CHAPTER 12. LIFE-CYCLE COST SUB-GROUP ANALYSIS 

TABLE OF CONTENTS 

12.1 INTRODUCTION ............................................................................................................ 12-1

12.2 SUB-GROUP ANALYSIS ............................................................................................... 12-1

12.2.1 BVM Customer Sub-Group ............................................................................... 12-1

12.2.2 Life-Cycle Cost and Payback Period Results for Manufacturing Sub-Group ... 12-2

REFERENCES .......................................................................................................................... 12-5

LIST OF TABLES 

Table 12.2.1 Mean LCC Savings by Equipment Category and Trial Standard Level, 

Manufacturers Sub-Group and All Business Types (2008$)*........................... 12-2 

Table 12.2.2 Percentage of Customers Showing Positive Life-Cycle Cost Savings by 

Equipment Category and Trial Standard Level, Manufacturers Sub-Group 

and All Business Types*.................................................................................... 12-3 

Table 12.2.3 Mean Payback Period by Equipment Category and Trial Standard Level, 

Manufacturers Sub-Group and All Business Types (Years)*............................ 12-3 

Table 12.2.4 Percentage of Customers Showing PBP Less Than 3 Years, by Equipment 

Category and Trial Standard Level, Manufacturers Sub-Group and All 

Business Types*................................................................................................. 12-4 

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CHAPTER 12. LIFE-CYCLE COST SUB-GROUP ANALYSIS 

12.1 INTRODUCTION 

The life-cycle cost (LCC) sub-group analysis evaluates impacts on any identifiable 

groups of customers of refrigerated beverage vending machines (BVMs) who may be 

disproportionately affected by amended energy conservation standards. The U.S. Department of 

Energy (DOE) accomplished this, in part, by analyzing the LCC and payback period (PBP) for 

those BVM customers that fall into any specific sub-groups. 

DOE used the LCC spreadsheet model to estimate the impact on BVM sub-groups. DOE 

developed this LCC spreadsheet model to conduct the LCC and PBP analyses for both BVM 

customers, as described in chapter 8, life-cycle cost and payback period analyses. The standard 

LCC and PBP analyses (see chapter 8) for BVMs includes various types of businesses that use 

BVM equipment. The LCC spreadsheet model allows for the identification of certain sub-groups 

of businesses, which can then be analyzed by sampling only that sub-group. Chapter 8, life-cycle 

cost and payback period analyses, explains in detail the inputs to the LCC spreadsheet model 

used in determining the LCC and PBP. The LCC spreadsheet model is accessible over the 

Internet at 

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.ht

ml. 

12.2 SUB-GROUP ANALYSIS 

12.2.1 BVM Customer Sub-Group 

DOE was concerned that increases in the purchase price of BVM equipment could have 

negative impacts on businesses with relatively high financing costs and especially those that 

were small businesses (i.e., those with low annual revenues). 

In examining the seven categories of businesses in the chapter 8 analysis, DOE 

considered which categories would be likeliest to be adversely affected. Manufacturing facilities 

that own their own BVMs are the likeliest businesses to be adversely affected since they had the 

highest financing costs for new equipment of any group of BVM owners (leading to the highest 

initial equipment cost) and faced the lowest electricity prices (thus showing the lowest value of 

energy savings). As a result, the LCC and payback calculations would be least favorable for this 

group. About 36 percent of all BVM units are placed in manufacturing facilities.1

 Based on this 

distribution of equipment and the distribution of ownership described by stakeholders at the 

advanced notice of proposed rulemaking (ANOPR), an estimated 1.8 percent of BVMs are sold 

to manufacturing enterprises who place them in their facilities. Some of these entities are also 

small businesses. To identify small businesses, DOE used size standards from the Small 

Business Administration (SBA) to define which business entities are considered to be small. The 

SBA established size standards for types of economic activity, or industry, under the North 

American Industry Classification System (NAICS).2 

The SBA defines a small business from a customer perspective by either its annual 

receipts (i.e., revenues) or its number of employees. Manufacturing businesses are generally 

defined to be small if employment of the entire business is 500 persons or less. DOE does not 

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EERE-2006-STD-0125 COMMENT 46
have sufficient information to correlate employment with the costs of more efficient BVMs to 

identify the sub-group of small businesses in the manufacturing sample. However, DOE believes 

that the results from the LCC sub-group analysis provide an adequate indication of whether the 

small manufacturing businesses might be disproportionately advantaged or disadvantaged by a 

proposed standard. 

For purposes of this sub-group analysis, manufacturers are assumed to pay industrial 

electricity prices, which are somewhat lower on average than prices to commercial customers. 

However, the smaller independent entities may face somewhat higher costs of electricity. With 

the exception of the cost of capital and electricity prices, all other inputs to the LCC and PBP 

spreadsheet model for the manufacturing sub-group were the same as for all the business types 

considered in the rulemaking (e.g., total installed costs, repair costs, maintenance costs, and 

equipment lifetime, etc). The lower the cost of electricity and the higher the cost of capital, the 

more likely it is that an entity would be disadvantaged by the requirement to purchase more 

efficient BVMs. 

12.2.2 Life-Cycle Cost and Payback Period Results for Manufacturing Sub-Group 

Table 12.2.1 summarizes the LCC savings results for the small business sub-group for 

each of the BVM equipment categories, and compares them to the results for the total sample of 

business types used in the overall LCC analysis. 

Table 12.2.1 Mean LCC Savings by Equipment Category and Trial Standard Level, 

Manufacturers Sub-Group and All Business Types (2008$)* 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

Manufacturers $60 $118 $94 $29 $27 $22 TSL 1 All Business Types $91 $175 $141 $48 $46 $39 

Manufacturers $89 $152 $123 $27 $28 ($6) TSL 2 All Buildings $145 $223 $197 $53 $57 $26 

Manufacturers $121 $160 $150 $13 $9 ($6) TSL 3 All Business Types $204 $258 $251 $51 $48 $26 

Manufacturers $144 $197 $166 $2 ($2) ($19) TSL 4 All Business Types $246 $327 $284 $42 $38 $13 

Manufacturers $153 $197 $168 ($567) ($579) ($623) TSL 5 All Business Types $272 $339 $297 ($515) ($528) ($582) 

Manufacturers $142 $181 $153 ($2,361) ($2,183) ($2,072) TSL 6 All Business Types $271 $331 $290 ($2,352) ($2,170) ($2,070) 

Manufacturers ($1,537) ($1,256) ($1,210) NA NA NA TSL 7 All Business Types ($1,419) ($1,119) ($1,090) NA NA NA 

* Values in parentheses stand for the negative LCC savings. NA indicates that this is not applicable for Class B equipment 

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Table 12.2.2 compares the percentages of customers showing LCC savings for the two 

groups of businesses, namely, the small business sub-group (or manufacturers) and the total 

sample of all business types considered for this BVM rulemaking. Similarly, Table 12.2.3

summarizes the mean PBP results for the two groups and NA indicates that this is not applicable 

for Class B equipment. 

Table 12.2.2 Percentage of Customers Showing Positive Life-Cycle Cost Savings by 

Equipment Category and Trial Standard Level, Manufacturers Sub-Group and All 

Business Types* 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

Manufacturers 10% 10% 10% 9% 9% 9% TSL 1 All Business Types 10% 10% 10% 10% 10% 10% 

Manufacturers 100% 100% 100% 79% 79% 35% TSL 2 All Business Types 100% 100% 100% 91% 89% 61% 

Manufacturers 93% 100% 93% 55% 53% 35% TSL 3 All Business Types 100% 100% 100% 81% 79% 61% 

Manufacturers 91% 95% 91% 45% 39% 27% TSL 4 All Business Types 100% 100% 100% 73% 67% 53% 

Manufacturers 91% 91% 91% 0% 0% 0% TSL 5 All Business Types 100% 100% 100% 0% 0% 0% 

Manufacturers 89% 89% 89% 0% 0% 0% TSL 6 All Business Types 93% 100% 93% 0% 0% 0% 

Manufacturers 0% 0% 0% NA NA NA TSL 7 All Business Types 0% 0% 0% NA NA NA 

*NA indicates that this is not applicable for Class B equipment. 

Table 12.2.3 Mean Payback Period by Equipment Category and Trial Standard Level, 

Manufacturers Sub-Group and All Business Types (Years)* 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

Manufacturers 2.6 2.4 2.4 3.7 3.9 4.4 TSL 1 All Business Types 2.1 2.0 2.0 3.0 3.1 3.5 

Manufacturers 3.5 2.3 3.4 5.1 5.2 10.0 TSL 2 All Business Types 2.9 1.9 2.7 4.1 4.1 7.5 

Manufacturers 3.9 3.5 3.8 7.4 7.9 10.0 TSL 3 All Business Types 3.2 2.8 3.1 5.8 6.1 7.5 

Manufacturers 4.1 3.7 4.0 8.6 9.1 12.4 TSL 4 All Business Types 3.3 3.0 3.2 6.6 6.9 9.1 

Manufacturers 4.4 4.1 4.3 86.1 88.7 95.8 TSL 5 All Business Types 3.5 3.3 3.5 74.0 76.9 86.9 

Manufacturers 4.9 4.6 4.8 100.0 100.0 100.0 TSL 6 All Business Types 3.9 3.7 3.9 100.0 100.0 100.0 

Manufacturers 84.2 74.1 81.0 NA NA NA TSL 7 All Business Types 74.0 59.2 69.7 NA NA NA 

*NA indicates that this is not applicable for Class B equipment. 

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Table 12.2.4 compares the percentages of the two groups experiencing payback periods 

of less than three years. Results are provided by trial standard level (TSL) for each of BVM 

equipment categories. As is evident from the LCC and PBP results, although the LCC savings 

for small business are slightly smaller than for the full sample of businesses due to their higher 

financing costs, the overall effect of a potentially higher BVM efficiency level on the small 

business sub-group is virtually identical to the effect on the full sample of business types that use 

BVM equipment. Thus, small businesses are affected no differently by increased BVM 

equipment efficiency levels than the full sample of BVM customers considered in the 

rulemaking. 

Table 12.2.4 Percentage of Customers Showing PBP Less Than 3 Years, by Equipment 

Category and Trial Standard Level, Manufacturers Sub-Group and All Business Types* 

A-L-IN A-M-IN A-S-IN B-L-IO B-M-IO B-S-IO 

Manufacturers 67% 71% 71% 43% 41% 33% TSL 1 All Business Types 85% 87% 87% 61% 59% 49% 

Manufacturers 43% 81% 47% 19% 19% 0% TSL 2 All Business Types 67% 89% 71% 35% 33% 5% 

Manufacturers 35% 43% 41% 0% 0% 0% TSL 3 All Business Types 53% 67% 65% 11% 11% 5% 

Manufacturers 35% 41% 35% 0% 0% 0% TSL 4 All Business Types 51% 65% 53% 9% 7% 0% 

Manufacturers 33% 35% 33% 0% 0% 0% TSL 5 All Business Types 45% 51% 49% 0% 0% 0% 

Manufacturers 19% 19% 19% 0% 0% 0% TSL 6 All Business Types 29% 39% 37% 0% 0% 0% 

Manufacturers 0% 0% 0% NA NA NA TSL 7 All Business Types 0% 0% 0% NA NA NA 

*NA indicates that this is not applicable for Class B equipment. 

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12-5

REFERENCES 

1. Automatic Merchandiser. 2008. “2007: Vending Becomes a Tougher Balancing Act.” State 

of the Vending Industry Report. Accessed online at 

http://www.amonline.com/content/reports/files/0808_SVI_report.pdf on February 21, 2009. 

2. Title 13, Code of Federal Regulations, Chapter I-Small Business Administration, Part 121-

Small Business Administration, Subpart A-Size Eligibility Provisions and Standards, January 

1, 2008. Accessed online at http://www.gpoaccess.gov/cfr/retrieve.html on February 21, 

2009.

EERE-2006-STD-0125 COMMENT 46