As recently as 1978, only 24% of U.S. households had central air conditioning according to the Air-conditioning, Heating, and Refrigeration Institute (AHRI). By 2005, 62% of households benefitted from central air. That's remarkable progress! So why are people in Washington and 50 state capitals determined to wreck it?
Surprisingly, the very merits of an air conditioned society are being called into question by some quarters. Many believe we suffer overpopulation, live in an unsustainable manner, and preach austerity. In their upside down world, they believe in the reverse of the American dream. Rather than seeking greater prosperity for yourself and your children, they believe you should seek greater deprivations, including a reduction in the use of air conditioning.
Air conditioning is the perfect bogeyman for Gaia worshipers. It consumes lots of energy — and it's peak energy to boot. It makes pristine regions (i.e., deserts and swamps) habitable. It symbolizes man's ability to craft personal habitats immune to the vagaries of nature. Since they see nature as good and man as bad, air conditioning must be pure evil.
Yet, by almost any measure, air conditioning characterizes a prosperous, healthy, and vigorous society. Well-designed and maintained air conditioning systems boost office and factory productivity, save lives during periods of excessive heat, improve health, impede the formation and spread of molds and allergens, and allow people to live comfortably in otherwise inhospitable regions.
Living in Texas, I say, “Hurray for air conditioning!”
Here's the Big “But …”
However, each regulation that affects the design, installation, retrofit, refrigerant, and efficiency of an air conditioning system raises the first cost. At some point the first cost becomes insurmountable.
A few years ago I participated in Wall Street meetings preceding the 13-SEER minimum efficiency mandate. Everyone was giddy with the thought that air conditioners would automatically ratchet up 30% in price and profit. I took the lonely stance that the final cost to the homeowner would increase 30% to 50% due to increased installation costs.
I also noted the flat spot in shipments 15 years earlier, resulting from the 10 SEER mandate and predicted it would repeat. All else being equal, the upward climb in shipments would kick in this year.
The recession may push it to next year.
In 2008, a survey of Service Roundtable members revealed that the installed costs of a 13-SEER system increased a stunning 46.8% over its lower-efficiency equipment counterparts. We calculated the payback using a generous number of cooling load hours for each respondent's location and state-wide average residential electric rates. On average, the increased cost for 13 SEER versus 10 SEER results in a 16.6 year payback.
Great return for a product with a 15-year lifespan.
The switch to R-410A is further increasing the base system cost. And further increases in mandated efficiency levels are coming like a freight train with passage of the regional energy standards.
When the installed price of an air conditioning replacement starts to compete with the cost to build an in-ground swimming pool, consumers are going to push back. They're going to do everything possible to keep old systems operating, no matter how poor the efficiency.
In the end, affluent consumers will replace their systems when breakdowns become endemic. The poorest Americans will lack the means to replace their systems. They'll switch to lower cost window units as central air conditioning saturation declines for the first time ever.
Raising air conditioning efficiency is like raising the minimum wage. Why not keep raising the level until every air conditioner is 21 SEER and the minimum wage is $50 an hour?
The point is this: raising efficiency levels further will only harm the industry and the public. It will make America a poorer nation. It's time manufacturers, distributors, and contractors unit to rally our trade groups to fight back. It's time to say no.
Matt Michel is the CEO of the Service Roundtable, one of the largest HVAC contractor business alliances (www.ServiceRoundtable.com). For a copy of his white paper, “Unaffordable Air Conditioning,” email him at firstname.lastname@example.org. Read his daily blog at ComancheMarketing.com and follow him on Twitter @ComancheMktg. You can reach him toll free at 877/262-3341 or on his mobile at 214/995-8889.
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