Memo: Changes to the LCC Analysis for Distribution Transformers

Prepared by: LBNL staff

For: DOE/ERAC Distribution Transformer Rulemaking Negotiating Sub-committees

Date: Nov. 6, 2011 

This memo summarizes LBNL responses to issues that have been raised by the subcommittees 

regarding the life-cycle cost (LCC) analysis. In some cases, issues have been dealt with by 

making changes to the LCC calculation. In other cases, after further consideration it was 

determined that no changes to the LCC were necessary. 

All the LCC results provided for the Nov. 8-9 meetings incorporate the changes described here. 

For most design lines, the LCC results are based on the engineering data that were distributed in 

August 2011. Design lines 6, 7, 8 (LVDT), 11 and 12 (MVDT) use updated engineering data. 

This memo does not discuss modifications to the engineering analysis. 

Liquid-Immersed Distribution Transformers

1. Loading levels for rural utilities: In the previous analysis, rural utilities were treated as a

subgroup in the LCC. Committee members have noted that in rural areas the number of 

customers per transformer is likely to be significantly lower than in urban or suburban 

areas, which in turn results in lower RMS loads. To account for this effect, LBNL 

performed an analysis to determine an average population density in the territory served 

by each of the utilities represented in the LCC simulation. For each utility, EIA Form 861 

data were used to generate a list of counties served by the utility. Census data were used 

to determine the average housing unit density in each county. An average over counties 

was then used to assign the utility to a low density, average density or high density 

category, with the cutoff for low density set at 30 households per square mile. In the 

current LCC, for those utilities serving primarily low density areas the median of the 

RMS load distribution is reduced from 35% to 25%. These modifications to the LCC also 

allow the RMS load to be adjusted upward for high population density areas, should that 

be necessary. With these changes, lower loading for rural utilities is represented directly 

in the LCC, so that the sub-group analysis is no longer necessary. 

2. Potential impact of electric vehicles: It has been suggested that a rapid increase in the 

number of plug-in electric vehicles will result in significant growth in loads on utility 

distribution transformers. The Department refers to the Energy Information Agency’s 

Annual Energy Outlook (AEO) for forecasts of electricity load growth, capacity changes, 

price trends etc. While the AEO forecasts substantial growth in the use of electricity as a 

light-duty vehicle fuel, it remains an extremely small fraction (less than 1%) of 

residential electricity use.

3. Hourly load data: A number of utilities, and EEI, have submitted hourly load data or 

other data on average transformer loads. Data on absolute load levels will be used to 

validate and correct the distribution of RMS loads used in the LCC. The hourly load 
shape information will be used to validate and correct the load distribution functions and 

the system load-transformer load joint distribution functions used in the LCC. In order to 

make these adjustments, the data need to be processed into a consistent format, and then 

run through a number of statistical processing steps. This analysis is not yet complete.

4. Utility pole change-outs: In general, as transformers are redesigned to reach higher 

efficiency, the weight and size also increase. The degree of weight increase depends on 

how the design is modified to improve efficiency. For pole-mounted transformers, 

represented by design line (DL) 2, the increased weight may lead to situations where the 

pole needs to be replaced to support the additional weight of the transformer. This in turn 

leads to an increase in the installation cost. To account for this effect in the analysis, three 

steps are needed:

a. The first step is to determine whether the pole needs to be changed. This depends 

on the weight of the transformer in the base case compared to the weight of the 

transformer under a proposed efficiency level, and on assumptions about the loadbearing capacity of the pole. In the LCC calculation, it is assumed that a pole 

change-out will only be necessary if the weight increase is larger than 15% of the 

weight of the baseline unit. The number of pole change-outs is also capped at 

25% of the total population. Utility poles are primarily made of wood. Both ANSI 

and NESC provide guidelines on how to estimate the strength of a pole based on 

the tree species, pole circumference and other factors. Pole species, circumference 

and height define a pole class. Natural variability in wood growth leads to a high 

degree of variability in strength values across a given class. Thus, NESC also 

provides guidelines on reliability, which result in an acceptable probability that a 

given pole will exceed the minimal required design strength. As poles are sized to 

cope with large wind stresses and potential accumulation of snow and ice, this 

results in “over-sizing” of the pole relative to the load by a factor of 2-4. Hence, 

the 15% limit assumed in the LCC calculation is likely to be conservative.

b. The second step is to determine the cost of a pole change-out. Specific examples 

of pole change-out costs were submitted by the sub-committee. These examples 

were consistent with data taken from the RSMeans Building Construction Cost 

database. Based on this information, a triangular distribution was used to estimate 

pole change-out costs, with a lower limit at $2025 and an upper limit at $5999. 

Utility poles have a finite life-time, so that pole change-out due to increased 

transformer weight should be counted as an early replacement of the pole, i.e. it is 

not correct to attribute the full cost of pole replacement to the transformer 

purchase. Equivalently, if a pole is changed-out when a transformer is replaced, it 

will have a longer lifetime relative to the pole it replaces, which offsets some of

the cost of the pole installation. To account for this affect, pole installation costs 

are multiplied by a factor n/pole-lifetime, which approximately represents the 

value of the additional years of life. The parameter n is chosen from a flat 

distribution between 1 and the pole-lifetime. For this calculation the pole lifetime 

is assumed to be 30 years. As the LCC represents the costs associated with 

purchase of a single transformer, to account for multiple transformers mounted on 

a single pole, the pole cost should also be divided by a factor representing the 
average number of transformers per pole. No data is currently available on the 

fraction of poles that have more than one transformer, so this factor is not 

included. 

c. The increased installation cost that arises due to pole replacement needs to be 

scaled from the representative unit to the full set of capacities covered by DL2. 

Since the pole strength is determined by the weight of the base case unit, and the 

weight of the base case unit increases as the capacity increases, higher capacity 

transformers will be installed on stronger poles. All the installation costs in the 

LCC are scaled with weight according to the 0.75 scaling law. Based on a review 

of RSMeans data, using this law to also scale the pole installation costs should 

adequately reflect the increase in installation cost with pole strength.

5. Vault Installed Transformers: In general, as transformers are redesigned to reach higher 

efficiency, the weight and volume also increase. The degree of volume increase depends 

on how the design is modified to improve efficiency. For vault installed transformers, 

represented by DL 4 and 5, the increased volume may lead to situations where a more 

expensive transformer would be purchased to fit into the existing vault without having 

physically modifying the vault. 

a. To determine whether a more expensive unit must purchased. This depends on the 

volume of the transformer in the base case compared to the volume of the 

transformer under a proposed efficiency level. If the LCC determines that a 

transformer is to be installed in a vault, it will select the lowest cost transformer 

design meeting the required efficiency that is of equal or lesser volume then the 

selected transformer in the basecase. 

b. In the LCC calculation, it is assumed that utilities serving dense urban populations 

are the main purchasers of vault transformers .Using the population density 

measure described in item 1 of this memo, a likely purchaser of a vault 

transformer is a utility serving a population density greater than 500 household 

per square mile. In the LCC calculation it is assumed that 50% of transformers 

purchased by these utilities will be vault installations.

It should be noted that the impacts of vault modification are not yet modeled in the LCC 

spreadsheet, and continued be analyzed in the Life-cycle Cost Subgroups Analysis (draft 

TSD chapter 11).

All Equipment Classes

6. Removal of ZDMH from the base case: The subcommittee has noted that in the current 

market no transformers using ZDMH as a core material are sold in the US market. Hence, 

designs using this material are screened out of the analysis for the base case only. For 

higher efficiency levels, the LCC still includes ZDMH designs. The question of how the 

market will evolve under a higher efficiency standard is still open, and as yet we do not 

have a solid basis for screening any material entirely out of the LCC. Quantitative 

analysis of the demand for specific materials, potential availability of materials, and the 
impact this may have on the market prices is performed downstream of the LCC in the 

National Impacts Analysis (NIA) and the Manufacturer Impact Analysis (MIA).

7. Market share of high-efficiency units in the base case: Sub-committee members have 

provided data on market share as a function of efficiency. For some design lines, the 

lower boundary of the price-efficiency curve is quite flat, so that the choice algorithm in 

the LCC showed units being selected in the base case with efficiencies substantially 

higher than the current DOE minimum standard. The LCC has been modified so that the 

fraction of units selected in the base case at different efficiency levels is consistent with 

the market share data that have been provided. 

8. Reduction of RMS load levels: The median value of the RMS load distribution for some 

design lines has been reduced as per committee recommendations.