1 | Energy Efficiency and Renewable Energy 

Energy Conservation StandardsNotice of Proposed Rulemaking (NOPR)

for packaged terminal air conditioners

(PTACs) and packaged terminal heatpumps (PTHPs)

October 29, 2014

Ron Majette

Department of EnergBuilding Technologie

EERE‐2012‐BT‐STD‐0

PTACs@ee.doe.gov
2

Welcome• Introductions (around the room)• Role of the Facilitator

• Ground Rules

- Speak one at a time.

- Say your name for the record – there will be a complete transc

meeting.

- Be concise – share the ‘air‐time.’

- Keep the focus here – cell phones on silent; limit sidebar conv

- Webinar participants turn phone on mute; “raise your hand” t

recognized to speak.

• Housekeeping Items

• Agenda Review

• Opening Remarks
3

Public Meeting Agenda

9:00 – 9:25 am Welcome, Introductions, Opening Statemen

Statute, Context

9:25 – 9:45 am Market and Technology Assessment, Screen

9:45 – 10:45 am Engineering Analysis

10:45 – 11:00 am Break

11:00 – 11:15 am Equipment Price Determination

11:15 – 12:00 pm Trial Standard Levels, Energy Use, Life‐Cycle 

12:00 – 1:00 pm Lunch

1:00 – 2:00 pm Shipments, National Impact Analysis

2:00 – 2:30 pm Manufacturer Impact Analysis

2:30 – 3:00 pm Emissions/Monetization of Emissions, Utility 

Employment Impact, Regulatory Impact Ana

3:00 – 3:15 pm Proposed Standard

3:15 – 3:30 pm Closing Remarks and Adjourn
4

Listening via the Webcast• The Department is broadcasting this meeting live ov

Internet.

• DOE is providing the webcast to accommodate stake

that are unable to attend the public meeting in perso

• The web broadcast allows stakeholders to listen in an

the slides.

• All stakeholders are encouraged to submit written co

after the public meeting.
5

Purpose of Public Meeting1. Present the energy conservation standards DOE is p

for PTACs and PTHPs in this notice of proposed rule

2. Invite comment on the analysis from participants.

3. Discuss the next steps for the rulemaking.4. Encourage participants to submit data, information,

summary statements, and written comments, includadditional issues for discussion.
6

Issue for Discussion

Issue box numbering corresponds to the list of issues pu

the end of the Notice of Public Rulemaking (NOPR) docuavailable at regulations.gov, under docket number EERE‐

STD‐0029, at:http://www.regulations.gov/#!documentDetail;D=EERE‐

STD‐0029‐0017.The deadline for submitting comments is November 17, 

Issue Box: DOE welcomes comments, data, and information

concerning standards being considered for PTACs and PTHPs. 

that correspond to those raised in DOE’s published material w

numbered in accordance with that material. Whether invited 

issue box or not, comments are welcome on any part of DOE’

analysis.
7

How to Submit Written Comments

• In all correspondence, please refer to the PTAC‐PTHP rulemaki

– Energy Conservation Standards for Packaged Terminal Air Co

and Packaged Terminal Heat Pumps;

– Docket Number EERE‐2012‐BT‐STD‐0029; and

– Regulatory Identification Number (RIN) 1904‐AC82.

• Email: pkgTerminalAC‐HP2012STD0029@ee.doe.gov

Postal: Courier:Ms. Brenda EdwardsU.S. Department of Energy

Building Technologies Program, Mailstop

EE‐5B1000 Independence Avenue, SWWashington, DC 20585‐0121

Ms. Brenda EdwardsU.S. Department of Energy

Building Technologies Progra950 L’Enfant Plaza, SW

Washington, DC 20024Tel: 202‐586‐2945

Comment Period closes: November 17, 2014, 11:59 PM E
8

Opening Remarks

Meeting participants are invited to provide ope

remarks or statements at this time.
9

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
10

Regulatory History

• The Energy Policy Act of 1992 (EPACT 1992) amended the Energ

Conservation Act of 1975 (EPCA) to:

− Include packaged terminal air conditioners (PTACs) and packaged term

pumps (PTHPs) as a covered equipment type; and

− Establish the first energy conservation standards for PTACs and PTHPs

• On October 7, 2008, DOE published a final rule amending existi

standards for PTACs and PTHPs (hereafter “2008 Final Rule”).

• On February 22, 2013, DOE initiated the rulemaking cycle by pu

framework document and holding a public meeting on March 1

• On October 9, 2013, ASHRAE Standard 90.1‐2013 amended

Standard 90.1 requirements for PTACs and triggered DOE review

• On March 13, 2014, DOE published a notice of proposed rulema

(NOPR) regarding test procedures for PTACs and PTHPs

• On April 11, 2014, DOE published a notice of data availability (N

response to the amended Standard 90.1 requirements for PTAC
11

Current Standards – PTACs and PTHPsThe 2008 Final Rule prescribed the current energy conservation st

PTACs and PTHPs manufactured on or after September 30, 2012 (f

size) or September 20, 2010 (for non‐standard size).

Equipment

Type Sub‐category Cooling Capacity (Btu/h) Energy Conservation 

EER (Btu/Wh), COP 

PTAC

Standard Size†

<7,000 EER = 11.7

≥7,000 and ≤15,000 EER = 13.8 – 0.30

>15,000 EER = 9.3

Non‐Standard

Size†

<7,000 EER = 9.4

≥7,000 and ≤15,000 EER = 10.9 – 0.21

>15,000 EER = 7.7

PTHP

Standard Size†

<7,000 EER = 11.9, COP 

≥7,000 and ≤15,000 EER = 14.0 – 0.30

COP = 3.7 – 0.052

>15,000 EER = 9.5, COP 

Non‐Standard

Size†

<7,000 EER = 9.3, COP 

≥7,000 and ≤15,000 EER = 10.8 – 0.21

COP = 2.9 – 0.026

>15,000 EER = 7.6, COP 

† Standard size refers to equipment with wall sleeve dimensions having an external wall 

opening greater than or equal to 16” high or greater than or equal to 42” wide. Non-standard size refers to equipment with existing wall sleeve dimensions having an external wall opening greater less than 16” high or less than 42” wide.

‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.
12

2013 2014 2015 2016 2017 2018

PTAC and PTHP Energy Conservation Standards Rulemak

Milestone 

Notice of Public Meeting and Availability of Framework Document 22 

Notice of Proposed Rulemaking 16 S

Final Rule (projected) SFinal Rule (statutory deadline, per ASHRAE trigger requirements) 

Compliance Date (projected) 
13

EPCA Factors

42 U.S.C. 6295(o)(2)(B)(i) directs DOE to consider seven factors 

setting energy conservation standards.

EPCA Factors DOE Analysis

1. Economic impact on customers and

manufacturers

Life‐Cycle Cost An

Manufacturer Impact 

2. Lifetime operating cost savings compared

to increased cost for the equipment Life‐Cycle Cost An

3. Total projected energy savings National Impact An

4. Impact on utility or performance Engineering Ana

Screening Analy

5. Impact of any lessening of competition Manufacturer Impact 

6. Need for national energy conservation National Impact An7. Other factors the Secretary considers

relevant

Emissions Analy

Utility Impact Ana

Employment Impact 
14

Scope of Coverage

• DOE is proposing standards for PTACs and PTHPs, defined 

Section 340 as follows:

A “packaged terminal air conditioner” is “a wall sleeve and a separate unenc

combination of heating and cooling assemblies specified by the builder and in

for mounting through the wall. It includes a prime source of refrigeration, sepoutdoor louvers, forced ventilation, and heating availability by builder's choic

water, steam, or electricity.” (42 U.S.C. 6311(10)(A))

A “packaged terminal heat pump” is “a packaged terminal air conditioner tha

utilizes reverse cycle refrigeration as its prime heat source and should have

supplementary heat source available to builders with the choice of hot water, 

or electric resistant heat.” (42 U.S.C. 6311(10)(B))
15

NOPR Stage

Framework

Document

NOPR Final

Rule

Market &Technology

ScreeningAnalysis

EngineeringAnalysis

Energy Use

Characterization

ShipmentsAnalysis

NationalImpactAnalysis

Life‐CycleCost andPaybackPeriod Analysis

MarkupsAnalysis

ManufacturerImpactAnalysis
16

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
17

Purpose of MTA and Screening Analysis

• Market and Technology Assessment (MTA)

 Determine equipment classes Provide information on the market, manufacturers, and shipment 

 Identify technology options to improve efficiency

• Screening Analysis

 Screen out technology options that DOE will not consider in the e

analysis based on:

1. Technological feasibility: incorporation in commercially available 

working prototypes

2. Practicability to manufacture, install, and service: mass productio

installation and servicing could be achieved on the scale necessar

relevant market at the time the standard requires compliance

3. Adverse impacts on equipment utility or availability: significant a

the utility of the equipment to significant subgroups of customers

unavailability of any covered equipment type with performance c

features, sizes, capacities, and volumes that are substantially the s

equipment generally available in the United States at the time.

4. Adverse impacts on health or safety: significant adverse impacts 

safety
18

Equipment Classes

• DOE divides covered equipment into classes by:

– the type of energy used;

– the capacity of the equipment; or– other performance‐related features that justify different standard l

such as features affecting customer utility.

• DOE establishes separate energy conservation standards fo

equipment class.

• DOE is proposing to maintain the existing equipment class 

for PTACs and PTHPs.

• DOE is not proposing new energy conservation standards f

standard size PTACs and PTHPs.

– “Non‐standard size” refers to equipment with existing wall sleeve d

having an external wall opening less than 16” high or less than 42” 

– Non‐standard size equipment holds a small and declining portion o

– Amendments to energy conservation standards for non‐standard si

would result in a very small amount of energy savings.
19

Equipment Classes

• DOE is proposing to maintain the following equipment clas

Equipment

Type

Sub‐

Category

PTAC

Standard

Size

≥ 7

Non‐

Standard

Size

≥ 7

PTHP

Standard

Size

≥ 7

Non‐

Standard

Size

≥ 7

Type of Equipment- PTAC equipment includes cooling and heat from

hot water, steam, or electricity.

- PTHP equipment utilizes reverse cycle

refrigeration as its prime heat source.

Physical Dimensions‐ Standard‐size units are sold for new construction

and replacement of existing standard‐size

equipment.

‐ Non‐standard size units are typically

manufactured for replacement of units in older

buildings, where alteration of non‐standard size

wall openings may be cost prohibitive.

Cooling Capacity‐ The single standard size associated with PTACs

and PTHPs makes it challenging to achieve higher

efficiency levels in higher‐capacity equipment.

‐ Smaller capacity units have more room for

design options (i.e., increased heat exchangersize) that enable greater energy efficiency.
20

• DOE identified technology options that can improve energ

efficiency for PTACs and PTHPs.

• DOE then reviewed the identified technology options and 

them using the following criteria:

– Technological feasibility;

– Practicability to manufacture, install, and service;

– Adverse impacts on equipment utility or availability to customers; 

– Adverse impacts on health or safety.

• DOE then eliminated technology options where:

– Available data suggest that the efficiency benefits of the technolog

negligible;

– Data are not available to evaluate the energy efficiency characteris

technology; or

– The test procedure and EER or COP metric would not measure the 

impact of the technology.

Technology Options and Screening Analysis
21

Technology Options/Screening Analysis

PTAC and PTHP Technology Options

Higher Efficiency Compressors Increased Heat Exchanger Area

Higher Efficiency Fan Motors Improved Air Flow and Fan Design

Scroll Compressors Hydrophobic Material Treatment o

Exchangers

Variable‐speed Compressors Re‐circuiting Heat Exchanger Coils

Complex Control Boards Heat PipesClutched Fan Motors Corrosion ProtectionMicrochannel Heat Exchangers Thermostatic Expansion Valve

Rifled Interior Heat Exchanger Tube Walls Alternate Refrigerants (such as HC

• DOE identified the technology options below that can imp

and PTHP efficiency.

• DOE screened in four of these options for consideration in 

engineering analysis. Those in red italics either do not me

screening criteria or do not offer efficiency gains over base

as measured by test procedure.
22

Issues for Comment

Issue 1: Alternate RefrigerantsDOE did not consider alternate refrigerants in the analysis because DOE is not aware 

approved refrigerants that are known to have better efficiency than R‐410A for PTA

equipment. DOE requests feedback on the efficacy of alternative refrigerants in PTA

equipment.
23

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
24

Engineering Analysis Methodology

Select certain representative equipment classe

capacities to be analyzed in the engineering an

Develop efficiency levels (ELs) that span the ran

efficiencies available from the baseline to the mtechnologically feasible.

Choose units that that cover the full range of e

levels and represent typical design approaches

 Test and teardown the chosen units to determ

relationship between manufacturer production 

and energy efficiency.

Select

Representative

Equipment

Classes

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships
25

Select Representative Equipment Classes

• There are large variations in equipment coo

and performance in the standard size PTAC 

equipment classes

• DOE selected representative cooling capacit

analyzed specific equipment to provide inforepresentative of the entire equipment clas

• DOE identified two representative cooling c

– The 9,000 Btu/h capacity had the highest numbe

size PTAC and PTHP models listed in the 2013 AH

– The 15,000 Btu/h capacity represents the greate

hurdles for efficiency improvement, considering t

constraints of standard‐size PTACs and PTHPs.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
26

Efficiency Levels

• The baseline efficiency level represents mod

minimum efficiency level allowed by the stan

– ANSI/ASHRAE/IES Standard 90.1‐2013 was issued 

this rulemaking and it raised the Standard 90.1 m

equipment efficiency for PTACs to 1.8% above the 

conservation.

– DOE is obligated either to adopt those standards d

ASHRAE or to adopt levels more stringent than th

– DOE identified the ANSI/ASHRAE/IES Standard 90

baseline efficiency level.

• The “max tech” efficiency level represents th

efficient model(s) observed in the market.

– DOE announced in the framework document for t

that it planned to consider the max tech level equ

the 2012 PTAC standard.

– After extensive equipment testing, DOE has revise

level to be 18% above the

2012 PTAC standard.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
27

Efficiency Levels

• DOE selected efficiency levels at increments 

current Federal standard and the max tech le

• Efficiency levels for standard size PTACs and 

1.8%, 4%, 8%, 12%, 16%, and 18% more effic

the current Federal PTAC standards that bec

effective on September 30, 2012.

• The table on the following slide presents the 

levels and their corresponding values for the

representative cooling capacities.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
28

Efficiency Levels

Equip‐

ment

Type

Cooling

Capacity

Efficiency Levels (Percentages relative to 2012 PT

Current

Federal

PTAC ECS*

EL1,

Baseline,

1.8%**

EL2,

4%

EL3,

8%

EL4,

12%

E

1

PTAC

All, EER‡ 13.8 – (0.300*Cap) 14.0 – (0.300*Cap) 14.4 – (0.312*Cap) 14.9 – (0.324*Cap) 15.5 – (0.336*Cap) 1

(0.34

9,000

Btu/h 11.1 EER 11.3 EER 11.5 EER 12.0 EER 12.4 EER 12

15,000

Btu/h 9.3 EER 9.5 EER 9.7 EER 10.0 EER 10.4 EER 10

Cooling

Capacity N/A Baseline, 1.8%** EL1, 4% EL2, 8% EL3, 12% E

1

PTHP

All, EER‡ N/A 14.0 – (0.300*Cap) 14.4 – (0.312*Cap) 14.9 – (0.324*Cap) 15.5 – (0.336*Cap) 1

(0.34

All, COP‡ N/A 3.7 – (0.052*Cap) 3.8 – (0.058*Cap) 4.0 – (0.064*Cap) 4.1 – (0.068*Cap) 4

(0.07

9,000

Btu/h N/A 11.3 EER 3.2 COP 11.5 EER 3.3 COP 12.0 EER 3.4 COP 12.4 EER 3.5 COP 12

3.

15,000

Btu/h N/A 9.5 EER 2.9 COP 9.7 EER 2.9 COP 10.0 EER 3.0 COP 10.4 EER 3.1 COP 10

3.

* This level represents the current Federal minimum for PTAC equipment.** This level represents the current Federal minimum for PTHP equipment and the

ANSI/ASHRAE/IES Standard 90.1‐2013 minimum for both PTAC and PTHP equipment.‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F outdoor dry‐bulb

temperature.
29

Representative Units for Analysis

• DOE selected several standard‐size PTAC and 

to represent the market, and used these for 

in the engineering analysis. The selected eq

exhibited the following five characteristics:

1. The selected equipment, taken together, cover the full ra

efficiency levels considered in the analysis.

2. The selected equipment has cooling capacity correspond

the selected representative cooling capacities (9,000 Btu/h 

Btu/h).3. When possible, DOE selected one lower‐efficiency unit a

efficiency unit from the same manufacturer. When possible

shared similar characteristics (e.g., both from the same equ

4. The equipment tended to be from manufacturers with re

shares of the PTAC and PTHP markets, and thus was represe

typical design approaches.

5. The selected equipment included base units with few, if 

features or options that add cost without affecting equipme

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
30

Representative Units for Analysis

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes

• The chart below illustrates the efficiency levels 

rated capacity and efficiency of twenty PTAC an

units selected to represent the market.
31

Cost‐Efficiency Relationships

• DOE calculated manufacturer production cos

disassembling PTACs and PTHPs from multip

manufacturers and creating bills of materials 

• BOMs describe the equipment components i

include estimates of materials, labor, capital 

and overhead costs.

• Comparing otherwise‐identical PTAC and PTH

(i.e., models with similar casing, controls, and 

where the PTHP has reverse cycle capability)

estimates that the typical PTHP unit has an a

$37‐$38 of production costs compared with 

otherwise‐identical PTAC unit. This additiona

PTHPs does not vary with efficiency level.

• Chapter 5 of the TSD provides additional det

teardown and cost model methodology.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
32

Cost‐Efficiency Relationships

• DOE created cost‐efficiency curves for each

representative cooling capacity and equipme

• In the shipments analysis, DOE combined rep

curves based on estimated market share to d

weighted‐average cost‐efficiency curve for ea

equipment class.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Weight

$MPC

Effi

Representative Capacity Curves

$MPC

Efficiency Level

15,000 Btu/h PTAC

9,000 Btu/h PTAC

15,000 Btu/h PTHP

9,000 Btu/h PTHP

Chapter 9 of the TSD contains more details explaining how DOE extrapolatesthe proposed amended energy conservation standards for the representativecooling capacities to the entire range of cooling capacities

Select

Representative

Equipment

Classes
33

Cost‐Efficiency Relationships: 9,000 Btu/h Cap

• Cost‐efficiency results for 9,000 Btu/h PTACs 

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Efficiency

Level

Percent

above

2012

PTAC ECS

Incre‐

mental

Cost

(2013$)

Cost‐Efficiency 

PTAC PTHP

EL1 Base‐ line 1.8% ‐‐

EL2 EL1 4% $3.88EL3 EL2 8% $7.93EL4 EL3 12% $16.57EL5 EL4 16% $25.91EL6 EL5 18% $35.94

$0

$10$20$30$40

11.3 11.5 12.0 1

Incremental Cost (2013$)

Energy Efficienc

Select

Representative

Equipment

Classes
34

Cost‐Efficiency Relationships: 15,000 Btu/h Ca

• Cost‐efficiency results for 15,000 Btu/h PTAC

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Efficiency

Level

Percent

above

2012

PTAC ECS

Incre‐

mental

Cost

(2013$)

Cost‐Efficiency 

PTAC PTHP

EL1 Base‐ line 1.8% ‐EL2 EL1 4% $3.73EL3 EL2 8% $8.29EL4 EL3 12% $19.96EL5 EL4 16% $35.00EL6 EL5 18% $53.42

$0

$10$20$30$40$50$60

9.5 9.7 10.0 1

Incremental Cost (2013$)

Energy Efficienc

Select

Representative

Equipment

Classes
35

Cost‐Efficiency Relationships: Results

• Cost‐efficiency curves are nonlinear. As effic

increases, additional efficiency increase beco

difficult and more costly for manufacturers.

• The increase in capacity between 9,000 Btu/

Btu/h causes an increase in the baseline unit 

• A faster increase in the curve (i.e., a steeper 

evident for the 15,000 Btu/h cooling capacity 

to the 9,000 Btu/h cooling capacity.

Develop

Efficiency Levels

Choose

Representative

Units for

Analysis

Test and

Teardown to

Determine Cost‐

Efficiency

Relationships

Select

Representative

Equipment

Classes
36

Markups Analysis• Purpose

– Characterize PTAC & PTHP distribution channels a

segments.

– Estimate customer prices based on manufacturer

price (MSP).

• Methodology

– DOE derived State‐level markups based on confid

interviews, economic reports from industry trade 

and U.S. census data.

– Markups were derived for each distribution chan
37

Markups Analysis: Distribution Channels• The PTAC and PTHP market has four primary distribu

channels.

Manufacturer

Mechanical Contractor

General

Contractor

Customer

57%

Wholesaler

Customer Customer Custo

21% 17% 5%
38

Markups Analysis: Data Sources

• Manufacturer markups are based on markups developed for the 2008 

confidential manufacturer interviews.

• Wholesaler markups are based on the “2010 Profit Report” from Heati

Air‐Conditioning & Refrigeration Distributors International.

• Mechanical contractor markups are based on the “2005 Financial Anal

HVACR Contracting Industry” from the Air Conditioning Contractors of 

• General contractor markups are based on the 2007 U.S. Economic Cen

• Sales taxes by state are based on information from the Sales Tax Cleari

• DOE derived national accounts markups by weighting the overall mark

for other distribution channels and then reducing that total by 50 perc

the price savings realized from equipment purchased through national 
39

Markup Types• Baseline Markups:

– Relate the MSP of baseline equipment to the customer purcha

– Indicate a customer price that covers the expenses plus profit 

segment in the distribution channel.

• Incremental Markups:

– Relate the increase in MSP of more efficient equipment to the 

customer purchase price.

– Cover only expenses that vary with MSP, in this case, expenses 

due to an efficiency standard.

– DOE believes that labor and occupancy costs are invariant wit

MSP, while other operating costs and profit are variant with re

• DOE calculated baseline and incremental markups for each distrib

and for new construction applications (14% of sales) and replacem

applications (86% of sales).

• DOE applied baseline markups to the MSP of the baseline level, an

incremental markups to the incremental difference in MSP for effi

equipment above the baseline.
40

Overall Markups: Baseline

Distribution Channel Wholesaler‐ End User

Wholesaler‐

Mechanical

Contractor‐

General

Contractor‐

End User

National

Account

(Mfg Direct)

Wholesaler‐

End User

Wholesaler‐

Mechanical

Contractor‐

End User

Who

Mec

Con

Ge

Con

En

NEW CONSTRUCTION REPLACEMENT 

Manufacturer 1.27 1.27 ‐ 1.27 1.27 

Wholesaler 1.36 1.36 ‐ 1.36 1.36 

Mechanical Contractor ‐ 1.43 ‐ ‐ 1.52 

General Contractor ‐ 1.34 ‐ ‐‐ National Accounts ‐ ‐ 1.49 ‐ ‐Sales Tax ‐ ‐‐ 1.07 1.07 

Markup by Distribution

Channel 1.73 3.31 1.49 1.85 2.81 3
41

Overall Markups: Incremental

Distribution Channel Wholesaler‐ End User

Wholesaler‐

Mechanical

Contractor‐

General

Contractor‐

End User

National

Account

(Mfg Direct)

Wholesaler‐

End User

Wholesaler‐

Mechanical

Contractor‐

End User

Who

Mec

Con

Ge

Con

En

NEW CONSTRUCTION REPLACEMENT 

Manufacturer 1.27 1.27 ‐ 1.27 1.27 

Wholesaler 1.10 1.10 ‐ 1.10 1.10 Mechanical Contractor ‐ 1.15 ‐ ‐ 1.22 

General Contractor ‐ 1.22 ‐ ‐‐ 

National Accounts ‐ ‐ 1.16 ‐ ‐

Sales Tax ‐‐ ‐ 1.07 1.07 

Markup byDistribution Channel 1.40 1.96 1.16 1.40 1.82 
42

Issues for Comment: Markups Analysis

Issue 2: Distribution Channels

To estimate the number and type of distribution channels and the distribu

shipments through the distribution channels, DOE leveraged the informati

2008 PTAC and PTHP final rule. (73 FR 58772). DOE requests comment reg

selected channels and distribution of shipments through the channels.
43

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
44

Energy Use Analysis• Purpose

– Determine unit‐average annual energy use (UEC) of PTACs and 

the considered efficiency levels to find annual energy costs an

– Annual energy costs are inputs to Life‐Cycle Cost and Payback 

Analysis.

• Methodology

– Post‐processed outputs from prior analysis:

• Total UECs for 50 States and D.C., 6x efficiency levels, 9,00

12,000 Btu/h cooling capacities, and PTAC and PTHP

• Prior simulations based on CBECS 2003 (most recent availa• 239 climate locations (based on TMY2 data), aggregated t

– Accounting for these changes since the 2008 rulemaking:

• Weather impacts

• Equipment efficiency and cooling capacity differences

• Population changes
45

• 2008 rulemaking analysis provided Total UEC for PTACs and for 

• For PTHPs, DOE analyzed Heating UEC and Cooling UEC separat

– Heating UEC: Heating and fan energy expended during ope

heating mode.

– Cooling UEC: Cooling and fan energy expended during oper

cooling mode.

• Cooling UEC = PTAC Total UEC, assuming similar functio

(other than reversing valve) between PTACs and PTHPs

same efficiency level and cooling capacity.

Energy Use Analysis: ApproachIssue 3: Cooling Energy Use

DOE requests comment on the energy a PTHP consumes when op

the cooling mode and the energy a PTAC consumes during its oper
46

Weather impacts

• Comparison of newer TMY3 weather data with TMY2 weather 

revealed more time at higher temperatures.

• Determined monthly cooling degree days (CDD) increased by 5

monthly heating degree days (HDD) decreased by 2%.

• Scaled cooling UEC up by 5% and scaled heating UEC down by 2

• Apply weather impacts for each State UEC.

Energy Use Analysis: Approach
47

Conversion of UECs• For the 9,000 Btu/h

representative cooling

capacity:

– Efficiency levels: DOE

linearly extrapolated acrossthe

6 efficiency levels

considered in the previousrulemaking to find UECs at

the considered efficiency

levels of the representativecooling capacity.

• For the 15,000 Btu/h

representative cooling

capacity (figure):

– Efficiency levels and Cooling

capacity: DOE linearlyextrapolated across the9,000 Btu/h and 12,000

Btu/h cooling capacitiesconsidered in the previous

rulemaking to find UECs at

the considered efficiency

levels and representative

cooling capacity.

Energy Use Analysis: Approach

900

100011001200130014001500160017001800

9.0 9.5 10.0 10.5 11.0 11.5 

UEC [kWh]

EER

UEC Conversion for 15,000 Btu/h 

Capacity PTACs

EER‐Scaled UEC for 9,000 Btu/h Previous UEC for 9EER‐Scaled UEC for 12,000 Btu/h Previous UEC for 1EER‐ and Capacity‐Scaled UEC for 15,000 Btu/h
48

Population change

• UECs by State are used in the LCC and PBP analysis.

• National UECs are used in the NIA.

– State populations were determined from the 2010 Census.

– State‐level UECs was averaged, weighted by State populatio

Energy Use Analysis: Approach

State State Name

PTAC Standard Size ‐

9,000 Btu/h ... Population

EL0 EL1 ... ... Weight

1 Alabama 1344 1326 ... ... 1.53%2 Alaska 511 510 ... ... 0.23%

...

Total US US Average 1078 1066 ... ... 100%
49

PTAC National UECs

RepresentativeCooling Capacity 9,000 Btu/h 15,000 Btu/

Efficiency Level EER UEC (kWh) EER 

0* 11.1 1078 9.3 

1† 11.3 1066 9.5 

2 11.5 1050 9.7 3 12.0 1022 10.0 4 12.4 994 10.4 5 12.9 966 10.8 6 13.1 952 11.0 

Energy Use Analysis: Results

PTHP National UECs

RepresentativeCooling Capacity 9,000 Btu/h 15,000 Btu

Efficiency Level EER | COP UEC (kWh) EER | COP 

0* 11.3 | 3.2 1985 9.5 | 2.9 

1 11.5 | 3.3 1956 9.7 | 2.9 

2 12.0 | 3.4 1918 10.0 | 3.0 

3 12.4 | 3.5 1879 10.4 | 3.1 

4 12.9 | 3.6 1841 10.8 | 3.2 

5 13.1 | 3.6 1822 11.0 | 3.2 

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1-2013 baseline for PTHPs.† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.
50

• Purpose

– Provide an economic evaluation from the end‐user’s perspective.

– Life Cycle Cost (LCC) is the total customer cost over the life of the equipm

– Simple Payback Period (PBP) is the time required to recover the increased 

of more energy‐efficient equipment through reduced first‐year operating 

• Methodology

– Determine energy and economic inputs.

• Determine total installed cost for each efficiency level.

• Use annual unit average energy use developed in the energy use analysis to re

consumption of different PTAC and PTHP end‐users across the United States.

• Determine operating costs for the first year and lifetime of equipment for each 

– Utilize a Monte Carlo simulation, consisting of 10,000 iterations that selec

that are characterized by probability distributions, to calculate LCC and PB

variation.

• Calculates simple PBP by dividing average increase in installed cost by the aver

first‐year operating cost.

• Calculates LCC by adding installed cost and lifetime operating costs.

• Calculates LCC savings by subtracting LCC of each efficiency level from LCC of t

of equipment that a customer would purchase in the absence of a new standa

Life‐Cycle Cost and Payback Period Analysis
51

• Total Installed Cost is the sum of equipment purchase price and

installation cost.

• Equipment purchase price is provided by the Engineering Analy

Markups Analysis.

• A constant price assumption was used to derive the equipment 

the compliance year (2019).

– The price trend is based on historical Producer Price Index 

for “all other miscellaneous refrigeration and air‐condition

equipment” spanning the time period 1990‐2013, which ha

characterized by declines and increases through the time p

– DOE chose the constant price assumption due to uncertain

the continuation of trends from past years.

• Installation costs represent the labor and materials necessary 

the equipment.

– Based on the materials, labor rate, and labor time data fro

Means (2013), the installation costs do not change with ef

level.

LCC & PBP Analysis: Total Installed Cost
52

• The annual energy cost is the annual

energy consumption from the Energy Use

Analysis multiplied by the energy price.

• DOE used electric utility tariff data to

develop average and marginal electricity

prices.

– Average electricity prices, and marginal

energy and demand prices were developed

for nine Census Divisions and California.

– Since PTACs and PTHPs are commercial air

conditioners and typically consume peak

electricity, annual marginal prices per kWh

by Census division were used to calculate

annual energy cost.

• DOE used Annual Energy Outlook (AEO)

2013 for projections of future average

energy prices for each census division.

LCC & PBP Analysis: Annual Energy Cost

Region Annual M

New England Mid‐Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific – WA,OR Pacific – CA US Average 
53

• Estimated repair costs based on the annualized value 

equipment warranty contract.

– Repair costs increases proportionally with the manufacture

price of more efficient equipment.

• Estimated annual maintenance costs based on mate

labor rate, and labor time data from RS Means (2013

– Maintenance costs do not change with efficiency level.

LCC & PBP Analysis: Maintenance and Repair C
54

• DOE used a Weibull distribution to model equipment lifetime.

• DOE used data from the previous rulemaking and input from in

with experience in manufacturing to estimate an equipment su

function.

– Supportive stakeholder comment received from the ASHRAE Standard 90

of Data Availability.

• The Weibull distribution is modeled off equipment having an a

lifetime of 10 years and a maximum lifetime of 20 years, which 

change with efficiency level or equipment class.

LCC & PBP Analysis: Equipment Lifetime
55

• Used to convert streams of annual operating expenses to the y

purchase (i.e., 2019).

• Estimated as the weighted average cost of capital using capital 

pricing model (CAPM).

• Discount rates were estimated for the types of firms that comm

PTAC or PTHP.

– Lodging, Offices, and Medical Services.

• DOE used Damodaran Online as the source of information for c

debt and equity financing.

– Financial cost of any debt incurred to purchase equipment.

– Opportunity cost of any equity to purchase equipment.

LCC & PBP Analysis: Discount Rates
56

LCC & PBP Analysis: Energy Efficiency in the Ba

• LCC and PBP analysis typically analyzes

standard levels relative to a baseline

efficiency level.

• Not all customers purchase equipment at

baseline levels.

– DOE must account for customers purchasing

more efficient equipment to accurately estimate

customer economic impacts.

• Base case efficiency distributions define

the percentage of equipment being

purchased at various efficiency levels.

– Customers already purchasing equipment at

efficiencies greater than or equal to a

prospective standard level are not impacted by

the standard.

– The base case efficiency distribution for PTHPs at

the 9,000 Btu/h representative cooling capacity

is shown in the figure on the right.

• Market share and efficienc

PTACs and PTHPs were obt

2013 dataset from the AHR

Certified Product Performa

• To estimate the base case 

compliance year (2019), DO

efficiency trend of 1 EER ev

from prior commercial air 

rulemakings.

0%

10%20%30%40%50%60%

0123

Market Share

Efficiency 
57

Efficiency

Level

Average Costs (2013$)

Simple

Payback

(years)

C

Installed

Cost

First Year's

Operating

Cost

Lifetime

Operating

Cost

LCC

1 $1,491 $194 $1,411 $2,902 6.6 

2 $1,508 $192 $1,395 $2,903 7.3 

3 $1,527 $189 $1,379 $2,906 7.8 

4 $1,547 $187 $1,363 $2,910 8.2 

5 $1,557 $186 $1,356 $2,913 8.3 

LCC & PBP Results: 9,000 Btu/h Representative Coolin
58

Efficiency

Level

Average Costs (2013$)

Simple

Payback

(years)

C

E

Installed

Cost

First Year's

Operating

Cost

Lifetime

Operating

Cost

LCC

1 $1,744 $252 $1,832 $3,575 7.8 

2 $1,767 $249 $1,812 $3,579 8.6 

3 $1,797 $246 $1,793 $3,590 9.8 

4 $1,833 $244 $1,776 $3,609 11.1 

5 $1,854 $243 $1,767 $3,621 11.7 

LCC & PBP Results: 15,000 Btu/h Representative Cooli
59

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
60

Shipments and National Impact Analyses

Engineering

Analysis

Markups

Analysis

Energy Use &

End Use Load

Characterization

NI

Shipments Analysis

• Shipments Analysis

– Estimates PTAC‐PTHP shipments over the 30‐year analysis period 

• National Impact Analysis

– Estimates the National Energy Savings (NES) from those shipment

trial standards levels.

– Estimates the Net Present Value (NPV) to PTAC and PTHP custome

savings from those shipments at the various trial standards levels
61

• Purpose

– To estimate PTAC and PTHP shipments over the 30‐year an

(2019‐2048).

• Methodology

– DOE developed a single shipments model for all PTACs and 

– The model is a stock accounting model, which assumes tha

the existing PTACs and PTHPs either age by one year or fail

– PTAC and PTHP shipments are driven by the construction o

space and the replacement of units that have failed.

Shipments Analysis
62

New Construction Shipments

• DOE developed projections for new

construction shipments based on

projections of new commercial floor

space from AEO 2013.

• Saturation values for new

construction were developed using

data from the 2008 rulemaking.

Replacement Shipments

• DOE built up initial stock by using

the average of the historical

shipments (1998‐2004) for the years

1993‐2012.

• DOE developed replacement

shipments based on a survival

function which projects a certainpercentage of units to fail each year

and be replaced.

Standards Case Impacts

• DOE assumed that standards will not

impact shipments: standards case

shipments equals the base case

shipments.

Shipments Analysis: Projected Shipments

 ‐

100,000200,000300,000400,000500,000600,000700,000800,000

Shipmnets

Year

Base case Shipments Proje

New Construction Replac
63

• To disaggregate total PTAC and PTHP shipments into equipment 

used the equipment class market shares based on model availab

AHRI Directory of Certified Product Performance.

• DOE expects equipment class market shares to be constant over 

exhibited in historical data.

Shipment Analysis: Disaggregation by Equipme

PTAC PTH

Cooling Capacity <7,000 Btu/h ≥7,000 Btu/h and ≤15,000 Btu/h >15,000 Btu/h <7,000 Btu/h ≥7,000 Bt

≤15,000 

Percent 3.0% 48.5% 3.7% 1.8% 39.8

Issue 4: Stakeholders mentioned that a number of shipments are not acc

in the AHRI database because certain manufacturers are non‐AHRI manu

and are not subject to reporting to the database. DOE requests data for t

distribution of models that are unreported to the AHRI Directory of Certi

Performance.
64

• Purpose

– To estimate the National Energy Savings (NES) and the nati

economic impact from new and amended energy conserva

standards at different efficiency levels for the 30 year perio

2019 – 2048.

• Methodology

– DOE calculates national energy savings by multiplying unit 

energy savings by projected shipments and accumulating t

projected value over the 30 years.

– DOE calculates the Net Present Value (NPV) by accumulatin

difference each year between energy bill savings and incre

equipment expenditures for all equipment shipped over th

period.

– NPV is calculated using a 3% and a 7% discount rate.

National Impact Analysis
65

• Table of inputs – from BVMNational Impact Analysis: Inputs

Input DescriptionTotal Installed Cost Annual weighted‐average per unit values as a function of efficiency level tak

PBP analysis.

Repair and MaintenanceCosts

Repair costs vary with efficiency level. Maintenance costs are constant with 

costs are taken from the LCC and PBP analysis.

Annual Energy Use Annual weighted‐average per unit energy use at the National level as a funct

and cooling capacity taken from the LCC and PBP analysis.

Base‐Case Efficiencies Shipments‐weighted efficiencies determined for the compliance year. Based 

distribution from LCC and PBP analysis.

Standards‐Case Efficiencies Roll‐up scenario assumed in the compliance year for determining shipment‐

each standards case.

Efficiency Trend Market‐weighted efficiency increases over time for the base and standards c

Energy Prices Average prices and forecasted energy prices from EIA AEO 2013 forecasts (to 

extrapolation to 2078.

Full Fuel Cycle Multiplier to convert site energy to full‐fuel cycle energy.

Discount Rate 7 percent and 3 percent real from OMB’s Regulatory Analysis Guideline A‐4.

Present Year Future expenses are discounted to the year 2019.
66

National Impact Analysis: Inputs from the LCC and PBP 

Equipment Class

(Current EnergyConservation Standards)

Representative Cooling

Capacity in the LCC and

PBP Analysis

Data Source

<7,000 Btu/h Did not analyze

DOE estimated the manufacturer producti

Btu/h cooling capacity equipment based o

Btu/h and 15,000 Btu/h representative coo

equipment, modified with lower capacity c

motors, and heat exchangers.

DOE extrapolated energy and other econo

across the 9,000 Btu/h and 15,000 Btu/h rcooling capacity for the <7,000 Btu/h equi

≥7,000 Btu/h and

≤15,000 Btu/h 9,000 Btu/h Inputs from the LCC and PBP analysis.

>15,000 Btu/h 15,000 Btu/h Inputs from the LCC and PBP analysis.
67

National Impact Analysis: Efficiency Levels

Equipment

Type PTAC PTHP

Equipment

Class

<7,000

Btu/h

≥7,000 Btu/h

and ≤15,000 Btu/h

>15,000

Btu/h

<7,000

Btu/h

≥7,000 Btu/h

and ≤15,000 Btu/h

Efficiency

Level EER EER EER EER | COP EER | COP 

0* 11.7 11.1 9.3 11.9 | 3.3 11.3 | 3.2 

1† 11.9 11.3 9.5 12.2 | 3.5 11.5 | 3.3 

2 12.2 11.5 9.7 12.6 | 3.5 12.0 | 3.4 

3 12.6 12.0 10.0 13.1 | 3.6 12.4 | 3.5 

4 13.1 12.4 10.4 13.6 | 3.7 12.9 | 3.6 

5 13.6 12.9 10.8 13.8 | 3.8 13.1 | 3.6 

6 13.8 13.1 11.0

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1-2013 baseline for PTHPs.† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.
68

National Impact Analysis:

Base Case and Standards Case Forecasted Efficiencie

• Because key inputs to the calculation of the NES and NPV are dependent 

estimated efficiencies under the base case (without standards) and the s

(with standards), forecasted efficiencies are of great importance to the a

• DOE used a “roll‐up” scenario to establish the shipment‐weighted efficie

that standards are estimated to become effective (i.e., 2019).

Efficiency

Level

Market Share (PTACs ≥ 7,000 Btu/h 

ASHRAE*

Standard

123 

Baseline 0.0% --- 

1 37.9% --- 2 29.0% 68.7% -- 3 29.3% 27.6% 96.3% -4 2.5% 2.5% 2.5% 98.85 0.9% 0.9% 0.9% 0.9% 6 0.3% 0.3% 0.3% 0.3% 

• Base case efficiency distribution.

– Based on AHRI data for the

year 2013.

– Shipment‐weighted efficiency

increases at a rate of 1 EER per

35 years from 2013‐2019.

• Standards case efficiency

distributions based on “roll‐up”

scenario.

– Efficiencies below the

standard level “roll‐up” to thestandard level.

– Efficiencies above the standard

level are unaffected.

* Refers to ANSI/ASHRAE/IES Standard 90.1‐2013 minimum effic
69

National Impact Analysis:

Base Case and Standards Case Forecasted Efficiencie

11.0011.5012.0012.5013.0013.50

Shipments‐weighted EER

Basecase Rollup to EL1 Rollup to EL2 Rollup to EL4 Rollup to EL5 Rollup to EL6

• For the base case and

standards cases after “roll‐up,” shipments‐weighted

efficiency increases 1 EER

every 35 years to account

for technologicalimprovement in equipment

and shifts to higher

efficiency equipment.

• The projected efficiency

distribution of shipments for

the PTAC ≥ 7,000 Btu/h and

≤ 15,000 Btu/h equipment

class is shown on the right.

Issue 5: DOE requests comment regarding and data supporting th

efficiency trend.
70

PTAC‐PTHP Trial Standard Levels Analyzed

Level

Margin above

current PTAC energy

conservation standard

Description

Baseline 1.8% Equivalent to ASHRAE 90.1‐2013 st

minimum standards DOE may adop

TSL 1 4% Positive customer impact; Negative 

TSL 2

(PROPOSED) 8% Max industry net present value (IN

Max customer NPV at 7% discount 

TSL 3 12% Negative customer and industry imTSL 4 16% Negative customer and industry im

TSL 5 18% Max Tech and Max national energy 

Negative customer and manufactu

Trial Standard Level (TSL) Descriptions

• DOE set TSLs at efficiency levels that increase incrementally 

current energy conservation standard (2008 Final Rule) up 

max‐tech level.
71

Equipment Class

TSL 1 TSL 2 TSL 3 

Efficiency Leve

PTAC < 7,000 Btu/h 2 3 4 

PTAC ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 2 3 4 

PTAC > 15,000 Btu/h 2 3 4 PTHP < 7,000 Btu/h 1 2 3 PTHP ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 1 2 3 

PTHP > 15,000 Btu/h 1 2 3 

Trial Standard Level (TSL) Descriptions
72

National Impact Analysis: Results

Equipment Class

Trial Standard Level

123

< 7,000 Btu/h 0 0.003 0.005 0

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 0.013 0.051 0.102 0

> 15,000 Btu/h 0.002 0.005 0.01 0

Total All Cooling Capacities 0.015 0.059 0.118 0

Cumulative Full Fuel Cycle National Energy Savings (quads)

Equipment Class Discount Rate

Trial Standard Level

12 3 

Million 2013$

< 7,000 Btu/h

3%

0.7 1.8 2.4 

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 22.3 65.9 113.8 1

> 15,000 Btu/h 1.0 1.2 (2.4) (Total – All Classes 23.9 69.0 113.8 1

< 7,000 Btu/h

7%

0.1 (0.2) (1.2) (

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 6.3 12.3 14.5 1

> 15,000 Btu/h ‐ (1.5) (5.4) (

Total All Cooling Capacities 6.5 10.7 7.9 (

Net Present Value of Consumer Benefit, Discounted at 3% and 7%
73

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
74

• Purpose

– To assess the impacts of standards on manufacturers;

– To identify and estimate impacts on manufacturer subgroup

be more severely affected than the industry as a whole; and

– To examine the direct employment, manufacturing capacity, 

cumulative regulatory impacts on the industry.

• Methodology

– Analyze industry cash flow and industry net present value (IN

through use of the Government Regulatory Impact Model (G

– Interview manufacturers to refine inputs to the GRIM, devel

subgroup analyses, and address qualitative issues.

MIA: OverviewDetails of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD
75

• Phase 1

– DOE creates an industry profile to characterize the market a

important issues that require further investigation.

• Phase 2

– DOE prepares an industry cash flow model and an interview

questionnaire to guide subsequent discussions with manufa

• Phase 3

– DOE interviews manufacturers and assesses the impacts of s

both quantitatively (using the GRIM) and qualitatively (impa

employment, competition, manufacturing capacity, and regu

burden).

MIA: MethodologyDetails of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD
76

MIA: MethodologyDetails of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD

• Upstream Inputs

– Market and Technology Assessment (MTA) Industry Profile

– Engineering MPCs

– Shipments

• MIA Inputs

– Markup Scenarios

– Conversion Costs
77

MIA: Key Issues

• Size Constraints

– Manufacturers expressed concern regarding their ability to increase

efficiency while maintaining the physical dimensions of PTACs and 

• Manufacturer Profitability

– Manufacturers indicated cost increases could reduce sales volumes 

profits.

• Customer Utility

– Manufacturers stated that increasing efficiency could make it diffic

meet customer requirements related to noise and humidity contro

– Manufacturers also noted potential loss of higher capacity models 

standard is set too high.

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD
78

• DOE modeled two markup scenarios to capture a rang

potential financial impacts on the industry:

– Preservation of Gross Margin Percentage Markup Scen

• Represents the upper bound of profitability impacts.

– Preservation of Operating Profit Markup Scenario

• Represents the lower bound of profitability impacts.

MIA: Markup ScenariosDetails of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD
79

MIA: Conversion Costs

Product Conversion Costs

(2013$M)

Capital Conversion Costs

(2013$M)

Total Conve

(2013

TSL 1 $2.2 $2.3 $4

TSL 2 $4.7 $2.9 $7

TSL 3 $7.2 $7.1 $14

TSL 4 $8.5 $7.1 $15

TSL 5 $13.5 $7.4 $20

• Industry conversion costs total $7.6 million at TSL 2.
80

MIA: INPV Results

Units Base Case

Trial Standard Level

1234

INPV 2013$M 58.5 57.1 to 57.4 57.7 to 58.8 55.4 to 57.5 55.0 to 5

Change in INPV

2013$M ‐ (1.4) to (1.1) (0.7) to 0.3 (3.1) to (0.9) (3.5) to 

% Change ‐ (2.4) to (1.9) (1.3) to 0.5 (5.3) to (1.6) (5.9) to 

ProductConversion Costs 2013$M ‐ 2.2 4.7 7.2 8.5 

Capital

Conversion Costs 2013$M ‐ 2.3 2.9 7.1 7.1 

Total ConversionCosts 2013$M ‐ 4.5 7.6 14.3 15.6 

Details of the manufacturer impact analysis can be found in chapter 12 of the TSD.

Note: Parentheses indicate negative values.

• Summary of TSL 2

– Expected INPV change in the range of ‐1.3% to 0.5%

– Expected conversion costs total $7.6 million for the industry
81

MIA: Subgroup of Manufacturers with Producti

• Add a few bullets plus table of INPV impacts• DOE identified 22 manufacturers of PTACs and PTHPs. Howeve

and distribute PTACs and PTHPs produced by OEMs overseas. D

a subset of domestic manufacturers that own production asset

analyzed these manufacturers as a distinct subgroup.

– DOE expects manufacturers with production assets to experience higher c

than their competitors without production assets.

Units

Trial Standard Level 2

All Manufacturers Manufacturers 

Production As

Base‐Case INPV 2013$M 58.5 46.8

Standards‐Case INPV 2013$M 57.7 to 58.8 45.7 to 46.

Change in INPV 2013$M (0.7) to 0.3 (1.1) to (0.3

% Change (1.3) to 0.5 (2.3) to (0.5

Product Conversion Costs 2013$M 4.7 3.9

Capital Conversion Costs 2013$M 2.9 2.9

Total Conversion Costs 2013$M 7.6 6.8

• Summary of TSL 2

– Expected INPV change in the range of ‐2.3% to ‐0.5%– Expected conversion costs of $6.8 million (89% of the industry total)
82

MIA: Small Business Impacts• DOE identified 12 domestic small business manufacturers 

and PTHPs.

– Small businesses were defined as having 750 employees or 

based on SBA small business size standards

• No small business identified is an OEM of standard‐size P

PTHPs. Rather, small businesses import, rebrand, and dist

equipment manufactured overseas.

• Small businesses likely would not incur capital conversion 

However, they may experience an increase in equipment 

price from overseas OEMs. They may also face testing an

certification costs for equipment redesigned to comply wamended standard.
83

MIA: Small Business ImpactsDetails of the Manufacturer Impact Analysis can be found in chapter 12 of the TSD

Issue 6: DOE requests comment on the number of small

manufacturers of PTACs and PTHPs; on the potential impact

of amended energy conservation standard on those small

manufacturers; and on the severity of those impacts.
84

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
85

• Purpose

– To analyze the impact of efficiency standards on small busine

particularly Independently‐operating lodging businesses.

• Methodology

‐ The Small Business Association classifies lodging businesses 

than $7 million in annual revenue as small businesses.

‐ Apply a discount rate premium (1.52%) for small businesses.

• Output

‐ The LCC and PBP results showed that the effect of higher PTA

PTHP standards on small businesses is similar to the effect o

sample of commercial customers.

LCC Subgroup Analysis
86

Emissions Analysis• Purpose

– To report emission impacts resulting from amended energy 

standards, including changes in power plant emissions and 

emissions.

• Methodology

– DOE used the National Energy Modeling System (NEMS) to 

emissions factors (physical units per unit of energy savings) 

Dioxide (CO2) and several other gases.

Details of the Analysis can be found in chapter 14 of the TSD.
87

Cumulative Emissions Reduction for Potential Standards of PTACs and PTHPs

Emissions Analysis: Results

Trial Standard Level

1234

CO2 (million metric tons) 1.10 4.33 8.60 10.9

NOx (thousand tons) 1.12 4.42 8.78 11.0

Hg (tons) 0.00 0.01 0.02 0.03 N2O (thousand tons) 0.02 0.07 0.14 0.18 

CH4 (thousand tons) 4.02 15.75 31.28 40.0

SO2 (thousand tons) 2.47 9.74 19.30 24.1
88

Emissions Monetization• Purpose

– To estimate the potential monetary benefit of reduced pow

emissions resulting from the considered standard levels.

• Methodology

– Social Cost of Carbon (SCC) is intended to be a monetary m

the incremental damage resulting from greenhouse gas (GH

emissions.

– DOE used the most recent (2013) U.S. government interage

estimates of the SCC for emissions in 2015, per metric ton 

‐ $12 (average value from distribution with a 5% discount rate)

‐ $40.5 (average value from distribution with a 3% discount rat

‐ $62.4 (average value from distribution with a 2.5% discount r

‐ $119 (95th‐percentile value from distribution with a 3% disco

– The SCC in constant dollars increases over time.
89

Emissions Monetization: Results

TSL 1 TSL 2 TSL 3 TSL 4 

CO2 * 7.21 to 105.5 28.06 to 412.08 56.03 to 820.95 73.86 to 1,066.

NOx ‐ 3 %

discount rate 1.39 5.43 10.85 14.16 

NOx ‐ 7 %

discount rate 0.57 2.2 4.42 6.02 

Full Fuel Cycle Emissions Reduction Benefits (million 2013$)

* Range of the economic value of CO2 reductions is based on estimates of 

the global benefit of reduced CO2 emissions.
90

Utility Impact Analysis• Purpose

- To estimate the changes in electric installed capacity and gene

result for each TSL.

• Methodology

- The National Energy Savings is used to provide a stream of ene

over the analysis period.

- The Energy Information Administration’s National Energy Mod

(NEMS) is modified to represent the impacts of DOEs standard

(modified code is known as NEMS‐BT).

• Output

- Reductions in total electricity generation.

- Reductions in primary fuel (coal, natural gas etc.) consumption

- Changes to the mix of electricity generation by fuel type.

- Changes to total installed capacity.

Details of the Analysis can be found in chapter 15 of the TSD.
91

Employment Analysis

• Purpose

‐ To estimate the net jobs created or eliminated nationally as 

consequence of amended energy conservation standards, i

direct and indirect employment impacts.

• Methodology

- Uses the ImSET (Impact of Sector Energy Technologies) mod

evaluation of indirect employment impacts, direct employm

to the commercial air conditioning industry are developed 

Manufacturer Impact Analysis (chapter 12 of the TSD).

- The changes in equipment and energy expenditures are tak

National Energy Savings Analysis.

• Output

- Change to commercial and energy sector employment as a

consequence of amended energy conservation standards.

Details of the Analysis can be found in chapter 16 of the TSD.
92

Regulatory Impact Analysis

• Purpose

- To investigate the national impacts of non‐regulatory altern

mandatory amended energy conservation standards.

• Methodology

- DOE modified NIA spreadsheet to represent the following n

regulatory alternatives:

• Output

- National Energy Savings and Net Present Value for the non‐

alternatives.

- Impact of non‐regulatory alternatives on purchase price and 

energy‐efficient equipment.

• No new regulatory action • Manufacturer tax credits

• Customer rebates • Voluntary efficiency targets

• Customer tax credits • Bulk government procurement

Details of the Analysis can be found in chapter 17 of the TSD.
93

Presentation Overview

Energy Use; Life-Cycle Cost AnalysisShipments; Trial Standard Levels; National Impact An

452 Market & Technology; Screening Analysis3 Engineering Analysis; Markups Analysis1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory ImpacProposed Standard

78
94

Proposed Standard (TSL 2): PTACs and PTHPs

Equipment

Type Sub‐category Cooling Capacity (Btu/h) Proposed Le

EER (Btu/Wh), COP 

PTAC Standard Size†

< 7,000 Btu/h EER = 12.6

≥ 7,000 Btu/h and

≤ 15,000 Btu/h EER = 14.9 – (0.32

> 15,000 Btu/h EER = 10.0

PTHP Standard Size†

< 7,000 Btu/h EER = 12.6 COP = 3.5

≥ 7,000 Btu/h and

≤ 15,000 Btu/h

EER = 14.9 – (0.32

COP = 4.0 – (0.064

> 15,000 Btu/h EER = 10.0 COP = 3.0

† Standard size refers to equipment with wall sleeve dimensions 

having an external wall opening greater than or equal to 16” high or greater than or equal to 42” wide. 

‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F 

outdoor dry-bulb temperature.
95

Summary of Notice of Proposed Rulemaking• At TSL 2, the lifetime energy savings for PTACs and PTHPs purch

30‐year period that begins in the year of expected compliance 

amended standards (2019–2048) amount to 0.06 quadrillion Bthermal units (quads).

• The cumulative net present value (NPV) of total customer costs 

savings of the proposed standards for PTACs and PTHPs ranges 

million (at a 7‐percent discount rate) to $69.0 million (at a 3‐pe

discount rate). This NPV expresses the estimated total value of 

operating‐cost savings minus the estimated increase in equipm

for equipment purchased in 2019–2048.
96

How to Submit Written Comments

• In all correspondence, please refer to the PTAC‐PTHP rulemaki

– Energy Conservation Standards for Packaged Terminal Air Co

and Packaged Terminal Heat Pumps;

– Docket Number EERE‐2012‐BT‐STD‐0029; and

– Regulatory Identification Number (RIN) 1904‐AC82.

• Email: pkgTerminalAC‐HP2012STD0029@ee.doe.gov

Postal: Courier:Ms. Brenda EdwardsU.S. Department of Energy

Building Technologies Program, Mailstop

EE‐5B1000 Independence Avenue, SWWashington, DC 20585‐0121

Ms. Brenda EdwardsU.S. Department of Energy

Building Technologies Progra950 L’Enfant Plaza, SW

Washington, DC 20024Tel: 202‐586‐2945

Comment Period closes: November 17, 2014, 11:59 PM E
97

Closing Remarks/Questions
98

Supporting Material: PTAC‐PTHP ENGINEER
99

Representative Cooling Capacity

05

10152025303540

6,800

7,200

7,600

8,000

8,400

8,800

9,200

9,600

10,000

10,400

10,800

11,200

11,600

12,000

12,400

12,800

13,200

13,600

14,000

14,400

14,800

Number of Certified

PTAC Models

in AHRI Directory

Cooling Capacity (Btu/h)

05

1015202530

6,800

7,200

7,600

8,000

8,400

8,800

9,200

9,600

10,000

10,400

10,800

11,200

11,600

12,000

12,400

12,800

13,200

13,600

14,000

14,400

14,800

Number of Certified

PTHP Models

in AHRI Directory

Cooling Capacity (Btu/h)

• For the engineering analysis, DOE selected the representative c

capacity of 9,000 Btu/h because this capacity had the highest n

standard‐size PTAC and PTHP models listed in the 2013 AHRI D
100

Engineering: Cost‐Efficiency Curves• Cost‐efficiency equations for representative capacity of 9

$300$320$340$360$380$400$420$440$460$480$500

9 9.5 10 10.5 11 11.5 12 12.5 13 

Manufacturer Production Cost (2013$)

EER (Btu/Wh)

Standard Size PTAC, 15,0Standard Size PTAC, 9,00Standard Size PTHP, 9,00Standard Size PTHP, 15,0

9,000 Btu/h PTAC: MPC = 1.78*(EER)2 ‐ 22.40*(EER) + 389.15

9,000 Btu/h PTHP: MPC = 1.78*(EER)2 ‐ 22.40*(EER) + 427.62

15,000 Btu/h PTAC: MPC = 12.19*(EER)2 ‐ 208.96*(EER) + 1280.9

15,000 Btu/h PTHP: MPC = 12.19*(EER)2 ‐ 208.96*(EER) + 1318.1

Details of the Engineering Analysis can be found in chapter 5 of the TSD
101

Supporting Material: LCC
102

LCC and PBP Analysis: Base Case Efficiency Distributio

012345

PTAC 9,000 Btu/h 0.0% 43.6% 24.3% 29.5% 2.1% 0.5% PTAC 15,000 Btu/h 0.0% 25.8% 34.8% 34.7% 2.7% 1.4% PTHP 9,000 Btu/h 48.5% 8.9% 30.2% 12.4% 0.0% 0.0%PTHP 15,000 Btu/h 58.2% 0.0% 32.5% 7.9% 1.4% 0.0%

0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%

Market Share

Efficiency Level

PTAC 9,000 Btu/h PTAC 15,000 Btu/h PTHP 9,000 Btu/h PTHP 15,000 Btu/h
103

LCC and PBP Analysis: Customer Purchase Pric

Equipment Type PTAC PTHP

Efficiency Level 9,000 Btu/h 15,000 Btu/h 9,000 Btu/h 15,0

0* $1,193 $1,294 $1,314 $

1† $1,204 $1,307 $1,323 $

2 $1,213 $1,316 $1,340 $3 $1,230 $1,339 $1,359 $4 $1,249 $1,369 $1,379 $5 $1,269 $1,405 $1,389 $6 $1,279 $1,426

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE Standard 90.1-2013 baseline for PTHPs.† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.

Note: A shipping cost of $19.52 was added to each MPC to determine the pre-markup MPC.
104

Supporting Material: Shipments and NI
105

Shipments Analysis: New Construction Floorsp

0

50

100150200250

2010 2015 2020 2025 2030 2035 2040 

Millions of square feet

Year

Healthcare Lodging Office

New commercial floor space projections from AEO 2013.
106

NIA: Unit Energy Consumption

0

200400600800

10001200140016001800

8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0

Annual Energy Consumption

EER

PTACs

7,000 Btu/h 9,000 Btu/h 15,000 Btu/h

0

500

10001500200025003000

8.0 9.0 10.0 11.0 12.0 

Annual Energy Consumption

EER

PTHPs

7,000 Btu/h 9,000 Btu/h