6

- i CHAPTER 6. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

TABLE OF CONTENTS

6.1 INTRODUCTION

................................ ................................ ................................ ........... 6

- 1

6.1.1 General Approach for Life

- Cycle Cost and Payback Period Analysis

................ 6

- 1

6.1.2 Overview of Life

- Cycle Cost and Payback Period Inputs

................................ ... 6

- 3

6.1.3 Effective Date

................................ ................................ ................................ ...... 6

- 6

6.1.4 Energy Use

................................ ................................ ................................ ........... 6

- 6

6.2 LIFE

- CYCLE COST INPUTS

................................ ................................ ........................ 6

- 7

6.2.1 Definition

................................ ................................ ................................ ............. 6

- 7

6.2.2 Tota l Installed Cost Inputs

................................ ................................ ................... 6

- 8

6.2.2.1 Baseline Manufacturer Selling Price

................................ ....................... 6

- 8

6.2.3 Trial Standard Level Energy Consumption and Manufacturer Selling Price

Increases

................................ ................................ ................................ ............. 6

- 12

6.2.3.1 Overall Markup

................................ ................................ ...................... 6

- 13

6.2.3.2 Installation Cost

................................ ................................ ..................... 6

- 13

6.2.3.3 Weighted

- Average Total Installed Cost

................................ ................. 6

- 15

6.2.4 Operating Cost Inputs

................................ ................................ ........................ 6

- 18

6.2.4.1 Electricity Price Analysis

................................ ................................ ....... 6

- 18

6.2.4.2 Electricity Price Trend

................................ ................................ ........... 6

- 20

6.2.4.3 Repair Cost

................................ ................................ ............................. 6

- 21

6.2.4.4 Maintenance Cost

................................ ................................ ................... 6

- 23

6.2.4.5 Lifetime

................................ ................................ ................................ .. 6

- 23

6.2.4.6 Di scount Rate

................................ ................................ ......................... 6

- 24

6.2.4.7 Compliance Date of Standard

................................ ................................ 6

- 27

6.3 PAYBACK PERIOD INPUT S

................................ ................................ ...................... 6

- 27

6.3.1 Definition

................................ ................................ ................................ ........... 6

- 27

6.3.2 Inpu ts

................................ ................................ ................................ .................. 6

- 28

6.4 LIFE

- CYCLE COST AND PAYBA CK PERIOD RESULTS

................................ ...... 6

- 28

6.4.1 Life

- Cycle Cost Results

................................ ................................ ..................... 6

- 28

6.4.2 Payback Period Results

................................ ................................ ...................... 6

- 32

6.4.3 Rebuttable Presumption Payback Period

................................ ........................... 6

- 33

6.5 DETAILED RESULTS

................................ ................................ ................................ . 6

- 35

REFERENCES

................................ ................................ ................................ .......................... 6

- 37

L IST OF TABLES

Table 6.1.1 Summary of Inputs for the Determination of Life

- Cycle Cost and Payback Period 6

- 6 Table 6.1.2 Electricity Use in Air

- Cooled < 65,000 Btu/h CRAC Equipment by Efficiency Level

................................ ................................ ................................ .............................. 6

- 7 Table 6.2.1 Inputs for Total Installed Costs

................................ ................................ ................. 6

- 8 Table 6.2.2 Equipment Classes Evaluated for the CRAC Equipment Standard Life

- Cycle Cost and Payback Period Analysis

................................ ................................ ............... 6

- 96

- ii Table 6.2.3 Baseline Energy Consumption Levels and MSP Values for the Representative CRAC Equipment Units of All 15 Primary Equipment Classes

................................ ... 6

- 12

Table 6.2.4 Standard

- Level Manufacturer Selling Price Increases (Price Increases Relative to the Price of Baseline Equipment, Including Learning)

................................ ............ 6

- 12 Table 6.2.5 Energy Consumption Values for Representative Units of the 15 CRAC Equipment Classes and All Efficiency Levels within the Equipment Classes

..................... 6

- 13 Table 6.2.6 CRAC Installation Cost by Equipment Class (2011$)

................................ ........... 6

- 14 Table 6.2.7 Installation Cost Indices (National Value = 100.0)

................................ ................ 6

- 15

Table 6.2.8 Costs and Markups for Determination of Weighted

- Average Total Installed Costs,

Air

- Cooled < 65,000 Btu/h Equipment Class*

................................ .................. 6

- 15 Table 6.2.9 Weighted

- Average Equipment Price, Installation Cost, and Total Installed Costs for

Air

- Cooled < 65,000 Btu/h at U.S. Average Conditions (2011$)*

................... 6

- 18 Table 6.2.10 Inputs for Operating Costs

................................ ................................ .................... 6

- 1 8 Table 6.2.11 Commercial Electricity Prices by State (2011 cents/kWh)

................................ .. 6

- 19 Table 6.2.12 Derived Average Commercial El ectricity Price by Business Type

...................... 6

- 20 Table 6.2.13 Annualized Maintenance Costs by Equipment Class for Each Efficiency Level

. 6

- 23 Table 6.2.14 Assignment of Building Occupants to Business Types

................................ ........ 6

- 26 Table 6.2.15 Derivation of Average Real Discount Rates by Business Type

........................... 6

- 27 Table 6.4.1 LCC Savings Distribution Results for the Air

- Cooled < 65,000 Btu/h Equipment Class (2011$)

................................ ................................ ................................ ..... 6

- 30 Table 6.4.2 Mean LCC Savings for All Equipment Classes and Efficiency Levels

................. 6

- 31

Table 6.4.3 Median LCC Savings for All Equipment Classes and Efficiency Levels

.............. 6

- 31 Table 6.4.4 Payback Period Distribution Results for the Air

- Cooled < 65,000 Btu/h Equipment

Class

................................ ................................ ................................ ................... 6

- 32 Table 6.4.5 Mean Payback Period for All Equipment Classes and Efficiency Levels

.............. 6

- 33 Table 6.4.6 Median Payback Period for All Equipment Classes and Efficiency Levels

........... 6

- 33 Table 6.4.7 Rebuttable Presumption Payback Periods by Efficiency Level and Equipment Class

................................ ................................ ................................ ............................ 6

- 35 Table 6.5.1 Summary of Results of LCC and PBP Analysis for the Air

- Cooled < 65,000 Btu/h Equipment Class

................................ ................................ ................................ 6

- 36

LIST OF FIGURES

Figure 6.1.1 Flow Diagram of Inputs for the Determination of Life

- Cycle Cost and Payback

Period

................................ ................................ ................................ ................... 6

- 5 Figure 6.2.1 Historical Nominal and Deflated Producer Price Indexes for Integral Horsepower Motors and Generators Manufacturing

................................ .............................. 6

- 10 Figure 6.2.2 Historical Deflated Producer Price Indexes for Copper Smelting, Steel Mills Manufacturing and All Other Miscell aneous Refrigeration and Air Conditioning Equipment

................................ ................................ ................................ .......... 6

- 11 Figure 6.2.3 Electricity Price Trends for Commercial Rates to 2045

................................ ........ 6

- 21 Figure 6.4.1 LCC and Installed Cost Variation over Efficiency Levels for the Air

- Cooled < 65,000 Btu/h Equipment Class

................................ ................................ .......... 6

- 29 Figure 6.4.2 LCC Savings Distribution for All the Efficiency Levels for the Air

- Cooled < 65,000 Btu/h Equipment Class

................................ ................................ .......... 6

- 306- iii Figure 6.4.3 Payback Period Distributions for All Efficiency Levels for the Air-Cooled < 65,000 Btu/h Equipment Class ...................................................................................... 6-326

- 1 CHAPTER 6 . LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

6.1 INTRODUCTION

This chapter describes the analysis that the U.S. Department of Energy (DOE) has carried

out to evaluate the economic impacts of possible energy conservation standards developed for

c omputer r oom a ir c onditioning (CRAC) equipment on individual commercial consumer s, henceforth referred to as consumer s

. The effect of standards on consumer s includes a change in operating cost (usually decreased) and a change in purchase cost (usually increased). This chapter describes two metrics used to determine the effect of standards on consumer s :

• Life

- cycle cost (LCC)

. The total consumer cost over the life of the equipment is the

sum of installed cost (purchase and installation costs) and operating costs (maintenance, repair, and energy costs). Future operating costs are discounted to the time of purchase, and summed ove r the lifetime of equipment.

• Payback perio d (PBP )

. Payback period is t he estimated amount of time it takes

consumer s to recover the assumed higher purchase price of more

- efficient equipment through lower operating costs.

An efficiency improvement to CRAC equipment that is financially attractive to a

consumer will typically be associated with a low PBP and a low LCC.

This chapter is organized as follows. The remainder of this section outlines the general approach and provides an overview of the inputs to the LCC and PBP analysis of CRAC equipment. I nputs to the LCC and PBP analysis are discussed in detail in s ections 6.2 and 6.3

. Results for the LCC and PBP analysi s are presented in s ections 6.4 and 6.5

.

The calculations discussed in this chapter were performed with a series of Microsoft

Excel spreadsheets available at www1.eere.energy.gov/buildings/appliance_standards/commercial/ashrae_products_docs_meeti ng.html

. Instructions for using the spreadsheets are included in A ppendix 6 A

. Detailed results are presented in A ppendix 6 B

. An analysis of the impact of alternative electricity price projections on LCC saving s and PBP is presented in A ppendix 6C.

6.1.1 General Approach for L ife

- C ycle C ost and P ayback Period Analysis

This section summarizes DOE’s approach to the LCC and PBP analysis for CRAC equipment.

As part of the engineering analysis, various efficiency levels are ordered on the basis of increasing efficiency (decreased energy consumption) and , typically, increas ing manufacturer selling price ( MSP ) values. For the LCC and PBP analysis, DOE chooses a maximum of five

levels

, henceforth referred to as efficiency levels

, from the list of engineering e fficiency levels

.

Because the LCC analysis of CRAC equipment is being conducted to help determine if

DOE should ado pt an efficiency standard more stringent than the American Society of Heating, Refrigerating and Air

- C onditioning Engineers ( ASHRAE ) standard level discussed in earlier chapters, t he baseline efficiency level is the ASHRAE standard for each equipment class (also6

- 2 see section 6.1.2 )

. The baseline efficiency level is the least efficient and the least expensive equipment in that equipment class . T he higher efficiency lev els (Level 1 and up ) have a progressive increase in efficiency and equipment cost from the ASHRAE level

. The highe s t efficiency level in each equipment class corresponds to the max imum efficiency level obtainable

with non

- proprietary technology (see prelim inary technical support document ( TSD ) chapter 3 for details)

. DOE treats the efficiency levels as trial standard levels , as each higher efficiency level represents a potential new standard level

.

The installed cost of equipment to a consumer is the sum of the equipment purchase price and installation costs. The purchase price includes manufacturer production cost (MPC), to which a manufacturer markup , distributor’s cost, and cost of delivery to the job site is applied to

obtain the MSP . This value is calculated as part of the engineering analysis ( c hapter 3 of the

TSD ). DOE then applies additional markups to the equipment in order to account for the markups associated with the distribution channels for this type of equipment (chapter 5 of the TSD)

. I nstallation costs vary by state depending on the prevailing labor rates.

Operating costs for CRAC equipment are a sum of maintenance costs, repair costs

, and energy costs. These costs are incurred over the life of the equipment and are discounted to the

year 201 7

, which is the effective date of the standards that will be established as part of this rulemaking . The sum of the installed cost and the operating cost , discounted to reflect the present value, is termed the life

- cycle cost or LCC.

General ly, consumer s incur higher installed costs when they purchase higher efficiency equipment

, and these cost increments will be partially or wholly offset by savings in the operating costs over the lifetime of the equipment. Usually, the savings in operating costs are due to savings in energy costs because higher efficiency equipment uses l ess energy over the lifetime of the equipment

. Often , the LCC of higher efficiency equipment is lower compared to lower efficiency equipment. LCC savings are calculated for each efficiency level of each equipment

class.

The PBP of higher efficiency equipment is obtained by dividing the increase in the installed cost by the decrease in annual operating cost. For this calculation, DOE uses the sum of

the first year operating cost changes as the estimate of the decrease in operating cost, noting that some of the repair and replacement costs used herein are annualized estimates of costs. P BP is calculated for each efficiency level of each equipment class

.

Apart from MSP , installation costs, and maintenance and repair costs, other important inputs for the LCC and PBP analysis are markups and sales tax, equipment energy consumption, electricity prices and future price trends, equipment lifetime, and discount rates.

Many inputs for the LCC and PBP analysis are estimated from the best available data in

the market

, and in some cases the inputs are generally accepted values in the refrigeration equipment industry . In general, there is uncertainty associated with m ost of the inputs because it is difficult to obtain one accurate representative value for some inputs. Therefore, DOE carries out the LCC and PBP analysis in the form of Monte Carlo simulations in which certain inputs are provided a range of values and pro bability distributions that account for the uncertainties. The results of the LCC and PBP analysis are presented in the form of mean and median LCC savings,6

- 3 percentages of consumer s experiencing net savings, net cost

, and no impact in LCC, and median

PBP

. For each equipment class, 5 ,000 Monte Carlo simulations were carried out. The

simulations were conducted using Microsoft Excel ® and Crystal Ball ® , a commercially available

Excel add

- in for doing Monte Carlo simulations

LCC savings and PBP are calculated by comparing the installed costs , operating costs,

and LCC values of a standards

- case scenario against those of the base

- case scenario

. The b ase

case scenario is the scenario in which equipment is assumed to be purchased by consumer s in the absence of the pr oposed energy conservation standards . Because th e purpose of this analysis is to determine whether efficiency levels beyond the level adopted by ASHRAE are economically justified, the b ase

- case scenario is the ASHRAE level

. Standards

- case scenarios are sce narios in which equipment is assumed to be purchased by consumer s after the energy conservation standards, determined as part of the current rulemaking, go into effect. The number of standards

case scenarios for an equipment class is equal to one less than the total number of efficiency levels in that equipment class because each efficiency level above the ASHRAE level represents a potential new standard

. Usually, the equipment available in the market will have a distribution of efficiencies. Therefore, for both base

- case and standards

- case scenarios in the LCC and PBP analysis, DOE assumes a distribution of efficiencies in the market

. T he distribution is assumed to be spread over the first few efficiency levels in the LCC and PBP analysis (see TSD chapter 8 )

.

Recognizing that each commercial building that uses CRAC equipment is unique, DOE analyzed variability and uncertainty by performing the LCC and PBP calculations for three types
of buildings : (1) health care ; (2 ) education; and ( 3 ) offices

. Different types of businesses face different energy prices and also exhibit differing discount rates that they apply to purchase

decisions.

Equipment lifetime for CRA C equipment is another input that does not justify usage of one single value for each equipment cla ss. Therefore, for purposes of the LCC analysis, DOE

assume d a distribution of equipment lifetime s between 10 and 2 5 years that are defined by

Weibull survival functions

, with an average value of 15 years

.

Another important factor influencing the LCC and P BP analysis is the state in which the

CRAC equipment is installed

. Inputs that vary based on this factor include installation costs, markups, energy prices

, and sales tax. At the national level, the spreadsheets explicitly modeled variability in the model inputs for electricity price and markups using probability distributions

based on the relative population s in different states and business types.

Results of the LCC and P BP analysis are presented in section 6.4 and in A ppendix 6 B

.

6.1.2 Overview of L ife

- C ycle C ost and P ayback Period Inputs

Inputs to the LCC and PBP analysis are categorize d as follows: (1) inputs for establishing

the total installed cost ; and (2) inputs for calculating the operating cost.

The primary inputs for establishing the total installed cost are as follows :6

- 4 • Baseline manufacturer selling price is t he price charged by the manufacturer to the installing contractor for equipment meeting baseline efficiency level

. The MSP

includes a manufacturer’s markup , which convert s the MPC to MSP

.

• Price l earning is a method of adjusting the MSP across time to accou nt for increased efficiency in the production of CRAC equipment . It is generally assumed in DOE LCC analyses that with time and experience, the real cost of producing equipment will decrease marginally.

• Trial s tandard l evel manufacturer selling price increase is t he incremental change in

MSP associated with producing equipment at each of the higher efficiency levels ( e fficiency l evels above the baseline )

.

• Markups and sales tax are t he distribution channel markups and sales tax associated

with convert ing the MSP to a consumer purchase price

. The methodology to determine markups and sales taxes is presented in TSD chapter 5

.

• Installation c ost is t he cost to the consumer of installing the equipment. The cost for

installation is estimated as a one

- time cost

, and is varied by state mainly to capture
the varying cost of labor . Installation o verhead and other miscellaneous materials and

parts are considered in the distribution channel markups.

The primary inputs for calculating the operating cost s are as fo llows :

• Equipment energy consumption : Consumption is the total annual energy consum ed by

CRAC equipment in kilowatt

- hours . This value is calculated as part of the engineering analysis for each trial standard level in each equipment class

.

• Electricity prices : Electricity prices used in the analysis are the price per kilowatt

hour in cents or dollars paid by each consumer for electricity. Electricity prices are determined using average commercial electricity prices in each s tate, as determined

from U.S. Energy Information Administration (EIA) data for 201 1

. The 201 1 average commercial prices d erived were modified to reflect the fact that the three types of businesses analyzed pay electricity prices that are different from the average commercial prices. Details on the development of electricity prices and the data

sources used are found in s ection 6.2.3.1

.

• Electricity price trends : The EIA’s Annual Energy Outlook 20 1 1 1 ( AEO201 1 ) is used to forecast electricity prices. For the results presented in this chapter, DOE used the regional prices from the AEO201 1 R eference C ase to forecast future electricity prices

.

• Maintenance costs : The cost for maintenance is e stimated as an annual expense representing the labor and materials costs associated with maintaining the operation of the equipment

. Maintenance include s activities such as cleaning heat exchanger coils, checking refrigerant ch arge levels

, and replacing filters, and other routine measures to keep the equipment running efficiently

. Many of these activities are carried more than once a year.

• Repair costs : The cost for repairs is estimated as an annual ized expense equivalent to the present value of a one

- time major repair , derived to represent the labor and materials costs associated with repairing or replacing components that have failed.

• Equipment l ifetime : This is t he age at which the CRAC equipment is retired f rom service.6

- 5 • Discount rate : This is t he rate at which future costs are discounted to establish their present value. It is calculated as t h e weighted average cost of capital for each of the three types of business es assumed to have the computer rooms cooled by CRAC equipment.

Figure 6.1.1 depicts the generic relationships between the installed cost and operating cost inputs for the calculation of the LCC and PBP. Table 6.1.1 summarizes the characteristics of

the inputs to the LCC and PBP analysis and lists the corresponding reference chapter in the TSD for details on the calculation of the inputs

.

Figure 6.1

. 1 Flow Diagram of Inputs for the Determination of Life

- Cycle Cost and Payback

Period6

- 6 Table 6.1

. 1 Summary of Inputs for the Determination of Life

- Cycle Cost a nd Payback

Period

Input Description TSD Chapter

Reference Total Installed Cost Primary Inputs

Baseline MSP Varies with equipment class. Chapter 3

Trial standard

- level

MSP increases Vary with equipment class and trial standard level within an equipment

class. Chapter 3

Markups and sales tax Vary with location (state) where equipment is installed. Chapter 5 Installation price Varies with equipment class location (state) where equipment is installed. Chapter 6 Operating Cost Primary Inputs Equipment energy consumption Varies with equipment class and trial standard level within an equipment

class. Chapter 4

Electricity prices Vary with location, building type. Chapter 6 Electricity price trends Vary with location (regional) and price scenario. Chapter 6

Maintenance costs Do not vary

. Chapter 6

Repair costs Vary with equipment class, trial standard level within equipment class

and location. Chapter 6

Lifetime Assumed in a range of 10 to 25 years with an average value of 15 years. Chapters 3, 6

Discount rate Varies with type of business. Chapter 6

All of the inputs depicted in Figure 6.1.1 and summarized in Table 6.1.1 are discussed in

s ections 6.2 and 6.3

.

6.1.3 Effective Date

There are two alternative effective dates that could result from this rulemaking. Both are directed by the Energy Policy Conservation Act (42 U.S.C. 6311

– 6316; EPCA), and depend on whether DOE adopts the ASHRAE proposal or a more

- stringent standard.

Standards set by this rulemaking are scheduled to go into effect on October 29, 2013 if DOE adopts the revised ASHRA E standard and April 29, 2017 if DOE were to propose a rule prescribing energy conservation standards higher than the efficiency levels contained in

ASHRAE Standard 90.1

- 2010

. EPCA requir es that DOE publish a final rule adopting more

stringent standards than those in ASHRAE Standard 90.1

- 2010 within 30 months of ASHRAE action ( i.e., by April 2013). Thus, 4 years from April 2013 would be April 2017, which would be the anticipated effective date for DOE adoption of more

- stringent standards

. For purposes of comparing different effici e ncy levels for this LCC analysis , it is assumed that the year of sale for the CRAC equipment is 2017.

6.1.4 Energy Use

Table 6.1

. 2 shows the five efficiency levels for the Air

- Cooled <65 ,000 Btu/h CRAC equipment class, obtained from the engineering analysis (ASHRAE baseline plus four additional levels) . This table represents the current (2011) efficiency levels modeled for Air

- Cooled

<65 ,000 Btu/h equipment on the market. As previously explained, DOE assumed that the

ASHRAE standard would represent the minimum efficiency level of the market for this uni t and that it would remain so. In order to approximate this state of market technology, DOE calculated

the annual energy consumption levels shown in Table 6.1.2 for Air

- Cooled < 65 ,000 Btu/h

CRAC equipment in U.S. average climate c onditions

. Energy consumption declines with6

- 7 increased effici e ncy , and varies with location (state). See TSD chapter 4 for a complete discussion of energy consumption for all equipment classes.

Table 6.1

. 2 Electricity Use in Air

- Cooled < 65 ,000 Btu/h CRAC Equipment by Efficiency

Level

Efficiency Level Electricity Consumption kWh/yr

A SHRAE Standard 27,406

Level 1 25,293

Level 2 23,506

Level 3 21,973

Level 4 20,646

6.2 LIFE

- CYCLE COST INPUTS

6.2.1 Definition

LCC is the total consumer cost over the life of a piece of equipment, including purchase cost and operating costs (energy costs, maintenance costs, and repair costs). Future operating costs are discounted to the time of purchase and summed over the lifetime of the equipment.

LCC is defined by Eq. 6

. 1 :



## ∑

= + + = N

t t

t r OC IC LCC

1 ) 1 /(

Eq. 6

. 1

W here :

LCC = life

- cycle cost ($)

, IC = total installed cost ($)

, N = lifetime of equipment (years)

, OC t = operating cost ($) of the equipment in year t

,

r = discount rate

, and

t = year for which operating cost is being determined.

Because DOE gathered most of its cost data for the LCC analysis in 201 1

, DOE expresses all costs in 201 1 $. Total installed cost, operating cost, lifetime, and discount rate are discussed in the following sections. In the LCC analy sis, the first year of equipment purchase is

assumed to be 201 7

.6

- 8 6.2.2 Total Installed Cost Inputs

The total installed cost to the consumer is defined by Eq. 6

. 2 :

INST EQP IC + = Eq. 6

. 2

W here :

EQP = consumer purchase price for the equipment ($)

, and

INST = installation cost or the consumer price to install equipment ($).

The equipment price is based on the distribution channel through which the consumer purchases the equipment, a s discussed in TSD chapter 5

.

The remainder of this section provides information about the variables DOE used to

calculate the total installed cost for CRAC equipment

. Table 6.2.1 shows i nputs for the

determination of total instal led cost

.

Table 6.2

. 1 Inputs for Total Installed Costs
Baseline manufacturer selling price ($)

Price l earning c oefficient

Trial s tandard l evel manufacturer selling price increases ($) Mechanical contractor markup Sales tax ($) Installation cost ($)

6.2.2.1 Baseline Manufacturer Selling Price

The baseline MSP is the price charged by manufacturers and distributors for CRAC equipment f or existing efficiency levels (for equipment classes with no standards)

. The MSP

includes manufacturer markup , distributor cost, and costs of delivery to the job site that are applied to convert the MPC to a n MSP

. DOE developed MSP values for the 15 primary equipment class es (see TSD chapter 3 )

. Table 6.2.2 shows t he set of 15 primary equipment

class es that DOE evaluated during the preliminary analysis of the current rulemaking

.6

- 9 Table 6.2

. 2 Equipment Classes Evaluated for the CRAC Equipment Standard Life

- Cycle Cost and Payback Period Analys i s Description ( Cooling Method and Capacity in Btu/h ) Abbreviation

Air

- Cooled < 65 ,000 Air

- Cooled < 65 kBtu

Air

- Cooled ≥ 65,000 and < 240,000 Air

- Cooled 65

– 240 kBtu

Air

- Cooled ≥ 240 ,000 and < 760,000 Air

- Cooled ≥ 240 kBtu

Water

- Cooled < 65 ,000 Water

- Cooled < 65 kBtu

Water

- Cooled ≥ 65,000 and < 240,000 Water

- Cooled 65

– 240 kBtu

Water

- Cooled ≥ 240 ,000 and < 760,000 Water

- Cooled ≥ 240 kBtu

Water

- Cooled w ith Fluid Economizer < 65 ,000 Water

- Cooled w/ FE < 65 kBtu

Water

- Cooled w ith Fluid Economizer ≥ 65,000 and < 240,000 Water

- Cooled w/ FE 65

– 240 kBtu

Water

- Cooled w ith Fluid Economizer ≥ 240 ,000 and < 760,000 Water

- Cooled w/ FE ≥ 240 kBtu Glycol

- Cooled < 65 ,000 Glycol

- Cooled < 65 kBtu Glycol

- Cooled ≥ 65,000 and < 240,000 Glycol

- Cooled 65

– 240 kBtu Glycol

- Cooled ≥ 240 ,000 and < 760,000 Glycol

- Cooled ≥ 240 kBtu Glycol

- Cooled w ith Fluid Economizer < 65 ,000 Glycol

- Cooled w/ FE < 65 kBtu Glycol

- Cooled w ith Fluid Economizer ≥ 65,000 and < 240,000 Glycol

- Cooled w/ FE 65

– 240 kBtu Glycol

- Cooled w ith Fluid Economizer ≥ 240 ,000 and < 760,000 Glycol

- Cooled w/ FE ≥ 240 kBtu

DOE’s LCC analysis typically includes an allowance for equipment prices to change as experience is gained with manufacturing. To derive a price trend for computer room air

conditioners , DOE obtained historical Producer Price Index (PPI) data for all other miscellaneous refrigeration and air conditioning equipment spanning the time period 19 90

- 2010 from the Bureau of Labor Statistics (BLS). a DOE used PPI data for al l other miscellaneous refrigeration and air conditioning equipment as representative of computer room air conditioners because PPI data specific to computer room air conditioners are not available. The PPI data reflect nominal prices, adjusted for product quality changes. An inflation

- adjusted (deflated) price index for all other miscellaneous refrigeration and air conditioning equipment was calculated by dividing the PPI series by the Gross Domestic Product Chained Price Index (see Figure 6.2.1 ).

a Series ID PCU3334153334159 ; www.bls.gov/ppi/6

- 10 Figure 6.2

. 1 Historical Nominal and Deflated Producer Price Indexes for Integral Horsepower Motors and Generators Manufacturing

From 1990 to 2004, the deflated price index for all other miscellaneous refrigeration and

air conditioning equipment showed a downward trend. Since then, the index has risen sharply, primarily due to rising prices of copper and steel products that go into computer room air conditioners (see Figure 6.2

. 2 ). The rising prices for copper and steel products were primarily a result of strong demand from China and other emerging economies. Given the slowdown in global economic activity in 2011, DOE believes that the extent to which the trends of the past couple of years will continue is very uncertain. DOE performed an exponential fit on the deflated price index for all other miscellaneous refrigeration and air conditioning equipment , but the R 2

par ameter, which indicates quality of the fit, was relatively low, indicating a poor fit to the data. DOE also considered the experience curve approach, in which an experience rate parameter is derived using two historical data series on price and cumulative production , but the time series for historical shipments was not available.

Given the above considerations, DOE decided to use a constant price assumption as the default price factor index to project future computer room air conditioner prices in 20 17. Thus, prices forecast for the LCC and PBP analysis are equal to the 2011 values for each efficiency level in each equipment class. 0.8 0.9 0.9 1.0 1.0 1.1

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0Deflated PPI (2010=1)Nominal PPI (1989=100)

Year Nominal All Other

Misc. Refrigeration &
Air-Conditioning
Equipments

Deflated All

Other Misc.
Refrigeration &
Air-Conditioning
Equipments6

- 11 Figure 6.2

. 2 Historical Deflated Producer Price Indexes for Copper Smelting, Steel Mills Manufacturing and All Other Miscellaneous Refrigeration and Air Conditioning Equipment

Table 6.2.3 presents the baseline energy consumption values and the baseline MSP s used in the LCC and PBP analysis for the representative sizes for each of the 15 primary equipment

class es (see TSD chapter 3 )

. Table 6.2.3 include s the adjust ment for cost reduction due to accumulated manufacturing experience , which in the case of CRAC equipment is determined t o be zero . Because the analysis in this chapter is designed to help determine whether efficiency

levels beyond the ASHRAE standard would be economically justified, the b aseline was set at the

ASHRAE standard baseline, as explained in s ection 6.1.2

. 0 0.2 0.4 0.6 0.8

1 1.2 1.4 1.6

1960 1970 1980 1990 2000 2010 2020Deflated Commodity Price Index (2010=1)

Year

Primary Copper Smelting PPI

Iron and Steel Mills PPI
Misc. Refrigeration & air-conditioning Annual Real PPI (deflated with GDP)6

- 12 Table 6.2

. 3 Baseline E nergy C onsumption L evels and MSP V alues for the Representative

CRAC Equipment Units of A ll 1 5 P rimary E quipment C lasses

Equipment Class Baseline Energy Consumption kWh/yr Manufacturer Selling Price

2011 $

Air

- Cooled < 65 kBtu 27,408 6,681

Air

- Cooled 65

– 240 kBtu 102,751 22,621

Air

- Cooled ≥ 240 kBtu 245,985 32,575

Water

- Cooled < 65 kBtu 24,725 14,233

Water

- Cooled 65

– 240 kBtu 92,117 12,883

Water

- Cooled ≥ 240 kBtu 208,714 24,453

Water

- Cooled w/ FE < 65 kBtu 15,422 15,062

Water

- Cooled w/ FE 65

– 240 kBtu 57,460 13,633

Water

- Cooled w/ FE ≥ 240 kBtu 129,609 25,878 Glycol

- Cooled < 65 kBtu 24,670 14,233 Glycol

- Cooled 65

– 240 kBtu 101,836 12,870 Glycol

- Cooled ≥ 240 kBtu 227,079 24,453 Glycol

- Cooled w/ FE < 65 kBtu 19,798 15,062 Glycol

- Cooled w/ FE 65

– 240 kBtu 81,603 13,620 Glycol

- Cooled w/ FE ≥ 240 kBtu 181,888 25,878

6.2.3 Trial Standard Level Energy Consumption and Manufacturer Selling Price

Increases

The trial standard level MSP increase is the change in MSP associated with producing equipment at higher efficiency levels. Increases in MSP as a function of equipment efficiency were developed fo r each of the 15 primary equipment classes. The engineering analysis established a

series of MSP increases for each standard level. Table 6.2.4 present s the increase in MSP corresponding to all efficiency levels for each primary equipment class , including cost reductions

due to accumulated manufacturing experience between 2011 and 2017

.

Table 6.2

. 4 Standard

- Level Manufacturer Selling Price Increases (Price Increases Relative

to the Price of Baseline Equipment , Including Learning )

Equipment Class Baseline (ASHRAE)

MSP MSP Increase by Efficiency Level
2011$ *

Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 6,681 1,172 2,551 4,171 6,075

Air

- Cooled 65

– 240 kBtu 22,621 1,762 3,661 5,708 7,914

Air

- Cooled ≥ 240 kBtu 32,575 2,537 5,272 8,219 11,397

Water

- Cooled < 65 kBtu 14,233 (2,705) (4,896) (6,671) (8,108)

Water

- Cooled 65

– 240 kBtu 12,883 4,432 10,389 18,396 29,157

Water

- Cooled ≥ 240 kBtu 24,453 8,410 19,713 34,903 55,318

Water

- Cooled w/ FE < 65 kBtu 15,062 (2,863) (5,181) (7,059) (8,580)

Water

- Cooled w/ FE 65

– 240 kBtu 13,633 4,690 10,995 19,468 30,856

Water

- Cooled w/ FE ≥ 240 kBtu 25,878 8,900 20,861 36,936 58,540 Glycol

- Cooled < 65 kBtu 14,233 (2,705) (4,896) (6,671) (8,108) Glycol

- Cooled 65

– 240 kBtu 12,870 4,426 10,375 18,370 29,115 Glycol

- Cooled ≥ 240 kBtu 24,453 8,410 19,713 34,903 55,318 Glycol

- Cooled w/ FE < 65 kBtu 15,062 (2,863) (5,181) (7,059) (8,580) Glycol

- Cooled w/ FE 65

– 240 kBtu 13,620 4,684 10,980 19,440 30,810 Glycol

- Cooled w/ FE ≥ 240 kBtu 25,878 8,900 20,861 36,936 58,540
*Values in parentheses are negative values.6

- 13 Table 6.2.5 presents the annual energy consumption of the representative units belonging to each of the 15 primary equipment classes that were selected for the engineering analysis.

Table 6.2

. 5 Energy C onsumption V alues for R epresentative U nits of the 15 CRAC

E quipment C lasses and A ll E fficiency L evels w ithin the E quipment C lasses

Product Class Annual Energy Consumption kWh/yr

Baseline (ASHRAE) Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 27,408 25,295 23,507 21,975 20,647

Air

- Cooled 65

– 240 kBtu 102,751 92,652 84,496 77,770 72,130

Air

- Cooled ≥ 240 kBtu 245,985 219,367 198,295 181,199 167,050

Water

- Cooled < 65 kBtu 24,725 23,091 21,674 20,435 19,342

Water

- Cooled 65

– 240 kBtu 92,117 85,819 80,388 75,659 71,503

Water

- Cooled ≥ 240 kBtu 208,714 193,848 181,105 170,062 160,399

Water

- Cooled w/ FE < 65 kBtu 15,422 14,584 13,859 13,227 12,670

Water

- Cooled w/ FE 65

– 240 kBtu 57,460 54,221 51,437 49,019 46,898

Water

- Cooled w/ FE ≥ 240 kBtu 129,609 121,951 115,407 109,751 104,812 Glycol

- Cooled < 65 kBtu 24,670 22,991 21,543 20,283 19,175 Glycol

- Cooled 65

– 240 kBtu 101,836 93,820 87,061 81,286 76,293 Glycol

- Cooled ≥ 240 kBtu 227,079 208,784 193,417 180,326 169,040 Glycol

- Cooled w/ FE < 65 kBtu 19,798 18,547 17,472 16,538 15,718 Glycol

- Cooled w/ FE 65

– 240 kBtu 81,603 75,585 70,531 66,225 62,513 Glycol

- Cooled w/ FE ≥ 240 kBtu 181,888 168,137 156,631 146,862 138,464

6.2.3.1 Overall Markup

As discussed in TSD chapter 5, Markups for Equipment Price Determination, DOE calculated overall markups to calculate the equipment purchase price to consumer s from the equipment MSP. DOE calculated baseline markups to convert baseline MSP to baseline

cons umer purchase price and incremental markups to convert the increments in MSP into

increments in consumer purchase price. DOE used these markup values in the LCC

- PBP analysis for calculation of baseline and higher efficiency equipment price s to consumer s.

6.2.3.2 Installation Cost

Although much CRAC equipment is not installed in standard configurations, which complicates estimating the cost of installation

, some standardized estimates do exist

. The estimated installation cost is designed to represent a one

- time fix ed cost, to incorporate the labor and materials required to fully install CRAC equipment of various capacities to serve a computer

room

. DOE utilized RS Means installation cost data from RS Means CostWorks 201 2 2 for major

U.S. cities to derive installation cost curves by size of unit for the base efficiency unit. Installation cost was also derived as a percentage of equipment cost at each of several unit sizes for each equipment class, and this percentage was used to estimate installation cost increase for

more

- efficient equipment.6

- 14 The in s tallation cost functions by size for the three CRAC equipment cooling methods

are as follows:

INST Air = 741

. 1 × Cap 0

. 6124

INST Glycol = 726

. 07 × Cap 0

. 5209

INST Water = 702

. 45 × Cap 0

. 5161

w here capacity is measured in t ons (multiple s of 12 ,000 Btu/h).

For the final rule analysis, DOE is assuming that the engineering design options do not significantly affect installation labor within an equipment class, and therefore, within a given equipmen t class the installation cost will not vary with efficiency levels, though installation cost may still vary from one equipment class to another. If installation c osts do not vary with efficiency levels , they do not impact the LCC savings , PBP

, or national impact analysis results.

T he installation costs in the final rule analysis are estimated very simply as a fixed value for each equipment class. To allow for the possibility that installation cost could increase as a function of increased efficiency within an equipment class , installation cost was also derived as a percentage of equipment cost at each of several unit sizes for each equipment class using the RS Means

CostWorks 2012 dat a and the average percentage in each case ( 9. 4

, 7.6

, and 7.7 percent for Air

Cooled

, Water

- Cooled

, and Glycol

- Cooled units, respectively) was recorded. The percentages

are available to estimate installation cost as a function of equipment efficiency

. DOE designed the LCC spreadsheet such that installation costs can be varied by efficiency level, but has modeled installation cost as constant across efficiency levels for the final rule analysis. Table

6.2

. 6 shows CRAC installation cost by equ ipment class.

Table 6.2

. 6 CRAC Installation Cost by Equipment Class (2011$)

Equipment Class Installation Cost (All Efficiencies)
2011$

Air

- Cooled < 65 kBtu 1,452

Air

- Cooled 65

– 240 kBtu 3,218

Air

- Cooled ≥ 240 kBtu 5,189

Water

- Cooled < 65 kBtu 1,238

Water

- Cooled 65

– 240 kBtu 2,421

Water

- Cooled ≥ 240 kBtu 3,622

Water

- Cooled w/ FE < 65 kBtu 1,238

Water

- Cooled w/ FE 65

– 240 kBtu 2,421

Water

- Cooled w/ FE ≥ 240 kBtu 3,622 Glycol

- Cooled < 65 kBtu 1,287 Glycol

- Cooled 65

– 240 kBtu 2,532 Glycol

- Cooled ≥ 240 kBtu 3,801 Glycol

- Cooled w/ FE < 65 kBtu 1,287 Glycol

- Cooled w/ FE 65

– 240 kBtu 2,532 Glycol

- Cooled w/ FE ≥ 240 kBtu 3,801

Table 6.2

. 7 shows installation cost indices for installations in each of the 50 states, the

District of Columbia , and weighted

- average for the entire U nited States

, which are used to adjust

the nationally representative installation costs for each s tate

. The state

- level indices are based on6

- 15 city indices. To arrive at an average index for each state, DOE first weighted the city indices in each state by their population within the state

. DOE used s tate

- level p opulation weights for 20 1 1

from the U.S. Census Bureau 3 to calculate a weighted

- average index for each state from the RS

Means data.

Table 6.2

. 7 Installation Cost Indices (National Value = 100.0)

State Index State Index State Index

Alabama 85.5 Kentucky 93.3 North Dakota 87.2

Alaska 122.6 Louisiana 86.1 Ohio 97.7

Arizona 89.5 Maine 92.2 Oklahoma 78.4

Arkansas 83.8 Maryland 95.5 Oregon 101.6

California 111.9 Massachusetts 115.7 Pennsylvania 111.2

Colorado 95.4 Michigan 101.4 Rhode Island 107.6

Connecticut 113.0 Minnesota 112.0 South Carolina 79.3

Delaware 105.6 Mississippi 85.0 South Dakota 83.0

Dist. of Columbia 100.6 Missouri 101.8 Tennessee 87.0

Florida 89.7 Montana 92.5 Texas 84.5 Georgia 86.6 Nebraska 91.7 Utah 88.4

Hawaii 119.7 Nevada 104.5 Vermont 87.0

Idaho 89.4 New Hampshire 96.8 Virginia 89.8

Illinois 117.6 New Jersey 114.0 Washington 103.0

Indiana 94.7 New Mexico 89.5 West Virginia 97.9

Iowa 94.1 New York 131.6 Wisconsin 103.8

Kansas 88.7 North Carolina 78.6 Wyoming 84.1

6.2.3.3 Weighted

- Average Total Installed Cost

As presented in Eq. 6.2 , the total installed cost is the sum of the equipment price and the

installation cost. DOE derived the consumer equipment price for any given standard level by multiplying the baseline MSP by the baseline markup and adding to it the product of the

incremental MSP and the incremental markup. Because MSP s, markups, and the sales tax all can take on a variety of values, depending on location, the resulting total installed cost for a particular st andard level will not be a single

- point value, but ra ther a distribution of values.

DOE used the baseline and incremental markups, the sales tax, and installation costs to

convert the MSPs into total installed costs for a case where the incremental install ation costs are

held flat. Table 6.2.8 summarizes the weighted average or mean costs and markups necessary for determining the weighted

- average baseli ne and standard

- level total installed costs for Air

- Cooled <65,000 Btu/h in office buildings as an example.

Table 6.2

. 8 Costs and Markups for Determination of Weighted

- Average Total Installed

Costs

, Air

- Cooled < 65 ,000 Btu/h Equipment Class *

Variable Weighted Average or Mean

Value

Baseline MSP $6,681

Standard

- Level MSP Increase (Efficiency Level 4) $6,075 Overall Markup Factor

– Baseline 1.579 Overall Markup Factor

– Incremental 1.269

Installation Cost

– Baseline $1,452 Installation Cost Factor, for U.S. Average 1.000

* Installation costs apply to the baseline unit, with no incremental installation costs.6

- 16 To illustrate the derivation of the weighted

- average total installed cost based on the data

shown in Table 6.2.8

, DOE presents Eq. 6

. 3 for the baseline ( ASHRAE s tandard l evel ) and for a higher efficiency level (Level 4) Air

- Cooled < 65 ,000 Btu/h equipment class

. For the baseline product, the calculation of the total installed cost at national average conditions is as follows : b

IC BASE AC < 65 = EQP BASE AC < 65 + INST BASE AC < 65 × ISTINDEX

= MFG BASE AC < 65 × Price Learning Coef Analysis Year × MU BASE AC < 65 × Sales Tax State

+ INST BASE AC < 65 × ISTINDEX

= $ 6,681 × 1.000 × 1. 4743 × 1.07 11 + $ 1,4 5 2 × (1.00)

= $ 10, 5 50 + $ 1,45 2

× (1.000)

= $ 12

, 0 02 Eq. 6

. 3

W here :

IC BASE AC <65 = total installed cost of Air

- Cooled < 65,000 Btu/h equipment at baseline efficiency

level ($), EQP BASE AC < 65 = equipment purchase price of Air

- Cooled < 65,000 Btu/h equipment at baseline efficiency level ($),

INST BASE AC<65 = installation cost of Air

- Cooled < 65,000 Btu/h equipment at baseline efficiency level ($),

MFG BASE AC<65 = MSP of Air

- Cooled < 65,000 Btu/h equipment at baseline efficiency level ($),

MU BASE AC<65 = overall baseline markup for equipment class Air

- Cooled < 65,000 Btu/h

, ISTINDEX = location dependent multiplier on installation costs ; equals 1.0 at a national

average , and Price Learning Coef Analysis Year = price learning coefficient value for the year in which the unit is being purchased (=1.0)

.

The calculation of the higher E fficiency L evel 4 total insta lled cost includes the use of a n MSP increment

. DOE uses an incremental markup factor that applies to increment al increases in

MSP. The L evel 4 price is equal to the baseline price calculated above, plus t he MSP increment

for a higher efficiency level multiplied by the incremental markup.

b Note that the numbers shown in Eq. 6

. 3 have been rounded and do not exactly match the numbers in the analysi s.6

- 17 As an example, DOE calculated the national average Level 4 total installed cost ( IC IMH

- A

Small

- B LEVEL4 ) as follows: c

IC AC < 65 LEVEL 4 = EQP AC < 65 LEVEL 4 + INST AC < 65 LEVEL 4 × ISTINDEX

= MFG BASE AC < 65 × Price Learning Coef Analysis Year × MU BASE AC < 65 + ∆ MFG AC < 65 LEVEL 4 ×

Price Learning Coef Analysis Year × MU I NCR × Sales Tax State + INST AC < 65 LEVEL 4 ×

ISTINDEX

= $ 6,681 x 1.000 x (1. 4743 ) x 1.07 11 + $ 6,075 x 1.000 x ( 1. 1844 ) x 1.07 11 + $1,4 52 x (1.000)

= $ 19, 709 Eq. 6

. 4

W here :

IC AC<65 LEVEL4 = total installed cost of Air

- Cooled < 65,000 Btu/h equipment at Efficiency Level

4 ($)

, EQP AC<65 LEVEL4 = equipment price of Air

- Cooled < 65,000 Btu/h equipment at Efficiency Level

4 ($)

, INST AC<65 LEVEL4 = installation cost of Air

- Cooled < 65,000 Btu/h equipment at Efficiency Level

4 ($)

, Δ MFG AC<65 LEVEL4 = i ncrement al increase in MSP of Air

- Cooled < 65,000 Btu/h equipment at Efficiency Level 4 compared to equipment at baseline efficiency level ($)

, and

MU I NCR = i ncremental markup for equipment class Air

- Cooled < 65,000 Btu/h

.

Table 6.2.9 presents the weighted

- average equipment price, installation costs, and total

installed costs for the Air

- Cooled < 65,000 Btu/h equipment class at the baseline level and each higher efficiency level examined

.

c Note that the numbers shown in Eq. 6

. 4 have been rounded and may not exactly match the numbers in the analysis.6

- 18 Table 6.2

. 9 Weighted

- Average Equipment Price, Installation Cost, and Total Installed

Costs for Air

- Cooled < 65 ,000 Bt u /h at U.S. Average C onditions (201 1 $) *

Efficiency Level Equipment Price ( MSP) Installation Cost Total Installed Cost Baseline (ASHRAE) 10,550 1,452 12,002

Level 1 12,037 1,452 13,490

Level 2 13,786 1,452 15,238

Level 3 15,841 1,452 17,293

Level 4 18,256 1,452 19,709

* Figures shown in the table were taken directly from the LCC analyses, and thus may differ from those shown above in the text due to rounding

.

6.2.4 Operating Cost Inputs

DOE define s the operating cost as the sum of energy cost, repair cost, and maintenance cost, as shown in the following equation:

OC = EC+ RC+ MC Eq. 6

. 5

W here :

OC = operating cost ($)

, EC = energy cost ($)

, RC = repair cost ($)

, and

MC = maintenance cost ($)

.

The remainder of this section provides information about the variables that DOE used to calculate the operating cost for commercial refrigeration equipment

. Table 6.2.10 shows the inputs for the determination of operating costs

.

Table 6.2

. 10 Inputs for Operating Costs
Electricity price ( cents /kWh ) Electricity price trend s Repair cost ($) Maintenance cost ($)

Lifetime (y ears )

Discount rate (%)

Effective date of standard Baseline electricity consumption (kWh/ yr) Standard case electricity consumption (kWh/ yr )

6.2.4.1 Electricity Price Analysis

This section describes the electricity price (cents/kWh) analysis used to develop the energy portion of the annual operating costs (price multiplied by electricity consumption) for commercial refrigeration equipment used in different commercial building types

.

Subdivision of the Country

. Because of the wide variation in electricity consumption patterns, wholesale costs, and retail rates acr oss the country, it is important to consider regional differences in electricity prices. For this reason, DOE divided the United States into the 50 states6

- 19 and the District of Columbia. DOE used reported average effective commercial electricity prices

at th e state level from the EIA publication Form EIA

- 826 Database Monthly Electric Utility

Sales and Revenue Data

. 4 The latest available prices from this source are for the calendar year

20 1 1

. d Table 6.2.11 provides data on the 2011 electricity prices.

Table 6.2

. 11 Commercial Electricity Prices by State ( 201 1 cents/k Wh )

State Commercial Electricity Price

cents/kWh State Commercial Electricity Price

cents/kWh State Commercial Electricity

Price

cents/kWh

Alabama 10.43 Kentucky 8.36 North Dakota 7.49

Alaska 14.90 Louisiana 8.50 Ohio 9.64

Arizona 9.51 Maine 12.30 Oklahoma 7.61

Arkansas 7.46 Maryland 11.48 Oregon 8.08

California 13.72 Massachusetts 14.44 Pennsylvania 10.04

Colorado 9.31 Michigan 10.23 Rhode Island 12.56

Connecticut 15.61 Minnesota 8.66 South Carolina 9.30

Delaware 10.78 Mississippi 9.42 South Dakota 7.72

Dist. of Col. 13.07 Missouri 8.00 Tennessee 10.13

Florida 9.97 Montana 9.08 Texas 8.98 Georgia 9.80 Nebraska 7.98 Utah 7.26

Hawaii 31.16 Nevada 9.08 Vermont 13.89

Idaho 6.46 New Hampshire 14.09 Virginia 7.84

Illinois 8.63 New Jersey 13.55 Washington 7.52

Indiana 8.76 New Mexico 8.81 West Virginia 8.07

Iowa 7.90 New York 16.02 Wisconsin 10.36

Kansas 8.72 North Carolina 8.11 Wyoming 7.63

DOE recognized that different kinds of businesses typically use electricity in different amounts at different times of the day, week, and year, and therefore face different effective prices. To make this adjustment, DOE used the 2003 Commercial Buildings Ener gy Consumption Survey ( CBECS ) 5 data set to identify the average prices paid by the three kinds of

businesses in this analysis compared with the average prices paid by all commercial consumer s. Eq. 6

. 6 shows t he ratio s of prices paid by the three types of businesses were used to increase or decrease the average commercial prices.

EPRICE COM BLDGTYPE STATE 2011 = EPRICE COM STATE 2011 × � EPRICE BLDGTYPE US 2003

EPRICE COM US 2003 �

Eq. 6

. 6

W here :

EPRICE COM BLD G TYPE STATE 20 1 1 = average commercial sector electricity price in a specific building type ( such as health care

, education , and office ) in a specific state in 20 1 1

, EPRICE COM STATE 20 1 1 = average commercial sector electricity price in a specific state in 20 1 1

, EPRICE BLDG TYPE US 2003 = national average commercial sector electricity price in a specific building
type in the 2003 CBECS

, and

EPRICE COM US 2003 = national average commercial sector electricity price in the 2003 CBECS

.

d The entire calendar year was not available. The actual period covered was November 2010

– October 2011.6

- 20 Table 6.2.12 shows the derivation of the EPRICE ratios from the CBECS.

Table 6.2

. 12 Derived Average Commercial Electricity Price by Business Type

Business Type Electricity Price

cents/kWh Ratio of Electricity Price to Average

Price for A ll Commercial Buildings

HealthCare 6

. 7 0. 848

Education 7

. 4 0.937

Office 8

. 1 1.025 All commercial buildings 7

. 9 1.000

Source : CBECS 2003

The derived ratio of commercial electricity prices by building type to the overall average commercial building price was then combined with state

- by

- state and U.S. average commercial rates to derive a series of prices for each state and the nation, for eac h building type. Future prices are project ed as described in section 6.2.4.2

.

6.2.4.2 Electricity Price Trend

The electricity price trend provides the relative change in electricity prices for future years out to the year 2045

. Estimating future electricity prices is difficult, especially considering that there are efforts in many states throughout the country to restructure the electricity supply industry.

DOE applie d a projected trend in national average electricity prices to each consumer ’s energy prices based on t he AEO201 1 price scenarios. The discussion in this chapter refers to the

201 1 reference price scenario

. In the LCC analysis, the following three scenarios can be analyzed:

1. AEO201 1 , High Economic Growth (“ AEO201 1 High Growth ” in Figure 6.2.3 )

2. AEO201 1 , Reference Case (“ AEO 2011 Reference ” in Figure 6.2.3 )

3. AEO201 1

, L ow Economic Growth (“ AEO201 1 Low Growth ” in Figure 6.2.3 )

Figure 6.2.3 shows the trends for the three AEO201 1 price projections where prices a re assumed to change. DOE extrapolated the values in later years ( i.e. , after 2035

— the last year of

the AEO201 1 forecast )

. To arrive at values for these later years, DOE used the price trend from

202 5 to 203 5 of each forecast scenario to establish prices for the years 203 6 to 204 5

.6

- 21 Figure 6.2

. 3 Electricity Price Trends for Commercial Rates to 204 5

The default electricity price trend scenario s used in the LCC analysis are the trend s at the

Census division level from the AEO201 1 Reference Case, the national average of which is

shown in Figure 6.2.3

. Spreadsheets used in calculating the LCC have the capability to analyze the other electricity price trend scenarios, namely, the AEO201 1 High Growth and the AEO201 1 Low Growth price trends and constant energy prices

. Appendix 6C shows results for LCC savings and PBP f rom performing sensitivity analyses using high and low prices.

6.2.4.3 Repair Cost

The repair cost is the average annual cost to the consumer for replacing or repairing components in the CRAC equipment that ha ve failed. Available data from c hapter 3 as well as

dat a on repair costs from RS Means suggest that costs of replacement parts used in repair increase as the size and the efficiency of CRAC units increases.6

- 22 RC BASE = K CAP × EQP OEM × � 1
( 1 + r ) MID � × � r ( 1

− ( 1 + r )

− LIFE ) �

Eq

. 6

. 7

W here :

RC BASE = annual ized repair cost for a baseline efficiency unit (including labor, overhead

, and profit) ($)

, K

CAP =percentage of original equipment price from manufacturer for a given equipment

capacity

, EQP OEM = estimate of raw original material price for one major repair ($) assumed to take place at the mid point of the equipment life

,

r = average real discount rate, assumed to be 4 percent

, MID = mid point of average equipment life (assumed to be 7.5 years)

and

LIFE = average lifetime of the equipment in years , assumed to be 15 years

.

The first bracket in the right

- hand expression is the present value factor for the midpoint of the equipment average life time , and the second is the annualization factor for the average

lifetime

.

K CAP = 0

. 0357 × Cap + 0

. 076 Eq

. 6

. 8

K CAP increases according to Eq

. 6

. 8 through capac ities ( Cap ) of 15 tons

, and is constant thereafter for larger sizes. This is in recognition of the observation that repair labor costs in the RS Means database are essentially constant for large capacities and the main increases occur as a

result of equipment costs.

For repair costs at higher efficiency levels as a result of standards, the materials component of repair costs is assumed to increase proportionately with the cost of the more

efficient equipment , while labor component is assumed to invol ve approximately the same activity at each level of efficiency and is held constant as efficiency increases :

RC STD = RC MATERIAL BASE × EQP OEM STD
EQP OEM BASE + RC LABOR BASE Eq

. 6

. 9

Where:

RC STD = repair cost at a standard level above the base (levels 1−4),

RC MATERIAL BASE = repair cost material component at the base level

, EQP OEM BASE = original equipment manufacturer price (MSP) at the base level, EQP OEM STD = original equipment manufacturer price at the standard level

, RC LABOR BASE = repair cost labor component at the base level.

As the components used for higher efficiency equipment have a higher original equipment manufacturer cost, t he above equation yi elds an increasing repair cost s scenario for higher efficiency equipment.6

- 23 There are other parts of the units that typically require repair, such as water distribution

c omponents, control modules, fan motors or water pumps for air

- or water

- cooled units

re spectively

, or evaporator components

. However, th ese parts are assumed to be th e same for all efficiency levels, so the repair costs for these parts remain constant for all efficiency levels. Therefore, these additional repair costs were not taken into consideration for the analysis.

6.2.4.4 Maintenance Cost

The maintenance cost is the cost to the consumer of maintaining equipment operation. The maintenance cost is not the cost associated with the replacement or repair of components that have failed (as discussed above). Rather, it is the cost associated with general maintenance ( e.g. , checking and maintaining refrigerant levels, replacing filters

, checking coolant distribution

line s for leaks

, cleaning , sanitizing

, and descaling ).

DOE estimated annualiz ed preventive maintenance costs for CRAC equipment as a percentage of the total MSP for each equipment class from data in the RS Means Cost W orks

data. RS Means provides estimates on the person

- hours, labor rates, and materials required to

maintain commerci al refrigeration equipment

. RS Means specifies preventive maintenance

activities for CRAC equipment expected to occur on a n annual basis as including the following

actions: c leaning evaporator coils

, lubricat ing motors

, clean ing condenser coils

, checking refrigerant pressures as necessary

, and similar activ it ies

. Many of these activities take place several times during the year. DOE did not break out t hese activities into separate line

- item

maintenance activities. Instead, DOE used a single figur e of $298 per year ( 2011 $) for preventive maintenance activities for all CRAC equipment classes between 3 tons and 24 tons capacity

. Because the largest units evaluated for the final rule were 24 tons capacity, all classes

had the same cost. D ata were not available to indicate how maintenance costs vary with equipment efficiency level . In addition, although preventive maintenance activities may vary by size of the unit, the activities are likely to be about the same regardless of efficiency lev el. Therefore, DOE assumed that preventive maintenance costs remain constant as equipment efficiency increase s

.

Table 6.2

. 13 Annualized Maintenance Costs by Equipment Class for Each Efficiency Level

Equipment Class Annualized Maintenance Costs for LCC by Efficiency Level $/yr

Baseline (ASHRAE) Level 1 Level 2 Level 3 Level 4

All Air

- Cooled 298 298 298 298 298

All Water

- Cooled 298 298 298 298 298

All Glycol

- Cooled 298 298 298 298 298

6.2.4.5 Lifetime

DOE defines lifetime as the age at which CRAC equipment is retired from service. DOE

based equipment lifetime on review of available online literature and studies and conclude d that a typical lifetime of b e tween 10 and 2 5 years with an average of 15 years is appropriate for most CRAC equipment

. While references to service life were found in online CRAC equipment literature, most documents found appeared to reference ASHRAE generally, and cite d equipment life estimates of 15 years

, 6 15

– 25 years

, 7

, 8 or 10

– 25 years

. 9 ASHRAE publishes service life6

- 24 estimates for a variety of equipment in the ASHRAE H andbook

, 10 but appears to have little data specific to CRAC equipment

. A 2005 ASHRAE study on equipment service life found a median

age for 92 CRAC units still in operation at 12 years, with the oldest at 20 years

, but did not have

end of life information. 11 An Australian study estimated the life at 10 years. 12 Based on the range of service life information available, DOE assume d a 10

– 25 yea r service l ife range and a 15

- year average service life for th e LCC analysis.

6.2.4.6 Discount Rate

The discount rate is the rate at which future expenditures are discounted to establish their present value. DOE derived the discount rates for the CRAC equipment analysis by estimating the cost of capital for companies that purchase CRAC equipment

. The cost of capital is commonly used to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so their cost of capital is the weighted average of the cost to the company of equity and debt financing.

DOE estimated the cost of equity financing by using the C apital A sset P ricing M odel (CAPM)

. 13 The CAPM, among the most widely used models to estimate the cost of equity financing, assumes that the cost of equity is proportional to the amount of systematic risk associated with a company. The cost of equity financing tends to be high when a company faces a large de gree of systematic risk and it tends to be low when the company faces a small degree of systematic risk.

DOE determined the cost of equity financing by using several variables, including the risk coefficient of a company

, 

### β ( beta), the expected return on “ risk free” assets ( R

f ), and the additional return expected on assets facing average market risk, also known as the equity risk premium or ERP

. The risk coefficient of a company

, 

### β

, indicates the degree of risk associated with a given firm relative to the l evel of risk (or price variability) in the overall stock market. Risk coefficients usually vary between 0.5 and 2.0. A company with a risk coefficient of

0.5 faces half the risk of other stocks in the market; a company with a risk coefficient of

2.0 faces twice the overall stock market risk.

Eq. 6

. 10 gives the cost of equity financing for a particular company:

k

e = R f + (β × ERP) Eq. 6

. 10

W here :

k

e = the cost of equity for a company (%),

R

f = the expected return of the risk free asset (%), 

### β

= the risk coefficient

, and

ERP = the expected equity risk premium (%)

.

DOE defined the risk

- free rate as the 40

- year geometric average yield on long

- term government bonds. The risk free rate was calculated using Federal Reserve data for the period6

- 25 19 7 2 to 20 1 1

, 14 with a resulting nominal rate of 6. 61 percent (2.73 percent after inflation)

. DOE

used a 2.94

- percent estimate for the ERP based on data from Damodaran Online

. 15

The cost of debt financing ( k d

) is the interest rate paid on money borrowed by a company. The cost of debt is estimated by adding a risk adjustment factor ( R

a ) to the risk

- free rate.

, Eq. 6

. 11

Where:

k

d = the cost of debt financing for each firm (%),

R

f = the expected return on risk

- free assets (%), and

a 

### R

= the risk adjustment factor to risk

- free rate for each firm (%)

.

The risk adjustment factor depends on the variability of stock returns represented by standard deviations in stock prices and was taken from Damodaran Online individual company cost of capital worksheets. 16 The weighted

- average cost of capital (WACC) of a company is the weighted

- average cost of debt and equity financing:

k = k

e × w e + k d × w d Eq. 6

. 12

W here :

k = the (nominal) cost of capital (%),

k

e = the expected rate of return on equity (%),

k

d = the expected rate of return on debt (%),

w e = the proportion of equity financing in total annual financing

, and

w d = the proportion of debt financing in total annual financing

.

The cost of capital is a nominal rate because it includes anticipated future inflation in the expected returns from stocks and bonds. The real discount rate or WACC deducts expected inflation ( r ) from the nominal rate. DOE calculated expected inflation ( 3.83 percent) over the

197 2

– 201 1 historical period used for the other data calculations

.

To estimate the WACC of computer room air conditioning equipment purchasers, DOE used a sample of companies that are likely to purchase CRAC equipment

. This sample was largely drawn from the database of U.S. companies given on the Damodaran Online individual company worksheet cited earlier

. Th e Damodaran database includes most of the publicly traded companies in the U nited S tates. State and Federal government data were added to complete the

database.

DOE divided building occupants into three occupant categori es : private, State and local government (including K

- 12 schools, colleges, and universities), and Federal government. Within the privat e occupant category, companies were further divided into three business types (Health Care, Education, and Office) accord ing to their type of activity

. Each business type was a f d 

### R R k + =6

- 26 assigned to the commercial building type of the same name, as shown in Table 6.2.14 . In

estimatin g the distribution of discount rates for each bu s iness t ype , DOE sampled the individual businesses within the business type. For the final rule, each private company within a business type ha s an equal chance of being selected, so there is a distribution of discount rates for each business type. The probability of an occupant category being selected within a building type depends on the relative employment of private firms, S tate agencies, and F ederal government agencies within the building type.

Table 6.2

. 14 Assignment of Building Occupants to Bu siness Types

Building Type Occupant Type Business Type Business Activities

Health Care Private * Health Care Medical supplies, Healthcare information,

Medical services

Education Private Education Educational services

State and Local

Government Education State and Local Government

Office Private Office Publishing, Newspapers, Computer software, Telecommunications utilities and services, Retail, Banks, Financial services, Securities brokerages, Insurance and reinsurance, Property management, Real estate inve s tment trusts, Public/private equity, Advertising,
Human resources, Internet, E

- commerce, I T services, Wireless networking, Information services, and Diversified companies

State and Local

Government Office State and Local Government

Federal

Government Office Federal Government

* Overall, this sector is dominated by private employers. Excluding the medical supply firms and health care information firms, which cannot be identified in the BLS May 2011 Occupational Employment and Wage Es t imates, the health care industry employs 14.9 m illion workers. Within the hospital sector (about 38 percent proportion of the health care industry), publicly owned hospitals employed about 18 percent of all hospital workers, or less than 7 percent of the total health care industry (see www.bls.gov/oes/current/oessrci.htm#62 ). Adding back in the medical supply and information firms further dilutes the public percentage.

Table 6.2.15 s hows the bu siness type and occupant categories as well as the number of companies used for determining real discount rates and the approximate weighted average real discount rate for each business type.6

- 27 Table 6.2

. 15 Derivation of Average Real Discount Rates by Bu siness Type

Business Type

Description Private Federal Government* State and Local

Government* Wtd

No.

Obs.* WACC Percent

of Stock Federal

Risk

- Free

Rate Percent

of Stock Muni

Bond

Rate Percent

of Stock Discount

Rate

Health Care 4. 98 % 100% 2. 73 % 0% 2.5 0 % 0% 4. 98 % 300

Education 4. 39 % 25% 2. 73 % 0% 2.5 0 % 75% 2.98 % 2 4

Office 4. 8 6% 83% 2. 73 % 5% 2.5 0 % 12% 4. 46 % 1574
Source: Pacific Northwest National Laboratory (PNNL) WACC calculations applied to firms sampled from the Damodaran Online website. Assumptions for weighting factors in offices are based on civil i an employment in office and administrative occupations and reflect lack of reliable data sources on the distribution of computer rooms. *No Damodaran observations available for governments

.

The Damodaran database contained data representative of privately operated schools, but lacked data on cost of capital for public schools. For the final rule, DOE assumed a 40

- year geometric average of yields on representative 2 0

- year municipal bonds as a proxy for the cost of capital for publ ic schools , 6.38 percent (2.50 percent after inflation)

. 17 There are both Federal government agencies and State and local government agencies with computer rooms outfitted with CRAC equipment in the offices category . The Federal risk

- free rate was used for the

discount rate for Federal offices; the same municipal bond rate was used for S tate offices as for public education

.

6.2.4.7 Compliance Date of Standard

As discussed in section 6.1.2

, DOE assumed that the final rule would be issued in 201 3 and, therefore, that the new standards would take effect in 201 7

. For the LCC analysis, the year of equipment purchase is 201 7

. H oweve r, all dollar values are expressed in 201 1 $.

6.3 PAYBACK PERIOD INPUT S

6.3.1 Definition

P BP is the amount of time it takes the consumer to recover the higher purchase cost of

more energy efficient equipment as a result of lower operating costs. Numerically, the PBP is the ratio of the increase in purchase cost to the decrease in annual operating expenditures. This type of calculation is known as a “simple” PBP because i t does not take into account changes in operating cost over time or the time value of money, that is, the calculation is done at an

effective discount rate of zero percent.

The equation for PBP is:

PBP =∆ IC/ ∆O C Eq. 6

. 13

W here :

PB P = p ayback period in years

, ∆ IC = difference in the total installed cost between the more

- efficient standard level and the baseline equipment

, and6

- 28 

### ∆ OC = difference in annual operating costs.

P BP s are expressed in years. P BPs greater than the life of the product mean that the

increased total installed cost of the more

- efficient equipment is not recovered in reduced operating costs over the life of the equipment

. N egative payback s were observed for certain equipment classes . Some of these negative paybacks occurred because the available data indicated that higher efficie ncy equipment had a lower initial cost than less

- efficient equipment just meeting the ASHRAE standard. DOE regards this as likely being a data quality issue rather

than reflective of real first cost savings due to higher standards . A smaller group of negative paybacks occu rr ed because the increase in annualized non

- electricity cost ( repair and

maintenance cost ) at higher efficiencies was greater than the energy cost savings, resulting in negative operating gains going from ASHRAE to the higher standard

, and thus negative paybacks . Although technically poss ible, this outcome would also mean LCC losses . An efficiency level with LCC losses would not be chosen as an efficiency standard

.

6.3.2 Inputs

The data inputs to PBP are the total installed cost of the equi pment to the consumer for

each efficiency level and the annual (first year) operating costs for each efficiency level

. The inputs to the total installed cost are the consumer’s final equipment price and the installation

cost. The inputs to the operating co sts are the annual energy cost, the annual repair cost, and the

annual maintenance cost. The PBP calculation uses the same inputs as the LCC analysis

described in section 6.2 , except that electricity price trends and discount rates are not required

because t he PBP is a “simple” (undiscounted) payback and the required electricity price is only for the year in which a new efficien cy standard is to take effect

— in this case, the year 2017

. The electricity price used in the PBP calculation of electricity cost was the price projected for 2017

, expressed in 201 1 $

. Discount rates are not used in the PBP calculation.

6.4 LIFE

- CYCLE COST AND PAY BACK PERIOD RESULTS

The results of the LCC and PBP analysis are presented in this section. Mean values of LCC savings and PBP are presented along with a summary of the distribution of these values.

6.4.1 Life

- Cycle Cost Results

Figure 6.4.1 shows the change in LCC over the ASHRAE baseline and the four higher efficiency levels for the Air

- Cooled < 65 ,000 Btu /h equipment class. The LCC values on this

chart are mean values obtained from t he LCC analysis. This curve is presented here as an example to illustrate the typical relationship between installation cost and LCC values over all the efficiency level s in a n e quipment class

. The installed costs increase steadily from the baseline to the highest possible efficiency level

. Total life

- cycle costs initially decrease from ASHRAE standard level ( baseline ) for the first two additional efficiency levels (Level s 1 and 2 ), then

increase to t he highest possible efficiency level (Level 4 )

.6

- 29 Figure 6.4

. 1 LCC and I nstalled C ost V ariation over E fficiency L evels for the Air

- Cooled <
65 ,000 Btu/h E quipment C lass

As stated earlier, the LCC savings output obtained from the LCC analysis are in the form of distributions. LCC savings distributions are illustrated here with the example of the Air

Cooled < 65 ,000 Btu equipment class as shown in Figure 6.4.2 . Similar plots of LCC savings distribution are presented in A ppendix 6 B for all equipment class es analyzed. Table 6.4.1 presents the numerical values associated with the plot in Figure 6.4.2

. Figure 6.4.2 illustrates the mean and median values on the plot with the help of red and blue markers , respectively

. The elongated large rectangular box is used to repre sent the 25 th and 75 th percentile values . The lower edge of the elongated rectangle represents the 25th percentile , which means that 25 percent

of the consumer s w ould experience LCC savings of $182 or less if the standard we re set at Level

1

, minus $ 378 or below in LCC saving s if the standard were set at Level 2 , and so on. The

m edian value of LCC savings is equal to the 50 th percentile. The upper edge of the elongated rectangle represents the 75 th percentile. The two ends of the vertical black line for each efficiency level represent the 5 th percentile (lower end) and 95 th percentile (upper end).

Mean and median LCC savings for all equipment class es analyzed are summarized in

Table 6.4.2 and Table 6.4.3

, respectively.6

- 30 Figure 6.4

. 2 LCC S avings D istribution for A ll the E fficiency L evels for the Air

- Cooled <
65 ,000 Btu/h Equipment Class

Table 6.4

. 1 LCC Savings D istribution R esults for the Air

- Cooled < 65 ,000 Btu/h Equipment Class (2011$)LCC Savings*2011$ Efficiency Level 1 2 3 4

Mean 584 122 (648) (1,828)
Median (50 th Percentile) 460 (111) (794) (1,878)

5 th Percentile (196) (774) (1,782) (3,384)

25 th Percentile 96 (459) (1,105) (2,559)

75 th Percentile 873 431 (382) (1,321)

95 th Percentile 1,752 1,676 889 (74)

* Values in parenthesis are negative numbers. These are efficiency levels for which the installed cost increases cannot be recovered through savings in operating costs.6

- 31 Table 6.4

. 2 Mean LCC Savings for All Equipment Classes and Efficiency Levels

Product Class Mean LCC Savings
2011$ *

Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 584 122 (648) (1,828)

Air

- Cooled 65

– 240 kBtu 8,535 6,378 5,894 6,474

Air

- Cooled ≥ 240 kBtu 24,709 18,947 18,146 20,871

Water

- Cooled < 65 kBtu 5,286 7,264 7,896 10,089

Water

- Cooled 65

– 240 kBtu (774) (4,582) (11,622) (23,097)

Water

- Cooled ≥ 240 kBtu (196) (7,906) (22,491) (46,570)

Water

- Cooled w/ FE < 65 kBtu 4,686 6,400 6,908 8,772

Water

- Cooled w/ FE 65

– 240 kBtu (4,179) (9,336) (17,987) (31,244)

Water

- Cooled w/ FE ≥ 240 kBtu (8,064) (18,795) (36,931) (64,864)
Glycol

- Cooled < 65 kBtu 5,372 7,375 8,009 10,226
Glycol

- Cooled 65

– 240 kBtu 588 (3,117) (10,236) (22,091)
Glycol

- Cooled ≥ 240 kBtu 1,633 (6,637) (22,582) (49,159)
Glycol

- Cooled w/ FE < 65 kBtu 5,162 7,064 7,640 9,722
Glycol

- Cooled w/ FE 65

– 240 kBtu (1,652) (6,282) (14,548) (27,719)
Glycol

- Cooled w/ FE ≥ 240 kBtu (3,338) (13,598) (31,974) (61,294)
*Values in parentheses are negative values.

Table 6.4

. 3 Median LCC Savings for All Equipment Classes and Efficiency Levels

Product Class Median LCC Savings
2011$ *

Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 460 (111) (794) (1,878)

Air

- Cooled 65

– 240 kBtu 7,758 5,282 4,478 4,942

Air

- Cooled ≥ 240 kBtu 22,520 15,830 13,996 16,809

Water

- Cooled < 65 kBtu 5,144 8,471 7,494 9,708

Water

- Cooled 65

– 240 kBtu (1,170) (4,796) (11,835) (23,862)

Water

- Cooled ≥ 240 kBtu (1,149) (8,810) (22,569) (48,314)

Water

- Cooled w/ FE < 65 kBtu 4,585 7,506 6,535 8,458

Water

- Cooled w/ FE 65

– 240 kBtu (4,462) (8,539) (18,938) (32,997)

Water

- Cooled w/ FE ≥ 240 kBtu (8,658) (17,369) (38,532) (67,834)
Glycol

- Cooled < 65 kBtu 5,229 8,582 7,597 9,808
Glycol

- Cooled 65

– 240 kBtu 83 (3,702) (10,118) (22,892)
Glycol

- Cooled ≥ 240 kBtu 508 (8,038) (22,386) (51,115)
Glycol

- Cooled w/ FE < 65 kBtu 5,002 8,140 7,123 9,259
Glycol

- Cooled w/ FE 65

– 240 kBtu (2,226) (6,608) (14,702) (28,421)
Glycol

- Cooled w/ FE ≥ 240 kBtu (4,493) (14,442) (32,317) (63,274)

*Values in parentheses are negative values.6

- 32 6.4.2 Payback Period Results

Figure 6.4.3 presents the distribution of the PBP results for Efficiency Level 1 to Efficiency Level 4 of the equipment class Air

- Cooled <65 ,000 Btu /h

. The numerical values associated with this plot are presented in Table 6.4.4

. The red marker represents the mean and the blue marker represents the me dian PBP for each efficiency level. The lower edge of the elongated rectangular box represents the 25 th percentile , which means that 25 percent of the

consumer s w ould experience a PBP of 6.9 years o r less if the energy conservation standard were

set at the ASHRAE standard ( Level 1 )

, 8

. 3 years or less if the energy conservation standard were

set at Level 2 , and so on. T he upper edge of the rectangular box represents the 75 th percentile. The two ends of the vertical line represent the 5 th percentile (lower en d) and 95 th percentile (upper end). Table 6.4.5 and Table 6.4.6 summarize the mean and median PBPs , respectively, for all efficiency levels for all the analyzed equipment class es.

Figure 6.4

. 3 P ayback P er iod Distributions for A ll E fficiency L evels for the Air

- Cooled <
65 ,000 Btu/h Equipment Class

Table 6.4

. 4 Payback P eriod D istribution R esults for the Air

- Cooled < 65 ,000 Btu/h Equipment ClassPayback periodyears Efficiency Level Level 1 Level 2 Level 3 Level 4

Mean 8.6 10.3 12.3 14.7 Median (50th Percentile) 8.6 10.3 12.2 14.6

5th Percentile 5.4 6.4 7.6 9.0

25th Percentile 7.2 8.5 10.2 12.1

75th Percentile 10.1 12.1 14.5 17.3

95th Percentile 11.9 14.3 17.2 20.76

- 33 Table 6.4

. 5 Mean Payback Period for All Equipment Classes and Efficiency Levels

Product Class Mean P ayback P eriod *

years
Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 8.6 10.3 12.3 14.7

Air

- Cooled 65

– 240 kBtu 2.6 3.0 3.5 4.0

Air

- Cooled ≥ 240 kBtu 1.5 1.7 2.0 2.3

Water

- Cooled < 65 kBtu (21.3) (20.7) (20.2) (19.6)

Water

- Cooled 65

– 240 kBtu 14.1 19.9 29.9 50.8

Water

- Cooled ≥ 240 kBtu 12.7 18.9 32.0 58.2

Water

- Cooled w/ FE < 65 kBtu (43.7) (42.7) (41.7) (40.7)

Water

- Cooled w/ FE 65

– 240 kBtu (584.7) (33.8) 111.3 (454.9)

Water

- Cooled w/ FE ≥ 240 kBtu (41.0) (194.2) (48.0) (159.5)
Glycol

- Cooled < 65 kBtu (20.4) (19.9) (19.3) (18.8)
Glycol

- Cooled 65

– 240 kBtu 11.0 15.8 24.1 42.2
Glycol

- Cooled ≥ 240 kBtu 11.0 17.3 34.0 1.1
Glycol

- Cooled w/ FE < 65 kBtu (29.1) (28.4) (27.7) (27.1)
Glycol

- Cooled w/ FE 65

– 240 kBtu 21.4 36.6 299.0 (141.0)
Glycol

- Cooled w/ FE ≥ 240 kBtu 26.9 (902.7) (112.6) 7.1

* Values in parentheses are negative values. Either there are savings in installed costs or repair and maintenance cost increases outweigh energy savings as efficiency levels are compared with the baseline (ASHRAE) standard

level

.

Table 6.4

. 6 Median Payback Period for All Equipment Classes and Efficiency Levels

Product Class Median P ayback P eriod *

years

Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 8.6 10.3 12.2 14.6

Air

- Cooled 65

– 240 kBtu 2.6 3.0 3.5 3.9

Air

- Cooled ≥ 240 kBtu 1.4 1.7 2.0 2.3

Water

- Cooled < 65 kBtu (21.7) (21.1) (20.5) (19.9)

Water

- Cooled 65

– 240 kBtu 14.2 19.9 29.3 47.0

Water

- Cooled ≥ 240 kBtu 12.6 18.6 29.7 54.6

Water

- Cooled w/ FE < 65 kBtu (40.7) (39.7) (38.7) (37.7)

Water

- Cooled w/ FE 65

– 240 kBtu 36.8 48.1 35.8 (73.0)

Water

- Cooled w/ FE ≥ 240 kBtu 32.3 22.6 (43.7) (57.2)
Glycol

- Cooled < 65 kBtu (20.5) (20.0) (19.5) (19.0)
Glycol

- Cooled 65

– 240 kBtu 10.9 15.5 23.0 37.5
Glycol

- Cooled ≥ 240 kBtu 10.6 16.3 28.0 48.4
Glycol

- Cooled w/ FE < 65 kBtu (28.4) (27.8) (27.1) (26.4)
Glycol

- Cooled w/ FE 65

– 240 kBtu 18.0 27.3 45.3 49.5
Glycol

- Cooled w/ FE ≥ 240 kBtu 19.4 26.8 17.6 (45.0)

* Values in parentheses are negative values. Either there are savings in installed costs or repair and maintenance cost increases outweigh energy savings as efficiency levels are compared with the baseline (ASHRAE) standard

level

.

6.4.3 Rebuttable Presumption Payback Period

Sections 325(o)(2)(B)(iii) and 345(e)(1)(A) of EPCA (42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)(A)) establish a rebuttable presumption for CRAC equipment. The6

- 34 rebuttable presumption states that a standard is economically justified if the Secretary of Energy finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer w ill receive as a result of the standard, as calculated under the applicable test procedure

. ” This rebuttable presumption test is an alternative path to establishing economic justification.

To evaluate the rebuttable presumption, DOE estimated the additiona l cost of purchasing

more

- efficient, standard s

- compliant equipment, and compared this cost to the value of the energy saved during the first year of operation of the equipment

. DOE interprets that the increased cost of purchasing standard s

- compliant equipment includes the cost of installing the equipment for use by the purchaser. DOE calculated the rebuttable presumption payback period (RPBP), or the ratio of the value of the increased installed price above the baseline efficiency level to the first

y ear’s energy cost savings. When RPBP is less than 3 years, the rebuttable presumption is satisfied; when RPBP is equal to or more than 3 years, the rebuttable presumption is not

satisfied. Note that this PBP calculation does not include other components to the annual operating cost of the equipment ( i.e.

, maintenance costs and repair costs). The RPBPs calculated

can thus be different from the PBPs calculated in section 6.4.2

.

DOE calculated the RPBPs for the distribution of installed costs and energy prices

discussed in section s 6.4.1 and 6.4.2 , which are representative of the same three building types

and all 50 s tates plus the District of Columbia

. The RPBP was calculated for each higher efficiency level within each equipment class

.

Table 6.4.7 shows the nationally averaged median RPBP s calculated for all equipment

class es and efficiency levels.6

- 35 Table 6.4

. 7 Rebuttable Presumption Payback Periods by Efficiency Level and Equipment

Class

Product Class R ebuttable P ayback P eriod *

years
Level 1 Level 2 Level 3 Level 4

Air

- Cooled < 65 kBtu 7.6 8.9 10.5 12.2

Air

- Cooled 65

– 240 kBtu 2.4 2.7 3.1 3.5

Air

- Cooled ≥ 240 kBtu 1.3 1.5 1.7 2.0

Water

- Cooled < 65 kBtu (22.5) (21.9) (21.2) (20.5)

Water

- Cooled 65

– 240 kBtu 9.6 12.1 15.2 19.3

Water

- Cooled ≥ 240 kBtu 7.7 9.7 12.3 15.6

Water

- Cooled w/ FE < 65 kBtu (46.5) (45.2) (43.8) (42.5)

Water

- Cooled w/ FE 65

– 240 kBtu 19.7 24.9 31.4 39.8

Water

- Cooled w/ FE ≥ 240 kBtu 15.8 20.0 25.3 32.1
Glycol

- Cooled < 65 kBtu (21.9) (21.3) (20.7) (20.1)
Glycol

- Cooled 65

– 240 kBtu 7.5 9.6 12.2 15.5
Glycol

- Cooled ≥ 240 kBtu 6.3 8.0 10.2 13.0
Glycol

- Cooled w/ FE < 65 kBtu (31.2) (30.3) (29.5) (28.6)
Glycol

- Cooled w/ FE 65

– 240 kBtu 10.6 13.5 17.2 22.0
Glycol

- Cooled w/ FE ≥ 240 kBtu 8.8 11.2 14.4 18.4

* Values in parentheses are negative values. Either there are savings in installed costs as efficiency levels are compared with the baseline (ASHRAE) standard level

.

6.5 DETAILED RESULTS

DOE presents detailed results f rom the LCC analysis in A ppendix 6 B

. Plots similar to Figure 6.4.2 and Figure 6.4.3 are presented in the appendix for all equipment class es. In addition,

tables summarizing the major metrics o n one table for each equipment class are includ ed. Table

6.5.1 is a reproduction of the summary table for the Ai r

- Cooled < 65 kBtu equipment class

. This table presents the mean values of installed costs, annual operating costs, LCC, LCC savings, and median PBP values for all the efficiency levels. It also presents the percentage of consumer s who experience net cost, no impact, and net benefit. The average LCC savings and the percentage of

consumer s experiencing a net benefit or cost are based on a distribution of efficiency choices. In the base case, not all consumer s are assumed to be buyin g equipment at the baseline efficiency. Some are assumed to be buying at higher efficiency levels. The LCC savings is an average of the savings achieved by consumer s who, in the base case, were buying less

- efficient equipment than the efficiency level exam ined. Consumer s with no impact were assumed in the base case to be already buying more

- efficient equipment, so the efficiency level in question would not affect

them.6

- 36 Table 6.5

. 1 Summary of R esults of LCC and PBP A nalysis for the Air

- Cooled <
65 ,000 Btu/h E quipment C lass

Efficiency

Level

Number Life

- Cycle Cost, All C onsu mers Life

- Cycle Cost Savings

Payback Period, Median

y ears Installed

Cost

201 1 $ Total

Discounted Operating

Cost

201 1 $ LCC,

All

Co nsum ers 201 1 $ Affected

Consumer s'

Average Savings

201 1 $ * % of Consumer s that Experience

Net

Cost

% No Impact

% Net

Benefit

%

Baseline (ASHRAE) 12,003 33,563 45,566

1 13,491 31,554 45,045 584 2 89 9 8.6

2 15,239 29,905 45,144 122 18 68 14 10.3

3 17,295 28,548 45,842 (648) 67 23 10 12.2

4 19,711 27,436 47,147 (1,828) 91 5 4 14.6
* Values in parentheses are negative values.6

- 37 REFERENCES

1

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