Energy Conservation Standards for RefrigeratedEnergyConservationStandardsforRefrigeratedBottled or Canned Beverage Vending Machines (BVMs)Notice of Proposed Rulemaking (NOPR)NoticeofProposedRulemaking(NOPR)Public MeetingBuilding Technologies ProgramOffice of EnergyEfficiencyand Renewable EnergyyU.S. Department of EnergyJune 17 2009June17,2009http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.htmlOverviewPurpose of the Public Meeting andComments From ParticipantsPurposes•To invite comment on the proposed energy conservation standard levels and requestrecommendations for alternatives;•To present methodologies and characterizeresults for the rulemaking analyses;•To discuss specific issues related to each analysis;•To seek input from interested parties onmethodologies, assumptions, data sources, andresults from the analyses; and•To describe the next steps in the rulemaking.Comments from ParticipantsCommentsfromParticipants•Participants are invited to providesummary comments or statements; and•Participants are invited to raise additional issues for discussion today.•NOPR comment period closes July 28 20092NOPRcommentperiodclosesJuly28,2009.OverviewStatutory Authority – Energy Policy andConservation Act as amendedAddresses requirements of 42 U.S.C. 6295(v)(1), (2), and (3):•(A) Not later than August 8, 2009, the Secretary shall issue, by rule, standardlevels for beverage vending machines, withthe standard levels effective forequipment manufactured on or after August 8, 2012.•This rulemaking is one of the scheduledactions described in DOE’s report toCongress, which was prepared in response to section 141(a) of the EnergyPolicy Act of 2005 (EPACT 2005).3OverviewDOE Actions for Beverage Vending MachinesTest Procedures•Final Rule published on December 8, 2006, based on American NationalStandards Institute (ANSI)/American Society of Heating, Refrigerating and AirConditioning Engineers (ASHRAE) Standard 32.1-2004, (Methods of Testing forR ti V di M hi f B ttl d C d Oth S l d B )(42RatingVendingMachinesforBottled,CannedorOtherSealedBeverages).U.S.C. 6293(b)(15)). 10 CFR 431.294.Energy Conservation Standards•Framework Document published June 28 2006 71 FR 36715FrameworkDocumentpublishedJune28,2006.71FR36715.•Advance Notice of Public Rulemaking (ANOPR) published June 16, 2008. 72 FR34094.•Technical Support Document (TSD) posted on DOE website.•Notice of Proposed Rulemaking (NOPR) published in the Federal Register onNoticeofProposedRulemaking(NOPR)publishedintheFederalRegisteronMay 29, 2009. 74 FR 26020.– Issued by DOE on May 22, 2009.– Available to stakeholders for review more than a couple weeks prior to the publicmeeting.4•Final Rule scheduled for publication by August 8, 2009.OverviewThe Energy Policy and Conservation Act (EPCA) directsDOE to consider seven factors when setting energyconservation standardsconservationstandardsFactorAnalysis1. Economic impact on consumersd ftLife-cycle cost analysisM ft i t liandmanufacturersManufacturerimpactanalysis2. Lifetime operating cost savings Life-cycle cost analysis3. Total projected energy savings National impact analysis4. Impact on utility or performance Screening analysisEngineering analysis5. Impact of any lessening ofcompetitionManufacturer impact analysis6. Need for national energyconservationNational impact analysis7. Other factors the SecretaryEnvironmental assessment5considers relevantUtility impact analysisEmployment impact analysisProposed StandardSelection of Proposed StandardDOE considered seven trial standard levels (TSLs) for Class A equipmentDOEconsideredseventrialstandardlevels(TSLs)forClassAequipmentand six TSLs for Class B equipment, beginning with the most efficient level(TSL 7 and TSL 6, respectively) and worked down to a level where thebenefits of potential standards outweighed the burdens.•DOE tentatively concludes that TSL 7 for Class A and TSLs 6, 5 and 4 for Class B are noteconomically justified because the known estimated benefits (energy savings,commercial consumer average LCC savings, and emission reductions) would notoutweigh the costs(national NPV decrease and loss of manufacturer INPV).(•DOE proposes that TSL 6 for Class A equipment and TSL 3 for Class B equipmentrepresent the maximum improvement in energy efficiency that is technologically feasibleand economically justified and that the estimated benefits to the Nation outweigh thecosts. Therefore, DOE is proposing TSL 6 for Class A and TSL 3 for Class B equipmentas the energy conservation standards for beverage vending machines in this NOPR.6Proposed StandardProposed Amended Energy Conservation Standards for Class Aand Class B Equipment (TSL 6 and TSL 3, respectively)Equipment Class Maximum daily energyconsumptionkilowatt hours per dayClass A0 055 x V + 2 56ClassA0.055xV+2.56Class B0.073 x V + 3.167Opening Remarks and CommentOpening Remarks and Comments from InterestedParties on the Proposed Energy Conservation StandardsOpening Remarks•At this time, DOE welcomes opening remarks from interested parties on theNOPR for beverage vending machines.In addition, DOE specifically invites comment on the proposedenergy conservation standard levels for beverage vending machines.8Issues for Public CommentSummary of Issues on which DOE seeks comment - NOPR issuesIndustry NPV:The magnitude of the estimated decline inINPV at TSL 6, and what impact thislevel could have on industry parties, including small businesses. Particularly 1) why the privatemarket has not been able to capture the energybenefits proposed in TSL 6; 2) whether and towhat extent parties estimate they will be ableto transfer costs of implementing TSL 6 on toconsumers; 3) whether and to what extent parties estimate distributional chain intermediaries(such as wholesalers or bottlers) will be able toabsorb TSL 6 implementation costs and in turnt f th t tith lti t l b fit f thitransferthese coststo on-se consumers, who ultimatelybenefitfromthe energy gansassociated with the proposed standard.Standards Equation:Whether the proposed linear equation used to describe the maximum dailyi d d h ld b b d di d l i ( ienergy consumption standards shouldbebasedon medium andlarge equipment(using twopoints); small, medium, and large equipment (threepoints); or some other possible weightingstrategy.9Industry Impact:What are the expected industry impacts?Issues for Public CommentSummary of Issues on which DOE seeks comment - NOPR issues (cont.)Impact on Small Businesses:How small business manufacturers will be affected due to newenergy conservation standards.Compliance Costs:Costs of compliance and other impacts to small manufacturers that do notpsupply the high-volume customers of beverage vending machines.Alternatives:Impacts on small manufacturers for possible alternatives to the proposed rule,namely the following alternatives: 1) establishment of different compliance or reportingnamelythefollowingalternatives:1)establishmentofdifferentcomplianceorreportingrequirements for small entities or timetables that takeinto account the resources available to smallentities, 2) clarification, consolidation, or simplification of compliance and reporting requirementsfor small entities, 3) use of performance rather than design standards, and 4) exemption forcertain small entities from coverage of the rule, in whole or in part.Standard Levels:Whether the energy savings and related benefits of TSL 6 outweigh the costs,including potential manufacturer impacts.10NOPR Analyses Flow DiagramManufacturerImpactUtilityImpactTrialStandardReviseANOPREnvironmentalRegulatoryImpactEmploymentImpactImpactAnalysisImpactAnalysisStandardLevelsANOPRAnalysesAssessmentImpactAnalysisImpactAnalysisEngineeringAnalysisLife-CycleCost &PaybackNationalImpact11AnalysisyPeriodAnalysesAnalysisEngineering AnalysisPurposeEngineering Analysis•To characterize manufacturer cost-efficiencyrelationships for higher efficiency equipment.•To evaluate design options that improve efficiency relative to the baseline units.•Sensitivity analysis to look at current material prices.Equipment classes analyzed•DOE analyzed two equipment classes, A and BDesign-option approach•DOE analytically derived six cost-efficiency curves across two equipment classes, usingthree representative sizes (volumes) analyzed in each equipment class•Using the design-option approach, cost-efficiency relationship estimates are based onmanufacturer or component supplier data or derived from engineering computermanufacturerorcomponentsupplierdataorderivedfromengineeringcomputersimulation models.12NOPR Analyses Flow DiagramManufacturerImpactUtilityImpactTrialStandardReviseANOPREnvironmentalRegulatoryImpactEmploymentImpactImpactAnalysisImpactAnalysisStandardLevelsANOPRAnalysesAssessmentImpactAnalysisImpactAnalysisEngineeringAnalysisLife-CycleCost &PaybackNationalImpact13AnalysisyPeriodAnalysesAnalysisEnergy Use CharacterizationPurposeEnergyUseCharacterization•To develop electrical energy consumption savings estimates for selectedequipment efficiency levels.•To validate the energy savings estimates from the engineering analysis usingrefrigerant system and whole building modeling for a diverse set of climatesrefrigerantsystemandwholebuildingmodelingforadiversesetofclimates.Markups for Equipment Price Determination•T h t i th h l f h i t i di t ib t d f thTo characterizethe channelsforhow equipmentisdistributedfromthemanufacturer to the customer.•To determine prices paid by customers based on manufacturer selling pricesfor baseline and higher efficiency equipment.Life-Cycle Cost and Payback Period Analyses•To develop the customer life-cycle cost savings and payback period for higherefficiency equipment.14Markups to Determine Equipment PriceDistribution ChannelsEstimated Fraction of Equipment Shipments by Distribution Channels(Modified from ANOPR based on public comment)ManufacturerEquipment Wholesaler/DistributorBeverageVendingMachineSite OwnerBVM Market Shares85%10%5%gBottler/DistributorgOperatorSiteOwner15Markups to Determine Equipment PriceInputsMarkups to Determine Equipment PriceInputs and Outputs•U.S. Census Bureau data (2002) for the Other Commercial Equipment MerchantWholesalers (North American Industry Classification System [NAICS] 423440):–Wholesalers/Distributors:U.S. Census Bureau2002 Economic Census.Sector 42: Wholesale Trade: Industry Series: Product Lines by Kind ofBusiness for the United States.– Manufacturer Direct:No markup before sales tax.Outputs•Overall weighted average baseline markups of 1 144 (1 226 in ANOPR) forOverallweightedaveragebaselinemarkupsof1.144(1.226inANOPR)forBVMs (including sales tax).•Overall weighted average incremental markups of 1.102 (1.137 in ANOPR) forBVMs (including sales tax).16Life-Cycle Cost and Payback Period AnalysesLife-Cycle Cost (LCC) equals customer price plus the sum of annualLife-Cycle Cost Analysisoperating costs discounted to a particular base year (2012, in this case).Economic evaluation from the customer perspective.Analysis implemented in an Excel®spreadsheet with add-on macro toestimate impacts in individual states.Results are expressed as LCC savings (baseline minus standard level).Payback period (in years) is also calculated and reported in this analysis.Operating ExpensesConvert toPresentCombine Changesin CostsLCC ResultsInstalled Cost(Customer Price + Installation Cost)Value17Life-Cycle Cost and Payback Period AnalysesFor the LCC analysis,DOE used the EIA industrial electricityprices for averagingState-byElectricity Pricesy ,y pg gyState electricity prices for the percentageof machines located in manufacturing andgovernment facilities for the ANOPR and NOPR analyses.The prices from EIA were multiplied by afactor that adjusted theprice to account fordifferent types of commercial customers historically having higher or lower prices thandifferenttypesofcommercialcustomershistoricallyhavinghigherorlowerpricesthanaverage. DOE used the 2003 CBECS data set to identify theaverage prices that the fourkinds of commercial businesses in this analysis pay compared withthe average prices allcommercial customers pay. These figures wereused to adjust the EIA commercial prices.Th i dj t d b b i thtd b th ti t d l fThese prices, adjustedbybusinesstype, were weig-averagedbythe estimatedsales ofbeverage vending machines in eachstate to each prototype building type, which resulted ina weighted average national price.DOE did not use seasonal variation in commercial electricity rates in its LCC analysisbecause seasonal variation in electricity ratesdiffers throughout the country and even byutility, significantly complicating the analysis.In regard to electricity price trends, DOEapplied the AEO 2009 reference case as the defaultscenario and extrapolated the trend in values from 2020-2030 of the forecast to establish18scenarioandextrapolatedthetrendinvaluesfrom20202030oftheforecasttoestablishprices for 2030-2042.Life-Cycle Cost and Payback Period AnalysesInstallation costs (updated and held constantwith higher efficiency levels based onindustrycomments).Other Inputsy )Discount rates (weighted average costof capital—data updated from 2008Damodaran Onlinewebsite).Equipment lifetime (average service life of10 years, with 15 years as a maximum).Repair costs (baseline repair cost plusincrease due to higher cost componentscalculated for higher efficiency level) DOE considered scenarios where 1) repaircalculatedforhigherefficiencylevel).DOEconsideredscenarioswhere1)repaircosts that varied in direct proportion with the manufacturer price of the equipment,and 2) repair costs that did not increase with efficiency.Maintenance costs One industry member estimated that average equipmentMaintenancecosts.Oneindustrymemberestimatedthataverageequipmentpreventative maintenance costs are $90. Industry contacts stated that most BVMsare fully refurbished every 5 years at anaverage cost of approximately $550. DOEtook the present value of this figure and annualized it. After adding the twomaintenance cost components of refurbishment andpreventative maintenance,19p p,DOE got an overall annual maintenancecost of approximately $154 (2008$).Sample Life-Cycle Cost Analysis Results: Bottler,Manufacturing FacilityOwner's Installed Cost-LCC Tradeoff$8,000Equipment= A-M-Indoor-Only, Fuel Price=AEO 2009 - Reference Case, Start Year= 2012$5,811$5 707$5 676$5 676$5 646$5 650$5 669$7,148$6,000$7,000$ ,$5,707$5,676$5,676$5,646$5,650$5,669$4,000$5,000

Cycle Cost$2,000$3,000

LifeInstalled Cost-LCC Tradeoff$0$1,000$2,617 $2,669 $2,679 $2,741 $2,790 $2,823 $2,857 $3,97720Level 1(EnergyStar Tier 1)Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8(Max Tech)Installed Cost and Efficiency LevelSample Life-cycle Cost Analysis ResultsOwner's Installed Cost-Payback Tradeoff120.0Equipment= A-M-Indoor-Only, Fuel Price=AEO 2009 - Reference Case, Start Year= 2012100.0100.0

)Installed Cost-Payback Period Tradeoff60.080.0

P eriod (Years )40.0

Payback2.53.63.94.34.82.40.020.0$2 669$2 679$2 741$2 790$2 823$2 857$3 97721$2,669$2,679$2,741$2,790$2,823$2,857$3,977Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 (MaxTech)Installed Cost and Efficiency LevelSample Payback Analysis Results: Bottler,Manufacturing FacilityOwner's Installed Cost-LCC Tradeoff$8,000Equipment= A-M-Indoor-Only, Fuel Price=AEO 2009 - Reference Case, Start Year= 2012$5,811$5 707$5 676$5 676$5 646$5 650$5 669$7,148$6,000$7,000$ ,$5,707$5,676$5,676$5,646$5,650$5,669$4,000$5,000

Cycle Cost$2,000$3,000

LifeInstalled Cost-LCC Tradeoff$0$1,000$2,617 $2,669 $2,679 $2,741 $2,790 $2,823 $2,857 $3,97722Level 1(EnergyStar Tier 1)Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8(Max Tech)Installed Cost and Efficiency LevelNOPR Analyses Flow DiagramManufacturerImpactUtilityImpactTrialStandardReviseANOPREnvironmentalRegulatoryImpactEmploymentImpactImpactAnalysisImpactAnalysisStandardLevelsANOPRAnalysesAssessmentImpactAnalysisImpactAnalysisEngineeringAnalysisLife-CycleCost &PaybackNationalImpact23AnalysisyPeriodAnalysesAnalysisShipments AnalysisPurposeShipments AnalysisShipmentsAnalysis•To estimate BVM shipments over time.National Impact Analysis•To estimate the National Energy Savings(NES) from BVMs at different trialstandard levels, and•T ti t th ti l i i t th ti ( th N t P tTo estimatethe nationaleconomicimpactonthe nation(ortheNetPresentValue (NPV)) from equipment energy conservation standards at differenttrial standard levels.24Shipments AnalysisApproachShi t f t (20122042) d i d fShipmentforecasts(2012-2042)derivedfrom:•Historical shipments;•Replacements based on equipment lifetimes; and•Estimates of the equipment mix of baseline and higher-efficiency technologies in the stockand shipments.Shipments and stocks of equipment tracked by vintage, market (new andreplacement), equipment class, and capacity.•In response to comments at the ANOPR stage,all future shipments assumed to be forreplacement only; constant number of ~90,000 units per year;•I t t ttAt 5t dt b CA4In responseto comments attheNOPRsage,55percentassumedtobeClass,5percent Class B equipment; and•In response to comments at the ANOPR stage,size distribution assumed to be 75 percentmedium, 25 percent large, 0 percent smallfor both Class A and Class B equipment.25Shipments AnalysisOutcomes of Shipments Forecasts: ShipmentsProductThousands of Units Shipped by Year, Equipment Class, and Unit Size(Small, Medium, and Large)2012 2015 2020 2025 2030 2035 2040 2042 CumulativeA-L-Indoor-Only12.4 12.4 12.4 12.4 12.4 12.4 12.4 12.4 383.6A-M-Indoor-Only37.1 37.1 37.1 37.1 37.1 37.1 37.1 37.1 1,150.9A-S-Indoor-Only- --------B-L-Indoor-Outdoor10.1 10.1 10.1 10.1 10.1 10.1 10.1 10.1 313.9B-M-Indoor-Outdoor30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 941.6Total90.0 90.0 90.0 90.0 90.0 90.0 90.0 90.0 2,790.026National Impact AnalysisNational energy savings calculated for products purchased from2012-2042 and National NPV calculated over the lifetime of thoseApproachproducts (2012-2057).Base case incorporates the penetration of higher efficiency BVMs.Example: No Amended Standard, A-M-INStandards “roll up” inefficient equipment, but do not affect efficient equipment.E l S d d Effi i L l 4Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Total10.0% 90.0% 0.0% 0.0% 0% 0.0%0% 0% 100%Example:StandardatEfficiency =Level4Once a standard is in place old equipment goes out of the inventory according toLevel 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Total0.0% 0.0% 0.0% 100.0% 0.0% 0.0%0% 0% 100%Onceastandardisinplace,oldequipmentgoesoutoftheinventoryaccordingtothe base case efficiency mix. New equipment is sold to replace equipmentaccording to the new efficiency mix.Use national average customer prices, annual energy use, energy prices, annualrepair and maintenance expenditures from LCC analysis. Streams of energy useand total costs calculated over analysis time periods and costs discounted to thepresent.27NOPR Analyses Flow DiagramManufacturerImpactUtilityImpactTrialStandardReviseANOPREnvironmentalRegulatoryImpactEmploymentImpactImpactAnalysisImpactAnalysisStandardLevelsANOPRAnalysesAssessmentImpactAnalysisImpactAnalysisEngineeringAnalysisLife-CycleCost &PaybackNationalImpact28AnalysisyPeriodAnalysesAnalysisTrial Standard LevelsPurposeSelection of Trial Standard Levels•To develop a list of standard levels fromwhich impacts are weighed and a proposed standardlevel is selected.– Each trial standard level consists of a set ofpotential minimum efficiency levels coveringll i t l d b t i t l dallequipmentclasses, andmay varybetween equipmentclasses; and– NOPR analyses assess impacts for trialstandard levels (not equipment classes).Method•Trial standard levels were developed in the NOPR.– Analyzed standard levels cover a range of efficiencies and can include:Most energy efficient level (max tech);Effi i l l ith th l t lifl tEfficiencylevelwiththelowestlife-cyce cos;Efficiency level with a payback period of three years or less;Efficiency levels with noteworthy technologies; andEfficiency levels that fill in large gaps between candidate standard levels.29– Each trial standard level consists of the analyzed standard level from each equipmentclass that meets one of the above criteria.Trial Standard LevelsTrial Standard Levels for the NOPRTrial StandardTrialStandardLevelTest MetricClass AClass BBaselinekWh/dayMDEC = 0.019 x V + 6.09 MDEC = 0.068 x V + 4.07TSL 1kWh/dayMDEC = 0.062 x V + 4.12 MDEC = 0.066 x V + 3.76TSL 2kWh/dayMDEC = 0.044 x V + 4.26 MDEC = 0.080 x V + 3.24TSL 3kWh/dayMDEC=0.044 x V + 3.76MDEC=0.073 x V + 3.160.044xV+3.760.073xV+3.16TSL 4kWh/dayMDEC = 0.062 x V + 2.80 MDEC = 0.073 x V + 3.12TSL 5kWh/dayMDEC = 0.058 x V + 2.66 MDEC = 0.070 x V + 2.68TSL 6kWh/dayMDEC = 0.055 x V + 2.56 MDEC = 0.068 x V + 2.63TSL 7kWh/dayMDEC = 0.045 x V + 2.42n/a*30Trial Standard LevelsNPV Results by TSLFor Class A equipment, TSL 6 provides the maximum NPV of $0.105 billionat 7 percent discount rate, all trial standard levels lower than TSL 7 showpositive NPVpositiveNPV.For Class B equipment, TSL 3 provides NPV of $ 0.0 billion (less than $0.5million) at 7 percent discount rate all trial standard levels lower than TSL 4million)at7percentdiscountrate,alltrialstandardlevelslowerthanTSL4with positive NPV.31Trial Standard LevelsIssues for which DOE seeks commentsDOE ifi ll i itth d t i l t d dDOEspecificallyinvites commentonthe proposedtrialstandardlevels, TSL 6 for Class A and TSL 3 for Class B equipment.32Life-Cycle Cost Subgroup AnalysisLCC Subgroup AnalysisPurpose•To evaluate the economic impacts of standards on customer subgroups who may bedisproportionately impacted compared with the general user population.Method•DOE identified disadvantaged businesses, exemplified by independent manufacturing sitesth t th BVM t th i it Thth hi h t fi i t dthatowntheBVMs attheir sites.These owners experiencethehighestfinancing costs andthe lowest financial savings.•DOE used the LCC spreadsheet model to determine the impact on this BVM customersubgroup.Output•LCC savings and simple payback period (in years) for the identified customer subgroup.•The independent manufacturing site was not disproportionately impacted by the standard33TheindependentmanufacturingsitewasnotdisproportionatelyimpactedbythestandardManufacturer Impact AnalysisManufacturer Impact AnalysisPurpose•To assess the impacts of standards on BVM manufacturers;•To identify and estimate impacts on manufacturer subgroups that may be more severelyToidentifyandestimateimpactsonmanufacturersub-groupsthatmaybemoreseverelyimpacted than the industry as a whole; and•To examine the impact of cumulative regulatory burdens on the industry.Method•Analyze industry cash flow and net present value through use of the GovernmentRegulatory Impact Model (GRIM); and•Interview manufacturers to refine inputsto the GRIM, develop sub-group analyses, andaddress qualitative issues.34Manufacturer Impact AnalysisManufacturer Impact Analysis ProcessThe MIA consists of three phases:TheMIAconsistsofthreephases:Phase 2Phase 3Phase 1IndustryprofileDevelopstrawmanGRIM*DevelopinterviewguideInterviews& industrywide/subgroupanalysesAssess directemployment,competition,cumulativeburdenFinalizeMIAresultsforNOPRanalysesburden*Government Regulatory Impact Model (GRIM)35GovernmentRegulatoryImpactModel(GRIM)Utility Impact AnalysisPurposeUtility Impact Analysis•To investigate the effects on utilities fromreduced energy sales and peak load demand due topotential standards.Method•U N ti l E S i R lt dUseNationalEnergySavingsResults; and•Use the EIA’s National Energy Modeling System (NEMS-BT) tailored for DOE’s BuildingTechnologies Program.Output•Change in electricity sales and price by region;•Ch i th i f l t i it ti d36Changeinthe mix ofelectricity generation; and•Change in installed capacity and generation.Employment Impact AnalysisPurposeEmployment Impact Analysis•To report net jobs created or eliminated nationally as a consequence of new or amendedenergy conservation standards. Employment impacts include direct and indirect impacts.Method•Uses the Impact of Sector Energy Technologies (ImSET) model to assess the indirectemployment impacts;•Estimate changes in employment, industry output, and wage income in the overall UnitedStates economy resulting from changes in expenditures in the various sectors of theeconomy;•Estimate changes in costs and benefits using the NES analysis; and•Direct employment impacts are addressed in the Manufacturer Impact Analysis (MIA).DirectemploymentimpactsareaddressedintheManufacturerImpactAnalysis(MIA).Output•Change in employment in national economy, other than in the manufacturing sector beingregulated as a consequence of the amended energy conservation standards37regulated,asaconsequenceoftheamendedenergyconservationstandards.Environmental AssessmentP rposeEnvironmental AssessmentPurpose•To report environmental impacts as a consequence of the amended energy conservationstandards,includingchanges inpowerlant emissions.ggpOutput•Calculated the reduction in power plant emissions of carbon dioxide (CO2), oxides of nitrogen(NOX) and mercury (Hg), using the NEMS-BT computer model.•Sulfur dioxide (SO2) emission was not included due to the emission cap set by the Clean AirAct Amendments of 1990. Impact on SO2emissions changes was estimated as too small toaffect value of emissions allowances under the cap.•Monetized value of reductions in CO2, NOX, and Hg.38Regulatory Impact AnalysisPurposeRegulatory Impact Analysis•To investigate the national impacts due tonon-regulatory alternatives compared withmandatory energy conservation standards.•The non-regulatory alternatives that DOE analyzed include:N N R l t A ti–NoNewRegulatoryAction;– Commercial Customer Rebates;– Commercial Customer Tax Credits; and– Voluntary Energy-Efficiency Targets—ENERGY STAR.Method•A qualitative analysis was conducted of thenon-regulatory alternatives to rulemakingConclusion•A qualitative analysis showed that the BVM market structure did not allow for a successful39AqualitativeanalysisshowedthattheBVMmarketstructuredidnotallowforasuccessfulquantitative analysis of non-regulatory alternatives on usage of energy-efficient equipment.ClosingHow to Submit Comments...Public Meeting–Oral comments will be captured in the transcript and becomePublicMeetingOralcommentswillbecapturedinthetranscriptandbecomepart of the public record.Written comments– NOPR comment period open untilJuly 28, 2009.Reference docket #: EERE–2006–STD–0125 and/or RIN #: 1904–AB58.Email: beveragevending.rulemaking@ee.doe.govMail: Ms. Brenda EdwardsU S Department of EnergyU.S.DepartmentofEnergyBuilding Technologies Program, Mailstop EE–2J1000 Independence Avenue, SW.Washington, DC 20585–0121.Telephone: (202) 586–2945.Courier: Ms. Brenda EdwardsU.S. Department of EnergyBuilding Technologies Program950 L’Enfant Plaza SW 6th Floor40950L EnfantPlaza,SW.,6thFloor,Washington, DC 20024.B k SlidBackupSlides41Summary of Results for Class A Equipment Based Uponthe AEO2009 Reference Case Energy Price Forecast*TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7Primary Energy Saved quads0.004 0.019 0.043 0.068 0.080 0.088 0.1077% Discount Rate0.001 0.006 0.013 0.020 0.024 0.026 0.0313% Discount Rate0.002 0.011 0.025 0.038 0.045 0.050 0.060Generation Capacity Reduction GW**0.002 0.009 0.020 0.031 0.037 0.041 0.049NPV 2008$billion:7% Discount Rate3% Discount Rate0.009 0.038 0.062 0.098 0.108 0.105 (0.719)0.020 0.084 0.149 0.235 0.263 0.265(1.210)Industry ImpactsIndustry NPV 2008$ million0(0.2) – (0.4) (1.9) – (2.6) (2.1) – (3.1) (8.8) – (9.9) (12.4) – (13.7) (8.3) – (20.9)Industry NPV % change0.1(0.6) – (1.0) (5.5) – (7.4) (5.9) – (8.8) (25.0) – (28.1) (35.1) – (38.9) (23.7) – (59.7)Cumulative Emissions Impacts†:CumulativeEmissionsImpacts†CO2Reductions Mt0.23 1.01 2.27 3.56 4.194.615.59Value of CO2 Reductions at 7%Discount Rate million 2007$0 – 2.2 0 – 9.7 0 – 21.9 0 – 34.3 0 – 40.4 0 – 44.5 0 – 53.9Value of CO2 Reductions at 3%Discount Ratemillion 2007$0 – 4.3 0 – 18.9 0 – 42.5 0 – 66.6 0 – 78.5 0 – 86.4 0 – 104.7DiscountRatemillion2007$NOxReductions kt0.03 0.14 0.31 0.48 0.570.620.75Value of NOxReductions at 7%Discount Rate thousand 2007$5 – 50 21 – 221 48 – 497 76 – 778 89 – 918 98 – 1010 119 – 1224Value of NOxReductions at 3%i$8–8537–37783–849129–1330153–1568168–1726203–209242Discount Rate thousand 2007$88537377838491291330153156816817262032092* Parentheses indicate negative (-) values.For LCCs, a negative value means an increase in LCC by the amount indicated.** Change in installed generation capacity by the year 2042 based on AEO2009Reference Case.†CO2emissions impacts include physicalreductions at power plants. NOxemissions impacts include physical reductions at power plants as well asproduction of emissions allowance credits where NOxemissions are subject to emissions caps.Summary of Results for Class A Equipment Based Upon the AEO2009 Reference Case Energy Price Forecast* (Cont.)TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7Hg Reductions tons0 –0.004 0 –0.017 0 –0.038 0 –0.059 0 –0.069 0 –0.076 0 –0.093Value of Hg Reductions at 7% Discount Ratethousand 2007$0 – 44 0 – 196 0 – 441 0 – 690 0 – 814 0 – 896 0 – 1086Value of Hg reductions at 3% Discount Ratethousand 2007$0 – 76 0 – 338 0 – 761 0 – 1192 0 – 1405 0 – 1547 0 – 1874thousand2007$Life-Cycle CostNet Savings %10 100 100 100 100 100 98Net Increase %0 0 0 0 0 2 100No Change %90 0 0 0 0 0 0Mean LCC Savings 2008$154 204 245 307 322 316 (1,194)Mean PBP years2.0 2.1 2.9 3.1 3.4 3.8 62.9Direct Domestic Employment Impacts (2012)jobs0 2 8 12 15 19 133Indirect Employment Impacts (2042) jobs14 64 146 226 265 292 30443* Parentheses indicate negative (-) values.For LCCs, a negative value means an increase in LCC by the amount indicated.** Change in installed generation capacity by the year 2042 based on AEO2009Reference Case.†CO2emissions impacts include physicalreductions at power plants. NOxemissions impacts include physical reductions at power plants as well asproduction of emissions allowance credits where NOxemissions are subject to emissions caps.Summary of Results for Class B Equipment Based Upon the AEO2009 Reference Case Energy Price Forecast*TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6Primary Energy Saved (quads)0.001 0.002 0.010 0.012 0.0310.0357% Discount Rate0.000 0.001 0.003 0.003 0.0090.0103% Discount Rate0.001 0.001 0.006 0.007 0.0180.020Generation Capacity Reduction (GW)**0.001 0.001 0.005 0.005 0.0140.016NPV (2008$billion):7% Discount Rate3% Discount Rate0.002 0.003 0.000 (0.004) (0.256) (1.013)0 0050 0070 0080 001(0 442)(1 822)3%DiscountRate....(0.442)(1.822)Industry ImpactsIndustry NPV (2008$ million)0 0(0.8) – (0.9) (1.3) – (1.3) (9.7) – (13.4) (11.2) – (23.4)Industry NPV (% Change)0 - (0.1) 0.1 - (0.1)(3.7) – (4.2) (5.7) – (6.1) (44.0) – (60.3) (50.4) – (105.8)Cumulative Emissions Impacts†:COR d ti (Mt)0 070 110 530 611 641 832Reductions(Mt)......Value of CO2 reductions at 7% discountrate (million 2007$)0 – 0.7 0 – 1 0 – 5.1 0 – 5.9 0 – 15.8 0 – 17.6Value of CO2 reductions at 3% discountrate(million 2007$)0 – 1.3 0 – 2 0 – 10 0 – 11.4 0 – 30.8 0 – 34.2( $)NOxReductions (kt)0.01 0.01 0.07 0.08 0.22 0.25Value of NOxreductions at 7% discount rate(thousand 2007$)2 – 16 2 – 23 11 – 116 13 – 133 35 – 359 39 – 400Value of NOxreductions at 3% discount rate( h d 2007$)3–274–4019–19922–22760–61467–68444(thousand2007$)32744019199222276061467684* Parentheses indicate negative (-) values.For LCCs, a negative value means an increase in LCC by the amount indicated.** Change in installed generation capacity by the year 2042 based on AEO2008Reference Case.†CO2emissions impacts include physicalreductions at power plants. NOxemissions impacts include physicalreductions at power plants aswell as production of emissions allowance credits where NOxemissions are subject to emissions caps.Summary of Results for Class B Equipment Based Upon the AEO2009 Reference Case Energy Price Forecast* (Cont.)TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6Hg Reductions (t)0-0.001 0-0.002 0-0.009 0-0.010 0-0.027 0-0.030Value of Hg reductions at 7% discount rate (thousand2007$)0 – 14 0 – 21 0 – 103 0 – 118 0 – 319 0 – 355Value of Hg reductions at 3% discount rate (thousand02403601 80204000613ValueofHgreductionsat3%discountrate(thousand2007$)0–240–360–1780–2040– 5500–613Life-Cycle CostNet Savings (%)10 100 90 80 69 0Net Increase (%)0 11 21 32 100 100No Change (%)900 0 0 0 0Mean LCC Savings (2008$)47 56 49 39 (525) (2216)Mean PBP (years)3 14 16 06 976 2100MeanPBP(years).....Direct Domestic Employment Impacts (2012) (jobs)0 0 3 4 41 134Indirect Employment Impacts(2042)(jobs)4 6 33 38 90 6845p y p ( )(j )* Parentheses indicate negative (-) values.For LCCs, a negative value means an increase in LCC by the amount indicated.** Change in installed generation capacity by the year 2042 based on AEO2008Reference Case.†CO2emissions impacts include physicalreductions at power plants. NOxemissions impacts include physicalreductions at power plants aswell as production of emissions allowance credits where NOxemissions are subject to emissions caps.Market and Technology AssessmentMarket CharacteristicsThree manufacturers account for the majority of domestic market sharefor beverage vending machines These are:forbeveragevendingmachines.Theseare:Crane Merchandising/Dixie-Narco, Inc.Royal Vendors, Inc.Sanden-Vendo AmericaApproximately 342,000 units covered by this rulemaking were shipped inyear 2003(Appliance Magazine data).( pp g )The installed base of units is as follows (Arthur D. Little, Inc., 1996):Cans – 2,400,000Bottles – 1,125,000Other – 186,00046Market and Technology AssessmentMaximum Technologically Feasible LevelsEquipment Class Maximum daily energyconsumptionkilowatt hours per dayClass AMDEC=0 045 x V+2 42ClassA0.045xV.Class B MDEC = 0.068 x V + 2.6347Screening AnalysisScreening Analysis MethodD i tid i th f ll i it iesgn options screenedusingthefollowing criteria:•Technological feasibility;Technologicalfeasibility;•Practicability to manufacture, install and service;•Adverse impacts on product utility or product availability; andAdverseimpactsonproductutilityorproductavailability;and•Adverse impacts on health or safety.48Screening AnalysisTechnologies Selected for Further ConsiderationTechnologies that can improve daily energy consumption (DEC)•higher-efficiency lighting•higher-efficiency lighting ballasts•higher-efficiency evaporator fan motors•evaporator fan motor controllers•higher-efficiency evaporator fan blades•improved evaporator design•low-pressure differential evaporators•improved or thicker insulation•defrost mechanismhi hffi i•ger-ecency compressors•improved condenser design•higher-efficiency condenser fan motors•higher-efficiency condenser fan blades49efficiencycondenserfanblades•improved glass pack design (for Class A machines)Engineering AnalysisPurpose of the Engineering AnalysisC tEffi iCharacterize the relationship between manufacturer cost and daily energyconsumption (DEC)Downstream Analyses•Life-Cycle Cost andCost–EfficiencyRelationship

ostyPayback Period•National Impacts

c remental a cturing C•Manufacturer ImpactAnalysis

In c Manuf aDEC (kWh/day)50Markups to Determine Equipment PriceBaseline and Incremental MarkupsMarkupsrelate customer price to cost of goods sold (COGS)relatecustomerpricetocostofgoodssold(COGS)Baseline markupsrelate price to cost priorto a change in efficiency•Baseline markups indicate a customer price that covers allof a wholesaler’s or contractor’s expenses plusprofit.•Direct labor costs (salaries, payroll, rental and occupancy) are included.Incremental markupsrelate the incremental change incustomer price to the incrementalchange in COGS beyond baseline•Some distribution costs remainconstant with COGS increases.•Incremental markups cover only expenses thatvary with an increase in equipment efficiency– For example, direct labor costs (salaries, payroll), rental, and occupancy do not vary with efficiencyinduced changes in COGS.•DOE assumes other operating costs andprofit will scale proportionally with COGS51DOEassumesotheroperatingcostsandprofitwillscaleproportionallywithCOGS.Life-Cycle Cost and Payback Period AnalysesLCC Calculation FlowchartBaselineManufacturerPriceStd-LevelManufacturerP iFromEngineeringAnalysis(Price is aFunction ofEfficiency)PriceTotal InstalledCostEfficiency)From MarkupsDistributorMarkupCustomerPriceCostpfor EquipmentPriceDeterminationAnalysisPaybackSales TaxContractorMarkupInstallationCostAnnual EnergyEAnnualOperatingLifetimeOperatingFrom EnergyUsePaybackPeriodExpenseRepair CostMitgExpenseLifetimeDiscount RateExpenseUseCharacterizationAnalysis(Energy Use as aFunction ofEfficiency)EnergyConsumption52ElectricityPricesMaintenanceCostElectricityPrice TrendNational Impact Analysis ProcessLCCAnalysisNationalE SiNationalEnergySavingsNationalEconomicImpactsyResults andOther InputsEnergySavings(Quads)N ti lShipmentsModelNationalNet Present Value(2006 US $, billion)National energy savings calculated for period from 2012-2042 (30 years)53NPV calculated for period from 2012-2057Shipments AnalysisShipments ModelNEMS Food ServicesBldgConstruction ForecastARI Estimate ofShipments (2005)% Shipments by ProductClass (2005)Initial Shipments to NewConstructionShipments to NewConstructionTotalShipments ByProduct ClassInitial ReplacementShipmentsInitial CRE StockReplacementShipmentsEstimated Lifetimeof CRE StockCRE StockbP d54byProductClassShipments AnalysisOutcomes of Shipments Forecasts: StockStock of BVM Equipment4 0003,5004,0002,5003,000

UnitsStock from Sales 2012 and LaterStock from Sales 2004 20111,5002,000

Thousands ofStockfromSales2004-2011Stock from Sales Before 20045001,00055- 200 6 200 8 2010 2012 2014 2016 2018 2020 2 022 202 4 202 6 202 8 203 0 203 2 203 4 203 6 2038 2040 2042 2044 2046 2048 2 050 205 2 205 4National Impacts AnalysisNPV Results by TSL for Class A Equipment(Seven-Percent Discount Rate)Trial Standard LevelPresent Value (Billion 2008$)TrialStandardLevelPresentValue(Billion2008$)10.00920.03830.06240.09850.10860.1057(0.719)N b i th i di t ti NPV (it t)56Numbersin parenthesesindicate negativeNPV(i.e., netcost).National Impacts AnalysisNPV Results by TSL for Class B Equipment(Seven-Percent Discount Rate)Trial Standard LevelPresent Value (Billion 2008$)10.00220.00330.0004(0.004)5(0.256)6(1.013)Numbers in parentheses indicate negative NPV (i.e., net cost).57