Energy Rebates on Appliances, Especially Hot Water Heaters

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Utilizing $300 million in stimulus-funded rebates on energy-efficient appliances, consumers have bought more than half a million washers, dryers, refrigerators and other appliances. Yet despite rebates of up to $425 offered, less than 3% of those consumers bought water heaters, often considered the second-largest energy hog in the home.

That's one reason the rebate program isn't meeting the US Department of Energy's projected energy savings. Only 88% of the rebates have been spent, generating $27.5 million in annual fuel and water savings – substantially less than the projected $84 million.

The government originally projected that 19% of energy savings would come from water heater replacements, but by June 30, that number was only 5%. The national program ends in February 2012, although it has already closed in 24 states. Experts offer a number of explanations for the low numbers so far:

Weather. In most states, the rebate program launched in March or April, giving a boost to sales of cooling appliances like refrigerators and air conditioners. The Department of Energy notes that climate is a driving factor in appliance purchases.

Visibility. Most people don't think about their water heaters – until they break down. Unless there's a puddle on the floor, a new water heater isn't a consideration for most consumers. Homeowner awareness of the warning signs of a failing water heater could help to drive the purchase of more energy-efficient appliances, before disasters strike.

Distribution. Most people directly purchase their refrigerators, washers, dryers, and dishwashers from retail stores. However, replacement water heaters are often chosen by plumbers. As individual states study the best ways to make use of remaining funds, many are communicating more actively with plumbing contractors.

State rules. The federal government allowed each state to craft its own rules for the program, based on local needs. Of all states and territories, only 29 offered specific rebates on water heaters.

The $814 billion stimulus program was designed with multiple goals, of which energy savings were just one. If you plan to purchase a new appliance – especially a water heater – prior to the program's 2012 expiration, research the costs and benefits of various energy-efficient machines. If your state is still participating, there are big savings to be reaped if you avail yourself of the Department of Energy's rebate program.

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