APPENDIX 10B. MARKET SEGMENT­BASED LIGHTING EXPERTISE ANALYSIS

TABLE OF CONTENTS

10B.1 INTRODUCTION .......................................................................................................10B­1

10B.2 METHODOLOGY ......................................................................................................10B­2

10B.3 MARKET ACTOR TAXONOMY..............................................................................10B­2

10B.3.1 COMMERCIAL VERSUS RESIDENTIAL SECTORS............................10B­3

10B.3.2 LARGE VERSUS SMALL COMMERCIAL SUBSECTORS..................10B­3

10B.4 THE MARKET SEGMENTS – COMMERCIAL SECTOR ......................................10B­3

10B.4.1 RENOVATION AND REMODELING .....................................................10B­4

10B.4.2 NEW CONSTRUCTION............................................................................10B­6

10B.4.3 RETROFITS ...............................................................................................10B­7

10B.4.4 BALLAST FAILURE.................................................................................10B­9

10B.4.5 FIXTURE REPLACEMENTS .................................................................10B­10

10B.4.6 CONCLUSION.........................................................................................10B­10

10B.5 THE MARKET SEGMENTS – RESIDENTIAL SECTOR .....................................10B­10

10B.5.1 RENOVATION AND REMODELING ...................................................10B­11

10B.5.2 NEW CONSTRUCTION..........................................................................10B­12

10B.5.3 RETROFIT, BALLAST FAILURE, AND FIXTURE

REPLACEMENTS ...................................................................................10B­13

10B.5.4 CONCLUSION.........................................................................................10B­14

REFERENCES ......................................................................................................................10B­15

LIST OF TABLES

Table 10B.1 Probability of Tuning a Lamp Ballast System in the Commercial Sector........10B­10

Table 10B.2 Probability of Tuning a Lamp Ballast System in the Commercial Sector........10B­14

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APPENDIX 10B. MARKET SEGMENT­BASED LIGHTING EXPERTISE ANALYSIS

10B.1 INTRODUCTION

New or amended energy conservation standards may require some consumers to purchase

higher efficacy lamps. How consumers pair these lamps with ballasts could substantially affect

the potential energy savings and NPV that would result form the proposed rule. For example,

to maintain lumen output with a new higher efficacy lamp, some consumers may select a

reduced­wattage lamp to replace a less efficacious predecessor. Others may simply replace the

lamp with one of the same wattage, not make any other adjustments, and accept higher light

output. For general service fluorescent lamps (GSFL), which operate on ballasts, there is

another alternative if reduced­wattage lamps are not available within desired lumen ranges in

particular applications: Consumers may choose to run the higher efficacy lamps on lower

ballast factor (BF) ballasts. Ballasts control the electrical current driving the lamp; pairing a

lower ballast factor with a more efficacious lamp would allow consumers to maintain lumen

levels while saving energy. The purpose of this section is to discuss the extent to which

consumers in the standards case will migrate to reduced­wattage lamps, or, when reducedwattage lamps are not available or feasible, pair the new lamps with a lower ballast factor

ballast (i.e., ballast factor “tuning”).

As discussed in the Chapter 10, DOE analyzes a set of standards case scenarios called the

“High” and “Market Segment­based” lighting expertise scenarios. This set of scenarios

characterizes consumers’ decisions (or lack thereof) to either maintain equivalent light output

upon the purchase of a new high efficacy lamp or accept higher lighting levels. The High

expertise scenario generally characterizes more sophisticated lighting decisions in which

consistent lighting levels and/or energy savings play a determinant role in consumer behavior.

In this scenario, consumers are more likely to choose a lower ballast factor to pair with higher

efficacy lamps or purchase a reduced­wattage lamp. Conversely, in the Market SegmentBased scenario, DOE assumes consumers occasionally accept high lighting levels as a

consequence of their expertise (or lack thereof). DOE analyzes lighting expertise based on the

consumer type (owner, electrical contractor, homebuilder, etc.) and the purchase event (new

construction, replacement, etc.).

This section draws on an extensive literature review and analysis to discuss market

behavior in five market segments: new construction, major renovation, fixture replacement,

retrofit, and ballast failure. (DOE did not include lamp failure as a market segment because

DOE assumes no consumers will replace a working ballast in order to “tune” it to a higherefficacy lamp.) Specifically, DOE’s goal is to determine what portion of new higher­efficacy

lamp purchases would be reduced­wattage or paired with lower BF ballasts. As discussed in

the Chapter 10, DOE used the results from this analysis (the percentage of consumers

purchasing not purchasing reduced­wattage lamps or using lower BFs) to characterize the

Market Segment­Based lighting expertise scenario. The High lighting expertise scenario

assumes that all consumers in the standards case will seek to maintain lumen output by

purchasing either: 1) reduced­wattage lamps, or 2) a lower ballast factor ballast.

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10B.2 METHODOLOGY

To conduct this analysis, DOE first identified the major actors most likely to make

purchase decisions in each market segment. Next, DOE apportions shares of all decisions to

each of those identified decision makers within each segment. Finally, DOE estimates the

probability of pairing a lower BF with a higher efficacy lamp for each decision maker within

each segment. Because DOE found no data on the probability of decision makers choosing

lower BF to maintain light output, DOE used the technical sophistication, or lighting expertise,

of each decision maker within the context of the purchase event as a proxy for that likelihood.

The more knowledgeable a decision maker is, the more likely they are to take measures (such as

using a lower BF or purchasing a reduced­wattage lamp) to maintain appropriate lumen levels.

For simplicity, all subsequent references in this appendix to the migration or purchase of a lower

BF ballast (as an energy savings option) is meant to also include the option of purchasing

reduced­wattage lamps.

10B.3 MARKET ACTOR TAXONOMY

Because the industry literature discussing building and lighting decision makers

frequently uses different terms for the same actors, it is necessary to briefly discuss how DOE

categorizes the following agents.

Owners. DOE broadly defines this category to include business owners, developers,

general contractors, and property and building managers. A broad definition is necessary

because who the “owner” is very much depends on which market segment is being analyzed.

For example, the owner in new construction could be the developer while the owner in a

hardware store could be a small business owner. However, in the residential sector DOE does

make a distinction between homeowners and developers/general contractors to better apply the

industry literature to our analysis.

Architects and Electrical Engineers. DOE groups electrical engineers, architects and

lighting designers into a category characterizing agents who work predominantly on lighting

design, layout, and specification.

Electrical Contractors. This category includes those agents charged mostly with

installation services and sometimes procurement.

Other agents such as distributors, energy service companies, manufacturer reps, and

lighting showrooms also play a decision­making role in the sector. However, based on its

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research, DOE does not believe these agents are central to the decision­making process to an

extent that would necessitate their inclusion in this analysis, especially given the lack of data

describing their behavior.

10B.3.1 COMMERCIAL VERSUS RESIDENTIAL SECTORS

DOE believes there is substantial market behavior differences between the commercial

and residential sectors and has therefore analyzed them separately. However, DOE assumes

that industrial sector decision makers generally behave similarly as those in the commercial

sector. As such, DOE did not conduct a separate analysis for the industrial sector. According

to DOE’s shipments analysis, the commercial and industrial sectors receive roughly 80 percent

of all GSFL shipments in the 2012 base case, while 20 percent go to the residential sector.

10B.3.2 LARGE VERSUS SMALL COMMERCIAL SUBSECTORS

Decision makers in the large­commercial sector can be different agents making different

decisions than those in the small­commercial sector. In the market segments (purchase events)

where DOE found consumer behavior to be substantially different between these subsectors,

DOE weighted the relative impact of each subsector when characterizing the overall

commercial market.

According to the Small Business Administration, firms with fewer than 50 employees

employ 29 percent of all employed workers.1 Using that figure as a proxy for proportional

floor space, small commercial firm space represents 29 percent of the commercial lighting

market and the large commercial market represents 71 percent.

10B.4 THE MARKET SEGMENTS – COMMERCIAL SECTOR

DOE begins its discussion of the market segments with renovation and remodeling

because it found the most comprehensive data for this segment. For those segments for which

little information was available (such as fixture replacements), DOE used the likelihood of

ballast factor tuning in the renovation and remodeling segment as a starting point or

benchmark, which is used to make estimates about other segments based on their similarity to

renovation and remodeling.

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10B.4.1 RENOVATION AND REMODELING

For this analysis, DOE defines renovation and remodeling (R&R) to include events that

alter existing buildings’ structure, space or systems beyond (but including) its luminaires.

Market literature suggests architects and electrical engineers play the largest role in the

commercial R&R segment. In a California survey of decision makers who recently completed

building renovations, 80 percent of projects involved architects; half of which were outside

consultants, and the rest split between owner and lessee in­house staff. Architects were

responsible for 62 percent of specifications, not counting any owners’ or general contractors’

in­house staff. The owner, general contractor, or developer’s staff was responsible 36 percent

of the time.2

Designers polled in a Pacific Northwest survey said architects, electrical engineers and

lighting designers influenced specification about 90 percent of the time. The owner/developer

composed the remaining 10 percent.3 Still, the owner sets the budget about 75 percent of the

time, although “lighting decisions were heavily influenced by external building professionals,

especially electrical engineers.”4 Further, “[c]ontractors and subcontractors were the least

likely to be primarily responsible for producing the renovation designs and specifications.”5

The literature also suggests that the decision maker will vary based on the size of the

clients. Owners of small businesses/buildings are much more likely to make purchase

decisions or hire small electrical contractors, while large commercial clients are more likely to

lean on external or internal lighting professionals: “...a study of the New England market

found that 50 percent of all remodeling and renovations used lighting designers; however only

one third of medium­size end­users were likely to use design services in their projects.”6 In

addition, “almost 60 percent of small commercial business owners surveyed indicated that they

are directly involved in decisions to upgrade or retrofit the lighting system at their facilities.”7

Based on these findings, DOE assumes that for large commercial buildings

architects/engineers make 70 percent of purchase decisions, while owners make 20 percent and

electrical contractors make 10 percent. In the small commercial segment, however, DOE

assumes owners make 40 percent of decisions, lighting designers make 30 percent, and

electrical contractors make 30 percent. Weighting those figures as discussed above for the

entire commercial sector, DOE assumes lighting designers make 59 percent of decisions,

owners make 26 percent, and contractors make 16 percent.

DOE then estimated the likelihood of these agents choosing a lower BF if required to

purchase a higher­efficacy lamp. In all market segments considered for this analysis—R&R,

new construction, fixture replacement, retrofit and ballast failure—the decision maker is

purchasing a more efficacious lamp (because of the standard) and a new ballast. In these cases,

first­cost does not factor into DOE’s analysis because there is no incremental cost to the

decision maker as long as low and normal BF ballasts are cost equivalent, which DOE’s

analysis confirms is the case. The more important factor, then, is the decision maker’s level of

technical lighting sophistication.

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DOE believes architects and engineers are the most sophisticated decision makers. They

generally design for lumen output,8 and, given the option, will maintain appropriate lumen

levels. In the Pacific Northwest survey “[n]early every lighting designer mentioned that they

use Illuminating Engineering Society (IES) guidelines to help them pick appropriate

illuminance levels and fixture densities in preparation for specifying.”9 Those guidelines

specifically address issues with ballast factors. Further, “Lighting designers often use specific

BF equipment to fine­tune lighting systems and maximize the versatility of each lamp type.”10

“Product literature is the single most important source of information on lighting

efficiency for the lighting professionals.”11 In their high­efficacy lamp product literature,

manufacturers tout the flexibility of the lamps to achieve various lumen levels when combined

when with low, normal and high BF ballasts.12 More explicitly, manufacturers note the

consumer’s choice between greater lumens levels or energy savings.13 More technical product

sheet from manufacturers offer detailed system performance data of various ballast/lamp

combinations.14 In other guidance documents, DOE found numerous references instructing

decision makers to consider ballast factor or face higher lumen levels when determining

appropriate lamp­ballast combination.15 For example, one guide recommends various “model”

layouts for a number of applications (office, retail, education, etc.) that utilize “the thoughtful

use of normal ballast factor (NLO), reduced ballast factor (RLO), and high ballast factor

(HLO) electronic ballasts to better match light levels and power to the room needs.”16 Further,

a “choice of ballast factor allows designers to better minimize energy use by “tuning” the

lighting levels in the space.... A wide range of ballast choices are available to lighting

practitioners, allowing them to attain their lighting objectives more efficiently.”17

Building lighting codes could also compel decision makers to consider using lower BF

ballasts rather than accept higher lumen output and greater energy use. Many states and

municipalities have adopted lighting codes that set maximum lighting power density (LPD)

levels, measure by watts per square foot, particularly in the commercial sector. Those codes

are often based on ANSI/ASHRAE/IESNA Standard 90.1 or IECC, which recommends

various LPD levels by sector and tasks, as well as target lighting levels, measured by

footcandles (lumens per square foot). Generally, building codes and lighting incentive

programs require compliance with codes based on Standard 90.1’s LPD and footcandle targets

and recommendations. The standards undergo revisions every few years. The 2004 edition of

Standard 90.1 dramatically lowered LPD limits for nearly all commercial applications for new

construction and signification alterations and additions.18 ASHRAE is targeting a 30 percent

energy reduction for in 2010 version of the standard compared to the latest 2004 standard.19

The Northeast Efficiency Partnership predicts that could yield a 10 percent decline in LPD in

the 2012 version of the IECC standard, which generally mirrors Standard 90.1 and is used by

many states. As there newer and increasingly stringent standards work their way into building

codes, if builders, contractors or owners simply accept higher lumen levels from higherefficiency lamps, it is possible they will not have reduced LPD levels and therefore may not be

code­compliant. DOE believes this is unlikely, particularly in the R&R market segment, where

the newest, more stringent lighting codes may not be fully applicable as they generally are in

new construction. Still, the fact that lighting codes exist requires decision makers to be

cognizant of lighting levels. Even more likely, achieved lighting levels will be well above

recommended illuminance levels if lower BF ballasts are not used.

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In summary, guidance documents and specification protocol instruct architects/engineers

to emphasize appropriate lighting levels, which are increasing subject to effective caps by

building and lighting codes. Additionally, architects/engineers depend heavily on product

literature, which is abundant and often suggests utilizing lower BF factors to maintain lumen

levels. For these reasons, DOE assumes architects and engineers will choose a lower BF

ballast 100 percent of the time.

Owners do not have the same level of expertise, but again, in the R&R segment there is

no incremental cost to a lower BF ballast. Additionally, in renovations, usually entirely new

fixtures are required, not just a lamp and ballast. DOE’s research shows that most fixtures are

sent with an accompanying ballast, which can be specified by the purchasers or based on the

manufacturer’s suggestion. This fixtures and ballasts can be pre­lamped by the manufacturer

as well, which saves the installer labor costs. Because at least some of the system specification

is done by the fixture manufacturer, often in concert with the lamp and ballast manufacturer

representatives, DOE believes the decision maker employs, by default, some level of technical

sophistication, even if that decision maker (the owner or electrical contractor) does not have a

great degree of lighting know­how. Further, manufacturer representatives, distributors and

even electrical contractors, have an incentive to avoid costly call backs due to inappropriate

lumen levels. DOE believes a conservative estimate would put the probability owners will

choose a lower BF ballast at 25 percent.

A California study found electrical contractors to be least likely to have a professional

engineer on staff, suggesting a level of sophistication below that of other market agents.20

While half of the engineering firms surveyed in the study had at least one lighting specialist,

less than 25 percent of electrical contractors had one. DOE estimates electrical contractors will

choose a lower BF ballast 25 percent of the time.

10B.4.2 NEW CONSTRUCTION

Importantly for this analysis, building professionals do not report a significantly different

market for new construction than that which exists for major renovation and remodeling.21

Therefore, DOE considers the data on decision makers in the R&R market, of which there is

more available, to be generally applicable to the new construction market and vice versa.

Much of the literature suggests the owner or general contractor makes the ultimate

lighting decision in the new construction market segment. While others may make the designs,

often the building contractors make the purchase decision.22 Architects and engineers can

suggest particular choices that would offer a trade­off between higher first cost and lower

lifecycle costs, but the decision is “strictly the owners.”23 Specialized contractors respond

“passively” to designs, suggesting the decision comes from the top down.24 “A survey of 228

architects and engineers in California reports that owners have the most important role in

energy–efficiency decision in commercial buildings (Wright et al. 2000, 387).”25

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Still, other studies offer a different picture. A study of the lighting fixture supply chain

concluded that generally “an owner assigns the architect the task of developing the project,

including lighting plans and specifications. The architect, in turn, may contract with lighting

designers and interior designers to assist with different components of the design.” When the

electrical contractor’s role expands beyond installation, it usually involves procurement.26

Similarly, a lighting study in the Pacific Northwest found “[e]lectrical engineers are most

influential over choices in lighting equipment, controls and layout.”27 Despite that importance

of engineers and architects, electrical contractors still made suggestions about a third of the

time. As the Consortium for Energy Efficiency put it, “[l]ighting designs are typically made at

the architect or lighting designer level; however, contractors can be the one that often make the

purchasing decisions.”28

The Pacific Northwest study, referring to all market segments (as opposed to only new

construction) reported that electrical engineers have lighting discretion in 74 percent of their

jobs, while contractors reported having discretion 35 percent of the time (distributors reported

33 percent). 29 However, that “discretion” is largely constrained by the owner’s budget, so it is

worth noting that in this market segment there is no incremental cost associated with the

decision DOE is analyzing. That is, there is no incremental first cost to buying a lower BF

ballast as opposed to a normal BF ballast—in new construction, one still must purchase a

ballast.

Because incremental cost isn’t an issue, DOE assumes the owner’s budgetary constraints

on designers and contractors allow the latter more decision making authority in new

construction. Furthermore, even when owners make the decision, it may be their own in­house

architects and engineers really guiding the decisions. Therefore, DOE weights the studies

showing the substantial influence from engineers and architects more heavily than those

ascribing ultimate decision­making power to owners.

In sum, DOE assumes lighting designers, architects and electrical engineers make 70

percent of the decisions, owners make 20 percent, and electrical contractors make the

remaining 10 percent. However, in contrast to the R&R market, DOE does not weight this

segment for the small commercial subsector because DOE did not find evidence of distinct

market behavior in the new construction market segment (e.g. A small business owner is

unlikely to be a decision maker in the new construction market segment).

DOE then estimated the likelihood of these agents choosing a lower BF, given a higherefficacy lamp. DOE uses the same probabilities for new construction as it does the R&R

market segment because the market segments are very similar. That is, decision makers face

similar decisions when choosing ballast­lamp combinations for a floor that has been gutted and

remodeled as they do for an entirely new building.

10B.4.3 RETROFITS

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For the purposes of this analysis, DOE defines a retrofit as a voluntary action taken to

save energy costs. Retrofits are generally less costly and time­intensive then new construction,

renovations or fixture replacements, but proactive in nature, and therefore still likely to require

substantial decision making involvement from the owner, particularly in the small commercial

market. A common retrofitting action, for example, is to replace older, less efficacious T12

lamps with newer T8 models.

An ACEEE study found that large “building owners and developers often work with

professional lighting designers, architects, and engineers.... Small building owners, on the

other hand, will use electrical contractors and lighting suppliers when developing or retrofitting

their lighting design.”30 A New York state study reported 66 percent of small commercial

customers enlisted the help of electrical contractors, with general contractors (37 percent) and

landlords (30 percent) being the next most likely options (multiple agents could be chosen).31

Another study showed nearly 60 percent of small commercial owners are directly involved in

their lighting upgrade decisions.32

DOE believes retrofits follow a similar decision making pattern as the previous events.

However, because retrofits are more limited in scope, DOE believes installers (electrical

contractors) likely play a greater role than designers (architects and electrical engineers)

relative to the previous market segments. Further, the ACEEE study reported that even “in

situations where the lighting system is specified by a lighting designer, architect, or engineer, it

is common for the electrical contractor installing the equipment to make last­minute

substitutions in order to use products currently in­stock or in response to cost­cutting pressures

from building owners.” 33

Therefore, DOE estimates that in the large commercial sector architects/engineers,

owners and electrical contractors make 50 percent, 40 percent, and 10 percent of the decisions

compared to 20 percent, 50 percent, and 30 percent, respectively, for the small commercial

subsector. Using the blended average, architects/engineers make 41 percent of the decisions,

while owners and electrical contractors make 43 and 16 percent, respectively.

DOE then estimated the likelihood of these agents choosing a lower BF, given a higher

efficacy lamp. Given the owner is making a proactive decision to cut energy costs by

retrofitting its lighting, DOE assumes owners in this market segment are more likely to be

technically sophisticated, to invest the time to overcome information barriers, and to hire

contractors with more lighting knowledge. In an analysis of fluorescent tube standards, Pacific

Gas & Electric Company includes a scenario in which a high output T8 lamp is paired with a

lower BF ballast, “because this option is standard practice in many retrofits to maintain lumen

levels.”34

For the above reasons, DOE estimates the likelihood of owners choosing a lower BF

ballast given a more efficacious lamp to be 90 percent. DOE assumes the likelihood for

electrical contractors and architects/electrical engineers to be 90 percent and 95 percent,

respectively, for this market segment.

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10B.4.4 BALLAST FAILURE

DOE characterizes ballast failure as general operations and maintenance (O&M), as

opposed to the above events which can be more easily considered capital investments requiring

a greater degree of owner involvement.

A decision based on a ballast failure is a reactive decision by nature and one that is

unlikely to trigger the use of professional lighting designers with a high degree of technical

sophistication. Ballast replacements are usually forced spot replacements driven by equipment

failure.

Building owners and managers often establish service contracts with contractors for

O&M to include situations like ballast (and lamp) failures. Contractors can “strongly”

influence owners in replacement situations.35

A study of commercial buildings O&M in the Pacific Northwest noted commercial

owners (broadly defined to include building managers as DOE does here) outsourced lighting

O&M responsibilities to outside contractors roughly 45 percent of the time.36 Therefore, DOE

estimates that in the large commercial subsector electrical engineers/architects, owners, and

electrical contractors make 10 percent, 50 percent, and 40 percent of the decisions,

respectively, versus 0 percent, 60 percent, and 40 percent for the small commercial subsector.

Using the blended average, architects/engineers make just 7 percent of the decisions, while

owners and electrical contractors make 53 percent and 40 percent, respectively.

DOE then estimated the likelihood of these agents choosing a lower BF, given a higher

efficacy lamp. DOE found no data specific to the ballast failure market segment so DOE uses

the probabilities it used in the R&R, adjusted downward based on the qualitative assumption

that the ballast failure is a reactive decision less likely to involve thorough consideration of

energy efficiency and lighting level factors. Additionally, DOE’s category of owners in the

R&R market segment will often include developers, general contractors and capital providers

with vested interests in energy savings, while in the ballast and lamp replacement categories

owners include building and property managers more often.

A California study reported, “Managers for some of the medium­size companies told us

that the skill level of their general maintenance personnel does not extend beyond simple

change outs. Changing a ballast may be beyond the skill level of the general maintenance

person.”37 In contrast, 65 percent of the service contracts with outside contractors (such as

electrical contractors) called for energy efficiency improvements in the Pacific Northwest

study. 38

Therefore, DOE assumes engineers would use a lower BF ballast with a higher efficacy

lamp 50 percent of the time in the ballast failure market segment, while owners and electrical

contractors would do so 0 percent of the time.

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10B.4.5 FIXTURE REPLACEMENTS

DOE found very little data pertaining specifically to decision making in fixture

replacements. However, this market segment—in terms of decision makers and their

behavior—likely falls in between the ballast failure and renovation market segments. Fixture

replacements are similar to ballast failures in that they are often forced by equipment failure.

Fixtures may be spot­replaced just like ballasts, a scenario that would likely involve the same

decision makers and behavior. On the other hand, fixture replacement is a more extensive

replacement and may be done for all fixtures on a floor or in a building to maintain aesthetic

consistency, more similar to the renovation market. Additionally, when someone purchases a

fixture to replace a failed one, the fixture usually comes equipped with a ballast and lamp(s)—

the same way it would come to someone ordering for a major renovation.

Therefore, DOE assumes decision maker and decision distributions that represent the

average of the renovation and ballast failure market segments. Owners, architects/engineers,

and electrical contractors will make 39 percent, 33 percent, and 28 percent of decisions,

respectively. The same players will choose a lower BF 12.5 percent, 75 percent and 17.5

percent of the time, respectively.

10B.4.6 CONCLUSION

Using the probabilities above, DOE derived the probabilities shown in Table 10B.1

describing the likelihood of a consumer using a lower BF with a higher efficacy lamp if lower

wattage lamps were not feasible alternatives. DOE used these probabilities as inputs for its

Market Segment­Based lighting expertise standards case scenarios. Conversely, in the High

lighting expertise scenario, each of the below values would be 100 percent.

Table 10B.1 Probability of Tuning a Lamp Ballast System in the Commercial Sector

Probability of "Tuning" Lamp­Ballast System

Ballast Replacement 7.6%

Retrofit 91.8%

Fixture Replacement 34.4%

Major Renovation 68.9%

New Construction 77.5%

10B.5 THE MARKET SEGMENTS – RESIDENTIAL SECTOR

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The residential sector represents roughly 20 percent of GSFL shipments. Nearly all

residential GSFL fixtures are hardwired in kitchens, garages, and bathrooms. 39 In general, the

majority of purchasing decisions in the residential sector are based on first cost or aesthetics,

suggesting careful consideration of a ballast factor is much less likely than in the commercial

sector given a higher efficacy lamp.

10B.5.1 RENOVATION AND REMODELING

Outside of new construction, homeowners and electrical contractors make the majority of

lamp and fixture decisions for all of the market segments DOE analyzes.40 In renovations,

general contractors usually have subcontractors (electrical contractors) select the equipment.41

A 2002 study of the California R&R market found owners lighting purchase decision 69

percent of the time, contractors did 16 percent and they both did in the 15 percent of the time.42

Other studies mention a small role for architects, particularly for significant renovations.

Using those numbers as a starting point, DOE adjusted those estimates to account for the

fact that while owners often make the purchase decision it is usually the contractor or architect

suggesting the equipment. DOE believes homeowners are more likely to be involved in the

fixture decision, rather than the lamp and ballast decision. Additionally, some contractors have

staff architects or electrical engineers who may specify the lighting equipment, particularly for

major renovations. Therefore, DOE assumes owners, electrical contractors,

architects/engineers, and general contractors/developers make 50 percent, 35 percent, 10

percent, and 5 percent of the decisions, respectively.

DOE then estimated the likelihood of these agents choosing a lower BF, given a higher

efficacy lamp. Of those who remodeled hardwired lighting in the California study, only 61

percent looked for information on energy efficiency. Further, only 40 percent said energy

efficiency was a major factor in their decision to remodel the lighting design. Another survey

found that specialized lighting electrical contractors tended to work more for commercial

enterprises, whose jobs are more profitable, while residential jobs are completed by less

specialized—and, presumably, less technically sophisticated—contractors.43 According to the

study’s contractor interviews, residential installers often “have not completed apprenticeships

and have not been technically trained.”44 In contrast, architects discuss energy efficiency in

lighting renovations for “most or all” of their specifications. 45

The above evidence suggests a low level of lighting energy efficiency sophistication for

some decision makers in this segment. Overall, however, DOE believes the lack of technical

expertise on the part of the installer or homeowner is somewhat offset by the fact that most

lighting purchases in the R&R segment require new fixtures, which are usually equipped with a

ballast and prescribe the lamp(s) to pair with it. In these cases, the lamp and ballast have

already been specified, so decision maker lighting expertise, or lack thereof, may not come into

play in all cases. A homeowner may simply buy the fixture (and accompanying ballast) at a

DIY store and then select the suggested type of lamp on the box. In renovation and

remodeling—as opposed to simple fixture replacement (discussed below)—DOE believes the

homeowner will be more likely to consult agents in the service chain with greater lighting

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expertise than themselves. For this reason, DOE believes homeowners are more likely to make

energy saving decisions for fixture replacements that are part of a larger renovation (and thus

more likely to engage knowledgeable lighting professionals) than with a spot fixture

replacement purchase event. Further, the fact that some contractors/developers do not have

significant energy efficiency expertise does not necessarily mean they are not concerned with

establishing appropriate lighting levels, particularly given their desire to reduce costly callbacks (customers complaints on the performance of the equipment installed). On balance,

DOE assumes homeowners, electrical contractors, general contractors/developers and

architects will choose a lower BF ballast 50 percent, 25 percent, 75 percent, and 100 percent of

the time.

10B.5.2 NEW CONSTRUCTION

In new residential construction, lighting specifications and design can involve at least 11

parties, with decision makers varying by the type of construction (i.e., tract home, semi­custom

home, custom home, or multifamily).46 For non­custom homes, the builder or their in­house

procurement staff most likely specifies hardwired lighting fixtures, while electrical contractors

“possibly” make specifiers, and homeowners are “unlikely” to.47 Generally, more expensive

and customized home construction features a greater degree of homeowner involvement in

lighting selections. However, even when homeowners are involved in the lighting decision,

they often select from a limited number of options supplied by the builder, architect or other

specialist. Further, builders frequently limit the options available to homeowners to minimize

construction delays and homeowners agree with all or some of the suggested indoor fixtures 96

percent of the time (significantly, homeowners agree with all suggestions 91 percent of the

time) and do not agree only 4 percent of the time. 48

According to California’s Lighting Technology Sector’s Residential Lighting Design

Guide, “Now more than ever, it is the responsibility of the builder to fully specify compliant

fixtures to the contractor. With the changes in code [more stringent efficiency requirements in

California’s Title 24 that became effective in 2005], manufacturer are trying to make it easier

for builders and contractors to specify compliant fixtures.”49

Given the difference regarding homeowner involvement between the custom home

submarket and the tract home submarket, DOE decided to break out the decision­maker

probability distributions for each. U.S. Census data shows 22 percent of new residential single

family homes completed in 2007 were custom built.50 After accounting for data on new

multifamily units as well, DOE found that approximately 19.6 percent of all new residential

square footage is custom built, while the remainder was built for sale. DOE uses those figures

to weight the following assumptions: for non­custom homes, homebuilders make 60 percent of

lighting decisions, while electrical contractor and architects (likely subcontracted by the

builder/developer/general contractor) make 30 percent and 10 percent, respectively; for custom

builders, homeowners, electrical contractors, and architects/engineers make 50 percent, 20

percent, 20 percent and 10 percent of the decisions, respectively. These assumptions yield the

following decision making distribution: homebuilders – 58 percent; electrical contractors – 28

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EE-2006-STD-0131 COMMENT 37.2
percent; architects/engineers – 10 percent; and homeowners – 4 percent. The above­mentioned

fact that 4 percent of homeowners do not follow the lighting specification suggestions of the

other market agents corroborates these results.

DOE then estimated the likelihood of these agents choosing a lower BF, given a higherefficacy lamp. Of the 11 parties referenced above, few “have significant lighting design

expertise and virtually none have expertise in energy efficient residential lighting.” Builders

often take first cost into consideration by choosing lighting fixtures that meet “minimal lighting

requirements at a minimal budget” and do not seek energy­saving features except on the rare

occasion home buyers request them.51 Still, as noted in the commercial sector discussion, first

cost is not a consideration in this analysis because the purchaser is forced to buy the higherefficacy lamp by the standard and because a ballast must be purchased in addition to the lamp.

Further, as with the R&R market segment, fixtures are often sold as a unit including a ballast

and suggesting a specified lamp to pair with it. As mentioned above for other market

segments, design guides nearly always instruct specifiers to determine the appropriate lumen

output. Under “What to specify” in above­mentioned “Residential Lighting Design Guide,”

the first item listed “specify the appropriate light output.”52 Given the above, DOE believes it’s

appropriate to assume homebuilders/developers will often choose (knowingly or not) to use

lower BF ballasts with higher­efficacy lamps.

In sum, DOE assumes builders/developers would choose to pair lower BF ballasts with

higher efficacy lamps 75 percent of the time. DOE uses the same probability for homeowners

(25 percent), electrical contractors (25 percent), and architects/engineers (100 percent) as for

the renovation market.

10B.5.3 RETROFIT, BALLAST FAILURE, AND FIXTURE REPLACEMENTS

DOE assumes residential lighting decisions in retrofit, ballast failure, and fixture

replacements purchase events are always made by homeowners. Homeowners generally value

first cost and aesthetics over energy efficiency.53 Homeowners are likely to make their

purchases from large retailers such as do­it­yourself and hardware stores, supermarkets, or

mass merchandisers where store staff does not have a solid understanding of fluorescent

technologies and energy efficiency. 54, 55 DOE surveyed available products at these locations

and assessed their packaging and labeling. DOE found that often ballast factor is not reported

on the packaging. The lighting Frequently Asked Questions (FAQ) pages on the

residential/consumer sections of most major manufacturers do not discuss ballast factor or

other specific ways to achieve energy efficiency while preserving lumen output in full­size

fluorescent lighting systems.56, 57 DOE considers it unlikely that homeowners will generally

have the expertise to look for, find, and interpret the information necessary to make an

educated decision on pairing a lower ballast factor with a higher efficacy lamp. As such, DOE

assumes no homeowners will migrate to lower BF ballasts given a more efficacious lamp for

these purchase events.

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EE-2006-STD-0131 COMMENT 37.2
10B.5.4 CONCLUSION

Using the probabilities above, DOE derived populated Table 10B.2 to describe the

likelihood of consumers choosing a lower BF ballast with a higher efficacy lamp if lower

wattage lamps not feasible alternatives. DOE used these probabilities as inputs for its Market

Segment­Based lighting expertise standards case scenarios. Conversely, in the High lighting

expertise scenario, each of the below values would each be 100 percent.

Table 10B.2 Probability of Tuning a Lamp Ballast System in the Commercial Sector

Probability of "Tuning" Lamp­Ballast System

Major Renovation 47.5%

New Construction 61.5%

Retrofit 0.0%

Ballast Replacement 0.0%

Fixture Replacement 0.0%

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EE-2006-STD-0131 COMMENT 37.2
REFERENCES

1 U.S. Small Business Administration, Office of Advocacy, based on data provided by the

U.S. Census Bureau, Statistics of U.S. Businesses. Last accessed July 21, 2008.

http://www.sba.gov/advo/research/us_05ss.pdf

2 ADM Associates, Inc., TecMRKT Work LLC, "Nonresidential Remodeling and Renovation

Study: Final and Summary Report", California Energy Commission, March 2002.

3 Xenergy, Inc., "Commercial and Industrial Lighting Study", Northwest Energy Efficiency

Alliance, Vol. 1, December 2000.

4 Donald R. Dohrmann, John H. Reed, Sylvia Bender, Catherine Chappell, Pierre Landry,

"Remodeling and Renovation of Nonresidential Buildings in California", California Energy

Commission, 2002.

5 Ibid. 2

6 Jennifer Thorne, Steve Nadel, "Commercial Lighting Retrofits: A Briefing Report for Program

Implementers", ACEEE, April 2003.

7 "New York Energy $mart Program Evaluation and Status Report", New York State Energy

Research and Development Authority, 2005.

8 “Engineering Analysis,” Department of Energy presentation at Public Meeting for Advance

Notice of Proposed Rule for Energy Conservation Standards for GSFL and IRL. March 10­11,

2008.

9 Ibid. 3

10 “Purchasing Advisor: Lighting: Fluorescent Ballasts”, E Source Companies LLC, 2006. Last

accessed on July 21, 2008. http://www.pnm.com/customers/tech_guides/PDF/P_PA_12.pdf

11 Heschong Mahone Group, Lighting Efficiency Technology Report: Market Barriers Report,

California Energy Commission, Vol. 3, September 1999.

12 For example, see: http://content.sylvania.com/app/display.aspx?id=003691809;

http://www.nam.lighting.philips.com/us/ecatalog/fluor/pdf/p­5369.pdf

13 For example, see:

http://www.gelighting.com/na/business_lighting/education_resources/literature_library/sell_shee

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EE-2006-STD-0131 COMMENT 37.2
ts/downloads/fluorescent/28337_f32t8_high_lumen_linear.pdf;

http://www.lithonia.com/Products/groups/Fluorescent/MS5/MoreInfo/GE_T5Lamps.pdf

14 For example, see: http://www.lithonia.com/relight/PDFs/SUPERT8_FINAL_PIB.pdf;

15 For example, see the New Building Institute’s Advanced Lighting Guide, page 6­35;

California’s Lighting Technology Center’s Residential Lighting Guide, page 4; Craig DiLouie ,

"The Next Generation of Electronic Lighting Systems: Smaller, Smarter and Greater Energy

Savings", Lighting Controls Association , 2003.

16 “Advanced Lighting Guidelines: 2003 Edition”, New Building Institute, 2003.

17 Ibid. 16

18 http://resourcecenter.pnl.gov/cocoon/morf/ResourceCenter/dbimages/full/1427.jpg

19 http://www.ashrae.org/publications/detail/16468;

20 Ibid. 11

21 John H. Reed, "Decision­Making and Market Segments in the Commercial Sector Building

Sector", TecMRKT Works, November 2002.

22 "High­Performance Commercial Lighting Systems Initiative", Consortium for Energy

Efficiency, 2004. Last accessed July 21, 2008. http://www.cee1.org/com/com­lt/com­lt­id.pdf

23 Lee A. Greer, Donald W. Jones, David J. Bjornstad, "Energy Efficiency, Building

Productivity, and the Commercial Buildings Market", Oak Ridge National Laboratory, May

2002.

24 Ibid. 23

25 Ibid. 23

26 Cynthia C.Y. Tsao, Iris D. Tommelein, Integrated Product­Process Development By A Light

Fixture Manufacturer, 2001

27 Ibid. 3

28 Ibid. 22

29 Ibid. 3

30 Ibid. 6

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EE-2006-STD-0131 COMMENT 37.2
31 Ibid. 6

32 Ibid. 6

33 Ibid. 6

34 Katie Ackerly, Steven Nadel, Stan Walerczyk, Analysis of Standards Options for Fluorescent

Tubes, Pacific Gas and Electric Company, January 2008.

35 John H. Reed, "Renovation and Remodeling: A Qualitative View", California Energy

Commission, July 2001.

36 Quantum Consulting and SBW Consulting, Inc., "Commercial Buildings Operations and

Maintenance Market Assessment", Northwest Energy Efficiency Alliance, October 2006.

37 ADM Associates, Inc., TecMRKT Work LLC, "Statewide Survey of Multifamily Common

Area Building Owners Market", Southern California Edison Co., Vol 1, June 2000.

38 Ibid. 36

39 Judy Jennings, Rich Brown, Mithra Moezzi, Evan Mills, Robert Sardinsky. “An Assessment

of the U.S. Residential Lighting Market.” Lawrence Berkeley National Laboratory. 1995. Last

accessed July 21, 2008.

40 Opinion Dynamics Corporation, “Residential Lighting Fixture Market Assessment: Ceiling

Fans and Outdoor Lighting.” Final Report. October 2000. Last accessed May 12, 2008.

41 Quantum Consulting, "Residential Discretionary Retrofit and Time of Sale Renovation Market

Characterization", Pacific Gas and Electric Company, July 1999.

42 Primen: The Response Center, "California Residential Remodeling/Renovation Market

Study", Southern California Edison Co., PG&E, San Diego Gas and Electric, Southern California

Gas Company, July 2001.

43 Ibid. 41

44 Ibid. 41

45 Ibid. 41

46 Ecos Consulting, "Energy Efficiency Lighting in New Construction", Northwest Energy

Efficiency Alliance, May 2002.

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EE-2006-STD-0131 COMMENT 37.2
47 Diana Vorsatz, Leslie Shown, Jonathan Koomey,Mithra Moezzi, Andrea Denver, and Barbara

Atkinson, The Lighting Market Sourcebook for the U.S., Lawrence Berkley National Laboratory,

1997

48 Ibid. 40

49 “Residential Lighting Design Guide,” California Lighting Technology Center, 2005.

50 U.S. Census Bureau. Last accessed on July 22, 2008.

http://www.census.gov/const/www/charindex.html#singlecomplete

51 Ibid. 41

52 “Residential Lighting Design Guide,” California Lighting Technology Center, 2005.

53 Ibid. 42

56 “GE Consumer and Industrial Lighting: Ask Us: FAQs – Ballasts and Fluorescent Tubes.”

General Electric Company. 2008. Last accessed July 21, 2008.

54 Ibid. 42

55 Ibid. 42

http://www.gelighting.com/na/home_lighting/ask_us/faq_ballasts.htm

57 “Lighting for the Home – FAQ.” Koninklijke Philips Electronics N.V. 2008. Last accessed

July 21, 2008. http://www.nam.lighting.philips.com/us/consumer/faq.php

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EE-2006-STD-0131 COMMENT 37.2