CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CONTENTS

3.1 INTRODUCTION

............................................................................................................ 3-1

3.1.1 Definitions

............................................................................................................. 3-1

3.1.2 Product Classes

...................................................................................................... 3-2

3.1.3 Test Proce dures

..................................................................................................... 3-3

3.2 MARKET ASSESSMENT

............................................................................................... 3-3

3.2.1 Trade Associations

................................................................................................ 3-4

3.2.2 Manufacturers and Ma rket Share

.......................................................................... 3-5

3.2.3 Regulatory Programs

............................................................................................. 3-8

3.2.4 Non-Regulatory Programs

................................................................................... 3-10

3.2.5 Industry Cost Structure

........................................................................................ 3-15

3.2.6 Equipment Lifetime

............................................................................................. 3-16

3.2.7 Market Performan ce Data

................................................................................... 3-17

3.2.8 Historical Shipments and Efficiencies

................................................................ 3-27

3.2.9 Saturations in U.S. Households

........................................................................... 3-30

3.3 TECHNOLOGY ASSESSMENT

................................................................................... 3-31

3.3.1 Compressor Improvements

.................................................................................. 3-31

3.3.2 Fan System Improvements

.................................................................................. 3-32

3.3.3 Expansion Valve Improvements

......................................................................... 3-33

3.3.4 Heat Exchanger Technologie s and Improvements

.............................................. 3-34

3.3.5 Designs Relevant Only to Heat Pumps

............................................................... 3-37

3-iLIST OF TABLES

Table 3.2.1 AHRI Directory of Cer tified Product Performance Classifications for Residential Central Air Conditioners and Heat Pumps

................................................................................... 3-5

Table 3.2.2 Manufacturer Brand Names Found in th e AHRI’s Directories of Certified Product

Table 3.2.3 Current Federal Energy Conservati on Standards for Resi dential Central Air

Table 3.2.4 Canadian Energy Conservation Standa rds for Residential Ce ntral Air Conditioners

Table 3.2.5 ENERGY STAR Levels for Split System and Single Package Re sidential Central Air

Table 3.2.8 Rebate Programs Offered by Local Utilities for Residential Central Air Conditioners

Table 3.2.9 Rebate Programs Offered by Local Ut ilities for Residential Ce ntral Air-Cooled Heat

Table 3.2.10 Air Conditioning and Warm Air He ating Equipment Industry Employment and

Table 3.2.12 Industry Cost Stru cture Developed from SEC Data Error! Bookmark not defined. Table 3.2.13 Types of Models Listed in the AHR I Directory of Certified Product Performance.... Performance for Residential Central Ai r Conditioners and Heat Pumps

.................................... 3-6

Conditioners and Heat Pumps

.................................................................................................... .. 3-9

and Heat Pumps

................................................................................................................. ........ 3-10

Conditioners and Heat Pumps

.................................................................................................... 3-11

Table 3.2.6 CEE Tiers for Residential Centra l Air Conditioners and Heat Pumps

................... 3-12

Table 3.2.7 Federal Tax Credits fo r Residential Central Air Cond itioners and Heat Pumps

.... 3-12

............................................................................................................................... ..................... 3-13

Pumps

.......................................................................................................................... ............... 3-14

Payroll Data

................................................................................................................... ............ 3-15 Table 3.2.11 Air Conditioning and Warm Air Heating Equipment Industry Cost Data

.......... 3-16

............................................................................................................................... ..................... 3-17

LIST OF FIGURES

Figure 3.2.1 2007 Market Shares for Unitary Air Conditioners and Heat Pumps

...................... 3-7 Figure 3.2.3 SEER Ratings for Single Package Ce ntral Air Conditioners in the AHRI Certified

Figure 3.2.4 SEER Ratings for Single Packag e Heat Pumps in the AHRI Certified Product

Figure 3.2.5 SEER Ratings for Split System Cent ral Air Conditioners in the AHRI Certified

Figure 3.2.6 SEER Ratings for Split System Heat Pumps in the AHRI Directory of Certified

Figure 3.2.7 SEER Ratings for SDHV Systems in the AHRI Directory of Certified Product

Figure 3.2.8 HSPF Ratings for Single Package He at Pumps in AHRI’s Directory of Certified

Figure 3.2.9 HSPF Ratings for Split System Heat Pumps in AHRI’s Directory of Certified

Figure 3.2.10 HSPF Ratings for SDHV Heat Pump s in AHRI’s Directory of Certified Product

Figure 3.2.11 Average SEER Ratings at Each Cooling Capacity for Single Package Air Product Performance Directory

................................................................................................. 3 -18

Performance Directory

.......................................................................................................... ..... 3-18

Product Performance Directory

................................................................................................. 3 -19

Product Perfo rmance

............................................................................................................ ...... 3-19

Performance

.................................................................................................................... ........... 3-20

Product Perfo rmance

............................................................................................................ ...... 3-21

Product Perfo rmance

............................................................................................................ ...... 3-21

Performance

.................................................................................................................... ........... 3-22

Conditioners in AHRI’s Directory of Certified Product Performance

...................................... 3-23

3-iiFigure 3.2.12 Average SEER Ratings at Each Cooling Capacity for Split System Air Conditioners in AHRI’s Directory of Certified Product Performance

...................................... 3-23 Figure 3.2.13 Average SEER Rating at Each Coolin g Capacity for Single Package Heat Pumps

Figure 3.2.14 Average SEER Rating at Each Coolin g Capacity for Split System Heat Pumps in

Figure 3.2.15 Average SEER Rating at Each Cooling Capacity for SDHV Systems in the AHRI

Figure 3.2.16 Average HSPF at Each Cooling Cap acity for Single Package Heat Pumps in the

Figure 3.2.17 Average HSPF Rating at Each Cooling Capacity for Split System Heat Pumps in

Figure 3.2.18 Average HSPF Rating at Each Cooling Capacity for SDHV Heat Pumps in the in the AHRI Directory of Cer tified Product Performance

......................................................... 3-24

the AHRI Directory of Certif ied Product Performance

............................................................. 3-24

Directory of Certified Product Performance

.............................................................................. 3-25

AHRI Directory of Certified Product Perfo rmance

................................................................... 3-26

the AHRI Directory of Certif ied Product Performance

............................................................. 3-26

AHRI Directory of Certified Product Perfo rmance

................................................................... 3-27

3-iiiCHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

3.1 INTRODUCTION

This chapter details the market and technolog y assessment that the U.S. Department of Energy (DOE) has carried out in support of the ongoing energy conservation standards rulemaking for residential central air conditioners and heat pumps. It consists of two sections: the

market assessment and th e technology assessment.

The goal of the market and technology assessment is to de velop a qualitative and quantitative characterization of the residential ce ntral air conditioner and heat pump industry and market structure, based on publicly available information and data and information submitted by

manufacturers and other stakeholde rs. Publicly available information includes the equipment certification directory from the Air-Conditioning, Heating and Refrigeration Institute (AHRI), as well as Current Industry Reports (CIR) and A nnual Survey of Manufactures (ASM) from the

U.S. Census Bureau. Issues addressed include: manufacturer characteristics and market shares; existing regulatory and non-regulatory efficien cy improvement initiatives ; product classes; and trends in the equipment markets and characteristics. The technol ogy assessment is a preliminary list of technologies that can improve the efficiency of residential central air conditioners and heat pumps. These technologies are consid ered in the screening analysis.

Residential central air conditioners and heat pum ps are products that are used to centrally heat and/or cool residential buildings. These pr oducts, also called unitary air conditioners and heat pumps, are limited to cooling capacities of less than 65,000 Btu/hr (5.4 tons) and do not

include room air conditioners a or packaged terminal air conditioners and heat pumps. b

3.1.1 Definitions

The Energy Policy and Conservation Act (EPCA) defines a “central air conditioner” as “a product, other than a packaged terminal air c onditioner, which is powered by single-phase electric current, air cooled, rated below 65,000 Btu per hour, not contained within the same cabinet as a furnace, the rated capacity of wh ich is above 225,000 Btu per hour, and is a heat pump or a cooling only unit.” (42 U.S.C. 6291(21)(A )-(E)) DOE has incorporated this definition into its regulations at 10 CFR 430.2.

a “Room air conditioner” is defined in 10 CFR 430.2 as “a consumer product, other than a ‘packaged terminal air conditioner,’ which is powered by a single phase electric cu rrent which is an encased assembly designed as a unit for mounting in a window or through the wall for the purpose of providing delivery of conditioned air to an enclosed space. It includes a prime source of refrigeration and may include a means for ventilating and heating.” For more information on room air conditioners, see http://www.eere.energy.gov/buildings/appliance_standards/residential/room_ac.html

. b “Packaged terminal air conditioner” is defined in 10 CFR 430.2 as “a wall sleeve and a separate unencased combination of heating and cooling assemblies specified by the builder and intended for mounting through the wall. It includes a prime source of refrigeration, separable outdoor louvers, forced ventilation, and heating availability energy.” “Packaged terminal heat pump” is defined in 10 CFR 430.2 as “a packaged terminal air conditioner that utilizes reverse cycle refrigeration as its prime heat source and should have supplementary heating availability by builder’s choice of energy.” For more information on package terminal air conditioners and heat pumps, see http://www.eere.energy.gov/buildings/appliance_standards/commercial/packaged_ac_hp.html

.

3-1EPCA defines a “heat pump” as “a product, other than a packaged terminal heat pump,

which consists of one or more assemblies, powered by single-pha se electric current, rated below 65,000 Btu per hour, utilizing an indoor conditioni ng coil, compressor, and refrigerant-tooutdoor air heat exchanger to provide air heating, and may also provide air cooling, dehumidifying, humidifying circulating, and air cleaning.” (42 U.S.C. 6291(24)(A)-(E)) DOE has incorporated this definition into its regulations at 10 CFR 430.2.

3.1.2 Product Classes

Residential central air conditioners and heat pumps are divided into nine product classes based on physical characteristics of the produc t that affect performance. Key physical characteristics include product ty pe (i.e., air conditioner or heat pump), whether the unit is a single package or has individual indoor and outdoor sections, and space constraints that relate to product utility.

3.1.2.1 Existing Product Classes

The existing Federal energy conservation standa rds for residential central air conditioners and heat pumps went into effect on January 23, 2006. 10 CFR Part 430.32(c)(2) lists the nine product classes of residential cen tral air conditioners and heatpumps and their corresponding energy conservation standards. The existing product classes are:

• Split-system air conditioners

• Split-system heat pumps

• Single-package air conditioners

• Single-package heat pumps

• Through-the-wall air conditioners and heat pumps – split system

• Through-the-wall air conditioners and heat pumps – single package

• Small duct, high velocity systems

• Space-constrained air conditioners

• Space-constrained heat pumps

3.1.2.2 Rulemaking Product Classes

For this residential central air conditioner and heat pump rulemaking, DOE maintained the existing product classes. However, two of th e existing product classes, through-the-wall air conditioners and heat pumps – split system and th rough-the-wall air conditioners and heat pumps

–

single package, no longer exist c , which is subsequent to the eff ective date of this rulemaking. Therefore, DOE did not consider those two product classes separately (instead DOE considered them to be space-constrained products), and ex amined only seven product classes for this

residential central air conditioner and heat pump rulemaking. The se ven product classes DOE

examined are:

c As defined in 10 CFR 430.2, the through-the-wall product class applies only to products manufactured prior to January 23, 2010. This provision eliminates through-the-wall units as a separate product class after this date.

3-2• Split-system air conditioners

• Split-system heat pumps

• Single-package air conditioners

• Single-package heat pumps

• Small duct, high velocity systems

• Space-constrained air conditioners

• Space-constrained heat pumps

3.1.3 Test Procedures

The test procedures for central air conditione rs and heat pumps are codified in 10 CFR 430, Subpart B, Appendix M. Most aspects of the existing test procedure for central air conditioners and heat pumps date back to its original publication in the Federal Register on December 27, 1979. 44 FR 76700. DOE modified the test procedure on March 14, 1988, to cover variable-speed central air conditioners and he at pumps, to address te sting of split non-ducted units, and to change the method used for cred iting heat pumps that provide a demand defrost capability. 53 FR 8304.

A further revision of the test procedure for central air conditioners and heat pumps was published as a final rule on October 11, 2005 and became effective on April 10, 2006. 70 FR 59122. Generally, the October 2005 final rule added new sections, revised several sections, and re-organized the test procedure in order to eliminate the need for several test procedure waivers and to make the test procedure more chronological in its progression. The revisions to the test procedure did not alter the minimum energy cons ervation standards in effect for central air conditioners and heat pumps. On July 20, 2006, DOE published a proposed rule to consider further changes to the test procedure in response to issues raised by stakeholders prior to the publication of the October 11, 2005, final rule . 71 FR 41320. DOE determined that it was appropriate to consider additional modifications to the test procedure for the following reasons: (1) to implement test procedure revisions that are needed because of new energy conservation standards for small-duct, high-velocity (SDHV) systems; (2) to better address test procedure waivers for multi-split systems; and (3) to address sampling and rating issues that have been raised since new minimum energy conservation standards for these products became effective on January 23, 2006. Id . at 41321-22 A final rule adopting additional amendments to the central air conditioner and heat pump test pr ocedures related to these issues was published on October 22, 2007, which became effective on April 21, 2008. 72 FR 59906. Subsequent waivers granted for residential modulating mu lti-split systems terminated on the eff ective date of the latest test procedure final rule. 72 FR at 59906-07.

3.2 MARKET ASSESSMENT

The following market assessment identifies manufacturer trade associations, domestic

and international manufacturers of residential ce ntral air conditioners and heat pumps and their corresponding market shares, regulatory and non -regulatory programs. The market assessment

also describes the cost structur e for the residential central air conditioner and heat pump industry,

and summarizes relevant ma rket performance data.

3-33.2.1 Trade Associations

DOE identified AHRI as the only trade group that supports, or has an interest in, the residential central air conditioner and heat pump industry.

AHRI is a national trade association of manuf acturers of residential, commercial, and industrial appliances and equipment, components, and relate d products. AHRI was established in January of 2008 when the Air-Conditioning and Refrigeration Institute (ARI) merged with the Gas Appliance Manufacturers Association (GAMA) . AHRI’s member companies are responsible for over 90 percent of the residential and co mmercial air conditioning and space heating equipment sold in North America. 1 AHRI develops and publishes technical standards for residential and commercial equipment using rati ng criteria and procedures for measuring and certifying equipment performance. AHRI also par ticipates in developing international standards and has established a policy of a dopting international standards for use in the United States when technologically and economically feasible.

AHRI administers the ARI Performance Certified programs that test and certify the performance of cooling equipment. AHRI mainta ins the AHRI Directory of Certified Product Performance that lists all produc ts that have been certified by the AHRI. AHRI maintains certified performance directories for both air conditioners and heat pumps rated below 65,000 Btu/h. The AHRI directories subdivide these products based upon certain defining characteristics, such as single package or split system and coil only or coil and blower

combinations. Table 3.2.1 shows the AHRI classifi cations where products are available in the AHRI directories of certified products, along with the corresponding DOE product classes for this rulemaking.

3-4Table 3.2.1 AHRI Directory of Certified Pr oduct Performance Classifications for Residential Central Air Conditioners and Heat Pumps

DOE Product Class AHRI Classifications* Split system air conditioners RCU-A-C

RCU-A-CB

RCU-A-CB-O

RCUY-A-CB

RCUY-A-CB-O

RC-A Split system heat pumps HRC-A-C

HRC-A-CB

HRCU-A-C

HRCU-A-CB

HRCU-A-CB-O

HORC-A-C

HORCU-A-C

HORCU-A-CB Single package air conditioners SP-A

SPY-A Single package heat pumps HSP-A Small duct, high velocity systems SDHV-RCU-A-CB

SDHV-HRCU-A-CB

SDHV-HORCU-A-CB Space constrained products – air conditioners** TTW-RCU-A-C

TTW-RCU-A-CB Space constrained products – heat pumps** TTW-HRCU-A-C

TTW-HRCU-A-CB
*The classifications listed are only those with products available in the AHRI Directories of Certified Product Performance for central air conditioners and heat pumps. For more information on AHRI classifications and their definitions, visit www.ahridirectory.org/ahriDirectory/pa ges/fieldHelp.aspx?program=AC&controlID=ariType for air conditioners, or www.ahridirectory.org/ahriDirectory/ pages/fieldHelp.aspx?program=HP&controlID=ariType for heat pumps. **The AHRI Directory of Certified Performance did not list any space constrained products as of March 16, 2009. However, after January 23, 2010 (which is after the effective date for this rulemaking) the Through-the-wall equipment classes will expire, at which time, they will become part of the space constrained product classes.

3.2.2 Manufacturers and Market Share

DOE examined AHRI’s Directory of Cer tified Product Performance for residential central air conditioners and heat pumps to identify residential central air conditioner and heat pump manufacturers. DOE identifie d 45 separate companies that manufacture and market air conditioner and heat pump systems and coils. Th e manufacturers found in the AHRI Directories

of Certified Pr oduct Performance for residential central air conditioners and heat pumps are listed in Table 3.2.2, along with their parent company in parentheses, if applicable.

3-5Table 3.2.2 Manufacturer Brand Names Found in the AHRI’s Directories of Certified Product Performance for Residential Central Air Conditioners and Heat Pumps 2

Aaon, Inc. Lennox International National Coil Company

Aire-Flo Friedrich Air Conditioning Co. (US Natural Resources, Inc.) National Comfort Products (National Refrigeration and Air Conditioning Products, Inc.)

Airquest Fujitsu General America, Inc. (Fujitsu General Group) Nutone

Airwell-Fedders North America,

Inc. GD Midea Commercial AirConditioning Equipment Co., Ltd. Quietside

Bard Manufacturing Company Goodman/Amana (Goodman Global, Inc.) Rheem/Ruud (Paloma Global)

Beutler Corporation Grandaire Style Crest Products

Broan Haier America (Haier Group) Summit Manufacturing, Inc.

Century (Heat Controller) Heat Controller, Inc. Texas Furnace, LLC

Cold Point Corp. Intertherm Thermo Products, Inc. (Burnham Holdings, Inc.) Dayton Electric Manufacturing Company (WW Grainger, Inc.) Kenmore (Sears Holdings Corpora tion) Trane/American Standard (Ingersoll Rand)

Eair LLC LG Electronics, Inc. Unitary Products Group (York/Johnson Controls)

Ecotemp Mammoth, Inc. (Thomas H. Lee Partners, LP) United Refrigeration Distributors,

Inc.

Enviromaster International (ECR International, Inc.) McQuay International (Daikin Industries, Ltd.) V-Aire

Espitech, LLC Mitsubishi Electric and Electronics USA, Inc. Whirlpool

International Comfort Products ­

Carrier/UTC Nordyne Xenon

Figure 3.2.1 displays the 2007 market shares for the residential central air conditioner market. The 7 largest residential central air c onditioner and heat pump ma nufacturers controlled 97 percent of the market. The seven largest ma nufacturers for the year 2007 are UTC/Carrier, Goodman, American Standard (Trane) d , Lennox, Rheem, York and Nordyne.

d Prior to 2007, Trane was a subsidiary of American Standard Companies. On November 28, 2007 Trane separated from the two other branches of American Standard Companies. On June 5, 2008, Ingersoll Rand acquired Trane. For more information, visit www.trane.com/Corporate/About/history.asp.

3-6Figure 3.2.1 2007 Market Shares for Unitar y Air Conditioners and Heat Pumps 3

3.2.2.1 Small Businesses

DOE considers the possibility of small businesses being particularly impacted by the promulgation of minimum energy conservation sta ndards for residential ce ntral air conditioners and heat pumps. The Small Business Admin istration (SBA) defines small business manufacturing enterprises for resi dential central air conditioners and heat pumps as having 750 employees or fewer. 4 SBA lists small business size standard s that are matched to industries as they are described in the North American I ndustry Classification System (NAICS). A size standard is the largest that a for-profit concern can be and still qualify as a small business for Federal Government programs. These size standard s are generally the average annual receipts or the average employment of a firm. For residen tial central air conditioners and heat pumps, the size standard is matched to NAICS code 333415, Air-Conditioning and Warm Air Heating Equipment and Commercial and I ndustrial Refrigeration Equipmen t Manufacturing, which has a size standard of 750 employees.

DOE further studied the potential impacts on these small businesses in detail and presented the results in manufacturer impact anal ysis (MIA) (Chapter 12 of this TSD). DOE has identified the following as small business residential central air conditioner and heat pump

manufacturers:

• Aire-Flo

• Airquest

• Bard Manufacturing Company

• Beutler Corporation

• Heat Controller

• Cold Point Corporation

• Eair, LLC

• Enviromaster International

3-7• Espitech, LLC

• National Coil Company

• National Comfort Products

• Quietside

• Style Crest Products

• Summit Manufacturing, Inc.

• Texas Furnace, LLC

3.2.2.2 Mergers and Acquisitions

A trend in the residential central air conditi oning and heat pump industry over the past decades has been the consolidation of major manufacturers. In the last ten years or so, the seven major manufacturers (i.e., Goodm an, Lennox, Carrier, York, Rheem, Nordyne, and Trane) have gone through various mergers and acquisitions, and have materialized as differentiated leaders in the air conditioning and heat pump manufacturing industry. A brief summary of the recent history of each of the seven largest manufacturers is as follows:

• Goodman Global, Inc. was founded and purchased Janitrol in 1982. In 1997, Goodman acquired the Amana brand.

• Lennox Industries is a subsidiary of Lennox International, Inc., a holding company

that was created in 1984. Lennox Internati onal acquired Armstrong Air Conditioning Inc. in 1988. In 1999, Lennox International co mpleted an Initial Public Offering and became a public company.

• Carrier has been a wholly-owned subsid iary of United Tec hnologies Corporation since 1979. In 2004, Carrier Corpora tion acquired Linde Refrigeration.

• York Unitary Products Group and York Inte rnational are subsidiaries of Johnson Controls, Inc. Johnson Controls, Inc. purchased York in 2005.

• Rheem is a privately held firm that was acquired by Paloma I ndustries of Japan in

1987. Paloma Industries also acquired Rheem Australia (Solahart) in 2002.

• Nordyne is a subsidiary of the privately held Nortek, Inc. It introduced the Frigidaire, Tappan, and Philco brands as potential repl acement HVAC brands in 1998. It also

added the Gibson and Kelvinator bra nds in 1999. In 2002, the firm added the Westinghouse brand as a residential produc t line. The Mammoth commercial line was introduced as a part of Nordyne in 2003. Most recently, Nordyne added the Broan brand of products in 2005.

• Trane Inc. was acquired by American Standard Companies in 1984. In 2007 Trane separated from American Standard and was subsequently bought by Ingersoll-Rand in

2008.

3.2.3 Regulatory Programs

The following section details current regula tory programs mandating energy conservation

standards for residential central air conditi oners and heat pumps. Section 3.2.3.1 discusses current Federal energy conservation standard s. Sections 3.2.3.2 and 3.2.3.3 review standards in both Canada and Mexico that may impact the companies servicing the North American market.

3-83.2.3.1 Current Federal Energy Conservation Standards

Part A of Title III of EPCA addresses the energy conservation standards for consumer products other than automobiles, which include residential centr al air conditioners and heat pumps. (42 U.S.C. 6291-6309) The most recent Fe deral standards for residential central air conditioners and heat pumps went into effect on January 23, 2006 and are codified in? 10 CFR Part 430.32. Table 3.2.3 presents the current Fe deral energy conservation standards for residential central air conditioners and heat pumps as presented in part (c)(2) of 10 CFR Part

430.32.

Table 3.2.3 Current Federal Energy Conservation Standards for Residential Central Air Conditioners and Heat Pumps e
Product class SEER* HSPF** (i) Split system air conditioners 13.0

- (ii) Split system heat pumps 13.0 7.7 (iii) Single package air conditioners 13.0

- (iv) Single package heat pumps 13.0 7.7 (v)(A) Through-the-wall air conditioners and heat pumps-split system*** 10.9 7.1

(v)(B) Through-the-wall air cond itioners and heat pumps-single package*** 10.6 7.0

(vi) Small duct, high velocity systems 13.0 7.7 (vii)(A) Space constrained pr oducts-air conditioners 12.0

- (vii)(B) Space constrained products-heat pumps 12.0 7.4
*SEER is seasonal energy efficiency ratio. **HSPF is heating seasonal performance factor for Region IV. ***As defined in 10 CFR Part 430.2, this product class applies to products manufactured before January 23, 2010.

3.2.3.2 Canadian Energy Conservation Standards

The Natural Resources Canada (NRCan) Office of Energy Efficiency regulation mandates minimum energy conserva tion standards for residential central air conditioners and heat pumps. These standards apply to single p ackage and split system air-source air conditioners and heat pumps with a cooling capacity less than 65,000 Btu/h. The current standards went into effect November 2006, and are shown in Table 3.2.4.

e Current Federal energy conservation standards for residential central air conditioners taken from 10 CFR 430.32(c)(2).

3-9Table 3.2.4 Canadian Energy Conservation St andards for Residential Central Air Conditioners and Heat Pumps 5

Product Minimum Energy

Performance Standard Air Conditioners – single package & split-system – cooling SEER = 13 Heat Pumps – single package & split–system – cooling SEER = 13 Heat Pumps – single package & split system – heating HSPF V* = 6.7 AC & HP – through–the–wall, coolin g – (until January 22, 2010) SEER = 10.9 AC & HP – through–the–wall, cooling – (after January 23, 2010) SEER = 12 Heat pumps – through–the–wall – heatin g – (until January 22, 2010) HSPF V = 6.2 Heat Pumps – through–the–wall – heatin g – (after January 23, 2010) HSPF V = 6.4 AC & HP – space–constrained – cooling SEER = 12 Heat pumps – space–constrained – heating HSPF V = 6.4 AC & HP – small duct, high velo city (SDHV) – cooling SEER = 11
*HSPF V is the Heating Seasonal Performance Factor – Region V. U.S. energy conservation standards specify HSPF as HSPF IV (i.e. HSPF – Regi on IV). HSPF V = HSPF IV/1.15.

3.2.3.3 Mexican Energy Conservation Standards

The National Commission for Energy Saving (CONAE) f is the agency responsible for developing, updating, and imple menting Mexican official standards of energy efficiency. CONAE published NOM-011-ENER-2006 (which update d previous standard effective in 2002) in June 2007. The standards prescribe minimum e fficiencies for central, package, and split system central air conditioners with cooling capacities between 30,000 and 65,000 Btu/h g at a
minimum of 13 SEER. h

Table 3.2.5 Mexican Energy Conservation St andards for Residential Central Air

Conditioners 6

Product Minimum Energy

Performance Standard
Air Conditioners – single package & split-system – cooling SEER = 13

3.2.4 Non-Regulatory Programs

DOE identified several non-regulatory programs aimed at improving the energy efficiency of residential central air conditioners and heat pumps. DOE reviewed two programs based on voluntary efficiency targets for residen tial central air conditioners and air-source heat pumps: the ENERGY STAR program and the Consortium for Energy Efficiency (CEE) initiative. In addition, DOE identif ied rebate programs for resi dential purchasers of higherefficiency central air conditione rs and heat pumps, DOE also identified Federal and State tax

f For more information visit www.conae.gob.mx/wb/CONAE/english/_rid/6600?page=1

. g Cooling capacity is specified in the standard as 8,800W to 19,050W.

h Mexican efficiency standards for central air conditioners are specified in terms of Relación de eficiencia energética

estacional (REEE). NOM-011-ENER-2006 mandates a minimum efficiency of 3.81 REEE, which is equivalent to

13 SEER.

3-10credits for residential consumers of higher-effici ency central air conditioners and heat pumps. DOE reviewed Federal procurement specifi cations for these products as well.

3.2.4.1 Voluntary Energy Efficiency Targets

Energy Star

ENERGY STAR i is a voluntary labeling program conducted by the U.S. Environmental Protection Agency (EPA) and DOE that identifie s and promotes energy-efficient products. To qualify, a product must usually exceed federal mi nimum standards by a specified amount, or if no federal standard exists, it must meet minimum efficiency levels set by the program and/or exhibit selected energy saving features. ENERGY STAR creates minimum energy efficiency specifications for various products, including split system and single package air conditioners and heat pumps. ENERGY STAR originally set specifications for central air conditioners and heat pumps in 1995, followed by revisions in 2002, 2006, and 2009. The current (2009)

ENERGY STAR levels are shown in Table 3.2.5.

Table 3.2.5 ENERGY STAR Levels for Split Sy stem and Single Pa ckage Residential Central Air Conditioners and Heat Pumps 7

Product Class SEER Rating EER Rating* HSPF Rating Split system air conditioners 14.5 12.0

- Split system heat pumps 14.5 12.0 8.2 Single package air conditioners 14.0 11.0

- Single package heat pumps 14.0 11.0 8.0
*EER is energy efficiency ratio.

Consortium for Energy Efficiency

The CEE Residential Central Air Conditioner and Heat Pump Initiative promotes the use of high-efficiency residential central air c onditioners and heat pumps, along with proper installation and sizing of these products. CEE identifies three tiers of efficiency for split system central air conditioners, and two tiers of efficiency for split system heat pumps and single package central air conditioners and heat pumps. For split system central air conditioners and package central air conditioners and heat pumps, the CEE Tier 1 levels are the same as the ENERGY STAR levels. The CEE tier requirements are shown in Table 3.2.6.

i For more information, visit www.energystar.gov.

3-11Table 3.2.6 CEE Tiers for Residential Cent ral Air Conditioners and Heat Pumps 8

Product Class CEE Tier SEER Requirement EER Requirement HSPF Requirement Split System Central Air Conditioners Tier 1 14.5 12.0

- Tier 2 15.0 12.5

- Tier 3 16.0 or higher 13.0 or higher

- Single Package Central Air Conditioners Tier 1 14.0 11.0

- Tier 2 14.0 or higher 12.0 or higher

- Split System Heat Pumps Tier 1 14.5 12.0 8.5

Tier 2 15.0 or higher 12.5 or higher 8.5 or higher Single Package Heat Pumps Tier 1 14.0 11.0 8.0

Tier 2 14.0 or higher 12.0 or higher 8.0 or higher

3.2.4.2 Consumer Rebate Programs

DOE has identified numerous reba te programs that are available to purchasers of new residential central air conditioners or heat pumps. These rebates are offered by electric utility companies or other agencies to residential consumers who purchase higher-efficiency units.

Appendix 3-A provides a listing of rebates for residential centr al air conditioners and heat pumps identified by DOE.

3.2.4.3 Consumer Tax Credits

Federal Tax Credits

DOE reviewed the Federal tax credit that provides consumers a credit toward their Federal income tax if they purchase qualifying re sidential central air conditioners or heat pumps. These tax credits apply only to products being in stalled in existing homes; they do not apply to central air conditioners and heat pumps for new housing construction. This Federal tax credit is 30 percent of the installation cost (equipment and labor) to the consumer of the new air conditioner or heat pump, with a maximum limit of $1500. To qualify for the Federal tax credit, products must meet varying levels of efficiency depending on the product class. Table 3.2.7 shows the required efficiency level for each produ ct class, along with the amount of the Federal

tax credit available.

Table 3.2.7 Federal Tax Credits for Residentia l Central Air Conditioners and Heat Pumps 9

Product EER Requirement SEER Requirement HSPF Requirement Available Tax Credit

Central Air Conditioners – Split Systems ≥ 13.0 ≥ 16.0 N/A 30% of cost, up to $1,500

Central Air Conditioners – Single Package ≥ 12.0 ≥ 14.0 N/A 30% of cost, up to $1,500

Air Source Heat Pumps – Split Systems ≥ 12.5 ≥ 15.0 ≥ 8.5 30% of cost, up to $1,500

Air Source Heat Pumps – Single Package ≥ 12.0 ≥ 14.0 ≥ 8.0 30% of cost, up to $1,500

3-12State Tax Credits

DOE also identified four states that have tax credits for central air conditioners and heat pumps: Montana, Oregon, Indiana, and Kentucky.

Montana has had an Energy Conservation Tax Credit for residential energy conservation

measures since 1998. 10

, 11 The tax credit covers a variety of residential energy and water efficiency installations, including ENERGY ST AR heating/cooling equipment. The amount of the credit increased in 2002 from 5 percent of e quipment costs (up to $150) to 25 percent (up to $500 per taxpayer). The Energy Conservation Tax Credit can be used for equipment installed in

new construction or rem odeling projects, with the tax credit allowed only for the portion of the

cost and materials above “establis hed standards of construction.”

Oregon’s Residential Energy Tax Credit (R ETC) was created in 1977 to encourage the

use of renewable resources in households. The Oregon legislature expanded the RETC program in 1997 to include residential refrigerators, clothes washers, and dishwashers; participation in the program increased significantly after they beca me eligible. The prog ram subsequently added credits for high-efficiency heat pump systems, air conditioners, and water heaters (2001); furnaces and boilers, (2002),and other equipm ent and measures. For HVAC, residential appliances, and water heating, the credit is $0.40/ kWh saved in the first year, or 25% of net purchase price, whichever is less. The credit limit for energy efficient appliances and heating and cooling systems is $1,000 per calendar year; excess credit may be carried forward for five

12

, 13 years.

To qualify, a central air conditioning or h eat pump system must have a performance verification test by a tax credit-certified technicia n. For this verification test there is a separate

tax credit of 25% of the cost of the test and an y needed repairs, up to $250. Purchasers of highefficiency central air conditioners or heat pumps who have pre mium efficiency ducts qualify for an additional $150 tax credit.

Central air conditioning split-system units mu st have EER of 13.0 or higher. The tax credit for qualifying central air conditioning systems is the amount listed in Table 3.2.8 or 25 percent of the net purchase price, whichever is less.

Table 3.2.8 Oregon Tax Credit for Central Air Conditioners

Tier Minimum Efficiency EER Maximum Tax Credit Amount

RAC4 13.0 $160

RAC5 14.0 $225

RAC6 15.0 $300

Air-source heat pump split-system equipment must have HSPF of 9.0 or higher and EER of 12 or higher. Table 3.2.9 shows the heat pum p tax credit levels by system efficiencies.

3-13Table 3.2.9 Oregon Tax Credits for Heat Pumps

HSPF EER

12 12.5 13

9.0 $300 $320 $340

9.5 $300 $360 $380

10.0 $300 $360 $430

Indiana offers a tax credit beginning in 2009 to individuals and small businesses for the costs associated with purchasing ENERGY STAR -qualified central air conditioners,and other appliances. The credit may be claimed against the state income tax, insurance premium tax, or

financial institutions tax. The amount of the ta x credit is set at 20% of the expenditures for qualified heating and cooling e quipment up to $100 per taxable year. The credit is for expenditures in 2009 and 2010 and there is no carryover. 14

, 15

Kentucky offers a 30% state income tax credit beginning in 2009 for taxpayers who install certain energy efficiency measures on their principal residence or residential rental property. These energy efficiency measures in clude “Qualified Energy Property Installation,” which includes heat pumps and central air conditi oners, among others. Eq uipment must meet the efficiency guidelines specified in the Federal tax credit for residential energy property (see Table 3.2.7). The total annual tax credit for this equipm ent may not exceed $250. These credits apply

to equipment purchased in taxable years 2009-201 5 and may be carried forward for one year. 16

, 17

3.2.4.4 FEMP Procurement Guidelines

DOE reviewed the Federal Energy Management Program (FEMP) procurement guidelines for Federal governme nt equipment purchasing. Fe deral constructi on requirements include these guidelines for installing or replacing equipment. Table 3.2.10 shows the FEMP performance requirements for residential cent ral air conditioners and Table 3.2.11 shows the requirements for air source heat pumps. 18

, 19

Table 3.2.10 FEMP Performance Requirements fo r Residential Central Air Conditioners
System Type SEER EER
Split 14.5 or greater 12.0 or greater

Packaged 14.0 or greater 11.0 or greater

Table 3.2.11 FEMP Performance Requirements for Air Source Heat Pumps
System Type HSPF EER SEER

Split 8.0 or greater 11.0 or greater 13.0 or greater

Single Package 7.6 or greater 10.5 or greater 12.0 or greater

3-143.2.5 Industry Cost Structure

DOE developed an industry cost structure for residential central air conditioners and heat pumps from publicly available information from the Census Bureau’s ASM and the SEC 10-K reports filed by publicly owned manufacturers.

The Census Bureau collects industry-wide em ployment data based on NAICS codes. As stated previously, manufacturers of residentia l central air conditioners and heat pumps are grouped into the Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufactur ing category, which is NAICS code 333415. Table 3.2.12 presents the commercial air cond itioning and warm air heating equipment manufacturing employment levels and earnings from 1997 to 2005 according to the NAICS.

Table 3.2.12 Air Conditioning and Warm Air Heating Equipment Industry Employment and Payroll Data 20,21

Year Production Workers All Employees Payroll for All Employees ($1000)

2006 74,909 98,097 4,019,813

2005 76,011 102,354 3,942,808

2004 73,106 99,035 3,691,029

2003 77,488 104,668 3,776,417

2002 80,417 108,274 3,815,747

2001 88,978 118,876 3,950,483

2000 97,978 127,384 4,267,872

1999 95,904 123,962 4,043,064

1998 91,994 120,011 3,844,667

1997 90,968 119,386 3,678,996

The statistics illustrate a steady decline in both the number of production and nonproduction workers in the industry after the year 2000, with the only exception being in 2005, when the number of employees increased. The overall decline in employment may be a result of industry consolidation, increased automation in production, or manufacturers moving their

facilities outside of the United States to reduce labor costs. The increase in employment in 2005 may have resulted from manufactur ers of residential central ai r conditioners in heat pumps augmenting the number of production workers to d eal with the increased demand for central air conditioners and heat pumps that occurred prior to the most recent Federal standards becoming effective in 2006 (as shown by the sharp increase in residential central air conditioner and heat pump shipments in 2005).

Table 3.2.13 presents the costs of materials and industry payroll as a percentage of value of shipments from 1997 to 2006.

3-15Table 3.2.13 Air Conditioning and Warm Air Heating Equipment Industry Cost Data 10,11

Year Cost of Materials as a percent of value of shipments (percent) Cost of Payroll for production workers as a percent of value of shipments (percent) Cost of Total Payroll (production + admin.)

as a percent of value of

shipments (percent)

2006 53.2 8.9 13.8

2005 53.8 8.5 13.8

2004 51.1 8.8 14.2

2003 50.6 9.5 15.4

2002 49.4 9.8 15.9

2001 52.6 9.8 15.8

2000 53.0 10.1 16.0

1999 53.4 9.8 15.4

1998 54.9 9.9 15.4

1997 54.2 10.1 16.0

The cost of materials as a percentage of valu e of shipments has fluctuated slightly over the 10-year period. Fluctuations in raw material costs are common from year to year. The cost of payroll for production workers as a percentage of value of shipments has followed a declining pattern since 1998, with the exception of only the year 2006, during which the cost of payroll increased from the previous year. Finally, the cost of total payroll as a percentage of value of shipments has generally declined since 2000, illu strating a reduction in industry non-production or administrative employees, possibly the product of selling, general, and administrative (SG&A) cost-cutting measures.

A detailed financial analysis of the manufacturers of each of the product types covered by this rulemaking is presented in the manufacturer impact analysis (MIA) (Chapter 12 of this TSD). This analysis identifies key financial i nputs including cost of capital, working capital, depreciation, capital expenditures, etc.

3.2.6 Equipment Lifetime

The lifetime of residential central air conditioners and heat pumps can vary greatly depending on how often the system is used (whi ch is dependent upon the climate of the region where the product is installed and the personal pr eferences of the consumer) and how regularly it is maintained and serviced. DOE reviewed available literature to determine the appropriate

lifetime for residential central air conditioners and air-sour ce heat pumps. Generally, most

sources estimate the lifetime of re sidential central air conditioners and heat pumps to be in the range of 10 to 20 years. Appliance Magazine pub lishes an Annual Portrait of the U.S. Appliance Industry, in which it estimates low, high, and av erage lifetimes for a range of home appliances, including unitary air conditioners and heat pum ps, based on input from appliance experts and many additional sources. Appliance Magazine estimates the average lifetime of a residential central air conditioner as 11 years and the average lifetime of a residential air-source heat pump as 12 years. AHRI estimates the average lifetime of a central air conditioner as 12 to 15 years, and the average lifetime of a heat pump as 14 years. 22 DOE used national survey data, along with manufacturer shipment data, to calculate the distribution of air conditioner and heat pump

lifetimes. The mean central ai r conditioner and heat pump lifetimes from the distributions were

3-16determined to be 19.0 and 16.2 years, respectiv ely. Additional information about equipment lifetimes is contained in the Life-Cycle Cost and Payback Period Analysis chapter (Chapter 8) of

this TSD.

3.2.7 Market Performance Data

DOE examined the AHRI Directory of Cer tified Product Performance for residential

central air conditioners and heat pumps to determine the characteri stics of residential central air conditioners and heat pumps currently available on the market. By defin ition, residential central air conditioners and heat pumps are products w ith a cooling capacity below 65,000 Btu/h and are air-cooled, and therefore DOE did not examine any products that did not meet these criteria. In addition, DOE excluded from its analysis any pro ducts that were manufactured for Canada or export only, and any products in the AHRI Direct ory of Certified Product Performance that were not labeled as “active,” meaning that they are currently being manufactured. Table 3.2.14 shows the number of the models in the AHRI Directory of Certified Product Performance for each equipment class. As the table shows, the large ma jority of residential ce ntral air conditioners and heat pumps are split system products, and th ere are relatively few space constrained ( i.e. through-the-wall) models.

Table 3.2.14 Types of Models Listed in the AHRI Directory of Certified Product

Performance

Product Class Number of Models Listed in the AHRI Directory of Certified Product Performance Split system air conditioners 281,184 Split system heat pumps 153,397 Single package air conditioners 8,479 Single package heat pumps 2,876 Small duct, high velocity system 4,468 Space constrained – air conditioners 12* Space constrained – heat pumps 12*
*Currently there are no space constrained air conditioners or space constrained heat pumps in the AHRI Directory of Certified Performance. However, the AHRI Directory of Certified Performance does list through-the-wall products that will be classified as space constrained products prior to the effective date of this rulemaking.

DOE examined the efficiency of residentia l central air conditioners and heat pumps currently available on the market in AHRI’s Certified Product Performance Directory. DOE divided the products into bins based on their effi ciency and counted the number of models in each efficiency bin. The efficiency ratings were se parated into efficiency bins of one SEER each, and the SEER ratings are calculated to two d ecimal points. Figure 3.2.2 through Figure 3.2.6 show histograms of the efficiency data for split system and single package central air conditioners and heat pumps, as well as for SDHV systems.

3-17Figure 3.2.2 SEER Ratings for Single Package Central Air Conditi oners in the AHRI Certified Product Performance Directory

Figure 3.2.3 SEER Ratings for Single Package He at Pumps in the AHRI Certified Product Performance Directory

3-18Figure 3.2.4 SEER Ratings for Split System Central Air Condition ers in the AHRI Certified Product Performance Directory

Figure 3.2.5 SEER Ratings for Split System Heat Pumps in the AHRI Directory of

Certified Product Performance

3-19Figure 3.2.6 SEER Ratings for SDHV Systems in the AHRI Directory of Certified Product

Performance

Figure 3.2.2 through Figure 3.2.6 show that the SEER Ratings for split system and single package air conditioners and heat pumps are mostly concentrated in the 13 to 14.99 SEER range, although split systems cover a much higher range of efficiencies. The ma jority of SDHV systems are concentrated in the 11 to 12.99 SEER rang e. The through-the-wall products in the AHRI Directory of Certified Product Pe rformance all had a SEER rating of either 10.9 (9 central air conditioners and 8 heat pumps were rated 10.9 SEER) or 11.0 (3 central air conditioners and 4 heat pumps were rated 11.0 SEER).

DOE also examined the HSPF ratings of the heat pumps in AHRI’s Directory of Certified Product Performance. Figure 3.2.7 through Figure 3.2.9 shows the number of single package, split system, and SDHV heat pumps models in the directory that fall into the specified HSPF

bins.

3-20Figure 3.2.7 HSPF Ratings for Single Package Heat Pumps in AHRI’s Directory of

Certified Product Performance

Figure 3.2.8 HSPF Ratings for Split System Heat Pumps in AHRI’s Directory of Certified

Product Performance

3-21Figure 3.2.9 HSPF Ratings for SDHV Heat Pumps in AHRI’s Directory of Certified

Product Performance

For single package heat pumps, the HSPF ratings are concentrated in the 7.5 to 8.49 range. Split system heat pumps cover a greater range of HSPF ratings, and are concentrated in the 7.5 to 8.99 range. For SDHV heat pumps, a signi ficant number of models fall into the range between 6.5 and 8.49. All 12 Through-the-wall heat pump models listed in AHRI’s directory had an HSPF rating of 7.1.

In reviewing the efficiency of residentia l central air conditioners and heat pumps currently available on the market, DOE also examined the relationship between efficiency and equipment capacity. Figure 3.2.10 through Figure 3.2.14 show the average SEER ratings at each equipment capacity available for single packag e and split system air conditioners and heat pumps, as well as for SDHV systems in AHRI’s Directory of Certified Product Performance.

3-22Figure 3.2.10 Average SEER Ratings at Each Cooling Capacity for Single Package Air Conditioners in AHRI’s Directory of Certified Product Performance

Figure 3.2.11 Average SEER Ratings at Each Cooling Capacity for Split System Air Conditioners in AHRI’s Directory of Certified Product Performance

3-23Figure 3.2.12 Average SEER Rating at Each C ooling Capacity for Single Package Heat Pumps in the AHRI Directory of Certified Product Performance

Figure 3.2.13 Average SEER Rating at Each C ooling Capacity for Split System Heat Pumps in the AHRI Directory of Certified Product Performance

3-24Figure 3.2.14 Average SEER Rating at Each C ooling Capacity for SDHV Systems in the AHRI Directory of Certified Product Performance

The average SEER ratings for single pack age air conditioners and heat pumps are concentrated generally in the 13 to 15 SEER range for the entire range of cooling capacities. Split system air conditioners and heat pumps displa y a greater range of average SEER ratings at lower cooling capacities, and then appear to be come concentrated between 13 and 15 SEER at the higher cooling capacities. Split system air conditioners and heat pumps appear to have “sweet spots” near the two and three ton cooling capacities (i.e. 24,000 and 36,000 Btu/h cooling capacities) where a greater range of average efficiencies occurs, and where the highest average SEER ratings occur. SDHV systems appear to have an average SEER value in the range of 11 to 13 SEER for the entire range of cooling capacities.

DOE also examined the average HSPF ratings at each equipment capacity for heat pumps listed in AHRI’s Directory of Certified Pr oduct Performance. Figure 3.2.15 through Figure

3.2.17 show the average HSPF at each available ca pacity rating in AHRI’s directory for single package, split system, and SDHV heat pumps.

3-25Figure 3.2.15 Average HSPF at Each Cooling Capa city for Single Package Heat Pumps in the AHRI Directory of Certified Product Performance

Figure 3.2.16 Average HSPF Rating at Each C ooling Capacity for Split System Heat Pumps in the AHRI Directory of Certified Product Performance

3-26Figure 3.2.17 Average HSPF Rating at Each C ooling Capacity for SDHV Heat Pumps in the AHRI Directory of Certified Product Performance

The HSPF ratings for single package heat pumps are consistently between 7.7 and 8.2 HSPF for the entire range of cooling capacities. Split system heat pumps appear to have a greater range of average HSPF ratings at lower cooling capacities, and a smaller range of average HSPF ratings at higher cooling capacities. The averag e HSPF ratings peak near 3 tons (36,000 Btu/h) and 5 tons (60,000 Btu/h). The average HSPF ratings of SDHV heat pumps are between 6.8 and 8 for the entire range of capacities.

3.2.8 Historical Shipments and Efficiencies

3.2.8.1 Historical Shipments

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) provided historical shipments data over the 1990- 2007 time-period disaggregated in to the four primary product

classes. 23 Historical shipments from 1972-1989 were also provided by AHRI from previous data submittals to the Lawrence Berkeley National Laboratory (LBNL). 24 The data for 1972­ 1989 included some shipments of 3- phase as well as single-phase central air conditioners and heat pumps, whereas the data for 1990-2007 included only single-phase central air conditioners. DOE disaggregated the shipments for single-phase and 3-phase central ai r conditioner and heat pump equipment in the earlier data and incl uded only single phase units. Table 3.2.14 summarizes the historical shipments data.

3-27Table 3.2.15 Central Air Conditioner and Heat Pump Shipments

Year Split CAC

thousands Single Package CAC

thousands Split HP

thousands Single Package HP

thousands

1972 1,489 257 28 52

1973 1,742 318 35 52

1974 1,503 289 49 48

1975 888 159 83 45

1976 1,219 231 177 74

1977 1,364 218 329 89

1978 1,546 253 389 97

1979 1,428 248 376 107

1980 1,233 134 293 61

1981 1,293 122 348 66

1982 1,037 111 267 49

1983 1,558 192 455 82

1984 1,857 189 535 98

1985 1,784 203 619 107

1986 1,876 203 680 106

1987 2,204 237 714 103

1988 2,334 247 649 91

1989 2,516 267 650 91

1990 2,241 334 643 104

1991 2,388 306 615 96

1992 2,254 330 647 101

1993 2,474 346 718 107

1994 3,087 387 825 118

1995 3,221 384 834 120

1996 3,635 418 936 139

1997 3,364 395 917 142

1998 4,010 406 1,019 148

1999 4,317 429 1,044 147

2000 4,280 437 1,073 159

2001 3,931 361 1,180 165

2002 4,381 380 1,229 165

2003 4,281 390 1,350 174

2004 4,561 414 1,584 190

2005 5,461 455 1,810 213

2006 4,038 330 1,807 190

2007 3,582 338 1,570 199

Source: Air-Conditioning, Heating, and Refrigeration Institute (AHRI)

3.2.8.2 Historical Efficiencies

AHRI provided historical shipment-weighted efficiency data (SWEF) data spanning the years 1992 to 2008. 28 Between 1992, the year in which the first set of standards for central air conditioners and heat pumps became effective, and 2006, when an updated set of standards became effective, the SWEFs fo r central air conditioners grew by approximately one SEER point. Figure 3.2.18 shows the SWEFs for split system and single package central air

3-28conditioners. The figure also presents the linear fit to each product class’ SWEF data series. The linear fits have high coefficients of deter mination, i.e., linear fits provide a good estimate of the SWEF growth rate. Table 3.2.15 provides a summary of the SWEF growth rates for each product class.

Split A/C SEER = 0.0703 * year - 129.65

R2 = 0.9633

Package A/C

SEER = 0.0 778 * year - 144.78

R2 = 0.9455

10.0 10.2 10.4 10.6 10.8 11.0 11.2 11.4

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YearShipment-Weighted SEER Split A/C
Package A/C Linear (Split A/C)
Linear (Package A/C)

Source: Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Figure 3.2.18 Central Air Conditi oner Historical Shipment-Weigh ted Efficiencies with

Linear Fits

Table 3.2.16 Central Air Conditioner Shipmen t-Weighted Efficiency Growth Rates

SWEF Growth Rate

Product Class SEER increase per year

Split System Air Conditioners 0.0703

Single Package Air Conditioners 0.0778

For heat pumps, between 1992 and 2006, the S EER-based also grew by approximately one SEER point. Figure 3.2.19 shows the SEER -based SWEFs for split system and single package heat pumps. The figure also presents the linear fit to each product class’ SWEF data series. The linear fits have high coefficients of determination, i.e., lin ear fits provide a good estimate of the SWEF growth rate. Table 3.2.16 provides a summary of the SEER-based SWEF growth rates for each product class. AHRI did not provide historical SWEF data for heat pump

HSPFs.

3-29Split HP SEER = 0.0739 * year - 136.55

R2 = 0.9594

Package HP SEER = 0.0736 * year - 136.03

R2 = 0.8886

10.2 10.4 10.6 10.8 11.0 11.2 11.4 11.6 11.8

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YearShipment-Weighted SEER Split HP
Package HP
Linear (Split HP)
Linear (Package HP)

Source: Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Figure 3.2.19 Heat Pump Historical Shipment-Weig hted Efficiencies ba se on SEER with

Linear Fits

Table 3.2.17 Heat Pump Shipment-Weigh ted Efficiency Growth Rates

SWEF Growth Rate

Product Class SEER increase per year

Split System Heat Pumps 0.0739

Single Package Heat Pumps 0.0736

3.2.9 Saturations in U.S. Households

Saturation refers to the percentage of the housing stock with a given product. The American Housing Survey (AHS) provides historical stoc k saturations for central air conditioning and heat pump equipment for every other year between 1991

− 2007. 25 Table 3.2.17 summarizes the saturations for central air conditioners, heat pump, and both types of equipment. Central air conditioerns and heat pump satura tion has grown from 38.6 percent to 64.6 percent

from 1991 to 2007.

3-30Table 3.2.18 Central Air Conditioner Heat Pump Historical Housing Stock Saturations

Year CAC HP Total

1991 30.8% 7.8% 38.6%

1993 32.0% 8.5% 40.5%

1995 33.9% 9.1% 43.0%

1997 36.3% 12.0% 48.3%

1999 41.4% 11.4% 52.8%

2001 45.0% 11.3% 56.3%

2003 46.5% 11.7% 58.2%

2005 50.2% 12.7% 62.9%

2007 51.8% 12.8% 64.6%

3.3 TECHNOLOGY ASSESSMENT

The purpose of the technology assessment is to develop a preliminary list of technologies that could potentially be used to improve the ef ficiency of central air conditioners and heat pumps. The following assessment provides descripti ons of technologies and designs that apply to subsystems within all product classes of centr al air conditioners and heat pumps, as well as innovations that apply to heat pumps only.

3.3.1 Compressor Improvements

Several technologies exist to increase the effici ency of the compressors used in central air conditioner and heat pump systems. High effi ciency reciprocating and scroll compressors, sometimes incorporating variable-speed motors, all have higher efficiencies than the traditional reciprocating compressors commonly used in air conditioners.

Scroll compressors compress gas in a fundamentally different manner from traditional compressors—between two spirals, one fixed and one rotating. High efficiency reciprocating compressors are as efficient, or more effici ent, than scroll compressors. However, these compressors are often considered to present some drawbacks exist including noise, cost and reliability, compared to scroll compressors.

Variable-speed compressors are implemented through the use of an electronic control on the compressor motor, which allows the motor to operate at different speeds. Variable-speed compressors reduce energy consumption in three ways (but it should be noted that it typically increases efficiency over a broad operating ra nge but does not inherently increase maximum efficiency at the comp ressor rating point):

1. When refrigerant flow is reduced duri ng part-load operation, the condenser and evaporator (designed for full flow conditions) ar e more effective and thus more efficient. Temperature drops decrease, resulting in reduced pressure rise across the compressor, which also improves efficiency.

2. Close matching of load eliminates the cycling that occurs with single-stage compressors. Maintaining a constant pressure is more effi cient because losses at higher pressure rise are greater than gains at lower pressure rise.

3-313. During the off-cycle, the pressure in the system equilibrates. At the intermediate pressure, refrigerant vapor will condense in the cold evaporator rather than the condenser. Essentially, some of the heat rejection load is rejected to the evaporator during this time, reducing overall system performance. Variable speed operation would eliminate or significantly reduce compressor off-time and the related inefficiencies.

3.3.2 Fan System Improvements

3.3.2.1 Higher Efficiency Fan Motors

Fan motors are fractional horsepower in size , are responsible for moving air across the indoor and outdoor coils, and typically run at one speed. The manufacturer will match the motor size and blade to the coil to meet the expect ed cooling load under most conditions. Higher efficiency fan motors reduce energy consumption by requiring less electrical power to generate motor shaft output power.

Electric motors operate based on the interaction between a field magnet and a magnetic rotor. In a brushed motor, the field magnets are permanent magnets and the rotor is an electromagnet; the situation is reversed in a brushless motor. The electromagnetic interactions between these two magnets cause the rotor to rotate.

Nearly all fan motors for standard central air conditioners and heat pumps are of the permanent split capacitor (PSC) variety. In PSC motors, the electromagnet consists of windings of electrical wire through which current is driv en. A smaller, start-up winding is present in addition to the main winding. The start-up winding is electrically connected in parallel with the main winding and in series with a capacitor. At start up, the interactions between the magnetic field generated by the start up winding and that generated by the main winding induce rotation. Because of the capacitor, however, the current to the start-up winding is cut off as the motor reaches steady state. This makes PSC motors more energy efficient, with motor efficiencies ranging from 50 to 70 percent. PSC motors are produced in large quantities and are relatively inexpensive.

Another type of electric moto r, the brushless direct curr ent (DC) (i.e., electronicallycommutated motor (ECM), is more energy-efficient than PSC motors of comparable size and capacity. Brushless DC motors, which are sold in high volumes, are three-phase electric motors with efficiencies ranging from 70 to 80 percent. However, brushless DC motors can weigh twice as much as equivalent PSC motors. In addition, brushless DC motors are complex, and can cost

from two and a half to five times as much as a PSC motor.

A way to further improve the efficiency of motors used for central air conditioner and heat pump applications is to make the critical components of an induction motor's rotor (e.g., conductor bars and end rings) out of copper instead of aluminum. Due to difficulties with casting copper, making these components out of alumi num is the common current practice. However, the greater conductivity of copper results in lower resistance heating losses in the rotor, and thus lower losses in the motor when compared to traditional aluminum motor parts. Recently, the creation of copper dies made fro m special alloys has allowed for the advancement of copper

3-32casting techniques. Additional imp rovements in the design and fabrication of copper motors, such as optimization of the steel laminations, c ould further increase the efficiency of copper

motors over aluminum motors.

3.3.2.2 Fan Motor Controllers

Fan motor controllers allow fan motors to run at variable speed to match changing load conditions. During periods of frost build-up in heat pumps, fan motor power requirements increase; during the post-defrost period, power requ irements decrease. Matching the fan speed to

all conditions ensures more stab le discharge air temperatures and improves coil performance.

Fan motor controllers would also allow both centr al air conditioners and heat pumps run more efficiently at varying ambient humidity and temperature levels. Because of practical limitations on efficiency, variable speed systems dominate the market over 14 SEER, and it is unusual to find a system over 13 SEER that does not inco rporate a variable speed indoor blower.

3.3.2.3 Higher Efficiency Fan Blades

High efficiency fan blades move air more efficiently, yielding energy consumption savings by reducing the required fan shaft power . The fans typically used in central air conditioners and heat pumps have stamped, curved sheet metal blades. The blades are typically supplied by a fan blade manufacturer and mounted to the motor by the manufacturer, and may not be optimized for the particular central air co nditioner or heat pump that they are installed on. Fans may have lower efficiencies due to the higher required pressure drops, for which sheet metal fans are not well suited. Requi red fan shaft power could be reduced if the fan blades were optimized for each given application.

3.3.3 Expansion Valve Improvements

Expansion valves are refrigerant metering de vices whose purpose is to control the amount of refrigerant flowing to the evaporator coil. In doing so, they simultaneously decrease the temperature and pressure of the refrigerant, creating a cold liquid-vapor mixture. The low temperature of the refrigerant leaving the expansion valve creates the driving force to move heat out of the refrigerated space and into the evaporator.

The most basic type of expansion device is a capillary tube, which may be found in older,

less efficient air conditioners and heat pumps. The capillary tube is a long, thin piece of pipe that creates a pressure drop in the refrigerant through frictional losses. Capillary tubes must be sized to the particular application and cannot adjust for variations in load or ambient operating conditions. They are often oversized for worst- case conditions, and therefore may operate at reduced efficiency during normal operation.

The thermostatic expansion valve (TXV) is common in air conditioners and heat pumps rated at an efficiency level of 13 SEER or above. This device uses an orifice to reduce the pressure of the entering refrigerant and a sens ing bulb to monitor and maintain the temperature of the superheated vapor leaving the evaporator. Because the TXV allows for some degree of adjustment of refrigerant expansion, it may be so mewhat more efficient than the capillary tube device under varying conditions.

3-33The electronic expansion valve (EEV) is similar to the TXV, but uses an electronic control system to optimize refrigeration-syst em performance under all operating conditions. Because it does this with greater flexibility than that allowed by a TXV, an EEV theoretically allows for further increases in energy efficiency under varying conditions.

3.3.4 Heat Exchanger Technologies and Improvements

3.3.4.1 Baseline Technology

Most central air conditioners and heat pumps currently on the market utilize traditional tube-and-fin heat exchangers for both the evaporator and condenser coils. These coils are refrigerant-to-air heat exchangers composed of metals with hi gh thermal conductivity, usually aluminum and copper, with the tubes generally being composed of copper and the fins of

aluminum.

The evaporator coil is responsible for evaporating and superheating the entering refrigerant liquid-vapor mixture while extracting heat from the air in the conditioned space. The internal heat-exchanging surfaces in contact with refrigerant are commonly referred to as “refrigerant-side” while the external heat-exchanging surfaces in contact with the air are referred to as “air-side.” Because a temperature difference is necessary to drive heat from the air into the refrigerant, the saturated evaporator temperature must be considerably colder than the evaporator’s discharge air temperature. The magnitude of this driving force is directly related to the total cooling load and the thermal characteristics of the evaporator. Increasing the area of the coil decreases the necessary temperature difference and therefore decreases the required saturated evaporator temperature. This results in an increased compressor energy efficiency ratio (EER) and lower compressor energy consumption.

The condenser coil is responsib le for condensing and sub-cooling the entering refrigerant vapor while rejecting heat from the refrigerant to the ambient air. As with evaporator coils, increasing the area of the condenser coil will decrease the necessary change in temperature across the coil, resulting in increased compressor efficiency (increased EER).

The majority of evaporator and condenser coils used in central air cond itioners and heat pumps currently on the market are of the traditiona l tube-and-fin heat exchanger design. Many manufacturers utilize a similar process in buildin g coils, and this methodology has remained fundamentally the same over the long period during which these products have been in use. The actual techniques utilized in this process vary by company, a nd proprietary methods are often utilized by specific manufacturer s in the production of coils. Manuf acturing of coils in-house is a process which requires high capital investments in machinery and line setup. As a result,

manufacturers have been hesitant to move aw ay from the traditional method of coil production, as doing so would require large new investments. Instead, companies have historically focused on improving the performance of their existing coil designs.

3.3.4.2 Improvements to Baseline Coils

Increasing the overall size of the coil in one or more dimensions tends to be the most cost-effective way to increase the system efficiency. However, many applications limit the

amount of coil size increase in or der to maintain overall cabinet dimensions. Most approaches to

3-34increasing the coil surface area also result in an increase in required fan motor power and an increase in refrigerant pressure drop. Enhancements to the refrigerant-side surface area of both evaporator and condenser coils typically include rifled or diamond-pattern tubing and increased number of tube passes. Enhancements to the ai r side surface area include increased fin pitch (decreased fin spacing), fin patterns (wavy or zi g-zag), and increased numbers of tube passes. The size constraints facing manufacturers who have already maximized the size of their units make it necessary for these companies to cons ider alternative methods to improving heat exchanger performance.

3.3.4.3 Alternative Coil Technologies

3.3.4.4.1. Liquid Suction Heat Exchangers

The goal of a liquid suction heat exchanger is to further cool the flow of liquid refrigerant entering the expansion valve using the flow of gaseous refrigerant leaving the evaporator, thus providing sub-cooling for the entering liquid by super-heating the exiting suction vapor. Hotter suction vapor is less susceptible to heat gains in the return piping to the compressor rack. The compressor work is increased, however, because the suction vapor has greater enthalpy. In addition, the possibility of compressor overheating problems, brought on by the combination of increased compressor work and hotter vapor, limits the use of this method in some situations. The possibility for these problems and the potential gains of liquid suction heat exchangers depend on the several factors, including evaporator temperature, type of refrigerant used, and

system pressures.

3.3.4.4.2 Microchannel Heat Exchangers

Several companies produce microchannel heat ex changers, which are mainly used in the automobile industry. Unlike a conventional round-tube plate-fin heat exchanger, the microchannel has a rectangular cross-section cont aining several small channels through which refrigerant passes. Fins pass between the tubes an d are brazed to the tubes, and all components are aluminum. The resulting microchannel coil transfers more heat per unit of face area than does a round-tube plate-fin coil of co mparable capacity. It does so with a lower airside pressure drop, yielding reduced fan power consumption. These benefits can improve system EER and SEER ratings in residential air conditioners when comp ared to a condenser coil of the same face area.

This would allow manufacturers to improve the rated SEER without fu rther increasing the size of the units. Because the microchannel fin arrangem ent prevents natural condensate drainage, their use in heat pump and evaporator coil applications is not forthcoming.

Although the microchannel heat exchanger co sts more to produce than a conventional round-tube plate-fin coil, this product offers particular opportunities to reduce the size and weight of the heat exchanger. Those advantages le d to the rapid and almost total transition of the

automobile air conditioner market to microchan nel technology. Microchannel heat exchangers also offer significant reductions in refrigerant charge, which suggests that they may reduce the rate of compressor failures caused by refrigerant slugging.

Even after several years of dominance in the automobile market, the microchannel heat exchanger has not penetrated the building air conditioning markets where size and weight

3-35constraints are not as important. The cost advantages of reduci ng the size and weight of the condenser or the capacity of the system have not sufficiently outweighed the added costs and risk associated with the microchannel technology for these systems to attain widespread use in building applications to date. A dditionally, given the fact that most manufacturers produce coils in-house, and that setting up a coil production line is an extremely capital-intensive process, manufacturers are generally hesitant to make the large investments needed to move away from the production of traditional tube -and-fin heat exchangers. Mo reover, several limitations and uncertainties are particularly hindering the large-scale adoption of microchannel heat exchangers. First, microchannel construction makes condensate re moval much more challenging than traditional tube-and-fin heat exchangers. This poses a serious barrier to the adoption of the technology in evaporators and in heat pump condensers. Some manufacturers may decide not to adopt the new technology if they cannot offer it in all of their products, including both air conditioners and heat pumps. Second, there are con cerns whether residential heat exchangers are proven to perform well under wide variations in ambient temperatures given that they are considerably larger than automobile heat ex changers and are configured differently. Third, compressor lubrication is entrained in the re frigerant, and residen tial microchannel heat exchangers must display a proven ability to consistently return lubricant to the compressor to avoid costly damage. Fourth, manufacturers are concerned that contractors will not be able to repair coil leaks effectively because of the difficulty of successfully brazing aluminum in the

field.

3.3.4.4.3 Flat-Tube Heat Exchangers

Flat-tube, louver-fin heat exchangers offer various advantages over traditional roundtube, plain-fin heat ex changers. The flat-tube design reduces wake region, which decreases heat transfer downstream of round tubes. The design improves fin efficiency, and creates a lower profile drag as a result of the smaller tube projected area. Serpentine louvered-fin, flat-tube heat exchangers have already been utilized in automotive applications because of their ability to produce the same amount of heat transfer with much more compact designs than the plain-fin, round-tube variety heat exchangers. In laborator y tests, the louver-fin, fl at-tube heat exchanger was found to produce heat transfer coefficients th at were 90% higher than those produced by a plain-fin, round-tube heat exchanger. The significan t increase in heat transfer coefficient resulted

in a size reduction factor of two to three for a residential absorption heat pump system. The more

efficient flat-tube heat ex changers would be able to provide th e same amount of heat transfer and

reduce the amount of airflow needed from the fa ns, thus reducing the amount of electricity consumed by the fan motors and increasing system efficiency.

Like the microchannel technology, the flat-t ube heat exchangers still have not broken through into the air conditioner and heat pump market, where the size of the unit is not as much of a concern. The extra cost of developing th ese systems and investing the large amounts of capital needed to produce them in-house has not ye t been offset by the potential advantages to using flat-tube heat exchangers. Also, condensate removal is a concern in louvered-fin, flat-tube heat exchangers because of water “bridges” that get into the louve r gaps and reduce heat transfer.

3-363.3.5 Designs Relevant Only to Heat Pumps

The following technologies, defrost mechan ism and defrost cycle control, are two examples of defrost-related improvements applic able to heat pump designs, and it should be noted that they are not intended to comprise an exhaustive list of viable technologies.

3.3.5.1 Defrost Mechanism

As the outside air passes over the outdoor coil of a heat pump operating in heating mode, its heat is absorbed by the refrigerant inside the coil, which lowers the temperature of the ambient air. When the temperature of the surrounding air is reduced to less than 32°F, the

moisture in the air will condense and freeze on th e outdoor coil, forming a layer of frost. The frost reduces performance by increasing the thermal resistance to heat transfer from the coil to the air, and by obstructing airflow. Both the met hod in which defrost is pe rformed and control of the defrost cycle can lead to increased energy savings.

The standard method of defrosting the outdoor coil during the heating operation of a heat pump is to temporarily reverse the flow of the refrigerant. This will use some of the heat from air

inside to heat the outdoor coil and melt the frost. At the same time the i ndoor coil is cooled, and it becomes necessary to heat the house using an auxiliary heating system (typically electric resistant heaters).

“Frost-less” heat pump defro st technology slows frost accumulation on the outdoor coil while also increasing the heating capacity by adding an accumulator to the heat pump cycle. The accumulator traps heat from the condensed liquid from the condenser, and this causes an increase the suction pressure of the compressor. This addition of heat to the accumulator increases the outdoor coil temperature by several degrees and th us reduces the frost accumulation on the coil. Also, much of the heat added to the accumulator is still brought inside by increased heat pump supply air temperature since the suction pressure of the compressor was increased. The frostless heat pump still may accumulate frost, however, if the heat pump is operated for a long period of time at low ambient temperatures, creating the need for a cycle reversal for defrosting. During the reverse cycle, the indoor blower is shut off and the refrigerant flows to the accumulator, making the accumulator take over the function of the evaporator. This allows for reverse cycle defrosting while also preventing cool air from being blown inside, and reduces the need for resistance heaters. When the surrounding te mperature drops below 32°F, increasing the temperature of the outdoor coil a few degrees will not prevent frost accumulation, and heat input

to the accumulator becomes useless. Therefor e, the accumulator should only be used at temperatures between 32°F and 41°F, when frost is most likely to collect on the coil and the use

of the accumulator will be able to reduce the amount of frost.

Another mechanism for reducing the number and duration of defrost cycles is hot watersource defrosting. In heat pumps equipped with hot water defrost, a specifically designed system of valves and conduit allow the heat pump to sele ctively send the refrigerant to the various heat pump components, depending on which heat pump functions are being performed. These heat pumps use components and valves arranged in such a way that they are able to cool a space, heat a space, heat a liquid without affecting the temp erature of the conditioned space, cool a space while heating a liquid, and defrost the outdoor coil using only the previously heated water as a

3-37heat source. During the defrost mode, hot water that is held in a storage tank is used to defrost the outdoor coil, without degrading the overall pe rformance of the heat pump. A refrigerant-towater heat exchanger is used to provide energy to the refrigerant and allow it to melt the frost on the outdoor coil. This can be done without any degradation to heat pump performance, and the energy taken from the hot water in the system is easily and inexpensively replaced when the heat pump switches back into normal heating mode.

3.3.5.2 Defrost Cycle Control

During a conventional heat pump defrost cycl e some form of supplemental heating is needed to compensate for the reversal of the heat pump cycle. Usually electric resistance heaters

are used to heat air inside the house while the de frost cycle occurs, and this type of heating is much less efficient than heating using the heat pump. Since the alternate heat sources are much less efficient, the efficiency of a heat pump can be increased by reducing the frequency and duration of the defrost cycles.

Defrost cycle control involves management of the initiation and termination of defrost cycles, and thereby the frequency and duration of defrost cycles. In conventional heat pumps defrost cycles are typically scheduled, and initiation and termination are timer-controlled. For this type of defrost cycle control, cycles are initiated at regular intervals, and terminated after a fixed amount of time. Cycle frequency and duration are unrelated to actual frost conditions, and are just based on estimations by the manufacturer. Under timer control, the frequency of defrost cycles is determined by the amount of time the manufacturer expects it to take for a large frost layer to develop in the worst-case scenario, a nd the cycle duration long enough to ensure complete defrost in the worst-case scenario. Timer-based defrost can lead to unnecessarily frequent and long defrost cycles.

Demand-based defrost cycles eliminate unnecessa ry defrost cycles. Demand-defrost heat pumps use sensors to measure outdoor coil and out door ambient conditions to determine when to initiate and terminate defrost cycles. A microprocessor examines and analyzes the compressor run time, ambient air temperature, and outdoor coil temperature, all of which determine the environment under which a defrost cycle should o ccur. The microprocessor is then able to determine when the defrost cycle should be initia ted and when it should be terminated, reducing the overall number and duration of cycles, and improving the efficiency of the heat pump.

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