1 | Energy Efficiency and Renewable Energy eere.energy.gov 

### Energy Conservation Standards 

## Notice of Proposed Rulemaking (NOPR) for packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs)
October 29, 2014 Ron Majette Department of Energy Building Technologies Program EERE

- 2012

- BT

- STD

- 0029 PTACs@ee.doe.gov2 

# Welcome

• Introductions (around the room )

• Role of the Facilitator

• Ground Rules

- Speak one at a time.

- Say your name for the record

– there will be a complete transcript of this meeting.

- Be concise

– share the ‘ air

- time .’

- Keep the focus here

– cell phones on silent; limit sidebar conversations.

- Webinar participants turn phone on mute; “raise your hand” to be recognized to speak.



## • Housekeeping Items

• Agenda Review

• Opening Remarks3 

# Public Meeting Agenda

9:00

– 9:25 am Welcome, Introductions, Opening Statements, Overview, Statute, Context

9:25

– 9:45 am Market and Technology Assessment, Screening Analysis

9:45

– 10:45 am Engineering Analysis

10:45

– 11:00 am Break

11:00

– 11:15 am Equipment Price Determination

11:15

– 12:00 pm Trial Standard Levels, Energy Use, Life

- Cycle Cost Analysis

12:00

– 1:00 pm Lunch

1:00

– 2:00 pm Shipments, National Impact Analysis

2:00

– 2:30 pm Manufacturer Impact Analysis

2:30

– 3:00 pm Emissions/Monetization of Emissions
, Utility Impact, Employment Impact, Regulatory Impact Analyses

3:00

– 3:15 pm Proposed Standard

3:15

– 3:30 pm Closing Remarks and Adjourn4 

# Listening via the Webcast

• The Department is broadcasting this meeting live over the Internet.

• DOE is providing the webcast to accommodate stakeholders that are unable to attend the public meeting in person.

• The web broadcast allows stakeholders to listen in and view the slides.

• All stakeholders are encouraged to submit written comments after the public meeting.5 

# Purpose of Public Meeting

1. Present the energy conservation standards DOE is proposing for PTACs and PTHPs in this notice of proposed rulemaking.

2. Invite comment on the analysis from participants.

3. Discuss the next steps for the rulemaking.

4. Encourage participants to submit data, information, summary statements, and written comments, including additional issues for discussion.6 

# Issue for Discussion

Issue box numbering corresponds to the list of issues published at the end of the Notice of Public Rulemaking (NOPR) document, available at regulations.gov, under docket number EERE

- 2012

- BT

STD

- 0029
, at: http ://www.regulations.gov /#! documentDetail;D=EERE

- 2012

- BT

STD

- 0029

- 0017

.
The deadline for submitting comments is November 17, 2014. Issue Box: DOE welcomes comments, data, and information concerning standards being considered for PTACs and PTHPs. Issues that correspond to those raised in DOE’s published material will be numbered in accordance with that material. Whether invited by an issue box or not, comments are welcome on any part of DOE’s analysis.7 

# How to Submit Written Comments

• In all correspondence, please refer to the PTAC

- PTHP rulemaking by:

– Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps;

– Docket Number EERE

- 2012

- BT

- STD

- 0029 ; and

– Regulatory Identification Number (RIN ) 1904

- AC82

.

• Email : pkgTerminalAC

- HP2012STD0029@ee.doe.gov

Postal : Courier : Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program, Mailstop EE

- 5B 1000 Independence Avenue, SW Washington, DC 20585

- 0121 Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program, Suite 600 950 L’Enfant Plaza, SW Washington, DC 20024 Tel : 202

- 586

- 2945



### Comment Period closes : November 17, 2014, 11:59 PM EDT8 

# Opening Remarks

Meeting participants are invited to provide opening remarks or statements at this time.9 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

810 

# Regulatory History

• The Energy Policy Act of 1992 (EPACT 1992) amended the Energy Policy and Conservation Act of 1975 (EPCA) to:

− Include packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs) as a covered equipment type; and

− Establish the first energy conservation standards for PTACs and PTHPs.



### • On October 7, 2008, DOE published a final rule amending existing standards for PTACs and PTHPs (hereafter “2008 Final Rule”).

• On February 22, 2013, DOE initiated the rulemaking cycle by publishing a framework document and holding a public meeting on March 18, 2013.

• On October 9, 2013, ASHRAE Standard 90.1

- 2013 amended Standard 90.1 requirements for PTACs and triggered DOE review

.

• On March 13, 2014, DOE published a notice of proposed rulemaking (NOPR) regarding test procedures for PTACs and PTHPs

• On April 11, 2014, DOE published a notice of data availability (NODA) in response to the amended Standard 90.1 requirements for PTACs.11 

# Current Standards

– PTACs and PTHPs

The 2008 Final Rule prescribed the current energy conservation standards for PTACs and PTHPs manufactured on or after September 30, 2012 (for standard size ) or September 20, 2010 (for non

- standard size).
Equipment Type Sub

- category Cooling Capacity (Btu/h) Energy Conservation Standard: EER (Btu/ Wh ) , COP ( unitless )

PTAC Standard Size † <7,000 EER = 11.7 ≥7,000 and ≤15,000 EER = 13.8

– 0.300*Cap ‡ >15,000 EER = 9.3

Non

- Standard Size † <7,000 EER = 9.4 ≥7,000 and ≤15,000 EER = 10.9

– 0.213*Cap ‡ >15,000 EER = 7.7

PTHP Standard Size † <7,000 EER = 11.9, COP = 3.3
≥7,000 and ≤15,000 EER = 14.0

– 0.300*Cap ‡ COP = 3.7

– 0.052*Cap ‡ >15,000 EER = 9.5, COP = 2.9

Non

- Standard Size † <7,000 EER = 9.3, COP = 2.7
≥7,000 and ≤15,000 EER = 10.8

– 0.213*Cap ‡ COP = 2.9

– 0.026*Cap ‡ >15,000 EER = 7.6, COP = 2.5
† Standard size refers to equipment with wall sleeve dimensions having an external wall

opening greater than or equal to 16” high or greater than or equal to 42” wide. Non

- standard size refers to equipment with existing wall sleeve dimensions having an external wall opening greater less than 16” high or less than 42” wide

. ‡ “Cap ” means cooling capacity in thousand Btu/h at 95 ° F outdoor dry

- bulb temperature.12 2013 2016 2014 2015 2017 2018 

## PTAC and PTHP Energy Conservation Standards Rulemaking Schedule

Milestone Date
Notice of Public Meeting and Availability of Framework Document 22 February 2013 Notice of Proposed Rulemaking 16 September 2014
Final Rule (projected) September 2015
Final Rule (statutory deadline, per ASHRAE trigger requirements) 9 April 2016 Compliance Date (projected) January 2019 201913 

# EPCA Factors

42 U.S.C. 6295(o)(2)(B)(i) directs DOE to consider seven factors when setting energy conservation standards.

EPCA Factors DOE Analysis

1. Economic impact on customers and manufacturers Life

- Cycle Cost Analysis Manufacturer Impact Analysis

2. Lifetime operating cost savings compared to increased cost for the equipment Life

- Cycle Cost Analysis

3. Total projected energy savings National Impact Analysis

4. Impact on utility or performance Engineering Analysis Screening Analysis

5. Impact of any lessening of competition Manufacturer Impact Analysis

6. Need for national energy conservation National Impact Analysis

7. Other factors the Secretary considers relevant Emissions Analysis Utility Impact Analysis Employment Impact Analysis14 

# Scope of Coverage

• DOE is proposing standards for PTACs and PTHPs, defined by EPCA Section 340 as follows:

A “ packaged terminal air conditioner ” is “a wall sleeve and a separate unencased combination of heating and cooling assemblies specified by the builder and intended for mounting through the wall. It includes a prime source of refrigeration, separable outdoor louvers, forced ventilation, and heating availability by builder's choice of hot water, steam, or electricity.” (42 U.S.C. 6311(10)(A))

A “ packaged terminal heat pump ” is “a packaged terminal air conditioner that utilizes reverse cycle refrigeration as its prime heat source and should have supplementary heat source available to builders with the choice of hot water, steam, or electric resistant heat.” (42 U.S.C. 6311(10)(B))15 

# NOPR Stage

Framework Document NOPR Final Rule

Market & Technology

Screening Analysis Engineering Analysis

Energy Use Characterization Shipments Analysis

National Impact Analysis Life

- Cycle Cost and Payback Period Analysis Markups Analysis

Manufacturer Impact Analysis Emissions Analysis

Employment Impact Analysis

Utility Impact Analysis

Regulatory Impact Analysis16 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

817 

# Purpose of MTA and Screening Analysis

• Market and Technology Assessment (MTA)

− Determine equipment classes

− Provide information on the market, manufacturers, and shipment trends

− Identify technology options to improve efficiency



## • Screening Analysis

− Screen out technology options that DOE will not consider in the engineering analysis based on:
1. Technological feasibility : incorporation in commercially available equipment or in working prototypes 2. Practicability to manufacture, install, and service : mass production and reliable installation and servicing could be achieved on the scale necessary to serve the relevant market at the time the standard requires compliance 3. Adverse impacts on equipment utility or availability : significant adverse impact on the utility of the equipment to significant subgroups of customers, or causing the unavailability of any covered equipment type with performance characteristics, features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time. 4. Adverse impacts on health or safety : significant adverse impacts on health or safety18 

# Equipment Classes

• DOE divides covered equipment into classes by:

– the type of energy used;

– t he capacity of the equipment; or

– other performance

- related features that justify different standard levels, such as features affecting customer utility.



## • DOE establishes separate energy conservation standards for each equipment class

.

• DOE is proposing to maintain the existing equipment class divisions for PTACs and PTHPs.

• DOE is not proposing new energy conservation standards for non

standard size PTACs and PTHPs

.

– “Non

- standard size” refers to equipment with existing wall sleeve dimensions having an external wall opening less than 16” high or less than 42” wide.

– Non

- standard size equipment holds a small and declining portion of the market.

– Amendments to energy conservation standards for non

- standard size equipment would result in a very small amount of energy savings.19 

# Equipment Classes

• DOE is proposing to maintain the following equipment class divisions:

Equipment Type Sub

Category Cooling Capacity (Btu/h)

PTAC Standard Size < 7,000 ≥ 7,000 and ≤ 15,000
> 15,000

Non

Standard Size < 7,000 ≥ 7,000 and ≤ 15,000
> 15,000

PTHP Standard Size < 7,000 ≥ 7,000 and ≤ 15,000
> 15,000

Non

Standard Size < 7,000 ≥ 7,000 and ≤ 15,000
> 15,000 

### Type of Equipment

- PTAC equipment includes cooling and heat from hot water, steam, or electricity.

- PTHP equipment utilizes reverse cycle refrigeration as its prime heat source. 

### Physical Dimensions

- Standard

- size units are sold for new construction and replacement of existing standard

- size equipment.

- Non

- standard size units are typically manufactured for replacement of units in older buildings, where alteration of non

- standard size wall openings may be cost prohibitive. 

### Cooling Capacity

- The single standard size associated with PTACs and PTHPs makes it challenging to achieve higher efficiency levels in higher

- capacity equipment.

- Smaller capacity units have more room for design options (i.e., increased heat exchanger size) that enable greater energy efficiency.20 

## • DOE identified technology options that can improve energy efficiency for PTACs and PTHPs.

• DOE then reviewed the identified technology options and screened them using the following criteria:

– Technological feasibility;

– Practicability to manufacture, install, and service;

– Adverse impacts on equipment utility or availability to customers; and

– Adverse impacts on health or safety.



## • DOE then eliminated technology options where:

– Available data suggest that the efficiency benefits of the technology are negligible;

– Data are not available to evaluate the energy efficiency characteristics of the technology; or

– The test procedure and EER or COP metric would not measure the energy impact of the technology. 

# Technology Options and Screening Analysis21 

# Technology Options/Screening Analysis

PTAC and PTHP Technology Options Higher Efficiency Compressors Increased Heat Exchanger Area Higher Efficiency Fan Motors Improved Air Flow and Fan Design

Scroll Compressors Hydrophobic Material Treatment of Heat Exchangers
Variable

- speed Compressors Re

- circuiting Heat Exchanger Coils Complex Control Boards Heat Pipes
Clutched Fan Motors Corrosion Protection Microchannel Heat Exchangers Thermostatic Expansion Valve Rifled Interior Heat Exchanger Tube Walls Alternate Refrigerants (such as HCFC

- 32 ) 

## • DOE identified the technology options below that can improve PTAC and PTHP efficiency

.

• DOE screened in four of these options for consideration in the engineering analysis. Those in red italics either do not meet the screening criteria or do not offer efficiency gains over baseline units as measured by test procedure.22 

# Issues for Comment

Issue 1 : Alternate Refrigerants DOE did not consider alternate refrigerants in the analysis because DOE is not aware of any SNAP

approved refrigerants that are known to have better efficiency than R

- 410A for PTAC and PTHP equipment. DOE requests feedback on the efficacy of alternative refrigerants in PTAC and PTHP equipment.23 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

824 

# Engineering Analysis Methodology

 Select certain representative equipment classes and capacities to be analyzed in the engineering analysis.



#  Develop efficiency levels (ELs) that span the range of efficiencies available from the baseline to the maximum technologically feasible.



#  Choose units that that cover the full range of efficiency levels and represent typical design approaches.



#  Test and teardown the chosen units to determine the relationship between manufacturer production cost (MPC) and energy efficiency. Select Representative Equipment Classes

Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships25 

# Select Representative Equipment Classes

• There are large variations in equipment cooling capacity and performance in the standard size PTAC and PTHP equipment classes

• DOE selected representative cooling capacities and analyzed specific equipment to provide information representative of the entire equipment class.

• DOE identified two representative cooling capacities:

– The 9,000 Btu/h capacity had the highest number of standard

size PTAC and PTHP models listed in the 2013 AHRI Directory.

– The 15,000 Btu/h capacity represents the greatest technical hurdles for efficiency improvement, considering the size constraints of standard

- size PTACs and PTHPs. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes26 

# Efficiency Levels

• The baseline efficiency level represents models at the minimum efficiency level allowed by the standard

.

– ANSI/ASHRAE/IES Standard 90.1

- 2013 was issued in the course of this rulemaking and it raised the Standard 90.1 minimum equipment efficiency for PTACs to 1.8 % above the Federal energy conservation.

– DOE is obligated either to adopt those standards developed by ASHRAE or to adopt levels more stringent than the ASHRAE levels.

– DOE identified the ANSI/ASHRAE/IES Standard 90.1

- 2013 as the baseline efficiency level.



## • The “max t ech” efficiency level represents the most efficient model(s) observed in the market.

– DOE announced in the framework document for this rulemaking that it planned to consider the max tech level equal to 20% above the 2012 PTAC standard.

– After extensive equipment testing , DOE has revised the max tech level to be 18% above the 2012 PTAC standard. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes27 

# Efficiency Levels

• DOE selected efficiency levels at increments between the current Federal standard and the max tech level.

• Efficiency levels for standard size PTACs and PTHPS are 1.8%, 4%, 8%, 12%, 16%, and 18% more efficient than the current Federal PTAC standards that became effective on September 30, 2012.

• The table on the following slide presents the efficiency levels and their corresponding values for the representative cooling capacities. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes28 

# Efficiency Levels

Equip

ment Type Cooling Capacity 

### Efficiency Levels (Percentages relative to 2012 PTAC ECS)
Current Federal PTAC E CS* EL1, Baseline,

1.8%** EL2, 4% EL3, 8% EL4, 12% EL5, 16% EL6, 18% ( MaxTech )



### PTAC All, EER‡ 13.8

– (0.300*Cap) 14.0

– (0.300*Cap) 14.4

– (0.312*Cap) 14.9

– (0.324*Cap) 15.5

– ( 0.336*Cap) 16.0

– ( 0.348*Cap) 16.3

– ( 0.354*Cap) 9,000 Btu/h 11.1 EER 11.3 EER 11.5 EER 12.0 EER 12.4 EER 12.9 EER 13.1 EER
15,000 Btu/h 9.3 EER 9.5 EER 9.7 EER 10.0 EER 10.4 EER 10.8 EER 11.0 EER
Cooling Capacity N/A Baseline, 1.8%** EL1, 4% EL2, 8% EL3, 12% EL4, 16% EL5, 18% ( MaxTech )



### PTHP All, EER‡ N/A 14.0

– ( 0.300*Cap) 14.4

– ( 0.312*Cap) 14.9

– ( 0.324*Cap) 15.5

– ( 0.336*Cap) 16.0

– ( 0.348*Cap) 16.3

– ( 0.354*Cap)

All, COP‡ N/A 3.7

– ( 0.052*Cap) 3.8

– ( 0.058*Cap) 4.0

– ( 0.064*Cap) 4.1

– ( 0.068*Cap) 4.2

– ( 0.070*Cap) 4.3

– ( 0.073*Cap)
9,000 Btu/h N/A 11.3 EER
3.2 COP 11.5 EER
3.3 COP 12.0 EER
3.4 COP 12.4 EER
3.5 COP 12.9 EER
3.6 COP 13.1 EER
3.6 COP 15,000 Btu/h N/A 9.5 EER
2.9 COP 9.7 EER
2.9 COP 10.0 EER
3.0 COP 10.4 EER
3.1 COP 10.8 EER
3.2 COP 11.0 EER
3.2 COP * This level represents the current Federal minimum for PTAC equipment.

** This level represents the current Federal minimum for PTHP equipment and the ANSI/ASHRAE/IES Standard 90.1

- 2013 minimum for both PTAC and PTHP equipment. ‡ “Cap” means cooling capacity in thousand Btu/h at 95 ° F outdoor dry

- bulb temperature.29 

# Representative Units for Analysis

• DOE selected several standard

- size PTAC and PTHP units to represent the market, and used these for teardown in the engineering analysis. The selected equipment exhibited the following five characteristics:

1. The selected equipment, taken together, cover the full range of efficiency levels considered in the analysis.
2. The selected equipment has cooling capacity corresponding to one of the selected representative cooling capacities (9,000 Btu/h or 15,000 Btu/h).

3. When possible, DOE selected one lower

- efficiency unit and one higher

efficiency unit from the same manufacturer. When possible, those units shared similar characteristics (e.g., both from the same equipment line ).

4. The equipment tended to be from manufacturers with relatively large shares of the PTAC and PTHP markets, and thus was representative of typical design approaches.

5. The selected equipment included base units with few, if any, equipment features or options that add cost without affecting equipment efficiency. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes30 

# Representative Units for Analysis

Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes 

### • The chart below illustrates the efficiency levels and the rated capacity and efficiency of twenty PTAC and PTHP units selected to represent the market.31 

# Cost

- Efficiency Relationships

• DOE calculated manufacturer production costs (MPCs) by disassembling PTACs and PTHPs from multiple manufacturers and creating bills of materials (BOMs).

• BOMs describe the equipment components in detail and include estimates of materials, labor, capital equipment, and overhead costs.

• Comparing otherwise

- identical PTAC and PTHP models (i.e., models with similar casing, controls, and fans, but where the PTHP has reverse cycle capability), DOE estimates that the typical PTHP unit has an additional $37

- $38 of production costs compared with an otherwise

- identical PTAC unit . This additional cost for PTHPs does not vary with efficiency level.

• Chapter 5 of the TSD provides additional details on DOE’s teardown and cost model methodology. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes32 

# Cost

- Efficiency Relationships

• DOE created cost

- efficiency curves for each representative cooling capacity and equipment type.

• In the shipments analysis, DOE combined representative

curves based on estimated market share to develop a weighted

- average cost

- efficiency curve for each equipment class

. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships 

### Weighted Average$MPC

Efficiency Level 

### Representative Capacity Curves$MPC

Efficiency Level 15,000 Btu/h PTAC 9,000 Btu/h PTAC

15,000 Btu/h PTHP 9,000 Btu/h PTHP

Chapter 9 of the TSD contains more details explaining how DOE extrapolates the proposed amended energy conservation standards for the representative cooling capacities to the entire range of cooling capacities Select Representative Equipment Classes33 

# Cost

- Efficiency Relationships: 9,000 Btu/h Capacity

• Cost

- efficiency results for 9,000 Btu/h PTACs and PTHPs:

Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Efficiency Level Percent above

2012 PTAC ECS Incre

mental

Cost (2013$) Cost

- Efficiency Curve
PTAC PTHP

EL1 Base

line 1.8%

--

EL2 EL1 4% $3.88

EL3 EL2 8% $7.93

EL4 EL3 12% $16.57

EL5 EL4 16% $25.91

EL6 EL5 18% $35.94 $0 $10 $20 $30 $40

11.3 11.5 12.0 12.4 12.9 13.1Incremental Cost (2013$)

Energy Efficiency Ratio (EER) Select Representative Equipment Classes34 

# Cost

- Efficiency Relationships: 15,000 Btu/h Capacity

• Cost

- efficiency results for 15,000 Btu/h PTACs and PTHPs:

Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Efficiency Level Percent above

2012 PTAC ECS Incre

mental

Cost (2013$) Cost

- Efficiency Curve
PTAC PTHP

EL1 Base

line 1.8%

-

EL2 EL1 4% $3.73

EL3 EL2 8% $8.29

EL4 EL3 12% $19.96

EL5 EL4 16% $35.00

EL6 EL5 18% $53.42 $0 $10 $20 $30 $40 $50 $60

9.5 9.7 10.0 10.4 10.8 11.0Incremental Cost (2013$)

Energy Efficiency Ratio (EER) Select Representative Equipment Classes35 

# Cost

- Efficiency Relationships: Results

• Cost

- efficiency curves are nonlinear. As efficiency increases, additional efficiency increase becomes more difficult and more costly for manufacturers.

• The increase in capacity between 9,000 Btu/h and 15,000 Btu/h causes an increase in the baseline unit MPC.

• A faster increase in the curve (i.e., a steeper slope) is evident for the 15,000 Btu/h cooling capacity compared to the 9,000 Btu/h cooling capacity. Develop Efficiency Levels

Choose Representative Units for Analysis

Test and Teardown to Determine Cost

Efficiency Relationships Select Representative Equipment Classes36 

# Markups Analysis

• Purpose

– Characterize PTAC & PTHP distribution channels and market segments.

– Estimate customer prices based on manufacturer’s selling price (MSP).

• Methodology

– DOE derived State

- level markups based on confidential interviews, economic reports from industry trade groups, and U.S. census data.

– Markups were derived for each distribution channel.37 

# Markups Analysis: Distribution Channels

• The PTAC and PTHP market has four primary distribution channels.

Manufacturer

Mechanical Contractor

General Contractor

Customer

57% Wholesaler

Customer Customer Customer

21% 17% 5%National Accounts38 

# Markups Analysis: Data Sources

• Manufacturer markups are based on markups developed for the 2008 Final Rule and confidential manufacturer interviews.

• Wholesaler markups are based on the “2010 Profit Report” from Heating
, Air

- Conditioning & Refrigeration Distributors International.

• Mechanical contractor markups are based on the “2005 Financial Analysis of the HVACR Contracting Industry” from the Air Conditioning Contractors of America.

• General contractor markups are based on the 2007 U.S. Economic Census.

• Sales taxes by state are based on information from the Sales Tax Clearinghouse.

• DOE derived national accounts markups by weighting the overall markups estimated for other distribution channels and then reducing that total by 50 percent to capture the price savings realized from equipment purchased through national accounts.39 

# Markup Types

• Baseline Markups:

– Relate the MSP of baseline equipment to the customer purchase price.

– Indicate a customer price that covers the expenses plus profit of each segment in the distribution channel.

• Incremental Markups:

– Relate the increase in MSP of more efficient equipment to the increase in customer purchase price.

– Cover only expenses that vary with MSP, in this case, expenses that increase due to an efficiency standard

.

– DOE believes that labor and occupancy costs are invariant with respect to MSP
, while other operating costs and profit are variant with respect to MSP

.

• DOE calculated baseline and incremental markups for each distribution channel and for new construction applications ( 14% of sales) and replacement applications ( 86% of sales).

• DOE applied baseline markups to the MSP of the baseline level, and the incremental markups to the incremental difference in MSP for efficient equipment above the baseline.40 

# Overall Markups: Baseline

Distribution Channel Wholesaler

End User Wholesaler

Mechanical Contractor

General Contractor

End User National Account ( Mfg Direct) Wholesaler

End User Wholesaler

Mechanical Contractor

End User Wholesaler

Mechanical Contractor

General Contractor

End User Weighted Overall Markup

NEW CONSTRUCTION REPLACEMENT

-

Manufacturer 1.27 1.27

- 1.27 1.27 1.27

-

Wholesaler 1.36 1.36

- 1.36 1.36 1.36

Mechanical Contractor

- 1.43

- - 1.52 1.52

-

General Contractor

- 1.34

- - - 1.34

-

National Accounts

- - 1.49

- - - -

Sales Tax

- - - 1.07 1.07 1.07

-
Markup by Distribution Channel 1.73 3.31 1.49 1.85 2.81 3.76 3.1041 

# Overall Markups: Incremental

Distribution Channel Wholesaler

End User Wholesaler

Mechanical Contractor

General Contractor

End User National Account ( Mfg Direct) Wholesaler

End User Wholesaler

Mechanical Contractor

End User Wholesaler

Mechanical Contractor

General Contractor

End User Weighted Overall Markup

NEW CONSTRUCTION REPLACEMENT

-

Manufacturer 1.27 1.27

- 1.27 1.27 1.27

-

Wholesaler 1.10 1.10

- 1.10 1.10 1.10

-

Mechanical Contractor

- 1.15

- - 1.22 1.22

-

General Contractor

- 1.22

- - - 1.22

-

National Accounts

- - 1.16

- - - -

Sales Tax

- - - 1.07 1.07 1.07

-
Markup by Distribution Channel 1.40 1.96 1.16 1.40 1.82 2.22 1.9342 

# Issues for Comment: Markups Analysis

Issue 2: Distribution Channels To estimate the number and type of distribution channels and the distribution of the shipments through the distribution channels, DOE leveraged the information from the 2008 PTAC and PTHP final rule. (73 FR 58772). DOE requests comment regarding the selected channels and distribution of shipments through the channels.43 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

844 

# Energy Use Analysis

• Purpose

– Determine unit

- average annual energy use (UEC) of PTACs and PTHPs at the considered efficiency levels to find annual energy costs and savings.

– Annual energy costs are inputs to Life

- Cycle Cost and Payback Period Analysis.

• Methodology

– Post

- processed outputs from prior analysis:

• Total UECs for 50 States and D.C., 6x efficiency levels, 9,000 Btu/h and 12,000 Btu/h cooling capacities, and PTAC and PTHP

• Prior simulations based on CBECS 2003 (most recent available)

• 239 climate locations (based on TMY2 data), aggregated to State

- level

– Accounting for these changes since the 2008 rulemaking:

• Weather impacts

• Equipment efficiency and cooling capacity differences

• Population changes45 

### • 2008 rulemaking analysis provided Total UEC for PTACs and for PTHPs.

• For PTHPs, DOE analyzed Heating UEC and Cooling UEC separately.

– Heating UEC: Heating and fan energy expended during operation in heating mode.

– Cooling UEC: Cooling and fan energy expended during operation in cooling mode.

• Cooling UEC = PTAC Total UEC, assuming similar functionality (other than reversing valve) between PTACs and PTHPs, given the

same efficiency level and cooling capacity. 

# Energy Use Analysis: Approach

Issue 3: Cooling Energy Use DOE requests comment on the energy a PTHP consumes when operating in the cooling mode and the energy a PTAC consumes during its operation

.46 

### Weather impacts

• Comparison of newer TMY3 weather data with TMY2 weather data revealed more time at higher temperatures.

• Determined monthly cooling degree days (CDD) increased by 5% and monthly heating degree days (HDD) decreased by 2%.

• Scaled cooling UEC up by 5% and scaled heating UEC down by 2%.

• Apply weather impacts for each State UEC. 

# Energy Use Analysis : Approach47 

### Conversion of UECs

• For the 9,000 Btu/h representative cooling capacity:

– Efficiency levels: DOE linearly extrapolated across the 6 efficiency levels considered in the previous rulemaking to find UECs at the considered efficiency levels of the representative cooling capacity.



### • For the 15,000 Btu/h representative cooling capacity (figure):

– Efficiency levels and Cooling capacity: DOE linearly extrapolated across the 9,000 Btu/h and 12,000 Btu/h cooling capacities considered in the previous rulemaking to find UECs at the considered efficiency levels and representative cooling capacity

. 

# Energy Use Analysis: Approach

9,000 Btu/h UEC =

- 63.367 x EER + 1781.1 R2 = 0.9983 12,000 Btu/h UEC = - 73.838 x EER + 2126.2 R2 = 0.9974

900 1000 1100 1200 1300 1400 1500 1600 1700 1800

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5 13.0UEC [kWh]

EER 

### UEC Conversion for 15,000 Btu/h Cooling Capacity PTACs

EER-Scaled UEC for 9,000 Btu/h Previous UEC for 9,000 Btu/h EER-Scaled UEC for 12,000 Btu/h Previous UEC for 12,000 Btu/h EER- and Capacity-Scaled UEC for 15,000 Btu/h48 

### Population change

• UECs by State are used in the LCC and PBP analysis.

• National UECs are used in the NIA.

– State populations were determined from the 2010 Census.

– State

- level UECs was averaged, weighted by State population. 

# Energy Use Analysis: Approach

State State Name PTAC Standard Size

- 9,000 Btu/h

... Population Weight EL0 EL1

... ... 1 Alabama 1344 1326

... ... 1.53%

2 Alaska 511 510

... ... 0.23%

... Total US US Average 1078 1066

... ... 100%49PTAC National UECs Representative Cooling Capacity 9,000 Btu/h 15,000 Btu/h

Efficiency Level EER UEC (kWh) EER UEC (kWh) 0* 11.1 1078 9.3 1688 1 † 11.3 1066 9.5 1671 2 11.5 1050 9.7 1657 3 12.0 1022 10.0 1625 4 12.4 994 10.4 1594 5 12.9 966 10.8 1563 6 13.1 952 11.0 1547 

# Energy Use Analysis: ResultsPTHP National UECs Representative Cooling Capacity 9,000 Btu/h 15,000 Btu/h

Efficiency Level EER | COP UEC (kWh) EER | COP UEC (kWh) 0* 11.3 | 3.2 1985 9.5 | 2.9 2847

1 11.5 | 3.3 1956 9.7 | 2.9 2829
2 12.0 | 3.4 1918 10.0 | 3.0 2778
3 12.4 | 3.5 1879 10.4 | 3.1 2727
4 12.9 | 3.6 1841 10.8 | 3.2 2676
5 13.1 | 3.6 1822 11.0 | 3.2 2651

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1

- 2013 baseline for PTHPs. † Represents ASHRAE Standard 90.1

- 2013 baseline for PTACs

.50 • Purpose

– Provide an economic evaluation from the end

- user’s perspective.

– Life Cycle Cost (LCC) is the total customer cost over the life of the equipment.

– Simple Payback Period (PBP) is the time required to recover the increased purchase price of more energy

- efficient equipment through reduced first

- year operating costs.

• Methodology

– Determine energy and economic inputs.

• Determine total installed cost for each efficiency level.

• Use annual unit average energy use developed in the energy use analysis to represent the consumption of different PTAC and PTHP end

- users across the United States.

• Determine operating costs for the first year and lifetime of equipment for each efficiency level.

– Utilize a Monte Carlo simulation, consisting of 10,000 iterations that select from inputs that are characterized by probability distributions, to calculate LCC and PBP results and variation.

• Calculates simple PBP by dividing average increase in installed cost by the average decrease in first

- year operating cost.

• Calculates LCC by adding installed cost and lifetime operating costs.

• Calculates LCC savings by subtracting LCC of each efficiency level from LCC of the efficiency level of equipment that a customer would purchase in the absence of a new standard. 

# Life

- Cycle Cost and Payback Period Analysis51 

### • Total Installed Cost is the sum of equipment purchase price and installation cost.

• Equipment purchase price is provided by the Engineering Analysis and Markups Analysis

.

• A constant price assumption was used to derive the equipment price in the compliance year (2019)



## .

– The price trend is based on historical Producer Price Index (PPI) data for “all other miscellaneous refrigeration and air

- conditioning equipment” spanning the time period 1990

- 2013, which has been characterized by declines and increases through the time period.

– DOE chose the constant price assumption due to uncertainty about the continuation of trends from past years.

• Installation costs represent the labor and materials necessary to install the equipment.

– Based on the materials, labor rate, and labor time data from RS Means (2013), the installation costs do not change with efficiency level. 

# LCC & PBP Analysis: Total Installed Cost52 

### • The annual energy cost is the annual energy consumption from the Energy Use Analysis multiplied by the energy price.

• DOE used electric utility tariff data to develop average and marginal electricity prices.

– Average electricity prices, and marginal energy and demand prices were developed for nine Census Divisions and California.

– Since PTACs and PTHPs are commercial air conditioners and typically consume peak electricity, annual marginal prices per kWh by Census division were used to calculate annual energy cost.



### • DOE used Annual Energy Outlook (AEO) 2013 for projections of future average energy prices for each census division. 

# LCC & PBP Analysis: Annual Energy Cost

Region Annual Marginal Price (¢/kWh)

New England 10.11

Mid

- Atlantic 9.71

East Nor th Central 6.58

West North Central 5.80

South Atlantic 7.37

East South Central 6.00

West South Central 6.15

Mountain 7.46

Pacific

– WA,OR 5.77

Pacific

– CA 12.74
US Average 7.6953 

## • Estimated repair costs based on the annualized value of a equipment warranty contract.

– Repair costs increases proportionally with the manufacturer selling price of more efficient equipment.



## • Estimated annual maintenance costs based on materials, labor rate, and labor time data from RS Means (2013).

– Maintenance costs do not change with efficiency level. 

# LCC & PBP Analysis: Maintenance and Repair Costs54 

### • DOE used a Weibull distribution to model equipment lifetime.

• DOE used data from the previous rulemaking and input from individuals with experience in manufacturing to estimate an equipment survival function.

– Supportive stakeholder comment received from the ASHRAE Standard 90.1

- 2013 Notice of Data Availability.



### • The Weibull distribution is modeled off equipment having an average lifetime of 10 years and a maximum lifetime of 20 years, which does not change with efficiency level or equipment class. 

# LCC & PBP Analysis: Equipment Lifetime55 

### • Used to convert streams of annual operating expenses to the year of purchase (i.e., 2019).

• Estimated as the weighted average cost of capital using capital asset pricing model (CAPM).

• Discount rates were estimated for the types of firms that commonly use a PTAC or PTHP

.

– Lodging, Offices, and Medical Services.

• DOE used Damodaran Online as the source of information for company debt and equity financing.

– Financial cost of any debt incurred to purchase equipment.

– Opportunity cost of any equity to purchase equipment. 

# LCC & PBP Analysis: Discount Rates56 

# LCC & PBP Analysis: Energy Efficiency in the Base Case

• LCC and PBP analysis typically analyzes standard levels relative to a baseline efficiency level.

• Not all customers purchase equipment at baseline levels.

– DOE must account for customers purchasing more efficient equipment to accurately estimate customer economic impacts.



### • Base case efficiency distributions define the percentage of equipment being purchased at various efficiency levels.

– Customers already purchasing equipment at efficiencies greater than or equal to a prospective standard level are not impacted by the standard.

– The base case efficiency distribution for PTHPs at the 9,000 Btu/h representative cooling capacity is shown in the figure on the right. 

### • Market share and efficiency level data for PTACs and PTHPs were obtained from a 2013 dataset from the AHRI Directory of Certified Product Performance

.

• To estimate the base case distribution in the compliance year (2019), DOE used an efficiency trend of 1 EER every 35 years, from prior commercial air conditioning rulemakings.

0% 10% 20% 30% 40% 50% 60%

0 1 2 3 4 5Market Share

Efficiency Level57 Efficiency Level Average Costs (2013$) Simple Payback (years) % of Consumers that Experience

Net Cost Installed Cost First Year's Operating Cost Lifetime Operating Cost LCC

1 $1,491 $194 $1,411 $2,902 6.6 20%

2 $1,508 $192 $1,395 $2,903 7.3 37%

3 $1,527 $189 $1,379 $2,906 7.8 62%

4 $1,547 $187 $1,363 $2,910 8.2 70%

5 $1,557 $186 $1,356 $2,913 8.3 73% 

## LCC & PBP Results: 9,000 Btu/h R epresentative Cooling Capacity58 Efficiency Level Average Costs (2013$) Simple Payback (years) % of Consumers that Experience

Net Cost Installed Cost First Year's Operating Cost Lifetime Operating Cost LCC

1 $1,744 $252 $1,832 $3,575 7.8 23%

2 $1,767 $249 $1,812 $3,579 8.6 42%

3 $1,797 $246 $1,793 $3,590 9.8 77%

4 $1,833 $244 $1,776 $3,609 11.1 87%

5 $1,854 $243 $1,767 $3,621 11.7 91% 

## LCC & PBP Results: 15,000 Btu/h Representative Cooling Capacity59 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

860 

# Shipments and National Impact Analyses

Engineering Analysis

Markups Analysis

Energy Use & End Use Load Characterization NIA Shipments

Analysis 

## • Shipments Analysis

– E stimates PTAC

- PTHP shipments over the 30

- year analysis period (2019

- 2048).



## • National Impact Analysis

– E stimates the National Energy Savings (NES) from those shipments at various trial standards levels

.

– E stimates the Net Present Value (NPV) to PTAC and PTHP customers of the savings from those shipments at the various trial standards levels.61 

### • Purpose

– To estimate PTAC and PTHP shipments over the 30

- year analysis period (2019

- 2048).

• Methodology

– DOE developed a single shipments model for all PTACs and PTHPs.

– The model is a stock accounting model, which assumes that each year the existing PTACs and PTHPs either age by one year or fail.

– PTAC and PTHP shipments are driven by the construction of new floor space and the replacement of units that have failed. 

# Shipments Analysis62 New Construction Shipments

• DOE developed projections for new construction shipments based on projections of new commercial floor space from AEO 2013.

• Saturation values for new construction were developed using data from the 2008 rulemaking.

Replacement Shipments

• DOE built up initial stock by using the average of the historical shipments (1998

- 2004) for the years 1993

- 2012.

• DOE developed replacement shipments based on a survival function which projects a certain percentage of units to fail each year and be replaced.

Standards Case Impacts

• DOE assumed that standards will not impact shipments: standards case shipments equals the base case shipments

. 

# Shipments Analysis: Projected Shipments

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000Shipmnets

Year 

### Base case Shipments Projection

New Construction Replacements63 

### • To disaggregate total PTAC and PTHP shipments into equipment classes, DOE used the equipment class market shares based on model availability in the AHRI Directory of Certified Product Performance.

• DOE expects equipment class market shares to be constant over time, as is exhibited in historical data. 

# Shipment Analysis: Disaggregation by Equipment Class

PTAC PTHP

Cooling Capacity < 7,000 Btu/h ≥ 7,000 Btu/h and ≤15,000 Btu/h >15,000 Btu/h <7,000 Btu/h ≥ 7,000 Btu/h and ≤15,000 Btu/h >15,000 Btu/h

Percent 3.0% 48.5% 3.7% 1.8% 39.8% 3.2%



### Issue 4: Stakeholders mentioned that a number of shipments are not accounted for in the AHRI database because certain manufacturers are non

- AHRI manufacturers and are not subject to reporting to the database. DOE requests data for the expected distribution of models that are unreported to the AHRI Directory of Certified Product Performance.64 

### • Purpose

– To estimate the National Energy Savings (NES) and the national economic impact from new and amended energy conservation standards at different efficiency levels for the 30 year period from 2019

– 2048.

• Methodology

– DOE calculates national energy savings by multiplying unit lifetime energy savings by projected shipments and accumulating this projected value over the 30 years.

– DOE calculates the Net Present Value (NPV) by accumulating the difference each year between energy bill savings and increased equipment expenditures for all equipment shipped over the 30 year period

.

– NPV is calculated using a 3% and a 7% discount rate. 

# National Impact Analysis65 

## • Table of inputs

– from BVM 

# National Impact Analysis: Inputs

Input Description

Total Installed Cost Annual weighted

- average per unit values as a function of efficiency level taken from the LCC and PBP analysis.
Repair and Maintenance Costs Repair costs vary with efficiency level. M aintenance costs are constant with efficiency level. These costs are taken from the LCC and PBP analysis.
Annual Energy Use Annual weighted

- average per unit energy use at the National level as a function of efficiency level and cooling capacity taken from the LCC and PBP analysis.

Base

- Case Efficiencies Shipments

- weighted efficiencies determined for the compliance year. Based on base

- case efficiency distribution from LCC and PBP analysis.

Standards

- Case Efficiencies Roll

- up scenario assumed in the compliance year for determining shipment

- weighted efficiency for each standards case. Efficiency Trend Market

- weighted efficiency increases over time for the base and standards cases.

Energy Prices Average prices and forecasted energy prices from EIA AEO 2013 forecasts (to 2040) and extrapolation to 2078.
Full Fuel Cycle Multiplier to convert site energy to full

- fuel cycle energy.

Discount Rate 7 percent and 3 percent real from OMB’s Regulatory Analysis Guideline A

- 4.

Present Year Future expenses are discounted to the year 2019.66 

## National Impact Analysis: Inputs from the LCC and PBP Analysis

Equipment Class (Current Energy Conservation Standards ) Representative Cooling Capacity in the LCC and PBP Analysis Data Source

<7,000 Btu/h Did not analyze DOE estimated the manufacturer production cost of 7,000 Btu/h cooling capacity equipment based on costs of 9,000 Btu/h and 15,000 Btu/h representative cooling capacity equipment, modified with lower capacity compressor, fan motors, and heat exchangers.

DOE extrapolated energy and other economics input data across the 9,000 Btu/h and 15,000 Btu/h representative cooling capacity for the <7,000 Btu/h equipment class.

≥7,000 Btu/h and

≤15,000 Btu/h 9,000 Btu/h Inputs from the LCC and PBP analysis.

>15,000 Btu/h 15,000 Btu/h Inputs from the LCC and PBP analysis.67 

# National Impact Analysis: Efficiency Levels

Equipment Type PTAC PTHP

Equipment Class < 7,000 Btu/h ≥7,000 Btu/h and ≤15,000 Btu/h >15,000 Btu/h < 7,000 Btu/h ≥7,000 Btu/h and ≤15,000 Btu/h >15,000 Btu/h
Efficiency Level EER EER EER EER | COP EER | COP EER | COP

0* 11.7 11.1 9.3 11.9 | 3.3 11.3 | 3.2 9.5 | 2.9

1 † 11.9 11.3 9.5 12.2 | 3.5 11.5 | 3.3 9.7 | 2.9

2 12.2 11.5 9.7 12.6 | 3.5 12.0 | 3.4 10.0 | 3.0

3 12.6 12.0 10.0 13.1 | 3.6 12.4 | 3.5 10.4 | 3.1

4 13.1 12.4 10.4 13.6 | 3.7 12.9 | 3.6 10.8 | 3.2

5 13.6 12.9 10.8 13.8 | 3.8 13.1 | 3.6 11.0 | 3.2

6 13.8 13.1 11.0

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1

- 2013 baseline for PTHPs. † Represents ASHRAE Standard 90.1

- 2013 baseline for PTACs

.68 

# National Impact Analysis: Base Case and Standards Case Forecasted Efficiencies

• Because key inputs to the calculation of the NES and NPV are dependent on the estimated efficiencies under the base case (without standards) and the standards case (with standards), forecasted efficiencies are of great importance to the analysis.

• DOE used a “roll

- up” scenario to establish the shipment

- weighted efficiency for the year that standards are estimated to become effective (i.e., 2019).

Efficiency

Level Market Share ( PTACs ≥ 7,000 Btu/h and ≤ 15,000 Btu/h)

ASHRAE* Standards Case

1 2 3 4 5

Baseline 0.0%

- - - - -

1 37.9%

- - - - -

2 29.0% 68.7%

- - - -

3 29.3% 27.6% 96.3%

- - -

4 2.5% 2.5% 2.5% 98.8%

- -

5 0.9% 0.9% 0.9% 0.9% 99.7%

-

6 0.3% 0.3% 0.3% 0.3% 0.3% 100.0% 

### • Base case efficiency distribution.

– Based on AHRI data for the year 2013.

– Shipment

- weighted efficiency increases at a rate of 1 EER per 35 years from 2013

- 2019.

• Standards case efficiency distributions based on “roll

- up ” scenario.

– Efficiencies below the standard level “roll

- up” to the standard level.

– Efficiencies above the standard level are unaffected. * Refers to AN SI/ASHRAE/IES Standard 90.1

- 2013 minimum efficiency levels.69 

# National Impact Analysis: Base Case and Standards Case Forecasted Efficiencies

11.00 11.50 12.00 12.50 13.00 13.50Shipments-weightedEER

Basecase Rollup to EL1 Rollup to EL2 Rollup to EL3 Rollup to EL4 Rollup to EL5 Rollup to EL6 

### • For the base case and standards cases after “roll

up,” shipments

- weighted efficiency increases 1 EER every 35 years to account for technological improvement in equipment and shifts to higher efficiency equipment.

• The projected efficiency distribution of shipments for the PTAC ≥ 7,000 Btu/h and ≤ 15,000 Btu/h equipment class is shown on the right.

Issue 5: DOE requests comment regarding and data supporting the selected efficiency trend.70 

### PTAC

- PTHP Trial Standard Levels Analyzed

Level Margin above current PTAC energy conservation standard Description

Baseline 1.8% Equivalent to ASHRAE 90.1

- 2013 standards, the minimum standards DOE may adopt.

TSL 1 4% Positive customer impact; Negative industry impact

TSL 2 (PROPOSED) 8% Max industry net present value (INPV); Max customer NPV at 7% discount rate

TSL 3 12% Negative customer and industry impact

TSL 4 16% Negative customer and industry impact

TSL 5 18% Max Tech and Max national energy savings; Negative customer and manufacturer impact 

# Trial Standard Level (TSL) Descriptions

• DOE set TSLs at efficiency levels that increase incrementally from the current energy conservation standard (2008 Final Rule) up to the

max

- tech level.71 

### Equipment Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Efficiency Level
PTAC < 7,000 Btu/h 2 3 4 5 6

PTAC ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 2 3 4 5 6

PTAC > 15,000 Btu/h 2 3 4 5 6

PTHP < 7,000 Btu/h 1 2 3 4 5

PTHP ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 1 2 3 4 5

PTHP > 15,000 Btu/h 1 2 3 4 5 

# Trial Standard Level (TSL) Descriptions72 

# National Impact Analysis: Results

Equipment Class Trial Standard Level

1 2 3 4 5 < 7,000 Btu/h 0 0.003 0.005 0.006 0.007 ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 0.013 0.051 0.102 0.131 0.134 > 15,000 Btu/h 0.002 0.005 0.01 0.013 0.014 Total All Cooling Capacities 0.015 0.059 0.118 0.15 0.155 

### Cumulative Full Fuel Cycle National Energy Savings (quads)

Equipment Class Discount Rate Trial Standard Level
1 2 3 4 5 Million 2013$ < 7,000 Btu/h

3% 0.7 1.8 2.4 2.2 2.1 ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 22.3 65.9 113.8 134.6 136.4 > 15,000 Btu/h 1.0 1.2 (2.4) (6.7) (7.6) Total

– All Classes 23.9 69.0 113.8 130.2 131.0 < 7,000 Btu/h

7% 0.1 (0.2) (1.2) (2.2) (2.5) ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 6.3 12.3 14.5 10.5 9.0 > 15,000 Btu/h

- (1.5) (5.4) (9.5) (10.4) Total All Cooling Capacities 6.5 10.7 7.9 (1.1) (3.8) 

### Net Present Value of Consumer Benefit, Discounted at 3 % and 7%73 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

874 

## • Purpose

– To assess the impacts of standards on manufacturers;

– To identify and estimate impacts on manufacturer subgroups that may be more severely affected than the industry as a whole; and

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



## • Methodology

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

– Interview manufacturers to refine inputs to the GRIM, develop subgroup analyses, and address qualitative issues. 

# MIA: Overview

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD75 

## • Phase 1

– DOE creates an industry profile to characterize the market and identify important issues that require further investigation.



## • Phase 2

– DOE prepares an industry cash flow model and an interview questionnaire to guide subsequent discussions with manufacturers.



## • Phase 3

– DOE interviews manufacturers and assesses the impacts of standards both quantitatively (using the GRIM) and qualitatively (impacts on employment, competition, manufacturing capacity, and regulatory burden). 

# MIA: Methodology

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD76 

# MIA: Methodology

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD 

## • Upstream Inputs

– Market and Technology Assessment (MTA) Industry Profile

– Engineering MPCs

– Shipments



## • MIA Inputs

– Markup Scenarios

– Conversion Costs77 

# MIA: Key Issues

• Size Constraints

– Manufacturers expressed concern regarding their ability to increase efficiency while maintaining the physical dimensions of PTACs and PTHPs.



## • Manufacturer Profitability

– Manufacturers indicated cost increases could reduce sales volumes and profits.



## • Customer Utility

– Manufacturers stated that increasing efficiency could make it difficult to meet customer requirements related to noise and humidity control.

– Manufacturers also noted potential loss of higher capacity models if the standard is set too high.

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD78 

## • DOE modeled two markup scenarios to capture a range of potential financial impacts on the industry:

– Preservation of Gross Margin Percentage Markup Scenario

• Represents the upper bound of profitability impacts.



## – Preservation of Operating Profit Markup Scenario

• Represents the lower bound of profitability impacts. 

# MIA: Markup Scenarios

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD79 

# MIA: Conversion Costs

Product Conversion Costs (2013$M) Capital Conversion Costs (2013$M) Total Conversion Costs (2013$M)

TSL 1 $2.2 $2.3 $4.5

TSL 2 $4.7 $2.9 $7.6

TSL 3 $7.2 $7.1 $14.3

TSL 4 $8.5 $7.1 $15.6

TSL 5 $13.5 $7.4 $20.9 

## • Industry conversion costs total $7.6 million at TSL 2.80 

# MIA: INPV Results

Units Base Case Trial Standard Level

1 2 3 4 5

INPV 2013$M 58.5 57.1 to 57.4 57.7 to 58.8 55.4 to 57.5 55.0 to 58.5 51.8 to 55.9

Change in INPV 2013$M

- (1.4) to (1.1) (0.7) to 0.3 (3.1) to (0.9) (3.5) to 0.0 (6.7) to (2.6)

% Change

- (2.4) to (1.9) (1.3) to 0.5 (5.3) to (1.6) (5.9) to 0.0 (11.4) to (4.4)

Product Conversion Costs 2013$M

- 2.2 4.7 7.2 8.5 13.5

Capital Conversion Costs 2013$M

- 2.3 2.9 7.1 7.1 7.4

Total Conversion Costs 2013$M

- 4.5 7.6 14.3 15.6 20.9

Details of the manufacturer impact analysis can be found in chapter 12 of the TSD. Note: Parentheses indicate negative values.



## • Summary of TSL 2

– Expected INPV change in the range of

- 1.3% to 0.5%

– Expected conversion costs total $7.6 million for the industry81 

# MIA: Subgroup of Manufacturers with Production Assets

• Add a few bullets plus table of INPV impacts • DOE identified 22 manufacturers of PTACs and PTHPs. However, most import and distribute PTACs and PTHPs produced by OEMs overseas. DOE identified a subset of domestic manufacturers that own production assets and analyzed these manufacturers as a distinct subgroup.

– DOE expects manufacturers with production assets to experience higher conversion costs than their competitors without production assets.

Units Trial Standard Level 2

All Manufacturers Manufacturers with Production Assets
Base

- Case INPV 2013$M 58.5 46.8
Standards

- Case INPV 2013$M 57.7 to 58.8 45.7 to 46.5

Change in INPV 2013$M (0.7) to 0.3 (1.1) to (0.3) % Change (1.3) to 0.5 (2.3) to (0.5)
Product Conversion Costs 2013$M 4.7 3.9 Capital Conversion Costs 2013$M 2.9 2.9
Total Conversion Costs 2013$M 7.6 6.8



### • Summary of TSL 2

– Expected INPV change in the range of

- 2.3 % to

- 0.5%

– Expected conversion costs of $6.8 million (89% of the industry total)82 

# MIA: Small Business Impacts

• DOE identified 12 domestic small business manufacturers of PTACs and PTHPs.

– Small businesses were defined as having 750 employees or fewer based on SBA small business size standards



## • No small business identified is an OEM of standard

- size PTACs and PTHPs. Rather, small businesses import, rebrand, and distribute equipment manufactured overseas.

• Small businesses likely would not incur capital conversion costs. However, they may experience an increase in equipment purchase price from overseas OEMs. They may also face testing and certification costs for equipment redesigned to comply with an amended standard.83 

# MIA: Small Business Impacts

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD 

### Issue 6: DOE requests comment on the number of small manufacturers of PTACs and PTHPs; on the potential impacts of amended energy conservation standard on those small manufacturers; and on the severity of those impacts.84 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

885 

## • Purpose

– To analyze the impact of efficiency standards on small business, particularly Independently

- operating lodging businesses.



## • Methodology

- The Small Business Association classifies lodging businesses with less than $7 million in annual revenue as small businesses.

- Apply a discount rate premium (1.52%) for small businesses.



## • Output

- The LCC and PBP results showed that the effect of higher PTAC and PTHP standards on small businesses is similar to the effect on the full sample of commercial customers. 

# LCC Subgroup Analysis86 

# Emissions Analysis

• Purpose

– To report emission impacts resulting from amended energy conservation standards, including changes in power plant emissions and full fuel cycle emissions.



## • Methodology

– DOE used the National Energy Modeling System (NEMS) to derive emissions factors (physical units per unit of energy savings) for Carbon Dioxide (CO 2 

### ) and several other gases.

Details of the Analysis can be found in chapter 14 of the TSD.87



### Cumulative Emissions Reduction for Potential Standards of PTACs and PTHPs 

# Emissions Analysis: Results

Trial Standard Level

1 2 3 4 5

CO 2 (million metric tons) 1.10 4.33 8.60 10.98 11.29

NO x (thousand tons) 1.12 4.42 8.78 11.06 11.31

Hg (tons) 0.00 0.01 0.02 0.03 0.03

N 2 O (thousand tons) 0.02 0.07 0.14 0.18 0.18

CH 4 (thousand tons) 4.02 15.75 31.28 40.08 41.22

SO 2 (thousand tons) 2.47 9.74 19.30 24.17 24.7088 

# Emissions Monetization

• Purpose

– To estimate the potential monetary benefit of reduced power plant emissions resulting from the considered standard levels

.



## • Methodology

– Social Cost of Carbon (SCC) is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions.

– DOE used the most recent (2013) U.S. government interagency estimates of the SCC for emissions in 2015, per metric ton (2013$):

- $12 (average value from distribution with a 5% discount rate )

- $40.5 (average value from distribution with a 3% discount rate )

- $62.4 (average value from distribution with a 2.5% discount rate )

- $119 (95th

- percentile value from distribution with a 3% discount rate )



### – T he SCC in constant dollars increases over time.89 

# Emissions Monetization: Results

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

CO 2 * 7.21 to 105.5 28.06 to 412.08 56.03 to 820.95 73.86 to 1,066.62 76.45 to 1,100.06

NO x - 3 % discount rate 1.39 5.43 10.85 14.16 14.59

NO x - 7 % discount rate 0.57 2.2 4.42 6.02 6.27 

### Full Fuel Cycle Emissions Reduction Benefits (million 2013$)

* Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions.90 

# Utility Impact Analysis

• Purpose

- To estimate the changes in electric installed capacity and generation that result for each TSL.



## • Methodology

- The National Energy Savings is used to provide a stream of energy savings over the analysis period.

- The Energy Information Administration’s National Energy Modeling System (NEMS) is modified to represent the impacts of DOEs standards program (modified code is known as NEMS

- BT).



## • Output

- Reductions in total electricity generation.

- Reductions in primary fuel (coal, natural gas etc.) consumption.

- Changes to the mix of electricity generation by fuel type.

- Changes to total installed capacity.

Details of the Analysis can be found in chapter 15 of the TSD.91 

# Employment Analysis

• Purpose



# - To estimate the net jobs created or eliminated nationally as a consequence of amended energy conservation standards, includes direct and indirect employment impacts.



## • Methodology



# - Uses the ImSET (Impact of Sector Energy Technologies) model for the evaluation of indirect employment impacts, direct employment impacts to the commercial air conditioning industry are developed in the Manufacturer Impact Analysis (chapter 12 of the TSD).



# - The changes in equipment and energy expenditures are taken from the National Energy Savings Analysis.



## • Output



# - Change to commercial and energy sector employment as a consequence of amended energy conservation standards.

Details of the Analysis can be found in chapter 16 of the TSD.92 

# Regulatory Impact Analysis

• Purpose

- To investigate the national impacts of non

- regulatory alternatives to mandatory amended energy conservation standards.



## • Methodology

- DOE modified NIA spreadsheet to represent the following non

regulatory alternatives:



## • Output

- National Energy Savings and Net Present Value for the non

- regulatory alternatives.

- Impact of non

- regulatory alternatives on purchase price and use of
energy

- efficient equipment. • No new regulatory action • Manufacturer tax credits

• Customer rebates • Voluntary efficiency targets

• Customer tax credits • Bulk government procurement

Details of the Analysis can be found in chapter 17 of the TSD.93 

# Presentation Overview

Energy Use; Life

- Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis 4

5 Market & Technology; Screening Analysis 2

Engineering Analysis; Markups Analysis 3 1 Overview; Scope of Coverage

Manufacturer Impact Analysis 6

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard 7

894 

# Proposed Standard (TSL 2): PTACs and PTHPs

Equipment Type Sub

- category Cooling Capacity (Btu/h) Proposed Level EER (Btu/ Wh ) , COP ( unitless )

PTAC Standard Size † < 7,000 Btu/h EER = 12.6 ≥ 7,000 Btu/h and

≤ 15,000 Btu/h EER = 14.9

– (0.324*Cap ‡ )

> 15,000 Btu/h EER = 10.0

PTHP Standard Size † < 7,000 Btu/h EER = 12.6 COP = 3.5 ≥ 7,000 Btu/h and

≤ 15,000 Btu/h EER = 14.9

– (0.324*Cap ‡ ) COP = 4.0

– (0.064*Cap ‡ )

> 15,000 Btu/h EER = 10.0 COP = 3.0 † Standard size refers to equipment with wall sleeve dimensions

having an external wall opening greater than or equal to 16” high or greater than or equal to 42” wide. ‡ “Cap” means cooling capacity in thousand Btu/h at 95 ° F

outdoor dry

- bulb temperature.95 

# Summary of Notice of Proposed Rulemaking

• At TSL 2 , t he lifetime energy savings for PTACs and PTHPs purchased in the 30

- year period that begins in the year of expected compliance with amended standards (2019

– 2048) amount to 0.06 quadrillion British thermal units (quads ).

• The cumulative net present value (NPV) of total customer costs and savings of the proposed standards for PTACs and PTHPs ranges from $10.7 million (at a 7

- percent discount rate) to $69.0 million (at a 3

- percent discount rate). This NPV expresses the estimated total value of future operating

- cost savings minus the estimated increase in equipment costs for equipment purchased in 2019

– 2048.96 

# How to Submit Written Comments

• In all correspondence, please refer to the PTAC

- PTHP rulemaking by:

– Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps;

– Docket Number EERE

- 2012

- BT

- STD

- 0029 ; and

– Regulatory Identification Number (RIN ) 1904

- AC82

.

• Email : pkgTerminalAC

- HP2012STD0029@ee.doe.gov

Postal : Courier : Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program, Mailstop EE

- 5B 1000 Independence Avenue, SW Washington, DC 20585

- 0121 Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program, Suite 600 950 L’Enfant Plaza, SW Washington, DC 20024 Tel : 202

- 586

- 2945



### Comment Period closes : November 17, 2014, 11:59 PM EDT97 

# Closing Remarks/Questions98 

# Supporting Material: PTAC

- PTHP ENGINEERING99 

# Representative Cooling Capacity

0 5 10 15 20 25 30 35 406,8007,2007,6008,0008,4008,8009,2009,60010,00010,40010,80011,20011,60012,00012,40012,80013,20013,60014,00014,40014,80015,20015,60016,00016,40016,800Number ofCertifiedPTAC Modelsin AHRI Directory

Cooling Capacity (Btu/h)

0 5 10 15 20 25 306,8007,2007,6008,0008,4008,8009,2009,60010,00010,40010,80011,20011,60012,00012,40012,80013,20013,60014,00014,40014,80015,20015,60016,00016,40016,800Number of CertifiedPTHP Modelsin AHRI Directory

Cooling Capacity (Btu/h)



### • For the engineering analysis, DOE selected the representative cooling capacity of 9,000 Btu/h because this capacity had the highest number of standard

- size PTAC and PTHP models listed in the 2013 AHRI Directory.100 

# Engineering: Cost

- Efficiency Curves

• Cost

- efficiency equations for representative capacity of 9,000 Btu/h

$300 $320 $340 $360 $380 $400 $420 $440 $460 $480 $500

9 9.5 10 10.5 11 11.5 12 12.5 13 13.5 14Manufacturer Production Cost (2013$)

EER (Btu/Wh) Standard Size PTAC, 15,000 Btu/h Standard Size PTAC, 9,000 Btu/h Standard Size PTHP, 9,000 Btu/h Standard Size PTHP, 15,000 Btu/h

9,000 Btu/h PTAC: MPC = 1.78*(EER) 2

- 22.40*(EER) + 389.15 9,000 Btu/h PTHP: MPC = 1.78*(EER) 2

- 22.40*(EER) + 427.62 15,000 Btu/h PTAC: MPC = 12.19*(EER) 2

- 208.96*(EER) + 1280.9 15,000 Btu/h PTHP: MPC = 12.19*(EER) 2

- 208.96*(EER) + 1318.1

Details of the Engineering Analysis can be found in chapter 5 of the TSD101 

# Supporting Material: LCC102 

## LCC and PBP Analysis: Base Case Efficiency Distribution

0 1 2 3 4 5 6 PTAC 9,000 Btu/h 0.0% 43.6% 24.3% 29.5% 2.1% 0.5% 0.0% PTAC 15,000 Btu/h 0.0% 25.8% 34.8% 34.7% 2.7% 1.4% 0.7% PTHP 9,000 Btu/h 48.5% 8.9% 30.2% 12.4% 0.0% 0.0% PTHP 15,000 Btu/h 58.2% 0.0% 32.5% 7.9% 1.4% 0.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%Market Share

Efficiency Level

PTAC 9,000 Btu/h PTAC 15,000 Btu/h PTHP 9,000 Btu/h PTHP 15,000 Btu/h103 

# LCC and PBP Analysis: Customer Purchase Price

Equipment Type PTAC PTHP

Efficiency Level 9,000 Btu/h 15,000 Btu/h 9,000 Btu/h 15,000 Btu/h

0* $1,193 $1,294 $1,314 $1,411

1 † $1,204 $1,307 $1,323 $1,420

2 $1,213 $1,316 $1,340 $1,443

3 $1,230 $1,339 $1,359 $1,473

4 $1,249 $1,369 $1,379 $1,509

5 $1,269 $1,405 $1,389 $1,530

6 $1,279 $1,426

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1

- 2013 baseline for PTHPs. † Represents ASHRAE Standard 90.1

- 2013 baseline for PTACs. Note: A shipping cost of $19.52 was added to each MPC to determine the pre

- markup MPC.104 

# Supporting Material: Shipments and NIA105 

# Shipments Analysis: New Construction Floorspace

0 50 100 150 200 250

2010 2015 2020 2025 2030 2035 2040 2045 2050Millions of square feet

Year

Healthcare Lodging Office

New commercial floor space projections from AEO 2013.106 

# NIA: Unit Energy Consumption

0 200 400 600 800 1000 1200 1400 1600 1800

8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0Annual Energy Consumption

EER PTACs

7,000 Btu/h 9,000 Btu/h 15,000 Btu/h 0 500 1000 1500 2000 2500 3000

8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0Annual Energy Consumption

EER PTHPs

7,000 Btu/h 9,000 Btu/h 15,000 Btu/h