17A-i

APPENDIX 16A. REGULATORY IMPACT ANALYSIS SUPPORTING 

MATERIAL 

TABLE OF CONTENTS 

17A.1 BACKGROUND ON MARKET PENETRATION CURVES DEVELOPED 

BY XENERGY..............................................................................................................2 

17A.2 UTILITY REBATE PROGRAMS FOR NEMA PREMIUM ELECTRIC 

MOTORS.......................................................................................................................3 

LIST OF TABLES 

Table 17A.2.1 Rebate Programs for NEMA Premium Electric Motors....................................5 

LIST OF FIGURES 

Figure 17A.1.1 Comparison of Exponential and Logistic Curves Showing External and 

Internal Influences on Consumers .....................................................................3 

EERE-2007-BT-STD-0007 COMMENT 33
2

APPENDIX 16A. REGULATORY IMPACT ANALYSIS SUPPORTING MATERIAL 

16A.1 BACKGROUND ON MARKET PENETRATION CURVES DEVELOPED BY 

XENERGY 

 Xenergy, Inc. developed a re-parameterized, mixed-source information diffusion model to 

estimate market impacts induced by financial incentives for energy-efficient appliances. The basic 

premise of this mixed-source model is that information diffusion drives technology adoption. 

There is extensive economic literature on the diffusion process of new products as technologies 

evolve. Some of the literature focuses primarily on the development of analytical models of diffusion 

patterns of new products for individual consumers or for technologies from competing firms.1,2,3 One 

study records researchers’ attempts to investigate underlying factors that drive diffusion processes.4

 

Because of the distinct characteristics of diverse new products, few studies have conclusively 

developed a universally-applicable model. Some key findings, however, have seemed to gain wide 

recognition in academia and industry. 

 First, new technologies may not be adopted by all potential users, regardless of their economic 

benefits and technological merits. Therefore, a ceiling on the adoption rate exists for many products. 

Second, not all adopters purchase new products at the same time; some act earlier after the introduction 

of a new product, while others respond slowly, waiting for products to become more mature. Third, 

diffusion processes can be approximately characterized by asymmetric S-curves, depicting three stages 

of diffusion: starting, accelerating, and decreasing as the adoption ceiling is being reached. 

 An important diffusion model, the epidemic model, is widely used in marketing and social 

studies on diffusion. It assumes that a) consumers value the benefits of a new product identically and 

b) the cost of a new product is constant or declines monotonically over time. What induces a 

consumer to purchase the new product is information about the availability and the benefits of the 

product. In other words, it is information diffusion that drives new product adoption by individual 

consumers.3 The model incorporates information diffusion from both internal sources (news spread by 

word of mouth from early adopters) and external sources (the “announcement effect” by government, 

other institutions, or commercial advertising) by superimposing a logistic function with an exponential 

function.1,4

 

 The relative degree of influence by internal or external sources determines the general shape of 

the diffusion curve of a specific product.1,4

 For instance, if the adoption of one particular product is 

more influenced by external sources of information diffusion (announcement effect) than by internal 

sources (word of mouth among earlier adopters to prospective adopters), the rate of diffusion at the 

beginning stage of the diffusion process is much higher. This reflects the immediate information 

exposure to a significant number of prospective adopters brought about by external sources, in contrast 

to the more gradual exposure to internal sources such as news propagation by earlier adopters, a small 

proportion of the population, to other prospective adopters. Graphically speaking, a relatively 

EERE-2007-BT-STD-0007 COMMENT 33
dominant external source of information diffusion gives an immediate jump-start to the adoption of a 

new product in the first years, forming a concave curve with respect to the Y axis (see the exponential 

curve in Figure A.1). Adoption of a new product with a stronger influence by internal sources of 

information diffusion (such as a socially-tightened network formed by prospective adopters) may start 

with a few early adopters and gradually increase as the number of adopters grows, and thus form a 

convex curve (see the logistic curve in Figure 17A.1.1). 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 5 10 15 20 25 30

Year

Market Penetration

Logistic Function Modified Exponential Function

External Influence 

Internal Influence

Figure 16A.1.1 Comparison of Exponential and Logistic Curves Showing External and 

Internal Influences on Consumers 

16A.2 UTILITY REBATE PROGRAMS FOR NEMA PREMIUM ELECTRIC MOTORS 

 Table 17A.2.1 presents a summary of rebate program amounts offered throughout the U.S. for 

NEMA Premium three-digit frame series electric motors. Since there have not been rebate programs 

for small electric motors, DOE studied rebate programs for larger motors as an analogous product.

3

EERE-2007-BT-STD-0007 COMMENT 33
4

 DOE found 48 agencies with programs for 1 HP NEMA Premium electric motors. 

Rebates for this product have been offered by electric utilities and municipal and regional 

agencies. Table 17A.2.1 shows the agency names, States, rebate amounts, and program 

websites. Multiple entries in the table indicate that an agency offers two rebate amounts, one for 

new motor purchases and one for replacements. The average rebate amount is a simple average 

of the wide range of all of the agencies. 

EERE-2007-BT-STD-0007 COMMENT 33
5

Table 16A.2.1 Rebate Programs for NEMA Premium Electric Motors Utility or Agency State 

New 1 HP 

Motor 

Amount 

Replacement 1 

HP Amount (if 

different) 

Website 

Tuscon Electric Power AZ $10 http://www.tepcommercialenergysolutions.com/ProjectCenter/ SRP AZ $30 http://www.srpnet.com/energy/powerwise/business/standardrebate.Riverside Public Utilities CA $35 http://www.riversideca.gov/utilities/busi-efficientmotors.asp Southern California Edison CA $35 http://www.sce.com/ExpressEfficiency/premium-efficiency-motorsSilicon Valley Power CA $35 http://www.siliconvalleypower.com/bus/?sub=rebatemotor Connecticut Municipal MotorUp (multiple utilities) CT $45 http://www.grotonutilities.com/elec_conserv_comm_motor.asp (foProgress Energy FL $5 http://progress-energy.com/custservice/flabusiness/efficiency/efficiTampa Electric FL $2.50 http://www.tampaelectric.com/business/saveenergy/energyefficientHawaii Electric HI $15 http://www.heco.com/vcmcontent/StaticFiles/pdf/RebateSummaryAvista ID, WA $10 https://www.avistautilities.com/business/rebates/washington_idahoRocky Mountain Power ID $45 http://www.rockymountainpower.net/Navigation/Navigation82820Ameren Illinois IL $7 http://www.actonenergy.net/business-programs-motor-system-inceComEd IL $7 http://www.comed.com/businesssavings/programsincentives/prescrMidAmerican Energy IL $15 to $25 http://www.midamericanenergy.com/html/energy6g_1.asp Alliant IA $25 to $30 

http://alliantenergy.com/UtilityServices/ForYourBusiness/Products

ncentives/IowaBusinessIncentivePrograms/015192 

Duke Energy IN $10 http://www.duke-energy.com/indiana-business/energy-managemenDuke Energy KY $10 http://www.duke-energy.com/kentucky-business/energy-managemLinn County REC IA $20 http://www.linncountyrec.com/cgi-script/csarticles/articles/000004Kansas City Power & Light KS, MO $50 http://kcpl.programprocessing.com/content/prescriptiverebates Efficiency Maine ME $45 http://www.efficiencymaine.com/business_programs_energywise.hBaltimore Gas & Electric MD $45 http://conservation.bgesmartenergy.com/business/energy-solutionsMassachusetts MotorUp (multiple utilities) MA $45 http://www.nstar.com/business/energy_efficiency/electric_programUnitil MA $75 http://services.unitil.com/fge/bus_energy_efficiency_programs.aspSouthern Minnesota Municipal Power Agency (multiple utilities) MN $25 $100 http://www.smmpa.org/ City of North St. Paul MN $5 $16.50 

http://www.ci.north-saint-paul.mn.us/index.asp?Type=B_BASIC&49AF-ACD8-59C3FB4192FF} 

Connexus Energy MN $7.50 $20 http://www.connexusenergy.com/busrebates.htm Dakota Electric MN $10 $20 

https://www.dakotaelectric.com/business/programs/rebates_grants__drive_and_motor_rebates 

City of Hutchinson MN $15 http://www.hutchinsonutilities.com/rebatecomm.html Minnesota Power MN $5 http://www.mnpower.com/powerofone/one_business/powergrant/r

EERE-2007-BT-STD-0007 COMMENT 33
6

Utility or Agency State 

New 1 HP 

Motor 

Amount 

Replacement 1 

HP Amount (if 

different) 

Website 

Minnesota Valley Electric Cooperative MN $7.50 $20 http://www.mvec.net/business/grants_rebates.asp Stearns Electric Association MN $7.50 $20 http://www.stearnselectric.org/grantsbus.htm Shakopee Public Utilities MN $20 $100 http://www.shakopeeutilities.com/commrebates.htm Otter Tail Power Company MN $20 http://www.otpco.com/SaveEnergyMoney/commercialMotorsEEP_Public Service of New Hampshire NH $45 $75 http://www.psnh.com/Business/Efficiency/default.asp Nebraska Public Power District NE $20 http://www.nppd.com/energy_efficiency/energywise/business.asp NorthWestern Energy MT $13 http://www.northwesternenergy.com/display.aspx?Page=Motor_ReEmpire District Electric MO $50 http://empire.programprocessing.com/content/Home Progress Energy NC $10 http://www.progress-energy.com/custservice/carbusiness/efficiencyNYSERDA NY $45 http://www.nyserda.org/Programs/Existing_Facilities/default.html Long Island Power Authority NY $45 http://www.lipower.org/efficiency/commercial.pre.html Energy Trust of Oregon OR $10 http://www.energytrust.org/pe/manufacturing.html Eugene Water & Electric Board OR $20 http://www.eweb.org/content.aspx/2e86bdb8-4143-499a-82b0-80cAustin Energy TX $15 

http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebal%20Energy/motors.htm 

Tacoma Public Utilities WA $15 

http://www.mytpu.org/customer-service/your-business/rebates-promrebates.htm 

Puget Sound Energy WA $8 http://www.pse.com/solutions/forbusiness/pages/comRebates.aspxPacific Power WA $45 http://www.pacificpower.net/Navigation/Navigation71829.html Focus On Energy WI $5 http://www.focusonenergy.com/Incentives/Business/Motor.aspx Carbon Power & Light WY $13 http://www.carbonpower.com/rebates.htm Number of Agencies 48 Average Rebate Amount $26 Websites last accessed June, 2009

EERE-2007-BT-STD-0007 COMMENT 33
7

 

REFERENCES 

1

 Geroski, P.A., Models of Technology Diffusion. 2000. Research Policy. 29, 603-625. 

2

 Hall, B. H. and B. Khan. “Adoption of New Technology.” 2003. Working Paper No.E03-

330. Department of Economics, University of California, Berkeley, CA. 

3

 Lekvall, P. and C. Wahlbin. “A Study of Some Assumptions Underlying Innovation 

Diffusion Functions.” 1973. Swedish Journal of Economics. 

4

 Van den Bulte, C. “Want to Know How Diffusion Speed Varies Across Countries and 

Products? Try a Bass Model.” PDMA Vision, October 2002. Product Development and 

Management Association. XXVI No 4. 

EERE-2007-BT-STD-0007 COMMENT 33