APPENDIX 8B. NATIONAL NET PRESENT VALUE OF CUSTOMER BE NEFITS USING ALTERNATIVE EQ UIPMENT PRICE PROJECTION S AND ECONOMIC

GROWTH SCENARIOS

TABLE OF CO NTENTS

INTRODUCTION

................................................................................................... 8B-1 8B.1 DESCRIPTION OF ALTERNATIVE EQUIPMENT PRI CE PROJECTIONS

..... 8B-1 8B.2 Decreasing Price Scenario

................................................................................. 8B-2 8B.2.1 Increasing Price Scenario

................................................................................... 8B-3 8B.2.2 Summary

............................................................................................................ 8B-6 8B.2.3

DESCRIPTION OF HIGH AND LOW ECONOMIC SCENARIOS

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

NET PRESENT VALUE RE SULTS USING ALTERNATIVE EQUIPMENT 8B.4

PRICE TRENDS

...................................................................................................... 8B-9

LIST OF TABLES

Small Commercial Air -Cooled Air Conditioning and Heating Table 8B.2.1 Equipment Price Trend Sensitivities ............................................................8B-6

Water

- Source Heat Pump Price Trend Sensitivities ....................................8B-6 Table 8B.2.2

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning Table 8B.4.1 and Heating Equipment Using Refe rence Equipment Price Forecast and AEO Reference Case Scenario, 3% Discount Rate (billion 2013$) .....8B-9

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning Table 8B.4.2 and Heating Equipment Using Reference Equipment Price Forecast and AEO Reference Case Scenario, 7% Discount Rate (billion 2013$) ...8B-10

Cumulative NPV Results 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.3 Heating Equipment Using Alternative Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario, 3% Discount Rate (billion 2013$) .............................................................8B-10

Cumulative NPV Results for 3 -phas e, Air -Cooled, Air Conditioning Table 8B.4.4 and Heating Equipment Using Alternative Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario, 7% Discount Rate (billion 2013$) .............................................................8B-11

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning Table 8B.4.5 and Heating Equipment Using Alternative Equipment Price Forecast (Increasing Trend) and AEO Low Economic Gro wth Case Scenario, 3% Discount Rate (billion 2013$) .............................................................8B-11

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning Table 8B.4.6 and Heating Equipment Using Alternative Equipment Price Forecast (Increasing Trend) and AEO Low Economic Growth Case Scenario, 7% Discount Rate (billion 2013$) .............................................................8B-12

8B -iCumulative NPV Results for Water Source Heat Pumps Equipment Table 8B.4.7 Using Reference Equipment Price Forecast and AEO Reference Case Scenario, 3% Discount Rate (billion 2013$) .............................................8B-12 Cumulative NPV Results for Water Source Heat Pumps Equipment Table 8B.4.8 Using Reference Equipment Price Forecast and AEO Reference Case Scenario, 7% Discount Rate (billion 2013$) .............................................8B-13 Cumulative NPV for Water Source Heat Pumps Using Alternative Table 8B.4.9 Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario, 3% Discount Rate (billion 2013$) ......8B-13

Cumu lative NPV Results for Water Source Heat Pumps Using Table 8B.4.10 Alternative Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario, 7% Discount Rate (billion 2013$) ........................................................................................................8B-14 Cumulative NPV Results for Water Source Heat Pumps Using Table 8B.4.11 Alternative Equipment Price Forecast (Increasing Trend) and AEO Low Economic Growth Case Scenario, 3% Discount Rate (billion 2013$) ........................................................................................................8B-14 Cumulative NPV Results for Water Source Heat Pumps Using Table 8B.4.12 Alternative Equipment Price Forecast (Increasing Trend) and AEO Low Economic Growth Case Scenario, 7% Discount Rate (billion 2013$) ........................................................................................................8B-15

LIST OF FIGURE S

Deflated Unitary Air -Conditioners PPI versus Year, with Exponential Figure 8B.2.1

Fit from 1978 to 2006 ..................................................................................8B-3 Deflated Unitary Air -Conditioners PPI versus Year, with Exponential Figure 8B.2.2

Fit from 2007 to 2013 ..................................................................................8B-4 Deflated All Other Miscellaneous Refrigeration and Air Conditioning Figure 8 B.2.3 Equipment PPI versus Year, with Exponential Fit from 2001 to 2013 .......8B-5

Small Commercial Air -Cooled Air Conditioning and Heating Figure 8B.2.4 Equipment Price Trend Indexes ...................................................................8B-7

Water

- Source Heat Pump Price Trend Indexes ...........................................8B-7 Figure 8B.2.5 Electricity Price Projections for Reference Case, High, and Low Figure 8B.3.1

Economic Growth Scenarios........................................................................8B-8

8B

- iiAPPENDIX 8B. NATIONAL NET PRESENT VALUE OF CUSTOMER BE NEFITS

USING ALTERNATIVE EQUIPMENT PRICE PROJECTIONS AND ECONOMIC

GROWTH SCENARIOS

INTRODUCTION 8B.1

This appendix presents National Impact Analysis (NIA) results using alternative equipment price projections and economic growth scenarios. As will be discussed below, DOE developed increasing and decreasing equipment price projections. In addition, alternative economic growth scenarios were utilized based on the High Economic Growth case and the Low

Economic Growth case from Energy Information Administration’s (EIA’s) Annual Energy

Outlook 201 4 ( AEO201 4 ). 1 DOE developed low and high NPV scenarios based on the combination of equipment price projections and economic growth scenarios. DOE based the low

NPV scenario on the combination of an increasing equipment price projection and the Low Economic Growth case, while the high NPV scenario was based on the combination of a decreasing equipment price projec tion and the High Economic Growth case. Results are presented for the above two combinations at the end of this appendix.

DESCRIPTION OF ALTER NATIVE EQUIPMENT PRICE PROJECTIONS 8B.2

DOE used a constant price assumption for the default projection in the NIA described in Chapter 8. In order to investigate the impact of different equipment price projections on the net present value (NPV) for the considered efficiency levels , DOE also considered two alternative price trends for a sensitivity analysis. This appendi x describes the alternative price trends and compares NPV results for these scenarios with the default projection.

I n recent rulemakings for several residential products, DOE has us ed the experience curve method to derive learning rates to project future prices . In the experience curve method, the real cost of production is related to the cumulative production, or experience, with a manufactured product. That experience usually is measured in terms of cumulative production.

A s experience (production) acc umulates, the cost of prod ucing the next unit decreases. The percentage reduction in cost that occurs with each doubling of cumulative production is known as the learning rate. A recent report from Lawrence Berkeley National Laboratory by Taylor and Fujita provides an overview of some of the major findings of the academi c literature on learning curves, and describes the application of a component- based learning curve approach ( by the Environmental Protection Agency and the National Highway Transportation Safety

Administration ) and a price -based learning curve approach (by DOE) in regulatory impact

assessment. 2

For some commercial and industrial equipment, there are insufficient data to apply a price

- based learning curve approach , particularly with respect to cumulative production. In such cases, DOE used a constant price assumption for the default forecast in the NIA, but made use of

8B

- 1price indexes that are relevant for the equ ipment in question to derive alternative price trends for sensitivity analysis. a DOE is using this approach for small commercial air -cooled air conditioning and heating equipment as well as for water- source heat pumps

.

D OE considered two alternative pr ice trends for a sensitivity analysis. For small

commercial air -cooled air conditioning and heating equipment, o ne assumes decreasing prices used an exponential fit on the deflated price index for “unitary air

- conditioners, except heat pumps” during the period of 1978 to 2006 ; t he other assumes rising prices and is based on the same deflated price index between 2007 and 2013. For water -source heat pumps, one assumes decreasing prices based on the deflator for industrial equipment that was forecasted for

AEO 2014; the other assumes rising prices and is based on an exponential fit on the deflated price

index for all other miscellaneous refrigeration and air

- conditioning equipment during the period

of 2001 to 2013.

Decreasing Price Scenario 8B.2.1

Small Commercial Air -Cooled Equipment
For the decreasing price scenario, DOE used an inflation -adjusted “unitary air

conditioners, except heat pumps” Producer Price Index (PPI) spanning the time period of 1978-

2006 from the Bureau of Labor Statistics’ (BLS) to fit an exponential model with year as the explanatory variable. b The PPI during this period of time showed a continuing downward trend, so the exponential fit based on this part of the historical PPI represents the decreasing price scenario of future pr ice projection.

T he PPI data reflect nominal prices, adjusted for equipment quality changes. An

inflation -adjusted (deflated) price index for “unitary air -conditioners, except heat pumps” was calculated by dividing the PPI series by the Gross Domestic P roduct Chained Price Index

. In this case, the exponential function takes the form of:

YY = aa ∙ ee bbbb

w here Y is the small commercial air -cooled air conditioning and heating equipment price index, X is the time variable, a is the constant and b is the sl ope parameter of the time variable.

T o estimate these exponential parameters, a least -square fit was performed on the

inflation -adjusted small commercial air -cooled air conditioning and heating equipment price

index versus year from 1978 to 2006. See Figure 8B.2.1

.

a See appendix 1 0C o f the final rule TSD for distribution transformers.

www. regulations.gov/#!documentDetail;D=EERE -2 01 0 -B T -S TD -0 048 -0 760

b Series ID PCU333415333415E ; http://www.bls. gov/ppi/

8B

- 2Deflated Unitary Air

- Conditioners PPI versus Year, with Figure 8B.2.1 Exponential Fit from 1978 to 2006

The regression performed as an exponential trend line fit results in an R -square of 0.95, which indicates a good fit to the data. The final estimated exponential function is:

YY = 3. 29 × 10 11 ∙ ee ( −0

. 0133 )

D OE then derived a price factor index for this scenario, renormalized with 2013 equal to 1, to project p rices in each future year in the analysis period considered in the NIA. The index value in a given year is a function of the exponential parameter and year

.

Water

- Source Heat Pumps

For water

- source heat pumps, DOE examined a forecast based on the “chained price index—industrial equipment” that was forecasted for AEO201 4 out to 2040. This index is themost disaggregated category that includes water-source heat pumps. To develop an inflationadjusted index, DOE normalized the above index with the “chained pr ice index —gross domestic product” forecasted for AEO2014 . To extend the price index beyond 2040, DOE used the average annual price growth rate in 2031 to 2040.

Increasing Price Scenario 8B.2.2

Small Commercial Air -Cooled Equipment
DOE used an inflation-adjusted “unitary air -conditioners, except heat pumps” Producer

Price Index (PPI) spanning the time period of 2007-2013 from the Bureau of Labor Statistics’ (BLS) to fit an exponential model with year as the explanatory variable. The PPI during this y = 3E+11e

- 0.013x

R2 = 0.9484

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

1970 1980 1990 2000 2010Deflated Price Index (2013=1)

Year Unitary AC Defalted PPI 1978

to 2006

Expon. (Unitary AC Defalted
PPI 1978 to 2006)

8B -3period of time shows a continuing upward trend, so the exponential fit based on this part of the historical PPI represents the increasing price scenario of future price projection. The PPI data reflect nominal prices, adjusted for equipment quality changes. An inflation-adjusted (deflated) price index for “unitary air -conditioners, except heat pumps” was calculated by dividing the PPI series by the Gross Domestic Product Chained Price Index . In this case, the exponential function

takes the f orm of:

YY = aa ∙ ee bbbb

where Y is the small commercial air -cooled air conditioning and heating equipment price index, X is the time variable, a is the constant and b is the slope parameter of the time variable.

To estimate these exponential parameters, a least -square fit was performed on the

inflation -adjusted small commercial air -cooled air conditioning and heating equipment price

index versus year fr om 2007 to 2013. See Figure 8B.2.2

.

Deflated Unitary Air

- Conditioners PPI versus Year, with Figure 8B.2.2 Exponential Fit from 2007 to 2013

The regression performed as an exponential trend line fit results in an R-square of 0.30.

The f inal estimated exponential function is:

YY = 1. 66 × 10 ( −4 ) ∙ ee 0

. 0043 y = 0.0002e 0.0043x

R2 = 0.3034

0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05

2006 2008 2010 2012 2014Deflated Price Index (2013=1)

Year Unitary AC Deflated PPI 2007

to 2013

Expon. (Unitary AC Deflated PPI
2007 to 2013)

8B -4DOE then derived a price factor index for this scenario, renormalized with 2013 equal to 1, to project prices in each future year in the analysis period considered in the NIA. The index value in a given year is a function of the exponential parameter and year

.

Water

- Source Heat Pumps
DOE used an inflation-adjusted “all other miscellaneous refrigeration and air conditioning equipment” Producer Price Index (PPI) spanning the time period of 2001-2013 from the Bureau of Labor Statistics’ (BLS) to fit an exponential model with year as the explanatory variable. The PPI during this period of time shows a continuing upward trend, so the exponential fit based on th is part of the historical PPI represents the increasing price scenario of future price projection. The PPI data reflect nominal prices, adjusted for equipment quality changes. An inflation-adjusted (deflated) price index for “all other miscellaneous refrig eration and air conditioning equipment” was calculated by dividing the PPI series by the Gross Domestic

Product Chained Price Index . In this case, the exponential function takes the same form

described above for small commercial air -cooled air conditioning and heating equipment.

To estimate the exponential parameters, a least

- square fit was performed on the inflation

adjusted water -source heat pump price index versus year from 2001 to 2013. See Figure 8B.2.3

.

Deflated All Other Miscellaneous Refrigeration and Air Figure 8B.2.3 Conditioning Equipment PPI versus Year, with Exponential

Fit from 2001 to 2013

The regression performed as an exponential trend line fit results in an R-square of 0.75. The final estimated exponential function is: y = 8E

- 13e 0.0138x

R2 = 0.753

0.50 0.60 0.70 0.80 0.90 1.00 1.10

2000 2005 2010 2015Deflated Price Index (2013=1)

Year Exponential Fit on

Deflated PPI from

2001 to 2013

Expon. (Exponential Fit

on Deflated PPI from 2001 to 2013)

8B -5YY = 8. 12 × 10 (

− 13 ) ∙ ee 0

. 0138

D OE then derived a price factor index for this scenario, renormalized with 2013 equal to 1, to project prices in each future year in the analysis period considered in the NIA. The index value in a given year is a function of the exponential parameter and year

.

Summary 8B.2.3

Table 8B.2.1 and Tabl e 8B.2.2 show the summar ies of the average annual rates of change for the equipment price index in each scenario. Figure 8B.2.4 and Figure 8B.2.5 show the resulting price trends.

Small Commercial Air

- Cooled Air Conditioning and Heating Equipment Table 8B.2.1

Price Trend Sensitivities

Sensitivity Price Trend Average Annual Rate of Change % Medium (Default) Constant Price Projection 0.0 Decreasing Price

Scenario Exponential Fit using data from 1978 to 2006 -1.32

Increasing Price

Scenario Exponential Fit using data from 2007 to 2013 0.43

Water- Source Heat Pump Price Trend Sensitivities Table 8B.2.2

Sensitivity Price Trend Average Annual Rate of Change % Medium (Default) Constant Price Projection 0.0 Decreasing Price

Scenario AEO2014

-- “chained price index

— industrial equipment” -0.39

Increasing Price

Scenario Exponential Fit using data from 2001 to 2013 1.39

8B -6Small Commercial Air -Cooled Air Conditioning and Heating Figure 8B.2.4 Equipment Price Trend Indexes

Water- Source Heat Pump Price Trend Indexes Figure 8B.2.5 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.420132016201920222025202820312034203720402043204620492052Price Factor Index (2013=1) Constant Price Index_Default

Exponential Fit using
Unitary air-conditioner defalted PPI (2007-2013)
High Price Case

Exponential Fit using
Unitary air-conditioner defalted PPI (1978-2006)

Low Price Case

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.020132016201920222025202820312034203720402043204620492052Price Factor Index (2013=1) Constant Price Index_Default

Exponential Fit using All
other misc. refrigeration &
air-conditioning equipment defalted PPI (2001-2013)_
High Price Case

AEO 2014_Low Price Case

8B -7DESCRIPTION OF HIGH AND LOW ECONOMIC SCENARIOS 8B.3

To generate NIA results reported in chapter 8, DOE uses t he Reference case energy price projection s from AEO201 4

. The reference case is a business- as -usual estimate, given known market, demographic, and technological trends. For AEO201 4 , EIA explored the impacts of alternative assumptions in other scenarios with different macroeconomic growth rates, world oil prices, rates of technology progress, and policy changes.

To reflect uncertainty in the projection of U.S. economic growth, EIA’s AEO2014 uses High and Low Economic Growth scenarios to project the possible impacts of alternative economic growth assumptions on energy markets. 3

Figure 8 B.3.1 shows electricity price projections based on the different AEO 2014

scenarios.

Electricity Price Projections for Reference Case, High, and Figure 8B.3.1

Low Economic Growth Scenarios

0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20

2011 2016 2021 2026 2031 2036 Reference

High

Low

8B -8NET PRESENT VALUE RESULTS USING ALTERNATIVE EQUIPMENT 8B.4

PRICE TRENDS

This section presents the NPV results for low and high scenarios using the alternative equipment price projections in combination with the alternative economic growth scenarios. DOE based the low NPV scenario on the combination of an increasing equipment price projection and the AEO Low Economic Growth case, while the high NPV scenario was based on the combination of a decreasing equipment price projection and the AEO High Economic

Growth case. Results are presented below for each equipment class.

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.1 Heating Equipment Using Reference Equipment Price Forecast and AEO

Reference Case Scenario, 3% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Sp lit System Air

Conditioners <65,000 Btu/h (0.07) (0.26) (0. 61) (1.11) (1. 64) (2.01)

Packaged Air Conditioners <65,000 Btu/h N/A * (0.20) (0.71) (1.41) (2. 21) (2. 84)

Split System Heat Pumps <65,000 Btu/h N/A * (0.05) (0.14) (0.25) (0.32) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.07) (0.18) (0.34) (0.46) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* Economic analysis was not conducted for the ASHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

8B -9Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.2 Heating Equipment Using Reference Equipment Price Forecast and AEO

Reference Case Scenario , 7% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Sp lit System Air

Conditioners <65,000 Btu/h (0.04) (0.16) (0.36) (0. 61) (0. 88) (1.08)

Packaged Air Conditioners

< 65,000 Btu/h N/A * (0.13) (0.40) (0.75) (1.16) (1. 51)

Split System Heat Pumps <65,000 Btu/h N/A * (0.03) (0.08) (0.14) (0.18) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.04) (0.10) (0.19) (0.25) N/A **

Notes: Numbers in parentheses indicate negative NPV.
The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* Economic analysis was not conducted for the ASHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

Cumulative NPV Results 3 -phase, Air- Cooled, Air Conditioning and Table 8B.4.3 Heating Equipment Using Alternative Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario, 3% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Split System Air Conditioners <65,000 Btu/h (0.05) (0.18) (0.46) (0. 88) (1. 34) (1. 66)

Packaged Air Conditioners <65,000 Btu/h N/A * (0.13) (0.53) (1.13) (1.81) (2.36)

Split System Heat Pumps <65,000 Btu/h N/A * (0.03) (0.11) (0.19) (0.25) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.05) (0.13) (0.27) (0.37) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* Economic analysis was not conducted for the ASHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

8B

- 10Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.4 Heating Equipment Using A lternative Equipment Price Forecast (Decreasing Trend) and AEO High Economic Growth Case Scenario , 7%

Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Split System Air Conditioners <65,000 Btu/h (0.04) (0.13) (0.29) (0. 51) (0. 74) (0. 92)

Packaged Air Conditioners <65,000 Btu/h N/A * (0.09) (0.32) (0.63) (0.97) (1.29)

Split System Heat Pumps <65,000 Btu/h N/A * (0.02) (0.07) (0.11) (0.15) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.03) (0.08) (0.15) (0.21) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* Economic analysis was not conducted for the A SHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.5 Heating Equipment Using Alternative Equipment Price Forecast (Increasing Trend) a nd AEO Low Economic Growth Case Scenario , 3%

Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Split System Air Conditioners <65,000 Btu/h (0.08) (0. 30) (0.69) (1. 21) (1. 78) (2.16)

Packaged Air Conditioners <65,000 Btu/h N/A * (0.24) (0.79) (1.53) (2.38) (3.05)

Split System Heat Pumps <65,000 Btu/h N/A * (0.06) (0.16) (0.27) (0.35) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.07) (0.20) (0.37) (0.50) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* Economic analysis was not conduc ted for the ASHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

8B

- 11Cumulative NPV Results for 3 -phase, Air-Cooled, Air Conditioning and Table 8B.4.6 Heating Equipment Using Alternative Equipment Price Forecast (Increasing Trend) and AEO Low Economic Growth Case Scenario , 7%

Discount Rate (billion 2013$)

Equipment Class Efficiency Level

0 1 2 3 4 5

Split System Air Conditioners <65,000 Btu/h (0.05) (0.18) (0.39) (0. 65) (0. 93) (1. 14)

Packaged Air Conditioners <65,000 Btu/h N/A * (0.14) (0.43) (0.81) (1.23) (1.60)

Split System Heat Pumps <65,000 Btu/h N/A * (0.03) (0.09) (0.15) (0.19) N/A **

Packaged Heat Pumps <65,000 Btu/h N/A * (0.04) (0.11) (0.20) (0.27) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* E conomic analysis was not conducted for the ASHRAE levels (Efficiency Level 0)

. ** The max

- tech level for this equipment class is efficiency level 4.

Cumulative NPV Results for Water Source Heat Pumps Equipment Table 8B.4.7 Using Reference Equipment Price Forecast and AEO Reference Case

Scenario

, 3% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.05) (0.19) (0.29) (0.46)

≥17,000 to ≤65,000 Btu/h 0.03 0.26 0.22 0.05 (0.31)

≥65,000 to ≤135,000 Btu/h

- * (0.02) (0.07) (0.14) N/A * *

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE St andard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

8B

- 12Cumulative NPV Results for Water Source Heat Pumps Equipment Table 8B.4.8 Using Reference Equipment Price Forecast and AEO Reference Case

Scenario

, 7% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.04) (0.13) (0.19) (0.30)

≥17,000 to ≤65,000 Btu/h 0.01 0.01 (0.09) (0.24) (0.53)

≥65,000 to ≤135,000 Btu/h

- * (0.01) (0.05) (0.10) N/A * *

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

Cumulative NPV for Water Source Heat Pumps Using Alternative Table 8B.4.9 Equipment Price Forecast (Decreasing Trend) and AEO High Economic

Growth Case Scenario , 3% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.04) (0.16) (0.25) (0.41)

≥17,000 to ≤65,000 Btu/h 0.04 0.35 0.39 0.28 0.02

≥65,000 to ≤135,000 Btu/h

- * (0.01) (0.06) (0.12) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE St andard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

8B

- 13Cumulative NPV Results for Water Source Heat Pumps Using Table 8B.4.10 Alternative Equipment Price Forecast (Decreasing Trend) and AEO High

Economic Growth Case Scenario , 7% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.03) (0.12) (0.17) (0.28)

≥17,000 to ≤65,000 Btu/h 0.01 0.04 (0.03) (0.15) (0.41)

≥65,000 to ≤135,000 Btu/h

- * (0.01) (0.05) (0.09) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

Cumulative NPV Results for Water Source Heat Pumps Using Table 8B.4.11

Alternative Equipment Price Forecast (Increasing Trend) and AEO Low

Economic Growth Case Scenario , 3% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.07) (0.27) (0.40) (0.62)

≥17,000 to ≤65,000 Btu/h 0.02 0.06 (0.14) (0.47) (1.09)

≥65,000 to ≤135,000 Btu/h

- * (0.03) (0.11) (0.21) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if A SHRAE Standard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

8B

- 14Cumulative NPV Results for Water Source Heat Pumps Using Table 8B.4.12

Alternative Equipment Price Forecast (Increasing Trend) and AEO Low

Economic Growth Case Scenario , 7% Discount Rate (billion 2013$)

Equipment Class Efficiency Level

1 2 3 4 5

<17,000 Btu/h (0.00) (0.05) (0.16) (0.24) (0.37)

≥17,000 to ≤65,000 Btu/h (0.00) (0.08) (0.25) (0.46) (0.87)

≥65,000 to ≤135,000 Btu/h

- * (0.02) (0.07) (0.13) N/A **

Notes: Numbers in parentheses indicate negative NPV.

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1

- 2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1

- 2013 standards were adopted.

* There are no savings for EL1 because there is no market share projected below this level in the base case.

** The max

- tech level for this equipment class is efficiency level 4.

8B

- 15REFERENCES

1 Energy Information Administration, Annual Energy Outlook 2014 with Projections to 2040

, 2014. Washington, DC. www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf

2 Taylor, Margaret, and Sydny K. Fujita. Accounting for Technological Change in Regulatory Impact Analyses: The Learning Curve Technique . Berkeley: Lawrence Berkeley National Laboratory, 2013. LBNL-6195E

3 Energy Information Administration, Macroeconomic Activity Module for Annual Energy

Outlook 2014 , 2014. Washington, DC.

www.e ia.gov/forecasts/aeo/assumptions/pdf/macroeconomic.pdf

8B

- 16