers could be within the estimates for these store types. However, we can not determine from the information provided whether this component of the Massachusetts estimates is free from this potential problem or not.

Another issue with the data from food stores, drug stores, and mass merchandisers is that the data source does not include the smaller “mom and pop” stores in the data. The Massachusetts 2002 Lighting Report contains a footnote that nationally these are estimated to represent 10-20% of lighting sales. We have no evidence whether the smaller stores among these store types in Massachusetts are more, less, or equal to this 10-20% national estimate. At the same time, 10-20% of sales is not an insignificant proportion of lighting sales, particularly in mind of the fact that the Itron estimate of

residential medium screw-based CFLs rose “from just over 0.5% in the first quarter of 2000 to nearly 4% in the third quarter of 2002”. With these small levels of penetration, changes within 10-20% of the market could be important. On the plus side, in Massachusetts missing the smaller hardware stores could be more problematic and the data source for these is said to be relatively complete by store size.

The Massachusetts 2002 Lighting Report does clearly state the loss of a large mass merchandiser for the New England data in 2001. They also mention the drop-out of a large home improvement center at the end of 2002, but also note that this doesn’t affect the reported data as it only goes through 2002.

The large work effort in obtaining sales data and creating Massachusetts estimates is laudable. Nonetheless, there were quite a few steps necessary to create the estimates for residential medium screw-in CFL sales in Massachusetts. Examining and comparing Tables 4-2 and 4-3 reinforces the possibility that comparing program sales to estimates of market sales may be a matter of comparing apples and oranges at this time.

6. Findings and Recommendations

Key Findings

The Massachusetts Residential ENERGY STAR Lighting Program was designed to achieve energy savings by increasing the availability of, and demand for, qualified lighting products in the marketplace, and thereby expanding the number of energy efficient bulbs in Massachusetts homes.

The current program, which focuses on increasing retailer and manufacturer participation through the ITP effort (as well as the lighting showroom stocking fee), is doing a remarkable job at increasing product availability and reducing the price of ENERGY STAR lighting. Its customer education efforts, however, are limited.

Based on customer responses, approximately 58% of the market indicate a willingness to purchase ENERGY STAR bulbs in the future on their own, but over one-third of residential customers are still in need of additional education and/or financial incentives before they would consider purchasing energy efficient light bulbs. Thus, approximately one-third of consumers appear to still need some sort of program to encourage energy efficient bulb purchases.

Although awareness and use in Massachusetts are relatively high, there is still a need for increasing customer understanding of the benefits associated with ENERGY STAR lighting products. Over one-fifth of respondents are still unaware that ENERGY STAR bulbs are less expensive in the long run. Thirty-one percent do not recognize that they last longer and can be changed less often. Only two-thirds think they are high quality and over 40% still think that there is a delay when turned on, there is a limited selection available, and they are less attractive. As product improvements and product selection have increased, marketing and education on these improvements needs to occur.

Evaluator Recommendations

Customer-Based:1 Educate consumers about the benefits of energy efficient lighting, specifically to

improve perceptions since perceptions appear to be lagging behind awareness.2 Educate consumers about the various applications for energy efficient lighting to

increase saturation. Rooms such as family rooms have much larger potential for energy efficient bulbs than rooms such as dining rooms. For this reason, the program may want to consider messages to increase use in particular rooms.

3 Consider whether additional program efforts are needed to advance the consumer education process.

Retailer-Based:4 Examine how to influence retailers and manufacturers to participate in this

consumer education process. Improve efforts to encourage program marketing and the marketing of ENERGY STAR lighting. While APT provided some POP materials through the rebate program, pricing rather than education appears to be

influencing the sales through the ITPs. The utilities should continue to monitor retailer displays and find new ways to encourage stores to dedicate resources toward product promotion, since this is important to the long-term transformation of this market.

5 Reach out to grocery stores and mass merchandisers. Although the program has made great strides at increasing participation among grocery stores and mass merchandisers, the sponsors should consider refining it further, or offering a grocery store/mass merchandiser specific pilot (such as the lighting showroom stocking component), to target these stores. The current type of program seems to work well in California where most residential lamp sales are at Home/Hardware stores (“Evaluation of the 2002 Statewide Crosscutting Residential Lighting Program” KEMA-Xenergy, October 13, 2003). This program design might not beoptimal, however, in Massachusetts, where drug and mass merchandisers comprise the largest percentage of the CFL market. As suggested by grocery stores, the program may want to consider a component that targets grocery store distributors instead of individual stores, and provides education of both the store and the customers. The program may also want to consider developing marketing materials (perhaps using information gathered through this research) to grocery stores and mass merchandisers. The program should strive to “think outside the box,” such as considering opportunities to link the promotion of ENERGY STAR bulbs at grocery stores or mass merchandisers with efforts to help the store reduce its own energy usage.

Process-Related:6 Give participating retailers and manufacturers adequate lead-time to ensure

success of the ITPs. Market participants need consistent signals from the program, and funding lapses negatively impact the effectiveness of the program; the sponsors may want to adjust the terms and conditions of the ITP efforts to ensure consistency.

7 Increase the importance of data collection. There are several cases—particularly for fixtures—where it appears that the amount of product sold through Massachusetts stores within the timeframe of the ITP effort was less than the amount shipped. In these cases, the current data does not provide enough information to confirm that the products were sold within Massachusetts or what was the final disposition of the product. In addition, the current data does not provide enough information to determine that the products were sold to residential households. Given these findings, the utilities should raise the importance of collecting and reviewing sales data and consider options for requiring transactional data, which allows the sponsors of the program to ensure that full palettes of bulbs or fixtures are not being sold to developers or being moved to other stores. The sponsors may want to consider paying 50% of the incentive after receipt of the shipping data, and the remaining 50% following the submission of sales data by store location.

8 In addition to sales data, review stocking data to look for trends in the number of stores and quantity of products on the shelf. Current stocking data appears to be limited, and this information is important to tracking program success.

9 Review hours of use to determine which sockets/rooms should be targeted, and assess how targeting specific applications can be encouraged within the various

program elements.10 Consider focusing incentives on the bulb market. Based on our market

assessment, 64% of sockets can be retrofitted through bulb purchases, while 6-20% must be retrofitted through fixture purchases. Supporting the fixture market, however, is approximately seven times more expensive per socket, and has much bigger barriers. Given this, the sponsors may want to consider how this affects their decisions on allocation of resources between the bulb and fixture market.

Documents

Evaluation of the Massachusetts ENERGY STAR Residential ... · during this evaluation suggests that the Massachusetts ENERGY STAR Lighting Program, specifically the ITP effort, has