8-i

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION ........................................................................................................... 8-1

8.1.1 General Approach for Life-Cycle Cost and Payback Period Analysis................ 8-1

8.1.2 Development of Customer Samples..................................................................... 8-2

8.1.3 Overview of Life-Cycle Cost and Payback Period Analysis Inputs.................... 8-3

8.2 LIFE-CYCLE COST ANALYSIS INPUTS.................................................................... 8-4

8.2.1 Total Installed Cost Inputs................................................................................... 8-5

8.2.1.1 Baseline Manufacturer Price ...................................................................... 8-5

8.2.1.2 Standard-Level Manufacturer Price Increases ........................................... 8-6

8.2.1.3 Projection of Future Equipment Prices ...................................................... 8-8

8.2.1.4 Overall Markup .......................................................................................... 8-9

8.2.1.5 Installation Cost........................................................................................ 8-10

8.2.1.6 Total Installed Cost .................................................................................. 8-11

8.2.2 Operating Cost Inputs........................................................................................ 8-12

8.2.2.1 Annual Energy Consumption................................................................... 8-13

8.2.2.2 Electricity Prices ...................................................................................... 8-13

8.2.2.3 Electricity Price Trends............................................................................ 8-16

8.2.2.4 Repair and Maintenance Costs................................................................. 8-16

8.2.2.5 Lifetime .................................................................................................... 8-18

8.2.2.6 Discount Rates.......................................................................................... 8-20

8.2.2.7 Compliance Date of Standard .................................................................. 8-23

8.2.2.8 Base Case Distribution of Efficiency Levels ........................................... 8-23

8.3 PAYBACK PERIOD INPUTS...................................................................................... 8-27

8.4 RESULTS OF LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS........... 8-28

8.4.1 Summary of LCC and PBP Results................................................................... 8-29

8.4.2 Distribution of LCC Impacts ............................................................................. 8-42

8.4.3 Range of LCC Savings....................................................................................... 8-50

8.5 REBUTTABLE PAYBACK PERIOD.......................................................................... 8-58

8.5.1 Inputs.................................................................................................................. 8-58

8.5.2 Results................................................................................................................ 8-58

LIST OF TABLES

Table 8.1.1 Building Types Used for BVM Life-Cycle Cost and Payback Analyses...... 8-2

Table 8.2.1 Equipment Subcategories Evaluated for BVM Life-Cycle Cost and 

Payback Analyses .......................................................................................... 8-6

Table 8.2.2 Mean Baseline BVM Manufacturer Selling Prices in 2013........................... 8-6

Table 8.2.3 Incremental Manufacturer Selling Prices, HFC refrigerant........................... 8-7

Table 8.2.4 Incremental Manufacturer Selling Prices, CO2 refrigerant ........................... 8-8

Table 8.2.5 Summary of Markups for Beverage Vending Machines ............................. 8-10
8-ii

Table 8.2.6 Nationally Representative Installation Costs for Beverage Vending 

Machine Equipment..................................................................................... 8-10

Table 8.2.7 Installation Cost Indices by State (National Value=1.000) ......................... 8-11

Table 8.2.8 Average Commercial and Industrial Electricity Prices (2013).................... 8-14

Table 8.2.9 Derived National Average Electricity Price Paid by Business Type*......... 8-15

Table 8.2.10 Annual Repair and Maintenance Costs........................................................ 8-17

Table 8.2.11 Distribution of BVM Ages in Pacific Northwest in 2007............................ 8-18

Table 8.2.12 Lifetime Parameters for Refrigerated Beverage Vending Machines........... 8-20

Table 8.2.13 Risk free rate and equity risk premium, 2011-2013 .................................... 8-22

Table 8.2.14 Weighted Average Cost of Capital for Sectors that Purchase 

Refrigerated Beverage Vending Machines.................................................. 8-23

Table 8.2.15 Base Case Efficiency Level Distributions for Class A Refrigerated 

Beverage Vending Machines....................................................................... 8-25

Table 8.2.16 Base Case Efficiency Level Distributions for Class B Refrigerated 

Beverage Vending Machines....................................................................... 8-26

Table 8.2.17 Base Case Efficiency Level Distributions for Combination 

Refrigerated Beverage Vending Machines.................................................. 8-27

Table 8.4.1 Average LCC and PBP Results for Class A HFC........................................ 8-30

Table 8.4.2 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Class A HFC ...................................................................... 8-30

Table 8.4.3 Average LCC and PBP Results for Class A CO2 ........................................ 8-31

Table 8.4.4 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Class A CO2 ....................................................................... 8-31

Table 8.4.5 Average LCC and PBP Results for Class B HFC........................................ 8-32

Table 8.4.6 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Class B HFC ...................................................................... 8-33

Table 8.4.7 Average LCC and PBP Results for Class B CO2......................................... 8-34

Table 8.4.8 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Class B CO2 ....................................................................... 8-35

Table 8.4.9 Average LCC and PBP Results for Combo-A HFC.................................... 8-36

Table 8.4.10 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Combo-A HFC................................................................... 8-37

Table 8.4.11 Average LCC and PBP Results for Combo-A CO2 ..................................... 8-38

Table 8.4.12 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Combo-A CO2.................................................................... 8-39

Table 8.4.13 Average LCC and PBP Results for Combo-B HFC .................................... 8-40

Table 8.4.14 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Combo-B HFC................................................................... 8-40

Table 8.4.15 Average LCC and PBP Results for Combo-B CO2 ..................................... 8-41

Table 8.4.16 Average LCC Savings Relative to the Base Case Efficiency 

Distribution for Combo-B CO2 .................................................................... 8-41

Table 8.5.1 Rebuttable Payback Periods for Refrigerated Beverage Vending 

Machines with HFC refrigerant ................................................................... 8-59

Table 8.5.2 Rebuttable Payback Periods for Refrigerated Beverage Vending 

Machines with CO2 refrigerant .................................................................... 8-60
8-iii

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ................. 8-4

Figure 8.2.1 Reference Case National Average Electricity Price Trends........................ 8-16

Figure 8.2.2 Adjusted Survival Function ......................................................................... 8-20

Figure 8.2.3 Energy Efficiency (Daily Energy Consumption Relative to DOE 

Standard) for Equipment Class A Models................................................... 8-24

Figure 8.2.4 Energy Efficiency (Daily Energy Consumption Relative to DOE 

Standard) for Equipment Class B Models ................................................... 8-24

Figure 8.4.1 LCC Savings Distribution for EL 5 Class A-HFC Refrigerated 

Beverage Vending Machines....................................................................... 8-42

Figure 8.4.2 LCC Savings Distribution for EL 5 Class A CO2 Refrigerated 

Beverage Vending Machines....................................................................... 8-43

Figure 8.4.3 LCC Savings Distribution for EL 8 Class B-HFC Refrigerated 

Beverage Vending Machines....................................................................... 8-44

Figure 8.4.4 LCC Savings Distribution for EL 8 Class B-CO2 Refrigerated 

Beverage Vending Machines....................................................................... 8-45

Figure 8.4.5 LCC Savings Distribution for EL 9 Combo A-HFC Refrigerated 

Beverage Vending Machines:...................................................................... 8-46

Figure 8.4.6 LCC Savings Distribution for EL 9 Combo A-CO2 Refrigerated 

Beverage Vending Machines....................................................................... 8-47

Figure 8.4.7 LCC Savings Distribution for EL 7 Combo B-HFC Refrigerated 

Beverage Vending Machines....................................................................... 8-48

Figure 8.4.8 LCC Savings Distribution for EL 7 Combo-B CO2 Refrigerated 

Beverage Vending Machines....................................................................... 8-49

Figure 8.4.9 Range of LCC Savings for Class A-HFC Refrigerated Beverage 

Vending Machines....................................................................................... 8-50

Figure 8.4.10 Range of LCC savings for Class A CO2 Refrigerated Beverage 

Vending Machines....................................................................................... 8-51

Figure 8.4.11 Range of LCC Savings for Class B HFC Refrigerated Beverage 

Vending Machines....................................................................................... 8-52

Figure 8.4.12 Range of LCC Savings for Class B CO2 Refrigerated Beverage 

Vending Machines....................................................................................... 8-53

Figure 8.4.13 Range of LCC Savings for Combo A HFC Refrigerated Beverage 

Vending Machines....................................................................................... 8-54

Figure 8.4.14 Range of LCC for Combo A CO2 Refrigerated Beverage Vending 

Machines...................................................................................................... 8-55

Figure 8.4.15 Range of LCC Savings for Combo B HFC Refrigerated Beverage 

Vending Machines....................................................................................... 8-56

Figure 8.4.16 Range of LCC Savings for Combo B CO2 Refrigerated Beverage 

Vending Machines....................................................................................... 8-57
8-1

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of standards on individual customers usually includes a reduction in operating 

cost and an increase in purchase cost. This chapter describes two metrics used in the analysis to 

determine the economic impact of standards on individual customers of refrigerated beverage 

vending machines (BVMs). 

• Life-cycle cost (LCC) is the total customer cost over the life of equipment, including 

purchase costs and operating costs (which in turn include maintenance, repair, and energy 

costs). Future operating costs are discounted to the time of purchase and summed over 

the lifetime of the equipment.

• Payback period (PBP) measures the amount of time it takes customers to recover the 

assumed higher purchase price of more energy-efficient equipment through reduced 

operating costs.

The U.S. Department of Energy (DOE) conducted the LCC and PBP analysis using a 

spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a 

commercially available software program), the LCC and PBP model generates a Monte Carlo 

simulation to perform the analysis by incorporating uncertainty and variability considerations in 

several of the key parameters as discussed further in section 8.1.1.

Inputs to the LCC and PBP analysis are discussed in sections 8.2 and 8.3 respectively. 

Results for each metric are presented in section 8.4. Key variables and calculations are presented 

for each metric. The calculations discussed here were performed with a Microsoft Excel 

spreadsheet available on the U.S. Department of Energy’s rulemaking website for Refrigerated 

Beverage Vending Machines.1 Details of the spreadsheet and instructions for using it are 

discussed in Appendix 8-A.

8.1.1 General Approach for Life-Cycle Cost and Payback Period Analysis

Recognizing that several inputs to the analysis of customer LCC and PBP are either 

variable or uncertain, DOE used a Monte Carlo simulation and probability distributions to model 

both the uncertainty and variability of inputs. Appendix 8-B provides a detailed explanation of 

Monte Carlo simulation and the use of probability distributions. DOE developed LCC and PBP 

spreadsheet models that incorporate both Monte Carlo simulation and probability distributions 

by using a Microsoft Excel® spreadsheet combined with Crystal Ball®, a commercially 

available program. 

DOE displays LCC and PBP results as distributions of impacts compared to baseline 

conditions. Results, presented in section 8.4, were derived from 10,000 samples for each Monte 

Carlo simulation run. To illustrate the implications of the analysis, DOE generated frequency 

charts that depict the variation in LCC savings for each efficiency level considered for 

refrigerated beverage vending machines. 
8-2

The LCC and PBP analysis reflects the situation in which a single customer pays the

increase in purchase cost for a more-efficient product and also receives the reduction in operating 

cost. DOE recognizes that in most cases the purchasers of refrigerated beverage vending 

machines (a bottler or a vending services company) do not pay the energy costs for operation and 

thus would not directly reap any energy cost savings from more-efficient equipment. However, 

DOE believes that BVM owners would seek to pass on higher equipment costs to the users who 

pay the energy costs. DOE understands that the BVM owner typically has a financial 

arrangement with the company or institution on whose premises the refrigerated beverage 

vending machine is located, in which the latter may pay a fee or receive a share of the revenue 

from the refrigerated beverage vending machine. Thus, DOE expects that BVM owners could 

modify the arrangement to effectively pass on higher equipment costs. Therefore, DOE's LCC 

and PBP analysis uses the perspective that the company or institution on whose premises the 

refrigerated beverage vending machine is located pays the higher equipment cost and receives

the energy cost savings. 

8.1.2 Development of Customer Samples 

DOE relied upon the 2003 Commercial Business Energy Consumption Survey 

(CBECS),2 the 2005 Interim State Population Projections (based on 2000 United States Census 

data),3 and a 2007 State of the Vending Industry report4 to develop customer samples for its LCC 

and PBP analyses.

For each equipment class subcategory (referred to as "analysis points" in chapter 5), DOE 

used population projections for 2020 from the United States Census to assign probabilities that a 

refrigerated beverage vending machine is located in a particular State or the District of 

Columbia. DOE used the Vending Industry report to estimate the proportion of refrigerated 

beverage vending machines found in each of six building types. The probabilities that a 

refrigerated beverage vending machine is located in a particular type of building are given in 

Table 8.1.1. DOE used the same set of probabilities for all equipment class subcategories. DOE 

used CBECS data to estimate base electricity prices for each of these six building types (this 

information is further modified by census region). Building type is also used as an input 

parameter for estimating discount rates, while geographic location is used as an input parameter 

for estimating sales taxes.

Table 8.1.1 Building Types Used for BVM Life-Cycle Cost and Payback Analyses

Building Type Percentage of BVM Stock

Manufacturing 36.2

Office/Health Care 25.7

Retail 8.7

Schools/Colleges/Correctional 14.7

Military 3.3

Other 11.4

Total 100.0
8-3

8.1.3 Overview of Life-Cycle Cost and Payback Period Analysis Inputs

The LCC is the total customer cost over the life of the equipment, including purchase 

price (including retail markups and sales taxes) and operating cost (including energy cost). 

Future operating costs are discounted to the time of purchase and summed over the lifetime of 

the equipment. The PBP is the increase in purchase cost of higher efficiency equipment divided 

by the change in operating cost during the first year of the equipment’s life. It represents the 

number of years that it will take the customer to recover the increased purchase cost through 

decreased operating costs, based on the costs in the first year of the equipment’s life. In the 

calculation of PBP, future costs are not discounted.

Inputs to the LCC and PBP analysis are categorized as: (1) inputs for establishing the 

purchase cost, otherwise known as the total installed cost; and (2) inputs for calculating the 

operating cost.

The primary inputs for establishing the total installed cost are:

• Baseline manufacturer selling price: The baseline manufacturer selling price (MSP) is the 

price charged by the manufacturer to a wholesaler for equipment meeting existing 

minimum efficiency (or baseline) standards. The MSP includes a markup that converts 

the cost of production (i.e., the manufacturer production cost) to a MSP.

• Standard-level MSP increase: The standard-level MSP is the incremental change in MSP 

associated with producing equipment at each of the higher efficiency levels. 

• Markups and sales tax: Markups and sales tax are the retail margins and state and local 

retail sales taxes associated with converting the MSP to a customer price.

• Installation cost: The installation cost is the sum of the labor and material costs associated 

with installing the equipment after purchase. 

The primary inputs for calculating the operating cost are:

• Equipment energy consumption: The equipment energy consumption is the site energy 

use associated with operating equipment.

• Energy prices: The energy prices are the prices customers paid for energy (electricity) in 

a recent year.

• Electricity price trends: The prices projected over the lifetime of BVMs installed in the 

compliance year.

• Maintenance costs: The labor and material costs associated with maintaining the 

operation of the equipment.

• Repair costs: The labor and material costs associated with repairing or replacing 

components that have failed.

• Lifetime: The age at which the equipment is retired from service.
8-4

• Discount rate: The rate at which future costs and savings are discounted to establish their 

present value.

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating 

cost inputs for the calculation of the LCC and PBP. As noted earlier, most of the inputs are 

characterized by probability distributions that capture variability in the input variables. All of the 

inputs depicted in Figure 8.1.1 are discussed in sections 8.2 and 8.3. 

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP

8.2 LIFE-CYCLE COST ANALYSIS INPUTS

Life-cycle cost is the total customer cost over the life of equipment, including purchase 

cost and operating costs (which are composed of energy costs, maintenance costs, and repair 

costs). Future operating costs are discounted to the time of purchase and summed over the 

lifetime of the equipment. Life-cycle cost is defined by the following equation:

Eq. 8.1

Where:

LCC = life-cycle cost ($),

Baseline

Manufacturer

Selling Price

Std-Level

Manufacturer

Selling Price

Retailer

Markup

Sales Tax

Installation

Cost

Total Installed

Cost

 Energy

Consumption

Equipment

Price

Lifetime

Operating

Cost

Annual Energy

Cost

Product

Lifetime

Repair and

Maintenance

Cost

Discount Rate

Energy Price

Trends

Annual

Operating

Cost

Payback

Period

Life-Cycle

Cost

Energy Prices

∑=

= + +

N

t

t

t LCC IC OC r

1

/(1 )
8-5

IC = total installed cost ($),

∑ = sum over the lifetime, from year 1 to year N, where N = lifetime of equipment 

(years),

OC = operating cost ($),

r = discount rate, and

t = year for which operating cost is being determined.

DOE expresses all the costs in 2013$. Total installed cost, operating cost, lifetime, and 

discount rate are discussed in the following sections. The year of equipment purchase is assumed 

to be 2019, the effective date of the energy conservation standards for refrigerated beverage 

vending machines.

8.2.1 Total Installed Cost Inputs

DOE calculated the cost customers pay for baseline equipment based on the following 

equation:

PCBASE = [(RSPBASE ) × (TAX )] + INST

Where:

PCBASE = customer cost for baseline equipment,

RSPBASE = retail selling price for baseline equipment

TAX = sales tax, and

INST = installation cost.

DOE calculated the customer cost for equipment having higher efficiency levels based on 

the following equation:

( ) PCSTD = PCBASE + ∆MSPSTD × MURET _ INCR ×TAX

Where:

PCSTD = customer equipment cost for higher efficiency equipment,

PCBASE = customer cost for baseline equipment,

ΔMSPSTD = change in MSP for more efficient model,

MURET_INCR =incremental retailer markup, and

TAX= sales tax.

8.2.1.1 Baseline Manufacturer Price

The baseline MSP is the price charged by manufacturers to either a wholesaler/distributor 

or very large customer for equipment meeting existing minimum efficiency (or baseline) 

standards. The MSP includes a markup that converts from the cost to manufacture the equipment 

(i.e., the manufacturing cost). DOE developed the baseline MSPs through a design option 

analysis. Refer to chapter 5 for details. The LCC and PBP have been carried out on multiple
8-6

subcategories within each equipment class (A, B and Combination) identified in chapter 5. The 

set of equipment subcategories evaluated is shown in Table 8.2.1.

Table 8.2.1 Equipment Subcategories Evaluated for BVM Life-Cycle Cost and Payback 

Analyses

Equipment Class Equipment 

Subcategory Refrigerant Symbol

A

Not applicable

HFC A-HFC

CO2 A-CO2

B

HFC B-HFC

CO2 B-CO2

Combination

Combo-A

HFC Combo A-HFC

CO2 Combo A-CO2

Combo-B

HFC Combo B-HFC

CO2 Combo B-CO2

DOE developed the MSPs for the baseline efficiency equipment as a part of the 

engineering analysis; see Table 8.2.2.

Table 8.2.2 Mean Baseline BVM Manufacturer Selling Prices in 2013

2013$

Equipment 

Class Equipment Subcategory HFC Refrigerant CO2 Refrigerant

A

Not applicable

2437.17 2515.61

B 2083.37 2160.74

Combination

Combo-A 2276.46 2335.71

Combo-B 1892.40 1950.72

8.2.1.2 Standard-Level Manufacturer Price Increases

The standard-level MSP increase is the change in MSP associated with producing 

equipment at higher efficiency levels. DOE developed MSP increases associated with increases 

in equipment efficiency levels through a design-option analysis. Refer to chapter 5 for details. 

Manufacturer price increases as a function of equipment efficiency were developed for each of 

the equipment subcategories. The engineering analysis identified efficiency levels that were used 

in the LCC and PBP analyses. 

The highest efficiency level in each equipment class subcategory is considered the 

maximum technologically achievable, or max-tech, level. 
8-7

The engineering analysis established MSP increases for each design option. DOE then 

interpolated MSP values for each efficiency level. Table 8.2.3 and Table 8.2.4 summarize the 

estimated MSP increases for BVM efficiency levels considered in the LCC and PBP analyses.

Table 8.2.3 Incremental Manufacturer Selling Prices, HFC refrigerant

2013$

Efficiency 

Level

Class A Class B Combination 

Combo-A

Combination

Combo-B

0* 0.00 0.00 0.00 0.00

1 4.99 0.60 4.97 1.00 

2 10.93 1.31 12.74 4.60 

3 22.68 3.43 29.26 14.20 

4 60.88 5.56 50.65 37.96 

5 114.07 14.05 61.72 57.87 

6 264.92 40.29 72.80 121.21 

7 516.88 102.52 84.65 239.32 

8 768.83 181.62 114.11 703.64 

9 920.00 543.53 219.49 

10 949.45 769.39 

11 1,030.64 884.25 

* Baseline.
8-8

Table 8.2.4 Incremental Manufacturer Selling Prices, CO2 refrigerant

2013$

Efficiency 

Level

Class A Class B Combination 

Combo-A

Combination

Combo-B

0* 0.00 0.00 0.00 0.00

1 4.88 0.63 5.10 0.99 

2 11.18 1.39 13.90 4.61 

3 25.54 3.52 33.63 15.13 

4 73.68 5.66 54.96 39.21 

5 127.87 14.79 65.96 61.44 

6 351.64 43.07 77.79 123.40 

7 594.86 117.02 91.88 229.22 

8 838.07 278.42 121.88 663.19 

9 886.71 648.46 236.10 

10 1,033.18 768.94 

11 880.02 

* Baseline.

8.2.1.3 Projection of Future Equipment Prices

Economic literature and historical data suggest that the real costs of appliances and 

equipment may trend downward over time according to “learning” or “experience” curves. 

Desroches et al. (2013) summarizes the data and literature currently available that is relevant to 

price forecasts for selected appliances and equipment.5

DOE projected the future price trend of refrigerated beverage vending machines based on 

the appropriate Producer Price Index (PPI) series fit with an exponential function, with year as 

the explanatory variable. In this case, the functional form looks like the following:

Y = a ∙ ebX

where Y is the automatic merchandising machine price index, X is the time variable, a is the 

constant, and b is the slope parameter of the time variable. 

To derive these exponential parameters for refrigerated beverage vending machines, DOE 

obtained historical PPI data for “automatic merchandising machines, excluding parts” during the 

time period of 1967 to 2013 from the Bureau of Labor Statistics. This is the most disaggregated 

industry including refrigerated beverage vending machine manufacturing.

a The PPI data reflect 

 a Series ID PCU33331833331811; http://www.bls.gov/ppi/
8-9

nominal prices, adjusted for equipment quality changes. An inflation-adjusted (deflated) price 

index was calculated by dividing the PPI series for BVM equipment by the Gross Domestic 

Product Chained Price Index. 

The regression performed as an exponential trend line fit results in an R-squared value of 

0.99, which indicates an excellent fit to the data and results in an annual price decline rate of 

1.48 percent. The final estimated exponential function is:

Y = 1.112 × 1013 ∙ e(−0.01495)X

where Y is the BVM price index, and X is the year.

DOE derived an index, with 2013 equal to 1, to forecast prices in 2019, the compliance 

date for amended energy conservation standards in the LCC and PBP analysis. The index value 

in 2019, 0.914, is a function of the exponential parameter and time. DOE applied the same value 

to project prices for each BVM equipment class at each considered efficiency level.

8.2.1.4 Overall Markup 

For a given distribution channel, the overall markup is the value determined by 

multiplying all the associated retail markups and the applicable sales tax. Because there are 

baseline and incremental markups associated with the wholesaler, the overall markup is also 

divided into a baseline markup (i.e., a markup used to convert the baseline MSP into a customer 

price) and an incremental markup (i.e., a markup used to convert a standard-level MSP increase 

because of an efficiency increase into an incremental customer price). 

As discussed in chapter 6, overall markups are based on one of three assumed distribution 

channels. The distribution channel is based on whether equipment is sold (1) through a 

wholesaler/distributor; or (2) directly to bottler/distributors.

Based on input from equipment manufacturers, for the new construction market it 

appears that 10 percent of equipment is purchased by vending machine operators from 

wholesalers/distributors, 5 percent is purchased by site owners from wholesalers/distributors, and 

85 percent is purchased by bottlers and distributors directly through equipment manufacturers. 

DOE's understanding is that most existing equipment replacements are done as a result of 

obsolescence or failure after one round of machine refurbishment. DOE has assumed that this 

split of percent of equipment purchased among difference distribution channels is the same for 

new and replacement equipment. Based on information provided by bottlers and manufacturers, 

DOE assumes that that all future sales are for replacement only. Since the vending machine 

operators and site owners both purchase equipment through wholesalers, the overall markups for 

these two distribution channels should be the same. Table 8.2.5 summarizes the overall baseline 

and incremental markups 
8-10

Table 8.2.5 Summary of Markups for Beverage Vending Machines

Distribution 

Channel

Manufacturer  Bottler Manufacturer  Wholesaler 

Operator/Site Owner

Baseline Incremental Baseline Incremental

Wholesaler - - 1.48 1.30

Sales Tax 1.071 1.071 1.071 1.071

Overall Markup 1.071 1.071 1.585 1.392

Based on the percentages of the market share attributed to each of the distribution 

channel described above, the weighted-average overall baseline markup equals 1.148 and the 

weighted-average overall incremental markup equals 1.119. 

8.2.1.5 Installation Cost

The installation cost is the price to the customer of labor and materials (other than the 

actual equipment) needed to install the BVM equipment. DOE derived installation costs for 

BVM equipment from data in Foster-Miller, Inc., which provides estimates on the person-hours 

required to install refrigerated beverage vending machines and the labor rates associated with the 

type of crew required to install the equipment.

6

 The installation cost was calculated by 

multiplying the number of person-hours by the corresponding labor rate. Labor rates vary 

significantly from region to region of the country and the U.S. Bureau of Labor Statistics (BLS) 

provides the necessary information to capture this regional variability.7 The BLS provides 

median wage rates for installation, maintenance, and repair occupations that reflect labor rates 

for each individual state (plus District of Columbia) and allows the computation of local labor 

cost indices relative to the national average for these occupations. These cost indices were 

incorporated into the analysis to capture variation in installation cost, depending on location. 

Since data were not available to indicate how installation costs actually vary with BVM 

equipment class, subcategory or efficiency level, DOE assumed that installation costs do not 

vary with the cost of the equipment. Table 8.2.6 summarizes the nationally representative 

person-hours and labor rates associated with the installation of BVM equipment as presented in 

Foster-Miller Inc. In Table 8.2.6, both “bare” installation costs—i.e., costs before overhead and 

profit (O&P)—and installation costs including O&P are provided. Although not currently 

implemented, the LCC spreadsheet allows for an alternative scenario where the installation cost 

increases at higher efficiency levels.

Table 8.2.6 Nationally Representative Installation Costs for Beverage Vending Machine 

Equipment

Labor Base Costs 2013$ 

Equipment Type Person-Hours Labor Rate Labor Cost Labor Cost 

Including O&P

All refrigerated beverage 

vending machines 

2.0 (1 hr, 2 

workers) 35.33/hr. 70.65 111.14
8-11

The basis for the installation costs are 2011 labor costs (adjusted to 2013$) for 

installation of refrigeration equipment. Daily rates were for a two-person crew, requiring one 

hour (including service call driving time) on average for installation. Table 8.2.7 summarizes the 

BLS labor rates indices described above for installations in each state, plus the District of 

Columbia, used to vary the nationally representative installation costs in Table 8.2.6.

Table 8.2.7 Installation Cost Indices by State (National Value=1.000)

Location Index Location Index Location Index

Alabama 0.85 Kentucky 0.84 North Dakota 0.99

Alaska 1.38 Louisiana 0.93 Ohio 0.95

Arizona 1.06 Maine 0.94 Oklahoma 0.90

Arkansas 0.81 Maryland 1.09 Oregon 1.09

California 1.14 Massachusetts 1.23 Pennsylvania 1.00

Colorado 1.06 Michigan 1.04 Rhode Island 1.18

Connecticut 1.19 Minnesota 1.04 South Carolina 0.80

Delaware 1.09 Mississippi 0.77 South Dakota 0.92

District of Columbia 1.28 Missouri 1.01 Tennessee 0.85

Florida 0.90 Montana 1.01 Texas 0.89

Georgia 0.90 Nebraska 1.01 Utah 0.96

Hawaii 1.05 Nevada 1.08 Vermont 0.95

Idaho 0.85 New Hampshire 1.03 Virginia 0.94

Illinois 1.26 New Jersey 1.18 Washington 1.12

Indiana 0.94 New Mexico 0.85 West Virginia 0.77

Iowa 1.00 New York 1.13 Wisconsin 1.03

Kansas 0.96 North Carolina 0.88 Wyoming 0.85

8.2.1.6 Total Installed Cost 

As presented in Section 8.2.1, the total installed cost is the sum of the equipment price 

and the installation cost. DOE derived the customer equipment price for any given standard level 

by multiplying the baseline MSP by the baseline markup and adding to it the product of the 

incremental MSP and the incremental markup. Because MSPs, markups, and the sales tax all can 

take on a variety of values, depending on location, the resulting total installed cost for a 

particular efficiency level will not be a single-point value, but rather a distribution of values.

The derivation of the total installed cost is relatively straightforward. The baseline MSP 

and the standard-level MSP increases are the starting points for determining the total installed 

cost (values are taken directly from Table 8.2.2 through Table 8.2.4). The baseline and 
8-12

incremental markups, the sales tax, and installation costs are used to convert the MSPs into total 

installed costs for beverage vending machine equipment where the incremental installation costs 

are held flat. The average shipment-weighted installed costs in 2019 at each considered 

efficiency level are included in the results tables presented in section 8.4. 

8.2.2 Operating Cost Inputs

DOE defined the operating cost by the following equation:

OC = EC+ RC+ MC

Eq. 8.2

Where:

OC = operating cost ($), 

EC = energy cost associated with operating the equipment ($),

RC = repair cost associated with component failure ($), and

MC = annual maintenance cost for maintaining equipment operation ($).

DOE used the following equation to calculate the annual operating cost for baseline 

equipment:

OCBASE = AECBASE × PRICEENERGY + RCBASE + MCBASE ( )

Where:

OCBASE = operating cost for baseline equipment,

AECBASE = annual energy consumption for baseline equipment, 

PRICEENERGY = energy price,

RCBASE = repair costs associated with component failure for baseline

equipment, and

MCBASE = maintenance costs for baseline equipment.

DOE used the following equation to calculate the annual operating cost for higher 

efficiency equipment:

OCSTD = AECSTD × PRICEENERGY + RCSTD + MCSTD ( )

Where:

OCSTD = operating cost of higher-efficiency equipment,

AECSTD = annual energy consumption of higher-efficiency equipment, 

PRICEENERGY = energy price in each year,

RCSTD = repair costs associated with component failure for higher-efficiency 

equipment, and
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MCSTD = maintenance costs for higher-efficiency equipment.

8.2.2.1 Annual Energy Consumption

As described in chapter 7, DOE developed equations to estimate annual energy 

consumption of refrigerated beverage vending machines from daily energy consumption. For 

equipment class B and equipment class Combination subcategory Combo-B, DOE estimated that 

16 percent of these units are located in outdoor settings, so DOE used energy use scaling factors 

specific to each State and the District of Columbia to modify the annual energy consumption 

estimates for each geographic location.

8.2.2.2 Electricity Prices

This section describes the electricity price (cents/kWh) analysis used to develop the 

energy portion of the annual operating costs for BVM equipment.

Because of the wide variation in electricity consumption patterns, wholesale costs, and 

retail rates across the country, it is important to consider regional differences in electricity prices. 

For this reason, DOE divided the United States into the 50 States and the District of Columbia. 

DOE used reported average commercial electricity prices (which apply to four of the six building 

types) and the industrial electricity prices (which are assumed to apply to the manufacturing 

plants and military facilities) at the State level from an EIA database on commercial and 

industrial electricity prices.1 The latest available prices from this source are for the calendar year 

2013. Table 8.2.8 provides data on the State electricity prices.
8-14

Table 8.2.8 Average Commercial and Industrial Electricity Prices (2013)

State

Average 

Price, 

Commercial 

$/kWh, 

2013 

Average 

Price, 

Industrial 

$/kWh, 

2013 

State

Average 

Price, 

Commercial 

$/kWh, 

2013 

Average 

Price, 

Industrial 

$/kWh, 

2013 

Alabama 0.110 0.067 Montana 0.095 0.097

Alaska 0.201 0.232 Nebraska 0.092 0.098

Arizona 0.101 0.073 Nevada 0.094 0.070

Arkansas 0.081 0.077 New 

Hampshire 0.150 0.180

California 0.142 0.107 New Jersey 0.135 0.079

Colorado 0.097 0.102 New Mexico 0.098 0.076

Connecticut 0.149 0.132 New York 0.159 0.081

Delaware 0.118 0.098 North Carolina 0.090 0.066

District of 

Columbia 0.125 0.080 North Dakota 0.084 0.080

Florida 0.100 0.083 Ohio 0.102 0.066

Georgia 0.101 0.079 Oklahoma 0.082 0.052

Hawaii 0.369 0.338 Oregon 0.084 0.064

Idaho 0.070 0.056 Pennsylvania 0.108 0.071

Illinois 0.091 0.070 Rhode Island 0.126 0.117

Indiana 0.095 0.071 South Carolina 0.100 0.068

Iowa 0.084 0.069 South Dakota 0.089 0.081

Kansas 0.101 0.088 Tennessee 0.107 0.078

Kentucky 0.092 0.065 Texas 0.099 0.078

Louisiana 0.081 0.054 Utah 0.083 0.058

Maine 0.117 0.081 Vermont 0.147 0.132

Maryland 0.108 0.089 Virginia 0.087 0.071

Massachusetts 0.145 0.123 Washington 0.080 0.057

Michigan 0.115 0.085 West Virginia 0.086 0.065

Minnesota 0.092 0.083 Wisconsin 0.107 0.078

Mississippi 0.101 0.082 Wyoming 0.084 0.068

Missouri 0.086 0.062
8-15

DOE recognized that different kinds of businesses typically use electricity in different 

amounts at different times of the day, week, and year, and therefore face different effective 

prices. To make this adjustment, DOE used the 2003 CBECS data2 to identify the average prices 

paid by the four kinds of commercial businesses in this analysis compared with the average 

prices paid by all commercial customers. Manufacturing and federal facilities are assumed to pay 

the average industrial price. The ratio of prices paid by the four types of commercial buildings 

was used to increase or decrease the average commercial electricity prices as shown in Eq. 8.3. 

EPRCOM BLD I ST 2013 = EPRCOM ST 2013 x (EPR BLDG I US 2003/EPRCOM US 2003)

Eq. 8.3

Where: 

EPR BLD I ST2013 = average commercial sector electricity price paid by business type I 

in a specific state in 2013, 

EPRCOM ST 2013 = average commercial sector electricity price in a specific state in 

2013, 

EPRBLD I US 2003 = national average commercial sector electricity price paid by 

business type I in 2003 CBECS, and 

EPRCOM US 2003 = national average commercial sector electricity price in 2003 

CBECS.

The electricity prices provided in CBECS and their ratios to the average price for all 

commercial buildings are shown in Table 8.2.9.

Table 8.2.9 Derived National Average Electricity Price Paid by Business Type*

Business Type Office and 

Health Care Retail School Other

All 

Commercial 

Buildings

Electricity Price, 

2003¢/kWh 7.74 8.53 7.44 7.91 7.94

Ratio of Electricity 

Price to Average Price 

for All Commercial 

Buildings

0.975 1.074 0.937 1.0 -

*Source: CBECS 2003.

Once the building types have prices adjusted, the resulting estimated prices paid are the 

electricity prices used in the analysis.
8-16

8.2.2.3 Electricity Price Trends

To arrive at prices in future years, DOE multiplied the prices described in the preceding 

section by the appropriate projected annual average price changes in the Energy Information 

Administration’s (EIA’s) Annual Energy Outlook 2014 (AEO 2014).

8 Figure 8.2.1 shows the 

national average commercial and industrial electricity price trends. To estimate the trend after 

2040, DOE used the average rate of change during 2025–2040. See Figure 8.2.1.

Figure 8.2.1 Reference Case National Average Electricity Price Trends

DOE used AEO 2014 Reference Case scenarios for the nine census divisions. The 

reference case is a business-as-usual estimate, given known market, demographic, and 

technological trends. For each customer sampled, DOE applied a price that is derived from the 

AEO annual change projections for the census division in which the customer was located. DOE 

also included AEO 2014 High Growth and AEO 2014 Low Growth scenarios in the analysis, but 

DOE is only presenting results from the Reference Case scenario in this chapter. 

8.2.2.4 Repair and Maintenance Costs

The repair cost is the cost to the customer for replacing or repairing components in the 

BVM equipment that have failed. The maintenance cost is the cost to the customer of 

maintaining equipment operation. The maintenance cost is not the cost associated with the 
8-17

replacement or repair of components that have failed; rather, it is the cost associated with general 

maintenance (e.g., checking and maintaining refrigerant charge levels, cleaning heat exchanger 

coils, etc.). 

DOE based the annualized repair cost for baseline equipment on data in the Foster-Miller 

Inc. 2002 report,4 adjusted for fewer lighting repairs and replacements (due to longer lifetimes of 

LED fixtures as compared to fluorescents and thus less frequent lighting replacement events), 

and to 2013 prices. The result was two estimates for annualized repair cost: $139 for machines 

without LED lighting, and $119 for machines with LED lighting. DOE assumed that equipment 

class A already had LED lighting at all efficiency levels, but for other equipment classes, DOE 

assumed that LED lighting is introduced at a specific efficiency level corresponding to using 

LED lighting as a design option (discussed in chapter 5). For equipment class B, DOE assumed 

that LED lighting was used at EL8 and higher. For equipment class Combination, subcategory 

Combo-A, DOE assumed that LED lighting was used at EL5 and higher (for HFC refrigerant) or 

EL6 and higher (for CO2 refrigerant). For equipment class Combination, subcategory Combo-B, 

DOE assumed that LED lighting was used at EL7 and higher

DOE derived the annual cost of BVM maintenance as the sum of the annual preventative 

maintenance cost and the annualized refurbishment cost. The basic preventative maintenance

cost is estimated from RSMeans9 to be $34.25 per year (2013$). DOE assumed two 

refurbishment events at intervals of 4-5 years based on a 2006 ENERGY STAR report10 and a 

2010 ENERGY STAR webinar.12 The average annualized cost of refurbishment is $88 (2013$), 

based on events assumed to occur at the 5th and 9th year of life, with a cost of $550 for each 

refurbishment event based on estimates in chapter 8 of the 2009 BVM Final Rule.11 Because data 

were not available to indicate how maintenance costs vary with equipment efficiency, DOE used

an estimate that remains constant with equipment efficiency.

Total annualized repair and maintenance cost including component equipment 

replacement and repairs, two refurbishment events and preventative maintenance is $241 (with 

LED lighting) or $261 (without LED lighting). See Table 8.2.10.

Table 8.2.10 Annual Repair and Maintenance Costs

Annual Cost (2013$)

Item With LED Lighting Without LED Lighting

Annual repair 119 139

Annual 

maintenance

Preventative 

maintenance 34

Refurbishment 88

Total 241 261
8-18

8.2.2.5 Lifetime

DOE defined lifetime as the age when a BVM unit is retired from service. The 2009 

BVM Final Rule assumed that the average BVM lifetime is 10 years. 

As explained in section 8.2.2.4, DOE assumed an average of two repairs/refurbishments 

over the lifetime of the equipment, occurring approximately every 4.5 years, which would 

suggest an average lifetime of about 13.5 years. A 2010 ENERGY STAR webinar12 reported 

average lifetimes of 12 to 15 years. In addition, DOE received a comment from AMS in response 

to the Framework Document of this rulemaking which states that their machines are built to last 

15 years (AMS, No. 17 at p. 12). 

DOE found data on the distribution of equipment ages in the stock from the Northwest 

Power and Conservation Council 2007 Regional Technical Forum13 (RTF). This source also 

reported average lifetimes longer than 10 years. The data shown in Table 8.2.11 is taken from the 

RTF report. The population of ages shown is based on the stock of vending machines in the 

Pacific Northwest, including the states of Idaho, Washington, Oregon, and Montana. 

Table 8.2.11 Distribution of BVM Ages in Pacific Northwest in 2007

Category

Percentage of 

total stock

0-3 Year 11.0

4-7 years 32.0

8-11 years 48.0

12+ years 9.0

Total 100.0

Source: RTF report13

A Weibull function was fit to the data in Table 8.2.11. The Weibull distribution is a 

probability distribution commonly used to measure failure rates.b Its form is similar to an 

exponential distribution, which models a fixed failure rate, except that a Weibull distribution 

allows for a failure rate that changes over time. The cumulative Weibull distribution takes the 

form: 

P(x) = e−(

x−θ

α )β

for x > θ 

Eq. 8.4

and

P(x) = 1 for x ≤ θ

where:

 b For reference on the Weibull distribution, see sections 1.3.6.6.8 and 8.4.1.3 of the NIST/SEMATECH e-Handbook 

of Statistical Methods, <www.itl.nist.gov/div898/handbook/>
8-19

P(x) = probability that the appliance is still in use at age x,

x = appliance age,

α = scale parameter, which would be the decay length in an exponential distribution, 

β = shape parameter, which determines the way in which the failure rate changes 

through time, and

θ = delay parameter, which allows for a delay before any failures occur.

When β = 1, the failure rate is constant over time, giving the distribution the form of a

cumulative exponential distribution. In the case of appliances, β is commonly greater than 1, 

reflecting an increasing failure rate as appliances age. 

The parameters of the Weibull function were initially determined by plotting a graph 

showing the Weibull curve over the actual values from Table 8.2.11. After finding the 

parameters that appeared to have the best fit, θ was held constant while α and β were optimized 

using a least squares approximation. For this approximation, the difference between each of the 

values (listed in Table 8.2.11) and the corresponding values calculated by the Weibull function 

were squared and summed together. The optimized parameters gave the closest value to zero of 

this sum. After the initial optimization, θ was adjusted by 0.1 and the least squares 

approximation repeated to find optimum α and β values. If the final least squares sum of this 

optimization was smaller than the original. The process was repeated until the optimal θ was 

found. Using this method the optimal parameters were found to be α = 6.6, β = 16.5, and θ = 7.5, 

with a mean lifetime of 13.4 years.

On closer inspection of this initial best-estimate Weibull function, DOE found that it did 

not fit with other sources of information DOE had. In particular, the Weibull function decreased 

essentially to zero after 18 years, indicating a maximum lifetime of 18 years. However, the RTF 

report states that equipment aged up to 30 years are in the current stock. DOE therefore decided 

to adjust the Weibull distribution to incorporate this other piece of data. 

As explained in section 8.2.2.4, assuming an average of two repairs/refurbishments 

approximately every 4.5 years gives an average lifetime of about 13.5 years. Keeping this mean 

lifetime, DOE then adjusted the distribution to extend the maximum lifetime to 30 years. The 

resulting Weibull distribution is shown in Figure 8.2.2. 
8-20

Figure 8.2.2 Adjusted Survival Function

Table 8.2.12 shows the minimum, median, and average lifetime, as well as the Weibull 

distribution parameters of α and β. The same Weibull function was assumed to apply to all three 

equipment classes. Although ENERGY STAR12 suggests that vending machines with more 

efficient components will have a longer useful life, they did not present any data to support this 

comment. DOE could not find detailed information to confirm this comment; therefore DOE 

assumes that the lifetime of a refrigerated beverage vending machine is the same at different 

efficiency levels.

Table 8.2.12 Lifetime Parameters for Refrigerated Beverage Vending Machines

Equipment Class

Weibull parameters Average 

age

years θ (delay) α (scale) β (shape)

Refrigerated Beverage Vending Machines 8.0 6.6 3.0 13.4

8.2.2.6 Discount Rates 

The discount rate is the rate at which future expenditures are discounted to establish their 

present value. DOE derived the discount rates for the LCC analysis by estimating the cost of 

capital for companies that purchase beverage vending machine equipment. The cost of capital is 

commonly used to estimate the present value of cash flows to be derived from a typical company 

project or investment. Most companies use both debt and equity capital to fund investments, so 

their cost of capital is the weighted average of the cost to the firm of equity and debt financing.14

DOE defines the discount rate as the weighted average cost of capital (WACC), calculated as the 

weighted average of the cost of equity financing and the cost of debt financing, as estimated 

from financial data for publicly traded firms in the sectors that purchase beverage vending 

machines.
8-21

Damodaran Online is a widely used source of information about company debt and 

equity financing for most types of firms, and was the primary source of data for this analysis.15

Companies included in the Damondaran Online database were assigned to the aggregate 

categories listed below:

• Manufacturing

• Office

• Retail

• Schools

• Military

• Other (including Entertainment, Transportation, Warehousing, Wholesale, and Lodging)

DOE estimated the cost of equity using the capital asset pricing model (CAPM).16 The 

CAPM assumes that the cost of equity (ke) for a particular company is proportional to the 

systematic risk faced by that company, where high risk is associated with a high cost of equity 

and low risk is associated with a low cost of equity. The systematic risk facing a firm is 

determined by several variables: the risk coefficient of the firm (β), the expected return on riskfree assets (Rf), and the equity risk premium (ERP). The risk coefficient of the firm indicates the 

risk associated with that firm relative to the price variability in the stock market. The expected 

return on risk-free assets is defined by the yield on long-term government bonds. The ERP

represents the difference between the expected stock market return and the risk-free rate. The 

cost of equity financing is estimated using the following equation, where the variables are 

defined as above:

k R ( ERP) e = f + β ×

Eq. 8.5

Where:

ke = cost of equity,

Rf = expected return on risk-free assets,

β = risk coefficient of the firm, and

ERP = equity risk premium.

Several parameters of the cost of capital equations can vary substantially over time, and 

therefore the estimates can vary with the time period over which data is selected and the 

technical details of the data averaging method. For guidance on the time period for selecting and 

averaging data for key parameters and the averaging method, DOE used Federal Reserve 

methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve 

uses a forty-year period for calculating discount rate averages, utilizes the gross domestic 

equipment price deflator for estimating inflation, and considers the best method for determining 

the risk free rate as one where “the time horizon of the investor is matched with the term of the 

risk-free security.”17

By taking a 40-year geometric average of Federal Reserve data on annual nominal returns 

for 10-year Treasury bills, DOE found for this analysis the following risk free rates for 2011-
8-22

2013 (Table 8.2.13).5 DOE also estimated the ERP by calculating the difference between risk 

free rate and stock market return for the same time period.18

Table 8.2.13 Risk free rate and equity risk premium, 2011-2013

Year Risk free rate (%) ERP (%)

2011 6.61 2.94

2012 6.41 3.99

2013 6.24 5.30

The cost of debt financing (kd) is the interest rate paid on money borrowed by a 

company. The cost of debt is estimated by adding a risk adjustment factor (Ra) to the risk-free 

rate. This risk adjustment factor depends on the variability of stock returns represented by 

standard deviations in stock prices. So for firm i, the cost of debt financing is:

kdi = Rf + Rai

Eq. 8.6

Where:

kd = cost of debt financing for firm, i,

Rf = expected return on risk-free assets, and

Rai = risk adjustment factor to risk-free rate for firm, i. 

DOE estimates the WACC using the following equation:

e e d wd WACC = k ×w + k ×

Where:

WACC =weighted average cost of capital,

we = proportion of equity financing, and

wd = proportion of debt financing.

By adjusting for the influence of inflation, DOE estimates the real weighted average cost 

of capital, or discount rate, for each company. DOE then aggregates the company real weighted 

average costs of capital to estimate the discount rate for each of the eight broader ownership 

types in the commercial air conditioner analysis. An overall average is estimated by weighting 

each ownership type’s discount rate by its estimated share of the commercial air conditioner 

market. These values are presented in Table 8.2.14. While WACC values for any category may 

trend higher or lower over substantial periods of time, these values represent a private sector cost 

of capital that is averaged over major business cycles.
8-23

Table 8.2.14 Weighted Average Cost of Capital for Sectors that Purchase Refrigerated 

Beverage Vending Machines

Sector Discount Rate

(%)

Standard Deviation 

(%)

Market Share 

(%)

Manufacturing 5.18 1.80 36.20

Office 4.63 0.53 25.70

Retail 4.65 2.05 8.70

Schools 3.51 1.20 14.70

Military 3.55 1.43 3.30

Other 5.06 2.15 11.40

Average Discount Rate: 4.68

Source: Damodaran Online Data Page: Costs of Capital by Industry Sector, 2011,2012,2013.

Table 8.2.14 summarized the WACC for sectors that purchase refrigerated beverage 

vending machines. The overall weighted average is 4.68 percent with the largest market shares

in the manufacturing and office sectors. In the 2009 BVM Final Rule, DOE included bottlers as 

one of the sectors that purchase refrigerated beverage vending machines when estimating the 

discount rate; however bottlers usually lease the machines to vending machine operators or site 

owners rather than being the end-user. In the case of leased machines, the discount rate of the 

machine end user (lessee) is utilized rather than the lessor. Although the lessor initially bears the

cost of purchasing more energy efficient machines, it is assumed that this cost increase will be 

passed through to the lessee through renegotiation of lease terms within a fairly short time frame.

Hence, DOE removed bottlers from the list of sectors being considered for estimating discount 

rate in this preliminary analysis. 

8.2.2.7 Compliance Date of Standard

Pursuant to 42 U.S.C. 6295(l), the compliance date of any new or amended energy 

efficiency standard for refrigerated beverage vending machines would be three years after the 

final rule is published. Consistent with its published regulatory agenda, DOE assumed that the 

final rule would be issued in 2016 and that, therefore, the updated standards for equipment 

classes A, B and Combination would require compliance beginning in 2019. DOE calculated the 

LCC and PBP as if all customers would purchase new equipment in 2019.

8.2.2.8 Base Case Distribution of Efficiency Levels

DOE analyzed the CCMSc and ENERGY STARd unique model data for equipment 

classes A and B with respect to efficiency relative to the current DOE standard. Models present 

in both data sets were removed from the CCMS data so that the CCMS data represent only those 

models not qualifying for ENERGY STAR. DOE found that the efficiency level of equipment 

 c Available for download at: http://www.regulations.doe.gov/certification-data/CCMS-41431629825.html. d Available for download at: http://www.energystar.gov/certified-products/detail/vending_machines. 
8-24

class A varied between 79 and 97 percent of the standard, while that of equipment class B varied 

between 44 and 100 percent of the standard. See Figure 8.2.3 and Figure 8.2.4.

Figure 8.2.3 Energy Efficiency (Daily Energy Consumption Relative to DOE Standard) 

for Equipment Class A Models

Figure 8.2.4 Energy Efficiency (Daily Energy Consumption Relative to DOE Standard) 

for Equipment Class B Models

From these data, DOE developed base case efficiency distributions by combining the two 

data sources and averaging across refrigerated volumes, making the assumption that each unique 

model represented an equal share of shipments. The ENERGY STAR data was weighted more 

heavily than the CCMS data because DOE estimates that approximately 93 percent of 
8-25

refrigerated beverage vending machine sales conform to ENERGY STAR standards. This 

assumption was based on the observation that the two major bottling companies responsible for 

90 percent of BVM shipments purchase almost exclusively ENERGY STAR-qualified 

equipment; for the remaining 10 percent of shipments, DOE assumed that 30 percent of 

equipment would qualify for ENERGY STAR, consistent with ENERGY STAR official targets.

The following tables show the base case distribution of efficiency levels for each 

equipment class. These tables show the percentage of each equipment class’ shipments that are 

made up of each EL. 

Table 8.2.15 Base Case Efficiency Level Distributions for Class A Refrigerated Beverage 

Vending Machines

Efficiency level % of baseline energy use Market share (%)

EL0 (Baseline) 100 4.67

EL1 (ENERGY STAR) 95 45.26

EL2 90 21.46

EL3 85 21.46

EL4 80 7.15

EL5 75 0.00

EL6 70 0.00

EL7 65 0.00

EL8 60 0.00

EL9 57 (HFC) / 59 (CO2) 0.00
8-26

Table 8.2.16 Base Case Efficiency Level Distributions for Class B Refrigerated Beverage 

Vending Machines

Efficiency level % of baseline energy use Market share (%)

EL0 (Baseline) 100 5.83

EL1 95 0.00

EL2 (ENERGY STAR) 90 7.75

EL3 85 28.29

EL4 80 7.75

EL5 75 11.63

EL6 70 3.88

EL7 65 15.50

EL8 60 11.63

EL9 55 0.00

EL10 50 3.88 (HFC) / 7.75 (CO2)

EL11 (HFC only) 49 3.88

For combination refrigerated beverage vending machines, no efficiency distribution data 

was available. DOE assumed that 100 percent of shipments occurred at the baseline efficiency 

level (EL0). See Table 8.2.17.
8-27

Table 8.2.17 Base Case Efficiency Level Distributions for Combination Refrigerated 

Beverage Vending Machines

Combo-A Combo-B

Efficiency 

level

% of baseline 

energy use

Market share 

(%)

% of baseline 

energy use

Market share 

(%)

EL0

(Baseline) 100 100.0 100 100.0

EL1 90 0.0 90 0.0

EL2 80 0.0 80 0.0

EL3 70 0.0 70 0.0

EL4 60 0.0 60 0.0

EL5 55 0.0 55 0.0

EL6 50 0.0 50 0.0

EL7 45 0.0 45 0.0

EL8 40 0.0 41 0.0

EL9 35 0.0

EL10 30 0.0

EL11 29 0.0

8.3 PAYBACK PERIOD INPUTS

The payback period (PBP) is the amount of time it takes the customer to recover the 

assumed higher purchase cost of more energy-efficient equipment as a result of lower operating 

costs. Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in first year annual operating expenditures

(using first-year energy costs and the annualized values for repair and maintenance discussed in 

section 8.2.2.4). 

The equation for PBP is:

PBP =∆IC/∆OC

Eq. 8.7

Where:

PBP = payback period in years,

∆ IC = difference in the total installed cost between the more efficient standard-level 

equipment (efficiency levels 2, 3, etc.) and the baseline efficiency equipment, and

∆OC = difference in first year annual operating costs.
8-28

Payback periods are expressed in years. Payback periods can be greater than the life of 

the equipment if the increased total installed cost of the more efficient equipment is not 

recovered fast enough in reduced operating costs.

The data inputs to PBP are the average total installed cost of the equipment to the 

customer for each efficiency level and the average annual (first year) operating costs for each 

efficiency level. The inputs to the total installed cost are the equipment price and the installation 

cost. The inputs to the operating costs are the annual energy cost and the annual maintenance 

cost. The PBP uses the same inputs as the LCC analysis, except that electricity price trends are 

not required. Since the PBP is a “simple” payback, the required electricity cost is only for the 

year in which a new or amended efficiency standard is to take effect—in this case, 2019.

DOE also calculates a rebuttable PBP, which is the time it takes the customer to recover 

the assumed higher purchase cost of more energy-efficient equipment as a result of lower energy 

costs. Numerically, the rebuttable PBP is the ratio of the increase in purchase cost (i.e., from a 

less efficient design to a more efficient design) to the decrease in annual energy expenditures, 

which is the decrease in first year annual energy cost as calculated from the DOE test procedure. 

The calculation excludes repair costs and maintenance costs. 

8.4 RESULTS OF LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

This section presents the results of the LCC and PBP analyses. As discussed in section

8.1, LCC calculations were performed for each of the 10,000 customers in the sample of 

customers established for each product class. Each LCC calculation also sampled from the 

probability distributions that DOE developed to characterize many of the inputs to the analysis. 

For the set of sample customers in each product class, DOE calculated the average 

installed cost, first year’s operating cost, lifetime operating cost, and LCC for each EL. These 

averages are calculated assuming that all of the sample customers purchase a product at each EL. 

This allows the installation costs, operating costs, and LCCs for each EL to be compared under 

the same conditions, across a variety of sample customers. DOE used these average values to 

calculate the PBP for each EL, relative to the baseline EL. 

DOE also calculated LCC savings for each EL. DOE used a “roll-up” approach to 

calculate the LCC savings relative to the LCC that each sample customer would experience with 

the base-case product that DOE assigned the customer. DOE assumed that all customers for 

whom DOE assigned base-case equipment that was less efficient than the EL being analyzed, 

would purchase equipment at the EL being analyzed. DOE assumed that all customers for whom 

DOE assigned base-case equipment that was as efficient as, or more efficient than, the EL being 

analyzed, would purchase equipment at the assigned base-case EL. Therefore, DOE assigned an 

LCC savings value of zero to all customers for whom DOE assigned base-case equipment that 

was as efficient as, or more efficient than, the EL being analyzed. For this reason, the average 

LCC savings are not equal to the difference between the LCC of a specific standard level and the 

LCC of the baseline product. For each efficiency level, DOE calculated the share of customers 

receiving a net LCC cost. DOE considered a customer to receive a net LCC cost if the customer 

had negative LCC savings at the EL being analyzed.
8-29

8.4.1 Summary of LCC and PBP Results

Table 8.4.1 through Table 8.4.16 show the LCC and PBP results by EL for all equipment 

classes and subcategories of refrigerated beverage vending machines.
8-30

Table 8.4.1 Average LCC and PBP Results for Class A HFC

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,387 386 4,921 7,309 --- 13.4

1 95 2,392 379 4,828 7,220 0.7 13.4

2 90 2,398 371 4,734 7,132 0.7 13.4

3 85 2,410 364 4,641 7,050 1.0 13.4

4 80 2,447 357 4,547 6,994 2.1 13.4

5 75 2,499 350 4,454 6,953 3.1 13.4

6 70 2,647 342 4,360 7,007 6.0 13.4

7 65 2,894 335 4,266 7,160 10.0 13.4

8 60 3,141 328 4,173 7,313 13.0 13.4

9 57 3,289 323 4,117 7,405 14.5 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.

Table 8.4.2 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Class A HFC

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 95 0 4

2 90 0 48

3 85 0 107

4 80 0 159

5 75 1 200

6 70 18 146

7 65 60 -7

8 60 80 -160

9 57 86 -252

* The calculation includes customers with zero LCC savings (no impact).
8-31

Table 8.4.3 Average LCC and PBP Results for Class A CO2

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,464 386 4,921 7,386 --- 13.4

1 95 2,469 379 4,828 7,297 0.7 13.4

2 90 2,475 371 4,734 7,209 0.8 13.4

3 85 2,489 364 4,641 7,130 1.2 13.4

4 80 2,536 357 4,547 7,084 2.5 13.4

5 75 2,590 350 4,454 7,043 3.5 13.4

6 70 2,809 342 4,360 7,169 7.9 13.4

7 65 3,047 335 4,266 7,313 11.5 13.4

8 60 3,285 328 4,173 7,458 14.2 13.4

9 59 3,333 326 4,154 7,487 14.6 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.

Table 8.4.4 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Class A CO2

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 95 0 4

2 90 0 48

3 85 0 104

4 80 1 148

5 75 2 188

6 70 43 62

7 65 73 -82

8 60 85 -227

9 59 87 -256

* The calculation includes customers with zero LCC savings (no impact).
8-32

Table 8.4.5 Average LCC and PBP Results for Class B HFC

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,041 424 5,410 7,451 --- 13.4

1 95 2,041 416 5,305 7,346 0.1 13.4

2 90 2,042 408 5,199 7,241 0.1 13.4

3 85 2,044 400 5,094 7,138 0.1 13.4

4 80 2,046 391 4,989 7,035 0.2 13.4

5 75 2,055 383 4,883 6,938 0.3 13.4

6 70 2,080 375 4,778 6,858 0.8 13.4

7 65 2,141 367 4,673 6,814 1.8 13.4

8 60 2,219 339 4,314 6,533 2.1 13.4

9 55 2,573 331 4,209 6,782 5.7 13.4

10 50 2,971 322 4,104 7,074 9.2 13.4

11 49 3,050 321 4,082 7,133 9.8 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.
8-33

Table 8.4.6 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Class B HFC

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 95 0 6

2 90 0 12

3 85 0 26

4 80 0 69

5 75 0 118

6 70 0 167

7 65 0 196

8 60 0 423

9 55 23 192

10 50 62 -78

11 49 70 -135

* The calculation includes customers with zero LCC savings (no impact).
8-34

Table 8.4.7 Average LCC and PBP Results for Class B CO2

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,117 424 5,410 7,527 --- 13.4

1 95 2,117 416 5,305 7,422 0.1 13.4

2 90 2,118 408 5,199 7,317 0.1 13.4

3 85 2,120 400 5,094 7,214 0.1 13.4

4 80 2,122 391 4,989 7,111 0.2 13.4

5 75 2,131 383 4,883 7,014 0.4 13.4

6 70 2,159 375 4,778 6,937 0.9 13.4

7 65 2,231 367 4,673 6,904 2.0 13.4

8 60 2,389 339 4,314 6,704 3.2 13.4

9 55 2,752 331 4,209 6,961 6.8 13.4

10 50 3,129 322 4,104 7,232 10.0 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.
8-35

Table 8.4.8 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Class B CO2

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 95 0 5

2 90 0 11

3 85 0 24

4 80 0 67

5 75 0 115

6 70 0 162

7 65 1 184

8 60 0 345

9 55 38 107

10 50 68 -143

* The calculation includes customers with zero LCC savings (no impact).
8-36

Table 8.4.9 Average LCC and PBP Results for Combo-A HFC

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,230 472 6,030 8,260 --- 13.4

1 90 2,235 451 5,757 7,992 0.2 13.4

2 80 2,242 430 5,485 7,727 0.3 13.4

3 70 2,259 409 5,212 7,471 0.5 13.4

4 60 2,280 388 4,939 7,219 0.6 13.4

5 55 2,290 357 4,550 6,840 0.5 13.4

6 50 2,301 347 4,414 6,715 0.6 13.4

7 45 2,313 336 4,277 6,590 0.6 13.4

8 40 2,342 325 4,141 6,483 0.8 13.4

9 35 2,445 315 4,005 6,450 1.4 13.4

10 30 2,984 304 3,868 6,852 4.5 13.4

11 29 3,096 302 3,841 6,937 5.1 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.
8-37

Table 8.4.10 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Combo-A HFC

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 90 0 268

2 80 0 533

3 70 0 789

4 60 0 1,041

5 55 0 1,420

6 50 0 1,545

7 45 0 1,670

8 40 0 1,777

9 35 0 1,811

10 30 0 1,408

11 29 0 1,323

* The calculation includes customers with zero LCC savings (no impact).
8-38

Table 8.4.11 Average LCC and PBP Results for Combo-A CO2

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 2,288 472 6,030 8,318 --- 13.4

1 90 2,293 451 5,757 8,051 0.2 13.4

2 80 2,302 430 5,485 7,786 0.3 13.4

3 70 2,321 409 5,212 7,533 0.5 13.4

4 60 2,342 388 4,939 7,281 0.6 13.4

5 55 2,353 377 4,803 7,156 0.7 13.4

6 50 2,364 347 4,414 6,778 0.6 13.4

7 45 2,378 336 4,277 6,655 0.7 13.4

8 40 2,407 325 4,141 6,548 0.8 13.4

9 35 2,519 315 4,005 6,524 1.5 13.4

10 30 3,041 304 3,868 6,910 4.5 13.4

11 29 3,150 302 3,841 6,991 5.1 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.
8-39

Table 8.4.12 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Combo-A CO2

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 90 0 268

2 80 0 532

3 70 0 785

4 60 0 1,037

5 55 0 1,162

6 50 0 1,540

7 45 0 1,663

8 40 0 1,770

9 35 0 1,794

10 30 0 1,409

11 29 0 1,327

* The calculation includes customers with zero LCC savings (no impact).
8-40

Table 8.4.13 Average LCC and PBP Results for Combo-B HFC

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 1,854 424 5,411 7,265 --- 13.4

1 90 1,855 408 5,200 7,055 0.1 13.4

2 80 1,858 392 4,990 6,848 0.1 13.4

3 70 1,868 375 4,779 6,646 0.3 13.4

4 60 1,891 359 4,568 6,459 0.6 13.4

5 55 1,910 351 4,463 6,373 0.8 13.4

6 50 1,973 343 4,357 6,330 1.5 13.4

7 45 2,088 314 3,999 6,087 2.1 13.4

8 41 2,543 308 3,914 6,457 5.9 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.

Table 8.4.14 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Combo-B HFC

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 90 0 210

2 80 0 417

3 70 0 618

4 60 0 806

5 55 0 892

6 50 0 935

7 45 0 1,178

8 41 1 807

* The calculation includes customers with zero LCC savings (no impact).
8-41

Table 8.4.15 Average LCC and PBP Results for Combo-B CO2

EL

% of 

baseline 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

(years) Installed Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 100 1,911 424 5,411 7,322 --- 13.4

1 90 1,912 408 5,200 7,112 0.1 13.4

2 80 1,915 392 4,990 6,905 0.1 13.4

3 70 1,926 375 4,779 6,704 0.3 13.4

4 60 1,949 359 4,568 6,517 0.6 13.4

5 55 1,971 351 4,463 6,434 0.8 13.4

6 50 2,032 343 4,357 6,389 1.5 13.4

7 45 2,135 314 3,999 6,134 2.0 13.4

8 41 2,561 308 3,914 6,475 5.6 13.4

Note: The results for each EL are calculated assuming that all customers use products with that 

efficiency level. The PBP is measured relative to the baseline product.

Table 8.4.16 Average LCC Savings Relative to the Base Case Efficiency Distribution for

Combo-B CO2

EL

% of 

baseline 

energy 

use

% of Customers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings*

(2013$)

0 100 0 0

1 90 0 210

2 80 0 417

3 70 0 618

4 60 0 805

5 55 0 888

6 50 0 933

7 45 0 1,188

8 41 0 847

* The calculation includes customers with zero LCC savings (no impact).
8-42

8.4.2 Distribution of LCC Impacts

Figure 8.4.1 through Figure 8.4.8 show the distribution of LCC impacts for each 

equipment class subcategory. The distribution figures are presented as frequency charts that 

show the distribution of LCC impacts with their corresponding probability of occurrence for one 

particular EL for each equipment class (for example, EL5 for Class A-HFC in Figure 8.4.1).

DOE generated the figures for the distributions from a Monte Carlo simulation run based on 

10,000 samples. DOE can generate frequency charts similar to those shown for every EL.

Figure 8.4.1 LCC Savings Distribution for EL 5 Class A-HFC Refrigerated Beverage 

Vending Machines
8-43

Figure 8.4.2 LCC Savings Distribution for EL 5 Class A CO2 Refrigerated Beverage Vending 

Machines
8-44

Figure 8.4.3 LCC Savings Distribution for EL 8 Class B-HFC Refrigerated Beverage 

Vending Machines
8-45

Figure 8.4.4 LCC Savings Distribution for EL 8 Class B-CO2 Refrigerated Beverage 

Vending Machines
8-46

Figure 8.4.5 LCC Savings Distribution for EL 9 Combo A-HFC Refrigerated Beverage 

Vending Machines:
8-47

Figure 8.4.6 LCC Savings Distribution for EL 9 Combo A-CO2 Refrigerated Beverage 

Vending Machines
8-48

Figure 8.4.7 LCC Savings Distribution for EL 7 Combo B-HFC Refrigerated Beverage 

Vending Machines
8-49

Figure 8.4.8 LCC Savings Distribution for EL 7 Combo-B CO2 Refrigerated Beverage 

Vending Machines
8-50

8.4.3 Range of LCC Savings

Figure 8.4.9 through Figure 8.4.16 show the range of LCC savings for all of the ELs 

considered for each equipment class subcategory. For each EL, the top and the bottom of the box 

indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the 

median; 50 percent of customers have LCC savings above this value. The horizontal lines above 

and below each box indicate the 95th and 5th percentiles, respectively. The small box shows the 

average LCC savings for each standard level.

Figure 8.4.9 Range of LCC Savings for Class A-HFC Refrigerated Beverage Vending 

Machines

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-51

Figure 8.4.10 Range of LCC savings for Class A CO2 Refrigerated Beverage Vending 

Machines

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-52

Figure 8.4.11 Range of LCC Savings for Class B HFC Refrigerated Beverage Vending 

Machines

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-53

Figure 8.4.12 Range of LCC Savings for Class B CO2 Refrigerated Beverage Vending 

Machines 

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-54

Figure 8.4.13 Range of LCC Savings for Combo A HFC Refrigerated Beverage Vending 

Machines 

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-55

Figure 8.4.14 Range of LCC for Combo A CO2 Refrigerated Beverage Vending Machines

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8 9

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-56

Figure 8.4.15 Range of LCC Savings for Combo B HFC Refrigerated Beverage Vending 

Machines 

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-57

Figure 8.4.16 Range of LCC Savings for Combo B CO2 Refrigerated Beverage Vending 

Machines

-600

-400

-200

0

200

400

600

1 2 3 4 5 6 7 8

Average LCC Savings ($)

Efficiency Level

Average LCC Savings

A-CO2

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-58

8.5 REBUTTABLE PAYBACK PERIOD

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption 

that an energy efficiency standard is economically justified if the additional product costs 

attributed to the standard are less than three times the value of the first-year energy cost savings. 

(42 U.S.C. §6295 (o)(2)(B)(iii))

The basic equation for rebuttable PBP is the same as that shown for the PBP in section

8.3. Unlike the analyses described in section 8.3, however, the rebuttable PBP is not based on the 

use of customer samples and probability distributions, and it is based not on distributions but on 

discrete single-point values. For example, whereas DOE uses a probability distribution of energy 

prices in the distributional PBP analysis, it uses only the national average energy price to 

determine the rebuttable PBP. In addition, the rebuttable PBP relies on the DOE test procedure to 

determine a product’s annual energy consumption. The rebuttable PBP also excludes any 

maintenance and repair costs. 

DOE based the annual energy consumption values that it used to determine the rebuttable 

PBP for refrigerated beverage vending machines on average energy consumption presented in 

chapter 7.

8.5.1 Inputs

Inputs for the rebuttable PBP differ from the distribution PBP in that the calculation uses 

discrete values, rather than distributions. The following summarizes the single-point values that 

DOE used in determining the rebuttable PBP: 

• Manufacturing costs, markups, sales taxes, and installation costs were all based on the 

single-point values used in the distributional LCC and PBP analysis.

• Energy prices were based on national average values for the year that new standards will 

take effect.

• An average discount rate or lifetime is not required in the rebuttable PBP calculation.

• The compliance date of the standard is assumed to be 2019. 

8.5.2 Results

DOE calculated rebuttable PBPs for each standard level relative to the baseline EL. Table 

8.5.1 and Table 8.5.2 present the rebuttable PBPs for each product class of refrigerated beverage 

vending machines.
8-59

Table 8.5.1 Rebuttable Payback Periods for Refrigerated Beverage Vending Machines 

with HFC refrigerant

EL

Rebuttable PBP (years)

Class A

HFC

Class B

HFC

Combo A

HFC

Combo B

HFC

0 0 0 0 0

1 0.7 0.1 0.2 0.1

2 0.8 0.1 0.3 0.1

3 1.1 0.1 0.5 0.3

4 2.1 0.2 0.6 0.6

5 3.2 0.4 0.7 0.8

6 6.2 0.8 0.7 1.5

7 10.4 1.8 0.8 2.7

8 13.5 2.8 0.9 7.5

9 15.0 7.5 1.6

10 6.8 5.4

11 11.6 6.1
8-60

Table 8.5.2 Rebuttable Payback Periods for Refrigerated Beverage Vending Machines 

with CO2 refrigerant

EL

Rebuttable PBP (years)

Class 

ACO2

Class 

BCO2

Combo A

CO2

Combo B

CO2

0 0.0 0.0 0.0 0.0

1 0.7 0.1 0.2 0.1

2 0.8 0.1 0.3 0.1

3 1.2 0.1 0.5 0.3

4 2.6 0.2 0.7 0.6

5 3.6 0.4 0.7 0.9

6 8.2 0.9 0.8 1.6

7 12.0 2.1 0.8 2.6

8 14.7 4.3 1.0 7.1

9 15.2 9.0 1.8

10 12.9 5.4

11 6.0
8-61

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