10B-i APPENDIX 10B. MARKET SEGMENT-BASED LIGHT ING EXPERTISE ANALYSIS

TABLE OF CONTENTS

10B.1 INTRODUCTION .......................................................................................................10B-1

10B.2 METHODOLOGY ......................................................................................................10B-2

10B.3 MARKET ACTOR TAXONOMY..............................................................................10B-2

10B.3.1 COMMERCIAL VERSUS RESIDENTIAL SECTORS............................10B-3

10B.3.2 LARGE VERSUS SMALL COMMERCIAL SUBSECTORS ..................10B-3

10B.4 THE MARKET SEGMENTS – COMMERCIAL SECTOR ......................................10B-3

10B.4.1 RENOVATION AND REMODELING .....................................................10B-4

10B.4.2 NEW CONSTRUCTION............................................................................10B-6

10B.4.3 RETROFITS ...............................................................................................10B-7

10B.4.4 BALLAST FAILURE.................................................................................10B-9

10B.4.5 FIXTURE REPLACEMENTS .................................................................10B-10

10B.4.6 CONCLUSION.........................................................................................10B-10

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

10B.5.1 RENOVATION AND REMODELING ...................................................10B-11

10B.5.2 NEW CONSTRUCTION..........................................................................10B-12 10B.5.3 RETROFIT, BALLAST FAILURE, AND FIXTURE

REPLACEMENTS ...................................................................................10B-13

10B.5.4 CONCLUSION.........................................................................................10B-14

REFERENCES ......................................................................................................................10B-15

LIST OF TABLES

Table 10B.1 Probability of Tuning a Lamp Ba llas t System in the Commercial Sector ........10B-10 Table 10B.2 Probability of Tuning a Lamp Ba llas t System in the Commercial Sector ........10B-1410B-1 APPENDIX 10B. MARKET SEGMENT-BASED LIGHT ING EXPERTISE ANALYSIS

10B.1 INTRODUCTION

New or a mended energy conservation standard s may require some consumers to purchase higher efficacy lamps. How consumers pair thes e lamps with ballasts coul d substantially affect the potential energy savings and NPV that would re sult form the proposed rule. For example, to maintain lumen output with a new higher efficacy lamp, some consumers may select a reduced-wattage lamp to replace a less efficaciou s 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 reduced-wattage lamps ar e not available within desired lumen ranges in particular applications: C onsumers 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 la mp would allow consumers to maintain lumen levels while saving energy. The purpose of this section is to discu ss the extent to which consumers in the standards case will migrate to reduced-wattage 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 cas e scenarios called the “High” and “Market Segment-based” lighting ex pertise scenarios. This set of scenarios characterizes consumers’ decisions (or lack thereo f) 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 determinan t role in consumer behavior. In this scenario, consumers are more likely to ch oose a lower ballast factor to pair with higher efficacy lamps or purchase a reduced-wattage lamp. Conversely, in the Market SegmentBased scenario, DOE assumes consumers occas ionally 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, hom ebuilder, etc.) and the purchase event (new construction, replacement, etc.).

This section draws on an exte nsive literature review and analysis to discuss market behavior in five market segments: new c onstruction, 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 higher-efficacy lamp purchases would be reduced-wattage or pair ed with lower BF ballasts. As discussed in the Chapter 10, DOE used the results from this analysis (the per centage of consumers purchasing not purchasing reduced-wattage lamp s or using lower BFs) to characterize the Market Segment-Based lighting expertise scenar io. The High lighti ng expertise scenario assumes that all consumers in the standards case will seek to maintain lumen output by purchasing either: 1) reduced-wattage lamps, or 2) a lower ballast factor ballast.10B-2 10B.2 METHODOLOGY

To conduct this analysis, DOE first identif ies the major actors most likely to make purchase decisions in each market segment. Ne xt, DOE apportions shares of all decisions to

each of those identified decision makers with in each segment. Finally, DOE estimates the probability of migrating to a reduced-wattage lamp or pairing a lower BF with a higher efficacy lamp for each decision maker within each se gment. 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. Th e more knowledgeable a decision maker is, the more likely they are to take measures (such as using a lower BF or purch asing a reduced-wattage lamp) to maintain appropriate lumen levels. Fo r simplicity, all subsequent references in this appendix to the migration or purchase of a lowe r BF ballast (as an energy savings option) is meant to also include the option of purchasing reduced-wattage lamps.

10B.3 MARKET ACTOR TAXONOMY

Because the industry literature discussi ng build ing and lighting decision makers frequently uses different terms for the same act ors, 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 prope rty 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 co uld 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 devel opers/general contractor s to better apply the industry literature to our analysis.

Architects and Electrical Engineers. DOE groups electrical engi neers, architects and lighting designers into a category characterizi ng 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, ma nufacturer reps, and lighting showrooms also play a decision-making role in the sector. However, based on its10B-3 research, DOE does not believe these agents are central to the decision-making process to an

extent that would necessitate their inclusion in th is analysis, especially given the lack of data describing their behavior.

10B.3.1 COMMERCIAL VERSUS RESIDENTIAL SECTORS

DOE believes ther e is substantial market be havior differences between the commercial and residential sectors and has therefore analyzed them separately. However, DOE assumes

that industrial sector decision makers generally behave simila rly 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 an d industrial sectors recei ve roughly 80 percent of all GSFL shipments in the 2012 base case, wh ile 20 percent go to the residential sector.

10B.3.2 LARGE VERSUS SMALL COMMERCIAL SUBSECTORS

Decision m akers in the large-commercial sect or can be different agents making different

decisions than those in the small-commercial sect or. In the market segments (purchase events)

where DOE found consumer behavior to be subs tantially different between these subsectors, DOE weighted the relative impact of each subsector when characterizing the overall

commercial market.

According to the Small Business Administrati on, 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 repres ents 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 m arket segments with renov ation and remodeling because it found the most comprehensive data for this segment. For those segments for which little information was available (such as fixt ure replacements), DOE used the likelihood of ballast factor tuning in th e 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.10B-4 10B.4.1 RENOVATION AND REMODELING

For this analysis, DOE defines renovation a nd re modeling (R&R) to include events that alter existing buildings’ structure, space or sy stems beyond (but including) its luminaires. Market literature suggests architects and electr ical engineers play the largest role in the commercial R&R segment. In a California survey of decision makers who recently completed building renovations, 80 pe rcent of projects invo lved architects; half of which were outside consultants, and the rest split between owner and lessee in-house staff. Architects were responsible for 62 percent of specifications, not counting any owners’ or general contractors’ in-house 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, elec trical engineers and lighting designers influenced sp ecification about 90 pe rcent of the time. The owner/developer composed the remaining 10 percent. 3 Still, the owner sets th e budget about 75 pe rcent of the time, although “lighting decisions were heavily influenced by external building professionals, especially electrical engineers.” 4 Further, “[c]ontractors and subcontractors we re the least likely to be primarily responsible for produci ng the renovation designs and specifications.” 5

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

clients. Owners of small businesses/buildi ngs are much more likely to make purchase decisions or hire small electrical contractors, wh ile large commercial clients are more likely to

lean on external or internal lighting professionals: “...a stud y of the New England market found that 50 percent of all remodeling and re novations used lighting designers; however only one third of medium-size end-users 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 ligh ting system at their facilities.” 7

Based on these findings, DOE assumes th at for large commercial buildings architects/engineers make 70 percent of purchas e 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 lighti ng designers make 59 percent of decisions, owners make 26 percent, and contractors make 16 percent.

DOE then estimated the likelihood of these ag ents choosing a lower BF if required to purchase a higher-efficacy 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 th e standard) and a new ballast. In these cases,

first-cost 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 equi valent, which DOE’s analysis confirms is the case. The more importa nt factor, then, is the decision maker’s level of technical lighting sophistication.10B-5 DOE believes architects and engineers are the mo st 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]ear ly every lighting designer mentioned that they use Illuminating Engineering Society (IES) gui delines to help them pick appropriate

illuminance levels and fixture densi ties in preparation for specifying.” 9 Those guidelines specifically address issues with ballast factors. Furt her, “Lighting designers often use specific BF equipment to fine-tune lighting systems and maximize the versatility of each lamp type.” 10

“Product literature is the single most im portant source of information on lighting efficiency for the li ghting professionals.” 11 In their high-efficacy 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 da ta 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 lamp-ballast combination. 15 For example, one guide recommends various “model” layouts for a number of applicati ons (office, retail, education, et c.) that utilize “the thoughtful use of normal ballast factor (NLO), reduced ba llast factor (RLO), a nd high ballast factor (HLO) electronic ballasts to better match li ght 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 th eir lighting objectives more efficiently.” 17

Building lighting codes could al so compel decision makers to consider using lower BF ballasts rather than accept hi gher lumen output and greater en ergy use. Many states and municipalities have adopted lighting codes th at set maximum lighting power density (LPD) levels, measure by watts per square foot, particul arly in the commercial sector. Those codes

are often based on ANSI/ASHRAE/IESNA Stan dard 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). Ge nerally, 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 revi sions 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 stan dard compared to the latest 2004 standard. 19
The Northeast Efficiency Partnership predicts th at could yield a 10 percent decline in LPD in the 2012 version of the IECC standard, which ge nerally mirrors Standard 90.1 and is used by many states. As there newer and increasingly stri ngent 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 ha ve reduced LPD levels and therefore may not be code-compliant. DOE believes this is unlikely, pa rticularly in the R&R market segment, where the newest, more stringent lighti ng codes may not be fully applicab le 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 likel y, achieved lighting levels will be well above

recommended illuminance levels if lo wer BF ballasts are not used.10B-6 In summary, guidance documents and specifica tion protocol instruct architects/engineers to emphasize appropriate lighting levels, which are increasing subject to effective caps by building and lighting codes. Additionally, ar chitects/engineers depend heavily on product literature, which is abundant a nd 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 expertis e, but again, in the R&R segment there is

no incremental cost to a lower BF ballast. Addi tionally, 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 ba llasts can be pre-lamped 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 co ncert with the lamp and ballast manufacturer representatives, DOE believes th e decision maker employs, by default, some level of technical sophistication, even if that deci sion maker (the owner or electric al contractor) does not have a great degree of lighting know-how. Further, ma nufacturer representative s, distributors and even electrical contractors, have an incentive to avoid costly call backs due to inappropriate

lumen levels. DOE believes a conservative esti mate would put the probability owners will choose a lower BF ballast at 25 percent.

A California study found electrical contractors to be least li kely to have a professional engineer on staff, suggesting a level of sophistication below th at 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

Im portantly for this analysis, building profe ssionals do not report a si gnificantly different

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

Therefore, DOE considers the data on decision ma kers 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 contractor s make the purchase decision. 22 Architects and engineers can suggest particular choices that would offer a trade-off between higher first cost and lower lifecycle costs, but the decisi on is “strictly the owners.” 23 Specialized contractors respond “passively” to designs, suggesting th e decision comes from the top down. 24 “A survey of 228 architects and engineers in Calif ornia reports that owners have the most important role in energy–efficiency decision in commercia l buildings (Wright et al. 2000, 387).” 2510B-7 Still, other studies offer a di fferent picture. A study of th e lighting fixture supply chain concluded that generally “an ow ner assigns the architect the ta sk of developing the project, including lighting plans and speci fications. The architect, in tur n, may contract with lighting designers and interior designers to assist with different compon ents of the design.” When the

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

Sim ilarly, a lighting study in the Pacific Nort hwest found “[e]lectrical engineers are most influential over choices in lighti ng equipment, controls and layout.” 27 Despite that importance of engineers and architects, elect rical contractors stil l 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, re ferring to all market segments (as opposed to only new construction) reported that elect rical engineers have lighting di scretion 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 largel y 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—i n 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 latt er more decision making authority in new construction. Furthermore, even when owners make the decision, it may be their own in-house architects and engineers really guiding the de cisions. Therefore, DOE weights the studies showing the substantial influence from engin eers and architects more heavily than those ascribing ultimate decision-making power to owners.

In sum, DOE assumes lighting designers, ar chitects and electrical engineers make 70 percent of the decisions, owners make 20 per cent, 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 b ecause DOE did not find evidence of distinct

market behavior in the new construction ma rket 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 probabilit ies 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 ballast-lamp comb inations for a floor that has been gutted and remodeled as they do for an entirely new building.

10B.4.3 RETROFITS10B-8 For the purposes of this analysis, DOE defi nes a retrofit as a vol untary action taken to save energy costs. Retrofits ar e generally less costly and time- intensive 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 exampl e, is to replace older, less efficacious T12 lamps with newer T8 models.

An ACEEE study found that larg e “building owners and deve lopers often work with professional lighting designers, architects, and engineers.... Small building owners, on the other hand, will use electrical co ntractors and lighting suppliers when developing or retrofitting their lighting design.” 30 A New York state study reporte d 66 percent of small commercial customers enlisted the help of electrical contract ors, with general contra ctors (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 decisi on making pattern as the previous events. However, because retrofits are more limited in scope, DOE believes in stallers (electrical contractors) likely play a greater role than designers (archite cts 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, ar chitect, or engineer, it

is common for the electrical contractor in stalling the equipment to make last-minute substitutions in order to use pr oducts currently in-stock or in response to cost-cutting pressures from building owners.” 33

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

owners and electrical contractor s make 50 percent, 40 percent, and 10 percent of the decisions compared to 20 percent, 50 percent, and 30 perc ent, respectively, for the small commercial subsector. Using the blended average, architect s/engineers make 41 percent of the decisions,

while owners and electrical contractor s 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 assu mes owners in this market segment are more likely to be technically sophisticated, to i nvest the time to overcome inform ation barriers, and to hire contractors with more lighting know ledge. In an analysis of fluor escent 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 standa rd practice in many retrofits to maintain lumen

levels.” 34

For the above reasons, DOE estimates the li kelihood 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 pe rcent and 95 percent, respectively, for this market segment.10B-9 10B.4.4 BALLAST FAILURE

DOE characterizes ballast failu re as gene ral 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 re active decision by nature and one that is unlikely to trigger the use of professional ligh ting designers with a high degree of technical sophistication. Ballast replacements are usually forced spot replacements driven by equipment

failure.

Building owners and managers often establis h 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 roughl y 45 percent of the time. 36 Therefore, DOE estimates that in the large commercial subsecto r 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 th e small commercial subsector. Using the blended average, architects/engineers make just 7 percent of the decisions, while

owners and electrical cont ractors 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 r eactive decision less likely to i nvolve 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 pr operty managers more often.

A California study reported, “Managers for some of the medium-size companies told us that the skill level of their general main tenance 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 co ntracts with outside contractors (such as electrical contractors) called for energy effi ciency improvements in the Pacific Northwest study. 38

Therefore, DOE assumes engine ers would use a lower BF balla st 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.10B-10 10B.4.5 FIXTURE REPLACEMENTS

DOE found very little data pertaining specifically to decision m aking in fixture replacements. However, this market segment—in terms of decision makers and their behavior—likely falls in between the ballast failure and renovati on market segments. Fixture replacements are similar to ballast failures in th at they are often forced by equipment failure. Fixtures may be spot-replaced 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. Addition ally, 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 some one ordering for a major renovation.

Therefore, DOE assumes deci sion maker and decision distri butions that represent the average of the renovation and ballast failure mark et segments. Owners, architects/engineers, and electrical contractors will make 39 percent, 33 percent, and 28 percent of decisions, respectively. The same play ers 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 consum er using a lo wer BF with a higher efficacy lamp if lower wattage lamps were not feasible alternatives. DOE used these probabilities as inputs for its Market Segment-Based lighting expertise standa rds case scenarios. Conversely, in the High lighting expertise scenario, each of th e below values would be 100 percent.

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

Probability of "Tuning" Lamp-Ballast 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 SECTOR10B-11 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 ba sed 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, hom eowners 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 cont ractors) 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 ro le for architects, particularly for significant renovations.

Using those numbers as a star ting point, DOE adjusted thos e estimates to account for the fact that while owners often make the purchase de cision it is usually the co ntractor or architect suggesting the equipment. DOE believes homeown ers are more likely to be involved in the fixture decision, rather than the lamp and ball ast decision. Additionally, some contractors have

staff architects or electrical engineers who may specify the lighting equipment, particularly for major renovations. Therefore, DOE assu mes owners, electrical contractors, architects/engineers, and general contractors/ developers make 50 pe rcent, 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 hard wired lighting in the California study, only 61 percent looked for information on energy effici ency. 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 sophisti cated—contractors. 43 According to the study’s contractor interviews, re sidential installers often “hav e 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. Overal l, however, DOE believes the lack of technical expertise on the part of the installer or homeown er is somewhat offset by the fact that most lighting purchases in the R&R segment require ne w 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 e xpertise, or lack thereof, may not come into play in all cases. A homeowner may simply buy the fixture (and acco mpanying ballast) at a

DIY store and then select th e suggested type of lamp on the box. In renovation and remodeling—as opposed to simple fixture replac ement (discussed below)—DOE believes the homeowner will be more likely to consult agents in the service chain with greater lighting10B-12 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 la rger renovation (and thus more likely to engage knowledgeable lighti ng 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 n ecessarily mean they are not concerned with establishing appropriate lighting levels, particularly given thei r desire to reduce costly callbacks (customers complaints on the performance of the equipment installed). On balance, DOE assumes homeowners, electrical contract ors, general contract ors/developers and architects will choose a lower BF ballast 50 perc ent, 25 percent, 75 percent, and 100 percent of

the time.

10B.5.2 NEW CONSTRUCTION

In new residential construction, lighting specifi cations and design can involve at least 11 parties, with decision m akers varying by the type of construction (i.e., tract home, semi-custom home, custom home, or multifamily). 46 For non-custom homes, the builder or their in-house procurement staff most likely sp ecifies hardwired light ing fixtures, while el ectrical 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 hom eowners are involved in the lighting decision, they often select from a limited number of opti ons supplied by the build er, architect or other specialist. Further, builders frequently limit th e 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 (significantl y, 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 Technol ogy Sector’s Resident ial Lighting Design Guide, “Now more than ever, it is the responsibility of the bu ilder 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 decision-maker probability distributions for each. U.S. Census da ta 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 remai nder was built for sale. DOE uses those figures to weight the following assumptions: for non-cu stom homes, homebuilder s make 60 percent of lighting decisions, while electri cal contractor and architects (likely subcontracted by the builder/developer/general contract or) make 30 percent and 10 per cent, respectively; for custom builders, homeowners, electrical contractors, and architects/engineers make 50 percent, 20 percent, 20 percent and 10 percen t of the decisions, respectively. These assumptions yield the following decision making distribution: homebuild ers – 58 percent; electrical contractors – 2810B-13 percent; architects/engineers – 10 percent; and homeowners – 4 percent. The above-mentioned fact that 4 percent of homeowners do not follo w the lighting specification suggestions of the other market agents corr oborates 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 cons ideration by choosing light ing fixtures that meet “minimal lighting requirements at a minimal budget” and do not seek energy-saving features except on the rare occasion home buyers request them. 51 Still, as noted in the commercial sector discussion, first

cost is not a considerat ion in this analysis because the pur chaser is forced to buy the higherefficacy lamp by the stan dard and because a ballast must be purchased in addition to the lamp. Further, as with the R&R market segment, fixt ures 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 above-m entioned “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/develope rs will often choose (knowingly or not) to use lower BF ballasts with higher-efficacy lamps.

In sum, DOE assumes builders/developers w ould 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 contract ors (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 replacem ents 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 do-it-your self 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 Frequen tly 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 effici ency while preserving lumen output in full-size fluorescent lighting systems. 56

, 57 DOE considers it unlikely that homeowners will generally have the expertise to look for, find, and inte rpret 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.10B-14 10B.5.4 CONCLUSION

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

likelihood of consum ers choosing a lower BF ba llast with a higher efficacy lamp if lower wattage lamps not feasible altern atives. DOE used these probabil ities as inputs for its Market Segment-Based lighting expertis e 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 Ba llast System in the Commercial Sector

Probability of "Tuning" Lamp-Ballast System Major Renovation 47.5%

New Construction 61.5%

Retrofit 0.0% Ballast Replacement 0.0% Fixture Replacement 0.0%10B-15 REFERENCES

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2 ADM Associates, Inc., TecMRKT Work LLC , "Nonresidential Rem odeling and Renovation Study: Final and Summary Report", California Energy Commission, March 2002.

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5 Ibid. 2

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9 Ibid. 3

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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.co m/us/ecatalog/fluor/pdf/p-5369.pdf

13 For example, see: http://www.gelighting.com/na/busin ess_lighting/education_resources/literature_library/sell_shee10B-16 ts/downloads/fluorescent/ 28337_f32t8_high_lumen_linear.pdf ; http://www.lithonia.com/Products/groups/Fl uorescent/MS5/MoreInfo/GE_T5La mps.pdf

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

15 For example, see the New Building Institute’s Advanced Lighting Guide, page 6-35; California’s Lighting Technology Cent er’s Residential Lighting Guid e, page 4; Craig DiLouie ,

"The Next Generation of Elect ronic Lighting Systems: Smaller, Smarter and Greater Energy Savings", Lighting Controls Association , 2003.

16 “Advanced Lighting Guidelines: 20 03 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/pu blications/detail/16468 ;

20 Ibid. 11

21 John H. Reed, "Decision-Making and Market Se gments in the Commercial Sector Building Sector", TecMRKT Works, November 2002.

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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, Integr ated Product-Process Development By A Light Fixture Manufacturer, 2001

27 Ibid. 3

28 Ibid. 22

29 Ibid. 3

30 Ibid. 610B-17 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.” La wrence Berkeley National Laboratory. 1995. Last accessed July 21, 2008.

40 Opinion Dynamics Corporation, “Residentia l Lighting Fixture Market Assessment: Ceiling Fans and Outdoor Lighting.” Final Report. October 2000. Last accessed May 12, 2008.

41 Quantum Consulting, "Residenti al Discretionary Retrofit and Ti me of Sale Renovation Market Characterization", Pacific Gas and Electric Company, July 1999.

42 Primen: The Response Center, "Californi a 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 2002.10B-18 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

54 Ibid. 42

55 Ibid. 42

56 “GE Consumer and Industrial Lighting: Ask Us : FAQs – Ballasts and Fluorescent Tubes.” General Electric Company. 2008. Last accessed July 21, 2008. 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