10

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### APPENDIX 10

- C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND

EMISSIONS REDUCTIONS USING ALTERNATIVE LEARNING RATES

TABLE OF CO NTENTS

10-C.1 INTRODUCTION

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

10-C.2 ROOM AIR CONDITIONER NPV RESULTS USING AL TERNATIVE

LEARNING RATES

........................................................................................... 10-C-2

10-C.3 CLOTHES DRYER NPV RESULTS USING ALTERNAT IVE 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 CO 2 

### and NO X 

### Emissions Reductions (3 Percent Discount Rate) ............................................................................ 10-C-2

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

I mpacts (7 Percent Discount Rate) and Annualized Present Value of

Monetized Benefits from CO 2 

### and NO X 

### Emissions Reductions (Discount Rate of 3% for CO 2 

### and 7% for NO X 

### ) .................................... 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 CO 2 

### and NO X 

### Emissions Reductions (3 Percent

Discount Rat e) ......................................................................................... 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 CO 2 

### and NO X 

### Emissions Reductions (Discount Rate of

3% for CO 2 

### and 7% for NO X 

### ) .................................................................. 10-C-510

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- 1 

### APPENDIX 10

- C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND

EMISSIONS REDUCTIONS USING ALTERNATIVE LEARNI N G 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. DO E 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 drye rs and the l earning 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 CO 2 

### and NO X 

### emissions. For these results, the economic benefits

from reduced CO 2 

### emissions were calculated using a SCC value of $22.1/ metric ton in 2010 (in 2009$) for CO 2 

### , increasing at 3% per year, and a discount rate of 3%. The economic benefits

from reduced NO X 

### 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

lif etime 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 20 11, 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 CO 2 

### 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 valu e. 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

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### 10

- C.2 ROOM AIR CONDITIONER NPV RESULTS USING ALTERNATIVE

LEARNI N G 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 CO 2 

### and NO X 

### Emissions Reductions (3 Percent Discount Rate)
Learning Rate (LR)

Trial

Standard

Level Default:

LR RoomAC =38.9% Low Sensitivity:

LR RoomAC =31.0% High Sensitivity:

LR RoomAC =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

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### 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 CO 2 

### and NO X 

### Emissions Reductions (Discount Rate of 3%

for CO 2 

### and 7% for NO X 

### )
Learning Rate (LR)

Trial

Standard

Level Default:

LR RoomAC =38.9% Low Sensitivity:

LR RoomAC =31.0% High Sensitivity:

LR RoomAC =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

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### 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 CO 2 

### and NO X 

### Emissions Reductions (3 Percent Discount Rate)
Learning Rate (LR)

Trial

Standard

Level 

### Default:

LR CD 

### =41.6% Low Sensitivity:

LR CD 

### =33.9% High Sensitivity:

LR CD 

### =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 0.02610

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- 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 CO 2 

### and NO X 

### Emissions Reductions (Discount Rate of 3%

for CO 2 

### and 7% for NO X 

### )
Learning Rate (LR)

Trial

Standard

Level 

### Default:

LR CD 

### =41.6% Low Sensitivity:

LR CD 

### =33.9% High Sensitivity:

LR CD 

### =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 0.00210

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- 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.