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5 Things to Know About How SEER Regulation Changes Will Impact Residential HVAC Systems

Though changes aren’t scheduled to take effect until January 1, 2023, your residential policyholders will likely be hearing from their contractors much sooner about what replacements they think insureds will need to comply with the upcoming HVAC system energy efficiency standards.

Adjusters should be prepared to field questions and claims related to the changes.

1. Efficiency Ratings Are Aimed to Benefit Consumers

The U.S. Department of Energy (DOE) applies a variety of energy conservation standards for appliances and other equipment to save consumers money on utility costs and implement the use of more environmentally friendly products. The Seasonal Energy Efficiency Ratio (SEER), Energy Efficiency Ratio (EER), and the Heating Seasonal Performance Factor (HSPF) were established to score HVAC systems’ efficiency. The DOE set minimum standards that manufacturers and policyholders must follow.

• SEER: the ratio of the total heat removed from a conditioned space during the annual cooling season divided by the total energy an HVAC system consumed during that time. The higher the SEER rating, the less electrical energy is used to cool a property.
• EER: the ratio of the cooling capacity divided by the watts per hour of electrical consumption when tested in 95 degrees Fahrenheit. It measures efficiency in areas that have hotter or dryer climates, like those in the Southwestern part of the United States, where HVAC systems work harder to cool.
• HSPF: This measurement tracks how much energy is used to heat a space. The higher the HSPF, the less electrical energy is used.

 

2. This Isn’t the First Time SEER Regulations Have Changed

HVAC systems have had energy conservation standards since 1992, with multiple updates since then. The most recent revision went into effect January 1, 2015, which set minimum standards and divided the country into regions based on climate for the first time.

The 2015 regulations developed regions with minimum SEER requirements.

North, Southeast, and Southwest Regions: Dividing the country as North and South was based on the number of population-weighted degree days. Those with 5,000 heating degree days or more are considered the North region. The Southern region was further divided based on the conditions of hot-dry (Southwest) versus hot-humid (Southeast). The Southwest region has the fewest states with California, Nevada, Arizona, and New Mexico.

In addition to identifying the regions, the 2015 regulation update gave minimum SEER requirements for split system HVAC systems, such as 13 SEER for the Northern states and 14 for those in the Southern regions, but it was known that regular efficiency updates would be necessary.

3. Multiple Efficiency Changes Take Effect in 2023

Like the 2015 revisions, the 2023 standards are meant to improve equipment efficiency. Many minimum requirements for SEER standards are slated to increase by at least 1 SEER.

Split system condensing units that are less than 45,000 Btu/hr (3.75 Tons) are expected to require a minimum 14 SEER in the North and 15 SEER for the Southeast and Southwest. Equipment equal to or greater than 45,000 Btu/hr (3.75 Tons) are supposed to be at least 14 SEER in the North and 14.5 SEER in both southern regions. Many times, a 14.5 unit would not be available based on many factors, including brand. At that point, the policyholder would have to round up to a 15 SEER unit.

HVAC systems used in the Southwest region must also meet required EER minimums. The minimums also depend on the size of the system.

Split system heat pumps efficiency minimums also are expected to increase from 14 SEER to 15 SEER in all regions. They must also comply with additional HSPF efficiency rules.

In addition to the new minimums, the DOE is updating its testing procedures. These increase the total external static pressure testing conditions for SEER2 to make the testing conditions more like that of a traditional ducted system in a real-world application. The required SEER2 and EER2 rating standards are lower when using this different testing method. For example, split system HVAC systems are projected to require a 13.4 SEER2 minimum rating in the North instead of 14 SEER.

4. It Could Impact Your Policyholders Who Need Replacement Equipment

All equipment manufactured or imported to the United States on January 1, 2023, or later must follow the new minimum standards. These additional efficiency requirements may cost policyholders more when purchasing new equipment – which could lead to increased settlements.

However, it is important to note that equipment, regardless of compliancy, can still be repaired.

Equipment can still be repaired, even if it isn’t compliant with the new standards.

5. You Don’t Have to Keep Up with Compatibility Alone

Staying up to date with all the different HVAC system types, and which regulations apply to them, can be complicated and time-consuming. HVACi’s experts help insurance professionals figure out the best solution to resolve HVAC-related claims that are in line with regulations and equipment best practices.

Through onsite assessments, we’ll confirm cause of loss and scope of damage to determine if replacements are necessary. Our comprehensive reports also provide a breakdown of repair and replacement recommendations, costs pertaining to each, and a settlement recommendation that considers market labor and equipment pricing. Submit a claim to ensure accuracy and prompt resolutions.

The Future of HVAC Refrigerant – And Why It Isn’t All Clear

It’s been nearly two years since the end of production of the refrigerant R-22. And while R-410A has gained popularity for use in HVAC systems in the United States, it likely won’t become the most prevalent refrigerant as leaders globally look for alternatives with fewer negative environmental impacts.

It may seem difficult to keep track of refrigerant rules when handling HVAC claims, but adjusters should understand what the changes are and why they are taking place, particularly because contractors may be giving policyholders misleading information that could affect settlements.

The Phase Out of R-22

Refrigerant is the chemical compound used in HVAC systems that is continually changing state while the system is engaged and the refrigerant is moving. Refrigerant absorbs heat in the evaporator coil when it is in a low pressure liquid state and releases that heat in the condenser coil during its high pressure gas phase.

Hydrochlorofluorocarbons (HCFCs), including R-22, have been used as refrigerants in HVAC systems for decades. However, the U.S. Clean Air Act and the Montreal Protocol on Substances That Deplete the Ozone Layer have initiated steps to reduce the negative impacts to the ozone layer since the 1980s. The HCFC phase out occurred in incremental decreases until the complete ban on production and importation of virgin R-22 went into effect January 1, 2020. (Find out more with this HVAC Regulations Overview Webinar)

Production of R-22 phased out over several years until the 2020 ban of virgin R-22; however, this equipment can still be serviced and repaired with a reclaimed version.

Regarding this change, it’s important to note that the U.S. Environmental Protection Agency (EPA) agrees that the overall use of R-22 is not illegal, and systems that operate with it don’t have to be replaced. Equipment can continue to be maintained, repaired, and serviced with reclaimed R-22.

However, HVAC systems being built must use R-410A. In 2020, 53% of the systems HVACi assessed used R-22, compared to 33% that used R-410A. This compares to 70% that used R-22 in 2019.

R-22 and R-410A are not interchangeable in HVAC systems. Policyholders who have a split system with a furnace can replace the condensing unit and evaporator coil and flush the lineset to make equipment compatible if they use different refrigerants. Systems with a heat pump that need a new condensing unit would need a full replacement for a refrigerant mismatch.

R-410A Is Not the Final Solution

While its prevalence is increasing, R-410A has been around more than 25 years. However, R-410A is not a long-term solution for manufacturers.

R-410A is a blend of two hydrofluorocarbons. It doesn’t have chlorine and is thought to be more efficient than R-22. However, it has different negative impacts to the environment. Though the ozone depletion potential is lower than R-22, it has a much higher Global Warming Potential (GWP), which is the measure of how much energy the emissions of 1 ton of a gas will absorb over a given period of time, relative to the emissions of 1 ton of carbon dioxide, according to the EPA.

The Kigali Amendment to the Montreal Protocol studied hydrofluorocarbons (HFCs) and other substances with high GWP. Countries who supported the amendment agreed to an 85% phasedown of the production and consumption of HFCs, including R-410A. This must be completed by 2036. The United States signed the agreement, but it had not been ratified as of January 2021.

Like R-22, the use of R-410A is going to be phased down to reduce environmental impacts.

In December 2020, the American Innovation and Manufacturing Act gave the EPA the authority to phase down consumption and production of HFC refrigerants with high GWP, and more specific regulations are expected. However, some states, including California and Washington have already been working on statewide regulations to go into effect sooner for certain types of HVAC systems.

Some Of the Front Runners – And Why It’s Not A Sure Thing

A few types of refrigerants are gaining popularity among manufacturers, but concerns exist that are keeping them from being chosen as the definitive alternative to R-410A.

Some manufacturers have already said they are looking to R-454B, particularly for chillers, heat pumps, and rooftop equipment. Carrier said it would use R-454B to replace R-410A in ducted residential and light commercial package solutions. Honeywell and Johnson Controls have also selected R-454B for ducted residential and commercial unitary products, according to articles by Cooling Post.

Some manufacturers have already said they will use R-454B in certain HVAC equipment, including air-cooled scroll chillers.

Other manufacturers have chosen R-32 for a few applications, including portable air conditioners, Packaged Terminal Air Conditioner units, and window air conditioners, according to an article in Air Conditioning, Heating & Refrigeration News.

R-454B has a lower GWP than R-32, though both are considered similar in performance to R-410A. While these may be better for the environment, safety concerns exist related to these refrigerants. They are mildly flammable, which may impact the claims that adjusters see from equipment that uses them. The worry is if a leak and a spark in an enclosed space could ignite a fire.

The EPA’s Protection of Stratospheric Ozone: Listing of Substitutes Under the Significant Alternatives Policy Program, published in May, lists R-454B and other similar refrigerants as “acceptable, subject to use conditions, for use in residential and light commercial air condition and heat pumps end-use for new equipment.” The same document lists R-32 as “acceptable, subject to use conditions, for use in residential and light commercial air conditioning and heat pumps – equipment other than self-contained room air conditioners for new equipment.” However, building codes may not allow their use in other applications because of their flammability.

Before the phasedown of R-410A, an overarching consensus of which refrigerant to use in most HVAC systems must be made. But for now, adjusters should continue ensuring accurate settlements on HVAC claims and not settle for unnecessary replacements based on misleading information about what regulations require.

Our HVACi team stays up to date with all HVAC efficiency and refrigerant rules, and our experts have the experience and knowledge to evaluate equipment to determine cause of loss, scope of damage, and market value pricing. Submit a claim to HVACi to receive comprehensive damage assessments and repair and replacement recommendations for accurate and quick settlements.