Cool ROI, Hot Sales

ROI

Take Tangora Technologies, an integrator based in upstate Delmar, N.Y. In 2004 the company created a division focused on HVAC sales and furnace tune-ups. In an area hard hit by soaring energy prices and subzero winter temperatures, the division has seen brisk sales by presenting its HVAC products and services as a way to help customers save money.

"When you starting looking at what a therm of gas or a kilowatt of power cost, there are major things to consider," says Mike Tangora, president of the company, which installs automated thermostats from Home Automation Inc. (HAI). "In conjunction with lighting systems, security and other utility type of management devices, it starts to make sense."

Integrators are also showing current customers how to save money on their HVAC systems. Chicago-based integrator Automated Lifestyles was recently asked by two customers to create automated schedules for previously installed HVAC equipment from Aprilaire, says Rob Kowalski, company president. Prior to making the calls, the customers had only used their thermostats for basic temperature control. But with the dropping temperatures and rising heating costs, the savings associated with automated schedules became a priority.

For many customers, the decision to buy an HVAC system is based on comfort and convenience first, and monetary considerations second. However, presenting the cost savings of an HVAC system can still validate the purchase, or provide the clincher for undecided clients.

"People already making the decision feel better about it," says Gerry Lynch, president of Newburyport, Mass.-based integrator System7, which also uses Aprilaire HVAC products. "It's still a lifestyle decision to get an automated home, as it costs a lot of money to automate your climate system. But everyone brings it up."

As the reality of customer heating bills set in, integrators say they expect to see even more interest. The Department of Energy expects natural gas expenditures to rise 48 percent this winter from last, and in the Midwest, where most homes are heated by natural gas, costs are expected to rise a staggering 71 percent. Nationwide, the Department of Energy expects the price of heating oil to rise 32 percent, and the price of electricity to rise 5 percent. With heating and cooling systems consuming 40 percent to 60 percent of the average home's energy bill, and lighting consuming another 10 percent to 20 percent, saving money here can be significant.

It's difficult to find precise ROI numbers for automated systems because numerous variables influence their efficiency. Many integrators say vendors have not provided the support they need to persuade customers and they need more data from vendors on the general cost savings, as well as specific marketing materials that address ROI.

"No one is pushing it. HAI, Crestron, Lutron, etc. should all be doing something about this," says John Goldenne, president of Palatine, Ill.-based Digital Home, which offers HVAC products from HAI and others. "If I was a vendor selling the devices, I would do a winter push on advertising."

New Orleans-based HAI is conducting government-sponsored research into the ROI of next-generation thermostats and how humidity and other factors affect HVAC systems, but precise numbers will not be available until late 2006, says Jay McLellan, company president. Other HVAC manufacturers say they recognize the benefit of mentioning the ROI but have no specific data.

Instead, integrators have found success by providing estimates. Studies by Honeywell and others have shown that basic programmable thermostats can save between 5 percent and 20 percent of a home's energy costs. An automated thermostat tied into a home's automation system can save up to 20 percent more, integrators estimate.

Highlighting some of the ways automated HVAC and lighting systems save money also helps sell them. By connecting a home's HVAC and lighting system to its security and control network, for example, the temperature can be automatically lowered and the lights turned off in the whole house or particular rooms when no one is present. A home's HVAC system can be connected with outside sensors to accurately judge how much energy will be needed. The remote management capabilities of most HVAC systems also improve the energy efficiency of primary or vacation homes.

Lights can automatically adjust to daylight savings times and sunrises and sunsets, which can drive down costs. Using fluorescent bulbs can save 75 percent of the electricity of incandescents, and using incandescent light bulbs at only 90 percent can save 10 percent of electrical cost and double the life of the bulb.

"People don't recognize how much they're letting these lights burn. They can easily recognize 30 percent savings on their lighting bill," says Mark Morgan, vice president of marketing and co-founder of Salt Like City-based Control4.

Integrators say the ROI pitch of networked HVAC systems works even better when selling to businesses. Tangora began offering HVAC systems to businesses last year and is building up the practice. "These people have not considered an energy management system before, but with skyrocketing fuel prices, they're interested," Tangora says. He estimates that businesses can save 14 percent to 20 percent on their HVAC bills with an automated HVAC system, which can pay for itself in one or two years.

For Tangora, presenting numbers to both business and homeowners means happy clients and a steady flow of business. "These automated systems are not only creating comfort zones for our customers, but also creating and keeping real dollars in their pockets."