Is There a Market Beyond Energy Star?

Triple-glazing and R-5 products aren’t for everyone, but some manufacturers see opportunities with these products
John G. Swanson
May 9, 2012
FEATURE ARTICLE | Products, Energy Efficiency, Segments

New Energy Star criteria are likely to improve window energy efficiency numbers across the board, but numerous manufacturers offer triple-pane and R-5 type windows exceeding those expected levels already. Most see a growing market for such products too, with much of the demand is driven by dealers.

 
 Manufacturers like Ply Gem report that more dealers are opting for higher-performing products to differentiate themselves in the market.

A market exists for "beyond Energy Star" type performance levels, says Chris Pickering, vice president, marketing, Ply Gem Windows. “Just as there are people willing to pay for insulation systems that exceed codes or ultra efficiency appliances, a certain segment of the market does want the best available.”

“We have a very well developed part of our business that is driven by performance,” reports Gary Delman, president of Sunrise Windows. “Over 15 percent of our sales come from triple-glazed replacement windows that meet or exceed R-5 type performance. Many of our replacement window dealers focus their selling efforts on the highest performance levels.”

“We see a couple of major market opportunities,” reports Matthew DeSoto, president of MI Windows & Doors' Western Division. “One opportunity is the replacement window consumer that simply wants the best.” He also points to a growing market in publicly-funded buildings being specified with lower U-value products. “These buildings are constructed for generations of occupants and users,” he notes. “It makes sense to construct these buildings with the most energy efficient products available at the time.”

Alan Levin of Northeast Building Products also points to projects supported by government funds as a major market for his company’s R-5 level products. Money from the federal stimulus package played a key role in a lot of these jobs, he notes, adding that the outlook for this market probably depends on November’s election results.

If President Obama wins, he suspects there will be more of this type of spending. If Mitt Romney wins, it may not disappear, but it much less likely to grow, Levin predicts.

DEALER DRIVEN
The Department of Energy’s High Performance (R-5) Window Volume Purchase Program launched in 2010 focused greater attention on such products, but these manufacturers agree that much of the demand is dealer driven. “We continue to see year over year growth of our highest performing windows, driven by the in-home selling efforts of our dealers,” says Delman. “They use high performance—beyond Energy Star levels—as a differentiator in the home.”

“We are seeing more interest in the early days of 2012 of mid-range dealers adding higher-performing glass packages to their sales mix to create improved value for their clients and to create differentiation in their market,” Pickering states. These dealers are not looking for the absolute top-performing high performance product, he notes, but rather a good value-add to the mid-range.

“Consumers purchase high-performance products for a number of reasons, some of which are directly attributed to the dealer selling the product,” says Pickering. “If trust is formed between the client and the dealer, and that dealer promotes and sells high-performance product, that might sometimes be enough. In other cases, the consumer wants something better than average in their home and seeks out such products.”

"We consumers base our decisions on a number of factors when selecting home improvement products,” says MI’s DeSoto. “Homeowners that favor premium products tend to value high-performance windows because it is consistent with their home improvement philosophy of upgrading to the best.”

The demand for “the best,” Delman notes, is evident not only in the energy performance levels offered. The homeowners buying these products want “the best” across the board. “They want the windows that are better looking. They want the better hardware,” he says.

 
Homeowners opting for higher performance levels tend to want 'the best' overall, and look for enhanced aesthetics and more options, Sunrise reports. 

Sunrise, he continues, has traditionally targeted the premium segment of the replacement window market. More dealers in that segment—the ones who sell the options, the ones who want offer something better looking—are moving to a higher energy performance levels too.

For Northern climates, that may be an R-5 or triple-glazed product, Delman points out. But the same is true in other parts of the country, where solar heat gain may be a more important consideration. “The prepronderance of products we’re selling in the South perform well beyond Energy Star products,” he says. “That’s what our dealers there want too.”

GOVERNMENT INFLUENCE
Opinions among these manufacturers regarding the government efforts to promote ultra-high-performance are mixed. Some point to successes with the R-5 program, while others point to its limitations. There’s also mixed sentiment on what the government could or should do.

“DOE has been successful in raising awareness and creating an efficiency target—R-5—that dealers and manufacturers could promote,” says DeSoto. "The program pushed the manufacturers to offer configurations that maximized the energy efficiency of their existing windows and to launch new products focused on maximum energy efficiency.”

MI Windows & Doors has received several leads through the program for multi-family projects, he also reports, but it has also worked to sell its higher-performing products outside the program.

“While we have seen the growth of this segment, we have not seen a positive impact from the DOE’s High Volume Purchase Program on our business,” Ply Gem’s Pickering reports. “We’ve found the program challenging from the standpoint of awareness of the program with consumers and the challenge of connecting our dealers back to the opportunities from this program in an effective way.”

Sunrise’s Delman agrees. He also points to the program’s limited focus on products for Northern climates. He does see potential benefits in the government getting more aggressive with its Energy Star standards. With most windows on the market now Energy Star qualified, the value of the label is “a bit watered down.”

“We do not anticipate DOE increasing their push for R-5 window program,” DeSoto states. “We do hope EPA and Energy Star will create a ‘Most Efficient' classification for windows similar to what they have done for appliances and electronic goods. This program is helpful to consumers or decisions makers seeking an unbiased and objective list of the most energy efficient products.”

Northeast Building Products’ Levin is a bit more cautious about performance criteria. He worries that more stringent energy numbers could make products unaffordable. He also sees, however, the potential for government funding of retrofit projects to have a major impact on demand, depending on election results.

Even if the government doesn’t act more aggressively, Levin does predict the market for products offering “better than Energy Star” will grow. 

“The highest performance products in virtually any category tend to be niche products, so the top-of-the-line performance glass packages will likely remain a niche,” Pickering concludes. “However, as low-E has done over the past 10 years, growing from little share to dominance, we will see the current level of premium performance also become more mainstream.”