Beginning in 2023, the Department of Energy, or DOE, will be increasing regional requirements on energy efficiency for HVAC products. These requirements have been in place since 1992 and have increased throughout the years. The last major update occurred in 2015 when the DOE did away with the national average and broke the United States into three different regions – North, Southeast, and Southwest.
This 2023 update is a huge change for manufacturers, distributors, and now contractors, who were previously not subject to any penalty for selling equipment that did not meet the national requirements. Come January 1, 2023, contractors can now be held responsible for installing equipment that does not meet the efficiency requirement.
Let's look a little closer at the new requirements, the DOEs enforcement strategy, and any consequences if you are found to be installing equipment that does not meet the current energy efficiency requirements.
Updated Efficiency Requirements
Beginning January 1, 2023, the minimum SEER requirements are increasing for the North, Southeast, and Southwest regions for central air conditioners and on a national level for central heat pumps.
*It is important to note that the minimum requirement for heat pumps is determined on a national level and not regional.
What Does This Mean for Installations?
You may be wondering how this will affect your current business and what units you will be able to install come January 1, 2023. If you are in the Southeast and Southwest, you CANNOT install any units manufactured prior to 2023 with ratings below the new minimums.
If you are in the North, units manufactured before 2023 CAN be installed indefinitely, whether or not they meet the new requirements.
For heat pumps, any pump manufactured in 2022 can still be installed in all regions after January 1, 2023.
Any product that is manufactured after January 1, 2023, must meet the new requirements. If they do not, they will be illegal to sell.
Enforcement and Consequences of the New Minimums
These new energy efficiency requirements will need to be followed starting January 1, 2023. The DOE has put a hotline in place that people can call to report any infractions. What that might look like for you:
- Employees of a business may call to report their employer if they are not using the correct energy-efficient equipment.
- Customers may report contractors who have sold them and installed a piece of equipment that does not meet the current standards.
- Building inspectors can report any infractions they see
- Competitors may turn you in if they know you are installing equipment that does not meet the minimums.
As a contractor, if you are caught violating the new regulations, you could face up to a $43,000 fine per day the equipment is in operation. You will most likely have to uninstall and reinstall equipment that meets the current standards at your own cost.
If a distributor knowingly sells an outdated system to a contractor that doesn't meet the minimum requirements, the DOE can revoke the right of the distributor to sell refrigeration equipment. The same goes for any manufacturer that is found guilty of selling equipment that does not meet the minimum to distributors.
What Does This Mean for your Business?
Typically, new energy minimum requirements mean an increase in cost of equipment. In 2006, efficiency minimums increased by about 30%, which equated to about a 30% increase in price. We expect equipment prices to rise again by about 15% to 20%, a cost that can be passed along to your consumer.
Even though customers will have to pay more upfront for the new equipment, they are getting much more efficient air conditioning units and heating pumps, which will help them save money in the long run on their total energy usage. Plus, the new equipment will be better for the environment.
Testing regulations that determine efficiencies have also been amended. Testing procedures and requirements for developing efficiency ratings will now be more stringent with the new 2023 DOE Regulations. For decades, the HVAC industry has used the classic metrics of SEER, EER, and HSPF. As we prepare for 2023, you will hear the new metric terms SEER2, EER2, and HSPF2. These terms reflect equipment metrics tested under the new M1 testing standards.
The DOE will also be enforcing efficiency standards for the HVAC industry. Contractors installing non-compliant equipment could be forced to replace the equipment at their cost. Routine violators can be placed on a national do-not-sell list.
Protect your business by learning your region’s efficiency standards and equipment requirements. If you haven’t already, educate your staff on the efficiency updates and specific rules that pertain to your location.
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