PGE Water Heater ET Final Report - FINAL.pdf - Emerging ...

PG&E’s Emerging Technologies Program ET12PGE3191
point of purchase. A water heater test program can assess the effectiveness of different
marketing strategies for targeted markets. For rebates to have an impact under these
circumstances, incentives should be immediately available. Instant rebates or point of sale
(POS) rebates are offered by some, but not all, channel participants primarily due to the
cost of adapting point of sale data management systems. Another objective of a test
program is to assess the impact of POS rebates on participation and calculate the retailer’s
benefits and costs to set up a POS system.
Shifting emergency decision-maker segment to planned purchaser segment.
Two program designs recognized by the CPUC have potential application to a marketfocused
water heater program: accelerated rebates and appliance recycling. Accelerated
rebates create a sense of urgency and permit higher rebate values, both of which may
motivate consumers to do advanced planning for a water heater purchase. Water heater
recycling is a program option for early retirement of inefficient water heaters. With targeted
marketing campaigns a recycling program could also shift a consumer decision to replace a
water heater to a time well before failure. Consumer research during a test of these design
options could reveal the impact of accelerated rebates or recycling incentives on changes in
purchasing behavior.
Tracking performance for continuous improvement
Retailer participation in PG&E’s Business and Consumer Electronics program is contingent
upon the retailer submitting total category sales from which qualified products are identified
and market penetration is calculated. PG&E uses this information for incentive payments,
performance management, and program evaluation. Retailers better understand the
business implications of program participation with these data as well as shelf survey data
that PG&E’s field services team collects. Total water heater sales reporting and store
stocking surveys during the test program will allow program refinements and performance
feedback to channel partners.
WATER HEATER MARKET EVALUATION
The water heater market is characterized by water heater technologies and products, sales
trends, industry structure, and customer segments. The market evaluation includes an
overview of the national market and a closer look at characteristics of the water heater
market in PG&E’s service territory.
RESIDENTIAL WATER HEATER PRODUCTS
Nationally, over 100 million residential water heaters are installed. More than half of these
U.S. households have natural gas as the primary water heating fuel. In PG&E’s service
territory, there are an estimated 5.3 million water heaters and, because of the accessibility
and affordability of natural gas, more than 90 percent of water heaters are gas-fired. On
average, PG&E has almost a 5 percent share of the total U.S. water heater market and close
to 10 percent of the natural gas storage water heater market.
The demand for residential water heaters has declined 20 percent over the last five years,
reflecting the poor state of the economy. The difficult economic conditions have also caused
consumers to defer water heater replacement until they need to make an emergency
decision and to select lower priced, less efficient options. Economic conditions and the
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