LED Insights: Incentify the Homebuilder!

We all know that the homebuilding market has fallen dramatically over the past several years, but certainly not to the point of extinction. This market will come back as the population increases, the economy historically recovers, and new buyers come into the market. The new home market still represents a good opportunity for all types…

We all know that the homebuilding market has fallen dramatically over the past several years, but certainly not to the point of extinction. This market will come back as the population increases, the economy historically recovers, and new buyers come into the market. The new home market still represents a good opportunity for all types of energy efficient products, especially lighting. When someone buys a new home, there is a “standard” package of lighting that is offered by the builder. Sometimes there are builder upgrades available as well, but the homebuyer typically focuses most of their available funds to improve the flooring, cabinetry, and appliances first, leaving little or no money to upgrade the lighting. More expensive energy efficient lighting, such as the LED variety, may not be introduced into a new home for many months or even years, when the homeowner begins to spend money again on remodeling projects.

There is a tremendous opportunity to save energy costs associated with lighting in those new homes. On average, there are 47 medium based sockets in a US residence. Assuming 2-3 hours of use per day, that could amount to at least $ 300 to $ 400 of energy costs for those sockets alone, depending on the kWh rates in the region. In most cases, LED lighting could save the homeowner up to $ 300 annually.

Many regional utility companies make rebates available to homeowners for the purchase energy efficient lighting. These can vary from state to state. However, there are no incentives being offered directly to the builders to install energy efficient lighting in a new home up front. The homebuilder is really the decision maker on what lighting goes into those homes initially, not the homebuyer. Outside of California, where energy efficient lighting is legislated, few builders have pioneered it. There is certainly a significant cost consideration to offer energy efficient lighting in new home construction, a business where managing the cost per square foot is very important, and where the builder does not get the ultimate advantage of energy savings products since they will not own the property. Today, the benefit to the builder is primarily a marketing one as they can offer greener homes and communities which are differentiated from the competition. However, this cost is generally prohibitive to most.

If the utilities would like to achieve a reduction in energy usage from these new homes, then it may be wise for them to incentify the homebuilder instead of the homebuyer in this case. By incentifying the builder to use energy efficient lighting as the standard package in their homes, the utilities would ensure that these energy savings would be generated from the new home construction segment for years to come.