1 | Building Technologies Programeere.energy.govThe Parker Ranch installation in HawaiiBUILDING TECHNOLOGIES PROGRAMEnergy Conservation Programfor Appliance StandardsResidential Central Air Conditioners and HeatPumpMay 5, 2010Agenda9:00– 9:05 am9:05– 9:10 am9:10– 9:25 am9:25– 10:00 am10:00– 10:30 am10:30– 10:45 amWelcome and IntroductionAttendee Introductions and Agenda OverviewBrief Opening RemarksRulemaking Overview, Regional Standards Background,Consensus Agreement, and Combined RulemakingMarket and Technology Assessment, Screening Analysis,and Engineering AnalysisBreak2 | Building Technologies Programeere.energy.govAgenda (Continued)10:45– 11:45 am11:45– 12:15 am12:15– 12:25 am12:25– 12:30 pmMarkups for Equipment PriceDetermination, Energy UseCharacterization, Life-Cycle Cost, and Payback PeriodAnalysisShipments Analysis and National Impact AnalysisPreliminary Manufacturer Impact AnalysisNext Steps and Closing3 | Building Technologies Programeere.energy.govWelcome and Introduction•Introductions•Role of the Facilitator•Ground Rules (norms)–Listen as an ally–Uh t i t t t t /k t th ise short, succinctstatements/keeptothe point–Hold any sidebar conversations outside of the room–Focus on issues, not personalities–Speak one at a time (raise hand to be recognized; state yourname for the record)–Set cell phones to silent/vibrate•Housekeeping Items4 | Building Technologies Programeere.energy.govPurpose of the Rulemaking AnalysisPlan Public Meeting•To present the procedural and analytical approaches to evaluateenergy conservation standards for residential central air conditionersand heat pumps.•To provide a forum for public discussion of rulemaking issues.•To encourage interested parties to submit data, information, andwritten comments.•To inform interested parties and facilitate the rulemaking process.5 | Building Technologies Programeere.energy.govStakeholder Participation in theRulemaking ProcessFederal RegisterNoticesFrameworkDocumentPreliminaryAnalysisNOPRFinalRuleStakeholder6 | Building Technologies Programeere.energy.gov•Public meetings and oral comments•Written comments on Federal Register notices, TechnicalSupport Documents and Analytical Spreadsheets•Data input from manufacturers and other interested partiesStakeholderParticipationTodayRequest for CommentIssue BoxIn the Notice of Public Meetingand AvailabilitofythePreliminary Technical Support Document (NOPM), DOEwelcomes comment. Throughout this presentation, specificissues will be raised for discussion on slides such as this,withidentifying item numbers corresponding to those in theexecutive summary. Nonetheless, comments concerning anypart of the document or presentation are welcome at any timeduring today’s meeting.7 | Building Technologies Programeere.energy.govDOE Seeks Comments on itsProposalIn all correspondence, include all of the following:–Energy Conservation Standards for Residential Central Air Conditioners andHeat Pumps–Docket Number EERE-2008-BT-STD-0006–Regulatory Identification Number (RIN) 1904-AB47Email:Res_Central_AC_HP@ee.doe.govP t l M ilCourier:PostalMail:Ms. Brenda EdwardsMs. Brenda EdwardsU.S.Department of EnergyU.S. Department of EnergyBuilding Technologies ProgramBuilding Technologies ProgramMailstop EE-2J950 L’Enfant Plaza, S.W., 6thFloor1000 Independence Avenue, S.W.Washington, DC 20024Washington, DC 20585-0121Telephone: (202) 586-2945Comment period closes May 10, 20108 | Building Technologies Programeere.energy.govInterested Parties OpeningStatements•At this time DOE welcomes opening remarks on the rulemakingAtthistimeDOEwelcomesopeningremarksontherulemakinganalysis plan for residential central air conditioners and heatpumps from interested parties.9 | Building Technologies Programeere.energy.gov123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses10 | Building Technologies Programeere.energy.govStatute•Addresses requirements from 42 USC 6295(d)(3)(A) and (B):–Pursuant to 6295(d)(3)(A), the first review was completed in August2004, with the publication of a Technical Amendmentthat establishedstandards determined in the 2001 “13 SEER” final rule–Pursuant to 6295(d)(3)(B), this rulemaking constitutes the secondreview of possible amendment to energy conservation standards forreviewofpossibleamendmenttoenergyconservationstandardsforcentral air conditioners and heat pumps11 | Building Technologies Programeere.energy.govConsent Decree•Pursuant to the consolidated consent decree, DOE must conduct asecond amended energy efficiency standards rulemaking andpublish a final rule for Residential Central Air Conditioners and HeatPumps (CAC) by June 30, 2011–Effective date of standards 5 years after publication of final rule (June2016)Item 1DOE seeks comment on the impact of the effectivedate occurring during the peak selling season for residentialcentral air conditioners and heat pumps.12 | Building Technologies Programeere.energy.govEISA 2007•Energy Independence and Security Act of 2007 (Public Law 110­140) (EISA 2007)–Directs DOE to incorporate standby and off mode for all final rulespublished after July 1, 2010–Permits DOE to establish up to two regional standards, in addition to anational standard–Requires DOE to consider the impact of any regional standards onconsumers, manufacturers, and othermarket participants, includingproduct distributors, dealers,contractors, and installersItem 13DOE seeks comment on the energy consumption ofcomponents during off-mode and the potential to reduce theenergy consumption of thesecomponents. DOE also seekscomment on the possibility of separate standards for off-modeenergy consumption.13 | Building Technologies Programeere.energy.govRegional Authority•EISA 2007 defines several requirements for the establishment ofregional standards:–DOE may establish up to two regional standards in addition to the basenational standard;–The boundaries of geographic regionsmust include only contiguousstates (with the exception of Alaska and Hawaii);states(withtheexceptionofAlaskaandHawaii);–Individual States may only be placed in a single region;–The establishment of any additionalregional standards must result insignificant energy savings; and–The establishment of any additional regional standards must beeconomically justified.(42 U.S.C. 6295(o)(6))14 | Building Technologies Programeere.energy.govRegions Analyzed for RegionalStandardsRest-of-CountryStandards Regions Analyzedin Preliminary AnalysisHot-DryHot-HumidHot-Humid States: AL, AR, FL, GA, HI, LA, MS, NC, OK, SC, TN, TXHot-Dry States: AZ, CA, NV, NM15 | Building Technologies Programeere.energy.govRegional Definitions•DOE has used the following regionaldefinitions to evaluate theimpacts of regional standards:Hot-HumidHot-DryRest-of-CountryAlabamaArizonaAlaskaNebraskaArkansasCaliforniaColoradoNewHampshireFloridaNevadaConnecticutNewJerseyGeorgiaNewMexicoDelawareNewYorkHawaiiDistrict of ColumbiaNorth DakotaLouisianaIdahoOhioMississippiIllinoisOregonN thC liorCarolinaI dinanaP l iennsylvaniaOklahomaIowaRhodeIslandSouth CarolinaKansasSouth DakotaTennesseeKentuckyUtahTexasMaineVermontMarylandVirginiaMassachusettsWashingtonMichiganWestVirginiaMinnesotaWisconsinMissouriWyomingMontanaItem 7DOE seeks comment from interested parties regardingDOE’s regional definitions for the analysis of regional standards.16 | Building Technologies Programeere.energy.govEnforcement of Regional Standards•Legal Requirements:–EISA 2007 requires DOE to begin a “rulemaking to develop andimplement an effective enforcement plan for regional standards”within 90 days of issuing a final rule establishing regionalstandards (42 U S C 6295(o)(g)(G)(ii)(I))standards(42U.S.C.6295(o)(g)(G)(ii)(I))–DOE must complete this enforcement rulemaking within 15months (42 U.S.C. 6295(o)(6)(G)(ii)(III))17 | Building Technologies Programeere.energy.govEnforcement of Regional Standards(Continued)•DOE has not yet determined theenforcement mechanism(s) forregional standards. An effective enforcement plan would likely becomposed of some of following elements:–Labeling–Building codes–Fines for installations thatdo not meet regional standards;–Warranty registration or other registration means to certify compliantinstallations;–Consumers education on regional standards: and–Competitively driven enforcement in which market participants reportviolations18 | Building Technologies Programeere.energy.govRequest for CommentsItem 12DOE seeks comment from interested parties regardingthe viability of the regionalstandard enforcement mechanismspresented in the executive summary, other mechanisms DOEshould consider and the extent to which these mechanismsshouldconsider,andtheextenttowhichthesemechanismswould result in additional financial burdens to consumers,manufacturers, contractors, distributors, dealers, and installers.DOE specifically seeks data on how, if at all, the enforcementoptions listed above would increase compliance or other costs.DOE also seeks comment on the regulation of field installationsof indoor and outdoor combinations.19 | Building Technologies Programeere.energy.govImpacts of Regional Standards on“Market Participants”•EISA directs DOE to consider the impact of “additional regionalstandards on ... other market participants, including distributors,dealers, contractors, and installers.” (42 U.S.C. 6295(o)(6)(D)(ii))•DOE’s preliminary analysis of these impacts can be found in chapter17 of the central air conditioners and heat pumps preliminary TSD.•DOE defined three categories of market participants in the HVACDOEdefinedthreecategoriesofmarketparticipantsintheHVACdistribution chain:–Distributors (wholesalers);–General Contractors (including builders); and–Mechanical Contractors (installers).•DOE characterized the role of these participants in detail.20 | Building Technologies Programeere.energy.govImpacts of Regional Standards on“Market Participants” (Continued)•DOE divided potential impacts into two categories:–Non-enforcement related impacts, which were analyzed in the TSD chapter (e.g.,increased inventory to meet the needs ofconsumers in multiple regions); and–Enforcement-related impacts, which were not analyzed at this stage becauseDOE has not yet established an enforcement plan (e.g., additional documentationrequired to facilitate tracking of the region in which HVAC units are installed).•Preliminary Conclusions:–For distributors, DOE found that regional standards could require additionalinventory, causing adverse financial impacts.–For general contractors and mechanical contractors, DOE found that any impactsof regional standards would be confined to border areas and would beenforcement-related only.Item 11DOE seeks comment on market data or informationthat will assist in the identification and analysis of the impactsof regional standards on marketparticipants, particularly thosethat serve two regions.21 | Building Technologies Programeere.energy.govConsensus Agreement•Interested parties filed a Joint Comment on October 13,2009, containing aconsensus agreement onamended standards for residential central airconditioners and heat pumps.–Signatories include AHRI, ACEEE, ASE, ASAP, NRDC, NEEP, Northwest Powerand Conservation Council, CEC, BardManufacturing Company Inc., CarrierResidential and Light Commercial Systems, Goodman Global Inc., LennoxResidential, Mitsubishi Electric & Electronics USA, National Comfort Products,and Trane Residential.–The consensus agreement was also submitted to Congress for consideration asTheconsensusagreementwasalsosubmittedtoCongressforconsiderationaslegislation and, if enacted as written, would become effective in 2015.•Separate standards for the Northernregion (HDD≥5000), Southernregion (HDD < 5000), andSouthwestern region (CA, AZ, NM,and NV).22 | Building Technologies Programeere.energy.gov-Consensus Agreement (Continued)•The consensus agreement contains the following levels:System TypeProposed SEER/HSPFRequirements forStates with≥5000 HDDProposed SEER/HSPFRequirements forStates with <5000 HDDProposed SEER/HSPF/EERRequirements for CA/AZ/NM/NVSplit-System ACSystemAC13 SEER13SEER14 SEER14SEER14 SEER/12.2 EER(<45,000 Btu/h)14 SEER/11.7 EER (≥45,000 Btu/h)Split-System HP14 SEER/8.2 HSPF14 SEER/8.2 HSPF14 SEER/8.2 HSPFSingle-PackageAC14 SEER14 SEER14 SEER/11.0 EERSingle-PackageHP14 SEER/8.0 HSPF14 SEER/8.0HSPF14 SEER/8.0 HSPFItem 16DOE seeks comment from interested parties relating tothe consensus agreement.23 | Building Technologies Programeere.energy.govCombined Rulemaking Approach•DOE is considering combining the analysesof central air conditioners and heat pumps,residential furnaces, and furnace fans into asingle rulemaking.–DOE proposes to examine how theinteraction between the three productsimpacts the cost toconsumers, the energysavings resulting from potential amendedstandards, and other factors.–If pursued, DOE would be required to publishthe combined final rule by May 1, 2011, tocomply with the conditions of the remandagreement for residential furnaces.Item 14DOE seeks comment from interested parties relating toa combined rulemaking regarding energy conservationstandards for residential central air conditioners and heatpumps, residential furnaces, and furnace fans.Current Final Rule PublicationDatesResidentialFurnacesMay 1, 2011ResidentialCentral AirConditionersandJune 30, 2011Heat PumpsFurnace FansJanuary 1,201324 | Building Technologies Programeere.energy.govPreliminary AnalysisRulemaking StageNOPRPreliminaryAnalysisFinalRuleMarket &Markups forFrameworkDocument25 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysis123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses26 | Building Technologies Programeere.energy.govPreliminary AnalysisRulemaking StageNOPRPreliminaryAnalysisFinalRuleMarket &Markups forFrameworkDocument27 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysisMarket Assessment•Purpose–Characterize the central airconditioner and heat pump market andmanufacturers–Determine appropriate product classes•Method–Determine scope of coverage–Identify and characterize manufacturers of central air conditioners andheat pumps–Classify covered products into appropriate product classes–Use historical shipment datato characterize market trends28 | Building Technologies Programeere.energy.govProduct Classes•DOE divides covered products into classes by–(1) the type of energy used;–(2) the capacity of the product; and–(3) any other performance-related features that justify adifferent standard level, considering such factors as consumerutility.(42 USC 6295(q))(42USC6295(q))•DOE used the existing product classes:–Split-system air conditioners–Split-system heat pumps–Single-package air conditioners–Single-package heat pumps–Small duct, high velocity (SDHV) systems–Space-constrained air conditioners–Space-constrained heat pumps29 | Building Technologies Programeere.energy.govProduct Classes (Continued)Item 3DOE seeks comment on the possible shifts in themarket due to the expiration of the TTW product classes.30 | Building Technologies Programeere.energy.gov–Technology Assessment•Purpose–To develop a preliminary list oftechnology options that couldimprove the efficiency of central air conditioners and heat pumps•Method–DOE identified technology options from:DOEidentifiedtechnologyoptionsfrom:•Literature review, including manufacturer marketing brochures•Comments and input fromstakeholders, including DOEtechnical contractors31 | Building Technologies Programeere.energy.govScreening Analysis•Purpose–To apply screening criteria to determine which technologyoptions to evaluate and which to eliminate•Technology options are screened using the following criteria:–Technological feasibility–Practicability to manufacture, install, and service–Adverse impacts on productutility or availability tocustomers–Adverse impacts on health or safety32 | Building Technologies Programeere.energy.govScreening Analysis (Continued)•Eliminated technologies:–High-efficiency expansion valves–Condenser fan motor controllers–Liquid-suction heat exchangers–Defrost cycle controls–Defrost mechanisms•DOE is aware of two emerging technologies:DOEisawareoftwoemergingtechnologies:1) Solar-assist products2) Three-stage heat pumps–Benefits are believed to primarilyresult in improved heating, notcooling, performanceItem 15DOE seeks comment on how the energy conservationstandard rulemaking can best address these technologies.DOE also seeks comment on anyother technology that iscurrently available on the market and could increasemaximum technologically feasible efficiency levels.33 | Building Technologies Programeere.energy.govg yEngineering Analysis•Purpose–To characterize the relationship between manufacturerselling price and air conditioner and heat pump efficiencyRulemakingAnalysesManufacturer Selling Price –Efficiency Relationship34 | Building Technologies Programeere.energy.gov•Life-Cycle Cost andPayback Period Analysis•Manufacturer ImpactAnalysis•Employment ImpactAnalysisEfficiencyRelationship

Manufacturer Selling PriceSEER/HSPF levelBaseline ModelsProduct Class Baseline Cooling/Heating CapacitySplit-System AC13 SEER3 Tons(36,000 Btu/h)Split-System HPSingle-Packaged ACSingle Packaged HPSDHV Systems11 SEERSpace-Constrained AC12 SEER2.5 Tons(30,000 Btu/h)Space-Constrained HPItem 4DOE seeks comment on methods to account fordifferences between typical 3-ton capacity products and otherlarge-tonnage products.Item 2DOE seeks comment on whether it should implementstandards with equal cooling efficiency requirements for airconditioners and heat pumps.35 | Building Technologies Programeere.energy.govtM fM fManufacturer Production Cost•Full production costs–Material and component costs derivedfrom a tear-down analysis ofcentral air conditioners and heat pumps–Various efficiencies analyzed from multiple manufacturersManufacturerManufacturerProductionCost•Direct Material•Direct Labor•Factory Overhead•DepreciationManufacturerMarkups=•Sales & marketing•Research &development•Interest•ProfitManufacturerSelling Price36 | Building Technologies Programeere.energy.govSEER Split-System AC(Blower-Coil)Split-System AC(Coil-Only)Split-SystemHPSingle-PackagedACSingle-PackagedHP13$ 715$ 580$ 861$ 726$ 89913.5$ 754$ 615$ 904$ 792$ 94014$ 793$ 651$ 951$ 835$ 99414.5$ 834$ 692$ 986$ 900$ 1,07315$ 864$ 739$ 1,020$ 952$ 1,14215.5$ 895$ 797$ 1,057$ 1,018$ 1,222Manufacturer Production Cost:Conventional Product Classes37 | Building Technologies Programeere.energy.gov16$ 927$ 871$ 1,105$ 1,097$ 1,31816.4----$ 1,41416.5$ 960$ 957--16.6--$ 1,20917$ 995$ 1,18818$ 1,068$ 1,27619$ 1,147$ 1,37219.5-$ 1,42320$ 1,23221$ 1,32422$ 1,422Coil-Only and Blower-Coil Systems•DOE developed separate analyses for coil-only and blower-coil split-systemair conditioners–Cost-efficiency curves–LCC and PBP•The analyses were combined to produce one set of NIA results for splitsystem air conditionersItem 10DOE seeks comment on whether it should develop aseparate analysis for coil-onlysplit-system heat pumps. DOEalso requests comment on the sizeof this market, whether it isstrongly regional in nature, and how DOE could modify theenergy-use characterization analysis to account for the impactof a home served by twodifferent heating fuels.Item 9DOE seeks comment on whether the differences incosts and market factors justify separate product classes forcoil-only and blower-coil split-system air conditioners.38 | Building Technologies Programeere.energy.gov$$SEER Space-Constrained AC SDHV11-$ 1,09611.5-$ 1,11012$992 $1,13512.5$1,018$1,172Manufacturer Production Cost:Niche Product Classes,,13$1,060 $1,22013.5$1,122 $1,28013.6$ 1,137-14$ 1,35214.5$ 1,43539 | Building Technologies Programeere.energy.govManufacturer Markups•DOE developed manufacturer markups using SEC form 10-Kreports from publicly owned central air conditioner and heatpump manufacturing companies– Net Sales–Costs of Sales–Gross Profit•The average manufacturer markup was found to be 1 32Theaveragemanufacturermarkupwasfoundtobe1.32ManufacturerProductionCostManufacturerMarkups=ManufacturerSelling Price•Direct material•Sales & marketing•Direct labor•Research &development•Factory overhead•Interest•Depreciation•Profit40 | Building Technologies Programeere.energy.gov123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses41 | Building Technologies Programeere.energy.govFrameworkDocumentPreliminaryAnalysisNOPRFinalRuleMarket &Markups forPreliminary AnalysisRulemaking Stage42 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisMarkupsforEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysisMarkup Analysis•Purpose–Determine consumer prices based on manufacturer costs–Characterize product distribution channels–Reflect CAC distribution direct costs, expenses, and profits•Inputs–Firm balance sheets from HARDI (wholesalers) and ACCA(mechanical contractors) data–U.S. Census Bureau data on wholesalers, mechanicalcontractors, general contractors•Output–Baseline and incremental markups43 | Building Technologies Programeere.energy.govDistribution ChannelsReplacement MarketNew Construction MarketManufacturerManufacturerDistributor (Wholesaler)Distributor (Wholesaler)MechanicalMechanicalContractorContractorConsumerBuilder (General Contractor)ConsumerDOE seeks comment on the accuracy of the two assumeddistribution channels.44 | Building Technologies Programeere.energy.govPreliminary National AverageMarkupsBaseline MarkupsIncremental MarkupsReplacementMarketNewConstructionMarketReplacementMarketNewConstructionMarketWholesaler1.3701.3701.1141.114MechanicalContractor1.3801.2801.1201.040GeneralContractor-1.290-1.170Sales Tax1.0711.0711.0711.071Overall2.0252.4221.3361.452•Product price also includes $0.20/lb shipping charges before markups45 | Building Technologies Programeere.energy.govEnergy Use Characterization•Purpose–To provide estimates of the national and regional distribution ofannual energy consumption of central air conditioners and heatpumps by efficiency level.•Methodology–Residential:EIA RECS surveydata with historical energyusescaled using SEER and HSPF to reflect 2016 baseline andhigher efficiency levels.–Commercial:Small commercial building simulation of CAC andCHP energy consumption at defined efficiency levels ­normalized to 3-ton unit.•Outputs–Annual CAC and CHP energy use statistics for sampleobservations.46 | Building Technologies Programeere.energy.govData Inputs•Residential (Est. 93% of Market)–Household cooling and heating energy from 2005 RECS•1854 air conditioner and 339heat pump observations•CAC and CHP product age information for RECS households–Historical state average monthlycooling and heating degree day data (1978–2007)–Historical average cooling and heatingefficiency data for CAC and CHP fromAHRI–Base case efficiency distributionsestimates for 2016 by product class•Commercial (Est. 7% of Market)–Engineering efficiency levels to be analyzed–Location specific weather files for use with building simulation tool–Population-based weighting factors for each weather file–Base case efficiency distributionsDOE seeks comment on the assumptions for the distributionof commercial and residential energy use. DOE also seekscomment on the market baseline efficiency distributions.47 | Building Technologies Programeere.energy.govResidential Energy Use CalculationsProcess Diagram of Residential Energy Use Calculations - CoolingRECSAge of HouseholdAgeofHouseholdCAC or CHPAHRIShipmentAverage SEERCAC and CHPEstimated SEERof StockCAC or CHPRECSStock HouseholdAnnual CoolingEnergy (WeatherNormalized)Baseline SEER(SEER 13)BaselineAnnual CoolingEnergy UseStandard LevelSEERMarket BaselineSEER DistributionMarket BaselineAnnual CoolingEnergy UseStandard LevelAnnual CoolingEnergy UseBasic Scaling of Cooling Energy Use:SEERres_stockUEC=UEC×res_standard_level_cres_stock_cSEERstandard_level48 | Building Technologies Programeere.energy.govCommercial Energy Use CalculationsProcess Diagram of Commercial Energy Use CalculationsSmall OfficeBuilding ModelEnergyPlus Simulation ToolTMY WeatherDataBldg. AnnualCooling, Heating,Fan Energy UseZone PeakProduct SizesMarket BaselineSEER /HSPFDistributionStandard LevelSEER/HSPFMarket BaselineAnnual Cooling,Heating, and FanEnergy UseStandard LevelAnnual Cooling, Heating, andFan Energy UseCAC or CHPCharacteristicsfor Four SelectedEfficiency LevelsAnnual Cooling, Heating, Fan EnergyUse for Selected Efficiency Levels(Normalized to 3-Tonunit)•Four SEER levels simulated: 13, 14, 16, MaxTech•Energy use at other levelsdetermined via interpolation•Simulations performed in237 U.S. TMY Locations•Population-based weighting factors assigned to TMY-Statecombinations based on USGS data49 | Building Technologies Programeere.energy.govCommercial Energy Use Calculations:Simulation Assumptions•Simulations used EnergyPlus simulation tool and DOE benchmark small officebuilding model•Standard level SEER/HSPF first converted to corresponding EER/COP47o F•Fan power at test conditions establishedbased on blower fan efficiency of 0.58,blower motor efficiency of 0.65 (SEER 13, 14) or 0.80 (SEER 16, Max Tech) and totalstatic pressure of 1.105 in. H2O•Corresponding condensing-unit-only cooling and heating COPs derived for use inEnergyPlus•Building model otherwise representedby benchmark model assumptions (e.g.,envelope design, internal use schedules)DOE seeks comment on theassumptions used in thecommercial energy useanalysis.50 | Building Technologies Programeere.energy.govAssumed Market Baseline EfficiencyDistributions•DOE developed market baselineefficiency distributions across 16 efficiency bins fromlimited market data and average industry SEER statisticsSEER BinsSEER Distribution by Product ClassIndustry-WideSEERDistribution(Four Classes)%Bottom of BinSEERTop of BinSEERCharacteristicEfficiency in BinSEERSplitSystemAC%*SinglePackageAC%Split –SystemHP%SinglePackageHP%1313.251324.0075.0013.0050.0024.1813.2513.7513.555.0020.0052.0032.0051.6613.7514.25144.002.0010.0011.005.8714.2514.7514.55.252.009.005.006.1714.7515.25153.251.005.502.003.7515.2515.7515.52.000.003.500.002.2715.7516.5163.500.003.000.003.0716.517.5171.500.002.000.001.5217.518.5180.700.001.500.000.8718.519.5190.300.000.500.000.3319.520.5200.200.1320.521.5210.200.1321.522.5220.100.06Wt. Average SEER13.7713.1713.9713.3913.7813.7213.9151 | Building Technologies Programeere.energy.govStandards Regions for PreliminaryAnalysisRest-of-CountryStandards Regions Proposed inPreliminary AnalysisHot-DryHot-HumidHot-Humid States: AL, AR, FL, GA, HI, LA, MS, NC, OK, SC, TN, TXHot-Dry States: AZ, CA, NV, NM52 | Building Technologies Programeere.energy.govHot-Humid region northern boundary roughly equivalent to HDD4,500Standards Regions for PreliminaryAnalysis (Continued)•Standards regions developed based onconsideration of:–Cooling Load Hours–Relative Humidity during Cooling Hours–Cooling Degree Days (base 65oF)–Contiguous Regions/Whole States Requirement–Population Distribution in Hot-Dry States and Texas•line•Wide variation in temperatures inHot-Dry states driven by elevation andmaritime influences – regions focused on population distribution•Regions cross certain census division boundaries, requiring additionalanalysis to allocate RECS observations to regions•App 7-C discusses the development of a possible SEER Hot-Dry(SEERHD) metric53 | Building Technologies Programeere.energy.govStandards Regions for PreliminaryAnalysis (Continued)Item 8DOE seeks comment on (1) the introduction of aregional SEER (SEERHDmetric); (2) the use of the bin methodregionalSEER(SEERmetric);(2)theuseofthebinmethodand the calculation of cooling load and hour bins fordetermining a regional SEERHD; and (3) the use of SEERHDforestablishing cooling efficiency standards in the hot-dry regionof the country.54 | Building Technologies Programeere.energy.govRegional Energy ConsumptionResults: ExampleAverage Annual Energy Consumption for Split-System AC – Blower Coil*Efficiency LevelAnnual Energy ConsumptionkWh/yrNationalHot-HumidHot-DryRestofCountry#SEERHSPF*CoolingHeatingCoolingHeatingCoolingHeatingCoolingHeating113.0N/A2,43303,58402,17201,3650MarketBaselineMarketBaselineN/A2,31503,41002,06701,3020213.5N/A2,34703,45502,09601,3190314.0N/A2,26703,33602,02501,2750414.5N/A2,19003,22301,95701,2330515.0N/A2,11903,11701,89301,1930615.5N/A2,05203,01801,83301,1550716.0N/A1,98802,92501,77701,1200816.5N/A1,93202,84001,72701,0890917.0N/A1,87802,76001,67901,06001018.0N/A1,78002,61301,59201,00701119.0N/A1,69202,48201,514096001220.0N/A1,61302,36301,444091701321.0N/A1,54102,25601,380087801422.0N/A1,47602,15801,32208420*Average annual energy consumption forother product classes shown in TSD55 | Building Technologies Programeere.energy.gov123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses56 | Building Technologies Programeere.energy.govPreliminary AnalysisRulemaking StageNOPRPreliminaryAnalysisFinalRuleMarket &Markups forFrameworkDocument57 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysisLCC Analysis•Methodology–LCC equals•product installed price•annual energy, maintenance, and repair costs•discounted to a particular base year–Consumer perspective–Excel® spreadsheet and Monte Carlo implementation tool–LCC difference of marketbaseline minus standard level–Simple payback period (years) also calculated–Monte Carlo analysis allows DOE toconsider end-user variability andconduct sensitivity analyses•Variation in energy use and price across individuals•Variations in installation, repair, and installation costs•Selects end-use sectors (commercial, residential)•Correlates inputs where necessary(e.g., electricity price and sector)–Results = distributions of LCCand PBP by product class, region, andefficiency level58 | Building Technologies Programeere.energy.govLCC and PBP Analysis Flow Chart59 | Building Technologies Programeere.energy.govMonte Carlo Simulation•What factors vary by region?–Markups (especially sales taxes)–Installation costs–Electricity consumption for cooling and heating–Electricity prices•What factors vary over time?−Electricity prices•What factors vary by individual consumer?−Product efficiency (Market baseline distribution)−Market baseline energy consumption−Product lifetime−Discount rates−Electricity prices60 | Building Technologies Programeere.energy.govElectricity Prices•Residential:database of residential electricity tariffs,RECS sample households–No time-of-use (TOU) tariffs•No mandatory TOU tariffs•Market penetration <1% of residential customers•No significant difference on average between default and TOU price•Commercial:database of commercial electricity tariffsdatabaseofcommercialelectricitytariffs,modeled commercial buildings–Includes demand charges, block rates, seasonal rates, andmandatory TOU rates where they exist.61 | Building Technologies Programeere.energy.govRegional Averages of Residential AnnualAverage and Seasonal Marginal PricesProduct andRegionResidential Electricity Prices2008 cents/kWhAnnualAveragePriceJanuaryMarginalPriceJulyMarginalPriceAir ConditionerHot-Humid10.048.869.75Hot-Dry16.1119.7919.97Rest of Country10.739.1110.57Nation11.1210.3011.40Heat PumpHot-Humid10.019.5010.20Hot-Dry14.3516.2215.80Rest of Country9.688.529.93Nation10.269.7110.5762 | Building Technologies Programeere.energy.govEffective Marginal Price by Regionfor Commercial BuildingsCensusDivisionMarginal Prices 2008 cents/kWhScalingFactor*Central Air ConditionersHeat PumpsSEER14SEER16SEER19SEER14SEER16SEER1912345678932.7 22.1 25.325.0 17.4 19.622.2 14.3 16.67.4 6.6 6.914.6 12.3 13.110.7 9.5 10.017.5 14.8 16.010.9 9.8 10.112.7 12.2 12.528.5 19.522.6 15.419.0 12.28.0 6.514.6 11.710.3 9.116.3 13.513.2 9.813.6 11.621.917.414.16.912.69.414.510.611.81.441.151.251.071.361.281.341.181.09*The scaling factors used to convert from 2004 to 2008 dollars63 | Building Technologies Programeere.energy.govElectricity Price ForecastsPrice Escalation Based on Annual Energy OutlookResidentialCommercialResidential Prices1.201.251.30Commercial Prices1 151.201.250.800.850.900.951.001.051.101.15 2007 2009 2011 2 013 2015 2017 2 01 9

2 021 2 023 20 2 5 20 2 7 2 029 2031 20 3 3 20 3 5 2037 2039 20 4 1 2043 2045 2047Years

Index 2008=1.00Low GrowthReferenceHigh Growth0.800.850.900.951.001.051.101.15 2007 200 9 201 1 201 3 201 5 2017 201 9 2021 2023 2025 2027 2029 2031 2033 203 5 2037 203 9 204 1 2043 204 5 2047Years

Index 2008=1.00Low GrowthReferenceHigh Growth64 | Building Technologies Programeere.energy.govRepair, Maintenance, and InstallationCosts•Major repairs (base system compressor replacement) = $700 to $1500─Probability of replacing during lifetime = 0.5─Increase with product price (efficiency level)─Vary regionally─Annualized•Annual maintenance costs = $20 to $120─Range: self-service to full service contract─Increase withproductprice(efficiencylevel)─Vary regionally•Installation costs vary by product class─Based onRS Means─Varies regionally, but not by efficiency levelDOE seeks additional data on maintenance, installation, andrepair costs and how they may vary with efficiency level. DOEalso seeks comments on any additional sources that could beconsidered for these costs.65 | Building Technologies Programeere.energy.govRepair, Maintenance, and InstallationCosts (Continued)Item 5DOE seeks comment on the impact of increasedefficiency standards on end-user decisions of whether toefficiencystandardsonenduserdecisionsofwhethertorepair or replace existing installed units. DOE also seeks anydata regarding the impact of product price on the decision torepair or replace products and the corresponding impact onproduct lifetime.66 | Building Technologies Programeere.energy.govDiscount Rates•Residential:real rates based on borrowing costs andopportunity costs for household investments–4.8% average for existing homeowners–3.0% average when included in mortgage (new constructiononly)•Commercial:real rates based on weighted average costof capital (WACC) for over 1700 companies–5.66% average67 | Building Technologies Programeere.energy.govLifetimes for CACs and CHPsAir Conditioners (19.01 yr avg)40%50%60%70%80%90%100%% Retiring% Survivingyears0%10%20%30%40%0.0 10.0 20.0 30.0 40.0 50.0Heat Pumps (16.24 yr avg)40%50%60%70%80%90%100%% Retiring% Surviving0%10%20%30%40%0.0 10.0 20.0 30.0 40.0years50.0•Survival function estimates based on an analysis of (1) manufacturer shipmentsdata; (2) American Housing Survey stockdata; and (3) responses in RECS on theage of household central air conditioner68 | Building Technologies Programeere.energy.govLife Cycle Cost and Payback PeriodResultsLCC and PBP Summary: Highest SEER and HSPF for WhichMean LCC Savings are Positive, and Corresponding MedianPBP in YearsProduct ClassNationalHot-HumidHot-DryRest of CountrySEER/HSPFPBPyearsSEER/HSPFPBPyearsSEER/HSPFPBPyearsSEER/HSPFPBPyearsSplit-System AC(Coil Only)13.527.815.017.514.542.613.0NASplit-System AC(Blower-Coil)13.527.419.017.917.030.113.0NASplit-System HP19.5/10.312.019.5/10.310.019.5/10.38.815.5./8.45*12.6Single-PackageAC13.0NA13.0NA13.0NA13.0NASingle-Package HP14.0/8.010.514.0/8.08.214.5/8.011.413.0/7.7NANA means not applicable.*SEER 15 and 15.5 show very small LCC savings. Savings are negative at SEER 13.5-14.5 and atSEER 16.0 and above69 | Building Technologies Programeere.energy.gov123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses70 | Building Technologies Programeere.energy.govPreliminary AnalysisRulemaking StageNOPRPreliminaryAnalysisFinalRuleMarket &Markups forFrameworkDocument71 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysisShipments Analysis: Purpose &Method•Purpose–To estimate CAC and HP shipmentsin the base case and standards cases•Method–Shipments model uses an accounting methodology to track the stock of CAC and HP–Total product stock is disaggregated according to:•Product class (CAC split systems further disaggregated into coil-only & blower coil units)•Market sector (residential and commercial)•Repair status (normal and extended repairs)–ttht“E hachmarkesectordisaggregatedintothefollowingthree productplacemenchannels”:•New construction•Existing owners (replacements)•New owners (existing buildings that acquire products for the first time)–Each “channel” modeled to respond tonew efficiency standards differently•New construction – unaffected•Existing owners – repair vs. replacement decision affected (i.e., more owners will choose to repair ratherthan replace)•New owners – purchase decision affected (i.e., some owners will choose alternative)–Potential CAC owners choose room air conditioners–Potential HP owners choose combination warm-air electric furnaces and CAC72 | Building Technologies Programeere.energy.govShipments Analysis: Inputs•Historical Shipments–Used to build up CAC and HP product stock–Shipments data provided by AHRI by product class over the time period 1972-2007–Split system CAC: 90% of shipments comprised of coil-only units; 10% as blower coil units–93% of annual shipments allocated to residential sector; 7% to commercial sector•Replacement Shipments–Based on product lifetime of CAC and HP products•New Construction Shipments–Based on new construction starts multiplied by product saturations in new construction–Residential and commercial starts:AEO2009–Residential saturations: Census,Characteristics of New Housing–Commercial saturations: DOE-EIA,Commercial Building Energy Consumption Survey•New Owner Shipments–Historical values: residual after the sum of replacement and new construction shipments subtracted fromhistorical total–Forecasted values: Average market share over 1990-2007 time period•Decision Model for New Owners and Existing Owners–Relative price elasticity of demand used to forecast impact on shipments from standards–Elasticity developed from data on home appliances after reviewing trends in new owner historical CAC and HPshipments relative to purchase price (PPI), operating costs (efficiency), and household income–Purchase price effects dominate–Consumers forecasted to be less sensitive to initial changes in purchase price based on consumer automobilepurchase decision-making data73 | Building Technologies Programeere.energy.gov%Shipments Analysis: Regional Model•No variability by region:(1) Product lifetimes and (2) Relative price elasticities•Variability by region:(1) Total installed costs; (2) Product operating costs; (3) Historical shipments; (4) Newconstruction starts and stock; (5) New construction product saturations•Total Installed Costsand Product Operating Costs–From LCC and PBP analysis•Allocation of Historical Shipments to Regions–Regional allocation factors developed todivide historical shipments into the threeclimatic regions–Factors determined through trial and error bycalibrating tohistorical stock saturationscalibratingtohistoricalstocksaturationsin the Census’American Housing Survey•Regional New Construction Starts–Combination ofAEO2009(starts by CensusDivision) and population used to allocatevalues to three climatic regions•Regional New Construction Saturations–Residential:Combination ofCharacteristics ofNew Housing(saturations by Census Region) andpopulation used to develop saturations for eachclimatic region–Commercial:Combination of DOE-EIA,CommercialBuilding Consumption Survey(saturations by CensusDivision) and population used to develop saturationsfor each climatic regionCAC & HP Saturation Hot-Dry10%20%30%40%50%60%70%80%90%100%

SaturationCAC calculat edHP calculat edCAC AHSHP AHSCAC & HP Saturation Hot-Hum id10%20%30%40%50%60%70%80%90%100%

SaturationCAC calculatedHP calculat edCAC AHSHP AHS0%1990 1992 1994 1996 1998 2000 2002 2004 2006 20080%1990 1992 1994 1996 1998 2000 2002 2004 2006 2008CAC & HP Saturation Rest of U.S.0%10%20%30%40%50%60%70%80%90%100%1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

SaturationCAC calculat edHP calculat edCAC AHSHP AHSCAC & HP Saturation Entire U.S.0%10%20%30%40%50%60%70%80%90%100%1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

SaturationCAC calculat edHP calculat edCAC AHSHP AHSHistorical Stock Saturations74 | Building Technologies Programeere.energy.govStandards Case Shipments: 16.5 SEERShipments Results:CAC Split Systems, Coil-Only Units123456

Shipments (million)Hot-Dry: New ConstructionHot-Dry: New Ow nerHot-Dry: ReplaceHot-Humid: New ConstructionHot-Humid: New Ow nerHot-Humid: ReplaceRest of Country: New ConstructionRest of Country: New Ow nerRest of Country: ReplaceRest-of-CountryHot-HumidHot-DryBase CaseShipments0

1 9 9 0 1 9 9 4 19 9 8 20 0 2 20 0 6 2010 2014 2 0 1 8 2 0 2 2 2 0 2 6 2030 2034 2038 2 0 4 2 2 0 4 6Year0.000.501.001.502.002.503.003.504.004.505.002000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040 2044

millionsHHHDROCHH (CSL13)HD (CSL13)ROC (CSL13)U.S.Replacements0.000.501.001.502.002.502000

millions2004 2008 2012 2016 2020 2024 2028 2032New Owners2036 2040 2044HHHDROCHH (CSL13)HD (CSL13)ROC (CSL13)U.S.0.000.200.400.600.801.001.201.402000

millions2004 20082012 2016 2020 2024 2028 2032 2036 2040 2044HHHDROCU.S.New Construction75 | Building Technologies Programeere.energy.govase CaseAnnual EnergyConsumptionAnnual EnergyAnnual EAnnual EnergyConsumptionAnnual EnergyAn l EConsumptionAnnualEnergyConsumptionConsumptionAnnualEnergyConsumptionNational Energy Savings Purposeand Methodology - Flow DiagramBase-CaseBase Case2046Base Case2018Base Casenergy2017BaseCase2016Annual EnergyConsumptionStandardsProjectionShipmentsAnalysisCase ProjectionStandards Case2046Standards Case2018Standards Casen a nerg2017Standards Case2016StandardsCaseAnnual EnergyConsumptionBase-CaseCumulativeEnergy UseSite to SourceEnergyConversionStandards-CaseCumulativeEnergy Use76 | Building Technologies Programeere.energy.govNational EnergySavingsNational Consumer NPV Purposeand Methodology - Flow DiagramBase-CaseShipmentsAnalysisStandardsProjectionMaint &Repair Cost(2016 –2046)ProductCost(2016 –2046)77 | Building Technologies Programeere.energy.govOperating CostSavingsTotal ProductCost IncreaseDiscountRateNet PresentValueEnergyCost(2016 –2046)Maint &Repair Cost(2016 –2046)ProductCost(2016 –2046)EnergyCost(2016 –2046)Case ProjectiontNational Impact Analysis: Inputs•Total Installed Cost, Repair and Maintenance Costs, Annual Energy Use–Average per unit values as a function of efficiency level taken from LCC and PBP analysis•Base-Case and Standards-Case Forecasted Efficiencies–Base-Case efficiencies 2008-2016: Based on base case efficiency distributions from LCC and PBPanalysis–Standards-Case efficiencies 2016:Based on “Roll-up” scenario–Forecasted efficiencies: Based on historical trends in shipment-weighted efficiencies•El i it PElectricityPrices–Average marginal prices taken from LCC PBP analysis–Future energy prices adjusted according to trend forecasted by theAEO2009•Electricity Site-to-Source Conversion Factors–Conversion factors based on marginal heat rates from NEMS corresponding toAEO2009–Factors vary annually and account for generation, distribution, and transmission losses•Discount Rate–7% and 3% real from OMB’s Regulatory Analysis Guideline A-4•Present Year–Future expenses are discounted to the year 200978 | Building Technologies Programeere.energy.govNational Impact Analysis: Base Caseand Standards Case EfficienciesExample: Split-System AC, Coil-Only UnitsCSLSEERMarket ShareBaseCaseStandards Case1234567Baseline13.024.6%-------113.556.4%81.0%-­­-­­214.04.1%4.1%85.1%-­-­­314.55.4%5.4%5.4%90.5%----415.03.3%3.3%3.3%3.3%93.8%---515.52.1%2.1%2.1%2.1%2.1%95.9%--616 0.3 6%.3 6%.3 6%.3 6%.3 6%.3 6%.99 5%.-716.50.5%0.5%0.5%0.5%0.5%0.5%0.5%100%SWEF13.6513.7714.1814.6015.0515.5216.0016.50•Base Case efficiency distribution from LCC and PBP analysis–For the year 2008, distributionderived from AHRI data submittal–Assumed to remain frozen from 2008 to 2016•Standards Case efficiency distributions based on “Roll-up” scenario–Efficiencies below the standard level “roll-up” to the standard level–Efficiencies above the standard level are unaffected79 | Building Technologies Programeere.energy.govNational Impact Analysis: Base Caseand Standards Case Efficiency TrendsExample: Split-System AC, Coil-Only Units121314151617

SWEF (SEER)Base CaseCSL 1: 13.5 SEERCSL 2: 14 SEERCSL 3: 14.5 SEERCSL 4: 15 SEERCSL 5: 15.5 SEERCSL 6: 16 SEERCSL 7: 16.5 SEER1011121990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045Year•Forecasted shipment-weighted efficiency (after 2016) assumed to grow ata rate equal to historical trend–Base case efficiency trend growth based on historical trend from 1992 to 2006–Standards case efficiency trend maintains the same per-unit average totalinstalled cost difference for year2016 (between the base case and standardscase) over the entire forecast period–Forecasted shipment-weighted efficiencies are limited to the max tech (16.5SEER for coil-only units)80 | Building Technologies Programeere.energy.govNational Impact Analysis:Annual Cost ValuesExample: Split-System AC, Coil-Only Units, Standard Level 2 (14 SEER)0.00.10.22016 2020 2024 2028 2032 2036 2040 2044 2048 2052 2056 2060 2064 2068 2072 2076 2080

0 8 DollarsTotal Installed Cost IncreaseOperating Cost SavingsNet Savings-0.4-0.3-0.2-0.1Year

Billion of 20 081 | Building Technologies Programeere.energy.govNational Impact Analysis:Energy Savings and NPV ResultsExample: Split-System AC

a nd Regional Energy SavingsSplit CAC - Coil Only Units0.51.01.52.02.53.03.5

NES or RES (quads)NationHot-HumidHot-DryRest of CountrySplit CAC - Blower Coil Units0.51.01.52.02.53.03.5

NES or RES (quads)NationHot-HumidHot-DryRest of Country

National and Regional NPV Nat’l a0.0CSLSEER123 45678910 11 12 1313.5 14 14.5 15 15.5 16 16.5 17 18 19 20 21 220.0CSLSEER123456 78910 11 12 1313.5 14 14.5 15 15.5 16 16.5 17 18 19 20 21 22Split CAC - Coil Only Units-45-40-35-30-25-20-15-10-505CSLSEER

NPV @ 3% discount rate (billion $)NationHot-HumidHot-DryRest of Country12345678910 11 12 1313.5 14 14.5 15 15.5 16 16.5 17 18 19 20 21 22Split CAC - Blower Coil Units-8-7-6-5-4-3-2-101CSLSEER

NPV @ 3% discount rate (billion $)NationHot-HumidHot-DryRest of Country123 45678910 11 12 1313.5 14 14.5 15 15.5 16 16.5 17 18 19 20 21 2282 | Building Technologies Programeere.energy.gov123456Public Meeting AgendaStatute and ContextMarket & Tech; Screening; EngineeringEnergy Use; Markup Analysis3EnergyUse;MarkupAnalysisLife-Cycle Cost and Payback Period AnalysisShipments Analysis; National Impact AnalysisPreliminary MIA; NOPR Analyses83 | Building Technologies Programeere.energy.govFrameworkDocumentPreliminaryAnalysisNOPRFinalRuleMarket &Markups forPreliminary AnalysisRulemaking Stage84 | Building Technologies Programeere.energy.govTechnologyScreeningAnalysisEngineeringAnalysisEnergy UseCharacterization& End Use LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisMarkupsforEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisPreliminaryManufacturerImpactAnalysisManufacturer Impact AnalysisOverview•Purpose–To identify the impacts ofenergy conservation standards onmanufacturers•Phase 1–DOE creates an industry profile to characterize the industry andidentify important issues that require consideration•Phase 2Phase2–DOE prepares an industry cash-flow model and an interviewquestionnaire to guide subsequent discussions•Phase 3–DOE interviews manufacturers, and assesses the impacts ofstandards both quantitatively (using the Government RegulatoryImpact Model) and qualitatively(impacts on competition,manufacturing capacity, employment, and regulatory burden)85 | Building Technologies Programeere.energy.govPreliminary Manufacturer ImpactAnalysis – Key Issues•Impacts on Profitability–Higher standards may decrease profit margins–Residential consumers may switchto other types of HVAC productsdue to higher prices, reducing sales•Conversion Costs/Diminishing Returns to Consumers–Conversion costs may increase theprice of the products to theconsumer, and, in most cases, a small increase in efficiency•Product Innovation–Resources available for the development of new products maydecrease because existing products may need to be redesigned•Regulatory Burden–Residential furnace standards–International standardsItem 6DOE seeks comment on the possible impact ofincreased efficiency standards on domestic manufacturers.86 | Building Technologies Programeere.energy.govAnalyses for Notice of ProposedRulemaking (NOPR)FrameworkDocumentNOPRNOPRPreliminaryAnalysisFinalRule87 | Building Technologies Programeere.energy.govEnvironmentalAssessmentLife-CycleCostSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisRegulatoryImpactAnalysisRevisePreliminaryAnalysisDOE Seeks Comments on itsProposalIn all correspondence, include all of the following:–Energy Conservation Standards for Residential Central Air Conditioners andHeat Pumps–Docket Number EERE-2008-BT-STD-0006–Regulatory Identification Number (RIN) 1904-AB47Email:Res_Central_AC_HP@ee.doe.govP t l M ilCourier:PostalMail:Ms. Brenda EdwardsMs. Brenda EdwardsU.S.Department of EnergyU.S. Department of EnergyBuilding Technologies ProgramBuilding Technologies ProgramMailstop EE-2J950 L’Enfant Plaza, S.W., 6thFloor1000 Independence Avenue, S.W.Washington, DC 20024Washington, DC 20585-0121Telephone: (202) 586-2945Comment period closes May 10, 201088 | Building Technologies Programeere.energy.gov