17-i

CHAPTER 17. REGULATORY IMPACT ANALYSIS 

TABLE OF CONTENTS

17.1 INTRODUCTION ................................................................................................... 17-1

17.2 NON-REGULATORY POLICIES .......................................................................... 17-2

17.2.1 Methodology ............................................................................................................ 17-2

17.2.2 Assumptions Regarding Non-Regulatory Policies .................................................. 17-3

17.2.3 Policy Interactions ................................................................................................... 17-6

17.3 NON-REGULATORY POLICY ASSUMPTIONS ................................................ 17-6

17.3.1 No New Regulatory Action ..................................................................................... 17-7

17.3.2 Consumer Rebates ................................................................................................... 17-7

17.3.2.1 Clothes Dryers ....................................................................................... 17-8

17.3.2.2 Room Air Conditioners ........................................................................ 17-12

17.3.3 Consumer Tax Credits ........................................................................................... 17-17

17.3.4 Manufacturer Tax Credits ...................................................................................... 17-20

17.3.5 Voluntary Energy Efficiency Targets .................................................................... 17-23

17.3.5.1 Clothes Dryers ..................................................................................... 17-24

17.3.5.2 Room Air Conditioners ........................................................................ 17-24

17.3.6 Early Replacement ................................................................................................. 17-25

17.3.7 Bulk Government Purchases .................................................................................. 17-28

17.3.7.1 Clothes Dryers ..................................................................................... 17-29

17.3.7.2 Room Air Conditioners ........................................................................ 17-30

17.4 IMPACTS OF NON-REGULATORY ALTERNATIVES ................................... 17-30

17.4.1 Clothes Dryers ....................................................................................................... 17-31

17.4.2 Room Air Conditioners .......................................................................................... 17-40

17.5 SUPER-EFFICIENT VOLUNTARY TARGETS ................................................. 17-50

LIST OF TABLES

Table 17.1.1 Non-Regulatory Alternatives to National Standards ...................................... 17-2

Table 17.2.1 Efficiency Levels in Proposed Standard Levels for Clothes Dryers .............. 17-5

Table 17.2.2 Efficiency Levels in Proposed Standard Levels for Room Air 

Conditioners .................................................................................................... 17-6

Table 17.3.1 Benefit/Cost Ratios Without and With Rebates for Clothes Dryers 

(2009$) .......................................................................................................... 17-10

Table 17.3.2 Market Penetrations in 2014 Without and With Rebates for Clothes 

Dryers............................................................................................................ 17-12

Table 17.3.3 Benefit/Cost Ratios Without and With Rebates for Room Air 

Conditioners .................................................................................................. 17-14

Table 17.3.4 Market Penetration in 2014 Without and With Rebates for Room Air 

Conditioners .................................................................................................. 17-16

Table 17.3.5 17-17

Table 17.3.6 Market Penetrations in 2014 Attributable to Consumer Tax Credits for 

Clothes Dryers .............................................................................................. 17-19
17-ii

Table 17.3.7 Market Penetrations in 2014 Attributable to Consumer Tax Credits for 

Room Air Conditioners ................................................................................. 17-20

Table 17.3.8 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits 

for Clothes Dryers ......................................................................................... 17-22

Table 17.3.9 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits 

for Room Air Conditioners ........................................................................... 17-23

Table 17.4.1 Impacts of Non-Regulatory Alternatives for Vented Electric Standard 

Dryers that Meet the Proposed Standard (TSL 4)......................................... 17-35

Table 17.4.2 Impacts of Non-Regulatory Alternatives for Vented Electric Compact 

120V Dryers that Meet the Proposed Standard (TSL 4) ............................... 17-36

Table 17.4.3 Impacts of Non-Regulatory Alternatives for Vented Electric Compact 

240V Dryers that Meet the Proposed Standard (TSL 4) ............................... 17-37

Table 17.4.4 Impacts of Non-Regulatory Alternatives for Vented Gas Dryers that 

Meet the Proposed Standard (TSL 4) ........................................................... 17-38

Table 17.4.5 Impacts of Non-Regulatory Alternatives for Vent-less Electric Compact 

240V Dryers that Meet the Proposed Standard (TSL 4) ............................... 17-39

Table 17.4.6 Impacts of Non-Regulatory Alternatives for Vent-less Electric 

Combination Washer/Dryer Dryers that Meet the Proposed Standard 

(TSL 4) .......................................................................................................... 17-40

Table 17.4.7 Impacts of Non-Regulatory Alternatives for Room Air Conditioners 

Group 1 - Less than 6,000 Btu/h, with Louvers, that Meet the Proposed 

Standard (TSL 4) .......................................................................................... 17-45

Table 17.4.8 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 2 - based on 8,000-13,999 Btu/h, with Louvers, that Meet the 

Proposed Standard (TSL 4)........................................................................... 17-46

Table 17.4.9 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 3 - based on 20,000-24,999 Btu/h, with Louvers, that Meet the 

Proposed Standard (TSL 4)........................................................................... 17-47

Table 17.4.10 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 4 - based on 25,000 Btu/h or more Btu/h, with Louvers, that Meet 

the Proposed Standard (TSL 4) ..................................................................... 17-48

Table 17.4.11 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 5 - based on 8,000-10,999 Btu/h, without Louvers, that Meet the 

Proposed Standard (TSL 4)........................................................................... 17-49

Table 17.4.12 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 6 - based on 11,000-13,999 Btu/h, without Louvers, that Meet the 

Proposed Standard (TSL 4)........................................................................... 17-50

Table 17.5.1 Super-efficient Voluntary Targets Program Parameters for Clothes 

Dryers............................................................................................................ 17-51

Table 17.5.2 Super-efficient Voluntary Targets Program Parameters for Room Air 

Conditioners .................................................................................................. 17-52

Table 17.5.3 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for 

Clothes Dryers by Census Division .............................................................. 17-53

Table 17.5.4 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for 

Room Air Conditioners by Census Division (Residential Sector) ............... 17-54
17-iii

Table 17.5.5 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for 

Room Air Conditioners by Census Division (Commercial Sector) .............. 17-55

Table 17.5.6 Super-efficient Voluntary Targets Program Total Installed Cost of 

Clothes Dryers (2009$) ................................................................................. 17-57

Table 17.5.7 Super-efficient Voluntary Targets Program Total Installed Cost of Room 

Air Conditioners (Residential Sector) (2009$) ............................................. 17-58

Table 17.5.8 Super-efficient Voluntary Targets Program Total Installed Cost of Room 

Air Conditioners (Commercial Sector) (2009$) ........................................... 17-59

Table 17.5.9 Super-efficient Voluntary Targets Program Market Penetration of 

Clothes Dryers .............................................................................................. 17-60

Table 17.5.10 Super-efficient Voluntary Targets Program Market Penetration of Room 

Air Conditioners (Residential Sector)........................................................... 17-61

Table 17.5.11 Super-efficient Voluntary Targets Program Market Penetration of Room 

Air Conditioners (Commercial Sector) ......................................................... 17-62

Table 17.5.12 Super-efficient Voluntary Targets Program Outputs for Clothes Dryers ..... 17-63

Table 17.5.13 Super-efficient Voluntary Targets Program Outputs for Room Air 

Conditioners .................................................................................................. 17-64

LIST OF FIGURES

Figure 17.3.1 Market Penetration Curve for Vented Standard Electric Dryers .................. 17-10

Figure 17.3.2 Market Penetration Curve for Vented Gas Dryers ........................................ 17-11

Figure 17.3.3 Market Penetration Curve for Room Air Conditioners, Less than 6,000 

Btu/h, with Louvers ...................................................................................... 17-14

Figure 17.3.4 Market Penetration Curve for Room Air Conditioners, 28,000-13,999 

Btu/h, with Louvers ...................................................................................... 17-15

Figure 17.3.5 Estimated Replacement Shipments of Clothes Dryers With and Without 

an Early Replacement Program .................................................................... 17-27

Figure 17.3.6 Estimated Replacement Shipments of Room Air Conditioners With and 

Without an Early Replacement Program ...................................................... 17-28

Figure 17.4.1 Market Penetration of Vented Electric Standard Clothes Dryers Meeting 

Target Level in Policy Cases ........................................................................ 17-31

Figure 17.4.2 Market Penetration of Vented Electric Compact 120V Clothes Dryers 

Meeting Target Level in Policy Cases .......................................................... 17-32

Figure 17.4.3 Market Penetration of Vented Electric Compact 240V Clothes Dryers 

Meeting Target Level in Policy Cases .......................................................... 17-32

Figure 17.4.4 Market Penetration of Vented Gas Clothes Dryers Meeting Target Level 

in Policy Cases .............................................................................................. 17-33

Figure 17.4.5 Market Penetration of Vent-less Electric Compact 240V Clothes Dryers 

Meeting Target Level in Policy Cases .......................................................... 17-33

Figure 17.4.6 Market Penetration of Vent-less Electric Combination Washer/Dryer 

Meeting Target Level in Policy Cases .......................................................... 17-34

Figure 17.4.7 Market Penetration of Room Air Conditioners Less than 6,000 Btu/h, 

with Louvers, Meeting Target Level in Policy Cases ................................... 17-41
17-iv

Figure 17.4.8 Market Penetration of Room Air Conditioners 8,000-13,999 Btu/h, with 

Louvers, Meeting Target Level in Policy Cases ........................................... 17-41

Figure 17.4.9 Market Penetration of Room Air Conditioners 20,000-24,999 Btu/h, 

with Louvers, Meeting Target Level in Policy Cases ................................... 17-42

Figure 17.4.10 Market Penetration of Room Air Conditioners 25,000 Btu/h or more, 

with Louvers, Meeting Target Level in Policy Cases ................................... 17-42

Figure 17.4.11 Market Penetration of Room Air Conditioners 8,000-10,999 Btu/h, 

without Louvers Meeting Target Level in Policy Cases .............................. 17-43

Figure 17.4.12 Market Penetration of Room Air Conditioners 11,000-13,999 Btu/h, 

without Louvers Meeting Target Level in Policy Cases .............................. 17-43
17-1

CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

 The U.S. Department of Energy (DOE) has determined that energy conservation 

standards for clothes dryers and room air conditioners constitute an “economically significant 

regulatory action” under Executive Order (E.O.) 12866, Regulatory Planning and Review. 58 FR 

51735, Volume 58, No. 190, page 51735. (October 4, 1993). Under 10 CFR part 430, subpart C, 

appendix A, section III.12, DOE committed to evaluating non-regulatory alternatives to proposed 

standards by performing a regulatory impact analysis (RIA). 61 FR 36981, Volume 61, No. 136, 

page 36978. (November 15, 1996). This RIA, which DOE has prepared pursuant to E.O. 12866, 

evaluates potential non-regulatory alternatives, comparing the costs and benefits of each to those 

of the proposed standards. 58 FR 51735, page 51741. As noted in E.O. 12866, this RIA is subject 

to review by the Office of Management and Budget’s Office of Information and Regulatory 

Affairs. 58 FR 51735, page 51740. 

 For this Regulatory Impact Analysis, DOE used integrated NIA-RIA integrated models 

built on the NIA models discussed in chapter 10 for its analysis. DOE studied the impacts of the 

non-regulatory policies on the representative product classes analyzed for the direct final rule. It 

then applied the assumptions of the impacts of each policy on these representative product 

classes to the shipments of the remaining product classes associated with each representative 

class. Thus, the savings reported in this chapter represent the savings for all the considered 

product classes for clothes dryers. For room air conditioners DOE studied the impacts of the 

policies on only the residential product classes. 

 DOE identified six non-regulatory policy alternatives that feasibly could provide 

incentives for the same energy efficiency levels as the proposed standards for the products that 

are the subject of this rulemaking. The non-regulatory policy alternatives are listed in Table 

17.1.1. DOE evaluated each alternative in terms of its ability to achieve significant energy 

savings at a reasonable cost, and compared the effectiveness of each to the effectiveness of the 

proposed standard. 
17-2

Table 17.1.1 Non-Regulatory Alternatives to National Standards 

No New Regulatory Action

Consumer Rebates

Consumer Tax Credits

Manufacturer Tax Credits

Voluntary Energy Efficiency Targets

Early Replacement

Bulk Government Purchases

 

 In addition to the above six non-regulatory policy alternatives, for this rulemaking DOE 

evaluated a super-efficient voluntary targets (SEVT) program. Sections 17.2 and 17.3 discuss the 

analysis of the six policies listed above, and section 17.3.8 describes the SEVT policy. Sections 

17.4 and 17.5 present the results of the six policy alternatives, and section 17.6 describes the 

analysis of the SEVT policy and presents the results. 

17.2 NON-REGULATORY POLICIES

 This section describes the method DOE used to analyze the energy savings and cost 

effectiveness of the six non-regulatory policy alternatives (excluding the alternative of no new 

regulatory action) for the identified clothes dryers and room air conditioners. This section also 

describes the assumptions underlying the analysis. 

17.2.1 Methodology 

DOE used its integrated national impact analysis–regulatory impact analysis (NIA-RIA)

spreadsheet models to calculate the national energy savings (NES) and net present value (NPV) 

associated with each non-regulatory policy alternative. Chapter 10 of the technical support 

document (TSD) describes the NIA spreadsheet models. Appendix 17-A, section 17-A.2, 

discusses the new NIA-RIA integrated model approach. 

DOE quantified the effect of each alternative on the purchase of products that meet target 

levels, which are defined as the efficiency levels in the proposed standards. After establishing the 

quantitative assumptions underlying each alternative, DOE appropriately revised inputs to the 

NIA-RIA spreadsheet models. The primary model inputs revised were market shares of products 

meeting target efficiency levels and equipment replacement rates. The shipments of products for 

any given year reflect a distribution of efficiency levels. DOE assumed that the proposed 

standards would affect 100 percent of the shipments of products that did not meet target levels in 

the base case,a

 

a

 The base case for the NIA is a market-weighted average of units at several efficiency levels.

whereas the non-regulatory policies would affect a smaller percentage of those 

shipments. DOE made certain assumptions about the percentage of shipments affected by each 

alternative policy. DOE used those percentages to calculate the shipment-weighted average 

energy consumption and costs of clothes dryers and room air conditioners attributable to each 

policy alternative. 
17-3

Increasing the efficiency of a product often increases its average installed cost. On the 

other hand, operating costs generally decrease because energy consumption declines. DOE 

therefore calculated an NPV for each non-regulatory alternative in the same way it did for the 

proposed standards. In some scenarios, increases in total installed cost are mitigated by 

government rebates or tax credits. Because DOE assumed that consumers would re-pay credits 

and rebates in some way (such as additional taxes), DOE did not include rebates or tax credits as 

a consumer benefit when calculating national NPV. DOE’s analysis also excluded any 

administrative costs for the non-regulatory policies; including such costs would decrease the 

NPVs slightly.

The following are key measures for evaluating the impact of each alternative. 

• National energy savings, given in quadrillion Btus (quads), describes the cumulative 

national primary energy savings for products bought during the period from the 

effective date of the policy (2014) through the end of the analysis period (2043). 

• Net present value represents the value in 2009$ (discounted to 2010) of net monetary 

savings from products bought during the period from the effective date of the policy 

(2014) through the end of the analysis period (2043). 

• DOE calculated the NPV as the difference between the present value of installed 

equipment cost and operating expenditures in the base case and the present value of 

those costs in each policy case. DOE calculated operating expenses (including energy

costs) for the life of the product.

17.2.2 Assumptions Regarding Non-Regulatory Policies 

The effects of non-regulatory policies are by nature uncertain, because they depend on 

program implementation and marketing efforts and on consumers’ responses to a program. 

Because the projected effects depend on assumptions regarding the rate of consumer 

participation, they are subject to more uncertainty than are the impacts of mandatory standards, 

which DOE assumes will meet with full compliance. To increase the robustness of the analysis, 

DOE conducted a literature review regarding each non-regulatory policy and consulted with 

recognized experts to gather information on similar incentive programs that have been 

implemented in the United States. By studying experiences with the various types of programs,

DOE sought to make credible assumptions regarding potential market impacts. Section 17.3 

presents the sources DOE relied on in developing assumptions about each alternative policy and 

reports DOE’s conclusions as they affected the assumptions that underlie the modeling of each 

policy. 

 Each non-regulatory policy that DOE considered would improve the average efficiency 

of new clothes dryers and room air conditioners relative to their base case efficiency scenarios

(which involve no new regulatory action). The analysis considered that each alternative policy 

would induce consumers to purchase units having the same efficiency levels as required by the 
17-4

proposed standards (the target levels). As opposed to the standards case, however, the policy 

cases may not lead to 100 percent market penetration of units that meet target levels.

Tables 17.2.1 and 17.2.2 show the efficiency levels stipulated in the proposed standards 

for clothes dryers and room air conditioners. 
17-5

Table 17.2.1 Efficiency Levels in Proposed Standard Levels for Clothes Dryers

Product Class TSL 4 

CEF

Vented Electric Standard 3.73

Vented Electric Compact 120V 3.61

Vented Electric Compact 240V 3.27

Vented Gas 3.30

Vent-less Electric Compact 240V 2.55

Vent-less Electric Combination 

Washer/Dryer 2.08
17-6

Table 17.2.2 Efficiency Levels in Proposed Standard Levels for Room Air 

Conditioners

Product Class TSL 4

CEER

Group 1 – includes PC 1 11.10

Group 2 – includes PC 2, 3, 4, 11 10.90

Group 3 – includes PC 5a, 9, 13 9.40

Group 4 – includes PC 5b, 10 9.00

Group 5 – includes PC 6, 7, 8a, 12 9.60

Group 6 – includes PC 8b, 14, 15, 16 9.50

 Besides the above policy alternatives, DOE evaluated a Super-Efficient Voluntary 

Targets policy where a new voluntary efficiency target program would be implemented in 

addition to the proposed standards. The voluntary efficiency targets would feature “superefficient” products at one efficiency level above the current max-tech levels. The program would 

target consumers in the highest electricity price regions of the country, to make the products 

maximally cost-effective. 

 DOE assumed that the effects of non-regulatory policies would last from the effective 

date of standards—2014—through the end of the analysis period, which is 2043. 

17.2.3 Policy Interactions 

DOE calculated the effects of each non-regulatory policy separately from those of the 

other policies. In practice, some policies are most effective when implemented in combination, 

such as early replacement implemented with consumer rebates, or early replacement 

implemented with bulk government purchases. However, DOE attempted to make conservative 

assumptions to avoid double-counting policy impacts. The resulting policy impacts are not 

additive: the combined effect of several or all policies cannot be inferred from summing their 

results. 

Section 17.3 presents graphs that show the market penetration estimated under each nonregulatory policy for clothes dryers and room air conditioners. 

17.3 NON-REGULATORY POLICY ASSUMPTIONS

 The following subsections describe DOE’s analysis of the impacts of the six nonregulatory policy alternatives to proposed standards for clothes dryers and room air conditioners. 

(Because the alternative of No New Regulatory Action has no energy or NPV impacts, 

essentially representing the NIA base case, DOE did not perform additional analysis for that 

alternative.) DOE developed estimates of the market penetration of high-efficiency products both 

with and without each of the non-regulatory policy alternatives. 
17-7

17.3.1 No New Regulatory Action 

 The case in which no new regulatory action is taken with regard to the energy efficiency 

of clothes dryers and room air conditioners constitutes the base case, as described in chapter 10, 

National Impact Analysis. The base case provides the basis of comparison for all other policies. 

By definition, no new regulatory action yields zero energy savings and an NPV of zero dollars. 

17.3.2 Consumer Rebates

DOE considered this scenario in which the Federal government would provide financial 

incentives in the form of rebates to consumers for purchasing energy efficient appliances. This 

policy provides a consumer rebate for purchasing clothes dryers or room air conditioners that 

operate at (or above) the same efficiencies as stipulated in proposed standards (target levels).

 To inform its estimate of the market impacts of consumer rebates, DOE performed a 

thorough search for existing rebate programs nationwide. It gathered data on utility or agency 

rebates for clothes dryers or room air conditioners throughout the country. DOE also reviewed 

the current State Energy Efficient Appliance Rebate Program (SEEARP) funded by the 

American Recovery and Reinvestment Act (ARRA).

1

, 

b

This program may be considered a 

combination of a consumer rebate and an early replacement program, with intention to induce 

appliance sales during the economic recession. DOE analyzed summary material from DOE on 

SEEARP rebates for room air conditioners.2

DOE based its evaluation methodology for consumer rebates on a comprehensive study 

of California’s potential for achieving energy efficiency. This study, performed by XENERGY,

Inc.,c summarized experiences with various utility rebate programs.3 XENERGY’s analytical 

method utilized graphs, or penetration curves, that estimate the market penetration of a 

technology based on its benefit/cost (B/C) ratio. DOE consulted with experts and reviewed other 

methods of estimating the effect of consumer rebate programs on the market penetration of 

efficient technologies. The other methods, developed after the referenced XENERGY report was 

published,4, 5, 6, 7, 8, 9 used different approaches: other economic parameters (e.g., payback 

period), expert surveys, or model calibration based on specific utility program data rather than 

multi-utility data. Some models in use by energy efficiency program evaluation experts were so 

client-specific that generic relationships between economic parameters and consumer response 

could not be established.7 DOE decided that the most appropriate available method for this RIA 

analysis was the XENERGY approach of penetration curves based on B/C ratio, which 

incorporates lifetime operating cost savings. 

 

b DOE provided funding for State-run rebate programs for consumer purchases of new ENERGY STAR® qualified 

home appliances. The resulting SEEARP was implemented beginning in late 2009 by the 50 States and six U.S. 

territories, each selecting its own appliances, rebate levels, efficiency levels, appliance recycling requirements, and 

eligible populations.

c XENERGY is now owned by KEMA, Inc. (www.kema.com) 
17-8

XENERGY’s model estimates market impacts induced by financial incentives based on 

the premise that two types of information diffusion drive the adoption of new technologies. 

Internal sources of information encourage consumers to purchase new products primarily 

through word-of-mouth from early adopters. External sources affect consumer purchase 

decisions through marketing efforts and information from outside the consumer group. Appendix 

17-A, section 17-A.3.1, contains additional details on internal and external information diffusion. 

XENERGY’s model equation accounts for the influences of both internal and external 

sources of information by superimposing the two components. Combining the two mechanisms 

for information diffusion, XENERGY’s model generates a set of penetration (or implementation) 

curves for a measure. XENERGY then calibrated the curves based on participation data from 

utility rebate programs. The curves illustrate the increased penetration (i.e., increased market 

share) of efficient products driven by consumer response to changes in B/C ratio induced by 

rebate programs. The penetration curves depict various diffusion patterns based on perceived 

barriers (from no barriers to extremely high barriers) to consumer purchase of high-efficiency 

products. 

DOE adjusted the XENERGY penetration curves based on expert advice founded on 

more recent utility program experience.7, 10 DOE also devised an interpolation method to create 

penetration curves based on relationships between the actual base case market penetrations and 

actual B/C ratios for each representative product class. Appendix 17-A, sections 17-A.3.2 and 

17-A.3.3, contain discussion on DOE’s methodology for adjusting and interpolating the curves. 

 DOE modeled the effects of a consumer rebate policy for clothes dryers and room air 

conditioners by determining the increases in market penetration of products meeting the target 

level relative to their market penetrations in the base case. It did this using the interpolated 

penetration curves created for each representative product class based on the XENERGY

methodology to best reflect the market barrier levels faced by each product class. 

 Section 17.3.2.1 shows examples of these interpolated curves for two clothes washer 

product classes: vented electric standard and vented gas. Section 17.3.2.2 shows examples of 

these interpolated curves for two room air conditioner product classes: PC 1 (Group 1) and PC 3 

(Group 2). 

17.3.2.1 Clothes Dryers

For clothes dryers, DOE estimated the effect of increasing the B/C ratio via a rebate that 

would pay part or all of the increased installed cost of a unit that met the target efficiency level 

compared to one meeting the baseline efficiency level.

d

 

d The baseline technology for each product class is defined in the engineering analysis, chapter 5, as the technology 

that represents the basic characteristics of products in that class. A baseline unit typically is one that just meets 

current Federal energy conservation standards and provides basic consumer utility. 

 DOE based the rebate amounts on a 

large sample of utility and agency rebate programs for clothes dryers. 
17-9

For gas clothes dryers, DOE gathered data on 16 rebate programs initiated by 16 utilities 

or agencies in several States. For electric clothes dryers, DOE gathered data on four rebate 

programs initiated by three utilities or agencies in States throughout the country, and for electric 

combination washer/dryer units it found one program. (Appendix 17-A, section 17-A.5, 

identifies the rebate programs.) To represent the rebate level for gas, electric, and combination 

clothes dryers, DOE used the simple average of the rebate amounts in these respective sets of 

programs. DOE assumed that these averages would apply to models at all efficiency levels at or 

above the target level for each representative product class. None of the rebates specified an 

efficiency level, but rather specified a moisture sensor or a conversion from electric to gas. DOE 

assumed that the impact of these rebates would be equivalent to those of rebates at the target 

levels. 

 

DOE assumed that rebates would remain in effect at the same levels throughout the 

forecast period (2014–2043). 

For clothes dryers, DOE first calculated B/C ratios without a rebate using the difference 

in total installed costs and lifetime operating cost savings between the unit meeting the target 

level and the baseline unit. It then calculated B/C ratios given a rebate for the unit meeting the 

target efficiency level. Because the rebate reduced the incremental cost, the unit receiving the 

rebate had a larger B/C ratio. Table 17.3.1 shows the effects of consumer rebates on B/C ratios 

for the two largest product classes, vented standard electric and vented gas clothes dryers. Each

B/C ratio value for units with rebates represents a weighted averagee

 of the values for the 

efficiency levels at or above the target level to which the rebate would apply. 

 

e The weighting factor is the 2014 base case market share of each of the corresponding efficiency levels. 
17-10

Table 17.3.1 Benefit/Cost Ratios Without and With Rebates for Clothes Dryers

(2009$) 

Vented 

Standard 

Electric

Vented Gas

B/C Ratio Without Rebate 1.8 1.2

Rebate Amount $31 $91

B/C Ratio With Rebate Inf. Inf.

Calculated Market Barrier Curve

Low -

Moderate No - Low

Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used the B/C ratios along with the penetration curves such as those shown in 

Figures 17.3.1 and 17.3.2 to estimate the percentage of consumers who would purchase clothes 

dryers that meet the target levels both with and without a rebate incentive.

Figure 17.3.1 Market Penetration Curve for Vented Standard 

Electric Dryers
17-11

Figure 17.3.2 Market Penetration Curve for Vented Gas Dryers

The curve calculated by DOE to represent the market behavior for vented standard 

electric clothes dryers was between the low and moderate barriers penetration curves. For vented 

gas clothes dryers the curve was between the no barriers and low barriers penetration curve. 

For each product class, DOE next estimated the percent increase represented by the 

change in penetration rate shown on the penetration curve. It then added that percent increase to 

the market share of units that meet the target level in the base case to obtain the market share of 

units that meet the target level in the rebate case. Table 17.3.2 summarizes the market shares of 

clothes dryers in 2014. DOE used the resulting increases in market shares as inputs to represent 

the policy case scenarios in its NIA-RIA model. Appendix 17-A, section 17-A.4, shows the 

annual market share increases due to this policy. Section 17.4 presents the resulting efficiency 

trends for the policy case of consumer rebates for clothes dryers 
17-12

Table 17.3.2 Market Penetrations in 2014 Without and With Rebates for Clothes 

Dryers

Vented 

Electric 

Standard 

%

Vented 

Gas %

Base-Case Market Share of Units that 

Meet Target Levels 25 41

Market Share of Units that Meet Target 

Levels With Rebates 76 92

Increased Market Share of Units that 

Meet Target Level With Rebates 51 51

17.3.2.2 Room Air Conditioners 

For room air conditioners, DOE estimated the effect of increasing the B/C ratio via a 

rebate that would pay part or all of the increased installed cost of a unit that met the target 

efficiency level compared to the cost of a unit meeting the baseline level. DOE based the rebate 

amounts on a large sample of utility and agency rebate programs for room air conditioners. 

DOE gathered data on 62 rebate programs provided by 61 utilities or agencies in various 

States. (Appendix 17-A, section 17-A.5, identifies the rebate programs.) To represent the rebate 

level for room air conditioners, DOE used the simple average of the rebate amounts in these 62

programs. DOE assumed that this average amount would apply to models at all efficiency levels 

at or above the target level for each representative product class. For each of these efficiency 

levels, the rebate amount represented a certain percent of the increase in total installed cost. 

Since nearly all of the utility/agency rebates were for room air conditioners at the ENERGY 

STAR level, while the proposed standard levels for room air conditioners were set at a higher 

efficiency level, DOE sought data on rebates requiring levels higher than ENERGY STAR to 

determine whether to adjust this average rebate level amount. Most of the SEEARP room air 

conditioner rebates were also for the ENERGY STAR efficiency level, but one rebate was for the 

CEE Tier 1 level. DOE adjusted the rebate amount by the ratio of the rebate amount for the 

higher efficiency level to the average of the rebate amounts for the ENERGY STAR level. 

DOE assumed that rebates would remain in effect until the market had been transformed; 

that is, the shift in market share of efficient units seen in the first year of the rebate program 

would be maintained throughout the forecast period (2014–2043). 

For room air conditioners, DOE first calculated B/C ratios without a rebate using the 

difference in lifetime operating costs and total installed costs between the unit meeting the target 

level and the baseline unit. It then calculated B/C ratios given a rebate for the unit meeting the 

target efficiency. Because the rebate reduced the incremental cost, the unit receiving the rebate 

had a larger B/C ratio. Table 17.3.3 shows the effects of consumer rebates on B/C ratios for the 

two largest product classes of room air conditioners. Each B/C ratio value for units with rebates 
17-13

represents a weighted averagef of the values for the efficiency levels at or above the target level 

to which the rebate would apply. 

 

f The weighting factor is the 2014 base case market share of each of the corresponding efficiency levels. 
17-14

Table 17.3.3 Benefit/Cost Ratios Without and With Rebates for Room Air 

Conditioners

Group 1

(PC1)

Group 2

(PC3)

B/C Ratio Without Rebate 26.3 41.0

Rebate Amount $65 $65

B/C Ratio With Rebate Inf. Inf.

Calculated Market Barrier Curve Extremely 

High

Extremely 

High

Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used these B/C ratios, along with the penetration curves such as those shown in 

Figures 17.3.3 and 17.3.4 to estimate the percentage of consumers who would purchase room air 

conditioners that meet the target efficiency level both with and without a rebate incentive. The 

curve calculated by DOE to represent the market behavior for product class 1 (Group 1) product 

and class 3 (Group 2) was closest to the extremely high barriers curve. 

Figure 17.3.3 Market Penetration Curve for Room Air 

Conditioners, Less than 6,000 Btu/h, with Louvers 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60 70 80 90 100

Penetration Rate

Benefit-Cost Ratio

High Estimated xHigh No Rebate With Rebate
17-15

Figure 17.3.4 Market Penetration Curve for Room Air 

Conditioners, 28,000-13,999 Btu/h, with Louvers

For each product class, DOE next estimated the percent increase represented by the 

change in penetration rate shown on the penetration curve. It then added that percent increase to 

the market share of units that meet the target level in the base case to obtain the market share of 

units that meet the target level in the rebate case. Table 17.3.4 summarizes market shares of 

target-level room air conditioners estimated for 2014. DOE used the resulting increased market 

shares attributable to the rebate policy as inputs to the NIA-RIA model. Appendix 17-A, section 

17-A.4, shows the annual market share increases due to this policy. Section 17.4 presents the 

resulting efficiency trends for the policy case of consumer rebates for room air conditioners. 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60 70 80 90 100

Penetration Rate

Benefit-Cost Ratio

High Estimated xHigh No Rebate With Rebate
17-16

Table 17.3.4 Market Penetration in 2014 Without and With Rebates for Room Air 

Conditioners

PC 1 

(Group 1)

PC 3 

(Group 2)

% %

Base-Case Market Share of Units that 

Meet Target Levels 1.2 2.2

Market Share of Units that Meet 

Target Levels With Rebates 2.6 3.4

Increased Market Share of Units that 

Meet Target Level With Rebates 1.4 1.2
17-17

Table 17.3.5

17.3.3 Consumer Tax Credits

DOE estimated the effects of tax credits on consumer purchases based on its previous 

analysis of consumer participation in tax credits. DOE supported its approach using data from 

Oregon State’s tax credit program for energy efficient appliances. DOE also incorporated 

previous research that disaggregated the effect of rebates and tax credits into a direct price effect, 

which derives from the savings in purchase price, and an announcement effect, which is 

independent of the amount of the incentive.11, 12 The announcement effect derives from the 

credibility that a technology receives from being included in an incentive program, as well as 

changes in product marketing and modifications in markup and pricing. DOE assumed that the 

rebate and consumer tax credit policies would encompass both direct price effects and 

announcement effects, and that half the increase in market penetration associated with either 

policy would be due to the direct price effect and half to the announcement effect. 

In estimating the effects of a tax credit on purchases of consumer products that meet new 

efficiency standards, DOE assumed the amount of the tax credits for each product class would be 

the same as the corresponding rebate amounts discussed above. 

DOE estimated that fewer consumers would participate in a tax credit program than 

would take advantage of a rebate. Research has shown that the delay required for a consumer to 

receive a tax credit, plus the added time and cost in preparing the tax return, make a tax credit 

incentive less effective than a rebate received at the time of purchase. Based on previous 

analyses, DOE assumed that only 60 percent of the consumers who would take advantage of a 

rebate would take advantage of a tax credit.13

In preparing its assumptions, DOE also reviewed other tax credit programs that have been 

offered at both the Federal and State levels for energy efficient appliances.

 

 The Energy Policy Act of 2005 (EPACT 2005) included Federal tax credits for 

consumers who purchase energy efficient equipment, including water heaters, furnaces, and 

furnace fans for new or existing homes.14 Those tax credits were in effect in 2006 and 2007, 

expired in 2008, and were reinstated for 2009–2010 by ARRA.1, 15 DOE reviewed Internal 

Revenue Service data on the numbers of taxpayers who claimed the tax credits during tax years 

2006 and 2007. DOE also reviewed data from an earlier Federal energy conservation tax credit 

program in place in the 1980s. However, DOE did not find data specific enough to refrigerators 

to warrant adjusting its analysis method for the Consumer Tax Credits policy case. Appendix 17-

A, section 17-A.6.1, contains more information on Federal consumer tax credits. 

 DOE also reviewed its previous analysis on Oregon’s tax credits for clothes washers to 

provide support for its assumptions.16 In the previous analysis, DOE compared the market shares 

of ultra-high efficiency (UHE) residential clothes washers in Oregon, which offered both State 

tax credits and utility rebates, with those in Washington State, which offered only utility rebates 

during the same period. Based on this analysis, DOE estimated that in Oregon the impact of tax 
17-18

credits was 62 percent of the impact of rebates for UHE clothes washers having equivalent 

efficiency. This finding supports its original assumption that participation in a tax credit program 

would be about 60 percent of participation in a rebate program. Additional discussion of State

tax credits for Oregon and other states is in Appendix 17-A, section 17-A.6.3. 

 

DOE applied the assumed 60 percent participation described above to the penetration 

rates estimated for the rebate policy to estimate penetration rates attributable to consumer tax 

credits. In doing so, DOE incorporated the assumptions for consumer response to financial 

incentives from the penetration curves selected for each product class. 

Tables 17.3.5 and 17.3.6 summarize DOE’s assumptions for clothes dryers and room air 

conditioners regarding the market penetration of units in 2014 that meet target efficiency levels 

given a consumer tax credit. 
17-19

Table 17.3.6 Market Penetrations in 2014 Attributable to Consumer Tax Credits for 

Clothes Dryers

Vented 

Electric 

Standard 

%

Vented Gas 

%

Base-Case Market Share of Units that Meet 

Target Levels 25 41

Market Share of Units that Meet Target 

Levels With Consumer Tax Credits 56 72

Increased Market Share of Units that Meet 

Target Level With Consumer Tax Credits 30 31
17-20

Table 17.3.7 Market Penetrations in 2014 Attributable to Consumer Tax Credits for 

Room Air Conditioners

PC 1 

(Group 1) 

%

PC 3 

(Group 2) 

%

Base-Case Market Share of Units that Meet 

Target Levels 1.2 2.2

Market Share of Units that Meet Target 

Levels With Consumer Tax Credits 2.0 2.9

Increased Market Share of Units that Meet 

Target Level With Consumer Tax Credits 0.8 0.7

 DOE assumed that this policy would transform the market permanently, so that the 

increase in market share seen in the first year of the program for room air conditioners would be 

maintained throughout the forecast period. The increased market shares attributable to consumer 

tax credits shown in Tables 17.3.5 and 17.3.6 were used as inputs to the NIA-RIA model. 

Appendix 17-A, section 17-A.4, shows the annual market share increases due to this policy. 

Section 17.4 presents the resulting efficiency trends for the policy case of consumer tax credits 

for clothes dryers and room air conditioners that meet target efficiency levels. 

17.3.4 Manufacturer Tax Credits 

To analyze the potential effects of a policy that offers tax credits to manufacturers that 

produce refrigeration products that meet target efficiency levels, DOE assumed that a 

manufacturer tax credit would lower the consumer’s purchase cost by an amount equivalent to 

that provided by the consumer rebates or tax credits described above. DOE further assumed that 

manufacturers would pass on some of their reduced costs to consumers, causing a direct price 

effect. DOE assumed that no announcement effect would occur, because the program would not 

be visible to consumers.g Because the direct price effect is approximately equivalent to the 

announcement effect,

11 DOE estimated that a manufacturer tax credit would induce half the 

number of consumers assumed to take advantage of a consumer tax credit to purchase more 

efficient products. This assumed participation rate is equal to 30 percent of the number of 

consumers who would participate in a rebate program. 

DOE attempted to investigate manufacturer response to the Energy Efficient Appliance 

Credits for manufacturers mandated by EPACT 2005.17 Those manufacturer tax credits were in 

effect for models produced in 2006 and 2007 and reinstated for 2009 and 2010. DOE was unable 

to locate data from the Internal Revenue Service or other sources on manufacturer response to 

the Federal credits. Appendix 17-A, section 17-A.6.2, presents details on Federal manufacturer 

tax credits.

 

g Note that this is a conservative assumption, since it is possible that manufacturers or utility/agency efficiency 

programs might promote the models for which manufacturers increase production due to the tax credits, which in 

turn might induce some announcement effect. However, DOE found no data on such programs on which to base an 

estimate of the magnitude of this possible announcement effect on consumer behavior.
17-21

DOE applied the assumption of 30 percent participation to the penetration rates predicted 

for the rebate policy to estimate the effects of a manufacturer tax credit policy. In doing so, the 

Department incorporated the assumptions for consumer response to financial incentives from the 

penetration curves selected for each product class. 

Tables 17.3.7 and 17.3.8 summarize DOE’s assumptions for clothes dryers and room air 

conditioners regarding the market penetration of units in 2014 meeting target efficiency levels 

given a manufacturer tax credit.
17-22

Table 17.3.8 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Clothes Dryers

Vented 

Electric 

Standard %

Vented Gas %

Base-Case Market Share of Units that Meet 

Target Levels 25 41

Market Share of Units that Meet Target 

Levels With Manufacturer Tax Credits 40 56

Increased Market Share of Units that Meet 

Target Level With Manufacturer Tax Credits 15 15
17-23

Table 17.3.9 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Room Air Conditioners 

PC 1 

(Group 1) 

%

PC 3 

(Group 2) 

%

Base-Case Market Share of Units that Meet 

Target Levels 1.2 2.2

Market Share of Units that Meet Target 

Levels With Manufacturer Tax Credits 1.6 2.6

Increased Market Share of Units that Meet 

Target Level With Manufacturer Tax 

Credits 0.4 0.4

 DOE assumed that this policy would transform the market permanently, so that the 

increase in market share seen in the first year of the program for clothes dryers or room air 

conditioners would be maintained throughout the forecast period. The increased market shares 

attributable to a manufacturer tax credit shown in Tables 17.3.7 and 17.3.8 were used as inputs to 

the NIA-RIA model. Appendix 17-A, section 17-A.4, shows the annual market share increases 

due to this policy. Section 17.4 presents the resulting efficiency trends for the policy case of 

manufacturer tax credits for clothes dryers and room air conditioners. 

17.3.5 Voluntary Energy Efficiency Targets 

For each product, DOE assumed that voluntary energy efficiency targets would be 

achieved as manufacturers gradually stopped producing units that operated below the target 

efficiency levels. DOE assumed that the impetus for phasing out production of low-efficiency 

units would be a program similar to the ENERGY STAR labeling program conducted by the 

Environmental Protection Agency (EPA) and DOE. The ENERGY STAR program specifies the 

minimum energy efficiencies that various products, including room air conditioners, must have 

to receive the ENERGY STAR label. ENERGY STAR encourages consumers to purchase 

efficient products via marketing that promotes consumer label recognition, various incentive 

programs that adopt the ENERGY STAR specifications, and manufacturers’ promotion of their 

qualifying appliances. ENERGY STAR projects market penetration of compliant appliances and 

estimates the percentage of sales of compliant appliances that are attributable to the ENERGY 

STAR program. 

Researchers have analyzed the ENERGY STAR program’s effects on sales of several 

consumer products. Program efforts generally involve a combination of information 

dissemination and utility or agency rebates. The analyses have been based on State-specific data 

on percentages of shipments of various appliances that meet ENERGY STAR specifications. The 

analyses generally have concluded that the market penetration of ENERGY STAR-qualifying 

appliances is higher in regions or States where ancillary promotional programs have been 

active.18, 19, 20
17-24

17.3.5.1 Clothes Dryers

Since there is no ENERGY STAR program for clothes dryers, DOE instead based its 

estimates of market penetration for clothes dryers on the ENERGY STAR projections for 

residential clothes washers as an analogous product. DOE estimated the percentage of market 

shares attributable to the existing ENERGY STAR program for clothes washers for 1996 –

2025.21 DOE then assumed that an ENERGY STAR program for clothes dryers would produce

the same patterns of annual increases in market penetration beginning in 2014. From this forecast 

DOE calculated the annual percent increases in market share for units represented by the 

shipments attributed to ENERGY STAR. DOE added those percent increases to the market 

shares of clothes dryers that met the target levels in the RIA base case, starting in 2014, to obtain 

the annual market shares of units meeting the target efficiency level in the voluntary efficiency 

targets case. 

 DOE estimated that the programs developed in support of the voluntary efficiency targets 

policy would increase market shares of efficient units. Appendix 17-A, section 17-A.4, shows 

the annual market share increases due to this policy. Section 17.4 presents the resulting 

efficiency trends for the policy case of voluntary energy efficiency targets for clothes dryers that 

meet target efficiency levels.

17.3.5.2 Room Air Conditioners

 To model the effects of a voluntary energy efficiency policy for room air conditioners, 

DOE assumed that such a program would be an expansion of existing ENERGY STAR efforts 

for this product. The ENERGY STAR program developed projections for 1996–2025 of 

increased market penetration attributable to its program for room air conditioners.21 DOE 

estimated that an expanded ENERGY STAR program would increase the annual market share of 

efficient units by 50 percent more than the increase that was attributable to the existing

ENERGY STAR program for room air conditioners, which began in 1996. Using ENERGY 

STAR’s forecast for 1996 – 2025, DOE first performed interpolation to smooth out fluctuations 

due to periodic program specification updates. From this adjusted forecast, DOE calculated the 

annual percent increases in market share for room air conditioners represented by an additional 

50 percent market share that would result from an enhanced program. DOE added those percent 

increases to the market shares of room air conditioners that meet the target level in the RIA base 

case,

h

 

h The base case projections for refrigeration products incorporate assumptions on the percentage of qualifying 

shipments under the current ENERGY STAR program.

 starting in 2014, to obtain the annual market shares of units meeting the target efficiency 

level in the voluntary efficiency targets policy case. DOE assumed that the programs resulting 

from the expanded voluntary efficiency targets policy would produce projected increases in 

market share. Appendix 17-A, section 17-A.4, shows the annual market share increases due to 

this policy. Section 17.4 presents the resulting efficiency trends for the policy case of voluntary 

energy efficiency targets for room air conditioners. 
17-25

17.3.6 Early Replacement 

 The non-regulatory policy of early replacement refers to a program to replace residential 

appliances before the ends of their useful lives. The purpose of such a policy is to replace old, 

inefficient units with higher efficiency units. The economic feasibility of early replacement

depends on the vintage of the unit being replaced, the installed cost of the new unit, and the 

energy cost savings. 

 DOE reviewed analysis of the Connecticut Retirement Program (ARP), which was 

conducted June through December 2004 by Nexus Market Research, Inc., and RLW Analytics, 

Inc., for Northeast Utilities–Connecticut Light and Power and the United Illuminating 

Company’s State programs.

25 The purpose of the ARP was to help Connecticut utility customers 

overcome barriers to recycling room air conditioners (RACs), secondary refrigerators, and 

freezers. The program picked up used appliances at customers’ homes or at turn-in events, paid 

participants to retire their units, and educated customers about the costs of operating older 

appliances. In addition, the program provided consumers with financial incentives to replace 

inefficient RACs with ENERGY STAR-qualified units. DOE considered the RAC program to 

most closely resemble the early replacement policy scenario for clothes dryers considered herein. 

Nexus/RLW used program data and surveys to estimate the number of RACs retired by ARP 

participants, the percentage of retired units that were replaced with an ENERGY STAR model, 

and the number of RACs replaced by non-participants during the program. According to the 

Nexus/RLW analysis, about 7 percent of all RACs retired during the program were retired 

through the ARP, and 63 percent of those were replaced with ENERGY STAR models. Thus the 

program resulted directly in about 4 percent of total eligible RAC consumers deciding on early 

replacement of inefficient units. 

 In 2006, GDS Associates, Inc performed a study of the potentials for electric energy 

efficiency for the State of Vermont.26 The report estimated the potentials for reducing electricity 

use and peak demand through energy efficiency and fuel conversion measures. The study took an 

aggressive, multi-program approach, one aspect of which was early replacement of 

appliances. GDS considered that under the program residential appliances, including RACs, 

would be replaced during four years (2006–2009). GDS estimated achievable market 

penetrations assuming that consumers would receive a financial incentive equal to 50 percent of 

the incremental cost of each measure. GDS assumed an 80 percent penetration limit. For early 

replacement of RACs, GDS estimated a maximum achievable participation of 5 percent of 

eligible single-family or multi-family homes in the year before the program began (2005). 

DOE also reviewed an earlier study it conducted in the 1990s, under Energy Policy Act 

of 1992 (EPACT 1992), which analyzed the feasibility of a Federal program to promote early 

replacement of appliances.27 The study identified policy options for early replacement that 

included a direct national program; replacement of Federally-owned appliances; and promotion 
17-26

through equipment manufacturers, consumer incentives, incentives to utilities, and building 

regulations.i

While the SEEARP rebate program has been an early replacement program, the program 

was still in process during the preparation of this TSD. The amount of money available for 

rebates for each State, apportioned between several appliances per State, may not have been 

adequate to demonstrate the full market potential of an early replacement program targeted at 

one appliance. 

 For this RIA analysis, DOE analyzed a program that would target installed units having 

efficiency levels that are lower than target levels and encourage their early replacement with 

products that perform at target levels. For each product, DOE modeled the effects of the early 

replacement policy by increasing by a certain percentage per year the retirement rate of units that 

were in the stock in the first year of the analysis period (2014). For clothes dryers and room air 

conditioners DOE used the 4 percent rate from the Connecticut ARP program report, because it 

dealt with room air conditioners. 

DOE assumed that the early replacement program would continue until it had facilitated 

the replacement of all eligible clothes dryers and room air conditioners in the stock in the year 

the program began (2014). Shipments of new units in 2014 and beyond were not affected by the 

program, but remained at base-case efficiency levels. After the stock of inefficient units was

completely replaced, the policy would produce no additional impacts. 

An early replacement policy would create a fairly immediate jump in shipments of 

products that meet target efficiency levels relative to the base case, as shown in Figures 17.3.5 

and 17.3.6. High-efficiency units would be brought quickly into the stock, leading to an 

immediate gain in the market share of efficient units compared to the base case. As opposed to 

the policy cases discussed previously, however, an early replacement policy results in market 

shares of efficient units returning to base-case percentages as the eligible market is depleted. In 

addition, as the figures illustrate, because units removed early from the stock would have been 

replaced later (at the ends of their useful lives) without the program, the number of shipments in 

later years drops slightly below the base-case shipments forecast for a period of years. The 

shipments shown in Figures 17.3.5 and 17.3.6 represent units that replace existing units 

(replacement shipments). Appendix 17-A, section 17-A.4, shows the annual market share 

increases due to this policy. Section 17.4 presents the resulting efficiency trends for the policy 

case of early replacement for clothes dryers and room air conditioners. 

 

i

The analysis concluded that, although cost-effective opportunities for early replacement exist, a widespread Federal 

program was not justified economically. Because early retirement means that a unit may be replaced by an 

appliance less efficient than the eventual replacement would have been, energy savings would be less than 

anticipated. Early replacement programs also could increase long-term sales volatility by encouraging a temporary 

increase in production, followed by a lull in demand. Early replacement could be economical in localities subject to

high energy costs or environmental constraints; when replacement appliances are much more efficient than existing 

stock; or when a major technology breakthrough has occurred, creating the need for a ready market. 
17-27

Figure 17.3.5 Estimated Replacement Shipments of Clothes Dryers

With and Without an Early Replacement Program

0.000

2.000

4.000

6.000

8.000

10.000

12.000

201020122014201620182020

202220242026202820302032

203420362038204020422044

Base Case Early Replacement
17-28

Figure 17.3.6 Estimated Replacement Shipments of Room Air 

Conditioners With and Without an Early 

Replacement Program

17.3.7 Bulk Government Purchases 

DOE assumed that a policy requiring bulk government purchases would lead to Federal, 

State, and local governments purchasing products that meet target efficiency levels. Combining 

the market demands of multiple public sectors also would provide a market signal to 

manufacturers and vendors that some of their largest customers seek products that meet an 

efficiency target at favorable prices. Such a program also could induce “market pull,” whereby 

manufacturers and vendors would achieve economies of scale for high-efficiency products. 

 Most of the previous bulk government purchase (procurement) initiatives at the Federal, 

State, and municipal levels have not tracked data on number of purchases or degree of 

compliance with procurement specifications. In many cases, procurement programs are 

decentralized, being part of larger State or regional initiatives. DOE based its assumptions 

regarding the effects of a policy calling for bulk government purchases on studies the Federal 

Energy Management Program (FEMP) performed regarding the savings potential of its 

procurement specifications for appliances and other equipment. FEMP, however, does not track 

0.000

2.000

4.000

6.000

8.000

10.000

12.000

20102012201420162018202020222024202620282030203220342036203820402042

Base Case Early Replacement
17-29

purchasing data, because of the range of complex the purchasing systems, number of vendors, 

etc. States, counties, and municipalities have demonstrated increasing interest and activity in 

“green purchasing." Although many of the programs target office equipment, the growing 

infrastructure for developing and applying efficient purchasing specifications indicates that bulk 

government purchase programs are feasible.28, 29 

 DOE assumed that government agencies, such as the Department of Housing and Urban 

Development, would administer a bulk purchasing program for refrigeration products. The bulk 

purchasing policy also could be incorporated at the Federal level into the FEMP program, which 

has established procurement guidelines. Federal construction requirements include the FEMP 

guidelines for installing or replacing equipment. The FEMP program currently has procurement 

guidelines in place for room air conditioners.30

DOE also reviewed its own previous research on the potential for market transformation 

through bulk government purchases. Its major study analyzed several scenarios based on the 

assumption that 20 percent of Federal equipment purchases in the year 2000 already incorporated 

energy efficiency requirements based on FEMP guidelines. One scenario in the DOE report 

showed energy efficient Federal purchasing ramping up during 10 years from 20 percent to 80 

percent of all Federal purchases.31 

17.3.7.1 Clothes Dryers

 Based on its study described above, DOE estimated that a bulk government purchase 

program instituted within a 10-year period would result in at least 80 percent of governmentpurchased clothes dryers meeting target efficiency levels. 

 DOE assumed that bulk government purchases would affect a subset of housing units for 

which government agencies purchased or influenced the purchase of clothes dryers. This subset 

would consist primarily of public housing and housing on military bases. DOE defined this 

subset based on publicly owned housing identified in the American Housing Survey (AHS) for 

2009, which was 1.8 million households, or about 1.4 percent of all U.S. households.32 (The 

AHS reports 130.0 million U.S. households.33) According to the 2005 Residential Energy

Consumption Survey (RECS 2005), 20.8 percent of publicly owned households had electric 

clothes dryers and 23.4 percent had gas dryers.

34 DOE therefore estimated that 0.3 percent of 

U.S. housing units represent publicly owned households using electric clothes dryers and 0.3 

percent using gas clothes dryers; these constitute the populations to which this policy would 

apply. 

DOE estimated that each year of a bulk government purchase policy (2014) an increasing

percent of shipments of government-purchased clothes dryers beyond the base case would meet 

target efficiency levels. DOE estimated that by 2024 bulk government purchasing programs 

would result in 80 percent of the clothes dryer market for publicly owned housing meeting target 
17-30

levels.j

17.3.7.2 Room Air Conditioners

 DOE modeled the bulk government purchase program assuming that the market share for 

each product achieved in 2024 would be maintained throughout the rest of the forecast period. 

Section 17.4 presents the resulting efficiency trends for the policy case of bulk government 

purchase of clothes dryers. 

DOE analyzed the market for room air conditioners and determined that compact 

refrigerators are sold to the residential and commercial sectors. However, DOE did not analyze 

the potential impacts of bulk government purchases on commercial sector room air conditioners 

because it assumed that the penetration of this product in publicly owned buildings was very 

small. DOE lacked data to estimate their percentages in publicly owned commercial buildings. 

 Based on its study described above, DOE estimated that a bulk government purchase 

program instituted within a 10-year period eventually would result in at least 80 percent of 

government-purchased room air conditioners meeting target efficiency levels. 

For the residential sector, DOE assumed that bulk government purchases would affect a 

subset of housing units for which government agencies purchased or influenced the purchase of 

compact refrigerators. DOE defined this subset based on publicly owned housing identified in 

the American Housing Survey (AHS) for 2009, which was 1.8 million households, or about 1.4 

percent of all U.S. households.32 (The AHS reports 130.0 million U.S. households.33) According 

to the 2005 Residential Energy Consumption Survey (RECS 2005), 38.4 percent of publicly 

owned households used room air conditioners.34 DOE therefore estimated that 0.5 percent of 

U.S. housing units represent publicly owned households using room air conditioners, to which 

this policy would apply. 

DOE estimated that by 2024 bulk government purchasing programs would result in 80 - 

100 percent of the room air conditioner market for publicly owned buildings meeting target 

levels. DOE modeled the bulk government purchase program assuming that the market share for 

each product achieved in 2024 would be maintained throughout the rest of the forecast period. 

Section 17.4 presents the resulting efficiency trends for the policy case of bulk government 

purchase of room air conditioners. 

17.4 IMPACTS OF NON-REGULATORY ALTERNATIVES 

 This section presents graphs of the projected annual market shares of units meeting the 

target levels that result from the non-regulatory policies for each product class of for clothes 

dryers and room air conditioners analyzed in the RIA-NIA integrated model. It also presents the 

tables of the national energy savings and net present value (NPV) for each of the six nonregulatory policies analyzed. 

 

j

For some product classes where the market share in the base case was already above 80%, the estimated 10-year 

market penetration was set at 90% or 100%.
17-31

17.4.1 Clothes Dryers 

Figures 17.4.1 through 17.4.6 show the effects of each non-regulatory policy on market 

penetration for clothes dryers. Note that the market share of products that meet the target level is 

forecasted to remain constant in the base case (i.e., the case with neither standards nor nonregulatory policies). Note that for product classes whose base case market shares are 100 percent, 

the non-regulatory policies have no impact and therefore their projections are identical to the 

base case. For the other product classes whose base case market shares are less than 100 percent, 

relative to the base case, the policy cases increase the market share of room air conditioners that 

meet the target level. Consumer rebates are most effective in increasing the market share of 

clothes dryers that meet the target level, while bulk government purchases are least effective in 

increasing market share. Recall that the standards (not shown in the figures) would result in a 

100 percent market penetration of products that meet target efficiency levels. 

Figure 17.4.1 Market Penetration of Vented Electric Standard

Clothes Dryers Meeting Target Level in Policy Cases

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-32

Figure 17.4.2 Market Penetration of Vented Electric Compact 

120V Clothes Dryers Meeting Target Level in Policy 

Cases

Figure 17.4.3 Market Penetration of Vented Electric Compact 

240V Clothes Dryers Meeting Target Level in Policy 

Cases

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-33

Figure 17.4.4 Market Penetration of Vented Gas Clothes Dryers 

Meeting Target Level in Policy Cases 

Figure 17.4.5 Market Penetration of Vent-less Electric Compact 

240V Clothes Dryers Meeting Target Level in Policy 

Cases

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-34

Figure 17.4.6 Market Penetration of Vent-less Electric 

Combination Washer/Dryer Meeting Target Level in 

Policy Cases 

Tables 17.4.1 through 17.4.6 show the national energy savings and net present value 

(NPV) for each of the six non-regulatory policies analyzed in detail for clothes dryers, where the 

target level for each policy equals the efficiency level in the corresponding proposed standard. 

 The cases in which no regulatory action is taken with regard to clothes dryers constitute 

the base cases (or "No New Regulatory Action" scenarios), in which energy savings and NPV 

zero by definition. For comparison, the tables include the impacts of the proposed standards. 

Energy savings are given in quadrillion British thermal units (quads). The NPVs shown in Tables 

17.4.1 through 17.4.12 are based on two discount rates, 7 percent and 3 percent. Negative NPVs 

are shown in parentheses. 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-35

Table 17.4.1 Impacts of Non-Regulatory Alternatives for Vented Electric Standard 

Dryers that Meet the Proposed Standard (TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.287 0.320 1.426

Consumer Tax Credits 0.173 0.193 0.859

Manufacturer Tax Credits 0.087 0.097 0.431

Voluntary Energy Efficiency Targets 0.050 0.161 0.442

Early Replacement 0.004 0.014 0.026

Bulk Government Purchases 0.001 0.002 0.006

Proposed Standards 0.347 1.017 2.779

* For products shipped in 2014─ 2043
17-36

Table 17.4.2 Impacts of Non-Regulatory Alternatives for Vented Electric Compact 

120V Dryers that Meet the Proposed Standard (TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.000 0.000 0.000

Consumer Tax Credits 0.000 0.000 0.000

Manufacturer Tax Credits 0.000 0.000 0.000

Voluntary Energy Efficiency Targets 0.000 0.000 0.001

Early Replacement 0.000 0.000 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.000 0.002 0.005

* For products shipped in 2014─ 2043
17-37

Table 17.4.3 Impacts of Non-Regulatory Alternatives for Vented Electric Compact

240V Dryers that Meet the Proposed Standard (TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

Quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.001 (0.002) 0.001

Consumer Tax Credits 0.001 (0.001) 0.001

Manufacturer Tax Credits 0.000 (0.001) 0.000

Voluntary Energy Efficiency Targets 0.000 0.001 0.003

Early Replacement 0.000 0.000 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.001 0.006 0.014

* For products shipped in 2014─ 2043
17-38

Table 17.4.4 Impacts of Non-Regulatory Alternatives for Vented Gas Dryers that Meet

the Proposed Standard (TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.040 (0.126) (0.074)

Consumer Tax Credits 0.024 (0.076) (0.045)

Manufacturer Tax Credits 0.012 (0.038) (0.022)

Voluntary Energy Efficiency Targets 0.007 0.014 0.049

Early Replacement 0.000 0.003 0.005

Bulk Government Purchases 0.000 0.000 0.001

Proposed Standards 0.038 0.051 0.215

* For products shipped in 2014─ 2043
17-39

Table 17.4.5 Impacts of Non-Regulatory Alternatives for Vent-less Electric Compact

240V Dryers that Meet the Proposed Standard (TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.000 0.000 0.000

Consumer Tax Credits 0.000 0.000 0.000

Manufacturer Tax Credits 0.000 0.000 0.000

Voluntary Energy Efficiency Targets 0.000 0.000 0.000

Early Replacement 0.000 0.000 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.000 0.000 0.000

* For products shipped in 2014─ 2043
17-40

Table 17.4.6 Impacts of Non-Regulatory Alternatives for Vent-less Electric 

Combination Washer/Dryer Dryers that Meet the Proposed Standard

(TSL 4) 

Policy Alternative

Primary Energy

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.000 0.000 0.000

Consumer Tax Credits 0.000 0.000 0.000

Manufacturer Tax Credits 0.000 0.000 0.000

Voluntary Energy Efficiency Targets 0.000 0.000 0.000

Early Replacement 0.000 0.000 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.000 0.000 0.000

* For products shipped in 2014─ 2043

17.4.2 Room Air Conditioners 

Figures 17.4.7 through 17.4.12 show the effects of each non-regulatory policy on market 

penetration for residential sector room air conditioners; these results do not include room air 

conditioners used in the commercial sector. The market share of products that meet the target 

level in the base case is forecasted to be constant for some product classes and to increase over 

time for some product classes. Note that for product classes whose base case market shares are 

100 percent, the non-regulatory policies have no impact and their projections are identical to the 

base case. For the other product classes whose base case market shares are less than 100 percent, 

relative to the base case, the policy cases increase the market share of room air conditioners that 

meet the target level. Of those policy cases, consumer rebates produce the greatest market share 

increases and bulk government purchases result in the least market share increases. Recall that 

the proposed standards (not shown in the figures) would result in a 100 percent market 

penetration of products that meet the target efficiency level. 
17-41

Figure 17.4.7 Market Penetration of Room Air Conditioners Less 

than 6,000 Btu/h, with Louvers, Meeting Target 

Level in Policy Cases 

Figure 17.4.8 Market Penetration of Room Air Conditioners 8,000-

13,999 Btu/h, with Louvers, Meeting Target Level in 

Policy Cases 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

20142015201620172018

2019

2020202120222023202420252026202720282029203020312032203320342035203620372038

20392040

204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-42

Figure 17.4.9 Market Penetration of Room Air Conditioners 

20,000-24,999 Btu/h, with Louvers, Meeting Target 

Level in Policy Cases 

Figure 17.4.10 Market Penetration of Room Air Conditioners 25,000 

Btu/h or more, with Louvers, Meeting Target Level

in Policy Cases 

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-43

Figure 17.4.11 Market Penetration of Room Air Conditioners 8,000-

10,999 Btu/h, without Louvers Meeting Target Level

in Policy Cases 

Figure 17.4.12 Market Penetration of Room Air Conditioners 

11,000-13,999 Btu/h, without Louvers Meeting 

Target Level in Policy Cases 

Tables 17.4.7 through 17.4.12 show the national energy savings and net present value 

(NPV) for each of the six non-regulatory policies analyzed in detail for room air conditioners, 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019

20202021

202220232024202520262027202820292030203120322033203420352036203720382039

20402041

20422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-44

where the target level for each policy equals the efficiency level in the corresponding proposed 

standard. The results shown in Tables 17.4.7 through 17.4.12 represent savings and NPV for 

room air conditioners used in the residential sector only. 

 The cases in which no regulatory action is taken with regard to room air conditioners 

constitute the base cases (or "No New Regulatory Action" scenarios), in which energy savings 

and NPV zero by definition. For comparison, the tables include the impacts of the proposed 

standards. Energy savings are given in quadrillion British thermal units (quads). The NPVs 

shown in Tables 17.4.7 through 17.4.12 are based on two discount rates, 7 percent and 3 percent. 

Negative NPVs are shown in parentheses. 
17-45

Table 17.4.7 Impacts of Non-Regulatory Alternatives for Room Air Conditioners 

Group 1 - Less than 6,000 Btu/h, with Louvers, that Meet the Proposed 

Standard (TSL 4) 

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.055 (0.064) 1.000

Consumer Tax Credits 0.033 (0.038) 0.001

Manufacturer Tax Credits 0.017 (0.019) 0.001

Voluntary Energy Efficiency Targets 0.016 (0.019) 0.000

Early Replacement 0.002 (0.002) 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.133 (0.203) (0.104)

* For products shipped in 2014─ 2043
17-46

Table 17.4.8 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 2 - based on 8,000-13,999 Btu/h, with Louvers, that Meet the 

Proposed Standard (TSL 4)

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

Quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.078 (0.142) (0.054)

Consumer Tax Credits 0.046 (0.086) (0.034)

Manufacturer Tax Credits 0.023 (0.043) (0.018)

Voluntary Energy Efficiency Targets 0.014 0.044 0.088

Early Replacement 0.002 0.007 0.012

Bulk Government Purchases 0.000 0.001 0.002

Proposed Standards 0.153 0.365 0.808

* For products shipped in 2014─ 2043
17-47

Table 17.4.9 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 3 - based on 20,000-24,999 Btu/h, with Louvers, that Meet the 

Proposed Standard (TSL 4)

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.000 (0.142) 0.000

Consumer Tax Credits 0.000 (0.086) 0.000

Manufacturer Tax Credits 0.000 (0.043) 0.000

Voluntary Energy Efficiency Targets 0.000 0.044 0.001

Early Replacement 0.000 0.007 0.000

Bulk Government Purchases 0.000 0.001 0.000

Proposed Standards 0.001 0.365 (0.009)

* For products shipped in 2014─ 2043
17-48

Table 17.4.10 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 4 - based on 25,000 Btu/h or more Btu/h, with Louvers, that Meet 

the Proposed Standard (TSL 4)

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount

rate

Consumer Rebates 0.000 0.000 0.000

Consumer Tax Credits 0.000 0.000 0.000

Manufacturer Tax Credits 0.000 0.000 0.000

Voluntary Energy Efficiency Targets 0.000 0.000 0.000

Early Replacement 0.000 0.001 0.001

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.000 (0.002) (0.003)

* For products shipped in 2014─ 2043
17-49

Table 17.4.11 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 5 - based on 8,000-10,999 Btu/h, without Louvers, that Meet the 

Proposed Standard (TSL 4)

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.002 0.001 0.005

Consumer Tax Credits 0.001 0.001 0.003

Manufacturer Tax Credits 0.000 0.000 0.001

Voluntary Energy Efficiency Targets 0.001 0.003 0.005

Early Replacement 0.000 0.000 0.001

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.006 0.020 0.039

* For products shipped in 2014─ 2043
17-50

Table 17.4.12 Impacts of Non-Regulatory Alternatives for Room Air Conditioners in 

Group 6 - based on 11,000-13,999 Btu/h, without Louvers, that Meet the 

Proposed Standard (TSL 4)

Policy Alternative

Primary Energy 

Savings 

Net Present Value*

quads

7% discount 

rate

billion 2009$

3% discount 

rate

Consumer Rebates 0.002 0.005 0.009

Consumer Tax Credits 0.001 0.003 0.005

Manufacturer Tax Credits 0.000 0.001 0.002

Voluntary Energy Efficiency Targets 0.000 0.002 0.003

Early Replacement 0.000 0.000 0.000

Bulk Government Purchases 0.000 0.000 0.000

Proposed Standards 0.004 0.009 0.017

* For products shipped in 2014─ 2043

17.5 SUPER-EFFICIENT VOLUNTARY TARGETS

Besides the above policy alternatives, DOE evaluated a policy where a new voluntary 

efficiency target program was implemented in addition to the proposed standards. This superefficient voluntary efficiency targets (SEVT) program would feature “super-efficient” products 

at one efficiency level (designated Super-Maxtech) above the current max-tech levels. The 

policy would target consumers willing to purchase highly efficient equipment, typically located 

in the highest electricity price regions of the country. For the purpose of evaluating the policy, all 

product classes were considered. In the case of clothes dryers, the electric Super-Maxtech

models would employ a CO2 heat pump and the gas models would use full modulating heat. For 

room air conditioners, all Super-Maxtech models would use a compressor with 10.4 EER and 

models from Groups 2 and 3 would have their unit size increased. Tables 17.5.1 and 17.5.2 show 

the targeted efficiency levels and parameters from the life-cycle cost analysis for the SuperMaxtech models for clothes dryers and room air conditioners. Tables 17.5.3 through 17.5.5 

present the consumer benefit/cost ratios (in 2014) for such models for each of the nine Census 

Divisions.k

 

k Benefits and costs are estimated for equipment purchased in 2014 and used during their corresponding unit average 

lifetime (8 years for clothes dryers and 4 years for room air conditioners). 
17-51

Table 17.5.1 Super-efficient Voluntary Targets Program Parameters for Clothes 

Dryers

Product Class

Elec Stand

Elec Comp 

120v

Elec Comp 

240v

Gas

Elec Comp 

Ventless

Elec 

Wash/Dryer

Efficiency level (lb/kWh) 5.60 5.58 5.05 3.83 4.16 3.81

LCC Parameters

Annual electricity consumption (kWh) 461.6 190.6 214.6 24.9 200.6 215.0

Annual gas consumption (MMBtu) - - - 2.12 - -

Total installed cost (2009$) $1,119 $1,174 $1,174 $809 $1,964 $2,514

Annual maintenance cost (2009$) $0.36 $0.37 $0.37 $0.34 $0.55 $0.68
17-52

Table 17.5.2 Super-efficient Voluntary Targets Program Parameters for Room Air 

Conditioners

Product Class

Group 1Group 2Group 3Group 4Group 5Group 6

Efficiency level (CEER) 11.10 10.90 9.40 9.00 9.60 9.50

LCC Parameters

Annual electricity 

consumption (kWh)

• Residential 312.3 493.5 400.0 479.1 405.7 622.5

• Commercial 468.6 846.3 2505.9 2580.0 975.2 1200.5

Total installed cost (2009$)

• Residential $515.86 $658.36 $1278.85 $1358.37 $660.72 $747.50

• Commercial $515.59 $657.22 $1277.70 $1357.17 $659.49 $746.16

Annual maintenance 

cost (2009$) $0.11 $0.28 $1.26 $1.18 $0.28 $0.28 
17-53

Table 17.5.3 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for 

Clothes Dryers by Census Division 

Product Class

Elec Stand

Elec Comp 

120v 

Elec Comp 

240v 

Gas 

Elec Comp 

Ventless

Elec 

Wash/Drye

r 

New England 0.52 0.24 0.27 0.31 0.28 0.38

Middle Atlantic 0.46 0.22 0.24 0.28 0.25 0.33

East North Central 0.32 0.15 0.16 0.22 0.17 0.23

West North Central 0.30 0.14 0.15 0.21 0.16 0.21

South Atlantic 0.34 0.16 0.17 0.27 0.18 0.25

East South Central 0.30 0.14 0.15 0.24 0.16 0.21

West South Central 0.35 0.17 0.18 0.23 0.19 0.26

Mountain 0.32 0.15 0.17 0.22 0.17 0.24

Pacific 0.37 0.17 0.19 0.24 0.20 0.27
17-54

Table 17.5.4 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for Room 

Air Conditioners by Census Division (Residential Sector)

Product Class

Group 1Group 2Group 3Group 4Group 5Group 6

New England 0.40 0.58 0.16 0.19 0.52 0.69

Middle Atlantic 0.34 0.51 0.14 0.16 0.45 0.60

East North Central 0.24 0.35 0.09 0.11 0.31 0.42

West North Central 0.22 0.33 0.09 0.10 0.29 0.39

South Atlantic 0.26 0.38 0.10 0.12 0.34 0.45

East South Central 0.22 0.33 0.09 0.10 0.29 0.39

West South Central 0.26 0.39 0.11 0.12 0.35 0.46

Mountain 0.24 0.36 0.10 0.11 0.32 0.42

Pacific 0.28 0.41 0.11 0.13 0.37 0.49
17-55

Table 17.5.5 Super-efficient Voluntary Targets Program Benefit/Cost Ratios for Room 

Air Conditioners by Census Division (Commercial Sector)

Product Class

Group 1Group 2Group 3Group 4Group 5Group 6

New England 0.43 0.73 0.75 0.75 0.91 0.98

Middle Atlantic 0.41 0.70 0.72 0.72 0.87 0.93

East North Central 0.30 0.51 0.53 0.52 0.64 0.69

West North Central 0.27 0.46 0.47 0.47 0.57 0.62

South Atlantic 0.32 0.55 0.56 0.56 0.68 0.73

East South Central 0.28 0.48 0.50 0.49 0.60 0.64

West South Central 0.29 0.49 0.51 0.51 0.61 0.66

Mountain 0.29 0.49 0.51 0.50 0.61 0.66

Pacific 0.39 0.66 0.68 0.68 0.82 0.88

 The benefit/cost analysis indicates that for all Super-Maxtech models evaluated, despite 

the energy savings they can provide, costs outweigh benefits for consumers in all Census 

Divisions. Nevertheless, DOE assumed that consumers willing to buy highly efficient 

equipment would move toward such models and therefore Super-Maxtech equipment would 

have some market penetration. Further, DOE considered that the market penetration of those 

models would increase with time as their price decreased. 

 Because the products modeled under this SEVT program rely on advanced technology, 

DOE adopted a learning model approach to estimate their market penetration. In such an 

approach, while the cost of mature technology (“low-tech”) components remains constant over 

time, the cost of advanced technology (“high-tech”) components decreases as a function of 

cumulative production of those products. DOE calculated the dynamic cost of Super-Maxtech 

models from the following equations: 

Ctotal (t) = Chigh-tech(t) + Clow-tech

Chigh-tech(t) = Chigh-tech(0) × (Q/Q0)

b

b = ln(PR) / ln(2)

where:

Ctotal(t) = (dynamic) total cost

Chigh-tech(t) = (dynamic) cost of high-tech components 
17-56

Clow-tech = (constant) cost of low-tech components

Chigh-tech(0) = cost of high-tech components in 2014 

Q = cumulative production of Super-Maxtech model since 2014 

Q0 = production of Super-Maxtech model in 2014 

b = learning rate coefficient

PR = progress ratio. 

 DOE estimated the costs of the Super-Maxtech models by breaking down their costs into 

two parts. For each Super-Maxtech model, the high-tech components cost (in 2014) is the 

incremental cost in relation to the cost projected for the “max-tech” model for that product 

class.

l

 The low-tech components cost is the cost projected for the max-tech model for that 

product class. Tables 17.5.6 through 17.5.8 show the resulting total installed costs of SuperMaxtech products in selected model years.

 

l

“Max-tech” model refers to the model in the life-cycle cost analysis with the highest efficiency level as reported in 

Chapter 8.
17-57

Table 17.5.6 Super-efficient Voluntary Targets Program Total Installed Cost of 

Clothes Dryers (2009$) 

Product Class

Elec Stand Elec Comp

120v

Elec Comp

240v Gas Elec CompVentless

Elec

Wash/Dryer

2014 $629.93 $663.85 $663.85 $234.36 $783.01 $841.97

2020 $568.04 $579.24 $582.69 $219.29 $634.98 $695.35

2025 $551.13 $555.82 $561.01 $215.16 $593.06 $654.15

2030 $541.42 $542.45 $548.75 $212.68 $569.53 $630.93

2035 $534.67 $533.21 $540.36 $210.93 $553.53 $615.09

2040 $529.59 $526.28 $534.06 $209.58 $541.67 $603.33

2043 $527.05 $522.83 $530.93 $208.91 $535.83 $597.52
17-58

Table 17.5.7 Super-efficient Voluntary Targets Program Total Installed Cost of Room 

Air Conditioners (Residential Sector) (2009$) 

Product Class

Group 1 Group 2 Group 3 Group 4 Group 5 Group 6

2014 $143.43 $155.83 $402.91 $359.10 $144.53 $144.27

2020 $139.37 $149.19 $378.03 $356.13 $142.90 $141.99

2025 $138.31 $147.45 $371.50 $355.37 $142.48 $141.39

2030 $137.72 $146.48 $367.90 $354.95 $142.24 $141.06

2035 $137.31 $145.80 $365.42 $354.66 $142.08 $140.83

2040 $137.01 $145.30 $363.59 $354.45 $141.96 $140.66

2043 $136.86 $145.05 $362.70 $354.35 $141.90 $140.58
17-59

Table 17.5.8 Super-efficient Voluntary Targets Program Total Installed Cost of Room 

Air Conditioners (Commercial Sector) (2009$)

Product Class

Group 1 Group 2 Group 3 Group 4 Group 5 Group 6

2014 $143.34 $155.52 $402.48 $358.72 $144.22 $143.96

2020 $139.26 $148.88 $377.45 $355.76 $142.58 $141.67

2025 $138.17 $147.10 $370.77 $355.00 $142.16 $141.07

2030 $137.56 $146.11 $367.06 $354.58 $141.92 $140.73

2035 $137.12 $145.40 $364.45 $354.30 $141.75 $140.49

2040 $136.79 $144.87 $362.51 $354.09 $141.62 $140.31

2043 $136.63 $144.61 $361.55 $353.99 $141.56 $140.22

 DOE used the Super-Maxtech models’ time-varying costs to estimate their dynamic 

benefit/cost ratios and market penetrations. For the estimation of the dynamic benefit/cost 

ratios, DOE used forecasted energy prices at the level of Census Divisions to calculate the 

energy cost savings for consumers in each region. To estimate the dynamic market penetrations, 

DOE followed a similar approach as described in Section 17.3.2, where an implementation rate

is calculated from a benefit/cost ratio and the implied market barrier level. In the SEVT case, 

since there is no market share information for the Super-Maxtech models, DOE assumed that 

for each Census Division the market barrier level for those models is the same as the market 

barrier level of the highest efficiency level with non-zero shipments in 2014. Tables 17.5.9 

through 17.5.11 present the estimated market penetrations for all Super-Maxtech models in 

selected years. 
17-60

Table 17.5.9 Super-efficient Voluntary Targets Program Market Penetration of 

Clothes Dryers

Product Class

Elec Stand Elec Comp

120v

Elec Comp

240v Gas Elec CompVentless

Elec

Wash/Dryer

2014 0.2% 0.02% 8.3% 0.2% 0.03% 0.1%

2020 0.2% 0.03% 9.9% 0.2% 0.05% 0.1%

2025 0.2% 0.04% 10.7% 0.3% 0.07% 0.1%

2030 0.3% 0.04% 11.5% 0.3% 0.08% 0.2%

2035 0.3% 0.05% 12.1% 0.4% 0.10% 0.2%

2040 0.3% 0.05% 12.6% 0.4% 0.11% 0.2%

2043 0.3% 0.06% 13.0% 0.5% 0.12% 0.2%
17-61

Table 17.5.10 Super-efficient Voluntary Targets Program Market Penetration of Room 

Air Conditioners (Residential Sector)

Product Class

Group 1 Group 2 Group 3 Group 4 Group 5 Group 6

2014 0.1% 0.6% 2.0% 7.8% 3.5% 3.2%

2020 0.1% 0.7% 2.4% 8.2% 3.8% 3.5%

2025 0.1% 0.7% 2.5% 8.3% 3.9% 3.6%

2030 0.1% 0.8% 2.8% 8.8% 4.3% 4.0%

2035 0.1% 0.9% 3.0% 9.2% 4.6% 4.3%

2040 0.1% 0.9% 3.2% 9.5% 4.8% 4.5%

2043 0.1% 1.0% 3.3% 9.7% 5.0% 4.7%
17-62

Table 17.5.11 Super-efficient Voluntary Targets Program Market Penetration of Room 

Air Conditioners (Commercial Sector)

Product Class

Group 1 Group 2 Group 3 Group 4 Group 5 Group 6

2014 0.1% 0.6% 2.2% 31.7% 3.7% 3.1%

2020 0.1% 0.7% 2.8% 32.7% 4.0% 3.5%

2025 0.1% 0.8% 3.0% 33.3% 4.2% 3.7%

2030 0.1% 0.9% 3.5% 34.7% 4.7% 4.1%

2035 0.1% 1.0% 3.9% 35.9% 5.2% 4.6%

2040 0.1% 1.1% 4.3% 36.9% 5.6% 4.9%

2043 0.2% 1.2% 4.5% 37.5% 5.9% 5.2%

 All Super-Maxtech models for clothes dryers and room air conditioners provide higher 

energy savings than do the proposed standards (TSL 4). Room air conditioner Super-Maxtech 

models also offer higher NPVs to consumers when compared to the proposed standards (TSL 

4). Tables 17.5.12 and 17.5.13 summarize the change in NES and NPV values from the SEVT

program (at three levels of progress-ratio) in relation to the NES and NPV results from the 

proposed standards. Negative NPVs are shown in parentheses.
17-63

Table 17.5.12 Super-efficient Voluntary Targets Program Outputs for Clothes Dryers

Policy Outputs

PR = 0.80 PR = 0.85 PR = 0.90

NES (quads)

Elec Standard 0.015 0.013 0.012

Elec Comp 120v 0.000 0.000 0.000

Elec Comp 240v 0.002 0.002 0.002

Gas 0.001 0.001 0.001

Elec Comp Ventless 0.000 0.000 0.000

Elec Wash/Dryer 0.000 0.000 0.000

Total 0.018 0.017 0.016

NPV (7% dr) (2009$ bil)

Elec Standard (0.056) (0.052) (0.048)

Elec Comp 120v 0.000 0.000 0.000

Elec Comp 240v (0.037) (0.035) (0.034)

Gas (0.010) (0.010) (0.009)

Elec Comp Ventless 0.000 0.000 0.000

Elec Wash/Dryer 0.000 0.000 0.000

Total (0.103) (0.097) (0.092)

NPV (3% dr) (2009$ bil)

Elec Standard (0.065) (0.060) (0.055)

Elec Comp 120v 0.000 0.000 0.000

Elec Comp 240v (0.061) (0.058) (0.055)

Gas (0.014) (0.014) (0.013)

Elec Comp Ventless 0.000 0.000 0.000

Elec Wash/Dryer 0.000 0.000 0.000

Total (0.140) (0.132) (0.124)

 
17-64

Table 17.5.13 Super-efficient Voluntary Targets Program Outputs for Room Air 

Conditioners

Policy Outputs

PR = 0.80 PR = 0.85 PR = 0.90

NES (quads)

Group 1 0.001 0.001 0.001

Group 2 0.035 0.033 0.032

Group 3 0.005 0.005 0.005

Group 4 0.025 0.025 0.025

Group 5 0.014 0.014 0.014

Group 6 0.017 0.016 0.016

Total 0.096 0.095 0.093

NPV (7% dr) (2009$ bil)

Group 1 0.017 0.017 0.017

Group 2 0.395 0.385 0.373

Group 3 0.086 0.083 0.080

Group 4 0.322 0.321 0.320

Group 5 0.175 0.174 0.173

Group 6 0.177 0.176 0.174

Total 1.172 1.155 1.137

NPV (3% dr) (2009$ bil)

Group 1 0.033 0.033 0.032

Group 2 0.771 0.748 0.722

Group 3 0.164 0.158 0.152

Group 4 0.616 0.614 0.613

Group 5 0.333 0.331 0.328

Group 6 0.345 0.342 0.338

Total 2.262 2.226 2.185
17-65

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