CHAPTER 10. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

**10.1 INTRODUCTION............................................................................................................. 10­1** 

**10.2 NATIONAL ENERGY SAVINGS................................................................................... 10­1** 

**10.2.1 NES**  **Definition................................................................................................... 10­1** 

**10.2.2 NES**  **Inputs......................................................................................................... 10­2**

**10.2.2.1 Annual**  **Energy Consumption**  **per Unit** 

**............................................. 10­3** 

**10.2.2.2 Shipments..........................................................................................**  **10­6**

**10.2.2.3 Equipment**  **Stock............................................................................... 10­6**

**10.2.2.4 National Annual Energy Consumption............................................. 10­6** 

**10.2.2.5 Site­to­Source**  **Conversion Factor..................................................... 10­6** 

**10.3 NET**  **PRESENT VALUE** 

**.................................................................................................. 10­7** 

**10.3.1 Net**  **Present Value**  **Definition............................................................................. 10­7**

**10.3.2 Net**  **Present Value**  **Inputs**

**................................................................................... 10­8** 

**10.3.2.1 Total**  **Annual Installed**  **Cost**

**.............................................................. 10­8** 

**10.3.2.2 Total**  **Annual Operating**  **Cost Savings** 

**.............................................. 10­9** 

**10.3.2.3 Discount**  **Factor............................................................................... 10­10**

**10.3.2.4 Present**  **Value of**  **Costs.................................................................... 10­11**

**10.3.2.5 Present**  **Value of**  **Savings**

**................................................................ 10­11** 

**10.4 NES**  **AND NPV**  **RESULTS............................................................................................. 10­11** 

**10.4.1 NES**  **and NPV**  **Input Summary** 

**........................................................................ 10­11** 

**10.4.2 National**  **Energy Savings**  **Results..................................................................... 10­12** 

**10.4.3 Annual**  **Costs and**  **Savings**

**............................................................................... 10­13** 

**10.4.4 Net**  **Present Value**  **Results................................................................................ 10­14** 

**REFERENCES**

**........................................................................................................................ 10­17** 

LIST OF TABLES

**Table 10.2.1**  **Risk Premiums**  **by Risk**  **Class (j)**  **in the**  **NEMS Commercial**  **Model................... 10­4** 

**Table 10.2.2**  **Beverage Vending**  **Machine Forecasted**  **Shipment­Weighted Market** 

**Shares by**  **Efficiency Level,**  **Base** **Case*............................................................** **10­4**

**Table 10.2.3**  **Average Annual**  **Unit Energy**  **Consumption by**  **Efficiency Level** 

**(kWh/Year)**

**........................................................................................................ 10­5** 

**Table 10.2.4**  **Shipment­Weighted Average**  **Annual Energy**  **Consumption per**  **Unit by** 

**Efficiency Level**  **(kWh/year)**

**............................................................................. 10­5** 

**Table 10.2.5**  **Site­to­Source Conversion**  **Factors**

**...................................................................... 10­7** 

**Table 10.3.1**  **Average Total**  **Installed Cost**  **per Unit**  **by Efficiency**  **Level (2007$)...................**  **10­8**

**10­i Table**  **10.3.2 Shipment­Weighted**  **Average Total**  **Installed Cost**  **per Unit**  **by Standard** 

**Level (2007$)..................................................................................................... 10­9** 

**Table 10.3.3**  **Average Annual**  **Repair Cost**  **per Unit**  **(2007$)**

**................................................. 10­10** 

**Table 10.4.1**  **NES and**  **NPV Inputs** 

**......................................................................................... 10­12** 

**Table 10.4.2** 

**Table 10.4.3** 

**Table 10.4.4**  **Cumulative National**  **Energy Savings**  **for Beverage**  **Vending Machines** 

**(2012­2042) (Quads)........................................................................................**  **10­12**

**Cumulative NPV**  **Results Based**  **on a**  **Seven­Percent Discount**  **Rate**

**(Billion** **2007$)*...............................................................................................** **10­15**

**Cumulative NPV**  **Results based**  **on a**  **Three­Percent Discount**  **Rate**

**(Billion** **2007$)*...............................................................................................** **10­15**

LIST OF FIGURES

**Figure 10.4.1**  **National Annual**  **Costs and**  **Savings for**  **B­L­IO Equipment**  **Class,**

**Efficiency Level**  **4............................................................................................ 10­14**

**10­ii**CHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

**This chapter**  **describes the**  **method for**  **estimating the**  **magnitude and**  **net present**  **value to** 

**consumers of**  **future national**  **energy savings**  **(NES) from**  **possible candidate**  **standard levels**  **for**

**beverage vending**  **machine (BVM)**  **equipment. Results**  **described here**  **include: 1)**  **national energy** 

**consumption and**  **savings, 2)**  **monetary value**  **of energy**  **savings to**  **the nation**  **due to**  **new energy** 

**conservation standards,**  **3) increased**  **total installed**  **costs to**  **the nation**  **due to**  **new energy** 

**conservation standards,**  **and 4)**  **the net**  **present value**  **(NPV) of**  **energy savings**  **(difference**

**between monetary**  **value of**  **energy savings**  **and increased**  **total installed**  **costs).**

**The Department**  **of Energy**  **(DOE) determined**  **both the**  **NPV and**  **NES for**  **all of**  **the**

**candidate standard**  **levels considered**  **for the**  **two equipment**  **classes of**  **BVM equipment** 

**examined. Up**  **to eight**  **candidate standard**  **levels above**  **the baseline**  **level are**  **being considered** 

**for each**  **equipment class.** 

**DOE performed**  **all calculations**  **using a**  **Microsoft Excel**  **spreadsheet (the**  **NES**

**spreadsheet), which**  **is accessible**  **on the**  **Internet at** 

**(http://www.eere.energy.gov/buildings/appliance_standards/**

**commercial/beverage_vending_machines.html). Details**  **and instructions**  **for using**  **the**

**spreadsheet are**  **discussed in**  **Appendix H.**  **A more**  **detailed set**  **of results**  **is available**  **in Appendix** 

**I. The**  **important facets**  **of national**  **energy consumption**  **of BVM**  **equipment include:**  **1) shipments** 

**of each**  **equipment class,**  **2) existing**  **stock of**  **each equipment**  **class, 3)**  **national average**  **electricity**

**consumption for**  **each equipment**  **class, and**  **4) site­to­source**  **conversion factor**  **to translate** 

**electricity consumption**  **at the**  **site of**  **use into**  **the amount**  **of electricity**  **that must**  **be generated**  **at**

**the power**  **plant (source)**  **and then**  **transmitted to**  **the site**  **where it**  **is consumed.**  **Chapter 9** 

**provides a**  **detailed description**  **of the**  **shipments analysis**  **model that**  **DOE used**  **to forecast**  **future**

**purchases of**  **BVM equipment.** 

**Although voluntary**  **energy efficiency**  **programs may**  **increase the**  **share of**  **energy**

**efficient equipment**  **prior to**  **the implementation**  **date of**  **any new**  **energy conservation**  **standards,**

**DOE was**  **not able**  **to obtain**  **information that**  **quantified how**  **such programs**  **affect equipment** 

**efficiencies on**  **a national**  **basis. Consequently,**  **DOE did**  **not explicitly**  **incorporate the**  **impact of** 

**market­based voluntary**  **energy efficiency**  **programs into**  **the shipment**  **forecasts detailed**  **in**

**Chapter 9.** 

10.2 NATIONAL ENERGY SAVINGS

10.2.1 NES Definition

**DOE calculated**  **annual national**  **energy savings**  **as the**  **difference between**  **two scenarios:** 

**a base**  **case (without**  **new standards)**  **and a**  **standards case**  **(with new**  **standards). Positive**  **values**

**of NES**  **correspond to**  **net energy**  **savings (i.e.,**  **annual national**  **energy consumption**  **(AEC) with** 

**standards is**  **less than**  **annual national**  **energy consumption**  **in the**  **base case).** 

NES

t =AEC base ­ AEC standard Eq. 10.1

**10­1 Cumulative**  **national energy**  **savings (NES** 

**cum )**  **is the**  **sum over**  **a defined**  **time period**  **(t)**

**from the**  **implementation of**  **a standard**  **(assumed to**  **be in**  **the year**  **2012) forward**  **thirty years**  **to**

**2042 (from**  **2012 to**  **2042) of**  **the annual**  **national energy**  **savings.**

NES

cum = ∑

t NES

t Eq. 10.2

**DOE calculated**  **the AEC**  **by multiplying**  **the number**  **or stock**  **of units**  **of BVM**  **equipment**

**(by vintage)**  **by the**  **unit energy**  **consumption (also**  **by vintage)**  **as shown**  **by the**  **following**

**equation:**

AEC

= STOCK V **x** UEC V **x** src_conv t Eq. 10.3

**For the**  **above equations,**  **DOE defined**  **the following**  **variables:**

AEC

**= Annual**  **national energy**  **consumption each**  **year in**  **quadrillion Btus**  **(quads),**

**summed over**  **vintages of**  **BVM equipment**  **stock,** STOCK V

**.** NES

**= Annual**  **national energy**  **savings (quads).** 

STOCK V **= Stock**  **of BVM**  **equipment (millions**  **of units)**  **of vintage**  V **surviving in**  **the year** 

**t for**  **which DOE**  **calculated annual**  **energy consumption.** 

**Vintages range**  **from 1**  **year to**  **approximately 20**  **years, a**  **function of**  **an assumed**  **14­year**

**average lifetime**  **of the**  **BVM equipment.** 

UEC V **= Annual**  **unit energy**  **consumption per**  **BVM unit**  **(kWh/year)**

src_conv t **= Time­dependent**  **conversion factor**  **to convert**  **from site**  **energy (kWh)**  **to**

**source energy**  **(quads) (Btu/kWh)** 

V

**= Year**  **in which**  **the BVM**  **equipment was**  **purchased as**  **a new**  **unit, and** 

t **= Year**  **in the**  **forecast (e.g.,**  **2012 to**  **2042).**

**The stock**  **of BVM**  **equipment is**  **dependent on**  **annual shipments**  **and the**  **lifetime of**  **the**

**equipment. DOE**  **believes that**  **the shipment**  **projections under**  **the standards**  **cases could**  **be lower** 

**than those**  **in the**  **base case**  **projection, because**  **the higher**  **installed costs**  **would cause**  **some**

**customers to**  **forego new**  **equipment purchases.**  **However, based**  **on available**  **information, DOE** 

**did not**  **include this**  **effect in**  **its analysis.**  **For this**  **ANOPR analysis,**  **the total**  **shipments**

**projections are**  **the same**  **in both**  **the base**  **case and**  **standards cases.** 

10.2.2 NES Inputs

**The inputs**  **for the**  **determination of**  **NES are**  **listed below:** 

• **Annual unit**  **energy consumption**  **(kWh/year) (section**  **10.2.2.1)**

• **Shipments (section**  **10.2.2.2)**

• **Equipment stock**  **(section 10.2.2.3)** 

**10­2**• **National Annual**  **Energy Consumption**  **(section 10.2.2.4)** 

• **Site­to­Source Conversion**  **factor (section**  **10.2.2.5)**

10.2.2.1 Annual Energy Consumption per Unit

**The annual**  **unit energy**  **consumption (UEC)**  **is the**  **site energy**  **consumed by**  **a BVM**  **unit**

**per year.**  **The annual**  **energy consumption**  **is directly**  **related to**  **the energy**  **efficiency of**  **the unit.** 

**Thus, knowing**  **the energy**  **efficiency of**  **a BVM**  **unit determines**  **the corresponding**  **annual energy** 

**consumption. As**  **described below,**  **DOE determined**  **annual forecasted**  **shipment­weighted**

**average BVM**  **equipment efficiencies**  **that, in**  **turn, enabled**  **a determination**  **of shipment­weighted** 

**annual energy**  **consumption values.** 

**Because no**  **data have**  **been found**  **on the**  **market shares**  **of the**  **various equipment**  **classes**

**of BVM**  **equipment by**  **efficiency level,**  **DOE based**  **shipment­weighted average**  **efficiency trends** 

**for BVM**  **equipment on**  **first converting**  **the 2005**  **BVM equipment**  **shipments by**  **equipment class** 

**into market**  **shares by**  **equipment class,**  **and then**  **adapting a**  **cost­based method**  **used in**  **the**

**National Energy**  **Modeling System**  **(NEMS) to**  **estimate market**  **shares for**  **each equipment**  **class**

**by efficiency**  **level. Then,**  **from those**  **market shares**  **and projections**  **of shipments**  **by product,** 

**DOE extrapolated**  **future trends**  **of BVM**  **equipment efficiency**  **both for**  **a base**  **case scenario**  **(i.e.,**

**without new**  **standards) and**  **various standards**  **case scenarios**  **(i.e., with**  **new standards).**  **The**

**difference in**  **equipment efficiency**  **between the**  **base case**  **and standards**  **cases was**  **the basis**  **for**

**determining the**  **reduction in**  **per­unit annual**  **energy consumption**  **that could**  **result from**  **new**

**standards.**

**Due to**  **the limited**  **availability of**  **historical efficiency**  **data for**  **BVM equipment,**  **DOE**

**used an**  **estimate of**  **market share,**  **or percent,**  **of BVM**  **units in**  **each equipment**  **class. DOE**  **used**

**the above**  **relative shipments**  **estimates to**  **estimate the**  **market share,**  EFF_Level_Share(i,y)

**, of** 

**each equipment**  **class** y **for each**  **efficiency level**  i

**. Because**  **the percent**  **of shipments**  **in each** 

**equipment class**  **is presumed**  **to be**  **relatively constant**  **over time**  **and the**  **lifetime of**  **each unit**  **in**

**an equipment**  **class is**  **presumed the**  **same (14**  **years), the**  **ratio of**  **shipments to**  **an equipment**  **class**

**is indicative**  **of the**  **market share**  **for that**  **equipment class.**  **DOE estimated**  **the** EFF_Level_Share

**for a**  **particular equipment**  **class to**  **be a**  **constant value**  **equal to**  **the average**  **of the**  **yearly percent** 

**shipments for**  **that equipment**  **class. From**  **these data,**  **DOE calculated**  **the** EFF_Level_Share(i,y)

**for each**  **efficiency level**  i **using the**  **following formula,**  **based on**  **the relative**  **annualized cost**  **of**

**each efficiency**  **level.**

EFF_Level_Share(i,y)

= ∑ m j=1 b j• [((IC(i,y) **x** (r j /(1­(1+r j ) ­n )+OC(i,y)) ­v / (∑ k

i=1 (((IC(i,y) **x** (r j /(1­

(1+r j ) ­n )+OC(i,y)) ­v ] Eq. 10.4

**where:**

EFF_Level_Share(i,y)

= **the market**  **share of**  **efficiency level**  **i for**  **equipment class**  **y**

IC(i, y)

= **installed costs**  **of equipment**  **class y**  **of efficiency**  **level i.**  **i=1 to**  **k.**

OC(i,y) =annual **operating cost**  **(maintenance, repair**  **and energy**  **cost) of**  **equipment class**  **y of** 

**efficiency level**  **i**

r j = **private, risk­adjusted**  **discount rate**  **for risk**  **class j.**  **Derived by**  **adding a**  **“time preference** 

**premium” to**  **the risk­free**  **real rate**  **of return**  **in the**  **marketplace (4.39%**  **long­term Treasury** 

**bond rate–long­term**  **inflation rate**  **of 2.2%** 

**= 2.19%)** 

**10­3**vel 8

x Tech)

**.1%**

**.2%**

**.4**

**.7%**

**.8%**

**.0%** b

j = **market share**  **of equipment**  **users with**  **risk class**  **j. j**  **=1 to**  **m**

v = **risk penalty**  **factor (also**  **known as**  **a measure**  **of market**  **heterogeneity)**

n = **equipment lifetime**  **(14 years)** 

**The components**  **for** IC **and** OC **came from**  **the same**  **inputs as**  **the life­cycle**  **cost analysis** 

**(see Chapter**  **8, Life­Cycle**  **Cost and**  **Payback Period**  **Analysis). The**  **annualization factor**  (r j /(1­

(1+r j ) ­n ) **converts installed**  **cost into**  **its annual**  **equivalent, so**  **that market**  **shares are**  **based on**  **the**

**relative annual**  **costs of**  **each efficiency**  **level, with**  **(generally) higher**  **annualized costs**  **of higher** 

**efficiency levels**  **leading to**  **lower relative**  **market shares.**  **This is**  **consistent with**  **the approaches** 

**used in**  **the EIA’s**  **National Energy**  **Modeling System**  **1 and**  **in Canada’s**  **CIMS model**  **2 a** 

**. The** 

**calibration constants**  **are the**  **private risk­based**  **discount rates**  **by risk**  **class** r j , **taken from**  **the**

**NEMS commercial**  **model as**  **shown in**  **Table 10.2.1** 

, **the default**  **value of**  v **= 10,**  **taken from**  **the**

**CIMS model,**  **and the**  **equipment lifetime**  **of 14**  **years.**

Table 10.2.1 Risk Premiums by Risk Class (j) in the NEMS Commercial Model

Percentage of Users in

Class Time Preference

Premium Implied Real Discount

Rate

**1% 0.0%**  **2.19%**

**2% 13.6%**  **15.79%**

**10% 19.9%**  **22.09%**

**15% 30.9%**  **33.09%**

**20% 55.4%**  **57.59%**

**25% 152.9%**  **155.09%**

**27% 1000.0%**  **1002.19%**

**100%**

**Source: NEMS**  **Commercial Model** 

**Table 10.2.2**  **provides estimated**  **base case**  **shipment­weighted market**  **shares for**  **each of** 

**the three**  **sizes of**  **both equipment**  **classes in**  **this rulemaking.** 

Table 10.2.2 Beverage Vending Machine Forecasted Shipment­Weighted Market Shares

by Efficiency Level, Base Case*

Equipment

Class Energy Consumption Level

Level 0

(Market

Baseline) Level 1

(Energy Star

Tier 1) Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 Le

(Ma

A­L­IN **0.0% 26.2%**  **14.0% 13.8%**  **13.3% 12.4%**  **12.0% 7.1%**  **1**

A­M­IN **0.0% 26.3%**  **14.1% 13.8%**  **13.3% 12.2%**  **11.8% 7.4%**  **1**

A­S­IN **0.0% 26.2%**  **14.1% 13.9%**  **13.3% 12.3%**  **11.8% 7.2%**  **1**

B­L­IO **0.0% 25.2%**  **16.0% 15.6%**  **14.6% 10.3%**  **9.0% 8.6%**  **0**

B­M­IO **0.0% 25.3%**  **16.2% 15.6%**  **14.5% 10.2%**  **8.8% 8.4%**  **0**

B­S­IO **0.0% 25.8%**  **16.7% 15.7%**  **14.4% 10.2%**  **8.4% 7.9%**  **1**

***** **Percentage may**  **not add**  **to 100%**  **due to**  **rounding.**

**To project**  **changes in**  **weighted average**  **efficiency levels**  **as standards**  **above baseline** 

**efficiency Level**  **1 (Energy**  **Star Tier**  **1), DOE**  **assumed that**  **market shares**  **above the**  **minimum**

**a The**  **CIMS Model**  **was originally**  **known as**  **the Canadian**  **Integrated Modeling**  **System, but**  **as the**  **model is**  **now**

**being applied**  **to other**  **countries, the**  **acronym is**  **now used**  **as its**  **proper name.** 

**10­4**Max Tech) **permitted efficiency**  **level would**  **be reassigned**  **to the**  **new minimum**  **level. b**  **For example,**  **if the** 

**efficiency Level**  **2 were**  **imposed as**  **the new**  **standard in**  **2012 on**  **B­L­IO equipment**  **class, then** 

**the market**  **shares for**  **efficiency levels**  **0 and**  **1 would**  **be assigned**  **to Level**  **2, which**  **would result** 

**in a**  **total market**  **share of**  **41.2 percent**  **= (0**  **percent+25.2 percent**  **+16.0 percent)**  **from the**  **first**

**three columns**  **of the**  **seventh row**  **in Table**  **10.2.3), beginning**  **in 2012.**  **The market**  **shares for** 

**efficiency levels**  **3 through**  **8 would**  **not be**  **affected, since**  **the market**  **already has**  **a choice**  **of that** 

**equipment with**  **efficiency level**  **2 also**  **available. It**  **was assumed**  **that the**  **standard would**  **not**

**affect the**  **relative attractiveness**  **of equipment**  **with efficiencies**  **higher than**  **the standard.** 

**As stated**  **earlier, annual**  **unit energy**  **consumption values**  **are tied**  **directly to**  **the efficiency** 

**of the**  **equipment. Table**  **10.2.3 provides**  **weighted­average annual**  **energy consumption**  **values**

**for specific**  **efficiency levels**  **for all**  **three sizes**  **of both**  **equipment classes.** 

Table 10.2.3 Average Annual Unit Energy Consumption by Efficiency Level (kWh/Year)

Equipment

Class Efficiency Level

Level 0

(Market

Baseline) Level 1

(Energy

Star Tier 1) Level 2 Level 3

(Energy

Star Tier 2) Level 4 Level 5 Level 6 Level 7 Level 8

(Max Tech)

A­L­IN **3,173 2,452**  **2,229 2,045**  **1,882 1,790**  **1,773 1,654**  **1,586**

A­M­IN **3,005 2,321**  **2,102 1,933**  **1,775 1,692**  **1,675 1,576**  **1,510**

A­S­IN **2,796 2,117**  **1,902 1,737**  **1,585 1,518**  **1,502 1,417**  **1,356**

B­L­IO **4,033 2,244**  **1,901 1,740**  **1,598 1,533**  **1,348 1,336**  **1,315**

B­M­IO **3,899 2,108**  **1,763 1,623**  **1,488 1,426**  **1,250 1,240**  **1,221**

B­S­IO **3,699 1,934**  **1,589 1,461**  **1,376 1,214**  **1,149 1,140**  **1,125**

**For the**  **annual shipment­weighted**  **efficiency levels**  **specified in**  **the base**  **case and** 

**standards cases,**  **DOE assigned**  **the appropriate**  **annual unit**  **energy consumption**  **values shown**  **in**

**Table 10.2.4.**  **For each**  **equipment class,**  **the value**  **shown for**  **a given**  **efficiency level**  **is the** 

**efficiency weighted**  **average annual**  **unit energy**  **consumption, after**  **taking into**  **account the**  **non**

**availability of**  **products at**  **efficiency levels**  **below the**  **efficiency level**  **shown.**

Table 10.2.4 Shipment­Weighted Average Annual Energy Consumption per Unit by

Efficiency Level (kWh/year)

Equipment

Class Efficiency Level

Level 0

(Market

Baseline) Level 1

(Energy Star

Tier 1) Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 (

A­L­IN **2,146 2,058**  **2,000 1,926**  **1,838 1,776**  **1,762 1,654** 

A­M­IN **2,030 1,947**  **1,889 1,821**  **1,735 1,679**  **1,666 1,576** 

A­S­IN **1,839 1,757**  **1,701 1,634**  **1,552 1,507**  **1,494 1,417** 

B­L­IO **1,954 1,777**  **1,691 1,625**  **1,544 1,498**  **1,347 1,336** 

B­M­IO **1,837 1,660**  **1,573 1,515**  **1,437 1,393**  **1,248 1,239** 

B­S­IO **1,687 1,512**  **1,423 1,369**  **1,319 1,202**  **1,148 1,140** 

**b This**  **“roll­up” scenario**  **for the**  **shipments is**  **similar to**  **what is**  **used in**  **the Manufacturer**  **Impact Analysis**  **(see**

**chapter 12**  **of the**  **TSD for**  **more details).** 

**10­5**10.2.2.2 Shipments

**DOE forecasted**  **shipments for**  **the base**  **case and**  **all standards**  **cases (see**  **Chapter 9**  **of the** 

**TSD).**

10.2.2.3 Equipment Stock

**The BVM**  **stock in**  **a given**  **year is**  **the total**  **units of**  **BVM equipment**  **shipped from**  **earlier**

**years which**  **survive in**  **the given**  **year. The**  **NES spreadsheet**  **model keeps**  **track of**  **the total** 

**number of**  **BVM units**  **shipped each**  **year. For**  **purposes of**  **the NES**  **and NPV**  **analyses, DOE** 

**assumes that**  **retirements follow**  **a Weibull**  **distribution with**  **a 14­year**  **average lifetime.** 

**Retirements for**  **any given**  **vintage build**  **to about**  **eight percent**  **per year**  **by year**  **seven, then**  **tail**

**off gradually**  **to less**  **than one**  **percent per**  **year by**  **year 20.**  **Retired units**  **are replaced**  **until 2042.** 

**For units**  **shipped in**  **2042, any**  **units still**  **remaining at**  **the end**  **of 2062**  **are replaced.** 

10.2.2.4 National Annual Energy Consumption

**The national**  **annual energy**  **consumption is**  **the product**  **of the**  **annual unit**  **energy**

**consumption and**  **the number**  **of BVM**  **units of**  **each vintage.**  **This approach**  **accounts for** 

**differences in**  **unit energy**  **consumption from**  **year to**  **year. Equation**  **10.3 above**  **was used**  **for**

**determining the**  **national annual**  **energy consumption**  **of BVM**  **equipment.**

**In determining**  **national annual**  **energy consumption,**  **DOE initially**  **calculated the**  **annual**

**energy consumption**  **at the**  **site (i.e.,**  **electricity in**  **kWh consumed**  **by the**  **BVM unit).**  **DOE then** 

**calculated primary**  **energy consumption**  **from site**  **energy consumption**  **by applying**  **a conversion** 

**factor to**  **account for**  **losses associated**  **with the**  **generation, transmission,**  **and distribution**  **of**

**electricity.**

10.2.2.5 Site­to­Source Conversion Factor

**The site­to­source**  **conversion factor**  **is the**  **multiplicative factor**  **used to**  **convert site** 

**energy consumption,**  **expressed in**  **kWh, into**  **primary or**  **source energy**  **consumption, expressed** 

**in quads.**  **The site­to­source**  **conversion factor**  **accounts for**  **losses in**  **electricity generation,** 

**transmission, and**  **distribution. DOE**  **used annual**  **site­to­source conversion**  **factors based**  **on U.S.** 

**average values**  **for the**  **commercial sector,**  **calculated from**  **the** 2007 Annual Energy Outlook

( **AEO2007** ), **Table A5.**  **As shown**  **in Table**  **10.2.6, the**  **average conversion**  **factors vary**  **over time,** 

**due to**  **projected changes**  **in electricity**  **generation sources**  **(i.e., the**  **power plant**  **types projected**  **to**

**provide electricity**  **to the**  **U.S.).**

**10­6**Table 10.2.5 Site­to­Source Conversion Factors

Year Site­to­Source

Conversion

Factor Btu/kWh Year Site­to­Source

Conversion

Factor Btu/kWh

**2012 10,680**  **2038 9,971** 

**2013 10,646**  **2039 9,942** 

**2014 10,631**  **2040 9,913** 

**2015 10,601**  **2041 9,883** 

**2016 10,584**  **2042 9,854** 

**2017 10,582**  **2043 9,825** 

**2018 10,568**  **2044 9,796** 

**2019 10,544**  **2045 9,767** 

**2020 10,516**  **2046 9,739** 

**2021 10,493**  **2047 9,710** 

**2022 10,467**  **2048 9,681** 

**2023 10,447**  **2049 9,653** 

**2024 10,414**  **2050 9,624** 

**2025 10,368**  **2051 9,596** 

**2026 10,328**  **2052 9,567** 

**2027 10,302**  **2053 9,539** 

**2029 10,272**  **2054 9,511** 

**2030 10,245**  **2055 9,483** 

**2031 10,210**  **2056 9,455** 

**2032 10,180**  **2057 9,427** 

**2033 10,150**  **2058 9,399** 

**2034 10,120**  **2059 9,372** 

**2035 10,090**  **2060 9,344** 

**2036 10,060**  **2061 9,316** 

**2037 10,031**  **2062 9,289** 

**Source: AEO**  **2007, Table**  **A.5. Linearly**  **extrapolated after**  **2030.**

10.3 NET PRESENT VALUE

10.3.1 Net Present Value Definition

**The NPV**  **is the**  **value in**  **the present**  **of a**  **time series**  **of costs**  **and savings.**  **The NPV**  **is**

**given by**  **the equation:** 

NPV

= PVS

– PVC Eq. 10.5

**where:**

PVS

**= present**  **value of**  **operating cost**  **savings (including**  **electricity, repair,**  **and**

**maintenance costs)**  **($), and** 

PVC

**= present**  **value of**  **increased total**  **installed costs**  **(including equipment**  **and**

**installation) ($).** 

**The** PVS **and** PVC **are determined**  **according to**  **the following**  **expressions:**

PVS



### = 

# ∑ OCS

t **x** 

### DF

t Eq. 10.6

PVC



### = 

# ∑ TIC

t **x** 

### DF

t Eq. 10.7

**where:**

OCS

**= total**  **annual operating**  **cost savings**  **($),**

TIC

**= total**  **annual installed**  **cost increases**  **($),**

**10­7**DF

**= discount**  **factor, and** 

t **= year**  **for which**  PVS **and** PVC **are determined.** 

**DOE determined**  **the** PVC **for each**  **year, from**  **the effective**  **date of**  **the standard**  **(2012) to** 

**the year**  **2062, discounted**  **for the**  **ANOPR analysis,**  **to the**  **year 2008.**  **The** PVS **was determined** 

**for each**  **year, from**  **the effective**  **date of**  **the standard**  **(2012) to**  **the year**  **when the**  **last units** 

**purchased in**  **2042 retire**  **(assumed to**  **be in**  **2062). DOE**  **calculated costs**  **and savings**  **as the** 

**difference between**  **a standards**  **case and**  **a base**  **case. DOE**  **calculated a**  **discount factor**  **from the** 

**discount rate**  **and the**  **number of**  **years between**  **the “present”**  **(i.e., year**  **to which**  **the sum**  **is being** 

**discounted) and**  **the year**  **in which**  **the costs**  **and savings**  **occur. The**  **net present**  **value is**  **the sum** 

**over time**  **of the**  **discounted net**  **savings.**

10.3.2 Net Present Value Inputs

**The inputs**  **to the**  **NPV calculation**  **are listed**  **below:**

• **Total Annual**  **Installed Cost**  **(section 10.3.2.1)** 

• **Total Annual**  **Operating Cost**  **Savings (section**  **10.3.2.2)**

• **Discount Factor**  **(section 10.3.2.3)** 

• **Present Value**  **of Costs**  **(section 10.3.2.4)** 

• **Present Value**  **of Savings**  **(section 10.3.2.5)** 

10.3.2.1 Total Annual Installed Cost

**The increase**  **in the**  **total annual**  **installed cost**  **is equal**  **to the**  **annual change**  **in the**  **per­unit**

**total installed**  **cost (difference**  **between base**  **case and**  **standards case)**  **multiplied by**  **the shipments** 

**forecasted in**  **the standards**  **case. As**  **with the**  **calculation of**  **the NES,**  **DOE used**  **the standards** 

**case shipments**  **forecast to**  **avoid miscounting**  **the reduction**  **in shipments**  **as a**  **reduction in**  **total**

**installed costs.**  **The total**  **installed cost**  **includes both**  **the equipment**  **cost and**  **the installation** 

**price. DOE**  **based average**  **equipment costs**  **on average**  **manufacturer prices**  **(see chapter**  **8)**

**multiplied by**  **average overall**  **markup values**  **(see chapter**  **8). DOE**  **based average**  **installation**

**prices on**  **nationally representative**  **values for**  **each equipment**  **class (see**  **Chapter 8).**  **Table 10.3.2** 

**shows the**  **resulting average**  **total installed**  **costs per**  **unit for**  **each of**  **the equipment**  **classes of** 

**BVM equipment**  **by efficiency**  **level analyzed.** 

Table 10.3.1 Average Total Installed Cost per Unit by Efficiency Level (2007$)

Equipment

Class Level 0

(Market

Baseline) Level 1

(Energy

Star Tier

1) Level 2 Level 3

(Energy

Star Tier

2) Level 4 Level 5 Level 6 Level 7 Level 8

(Max

Tech)

A­L­IN **$2,544 $2,563**  **$2,581 $2,604**  **$2,631 $2,662**  **$2,674 $2,855**  **$3,545**

A­M­IN **$2,363 $2,379**  **$2,398 $2,420**  **$2,447 $2,479**  **$2,491 $2,641**  **$3,274**

A­S­IN **$1,982 $1,997**  **$2,016 $2,035**  **$2,060 $2,086**  **$2,098 $2,231**  **$2,720**

**10­8**evel 8 (Max B­L­IO **$1,880 $1,893**  **$1,911 $1,933**  **$1,962 $2,050**  **$2,105 $2,117**  **$2,845**

B­M­IO **$1,819 $1,832**  **$1,851 $1,872**  **$1,902 $1,989**  **$2,043 $2,055**  **$2,710**

B­S­IO **$1,615 $1,627**  **$1,646 $1,670**  **$1,695 $1,783**  **$1,833 $1,845**  **$2,373**

**As discussed**  **earlier in**  **section 10.2.2.1,**  **DOE developed**  **base case**  **and standards**  **case**

**energy efficiency**  **trends. DOE**  **based its**  **standards case**  **forecasts (i.e.,**  **forecasts of**  **efficiency**

**trends after**  **standards take**  **effect) on**  **the use**  **of a**  **roll­up efficiency**  **scenario and**  **parallel growth** 

**trend. For**  **both the**  **base case**  **and standards**  **case energy­efficiency**  **trends, DOE**  **calculated**

**annual shipment­weighted**  **average efficiencies.**  **Associated with**  **each annual**  **shipment­weighted**

**average efficiency**  **value, DOE**  **assigned a**  **total installed**  **cost, based**  **on the**  **relationship between** 

**efficiency and**  **total installed**  **cost. DOE**  **based the**  **relationship between**  **efficiency and**  **total**

**installed cost**  **for each**  **BVM equipment**  **class on**  **the data**  **in Table**  **10.3.1. As**  **shown in**  **Table**

**10.3.2, DOE**  **estimated the**  **shipment­weighted installed**  **cost. DOE**  **determined forecasted** 

**average shipments­weighted**  **total installed**  **costs based**  **on the**  **annual shipments**  **by efficiency** 

**level.**

Table 10.3.2 Shipment­Weighted Average Total Installed Cost per Unit by Standard Level

(2007$)

Equipment

Class Level 0

(Market

Baseline) Level 1

(Energy Star

Tier 1) Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 L

A­L­IN **$2,635 $2,638**  **$2,642 $2,651**  **$2,666 $2,687**  **$2,697 $2,863** 

A­M­IN **$2,450 $2,452**  **$2,457 $2,466**  **$2,480 $2,501**  **$2,511 $2,649** 

A­S­IN **$2,061 $2,063**  **$2,068 $2,075**  **$2,089 $2,107**  **$2,116 $2,238** 

B­L­IO **$1,972 $1,973**  **$1,978 $1,987**  **$2,004 $2,066**  **$2,111 $2,122** 

B­M­IO **$1,911 $1,912**  **$1,917 $1,926**  **$1,943 $2,005**  **$2,050 $2,060** 

B­S­IO **$1,703 $1,704**  **$1,709 $1,719**  **$1,734 $1,798**  **$1,839 $1,850** 

10.3.2.2 Total Annual Operating Cost Savings

**The annual**  **operating cost**  **savings to**  **the Nation**  **are equal**  **to the**  **change in**  **the annual** 

**operating costs**  **(difference between**  **base case**  **and standards**  **case) per**  **unit multiplied**  **by the** 

**shipments forecasted**  **in the**  **standards case.**  **DOE used**  **the standards**  **case shipments**  **forecast, in** 

**order to**  **avoid miscounting**  **the reduction**  **in shipments**  **as an**  **operating cost**  **savings.**

**The annual**  **operating cost**  **includes electricity,**  **repair, and**  **maintenance costs.** 

Annual Electricity Cost Savings. **As described**  **in chapter**  **8, DOE**  **calculated annual** 

**electricity costs**  **based on**  **average State­level**  **commercial electricity**  **prices. To**  **calculate annual** 

**energy cost**  **savings for**  **a particular**  **equipment class**  **in a**  **given year,**  **DOE first**  **calculated the** 

**annual energy**  **costs in**  **each forecast**  **year at**  **each efficiency**  **level by**  **multiplying the**  **weighted**

**10­9**Max

) **average energy**  **consumption at**  **each efficiency**  **level from**  **Table 10.2.6**  **by the**  **units of**  **equipment**

**stock in**  **the equipment**  **class in**  **each year,**  **and then**  **multiplying the**  **energy consumption**  **by the** 

**sales­weighted national**  **average electricity**  **prices for**  **the four**  **business types**  **in chapter**  **8. To** 

**determine energy**  **savings, the**  **national energy**  **costs at**  **each candidate**  **standard level**  **(Levels 2­8)** 

**were then**  **subtracted from**  **the national**  **energy costs**  **at the**  **baseline level**  **(Level 1).**  **Because**

**projections of**  **the stock**  **of BVM**  **equipment (expressed**  **in units**  **shipped) are**  **the primary**  **driver**

**used to**  **estimate future**  **BVM equipment**  **shipments, DOE**  **calculated the**  **national energy**  **cost on**  **a**

**per­unit basis.** 

Annual Repair Costs. **DOE based**  **average annual**  **repair costs**  **on the**  **value of**  **the BVM** 

**equipment (see**  **Chapter 8).**  **Table 10.3.3**  **shows the**  **average per­unit**  **repair costs**  **for the** 

**equipment classes**  **of BVM**  **equipment. The**  **NES spreadsheet**  **provides the**  **capability to**  **allow**

**repair costs**  **to differ**  **by the**  **price of**  **the BVM**  **equipment, and**  **therefore by**  **efficiency level.**  **For**

**the purposes**  **of this**  **ANOPR analysis,**  **DOE assumed**  **the repair**  **costs to**  **increase for**  **each**

**equipment class**  **as the**  **manufacturer’s price**  **increases, as**  **shown in**  **Table 10.3.3.** 

Table 10.3.3 Average Annual Repair Cost per Unit (2007$)

Equipment

Class Level 0

(Market

Baseline) Level 1

(Energy

Star Tier

1) Level 2 Level 3 (Energy

Star Tier 2) Level 4 Level 5 Level 6 Level 7 Level 8 (

Tech

A­L­IN $114 $115 $116 $117 $118 $120 $121 $130 $164

A­M­IN $114 $115 $116 $117 $119 $120 $121 $129 $163

A­S­IN $114 $115 $116 $117 $119 $121 $122 $130 $162

B­L­IO

$114 $115 $116 $118 $120 $126 $130 $130 $180

B­M­IO

$114 $115 $116 $118 $120 $126 $130 $131 $177

B­S­IO

$114 $115 $117 $118 $121 $128 $132 $132 $175

Annual Maintenance Costs. **DOE was**  **unable to**  **locate any**  **data on**  **annual preventive** 

**maintenance cost**  **(see Chapter**  **8, section**  **8.2.3.4), but**  **annual maintenance**  **is believed**  **to be**  **a**

**relatively straightforward**  **process. An**  **annual value**  **of $165.44**  **per unit**  **was assigned**  **to all** 

**equipment because**  **the maintenance**  **procedures are**  **the same**  **for all**  **sizes and**  **efficiency levels**  **of**

**beverage vending**  **machines.**

10.3.2.3 Discount Factor

**DOE determined**  **present value**  **of monetary**  **values in**  **future years**  **using the**  **discount**

**factor. The**  **discount factor**  **(** DF **) is**  **described by**  **the equation:** 



### DF **=1/ (1+r)**  **(** y ­ yp) Eq. 10.8

**where:**

r **= discount**  **rate,**

y **= year**  **of the**  **monetary value,**  **and**

**10­10**y

P **= year**  **in which**  **the present**  **value is**  **being determined.** 

**DOE estimated**  **national impacts**  **with both**  **a three­percent**  **and a**  **seven­percent real** 

**discount rate**  **as the**  **average real**  **rate of**  **return on**  **private investment**  **in the**  **U.S. economy.**  **These**

**discount rates**  **are used**  **in accordance**  **with the**  **Office of**  **Management and**  **Budget (OMB)’s** 

**guidance to**  **Federal agencies**  **on the**  **development of**  **regulatory analysis**  **(OMB Circular**  **A­4,**

**September 17,**  **2003), and**  **section E.,**  **“Identifying and**  **Measuring Benefits**  **and Costs,”**  **therein.**

**DOE defined**  **the present**  **year as**  **2007 for**  **the ANOPR**  **analysis.**

10.3.2.4 Present Value of Costs

**The present**  **value of**  **increased installed**  **costs is**  **the annual**  **installed cost**  **increase in**  **each**

**year (i.e.,**  **the difference**  **between the**  **standards case**  **and base**  **case), discounted**  **to the**  **present,**

**and summed**  **for the**  **time period**  **over which**  **DOE is**  **considering the**  **installation of**  **BVM**

**equipment (i.e.,**  **from the**  **effective date**  **of standards,**  **2012, to**  **the year**  **2042).**

**The increase**  **in total**  **installed cost**  **refers to**  **both equipment**  **cost and**  **installation cost** 

**associated with**  **the higher**  **energy efficiency**  **of BVM**  **units purchased**  **in the**  **standards case** 

**compared to**  **the base**  **case. DOE**  **calculated annual**  **installed costs**  **as the**  **difference in**  **total**

**installed cost**  **for new**  **equipment purchased**  **each year,**  **multiplied by**  **the shipments**  **in the** 

**standards case.** 

10.3.2.5 Present Value of Savings

**The present**  **value of**  **operating cost**  **savings is**  **the annual**  **operating cost**  **savings (i.e.,**  **the**

**difference between**  **the base**  **case and**  **standards case)**  **discounted to**  **the year**  **2007, and**  **summed**

**over the**  **period from**  **the effective**  **date, 2012,**  **to the**  **time when**  **the last**  **unit installed**  **in 2042**  **is**

**retired from**  **service (in**  **the year**  **2062). Savings**  **are decreases**  **in operating**  **costs (including** 

**electricity, repair,**  **and maintenance)**  **associated with**  **the higher**  **energy efficiency**  **of BVM**  **units**

**purchased in**  **the standards**  **case compared**  **to the**  **base case.**  **Total annual**  **operating cost**  **savings is** 

**the savings**  **per unit**  **multiplied by**  **the number**  **of units**  **of each**  **vintage surviving**  **in a**  **particular**

**year. Equipment**  **consumes energy**  **over its**  **entire lifetime,**  **and for**  **units purchased**  **in 2042,**  **the**

**PVS includes**  **energy consumed**  **until the**  **unit is**  **retired from**  **service (in**  **the year**  **2062).**

10.4 NES AND NPV RESULTS

**The NES**  **spreadsheet model**  **provides estimates**  **of the**  **NES and**  **NPV for**  **various**

**candidate standards**  **levels. The**  **inputs to**  **the NES**  **spreadsheet are**  **presented above**  **in sections** 

**10.2.2 (NES**  **Inputs) and**  **10.3.2 (NPV**  **Inputs).**

10.4.1 NES and NPV Input Summary

**Table 10.4.1**  **summarizes the**  **inputs to**  **the NES**  **spreadsheet model.**  **For each**  **input a**  **brief**

**description of**  **the data**  **source is**  **given.**

**10­11**10.4.2 National Energy Savings Results

**The following**  **section provides**  **NES results**  **for each**  **efficiency level**  **considered for**  **the**

**two equipment**  **classes of**  **beverage vending**  **machines analyzed.**  **Results are**  **cumulative to**  **2042**

**and are**  **shown as**  **primary energy**  **savings in**  **quads. Inputs**  **to the**  **NES spreadsheet**  **model are** 

**based on**  **weighted­average values,**  **yielding results**  **which are**  **discrete point**  **values, rather**  **than a** 

**distribution of**  **values as**  **in the**  **LCC analysis.** 

**Table 10.4.2**  **shows the**  **NES results**  **for the**  **efficiency levels**  **analyzed for**  **each equipment** 

**class of**  **beverage vending**  **machines. DOE**  **based all**  **the results**  **on electricity**  **price forecasts** 

**from the**  AEO2007 **Reference Case.** 

Table 10.4.1 NES and NPV Inputs

Input Data Description

**Shipments Annual**  **shipments from**  **shipments model**  **(see chapter**  **9).**

**Effective Date**  **of Standard**  **2012**

**Base Case**  **Efficiencies Annual**  **shipment­weighted efficiencies**  **based on**  **historical BVM** 

**weighted efficiency**  **values**

**Beverage Vending**  **Machine shipment** 

**weighted standard**  **levels Standards**  **case annual**  **shipment­weighted market**  **shares remain** 

**constant for**  **base case**  **and each**  **standard level** 

**Annual Energy**  **Consumption per**  **Unit Annual**  **weighted­average values**  **are a**  **function of**  **efficiency level.** 

**(Established from**  **the Engineering**  **Analysis, Chapter**  **5).**

**Total Installed**  **Cost per**  **Unit Annual**  **weighted­average values**  **are a**  **function of**  **efficiency level.** 

**(Established from**  **the life­cycle**  **cost analysis,**  **Chapter 8).** 

**Repair Cost**  **per Unit**  **Annual weighted­average**  **values increase**  **with manufacturer’s**  **cost**

**level. (Established**  **from the**  **life­cycle cost**  **analysis, Chapter**  **8).**

**Maintenance Cost**  **per Unit**  **Annual weighted­average**  **value equals**  **$165.44 by**  **assumption.**

**Escalation of**  **Electricity Prices**  **2007 EIA**  Annual Energy Outlook **forecasts (to**  **2030) and**  **extrapolation**

**for beyond**  **2030 (see**  **the life­cycle**  **cost analysis,**  **Chapter 8).** 

**Electricity Site­to­Source**  **Conversion Conversion**  **varies yearly**  **and is**  **generated by**  **DOE/EIA’s NEMS** *

**program (a**  **time series**  **conversion factor;**  **includes electric**  **generation,**

**transmission, and**  **distribution losses).** 

**Discount Rate**  **3 and**  **7 percent**  **real.**

**Present Year**  **Future costs**  **are discounted**  **to year**  **2007.**

***** **Chapter 13**  **on the**  **utility impact**  **analysis and**  **Chapter 14**  **on the**  **environmental assessment**  **provide more**  **detail on**  **NEMS.**

Table 10.4.2 Cumulative National Energy Savings for Beverage Vending Machines

(2012­2042) (Quads)

Equipment

Class Efficiency Level

Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 Level 8

(Max

Tech)

A­L­IN **0.002 0.004**  **0.006 0.008**  **0.008 0.011**  **0.013**

A­M­IN **0.002 0.004**  **0.006 0.008**  **0.008 0.010**  **0.012**

A­S­IN **0.002 0.003**  **0.006 0.007**  **0.007 0.010**  **0.011**

B­L­IO **0.016 0.035**  **0.060 0.073**  **0.077 0.099**  **0.116**

B­M­IO **0.016 0.035**  **0.060 0.074**  **0.078 0.100**  **0.117**

**10­12**B­S­IO **0.016 0.036**  **0.061 0.075**  **0.079 0.101**  **0.118**

10.4.3 Annual Costs and Savings

**As a**  **prelude to**  **providing the**  **NPVs for**  **each standard**  **level in**  **each equipment**  **class, this** 

**section presents**  **the annual**  **equipment cost**  **(or total**  **installed cost)**  **increases and**  **annual operating** 

**cost savings**  **at the**  **national level.** 

**Figure 10.4.1**  **shows the**  **changes over**  **time of**  **the non­discounted**  **annual equipment**  **price**

**increases and**  **the non­discounted**  **operating cost**  **savings at**  **the standard**  **level 4**  **for B­L­IO** 

**equipment. The**  **total net**  **annual impact**  **is the**  **discounted value**  **of the**  **difference between**  **annual**

**equipment purchases**  **and annual**  **operating costs**  **at a**  **seven percent**  **discount rate.**  **Figures H.1.1** 

**through H.x.x**  **in Appendix**  **H show**  **comparable figures**  **for other**  **efficiency levels**  **and other** 

**equipment classes.**  **Each figure**  **also shows**  **the net**  **annual impact,**  **which is**  **the difference** 

**between the**  **savings and**  **costs for**  **each year.**  **The annual**  **equipment price**  **change is**  **the increase** 

**in equipment**  **price for**  **equipment purchased**  **each year**  **over the**  **period 2012–2042.**  **The annual** 

**operating savings**  **is the**  **savings in**  **operating costs**  **for equipment**  **purchased, and**  **which have**  **not**

**been retired,**  **for each**  **year over**  **the time**  **period 2012­2062.**  **DOE determined**  **the annual**  **costs**

**and savings**  **presented in**  **each figure**  **based on**  **the** AEO2007 **Reference Case.**  **The NPV**  **is the** 

**difference between**  **the cumulative**  **annual discounted**  **savings and**  **the cumulative**  **annual**

**discounted costs.** 

**10­13**Un Select Standard level to plot Annual

Net Impacts trend.

Std Level

Level 4

Net Savings

­0.005 0 0.005

0.01 0.015

0.02 0.025

0.03

2012 2016 2020 2024 2028 2032 2036 2040 2044 2048 2052 2056 2060

YearBillion2007$

Undiscounted Total Annual Operating Savings

discounted Annual Equipment Purchase Savings

Discounted Total Net Annual Impact

Figure 10.4.1 National Annual Costs and Savings for B­L­IO Equipment Class, Efficiency

Level 4

**Figure 10.4.1**  **initially shows**  **smaller annual**  **operating cost**  **savings compared**  **to the** 

**increased equipment**  **price costs**  **(shown on**  **the figure**  **as operating**  **savings). For**  **efficiency levels** 

**up through**  **Level 8,**  **operating cost**  **savings increase**  **with time,**  **as more**  **and more**  **equipment**

**meeting the**  **efficiency standard**  **comprises the**  **beverage vending**  **machine stock.** 

10.4.4 Net Present Value Results

**The following**  **section provides**  **NPV results**  **for the**  **efficiency levels**  **considered for**  **the**

**equipment classes**  **of beverage**  **vending machines.**  **Results are**  **cumulative and**  **are shown**  **as the** 

**discounted value**  **of these**  **savings in**  **dollar terms.**  **The inputs**  **to the**  **NES spreadsheet**  **model are** 

**based on**  **weighted­average values**  **yielding results**  **which are**  **discrete point**  **values, rather**  **than a** 

**distribution of**  **values as**  **in the**  **LCC analysis.**  **The present**  **value of**  **increased total**  **installed costs** 

**is the**  **total installed**  **cost increase**  **(i.e., the**  **difference between**  **the standards**  **case and**  **base case),** 

**discounted to**  **2007, and**  **summed over**  **the time**  **period in**  **which DOE**  **evaluates the**  **impact of** 

**standards (i.e.,**  **from the**  **effective date**  **of standards,**  **2012, to**  **the year**  **2062).**

**Savings are**  **decreases in**  **operating costs**  **(including electricity,**  **repair, and**  **maintenance)**

**associated with**  **the higher**  **energy efficiency**  **of beverage**  **vending machines**  **purchased in**  **the**

**10­14 standards**  **case compared**  **to the**  **base case.**  **Total operating**  **cost savings**  **are the**  **savings per**  **unit**

**multiplied by**  **the number**  **of units**  **of each**  **vintage (i.e.,**  **the year**  **of manufacture)**  **surviving in**  **a**

**particular year.**  **Beverage vending**  **machines consume**  **energy and**  **must be**  **maintained over**  **their**

**entire lifetime.**  **For units**  **purchased in**  **2042, the**  **operating cost**  **includes energy**  **consumed and** 

**maintenance and**  **repair costs**  **incurred until**  **the last**  **unit is**  **retired from**  **service in**  **2062.**

**Table 10.4.3**  **shows the**  **NPV results**  **for the**  **efficiency levels**  **considered for**  **beverage**

**vending machines**  **based upon**  **a seven**  **percent discount**  **rate. DOE**  **based all**  **results on**  **electricity**

**price forecasts**  **from the**  AEO2007 **Reference Case.**  **Detailed results**  **showing the**  **breakdown of** 

**the NPV**  **into national**  **equipment costs**  **and national**  **operating costs**  **are provided**  **in Appendix**  **H.**

Table 10.4.3 Cumulative NPV Results Based on a Seven­Percent Discount Rate

(Billion 2007$)*

Equipment

Class Efficiency Level

Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 Level 8

(Max

Tech)

A­L­IN 0.003 0.006 0.010 0.011 0.010 (0.003) (0.082)

A­M­IN 0.003 0.006 0.009 0.010 0.009 (0.003) (0.076)

A­S­IN 0.003 0.006 0.009 0.009 0.008 (0.003) (0.063)

B­L­IO 0.026 0.056 0.089 0.092 0.087 (0.028) (0.640)

B­M­IO 0.026 0.057 0.089 0.093 0.088 (0.027) (0.639)

B­S­IO 0.027 0.058 0.091 0.095 0.089 (0.026) (0.637)

***** **Values in**  **parentheses indicate**  **negative NPV.** 

**Table 10.4.4**  **provides the**  **NPV results**  **based on**  **the three**  **percent discount**  **rate and** 

**electricity price**  **forecasts from**  **the** AEO2007 **Reference Case.**  **As with**  **the NPV**  **results based** 

**upon a**  **seven percent**  **discount rate,**  **detailed results**  **showing the**  **breakdown of**  **the NPV**  **into**

**national equipment**  **costs and**  **national operating**  **costs based**  **upon a**  **three percent**  **discount rate** 

**are provided**  **in Appendix**  **H.**

Table 10.4.4 Cumulative NPV Results based on a Three­Percent Discount Rate

(Billion 2007$)*

Equipment

Class Efficiency Level

Level 2 Level 3

(Energy Star

Tier 2) Level 4 Level 5 Level 6 Level 7 Level 8

(Max

Tech)

A­L­IN 0.007 0.016 0.025 0.029 0.029 0.004 (0.154)

A­M­IN 0.007 0.015 0.024 0.026 0.026 0.004 (0.144)

A­S­IN 0.007 0.015 0.023 0.025 0.024 0.002 (0.121)

B­L­IO 0.067 0.146 0.234 0.252 0.244 0.026 (1.222)

B­M­IO 0.068 0.147 0.235 0.254 0.246 0.028 (1.219)

**10­15**B­S­IO 0.069 0.150 0.240 0.258 0.251 0.031 (1.213)

***** **Values in**  **parentheses indicate**  **negative NPV.** 

**10­16**REFERENCES

**1. Energy**  **Information Administration**  **(EIA). National**  **Energy Modeling**  **System Commercial** 

**Model (2004**  **Version).**

**2. ERG/MKJ.**  **Energy Research**  **Group &**  **M.K. Jaccard**  **& Associates.**  **2000. Integration**  **of**

**GHG Emissions**  **Reduction Options**  **using CIMS.** 

**<<http://www.emrg.sfu.ca/reports/Rollup.pdf>> (05**  **June 2001).** 

**10­17**