i

APPENDIX 8A. NIA SENSITIVITY ANALYSIS FOR ALTERNATIVE

PRODUCT PRICE TREND SCENARIOS

TABLE OF CONTENTS

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 Forecast (Low Price Scenario).............................2

8A.2.3 Summary........................................................................................................................3

8A.3 NPV RESULTS BY ALTERNATIVE PRICE TREND SCENARIO ..........................4

LIST OF TABLES

Table 8A.2.1 Price Trend Sensitivities............................................................................................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 Discount 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-Conditioner Price Forecast Indexes ...................................3
1

APPENDIX 8A. NIA SENSITIVITY ANALYSIS FOR

ALTERNATIVE PRODUCT PRICE TREND SCENARIOS

8A.1 INTRODUCTION

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 CSLs 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 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 Price Index (PPI) for all other miscellaneous 

refrigeration and air-conditioning equipments, and the other is based on the “deflator— other 

durables 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 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 exponential function takes the 

form of:

Y = a ∙ ebX 

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/
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 0.588, 

which indicates a moderate fit to the data. The final estimated exponential function is:

Y = 1.90 × 10(−12) ∙ e0.0134X 

DOE then derived a price factor index for this scenario, with 2011 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 durables 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-12e0.0134x

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 2012

Deflated 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 0.00

Low Price Scenario AEO2011-- “deflator— other durables 

excluding medical”

-1.34

High Price Scenario Exponential Fit using data from 2001 to 

2010

1.35

Figure 8A.2.2 Computer Room Air-Conditioner Price Forecast Indexes

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

201120142017202020232026202920322035203820412044

Price 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 Case
4

8A.3 NPV RESULTS BY ALTERNATIVE PRICE TREND SCENARIO

Table 8A.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 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 8A.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 8A.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 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, ≥240,000 

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 8A.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.