Quarterly Utility Webinar April 4, 2013

Agenda Q1 2013 PROJECT OVERVIEW DUCTLESS SYSTEM REGIONAL SALES DATA COOPERATIVE MARKETING PROGRAM

Q1 2013 Project Overview

Q1 2013 Project Overview REGIONAL SALES & INSTALLATIONS Q1 2013 Project Installations: 367 (to-date) Total Project Installations: 18,252 Total Regional Sales: 52,770 MASTER INSTALLER PROGRAM Q1 2013 Master Installer recruited: 4 Total Master Installers: 100 QUALITY ASSURANCE Q1 2013 QA Inspections Performed: 15 10 passed 4 minor deviations 1 failure Total QA Inspections Performed: 728 84% passed 14% minor deviations 1% major deviations <1% failures Regional Sales & Installations: Q1 2013 Project Installations – This number will increase as data is submitted by utilities. Quality Assurance: Q1 2013 QA Inspections 4 minor deviations – Mostly lack of insulation protection and outdoor unit not being properly secured. (Project worked with contractors to resolve) 1 failure – Wrong equipment, unit was a ducted mini-split system Total QA Inspections 14% minor deviations – Most were Lack of UV protection, and the outdoor unit not being properly secured (Project worked with contractors to resolve issues) 1% major deviations – Improper equipment operation (Project worked with the contractor and manufacturer to resolve) <1% failures – Wrong equipment or unit not installed in proper location. Master Installer Program: The Project continues to increase contractor participation in the Master Installer Program Master installers are committed to installation quality, ductless technology, their customers and understand and support the Project mission Master Installer participation increased by 26% in 2012 and we hope to obtain a similar increase this year through outreach and installer support activities Retail Data on ductless system installations through The Home Depot (THD) retail channel are still being collected/analyzed.

2012 Ductless System Regional Sales Data Overview Those of you who attended last August’s webinar on DHP Data and calculation of Net Market Effects are likely familiar with this part of the Project. We collected quarterly data on sales data from distributors and manufacturers and incented installations from utilities in the region to track ductless system market progress in the Northwest. NEEA not only uses this information to understand patterns in the ductless market, but it is also used to calculate net market effects on an annual basis, and to deliver savings back to you, the utilities.

Total Unit Sales by Type 2008 – 2012 This graph shows total sales by type since the beginning of 2008. You can see where the Project began in Q4 2008. Outline 4 types of units shown on graph Overall continued positive trend; see quarterly fluctuations Q3-Q4 2012 was unusually flat but peaks higher than in 2011 and tops out at the same number of installs as in 2010 when WA Cash for appliances was offered. Additionally it’s worth noting that both the ceiling and the floor are higher Incented Sales This graph includes final 2012 incented data aggregated from four sources. NEEA Local Program Survey Data BPA Reported data to NEEA Fluid DHP Services data 2011 installation data to represent gaps in utility installation data-(approximately 28 utilities representing less than 200 installs) 5,289 incented DHP sales in 2012 4,883 incented sales in 2011 Non Incented and cooling-only Non-incented sales have been consistently higher than incented sales since Q1 2011 We continue to see roughly the same kind of split in HC/cooling-only units, although the trend towards slightly more cooling only units has continued from 2011. DHP sales continue their upward trend, matching their all time high that was reached during Washington’s cash for appliance program. The difference between the spike in 2010 and today is that the numbers are being primarily driven by non-incented sales. You can also see see the sustained deviation between incented heating and cooling units and non-incented non-incented units outpacing incented on a sustained level since Q2 2011 This could signal the beginnings of market transformation as consumers view DHPs as a viable option regardless of utility offered incentives. We do see some convergence in Q4, as incented sales increase, but non-incented sales continued to outpace incented in every state in 2012. This chart also demonstrates the slight increase in cooling only sales, a trend we will continue to monitor in 2013.

Non-Incented Sales that Displaced ERH in the Primary Living Space of Single Family Homes, 2008 – 2012 Non-incented sales that displaced ERH in the PLS of SFH homes continue to increase along with overall DHP sales, following a yearly trend of peaking in Q3 and declining in Q4. Incented sales are primarily ERH replacement and peaked in Q4, resulting in fewer non-incented ERH replacements, but this is not indicative of overall ERH replacements decreasing, but more shifting to incented sales in Q4. This number is calculated quarterly based on non-incented sales using DHP application research commissioned by NEEA and performed by Research into Action in 2011.

Cooperative Marketing Program

2012 Cooperative Marketing Overview The following ads are examples of projects that the co-op supports: In total, the Project recruited 31 contractors to participate in the co-op marketing program which exceeds the 2011 co-op program by one contractor. The co-op program influenced approximately $160,000 in regional media value, a 3% increase over the 2011.

2013 Cooperative Marketing Program Options MAY 1 – DECEMBER 15 Option A Option B Design your own custom marketing piece incorporating at least two required messages Ductless systems must be the primary message Choose a Project template that can be customized with company branding and contact information The Project can help to customize the templates The NW Ductless Heat Pump Project’s cooperative marketing program reimburses participating installers for a portion of their marketing efforts, up to $2,500, to promote ductless heating and cooling systems. These funds may be used for newspaper ads, magazine ads, radio, television, billboards, direct mail, online ads, brochures and other approved marketing activities. In 2013, the Project is introducing two new options to the cooperative marketing program, including: Option C) Promote on Website Home Page and Option D) Trade Event Promotions. Option C Option D Display or distribute information incorporating ductless heating and cooling systems as the primary message at trade events Ductless systems must be prominently displayed Design your own custom homepage promotion incorporating at least two required messages Ductless systems must be the primary message $2,500 total maximum co-op reimbursement per company

2013 Cooperative Marketing Process MAY 1 – DECEMBER 15 Step 1 Choose an option, or combination of options, for reimbursement - Option A, Option B, Option C and/or Option D Step 2 Apply - Send a proof of your marketing piece, homepage website URL or event display photo along with this completed form to the co-op coordinator Step 3 Submit for reimbursement - Send required information, invoice, completed marketing piece website update or event and agree to the terms Co-op reimbursement form will be available to access on GoingDuctless.com/Partners on May 1, 2013. The NW Ductless Heat Pump Project’s cooperative marketing program reimburses participating installers for a portion of their marketing efforts to promote ductless heating and cooling systems. These funds may be used for newspaper ads, magazine ads, radio, television, billboards, direct mail, online ads, brochures and other approved marketing activities. This is a great time to market ductless systems. Coupled with our efforts, you can maximize the amount of times a homeowner sees an ad or hears a commercial. Take advantage of our tools that we have made available and add your logo, place ads in your local market and get reimbursed through co-op.

Save the Date Next Utility Webinar July 11, 2013: 12-1pm

Questions?

Thank you! For general questions, please contact: Ty Stober tstober@neea.org Direct: 503.688.5494 Joe Marcotte info@goingductless.com Direct: 503.688.1557 For marketing questions, please contact: Brooke Alley DHPmarketing@fluidms.com Direct: 503.467.2134