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After the New Year, we talked to Mark Chaffee, the well-known industry veteran who’s spent close to 30 years working at Taco Comfort Solutions. We wanted to hear Chaffee’s perspective on the new DOE energy standards that went into effect on Jan. 1. While largely impacting air-conditioning products, we wanted to make sure we aren’t missing anything in these standards that impacts the overall boiler and hydronics industries.
PHCPPros: What can you tell us about these new standards?
Chaffee: There’s nothing specific affecting the hydronics industry in the Jan. 1 updates, but there is a lot coming soon.
For example, the DOE has been very busy moving the circulator rulemaking forward, recently publishing a notice of proposed rulemaking with efficiency levels that would mean all circulators would be going to ECM. The current proposal has a two-year implementation time after the final rule is published, which should be by the middle of this year.
The DOE is also examining commercial and industrial pumps, considering expanding the scope to include additional pump styles and sizes, with the expectation that this will be finalized this year with most likely a four-year implementation.
In the meantime, the market is actively transforming toward broad use of high efficiency pumps and pumping systems. The best way to take advantage of the energy savings and advanced technology offered by these products today is to look for the HI Efficiency label.
The Hydraulic Institute Energy Rating labels on commercial and industrial pumps and circulators have made it easy for buyers and specifiers to see the benefits of choosing a more efficient product. (See bit.ly/3ZNTpM5 and bit.ly/3ZLUO5Q for reference.)
Pump systems account for about 40% of industrial energy use, but they don’t have to. Transitioning the market to more efficient HI-labeled variable speed commercial pumps could save enough energy to provide a year’s worth of electricity for more than 1.5 million homes. With short payback periods and a huge installed base, energy efficient pump retrofits will also continue to be a strong market segment through and beyond 2023.
PHCPPros: The new Jan. 1, 2023 standards also impact heat pumps. I guess that brings up the much larger matter of the so-called “electrification of everything.” Where does Taco stand on this trend?
Chaffee: We’ve seen this trend developing for a while now, both through governmental legislation and general industry preferences. We believe that there needs to be a place for hydronics in this new electrified world, as water is the most natural and efficient energy transfer medium on the planet. That’s why we developed and have now released the System M air-to-water heat pump.
I’ll note that Taco’s System M just won the coveted 2023 AHR Expo Innovation Award for Sustainable Solutions. We take great pride in this. The technology is an air-to-water heat pump for heating, cooling, and domestic hot water production. It’s a perfect fit for homeowners who want to reduce their carbon footprint.
System M is the result of Taco’s alliance with German partner, Glen Dimplex. Together, our experts developed an innovative, packaged appliance that delivers superior comfort, high efficiency and ease of installation. With just six pipe connections, the heat pump provides up to 44,000 BTUh, 3½ tons of cooling and has a max COP of over 4.
PHCPPros: Are there more regulatory matters in store particularly when it comes to this push to cut carbon emissions?
Chaffee: Well, I can tell you this, and though it’s not a comprehensive answer, it may help trade pros to know some of what’s happening. It appears that New York state is headed toward a mandate that will phase out heating systems that use combustible fuels — and the first to be affected, within just a few years, will be new construction.
The plan depends heavily on broad acceptance of air-source heat pumps. They anticipate the installation of
1 million to 2 million heat pumps in New York homes by 2030. New York is at the forefront of these developments. They’re just now coming out with new legislation.
The federal government — and some state and local governments — are the driving forces behind the electrification movement. Many billions of dollars will be invested in this forceful trend over the next several years — with great impact across all facets of the fossil fuel industry. Areas of growth will be electric technologies, such as Taco’s System M air-to-water heat pump, all facets of solar energy, storage (both thermal and electrical), as well as all other alternative energy sources.
PHCPPros: Speaking of other legislation, how do you think the Inflation Reduction Act will impact the PHCP industry?
Chaffee: We’re apparently at the leading edge of what’s expected to be a tsunami of federal funding: $369 billion for energy efficiency and carbon reduction alone, soon to involve every funding mechanism in the market.
Yet there are plenty of unanswered questions, some of which stem from the fact that many government agencies weren’t prepared to receive the sorts of increases now on the table. The answers are evolving, and are sure to involve direct rebates, tax credits, green infrastructure spending and more.
And, there’s also $70 billion in funding as part of the Infrastructure Investment and Jobs Act specifically directed toward water and wastewater projects. This will have a significant impact to America’s water systems. Many of these projects are funded through local state revolving funds, permitted and in the wings just waiting for the money.
Worth mentioning is that, within this funding is a 10% set-aside for “green infrastructure” — which efficient pumps and pumping systems qualify for. It’s expected that municipalities will soon have the money and incentive to upgrade old pumping system with the latest energy efficient technology.
PHCPPros: Beyond regulatory matters, what do you think the PHC market look will look like for trade pros in 2023?
Chaffee: There’s little doubt that inflation and its impact will continue to affect the industry into 2023. For the most part, installers won’t have any choice, but to pass along increasing prices to their customers.
One way to help offset the challenge of increasing prices may be for contractors to improve their efforts to encourage customers to invest in seasonal maintenance plans. To help them see the advantages of earlier investment in pre-season service appointments. This could help to get installers in the door before the height of the heating or cooling seasons. And, it allows installers to get their orders in for materials and equipment.
Training fits into this, too. There continues to be a lot of new technology on the market. Each new entry creates some impact in the learning curve for trade pros. New technology often comes with an app — many of which interact with a system’s control strategy. These sorts of things point to the advantage of installer training, usually available at factories, online, and through reps and wholesalers. Taco’s training is widely regarded as among the best and most readily available in the industry.
PHCPPros: What may be some of the most substantial market influences this year overall?
Chaffee: It appears to me that the economy will continue to decelerate in 2023. Among the many influences pulling us from our desire to grow is the labor challenge. We’re losing a lot of trade professionals who’ve been in the field for decades. We need to replace them, but it’s not happening at a sufficient rate.
And, supply chain woes: this is probably our biggest constraint as a manufacturer. Though there’s some easing with low-tech commodities such as steel and copper, most of our supply chain challenges remain. They got their start at the beginning of the COVID pandemic, and haven’t eased. Mainly, the areas of challenge are electronic components, especially semiconductors.
On the positive side, we’re seeing positive movement in higher education, healthcare, and multifamily construction. New infrastructure funding also assures strong growth in public water and sewer facility market — both for construction and renovation.
PHCPPros: What do you think are some specific challenges remaining for the PHC industry in 2023?
Chaffee: Quickly coming to mind are the rising costs for energy: electricity, natural gas, LP gas and oil, all of which can force lifestyle changes. These factors are placing greater importance on equipment and components that save energy.
A bright spot is that the solar energy market is maintaining steady growth. Yet, we may need to come to terms with the realization that the days of carefree and inexpensive energy use are gone. We’re seeing the acceleration of a political and regulatory environment that has no toleration of wasteful energy use. The use of fossil fuels is under scrutiny like never before, and being pushed out as forcefully as possible. Net zero policies and carbon reduction are the key movers here.
A substantial part of this are bans being placed on new fossil fueled permits in municipalities from coast-to-coast. This shock wave is part of the leading edge of the beneficial electrification movement. But, as an industry, we need to react to these political and regulatory moves with equipment and systems that can still deliver the required performance.
PHCPPros: Are there new technologies poised for growth in 2023?
Chaffee: Connected homes, and integrating vast amounts of commercial communications technology holds a lot of opportunity for the foreseeable future. A wide variety of devices, even appliances, are getting smarter and more connected every day. Using all this data to make more intelligent decisions, to save fuel, to increase the IAQ of buildings is the next great challenge.
Just look at the commercial office market, where facility managers and building owners are now facing shifting occupancy issues. People are returning to work in facilities built for much larger numbers of employees or only for a few days each week. These new occupancy levels challenge many facets of building operations, including ventilation, cooling and heating — and how systems can be used in ways that use energy smartly. Managers of hydronically-heated or cooled facilities will find the adjustments easiest to manage.
PHCPPros: How can contractors best prepare for what’s coming around the corner this year?
Chaffee: Education and training have important roles to play. Most installers are already stretched to the max, especially considering the impact of labor shortages. So, it only makes sense that — with targeted education and training — installers can shorten the learning curve, and move into the fast pace of this new energy efficiency driven work better prepared.
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