1 | Building Technologies Program eere.energy.gov 

# BUILDING TECHNOLOGIES PROGRAM

Energy Conservation Standards Proposed Rulemaking for Small Electric Motors (SEMs) James Raba Department of Energy Energy Efficiency & Renewable Energy small_electric_motors_std.rulemaking@hq.doe.gov December 17, 20092 | Building Technologies Program eere.energy.gov 

## • Purposes

– To invite comment on the proposed energy conservation standard levels;

– To present methodologies and characterize results for the rulemaking analyses;

– To discuss specific issues related to each analysis;

– To seek input from interested parties on methodologies, assumptions, data sources, and results from the analyses; and

– To describe the next steps in the rulemaking. 

## • Comments from Participants

– Participants are invited to provide summary comments or statements; and

– Participants are invited to raise additional issues for discussion today.

– NOPR comment period closes January 25, 2010 . 

# Purpose of the Public Meeting and Comments From Participants3 | Building Technologies Program eere.energy.gov 

# The Energy Policy and Conservation Act (EPCA)

• EPCA directs DOE to consider seven factors when setting energy conservation standards Factor Analysis 1. Economic impact on consumers and manufacturers Life-cycle cost analysis Manufacturer impact analysis 2. Lifetime operating cost savings Life-cycle cost analysis 3. Total projected energy savings National impact analysis 4. Impact on utility or performance Screening analysis Engineering 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 Environmental assessment Utility impact analysis Employment impact analysis4 | Building Technologies Program eere.energy.gov 

## • Test Procedures

– Final Rule published on July 7, 2009, based on Institute of Electrical and Electronics Engineers (IEEE) Standard 114 and IEEE Standard112. 74 FR 32059.



## • Energy Conservation Standards

– Determination Analysis published July 10, 2006 71 FR 38799.

– Framework Document published August 10, 2007. 72 FR 44990.

– Notice of Public Meeting and Availability of the Preliminary Technical Support Document December 30, 2008. 73 FR 79723.

– Notice of Proposed Rulemaking (NOPR) published November 24, 2009. 74 FR 61410.

– Final Rule scheduled for publication by February 28, 2010. 

# DOE Actions for Small Electric Motors5 | Building Technologies Program eere.energy.gov 

## • The Energy Policy Act of 1992 amended the Energy Policy and Conservation Act to direct DOE to prescribe energy conservation standards for those small electric motors for which the Secretary determines that standards ‘‘would be technologically feasible and economically justified, and would result in significant energy savings.’’ (42 U.S.C. 6317(b)(1)). • DOE is scheduled to publish a final rule for these products by February 28, 2010, pursuant to the consent decree in State of New York, et al. v. Bodman, and NRDC, Inc. et al. v. Bodman. 

# Authority for Small Electric Motors6 | Building Technologies Program eere.energy.gov 

## • DOE is proposing trial standard level (TSL) 5 for polyphase small electric motors. 

# Proposed Energy Conservation Standards

Motor horsepower / standard kilowatt equivalent Nominal full load efficiency Polyphase (number of poles) 6 4 2 0.25 / 0.18 77.4 72.7 69.8 0.33 / 0.25 79.1 75.6 73.7

0.5 / 0.37 81.1 80.1 76.0 0.75 / 0.55 84.0 83.5 81.6 1 / 0.75 84.2 85.2 83.6 1.5 / 1.1 85.2 87.1 86.6

2 / 1.5 89.2 88.0 88.2 3 / 2.2 90.8 90.0 90.57 | Building Technologies Program eere.energy.gov 

# Proposed Energy Conservation Standards

• DOE is proposing TSL 7 for single - phase (capacitor-start) small electric motors. Motor horsepower / standard kilowatt equivalent Nominal full load efficiency CSIR (number of poles) CSCR (number of poles) 6 4 2 6 4 2 0.25 / 0.18 65.4 69.8 71.4 63.9 68.3 70.0 0.33 / 0.25 70.7 72.8 74.2 69.2 71.6 72.9

0.5 / 0.37 77.0 77.0 76.3 75.8 76.0 75.1 0.75 / 0.55 81.0 80.9 78.1 79.9 80.3 77.0 1 / 0.75 84.1 82.8 80.0 83.2 82.0 79.0 1.5 / 1.1 87.7 85.5 82.2 87.0 84.9 81.4

2 / 1.5 89.8 86.5 85.0 89.1 86.1 84.2 3 / 2.2 92.2 88.9 85.6 91.7 88.5 84.98 | Building Technologies Program eere.energy.gov 

## • Opening remarks

– At this time, DOE welcomes opening remarks from interested parties on the NOPR for small electric motors. 

## • In addition, DOE specifically invites comment on the proposed energy conservation standard levels for small electric motors. 

# Opening Remarks and Comments

ISSUE 16. DOE seeks input on the proposed standard level for polyphase small electric motors. ISSUE 17. DOE seeks input on the proposed standard level for single- phase (capacitor -start) small electric motors.9 | Building Technologies Program eere.energy.gov 

# Summary of NOPR Issues on which DOE seeks comment 1. Product Classes: The proposal of product classes based on motor category, pole configuration, and horsepower. 2. Insulation Class Systems: The proposal to include other insulation class systems besides A, in particular B and F insulation class systems. 3. Baseline Motors: The appropriateness of the baseline models and efficiencies used in the engineering analysis. 4. Markups: The various markups used in the engineering analysis, in particular the difference in overhead markups for designs that use a copper rotor and those that use an aluminum rotor. 5. Design Limitations: The design options and limitations presented in the engineering analysis, such as limitations on motor size, the air gap between the rotor and stator, and the power factor. 6. Scaling: The approach to scale the engineering analysis results to product classes for which a complete analysis was not performed, especially the decisions to use the relationship found for CSIR motors to scale results for CSCR motors.10 | Building Technologies Program eere.energy.gov 

# Summary of NOPR Issues on which DOE seeks comment (continued) 7. Nominal Efficiency: The proposal to define nominal efficiency as the average full - load efficiency of a large population of motors or the same design. 8. INPV Scenarios: The preservation of operating profits as the lower bound scenario and the preservation of return on invested capital as the upper bound scenario for the INPV results generated in the manufacturer impacts analysis. 9. Capital Costs: The capital investments needed to reach each efficiency level 10. Market Reaction: Input and data regarding how the single- phase market will respond to the proposed standard. In particular, DOE seeks comment regarding its CSIR/CSCR market share model, the current shares of CSIR and CSCR motors in each combination of motor power and number of poles, and the barriers the customers face if they switch from CSIR to CSCR motors or vice versa. 11. Market Reaction: Input data regarding how the small electric motors market will respond to the proposed standards. In particular, DOE seeks comment regarding alternative small electric motor technologies and how they could potentially affect the projected shipments and energy savings.11 | Building Technologies Program eere.energy.gov 12. Space-Constrained Applications: The behavior of customers with space - constrained applications, the costs they face, and the time -frame over which they may need to redesign a system or large piece of equipment to accommodate a larger- component small electric motor. DOE also seeks further information regarding the population and distribution of space - constrained customers among motor applications. 13. Impact of Standards: DOE seeks comment on how forecasted uncertainty in market shifts can be estimated and weighed against the potential increases in benefits when selecting a higher standard level that may cause a shift in motor purchases. 14. Emissions Discount Rates: The appropriateness of using other discount rates in addition to seven percent and three percent real to discount future emissions reductions. 15. Environmental Assessment: The determination of the anticipated environmental impacts of the proposed rule, particularly with respect to the methods for valuing the expected CO 2 and NOx emissions savings due to the proposed standards. 16. Trial Standard Levels: The proposed standard level for polyphase small electric motors. 17. Trial Standard Levels: The proposed standard level for single - phase (capacitor-start) small electric motors. 

# Summary of NOPR Issues on which DOE seeks comment (continued)12 | Building Technologies Program eere.energy.gov 

# Scope of Coverage

• Statutory Definition of Small Electric Motor

– “a NEMA [National Electrical Manufacturers Association] general purpose alternating current single-speed induction motor, built in a twodigit frame number series in accordance with NEMA Standards Publication MG1 – 1987. ” (42 U.S.C. 6311(13)(G))

– EPCA particularly defines small electric motors by citing the 1987 version of MG1; therefore it is the only version of that document which is applicable to the definition.13 | Building Technologies Program eere.energy.gov 

## • Only open motors are considered covered products under the EPCA definition of “small electric motor.” • DOE covers IEC motors by establishing standards for horsepower ratings and the corresponding kilowatt ratings. • Insulation class systems

– DOE interprets the definition “general - purpose, alternating current motor” as being applicable to insulation classes rated A or higher.

– Insulation class systems, B, F, and H all meet requirements for class A systems.

– In the current market, class B and F insulation systems are much more common in small electric motors than A. ISSUE 2. DOE seeks comment on the proposal to include other insulation class systems besides A, in particular B and F insulation class systems 

# Scope of Coverage14 | Building Technologies Program eere.energy.gov 

# Product Classes

• In general, DOE divides covered products into classes based on:

– (1) the type of energy used;

– (2) the capacity of the equipment; and

– (3) any other performance related features that require different standard levels, such as features affecting consumer utility (42 USC 6295(q)) 

## • For small electric motors, DOE defines product classes using three motor characteristics

– Motor category (polyphase, CSIR, and CSCR)

– Horsepower ratings (1/4, 1/3, 1/2, 3/4, 1, 1 1/2, 2, and ≥3)

– Pole configuration (2, 4, and 6) ISSUE 1. DOE seeks comment on the proposal to separate product classes based on motor category, pole configuration and horsepower rating.15 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram16 | Building Technologies Program eere.energy.gov 

## • Purpose

– To evaluate design options that improve efficiency relative to the baseline models.

– To characterize manufacturer cost- efficiency relationships for higher efficiency equipment.



## • Methodology 1. Select representative product classes to analyze. 2. Develop baseline models. 3. Model motors of higher efficiency using designs created in a technical expert’s proprietary software program. 4. Use a bill of materials and markups to generate cost- efficiency curves. 5. Scale to unanalyzed product classes. 

# Engineering Analysis17 | Building Technologies Program eere.energy.gov Basic Characteristics of Motors Analyzed Baseline Efficiency % Polyphase, 1 hp, 4-pole, 56 frame 77.2 CSIR, 1⁄2 hp, 4-pole, 48 frame 57.7 CSCR, 3⁄4 hp, 4-pole, 56 frame 71.0 

# Representative Product Classes and Baseline Models

ISSUE 3. DOE seeks comment on the appropriateness of the baseline models and efficiencies used in the engineering analysis.18 | Building Technologies Program eere.energy.gov 

# Software Design Approach

• DOE applied various design options to the baseline models to create more efficient motor designs. • Design limitations were used to maintain both manufacturability and utility of the baseline model. Parameters with Design Limitations Air gap between rotor and stator Service factor Slot fill Assumed stray- load losses Stator slot opening Motor diameter Locked - rotor torque Cooling system Locked - rotor current Rotor skew

Breakdown torque Stack length Power factor Thermal performance Speed at rated load19 | Building Technologies Program eere.energy.gov 

## • Stack Length

– In general, increasing stack length is a relatively inexpensive way to increase motor efficiency.

– Increasing stack length can also affect a motor’s ability to fit in some space - constrained applications.

– For each representative unit DOE developed two cost- efficiency curves, one for motors going into space - constrained applications and one for motors going into non -space constrained applications.

– DOE assumed space - constrained applications could only allow a 20% increase in stack length, while non -space constrained applications could allow the stack length to double. 

# Motor Size Design Limitations: Stack Length

ISSUE 5. DOE seeks comment on the design options and limitations presented in the engineering analysis.20 | Building Technologies Program eere.energy.gov Manufacturer Selling Price 

## • Manufacturer Markups

– DOE applied a markup to the motor bill of materials for scrap factor, factory overhead, and non - production costs to develop manufacturer selling prices.



## • Copper Rotor Pricing

– DOE increased the factory overhead markup for the higher depreciation of the tooling necessary to manufacture motors with a copper die- cast rotor. 

# Markups

ISSUE 4. DOE seeks comment on the various markups used in the engineering analysis, in particular the difference in overhead markups for designs that use a copper rotor and those that use an aluminum rotor.21 | Building Technologies Program eere.energy.gov 

# Example Cost- Efficiency Curve (Polyphase, 4- pole, 1 hp motor)

$0 $50 $100 $150 $200 $250 $300 $350

76 78 80 82 84 86 88 90Manufacturer Selling Price ($2008)

Full Load Efficiency (%) Space Constrained Non -Space Constrained22 | Building Technologies Program eere.energy.gov 

# Scaling the Engineering Analysis Small Electric Motor Product Classes Polyphase CSIR CSCR hp / kW 2 poles 4 poles 6 poles 2 poles 4 poles 6 poles 2 poles 4 poles 6 poles 1/4 / .18 1/3 / 0.25 1/2 / 0.37 Rep. Unit 3/4 / 0.55 Rep. Unit 1 / 0.75 Rep. Unit 1 1⁄2 / 1.1

2 / 1.5 ≥3 / 2.223 | Building Technologies Program eere.energy.gov 

## • Scaling Motor Efficiencies

– DOE purchased and tested motors to develop efficiency relationships between poles and horsepower ratings.

– Testing was done by an independently accredited laboratory, who used the appropriate IEEE test procedures.

– The test data were supplemented with efficiencies from manufacturer catalogs. 

## • CSCR Scaling

– DOE used the same relationships found for CSIR motors to scale efficiencies for CSCR motors due to limited product availability. 

## • Scaling Manufacturer Selling Prices

– DOE developed scaling equations for prices based on data pulled from manufacturer catalogs. 

# Scaling the Engineering Analysis (continued)24 | Building Technologies Program eere.energy.gov 

# Scaling the Engineering Analysis (continued)
ISSUE 6. DOE seeks comment on the approach to scale the engineering analysis results to product classes for which a complete analysis was not performed, especially the decision to

use the relationship found for CSIR motors to scale results for CSCR motors.25 | Building Technologies Program eere.energy.gov 

### • In the July 7, 2009, Final Rule for small electric motor test procedures, DOE uses the term “nominal full load efficiency” when defining the term basic model (§431.442) and when discussing the selection of basic models for testing if an AEDM [alternative efficiency determination method] is to be applied ( §431.445(c)(i)(D)). • Today, DOE proposes to define “nominal full load efficiency” as the average (arithmetic mean) full load efficiency of a population of motors.

– This is different than the definition used for electric motors.

– Electric motors definition is based on data that is not applicable to small electric motors.

– DOE will consider revising the definition in the future, should appropriate data become available. 

# Nominal Full Load Efficiency

ISSUE 7. DOE seeks comment on the proposal to define nominal efficiency

as the arithmetic mean of the full load efficiencies of a population of motors of the same design.26 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram27 | Building Technologies Program eere.energy.gov 

### • Energy Use Characterization

– To develop electrical energy consumption savings estimates for selected equipment efficiency levels.

– To develop distributions representing the variety of motor use patterns, including variability in motor hours of operation and motor loading.



### • Markups for Equipment Price Determination

– To characterize the channels for how equipment is distributed from the manufacturer to the customer.

– To determine prices paid by customers based on manufacturer selling prices for baseline and higher efficiency equipment.



### • Life-Cycle Cost and Payback Period Analyses

– To develop the customer life - cycle cost savings and payback period for higher efficiency equipment. Purpose 

# Energy Use, Markups, Life Cycle Cost, and Payback Period28 | Building Technologies Program eere.energy.gov 

# Energy Use Characterization

• In view of additional information, new data, and comments after the preliminary analysis, DOE revised its methodology for calculating energy use.

– In the preliminary analysis, DOE used values scaled from the engineering designs.

– For this NOPR analysis, DOE used the losses and power factors of the specific motor designs developed in the Engineering Analysis to calculate the energy use of representative product classes under each standards scenario.


## • DOE used distributions to characterize motor loading and annual hours of operation.

– In the preliminary analysis, DOE used point values.

– DOE used survey data for motor duty factor to develop annual hours of operation distributions that correspond to the average and typical (median) hours of operation developed in earlier stages of the analysis, but better reflect the wide range of small motor duty factor.29 | Building Technologies Program eere.energy.gov 

## • Inputs

– U.S. Census Bureau data (2002) from the 2002 Economic Census Manufacturing Industry Series for 11 types of OEMs

– Retailer and Distributor data from U.S. Census Business Expenses Survey

– National distribution of sales taxes



## • Outputs

– Overall weighted average baseline markups of 2.49 (2.42 in preliminary analysis) for SEMs (including sales tax).

– Overall weighted average incremental markups of 1.83 (1.75 in preliminary analysis) for SEMs (including sales tax). 

# Markups to Determine Equipment Price30 | Building Technologies Program eere.energy.gov 

# Markups: Distribution Channels

• Estimated Fraction of Equipment Shipments by Distribution Channels (Modified from preliminary analysis based on public comment)

SEM Market Shares 5% 65% 30% Manufacturer

Motor User Original Equipment Manufacturer (OEM) Motor User Motor User OEM Distributor Distributor31 | Building Technologies Program eere.energy.gov 

### • Life- Cycle Cost (LCC) equals customer price plus the sum of annual operating costs discounted to a particular base year (2015, in this case). • Economic evaluation from the customer perspective. • Analysis implemented in an Excel ® 

### spreadsheet combined with Crystal Ball ® 

### to estimate impacts for a sample of motor customers. • Results are expressed as LCC savings (baseline minus standard level). • Payback period (in years) is also calculated and reported in this analysis. 

# Life - Cycle Cost and Payback Period Analyses

Combine Changes in Costs LCC Results Installed Cost (Customer Price + Installation Cost) Operating Expenses Convert to Present

Value32 | Building Technologies Program eere.energy.gov 

## • Electricity prices are distributions of average prices derived from 2007 EIA Form 861 data and adjusted for inflation.
• Separate distributions derived for industrial, commercial, and residential customers. Agricultural customers were assumed to pay industrial electricity prices.
• Electricity price projections were based on the ARRA case of AEO 2009.

– Sensitivity analyses performed on high and low energy price forecasts. 

## • Prices beyond 2030 are extrapolated based on the trend from 2020 - 2030. 

# Life - Cycle Cost and Payback Period Analyses: Energy Prices33 | Building Technologies Program eere.energy.gov • Installation costs based on RS Means, unchanged from preliminary analysis.
• Shipping costs of $0.50 per pound added in response to public comments.
• Discount rates (weighted average cost of capital—data updated from 2008 Damodaran Online website). Average discount rate is 5.86% for commercial customers, 5.92% for industrial customers, and 5.5% for residential customers.
• Repair and maintenance costs do not change with efficiency (unchanged from the preliminary analysis)
• Equipment lifetime average 9 years for polyphase and 7 years for single -phase motors

– For NOPR analysis, DOE added correlation between annual hours of operation and motor lifetime • A motor is retired when it reaches either its mechanical lifetime (measured in hours of operation) or the equipment of which it is a part reaches its lifetime (measured in years), whichever happens first. • Distribution of shipments between applications changed from the preliminary analysis • DOE estimated that shipments to space - constrained applications comprise 20% of motor shipments Other Inputs 

# Life - Cycle Cost and Payback Period Analyses34 | Building Technologies Program eere.energy.gov $1,200 $1,225 $1,250 $1,275 $1,300 $1,325 $1,350 $1,375 $1,400

76.0 78.0 80.0 82.0 84.0 86.0 88.0 90.0 Motor Efficiency (%)Life Cycle Cost 

### Life Cycle Cost Analysis: Total Average Life Cycle Cost

Baseline EL 1 EL 2 EL 3 EL 4 EL 5 EL 6 

# Sample Life - Cycle Cost Analysis Results: Polyphase 4- pole, 1 hp35 | Building Technologies Program eere.energy.gov 

### Life Cycle Cost Analysis: Customers with Net Benefit

0% 10% 20% 30% 40% 50% 60%

78.0 80.0 82.0 84.0 86.0 88.0 90.0 Motor Efficiency (%)Percent of Customers with Net Benefit

EL 1 EL 2 EL 3 EL 4
EL 5 EL 6 EL 7 

# Sample Life - Cycle Cost Analysis Results: Polyphase 4- pole, 1 hp36 | Building Technologies Program eere.energy.gov 

### DOE invites comments on any issues pertaining to the Energy Use, Markups, and Life- Cycle Cost and Payback Period Analyses. 

# Public Comment37 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram38 | Building Technologies Program eere.energy.gov 

## • Purpose

– To evaluate the economic impacts of standards on customer subgroups that may be disproportionately impacted compared with the general user population.



## • Method

– DOE identified two subgroups: disadvantaged businesses, exemplified by small businesses (which experience a higher discount rate); and customers with space - constrained applications.

– DOE used the LCC spreadsheet model to determine the impact on these two customer subgroups.



## • Output

– LCC savings and simple payback period (in years) for the identified customer subgroup.

– Space - constrained customers and small businesses experience greater costs or fewer benefits than average customers. 

# Life - Cycle Cost Subgroup Analysis39 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram40 | Building Technologies Program eere.energy.gov 

## • Shipments Analysis

– To estimate small electric motor shipments over time.



## • National Impact Analysis

– To estimate the National Energy Savings (NES) from small electric motors at different trial standard levels (TSLs), and

– To estimate the national economic impact on the nation (or the Net Present Value (NPV)) from equipment energy conservation standards at different efficiency levels. 

# Purpose of Shipments Analysis and National Impacts Analysis41 | Building Technologies Program eere.energy.gov Approach


### • Shipment forecasts (2015 -2045) derived from:

– Estimated 2008 shipments and

– Growth drivers in the industrial, commercial, and residential sectors.



### • Alternative shipments scenarios were examined through sensitivity analyses

– High Growth (AEO 2009)

– Low Growth (AEO 2009)

– Falling Market Share, which models constant shipments regardless of economic growth



### • Shipments and stocks of equipment tracked by vintage and product class.

– DOE used the number of models as a proxy for shipments in order to estimate the shipments in product classes where no data were available. 

# Shipments Analysis42 | Building Technologies Program eere.energy.gov 

# Example of Shipments Forecasts: Polyphase Small Electric Motors

0 0.2 0.4 0.6 0.8

1 1.2 1.4 1.6 1.8

2

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 YearShipments (Millions) Reference Case High Growth Case Low Growth Case Falling Market Share43 | Building Technologies Program eere.energy.gov 

# Shipments Analysis: Market Response to Standards

• DOE's reference shipments analysis assumed that the market for covered small electric motors is inelastic. DOE conducted a sensitivity analysis with elasticities of - 0.25 and - 0.5, between covered small electric motors and totally enclosed small motors, using the same technologies. ISSUE 10. DOE seeks input and data regarding how the small electric motors market will respond to the proposed standards. In particular, DOE seeks comment regarding alternative small electric motor technologies, such as electronically commutated motors, and how elasticity between the market

for these alternative technologies and the market for covered motors could potentially affect the projected shipments and energy savings.44 | Building Technologies Program eere.energy.gov 

# Shipments Analysis: CSIR/CSCR Market Dynamics

• DOE developed a market share model based on current market shares, efficiencies, and prices.

• DOE used this model to forecast market shares in each product class under each TSL. -20%

0% 20% 40% 60% 80% 100% 120%

-6 -4 -2 0 2 4 6 Cost FactorMarket Share DOE Market Share Model Current Estimated Market Share45 | Building Technologies Program eere.energy.gov 

### ISSUE 11. DOE seeks input and data regarding how the single- phase small motor market will respond to the proposed standards. In particular, DOE seeks comment regarding its CSIR/CSCR cross-elasticity model, the current market shares of CSIR and CSCR motors in each combination of motor power and number of poles, and the barriers the customers face if they switch from CSIR to CSCR motors or vice versa. • DOE developed a CSIR/CSCR market share cross - elasticity model using its shipments estimates for each combination of motor power and number of poles. The model uses the purchase price difference and energy use difference between CSIR and CSCR motors with the same power and number of poles to predict market share for each product class under each standards scenario. 

# Shipments Analysis: CSIR/CSCR Market Response to Standards46 | Building Technologies Program eere.energy.gov • National energy savings calculated for equipment purchased from 2015 -2045 and National NPV calculated over the lifetime of those products (2015 -2065). • Base case incorporates the penetration of higher efficiency motors. Example: Polyphase Motors

• Standards “roll up” inefficient equipment, but do not affect efficient equipment. Example: Standard at Efficiency = Level 4

• Account for all stock resulting from shipments during the period 2015 -2045. • Use national average customer prices for each product class (including different prices for space constrained and non -space - constrained motors), annual energy use, lifetime, and energy prices from LCC analysis. Streams of energy use and total costs calculated over analysis time periods and costs discounted to the present. Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Total

82.0% 4.0% 4.0% 4.0% 6.0% 0.0% 0.0% 100%

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Total 0.0% 0.0% 0.0% 94.0% 6.0% 0.0% 0.0% 100% 

# National Impact Analysis47 | Building Technologies Program eere.energy.gov 

# NIA: Space Constrained Applications

ISSUE 12. DOE seeks comment regarding the behavior of customers with space-constrained applications, the costs they face, and the time-frame over which they may need to redesign a system or large piece of equipment to accommodate a larger -component small electric motor. DOE also seeks further information regarding the population and distribution of space constrained customers among motor applications. • DOE’s NIA analysis assumes that 20% of customers face space constraints, and that these customers are distributed across applications in proportion with all small motor customers. • DOE’s analysis also assumes that the additional costs faced by motor customers with space - constrained applications do not change during the analysis period, and are equal to the additional cost of motors which use more expensive design options in order to avoid increases in stack length of more than 20%.48 | Building Technologies Program eere.energy.gov 

# NIA: Combined Assumptions

ISSUE 13. DOE seeks comment regarding the combined effect of the several assumptions and estimates that DOE makes in order to estimate the impact of

standards under expected market shifts. DOE seeks comment regarding its approach and suggestions on how forecasted market shifts can be estimated and weighed against the potential increases in benefits when selecting a higher standard level that may induce a shift in motor purchases. • The results of DOE’s single- phase NIA model depend on several assumptions made throughout the analyses, including: the costs associated with purchasing motors for space - constrained applications, the portion of space - constrained applications in the market, shipments in each product class, the scaling of motor losses and prices between product classes, and the mathematical form of DOE’s cross- elasticity model.49 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram50 | Building Technologies Program eere.energy.gov 

## • Purpose

– To develop a list of standard levels from which impacts are weighed and a proposed standard level is selected.



## • Method

– Trial standard levels were developed for the NOPR.

– Analyzed standard levels cover a range of efficiencies and can include :

– Efficiency level with the highest energy savings;

– Efficiency level with the lowest life - cycle cost;

– Most energy efficient level; and

– Efficiency levels that fill in large gaps between standard levels.



### – The two capacitor-start motor categories were paired together when creating TSLs due to the market interaction between the two categories. 

# Trial Standard Levels (TSLs)51 | Building Technologies Program eere.energy.gov TSL CSIR EL CSCR EL Notes 8 7 7 EL combination with greatest energy savings 7 7 3 Same efficiency requirements for CSIR and CSCR motors 6 7 8 Maximum-Technology ELs 5 6 3 NEMA Recommended Level 2* 4 6 4 Highest ELs with positive LCC savings 3 5 3 Highest ELs with majority LCC beneficiaries 2 4 3 Minimum LCCs for CSIR and CSCR 1 4 2 NEMA Recommended Level 1*
* NEMA- recommended levels represent levels that NEMA requested DOE to examine through their submitted comment.



# TSLs for Capacitor- Start Small Electric Motors52 | Building Technologies Program eere.energy.gov Polyphase TSL Polyphase EL Notes 7 7 EL with the greatest energy savings 6 6 Intermediate EL 5 5 Harmonizes with Medium Motors Standards (NEMA Premium) 4 4 Highest EL with Positive LCC Savings 3 3 Minimum LCC 2 2 Intermediate EL 1 1 Intermediate EL 

# TSLs for Polyphase Small Electric Motors53 | Building Technologies Program eere.energy.gov 

## • Polyphase Small Electric Motors

– TSL 5 is the highest TSL with a positive NPV, $0.06 billion.

– Estimated national energy savings for TSL 5 are 0.33 quads.


## • Capacitor- Start Small Electric Motors

– TSL 7 provides an NPV of $1.47 to $5.67 billion at a 7- percent discount rate.

– Estimated national energy savings for TSL 7 are 2.10 to 2.13 quads.

– Ranges in capacitor-start values reflect the uncertainty regarding changes in CSIR and CSCR motor market shares in response to the standards. 

# NPV and NES Results by TSL54 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram55 | Building Technologies Program eere.energy.gov 

## • Purpose

– To assess the impacts of standards on SEM manufacturers;

– To identify and estimate impacts on manufacturer sub- groups that may be more severely impacted than the industry as a whole; and

– To examine the impact of cumulative regulatory burdens on the industry.



## • Method

– Analyze industry cash flow and net present value 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 . 

# Manufacturer Impact Analysis56 | Building Technologies Program eere.energy.gov 

### • The MIA consists of three phases:

Industry profile Develop strawman GRIM* Develop interview guide Interviews & industrywide/ subgroup analyses Assess direct employment, competition, cumulative burden Finalize MIA results for NOPR Phase 2

*** Government Regulatory Impact Model (GRIM)** Phase 3 Phase 1 

# Manufacturer Impact Analysis Process57 | Building Technologies Program eere.energy.gov 

# • Impact of Increasing Motor Size

– To achieve higher efficiencies manufacturers may need to increase motor sizes

– Motor size increases could potentially eliminate some retrofit applications

– Consumers could be forced to migrate to unregulated motors or smaller horsepower motors for space - constrained applications

– DOE incorporates these concerns throughout its analysis including the engineering and shipments analyses, which are inputs to the GRIM 

# Key Issues58 | Building Technologies Program eere.energy.gov 

# • Capital Conversion Costs

– Possible exit of market due to high investments for small segment of some manufacturers’ entire business

– Significant investments for alternative metals in redesigns • DOE estimated capital conversion costs for each design option from the engineering analysis giving weights to space constrained and non -space constrained assumptions. • Capital conversion cost estimates were derived through information provided by manufacturers and industry experts. • DOE derived industry wide capital investments by aggregating responses from manufacturers and DOE’s own estimates. 

# Key Issues (continued)

ISSUE 9. DOE seeks comment on the capital investments needed to reach each efficiency level.59 | Building Technologies Program eere.energy.gov 

## • Preservation of Return on Invested Capital - Upper Bound Scenario

– Return on invested capital is the ratio of net operating profits (after taxes) to invested capital.

– Markups are set so that as invested capital increases, net operating profits proportionately increase.


## • Preservation of Operating Profit (Absolute Dollars) - Lower Bound Scenario

– Operating profit is earnings before interest and taxes.

– Assumes once standards are implemented, manufacturers maintain same total operating profits as before standards. 

## ISSUE 8. DOE seeks comments on the use of the preservation of operating profits as the lower bound scenario and the preservation of return on invested capital as the upper bound scenario for the INPV results generated in the MIA. 

# Analyzed Markup Scenarios60 | Building Technologies Program eere.energy.gov 

# Polyphase Motors Units Base Case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 INPV (2008$ millions) 64 63 – 65 63 – 65 62 – 66 62 – 67 55 – 75 51 – 80 4 – 149 Change in INPV (2008$ millions) - (1.14) – 0.52 (1.56) – 1.11 (2.01 ) – 1.83 (2.39) – 2.41 (8.83) – 10.85 (13.09) – 15.94 (59.74) – 85.23 (%) - (1.78) – 0.80 (2.42) – 1.74 (3.14) – 2.86 (3.73) – 3.73 (13.76) – 16.91 (20.41) – 24.84 (93.14) – 132.87 Total Investment Required (2008$ millions) - 1.4 1.6 1.7 1.9 5.9 9.2 30.9 

# SEM GRIM Results61 | Building Technologies Program eere.energy.gov 

# CSIR – CSCR Motors Units Base Case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 TSL 8 INPV (2008$ millions) 279 264 – 290 263 – 291 256 – 297 247 – 310 250 – 307 141 – 467 243 – 309 226 – 336 Change in INPV (2008$ millions) - (14.87) – 11.21 (15.64) – 12.22 (22.87) – 18.03 (31.57) – 31.21 (29.01 ) – 27.96 (137.53) – 187.88 (35.84) – 29.80 (53.30) – 56.70 (%) - (5.33) – 4.02 (5.61) – 4.38 (8.20) – 6.47 (11.32) – 11.19 (10.41) – 10.03 (49.33) – 67.39 (12.86) – 10.69 (19.12) – 20.34 Total Investment Required (2008$ millions) - 16.9 17.9 24.5 27.3 24.5 70.8 45.7 50.4 

# SEM GRIM Results (continued)62 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram63 | Building Technologies Program eere.energy.gov 

## • Purpose

– To investigate the effects on utilities from reduced energy sales and peak load demand due to potential standards .


## • Method

– Use National Energy Savings Results; and

– Use the EIA’s National Energy Modeling System (NEMS - BT) tailored for DOE’s Building Technologies Program.


## • Output

– Change in electricity sales and price by region;

– Change in the mix of electricity generation; and

– Change in installed capacity and generation. 

# Utility Impact Analysis64 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram65 | Building Technologies Program eere.energy.gov 

## • Purpose

– To report net jobs created or eliminated nationally as a consequence of new or amended energy conservation standards. Employment impacts include direct and indirect impacts. 

## • Method

– Uses the Impact of Sector Energy Technologies (ImSET) model to assess the indirect employment impacts;

– Estimate changes in employment, industry output, and wage income in the overall United States economy resulting from changes in expenditures in the various sectors of the economy;

– Estimate changes in costs and benefits using the NES analysis; and

– Direct employment impacts are addressed in the Manufacturer Impact Analysis (MIA). 

## • Output

– Change in employment in national economy, other than in the manufacturing sector being regulated, as a consequence of the amended energy conservation standards. 

# Employment Impact Analysis66 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram67 | Building Technologies Program eere.energy.gov 

## • Purpose

– To report environmental impacts as a consequence of the amended energy conservation standards, including changes in power plant emissions. 

## • Output

– Calculated the reduction in power plant emissions of carbon dioxide (CO 2), oxides of nitrogen (NOX) and mercury (Hg), using the NEMS -BT computer model.

– Sulfur dioxide (SO2) emission was not included due to uncertainty regarding impacts of electricity use reductions on the capped emissions under Title IV of the Clean Air Act and the Clean Air Interstate Rule. The NEMS-BT model predicts no change in physical SO2 emissions from the power sector.

– Monetized value of reductions in CO 2 , NOX , and Hg.

– Particulate matter (PM) was not included because DOE is unable to generate a reliable estimate due to the complex interactions between PM, other power plant emissions, meteorology and atmospheric chemistry that impact human exposure to particulates . 

# Environmental Assessment68 | Building Technologies Program eere.energy.gov ISSUE 14. DOE seeks comment on the appropriateness of using other discount rates in addition to seven percent and three percent real to discount future emissions reductions.

ISSUE 15. DOE seeks comment on the determination of the anticipated environmental impacts of the proposed rule, particularly with respect to the methods for valuing the expected CO2, NO X

, and Hg emissions savings due to the proposed standards. – DOE believes that discounted environmental benefits represent a policy perspective wherein benefits farther in the future are less significant than energy savings closer to the present.

– DOE has made several additions to its monetization of environmental emissions reductions in today’s proposed rule, and has chosen to report these benefits both separately from and together with the net benefits of energy savings.

– Nothing in EPCA, nor in the National Environmental Policy Act, requires that the economic value of emissions reduction be incorporated in the net present value analysis of the value of energy savings.

– Unlike energy savings, the economic value of emissions reduction is not priced in the marketplace. 

# Environmental Assessment (continued)69 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram70 | Building Technologies Program eere.energy.gov 

## • Purpose

– To investigate the national impacts of non - regulatory alternatives compared with mandatory energy conservation standards.

– The non - regulatory alternatives that DOE analyzed include: • No New Regulatory Action; • Bulk Government Purchases; • Customer Rebates; • Customer Tax Credits; • Manufacturer Tax Credits; and • Voluntary Energy- Efficiency Targets— ENERGY STAR or NEMA Premium. 

## • Method

– A variant of the National Impact Analysis spreadsheet model evaluated the national energy savings and net present value of each non regulatory alternative. 

## • Output

– National Energy Savings and Net Present Value of each of the non regulatory alternatives. 

# Regulatory Impact Analysis71 | Building Technologies Program eere.energy.gov Manufacturer Impact Analysis Utility Impact Analysis Trial Standard Levels Revise Preliminary Analyses Environmental Assessment Regulatory Impact Analysis Employment Impact Analysis

Engineering Analysis Life-Cycle Cost & Payback Period Analyses National Impact Analysis Framework Document Preliminary Analysis NOPR Final Rule

Customer Subgroup Analysis 

# NOPR Analyses Flow Diagram72 | Building Technologies Program eere.energy.gov 

## • DOE is proposing trial standard level (TSL) 5 for polyphase small electric motors. 

# Proposed Energy Conservation Standards

Motor horsepower / standard kilowatt equivalent Nominal full load efficiency Polyphase (number of poles) 6 4 2 0.25 / 0.18 77.4 72.7 69.8 0.33 / 0.25 79.1 75.6 73.7

0.5 / 0.37 81.1 80.1 76.0 0.75 / 0.55 84.0 83.5 81.6 1 / 0.75 84.2 85.2 83.6 1.5 / 1.1 85.2 87.1 86.6

2 / 1.5 89.2 88.0 88.2 3 / 2.2 90.8 90.0 90.573 | Building Technologies Program eere.energy.gov 

# Proposed Energy Conservation Standards

• DOE is proposing TSL 7 for single - phase (capacitor-start) small electric motors. Motor horsepower / standard kilowatt equivalent Nominal full load efficiency CSIR (number of poles) CSCR (number of poles) 6 4 2 6 4 2 0.25 / 0.18 65.4 69.8 71.4 63.9 68.3 70.0 0.33 / 0.25 70.7 72.8 74.2 69.2 71.6 72.9

0.5 / 0.37 77.0 77.0 76.3 75.8 76.0 75.1 0.75 / 0.55 81.0 80.9 78.1 79.9 80.3 77.0 1 / 0.75 84.1 82.8 80.0 83.2 82.0 79.0 1.5 / 1.1 87.7 85.5 82.2 87.0 84.9 81.4

2 / 1.5 89.8 86.5 85.0 89.1 86.1 84.2 3 / 2.2 92.2 88.9 85.6 91.7 88.5 84.974 | Building Technologies Program eere.energy.gov Request for Additional Comments 

## DOE invites comments on any remaining issues pertaining to this NOPR. 

# Public Comment75 | Building Technologies Program eere.energy.gov 

## • Public Meeting – Oral comments will be captured in the transcript and become part of the public record. 

## • Written comments – NOPR comment period is open until January 25, 2010. Reference docket #: EERE -2007-BT-STD- 0007 and/or RIN #: 1904- AB70. Email: small_electric_motors_std.rulemaking@hq.doe.gov. Mail: Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program, Mailstop EE –2J 1000 Independence Avenue, SW. Washington, DC 20585–0121. Telephone: (202) 586–2945. Courier: Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program 950 L’Enfant Plaza, SW., 6th Floor, Washington, DC 20024. 

# Submission of Comments