Summary of the Third Meeting of the Working Group on Low-Voltage Dry-Type Distribution Transformers of the Energy Efficiency and Renewable Energy Advisory Committee November 9, 2011

Richard W. Parker, Facilitator

Note: This meeting summary has been prepared fo r the convenience of the Working Group. It has not been approved by the Working Group and should not be construed or taken to represent the official position of the Working Group or any member as to what transpired at the meeting.

The Working Group on Low-Voltage Dry-Type Di stribution Transformers (“LV Group”) held its third meeting on Nov. 9, hosted by the National Rural Electric Cooperatives Association in Arlington, VA. A list of attendees is included in the official transcript to the meeting.

The meeting began at 12:05 pm after the conclusion of the Medium-Voltage Dry-Type Meeting in the morning. After introductions, the meeting bega n with an update on the status of the Engineering Analysis for low-voltage transformers, the results of which participants had received the previous evening. (See Annex A for a summary). Mr. Coffey of Navigant Consulting noted that after the last meeting DOE had sent out a template to manufacturers for the purpose of providing feedback on the validity of DOE’s engineering designs for low voltage transformers. He noted that they had received some feedback (mostly for DL 7 and 8) and at the meeting he reviewed the changes to the Engineering Analysis made in response to this feedback.

Engineering Analysis Reviewing the principal changes, Mr. Coffey noted that they had added a design option for M6 Al-Al full miter in Design Line 8, because that is common in today’s market. They adjusted the materials prices for M4 steels and worse, because staff discovered that grades below M3 were being used more frequently than their model predicted, perhaps because the pr ice spread between M4 and M3 was unrealistically

small in DOE’s model.

Navigant also limited core construction to stacked cores because, as Mr. Rivest explained, although wound core designs are being produced, combining wound cores and stack cores in the analysis produced anomalies in the handling of capital costs that skewed the results. These could be avoided by excluding wound cores in the analysis even though there is no proposal to exclude them as a design option. He thought the results should not be biased because ther e is no cost advantage for either design.

Mr. Coffey noted that DOE also had created a per-p ound cost average for form mitering and step-lap mitering to reflect additional process and costs associated with these operations. He noted that the results had been posted to the Sharepoint site along with a pr ice sensitivity tool that participants could use to model their own results using a range of material price inputs.

Mr. Rivest added that they had received very little feedback on DL 6, which is very low-volume line. The facilitator distributed a handout drawn from the TSD indicating the sales by equipment class and showing DL 6 to be a very low-volume category. Partic ipants agreed to focus their attention on DL 7 and

8.

After recessing for lunch, the meeting resumed with a review of the updated LCC/NIA results for low voltage dry transformers.2

LCC/NIA Analysis Mr. Bolduc reviewed the LCC results, explaining that the sawtooth pattern at various points in the LCC and PBP charts usually corresponded to materials switching. He noted that the results showed rising LCC savings through EL 6, followed by a dip to ne gative savings at EL 7. There was a zero mean payback period for DL 7 and a very low payback period through EL 5. One participant asked how there could be a zero payback period, and the response was that that meant that the cost of the least cost standards design was less than or equal to the base case. (T21). Looking at the engineering plots, M5 dominates the base case, with a switch to M4 and M3 at EL2 and to H0 thereafter.

One industry participant noted that the engineeri ng results suggested that the industry should be building base case efficiency level transformers with M6 steel, when in fact the speakers’ company is using M12, at a cost close to the lowest cost appear ing in the engineering analysis. Another manufacturer agreed that M12, not M6, is the grade primarily used.

Moreover, after some discussion Mr. Rivest conclude d that the negative incremental first cost results were probably the result of a “math error”, that more OPS modeling was needed, along with further guidance from industry. He noted that DOE consu ltants had been able to get good alignment with industry data for reoptimized M12 designs at the baseline and NEMA premium levels, because these units were actually being manufactured. So it was agreed to send the design details in the OPS model for DL 7 back to those who had provided design details to make sure that Navigant has acceptable designs at each of the ELs (T37).

Moving on to DL 8, Mr. Rivest noted that the l east cost design used M6 butt-lap aluminum-aluminum for the base case, and M5 for CSL-2, which corres ponded to NEMA premium. Industry participants believed these were reasonable designs at those ELs. However, an industry representative then asked why it appeared on the LCC that the material selecte d for EL2 is “98 percent M3” and “100 % ZDMH” at EL3. Ms Coughlin noted that this reflected the propensity of the LCC model to pick a single point at the efficiency frontier, and that the efficiency boundary had been put at that point, causing a very rapid shift.

This was not considered realistic by the participants in the room, and the participants agreed to defer further negotiation of standards levels to a futu re meeting to allow time for refined analysis.

Market for low-voltage transformers Discussion then turned to a general overview of market conditions for low voltage transformers. There was a discussion about the origins of the NEMA premium and it was revealed that it accounts for a small percentage of the market that is built in lo w-volume facilities. Raising the minimum standard would require retooling factories to manufacture th ese transformers at much higher volumes.

The facilitator asked whether it is correct that most low-voltage transformers are sold for installation in public, commercial and industrial facilities and ar e a small but essential component of total building cost, meaning that sales would not likely diminish if the standard were to increase. An industry participant agreed that this is the case with one caveat: that electrical contractors/builders who buy transformers would have to pay more, and this might reduce their profits.

Data centers An industry participant raised a concern with certain companies not represented in the room are according themselves exemptions from the existing st andard by selling distribution transformers as exempt UPS units, saving 30-40 percent in cost. One i ndustry participant opined that this is not a result of a loophole in the law. It is an enforcement issue (T61, T63).3

In addition, an industry participant reiterated hi s company’s prior request for a differential standard

for data center transformers. Anot her industry participant seconded this request, noting that it makes little sense to establish a standard based on a 35 percent loading, when data center transformers are operating at 80 percent loads.

The facilitator noted that creating a sub-class for da ta center transformers would require developing a clear legal definition of data center transformers based up some physical and operational uniqueness in the sub-class that requires a separate and lower standard. This definition must be sufficiently clear as to prevent circumvention. One industry participant expressed skepticism that a unique legal specification based on physical difference could be found, and opin ed that the risk of circumvention is high.

The facilitator called for the formation of a sub-gr oup to explore the possibility of creating a sub-class and separate standard for data center transformers. On yx agreed to lead the group (Vijay Tendulkar, Irene Kennedy, Alan Katz). The following individuals volunteered to pa rticipate: Thomas Patzner, Schneider Electric; Gary Fernstrom, PG&E; Tim Ballo , Earth Justice; Jerry Schoen, AK Steel.

Availability of separate test method for data center transformers Participants noted that the current test method ca lling for testing of low-voltage transformers at a loading of 35 percent makes little sense for data center transformers which typically are loaded at near 80 percent, but it was noted that this group does not have jurisdiction to alter the test method rule.

Manufacturing Impact Analysis (MIA) Mr. Carmichael of Navigant Consulting noted that the MIA will include an analysis of conversion costs, a discussion of the impacts of various efficien cy levels on subgroups, and a discussion of some of the options companies might pursue to begin meeting a hypothetical higher standard, which might include mitering, moving to a better grade of steel, or outsourcing the cores. He indicated there will also be an analysis of impacts on employment, though he noted that a number of companies, including small businesses, are already making their product in Mexico.

He noted that his group had found 25 businesses in the space, of which 15-20 are relatively low volume players, and perhaps 10-15 are small businesses w ithin the legal definition of the term (T76). He also noted that about 50 percent of low-voltage transf ormers are sold in statutorily exempt categories, and a number of manufacturers of covered products also ma nufacture exempt products. He noted that the key output of the manufacturing impact analysis will be a discussion of the impact of higher standards on small businesses relative to larger players. He opined that small volume manufacturers in aggregate probably account for less than 20 percent of the to tal market for low-voltage covered products.

He noted that small businesses typically face hi gher prices for steel than larger companies.

One call-in participant stressed the importance of reaching out to small low-voltage manufacturers who might not be in the room and might not be represented by NEMA. Many of them manufacture in Mexico to take advantage of low labor rates but still have large staffs of people in the U.S. to manage the product and design it. The facilitator noted that Navigant has been reaching out to a small companies in their surveys and interviews, and has received feedba ck from a number of them. An industry participant noted that Navigant had sent out a design engineerin g template to the manufacturers in their database and encouraged the phone caller to encourage his associated companies to participate in that validation

exercise.

Another industry participant noted the importanc e of adequate lead times for compliance since mitering machines cost half a million dollars and have a six to eight-month backlog.4

Conclusion and Next Steps

In an effort to make doubly sure that those not at the table would not be overlooked, the facilitator asked the NEMA participant if he would alert his members (particularly smaller manufacturers) to the group’s work and analysis. He agreed but asked for a short summary of the information they need to have in order to weigh in effectively.

Another industry participant asked if Navigant planned to disclose the manufacturing requirements that the model expects for each EL. Mr. Carmichael responded that it would.

Mr. Carmichael of Navigant also indicated, in res ponse to a request from an industry participant, that it should be possible to include amortized conversion cost s in the engineering analysis, as part of the next

revision.

The parties then agreed to hold a telephone confer ence call/webinar to discuss revised engineering and

LCC results on November 21 st at 2:00 pm.

The meeting adjourned at 2:27 pm.5



## Annex A

TO: Distribution Transformers Negotiation Committee

FROM: Navigant on behalf of DOE

DATE: Monday, 07 November 2011

RE: Updates to the Analytical Methodolo gy since meetings of 12-14 October

Navigant has made several changes to the engi neering analyses in re sponse to manufacturersupplied design details.

Liquid-Immersed (Design Lines 1-5): (no changes)

Medium-Voltage Dry-Type (Design Lines 11 and 12 only): • New design option combination (M4 Al Al step-lap miter) • Adjusted material prices for M6 and worse (see table below)

• Revised labor estimates

• Modified estimates of losses to re flect those of substation-style units

Low-Voltage Dry-Type (Design Lines 6-8): • New design option combination (M6 Al Al full miter) for design line 8 • Adjusted material prices for M4 1 

### and worse (see table below)

• Revised labor estimates • Limited core construction type to Stacked core to improve comparisons(amorphous excepted) • Deleted step-lapping as a design option for design line 6 • Created per-pound cost adders for both full mitering and step-lapping • Reduced induction upper bound limit in design line 7

1 The original version read M6, but this was revealed to be a typographical error during the meeting (see p. 12 of transcript). 

### Dry-Type Material Price Changes Material for Dry-type Original Current M36 core steel (26 gauge) $ 0.66 $ 0.60 M19 core steel (26 gauge) $ 0.91 $ 0.83

M12 core steel $ 1.03 $ 0.95

M6 core steel $ 1.46 $ 1.33

M5 core steel $ 1.51 $ 1.38

M4 core steel $ 1.59 $ 1.456



## Annex B

Equipment Classes and Shipments

Table 2.4.1

Distribution

Transformer Equipment

Classes EC # DL Shipments (MVA Capacity) (2009 estimates) Insulation Voltage Phase BIL Rating kVA Range

1 1,2,3 21,994 LiquidImmersed Medium Single - 10-833 kVA

2 4,5 28,372 LiquidImmersed Medium Three - 15-2500 kVA

3 6 647 Dry-Type Low Single - 15-333 kVA

4 7,8 15,778 Dry-Type Low Three - 15-1000 kVA

5 9*,10* 23 Dry-Type Medium Single 20-45kV BIL 15-833 kVA

6 9,10 257 Dry-Type Medium Three 20-45kV BIL 15-2500 kVA

7 11*,12* 23 Dry-Type Medium Single 46-95kV BIL 15-833 kVA

8 11,12 3,665 Dry-Type Medium Three 46-95kV BIL 15-2500 kVA

9 13* 9 Dry-Type Medium Single ≥ 96kV BIL 75-833 kVA

10 13a,

13b 2,206 Dry-Type Medium Three ≥ 96kV BIL 225-2500 kVA