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-28C -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 ( AEO201 3 ) 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 201 9 , falling to 5.1 percent below the Reference Case by

2044. A s 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 PBP s are shown consistently for the Low Growth

Case. A t Trial Standard Level ( TSL ) 2, the High Growth C ase 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

li kely a function of r egional electricity price differences

.

8C.2 DETAILED RESULTS

T he 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 m ean LCC savings

are positive at exactly the same E Ls as in the Reference C ase

.

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 fo r 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 t here are small numerical

differences among the three cases, there are no substanti al difference s 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 R eference C ase 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

201 3 $ *

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. Fi nally, 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 pr ice 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