11-i

CHAPTER 11. LIFE-CYCLE COST SUBGROUP ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION ......................................................................................................... 11-1

11.2 ANALYSIS APPROACH FOR MUNICIPAL UTILITIES AND RURAL 

ELECTRIC COOPERATIVES ..................................................................................... 11-1

11.3 ANALYSIS APPROACH FOR PURCHASERS OF VAULT INTALLED 

TRANSFORMERS ........................................................................................................ 11-1

11.4 LIFE-CYCLE COST SUBGROUP RESULTS ............................................................. 11-2

11.4.1 Vault Installation Results ............................................................................................... 11-2

11.5 PAYBACK PERIOD RESULTS ................................................................................... 11-3

11.5.1 Vault Installation Results ............................................................................................... 11-4

LIST OF TABLES

Table 11.4.1 Design Line 4, Medium Vault Modification Costs Life-Cycle Cost Results .... 11-2

Table 11.4.2 Design Line 4, High Vault Modification Costs Life-Cycle Cost Results .......... 11-2

Table 11.4.3 Design Line 5, Medium Vault Modification Costs Life-Cycle Cost Results .... 11-3

Table 11.4.4 Design Line 5, High Vault Modification Costs Life-Cycle Cost Results .......... 11-3

Table 11.5.1 Design Line 4, Medium Vault Modification Costs Payback-Period Results..... 11-4

Table 11.5.2 Design Line 4, High Vault Modification Costs Payback-Period Result ............ 11-4

Table 11.5.3 Design Line 5, Medium Vault Modification Costs Payback-Period Results..... 11-5

Table 11.5.4 Design Line 5, High Vault Modification Costs Payback-Period Results .......... 11-5

LIST OF FIGURE

No table of figures entries found.
11-1

CHAPTER 11. LIFE-CYCLE COST SUBGROUP ANALYSIS

11.1 INTRODUCTION

The life-cycle cost (LCC) subgroup analysis evaluates impacts on any identifiable groups 

of customers who may, because of their particular socio-economic characteristics, be 

disproportionately affected by any national energy-efficiency standard level. This chapter of the 

TSD describes how the Department performed its life-cycle cost consumer subgroup analysis for 

the distribution transformer energy-efficiency standard rulemaking. 

 The Department conducted this evaluation for the Notice of Proposed Rulemaking 

(NOPR), in part, by analyzing the LCC and payback periods for those customers that fall into 

identified subgroups. For this rulemaking, the Department defined consumer subgroups in terms 

of utilities that may be disproportionally affected by some installation costs. The specific 

consumer subgroup that the Department chose to analyze is utilities that install distribution 

transformers in vaults or other space-constrained sites. 

11.2 ANALYSIS APPROACH FOR MUNICIPAL UTILITIES AND RURAL 

ELECTRIC COOPERATIVES 

As part of the regular life-cycle cost analysis, the Department built spreadsheet analysis 

tools that provide a consumer economic analysis for a nationally representative sample of 

utilities. The Department developed an approach to perform the consumer subgroup for utilities 

that serve low populations density customer bases, which the majority of these utilities are either 

municipal utilities or rural electric cooperatives. These calculations are part its normal life-cycle 

costs and payback period analysis and are described in chapter 8, section 8.3.4.1 of this TSD. 

11.3 ANALYSIS APPROACH FOR PURCHASERS OF VAULT INTALLED 

TRANSFORMERS

DOE calculated the volumes of those transformers selected by the LCC spreadsheets, as a 

function of EL, for the two design lines (DLs) for which transformer vault constraints are most 

likely to be an issue: DL4 and DL5. DOE examined the impacts of increasing transformer 

volume with regard to costs for vault enlargement. DOE assumed that if the volume of a 

transformer in a standard case is larger than the volume of the unit in the base case, a vault 

modification would be warranted. 

To estimate the cost of vault modification, DOE compared the difference in volume 

between the unit selected in the base case against the unit selected in the standard case, and 

applied fixed and variable costs. In the 2007 notice of data availability1

, DOE estimated the fixed 

cost as $1,740 per transformer and the variable cost as $26 per transformer cubic foot, in this 

TSD, these costs were adjusted to 2011$ using the chained price index for non-residential 
11-2

construction for power and communications to $1886 per transformer and $28 per transformer 

cubic foot. DOE considered instances where it may be extremely difficult to modify existing 

vaults by adding a Very High Vault Replacement Cost option to the LCC spreadsheet. Under this 

option, the fixed cost is $30,000 and the variable cost is $733 per transformer cubic foot. 

11.4 LIFE-CYCLE COST SUBGROUP RESULTS

 This section presents the results of the LCC subgroups analysis for utilities that 

experience vault replacement costs. The section presents the results for each design line in the 

form of tables that report the efficiency level, the mean LCC savings, and the fraction of 

transformers that have net savings, no impact, and net LCC cost (i.e., negative savings). 

11.4.1 Vault Installation Results

 The LCC results for the vault installation subgroup are a reflection of the increased costs 

associated with installing a transformer that meets each EL that is the same, or of less volume 

then the transformer selected in the basecase. Vault enlargement generally decreases the 

potential savings due to increased first cost for the new transformer. 

Table 11.4.1 Design Line 4, Medium Vault Modification Costs Life-Cycle Cost Results

Efficiency Level

1 2 3 4 5 6 7

Efficiency (%) 99.16 99.22 99.25 99.31 99.42 99.50 99.60

Transformers with Net LCC Cost (%) 50.02 67.29 67.29 67.29 64.79 58.42 70.99

Transformers with No Change in LCC (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Transformers with Net LCC Benefit (%) 49.98 32.71 32.71 32.71 35.21 41.58 29.01

Mean LCC Savings ($) -1236 -758.8 -758.8 -758.8 -665.7 -377 -1739

Median LCC Savings ($) -5 -820.3 -820.3 -820.3 -727.8 -600 -2148

Table 11.4.2 Design Line 4, High Vault Modification Costs Life-Cycle Cost Results

 

Efficiency Level

1 2 3 4 5 6 7

Efficiency (%) 99.16 99.22 99.25 99.31 99.42 99.50 99.60

Transformers with Net LCC Cost (%) 44.47 84.69 84.69 84.69 88.59 99.10 96.52

Transformers with No Change in LCC (%) 0.62 0.62 0.62 0.62 0.18 0.00 0.00

Transformers with Net LCC Benefit (%) 54.91 14.69 14.69 14.69 11.23 0.90 3.48

Mean LCC Savings ($) -30449 -74348 -74348 -74348 -75727 -83140 -79946

Median LCC Savings ($) 360 -89986 -89986 -89986 -91427 -98627 -95574
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Table 11.4.3 Design Line 5, Medium Vault Modification Costs Life-Cycle Cost Results

 

Efficiency Level

1 2 3 4 5 6 

Efficiency (%) 99.48 99.51 99.54 99.57 99.61 99.69

Transformers with Net LCC Cost (%) 37.65 75.22 78.01 72.27 65.15 41.91

Transformers with No Change in LCC (%) 0.39 0.00 0.00 0.00 0.00 0.00

Transformers with Net LCC Benefit (%) 61.96 24.78 21.99 27.73 34.85 58.09

Mean LCC Savings ($) 2387 -6183 -6156 -4421 -2905 4619

Median LCC Savings ($) 3185 -6782 -6680 -5121 -3734 3015

Table 11.4.4 Design Line 5, High Vault Modification Costs Life-Cycle Cost Results

Efficiency Level

1 2 3 4 5 6

Efficiency (%) 99.48 99.51 99.54 99.57 99.61 99.69

Transformers with Net LCC Cost (%) 38.81 91.01 100.00 100.00 100.00 41.91

Transformers with No Change in LCC (%) 0.39 0.00 0.00 0.00 0.00 0.00

Transformers with Net LCC Benefit (%) 60.80 8.99 0.00 0.00 0.00 58.09

Mean LCC Savings ($) -13,691 -169,990 -191,791 -190,474 -190,494 4,619

Median LCC Savings ($) 3,006 -192,129 -192,312 -191,084 -191,246 3,015

11.5 PAYBACK PERIOD RESULTS

 As described in more detail in section 8.6, a common technique for evaluating investment 

decisions is to perform a payback period (PBP) analysis. A more energy-efficient device will 

usually cost more to purchase than a device of standard energy efficiency, while the more 

efficient device will usually cost less to operate. Operating expenses decrease due to a reduction 

in energy use. The payback period is the time (usually expressed in years) it takes to recover the 

additional first cost of the efficiency device with its energy cost savings. Because the Department 

analyzes the economics of a nationally representative distribution of transformers, DOE provides 

results in terms of a distribution of payback periods. 

There are several potential complications to performing an analysis of a distribution of 

PBP estimates that are discussed in more detail in section 8.6. Specifically, a payback period is a 

ratio of increased first cost and decreased operating expenses. When there is a distribution of 

changes for both first cost and operating expense reductions, the average of the ratio does not 

equal the ratio of the averages. Therefore, in the tables below, the Department reports all 

quantities of interest: the mean PBP, the average increase in first cost, and the average decrease 

in annual operating expenses (in the first year of operation). These quantities allow stakeholders 

to compare the average PBP to a ratio of the average first cost increase and the average operating 

cost decrease. These two values are comparable, but not equal because not all transformer 

purchase decision computations have well-defined PBPs. 
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11.5.1 Vault Installation Results

The PBP results for the vault installed subgroup are a reflection of the increased costs 

associated with vault enlargement. Vault enlargement decreases the potential savings due to 

increased installation costs that are required to install the new transformer. 

Table 11.5.1 Design Line 4, Medium Vault Modification Costs Payback-Period Results

Efficiency Level

1 2 3 4 5 6 7 

Mean Payback (Years) 45.0 28.2 28.2 28.2 28.2 29.1 34.2

Median Payback (Years) 22.3 27.8 27.8 27.8 27.5 27.9 32.9

Transformers having Well 

Defined Payback (%) 99.38 99.38 99.38 99.38 99.82 100.00 100.00 

Transformers having Undefined 

Payback (%) 0.62 0.62 0.62 0.62 0.18 0.00 0.00 

Mean Incremental First Cost ($) 2,577 5,303 5,303 5,303 5,446 7,194 10,154

Mean Operating Cost Savings ($) 57 194 194 194 202 263 318

Payback of Average Transformer 

(Years) 45.2 27.3 27.3 27.3 27.0 27.4 31.9 

Table 11.5.2 Design Line 4, High Vault Modification Costs Payback-Period Result

 

Efficiency Level

1 2 3 4 5 6 7 

Mean Payback (Years) 45.7 85.1 85.1 85.1 86.1 91.6 89.4

Median Payback (Years) 11.8 100.0 100.0 100.0 100.0 100.0 100.0

Transformers having Well 

Defined Payback (%) 99.38 99.38 99.38 99.38 99.82 100.00 100.00

Transformers having Undefined 

Payback (%) 0.62 0.62 0.62 0.62 0.18 0.00 0.00

Mean Incremental First Cost ($) 30,786 76,362 76,362 76,362 77,928 87,112 85,672

Mean Operating Cost Savings ($) 57 194 194 194 202 263 318

Payback of Average Transformer 

(Years) 539.5 393.0 393.0 393.0 386.2 331.5 269.4
11-5

Table 11.5.3 Design Line 5, Medium Vault Modification Costs Payback-Period Results

Efficiency Level

1 2 3 4 5 6 

Mean Payback (Years) 15.9 35.0 33.6 30.1 28.2 23.7

Median Payback (Years) 7.0 28.5 28.6 27.2 26.6 22.5

Transformers having Well 

Defined Payback (%) 91.46 97.46 99.68 100.00 100.00 100.00 

Transformers having Undefined 

Payback (%) 8.54 2.54 0.32 0.00 0.00 0.00 

Mean Incremental First Cost ($) 4,524 16,403 20,152 21,445 25,331 32,803

Mean Operating Cost Savings ($) 458 581 710 805 975 1,487

Payback of Average Transformer 

(Years) 9.9 28.3 28.4 26.6 26.0 22.1 

Table 11.5.4 Design Line 5, High Vault Modification Costs Payback-Period Results

Efficiency Level

1 2 3 4 5 6 

Mean Payback (Years) 19.3 89.5 100.0 100.0 100.0 23.7

Median Payback (Years) 7.0 100.0 100.0 100.0 100.0 22.5

Transformers having Well 

Defined Payback (%) 91.46 97.46 99.68 100.00 100.00 100.00 

Transformers having Undefined 

Payback (%) 8.54 2.54 0.32 0.00 0.00 0.00 

Mean Incremental First Cost ($) 20,012 174,207 198,982 200,679 206,044 32,803

Mean Operating Cost Savings ($) 458 581 710 805 975 1,487

Payback of Average Transformer 

(Years) 43.7 300.1 280.2 249.2 211.4 22.1 
11-6

REFERENCES

1. Energy Conservation Program for Commercial Equipment: Distribution Transformers Energy 

Conservation Standard; Notice of data availability and request for comment. Federal Register 

72 No. 27, (2007). <http://www.regulations.gov/#!docketDetail;D=EERE-2006-STD-0099>