8C-i 

APPENDIX 8C. SENSITIVITY OF LIFE-CYCLE COST AND PAYBACK PERIOD 

ANALYSIS RESULTS TO ENERGY PRICES

TABLE OF CONTENTS

8C.1 INTRODUCTION AND OVERVIEW .........................................................................8C-1

8C.2 DETAILED RESULTS .................................................................................................8C-1

LIST OF TABLES

Table 8C.2.1 Effect of AEO Price Scenarios on Mean LCC Savings.......................................8C-2

Table 8C.2.2 Effect of AEO Price Scenarios on Median LCC Savings ...................................8C-2

Table 8C.2.3 Effect of AEO Price Scenarios on Median PBP ..................................................8C-2
8C-1 

APPENDIX 8C. SENSITIVITY OF LIFE-CYCLE COST AND PAYBACK PERIOD 

ANALYSIS RESULTS TO ENERGY PRICES

8C.1 INTRODUCTION AND OVERVIEW

For the notice of proposed rulemaking, the U.S. Department of Energy (DOE) 

investigated the sensitivity of the life-cycle cost (LCC) savings and payback period (PBP) to 

changes in the assumed future energy prices. As stated in the chapter 8 of the technical support 

document, DOE ran the LCC model with energy price scenarios that were above and below the 

Annual Energy Outlook 2013 (AEO2013) Reference Case and then compared LCC savings and 

PBP with Reference Case results. In the High Growth Case, the national average commercial 

sector electricity price is about 0.2 percent higher than in the Reference Case by the year 2019, 

rising to 5.8 percent higher by 2044, the last year of the LCC analysis. Conversely, in the Low 

Growth Case, the national average commercial sector electricity price is actually 1.3 percent 

higher than in the Reference Case in 2019, falling to 5.1 percent below the Reference Case by 

2044. As might be expected, higher electricity prices make the mean LCC savings higher and the 

PBP shorter. However, the relative regional prices in 2019 are not necessarily the same as at the 

national level; nor are the regional growth trends the same as at the national level; nor are the 

relative installed costs for the equipment the same in all regions—all of which complicates the 

interpretation of the results. Both mean and median LCC savings are strongly influenced by 

national price trends; thus, the High Growth Case consistently has the highest LCC savings, and 

the Low Growth Case has the lowest savings. 

PBP is more complicated because the PBP estimates are based on 2019 conditions, where 

the Low Growth Case has the highest electricity price and the Reference Case has the lowest 

price. At most levels, for example, the shortest PBPs are shown consistently for the Low Growth 

Case. At Trial Standard Level (TSL) 2, the High Growth Case has the longest median payback

for single package vertical heat pump (SPVHP) units, and the Reference Case has the longest 

median payback for single package vertical air conditioner (SPVAC) units. This difference is 

likely a function of regional electricity price differences. 

8C.2 DETAILED RESULTS

The differences in savings among the AEO cases, while noticeable, do not change the 

fundamental message as portrayed in the Reference Case. For this NOPR, TSLs and Efficiency 

Levels (ELs) have a one-to-one correspondence. For example, TSL 1 calls for EL 1 equipment, 

TSL 2 calls for EL 2 equipment, and so on. Table 8C.2.1 compares the mean LCC savings at 

each EL for all consumers affected by the standards. The High Growth Case mean LCC savings 

are positive at exactly the same ELs as in the Reference Case. 

Table 8C.2.2 shows the median LCC savings at each EL for those consumers affected by 

the standards. For all of the price scenarios, at TSL 4 for both classes and TSL 3 for SPVAC 

units, more than 50 percent of affected customers would clearly experience LCC losses (median 

LCC savings are negative in these cells of Table 8C.2.2). While there are small numerical

differences among the three cases, there are no substantial differences among the price scenarios. 

At each EL, the High Growth Case and Low Growth Case median value is always a loss if the 

Reference Case median value is a loss and is a savings if the Reference Case shows a savings. 
8C-2 

Table 8C.2.1 Effect of AEO Price Scenarios on Mean LCC Savings 

Equipment Class

Reference Case Mean LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 116 179 (24) (825)

SPVHP <65 kBtu/h 358 424 819 (177)

Equipment Class

High Growth Case Mean LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 120 185 (14) (812)

SPVHP <65 kBtu/h 365 434 842 (151)

Equipment Class

Low Growth Case Mean LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 112 171 (39) (843)

SPVHP <65 kBtu/h 348 411 787 (211)

* Parentheses indicate negative values.

Table 8C.2.2 Effect of AEO Price Scenarios on Median LCC Savings

Equipment Class

Reference Case Median LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 60 79 (193) (1,042)

SPVHP <65 kBtu/h 320 350 665 (315)

Equipment Class

High Growth Case Median LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 62 83 (187) (1029)

SPVHP <65 kBtu/h 329 353 694 (301)

Equipment Class

Low Growth Case Median LCC Savings 

2013$*

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 56 74 (205) (1059)

SPVHP <65 kBtu/h 313 335 649 (356)

* Parentheses indicate negative values.

Table 8C.2.3 shows the median PBP values for the three scenarios. The Low Growth 

price scenario (with the highest energy prices in 2019) typically shortens the PBP in the range of 

1 to 2 months, depending on the equipment class and EL, which is a very small effect. Given the 

small difference in the national average price between the High Growth and Reference scenarios, 

there is not a consistent directional effect on median PBP between the two scenarios. Finally, it is 

useful to keep in mind that the PBP analysis is based on 2019 conditions, which are not 

representative of the AEO forecast period as a whole and are not helpful in evaluating the 

sensitivity of LCC investment decisions to future electricity price scenarios. 
8C-3 

Table 8C.2.3 Effect of AEO Price Scenarios on Median PBP 

Equipment Class

Reference Case Median Payback Period

years

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 7.9 8.4 14.4 27.3 

SPVHP <65 kBtu/h 4.1 4.8 6.2 13.6 

Equipment Class

High Growth Case Median Payback Period

years

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 7.9 8.3 14.3 27.2

SPVHP <65 kBtu/h 4.1 4.9 6.2 13.7

Equipment Class

Low Growth Case Median Payback Period

years

EL 1 EL 2 EL 3 EL 4

SPVAC <65 kBtu/h 7.8 8.3 14.2 27.3

SPVHP <65 kBtu/h 4.0 4.8 6.2 13.4