### 8A

- i APPENDIX 8A

. NIA SENSITIVITY ANALYSIS FOR ALTERNATIVE

PRODUCT PRICE TREND SCENARIOS

TABLE OF CO NTENTS

8A.1 INTRODUCTION

................................ ................................ ................................ .. 8A

- 1

8A.2 ALTERNATIVE COMPUTER ROOM AIR CONDITIONER PRICE

TREND SCENARIOS

................................ ................................ ............................ 8A

- 1

8A.2.1 Exponential Fit Approach (High Price Scenario)

................................ ....... 8A

- 1

8A.2.2 Annual Energy Outlook 2011 Pr ice Forecast (Low Price Scenario)

.......... 8A

- 2

8A.2.3 Summary

................................ ................................ ................................ ..... 8A

- 3

8A.3 NPV RESULTS BY ALTERNATI VE PRICE TREND SCENA RIO

................... 8A

- 3

LIST OF TABLES

Table 8A.2.1 Price Trend Sensitivities

................................ ................................ ............. 8A

- 3

Table 8A.3.1 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners: Low Price S cenario (Seven Percent Discount Rate)

............ 8A

- 3

Table 8A.3.2 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners: Low Price Scenario (Three Percent Discount Rate)

............ 8A

- 4

Table 8A.3.3 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners: High Price Scenario (Seven Percent Discount Rate)

........... 8A

- 5

Table 8A.3.4 Summary of Cumulative Net Present Value for Compu ter Room Air

Conditioners: High Price Scenario (Three Percent Discount Rate)

............ 8A

- 5

LIST OF FIGURES

Figure 8A.2.1 Relative Price of Computer Room Air Conditioners versus Year, with

Exponential Fit

................................ ................................ ............................ 8A

- 2

Figure 8A.2.2 Computer Room Ai r Conditioner Price Forecast Indexes

.......................... 8A

- 38A

- 1 

### APPENDIX 8A. NIA SENSITIVITY ANAL YSIS F O R ALTERNATIVE PRODUCT

PRICE TREND SCENARIOS

8A.1 I N TR ODUCTION

DOE used a constant price assumption for the default forecast in the NIA described in

Chapter 10. In order to investigate the impact of different product price forecasts on the

consumer net present v alue (NPV) for the considered efficiency levels for computer room air

conditioners , DOE also considered two alternative price trends for a sensitivity analysis. This

appendix describes the alternative price trends and compares NPV results for these scenari os

with the default forecast

.

8A.2 ALTERNATIVE COMPUTER ROOM AIR CONDITIONER PRICE TREND

SCENARIOS

DOE considered two alternative price trends for a sensitivity analysis. One of these used

an exponential fit on the deflated Producer P rice I ndex (PPI) for all other miscellaneous

refrigeration and air

- conditioning equipments

, and the other is based on the “ deflator

— other

d

urables excluding medical ” that was forecasted for EIA’s Annual Energy Outlook 2011

( AEO2011 )

.

8A.2.1 Exponential Fit Approach ( High Price Scenar io )

For this scenario , DOE used an inflation

- adjusted all other miscellaneous refrigeration

and air

- conditioning equipment PPI from 2001

- 2010 to fit an exponential model with year as the

explanatory variable. DOE obtained historical Producer Price Index (PPI) data all other

miscellaneous refrigeration and air

- conditioning equipment spanning the time period 2001

- 2010

from the Bureau of Labor Statistics’ (BLS). a 

### The PPI data reflect nominal prices, adjusted for

p roduct quality changes. An inflation

- adjusted (deflated) price index for all other miscellaneous

refrigeration and air

- conditioning equipment was calculated by dividing the PPI series by the

Gross Domestic Product Chained Price Index

. In this case, the exp onential function takes the

form of:

Y = a ∙ e bX



### where Y is the computer room air conditioner price index, X is the time variable, a is the

constant and b is the slope parameter of the time variable.

a Series ID PCU3334153334159 ; http://www.bls.gov/ppi/8A

- 2 

### To estimate these exponential parameters, a least

- square fit was performed on the

inflation

- adjusted computer room air

- conditioner price index versus year from 2001 to 2010. See

Figure 8A.2

. 1

.

Figure 8A.2

. 1 Relative Price of Computer Room Air Conditioners versus Year, with

Exponential Fit

The regression performed as an exponential trend line fit results in an R

- square of 0.5 88

, which indicates a mode r ate fit to the data. The final estimated exponential func t ion is:

Y = 1

. 90 × 10 (

− 12 )



### ∙ e 0

. 0134 X



### DOE then derived a price factor index for this scenario , with 201 1 equal to 1, to forecast

prices in each future year in the analysis period considered in the NIA . The index value in a

given year is a function of the exponential parameter and year

.

8A.2.2 Annual Energy Outlook 2011 Price Forecast ( Low Price Scenario )

DOE also examined a forecast based on the “ deflator

— other d urables excluding

medical ” that was forecasted for AEO2011 out to 2035. This index is the most disaggregated

category that includes computer room air conditioners . To develop an inflation

- adjusted index,

DOE normalized the above index with the “ chained price index

— gross domestic product ”

forecasted for AEO2011 . To extend the price index beyond 2035, DOE used the average annual

price growth rate in 2026 to 2035. y = 2E

- 12e 0.0134x

R2 = 0.5877

0.840 0.860 0.880 0.900 0.920 0.940 0.960 0.980 1.000 1.020

2000 2002 2004 2006 2008 2010 2012Deflated Price Index (2010=1)

Year Exponential Fit on

Deflated PPI from 2001

to 2010

Expon. (Exponential Fit

on Deflated PPI from

2001 to 2010)8A

- 3 

### 8A.2.3 S ummary

Table 8A.2.1 shows the summary of the average annual rates of changes for the product

price index in each scenario

. Figure 8A.2.2 shows the resulting price trends.

Table 8A.2

. 1 Price Trend Sensitivities

Sensitivity Price Trend Average Annual rate of

change %

Medium (Default) Constant Price Projection 0.0 0

Low Price Scenario AEO2011

-- “ deflator

— other d urables

excluding medical ” - 1.34

High Price Scenario Exponential Fit using data from 2001 to

2010 1.35

Figure 8 A.2

. 2 Computer Room Air Conditioner Price Forecast Index es

8A.3 N PV RESULTS BY ALTERNATIVE PRICE TREND SCENARIO

Table 8 A.3

. 1 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners : Low Price Scenario (Seven Percent Discount Rate )

Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air

- cooled, <65, kBtu/h $ 0.001 $ 0.001 $ (0.002) $ (0.009)

Air

- cooled, ≥65and <240 kBtu/h $ 0.01 $ 0.12 $ 0.37 $ 0.62 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8201120142017202020232026202920322035203820412044Price Factor Index (2011=1)

Year Constant Price

Index_Default

Exponential Fit using PPI

deflated with GDP (2001

- 2010)_ High Price Case

AEO 2011_Low Price Case8A

- 4 Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air

- cooled, ≥240 and <760 kBtu/h $ 0.01 $ 0.08 $ 0.25 $ 0.42

Water

- cooled, <65 kBtu/h $ 0.001 $ 0.003 $ 0.006 $ 0.008

Water

- cooled, ≥65and <240 kBtu/h $ (0.0001) $ (0.0264) $ (0.1056) $ (0.2647)

Water

- cooled, ≥240 and <760 kBtu/h $ 0.002 $ (0.016) $ (0.077) $ (0.203)

Water

- cooled with fluid economizers,

<65 kBtu/h $ 0.001 $ 0.002 $ 0.003 $ 0.004

Water

- cooled with fluid economizers,

≥65and <240 kBtu/h $ (0.01) $ (0.06) $ (0.15) $ (0.32)

Water

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.004) $ (0.019) $ (0.054) $ (0.114)

Glycol

- cooled, <65 kBtu/h $ 0.001 $ 0.003 $ 0.005 $ 0.008

Glycol

- cooled, ≥65 and <240 kBtu/h $ 0.01 $ (0.01) $ (0.09) $ (0.25)

Glycol

- cooled, ≥240 and <760 kBtu/h $ 0.004 $ (0.009) $ (0.062) $ (0.176)

Glycol

- cooled with fluid economizers,

<65 kBtu/h $ 0.001 $ 0.003 $ 0.005 $ 0.007

Glycol

- cooled with fluid economizers,

≥65 and <240 kBtu/h $ (0.005) $ (0.048) $ (0.162) $ (0.380)

Glycol

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.002) $ (0.025) $ (0.087) $ (0.204)

* Numbers in parentheses indicate negative NPV.



### Table 8 A.3

. 2 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners : Low Price Scenario (Three Percent Discount Rate )

Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficienc y

Level 3 Efficiency

Level 4

Air

- cooled, <65, kBtu/h $ 0.002 $ 0.005 $ 0.005 $ (0.004)

Air

- cooled, ≥65and <240 kBtu/h $ 0.03 $ 0.31 $ 0.95 $ 1.64

Air

- cooled, ≥240 and <760 kBtu/h $ 0.02 $ 0.20 $ 0.60 $ 1.05

Water

- cooled, <65 kBtu/h $ 0.002 $ 0.006 $ 0.011 $ 0.016

Water

- cooled, ≥65and <240 kBtu/h $ 0.01 $ (0.02) $ (0.15) $ (0.43)

Water

- cooled, ≥240 and <760 kBtu/h $ 0.01 $ (0.01) $ (0.11) $ (0.33)

Water

- cooled with fluid economizers,

<65 kBtu/h $ 0.001 $ 0.003 $ 0.006 $ 0.008

Water

- cooled with fluid economizers,

≥65and <240 kBtu/h $ (0.02) $ (0.09) $ (0.26) $ (0.57)

Water

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.006) $ (0.033) $ (0.096) $ (0.209)

Glycol

- cooled, <65 kBtu/h $ 0.002 $ 0.006 $ 0.010 $ 0.015

Glycol

- cooled, ≥65 and <240 kBtu/h $ 0.02 $ 0.01 $ (0.11) $ (0.39)

Glycol

- cooled, ≥240 and <760 kBtu/h $ 0.02 $ 0.00 $ (0.09) $ (0.29)

Glycol

- cooled with fluid economizers,

<65 kBtu/h $ 0.002 $ 0.005 $ 0.010 $ 0.014

Glycol

- cooled with fluid economizers,

≥65 and <240 kBtu/h $ 0.003 $ (0.060) $ (0.255) $ (0.649)8A

- 5 Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficienc y

Level 3 Efficiency

Level 4

Glycol

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ 0.001 $ (0.035) $ (0.146) $ (0.368)

* Numbers in parentheses indicate negative NPV.



### Table 8 A.3

. 3 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners : High Price Scenario (Seven Percent Discount Rate )

Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air

- cooled, <65, kBtu/h $ 0.0001 $ (0.0014) $ (0.0093) $ (0.0245)

Air

- cooled, ≥65and <240 kBtu/h $ 0.01 $ 0.10 $ 0.28 $ 0.43

Air

- cooled, ≥240 and <760 kBtu/h $ 0.01 $ 0.07 $ 0.22 $ 0.36

Water

- cooled, <65 kBtu/h $ 0.002 $ 0.004 $ 0.007 $ 0.010

Water

- cooled, ≥65and <240 kBtu/h $ (0.01) $ (0.06) $ (0.19) $ (0.43)

Water

- cooled, ≥240 and <760 kBtu/h $ (0.005) $ (0.042) $ (0.139) $ (0.323)

Water

- cooled with fluid economizers,

<65 kBtu/h $ 0.001 $ 0.002 $ 0.004 $ 0.006

Water

- cooled with fluid economizers,

≥65and <240 kBtu/h $ (0.02) $ (0.09) $ (0.23) $ (0.46)

Water

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.007) $ (0.030) $ (0.079) $ (0.163)

Glycol

- cooled, <65 kBtu/h $ 0.001 $ 0.004 $ 0.007 $ 0.010

Glycol

- cooled, ≥65 and <240 kBtu/h $ (0.004) $ (0.050) $ (0.175) $ (0.416)

Glycol

- cooled, ≥240 and <760 kBtu/h $ (0.002) $ (0.031) $ (0.114) $ (0.275)

Glycol

- cooled with fluid economizers,

<65 kBtu/h $ 0.001 $ 0.004 $ 0.007 $ 0.009

Glycol

- cooled with fluid economizers,

≥65 and <240 kBtu/h $ (0.02) $ (0.09) $ (0.27) $ (0.58)

Glycol

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.008) $ (0.046) $ (0.135) $ (0.298)

* Numbers in parentheses indicate negative NPV.



### Table 8 A.3

. 4 Summary of Cumulative Net Present Value for Computer Room Air

Conditioners : High Price Scenario (Three Percent Discount Rate )

Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air

- cooled, <65, kBtu/h $ 0.001 $ 0.000) $ (0.011) $ (0.035)

Air

- cooled, ≥65and <240 kBtu/h $ 0.03 $ 0.27 $ 0.77 $ 1.24

Air

- cooled, ≥240 and <760 kBtu/h $ 0.02 $ 0.18 $ 0.54 $ 0.92

Water

- cooled, <65 kBtu/h $ 0.003 $ 0.008 $ 0.014 $ 0.020

Water

- cooled, ≥65and <240 kBtu/h $ (0.01) $ (0.10) $ (0.33) $ (0.78)

Water

- cooled, ≥240 and < 760 kBtu/h $ (0.002) $ (0.062) $ (0.238) $ (0.586)

Water

- cooled with fluid economizers,

<65 kBtu/h $ 0.002 $ 0.004 $ 0.008 $ 0.0118A

- 6 Equipment Class Net Present Value (Billion 2011$)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Water

- cooled with fluid economizers,

≥65and <240 kBtu/h $ (0.04) $ (0.16) $ (0.42) $ (0.88)

Water

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.01) $ (0.06) $ (0.15) $ (0.31)

Glycol

- cooled, <65 kBtu/h $ 0.003 $ 0.007 $ 0.013 $ 0.019

Glycol

- cooled, ≥65 and <240 kBtu/h $ 0.003 $ (0.067) $ (0.289) $ (0.738)

Glycol

- cooled, ≥240 and <760 kBtu/h $ 0.004 $ 0.042) $ (0.194) $ (0.503)

Glycol

- cooled with fluid economizers,

<65 kBtu/h $ 0.003 $ 0.007 $ 0.013 $ 0.018

Glycol

- cooled with fluid economizers,

≥65 and <240 kBtu/h $ (0.02) $ (0.15) $ (0.48) $ (1.08)

Glycol

- cooled with fluid economizers,

≥240 and <760 kBtu/h $ (0.01) $ (0.08) $ (0.25) $ (0.56)

* Numbers in parentheses indicate negative NPV.