Murphy's Law: Tax Credits and Efficiency

A recent opinion on this page (“Tax Credits Tough to Use,” May 25, 2009) received a lot of attention from our vast readership. The variety of rebuttals ranged from “It is a sure bet that all HVAC contractors have wasted countless hours trying to fit square pegs in round holes. The tax credit program is nuts …” to “Are you crazy? The tax credits are great for business. If you want a dose of reality, call me.”

Since that point in time, The NEWS has spoken to quite a few people and unraveled a bit more of this very large ball of twine.

SELL THE SYSTEM

There was a recent article in the Cleveland Plain Dealer, and also seen across the nation, by syndicated columnist James Dulley that led people to believe that there are systems that would allow them to simply replace the a/c and qualify for a tax credit. However, a vast majority of consumers (and contractors) are discovering that they are faced with replacing the a/c and the furnace - not just the a/c as might be construed from the tax credit language.

Some distributors are telling customers that no manufacturer can achieve the required 16 SEER and 13 EER requirements without a variable-speed furnace. This is probably not entirely true, but it is not simply the competitive rhetoric of one salesperson trying to best another.

Replacing both a/c and furnace may not be the only option for qualifying for the tax credits, (all manufacturers have not weighed in on this challenge), but it may be true a vast amount of the time according to the president of one of the super-heavyweights in HVAC manufacturing who said, “More than 98 percent of all applications require a variable-speed furnace to achieve such a rating.”

Selling complete matched systems has always been more desirable than just selling a quick change-out of an outdoor unit, and better for the consumer’s energy bills, so a tax credit that drives system selling is not a bad thing. It’s just a shame that more consumers won’t be able to take advantage of the situation, because let’s face it - some people won’t fork over the dough for a variable-speed furnace right now, especially folks who live in areas where cooling is king and heating is hardly ever.

DUH?

OK, you are not surprised, shocked, or otherwise enlightened - you had already figured this one out on your own. You haven’t found very many coil-only matches except for the most monstrous indoor coil on earth coupled with a very high efficient tiny, tiny condensing unit. Theoretically, the physics around coil-only/condenser matches does suggest all things are possible; however, it is actually very difficult and very expensive to get such matches with any kind of practical application in the field.

DOWN THE ROAD

The push for higher efficiency is certainly nothing new to any of you; energy conservation is a strong driver for the design of refrigerators, cars, toasters, and of course - HVACR systems. If the current tax credits do anything at all to stimulate the economy, and stimulate the HVACR industry specifically, then Amen and pass the biscuits. Many contractors called in to praise the tax credit program and have found it easy to up-sell customers who might otherwise have only purchased a lower efficiency solution. Smart contractors will continue to provide great energy solutions for their customers, with or without tax credits, incentives or rebates.

Now let us take a look a bit further down the road; what does this all mean? The president of the super-heavyweight said, “There is clearly an opportunity in the future to develop a new line based on very high efficiency systems.”

Though this may sound like a bit of an understatement, there is a tremendous amount of wisdom between the lines. For years it has been discussed, argued, and bandied about that the technology for heat transfer has peaked; reached its limit; and that we are destined to wait for the next major technological advancement. The concept is similar for computer storage technology. There actually is a limit to the amount of data that can be stored on a chip - until the next generation of chip is discovered.

This industry is being pushed to accelerate the adoption of natural refrigerants, and to develop higher efficiency cooling and heating systems, and to do both at prices that are affordable for the common customer.

Wouldn’t it be fun to take a stroll through the skunk-works of the major manufacturers, just to see what they are toying around with behind those emerald green curtains? I have a hunch that this industry is not sitting still, any more than is Microsoft or Apple.

MURPHY’S LAW: You don’t know what you don’t know.

Publication date: 06/22/2009