CHAPTER 10. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION ......................................................................................................... 10-3

10.1.1 Trial Standard Levels ......................................................................................... 10-3

10.2 FORECASTED EFFICIENCIES FOR BASE AND STANDARDS CASES .............. 10-4

10.3 NATIONAL ENERGY SAVINGS ............................................................................... 10-6

10.3.1 Approach ............................................................................................................ 10-6

10.3.2 Inputs.................................................................................................................. 10-7

10.3.2.1 Shipments ......................................................................................... 10-8

10.3.2.2 Equipment Stock .............................................................................. 10-8

10.3.2.3 Annual Energy Consumption per Unit ............................................ 10-8

10.3.2.4 National Annual Energy Savings ..................................................... 10-9

10.3.2.5 Site-to-Power Plant Energy Use Factor ......................................... 10-10

10.3.2.6 Full-Fuel-Cycle Energy ................................................................. 10-11

10.4 NET PRESENT VALUE ............................................................................................. 10-12

10.4.1 Approach .......................................................................................................... 10-12

10.4.2 Inputs................................................................................................................ 10-13

10.4.2.1 Average Annual Per-Unit Equipment Cost.................................... 10-14

10.4.2.2 Average Annual Per-Unit Operating Cost ..................................... 10-14

10.4.2.3 Total Annual Increases in Equipment Cost ................................... 10-15

10.4.2.4 Total Annual Savings in Operating Cost ....................................... 10-15

10.4.2.5 Discount Factor .............................................................................. 10-16

10.4.2.6 Present Value of Costs ................................................................... 10-16

10.4.2.7 Present Value of Savings ............................................................... 10-16

10.5 RESULTS OF NES AND NPV CALCULATIONS ................................................... 10-17

10.5.1 Summary of Inputs ........................................................................................... 10-17

10.5.2 Results of National Energy Savings Calculations ........................................... 10-17

10.5.3 Results of Net Present Value Calculations ...................................................... 10-19

10.6 ANNUALIZED NATIONAL COSTS AND BENEFITS ........................................... 10-21

10.6.1 Calculation Method .......................................................................................... 10-21

10.6.2 Results for the Proposed Standards.................................................................. 10-22

LIST OF TABLES

Table 10.1.1 Trial Standard Levels for SPVUs ...................................................................... 10-4

Table 10.2.1 Base Case and Standards Case Efficiency Distributions for Equipment 

Classes <65,000 Btu/h (2019) ............................................................................ 10-5

Table 10.2.2 Base Case and Standards Case Efficiency Distribution for SPVACs 

≥65,000 Btu/h and <135,000 Btu/h (2019) ........................................................ 10-5

Table 10.3.1 Shipment-Weighted Average Annual Energy Consumption in 2019 ................ 10-9

10-i 
Table 10.3.2 Upstream Energy Multipliers (Based on AEO 2013) ...................................... 10-12

Table 10.4.1 Shipment-Weighted Average Equipment Cost in 2019 for Base Case and 

Trial Standards Levels ..................................................................................... 10-14

Table 10.4.2 Shipment-Weighted Average Repair and Maintenance Cost in 2019 for 

Base Case and Trial Standards Levels ............................................................. 10-15

Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value ...... 10-17

Table 10.5.2 Cumulative National Primary Energy Savings for SPVU Trial Standard 

Levels ............................................................................................................... 10-18

Table 10.5.3 Cumulative National FFC Energy Savings for SPVU Trial Standard 

Levels ............................................................................................................... 10-18

Table 10.5.4 Cumulative National Primary Energy Savings for SPVU Trial Standard 

Levels (EPCA Baseline) .................................................................................. 10-19

Table 10.5.5 Cumulative National FFC Energy Savings for SPVU Trial Standard 

Levels (EPCA Baseline) .................................................................................. 10-19

Table 10.5.6 Cumulative Net Present Value for SPVU Trial Standard Levels .................... 10-20

Table 10.5.7 Cumulative Net Present Value for SPVU Trial Standard Levels (EPCA 

Baseline) .......................................................................................................... 10-20

Table 10.6.1 Annualized Benefits and Costs of Proposed Standards for SPVUs ................. 10-23

LIST OF FIGURES

Figure 10.2.2 Projected Shipment-Weighted EERs as a Function of Standard Level for 

All Equipment Classes <65,000 Btu/h ............................................................... 10-6

Figure 10.3.1 Annual site electric savings over time for one phase SPVACs less than 

65,000 Btu/h (TSL 2) ....................................................................................... 10-10

Figure 10.3.2 Site-to-Power Plant Energy Use Factor for SPVU .......................................... 10-11

10-ii
CHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the method the U.S. Department of Energy (DOE) used to 

estimate the national impacts of trial standard levels (TSLs) for five equipment classes of

SPVUs. DOE evaluated the following impacts: (1) national energy savings (NES) attributable to 

each possible standard, (2) monetary value of those energy savings to customers of the 

considered equipment, (3) increased total installed cost of the equipment because of standards, 

and (4) net present value (NPV) of energy savings (the difference between the operational 

savings and increased total installed cost). 

DOE determined both the NES and NPV for all the efficiency levels considered for 

amended standards for SPVUs. DOE performed all calculations for each considered equipment 

class using a Microsoft Excel spreadsheet model, which is accessible on the Internet. 

<www.eere.energy.gov/buildings/appliance_standards/> The spreadsheet, which implements the 

National Impact Analysis (NIA) model, combines the calculations for determining the NES and 

NPV for each considered equipment class with input from the shipments model. 

 Chapter 9 provides a detailed description of the shipments models that DOE used to 

project future purchases of the considered equipment. 

10.1.1 Trial Standard Levels

DOE developed trial standard levels (TSLs) that combine efficiency levels for each 

equipment class. Table 10.1.1 shows the efficiency EERs for each equipment class in each TSL. 

TSL 1 consists of efficiency level 1 for equipment classes less than 65,000 Btu/h. TSL 2 

consists of efficiency level 2 for equipment classes less than 65,000 Btu/h. TSL 3 consists of 

efficiency level 3 for equipment classes less than 65,000 Btu/h. TSL 4 consists of efficiency 

level 4 (max-tech) for equipment classes less than 65,000 Btu/h. For SPVACs between 65,000 

and 135,000 Btu/h, there are no models on the market above the ASHRAE level, and for 

SPVHPs between 65,000 and 135,000 Btu/h and SPVUs greater than or equal to 135,000 Btu/h 

and less than 240,000 Btu/h, there are no models on the market at all, and, therefore, DOE had 

no basis with which to develop higher efficiency levels or conduct analyses. As a result, for each 

TSL, the EER (and COP) for these equipment classes is shown as the ASHRAE standard level of 

10.0 EER (and 3.0 COP for heat pumps). 

10-3
Table 10.1.1 Trial Standard Levels for SPVUs

Equipment Class

ASHRAE

Trial Standard Levels

EER(/COP)

1 2 3 4

SPVAC <65,000 Btu/h 10.0 10.5 11.0 11.75 12.3

SPVHP <65,000 Btu/h 10.0/

3.0

10.5/ 

3.2

11.0/ 

3.3

11.75/ 

3.9

12.3/ 

3.9

SPVAC ≥65,000 Btu/h and 

<135,000 Btu/h 10.0 10.0 10.0 10.0 10.0

SPVHP ≥65,000 Btu/h and 

<135,000 Btu/h

10.0/

3.0

10.0/ 

3.0

10.0/ 

3.0

10.0/ 

3.0

10.0/ 

3.0

SPVAC ≥135,000 Btu/h and 

<240,000 Btu/h 10.0 10.0 10.0 10.0 10.0

SPVHP ≥135,000 Btu/h and 

<240,000 Btu/h

10.0/

3.0

10.0/ 

3.0

10.0/ 

3.0

10.0/ 

3.0

10.0/ 

3.0

10.2 FORECASTED EFFICIENCIES FOR BASE AND STANDARDS CASES 

A key factor in estimating NES and NPV is the trend in energy efficiency forecasted for 

the base case (without new standards) and each of the standards cases. Chapter 8 described how 

DOE estimated base case efficiency distributions for 2015, the year that compliance with the 

ASHRAE level would be required, or 2019, the year that compliance with any higher standard 

would be required. To estimate a trend post-2015 or 2019, DOE applied the same rate of growth 

in efficiency as it did to get to 2019, which is also the same rate of growth used in the 2004 

rulemaking for commercial unitary air conditioners, which is approximately 1 EER every 35 

years.1

To determine efficiency distributions for cases in which a trial standard applies, DOE 

used a “roll-up” scenario for 2015 (ASHRAE level) or 2019 (higher levels). DOE assumed that 

equipment in the base case that did not meet the standard under consideration would roll up to 

meet the new standard in 2015 or 2019. Shares of equipment that met or exceeded the standard 

would not be affected. The resulting efficiency distributions are shown in Table 10.2.1 and Table 

10.2.2, along with the shipments-weighted EER, or SW EER, for each TSL.

10-4
Table 10.2.1 Base Case and Standards Case Efficiency Distributions for Equipment 

Classes <65,000 Btu/h (2019) 

Trial Standard Level

EER Base Case ASHRAE* 1 2 3 4

9.0 69.3%

10.0 28.1% 74.4%

10.5 1.5% 24.5% 98.9%

11.0 1.0% 1.0% 1.0% 99.9%

11.75 0.1% 0.1% 0.1% 0.1% 100%

12.3 0.0% 0.0% 0.0% 0.0% 0.0% 100%

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Note: The compliance date for the ASHRAE standard is 2015, so the roll-up occurs 

in that year and the growth rate continues between 2015 and 2019; as a result the 

roll-up is not fully apparent in this table. 

Table 10.2.2 Base Case and Standards Case Efficiency Distribution for SPVACs ≥65,000 

Btu/h and <135,000 Btu/h (2019) 

Trial Standard Level

EER Base Case ASHRAE 1-4

9.0 71.1%

10.0 28.9% 100% 100%

SW EER 9.22 10.0 10.0

To estimate a trend post-2019 for each standards case, DOE applied the same rate of 

growth in efficiency as it used for the base case. Figure 10.2.2 shows the SW EER for the base 

case and each TSL for all equipment classes <65,000 Btu/h. A similar figure could be created for 

the equal to or greater than 65,000 Btu/h equipment class. 

10-5
Figure 10.2.2 Projected Shipment-Weighted EERs as a Function of Standard 

Level for All Equipment Classes <65,000 Btu/h 

10.3 NATIONAL ENERGY SAVINGS

DOE calculated the national energy savings associated with the difference between the 

base case and the case associated with each TSL for SPVUs. 

10.3.1 Approach

DOE calculated the national annual site energy savings (AES) by multiplying the number 

or stock of each equipment class (by vintage) by the delta unit energy consumption between a 

base case and a standards case (UEC; also by vintage). DOE then calculated the national annual 

primary energy savings (NES) as a sum of the gas AES and the electric AES multiplied by a siteto-power plant conversion factor. The calculations are represented by the following equations. 

AAAAAAyy = � SSSSSSSSvv × (UU _bbbbbbbbvv − UU _ ssssvv)

8

9

10

11

12

13

2012 2017 2022 2027 2032 2037 2042

Shipment Weighted EER

Year

Base Case TSL1 TSL2 TSL3 TSL4 TSL5

10-6
NN yy = �AAAAAA_ ee eeyy × PPPPPPyy� + AAAAAA_gg yy

 DOE defined the quantities for the above expressions as follows. 

AESy= national annual site energy savings (gas or electric) in a given year;

STOCKV = stock of equipment (units) of vintage V that survive in the year for which DOE 

calculated annual energy savings; 

UECV = annual unit energy consumption for a given vintage; 

NESy= national annual primary energy savings in a given year;

PPFy= power plant primary energy use factor for annual electricity consumption for a 

given year;

V = year in which the unit was purchased new (vintage); and 

y = year in the projection. 

 The stock of equipment depends on annual shipments and the lifetime of the equipment. 

As described in chapter 9, DOE assumed equipment shipments under the base case and standards 

cases would be equivalent

Cumulative energy savings are the sum of annual national primary energy savings 

throughout the forecast period, which extends from the assumed effective date of new standards 

(2015 or 2019) to the date at which all equipment shipped within 30 years of the effective date of 

new standards (through 2044 or 2048) are retired (2068 or 2072). The calculation is represented 

by the following equation. 

NEScumulative = ∑NESy

10.3.2 Inputs 

 The inputs to the calculation of national energy savings (NES) are:

• shipments; 

• equipment stock (STOCK);

• annual energy consumption per unit (UEC);

• national annual energy savings (AES); and

• power plant primary energy use factor.

10-7
10.3.2.1 Shipments

DOE projected shipments of each equipment class under the base case and all standards 

cases. DOE assumes that shipments are the same in all cases. The method DOE used to calculate

and generate the shipments forecasts for each equipment class is described in detail in Chapter 9, 

Shipments Analysis. 

10.3.2.2 Equipment Stock

The equipment stock in a given year is the number of units shipped from earlier years that 

survive in that year. The NIA model tracks the number of units shipped each year. DOE assumes 

that units have an increasing probability of retiring as they age. The probability of survival as a 

function of years since purchase is the survival function. Chapter 9 provides additional details on 

the survival function that DOE used. 

10.3.2.3 Annual Energy Consumption per Unit

 DOE used the shipment-weighted EERs presented in section 10.2 for the base case and 

standards cases, along with the data on annual energy consumption presented in chapters 7 and 8, 

to estimate the shipment-weighted average annual per-unit energy consumption under the base 

and standards cases. The average annual per-unit electricity consumption projected for 2019 for 

each equipment class is shown in Table 10.3.1, along with the additional gas use associated with 

each TSL. 

10-8
Table 10.3.1 Shipment-Weighted Average Annual Energy Consumption in 2019 

Base 

Case

ASHRAE

Trial Standard Level

1 2 3 4

SPVAC <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Electricity Use (kWh) 6,654 6,107 5,920 5,693 5,387 5,185

Additional Gas Use 

(MMBtu) 0.0166 0.0541 0.0541 0.0541 0.0541 0.0541

SPVHP <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Electricity Use (kWh) 20,740 20,261 19,917 19,628 18,775 18,633

Additional Gas Use 

(MMBtu) - - - - - -

SPVAC ≥65,000 Btu/h and <135,000 Btu/h

SW EER 9.22 10.00 10.00 10.00 10.00 10.00

Electricity Use (kWh) 13,312 12,251 12,251 12,251 12,251 12,251

Additional Gas Use 

(MMBtu) - - - - - -

10.3.2.4 National Annual Energy Savings 

 The national annual site energy savings (AES) is the product of the number of units of 

each vintage and the delta annual energy consumption per unit between the base case and the 

standards case, also by vintage. This method of calculation accounts for differences in unit 

energy consumption from year to year. The equation for determining the national annual site 

energy savings, which was presented in section 10.3.1, is repeated below. Figure 10.3.1 shows an 

example of how electric AES changes over time, using one phase SPVACs less than 65,000 

Btu/h at TSL 2. 

AAAAAAyy = � SSSSSSSSvv × (UU _bbbbbbbbvv − UU _ ssssvv)

10-9
Figure 10.3.1 Annual site electric savings over time for one phase SPVACs less 

than 65,000 Btu/h (TSL 2) 

 In determining national annual primary energy savings, DOE first calculated national 

annual site energy savings for both electricity and gas, and then applied a conversion factor for 

electricity, described below, to calculate primary energy savings, as in the following equation. 

NN yy = �AAAAAA_ ee eeyy × PPPPPPyy� + AAAAAA_gg yy

10.3.2.5 Site-to-Power Plant Energy Use Factor

DOE calculates primary energy savings (power plant consumption) by applying a factor 

to account for losses associated with the generation, transmission, and distribution of electricity. 

DOE derived annual average site-to-power plant factors based on the version of the National 

Energy Modeling System (NEMS) that corresponds to EIA’s Annual Energy Outlook 2013 (AEO

2013).2 The factors change over time in response to projected changes in the types of power 

plants projected to provide electricity to the nation. Figure 10.3.2 shows the site-to-power plant 

factors from 2016 to the end of the projection period. For years after 2040 (the last year in the 

AEO), DOE held the value constant. 

0.0

0.1

0.1

0.2

0.2

0.3

0.3

0.4

0.4

2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069

Annual Site Electricity Savings (Twh)

Year

10-10
Figure 10.3.2 Site-to-Power Plant Energy Use Factor for SPVU

10.3.2.6 Full-Fuel-Cycle Energy 

 The full-fuel-cycle (FFC) measure includes point-of-use (site) energy, the energy losses 

associated with generation, transmission, and distribution of electricity, and the energy consumed 

in extracting, processing, and transporting or distributing primary fuels. DOE’s traditional 

approach encompasses site energy and the energy losses associated with generation, 

transmission, and distribution of electricity. To complete the full-fuel-cycle by encompassing the 

energy consumed in extracting, processing, and transporting or distributing primary fuels, which 

we refer to as “upstream” activities, DOE developed FFC multipliers using the data and 

projections generated by the National Energy Modeling System (NEMS) and published in AEO 

2013. The AEO provides extensive information about the energy system, including projections 

of future oil, natural gas and coal supply, energy use for oil and gas field and refinery operations, 

and fuel consumption and emissions related to electric power production. This information can 

be used to define a set of parameters representing the energy intensity of energy production. The 

method used to calculate FFC energy multipliers is described in appendix 10A.

Table 10.3.2 shows the FFC energy multipliers used for SPVU for selected years. The 

multipliers are applied to site energy. For years after 2040 (the last year in the AEO), DOE 

maintained the 2040 value. 

0.0076

0.0078

0.0080

0.0082

0.0084

0.0086

0.0088

0.0090

0.0092

2016 2021 2026 2031 2036 2041 2046 2051 2056 2061 2066

Primary Energy (Quad)/Site TWh

Year

10-11
Table 10.3.2 Upstream Energy Multipliers (Based on AEO 2013) 

Fuel 2015 2020 2025 2030 2035 2040

Electricity 1.042 1.041 1.040 1.040 1.041 1.041

Natural Gas 1.103 1.103 1.100 1.099 1.098 1.097

10.4 NET PRESENT VALUE

DOE calculated the net present value (NPV) of the increased equipment cost and reduced 

operating cost associated with the difference between the base case and each potential standards 

case for the SPVU equipment classes. 

10.4.1 Approach

 The NPV is the value in the present of a time-series of costs and savings. The NPV is 

described by the equation: 

NPV PVCPVS

_ =

Where: 

PVS = present value of savings in operating cost, and 

PVC = present value of increased total equipment cost to customers. 

DOE determined the PVS and PVC according to the following expressions. 

PVS ∑ ×= DFOCS yy

PVC ∑TIC ×= DFyy

Where:

OCS y= total annual savings in operating cost each year; 

TICy = total annual increases in equipment cost each year; 

DFy = discount factor in each year; and 

y = year in the forecast.

DOE calculated the total annual customer savings in operating cost as a sum of: (1) the 

annual site electric savings multiplied by an electric price (for the given year); (2) the annual 

additional gas use multiplied by a gas price (for the given year); and (3) the sum over all vintages 

of the product of the number or stock of a given equipment class (by vintage) and its per-unit 

repair and maintenance cost savings (also by vintage). DOE calculated the total annual increases 

in customer equipment cost by multiplying the number or shipments of the given equipment

10-12
class (for a given year) by its per-unit increase in customer equipment cost (for a given year). 

The calculation of total annual operating cost savings and total annual equipment cost increases 

are represented by the following equations. 

yy = (AAAAAA_ ee eeyy × yy) + �AAAAAA_gg yy × GG yy� + � SSSSSSSSvv × UUUUUU vv

TT yy = SS yy × UU yy

Where:

EPy= electricity price for a given year;

GPy= gas price for a given year;

STOCKV = stock of equipment of vintage V that survive in the year for which DOE calculated 

annual energy consumption; 

URMCSV = annual per-unit savings in repair and maintenance cost for stock of a given vintage; 

SHIPy = annual shipments of equipment in a given year; and

UTICy = annual per-unit increase in installed equipment cost in a given year. 

DOE determined the total increased equipment cost for each year from the compliance

date of a potential standard to 2044 or 2048. DOE determined the present value of operating cost 

savings for each year from the effective date of the standard to the year when all units purchased 

by 2044 or 2048 have been retired. DOE calculated costs and savings as the difference between a 

standards case and a base case without new standards. 

DOE developed a discount factor from the national discount rate and the number of years 

between the present (i.e., year to which the sum is being discounted) and the year in which the 

costs and savings occur. The NPV is the sum over time of the discounted net savings. 

10.4.2 Inputs

 The inputs to calculation of the net present value (NPV) are: 

• average annual per-unit equipment cost;

• average annual per-unit operating cost;

• total annual increases in equipment cost;

• total annual savings in operating cost; 

• discount factor; 

• present value of costs; and

• present value of savings.

10-13
10.4.2.1 Average Annual Per-Unit Equipment Cost

 The average annual equipment cost is directly dependent on efficiency. DOE therefore 

used the SW EERs presented in section 10.2 for the base case and each standards case, along 

with the equipment costs at various efficiency levels (presented in chapter 8), to estimate the 

shipment-weighted average annual equipment cost under the base and standards cases. Table 

10.4.1 shows the shipment-weighted average customer equipment cost based on the SW EERs 

that correspond to the base case and each standards case in 2019. Note that installation cost does 

not change with efficiency, so these values reflect the equipment cost only and not the total 

installed cost. 

Table 10.4.1 Shipment-Weighted Average Equipment Cost in 2019 for Base Case and 

Trial Standards Levels 

Base 

Case ASHRAE

Trial Standard Levels

1 2 3 4

SPVAC <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Equipment Cost 2013$ $3,126 $3,581 $3,688 $3,831 $4,293 $5,155

SPVHP <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Equipment Cost 2013$ $3,633 $4,155 $4,279 $4,443 $4,972 $5,958

SPVAC ≥65,000 Btu/h 

and <135,000 Btu/h

SW EER 9.22 10.00 10.00 10.00 10.00 10.00

Equipment Cost 2013$ $4,085 $4,653 $4,653 $4,653 $4,653 $4,653

As discussed in chapter 8, DOE used a constant price assumption for the default 

equipment cost forecast in the NIA. In order to investigate the impact of different equipment 

price forecasts on the customer net present value (NPV) for the considered efficiency levels for 

SPVUs, DOE also considered two alternative price trends. One of these used an exponential fit 

on the deflated price index for “all other miscellaneous refrigeration and air-conditioning 

equipment”, and the other is based on the “chained price index — industrial equipment” that was 

forecasted for AEO2013. Details on how these alternative price trends were developed are in 

appendix 10B, which also presents the results of the sensitivity analysis. 

10.4.2.2 Average Annual Per-Unit Operating Cost 

The average annual per-unit repair and maintenance cost is directly dependent on 

efficiency. DOE therefore used the SW EERs presented in section 10.2 for the base case and 

each standards case, along with the repair and maintenance costs at various efficiency levels 

(presented in chapter 8), to estimate the shipment-weighted average annual repair and 

maintenance cost under the base and standards cases. As described in chapter 8, only repair costs 

10-14
actually increase with efficiency, but repair and maintenance costs are combined in the NIA. 

Table 10.4.2 shows the shipment-weighted average customer repair and maintenance cost based 

on the SW EERs that correspond to the base case and each standards case in 2019. 

Table 10.4.2 Shipment-Weighted Average Repair and Maintenance Cost in 2019 for Base 

Case and Trial Standards Levels

Base 

Case ASHRAE

Trial Standard Level

1 2 3 4

SPVAC <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Repair & Maint. Cost 2013$ $470 $478 $480 $483 $491 $507

SPVHP <65,000 Btu/h

SW EER 9.33 10.13 10.51 11.00 11.75 12.30

Repair & Maint. Cost 2013$ $508 $517 $519 $521 $530 $546

SPVAC ≥65,000 Btu/h and 

<135,000 Btu/h

SW EER 9.22 10.00 10.00 10.00 10.00 10.00

Repair & Maint. Cost 2013$ $511 $522 $522 $522 $522 $522

 DOE’s method of calculation does not produce per-unit energy cost, the other component 

of operating cost, but rather national annual energy cost savings are derived as discussed in 

section 10.4.2.4. 

10.4.2.3 Total Annual Increases in Equipment Cost 

 The total annual increase in equipment cost for any given standards case is the product of 

the average cost increase per unit due to the standard and the number of units shipped in a given 

year. The equation for determining the total annual increase in equipment cost for a given 

standards case, which was shown in section 10.4.1, is repeated here. 

 

TT yy = SS yy × UU yy

10.4.2.4 Total Annual Savings in Operating Cost 

DOE calculated the total annual customer savings in operating cost as a sum of: (1) the 

national annual site electric savings multiplied by an electric price for the given year; (2) the 

national annual gas savings multiplied by a gas price for the given year; and (3) the sum over all 

vintages of the equipment of the number or stock of a given equipment class (by vintage) and its 

per-unit repair and maintenance cost savings (also by vintage). This method accounts for 

differences in annual savings in operating cost from year to year. As described in chapter 8, DOE 

projected energy prices based on EIA’s AEO 2013. For SPVUs, gas cost impacts (small increases 

in gas usage associated with the standard) are negative. The equation for determining the total 

10-15
annual savings in operating cost for a given standards case, which was presented in section 

10.4.1, is repeated here. 

yy = (AAAAAA_ ee eeyy × yy) + �AAAAAA_gg yy × GG yy� + � SSSSSSSSvv × UUUUUU vv

 

10.4.2.5 Discount Factor 

DOE multiplied monetary values in future years by a discount factor to determine the 

present value. The discount factor (DF) is described by the equation: 

)( _

)1(

1

y yp r

DF

+ =

Where: 

r = discount rate, 

y = year in which the monetary value exists, and 

yP = year in which the present value is being determined. 

 Although DOE uses customer discount rates to determine the life-cycle cost (chapter 8), 

it uses national discount rates to calculate national NPV. DOE estimated NPV using both a 3-

percent and a 7-percent real discount rate, in accordance with the Office of Management and 

Budget’s guidance to Federal agencies on the development of regulatory analysis, particularly

section E therein: Identifying and Measuring Benefits and Costs.

3 DOE defined the present year 

as 2013. 

10.4.2.6 Present Value of Costs

The present value of increased equipment costs is the annual total cost increase in each 

year (the difference between a standards case and the base case), discounted to the present and 

summed throughout the period in which DOE is considering the installation of equipment (that 

is, from the compliance date of standards, 2015 or 2019, to 2044 or 2048). DOE calculated 

annual increases in installed cost as the difference in total equipment cost for new units 

purchased each year, multiplied by the shipments. 

10.4.2.7 Present Value of Savings 

The present value of savings in operating cost is the annual savings on operating cost (the 

difference between the base case and a standards case), discounted to the present and summed 

from the effective date to the time when the last unit installed by 2044 or 2048 is retired from 

service. Savings are decreases in energy cost less the increases in repair costs associated with the 

higher energy efficiency of products purchased in the standards case compared to the base case. 

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10.5 RESULTS OF NES AND NPV CALCULATIONS

The National Impact Analysis (NIA) model produces estimates of the NES and NPV 

attributable to a given candidate standard level. The inputs to the NIA model were discussed in 

sections 10.3.2 (inputs to NES) and 10.4.2 (inputs to NPV). DOE generated the NES and NPV 

results using a Microsoft Excel spreadsheet, which is accessible on the Internet 

<http://energy.gov/eere/buildings/appliance-and-equipment-standards-program>. In addition, 

DOE calculated FFC energy savings using a separate spreadsheet.

10.5.1 Summary of Inputs 

Table 10.5.1 summarizes the inputs to the NIA model. A brief description of the data is

provided for each input. 

Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value 

Input Description

Shipments Annual shipments from shipments model. (See chapter 9.)

Compliance date of standard 2015 (ASHRAE) or 2019 (higher)

Base-case forecasted efficiencies See section 10.2.

Standards-case efficiencies See section 10.2.

Annual energy consumption per unit Annual weighted-average values are a function of the 

efficiency distribution. (See section 10.3.2.1.)

Total installed cost per unit Annual weighted-average values are a function of the 

efficiency distribution. Only equipment costs increase with 

efficiency level. (See section 10.4.2.1.)

Repair and maintenance cost per unit Annual weighted-average values are a function of the 

efficiency distribution. Only repair costs increase with 

efficiency level. (See chapter 8 for repair and maintenance 

costs.)

Forecast of energy prices Energy prices: EIA AEO2013 forecasts (to 2040) and 

extrapolation thereafter. (See chapter 8).

Average energy site-to-power plant 

conversion factor

A time-series conversion factor that includes electric 

generation, transmission, and distribution losses. Conversion, 

which changes yearly, is based on AEO 2013.

Discount rates 3% and 7% real.

Present year Future costs and savings are discounted to 2014.

10.5.2 Results of National Energy Savings Calculations 

 The following sections provide NES calculation results for the efficiency levels analyzed 

for the considered equipment. NES results, which are cumulative from 2015 or 2019 to 2068 or 

2072 (the year in which all units shipped through 2044 or 2048 are retired), are primary energy 

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savings. DOE based the inputs to the NIA model on weighted-average values, yielding results 

that are discrete point values, rather than a distribution of values as in the life-cycle cost and 

payback period analyses. Table 10.5.2 shows the NES results for the TSLs analyzed for the five 

equipment classes. Table 10.5.3 shows the FFC results for the TSLs analyzed for the five 

equipment classes. Although DOE does not set separate standards for one phase and three phase 

SPVUs, results are presented separately for these classes because of the difference in shipments, 

as shown in chapter 9.

Table 10.5.2 Cumulative National Primary Energy Savings for SPVU Trial Standard 

Levels

Equipment Class ASHRAE Trial Standard Level1 2 3 4

quads*

SPVAC <65,000 Btu/h 1 Phase 0.10 0.04 0.09 0.15 0.16

SPVAC <65,000 Btu/h 3 Phase 0.04 0.02 0.04 0.07 0.07

SPVHP <65,000 Btu/h 1 Phase 0.05 0.02 0.07 0.10 0.11

SPVHP <65,000 Btu/h 3 Phase 0.02 0.01 0.03 0.05 0.05

SPVAC ≥65,000 Btu/h to 

<135,000 Btu/h 0.01 - - - -

All Classes 0.22 0.09 0.22 0.36 0.39

* All energy savings from TSLs above the ASHRAE Standard 90.1-2013 level are calculated with 

those ASHRAE levels as a baseline.

Table 10.5.3 Cumulative National FFC Energy Savings for SPVU Trial Standard Levels

Equipment Class ASHRAE Trial Standard Level

1 2 3 4

quads*

SPVAC <65,000 Btu/h 1 Phase 0.10 0.04 0.09 0.15 0.16

SPVAC <65,000 Btu/h 3 Phase 0.05 0.02 0.04 0.07 0.07

SPVHP <65,000 Btu/h 1 Phase 0.05 0.02 0.07 0.10 0.11

SPVHP <65,000 Btu/h 3 Phase 0.02 0.01 0.03 0.05 0.05

SPVAC ≥65,000 Btu/h to 

<135,000 Btu/h 0.01 - - - -

All Classes 0.22 0.09 0.23 0.37 0.39

* All energy savings from TSLs above the ASHRAE Standard 90.1-2013 level are calculated with 

those ASHRAE levels as a baseline.

 For informational purposes only, Table 10.5.4 and Table 10.5.5 show the primary and 

FFC energy savings for the TSLs analyzed compared to a base case including the current Federal 

minimum standards (i.e., EPCA Baseline). 

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Table 10.5.4 Cumulative National Primary Energy Savings for SPVU Trial Standard 

Levels (EPCA Baseline) 

Equipment Class ASHRAE Trial Standard Level

1 2 3 4

quads*

SPVAC <65,000 Btu/h 1 Phase 0.10 0.14 0.19 0.25 0.26

SPVAC <65,000 Btu/h 3 Phase 0.04 0.06 0.09 0.11 0.12

SPVHP <65,000 Btu/h 1 Phase 0.05 0.07 0.12 0.15 0.16

SPVHP <65,000 Btu/h 3 Phase 0.02 0.03 0.05 0.07 0.07

SPVAC ≥65,000 Btu/h to 

<135,000 Btu/h 0.01 0.01 0.01 0.01 0.01

All Classes 0.22 0.32 0.45 0.59 0.62

Table 10.5.5 Cumulative National FFC Energy Savings for SPVU Trial Standard Levels 

(EPCA Baseline) 

Equipment Class ASHRAE Trial Standard Level1 2 3 4

quads*

SPVAC <65,000 Btu/h 1 Phase 0.10 0.14 0.19 0.25 0.27

SPVAC <65,000 Btu/h 3 Phase 0.05 0.06 0.09 0.11 0.12

SPVHP <65,000 Btu/h 1 Phase 0.05 0.08 0.12 0.16 0.16

SPVHP <65,000 Btu/h 3 Phase 0.02 0.04 0.06 0.07 0.07

SPVAC ≥65,000 Btu/h to 

<135,000 Btu/h 0.01 0.01 0.01 0.01 0.01

All Classes 0.22 0.33 0.46 0.60 0.63

10.5.3 Results of Net Present Value Calculations

 This section provides net present value (NPV) calculation results for the potential 

efficiency standards for SPVU equipment classes. Results, which are cumulative, are shown as 

the discounted value of the savings in dollar terms. Results are provided for each potential 

efficiency standard. DOE based the inputs to the NIA model on weighted-average values, 

yielding results that are discrete point values, rather than a distribution of values as in the lifecycle cost and payback period analysis. Table 10.5.6 presents the NPV associated with the 

potential standards for SPVUs. As with the NES results, NPV results are presented as a function 

of equipment class and TSL. For informational purposes only, Table 10.5.7 presents the results 

compared to a base case including the current federal minimum standards (i.e., EPCA baseline). 

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Table 10.5.6 Cumulative Net Present Value for SPVU Trial Standard Levels

Equipment Class

Discount 

Rate (%)

Trial Standard Level

1 2 3 4

billion 2013$

SPVAC <65,000 

Btu/h 1 Phase

3 0.09 0.09 (0.44) (0.72)

7 0.03 0.01 (0.26) (0.45)

SPVAC <65,000 

Btu/h 3 Phase

3 0.04 0.04 (0.20) (0.32)

7 0.01 0.00 (0.12) (0.20)

SPVHP <65,000 

Btu/h 1 Phase

3 0.09 0.22 0.10 (0.04)

7 0.03 0.07 0.01 (0.08)

SPVHP <65,000 

Btu/h 3 Phase

3 0.04 0.10 0.04 (0.02)

7 0.01 0.03 0.00 (0.04)

SPVAC ≥65,000 

Btu/h to <135,000 

Btu/h

3 - - - - 

7 - - - - 

All Classes 3 0.26 0.44 (0.50) (1.10)

7 0.09 0.11 (0.37) (0.78)

* All NPVs from TSLs above the ASHRAE Standard 90.1-2013 level are calculated with those ASHRAE levels 

as a baseline.

Table 10.5.7 Cumulative Net Present Value for SPVU Trial Standard Levels (EPCA 

Baseline) 

Equipment Class

Discount 

Rate (%)

Trial Standard Level

1 2 3 4

billion 2013$

SPVAC <65,000 

Btu/h 1 Phase

3 0.36 0.36 (0.18) (0.46)

7 0.09 0.07 (0.20) (0.39)

SPVAC <65,000 

Btu/h 3 Phase

3 0.16 0.16 (0.08) (0.20)

7 0.04 0.03 (0.09) (0.18)

SPVHP <65,000 

Btu/h 1 Phase

3 0.24 0.36 0.24 0.11

7 0.06 0.10 0.04 (0.05)

SPVHP <65,000 

Btu/h 3 Phase

3 0.11 0.17 0.11 0.05

7 0.03 0.05 0.02 (0.02)

SPVAC ≥65,000 

Btu/h to <135,000 

Btu/h

3 0.02 0.02 0.02 0.02 

7 0.01 0.01 0.01 0.01 

All Classes 3 0.89 1.07 0.13 (0.48)

7 0.23 0.26 (0.22) (0.63)

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10.6 ANNUALIZED NATIONAL COSTS AND BENEFITS

 The benefits and costs of the proposed standards for SPVUs can be expressed in terms of 

annualized values over the analysis period. The annualized monetary values are the sum of (1) 

the annualized national economic value of the benefits from operating equipment that meet the 

proposed standards (consisting primarily of operating cost savings from using less energy, minus 

increases in equipment purchase costs, which is another way of representing customer NPV), and 

(2) the monetary value of the benefits of emission reductions, including CO2 emission 

reductions. The emissions reductions for each TSL are described in chapter 13, and the 

derivation of the monetary value of the benefits of emission reductions is described in chapter 14 

of this TSD. The value of the CO2 reductions, otherwise known as the Social Cost of Carbon 

(SCC), is calculated using a range of values per metric ton of CO2 developed by a recent 

interagency process. The derivation of the time series of SCC values is discussed in Appendix 

14-A of this TSD. 

 Although combining the values of operating savings and CO2 reductions provides a 

useful perspective, two issues should be considered. First, the national operating savings are 

domestic U.S. customer monetary savings that occur as a result of market transactions while the 

value of CO2 reductions is based on a global value. Second, the assessments of operating cost 

savings and CO2 savings are performed with different methods that use quite different time 

frames for analysis. The national operating cost savings is measured for the lifetime of 

equipment shipped in the 30-year analysis period. The SCC values, on the other hand, reflect the 

present value of future climate-related impacts resulting from the emission of one ton of carbon 

dioxide in each year. These impacts go well beyond 2100. 

10.6.1 Calculation Method 

DOE uses a two-step calculation process to convert each time-series of costs and benefits 

into annualized values. First, DOE calculates a present value in the “present” year used in 

discounting the NPV of total customer costs and savings.a For this calculation, DOE uses 

discount rates of three and seven percent for all costs and benefits except for the value of CO2

reductions. For the latter, DOE uses the discount rate appropriate for each SCC time-series (see 

chapter 14 for discussion). 

PPPPxx = � (xx( ) ∙ (1 + rrxx)yyNPV−tt)

tt=yy1,yyT

Where:

xx( ) = Time-series under evaluation, 

PPPPxx = Present value of the time-series xx, 

a For the value of emissions reductions, DOE uses a time series that corresponds to the time period used in 

calculating the operating cost savings (i.e., through the final year in which products shipped are still operating).

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yy1 = First year in the analysis period, 

yyT = Last year in the analysis period,

yyNPV = Year to which the NPV of customers’ costs and savings are being 

discounted, 

rrxx = Discount rate used to discount the annual values of time-series xx to year 

yyNPV. 

 In the second step, DOE calculates, from the present values, the fixed annual payments 

over a 30-year period, starting in the first year of the analysis period (i.e., the compliance year), 

which yields the same present values with discount rates of three and seven percent. This 

requires projecting the present values in the “present” year ahead to the compliance year. The 

fixed annual payments are the annualized values. 

AAAAAAxx,rr = PPPPxx ∙ ffyy1−yyNPV,rr ∙ 30,rr = PPPPxx ∙ (1 + rr)yy1−yyNPV ∙

rr ∙ (1 + rr)30

(1 + rr)30 − 1

Where:

AAAAAAxx,rr = Annualized value of the time-series xx, 

ffnn,rr = Factor to project a value years aheadb with rr discount rate, 

30,rr = Factor to annualize present values over a 30-year period with rr discount 

rate.

 Although DOE calculates annualized values, this does not imply that the time-series of 

cost and benefits from which the annualized values were determined would be a steady stream of 

payments. 

10.6.2 Results for the Proposed Standards

 The NOPR associated with this TSD states that DOE is proposing amended energy 

conservation standards that correspond to TSL 3. Estimates of annualized benefits and costs for 

the proposed standards are shown in Table 10.6.1. 

 The Primary, Low Net Benefits, and High Net Benefits Estimates utilize forecasts of 

energy prices from the AEO2013 Reference case, Low Economic Growth case, and High 

Economic Growth case, respectively. In addition, incremental equipment costs reflect no change 

in the Primary estimate, rising equipment prices in the Low Net Benefits estimate, and declining 

equipment prices in the High Net Benefits estimate. 

 

b

n is the number of years between the “present” year and the compliance year.

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Table 10.6.1 Annualized Benefits and Costs of Proposed Standards for SPVUs

Discount Rate

Primary 

Estimate*

Low Net 

Benefits 

Estimate*

High Net 

Benefits 

Estimate*

million 2013$/year

Benefits

Operating Cost Savings

7% 38 36 39

3% 58 55 61

CO2 Reduction Monetized Value 

($12.0/t case)** 5% 7.7 7.6 7.7

CO2 Reduction Monetized Value 

($40.5/t case)** 3% 29 28 29

CO2 Reduction Monetized Value 

($62.4/t case)** 2.5% 43 42 43

CO2 Reduction Monetized Value 

$119/t case)** 3% 89 88 89

NOX Reduction at $2,684/ton**

7% 0.57 0.56 0.57

3% 0.97 0.97 0.98

Total Benefits†

7% plus CO2

range

46 to 127 44 to 125 48 to 129

7% 67 65 69

3% plus CO2

range

67 to 148 63 to 144 70 to 151

3% 88 84 91

Costs

Incremental Equipment Costs

7% 29 40 28

3% 37 53 36

Net Benefits/Costs

Total†

7% plus CO2

range

17 to 98 4 to 85 19 to 101

7% 38 25 40

3% plus CO2

range

30 to 111 11 to 91 34 to 115

3% 51 31 55

* This table presents the annualized costs and benefits associated with SPVUs shipped in 2019−2048. These 

results include benefits to consumers which accrue after 2048 from the products purchased in 2019-2048. 

Costs incurred by manufacturers, some of which may be incurred in preparation for the rule, are not directly 

included, but are indirectly included as part of incremental equipment costs. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices and building growth from the AEO 2013 

Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental equipment costs 

reflect constant real prices for the Primary Estimate, an increase for projected equipment price trends for the 

Low Benefits Estimate, and a decline for projected equipment price trends for the High Benefits Estimate. 

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** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios. 

The values of $12.0, $40.5, and $62.4 per metric ton are the averages of SCC distributions calculated using 

5%, 3%, and 2.5% discount rates, respectively. The value of $119/t represents the 95th percentile of the SCC 

distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an 

escalation factor. The value for NOX (in 2013$) is the average of the low and high values used in DOE’s 

analysis.

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to SCC 

value of $40.5/t. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost and 

NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of 

CO2 values.

10-24
REFERENCES

1. U.S. Department of Energy. 2004. Technical Support Document: Energy Efficiency 

Program for Commercial and Industrial Equipment: Commercial Unitary Air 

Conditioners and Heat Pumps. Washington, D.C. 

www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0103-0078

2. U.S. Department of Energy–Energy Information Administration. 2013. Annual Energy 

Outlook 2013. U.S. DOE–EIA: Washington, D.C. DOE/EIA-0383(2013).

3. Office of Management and Budget. OMB Circular A-4, Regulatory Analysis. 2003. 

OMB: Washington, D.C. September 17, 2003. 

www.whitehouse.gov/omb/circulars_a004_a-4/

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