S-i

APPENDIX S. NATIONAL EQUIPMENT AND OPERATING COSTS

TABLE OF CONTENTS

S.1 INTRODUCTION ................................................... S-1

S.2 RESULTS ......................................................... S-2

LIST OF TABLES

Table S.2.1 $65,000 Btu/h to <135,000 Btu/h: Cumulative National Equipment and 

Operating Costs with NPV, 7% Discount Rate (billion 2001$) ............ S-3

Table S.2.2 $65,000 Btu/h to <135,000 Btu/h: Cumulative National Equipment and 

Operating Costs with NPV, 3% Discount Rate (billion 2001$) ............ S-4

Table S.2.3 $135,000 Btu/h to <240,000 Btu/h: Cumulative National Equipment and 

Operating Costs with NPV, 7% Discount Rate (billion 2001$) ............ S-5

Table S.2.4 $135,000 Btu/h to <240,000 Btu/h: Cumulative National Equipment and 

Operating Costs with NPV, 3% Discount Rate (billion 2001$) ............ S-6
S-1

APPENDIX S. NATIONAL EQUIPMENT AND OPERATING COSTS

S.1 INTRODUCTION

In this appendix, the Department presents the components of the net present value (NPV),

namely, the present value of the equipment (or total installed costs) and the present value of the

operating costs. The present value of equipment costs is also termed the cumulative national

equipment costs while the present value of operating costs is also termed the cumulative national

operating costs.

As presented in Chapter 10, National Energy Savings and Consumer Impacts, the NPV is

described by the equation:

where PVS is the present value of operating cost savings (including electricity, repair, and

maintenance costs) and PVC is the present value of increased total installed costs (including

equipment and installation). PVS and PVC are determined according to the following expressions:

where OCS are the total annual operating cost savings, TIC are the total annual installed cost

increases, DF is the discount factor, and y is the year for which PVS and PVC are determined. 

PVS and PVC are determined for each year from the effective date of the standard to the year

when units purchased in 2035 retire.

The present value of operating costs and the present value of equipment costs (or total

installed costs) are the components comprising the PVS and PVC, respectively. The PVS is

determined by taking the difference between the present value of operating costs for the base case

and the present value of operating costs for the standards case. The PVC is determined by taking

the difference between the present value of equipment costs for the base case and the present

value of equipment costs for the standards case.
a

 The range of values for the total base case national equipment and operating costs for both the $65,000 Btu/h to

<135,000 Btu/h and the $135,000 Btu/h to <240,000 Btu/h equipment classes are based on a time period of 2008-2035.

Because the assumed effective date of the ASHRAE/IESNA 90.1-1999 standards case is 2004, the total base case

national costs under this standards case are greater than those for all other standards cases. The total base case national

costs for all standards cases are provided in Tables S.2.1-S.2.4.

S-2

S.2 RESULTS

Tables S.2.1 and S.2.2 provide the present value of operating costs (also known as the

cumulative national operating costs) and the present value of equipment costs (also known as the

cumulative national equipment costs) for the $65,000 Btu/h to <135,000 Btu/h equipment class.

Tables S.2.1 and S.2.2 present the results based upon a 7 percent discount rate and a 3 percent

discount rate, respectively. Tables S.2.3 and S.2.4 provide the same information but for the

$135,000 Btu/h to <240,000 Btu/h equipment class.

In the following tables, the national operating and equipment costs are presented for the

base case (i.e., without standards) and each standards case analyzed for the equipment class. For

the $65,000 Btu/h to <135,000 Btu/h equipment class, the following standards cases were

analyzed: ASHRAE/IESNA 90.1-1999, 10.5 EER, 11.0 EER, 11.5 EER, and 12.0 EER. For the

$135,000 Btu/h and <240,000 Btu/h equipment class, the following standards cases were

analyzed: ASHRAE/IESNA 90.1-1999, 10.0 EER, 10.5 EER, 11.0 EER, 11.5 EER, and 12.0

EER. Differences between the base case and standards cases are also presented. The difference in

the national equipment costs represents the PVC or present value of equipment cost increases

while the difference in the national operating costs represents the PVS or present value of

operating cost savings. The difference between the base case and standards case total national

equipment and operating costs represents the NPV.

All base case values were determined with shipments projections established under the

standards case. As detailed in Chapter 9, shipments projections under the standards cases were

determined to be lower than those in the base case projection due to the higher installed cost of

the more efficient equipment. As a result, the standards case shipments projection and, in turn, the

standards case equipment stock, were used to determine the NPV to avoid the inclusion of

savings due to displaced shipments. Thus, the base case values shown in Tables S.2.1–S.2.4 vary

with the standards case. For the $65,000 Btu/h to <135,000 Btu/h equipment class, 7 percent

discount rate, the total base case national equipment and operating costs range from $58.1 to

$57.7 billion. When a 3 percent discount rate is used, the total base case national equipment and

operating costs range from $124.7 to $124.1 billion. For the $135,000 Btu/h to <240,000 Btu/h

equipment class the total base case national equipment and operating costs range from $46.4 to

$47 billion for the 7 percent discount case and $100.2 to $101.4 billion for the 3 percent discount

case.a
S-3

Table S.2.1 $65,000 Btu/h to <135,000 Btu/h: Cumulative National Equipment and

Operating Costs with NPV, 7% Discount Rate (billion 2001$)

Standards Case Equipment1 Operating* Total1

Base Case $19.01 $54.99 $74.00

ASHRAE 90.1-1999 Case $19.25 $54.23 $73.48

Difference†-$0.23 $0.75 $0.52

Base Case $14.78 $43.29 $58.07

10.5 EER Case $15.05 $42.45 $57.50

Difference†-$0.27 $0.84 $0.57

Base Case $14.71 $43.29 $58.00

11.0 EER Case $15.28 $41.80 $57.07

Difference†-$0.57 $1.50 $0.93

Base Case $14.56 $43.27 $57.83

11.5 EER Case $15.54 $41.21 $56.75

Difference†-$0.99 $2.06 $1.08

Base Case $14.41 $43.25 $57.66

12.0 EER Case $15.67 $40.97 $56.64

Difference†-$1.26 $2.48 $1.02

* Cumulative values for the ASHRAE/IESNA 90.1-1999 standards cases are based on a time period of 2004-2035. All other

standards cases are based on a time period of 2008-2035.

† Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is represented by the

bold and italicized values.
S-4

Table S.2.2 $65,000 Btu/h to <135,000 Btu/h: Cumulative National Equipment and

Operating Costs with NPV, 3% Discount Rate (billion 2001$)

Standards Case Equipment* Operating* Total*

Base Case $34.78 $108.82 $143.61

ASHRAE 90.1-1999 Case $35.21 $107.15 $142.35

Difference†-$0.42 $1.68 $1.25

Base Case $29.75 $94.98 $124.74

10.5 Case $30.30 $92.92 $123.22

Difference†-$0.55 $2.07 $1.52

Base Case $29.60 $95.04 $124.65

11.0 Case $30.75 $91.37 $122.12

Difference†-$1.15 $3.67 $2.53

Base Case $29.34 $95.00 $124.33

11.5 Case $31.26 $90.01 $121.27

Difference†-$1.92 $4.99 $3.06

Base Case $29.13 $94.94 $124.06

12.0 Case $31.46 $89.55 $121.01

Difference†-$2.34 $5.39 $3.05

* Cumulative values for the ASHRAE/IESNA 90.1-1999 standards cases are based on a time period of 2004-2035. All other

standards cases are based on a time period of 2008-2035.

† Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is represented by the

bold and italicized values.
S-5

Table S.2.3 $135,000 Btu/h to <240,000 Btu/h: Cumulative National Equipment and

Operating Costs with NPV, 7% Discount Rate (billion 2001$)

Standards Case Equipment* Operating* Total*

Base Case $13.30 $41.27 $54.58

ASHRAE 90.1-1999 Case $13.42 $40.78 $54.20

Difference†-$0.12 $0.50 $0.38

Base Case $10.42 $32.81 $43.23

10.0 Case $10.59 $32.13 $42.72

Difference†-$0.17 $0.68 $0.51

Base Case $10.40 $32.80 $43.20

10.5 Case $10.72 $31.66 $42.37

Difference†-$0.32 $1.15 $0.83

Base Case $10.34 $32.80 $43.14

11.0 Case $10.91 $31.11 $42.02

Difference†-$0.57 $1.69 $1.12

Base Case $10.24 $32.77 $43.00

11.5 Case $11.14 $30.63 $41.77

Difference†-$0.90 $2.14 $1.24

Base Case $10.14 $32.74 $42.88

12.0 Case $11.26 $30.43 $41.68

Difference†-$1.11 $2.31 $1.20

* Cumulative values for the ASHRAE/IESNA 90.1-1999 standards cases are based on a time period of 2004-2035. All other

standards cases are based on a time period of 2008-2035.

† Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is represented by the

bold and italicized values.
S-6

Table S.2.4 $135,000 Btu/h to <240,000 Btu/h: Cumulative National Equipment and

Operating Costs with NPV, 3% Discount Rate (billion 2001$)

Standards Case Equipment* Operating* Total*

Base Case $24.49 $82.55 $107.04

ASHRAE 90.1-1999 Case $24.70 $81.44 $106.14

Difference†-$0.22 $1.11 $0.90

Base Case $21.06 $72.52 $93.59 

10.0 Case $21.40 $70.85 $92.26

Difference†-$0.34 $1.67 $1.33

Base Case $21.02 $72.53 $93.55 

10.5 Case $21.66 $69.70 $91.37

Difference†-$0.64 $2.83 $2.19

Base Case $20.90 $72.56 $93.46 

11.0 Case $22.05 $68.40 $90.45

Difference†-$1.15 $4.16 $3.02

Base Case $20.71 $72.49 $93.20 

11.5 Case $22.49 $67.27 $89.76

Difference†-$1.78 $5.22 $3.44

Base Case $20.58 $72.42 $92.99 

12.0 Case $22.67 $66.88 $89.55

Difference†-$2.10 $5.53 $3.44

* Cumulative values for the ASHRAE/IESNA 90.1-1999 standards cases are based on a time period of 2004-2035. All other

standards cases are based on a time period of 2008-2035.

† Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is represented by the

bold and italicized values.