CHAPTER 11. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION ............................................................................................................ 11-1 11.2 NATIONAL ENERGY SAVINGS .................................................................................. 11-2 11.2.1 NES Definition................................................................................................... 11-2 11.2.2 NES Inputs......................................................................................................... 11-3 11.2.2.1 Annual Unit Energy Consumption .................................................... 11-3 11.2.2.2 Shipments .......................................................................................... 11-6 11.2.2.3 Equipment Stock ............................................................................... 11-6 11.2.2.4 National Annual Energy Consumption ............................................. 11-6 11.2.2.5 Site-to-Source Conversion Factor ..................................................... 11-6 11.3 NET PRESENT VALUE.................................................................................................. 11-7 11.3.1 Net Present Value Definition.............................................................................11-7 11.3.2 NPV Inputs......................................................................................................... 11-8 11.3.2.1 Total Annual Installed Cost............................................................... 11-8 11.3.2.2 Total Annual Operating Cost Savings............................................... 11-9 11.3.2.3 Discount Factor ............................................................................... 11-10 11.3.2.4 Present Value of Costs .................................................................... 11-11 11.3.2.5 Present Value of Savings................................................................. 11-11 11.4 NES AND NPV RESULTS............................................................................................ 11-11 11.4.1 NES and NPV Input Summary ........................................................................ 11-11 11.4.2 National Energy Savings Results.....................................................................11-12 11.4.3 Annual Costs and Savings ...............................................................................11-13 11.4.4 NPV Results..................................................................................................... 11-14 REFERENCES ..................................................................................................................... ... 11-16

LIST OF TABLES

Table 11.2.1 Average Annual UEC by TSL (kWh/Year) ....................................................... 11-4

Table 11.2.2 Shipment-Weighted Average Annual UEC by TSL (kWh/year) ...................... 11-6

Table 11.2.3 Marginal Site-to-Source Conversion Factors ..................................................... 11-7

Table 11.3.1 Average TIC per Unit by TSL (2008$).............................................................. 11-8

Table 11.3.2 Shipment-Weighted Average TIC per Unit by TSL (2008$) ............................ 11-9

Table 11.3.3 Average Annual Repair Cost per Unit (2008$) ............................................... 11-10

Table 11.4.1 NES and NPV Inputs ....................................................................................... 11-12

Table 11.4.2 Cumulative NES for BVMs (2012-2042) (Quads) .......................................... 11-12

11-i11-ii Table 11.4.3 Cumulative NPV Results Based on a 7-Percent Discount Rate (Billion 2008$)* ............................................................................................... 11-15

Table 11.4.4 Cumulative NPV Results based on a 3-Percent Discount Rate (Billion 2008$)* ............................................................................................... 11-15

LIST OF FIGURES
Figure 11.4.1 National Annual Costs and Savings for B-L-IO Equipment category, TSL 4........................................................................................................................ 11-14CHAPTER 11. NATIONAL IMPACT ANALYSIS

11.1 INTRODUCTION
This chapter describes the me thod for estimating the magnitude and net present value to consumers of future national energy savings (NES) from possible trial standard levels (TSLs) for beverage vending machine (BVM) equipment. Re sults described in this chapter include (1) national energy consumption and savings, (2) monetary value of energy savings to the nation resulting from new energy conservation standard s, (3) increased total installed costs (and associated repair and maintenance costs) to the nation because of new energy conservation standards, and (4) the net pres ent value (NPV) of savings ( i.e. , the difference between monetary value of savings and in creased total costs).
The U.S. Department of Energy (DOE) has determined both the NPV and NES for all of the TSLs considered for the two equipment clas ses of BVM equipment examined. Up to seven TSLs above the baseline leve l are being considered fo r each equipment class.
DOE performed all calculations using a Microsoft Excel spreadsheet (the NES spreadsheet), which is accessible on the Internet at http://www1.eere.energy.gov/build ings/appliance_standards/comm ercial/beverage_machines.ht ml . Details and instructions for using the spreadsheet are disc ussed in appendix G; a more detailed set of results is available in appe ndix H. The calculations were performed for two equipment classes (A and B) and three size categories, as descri bed in chapter 10. The important features of national energy consum ption of BVM equipment include:

1. shipments of each equipment category 2. existing stock of each equipment category 3. national average electricity consumption for each equipment category 4. site-to-source conversion factor to translate electricity consumpti on at the site of use into the amount of electricity that must be generated at the power plant (source) and then transmitted to the site where it is consumed.

Chapter 10 provides a detailed description of the shipments analysis model that DOE used to forecast future purchases of BVM equipment.
Voluntary energy efficiency programs may increase the share of energy-efficient equipment prior to the implementation date of any new energy conservation standards. At the ANOPR stage, DOE received information from i ndustry stakeholders identifying and partially quantifying the likely impact of the ENERGY STAR Tier 1 and Tier 2 standards on the national mix of BVM equipment efficiencies. Consequentl y, DOE explicitly incorporated the impact of this market-based voluntary energy efficiency pr ogram into the shipment forecasts by efficiency level.

11-111.2 NATIONAL ENERGY SAVINGS

11.2.1 NES Definition

DOE calculated annual NES as the differen ce between two scenarios: a base case (without new standards) and a standards case (w ith new standards). Positive values of NES correspond to NES ( i.e. , annual national energy consumption [A EC] with standards is less than annual national energy consumption in the base case; see equation 11.1).

NES t =AEC base - AEC standard Eq. 11.1

The variables are defined as:

NES t National energy savings in year t.

AEC base Total annual energy consumption, base case.

AEC standard Total annual energy consumption under the standard.

Cumulative NES (NES cum ) is the sum over a defined time period (t) from the implementation of a standard (assumed to be in 2012) forward 30 years to 2042 (from 2012 to 2042) of the annual NES (see equation 11.2).

NES cum = ∑ t NES t Eq. 11.2

The variables are defined as:

NES cum Cumulative national energy savings.
DOE calculated the AEC by multiplying the number or stock of units of BVM equipment (by vintage v and equipment category E ) by the unit energy consump tion (also by vintage) as shown by equation 11.3 and 11.4.

AEC E

= (STOCK VE x UEC VE ) x src_conv t Eq. 11.3

AEC = ∑ E AEC E Eq. 11.4

For equations 10.3 and 10.4, DOE defi ned the following variables:

AEC E

Annual national energy consumption each year in quadrillion Btus (quads) in equipment category E , summed over vintages V of BVM equipment stock STOCK VE

.
AEC Annual national energy consumption each year in quadrillion Btus (quads), summed over equipment categories of BVM equipment stock

NES Annual NES (quads).

11-2STOCK VE Stock of BVM equipment (millions of units) of vintage V and equipment category E surviving in the year t for wh ich DOE calculated annual energy consumption.
Vintages range from 1 year to approximately 15 years, a function of an assumed 10-year average lifetime of the BVM equipment.

UEC VE Annual unit energy consump tion per BVM unit (kWh/year)

src_conv t Time-dependent conversion factor to convert from site energy (kWh) to source energy (quads) (Btu/kWh)

V Year in which the BVM equipment was purchased as a new unit.

E

Equipment category.

t Year in the forecast ( e.g. , 2012 to 2042).
The stock of BVM equipment is dependent on annual shipments and the lifetime of the equipment. DOE believes that the shipment project ions under the standards cases could be lower than those in the base-case projection because the higher installed costs would cause some customers to forego new equipment purchases. However, based on available information, DOE did not include this effect in its analysis. For this advance notice of proposed rulemaking (ANOPR) analysis, the total shipments projectio ns are the same in both the base case and standards cases.

11.2.2 NES Inputs
The inputs for the determ ination of NES are listed below:

 Annual unit energy consump tion (kWh/year; section 11.2.2.1 )

 Shipments (section 11.2.2.2 )

 Equipment stock (section 11.2.2.3 )

 National annual energy consumption (section 11.2.2.4 )

 Site-to-source convers ion factor (section 11.2.2.5 ).

11.2.2.1 Annual Unit Energy Consumption
The annual unit energy consumption (UEC) is the site energy consum ed by a BVM unit per year. The annual UEC is directly related to the energy efficiency of the unit. Thus, knowing the energy efficiency of a BVM unit determines the corresponding annual UEC. As described below, DOE determined annual forecasted shipment-weighted av erage BVM equipment efficiencies that, in turn, enabled a determin ation of shipment-weighted annual UEC values.

Because no published data have been found on the market shares of the various equipment classes of BVM equipment by TS L, DOE sought industry input on the based shipment-weighted average efficiency trends fo r BVM equipment. Industry responses indicated

11-3that all shipments of new BVM equipment to major bottlers sin ce 2004 meet Energy Star Tier 1 standards (equal to Efficiency Le vel 1 or TSL 1). DOE interpreted these comments to mean that about 90 percent of the current market shipment s are at Efficiency Level 1, and the remainder was assumed to be at Efficiency Level 0. Moreov er, industry responses indicated that for major bottlers and distributors, all new equipment in 2012 and beyond would meet Energy Star Tier 2 standards (equal to TSL 2 for Equipment Class A and TSL 3 for Equipment Class B). This would be about 90 percent of the market. The re mainder was assumed to be at TSL 1. DOE extrapolated future trends of BVM equipment efficiency both for this base-case scenario ( i.e. , without new standards) and va rious standards-case scenarios ( i.e. , with new standards). The difference in equipment efficiency between the base case and standards cases was the basis for determining the reduction in annual UEC that could result from new standards.
To project changes in weighted average effi ciency levels at sta ndards above baseline Efficiency Level 1 (Energy Star Tier 1), DOE assumed that ma rket shares above the minimum permitted efficiency level would be reassigned to the new minimum level. a For example, if the TSL 4 were imposed as the new standard in 2012 on B-L-IO equipment category, then the market shares for TSLs 1-3 would be assigned to TSL 4, which would result in a total market share of 100 percent ( i.e. , 10 percent + 90 percent + 0 percen t) from the first three TSLs, beginning in 2012. The market shares for TSLs 5, 6 and 7 would not be affected, since the market already has a choice of equipment at TSL 5 and above also available. It was assumed that the standard would not affect th e relative attractiveness of equi pment with efficiencies higher than the standard.

As stated earlier, annual UEC values are tied di rectly to the efficiency of the equipment. Table 11.2.1 provides weighted-average annual energy consumption values for specific TSLs for all three sizes of bot h equipm ent classes.

Table 11.2.1 Average Annual UEC by TSL (kWh/Year)

Trial Standard Level Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN 2,267 2,099 1,916 1,785 1,679 1,610 1,438 A-M-IN 2,011 1,916 1,734 1,529 1,442 1,383 1,252 A-S-IN 1,924 1,734 1,551 1,442 1,361 1,307 1,186 B-L-IO 1,890 1,842 1,760 1,746 1,561 1,526 NA* B-M-IO 1,799 1,731 1,658 1,645 1,463 1,431 NA B-S-IO 1,606 1,505 1,505 1,495 1,313 1,285 NA *NA signifies that there is no TSL 7 for the B equipment class.

For the annual shipment-weighted TSLs specifi ed in the base case and standards cases, DOE assigned the appropriate annual UEC values shown in

a This “roll-up” scenario for the shipments is similar to what is used in the Manufacturer Impact Analysis (see chapter 12 of the Technical Support Document [TSD] for more details).

11-4Table 11.2.2 . For each equipment category, the value shown for a given TSL is the efficiencyweighted average annual UEC, after taking into account the n on-availability of products at efficiency levels below the TSL shown.

11-5Table 11.2.2 Shipment-Weighted Average Annual UEC by TSL (kWh/year)

Trial Standard Level Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN 2,267 2,099 1,916 1,785 1,679 1,610 1,438 A-M-IN 2,011 1,916 1,734 1,529 1,442 1,383 1,252 A-S-IN 0 0 0 0 0 0 0 B-L-IO 1,847 1,842 1,760 1,746 1,561 1,526 NA* B-M-IO 1,738 1,731 1,658 1,645 1,463 1,431 NA B-S-IO 0 0 0 0 0 0 0 *NA signifies that there is no TSL 7 for the B equipment class. There are no small units shipped in the scenario.

11.2.2.2 Shipments
DOE forecasted shipments for the b ase case an d all standards cases (see chapter 10 of the TSD).

11.2.2.3 Equipment Stock
The BVM stock in a given year is th e total units of BVM equipment shipped from earlier years that survive in the given year. The NES spreadsheet model keeps track of the total number of BVM units shipped each year. For purposes of the NES and NPV analyses, DOE assumes that retirements follow a Weibull distribution with a 10-year average lifetime. Retirements for any given vintage build quickly after about year 5 to about 22 percent per year by year 10, then decrease rapidly to less than 1 percent per year by year 14. Retired units are replaced, but only to the extent of 90,000 units per year and only unt il 2042. For units shipped in 2042, no units are assumed to remain at the end of 2057.

11.2.2.4 National Annual Energy Consumption
The national annual energy consumption is the product of the annual unit energy

consum ption and the number of BVM units of e ach category in each vintage. This approach accounts for differences in UEC from year to year. Equation 11.4 above was used for determining the national annual energy consumption of BVM equipment.
In determining national annual energy consum ption, DOE initially calculated the annual energy consumption at a site ( i.e. , electricity in kWh consumed by a BVM unit). DOE then calculated primary energy consumption from s ite energy consumption by applying a conversion factor to account for losses associated with the generation, transmission, and distribution of electricity.

11.2.2.5 Site-to-Source Conversion Factor

The site-to- source conversion f actor, which accounts for losse s in electricity generation, transmission, and distribution, is used to conve rt site energy consumption, expressed in kWh, into primary or source energy consumption, expr essed in quads. DOE used annual site-to-source conversion factors based on U.S. marginal values for the commercial sector, calculated as shown in appendix H. As shown in Table 11.2.3 , the marginal conversion factors vary over time

11-6because of projected changes in electricity gene ration sources ( i.e. , the power plant types projected to provide electric ity to the United States).

Table 11.2.3 Marginal Site-to-Source Conversion Factors

Year Site-to-Source Conversion Factor Btu/kWh Year Site-to-Source Conversion Factor Btu/kWh Year Site-to-Source Conversion Factor Btu/kWh 2012 9,775 2018 9,738 2024 10,137 2013 9,623 2019 9,922 2025 10,163 2014 9,458 2020 9,817 2026 10,046 2015 9,304 2021 9,787 2027 9,868 2016 9,282 2022 9,786 2028 9,686 2017 9,492 2023 10,051 2029 9,592 2030-2057 9,642 Source: Appendix L of the TSD

11.3 NET PRESENT VALUE

11.3.1 Net Present Value Definition
The net pres ent value (NPV) is the value in the present of a time series of costs and savings. The NPV is given by equation 11.5:

NPV = PVS – PVC Eq. 11.5 Where: PVS = present value of operating cost saving s (including electricity, repair, and maintenance costs) ($) PVC = present value of increased total installed costs (including equipment and installation) ($).

The PVS and PVC are determined using equations 11.6 and 11.7:

PVS 

### = ∑ 

### OCS t x 

### DF t Eq. 11.6

PVC 

### = ∑ 

### TIC t x 

### DF t Eq. 11.7 Where: OCS = total annual opera ting cost savings ($) TIC = total annual installed cost increases ($) DF = discount factor
t = year for which PVS and PVC are determined.

DOE determined the PVC for each year, from the effective date of the standard (2012) to the year 2057, discounted for the NOPR analysis, to the year 2009. The PVS was determined for each year, from the effective date of the standard (2012) to the year when the last units purchased in 2042 retire (assumed to be in 2057). DOE cal culated costs and savings as the difference between a standards case and a base case. DOE calculated a DF from the discount rate and the number of years between the “present” ( i.e. , 2009, the reference year to which the sum is being

11-7discounted) and the year in which the costs and savings occur. The NPV is the sum over time of the discounted net savings.

11.3.2 NPV Inputs
The inputs to the NPV calcu lation are listed below:

 Total Annual Installed Cost (section 11.3.2.1 )

 Total Annual Operating Cost Savings ( 11.3.2.2 )

 Discount Factor (section 11.3.2.3 )

 Present Value of Costs (section 11.3.2.4 )

 Present Value of Savings (section 11.3.2.5 ).

11.3.2.1 Total Annual Installed Cost

The increase in the total annual installed cost is equal to th e annual change in the per-unit TIC (difference between base cas e and standards case) multiplied by the shipments forecasted in both the base case and the standards case. TI C includes both the equipment cost and the installation price. DOE based average equipmen t costs on average manufacturer prices (see chapter 8, Life-Cycle Cost and Payback Period Analyses) multiplied by average overall markup values (chapter 8). DOE based average installation prices on nationally repr esentative values for each equipment class and size category (chapter 8). Table 11.3.1 shows the resulting average total inst alled costs per unit for each of the BVM equipment categories that TSL analyzed.

Table 11.3.1 Average TIC per Unit by TSL (2008$)

Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN $2,881 $2,923 $2,969 $3, 002 $3,035 $3,070 $4,415 A-M-IN $2,669 $2,679 $2,741 $2, 790 $2,823 $2,856 $3,977 A-S-IN $2,240 $2,287 $2,333 $2, 361 $2,388 $2,418 $3,428 B-L-IO $2,153 $2,155 $2,194 $2 ,207 $2,670 $3,941 NA* B-M-IO $2,085 $2,088 $2,127 $2 ,139 $2,603 $3,725 NA B-S-IO $1,888 $1,893 $1,893 $1 ,906 $2,369 $3,345 NA *NA signifies that there is no TSL 7 for the B equipment class.

As discussed earlier in section 11.2.2.1 , DOE developed base case and standards case energy-efficiency trends. DOE based its s tandards-case forecasts ( i.e. , forecasts of efficiency trends after standards take effect ) on the use of a roll-up efficien cy scenario and parallel growth trend. For both the base case and standards case energy-efficiency trends, DOE calculated annual shipment-weighted average efficiencies. Asso ciated with each a nnual shipment-weighted average efficiency value, DOE assigned a total installed cost, based on the relationship between efficiency and TIC. DOE based the relations hip between efficiency and TIC for each BVM equipment category on the data in Table 11.3.1 . As shown in Table 11.3.2 , DOE estimated the shipment-weighted installed co st. DOE determin ed forecasted average shipments-weighted TIC based on the annual shipments by TSL.

11-8Table 11.3.2 Shipment-Weighted Average TIC per Unit by TSL (2008$)

Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN $2,881 $2,923 $2,969 $3, 002 $3,035 $3,070 $4,415 A-M-IN $2,669 $2,679 $2,741 $2, 790 $2,823 $2,856 $3,977 A-S-IN 0 0 0 0 0 0 0 B-L-IO $2,153 $2,155 $2,194 $2,207 $2,670 $3,941 NA* B-M-IO $2,085 $2,088 $2,127 $2,139 $2,603 $3,725 NA B-S-IO 0 0 0 0 0 0 0 *NA signifies that there is no TSL 7 for the B equipment class. There are no small-size equipment shipped in the scenario.

11.3.2.2 Total Annual Operating Cost Savings
The annual operating cost saving s to the nation are equal to the change in the annual operating costs ( i.e. , diff erence between the base case and the standards case) per unit multiplied by the shipments forecasted in both the base cas e and the standards case. The annual operating cost includes electricity, re pair, and maintenance costs.
Annual Electricity Cost Savings . As described in chapter 8, DOE calculated annual electricity costs based on average state-level co mmercial electricity prices. To calculate annual energy cost savings for a particular equipment cat egory in a given year, DOE first calculated the annual energy costs in each forecast year at each TSL by multiplying the shipment-weighted average energy consumption at each TSL from

11-9Table 11.2.2 by the units of equipment stock in the equipment category in each year, and then multiply ing the energy consumption by the sales-weighted national average electricity prices for the four business types described in chapter 8. To determine energy savings, the national energy costs at TSL 1-7 (Equipment Class A) or TSL 1- 6 (Equipment Class B) were then subtracted from the national energy costs at the baseline level. Because projections of the stock of BVM equipment (expressed in units sh ipped) are the primary driver used to estimate future BVM equipment shipments, DOE calculated the national energy cost on a per-unit basis.
Annual Repair Costs . DOE based average annual repair costs on the value of the BVM equipment (see chapter 8). Table 11.3.3 shows the average per-unit repair costs for the equipment categories of BVM equipm ent. The NE S spreadsheet has the capability to allow repair costs to differ by the price of the BVM equipment and, therefore, by TSL. For the purposes of this NOPR analysis, DOE assumed th at the repair costs would increase for each equipment category as the manufacturer’s price increases, as shown in Table 11.3.3

.
Table 11.3.3 Average Annual Repair Cost per Unit (2008$)

Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN $123 $125 $127 $129 $130 $132 $193 A-M-IN $124 $125 $128 $131 $132 $134 $190 A-S-IN $124 $127 $130 $132 $133 $135 $195 B-L-IO $123 $125 $127 $128 $157 $236 NA* B-M-IO $124 $125 $128 $128 $158 $231 NA B-S-IO $124 $128 $128 $128 $162 $233 NA *NA signifies that there is no TSL 7 for the B equipment class.

Annual Maintenance Costs . DOE was unable to locate a ny data on annual preventive maintenance cost (see chapter 8, section 8.2.3.4), but annual maintenance is believed to be a relatively straightforward process. A weight ed average annual va lue of $164 per unit was assigned to all equipment because the maintenan ce procedures are the same for all sizes and TSLs of BVMs.

11.3.2.3 Discount Factor
DOE determined present value of mo netary valu es in future years using the DF, which is described by Eq. 11.8:



### DF = 1/(1+r) ( y - yp ) Eq. 11.8 Where:

r = discount rate
y = year of the monetary value
yp = year in which the present value is being determined.

DOE estimated national impacts with a 3- and 7-percent real discount rates as the average real rate of return on private in vestment in the U.S. economy. Th ese discount rates are used in accordance with the Office of Management and B udget’s (OMB) guidance to federal agencies on the development of regulatory analysis (OMB Circular A-4, September 17, 2003), and section E,

11-10“Identifying and Measuring Bene fits and Costs,” therein. DOE de fined the present year as 2009 for the NOPR analysis.

11.3.2.4 Present Value of Costs
The present value of increased installed costs is the annual installed cost increase in each year ( i.e. , the difference between the standard s case a nd base case), discounted to the present, and then summed for the time period over which DOE is considering the installation of BVM equipment ( i.e. , from the effective date of standards [2012] to 2042).

The increase in TIC refers to both equipment co st and installation cost associated with the higher energy efficiency of BVM units purchased in the standards case compared to the base case. DOE calculated annual installed costs as the difference in TIC for new equipment purchased each year, multiplied by the number of shipments in the standards case.

11.3.2.5 Present Value of Savings
The present value of operating cost savings is the annual operating cost savings ( i.e. , the difference between the base case and standard s case) discounted to 2009 and then summed over the per iod from the effective date (2012) to the time when the last unit installed in 2042 is retired from service (2057). Savings are decreases in op erating costs (including electricity, repair, and maintenance) associated with the higher ener gy efficiency of BVM units purchased in the standards case compared to the base case. Total annual operating co st savings equals the savings per unit multiplied by the number of units of each vintage surviving in a particular year. Equipment consumes energy over its entire lifeti me, and for units purchased in 2042, the present value of savings includes energy consumed until the unit is retired from service (2057).

11.4 NES AND NPV RESULTS
The NES spreadsheet model prov ides estimat es of the NES and NPV for various TSLs. The inputs to the NES spreadsheet are presented above in sections 11.2.2 (NES Inputs) and 11.3.2 (NPV Inputs).

11.4.1 NES and NPV Input Summary

Table 11.4.1 summarizes the inputs to the NES spr eadsheet model. For each input, a brief description of the da ta source is given.

11-11Table 11.4.1 NES and NPV Inputs

Input Data Description Shipments Annual shipments from shipments model (see chapter 10). Effective Date of Standard 2012 Base-Case Efficiencies Annual shipment-wei ghted efficiencies based on historical BVM weighted-efficiency values BVM shipment-weighted TSLs Standards case annual shipment-weighted market shares remain constant for base case and each TSL Annual UEC Annual weighted-average values are a function of TSL. (Established from the Engineering Analysis, chapter 5). TIC per Unit Annual weighted-average values are a function of TSL. (Established from the life-cycle cost analysis, chapter 8). Repair Cost per Unit Annual weighted-average values increase with manufacturer’s cost level. (Established from the life-cy cle cost analysis, chapter 8). Maintenance Cost per Unit Annual weighted-average value equals $164 by assumption. Escalation of Electricity Prices 2009 EIA Annual Energy Outlook forecasts (to 2030) and extrapolation for beyond 2030 (see the life-cycle cost analysis, chapter 8). Electricity Site-to-Source Conversi on Conversion varies yearly and is generated by DOE-EIA’s NEMS* program (a time series conversion factor; includes electric generation, transmission, and distribution losses). Discount Rate 3 and 7 percent real. Present Year Future costs are discounted to 2008. * Sources: Chapter 14 on the utility impact analysis and chapter 16 on the environm ental assessment provide more detail on NEMS.

11.4.2 National Energy Savings Results
This section provides NES results for each TS L considered for the equipm ent categories of BVMs analyzed. Results are cumulative to 204 2 and are shown as primary energy savings in quads. Inputs to the NES spreadsheet model ar e based on weighted-average values, yielding results that are discrete point values, rather than a distribution of values as in the life-cycle cost (LCC) analysis.

Table 11.4.2 shows the NES results for the TSLs analyzed for each equipment category of BVMs. DOE based all the results o n electricity price forecasts from the AEO2009 Reference Case. 1

Table 11.4.2 Cumulative NES for BVMs (2012-2042) (Quads)

Trial Standard Level Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN 0.001 0.006 0.012 0.017 0.020 0.022 0.028 A-M-IN 0.004 0.013 0.031 0.051 0.060 0.066 0.079 A-S-IN 0.000 0.000 0.000 0.000 0.000 0.000 0.000 B-L-IO 0.000 0.000 0.003 0.003 0.008 0.009 NA* B-M-IO 0.001 0.002 0.007 0.009 0.023 0.026 NA B-S-IO 0.000 0.000 0.000 0.000 0.000 0.000 NA *NA signifies that there is no TSL 7 for the B equipment class. There are no small units shipped in the scenario.

11-1211.4.3 Annual Costs and Savings
As a prelude to providi ng the NPVs for each TSL in each equipment category, this section presents the annual equipment cost (or TIC) increases and annual operating cost savings at the national level.
Figure 11.4.1 shows the changes over time of the non-discounted annual equipment price increases and the non-discounted op erating cost savings at the TS L 4 for B-L-IO equipm ent. The total net annual impact is the discounted va lue of the difference between annual equipment purchases and annual operating co sts at a 7-percent di scount rate. Appendix H shows comparable figures for other TSLs and other equipment categories. Each figure also shows the net annual impact, which is the difference between the sa vings and costs for each year. The annual equipment price change is the increase in equi pment price for equipment purchased each year during 2012–2042. The annual operating savings is th e savings in operating costs for equipment purchased, and that have not been retired, for each year over the time period 2012-2057. DOE determined the annual costs and savings presented in each figure based on the AEO2009 Reference Case. The NPV is the difference between the cumulative annual discounted savings and the cumulative annual discounted costs.

11-13Trial Standard Level TSL 4 Efficiency Level
Level 5

Net Savings

-0.0008 -0.0006 -0.0004 -0.0002 0.0000 0.0002 0.0004 0.0006 0.0008 0.0010

201 2 2016 2 020 2 024 2 0 2 8 203 2 203 6 204 0 2 044 2 048 2 052 205 6 206 0

YearBillion 2008$

Undiscounted Total Annual Operating Savings Undiscounted Annual Equipment Purchase Savings Discounted Total Net Annual Impact Figure 11.4.1 National Annual Costs and Savings for B-L-IO Equipment Category TSL 4

Figure 11.4.1 initially shows smaller annual opera ting cost savings compared to the increased eq uipment price costs (s hown on the figure as negative pu rchase savings). For all years through 2042, operating cost savings increase with time, as more equipment that meets the trial standard comprises the BVM stock.

11.4.4 NPV Results
The following section provides NPV results fo r the TSLs co nsidered for the equipment categories of BVMs. Results are cumulative and are shown as the discounted value of these savings in dollar terms. The inputs to the NES spreadsheet model are based on weighted-average values, yielding results that are disc rete point values rather than a distribution of values as in the LCC analysis. The present value of increased TICs is the TIC increase ( i.e. , the difference between the standards case and base case), disc ounted to 2009, and then summed over the time period in which DOE evaluates the impact of standards ( i.e. , from the effective date of standards [2012] to 2057).

11-14Savings are decreases in operati ng costs (including electricit y, repair, and maintenance) associated with the higher energy efficiency of BVMs purchased in the standards case compared to the base case. Total operating cost savings are the savings per unit multiplied by the number of units of each vintage ( i.e. , the year of manufacture) surviv ing in a particular year. BVMs consume energy and must be maintained over th eir entire lifetime. For units purchased in 2042, the operating cost includes energy consumed and maintenance and repair costs incurred until the last unit is retired from service in 2057.

Table 11.4.3 shows the NPV results for the TS Ls considered for BVMs based upon a 7 percent discount rate. DOE based all result s on electricity price forecasts from the AEO2009 Reference Case. Detailed results showing the breakdown of the NPV into national equipm ent costs and national operating cost s are provided in appendix H.

Table 11.4.3 Cumulative NPV Results Based on a 7-Pe rcent Discount Rate (Billion 2008$)*

Trial Standard Level Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN $0.001 $0.009 $0.018 $0.024 $0.028 $0.028 ($0.203) A-M-IN $0.007 $0.028 $0.044 $0.074 $0.080 $0.077 ($0.516) A-S-IN $0.000 $0.000 $0.000 $0. 000 $0.000 $0.000 $0.000 B-L-IO $0.001 $0.001 $0.000 ($0.001) ($0.062) ($0.268) NA* B-M-IO $0.002 $0.002 ($0.001) ($0.004) ($0.193) ($0.745) NA B-S-IO $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 NA *Values in parentheses indicate negative NPV. NA signifies that there is no TSL 7 for the B equipment class. There are no small-size equipment shipped in the scenario.

Table 11.4.4 provides the NPV results based on the 3- percent discount rate and electricity price forecasts from the AEO2009 Reference Case. As with the NPV results based upon a 7 percent discount rate, detailed results showing the breakdown of the NPV into national equipment costs and national operating costs ba sed upon a 3 percent discount rate are provided in appendix H.

Table 11.4.4 Cumulative NPV Results based on a 3- Percent Discount Ra te (Billion 2008$)*

Trial Standard Level Equipment

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 A-L-IN $0.003 $0.022 $0.043 $0.058 $0.067 $0.069 ($0.341) A-M-IN $0.017 $0.062 $0.106 $0.177 $0.195 $0.195 ($0.868) A-S-IN $0.000 $0.000 $0.000 $0. 000 $0.000 $0.000 $0.000 B-L-IO $0.001 $0.002 $0.003 $0.002 ($0.108) ($0.482) NA* B-M-IO $0.004 $0.005 $0.004 ($0.000) ($0.334) ($1.340) NA B-S-IO $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 NA * Values in parentheses indicate negative NPVs. NA signifies that there is no TSL 7 for the B equipment class. There are no small-size equipment shipped in the scenario.

11-1511-16 REFERENCES

1 Energy Information Administration (EIA). Annual Energy Outlook 2009. EIA, Washington, D.C., DOE/EIA-0554, Early Release.