11

- i 

### CHAPTER 11. LIFE

- CYCLE COST SUBGROUP ANALYSIS

TABLE OF CO NTENTS

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

11.2 ANALYSIS APPROACH FO R MUNICIPAL UTILITIE S AND RURAL

ELECTRIC COOPERATIVE S ..................................................................................... 11-1

11.3 ANALYSIS APPROACH FOR PURCHASERS OF VAUL T 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 RESUL TS ................................................................................... 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 C ost 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

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### 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 UTILIT IES AND RURAL

ELECTRIC COOPERATIVE S

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 VAUL T INTALLED

TRANSFORMERS

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

function of EL , for the two design lin es (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 standa rd 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 selecte d in the standard case, and

applied fixed and variable costs. In the 2007 notice of data availability 1 

### , DOE estimated the fixed

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

TSD, th ese costs were adjusted to 201 1$ using the chained price index for non- residential11

- 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

transform ers 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 L ife

- 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

- 9557411

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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 RESUL TS

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 complication s 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 f or 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 a re comparable, but not equal because not all transformer

purchase decision computations have well-defined PBPs.11

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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) 539.5 393.0 393.0 393.0 386.2 331.5 269.411

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### 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 22.111

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### 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>