1 | Energy Efficiency and Renewable Energy eere.energy.gov

Energy Conservation Standards

Notice of Proposed Rulemaking (NOPR) 

for packaged terminal air conditioners 

(PTACs) and packaged terminal heat 

pumps (PTHPs)

October 29, 2014

Ron Majette

Department of Energy

Building Technologies Program

EERE-2012-BT-STD-0029

PTACs@ee.doe.gov

This slide deck is issued to 

clarify efficiency level 

nomenclature on the following 

slide numbers: 26, 27, 28, 30, 

33, 34, 49, 57, 58, and 70.
2

Welcome

• Introductions (around the room)

• Role of the Facilitator

• Ground Rules

- Speak one at a time.

- Say your name for the record – there will be a complete transcript of this 

meeting.

- Be concise – share the ‘air-time.’

- Keep the focus here – cell phones on silent; limit sidebar conversations.

- Webinar participants turn phone on mute; “raise your hand” to be 

recognized to speak.

• Housekeeping Items

• Agenda Review

• Opening Remarks
3

Public Meeting Agenda

9:00 – 9:25 am Welcome, Introductions, Opening Statements, Overview, 

Statute, Context

9:25 – 9:45 am Market and Technology Assessment, Screening Analysis

9:45 – 10:45 am Engineering Analysis

10:45 – 11:00 am Break

11:00 – 11:15 am Equipment Price Determination

11:15 – 12:00 pm Trial Standard Levels, Energy Use, Life-Cycle Cost Analysis

12:00 – 1:00 pm Lunch

1:00 – 2:00 pm Shipments, National Impact Analysis

2:00 – 2:30 pm Manufacturer Impact Analysis

2:30 – 3:00 pm Emissions/Monetization of Emissions, Utility Impact, 

Employment Impact, Regulatory Impact Analyses

3:00 – 3:15 pm Proposed Standard

3:15 – 3:30 pm Closing Remarks and Adjourn
4

Listening via the Webcast

• The Department is broadcasting this meeting live over the 

Internet. 

• DOE is providing the webcast to accommodate stakeholders 

that are unable to attend the public meeting in person. 

• The web broadcast allows stakeholders to listen in and view 

the slides.

• All stakeholders are encouraged to submit written comments 

after the public meeting. 
5

Purpose of Public Meeting

1. Present the energy conservation standards DOE is proposing 

for PTACs and PTHPs in this notice of proposed rulemaking.

2. Invite comment on the analysis from participants.

3. Discuss the next steps for the rulemaking.

4. Encourage participants to submit data, information, 

summary statements, and written comments, including 

additional issues for discussion.
6

Issue for Discussion

Issue box numbering corresponds to the list of issues published at 

the end of the Notice of Public Rulemaking (NOPR) document, 

available at regulations.gov, under docket number EERE-2012-BTSTD-0029, at: 

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BTSTD-0029-0017.

The deadline for submitting comments is November 17, 2014.

Issue Box: DOE welcomes comments, data, and information 

concerning standards being considered for PTACs and PTHPs. Issues 

that correspond to those raised in DOE’s published material will be 

numbered in accordance with that material. Whether invited by an 

issue box or not, comments are welcome on any part of DOE’s 

analysis.
7

How to Submit Written Comments

• In all correspondence, please refer to the PTAC-PTHP rulemaking by:

– Energy Conservation Standards for Packaged Terminal Air Conditioners 

and Packaged Terminal Heat Pumps;

– Docket Number EERE-2012-BT-STD-0029; and

– Regulatory Identification Number (RIN) 1904-AC82.

• Email: pkgTerminalAC-HP2012STD0029@ee.doe.gov

Postal: Courier:

Ms. Brenda Edwards

U.S. Department of Energy

Building Technologies Program, Mailstop 

EE-5B

1000 Independence Avenue, SW

Washington, DC 20585-0121

Ms. Brenda Edwards

U.S. Department of Energy

Building Technologies Program, Suite 600

950 L’Enfant Plaza, SW

Washington, DC 20024

Tel: 202-586-2945

Comment Period closes: November 17, 2014, 11:59 PM EDT
8

Opening Remarks

Meeting participants are invited to provide opening 

remarks or statements at this time.
9

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
10

Regulatory History

• The Energy Policy Act of 1992 (EPACT 1992) amended the Energy Policy and 

Conservation Act of 1975 (EPCA) to:

− Include packaged terminal air conditioners (PTACs) and packaged terminal heat 

pumps (PTHPs) as a covered equipment type; and

− Establish the first energy conservation standards for PTACs and PTHPs.

• On October 8, 2008, DOE published a final rule amending existing 

standards for PTACs and PTHPs (hereafter “2008 Final Rule”). 

• On February 22, 2013, DOE initiated the rulemaking cycle by publishing a 

framework document and holding a public meeting on March 18, 2013.

• On October 9, 2013, ASHRAE Standard 90.1-2013 amended 

Standard 90.1 requirements for PTACs and triggered DOE review. 

• On March 13, 2014, DOE published a notice of proposed rulemaking 

(NOPR) regarding test procedures for PTACs and PTHPs

• On April 11, 2014, DOE published a notice of data availability (NODA) in 

response to the amended Standard 90.1 requirements for PTACs.
11

Current Standards – PTACs and PTHPs

The 2008 Final Rule prescribed the current energy conservation standards for 

PTACs and PTHPs manufactured on or after September 30, 2012 (for standard 

size) or September 20, 2010 (for non-standard size).

Equipment

Type Sub-category Cooling Capacity (Btu/h)

Energy Conservation Standard:

EER (Btu/Wh), COP (unitless)

PTAC

Standard Size†

<7,000 EER = 11.7

≥7,000 and ≤15,000 EER = 13.8 – 0.300*Cap‡

>15,000 EER = 9.3

Non-Standard 

Size†

<7,000 EER = 9.4

≥7,000 and ≤15,000 EER = 10.9 – 0.213*Cap‡

>15,000 EER = 7.7

PTHP

Standard Size†

<7,000 EER = 11.9, COP = 3.3

≥7,000 and ≤15,000 EER = 14.0 – 0.300*Cap‡

COP = 3.7 – 0.052*Cap‡

>15,000 EER = 9.5, COP = 2.9

Non-Standard 

Size†

<7,000 EER = 9.3, COP = 2.7

≥7,000 and ≤15,000 EER = 10.8 – 0.213*Cap‡

COP = 2.9 – 0.026*Cap‡

>15,000 EER = 7.6, COP = 2.5

† Standard size refers to equipment with wall sleeve dimensions having an external wall 

opening greater than or equal to 16” high or greater than or equal to 42” wide. 

Non-standard size refers to equipment with existing wall sleeve dimensions having an 

external wall opening greater less than 16” high or less than 42” wide.

‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.
12

2013 2014 2015 2016 2017 2018

PTAC and PTHP Rulemaking Schedule

Milestone Date

Notice of Public Meeting and Availability of Framework Document 22 February 2013

Notice of Proposed Rulemaking 16 September 2014

Final Rule (projected) September 2015

Final Rule (statutory deadline, per ASHRAE trigger requirements) 9 April 2016

Compliance Date (projected) January 2019

2019
13

EPCA Factors

42 U.S.C. 6295(o)(2)(B)(i) directs DOE to consider seven factors when 

setting energy conservation standards.

EPCA Factors DOE Analysis

1. Economic impact on customers and 

manufacturers

Life-Cycle Cost Analysis

Manufacturer Impact Analysis

2. Lifetime operating cost savings compared 

to increased cost for the equipment Life-Cycle Cost Analysis

3. Total projected energy savings National Impact Analysis 

4. Impact on utility or performance Engineering Analysis

Screening Analysis

5. Impact of any lessening of competition Manufacturer Impact Analysis

6. Need for national energy conservation National Impact Analysis

7. Other factors the Secretary considers 

relevant

Emissions Analysis

Utility Impact Analysis

Employment Impact Analysis
14

Scope of Coverage

• DOE is proposing standards for PTACs and PTHPs, defined by EPCA 

Section 340 as follows:

A “packaged terminal air conditioner” is “a wall sleeve and a separate unencased

combination of heating and cooling assemblies specified by the builder and intended 

for mounting through the wall. It includes a prime source of refrigeration, separable 

outdoor louvers, forced ventilation, and heating availability by builder's choice of hot 

water, steam, or electricity.” (42 U.S.C. 6311(10)(A)) 

A “packaged terminal heat pump” is “a packaged terminal air conditioner that 

utilizes reverse cycle refrigeration as its prime heat source and should have 

supplementary heat source available to builders with the choice of hot water, steam, 

or electric resistant heat.” (42 U.S.C. 6311(10)(B)) 
15

NOPR Stage

Framework

Document

NOPR Final

Rule

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Energy Use

Characterization

Shipments

Analysis

National

Impact

Analysis

Life-Cycle

Cost and

Payback 

Period Analysis

Markups 

Analysis

Manufacturer 

Impact 

Analysis

Emissions 

Analysis

Employment 

Impact 

Analysis

Utility 

Impact 

Analysis

Regulatory 

Impact 

Analysis
16

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
17

Purpose of MTA and Screening Analysis

• Market and Technology Assessment (MTA)

− Determine equipment classes 

− Provide information on the market, manufacturers, and shipment trends

− Identify technology options to improve efficiency

• Screening Analysis

− Screen out technology options that DOE will not consider in the engineering 

analysis based on: 

1. Technological feasibility: incorporation in commercially available equipment or in 

working prototypes

2. Practicability to manufacture, install, and service: mass production and reliable 

installation and servicing could be achieved on the scale necessary to serve the 

relevant market at the time the standard requires compliance

3. Adverse impacts on equipment utility or availability: significant adverse impact on 

the utility of the equipment to significant subgroups of customers, or causing the 

unavailability of any covered equipment type with performance characteristics, 

features, sizes, capacities, and volumes that are substantially the same as 

equipment generally available in the United States at the time.

4. Adverse impacts on health or safety: significant adverse impacts on health or 

safety
18

Equipment Classes

• DOE divides covered equipment into classes by:

– the type of energy used;

– the capacity of the equipment; or

– other performance-related features that justify different standard levels, 

such as features affecting customer utility.

• DOE establishes separate energy conservation standards for each 

equipment class.

• DOE is proposing to maintain the existing equipment class divisions 

for PTACs and PTHPs.

• DOE is not proposing new energy conservation standards for nonstandard size PTACs and PTHPs.

– “Non-standard size” refers to equipment with existing wall sleeve dimensions 

having an external wall opening less than 16” high or less than 42” wide.

– Non-standard size equipment holds a small and declining portion of the market.

– Amendments to energy conservation standards for non-standard size equipment 

would result in a very small amount of energy savings.
19

Equipment Classes

• DOE is proposing to maintain the following equipment class divisions:

Equipment 

Type

SubCategoryCooling Capacity 

(Btu/h)

PTAC

Standard 

Size

< 7,000

≥ 7,000 and ≤ 15,000

> 15,000

NonStandard 

Size

< 7,000

≥ 7,000 and ≤ 15,000

> 15,000

PTHP

Standard 

Size

< 7,000

≥ 7,000 and ≤ 15,000

> 15,000

NonStandard 

Size

< 7,000

≥ 7,000 and ≤ 15,000

> 15,000

Type of Equipment

- PTAC equipment includes cooling and heat from 

hot water, steam, or electricity.

- PTHP equipment utilizes reverse cycle 

refrigeration as its prime heat source. 

Physical Dimensions

- Standard-size units are sold for new construction 

and replacement of existing standard-size 

equipment.

- Non-standard size units are typically 

manufactured for replacement of units in older 

buildings, where alteration of non-standard size 

wall openings may be cost prohibitive.

Cooling Capacity

- The single standard size associated with PTACs 

and PTHPs makes it challenging to achieve higher 

efficiency levels in higher-capacity equipment.

- Smaller capacity units have more room for 

design options (i.e., increased heat exchanger 

size) that enable greater energy efficiency.
20

• DOE identified technology options that can improve energy 

efficiency for PTACs and PTHPs. 

• DOE then reviewed the identified technology options and screened 

them using the following criteria:

– Technological feasibility;

– Practicability to manufacture, install, and service;

– Adverse impacts on equipment utility or availability to customers; and

– Adverse impacts on health or safety.

• DOE then eliminated technology options where:

– Available data suggest that the efficiency benefits of the technology are 

negligible; 

– Data are not available to evaluate the energy efficiency characteristics of the 

technology; or 

– The test procedure and EER or COP metric would not measure the energy 

impact of the technology.

Technology Options and Screening Analysis
21

Technology Options/Screening Analysis

PTAC and PTHP Technology Options

Higher Efficiency Compressors Increased Heat Exchanger Area

Higher Efficiency Fan Motors Improved Air Flow and Fan Design

Scroll Compressors Hydrophobic Material Treatment of Heat 

Exchangers

Variable-speed Compressors Re-circuiting Heat Exchanger Coils

Complex Control Boards Heat Pipes

Clutched Fan Motors Corrosion Protection

Microchannel Heat Exchangers Thermostatic Expansion Valve

Rifled Interior Heat Exchanger Tube Walls Alternate Refrigerants (such as HCFC-32)

• DOE identified the technology options below that can improve PTAC 

and PTHP efficiency. 

• DOE screened in four of these options for consideration in the 

engineering analysis. Those in red italics either do not meet the 

screening criteria or do not offer efficiency gains over baseline units 

as measured by test procedure.
22

Issues for Comment

Issue 1: Alternate Refrigerants

DOE did not consider alternate refrigerants in the analysis because DOE is not aware of any SNAPapproved refrigerants that are known to have better efficiency than R-410A for PTAC and PTHP 

equipment. DOE requests feedback on the efficacy of alternative refrigerants in PTAC and PTHP 

equipment.
23

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
24

Engineering Analysis Methodology

Select certain representative equipment classes and 

capacities to be analyzed in the engineering analysis.

Develop efficiency levels (ELs) that span the range of 

efficiencies available from the baseline to the maximum 

technologically feasible. 

Choose units that that cover the full range of efficiency 

levels and represent typical design approaches. 

 Test and teardown the chosen units to determine the 

relationship between manufacturer production cost (MPC) 

and energy efficiency.

Select 

Representative 

Equipment 

Classes

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships
25

Select Representative Equipment Classes

• There are large variations in equipment cooling capacity 

and performance in the standard size PTAC and PTHP 

equipment classes

• DOE selected representative cooling capacities and 

analyzed specific equipment to provide information 

representative of the entire equipment class. 

• DOE identified two representative cooling capacities: 

– The 9,000 Btu/h capacity had the highest number of standardsize PTAC and PTHP models listed in the 2013 AHRI Directory. 

– The 15,000 Btu/h capacity represents the greatest technical 

hurdles for efficiency improvement, considering the size 

constraints of standard-size PTACs and PTHPs. 

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
26

Efficiency Levels

• The baseline efficiency level represents models at the 

minimum efficiency level allowed by the standard.

– ANSI/ASHRAE/IES Standard 90.1-2013 was issued in the course of 

this rulemaking and it raised the Standard 90.1 minimum 

equipment efficiency for PTACs to 1.8% above the Federal energy 

conservation standard for PTACs.

– DOE is obligated either to adopt those standards developed by 

ASHRAE or to adopt levels more stringent than the ASHRAE levels. 

– DOE identified the ANSI/ASHRAE/IES Standard 90.1-2013 as the 

baseline efficiency level (baseline).

• The “max tech” efficiency level represents the most 

efficient model(s) observed in the market. 

– DOE announced in the framework document for this rulemaking 

that it planned to consider the max tech level equal to 20% above 

the current Federal standard for PTACs (18.2% above the baseline).

– After extensive equipment testing, DOE has revised the max tech 

level to be 18% above the current Federal standard for PTACs 

(16.2% above the baseline).

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
27

Efficiency Levels

• DOE selected efficiency levels at increments between the 

current Federal standard and the max tech level. 

• Efficiency levels for standard size PTACs and PTHPS are 1.8%, 

4%, 8%, 12%, 16%, and 18% more efficient than the current 

Federal PTAC standards that became effective on September 

30, 2012. 

• Against the ANSI/ASHRAE/IES Standard 90.1-2013 baseline 

efficiency level, efficiency levels for standard size PTACs and 

PTHPs are 2.2%, 6.2%, 10.2%, 14.2%, and 16.2% more 

efficient. The remainder of this presentation will use 

percentages relative to the ANSI/ASHRAE/IES Standard 90.1-

2013 baseline.

• The table on the following slide presents the efficiency levels 

and their corresponding values for the representative cooling 

capacities.

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
28

Efficiency Levels

Equipment

Type

Cooling 

Capacity

Efficiency Levels (Percentages relative to baseline)

Current 

Federal 

PTAC ECS*

EL1

Baseline**

EL2,

2.2%

EL3,

6.2%

EL4,

10.2%

EL5,

14.2%

EL6, 

16.2%

(MaxTech)

PTAC

All, EER‡ 13.8 – 

(0.300*Cap)

14.0 –

(0.300*Cap)

14.4 –

(0.312*Cap)

14.9 –

(0.324*Cap)

15.5 –

(0.336*Cap)

16.0 –

(0.348*Cap)

16.3 –

(0.354*Cap)

9,000 

Btu/h 11.1 EER 11.3 EER 11.5 EER 12.0 EER 12.4 EER 12.9 EER 13.1 EER

15,000 

Btu/h 9.3 EER 9.5 EER 9.7 EER 10.0 EER 10.4 EER 10.8 EER 11.0 EER

Cooling 

Capacity N/A Baseline** EL1, 2.2% 

EL2, 

6.2%

EL3, 

10.2%

EL4, 

14.2%

EL5,

16.2% 

(MaxTech)

PTHP

All, EER‡ N/A 14.0 –

(0.300*Cap)

14.4 –

(0.312*Cap)

14.9 –

(0.324*Cap)

15.5 –

(0.336*Cap)

16.0 –

(0.348*Cap)

16.3 –

(0.354*Cap)

All, COP‡ N/A 3.7 –

(0.052*Cap)

3.8 –

(0.058*Cap)

4.0 –

(0.064*Cap)

4.1 –

(0.068*Cap)

4.2 –

(0.070*Cap)

4.3 –

(0.073*Cap)

9,000 

Btu/h N/A 11.3 EER

3.2 COP

11.5 EER

3.3 COP

12.0 EER

3.4 COP

12.4 EER

3.5 COP

12.9 EER

3.6 COP

13.1 EER

3.6 COP

15,000 

Btu/h N/A 9.5 EER

2.9 COP

9.7 EER

2.9 COP

10.0 EER

3.0 COP

10.4 EER

3.1 COP

10.8 EER

3.2 COP

11.0 EER

3.2 COP

* This level represents the current Federal minimum for PTAC equipment. 

** This level represents the current Federal minimum for PTHP equipment and the 

ANSI/ASHRAE/IES Standard 90.1-2013 minimum for both PTAC and PTHP equipment. 

‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.
29

Representative Units for Analysis

• DOE selected several standard-size PTAC and PTHP units 

to represent the market, and used these for teardown 

in the engineering analysis. The selected equipment 

exhibited the following five characteristics:

1. The selected equipment, taken together, cover the full range of 

efficiency levels considered in the analysis.

2. The selected equipment has cooling capacity corresponding to one of 

the selected representative cooling capacities (9,000 Btu/h or 15,000 

Btu/h).

3. When possible, DOE selected one lower-efficiency unit and one higherefficiency unit from the same manufacturer. When possible, those units 

shared similar characteristics (e.g., both from the same equipment line).

4. The equipment tended to be from manufacturers with relatively large 

shares of the PTAC and PTHP markets, and thus was representative of 

typical design approaches.

5. The selected equipment included base units with few, if any, equipment 

features or options that add cost without affecting equipment efficiency.

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
30

Representative Units for Analysis

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes

• The chart below illustrates the efficiency levels and the 

rated capacity and efficiency of twenty PTAC and PTHP 

units selected to represent the market. 
31

Cost-Efficiency Relationships

• DOE calculated manufacturer production costs (MPCs) by 

disassembling PTACs and PTHPs from multiple 

manufacturers and creating bills of materials (BOMs).

• BOMs describe the equipment components in detail and 

include estimates of materials, labor, capital equipment, 

and overhead costs.

• Comparing otherwise-identical PTAC and PTHP models 

(i.e., models with similar casing, controls, and fans, but 

where the PTHP has reverse cycle capability), DOE 

estimates that the typical PTHP unit has an additional 

$37-$38 of production costs compared with an 

otherwise-identical PTAC unit. This additional cost for 

PTHPs does not vary with efficiency level.

• Chapter 5 of the TSD provides additional details on DOE’s 

teardown and cost model methodology.

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
32

Cost-Efficiency Relationships

• DOE created cost-efficiency curves for each 

representative cooling capacity and equipment type.

• In the shipments analysis, DOE combined representative 

curves based on estimated market share to develop a 

weighted-average cost-efficiency curve for each 

equipment class. 

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Weighted Average

$MPC

Efficiency Level

Representative Capacity Curves

$MPC

Efficiency Level

15,000 Btu/h PTAC

9,000 Btu/h PTAC

15,000 Btu/h PTHP

9,000 Btu/h PTHP

Chapter 9 of the TSD contains more details explaining how DOE extrapolates 

the proposed amended energy conservation standards for the representative 

cooling capacities to the entire range of cooling capacities

Select 

Representative 

Equipment 

Classes
33

Cost-Efficiency Relationships: 9,000 Btu/h Capacity

• Cost-efficiency results for 9,000 Btu/h PTACs and PTHPs:

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Efficiency

Level Percent 

above 

Baseline

Incremental 

Cost 

(2013$)

Cost-Efficiency Curve

PTAC PTHP

Baseline -- --

EL2 EL1 2.2% $3.88

EL3 EL2 6.2% $7.93

EL4 EL3 10.2% $16.57

EL5 EL4 14.2% $25.91

EL6 EL5 16.2% $35.94

$0

$10

$20

$30

$40

11.3 11.5 12.0 12.4 12.9 13.1

Incremental Cost (2013$)

Energy Efficiency Ratio (EER)

Select 

Representative 

Equipment 

Classes
34

Cost-Efficiency Relationships: 15,000 Btu/h Capacity

• Cost-efficiency results for 15,000 Btu/h PTACs and PTHPs:

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Efficiency

Level Percent 

above 

Baseline

Incremental 

Cost 

(2013$)

Cost-Efficiency Curve

PTAC PTHP

Baseline -- --

EL2 EL1 2.2% $3.73 

EL3 EL2 6.2% $8.29 

EL4 EL3 10.2% $19.96 

EL5 EL4 14.2% $35.00 

EL6 EL5 16.2% $53.42 

$0

$10

$20

$30

$40

$50

$60

9.5 9.7 10.0 10.4 10.8 11.0

Incremental Cost (2013$)

Energy Efficiency Ratio (EER)

Select 

Representative 

Equipment 

Classes
35

Cost-Efficiency Relationships: Results

• Cost-efficiency curves are nonlinear. As efficiency 

increases, additional efficiency increase becomes more 

difficult and more costly for manufacturers.

• The increase in capacity between 9,000 Btu/h and 15,000 

Btu/h causes an increase in the baseline unit MPC.

• A faster increase in the curve (i.e., a steeper slope) is 

evident for the 15,000 Btu/h cooling capacity compared 

to the 9,000 Btu/h cooling capacity. 

Develop 

Efficiency Levels

Choose 

Representative 

Units for 

Analysis

Test and 

Teardown to 

Determine CostEfficiency 

Relationships

Select 

Representative 

Equipment 

Classes
36

Markups Analysis

• Purpose

– Characterize PTAC & PTHP distribution channels and market 

segments.

– Estimate customer prices based on manufacturer’s selling 

price (MSP). 

• Methodology

– DOE derived State-level markups based on confidential 

interviews, economic reports from industry trade groups, 

and U.S. census data.

– Markups were derived for each distribution channel.
37

Markups Analysis: Distribution Channels

• The PTAC and PTHP market has four primary distribution 

channels. 

Manufacturer

Mechanical Contractor

General 

Contractor

Customer

57%

Wholesaler

Customer Customer Customer

21% 17% 5% 

National Accounts
38

Markups Analysis: Data Sources

• Manufacturer markups are based on markups developed for the 2008 Final Rule and 

confidential manufacturer interviews. 

• Wholesaler markups are based on the “2010 Profit Report” from Heating, 

Air-Conditioning & Refrigeration Distributors International.

• Mechanical contractor markups are based on the “2005 Financial Analysis of the 

HVACR Contracting Industry” from the Air Conditioning Contractors of America. 

• General contractor markups are based on the 2007 U.S. Economic Census.

• Sales taxes by state are based on information from the Sales Tax Clearinghouse.

• DOE derived national accounts markups by weighting the overall markups estimated 

for other distribution channels and then reducing that total by 50 percent to capture 

the price savings realized from equipment purchased through national accounts.
39

Markup Types

• Baseline Markups:

– Relate the MSP of baseline equipment to the customer purchase price.

– Indicate a customer price that covers the expenses plus profit of each 

segment in the distribution channel.

• Incremental Markups:

– Relate the increase in MSP of more efficient equipment to the increase in 

customer purchase price.

– Cover only expenses that vary with MSP, in this case, expenses that increase 

due to an efficiency standard.

– DOE believes that labor and occupancy costs are invariant with respect to 

MSP, while other operating costs and profit are variant with respect to MSP.

• DOE calculated baseline and incremental markups for each distribution channel 

and for new construction applications (14% of sales) and replacement 

applications (86% of sales). 

• DOE applied baseline markups to the MSP of the baseline level, and the 

incremental markups to the incremental difference in MSP for efficient 

equipment above the baseline.
40

Overall Markups: Baseline

Distribution Channel WholesalerEnd User

WholesalerMechanical 

ContractorGeneral 

ContractorEnd User

National 

Account 

(Mfg Direct)

WholesalerEnd User

WholesalerMechanical 

ContractorEnd User

WholesalerMechanical 

ContractorGeneral 

ContractorEnd User

Weighted 

Overall 

Markup

NEW CONSTRUCTION REPLACEMENT -

Manufacturer 1.27 1.27 - 1.27 1.27 1.27 -

Wholesaler 1.36 1.36 - 1.36 1.36 1.36

Mechanical Contractor - 1.43 - - 1.52 1.52 -

General Contractor - 1.34 - - - 1.34 -

National Accounts - - 1.49 - - - -

Sales Tax - - - 1.07 1.07 1.07 -

Markup by Distribution 

Channel 1.73 3.31 1.49 1.85 2.81 3.76 3.10
41

Overall Markups: Incremental

Distribution Channel WholesalerEnd User

WholesalerMechanical 

ContractorGeneral 

ContractorEnd User

National 

Account 

(Mfg Direct)

WholesalerEnd User

WholesalerMechanical 

ContractorEnd User

WholesalerMechanical 

ContractorGeneral 

ContractorEnd User

Weighted 

Overall 

Markup

NEW CONSTRUCTION REPLACEMENT -

Manufacturer 1.27 1.27 - 1.27 1.27 1.27 -

Wholesaler 1.10 1.10 - 1.10 1.10 1.10 -

Mechanical Contractor - 1.15 - - 1.22 1.22 -

General Contractor - 1.22 - - - 1.22 -

National Accounts - - 1.16 - - - -

Sales Tax - - - 1.07 1.07 1.07 -

Markup by 

Distribution Channel 1.40 1.96 1.16 1.40 1.82 2.22 1.93
42

Issues for Comment: Markups Analysis

Issue 2: Distribution Channels

To estimate the number and type of distribution channels and the distribution of the 

shipments through the distribution channels, DOE leveraged the information from the 

2008 PTAC and PTHP final rule. (73 FR 58772). DOE requests comment regarding the 

selected channels and distribution of shipments through the channels.
43

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
44

Energy Use Analysis

• Purpose

– Determine unit-average annual energy use (UEC) of PTACs and PTHPs at 

the considered efficiency levels to find annual energy costs and savings.

– Annual energy costs are inputs to Life-Cycle Cost and Payback Period 

Analysis.

• Methodology

– Post-processed outputs from prior analysis:

• Total UECs for 50 States and D.C., 6x efficiency levels, 9,000 Btu/h and 

12,000 Btu/h cooling capacities, and PTAC and PTHP

• Prior simulations based on CBECS 2003 (most recent available)

• 239 climate locations (based on TMY2 data), aggregated to State-level

– Accounting for these changes since the 2008 rulemaking:

• Weather impacts

• Equipment efficiency and cooling capacity differences

• Population changes
45

• 2008 rulemaking analysis provided Total UEC for PTACs and for PTHPs.

• For PTHPs, DOE analyzed Heating UEC and Cooling UEC separately.

– Heating UEC: Heating and fan energy expended during operation in 

heating mode.

– Cooling UEC: Cooling and fan energy expended during operation in 

cooling mode.

• Cooling UEC = PTAC Total UEC, assuming similar functionality 

(other than reversing valve) between PTACs and PTHPs, given the 

same efficiency level and cooling capacity.

Energy Use Analysis: Approach

Issue 3: Cooling Energy Use

DOE requests comment on the energy a PTHP consumes when operating in 

the cooling mode and the energy a PTAC consumes during its operation.
46

Weather impacts

• Comparison of newer TMY3 weather data with TMY2 weather data 

revealed more time at higher temperatures.

• Determined monthly cooling degree days (CDD) increased by 5% and 

monthly heating degree days (HDD) decreased by 2%.

• Scaled cooling UEC up by 5% and scaled heating UEC down by 2%.

• Apply weather impacts for each State UEC.

Energy Use Analysis: Approach
47

Conversion of UECs

• For the 9,000 Btu/h 

representative cooling 

capacity:

– Efficiency levels: DOE 

linearly extrapolated across

the 6 efficiency levels 

considered in the previous 

rulemaking to find UECs at 

the considered efficiency 

levels of the representative 

cooling capacity.

• For the 15,000 Btu/h 

representative cooling 

capacity (figure):

– Efficiency levels and Cooling 

capacity: DOE linearly 

extrapolated across the 

9,000 Btu/h and 12,000 

Btu/h cooling capacities 

considered in the previous 

rulemaking to find UECs at 

the considered efficiency 

levels and representative 

cooling capacity.

Energy Use Analysis: Approach

9,000 Btu/h

UEC = -63.367 x EER + 1781.1

R2 = 0.9983

12,000 Btu/h

UEC = -73.838 x EER + 2126.2

R2 = 0.9974

900

1000

1100

1200

1300

1400

1500

1600

1700

1800

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5 13.0

UEC [kWh]

EER

UEC Conversion for 15,000 Btu/h Cooling 

Capacity PTACs

EER-Scaled UEC for 9,000 Btu/h Previous UEC for 9,000 Btu/h

EER-Scaled UEC for 12,000 Btu/h Previous UEC for 12,000 Btu/h

EER- and Capacity-Scaled UEC for 15,000 Btu/h
48

Population change

• UECs by State are used in the LCC and PBP analysis.

• National UECs are used in the NIA.

– State populations were determined from the 2010 Census.

– State-level UECs was averaged, weighted by State population.

Energy Use Analysis: Approach

State State Name

PTAC Standard Size -

9,000 Btu/h ... Population 

EL0 EL1 ... ... Weight

1 Alabama 1344 1326 ... ... 1.53%

2 Alaska 511 510 ... ... 0.23%

...

Total US US Average 1078 1066 ... ... 100%
49

PTAC National UECs

Representative 

Cooling Capacity 9,000 Btu/h 15,000 Btu/h

Efficiency Level EER UEC (kWh) EER UEC (kWh)

0* 11.1 1078 9.3 1688

1† - Baseline 11.3 1066 9.5 1671

2 11.5 1050 9.7 1657

3 12.0 1022 10.0 1625

4 12.4 994 10.4 1594

5 12.9 966 10.8 1563

6 13.1 952 11.0 1547

Energy Use Analysis: Results PTHP National UECs

Representative 

Cooling Capacity 9,000 Btu/h 15,000 Btu/h

Efficiency Level EER | COP UEC (kWh) EER | COP UEC (kWh)

0* - Baseline 11.3 | 3.2 1985 9.5 | 2.9 2847

1 11.5 | 3.3 1956 9.7 | 2.9 2829

2 12.0 | 3.4 1918 10.0 | 3.0 2778

3 12.4 | 3.5 1879 10.4 | 3.1 2727

4 12.9 | 3.6 1841 10.8 | 3.2 2676

5 13.1 | 3.6 1822 11.0 | 3.2 2651

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE 

Standard 90.1-2013 baseline for PTHPs.

† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.
50

• Purpose

– Provide an economic evaluation from the end-user’s perspective.

– Life Cycle Cost (LCC) is the total customer cost over the life of the equipment.

– Simple Payback Period (PBP) is the time required to recover the increased purchase price 

of more energy-efficient equipment through reduced first-year operating costs. 

• Methodology

– Determine energy and economic inputs.

• Determine total installed cost for each efficiency level. 

• Use annual unit average energy use developed in the energy use analysis to represent the 

consumption of different PTAC and PTHP end-users across the United States.

• Determine operating costs for the first year and lifetime of equipment for each efficiency level.

– Utilize a Monte Carlo simulation, consisting of 10,000 iterations that select from inputs 

that are characterized by probability distributions, to calculate LCC and PBP results and 

variation.

• Calculates simple PBP by dividing average increase in installed cost by the average decrease in 

first-year operating cost.

• Calculates LCC by adding installed cost and lifetime operating costs.

• Calculates LCC savings by subtracting LCC of each efficiency level from LCC of the efficiency level 

of equipment that a customer would purchase in the absence of a new standard.

Life-Cycle Cost and Payback Period Analysis
51

• Total Installed Cost is the sum of equipment purchase price and 

installation cost.

• Equipment purchase price is provided by the Engineering Analysis and 

Markups Analysis.

• A constant price assumption was used to derive the equipment price in 

the compliance year (2019).

– The price trend is based on historical Producer Price Index (PPI) data 

for “all other miscellaneous refrigeration and air-conditioning 

equipment” spanning the time period 1990-2013, which has been 

characterized by declines and increases through the time period.

– DOE chose the constant price assumption due to uncertainty about 

the continuation of trends from past years.

• Installation costs represent the labor and materials necessary to install 

the equipment.

– Based on the materials, labor rate, and labor time data from RS 

Means (2013), the installation costs do not change with efficiency 

level.

LCC & PBP Analysis: Total Installed Cost
52

• The annual energy cost is the annual 

energy consumption from the Energy Use 

Analysis multiplied by the energy price.

• DOE used electric utility tariff data to 

develop average and marginal electricity 

prices. 

– Average electricity prices, and marginal 

energy and demand prices were developed 

for nine Census Divisions and California.

– Since PTACs and PTHPs are commercial air 

conditioners and typically consume peak 

electricity, annual marginal prices per kWh 

by Census division were used to calculate 

annual energy cost.

• DOE used Annual Energy Outlook (AEO) 

2013 for projections of future average 

energy prices for each census division.

LCC & PBP Analysis: Annual Energy Cost

Region Annual Marginal Price (¢/kWh)

New England 10.11

Mid-Atlantic 9.71

East North Central 6.58

West North Central 5.80

South Atlantic 7.37

East South Central 6.00

West South Central 6.15

Mountain 7.46

Pacific – WA,OR 5.77

Pacific – CA 12.74

US Average 7.69
53

• Estimated repair costs based on the annualized value of a 

equipment warranty contract.

– Repair costs increases proportionally with the manufacturer selling 

price of more efficient equipment.

• Estimated annual maintenance costs based on materials, 

labor rate, and labor time data from RS Means (2013).

– Maintenance costs do not change with efficiency level.

LCC & PBP Analysis: Maintenance and Repair Costs
54

• DOE used a Weibull distribution to model equipment lifetime.

• DOE used data from the previous rulemaking and input from individuals 

with experience in manufacturing to estimate an equipment survival 

function.

– Supportive stakeholder comment received from the ASHRAE Standard 90.1-2013 Notice 

of Data Availability.

• The Weibull distribution is modeled off equipment having an average 

lifetime of 10 years and a maximum lifetime of 20 years, which does not 

change with efficiency level or equipment class.

LCC & PBP Analysis: Equipment Lifetime
55

• Used to convert streams of annual operating expenses to the year of 

purchase (i.e., 2019). 

• Estimated as the weighted average cost of capital using capital asset 

pricing model (CAPM). 

• Discount rates were estimated for the types of firms that commonly use a 

PTAC or PTHP.

– Lodging, Offices, and Medical Services.

• DOE used Damodaran Online as the source of information for company 

debt and equity financing.

– Financial cost of any debt incurred to purchase equipment.

– Opportunity cost of any equity to purchase equipment.

LCC & PBP Analysis: Discount Rates
56

LCC & PBP Analysis: Energy Efficiency in the Base Case

• LCC and PBP analysis typically analyzes 

standard levels relative to a baseline 

efficiency level.

• Not all customers purchase equipment at 

baseline levels.

– DOE must account for customers purchasing 

more efficient equipment to accurately estimate 

customer economic impacts.

• Base case efficiency distributions define 

the percentage of equipment being 

purchased at various efficiency levels.

– Customers already purchasing equipment at 

efficiencies greater than or equal to a 

prospective standard level are not impacted by 

the standard.

– The base case efficiency distribution for PTHPs at 

the 9,000 Btu/h representative cooling capacity 

is shown in the figure on the right.

• Market share and efficiency level data for 

PTACs and PTHPs were obtained from a 

2013 dataset from the AHRI Directory of 

Certified Product Performance.

• To estimate the base case distribution in the 

compliance year (2019), DOE used an 

efficiency trend of 1 EER every 35 years, 

from prior commercial air conditioning 

rulemakings.

0%

10%

20%

30%

40%

50%

60%

0 1 2 3 4 5

Market Share

Efficiency Level
57

Efficiency Level

Average Costs (2013$)

Simple 

Payback 

(years)

% of 

Consumers 

that 

Experience 

Net Cost

Installed 

Cost

First Year's 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

PTAC PTHP

2 1 $1,491 $194 $1,411 $2,902 6.6 20%

3 2 $1,508 $192 $1,395 $2,903 7.3 37%

4 3 $1,527 $189 $1,379 $2,906 7.8 62%

5 4 $1,547 $187 $1,363 $2,910 8.2 70%

6 5 $1,557 $186 $1,356 $2,913 8.3 73%

LCC & PBP Results: 9,000 Btu/h Representative Cooling Capacity
58

Efficiency Level

Average Costs (2013$)

Simple 

Payback 

(years)

% of 

Consumer

s that 

Experienc

e Net Cost

Installed 

Cost

First Year's 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

PTAC PTHP

2 1 $1,744 $252 $1,832 $3,575 7.8 23%

3 2 $1,767 $249 $1,812 $3,579 8.6 42%

4 3 $1,797 $246 $1,793 $3,590 9.8 77%

5 4 $1,833 $244 $1,776 $3,609 11.1 87%

6 5 $1,854 $243 $1,767 $3,621 11.7 91%

LCC & PBP Results: 15,000 Btu/h Representative Cooling Capacity
59

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
60

Shipments and National Impact Analyses

Engineering 

Analysis

Markups 

Analysis

Energy Use & 

End Use Load 

Characterization

NIA Shipments 

Analysis

• Shipments Analysis

– Estimates PTAC-PTHP shipments over the 30-year analysis period (2019-2048).

• National Impact Analysis

– Estimates the National Energy Savings (NES) from those shipments at various 

trial standards levels.

– Estimates the Net Present Value (NPV) to PTAC and PTHP customers of the 

savings from those shipments at the various trial standards levels.
61

• Purpose

– To estimate PTAC and PTHP shipments over the 30-year analysis period 

(2019-2048).

• Methodology

– DOE developed a single shipments model for all PTACs and PTHPs.

– The model is a stock accounting model, which assumes that each year 

the existing PTACs and PTHPs either age by one year or fail.

– PTAC and PTHP shipments are driven by the construction of new floor 

space and the replacement of units that have failed.

Shipments Analysis
62

New Construction Shipments

• DOE developed projections for new 

construction shipments based on 

projections of new commercial floor 

space from AEO 2013. 

• Saturation values for new 

construction were developed using 

data from the 2008 rulemaking.

Replacement Shipments

• DOE built up initial stock by using 

the average of the historical 

shipments (1998-2004) for the years 

1993-2012.

• DOE developed replacement 

shipments based on a survival 

function which projects a certain 

percentage of units to fail each year 

and be replaced. 

Standards Case Impacts

• DOE assumed that standards will not 

impact shipments: standards case 

shipments equals the base case 

shipments.

Shipments Analysis: Projected Shipments

 -

 100,000

 200,000

 300,000

 400,000

 500,000

 600,000

 700,000

 800,000

Shipmnets

Year

Base case Shipments Projection

New Construction Replacements
63

• To disaggregate total PTAC and PTHP shipments into equipment classes, DOE 

used the equipment class market shares based on model availability in the 

AHRI Directory of Certified Product Performance. 

• DOE expects equipment class market shares to be constant over time, as is 

exhibited in historical data.

Shipment Analysis: Disaggregation by Equipment Class

PTAC PTHP

Cooling Capacity <7,000 

Btu/h

≥7,000 Btu/h and 

≤15,000 Btu/h

>15,000 

Btu/h

<7,000 

Btu/h

≥7,000 Btu/h and 

≤15,000 Btu/h

>15,000 

Btu/h

Percent 3.0% 48.5% 3.7% 1.8% 39.8% 3.2%

Issue 4: Stakeholders mentioned that a number of shipments are not accounted for 

in the AHRI database because certain manufacturers are non-AHRI manufacturers 

and are not subject to reporting to the database. DOE requests data for the expected 

distribution of models that are unreported to the AHRI Directory of Certified Product 

Performance.
64

• Purpose

– To estimate the National Energy Savings (NES) and the national 

economic impact from new and amended energy conservation 

standards at different efficiency levels for the 30 year period from 

2019 – 2048. 

• Methodology

– DOE calculates national energy savings by multiplying unit lifetime 

energy savings by projected shipments and accumulating this 

projected value over the 30 years.

– DOE calculates the Net Present Value (NPV) by accumulating the 

difference each year between energy bill savings and increased 

equipment expenditures for all equipment shipped over the 30 year 

period. 

– NPV is calculated using a 3% and a 7% discount rate.

National Impact Analysis 
65

• Table of inputs – from BVM

National Impact Analysis: Inputs

Input Description

Total Installed Cost Annual weighted-average per unit values as a function of efficiency level taken from the LCC and 

PBP analysis.

Repair and Maintenance 

Costs

Repair costs vary with efficiency level. Maintenance costs are constant with efficiency level. These 

costs are taken from the LCC and PBP analysis.

Annual Energy Use Annual weighted-average per unit energy use at the National level as a function of efficiency level 

and cooling capacity taken from the LCC and PBP analysis.

Base-Case Efficiencies Shipments-weighted efficiencies determined for the compliance year. Based on base-case efficiency

distribution from LCC and PBP analysis. 

Standards-Case Efficiencies Roll-up scenario assumed in the compliance year for determining shipment-weighted efficiency for 

each standards case.

Efficiency Trend Market-weighted efficiency increases over time for the base and standards cases.

Energy Prices Average prices and forecasted energy prices from EIA AEO 2013 forecasts (to 2040) and 

extrapolation to 2078.

Full Fuel Cycle Multiplier to convert site energy to full-fuel cycle energy.

Discount Rate 7 percent and 3 percent real from OMB’s Regulatory Analysis Guideline A-4.

Present Year Future expenses are discounted to the year 2019.
66

National Impact Analysis: Inputs from the LCC and PBP Analysis

Equipment Class

(Current Energy 

Conservation Standards)

Representative Cooling 

Capacity in the LCC and 

PBP Analysis

Data Source

<7,000 Btu/h Did not analyze

DOE estimated the manufacturer production cost of 7,000 

Btu/h cooling capacity equipment based on costs of 9,000 

Btu/h and 15,000 Btu/h representative cooling capacity 

equipment, modified with lower capacity compressor, fan 

motors, and heat exchangers. 

DOE extrapolated energy and other economics input data 

across the 9,000 Btu/h and 15,000 Btu/h representative 

cooling capacity for the <7,000 Btu/h equipment class.

≥7,000 Btu/h and 

≤15,000 Btu/h 9,000 Btu/h Inputs from the LCC and PBP analysis.

>15,000 Btu/h 15,000 Btu/h Inputs from the LCC and PBP analysis.
67

National Impact Analysis: Efficiency Levels

Equipment 

Type PTAC PTHP

Equipment 

Class

<7,000 

Btu/h

≥7,000 Btu/h

and ≤15,000 Btu/h

>15,000 

Btu/h

<7,000

Btu/h

≥7,000 Btu/h

and ≤15,000 Btu/h

>15,000 

Btu/h

Efficiency 

Level EER EER EER EER | COP EER | COP EER | COP

0* 11.7 11.1 9.3 11.9 | 3.3 11.3 | 3.2 9.5 | 2.9

1† 11.9 11.3 9.5 12.2 | 3.5 11.5 | 3.3 9.7 | 2.9

2 12.2 11.5 9.7 12.6 | 3.5 12.0 | 3.4 10.0 | 3.0

3 12.6 12.0 10.0 13.1 | 3.6 12.4 | 3.5 10.4 | 3.1

4 13.1 12.4 10.4 13.6 | 3.7 12.9 | 3.6 10.8 | 3.2

5 13.6 12.9 10.8 13.8 | 3.8 13.1 | 3.6 11.0 | 3.2

6 13.8 13.1 11.0

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE 

Standard 90.1-2013 baseline for PTHPs.

† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.
68

National Impact Analysis:

Base Case and Standards Case Forecasted Efficiencies

• Because key inputs to the calculation of the NES and NPV are dependent on the 

estimated efficiencies under the base case (without standards) and the standards case 

(with standards), forecasted efficiencies are of great importance to the analysis. 

• DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year 

that standards are estimated to become effective (i.e., 2019).

Efficiency 

Level

Market Share (PTACs ≥ 7,000 Btu/h and ≤ 15,000 Btu/h)

ASHRAE*

Standards Case

1 2 3 4 5

Baseline 0.0% - - - - -

1 37.9% - - - - -

2 29.0% 68.7% - - - -

3 29.3% 27.6% 96.3% - - -

4 2.5% 2.5% 2.5% 98.8% - -

5 0.9% 0.9% 0.9% 0.9% 99.7% -

6 0.3% 0.3% 0.3% 0.3% 0.3% 100.0%

• Base case efficiency distribution.

– Based on AHRI data for the 

year 2013.

– Shipment-weighted efficiency 

increases at a rate of 1 EER per 

35 years from 2013-2019.

• 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 unaffected.

* Refers to ANSI/ASHRAE/IES Standard 90.1-2013 minimum efficiency levels.
69

National Impact Analysis:

Base Case and Standards Case Forecasted Efficiencies

11.00

11.50

12.00

12.50

13.00

13.50

Shipments-weighted EER

Basecase Rollup to EL1 Rollup to EL2 Rollup to EL3

Rollup to EL4 Rollup to EL5 Rollup to EL6

• For the base case and 

standards cases after “rollup,” shipments-weighted 

efficiency increases 1 EER 

every 35 years to account 

for technological 

improvement in equipment 

and shifts to higher 

efficiency equipment.

• The projected efficiency 

distribution of shipments for 

the PTAC ≥ 7,000 Btu/h and 

≤ 15,000 Btu/h equipment 

class is shown on the right.

Issue 5: DOE requests comment regarding and data supporting the selected 

efficiency trend.
70

PTAC-PTHP Trial Standard Levels Analyzed

Level Percent above Baseline Description

Baseline -- Equivalent to ASHRAE 90.1-2013 standards, the 

minimum standards DOE may adopt.

TSL 1 2.2% Positive customer impact; Negative industry impact

TSL 2

(PROPOSED) 6.2% Max industry net present value (INPV);Max customer NPV at 7% discount rate

TSL 3 10.2% Negative customer and industry impact

TSL 4 14.2% Negative customer and industry impact

TSL 5 16.2% Max Tech and Max national energy savings;

Negative customer and manufacturer impact

Trial Standard Level (TSL) Descriptions

• DOE set TSLs at efficiency levels that increase incrementally from the 

current energy conservation standard (2008 Final Rule) up to the 

max-tech level.
71

Equipment Class

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Efficiency Level

PTAC < 7,000 Btu/h 2 3 4 5 6

PTAC ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 2 3 4 5 6

PTAC > 15,000 Btu/h 2 3 4 5 6

PTHP < 7,000 Btu/h 1 2 3 4 5

PTHP ≥ 7,000 Btu/h and ≤ 15,000 Btu/h 1 2 3 4 5

PTHP > 15,000 Btu/h 1 2 3 4 5

Trial Standard Level (TSL) Descriptions
72

National Impact Analysis: Results

Equipment Class

Trial Standard Level

1 2 3 4 5

< 7,000 Btu/h 0 0.003 0.005 0.006 0.007

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 0.013 0.051 0.102 0.131 0.134

> 15,000 Btu/h 0.002 0.005 0.01 0.013 0.014

Total All Cooling Capacities 0.015 0.059 0.118 0.15 0.155

Cumulative Full Fuel Cycle National Energy Savings (quads)

Equipment Class Discount 

Rate

Trial Standard Level

1 2 3 4 5

Million 2013$

< 7,000 Btu/h

3%

0.7 1.8 2.4 2.2 2.1 

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 22.3 65.9 113.8 134.6 136.4 

> 15,000 Btu/h 1.0 1.2 (2.4) (6.7) (7.6)

Total – All Classes 23.9 69.0 113.8 130.2 131.0 

< 7,000 Btu/h

7%

0.1 (0.2) (1.2) (2.2) (2.5)

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 6.3 12.3 14.5 10.5 9.0 

> 15,000 Btu/h - (1.5) (5.4) (9.5) (10.4)

Total All Cooling Capacities 6.5 10.7 7.9 (1.1) (3.8)

Net Present Value of Consumer Benefit, Discounted at 3% and 7%
73

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
74

• Purpose

– To assess the impacts of standards on manufacturers;

– To identify and estimate impacts on manufacturer subgroups that may 

be more severely affected than the industry as a whole; and

– To examine the direct employment, manufacturing capacity, and 

cumulative regulatory impacts on the industry.

• Methodology 

– Analyze industry cash flow and industry net present value (INPV) 

through use of the Government Regulatory Impact Model (GRIM); and

– Interview manufacturers to refine inputs to the GRIM, develop 

subgroup analyses, and address qualitative issues.

MIA: Overview

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD
75

• Phase 1

– DOE creates an industry profile to characterize the market and identify 

important issues that require further investigation.

• Phase 2

– DOE prepares an industry cash flow model and an interview 

questionnaire to guide subsequent discussions with manufacturers.

• Phase 3

– DOE interviews manufacturers and assesses the impacts of standards 

both quantitatively (using the GRIM) and qualitatively (impacts on 

employment, competition, manufacturing capacity, and regulatory 

burden).

MIA: Methodology

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD
76

MIA: Methodology

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD

• Upstream Inputs

– Market and Technology Assessment (MTA) Industry Profile 

– Engineering MPCs

– Shipments

• MIA Inputs

– Markup Scenarios

– Conversion Costs
77

MIA: Key Issues

• Size Constraints

– Manufacturers expressed concern regarding their ability to increase 

efficiency while maintaining the physical dimensions of PTACs and PTHPs.

• Manufacturer Profitability

– Manufacturers indicated cost increases could reduce sales volumes and 

profits.

• Customer Utility

– Manufacturers stated that increasing efficiency could make it difficult to 

meet customer requirements related to noise and humidity control.

– Manufacturers also noted potential loss of higher capacity models if the 

standard is set too high. 

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD
78

• DOE modeled two markup scenarios to capture a range of 

potential financial impacts on the industry:

– Preservation of Gross Margin Percentage Markup Scenario 

• Represents the upper bound of profitability impacts.

– Preservation of Operating Profit Markup Scenario 

• Represents the lower bound of profitability impacts.

MIA: Markup Scenarios

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD
79

MIA: Conversion Costs

Product Conversion Costs 

(2013$M)

Capital Conversion Costs

(2013$M)

Total Conversion Costs

(2013$M)

TSL 1 $2.2 $2.3 $4.5

TSL 2 $4.7 $2.9 $7.6

TSL 3 $7.2 $7.1 $14.3

TSL 4 $8.5 $7.1 $15.6

TSL 5 $13.5 $7.4 $20.9

• Industry conversion costs total $7.6 million at TSL 2.
80

MIA: INPV Results

Units Base Case

Trial Standard Level

1 2 3 4 5

INPV 2013$M 58.5 57.1 to 57.4 57.7 to 58.8 55.4 to 57.5 55.0 to 58.5 51.8 to 55.9

Change in INPV

2013$M - (1.4) to (1.1) (0.7) to 0.3 (3.1) to (0.9) (3.5) to 0.0 (6.7) to (2.6)

% Change - (2.4) to (1.9) (1.3) to 0.5 (5.3) to (1.6) (5.9) to 0.0 (11.4) to (4.4)

Product 

Conversion Costs 2013$M - 2.2 4.7 7.2 8.5 13.5

Capital 

Conversion Costs 2013$M - 2.3 2.9 7.1 7.1 7.4

Total Conversion

Costs 2013$M - 4.5 7.6 14.3 15.6 20.9

Details of the manufacturer impact analysis can be found in chapter 12 of the TSD.

Note: Parentheses indicate negative values.

• Summary of TSL 2

– Expected INPV change in the range of -1.3% to 0.5%

– Expected conversion costs total $7.6 million for the industry
81

MIA: Subgroup of Manufacturers with Production Assets

• Add a few bullets plus table of INPV impacts

• DOE identified 22 manufacturers of PTACs and PTHPs. However, most import 

and distribute PTACs and PTHPs produced by OEMs overseas. DOE identified 

a subset of domestic manufacturers that own production assets and 

analyzed these manufacturers as a distinct subgroup. 

– DOE expects manufacturers with production assets to experience higher conversion costs 

than their competitors without production assets. 

Units

Trial Standard Level 2

All Manufacturers Manufacturers with 

Production Assets

Base-Case INPV 2013$M 58.5 46.8

Standards-Case INPV 2013$M 57.7 to 58.8 45.7 to 46.5

Change in INPV 2013$M (0.7) to 0.3 (1.1) to (0.3)

% Change (1.3) to 0.5 (2.3) to (0.5)

Product Conversion Costs 2013$M 4.7 3.9

Capital Conversion Costs 2013$M 2.9 2.9

Total Conversion Costs 2013$M 7.6 6.8

• Summary of TSL 2

– Expected INPV change in the range of -2.3% to -0.5%

– Expected conversion costs of $6.8 million (89% of the industry total)
82

MIA: Small Business Impacts

• DOE identified 12 domestic small business manufacturers of PTACs 

and PTHPs.

– Small businesses were defined as having 750 employees or fewer 

based on SBA small business size standards

• No small business identified is an OEM of standard-size PTACs and 

PTHPs. Rather, small businesses import, rebrand, and distribute 

equipment manufactured overseas.

• Small businesses likely would not incur capital conversion costs. 

However, they may experience an increase in equipment purchase 

price from overseas OEMs. They may also face testing and 

certification costs for equipment redesigned to comply with an 

amended standard. 
83

MIA: Small Business Impacts

Details of the Manufacturer Impact Analysis can be found in chapter 12 of the 

TSD

Issue 6: DOE requests comment on the number of small 

manufacturers of PTACs and PTHPs; on the potential impacts 

of amended energy conservation standard on those small 

manufacturers; and on the severity of those impacts.
84

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
85

• Purpose

– To analyze the impact of efficiency standards on small business, 

particularly Independently-operating lodging businesses. 

• Methodology

- The Small Business Association classifies lodging businesses with less 

than $7 million in annual revenue as small businesses.

- Apply a discount rate premium (1.52%) for small businesses.

• Output

- The LCC and PBP results showed that the effect of higher PTAC and 

PTHP standards on small businesses is similar to the effect on the full 

sample of commercial customers.

LCC Subgroup Analysis
86

Emissions Analysis

• Purpose

– To report emission impacts resulting from amended energy conservation 

standards, including changes in power plant emissions and full fuel cycle 

emissions.

• Methodology

– DOE used the National Energy Modeling System (NEMS) to derive 

emissions factors (physical units per unit of energy savings) for Carbon 

Dioxide (CO2) and several other gases.

Details of the Analysis can be found in chapter 14 of the TSD.
87

Cumulative Emissions Reduction for Potential Standards of PTACs and PTHPs

Emissions Analysis: Results

Trial Standard Level

1 2 3 4 5

CO2 (million metric tons) 1.10 4.33 8.60 10.98 11.29

NOx (thousand tons) 1.12 4.42 8.78 11.06 11.31

Hg (tons) 0.00 0.01 0.02 0.03 0.03

N2O (thousand tons) 0.02 0.07 0.14 0.18 0.18

CH4 (thousand tons) 4.02 15.75 31.28 40.08 41.22

SO2 (thousand tons) 2.47 9.74 19.30 24.17 24.70
88

Emissions Monetization

• Purpose

– To estimate the potential monetary benefit of reduced power plant 

emissions resulting from the considered standard levels.

• Methodology

– Social Cost of Carbon (SCC) is intended to be a monetary measure of 

the incremental damage resulting from greenhouse gas (GHG) 

emissions.

– DOE used the most recent (2013) U.S. government interagency 

estimates of the SCC for emissions in 2015, per metric ton (2013$): 

- $12 (average value from distribution with a 5% discount rate)

- $40.5 (average value from distribution with a 3% discount rate)

- $62.4 (average value from distribution with a 2.5% discount rate)

- $119 (95th-percentile value from distribution with a 3% discount rate)

– The SCC in constant dollars increases over time.
89

Emissions Monetization: Results

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

CO2* 7.21 to 105.5 28.06 to 412.08 56.03 to 820.95 73.86 to 1,066.62 76.45 to 1,100.06

NOx - 3 % 

discount rate 1.39 5.43 10.85 14.16 14.59

NOx - 7 % 

discount rate 0.57 2.2 4.42 6.02 6.27

Full Fuel Cycle Emissions Reduction Benefits (million 2013$)

* Range of the economic value of CO2 reductions is based on estimates of 

the global benefit of reduced CO2 emissions.
90

Utility Impact Analysis

• Purpose

- To estimate the changes in electric installed capacity and generation that 

result for each TSL.

• Methodology

- The National Energy Savings is used to provide a stream of energy savings 

over the analysis period.

- The Energy Information Administration’s National Energy Modeling System 

(NEMS) is modified to represent the impacts of DOEs standards program 

(modified code is known as NEMS-BT).

• Output

- Reductions in total electricity generation.

- Reductions in primary fuel (coal, natural gas etc.) consumption.

- Changes to the mix of electricity generation by fuel type.

- Changes to total installed capacity.

Details of the Analysis can be found in chapter 15 of the TSD.
91

Employment Analysis

• Purpose

- To estimate the net jobs created or eliminated nationally as a 

consequence of amended energy conservation standards, includes 

direct and indirect employment impacts.

• Methodology

- Uses the ImSET (Impact of Sector Energy Technologies) model for the 

evaluation of indirect employment impacts, direct employment impacts 

to the commercial air conditioning industry are developed in the 

Manufacturer Impact Analysis (chapter 12 of the TSD).

- The changes in equipment and energy expenditures are taken from the 

National Energy Savings Analysis.

• Output

- Change to commercial and energy sector employment as a 

consequence of amended energy conservation standards.

Details of the Analysis can be found in chapter 16 of the TSD.
92

Regulatory Impact Analysis

• Purpose

- To investigate the national impacts of non-regulatory alternatives to 

mandatory amended energy conservation standards.

• Methodology

- DOE modified NIA spreadsheet to represent the following nonregulatory alternatives:

• Output

- National Energy Savings and Net Present Value for the non-regulatory 

alternatives.

- Impact of non-regulatory alternatives on purchase price and use of 

energy-efficient equipment.

• No new regulatory action • Manufacturer tax credits

• Customer rebates • Voluntary efficiency targets

• Customer tax credits • Bulk government procurement

Details of the Analysis can be found in chapter 17 of the TSD.
93

Presentation Overview

Energy Use; Life-Cycle Cost Analysis

Shipments; Trial Standard Levels; National Impact Analysis

4

5

2 Market & Technology; Screening Analysis

3 Engineering Analysis; Markups Analysis

1 Overview; Scope of Coverage

6 Manufacturer Impact Analysis

Emissions, Utility, Employment, and Regulatory Impacts

Proposed Standard

7

8
94

Proposed Standard (TSL 2): PTACs and PTHPs

Equipment

Type Sub-category Cooling Capacity (Btu/h)

Proposed Level

EER (Btu/Wh), COP (unitless)

PTAC Standard 

Size†

< 7,000 Btu/h EER = 12.6

≥ 7,000 Btu/h and

≤ 15,000 Btu/h EER = 14.9 – (0.324*Cap‡)

> 15,000 Btu/h EER = 10.0

PTHP Standard 

Size†

< 7,000 Btu/h EER = 12.6

COP = 3.5

≥ 7,000 Btu/h and

≤ 15,000 Btu/h

EER = 14.9 – (0.324*Cap‡)

COP = 4.0 – (0.064*Cap‡)

> 15,000 Btu/h EER = 10.0

COP = 3.0

† Standard size refers to equipment with wall sleeve dimensions 

having an external wall opening greater than or equal to 16” 

high or greater than or equal to 42” wide. 

‡ “Cap” means cooling capacity in thousand Btu/h at 95 °F 

outdoor dry-bulb temperature.
95

Summary of Notice of Proposed Rulemaking

• At TSL 2, the lifetime energy savings for PTACs and PTHPs purchased in the 

30-year period that begins in the year of expected compliance with 

amended standards (2019–2048) amount to 0.06 quadrillion British 

thermal units (quads).

• The cumulative net present value (NPV) of total customer costs and 

savings of the proposed standards for PTACs and PTHPs ranges from $10.7 

million (at a 7-percent discount rate) to $69.0 million (at a 3-percent 

discount rate). This NPV expresses the estimated total value of future 

operating-cost savings minus the estimated increase in equipment costs 

for equipment purchased in 2019–2048. 
96

How to Submit Written Comments

• In all correspondence, please refer to the PTAC-PTHP rulemaking by:

– Energy Conservation Standards for Packaged Terminal Air Conditioners 

and Packaged Terminal Heat Pumps;

– Docket Number EERE-2012-BT-STD-0029; and

– Regulatory Identification Number (RIN) 1904-AC82.

• Email: pkgTerminalAC-HP2012STD0029@ee.doe.gov

Postal: Courier:

Ms. Brenda Edwards

U.S. Department of Energy

Building Technologies Program, Mailstop 

EE-5B

1000 Independence Avenue, SW

Washington, DC 20585-0121

Ms. Brenda Edwards

U.S. Department of Energy

Building Technologies Program, Suite 600

950 L’Enfant Plaza, SW

Washington, DC 20024

Tel: 202-586-2945

Comment Period closes: November 17, 2014, 11:59 PM EDT
97

Closing Remarks/Questions
98

Supporting Material: PTAC-PTHP ENGINEERING
99

Representative Cooling Capacity

0

5

10

15

20

25

30

35

40

6,8007,2007,6008,0008,4008,8009,2009,600

10,00010,40010,80011,20011,60012,00012,40012,80013,20013,60014,00014,40014,80015,20015,60016,00016,40016,800

Number of Certified 

PTAC Models 

in AHRI Directory

Cooling Capacity (Btu/h)

0

5

10

15

20

25

30

6,8007,2007,6008,0008,4008,8009,2009,600

10,00010,40010,80011,20011,60012,00012,40012,80013,20013,60014,00014,40014,80015,20015,60016,00016,40016,800

Number of Certified 

PTHP Models 

in AHRI Directory

Cooling Capacity (Btu/h)

• For the engineering analysis, DOE selected the representative cooling 

capacity of 9,000 Btu/h because this capacity had the highest number of 

standard-size PTAC and PTHP models listed in the 2013 AHRI Directory. 
100

Engineering: Cost-Efficiency Curves

• Cost-efficiency equations for representative capacity of 9,000 Btu/h 

 $300

 $320

 $340

 $360

 $380

 $400

 $420

 $440

 $460

 $480

 $500

9 9.5 10 10.5 11 11.5 12 12.5 13 13.5 14

Manufacturer Production Cost (2013$)

EER (Btu/Wh)

Standard Size PTAC, 15,000 Btu/h

Standard Size PTAC, 9,000 Btu/h

Standard Size PTHP, 9,000 Btu/h

Standard Size PTHP, 15,000 Btu/h

9,000 Btu/h PTAC: MPC = 1.78*(EER)2 - 22.40*(EER) + 389.15

9,000 Btu/h PTHP: MPC = 1.78*(EER)2 - 22.40*(EER) + 427.62

15,000 Btu/h PTAC: MPC = 12.19*(EER)2 - 208.96*(EER) + 1280.9

15,000 Btu/h PTHP: MPC = 12.19*(EER)2 - 208.96*(EER) + 1318.1

Details of the Engineering Analysis can be found in chapter 5 of the TSD
101

Supporting Material: LCC
102

LCC and PBP Analysis: Base Case Efficiency Distribution

0 1 2 3 4 5 6

PTAC 9,000 Btu/h 0.0% 43.6% 24.3% 29.5% 2.1% 0.5% 0.0%

PTAC 15,000 Btu/h 0.0% 25.8% 34.8% 34.7% 2.7% 1.4% 0.7%

PTHP 9,000 Btu/h 48.5% 8.9% 30.2% 12.4% 0.0% 0.0%

PTHP 15,000 Btu/h 58.2% 0.0% 32.5% 7.9% 1.4% 0.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Market Share

Efficiency Level

PTAC 9,000 Btu/h PTAC 15,000 Btu/h PTHP 9,000 Btu/h PTHP 15,000 Btu/h
103

LCC and PBP Analysis: Customer Purchase Price

Equipment Type PTAC PTHP

Efficiency Level 9,000 Btu/h 15,000 Btu/h 9,000 Btu/h 15,000 Btu/h

0* $1,193 $1,294 $1,314 $1,411

1† $1,204 $1,307 $1,323 $1,420

2 $1,213 $1,316 $1,340 $1,443

3 $1,230 $1,339 $1,359 $1,473

4 $1,249 $1,369 $1,379 $1,509

5 $1,269 $1,405 $1,389 $1,530

6 $1,279 $1,426

* Represents Federal minimum efficiency level for PTACs. Represents Federal minimum and ASHRAE 

Standard 90.1-2013 baseline for PTHPs.

† Represents ASHRAE Standard 90.1-2013 baseline for PTACs.

Note: A shipping cost of $19.52 was added to each MPC to determine the pre-markup MPC.
104

Supporting Material: Shipments and NIA
105

Shipments Analysis: New Construction Floorspace

0

50

100

150

200

250

2010 2015 2020 2025 2030 2035 2040 2045 2050

Millions of square feet

Year

Healthcare Lodging Office

New commercial floor space projections from AEO 2013.
106

NIA: Unit Energy Consumption

0

200

400

600

800

1000

1200

1400

1600

1800

8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0

Annual Energy Consumption

EER

PTACs

7,000 Btu/h 9,000 Btu/h 15,000 Btu/h

0

500

1000

1500

2000

2500

3000

8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0

Annual Energy Consumption

EER

PTHPs

7,000 Btu/h 9,000 Btu/h 15,000 Btu/h