#23.4

ineering Analysis

Microwave Oven Standby Power (Issue #1)

n Standby power in microwave ovens represents a significant percentage of annual

energy consumption.

n Industry-supplied data suggests that there is a wide range of standby power use

among units currently on the market.

n Addition of a standby power test to the existing test procedure would be necessary

for standby power to be included in an efficiency standard.

n DOE has conducted a test program to analyze standby power performance in

representative microwave ovens, and determined that standby power consumption is

largely driven by display type and the presence or lack of a cooking sensor.

DOE invites comment on including standby power in a microwave oven

efficiency standard. Specifically, DOE seeks input on analyzing standby

power characteristics and stakeholder feedback on a test procedure

change.

39

EE-2006-STD-0127 COMMENT 23.4
#23.4

ng Analysis

Commercial Clothes Washers : Incremental Efficiency

Levels

Efficiency

Level

Efficiency Level Source

I

W1

Baseline Current Federal Standard 1.26

7

9.5

1 CEE Tier 1 (2004) 1.42 9.5

2 CEE Tier 2 (2004) 1.60 8.5

3 Energy Star (2007) 1.72 8.0

4 CEE Tier 3A (2004) 1.80 7.5

5 Gap Fill 2.00 5.5

6 Maximum Available 2.20 5.1

40

EE-2006-STD-0127 COMMENT 23.4
#23.4

Commercial Clothes Washers: Cost -Efficiency Relationship

n AHAM provided incremental manufacturing cost data for two efficiency

levels: 1.42 MEF/9.5 WF and 2 .00 MEF/5.5 WF.

n Insufficient data were available to report costs at other efficiency levels.

n A review of the previous residential clothes washer rulemaking uncovered

key issues that preclude the use of that cost and energy consumption data

in the current rulemaking.

n Manufacturer interviews indicated:

• A platform change from vertical-axis to horizontal-axis would be necessitated

somewhere between the two reported efficiency levels.

• There would be a "step change" in cost associated with this platform change.

• Implementing different efficiencies for models within a horizontal-axis platform consists

primarily of different controller programs, which would not have inherently different

manufacturing cost.

41

EE-2006-STD-0127 COMMENT 23.4
#23.4

Commercial Clothes Washers : Horizontal-Axis Designs

(Issue #3)

n Available information suggests that commercial clothes washers with an efficiency

of 1.6 MEF/8.5 WF and higher will be horizontal-axis technology.

n DOE believes that incremental costs between 1.6 MEF/8.5 WF and 2.2 MEF/5.1

MEF will be constant at the same level as the AHAM cost data submittal for 2.0

MEF/5.5 WF ($316.35)

DOE invites comments and seeks information on:

• The validity of a constant incremental manufacturing cost at efficiency levels of 9.60

MEF/8.5 WF and higher

• Lower-cost alternatives to horizontal-axis designs for efficiency levels greater than 1.42

MEF/9.5 WF and 2.0 MEF/5.5 WF

• Potential adjustments to the energy and water consumption at the 2.0 MEF/5.5 WF

efficiency level to allow for manufacturer cost differentiation above and below this level

• Methods to weigh the impacts of a potential market shift from vertical- to horizontal-axis

technologies

42

EE-2006-STD-0127 COMMENT 23.4
Other Issues

The Department seeks comments and recommendations from

stakeholders on any other aspects related to the Market and

Technology Assessment, Screening Analysis, and Engineering

Analysis.

#23.4

43

EE-2006-STD-0127 COMMENT 23.4
#23.4

Energy Conservation Standards for

Residential Dishwashers , Dehumidifiers , and Cooking Products

and Commercial Clothes Washers

ANOPR Public Meeting

Preliminary Manufacturer Impact Analysis

Building Technologies Program

Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy

December 13, 2007

EE-2006-STD-0127 COMMENT 23.4
ANOPR Preliminary MIA Overview

n DOE conducted telephone interviews with manufacturers of:

• Dishwashers

• Dehumidifiers

• Commercial clothes washers

n Topics included:

• Key Issues (as defined by manufacturer)

• Current market conditions (shipments, market share, product mix, profitability)

• Manufacturer sub-group analysis

• Product utility and innovation (performance vs. efficiency, design options)

• Potential impacts of energy efficiency standards (esp. conversion costs)

• Cumulative regulatory burdens (state, federal, international)

n In concurrence with multiple stakeholders, DOE did not interview

manufacturers for cooking appliances as part of the ANOPR phase.

#23.4

45

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dishwasher MIA

Ianufacturer Impact Analysis

n DOE interviewed manufacturers representing about 80 % of the US

dishwasher market.

n Focus topics:

Key

Issues

Current Manufacturer Product

Market Sub-Group Utility and

Conditions ,/Analysis Innovation

Cumulative

Regulatory

Burden

46

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dishwasher Key Issues

n The potential elimination of entry-level dishwashers from the market due

to high cost. The resultant reduced dishwasher market saturation would

increase energy and water consumption since hand-washing is less

efficient than machine washing.

n A possible reduction in dishwasher performance

n The increased likelihood of consumers hand washing and pre-rinsing

dishes

n The potential relocation of production facilities overseas.

47

EE-2006-STD-0127 COMMENT 23.4
#23.4

Issue: Potential Elimination of Entry -Level Dishwashers

n Multiple manufacturers stated that:

• The sub-$300 category represents about 30 percent of industry unit shipments.

• Manufacturers have great difficulty producing inexpensive dishwashers that can wash

dishes well while meeting high energy efficiency standards.

• Higher unit prices would reduce market saturation and increase energy and water

consumption as builders, first time buyers, and other entry-level purchasers opt out.

n As unit prices increase, price sensitive consumers might:

• Repair rather than replace malfunctioning units, retaining lower-efficiency installed

stock; or

• Avoid buying a dishwasher altogether; or

• Wash dishes by hand, using more water and energy than if they used a dishwasher.

48

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dishwasher Industry Profitability

n Multiple manufacturers noted fierce price competition and an inability to

pass on cost increases without sacrificing market share.

n Multiple retail chains demand Energy Star-compliant units.

• In 2005, 82% of unit shipments met Energy Star (0.58EF)

• In 2007, Energy Star was raised to 0.65EF

n As efficiency levels rise, the ability of manufacturers to differentiate their

dishwashers diminishes, increasing costs and reducing profitability.

n The cost of meeting higher standards also depends on the inherent energy

efficiency of a dishwasher platform - some manufacturers have less

efficient and/or older platforms than others, leading to uneven standards

costs.

49

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dishwasher Conversion Costs and Employment Trends

n Manufacturers use a limited set of platforms as a basis for all their

dishwashers.

n Most dishwashers sold in the US are produced domestically.

n AHAM-supplied capital conversion expenditures ranged from $ 17-98MM,

depending on the efficiency level.

n Major manufacturers noted individual factory conversion costs of $50-

100MM.

n Significant stranded assets could occur at higher standards levels, which

could encourage manufacturers to:

• Relocate abroad rather than renew or replace domestic production capacity;

• Reduce product platforms and scope;

• Consolidate manufacturing facilities;

• Merge with other manufacturers; or

• Cease production and source from others; 50

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dishwasher Cumulative Burden

n Energy standards compliance consumes significant manufacturer

resources and can detract from product innovation.

n Multiple manufacturers expressed concern about wash performance as a

result of phosphate phase-outs being considered in various

municipalities.

51

EE-2006-STD-0127 COMMENT 23.4
Dehumidifier MIA

n DOE interviewed manufacturers representing about 66% of the US unit

shipments.

n Focus topics:

Manufacturer f Product

Sub-Group Utility and

Analysis Innovation

#23.4

52

EE-2006-STD-0127 COMMENT 23.4
Dehumidifier Key Issues

n Ability to pass manufacturing cost increases on to consumers

n Increased pressure from foreign competition

n Ability to maintain Energy Star-qualified product offerings

#23.4

53

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dehumidifier Product Mix

n Product platforms are used extensively to:

• Minimize fixed investments, since product lifecycles are three years or less.

• Maximize range of product capacities offered.

n Tradeoffs include:

• Units are cost-optimized for the highest shipping volumes.

• The design and components used may not be optimal for every other SKU sharing the

same product platform.

n Manufacturers prefer to differentiate their products via Energy Star.

• However, if Energy Star compliance requires a new product platform, many

manufacturers lack the scale to develop one.

n There is a continuing trend to outsource.

' The scope ranges from simple rebranding to designing custom external enclosures.

However, the underlying platform stays largely the same.

54

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dehumidifier Industry Profitability

n Multiple manufacturers noted:

• Fierce price competition and an inability to pass on cost increases without sacrificing

market share unless the whole industry raises prices.

• Unit redesigns to meet new energy efficiency standards could require larger

enclosures, raising shipping costs.

• Higher unit costs would decrease demand, since most dehumidifier purchases are

discretionary.

• Conversion costs to meet higher standards depend in large part on inherent platform

efficiency and the number of different platforms a manufacturer produces.

n All manufacturers agreed with the aggregated industry conversion costs

submitted by AHAM.

55

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dehumidifier Conversion Costs and Employment Trends

n AHAM-supplied capital conversion expenditures ranged from $300K-

$ 18MM , depending on the efficiency level and product class.

n Most dehumidifiers are produced abroad.

• There is a large private-labeling industry.

n The remaining US manufacturing facilities are likely to continue

manufacturing domestically as long as amended energy efficiency

requirements result only in incremental unit/factory redesigns.

n All manufacturers interviewed did not expect any further industry

consolidation as a result of energy efficiency standards.

56

EE-2006-STD-0127 COMMENT 23.4
#23.4

Dehumidifier Product Innovation and Cumulative Burden

n Multiple manufacturers noted:

• Innovation typically occurs only in high-end models.

• Innovation is thus less likely to be affected by standards.

• However, most customers care primarily about price, performance and size.

n All manufacturers worry about the mandated conversion away from R-22

to other refrigerants.

• Some dehumidifier manufacturers already use R-134a in their products.

n Final refrigerant choice will likely be driven by compressor manufacturers.

• The replacement refrigerant will depend on the scope of compatible compressors made

available to dehumidifier manufacturers.

57

EE-2006-STD-0127 COMMENT 23.4