1 | Building Technologies Program eere.energy.gov The Parker Ranch installation in Hawaii 

### Manufacturer Impact Analysis Overview and Preliminary Results



# Distribution Transformers October 13, 2011

Liquid Immersed and Medium Voltage Dry Type2 | Building Technologies Program eere.energy.gov Industry profile Develop straw

man GRIM* Develop interview guide Interviews & industry

wide/ subgroup analyses Assess direct employment, manufacturing capacity, and cumulative burden Finalize MIA results for NOPR 

### Phase 2

*** Government Regulatory Impact Model (GRIM)** Phase 3 Phase 1 

# Manufacturer Impact Analysis: Overview3 | Building Technologies Program eere.energy.gov 

## • Purpose

– To assess the impacts of standards on manufacturers;

– To identify and estimate impacts on manufacturer sub

- groups that may be more severely affected than the industry as a whole; and

– To examine the direct employment impacts, manufacturing capacity, and the cumulative regulatory impact on the industry.



## • Methodology

– Analyze industry cash flow and industry net present value (INPV) through use of the Government Regulatory Impact Model (GRIM); and

– Interview manufacturers to refine inputs to the GRIM, develop sub

group analyses, and address qualitative issues. 

# MIA Overview4 | Building Technologies Program eere.energy.gov 

## • Core steel availability

– Supply and demand: There is currently a limited supply of M3, M2, ZDMH, H

- 0 DR, and SA1 on the market. If standards are raised, demand for these grain

- oriented electrical steels would increase.

– Amorphous steel: If efficiency levels are set so high that only amorphous can be used, then manufacturers may be subject to monopolistic pricing.



## • Size and weight constraints for pole mounts

– The increased size and weight of higher efficiency transformers may not be able to meet the physical constraints of utility poles



## • Conversion costs and stranded assets

– Producing higher efficiency transformers may require the purchase of new equipment and significant R&D investment 

# Manufacturer Key Issues

- Liquid5 | Building Technologies Program eere.energy.gov 

# Capital Conversion Cost Calculations

Engineering

Analysis LCC Analysis Shipments Analysis Key Inputs Methodology

Base Case Steel Demand By Type and Quantity

(Forecast for 2016) Standards Case Steel Demand By Type and Quantity

(Forecast for 2016)

Change in Steel Mix and Quantity Manufacturer

Interviews

Equipment Supplier Interviews

Previous Rulemaking Production Processes and Equipment Capacities

Equipment Costs New Equipment Needs

CAPITAL CONVERSION COSTS6 | Building Technologies Program eere.energy.gov 

# • Based on industry interviews and calls with equipment suppliers, the major capital expenses related to any new efficiency standards would be associated with expanding capacity for amorphous core transformer production.

– Large ticket items include specialized core cutting equipment, new annealing ovens, overhead cranes, and epoxy coating equipment

– For a line capable of producing roughly 1000 tons/yr of amorphous core, DOE estimates that manufacturers would incur a capital cost s of between $450K and $950K, largely driven by the quality and brand of the core cutting equipment. 

# Amorphous Production Line Estimates