i APPENDIX 8A

. NIA SENSITIVITY ANALYSIS FOR ALTERNATIVE

PRODUCT PRICE TREND SCENARIOS

TABLE OF CO NTENTS

8A.1 INTRODUCTION

................................ ................................ ................................ ......... 1

8A.2 ALTERNATIVE COMPUTER ROOM AIR

- CONDITIONER PRICE

TREND SCENARIOS

................................ ................................ ................................ ... 1

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

................................ .......................... 1

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

............................. 2

8A.2.3 Summary

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

8A.3 NPV RESULTS BY ALTERNATIVE PRICE TR END SCENARIO

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

LIST OF TABLES

Table 8A.2.1 Price Trend Se nsitivities

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

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

Conditioners: Low Price Scenario (Seven Percent Discount Rate)

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

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

Conditioners: Low Price Scenario (Three Percent Discount Rate)

................... 5

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

Conditioners: High Price Scenario (Seven Percent Discount Rate)

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

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

Conditioners: High Price Scenario (Three Percent Disco unt Rate)

................... 7

LIST OF FIGURES

Figure 8A.2.1 Relative Price of Computer Room Air

- Conditioners versus Year, with

Exponential Fit

................................ ................................ ................................ ... 2

Figure 8A.2.2 Computer Room Air

- Conditione r Price Forecast Indexes

................................ ... 31 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 value (NPV) for the considered CS Ls 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 scenarios with the

default forecast

.

8A.2 ALTERNATIVE CO MPUTER 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 Scenario )

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

product quality changes. An inflation

- adjusted (deflated) price index for all oth er 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 exponential function takes the

form of:

Y = a ∙ e bX

where Y is the computer ro om 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/2 To estimate these exponential parameters, a least

- square fit was performed on the

inflation

- adjusted computer room air

- conditio ner 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 expone ntial 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,

D OE 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)3 8A.2.3 Summary

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 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 Case4 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 201 1 $)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air conditioners, air cooled,

<65,000 Btu/h $ 0.0005 $ 0.000 $ (0.003) $ (0.011)

Air conditioners, air cooled,

≥65,000 to <240,000 Btu/h $ 0.01 $ 0.11 $ 0.32 $ 0.52

Air conditioners, air cooled,

≥240,000 Btu/h $ 0.01 $ 0.08 $ 0.23 $ 0.39

Air conditioners, water cooled,

<65,000 Btu/h $ 0.001 $ 0.003 $ 0.005 $ 0.008

Air conditioners, water cooled,

≥65,000 to <240,000 Btu/h $ (0.004) $ (0.038) $ (0.131) $ (0.310)

Air conditioners, water cooled,

≥240,000 Btu/h $ 0.002 $ (0.015) $ (0.072) $ (0.190)

Air conditioners, water cooled

with fluid economizers, <65,000

Btu/h $ 0.001 $ 0.002 $ 0.003 $ 0.004

Air conditioners, water cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.01) $ (0.06) $ (0.17) $ (0.35)

Air conditioners, water cooled

with fluid economizers, ≥240,000

Btu/h $ (0.004) $ (0.018) $ (0.050) $ (0.107)

Air conditioners, glycol cooled,

<65,000 Btu/h $ 0.001 $ 0.003 $ 0.005 $ 0.007

Air conditioners, glycol cooled,

≥65,000 to < 240,000 Btu/h $ 0.001 $ (0.029) $ (0.122) $ (0.308)

Air conditioners, glycol cooled,

≥240,000 Btu/h $ 0.004 $ (0.008) $ (0.056) $ (0.160)

Air conditioners, glycol cooled

with fluid economizers, <65,000

Btu/h $ 0.001 $ 0.003 $ 0.005 $ 0.007

Air conditioners, glycol cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.01) $ (0.06) $ (0.20) $ (0.44)

Air conditioners, glycol cooled

with fluid economizers, ≥240,000

Btu/h $ (0.002) $ (0.023) $ (0.08) $ (0.19)

* Numbers in parentheses indicate negative NPV.5 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 Efficiency

Level 3 Efficiency

Level 4

Air conditioners, air cooled,

<65,000 Btu/h $ 0.0018 $ 0.004 $ 0.002 $ (0.009)

Air conditioners, air cooled,

≥65,000 to <240,000 Btu/h $ 0.03 $ 0.28 $ 0.84 $ 1.41

Air conditioners, air cooled,

≥240,000 Btu/h $ 0.02 $ 0.18 $ 0.56 $ 0.98

Air conditioners, water cooled,

<65,000 Btu/h $ 0.002 $ 0.006 $ 0.011 $ 0.015

Air conditioners, water cooled,

≥65,000 to <240,000 Btu/h $ 0.002 $ (0.048) $ (0.206) $ (0.530)

Air conditioners, water cooled,

≥240,000 Btu/h $ 0.012 $ (0.005) $ (0.097) $ (0.305)

Air conditioners, water cooled

with fluid economizers, <65,000

Btu/h $ 0.001 $ 0.003 $ 0.006 $ 0.008

Air conditioners, water cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.02) $ (0.11) $ (0.30) $ (0.64)

Air conditioners, water cooled

with fluid economizers, ≥240,000

Btu/h $ (0.005) $ (0.030) $ (0.088) $ (0.194)

Air conditioners, glycol cooled,

<65,000 Btu/h $ 0.002 $ 0.005 $ 0.010 $ 0.014

Air conditioners, glycol cooled,

≥65,000 to < 240,000 Btu/h $ 0.01 $ (0.03) $ (0.18) $ (0.52)

Air conditioners, glycol cooled,

≥240,000 Btu/h $ 0.016 $ 0.006 $ (0.072) $ (0.259)

Air conditioners, glycol cooled

with fluid economizers, < 65,000

Btu/h $ 0.002 $ 0.005 $ 0.009 $ 0.013

Air conditioners, glycol cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.01) $ (0.10) $ (0.34) $ (0.80)

Air conditioners, glycol cooled

with fluid economizers, ≥240,000

Btu/h $ 0.002 $ (0.030) $ (0.13) $ (0.33)

* Numbers in parentheses indicate negative NPV.6 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 201 1 $)

Efficiency

Level 1 Efficiency

Level 2 Efficiency

Level 3 Efficiency

Level 4

Air conditioners, air cooled,

< 65,000 Btu/h $ (0.0001) $ (0.002) $ (0.011) $ (0.027)

Air conditioners, air cooled,

≥65,000 to <240,000 Btu/h $ 0.01 $ 0.09 $ 0.23 $ 0.33

Air conditioners, air cooled,

≥240,000 Btu/h $ 0.01 $ 0.07 $ 0.20 $ 0.33

Air conditioners, water cooled,

<65,000 Btu/h $ 0.002 $ 0.004 $ 0.007 $ 0.010

Air conditioners, water cooled,

≥65,000 to <240,000 Btu/h $ (0.01) $ (0.08) $ (0.22) $ (0.48)

Air conditioners, water cooled,

≥240,000 Btu/h $ (0.005) $ (0.042) $ (0.135) $ (0.311)

Air conditioners, water cooled

with fluid economizers, <65,000

Btu/h $ 0.001 $ 0.002 $ 0.004 $ 0.006

Air conditioners, water cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.02) $ (0.10) $ (0.25) $ (0.50)

Air conditioners, water cooled

with fluid economizers, ≥2 40,000

Btu/h $ (0.01) $ (0.03) $ (0.08) $ (0.16)

Air conditioners, glycol cooled,

<65,000 Btu/h $ 0.001 $ 0.004 $ 0.007 $ 0.009

Air conditioners, glycol cooled,

≥65,000 to <240,000 Btu/h $ (0.01) $ (0.07) $ (0.21) $ (0.47)

Air conditioners, glycol cooled,

≥240,000 Btu/h $ (0.002) $ (0.030) $ (0.108) $ (0.260)

Air conditioners, glycol cooled

with fluid economizers, <65,000

Btu/h $ 0.001 $ 0.004 $ 0.006 $ 0.009

Air conditioners, glycol cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.02) $ (0.11) $ (0.30) $ (0.65)

Air conditioners, glycol cooled

with fluid economizers, ≥240,000

Btu/h $ (0.01) $ (0.04) $ (0.13) $ (0.28)

* Numbers in parentheses indicate negative NPV.7 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 conditioners, air cooled,

<65,000 Btu/h $ 0.0006 $ (0.001) $ (0.014) $ (0.040)

Air conditioners, air cooled,

≥65,000 to <240,000 Btu/h $ 0.03 $ 0.23 $ 0.66 $ 1.02

Air conditioners, air cooled,

≥240,000 Btu/h $ 0.02 $ 0.17 $ 0.50 $ 0.85

Air conditioners, water cooled,

<65,000 Btu/h $ 0.003 $ 0.008 $ 0.014 $ 0.020

Air conditioners, water cooled,

≥65,000 to <240,000 Btu/h $ (0.02) $ (0.12) $ (0.39) $ (0.88)

Air conditioners, water cooled,

≥240,000 Btu/h $ (0.003) $ (0.061) $ (0.228) $ (0.558)

Air conditioners, water cooled

with fluid economizers, <65,000

Btu/h $ 0.002 $ 0.004 $ 0.008 $ 0.011

Air conditioners, water cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.04) $ (0.18) $ (0.46) $ (0.95)

Air conditioners, water cooled

with fluid economizers, ≥240,000

Btu/h $ (0.01) $ (0.05) $ (0.14) $ (0.30)

Air conditioners, glycol cooled,

<65,000 Btu/h $ 0.003 $ 0.007 $ 0.013 $ 0.019

Air conditioners, glycol cooled,

≥65,000 to <240,000 Btu/h $ (0.01) $ (0.10) $ (0.37) $ (0.87)

Air conditioners, glycol cooled,

≥240,000 Btu/h $ 0.004 $ (0.039) $ (0.180) $ (0.468)

Air conditioners, glycol cooled

with fluid economizers, <65,000

Btu/h $ 0.003 $ 0.007 $ 0.013 $ 0.018

Air conditioners, glycol cooled

with fluid economizers, ≥65,000

to <240,000 Btu/h $ (0.03) $ (0.19) $ (0.56) $ (1.23)

Air conditioners, glycol cooled

with fluid economizers, ≥240,000

Btu/h $ (0.01) $ (0.07) $ (0.23) $ (0.53)

* Numbers in parentheses indicate negative NPV.