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Rebate Program Saves 37 Billion Btus Per Year

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# of Rebates ChartBetween April, 2010 and May, 2012, the State of Missouri conducted a rebate program to help residents replace older, inefficient appliances with new ENERGY STAR models. The 2-year program covered 10 product categories, providing rebates from $125-$500.

The graphs at right show the results. The first graph shows the number of rebates distributed by appliance category. The pink and red pie slices are for major appliances, the green slices are for HVAC equipment, and the blue slices are for water heaters. The most rebates were given out for dish washers and clothes washers.

Overall, the program is estimated to save 37 billion Btu per year of energy. To put this amount of energy in context, it is approximately equal to the output of the Callaway Energy Center (the Ameren Missouri nuclear generating station) for about 8-9 hours.

Appliance Program ResultsIn the second graph, for each class of appliance the light blue columns show how much consumers spent to purchase the equipment, the medium blue columns show how much was rebated, the dark blue columns show the estimated annual energy cost savings delivered by the new equipment, and the red line shows the estimated energy saved by the new equipment annually.

The graph shows that the cost to consumers was relatively high compared to the annual savings delivered. There are several ways to think about this. One popular way is to calculate the payback period – how many years it takes to earn back the cost of the item. After deducting the rebate, the payback period for major appliances was 12.6 years, the payback period for HVAC equipment was 78.8 years, and the payback period for water heaters was 18.0 years.

I’m not sure why the energy cost savings associated with the program were so modest, especially with regard to HVAC equipment. Replacing outdated, inefficient HVAC equipment is often one of the most cost effective energy upgrades. The results depend on the age and energy efficiency of the equipment being replaced, but payback periods are often short.

The rebate program was intended partially as an energy efficiency program, and partly as an economic stimulus under the ARRA of 2009, to help the country out of the Great Recession. Reporting on the economic impact is beyond the scope of this blog, however it may explain the rather modest energy efficiency and cost reductions achieved. The program may have caused people who were thinking of purchasing new equipment for many possible reasons to avoid delaying. It may not have effectively targeted and triggered the replacement of the most energy inefficient appliances.

What do you think?

Source:

Missouri Program Impacts, State Energy Efficient Appliance Rebate Program, Energy Information Agency, http://www.dnr.mo.gov/energy/docs/rebate_impacts_MO.pdf.

For the Calloway Energy Center: Callaway Plant Facts and Statistics, Ameren Missouri, http://www.ameren.com/sites/aue/Callaway/Documents/AmerenMissouriCallawayFacts.pdf.

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