10-C-i

APPENDIX 10-C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND 

EMISSIONS REDUCTIONS USING ALTERNATIVE LEARNING RATES

TABLE OF CONTENTS

10-C.1 INTRODUCTION ............................................................................................... 10-C-1

10-C.2 ROOM AIR CONDITIONER NPV RESULTS USING ALTERNATIVE 

LEARNING RATES ........................................................................................... 10-C-2

10-C.3 CLOTHES DRYER NPV RESULTS USING ALTERNATIVE LEARNIG 

RATES ................................................................................................................. 10-C-4

LIST OF TABLES

Table 10-C.2.1 Room Air Conditioners: Annualized Present Value of Consumer 

Impacts (3 Percent Discount Rate) and Annualized Present Value of 

Monetized Benefits from CO2 and NOX Emissions Reductions (3 

Percent Discount Rate) ............................................................................ 10-C-2

Table 10-C.2.2 Room Air Conditioners: Annualized Present Value of Consumer 

Impacts (7 Percent Discount Rate) and Annualized Present Value of 

Monetized Benefits from CO2 and NOX Emissions Reductions 

(Discount Rate of 3% for CO2 and 7% for NOX) .................................... 10-C-3

Table 10-C.3.1 Clothes Dryers: Annualized Present Value of Consumer Impacts (3 

Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (3 Percent 

Discount Rate) ......................................................................................... 10-C-4

Table 10-C.3.2 Clothes Dryers: Annualized Present Value of Consumer Impacts (7 

Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (Discount Rate of 

3% for CO2 and 7% for NOX) .................................................................. 10-C-5
10-C-1

APPENDIX 10-C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND 

EMISSIONS REDUCTIONS USING ALTERNATIVE LEARNING RATES

10-C.1 INTRODUCTION

 DOE investigated the impact of different learning rates on the combined net present value 

(NPV) for the considered TSLs for room air conditioners and clothes dryers. The NPV results 

presented in chapter 10 are based on learning rates of 38.9% for room air conditioners and 41.6% 

for clothes dryers, both of which are referred to as the “default” learning rates. DOE considered 

three learning rate sensitivities: (1) a “high learning” rate; (2) a “low learning” rate; and (3) a “no 

learning” rate. In addition, for clothes dryers there is a fourth sensitivity: “Clothes Dryers Only”. 

The “high learning” rates are 41.4% for room air conditioners and 42.9% for clothes 

dryers. The “low learning’ rates are 31.0% for room air conditioners and 33.9% for clothes 

dryers. The “no learning” rate sensitivity, which is zero percent for all products, assumes 

constant real prices over the entire forecast period. For clothes dryers, “clothes dryers only” is 

based on limited set of historical price data specifically for clothes dryers and the learning rate is 

52.2%. Refer to appendix 8-J for details on the development of the above learning rates.

 The results presented here combine the NPV of the consumer savings, calculated for each 

TSL using 3 and 7 percent discount rates, with the present value of the potential economic 

benefits resulting from reduced CO2 and NOX emissions. For these results, the economic benefits 

from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 

2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits 

from reduced NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is 

the average of the low and high values used in DOE’s analysis, and either a 3% or 7% discount 

rate. See chapter 16 for information regarding the derivation of these values. All results refer to 

lifetime impacts of products shipped in 2014-2043. 

The results presented here are annualized values. DOE used a two-step calculation 

process to convert the time-series of costs and benefits into annualized values. First, DOE 

calculated a present value in 2011, the year used for discounting the NPV of total consumer costs 

and savings, for the time-series of costs and benefits using discount rates of three and seven 

percent for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used 

the discount rate appropriate for each SCC time series. From the present value, DOE then 

calculated the fixed annual payment over a 30-year period, starting in 2011, that yields the same 

present value. The fixed annual payment is the annualized value. Although DOE calculated 

annualized values, this does not imply that the time-series of cost and benefits from which the 

annualized values were determined would be a steady stream of payments.
10-C-2

10-C.2 ROOM AIR CONDITIONER NPV RESULTS USING ALTERNATIVE 

LEARNING RATES

Table 10-C.2.1 Room Air Conditioners: Annualized Present Value of Consumer Impacts

(3 Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (3 Percent Discount 

Rate) 

Learning Rate (LR)

Trial 

Standard

Level

Default:

LRRoomAC 

=38.9%

Low 

Sensitivity:

LRRoomAC 

=31.0%

High 

Sensitivity:

LRRoomAC 

=41.4%

No 

Learning:

LR = 0%

(constant real 

prices)

1 

Billion 2009$

Incr. Installed Cost 0.060 0.064 0.059 0.080 

Operating Cost Savings 0.128 0.128 0.128 0.128 

Value of Emissions 

Reduction

0.012 0.012 0.012 0.012 

Net Present Value 0.079 0.075 0.081 0.059 

2 

Incr. Installed Cost 0.059 0.063 0.057 0.078 

Operating Cost Savings 0.125 0.125 0.125 0.125 

Value of Emissions 

Reduction

0.014 0.014 0.014 0.014 

Net Present Value 0.080 0.076 0.082 0.061 

3 

Incr. Installed Cost 0.055 0.059 0.054 0.074 

Operating Cost Savings 0.132 0.132 0.132 0.132 

Value of Emissions 

Reduction 

0.015 0.015 0.015 0.015 

Net Present Value 0.092 0.088 0.093 0.072 

4 

Incr. Installed Cost 0.111 0.118 0.108 0.146 

Operating Cost Savings 0.186 0.186 0.186 0.186 

Value of Emissions 

Reduction

0.021 0.021 0.021 0.021 

Net Present Value 0.096 0.088 0.098 0.061 

5 

Incr. Installed Cost 0.215 0.230 0.210 0.284 

Operating Cost Savings 0.289 0.289 0.289 0.289 

Value of Emissions 

Reduction

0.032 0.032 0.032 0.032 

Net Present Value 0.106 0.091 0.111 0.037 

6 

Incr. Installed Cost 0.689 0.736 0.674 0.909 

Operating Cost Savings 0.403 0.402 0.403 0.401 

Value of Emissions 

Reduction

0.045 0.045 0.045 0.045 

Net Present Value (0.241) (0.289) (0.226) (0.463)

Parentheses indicate negative (-) values.
10-C-3

 

Table 10-C.2.2 Room Air Conditioners: Annualized Present Value of Consumer Impacts

(7 Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (Discount Rate of 3% 

for CO2 and 7% for NOX) 

Learning Rate (LR)

Trial 

Standard 

Level

Default:

LRRoomAC 

=38.9%

Low 

Sensitivity:

LRRoomAC 

=31.0%

High 

Sensitivity:

LRRoomAC 

=41.4%

No 

Learning:

LR = 0%

(constant real 

prices)

1 

Billion 2009$

Incr. Installed Cost 0.058 0.062 0.057 0.076 

Operating Cost Savings 0.106 0.106 0.106 0.106 

Value of Emissions 

Reduction 

0.011 0.011 0.011 0.011 

Net Present Value 0.059 0.055 0.060 0.041 

2 

Incr. Installed Cost 0.057 0.061 0.056 0.074 

Operating Cost Savings 0.103 0.103 0.103 0.103 

Value of Emissions 

Reduction

0.014 0.014 0.014 0.014 

Net Present Value 0.060 0.057 0.061 0.043 

3 

Incr. Installed Cost 0.054 0.057 0.052 0.070 

Operating Cost Savings 0.111 0.111 0.111 0.111 

Value of Emissions 

Reduction

0.015 0.015 0.015 0.015 

Net Present Value 0.072 0.068 0.073 0.056 

4 

Incr. Installed Cost 0.108 0.114 0.106 0.137 

Operating Cost Savings 0.154 0.154 0.154 0.154 

Value of Emissions 

Reduction

0.020 0.020 0.020 0.020 

Net Present Value 0.066 0.060 0.069 0.037 

5 

Incr. Installed Cost 0.209 0.221 0.204 0.267 

Operating Cost Savings 0.235 0.235 0.235 0.235 

Value of Emissions 

Reduction 

0.032 0.032 0.032 0.032 

Net Present Value 0.058 0.045 0.062 (0.000)

6 

Incr. Installed Cost 0.681 0.722 0.668 0.869 

Operating Cost Savings 0.323 0.323 0.323 0.322 

Value of Emissions 

Reduction

0.045 0.045 0.045 0.044 

Net Present Value (0.313) (0.355) (0.300) (0.502)

Parentheses indicate negative (-) values.
10-C-4

10-C.3 CLOTHES DRYER NPV RESULTS USING ALTERNATIVE LEARNIG 

RATES

 

Table 10-C.3.1 Clothes Dryers: Annualized Present Value of Consumer Impacts (3 

Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (3 Percent Discount 

Rate) 

Learning Rate (LR)

Trial 

Standard 

Level

Default:

LRCD 

=41.6% 

Low 

Sensitivity:

LRCD 

=33.9% 

High 

Sensitivity:

LRCD 

=42.9% 

No 

Learning:

LR = 0%

(constant real 

prices)

Sensitivity 

(Clothes 

Dryers 

Only):

LR = 

52.2% 

1 

Billion 2009$

Incr. Installed 

Cost

0.000 0.000 0.000 0.000 0.000 

Operating Cost 

Savings

0.001 0.001 0.001 0.001 0.001 

Value of 

Emissions 

Reduction 

0.000 0.000 0.000 0.000 0.000 

Net Present 

Value

0.001 0.001 0.001 0.001 0.001 

2 

Incr. Installed 

Cost

0.002 0.002 0.002 0.003 0.002 

Operating Cost 

Savings

0.034 0.034 0.034 0.034 0.034 

Value of 

Emissions 

Reduction 

0.004 0.004 0.004 0.004 0.004 

Net Present 

Value

0.036 0.036 0.036 0.035 0.036 

3 

Incr. Installed 

Cost

0.047 0.051 0.046 0.067 0.041 

Operating Cost 

Savings

0.200 0.200 0.200 0.200 0.200 

Value of 

Emissions 

Reduction

0.025 0.025 0.025 0.025 0.025 

Net Present 

Value

0.178 0.173 0.179 0.158 0.183 

4 

Incr. Installed 

Cost

0.055 0.061 0.055 0.079 0.049 

Operating Cost 

Savings

0.209 0.209 0.209 0.209 0.209 

Value of 0.026 0.026 0.026 0.026 0.026 
10-C-5

Emissions 

Reduction

Net Present 

Value

0.180 0.175 0.181 0.156 0.186 

5 

Incr. Installed 

Cost

0.772 0.849 0.761 1.103 0.683 

Operating Cost 

Savings

0.783 0.783 0.783 0.783 0.783 

Value of 

Emissions 

Reduction

0.099 0.099 0.099 0.099 0.099 

Net Present 

Value

0.110 0.033 0.121 (0.220) 0.199 

6 

Incr. Installed 

Cost

1.767 1.934 1.744 2.483 1.574 

Operating Cost 

Savings

1.689 1.689 1.689 1.689 1.689 

Value of 

Emissions 

Reduction

0.263 0.263 0.263 0.263 0.263 

Net Present 

Value

0.185 0.018 0.209 (0.531) 0.378 

Parentheses indicate negative (-) values.

 

Table 10-C.3.2 Clothes Dryers: Annualized Present Value of Consumer Impacts (7 

Percent Discount Rate) and Annualized Present Value of Monetized 

Benefits from CO2 and NOX Emissions Reductions (Discount Rate of 3% 

for CO2 and 7% for NOX) 

Learning Rate (LR)

Trial 

Standard 

Level

Default:

LRCD 

=41.6%

Low 

Sensitivity:

LRCD 

=33.9%

High 

Sensitivity:

LRCD 

=42.9%

No 

Learning:

LR = 0%

(constant real 

prices)

Sensitivity 

(Clothes 

Dryers 

Only):

LR = 

52.2%

1 

Billion 2009$

Incr. Installed 

Cost

0.000 0.000 0.000 0.000 0.000 

Operating Cost 

Savings

0.001 0.001 0.001 0.001 0.001 

Value of 

Emissions 

Reduction 

0.000 0.000 0.000 0.000 0.000 

Net Present 

Value

0.001 0.001 0.001 0.001 0.001 

2 Incr. Installed 0.002 0.002 0.002 0.003 0.002 
10-C-6

Cost

Operating Cost 

Savings

0.022 0.022 0.022 0.022 0.022 

Value of 

Emissions 

Reduction

0.004 0.004 0.004 0.004 0.004 

Net Present 

Value

0.025 0.024 0.025 0.024 0.025 

3 

Incr. Installed 

Cost

0.044 0.048 0.044 0.060 0.040 

Operating Cost 

Savings

0.133 0.133 0.133 0.133 0.133 

Value of 

Emissions 

Reduction 

0.025 0.025 0.025 0.025 0.025 

Net Present 

Value

0.114 0.110 0.114 0.098 0.118 

4 

Incr. Installed 

Cost

0.052 0.057 0.052 0.071 0.047 

Operating Cost 

Savings

0.139 0.139 0.139 0.139 0.139 

Value of 

Emissions 

Reduction 

0.026 0.026 0.026 0.026 0.026 

Net Present 

Value

0.113 0.108 0.113 0.094 0.118 

5 

Incr. Installed 

Cost

0.730 0.794 0.721 0.994 0.659 

Operating Cost 

Savings

0.521 0.521 0.521 0.521 0.521 

Value of 

Emissions 

Reduction

0.098 0.098 0.098 0.098 0.098 

Net Present 

Value

(0.111) (0.176) (0.103) (0.375) (0.041)

6 

Incr. Installed 

Cost

1.665 1.805 1.647 2.236 1.513 

Operating Cost 

Savings

1.124 1.124 1.124 1.124 1.124 

Value of 

Emissions 

Reduction

0.259 0.259 0.259 0.259 0.259 

Net Present 

Value

(0.282) (0.421) (0.263) (0.853) (0.130)

Parentheses indicate negative (-) values.