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Printable Version Small Electric Motors Final Rule Technical Support Document This page presents the chapters and appendices from the technical support document, which provides the analyses and results supporting the final rule for small electric motors.

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. Title Page ( PDF 76 KB )

Chapters Chapter 1: Introduction ( PDF 198 KB ) Chapter 2: Analytical Framework ( PDF 316 KB ) Chapter 3: Market and Technology Assessment ( PDF 456 KB ) Chapter 4: Screening Analysis ( PDF 261 KB ) Chapter 5: Engineering Analysis ( PDF 1.6 MB ) Chapter 6: Energy Use Characterization ( PDF 520 KB ) Chapter 7: Markups for Equipment Price Determination ( PDF 336 KB ) Chapter 8: Life-Cycle Cost and Payback Period Analysis ( PDF 2.4 MB ) Chapter 9: Shipments Analysis ( PDF 653 KB ) Chapter 10: National Impact Analysis ( PDF 1.1 MB ) Chapter 11: Life-Cycle Cost Sub-Group Analysis ( PDF 591 KB ) Chapter 12: Manufacturer Impact Analysis ( PDF 1.4 MB ) Chapter 13: Utility Impact Analysis ( PDF 761 KB ) Chapter 14: Employment Impact Analysis ( PDF 167 KB ) Chapter 15: Environmental Assessment ( PDF 652 KB ) Chapter 16: Regulatory Impact Analysis ( PDF 680 KB )

Appendices Appendix 5A: Construction and Performance Specifications of Small Electric Motors Designed for the Engineering Analysis ( PDF 880 KB ) Appendix 8A: User Instructions for Life-Cycle Cost and Payback Period Analysis Spreadsheet ( PDF 50 KB ) Appendix 8B: Life-Cycle Cost and Payback Period Analysis Results ( PDF 342 KB ) Appendix 8C: Life-Cycle Cost Sensitivity Analyses ( PDF 533 KB ) Appendix 8D: Life-Cycle Cost and Payback Period Results by Product Class ( PDF 472 KB ) Appendix 10A: User Instructions for National Impact Analysis Spreadsheet ( PDF 87 KB ) Appendix 10B: National Energy Savings and Net Present Value Results ( PDF 39 KB ) Appendix 10C: National Energy Savings and Net Present Value Sensitivity Analysis ( PDF 304 KB ) Appendix 12A: Manufacturer Impact Analysis Interview Guide ( PDF 568 KB ) Appendix 12B: Government Regulatory Impact Model Help Document ( PDF 205 KB ) Appendix 15A: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 ( PDF 1.7 MB ) Appendix 16A: Regulatory Impact Analysis Supporting Material ( PDF 228 KB )

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## FINAL RULE TECHNICAL SUPPORT DOCUMENT (TSD): ENERGY EFFICIENCY PROGRAM FOR COMMERCIAL AND INDUSTRIAL EQUIPMENT:

SMALL ELECTRIC MOTORS

March 9, 2010

U.S. Department of Energy Assistant Secretary Office of Energy Efficiency and Renewable Energy Building Technologies Program Appliances and Commercia l Equipment Standards Washington, DC 20585This Document was prepared for the Department of Energy by staff members of Navigant Consulting, Inc., and Lawrence Berkeley National LaboratoryCHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF DOCUMENT

............................................................................................. 1 1.2 OVERVIEW OF APPLIANCE STANDARDS

................................................................. 1 1.3 OVERVIEW OF SMALL ELECTRIC MOTOR STANDARDS

...................................... 2 1.4 STRUCTURE OF THE DOCUMENT

............................................................................... 4

LIST OF TABLES

Table 1.3.1 Small Electric Motors Analyses

................................................................................ 3

iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF DOCUMENT

This Technical Support Document (TSD) provi des the analytical approaches, inputs and results associated with DOE’s study of energy conservation standards for small electric motors in the final rule. This TSD also serves to provide technical detail and is a compendium to the lifecycle cost (LCC) and payback period (PBP), national impact analysis (NIA), and manufacturer impact analysis (MIA) spreadsheets that are posted on the DOE’s website for the final rule analyses. 1

1.2 OVERVIEW OF APPLIANCE STANDARDS

Part C of title III of the Energy Policy and Conservation Act (EPCA) provides for an energy conservation program for certain commerc ial and industrial equipment. (42 U.S.C. 6311

- 6317) In particular, section 346(b) of EPCA states that the Secr etary of Energy must prescribe testing requirements and energy c onservation standards for those small electric motors for which the Secretary determines that standards would be technologically feasible and economically justified, and would result in significant energy savings. (42 U.S.C. 6317(b))

Before DOE determines whether to adopt a proposed energy conservation standard, it first solicits comments on the proposed standard. DOE designs any new or amended standard to achieve the maximum improvement in energy effi ciency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A), 42 U.S.C. 6313(a)(6)(B)(i) and (b)(3)(A), and 42 U.S.C. 6317(a)(1) and (c)) To determine whet her economic justification exists, DOE must review comments on the proposal and determine th at the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the following seven factors:

1. the economic impact of the standard on manufacturers and c onsumers of products subject to the standard;

2. the savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products likely to result from imposition of the standard;

3. the total projected amount of energy savings likely to result directly from imposition of the standard;

4. any lessening of utility or performan ce of the covered products likely to result from imposition of the standard;

1 DOE website: http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html

.

15. the impact of any lessening of comp etition, as determined in writing by the Attorney General, likely to result from imposition of the standard;

6. the need for national energy conservation; and

7. other factors the Secr etary considers relevant.

(42 U.S.C. 6295(o)(2)(B))

1.3 OVERVIEW OF SMALL ELECTRIC MOTOR STANDARDS

On July 10, 2006, the Secretary of Energy issued a determination stating “...the Department believes that standards for considered small motors appear economically justified based on balanced consider ation of the information and analysis available to the Department at this time.” 71 FR 38807. DOE defines “considered small motors” as capacitor-start motors, including both induction-run and capacitor- run, and non-servo three-phase motors.

The Secretary’s determination was based pa rtly on analyses conducted by Lawrence Berkley National Laboratory (LBNL). In February 2002, LBNL published a report entitled Determination Analysis of Energy Cons ervation Standards for Small Electric Motors , which assessed options for setting energy conserva tion standards. That report was based on information from annual sales da ta, average load data, and re search on existing and potential small motor efficiencies obtai ned from several organizations.

DOE reviewed the comments it received from stakeholders on this draft analysis published in 2002 and then prepared its final, posi tive, determination for small electric motors on July 10, 2006. In that notice, DOE indicated th at it found energy conservation standards for small electric motors appeared to be technologic ally feasible, economically justified and would result in significant energy savings. 71 FR 38799. As a result of this positive determination, DOE published an Energy Conservation Standards Rulemaking Framework Document for Small Electric Motors in 2007. This document describes the pro cedural and analytical approaches that DOE anticipated that it would use to evaluate th e establishment of energy conservation standards for small electric motors. 2 DOE also published the Notice of Public Mee ting and Availability of Framework Document .72 FR 44990 (August 10, 2007).

On September 13, 2007, DOE held a public mee ting to discuss the proposed analytical framework. The analytical framework presente d at the public meeting described different analyses, such as life-cycle cost and paybac k, the methods proposed for conducting them, and the relationships among the various analyses . Table 1.3.1 below provides a list of all the rulemaking analyses conducted, and at which stage of the rulemaking DOE publishes those analyses.

2 The document is available at the DOE website: http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html

.

2Table 1.3.1 Small Electric Motors Analyses Preliminary Analyses NOPR Final Rule* Market and technology

assessment Revised preliminary analyses Revised analyses

Screening analysis Life-cycle cost subgroup analysis Engineering analysis Manufacturer impact analysis Energy use and end-use load characterization Utility impact analysis

Markups for equipment price determination Employment impact analysis

Life-cycle cost and payback period analyses Environmental assessment

Shipments analysis Regulatory impact analysis National impact analysis Preliminary manufacturer impact analysis

* During the Final Rule phase, DOE considers the comments submitted by the U.S. Department of Justice in the NOPR phase concerning the impact of any lessening of competition that is likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v))

Representatives of small moto r manufacturers, a nationally recognized trade association, and a prominent energy efficiency advocacy group attended the framework document public meeting and indicated their willingness to work with DOE in its analysis of potential energy conservation standards. The majo r items discussed at the public meeting included definitions for covered small electric motors a nd product classes; matters of pr oprietary designs; ties between efficiency improvements and incremental manufacturing costs; baseline and potential efficiency levels; base-case trends under di fferent regulatory scenarios; analyses of costs to manufacture energy efficient small electric motors and the relationship to selling prices; LCC analyses and methods; LCC subgroups that may be more impacted by efficiency standards over other groups; motor rating, loading, and operating hours; th e impacts of a standard on domestic energy supplies; and the scope of an environmental assessment.

As part of information gathering and sh aring, DOE prepared and circulated three interview guides to small motor manufactur ers in 2007 and early 2008 (see preliminary TSD appendices 12A, 12B, and 12C). DOE issued thes e interview guides to small electric motor manufacturers with the following objectives: (1) to obtain the manufacturer selling price (MSP) versus efficiency curves for the engineering anal ysis; (2) to obtain market-related information for the covered motors, including an estimate of shipments; (3) to assess any preliminary impacts on manufacturers that may be associated with higher efficiency designs; and (4) to foster cooperation between DOE and these interested parties, who may choose to participate in the manufacturer impact analysis following the public meeting comment period. The interview guides requested input on (1) the relationship be tween manufacturing selling price and efficiency for four representative units selected by DOE; (2) market data such as di stribution channels and end-use operating profiles for small motors; (3) preliminary manufacturer’s impacts; and (4) national shipment estimates (to be aggregated by the Business Information Service of the National Electrical Manuf acturers Association).

3DOE incorporated the information gathered at these meetings in its engineering analysis. Following the publication of the preliminary TS D and the public meeting for the preliminary analyses on January 31, 2009 DOE held additional m eetings with manufacturers as part of the consultative process for the manufacturer impact an alysis (Chapter 12). During this period, DOE received numerous comments regarding the preliminary analyses.

On November 24, 2009 DOE published its NOPR for energy conservation standards for small electric motors in the Federal Register. 74 FR 61410-500. Shortly afterward, DOE held a public meeting on December 17, 2009, where interest ed parties commented on the assumptions and analyses conducted in the NOPR phase. In the issuance of today’s final rule, DOE considered all the comments received on the NOPR analyses.

DOE developed three spreadsheet tools for th is rulemaking. The first spreadsheet tool calculates LCC and payback periods. The second spreadsheet tool calculates impacts of trial standards at various levels on small electric moto r shipments, and calculates the NES and NPV at various standard levels. The third spreadsheet is for the government regulatory impact model (GRIM) used to calculate the INPV for the manufacturer impact analysis. The spreadsheets are posted on DOE’s website along with the complete TSD documenting the analysis supporting this final rule.

1.4 STRUCTURE OF THE DOCUMENT

This TSD consists of 16 chapters including an environmental assessment and a regulatory impact analysis, plus additional appendices.

Chapter 1 Introduction: Provi des an overview of the applia nce standards program and how it applies to the small electric motors rulemaking, provides a history of DOE’s actions to date, and outlines the structure of the TSD.

Chapter 2 Analytical Framework: Describe s the rulemaking process step by step.

Chapter 3 Market and Technology Assessment: Characterizes the small electric motor market and the technologies available for increasing equipment efficiency.

Chapter 4 Screening Analysis: Discusses the design options identified in chapter 3 that improve small motor efficiency, and determines which of these are viable for consideration in the engineering analysis.

Chapter 5 Engineering Analysis: Presents detailed cost and efficiency information for the motors that constitute the representative units for analysis. This chapter describes DOE’s approach to the engineering analysis for determining manufacturer costs and selling prices.

4Chapter 6 Energy Use and End-Use Load Char acterization: Discusses the process DOE used for generating energy use estimates and end-use load profiles for small electric motors.

Chapter 7 Markups for Equipment Price Deter mination: Discusses the methods DOE used for establishing markups to convert ma nufacturer selling prices to installed customer equipment prices.

Chapter 8 Life-Cycle Cost and Payback Period Analyses: Describes the impact of energy conservation standards on consumers of small electric motors. This chapter compares the life-cycle cost of small mo tors and other measures of consumer impact with and without energy conservation standards.

Chapter 9 Shipments Analysis: Provide s a shipments estimate for 2015-2045 and the methods DOE used for forecasting ship ments with and without new energy conservation standards.

Chapter 10 National Impact Analysis: De scribes the national forecast of energy consumption, efficiency of new units, and annual equipment sales with and without new energy conservation standards.

Chapter 11 Life-Cycle Cost Subgroup Analysis: Evaluates impacts on any identifiable groups or customers who may be disproportionately affected by the national energy efficiency standard level.

Chapter 12 Manufacturer Impact Analysis: Assesses the impacts on small motor manufacturers of energy efficiency standard s. In addition to financial impacts, a wide range of quantitative and qualitative effects may occur following adoption of the standard that may require changes to the manufacturing practices for these products.

Chapter 13 Utility Impact Analysis: Analyzes the effects of small electric motor energy conservation standards on electricity sales. The utility impact analysis compares model results for the base case and policy cases in which standards are in place.

Chapter 14 Employment Impact Analysis: Estimates national job creation or elimination (direct and indirect effects) resulting from energy conservation standards due to reallocation of the associated commercial expenditures for purchasing and operating equipment.

Chapter 15 Environmental Assessment for Small Electric Motors: Discusses the effects of energy conservation standards on airborne emissions of electric utilities.

Chapter 16 Regulatory Impact Analysis: Discusses the impact of the present regulatory actions and of non-regulatory alterna tives to setting energy conservation standards.

5CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION

........................................................................................................... 2-1 2.2 BACKGROUND

............................................................................................................. 2-4 2.3 MARKET AND TECHNOLOGY ASSESSMENT

........................................................ 2-5 2.3.1 Market Assessment

.............................................................................................. 2-5 2.3.2 Technology Assessment

....................................................................................... 2-5 2.4 SCREENING ANALYSIS

.............................................................................................. 2-5 2.5 ENGINEERING ANALYSIS

.......................................................................................... 2-6 2.5.1 Modified Design Option Approach

..................................................................... 2-6 2.5.2 Manufacturing Cost Model

.................................................................................. 2-6 2.6 ENERGY USE CHARACTERIZATION

....................................................................... 2-6 2.7 MARKUPS TO DETERMINE EQUIPMENT PRICE

................................................... 2-7 2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

.................................... 2-7 2.9 SHIPMENTS ANALYSIS

.............................................................................................. 2-8 2.10 NATIONAL IMPACT ANALYSIS

................................................................................ 2-8 2.10.1 National Energy Savings Analysis

....................................................................... 2-9 2.10.2 Net Present Value Analysis

................................................................................. 2-9 2.10.3 Efficiency Scenarios and Trends

......................................................................... 2-9 2.11 LIFE-CYCLE COST SUB-GROUP ANALYSIS

......................................................... 2-10 2.12 MANUFACTURER IMPACT ANALYSIS

.................................................................. 2-10 2.13 UTILITY IMPACT ANALYSIS

................................................................................... 2-11 2.14 EMPLOYMENT IMPACT ANALYSIS

....................................................................... 2-11 2.15 ENVIRONMENTAL ASSESSMENT

.......................................................................... 2-12 2.16 REGULATORY IMPACT ANALYSIS

....................................................................... 2-12 2.17 DEPARTMENT OF JUSTICE REVIEW

..................................................................... 2-12

2-iCHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

Section 6317(b)(1) of Title 42, United States C ode (42 U.S.C.), as directed by 346(b)(1) of the Energy Policy and Conservation Act (EPC A), requires the U.S. Department of Energy (DOE) to set forth energy conservation standa rds that are technologically feasible and economically justified, and would achieve the ma ximum improvement in energy efficiency. This chapter describes the general analytical framework that DOE uses in developing such standards and, in particular, sta ndards for small electric motors. The analytical framework is a description of the methodology, analytical tool s, and relationships among the various analyses that are part of this rulemaking. For exampl e, the methodology that addresses the statutory requirement for economic justification includes analyses of life-cycle cost (LCC); economic impact on manufacturers and users; national benefits; impacts, if any, on utility companies; and impacts, if any, from lessening competition am ong manufacturers. DOE will solicited the views of the Department of Justice (DOJ) on any lessening of competition likely to result from the imposition of a proposed standard.

Figure 2.1.1 summarizes the analytical components of the standards-setting process. The columns labeled “Key Inputs” and “Key Outputs” show how the analyses fit into the rulemaking process, and how they relate to each other. Ke y inputs are the types of data and information that the analyses require. Some key inputs exist in public databases; DOE al so collects other inputs from interested parties and persons with special knowledge. Key outputs are analytical results that feed directly into the standards-setting process. Arrows connecting analyses show types of information that feed from one analysis to another.

2-1Figure 2.1.1 Flow Diagram of Analyses fo r the Small Electric Motor Rulemaking Process

2-2The analyses performed prior to the notice of proposed rulemaking (NOPR) stage as part of the preliminary analyses and described in the preliminary technical support document (preliminary TSD) are listed below. These analyses were revised for the NOPR based on new information from comments received, and then revised again for the final rule. They are included as part of the accompanying notice and are reported in this TSD.

• A market and technology assessm ent is conducted to characteri ze the relevant equipment markets and existing technology opti ons, including prototype designs.

• A screening analysis is conducted to review each technology option and determine if it is technologically feasible; is practical to manuf acture, install, and service; would adversely affect equipment utility or equipment availability; or would have adverse impacts on health and safety.

• An engineering analysis is conducted to deve lop the cost-efficiency relationship, which is the increased manufacturer selling prices (material, labor, factory overhead, selling, general and administrative expenses, research and development costs, and profit) of more efficient equipment.

• An equipment price markup analysis is conduc ted to convert the manufacturer’s sellingprice estimates from the engineering analysis to customer prices, which are then used in the LCC and payback period (PBP) analyses and the manufacturer impact analysis (MIA).

• An energy use analysis is conducted to deter mine the annual energy use characteristics of small electric motors.

• LCC and PBP analyses are conducted to calculate, at the customer level, the discounted savings in operating costs (le ss maintenance and repair co sts) throughout the estimated average life of the covered equipment compared to any increase in the installed cost for the equipment likely to result directly from the imposition of the standard.

• A shipments analysis is conducted which forecast s equipment shipments. This analysis is then used to calculate the national impacts of standards on energy consumption and costs, net present value (NPV), and fu ture manufacturer cash flows.

• A national impact analysis is conducted to assess the aggregate impacts at the national level of NPV of total customer LCC and national energy savings (NES).

• A preliminary MIA is conducted to assess th e potential impacts of energy conservation standards on manufacturers such as capital c onversion expenditures, marketing costs, shipments, and research and development costs.

The additional analyses performed for the NOPR stage include those listed below. In addition, DOE re-analyzes the work done in th e preliminary stage based on comments and new information received. These analyses were subs equently revised for the final rule stage and reported in this final rule TSD.

2-3• An LCC sub-group analysis is conducted to ev aluate variations in commercial business type characteristics ( e.g. , energy prices, equipment use patterns, and installation and maintenance costs) that might cause a sta ndard to affect particular customer subpopulations.

• A manufacturer impact analysis is conducted to estimate the financia l impact of standards on manufacturers and to calculate imp acts on competition, employment, and manufacturing capacity.

• A utility impact analysis is conducted to estima te the effects of proposed standards on electric utilities.

• An employment impact analysis is conducte d to assess the aggregate impacts on national employment.

• An environmental asse ssment is conducted to provide es timates of changes in emissions of pollutants from electricity generation ( i.e. , carbon dioxide (CO 2 ), oxides of nitrogen (NO x ), and mercury (Hg).

• A regulatory impact analysis is conducted to present major alternatives to proposed standards that could achieve substantially th e same regulatory goal at a lower cost.

2.2 BACKGROUND

DOE conducted a formal effort to consider fu rther improvements to the process used to develop appliance efficiency standards. DOE called on energy efficiency groups, manufacturers, trade associations, state agencies, utilities, and othe r interested parties to provide input to this effort. As a result of this combined effort, DOE published Procedures, Interpretations and Policies for Consideration of New or Revise d Energy Conservation Standards for Customer Products (the “Process Rule”), 10 CFR 430, Subpart C, Appendix A. The Process Rule outlined the procedural improvements identified by the interest ed parties, and included a review of the: 1) economic models, 2) analytical tools, 3) met hodologies, 4) non-regulatory approaches, and 5) prioritization of future rules.

DOE developed an analytical framework for the small electric motor rulemaking under the Process Rule. DOE documented this analytical framework in the Energy Conservation Standards Rulemaking Framework Docu ment for Small Electric Motors and presented the analytical approach to interested parties dur ing a public meeting on September 13, 2007. This document is available at:

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.h tml.

The following sections describe the differen t analytical components of the rulemaking framework.

2-42.3 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment charact erizes the relevant product markets and existing technology options.

2.3.1 Market Assessment

When initiating a standards rulemaking, DOE develops information on the present and past industry structure and market characteris tics for the equipment concerned. This activity assesses the industry and equi pment both quantitatively and qu alitatively, based on publicly available information. DOE addresses the fo llowing: (1) manufacturer market share and characteristics, (2) existing regulatory and non-regulatory equipment efficiency improvement initiatives, and (3) trends in produc t characteristics and retail market s. This information serves as resource material throughout the rulemaking.

For this rulemaking, DOE reviewed existing literature and interviewed manufacturers to get an overall picture of the small electric motor market in the United States. Product catalogs, third-party experts, and small electric motor manu facturers provided the bulk of the information. The appropriate sections of the final rule describe the analysis and resulting information as reported in the TSD.

DOE uses the most reliable and accurate data available at the time of each analysis in its rulemakings. All data is available for public review.

2.3.2 Technology Assessment

DOE typically uses information about existing and past technology options and prototype designs to help determine which technologies manufacturers us e to attain higher energy performance levels. In consultation with interest ed parties, DOE develops a list of technologies for consideration. Initially, these technol ogies encompass all those it believes are technologically feasible.

For this rulemaking, DOE developed a list of technologically feasible design options after consultation with manufactu rers and third-party experts, as desc ribed in chapter 3 of the TSD.

2.4 SCREENING ANALYSIS

In the screening analysis, DOE screens out technologies that are not technologically feasible; not practicable to manufacture, install, or service; have an adverse impact on equipment utility or availability; or have adverse impacts on health and safety. In the engineering analysis, DOE further considers design options that remain after the screening process.

As described in chapter 4 of the TSD, DOE grouped technologies into the following categories: (1) technology options not screened out that decrease small electric motor losses and the type of motor losses they reduce and (2) tech nology options screened out and the type of motor losses they reduce.

2-52.5 ENGINEERING ANALYSIS

As presented in chapter 5, the engineering analysis establishes the relationship between the manufacturer selling price and efficiency of small electric motors. This relationship serves as the basis for cost/benefit calculations for indivi dual customers, manufacturers, and the Nation. The engineering analysis discusses cost-efficiency curves, product classes analyzed, representative baseline units, the methodology used to develop manufactur ing selling prices, and the methodology used to develop the energy consumption model.

2.5.1 Modified Design Option Approach

In this rulemaking, DOE conducted the engin eering analysis using a modified designoption approach where DOE employed a technical expert with motor design software to develop motor designs at several efficiency levels fo r each analyzed product class. Based on these simulated designs and manufacturer and co mponent supplier data, DOE calculated manufacturing costs and selling pric es associated with each effi ciency level. DOE decided on this approach after receiving insufficient response to its request for the manufacturer data needed to execute an efficiency-level approach for the preliminary analyses. The design-option approach allows DOE to make its engineering analysis methodologies, assumptions , and results publicly available, thereby permitting all interested parties the opportunity to review and comment on this information. The design options considered in th e engineering analysis include: copper die-cast rotor, reduce skew on stack, increase cross-sectio nal area of rotor conductor bars, increase endring size, change gauge of copper wire in stator , manipulate stator slot size, decrease air gap between rotor and stator to 12.5 thousandths of an inch, improve grades of electrical steel, use thinner steel laminations, anneal steel lamina tions, add stack height, use high efficiency lamination materials, change capacitors ratings, install better ball bearings and lubricant, and install a more efficient cooling system. chapter 5 of the TSD contains a detailed description of the product classes analyzed and the analytical models DOE used to conduct the small electric motors engineering analysis and chapter 3 of th e TSD contains a detailed description of how all the design options increase motor efficiency.

2.5.2 Manufacturing Cost Model

DOE used a cost model to estimate the core production cost of small electric motors. This cost model was developed using motor tear downs performed by a third-part expert. The approach for the teardowns involved the disasse mbly of three representative small electric motors on the market today, an analysis of th e materials and manufacturi ng processes, and the development of a spreadsheet model. DOE obtai ned input from interested parties on the small electric motor manufacturer selling prices estimates and assumptions to confirm their accuracy.

2.6 ENERGY USE CHARACTERIZATION

The energy use and end-use load characteriza tion analysis (chapter 6) produces energy use estimates and end-use load shapes for small electric motors. The energy use estimates enable evaluation of energy savings from the operation of small electric motors equipment at various efficiency levels, while the end-use load characterization allows evaluation of the impact on

2-6electricity monthly and peak demand from the ope ration of motors. The analysis produces a distribution of results for a variety of building types and uses covering a range of climate locations in order to represent the diversity of use, and performance, of small electric motors.

2.7 MARKUPS TO DETERMINE EQUIPMENT PRICE

DOE used manufacturer-to-customer markups to convert the manufacturer selling-price estimates from the engineering analysis to customer prices, which were then used in the LCC, PBP, and manufacturer impact analyses. Because retail prices are required for the baseline performance level and all other performance le vels under consideration, DOE obtained these retail prices by applying manufacturer-to-cust omer markups to the manufacturer selling-price estimates.

Before it can develop markups, DOE must id entify distribution channels (i.e., how the equipment is distributed from the manufacturer to the customer). Once it established proper distribution channels for each of the product clas ses, DOE relied on economic data from the U.S. Census Bureau and input from the industry to de termine how much product prices are increased as they pass from the manufacturer to the customer (see chapter 7 of the TSD).

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

New energy conservation standards on equipm ent usually reduce operating expenses and increase customer prices. DOE analyzed the net effect of new standards on customers by evaluating the net LCC using the cost-efficiency relationship derived in the engineering analysis, as well as the energy costs derived from the ener gy use characterization analysis. Inputs to the LCC calculation include the installed cost to the customer (customer price plus installation cost), operating expenses (energy expenses and maintenance costs), the lifetime of the motor, and a discount rate. These inputs are described in detail in chapter 8 of the TSD.

The installed cost typically increases and opera ting cost typically decreases in response to new standards. Thus, there is a specific time in the life of higher-than-baseline efficiency equipment when the net operating-cost benefit (in dollars) from the time of purchase is equal to the incremental first cost of purchasing the more efficient equipment. The length of time required for equipment to reach this cost-equi valence point is known as the payback period.

DOE conducted the LCC and PBP analyses using distributions of values to reflect the conditions in the field for motor life, motor retail price, national or regional energy costs, energy consumption, and discount rates. The life-cycle cost sub-group analysis includes an assessment of impacts on customer sub-groups.

For small electric motors, it was necessary to determine several of the input values for the LCC estimation, including retail prices; electricity prices; discount rate; ma intenance, service, and installation costs; and motor lifetimes.

2-7DOE developed discount rates by estimating the cost of capital to companies that manufacture small electric motors covered under th is rulemaking. DOE commonly uses the cost of capital to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so the cost of capital is the weighted-average cost to the firm of equity and debt financing. This corporate finance approach is referred to as the weighted-average cost of capital.

DOE considered expected changes to maintenance, repair, and installation costs for the motors covered in this rulemaking. Typically, small incremental changes in motor efficiency incur no, or only very small, changes in repair and maintenance costs over baseline efficiency products. There is a greater probability that motors with efficiencies that are significantly greater than the baseline will incur increased repair and maintenance costs since such motors are more likely to incorporate technologies that are new to the industry and not widely available. DOE relied on input from manufacturers a nd other interested parties to develop appropria te repair and maintenance costs. DOE concluded that analys is of repair and main tenance costs was not necessary because small electric motors are not designed to be repaired.

2.9 SHIPMENTS ANALYSIS

One of the more important components of any estimate of future impacts from energy efficiency standards is small electric motor shipme nts (chapter 9). Forecasts of shipments for the base case and each potential standard case are used as an input to the national energy savings (NES) model. DOE developed these shipment forecasts for each of the three covered small motor categories (polyphase, capacitor-start i nduction-run, and capacitor-start capacitor-run motors). Within each motor category, shipments are comprised of products in a number of horsepower ratings and three rotation speeds (c orresponding to 2-pole, 4-pole, and 6-pole motors).

The core of the shipments analysis is an accounting model that the DOE developed to simulate how future purchases are incorporated into an in-service stock of aging motors that are gradually replaced. The model keeps track of the aging and replacement of small electric motor capacity given a projection of future motor sales growth. Small electric motor shipments and a retirement function influence how the motors in service and the supply of motor capacity changes over time. DOE also developed a cross- elasticity model to forecast the effect of standards on the market shares of CSIR and CSCR motors within each combination of motor size and speed; this model is described in chapter 9.

2.10 NATIONAL IMPACT ANALYSIS

The national impact analysis assesses the NPV of total customer LCC and NES. DOE determined both the NPV and NES for the performance levels considered for the product classes analyzed. To make the analysis more accessible and transparent to all interested parties, DOE prepared a NES spreadsheet model in Microsoft Excel to forecast energy savings and the national economic costs and savings resulting from new standards. The NES spreadsheet model does not use probability distributions for inputs or outputs. To assess the impact of input

2-8uncertainty on the NES and NPV results, DOE can conduct sensitivity analyses for future analyses by running scenarios on input variables of concern for interested parties. DOE conducted an assessment of the ag gregate economic impacts at the na tional level as described in chapter 10 of the TSD.

2.10.1 National Energy Savings Analysis

The inputs for determining NES are (1) a nnual energy consumption per unit, (2) shipments, (3) equipment stock, (4) national energy consumption, and (5) site-to-source conversion factors. DOE calculated the nationa l energy consumption by multiplying the number of units, or stock, of small electric motors by the unit energy consumption. Then, DOE calculated national annual energy savings fr om the difference between national energy consumption in the base case (wit hout new efficiency standards) a nd in each higher efficiency standard case. The analysis included estimated energy savings by fuel type used for generating electricity. DOE estimated energy consumption and savings based on site energy, and converted the electricity consumption and savings to source energy. Cumulative energy savings are the sum of the annual NES, which DOE de termined over specific time periods.

2.10.2 Net Present Value Analysis

The inputs for determining NPV are (1) tota l annual installed cost, (2) total annual operating cost savings, (3) discount factor, (4) pr esent value of costs, and (5) present value of savings. DOE calculated net savings each year as the difference between total operating-cost savings (including electricity, repair, and main tenance cost savings) and increases in total installed costs (including equipmen t price and installation cost). DOE calculated savings over the life of the motor, accounting for differences in yearly energy rates. DOE calculated NPV as the difference between the present value of opera ting cost savings and the present value of increased total installed costs. DOE discounted future costs and savings to the present with a discount factor.

DOE calculated increases in total installed co sts as the product of the difference in the total installed cost between th e base case and standards case and the annual shipments in the standards case. Because costs of more effici ent equipment bought in the standards case are higher than the costs of equipment bought in th e base case, price increases appear as negative values in the NPV.

DOE expressed operating cost savings as decreas es in operating costs associated with the lower energy consumption of motors bought in the standards case compared to the base efficiency case. Total operating-cost savings are the product of savings per motor and the number of motors.

2.10.3 Efficiency Scenarios and Trends

Several of the inputs for determining NES ( e.g. , the annual energy consumption per unit) and NPV ( e.g. , the total annual installed cost and the total annual operating-cost savings) depend on the efficiency of the equipment. Thus, DOE developed base case and standards case

2-9efficiency trends. The efficiency trends speci fy the annual historical and forecasted shipmentweighted average equipment efficiencies.

DOE based historical shipment-weighted average efficiency trends for small electric motors on limited catalog efficiency data and test results from representative motor lines. DOE found no evidence of trends toward greater effici ency within the class of covered motors, and therefore did not use an efficiency trend in either the base or standards cases.

DOE based its standards case forecasts ( i.e. , forecasts of efficiency trends after standards take effect) on the use of a roll-up efficiency s cenario and parallel growth trend. Under a roll-up scenario, all motors at performance levels below a prospective standard are moved or rolled up to the minimum performance level allowed under the ne w standard. The distribution of motors at higher efficiency standard levels is unaffected ( i.e. , the motor remains at its pre-standard performance levels). The roll-up efficiency scenario dictates how DOE determined efficiency distributions in the first year a new standard takes effect, but does not define how motor efficiency will be distributed in the future. Under the parallel growth trend, DOE assumes that the standards case efficiency trend parallels the ba se case efficiency trend; in the case of small electric motors this means there was no trend toward higher efficiency in the standards case. In other words, the initial jump in shipment-weighted efficiency that occurs when the standard first becomes effective is maintained throughout the forecast.

2.11 LIFE-CYCLE COST SUB-GROUP ANALYSIS

The LCC sub-group analysis evaluates economic impacts on virtually any group of customers. In analyzing the potential impact of new or amended standards on customers, DOE evaluates the impact on identifiable groups of customers ( i.e. , sub-groups), such as small businesses, that may not be equally affected by a national standard level. In this rulemaking, this analysis examined the economic impacts on diffe rent groups of customers by estimating the average change in LCC and by calculating the fraction of customers that would benefit. DOEanalyzed the potential effect of standards for small businesses and customers with spaceconstrained applications, two consumer sub-groups of interest identified by DOE. For small businesses, DOE analyzed the potential impacts of standards by conducting the analysis with different discount rates, as sm all businesses do not have the sa me access to capital as larger businesses.

2.12 MANUFACTURER IMPACT ANALYSIS

DOE performed an MIA to estimate the financial impact of higher energy conservation standards on small electric motor manufacturers, a nd to calculate the impact of such standards on domestic manufacturing employment and plant capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (GRIM) - an industry-cash-flow model customized for this rulemaking. The GRIM inputs are data characteriz ing the industry cost structure, shipments, and revenues. The key output is the industry net present value (INPV). Different sets of assumptions (scenarios) produce different results. The qualitative part of the MIA addresses factors such as

2-10motor characteristics, characteristics of particul ar firms, and market a nd equipment trends, and includes an assessment of the impacts of st andards on sub-groups of manufacturers.

DOE conducted the MIA in three phases. Phas e one consisted of preparing an industry characterization and identifying key issues. Phase two addressed the broader industry where DOE would use the GRIM to perform an industr y cash flow analysis. DOE also developed a questionnaire for interviewing sm all electric motor manufacturers about the potential impacts of new energy conservation standards on their bus iness during phase two. Phase three involved interviewing manufacturers and adjusting the indust ry cash flow analysis as needed. Phase three also examined any additional impacts on co mpetition, manufacturing capacity, direct employment, and the cumulative burden of other regulations on manufacturers. The complete MIA is outlined in chapter 12 of the TSD.

2.13 UTILITY IMPACT ANALYSIS

The utility impact analysis estimates the effects of reduced energy consumption due to improved appliance efficiency on the utility industry. This utility analysis compares forecast results for a case comparable to the AEO2009 Reference Case and forecasts for policy cases incorporating each of the small electric motors trial standard levels.

The utility impact analysis reports the changes in installed capacity and generation by plant type that result for each trial standard level, as well as changes in electricity sales to the residential, commercial and indus trial sectors. The estimated imp acts of the standard are the difference between the valued forecasted by a variant of EIA’s National Energy Modeling System (currently termed NEMS-BT, BT referring to the DOE’s Building Technologies Program), and the AEO 2009 Reference Case.

2.14 EMPLOYMENT IMPACT ANALYSIS

The imposition of standards can affect employme nt both directly and indirectly. Direct employment impacts are changes in the number of employees at the plants that produce the covered motors and at affiliated distribution and service companies. DOE evaluates the direct employment impacts in the manufacturer impact analysis. Indirect employment impacts may result from expenditures shifting between goods (t he substitution effect) and changes in income and overall expenditure levels (t he income effect). The combined direct and indirect employment impacts are investigated in the employment impact analysis using the “Impact of Sector Energy Technologies” (ImSET) model. The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis to estimate the employment and income effects of energy-saving technologies on buildings, industry, and transportation. Compared to simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of energy conservation investments.

2-112.15 ENVIRONMENTAL ASSESSMENT

The primary environmental effects of energy conservation standards for the small electric motors covered under this rulemaking will be decreased emissions resulting from reduced electrical energy consumption. The environmental assessment tracks the impact of possible standards on CO 2 , NO x , and Hg. DOE bases these calculations on the NEMS-BT modeling work proposed for the utility impact analysis. This approach has the advantage of examining the marginal impact of higher efficiency standards for the covered motors on the utility generation mix and the subsequent environmental emissions.

CO 2 emissions are tracked in NEMS-BT by a de tailed module that produces robust results because of its broad coverage of all sectors and inclusion of interactive effects. NEMS-BT also has an algorithm for estimating Hg and NOx emi ssions from power generation. Details can be found in chapter 15 of the TSD.

2.16 REGULATORY IMPACT ANALYSIS

In the NOPR stage, DOE prepared a regulatory impact analysis (RIA) pursuant to Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993), which is subject to review under the Executiv e Order by the Office of Information and Regulatory Affairs at the Office of Management and Budget. The RIA addressed the potential for non-regulatory approaches to supplant or augment energy conservatio n standards to improve the energy efficiency or reduce the energy consumption of the small electric motors covered under this rulemaking.

2.17 DEPARTMENT OF JUSTICE REVIEW

Section 325(o)(2)(B)(i)(V) of the Energy Polic y and Conservation Act states that before the Secretary of Energy may prescribe a new or amended energy cons ervation standard, the Secretary shall ask the Attorney General to make a determination of “the impact of any lessening of competition...that is likely to result from the imposition of the standard.” (42 U.S.C. 6295) Pursuant to this requirement , DOE solicited the views of the DOJ on any lessening of competition that is likely to result from the impos ition of a proposed standard and gave the views provided full consideration in assessing the ec onomic justification of a proposed standard.

2-12CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CONTENTS

3.1 INTRODUCTION

.............................................................................................................. 1 3.2 MARKET ASSESSMENT

................................................................................................. 1 3.2.1 Small Electric Moto r Definition

............................................................................. 1 3.2.1.1 General-Purpose Alternating-Current Motor

.............................................. 3 3.2.1.2 Categories of Induction Motors

.................................................................. 5 3.2.1.3 Frame Series and Metric Equivalents

......................................................... 6 3.2.1.4 Motor Enclosure

.......................................................................................... 7 3.2.1.5 Horsepower Ratings

.................................................................................... 8 3.2.2 Small Electric Motor Nameplates and Terminology

.............................................. 8 3.2.3 Product Classes

..................................................................................................... 11 3.2.4 Manufacturers and Market Share

.......................................................................... 14 3.2.4.1 Small Businesses

....................................................................................... 15 3.2.5 Application and Performance of Existing Equipment

.......................................... 15 3.2.6 Trade Associations

................................................................................................ 16 3.2.6.1 National Electrical Manuf acturers Association

........................................ 16 3.2.6.2 The Motors and Motion Association

........................................................ 16 3.2.7 Regulatory Programs

............................................................................................ 17 3.2.8 Non-Regulatory Programs

.................................................................................... 17 3.2.8.1 Department of Energy Motor Challenge Program

.................................... 18 3.2.8.2 National Electrical Manufacturers A ssociation Premium Efficiency Motor Program

..................................................................................................... 19 3.2.8.3 Consortium for Energy Efficiency

............................................................ 19 3.3 TECHNOLOGY ASSESSMENT

..................................................................................... 20 3.3.1 Technology Options for I 2 R Losses

...................................................................... 20 3.3.2 Technology Options for Core Losses

................................................................... 22 3.3.2.1 Plastic Bonded Iron Powder

...................................................................... 24 3.3.3 Technology Options for Friction and Windage Losses

........................................ 25 3.3.4 Technology Options for Stray Load Losses

.......................................................... 25 3.3.5 Summary of the Technology Options Under Consideration

................................. 25

LIST OF TABLES

Table 3.1. National Electrical Manufacturers As sociation Standard MG1–1987 Service Factor Requirements of Small Electric Motors

.......................................................................................... 4 Table 3.2 Horsepower Ratings for Which No Motors are Commercially-Available

..................... 8 Table 3.3. Required Small Electric Motor Nameplate Information

.............................................. 10 Table 3.4. Optional Small Electric Motor Nameplate Information

.............................................. 11 Table 3.5 Polyphase Small Electric Motor Product classes

.......................................................... 13 Table 3.6 Capacitor-Start, Induction-Run Sm all Electric Motor Product classes

........................ 14 Table 3.7 Capacitor-Start, Capacitor-Run Small Electric Motor Product classes

........................ 14 Table 3.8. Core Steel Grades, Thicknesses, and Associated Losses

............................................. 24

3-iTable 3.9. Summary of Technology Opti ons for Improving Efficiency....................................... 26

3-iiCHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

3.1 INTRODUCTION

This chapter details the market and technology assessment that the U.S. Department of Energy (DOE) conducted in support of its energy conservation standards rulemaking for small electric motors. The small electric motors rulemaking was initiated under the Energy Policy and Conservation Act (EPCA), Public Law 94–163, as amended, by the Energy Policy Act of 1992 (EPACT 1992), Public Law 102–486. The statute re quires that, if DOE were to adopt energy conservation standards for small electric motors, they would become effective to small electric motors manufactured five years after the publication date of the final rule. a

This chapter consists of two major sections , the market assessment and the technology assessment. The goal of the market assessmen t is to develop a qualitative and quantitative characterization of the small elect ric motors industry. This asse ssment characterizes the market structure based on publicly available information as well as data supplied by manufacturers and other interested parties. Issues include manufacturer characteri stics and market shares, existing regulatory and non-regulatory efficiency improveme nt programs, product classes, and trends in market and equipment characteristics. The goal of the technology assessment is to develop a list of technology options that manuf acturers can use to improve the efficiency of small electric

motors.

3.2 MARKET ASSESSMENT

This section addresses the sc ope of the rulemaking, identifies potential product classes, estimates national shipments of small electric mo tors, and the market shares of small electric motor manufacturers. This section also addr esses typical equipment lifetimes and market performance data, and discusses regulatory and non-regulatory programs that apply to small electric motors.

3.2.1 Small Electric Motor Definition

One of the key documents that relates to the sc ope of coverage for small electric motors is the National Electrical Manufacturers Associat ion (NEMA) Standards Publication MG1 for Motors and Generators. NEMA drafted and main tains the MG1 document, most recently revised in November 2007 as MG1–2006 with Revision 1. MG 1 assists users in the correct selection and application of electric motors and generators. MG1 provides practical information to small

a A Final Rule for Small Electric Motors was published by March 9, 2010. Under section 346(b)(3), any standard for small electric motors “shall apply to small electric moto rs manufactured 60 months after the date such rule is published or, in the case of small electric motors which requi re listing or certification by a nationally recognized test laboratory, 84 months after such date.” (42 U.S.C. 6317(b)(3)) Thus, energy conservation standards for small electric motors apply to motors manufactured after March 9, 2015 and March 9, 2017, respectively.

3-1electric motor manufacturers and users concer ning the construction, testing, performance, and safety of alternating current (AC) and di rect current (DC) motors and generators.

The term “small electric motor” is defined in the statute, and thus, the scope of coverage for this rulemaking is determined by this stat utory definition. Sec tion 340(13)(G) of EPCA defines the term “small electric motor” to m ean “a NEMA general-purpose alternating current b single-speed induction motor, c built in a two-digit frame number series d in accordance with NEMA Standards Publication MG1–1987.” (42 U. S.C. 6311(13)(G)) Such motors include single-phase, capacitor-start induction-run (CSI R), capacitor-start capa citor-run (CSCR), and polyphase motors. DOE addresses the scope of sma ll electric motors covered in the sections that follow. See http://www1.eere.energy.gov/build ings/appliance_standards/comm ercial/small_electric_motors.h tml.

Section 346(b)(3) of EPCA (42 U.S.C. 6317(b)(3 )) requires that a sta ndard prescribed for small electric motors shall not apply to any small electric motor that is a component of a covered product under section 322(a) of EPCA (42 U. S.C. 6292(a)) or of covered equipment under section 340 of EPCA. (42 U.S.C. 6311) Such products and equipment include, for example, residential air conditioners and heat pumps, fu rnaces, refrigerators and freezers, clothes washers and dryers, commercial packaged air-conditioni ng and heating equipment, and commercial refrigeration equipment. Accordingly, the anal ysis does not include small electric motors incorporated into residential and commercial pr oducts either covered or specifically excluded by

statute.

b “General-purpose alternatin g current” is a term that NEMA uses for alternating-current motors that are not designed with a specific application in mind.

c An induction motor converts electrical power into rotational mechanical power. It depends on electromagnetic induction for its operation and has one or more component members capable of rotary movement.

d The terms “two-digit frame number series” and “frame seri es” refer to a motor’s standard system of numbers in combination with letters for designating the size and mounting dimensions of a motor, according to NEMA Standards Publication MG1, “Motors and Generators.” In the case of small motors, frame series is the “D” dimension in inches multiplied by 16. The “D” dimension is measured from the centerline of the shaft to the bottom of the mounting feet. For example, a 48-frame motor would have a “D” dimension of 3.00 inches (16 x 3.00 = 48). Such standard dimensions are essential to fitting a motor to the equipment it drives an d for interchangeability among

motors.

3-2On July 10, 2006, DOE published in the Federal Register its determination that energy conservation standards for small electric motors appear to be technologically feasible and economically justified, and would result in sign ificant energy savings . 71 FR 38807. A key issue that arose early in the analytical process was interpretation of the EPCA definition of a small electric motor and precisely which motors are covered. The EPCA definition identifies several key terms that are defined in NEMA MG1–1987, such as general-purpose, alternatingcurrent and two-digit frame series. Thus, EPCA’s definition of a small electric motor is tied to NEMA MG1–1987 terminology and performance re quirements established for (1) generalpurpose alternating-curr ent motors, (2) various categories of induction motors, and (3) the definition of two-digit frame number series. In the following subsections, DOE addresses elements of the definition of “small elec tric motor” that need clarification.

3.2.1.1 General-Purpose Alternating-Current Motor

One element in the statutory definition of small electric motors that derives from NEMA MG1–1987 is “general-purpose, alternating-cu rrent.” Paragraph MG1–1.05 sets forth the definition:

A general-purpose alternating-current motor is an induction motor, rated 200-horsepower and less, which incorporat es all of the following: (1) open construction e , (2) rated continuous duty, (3) service factor in accordance with MG1-12.47, and (4) Class A insulation system with a temperature rise as specified in MG1-12.42 for small electric motors or Class B insulation system with a te mperature rise as specified in MG1-12.43 for medium motors. It is designed in standard ratings with standard operating characteristics and mechanical construction for use under usua l service conditions with out restriction to a particular application or type of application.

The four criteria that NEMA used in MG1- 1987 to define a general-purpose alternatingcurrent motor are open construction, continuous duty, service factor, and a Class A insulation system.

Open construction refers to the type of enclosure that houses the motor. An open construction enclosure allows outside air to pass through and cool the motor when it is operating. Electric motors are also manufactured with enclosed construction housings, which do not circulate external air for cooling.

A motor rated for continuous duty can operate a driven machine indefinitely at the rated load, speed, and temperature without injury to th e motor. The statutory language directs DOE to cover and evaluate general-purpo se alternating-currentmotors, which are rated for continuous

e NEMA MG1–1987 defines each of the following motors, in part, as “an open machine”: drip-proof, splash-proof, semi-guarded, guarded, dripproof guarded, open externally ventilated, open pipe-ventilated, and weather-protected (Type I and Type II).

3-3duty (as opposed to intermittent duty). Therefor e, in this rulemaking, DOE covers only those motors rated for continuous duty.

MG1–1987 defines general-purpose alternating-current motors as having a service factor in accordance with MG1–12.47 . The service factor is a measure of the overload capacity at which a motor can operate without damage, while operating normally within the correct voltage tolerances. The rated horsepower (hp) multiplied by the service factor gives that overload capacity. For example, a 1-horsepower motor with a 1.25 service fact or can operate at 1.25­ horsepower (1-horsepower x 1.25 service factor). NEMA MG1–1987 requires that the service factor for general-purpose alternating-current motors be in accordance with MG1–12.47 . (See Table 3.1.) Therefore, in this rulemaking, DOE cove rs only those small electric motors that meet the NEMA service factor requirements.

Table 3.1. National Electrical Manufacturers Association Standard MG1–1987 Service Factor Requirements of Small Electric Motors Horsepower Required Service Factors by Synchronous Speed (rpm)
3,600 1,800 1,200

1/4 1.35 1.35 1.35

1/3 1.35 1.35 1.35

1/2 1.25 1.25 1.25

3/4 1.25 1.25

-

1 1.25

- -

The MG1–1987 definition of “general-purpose alternating-current motor,” in part identifies a small electric motor as one that in corporates a Class A insulation system with a temperature rise as specified in MG1–12.42

. In NEMA MG1-1987, paragraphs 1.66 and 12.42.1 define four insulation class systems: Class A, Cl ass B, Class F, and Class H. They are divided into classes based on the thermal endurance and each system has a different temperature rise that the insulating material must be able to with stand without degradation. The temperature rise requirement for Class A systems is the lowest of the four systems defined in NEMA MG1-1987, which means that all other insulation classes m eet Class A requirements. Because all insulation class systems meet the Class A requirements, small electric motors w ith class A insulation system or higher are cons idered covered product.

Lastly, MG1–1987 requires that a general-purpos e alternating-current motor be designed in standard ratings with standard operating ch aracteristics and mechanical construction for use under usual service conditions without restrictio n to a particular application or type of application. This provision is consistent with the definition of “general-purpose motor” under section 431.12 of Title 10 of the Code of Fe deral Regulations, Part 431 (10 CFR Part 431). Essentially, both MG1–1.05 and 10 CFR 431.12 requi re general-purpose motors to meet “standard ratings,” which are generally understood to mean any performance or physical characteristics established as a rule or model by authority, custom, or general consent. The

3-4NEMA Standard MG1 is based on general c onsent, meaning that NEMA members who manufacture motors and generators covered in MG1 can vote to approve the document.

For small electric motors, examples of standa rd ratings include minimum breakdown torque, minimum locked-rotor torque, and maximum lock ed-rotor current. Such requirements limit the scope of covered small electric motors. For example, the breakdown torques of many shadedpole and permanent-split capacitor motors (which are single-phase motors) do not fall within the breakdown torque ranges of MG1-1987.

Of the motors satisfying the frame-size re quirement of the EPCA definition of “small electric motor” and “built in a two-digit fr ame number series in accordance with NEMA Standards Publication MG1–1987,” only a subset incorporates the other performance requirements of a general-purpose moto r under NEMA MG1–1987, paragraph 1.05. Among single-phase motors with a two-di git frame series, DOE found that only capacito r-start motors– including CSIR and CSCR–can meet the tor que requirements for NEMA general-purpose motors. Among three-phase small electric motors, only non-servo motors can meet the NEMA performance requirements for general-purpose moto rs. Hence, DOE’s analysis only covers the capacitor-start categories of single-phase motors and three-phase small electric motors.

3.2.1.2 Categories of Induction Motors

The statutory definition also requires that a small electric motor be a single-speed induction motor “built in accordance with NEMA MG1–1987.” DOE identified six categories of alternating current single-speed induction motors: split-phase, f shaded-pole, g capacitor-start (both CSIR h and CSCR i ), permanent-split capacitor (PSC), j and polyphase. k In the discussion that follows, DOE explains its review of thes e six induction motor categories and its conclusion that the CSIR, CSCR, and polyphase motors ar e the only three categories which are covered under EPCA.

DOE eliminated split-phase, PSC, and shaded -pole motors from consideration because they are not designed as and do not meet the performance requirements of general-purpose motors. Split-phase motors are designed for sp ecific purposes and appl ications, and generally

f A split-phase motor is a single-phase induction motor eq uipped with an auxiliary winding displaced in magnetic position from, and connected parallel to, the main winding. Unless otherwise specified, DOE assumed that the auxiliary circuit is open when the motor attains a predet ermined speed. The term “split-phase motor” describes a motor to be used without impedance other than that offered by the motor windings themselves.

g A shaded-pole motor is a single-phase induction moto r provided with an auxiliary short-circuited winding or windings displaced in magnetic position from the main winding.

h A capacitor-start, induction-run motor is a single-phase motor with a main wi nding arranged for direct connection to a source of power and an auxiliary winding connected in series with a capacitor. The motor has a capacitor phase, which is in the circuit only during the starting period.

i A capacitor-start, capacitor-run motor is a single-phase motor with different values of effective capacitance for the starting and running conditions. j A permanent-split capacitor motor is another category of si ngle-phase motor that has the same value of capacitance for both starting and running conditions.

k A polyphase motor is an electric motor that uses the phase changes of the electrical supply to induce a rotational magnetic field and thereby supply torque to the rotor.

3-5for applications that are short-time rated. Al so, split-phase motors do not meet the breakdown torque requirements or the lock ed-rotor torque requirements while simultaneously maintaining the locked-rotor current require ments that have been established in NEMA for general-purpose motors. In some cases, split-phase motors are components of produc ts covered under EPCA sections 322(a) and 340, 42 U.S.C. 6292(a) and 6311, respectively and are otherwise excluded from coverage by statute. (42 U.S.C. 6317(b)(3)) Similarly, PSC motors used in fans, business machines, and hermetic motor compressors do no t meet the torque requirements for NEMA general-purpose motors. Shaded-pole motors that are generally intended for intermittent operation in applications such as rotisseries , fans, humidifiers, small business machines, advertising machines, copiers, vending machines and advertising displays also do not meet the performance requirements. These shaded-pole mo tors tend to have low efficiency ratings ( i.e.

, less than 50-percent) and are so ld in high volume. However, DOE believes that because PSC and shaded-pole motors do not meet the perfor mance characteristics for NEMA general-purpose motors, which are required under EPCA sec tion 340(13)(G), 42 U.S.C. 6311(13)(G), and identified in NEMA MG1–1.05 , and therefore are not covered categories of induction motors.

The remaining categories of small electri c motors include CSIR, CSCR, and polyphase motors. In view of its July 2006 determina tion (71 FR 38799), DOE re-examined the standard performance characteristics, construction spec ifications, and ratings for these three motor categories. DOE concluded that they meet the EPCA requirements for small electric motors. Furthermore, CSIR, CSCR, and polyphase small el ectric motors are manufactured in two-digit frame series, can be rated for continuous-duty applications, and can m eet other performance requirements for general-purpose motors, includ ing the torque requirements in NEMA MG1– 1987. Therefore, DOE addresses thr ee categories of small electric mo tors in today’s rulemaking: single-phase CSIR, single-phase CSCR, and polyphase.

3.2.1.3 Frame Series and Metric Equivalents

Another element in the statutory definition is th at a small electric motor is “built in a twodigit frame number series in accordance w ith NEMA Standards Publication MG1–1987.” NEMA MG1–1987 establishes a system of numbers and letters for designating motor frames. The frame number for a small electric motor is de termined by measuring the distance in inches between the centerline of the sh aft to the bottom of the mount ing feet and multiplying by 16. The two-digit frame series encompasses NEMA frame series 42, 48, and 56. Two-digit NEMA frames have standard dimensions and tolera nces specified in NE MA Standard MG1-1987 paragraphs 11.31 and 11.34, which are necessary for mounting and interchangeability among general-purpose applications.

DOE understands that manufacturers produce ot her two-digit frame series, namely a 66 frame series. The 66 frame series is used for definite-purpose or special-purpose motors and not used in general-purpose applications and ther efore not covered under th e EPCA definition of “small electric motor.” At this time, DOE is unawa re of any other motors with frame series that are built in accordance with NEMA MG1-1987, but should such frame series appear, DOE will evaluate whether or not they are included equipment at that time.

3-6DOE is concerned about metric equivalents for the two-digit NEMA frame series, the uncertainty about cross-references , and the potential issues with imports of small electric motors, whether manufactured alone or as a com ponent of another piece of equipment.

EPCA section 340(13)(F), as amended by EPCA 1992, 42 U.S.C. 6311(13)(F), defines small electric motors in terms of “N EMA Standards Publication MG1–1987,” whose construction and rating system uses English un its of measurement and output ratings in horsepower. l In contrast, general-purpose electric motors manufactured outside the United States and Canada are defined a nd described with refe rence to the International Electrotechnical Commission (IEC) Standard 60034–1 series, “Rotati ng electrical machines,” which use different terminology and criteria than EPCA. The performa nce attributes of these IEC motors are rated pursuant to IEC Standard 60034–1, “Rating and pe rformance,” which uses metric units of measurement, a different construction and rating system than NEMA MG1–1987, and output ratings in kilowatts instead of out put ratings in horsepower. Standa rds exist, such as the Institute of Electrical and Electronics Engineers Standard 112, which de fine the relationship between horsepower and watts or kilowatts. Further, 10 CFR 431.12 (2008) defines “electric motor” in terms of NEMA and IEC equivalents, and 10 CFR 431.25 provides a table of horsepower and kilowatt equivalent ratings, which DOE views as a precedent for similar treatment of small electric motors.

Although the statutory definition of small el ectric motor does not address metric or kilowatt-rated motors, DOE believes that EPCA cove rs any motor that is equivalent to or can beused as a substitute for a covered small electric motor. Generally, IEC metric or kilowattequivalent motors can perform the identical functions of sma ll electric motors and provide comparable rotational mechanical power to the same machines or equipment. In other words, IEC metric or kilowatt-equivalent motors can be interchanged with small electric motors as defined by NEMA standards. A given commercial central air conditioner, for example, could operate with either an IEC moto r or NEMA motor with little or no effect on performance. Therefore, DOE interprets EPCA to mean that a “small electric motor” is any motor that is identical or equivalent to a motor constructe d and rated in accordan ce with NEMA MG1 and covered by the statute. Othe rwise, placing energy efficien cy requirements on NEMA small electric motors, but not on equi valent IEC or kilowatt-rated sm all electric motors, could give preferential treatment to th e latter, when DOE establishes minimum energy conservation standards for the NEMA small electric moto rs, but not the IEC equivalent motors.

3.2.1.4 Motor Enclosure

DOE examined the definition of “general-pur pose, alternating-current” motor as it appears in NEMA Standard MG1–1987. It explicitly states that a genera l-purpose, alternatingcurrent motor incorporates an “open constructio n.” Later versions of NEMA Standard MG1 revised the definition and expande d it to incorporate open or encl osed construction. However, this is not the case with the EPCA-directed defini tion. DOE considered this and believes that the reference MG1-1987 applies to all facets of the statutory definiti on of a small electric motor.

l The Energy Independence and Security Act of 2007 (EISA 2007), renumbered EPCA section 340(13)(F) (42 U.S.C. 6311(13)(F)) to be section 340(13)(G) (42 U.S.C. 6311(13)(G)). There was no change in the language.

3-7The language of the statute specifies that the requirements of MG1-1987 apply in determining what constitutes a small electric motor. DOE's a pplication of that definition is consistent with that language. Similarly, because the statute sp ecifically mentions MG1-1987 as the version of MG1 on which DOE should relay, the 1987 version is the only applicable version of NEMA MG1. Accordingly, consistent with MG1-1987, only CSIR, CSCR, and polyphase motors with open construction meet the statutory definition.

3.2.1.5 Horsepower Ratings

Small electric motors built in a two-digit frame number series have horsepower ratings ranging from 1⁄4- to 3-horsepower. However, upon examining manufacturer catalogs, DOE found that motors do not exist for some horsepower ratings in certain pol e configurations. Specifically, DOE found that no open construc tion, two-digit frame size moto rs have horsepower ratings greater than 3-horsepower. In addition, DOE fo und no small electric polyphase motors built with a 2- or 3-horsepower rating and a six-pole configuration. DOE also found that small electric single-phase motors (CSIR and CSCR) do not exist with a 11⁄2-horsepower rating or higher for six-poles or a 3-horsepow er rating for four-poles. As th ere is no evidence that these motors, if manufactured, would be considered general purpose motors, and because DOE lacks data on which to base energy conservation stan dards for these motors, DOE is not including them in the scope of this rulemaking. Table 3.2 presents the horsepower ratings for which DOE believes no small electric motors are currently commercially available.

Table 3.2 Horsepower Ratings for Which No Motors are Co mmercially-Available Motor Category Two-Pole Four-Pole Six-Pole Polyphase ≥ 2 Hp Single-Phase ≥ 3 Hp ≥ 1.5 Hp

3.2.2 Small Electric Motor Nameplates and Terminology

The National Fire Protection Association (N FPA) Standard 70, “National Electrical Code,” article 430.7, and NEMA MG1 paragraph 10.39 prescribe a consistent set of required information that is reported on all motor nameplat es. This information enables a motor user to purchase and install a motor that is appropriate for a particular application. NFPA Standard 70 and MG1 each require that an electric motor na meplate be marked with information that includes, but is not limited to:

 manufacturer's name;

 frame designation;

 rated voltage;

 rated full-load current;

 rated frequency;

 number of phases;

 rated full-load speed;

3-8 rated temperature rise or the insulation sy stem class and rated ambient temperature;

 rated horsepower;

 time rating;

 code letter for locked-rotor amperes; and

 thermal protection.

In Table 3.3, DOE provides a brief descripti on of each of the fields that NFPA 70 and NEMA Standard MG1 require on the motor nameplate.

3-9Table 3.3. Required Small Electric Motor Nameplate Information

Frame Designation Frame series numbers represent stan dardized designations for size and dimensions. For small electric motors, the frame series are two digits, determined by the shaft height of the motor from the bottom of the base in sixteenths of an inch. For example, a 56-frame motor would have a shaft height (“D” dimension) of 56/16 of an inch, or 3.5 inches. For metric motors, the frame series is also the shaft height of the motor from the bottom of the base, but the height is noted in millimeters rather than sixteenths of an inch. Rated Voltage Rated voltage is the design voltage at which an electric motor will yield optimal performance. In general, mo tors should be capable of operating within a 20% band of the rated voltage, 10% above to 10% below.

Rated Full-Load Amperage The rated full-load amperage represents the amperage consumption when the motor reaches full-load torque. The value is determined by testing a sample of motors, and is usually rounded up to allow for slight variations in manufacturing that may increase the fu ll-load amperes. The purpose of the full-load amperage is to enable appr opriate sizing of power supply wiring and any overload protection devices.
Frequency For the North American market , motors are designed to operate on alternating current at 60 He rtz (cycles per second).

Phase Single-phase and three-phase motors are available in the United States.

Rated Full-Load Speed The rated full-load speed is the appr oximate rotations per minute of the motor under full-load conditions at a sp ecified voltage and frequency. The full-load speed is typically 95% to 99% of the no-load speed.

Insulation Class and Rated Ambient Temperature Insulation class and allowable maxi mum ambient temperature denote the operating parameters of an electric mo tor, which directly relates to motor operating life. The maximum temperature ( i.e. , hot spot) is a combination of motor design and ambient temperature.

Rated Horsepower Rated horsepower is a measure of how much work a motor is expected to perform. Horsepower is based on fu ll-load speed and torque rating, as follows: Horsepower (hp) = [(Motor Sp eed) × (Torque (lb-ft))] ÷ 5,250. Time Rating Time rating states whether the motor is rated for continuous duty (24 hours per day / 7 days per week) or certai n “short-time” requirements, ranging from 5 to 60 minutes. In this rulemaki ng, all small electric motors are rated for continuous duty.

Locked-Rotor Code Letter Starting an AC motor creates an inrush current that is usually several times greater than the full-load current. The inrush curren t may be large enough to cause a voltage dip that affects other equipment. Manufacturers provide the inrush current in motor performan ce specification sheets (“locked-rotor current”) and as a coded letter on the nameplate.

Manufacturer's
Name The name of the motor’s manufactur er must appear on the nameplate.

3-10In addition to the above information, manuf acturers of small electric motors may voluntarily include information, such as serv ice factor, efficienc y, and power factor. Manufacturers usually provide such information because it facilitates purchasing and allows maintenance personnel to quickly identify an appropriate replacement motor. Table 3.4 contains some of the optional information that may be found on motor nameplates.

Table 3.4. Optional Small Electri c Motor Nameplate Information
Service Factor This measure indicates how much overload a motor can withstand when operating normally within the correct voltage tolerances. The standard service factor for a 1-hor sepower open motor with a rated full-load speed of 1800 revolutions per minute is 1.15. This means that such a motor could provide 1.15-horsepower when operated at its service factor. Small electric motors are also designed with higher service fact ors, such as 1.25 or 1.35.

Full-Load Efficiency Full-load efficiency is a measure of th e motor’s ability to effectively convert electrical power into mechanical powe r and is expressed as a percentage.

Power Factor This value is represented by the ratio of the motor load in watts divided by voltage-amperes at full-load. Power f actor varies directly with loading, generally increasing with load percentage.

3.2.3 Product Classes

In general, DOE identifies a class of cove red equipment by the type of energy used, capacity, and performance-related features that a ffect consumer utility or efficiency. Different energy conservation standards may apply to diff erent equipment classes. DOE established 62 equipment classes for small electric motors, ba sed on the following criteria: motor category, number of poles, and horsepower. As these moto r characteristics change, so does the utility and efficiency of the small electric motor. The lists below identify these three characteristics. There are three motor categories, three pole configurations, and eight horsepower ra tings that affect energy consumption or efficiency, resulting in 62 combinations, or product classes. As discussed earlier several horsepower/pole configuration combinations are excluded from coverage.

1. Motor Category ( i.e. , start and run ch aracteristics)

 polyphase

 capacitor-start, induction run (CSIR)

 capacitor-start, capacitor run (CSCR)

2. Number of Poles

 2

 4

 6

3-113. Horsepower

 1/4

 1/3

 1/2

 3/4

 1

 1 1⁄2

 2

 3

First, the motor category depends on its st arting and running electrical characteristics. These characteristics are important because they can affect the motor’s utility and potential for improving efficiency, which are factors that distinguish equipment classes. In some manufacturers’ catalogs, CSCR motors are listed as more effi cient versions of CSIR motors. However, it is not always possible to replace a CSIR motor with a CSCR motor due to the run capacitor, which is often mounted in an external housing on the motor. In some applications, the second capacitor mounted on the motor may physically prohibit it from re placing a CSIR motor.

Second, the number of poles in an induc tion motor determines the synchronous speed ( i.e. , revolutions per minute). There is an inve rse relationship between number of poles and speed: as you increase from two to four to six poles, the synchronous speed drops from 3,600 to 1,800 to 1,200 revolutions per minute. The number of poles has a direct impact on the motor’s performance, including efficiency. Consequently , DOE uses the number of poles as a means of differentiating among product classes.

Third, in general, efficiency scales with horsepower, or in other words, a 3-horsepower motor is usually more efficient than a 1⁄4-hor sepower motor. Horse power is a critical performance attribute of an electric motor, and si nce there is a direct corr elation with efficiency, DOE uses this as a criterion for distinguishing among product classes.

Table 3.5 through Table 3.7 present the 62 produ ct classes (PC) for polyphase, CSIR and CSCR motors, broken down by numb er of poles and horsepower/st andard kilowatt equivalent ratings. For DOE’s minimum energy conservation st andards for small electric motors, each “PC” cell in the following table is replaced by the a pplicable average full-load efficiency value.

3-12Table 3.5 Polyphase Small Electric Motor Product classes Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW PC # 1 PC # 2 PC # 3 1/3 hp/0.25 kW PC # 4 PC # 5 PC # 6 1/2 hp/0.37 kW PC # 7 PC # 8 PC # 9 3/4 hp/0.55 kW PC # 10 PC # 11 PC # 12

1 hp/0.75 kW PC # 13 PC # 14 PC # 15 11⁄2 hp/1.1 kW PC # 16 PC # 17 PC # 18 2 hp/1.5 kW

- PC # 19 PC # 20

≥ 3 hp/2.2 kW

- PC # 21 PC # 22

3-13Table 3.6 Capacitor-Start, Induction-Run Small Electric Motor Product classes Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW PC #23 PC # 24 PC # 25 1/3 hp/0.25 kW PC #26 PC #27 PC #28 1/2 hp/0.37 kW PC #29 PC # 30 PC # 31 3/4 hp/0.55 kW PC #32 PC # 33 PC # 34

1 hp/0.75 kW PC #35 PC # 36 PC # 37 11⁄2 hp/1.1 kW

- PC #38 PC # 39 2 hp/1.5 kW

- PC #40 PC # 41

≥ 3 hp/2.2 kW

- - PC #42

Table 3.7 Capacitor-Start, Capacitor-Run Small Electric Motor Product classes Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles

1/4 hp/0.18 kW PC #43 PC #44 PC #45 1/3 hp/0.25 kW PC #46 PC #47 PC #48 1/2 hp/0.37 kW PC #49 PC #50 PC #51 3/4 hp/0.55 kW PC #52 PC #53 PC #54

1 hp/0.75 kW PC #55 PC #56 PC #57 11⁄2 hp/1.1 kW

- PC #58 PC #59 2 hp/1.5 kW

- PC #60 PC #61

≥ 3 hp/2.2 kW

- - PC #62

3.2.4 Manufacturers and Market Share

Five large manufacturers dominate the small elec tric motor market for this rulemaking:

 A.O. Smith Electrical Products Company;

 Baldor Electric Company;

 Emerson Motor Technologies;

 Regal-Beloit Corporation; and

 WEG Electric Motors Corporation.

The five manufacturers identified above ar e all major manufacturers with diverse portfolios of product offerings, including small el ectric motors covered under EPCA. Over the past decade, there has been a consolidation of motor manufacturing in the United States and, in

3-14part, the limited number of small electric mo tor manufacturers is a result of mergers and acquisitions occurring over the last few decades.

DOE does not have empirical data on the mark et shares of particular manufacturers of small electric motors. Nevertheless, estimates of available cumulative data indicate that shipments of small electric motors from these fi ve companies constitute over 50-percent of the total U.S. market.

3.2.4.1 Small Businesses

The small electric motor market is predominantly supplied by large manufacturers. DOE examined those small businesses that manufacture sm all electric motors during the several stages of the rulemaking. In general, the Small Business Administration (SBA) defines a small business manufacturing enterprise for “motor a nd generator manufacturing” as one that has 1,000 or fewer employees. The number of employees in a small business is rolled up with the total employees of the parent company; it does not represent the division manufacturing small electric motors. SBA lists small business size st andards for industries as they are described in the North American Industry Classification System (NAICS). For small electric motors, the size standard is matched to NAICS code 335312, Motor and Generator Manufacturing. 1

DOE found that there are no sma ll businesses that manufacture th e type of small electric motors covered by this rulemaking. While ma ny small businesses exist that produce small electric motors, none of these companies produce mo tors that meet the criteria to be covered by this rulemaking. For example, St erling Electric manufactures a line of small electric motors that meet most criteria (open enclosur e, general-purpose, etc.), but th e motors are not two-digit frame series, and therefore are not covered by this rulemaking.

3.2.5 Application and Performance of Existing Equipment

The general-purpose CSIR, CSCR and polyphase small electric motors covered are used in a fairly wide range of applic ations, including the following:

 blowers

 compressors

 commercial clothes dryers

 conveyors

 fans

 heating, ventilation, and air-conditioning equipment

 medical equipment

 packing machinery

 pumps

3-153.2.6 Trade Associations

DOE is aware of two trade associations fo r manufacturers of small electric motors: the National Electrical Manufacturer s Association (NEMA) and the Motors and Motion Association (SMMA). m All five major manufacturers discusse d above are members of NEMA and SMMA.

3.2.6.1 National Electrical Manufacturers Association

NEMA was established as a trade association in 1926, and ha s since been divided into four groups that provide different functions for its members:

 NEMA/TEC, Technical Services Department

 NEMA/GOV, Government Relations Department

 NEMA/PAC, Political Action Committee

 NEMA/BIS, Business Information Services

Through these groups, NEMA helps to st andardize the performance, size, and functionality of electrical equi pment for its members. An example of NEMA’s role in standardization is the NEMA Standard MG1 document, n which is a reference document for motor and generator manufacturers and users. NEMA Standard MG1 provides guidance to motor manufacturers on performance and constructi on specifications for a broad range of electric motors. By standardizing around certain parameters, NEMA makes it easier for users to identify and purchase electric motors. NEMA Standard MG1 is a complete industry reference document for standardizing the motors offered in the market. 2

In addition to MG1, NEMA established and pr omoted a high efficiency standard for electric motors through the “NEMA Pr emium®” label for qualifying motors. o NEMA motor manufacturers attach this label to motors that ar e built to prescribed high efficiency standards. These standards exceed the minimum require ments established by EPACT 1992, which requires general-purpose motors from 1- to 200-horsepower to meet certain minimum efficiency levels. See section 3.2.8 for more discussion on these minimum efficiency levels.

3.2.6.2 The Motors and Motion Association

SMMA is a trade association focused on el ectric motors and motion control products. SMMA has over 120 members, including manufac turers, suppliers, users, consultants, universities, and distributors . SMMA supports its members through programs and services, including annual conferences, in-house educa tional courses from the SMMA Motor and Motion College, the publication of indus try market trend data, and small electric motor research activity. p

m

For more information about The Motors and Motion Association, visit www.smma.org . Likewise, for information about NEMA, visit www.nema.org.

n NEMA’s MG1 document can be purchased online at www.nema.org/stds/MG1.cfm

. o NEMA’s Premium ® Motors program can be reviewed at www.nema.org/gov/energy/efficiency/premium

. p Information about the SMMA Motor and Motion College can be obtained at http://www.smma.org/MotorMotionCollege.htm.

3-16In 1995, SMMA founded the Electric Mo tor Education and Research Foundation (EMERF), whose mission is “to advance and promote the electric motor industry through education, pre-competition research, and facilita tion of technology transfer within the industry and in cooperation with academic, private research and governme ntal organizations.” 3 EMERF is important because it is a segment of the SMMA that promotes energy efficiency through teaching and providing information on new motor technologies.

3.2.7 Regulatory Programs

Under EPCA, as amended by EPACT 1992, eac h general-purpose th ree-phase induction motor, which is covered by definition and manufactured for distribution in commerce in the United States, is required to have a nominal full-load efficiency that is not less than the efficiency in 10 CFR 431.25. The output ratings of these electric motors are from 1- to 200­ horsepower and, as such, there appears to be so me overlap with the 1- to 3-horsepower small electric motors covered in this rulemaking. Ho wever, the electric motors covered under the EPACT 1992 amendment are defined as “T-f rame” and constructed according to NEMA standard three-digit frame series dimensions for mounting and interchangeability. The small electric motors covered in the analysis are, by definition, built in a “two-digit frame number series” for which the dimensions for mounting an d interchangeability are fundamentally different from “T-frame” motors. This one element in the definition of “small electric motor,” distinctly separates the identity of “small electric mo tors” from “electric motors” covered by EPCA. Therefore, DOE concludes that there is no ove rlap between these covered electric motors.

In general, EPCA, as amended by EISA 2007, c overs certain categori es of motors other than those already covered under the EPACT 1992 amendment and for some, it extends the upper limit of the output power range from 201-hor sepower to 500-horsepower . For all of these motors, EISA 2007 prescribes nominal full-load efficiency levels as defined in NEMA MG1– 2006, Table 12–11. Further, for those electric motors already covered under the EPACT 1992 amendment, EISA 2007 prescribes nominal full-lo ad efficiency levels as defined in NEMA MG1–2006, Table 12–12. EISA 2007 does not however, address efficiency levels for small electric motors that are the subject of this analysis.

Nevertheless, EPACT 1992 amended EPCA to c over “small electric motors” and directed the Secretary of Energy to make a determination as to whether energy conservation standards for covered small electric motors would be techno logically feasible, econom ically justified, and would result in significant energy savings. 42 U.S. C. 6317(b). Based on its analysis of available information, DOE determined that energy conser vation standards for the defined small electric motors appear to meet these criteria. 71 FR 38807. As a result, DOE undertook a rulemaking process for small electric motors as directed by EPCA.

3.2.8 Non-Regulatory Programs

DOE reviewed voluntary programs that promot e energy efficient electric motors in the United States, including the DOE Motor Challe nge program, NEMA Premium energy efficient motors program, and Consortium for Energy E fficiency (CEE) Premiu m Efficiency motors

program.

3-173.2.8.1 Department of Energy Motor Challenge Program

In general, motor-driven equipment accounts fo r more than 70-percent of all electricity consumption by U.S. industries. In 1993, DOE launched its industry/government partnership, Motor Challenge Program with the goals of incr easing the energy-efficiency of electric motordriven systems in domestic indus try and enhancing environmental quality. The program uses a market-driven approach to promote the desi gn, purchase, installation, and management of energy-efficient electric motors and motor-driven systems and equipment, such as pumps, fans, and compressors. It was designed to help indus try capture 5 billion ki lowatt-hours per year of electricity savings and 1.2 million metric tons of carbon equivalent by the year 2000, with projections of much larger and longer-term national energy savings opportunities of over 100 billion kilowatt-hours per year by the year 2010. q

The Motor Challenge program encompasse s three-phase 60 Hertz motors rated 1­ horsepower and above. Its elemen ts and offerings include: the DOE Energy Efficiency and Renewable Energy (EERE) Inform ation Center, which provides up- to-date information about the practicality and profitabili ty of electric motor system strate gies; design decision tools, such as MotorMaster+ software; Showcase Demonstr ation projects; trai ning; workshops; and conferences. In general, the response to the program from industry has been overwhelmingly favorable. The Motor Challenge program is no longer active; however, the EERE Information Center and the MotorMaster+ database of industrial motors remain viable.

The EERE Information Center answers ques tions on energy efficient products and services and refers callers to the most appropr iate DOE/EERE resources. Industrial callers are eligible for an advanced level of service that includes engineering a ssistance, research, and software support for plant staff and industrial service providers worki ng on industrial energy savings projects. r

MotorMaster+ is an energy-efficient moto r selection and management tool, which includes a database of over 20,000 electric motors. It features motor inventory management tools, maintenance log tracking, efficiency an alysis, savings evaluation, energy accounting, and environmental repo rting capabilities. s Recently, MotorMaster+ has been expanded to include an International Electrotechnical Commission 50 Hertz database that contains 0.03, 0.04, 0.06, 0.09, 0.12, 0.15, 0.18, 0.25, 0.3, 0.37, 0.45, 0.55, and 0.75 kW motors – the equivalent of polyphase small electric motors, but rated in kilowatts . Many manufacturers ha ve supplied data to MotorMaster+ that was outside the scope of sma ll electric motors, nevertheless, the database could be expanded in the future to include small electric motors.

q For more information about DOE “Bes tPractices,” under the DO E Industrial Technologi es Program, and Motor Challenge, visit http://www1.eere.energy. gov/industry/bestpractices/index.html.

r For more information about the EERE Information Center, visit https://www .eecbg.energy.gov/informationcenter/.

s For more information about MotorMaster+, visit www1.ee re.energy.gov/industry/bestpractices/software.html#mm.

3-183.2.8.2 National Electrical Manufacturers Asso ciation Premium Efficiency Motor Program

On January 11, 1989, NEMA established volunt ary energy efficiency levels for 1- through 200-horsepower, polyphase squi rrel-cage induction motors. Fo r an electric motor to be classified as “energy efficient,” it was required to meet certain levels of efficiency in NEMA Standards Publication MG1–1987 (Revised March 1991). In 1992, the NEMA efficiency levels were incorporated into secti on 342(b) of EPACT 1992 and subse quently codified in 10 CFR 431.25. In 2001, the NEMA Premium Efficiency Mo tor Program was established to provide special recognition to electric moto rs that exceed the required e fficiency levels established by EPACT 1992. NEMA Premium labeled motors help purchasers identify more efficient motors and optimize motor system efficiency comme nsurate with a particular application. 4 t

Going a step beyond EPACT, NEMA Premium applies to single-speed, polyphase; 1- to 500-horsepower; 2-, 4-, and 6-pole; squirrel-cage; induction moto rs; NEMA Designs A or B; 600 volts or less; and rated for continuous duty operation. 5 Such electric motors are typically used in industrial applications operating more than 2000 hours per year. The NEMA Premium Efficiency Motor Program does not cover small elec tric motors as they are defined in EPCA. Nevertheless, some motor manufacturers offe r polyphase, capacitor-start induction-run, and capacitor-start capacitor-run small electric motors at premium efficiency levels. As a result of the Energy Independence and Security Act (EISA) of 2007, these efficiency levels will become mandatory for polyphase motors on December 19, 2010.

3.2.8.3 Consortium for Energy Efficiency

The Consortium for Energy Efficiency (CEE) is a nonprofit corporation that develops initiatives for its North American members to promote the manufacture and purchase of energyefficient products, including electric motors and services. Its memb ers include utilities, statewide and regional market transformation administrators, environmental groups, research organizations and state energy offices in the U. S. and Canada. Also included in the CEE collaborative process are manufacturers, retailers, and government agencies.

In 1996, CEE began its Premium-Efficiency Mo tors Initiative to promote the production, distribution, and adoption of pr emium efficiency motors over motors meeting the minimum efficiency levels established under EPACT 1992. In 1999, CEE took a systems approach to energy savings and launched its Motor Systems Initi ative that viewed the motor as a component of a larger system, where efficient motors, adju stable speed drives, and system-specific design strategies would provide the gr eatest opportunity for savings. Then, in 2001, CEE launched its Motor Decisions Matter to promote greater aw areness of the benefits of motor systems efficiency. In June 2001, CEE and NEMA aligne d to promote NEMA Premium motor efficiency levels that are higher th an EPACT 1992 requirements. 6

t For more information about the NEMA Premium Efficiency Motor Program, visit http://www.nema.org/gov/ener gy/efficiency/premium/.

3-19In May 2007, CEE published the Energy-E fficiency Incentive Programs – PremiumEfficiency Motors & Adjustable Speed Driv es in the U.S and Canada, which provides information about the incentive-ba sed programs in North America. These programs concentrate on 1- to 200-horsepower motors, but some include 201- to 500-horsepower motors. DOE reviewed the report and th e CEE program descriptions it contains, but did not find any incentives that explicitly cover small electric motors. It appears that the program s cover commercial and industrial motors rated from 1- to 500-horsepower , although there is some potential for crossover to small polyphase electric motors in the 1- to 3-horsepower range. u There are a number of different programs broken down by region. For more information on these programs, download the report from CEE. 7

3.3 TECHNOLOGY ASSESSMENT

The small electric motors covered in this rulemaking are all AC induction motors. Induction motors have two core components: a stator and a rotor. The components work together to convert electrical energy into rotational mechanical energy. This is done by creating a rotating magnetic field in the stator, which induces a current flow in the rotor. This current flow creates an opposing magnetic fi eld in the rotor, which creates rotational forces. Because of the orientation of these fields, th e rotor field follows the stator field. The rotor is connected to a shaft that also rotates and provi des the mechanical energy output.

The purpose of the technology assessment is to develop a prelimin ary list of technology options that could improve the efficiency of small electric motors. In the small electric motors covered in this rulemaking, energy efficiency loss es are grouped into four main categories: I 2 R losses, core losses, friction and windage losses, and stray load losses. The technology options considered in this section are categori zed by these four cat egories of losses.

3.3.1 Technology Options for I 2 R Losses

I 2 R losses stem from the current flow thr ough the copper windings in the stator and conductor bars in the rotor. These conductor bars are usually made of aluminum, but some high efficiency motors that use copper are now available. I 2 R losses are reduced by decreasing resistance to current flow in the electrical co mponents of a motor. These losses are manifested as waste heat, which can shorte n the service life of a motor.

There are several ways that manufacture rs work to minimize the losses created by resistance to current flow. Most of these effort s use the same principle of decreasing resistance, but there are different ways and areas of the motor where this can be done effectively. The resistance of a conductor is a function of both the resistivity and the geometric dimensions ( e.g. , the cross-sectional area) of the material through which current flows. Resistivity is a physical characteristic that remains relatively constant fo r a given material, so changing the material type or manipulating the material’s geometry ( e.g. , copper wire diameter) are two approaches

u For more information about CEE motor and motor systems programs, visit http://www.cee1.org/ind/mot-sys/mtrms-main.php3.

3-20manufacturers employ to lower resistance. Fo r single-phase CSCR motors , design engineers can also change the microfarad rating of the run- capacitor in combination with changing the copper wiring. The second capacitor reduces the current re quired to run the motor and in turn reduces the I 2 R losses.

Rotor conductor bars are areas where current flows. These bars are usually made of aluminum in small electric motors. One method of increasing the efficiency of the motor is to substitute copper bars for aluminum. Alumin um has a higher electrical resistivity (2.65 x 10 -8 ohm-m) than copper (1.68 x 10 -8 ohm-m). Copper is approximately 58-percent more conductive than aluminum, and changing from aluminum bars to copper would reduce associated I 2 R losses in the rotor.

Manipulation of the rotor’s geometrical design is anot her approach to reduce I 2 R losses in the rotor. For the motors cove red in this rulemaking, the rotors are called “squirrel-cage rotors” because without the core steel stack, the rotor co nductor bars and end rings resemble the exercise wheels that domesticated squirrel s would run in. The conductor ba rs of the rotor cage are not straight from one end ring to anot her; instead, they are twisted or slightly skewed. By skewing the rotor bars, motor designers can reduce harm onics that add cusps to the speed-torque characteristics of the motor. The cusps in the speed-torque curves mean that the acceleration of the motor will not be completely smooth. The degree of skew matters, because reducing the skew will help reduce the rotor resistance and reac tance, thereby providing gains in efficiency. However, overly reducing the skew may ha ve adverse impacts on the speed-torque characteristics.

Another change to the roto r bar geometry that can redu ce resistance is increasing the cross-sectional area of the conduc tor bars. Resistance is invers ely proportional to the crosssectional area of the material ( i.e. , aluminum or copper) through wh ich current is flowing. By increasing the cross-sectional area, resistance wi ll decrease and current flow will increase.

Another area of the rotor that manufacturers may alter to increase efficiency is the end ring. Current also flows through this area of the rotor. Increasing the size of the end ring can help decrease resistance and alleviate some of the I 2 R losses.

When rotor resistance is lowered, rotor bar curre nt is increased, resulting in an increase in the electromagnetic forces. Depending on the magn itude of the gain in efficiency, this may actually have some adverse impacts on the elect ric motor. Also, when manufacturers increase the diameter of the rotor bars to lower rotor resistance, they remove steel from the lamination and thus the magnetic circuit. The reduction in steel will dr ive up magnetic saturation, which could counteract the efficiency gains. Furthermore, changing the conductor bar shape could induce harmonic content to the motor’s operati on. Odd harmonics, pa rticularly the third harmonic, can create cusps in the speed-torque characteristics, which in turn disrupt motor acceleration. Larger rotor bars may also cause manufacturers to build new lamination tooling and add stack length becaus e of magnetic saturation.

I 2 R losses are also prevalent in the stator. There are seve ral design alterations that manufacturers may employ to decrease these lo sses. Most of the design options involve

3-21increasing the amount of copper winding in the slots. Manufacturers can accomplish this by using different gauges of copper wire, changing th e slot sizes, and adju sting the length to diameter ratios. The use of larger ( i.e. , numerically lower) wire gauges increases the efficiency of the motor because the larger cross-sectiona l area decreases the overall motor resistance. Increasing the stator’s slot size may also allow ma nufacturers to increase the slot fill. Slot fill is the amount of copper wire inserted into a cross- sectional area relative to the total slot crosssectional area. Depending on the number of poles in the motor, certain length-to-diameter ratios are better suited to balance the magnetic circuit.

Another way for manufacturers to reduce I 2 R losses is to reduce the air gap between the stator and rotor. A smaller air gap will decrease the magnetomotive force drop, which occurs across the air gap. The motor will then require le ss current to drive the load and thereby reduce
I 2 R losses. The problem with this option is that sm aller air gaps mean there are tighter tolerances on specifications when building a motor, which at some point become technically infeasible to manufacture. Based on discussion with manufacture rs and small electric motor design engineers, DOE believes that the smallest air gap possibl e, without manufacturing problems, is 0.0125 inch.

3.3.2 Technology Options for Core Losses

Core losses are those losses created in the steel components of a motor. These losses, like I 2 R losses, manifest themselves as heat. Co re losses are generate d in the steel by two electromagnetic phenomena: hyste resis losses and eddy currents. Hysteresis losses are caused by magnetic domains resisting reorientati on to the alternating magnetic field ( i.e. , 60 times per second, or 60 hertz). Eddy current s are physical currents that are i nduced in the steel laminations by the magnetic flux of the windings.

Manufacturers have several techniques to he lp reduce the effects of hysteresis and eddy current losses in their motors. One of the first ap proaches is simply adding additional steel to the rotor and stator ( i.e. , increasing the “stack” length). This is one of the least costly and least invasive changes a manufacturer can use to increase motor efficiency. The extra steel laminations and increased stack height decrease fl ux density. This reduces hysteresis losses, but also changes motor performance. Adding stack le ngth increases motor impedance, which is then reduced by removing turns of wire in the stator. Monitored starting torque is also important because an increased stack may reduce torque, po tentially rendering the mo tor unable to start in certain applications. Adding stack to the mo tor means the motor is also getting longer physically, therefore geometrical constrai nts can become an issue as well.

Another technique for reducing steel losses is using a higher quality, more efficient grainoriented electrical steel in the core. Hyst eresis losses are reduced because the magnetic permeability improves and grain size increases, reducing the magnetic domain resistance. Eddy currents are reduced because the resistivity of th e laminations is higher, reducing the magnitude of the currents. In studying the techniques used to reduce steel losses, DOE considered two types of materials: conventi onal silicon steel and so-called “exotic” steels, which contain a relatively high percentage of boron or cobalt.

Conventional steels are commonly used in small electric motors manufactured today. There are three types of steel that DOE c onsiders “conventional:” cold-rolled magnetic

3-22laminations (CRML), fully pro cessed non-oriented electrical steel, and semi-processed nonoriented electrical steel. Each steel type is sold in a range of grades. Generally, as the grade number goes down, so does the amount of loss associated with the steel ( i.e. , watts of loss per pound of steel). The induction leve l also drops, causing the need for increased stack length. Of these three types, CRML steels ar e the most commonly used, but al so the least efficient. The fully processed steels do not require annealing after being punched and assembled, and are available in a range of steel grades from M56 through M15. v Semi-processed electrical steels are designed for annealing after punching and assemb ly, but they have more limited availability. 8

The exotic steels generally are not manufactured for specific use in small electric motors. These steels include amorphous st eel, vanadium permendur, and ot her alloyed steels containing a high percentage of boron or cobalt. These steels offer a lower loss level than the best electrical steels, but are more expensive per pound. From a manufacturing perspective, these steels also present problems because they come in non-standa rd thicknesses that are harder to manufacture.

Another method manufacturers use to reduce co re losses is to use thinner laminations of steel. Using thinner laminations decreases the cross-secti onal area through which the eddy currents are produced, reducing the magnitude of th e eddy currents. This reduction in losses will reduce heat generation in the st eel and improve efficiency. Ho wever, this design change does come with a penalty. As laminations become thi nner, more laminations are needed for the same stack height, requiring more punching and assembly time.

Manufacturers may also reduce eddy currents by using improved insulating coatings between the steel laminations. Improved coatings increase the resistance between the steel laminations, which makes it more difficult for eddy currents to flow from lamination to lamination.

Annealing the core steel is another tec hnique manufacturers use to reduce hysteresis losses. Annealing is a heating process that alters the grain structure of the steel and alleviates any stresses introduced during punching and assemb ly. After being annealed, the material becomes much easier to magnetize, which means the magnetic domains reorient more easily. Manufacturers will incur more cost if they do addi tional annealing to the steel because they are adding another step to the ma nufacturing process, which in creases production time. The necessary annealing equipment also requires a large capital investment.

Table 3.8 presents the core steels used in manufacturing small electr ic motors, including some more efficient steels that are not as comm on, which DOE considered in its analysis. In addition to the steel grade name, the table presen ts nominal thickness and core losses at a fixed magnetic flux density.

v Lower “M” grades of steel denote lower losses, thus M15 has fewer losses per pound of steel than M56.

3-23Table 3.8. Core Steel Grades, Thicknesses, and Associated Losses

Steel Grade Nominal Thickness

(inches) Theoretical Core Loss at 60 Hz
(Watts per Pound at Magnetic Flux Density) Remarks

24 M56* 0.025 4.30 Watts/lb at 1.5 T 9 Cold-rolled magnetic laminations (semiprocessed)

24 M47* 0.025 3.20 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

26 M47 0.019 2.80 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

24 M36 0.025 2.35 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

24 M19* 0.025 2.00 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

29 M19* 0.014 1.55 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

29 M15* 0.014 1.45 Watts/lb at 1.5 T 8 Non-oriented electrical steel (fully processed)

Hiperco

50* 0.006 1.00 Watts/lb at 1.5 T 10 Iron-cobalt-vanadium soft magnetic alloy

* Denotes a steel used in the engineering analysis. † Watts of loss per pound of core steel are only comparable at the same magnetic flux density, measured in tesla. The tesla (symbol T) is the SI-derived unit of magnetic field, which is also known as "magnetic flux density," named in honor of inventor, scientist, and electrical engineer Nikola Tesla.

3.3.2.1 Plastic Bonded Iron Powder

DOE became aware of a new technology that Lund University researchers in Sweden developed the production of magnetic components for electric motors from plastic bonded iron powder (PBIP). The technique has the potential to cut production costs by 50-percent while doubling motor output.

The method uses two main ingredients: metal powder and plastics. Combining the ingredients creates a material with low conduc tivity and high permeability. The metal particles are surrounded by an insulating plastic, which pr events electric current from developing in the material. This is critical because it essentially elim inates losses in the core due to eddy currents. Properties of PBIP can differ depending on the pro cessing. If the metal pa rticles are too closely compacted and begin to touch, the material will gain electrical conductivity, counteracting one of its most important features.

Another advantage of PBIP is a reduction in the number of production steps. The number of steps in manufacturing a rotor and stator is reduced from roughly 60 to just a few. A second way to increase savings is to build an inductor with PBIP . During processing, the plastic and metal are molded together using a centrifugal fo rce. During this process, the inductor core consisting of PBIP and pre-wound wi ndings are baked into the core. This inductor is then used as a filter for grid power application. The filte r then reduces the use of cooling equipment in the

motor design. 11

3-243.3.3 Technology Options for Friction and Windage Losses

Bearing friction and an imperfect cooling fa n system create what is called “friction and windage losses” in AC induction motors. These losses also add heat to the motor’s system and decrease the motor’s efficiency.

To decrease the losses caused by motor bear ings, manufacturers can change the bearings or bearing lubricant. Less friction, and thus less heat, is produced when manufacturers use a better bearing structure or bearing lubricant, but manufacturers must also c onsider issues such as temperature rating and speed.

Another way to reduce heat in an induction motor is to use a better cooling system. Changing the fan or adding baffles to the current fan can help reduce heat and losses. Baffles help redirect airflow through the motor, creating better circulation and a cooler motor overall. With a well-designed cooling system, the motor should run more efficiently. However, some manufacturers choose to use one cooling system for a range of horsepower ratings. This means that the same cooling system ma y exceed spatial constraints for cer tain smaller motors, resulting in more losses than are necessary to cool the motor.

3.3.4 Technology Options for Stray Load Losses

Any losses that are otherwise unacco unted for and not attributed to I 2 R losses, steel losses, or frictional and windage losses are considered stray-load losses. DOE is not aware of any specific techniques manufactur ers use to reduce stray-load lo sses. General process changes to the manufacturing of rotors and stators could somewhat reduce these losses.

3.3.5 Summary of the Technology Options Under Consideration

Table 3.9 summarizes the technology options di scussed in this technology assessment, and those that DOE will now consider in the screen ing analysis (see chapter 4). The options that pass all four screening criteria ar e considered “design options” and are used in the engineering analysis (see chapter 5) as a means of improving the efficiency of small electric motors.

3-25Table 3.9. Summary of Technology Op tions for Improving Efficiency

Type of Loss to Reduce Technology Option Applied

I 2 R Losses Use copper die-cast rotor cage Remove skew on conductor cage

Increase cross-sectional ar ea of rotor conductor bars Increase end ring size Changing gauges of copper wire in stator Manipulate stator slot size Decrease the radial air gap Change run-capacitor rating

Core Losses Improve grades of electrical steel

Use thinner steel laminations

Anneal steel laminations Add stack height ( i.e. , length, add electrical steel laminations) Use high-efficiency lamination materials Use plastic bonded iron powder

Friction and Windage Losses Use better bearings and lubricant Install a more efficient cooling system

3-26REFERENCES

1 U.S. Small Business Administration. Small Business Size Standards Matched to North American Industry Classification System. 2006. (Last accessed March 1, 2010.)

< http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf > The September 22, 2008, material from this website is available in Dock et # EERE–2007–BT–STD– 0007.

2 National Electric Manufacturers Association. (Last accessed March 1, 2010.)

< http://www.nema.org/about/upload/NEMACorpBroc hure05.pdf > The March 1, 2010, material from this website is availabl e in Docket #EERE–2007–BT–STD–0007.

3 Small Motor and Motion Associati on. 2008. (Last accessed March 1, 2010.)

< http://www.smma.org /> The March 1, 2010, material from this website is available in Docket #EERE–2007–BT–STD–0007.

4 National Electric Manufacturers Association. NEMA Premium Efficiency Electric Motors Program. 2008. (Last accessed April 21, 2008.)

< http://www.nema.org/gov/energy/efficiency/premium/upload/nemaprem1p.doc > The April 21, 2008, material from this website is ava ilable in Docket #EERE–2007–BT–STD–0007.

5 National Electric Manufacturers Association. NEMA Premium Product Scope and Nominal Efficiency Levels. June 3, 2009. (Last accessed March 1, 2010.)

< http://www.nema.org/stds/complimentary-docs/upload/MG1premium.pdf > The September 22, 2009, material from this website is ava ilable in Docket #EERE–2007–BT–STD–0007.

6 Consortium for Energy Efficiency. Industrial Programs Premium-Efficiency Motors . 2008. (Last accessed March 1, 2010.) < http://www.cee1.org/ind/motrs/timeline_poster.pdf> The March 1, 2010, material from this website is available in Docket #EERE–2007–BT–STD–0007.

7 Consortium for Energy Efficiency. Energy-Efficiency Incentive Programs, Premium-Efficiency Motors and Adjustable Speed Dr ives in the U.S. and Canada . May 2007. (Last accessed March 1, 2010.) < http://www.motorsmatter.org/tools/ programs2007.pdf > The March 1, 2010, material from this website is availabl e in Docket #EERE-2007-BT-STD-0007.

8 AK Steel Corporation. Product Data Bulletin: Selection of Electrical Steels for Magnetic Cores . July 2007. West Chester, Ohio.

9 National Materials. National Materials Company: Materials . (Last accessed April 21, 2008.)

< http://nmlp.hypermart.net/Material/index.html > The April 21, 2008, material from this website is available in Docket #EERE–2007–BT–STD–0007.

10 Carpenter Technology Corporation. Core Loss vs. Induction for 0.006” thick strip. 2009. (Last accessed March 1, 2010.)

< http://cartech.ides.com/data sheet.aspx?i=101&e=200&c=Tech Art >. The March 1, 2010, material from this website is avai lable in Docket #EERE-2007-BT-STD-0007.

3-2711 Horrdin, H., Olsson, E. Technology Shifts in Power Electronics and Electric Motors for Hybrid Electric Vehicles: A Study of Silicon Carbide and Iron Powder Materials. 2007. Chalmers University of T echnology. Göteborg, Sweden.

3-28CHAPTER 4. SCREENING ANALYSIS

TABLE OF CONTENTS

4.1 INTRODUCTION

........................................................................................................... 4-1 4.2 DISCUSSION OF DESIGN OPTIONS

.......................................................................... 4-1 4.3 DESIGN OPTIONS NOT SCREENED OUT OF THE ANALYSIS

............................. 4-3 4.3.1 Copper Die-Cast Rotor Cage

............................................................................... 4-3 4.3.2 Reduce Skew on Conductor Cage

........................................................................ 4-4 4.3.3 Increase Cross-Sectional Area of Rotor Conductor Bars

.................................... 4-4 4.3.4 Increase End Ring Size

........................................................................................ 4-4 4.3.5 Change Gauges of Copper Wire in Stator

............................................................ 4-5 4.3.6 Stator Slot Size Manipulation

.............................................................................. 4-5 4.3.7 Air Gap Between Rotor and Stator

...................................................................... 4-6 4.3.8 Improved Grades of Electrical Steel

.................................................................... 4-6 4.3.9 Thinner Steel Laminations

................................................................................... 4-6 4.3.10 Anneal Steel Laminations

.................................................................................... 4-7 4.3.11 Additional Stack Height

....................................................................................... 4-7 4.3.12 High-Efficiency Lamination Materials

................................................................ 4-8 4.3.13 Better Bearings and Lubricant

............................................................................. 4-8 4.3.14 More Efficient Cooling System

........................................................................... 4-8 4.3.15 Change Run-Capacitor Rating

............................................................................. 4-9 4.3.16 Summary of Technology Options Not Screened Out

.......................................... 4-9 4.4 DESIGN OPTIONS SCREENED OUT OF THE ANALYSIS

.................................... 4-10 4.4.1 Air Gap Between Rotor and Stator

.................................................................... 4-10 4.4.2 Plastic Bonded Iron Powder

............................................................................... 4-11 4.4.3 Summary of Technology Options Screened Out of the Analysis

...................... 4-11

LIST OF TABLES

Table 4.2.1 Summary List of Options from Technology Assessment

.................................... 4-3 Table 4.3.1 Design Options Not Screened Out of the Analysis

............................................ 4-10 Table 4.4.1 Design Options Screened Out of the Analysis

................................................... 4-11

4-iCHAPTER 4. SCREENING ANALYSIS

4.1 INTRODUCTION

The purpose of the screening analysis is to identify design options that improve small electric motor efficiency and determine which options the Department of Energy (DOE) will either evaluate or screen out. DOE consults with industry, technical experts, and other interested parties in developing a list of design options for consideration. Then DOE applies the following set of screening criteria to determine whic h design options are unsuitable for further consideration in the rulemaking (1 Title 10 of the Code of Federal Regulations, Part 430, Subpart C, Appendix A at 4(a)(4) and 5(b)):

(1) Technological feasibility. Technologies incorporated in commercial products or in working prototypes will be considered technologically feasible.

(2) Practicability to manufactu re, install, and service . If mass production of a technology in commercial products and reliabl e installation and servicing of the technology could be achieved on the scale necessary to serve the relevant market at the time of the effective date of the standard, then DOE will consider that technology practicable to manufacture, install, and service.

(3) Adverse impacts on product u tility or product availability . If DOE determines that a technology will have significant adverse impacts on the utility of the product to significant subgroups or consumers or result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, that technology will not be considered further.

(4) Adverse impacts on health or safety . If DOE determines that a technology will have significant adverse impacts on health or safe ty, that technology will not be considered further.

This chapter discusses the design options th at DOE considered for improving the energy efficiency of small electric motors and describes how DOE applied the screening criteria.

4.2 DISCUSSION OF DESIGN OPTIONS

Several well-established engineering practices and techniques exist for improving the efficiency of a small electric motor. Improving the construction materials ( e.g. , the core steel, winding material, cooling system) and modify ing the motor’s geometric configuration ( i.e. , the core and winding assemblies, the rotor, and stator) can make a small electric motor more energy efficient.

As discussed in the market and technology as sessment (chapter 3), there are four general areas of efficiency loss in small electric motors: I 2 R, core, friction and windage, and stray load.

4-1DOE presented an initial list of technology options used to reduce energy consumption and thus improve the efficiency of general purpose induc tion motors. Unfortunate ly, methods of reducing electrical losses in the equipment are not complete ly independent of one another. This means that some technology options that decrease one ty pe of loss may cause an increase in a different type of loss in the motor. Thus, it takes a great degree of engineering skill to maximize the efficiency gains in a motor design overall, balancing out the loss mechanisms. In some instances, motor design engineers must make de sign tradeoffs when finding the appropriate combination of materials and costs. However, there are multiple design pathways to achieve a given efficiency level.

Although I 2 R and core losses account for the majority of the losses in an induction motor, friction and windage losses and stray load losses also contribute to the total loss. In an induction motor, friction and windage losses can manifest in the bearings, bearing lubricant, and cooling fan system. Stray load losses are electromagnetic losses that generally require process changes in manufacturing. These various technologies ca n constrain the design parameters of a motor and thus limit the improvement in efficiency.

Table 4.2.1 presents a general summary of th e methods that a manufacturer may use to reduce losses in small electric motors. The approaches presented in this table refer either to specific technologies ( e.g. , aluminum versus copper die-cast rotor cages, different grades of electrical steel) or physical changes to the motor geometries ( e.g. , cross-sectional area (CSA) of rotor conductor bars, additional stack height).

4-2Table 4.2.1 Summary List of Opti ons from Technology Assessment

Type of Loss to Reduce Technology Option Applied

I 2 R Use a copper die-cast rotor cage Reduce skew on conductor cage

Increase cross-sectional area of rotor conductor bars Increase end ring size Change gauges of copper wire in stator Manipulate stator slot dimensions Decrease air gap between rotor and stator Change run-capacitor rating (CSCR motors only)

Core Improve grades of electrical steel

Use thinner steel laminations

Anneal steel laminations Add stack height ( i.e. , more electrical steel) Use high-efficiency lamination materials
Use plastic bonded iron powder

Friction and Windage Install better bearings and lubricant Install a more efficient cooling system

4.3 DESIGN OPTIONS NOT SCREENED OUT OF THE ANALYSIS

This section discusses the technology opti ons that DOE considers viable means of improving the efficiency of small electric motors.

4.3.1 Copper Die-Cast Rotor Cage

Aluminum is the most common material used t oday to create die-cast rotor bars in small motors. Some manufacturers that focus on produci ng high-efficiency designs have started to offer electric motors with die-cas t rotor bars made of copper. Copper offers better performance than aluminum because, per unit area, copper has a higher electrical conductivity ( i.e. , a lower electrical resistance). However, copper has a hi gher melting point than aluminum, so the casting process becomes more difficult and is likely to increase both production time and cost for manufacturing a motor.

Considering the four screening criteria for this technology option, DOE did not screen out copper as a die-cast rotor cage conductor material. Because this material is in commercial use today, DOE concluded that this material is technologically feasible and practicable to manufacture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or sa fety associated with the use of coppe r as a die-cast rotor cage material.

4-34.3.2 Reduce Skew on Conductor Cage

In the rotor, the conductor bars are not straig ht from one end to the other, but skewed or twisted slightly around the axis of the rotor. Decreasing the degree of skew can improve a motor’s efficiency. The conductor bars are skewed to help eliminate harmonics that add cusps, losses, and noise to the motor’s speed-torque char acteristics. Reducing th e degree of skew can help reduce the rotor resistance and reactance, which helps improve efficiency. However, overly reducing the skew also may have adverse eff ects on starting, noise, and the speed-torque characteristics.

Considering the four screening criteria for this technology option, DOE did not screen out adjusting rotor skew as a means of improving effici ency. Rotor skew is one of the variables that motor design engineers can manipulate to obtain ce rtain performance and efficiency targets. The rotor skew is part of the overall motor desi gn, which is input into automated production equipment that punches and stacks the steel to create a rotor with the desired skew. Because this design technique is in comme rcial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with properly manipulating the rotor skew to obtain improved performance.

4.3.3 Increase Cross-Sectional Area of Rotor Conductor Bars

Increasing the cross-sectional area of the rotor conductor bars, either by making the diameter of the conductor bars larger or changing the cross-sectional geometry of the rotor, can improve motor efficiency. Either way, increasin g the cross-sectional area of the rotor conductor bars will decrease the resistance, increase current flow, and lower losses. Note that the shape of the rotor may affect the size of the end rings.

Considering the four screening criteria for this technology option, DOE did not screen out increasing the cross-sectional area of rotor conduc tor bars as a means of improving efficiency. Motor design engineers adjust this particular variable when manufacturing to obtain performance and efficiency targets. The rotor conductor ba rs are created by automated production equipment that have certain tolerances and allow variance in this parameter. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufacture, in stall, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with increasing the cross-sectional area of rotor conductor bars to obt ain increased efficiency.

4.3.4 Increase End Ring Size

Creating an electrical connection between the rotor bars by increasing the size of the endrings can increase motor efficiency. Increasing the size of the end rings reduces the resistance and thus lowers the I 2 R losses in the end rings.

Considering the four screening criteria for this technology option, DOE did not screen out increasing end ring size as a means of improving efficiency. As with some of the previous technology options, motor design engineers adjust this variable when manufacturing an electric

4-4motor to achieve performance and efficiency targets. Automated production and casting equipment, which allow some degree of variability, determine the end ring size. Because this design technique is in comme rcial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with increasing the size of the rotor end rings to obtain increased efficiency.

4.3.5 Change Gauges of Co pper Wire in Stator

Increasing the slot fill by changing the gauge of wire used in the stator winding can also increase motor efficiency. Motor design engineers can achieve this by manipulating the wire gauges to allow a greater total cross-sectional area of wire to be incorporated into the stator slots. This could mean either an increase or decrease in wire gauge, depending on the dimensions of the stator slots and insulation th icknesses. As with the benefits associated with larger crosssectional area of rotor conductor bars, using more to tal cross-sectional area in the stator windings decreases the winding resistance and associated losses. However, this change could affect the packing factor of the wire in the stator slots. The stator slot openings must fit the wires so that machinery can pull (or push) the wire into the stator slots. DOE used 65 percent as a maximum peak slot fill percentage in all of the design s presented in chapter 5 of the Technical Support Document (TSD).

Considering the four screening criteria for this technology option, DOE did not screen out changing gauges of copper wire in stator as a means of improving efficiency. Motor design engineers adjust this technology option in frac tions of a half a gauge when manufacturing an electric motor to achieve desired performance and efficiency targets. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with changing the wire gauges in the stator to obtain increased efficiency.

4.3.6 Stator Slot Size Manipulation

Varying the stator slot size and geometry associated with a given motor design can improve motor efficiency. Similar to changing gauges of wires, manipulating the stator dimensions can allow the motor design engineer to incorporate more copper into the stator slots. This decreases the losses in the windings and can affect motor torque and performance (including efficiency).

Considering the four screening criteria for this technology option, DOE did not screen out changing stator slot size as a means of improving efficiency. Mo tor design engineers modify this technology to achieve desired performance and effici ency targets. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufacture, in stall, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with changing stator slot sizes to obtain increased efficiency.

4-54.3.7 Air Gap Between Rotor and Stator

Reducing the radial air gap between the rotor and stator can improve motor efficiency. For small electric motors, the air gap is commonly set at 15 thousandths of an inch. However, reducing the air gap to 12.5 thousandths of an inch per side is still practic able to manufacture. Although DOE is aware that some stepper motors have tighter tolerances, radial air gaps less than 12.5 thousandths of an inch are not achieva ble for continuous duty motors, such as small electric motors, as defined by the Energy Polic y and Conservation Act, as amended, 42 U.S.C. 6291–6317 (EPCA).

Considering the four screening criteria for this technology option, DOE did not screen out decreasing the radial air gap to 12.5 thousandths of an inch as a means of improving efficiency. DOE recognizes that reducing the radial air gap is a means design engineers use to achieve desired performance and efficiency targets. Becau se this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufacture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safe ty associated with reducing the radi al air gap to 12.5 thousandths of an inch.

4.3.8 Improved Grades of Electrical Steel

Losses generated in the electrical steel of an induction motor can be significant for a small electric motor. Generally, these losses are classified as either hysteresis or eddy current. Hysteresis losses are caused by magnetic domains resisting reorientation to the alternating magnetic field ( i.e. , 60 times per second, or 60 hertz). Eddy currents are physical currents that are induced in the steel laminations by the ma gnetic flux produced by the current in the windings. Both of these losses generate heat in the electrical steel.

One way to reduce hysteresis losses is to incorporate a higher grade of core steel into the electric motor design ( e.g. , switching from an M56 to an M 19). Even for the same thickness ( i.e. , gauge) of core steel lamination, losses are reduced as the grain size increases, thus reducing magnetic resistance to reorientation by the alternating current.

Considering the four screening criteria for this technology option, DOE did not screen out improved grades of electrical steel as a means of improving efficiency. Design engineers use this approach to achieve desired performance a nd efficiency targets. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with improving the electrical steel.

4.3.9 Thinner Steel Laminations

DOE can use thinner laminations of core stee l to reduce eddy currents. DOE can either change grades of electrical steel as described above, or use a thinner gauge of the same grade of electrical steel. The magnitude of the eddy currents induced by the magnetic field becomes smaller in thinner laminations, making the motor more energy efficient.

4-6Considering the four screening criteria for this technology option, DOE did not screen out thinner steel laminations as a means of improvi ng efficiency. Design engineers use this approach to achieve desired impr ovements in performance and efficiency. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with using thinner steel laminations.

4.3.10 Anneal Steel Laminations

Annealing the laminations can also reduce the losses in the electrical steel. This process subjects the laminations to an extremely high te mperature to alleviate the stresses from punching and assembly. There is reduced stress, but also gr ain growth, which alleviates hysteresis losses. In addition to these benefits, the steels are oxidized to create a resistive coating that helps reduce eddy current flow and thus core losses.

Considering the four screening criteria for this technology option, DOE did not screen out annealing steel laminations as a means of impr oving efficiency. Design engineers use this approach to achieve desired impr ovements in performance and efficiency. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with annealing steel laminations.

4.3.11 Additional Stack Height

Adding electrical steel to the rotor and stat or to lengthen the motor can also reduce the efficiency losses in steel. Lengthening the motor by increasing stack length reduces the magnetic flux density, which lowers the core watts lost overall. However, increasing the stack length affects other performance attributes of the mo tor, such as starting torque. Issues can arise when installing a more efficient motor with a dditional stack height because the motor becomes longer and therefore may not fit into app lications with dimens ional constraints.

Considering the four screening criteria for this technology option, DOE did not screen out additional stack height as a means of improving ef ficiency. Design engineers use this approach to achieve desired improvements in performance a nd efficiency. Because this design technique is in commercial use today, DOE considers this technology option technologically feasible. Regarding the second screening criterion–practicable to manufacture, install, and service–DOE is concerned that increasing motor length makes installation of these motors too problematic. However, DOE recognizes that many small moto r applications are not constrained by motor length. Thus, DOE believes that this technol ogy option meets the second screening criterion. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with increased stack height.

4-74.3.12 High-Efficiency Lamination Materials

Another technology option to improve the effi ciency of small electric motors is using nontraditional laminati on materials. These materials are stee l alloys that contain boron or cobalt ( e.g. , Hiperco 50TM a and vanadium permendur), which ar e used instead of conventional and silicon steel when assembling a stator and rotor stack.

These materials offer lower core losses because the laminations are extremely thin and the magnetic permeability is extremely high. These steels are not typically used in small electric motors, as defined by EPCA. However, DOE is not aware of any technical impediment preventing their use, because these are commerciall y available steels used in the manufacture of electric motors. DOE is aware of some small electric motor designs that were prepared for a manufacturer using one of these high-efficiency lamination materials. Thus, DOE believes that such steels are technologically feasible and practicable to manufacture, install, and service, because of their use in mass-produced electric mo tors. However, DOE is concerned that there may not be an adequate supply of these material s to meet the manufacturing requirements of all the small motors manufactured in the United Stat es today. DOE is not aware of any adverse impacts on product utility, product availability, health, or safety for this technology option.

4.3.13 Better Bearings and Lubricant

Another technology option to improve the effi ciency of small electric motors is using better ball bearings and a lower-f riction lubricant. Using impr oved bearings and lubricants minimizes mechanical resistance to the rotation of the rotor, which also extends motor lifetime.

Considering the four screening criteria for this technology option, DOE did not screen out better ball bearings and lubricants as a means of improving efficiency. Design engineers use this approach to achieve desired impr ovements in performance and efficiency. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with better ball bearings and lubricant.

4.3.14 More Efficient Cooling System

Using a more efficient cooling system that circulates air through the motor is another technology option to improve the efficiency of small electric motors. Improving the cooling system reduces air resistance and associated frictional losses and decreases the operating temperature (and associated el ectrical resistance) by cooling the motor during operation.

Considering the four screening criteria for this technology option, DOE did not screen out a more efficient cooling system as a means of improving efficiency. Design engineers use this approach to achieve desired impr ovements in performance and efficiency. Because this design technique is in commercial use today, DOE considers this technology option both

a Registered trademark of the Carpenter Technology Corporation.

4-8technologically feasible and practicable to manufac ture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with improved cooling systems for small electric motors.

4.3.15 Change Run-Capacitor Rating

Another technology option to improve the effi ciency of CSCR small electric motors is changing the microfarad rating of the run-capacitor. A motor design engineer will usually modify the run-capacitor’s rating along with the auxiliary windings of a CSCR motor to simulate a balanced two phase motor at full load. The combination of these changes helps to minimize the required current to run the motor, thereby reducing the I 2 R losses.

Considering the four screening criteria for th is technology option, DOE did not screen out changing the rating of a run-capacitor in a CSCR motor as a means of improving efficiency. Design engineers use this approach to ach ieve desired improveme nts in performance and efficiency. Because this design technique is in commercial use today, DOE considers this technology option both technologically feasible and practicable to manuf acture, install, and service. DOE is not aware of any adverse impacts on consumer utility, reliability, health, or safety associated with improved cooling systems for small electric motors.

4.3.16 Summary of Technology Options Not Screened Out

Table 4.3.1 summarizes the design options that DOE did not screen out of the analysis.

4-9Table 4.3.1 Design Options Not Screened Out of the Analysis

Type of Loss to Reduce Technology Option Applied

I 2 R Use a copper die-cast rotor cage Reduce skew on conductor cage

Increase cross-sectional area of rotor conductor bars Increase end ring size Change gauges of copper wire in stator Manipulate stator slot dimensions Decrease the air gap between rotor and stator (down to 12.5 thousandths of an inch) Change run-capacitor rating (CSCR motors only)

Core Use improved grades of electrical steel

Use thinner steel laminations

Anneal steel laminations
Add stack height ( i.e. , more electrical steel)
Use high-efficiency lamination materials

Friction and Windage Install better bearings and lubricant Install a more efficient cooling system

4.4 DESIGN OPTIONS SCREENED OUT OF THE ANALYSIS

DOE screened out the following design options from further consideration because they do not meet the screening criteria.

4.4.1 Air Gap Between Rotor and Stator

Reducing the air gap between the rotor and stator can improve motor efficiency. For small electric motors, the air gap is commonly set at 15 thousandths of an inch. Although reducing this air gap can improve efficiency, there is some point at which the air gap is too tight and becomes impracticable to manufacture. DOE believes that air gaps below 12.5 thousandths of an inch would exceed the threshold for practicability to manufacture.

Considering the four screening criteria fo r this technology option, DOE screened out decreasing the radial air gap below 12.5 thousan dths of an inch as a means of improving efficiency. DOE considers this technology opti on technologically feasible, because smaller air gaps do not present any technological barrier. DO E also is not aware of any adverse impacts on health or safety associated with reducing the radial air gap below 12.5 thousandths of an inch. However, DOE believes that this technology option fails the screening criterion of being practicable to manufacture, install, and service. Such a tight air gap may cause problems in manufacturing and service, with the rotor potentially coming into contact with the stator. This

4-10technology option fails the screening criterion of adverse impacts on consumer utility and reliability, because the motor may experience higher failure rates in service when the manufactured air gaps are less than 12.5 thousandths of an inch.

4.4.2 Plastic Bonded Iron Powder

Plastic bonded iron powder (PBIP) could cut pr oduction costs while increasing the output of electric motors. Although other researcher s may be working on this technology option, DOE is aware of a research team at Lund University in Sweden that published a paper about PBIP. This technology option is based on an iron powder a lloy that is suspended in plastic, and is used in certain motor applications such as fans, pumps, and household appliances. 1 The compound is then shaped into motor components using a centrifugal mold, reducing the number of manufacturing steps. Researchers claim that this technology option could cut losses by as much as 50 percent. The Lund University team already produces inductors, transformers, and induction heating coils using PBIP, but has not ye t produced a small electric motor. In addition, it appears that PBIP technology is aimed at torus, claw-pole, and transversal flux motors, none of which fit EPCA’s definiti on of small motors.

Considering the four screening criteria fo r this technology option, DOE screened out PBIP as a means of improving efficiency. Although PBIP has the potential to improve efficiency while reducing manufacturing costs, DOE does not consider this technology option technologically feasible, because it has not been in corporated into a working prototype of a small electric motor. Also, DOE is uncertain whether the material has the structural integrity to form into the necessary shape of a small electric motor steel frame. Furthermore, DOE is uncertain whether PBIP is practicable to manufacture, insta ll, and service, because a prototype PBIP small electric motor has not been made and little information is available on the ability to manufacture this technology to make a judgment. Howeve r, DOE is not aware of any adverse impacts on product utility, product availa bility, health, or safety that may arise from the use of PBIP in small electric motors.

4.4.3 Summary of Technology Options Screened Out of the Analysis

Table 4.4.1 shows the criteria DOE used to scre en radial air gaps below 12.5 thousandths of an inch, PBIP, and permanent magnet el ectric motors out of the analysis.

Table 4.4.1 Design Options Screened Out of the Analysis Design Option Screening Criteria

Radial Air Gaps Below 12.5 Thousandths of an Inch Practicability to manufacture, install, and service; adverse impacts on prod uct utility or product availability

PBIP Technological feasibility

4-11REFERENCES

1 Horrdin, H., and E. Olsson. Technology Shifts in Power Electronics and Electric Motors for Hybrid Electric Vehicles: A Study of Silicon Carbide and Iron Powder Materials. 2007. Chalmers University of T echnology. Göteborg, Sweden.

4-12CHAPTER 5. ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION

.............................................................................................................. 5 5.2 PRODUCT CLASSES AND BASELINE MOTORS ANALYZED

................................. 6 5.2.1 Product Classes Analyzed

....................................................................................... 6 5.2.2 Baseline Models

.................................................................................................... 13 5.3 ENGINEERING ANALYSIS METHODOLOGY

........................................................... 14 5.3.1 Subcontractor Software Design Approach

............................................................ 14 5.3.2 Market Motor Validation

...................................................................................... 17 5.4 COST MODEL

................................................................................................................. 18 5.4.1 Constructing a Bill of Materials

............................................................................ 19 5.4.2 Commodity Prices

................................................................................................. 20 5.4.3 Labor Costs and Assumptions

............................................................................... 22 5.4.4 Manufacturer Markups

.......................................................................................... 24 5.5 RESULTS OF ENGINEERING ANALYSIS

.................................................................. 24 5.5.1 Polyphase, 1-horsepower, 4-Pole, 56-Frame Motor

............................................. 25 5.5.2 Capacitor-Start, Induction-Run, 1⁄2-hor sepower, 4-Pole, 48-Frame Motor

........... 29 5.5.3 Capacitor-Start, Capac itor-Run, 3⁄4-horsepower, 4-Pole, 56-Frame Motor

........... 34 5.6 SCALING RELATIONSHIPS

......................................................................................... 39 5.6.1 NEMA Provided Efficiency Data

......................................................................... 39 5.6.2 Market Efficiency Data

......................................................................................... 41 5.6.3 Independently Tested Motor Results

..................................................................... 41 5.6.4 Modeling Small Electric Motor Efficiency

........................................................... 42 5.6.5 Scaling Polyphase Small Electric Motor Data

...................................................... 42 5.6.6 Scaling Single-Phase Small Electric Motor Data

.................................................. 44

5-iLIST OF TABLES

Table 5.2.1 Representative Units Selected fo r the Determination Analysis

.............................. 6

Table 5.3.1 Percent Change in Motor Losses to Align Modeled Baseline with Tested Baseline

Table 5.5.5 Capacitor-Start, Inducti on-Run, 1⁄2-horsepower, 4-Pole, 48-Frame Motor Designs

Table 5.6.1 NEMA Recommended Efficiency Values fo r 42 and 48 Frame Size Small Electric

Table 5.6.2 NEMA Recommended Efficiency Values for 56 Frame Size Small Electric Table 5.2.2 Representative Units Selected for the Final Rule

.................................................. 12 Table 5.2.3 Tested Efficiency of Baseline Motors Selected for Analysis

................................ 13

17 Table 5.4.1 Labor Markups for Small Elect ric Motor Manu facturers

..................................... 23 Table 5.5.1 Efficiency and MSP Data for Polyphase Motor

.................................................... 26 Table 5.5.2 Polyphase, 1-horsepower, 4-Pole, 56-Frame Motor Designs

................................ 28 Table 5.5.3 Analysis of Steel Type for Polyphase Motor Designs

.......................................... 29 Table 5.5.4 Efficiency and MSP Data for Capacitor-Start, Induction-Run, 48-Frame Motor. 31

33 Table 5.5.6 Analysis of Steel Type for CSIR Motor Designs

.................................................. 34 Table 5.5.7 Efficiency and MSP Data for Capa citor-Start, Capacitor-Run Motor

.................. 36 Table 5.5.8 Capacitor-Start, Capac itor-Run, 3⁄4-horsepower, 4-Pole, 56-Frame Motor

........... 37 Table 5.5.9 Analysis of Steel Type for CSCR Motor Designs

................................................. 38

Motors 40

Motors 40 Table 5.6.3 Frame Sizes Associated with NEMA Premium Standards

................................... 41

LIST OF FIGURES

Figure 5.2.1 Polyphase Small Electric Motor Shipments Broken Down by Pole Configuration 7

Figure 5.2.4 Capacitor-Start, Induction- Run Small Electric Motor Shipments Broken Down by

Figure 5.2.5 Capacitor-Start, Induction- Run Small Electric Motor Shipments Broken Down by

Figure 5.2.6 Models of Capacitor-Start , Induction-Run Small Electric Motors Broken Down by

Figure 5.2.7 Capacitor-Start, Capacitor-Run Small Electric Motor Shipments Broken Down by

Figure 5.2.8 Capacitor-Start, Capacitor-Run Small Electric Motor Shipments Broken Down by

Figure 5.2.9 Models of Capacitor-Start, Capacitor-Run Small Electric Motors Broken Down by Figure 5.2.2 Polyphase Small Electric Motor Shipments Broken Down by Horsepower

........... 7 Figure 5.2.3 Models of Polyphase Small Electric Motors Broken Down by Horsepower

.......... 8

Pole Configuration

.......................................................................................................................... 8

Horsepower 9

Horsepower 10

Pole Configurations

...................................................................................................................... 11

Horsepower 11

Horsepower 12 Figure 5.4.1 Standard Method of Cost Accoun ting for Standards Rulemaking

........................ 18 Figure 5.4.2 Five-Year Copper Wire Prices in $2009 US

......................................................... 21 Figure 5.4.3 Five-Year Die-Casting Prices in $2009 US

.......................................................... 21

5-iiFigure 5.4.4 Five-Year Steel Lamination Prices in $2009 US

.................................................. 22 Figure 5.5.1 Polyphase 1-horsepower, 4-Pole, 56-Frame Motor Engineering Analysis, with

Figure 5.5.2 Polyphase 1-horsepower, 4-Pole, 56-Frame Motor Engineering Analysis, without

Figure 5.5.3 Capacitor-Start, Inducti on-Run, 1⁄2-horsepower, 4-Pole , 48-Frame Engineering

Figure 5.5.4 Capacitor-Start, Inducti on-Run, 1⁄2-horsepower, 4-Pole , 48-Frame Engineering

Figure 5.5.5 Capacitor-Start, Capacito r-Run 3⁄4-horsepower, 4-Pole, 56-Frame Engineering

Figure 5.5.6 Capacitor-Start, Capacito r-Run 3⁄4-horsepower, 4-Pole, 56-Frame Engineering

Figure 5.6.3 Manufacturer 4-Pole Values of Moto r Losses Shifted to NEMA Recommended Maximum Technology Point

....................................................................................................... . 25

Maximum Technology Point

....................................................................................................... . 26

Analysis Curve, with Maximum Technology Point

..................................................................... 30

Analysis Curve, without Maximum Technology Point

................................................................ 30

Analysis Curve, with Maximum Technology Point

..................................................................... 35

Analysis Curve, without Maximum Technology Point

................................................................ 35 Figure 5.6.1 NEMA Recommended 4-Pole Values Shifted to NEMA Premium

..................... 43 Figure 5.6.2 Four-Pole CSIR Efficiency vs. Four Pole CSCR Efficiency

................................ 44

Values 45

5-iiiLIST OF ACRONYMS AND ABBREVIATIONS

AWG American wire gauge BOM Bill of materials CSCR Capacitor-Start, Capacitor-Run Motor CSIR Capacitor-Start, Induction-Run Motor DOE United States Department of Energy EISA Energy Independence and Security Act M* M15, M19, M56 - grade of core steel MSP Manufacturer Selling Price MPC Manufacturer Production Cost NEMA National Electrical Manufacturers Association NCI Navigant Consulting, Inc RPM Revolutions per minute TSD Technical Support Document SEC Securities and Exchange Commission U.S. United States

μ F Microfarads

5-ivCHAPTER 5. ENGINEERING ANALYSIS

5.1 INTRODUCTION

The engineering analysis estimates the increase in manufacturer selling price (MSP) associated with technological and design changes that improve the efficiency of small electric motors. This chapter presents the U.S. De partment of Energy’s (DOE’s) assumptions, methodology and findings for the small electric mo tor engineering analysis. The output from the engineering analysis is a “cost-efficiency” relationship for each motor analyzed which describes how cost changes as efficiency increases. The engi neering analysis is used as an input to the lifecycle cost analysis (see Techni cal Support Document (TSD) chapter 8) as well as the national impact analysis (see TSD chapter 10).

As discussed in chapter 3 of this TSD, the small electric motors covered in this rulemaking include general-purpose capacitor-s tart, induction-run (CSIR), capacitor-start, capacitor-run (CSCR), and polyphase motors built in a National Electrical Manufacturers Association (NEMA) two-digit frame number series. The engineering analysis selected and analyzed one small electric motor from each of these three categories of covered motors.

The engineering analysis takes input from the market and technology assessment (see TSD chapter 3) and the screening analysis (s ee TSD chapter 4). These inputs include product classes, baseline motor performance, methods for improving efficiency, and design options that have passed the screening criteria. The engineer ing analysis uses these inputs, coupled with material price estimates, design parameters, and other manufact urer inputs, to develop the relationship between the MSP and nominal full-load efficiency of the representative motors studied. For small electric motors, this relati onship was evaluated using third-party design software, created and maintained by Yeadon Energy Systems, Inc.

At its most basic level, the output of the engineering analysis is a curve that estimates the manufacturer’s selling price for a range of efficien cy values. This output is subsequently markedup to determine the end-user prices based on th e various distribution ch annels (see TSD chapter 6). After determining customer prices by appl ying distribution chain markups, sales tax, and contractor markups, the data is combined with the energy-use and end-use load characterization (see TSD chapter 7) and used as a critical input to the custome r’s life-cycle cost and payback period analysis (see TSD chapter 8).

The results presented in this chapter do not provide a full assessment of the manufacturer’s costs associated with increasing efficiency levels for a small electric motor. The relationship presented in this chapter assume s an ideal situation, where manufacturers do not incur any costs associated with retooling, produ ct redesign, training, or marketing associated with incorporating design changes to their product lines to achieve the efficiency levels presented. DOE has quantified the additional costs manufacturers would incur when complying with mandatory efficiency standards using the design specifications outlined in this chapter. For a discussion of those costs and DOE’s methodol ogy for quantifying them, see TSD chapter 12, the manufacturer impact analysis.

5-5In this chapter, DOE discusses the product classes analyzed and the representative motors selected from all covered small electric motors. DOE also presen ts the methodology, inputs, and results associated with the development of M SP versus efficiency curves for each of the representative motors. Finally, DOE discusses the approach used to scale the engineering analysis to all other product classes for the national impact analysis.

5.2 PRODUCT CLASSES AND BASELINE MOTORS ANALYZED

Due to the large number of product classes, DOE did not directly analyze all covered motors. Instead, DOE selected representative units from the 62 product classe s of small electric motors based on three factors: (1) the motors that were studied in the determination and preliminary analyses, (2) manufacturer’s sales catalogs for this equipment, and (3) the ability to scale from these units to other units.

5.2.1 Product Classes Analyzed

In the determination analysis, DOE studied five different motors as the representative units. Two of the motors were capacitor-start, in duction-run and three were polyphase. For the capacitor-start, induction-run motors, DOE chose two similar models with 56 and 48 frame series to capture different cost-efficiency charact eristics associated with frame series. For the polyphase motors, DOE chose three models, holdi ng frame series constant, but varying the horsepower for two motors. The five motors studi ed in the determination analysis are presented in Table 5.2.1.

Table 5.2.1 Representative Unit s Selected for the De termination Analysis

Motor Category Model Horsepower Number of Poles Frame series

CSIR Dayton 4K856 0.50 4 56

CSIR Dayton 6K965 0.50 4 48 Polyphase Dayton 3N641 0.50 4 56 Polyphase Dayton 2N103 0.50 4 56 Polyphase Dayton 3N102 1.0 4 56

As mentioned, DOE also reviewed manufacture r catalogs. Also, DOE created a database of over 1,400 models that represen t all the small electric motors manufactured and listed in the catalogs. Although this database does not provi de information on unit sa les, it does provide an indication of the more popular motors from the st andpoint of having a greater variety of certain combinations of horsepower and fra me series. Analyzing this da ta and shipments data enabled DOE to select popular configurati ons of small electric motors.

Figure 5.2.1 through Figure 5.2.9 show ship ments data for each motor category broken down by pole configuration and horsepower, as we ll as the number of models of each motor category broken down by horsepower.

5-66-Pole 7%

4-Pole 68% 2-Pole 25%

Figure 5.2.1 Polyphase Small Electric Motor Shipments Broken Down by Pole Configuration

1/4 hp

2% 1/3 hp 5% 1/2 hp 11%

3/4 hp 28%

1 hp 19% 1.5 hp 28% 2 hp 5% 3 hp 2%

Figure 5.2.2 Polyphase Small Electric Motor Shipments Broken Down by Horsepower

Figure 5.2.1 and Figure 5.2.2 are based on projected shipments da ta for the National Impacts Analysis (see chapter 6 for more detail on the development of these data). They show the breakdown of shipments by pole configuratio n and horsepower. An overwhelming majority of polyphase motors shipped are four-pole mach ines and the weighted average horsepower of shipments is 1-horsepower.

5-7

### 0 10 20 30 40 50 60

0.25 0.33 0.50 0.75 1.00 1.50 2.00 3.00Number of Models



### Horsepower

Figure 5.2.3 Models of Polyphase Small Electric Motors Broken Down by Horsepower

The data in Figure 5.2.3 are based on DOE’s database of small elec tric motors compiled from several manufacturers’ sales catalogs. This figure shows the distribution of models by horsepower for polyphase motors. The most common horsepower models are 1⁄2- to 1­ horsepower, but the data show a skew toward models around 1-horsepower. This data reaffirm the weighted average of 1-horsepower for pol yphase motor shipments, which is why DOE selected 1-horsepower for the polyphase representative unit.

6-Pole 26%

4-Pole

38% 2-Pole 36%

Figure 5.2.4 Capacitor-Start, Induction-Run Small Electric Motor Shipments Broken Down by Pole Configuration

5-81/4 hp 18%

1/3 hp 30%

1/2 hp 25% 3/4 hp 22% 1 hp 4% 1.5 hp 1% 2 hp 0% 3 hp 0%

Figure 5.2.5 Capacitor-Start, Induction-Run Small Electric Motor Shipments Broken Down by Horsepower

Figure 5.2.4 and Figure 5.2.5 are based on projected shipments da ta for the National Impacts Analysis (see chapter 6 for more detail on the development of these data). They show the breakdown of shipments by pole configura tion and horsepower. Th e pole configuration distribution is fairly even among two, four, and six poles, but four pole motors are still the most common. The weighted average horsepower of CSIR motors shipped is 1⁄2 hp.

5-9

### 0 20 40 60 80 100 120

0.25 0.33 0.50 0.75 1.00 1.50 2.00 3.00Number of Models



### Horsepower

Figure 5.2.6 Models of Capacitor-Start, Induction-Run Small Electric Motors Broken Down by Horsepower

The data in Figure 5.2.6 are based on DOE’s review of manufacturer catalogs and show the distribution of models by horsepower for CSIR motors. The most common horsepower model is 1⁄2 hp which reaffirms the weighted av erage of 1⁄2-horsepower for CSIR shipments. Therefore, DOE selected a rating of 1⁄2-horsepower for the CSIR representative unit.

5-106-Pole 9%

4-Pole 67% 2-Pole 24%

Figure 5.2.7 Capacitor-Start, Capacitor-Run Small Electric Motor Shipments Broken Down by Pole Configurations

1/4 HP

2% 1/3 HP 6% 1/2HP 6%

3/4 HP 27%

1 HP 12% 1.5 HP 24% 2 HP 19% 3 HP 4%

Figure 5.2.8 Capacitor-Start, Capacitor-Run Small Electric Motor Shipments Broken Down by Horsepower

Figure 5.2.7 and Figure 5.2.8 are based on pr ojected shipments data for the National Impacts Analysis (see chapter 6 for more detail on the development of these data). These figures show the breakdown of shipments by pole configuration and horsepower. The pole

5-11configuration distribution shows that four pol e motors are the most common. The weighted average horsepower of CSCR motors shi pped is between 1- and 11⁄2-horsepower.

0 5 10 15 20 25

0.25 0.33 0.50 0.75 1.00 1.50 2.00 3.00Number of Models

Horsepower

Figure 5.2.9 Models of Capacitor-Start, Capaci tor-Run Small Electric Motors Broken Down by Horsepower

The weighted average horsepower of CSCR motors shipped was between 1- and 1 1⁄2­ horsepower, with the 11⁄2-horsepower models bare ly exceeding the 3⁄4-horsepower models for the most common horsepower, as shown in Figure 5.2.9. DOE did not want to choose another representative unit with a 1-horsepower rating an d felt that a rating of 11⁄2-horsepower could overly skew the scaling results by over-representing the high end of the range of horsepower ratings. Therefore, DOE selected its CSCR repres entative unit to have a horsepower rating of 3⁄4, which corresponded to the second most common model of CSCR motors.

Table 5.2.2 presents the three representative units DOE selected for this Final Rule analysis. All of the motors are four-pole motors and, in view of DOE’s analysis of manufacturer catalogs, this is the most common configurati on for these horsepower ratings. DOE selected motors that approximate the middle of the rang e of covered horsepower ratings, partly to minimize any error that might be introduced as the efficiency of these motors are extrapolated to other horsepower ratings.

Table 5.2.2 Representative Units Sel ected for the Final Rule Motor Category Horsepower Number of Poles Frame series
Polyphase 1.00 4 56

CSIR 0.50 4 48

CSCR 0.75 4 56

DOE identified these three as representative units of interest. All three units fit the requirements of a NEMA general-purpose, single speed, induction motor, rated for continuous

5-12duty, and built with open construction in a two-digit frame series. DOE provides additional detail on each motor, including input voltage, base line efficiency, and other critical performance characteristics in the sections that follow.

DOE decided to only consider the minimum frame number series in each product class when determining efficiency standards. Ther efore, the baseline motors listed in Table 5.2.4 represent the minimum available frame size in th eir respective product class. There is more detail on the reason for this decision in section 5.6.

5.2.2 Baseline Models

For each representative product class select ed, DOE identified a specific motor as a fundamental design against whic h it would apply changes to improve the motor’s efficiency. These small electric motors were considered DOE’s baseline models. DOE chose these small electric motors to represent the characteristics of the least efficient motor for each analyzed product class. Because there are no existing minim um energy conservation standards for small electric motors, the baseline models were selected after reviewing efficiency ratings suggested by manufacturers in the preliminary analyses a nd examining products available in the current market.

To establish the baseline efficiency, DOE purc hased and tested motors with the lowest catalog efficiency rating for each representative product class. DOE presented the results of one test on each of the three baseline motors. In response to comments that a single tested efficiency of the polyphase motor may not represent the averag e efficiency over a population of motors of a single model and because the catalog efficiency significantly deviated from the tested efficiency, DOE averaged tests on six different motors of the same model to establish the polyphase baseline efficiency. For the single-phase baseline motors, because the tested values did not deviate significantly from the catalog efficiency values and as DOE did not receive specific comments opposing the values used in the NOPR, DOE used the single-tested efficiency values as the baseline efficiencies. Table 5.2.3 below presents the three baseline efficiencies.

Table 5.2.3 Tested Efficiency of Baseline Motors Selected for Analysis Basic Characteristics of Motors Analyzed Baseline Efficiency %
Polyphase, 1 hp, 4-pole, 56 frame 75.3*

CSIR, 1⁄2 hp, 4-pole, 48 frame 57.9
CSCR, 3⁄4 hp, 4-pole, 56 frame 71.4

* This baseline efficiency is based on testing 6 motors according to IEEE Standard 112 method A.

As mentioned, DOE tested each motor that was purchased and to be used as a baseline model. DOE contracted an inde pendent laboratory, Advanced En ergy, as well as its technical expert, Yeadon Energy Systems, to perform the ap propriate IEEE test procedure for each motor. DOE established dimensional and performance specifications in a ddition to efficiency for the baseline models by examining a ll outputs of the IEEE test proced ures and performing teardowns of the purchased motors. The results of th e IEEE test procedures provided several motor performance characteristics including speed, power factor, torque, and line current at various

5-13load points. After compiling this test data, DOE’s technical expert tore down each motor to obtain dimensions, copper wire gaug es, steel grade, and any other pertinent design information. Finally, the purchased motors were modeled in th e designer’s software and used as the baseline designs in each analyzed product class for the engineering analysis. Again, the three product classes that were analyzed were: CSIR, 1⁄2-hor sepower, four-pole; CS CR, 3⁄4-horsepower, fourpole; and polyphase, 1-horsepower, four-pole moto rs. Specific detail on these baseline motors is provided in the results section of this chapter, section 5.5.

5.3 ENGINEERING ANALYSIS METHODOLOGY

DOE conducted the engineering analysis using a modified design-option approach where DOE employed its technical expert, with motor design software, to develop motor designs at several efficiency levels for each analyzed produ ct class. Based on these simulated designs and manufacturer and component supplier data, DOE calculated manufacturing costs and selling prices associated with each efficiency level. DOE decided on this approach after receiving insufficient response to its request for the manufact urer data needed to execute an efficiencylevel approach for the preliminary analyses. The design-option approach allows DOE to make its engineering analysis methodologies, assump tions, and results publicly available, granting advocates, manufacturers, and other interested parties the opportunity to review and comment on this information. The design options consider ed in the engineering analysis include: using copper die-cast rotor, reducing skew on stack, incr easing cross-sectional area of rotor conductor bars, increasing end-ring size, changing the gaug e of copper wire in stat or, manipulating stator slot dimensions, decreasing air gap between roto r and stator to 12.5 thousandths of an inch, improving grades of electrical steel, using thi nner steel laminations, annealing steel laminations, adding stack height, using high efficiency lamin ation materials, changing run-capacitor ratings, installing better ball bearings and lubricant, and installing a more efficient cooling system.

DOE’s technical expert, who specializes in small electric motor designs, prepared six sets of designs, two sets for each motor analyzed with each set spanning a range of efficiency levels. The third-party software design company determin ed the fundamental design parameters of the baseline motors through the aforementioned testing and teardowns. After modeling the baseline motors and creating theoretical, more efficient designs, DOE attempted to validate the results of the engineering analysis with the testing and teardown of additional motors available in the current market, as shown in appendix 5A.

5.3.1 Subcontractor Software Design Approach

DOE worked with a subcontractor to deve lop MSP-efficiency curves for the three representative small electric motors. As discu ssed above, DOE retained a small electric motor expert a with design experience and software, who prepared multiple sets of designs with increasing efficiency. The contractor started by testing the baseline motors purchased according to the applicable IEEE test procedure, both I EEE 112 test methods A and B were performed for the polyphase motor and IEEE 114 for the two single -phase motors. After testing the motors, the subcontractor tore down the motor, measured va rious dimensions, counted the steel laminations,

a Yeadon Energy Systems, Inc. (YES) of Iron River, Michigan.

5-14examined the slot fill, and determined all other pertinent design parameters. This data was combined and used as inputs to the design software. The resulting designs served duel purposes. First, by showing that the output of the softwa re program was in line with the results obtained through testing, the subcontractor’s proprietary so ftware program was validated as a design tool. DOE feels very confident in its selection of softwa re as it has been used in the past to design, prototype, and produce complete induction motor lines. Second, the designs became the starting point, or baseline models, against which design options were applied to increase efficiency, for each product class analyzed. As new designs were created, careful attention was paid to the critical performance characteristics to ensure that the resulting designs were reasonable and manufacturable replacements of the baseline mo tors. To this end, DOE established a set of design limitations that are applied across six sets of designs.

There is one design limitation that is an exception, stack height, and DOE uses this design option as a sensitivity analysis. Half of the design sets follow a limitation of no more than a 20% increase in stack height, while the othe r half follow another less stringent restriction of no more than a 100% increase in stack height . Both restrictions are listed below and the following list presents all of the design limitations DOE imposed.

• Peak slot fill – the minimum value of th is parameter should exceed 50% while the maximum value should not reach more than 65% for an assumed high volume simultaneous insertion process. (Note: DOE considers “slot fill” to be the area of the wire (including insulation) divided by th e total slot area available for winding.)

• Air gap between rotor and stator – the air ga p between the rotor and stator should not be less than 0.0125 inches for any design. Having air gaps tighter than this minimum could be problematic and may cause contact between the spinning rotor and the stationary stator, especially as shaft length increases.

• Stator slot opening – the slot opening width in combination with the copper wire gauges used should graph to a point in the “Level Wind Area” of the “Blade Gap Chart” taken from Alliance Winding. 1 Without this restriction, DOE is concerned there may be too many issues with wire breakage and jamming of manufacturers’ winding tools.

• Locked-rotor torque – for single-phase motors, the locked-rotor torque must be within the specifications set forth by NEMA MG1-1987 in Section 12.32.2. For polyphase motors, no such requirements exist in NEMA MG1- 1987 for motors built in a two-digit frame number series, but all of DOE’s designs ar e within the limits specified in Section 12.38.1 for medium electric motors.

• Locked-rotor current – for single-phase mo tors, the locked-rotor current should not exceed the values of NEMA MG1-1987 Section 12.33.2. Again, for polyphase motors there are no requirements for locked-rotor current in NEMA MG1-1987. However, DOE did ensure that the locked-rotor current of its designs did not exceed the requirement for medium motors as outlined in MG1-12.35

.

5-15• Breakdown torque – for single-phase motors, the breakdown torque must meet the requirements of NEMA MG 1-1987 Sec tion 12.32.1. For polyphase motors, the breakdown torque should follow the guidelin es established in NEMA MG1-1987 Section 12.37.

• Power factor – the power factor of the base line motor should be maintained or increased for all designs.

• Speed at rated load – the speed of the base line motor should be maintained or increased for all designs.

• Service factor – the service factor of each de sign should be within the limits set forth in NEMA MG1-1987 Table 12-2.

• Stray load loss – the assumed value of stray load loss should be 1.8% when it is not determined through testing. DOE used th e IEEE 112 method B tested value of 2.4% for polyphase designs, and the IEEE 114 assumed value of 1.8% for single-phase designs.

• Temperature rise – the temperature rise for each design should not exceed the temperature rise limit associated with the appropriate insulation class system.

• Motor diameter – the motor diam eter of the baseline motor s hould be that of the baseline and remain constant for all designs.

• Cooling system – the parameters directly related to the motor’s cooling system, such as ventilation openings in the laminations, shoul d not be modified in a manner that will increase the operating temperature of the motor.

• Rotor skew – the rotor skew may be altered, but it cannot be raised or lowered to a point that will introduce harmonics that a dversely affect motor performance ( e.g. completely removing it) or introduce cusps in the acceleration curve. (Note: this design limitation is subjective and relies on the design of the baseline motor and the expertise of the designer).

• Stack height – as mentioned before, DOE’s expert prepared two sets of designs for each motor analyzed. The first set of designs for each motor allows a maximum increase in stack height of 20% relative to the baseline. The second set of designs are less restricted and allow a 100% increase in stack height ( i.e. the stack height may double the original value).

Working within these parameters, the subcontr actor prepared eight to nine designs of increased efficiency for each of the two design sets for each representative motor. The design levels prepared for the space constrained designs were at the baseline, intermediate levels, a level for a design using a copper rotor, and a max-t ech level with a design using a copper rotor and exotic core steel. The non-space constrained design (100% increase of stack height) efficiency levels corresponded to the efficiency levels created for the space-constrained designs.

5-16As the baseline efficiency values modeled in the design software we re slightly different than the tested efficiency values, DOE shifted a ll of its modeled efficiency values. To do this, DOE first found the percentage difference in motor losses for the baseline tested value and the baseline modeled value of efficiency. Then DOE applied that percentage change to the motor losses of all the higher efficient designs. Tabl e 5.3.1 shows the shift implemented for each of the representative product classes.

Table 5.3.1 Percent Change in Motor Losses to Align Modeled Base line with Tested Baseline Modeled Baseline Efficiency (%) Tested Baseline Efficiency (%) Percent Change in Motor Losses (%) Polyphase 77.7 75.3 14 CSIR 57.9 57.9 0 CSCR 70.7 71.4 -3

5.3.2 Market Motor Validation

After DOE created its theoretical designs, DOE attempted to validate those results with data from motors currently available in the small electric motors market. DOE selected two to three motors from each representative product class, each with a different catalog listed efficiency level. DOE then had its subcontractor perform testing on these motors to verify its efficiency level. Next, the motors were torn down and a bill of materials was constructed and marked up to create an MSP using the same pric ing scheme developed an d discussed in section 5.4. The results of the test data and the MSPs developed from the tear downs of these motors were plotted along with the curves of the theo retical designs developed for the representative units. DOE found that the data points at comparable efficiency levels were consistent with the curves of the theoretical designs. The results of this validation analysis are illustrated along with the curves developed for the analyzed product classes in appendix 5A.

5-17Direct Labor Direct Material Overhead Selling General & Admin. R & D Interest Full Cost of Produc t 5.4 COST MODEL

DOE uses a standard method of cost accoun ting to determine the costs associated with manufacturing. This methodology is illustrated in Figure 5.4.1, where production costs and nonproduction costs are combined to deter mine the manufacturer selling price (MSP).

Direct Labor Direct Material Overhead Selling General & Admin. R & D Interest

Indirect Labor Full Production Cost* (Manufacturer Production Cost) Non-Production Cost

Indirect Material

Maintenance

Depreciation

Taxes

Insurance related to assets Mkt . research

A dvertising

POS promotion

Sales person salary + travel + commission Logistics - Warehousing - Delivery - Record keeping - Order entry/ processing Costs of service & staff units

General corporate costs - comp. etc. Costs associated with efforts to find new or improved products or production
processes Costs

o f borrowing funds

* Tax Reform Act of 1986, essentially, requires companies to measure cost of goods sold as the full production cost of the goods sold. Manufacturer Selling Price

Code compliance

Modernization Cust . service

Figure 5.4.1 Standard Method of Cost Acco unting for Standards Rulemaking

DOE developed estimates of some of the cost multipliers shown in Figure 5.4.1 by reviewing Security and Exchange Commission (SEC) SEC-10K reports from A.O. Smith Corporation, Baldor Electric Company, Emers on Motor Technologies, Re gal-Beloit Corporation, and WEG Electric Corporation as well as through conversations with indus try experts. Together, the full production cost or manufacturer produc tion cost (MPC) and the non-production costs equal the MSP. Full production cost is a combina tion of direct labor, di rect materials, and overhead. The overhead contributing to full produc tion cost includes indi rect labor, indirect material, maintenance, depreci ation, taxes, and insurance re lated to company assets. Nonproduction costs include the cost of selling (marke t research, advertising, sales representatives, logistics), general and administrative costs, research and development, interest payments and profit factor (not shown in the figure).

After the subcontractor designs were completed and verified for manufacturability ( i.e.

, following the design limitations mentioned in secti on 5.3.1), the next step was applying this cost model to all of them. A standard bill of materials (BOM) was constructed that includes direct

5-18material costs and labor time estimates along with costs. The BOM is then multiplied by a markup for overhead to obtain an MPC which in turn is marked up again for non-production costs to create a MSP.

5.4.1 Constructing a Bill of Materials

The BOM calculated for each design contained three types of material costs: fixed costs, variable costs, and semi-fixed costs. Fixed co st materials are those components that remain constant across all designs within a set. That is, these are the parts that do not vary with efficiency, such as switches, ba ll-bearings and other components. The aggregate fixed cost will vary from one motor category to another because the different motor categories have different component lists, but for a given motor category the total fixed costs re main constant for all designs. The variable costs considered are those portions of the BOM that vary based on the cost of the material and the amount of that material us ed in the design. For example, stator and rotor lamination costs are variable costs because the material price for the different steel grades changes as does the volume of steel needed for each design. Finally, semi-fixed costs are those materials that have a constant price, but vary in cost from design to design as a function of the amount used in the motor designs. An example of this is the cost of the die-cast aluminum or copper rotor bars. The price per pound for alumin um or copper is the same from design to design; however, the cost per design is different because the amount of metal used for die-casting the rotor bars varies depending upon the design ( e.g. a longer motor will require more aluminum).

DOE presents a detailed bill of materials for one design from each of the three motor categories analyzed in TSD appendix 5A. The di scussion below describe s the level of detail contained in the bill of materials presented in this appendix.

Each item in the BOM is organized by the component of the motor to which they apply. For example “end cap assembly” is a heading an d under this label ther e are several itemized parts with associated costs. The BOM includes the following headings, each with an itemized parts list: stator assembly, ro tor assembly, end cap assembly, housing assembly, hardware, and final assembly.

As mentioned, each heading has an itemized list of components. The stator assembly’s itemized lists include prices for cleats, lead wires, capacitor wires (for appropriate motor categories), splices, insulation, slot liner, copper sh ipping, stator laminati ons, main and auxiliary (when applicable) copper wire costs. The rotor assembly portion of the BOM includes prices for a fan, bearings, the rotor aluminum or copper, and the lamination costs. The housing assembly list includes paint, a fan shroud, a base, and the actual housing costs. Much of the hardware costs are fixed and include prices for washers, capac itor covers (when applicable), mounting bolts, cap screws, thermal switch screws, terminal block screws, terminal cover screws, studs, conduit cap, a start switch (when applicable), a nameplate, as well as some variable costs for start and run capacitors (when applicable).

5-195.4.2 Commodity Prices

A significant portion of the costs associated with small electric motors is attributed to the fluctuating metal prices of se veral motor components. These include steel laminations, copper wiring, and rotor die-casting aluminum or copper. DOE understands that it is difficult to choose an accurate price point for these components because their underl ying commodity prices have seen great fluctuations over the past several years, translating into large variations in cost. As a best estimate for these prices, DOE used an inflation adjusted five-year average price point for these components. In calculating the five-y ear average prices for these commodities, DOE adjusted historical prices to $2009 using the hist orical Bureau of Labor Statistics Producer Price Indices (PPI) for each commodity’s industry. 2

Additionally, DOE performed a cost sensitivity analysis in which they examined both a high and low commodities cost scenario. For all commodity prices, DOE used the PPI to determine the high and low cost points and then input those component costs into the model. This allowed DOE to generate a high commodities case and a low commodities case for the engineering analysis results. Please see appendix 5A for greater detail on the high and low cost scenarios.

DOE utilized the PPI for each commodity’s industry to calculate these prices. The PPI is an index that tracks the average change in pr ices that domestic produc ers receive for their product. This allowed DOE to scale its current 2009 component prices back for the previous five years for an inflation adjusted comparison. Once DOE had prices for 2005 through 2009, it was able to take a five-year average of these prices, as well as determine the maximum and minimum prices over the time period. The following figu res depict the component prices over the fiveyear timeframe.

5-20$2.20 $2.30 $2.40 $2.50 $2.60 $2.70 $2.80 $2.90 $3.00 $3.10 $3.20

2004 2005 2006 2007 2008 2009 2010$/lb

Year Copper Wire Prices (in 2009 US$)

18 Gauge
19 Gauge
20 Gauge
21 Gauge
22 Gauge

Figure 5.4.2 Five-Year Copper Wire Prices in $2009 US

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50

2004 2005 2006 2007 2008 2009 2010$/lb

Year Casting Material Prices (in 2009 US$)

Copper

Aluminum

Figure 5.4.3 Five-Year Die-Casting Prices in $2009 US

5-21$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45

2004 2005 2006 2007 2008 2009 2010$/lam

Year Core Steel Stator Prices (in 2009 US$)

29M15

29M19

24M19

24M47

24M56

Figure 5.4.4 Five-Year Steel Lamination Prices in $2009 US

5.4.3 Labor Costs and Assumptions

Due to the degree of automation used in manufacturing small electric motors, labor costs are not a significant portion of the overall produc tion cost and do not vary significantly with increasingly efficient designs. The modeling software provides an estimate of the amount of labor associated with each small electric motor design. DOE then multiplies that time estimate by a marked up hourly rate to determine the pr oportion of labor cost associated with the manufacturer’s production cost.

DOE used the same hourly labor rate for all motors analyzed. The base hourly rate was developed from the 2002 Ec onomic Census of Industry 3 by the U.S. Census Bureau. Several markups were applied succe ssively and with cumulative effect to the base hourly rate to obtain a fully burdened rate which was inte nded to be representative of the labor costs associated with manufacturing these motors. Table 5.4.1 shows th e base labor rate DOE started with, each markup with its corresponding markup percentage and the resulting partiall y burdened rate after that markup, and a final fully burde ned labor rate. The markups we re applied in the order they appear in the table and to the “rate per hour” lis ted for the previous markup. For example, the 28-percent markup for fringe was applied to the $18.02 ( i.e. , 1.28 x $18.02 = $23.07) that DOE obtained after marking up the base labor ra te by 33-percent for indirect production.

5-22Table 5.4.1 Labor Markups for Small Electric Motor Manufacturers Item description Markup Rate per hour Labor cost per hour ٭ $ 13.55

Indirect Production ٭٭ 33 % $ 18.02
Fringe† 28 % $ 23.07
Assembly Labor Up-time†† 43 % $ 32.99
Cost of Labor Input to Spreadsheet $ 32.99
published December 2004, Table 2002 Economic Census of Industry, Cost per hour is from U.S. Census Bureau, ٭ 5, page 5. Data for NAICS code 3353121 “Fractional Horsepower Motors” Production workers hours and wages. Indirect Production Labor (Production managers, quality cont rol, etc.) as a percent of direct labor on a cost basis. ٭٭ Navigant Consulting, Inc. NCI estimate. † Fringe includes pension contributions, group insurance premiums, workers compensation. Source: U.S. Census Bureau, 2002 Economic Census of Industry , published December 2004, Table 3, page 3. Data for NAICS code 335312 “Motors and generator manufacturing,” total fringe benefits as a percent of total compensation for all employees (not just production workers). †† Assembly labor up-time is a factor applied to account for the time that workers are not assembling product and/or reworking unsatisfactory units. The markup of 43-percent represents a 70-percent utilization (multiplying by 100/70). NCI estimate.

As discussed above, the small electric motor design software provides an estimated manufacturing time for each design. The softwa re apportions the labor time estimates into categories that identify an overall activity, such as stator assembly, rotor assembly, and housing assembly. Within these categories, subheadings denote process steps for specific parts of the motor. Summing the list of process steps gives a total time estimate for manufacturing the motor, which is multiplied by the fully burdened labor cost, shown as $32.99.

In consultation with manufacturers, DOE l earned that the amount of time necessary to build a motor with a longer stack or more copper wirings is considered negligible. Therefore, there was only one process step that DOE calculate d as a variable labor cost, namely the “Rotor Core Assembly” process. This activity change d to a longer time when the subcontractor’s designs called for a copper rotor. The reason fo r the increased labor time is because copper has a higher melting point than aluminum does, so die-casting the rotor takes more time to heat the metal sufficiently.

The remainder and the majority of the labor costs calculated were fixed costs. The following categories are associated with the labor estimates: stator assembly, rotor assembly, end cap assembly, housing assembly, hardware, an d final assembly. The stator assembly list includes time estimates for punching and stacking the laminations, adding slot liner, winding coils, inserting coils, forming end-turns, lead st ripping and terminal placement, magnet wire or lead splicing, using the stator test system, a nd applying the varnish. Adding the fan, machining the shaft, pressing the shaft onto the rotor, bala ncing the rotor, and heat shrinking bearings onto the shaft are labor steps for the rotor assembly. For end cap assembly there are time estimates for machining the bearing bore at each end, pressing the cap, washing, and performing the die-cast press. The labor times under the ha rdware section are estimates of adding the components to the motor. Various washers, bolts, studs, screws, gr ommets for capacitor wire (when applicable), start and/or run capacitors (w hen applicable), and a start sw itch (when applicable) are among

5-23these hardware components. Included in the fina l assembly section are times for actual assembly, motor testing, labeling and packaging.

5.4.4 Manufacturer Markups

DOE used the three markups described below to account for costs that are part of each motor leaving a manufacturer’s facility. Scrap factors, overhead costs, and non-production markups will vary from manufacturer to manufacturer because their profit margins, prices paid for goods, and business structures vary. DOE prepared estimates for these three non-production cost manufacturer markups from SEC-10K reports and conversations w ith manufacturers and experts.

• Handling and scrap factor: 2.5-percent mar kup. This markup was applied to the direct material production costs of each motor. It acc ounts for the handling of material (loading into assembly or winding equipment) and the scrap material that cannot be used in the production of a finished small electric motor ( e.g. , lengths of wire too short to wind).

• Factory overhead: 17.5- or 18.0-percent ma rkup. Factory overhead includes all the indirect costs associated with production, i ndirect materials and energy use, taxes, insurance, and depreciation. DOE applies f actory overhead to the direct material production costs, including the handling and scrap factor, and labor estimates. For aluminum rotor designs a 17.5-percent markup was used, but for all copper rotor designs an 18.0-percent markup was used to factor in increased depreciation for the equipment.

• Non-production: 45-percent ma rkup. This markup reflects costs including sales and general administrative, research and developm ent, interest payments, and profit factor. DOE applies the non-production markup to the sum of the direct material production, the handling and scrap, the direct labor, and the factory overhead otherwise known as the MPC. The MPC plus the non-production ma rkup gives a manufacturer selling price MSP.

5.5 RESULTS OF ENGINEERING ANALYSIS

For the CSIR motor analyzed, DOE developed eight efficiency levels using a motor design software tool, and for the polyphase and CSCR motors analyzed DOE developed nine efficiency levels. These included a baseline desi gn, intermediate designs, then a copper rotor design, and a max-tech design that uses a copper rotor and an exotic core steel. Then by using the methodology and pricing scheme outlined in the previous section, DOE developed manufacturer selling prices for each small elec tric motor design created. Throughout this section, DOE shows the bottom-up derived MSP’s.

The engineering analysis results are essentially six manufacturer selling price-versus-fullload efficiency curves that represent two re lationships for each of the three representative product classes analyzed. For each of the three motors analyzed, DOE created designs that allowed stack height to double and designs that only allowed stack height to increase by 20­ percent over the baseline design. This wa s done to determine how the cost-efficiency

5-24relationship would change for space constrai ned OEMs (only 20-percent increase) versus nonspace constrained OEMs (doubled stack height maximum). Thus, each of the three motors analyzed have two curves plotted to depict these two scenarios. The six graphs shown in Figure 5.5.1 through Figure 5.5.6 provide the MSP versus efficiency curves and Table 5.5.1 through Table 5.5.8 present the tabulated results.

5.5.1 Polyphase, 1-horsepower, 4-Pole, 56-Frame Motor

Figure 5.5.1 presents the relationship between the MSP and full-load efficiency for the polyphase motor analyzed. DOE developed an exotic maximum technology (max-tech) design using a non-traditional steel type ( i.e. , Hiperco 50 TM ) that makes the motor considerably more expensive than other designs analyzed. Use of this premium electromagnetic steel greatly increases the MSP of the motor, thereby skewing the Y-axis. For this reason, the engineering analysis results are presented twice, first with the max-tech design (Figure 5.5.1) and then again without the max-tech design (Figure 5.5.2).Manufacturer Selling Price ($2009) $2,000
$1,800
$1,600
$1,400
$1,200
$1,000

$800
$600
$400
$200

$0 Space Constrained Non-Space Constrained

74 76 78 80 82 84 86 88 90
Full Load Efficiency (%)

Figure 5.5.1 Polyphase 1-horsepower, 4-Pole, 56-Frame Motor Engineering Analysis, with Maximum Technology Point

5-25$350

$300

$250

$200

$150

$100

$50

$0

74 76 78 80 82 84 86 88 90 Space Constrained Non-Space Constrained

Full Load Efficiency (%)

Figure 5.5.2 Polyphase 1-horsepower, 4-Pole, 56- Frame Motor Engin eering Analysis, without Maximum Technology Point

Table 5.5.1 presents the same engineering anal ysis results in a tabular form, including the full-load efficiency values and the MSPs. Moving from the baseline motor to the max-tech motor, DOE found that the full-load efficiency would increase 12.5 percentage points, for a 16.7­ percent improvement over the baseline motor. Raising the efficiency to that level caused the MSP to more than triple, increasing from$98.54 for the baseline model to $326.18 for the nonspace constrained max-tech motor. The difference in MSP is even greater for the spaceconstrained max-tech moto r, which has a MSP of $1,766.06.

Table 5.5.1 Efficiency and MSP Data for Polyphase MotorManufacturer Selling Price ($2009)

Efficiency Level Efficiency % (Design 1 / Design 2)* MSP $ (Design 1 / Design 2)*

Baseline 75.3 98.54

EL 1 77.3 104.83

EL 2 78.8 108.17

EL 3 80.5 114.24

EL 4 81.1 118.54

EL 4b 83.5 / 83.5 135.62 / 134.04

EL 5 85.3 / 85.2 230.92 / 153.92

EL 6 86.2 / 86.3 237.70 / 186.37
EL 7 (Max-tech) 87.7 / 87.8 1,766.06 / 326.18
*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constrained design is the same as the non-space constrained design.

5-26Table 5.5.2 presents some of the design and perfo rmance specifications asso ciated with the nine polyphase designs presented above. Additiona lly, DOE provides a column titled “NEMA MG1 Req.” that presents the value required by NEMA MG1-1987 for a given performance specification. Additional details and performance characteristics for polyphase designs can be found in appendix 5A.

5-27Table5.5.2 Polyphase, 1-horsepower, 4-Pole, 56-Frame Motor DesignsParameter (Units)NEMA MG1Req.BaselineEL1EL2EL3EL4EL4bEL5EL6EL7--Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Efficiency(%)N/A75.377.378.880.581.183.583.585.385.286.286.387.787.8PowerFactorN/A69.070.671.073.973.572.969.771.274.074.273.871.669.7Speed(RPM)N/A1728173517351728172917281729173317371741174317411761Torque(in-lbs)N/A36.836.336.336.736.436.636.836.736.636.436.236.636.2Current (A)N/A3.523.323.253.083.063.01 / 3.173.06 / 2.942.89 / 2.892.96 / 3.04Core SteelN/A24M5624M5624M5624M5624M5624M1924M4729M1524M1929M1524M19Hiperco 5029M15Stack Height (in)N/A3.03.23.4253.53.63.6 / 4.43.6 / 4.453.6 / 63.6 / 5.525RotorMaterialN/AAlAlAlAlAlAlAlAlAlCuAlCuCuMain Wire (AWG)N/A222120.52019.5202019.52119.52019.520FL Winding Temp.( ̊C)≤90 Temp.Rise at SFLoad70.5 (61.6 atSF Load)65.759.054.652.547.442.744.139.542.735.739.534.5BD Torque (in-lbs)(at 25 ̊C)≥114.2133.3139.6140.6128.8131.3128.8132.7137.6135.8128.0145.0130.2163.8LR Torque(in-lbs) (at 25 ̊C)≥275% of FLTorque**123.2(334%)126.7(349%)126.8(349%)111.2(303%)113.1(311%)111.7(305%)117.8(320%)121.1(330%)115.7(316%)102.3(281%)124.0(343%)106.2(290%)138.6(383%)LR Current(A) (at 25 ̊C)≤30**19.720.119.917.918.117.818.418.918.617.919.618.323.2Service Factor1.151.151.151.151.151.151.151.151.151.151.151.151.151.15*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constraineddesign is the same as the non-space constrained design.** The NEMA MG1 requirements listed for LR Torque and LR Current are for medium electric motors. No such requirements exist for small electric motors inthe NEMA MG1 document, but DOE would like to demonstrate that the motor designs meet the requirements for medium electric motors.Note: FL = full-load; SF = service factor; BD = breakdown; LR = locked-rotor.5-28DOE recognizes that in analyzing and modeling motor performance, calculated core losses based on Epstein tests may deviate from actual core losses in the motor. This is primarily due to the harmonic effects created by the distor tion of the flux density waveform. It is DOE’s understanding that Epstein core loss data begins to vary significantly from actual motor core losses when various components of the core steel are driven into magnetic saturation. Therefore, DOE analyzed the flux densities in each of its designs to ensure that the motor was operating below the saturation level. Table 5.5.3 presents th e flux densities in the various portions of the rotor and stator and the corresponding assumed saturation points for the steels used in the polyphase designs. To identify the saturation points for each of the steel types, DOE analyzed the magnetization curves provided by steel manufac turers and noted that the steels did not reach their maximum flux density levels until the end of the magnetization test. Given this data, DOE believes it is reasonable to assume that the saturation levels are at the terminal points of the magnetization curves and thus presents these values in Table 5.5.3.

Table 5.5.3 Analysis of Steel Type for Polyphase Motor Designs Steel Type Saturation Point* (Kilolines/in 2 ) Flux Density (Kilolines/in 2 ) Air Gap Stator Yoke Stator Teeth Rotor Yoke Rotor Teeth Baseline 24M56 116.1 @ 60 Oe 53.4 101.2 89.3 50.1 109.5

EL 1 24M56 116.1 @ 60 Oe 56.2 103.4 91.3 52.8 115.3
EL 2 24M56 116.1 @ 60 Oe 53.1 97.7 86.3 49.9 108.9
EL 3 24M56 116.1 @ 60 Oe 49.1 90.4 79.8 46.1 100.8
EL 4 24M56 116.1 @ 60 Oe 48.3 88.8 78.5 45.3 99.0 EL 4b 24M19 116.1 @ 82 Oe 48.3 88.8 78.5 45.3 99.0 EL 4b 2x 24M47 116.1 @ 62 Oe 40.4 76.1 67.2 38.0 82.9 EL 5 29M15 116.1 @ 86 Oe 49.4 90.9 80.2 46.4 101.3 EL 5 2x 24M19 116.1 @ 82 Oe 43.9 80.8 71.4 41.3 90.1

EL 6 29M15 116.1 @ 86 Oe 48.3 88.8 78.5 45.3 99.0 EL 6 2x 24M19 116.1 @ 82 Oe 38.3 70.5 62.3 36.0 78.7

EL 7 Hiperco 50 147.2 @ 200 Oe 48.3 88.8 78.5 45.3 99.0
EL 7 2x 29M15 116.1 @ 86 Oe 42.9 78.9 69.7 40.3 88.0

* This data was aggregated from steel manufacturers: AK Steel, Tempel, and Carpenter.

5.5.2 Capacitor-Start, Induction-Run, 1⁄2-horsepower, 4-Pole, 48-Frame Motor

Figure 5.5.3 presents the relationship between the MSP and full-load efficiency for the 48-frame capacitor-start, induction-run motor DOE an alyzed. The max-tech design incorporates a high-grade non-traditional elect romagnetic steel (Hiperco 50 TM ) alloy that is much more expensive than the high quality electromagnetic st eel alloy used in any of the other designs. Use of such steel greatly increases the MSP of the motor, thereby skewing the Y-axis. For this reason, the engineering analysis results are pres ented again without the max-tech design in Figure 5.5.4.

5-29Manufacturer Selling Price ($2009) $1,400

$1,200

$1,000

$800

$600

$400

$200

$0 Space Constrained

Non-Space Constrained

55 60 65 70 75 80
Full Load Efficiency (%)

Figure 5.5.3 Capacitor-Start, Induction-Run, 1⁄2-horsepower, 4-Pole, 48-Frame Engineering Analysis Curve, with Maximum Technology PointManufacturer Selling Price ($2009) $195

$175

$155

$135

$115

$95

$75 Space Constrained

Non-Space Constrained

55 60 65 70 75 80
Full Load Efficiency (%)

Figure 5.5.4 Capacitor-Start, Induction-Run, 1⁄2-horsepower, 4-Pole, 48-Frame Engineering Analysis Curve, without Maximum Technology Point

Table 5.5.4 presents the same engineering anal ysis results in a tabular form, including the full-load efficiency values and the MSPs. Moving from the baseline motor to the max-tech

5-30motor, DOE found that the full-load efficiency would increase 19.8 percentage points, for about a 34-percent improvement over the baseline motor. Raising the efficiency to that level caused the MSP to increase by more than 65-percent, increasing from $91.24 for the baseline model to $151.25 for the non-space constrained max-tech motor. The difference in MSP is significantly greater for the space-constrained max-tech motor, which has a MSP of $1,200.98.

Table 5.5.4 Efficiency and MSP Data for Capa citor-Start, Induction-Run, 48-Frame Motor

Efficiency Level Efficiency % (Design 1 / Design 2)* MSP $ (Design 1 / Design 2)*

Baseline 57.9 91.24

EL 1 61.1 95.43

EL 2 63.5 98.45

EL 3 65.7 99.58

EL 4 70.6 / 70.5 114.31 / 106.99

EL 5 71.8 / 71.8 117.07 / 118.00

EL 6 73.1 / 73.3 182.09 / 132.22
EL 7 (Max-tech) 77.6 / 77.7 1,200.98 / 151.25
*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constrained design is the same as the non-space constrained design.

5-31Table 5.5.5 presents some of the design and perfo rmance specifications asso ciated with the eight CSIR efficiency levels presented above. Additionally, DOE provides a column titled “NEMA MG1 Req.” that presents the value require d by NEMA MG1-1987 for a given performance specification. Additional details and performance characteristics for CSIR designs can be found in appendix 5A.

5-32Table5.5.5 Capacitor-Start, Induction-Run, 1⁄2-horsepower, 4-Pole, 48-Frame Motor DesignsParameter(Units)NEMAMG1 Req.BaselineEL1EL2EL3EL4EL5EL6EL7--Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Efficiency(%)N/A57.961.163.565.770.670.571.871.873.173.377.677.7PowerFactorN/A56.958.258.560.860.065.362.867.661.961.666.365.6Speed(RPM)N/A173017301732173217351746174217401731173917341754Torque(in-lbs)N/A18.318.418.418.318.218.118.118.318.418.018.218.3Current (A)N/A9.498.868.487.827.49/ 6.676.99 / 6.407.12 / 6.926.23 / 6.26Core SteelN/A24M5624M5624M5624M5624M1924M5624M1924M5629M1524M19Hiperco 5024M19Stack Height (in)N/A22.12.22.32.4 / 2.92.4 / 42.4 / 3.2752.4 / 4RotorMaterialN/AAlAlAlAlAlAlCuAlCuAlCuCuMain Wire(AWG)N/A18.52120.520.520.5202121.520.52120.521Aux. Wire(AWG)N/A21.521.521.521.521.521.521.521.521.521.521.521.5Start Cap.(μF)N/A333300300275260275350275350325380375FL WindingTemp. ( ̊C)≤90 Temp.Rise at SFLoad81.9(72.8 at SFLoad)80.172.965.956.249.652.139.349.441.043.834.7BD Torque (inlbs) (at 25 ̊C)≥43.554.453.853.851.050.152.950.250.646.156.244.453.9LR Torque(in-lbs) (at 25 ̊C)≥63.864.065.264.064.163.964.064.567.464.264.963.864.5LR Current(A) (at 25 ̊C)≤4543.441.140.637.535.836.038.335.735.541.234.637.0Service Factor1.251.251.251.251.251.251.251.251.251.251.251.251.25*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constraineddesign is the same as the non-space constrained design.Note: FL = full-load; SF = service factor; BD = breakdown; LR = locked-rotor.5-33As mentioned in Section 5.5.1, DOE examined the flux densities and saturation point for each steel type used in its designs. Table 5.5.6 presents the flux densities in the various portions of the rotor and stator and the corresponding assu med saturation points for the steels used in the CSIR designs.

Table 5.5.6 Analysis of Steel Type for CSIR Motor Designs Steel Type Saturation Point* (Kilolines/in 2 ) Flux Density (Kilolines/in 2 ) Air Gap Stator Yoke Stator Teeth Rotor Yoke Rotor Teeth Baseline 24M56 116.1 @ 60 Oe 52.0 93.6 113.5 40.9 116.9

EL 1 24M56 116.1 @ 60 Oe 49.9 88.1 106.9 39.6 113.2
EL 2 24M56 116.1 @ 60 Oe 48.1 84.6 102.6 38.3 109.3 EL 3 24M56 116.1 @ 60 Oe 46.0 80.1 97.2 36.6 104.5
EL 4 24M19 116.1 @ 82 Oe 44.7 77.5 94.1 35.6 101.6
EL 4 2x 24M56 116.1 @ 60 Oe 42.7 72.3 87.7 34.0 97.1

EL 5 24M19 116.1 @ 82 Oe 46.4 79.2 96.1 36.8 105.3 EL 5 2x 24M56 116.1 @ 60 Oe 35.9 60.2 73.0 28.5 81.4

EL 6 29M15 116.1 @ 86 Oe 42.7 73.9 89.7 33.9 96.9 EL 6 2x 24M19 116.1 @ 82 Oe 42.6 71.7 87.0 33.9 96.7

EL 7 Hiperco 50 147.2 @ 200 Oe 43.6 73.9 89.7 34.6 99.0
EL 7 2x 24M19 116.1 @ 82 Oe 36.3 60.7 73.6 28.8 82.4

* This data was aggregated from steel manufacturers: AK Steel, Tempel, and Carpenter.

5.5.3 Capacitor-Start, Capacitor-Run, 3⁄4-horsepower, 4-Pole, 56-Frame Motor

Figure 5.5.5 presents the relationship between the MSP and full-load efficiency for the CSCR motor. The max-tech design incorporates a high-grade non-trad itional electromagnetic steel alloy (Hiperco 50 TM ) that is much more expensive than the high quality electromagnetic steel alloy used in any of the other designs. Use of such steel greatly increases the MSP of the motor, thereby distorting the Y-axis. For this reason, the engineering analysis results are presented again without the max-tech design in Figure 5.5.6.

5-34Manufacturer Selling Price ($2009) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000

$800 $600 $400 $200 $0 Space Constrained

Non-Space Constrained

70 75 80 85 90
Full Load Efficiency (%)

Figure 5.5.5 Capacitor-Start, Capacitor-Run 3⁄4-horsepower, 4-Pole, 56-Frame Engineering Analysis Curve, with Maximum Technology PointManufacturer Selling Price ($2009) $350

$300

$250

$200

$150

$100

$50

$0 Space Constrained

Non-Space Constrained

70 75 80 85 90
Full Load Efficiency (%)

Figure 5.5.6 Capacitor-Start, Capacitor-Run 3⁄4-horsepower, 4-Pole, 56-Frame Engineering Analysis Curve, without Maximum Technology Point

5-35Table 5.5.7 presents the same engineering anal ysis results in tabular form, including the full-load efficiency values and the MSPs. Moving from the baseline motor to the max-tech motor, DOE found that the full-load efficiency would increase 16.5 percentage points, for about a 23-percent improvement over the baseline motor. Raising the efficiency to that level caused theMSP to nearly triple, increasing from $111.72 for the baseline model to $327.69 for the nonspace constrained max-tech motor. The difference in MSP is significantly greater for the spaceconstrained max-tech moto r, which has a MSP of $1,771.47.

Table 5.5.7 Efficiency and MSP Data for Capa citor-Start, Capacitor-Run Motor

Efficiency Level Efficiency % (Design 1 / Design 2)* MSP $ (Design 1 / Design 2)*

Baseline 71.4 111.72

EL 1 75.1 117.13

EL 2 79.5 / 79.5 137.20 / 129.88

EL 3 81.7 / 81.8 142.63 / 135.56

EL 4 82.8 / 82.8 146.44 / 142.76

EL 5 84.1 / 84.0 154.55 / 151.91

EL 6 84.8 / 84.6 236.98 / 158.25

EL 7 86.8 / 86.7 244.03 / 175.75
EL 8 (Max-tech) 88.1 / 87.9 1,771.47 / 327.69
*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constrained design is the same as the non-space constrained design.

Table 5.5.8 presents some of the design and performance specifications associated with the nine CSCR efficiency levels presented a bove. Additionally, DOE provides a column titled “NEMA MG1 Req.” that presents the valu e required by NEMA MG1-1987 for a given performance specification. Additional details and performance characteristics for CSCR designs can be found in appendix 5A.

5-36Table5.5.8 Capacitor-Start, Capacitor-Run, 3⁄4-horsepower, 4-Pole, 56-Frame MotorParameter (Units)NEMAMG1 Req.BaselineEL1EL2EL3EL4EL5EL6EL7EL8-Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Design 1Design 2Efficiency(%)N/A71.475.179.579.581.781.882.882.884.184.084.884.686.886.788.187.9PowerFactorN/A69.077.475.983.682.082.892.295.992.195.892.997.494.497.590.099.0Speed(RPM)N/A1733174017451736174717421749175717741767174417581760176917571751Torque(in-lbs)N/A27.327.427.127.227.227.027.026.726.426.927.327.226.926.527.227.1Current (A)N/A9.998.518.11 / 7.367.35 / 7.196.41/ 6.116.25 / 6.106.25 / 6.005.97 / 5.746.21 / 5.64CoreSteelN/A24M5624M5624M1924M5624M1924M5624M1924M5624M1924M5629M1524M5629M1524M19Hiperco 5029M19Stack Height (in)N/A33.153.3 / 4.13.45 / 4.63.6 / 4.53.6 / 53.6 / 5.53.6 / 4.753.6 / 6Rotor MaterialN/AAlAlAl / AlAl / AlAl / CuCu / CuAl / CuCu / CuCu / CuMain Wire (AWG)N/A1820.520.5 / 20.520 / 21.520 / 21.520 / 21.520 / 21.520 / 21.520 / 21.5Aux. Wire (AWG)N/A1921.521.5 / 21.521 / 2121 / 2121 / 2119 / 2119 / 2121.5 / 21Start Cap.(μF)N/A433433433433433515433433400525350525440525433495Run Cap.(μF)N/A7.5202020252535354040354035453545FL Winding Temp.( ̊C)≤90 Temp.Rise @ SFLoad76.4(74.4 at SFLoad)66.455.448.750.142.446.641.144.637.439.435.239.135.036.330.1BD Torque (in-lbs)(at 25 ̊C)≥61.968.371.272.762.473.764.573.163.578.367.967.060.2**68.070.070.657.1**LR Torque(in-lbs) (at 25 ̊C)≥89.389.791.292.0102.795.591.391.290.092.889.398.989.689.389.799.290.8LR Current(A) (at 25 ̊C)≤6158.258.159.451.659.640.957.349.859.054.946.953.149.754.147.948.6Service Factor1.251.251.251.251.251.251.251.251.251.25*Design 1 denotes the space constrained design, and design 2 denotes the non-space constrained design. If only one value is listed, then the space constraineddesign is the same as the non-space constrained design.** The breakdown torque requirement for single-phase motors should be greater than the NEMA MG1 value subject to manufacturingtolerances. DOE believesthat the variances seen at EL 6 and EL 8 are within these manufacturing tolerances.Note: FL = full-load; SF = service factor; BD = breakdown; LR = locked-rotor.5-37As mentioned in Section 5.5.1, DOE examined the flux densities and saturation point for each steel type used in its designs. Table 5.5.9 pr esents the flux densities in the various portions of the rotor and stator and the corresponding assu med saturation points for the steels used in the CSCR designs.

Table 5.5.9 Analysis of Steel Type for CSCR Motor Designs Steel Type Saturation Point* (Kilolines/in 2 ) Flux Density (Kilolines/in 2 ) Air Gap Stator Yoke Stator Teeth Rotor Yoke Rotor Teeth Baseline 24M56 116.1 @ 60 Oe 45.0 113.3 91.5 36.9 87.2

EL 1 24M56 116.1 @ 60 Oe 43.0 107.9 87.1 35.3 83.3
EL 2 24M19 116.1 @ 82 Oe 42.3 105.9 85.5 34.7 81.9
EL 2 2x 24M56 116.1 @ 60 Oe 34.7 85.8 69.3 28.5 67.2

EL 3 24M19 116.1 @ 82 Oe 40.7 101.4 81.9 33.4 78.8 EL 3 2x 24M56 116.1 @ 60 Oe 32.4 82.1 66.3 26.6 62.7

EL 4 24M19 116.1 @ 82 Oe 38.5 96.0 77.6 31.6 74.6
EL 4 2x 24M56 116.1 @ 60 Oe 31.8 78.2 63.1 26.1 61.7

EL 5 24M19 116.1 @ 82 Oe 38.4 96.0 77.6 31.5 74.4 EL 5 2x 24M56 116.1 @ 60 Oe 30.8 75.5 61.0 25.3 59.6

EL 6 29M15 116.1 @ 86 Oe 36.8 91.7 74.0 30.2 71.3 EL 6 2x 24M56 116.1 @ 60 Oe 27.6 67.6 54.6 22.6 53.4

EL 7 29M15 116.1 @ 86 Oe 37.3 91.7 74.0 30.6 72.3
EL 7 2x 24M19 116.1 @ 82 Oe 31.9 78.3 63.2 26.2 61.8

EL 8 Hiperco 50 147.2 @ 200 Oe 38.5 94.8 76.5 31.5 74.5
EL 8 2x 29M19 109.6 @ 46 Oe 25.2 62.0 50.1 20.7 48.8

* This data was aggregated from steel manufacturers: AK Steel, Tempel, and Carpenter.

5-385.6 SCALING RELATIONSHIPS

In order to reduce the analytical burden associated with conducting a detailed engineering analysis of the cost-efficiency relationshi p on all 62 product classe s, DOE developed a systematic approach that reduced the number of small electric motors it analyzed while retaining reasonable levels of accuracy. DOE selected one baseline model from each motor category to evaluate in the engineering analysis. It then extrapolated the results of this analysis from the units studied to the other product classes. This section describes the methodology DOE followed to scale to product classes that were not directly analyzed.

To scale to the product classes that were not analyzed, DOE followed several steps. First, DOE evaluated the efficiency re lationships presented in the r ecommended standards provided by NEMA. DOE then compiled efficiency data for as many manufacturers and product classes as possible and filtered the data to ensure an accurate representation of the small electric motors that are covered by the statute. Next, DOE modeled all the efficiency data in terms of motor losses and used a best-fit curve to project values to fill in any potential gaps in data. An independent laboratory validated the efficiency data by testing certain small electric motors according to the applicable IEEE test proce dures: IEEE 112 (test methods A and B) for polyphase motors and IEEE 114 for single-phase moto rs. Finally, DOE scaled the results of the engineering analysis based on the relationships found from the combined NEMA data, catalog data, and test data.

5.6.1 NEMA Provided Efficiency Data

One new source of data that DOE utilized in the final rule was the recommended standard levels for polyphase, CSIR, and CSCR motors provided by NEMA after publication of the NOPR. NEMA submitted their proposed efficiency levels disaggregated by motor category as well as by motors built in a 56 frame versus those built in a 42 or 48 frame. These recommended standard levels included efficien cies for motors with horsepower ratings less than or equal to 1­ horsepower and with two-, four-, or six-pole configurations. DOE first examined this data to see how it compared to the efficiency data of moto rs currently on the market. DOE noted that the efficiency relationships that NEMA presented be tween product classes were comparable to the market data that DOE had collected for the NOPR. For this reason, DOE felt that NEMA’s recommended standard levels coul d be used to establish appr opriate efficiency (or loss) relationships for lower horsepower polyphase , CSIR, and CSCR motors. Table 5.6.1 through Table 5.6.2 presents the NEMA recommended effi ciency values for each motor category.

5-39Table 5.6.1 NEMA Recommended Efficiency Values for 42 and 48 Frame Size Small Electric Motors

Motor Output Power Polyphase (number of poles) CSIR (number of poles) CSCR (number of poles)
6 4 2 6 4 2 6 4 2 0.25 Hp/0.18 kW 66.0 68.0 64.0 59.5 64.0 62.0 59.5 66.0 64.0 0.33 Hp/0.25 kW 70.0 72.0 68.0 64.0 68.0 66.0 64.0 70.0 68.0 0.5 Hp/0.37 kW 74.0 77.0 72.0 68.0 72.0 70.0 70.0 74.0 70.0 0.75 Hp/0.55 kW 80.0 75.5 74.0 72.0 77.0 74.0

1 Hp/0.75 kW 78.5 74.0 75.5

Table 5.6.2 NEMA Recommended Efficiency Values for 56 Frame Size Small Electric Motors

Motor Output Power Polyphase (number of poles) CSIR (number of poles) CSCR (number of poles)
6 4 2 6 4 2 6 4 2 0.25 Hp/0.18 kW 70.0 72.0 68.0 64.0 68.0 66.0 64.0 70.0 68.0 0.33 Hp/0.25 kW 74.0 75.5 72.0 68.0 72.0 70.0 68.0 74.0 72.0 0.5 Hp/0.37 kW 77.0 80.0 75.5 72.0 75.5 74.0 74.0 77.0 74.0 0.75 Hp/0.55 kW 82.5 78.5 77.0 75.5 80.0 77.0

1 Hp/0.75 kW 81.5 77.0 78.5

For the high horsepower (greater than or equal to 1-horsepower) polyphase motors, DOE considered the relationships found in the NEMA Pr emium standards for electric motors. As seen in Table 5.6.3, the majority of the NEMA Pre mium standards between 1- and 3-horsepower are based on motors with a frame size in the 140T seri es, which has the same foot to shaft dimension as the 56 frame motor. Therefore, for these 140T series product classes, DOE used NEMA Premium efficiencies to devel op relationships across horsepower ratings and poles. DOE did not use the efficiency relationships found from NEMA Premium classes associat ed with larger frame sizes (182T). For these horsepower/pole configur ations, DOE felt that it did not have sufficient efficiency data to determine a ppropriate scaling relationships. T hus, though efficiency generally increases with horsepower, in order to ensure th at all efficiency levels were technologically feasible given constraints on fra me size, DOE decided that the 3-horsepower, four-pole motor would have the same efficiency standard as a the 2-horsepower, four-pole motors and the 11⁄2­ horsepower, two-pole motor would have the sa me minimum efficiency standard as the 1­ horsepower, two-pole motor.

5-40Table 5.6.3 Frame Sizes Associated with NEMA Premium Standards Motor Horsepower/Standard Kilowatt Equivalent Six Poles Four Poles Two Poles

1 Hp/0.75 kW 56 143T 145T
11⁄2 Hp/1.1 kW 143T 145T 182T

2 H p /1.5 kW 145T 145T 3 Hp/2.2 kW 145T 182T

5.6.2 Market Efficiency Data

To determine the existing efficiency relati onships between product classes as identified by motors on the market, DOE examined all the publicly available efficiency data for small electric motors covered by this rulemaking. DOE compiled available catalog data and online listings for polyphase, CSIR, and CSCR motors to see how efficiency changes across different pole configurations and with va rying horsepower ratings. DOE developed a database of over 1,400 motors built in a NEMA two-digit frame size and covered by this rulemaking. This database was filtered to create a comprehensive list of motors that met the statutory definition of a small electric motor. DOE also filtered the database to only include efficiency data for the smallest frame series seen for each product cla ss. The smallest frame series for a given product class is the most restricted frame series in terms of possible efficiency. Th e reason for this is that there is less room to add core material (in term s of diameter), which helps increase efficiency, therefore any efficiency the smallest frame seri es motor can achieve should also be achievable for the larger frame series in the same product class. Additionally, individual manufacturer motor lines were examined independent ly so that design characteristics ( e.g. steel grade) would be consistent. Since each manufacturer was looked at individua lly, if a manufacturer did not have a nearly complete product line, or if the manufacturer did not provide enough efficiency data to create an accurate assessment of the pr oduct line, then that manufacturer’s data was not included in the initial efficiency relationship data set.

5.6.3 Independently Tested Motor Results

At the time of this data collection and analysis, there were no energy-efficiency standards or mandated test procedures for small electric motors. Therefore, when one manufacturer lists efficiency in their catalog it was not necessarily calculated and reported in the same way that another manufacturer calculates and reports it. So, DOE contra cted an independent electric motor testing company. In addition to using catalog data and online listings to determine the existing efficiency relationship across product cl asses, DOE purchased and tested a sample product line of polyphase and CSIR motors to ve rify efficiency relationships. DOE was unable to purchase and test a complete product line of CSCR motors because no manufacturers currently offer a complete product line of this motor category. This issue is discussed further in Section 5.6.6 dealing with CSCR scaling. This test data was intended to validate the efficiency relationships seen across product classes, not necessa rily to confirm the value of efficiency listed by the manufacturer. Results from this testing are available in appendix 5A.

5-415.6.4 Modeling Small Electric Motor Efficiency

After compiling the data from catalogs, NEMA, and testing, DOE modeled the data and began drawing conclusion s about the relationship between prod uct class and efficiency. To do this DOE converted efficiency into motor losses using the equation: (100/ μ ) – 1, where μ is fullload efficiency. By converting the efficiency data into motor losses, DOE could generate the most accurate line of best fit. DOE used a power equation to model motor losses and then plotted the results for the NEMA values, the manufacturer catalog data, and the tested motors on graphs with logarithmic axes. Using the genera ted equations, DOE interpolated and extrapolated the catalog and test data to appr oximate data for any gaps of information. This allowed DOE to generate complete sets of data, a set being all of the product classes within a motor category. After modeling motor losses for the various source s of efficiency data, DOE evaluated the data from each pole of each data source independentl y to determine how best to scale each pole.

5.6.5 Scaling Polyphase Small Electric Motor Data

As mentioned previously, DOE leveraged the efficiency relationships found in the NEMA recommended and NEMA Premium levels for polyphase motors. Since the combination of these two data sets spanned the majority of polyphase product classes, and since they represented efficiency relations hips corroborated in the market and confirmed by NEMA, DOE utilized this data to develop its polyphase scaling.

First, DOE graphed the motor losses of the NEMA recommended levels and the NEMA Premium levels on a log-log chart. DOE then used a line of best fit to project motor losses from NEMA’s recommended values so data would be available up to the 1-horsepower rating. DOE then aligned all of the recommended four-pole values with the NEMA Premium values by shifting their motor losses based on the percentage change necessary to equate their four-pole, 1­ horsepower values. Since the NEMA recommend ed values closely aligned with the NEMA Premium values, there was a minimal shift of only -3.8-percent. DOE then applied this same percentage change to the two-pole and six-pol e product classes to main tain the relationship across poles presented in NEMA’s recommended va lues. This gave DOE a reference table of motor losses, and therefore, efficiencies that categorize the relationships between poles and horsepower ratings that could be expected for polyphase motors. Figure 5.6.1 shows the fourpole values recommended by NEMA with the projected 1-horsepower value and the resulting shifted NEMA recommended values based on the -3.8-percent shift in motor losses.

5-42NEMA Recommendation: y = 17.625x -0.557

R2 = 0.9891

Shifted NEMA Recommendation: y = 16.959x -0.557

R2 = 0.9891

10.0 100.0

0.10 1.00Motor Losses

Horsepower Rating NEMA Recommendation

NEMA Premium

Projected Value

Shifted NEMA Recommendation

-3.8% Shift -3.8% Shift

Figure 5.6.1 NEMA Recommended 4-Pole Valu es Shifted to NEMA Premium

DOE then needed to obtain values of efficiency for each polyphase product class at each efficiency level generated by its design work. To do this DOE scaled its reference table of motor losses by the percentage change in motor losses seen in the representative unit going from the reference efficiency to each efficiency level examined. For example, the reference value of motor losses for a 1-horsepower, four-pole moto r was 17.0 while at efficiency level 4b (83.5­ percent efficiency) the value of motor losses is 19.8, which constitutes a 16.5-percent increase. b This 16.5-percent increase in motor losses was then applied to all of the re ference values of all product classes of polyphase moto r losses, thus giving DOE a table of motor losses for all polyphase product classes at efficiency level 4b.

After the motor losses for each product class were scaled, DOE adjusted for frame size to ensure that the efficiency level designated for each product class considered the most restrictive frame size available in that produc t class. To do this, DOE adjusted the scaled motor loss values of the relevant product classes by the percentage difference betw een the 56 frame motors and the 48 and 42 frame motors illustrated in NEMA’s recommended efficiency levels. This percentage difference is roughly equal to a 20-percent increase in motor losses when going from a larger frame size to a smaller one. After doing this , DOE converted the scaled motor losses back to efficiency, and used these values as the scaled efficiencies for polyphase motors.

b Note that the reference table of motor losses does not equate to a baseline table of motor losses, which is why there is an increase in motor losses going from the reference table to efficiency level 4b. The reference table provides the relationships between horsepower ratings and pole configurations for a motor category, and for polyphase motors, it is roughly equivalent to a table of NEMA Premium values as the NEMA recommended efficiencies were scaled to align with the NEMA Premium value for the representative product class.

5-435.6.6 Scaling Single-Phase Small Electric Motor Data

The methodology DOE used for single-phase motors was similar to what DOE did for polyphase motors. Again, DOE relied on th e relationships presented in the NEMA recommended efficiency levels for the lower horsepower ratings. In the absence of any previously standardized efficiency levels above 1-horsepower (such as the NEMA Premium standards for polyphase motors), DOE examined its catalog and test data and then found the manufacturer that demonstrated the most achievable change in efficiency between horsepower ratings to characterize efficiency relati onships at the higher horsepower ratings. c This equated to the manufacturer with the flattest slope when pl otting motor losses on a log-log plot. Each pole configuration was examined inde pendently to ensure that scaling would be specific to the considered pole configuration.

DOE was unable to locate sufficient market data for CSCR motors. However, the data that DOE reviewed indicated that CSCR motors exhibit efficiency relationships similar to CSIR motors, but shifted to higher efficiency levels. This relationship can be seen in Figure 5.6.2. For these reasons, DOE decided to utilize CSIR market data to characterize the efficiency relationships of higher horsepower ratings fo r CSCR motors. For the lower horsepower ratings DOE utilized the CSCR data provided by NEMA.

Figure 5.6.2 Four-Pole CSIR Efficiency vs . Four Pole CSCR Efficiency

Again, DOE took the manufacturer with the most achievable effici ency relationships across the higher horsepower ratings for a given pole configuration and plotted its motor losses on a log-log plot alongside the NEMA recommended values for the lower horsepower ratings. Then, DOE determined the percentage shift necessary to align the manufacturer data with the NEMA recommended level at the representative product class and applie d this percentage

c For the NOPR, DOE used an average of all the manuf acturers’ relationships which provided exceedingly high efficiency values and the high end of horsepower ratings.

5-44change to the manufacturer data. By maintaining the relationships evidenced across pole configurations in the NEMA recommended valu es, DOE ensured accurate scaling across pole configurations. Figure 5.6.3 shows an example of this shift for the four-pole, CSIR motor data. After shifting values for each pole configuration, DOE had developed a reference table of motor losses for CSIR motors and a separate reference table for CSCR motors.

y = 25.578x -0.409
R2 = 0.9471 y = 47.689x -0.202
R2 = 1

y = 28.184x -0.202
R2 = 1

10.0 100.0

0.10 1.00 10.00Motor Losses

Horsepower Rating NEMA Recommendation

Original Manufacturer Data

Shifted Manufacturer Data

Percentage Shift

Figure 5.6.3 Manufacturer 4-Pole Values of Motor Losses Shifted to NEMA Recommended Values

DOE then followed the same methodology employed in the polyphase scaling. It adjusted its reference table of motor losses by the percentage change necessary to reach the new representative product class’ value. Similar to polyphase motors, the percentage change calculated for the representative product class was applied to each scaled product class.

Once these motor losses were scaled, DOE adjusted for frame size to ensure that the efficiency level designated for each product cla ss considered the most restrictive frame size available in that product class. After doing this, DOE converted the scaled motor losses back to efficiency and used these values as the scaled efficiencies for CSIR or CSCR motors.

5-45REFERENCES

1 Design Considerations to Optimize Stator Manufacturing, Alliance Winding Equipment, Inc., Ft. Wayne, Indiana. Blade-Gap Chart.

2 U.S. Department of Labor, Bureau of Labor St atistics, Producer Price Indices. Last accessed January 20, 2010. <http://www.bls.gov/ppi>.

3 U.S. Census Bureau, 2002 Economic Census of Industry Series Reports for Industry, US Department of Commerce, 2003.

5-46CHAPTER 6. ENERGY USE CHARACTERIZATION

TABLE OF CONTENTS

6.1 INTRODUCTION

........................................................................................................... 6-1 6.2 ENERGY USE ANALYSIS FOR SMALL ELECTRIC MOTORS

............................... 6-1 6.2.1 Introduction

.................................................................................................... 6-1 6.2.2 Motor Losses

.................................................................................................. 6-1 6.2.3 Reactive Power

.............................................................................................. 6-2 6.2.4 Motor Applications

........................................................................................ 6-4 6.2.5 Loading

.......................................................................................................... 6-5 6.2.6 Motor Hours of Operation/Duty Factor

......................................................... 6-5 6.3 ANNUAL ENERGY USE

............................................................................................... 6-8

LIST OF TABLES

Table 6.2.1 Losses vs. Loading, Polyphase Motors

................................................................ 6-2 Table 6.2.2 Losses vs. Loading, Capac itor-Start Induction Run Motors

................................ 6-2 Table 6.2.3 Losses vs. Loading, Capac itor-Start Capacitor-Run Motors

............................... 6-2 Table 6.2.4 Power Factor vs. Loading, Polyphase Motors

..................................................... 6-3 Table 6.2.5 Power Factor vs. Loading, Ca pacitor-Start Induction-Run Motors

..................... 6-4 Table 6.2.6 Power Factor vs. Loading, Cap acitor-Start Capacitor-Run Motors

..................... 6-4 Table 6.2.7 Application Shares by Equipment Category

........................................................ 6-5 Table 6.2.8 Motor Loading by Application

............................................................................ 6-5 Table 6.2.9 Median and Average Hours of Motor Operation by Application

........................ 6-7 Table 6.2.10 NEMA-Proposed Median and Average Hours of Motor Operation by Application

........................................................................................................... 6-8 Table 6.3.1 Average Annual Electricity Use by Efficiency Level for Small Electric Motors (Using National Shipment-Wei ghted Distribution of Product Class Shipments)

........................................................................................................... 6-8

LIST OF FIGURES

Figure 6.2.1 Comparison of DOE’s Duty F actor Model with Na del et al.

.............................. 6-6 Figure 6.2.2 DOE Estimates of Duty Factor Distributions for Motors in Analyzed Applications

......................................................................................................... 6-7

6-iCHAPTER 6. ENERGY USE CHARACTERIZATION

6.1 INTRODUCTION

A key component of the life-cycle cost (L CC) and payback period (PBP) calculations described in chapter 8 is the savings in operati ng cost customers would realize from more energy efficient products. Energy costs are the most si gnificant component of customer operating costs. DOE uses annual energy use, along with energy pr ices, to establish energy costs at various energy efficiency levels. This chapter describe s how DOE determined the annual energy use of small electric motors.

6.2 ENERGY USE ANALYSIS FOR SMALL ELECTRIC MOTORS

6.2.1 Introduction

The energy use by small electric motors derives from three components: energy converted to useful mechanical shaft power, motor losses, an d reactive power. Motor losses consist of I 2 R losses (both stator and rotor), core lo sses, stray losses and friction and windage losses. 1 Core losses and friction and windage losses ar e relatively constant with variations in motor loading, while I 2 R losses increase with the square of the motor loading. Stray losses are also dependent upon loading. DOE models the I 2 R losses and stray losses as load-dependent losses.

6.2.2 Motor Losses

DOE obtained estimates of motor losses from estimates of the performance of the specific motor designs that it developed in th e engineering analysis. To determine the annual energy use in kilowatt-hours (kWh), DOE adjusts the full-load losses using the estimate of the motor duty factor (hours of operation per year) and loading. Tables 6.2.1 through 6.2.3 present the losses as a function of loading for each motor type and for each efficiency level analyzed by DOE. These efficiency levels correspond with de signs analyzed in the Engineering Analysis. Total annual losses are proportional to duty factor. Annual energy losses E loss is represented by the following equation:

E loss = H op × Loss(L )

Where:

E loss = annual energy consumed by motor losses;
H

op = the annual operating hours, also known as the duty factor; Loss(L ) = the losses of the motor at loading L ; and
L = motor loading as a fraction of rated power.

6-1Table 6.2.1 Losses vs. Loading, Polyphase Motors

Losses (W) vs. Loading (%) – Polyphase, 1 hp

EL Space Constrained Not Space Constrained

0% 25% 50% 75% 100% 125% 150% 0% 25% 50% 75% 100% 125% 150%

0 125.0 133.1 149.3 175.6 213.8 266.6 337.2 125.0 133.1 149.3 175.6 213.8 266.6 337.2

1 114.8 122.6 137.0 159.8 191.5 234.1 290.2 114.8 122.6 137.0 159.8 191.5 234.1 290.2

2 102.6 110.3 124.0 145.6 175.2 214.7 266.4 102.6 110.3 124.0 145.6 175.2 214.7 266.4

3 84.1 91.9 106.0 127.6 158.1 199.2 253.0 84.1 91.9 106.0 127.6 158.1 199.2 253.0

4 81.1 88.7 102.2 122.5 151.2 189.5 239.6 81.1 88.7 102.2 122.5 151.2 189.5 239.6 5 (4b) 55.2 62.9 76.9 98.3 128.3 168.9 222.3 56.6 64.2 77.9 99.0 128.6 168.1 219.9

6 45.8 53.1 65.8 85.8 112.9 148.6 194.9 50.3 57.5 69.9 88.4 113.5 146.8 189.5

7 41.3 48.5 61.0 79.4 105.0 138.6 181.9 47.1 53.9 65.3 81.2 103.5 131.6 167.3

8 27.3 34.4 47.0 65.2 90.9 124.3 167.1 44.3 50.6 60.4 73.8 91.3 113.2 140.0

Table 6.2.2 Losses vs. Loading, Capacitor-Start Induction Run Motors

Losses (W) vs. Loading (%) – Capacitor-Start Induction-Run, 0.5 hp

EL Space Constrained Not Space Constrained

0% 25% 50% 75% 100% 125% 150% 0% 25% 50% 75% 100% 125% 150%

0 221.0 223.9 232.5 248.2 271.9 306.3 354.7 221.0 223.9 232.5 248.2 271.9 306.3 354.7

1 192.2 192.0 200.7 216.1 239.1 272.2 318.6 192.2 192.0 200.7 216.1 239.1 272.2 318.6

2 173.8 170.9 179.5 194.2 215.7 246.3 289.2 173.8 170.9 179.5 194.2 215.7 246.3 289.2

3 155.5 149.9 158.7 173.5 195.4 226.7 270.4 155.5 149.9 158.7 173.5 195.4 226.7 270.4

4 119.5 110.7 119.6 134.0 155.5 185.9 228.1 123.7 118.9 126.6 138.8 155.9 179.0 210.7

5 104.9 103.4 111.9 125.6 146.2 174.6 214.2 110.4 108.1 116.0 128.3 147.1 172.5 207.2

6 86.1 90.2 99.2 114.7 137.5 170.2 216.5 95.6 96.8 103.8 114.7 134.2 155.7 183.4

7 61.1 61.0 70.0 85.2 107.4 139.3 184.7 88.0 75.3 82.1 92.7 107.6 125.3 148.6

Table 6.2.3 Losses vs. Loading, Capacitor-Start Capacitor-Run Motors

Losses (W) vs. Loading (%) – Capacitor-Start Capacitor-Run, 0.75 hp

EL Space Constrained

0% 25% 50% 75% 100%

0 157.7 159.1 171.6 195.5 232.5

1 155.0 144.0 151.2 166.3 192.5

2 116.2 103.7 110.5 124.9 149.0

3 109.5 93.7 98.3 109.9 129.3

4 117.4 99.1 99.6 106.4 120.4

5 133.3 99.4 98.6 103.1 113.4

6 94.1 77.5 78.8 86.6 103.3

7 86.1 62.7 65.2 73.5 88.6

8 70.0 49.2 52.4 61.6 77.9

6.2.3 Reactive Power Not Space Constrained

125% 150% 0% 25% 50% 75% 100% 125% 150%

287.5 370.1 157.7 159.1 171.6 195.5 232.5 287.5 370.1

231.9 289.9 155.0 144.0 151.2 166.3 192.5 231.9 289.9

184.9 237.7 107.0 96.6 104.5 121.2 148.7 191.8 257.7

160.1 204.8 87.5 77.2 85.7 101.6 128.4 168.0 226.5

144.9 181.9 116.3 94.1 96.1 104.2 120.2 146.3 185.9

129.5 153.1 118.8 89.6 91.4 98.0 110.8 131.4 162.2

131.0 174.4 104.9 81.6 83.3 90.9 105.5 130.5 168.6

112.2 148.8 102.0 71.4 72.1 77.2 88.6 107.1 134.1

104.1 141.0 76.8 57.0 57.3 64.8 80.3 107.3 152.4

In an alternating current pow er system, the reactive power is the root mean square (RMS) voltage times the RMS current, multiplied by the sine of the phase difference between the

6-2voltage and the current. Reactive power occurs when the inductance or capacitance of the load shifts the phase of the voltage relative to the phase of the current. While reactive power does not consume energy directly, it can increase losses an d costs for the electricity distribution system. Motors tend to create reactive power because the windings in the motor coils have high inductance.

Alternating current power flow ha s three components: real power ( P ), measured in watts (W); apparent power ( S ), measured in volt-amperes (VA); and reactive power ( Q ), measured in reactive volt-amperes (VAr). Th e power factor is defined as P / S . In the case of a perfectly sinusoidal waveform, P

, Q and S can be expressed as vectors that form a vector triangle such that: S 2 = P 2 + Q 2 . This implies that the formula for reactive power as a function of real power and power factor is as follows:

Q = P * (1/PF 2 -1) Where:

Q = reactive power in reactive volt-amperes;
P = real power in watts;
PF = the motor’s power factor;

DOE obtained motor power factor as a functi on of motor loading from estimates of the performance of the specific motor designs that it developed in the engine ering analysis. Tables 6.2.4 through 6.2.6 present the power factor as a func tion of loading for each motor type and for each efficiency level analyzed by DOE.

Table 6.2.4 Power Factor vs. Loading, Polyphase Motors

Power Factor (kW/kVAr) vs. Loading (%) – Polyphase, 1 hp

EL Space Constrained Not Space Constrained

0% 25% 50% 75% 100% 125% 150% 0% 25% 50% 75% 100% 125% 150%

0 0.13 0.31 0.47 0.60 0.69 0.75 0.79 0.13 0.31 0.47 0.60 0.69 0.75 0.79

1 0.13 0.33 0.50 0.62 0.71 0.76 0.80 0.13 0.33 0.50 0.62 0.71 0.76 0.80

2 0.12 0.33 0.50 0.62 0.71 0.77 0.80 0.12 0.33 0.50 0.62 0.71 0.77 0.80

3 0.11 0.35 0.53 0.66 0.74 0.79 0.82 0.11 0.35 0.53 0.66 0.74 0.79 0.82

4 0.11 0.34 0.53 0.66 0.73 0.78 0.81 0.11 0.34 0.53 0.66 0.73 0.78 0.81 5 (4b) 0.08 0.31 0.51 0.64 0.73 0.78 0.81 0.07 0.29 0.47 0.60 0.69 0.75 0.79

6 0.06 0.29 0.48 0.62 0.71 0.77 0.80 0.07 0.32 0.52 0.65 0.74 0.79 0.82

7 0.06 0.32 0.52 0.66 0.74 0.79 0.82 0.07 0.32 0.52 0.66 0.74 0.79 0.82

8 0.04 0.28 0.48 0.62 0.71 0.77 0.80 0.06 0.28 0.46 0.60 0.69 0.75 0.79

6-3Table 6.2.5 Power Factor vs. Loading, Capacitor-Start Induction-Run Motors

Power Factor (kW/kVAr) vs. Loading (%) – Capacitor-Start Induction-Run, 0.5 hp

EL Space Constrained Not Space Constrained

0% 25% 50% 75% 100% 125% 150% 0% 25% 50% 75% 100% 125% 150%

0 0.225 0.318 0.409 0.493 0.568 0.632 0.686 0.23 0.32 0.41 0.49 0.57 0.63 0.69

0.215 0.314 0.412 0.501 0.578 0.643 0.695 0.22 0.31 0.41 0.50 0.58 0.64 0.69 1

0.207 0.308 0.411 0.502 0.581 0.644 0.695 0.21 0.31 0.41 0.50 0.58 0.64 0.69 2

0.207 0.317 0.428 0.526 0.606 0.668 0.716 0.21 0.32 0.43 0.53 0.61 0.67 0.72 3

0.170 0.285 0.406 0.512 0.598 0.664 0.714 0.21 0.34 0.47 0.57 0.65 0.71 0.75 4

0.164 0.300 0.430 0.540 0.626 0.691 0.737 0.20 0.35 0.49 0.59 0.67 0.73 0.76 5

0.135 0.280 0.414 0.526 0.615 0.680 0.726 0.15 0.29 0.43 0.54 0.62 0.69 0.75 6

0.119 0.290 0.449 0.573 0.662 0.723 0.761 0.17 0.31 0.46 0.57 0.65 0.71 0.75 7

Table 6.2.6 Power Factor vs. Loading, Capacitor-Start Capacitor-Run Motors

Power Factor (kW/kVAr) vs. Loading (%) – Capacitor-Start Capa citor-Run, 0.75 hp

EL Space Constrained Not Space Constrained

0% 25% 50% 75% 100% 125% 150% 0% 25% 50% 75% 100% 125% 150%

0 0.19 0.35 0.49 0.60 0.69 0.75 0.79 0.19 0.35 0.49 0.60 0.69 0.75 0.79

1 0.26 0.45 0.60 0.71 0.77 0.81 0.84 0.26 0.45 0.60 0.71 0.77 0.81 0.84

2 0.20 0.40 0.56 0.68 0.76 0.80 0.83 0.27 0.52 0.69 0.79 0.84 0.86 0.86

3 0.25 0.48 0.65 0.76 0.82 0.85 0.87 0.22 0.49 0.67 0.78 0.83 0.85 0.86

4 0.48 0.74 0.85 0.90 0.92 0.93 0.93 0.78 0.90 0.95 0.96 0.96 0.95 0.94

5 0.54 0.69 0.85 0.90 0.92 0.93 0.93 0.76 0.86 0.94 0.96 0.96 0.95 0.94

6 0.46 0.75 0.87 0.91 0.93 0.93 0.93 0.94 0.97 0.98 0.98 0.97 0.96 0.95

7 0.53 0.77 0.90 0.94 0.94 0.94 0.93 0.86 0.93 0.97 0.98 0.97 0.97 0.96

8 0.29 0.60 0.80 0.87 0.90 0.91 0.91 0.94 0.99 1.00 1.00 0.99 0.98 0.96

6.2.4 Motor Applications

The annual operating hours and loading of small electric motors depends on the application. For different types of motors, the ma rket shares of different motor applications can

vary.

As described in more detail in chapter 9 of this TSD, DOE drew upon several data sources to develop a model of the applications for which motors covered in this analysis are used: data collected by Easton Consultants in the preparation of the Small Motors Determination Analysis, 2 DOE’s own analysis in the Determination and Framework stages, 3,4 U.S. Census reports, comments from interested parties (both written and at the preliminary analysis public meeting), 5 and interviews with expe rts in motor OEM industries. 6 Chapter 9 discusses an alternate application distribution submitted by NEMA and analyzed by DOE.

Table 6.2.7 summarizes the market shares fo r shipments of small electric motors by application based on DOE’s analys is of the available data.

6-4Table 6.2.7 Application Shares by Equipment Category Equipment Category

No. Application Polyphase CSIR CSCR

1 Air and gas compressors 17.3% 14.9% 14.9%

2 Conveyors 13.3% 11.9% 11.9%

3 General industrial machinery 11.3% 12.5% 12.5%

4 Industrial and commercial fans and blowers 7.3% 6.9% 6.9%

5 Pumps and pumping equipment 50.7% 53.7% 53.7%

TOTAL 100% 100% 100%

6.2.5 Loading

To calculate the annual kWh use at each effi ciency level in each equipment class, DOE used the efficiencies and losses from the engin eering analysis, along with estimates of operating hours. Since the losses of a motor depend on th e motor loading, DOE estimated average motor loading in order to look-up the motor losses fr om the engineering data. DOE obtained motor loading as a function of motor application from the determination analysis for the applications that use equipment containing covered small electric motors, as shown in Table 6.2.8. DOE assumed that the motor loading distribution took the form of a normal distribution, centered on the average value, with a sta ndard deviation equal to one fi fth of the average loading.

Table 6.2.8 Motor Loading by Application

No. Application Loading

1 Air and gas compressors 85%

2 Conveyors 50%

3 General industrial machinery 70%

4 Industrial and commercial fans and blowers 80%

5 Pumps and pumping equipment 65%

6.2.6 Motor Hours of Operation/Duty Factor

DOE developed estimated distributions for the duty factor of motors for each application. See chapter 9 for a discussion of the applications that DOE analyz ed for covered motors, and the fraction of small electric motor shipments for each application. DOE estimated the distribution of motor duty factors from data referenced in Nadel et al

. 7 DOE approximated this distribution as a decaying exponential curve plus a percentage of mo tors that operate 8760 hours per year (that is,

6-5100% of the time). Figure 6.2.1 shows the corresp ondence between this simple model and the data referenced in Nadel et al

.

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%Cumulative Percentage of Motors

Nadel et al, 1-5 HP data DOE Model, Small Motors

0 1000 2000 3000 4000 5000 6000 Duty Factor (Hours per year) 7000 8000 9000

Figure 6.2.1 Comparison of DOE’s Duty Factor Model with Nadel et al.

DOE then adapted this model for each of the five application areas analyzed as part of this rulemaking: pumps; conveyor, material handl ing, and packaging systems; air compressors; blowers and fans; and general industrial machiner y. DOE used estimates for average and median hours of operation based on the 2006 Determinat ion Analysis, along with comments from interested parties on the Prelim inary Analysis, to develop dist ributions for each application.

Table 6.2.9 shows DOE’s estimated median and mean hours of operation in each application, along with the per centage of motors that operate 100% of the time. Figure 6.2.2 shows the cumulative form of the discrete distri butions DOE used in it s Monte Carlo analysis. (The Monte Carlo analysis is described in chapter 8.)

6-6Table 6.2.9 Median and Average Hours of Motor Operation by Application

Application Median Annual Hours of Operation Average Annual Hours of Operation 100% Run Time Motors (%) Compressors 375 600 0 Conveyors 2000 3000 8 General Industry 1200 2000 4 Fans and Blowers 2825 4500 40 Pumps 1850 3000 12

Compressors

Conveyors

Pumps

Fans & Blowers

General IndustryCumulative % of Motors 100.00%

80.00%

60.00%

40.00%

20.00%

0.00%

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Duty Factor (Hours per Year)

Figure 6.2.2 DOE Estimates of Duty Factor Distri Motors in Analyzed Applications butions for

In comments submitted is response to th e NOPR for this rulemaking, NEMA submitted alternate distributions of annual hours of ope ration in each motor application. (In addition, NEMA suggested another application area, Service Industry motors.) Table 6.2.10 shows NEMA’s suggested data. In its LCC and NIA anal yses, DOE analyzed alternate scenarios, as sensitivities, which incorporat e NEMA’s suggested hours of ope ration, application distribution, and the fraction of motor applica tions which are space constrained.

6-7Table 6.2.10 NEMA-Proposed Median and Average Hours of Motor Operation by Application

Application Median Annual Hours of Operation Average Annual Hours of Operation 100% Run Time Motors (%) Compressors 100 200 0 Conveyors 2000 3000 0 General Industry 1200 2000 4 Fans and Blowers 2825 4500 10 Pumps 1850 3000 12 Service Industry 400 1000 2

6.3 ANNUAL ENERGY USE

Depending on the hours of operation and the loading (which are functions of the application) and the efficiency of the motor (whi ch varies with the standard level), the annual energy use varies both by efficiency level and from motor to motor. Table 6.3.1 shows the average annual energy use as a function of effi ciency level for a national shipment-weighted distribution of product classes. The average en ergy use estimates are from a calculation for a nationally representative distribution of motor applications, and include both motor losses and the shaft power provided by the motor as de scribed in chapter 8 of this TSD.

Table 6.3.1 Average Annual Electricity Use by E fficiency Level for Small Electric Motors (Using National Shipment- Weighted Distribution of Product Class Shipments)

Efficiency Level Polyphase CSIR CSCR Energy Use

(kWh/yr) Energy Use (kWh/yr) Energy Use (kWh/yr)
Baseline 1934 1265 2310
1 1883 1182 2208
2 1836 1125 2036
3 1775 1071 1965
4 1759 979 1979
5* 1678 953 1959
6* 1643 920 1923
7* 1622 858 1873
8* 1594 NA 1824
* ELs 5 through 8 for polyphase motors are referred to elsewhere as ELs 4b, 5, 6, and 7.

6-8REFERENCES

1 National Electrical Manufacturers A ssociation, NEMA Standards Publication: Information Guide for General Purpose Industrial AC Small and Me dium Squirrel-Cage Inducation Motor Standards, NEMA, 1300 North 17 th Street, Suite 1847, Rosslyn, VA 22209, 2002.

2 The work by Easton Consultants is summarized in Appendix B of Determination Analysis Technical Support Document: Analys is of Energy Conservation Standards for Small Electric Motors , June 2006

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_tsd.pdf>

3 Determination Analysis Technical Support Do cument: Analysis of Energy Conservation Standards for Small Electric Motors , June 2006

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_tsd.pdf>

4 Energy Conservation Standards Rulemaki ng Framework Document for Small Electric
Motors

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_framework_073007.pdf>

5 Transcript of Public Meeting on Energy Conservation Standards for Small Electric Motors, January 30, 2009,

< http://www1.eere.energy.gov/buildings/appliance_ standards/commercial/pdfs/transcript _small_motors_standards_meeting.pdf>

6 Joe Evans. PentAir Water Pumps, personal communication, March 5, 2009.

7 Nadel, S., Elliott, R.N., Shepard, M., Gree nberg, S., Katz, G., and Almeida, A. de, Energy-efficient motor systems: A handbook on technology, programs, and policy opportunities, 2nd edition. 2000. American Council for an Energy-Efficient Economy, Washington, DC (US).

6-9CHAPTER 7. MARKUPS FOR EQUI PMENT PRICE DETERMINATION

TABLE OF CONTENTS

7.1 INTRODUCTION

........................................................................................................... 7-1 7.1.1 Distribution Channels

.......................................................................................... 7-1 7.1.2 Markup Calculation Procedure

............................................................................ 7-2 7.2 DISTRIBUTOR AND RETAIL MARKUPS

.................................................................. 7-2 7.3 ORIGINAL EQUIPMENT MA NUFACTURER MARKUP

.......................................... 7-7 7.4 CONTRACTOR OR IN STALLER MARKUP

............................................................... 7-8 7.5 SALES TAXES

............................................................................................................... 7 -8 7.6 OVERALL MARKUP

..................................................................................................... 7-9 7.7 SHIPPING COSTS

........................................................................................................ 7-11

LIST OF TABLES

Table 7.2.1 Data Used to Calc ulate Wholesale Markups

....................................................... 7-5 Table 7.2.2 Data Used to Ca lculate Retail Markups

............................................................... 7-6 Table 7.5.1 Average Sales Tax Rates by Ce nsus Division and Large State

........................... 7-9 Table 7.6.1 Summary of Markups for Small Motors

............................................................ 7-10

LIST OF FIGURES

Figure 7.1.1 Distribution Channels for Small Electric Motors

................................................ 7-1

7-iCHAPTER 7. MARKUPS FOR EQUIPMENT PRICE DETERMINATION

7.1 INTRODUCTION

To carry out the engineering and life-cy cle cost (LCC) analyses, DOE needed to determine the cost to the customer of a baseline product and the co st of more-efficient units. By applying multipliers called “markups” to the manuf acturers’ selling prices estimated in the engineering analysis, DOE estimated the end user prices for baseline models and more-efficient equipment.

7.1.1 Distribution Channels

The appropriate markups for determining the end user equipment price depend on the type of distribution channels through which products move from manufacturers to purchasers. At each point in the distribution channel, compan ies mark up the price of the equipment to cover their business costs and profit margin.

Because most small electric motors are used as components in larger pieces of equipment, much of the market passes through original equipment manu facturers (OEMs) who design, assemble and brand products that may c ontain small electric motors. OEMs in turn obtain their motors either dire ctly from the motor manufacturer s or from manufacturers via distributors.

Based on market research, DOE defined thre e distribution channels for small electric motors, and estimated their respective shares of shipments. Two channels exist for motors installed in new equipment: (1 ) from manufacturers to OEMs and then to end-users through equipment distributors or retailers—65 percent of shipments; and (2) from manufacturers to wholesale motor distributors to OEMs and then to end-users through equipment distributors or retailers—30 percent of shipments. The third channel refers to replacement or spare motors: (3) from manufacturers to wholesale motor distri butors to end-users th rough distributors or retailers—5 percent of shipments. DOE estim ates the proportion of shipments through each distribution channel based on public comments ma de by the National Electrical Manufacturers Association (NEMA).

Figure 7.1.1 Distribution Channels for Small Electric Motors

7-1In addition to these distribution chain mar kups, DOE estimated and added the shipping costs of the motors. This is a significant factor because more efficient motors are often larger ad heavier than less efficient motors, so this is a cost that needs to be included in an accurate cost analysis.

7.1.2 Markup Calculation Procedure

As just discussed, at each point in the di stribution channel, companies mark up the price of the equipment to cover their business costs a nd profit margin. In fina ncial statements, gross margin is the difference between the company reve nue and the company cost of sales or cost of goods sold ( CGS ). Inputs for calculating the gross ma rgin are all corporate costs—including overhead costs (sales, general, and administ ration); research and development (R&D) and interest expenses; depreciation, and taxes—and profits. In order for sales of a product to contribute positively to company cash flow, th e product’s markup must be greater than the corporate gross margin. Individual pr oducts may command a lower or higher markup, depending on their perceived added value and the competition they face from similar products in the market.

In developing markups for OEMs, distributo rs and retailers, DOE obt ained data about the

revenue, CGS , and expenses of firms that produce and sell the products of interest. DOE’s approach categorizes the expenses into two categories: labor-scaling costs ( LSC ), which are fixed labor and occupancy expenses that increase in proportion to the amount of labor required to produce or sell the product, and non-labor-scaling costs ( NLSC ), which are variable operating costs that do not scale with la bor and vary in proportion to CGS . Together, LSC and NLSC represent the gross margin.

For each step in equipment distribution, DOE estimated both a baseline markup and an incremental markup. For small electric motors, DOE understands that no in crease in distribution labor is necessary for the dist ribution of more efficient equi pment, while the non-labor-scaling cost does increase with increasing equipment costs. This allowed DOE to estimate the incremental markup given a breakdown of distri bution and manufacturing business expenses for a particular industry.

In the case of OEM manufacturing costs, DOE did not have detailed industry component costs, but it did have time series of total sales payroll and material costs for a variety of related industries. In this case, DOE performed a regr ession analysis to estimate incremental markups on material input costs.

7.2 DISTRIBUTOR AND RETAIL MARKUPS

DOE based its distributor and retail markups on financial data from the U.S. Census Business Expenses Survey (BES). DOE organized the financial data into balance sheets that break down cost components incurred by firms that sell equipment with small motors or

7-2replacement motors. a The key assumptions that DOE used to estimate the retailer and distributor markups using these financial data were:

1. The balance sheets faithfully represent th e various average costs incurred by firms distributing motors and e quipment containing motors.

2. These costs can be divided into two categories:

a. Costs that vary in proportion to the manu facturer sales price (variable costs); and b. Costs that do not vary with the manu facturer sales price (fixed costs).

3. Retailer and distributor sales pr ices vary in proportion to reta iler and distributor costs that are included in the balance sheets.

In support of the first assumption, the balanc e sheets itemize firm costs into a number of expense categories, including CGS , operating labor and occupancy costs, and other operating costs and profit. Although retailers and distribu tors tend to handle multiple commodity lines, the data provide the most accurate available indication of distributor expenses.

In the discussion that follows, DOE uses a division of costs between those that do not scale with the manufacturer sale s price (fixed costs—labor and occupancy expenses referred to above as LSC ), and those that do scale (variable costs —operating expenses and profit referred to above as NLSC ).

In support of the third assumption, the retail er and distributor indus tries are relatively competitive, and end user demand for motors and equipment with motors is relatively inelastic— i.e., the demand is not expected to decrease signifi cantly with a relatively small increase in price. Following standard economic theory, competitive firms facing inelastic demand either set prices in line with costs or qu ickly go out of business. i

Using the above assumptions, DOE developed baseline and incremental markups and applied them in calculating end user equipment prices from manufactur er sales prices. DOE used the baseline markups, which cover all of a retailer’s or distribut or’s costs (i.e., both LSC and NLSC ), to determine the sales price of baselin e models. The baseline markup relates the manufacturer sales price to the retailer sales pr ice or distributo r sales price. DOE considers baseline models to be equipment sold under ex isting market conditions (i.e., without new energy efficiency standards). DOE calculated the baseline markup ( MU BASE ) for retailers and distributors using the following equation:

CGS RTL / DIST + GM RTL / DIST CGS RTL / DIST + ( LSC RTL / DIST + NLSC RTL / DIST ) MU = = BASE CGS CGS RTL / DIST RTL / DIST

a The distributors to whom these financial data refer handle multiple commodity lines.

7-3Where:

MU BASE = baseline retailer or distributor markup, CGS RTL/DIST = retailer’s or distribut or’s cost of goods sold, GM RTL/DIST = retailer’s or distri butor’s gross margin, LSC RTL/DIST = retailer’s or distributo r’s labor-scaling costs, and NLSC RTL/DIST = retailer’s or distributor’s non-labor-scaling costs.

Incremental markups cover only those co sts that scale with a change in the manufacturer’s sales price (i.e., NLSC ). Incremental markups are co efficients that relate the change in the manufacturer sales price of higher-efficiency models to the change in the retailer or distributor sales price. DOE considers higher-efficiency models to be equipment sold under market conditions with new efficiency standard s. It calculated the incremental markup ( MU INCR ) for retailers and distributors using the following equation:

CGS + NLSC RTL / DIST RTL / DIST MU INCR = CGS RTL / DIST Where:

MU INCR = incremental retailer or distributor markup, CGS RTL/DIST = retailer’s or distributo r’s cost of goods sold, and NLSC RTL/DIST = retailer’s or distributor’s non-labor-scaling costs.

DOE used financial data from the BES fo r the categories “Electrical Goods Merchant Wholesalers” and “Machinery, Equipment, and S upplies Merchant Wholesalers” to calculate markups used by wholesale distributors of moto rs to OEMs and by distributors of equipment containing small motors or replacement motors, respectively. Table 7.2.1 shows the data from the BES and the markups DOE estimated using the procedures described above.

DOE used financial data from the BES, in the “Building materials, hardware, garden supply and mobile home dealers” category to calculate markups us ed by retail outle ts that sell equipment containing motors or replacement motors. ii Table 7.2.2 shows the BES data that DOE used and the markups that DOE estimated following the procedures described above.

7-4Table 7.2.1 Data Used to Calculate Wholesale Markups

Item Equipment Wholesale (Million Dollars) Motors Wholesale (Million Dollars)

Sales (revenue) 225425 205688

Cost of Goods Sold (CGS) 158097 160435
Gross Margin (GM) 67328 45253
Operating Expenses 52498 42110

Labor-Scaling Costs (LSC):

Annual Payroll 25804 19402
Fringe benefits 4343 3233

Contract labor 750 954

Taxes and license fees 823 450
Lease and rental payments 2932 1980
Telephone and other communications 1185 958

Purchased Utilities 706 478

Contract work 151 269
Purchased repair and maintenance services 826 436
Commissions paid 963 1309

LCS Subtotal: 38483 29469

Non-Labor-Scaling Costs (NLSC):

Depreciation and Amortization 2650 1947
Office Supplies 885 663
Packaging and Other Materials 346 425

Advertising Services 959 1842
Legal Services 277 292

Accounting, Auditing, and Bookkeeping 346 215
Computer Related Services 403 498

Other Operating Expenses 8149 6759

Net Profit Before Taxes 14830 3143

NLSC Subtotal: 28845 15784

Baseline Markup (MU BASE ) = (CGS+GM)/CGS 1.43 1.28
Incremental Markup (MU INCR ) = (CGS+NLSC)/CGS 1.18 1.10

7-5Table 7.2.2 Data Used to Calculate Retail Markups

Item Million Dollars
Sales (revenue) 148397 Cost of Goods Sold (CGS) 102922 Gross Margin (GM) 45475 Operating Expenses 3664
Labor-Scaling Costs (LSC)

Annual Payroll 17740 Fringe benefits 3212

Contract labor 941

Taxes and license fees 728 Lease and rental payments 2474 Telephone and other communications 601

Purchased Utilities 918

Contract work 0 Purchased repair and maintenance services 840 Commissions paid 0

LCS Subtotal: 27454
Non-Labor-Scaling Costs (NLSC)

Depreciation and Amortization 1783 Office Supplies 488 Packaging and Other Materials 264

Advertising Services 1321 Legal Services 159

Accounting, Auditing, and Bookkeeping 196 Computer Related Services 179

Other Operating Expenses 4820

Net Profit Before Taxes 8811

NLSC Subtotal: 18021
Baseline Markup (MU BASE ) = (CGS+GM)/CGS 1.44 Incremental Markup (MU INCR ) = (CGS+NLSC)/CGS 1.18

7-67.3 ORIGINAL EQUIPMENT MANUFACTURER MARKUP

DOE calculated the OEM markup as follows:

SALES

=

. MU BASE PAY + MAT + CAP

Where:

SALES = value of shipments, PAY = payroll expenses, MAT = material input expenses, CAP = capital expenses,
MU BASE = baseline markup.

The 2002 Economic Census Manufacturing Industry Series reports the payroll (production and total), cost of materials, capital expend itures, and total valu e of shipments for manufacturers of various types of machinery. Six years of data are reported for each manufacturer type. DOE collected this data for 11 types of OEMs:

• Air-conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing

• All other industrial machinery manufacturing

• Farm machinery and equipment manufacturing

• Food product machinery manufacturing

• Heating equipment (except warm air furnaces) manufacturing

• Industrial and commercial fan and blower manufacturing

• Machine tool (metal cutting types) manufacturing

• Machine tool (metal form ing types) manufacturing

• Other metalworking machinery manufacturing

• Sawmill and woodworking machinery manufacturing

• Textile machinery manufacturing

The markups range between 1.20 (Industrial machinery, Machine tools) and 1.56 (Heating equipment), w ith an average of 1.37.

DOE estimated incremental markups using a least squares regression of the value of shipments on payroll and cost of materials. Beca use there is a large range in the size of the OEM types, companies with value of sales greater th an $10 billion were separated from those with value of sales less than $10 b illion. The incremental markup for larger companies was 1.27 and the incremental markup for smaller companies was 1.33. DOE used the former value for the

7-7channel in which OEMs purchase motors directly from motor manufacturers, and the latter value for the channel in which OEMs purchase motors from a motor distributo r. This approach assumes that larger companies would be more likely to purchase motors directly from motor manufacturers.

DOE developed a modified OEM markup for th e Final Rule analysis which takes into account the costs faced by OEMs whic h need to redesign their produc ts in order to incorporate small motors of different sizes. Nationally, abou t 2.5% of U.S. gross domestic product is spent on research and development (R&D) iii . DOE estimates that R&D by equipment OEMs, including the design of new produc ts, generally represents approxi mately 2 percent of company revenue. This percentage is slightly less than the national average to account for high technology companies that generally spend a much larg er fraction of revenue on R&D than OEMs of equipment that incorporate small motors. DOE accounted for the additional costs to redesign products and incorporate differently-shaped motors by adding 2% to the OEM markup, increasing the baseline OEM markup from 1.37 to 1.39 and the incremental OEM markup from 1.27 to 1.29 for OEMs without a di stributor, and 1.33 to 1.35 for OEMs that purchase motors through distributors. For sensitivity cases (b ased on NEMA’s OEM survey) in which some OEMs are assumed to require space-constraine d designs, DOE assumed that these OEMs would not face redesign costs, and therefore did not include this 2% increase in the OEM markup.

7.4 CONTRACTOR OR INSTALLER MARKUP

DOE used information from RSMeans Electrical Cost Data iv to estimate markups used by contractors in the installation of equipment with small motors or replacement motors. RSMeans electrical cost data estimates ma terial expense markups for electric al contractors as 10%, leading to a markup factor of 1.10. DOE recognizes that contractors are not used in all installations, since some firms have in-house technicians who would install equipment or replace a motor. However, DOE has no information on the extent to which this occurs, so it applied a markup of 1.10 in all cases.

7.5 SALES TAXES

The sales tax represents state and local sa les taxes that are applied to the end user equipment price of the equipment. The sales tax is a multiplicative factor that increases the end user equipment price.

DOE derived state and local taxes from da ta provided by the Sales Tax Clearinghouse. v These data represent weighted averages that in clude county and city rates. DOE then derived population-weighted average tax values for each Ce nsus division and large state, as shown in Table 7.5.1 below. DOE then derived U.S. av erage tax values usi ng a populated-weighted average of the Census division and large State va lues. This provides a national average tax rate of 6.84 percent, which DOE used for each of the distribution channels.

7-8Table 7.5.1 Average Sales Tax Rates by Census Division and Large State

Census Division/State Tax Rate Population (July 1, 2007) vi

New England 4.98% 14,264,185

Mid Atlantic 6.07% 21,118,712

East North Central 6.56% 46,338,216

West North Central 6.65% 20,050,579

South Atlantic 5.95% 39,609,017

East South Central 7.85% 17,944,829

West South Central 8.30% 10,745,317

Mountain 6.46% 21,360,990

Pacific 4.97% 12,182,745

New York State 8.25% 19,297,729

California 7.95% 36,553,215

Texas 7.95% 23,904,380

Florida 6.70% 18,251,243

7.6 OVERALL MARKUP

The overall markup for each distribution channe l is the product of the relevant markups, as well as the sales tax. DOE used the overa ll baseline markup to estimate the end user equipment price of baseline models, given the manuf acturer selling price of the baseline models. As stated above, DOE considers baseline models to be equipment sold under existing market conditions (i.e., without new ener gy efficiency standards).

DOE used the overall incremental markup to es timate changes in the end user equipment price, given changes in the manu facturer cost above the baseline model cost resulting from a standard to raise equipment efficiency. The tota l end user equipment price for higher-efficiency models is composed of two com ponents: the end user equipment pr ice of the baseline model and the change in end user equipment price associated with the increas e in manufacturer cost to meet the new efficiency standard. The followi ng equation shows how DOE used the overall incremental markup to determine the end user eq uipment price for higher-efficiency models (i.e., models meeting new efficiency standards).

EQP = MSP × MU + Δ COST × 

## ( MU × Tax 

## )

STD MFG OVERALL

_ BASE MFG INCR SALES

= EQP + Δ COST × MU BASE MFG OVERALL

_ INCR

7-9Where:

EQP STD = end user equipment price fo r models meeting new efficiency standards, EQP BASE = end user equipment price for baseline models, MSP MFG = manufacturer selling price for baseline models, Δ MSP MFG = change in manufacturer selling price for higher-efficiency models,
MU INCR = incremental OEM or distributor markup,
Tax SALES = sales tax,
MU OVERALL_BASE = baseline overall markup (product of manufacturer markup, baseline OEM or distributor markup, and sales tax), and
MU OVERALL_INCR = incremental overall markup (product of manufacturer markup, incremental OEM or distributor markup, and sales tax).

Table 7.6.1 summarizes the markups and the overall baseline and incremental markups for each of the three identified channels. Weigh ting the values by the respective shares of each channel yields an average overall baseline mar kup of 2.42 and an overall incremental markup of 1.75.

Table 7.6.1 Summary of Markups for Small Motors

Direct to OEMs (65%) Via Distributors to OEMs (30%) Via Distributors to EndUsers (5%)

Baseline Incremental Baseline Incremental Baseline Incremental

Motor Wholesale Distributor - - 1.28 1.10 1.28 1.10

Equipment Manufacturer (OEM) 1.39 1.29 1.39 1.35

- -

Equipment or Motor Distributor or Retailer 1.43 1.18 1.43 1.18 1.44 1.18

Contractor or Installer 1.10 1.10 1.10 1.10 1.10 1.10

Sales Tax 1.0684 1.0684 1.0684

Overall 2.34 1.79 2.99 2.06 2.17 1.53

The example provided below illustrates how DOE used the baseline and incremental markups to derive an end user equipment price. Assuming the baseline manufacturer selling price is $93.46 and the change in manufacturer price to meet a given energy efficiency standard is $10, the resulting baseline end user equipment price ( EQP BASE ) and higher-efficiency equipment price ( EQP STD ) are:

7-10EQP = MSP × MU BASE MFG OVERALL

_ BASE

= $93.46 × 2.35 = $219.63

EQP = EQP + ( Δ MSP × 

# ( MU 

# ) ) STD BASE MFG OVERALL

_ INCR

= $219.63 + ($10 × 1.75) = $219.63 + $17.50 = $237.13

7.7 SHIPPING COSTS

DOE examined freight shipping costs to eval uate the impact of increased motor weight on installed cost. The Department collected quot ed shipping costs from 8 freight shipment companies for single shipments by "less than tr uckload" (LTL) ground service weighing between 50 and 1,200 pounds and over shipping distances between 350 and 3,000 miles. Marginal shipment costs per pound varied from 10.5 cents to $1.52, depending on the total weight, distance shipped, and guaranteed delivery times. In addition, marginal costs can be zero for small shipments whose cost is determined by size rath er than weight. DOE used a median marginal shipment cost of 50 cents per pound.

According to the engineering analysis, DOE estimates that the weight of a 1 hp small electric motor can vary from 31 to 55 pounds while the manufacturer sell ing price varies from $98 to $235. Shipping costs therefore are potentially significant tend to be less than 10% of the manufacturer selling price increas e of more efficient motors.

7-11REFERENCES

i Pindyck, R.S. and D.L. Rubinfeld, Microeconomics, 5 th ed. , 2000. New Jersey: Prentice Hall.

ii U.S. Census Bureau. 1997 Economic Census, Business Expenses Survey, Retail Trade, Household Appliance Stores , 1997. Washington, DC.

< http://www.census.gov/csd/bes/bes97.htm >

iii National Science Board. 2010. Science and Engineering Indicators 2010 . Arlington, VA: National Science Foundation (NSB 10-01)

iv RSMeans Construction Publishers & Consultants, Electrical Cost Data, 31 st Annual Edition. 2008. ed. J.H. Chiang, Kingston, MA.

v Sales Tax Clearinghouse, Inc. State sales tax rates along with combined average city and county rates , 2006. < http://thestc.com/STrates.stm >

vi U.S. Census Bureau. Table 1: Annual Estimates of the Population for the United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2007 (NST-EST2007-01)

, December 27, 2007, < http://www.census.gov/popes t/states/NST-ann-est.html >

7-12CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

........................................................................................................... 8-1 8.1.1 General Approach for Life-Cycle Co st and Payback Period Analysis

................ 8-1 8.1.2 Overview of Life-Cycle Cost and Payback Period Inputs

................................... 8-3 8.2 LIFE-CYCLE COST INPUTS

........................................................................................ 8-5 8.2.2 Total Installed Cost Inputs

................................................................................... 8-9 8.2.2.1 Baseline Manufacturer Selling Price

........................................................... 8-11 8.2.2.2 Manufacturer Selling Price Increases for Higher-Efficiency Products

........ 8-11 8.2.3 Operating Cost Inputs

........................................................................................ 8-16 8.2.3.1 Annual Energy Consumption

....................................................................... 8-18 8.2.3.2 Energy Prices

............................................................................................... 8-19 8.2.3.3 Energy Price Trends

..................................................................................... 8-20 8.2.3.4 Repair and Maintenance Costs

..................................................................... 8-21 8.2.4 Motor Lifetime

................................................................................................... 8-21 8.2.4.1 The Weibull Distribution

............................................................................. 8-22 8.2.4.2 Capacitor-Start Mechanical a nd Application Lifetimes

.............................. 8-23 8.2.5 Polyphase Mechanical and Application Lifetimes

............................................ 8-23 8.2.5.1 Discount Rates

............................................................................................. 8-24 From rulemaking on distribution transformer standards

............................................... 8-27 8.2.5.2 Effective Date of Standard

........................................................................... 8-31 8.2.6 Product Energy Efficiency in the Base Case

..................................................... 8-31 8.3 PAYBACK PERIOD INPUTS

...................................................................................... 8-32 8.4 LIFE-CYCLE COST AND PA YBACK PERIOD RESULTS FOR REPRESENTATIVE PRODUCT CLASSES

............................................................... 8-33 8.4.1 Polyphase Motors

............................................................................................... 8-33 8.4.2 Capacitor-Start Indu ction-Run Motors

.............................................................. 8-35 8.4.3 Capacitor-Start Capacitor-Run Motors

.............................................................. 8-37 8.5 LIFE CYCLE COSTS FOR AL L PRODUCT CLASSES

............................................ 8-39 8.6 LIFE-CYCLE COST SENSIT IVITY CALCULATIONS

............................................ 8-43 8.6.2 Application Data Submitted by NEMA

............................................................. 8-47 8.7 REBUTTABLE PAYBACK PERIOD

.......................................................................... 8-54

LIST OF TABLES

Table 8.1.1 Application Shares by Equipment Class

.............................................................. 8-2 Table 8.1.2 Shares of Motor Own er Type by Application

...................................................... 8-2 Table 8.2.1 Inputs for Life-Cycle Cost and Payback Period Analysis: Polyphase
Motors

.................................................................................................................. 8-7

8-iTable 8.2.2 Inputs for Life-Cycle Cost and Payback Period Analys is: Capacitor-Start Induction-Run Motors

.......................................................................................... 8-8 Table 8.2.3 Inputs for Life-Cycle Cost and Payback Period Analysis: Capacitor-Start

Table 8.2.7 Capacitor-Start I nduction-Run Motors: Manufacturer Selli ng Price, 4 pole Capacitor-Run Motors

......................................................................................... 8-9 Table 8.2.4 Inputs for Total Installed Cost

........................................................................... 8-10 Table 8.2.5 Engineering Baseline Manufacturer Selling Price

............................................. 8-11 Table 8.2.6 Polyphase Motors: Manufacturer Selling Price, 4 pole 1 Horsepower

.............. 8-12

0.5 Horsepower

.................................................................................................. 8-12 Table 8.2.8 Capacitor-Start Ca pacitor-Run Motors: Manufacturer Selling Price, 4 pole 0.75 Horsepower

................................................................................................ 8-13

Table 8.2.10 Polyphase Motors (4 pole, 1 hp) : Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total In stalled Costs for Motors that are Not

Table 8.2.11 Polyphase Motors (4 pole, 1 hp) : Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are

Table 8.2.12 Capacitor-Start Induction-Run Motors (4 pole, 0.5 hp): Consumer Equipment Prices, Shipping Costs, Inst allation Costs, and Total Installed

Table 8.2.13 Capacitor-Start Induction-Run Motors (4 pole, 0.5 hp): Consumer Equipment Prices, Shipping Costs, Inst allation Costs, and Total Installed

Table 8.2.14 Capacitor-Start Capacitor-Run Motors (4 pole, 0.75 hp): Consumer Equipment Prices, Shipping Costs, Inst allation Costs, and Total Installed

Table 8.2.15 Capacitor-Start Capacitor-Run Motors (4 pole, 0.75 hp): Consumer Equipment Prices, Shipping Costs, Inst allation Costs, and Total Installed

Table 8.2.17 Average Annual Electricity Use by Efficiency Level for Small Electric

Table 8.2.19 Weighted Average Cost of Capita l for Sectors that Purchase Small Electric

Table 8.2.22 Average Real Effective Intere st Rates for Household Debt Classes

Table 8.2.24 Shares and Interest or Return Rates Used for Household Debt and Equity Table 8.2.9 Markups for Small Electric Motors

................................................................... 8-13

Space-Constrained

............................................................................................. 8-14

Space-Constrained

............................................................................................. 8-14

Costs for Motors that are Not Space-Constrained

............................................. 8-15

Costs for Motors that are Space-Constrained

.................................................... 8-15

Costs for Motors that are Not Space-Constrained

............................................. 8-16

Costs for Motors that are Space-Constrained

.................................................... 8-16 Table 8.2.16 Inputs for Operating Cost

................................................................................... 8-17

Motors

................................................................................................................ 8-19 Table 8.2.18 Adjusted Real Discoun t Rates for Updated Values of R f and ERP

.................... 8-27

Motors

................................................................................................................ 8-27 Table 8.2.20 Average Shares of Considered Household Debt and Equity Types

.................. 8-28 Table 8.2.21 Average Nominal Interest Rates fo r Household Debt Classes (percent)

........... 8-29

(percent)

............................................................................................................. 8-29 Table 8.2.23 Average Nominal and Real Interest Rates for Household Equity Types

........... 8-30

Types

.................................................................................................................. 8-31 Table 8.2.25 Product Energy Efficiency in the Base Case

..................................................... 8-32

8-iiTable 8.4.1 Polyphase Motors: Life-Cyc le Cost and Payback Period Results (Representative Product Class)

.......................................................................... 8-35 Table 8.4.2 Capacitor-Start Induction-Run Motors: Life -Cycle Cost and Payback Period Results (Representat ive Product Class)

.................................................. 8-37 Table 8.4.3 Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results (Representat ive Product Class)

.................................................. 8-39 Table 8.5.1 Parameters for Motor Purchase Cost Model

...................................................... 8-40 Table 8.5.2 Polyphase Motor Consum er Cost Scaling Factors

............................................. 8-41 Table 8.5.3 CSIR Motor Consumer Cost Scaling Factors

.................................................... 8-41 Table 8.5.4 CSCR Motor Consumer Cost Scaling Factors

................................................... 8-41 Table 8.5.5 Polyphase Motors: Life-Cycle Co st and Payback Peri od Results (National Shipment-Weighted Distribution)

...................................................................... 8-42 Table 8.5.6 Capacitor-Start Induction-Run Motors: Life -Cycle Cost and Payback Period Results (National Shipme nt-Weighted Distribution)

............................. 8-42 Table 8.5.7 Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results (National Shipme nt-Weighted Distribution)

............................. 8-43 Table 8.6.1 Polyphase Motors: Low Energy Price Trend Scenario

..................................... 8-44 Table 8.6.2 Capacitor-Start Indu ction Run Motors: Low Energy Price Trend Scenario

..... 8-44 Table 8.6.3 Capacitor-Start Capa citor Run Motors: Low Energy Price Trend Scenario

..... 8-45 Table 8.6.4 Capacitor-Start Small Electric Motors: Life-Cycle Cost and Payback Period Sensitivity Results for a Space-Constrained 0.5 hp, 4-pole CSCR Motor Customer with a CSIR Motor Baseline

.................................................. 8-46 Table 8.6.5 Capacitor-Start Induction-Run Motors: Ship ment-Weighted Life-Cycle Cost and Payback Period Results for a 4-Pole One-Half Horsepower Motor with Switching to CSCR

......................................................................... 8-47 Table 8.6.1 Application Shares by Equipment Type (NEMA)

............................................. 8-48 Table 8.6.2 Shares of Motor Owner Type by Application (NEMA)

.................................... 8-48 Table 8.6.3 Polyphase Motors: NEMA with 20% Space-Constrained

................................. 8-49 Table 8.6.4 Polyphase Motors: NEMA with 62% Space-Constrained

................................. 8-49 Table 8.6.5 Polyphase Motors: NEMA with 95% Space-Constrained

................................. 8-50 Table 8.6.6 Capacitor-Start Induction Run Motors: NEMA with 20% SpaceConstrained

........................................................................................................ 8-50 Table 8.6.7 Capacitor-Start Induction Run Motors: NEMA with 62% SpaceConstrained

........................................................................................................ 8-51 Table 8.6.8 Capacitor-Start Induction Run Motors: NEMA with 95% SpaceConstrained

........................................................................................................ 8-51 Table 8.6.9 Capacitor-StartCapacitor Run Motors: NEMA with 20% SpaceConstrained

........................................................................................................ 8-52 Table 8.6.10 Capacitor-StartCapacitor Run Motors: NEMA with 62% SpaceConstrained

........................................................................................................ 8-53 Table 8.6.11 Capacitor-StartCapacitor Run Motors: NEMA with 95% SpaceConstrained

........................................................................................................ 8-53 Table 8.7.1 Rebuttable Presumption Pa yback for Polyphase Motors

................................... 8-55 Table 8.7.2 Rebuttable Presumption Payb ack for Capacitor-Start Motors

........................... 8-55

8-iiiLIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of Life-Cycle Cost and Payback Period

..................................................................................................... 8-5 Figure 8.2.1 Electricity Price (2007$/kWh) Distributions

..................................................... 8-20 Figure 8.2.2 Industrial Electri city Price Trends

..................................................................... 8-21 Figure 8.4.1 Polyphase Motors: Di stribution of Life-Cycle Co st Savings for Efficiency Level 4b

............................................................................................................. 8-34 Figure 8.4.2 Polyphase Motors: Distribution of Payback Periods for Efficiency Level 4b

........................................................................................................................ 8-35 Figure 8.4.3 Capacitor-Start I nduction-Run Motors: Distribu tion of Life-Cycle Cost Savings for Efficiency Level 7

.......................................................................... 8-36 Figure 8.4.4 Capacitor-Start I nduction-Run Motors: Distribution of Payback Periods for Efficiency Level 7

....................................................................................... 8-36 Figure 8.4.5 Capacitor-Start Ca pacitor-Run Motors: Distribu tion of Life-Cycle Cost Savings for Efficiency Level 3

.......................................................................... 8-38 Figure 8.4.6 Capacitor-Start Capacitor-Run Motors: Distri bution of Payback Periods for Efficiency Level 3

....................................................................................... 8-38

8-ivCHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 INTRODUCTION

This chapter describes the Department of Energy (DOE)’s methodology for analyzing the economic impacts of possible energy efficiency sta ndards on individual end users. The effect of standards on individual end users includes a change in operating expense (usually decreased) and a change in purchase price (usua lly increased). This chapter describes three metrics DOE used to determine the effect of sta ndards on individual end users:

• Life-cycle cost (LCC) is the total consumer expe nse over the life of an appliance, including purchase expense and operating costs (including ener gy expenditures). DOE discounts future operating costs to the time of purchase, and sums them over the lifetime of the equipment.

• Payback period (PBP) is the change in purchase expense due to an increased efficiency standard divided by the change in annual operating expense that results from the standard. It represents the numbe r of years it will take the user to recover the increased purchase expense through d ecreased operating expenses.

• Rebuttable payback period is a special case of the PBP. Where LCC and PBP are estimated over a range of inputs reflecting ac tual conditions, rebuttabl e payback period is based on laboratory conditions, specif ically DOE test procedure inputs.

Inputs to the LCC and PBP are discussed in sections 8.2 and 8.3, respectively, of this chapter. Results for the LCC and PBP are presen ted in section 8.4, with sensitivity results in section 8.6. The rebuttable PBP is discussed in section 8.7. Key variables and calculations are presented for each metric. DOE performed the calculations discussed here using a Microsoft Excel spreadsheet which is accessible on the Internet ( http://www.eere.energy.gov/ buildings/appliance_standards / ).

8.1.1 General Approach for Life-Cycle Co st and Payback Period Analysis

Recognizing that several i nputs to the determination of consumer LCC and PBP are either variable or uncertain, DOE conducted th e LCC and PBP analysis by modeling both the uncertainty and variability in the inputs using Monte Carlo simulation and probability distributions. DOE developed LCC and PBP spread sheet models incorporating both Monte Carlo simulation and probability distributions by using a Microsoft Excel spreadsheet combined with Crystal Ball (a commercially available add-in program).

In addition to characterizi ng several of the inputs to th e analysis with probability distributions, DOE also develope d a sample of end-use applica tions for the equipment. These end-use applications determine the use profile of the motor and the economic characteristics of

8-1(%) the motor owner. Table 8.1.1 shows the market sh ares of each application for each equipment class.

Table 8.1.1 Application Shares by Equipment Class Equipment Class

No. Application Polyphase CSIR CSCR

1 Air and gas compressors 17.3% 14.9% 14.9%

2 Conveyors 13.3% 11.9% 11.9%

3 General industrial machinery 11.3% 12.5% 12.5%

4 Industrial and commercial fans and blowers 7.3% 6.9% 6.9%

5 Pumps and pumping equipment 50.7% 53.7% 53.7%

TOTAL 100% 100% 100%

In each Monte Carlo iteration, for each equi pment class, one of the applications is identified by sampling a distribution of applicat ions for that equipment class. The selected application determines the number of operating h ours per year as well as the motor loading. The operating hours and the motor load ing for the application are used in the energy use calculation (see Chapter 6).

There is also a distribution of owner types (by sector) associated with each application (Table 8.1.2). The sector to which the application belongs determines the energy price and discount rate used in the LCC calculation in each simulation.

Table 8.1.2 Shares of Motor Owner Type by Application Motor Owner Type

No. Application Industrial Comme rcial Agricultural Residential

1 Air and gas compressors 40% 40% 10% 10%

2 Conveyors and packaging equipment 40% 50% 10% 0%

3 General industrial machinery 50% 40% 10% 0%

4 Industrial and commercial fans and blowers 50% 50% 0% 0%

5 Pumps and pumping equipment 40% 35% 20% 5%

DOE used Energy Information Administration (E IA) data on electricit y prices in 2006 for different customer classes (which is accessible on the Internet at http://www.eia.doe.gov/cneaf/electricity/page/eia861.html ) to establish the variability in energy pricing. DOE used data from the literature on motor loading and motor application characteristics to estimate the variability of annual energy use. Due to the large range of applications and motor use characteristics consider ed in the LCC and PBP analysis, the range of annual energy use and energy prices can be quite large. Thus, although the annual energy use and

8-2energy pricing are not uncertain for any partic ular application, their variability across all applications contributes to the range of LCCs and PBPs calculate d for any particular standard level.

Results presented at the end of this chap ter are based on 10,000 samples per Monte Carlo simulation run. DOE displays the LCC and PBP resu lts as distributions of impacts compared to the base case without standards.

8.1.2 Overview of Life-Cycle Cost and Payback Period Inputs

DOE categorizes inputs to the LCC and PB P analysis as follows: (1) inputs for establishing the initial ex pense, otherwise known as the total installed cost, and (2) inputs for calculating the operating cost.

The primary inputs for establishi ng the total insta lled cost are:

• Baseline manufacturer selling price : The price at which the manufacturer sells the baseline equipment, which includes the co sts incurred by the manu facturer to produce equipment meeting existing standards.

• Manufacturer selli ng price increases : The change in manufacturer selling price associated with producing equipment to meet a particular standard level.

• Markups and sales tax : The markups and sales tax a ssociated with converting the manufacturer cost to a consumer equipm ent price. The markups and sale tax are described in detail in Chapter 7, Mark ups for Equipment Price Determination.

• Installation cost : The cost to the consumer of inst alling the equipment. The installation cost represents all costs required to inst all the equipment othe r than the marked-up consumer equipment price. The installati on cost includes labor, overhead, and any miscellaneous materials and parts. Thus, the total installed cost equals the consumer equipment price plus the installation cost.

The primary inputs for calcul ating the operating cost are:

• Equipment energy consumption and reactive power : The equipment energy consumption is the site energy use associated with operating the equipment. Reactive power is power that is reflected back to the electrical sy stem by a change in th e phase of alternating current power. Chapter 6, Energy Use Characte rization, details how DOE determined the equipment energy consumption based on various data sources.

• Equipment efficiency : The equipment efficiency dictates the energy consumption associated with standard-level equipment (i.e ., equipment with efficiencies greater than baseline equipment). Chapter 6, Energy Use Characterization, details how energy and reactive power change with increasing e quipment efficiency and how equipment efficiency relates to actual equipment energy use.

8-3• Energy prices : Energy prices are the prices paid by end users for energy (i.e., electricity). DOE determined current energy prices based on data from the DOE-EIA.

• Energy price trends : DOE used the EIA Annual Energy Outlook 2010 ( AEO2010 ) 1 to forecast energy prices into the future. For the results presented in this chapter, DOE used the Early Release case of AEO2010 (DOE’s reference case) to forecast future energy prices.

• Repair and maintenance costs : Repair costs are associated with repairing or replacing components that have failed. Maintenance co sts are associated with maintaining the operation of the equipment.

• Lifetime : The age at which the equipment is retired from service.

• Discount rate : The rate at which DOE discounted fu ture expenditures to establish their present value.

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating cost inputs for the calculation of the LCC a nd PBP. In the figure below, the yellow boxes indicate the inputs, the green boxes indicate intermediate outputs, and the blue boxes indicate the final outputs (the LCC and PBP).

8-4Figure 8.1.1 Flow Diagram of Inputs for the De termination of Life-Cycle Cost and Payback Period

8.2 LIFE-CYCLE COST INPUTS

Life-cycle cost is the total customer e xpense over the life of a piece of equipment, including purchase expense a nd operating costs (including ener gy expenditures). DOE discounts future operating costs to the time of purchase, an d sums them over the lifetime of the equipment. DOE defines LCC by the following equation:

N OC
t LCC = IC + 

## ∑

t 

## ( 1 + r 

## )

Where: t = 1

LCC = life-cycle cost in dollars,

8-5IC = total installed cost in dollars, ∑ = sum over the lifetime, from year 1 to year N, N = lifetime of appliance in years, OC = operating cost in dollars,

r

= discount rate, and

t = year for which operating cost is being determined.

DOE gathered most of its data for the LCC and PBP analysis in 2008, and updated its inputs to 2009$ using appropriate measures of inflation. Thro ughout this TSD, DOE expresses dollar values in 2009$.

Tables 8.1.1 through 8.1.3 summarize the input values that DOE used to calculate the LCC and PBP for the three equipment classes of small electric motors: polyphase, capacitor-start induction-run (CSIR), and capacitor-start capac itor-run (CSCR) resp ectively. Each table summarizes the total installed co st inputs and the ope rating cost inputs in cluding the lifetime, discount rate, and energy price tr ends. DOE characterized all of th e total cost inputs with singlepoint values, but characterized several of the opera ting cost inputs with probability distributions that capture the input’s uncertainty and/or variability. For th ose inputs characterized with probability distributions, the values provided in th e following tables are the average or typical values. Also listed in the following tables is th e chapter of the technical support document (TSD) where more detailed information on the inputs can be found. The sections following the tables discuss total installed cost, operating cost, lifetime, and discount rate.

8-6Table 8.2.1 Inputs for Life-Cycle Cost and Paybac k Period Analysis: Polyphase Motors

Input Average or Typical Value Characterization TSD Chapter Reference
Total Installed Cost Inputs

Baseline Manufacturer Selling Price $98.54 Price for 1 HP, 4 pole motor. Single-Point Value. Scaled to other sizes and speeds. 5

Manufacturer Selling Price EL 1 = $104.83 EL 2 = $108.17 EL 3 = $114.24 EL 4 = $118.54 EL 4b = $134.04 - $135.62 EL 5 = $153.92 - $230.92 EL 6 = $186.37 - $237.70 EL 7 = $326.18 - $1,766.06 Price for 1 HP, 4 pole motor. Price varies with efficiency level and whether or not application is space-constrained. DOE estimates20% of applications may be spaceconstrained. Scaled to other sizes and speeds. 5

Distribution and OEM Markups Baseline = 2.36 Incremental = 1.74 Shipping Cost = $0.50/pound Point Value for each distribution chain with 20% variance added 7

Sales Tax 1.0684 Point Value 7

Installation Cost $252.90 Point Value 8
Operating Cost Inputs

Duty cycle 2562 hours/year Full distribution ranging from 50 to 8760 hours per year and with distribution varying with application 6

Annual Energy Use Baseline use* = 1882 kWh Variability based on usage 6

Reactive Power Baseline = 1.1 kilovolt-amperes reactive Variability based on usage, load and power factor 6

Energy Prices (Marginal) Electric Energy = 8.1 ¢/kWh Variability based on application owner types 8

Repair and Maintenance Costs No cost increase with efficiency No cost increase with efficiency 8

Lifetime 9 years Distribution based in part on annual hours of operation 8

Discount Rate 5.89% Variability based on application owner types 8

Energy Price Trend AEO 2010 Early Release Two sensitivities: High & Low Energy Price Cases 8

* Annual use provided for market baseline product only. A nnual use decreases with increased product efficiency.

8-7Table 8.2.2 Inputs for Life-Cycle Cost and Paybac k Period Analysis: Capacitor-Start Induction-Run Motors

Input Average or Typical Value Characterization TSD Chapter Reference
Total Installed Cost Inputs

Baseline Manufacturer Selling Price $91.24 Price for 1/2 HP, 4 pole motor. Single-Point Value. Scaled to other sizes and speeds. 5

Manufacturer Selling Price EL 1 = $95.43 EL 2 = $98.45 EL 3 = $99.58 EL 4 = $104.99 - $114.31 EL 5 = $117..07 - $118.00 EL 6 = $132.22 - $182.09 EL 7 = $151.25 - $1,200.98 Price for 1/2 HP, 4 pole motor. Price varies with efficiency level and whether or not application is space-constrained. DOE estimates20% of applications may be spaceconstrained. Scaled to other sizes and speeds. 5

Distribution and OEM Markups Baseline = 2.36 Incremental = 1.74 Shipping Cost = $0.50/pound Point Value for each distribution chain, with 20% variance added 7

Sales Tax 1.0684 Point Value 7

Installation Cost $252.90 Point Value 8
Operating Cost Inputs

Usage 2615 hours/year Full distribution ranging from 50 to 8760 hours per year and with distribution varying with application 6

Annual Energy Use Baseline use* = 1274 kWh Variability based on usage 6

Reactive Power Baseline = 0.93 kilovolt-amperes reactive Variability based on usage, load and power factor 6

Energy Prices Electric Energy = 8.1 ¢/kWh Variability based on application owner types 8

Repair and Maintenance Costs No cost increase with efficiency No cost increase with efficiency 8

Lifetime 7 years Distribution based in part on annual hours of operation 8

Discount Rate 5.87% Variability based on application owner types 8

Energy Price Trend AEO 2010 Early Release Two sensitivities: High & Low Energy Price Cases 8

* Annual use provided for market baseline product only. A nnual use decreases with increased product efficiency.

8-8Table 8.2.3 Inputs for Life-Cycle Cost and Paybac k Period Analysis: Capacitor-Start Capacitor-Run Motors

Input Average or Typical Value Characterization TSD Chapter Reference
Total Installed Cost Inputs

Baseline Manufacturer Selling Price $111.72 Price for 3/4 HP, 4 pole motor. Single-Point Value. 5

Manufacturer Selling Price EL 1 = $117.13 EL 2 = $129.88 - $137.20 EL 3 = $135.56 - $142.63 EL 4 = $142.76 - $146.44 EL 5 = $151.91 - $154.55 EL 6 = $158.25 - $236.98 EL 7 = $175.75 - $244.03 EL 8 = $327.69 - $1,771.47 Price for 3/4 HP, 4 pole motor. Price varies with efficiency level and whether or not application is space-constrained. DOE estimates20% of applications may be spaceconstrained. Scaled to other sizes and speeds. 5

Distribution and OEM Markups Baseline = 2.36 Incremental = 1.74 Shipping Cost = $0.50/pound Point Value for each distribution chain, with 20% variance added 7

Sales Tax 1.0684 Single-Point Value 7

Installation Cost $252.90 Single-Point Value 8
Operating Cost Inputs

Usage 2615 hours/year Variability determined from distribution of applications. Usage ranges from 50 to 8760 hours/year 6

Annual Energy Use Baseline use* = 2290 kWh Variability based on usage 6

Reactive Power Baseline = 1.28 kilovolt-amperes reactive Variability based on usage, load and power factor 6

Energy Prices Electric Energy = 8.1 ¢/kWh Variability based on application owner types 8

Repair and Maintenance Costs No cost increase with efficiency No cost increase with efficiency 8

Lifetime 7 years Distribution based in part on annual hours of operation 8

Discount Rate 5.87% Variability based on application owner types 8

Energy Price Trend AEO 2010 Early Release Two sensitivities: High & Low Energy Price Cases 8

* Annual use provided for market baseline product only. A nnual use decreases with increased product efficiency.

8.2.2 Total Installed Cost Inputs

DOE defines the total installed cost , IC, using the following equation:

IC = EQP + INST

8-9Where:

EQP = equipment price (i.e., customer cost for the equipment only), expressed in dollars, and INST = installation cost or the customer pric e to install equipment (i.e., the cost for labor and materials), also in dollars.

The equipment price is based on how the cu stomer (end user) purchases the equipment. As discussed in Chapter 7, Markups for Equipm ent Price Determination, DOE defined markups and sales taxes for converting manufacturing sell ing prices into customer equipment prices.

Table 8.2.4 summarizes the inputs for the determination of total installed cost.

Table 8.2.4 Inputs for Total Installed Cost Baseline Manufacturer Selling Price
Manufacturer Selling Price Increase
Markups and Sales Tax

Installation Cost

The baseline manufacturer selling price is the price charged by the manufacturer to produce equipment for the current market. Manufacturer selling price increase is the change in manufacturer price associated with pr oducing equipment at a standard level. Markups and sales

tax convert the manufacturer selling pri ce to a consumer equipment price. The installation cost is the cost to the consumer of installing the equipmen t and represents all costs required to install the equipment other than the marked-up consumer e quipment price. The installation cost includes labor, overhead, and any miscellaneou s materials and parts. Thus, th e total installed cost equals the consumer equipment price plus the installation cost. DOE calculated the total installed cost for baseline products based on the following equation:

IC = EQP + INST BASE BASE BASE

= MSP × MU + INST MFG OVERALL

_ BASE BASE

Where:

IC BASE = baseline total installed cost, EQP BASE = consumer equipment price for baseline models, INST BASE = baseline installation and shipping cost, MSP MFG = manufacturer selling pr ice for baseline models, and
MU OVERALL_BASE = baseline overall markup (produc t of manufacturer markup, baseline retailer or distributor markup, and sales tax).

DOE calculated the total installed cost for standard-level products based on the following equation:

8-10IC = EQP + INST STD STD STD 

## ( EQP + Δ EQP 

## ) ( INST + Δ INST 

## )

= + BASE STD BASE STD + Δ 

## )

= 

## ( EQP + INST 

## ) ( EQP + Δ INST BASE BASE STD STD + Δ = IC BASE + 

# ( Δ

MSP MFG × MU OVERALL

_ INCR INST STD 

# )

Where:

IC STD = standard-level total installed cost, EQP STD = consumer equipment price for standard-level models, INST STD = standard-level installation cost, EQP BASE = consumer equipment price for baseline models, Δ EQP STD = change in equipment price for standard-level models, INST BASE = baseline installation and shipping cost, Δ INST STD = change in installation and shi pping cost for standard-level models, IC BASE = baseline total installed cost, Δ MSP MFG = change in manufacturer selling price for standard-level models, and
MU OVERALL_INCR = incremental overall markup (p roduct of manufacturer markup, incremental retailer or distri butor markup, and sales tax).

The remainder of this section provides information about each of the above input variables that DOE used to calculate the tota l installed cost for small electric motors.

8.2.2.1 Baseline Manufacturer Selling Price

The engineering analysis pr ovides a baseline manufacturer selling price (MSP) that includes all manufacturer markups (see TSD chap ter 5). Table 8.2.5 presents the baseline MSP and the associated energy efficiency for each eq uipment class for the baseline models analyzed in the engineering analysis.

Table 8.2.5 Engineering Baseline Manufacturer Selling Price

Product Class Baseline Efficien cy (%) Baseline MSP (2009$) Polyphase (1 hp) 75.3 $98.54

CSIR (0.5 hp) 57.9 $91.24
CSCR (0.75 hp) 71.4 $111.72

8.2.2.2 Manufacturer Selling Price Increases for Higher-Efficiency Products

DOE determined the MSP associated with motors produced at increasing energy efficiency levels for small electric motors in the engineering analys is (see TSD chapter 5). Tables 8.2.6 through 8.2.8 present the MSP along with the associated energy efficiency for each equipment category.

8-11Table 8.2.6 Polyphase Motors: Manufacturer Selling Price, 4 pole 1 Horsepower

Energy Efficiency Level Efficiency (%) Not Space-Constrained Standard-Level

MSP (2009$) Space-Constrained Standard-Level

MSP (2009$)

Baseline 75.3 $98.54 $98.54

1 77.3 $104.83 $104.83

2 78.8 $108.17 $108.17

3 80.5 $114.24 $114.24

4 81.1 $118.54 $118.54

4b 83.5 $134.04 $135.62

5 85.2 $153.92 $230.92

6 86.2 $186.37 $237.70

7 87.7 $326.18 $1,766.06

Table 8.2.7 Capacitor-Start Induction-Run Motors: Manufacturer Selling Price, 4 pole 0.5 Horsepower

Energy Efficiency Level Efficiency (%) Not Space-Constrained Standard-Level

MSP (2009$) Space-Constrained Standard-Level

MSP (2009$)

Baseline 57.9 $91.24 $91.24

1 61.1 $95.43 $95.43

2 63.5 $98.45 $98.45

3 65.7 $99.58 $99.58

4 70.5 $106.99 $114.31

5 71.8 $118.00 $117.07

6 73.1 $132.22 $182.09

7 77.6 $151.25 $1,200.98

8-12Table 8.2.8 Capacitor-Start Capacitor-Run Motors: Manufacturer Selling Price, 4 pole 0.75 Horsepower

Energy Efficiency Level Efficiency (%) Not Space-Constrained Standard-Level

MSP (2009$) Space-Constrained Standard-Level

MSP (2009$)

Baseline 71.4 $111.72 $111.72

1 75.1 $117.13 $117.13

2 79.5 $129.88 $137.20

3 81.7 $135.56 $142.63

4 82.8 $142.76 $146.44

5 84.0 $151.91 $154.55

6 84.6 $158.25 $236.98

7 86.7 $175.75 $244.03

8 87.9 $327.69 $1,771.47

Table 8.2.9 shows the baseline and incrementa l markups estimated for each point in the small motor supply chain. The overall baseline and incremental markups shown are weighted averages based on the share of shipments in each distribution channel. Refer to TSD chapter 7 for details.

Table 8.2.9 Markups for Small Electric Motors Point in Supply Chain Baseline* Incremental*

Wholesale 1.28 1.10

OEM 1.39 1.31

Retail and Post-OEM 1.43 1.18

Contractor/Installer 1.10 1.10

Sales Tax 1.0684

Overall 2.52 1.86

* Weighted average of the three distribution channels.

DOE derived installation costs for small electric motors from data in the RS Means Electrical Cost Data, 2008

. 2 The average cost estimated by DOE is $253. Since DOE found no information to indicate differences in installation costs among motor applications, it used the same installation cost for each equipment cla ss. While DOE did find evidence of increasing installation costs with increasing mo tor size for medium motors in the RS Means data, DOE found no evidence that installation costs would be impacted with increased motor energy efficiency levels for small electric motors.

Total Installed Cost: The total installed cost is the sum of the end user equipment price and the installation cost. Refer back to section 8.2.1 to see th e equations that DOE used to

8-13calculate the total installed cost for various energy efficiency leve ls. Tables 8.2.10 through 8.2.15 present the end user equipment pr ice, installation costs, shipping and total installed costs for each small motor equipment class for both the space-c onstrained and the not space-constrained cases.

Table 8.2.10 Polyphase Motors (4 pole, 1 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Not Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 75.3 $245.25 $15.31 $252.90 $516.89

1 77.3 $256.77 $16.51 $252.90 $529.77

2 78.8 $262.88 $17.61 $252.90 $537.07

3 80.5 $273.98 $18.28 $252.90 $549.01

4 81.1 $281.86 $18.99 $252.90 $557.72

4b 83.5 $310.21 $21.55 $252.90 $589.06

5 85.2 $346.59 $22.22 $252.90 $626.64

6 86.2 $405.97 $28.75 $252.90 $693.43

7 87.7 $661.78 $27.17 $252.90 $951.46

Table 8.2.11 Polyphase Motors (4 pole, 1 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 75.3 $245.25 $15.31 $252.90 $513.47

1 77.3 $256.77 $16.51 $252.90 $526.17

2 78.8 $262.88 $17.61 $252.90 $533.39

3 80.5 $273.98 $18.28 $252.90 $545.16

4 81.1 $281.86 $18.99 $252.90 $553.75

4b 83.5 $313.11 $18.61 $252.90 $584.62

5 85.2 $487.48 $18.91 $252.90 $759.28

6 86.2 $499.89 $19.30 $252.90 $772.08

7 87.7 $3,296.37 $19.30 $252.90 $3,568.57

8-14Table 8.2.12 Capacitor-Start Induction-Run Motors (4 pole, 0.5 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Not Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 57.9 $227.09 $10.58 $252.90 $493.74

1 61.1 $234.76 $11.09 $252.90 $502.03

2 63.5 $240.29 $11.59 $252.90 $508.15

3 65.7 $242.35 $11.94 $252.90 $510.58

4 70.5 $255.92 $13.91 $252.90 $526.33

5 71.8 $276.05 $16.80 $252.90 $549.65

6 73.1 $302.08 $15.23 $252.90 $574.49

7 77.6 $336.89 $18.03 $252.90 $612.62

Table 8.2.13 Capacitor-Start Induction-Run Motors (4 pole, 0.5 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 57.9 $227.09 $10.58 $252.90 $490.57

1 61.1 $234.76 $11.09 $252.90 $498.74

2 63.5 $240.29 $11.59 $252.90 $504.78

3 65.7 $242.35 $11.94 $252.90 $507.19

4 70.5 $269.31 $12.26 $252.90 $534.47

5 71.8 $274.35 $12.25 $252.90 $539.51

6 73.1 $393.32 $12.52 $252.90 $658.75

7 77.6 $2,257.61 $12.49 $252.90 $2,523.00

8-15Table 8.2.14 Capacitor-Start Capacitor-Run Motors (4 pole, 0.75 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Not Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 71.4 $278.08 $12.71 $252.90 $547.58

1 75.1 $287.97 $13.40 $252.90 $558.31

2 79.5 $311.29 $16.28 $252.90 $584.85

3 81.7 $321.70 $17.64 $252.90 $596.77

4 82.8 $334.87 $17.96 $252.90 $610.46

5 84.0 $351.61 $19.72 $252.90 $629.20

6 84.6 $363.22 $21.14 $252.90 $642.40

7 86.7 $395.23 $18.96 $252.90 $672.71

8 87.9 $673.24 $22.61 $252.90 $958.50

Table 8.2.15 Capacitor-Start Capacitor-Run Motors (4 pole, 0.75 hp): Consumer Equipment Prices, Shipping Costs, Installation Costs, and Total Installed Costs for Motors that are Space-Constrained

Energy Efficiency Level Efficiency (%) Equipment Price (2009$) Shipping Cost (2009$) Installation Cost (2009$) Total Installed Cost (2009$)

Baseline 71.4 $278.08 $12.71 $252.90 $543.69

1 75.1 $287.97 $13.40 $252.90 $554.28

2 79.5 $324.70 $13.80 $252.90 $591.40

3 81.7 $334.62 $14.50 $252.90 $602.02

4 82.8 $341.60 $14.96 $252.90 $609.46

5 84.0 $356.44 $15.72 $252.90 $625.06

6 84.6 $507.27 $14.83 $252.90 $775.00

7 86.7 $520.16 $15.18 $252.90 $788.24

8 87.9 $3,314.96 $15.09 $252.90 $3,582.95

8.2.3 Operating Cost Inputs

DOE defines the operating cost, OC, by the following equation:

OC = EC + RC + MC Where:

8-16EC = energy expenditure associated with operating the equipment, RC = repair cost associated with component failure, and MC = cost for maintaining equipment operation.

Table 8.2.16 shows the inputs for determining the operating costs. The inputs listed in Table 8.2.16 are also necessary for determining the present value of life time operating expenses, which include the energy price trends, product life time, discount rate, and effective date of the standard.

Table 8.2.16 Inputs for Operating Cost Annual Energy Consumption
Energy Prices
Repair and Maintenance Costs
Energy Price Trends

Product Lifetime

Discount Rate

Effective Date of Standard

The annual energy consumption is the site energy use associated with operating the equipment. Energy prices are the prices paid by end user s for energy supply including both energy and demand charges. Multiplying the annual energy and demand by the appropriate prices yields the annual energy cost. Repair costs are associated with repairing or replacing components that have failed, and maintenance costs are associated with maintaining the operation of the equipment. DOE used energy price trends to forecast energy supply prices into the future and, along with the product lifetime and discount rate, to establ ish the lifetime energy supply costs. The product lifetime is the age at which the equipment is retired from service. The discount rate is the rate at which DOE discounted futu re expenditures to establish their present value. DOE calculated th e operating cost for baseline products based on the following equation:

OC = EC + RC + MC BASE BASE BASE BASE

= AEC × PRICE + RC + MC BASE ENERGY BASE BASE

Where:

OC BASE = baseline operating cost, EC BASE = energy expenditure associated w ith operating the baseline equipment which may include reactive power costs, RC BASE = repair cost associated with component failure for the baseline equipment, MC BASE = cost for maintaining baseline equipment operation, AEC BASE = annual energy consumption for baseline equipment,

8-17__ PRICE ENERGY = energy price.

DOE calculated the operating cost for sta ndard-level products based on the following equation:

OC = EC + RC + MC STD STD STD STD

= AEC × PRICE + RC + MC STD ENERGY STD STD

= 

# ( AEC BASE Δ AEC STD 

# ) × PRICE ENERGY + RC BASE + Δ RC STD 

## ) ( MC BASE STD 

## ) ( + + Δ MC
Where:

OC STD = standard-level operating cost, EC STD = energy expenditure associated with operating standard-level equipment, RC STD = repair cost associated with component failure for standard-level equipment, MC STD = cost for maintaining sta ndard-level equipment operation, AEC STD = annual energy consumption fo r standard-level equipment, PRICE ENERGY = energy price, Δ

AEC STD = decrease in annual energy c onsumption caused by standard-level equipment, Δ RC STD = change in repair cost cause d by standard-level equipment, and Δ MC STD = change in maintenance cost caused by standard-level equipment.

The remainder of this section provides information about each of the above input variables that DOE used to calculate the operating costs for small electric motors.

8.2.3.1 Annual Energy Consumption

Chapter 6, Energy Use Characterization, details how DOE determined the annual energy consumption for baseline and standard-level products. Table 8.2.17 provides the average annual energy consumption by efficiency level for each representative small mo tor product class. DOE captured the variability in energy consumption by estimating energy consumption for a variety of motor-using applications.

8-18Table 8.2.17 Average Annual Electricity Use by E fficiency Level for Small Electric Motors Polyphase (4 pole, 1 hp) CSIR (4 pole, 0.5 hp) CSCR (4 pole, 0.75 hp) Efficiency (%) Energy Use (kWh/yr) Efficiency (%) Energy Use (kWh/yr) Efficiency (%) Energy Use (kWh/yr)
75.3 1,892 57.9 1250 71.4 1425
77.3 1729 61.1 1170 75.1 1360
78.8 1686 63.5 1116 79.5 1250
80.5 1630 65.7 1064 81.7 1205
81.1 1615 70.5 976 82.8 1214
83.5 1540 71.8 951 84.0 1201
85.2 1508 73.1 920 84.6 1179
86.2 1488 77.6 860 86.7 1146
87.7 1462 NA NA 87.9 1115

8.2.3.2 Energy Prices

To estimate the energy prices faced by sm all motor end users throughout the U.S., DOE estimated electricity prices for end users in each sector using EIA Form 861 data. 3 These data are published annually and include annual electricity sales in k ilowatt-hours (kWh), revenues from electricity sales, and number of consumers, for the residential, commercial, and industrial sectors, for every utility serving final consumers.

DOE sorted the volumes of electricity sold as reported by the year 2007 EIA Form 861 by price and customer class and ca lculated the distribution of elec tricity prices for each customer class. DOE used these electricity price distributions to represent th e customer cost of electricity for the different classes of motor owners. DOE assigned the electricity price distribution for industrial customers to the cla ss of agricultural motor owners. The resulting electricity price distributions are shown in Figure 8.2.1.

8-190.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0Cumulative Probability

$0.00 $0.05 $0.10 $0.15 $0.20
Price (2007$)

Industrial Commercial Residential

Figure 8.2.1 Electricity Price (2007 $/kWh) Distributions

8.2.3.3 Energy Price Trends

DOE used price forecasts by the EIA to estimate the trends in electric ity prices. To arrive at prices in future years, it multiplied the aver age prices described in the preceding section by the forecast of annual average price changes in EIA’s AEO 2009 . To estimate the trend after 2030, DOE followed past guidelines provided to the Federal Energy Management Program by EIA and used the average rate of change during 2020–2030 for electricity prices.

DOE calculated LCC and PBP using three separate projections from AEO2009 and AEO2010 : the AEO2010 Early Release, and the Low Ener gy Price and High Energy price cases of AEO2009 . DOE used the Low and High Energy Price scenarios from AEO2009 to determine the ratio of energy prices in these scenarios to the AEO2009 reference case. DOE then developed Low and High Price trends based on the AEO2010 Early Release by multiplying its prices by these ratios. These three cases reflect the uncertain ty of energy prices in the forecast period. The high and low energy price cases show the projected effects of alternativ e growth assumptions on energy markets. Figure 8.2.2 shows the industrial electricity price tren ds based on the three projections. For the LCC results presented in section 8.4, DOE used only the energy price forecasts from the Department’s reference case, the Early Release of AEO2010

.

8-200.8 0.85

0.9 0.95 1 1.05

1.1Price Trend (2009 = 1)

AEO 2010 Industrial

High Price Trend

Low Price Trend

2005 2010 2015 2020 2025 2030 2035 2040

Year Figure 8.2.2 Industrial Electricity Price Trends

8.2.3.4 Repair and Maintenance Costs

DOE understands that small electric motors ar e usually not repaired. Most small motors are mass produced and are not constructed or designed to be repaired because the manufacturing process uses spot welding weld s and rivets to fasten or s ecure the frame and assembled components, not nuts and bolts. DOE found no evid ence that any repair or maintenance costs would increase with higher motor energy effici ency. Thus, it did not in clude any changes in repair and maintenance costs for motors more efficient than baseline products.

8.2.4 Motor Lifetime

DOE relied on several sources to inform its model of the lifetime of small electric motors. A study by Easton Consultants, prepared for the Department in 2001, surveyed experts in OEM industries, analyzed causes of motor failure, a nd developed estimates for typical motor lifetime of 7 years for capacitor-start motors and 9 years for small polyphase motors (two-digit frame series). The Department used Weibull distribu tions based on these values in its preliminary analysis. (The Weibull distributi on is a standard distribution used to model failure processes.)

DOE has developed a more sophisticated model for motor lifetime for us e in this stage of the analysis. This model combines annual hour s of motor operation with OEM application lifetimes to estimate the distribution of motor lifetimes. This model results in a negative correlation between annual hours of operation and motor lifetime; motors operated many hours per year are likely to be retired sooner than mo tors which are used for only a few hundred hours

per year.

8-21The Department’s motor lifetim e model relies on four distributions: 1) the duty factor or annual hours of operation distributio n derived for use in the energy use analysis (see chapter 6), 2) the distribution of motor shipments into five application areas, each with its own distribution of annual hours of operation, 3) a Weibull distribu tion of mechanical motor lifetimes, expressed in total hours of operation before failure, and 4) a Weibull distribution of application lifetimes, expressed in years. DOE combined expert interviews (conducted by Easton Consultants) regarding motor lifetime in hours with its estimat es of typical motor lifetime to develop the parameters for the Weibull distributions for both polyphase and single-phase motors. DOE’s Monte Carlo analysis of the motor life cycle cost selected an application, an appropriate number of hours of operation, motor mechanical lifet ime, and application lifetime from these distributions in order to calculate th e sampled motor’s lifetime in years.

The Department determined the mechanical lifetime of each motor in years by dividing its mechanical lifetime in hours by its annual hours of operation. DOE then compared this mechanical lifetime (in years) with the sampled application lifetime (also in years), and assumed that the motor would be retired at the younger of these two ages. For example, a pump motor with a duty factor of 2500 hours per year may have a mechanical lifetime of 30,000 hours (12 years) and an application lifetime of 10 years. DOE assumed the motor would retire in 10 years, when its application reached the end of its lifetim e, even if the motor itself could run for several more years. If the pump motor were to run fo r 6000 hours per year, with the same mechanical and application lifetimes, DOE would assume it w ould retire after 5 years due to motor failure upon reaching its mechanical lifetime of 30,000 hours.

8.2.4.1 The Weibull Distribution

The Weibull distribution is a probability distribution comm only used to measure failure

rates. a Its form is similar to an exponential distri bution, which models a fixed failure rate, except that a Weibull distribution allows for a failure rate that changes ove r time in a particular fashion. The cumulative Weibull distribution takes the form:

⎛ x

− θ ⎞ β

− ⎜ ⎟ 

### P ( x ) = 

# e ⎝ α ⎠ for x > θ and
P(x) = 1 for x ≤ θ Where:

P(x) = probability that the equipm ent is still in use at age x ;

x

= equipment age;

α = scale parameter, which would be the d ecay length in an exponential distribution; β

= shape parameter, which determines the wa y in which the failure rate changes through time; and

a For reference on the Weibull distribution, see sections 1.3.6.6.8 and 8.4.1.3 of the NIST/SEMATECH e-Handbook

of Statistical Methods , < www.itl.nist.gov/div898/handbook / >.

8-22θ = delay parameter, or location, which allo ws for a delay before any failures occur.

When β = 1, the failure rate is constant over tim e, giving the distribution the form of a cumulative exponential distribution. In th e case of mechanical equipment, β commonly is greater than 1, reflecting an increasing failure rate as equipment ages.

8.2.4.2 Capacitor-Start Mechanical and Application Lifetimes

DOE’s derived Weibull parameters for capacito r-start motor mechanical lifetimes are:

α = 17,000 hours; β

= 2.5; and θ

= 15,000 hours. These parameters produce a distribution in which no motors suffer mechanical failure until they have run at least 15,000 hours. The mean mechani cal lifetime is 30,080 hours, and the median is 29,680 hours.

DOE’s derived Weibull parameters for capacito r-start motor application lifetimes are:

α = 3.12 years; β

= 1.9; and θ

= 5 years. These parameters produce a distribution in which no motors are retired due to their application’s retirement until they are at least 5 years old. Th e mean application lifetime is 7.77 years, and the median is 7.57 years.

In the course of the life-cycle analysis, DOE combines these two distributions with the appropriately weighted duty fact or distribution to select a lifetime for each motor. The overall mean age at capacitor-start motor retirement is 6.95 years, with a median of 7 years. In this model, 95% of polyphase small electric motors have lifetimes between 2.8 and 10.8 years. The correlation coefficient between annual hours of operation and motor lifetime is -0.712, indicating an inverse relationship as expected.

8.2.5 Polyphase Mechanical and Application Lifetimes

Interviews with OEM-industry ex perts indicate that polyphase motors are expected to be used for more years before retirement. Mechanic ally and electrically, they are simpler than capacitor-start motors due to the l ack of a capacitor; failure of the bearings is expected to be the dominant cause of polyphase motor failure. DOE therefore derived a polyphase mechanical motor lifetime distribution with a somewhat higher number of hours until failure than for capacitor-start motors. DOE’s derived Weibull parameters for polyphase motor mechanical lifetimes are:

α = 23,000 hours; β

= 2.5; and θ

= 20,000 hours.

8-23These parameters produce a distribution in which no motors suffer mechanical failure until they have run at least 20,000 hours. The mean mechani cal lifetime is 40,400 hours, and the median is 39,860 hours.

DOE’s derived Weibull parameters for polyphase motor application lifetimes are:

α = 3.03 years; β

= 1.9; and θ

= 7 years. These parameters produce a distribution in which no motors are retired due to their application’s retirement until they are at least 7 years old. Th e mean application lifetime is 9.69 years, and the median is 9.50 years.

In the course of the life-cycle analys is, DOE combines these two distributions with the appropriately weighted duty factor dist ribution to select a lifet ime for each motor. The overall mean age at capacitor-start motor retirement is 8.75 years, with a median of 9 years. In this model, 95% of polyphase small electric motors have lifetimes between 3.7 and 12.7 years. The correlation coefficient between annual hour s of operation and motor lifetime is -0.746, indicating an inverse re lationship as expected.

8.2.5.1 Discount Rates

DOE derived the discount rates for the L CC and PBP analysis from estimates of the finance cost of purchasing the c onsidered products. Fo llowing financial theory, the finance cost of raising funds to purchase equipment can be inte rpreted as: (1) the financ ial cost of any debt incurred to purchase equipment, or (2) the opportunity cost of any equity used to purchase equipment.

Commercial, Industrial, and Agricultural Owners For motors purchased and used in the industr ial, agricultural, and commercial sectors, DOE calculated the discount rate for a distribu tion of representative product owners. This distribution of representative ow ners is the weighted sum of discount rate distributions for different ownership categories. DOE calculated a distribution of di scount rates for owners within each ownership category. The discount rate for an individual owner is the weighted average cost of capital (WACC) where, given th e mix of debt and equity for th at individual owner, a weighted average of the discount rates for each loan and investment calculated in which the weights are equal to the size of the loan or investment.

DOE estimated the cost of equity usi ng the capital asset pricing model (CAPM). 4 The CAPM assumes that the cost of equity ( k e ) for a particular company is proportional to the systematic risk faced by that company, where high risk is associated with a high cost of equity and low risk is associated with a low cost of equity. The systematic risk facing a firm is determined by several variables: th e risk coefficient of the firm ( β ), the expected return on riskfree assets ( R f ), and the equity risk premium ( ERP ). The risk coefficient of the firm indicates the risk associated with that firm relative to the pr ice variability in the stock market. The expected

8-24return on risk-free assets is defined by the yield on long-term government bonds. The ERP represents the difference between the expected st ock market return and the risk-free rate. The cost of equity financing is estimated using the following equation, where the variables are defined as above:

k

e = R f + 

## ( β × ERP 

## )

Where:

k e = cost of equity,
R

f = expected return on risk-free assets, β = risk coefficient of the firm, and
ERP = equity risk premium.

The cost of debt financing ( k d ) is the interest rate paid on money borrowed by a company. The cost of debt is estimated by adding a risk adjustment factor ( R a ) to the risk-free rate. This risk adjustment factor depends on the variability of stock returns represented by standard deviations in stock prices. So for firm i , the cost of debt financing is:

k = R + R

di f ai Where:

k d = cost of debt financing for firm, i

, R

f = expected return on risk-free assets, and
R ai = risk adjustment factor to risk-free rate for firm, i

.
DOE estimates the WACC using the following equation:

WACC = k

e × w e + k d × w d

Where:

WACC = weighted average cost of capital,

w e = proportion of equity financing, and

w d = proportion of debt financing.

Damodaran Online is a widely used sour ce of information about company debt and equity financing for most types of firms. 5

Several parameters of the cost of capital e quations can vary substantially over time, and therefore the estimates can vary with the time period over whic h data is selected and the technical details of the data av eraging method. For guidance on th e time period for selecting and averaging data for key parameters and the averaging method, DOE used Federal Reserve methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve

8-25uses a forty-year period for cal culating discount rate averages , utilizes the gross domestic product price deflator for estimati ng inflation, and considers the best method for determining the risk free rate as one where “the time horizon of the investor is matc hed with the term of the riskfree security.” 6

During the preliminary analysis, DOE adjust ed the discount rate distributions from a previous rulemaking on dist ribution transformer standards with updated values of the equity risk premium, inflation, and the ri sk-free rate using the 10-year Treasury bond as the risk-free security. DOE did not receive comments in response to the preliminary analysis regarding this approach and has therefore reta ined the same estimates for the NOPR. By taking an updated forty-year (1967–2007) geometric average of Damodaran Online data, DOE found for this analysis a real (inflation-adjusted) risk free rate of 3.15 percent and an equity risk premium of 3.50 percent. The values for the previous analysis (for distribution transformer standards) were 3.20 percent and 5.50 percent resp ectively. Table 8.2.18 shows the conversion from the previous set of parameters to the new va lues and the new discount rate distributions assuming no change in the corresponding company weighted-average cost of capital betas. DOE used the CAPM equation to derive a relationship between beta and the discount ra te that was used to convert discount rates to the values that correspond to th e new values of risk-free rate and ERP. DOE obtained the following equation for be ta by solving the CAPM equation:

β = ( k

e − R f ) / ERP

Where:

k e = cost of equity,
R

f = expected return on risk-free assets, β = risk coefficient of the firm, and
ERP = equity risk premium.

8-26Table 8.2.18 Adjusted Real Discount Rates for Updated Values of R f and ERP

. Previous Discount Rate* (%) CAPM Beta Value Updated Discount Rate (%) Industrial Discount Rate

Distribution (%) Commercial Discount Rate

Distribution (%) 0.5 -0.491 1.43 0.0 0.0 1.5 -0.309 2.07 0.0 0.0 2.5 -0.127 2.70 0.5 3.1 3.5 0.055 3.34 1.3 1.2 4.5 0.236 3.98 4.2 2.1 5.5 0.418 4.61 14.6 9.8 6.5 0.600 5.25 24.7 22.4 7.5 0.782 5.89 24.9 23.9 8.5 0.964 6.52 6.6 23.2 9.5 1.145 7.16 6.5 6.6 10.5 1.327 7.80 8.6 4.0 11.5 1.509 8.43 6.8 2.3 12.5 1.691 9.07 0.9 0.5 13.5 1.873 9.70 0.2 0.1 14.5 2.055 10.34 0.1 0.7 15.5 2.236 10.98 0.0 0.0 16.5 2.418 11.61 0.0 0.0 From rulemaking on distribu tion transformer standards

Table 8.2.19 shows the average WACC valu es for the three non-residential ownership types in the small electric motors analysis. Wh ile WACC values for any sector may trend higher or lower over substantial periods of time, these va lues represent a private sector cost of capital that is averaged over major busine ss cycles. For all sector s, the averages are slightly lower than 6 percent real.

Table 8.2.19 Weighted Average Cost of Capital fo r Sectors that Purchase Small Electric Motors
Sector Weighted-Average Cost of Capital

Industrial 5.92%
Agricultural 5.92%

Commercial 5.86%

Residential Owners Households use a variety of methods to finance equipmen t. In principle, one could estimate the interest rates on the actual fina ncing vehicles used to purchase replacement

8-27equipment. The shares of different financing ve hicles in total equipment purchases are unknown, however.

DOE’s approach involves identifying all possibl e debt or asset classes that might be used to purchase equipment, including household as sets that might be affected indirectly. b DOE did not include debt from primary mortgages and equity of assets considered non-liquid (such as retirement accounts), since thes e would likely not be affected by equipment purchases. DOE estimated the average shar es of the various debt and equity classes in the average U.S. household equity and debt portfolios using Survey of C onsumer Finances (SCF) data for 1989, 1992, 1995, 1998, 2001, and 2004. Table 8.2.20 shows the averag e shares of each considered class. DOE used the mean share of each cl ass across the six years as a ba sis for estimating the effective financing of equipment.

Table 8.2.20 Average Shares of Considered Household Debt and Equity Types

Type 1989 SCF 1992 SCF 1995 SCF 1998 SCF 2001 SCF 2004 SCF Mean (%)
Home equity loans 4.3 4.5 2.7 2.8 2.8 4.4 3.6

Credit cards 1.6 2.1 2.6 2.2 1.7 2.0 2.0

Other installment loans 2.8 1.7 1.4 1.7 1.1 1.3 1.7

Other residential loans 4.4 6.9 5.2 4.3 3.1 5.8 4.9

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.5
Checking accounts 5.8 4.7 4.9 3.9 3.6 4.2 4.5
Savings & money market 19.2 18.8 14.0 12.8 14.2 15.1 15.7
Certificate of deposit (CD) 14.5 11.7 9.4 7.0 5.4 5.9 9.0
Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 1.5

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 10.0

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 29.1

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 17.5

Total 100 100 100 100 100 100 100

DOE estimated interest or return rates associ ated with each type of equity and debt. The data source for the interest rates for loans, credit cards, and lines of credit is the Federal Reserve Board’s SCF in 1989, 1992, 1995, 1998, 2001, and 2004. Table 8.2.21 shows the average nominal rates in each year, and the inflation rates used to calculate real rates. For home equity loans, DOE calculated effective interest rates in a similar manner as for mortgage rates, since interest on such loans is tax deductible. Table 8. 2.22 shows the average e ffective real rates in each year and the mean rate across the years. Si nce the interest rates fo r each debt carried by

b An indirect effect would arise if a household sold some assets in order to pay off a loan or credit card debt that

might have been used to finance the actual appliance purchase.

8-28households in these years were established ov er a range of time, DOE believes they are representative of rates that may be in effect in 2015.

Table 8.2.21 Average Nominal Interest Rates for Household Debt Classes (percent)

Type 1989 SCF 1992 SCF 1995 SCF 1998 SCF 2001 SCF 2004 SCF Mean (%)
Home equity loans 11.5 9.6 9.6 9.8 8.7 5.7 9.2

Credit cards*

- - 14.2 14.5 14.2 11.7 13.6

Other installment loans 9.0 7.8 9.3 7.8 8.7 7.4 8.3

Other residential loans 8.8 7.6 7.7 7.7 7.5 6.0 7.5

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 12.5

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66

* No interest rate data available for credit cards in 1989 or 1992.

Table 8.2.22 Average Real Effective Interest Rates for Household Debt Classes (percent)

Type 1989 SCF 1992 SCF 1995 SCF 1998 SCF 2001 SCF 2004 SCF Mean (%)
Home equity loans 3.8 4.3 4.4 5.8 3.8 1.9 4.0

Credit cards*

- - 11.0 12.7 11.1 9.1 11.0

Other installment loans 4.9 5.8 7.0 6.6 6.1 5.4 6.0

Other residential loans 4.0 4.7 4.8 6.0 4.6 3.3 4.6

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 8.7

* No interest rate data available for credit cards in 1989 or 1992.

To account for variation among new househol ds, DOE sampled a rate for each household from a distribution of rates for each of the a bove debt classes. DOE developed a probability distribution of interest rates for each debt class based on the SCF data.

Similar rate data are not available from the SCF for the asset classe s, so DOE derived data for these classes from national-level histor ical data. The interest rates associated with certificates of deposit (CDs), 7 savings bonds, 8 and bonds (AAA corporate bonds) 9 are from Federal Reserve Board time-series data c overing 1977–2005. DOE assumed rates on checking accounts to be zero. Rates on savings and mone y market accounts are from Cost of Savings Index data covering 1984–2005. 10 The rates for stocks are the annual returns on the Standard and Poor’s (S&P) 500 in the 1977–2005 period. 11 The mutual fund rates are a weighted average of the stock rates (two-thirds we ight) and the bond rates (one-third weight) in each year of the 1977–2005 period. DOE adjusted the nominal rates to re al rates using the annua l inflation rate in each year. Average nominal and real interest rates for the classes of assets are shown in Table 8.2.23. Since the interest and return rates for ea ch asset type cover a ra nge of time, DOE believes they are representative of rates that may be in effect in 2015.

8-29Table 8.2.23 Average Nominal and Real Interest Rates for Household Equity Types Type Average Nominal Rate (%) Average Real Rate (%)
Checking accounts

- 0.0
Savings and money market 5.5 2.3

CDs 6.9 2.4
Savings bonds 8.0 3.5

Bonds 8.8 4.2

Stocks 13.3 8.8

Mutual funds 11.6 7.0

To account for variation among households, DOE sampled a rate for each household from a distribution of rates for each of th e above asset types. DOE developed a normal probability distribution of interest rates for each asset type by using the mean value and standard deviation from the distribution.

Table 8.2.24 summarizes the mean real effec tive rates of each type of equity or debt. DOE determined the average share of each debt and asset using SCF data for 1989, 1992, 1995, 1998, 2001, and 2004. Each year of SCF data pr ovides the debt and asset shares for U.S. households. DOE averaged the debt a nd asset shares over the six years of survey data to arrive at the shares shown below. The average rate acr oss all types of house hold debt and equity, weighted by the shares of each class, is 5.6 percent.

8-30Table 8.2.24 Shares and Interest or Return Rates Us ed for Household Debt and Equity Types

Type Average Share of Household Debt plus Equity (%)* Mean Effective Real Rate (%)**
Home equity loans 3.6 4.0

Credit cards 2.0 11.0

Other installment loans 1.7 6.0

Other residential loans 4.9 4.6

Other line of credit 0.5 8.7
Checking accounts 4.5 0.0
Savings and money market accounts 15.7 2.3

CDs 9.0 2.4
Savings bonds 1.5 3.5

Bonds 10.0 4.2

Stocks 29.1 8.8

Mutual funds 17.5 7.0
Total/Weighted-average discount rate 100 5.6

* Not including primary mortgage or retirement accounts. ** Adjusted for inflation and, for home equity loans, loan interest tax deduction.

8.2.5.2 Effective Date of Standard

The effective date of an energy conservati on standard is the future date when a new standard becomes operative. S ection 346(b)(3) of the Energy Policy and Conservation Act (EPCA) requires that any standard for small electr ic motors "shall apply to small electric motors manufactured 60 months after the date such rule is published." (42 USC 6317(b)(3)) DOE published this standard on February 26, 2010. Th erefore, the effective date of any new energy conservation standards for small electric motors will be in February 2015. DOE calculated the LCC and PBP for all end users as if they each would purchase a new piece of equipment in the year the standard takes effect.

8.2.6 Product Energy Efficiency in the Base Case

For purposes of conducting the LCC analysis, DOE analyzed efficiency levels relative to a base case (i.e., the case without new energy efficiency standards) . This requires an estimate of the distribution of product efficiencies in th e base case (i.e., what consumers would have purchased in the year 2015 in th e absence of new standards).

In other rulemakings, DOE often uses the distribution of product efficiencies currently in the marketplace to develop its estimate of such di stribution in the base case. DOE did find some

8-31models offered in the manufacturer catalogues th at were low first cost and then had matching higher-efficiency units. These so-called 'matched pa irs' would seem to indicate that there is some voluntary purchasing of hi gher-efficiency motors. However, DOE did not have any data on the market shares of such motors. Therefore, DOE assumed that all motors purchased in the base case would be at the baseline efficiency levels, as shown in Table 8.2.25.

Table 8.2.25 Product Energy Efficiency in the Base Case Product Class Efficiency (%) Polyphase, 1 hp 75.3 CSIR, 0.5 hp 57.9 CSCR, 0.75 hp 71.4

8.3 PAYBACK PERIOD INPUTS

The payback period is the amount of time it takes the consumer to recover the assumed higher purchase expense of more energy-efficient equipment as a result of lower operating costs. Numerically, the PBP is the ratio of the increase in purchase expense (i.e., from a less efficient design to a more efficient design ) to the decrease in annual operati ng expenditures. This type of calculation is known as a “simple” payback period, because it does not take into account changes in operating expense over time or the time value of money; i.e., the calculation is done at an effective discount rate of zero percent.

The equation for PBP is:

Δ IC PBP = Δ O C Where:

Δ IC = increase in the total installed cost between the more effi cient standard level and the baseline design, and Δ OC = decrease in annual operating expenses.

Payback periods are expressed in years. Pa yback periods greater than the life of the product indicate that the increase d total installed cost is not recovered in reduced operating

expenses.

The data inputs to PBP are the total installe d cost of the equipment to the consumer for each efficiency level and the annual (first year ) operating expenditures for each standard level. The inputs to the total in stalled cost are the equipment price and the installati on cost. The inputs to the operating costs are the annual energy co st, the annual repair cost, and the annual maintenance cost. The PBP uses the same inputs as the LCC analysis as described in section 8.2, except that lifetime, energy price trends and disc ount rates are not requir ed. Since the PBP is a “simple” payback, the required energy price is only for the year in which a new standard is to

8-32take effect—in this case, the year 2015. The energy price DOE used in the PBP calculation was the price projected for that year.

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR

REPRESENTATIVE PRODUCT CLASSES

This section presents the LCC and PBP result s for small motors. As discussed in section 8.1.1, DOE’s approach for conducting the L CC analysis relied on de veloping samples of customers that use motors in each product class. DOE also characterized the uncertainty of many of the inputs to the analysis with probability distributions. DOE used a Monte Carlo simulation technique to perform the LCC calculations on th e customers in the sample. For each set of sample customers using motors in each equipm ent class, DOE calculated the average LCC and LCC savings and the median and average PBP for each of the standard levels.

In the subsections below, DOE presents figur es showing the distribut ion of LCCs in the base case for each equipment class. Also presente d below for a specific sta ndard level are figures showing the distribution of LCC impacts and the distribution of PBPs. Th e figures are presented as frequency charts that show the distribution of LCCs, LCC impacts, and PBPs with their corresponding probability of occu rrence. DOE generated the figures for the distributions from a Monte Carlo simulation run ba sed on 10,000 samples. The LCC and PBP calculations were performed 10,000 times by sampling from the proba bility distributions th at DOE developed to characterize many of the inputs.

Based on the Monte Carlo simulations that DOE performed, for each efficiency level, DOE calculated the share of small motor users w ith a net LCC benefit and with a net LCC cost. To illustrate the range of LCC and PBP impacts among the small motor end users, the sections below present figures that provide such information for each equipment class.

8.4.1 Polyphase Motors

Figure 8.4.1 is an example of a freque ncy chart showing the distribution of LCC differences for the case of efficiency level 4b fo r polyphase motors. In th e figure, a text box next to a vertical line at that value on the x-axis s hows the mean change in LCC (a net benefit of approximately $34 in this example Monte Carlo r un). The figure corresponds to the case of the weighted average of LCC results across all po lyphase product classes; see section 8.5 for a discussion of the methodology of extendi ng LCC results to all product classes.

8-33Polyphase Life-Cycle Cost Savings for 4B

5% 95% 25% 50% 75%

Mean: 34.2

0 20 40 60 80 100 120 140

-150.0 -100.0 -50.0 0.0 50.0 100.0 150.0 200.0 250.0
Life-cycle Cost (2009$)Frequency (#)

492 Outliers 10000 Trials

Figure 8.4.1 Polyphase Motors: Distribut ion of Life-Cycle Cost Savings for Efficiency Level 4b

Figure 8.4.2 is an example of a frequenc y chart showing the di stribution of payback periods of efficiency level corresponding to TSL 4b for polyphase motors. Because many motors operate for very few hours per year, this means that there is a significant nu mber of motors that may have extremely long payback periods because the operating cost savings is very small compared to the increase in first cost. The distri bution in the figure illust rates that most motors have a payback of less than 20 years, but the m ean value of the distribution payback is large (24.1 years) because of the small, but significan t number of motors with payback periods longer then 100 years. Because of the skewed distribut ion in payback periods, DOE also considers the payback period of the typical cust omer, or the median of the dist ribution, which is 7.4 years for Figure 8.4.2.

Polyphase Payback Period Results for EL4B

25%50% 75%

Mean: 24.1

0 50 100 150 200 250 300 350

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0

Payback Period (years)Frequency

339 Outliers 10000 Trials

8-34Figure 8.4.2 Polyphase Motors: Distribution of Payback Periods for Efficiency Level 4b

Table 8.4.1 summarizes the L CC and PBP results for polyphase motors based on a run of 10,000 Monte Carlo samples. The highest energy efficiency level with positive average LCC savings is level 4b, 83.5 percent. Approximately 49 percent of end users are estimated to have a net benefit (i.e., LCC decrease) at this level. The increase in average total installed cost at this level (relative to the base cas e) is $72, while operating costs decrease by approximately $17 per

year.

Table 8.4.1 Polyphase Motors: Life-Cycle Cost and Payback Period Results (Representative Product Class)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 75.3 517 1,892 130 1,268

1 77.3 530 1,729 127 1,261 8 46.8 53.2 21.8 7.1

2 78.8 537 1,686 123 1,249 19 41.3 58.7 17.8 5.8

3 80.5 549 1,630 119 1,237 31 40.6 59.4 17.7 5.6

4 81.1 558 1,615 118 1,240 29 45.1 54.9 20.4 6.5

4b 83.5 589 1,540 113 1,240 28 51.2 48.8 24.8 7.8

5 85.2 655 1,508 110 1,291 -23 65.8 34.3 41.5 12.4

6 86.2 711 1,488 109 1,339 -71 77.4 22.6 54.2 16.9

7 87.7 1,477 1,462 107 2,095 -827 96.8 3.2 243.0 51.1

8.4.2 Capacitor-Start Induction-Run Motors

Figure 8.4.3 is an example of a frequency chart showing the distri bution of LCC impacts for the case of efficiency leve l 7 for CSIR motors. Efficiency level 7 is the maximum technologically feasible level fo r space-constrained CSIR motors . This can be seen by the significant population (approximately 20%) of motors that have large negative LCC impacts. For those motors that do not have space constraints, a substantial fraction (approximately half) experience a net LCC benefit from this level. Th e figure corresponds to the case of the weighted average of LCC results across all CSIR product cla sses; see section 8.5 fo r a discussion of the methodology of extending LCC results to all product classes.

8-35Capacitor-Start Induction Run Life-Cycle Cost Savings for EL7

5% 95% 25%50%75%

Mean: -370

0 50 100 150 200 250 300 350 400

-2500.0 -2000.0 -1500.0 -1000.0 -500.0 0.0 500.0
Life-cycle Cost (2009$)Frequency (#)

72 Outliers 10000 Trials

Figure 8.4.3 Capacitor-Start Induction-Run Motors: Distribution of Life-Cycle Cost Savings for Efficiency Level 7

Figure 8.4.4 is an example of a frequenc y chart showing the di stribution of payback periods of efficiency level 7 for CSIR motors. While a majority of motors have a payback time less than 12 years (the median is 11.9 years), b ecause of a significant fr action of motors with extremely high payback periods, the average of the distribution is over 100 years.

Capacitor-Start Induction Run Payback Period Results for EL7

25%50% 75%

Mean: 108.5

0 100 200 300 400 500 600 700 800

0.0 50.0 100.0 150.0 200.0 250.0

Payback Period (years)Frequency

756 Outliers 10000 Trials

Figure 8.4.4 Capacitor-Start Induction-Run Motors: Distribution of Payback Pe riods for Efficiency Level 7

8-36Table 8.4.2 summarizes the LCC and PBP results for CSIR motors based on a run of 10,000 Monte Carlo samples. The highest energy efficiency level with positive average LCC savings is level 6, at 73.1 percent efficiency. Ho wever, approximately 55 percent of end users are estimated to have a net cost (i.e., LCC increase) at this level. The increase in average total installed cost at this level (relative to the base case) is $99, while annual operating costs decrease by $24.

Table 8.4.2 Capacitor-Start Induction-Run Motors: Li fe-Cycle Cost and Payback Period Results (Representative Product Class)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 57.9 494 1,250 91 915

1 61.1 502 1,170 85 896 19 27 73 8.6 2.7

2 63.5 508 1,116 81 884 31 28 72 8.8 2.8

3 65.7 511 1,064 77 869 46 24 76 7.5 2.3

4 70.5 529 976 71 857 58 32 68 10.5 3.2

5 71.8 549 951 69 868 47 42 58 15.1 4.7

6 73.1 593 920 67 902 13 55 45 24.9 7.2

7 77.6 996 860 63 1,285 -369 66 34 108.2 12.4

8.4.3 Capacitor-Start Capacitor-Run Motors

Figure 8.4.5 is an example of a frequency chart showing the distri bution of LCC savings for the case of efficiency level 3 for CSCR moto rs. DOE has published a frequency chart like the one shown in Figure 8.4.5 for every efficiency le vel in Appendix B to this chapter. The figure corresponds to the case of the we ighted average of LCC results across all CSCR product classes; see section 8.5 for a discussion of the methodol ogy of extending LCC re sults to all product classes.

8-37Capacitor-Start Capacitor-Run Life-Cycle Cost Savings for EL3

5% 25% 50% 75%

Mean: 60.7

0 20 40 60 80 100 120

-100.0 -50.0 0.0 50.0 100.0 150.0 200.0
Life-cycle Cost (2009$)Frequency (#)

1147 Outliers 10000 Trials

Figure 8.4.5 Capacitor-Start Capacitor-Run Motors: Distribution of Life-Cycle Cost Savings for Efficiency Level 3

Figure 8.4.6 is an example of a frequenc y chart showing the di stribution of payback periods of efficiency level 3 for CSCR motors . DOE has published a freq uency chart like the one shown in Figure 8.4.6 for every efficiency level in Appendix B to this chapter.

Capacitor-Start Capacitor-Run Payback Period Results for EL3

25%50% 75%

Mean: 15.3

0 50 100 150 200 250 300 350

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Payback Period (years)Frequency

588 Outliers 10000 Trials

Figure 8.4.6 Capacitor-Start Capacitor-Run Motors: Distribution of Payback Pe riods for Efficiency Level 3

Table 8.4.3 summarizes the LCC and PBP results for CSCR motors based on a run of 10,000 Monte Carlo samples. The highest energy efficiency level with positive average LCC savings is level 4, 82.8 percent. Approximately 45 percent of end users are estimated to have a

8-38net benefit at this level. The increase in average total installed cost at this level (relative to the base case) is $64, while average an nual operating costs decrease by $16.

Table 8.4.3 Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results (Representative Product Class)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 71.4 548 1,425 104 1,026

1 75.1 559 1,360 99 1,014 12 36 64 13.4 4.3

2 79.5 587 1,250 91 1,005 21 46 54 18.5 5.8

3 81.7 599 1,205 88 1,002 24 48 52 19.1 5.9

4 82.8 612 1,214 88 1,015 11 55 45 24.4 7.8

5 84.0 630 1,201 88 1,029 -3 62 38 29.5 9.4

6 84.6 670 1,179 86 1,062 -36 70 30 40.3 11.8

7 86.7 697 1,146 84 1,078 -52 75 25 43.5 13.1

8 87.9 1,485 1,115 81 1,856 -830 99 1 250.0 49.0

8.5 LIFE CYCLE COSTS FOR ALL PRODUCT CLASSES

The Department’s engineering analysis (c hapter 5) along with the markups analysis (chapter 6) allowed the Departme nt to develop a dist ribution of consumer purchase costs for each of the three representa tive product classes analyzed in de tail in the engineering analysis. However, in order to present national impacts (c hapter 10), examine the LCC results for other product classes (section 8.6), and to model the current market in terplay between CSIR and CSCR motors, the Department develope d a power-law-based scaling rela tion to estimate the costs of motors in other product classes. This scaling relation applies to the purchase cost of the motor, and not to installation costs (which DOE assumed were fixed a nd equal for all product classes).

The Department first used manufacturer cata log data to develop av erage list prices for each product class available for sale. DOE then fit the price of each combination of motor category and number of poles to a power law function of motor horsepower. That is, DOE developed a best-fit power law function for the prices of 4 pole CSIR motors, 6 pole polyphase motors, etc. The power law equations for each motor category take the following form:

8-39γ ( p , Cat ) ⎛ hp ⎞ $( p , hp ) = C ( p ) × $(4, hp ref ) × ⎜ ⎜ ⎟ ⎟ ⎝ hp ref ⎠

Where: $(p, hp) = the purchase cost of an hp horsepower motor with p poles, hp ref = the horsepower of the motor analyzed by DOE in the engineering analysis for the equipment category (1 hp for polyphase, 3⁄4 hp for CSCR, and 1⁄2 hp for CSIR), C(p) = the ratio of the purchase cost of an hp ref horsepower motor with p poles to one with 4 poles, and

γ (p, Cat) = the best-fit power law exponent to average list price da ta collected from manufacturer catalogs, for motors in category Cat with p poles.

The best-fit values for C and γ are given in Table 9.4.7. DOE did not calculate power law fit parameters ( γ ) for 2 pole CSCR or 6 pole CSCR motors beca use it determined that there were not enough published prices to derive an accurate s caling relation. Instead, DOE assigned the power law of the 4 pole CSCR motors to all CSCR classes, and used only C to match the average prices of 3⁄4 hp CSCR motors with each number of poles. These scaling relations allow the Department to estimate the list prices of motors, such as small CSCR motors with 2 or 6 poles, not currently available from any manufacturer.

Table 8.5.1 Parameters for Motor Purchase Cost Model Polyphase CSIR CSCR Six Poles C(6, Cat)

γ 1.2957 0.2492 1.5780 0.6746 1.3033 0.3646
Four Poles C(4, Cat)

γ 1.0000 0.3387 1.0000 0.5007 1.0000 0.3646
Two Poles C(2, Cat)

γ 0.9167 0.3442 0.8396 0.4494 0.7923 0.3646

Tables 9.4.8, 9.4.9, and 9.4.10 show the c onsumer purchase cost sc aling relation derived from this model, where the value of 1.0 in each motor category is assigned to the motor examined in detail in the engineering analysis . Product classes in which there are no shipments under any of the Department’s scenarios ar e marked with a dash in the tables.

8-40Table 8.5.2 Polyphase Motor Consumer Cost Scaling Factors
Motor Power Six Poles Four Poles Two Poles 1/4 hp 0.917 0.625 0.569 1/3 hp 0.985 0.689 0.628 1/2 hp 1.090 0.791 0.722 3/4 hp 1.206 0.907 0.830 1 hp 1.296 1.000 0.917 1 1/2 hp 1.433 1.147 1.054 2 hp

-­ 1.265 1.164 3 hp

-­ 1.451 1.338

Table 8.5.3 CSIR Motor Consumer Cost Scaling Factors
Motor Power Six Poles Four Poles Two Poles 1/4 hp 0.989 0.707 0.615 1/3 hp 1.200 0.816 0.699 1/2 hp 1.578 1.000 0.840 3/4 hp 2.074 1.225 1.007 1 hp 2.519 1.415 1.146 1 1/2 hp

-- 1.733 1.376 2 hp

-- 2.002 1.565 3 hp

-- -­ 1.878

Table 8.5.4 CSCR Motor Consumer Cost Scaling Factors
Motor Power Six Poles Four Poles Two Poles 1/4 hp 0.873 0.670 0.531 1/3 hp 0.969 0.744 0.589 1/2 hp 1.124 0.863 0.683 3/4 hp 1.303 1.000 0.792 1 hp 1.447 1.111 0.880 1 1/2 hp

-- 1.288 1.020 2 hp

-- 1.430 1.133 3 hp

-- -­ 1.313

The cost scaling relations described in Tabl es 8.5.2, 8.5.3, and 8.5.4, when combined with the loss scaling relations derived in Chapte r 5, Engineering Analysis, allow the Department to analyze the life-cycle cost impacts due to potential standards on customers using motors in each product class. Appendix 8D provides these LCC results for every product class. These calculations also allow the Department to de velop national shipment -weighted average LCC results for polyphase, CSIR, and CSCR motors. Th ese results are presente d in Tables 8.5.5, 8.5.6, and 8.5.7.

8-41Table 8.5.5 Polyphase Motors: Life-Cycle Cost and Payback Period Results (National Shipment-Weighted Distribution)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 78.8 515 1934 139.52 1,323

1 80.6 528 1883 135.85 1,314 9 44.7 55.3 21.1 6.6

2 82.0 535 1836 132.45 1,302 22 39.2 60.8 17.2 5.3

3 83.4 547 1775 128.07 1,287 36 38.7 61.3 17.1 5.2

4 84.0 556 1759 126.91 1,289 34 42.7 57.3 19.6 6.0

4b 86.1 587 1678 121.06 1,288 36 49.2 50.8 23.9 7.3

5 87.6 651 1643 118.52 1,337 -13 63.2 36.8 39.1 11.5

6 88.4 707 1622 116.99 1,383 -60 74.8 25.2 51.8 15.7

7 89.7 1,465 1594 114.96 2,131 -808 96.2 3.8 220.4 47.8

Table 8.5.6 Capacitor-Start Induction-Run Motors: Li fe-Cycle Cost and Payback Period Results (National Shipment-Weighted Distribution)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 49.9 496 1265 92.12 920

1 53.2 504 1182 86.03 900 20 26.9 73.1 8.5 2.5

2 55.7 510 1125 81.89 888 33 27.7 72.3 8.7 2.6

3 58.1 513 1071 77.96 871 49 24.0 76.0 7.4 2.2

4 63.5 531 979 71.28 859 62 30.7 69.3 10.4 3.1

5 64.8 551 953 69.40 870 51 40.2 59.8 14.9 4.5

6 66.3 595 920 67.00 903 17 54.1 45.9 24.5 7.0

7 71.5 1,000 858 62.48 1,287 -367 65.1 34.9 104.4 11.7

8-42Table 8.5.7 Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results (National Shipment-Weighted Distribution)

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

Baseline 73.2 582 2310 167.38 1,349

1 76.7 594 2208 160.02 1,325 24 29.3 70.7 10.9 3.3

2 80.9 626 2036 147.55 1,299 50 38.4 61.6 14.9 4.4

3 83.0 639 1965 142.43 1,289 60 39.7 60.3 15.4 4.6

4 84.0 653 1979 143.43 1,304 45 46.1 53.9 19.8 5.9

5 85.2 673 1959 141.96 1,318 32 52.6 47.4 23.9 7.2

6 85.9 719 1923 139.37 1,351 -1 60.2 39.9 32.5 8.9

7 87.8 749 1873 135.72 1,364 -15 65.1 35.0 35.1 10.1

8 89.0 1,629 1824 132.17 2,228 -879 94.7 5.3 200.0 36.4

8.6 LIFE-CYCLE COST SENSITIVITY CALCULATIONS

DOE developed a number of sensitivity analys es in order to analyze the particular impacts of many inputs to its life- cycle cost analysis. These sens itivity analyses include lower and higher markups, lower and high er hours of motor operation, lo wer and higher motor loading, two models for including the cost of greenhouse gas emissions, variation in the starting year for the analysis, and three options for including the costs of reactive power. These sensitivities may also be combined with analysis of the LCC fo r each product class, or for a national shipmentweighted distribution, using th e price scaling described in se ction 8.5 and the loss scaling described in chapter 5. DOE also developed the ability to report the distribution of customers with net costs and net benefits, including division into three categories: costs above a threshold fraction of life-cycle cost, bene fits greater than a threshold fraction of life-cycle cost, and customers whose impact, whether positive or negative, falls below the user-selected threshold.

Tables 8.6.1 through 8.6.3 show an example of these sensitivity analyses. The data in the tables correspond to the case of low energy prices . This scenario uses energy prices which are lower than the AEO2010 Early Release forecast values by th e same ratio that the low energy price case of the AEO2009 March Release 12 displays with the refere nce case energy prices. All three tables are calculated using the shipment-weighted product class distribution.

8-43Table 8.6.1 Polyphase Motors: Low Energy Price Trend Scenario

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost (%) Net Benefit

(%) Average Median

Base case 78.8 517 1940 131.18 1,278

1 80.6 530 1889 127.75 1,270 8 47.4 52.6 22.9 7.3

2 82.0 538 1842 124.58 1,259 19 42.3 57.7 18.7 6.0

3 83.4 550 1782 120.49 1,246 31 41.6 58.4 18.5 5.9

4 84.0 558 1766 119.40 1,249 29 45.8 54.2 21.3 6.8

4B 86.1 590 1684 113.93 1,250 28 52.3 47.7 25.9 8.2

5 87.6 655 1649 111.56 1,301 -23 66.6 33.4 43.8 12.8

6 88.4 711 1628 110.13 1,348 -71 77.6 22.4 57.0 17.8

7 89.7 1,487 1600 108.24 2,114

- 836 97.1 3.0 261.4 53.2

Table 8.6.2 Capacitor-Start Induction Run Motors: Low Energy Price Trend Scenario

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost (%) Net Benefit

(%) Average Median

CSCR Base case 51.7 499 1139 76.23 850

CSIR Base case 49.9 498 1283 85.84 895

1 53.2 507 1198 80.18 878 18 28.3 71.7 9.1 2.8

2 55.7 513 1141 76.33 866 29 29.4 70.6 9.4 2.9

3 58.1 515 1086 72.68 851 44 25.0 75.1 7.9 2.4

4 63.5 534 993 66.47 841 55 33.0 67.0 11.1 3.4

5 64.8 554 967 64.72 852 43 42.7 57.3 16.0 4.9

6 66.3 599 933 62.50 887 8 57.4 42.6 26.0 7.7

7 71.5 1,013 870 58.29 1,282

- 387 68.1 31.9 107.1 13.4

8-44Table 8.6.3 Capacitor-Start Capacitor Run Motors: Low Energy Price Trend Scenario

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSIR Base case 65.5 618 2732 182.48 1,467

CSCR Base case 73.2 586 2349 156.99 1,313

1 76.7 598 2246 150.10 1,291 22 30.8 69.2 11.6 3.6

2 80.9 630 2071 138.43 1,269 44 41.0 59.0 15.8 4.9

3 83.0 643 1999 133.65 1,260 53 42.4 57.6 16.3 5.0

4 84.0 657 2014 134.59 1,275 38 48.9 51.2 21.0 6.5

5 85.2 678 1993 133.22 1,289 24 56.1 43.9 25.4 7.9

6 85.9 724 1957 130.79 1,324 -11 64.3 35.7 34.1 9.9

7 87.8 755 1906 127.37 1,339 -26 69.0 31.0 36.9 11.2

8 89.0 1,656 1856 124.05 2,224

- 911 95.5 4.5 204.9 41.5

As described in more details in chapters 9 and 10, DOE analyzed the market dynamics between CSIR and CSCR motors. In this context, it is illustrative to exam ine the LCC impacts of standards for customers who may switch for CS IR to CSCR motors of the same speed and horsepower, or vice versa. Table 8.6.4 shows the shipment-weighted average LCC results for the case baseline CSIR motor customers moving fr om a CSIR motor to a CSCR motor of each efficiency level.

8-45Table 8.6.4 Capacitor-Start Small Electric Motors: Life-Cycle Cost and Payback Period Sensitivity Results for a Space-Constrained 0.5 hp, 4-pole CSCR Motor Customer with a CSIR Motor Baseline

Energy Efficiency

Level Life-Cycle Cost Life-Cycle Cost Savings Payback Period

years Average Installed

Price

$ Average Ener gy Use kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Customers with

Net Cost

% Net Benefit % Average Median

CSIR Base

case 614 2688 196.05 1,520

CSCR Base

case 582 2311 168.63 1,358 162 4.1 95.9 9.1 2.6

1 594 2209 161.23 1,334 186 6.0 94.0 5.5 1.4

2 626 2037 148.67 1,307 213 11.8 88.2 5.1 1.0

3 640 1966 143.52 1,297 223 14.7 85.3 5.5 1.2

4 653 1981 144.54 1,312 208 18.9 81.1 7.1 1.8

5 674 1960 143.07 1,326 194 23.9 76.1 9.3 2.5

6 719 1925 140.45 1,359 161 33.3 66.8 13.4 3.3

7 749 1874 136.78 1,372 148 39.0 61.1 15.6 4.2

8 1,632 1825 133.21 2,238 -718 81.3 18.7 104.6 20.0

DOE used the results shown in Table 8.6.4, combined with the market share shifts forecast to occur under the Department’s segmented market scenario (see section 9.4 for details on CSIR/CSCR market share shifts), to calculate the shipment-weighted average LCC results for 0.5 hp, 4-pole CSIR customers under each trial sta ndard level. Table 8.6.5 shows these results.

8-46Table 8.6.5 Capacitor-Start Induction-Run Motors: Shipment-Weighted Life-Cycle Cost and Payback Period Results for a 4-Pole One-Half Horsepower Motor with Switching to CSCR

Trial Standard

Level Life-Cycle Cost Life-Cycle Cost Savings

Average Installed

Price

$ Avera g e Ener gy Use kWh/yr Average Annual Operating Cost Average LifeCycle Cost Average Savings Customers with

Net Cost

% Net Benefit %

Baseline

1 528 969 70.8 854 58 32.5 67.5

2 528 969 70.8 854 58 32.5 67.5

3 547 945 69.0 865 47 41.7 58.3

4 590 913 66.7 897 15 55.0 45.0

5 589 913 66.7 897 15 55.0 45.0

6 994 854 62.4 1,282 -370 66.0 34.0

7 601 863 63.1 891 23 53.7 46.3

8 633 847 61.9 917 -3 60.6 39.4

DOE has collected the results of each sens itivity analysis, applied individually, in Appendix 8C. The Department’s life-cycle analys is and payback period spreadsheet tool is available for download via the Internet c , and allows the user to examine the results for the sensitivity scenario of their choice.

8.6.2 Application Data Submitted by NEMA

In comments submitted following the NOPR stage of this rulemaking, the National Electrical Manufacturers Association (NEMA) submitte d alternate versions of the data shown in Tables 9.2.1 and 9.2.2, based on a survey of Original Equipment Manufacturers (OEMs). These alternate tables are reproduced below, as Tables 8.6.1 and 8.6.2. This data submittal added a sixth motor application, Service Industry motors, and proposed th at DOE consider the cases in with 62% and 95% of applicati ons are space constrained. (Acc ording to NEMA, 62% of OEMs reported they would be negatively impacted if the motors they use change size at all; 95% reported that they face some sort of space constraint.) DOE used these data to develop alternate scenarios for the life-cycle cost analyses, and th e results of these sensitivity scenarios (for shipment-weighted product class distributions) are presented in Tables 8.6.3 through 8.6.11.

c See links from this web site: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html

8-47(%) Table 8.6.1 Application Shares by Equipment Type (NEMA) Equipment Category

No. Application Polyphase CSIR CSCR

1 Air and gas compressors 45% 22% 45%

2 Conveyors 5% 2% 2%

3 General industrial machinery 7% 1% 1%

4 Industrial and commercial fans and blowers 23% 51% 29%

5 Pumps and pumping equipment 15% 13% 12%

6 Service Industry 5% 11% 11%

TOTAL 100% 100% 100%

Table 8.6.2 Shares of Motor Owner Type by Application (NEMA) Motor Owner Type

No. Application Industrial Comme rcial Agricultural Residential

1 Air and gas compressors 0% 15% 15% 70%

2 Conveyors 65% 35% 0% 0%

3 General industrial machinery 80% 20% 0% 0%

4 Industrial and commercial fans and blowers 20% 80% 0% 0%

5 Pumps and pumping equipment 10% 40% 20% 30%

6 Service Industry 10% 80% 0% 10%

Under this sensitivity, LCC savings are re duced and payback periods are increased for polyphase and CSCR motor customers, while LCC savings are increased and payback periods reduced for CSIR motor customers. This is the result of average ope rating hours of polyphase and CSCR motors being reduced by about 30 pe rcent from the DOE reference case, while operating hours of CSIR motors are increased by about 10 percent.

8-48Table 8.6.3 Polyphase Motors: NEMA with 20% Space-Constrained

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Base case 78.8% $515 1535 $127.89 $1,255

1 80.6% $527 1495 $124.51 $1,248 $7 58.8% 41.3% 35.1 13.3

2 82.0% $535 1459 $121.56 $1,238 $17 55.4% 44.6% 29.6 11.3

3 83.4% $546 1415 $117.94 $1,228 $27 55.4% 44.6% 30.3 11.6

4 84.0% $555 1402 $116.87 $1,230 $25 58.4% 41.6% 34.7 13.3

4B 86.1% $586 1344 $112.04 $1,235 $21 63.0% 37.0% 43.1 16.3

5 87.6% $651 1316 $109.72 $1,285 -$30 71.6% 28.4% 70.7 25.3

6 88.4% $707 1299 $108.28 $1,332 -$77 78.0% 22.0% 92.5 34.8

7 89.7% $1,474 1276 $106.41 $2,090

- $835 94.8% 5.2% 405.8 102.6

Table 8.6.4 Polyphase Motors: NEMA with 62% Space-Constrained

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Base case 78.8% $513 1550 $129.33 $1,260

1 80.6% $526 1509 $125.93 $1,252 $8 58.9% 41.1% 34.7 13.8

2 82.0% $533 1474 $122.98 $1,242 $18 56.2% 43.8% 29.4 11.6

3 83.4% $544 1430 $119.35 $1,232 $28 56.0% 44.0% 30.2 11.9

4 84.0% $553 1417 $118.28 $1,235 $25 58.7% 41.3% 34.5 13.6

4B 86.1% $584 1358 $113.38 $1,238 $22 62.5% 37.5% 42.8 16.8

5 87.6% $706 1328 $110.89 $1,345 -$85 77.9% 22.1% 99.2 36.4

6 88.4% $739 1312 $109.52 $1,369 -$110 80.9% 19.2% 108.4 42.1

7 89.7% $2,557 1283 $107.10 $3,175 -$1, 915 97.5% 2.5% 855.8 215.5

8-49Table 8.6.5 Polyphase Motors: NEMA with 95% Space-Constrained

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Base case 78.8% $512 1524 $124.15 $1,237

1 80.6% $525 1483 $120.87 $1,230 $7 59.2% 40.8% 34.2 14.0

2 82.0% $532 1448 $118.01 $1,220 $17 56.4% 43.6% 28.9 11.7

3 83.4% $544 1405 $114.49 $1,211 $26 56.2% 43.9% 29.7 11.9

4 84.0% $552 1392 $113.46 $1,213 $24 59.3% 40.7% 33.9 13.7

4B 86.1% $583 1333 $108.67 $1,217 $21 63.1% 36.9% 42.0 16.7

5 87.6% $750 1302 $106.14 $1,369 -$132 84.3% 15.7% 120.6 47.3

6 88.4% $765 1287 $104.87 $1,376 -$139 84.2% 15.8% 119.8 47.5

7 89.7% $3,418 1253 $102.13 $4,014 -$2, 777 99.6% 0.4% 1,205.3 457.9

Table 8.6.6 Capacitor-Start Induction Run Motors: NEMA with 20% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSCR Base case 51.7% $498 1413 $118.04 $1,020

CSIR Base case 49.9% $498 1553 $129.71 $1,073 $0 0.0% 0.0% 0.0 0.0

1 53.2% $506 1459 $121.90 $1,047 $26 28.9% 71.1% 10.1 1.9

2 55.7% $512 1394 $116.51 $1,029 $44 29.6% 70.4% 10.4 2.0

3 58.1% $515 1335 $111.52 $1,009 $64 26.5% 73.5% 8.8 1.7

4 63.5% $533 1229 $102.68 $988 $86 31.9% 68.2% 12.3 2.4

5 64.8% $553 1201 $100.34 $997 $76 38.2% 61.8% 17.7 3.4

6 66.3% $598 1164 $97.28 $1,029 $45 48.4% 51.7% 29.0 5.3

7 71.5% $1,010 1092 $91.31 $1,414

- $341 58.7% 41.3% 122.8 10.9

8-50Table 8.6.7 Capacitor-Start Induction Run Motors: NEMA with 62% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSCR Base case 51.7% $495 1411 $118.75 $1,018

CSIR Base case 49.9% $495 1546 $130.21 $1,070 $0 0.0% 0.0% 0.0 0.0

1 53.2% $503 1453 $122.35 $1,043 $27 29.7% 70.3% 10.1 2.0

2 55.7% $510 1389 $116.93 $1,025 $44 30.4% 69.6% 10.4 2.1

3 58.1% $512 1329 $111.91 $1,005 $65 27.2% 72.9% 8.8 1.7

4 63.5% $535 1219 $102.64 $987 $82 35.0% 65.0% 13.8 2.7

5 64.8% $547 1193 $100.43 $990 $80 38.6% 61.4% 16.7 3.3

6 66.3% $632 1160 $97.62 $1,062 $8 56.7% 43.3% 40.0 7.6

7 71.5% $1,820 1081 $90.98 $2,220 -$1, 150 81.0% 19.0% 315.8 41.0

Table 8.6.8 Capacitor-Start Induction Run Motors: NEMA with 95% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSCR Base case 51.7% $495 1414 $119.01 $1,019

CSIR Base case 49.9% $495 1551 $130.47 $1,071 $0 0.0% 0.0% 0.0 0.0

1 53.2% $504 1457 $122.61 $1,045 $27 30.4% 69.6% 10.2 1.9

2 55.7% $510 1393 $117.18 $1,027 $44 31.1% 69.0% 10.5 2.0

3 58.1% $512 1333 $112.17 $1,007 $65 28.1% 71.9% 8.9 1.7

4 63.5% $539 1219 $102.58 $992 $80 37.0% 63.0% 15.3 2.9

5 64.8% $545 1195 $100.49 $988 $83 37.8% 62.2% 16.2 3.1

6 66.3% $662 1164 $97.88 $1,093 -$22 62.9% 37.1% 49.3 9.4

7 71.5% $2,466 1079 $90.74 $2,865 -$1, 794 97.5% 2.5% 473.9 85.7

8-51Table 8.6.9 Capacitor-Start Capacitor Run Motors: NEMA with 20% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSIR Base case 65.5% $617 2205 $186.66 $1,480

CSCR Base case 73.2% $584 1931 $163.54 $1,336 $0 0.0% 0.0% 0.0 0.0

1 76.7% $596 1845 $156.22 $1,312 $24 44.2% 55.8% 17.7 6.4

2 80.9% $628 1718 $145.54 $1,294 $42 54.0% 46.0% 26.5 9.4

3 83.0% $641 1664 $140.99 $1,286 $50 55.5% 44.5% 27.5 9.7

4 84.0% $655 1665 $141.02 $1,297 $39 58.4% 41.6% 33.9 12.2

5 85.2% $676 1647 $139.51 $1,311 $25 62.5% 37.5% 40.9 14.8

6 85.9% $722 1623 $137.47 $1,347 -$11 68.0% 32.0% 56.2 18.7

7 87.8% $752 1583 $134.08 $1,362 -$26 70.6% 29.4% 60.8 20.8

8 89.0% $1,647 1550 $131.29 $2,243

- $907 93.6% 6.4% 347.7 79.1

8-52Table 8.6.10 Capacitor-Start Capacitor Run Motors: NEMA with 62% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSIR Base case 65.5% $610 2196 $186.01 $1,455

CSCR Base case 73.2% $579 1919 $162.59 $1,314 $0 0.0% 0.0% 0.0 0.0

1 76.7% $590 1833 $155.29 $1,290 $23 44.2% 55.8% 17.2 6.6

2 80.9% $627 1711 $144.94 $1,280 $34 57.3% 42.7% 29.6 11.2

3 83.0% $640 1662 $140.80 $1,273 $41 57.8% 42.3% 30.1 11.4

4 84.0% $651 1656 $140.33 $1,279 $35 59.2% 40.8% 34.4 13.1

5 85.2% $669 1642 $139.11 $1,292 $21 63.0% 37.1% 41.1 15.6

6 85.9% $778 1608 $136.24 $1,388 -$74 76.1% 23.9% 79.7 27.6

7 87.8% $800 1568 $132.90 $1,395 -$81 76.6% 23.4% 78.9 28.3

8 89.0% $2,851 1535 $130.09 $3,433 -$2, 120 96.9% 3.1% 731.0 177.0

Table 8.6.11 Capacitor-Start Capacitor Run Motors: NEMA with 95% SpaceConstrained

Energy Efficiency Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy

Use kWh/yr Average Annual Operating Cost

$ AverageLifeCycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

CSIR Base case 65.5% $612 2138 $179.93 $1,449

CSCR Base case 73.2% $579 1866 $157.17 $1,307 $0 0.0% 0.0% 0.0 0.0

1 76.7% $591 1782 $150.14 $1,284 $23 44.4% 55.6% 17.6 6.7

2 80.9% $632 1666 $140.32 $1,280 $27 59.9% 40.1% 33.1 12.4

3 83.0% $644 1622 $136.63 $1,273 $33 59.6% 40.4% 33.2 12.5

4 84.0% $653 1612 $135.80 $1,275 $31 59.7% 40.3% 36.0 13.7

5 85.2% $671 1601 $134.86 $1,289 $18 63.8% 36.2% 42.7 16.2

6 85.9% $831 1559 $131.38 $1,433 -$127 83.0% 17.0% 102.6 38.1

7 87.8% $847 1521 $128.17 $1,434 -$127 81.8% 18.3% 97.1 36.1

8 89.0% $3,841 1489 $125.42 $4,417 -$3, 110 99.6% 0.4% 1,085.2 388.6

8-538.7 REBUTTABLE PAYBACK PERIOD

A more energy efficient motor will usually co st more to buy than a motor of standard energy efficiency. However, the more efficient motor will usually cost less to operate due to reductions in operating costs (i.e., lower energy bills ). The PBP is the time (usually expressed in years) it takes to recover the a dditional installed cost of the mo re efficient motor through energy cost savings. EPCA provides a rebuttable presumption that, in essence, an energy conservation standard is economically justified if the increas ed purchase cost for a product that meets the standard is less than three times the value of the first-year energy savi ngs resulting from the standard. However, DOE routinely conducts a fu ll economic analysis th at considers the full range of impacts, including t hose to the customer, manufacturer , Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B )(i) and 42 U.S.C. 6316(e)(1). The results of this analysis serve as the basis for DOE to ev aluate definitively the economi c justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification).

The results of DOE’s rebuttable payback pe riod calculations are s hown in Tables 8.5.1 and 8.5.2 below. No polyphase TSL has a rebutta ble presumption payback period of less than 3 years. For CSIR and CSCR motors, TSLs 1 th rough 3 have rebuttable presumption payback periods of less than 3 years.

8-54Table 8.7.1 Rebuttable Presumption Payback for Polyphase Motors

TSL Payback Period

years
1 3.3

2 3.0

3 3.3

4 3.8

4b 4.9

5 7.9

6 10.2

7 45.7

Table 8.7.2 Rebuttable Presumption Payback for Capacitor-Start Motors

TSL Induction-Run (1/2 hp, 4 poles) Capacitor-Run (3/4 hp 4 poles) CSIR Efficiency Level Payback Period

years CSCR Efficiency Level Payback Period

years
1 4 1.7 2 1.5

2 4 1.7 3 2.7

3 5 2.5 3 2.7

4 6 4.1 4 3.3

5 6 4.1 3 2.7

6 7 17.7 8 35.5

7 7 17.7 3 2.7

8 7 17.7 7 6.0

8-55REFERENCES

1 U.S. Department of Energy- Energy Information Administration. Annual Energy Outlook 2010 Early Release , December, 2009. Washington, DC. <www.eia.doe.gov/oiaf/aeo>

2 RS Means. Electrical Cost Data, 28 th Annual Edition , 2005. Kingston, MA. p. 97.

3 U.S. Department of Energy- Energy Information Administration. Form EIA-861 for 2004, 2004. Washington, DC. < http://www.eia.doe.gov/cneaf/electricity/page/eia861.html >

4 Ibbotsons Associates. SBBI Valuation Edition 2001 Yearbook , 2001. Chicago, IL. pp. 38, 44.

5 Damodaran Online. The Data Page: Cost of Capital by Industry Sector , 2006.

< http://pages.stern.nyu.edu/~adamodar / >

6 The Federal Reserve Board. Federal Reserve Bank Services Private Sector Adjustment
Factor , 2005, Docket No.OP-1229. Washington, DC.

< h ttp://www.federalreserve.gov/boarddocs/ Press/other/2005/2 0051012/attachment.pdf >

7 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs (secondary market), Maturity: 6-month, Frequency: Annual, Description: Average rate on 6-mont h negotiable certificates of deposit (secondary market), quoted on an investment basis , 2006. Washington, DC.

< http://www.federalreserve. gov/releases/H15/data.htm >

8 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20-year, Frequency: Monthly, Description: Bond buyer go 20-bond municipal bond index , 2006. Washington, DC.

< http://www.federalreserve. gov/releases/H15/data.htm >

9 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: Corporate bonds/Moody’s Seasoned AAA, Frequency: Annual, Description: Moody’s yield on seasoned corporate bonds – all industries, AAA , 2006. Washington, DC. < http://www.federalreserve.gov/releases/H15/data.htm >

10 Mortgage-X, Mortgage Information Service. Cost of Savings Index (COSI) Index History

, 2006. < http://mortgage-x.com/general/indexes/default.asp > (Last accessed, October 10, 2006).

11 Damodaran Online. The Data Page: Historical Returns on Stocks, Bonds, and Bills – United States , 2006. < http://pages.stern.nyu.edu/~adamodar / >

8-5612 U.S. Department of Energy-En ergy Information Administration. Annual Energy Outlook 2009 with Projections to 2030 , March 2009. Washington, DC.

< www.eia.doe.gov/oiaf/ aeo/pdf/0383(2009).pdf >

8-57CHAPTER 9. SHIPMENTS ANALYSIS

TABLE OF CONTENTS

9.1 INTRODUCTION

........................................................................................................... 9-1 9.2 TOTAL SHIPMENTS AND MO TOR APPLICATIONS

............................................... 9-2 9.2.1 Compressors

......................................................................................................... 9-2 9.2.2 Conveyors

............................................................................................................ 9-3 9.2.3 Pumps

................................................................................................................... 9 -3 9.2.4 Fans and Blowers

................................................................................................. 9-4 9.2.5 General Industry and Miscellaneous

.................................................................... 9-4 9.2.6 Covered Motor Applications Summary

............................................................... 9-4 9.2.7 Application Data Submitted by NEMA

............................................................... 9-5 9.3 SHIPMENTS BY PRODUCT CLASS

............................................................................ 9-6 9.4 SHIPMENTS FORECAST

............................................................................................ 9-10 9.4.1 Sensitivity of Shipments to Installed Cost

......................................................... 9-11 9.4.2 Polyphase Motor Shipment Forecast

................................................................. 9-11 9.4.3 Capacitor-Start Motor Shipment Forecast

......................................................... 9-13 9.4.4 CSIR/CSCR Market Share Response to the Standard Level

............................. 9-15

LIST OF TABLES

Table 9.2.1 Application Shar es by Equipment Type

.............................................................. 9-4 Table 9.2.2 Shares of Motor Own er Type by Application

...................................................... 9-5 Table 9.2.3 Application Shares by Equipment Type (NEMA)

............................................... 9-5 Table 9.2.4 Shares of Motor Owner Type by Application (NEMA)

...................................... 9-6 Table 9.3.1 Polyphase Small Electric Moto rs, NEMA Shipment Data, 2000

........................ 9-6 Table 9.3.2 CSIR Small Electric Moto rs, NEMA Shipment Data, 2000

................................ 9-7 Table 9.3.3 Polyphase Small Electric Motor Mo dels in Manufacturer Catalogs, 2009

......... 9-7 Table 9.3.4 CSIR Small Electric Motor Mode ls in Manufacturer Catalogs, 2009

................. 9-7 Table 9.3.5 CSCR Small Electric Motor Mode ls in Manufacturer Catalogs, 2009

................ 9-8 Table 9.3.6 Estimated Polyphase Small El ectric Motor Shipments by Product Class, 2008

...................................................................................................................... 9-9 Table 9.3.7 Estimated Capacitor-Start Induc tion-Run Small Electri c Motor Shipments by Product Class, 2008

........................................................................................ 9-9 Table 9.3.8 Estimated Capacitor-Start Capa citor-Run Small Electri c Motor Shipments by Product Class, 2008

...................................................................................... 9-10 Table 9.4.1 Annual and Cumulative Shipment s Forecast for Polyphase Small Electric
Motors

................................................................................................................ 9-12 Table 9.4.2 Annual and Cumulative Shipment s Forecast for Capacitor-Start Small Electric Motors in the Base Case

....................................................................... 9-15

9-iTable 9.4.3 CSCR Current Market Share and Model Comparison for Each Combination of Horsepower and Number of Poles

........................................... 9-18 Table 9.4.4 Cumulative CSIR and CSCR Mo tor Shipments (Millions) Between 2015 and 2045 (Market Share Shift Complete Prior to 2015)

.................................... 9-19

LIST OF FIGURES

Figure 9.4.1 Shipments Forecasts for Po lyphase Small Electric Motors

............................... 9-12 Figure 9.4.2 Affected Stock of Pol yphase Small Electric Motors

......................................... 9-13 Figure 9.4.3 Shipments Forecasts for Capacitor-S tart Small Electric Motors in the Base Case

.................................................................................................................... 9-14 Figure 9.4.4 Comparison of CSCR Market Sh are Between Current Market and DOE’s Logistic Model

................................................................................................... 9-17

9-iiCHAPTER 9. SHIPMENTS ANALYSIS

9.1 INTRODUCTION

Future product shipments estimates are a ne cessary input to the national energy savings (NES) and net present value (NPV) calculations. Shipments, combined with the characteristics of the applications in which the motors are used and the motor lifetime, allow the Department to estimate the total energy used by the installed stock of small mo tors each year. Shipments are also a necessary input to the manufacturer impact analysis. The core of the shipments analysis is an accounting model that the U.S. Department of Energy (DOE) developed to simulate how future purchases are incorporated into an in-s ervice stock of aging motors that are gradually replaced. DOE’s small motors shipments forecas ts are based on forecasts of economic growth, and do not incorporate a distinction within sh ipments between replacements and purchases for new applications.

DOE developed a shipments forecast fo r each of the three covered small motor equipment categories (polyphase, capacitor-start induction-run, a nd capacitor-star t capacitor-run motors). Within each category, small motor shipme nts are comprised of products in a number of horsepower ratings and three rotation speeds (corresponding to 2-pole, 4-pole, and 6-pole motors). DOE conducted its life-cycle cost analys is (see chapter 8) using representative 4-pole motors in each equipment category, and used the results of section 9.3 to produce shipmentweighted LCC results as well.

To formulate its shipment estimates, DOE began with shipments data provided by National Electrical Manufacturers Association (NEMA) for the determination analysis, 1 along with a comprehensive survey of the number of covered models listed in manufacturer catalogs available on the internet 2 and a review of U.S. Census data regarding production and imports of motors and equipment containing motors. Based on these data, DOE estimates that polyphase motors account for an estimated 19 percent of cu rrent total unit shipments while capacitor-start induction-run (CSIR) motors are 77 percent and capacitor-start capacitor-run (CSCR) motors are 4 percent.

Section 9.2 provides a summary of the data DOE used to develop estimates of the shipments of covered small electric motors in seve ral applications, and the resulting estimates of total covered motor shipments. Section 9.3 addresses the distribution of these motors into product classes (horsepower and number of poles ) within each category, based in part on the number of models currently avai lable for sale in each product class. Section 9.4 presents DOE’s forecasts of covered motor shipments throughout the analysis period.

9-19.2 TOTAL SHIPMENTS AND MOTOR APPLICATIONS

Based on comments from NEMA manufacturer s in combination with DOE’s previous estimates and an application analysis conducted for this stage of the rulemaking, total annual shipments of polyphase covered motors were modeled to total 750,000 per year. DOE’s preliminary analysis suggested total cove red polyphase shipments as 557,000, and a motor manufacturer representative at th e preliminary public meeting sugge sted that the total was closer to 1 million. Upon analyzing the various applicati ons for these motors, DOE determined that the total number of shipments lay be tween these two estimates, at r oughly 750,000. This total is also consistent with U.S. Census-reported small polyphase motor shipments, adjusted for the breakdown of 2/3 enclosed, 1/3 open polyphase moto rs determined from a NEMA survey in the Determination phase. CSIR motor shipments tota l 3.1 million units per year, according to the written comment from NEMA, and CSCR mo tor shipments total roughly 163,000 (based on DOE’s assumption, in turn based on a joint NEMA/SMMA survey in 2000, 1 that 5% of capacitor-start shipments are capacitor-run motors ). CSIR and CSCR motors are used for the same range of applications, alt hough CSCR motors are generally mo re widely available in higher horsepower ratings.

DOE drew upon several data sources to develop a model of the applications for which motors covered in this analysis are used: data collected by Easton Consultants in the preparation of the Small Motors Determination Analysis, 3 DOE’s own analysis in the Determination and Framework stages, 4,5 U.S. Census reports, comments from interested parties, both written and at the preliminary public meeting 6 , and interviews with experts in motor OEM industries. 7 The report by Easton Consultants developed for the Sm all Motors Determination Analysis provided the foundation for initial shipment estimates. Ho wever, the motor applications summarized in that report did not reflect DOE’s current defini tion of general purpose small electric motors.

9.2.1 Compressors

Most small air compressors (under 11 CFM) use small electric motors. Based on studies of compressor manufacturer a nd retailer catalogs, DOE concl uded that these motors are commonly open-enclosure, general purpose elect ric motors of the sort covered in this rulemaking. Very small (hand-carry-sized) comp ressors often use universal or permanentmagnet-DC motors, and some smaller compressors use special-purpose assemblies in which the compressor and motor are intimately linked. Some larger compressors use motors (referred to as “compressor-duty” motors) which do not meet th e service factor requirements for a NEMA general purpose small electric motor. However, a significant fraction of portable and small stationary air compressors do use general purpose small electric motors which would be covered by this rulemaking.

The U.S. Census reports that total U.S. shipments of portable air compressors totaled roughly 2.7 million units in 2007 8 . Shipments of stationary air co mpressors with motors smaller than or equal to 1.5 hp are not reported by the Ce nsus due to the small number of manufacturers. However, the Census does report that the va lue of these shipments totaled $101 million. DOE

9-2assumed that these small compressors are less valuable, per unit, than compressors with larger motors, and estimated that statio nary compressor shipments with motors less than 1.5 hp exceed 250,000 per year, indicating total “small air comp ressor” shipments of roughly 3 million units. DOE assumed that about 20% of these compressors use motors covered by this analysis, with 80% of those being capacitor-start motors a nd 20% polyphase. DOE therefore estimated motor shipments for compressors to be 500,000 capaci tor-start motors and 130,000 polyphase motors.

9.2.2 Conveyors

The U.S. Census reports that conveyors a nd material handling shipments totaled roughly $5.9 billion in 2002 9 . This total includes parts (roughly $400 million), as well as bulk handling and unit handling conveyors. DOE assumed that roughly $2 billion of conveyor and material handling system shipment value in 2008 is acco unted for by electrically driven conveyors and material handling systems. Conveyor sales catalogs indicate a typical sy stem cost (per singlemotor driven conveyor) of between $1500 and $5000 10 , which implies unit shipments between 400,000 and 1.3 million. The Determination Analys is assumed small motor shipments for conveyors of roughly 700,000, which is consistent with these estimates. DOE recognizes that conveyors are driven by a range of motors, includ ing enclosed motors a nd variable-speed DC motors. Therefore, DOE estimated covered motor shipments for conveyor applications to total 500,000, of which 80% (400,000) are assumed to be capacitor-start motors, and 20% (100,000) to be polyphase motors. This represents a reduc tion in polyphase shipment s of a factor of two relative to the Determination An alysis. DOE assumed that polyphase motors are more likely to be used in industrial settings, where enclosed motors play larger role.

9.2.3 Pumps

Pumps represent the largest application of general-purpose small electric motors. U.S. pump manufacturers ship roughly 20 million pumps each year, of which roughly 15 million are industrial pumps (or labeled “other” by the U.S. Census) 8 . Of the 15 million industrial pumps produced by U.S. companies, between 1 and 2 milli on are close coupled to their driver (motor), and therefore are not driven by general purpo se motors. Roughly 1 million industrial pumps shipped each year are submersible, and theref ore cannot be open, general purpose motors. The possible universe of industrial pumps which migh t use small general purpose motors is therefore between 12 and 13 million. Residential applicati ons total about 5 million pump shipments per year and include pool pumps, hot water circulat ors, irrigation pumps, sump pumps, and well pumps. U.S. Census totals include 1.3 million non-submersible water pumps, which could be driven by general purpose motors. The total shipments of pu mps that might use a covered general purpose small motor are therefore roughl y 13 million. DOE assumed that 15% of these pumps use motors which would be covered under this proposed rule. DOE estimated a total of 2.18 million shipments in 2008 of covered small elec tric motors in pump applications, of which 1.8 million are capacitor-start and 380,000 are polyphase.

9-39.2.4 Fans and Blowers

The 2002 U.S. Economic Census 11 reported that industrial and commercial fan and blower manufacturers spent $103.8 million on driv ers (motors) for their products. Fans and blowers use a wide range of moto r sizes (although small motors are highly represented due to the relatively low power necessary to move large volumes of air), as well as a mixture of open and enclosed motors. DOE estimated that the average co st of a fan or blower motor to a manufacturer in 2002 was $150, which resulted in an estimate of 650,000 motors shipped to drive fans and blowers. Many of these motors are permanent-sp lit capacitor (PSC) motors or other motors with low starting torque, suitable for driving fans. DOE estimated that 230,000 capacitor-start motors and 55,000 polyphase motors covered by this pro posed rule are used in fan and blower applications.

9.2.5 General Industry and Miscellaneous

DOE calculated the total motors in “general industrial” applicatio ns by subtracting the four specific applications from the estimated sh ipments. This application category includes the small number of covered motors used in appl ication categories which DOE has not analyzed separately, such as medical applications, co mmercial clothes dryers, machine tools, food processing equipment, packaging machinery, and HVAC/R. DOE estimated that the total shipments into this broad range of applic ations are 450,000 capacito r-start motors and 85,000 polyphase motors.

9.2.6 Covered Motor Applications Summary

Table 9.2.1 shows the percentage of shipments in each motor category that are used in the five applications DOE examined.

Table 9.2.1 Application Shares by Equipment Type Equipment Category

No. Application Polyphase CSIR CSCR

1 Air and gas compressors 17.3% 14.9% 14.9%

2 Conveyors 13.3% 11.9% 11.9%

3 General industrial machinery 11.3% 12.5% 12.5%

4 Industrial and commercial fans and blowers 7.3% 6.9% 6.9%

5 Pumps and pumping equipment 50.7% 53.7% 53.7%

TOTAL 100% 100% 100%

For each equipment category, DOE calculated an average annual shipments growth rate by weighting the growth rates in the application s ectors by the ownership shar es of each sector in that class. In order to develop these forecasts, DOE estimated the percenta ge of motors within

9-4(%) each application which are used in industrial, agri cultural, commercial, or residential sectors. The estimated sector ownership shares are shown in Table 9.2.2 for each application.

Table 9.2.2 Shares of Motor Owner Type by Application Motor Owner Type

No. Application Industrial Comme rcial Agricultural Residential

1 Air and gas compressors 40% 40% 10% 10%

2 Conveyors 40% 50% 10% 0%

3 General industrial machinery 50% 40% 10% 0%

4 Industrial and commercial fans and blowers 50% 50% 0% 0%

5 Pumps and pumping equipment 40% 35% 20% 5%

9.2.7 Application Data Submitted by NEMA

In comments submitted following the NOPR stage of this rulemaking, the National Electrical Manufacturers Association (NEMA) submitte d alternate versions of the data shown in Tables 9.2.1 and 9.2.2, based on a survey of Orig inal Equipment Manufacturers (OEMs). These alternate tables are reproduced below, as Tables 9.2.3 and 9.2.4. This data submittal added a sixth motor application, Service I ndustry. DOE used these data to develop alternate scenarios for the life-cycle cost and national impact analyses, and the results of these sensitivity scenarios are presented in chapters 8 and 10 of this TSD.

Table 9.2.3 Application Shares by Equipment Type (NEMA) Equipment Category

No. Application Polyphase CSIR CSCR

1 Air and gas compressors 45% 22% 45%

2 Conveyors 5% 2% 2%

3 General industrial machinery 7% 1% 1%

4 Industrial and commercial fans and blowers 23% 51% 29%

5 Pumps and pumping equipment 15% 13% 12%

6 Service Industry 5% 11% 11%

TOTAL 100% 100% 100%

9-5(%) Table 9.2.4 Shares of Motor Owner Type by Application (NEMA) Motor Owner Type

No. Application Industrial Comme rcial Agricultural Residential

1 Air and gas compressors 0% 15% 15% 70%

2 Conveyors 65% 35% 0% 0%

3 General industrial machinery 80% 20% 0% 0%

4 Industrial and commercial fans and blowers 20% 80% 0% 0%

5 Pumps and pumping equipment 10% 40% 20% 30%

6 Service Industry 10% 80% 0% 10%

9.3 SHIPMENTS BY PRODUCT CLASS

DOE developed an estimated distribution of shipments for 2008 among the various product classes. (Average motors within each pr oduct class use different amounts of energy; see chapter 6). DOE used two data sources to de velop these estimates: a distribution for many product classes for the year 2000, provided by NEMA as part of the Determination Analysis, and a survey of internet catalogs of 9 small elect ric motor manufacturers, und ertaken between April 1 and May 1, 2009. 2

For the Determination Analysis, NEMA provided shipment data on small electric motors to DOE. Tables 9.3.1 and 9.3.2 show this data, which provided the basis for the Department’s estimated distributions of shipments for pol yphase and CSIR motors. NEMA was unable to provide shipments for some product classes, as well as virtually the entire CSCR equipment category, due to anti-trust restrictions. The product classes for which NEMA provided no data are shown as asterisks in Tables 9.3.1 and 9.3.2.

Table 9.3.1 Polyphase Small Electric Motors, NEMA Shipment Data, 2000
Motor Horsepower Six Poles Four Poles Two Poles Total

1/4 hp * * * 9,163 1/3 hp 3,788 12,899 2,585 19,272 1/2hp 6,478 39,501 2,856 48,835 3/4 hp 9.729 47,084 65,405 122,218

1 hp * 56,783 * 84,670 1 1/2 hp * 115,638 * 124,959 2-3 hp

- 22,384 10,149 32,533 TOTAL 441,650

* Data withheld by NEMA due to insufficient number of manufacturers reporting for those ratings / poles

9-6Table 9.3.2 CSIR Small Electric Motors, NEMA Shipment Data, 2000
Motor Horsepower Six Poles Four Poles Two Poles Total

1/4 hp * 342,064 * 882,878 1/3 hp 551,566 609,264 354,258 1,515,088 1/2hp 301,198 493,151 465,799 1,260,148 3/4 hp * 385,013 * 1,121,644

1 hp

- 53,042 143,571 196,613 >1 hp

- 23,638 24,892 48,530 TOTAL 5,024,901

* Data withheld by NEMA due to insufficient number of manufacturers reporting for those ratings / poles.

The Department used the number of mode ls currently sold by NEMA-member motor manufacturers as an estimated measure of rela tive shipments for product classes where NEMA provided no collective data. Tables 9.3.3 through 9.3.5 show the number of models in each class as determined from the Department’s survey of internet motor catalogs.

Table 9.3.3 Polyphase Small Electric Motor Models in Manufacturer Catalogs, 2009
Motor Horsepower Six Poles Four Poles Two Poles Total

1/4 hp 7 13 2 22 1/3 hp 8 30 21 59 1/2hp 15 45 29 89 3/4 hp 16 42 26 84

1 hp 7 48 24 79
1 1/2 hp 2 39 28 69

2 hp 0 32 29 61 3 hp 0 12 14 26 TOTAL 489

Table 9.3.4 CSIR Small Electric Motor Models in Manufacturer Catalogs, 2009
Motor Horsepower Six Poles Four Poles Two Poles Total

1/4 hp 7 57 4 68 1/3 hp 11 91 35 137 1/2hp 15 88 52 155 3/4 hp 6 60 40 106

1 hp 0 59 37 96
1 1/2 hp 0 27 24 51

2 hp 0 6 25 31 3 hp 0 0 4 4 TOTAL 648

9-7Table 9.3.5 CSCR Small Electric Motor Models in Manufacturer Catalogs, 2009
Motor Horsepower Six Poles Four Poles Two Poles Total

1/4 hp 0 2 0 2 1/3 hp 0 7 0 7 1/2hp 0 7 0 7 3/4 hp 9 22 0 31

1 hp 2 8 4 16 1 1/2 hp 0 18 9 27

2 hp 0 12 9 21 3 hp 0 0 5 5 TOTAL 114

DOE developed shipment distributions among product classes for the year 2008 by first scaling the polyphase and CSIR distributions in Tables 9.3.1 and 9.3.2 so that their totals were equal to the total estimated shipments determined in the application analysis in Section 9.2 (3.1 million CSIR and 750,000 polyphase small electric motors). DOE developed estimates for the product classes not provided by NEMA by using the number of models currently sold as a measure of relative shipments. For 1⁄4 horsepower polyphase motors , for example, DOE used the scaled total shipments, 15,560, and divided them among the three product classes in the ratio 7:13:2 because it found 7 six-pole models sold, 13 four-pole models sold, and 2 two-pole models sold in its catalog survey. For 1 and 11⁄2 horse power polyphase motors and 1⁄4 and 3⁄4 horsepower CSIR motors, DOE first calculated the difference between the total shipments with each power and the four-pole shipments, and then divi ded this value between the two unknown product classes in proportion to the number of models so ld in each class. The resulting estimates for shipments in each product class of polyphase and CSIR motors are shown in Tables 9.3.6 and 9.3.7, respectively.

9-8Table 9.3.6 Estimated Polyphase Small Electric Motor Shipments by Product Class, 2008

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW 4,951 9,195 1,415 15,560

1/3 hp/0.25 kW 6,433 21,905 4,390 32,727

1/2 hp/0.37 kW 11,001 67,080 4,850 82,930

3/4 hp/0.55 kW 16,522 79,957 111,069 207,548

1 hp/0.75 kW 10,694 96,428 36,664 143,785

11⁄2 hp/1.1 kW 1,055 196,374 14,773 212,203

2-3 hp/1.5-2.2 kW

- 38,012 17,235 55,247

Total 50,655 508,950 190,395 750,000

Table 9.3.7 Estimated Capacitor-Start Induction-Run Small Electric Motor Shipments by Product Class, 2008

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW 212,318 211,029 121,325 554,672

1/3 hp/0.25 kW 340,276 375,872 218,552 934,700

1/2 hp/0.37 kW 185,817 304,238 287,364 777,420

3/4 hp/0.55 kW 59,276 237,525 395,172 691,973

1 hp/0.75 kW - 32,723 88,573 121,296

1.5 hp/1.1 kW

- 11,931 6,954 18,885

2-3 hp/1.5-2.2 kW

- 2,651 8,403 11,054

Total 797,688 1,175,970 1,126,342 3,100,000

DOE’s 2006 Determination Analysis concl uded that CSCR motors make up roughly 5% of all capacitor-start shipments. DOE assumed the same ratio for this analysis (for total shipments of 163,158), and divided the shipment s among product classes in proportion to the number of models sold in each class. For ex ample, of the 114 models of CSCR motor sold, 22 are four-pole, 3⁄4 horsepower, so DOE estimated th e shipments to that class as 22/111 = 19.8% of the total, or 31,487 in 2008. Table 9.3.8 shows DOE’s shipment estimates for each CSCR product class.

9-9Table 9.3.8 Estimated Capacitor-Start Capacitor-Run Small Electric Motor Shipments by Product Class, 2008

Motor Horsepower/Standard

Kilowatt Equivalent Six Poles Four Poles Two Poles Total

1/4 hp/0.18 kW

- 2,862

- 2,862

1/3 hp/0.25 kW

- 10,018

- 10,018

1/2 hp/0.37 kW

- 10,018

- 10,018

3/4 hp/0.55 kW 12,881 31,487

- 44,367

1 hp/0.75 kW 2,862 11,450 5,725 20,037

1.5 hp/1.1 kW

- 25,762 12,881 38,643

2-3 hp/1.5-2.2 kW

- 17,175 20,037 37,211

Total 15,743 108,772 38,643 163,158

9.4 SHIPMENTS FORECAST

DOE forecasted shipments of covered moto rs throughout the 30-year analysis period, which stretches from 2015 (the assumed effective date of the standard) to 2045. DOE forecast the total shipments in two cat egories of motors, polyphase a nd capacitor-start, using a model driven by forecasted economic growth. DOE’s for ecast assumed that motors sales are driven by macroeconomic activity of the sectors in which th ey are used. DOE used th e estimated shares of motor owner type shown in Table 9.2.2 to devel op a weighted-average market growth driven by the Nation’s economic growth.

Annual shipments growth rates fo r each sector are set as equa l to annual growth rates in the following drivers, which are provided by the 2010 Annual Energy Outlook ( AEO 2010) 12 through 2030:

• Industrial and Agricultural: Manufacturing activity (total shipments—manufacturing only, in dollars);

• Commercial: Commer cial floor space;

• Residential: Number of households.

DOE continued the growth trend in AEO fo recasts through 2045 by, first, determining the growth rate for these drivers between 2020 and 2030, and then continuing this rate from 2030 to 2045.

9-10DOE modeled four scenarios, which the user may select in the National Impact Analysis spreadsheets available on the internet at

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors .html>. The Department’s reference scenario, fo r which NES and NPV results are reported in chapter 10, is the Early Release reference scen ario, released by the EIA in December, 2009. The High Growth and Low Growth scenarios are from the AEO 2009 release 13 , March 2009. The fourth scenario reflects comments from interested parties who forecast a falling market share for motors covered by this rulemaking. In this scen ario, DOE forecast that total shipments would remain equal to the 2008 shipments throughout the forecast period, regardless of economic growth between 2008 and 2045.

9.4.1 Sensitivity of Shipments to Installed Cost

Sales of small electric motors may be sensitiv e to increases in the installed cost that mayresult from efficiency standards. Totally enclosed motors are potential substitutes for the openconstruction motors covered in this rulemaking. Th ese types of motors come in the same frame sizes, horsepower ratings and ha ve similar performance charact eristics (although they commonly have lower service factors). T oday, the incremental purchase cost of a totally enclosed motor instead of an open-construction motor is approxima tely 18 percent. If the installed cost of openconstruction motors were to increase much beyond 18 percent due to energy efficiency standards, there might be some migration to (non-covered) totally enclosed motors.

DOE believes that increases in the installed cost of small electric motors could reduce their purchase due to migration to totally enclos ed motors or other fact ors. Based on comments indicating the presence of elasticity to enclosed motors, received from interested parties at the NOPR public meeting and in written comment s submitted in response to the NOPR, DOE adopted an elasticity to enclosed motors of -0.25. DOE included an elasticity variable in the publicly-available National Impact Analysis spread sheet models (with user-selectable choices of elasticity equal to 0, -0.2 5, and -0.5), but all result s presented in this ch apter and in chapter 10 assume that overall small electric motor sales have an elasticity of -0.25.

9.4.2 Polyphase Motor Shipment Forecast

DOE’s forecast of annual polyphase small el ectric motor shipments is shown in Figure 9.4.1 and summarized in Table 9.4.1. The figure show s the four different growth rates modeled by the Department. The average annual shipments growth rate in the reference case is 1.33%. In the price-inelastic case (the Department’s re ference case), polyphase shipments are unaffected by the standard level.

9-11Shipments (Millions) 2

1.8

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

0 Reference Case High Growth Case
Low Growth Case Falling Market Share

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Year Figure 9.4.1 Shipments Forecasts for Polyphase Small Electric Motors

Table 9.4.1 Annual and Cumulative Shipments Foreca st for Polyphase Small Electric Motors

Growth Scenario Annual Shipments (millions)

2015 2025 2035 2045 Cumulative 2015–2045

Reference Case High Growth

Low Growth Falling Market Share 0.832

0.872

0.802

0.750 0.969

1.086

0.892

0.750 1.101

1.431

1.009

0.750 1.251

1.857

1.132

0.750 32.2

40.0

29.7

23.3

Figure 9.4.2 shows the affected stock forecas t from the shipments model for polyphase motors, in the Department’s reference case. (T he Department could produce similar plots for each product class, or each shipment forecast, but shows only one here as an illustration.) The affected stock is the accumulation of motors in use that are subject to standards, and energy savings from a standard tends to increase with the accumulating affected stock of equipment. The affected stock increases rapi dly initially as the older, ine fficient stock of equipment is replaced by standard-compliant equipment. The stock then expe riences a relatively long period of a gradual increase as the stock of equipment increases w ith gradually increasing national

9-12economic activity. Then at the end of the fo recast period for annual shipments at 2045, the equipment is rapidly replaced by equipment purchased after the end of the forecast period.Motors (Millions) 12.00

10.00

8.00

6.00

4.00

2.00

0.00 Affected Stock

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065
Year

Figure 9.4.2 Affected Stock of Polyphase Small Electric Motors

9.4.3 Capacitor-Start Motor Shipment Forecast

DOE’s forecasts of annual capacitor-start sm all electric motor shipments are shown in Figure 9.4.3. The figure shows the four different growth rates modeled by the Department. The average annual shipments growth rate in th e reference case is 1.83%. Table 9.4.2 presents the annual and cumulative shipments for CSIR and CS CR motors in the base (no standards) case. Total capacitor-start shipments ar e unchanged by standards in the Department’s price-inelastic reference scenario. However, the shares of thes e shipments that are CSIR or CSCR motors are affected by the standard. Sec tion 9.4.4 explains the Departme nt’s CSIR/CSCR market share model used to forecast shipments in the standards cases.

9-130.000 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000Motor Shipments (Millions) CSIR Reference CSIR High Growth
CSIR Low Growth CSIR Falling Market Share
CSCR Reference CSCR High Growth
CSCR Low Growth CSCR Falling Market Share

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Year Figure 9.4.3 Shipments Forecasts for Capacitor-Start Small Electric Motors in the Base Case

9-14Table 9.4.2 Annual and Cumulative Shipments Fo recast for Capacitor-Start Small Electric Motors in the Base Case

Growth Scenario Annual Shipments (millions)

2015 2025 2035 2045 Cumulative 2015–2045

CSIR

Reference Case High Growth

Low Growth Falling Market Share

CSCR

Reference Case High Growth

Low Growth Falling Market Share 3.437

3.605

3.315

3.100

0.181

0.190

0.174

0.163 4.006

4.487

3.687

3.100

0.211

0.236

0.194

0.163 4.551

5.915

4.171

3.100

0.240

0.311

0.220

0.163 5.170

7.675

4.677

3.100

0.272

0.404

0.246

0.163 132.9

165.3

122.6

96.1

7.0

8.7

6.5

5.1

9.4.4 CSIR/CSCR Market Share Response to the Standard Level

For most applications, small general purpos e CSCR motors are potential replacements for small CSIR motors in that they meet the same NEMA criteria regarding torque, service factor, and frame size, as detailed in NEMA MG1. 14 Currently, CSCR motors are, on average, more expensive than CSIR motors for most product clas ses, physically larger due to the space required by a second capacitor, have lower losses, and ha ve a relatively small overall market share. However, if a combination of standards were to be adopted which significantly changed the relative prices of CSCR and CSIR motors, DOE forecasts thatthis could result in significant changes in their respective market shares. DOE developed a model to analyze this potential market shift based on incremental purchase cost , incremental operating losses, and the observed market share in the current market (as derive d in section 9.3). In the base case (no energy conservation standard), DOE assu med that the market shares of CSIR and CSCR motors would remain fixed at their current values for each product class.

DOE developed a three-parameter market shar e model to determine the market share of CSCR and CSIR motors (within each combinati on of horsepower and number of poles) in the case of potential standard levels. The three parameters are:

• α , the relative weight customers choose to gi ve operating costs compared with purchase costs (the units of α are $/kWh),

• δ , an “unfamiliarity cost” associated with CSCR motors (in dollars), and

• β , an overall elasticity or scaling factor (no units). Customers appear to favor CSIR motors over CSCR motors, even if their initial costs and losses were almost identical. The “unfamiliarity cost” parameter δ is not a cost faced by the motor customer. Instead, DOE’s model uses this dollar value to describe customer behavior favoring CSIR motors: If a CSIR and CSCR motor had identical purchas e and operating costs and the

9-15CSCR motor were δ dollars less expensive than the CS IR motor, the Department’s model predicts that each motor would have 50% market share.

For each product class, DOE developed a “cost factor” based on these three parameters and the incremental purchase cost and incremen tal operating losses associated with a CSCR motor compared with a CSIR moto r of the same power and number of poles. This cost factor CF is equal to:
CF ( p , hp ) = β × 

## ( Δ PurCost ( p , hp ) + α × Δ AnnLosses ( p , hp ) + δ 

## )

Where:

α , β , and δ = fit parameters as defined above, fixed for all motor powers and speeds, a
Δ PurCost(p,hp) = the difference between the averag e purchase cost of CSCR and CSIR motors with hp horsepower and p poles (in $2008) Δ AnnLosses(p,hp) = the difference between the averag e annual operating losses of CSCR and CSIR motors with hp horsepower and p poles (in kWh/year).

DOE then calculated the cost factor fo r each product class, as a function of α , β , and δ

, and developed a logistic consumer choice model. That is, DOE assumed that the product market share is a modified logistic func tion of the cost factor. A simple logistic model would calculate the market share as:
1 MS ( p , hp ) = CF ( p , hp ) 1 + 

# e

Where: MS(p,hp) = market share of CSCR motors among all covered capacitor-start motors with p poles and hp horsepower.

DOE modified this model to account for the manufacturer barrier to create a new motor design in a product class in wh ich no equipment is currently produced. DOE assumed that no manufacturer would enter a currently empty produc t class market until the forecast market share for that product class reached 10%. For exam ple, DOE found no 1⁄2 horse power, two-pole CSCR motors currently available. If the simple logistic model predicts a 3% market share for CSCR motors in this class, DOE assumed that the ma rket share would remain zero. If the simple logistic model predicted a market share of 15% for CSCR motors in this class, DOE assumed that at least one manufacturer would enter the market in this class, and the CSCR market share would be 15%.

DOE then found the values of α , β , and δ that minimized the sum of the squares of the differences in market share (a “least squares” fi t) between the current ma rket and the model. The best-fit values of the model parameters are:

a DOE fit the 6 pole, 3⁄4 horsepower capacitor- start motor classes with their own value of δ . See the subsequent discussion.

9-16• α = 0.537 $/kWh

• β = 0.0249

• δ = $220.43

DOE found that the relationship between the cost factor and ma rket share for the 6 pole, 3⁄4 horsepower motor was a significant outlier compared with all other product class pairs. DOE fit the market share and cost factor for this class with a different value of δ , $277.74. Figure 9.4.4 shows the current and modeled market shares fo r each CSCR product class as a function of the best-fit cost factor. Table 9.4. 3 lists DOE’s estimated market share and the prediction of its market share model for each combination of horsepow er and number of poles, in the absence of standards.

-20%

0% 20% 40% 60% 80% 100% 120%

-5 -4 -3 -2 -1 0 1 2 3 4 5 6

Cost FactorMarket Share DOE Market Share Model

Current Estimated Market Share

Figure 9.4.4 Comparison of CSCR Market Share Between Current Market and DOE’s Logistic Model

9-17Table 9.4.3 CSCR Current Market Share and Model Comparison for Each Combination of Horsepower and Number of Poles

Motor Horsepower Six Poles Four Poles Two Poles Current CSCR Mkt. Share (%) Logistic Model Mkt. Share (%) Current CSCR Mkt. Share (%) Logistic Model Mkt. Share (%) Current CSCR Mkt. Share (%) Logistic Model Mkt. Share (%)
0.25 0.0 0.0 1.3 0.9 0.0 0.0 0.33 0.0 0.0 2.6 1.2 0.0 0.0 0.5 0.0 0.0 3.2 2.4 0.0 0.0 0.75 17.9 17.8 11.7 6.7 0.0 13.0

1 100.0 100.0 25.9 18.1 6.1 14.8 1.5

-- -- 68.3 64.3 64.9 49.4
2

-- -- 86.6 92.8 64.0 79.2 3

-- -- -- -- 86.1 98.4

DOE conducted an error analys is to determine the standard deviations for the values of α , β , and δ :

• Δα = 0.308 $/kWh

• Δβ = 0.0126

• Δδ = $114.95

DOE then used the standard deviation of δ to derive “high CSCR” and “low CSCR” scenarios, in addition to the be st fit “reference” scenario. These scenarios model the market share in the case that the “unfamiliarity cost” is sign ificantly lower (high CSCR model) or higher (low CSCR model) than the Departme nt’s reference case. Varying α or β does not result in a model with solely higher or lower CSCR market share (t hey change the relative behavior of different product classes within each moto r category), and the Department feels that its “high CSCR” and “low CSCR” scenarios span the range of likely market responses.

DOE used the modified logistic model deri ved based on the current market shares to forecast the market shares of CSIR and CS CR motors within each product class for each combination of possible energy efficiency standard s, including the 8 combinations examined as trial standard levels (TSLs). (See chapter 10 for description of the TSLs evaluated in the NOPR analysis.) For this reference market share forecast, DOE used the average price for motors in each product class, accounting for both space constr ained and space-unconstrained motors with a single price. DOE estimated that the market share transition w ould be complete by 2015, when the standard takes effect, due to motor ma nufacturer anticipation of customer demand. Error! Reference source not found. shows the total shipments of CSIR and CSCR motors during the analysis period corresponding to Department’s reference, “Low CSCR”, and “High CSCR” scenarios for each trial standard level. In chap ter 10, DOE presents the resulting energy savings and net present value corre sponding to each scenario.

9-18Table 9.4.4 Cumulative CSIR and CSCR Motor Shi pments (Millions) Between 2015 and 2045
Trial Standard Level Reference Scenario Low CSCR Scenario High CSCR Scenario CSIR CSCR CSIR CSCR CSIR CSCR No standard* 132.9 7.0 132.9 7.0 132.9 7.0
1 138.3 1.7 139.8 0.1 113.8 26.1
2 137.5 2.4 139.7 0.2 108.1 31.8 3 137.2 2.8 139.7 0.3 104.9 35.0
4 131.5 5.5 136.4 0.4 94.0 43.9 5 129.7 7.3 136.2 0.7 86.1 51.9
6 122.9 0.0 122.9 0.0 122.8 0.1
7 4.4 135.0 28.3 107.7 0.3 139.6 8 9.1 126.1 41.5 90.2 0.7 135.5

* DOE did not use its market share model to predict market shares in the b ase case; it used its current market share estimates.

The National Impact Analysis spreadsheet tool that accompanies this TSD provides shipment estimates for each product class in each year, under each of the TS Ls. The tool allows the user to select among several scenarios, in cluding the high- and low-CSCR scenarios (with user-adjustable transition time to the new market shares), different market and economic growth rates, and different mark et elasticity models.

9-19REFERENCES

1 National Electrical Ma nufacturers Association, Joint NEMA/SMMA Bulletin of US Sales of Selected Small Motors in 2000 , September 5, 2001.

2 DOE examined online catalogs for A.O. Smith, Baldor, Emerson, Leeson, Marathon, Weg, Lincoln, McMaster Carr and Regal-Belo it motors. A spreadsheet tool showing the collected motors and their characteri stics is available at <http://>.

3 The work by Easton Consultants is summarized in Appendix B of Determination Analysis Technical Support Document: Analys is of Energy Conservation Standards for Small Electric Motors , June 2006

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_tsd.pdf>

4 Determination Analysis Technical Support Do cument: Analysis of Energy Conservation Standards for Small Electric Motors , June 2006

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_tsd.pdf>

5 Energy Conservation Standards Rulemaki ng Framework Document for Small Electric
Motors

< http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_mo tors_framework_073007.pdf>

6 Transcript of Public Meeting on Energy Conservation Standards for Small Electric Motors, January 30, 2009,

< http://www1.eere.energy.gov/buildings/applian ce_standards/commercial/pdfs/transcript _small_motors_standards_meeting.pdf>

7 Joe Evans. PentAir Water Pumps, personal communication, March 5, 2009.

8 U.S. Census Bureau. Current Industrial Report MA 333P, Pumps (except hydraulic) and Compressors – 2007.

9 U.S. Census Bureau. Economic Census 2002, Industr y Statistics Sampler: NAICS 333922, Industrial and Commercial Fan and Blower Manufacturing.

< http://www.census.gov/econ/census02/data/industry/E333922.HTM > 10 See, for example, Roach Conveyors < www. roachconveyors.com>, or Material Flow and Conveyor Systems < www.materialflow.com > 11 U.S. Census Bureau. Economic Census 2002, Industr y Statistics Sampler: NAICS 333412, Industrial and Commercial Fan and Blower Manufacturing.

< http://www.census.gov/econ/census02/data/industry/E333412.HTM > 12 U.S. Department of Energy-En ergy Information Administration. Annual Energy Outlook 2010 Early Release , December, 2009. Washington, DC. <www.eia.doe.gov/oiaf/aeo>

13 U.S. Department of Energy- Energy Information Administration. Annual Energy Outlook 2009 with Projections to 2030 , March 2009. Washington, DC.

< www.eia.doe.gov/oiaf/aeo/pdf/0383(2009).pdf > 14 MG1 is a standards publication for electric motors and generators (MG) issued by NEMA and updated periodically. The version of MG1 explicitly cited in the legislation for the purposes of defining “small electric motors” is MG1-1987.

9-20CHAPTER 10: NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION

......................................................................................................... 10-1 10.2 BASE AND STANDARDS CASE E FFICIENCY DISTRIBUTIONS

........................ 10-2 10.2.1 Base Case Efficiency Distribution

..................................................................... 10-2 10.2.2 Standards Case Efficiency Distributions

........................................................... 10-3 10.3 NATIONAL ENERGY SAVINGS

............................................................................... 10-4 10.3.1 National Energy Savings Definition

.................................................................. 10-4 10.3.2 National Energy Savings Inputs

......................................................................... 10-5 10.3.2.1 Annual Energy Consumption per Unit

........................................................ 10-5 10.3.2.2 Shipments and Equipment Stock

................................................................. 10-7 10.3.2.3 National Annual Energy Consumption

........................................................ 10-7 10.3.2.4 Energy Site-to-Source Conversion Factors

.................................................. 10-8 10.4 NET PRESENT VALUE

............................................................................................. 10-10 10.4.1 Net Present Value Definition

........................................................................... 10-10 10.4.2 Net Present Value Inputs

................................................................................. 10-11 10.4.2.1 Total Installed Cost per Unit

...................................................................... 10-11 10.4.2.2 Annual Operating Cost Savings per Unit

................................................... 10-12 10.4.2.3 Total Annual Installed Cost Increases

....................................................... 10-12 10.4.2.4 Total Annual Operating Cost Savings

....................................................... 10-13 10.4.2.5 Discount Factors

........................................................................................ 10-13 10.4.2.6 Present Value of Costs

............................................................................... 10-13 10.4.2.7 Present Value of Savings

........................................................................... 10-14 10.5 TRIAL STANDARD LEVELS

................................................................................... 10-14 10.5.1 Polyphase Small Electric Motors

..................................................................... 10-14 10.5.2 Capacitor-Start Small Electric Motors

............................................................. 10-15 10.6 NATIONAL ENERGY SAVINGS AND N ET PRESENT VALUE RESULTS

........ 10-16 10.6.2 National Energy Savings Results

..................................................................... 10-17 10.6.3 Annual Costs and Savings

............................................................................... 10-18 10.6.4 Net Present Value Results

................................................................................ 10-19 10.6.5 Sensitivity of NES and NPV to Model Inputs

................................................. 10-20 10.6.6 Capacitor-Start Nationa l Impact Summary

...................................................... 10-23 10.6.7 Annualized National Impacts

........................................................................... 10-26

LIST OF TABLES

Table 10.2.1 Base Case Effi ciency Distributions

................................................................... 10-2 Table 10.2.2 Polyphase Motor Efficiency Mark et Shares in the Base and Standards Cases

.................................................................................................................. 10-3 Table 10.2.3 CSIR Motor Efficiency Market Shares in the Base and Standards Cases

......... 10-4 Table 10.2.4 CSCR Motor Efficiency Market Shares in the Base and Standards Cases

........ 10-4

10-iTable 10.3.1 National Ener gy Saving Inputs

.......................................................................... 10-5 Table 10.3.2 Small Electric Motors: Ship ment-Weighted Average Per-Unit Annual Energy Consumption in 2015 for Repr esentative Product Classes

................... 10-6 Table 10.4.1 Net Present Value Inputs

................................................................................. 10-11 Table 10.4.2 Small Electric Motors: Ship ment-Weighted Average Per-Unit Total Installed Cost in 2015 for Repres entative Product Classes

............................. 10-12 Table 10.5.1 Trial Standard Levels for Polyphase Small Electric Motors

........................... 10-15 Table 10.5.2 Trial Standard Levels for Ca pacitor-Start Small Electric Motors

................... 10-15 Table 10.6.1 Inputs to the Net Pr esent Value Calculation

.................................................... 10-17 Table 10.6.2 Polyphase Motors: Cumulative National Energy Savings Results

.................. 10-18 Table 10.6.3 Capacitor-Start Motors: Cumulative National Energy Savings Results

.......... 10-18 Table 10.6.4 Polyphase Motors: Cumulativ e Net Present Value Results

............................. 10-20 Table 10.6.5 Capacitor-Start Motors: Cumulative Net Present Value Results

..................... 10-20 Table 10.6.6 Undiscounted Cumulative National Energy Savings for Capacitor-Start Small Electric Motors Under Diffe rent CSIR/CSCR Market Share Scenarios (Energy Savings between 2015 and 2045)

...................................... 10-21 Table 10.6.7 Capacitor-Start Mo tors: Cumulative Net Present Value Results in the Low CSCR Scenario

................................................................................................ 10-22 Table 10.6.8 Capacitor-Start Mo tors: Cumulative Net Present Value Results in the High CSCR Scenario

................................................................................................ 10-22 Table 10.6.9 Location and Identification of Da ta for Each EL Combination in Tables 10.5.12 and 10.5.13

.......................................................................................... 10-24 Table 10.6.10 LCC and National Impact Summary for All Combinations of CapacitorTable 10.6.11 LCC and National Impact Summary for All Combinations of CapacitorStart Efficiency Leve ls, Part One*

................................................................... 10-24

Start Efficiency Levels, Part Two*

.................................................................. 10-25 Table 10.6.12 Annualized Costs and Benefits for Polyphase Small Electric Motors

............. 10-26 Table 10.6.13 Annualized Costs and Benefits for Capacitor-Start Small Electric Motors

..... 10-26

LIST OF FIGURES

Figure 10.3.1 Site-to-Source Conversion Factors for Electricity

............................................. 10-9 Figure 10.6.1 Non-Discounted Annual Installe d Cost Increases and Annual Operating Cost Savings for Polyphase Small Electric Motors, Trial Standard Level 4b

...................................................................................................................... 10-19

10-iiCHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the U.S. Departme nt of Energy (DOE)’s estimation of certain national impacts of potential ener gy conservation standards for sm all electric motors. Results described here include: (1) nati onal energy savings (NES) from possible trial standard levels (TSLs), (2) monetary value of the operating cost savings, (3) increa sed total installed costs of the considered products due to energy conservation standards, and (4) the net present value (NPV) of the difference between the value of operating cost savings and increased to tal installed costs.

DOE determined the NES and NPV for all of the energy efficiency levels considered for the three equipment categories of small electric motors considered for this rulemaking: (1) polyphase motors, (2) capacitor-start induction-ru n (CSIR), and (3) capacitor-start capacitor-run (CSCR) motors. DOE built a combined NES and NPV model for CSIR and CSCR motors, reflecting the fact that these motors may be us ed interchangeably in many applications. This model incorporates the shipments market share model for these motors detailed in Section 9.4. DOE performed all calculations for each of th e considered equipment categories using a Microsoft Excel spreadsheet model, which is accessible on the Internet (< http://www1.eere.energy.gov/buildi ngs/appliance_standards />). Th e spreadsheet models that contain the national impact analysis (NIA) co mbine the calculations for determining the NES and NPV with the relevant shipments models. Th e shipments analysis (see chapter 9) provides a detailed description of the shipments models that DOE used to forecast future purchases of the considered equipment.

The small electric motors covered by this ru lemaking and analysis constitute a fraction of all small electric motors in use throughout th e United States. In residential and commercial contexts, most motor energy is used by app liances or systems covered by other existing efficiency standards (such as refrigerators and air conditioners). DOE drew upon analysis conducted in 1999 1 to conclude that small electric motors less than or equal to 2 horsepower use approximately 300 TWh per year in the reside ntial sector and 150 TWh per year in the commercial sector. This energy consumption incl udes the useful work conducted by the motors in addition to losses. DOE assumed that energy us e by small motors in industrial and agricultural applications totals approximately half the use in commercial applications , or roughly 75 TWh per year. This analysis implies that total annual electricity use by small electric motors is approximately 525 TWh. Of this, DOE’s 1999 analysis indicates that roughl y 12% of residential small motor energy use and 25% of commercial small motor energy use are due to motors in applications not covered by other efficiency standards. DOE assumed that 95% of industrial and agricultural small motor energy use is due to moto rs not covered by other efficiency standards. This implies that motor energy use (including usef ul work and losses) by small electric motors not covered by other efficiency standards is approximately 145 TWh per year. DOE’s national energy savings analysis indicates that electric ity use by motors covered by this rulemaking is approximately 40 TWh per year (including useful work and losses). This is approximately 27%

10-1of the energy use by small electric motors not covered by other standards, and approximately 7% of the energy use by al l small electric motors.

10.2 BASE AND STANDARDS CASE EFFICIENCY DISTRIBUTIONS

This section describes the method DOE used to forecast the energy efficiencies of considered equipment under the base case and each of the potential standards cases. It provides efficiency distributions for the three equipment cat egories of small electric motors considered for this rulemaking.

10.2.1 Base Case Efficiency Distribution

DOE did not have access to motor shipment data as a function of efficiency for any product classes. DOE studied manufacturer catalogs to determine the current distribution of motor efficiency among the levels considered in this analysis. Not all motors listed in manufacturer catalogs included in formation regarding the motor’s full-load or nominal (NEMA) efficiency. Therefore, the Department used the number of models with a published efficiency rating as a proxy for the number of shipments. DOE did not develop separate efficiency distributions for each of the 62 product classes covered in this rulemaking. Instead, it used a single efficiency distribution for each motor category (polyphase, CS IR, and CSCR), derived from the distribution of models within each category.

Table 10.2.1 shows DOE’s estimated current efficiency distribution for polyphase, CSIR, and CSCR motors. DOE assumed that, in the abse nce of standards (the base case), this distribution would remain fi xed over the analysis period.

Table 10.2.1 Base Case Efficiency Distributions

Efficiency Market Share (%) Level Polyphase CSIR CSCR Baseline 54.0 40.0 37.0
1 6.0 30.0 33.0
2 13.0 13.0 4.0 3 7.0 15.0 11.0
4 12.0 2.0 11.0 5 5.0 0.0 0.0
6 3.0 0.0 4.0
7 0.0 0.0 0.0 8 0.0

- 0.0

10-210.2.2 Standards Case Efficiency Distributions

DOE used a simple “roll up” approach to for ecast efficiency distributions in the case of standards. That is, DOE assumed that motor cust omers who would have purchased motors with a rated efficiency below that of the minimum ef ficiency required by the standard would instead purchase motors which exactly met the standar d. Customers who would have purchased motors above the minimum required by the standard ar e unaffected, so the market shares in those efficiency levels remain unchanged.

Tables 10.2.2, 10.2.3, and 10.2.4 show the resu lting efficiency distributions the Department used for each standard s case. For example, in the case of a standard for polyphase motors at efficiency level 1, the 54 percent of pur chases at the baseline efficiency level would roll up to level 1, yielding a tota l share of 60 percent, while the shares above level 1 are unaffected.

Table 10.2.2 Polyphase Motor Efficiency Market Shares in the Base and Standards Cases Standard Case Efficiency Level Market Share (%) Baseline Effic. Level 1 Effic. Level 2 Effic. Level 3 Effic. Level 4 Effic. Level 5 (4b) Effic. Level 6 Effic. Level 7 Effic. Level 8 Baseline 54.0 6.0 13.0 7.0 12.0 5.0 3.0 0.0 0.0
1 0.0 60.0 13.0 7.0 12.0 5.0 3.0 0.0 0.0
2 0.0 0.0 73.0 7.0 12.0 5.0 3.0 0.0 0.0 3 0.0 0.0 0.0 80.0 12.0 5.0 3.0 0.0 0.0
4 0.0 0.0 0.0 0.0 92.0 5.0 3.0 0.0 0.0 4b 0.0 0.0 0.0 0.0 0.0 97.0 3.0 0.0 0.0 5 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0
6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0
7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

10-3Table 10.2.3 CSIR Motor Efficiency Market Shares in the Base and Standards Cases Standard Case Efficiency Level Market Share (%) Baseline Effic. Level 1 Effic. Level 2 Effic. Level 3 Effic. Level 4 Effic. Level 5 Effic. Level 6 Effic. Level 7

Baseline 40.0 30.0 13.0 15.0 2.0 0.0 0.0 0.0
1 0.0 70.0 13.0 15.0 2.0 0.0 0.0 0.0
2 0.0 0.0 83.0 15.0 2.0 0.0 0.0 0.0 3 0.0 0.0 0.0 98.0 2.0 0.0 0.0 0.0
4 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 5 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0
6 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0
7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

Table 10.2.4 CSCR Motor Efficiency Market Shares in the Base and Standards Cases

Standard Case Efficiency Level Market Share (%) Baseline Effic. Level 1 Effic. Level 2 Effic. Level 3 Effic. Level 4 Effic. Level 5 Effic. Level 6 Effic. Level 7 Effic. Level 8 Baseline 37.0 33.0 4.0 11.0 11.0 0.0 4.0 0.0 0.0
1 0.0 70.0 4.0 11.0 11.0 0.0 4.0 0.0 0.0
2 0.0 0.0 74.0 11.0 11.0 0.0 4.0 0.0 0.0 3 0.0 0.0 0.0 85.0 11.0 0.0 4.0 0.0 0.0
4 0.0 0.0 0.0 0.0 96.0 0.0 4.0 0.0 0.0 5 0.0 0.0 0.0 0.0 0.0 96.0 4.0 0.0 0.0
6 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0
7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

10.3 NATIONAL ENERGY SAVINGS

10.3.1 National Energy Savings Definition

DOE calculates annual NES in each year as the difference between energy consumption of the equipment stock using the average unit energy consumption ( UEC ) of the stock in the base case (without new standards) compared with a case with new standards.


## ( )
class = AffStock 

## ( y 

## )
class × UEC ( y ) base

, class − UEC ( y ) std

, class 

# ) NES y 

# (

Where:

10-4AffStock(y) class = the stock of equipment sold after the year of the standard that is still in operation in year y (the “affected stock”),

UEC(y) base class = the unit energy consumption in the base case in year y , and

UEC(y) std. class = the unit energy consumption in the standard case in year y

.
The affected stock in year y is given by



## ( ) y 

## ( ) × Surv 

## ( y

− i 

## ) AffStock y = 

## ∑ S i class class class
i = stdyr

The stock in year y is dependent on the number of shipments S(y) class in past years, multiplied by the survival function Surv(v) , the fraction of shipments surviving until age v (vintage). Only shipments occurring afte r the effective year of the standard ( stdyr ) are considered for the calculation of NES, since shipments before this date will not be affected by the standard, and thus will produce no savings.

Cumulative energy savings are the sum of the annual national energy savings over a defined time period (in this case, from 2015 until 2045):

2045 NES

cum = 

## ∑ NES 

## ( ) y

y = stdyr

10.3.2 National Energy Savings Inputs

Table 10.2.1 lists the inputs for the determination of national energy savings. The following sections discuss each input.

Table 10.3.1 National Energy Saving Inputs Annual Energy Consumption per Unit ( UEC ) Shipments Equipment Stock ( STOCK V

) National Annual Energy Consumption ( AEC ) Site-to-Source Conversion Factor ( src_conv )

10.3.2.1 Annual Energy Consumption per Unit

For each of the representative product classe s, DOE presented the per-unit annual energy consumption as a function of equipment energy e fficiency in the energy use determination (see chapter 7). Because the per-uni t annual energy consumption is directly dependent on energy

10-5efficiency, DOE used the base case and standa rds case shipment-weighted energy efficiencies presented above in section 10.2, in combination with the annual energy use data presented in the energy use determination (see chapter 7), to es timate the shipment-weight ed average annual perunit energy consumption under the base case an d standards cases for each of the three representative product classe s (4-pole 1 hp polyphase, 3⁄4 hp CSCR, and 1⁄2 hp CSIR).

DOE also used the power factor of its moto r designs in the repres entative product classes to determine the shipment-wei ghted reactive power requiremen ts of motors of varying efficiency. Reactive power is measured in Ki lovolt Amperes-reactive (kVAr). Table 10.3.2 shows the shipment-weighted a nnual energy use and reactive pow er for each of these product classes.

Table 10.3.2 Small Electric Motors: Shipment-We ighted Average Per-Unit Annual Energy Consumption in 2015 for Representative Product Classes

Product class Base Case Efficiency Level

1 2 3 4 5** 6** 7** 8**
Efficiency (%) 75.3 77.3 78.8 80.5 81.1 83.5 85.2 86.2 87.7

Polyphase 1 HP, 4 poles Annual Energy Use (kWh/yr)* 356 336 316 287 277 227 202 186 165

Reactive Power (kVAr) 0.98 0.93 0.91 0.84 0.84 0.83 0.80 0.78 0.87

Single Phase – CSIR, 1⁄2 HP, 4 poles Efficiency (%) 57.9 61.1 63.5 65.7 70.5 71.8 73.1 77.6

- Annual Energy Use (kWh/yr)* 534 502 464 421 335 310 279 219

-

Reactive Power (kVAr) 0.84 0.82 0.79 0.72 0.61 0.56 0.61 0.53

-

Single Phase – CSCR, 3⁄4 HP, 4 poles Efficiency (%) 71.4 75.1 79.5 81.7 82.8 84.0 84.6 86.7 87.9 Annual Energy Use (kWh/yr)* 378 354 277 244 251 239 217 185 154

Reactive Power (kVAr) 0.58 0.50 0.40 0.39 0.17 0.17 0.12 0.12 0.08

* Kilowatt hours per year, losses only. ** ELs 5-8 for polyphase motors are labeled elsewhere as ELs 4b, 5, 6, and 7.

DOE used the loss scaling relations detailed in chapter 5 to scale the losses from the representative product cla ss within each motor cate gory to each of the ot her product classes. In this way, the Department was able to devel op a shipment-weighted su m of all annual motor losses across each motor category (see section 10.3.2.3).

For some types of equipment, a “rebound effect” can occur when more efficient equipment is used more intensely in response to the economic savings from energy efficiency. Accounting for a rebound effect w ill decrease energy savings comp ared to a scenario with no rebound effect. Small electric motors are pre dominantly components of larger pieces of equipment or an integrated production proce ss. Typically, energy losses from inefficient

10-6operation of the larger equipment or process that contains a small electric motor are much greater than losses due to inefficiencies of the individual motor. In addition, cust omers rarely have direct control over the intensity of motor operation. Gi ven these considerations and a lack of data indicating a rebound effect for small electric motors, DOE assumed that there is no significant rebound effect for this equipment.

10.3.2.2 Shipments and Equipment Stock

An extensive description of the methodology for conducting and generating the shipments forecasts for each of the considered product classes can be found in chapter 9. The equipment stock in a given year is the number of motors shipped from earlier years that survive in the given year. The NIA models keep track of the number of units shipped each year. DOE assumes that the motors have an increasing probabili ty of retiring as they age. The probability of survival as a function of years- since-purchase is the survival f unction. Please refer to the life cycle cost analysis (see chapter 8) for further de tails on the motor lifetimes that DOE used in its analysis. In the NIA, DOE used shipment-wei ghted average energy use, corresponding roughly to average hours of operation. Therefore, in the NIA there is no explicit correlation between annual hours of operation and motor lifetime, as ther e is in the life- cycle cost analysis. DOE did, however, develop an “energy scal er” based on the results of th e LCC analysis, which accounts for the fact that motors with a longer lifetime are generally motors with fewer annual hours of operation, and therefore less annual energy use.

The survival function used in the NIA for each motor category is the aggregate survival function for motors within that category. Becau se DOE’s forecasts of shipments are based on economic drivers, rather than e xplicit replacements and growth within a particular customer base, motors with shorter lifetimes constitute a larger fraction of moto r shipments than they constitute of the installed motor stock. DOE uses the shipment-weighted annual energy consumption, adjusted by the “energy scaler”, which together account for the fact that these motors use a larger fraction of the energy than they constitute of the installed motor stock.

10.3.2.3 National Annual Energy Consumption

The national annual energy consumption (AEC ) is calculated in the base case and standards cases and is the produc t of the annual energy consumpti on per unit and the number of units of each vintage:



## ( )

= UEC 

## ( ) AEC y × Stock y class class class Where:

UEC class = the unit energy consumption for a given class

Stock(y) class = the stock of equipment in year y

10-7The Department summed the UEC for each pr oduct class within each motor category to determine the total energy used for each category of motors in each year during the analysis period.

10.3.2.4 Energy Site-to-Source Conversion Factors

In determining national annual energy sa vings, DOE initially calculated the annual energy consumption at the site (e.g., for elect ricity, the energy in kWh consumed at the household, commercial building, fa rm, or industrial faci lity). It then calcu lated primary (source) energy savings from site energy consumption by applying a conversion factor to account for losses associated with the generation, transmissi on, and distribution of el ectricity. The site-tosource conversion factor is the multiplicative fact or used for converting site energy consumption into primary or source energy cons umption, expressed in quads.

DOE used annual site-to-sour ce conversion factors based on the version of the National Energy Modeling System (NEMS) that corresponds to the American Recovery and Reinvestment Act scenario of the U.S. DOE/Energy Information Administration (EIA)’s Annual Energy Outlook 2009 (AEO2009). 2 The factors used are marginal va lues, which represent the response of the system to an incrementa l decrease in consumption. For el ectricity, the conversion factors vary over time, due to projecte d changes in generation source s (i.e., the power plant types projected to provide electricity to the country). NEMS outputs stop in 2030; DOE assumed that conversion factors remain constant at 2030 va lues throughout the remainder of the forecast period. Figure 10.2.1 shows the site-to-s ource conversion factors between 2005 and 2030 for electricity.

10-80 2000 4000 6000 8000 10000 12000 14000Btu/kWh

2005 2010 2015 2020 2025 2030
Year

Figure 10.3.1 Site-to-Source Conversion Factors for Electricity

DOE also developed an estimate of the ener gy losses in the transm ission and distribution system due to the reactive power needed by sm all electric motors. Reactive power is not consumed within the motor, but the necessary power must be generate d by utilities and is manifested as larger currents in the transmissi on and distribution system than would be required if every load required only activ e power (that is, had a power f actor of 1.0). The conversion factor between the reactive power (in giga-VAr) required by motors and the site requirements (primary energy) for that reactive power is:

PE = 

## ( RP × S 2 S × Loss × AvgHours 

## )

active trans reactive LossAdj mid

Where:
PE reactive = annual primary energy, in quads, requ ired to meet the reactive power load,
RP = reactive load, in GVAr, required by motors, S2S active = the site-to-source convers ion factor for active power,
Loss trans = 6.33%, the national average energy loss in transmission and distribution, AvgHours = the average annual hours of motor operation, and

10-9LossAdj mid = a conversion factor, equal to 1 + Loss , which accounts for the assignment of
trans transmission and distribution losses to the midpoint of the route between site and

source.

10.4 NET PRESENT VALUE

10.4.1 Net Present Value Definition

The NPV is the value in the present of a time series of costs and savings. The NPV is described by the equation:

NPV = 

# ∑ ( S ( y )

− C ( y ) 

## ) × DF ( y )

y

Where: S(y) = in year y , and C(y) = installation). DF(y) = value of operating cost savings (includi ng energy, repair, and maintenance costs)

value of increased total installed co sts (including equipment purchase cost and

discount factor in each year,

DOE calculated the total annual operating cost savings by multiplying the number or stock of the given product class ( by vintage) by its per-unit operati ng cost (also by vintage) in the base case and standards case, a nd subtracting to calculate the savings. DOE calculated the total annual installed cost increases by multiplying the number or stock of th e given product class (by vintage) by its per-unit total insta lled cost (also by vintage) in th e base case and standards case, and subtracting to calculate the increase. The calculation of th e annual operating costs savings and total annual installed cost increases is represented with the following equations:

OCS ( y ) = 

# ‡” UOCS ( y ) × AffStock ( y )

Δ TIC ( y ) = 

# ‡” UTIC ( y ) xS ( y )

Where:

OCS = total annual operating cost savings each year summed over vintages of the affected equipment stock, AffStock(y)

, Δ TIC = total annual installed cost increases each year summed ove r vintages of the affected equipment stock, AffStock(y)

, S(y) = stock of motors of vintage V surviving in the year fo r which DOE calculated annual energy consumption,

10-10UOCS(y) = annual operating cost sa vings per unit in year y, UTIC(y) = annual total installed cost increase per unit in year y, and

y = year in the forecast.

DOE calculated a discount factor from the di scount rate and the num ber of years between the “present” (i.e., year to wh ich the sum is being discounted

─ 2009 for all NPV quantities presented in this TSD) and the year in which the costs and savings occur. The NPV is the sum over time of the discounted net savings.

10.4.2 Net Present Value Inputs

Table 10.3.1 summarizes the inputs to the net present value calculation.

Table 10.4.1 Net Present Value Inputs Total Installed Cost per Unit Annual Operating Cost Savings per Unit

Total Annual Installed Cost Increases Total Annual Operating Costs

Discount Factor

Present Value of Costs Present Value of Savings

The increase in the total annual installed cost is equal to the annual change in the per-unit total installed cost (difference between each standards case and base case) multiplied by the shipments forecasted in the standards case.

The total annual operating cost savings are equal to the di fference in the annual operating costs between the base case and each st andards case, calculated by multiplying the cost to operate each unit by the ship ments forecasted in the base and standards cases. The annual operating cost includes energy, repair, and maintenance costs.

10.4.2.1 Total Installed Cost per Unit

For each of the representative product classes, DOE presented the per-unit total installed cost as a function of equipment energy effici ency in the life-cycle cost and payback period analysis (see chapter 8.) Because the per-unit total annual installed cost is directly dependent on energy efficiency, DOE used the base case a nd standards case shipment-weighted energy efficiencies presented above in section 10.2, in combination with the total installed costs presented in the life-cycle cost and payback pe riod analysis, to estimate the shipment-weighted average annual per-unit total in stalled cost under the base case and standards cases for each of the three representative product classes. These aver ages are shown in Table 10.4.2. As in the lifecycle cost analysis, DOE assumed that 20% of the motors were space-constrained.

10-11Table 10.4.2 Small Electric Motors: Shipment-Weighted Average Per-Unit Total Installed Cost in 2015 for Representative Product Classes

Product class Base Case Efficiency Level

1 2 3 4 5* 6* 7* 8*

Polyphase 1 HP, 4 poles Efficiency (%) 75.3 77.3 78.8 80.5 81.1 83.5 85.2 86.2 87.7

Total Installed Cost (2008$) $536 $543 $547 $556 $563 $591 $755 $770 $3,450

Single Phase – CSIR, 1⁄2 HP, 4 poles Efficiency (%) 57.9 61.1 63.5 65.7 70.5 71.8 73.1 77.6

-
Total Installed Cost (2008$) $501 $504 $509 $511 $528 $548 $592 $996

-

Single Phase –, CSCR, 3⁄4 HP, 4 poles Efficiency (%) 71.4 75.1 79.5 81.7 82.8 84.0 84.6 86.7 87.9

Total Installed Cost (2008$) $570 $573 $594 $602 $613 $630 $669 $696 $1,482

* ELs 5-8 for polyphase motors are labeled elsewhere as ELs 4b, 5, 6, and 7.

DOE used the price scaling rela tions derived in its life-cycle cost analysis (see chapter 8) to develop shipment-weighted average motor instal led costs for each product class. This allowed the Department to weight the total installed cost increases by the distribution of motor shipments across product classes.

As noted in section 10.2, DOE assumed that forecasted energy efficiencies in the base case and standards cases remain constant at the energy efficiency levels in the effective year. Therefore, because the per-unit to tal installed costs are a function of energy efficiency, DOE held the installed cost constant over the forecast period.

10.4.2.2 Annual Operating Cost Savings per Unit

The per-unit annual operating cost include s the energy, reactive power, repair, and maintenance costs. DOE determined the per-unit annual operating cost savings by taking the perunit annual energy consumption savings developed for each product class and multiplying it by the appropriate energy a nd reactive power prices.

DOE forecasted the per-unit annual energy consumption for the base case and each standards case by fixing the consumption at levels estimated for the effective year.

DOE forecasted energy prices based on the American Recovery and Reinvestment Act scenario of EIA’s AEO2009 . The energy prices and energy price trends are described in chapter 8.

10.4.2.3 Total Annual Installed Cost Increases

The total annual installed cost increase for any given standa rds case is the product of the total installed cost increase pe r unit due to the standard and the number of units shipped each

10-12year. The equation for determining the total annual inst alled cost increase for a given standards case was shown in section 10.4. 1 and is repeated here:

TIC ( y ) = 

# ‡” UTIC ( y ) xS ( y )

10.4.2.4 Total Annual Operating Cost Savings

The total annual operating cost savings for a ny given standards case is the product of the annual operating cost savings per unit due to th e standard and the number of units of each vintage. The equation for determining the total annual operating cost savings for a given standards case was shown in secti on 10.4.1 and is repeated here:

OCS ( y ) = 

# ‡” UOCS ( y ) × AffStock ( y )

10.4.2.5 Discount Factors

DOE multiplies monetary values in future years by a discount factor to determine the present value. The discount factor (DF) is described by the equation:

1 DF =

_ ( y yp ) ( 1+ r )
Where:

r

= discount rate,

y = year of the monetary value, and

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

DOE estimated national impacts with both a three-percent and a seven-percent real discount rate. It used these discount rates in accordance with the Office of Management and Budget (OMB)’s guidance to Federa l agencies on the development of regulatory analysis (OMB Circular A-4, September 17, 2003), and section E., “Identifying and Measuring Benefits and Costs,” therein. DOE defines the present year as 2009.

10.4.2.6 Present Value of Costs

The present value of increased installed costs is the annual installed cost increase in each year (i.e., the difference between the standards ca se and base case), discounted to the present, and summed for the time period over which DOE is considering the installation of equipment (i.e., from the effective date of energy conservation standards through 30 years later).

The increase in total installed cost refers to both equipment purchase cost and installation cost associated with the higher energy efficiency of products purchased in the standards case

10-13compared to the base case. DOE calculated annual increases in in stalled costs as the difference between the total installed cost for all new produc ts purchased each year in the base case and in the standards case. (DOE assumed that total moto r sales were inelastic – see section 9.4.1 – so that total shipments are unchanged be tween the base and standards cases.)

10.4.2.7 Present Value of Savings

The present value of operating cost savings is the annual operating cost savings (i.e., the difference between the base case and standards case) discounted to the present, and summed over the period from the effective date to the time when the last unit installed is retired from service.

Savings are decreases in ope rating costs (including energy, repair, and maintenance costs) associated with the highe r energy efficiency of equipmen t purchased in a standards case compared to the base case. Total annual operating cost savings are the savings per unit multiplied by the number of units of each vintage surviving in a particular year. Equipment consumes energy over its entire lifetime, a nd for units purchased in the last year, the consumption includes energy consumed until the unit is retired from service.

10.5 TRIAL STANDARD LEVELS

DOE generated NES and NPV results based on tr ial standard levels (TSLs). The TSLs are based on the following: (1) efficiency levels corresponding to designs of motors in representative product classes, characterized in the engineering analysis, (2) the efficiency level identified with the maximum efficiency, and (3) a combination of efficiency levels for different product categories that have potentially positive impacts on consumers and the Nation. The efficiency levels considered were those analyzed in the engineering analysis (chapter 5), for which the Department designed motors utilizing technologically feasible desi gn options. The Department analyzed the national impacts of a set of trial standa rd levels (TSLs) for polyphase motors and a set of TSLs for capacitor-start motors.

10.5.1 Polyphase Small Electric Motors

The polyphase TSLs, listed in Table 10.5.1, co rrespond to the efficiency levels described in the engineering analysis (chapter 5) and life -cycle cost analysis (chapter 8). DOE used the price and energy use relations de veloped in the engineering and LCC analyses to assign costs and efficiencies to motors in pr oduct classes other than the representative product class (4 poles, 1 horsepower).

10-14Table 10.5.1 Trial Standard Levels for Polyphase Small Electric Motors

Trial Standard Level Efficiency Level 4 pole, 1 Hp Full Load Efficiency %
1 1 75.3
2 2 77.3 3 3 78.8
4 4 80.5 4b 4b 81.1 5 5 83.5
6 6 85.2
7** 7 86.2 *Standard levels are expressed in terms of full-load efficiency. ** Maximum technologically feasible efficiency level

10.5.2 Capacitor-Start Small Electric Motors

Trial standard levels for capacitor-start motors are composed of efficiency level standards for both CSIR and CSCR motors. The Department chose to analyze a subset of all possible combinations of CSIR and CSCR efficiency levels as its TSLs for capacitor-start motors. Table 10.5.2 shows the combinations the Department selected.

Table 10.5.2 Trial Standard Levels for Capacitor-Start Small Electric Motors
Trial Standard

Level CSIR Efficiency Level CSIR 4 pole 0.50 Hp Full Load Efficiency % CSCR Efficiency Level CSCR 4 pole 0.75 Hp Full Load Efficiency %
1 4 70.5 2 79.5
2 4 70.5 3 81.7 3 5 71.8 3 81.7
4 6 73.1 4 82.8 5 6 73.1 3 81.7 6** 7 77.6 8 87.9

7 7 77.6 3 81.7 8 7 77.6 7 86.7 *Standard Levels are expressed in terms of full-load efficiency. ** Maximum technologically feasible efficiency levels

Trial standard level 1 corresponds to an effi ciency level combination considered by motor manufacturers to be comparable to the EPACT 1992 efficiencies for polyphase medium motors. It consists of the combination of efficiency le vel 4 for CSIR motors and efficiency level 2 for CSCR motors.

TSL 2 consists of the combination of EL 4 for CSIR motors and EL 3 for CSCR motors. This combination has the highest energy savings and net present value of any level combination utilizing CSIR EL 4.

10-15TSL 3 consists of the combination of EL 5 for CSIR motors and EL 3 for CSCR motors. This combination has the highest energy savings and net present value of any level combination utilizing CSIR EL 5.

TSL 4 consists of the combination of EL 6 for CSIR motors and EL 4 for CSCR motors. In the “High CSCR” sensitivity case, TSL 4 has the highest energy savings of any level combination utilizing CSIR EL 6.

TSL 5 consists of the combination of EL 6 for CSIR motors and EL 3 for CSCR motors. In the Departments’ reference scenarios, TSL 5 has the highest energy savings and net present value of any level combination utilizing CSIR EL 6. This combination is considered by motor manufacturers to be comparable to NEMA Pr emium efficiency levels for polyphase medium

motors.

TSL 6 consists of the combination of EL 7 for CSIR motors and EL 8 for CSCR motors. These levels are the maximum technologically feasible levels for both motor categories.

TSL 7 consists of the combination of EL 7 for CSIR motors and EL 3 for CSCR motors. TSL 7 has the highest net present value of any level combination utilizing CSIR EL 7. Under some sensitivity scenarios, as well as the Depa rtment’s reference scenario with a 3% discount rate, this level has the highest NPV of any comb ination of CSIR and CSCR efficiency levels.

TSL 8 consists of the combination of EL 7 for CSIR motors and EL 7 for CSCR motors. This combination exhibits the greatest energy savings of any combination of CSIR and CSCR efficiency levels.

Section 10.6.6 discusses national impact resu lts for all possible combinations of CSIR and CSCR efficiency levels, includi ng those not selected as TSLs.

10.6 NATIONAL ENERGY SA VINGS AND NET PRES ENT VALUE RESULTS

The NIA model provides estimates of the NES and NPV for standards set at various efficiency levels. The inputs to the NIA model ha ve been discussed earlier in sections 10.3.2 (NES Inputs) and 10.4.2 (NPV Inputs). DOE generated the NES and NPV results using a Microsoft Excel spreadsheet, which is accessible on the Internet ( http://www1.eere.energy.gov/build ings/appliance_standards/commercial/small_electric_motors.html ). Details and instructions for using the spread sheet are provided in Appendix 10-A, User Instructions for National Impact Analysis Spreadsheet.

Table 10.6.1summarizes the inputs to the NIA model.

10-16Table 10.6.1 Inputs to the Net Present Value Calculation
Input Data Description Shipments Annual shipments for each product class from shipments model. (See chapter 9.)

Effective Date of Standard 2015 Base Case Forecasted Energy Consumption Shipment- weighted unit energy consum ption (UEC), based on efficiency and hours of operation Standards Case Energy Consumption The UEC for each standards case, based on efficiency and hours of operation. Annual Energy Consumption per Unit Annual weighted-average values for each product class are a function of shipment-weighted UEC. Total Installed Cost per Unit Annual weighted-average values for each product class are a function of efficiency level. Energy Cost per Unit Annual weighted-average values are a function of the annual UEC and energy prices. (See chapters 7 and 8.) Repair Cost and Maintenance Cost per Unit Annual values are constant, and not a function of efficiency level. (See chapter 8.) Trend in Energy Prices Based on EIA AEO2010 forecasts (to 2035) and extrapolation to 2065. (See chapter 8.)

Energy Site-to-Source Conversion Factor Conversion varies yearly and is generated by DOE/EIA’s NEMS* program (a time series conversion factor; includes electric generation, transmission, and distribution losses).

Discount Rate 3 percent and 7 percent real.

Present Year Future expenses are discounted to year 2010.

* Chapter 13 on the Utility Impact Analysis and the Envi ronmental Assessment Report (Chapter 15) provide more

detail on NEMS.

10.6.2 National Energy Savings Results

The following sections provide NES result s for the standards cases analyzed for polyphase and capacitor-start motors. NES resu lts are cumulative to 2045 and are shown as primary energy savings. DOE based the inputs to the NIA model on weighted-average values, yielding results that are discrete point values, rath er than a distribution of values as in the lifecycle cost and payback period analysis.

Table 10.6.2 and Table 10.6.3 show the NES re sults for the trial standard levels (TSLs) analyzed for small electric motors. For polyphase motors, the TSLs correspond to the efficiency levels analyzed in the engineering and LCC analyses. For capacitor-start motors, the TSLs consist of combinations of efficiency levels for CSIR and CSCR motors, as shown in Table 10.6.3.

10-17Table 10.6.2 Polyphase Motors: Cumulative National Energy Savings Results

Trial standard level National Energy Savings (quads)*

Not Discounted Discounted at 3% Discounted at 7%

1 0.05 0.03 0.01
2 0.09 0.05 0.02 3 0.17 0.09 0.04
4 0.19 0.10 0.05 4b 0.29 0.15 0.07 5 0.34 0.18 0.09
6 0.37 0.19 0.09
7 0.37 0.20 0.09
* Quadrillion British thermal units.

Table 10.6.3 Capacitor-Start Motors: Cumulative National Energy Savings Results
Trial standard level CSIR Efficiency Level CSCR Efficiency Level National Energy Savings (quads)

Not Discounted Discounted at 3% Discounted at 7%
1 4 2 1.18 0.63 0.31 2 4 3 1.19 0.64 0.31 3 5 3 1.36 0.73 0.36 4 6 4 1.47 0.79 0.39 5 6 3 1.47 0.79 0.39 6 7 8 1.61 0.87 0.43 7 7 3 1.91 1.03 0.51 8 7 7 2.33 1.25 0.62

10.6.3 Annual Costs and Savings

To illustrate the basic inputs to the NP V calculations, Figure 10.6.1 presents the nondiscounted annual installed cost in creases and annual operating cost savings at the national level for TSL 4b for polyphase small electric motors. Th e figure also shows the net savings, which is the difference between the savings and costs for e ach year. The annual equipment cost is the sum of the increase in the total installed cost fo r equipment purchased each year over the forecast period. The annual operating cost savings is the savings in operating costs for equipment operating in each year. The NPV is the difference between the cumulative annual discounted savings and the cumulative annual discounted co sts. DOE could create figures like the one shown below for each of the considered standards cases for each product class.

10-18-0.1 -0.075

-0.05 -0.025 0 0.025

0.05 0.075 0.1 0.125

0.15 0.175 0.2 0.225

0.25

2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065Billions of 2009$ Operating Cost Savings Equipment Cost Net Savings

Figure 10.6.1 Non-Discounted Annual Installed Cost Increases and Annual Operating Cost Savings for Polyphase Small Electric Motors, Trial Standard Level 4b

10.6.4 Net Present Value Results

The following sections provide NPV results for the TSLs analyzed for small electric motors. Results are cumulative and are shown as the discounted value of the net savings in dollar terms. DOE based the inputs to th e NIA model on weighted-average values, yielding results that are discrete point values, rather than a distribution of values as in the life-cycle cost and payback period analysis.

The present value of increased total installed costs is th e total annual installed cost increase (i.e., the difference between the standard s case and base case), discounted to the present, and summed over the time period in which DOE evaluates the impact of energy conservation standards. Savings are decreases in operating cost s associated with the higher energy efficiency of equipment purchased in the standards cases co mpared to the base case. Total operating cost savings are the savings per unit multiplied by the numb er of units of each vintage (i.e., the year of manufacture) surviving in a particular year. For units purchased up through the final year (2045), the operating cost includes energy consumed until the last unit is retired from service.

10-19Table 10.6.4 and Table 10.6.5 show the NPV re sults for the trial standard levels analyzed for small electric motors. The highest TSL that has a positive NPV for bot h discount rates is TSL 5 for polyphase motors and TSL 7 for capacitor-start motors.

Table 10.6.4 Polyphase Motors: Cumulative Net Present Value Results
Trial Net Present Value (billion 2008$) Standard

Level 7% Discount Rate 3% Discount Rate
1 0.10 0.26 2 0.22 0.55 3 0.41 1.01 4 0.42 1.05 4b 0.54 1.44 5 0.16 0.77 6 -0.22 0.06 7 -6.82 -12.65

Table 10.6.5 Capacitor-Start Motors: Cumulati ve Net Present Value Results
Trial CSIR CSCR Net Present Value (billion 2008$) Standard

Level Efficiency Level Efficiency Level 7% Discount Rate 3% Discount Rate
1 4 2 3.01 7.03
2 4 3 3.05 7.13 3 5 3 2.83 6.87
4 6 4 1.97 5.35 5 6 3 2.08 5.57
6 7 8 -9.29 -16.23
7 7 3 4.74 11.08 8 7 7 3.03 8.14

10.6.5 Sensitivity of NES and NPV to Model Inputs

The Department analyzed the effects of va riation in many inputs to its NIA model. For both polyphase and capacitor-start mo tors, DOE analyzed four shipment growth scenarios, four electricity price forecasts, three shipment elastic ity scenarios (see section 9.4.1), and three ways of accounting for reactive power charges. For ca pacitor-start motors, the Department also analyzed the impact of varia tion in the parameters of its CSIR-CSCR market share model (described in chapter 9). Appendix 10C shows the sensitivity of NES and NPV results (as well as each of their constituent parts) to these differe nt inputs. The appendix includes capacitor-start sensitivity results with a market share transi tion that begins in 2015 and is complete by 2025. The spreadsheet tool allows the user to choose any combination of the scenarios whose results are included in the appendix, including a longer market share transition time.

10-20Table 10.6.6 through Table 10.6.8 show the re sults of the NES and NPV calculations in the Low CSCR and High CSCR alternative scenarios. The High CSCR and Low CSCR scenarios have significant differences from the reference case on the magnitude (and in some cases the sign) of the NES and NPV results. The Hi gh CSCR and Low CSCR scenarios correspond to changing the “unfamiliarity cost” associated wi th CSCR motors; this cost is the parameter δ in the market share model described in section 9.4. 4. The Department’s reference case is based on the value for this parameter which best fits the current market share of CSCR motors in different product classes, $220. The Low CSCR scenario is based on a value for this parameter which is higher by one standard deviation ($335), and the High CSCR scenario is based on a value for this parameter which is lower by one standard devi ation ($105). All three sc enarios use the same values for the installed costs and motor losses, but their forecasts regarding resulting customer behavior in response to standards differ. CSCR motors are commonly more efficient than CSIR motors, particularly for larger motors. The High CSCR scenario, which models a market in which more customers switch from CSIR to CSCR motors than in the reference case, has higher energy savings. The Low CSCR scenario, in contrast, shows smaller energy savings.

DOE’s uncertainty in this model is the larg est uncertainty in its modeling of the NES and NPV for capacitor-start motors, so the results of th ese alternative scenarios are presented here to demonstrate the effect of this uncertainty on the national results of the analysis.

Table 10.6.6 Undiscounted Cumulative National Energy Savings for Capacitor-Start Small Electric Motors Under Different CSIR/CSCR Market Share Scenarios (Energy Savings between 2015 and 2045)

Trial Standard Level National Energy Savings (quads) Low CSCR

Scenario Reference Scenario High CSCR Scenario
1 1.17 1.18 1.30
2 1.17 1.19 1.38 3 1.34 1.36 1.52
4 1.43 1.47 1.67 5 1.43 1.47 1.65
6 1.61 1.61 1.62
7 1.87 1.91 1.92 8 2.17 2.33 2.37

For many customers, particularly those us ing more powerful motors, CSCR motors are not only more efficient but also more cost eff ective. The High CSCR scenario models a market in which motor customers feel smaller barriers to switch to CSCR motors, and it has a higher NPV for each trial standard level than the reference case, whereas the Low CSCR scenario has a lower NPV.

10-21Table 10.6.7 Capacitor-Start Motors: Cumulative Net Present Value Results in the Low CSCR Scenario

Trial Standard Level Net Present Value (billion 2008$)
7% discount rate 3% discount rate
1 2.95 6.90
2 2.95 6.92 3 2.71 6.63
4 1.70 4.81 5 1.72 4.84
6 -9.30 -16.23
7 2.75 7.21 8 0.52 3.17

Table 10.6.8 Capacitor-Start Motors: Cumulative Net Present Value Results in the High CSCR Scenario

Trial Standard Level Net Present Value (billion 2008$)
7% discount rate 3% discount rate
1 3.54 8.17
2 3.76 8.68 3 3.66 8.63
4 3.13 7.73 5 3.41 8.30
6 -9.29 -16.22
7 5.05 11.70 8 3.61 9.30

Electricity prices have an impact on th e national net present value of an energy conservation standard. The Department considered four electricity price forecasts. Its reference scenario is based on the electricity price forecast in the Early Release case of AEO2010 3 , and it developed low- and high-energy price scenarios based on the ra tio between the low- and highenergy prices presented in the AEO2009 March Release 4 and the reference case in that release. Energy savings and NPV for these scenarios are presented in Appendix C to this chapter.

DOE explored the sensitivity of its NES and NPV results to each of the model inputs, and also developed alternative scenarios correspondin g to the data submitted by NEMA in its public comments on the NOPR analysis for this rulemaki ng. This alternate data included different motor applications, a different di stribution of motors in sectors of the economy, and different hours of operation than DOE’s reference case. Using the data submitted by NEMA increases life-cycle costs for polyphase and CSCR motor us ers, but decreases lifecycle costs for CSIR motor users. Using the NEMA assumptions, DOE estimates there would be a net increase in national benefits from the standa rds promulgated in today’s, with energy savings increasing from 2.20 to 2.68 quads, and NPV increasing from $12. 52 to $19.75 billion, using a 3 percent discount

rate.

10-22In addition, NEMA data from a survey of OEMs indicated that 95% of OEMs face some sort of space constraint, and that 62% would f ace significant expense if the motors they use change size. DOE examined scenarios using NEMA s distributions for app lications, sectors, and hours of operation, with a space-constrained fr action equal to 20%, 62% and 95%. The increase in the fraction of motors that face space constraints has little impact on the national impacts for capacitor-start motors because at the capacitor-star t efficiency levels in today’s rule (TSL 7), DOE estimates that 97 percent of the CSIR mark et will migrate to CSCR motors assuming only 20 percent of the market is space-constrained . Therefore, increasing the assumption of the fraction of space-constrained CSIR motors to 95-p ercent only affects the 3-percent of the CSIR market that had not already migrated to CSCR mo tors under DOE’s referen ce case, and has little effect on the estimates of national energy savi ngs. The NES and NPV results corresponding to these scenarios are presented in Appendix C to this chapter, along with the results of a number of other sensitivity calculations.

10.6.6 Capacitor-Start National Impact Summary

DOE analyzed 8 TSLs for capacitor-start motors in detail, each made up of efficiency level requirements for both CSIR and CSCR mo tors. Table 10.6.10 and Table 10.6.11 show the national impacts, along with the life-cycle cost results, for each possible pair of CSIR and CSCR efficiency levels (a total of 63 combinations). For each combination, the tables show: (1) the National Energy Savings, (2) the average LCC savi ngs for the CSIR and CSCR level, and (3) the Net Present Value of a standard at that combinat ion of efficiency levels , at both a 3% and 7% discount rate. Table 10.6.9 acts as a key to Table 10.6.10 and Ta ble 10.6.11. These tables are provided only for the shipments forecast scenario with a 10-year market sh are shift, taking place from 2015 to 2025. This table may be generated fo r any user-selected scenario in the national impact spreadsheet model.

10-23Table 10.6.9Location and Identification of Data for Each EL Combination in Tables 10.5.12 and 10.5.13NPV at 3%NPV at 7%Discount Rate(Billions ofDiscount Rate(Billions ofAverage CSCR LCC Savings (2008$)2008$)2008$)Average CSIR LCC Savings (2008$)National Energy Savings (Quads)Table 10.6.10LCC and National Impact Summary for All Combinationsof Capacitor-Start Efficiency Levels, Part One*CSCRBaselineEL 1EL 2EL 3EL 4

CSIRBaseline0.000.00$0.000.580.26$12.311.780.79$21.072.571.13$24.501.930.84$10.96$0.000.00$0.000.08$0.000.26$0.000.38$0.000.32EL 11.010.44$0.001.360.59$12.312.351.03$21.072.901.27$24.502.471.08$10.96$18.830.16$18.830.20$18.830.35$18.830.43$18.830.40EL 22.270.98$0.002.411.04$12.313.141.36$21.073.611.57$24.503.241.40$10.96$31.080.35$31.080.37$31.080.48$31.080.55$31.080.51EL 34.101.79$0.004.181.82$12.314.511.97$21.074.872.13$24.504.561.99$10.96$46.400.62$46.400.63$46.400.67$46.400.73$46.400.69EL 46.922.95$0.006.932.96$12.317.033.01$21.077.133.05$24.507.063.02$10.96$58.271.16$58.271.17$58.271.18$58.271.19$58.271.19EL 56.642.72$0.006.662.73$12.316.772.78$21.076.872.83$24.506.792.79$10.96$47.151.34$47.151.34$47.151.35$47.151.36$47.151.36EL 64.981.80$0.005.061.84$12.315.361.98$21.075.572.08$24.505.351.97$10.96$13.431.42$13.431.43$13.431.45$13.431.47$13.431.47EL 76.202.63$0.007.363.15$12.3110.024.29$21.0711.084.74$24.5010.574.45$10.96($370.06)1.11($370.06)1.29($370.06)1.73($370.06)1.91($370.06)2.05*Levels selected by the Department as Trial Standard Levels are shown with light gray backgrounds and bold text. Negative numbers are shown in parentheses.10-24Table 10.6.11LCC and National Impact Summary for All Combinationsof Capacitor-Start Efficiency Levels, Part Two*CSCREL 5EL 6EL 7EL 8

CSIRBaseline1.660.71($2.93)1.050.43($35.55)1.100.44($51.85)-0.87-0.39($829.71)$0.000.30$0.000.23$0.000.25$0.00(0.10)EL 12.210.95($2.93)1.800.76($35.55)1.840.77($51.85)0.440.18($829.71)$18.830.37$18.830.33$18.830.34$18.830.09EL 23.111.34($2.93)2.821.20($35.55)2.861.22($51.85)1.950.83($829.71)$31.080.50$31.080.47$31.080.48$31.080.32EL 34.491.96($2.93)4.351.89($35.55)4.381.90($51.85)3.991.74($829.71)$46.400.69$46.400.67$46.400.68$46.400.61EL 47.033.00($2.93)6.972.98($35.55)6.992.99($51.85)6.892.94($829.71)$58.271.18$58.271.18$58.271.18$58.271.16EL 56.752.77($2.93)6.682.74($35.55)6.702.74($51.85)6.602.70($829.71)$47.151.35$47.151.35$47.151.35$47.151.34EL 65.221.90($2.93)4.971.78($35.55)4.981.78($51.85)4.741.67($829.71)$13.431.46$13.431.45$13.431.45$13.431.43EL 79.874.05($2.93)8.363.22($35.55)8.143.03($51.85)-16.23-9.29($829.71)($370.06)2.10($370.06)2.21($370.06)2.33($370.06)1.61*Levels selected by the Department as Trial Standard Levels are shown with light gray backgrounds and bold text. Negative numbers are shown in parentheses.10-2510.6.7 Annualized National Impacts

DOE calculated an annualized summary of natio nal impacts for each trial standard level. These annualized values were calculated by determ ining the annual values of future equipment cost increases and operating cost savings di stributed evenly among the years 2015 to 2045 (31 years total) which would have the same NPVs as the increases in costs a nd decrease in operating expenses caused by the trial standard levels.

Table 10.6.12 shows the annualized costs, be nefits, and net benefit for each of the 7 polyphase trial standard levels . Table 10.6.13 shows the annualized national impacts for capacitor-start motors.

Table 10.6.12 Annualized Costs and Benefits for Polyphase Small Electric Motors

Trial Standard Level Ann. Equip. Cost Increase (million $2008) Ann. Op. Cost Savings (million $2008) Annualized Net Benefit (million $2008)
7% disc.
rate 3% disc.
rate 7% disc.
rate 3% disc.
rate 7% disc.
rate 3% disc.
rate 1 7.2 7.2 18.8 22.4 11.6 15.2
2 11.7 11.7 36.6 43.6 24.9 31.9 3 20.6 20.6 66.6 79.4 46.0 58.8
4 27.8 27.8 74.4 88.6 46.6 60.9 4b 57.0 57.0 118.0 140.5 61.0 83.5 5 122.6 122.5 140.5 167.3 18.0 44.9
6 175.1 175.0 149.9 178.5 -25.2 3.6
7 921.5 920.8 157.8 187.8 -763.7 -733.0

Table 10.6.13 Annualized Costs and Benefits for Ca pacitor-Start Small Electric Motors

Trial Standard Level Ann. Equip. Cost Increase (million $2008) Ann. Op. Cost Savings (million $2008) Annualized Net Benefit (million $2008)
7% disc.
rate 3% disc.
rate 7% disc.
rate 3% disc.
rate 7% disc. rate 3% disc. rate

1 129.6 129.5 466.4 537.2 336.7 407.7
2 129.3 129.2 471.1 542.6 341.8 413.4 3 218.0 217.8 535.0 616.3 317.1 398.5 4 368.8 368.5 589.3 678.8 220.5 310.3 5 359.1 358.8 591.8 681.6 232.7 322.8 6 1688.5 1687.2 648.3 746.7 -1040.2 -940.4 7 206.9 206.7 737.1 849.1 530.3 642.4 8 533.5 533.1 872.2 1004.7 338.7 471.6

10-26REFERENCES

1. U.S. Department of Energy. Opportunities for Energy Sav ings in the Residential and Commercial Sectors with High-Efficiency Electric Motor , December, 1999. Washngton, DC.

2. U.S. Department of Energy- Energy Information Administration. An Updated Annual Energy Outlook 2009 Reference Case Reflect ing Provisions of the American Recovery and Reinvestment Act and Recent Changes in the Economic Outlook , April, 2009. Washington, DC. SR/OIAF/2009-03.

< http://www.eia.doe.gov/oiaf/servic erpt/stimulus/pdf/sroiaf(2009)03.pdf >

3. U.S. Department of Energy- Energy Information Administration. Annual Energy Outlook 2010 Early Release , December, 2009. Washington, DC. <www.eia.doe.gov/oiaf/aeo>

4. U.S. Department of Energy- Energy Information Administration. Annual Energy Outlook 2009 with Projections to 2030 , March 2009. Washington, DC.

< www.eia.doe.gov/oiaf/aeo/pdf/0383(2009).pdf >

10-27CHAPTER 11. LIFE-CYCLE CO ST SUBGROUP ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION

......................................................................................................... 11-1 11.2 SMALL ELECTRIC MOTOR CU STOMER SUBGROUPS

....................................... 11-1 11.2.1 Inputs to the Subgroup Analysis for Customers with and without Space Constraints

.................................................................................................................... . 11-1 11.2.2 Inputs to the Subgroup Analysis for Small Businesses

................................................. 11-2 11.3 RESULTS FOR SMALL ELECTRIC MOTOR SUBGROUPS

................................... 11-3

LIST OF TABLES

Table 11.2.1 Discount Rate Difference Between Small Company and Market Average

....... 11-3Table 11.3.1 Polyphase Small Electric Motors: LCC and PBP Results for SpaceConstrained Customers

...................................................................................... 11-4Table 11.3.2 Polyphase Small Electric Motors: LCC and PBP Results for Non-SpaceConstrained Customers

...................................................................................... 11-4 Table 11.3.3 Polyphase Small Electric Moto rs: LCC and PBP Results for Small Companies

.......................................................................................................... 11-5 Table 11.3.4 Capacitor-Start Induction-Run Small Electric Motors: LCC and PBP Results for Space-Constrained Customers

......................................................... 11-5 Table 11.3.5 Capacitor-Start Induction-Run Small Electric Motors: LCC and PBP Results for Non-Space-Constrained Customers

................................................. 11-6 Table 11.3.6 Capacitor-Start Induction-Run Small Electric Motors: LCC and PBP Results for Small Companies

............................................................................. 11-6 Table 11.3.7 Capacitor-Start Capacitor-Run Small Electri c Motors: LCC and PBP Results for Space-Constrained Customers

......................................................... 11-7 Table 11.3.8 Capacitor-Start Capacitor-Run Small Electri c Motors: LCC and PBP Results for Non-Space-Constrained Customers

................................................. 11-7 Table 11.3.9 Capacitor-Start Capacitor-Run Small Electri c Motors: LCC and PBP Results for Small Companies

............................................................................. 11-8

11-iCHAPTER 11. LIFE-CYCLE COST SU BGROUP ANALYSIS

11.1 INTRODUCTION

Chapter 8 describes the life -cycle cost (LCC) and payback period (PBP) analysis that examines impacts of energy conservation standard s on purchasers of the affected products. In analyzing the potential impact of new or amen ded standards on residential, industrial, and commercial customers, DOE further evaluates th e impact on identifiable groups of customers (i.e., subgroups) that may be disproportionately affected by a national standard level. The LCC subgroup analysis evaluates impacts by anal yzing the LCC and PBPs for subgroups of customers. For its analysis of small electric motors, DOE identified three customer subgroups: small businesses and customers with and without space constraints restri cting their choice of

motor.

Because DOE did not conduct its LCC and PBP analysis with a sample of small motor users, it did not develop speci fic subgroup samples for the subgroup analysis. Instead, it varied certain inputs to the LCC and PBP calculations in order to approximate the impacts of potential standards on the considered subgr oups. This chapter de scribes the subgroup an alysis in further detail and gives the results of the LCC a nd PBP analyses for the considered subgroups.

11.2 SMALL ELECTRIC MOTO R CUSTOMER SUBGROUPS

DOE considered three subgroups for the L CC and PBP analyses for small electric motors: (1) customers facing spac e constraints in their motor in stallation, (2) customers without space constraints in their motor inst allation, and (3) small businesses.

For customers with space constraints, DOE analyzed the potential impacts of standards by conducting the analysis with motor designs cons trained to a stack leng th increase of 20% or less. For customers without space constraints, DO E analyzed the potential impacts of standards by conducting the analysis with motor designs cons trained to a stack leng th increase of 100% or less. For small businesses, DOE analyzed the potential impacts of standards by conducting the analysis with different discount rates, as small businesses do not have the same access to capital as larger businesses.

11.2.1 Inputs to the Subgroup Analysis for Custom ers with and without Space Constraints

One of the more cost-effective ways to in crease motor efficiency is by increasing the motor stack length. However, many motor users face space constraints, which restrict their ability to replace existing motors with much longer, more effici ent, designs. The Department’s engineering analysis produced motor designs th at meet space constraint s by restricting stack length increases to 20% or less. The Department also analyzed de signs in which the stack length was free to increase up to 100% (effectively an unconstrained stack length increase).

11-1DOE assumed that 20% of customers face space constraints in order to develop national average LCC results in chapter 8. For its sp ace-constrained customer subgroup analysis, DOE used its LCC spreadsheet tool, but selected only customers who face space constraints. For its non-space-constrained customer subgroup analysis , DOE selected only customers who do not face space constraints. These customers use the same motor designs at low energy efficiency levels (where all designs the Department consid ered have stack length increases of less than 20%), but constrained designs become distinct at efficiency level (EL) 4b for polyphase, EL 6 for CSIR, and EL 2 for CSCR. Generally, these sp ace-constrained designs cost more than less constrained designs to achi eve the same efficiency.

11.2.2 Inputs to the Subgroup Analysis for Small Businesses

The Small Business Administration (SBA) defi nes a small business by its annual receipts or its number of employees. Small motors are used throughout the U.S. economy, so DOE did not assign a different distributi on of motor applications or se ctors of the economy to this subgroup.

To calculate discount rates for small compan ies that purchase small electric motors, DOE used the same methodology as for the general p opulation of small electric motor customers as presented in chapter 8. a Although the methodology is appropriat e, the capital asse t pricing model (CAPM) b described in chapter 8 for th e general population underestimates the cost of capital for small companies. In CAPM, the risk premium β is used to account for the higher returns associated with greater risk. However, for small companies, particularly very small companies, historic returns have been signi ficantly higher than the CAPM e quation predicts. This additional return can be accounted for by adding a size premiu m to the cost of equity for small firms:

k

e = R f + 

## ( β × ERP 

## ) + S

k e = Cost of equity,
R

f = Expected return on risk-free assets, β = Risk coefficient of the firm,
ERP = Equity risk premium, and S = Size Premium.

DOE obtained size premium data from Ibbotson Associates’ Stocks, Bonds, Bills, and Inflation 2007 Yearbook

. 1 For the period of 1926–2006, the average size premium for the smallest companies in all i ndustries is 6.27 percent, implyi ng that on average, historic

a DOE assumed that small businesses as a whole are a r easonable approximation for small businesses which use small electric motors.

b See 8.2.4.3 for more extensive description of CAPM and its parameters.

11-2performance of small companies has been 6.27 pe rcent higher than the CAPM estimate of the small company cost of equity. c

DOE calculated the real weighted average cost of capital (as described in chapter 8) using the cost of equity including a size premium for small companies instead of the CAPM cost of equity. DOE estimates that in industries that purchase small electric motors, small companies have an average discount rate 4.2 percent higher than the industry average. This conclusion is supported by the similar difference (3.8 percent) between small and average company discount rates for the entire market based on data from Damodaran d, 2 (see Table 11.2.1).

Table 11.2.1 Discount Rate Difference Between Sm all Company and Market Average
Discount Rate
Sector Average Std Dev Difference
Entire Market 6.3% 2.3%

-- Small Company 10.2% 3.3% 3.8%

In chapter 8, DOE estimated the average disc ount rate for both indus trial and commercial customers to be 5.9 percent. Applying the addi tional small capitalization (small cap) discount rate premium of 4.2 percent presented above to th ese discount rates for businesses that purchase small electric motors, the average discount rate for small industrial and commercial companies is approximately 10.1 percent.

11.3 RESULTS FOR SMALL ELEC TRIC MOTOR SUBGROUPS

Tables 11.3.1 through 11.3.3 summarize the polypha se small electric motor results for customers with and without space-constrained app lications and those that are small businesses. Tables 11.3.4 through 11.3.6 summari ze the capacitor-start induction -run small electric motor results for the same subgroup types, while Tables 11.3.7 - 11.3.9 summarize the capacitor-start capacitor-run small electric motor results. For the eight energy e fficiency levels for polyphase motors, seven energy efficiency levels for CSIR motors, and the eight energy efficiency levels for CSCR motors, the tables provide the average or mean LCC, the LCC savings or costs relative to the base case, and the percen tage of customers that are burde ned with net costs or realize net savings. The mean and median payback periods are also provided. The LCC results presented here are national averages based on the curren t distribution of ship ments among motors of different sizes, for each motor type.

LCC results for space-constrained and non-space -constrained customers are different in the following tables even at efficiency levels below the level at which the motor designs differ, due to randomness resulting from the Monte Carlo sampling method.

In this calculation, small companies are defined as comp anies with market capitalization of less than or equal to $84.5 million, the Ibbotson Associates’ definition of Decile 10 companies.

d The Damodaran database for the entire market used for th is analysis includes 6559 companies, 2605 of which are

small companies.

11-3 cIn general, the benefits of moving to a highe r efficiency are less in the case of the small business subgroups than in the overall sample . Space-constrained users achieve substantially lower LCC savings at high effi ciency levels, where space constr aints result in significantly different motor designs, technology, materials, an d costs than unconstrained motors. Non-space constrained customers receive greater benefits (or lower burdens) than the overall sample, consistent with their lower incremental cost of efficiency.

Table 11.3.1 Polyphase Small Electric Motors: LCC and PBP Results for SpaceConstrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 78.8 512 1903 140.60 1,318

1 80.6 524 1853 136.90 1,308 9 45.6 54.4 21.5 6.8

2 82.0 531 1807 133.49 1,296 22 40.2 59.8 17.5 5.5

3 83.4 543 1748 129.13 1,282 36 39.6 60.4 17.4 5.4

4 84.0 552 1732 127.96 1,284 34 43.7 56.3 20.0 6.3

4B 86.1 582 1650 121.98 1,280 37 49.7 50.3 24.2 7.5

5 87.6 756 1610 119.00 1,437 -120 84.8 15.2 71.8 22.3

6 88.4 769 1590 117.55 1,441 -123 84.3 15.7 70.7 22.1

7 89.7 3,548 1543 114.11 4,201 -2 ,883 100.0 0.0 728.2 226.0

Table 11.3.2 Polyphase Small Electric Motors: LCC and PBP Results for Non-SpaceConstrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 78.8 516 1888 137.84 1,308

1 80.6 529 1838 134.21 1,299 9 46.3 53.7 22.0 6.9

2 82.0 536 1792 130.85 1,287 21 41.2 58.8 18.0 5.6

3 83.4 548 1733 126.54 1,274 34 40.6 59.4 17.9 5.5

4 84.0 556 1718 125.39 1,276 32 44.7 55.4 20.6 6.3

4B 86.1 588 1639 119.67 1,275 33 50.8 49.2 25.2 7.7

5 87.6 625 1606 117.26 1,298 10 59.8 40.2 33.6 10.3

6 88.4 691 1585 115.72 1,355 -47 72.9 27.1 50.1 15.4

7 89.7 948 1563 114.07 1,604 -296 95.1 4.9 114.5 35.3

11-4Table 11.3.3 Polyphase Small Electric Motors: LCC and PBP Results for Small Companies

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 78.8 516 1888 137.84 1,192

1 80.6 529 1838 134.21 1,186 6 51.9 48.1 22.0 6.9

2 82.0 536 1792 130.85 1,177 15 46.1 54.0 18.0 5.6

3 83.4 548 1733 126.54 1,167 25 45.5 54.5 17.9 5.5

4 84.0 556 1718 125.39 1,170 22 49.7 50.3 20.6 6.3

4B 86.1 588 1639 119.63 1,174 18 56.5 43.5 25.1 7.7

5 87.6 652 1604 117.13 1,226 -34 69.6 30.4 41.8 12.2

6 88.4 708 1584 115.60 1,274 -82 80.2 19.9 54.7 16.7

7 89.7 1,460 1557 113.63 2,017

- 825 97.4 2.6 243.1 50.2

Table 11.3.4 Capacitor-Start Induction-Run Sma ll Electric Motors: LCC and PBP Results for Space-Constrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 49.9 494 1274 92.66 923

1 53.2 503 1190 86.56 903 20 26.7 73.3 8.5 2.6

2 55.7 509 1133 82.42 890 33 27.5 72.5 8.8 2.6

3 58.1 511 1079 78.48 873 49 23.6 76.4 7.5 2.2

4 63.5 539 976 71.00 867 56 37.2 62.8 12.9 3.9

5 64.8 544 955 69.45 864 58 38.0 62.0 13.4 4.0

6 66.3 665 925 67.28 976 -53 74.0 26.0 42.3 12.6

7 71.5 2,559 848 61.68 2,843 -1 ,921 100.0 0.0 418.9 124.7

11-5Table 11.3.5 Capacitor-Start Induction-Run Sma ll Electric Motors: LCC and PBP Results for Non-Space-Constrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 49.9 497 1261 91.33 921

1 53.2 506 1178 85.28 901 20 27.8 72.2 8.5 2.6

2 55.7 512 1121 81.16 888 33 28.5 71.5 8.7 2.7

3 58.1 514 1067 77.25 872 49 24.4 75.6 7.4 2.3

4 63.5 530 978 70.82 858 63 30.6 69.4 9.8 3.0

5 64.8 554 952 68.86 872 49 41.5 58.5 15.3 4.7

6 66.3 579 918 66.43 887 34 49.5 50.5 20.0 6.1

7 71.5 618 860 62.20 906 15 56.5 43.5 25.1 7.7

Table 11.3.6 Capacitor-Start Induction-Run Sma ll Electric Motors: LCC and PBP Results for Small Companies

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 49.9 497 1261 91.33 869

1 53.2 506 1178 85.28 852 16 31.3 68.7 8.5 2.6

2 55.7 512 1121 81.16 842 27 32.4 67.6 8.7 2.7

3 58.1 514 1067 77.25 828 41 28.0 72.0 7.4 2.3

4 63.5 533 976 70.63 819 50 35.8 64.2 10.4 3.2

5 64.8 553 950 68.75 832 37 45.3 54.7 14.9 4.6

6 66.3 597 917 66.37 866 3 58.6 41.4 24.7 7.1

7 71.5 995 855 61.89 1,246 -377 68.5 31.5 108.4 11.9

11-6Table 11.3.7 Capacitor-Start Capacitor-Run Sma ll Electric Motors: LCC and PBP Results for Space-Constrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 73.2 579 2313 167.74 1,355

1 76.7 591 2212 160.38 1,331 24 29.2 70.8 10.9 3.3

2 80.9 633 2053 148.85 1,320 35 47.4 52.6 19.0 5.8

3 83.0 645 1998 144.88 1,312 43 47.2 52.8 19.2 5.9

4 84.0 653 1991 144.36 1,316 40 49.3 50.7 21.1 6.5

5 85.2 671 1981 143.61 1,330 26 55.4 44.6 25.3 7.8

6 85.9 839 1914 138.80 1,476 -121 84.3 15.7 60.1 18.4

7 87.8 854 1862 135.02 1,473 -118 82.5 17.5 56.3 17.1

8 89.0 3,992 1815 131.61 4,597 -3 ,242 100.0 0.0 634.4 193.1

Table 11.3.8 Capacitor-Start Capacitor-Run Sma ll Electric Motors: LCC and PBP Results for Non-Space-Constrained Customers

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 73.2 586 2339 169.80 1,369

1 76.7 598 2236 162.36 1,345 24 29.8 70.2 10.8 3.3

2 80.9 628 2059 149.51 1,314 55 37.2 62.8 13.9 4.2

3 83.0 641 1984 144.05 1,303 67 39.0 61.0 14.5 4.3

4 84.0 657 2003 145.45 1,322 48 45.7 54.4 19.4 5.9

5 85.2 678 1980 143.78 1,335 34 52.3 47.7 23.5 7.1

6 85.9 693 1952 141.72 1,340 29 54.8 45.3 25.4 7.7

7 87.8 727 1902 138.07 1,358 12 60.8 39.2 29.6 9.0

8 89.0 1,049 1852 134.45 1,663

- 293 93.6 6.4 87.6 26.3

11-7Table 11.3.9 Capacitor-Start Capacitor-Run Sma ll Electric Motors: LCC and PBP Results for Small Companies

Energy Efficiency

Level Efficiency % Life-Cycle Cost Life -Cycle Cost Savings Payback Period (years) Average Installed

Price

$ Average Energy Use

kWh/yr Average Annual Operating Cost

$ Average Life-Cycle Cost

$ Average Savings $ Consumers with

Net Cost

% Net Benefit % Average Median

Baseline 73.2 586 2339 169.80 1,273

1 76.7 598 2236 162.36 1,253 20 33.6 66.4 10.8 3.3

2 80.9 630 2062 149.73 1,234 39 43.4 56.6 15.0 4.4

3 83.0 643 1991 144.55 1,226 47 44.7 55.3 15.5 4.6

4 84.0 657 2005 145.59 1,241 32 51.1 48.9 19.7 6.0

5 85.2 678 1985 144.09 1,256 17 58.0 42.0 23.9 7.3

6 85.9 723 1949 141.51 1,290 -17 65.1 34.9 32.8 9.1

7 87.8 754 1898 137.82 1,306 -33 69.7 30.4 35.4 10.2

8 89.0 1,633 1849 134.23 2,171

- 898 96.0 4.0 205.3 37.3

11-8REFERENCES

1 Ibbotsons Associates. Stocks, Bonds, B ills, and Inflation 2007 Yearbook, 2007. Chicago, IL.

2 Damodaran Online. The Data Page: Cost of Capital by Industry Sector , 2006.

< http://pages.stern.nyu.edu/~adamodar / >

11-9CHAPTER 12. MANUFACTURER IMPACT ANALYSIS

TABLE OF CONTENTS CHAPTER 12. MANUFACTURER IMPACT ANALYSIS .....................................................12-i 12.1 INTRODUCTION

......................................................................................................... 12-1 12.2 METHODOLOGY

........................................................................................................ 12-1 12.2.1 Phase I: Industry Profile

.................................................................................. 12-1 12.2.2 Phase II: Industry Cash Flow Analysis and Interview Guide

......................... 12-2 12.2.2.1 Industry Cash Flow Analysis

............................................................... 12-2 12.2.2.2 Interview Guide

................................................................................... 12-2 12.2.3 Phase III: Subgroup Impact Analysis

............................................................. 12-2 12.2.3.1 Manufacturer In terviews

...................................................................... 12-3 12.2.3.2 Revised Industry Cash Flow Analysis

................................................. 12-3 12.2.3.3 Manufacturer Subgroup Analysis

........................................................ 12-3 12.2.3.4 Small-Business Manufact urer Subgroup

............................................. 12-4 12.2.3.5 Manufacturing Capacity Impact

.......................................................... 12-4 12.2.3.6 Employment Impact

............................................................................. 12-4 12.2.3.7 Cumulative Regulatory Burden

........................................................... 12-5 12.3 MANUFACTURING IMPACT ANALYSIS KEY ISSUES

........................................ 12-5 12.3.1 Maintaining Product Availa bility and Features

.............................................. 12-5 12.3.2 Significant Capital Conversion Costs

............................................................. 12-5 12.3.3 Substitutes

....................................................................................................... 12-6 12.3.4 Narrow Focus of th e Rulemaking

................................................................... 12-6 12.3.5 National Energy Savings as a Result of the Rulemaking

............................... 12-6 12.3.6 Use of Alterna tive Metals

............................................................................... 12-6 12.3.7 Enforcement of Standards

............................................................................... 12-7 12.4 GRIM INPUTS AND ASSUMPTIONS

........................................................................ 12-7 12.4.1 Overview of the GRIM

................................................................................... 12-7 12.4.2 Sources of GRIM Inputs

................................................................................. 12-8 12.4.2.1 Corporate Annual Reports

................................................................... 12-8 12.4.2.2 Standard and Poor Credit Ratings

........................................................ 12-8 12.4.2.3 Shipments Model

................................................................................. 12-8 12.4.2.4 Engineering Analysis

........................................................................... 12-8 12.4.2.5 Manufacturer In terviews

...................................................................... 12-9 12.4.3 Financial Para meters

....................................................................................... 12-9 12.4.4 Corporate Discount Rate

............................................................................... 12-10 12.4.5 Trial Standard Levels

.................................................................................... 12-12 12.4.6 Shipments

...................................................................................................... 12-13 12.4.7 Production Costs

........................................................................................... 12-14 12.4.8 Conversion Costs

.......................................................................................... 12-16 12.4.8.1 Capital Conversion Costs

................................................................... 12-16 12.4.8.2 Equipment Conversion Costs

............................................................. 12-19 12.4.9 Markup Scenarios

......................................................................................... 12-20 12.4.9.1 Preservation-of-Return-on-Inve sted-Capital Scenario

....................... 12-20 12.4.9.2 Preservation-of-Operatin g Profit Scenario

........................................ 12-21

12-i12.5 INDUSTRY FINANCIAL IMPACTS

........................................................................ 12-21 12.5.1 Impacts on Industry Net Present Value

........................................................ 12-21 12.5.2 Impacts on Annual Cash Flow

...................................................................... 12-24 12.6 OTHER IMPACTS

...................................................................................................... 12-28 12.6.1 Employment

.................................................................................................. 12-28 12.6.2 Production Capacity

...................................................................................... 12-30 12.6.3 Exports

.......................................................................................................... 12-30 12.6.4 Cumulative Regulatory Burden

.................................................................... 12-30 12.6.4.1 Federal Regulations on SEMs and Other Equipment Produced by the Same Manufacturers

......................................................................... 12-31 12.6.4.2 Restriction of Hazardous Substances Directive

................................. 12-32 12.6.4.3 Registration, Evaluation and Authoriz ation of Chemical substances 12-32 12.6.4.4 Trade Group Regulations

................................................................... 12-32 12.6.4.5 Other Regulations

.............................................................................. 12-32 12.7 CONCLUSIONS

.......................................................................................................... 12-32

LIST OF TABLES

Table 12.4.1 GRIM Financ ial Parameters

............................................................................... 12-10

Table 12.4.4 Baseline Efficiency Level and Trial St andard Levels for Po lyphase 1 HP, 4-Pole

Table 12.4.5 Baseline Efficiency Level and Trial St andard Levels for Ca pacitor-Start, InductionTable 12.4.6 Baseline Efficiency Level and Trial St andard Levels for Capa citor-Start, CapacitorTable 12.4.7 Base Case Total Industry Shipments by Motor Type for 2015 (Reference

Table 12.4.8 Distribution of Shipments in the Ba se Case for Polyphase 1 HP, 4-Pole Small

Table 12.4.9 Distribution of Shipments in the Ba se Case for Capacitor-Start, Induction-Run 1⁄2

Table 12.4.10 Distribution of Shipments in the Ba se Case for Capacito r-Start, Capacitor-Run 3⁄4

Table 12.4.11 Production Cost Breakdown for Polyph ase 1 HP, 4-Pole Small Electric Motor

Table 12.4.12 Production Cost Breakdown for Capac itor-Start, Induction-Run 1⁄2 HP, 4-Pole

Table 12.4.13 Production Cost Breakdown for Cap acitor-Start, Capacitor-Run 3⁄4 HP, 4-Pole

Table 12.4.15 Capacitor-Start, Induction-Run To tal Capital Conversion Costs for Typical Table 12.4.2 Cost of Equi ty Calculation

.................................................................................. 12-11 Table 12.4.3 Cost of De bt Calculation

..................................................................................... 12-12

Small Electric Motor

.................................................................................................... 12-12

Run 1⁄2 HP, 4-Pole Small Electric Motor

...................................................................... 12-12

Run 3⁄4 HP, 4-Pole Small Electric Motor

...................................................................... 12-13

Shipments)

................................................................................................................... 12 -13

Electric Motor

.............................................................................................................. 12- 14

HP, 4-Pole Small Electric Motor

................................................................................. 12-14

HP, 4-Pole Small Electric Motor

................................................................................. 12-14

(2009$)*

....................................................................................................................... 12-15

Small Electric Motor (2009$)*

.................................................................................... 12-15

Small Electric Motor (2009$)*

.................................................................................... 12-16 Table 12.4.14 Polyphase Total Cap ital Conversion Costs for Typical Manufacturer by TSL*

.. 12­ 17

Manufacturer by TSL*

................................................................................................. 12-18

12-iiTable 12.4.16 Capacitor-Start, Capacitor-Run To tal Capital Conversion Costs for Typical Manufacturer by TSL*

................................................................................................. 12-18 Table 12.4.17 Industry-Wide Capital Conversion Co sts by Trial Standard Level (2009$ Millions)

Table 12.4.18 Industry-Wide Equipment Conversi on Costs by Trial Standard Level (2009$

Table 12.4.19 Preservation-of-Return-on-Invested-C apital Markup for Polyphase Small Electric

Table 12.4.20 Preservation-of-Return-on-Invested -Capital Markup for A ll Capacitor-Start ............................................................................................................................... ....... 12-19

Millions)

...................................................................................................................... . 12-20

Motors

......................................................................................................................... . 12-21

Motors

......................................................................................................................... . 12-21 Table 12.4.21 Preservation-of-Opera ting Profit Markup for Polyphase Small Electric Motors . 12­ 21 Table 12.4.22 Preservation-of-Opera ting Profit Markup for all Ca pacitor-Start Motors

........ 12-21 Table 12.5.1 Change in Industry Net Present Va lue for Polyphase SEMs (Preservation-ofReturn-on-Invested-Capital Markup Scenario)

............................................................ 12-22 Table 12.5.2 Change in Industry Net Present Va lue for Polyphase SEMs (Preservation-ofTable 12.5.3 Change in Industry Net Present Valu e for Capacitor-Start SEMs (Preservation-ofTable 12.5.4 Change in Industry Net Present Valu e for Capacitor-Start SEMs (Preservation-ofTable 12.5.5 Annual Industry Net Cash Flows for Polyphase Motors (Preservation-of-Return-onTable 12.5.6 Annual Industry Net Cash Flows for Polyphase Motors (Preservation-of-Operating

Table 12.5.7 Annual Industry Net Cash Flows for Capacitor-Start Motors (Preservation-ofTable 12.5.8 Annual Industry Net Cash Flows for Capacitor-Start Motors (Preservation-ofOperating Profit Mar kup Scenario)

............................................................................. 12-23

Return-on-Invested-Capital Markup Scenario)

............................................................ 12-23

Operating Profit Mar kup Scenario)

............................................................................. 12-24

Invested-Capital Markup Scenario)

............................................................................. 12-25

Profit Markup Scenario)

.............................................................................................. 12-25

Return-on-Invested-Capital Markup Scenario)

............................................................ 12-27

Operating Profit Mar kup Scenario)

............................................................................. 12-27 Table 12.6.1 Other DOE Actions Affecting the SEM Industry

............................................... 12-31

LIST OF FIGURES

Figure 12.4.1 Using the GRIM to Calculate Cash Flow

............................................................ 12-7

12-iiiCHAPTER 12. MANUFACTURE R IMPACT ANALYSIS

12.1 INTRODUCTION

In determining whether a standard is economically justified, the Secretary of Energy is required to consider "the ec onomic impact of the standard on the manufacturers and on the consumers of the equipment subject to such a standard.” The legislation also calls for an assessment of the impact of any lessening of competition as determined in writing by the Attorney General. The U.S. Department of Energy (DOE) conducted a manufacturer impact analysis (MIA) to estimate the financial impact of higher efficiency standards on manufacturers of small electric motors (SEM) and to assess th e impact of such standards on employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects.

The quantitative portion of the MIA primarily relies on the Government Regulatory Impact Model (GRIM), an industry cash flow model adapted for this rulemaking. GRIM inputs are industry cost structure, shipments, and pric ing strategies. The GRIM’s key output is industry net present value (INPV). The model estimates the financial impact of higher energy conservation standards by comparing changes in INPV between a base case and various trial standard levels (TSLs).

The qualitative portion of the MIA addresses factors such as equipment characteristics, characteristics of particular fi rms, and market and equipment tr ends, and includes an assessment of the impacts of standards on subgroups of manufacturers.

12.2 METHODOLOGY

DOE conducted the MIA in three phases. Phas e I, Industry Profile, consisted of the preparation of an industry characterization incl uding data on market share, sales volumes and trends, pricing, employment, and financial structure. Phase II, Industry Cash Flow Analysis and Interview Guide, focused on the industry as a whole. In this phase, DOE used the GRIM to prepare an industry cash flow analysis. For the quantitative portion of the MIA analysis, DOE analyzed all product classes used in the nationa l impact analysis (NIA) and the life-cycle cost (LCC) analysis. In this phase DOE also used pub licly available informatio n developed in Phase I to adapt the GRIM’s structure to facilitate analysis of new SEM standards. In Phase III, Subgroup Impact Analysis, DOE conducted intervie ws with several manufacturers comprising the majority of the SEM industry. During thes e interviews, DOE discu ssed financial topics specific to each company and obtained each manufacturer’s view of the industry as a whole. The interviews provided valu able information that DOE used to evaluate the impacts of a new standard on manufacturer cash flows, manufactur ing capacities, and employment levels. The following subsections describe more specificall y the steps DOE took in developing information for the MIA.

12.2.1 Phase I: Industry Profile

In Phase I of the MIA, DOE prepared a profile of the SEM industry that built on the market and technology assessments prepared for this rulemaking (chapter 3 of this TSD). Before

12-1initiating the detailed impact studies, DOE collected information on the past and present structure and market characteristics of the SEM industry. This included estimated market shares of SEM manufacturers, corporate operating ra tios, wages, employment, and production cost ratios. The industry profile included a top-down co st analysis of the SEM manufacturing industry that DOE used to derive cost and financial inputs for the GRIM ( e.g., revenues; material; labor; overhead; depreciation; sales, ge neral, and administration expens es (SG&A); and research and development (R&D) expenses). DOE used additional sources of information to further calibrate its characterization of the industry, including company Securities and Exchange Commission (SEC) 10–K reports, Standard & Poor’s (S&P) stock reports, and corporate annual reports. DOE also relied on information from its engineering analysis, LCC analysis, NIA, and analysis of markups to characterize the SEM manufacturing industry.

12.2.2 Phase II: Industry Cash Flow Analysis and Interview Guide

In Phase II, DOE performed a preliminary industry cash flow analysis and prepared written guidelines for interviewing manufacturers.

12.2.2.1 Industry Cash Flow Analysis

The industry cash flow analysis focused on the financial impacts of new standards on the SEM industry as a whole. New energy conserva tion standards can affect SEM manufacturers in three distinct ways: (1) require additional inves tment, (2) raise production costs, and (3) affect revenues through variations in prices and shipments. The an alytical tool DOE uses for calculating the financial impacts of new energy conservation standards on manufacturers is the GRIM. DOE performed a cash flow analysis using the GRIM on the SEM industry to quantify these impacts.

12.2.2.2 Interview Guide

During Phase III of the MIA, DOE conducted interviews with manufacturers to gather information on the effects of new energy conserva tion standards on revenues and finances, direct employment, capital assets, and industry co mpetitiveness. Before the interviews, DOE distributed an interview guide to help identify the impacts of new energy conservation standards on individual manufacturers, and subgroups of manufacturers. Manufacturers received the guide before the interviews to allow them to prepare their responses in advance. The interview guide led interviewers through a series of questions on current organizational characteristics, industry infrastructure, manufacturer cash flow, competitive impacts, employment impacts, and manufacturing capacity impacts. The interview guides used to conduct the manufacturer and customer interviews are found in Appendix 12A of this TSD.

12.2.3 Phase III: Subgroup Impact Analysis

Many of the same companies that participated in the MIA interviews also participated in interviews for the engineering analysis. However, the MIA interviews broadened the discussion from primarily technology-related issues to busine ss-related topics. The objectives were to obtain feedback from industry on the GRIM’s assumptions and to isolate key issues and concerns. DOE defined two distinctive subgroups that could be affected by the new energy conservation

12-2standards: major manufacturers and small businesses. The following sections summarize the methodology and findings of this assessment.

12.2.3.1 Manufacturer Interviews

DOE supplemented the information gathered in Phase I and the cash flow analysis performed in Phase II with information gather ed during interviews with manufacturers during Phase III. The interview process has a key role in the manufacturer impact analyses since it provides an opportunity for interested parties to express thei r views privately on important issues, allowing confidential or sensitive information to be considered in the rulemaking process.

DOE’s contractor contacted all of the comp anies from its databa se of manufacturers, which provided names of manufact urers across the SEM industry, including National Electrical Manufacturers Association (NEMA) members. DO E’s contractor interviewed all relevant companies interested in participating, subsid iaries and independent firms. DOE scheduled interviews well in advance in order to provide every opportunity for key individuals to be available for comment. Although a written res ponse to the questionnaire was acceptable, DOE prefers interactive interviews because they help clarify responses and provide the opportunity to identify additional issues.

DOE’s contractor conducted de tailed interviews with all manufacturers who agreed to participate to gain insight into the range of potential impacts and how these impacts vary with each TSL. During the interviews, DOE’s contractor solicited information on the possible impacts of energy conservation standards on sales, di rect employment, capital assets, and industry competitiveness. Both qualitative and quantitative information are valuable to the interview process. DOE’s contractor then used the informa tion gathered during manufacturer interviews to tailor the GRIM to incorporate unique financial characteristics from each product class.

12.2.3.2 Revised Industry Cash Flow Analysis

In Phase II of the MIA, DOE provided manu facturers with prelimin ary financial input figures from the GRIM for review and evalua tion. During the interviews, DOE requested comments on the values DOE selected for the pa rameters. Upon completi on of the interviews, DOE revised its industry cash flow model where applicable.

12.2.3.3 Manufacturer Subgroup Analysis

Using average cost assumptions to develop an industry cash flow estimate is not adequate for assessing differential impacts among subgr oups of manufacturers. Smaller manufacturers, niche players, or manufacturers exhibiting a cost structure that differs significantly from the industry average could be more negatively aff ected. Ideally, DOE would consider the impact on every manufacturer individually; however, it typically uses the results of the industry characterization to group manufacturers exhibiting similar characteristics. During the interviews, DOE discussed the potential subgroups and subg roup members identified for the analysis. DOE looked to the manufacturers and other stakeholders to suggest what subgroups or characteristics are most appropriate for the analysis.

12-312.2.3.4 Small-Business Manufacturer Subgroup

DOE used the small business size standa rds published on August 18, 2008, as amended by the Small Business Administration (SBA), to determine whether any small entities would be required to comply with the rule. 61 FR 3286 and codified at 13 CFR Parts 121. The North American Industry Classification System (NAICS ) code lists the size standards for various industries. SEM manufacturing is classifi ed under NAICS 335312 (Motor and Generator Manufacturing). To be categorized as a small business, a SEM manufacturer and its affiliates may employ a maximum of 1,000 employees.

DOE reviewed NEMA’s listing of SEM member s and surveyed the industry to develop a list of every manufacturer. DOE then examined publicly available data and contacted manufacturers, when needed, to de termine if they meet the SBA’s definition of a small business manufacturer and if their manufacturing facilities are located in the United States. Based on this analysis, DOE estimates that there are no small manufacturers that make equipment that are covered by this rulemaking.

Therefore, since DOE has not indentified any SEM small business manufacturers, DOE believes the GRIM analysis, which models each product class separately and aggregates the results to produce an industry-wide impact, is representative of the manufacturers that would be affected by standards.

12.2.3.5 Manufacturing Capacity Impact

One of the significant outcomes of new en ergy conservation standards could be the obsolescence of existing manufacturing assets , including tooling and investment. The manufacturer interview guide helped identify impacts on manufacturing capacity, specifically capacity utilization and plant location decisions in the United States and North America with and without an energy conservation standard; the ab ility of manufacturers to upgrade or remodel existing facilities to accommodate the new requi rements due to new energy conservation standards; the nature and value of stranded assets, if any; and estimates for any one-time restructuring and other charges, where applicable.

12.2.3.6 Employment Impact

The impact of new energy conservation st andards on employment is an important consideration in the rulemaking process. To as sess how domestic employ ment patterns might be affected, DOE used the GRIM to calculate employment impacts at each TSL. During interviews, DOE explored current employment trends in the SEM industry. In addition, DOE solicited manufacturer views on changes in employment patterns that may result from more stringent standard levels. The employment impacts section of the interview guide focused on current employment levels associated with manufacturers at each of their production facilities, expected future employment levels with and without new energy conserva tion standards, and differences in workforce skills and issues related to employee retraining.

12-412.2.3.7 Cumulative Regu latory Burden

DOE seeks to mitigate the overlapping effects on manufacturers of new energy conservation standards and other re gulatory actions affecting the same equipment. DOE analyzed and considered the impact on manufacturers of multiple equipment-specific regulatory actions.

Based on its own research and discussions with manufacturers, DOE identified several regulations relevant to the SEM industry, in cluding the Restriction of Hazardous Substance Directive (RoHS) and the Registration, Evaluati on and Authorization of Chemical substances (REACH), and energy conservation standards for other equipment made by SEM manufacturers.

12.3 MANUFACTURING IMPACT ANALYSIS KEY ISSUES

The first question each of the MIA interview guides asks is the following: “What are the key issues for your company regarding energy conservation standards for small electric motor equipment and this rulemaking?” This open question initiated dialogue with manufacturers, prompting them to identify key points that DOE c ould explore during the interview. This section describes the issues that the manufacturers raised most often. a

12.3.1 Maintaining Product Availability and Features

Manufacturers expressed concer n about the impact on typical motor characteristics that may result after the adoption of new energy cons ervation standards. Specifically, manufacturers were concerned that standards- compliant small electric motors might require larger housing diameters and shaft lengths. Manufacturers were al so greatly concerned that larger dimensions could eliminate the ability to retrofit newer, potentially larger motors into existing applications. However, manufacturers are concerned that thei r sales could be impacted if larger motors required end-users to modify their existing applications. If existing motor sizes were increased, end-users could choose to use othe r horsepower motors or a differe nt motor category that is not covered by today’s rulemaking rather than modify the application to allow installation of the standards-compliant small electric motor. Manufacturers were also concerned that energy conservation standards could consolidate horsepower ratings by eliminating some of today’s standard ratings from the market.

12.3.2 Significant Capital Conversion Costs

Manufacturers expressed concern over the pot entially large conversion costs required to manufacture standards-compliant small electric motors. Large manufacturers that produce the vast majority of motors covered by this rule making typically also manufacture many other categories of motors. The majority of manufactur ers interviewed indicate d that the proportion of covered small electric motors represents a sma ll share of the manufacturer’s overall business. The increased stringency at each standard level will require manufacturers to increase the amount of capital conversion costs, potentially ne cessitating an investme nt in new lamination dies, winding tooling, testing equipment, and ev en re-allotting factory floor space. According to the majority of manufacturers, if the standard forces a substantial increase in motor dimensions or redesign costs, manufacturers could simply exit the small electric motors market rather than

a Manufacturers indicated that the risks associated with these issues generally increase with increasing TSL.

12-5develop standards-compliant motors. Additionally, manufacturers indicated that the resources for manufacturing standard-compliant motors would be taken away from ot her motor technologies that could potentially provide greater energy savings, such as variable speed motors.

12.3.3 Substitutes

Manufacturers expressed concerns that st andard-compliant motor prices would be greater due to more costly components and to compensate the company for the required capital investment. Manufacturers stated that because the small electric motor market is highly price sensitive, higher selling prices could pus h customers towards other technologies ( e.g. , electronic commutated (ECM) motors). Manufacturers believed that the economics for customers with equipment that use motors sparingly could notjustify using the more-efficient, standardscompliant motors covered by this rulemaking b ecause the energy savings would not compensate for the higher first-costs of these motors.

12.3.4 Narrow Focus of the Rulemaking

Manufacturers are concerned that the market covered by this rulemaking is extremely narrow and only applies to a sma ll number of motors. As a resu lt, many of the manufacturers indicated that since the motors affected by this rule make up such a sm all percentage of total sales, they would simply exit the market if energy conservation standards became too stringent.

12.3.5 National Energy Savings as a Result of the Rulemaking

A number of manufacturers argued that there was no payback period in regards to national energy savings. Manufacturers said that the annual usage of their motors was in the hundreds of hours per year, not thousands. Thus, even a significant increase in efficiency would not result in material national energy savings. As a result, several manufacturers urged DOE to examine system efficiencies rather th an specific component efficiencies.

12.3.6 Use of Alternative Metals

All interviewed manufacturers ex pressed concerned about the use of copper and premium electrical steels in redesigning their motors. Ac cording to manufacturers, copper rotor designs would require new specialized tooling that manufacturers currently do not employ. Some manufacturers reported the need for significant ch anges to their plants if copper rotors are required to meet standards, including the use of special smelting and casting operations. Also, manufacturers indicated that the use of copper in rotors would require a significant R&D effort because of their lack of experience with th e materials and deter mining how to optimize manufacturing these types of rotors in high vol umes. Manufacturers specifically referenced the lack of availability and unproven nature of very low-loss steels like Hiperco as variables that could reduce energy use. Finally, all interv iewed manufacturers were concerned that the extremely higher prices of motors that use thes e metals could force significant conversion costs that would not be recouped if higher price point s led to a decline in sa les. Manufacturers reported that most likely they would exit the market if premium electrical steels were required to meet the energy conservation standard.

12-612.3.7 Enforcement of Standards

Manufacturers expressed con cern about the feasibility of enforcing an energy conservation standard, par ticularly for motors embedded in ot her equipment. This concern was a particular concern for domestic manufacturers that indicated fo reign companies could potentially import non-compliant motors as a component in other non-regulated equipment and put U.S. manufacturers at a competitive disadvantage.

12.4 GRIM INPUTS AND ASSUMPTIONS

The GRIM serves as the main tool for a ssessing the impact on the SEM industry due to the imposition of new energy conservation standa rds. DOE relied on several sources to obtain inputs for the GRIM. Data and assumptions from these sources are then fed into an accounting model that details the cash flow on a base case basis, as well as calculates the impacts on manufacturers due to new ener gy conservation standards.

12.4.1 Overview of the GRIM

The basic structure of the GRIM, illustrate d in Figure 12.4.1, is a standard annual cash flow analysis that uses manuf acturer prices, manufacturing costs, shipments, and industry financial information as inputs. The GRIM estima tes the effects of regulatory conditions caused by changes in costs, investments, and associated margins. The GRIM spreadsheet uses several inputs to arrive at a series of annual cash flows, beginning with the base year of the analysis, 2010, and continuing to 2044. The model calculates the INPV by summing the stream of annual discounted cash flows during this period.

Figure 12.4.1 Using the GRIM to Calculate Cash Flow

The GRIM projected cash flows using st andard accounting principles. The model compared changes in INPV between the baseline equipment information (the base-case scenario) and different TSLs (the standards-case scenario). The difference in INPV between the base case and the standards case(s) represents the estimated financial impact of the new energy conservation standard on manufacturers. Appendix 12B provides more techni cal details and user information for the GRIM.

12-712.4.2 Sources of GRIM Inputs

The GRIM used several different sources for data inputs to determine cash flows for the industry, including corporate annual reports, co mpany profiles, credit ra tings, Census data, the shipments model, the engineering an alysis, and manufacturer interviews.

12.4.2.1 Corporate Annual Reports

Corporate annual reports to the SEC (SEC 10-Ks) provided many of the financial inputs to the GRIM. 1 These reports exist for publicly held companies and are freely available to the public. The SEC 10-Ks provide cons istent financial data for the consolidated corporation but do not provide detailed fina ncial information for the company’s SEM lines. Some SEC 10-Ks are therefore more relevant than others to the SEM industry analysis, depending on the prominence that business has in the company’s overall operations. In determining financial parameters for the industry, DOE weighted corporate financial in formation contained in the SEC 10-Ks by each company’s market share in the SEM industry to ar rive at industry-weighted averages. DOE used corporate annual reports to derive the following GRIM inputs:

• tax rate

• working capital

• SG&A expenses

• research and development (R&D) expenses

• depreciation

• capital expenditures

• net property, plant, and equipment (PPE)

DOE also used information from company SEC 10-K reports to calibrate the GRIM’s operating profit margin against the industry-weighted average.

12.4.2.2 Standard and Poor Credit Ratings

S&P provides independent cred it ratings, research, and fina ncial information. DOE relied on S&P reports to determine the industry’s aver age cost of debt for the cost of capital calculation.

12.4.2.3 Shipments Model

The GRIM used shipment projections deri ved from DOE's shipments model in the national impact analysis. Chapter 10 of the TSD is exclusively dedicated to describing the methodology and analytical model DOE used to forecast shipments.

12.4.2.4 Engineering Analysis

DOE conducted the engineering analysis using a modified design-option approach where DOE employed a technical expert with motor de sign software to develop motor designs at several efficiency levels for each analyzed pr oduct class. Based on these simulated designs and

12-8manufacturer and component supplier data, DOE calculated manufacturing costs and selling prices associated with each efficiency level.

12.4.2.5 Manufacturer Interviews

Key topics discussed during the intervie ws and reflected in the GRIM include

• Capital conversion costs (one -time investments in propert y, plant, and equipment);

• Equipment conversion costs (one-time investments in resear ch, equipment development, testing, and marketing);

• The portion of the conversion capital expenditures that companies use to replace stranded assets;

• Equipment cost structure (the portion of manufacturer production costs related to materials, labor, overhead, and depreciation costs);

• Projected total shipment and shipment distribution mix;

• Estimated profit margins characteristic of the industry; and

• Engineering analysis information.

12.4.3 Financial Parameters

For the preliminary analysis, DOE developed financial estimates of the SEM industry by examining several major SEM ma nufacturers’ financial inform ation from annual reports and SEC 10-K reports. Each company DOE analyzed is a subsidiary of a more diversified parent company that manufactures equipment other than SEMs. Because the SEC 10-K reports did not provide financial information at the subsidiary level, the financial parameters DOE calculated represented averages of the parent companies applied over the entire range of their equipment offerings; these parameters did not nece ssarily represent the SEM industry alone.

DOE presented these values to manufacturers during the interviews for comment. While most manufacturers were unable to provide estimates for the SEM i ndustry, they were able to provide their own financial parameters. Using these values, DOE calibrated its original estimates to develop financial parameters that it considers representative of the SEM industry. An aggregation of the MIA interview responses yielded the market-share-weighted financial parameters shown in Table 12.4.1. These aggregated values were the fina ncial parameter inputs DOE used in the GRIM analysis for the notice of proposed rulemaking (NOPR) and subsequent final rule.

12-9Table 12.4.1 GRIM Financial Parameters

Parameter Industry Weighted Average (%)

Tax Rate (% of Taxable Income) 32.0

Working Capital (% of Revenues) 16.0

SG&A (% of Revenues) 18.9

R&D (% of Revenues) 2.1

Depreciation (% of Revenues) 3.0

Capital Expenditures (% of Revenues) 3.2

Net Property, Plant, and Equipment (% of Revenues) 18.4

12.4.4 Corporate Discount Rate

DOE used the weighted-average cost of cap ital (WACC) for the industry as the discount rate to calculate the INPV. Because a company’s assets are financed by a combination of debt and equity, the industry WACC is the total cost of debt and equity weighted by the composite companies’ respective proportions of debt and eq uity in the capital structure of the industry. DOE made its initial estimate of the WACC for the SEM industry using publicly available information of the four companies used to derive the financial parameters . As described below, DOE revised its estimate of th e discount rate after independe ntly researching the industry WACC.

DOE made its initial estimate of the SEM WACC using the following formula:

WACC = After-Tax Cost of Debt x (Debt Ratio) + Cost of Equity x (Equity Ratio)

The cost of equity is the rate of return th at equity investors (including, potentially, the company) expect to earn on a company’s stock. These expectations are reflected in the market price of the company’s stock. The capital asset pr icing model (CAPM) provides one widely used means to estimate the cost of equity. According to the CAPM, the cost of equity (expected return) is:

Cost of Equity = Riskless Rate of Return + β x Risk Premium

where:

Riskless rate of return is the rate of return on a “saf e” benchmark investment, typically considered the short-term Treasury Bill (T-Bill) yield.

Risk premium is the difference between the expect ed return on stocks and the riskless

rate.

12-10Beta ( β ) is the correlation between the movement in the price of the stock and that of the broader market. In this case, Be ta equals one if the stock is perfectly correlated with the S&P 500 market index. A Beta lower than on e means the stock is less volatile than the market index.

DOE initially determined that the industry aver age cost of equity for the SEM industry is 16.3-percent, as calculated in Table 12.4.2.

Table 12.4.2 Cost of Equity Calculation

Parameter IndustryWeighted Average (%)
(1) Average Beta 1.17

(2) Yield on 10 Year TBill (1991-2008) 5.52

(3) Market Risk Premium (1926-1999) 9.20

Cost of Equity

(2)+((1)*(3)) 16.3

Equity/Total Capital 64.9

Bond ratings are a tool to measure default ri sk and arrive at a cost of debt. Each bond rating is associated with a particular spread. One way of estimating a company’s cost of debt is to treat it as a spread (usually expressed in ba sis points) over the risk-free rate. DOE used this method to calculate the cost of debt for all f our manufacturers. S&P had bond ratings for most manufacturers, so DOE used these ratings to estimate the manufacturers’ cost of debt by adding the relevant spread to the risk-free rate.

In practice, investors use a variety of diff erent maturity Treasury bonds to estimate the risk-free rate. DOE used a long-term Treasury bond return (10-year bond return) because it captures long-term inflation expectations and is less volatile than short-term rates. The risk-free rate is estimated to be approximately six-percent, which is the average 10-year Treasury bond return over the period of 1991 to 2008.

For the cost of debt, S&P’s Credit Services provided the average spread of corporate bonds for all of the public manufacturers. To th is, DOE added the industry-weighted average spread to the average T-Bill yield over the same period. Since proceeds from debt issuance are tax deductible, DOE adjusted the gr oss cost of debt by the industr y-average tax rate to determine the net cost of debt for the industry. Table 12.4.3 pr esents the derivation of the cost of debt. Also shown is the capital structure of the industr y, i.e. the debt ratio (debt/total capital).

12-11Table 12.4.3 Cost of Debt Calculation

Parameter IndustryWeighted Average (%) S&P Bond Rating

-­ (1) Yield on 10 year T-Bill (1991-2008) 5.52

(2) Gross Cost of Debt 8.0 (3) Tax Rate 32.0 Net Cost of Debt (2)x((1)­ (3)) 5.44

Debt/Total Capital 35.1

Using the publicly available informati on above, DOE initially estimated the SEM industry’s WACC to be approximately 12.5-percent. Subtracting an inflati on rate of 2.82-percent between 1991 and 2008, the inflation ad justed WACC was 9.68-percent.

12.4.5 Trial Standard Levels

DOE developed eight TSLs for polyphase motors and eight TSLs for CSIR and CSCR motors that include combinations of energy efficiency levels representing comparable stringency for SEM product classes. As explained in chap ter 5 of the TSD, DOE shifted the efficiency values from the engineering analysis after the MIA was performed. Since this shift was performed uniformly across all TSLs, it will not impact the analyses. The efficiency values presented in Table 12.4.4, Table 12.4.5, and Tabl e 12.4.6 represent these shifted efficiency values for consistency with chapter 5. These efficiency levels are the same levels presented in the life-cycle cost (LCC) and NIA chapters of the TSD. For the GRIM, DOE used the same efficiencies presented in the LCC and NIA spreadsheets. Chapter 10 of the TSD discusses in further detail all TSLs for each pr oduct class in further detail.

Table 12.4.4 Baseline Efficiency Level and Trial Standard Levels for Polyphase 1 HP, 4­ Pole Small Electric Motor

Motor Category Trial Standard Levels for SEM Product Classes Analyzed (%)
Baseline 1 2 3 4 4b 5 6 7 Polyphase 75.3 77.3 78.8 80.5 81. 1 83.5 85.3 86.2 87.7

Table 12.4.5 Baseline Efficiency Level and Trial Standard Levels for Capacitor-Start, Induction-Run 1⁄2 HP, 4-Pole Small Electric Motor

Motor Category Trial Standard Levels for SEM Product Classes Analyzed (%) Baseline 1 2 3 4 5 6 7 8 Capacitor-Start, Induction-Run 57.9 70.5 70.5 71.8 73. 1 73.1 77.6 77.6 77.6

12-12Table 12.4.6 Baseline Efficiency Level and Trial Standard Levels for Capacitor-Start, Capacitor-Run 3⁄4 HP, 4-Pole Small Electric Motor

Motor Category Trial Standard Levels for SEM Product Classes Analyzed (%)
Baseline 1 2 3 4 5 6 7 8 Capacitor-Start, Capacitor-Run 71.4 79.5 81.7 81.7 82. 8 81.7 87.9 81.7 86.7

12.4.6 Shipments

The GRIM estimated yearly revenues using the reference shipment forecasts and average efficiency levels from the shipments model us ed for the NIA (chapter 10 of this TSD). The shipment analysis is a key driver of manufacturer finances because changes in the efficiency mix at the various trial standard levels are tied to shipments. Further explan ation of assumptions and calculations of total shipments can be found in chapter 10 of this TSD. Total shipments forecasted in the shipment analysis for all efficiency levels in 2015 are shown in Table 12.4.7 and discussed below.

Table 12.4.7 Base Case Total Industry Shipments by Motor Type for 2015 (Reference Shipments)

Motor Category Estimated Total Industry Shipments (Number of Units) Polyphase 831,627Capacitor-Start, InductionRun 3,437,392

Capacitor-Star t, CapacitorRun 180,915

DOE assumed a roll-up of efficiency distribu tion in the standards year followed by a gradual improvement in efficiency, which mimics the growth in efficiency observed in historical data (parallel growth trend). U nder the parallel growth trend, the equipment mix moves to higher efficiency levels until the maximum efficiency level is reached. In its engineering analysis, DOE analyzed one representative combination of hor sepower (hp) and number of poles for each SEM motor category ( e.g . polyphase, CSIR, or CSCR) and ex trapolated the results to other horsepower ratings and number of poles. The shipments distribution by TSL estimated in the shipment analysis for these product classes in 201 5 for these three representative motors is found in Table 12.4.8, Table 12.4.9, and Table 12.4.10.

12-13Table 12.4.8 Distribution of Shipments in the Base Case for Polyphase 1 HP, 4-Pole Small Electric Motor
TSL (%) Baseline (75.3) TSL 1 (77.3) TSL 2 (78.8) TSL 3 (80.5) TSL 4 (81.1) TSL 4b (83.5) TSL 5 (85.3) TSL 6 (86.2) TSL 7 (87.7) Polyphase 54.0% 6.0% 13.0% 7.0% 12.0% 5.0% 3.0% 0.0% 0.0%

Table 12.4.9 Distribution of Shipments in the Base Case for Capacitor-Start, InductionRun 1⁄2 HP, 4-Pole Small Electric Motor
TSL (%) Baseline (57.9) TSL 1 (70.5) TSL 2 (70.5) TSL 3 (71.8) TSL 4 (73.1) TSL 5 (73.1) TSL 6 (77.6) TSL 7 (77.6) TSL 8 (77.6) CSIR 40.0% 2.0% 2.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Table 12.4.10 Distribution of Shipments in the Base Case for Capacitor-Start, CapacitorRun 3⁄4 HP, 4-Pole Small Electric Motor
TSL (%) Baseline (71.4) TSL 1 (79.5) TSL 2 (81.7) TSL 3 (81.7) TSL 4 (82.8) TSL 5 (81.7) TSL 6 (87.9) TSL 7 (81.7) TSL 8 (86.7) CSCR 37.0% 4.0% 11.0% 11.0% 11.0% 11.0% 0.0% 11.0% 0.0%

12.4.7 Production Costs

For the engineering analysis, DOE examin ed three specific pr oduct classes at each analyzed efficiency level and created a bill of materials to determine the manufacturing production costs (MPCs) of these three product cl asses. For each product class and efficiencylevel, DOE analyzed the production costs for motor designs used in space constrained and nonspace constrained applications. The production co sts varied between space constrained and nonspace constrained designs by number of laminations, grade of steel used, rotor design, and other design pathways that are fully described in the market and technology assessment (chapter 3). In addition, DOE consulted an industry expert to de termine total labor hours required per motor, as well as associated overhead. By applying a markup to the MPCs, DOE calculates the manufacturer selling prices (MSPs) that are used in subsequent analyses, such as the LCC analysis.

In the engineering analysis, DOE analyzes both space constrained and non-space constrained motor designs for the representative motors to derive the MSPs for each efficiency level. Using a scaling formula, DOE determined the MSPs for all product classes. For more discussion on the scaling, see the LCC analysis in chapter 8 of the TSD. In the GRIM, DOE uses weighted average MSPs of each product class at each efficiency level to first calculate weighted average MPCs. By dividing the MSPs calculated in the engineering analysis and the scaled MSPs from the LCC analysis by the manufacturer markup, DOE calculated the MPCs for all product classes at each efficiency level. For the MIA, DOE then applied different sets of markup scenarios to MPCs to determine pricing strategies used by manufacturers.

For polyphase motors, shipment distributi ons between space constrained and non-space constrained motors were estimate d to not vary with higher efficiency requirements. Space constrained polyphase motor MP Cs were given a 20-percent we ight while non-space constrained polyphase motors MPCs were given 80-percent. For single-phase motors (CSIR and CSCR) shipments, distributions between space constr ained and non-space constrained motors were estimated to vary with each TSL analyzed. At each TSL, weighted MPCs were calculated using

12-14the same shipment distributions used in th e NIA between space constrained and non-space constrained single-phase motors.

The GRIM included the proportion of costs devot ed to labor, material s, depreciation, and overhead that make up the weighted MPC of the equipment. DOE used the same breakdown used for the engineering analysis, except deprecia tion is broken out of overhead. See chapter 5 of the TSD for more information on the cost breakdown. Table 12.4.11, Table 12.4.12, and Table 12.4.13 provide the production cost assumptions, in cluding the weighted MPCs, at the various TSLs used in the GRIM for the product classes analyzed in the engineering analysis.

Table 12.4.11 Production Cost Breakdown for Polyphase 1 HP, 4-Pole Small Electric Motor (2009$)*

TSL Efficiency (%) Labor ($) Material ($) Overhead ($) Depreciation ($) MPC ($) MSP ($)
Baseline 75.3 12.90 40.01 6.59 2.67 62.17 90.33 TSL 1 77.3 13.73 42.56 7.01 2.84 66.14 96.09 TSL 2 78.8 14.17 43.92 7.24 2.93 68.25 99.16 TSL 3 80.5 14.96 46.38 7.64 3.09 72.08 104.72 TSL 4 81.1 15.52 48.13 7.93 3.21 74.80 108.67 TSL 4b 83.5 17.60 54.55 8.99 3.64 84.77 123.16 TSL 5 85.3 22.17 68.75 11.33 4.58 106.84 155.22 TSL 6 86.2 25.75 79.84 13.15 5.32 124.07 180.26 TSL 7 87.7 80.43 249.37 41.09 16.63 387.51 563.00 *Dollar values rounded to the nearest cent.

Table 12.4.12 Production Cost Breakdown for Capacitor-Start, Induction-Run 1⁄2 HP, 4­ Pole Small Electric Motor (2009$)*

TSL Efficiency (%) Labor ($) Material ($) Overhead ($) Depreciation ($) MPC ($) MSP ($)
Baseline 57.9 12.19 41.25 6.66 2.69 62.80 91.24 TSL 1 70.5 14.49 49.04 7.91 3.20 74.65 106.99 TSL 2 70.5 14.49 49.04 7.91 3.20 74.65 106.99 TSL 3 71.8 15.74 53.27 8.60 3.48 81.09 118.00 TSL 4 73.1 19.00 64.30 10.38 4.20 97.87 132.22 TSL 5 73.1 19.00 64.30 10.38 4.20 97.87 132.22 TSL 6 77.6 48.26 163.32 26.36 10.67 248.61 361.19 TSL 7 77.6 20.21 68.39 11.04 4.47 104.10 151.25 TSL 8 77.6 20.21 68.39 11.04 4.47 104.10 151.25 *Dollar values rounded to the nearest cent.

12-15Table 12.4.13 Production Cost Breakdown for Capacitor-Start, Capacitor-Run 3⁄4 HP, 4­ Pole Small Electric Motor (2009$)*

TSL Efficiency (%) Labor ($) Material ($) Overhead ($) Depreciation ($) MPC ($) MSP ($)
Baseline 71.4 12.26 53.18 8.15 3.30 76.90 111.72 TSL 1 79.5 14.42 62.52 9.58 3.88 90.40 131.34 TSL 2 81.7 15.03 65.20 10.00 4.05 94.28 136.97 TSL 3 81.7 15.03 65.20 10.00 4.05 94.28 136.97 TSL 4 82.8 15.75 68.31 10.47 4.24 98.77 143.49 TSL 5 81.7 15.03 65.20 10.00 4.05 94.28 136.97 TSL 6 87.9 67.66 293.45 44.99 18.21 424.31 616.45 TSL 7 81.7 15.04 65.23 10.00 4.05 94.31 137.02 TSL 8 86.7 20.90 90.63 13.89 5.62 131.05 190.39 *Dollar values rounded to the nearest cent.

12.4.8 Conversion Costs

New energy conservation standards typically cause manufacturers to incur one-time conversion costs to bring thei r production facilities and equipmen t designs in compliance with the new regulation. For the MIA, DOE classified these one-time conversion costs into three major groups. Equipment conversion costs are one- time investments in re search, development, testing, and marketing focuse d on making equipment designs comply with the new energy conservation standard. Ca pital conversion costs are one-time investments in property, plant, and equipment to adapt or change existing production facilities so that new e quipment designs can be fabricated and assembled under the new regulation. Stranded assets are equipment or tooling that become obsolete as a result of new regulation. Du ring interviews, DOE asked manufacturers to discuss the impacts of new energy conservation st andard on their current assets. In general, manufacturers reported that alt hough some redesigns could pot entially make some tooling inapplicable for covered SEMs, this tooling would still be applicable to other types of motors that the manufacturer currently pr oduces and not merely scrapped.

12.4.8.1 Capital Conversion Costs

To calculate the industry-wide capital conversion costs, DOE used a combination of estimates provided by manufacturers and an estimated tooling cost at each incremental efficiency level for a typical manufacturer. As part of the tooling cost estimates, DOE examined the specific tooling requirements necessary for a typical manufacturer at each TSL for both space constrained and non-space constr ained motor designs. For many design options analyzed, this leads to capital conversion costs that are additive across space constrained and non-space constrained motors.

Because DOE did not receive specific feedback from all manufacturers, DOE estimated the total capital conversion cost for a typical manufacturer based on the engineering designs developed for the analysis and DOE’s estimated tooling cost for each separate design at each efficiency level and informati on provided by industry experts. DOE used these sources to estimate the required tooling costs for each of th e three representative motor designs at each TSL analyzed. For each of these designs, DOE estimated the tooling costs for: (1) rotor redesigns to use copper (if applicable); (2) grade of steel in cluding the use of premiu m electrical steels; (3)

12-16increases in stack length; (4) necessary rewiring; (5) replacement of end rings; and (6) total number of laminations and the requi red increases in stack length ov er baseline designs. For rotor redesigns to use copper, DOE estimated the costs to purchase new presses, new end rings, and additional tooling. For changes to the grade of steel, DOE estimated the costs for punch press dyes. For increases in stack length, DOE es timated the costs of sw itching more production equipment to accommodate a higher volume of larger sized SEMs. For necessary rewiring, DOE estimates the cost of crimp tools. For replacement of end rings, DOE estimated the tooling changes for different dimensional changes to th e end rings. For increases in laminations, DOE estimated the purchase of pre sses and tooling for winding machinery. Table 12.4.14, Table 12.4.15, and Table 12.4.16 show the estimated total t ooling cost at each TSL for a typical manufacturer.

Table 12.4.14 Polyphase Total Capital Conversion Costs for Typical Manufacturer by TSL*

TSL Design Changes Total Capital Conversion Cost for Typical Manufacturer ($)
Baseline

- 0

TSL 1 Small lamination increase, change in end ring 119,300 TSL 2 Small lamination increase, change in end ring 213,100 TSL 3 Small lamination increase, change in end ring 244,300 TSL 4 20% lamination increase, change in end ring 286,000 TSL 4b 46% lamination increase, change in end ring 619,300

TSL 5 Steel grade change, 115% lamination increase, change in end ring, crimp tooling 1,864,600

TSL 6 Copper rotor, steel grade change, 114% lamination increase, change in end ring, crimp tooling 3,030,600

TSL 7 Copper rotor, premium electrical steel change, 400% lamination increase, change in end ring, crimp tooling 8,329,500

* Estimates rounded to the nearest hundred.

12-17Table 12.4.15 Capacitor-Start, Induction-Run Total Capital Conversion Costs for Typical Manufacturer by TSL*

TSL Design Changes Total Capital Conversion Cost for Typical Manufacturer ($)

Baseline

- 0

TSL 1 61% lamination increase, change in end ring, crimp tooling 783,400

TSL 2 61% lamination increase, change in end ring, crimp tooling 783,400

TSL 3 Copper rotor, 122% lamination increase, change in end ring, crimp tooling, stack length change 2,731,300

TSL 4 Copper rotor, steel grade change, 139% lamination increase, change in end ring, crimp tooling, stack length change 3,339,600

TSL 5 Copper rotor, steel grade change, 139% lamination increase, change in end ring, crimp tooling, stack length change 3,339,600

TSL 6 Copper rotor, premium electrical steel, 456% lamination increase, change in end ring, crimp tooling, stack length change 9,023,900

TSL 7 Copper rotor, change in end ring, crimp tooling, stack length change 1,185,500

TSL 8 Copper rotor, change in end ring, crimp tooling, stack length change 1,185,500

* Estimates rounded to the nearest hundred.

Table 12.4.16 Capacitor-Start, Capacitor-Run Total Capital Conversion Costs for Typical Manufacturer by TSL*

TSL Design Changes Total Capital Conversion Cost for Typical Manufacturer ($)

Baseline

- 0

TSL 1 37% laminations increase, crimp tooling 459,800

TSL 2 53% laminations increase, change in end ring, crimp tooling, stack length change 716,200

TSL 3 53% laminations increase, change in end ring, crimp tooling, stack length change 716,200

TSL 4 Copper rotor, 50% laminations increase, change in end ring, crimp tooling, stack length change 1,810,500

TSL 5 53% laminations increase, change in end ring, crimp tooling, stack length change 716,200

TSL 6 Cooper rotor, premium electrical steel, 400% laminations increase, change in end

ring, crimp tooling, stack length change 8,329,500

TSL 7 Laminations capacity increase, change in end ring, crimp tooling, stack length change 3,627,700

TSL 8 Laminations capacity increase, copper rotor, steel grade change, 115% laminations increase, change in end ring, crimp tooling, stack length change 6,350,500

* Estimates rounded to the nearest hundred.

12-18In addition to estimating the total tooling cost per typical manufacturer, DOE asked manufacturers during interviews to estimate the capital conversion costs they would incur due to new energy conservation standards. Not all manufacturers were able to provide estimates for each TSL. However, DOE used the costs manufact urers provided along with input from industry experts to calibrate final conve rsion cost figures. For manufacturers that did not provide estimates, DOE used its typical manufacturer estimate for the tooling costs for that manufacturer. DOE weighed manufacturer responses and its esti mate of the conversion costs for a typical manufacturer based on their respective market shares to develop estimates for the capital conversion costs for the entire SEM industry at each TSL. Table 12.4.17 summarizes the industry-wide capital conversion estimate s used for the cash flow analysis.

Table 12.4.17 Industry-Wide Capital Conversion Co sts by Trial Sta ndard Level (2009$ Millions)

TSL Total Capital Conversion Cost by Motor Category (2009$ Millions) TSL Total Capital Conversion Cost by Motor Category (2009$ Millions)

Polyphase CSIR CSCR
Baseline 0 Baseline 0 0

TSL 1 0.37 TSL 1 8.00 1.41 TSL 2 0.65 TSL 2 8.00 2.49 TSL 3 0.75 TSL 3 13.98 2.49 TSL 4 0.88 TSL 4 15.85 5.85 TSL 4b 1.90 TSL 5 15.85 2.49 TSL 5 7.08 TSL 6 43.7 36.23 TSL 6 10.66 TSL 7 9.23 11.43 TSL 7 37.29 TSL 8 9.23 19.79

12.4.8.2 Equipment Conversion Costs

Equipment conversion costs include R&D, certif ication and testing, marketing, and other costs required to bring more efficient equipment to the market. DOE estimated total equipment conversion for a typical manufacturer using the cost of engineering time and product development resources for each of the three representative motor designs at each incremental efficiency level. DOE estimated the engineering hours necessary for each design by assigning each a cost based on the complexity of the requi red redesigns. The engineering times required to use copper and premium electrical steels in motor designs were given add itional weight due to the lack of experience using the material within the industry.

In addition to estimating the total equipmen t conversion cost per typical manufacturer, DOE asked manufacturers during interviews to estimate the equipment conversion costs they would incur due to new energy conservation stan dards. Not all manufacturers were able to provide estimates for each TSL. DOE used the costs manufacturers provided in conjunction with input from industry experts to calibrate its fina l equipment conversion costs. For manufacturers that did not provide estimates, the estimated typical manufactu rer equipment conversion costs were used. DOE weighed manufacturer responses based on their respective market shares to develop estimates for the equipment conversion costs of the entire SEM industry at each TSL.

12-19Table 12.4.18 summarizes the total equipment conve rsion estimates for the industry for each motor category.

Table 12.4.18 Industry-Wide Equipment Conversion Co sts by Trial Sta ndard Level (2009$ Millions)

TSL Total Equipment Conversion Cost by Motor Category (2009$ Millions) TSL Total Equipment Conversion Cost by Motor Category (2009$ Millions)

Polyphase CSIR CSCR
Baseline 0 Baseline 0 0

TSL 1 1.92 TSL 1 15.87 0.84 TSL 2 1.92 TSL 2 15.87 0.84 TSL 3 1.92 TSL 3 24.05 0.84 TSL 4 3.84 TSL 4 24.05 1.27 TSL 4b 3.84 TSL 5 24.05 0.84 TSL 5 3.84 TSL 6 31.99 1.68 TSL 6 5.82 TSL 7 24.05 0.84 TSL 7 7.74 TSL 8 24.05 1.27

12.4.9 Markup Scenarios

To understand how baseline and more-effi cient equipment are differentiated, DOE reviewed manufacturer catalogs and utilized information gathered from manufacturers. To estimate the manufacturer price of the equipmen t sold, DOE applied markups to the production costs. For the analysis, DOE considered differe nt markup scenarios base d on manufacturer input for SEMs. Scenarios were used to bound the range of expected equipment prices following new energy conservation standards. For each product cl ass, DOE used the markup scenarios that best characterized the prevailing markup conditions and described the range of market responses manufacturers expect as a result of ne w energy conservation standards.

After discussions with manuf acturers and market resear ch, DOE modeled two markupscenarios: The preservation-of-return-on-invested-capital scenario and the preservation-ofoperating profit scenario.

12.4.9.1 Preservation-of-Return-on-Invested-Capital Scenario

Under the preservation-of-return-on-invested -capital scenario, DOE applied a markup at each TSL that sets manufacturers return on invested capital in the standards case to the same level as in the base case. Return on invested capital is the ratio of net operating profits (after taxes) to invested capital. As invested capita l increases, net operatin g profits proportionately increase.

During interviews, manufacturers expresse d a range of opinions on how selling prices would be impacted by new energy conservation standards. While some manufacturers stated it has been difficult passing along any increase in material or component costs on to customers, others stated that that these cost increases have had a minimal effect on their margins. Due to the uncertainty in how market prices will respond to standards, DOE assumes that this scenario represents a high bound to manufacturer selling pri ces after a new energy conservation standard.

12-20Table 12.4.19 Preservation-of-Return-on-Invested-Capital Markup for Polyphase Small Electric Motors
Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 4b TSL 5 TSL 6 TSL 7
1.453 1.452 1.452 1.448 1.446 1.442 1.446 1.446 1.413

Table 12.4.20 Preservation-of-Return-on-Invested-Capital Markup for All Capacitor-Start Motors
Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 TSL 8 1.453 1.454 1.456 1.456 1. 447 1.444 1.421 1.468 1.447

12.4.9.2 Preservation-of-Operating Profit Scenario

Operating profit is defined as earnings before interest and taxes. The implicit assumption behind this markup scenario is that the industr y can maintain its opera ting profit (in absolute dollars) after the standard. The industry would do so by passing through its increased costs to customers without increasing its operating profits in absolute dollars. DOE implemented this scenario in the GRIM by setting the markups fo r each TSL to yield approximately the same operating profit in the standards cases the year afte r the effective date (2016) as is yielded in the base case. For this scenario, the financial metr ics of return on sales (percent) and return on invested capital (ROIC) decline with increasing TSL, indicating reduced industry profitability. DOE assumes that this scenario represents a low bound to manufacturer selling prices after a new energy conservation standar d. The markups under this scenario are summarized in Table 12.4.21 and Table 12.4.22 for the representative motors.

Table 12.4.21 Preservation-of-Operating Profit Markup for Polyphase Small Electric Motors
Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 4b TSL 5 TSL 6 TSL 7
1.453 1.443 1.440 1.433 1. 430 1.413 1.384 1.368 1.298

Table 12.4.22 Preservation-of-Operating Profit Markup for all Capacitor-Start Motors
Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 TSL 8 1.453 1.429 1.429 1.417 1. 395 1.396 1.321 1.416 1.385

12.5 INDUSTRY FINANCIAL IMPACTS

Using the inputs and scenarios described in the previous sections, the GRIM estimated financial impacts on the SEM industry due to ne w energy conservation standards. The main results of the MIA are also reported in this s ection and consist of two key financial metrics: INPV and annual cash flows. During interviews, the majority of manufacturers generally agreed with the assumed markup of 1.45. With that fi gure fixed, the GRIM was calibrated to produce the same EBIT by adjusting the amounts for R&D and SG&A expenses.

12.5.1 Impacts on Industry Net Present Value

In the MIA, DOE compared the INPV of the base case (no new energy conservation standards) to that of each TSL. The difference in INPV is an estimate of the economic impacts that implementing that particul ar TSL would have on the entire industry. For the SEM industry,

12-21DOE examined two markup scenarios as desc ribed in the markup section above. Table 12.5.1 and Table 12.5.2 provide the INPV estimates for the SEM industry for polyphase motors under the different scenarios, while Table 12.5.3 and Table 12.5.4 provide the INPV estimates for the SEM industry for capacitor-start motors under th e different scenarios. The INPV figures are calculated separately for polyphase motors and capacitor-start motors. The two capacitor-start motor categories are combined for this analysis as they can potentially be used interchangeably for many functions.

Table 12.5.1 Change in Industry Net Present Value for Polyphase SEMs (Preservation-ofReturn-on-Invested-Capital Markup Scenario)
Units Base Case Trial Standard Level
1 2 3 4 4b 5 6 7

INPV 2009$ millions 70 69 70 71 70 73 82 88 165

Change in INPV 2009$ millions - (0.19) 0.34 0.98 0.57 3.37 12.62 18.54 95.27

%

- (0.27) 0.49 1.41 0.82 4.84 18.15 26.65 136.95 Equipment Conversion Costs 2009$ millions - 1.9 1.9 1.9 3.8 3.8 3.8 5.8 7.7

Capital Conversion Costs 2009$ millions - 0.4 0.7 0.7 0.9 1.9 7.1 10.7 37.3

Total Investment Required 2009$ millions - 2.3 2.6 2.7 4.7 5.7 10.9 16.5 45.0

12-22Table 12.5.2 Change in Industry Net Present Value for Polyphase SEMs (Preservation-ofOperating Profit Markup Scenario)
Units Base Case Trial Standard Level
1 2 3 4 4b 5 6 7

INPV 2009$ millions 70 68 68 67 66 64 58 52 0

Change in INPV 2009$ millions - (1.49) (1.86) (2.26) (3.58) (5.43) (11.80) (17.51) (69.47)

%

- (2.15) (2.67) (3.25) (5.15) (7.80) (16.96) (25.16) (99.85) Equipment Conversion Costs 2009$ millions - 1.9 1.9 1.9 3.8 3.8 3.8 5.8 7.7

Capital Conversion Costs 2009$ millions - 0.4 0.7 0.7 0.9 1.9 7.1 10.7 37.3

Total Investment Required 2009$ millions - 2.3 2.6 2.7 4.7 5.7 10.9 16.5 45.0

Table 12.5.3 Change in Industry Net Pres ent Value for Capacitor-Start SEMs (Preservation-of-Return-on-Invested-Capital Markup Scenario)
Units Base Case Trial Standard Level
1 2 3 4 5 6 7 8

INPV 2009$ millions 279 287 289 295 311 308 466 297 325

Change in INPV 2009$ millions - 8.40 9.46 16.27 32.15 28.48 186.60 18.40 46.35

%

- 3.01 3.39 5.83 11.52 10.20 66.87 6.59 16.61 Equipment Conversion Costs 2009$ millions - 16.7 16.7 24.9 25.3 24.9 33.7 24.9 25.3

Capital Conversion Costs 2009$ millions - 9.4 10.5 16.5 21.7 18.3 79.9 20.7 29.0

Total Investment Required 2009$ millions - 26.1 27.2 41.4 47.0 43.2 113.6 45.5 54.3

12-23Table 12.5.4 Change in Industry Net Pres ent Value for Capacitor-Start SEMs (Preservation-of-Operating Profit Markup Scenario)
Units Base Case Trial Standard Level
1 2 3 4 5 6 7 8

INPV 2009$ millions 279 259 258 247 236 239 127 245 226

Change in INPV 2009$ millions - (19.99) (20.79) (32.42) (43.15) (40.09) (152.05) (34.05) (52.58)

% ­ (7.16) (7.45) (11.62) (15.46) (14.37) (54.49) (12.20) (18.84) Equipment Conversion Costs 2009$ millions - 16.7 16.7 24.9 25.3 24.9 33.7 24.9 25.3

Capital Conversion Costs 2009$ millions - 9.4 10.5 16.5 21.7 18.3 79.9 20.7 29.0

Total Investment Required 2009$ millions - 26.1 27.2 41.4 47.0 43.2 113.6 45.5 54.3

12.5.2 Impacts on Annual Cash Flow

While INPV is useful for evaluating the lo ng-term effects of new energy conservation standards, short-term changes in cash flow are also important indicators of the industry’s financial situation. For example, a large investment over a period of one or two years could strain the industry’s access to capital. Consequently, the sharp drop in financial performance could cause investors to flee, even though recovery ma y be possible. Thus, a short-term disturbance can have long-term effects that the INPV cannot capture. To get an idea of the behavior of annual net cash flows, DOE presents the a nnual net or free cash flows from 2008 through 2044 for the different TSLs. Table 12.5.5 and Table 12. 5.6 present the annual net cash flows for the base case and each of the eight polyphase motor TSLs, while Table 12.5.7 and Table 12.5.8 present the annual net cash flows for the base case and each of the eight CSIR and CSCR TSLs for the SEM industry assuming the different markups scenarios.

12-24Table 12.5.5 Annual Industry Net Cash Flows for Polyphase Motors (Preservation-ofReturn-on-Invested-Capital Markup Scenario)

Table 12.5.6 Annual Industry Net Cash Flows for Polyphase Motors (Preservation-ofOperating Profit Markup Scenario)

Prior to the effective date of the amended energy conservation standard for polyphase motors, cash flows are driven by the level of ca pital investments and e quipment conversion costs and the proportion of these investments spent ev ery year. After the standard announcement date,

12-25industry cash flows begin to decline as companies use their financial resources to prepare for the new standard. The more stringent the energy conservation standard, the greater the impact on industry cash flows in the years running up to the effective date, as capital expenditures and equipment development costs de press cash flows from operations. Free cash flow begins to improve during the year the new energy conservati on standard becomes effective. In this year, manufacturers write down the part of the value of existing tooling, equipment, and intellectual property whose value is impacted by the new efficiency standard. This one-time write-down acts as a tax shield that increases the cash flow from operations for this one year only. In the years following the standard, the impact on cash flow depends on the operating revenue.

Higher polyphase TSLs have a positive impact on cash flows relative to the base case under the preservation-of-return-on-invested-capit al markup scenario because manufacturers are able to pass along some costs to customers. Unde r this scenario, free cash flow is restored to baseline level or greater for all TSLs the year the standard becomes effective. Prior to 2015, higher TSLs have a greater cash outlay on the i ndustry’s cash position because the investment in new equipment, however, after 2015 the industry is able to obtain higher prices, improve revenue brought in by standards-compliant equipment and increase operating cash flows. Under this scenario, the higher the TSL, the higher industry cash flows will be.

Unlike the preservation-of-return-on-invested -capital markup scenario, the preservationof-operating profit markup scenario indicates higher polyphase TSLs will have a negative impact on free cash flow relative to the base case prior to the standards year of 2015. In this scenario, higher TSLs squeeze the gross margin percentages as higher incremental price increases of standards-compliant equipment lead to a greater proportion of those costs not being recouped, eroding operating cash flow.

12-26Table 12.5.7 Annual Industry Net Cash Flows for Capacitor-Start Motors (Preservation-ofReturn-on-Invested-Capital Markup Scenario)

Table 12.5.8 Annual Industry Net Cash Flows for Capacitor-Start Motors (Preservation-ofOperating Profit Markup Scenario)

Prior to the effective date of the amended en ergy conservation standard for capacitor-start motors, cash flows are driven by the level of ca pital investments and e quipment conversion costs

12-27and the proportion of these investments spent ev ery year. After the standard announcement date, industry cash flows begin to decline as companies use their financial resources to prepare for the new standard. The more stringent the energy conservation standard, the greater the impact on industry cash flows in the years running up to the effective date, as capital expenditures and equipment development costs de press cash flows from operations. Free cash flow begins to improve during the year the new energy conservati on standard becomes effective. In this year, manufacturers write down the part of the value of existing tooling, equipment, and intellectual property whose value is impacted by the new efficiency standard. This one-time write-down acts as a tax shield that increases the cash flow from operations for this one year only. In the years following the standard, the impact on cash flow depends on the operating revenue.

Higher capacitor-start TSLs have a positive impact on cash flows relative to the base case under the preservation-of-return-on-invested-capit al markup scenario because manufacturers are able to pass along some costs to customers. Unde r this scenario, free cash flow is restored to baseline level or greater for all TSLs the year the standard becomes effective. Prior to 2015, higher TSLs have a greater cash outlay on the i ndustry’s cash position because the investment in new equipment, however, after 2015 the industry is able to obtain higher prices, improve revenue brought in by standards-compliant equipment and increase operating cash flows. Under this scenario, the higher the TSL, the higher industry cash flows will be.

Unlike the preservation-of-return-on-invested -capital markup scenario, the preservationof-operating profit markup scenario indicates higher TSLs will have a negative impact on free cash flow relative to the base case prior to the standards year of 2015. In this scenario, higherTSLs squeeze the gross margin percentages as higher incremental price increases of standardscompliant equipment lead to a greater proporti on of those costs not being recouped, eroding operating cash flow.

12.6 OTHER IMPACTS

12.6.1 Employment

To quantitatively assess the impacts of energy conservation standards on SEM manufacturing employment, DOE used the SEM GRIM to estimate the domestic labor expenditures and number of employees. Higher TS Ls should not alter employment at the plant level. During interviews with manufacturers, DOE learned that many facilities produced many products other than SEMs. As such, DOE’s figu res assume that even if some manufacturers exited the market, these employees would still be retained.

DOE used statistical data from the U.S. Census Bureau’s 2007 Economic Census (2007 EC), the results of other rulemaking analysis, and interviews with manufacturers to estimate the inputs necessary to calculate industry-wide la bor expenditures and em ployment levels. DOE multiplied the labor percentage of cost-of-goods -sold (COGS) by the tota l annual COGS for the industry to calculate the total labor expenditure. In response to comments received in the NOPR, DOE re-evaluated its direct employment estimates. During manufacturer interviews, DOE asked manufacturers to discuss the impacts of new en ergy conservation standards on their direct employment and also requested information on domestic facilities. Based on the information provided from interviews, DOE estimates that approximately 60-percent of SEMs are

12-28manufactured and sold in the U.S. DOE multiplie d the total annual labor expenditures in the SEM GRIM by the percentage of U.S. produc tion for domestic consumption to calculate domestic labor expenditures for SEM production labor. The domestic annual labor expenditures in the SEM GRIM were converted to a domes tic production employment level by dividing domestic production labor expenditures by th e annual payment per production worker (production worker hours times th e labor rate found in the 2007 EC). The number of nonproduction employees was calculated by multiplying the number of production workers by the ratio of non-production workers to production workers, which was calculated using the employment data in the 2007 EC.

The SEM GRIM calculates that the SEM industry’s domestic labor expenditure for production labor in 2015 is a pproximately $35.9 million. Domes tic labor expenditures on production labor is calculated by multiplying total COGS in 2015 by the production labor percentage of COGS and the percentage of U.S production. Using the $17.21 wage rate and 1,955 production hours per year per employee found in the 2007 EC, the GRIM estimates that there are approximately 1,068 U.S. production work ers in the SEM industry in 2015. In addition, DOE estimates that there are approximately 417 non-production employees in the U.S. in 2015 that support SEM production. b DOE notes that the U.S. production and non-production employee estimates are subject to considerable uncertainty due to the level of detail of information received from manufacturers and public comme nts. Given this uncertainty, the direct employment figures may be significantly lower. However, direct empl oyment levels are not expected to change due to the increased labor content of more efficient motors, and because the overall scale of the facility does not change with higher efficiency levels.

The employment impacts calculated by DOE ar e independent of the employment impacts from the broader U.S. economy, which are documented in chapter 15 of the TSD. Theemployment impacts also do not account for the possible relocation of domestic jobs to lowerlabor-cost countries because the potential relocation of U.S. jobs is uncertain and highly speculative.

b As defined in the 2006 Annual Survey of Manufacturers, production workers number include “workers (up through the line-supervisor level) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping (but not delivering), maintenance, repair, janitorial and guard services, product development, auxiliary production for plant's own use (e.g., power plant), recordkeeping, and other services closely associated with these production operations at the establishmentcovered by the report. Employees above the working-supervisor level are excluded from this item.” Nonproduction workers are defined as “employees of the manufacturing establishment including those engaged in factory supervision above the line-supervisor level. It includes sales (including driver-salespersons), sales delivery (highway truck drivers and their helpers), adver tising, credit, collection, installation and servicing of own products, clerical and routine office functions, executive, purchasing, financing, legal, personnel (including cafeteria, medical, etc.), professional, and technical employees. Also included are employees on the payroll of the manufacturing establishment engaged in the construction of major additions or alterations utilized as a separate work force.”

12-2912.6.2 Production Capacity

New energy conservation standards will not significantly affect the production capacity of small electric motor manufacturers. For manufacturers, any necessary redesign will not change the fundamental assembly of the produc ts. Most manufacturers reported that current production equipment has the ability to produce motors designed to reach efficiency level 4 for both polyphase and single-phase motors with only minor modifications needed. Therefore, in the long-term there should be no capacity constraint s. Manufacturers indicated that producing more efficient small electric motors w ould not be technically difficult and that they would not need to build new facilities to accommodate the manufacturing of a more efficient motor.

However, short-term capacity could be negativ ely affected if manufacturers significantly increase the number of laminations for each motor. This increase would likely necessitate the purchase of new stamping tooling and could create a bottleneck until the new tooling is purchased. Most manufacturers indicated that this bottleneck would be at least partially offset by current excess capacity. The real risk is that standards could cause manufacturers to eliminate some motor categories, and reduce overall production.

12.6.3 Exports

SEM exports comprise a small fraction of SE M sales for most manufacturers. A minority of manufacturers sell more internationally than domestically, but these companies typically import SEMs from overseas. Manufacturers intervie wed estimate that exports account for 10- to15-percent of total sales. The majority of ex ports are sold to Mexico and Asian countries.

Most manufacturers interviewed stated that th ey do not expect much change to their export strategies following standards. Regardless of standards, some manufacturers indicated that they expect an increase in exports going forward. Once the U.S. standard takes effect, SEM manufacturers would still be able to produce and export units that do not meet DOE’s efficiency standard, since the standard only applies to equipment for use in the United States.

Manufacturers informed DOE that a large per cent of the domestic market is imported. In turn, the manufacturers were c oncerned about the enforcement of energy conservation standards if legislation is enacted.

12.6.4 Cumulative Regu latory Burden

While any one regulation may not impose a significant burden on manufacturers, the combined effects of several impending regulatio ns may have serious consequences for some manufacturers, groups of manufacturers, or an enti re industry. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. For the cumulative regulatory burden analysis, DOE describes other significant e quipment-specific regulati ons that could affect SEM manufacturers or their parent company that will take effect three years before or three years after the effective date of the new energy c onservation standards for the covered equipment. c

c The effective date of new energy conservation standards for this rulemaking for SEMs is five years from the date of publication of the final rule (approximately February 2015).

12-30Companies that produce a wider range of regu lated equipment may be faced with more capital and equipment development expenditures than their competitors. Regulatory burdens can prompt companies to exit the market or reduc e their equipment offerings, possibly reducing competition. Smaller companies may be especially affected since they have lower sales volumes over which to amortize the costs of meeting new regulations. A proposed standard is not economically justified if it contributes to an unacceptable level of cumulative regulatory burden.

In addition to the energy conservation re gulations on SEMs, se veral other Federal regulations and pending regulations apply to th is equipment and other equipment produced by the same manufacturers. DOE recognizes that each regulation can significantly impact manufacturers’ financial operations. The following sections provide a qualitative discussion of some of these regulations and standards.

12.6.4.1 Federal Regulations on SEMs and Other Equipment Produced by the Same Manufacturers

Besides the energy conservation regulations on SEMs, several other Federal regulations and pending regulations apply to other equipm ent produced by the same manufacturers. DOE recognizes that each regulation can significantly impact manufacturers’ financial operations. Multiple regulations affecting the same manufacturer can quickly strain manufacturers’ profits and possibly cause an exit from the market. Tabl e 12.6.1 lists the Federal regulations that could also affect manufacturers of the SEM industry in th e three years leading up to and the three years preceding the effective date of the new energy conservation standards for this equipment. It must be noted that the amount of cumulative burden on an y particular firm is ex tremely variable since the product scope of each company is different . Table 12.6.1 also provides the timetables for these regulations.

Table 12.6.1 Other DOE Actions A ffecting the SEM Industry Regulation Approximate Effective Date* Number of Impacted Companies from the Market and Technology Assessment Estimated Total Conversion Costs**

Power Supplies 2013* 1 N/A †

Water Heaters 2015* 1 N/A † *The dates listed are an approximation. The exact dates are pending final DOE action. ** Total conversion costs include both capital and equipment conversion costs. † For energy conservation standards for ongoing rulemakings that are awaiting DOE final action, DOE does not have finalized estimated total industry conversion costs.

Additional investments necessary to meet thes e potential standards c ould have significant impacts on manufacturers of the covered equipment. However, DOE has limited data on the importance of these other regulated products for manufacturers of SEMs. Differences in market shares and manufacturing processes of other regulated products for each manufacturer could cause varying degrees of burdens on these manufacturers. Therefore, DOE only estimated the cost of compliance to meet other energy cons ervation standards for re gulated products if DOE had published a final rule.

12-3112.6.4.2 Restriction of Hazardous Substances Directive

The Restriction of Hazardous Substance Directive 2 (RoHS) will have some global impact on manufacturing of electrical and electronic equi pment. Under the directive, all manufacturers are banned from placing on the European Union market new electrical and electronic equipment containing more than agreed levels of l ead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl, and polybrominated di phenyl ether flame retardants. Though not all manufacturers export SEMs to the European Unio n, manufacturers stated this directive could potentially impact their business. Although ther e is no Federal regulation on RoHS, California has passed SB 20: Electronic Waste Recycling Ac t of 2003. Under this la w, California limits the amount of hazardous substances included in the Ro HS directive that can be sold in California. However, manufacturers do not anticipate RoHS w ill significantly affect the SEM industry as a whole.

12.6.4.3 Registration, Evaluation and Authorization of Chemical substances

Registration, Evaluation and Authorization of Chemical substances (REACH), is a European Community Regulation enacted on J une 1, 2007. REACH requires that manufacturers and importers demonstrate that th ey have identified and managed risks linked to the substances they manufacture and market. Companies are requir ed to gather informa tion on the properties of their chemical substances, which will allow their safe handling, and to register the information in a central database run by the European Chemicals Agency (ECHA). The Regulation also calls for the progressive substitution of the most dangerous chemicals when suitable alternatives have been identified. One manufacturer mentioned concern that new energy conservation standards would require added cost and time burdens with respect to REACH compliance.

12.6.4.4 Trade Group Regulations

The National Electrical Manufacturers Association (NEMA) and the International Electrotechnical Commission (IEC) both have opt ional standards that have impacted how manufacturers have designed SEMs. NEMA established a level of “premium” motors that achieve certain efficiency levels depending on pr oduct class. The IEC specified electrical (IEC 34) and mechanical (IEC 72) speci fications in motors. If new regulations are enacted, this could impact both NEMA and IEC SEM designs.

12.6.4.5 Other Regulations

Some manufacturers expressed their opinion th at the Canadian Standards Association (CSA) will likely adopt DOE’s efficiency levels fo llowing the issuance of the final rule in 2010.

12.7 CONCLUSIONS

The following section summarizes the different impacts for the two scenarios DOE believes are most likely to capture the range of impacts on SEM manufacturers as a result of new energy conservation standards. DOE also notes that while these two scenarios bound the range of

12-32most plausible impacts on manufacturers, there po tentially could be circ umstances which cause manufacturers to experience imp acts outside of this range.

To assess the higher end of the range of potential impacts on the SEM industry, DOE considered a scenario in which the industry re turn on invested capital in the base case is preserved in the standards case ( i.e

. , the markup is adjusted at each TSL). Thus, a manufacturer is able to pass on any additional costs due to standa rds at the same level as they have historically and maintain the ratio between net operating profits after taxes (NOPAT) and working capital.

To assess the lower end of the range of potential impacts for the SEM industry, DOE considered the scenario reflecting the pres ervation-of-operating pr ofit markup. Besides the impact of shipments on the INPV, this case assume d that the industry can maintain its operating profit (EBIT) after the standard effective date. The industry would do so by passing through its increased costs to customers without passing through R&D and SG&A in the year standards become effective.

Polyphase Small Electric Motors

DOE estimated the impacts on INPV at TSL 1 to range from -$0.19 million to -$1.49 million, or a change in INPV of - 0.27-percent to -2.15-percent. At th is level, industry cash flow decreases by approximately 13.3-percent, to $4.8 4 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standards. The majority of manufacturers have motors that meet this efficiency level. All manufacturers that were interviewed stated that their existing motor designs allow for simple modifications that would require minor capital and equi pment conversion costs to reach TSL 1. A possible modification analyzed in the engineering analysis is a roughly 7-percent increase in the number of laminations within both space constrained and non-space cons trained motors. Manufacturers indicated that modifications like increased laminations could be made within existing baseline motor designs without significantly altering their size. In add ition, these minor design changes will not raise the production costs beyond the cost of most motors sold today, resulting in minimal impacts on industry value.

DOE estimated the impacts in INPV at TSL 2 to range from $0.34 million to -$1.86 million, or a change in INPV of 0.49- percent to 2.67-percent. At this level, industry cash flow decreases by approximately 15.6-percent, to $4.7 1 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standards. Similar to TSL 1, at TSL 2 manufacturers stated that their existing motor designs allow for simple modifications that would entail only minor capital and equipment conversion costs. A possible modification analyzed in the engineering analysis increases the number of laminations by approximately 15­ percent from the baseline within both space constrained and non-spaced constrained motors. Manufacturers indicated that these modifications could be made within baseline motor designs without significantly changing their size. At TSL 2, the production costs of standards-compliant motors do not increase enough to significantly affect INPV.

At TSL 3, DOE estimated the impacts in INPV to range from $0.98 million to -$2.26 million, or a change in INPV of 1.41-percent to -3.25-percent. At this level, industry cash flow decreases by approximately 16.4-percent, to $4.6 7 million, compared to the base-case value of

12-33$5.58 million in the year leading up to the energy conservation standards. Similar to TSL 1 and TSL 2, at TSL 3 manufacturers stated that their existing motor designs would still allow for simple modifications that would not require sign ificant capital and equi pment conversion costs. In the engineering analysis, standards-compliant motors that meet the efficiency requirements at TSL 3 have 17-percent increase in the number of laminations compared to the baseline design within both space constrained and non-spaced cons trained motors. These changes do not result in significant impacts on INPV.

At TSL 4, DOE estimated the impacts in INPV to range from $0.57 million to -$3.58 million, or a change in INPV of 0.82-percent to -5.15-percent. At this level, industry cash flow decreases by approximately 27.7-percent, to $4.0 3 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standard s. Most manufacturers that were interviewed are able to reach this level without significant redesigns. At TSL 4, a possible design pathway for manufacturers could be to increase the number of laminations by approximately 20-percent over the baseline designs within space constrained and non-space constrained motors.

At TSL 4b, DOE estimated the impacts in INPV to range from $3.37 million to -$5.43 million, or a change in INPV of 4.84-percent to -7.80-percent. At this level, industry cash flow decreases by approximately 36.0-percent, to $3.5 7 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standard s. Most manufacturers that were interviewed are able to reach this level without significant redesigns. A possible redesign for non-space constrained motors would include increasing the number of laminations by 47-percent relative to the baseline motor de sign. For space constrained motors, redesigns could require up to 20-percent more laminations of better grade electrical steel. However, manufacturers reported that efficiency levels similar to TSL 4b would be the highest achievable before required efficiencies could significantl y change motor designs and production equipment. However, setting a level higher than TSL 4b may require significant motor size changes.

At TSL 5, DOE estimated the impacts in INPV to range from $12.62 million to -$11.80 million, or a change in INPV of 18.15-percent to - 16.96-percent. At this level industry cash flow decreases by approximately 77.7-percent, to $1.2 4 million, compared to the base-case value of $5.58 million in the year leading up to the energy c onservation standards. TS L 5 is equivalent to the current NEMA Premium level that manufactur ers produce for medium-s ized electric motors. Although some manufacturers reported having exis ting small electric motors that reach TSL 5, the designs necessary are more complex than their cost optimized designs at lower TSLs. A possible redesign for non-space constrained motors would include adding up to 49-percent more laminations relative to the baseline motor design and improving the grade of steel. For space constrained motors, redesigns could require up to 114-percent more laminations of a thinner and higher grade of steel. Manufacturers are concerned that redesigns at TSL 5 could increase the size of the motors if they do not currently have motors that reach the NEMA Premium efficiency levels. A shift to larger motors could be detrimental to sales due to the inability of OEMs to use standards-compliant motors as direct replac ements in some applications. According to manufacturers, at TSL 5, the industry would incur significantly higher capital and equipment conversion costs in comparison to the lower effi ciency levels analyzed. DOE estimates that the capital and equipment conversion costs required to make the redesigns at TSL 5 would be approximately four times the am ount required to meet TSL 1. At TSL 5 manufacturers would

12-34also be required to shift their entire production of baseline motors to higher priced and higher efficiency motors, making their current cost-optimized designs obsolete. These higher production costs could have a greater impact on the industry value if operating profit does not increase. Manufacturers indicated that setting energy conservation standards at TSL 5 could cause some manufacturers to consider exiting the small electric motor market because of the lack of resources, potentially unjustifiabl e investments for a small segmen t of their business, and the possibility of lower revenues if OEMs will not accept large motors.

At TSL 6, DOE estimated the impacts in INPV to range from $18.54 million to -$17.51 million, or a change in INPV of 26.65-percent to - 25.16-percent. At this level industry cash flow decreases by approximately 117.2-percent, to - $0.96 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standard s. Currently, no small electric motors are rated above the equivalent to the NEMA Premium standard (TSL 5). Possible redesigns for space constrained motors at TSL 6 include the use of copper rotors and a 114­ percent increase in the number of laminations of a thinner and higher grade of steel. These changes would cause manufacturers to incur sign ificant capital and equipment conversion costs to redesign their space constrained motors due to the lack of experience in using copper. According to manufacturers, copper tooling is signi ficantly costlier and not currently used by any manufacturers for the production of small electri c motors. If copper rotor designs are required, manufacturers with in-house die-casting capabilities will need completely new machinery to process copper. Manufacturers th at outsource rotor production would pay higher prices for their rotor designs. In both cases, TSL 6 results in si gnificant equipment conversion costs to modify current manufacturing processes in addition to redesigning motors to use copper in the applications of general-purpose small electric motors. Largely due to the significant changes to space constrained motors, DOE estimates that at TSL 6 manufacturers would incur close to seven times the total conversion costs required at TSL 1 (a total of approximately $16.5 million). However, for non-space constrained motors, manufacturers are able to redesign their existing motors without the use of copper rotors by using twice the number of laminations that are contained in the baseline design. Therefore, for non-space constrained motors the impacts at TSL 6 are significantly less because manufacturers can maintain existing manufacturing processes without the potentially significant changes associat ed with copper rotors. At TSL 6 the impacts for non-space constrained motors are mainly due to higher motor costs and the possible decrease in profitability if manufac turers are unable to fully pass through their higher production costs.

At TSL 7, DOE estimated the impacts in INPV to range from $95.27 million to -$69.47 million, or a change in INPV of 136.95-percent to -99.85-percent. At this level industry cash flow decreases by approximately 342.4-percent, to -$13.52 million, compared to the base-case value of $5.58 million in the year leading up to the energy conservation standards. Currently, the market does not have any motors that reach TSL 7. At TSL 7, space constrained motor designs may require the use of copper rotors and premium electrical steels, such as the Hiperco steel used in DOE’s design. There is some uncertainty a bout the magnitude of the impacts on the industry of using Hiperco steel. Manufacturers were unsure about the required conversion costs to reach TSL 7 because of the unproven properties and ap plicability of the technology in the generalpurpose motors covered by this rulemaking. Si gnificant R&D for both manufacturing processes and motor redesigns would be necessary to unde rstand the applications of premium steels to general-purpose small electric motors. According to manufacturers, requiring this technology could cause some competitors to exit the small electric motor market. If manufacturers’ concerns

12-35of having to use both copper rotors and new steels materialize, manufacturers could be significantly impacted. For non-space constrai ned motors, DOE estimates that manufacturers would require the use of copper rotors but not pr emium steels. If manufacturers are required to redesign non-spaced constrained motors with co pper, the total conversion costs for the industry increases greatly because all motors require substantially different production equipment. Finally, the production costs of motors that meet TSL 7 could be up to 18 times higher than the production costs of baseline motors. The cost to manufacture standards-compliant motors could have a significant impact on the industry if ope rating profit does not in crease with production

costs.

Capacitor-Start, Induction-R un and Capacitor-Start, Capacitor-Run Small Electric Motors

At TSL 1, DOE estimated the impacts in INPV to range from $8.4 million to -$19.99 million, or a change in INPV of 3.01-percent to -7.16-percent. At this level, industry cash flow decreases by approximately 41.3-percent, to $13. 13 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. At TSL 1 for CSIR motors, DOE estimates manufacturers would need to increase the number of laminations for space constrained motors by approximately 33-percent and use a thinner and higher grade of steel. For non-space constrained CSIR motors , manufacturers could increase laminations by approximately 61-percent with the use of a better grade of electric steel. For space constrained CSCR motors, manufacturers could increase laminati ons by 10-percent and use a higher grade of steel. For non-space constrained CSCR motors, manufacturers could incr ease laminations by approximately 37-percent. For bot h CSIR and CSCR motors, the additional stack length needed to reach TSL 1 is still within the tolerances of many manufacturers’ existing motors. DOE estimates that these changes would cause the i ndustry to incur capital and equipment conversion costs of approximately $26.1 million to reach TSL 1. While TSL 1 would increase production costs, the cost increases are not enough to seve rely affect INPV under the scenarios analyzed.

At TSL 2, DOE estimated the impacts in INPV to range from $9.46 million to -$20.79 million, or a change in INPV of 3.39-percent to -7.45-percent. At this level, industry cash flow decreases by approximately 43.5-percent, to $12. 65 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. For CSIR motors, the same changes to meet TSL 1 are necessary for TSL 2. For CSCR motors, TSL 2 represents what manufacturers might consider a NEMA Premium equivalent efficiency level. The changes required for CSCR motors could cause manufactur ers to incur additional capital conversion costs to accommodate the required increase in laminations. Imposing standards at TSL 2 would increase production costs for both CSIR and CSCR mo tors, but the cost increases for both types of motors are not enough to severely affect INPV.

At TSL 3, DOE estimated the impacts in INPV to range from $16.27 million to -$32.42 million, or a change in INPV of 5.83- percent to -11.62-percent. At th is level, industry cash flow decreases by approximately 66.5-percent, to $7.5 1 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. At TSL 3, space constrained CSIR motors could re quire redesigns that use copper rotors. Using copper rotors for space constrained CSIR motors could cause manufacturers to incur approximately $41.4 million in capital and equipment convers ion costs, largely to purchase the equipment necessary to produce these redesigned motors. As with poly phase motors, manufacturer s reported that copper

12-36rotor tooling is significantly costlier than traditional aluminum rotor tooling and not currently used by the industry for the production of small electric motors. Similarly, in-house die-casting capabilities would need completely new machinery to process copper and the alternative of outsourcing rotor production would greatly increa se material costs. For non-space constrained CSIR motors, manufacturers could redesign moto rs by increasing the number of laminations without the use of copper rotors, resulting in si gnificantly smaller impacts. At TSL 3, the impacts for non-space constrained motors are mainly due to higher motor material costs and a possible decline in profit margins. TSL 3 represents what manufacturers may consider a NEMA Premium equivalent efficiency level for CSCR motors. The required efficiencies for space constrained CSCR motors could be met by manufacturers by increasing the number of laminations by 15­ percent and using higher steel grades. The re quired efficiencies for non-spaced constrained CSCR motors could be met by increasing the numb er of laminations by 53-percent. Because the redesigns for CSCR motors are less substantial, the impacts at TSL 3 are driven largely by the required CSIR efficiencies.

At TSL 4, DOE estimated the impacts in INPV to range from $32.15 million to -$43.15 million, or a change in INPV of 11.52- percent to -15.46-percent. At this level, industry cash flow decreases by approximately 77.5-percent, to $5.0 2 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. TSL 4 currently represents what manufacturers may consider a NEMA Premium equiva lent level for CSIR motors. Possible redesigns for both CSIR a nd CSCR motors to meet TSL 4 involve both increasing the number of laminations as well as using higher grades of steel. For space constrained CSIR motors, redesigns could require the use of copper rotors. Because of these redesigns, standards-compliant motors at TS L 4 have significantly higher costs than manufacturers’ baseline motors. These changes increase the engineering and capital resources that must be employed, especially for CSIR moto rs. The negative impacts at TSL 4 are driven by the conversion costs that potentially require some single-phase motors to use copper rotors, and the higher production costs of standards-compliant motors.

At TSL 5, DOE estimated the impacts in INPV to range from $28.48 million to -$40.09 million, or a change in INPV of 10.20- percent to -14.37-percent. At this level, industry cash flow decreases by approximately 70.2-percent, to $6.6 6 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. TSL 5 represents what manufacturers may consider a NEMA Premiu m equivalent efficiency levels for both CSIR and CSCR motors. At TSL 5, space constrained CS IR motors could require the use of copper rotors. The required efficiencies for non-space constrained CSIR motors could be met by manufacturers by increasing the number of lamina tions by 82-percent and using a higher grade of steel. The required efficiencies for spac e constrained CSCR motors could be met by manufacturers by increasing the number of lamina tions by 15-percent and using higher steel grades. The required efficienci es for non-spaced constrained CSCR motors could be met by increasing the number of laminations by 53-pe rcent. Although manufacturers reported that meeting TSL 5 is feasible, the production costs of motors at TSL 5 increase substantially and require approximately $43.2 million in total capital and e quipment conversion costs. The negative impacts at TSL 5 are driven by these conversion costs that potentially require some CSIR motors to use copper rotors, and the imp acts on profitability if th e higher production costs of standards-compliant motors cannot be fully passed through to customers.

12-37At TSL 6, DOE estimated the impacts in INPV to range from $186.60 million to ­ $152.05 million, or a change in INPV of 66.87-percent to -54.49-percent. At this level, industry cash flow decreases by approximately 205.8-per cent, to -$22.67 million, compared to the basecase value of $22.38 million in the year leading up to the energy conservation standards. Currently, the market does not have any CSIR and CSCR motors that reach TSL 6. TSL 6 represents the max-tech level for both CSIR and CSCR motors. In addition to the possibility of using copper rotors for both CSIR and CSCR motors, at TSL 6, space constrained motor designs could require premium steels, such as Hiperco. Th ere is uncertainty about the impact of Hiperco steel on the industry, primarily due to uncertainty about capital conversion costs required to use a new type of steel. Significant R&D in manu facturing processes would be necessary to understand the applications of th ese premium steels in general- purpose small electric motors. Because all space constrained motors could requi re copper rotors and premium steels and all non-spaced constrained motors could require copp er rotors, the capital conversion costs are a significant driver of INPV at TSL 6. Finally, th e production costs of motors that meet TSL 6 can be as high as 13 times the production cost of ba seline motors, which impact profitability if the higher production costs cannot be fully passed th rough to OEMs. Manufacturers indicated that the potentially large impacts on the industry at TS L 6 could force some manufacturers to exit the small electric motor market because of the lack of resources and what could be an unjustifiable investment for a small segment of their total business.

At TSL 7, DOE estimated the impacts in INPV to range from $18.40 million to -$34.05 million, or a change in INPV of 6.59- percent to -12.20-percent. At th is level, industry cash flow decreases by approximately 74.7-percent, to $5.6 6 million, compared to the base-case value of $22.38 million in the year leading up to the energy conservation standards. TSL 7 corresponds to what manufacturers may consider a NEMA Prem ium equivalent efficiency for CSCR motors. The required efficiencies for space constrained CSCR motors could be met by manufacturers by increasing the number of laminations by 15-percen t and using higher steel grades. The required efficiencies for non-space constrained CSCR motors could be met by increasing the number of laminations by 53-percent. Consequently, the i ndustry is not severely impacted by the CSCR efficiency requirements at TSL 7 because these design changes could be met with relatively minor changes to baseline designs. However, th ere are no CSIR motors currently on the market that reach TSL 7 (the max-tech level for CSIR). At TSL 7 space constrained CSIR redesigns could require the use of both copper rotors and premium steels while non-space constrained CSIR motors could require only copper rotors . Manufacturers continue to have the same concerns about copper rotors and premium steels for CSIR motors as with other efficiency levels that may require these technologies. The impacts on INPV from CSIR motors are mainly associated with estimated shipments of non-space constrained CSIR motors and how investments exclude premium steels in motor redesigns. The INPV impacts for all single-phase motors at TSL 7 are less severe than at TSL 6 due to a ch ange in balance of shipments between CSIR and CSCR motors. At TSL 7, the possible high cost of CSIR motors would likely cause customers to migrate to CSCR motors. In its analysis, DOE as sumed that manufacturers would not invest in all the alternative technologies for CSIR motors in light of the expected migration to CSCR motors. At TSL 7, the industry is impacted (though to a lesser extent than at TSL 6) by the high conversion costs for CSIR motors, for which manu facturers must invest even though these are asmall portion of total shipments after standards. However, because the total volume of singlephase motors does not decline with the shift from CSIR to CSCR motors, the higher revenues from standards-compliant CSCR motors mitigate redesign costs for CSIR motors.

12-38At TSL 8, DOE estimated the impacts in INPV to range from $46.35 million to -$52.58 million, or a change in INPV of 16.61- percent to -18.84-percent. At th is level, industry cash flow decreases by approximately 92.1-percent, to $1.7 7 million, compared to the base-case value of $22.38 million in the year leading up to the compliance date for the energy conservation standards. As with TSL 7, CSIR motors are at the max-tech level at TSL 8. However, the impacts on INPV are worse at TSL 7 because the efficiency requirements for CSCR motors increase. At TSL 8, both space constrained and non-space constrained CSCR motors could require the use of copper, which increases the total conversion costs for the industry. Manufacturers continue to share the same c oncerns about the copper and premium steel investments for CSCR and CSIR motors as at TSL 6 and TSL 7. Like TSL 7, TSL 8 causes a migration of CSIR motors to CSCR motors. DOE assumed that manufacturers would fully incur the required conversion costs for CSCR, but partially for CSIR motors, due to the low market share of CSIR motors after the energy conservatio n standards must be met. After these standards apply, the shift to CSCR motors increases total industry revenue and helps to mitigate impacts related to capital conversion cost s necessary for CSIR motors to use alternative technologies.

12-39REFERENCES

1 Securities and Exchange Commission, Annual 10-K Reports , Various Years,

Washington D.C., www.sec.gov

.

2 Further information about RoHS can be found at

http://eur-lex.europa.eu/LexUriSe rv/site/en/oj/2003/l_037/l_03720030213en00190023.pdf

.

12-40CHAPTER 13. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION

......................................................................................................... 13-1 13.2 ASSUMPTIONS

............................................................................................................ 13-1 13.3 METHOD

...................................................................................................................... 13-2 13.4 RESULTS

...................................................................................................................... 13-3

LIST OF TABLES

Table 13.4.1 AEO2009 Stimulus Reference (A merican Recovery and Reinvestment Act) Case Forecast

............................................................................................. 13-4 Table 13.4.2 Polyphase Small Electric Motor Trial Standard Level 1 Forecast

..................... 13-5 Table 13.4.3 Polyphase Small Electric Motor Trial Standard Level 2 Forecast

..................... 13-5 Table 13.4.4 Polyphase Small Electric Motor Trial Standard Level 3 Forecast

..................... 13-6 Table 13.4.5 Polyphase Small Electric Motor Trial Standard Level 4 Forecast

..................... 13-6 Table 13.4.6 Polyphase Small Electric Motor Trial Standard Level 5 Forecast

..................... 13-8 Table 13.4.7 Polyphase Small Electric Motor Trial Standard Level 6 Forecast

..................... 13-8 Table 13.4.8 Polyphase Small Electric Motor Trial Standard Level 7 Forecast

..................... 13-9 Table 13.4.9 Capacitor-Start Small Electric Mo tor Trial Standard Level 1 Forecast

........... 13-10 Table 13.4.10 Capacitor-Start Small Electric Mo tor Trial Standard Level 2 Forecast

........... 13-10 Table 13.4.11 Capacitor-Start Small Electric Mo tor Trial Standard Level 3 Forecast

........... 13-11 Table 13.4.12 Capacitor-Start Small Electric Mo tor Trial Standard Level 4 Forecast

........... 13-11 Table 13.4.13 Capacitor-Start Small Electric Mo tor Trial Standard Level 5 Forecast

........... 13-12 Table 13.4.14 Capacitor-Start Small Electric Mo tor Trial Standard Level 6 Forecast

........... 13-12 Table 13.4.15 Capacitor-Start Small Electric Mo tor Trial Standard Level 7 Forecast

........... 13-13 Table 13.4.16 Capacitor-Start Small Electric Mo tor Trial Standard Level 8 Forecast

........... 13-13

13-iCHAPTER 13. UTILITY IMPACT ANALYSIS

13.1 INTRODUCTION

DOE analyzed the effects of small electric motor standard levels on the electric utility industry using a variant of the DOE/Energy Info rmation Administration (EIA)’s National Energy Modeling System (NEMS). a NEMS is a public domain, multi-sectored, partial equilibrium model of the U.S. energy sector. Each year, DOE/E IA uses NEMS to produce a baseline energy forecast for the United States, the Annual Energy Outlook (AEO) . The AEO for 2009 (AEO2009) forecasts energy supply and demand through 2030. 1 DOE used a variant of this model, referred to here as NEMS-BT, b to account for the impacts of small electric motor energy conservation standards on the baseline energy fo recast. DOE’s utility impact analysis consists of a comparison between model results for the AEO2009 American Recovery and Reinvestment Act (ARRA) Case and for policy cases in which standards ar e in place, and applies the same basic set of assumptions as this case of AEO2009 . For example, the operating characteristics (e.g., energy conversion efficiency, emissions rate s) of future electricity genera ting plants are as specified in the AEO2009 ARRA Case, as are the prospects for natural gas supply. The Early Release of AEO2010 has been published. However, NEMS-BT has not yet been updated to reflect AEO2010 , so DOE used the most recent version of NEMS-BT, which corresponds with the ARRA case of AEO2009

.
The utility impact analysis reports the change s in installed capacity and generation that result for each trial standard level (TSL) by fuel type, as well as changes in residential electricity consumption. The AEO2009 reference case corresponds to the American Recovery and Reinvestment Act (Stimulus) case.

13.2 ASSUMPTIONS

NEMS-BT has several advantages that have led to its adoption as the forecasting tool in the analysis of energy conservation standards. NE MS-BT uses a set of assumptions that are well known and fairly transparent, due to the exposure and scrutiny each AEO receives. In addition, the comprehensiveness of NEMS-BT permits th e modeling of interact ions among the various energy supply and demand sectors and the economy as a whole, producing a complete picture of the effects of energy conservation standards. Perhaps most importantly, NEMS-BT can be used

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2003 , DOE/EIA-0581(2003), March, 2003.

b DOE/EIA approves use of the name NEMS to describe only an official version of the model without any modification to code or data. Because this analysis enta ils some minor code modifications and the model is run under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the name NEMS

BT (BT is DOE ’ s Building Technologies Program, under whose aegis this work has been performed). NEMS-BT was previously called NEMS-BRS.to estimate marginal effects, which yield a be tter estimate of the actual impact of energy conservation standards than cons idering only average effects.

The utility impact analysis us es the assumptions of the AEO2009 and treats polyphase and capacitor-start small electric motor energy co nservation standards as variations in policy. The effect of the policy is calcula ted as the difference between the AEO2009 ARRA Case and each proposed standard case. Because the implemen tation of standards reduces total electricity demand by less than one percent in any given year, its effect cannot be detected directly in the simulations. Therefore, DOE mode led larger reductions in dema nd and interpolated results for the TSLs. DOE assumed the effects to be linear within the range of interpolation.

13.3 METHOD

DOE used the national energy savings develope d in the national impact analysis (chapter 10) for each TSL as input to NEMS-BT. The magn itude of the energy decrement that would be required for NEMS-BT to produce stable results out of the range of numerical noise is larger than the highest efficiency standard under c onsideration. Therefore, DOE estimated results corresponding to each TSL using interpolation. DOE ran higher use reduction levels in NEMS

BT, representing multipliers of each TSL, and used these outputs to linearly interpolate the results to estimate actual changes in gene ration and capacity due to the standard.

Policy runs are executed by reducing el ectricity consumption in the NEMS-BT Residential Demand, Commercial Demand, and I ndustrial Demand Modules. The savings are divided evenly among the U.S. Census division s. All fuels are considered simultaneously.

Although the current time hor izon of NEMS-BT is 2030, other parts of the small electric motor energy conservation standards analysis exte nd to the year 2045. It is not feasible to extend the forecast period of NEMS-BT for the purposes of this analysis, nor does DOE/EIA have an approved method for extrapolation of ma ny outputs beyond 2030. While it might seem reasonable to make simple linear extrapolations of results, in practice this is not advisable because outputs could be contradictory. For example, changes in the fuel mix implied by extrapolations of those outputs could be incons istent with the extrapolation of marginal emissions factors. An analysis of various trends sufficiently detailed to guarantee consistency is beyond the scope of this work, and, in any case, would involve a great deal of uncertainty. Therefore, all extrapolations beyond 2030 are simp le replications of year 2030 results. While these may seem unreasonable in some instances, in this way results are guaranteed to be consistent. As with the AEO Reference Case in general, the implicit assumption is that the regulatory environment does not deviate from the current known situation during the extrapolation period. Only changes that have b een announced with date-c ertain introduction are included in NEMS-BT. To emphasize the extrapolat ed results wherever they appear, they are shaded in gray to distinguish them from actual NEMS-BT results.

13-213.4 RESULTS

The utility impact analysis reports NEMS-BT forecasts for generation, installed capacity, and residential-sector consumption. Results ar e for all TSLs are presented in five-year increments to year 2030. Beyond year 2030, an extrapolation to 2045 for each proposed TSL represents a simple replicati on of the year 2030 results.

The results from the AEO2009 Reference Case are shown in Table 13.4.1.

A separate set of TSLs are modeled for each energy conservation standard product. Eight TSLs each are modeled for polyphase and for capac itor-start small electric motors. The reference case results for each TSL are presented in Tables 13.4.2 through 13.4.17. The results from polyphase SEM TSLs are presented in Ta bles 13.4.2 through 13.4.9 and the results from capacitor-start SEM TSLs are presented in Tables 13.4.10 through 13.4.17. Each table shows forecasts using interpolated results, as descri bed in section 13.3 for total U.S. electricity generation and installed capacity.

The proposed polyphase SEM TSLs reduce elect ricity consumption compared to the AEO2009 ARRA Case. The electricity savings pred icted by the NIA model range from 0.004 to 0.042 percent of total electricity consumption by year 2030.

The proposed capacitor-start SEM TSLs also reduce electricity consumption compared to the AEO2009 ARRA Case. The electricity savings pr edicted by the NIA model range from 0.10 to 0.22 percent of total electri city consumption by year 2030.

13-3Table 13.4.1 AEO2009 Stimulus Reference (America n Recovery and Reinvestment Act) Case Forecast 

### NEMS-BT Results: AEO2009 Reference

2005 2010 2015 2020 2025 2030 Residential Sector Energy Consumption 1

Electricity Sales (TWh) 2 1,359 1,403 1,407 1,477 1,571 1,661 Natural Gas (EJ) 5.23 5.34 5.21 5.26 5.32 5.28 Other (EJ) 1.98 1.87 1.74 1.72 1.70 1.69 Natural Gas (Quads) 4.96 5.06 4.94 4.99 5.04 5.00 Other (Quads) 3 1.88 1.77 1.65 1.63 1.61 1.60

Total U.S. Electric Generation 4
Coal (TWh) 2,014 2,022 2,138 2,198 2,203 2,305 Gas (TWh) 753 775 647 714 908 979 Petroleum (TWh) 123 56 47 49 49 50 Nuclear (TWh) 782 809 831 876 881 890 Renewables (TWh) 357 468 645 707 771 797 Total (TWh) 5 4,029 4,130 4,308 4,544 4,812 5,021

Installed Generating Capacity 6
Coal (GW) 313.8 325.0 331.0 333.3 333.9 344.6
Other Fossil (GW) 7 438.9 470.5 443.2 451.8 499.4 542.4 Nuclear (GW) 100.1 101.2 104.1 110.3 110.3 110.0 Renewables (GW) 99.5 133.5 171.1 176.1 182.3 188.3 Total (GW) 8 952.3 1,030.2 1,049.4 1,071.5 1,125.9 1,185.3

Residential Fuel Prices 9 Electricity (¢/kWh) 10.00 9.77 10.55 11.08 11.24 11.79 Natural Gas ($/GJ) 12.39 10.61 10.75 11.90 12.00 13.27 Petroleum Products ($/GJ) 16.57 12.66 20.46 23.24 23.84 25.48 Natural Gas ($/MBtu) 13.07 11.19 11.34 12.56 12.66 14.00 Petroleum Products ($/MBtu) 17.48 13.36 21.59 24.52 25.15 26.88

1 Comparable to Table A2 of AEO2009: Energy Consumption, Residential

2 Comparable to Table A8 of AEO2009: Electricity Sales by Sector

3 Includes distillate fuel, commercial fuel, kerosene, LPG, motor gasoline, coal, and renewable energy

4 Comparable to Table A8 of AEO2009: Electric Generators and Cogenerators

5 Excludes "Other Gaseous Fuels" cogenerators and "Other" cogenerators

6 Comparable to Table A9 of AEO2009: Electric Generators and Cogenerators Capability

7 Includes "Other Gaseous Fuels" cogenerators

8 Excludes Pumped Storage and Fuel Cells

9 Comparable to Table A3 of AEO2009: Residential

13-4Table 13.4.2Polyphase Small Electric Motor Trial Standard Level 1 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 0.00 -0.01 -0.04 -0.05 -0.06 -0.06 -0.06 -0.06Gas (TWh)753 775 647 714 908 979Gas (TWh)0.00 0.02 0.05 -0.01 -0.06 -0.07 -0.07 -0.07 -0.07Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 645 707 771 797Renewables (TWh)0.00 -0.02 -0.07 -0.07 -0.07 -0.07 -0.07 -0.07 -0.07Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,544 4,812 5,021Total (TWh)Installed Generating Capacity0.00 0.00 -0.03 -0.13 -0.19 -0.20 -0.20 -0.20 -0.20Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.01Other Fossil (GW)438.9 470.5 443.2 451.8 499.4 542.4Other Fossil (GW)0.00 0.00 0.00 -0.01 -0.02 -0.02 -0.02 -0.02 -0.02Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.5 171.1 176.1 182.3 188.3Renewables (GW)0.00 -0.01 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02Total (GW)952.3 1,030.2 1,049.4 1,071.5 1,125.9 1,185.3Total (GW)0.00 -0.01 -0.03 -0.03 -0.04 -0.05 -0.05 -0.05 -0.05Table 13.4.3Polyphase Small Electric Motor Trial Standard Level 2 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 0.00 -0.01 -0.02 -0.02 -0.02 -0.02 -0.02Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 -0.01 -0.02 -0.08 -0.11 -0.12 -0.12 -0.12 -0.12Gas (TWh)753 775 647 714 908 979Gas (TWh)0.00 0.05 0.10 -0.03 -0.13 -0.14 -0.14 -0.14 -0.14Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 645 707 771 797Renewables (TWh)0.00 -0.04 -0.15 -0.14 -0.14 -0.14 -0.14 -0.14 -0.14Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,544 4,812 5,021Total (TWh)Installed Generating Capacity0.00 0.00 -0.07 -0.26 -0.38 -0.40 -0.40 -0.40 -0.40Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01Other Fossil (GW)438.9 470.5 443.2 451.8 499.4 542.4Other Fossil (GW)0.00 0.00 -0.01 -0.02 -0.04 -0.04 -0.04 -0.04 -0.04Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.5 171.1 176.1 182.3 188.3Renewables (GW)0.00 -0.01 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04Total (GW)952.3 1,030.2 1,049.3 1,071.4 1,125.8 1,185.2Total (GW)0.00 -0.01 -0.05 -0.06 -0.08 -0.09 -0.09 -0.09 -0.0913-5Table 13.4.4Polyphase Small Electric Motor Trial Standard Level 3 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 0.00 -0.02 -0.03 -0.03 -0.03 -0.03 -0.04Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 -0.01 -0.04 -0.15 -0.20 -0.22 -0.22 -0.22 -0.22Gas (TWh)753 775 647 714 908 979Gas (TWh)0.00 0.08 0.18 -0.05 -0.23 -0.25 -0.25 -0.25 -0.25Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 645 707 771 797Renewables (TWh)0.00 -0.08 -0.26 -0.25 -0.25 -0.26 -0.26 -0.26 -0.26Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,544 4,811 5,020Total (TWh)Installed Generating Capacity0.00 0.00 -0.12 -0.46 -0.68 -0.73 -0.73 -0.73 -0.73Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 -0.01 -0.01 -0.01 -0.02 -0.02 -0.02 -0.02Other Fossil (GW)438.9 470.5 443.2 451.8 499.3 542.3Other Fossil (GW)0.00 0.00 -0.02 -0.03 -0.08 -0.08 -0.08 -0.08 -0.08Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.5 171.0 176.0 182.2 188.2Renewables (GW)0.00 -0.02 -0.07 -0.07 -0.06 -0.07 -0.07 -0.07 -0.07Total (GW)952.3 1,030.2 1,049.3 1,071.4 1,125.7 1,185.1Total (GW)0.00 -0.03 -0.10 -0.11 -0.15 -0.16 -0.16 -0.16 -0.16Table 13.4.5Polyphase Small Electric Motor Trial Standard Level 4 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 0.00 -0.02 -0.03 -0.03 -0.04 -0.04 -0.04Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 -0.01 -0.04 -0.17 -0.22 -0.25 -0.25 -0.25 -0.25Gas (TWh)753 775 647 714 908 979Gas (TWh)0.00 0.09 0.20 -0.06 -0.26 -0.28 -0.28 -0.28 -0.28Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 645 707 771 797Renewables (TWh)0.00 -0.09 -0.30 -0.29 -0.29 -0.29 -0.29 -0.29 -0.29Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,543 4,811 5,020Total (TWh)Installed Generating Capacity0.00 0.00 -0.14 -0.52 -0.76 -0.82 -0.82 -0.82 -0.82Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 -0.01 -0.01 -0.01 -0.02 -0.02 -0.02 -0.02Other Fossil (GW)438.9 470.5 443.2 451.8 499.3 542.3Other Fossil (GW)0.00 0.00 -0.02 -0.04 -0.09 -0.08 -0.08 -0.08 -0.08Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.5 171.0 176.0 182.2 188.2Renewables (GW)0.00 -0.03 -0.08 -0.08 -0.07 -0.08 -0.08 -0.08 -0.08Total (GW)952.3 1,030.2 1,049.3 1,071.4 1,125.7 1,185.1Total (GW)0.00 -0.03 -0.11 -0.13 -0.17 -0.19 -0.19 -0.19 -0.1913-6Table 13.4.6Polyphase Small Electric Motor Trial Standard Level 4b ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.01 -0.03 -0.05 -0.06 -0.06 -0.06 -0.07Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 -0.02 -0.07 -0.28 -0.37 -0.41 -0.41 -0.41 -0.41Gas (TWh)753 775 647 714 908 979Gas (TWh)0.00 0.16 0.33 -0.10 -0.42 -0.47 -0.47 -0.47 -0.47Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 645 707 771 797Renewables (TWh)0.00 -0.14 -0.49 -0.47 -0.47 -0.48 -0.48 -0.48 -0.48Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,543 4,811 5,020Total (TWh)Installed Generating Capacity0.00 0.00 -0.23 -0.85 -1.26 -1.35 -1.35 -1.35 -1.35Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 -0.02 -0.02 -0.02 -0.04 -0.04 -0.04 -0.04Other Fossil (GW)438.9 470.5 443.2 451.7 499.3 542.3Other Fossil (GW)0.00 0.00 -0.03 -0.06 -0.14 -0.14 -0.14 -0.14 -0.14Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.5 171.0 176.0 182.2 188.2Renewables (GW)0.00 -0.05 -0.14 -0.13 -0.12 -0.13 -0.13 -0.13 -0.13Total (GW)952.3 1,030.2 1,049.2 1,071.3 1,125.6 1,185.0Total (GW)0.00 -0.05 -0.18 -0.21 -0.28 -0.31 -0.31 -0.31 -0.3113-7Table 13.4.7Polyphase Small Electric Motor Trial Standard Level 5 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.01 -0.04 -0.06 -0.07 -0.07 -0.08 -0.08Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,305Coal (TWh)0.00 -0.02 -0.08 -0.33 -0.44 -0.48 -0.48 -0.48 -0.48Gas (TWh)753 775 647 714 907 978Gas (TWh)0.00 0.19 0.39 -0.12 -0.50 -0.56 -0.56 -0.56 -0.56Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 468 644 706 770 796Renewables (TWh)0.00 -0.17 -0.58 -0.56 -0.56 -0.57 -0.57 -0.57 -0.57Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,543 4,810 5,019Total (TWh)Installed Generating Capacity0.00 0.00 -0.27 -1.02 -1.50 -1.61 -1.61 -1.61 -1.61Coal (GW)313.8 325.0 331.0 333.3 333.9 344.6Coal (GW)0.00 0.00 -0.02 -0.02 -0.02 -0.05 -0.05 -0.05 -0.05Other Fossil (GW)438.9 470.5 443.2 451.7 499.2 542.2Other Fossil (GW)0.00 0.00 -0.04 -0.07 -0.17 -0.17 -0.17 -0.17 -0.17Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.4 170.9 175.9 182.2 188.2Renewables (GW)0.00 -0.05 -0.16 -0.16 -0.14 -0.15 -0.15 -0.15 -0.15Total (GW)952.3 1,030.1 1,049.2 1,071.2 1,125.6 1,184.9Total (GW)0.00 -0.06 -0.22 -0.25 -0.33 -0.36 -0.36 -0.36 -0.36Table 13.4.8Polyphase Small Electric Motor Trial Standard Level 6 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.01 -0.04 -0.07 -0.07 -0.08 -0.08 -0.09Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,203 2,304Coal (TWh)0.00 -0.02 -0.09 -0.35 -0.46 -0.51 -0.51 -0.51 -0.51Gas (TWh)753 775 647 714 907 978Gas (TWh)0.00 0.20 0.42 -0.13 -0.54 -0.59 -0.59 -0.59 -0.59Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 -0.05 -0.06 -0.11 -0.11 -0.11 -0.11Renewables (TWh)357 468 644 706 770 796Renewables (TWh)0.00 -0.18 -0.62 -0.60 -0.60 -0.61 -0.61 -0.61 -0.61Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,543 4,810 5,019Total (TWh)Installed Generating Capacity0.00 -0.01 -0.29 -1.13 -1.65 -1.82 -1.82 -1.82 -1.82Coal (GW)313.8 325.0 331.0 333.3 333.9 344.5Coal (GW)0.00 0.00 -0.02 -0.02 -0.02 -0.05 -0.05 -0.05 -0.05Other Fossil (GW)438.9 470.5 443.2 451.7 499.2 542.2Other Fossil (GW)0.00 0.00 -0.04 -0.08 -0.18 -0.18 -0.18 -0.18 -0.18Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.4 170.9 175.9 182.1 188.1Renewables (GW)0.00 -0.06 -0.17 -0.17 -0.15 -0.16 -0.16 -0.16 -0.16Total (GW)952.3 1,030.1 1,049.2 1,071.2 1,125.5 1,184.9Total (GW)0.00 -0.06 -0.23 -0.27 -0.36 -0.39 -0.39 -0.39 -0.3913-8Table 13.4.9Polyphase Small Electric Motor Trial Standard Level 7 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.01 -0.05 -0.07 -0.08 -0.08 -0.09 -0.09Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,198 2,202 2,304Coal (TWh)0.00 -0.02 -0.10 -0.39 -0.51 -0.56 -0.56 -0.56 -0.56Gas (TWh)753 775 647 714 907 978Gas (TWh)0.00 0.22 0.46 -0.14 -0.58 -0.65 -0.65 -0.65 -0.65Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 -0.05 -0.06 -0.12 -0.12 -0.12 -0.12Renewables (TWh)357 468 644 706 770 796Renewables (TWh)0.00 -0.20 -0.68 -0.65 -0.65 -0.66 -0.66 -0.66 -0.66Total (TWh)Installed Generating Capacity4,029 4,130 4,308 4,543 4,810 5,019Total (TWh)Installed Generating Capacity0.00 -0.01 -0.31 -1.23 -1.80 -1.98 -1.98 -1.98 -1.98Coal (GW)313.8 325.0 331.0 333.3 333.9 344.5Coal (GW)0.00 0.00 -0.02 -0.03 -0.02 -0.06 -0.06 -0.06 -0.06Other Fossil (GW)438.9 470.5 443.2 451.7 499.2 542.2Other Fossil (GW)0.00 0.00 -0.04 -0.08 -0.20 -0.19 -0.19 -0.19 -0.19Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.4 170.9 175.9 182.1 188.1Renewables (GW)0.00 -0.06 -0.19 -0.18 -0.17 -0.17 -0.17 -0.17 -0.17Total (GW)952.3 1,030.1 1,049.1 1,071.2 1,125.5 1,184.9Total (GW)0.00 -0.07 -0.25 -0.29 -0.39 -0.42 -0.42 -0.42 -0.4213-9Table 13.4.10Capacitor-Start Small Electric Motor Trial Standard Level 1 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.03 -0.18 -0.23 -0.25 -0.27 -0.28 -0.30Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,197 2,202 2,303Coal (TWh)0.00 -0.07 -0.33 -1.29 -1.46 -1.56 -1.56 -1.56 -1.56Gas (TWh)753 776 648 713 906 977Gas (TWh)0.00 0.65 1.25 -0.68 -1.65 -1.86 -1.86 -1.86 -1.86Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 643 705 769 795Renewables (TWh)0.00 -0.58 -1.96 -1.86 -1.93 -1.92 -1.92 -1.92 -1.92Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,540 4,807 5,016Total (TWh)Installed Generating Capacity0.00 0.00 -1.03 -3.83 -5.04 -5.34 -5.34 -5.34 -5.34Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.07 -0.07 -0.07 -0.15 -0.15 -0.15 -0.15Other Fossil (GW)438.9 470.5 443.1 451.6 498.9 541.9Other Fossil (GW)0.00 -0.01 -0.12 -0.23 -0.54 -0.55 -0.55 -0.55 -0.55Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.3 170.6 175.6 181.8 187.8Renewables (GW)0.00 -0.18 -0.55 -0.53 -0.49 -0.50 -0.50 -0.50 -0.50Total (GW)952.3 1,030.0 1,048.7 1,070.7 1,124.8 1,184.1Total (GW)0.00 -0.20 -0.73 -0.82 -1.10 -1.21 -1.21 -1.21 -1.21Table 13.4.11Capacitor-Start Small Electric Motor Trial Standard Level 2 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.03 -0.18 -0.24 -0.25 -0.27 -0.29 -0.31Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,197 2,202 2,303Coal (TWh)0.00 -0.07 -0.33 -1.30 -1.47 -1.58 -1.58 -1.58 -1.58Gas (TWh)753 776 648 713 906 977Gas (TWh)0.00 0.65 1.27 -0.69 -1.67 -1.87 -1.87 -1.87 -1.87Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 643 705 769 795Renewables (TWh)0.00 -0.59 -1.98 -1.88 -1.95 -1.93 -1.93 -1.93 -1.93Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,540 4,807 5,016Total (TWh)Installed Generating Capacity0.00 0.00 -1.04 -3.87 -5.09 -5.39 -5.39 -5.39 -5.39Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.07 -0.07 -0.07 -0.16 -0.16 -0.16 -0.16Other Fossil (GW)438.9 470.5 443.1 451.6 498.9 541.8Other Fossil (GW)0.00 -0.01 -0.12 -0.23 -0.55 -0.55 -0.55 -0.55 -0.55Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.3 170.5 175.6 181.8 187.8Renewables (GW)0.00 -0.19 -0.55 -0.53 -0.50 -0.51 -0.51 -0.51 -0.51Total (GW)952.3 1,030.0 1,048.7 1,070.7 1,124.8 1,184.1Total (GW)0.00 -0.20 -0.74 -0.83 -1.11 -1.22 -1.22 -1.22 -1.2213-10Table 13.4.12Capacitor-Start Small Electric Motor Trial Standard Level 3 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.03 -0.20 -0.27 -0.29 -0.30 -0.32 -0.35Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,197 2,201 2,303Coal (TWh)0.00 -0.07 -0.37 -1.47 -1.67 -1.78 -1.78 -1.78 -1.78Gas (TWh)753 776 648 713 906 977Gas (TWh)0.00 0.74 1.43 -0.78 -1.89 -2.12 -2.12 -2.12 -2.12Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 643 705 769 795Renewables (TWh)0.00 -0.66 -2.24 -2.12 -2.20 -2.18 -2.18 -2.18 -2.18Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,540 4,806 5,015Total (TWh)Installed Generating Capacity0.00 0.00 -1.18 -4.37 -5.75 -6.09 -6.09 -6.09 -6.09Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.08 -0.08 -0.07 -0.18 -0.18 -0.18 -0.18Other Fossil (GW)438.9 470.5 443.1 451.5 498.8 541.8Other Fossil (GW)0.00 -0.01 -0.13 -0.26 -0.62 -0.63 -0.63 -0.63 -0.63Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.3 170.5 175.5 181.7 187.7Renewables (GW)0.00 -0.21 -0.62 -0.60 -0.56 -0.58 -0.58 -0.58 -0.58Total (GW)952.3 1,030.0 1,048.6 1,070.6 1,124.6 1,183.9Total (GW)0.00 -0.22 -0.83 -0.94 -1.25 -1.38 -1.38 -1.38 -1.38Table 13.4.13Capacitor-Start Small Electric Motor Trial Standard Level 4 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.04 -0.22 -0.30 -0.32 -0.34 -0.36 -0.39Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,196 2,201 2,303Coal (TWh)0.00 -0.08 -0.42 -1.65 -1.87 -2.00 -2.00 -2.00 -2.00Gas (TWh)753 776 649 713 906 977Gas (TWh)0.00 0.83 1.61 -0.87 -2.12 -2.38 -2.38 -2.38 -2.38Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 642 705 769 795Renewables (TWh)0.00 -0.75 -2.51 -2.38 -2.47 -2.45 -2.45 -2.45 -2.45Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,539 4,806 5,014Total (TWh)Installed Generating Capacity0.00 0.00 -1.32 -4.91 -6.45 -6.83 -6.83 -6.83 -6.83Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.09 -0.09 -0.08 -0.20 -0.20 -0.20 -0.20Other Fossil (GW)438.9 470.5 443.1 451.5 498.7 541.7Other Fossil (GW)0.00 -0.02 -0.15 -0.29 -0.69 -0.70 -0.70 -0.70 -0.70Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.3 170.4 175.4 181.7 187.7Renewables (GW)0.00 -0.24 -0.70 -0.67 -0.63 -0.65 -0.65 -0.65 -0.65Total (GW)952.3 1,029.9 1,048.5 1,070.4 1,124.5 1,183.8Total (GW)0.00 -0.25 -0.94 -1.06 -1.41 -1.54 -1.54 -1.54 -1.5413-11Table 13.4.14Capacitor-Start Small Electric Motor Trial Standard Level 5 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.04 -0.23 -0.30 -0.32 -0.34 -0.37 -0.39Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,196 2,201 2,303Coal (TWh)0.00 -0.08 -0.42 -1.66 -1.88 -2.01 -2.01 -2.01 -2.01Gas (TWh)753 776 649 713 906 977Gas (TWh)0.00 0.83 1.62 -0.88 -2.13 -2.39 -2.39 -2.39 -2.39Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 642 705 769 795Renewables (TWh)0.00 -0.75 -2.53 -2.39 -2.49 -2.47 -2.47 -2.47 -2.47Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,539 4,806 5,014Total (TWh)Installed Generating Capacity0.00 0.00 -1.33 -4.94 -6.49 -6.87 -6.87 -6.87 -6.87Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.09 -0.09 -0.08 -0.20 -0.20 -0.20 -0.20Other Fossil (GW)438.9 470.5 443.0 451.5 498.7 541.7Other Fossil (GW)0.00 -0.02 -0.15 -0.30 -0.70 -0.71 -0.71 -0.71 -0.71Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.3 170.4 175.4 181.7 187.7Renewables (GW)0.00 -0.24 -0.70 -0.68 -0.63 -0.65 -0.65 -0.65 -0.65Total (GW)952.3 1,029.9 1,048.5 1,070.4 1,124.5 1,183.7Total (GW)0.00 -0.25 -0.94 -1.06 -1.41 -1.55 -1.55 -1.55 -1.55Table 13.4.15Capacitor-Start Small Electric Motor Trial Standard Level 6 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.04 -0.25 -0.33 -0.35 -0.38 -0.40 -0.43Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,138 2,196 2,201 2,303Coal (TWh)0.00 -0.09 -0.46 -1.81 -2.06 -2.20 -2.20 -2.20 -2.20Gas (TWh)753 776 649 713 906 976Gas (TWh)0.00 0.91 1.77 -0.96 -2.33 -2.61 -2.61 -2.61 -2.61Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 642 704 768 794Renewables (TWh)0.00 -0.82 -2.76 -2.61 -2.72 -2.70 -2.70 -2.70 -2.70Total (TWh)Installed Generating Capacity4,029 4,130 4,307 4,539 4,805 5,013Total (TWh)Installed Generating Capacity0.00 0.00 -1.46 -5.40 -7.09 -7.51 -7.51 -7.51 -7.51Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.10 -0.10 -0.09 -0.22 -0.22 -0.22 -0.22Other Fossil (GW)438.9 470.5 443.0 451.5 498.6 541.6Other Fossil (GW)0.00 -0.02 -0.16 -0.32 -0.76 -0.77 -0.77 -0.77 -0.77Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.2 170.3 175.4 181.6 187.6Renewables (GW)0.00 -0.26 -0.77 -0.74 -0.69 -0.71 -0.71 -0.71 -0.71Total (GW)952.3 1,029.9 1,048.4 1,070.3 1,124.4 1,183.6Total (GW)0.00 -0.28 -1.03 -1.16 -1.55 -1.70 -1.70 -1.70 -1.7013-12Table 13.4.16Capacitor-Start Small Electric Motor Trial Standard Level 7 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.05 -0.27 -0.36 -0.39 -0.41 -0.44 -0.47Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,137 2,196 2,201 2,303Coal (TWh)0.00 -0.10 -0.51 -1.98 -2.25 -2.41 -2.41 -2.41 -2.41Gas (TWh)753 776 649 713 905 976Gas (TWh)0.00 0.99 1.93 -1.05 -2.55 -2.86 -2.86 -2.86 -2.86Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.01 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 642 704 768 794Renewables (TWh)0.00 -0.90 -3.02 -2.86 -2.97 -2.95 -2.95 -2.95 -2.95Total (TWh)Installed Generating Capacity4,029 4,130 4,306 4,538 4,804 5,013Total (TWh)Installed Generating Capacity0.00 0.00 -1.59 -5.90 -7.76 -8.22 -8.22 -8.22 -8.22Coal (GW)313.8 325.0 330.9 333.2 333.8 344.4Coal (GW)0.00 0.00 -0.11 -0.11 -0.10 -0.24 -0.24 -0.24 -0.24Other Fossil (GW)438.9 470.5 443.0 451.4 498.6 541.6Other Fossil (GW)0.00 -0.02 -0.18 -0.35 -0.83 -0.84 -0.84 -0.84 -0.84Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.2 170.3 175.3 181.5 187.5Renewables (GW)0.00 -0.28 -0.84 -0.81 -0.76 -0.78 -0.78 -0.78 -0.78Total (GW)952.3 1,029.9 1,048.3 1,070.2 1,124.2 1,183.4Total (GW)0.00 -0.30 -1.13 -1.27 -1.69 -1.86 -1.86 -1.86 -1.86Table 13.4.17Capacitor-Start Small Electric Motor Trial Standard Level 8 ForecastNEMS-BT Results:Difference from AEO2009 LBNL Stimulus Reference CaseExtrapolationResidential Sector Energy Consumption2005 2010 2015 2020 2025 2030Residential Sector Energy Consumption2005 2010 2015 2020 2025 2030 2035 2040 2045Electricity Sales (TWh)1,359 1,403 1,407 1,477 1,571 1,661Electricity Sales (TWh)0.00 0.00 -0.05 -0.31 -0.41 -0.44 -0.47 -0.50 -0.54Natural Gas (EJ)5.23 5.34 5.21 5.26 5.32 5.28Natural Gas (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (EJ)1.98 1.87 1.74 1.72 1.70 1.69Other (EJ)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Natural Gas (Quads)4.96 5.06 4.94 4.99 5.04 5.00Natural Gas (Quads)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Other (Quads)Total U.S. Electric Generation1.88 1.77 1.65 1.63 1.61 1.60Other (Quads)Total U.S. Electric Generation0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Coal (TWh)2,014 2,022 2,137 2,196 2,200 2,302Coal (TWh)0.00 -0.12 -0.58 -2.28 -2.59 -2.77 -2.77 -2.77 -2.77Gas (TWh)753 776 649 713 905 976Gas (TWh)0.00 1.15 2.22 -1.21 -2.93 -3.29 -3.29 -3.29 -3.29Petroleum (TWh)123 56 47 49 49 50Petroleum (TWh)0.00 0.00 0.00 -0.02 0.01 0.00 0.00 0.00 0.00Nuclear (TWh)782 809 831 876 881 890Nuclear (TWh)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (TWh)357 467 642 704 768 794Renewables (TWh)0.00 -1.03 -3.48 -3.29 -3.42 -3.40 -3.40 -3.40 -3.40Total (TWh)Installed Generating Capacity4,029 4,130 4,306 4,537 4,803 5,012Total (TWh)Installed Generating Capacity0.00 0.00 -1.83 -6.80 -8.93 -9.46 -9.46 -9.46 -9.46Coal (GW)313.8 325.0 330.9 333.2 333.8 344.3Coal (GW)0.00 0.00 -0.12 -0.12 -0.12 -0.27 -0.27 -0.27 -0.27Other Fossil (GW)438.9 470.5 443.0 451.4 498.4 541.4Other Fossil (GW)0.00 -0.02 -0.21 -0.41 -0.96 -0.97 -0.97 -0.97 -0.97Nuclear (GW)100.1 101.2 104.1 110.3 110.3 110.0Nuclear (GW)0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Renewables (GW)99.5 133.2 170.1 175.2 181.4 187.4Renewables (GW)0.00 -0.33 -0.97 -0.93 -0.87 -0.89 -0.89 -0.89 -0.89Total (GW)952.3 1,029.9 1,048.1 1,070.0 1,124.0 1,183.2Total (GW)0.00 -0.35 -1.30 -1.46 -1.95 -2.14 -2.14 -2.14 -2.1413-13REFERENCES

1. Energy Information Administration, Annual Energy Outlook 2009 with Projections to 2030 , 2009. Washington, DC. Report No. DOE/EIA-0383(2009).

< http://www.eia.doe.gov/oiaf/aeo / > and U.S. Department of Energy-En ergy Information Administration. An Updated Annual Energy Outlook 2009 Reference Case Reflecti ng Provisions of the American Recovery and Reinvestment Act and Recent Changes in the Economic Outlook , April, 2009. Washington, DC. SR/OIAF/2009-03.

< www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf >

13-14CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS 14.1 INTRODUCTION

......................................................................................................... 14-1 14.2 METHODOLOGY

........................................................................................................ 14-1 14.3 RESULTS

................................................................................................................... ... 14-2 14.3.2 Net National Employment Impact Summary

............................................... 14-6

LIST OF TABLES

Table 14.3.1 Polyphase Small Electric Motors: Net National Change in Employment

......... 14-8 Table 14.3.2 Capacitor-Start Small Electri c Motors: Net National Change in Employme nt

....................................................................................................... 14-9

LIST OF FIGURES

Figure 14.3.1 Polyphase Small Electric Moto rs: Employment Impact of Increased Equipment Costs

................................................................................................ 14-3 Figure 14.3.2 Capacitor-Start Small Electric Mo tors: Employment Impact of Increased Equipment Costs

................................................................................................ 14-4 Figure 14.3.3 Polyphase Small Electric Motors: Em ployment Impact of Energy Savings

..... 14-5 Figure 14.3.4 Capacitor-Start Small Electric Motors: Employment Impact of Energy Savings

............................................................................................................... 14-6 Figure 14.3.5 Polyphase Small Electric Motors: Net National Change in Employment

......... 14-7 Figure 14.3.6 Capacitor-Start Small Electri c Motors: Net National Change in Employme nt

....................................................................................................... 14-8

14-iCHAPTER 14. EMPLOYMENT IMPACT ANALYSIS

14.1 INTRODUCTION

DOE’s employment impact anal ysis is designed to estimate indirect national job creation or elimination resulting from possible standa rds, due to reallocation of the associated expenditures for purchasing and operating small electric motors.

DOE expects small electric motor standa rds to decrease energy consumption, and therefore to reduce energy expenditures. The savings in energy expenditures may be spent on new investment or not at all (i .e., they may remain “saved”). The standards may increase the purchase price of general purpose small electric motors, including the retail price plus sales tax. Using an input/output econometric model of the U.S. economy, this analysis estimated the year

to-year effect of these expe nditure impacts on net economic output and employment.

DOE intends this analysis to quantify the indirect employment impacts of these expenditure changes. It evaluate d direct employment impacts at manufacturers of small electric motors in the manufacturer im pact analysis (see chapter 12).

14.2 METHODOLOGY

The Department based its analysis on an input/output model of the U.S. economy that estimates the effects of standards on major sector s of the economy related to buildings and the net impact of standards on jobs. The Pacifi c Northwest National Laboratory developed the model, ImSET 1 (Impact of Sector Energy Techno logies) as a successor to ImBuild 2 , a specialpurpose version of the IMPLAN 3 national input/output model. Im SET estimates the employment and income effects of building energy technol ogies. In comparison with simple economic multiplier approaches, ImSET allows for more co mplete and automated analysis of the economic impacts of energy-efficiency investments in buildings.

In an input/output model, the level of employment in an economy is determined by the relationship of different sectors of the econom y and the spending flows among them. Different sectors have different levels of labor intensity and so changes in the level of spending (e.g., due to the effects of an efficiency standard) in one sector of the economy will affect flows in other sectors, which affects the overall level of employment.

ImSET uses a 188-sector model of the nationa l economy to predict the economic effects of residential and commercial buildings technologies. ImSET collects estimates of initial investments, energy savings, and economic activ ity associated with spending the savings resulting from standards (e.g., changes in fi nal demand in personal consumption, business investment and spending, and government spending) . It provides overall estimates of the change in national output for each input-output sector. The model applies estimates of employment and wage income per dollar of economic output for each sector and calcula tes impacts on national employment and wage income.

14-1Energy-efficiency technology primarily a ffects the U.S. economy along three spending pathways. First, general investment funds are dive rted to sectors that manufacture, install, and maintain energy-efficient appliances. The incr eased cost of appliances leads to higher employment in the appliance manufacturing sect ors and lower employment in other economic sectors. Second, commercial firm and residential spending are redirected from utilities toward firms that supply production inputs. Third, electric utility sector investment funds are released for use in other sectors of the economy. When consumers use less energy, electric utilities experience relative reductions in demand which lead s to reductions in utili ty sector investment and employment.

14.3 RESULTS

The results in this section refer to impacts of small electric motor standards relative to the base case for each appliance. DOE disaggregated th e impact of small electric motor standards on employment into two component effects: incr eased capital investment costs and decreased energy costs. DOE does not project that repair or maintenanc e costs will vary with motor efficiency. Therefore, these costs are uncha nged by the proposed standard, and have no employment impacts. These component effects and a summary impact are presented for polyphase and capacitor-start motors at each trial standard level.

Figure 14.3.1and Figure 14.3.2 summarize the em ployment impacts of the increased investment and spending on higher- efficiency equipment. Equipment manufacturing is relatively capital-intensive compared to ot her sectors of the economy, but the increased costs of efficiency add to the income of distribut ors and retail businesses, which are (on average) more laborintensive than other sectors. Th erefore, the department projects that the capital expenditures on more expensive motors will result in a net increase of jobs.

14-2Net Jobs (1000s) 5

4

3

2

1

0 TSL 1
TSL 2
TSL 3
TSL 4
TSL 4b
TSL 5
TSL 6
TSL 7

2015 2020 2025 2030 2035 2040 2045

Year
Figure 14.3.1 Polyphase Small Electric Motors : Employment Impact of Increased Equipment Costs

14-30 2 4 6 8 10 12Net Jobs (1000s) TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
TSL 8

2015 2020 2025 2030 2035 2040 2045

Year
Figure 14.3.2 Capacitor-Start Small Electric Mo tors: Employment Impact of Increased Equipment Costs

Figure 14.3.3 and Figure 14.3.4 show the empl oyment impact of redirected spending made possible by equipment energy savings. For all products, the employment impact is strongly positive.

14-4Net Jobs (1000s) 2.5

2.0

1.5

1.0

0.5

0.0 TSL 1
TSL 2
TSL 3
TSL 4
TSL 4b
TSL 5
TSL 6
TSL 7

2015 2020 2025 2030 2035 2040 2045

Year
Figure 14.3.3 Polyphase Small Electric Motors : Employment Impact of Energy Savings

14-50 2 4 6 8 10 12Net Jobs (1000s) TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
TSL 8

2015 2020 2025 2030 2035 2040 2045

Year
Figure 14.3.4 Capacitor-Start Small Electric Mo tors: Employment Impact of Energy Savings

14.3.2 Net National Employment Impact Summary

Figure 14.3.5 and Figure 14.3.6 show the estimated net national employment impacts of the polyphase and capacitor-start small electric motor trial standard levels. For any given year, these figures show the net change in the number of jobs in the economy relative to if there were no change in standards (and thus no resulti ng change in spending and cash flow patterns throughout the economy). Table 14.3.1 and Tabl e 14.3.2 show the net national employment impact in specific years.

14-60 1 2 3 4 5 6 7Net Jobs (1000s) TSL 1
TSL 2
TSL 3
TSL 4
TSL 4b
TSL 5
TSL 6
TSL 7

2015 2020 2025 2030 2035 2040 2045

Year
Figure 14.3.5 Polyphase Small Electric Motors: Net National Change in Employment

14-720

16

2015 2020 2025 2030 2035 2040 2045

YearNet Jobs (1000s) 12

8 TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
TSL 8

4

0

Figure 14.3.6 Capacitor-Start Small Electric Mo tors: Net National Change in Employment

Table 14.3.1 Polyphase Small Electric Motors: Ne t National Change in Employment Trial Standard Level 2015 (thousands) 2025 (thousands) 2035 (thousands) 2045 (thousands)
1 0.05 0.14 0.22 0.30
2 0.08 0.25 0.42 0.57 3 0.15 0.46 0.76 1.03
4 0.19 0.54 0.87 1.18 4b 0.36 0.92 1.45 1.94 5 0.66 1.35 2.02 2.67
6 0.90 1.68 2.45 3.22
7 2.35 3.62 4.92 6.34

14-8Table 14.3.2 Capacitor-Start Small Electric Motors: Net National Change in Employment Trial Standard Level 2015 (thousands) 2025 (thousands) 2035 (thousands) 2045 (thousands)
1 1.11 3.65 5.25 7.06
2 1.12 3.67 5.29 7.12 3 1.58 4.51 6.40 8.56
4 2.29 5.56 7.72 10.24 5 2.25 5.53 7.69 10.20
6 8.04 12.16 15.35 19.57
7 1.78 5.80 8.34 11.22 8 2.32 9.59 13.88 18.70

14-9REFERENCES

1 Roop, J.M., M. J. Scott, and R. W. Schultz. ImSET: Impact of Sector Energy Technologies

. Pacific Northwest National Laboratory. July 2005.

2 Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy Efficiency Programs , April, 1998. Pacific Northwest Nationa l Laboratory. Richland, WA. Report No. PNNL-11884. Prepared for the U.S. Departme nt of Energy under Contract DE-AC06-76RLO 1830.

3 Minnesota IMPLAN Group, Inc., IMPLAN Professional: User’s Gu ide, Analysis Guide, Data Guide , 1997. Stillwater, MN.

14-10ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL ELECTRIC MOTORS

TABLE OF CONTENTS

15.1 INTRODUCTION

............................................................................................................... 1 15.2 AIR EMISSIONS ANALYSIS

............................................................................................ 1 15.2.1 Air Emissions Descriptions

...................................................................................... 1 15.2.1.1 Sulfur Dioxide

................................................................................................... 2 15.2.1.2 Nitrogen Oxides

................................................................................................ 2 15.2.1.3 Mercury

............................................................................................................. 3 15.2.1.4 Carbon Dioxide (CO 2 )

...................................................................................... 3 15.2.1.5 Particulate Matter

.............................................................................................. 4 15.2.2 Air Quality Regulation

............................................................................................. 5 15.2.3 Global Climate Change

............................................................................................ 6 15.2.3.1 Impacts of Climate Change on the Environment

.............................................. 6 15.2.3.2 Causes of Climate Change

................................................................................ 7 15.2.3.3 Stabilization of CO 2 Concentrations

................................................................. 7 15.2.3.4 The Beneficial Impact of the Rule on CO 2 Emissions

...................................... 8 15.2.3.5 The Incremental Impact of the Rule on Climate Change

................................. 9 15.2.4 Analytical Methods for Air Emissions

.................................................................... 9 15.2.5 Effects on Power Plant Emissions

......................................................................... 10 15.2.6 Effects on Upstream Fuel-Cycle Emissions

.......................................................... 13 15.3 SOCIAL COST OF CARBON DIOXIDE EMISSIONS

.................................................. 14 15.3.1 Monetizing Carbon Dioxide Emissions

................................................................. 16 15.3.2 Social Cost of Carbon Values Used in Past Regulatory Analyses

......................... 17 15.3.3 Approach and Key Assumptions

........................................................................... 18 15.4 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL RESOURCES

.............................................................................................. 19 15.5 SOCIOECONOMIC IMPACTS

........................................................................................ 19 15.6 ENVIRONMENTAL JUSTICE IMPACTS

...................................................................... 20 15.7 NOISE AND AESTHETICS

............................................................................................. 20 15.8 SUMMARY OF ENVIRONMENTAL IMPACTS

........................................................... 20

15-iENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION

STANDARDS FOR SMALL ELECTRIC MOTORS

15.1 INTRODUCTION

This chapter describes potential environmental effects that may result from energy conservation standards for small electric motors. The U.S. Department of Energy (DOE)’s proposed energy conservation standards are not site-speci fic and would apply to all 50 states and U.S. territories. Therefore, none of the proposed standards would impact land uses, cause any direct disturbance to the land, or directly affect biological resources in any one area.

All of the trial standard levels (TSLs) ar e expected to reduce energy consumption in comparison to the baseline efficiency levels. Th ese changes in the demand for electricity are the primary drivers in analyzing environmental effect s. Estimates of source energy savings can be found in the utility impact analysis in chapter 13 of this technical support document (TSD).

The primary impact of the TSLs is in air quality resulting from changes in power plant operations and capacity additions. Therefore, much of this chapter describes the air quality analysis, and the latter part describes potential impacts to other environmental resources.

15.2 AIR EMISSIONS ANALYSIS

The primary focus of the environmental analysis is the impact on air quality of energy conservation standards for small electric motors. The outcomes of the environmental analysis are driven by changes in power plant types and quant ities of electricity generated under each of the alternatives. Changes in generation are described in the utility impact analysis in TSD chapter 13.

15.2.1 Air Emissions Descriptions

For each of the TSLs, DOE calculated tota l power-sector emissions based on output from NEMS-BT model (see chapter 13 for description of the model). This analysis considers three pollutants: sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), and mercury (Hg). An air pollutant is any substance in the air that can cause harm to humans or the environment. Pollutants may be natural or man-made (i.e., anthropogenic) a nd may take the form of solid particles (i.e., particulates or particulate matter), liquid droplets, or gases 1 . This analysis also considers carbon dioxide (CO 2 ).

1 More information on air pollution characteristics and regulations is available on the U.S. Environment Protection Agent (EPA)’s website at www.epa.gov.

15-115.2.1.1 Sulfur Dioxide

Sulfur dioxide, or SO 2 , belongs to the family of sulfur oxide gases (SOx). These gases dissolve easily in water. Sulfur is prevalent in a ll raw materials, including crude oil, coal, and ore that contains common metals like aluminum, copper, zinc , lead, and iron. SO x gases are formed when fuel containing sulfur, such as coal and oil, is burned, and when gasoline is extracted from oil, or metals are extracted from ore. SO2 disso lves in water vapor to form acid, and interacts with other gases and particles in the air to form sulfates and other products that can be harmful to people and their environment. 1

DOE has preliminarily determined that SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and region al emissions cap and trading programs that create uncertainty about standard’s impact on SO 2 emissions. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for all affected EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (D .C.) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005), which creates an allowance-based trading program that will gradually replace the Title IV program in those States and D.C.. (The recent legal history surrounding CAIR is discussed below.) The attainment of the emissions caps is flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO2 emissions by any regulated EGU. However, if the standard resulted in a perman ent increase in the quantity of unused emission allowances, there would be an overall reduction in SO 2 emissions from the standards. While there remains some uncertainty about the ultimate effects of efficiency standards on SO2 emissions covered by the existing cap and trade system, the NEMS-BT modeling system that DOE plans to use to forecast emissions reductions currently indicates that no physical reductions in power sector emissions would occur for SO 2.

Even if there is no significant reduction in the overall emissions of SO2 that results from the standard, there may still be some ec onomic benefit from reduced demand for SO 2 emission allowances that is not fully reflected in the co st savings experienced by individual consumers. Electricity savings that decrease the overall demand for SO 2 emissions allowances could lower allowance prices and thereby result in some econo mic benefits for all electricity consumers, not just those that reduced their electricity use as a result of an efficiency standard. DOE does not plan to monetize this particular benefit because the effect on the SO 2 allowance price from any single energy conservation standard is likely to be small and highly uncertain.

15.2.1.2 Nitrogen Oxides

Nitrogen oxides , or NO x , are the generic term for a group of highly reactive gases, all of which contain nitrogen and oxygen in varyin g amounts. Many of the nitrogen oxides are colorless and odorless. However, one co mmon pollutant, nitrogen dioxide (NO 2 ), along with

15-2particles in the air can often be seen as a reddish-brown layer over many urban areas. NO 2 is the specific form of NO x reported in this document. NO x is one of the main ingredients involved in the formation of ground-level ozone, which can tr igger serious respiratory problems. It can contribute to the formation of acid rain, and can impair visibility in areas such as national parks. NO x also contributes to the formation of fi ne particles that can impair human health. 2

Nitrogen oxides form when fossil fuel is bur ned at high temperatures, as in a combustion process. The primary manmade sources of NO x are motor vehicles, electric utilities, and other industrial, commercial, a nd residential sources that burn fossil fuels. NO x can also be formed naturally. Electric utilities account for about 22 percent of NO x emissions in the United States.

15.2.1.3 Mercury

Coal-fired power plants emit mercury (Hg) found in coal during the burning process. While coal-fired power plants are the largest remaining source of human-generated Hg emissions in the United States, they contribute very little to the global Hg pool or to contamination of U.S. waters. U.S. coal-fired power plants emit Hg in three different forms: oxidized Hg (likely to deposit within the United States); elemental Hg , which can travel thousands of miles before depositing to land and water; and Hg that is in particulate form. Atmospheric Hg is then deposited on land, lakes, rivers, a nd estuaries through rain, snow, and dry deposition. Once there, it can transform into methylmercury and accumu late in fish tissue through bioaccumulation.

Americans are exposed to methylmercury primarily by eating contaminated fish. Because the developing fetus is the most sensitive to the toxic effects of methylmercury, women of childbearing age are regarded as the populati on of greatest concern. Children exposed to methylmercury before birth may be at increased risk of poor performa nce on neurobehavioral tasks, such as those measuring attention, fine motor function, language skills, visual-spatial abilities, and verbal memory.

15.2.1.4 Carbon Dioxide (CO 2 )

Carbon dioxide (CO 2 ) is not a criteria pollutant (see belo w), but it is of interest because of its classification as a greenhouse gas (GHG). G HGs trap the sun’s radiation inside the Earth’s atmosphere and either occur naturally in the atmosphere or result from human activities. Naturally occurring GHGs include water vapor, CO 2 , methane (CH 4 ), nitrous oxide (N 2 O), and ozone (O 3 ). Human activities, however, add to the levels of most of these naturally occurring gases. For example, CO 2 is emitted to the atmosphere when solid waste, fossil fuels (oil, natural gas, and coal), wood, and wood products are bur ned. In 2007, over 90 percent of anthropogenic (i.e., human-made) CO 2 emissions resulted from burning fossil fuels. 3

Concentrations of CO 2 in the atmosphere are naturally regulated by numerous processes, collectively known as the “carbon cycle.” The movement of carbon betwee n the atmosphere and the land and oceans is dominated by natural proce sses, such as plant photosynthesis. While these natural processes can absorb some of the anthropogenic CO 2 emissions produced each year,

15-3billions of metric tons are a dded to the atmosphere annually. In the United States, in 2007, CO 2 emissions from electricity gene ration accounted for 39 percent of total U.S. GHG emissions. 3

15.2.1.5 Particulate Matter

Particulate matter (PM) also known as pa rticle pollution, is a complex mixture of extremely small particles and li quid droplets. Particle polluti on is made up of a number of components, including acids (such as nitrates an d sulfates), organic chemicals, metals, and soil or dust particles.

PM impacts are of concern due to human ex posures that can impact health. Particle pollution - especially fine partic les - contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. Numerous scientific studies have linked particle pollution exposure to a variety of problems, including: increased respiratory symptoms, such as irrita tion of the airways, coughing, or difficulty breathing, for example; decrease d lung function; aggravated asthma; development of chronic bronchitis; irregular heartbeat; nonfat al heart attacks; and premature death in people with heart or lung disease.

Power plant emissions can have either direct or indirect impacts on PM. A portion of the pollutants emitted by a power plant are in the form of particulates as they leave the smoke stack. These are direct PM emissions. M eanwhile other pollutants such as SO 2 and NO x interact with other elements in the atmosphere to produce PM at some distance from the power plant.

In general, the relative impacts of direct PM emissions reduction compared to other pollutants on PM exposures are much more difficult to estimate than other emissions reductions. This is due to the complex interactions betw een PM, other power plan t emissions, meteorology and atmospheric chemistry that impact human ex posure to particulates. Human exposure to PM usually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissi ons travel this distance they undergo highly complex atmospheric chemical reactions and the proportion of impacts and exposures attributable to different emissions can vary dram atically for different emissions sources and types of particulate precursors. These variations in emissions impacts depend on the distance to the source, land use and land cover, and the local a nd regional meteorology re sponsible for pollutant transport, deposition and a tmospheric chemistry.

The Environmental Protection Agency (EPA) has compiled and summarized technical studies regarding PM source apportionment. In this compilation of studies, sources are classified into seven categories: (1) Secondary sulfate/coal, (2) Secondary organic matter/mobile sources, (3) Nitrate dominated sour ces, (4) Biomass burning, (5) I ndustrial, (6) Cr ustal and salt (7) Other. In these studies, the PM exposures attributed to coal power plants are not disaggregated between direct particulate emissions and SO 2 emissions from these power plants. This is because both SO 2 and direct PM emissions aggregate and interact with water droplets and emissions from other sources to create final partic ulates that are a comple x mixture of different

15-4constituents. Both the SO 2 and direct PM are emitted from the power plant at the same time and if the final aerosol particle contains both su lfur compounds and other PM components it is not possible to attribute that aerosol particle to one source or the other. Therefore, DOE is not currently able to perform modeling that can make reliable estimates of the impact of direct PM emissions on air quality at this time.

15.2.2 Air Quality Regulation

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required
to control. 1 EPA has set national air quality standards fo r six common pollutants (also referred to as “criteria” pollutants), two of which are SO 2 and NO x . Also, the Clean Air Act Amendments of 1990 gave EPA the authority to control acidificat ion and to require operators of electric power plants to reduce emissions of SO 2 and NO x . Title IV of the 1990 amendments established a capand-trade program for SO 2 intended to help control acid rain. 1 This cap-and-trade program serves as a model for more recent programs with similar features.

In 2005, EPA issued the Clean Air Interstate Rule (CAIR) under sections 110 and 111 of the Clean Air Act (40 CFR Parts 51, 96, and 97). 4 2 CAIR will permanently cap emissions of SO 2 and NOx in eastern States of the United States. CAIR achieves large reductions of SO 2 and/or NOx emissions across 28 eastern States and the District of Columbia. States must achieve the required emission reductions usin g one of two compliance options : 1) meet an emission budget for each regulated state by requiring power pl ants to participate in an EPA-administered interstate cap-and-trade system that caps emissions in two stages, or 2) meet an individual state emissions budget through measures of th e state’s choosing. Phase 1 caps for NO x are to be in place in 2009. Phase 1 caps for SO 2 are to be in place in 2010. The Phase 2 caps for both NO x and SO 2 are due in 2015.

Also in 2005, EPA issued the final rule en titled “Standards of Performance for New and Existing Stationary Sources: Electric Steam Ge nerating Units,” under sections 110 and 111 of the Clean Air Act (40 CFR Parts 60, 63, 72, and 75) 5 . This rule, called the Clean Air Mercury Rule (CAMR), was closely related to the CAIR an d established standards of performance for Hg emissions from new and existing coal-fired electric utility steam generating units. The CAMR regulated Hg emissions from coal-fired power plants.

On February 8, 2008, the U.S. Court of App eals for the District of Columbia Circuit (D.C. Circuit) issued its deci sion in State of New Jersey, et al. v. Environmental Protection Agency

, 3 in which the Court, among other actions , vacated the CAMR referenced above.

On July 11, 2008, the U.S. Court of Appeals fo r the District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Agency

, which

2 See http://www.epa.gov/cleanairinterstaterule/.

3 No. 05-1097, 2008 WL 341338, at *1 (D.C. Cir. Feb. 8, 2008).

15-5vacated the CAIR issued by the U.S. E nvironmental Protection Agency on March 10, 2005. 4 CAIR was the vehicle for capping NOx emissions

. 5 On December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is replaced by a rule cons istent with the court’s earlier opinion. North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). 6

15.2.3 Global Climate Change

Climate change has evolved into a matter of global concern because it is expected to have widespread, adverse effects on natural resources and systems. A growing body of evidence points to anthropogenic sources of greenhouse gases, such as carbon dioxide (CO 2 ), as major contributors to climate change. Because this Rule, if finalized, will likely decrease CO 2 emission rates from the fossil fuel sector in the United States, the Department here examines the impacts and causes of climate change and then the potential impact of the Rule on CO 2 emissions and global warming.

15.2.3.1 Impacts of Climate Change on the Environment

Climate is usually defined as the average weather, over a period ranging from months to many years. Climate change refers to a change in the state of the climate, which is identifiable through changes in the mean and/or the variability of its properties (e.g., temperature or precipitation) over an extended peri od, typically decades or longer. 7

The World Meteorological Organization and United Nations E nvironment Programme (UNEP) established the Intergovernmental Panel on Climate Change (IPCC) to provide an objective source of information about climate change. According to the IPCC Fourth Assessment Report (IPCC Report), pub lished in 2007, climate change is cons istent with observed changes to the world’s natural systems; the IPCC expects these changes to continue. 7

Changes that are consistent with warming include warming of the world’s oceans to a depth of 3000 meters; global averag e sea level rise at an average rate of 1.8 mm per year from 1961 to 2003; loss of annual average Arctic sea ice at a rate of 2.7 percent per decade, changes in wind patterns that affect extra-tropical storm tracks and temperature patterns, increases in intense precipitation in some parts of the world, as well as increased drought and more frequent heat waves in many locations worldwide, and numerous ecological changes. 6

Looking forward, the IPCC describes con tinued global warming of about 0.2 °C per decade for the next two decades under a wide range of emission scenarios for carbon dioxide (CO 2 ), other greenhouse gases (GHG)s, and aerosols. After that period, the rate of increase is less certain. The IPCC Report descri bes increases in average global temperatures of about 1.1 °C

4 North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008) See http://www.epa.gov/cleanairinterstaterule/.

5 See id. at 903.

6 State of North Carolina, et al. v. Environmental Protection Agency, 550 F.3d 1176 (D.C. Cir. 2008).

15-6to 6.4 °C at the end of the century relative to t oday. These increases vary depending on the model and emissions scenarios. 6

The IPCC Report describes incremental impacts associated with the rise in temperature. At ranges of incremental increases to the global average temperature, IPCC reports, with either high or very high confidence, that there is likel y to be an increasing degree of impacts such as coral reef bleaching, loss of wildlife habitat, loss to specific ecosystems, and negative yield impacts for major cereal crops in the tropics, but also projects that there likely will be some beneficial impacts on crop yields in temperate regions.

15.2.3.2 Causes of Climate Change

The IPCC Report states that the world has wa rmed by about 0.74 °C in the last 100 years. The IPCC Report finds that most of the temperature increase since the mid-20th century is very likely due to the increase in anthropogenic concentrations of CO 2 and other long-lived greenhouse gases such as methane and nitrous oxid e in the atmosphere, rather than from natural

causes.

Increasing the CO 2 concentration partially blocks the earth’s re-radiation of captured solar energy in the infrared band, inhibits the radiant cooling of the earth, and thereby alters the energy balance of the planet, which gradually increases its average temperature. The IPCC Report estimates that currently, CO 2 makes up about 77 percent of the total CO 2 -equivalent 7 global warming potential in GHGs emitted from huma n activities, with the vast majority (74 percent) of the CO 2 attributable to fossil fuel use. 7 For the future, the IPCC Report describes a wide range of GHG emissions scen arios, but under each scenario CO 2 would continue to comprise above 70 percent of th e total global warming potential. 7

15.2.3.3 Stabilization of CO 2 Concentrations

Unlike many traditional air pollutants, CO 2 mixes thoroughly in the entire atmosphere and is long-lived. The residence time of CO 2 in the atmosphere is long compared to the emission processes. Therefore, the gl obal cumulative emissions of CO 2 over long periods determine CO 2 concentrations because it takes hundreds of years for natural processes to remove the CO 2

. Globally, 49 billion metric tons of CO 2 –equivalent of anthropogenic (man-made) greenhouse gases are emitted every year. Of this annual tota l, fossil fuels contribute about 29 billion metric tons of CO 2

. 8 8

7 GHGs differ in their warming influence (radiative forci ng) on a global climate system due to their different radiative properties and lifetimes in the atmosphere. These warming influences may be expressed through a common metric based on the radiative forcing of CO 2 , i.e., CO 2 -equivalent. CO 2 equivalent emission is the amount of CO 2 emission that would cause the same- time integrated radiative forcing, over a given time horizon, as an emitted amount of other long- lived GHG or mixture of GHGs.

8 Other non-fossil fuel contributors include CO 2 emissions from deforestation and decay from agriculture biomass; agricultural and industrial emissions of methane; and emissions of nitrous oxide and fluorocarbons.

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