Russell Tharp Interview: Your Guide to the New Changes Affecting the HVAC Industry from The Department of Energy

Starting January 1st, 2023, the HVAC industry will be met with a substantial change from the Department of Energy (DOE). New energy efficiency standards will be implemented that affects the seasonal energy efficiency ratio (SEER) and the heating seasonal performance factor (HSPF) for all residential central air-conditioning and air-source heat pump systems sold in the United States. Property owners and managers, manufacturers, and contractors will be affected and action should be taken soon. Everyone involved in the HVAC industry should understand these regulations, how it affects them, and prepare for their implementation. 

Previous laws

The Energy Policy and Conservation Act (EPCA) was enacted in 1975 which established a federal program for consumer products affecting testing procedures, labeling, and energy targets. Four years later, the Department of Energy was directed to establish energy conservation standards and periodically adjust these standards. 

The National Appliance Energy Conservation Act of 1987 established minimum energy efficiency requirements for air conditioning and heat pump equipment in the U.S. Since then, it has been updated a few times.

Now, at a minimum of every six years, the EPCA requires the Department of Energy to review established energy standards for a product and propose updated standards. 

Last change in SEER

The most recent minimum energy efficiency standards went into effect in 2015 that separated standards between the northern and southern parts of the United States for cooling systems for cooling and heating efficiency. Air conditioners in the north saw an increase from a minimum SEER of 13.0 to 14.0. Air conditioners in the South saw an increase from 14.0 to 15.0 SEER.

New regulations in 2023

In 2023, the minimum SEER for residential systems will be a minimum of 14.0 in the north, and 15.0 in the south. The national heat pump minimum efficiency will increase from 14.0 to 15.0 SEER under today’s test procedure.

The new standards for 2023 are more substantial when compared to previous years. The new appendix M1 is a testing procedure that demonstrates compliance with energy conservation standards. It requires manufacturers to comply with the new energy efficiency metrics for SEER2, EER2, and HSPF2. Each central air conditioner and central air conditioning heat pump manufactured on or after January 1, 2023, shall have a Seasonal Energy Efficiency Ratio2 and Heating Seasonal Performance Factor2

Why

The Department of Energy’s analysis has indicated a significant amount of energy saved as a result of these new regulations. The DOE predicts that 30 years after the implementation of the new standards, households will collectively save $2.5 billion to $12.2 billion on energy bills.  

Not only will these new initiatives for central air conditioners and heat pumps save money and energy, but the environment will benefit as well. DOE estimates cumulative reductions of 188.3 million metric tons of carbon dioxide, 100.8 thousand tons of sulfur dioxide, 350.3 thousand tons of nitrogen oxides, 842.4 thousand tons of methane, 2.1 thousand tons of nitrous oxide, and 0.372 tons of mercury.  

What now? Interview with Russell Tharp, Senior Director of Regulatory Affairs at Goodman Manufacturing

Russell Tharp from Goodman Manufacturing shares insight on the new regulations, what this means for manufacturers, property owners and contractors, as well as upcoming changes regarding refrigerants.

What key things should we know about concerning the upcoming 2023 regulations?

These new regional standards are based upon the date of installation. So, one thing that property owners need to be careful about is that, for example, units are being produced today that are labeled with the energy guide label as being ‘OK’ for installation in the south and southwest, but those become illegal to install effective January 1st, 2023.

For the south and southwest regions, two-stage 18 SEER products and variable speed products are high efficiency and there’s no doubt that a 20 SEER air conditioner is going to meet the 13.4 or 14.3 minimum of the south. With the SEER2 regulations, if a contractor or distributor in the South has 18 SEER or 20 SEER products, they can continue to sell those and install those. However, when you get down to a single-speed product that’s at the minimum, even if it’s rated 15 SEER, it may not meet the 13.4 or 14.3 SEER2 requirements. Therefore, those may become illegal to install.

It’s not the manufacturer that is the violator of the regulations, it’s the installer.

What does this mean for contractors, manufacturers, and property owners?

Contractors should take time to understand the minimum efficiency levels and what regulations are in place by region. Contractors, especially in the south, need to make sure they have good communication with their supplier, distributor, and the manufacturer to know which units they will or will not be able to install after January 1st of 2023 without being a violator.

Manufacturers need to consider these new regulations and make changes accordingly. You don’t want to produce and sell products that are going to be illegal to install down the line, so being proactive and planning ahead is crucial. You can also expect price increases. There are a lot of price increases by almost all manufacturers this calendar year and they’re probably going to continue and get worse when we get to 2023. So, these new products are going to be even more expensive.

From a property owner’s perspective, these changes will impact your capital planning. You can probably look and see what happened during the last energy efficiency changes in 2015. What were your price increases like back then? The increase should be the same or more as what you experienced during the 2015 changes. I would not expect less. One of the best things property owners should do to prepare is that if they anticipate future projects within the next few years, they should perform those installations now.

What changes could emerge regarding refrigerants?

There’s a refrigerant change that is coming, and it’s not final as of now, but we expect that the EPA will issue a rulemaking that requires the current refrigerant, R-410A, to be discontinued in new equipment on January 1st, 2025. So, some people may be afraid to put in new equipment. But the reality is that the refrigerant should be available for at least a decade after the installation. If equipment with R-410A refrigerant is installed in 2022, they should have refrigerant service through the mid-twenties. However, once you get to mid-2030, it may be difficult to find. Keep this in mind – how often will you need to replace and service your systems? When property managers plan out that far out past 2034, due to the Kigali amendment, there are more step-downs and refrigerant regulations in 2029, 2034, and 2036.

As the HVAC industry goes through the process of transitioning to next-generation refrigerants, Daikin, Goodman, and manufacturers of Amana-brand HVAC products are confident that R-32 is the best choice for the future for an R-410A alternative, and have announced that R-32 is the refrigerant of choice for the future. However, other manufacturers have committed to using other refrigerants. This means that contractors are going to have to start planning to carry multiple jugs of refrigerant. 

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