### Energy Conservation Standards for Distribution Transformers ANOPR Public Meeting 

## Life-Cycle Cost Analysis
Building Technologies Program Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy September 28, 2004 

### Energy Conservation Standards for Distribution Transformers ANOPR Public Meeting 

## Life-Cycle Cost Analysis
Building Technologies Program Office of Energy Efficiency and Renewable Energy U.S. Department of Energy September 28, 2004

## ANOPR Analyses Flow Diagram

Market & Tech nology F Markups for

Engineer 'iii f ',\ Equipment Analysis 1 7 Price

Determination Energy use & End-Use Load ;liaracte^ization Life-Cycle Cost and Payl)ack Perioca Analyses National Impact Analysi€..

2 

## ANOPR Analyses Flow Diagram

MarKet & l___**_e_ch _lo_g_y** _ _**-----,, ~)** **ginee f1** **~** Scree ning r An :sJl\lsls J / , Anal ,ysi , s \ ' \ F i nal \\) ..

### EffectiV~**)** NOPR "? ,( Rule ,/ Date / I I
lI11arkuJ)s for \ Equi pment . Price Dete r liT'li'hati ofl (. "Em er gy us e & End-U se L CJ3d ' I Lif e-C ¥cle**rC ~st**  an d IPay lJack p erio<" J**al ~ses** 



# . _ 1 Na t ional I'mp act**Analysi~ )**  

# \ '>

2

## Purpose

Markups for Equipment Price Determination • To characterize the channels for how distribution transformers are distributed from the manufacturer to the customer. • To determine prices paid by customers based on manufacturer prices of base case and higher efficiency equipment. Energy Use & End
- Use Load Characterization • To develop electrical energy use and peak electrical consumption characteristics for distribution transformers. • To provide these characteristics for selected equipment efficiency levels across a diverse set of applications. Life-Cycle Cost and Payback Period Analyses • To develop the customer life-cycle cost savings and payback periods of higher efficiency equipment. • To evaluate the economic effects of potential standards from the customer perspective.

3 

## Purpose Markups for Equipment Price Determination

• To characterize the channels for how distribution transformers are distributed from the manufacturer to the customer. • To determine prices paid by customers based on manufacturer prices of base case and higher efficiency equipment. Energy Use & End-Use Load Characterization

• To develop electrical energy use and peak electrical consumption characteristics for distribution transformers. • To provide these characteristics for selected equipment efficiency levels across a diverse set of applications. • Life-Cycle Cost and Payback Period Analyses • To develop the customer life-cycle cost savings and payback periods of higher efficiency equipment. • To evaluate the economic effects of potential standards from the customer perspective.
3

## Issues for Public Comment

Modeling of Transformer Load Profiles (ANOPR Issue #6) • Distribution Chain Markups (ANOPR issue #7) • Discount Rate Selection and Use (ANOPR Issue #8) • Baseline Determination Through Purchase Evaluation Formulae (ANOPR Issue #9) • Electricity Prices (ANOPR Issue #10) Load Growth Over Time (ANOPR Issue #11)

4 

## Issues for Public Comment
• Modeling of Transformer Load Profiles (ANOPR Issue #6) • Distribution Chain Markups (ANOPR issue #7) Discount Rate Selection and Use (ANOPR Issue #8) • Baseline Determination Through Purchase Evaluation Formulae (ANOPR Issue #9) • Electricity Prices (ANOPR Issue #10) • Load Growth Over Time (ANOPR Issue #11)

4l ^-;J!" - 2 a r

Transformer Design and Cost from Engineering Analysis 

### Process Flowchart Calculate Markup and Installation Cost Select Transformer Design Electricity Costs and Prices Transformer Loading 

# i Calculate Cost of Losses

Discount Calculate Present Value of Rate Future Costs of Losses



# 1 Results: LCC Savings and Payback 5 Transformer Design and Cost from ' Engineering Analysis 

### Process Flowchart Calculate Markup and Installatron Cost

# ~ Electricity Costs and Prices Sele . ct Transfo', rmer Design

# ~ Cafculate Cost of !osses Transformer Loading
D'iscou . nt Rate

# ~
Calcul ' ate Present Value of

.. Futu re Costs of Losses

# ~ Results: 

## Lee Savings and Payback 5600 4

500 4

100-I Compliant A A

^L• 5aa•_aP• ^^4 ..^a AIA ^• •° ,.dg, t1, Sr1.Y•; ^'.,.y=• .•* •! • • •i • '

0 50 100 150 200 250 No-Load Losses (Watts) . Available Designs A Selected Designs, Base G) Selected Designs, Standard Standard Level 300

6 600**~------------------------------ ----------------------------------------~**  500 u;-400 :::**~** 

# - III**~** 300 III o ..J 'C ca 

### .3 200 100


### o 

### • '\
Compliant o 50

• Ava i lable Designs .' t",.. " , . " •• '.**~** 

### .. .**~~**

### .. ... • e ,

. • ,. • 

## . .
. "

100 150 No-Load Losses (Watts) 

# .. .... . . .**~** "

200 Non-C0l11pHant A

- - - - _ .. . . _ - -



### ..

250

.. Selected Designs, Base (Q) Selected Designs, Standard

_ Standard Level 300

6Ili ,_ vlu 

# ^`WU_ Baseline Determination Through Purchase Evaluation Formulae (ANOPR Issue #9) Common industry descriptors, A and B, capture current market purchase decision criteria. • A = equivalent first cost of no-load (core) losses ($/watt) • B = equivalent first cost of load (winding) losses ($/watt) 

### Distributions of A and B represent variability (fixed over analysis period). Different evaluation percentages applied to liquid-immersed and dry-type. The Department seeks stakeholder comments on the purchase decision model.

7 

## Baseline Determination Through Purchase Evaluation Formulae (ANOPR Issue #9) Common industry descriptors, A and B, capture current market purchase decision criteria. • A = equivalent first cost of no-load (core) losses ($/watt) • B 

# =equivalent first cost of load (winding) losses ($/watt) 

### Distributions of A and B represent variability (fixed over analysis period). Different evaluation percentages applied to liquid-immersed and dry-type. 

### The Department seeks stakeholder comments on the purchase decision model.
7

## Distribution Channels

Liquid- immersed Manufacturer

Customer Dry-type Manufacturer

Customer 

### s 

## Distribution Channels Liquid-immersed Dry-type Manufacturer Manufacturer
Distributor Contractor
Customer Customer 8Markui* for Pnt ferm in

### atio



## Markup and Installation Cost Examples Design Line #1: 50 kVA Liquid- immersed, Single-phase Manufacturer ' s selling price Shipping Sales tax Cost of installation Installed price Design Line #7: 75 kVA Dry-type, Three-phase, Low-voltage $1,275 $77 $151 $1,441 $2,944
Manufacturer ' s selling price $963 Distributor markup $337 Shipping $109 Contractor markup $141 Sales tax $146 Cost of installation $1,160 Installed price $2,855 9 . 

# .. Markup and Installation Cost Examples Design Line #1: 50 kVA Liquid-immersed, Single-phase Manufacturer's selling price Shipping Sales tax Cost of installation Installed price $1,275 $77 $151 $1,441 $2,944 Design Line #7: 75 kVA Dry-type, Three-phase, Low-voltage Manufacturer's selling price Distributor markup Shipping Contractor markup Sales tax Cost of installation Installed price $963 $337 $109 $141

. $146 $1,160 $2,855 9

## Distribution Chain Markups (ANOPR Issue # 7) Average markup factor for 50 kVA liquid-immersed transformer from manufacturer selling price to installed price is 2.1. Average markup factor for 75 kVA dry-type transformer from manufacturer selling price to installed price is 2.5. Issues



### The Department seeks stakeholder comments on factors, methods, and data used to determine distribution chain markups.

10 

## Distribution Chain Markups (ANOPR Issue # 7) Average markup factor for 50 kVA liquid-immersed transformer from manufacturer selling price to installed price is 2.1. Average markup factor for 75 kVA dry-type transformer from manufacturer selling price to installed price is 2.5. 

### The Department seeks stakeholder comments on factors, methods, and data used to determine distribution chain markups.

10?4C:AF1 --, rft^t I F.V1.3 

## Electricity Costs Liquid- immersed transformers • Hourly marginal electricity costs • Both capacity and energy components • FERC and electricity market data


### Dry-type transformers • Monthly electricity bills • Both demand and energy charges • Tariff data from about 100 utilities

11 

## Electricity 

## Costs



# . 1 Liquid-immersed transformers

• Hourly marginal electricity costs • Both capacity and energy components • FERC and electricity market data


### Dry-type transformers

• Monthly electricity bills • Both demand and energy charges • Tariff data from about 100 utilities

1 1

## Electricity Prices (ANOPR Issue #10) i ss 

### ues
For liquid-immersed analysis, weighted national average wholesale marginal cost

3.8 cents no-load loss , 4.5 cents load loss 

### For dry-type analysis , weighted national average commercial marginal rate including demand charges

6.4 cents no-load loss, 7.4 cents load loss 

### The Department seeks stakeholder feedback on the two methods used for this rulemaking to determine the cost of electricity.

12 

## Electricity Prices (ANOPR Issue #10) For liquid-immersed analysis, weighted national average wholesale marginal cost • 3 . 8 cents no-I,oad**I,oss ~**  4 .5 cents load loss 

### For dry-type analysis, weighted national average commercial marginal rate, including demand charges • 6.4**~ents** no-I ' oad loss l 7.4 cents load loss 

### The Department seeks stakeholder feedback on the two m , ethods used for this rulemaking to 

### determine the cost 

### of 

### electricity.

12

## Transformer Loading

Average transformer loading • < 100 kVA liquid-immersed - 30% RMS • > 100 kVA liquid-immersed - 50% RMS • Dry-type low- and medium-voltage - 35% RMS 

### References • Technical Support Documents: technical details • IEEE Transformer Loss Evaluation Guide: background

13 

## Transformer Loading
• Average transformer loading • < 100 kVA liquid-immersed - 30% RMS • > 100 kVA liquid-immersed - 50% RMS 

## • Dry-type low- and medium-voltage - 35% RMS


### • References • Technical Support Documents: technical details • IEEE Transformer Loss Evaluation Guide: background

13

### ue.s

## M odeling of Transformer Load P rofiles

(A N OP R Issue #6) For liquid-immersed, initial average loading ranges from 30% for 25 kVA to nearly 60 % for 1500 kVA. For dry -type, initial average loading ranges from 32% for 25 kVA to 37% for 2000 kVA. Initial peak loading assumptions directly impact load model results. The Department seeks stakeholder feedback on the loading model used in the ANOPR analysis, especially initial peak loading assumptions.

14 

## Modeling of Transformer Load Profiles (ANOPR Issue #6) For liquid-immersed, initial average loading ranges from 30% for 25 kVA to nearly 60% for 1500 kVA. For dry-type, initial average loading ranges from 32% for 25 kVA to 37% for 2000 kVA. Initial peak loading assumptions directly impact load model results. 

### The Department seeks stakeholder feedback on the loading model use " d in 

### the ANOPR analysis, es · peciaUy initial 

### peak loading assumptions.

14

## Load Growth Over Time (ANOPR Issue #11) One percent load growth used as default for liquid-immersed, zero percent load growth for dry-type. Load Growth

50% 40% 30% 20% 10% 0% 2005 2010 2015 2020 2025 2030 2035 2040 Year 

### Zero percent and two percent used for sensitivity for liquid-immersed. The Department seeks stakeholder comments on these assumptions. 15**~ \,~**  • .so**En~gy Etli&lefl~**  and Aenewable Energy I**"(":-~'.~** ssues**~~,.** 

## .**~.** 

## J Load Growth Over Time (ANOPR Issue #11) One percent load growth used as default for liquid-immersed, zero percent load growth for dry-type.

,---- - - -- - ---- ---- -- --**-- -.-** **,** Load Growth**~** 50% 

### i 

# _.J 0 40% 

### ... C) 30%**~** Q) > 20% ;: ..!!! 10% :::::I E 0% :::::I 0 2005 2010 2015 2020 2025 2030 2035 2040 Year 

### Zero percent and two percent used for sensitivity for liquid-immersed. The Department seeks stakeholder comments on these assumptions. 15 

## •^^ ^ ^ } 1' r , t '11 ^ l a•;- s p ^: , ^ . . is. . ^ i air i-•tr f ski-E !=•I^^el ^- .-t. -:n.N •:.*.1= _'^aiSs¢' = 

## Discount Rates Relative ( time) value of money • Now versus later 

### • Determined by the interest rate for borrowed money and the rate of return on equity n Interest rates are borrower - dependent n DOE analysis determines discount rate by owner type n Analysis, and consequently the discount rate, are in real terms

16 

## Discount Rates
• Relative (time) value of money • Now versus later 

### • Determined by the interest rate for borrowed money and the rate of return on equity • Interest rates are borrower-dependent • DOE analysis determines discount rate by owner type Analysis, and consequently the discount rate, are in real terms

16

## Discount Rate Selection and Use (ANOPR Issue # 8) Average Discount Rate by Ownership Category
• 4.35% Property Owner • 7.55% Industrial Companies • 7.46% Commercial Companies • 4.16% Investor Owned Utilities • 4.31% Publicly Owned Utilities • 3.33% Government 

### The Department invites comments on these discount rates

17 

## Discount Rate Selection and Use (ANOPR Issue 

## # 8) Average Discount Rate by Ownership Category • 4.35%) • 7.55%) • 7.46% • 4.16% • 4.31 %) • 3.33% Property Owner Industrial Companies Commercial Companies Investor Owned Utilities Publicly Owned Utilities Government 

### The Department invites comments on these discount rates

17

## Example of LCC Results

DL 1: 5OkVA, Liquid- immersed, Single-phase

Mean = ($13) 

### Forecast: LCC Savings 10,000 Trials Frequency Chart

Z

I0 .046- .030 - .015- .000 ($1,000) ($500) I



### .1 I

$500 609 - 456.7 11

18 

## Example of LCC Results DL 1: 50kVA, Liquid-immersed, Single-phase
10,000 Trials

.061 

# 1 .046 1**~** 

### -- 

# - -- .CI (w;:I .CI CI 

# ... c.. I 1

. 030 

# 1
-i .015 Forecast: LCC Savings Frequency Chart

.000 --'----- ,...----- ...... ($1,000) ($500) $0 ,----- - - -, - 609 I Mean = ($13) 1· - 1
- 456.7

. ." i - ..... 

### . n [ - 304.5**~** 

### _ n 

# , = ;- 152.2**~** $500 $1,000

18

### 500

400 300 200 100 0 -100 -200 -300 -400 -500 

## Example of LCC Results DL 1: 50 kVA, Liquid- immersed, Single-phase

2 3 4 5 Candidate Standard Level 

### Candidate Efficiency Standard Rating Mean LCC Savings Levels (percent) 1 98.90 $134 2 99.10 $158 3 99.30 (S13) 

### 4 99.40 ($54) 5 99.58 ;a ^'f7 7, Mean LCC w/o Standard $4,914

19 

## Example of LCC Results DL 1: 50 kVA, Liquid-immersed, Single-phase**500 ~------~----------~**  

### 400 r --------- 

### 300 .- ... -.----- . -

. -... . - ... .. . --

...... . . - -

..-

......... .. ..-- .... ---.--- -- . .. -

--._ ...---..--- ..- Candidate Efficiency Mean LCC Standard Rating Savings Levels (percent) 

### 200
--- -- -- .- 1 98.90 $134 

### 2 99.10 $158 

### 3 ' 99.30 ($13)**~** 

### -1 00
---------- ------------ ---------- - ..- -..--- . .... ...... 4 99.40 ($64) o 

### -200-- -.--------.------... . --- Cl



### -300

_ _ _________._.______ 1

___ _ ___ _ 

### 5 99.58 ($359) 

# I f , 

### -400
------- - . --- - .... - ----**-500 ~------------------~**  1 

### 2 

### 3 4 

### 5 

### $4,914 ] Mean LCCw/o Standard Candidate Standard Level 19±Tai ' Jai: i ; p 4 

## Example of Payback Results DL 9: 300 kVA, Dry-type, Three -phase, Medium-voltage Forecast: payback 9,406 Trials Frequency Chart .091-I .068 .045 M I- .023 000 . 0.3 6.4 Mean = 5 .7 years

12.5 18.6 - 852 - 639 11 426 4,.a 213 -0 

### -4 24.6

20 

## Example of Payback Results DL 9: 300 kVA, Dry-type, Three-phase, Medium-voltage Forecast: payback 9,406 Trials Frequency Chart .091**-r- ------.** **---------~I;::============~** Mean = 5.7 years 852 .068 ........ . ................................................................................................................................................... 639**~** 

### .- 

# " -tI n .CI .045 ........ . .............................................................................................................................................. - 426 .c**~** .CI o 

# c: .023 ...... .

.000 --'--------II u.u. ..................... 0.3 6.4 c n :I

................................................................................................................... - 213 

### Q

12.5 18.6 24.6

20

## Example of Payback Results

DL 9: 300 kVA, Dry -type , Three -phase, Medium-voltage 35 30

5 0 1 2 3 4 5 

### Candidate Standard Leve 

### Candidate Standard Level Efficiency

Rating (percent) Mean

Payback (years) 1 98.90 4.8 2 99.19 6.1 3 99.30 5.7 4 99.40 8.9 

### 5 99.58 13.1

21 

## Example of Payback Results DL 9: 300 kVA, Dry-type, Three-phase, Medium-voltage**35 ~------------------~**  

### 30**~** u (t1 

### 15 ..0 >,

### ~ 10**~~~ ~~~~~~~~~~** **~** 

### 1 

### 2 

### 3 4 

### 5

Candidate Standard Level 

### Candidate Efficiency Mean Standard Rating Payback Level (percent) (years) 1 , 98.90 4.8 

### 2 99.10 6.1 

### 3**9g~30** 

### 5.7 4 

### 99.40 8.9 

## 5 99,58 

### 13.1

21

## Other Issues

The Department seeks input on whether income tax effects are significant enough to warrant inclusion in the LCC analysis for the NOPR. The Department requests specific stakeholder comments on the power factor of 1.0 assumption. The Department seeks comments and recommendations from stakeholders on any other aspects related to the Life-Cycle Cost Analysis.

22 

## Other Issues The 

### Department seeks input on whether income tax effects are significant enough 

### to warrant inclusion in 

### the 

## Lee analysis for the 

### NOPR. The Department requests spec,jfic stakeholder comments on the power factor of 

### 1 . 0 assumption. The Department seeks co ' mments and recomm , endati'ons from stakeholders on any other aspects related to the Life-Cycle Cost Analysis.

22