1

- i CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT

................................ ................................ ................. 1

- 1

1.2 SUMMARY OF NATIONAL BENEFITS (ANNUALIZED )

................................ ........ 1

- 1

1.3 OVERVIEW OF STANDARD S FOR RESIDENTIAL RE FRIGERATORS,

REFRIGERATOR

- FREEZERS, AND FREEZE RS

................................ ....................... 1

- 3

1.4 PR OCESS FOR SETTING EN ERGY CONSERVATION ST ANDARDS

................... 1

- 4

1.5 STRUCTURE OF THE DOC UMENT

................................ ................................ ............ 1

- 7

LIST OF TABLES

Table 1.2.1 Annualized Benefits and Costs of Proposed Standards for Refrigeration

Products for 2014

- 2043 Period

................................ ................................ ............ 1

- 2

Table 1.4.1 Analyses Under the Process Rule

................................ ................................ ........ 1

- 61-1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT

This technical support document (TSD) is a stand

- alone report that provides the technical analyses and results supporting the development of the notice of proposed rulemaking (NOPR) of this rulemaking for residential refrigeration products

.

1.2 SUMMARY OF NATIONAL BENEFITS (ANNUALIZED)

The benefits and costs of today’s proposed standards can also be expressed in terms of

annualized values over the 30

- year analysis period (2014

– 2043). Estimates of annualized values are shown in Table 1.2.1 The annualized monetary values are the sum of (1) the annualized national economic value, expressed in 2009$, of the benefits from operating produc ts that meet the proposed standards (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase costs, which is another way of representing consumer NPV), and (2) the monetary value of the benefits of emiss ion reductions, including CO 2 emission

reductions. The value of the CO 2 reductions, otherwise known as the Social Cost of Carbon (SCC), is calculated using a range of values per metric ton of CO2 developed by a recent interagency process. The monetary cos ts and benefits of cumulative emissions reductions are reported in 2009$ to permit comparisons with the other costs and benefits in the same dollar units. The derivation of the SCC values is discussed in chapter 15 of this TSD.

Although combining the va lues of operating savings and CO 2 reductions provides a useful perspective, two issues should be considered. First, the national operating savings are domestic U.S. consumer monetary savings that occur as a result of market transactions while the

value of CO 2 reductions is based on a global value. Second, the assessments of operating cost savings and CO 2 savings are performed with different methods that use quite different time frames for analysis. The national operating cost savings is measured for the li fetime of refrigeration products shipped in 2014

– 2043. The SCC values, on the other hand, reflect the present value of all future climate

- related impacts resulting from the emission of one ton of carbon dioxide in each year. These impacts go well beyond 21 00.1-2 Table 1.2.1 Annualized Benefits and Costs of Proposed Standards for Refrigeration

Products for 2014

- 2043 Period

Discount

Rate Primary

Estimate * Low Estimate * High Estimate *

Monetized (million 2009$/year)

Benefits

Operating Cost Savings 7% 2112 1852 2377

3% 2929 2520 3335

CO 2 Reduction at $4.7/t* * 5% 85 85 85

CO 2 Reduction at $21.4/t* * 3% 316 316 316

CO 2 Reduction at $35.1/t* * 2.5% 492 492 492

CO 2 Reduction at $64.9/t* * 3% 963 963 963

NO X Reduction at $ 2,519 /t ** 7% 7 7 7

3% 33 33 33

Total (Operating Cost Savings, CO 2 Reduction and

NO

x Reduction)† 7% plus CO 2
range 2204

- 3082 1944

- 2822 2469

- 3348

7% 2435 2175 2700

3% 3278 2869 3684

3% plus CO 2
range 3047

- 3925 2638

- 3516 3453

- 4331

Costs

Incremental Product Costs 7% 1841 1733 1950

3% 1849 1729 1969

Net Benefits/Costs

Total (Operating Cost Savings, CO 2 Reduction and

NO

x Reduction, minus Incremental Product Costs)† 7% plus CO 2
range 363

- 1241 211

- 1089 519

- 1397

7% 594 442 750

3% 1429 1140 1714

3% plus CO 2
range 1198

- 2076 909

- 1787 1483

- 2362

* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010

Reference case

, Low Economic Growth case , and Low Economic Growth case , respectively.

* * The CO 2 values represent global monetized values (in 2007$) of the social cost of CO 2 emissions in 2010 under
several scenarios. The values of $4.7 0 , $21.4 0 , and $35.1 0 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $64.9 0 per ton represents the 95 th percentile of the SCC distribution calculated using a 3% discount rate. The value for NO X (in 2009$) is the average of the low and high values used in DOE’s analysis. NO

x savings are in additio n to the regulatory emissions reductions modeled

in the Annual Energy Outlook forecast

.1-3 † Total Benefits for b oth the 3% and 7% cases are derived using the SCC value c alculated at a 3% discount rate,
which is $21.4 0 /ton in 2010 (in 2007$). In t he rows labeled as “7% plus CO 2 range” and “3% plus CO 2 range , ” the operating cost and NO X benefits are calculated using the labeled discount rate , and those values are add ed to the full range of CO 2 values with the $4.7 0 /ton value at the low end, and the $64.9 0 /t on value at the high end.

1.3 OVERVIEW OF STANDARD S FOR RESIDENTIAL REFRIGERATOR S

, REFRIGERATOR

- FREEZERS, AND FREEZE RS

The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94

- 163 (42 United States Code (U.S.C.) 6291

– 6309)

, established an energy con servation program for major household appliances. The National Energy Conservation Policy Act of 1978 (NECPA), Pub. L.

95

- 619, amended EPCA to add Part C a of Title III (42 U.S.C. 6311

– 6317), which established an energy conservation program for certain indu strial equipment. Additional amendments to EPCA give DOE the authority to regulate the energy efficiency of several products, including residential refrigerators, refrigerator

- freezers, and freezers

— the products that are the focus of

this document. The ame ndments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA), Pub. L. 100

- 12, established energy conservation standards for refrigerators, refrigerator

- freezers, and freezers, as well as requirements for determining whether these

stand ards should be amended. (42 U.S.C. 6295(b))

NAECA first established performance standards for residential refrigerators, refrigerator

freezers, and freezers

, and further required that DOE conduct two cycles of rulemakings to determine if more stringent s tandards are justified. b (42 U.S.C. 6295(b)) On November 17, 1989, DOE published a final rule in the Federal Register updating the performance standards; the new standards became effective on January 1, 1993. 54 FR 47916. Subsequent to this final rule, DOE determined that new standards for some of the product classes were based on incomplete data and incorrect analysis. As a result, DOE published a correction that amended the new standards for three product classes: (1) refrigerators and refrigerator

- freeze rs with manual defrost

, (2) refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer but without through

- the

door (TTD) ice service

, and (3) chest freezers and all other freezers. 55 FR 42845 (Oct. 24, 1990)

. DOE updated the performance standard s once again for refrigerators, refrigerator

freezers, and freezers by publishing a final rule in the Federal Register on April 28, 1997. 62 FR

23102. The new standards became effective on July 1, 2001. By completing a second standards rulemaking, DOE had fulfilled its legislative requirement to conduct two cycles of standards rulemakings.

Stakeholders submitted a petition in 2004 requesting that DOE conduct another rulemaking to amend the standards for residential refrigerator

- freezers. In April 2005, DO E granted the petition and conducted a limited set of analyses to assess the potential energy savings

a Part C has been redesignated Part A

- 1

b Definition of “refrigerators”, “refrigerator

- freezers”, and “freezers” is provided in chapter 3 of the TSD.1-4 and economic benefit of new standards. DOE issued a report in October 2005 detailing the analyses. 1 The analysis examined the technological and economic f easibility of new standards

set at Energy Star levels effective in 2005 for the two most popular product classes of refrigerators: top

- mount refrigerator

- freezers without TTD features and side

- mount refrigerator

freezers with TTD features. DOE confined its updated analysis to these two classes b ecause they

account ed for a majority of current product shipments. Depending on assumptions about the impact that standards would have on market efficiency, DOE estimated that amended standards

at the 2005 Energy Sta r levels would yield between 2.4 to 3.4 quads

, c with an associated economic impact to the Nation ranging from a burden or cost of $1.2 billion to a benefit or savings of $3.3 billion. d

DOE published draft data sheets containing energy

- savings potentials for refrigerator

freezers in October 2005 as part of its fiscal year 2006 schedule

- setting process. T hese data

sheets summarize d the following in table format : (1) the potential energy savings from regulatory action in cumulative quads from 2010 to 2035

, (2) the potential economic benefits or

burdens

, (3) the potential environmental or energy security benefits

, (4) the status of required changes to test procedures

, (5) other regulatory actions

, (6) recommendations by interested parties

, (7) evidence of ma rket

- driven or voluntary efficiency improvements

, (8) regulatory

issues

, and (9) the 2005 priority. The data sheets for refrigerators and refrigerator

- freezers were based on the October 2005 draft technical report analyzing potential new amended energy

con servation standards for residential refrigerator

- freezers described above. This report and the associated data sheets provided input to the setting of priorities for rulemakings activities. Other products were given a higher priority, and limited rulemakin g work on refrigerators and freezers was carried out in the following years prior to the enactment of the Energy Independence and Security Act of 2007 (EISA).

EISA, signed into law on December 19, 2007, requires that DOE publish a final rule no

later th an December 31, 2010

, to determine whether to amend the standards in effect for refrigerators, refrigerator

- freezers, and freezers manufactured on or after January 1, 2014. As a result, DOE embark ed on a standards rulemaking for these products to comply wi th the requirements of EISA

.

1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

Under EPCA, when DOE is studying new or amended standards, it must consider, to the greatest extent practicable, the following seven factors (42 U.S.C. 6295 (o)(2)(B)(i)):

1) the economic impact of the standard on the manufacturers and consumers of the affected products;

c A quad represents a quadrillion Btu (or 10 15 Btu).

d Economic impact based on a discount rate of 7 percent real.1-5 2) the savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost or maintenance expense;

3) the total projected amount of energy savings likely to result directly from the imposition of the standard;

4) any lessening of the utility or the performance of the products likely to result from the imposition of the standard;

5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6) the need for national energy conservation; and

7) other factors the Secretary considers relevant.

Other statutory requirements are set forth in 42 U.S.C. 6295 (o)(1)

– (2)(A), (2)(B)(ii)

– (iii), and (3)

– (4) and 42 U.S.C. 6316(e).

DOE considers stakeholder participation to be a very important part of the process for setting energy conservation standard s. Through formal public notifications (i.e., Federal Register notices) , DOE actively encourages the participation and interaction of all stakeholders during the comment period in each stage of the rulemaking. Beginning with the Framework Document and

duri ng subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.

B efore DOE determines whether or not to adopt a proposed energy conservation standard, it must first solicit comments on the proposed standard. (42 U.S.C. 6313(a)(6)(B)(i)) Any new or amended standard must be designed to achieve significant additional conservation of energy and be technologically feasible and economically justified. (42 U.S.C. 6313( a)(6)(A)) To determine whether economic justification exists, DOE must review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the seven factors listed above. (42 U.S.C. 6295 (o)(2)(B)(i))

After the publication of the framework document, the energy conservation standards rulemaking process involves three additional, formal public notices, which DOE publishes in the Federal Register. The first of the rulemaking notices is a NOPM, which is designed to publicly vet the models and tools used in the preliminary rulemaking and to facilitate public participation before the NOPR stage. The second notice is the NOPR, which presents a discussion of

c omments received in r esponse to the NOPM and the preliminary analyses and analytical tools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these impacts of amended energy

conservation s tandards; and the proposed energy conservation standards for each product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s weighting of these impacts; the amended energy1-6 conservation standards DOE is adopting for each product; and the effective dates of the amended energy conservation standards.

In September 2008, DOE published a notice of public meeting and availability of the framework document. 73 FR 54089 (Se ptember 18, 2008). The framework document, Rulemaking Framework for Residential Refrigerators, Refrigerator

- Freezers, and Freezers

, describes the procedural and analytical approaches DOE anticipated using to evaluate the establishment of amended energy conservation standards for these products. This document is

available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer _framework.pdf

.

Subsequently, DOE held a public meeting on September 29, 2008, to discuss proc edural and analytical approaches to the rulemaking. In addition, DOE used the public meeting to inform and facilitate involvement of interested parties in the rulemaking process. The analytical framework presented at the public meeting described the differ ent analyses, such as the engineering analysis and the consumer economic analyses (i.e., the life

- cycle cost (LCC) and payback period (PBB) analyses), the methods proposed for conducting them, and the relationships among the various analyses.

During the September 2008 public meeting, interested parties commented about numerous issues relating to each one of the analyses listed in Table 1. 4 .1. Comments from interested parties submitted during the framework document comment period elaborated on the

issues r aised during the public meeting. DOE attempted to address these issues during its preliminary analyses and summarized the comments and DOE’s responses in chapter 2 of the preliminary TSD.

Table 1.4.1 Analyses Under the Process Rule

Preliminary Analyses NOPR Final Rul e Market and technology assessment Revised preliminary analyses Revised analyses

Screening analysis Consumer sub

- group analysis

Engineering analysis Manufacturer impact analysis

Energy use analysis Utility impact analysis

Markups analysis Environmental assessment

Life

- cycle cost and payback period analysis Employment impact analysis

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer impact analysis1-7 As part of the information gathering and sharing process, DOE organized and held interviews with manufacturers of the residential refrigerators, refrigerator

- freezers, and freezers considered in this rulemaking as part of the engineering analysis. DOE selected companies that

represe nted production of all types of products, ranging from small to large manufacturers, and included the Association of Home Appliance Manufacturers (AHAM) member companies. DOE had four objectives for these interviews: (1) solicit manufacturer feedback on th e draft inputs to the engineering analysis; (2) solicit feedback on topics related to the preliminary manufacturer impact analysis; (3) provide an opportunity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster coope ration between manufacturers and DOE.

DOE incorporated the information gathered during the engineering interviews with manufacturers into its engineering analysis (Chapter 5) and the preliminary manufacturer impact analysis (Chapter 12). Following the publication of the preliminary analyses and the preliminary public meeting, DOE held additional meetings with manufacturers as part of the consultative process for the manufacturer impact analysis conducted during the NOPR phase of the rulemaking.

DOE developed spreadsheets for the engineering, LCC, PBP, and national impact analyses for each product. For each product, DOE developed an LCC spreadsheet that calculates the LCC and PBP at various energy efficiency levels. DOE also developed a national impac t analysis spreadsheet that calculates the national energy savings (NES) and national net present values (NPVs) at various energy efficiency levels. This spreadsheet includes a model that forecasts the impacts of amended energy conservation standards at va rious levels on product shipments. All of these spreadsheets are available on the DOE website for refrigerators and

freezers ( http://www1.eere.e nergy.gov/buildings/appliance_standards/residential/refrigerators_freezers.ht

ml ).

1.5 STRUCTURE OF THE DOC UMENT

This NOPR TSD outlines the analytical approaches used in this rulemaking. The TSD

consists of sixteen chapters and seventeen appendices.

Chapter 1 Introduction: provides an overview of the appliance standards pr ogram and how it applies to this rulemaking, and outlines the structure of the

document.

Chapter 2 Analytical Framework: describes the rulemaking process.

Chapter 3 Market and T echnology Assessment: characterizes the market for the considered products and the technologies available for increasing equipment efficiency.1-8 Chapter 4 Screening Analysis: identifies all the design options that improve efficiency of the considered produ cts, and determines which technology options are viable for consideration in the engineering analysis.

Chapter 5 Engineering Analysis: discusses the methods used for developing the relationship between increased manufacturer price and increased

efficienc y.

Chapter 6 Markups for Equipment Price Determination: discusses the methods used for establishing markups for converting manufacturer prices to customer equipment prices.

Chapter 7 Energy Use Analysis : discusses the pro cess used for generating energy

use estimates for the considered products as a function of efficiency

levels.

Chapter 8 Life

- Cycle Cost and Payback Period Analysis: discusses the effects of standards on individual customers and users of the equipment and compares the LCC and PBP of equipment with and without higher efficiency standards.

Chapter 9 Shipments Analysis: estimate s shipments of the refrigeration products

over the 30

- year analysis period (2014

- 2043), which i s used in performing the national impact analysis (NIA)

.

Chapter 10 National Impact Analysis: assesse s the national energy savings, and the national net present value of total consumer costs and savings, expected to result from specific, potential energy conservation standards for refrigeration products

.

Chapter 11 Consumer Subgroup Analysis: discusses the effects of standards on

different subgroups of consumers.

Chapter 12 Manufacturer Impact Analysis: discusses the effects of standards on the finances and profitability of product manufacturers.

Chapter 13 Emplo yment Impact Analysis: discusses the effects of standards on national employment.

Chapter 14 Utility Impact Analysis: discusses selected effects of standards on

electric and gas utilities.

Chapter 15 Environmental Assessment: discusses the effects of standards on emission of carbon dioxide, nitrogen oxides (NO

x ), and mercury.1-9 Chapter 16 Regulatory Impact Analysis: discusses the impact of non

- regulatory alternatives to efficiency standards.

Appendix 4

- A Investigation of VIP Supply

Appendix 5

- A Engineering Data

Appendix 5

- B ERA Model Development and WinERA User Manual

Appendix 7

- A Literature Survey of Energy Consumption by Residential Refrigerator

Freezers

Appendix 7

- B Data for Estimating Distribution of Refrigerator and Freezer Size in the RECS Sample

Appendix 8

- A User Instructions for LCC and PBP Spreadsheets

Appendix 8

- B Uncertainty and Variability

Appendix 8

- C Consumer Retail Prices for Baseline Residential Refrigerator

- Freezers

and Freezers

Appendix 8

- D Household Discount Rate Di stributions

Appendix 9

- A Relative Price Elasticity of Demand for Appliances

Appendix 10

- A User Instructions for Shipments and NIA Spreadsheets

Appendix 10

- B N ational Equipment and Operating Costs

Appendix 12

- A Manufacturer Impact Analysis Intervie w Guides

Appendix 12

- B Government Regulatory Impact Model Overview

Appendix 12

- C Federal Production Tax Credits

Appendix 15

- A Social Cost of Carbon

Appendix 16

- A RIA Supporting Materials1-10 REFERENCES

1 U.S. Department of Ener gy. Technical Report: Analysis of Amended Energy Conservation Standards for Residential Refrigerator

- Freezers . October 2005.

< http://www1.eere.energy.gov /buildings/appliance_standards/pdfs/refrigerator_report_1.pdf >i CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION

................................ ................................ ................................ ........... 2

- 1

2.2 BACKGROUND

................................ ................................ ................................ ............. 2

- 4

2.3 MARKET AND TECHNOLOGY ASSESSMEN T

................................ ........................ 2

- 5

2.3.1 Product Classes

................................ ................................ ................................ .... 2

- 5

2.3.2 Technology Assessment

................................ ................................ ....................... 2

- 6

2.4 SCREENING ANALYSIS

................................ ................................ .............................. 2

- 6

2.5 ENGINEERING ANALYSIS

................................ ................................ .......................... 2

- 7

2.6 MARKUPS TO DETERMINE PRODUCT PRICE

................................ ........................ 2

- 8

2.7 ENERGY USE ANALYSIS

................................ ................................ ............................ 2

- 8

2.8 LIFE

- CYCLE COST AND PAYBA CK PERIOD ANA LYSES

................................ .... 2

- 9

2.9 SHIPMENTS ANALYSIS

................................ ................................ ............................ 2

- 10

2.10 NATIONAL IMPACT ANAL YSIS

................................ ................................ .............. 2

- 10

2.10.1 National Energy Savings Analysis

................................ ................................ ..... 2

- 11

2.10.2 Net Present Value Analysis

................................ ................................ ............... 2

- 11

2.11 CONSUMER SUBGROUP AN ALYSIS

................................ ................................ ...... 2

- 12

2.12 MANUFACTURER IMPACT ANALYSIS

................................ ................................ .. 2

- 12

2.13 EMPLOYMENT IMPACT AN ALYSIS

................................ ................................ ....... 2

- 13

2.14 UTILITY IMPACT ANALY SIS

................................ ................................ ................... 2

- 13

2.15 ENVIRONMENTAL IMPACT ANALYSIS

................................ ................................ 2

- 14

2.15.1 Carbon Dioxide

................................ ................................ ................................ .. 2

- 14

2.15.2 S ulfur Dioxide

................................ ................................ ................................ .... 2

- 14

2.15.3 Nitrogen Oxides

................................ ................................ ................................ . 2

- 15

2.15.4 Mercury

................................ ................................ ................................ .............. 2

- 15

2.15.5 Particula te Matter

................................ ................................ ............................... 2

- 15

2.15.6 Monetization of Emissions Reductions

................................ ............................. 2

- 16

2.16 REGULATORY IMPACT AN ALYSIS

................................ ................................ ....... 2

- 17

LIST OF FIGURES

Figure 2.1.1 Flow Diagram of Analyses for the Energy Conservation Standards Rulemaking Analysis Process

................................ ................................ ........ 2

- 22

- 1 CHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

Section 6295(o)(2)(A) of 42 United States Code (U.S.C.) requires the U.S. Department of Energy (DOE) to set forth energy conservation standards that are technologically feasible and economically justified, and would achieve the maximum improvement in energy efficiency. This chapter provides a description of the general analytical framework that DOE uses in deve loping such standards. The analytical framework is a description of the methodology, the analytical tools, and relationships among the various analyses that are part of this rulemaking. For example, the methodology that addresses the statutory requirement for economic justification includes analyses of life

- cycle cost (LCC), economic impact on manufacturers and users, national benefits, impacts, if any, on utility companies, and impacts, if any, from lessening competition among manufacturers.

Figure 2.1

. 1 summarizes the stages and analytical components of the rulemaking process. The focus of this figure is the center column, which lists the a nalyses that DOE conducts . The figure show s how the analyses fit into the rulemaking process, and how the y relate to each other. Key inputs are the types of data and information that the analyses require. Some key inputs exist in public databases; DOE collects other inputs from stakeholders or pers ons with special knowledge. Key outputs are analytical results that feed directly into the standards

- setting process. Arrows connecting analyses show types of information that feed from one analysis to

another.2

- 2 Figure 2.1

. 1 Flow Diagram of Analyses for the Energy Conservation Standards Rulemaking Analysis Process2

- 3 The analyses performed prior to the notice of proposed rulemaking (NOPR) stage as part of the preliminary analyses and described in the prelimina ry technical support document (TSD) are listed below. These analyses were revised for the NOPR based in part on comments received, and are reported in this NOPR TSD. The analyses will be revised once again for the final rule based on any new comments or da ta received in response to the NOPR.

**•** A market and technology assessment to characterize the relevant product markets and existing technology options, including prototype designs.

**•** A screening analysis to review each technology option and determine if it i s technologically feasible; is practical to manufacture, install, and service; would adversely affect product utility or product availability; or would have adverse impacts on health and safety.

**•** An engineering analysis to develop cost

- efficiency relations hips that show the

manufacturer ’s cost of achieving increased efficiency.

**•** An energy use analysis to determine the annual energy use in the field of the considered products as a function of efficiency level

.

**•** An LCC and payback period (PBP) analys i s to ca lculate, at the consumer level, the relationship between savings in operating costs compared to any increase in the installed cost for products at higher efficiency levels

.

**•** A shipments analysis to forecast product shipments, which then are used to calculate the national impacts of standards and future manufacturer cash flows.

**•** A national impact analysis (NIA) to assess the impacts at the national level of potential energy conservation standards for each of the considered products, as mea sured by the net present value (NPV) of total consumer economic impacts and the national energy savings (NES).

**•** A preliminary manufacturer impact analysis to assess the potential impacts of energy conservation standards on manufacturers, such as impacts on capital conversion expenditures, marketing costs, shipments, and research and development costs.

The additional analyses DOE performed for the NOPR stage of the rulemaking analysis include those listed below. DOE further revises the analyses for the fin al rule based on comments received in response to the NOPR.

**•** A consumer subgroup analysis to evaluate impacts of standards on particular consumer

sub

- populations, such as low

- income households.2

- 4 **•** A manufacturer impact analysis to estimate the financial impa ct of standards on manufacturers and to calculate impacts on competition, employment, and manufacturing capacity.

**•** An employment impact analysis to assess the indirect impacts of amended energy conservation standards on national employment.

**•** A utility impact analysis to estimate the effects of amended energy conservation

standards on installed electricity generation capacity and electricity generation

.

**•** An environmental impact analysis to provide estimates of the effects of amended energy

conservation s tandards on emissions of carbon dioxide (CO 2 ), nitrogen oxides (NOx), and mercury (Hg).

**•** A regulatory impact analysis to assess alternatives to amended energy conservation standards that could achieve substantially the same regulatory goal.

2.2 BACKGROUND

DOE developed this analytical framework and documented it in the Rulemaking Framework Document for Refrigerators, Refrigerator

- Freezers, and Freezers (September 18, 2008). DOE presented the analytical approach to interested parties during a public meeting held on September 29, 2008. The framework document is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrige rators_freezers.ht

ml . At the meeting and during the related comment period, DOE received many comments that helped it identify and resolve issues involved in this rulemaking.

DOE then gathered additional information and performed preliminary analyses to help develop the potential energy conservation standards for refrigeration products. This process

culminated in DOE’s announcement of a preli minary analysis public meeting to discuss and receive comments on the following matters: The product classes DOE an alyzed; the analytical framework, models, and tools that DOE was using to evaluate standards; the results of the preliminary analyses performed by DOE; and potential standard levels that DOE could consider. 74 FR 58915 (November 16, 2009). DOE also invited written comments on these subjects and announced the availability on its website of a preliminary technical support document (preliminary TSD) it had prepared to inform interested parties and enable them to provide comments. Id. (The preliminary TSD is av ailable at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ref_frz_prenopr_pre lim_tsd.pdf)

The preliminary analysis public meeting announced in the November 200 9 notice took place on December 10

, 2009. At this meeting, DOE prese nted the methodologies and results of2

- 5 the analyses set forth in the preliminary TSD. DOE also discussed plans for conducting the NOPR analyses. The c omments received since publication of the November 200 9 notice, including those received at the preliminary analysis public meeting

, have contributed to DOE’s proposed resolution of the issues in this rulemaking and the analysis conducted in support of the

NOPR.

The following sections provide a general description of the different analytical components of the rulemaking analytical plan

. DOE has used the most reliable data available at

the time of eac h analysis in this rulemaking. DOE has also consider ed submissions of additional

data from interested parties during the rulemaking process

.

2.3 MARKET AND TECHNOLOG Y ASSESSMENT

When initiating a standards rulemaking, DOE develops information on the present and past industry structure and market characteristics for the equipment concerned. This activity assesses the industry and equipment both quantitatively and qualita tively based on publicly available information and encompasses the following: (1) manufacturer market share and characteristics, (2) existing regulatory and non

- regulatory equipment efficiency improvement initiatives, and (3) trends in product characterist ics and retail markets. This information serves as resource material throughout the rulemaking.

DOE reviewed existing literature and interviewed manufacturers to get an overall picture of the residential refrigeration product industry serving the United S tates market. Industry publications and trade journals, government agencies, and trade organizations provided the bulk of the information, including: (1) manufacturers and their approximate market shares, (2) shipments by capacity and equipment class, (3) equipment information, and (4) industry trends. The appropriate sections of the NOPR describe the analysis and resulting information leading up to the proposed trial standard level while the supporting documentation is provided in the different chapters of the TSD.

The market and technology assessment also addresses applicable test procedures. DOE initiated a test procedure rulemaking for refrigeration products and published a test procedure NOPR on May 27, 2010. 75 FR 29824 The test procedure rulemaking i s discussed briefly in Chapter 3 of the NOPR TSD.

2.3.1 Product Classes

DOE categorizes covered products into separate product classes and formulates a separate energy conservation standard for each product class. The criteria for separation into

different cl asses are type of energy used, capacity, and other performance

- related features such as those that provide utility to the consumer or others deemed appropriate by the Secretary that2

- 6 would justify the establishment of a separate energy conservation standard . (42 U.S.C. 6295(q) and 6316(a))

DOE is proposing several new product classes for refrigeration products as part of this rulemaking. The new product classes include product classes made effective through the Office of Hearing and Appeal’s exception relie f process, and based on performance and utility

differences associated with all

- refrigerators, products with automatic icemakers, and built

- in products. This is described briefly in Chapter 3 of the NOPR TSD, and in greater detail in the

NOPR.

2.3.2 Technology Assessment

As part of the market and technology assessment, DOE developed a list of technologies for consideration for improving the efficiency of residential refrigeration products. DOE typically uses information about existing and past technology option s and prototype designs to determine which technologies manufacturers use to attain higher performance levels. In consultation with interested parties, DOE develops a list of technologies for consideration. Initially, these technologies encompass all those DOE believes are technologically feasible.

DOE developed its list of technologically feasible design options for refrigeration products from trade publications, technical papers, the TSD for the previous refrigeration product rulemaking, and through consultation with manufacturers of components and systems. Since many options for improving product efficiency are available in existing products, product literature and direct examination provided additional information. Chapter 3 of the NOPR TSD

includes the detailed list of all technology options identified.

2.4 SCREENING ANALYSIS

After DOE identified the technologies in the technology assessment that could potentially improve the energy efficiency of residential refrigeration products, DOE conducted the s creening analysis. The purpose of the screening analysis is to evaluate the technologies to determine which options to consider further and which options to screen out. DOE consults with industry, technical experts, and other interested parties in developi ng a list of technologies for consideration. DOE then applies the screening criteria to determine which technologies are unsuitable for further consideration in this rulemaking. Chapter 4 of the NOPR TSD, the screening analysis, contains details on the cri teria that DOE uses.

The screening analysis examines whether various technologies (1) are technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an adverse impact on product utility or availability; and (4) have adver se impacts on health and safety. In consultation2

- 7 with interested parties, DOE reviews the list to determine if the technologies described in chapter 3 of the NOPR TSD are practicable to manufacture, install, and service; would adversely affect product util ity or availability; or would have adverse impacts on health and safety. In the engineering analysis, DOE further considers the efficiency enhancement options (i.e., technologies) that it did not screen out in the screening analysis.

2.5 ENGINEERING ANALYSIS

The engineering analysis (chapter 5) establishes the relationship between the manufacturing production cost and the efficiency for each residential refrigeration product. This relationship serves as the basis for cost/benefit calculations in terms of ind ividual consumers, manufacturers, and the Nation. Chapter 5 discusses product classes DOE analyzed, the representative baseline units, the efficiency levels analyzed, the methodology DOE used to develop the manufacturing production costs, and the cost

- effi ciency curves.

In the engineering analysis, DOE evaluates a range of product efficiency levels and their associated manufacturing costs. The purpose of the analysis is to estimate the incremental manufacturer selling prices (MSPs) for a product that would result from increasing efficiency levels above the level of the baseline model in each product class. The engineering analysis considers technologies not eliminated in the screening analysis. The LCC analysis uses the cost

efficiency relationships develop ed in the engineering analysis.

The proposed changes to the test procedure will result in changes in the measured energy use of most refrigeration products, and also in the adjusted volume of these products. The adjusted volume measurement directly impact s the energy conservation standards, since the standards are expressed in terms of this parameter. Chapter 5 of the NOPR TSD describes conversion of the energy standard equations for baseline

- efficiency products from representation

based on the current tes t procedure to the proposed new test procedure. The chapter also presents calculations showing the adjustment of the energy use equation slope for three product classes.

DOE typically structures its engineering analysis around one of three methodologies: (1) the design

- option approach, which calculates the incremental costs of adding specific design options to a baseline model; (2) the efficiency

- level approach, which calculates the relative costs of achieving increases in energy efficiency levels without regard to the particular design options used to achieve such increases; and/or (3) the reverse

- engineering or cost

- assessment approach,

which involves a “bottom

- up” manufacturing cost assessment based on a detailed bill of

materials derived from teardowns of the product being analyzed.

For the NOPR analysis, DOE used a combination of all three of these approaches. DOE developed a manufacturing cost model for refrigeration products based on reverse engineering of purchased products. DOE determined the poten tial for efficiency improvement of design options and groups of design options using energy modeling. DOE estimated costs for these efficiency2

- 8 improvements based on the manufacturing cost model, information from component vendors,

and information obtained through discussions with manufacturers. However, DOE based the

cost

- efficiency curves developed for the downstream analyses on specific efficiency levels representing percent energy use reductions in 5 percent increments. Chapter 5 of the NOPR TSD

describe s the methodology that DOE used to perform the efficiency level analysis and derive the

cost

- efficiency relationship.

2.6 MARKUPS TO DETERMINE PRODUCT PRICE

DOE used markups to convert the manufacturer selling prices estimated in the engineering analysis to customer prices, which then were used in the life

- cycle cost (LCC) and payback period (PBP) and manufacturer impact analyses. DOE calculates separate markups for baseline products (baseline markups) and for more efficient products (incremental markups). The incremental markup relates the change in the manufacturer sales price of higher

- efficiency models (the incremental cost increase) to the change in the retailer or distributor sales price.

To develop markups, DOE identifies how the products are dist ributed from the manufacturer to the customer. After establishing appropriate distribution channels, DOE relied on economic data from the U.S. Census Bureau and other sources to define how prices are marked up as the products pass from the manufacturer to the customer. See Chapter 6 for details on the development of markups.

2.7 ENERGY USE ANALYSIS

The energy use analysis, which assesses the energy savings potential from higher efficiency levels, provides the basis for the energy savings values used in the LC C and subsequent analyses. The goal of the energy use analysis is to generate a range of energy use values that reflects actual product use in American homes. The analysis uses information on use of actual products in the field to estimate the energy that would be used by new products at various efficiency levels.

Studies show that measurements of field energy use often vary considerably from the rated usage as determined by the DOE test procedure. To determine the field energy use by products that would meet possible energy efficiency standards, DOE developed “ usa ge adjustment factors’ (UAFs) that relate estimated field energy consumption for each sample household to the estimated test energy use. DOE develop ed such UAFs for standard

- size units.

In its preliminary analysis, DOE treated the field energy consumption reported for

households in the Energy Information Administration ’s 2005 Residential Energy Consumption Survey (RECS) as the actual consumption of the refrigeration product(s) in that household. RECS is a national sample survey of housing units that collects statistical information on the consumption of and expenditures for energy in housing units along with data on energy

- related2

- 9 characteristics of the housing units and occupants. DOE used RECS to estimate the field energy usage of standard

- sized refrigerator

- freezers and freezers on a representative sample of housing units using these products.

For the NOPR, DOE developed a new approach to derive UAFs for the RECS sample households. This appr oach involved collection of field metered electricity use data for residential refrigeration products. DOE was able to obtain data from seven studies , including about 100 data points that DOE collected itself. From identifying information about each unit, its test energy consumption was estimated and the UAF was calculated as the ratio of metered energy use to test

energy use. For each product category, DOE performed regressions on numerous variables of potential interest in order to construct a function th at predicts the UAF based on household and

climate variables. Within each of the product categories modeled , DOE used the appropriate set of regression coefficients , along with values for the relevant variables specific to each household, to generate UAF e stimates for each RECS household . For compact refrigeration products, a UAF

of 1 was used.

Chapter 7 of this TSD provides more detail about DOE’s approach for characterizing energy use of refrigeration products.

2.8 LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSES

New or amended energy conservation standards affect products’ operating expenses

— usually decreasing them

— and consumer prices for the products

— usually increasing them. DOE analyzed the net effect of amended standards on consumers by evaluating the net LCC . To evaluate the net LCC, DOE used the cost

- efficiency relationship derived in the engineering analysis, along with the energy costs derived from the energy use characterization. Inputs to the LCC calculation include the installed cost of a product to the consumer (consumer purchase price plus installation cost), operating expenses (energy expenses and maintenance costs), the lifetime of the unit, and a discount rate.

Because the installed cost of a product typically increases while operating cost typica lly decreases in response to new standards, there is a time in the life of products having higher

- than

baseline efficiency when the net operating

- cost benefit (in dollars) since the time of purchase is equal to the incremental first cost of purchasing the higher

- efficiency product. The length of time required for products to reach this cost

- equivalence point is known as the payback period (PBP).

Recognizing that several inputs to the determination of consumer LCC and PBP are either variable or uncertain, D OE conducted the LCC and PBP analysis by modeling both the uncertainty and variability in the inputs using Monte Carlo simulation and probability

distributions. DOE developed LCC and PBP spreadsheet models incorporating both Monte Carlo simulation and prob ability distributions by using Microsoft Excel spreadsheets combined with Crystal Ball (a commercially available add

- in program).2

- 10 Using information in RECS

, DOE developed samples of individual households that use

the considered standard

- size refrigeratio n products. By developing household samples, DOE was able to perform the LCC and PBP calculations for each household to account for the variability in energy consumption and electricity price associated with each household. As noted above,

DOE did not deve lop a household sample for compact refrigerators and freezers since a large number of such products are used in lodging, dormitories and other commercial establishments.

DOE identified several other input values for estimating the LCC, including : retail prices; discount rates; and product lifetimes. DOE characterized these values with probability

distributions.

DOE developed discount rates separately for residential consumers and commercial consumers. Because some compact refrigerators and fre ezers are used in commercial applications, DOE developed commercial discount rates and for those commercial consumers that purchase compact refrigerators and freezers

. DOE developed discount rates from estimates of the interest rate, or finance cost, appli ed to purchases of residential and commercial products. Following accepted principles of financial theory, the finance cost of raising funds to purchase such products can be interpreted as: (1) the financial cost of any debt incurred to purchase products, principally interest charges on debt; or (2) the opportunity cost of any equity used to purchase products, principally interest earnings on household equity.

2.9 SHIPMENTS ANALYSIS

Forecasts of product shipments are needed to calculate the national impacts o f standards on energy use, NPV, and future manufacturer cash flows. DOE developed shipment forecasts based on an analysis of key market drivers for each considered product. In DOE’s shipments model, shipments of products are driven by new construction as w ell as stock replacements.

The shipments models take an accounting approach, tracking market shares of each product class and the vintage of units in the existing stock. Stock accounting uses product shipments as inputs to estimate the age distribution of in

- service product stocks for all years. The age distribution of in

- service product stocks is a key input to calculations of both the NES and NPV, because operating costs for any year depend on the age distribution of the stock.

Chapter 9 of the TSD pr ovides additional details on the shipments analysis.

2.10 NATIONAL IMPACT ANAL YSIS

The national impact analysis assesses the aggregate impacts at the national level of potential energy conservation standards for each of the considered products, as measured by the net present value (NPV) of total consumer economic impacts and the national energy savings (NES). DOE determined both the NPV and NES for the efficiency levels considered for the2

- 11 product classes analyzed. To make the analysis more accessible and tra nsparent to all interested parties, DOE prepared a Microsoft Excel spreadsheet model to forecast NES and the national consumer economic costs and savings resulting from new standards. The spreadsheet model uses as inputs typical values (as opposed to proba bility distributions). To assess the effect of input uncertainty on NES and NPV results, DOE conducted sensitivity analyses by running scenarios on specific input variables, which are described in chapter 10.

Several of the inputs for determining NES an d NPV depend on the product efficiency. DOE developed efficiency trends for the base case and standards cases. These trends specify the average annual historical and forecasted shipments

- weighted product efficiencies. In developing the energy efficiencies forecasted over time for each of the standards cases, DOE used a “roll

- up + ENERGY STAR” scenario to establish the distribution of efficiencies for the year that revised standards are assumed to become effective (i.e., 2014) and subsequent years. In this s cenario, product efficiencies in the base case that did not meet the standard level under consideration

would roll

- up to meet the new standard level in 2014. DOE assumed that new criteria would be established for ENERGY STAR refrigeration products, and tha t such products would gradually gain a larger market share. The details of the approach are described in Chapter 10.

2.10.1 National Energy Savings Analysis

The inputs for determining the national energy savings (NES) for each product analyzed are: (1) annual en ergy consumption per unit; (2) shipments; (3) product stock; (4) national energy consumption; and (5) site

- to

- source conversion factors. DOE calculated the national energy consumption by multiplying the number of units, or stock, of each product (by vintag e, or age) by the unit energy consumption (also by vintage). DOE calculated annual NES based on the difference in national energy consumption for the base case (without new efficiency standards) and for each considered efficiency level. DOE estimated energ y consumption and savings based on site energy, and converted the electricity consumption and savings to source (primary) energy. Cumulative energy savings are the sum of the NES for each year.

2.10.2 Net Present Value Analysis

The inputs for determining net pre sent value (NPV) of consumer benefits are: (1) total annual installed cost; (2) total annual savings in operating costs; (3) a discount factor; (4) present value of costs; and (5) present value of savings. DOE calculated net savings each year as the

differ ence between the base case and each standards case in total savings in operating costs and total increases in installed costs. DOE calculated savings over the life of each product, accounting for differences in yearly energy rates. DOE calculated NPV as th e difference between the present value of operating cost savings and the present value of total installed costs. DOE

used a discount factor based on real discount rates of 3% and 7% to discount future costs and savings to present values.

DOE calculated i ncreases in total installed costs as the difference in total installed cost between the base case and standards case ( i.e ., once the standards take effect). Because the more2

- 12 efficient products bought in the standards case usually cost more than products bo ught in the base case, cost increases appear as negative values in the NPV.

DOE expressed savings in operating costs as decreases associated with the lower energy consumption of products bought in the standards case compared to the base efficiency case. Total savings in operating costs are the product of savings per unit and the number of units of each vintage that survive in a given year.

Chapter 10 of this TSD provides additional details regarding the national impacts analysis.

2.11 CONSUMER SUBGROUP AN ALY SIS

The consumer subgroup analysis evaluates economic impacts on selected groups of consumers who might be adversely affected by a change in the national energy conservation standards for the considered products. DOE evaluates impacts on particular subgro ups of consumers primarily by analyzing the LCC impacts and PBP for those particular consumers using the LCC spreadsheet model.

For the NOPR, DOE evaluated impacts of standards on low

- income and fixed

- income (i.e., senior) consumers.

2.12 MANUFACTURER IMPAC T ANALYSIS

DOE performed a manufacturer impact analysis (MIA) to estimate the financial impact of amended energy conservation standards on manufacturers of residential refrigeration products, and to calculate the impact of such standards on employment an d manufacturing capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA relies on the government regulatory impact model (GRIM), an industry

- cash

- flow model customized for this rulemaking. The GRIM inputs are infor mation regarding the industry cost structure, shipments, and revenues. This includes information from many of the analyses described above, such as manufacturing costs and prices from the engineering analysis and shipments forecasts. The key GRIM output is the industry net present value (INPV). Different sets of assumptions (scenarios) will produce different results. The qualitative part of the MIA addresses factors such as product characteristics, characteristics of particular firms, and market and product trends, and includes assessment of the impacts of standards on subgroups of manufacturers. The complete MIA is described in chapter 12 of the NOPR TSD.

DOE conducted each MIA in this rulemaking in three phases. In Phase I, DOE created an industry profil e to characterize the industry and identify important issues that require consideration. In Phase II, DOE prepared an industry cash

- flow model and an interview questionnaire to guide subsequent discussions. In Phase III, DOE interviewed manufacturers, and assessed the impacts of standards both quantitatively and qualitatively. DOE assessed industry2

- 13 and subgroup cash flow and NPV using the GRIM. DOE then assessed impacts on competition, manufacturing capacity, employment, and regulatory burden based on manuf acturer interview

feedback and discussions.

2.13 EMPLOYMENT IMPACT AN ALYSIS

The imposition of standards can affect employment both directly and indirectly. Direct employment impacts are changes, produced by new standards, in the number of employees at plants t hat produce the covered products. DOE evaluated direct employment impacts in the manufacturer impact analysis. Indirect employment impacts that occur because of the imposition of standards may result from consumers shifting expenditures between goods (the substitution effect) and from changes in income and overall expenditure levels (the income effect). DOE utilizes Pacific Northwest National Laboratory’s ImSET model to investigate the combined direct and indirect employment impacts. The ImSET model, which was developed for DOE’s Office of Planning, Budget, and Analysis, estimates the employment and income effects energy

saving technologies produced in buildings, industry, and transportation. In comparison with simple economic multiplier approaches, ImSET al lows for more complete and automated analysis of the economic impacts of energy conservation investments.

2.14 UTILITY IMPACT ANALY SIS

The utility impact analysis estimate s the effects of amended energy conservation

standards on installed electricity generation capacity and electricity generation

. For this analysis, DOE adapted NEMS, which is a large multi

- sectoral, partial

- equilibrium model of the U.S. energy sector that the EIA has developed throughout the past decade, primarily for preparing EIA’s AEO. In previous rulemakings, a variant of NEMS (currently termed NEMS

- BT, BT referring to DOE’s Building Technologies Program), was developed to better address the specific impacts of an energy conservation standard. NEMS, which is available in the public domain, produces a widely recognized baseline e nergy forecast for the United States through the year 2030. The typical NEMS outputs include forecasts of electricity sales, prices, and electric generating capacity. DOE conducts the utility impact analysis as a scenario that departs from the

latest AEO r eference case. In other words, the energy savings impacts from amended energy conservation standards are modeled using NEMS

- BT to generate forecasts that deviate from the

AEO reference case.

As part of the utility impact analysis , DOE analyzed the potent ial impact on electricity prices resulting from amended standards on refrigeration products and the associated benefits for all electricity users in all sectors of the economy.2

- 14 2.15 ENVIRONMENTAL IMPACT ANALYSIS

The intent of the environmental assessment is to quantify and consider the environmental effects of amended energy conservation standards for the products covered in this rulemaking. The primary environmental effects of these standards would be reduced power plant emissions resulting from reduced consum ption of electricity. DOE will assess these environmental effects by using NEMS

- BT to provide key inputs to its analysis. The portion of the environmental assessment that will be produced by NEMS

- BT considers carbon dioxide (CO 2 ), nitrogen oxides (NO X ), an d mercury (Hg). The environmental assessment also considers impacts on SO 2 emissions.

2.15.1 Carbon Dioxide

In the absence of any Federal emissions control regulation of power plant emissions of

CO 2 , a DOE standard is likely to result in reductions of these em issions. The CO 2 emission reductions likely to result from a standard will be estimated using NEMS

- BT and national energy savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the

difference between emissions estimated by NEMS

- BT at each standard level considered and the

AEO Reference Case. NEMS

- BT tracks CO 2 emissions using a detailed module that provides results with broad coverage of all sectors and inclusion of interactive effects.

2.15.2 Sulfur Dioxide

DOE has preliminaril y determined that SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that are likely to eliminate the standards’ impact on SO 2 emissions. The costs of meeting such emission cap requirements are reflected in the electricity prices and forecasts used in DO E’s analysis of

the standards. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for all affected

EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (DC) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005)), which creates an allowance

- based trading program that will gradually replace the Title IV program i n those States and DC. (The recent legal history surrounding CAIR is discussed below.) The attainment of the emissions caps is flexible among EGUs and is enforced through the use of emissions a llowances and tradable permits. Under existing EPA regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO 2 e missions by any regulated EGU. However, if the standard resulted in

a pe rmanent increase in the quantity of unused emission allowances, there would be an overall

reduction in SO 2 emissions from the standards. While there remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS

- BT modeling system that DOE plans to use to forecast emissions reductions currently indicates that no physical reductions in power sector emissions would occur for SO 2

.2

- 15 2.15.3 Nitrogen Oxides

NEMS

- BT also has an algorith m for estimating NO X emissions from power generation. The impact of these emissions, however, will be affected by the CAIR, which the Environmental Protection Agency (EPA) issued on May 12, 2005. CAIR will permanently cap emissions of

NO X in 28 eastern sta tes and the District of Columbia. 70 FR 25162 (May 12, 2005).

Much like SO 2 emissions, a cap on NO X emissions means that amended energy conservation standards may have little or no physical effect on these emissions in the 28 eastern

Stat es and the DC cov ered by CAIR. Although CAIR has been remanded to the EPA by the DC Circuit, it will remain in effect until it is replaced by a rule consistent with the Court’s July 11, 2008, opinion in North Carolina v. EPA. 531 F.3d 896 (DC Cir. 2008); see also North Car olina v. EPA, 550 F.3d 1176 (DC Cir. 2008). Because all States covered by CAIR opted to reduce

NO X emissions through participation in cap

- and

- trade programs for electric generating units, emissions from these sources are capped across the CAIR region.

DOE use s NEMS

- BT to estimate the emissions reductions from possible standards in the 22 States where emissions are not capped.

2.15.4 Mercury

Similar to emissions of SO 2 and NO X , future emissions of Hg would have been subject to emissions caps. In May 2005, E PA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new and existing coal

- fired power plants in all States by 2010. However, on February 8, 2008, the DC

Circuit issued its dec ision in New Jersey v. Environmental Protection Agency, in which the DC Circuit, among other actions, vacated the CAMR. 517 F.3d 574 (DC Cir. 2008). EPA has decided to develop emissions standards for power plants under the Clean Air Act (Section 112),

con sistent with the DC Circuit’s opinion on the CAMR. See http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf . Pending EPA's forthcoming revisions to the rule , DOE is excluding the CAMR from its Environmental Analysis. In the absence of CAMR, a DOE standard would likely reduce Hg emissions and DOE plans to use NEMS

- BT to estimate these emission reductions. However, DOE continues to review the impact of rules t hat reduce energy consumption on Hg emissions, and may revise its assessment of Hg emission reductions in future rulemakings.

2.15.5 Particulate Matter

DOE acknowledges that particulate matter (PM) impacts are of concern due to human exposures that can impact hea lth. However, impacts of PM emissions reduction are much more difficult to estimate than other emissions reductions due to the complex interactions between PM, other power plant emissions, meteorology, and atmospheric chemistry that impact human

exposure to particulates. Human exposure to PM usually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance, they undergo highly complex atmospheric chemica l reactions.2

- 16 Although the EPA does keep inventories of direct PM emissions of power plants, in its source attribution reviews, the EPA does not separate direct PM emissions from power plants from the sulfate particulates indirectly produced through complex atmospheric chemical reactions. The great majority of PM emissions from power plants are of these secondary particles (secondary sulfates). Thus, it is not useful to examine how the amended standard impacts direct PM emissions independent of indirect PM p roduction and atmospheric dynamics. Therefore, DOE is not planning to assess the impact of these standards on particulate emissions. Further, even the cumulative impact of PM emissions from power plants and in direct emissions of pollutants from

other sour ces is unlikely to be significant.

2.15.6 Monetization o f Emissions Reductions

For those emissions for which real national emission reductions are anticipated ( CO 2 , Hg,

and NO X for 22 states), only ranges of estimated economic values based on environmental damag e studies of varying quality and applicability are available. Therefore, DOE intends to report estimates of monetary benefits derived using these values and c onsider these benefits in weighing the costs and benefits of each of the standard levels considere d.

In order to estimate the monetary value of benefits resulting from reduced emissions of

CO 2 emissions, it is DOE’s intent to use in its analysis the most current Social Cost of Carbon (SCC) values developed and/or agr eed to by interagency reviews. Th e SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization,

the SCC can be used to provide estimates of the social benefits of reductions in GHG emissions.

At the time of this notice, the most recent interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2010 were $ 4.7 , $ 21.4 , $ 35.1

, and $ 64.9 per metric ton in 2007 dollars. These values are then adjusted to 2009$ using the appropriate

standard GDP deflator values. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interag ency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects, although DOE will give preference to consideration of the global benefits of reducing CO2 emissions. See append ix 15A of this TSD for the full range of annual SCC

estimates from 2010 to 2050. To calculate a present value of the stream of monetary values,

DOE discounte d the values in each of the four cases using the discount rates that had been used

to obtain the SC C values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to

the contribution of CO 2 and other GHG to changes in the future global climate and the potential resulting damages to the world economy. Thus, th ese values are subject to change.2

- 17 DOE also estimate s the potential monetary benefit of reduced NO X emissions resulting

from the standard levels it considers. For NO X emissions, available estimates suggest a very wide range of monetary values for NO X emis sions, ranging from $370 per ton to $3,800 per ton of

NO X from stationary sources, measured in 2001$ (equivalent to a range of $44 7 to $4,5 91 per ton in 200 9 $). Refer to the OMB, Office of Information and Regulatory Affairs, “2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” for additional information. In accordance with U.S. Office of Management and Budget (OMB) guidance, DOE will conduct two calculations of the monetary

be nefits derived using each of the economic values used for NO X

, one using a real discount rate of 3 percent and another using a real discount rate of 7 percent. a

DOE does not plan to monetize estim ates of Hg in this rulemaking. DOE is aware of multip le agency efforts to determine the appropriate range of values used in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions before it once again monetizes Hg in its rulemakings.

2.16 REGULATORY IMPACT AN ALYSIS

In the NOPR stage, DOE prepared a regulatory impact analysis (RIA) pursuant to Executive Order 12866, Regulatory Planning and Review, 58 FR 51735, October 4, 1993, which is subject to review by the Office of Information and Regulatory Affairs at the Office of Management and Budget. The RIA addresses the potential for non

- regulatory approaches to supplant or augment energy conservation standards in order to improve the energy efficiency or reduce the energy consumption of the products covered under this rulemaking.

DOE recognizes that voluntary or other non

- regulatory efforts by manufacturers, utilities, and other interested parties can substantially affect energy efficiency or reduce e nergy consumption. DOE bases its assessment on the actual impacts of any such initiatives to date, but also considers information presented by interested parties regarding the impacts existing initiatives might have in the future.

a OMB, Circular A

- 4 : Regulatory Analysis ( Sept. 17, 2003).3

- i CHAPTER 3: MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CO NTENTS

3.1 INTRODUCTION

................................ ................................ ................................ ........... 3

- 1

3.1.1 Product Definitions

................................ ................................ ................................ .......... 3

- 1

3.1. 1.1 Refrigerators, Refrigerator

- Freezers, and Freezers

................................ ........ 3

- 1

3.1.1.2 Wine Coolers

................................ ................................ ................................ . 3

- 2

3.2 MARKET ASSESSMENT

................................ ................................ .............................. 3

- 2

3.2.1 Product Classes

................................ ................................ ................................ ................ 3

- 2

3.2.1.1 Pr oduct Classes Listed in the CFR

................................ ................................ . 3

- 2

3.2.1.2 Product Classes Modifications

................................ ................................ ....... 3

- 2

3.2.2 Product Test Procedures

................................ ................................ ................................ .. 3

- 5

3.2.3 Manufacturer Information

................................ ................................ ................................ 3

- 6

3.2.3.1 Refrigerator, Refrigerator

- Freezer, and Freezer Manufacturers

.................... 3

- 6

3.2.3.2 Refrigerator, Refrigerator

- Freezer, and Freezer Manufacturer Market

Shares

................................ ................................ ................................ ............ 3

- 9

3.2.3.3 Mergers and Acquisitions

................................ ................................ ............ 3

- 11

3.2.3.4 Distribution Channels

................................ ................................ .................. 3

- 12

3.2.3.5 Manufacturer Trade Groups

................................ ................................ ......... 3

- 13

3.2.3.6 Compressor Manufacturers and Market Shares

................................ ........... 3

- 13

3.2.4 Regulatory Programs

................................ ................................ ................................ ..... 3

- 13

3.2.4.1 Federal Energy Conservation Standards

................................ ...................... 3

- 14

3.2.4.2 State Energy Conservation Standards

................................ .......................... 3

- 16

3.2.4.3 Canadian Energy Conservation Standards

................................ ................... 3

- 16

3.2.4.4 Mexican Energy Conservation Standards

................................ .................... 3

- 17

3.2.4.5 Efficiency Standards Outside North America

................................ .............. 3

- 17

3.2.5 Voluntary and other Federal and State Programs

................................ .......................... 3

- 18

3.2.5.1 ENERGY STAR

................................ ................................ .......................... 3

- 18

3.2.5.2 Federal Energy Management Program

................................ ........................ 3

- 20

3.2.5.3 Consortium for Energy Efficiency

................................ ............................... 3

- 21

3.2.5.4 ENERGY STAR, FEMP, CEE Summary

................................ .................... 3

- 22

3.2.5.5 Manufacturer Tax Credits for Energy

- Efficient Appliances

....................... 3

- 22

3.2.5.6 Rebates for Highly Energy

- Efficient Products

................................ ............ 3

- 23

3.2.5.7 State Tax Incentives for Highly Energy

- Efficient Products

........................ 3

- 24

3.2. 6 Historical Shipments and Efficiencies

................................ ................................ ........... 3

- 24

3.2.6.1 Historical Shipments

................................ ................................ .................... 3

- 24

3.2.6.2 Historical Efficiencies

................................ ................................ .................. 3

- 26

3.2.6.3 Imports and Exports

................................ ................................ ..................... 3

- 28

3.2.7 Saturation in U.S. Homes

................................ ................................ ............................... 3

- 28

3.2.8 Product Retail Prices

................................ ................................ ................................ ...... 3

- 32

3. 2.8.1 Historical Retail Prices

................................ ................................ ................ 3

- 32

3.2.8.2 Refrigerator

- Freezer 2004 Retail Prices

................................ ...................... 3

- 32

3.2.8.3 2007 Manufacturer

- Suggested Retail Prices

................................ ................ 3

- 34

3.2.8.4 Refrigerator

- Freezer and Freezer 2008 Retail Prices

................................ ... 3

- 393

- ii 3.3 TECHNOLOGY ASSESSMEN T

................................ ................................ .................. 3

- 40

3.3.1 Product Operation and Components

................................ ................................ .............. 3

- 40

3.3.1.1 Product Operation

................................ ................................ ........................ 3

- 40

3.3.1.2 Primary Components

................................ ................................ ................... 3

- 41

3.3.2 Technology Options

................................ ................................ ................................ ....... 3

- 45

3.3.2. 1 Insulation

................................ ................................ ................................ ...... 3

- 46

3.3.2.2 Gasket and Door Design

................................ ................................ .............. 3

- 50

3.3.2.3 Anti

- Sweat Heater

................................ ................................ ........................ 3

- 52

3.3.2.4 Compressor

................................ ................................ ................................ .. 3

- 53

3.3.2.5 Evap orator

................................ ................................ ................................ .... 3

- 57

3.3.2.6 Condenser

................................ ................................ ................................ .... 3

- 58

3.3.2.7 Fan and Fan Motor

................................ ................................ ....................... 3

- 60

3.3.2.8 Expansion Valve

................................ ................................ .......................... 3

- 60

3.3.2.9 Cycling Losses

................................ ................................ ............................. 3

- 61

3.3.2.10 Defrost System

................................ ................................ ............................. 3

- 61

3.3.2.11 Control System

................................ ................................ ............................. 3

- 62

3.3.2.12 Other Technologies

................................ ................................ ...................... 3

- 63

3.3.2.13 Alternative Refrigeration Cycles

................................ ................................ . 3

- 64

3.3.2.14 Alternative Refrigeration Systems

................................ ............................... 3

- 67

3.3.3 Energy Efficiency

................................ ................................ ................................ .......... 3

- 67

REFERE NCES

................................ ................................ ................................ .......................... 3

- 79

LIST OF TABLES

Table 3.2.1 Product Classes for Refrigerators, Refrigerator

- Freezers, and Freezers

.................. 3

- 3 Table 3.2.2 Refrigerator, Refrigerator

- Freezer, and Freezer Manufacturers

............................... 3

- 7

Table 3.2.3 Standard

- Size Refrigerator

- Freezer Manufacturer Market Shares

........................... 3

- 9 Table 3.2.4 Compact Refrigerator Manufacturer Market Shares

................................ .............. 3

- 10

Table 3.2.5 Built

- In Undercounter Refrigerator Manufacturer Market Shares

......................... 3

- 10 Table 3.2.6 Chest/Upri ght Freezer Manufacturer Market Shares

................................ .............. 3

- 11 Table 3.2.7 Major Appliance Sales by Channel

................................ ................................ ........ 3

- 12 Table 3.2.8 Compressor Manufacturers and World and U.S. Market Shares

............................ 3

- 13 Table 3.2.9 Federal Energy Efficiency Standards for Refrigerators, Refrigerator

- Freezers,

and Freezers

................................ ................................ ................................ ....... 3

- 15

Table 3.2.10 California Standards for Wine Chillers

................................ ................................ 3

- 16

Table 3.2.11 California Standards for Freezers with Volume Greater than 30 cubic feet

......... 3

- 1 6

Table 3.2.12 Canadian Energy Standards for Added Refrigerator and Freezer Product

Classes

................................ ................................ ................................ ................ 3

- 17

Table 3.2.13 Canadian Standards for Wine Chillers

................................ ................................ .. 3

- 17 Table 3.2.14 History of ENERGY STAR Energy Use Criteria for Residential Refrigerators and Freezers

................................ ................................ ................. 3

- 19 Table 3.2.15 Efficiency of Standard Refrigerators and Refrigerator

- Freezers on the

Market Relative to Current Federal Standard

................................ .................... 3

- 203

- iii Table 3.2.16 Performance Requirement for Federal Purchases of Refrigerators and

Freezers

................................ ................................ ................................ .............. 3

- 21 Table 3.2.17 CEE Tier Levels Refrigerators and Refrigerator

- Freezers

................................ ... 3

- 22 Table 3.2.19 Manufacturer Tax Credits for Energy

- Efficient Appliances in EESA 2008

........ 3

- 23

Table 3.2.20 Rebates Offered for Highly Energy

- Efficient Refrigerators and Recycled Refrigerators in 2010

................................ ................................ ......................... 3

- 23

Table 3.2.21 Market Shares of Standard Refrigerator

- Freezer Product Classes

....................... 3

- 26 Table 3.2.22 Sales of ENERGY STAR Labeled Refrigerator

- Freezers

................................ .... 3

- 27 Table 3.2.23 Standard Refrigerator Saturation in U.S. Homes in 1987

– 2008 Period

............... 3

- 29 Table 3.2.24 Compact Refrigerator Saturation in U.S. Homes in 1987

– 2008 Period

............... 3

- 30

Table 3.2.25 Freezer Saturation in U.S. Homes in 1987

- 2008 Period

................................ ....... 3

- 31 Table 3.2.26 Refrigerator and Fr eezer Saturation in New U.S. Homes

................................ ..... 3

- 32 Table 3.2.27 Refrigerator

- Freezer and Freezer Average Retail Prices

................................ ...... 3

- 32 Table 3.2.28 Baseline Unit Retail Prices from 2005 DOE Report (2004$)

............................... 3

- 33 Table 3.2.30 Regression Analysis of the Incremental Price of ENERGY STAR and other

Attributes based on 2007 Manufacturer

- Suggested Retail Prices (2007$)

........ 3

- 39 Table 3.2.31 Residential Refrigeration Products: Average Baseline Retail Price

..................... 3

- 40 Table 3.3.1 Technology Options for Refrigerators, Refrigerator

- Freezers, and Freezers

......... 3

- 46 Table 3.3.2 Thermal Conductivity of Freshly

- Sliced Foam Specimens at 75 oF (23.9 oC)

....... 3

- 47 Table 3.3.3 Comparison of Various VIP Core Materials

................................ .......................... 3

- 48

Table 3.3.4 Center

- of

- Panel Thermal Conductivity of VIPs

................................ ..................... 3

- 49 Table 3.3.5 Comparison of Various Gas

- Filled Panel Core Materials

................................ ...... 3

- 50

Table 3.3.6 Overall Cabinet Loads

................................ ................................ ............................ 3

- 51 Table 3.3.7 Compressor Rating Conditions

................................ ................................ ............... 3

- 54 Table 3.3.8 Estimated 1998 Maximum Compressor Efficiencies

................................ ............. 3

- 55

Table 3.3.9 Efficiencies of Some of Embraco’s Variable

- Speed Compressor Models

............. 3

- 56

Table 3.3.10 Effic iencies of LG’s Current Linear Compressor Models

................................ .... 3

- 57

LIST OF FIGURE S

Figure 3.2.1 Annual Shipments of Refrigerators and Refrigerator

- Freezers

............................. 3

- 25 Figure 3.2.2 Annual Shipments of Freezers

................................ ................................ ............... 3

- 25 Figure 3.2.3 Average Annual Electricity Use of New Refrigerator

- Freezers and Freezers

...... 3

- 27 Figure 3.2.4 2007 Manufacturer

- Suggested Retail Price Distribution of Side

- Mount Refrigerator

- Freezers with and without ENERGY STAR (2007$)

................... 3

- 35 Figure 3.2.5 2007 Manufacturer

- Suggested Retail Price Distribution of Top

- Mount Refrigerator

- Freezers with and without ENERGY STAR (2007$)

................... 3

- 36 Figure 3.2.6 2007 Manufacturer

- Suggested Retail Price Distribution of Bottom

- Mount Refrigerator

- Freezers with and without ENERGY STAR (2007$)

................... 3

- 36 Figure 3.2.7 2007 Manufacturer

- Suggested Retail Price Distribution of Upright Freezers with and without ENERGY STAR (2 007$)

................................ ...................... 3

- 37 Figure 3.2.8 2007 Manufacturer

- Suggested Retail Price Distribution of Chest Freezers with and without ENERGY STAR (2007$)

................................ ...................... 3

- 37 Figure 3.3.1 Refrigeration Circuit

................................ ................................ .............................. 3

- 413

- iv Figure 3.3.2 Top

- Mount Refrigerator

- Freezer Components

................................ ...................... 3

- 42 Figure 3.3.3 Annual Energy Consumption for Refrigerators and Refrigerato r

- Freezers with Manual Defrost (Product Class 1)

................................ ............................. 3

- 69 Figure 3.3.4 Annual Energy Consumption for Refrigerator

- Freezers with Partial Automatic Defrost (Product Class 2)

................................ ................................ . 3

- 69 Figure 3.3.5 Annual Energy Consumption for Top

- Mount Refrigerator

- Freezers with

Automatic Defrost without TTD Ice Service and All

- Refrigerators with

Automatic D efrost (Product Class 3)

................................ ................................ . 3

- 70 Figure 3.3.6 Annual Energy Consumption for Side

- Mount Refrigerator

- Freezers with

Automatic Defrost wit hout TTD Ice Service (Product Class 4)

........................ 3

- 70 Figure 3.3.7 Annual Energy Consumption for Bottom

- Mount Refrigerator

- Freezers with

Autom atic Defrost without TTD Ice Service (Product Class 5)

........................ 3

- 71 Figure 3.3.8 Annual Energy Consumption for Bottom

- Mount Refrigerator

- Fre ezers with Automatic Defrost with TTD Ice Service (Product Class 5A)

.......................... 3

- 71 Figure 3.3.9 Annual Energy Consumption for Top

- Mount Refrigerator

- Freezers with Automatic Defrost with TTD Ice Service (Product Class 6)

............................. 3

- 72 Figure 3.3.10 Annual Energy Consumption fo r Side

- Mount Refrigerator

- Freezers with Automatic Defrost with Through

- the

- Door Ice Service (Product Class 7)

....... 3

- 72 Figure 3.3.11 An nual Energy Consumption for Upright Freezers with Manual Defrost (Product Class 8)

................................ ................................ ................................ 3

- 73 Figure 3.3.12 Annual Energy Consumption for Upright Freezers with Automatic Defrost (Product Class 9)

................................ ................................ ................................ 3

- 73 Figure 3.3.13 Annual Energy Consumption for Chest Freezers and all o ther Freezers except Compact Freezers (Product Class 10)

................................ .................... 3

- 74 Figure 3.3.14 Annual Energy Consumption for Chest Freezers with Automatic Defrost (Product Class 10A)

................................ ................................ ........................... 3

- 74 Figure 3.3.15 Annual Energy Consumption for Compact Refrigerators and Refrigerator

Freez ers with Manual Defrost (Product Class 11)

................................ ............. 3

- 75 Figure 3.3.16 Annual Energy Consumption for Compact Refrigerator

- Freezers with

Parti al Automatic Defrost (Product Class 12)

................................ ................... 3

- 75 Figure 3.3.17 Annual Energy Consumption for Compact Top

- Mount Refrigerator

Freezers wi th Automatic Defrost and All

- Refrigerators with Automatic Defrost (Product Class 13)

................................ ................................ ................. 3

- 76 Figure 3.3.18 Annual Energy Consumption fo r Compact Side

- Mount Refrigerator

Freezers with Automatic Defrost (Product Class 14)

................................ ........ 3

- 76 Figure 3.3.19 Annual Energy Consumption for Compact Bottom

- Mount Refrigerator

Freezers with Automatic Defrost (Product Class 15)

................................ ........ 3

- 77 Figure 3.3.20 Annual Energy Consumptio n for Compact Upright Freezers with Manual Defrost (Product Class 16)

................................ ................................ ................. 3

- 77 Figure 3.3.21 Annual Energy Consumption for Compact Upri ght Freezers with Automatic Defrost (Product Class 17)

................................ ............................... 3

- 78 Figure 3.3.22 Annual Energy Consumption for Compact Chest Freezers (Prod uct Class 18)

................................ ................................ ................................ ...................... 3

- 783-1 CHAPTER 3. MARKET AND TECHNOLOG Y ASSESSMENT

3.1 INTRODUCTION

This report provides a profile of the residential refrigerator and freezer product industries

in the United States. The U.S. Department of Energy (DOE) developed the preliminary market and technology assessment presented in this chapter primarily from publicly availa ble

information. This assessment identifies the major manufacturers and their product characteristics, which form the basis for the engineering and the life

- cycle cost (LCC) analyses. Present and past industry structure and industry financial information h elp DOE in the process of conducting the manufacturer impact analysis.

3.1.1 P roduct Definitions

3.1.1.1 Refrigerators, Refrigerator

- Freezers, and Freezers

The Code of Federal Regulations (CFR) establishes the product definitions for refrigerators, refrigerator

- freezers, and freezers as follows: 1

• The term Refrigerator means an electric refrigerator and the term Refrigerator

- freezer means an electric r efrigerator

- freezer.

• Electric refrigerator means a cabinet designed for the refrigerated storage of food at temperatures above 32 degrees Fahrenheit ( °F ) and below 39 ° F, configured for general refrigerated food storage, and having a source of refrigeration requiring single phase, alternating

curr ent electric energy input only. An electric refrigerator may include a compartment for freezing and storage of food at temperatures below 32 ° F, but does not provide a separate low temperature compartment designed for the freezing and storage of food at te mper atures below 8

° F.

• Electric refrigerator

- freezer means a cabinet which consists of two or more compartments with at least one of the compartments designed for the refrigerated storage of food at temperatures above 32 °F. and with at least one of the c ompartments designed for the freezing and storage of food at temperatures below 8 °F. which may be adjusted by the user to a temperature of 0 °F. or below. The source of refrigeration requires single phase, alternating current electric energy input only.

• Compact refrigerator, refrigerator

- freezer, and freezer means any refrigerator, refrigerator

freezer or freezer with total volume less than 7.75 ft 3 (220 L ) and 36 inches (0.91 meters) or less in height.

• Freezer means a cabinet designed as a unit for the freezing and stora ge of food at temperatures of 0 ° F or below, and having a source of refrigeration requiring single phase, alternating current electric energy input only.3-2 DOE has proposed changes to some of these definitions in the refrigeration product test procedure NOPR (75 CFR 29824 (May 27, 2010)) and in the refrigeration product energy

conservation standards NOPR.

3.1.1.2 Wine Coolers

DOE amended the definition of “electric refrigerator”, effective December 19, 2001, to include a maximum temperature of the fresh food storage compartment, and to exclude certain appliances whose physical configuration makes them unsuitable for general storage of perishable

foods. 2

3.2 MARKET ASSESSMENT Because w ines coolers maintain storage temperature above 39 oF, they are exempted from existing refrigerator product classifications and are not required to meet minimum efficiency standards.

3.2.1 P roduct Classes

3.2.1.1 Product Classes Listed in the CFR

The CFR establishes the product classes for refrigerators, refrigerator

- freezers, and

freezers. 3 As per the CFR, there are 18 product classes. The product classes are based on the following characteristics: type of unit (refrigerator, refrigerator

- freezer, or freezer), size of the cabinet (standard or compact), type of defrost system (man ual, partial, or automatic), presence or absence of through

- the

- door (TTD) ice service , and placement of the fresh food and freezer compartments for refrigerator

- freezers.

DOE established se parate product classes for compact products (<220 L or <7.75 ft 3 ) because fewer opportunities are available for reducing energy consumption in these products. Space is limited in c ompact units , so increasing the wall thickness is undesirable

. Limited high

efficiency compressor options are available in the capacity ranges appropriate for compact refrigerators. These units typically use natural convection e vaporator s and condenser s and, therefore, cannot employ better fan motors as an energy

- saving option.

3.2.1.2 P roduct Classes Modifications

Table 3.2.1 below shows 19 proposed new pr oduct classes

. The additional product classes are proposed to address the following:

**•** Product classes made effective through the Office of Hearing and Appeal’s exception relief

process.

**•** All

- refrigerators.

**•** Products with automatic icemakers.

**•** Built

- in products.3-3 Table 3.2

. 1 Product Classes for Refrigerators, Refrigerator

- Freezers, and Freezers

No. Product Class

Classes listed in the CFR

1 Refrigerators and r efrigerator

- freezers with manual defrost

2 Refrigerator

- freezers

— partial automatic defrost

3 Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

door ice service

4 Refrigerator

- freezers

— automatic defro st with side

- mounted freezer without through

- the

door ice service

5 Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

door ice service

6 Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door

ice service

7 Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door

ice service

8 Upright freezers with manual defrost

9 Upright freezers with automatic defrost

10 Chest freezers and all other freezers except compact freezers

11 Compact refrigerators and refrigerator

- freezers with manual defrost

12 Compact refrigerator

- freezers

— partial automatic defrost

13 Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer

14 Compact r efrigerator

- freezers

— automatic defrost with side

- mounted freezer

15 Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer

16 Compact upright freezers with manual defrost

17 Compact upright freezers with automatic defrost

18 Compact chest freezers

Product Classes Proposed to be Established During this Rulemaking

1A All

- refrigerators

— manual defrost

3A All

- refrigerators

— automatic defrost

5A Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with TTD ice

service

10A Chest freezers with automatic defrost

11A Compact all

- refrigerators

— manual defrost

13A Compact all

- refrigerators

— automatic defrost

3

- BI Built

- in refrigerator

- freezer

— automatic defrost with top

- mounted freezer without an

automatic icemaker

3I Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service

3I

- BI Built

- in refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service

3A

- BI Built

- in all

- refrigerators

— automatic defrost

4I Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service

4

- BI Built

- in r efrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker3-4 No. Product Class

4I

- BI Built

- in refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5I Refrigerato r

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5

- BI Built

- in r efrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker

5I

- BI Built

- in r efrig erator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5A

- BI Built

- in refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

the

- door ice service

7

- BI Built

- in r efrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

the

- door ice service

9

- BI Built

- in u pright freezers with automatic defrost without an automatic icemaker

Two of these new product classes, currently called product class 5A , automatic defrost refrigerator

- freezers with bottom

- mounted freezer with TTD i ce service, and product class 10A

, chest freezers with automatic defrost , were identified in the framework document as product

classes 19 and 20

. DOE proposes to establ ish these two new product classes pursuant to its decision order to grant exemptions to standards for these specific product categories. DOE proposes to adopt the product class designations for these products which have been adopted by

Canada in order to m aintain international consistency.

DOE’s Office of Hearings and Appeals granted five ex c eptions for refrigerator

- freezer products with bottom

- mounted freezer and TTD ice service, to Maytag Corporation (Maytag)

, LG Electronics, Inc. (LG), Samsung Electronics , Electrolux Home Products , and BSH Home Appliances Corporation (BSH)

. DOE granted Maytag its exception on August 11, 2005 (case

number TEE

- 0022), LG’s exception on November 9, 2005 (case number TEE

- 0025)

, Samsung ’s exception on July 26, 2007 (case number TEE

- 0047)

, Electrolux’s exception on December, 2008 (case number TEE

- 0056) , and BSH’s exception on April 23, 2010 (case number TEE

- 0070)

. Before th e s e ruling s , there was no appropriate ly

- defined category for this type of product, since

the mi nimum standard for product class 5 (refrigerator

- freezers with automatic defrost with

bottom

- mounted freezer without TTD ice service) was established to cover only products

without TTD ice

- service at the time of its development. The actual energy consumpti on of this new product (i.e., with TTD ice

- service) is higher than that of product class 5 due to the added heat loss through the door to the fresh

- food space , the reduced temperatures of the space reserved in the fresh food compartment for ice storage, wh ich is maintained at lower temperatures than the rest of the fresh food compartment, and the energy consumed by the fan used to cool the space used for ice production and storage

.

DOE’s Office of Hearings and Appeals granted an ex ce ption to Electrolux H ome Products (Electrolux) for a specific brand of chest freezer with automatic defrost (case number

TEE

- 0012). The Association of Home Appliance Manufacturers (AHAM) filed a letter supporting this ex emption and recommended that DOE use the direct final rul e process to establish a new class of chest freezers that would correspond to the minimum efficiency standard3-5 for automatic defrost chest freezers. The minimum standard for product class 10 (chest freezers and all other freezers) was established to cover p roducts without automatic defrost at the time of its development. The a ctual energy consumption of the new product (i.e., with automatic defrost) is higher than that of product class 10 due to the added energy consumption associated with the

automatic defr ost system.

Five of the additional new product classes are all

- refrigerator products which DOE proposes to separate from their current product classes, which currently include refrigerators with freezer compartments, refrigerator

- freezers, and/or all

- refr igerators. The proposed test procedure changes described in section 3.2.2 will result in significantly higher energy use for refrigerators with freezer compartment s and refrigerator

- freezers and somewhat less energy use

for all

- refrigerators. Hence, maintaining meaningful but fair energy standards requires the separation of all

- refrigerators from the other product types.

DOE proposes six of the additional new produ ct classes to distinguish products with automatic icemakers from those that do not have automatic icemakers. The proposed incorporation of icemaking energy use into the test procedure for products with automatic icemakers requires this step.

Ten of the ad ditional new product classes are built

- in products. Built

- in products represent a small percentage of total refrigeration product shipments, in the range 1 to 2 percent. These products are designed to be integrated seamlessly into the kitchen cabinetry . Ac hieving this functionality requires design features that limit the potential to improve efficiency. DOE has concluded that creating separate product classes for these products is justifiable under EPCA’s requirements for separate product classes (42 U.S.C. 6295(q)).

3.2.2 P roduct Test Procedures

The CFR establishes the test procedures for refrigerators, refrigerator

- freezers, and

freezers. (10 CFR Part 430, Subpart B, Appendices A1 and B1 ) DOE initiated a test procedure rulemaking in late 2008 to address test procedure issues identified at the framework workshop associated with this energy conservation standard rulemaking and to address recent test procedure waivers. A test procedure NOPR was pu blished May 27, 2010. 75 FR 29824

The NOPR propose d the following test procedure amendments to apply to products manufactured prior to the energy conservation standard compliance date (January 1, 2014):

1. Modified procedures for test sample preparation

2. Clarification of procedures for establishing product clearances to walls during testing

3. Special requirements in case non

- standard compartment temperature sensor locations are used during testing.

4. Clarification of how to set the median temperature settings for electronic control products

5. Modified test procedures for convertible compartments and special compartments

6. Establishment of a temperature

- averaging procedure for auxiliary compartments

7. Modified definition for anti

- sweat heater so that the definition ap plies to heaters preventing

interior as well as exterior condensation.

8. Clarification that averaging of tests with the anti

- sweat heater switch turned on and off3-6 applies to energy use measurements as well as annual energy cost measurements.

9. Incorporation of t est p rocedures for p roducts with v ariable a nti

- s weat h eating c ontrol

, currently addressed in w aivers

10. Modification of the long

- time and v ariable d efrost t est method to capture p recooling e nergy 11. Establishing t est p rocedures measure all defrost energy use for products with m ultiple d efrost

c ycle t ypes 12. Elimination of the optional Part 3 of the v ariable d efrost t est

13. Corrections and o ther t est p rocedure l anguage c hanges

14. Requirements to i nclud e in c ertification r eports some additional i nformation to c larify e nergy

m easurements

The test procedure NOPR also proposed changes to apply to products manufactured on or after the energy conservation standard compliance date, as follows.

1. Update the AHAM standard reference from AHAM HRF

- 1

- 1979 to HRF

- 1

- 2008

2. Establishin g new compartment temperatures

3. Establishing a new volume calculation method

4. Clarification and adjustments to requirements for control settings for refrigerators and refrigerator

- freezers during testing

5. Incorporation of a fixed

- value placeholder representin g icemaking energy use for products

with automatic icemakers.

DOE proposed the first of these two groups of changes without an expectation that they would require changes in the energy conservation standards. The expected measurement changes

for the secon d group of changes are associated primarily with the compartment temperature changes and the change in the volume calculation method. Chapter 5 discusses these measurement changes in greater detail, in section 5.4.2.

3.2.3 M anufacturer Information

This section provides information on domestic manufacturers of residential refrigerator s , refrigerator

- freezer s , and freezer s , including their brand names and products sold in the United States (section 3.2.3.1 ), estimated market shares (section 0 ), industry mergers and acquisitions (section 3. 2.3.3 ), and product distribution channels (section 3.2.3.4 ). The section also discusses manufacturer trade groups (section 3.2.3.5 ) and manufacturers of compr essors ( section 3.2.3.6 ), as this is one of the most important components of residential refrigeration products.

3.2.3.1 Refrigerator, Refrigerator

- Freezer, and Freezer Ma nufacturers

Table 3.2

. 2 lists refrigerator, refrigerator

- freezer, and freezer manufacturers selling product s in the United States. The second column indicates whethe r the manufacturer is a member of AHAM, and the third column indicates whether the manufacturer produces products

that are ENERGY STAR compliant. Manufacturers that are a member of AHAM are listed first

in the table and generally have the largest U.S. mark et shares. There are also several smaller manufacturers supplying products to the U.S. Those smaller manufacturers that produce

ENERGY STAR

- compliant products are listed directly after AHAM member manufacturers.3-7 Table 3.2

. 2 Refrigerator, Refrigerator

- Freezer, and Freezer Manufacturers

Manufacturer Name AHAM

Member E*

Products Std Refrig

Freezer Freezer Com

pact Built

- In Custom

Door/Inter. Under

Counter Luxury Unitoo Other ′ ′ Aga Foodservice Group* Y

- - - - - - - - - Marvel Industries

- - Y Y

- Y

- Y Y (BI,SS,SI) Y Northland Corp.

- - - Y

- - Y

- Y ( BI,SS,CDD,SI)

- Bosch Home Appliances Corp. Y Y Y Y

- - Y

- Y (CDD,SS)

- Electrolux Home Products** Y Y

- - - Y Y Y Y (CDD,SS,BI)

- Frigidaire

- Y Y Y

- - - - - - Fisher & Paykel Appliances Inc. Y

- Y

- - - - - Y (SS)

- GE Appliances*** Y Y Y Y Y

- - - Y (SS,SI)

-

Hotpoint

- Y Y Y Y

- - - - - Monogram

- Y Y Y

- Y

- - Y (BI,SS,SI) Y Haier Group Y Y Y

- Y

- - - Y (CB,SS,SI) Y

LG Electronics Y Y Y

- - - - - Y (TD,SI, SS) Y

Liebherr Y Y Y

- - Y

- - Y (BI,SS) Samsung Electronics America Y Y Y

- - - - - - - Sanyo North America Corp. Y Y Y Y Y

- - Y

- Y

Sub

- Zero Freezer Company Y Y

- Y

- Y Y Y Y (BI,CDD) Y

U

- Line Corporation Y Y

- Y Y

- - Y

- Y Viking Range Corporation Y Y

- Y

- Y Y

- Y (BI,CDD,SS)

- Whirlpool †† Y Y Y

- - - - - - - Amana Appliances

- Y Y Y

- - - - Y (SS) Y Maytag

- Y Y Y

- - - - Y (SI,SS)

- Estate Appliances

- - Y

- - - - - - - Magic Chef & Ewave

- - Y Y Y

- - - - - Gladiator Garage Works

- Y Y

- - - - - - - Ikea

- Y Y

- - - - - - - Inglis Home Appliances

- Y Y

- - - - - - - Jenn

- Air

- Y Y

- - Y Y

- Y (SS,SI,PI,CDD,BI)

- Kitchen Aid

- Y Y

- - Y

- Y Y (BI,SS,PI) Y Roper Appliances

- - Y

- - - - - - - Daewoo Electronics Co.

- Y

- - Y

- - - - - Gorenje USA, Inc.

- Y NA NA NA NA NA NA NA NA Organizacion Mabe #

- Y Y

- Y

- - - - - Camco Inc.

- Y Y Y Y

- - - Y (SI,SS,PI)

- Moffat

- Y Y

- - - - - - - Summit Appliances

- Y Y Y Y

- - Y

- Y

Atlas Eléctrica ##

- - NA NA NA NA NA NA NA NA Indesit Company ###

- - Y

- - - - Y

- -3-8 Manufacturer Name AHAM

Member E*

Products Std Refrig

Freezer Freezer Com

pact Built

- In Custom

Door/Inter. Under

Counter Luxury Unitoo Other ′ ′

WiniaMando Inc.

- - - - - - - - - Kimchi

Kenmore ^^

- Y Y Y Y

- - - - - * Owns Marvel Industries and Northland Corp.

** Includes Frigidaire and White Westinghouse brands. *** Includes Hotpoint and Monogram brands.

†† Includes the following brands: Amana Appliances, Maytag, Estate Appliances, Magic Chef & Ewave, Gladiator Garage Works, Ikea, Inglis Home Appliances, Jenn

- Air, Kitchen Aid, Roper Appliances.

# 48 percent owned by GE. Includes Moffat brand. Owns Camco Inc.

## 20 percent owned by Electrolux. ### Includes Aritson brand.

^^ Brand names that are produced by more than one mfg.

oo SS=Stainless Steel; BI=Built

- In; CDD=Customized Designed Door; TD=TV in Door; SI=Size; CB=Convertible; PI=Price

′′ Units included: units with more than three doors, units for ‘compact kitchens’; refrigerated drawers; commercial

- size units3-9 Table 3.2

. 2 also indicates the types of products that each manufacturer produces. Product types include: standard

- size refrigerator

- freezers, freezers, compact units, built

- in units, custom units, underc ounter units, luxury units, and other types. Other types include: units with more than three doors, units for ‘compact kitchens’ other than compact refrigerators, refrigerated drawers,

and commercial

- size units.

3.2.3.2 Refrigerator, Refrigerator

- Freezer, and Free zer Manufacturer Market

Shares

Appliance magazine provides market share data for the most significant manufacturers ( i.e. , manufacturers with the greatest sales) for the following four product types: (1) standard

- size refrigerators and refrigerator

- freeze rs, (2) compact refrigerators, (3) built

- in/undercounter refrigerators, and (4) freezers. 4 Table 3.2

. 3 through Table 3.2

. 6 show how market shares have changed over at least a ten

- year period. Market share s among the largest manufacturers of

standard

- size refrigerator

- freezers have remained relatively stable. Whirlpool Corporation ( Whirlpool )’s 2006 acquisition of Maytag Corporation (Maytag) (discussed below) now gives Whirlpool the largest U.S. market shar e. Also, Haier America Trading, LLC (Haier) , a relatively recent entrant to the market, captured six percent of the market in 200 8

.

Table 3.2

. 3 Standard

- Size Refrigerator

- Freezer Manufacturer Market Shares

The market for compact refrigerators has seen a dramatic shift since 1993 ( Table 3.2

. 4 ). SANYO North America Corporation ( Sanyo ) had the largest market share by far in 1993 , but now accounts for only seven percent of the market. Haier now has the largest compact refrigerator market share, followed by the joint venture between GE and Mexican appliance

company Grupo P.I. Mabe S.A. (Mabe )

. Company Market Share

2008 2007 2006 2005 2004 2002 2000 1995

GE 27% 29% 29% 29% 29% 36% 34% 35%

Electrolux 23% 25% 25% 25% 25% 26% 21% 17% Whirlpool 33% 25% 25% 25% 25% 23% 24% 27%
Maytag NA 10% 10% 11% 11% 13% 14% 10% Goodman/Raytheon (Amana) NA NA 0% 0% 0% 0% 5% 10%

Haier 6% 4% 3% 2% 2% 2% 0% 0%

W.C. Wood 1% 1% 1% 1% 0% 0% 0% 0%

Other 10% 6% 7% 7% 8% 0% 2% 1%

Source: Appliance magazine3-10 Table 3.2

. 4 Compact Refrigerator Manufacturer Market Shares

The reported market for built

- in undercounter units has remained relatively stable over the past ten years ( Table 3.2

. 5 ). The data show that U

- Line Corporation (U

- Line) has the greatest

market share . Note that t his market share distribution does not include full

- size built

- in products.

Table 3.2

. 5 Built

- In Undercounter Refrigerator Manufacturer Market Shares

Company Market Share

2007 2006 2005 2004 2002 2000 1995*

U

- Line 69% 70% 69% 67% 65% 75% 58%

Marvel 21% 21% 21% 22% 25% 14% 27%

Sub

- Zero 6% 6% 6% 7% 6% 10% 12%

Others 4% 3% 4% 4% 4% 1% 3%

Source: Appliance magazine; * 1995 data includes compact refrigerators.

Market share data for full

- size built

- in refrigerators and refrigerator

- freezers is not publicly available. Key manufacturers in this product category include Sub

- Zero, General Electric’s Monagram line, Whirlpool’s Kitchenaid line, Viking, and Northland. Manufacturers providing imported products for this market include Liebherr, Bosch , and Miele. AHAM has recently begun collecting shipment data on built

- in products. The percentage of overall shipments represented by built

- in products has fluctuated between 2005 and 2007 between 1.6%

and 2.2%. This includes both full

- size and compact (undercounter) built

- in products. This data was provided by AHAM as part of the pre

- NOPR phase of this rulemaking. Company Market Share

2007 2006 2005 2004 2002 1997 1993

Haier 22% 21% 20.1% 20% NA 15% 0%

GE/Mabe 16% 16% 16.7% 17% NA 18% 17% Sanyo 7% 7% 7.3% 8% NA 58% 61%

U

- Line 5% 5% 4.8% 0% NA 0% 0% Danby 3% 3% 2.9% 3% NA 0% 0%

Avanti 1% 2% 2.5% 0% NA 0% 0% Whirlpool/Consul 1% 2% 1.9% 0% NA 2% 2%

Marvel 2% 2% 1.6% 0% NA 0% 0%

Wanbao NA 0% 0% 0% NA 5% 12%

Others 43% 42% 42.2% 52% NA 2% 8%

Source: Appliance magazine3-11 For chest and upright freezers, Electrolux has retained the largest market share for ten years ( Table 3.2

. 6 ). Haier, which was not in the market in 1995, now captures 16 percent of the

market.

Table 3.2

. 6 Chest/Upright Freezer Manufacturer Market Shares

3.2.3.3 Mergers and Acquisitions

The appliance manufacturing industry has had a continuous history of consolidation. Maytag acquired Jenn

- Air Corporation (Jenn

- Air) in 1982, Magic Chef, Inc. (Magic Chef) in 1986, and Amana Appliances (Amana) in 2001. Whirlpool acquired the KitchenAid division of Hobart Corporation (KitchenAid) in 1986. White Consolidated Industries (WCI) acquired Frigidaire in 1979, and AB Electrolux acquired WCI ( including F rigidaire) in 1986.

Mergers and acquisitions have two purposes. First, they produce large corporations with the financial resources and stability to be successful in a competitive market. Second, mergers

a nd acquisitions mean manufacturers can have a complete line of home appliances. This product diversification allows firms to offer a complete set of appliances to consumers, an important

feature in the builder market. There is also increasing worldwide com petition in the major appliance market, so mergers and acquisitions are likely to continue.

On August 22, 2005, Whirlpool and Maytag announced plans to merge in a deal worth
$2.7 billion. 5 Maytag shareholders approved the merger on December 22, 2005. Th e U.S. Department of Justice (DOJ) Antitrust Division initiated an investigation into the effects of the merger, including potential lessening of competition or the creation of a monopoly. Opponents of the merger asserted that the combined companies would control as much as 70 percent of the residential laundry market and as much as 50 percent of the residential dishwasher market. 6
Whirlpool claimed that its large potential residential laundry market share was skewed because the company produces washing mac hines for Sears, which sells them under its Kenmore in

house brand. Whirlpool further stated that it must periodically bid with other manufacturers to keep the Kenmore contract and that Sears controls the pricing of the Kenmore units. 7

In early January 20 06, U.S. Senator Tom Harkin and U.S. Representati ve Leonard

Boswell called on the DOJ to block the merger, claiming it would give Whirlpool an unfair advantage in the home appliance industry. On March 29, 2006, DOJ closed its investigation and approved the merger. DOJ stated that “the proposed transaction is not likely to reduce competition substantially. The combination of strong rival suppliers with the ability to expand Company Market Share

2008 2007 2006 2005 2004 2002 2000 1995

Electrolux (Frigidaire) 64% 66% 66% 67% 68% 68% 69% 67%

W.C. Wood 19% 20% 21% 21% 22% 21% 27% 30%

Haier 16% 13% 12% 11% 9% 9% 3% 0% Sanyo 1% 1% 1% 1% 1% 2% 1% 1% Whirlpool 0% NA 0% 0% 0% 0% 0% 1%

Others 0% NA 0% 0% 0% 0% 0% 1%

Source: Appliance magazine3-12 sales significantly and large cost savings and other efficiencies that Whirlpool appe ars likely to achieve indicates that this transaction is not likely to harm consumer welfare.” 8

The DOJ Antitrust Division focused its investigation on residential laundry, although it considered impacts across all products offered by the two companies. D OJ determined that the merger would not give Whirlpool market power in the sale of its products and that any attempt to raise prices would likely be unsuccessful. To support this claim, DOJ provided reasons including: (1) other U.S. brands, including Kenmo re, GE, and Frigidaire, are well established; (2) foreign manufacturers, including LG and Samsung, are gaining market share; (3) existing U.S. manufacturers are below production capacity; (4) the large home appliance retailers have

alternatives available t o resist price increase attempts; and (5) Whirlpool and Maytag substantiated large cost savings and other efficiencies to benefit consumers. 8

Whirlpool and Maytag completed the merger on March 31, 2006.

In May 2009, W.C. Wood, a major freezer manufacturer, declared bankruptcy in Canada

and the U.S. A ttempts to s ell W.C. Wood w ere un successful , and on November 16, 2009, W.C.

Wood entered liquidation. W.C. Wood had a long

- standing relationship with Whirlpool as its freezer supplier

. Whirlpool purchased the W.C. Wood facility and assets in Ottawa, OH in

December 2009. W.C. Wood had the second largest market share of all freezer manufacturers at the time of its exit from the industry, so the competitive landscape for standard size freezers will change in 2010 and beyond.

3.2.3.4 Distribution Channels

M ost residential refrigerator s and freezer s move directly from manufacturers to retail

outlets. Table 3.2

. 7 identifies the types of retail stores through which major appliances, including refrigerators and freezers, are sold based on data from AHAM 2005 Fact Book

. 9

Table 3.2

. 7 Major Appliance Sales by Channel
Type of Store Percentage of Appliance Purchases Department Store (such as Sears or Kohls) 34.7% Appliance Store or Consumer Electronics Store 30.9%

Home Improvement Store (such as Lowe’s or Home Depot) 23.8% Discount Store (such as Wal

- Mart or K

- Mart) 2.0% Membership Warehouse Club/Store (such as Sam’s or Costco) 1.8% Another type of store 6.8%

Source: AHAM Fact Book

A certain share of shipments is purchased through channels other than retail outlets, e.g. , by multi

- family home builders for installation in new homes. The Consortium for Energy Efficiency (CEE) estimates that 20 to 30 percent of home appliance sales are commercial sales,

i.e. , sales to single/multi

- family builders, contractors, government, public housing, and multi

family property managers. 10 Because single

- family builders typically do not include refrigerator

freezers as part of a home sale, the 20 to 30 percent estimate by CEE is probably too high for the refrigerator market.3-13 3.2.3.5 Manufacturer Trade Groups

AHAM is the primary manufacturer trade group representing most manufactures of refrigerators, refrigerator

- freezers, and freezers. AHAM provides services to its members including government relations; certification programs for room air conditioners, dehumidifiers,

and room air clean ers; an active communications progr am; and technical services and research. In addition, AHAM conducts other market and consumer research studies and publishes a

biennial Major Appliance Fact Book

. AHAM also develops and maintains technical test procedures for various appliances to provide uniform, repeatable procedures for measuring specific product characteristics and performance features

.

3.2.3.6 Compressor Manufacturers and Market Shares

Because the compressor is a key energy

- using component of refrigerators, it is important

to determine which compressor manufacturers are supplying the U.S. refrigerator market. According to three sources, Embraco is the compressor manufacturer with the largest global market share, although several other manufacturers have significant global market share as

well

. 11

, 12 F or the U.S. refrigerator market, based on data from Embraco, it has by far the largest

market share. 13

Table 3.2

. 8 Besides Embraco, there are five other major compressor manufacturers supplying the world refrigerator and freezer market: Appliances Components Com panies ( ACC )

, Tecumseh Compressor Company (Tecumseh) , Danfoss Compressors GmbH , Matsushita Electric Industrial Co., Ltd. (Matsushita) , and LG Electronics, Inc. (LG)

. lists the compressor manufacturers and their estimated global and U.S. market shares.

Table 3.2

. 8 Compressor Manufacturers and World and U.S. M arket Shares

Manufacturer World Market Share U.S. Market Share

2005* Year not specified** 2006*** 2001 †

Embraco 19.5% ~23% 25% 56%

ACC 15.0% ~20% NA NA

Tecumseh 13.5% ~8% NA NA

Matsushita 12.9% ~9% 18% NA

LG 10.8% ~8% NA NA

Danfoss 8.9% ~9% 15% < 1%

Others 19.4% ~23% NA NA

Sources: *Universidade Federal de Santa Catarina, 2006; **Institute for Materials Science, Welding and
Forming; ***Unable to cite source; † Embraco, 2001

.

3.2.4 R egulatory Programs

The following section details current regulatory programs mandating energy conservation standards for refrigerator/freezers. It covers U.S. Federal energy conservation standards , State standards, standards in Canada and Mexico (which may impact the companies serv icing the

North Americ an market), and international standards.3-14 3.2.4.1 Federal Energy Conservation Standards

The National Appliance Energy Conservation Act of 1987 (NAECA) (42 U.S.C. 6291

– 6309 ) established efficiency standards for refrigerators and refrigerator

- freezers with a total

r efrigerated volume of less than 1104 L (39 ft 3 ) and for freezers with a total refrigerated volume

of less than 850 L (30 ft 3 ). Compact refrigerators and freezers represent separate product classes

and have a volume less than 220 L (7.75 ft 3 ) and a height o f 0.91 meters (36 inches) or less. The minimum efficiency levels depend on product class and adjusted volume. The adjusted volume is equal to the fresh food internal volume plus an adjustment factor which depends on the product

type times the freezer inter nal volume. The adjustment factor is 1.63 for refrigerator

- freezers, 1.44 for refrigerators with freezer compartments, 1.00 for all

- refrigerators (which may have a freezer compartment with less than 0.5 ft 3 volume), and 1.73 for freezers. Maximum annual

en ergy use is expressed as kilowatt

- hours (kWh) per year (yr) . Note the these adjustment factors would change under the test procedure proposed to be required for testing of products when new energy conservation standards take effect in 2014. 75 FR 29824 (Ma y 27, 2010)

NAECA initially established energy conservation standards for refrigerator

- freezers t hat

became effective in 1990. D OE amended NAECA with new standards that went into effect in 1993, followed by the current amended standards that became effec tive in July 2001. Refrigerator

- freezers manufactured to meet the 2001 standard typically consume about 30 percent less energy than required under the 1993 efficiency regulations. The 1993 and 2001

standards are summarized in Table 3.2

. 9 below.3-15 Table 3.2

. 9 Federal Energy Efficiency Standards for Refrigerator s , Refrigerator

- Freezer s , and Freezer s

Product Class Energy St andard Equations for Maximum Energy Use (kWh/yr)

Effective January 1, 1993 Effective July 1, 2001

1. Refrigerators and r efrigerator

- freezers with manual defrost. 13.5AV+299

0.48av+299 8.82AV+248.4

0.31av+248.4

2. Refrigerator

- freezer

— partial automatic defrost. 10.4AV+398

0.37av+398 8.82AV+248.4

0.31av+248.4

3. Refrigerator

- freezer

— automatic defrost with top

- mounted freezer without through

- the

- door ice service and all

refrigerator

— automatic defrost. 16.0AV+355

0.57av+355 9.80AV+276.0

0.35av+2 76.0

4. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without through

- the

- door ice service. 11.8AV+501

0.42av+501 4.91AV+507.5

0.17av+507.5

5. Refrigerator

- freezers

— automatic defrost with bottom

- mounted

freezer without through

- the

- door ice service. 16.5AV+367

0.58av+367 4.60AV+459.0

0.16av+459.0

6. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice service. 17.6AV+391

0.62av+391 10.20AV+356.0

0.36av+356.0

7. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 16.3AV+527

0.58av+527 10.10AV+406.0

0.36av+406.0

8. Upright freezers with manual defrost. 10.3AV+264

0.36av+264 7.55AV+258.3

0.27av+258.3

9. Upright f reezers with automatic defrost. 14.9AV+391

0.53av+391 12.43AV+326.1

0.44av+326.1

10. Chest freezers and all other freezers except compact freezers. 11.0AV+160

0.39av+160 9.88AV+143.7

0.35av+143.7 11. Compact refrigerators and refrigerator

- freezers with manual

defrost. 13.5AV+299*

0.48av+299* 10.70AV+299.0

0.38av+299.0

12. Compact refrigerator

- freezer

— partial automatic defrost. 10.4AV+398*

0.37av+398* 7.00AV+398.0

0.25av+398.0 13. Compact refrigerator

- freezers

— automatic defrost with top

mounted freezer and compact all

- refrigerator

— automatic defrost. 16.0AV+355*

0.57av+355* 12.70AV+355.0

0.45av+355.0 14. Compact refrigerator

- freezers

— automatic defrost with side

mounted freezer. 11.8AV+501*

0.42**+501* 7.60AV+501.0

0.27av+501.0 15. Compact refrigerator

- freezers

— automatic defrost with bottom

mounted freezer. 16.5AV+367*

0.58av+367* 13.10AV+367.0

0.46av+367.0

16. Compact upright freezers with manual defrost. 10.3AV+264*

0.36av+264* 9.78AV+250.8

0.35av+250.8

17. Compact upright freezers with automatic defrost. 14.9AV+391*

0.53av+391* 11.40AV+391.0

0.40av+391.0

18. Compact chest freezers. 11.0AV+160*

0.39av+160* 10.45AV+152.0

0.37av+152.0

5A . Refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. NA 5.0AV+539.0

0.18 av+539.0

10A . Chest freezers with automatic defrost. NA 14.76AV+211.5

0.52av+211.5

AV: Adjusted Volume in ft 3 ; av: Adjusted Volume in L

* Applicable standards for compact refrigerator products manufactured before July 1, 2001 . Compact refrigerator products are not separate product categories under the standards effective January 1, 1993.3-16 As discussed in section 3.2.1 , two of the pro duct classes listed in the table were made effective through the exception relief process of the Office of Hearings and Appeals. These product classes include ( 5A ) automatic defrost refrigerator

- freezers with bottom

- mounted freezer

and TTD ice service, and (10A) automatic defrost chest freezers.

The Energy Independence and Security Act of 2007 (EISA) (P.L. 110

- 140) , requires that DOE publish a final rule no later than December 31, 2010 to determine whether to amend the standards in effect for refrigerator s, refrigerator

- freezers, and freezers manufactured on or after January 1, 2014

.

3.2.4.2 State Energy Conservation Standards

As part of its Title 20 Appliance Efficiency Regulations, the California Energy Commission (CEC) has established standards for consumer refrigeration products that are not covered by Federal standards. CEC set stan dards for wine chillers ( Table 3.2

. 10 ) and freezers

that have a total refrigerated volume greater than 850 L (30 ft 3 ) ( Table 3.2

. 11 ). 14 The standards for freezers with volume greater than 30 ft 3 are numerically identical to the federal standards for

smalle r freezers

— the California standards simply extend the federal standards beyond the

federal size limitation.

Table 3.2

. 1 0 California Standards for Wine Chillers
Appliance Maximum Annual Energy Consumption (kWh)

Wine chillers with manual defrost 13.7V + 267

Wine chillers with automatic defrost 17.4V + 344

V = volume in ft 3

.

Table 3.2

. 11 California Standards for Freezers with Volume Greater than 30 c ubic feet Appliance Maximum Annual Energy Consumption (kWh) Upright Freezers with manual defrost 7.55 A V + 258.3
Upright Freezers with automatic defrost 12.43 A V + 326.1

Chest Freezers 9.88 A V + 143.7

A V = adjusted total volume, expressed in ft 3 , which is 1.73 times freezer volume (in ft 3 ).

3.2.4.3 Canadian Energy Conservation Standards

R efrigerators and freezers are regulated products in Canada under the Canadian Ener gy Efficiency Regulations. The r egulations reference Canadian Standards Association (CSA)

CAN/CSA

- C300

- 00

, Energy Performance and Capacity of Household Refrigerators, Refrigerator

- Freezers, and Freezers

, for the testing procedure and for maximum annual energy consumption (MAEC) limits for residential refrige rators, ref rigerator

- freezers, and freezers

. The product classes and MAEC limits in the Canadian regulations are the same as in the U.S. Federal

standards.3-17 In November 2006, Canada added two new product types to its Regulations (Amendment 9) to harmonize with recent U.S. rulings with respect to these products. 15

Table 3.2

. 12 These product types are refrigerator

- freezers with automatic defrost and with a bottom

- mounted freezer with TTD ice

service and chest freezer s with automatic defrost system. T he maximum energy use regulations

, listed in below, are identical to the energy standards that DOE’s Office of Hearings and Appeals assigned to these classes.

Table 3.2

. 12 Canadian Energy Standards for Added Refrigerator and Freezer Product

Classes Appliance Maximum Annual Energy Consumption (kWh)

Product Class 5A 0.18av+539 : refrigerator

- freezers with

automatic defrost and with bo ttom

- mounted

freezers with TTD ice service

Product Class 10A 0.52av + 211.5 : chest freezers with automatic defrost system av = adjusted volume in liters

Natural Resources Canada (NRCan)’s Office of Energy Efficiency (OEE) amend ed

Canada's Energy Efficiency R egulations to add energy performance standards for residential wine chillers (or wine coolers). 16

Table 3.2

. 13 The proposed standard includes a test procedure and minimum energy performance standard levels for wine chillers harmonized with those in ef fect in

California. below shows the maximum annual energy consumption limits (in kWh)

for residential wine chillers.

Table 3.2

. 13 Canadian Standards for Wine Chillers
Appliance Maximum Annual Energy Consumption (kWh)

Wine chillers with manual defrost 0.48 av + 267

Wine chillers with automatic defrost 0.61 av + 344

av = adjusted volume in L

.

3.2.4.4 Mexican Energy Conservation Standards

The Mexi c an Official Standard establishes the maximum energy consumption limits for household refrigerators and freezers using hermetic motor

- driven compressors, specifies the test methods for determining such energy consumpt ion and the total refrigerated volume, and provides energy consumption label requirements . This standard applies to household refrigera tors up to 1,104 cubic decimeter s (39 ft 3 ) and household freez ers of up to 850 cubic

decimeter s (30 ft 3 ) using hermetic motor

- driven compressors. 17

3.2.4.5 Efficiency Standards O utside North America The new standard level s (NOM

015

- ENER

- 2002) became effective i n May 2003

.

According to the Collaborative Labeling and Appliance Standards Program (CLASP) database, all 15 original European Union (EU) member countries, plus 16 other countries outside3-18 North America, have mandatory energy efficiency standards for refrigerator

- freez ers. 18 The countries other than the original EU member countries are: Algeria, Australia, Bahrain, Chile, China, Chinese Taipei, Costa Rica, Hungary, Indonesia, Iran, Israel, New Zealand, Philippines, Republic of Korea, Thailand, and Viet Nam.

In 2005, t he European Parliament adopted a Commission proposal for a directive on

establ ishing a framework for setting e co

- design requirements (such as energy efficiency requirements) for all energy

- using products in the residential, tertiary (services), and industr ial

sectors. 19 EU

- wide rules for eco

- design are intended to ensure that disparities among national regulations do not become obstacles to intra

- EU trade. The directive does not directly introduce binding requirements for specific products, but does define c onditions and criteria for setting requirements regarding environmentally relevant product characteristics (such as energy consumption)

, and allows these requirements to be improved quickly and efficiently. The directive will be followed by implementing me asures that will establish the eco

- design requirements.

It is difficult to compare the standards in other countries with those in the U.S. due to differences in test procedures. The development of an international test procedure under the auspices of the International Electrotechnical Commission has international test procedure harmonization as a key objective. Establishment of Standard IEC 62552 , which is currently under development, should make it easier in future to compar e international refrigeration product energy standard level s

.

3.2.5 V oluntary and other F ederal and S tate P rograms

In addition to mandatory standards, there are voluntary programs

— e.g. , the Federal Energy Management Program (FEMP) and CEE

— as well as other Federal and State policies that affect the efficiency of new refrigerators and freezers.

3.2.5.1 ENERGY STAR

Historical ENERGY STAR Requirements

ENERGY STAR is a voluntary program administered by the U. S. government to
promote energy e fficient consumer products. Table 3.2.14 below shows the history of ENERGY

STAR energy use criteria for each of the three covered product categories.3-19 Table 3.2

. 14 History of ENERGY STAR Energy Use Criteria for Residential Refrigerators

and Freezers Product Group 1997

Initial

Criteria 2001

Revision #1 2003

Addition of

Freezers

and Compacts 2004

Revision #2 2008

Revision #3

Standard

- size Refrigerators & Refrigerator

Freezers 20% below

1993 Federal

Standard 10% below

2001 Federal

Standard 10% below

2001 Federal

Standard 15% below

2001 Federal

Standard 20% below

2001 Federal

Standard

Standard

- size

Freezers

-------- -------- 10% below

2001 Federal

Standard 10% below

2001 Federal

Standard 10% below

2001 Federal

Standard Compact Refrigerators &

Freezers -------- -------- 20% below

2001 Federal

Standard 20% below

2001 Federal

Standard 20% below

2001 Federal

Standard

As of 2006, the market share of ENERGY STAR

- compliant full

- size refrigerators and refrigerator

- freezers was just under 30%. 20 Within this category, approximately 20 percent of

top

- and bottom

- mount and 50 percent of side

- mount re frigerator

- freezer units sold in the U.S.

we re ENERGY STAR compliant. Some States ( i.e. , Massachusetts, Michigan) have waived s tate sales tax for purchase of appliances that meet ENERGY STAR levels.

New ENERGY STAR requir e ments effective in 2008

The curre nt ENERGY STAR criteria, drafted with input from stakeholders and two rounds of public comments, went into effect on April 28, 2008. To support the change,

ENERGY STAR released a market analysis 20 and a final report on proposed program requirements. 21 Table 3.2.15 shows the number of models that met the current Federal standard for refrigerators and available models with efficiencies 15 percent, 20 percent, and 25 percent higher than the Federal standard , as of April 2007 (prior to the 2008 revision)

. E NERGY STAR program staff deemed the number of models offered to consumers at the higher efficiencies to be

sufficient to warrant changing the labeling criteria.3-20 Table 3.2

. 15 Efficiency of Standard Refrigerators and Refrigerator

- Freezers on the Market

Relative to Current Federal Standard

Efficiency Level Number of Available Models (prior to 2008 criteria revision) Percent of Available Models (prior to 2008 criteria revision)

Current Federal Standard (effective July 2001) 2,524 100%

2004 ENERGY STAR Criteria (15% better than Federal Standard) 1,441 57%

2008 ENERGY STAR Criteria ( 2 0% better than Federal Standard) 121 4.8%

25% better than Federal Standard 14 0.6%

Source: ENERGY STAR , April 27, 2007 20

3.2.5.2 Federal Energy Management Program

DOE’s FEMP a works to reduce the cost and environmental impact of the Federal government by advancing energy efficiency and water conservation, promoting the use of distributed and renewable energy, and improving utility management decisions at Federal sites.

FEMP hel ps Federal buyers identify and purchase energy

- efficient equipment, including residential refrigerator s and freezers.

Federal agencies are required by the Energy Policy Act of 2005 (EPACT 2005, P.L. 109

- 58) and Federal Acquisition Regulations (FAR) Subpart 23.2 to specify and buy ENERGY

STAR

- qualified products or, in categories with no ENERGY STAR label, FEMP

- designated products which are among the highest 25 percent of equivalent products for energy efficiency.

Table 3.2

. 16 below shows refrigerator and freezer performance requirements for Federal purchases.

a For more information, please visit www.eere.energy.gov/femp.3-21 Table 3.2

. 16 Performance Requirement for Federal Purchases of Refrigerators and

Freezers

Product Class Total Volum e* (ft 3 ) Product Class Number(s) *** Annual Energy Us e**
Single

– Door Manual Defrost < 2.4 11 255 kWh/year or less

Single

– Door Manual Defrost 2.5 to 4.4 11 275 kWh/year or less

Single

– Door Manual Defrost 4.5 to 6.4 11 295 kWh/year or less

Single

– Door Manual Defrost > 6.5 1 or 11 315 kWh/year or less

Single

– Door Automatic Defrost < 2.4 13 305 kWh/year or less

Single

– Door Automatic Defrost 2.5 to 4.4 13 325 kWh/year or less

Single

– Door Automatic Defrost 4.5 to 6.4 13 345 kWh/year or less

Single

– Door Automatic Defrost > 6.5 3 or 13 365 kWh/year or less

Bottom

– Mount Freezer < 18.4 5, 5A, or 15 475 kWh/year or less

Bottom

– Mount Freezer 18.5 to 20.4 5 or 5A 485 kWh/year or less

Bottom

– Mount Freezer > 20.4 5 or 5A 495 kWh/year or less

Top

– Mount Freezer < 10.4 3, 6, or 13 340 kWh/year or less

Top

– Mount Freezer 10.5 to 12.4 3 or 6 360 kWh/year or less

Top

– Mount Freezer 12.5 to 14.4 3 or 6 380 kWh/year or less

Top

– Mount Freezer 14.5 to 16.4 3 or 6 400 kWh/year or less

Top

– Mount Freezer 16.5 to 18.4 3 or 6 420 kWh/year or less

Top

– Mount Freezer 18.5 to 20.4 3 or 6 440 kWh/year or less

Top

– Mount Freezer 20.5 to 22.4 3 or 6 460 kWh/year or less

Top

– Mount Freezer 22.5 to 24.4 3 or 6 480 kWh/year or less

Top

– Mount Freezer > 24.5 3 or 6 500 kWh/year or less

Side

- mount Freezer < 20.4 4, 7, or 14 560 kWh/year or less

Side

- mount Freezer 20.5 to 22.4 4 or 7 580 kWh/year or less

Side

- mount Freezer 22.5 to 24.4 4 or 7 600 kWh/year or less

Side

- mount Freezer > 25.5 4 or 7 620 kWh/year or less

* T otal volume is the sum of the refrigerator and freezer volumes.

** An nual Energy Use is based on DOE test procedure (10 CFR 430, s ub p art B, a ppendix A1 ).

*** Possible Product Class numbers based on Product Class Descriptions

3.2.5.3 Consortium for Energy Efficiency

The Consortium for Energy Efficiency ( CEE ) is a nonprofit corporation that promotes the manufacture and purchase of energy

- efficient products and services. CEE promotes energy

efficient refrigerators that use significantly less electricity than the Federal standard. These

energy

- efficient refrigerators represent t he upper end of the ENERGY STAR efficiency levels

. Effective January 1, 2007, CEE identifies three tiers for “ super

- efficient” refrigerators and refrigerator

- freezers. Table 3.2.17 below provides the specifications for the CEE

.3-22 Table 3.2

. 17 CEE Tier Levels Refrigerators and Refrigerator

- Freezers
Efficiency level Percent Energy Use below Federal Standard Standard Refrigerators Compact Refrigerators

CEE Tier 1 (Current

ENERGY STAR ) 20 20

CEE Tier 2 25 25

CEE Tier 3 30 30

3.2.5.4 ENERGY STAR , FEMP, CEE Summary

Table 3.2

. 18 below presents maximum unit energy consumption (UEC) values for the

current Federal standard and the ENERGY STAR and CEE voluntary standards for (1) a top

mount refrigerator

- freezer with auto matic defrost with no TTD ice features and 21.4 ft 3 adjusted volume, and (2) a side

- mount refrigerator freezer with TTD features and 26.2 ft 3 adjusted

volume.

Table 3.2

. 18 Annual Energy Consumption for Refrigerator

- Freezers with Different Specifications
Efficiency Level Top Mount* Side

- Mount**

2001 Federal Standard 486 671

Former ENERGY STAR (15% below standard) 413 570

CEE Tier 1 , c urrent ENERGY STAR ( 20% below standard) 389 537
CEE Tier 2 (25% below standard) 364 503
CEE Tier 3 (30% below standard) 340 469

* Auto defrost, no TTD features, 18.2 ft 3 total volume, and 21.4 ft 3 adjusted volume.

** Auto defrost, TTD features, 21.7 ft 3 total volume, and 26.2 ft 3 adjusted volume.

Source: DOE FY

- 2005 Priority Se tting TSD; based on ENERGY STAR (2004), 22 FEMP (2005) 23 CEE (2004) 24

3.2.5.5 M anufacturer Tax Credits for Energy

- Efficient Appliances

EPACT 2005 provide d tax credits to manufacturers for the production of energy

- efficient residential refrigerators. These credits we re intended to help manufacturers meet the costs of producing appliances that exceed the Federal standards. The credit program was modified by t he Emergency Economic Stabilization Act of 2008 (EESA 2008) and extended through 2010. 25 The credit for residential refrigerators is a per

- product credit (see Table 3.2.19 ). For more information

on manufacturer ta x credits, refer to a ppendix 12

- C

.3-23 Table 3.2

. 19 Manufacturer Tax Credits for Energy

- Efficient Appliances in E ESA 200 8
Savings relative to 2001 Federal

Standard Applicable Credit Amount Applicable Years

20 % to 22.9% $ 50 2008

2 3 % to 24.9% $ 7 5 2008, 2009

25% to 29.9% $1 00 2008, 2009, 2010 30% or more $200

Notes: ‘R efrigerators’ refers to residential automatic defrost refrigerator

- freezers with an internal volume of at

least 16.5 ft 3

.

3.2.5.6 Rebates for Highly Energy

- Efficient Products

Electric utilities and other organizations promote the purchase of highly energy

- efficient refrigerators through consumer rebates. Typically, these programs offer rebates for products meeting existing ENERGY STAR efficiency levels. Some utilities also offer incenti ves to retire old and inefficient appliances by offering rebates and disposal services for recycling old units in order to encourage consumers to purchase new, more efficient units and to ensure the safe disposal of hazardous waste. T able 3.2

. 20 below lists some rebates that are offered in 20 10

.

Table 3.2

. 20 Rebates Offered for Highly Energy

- Efficient Refrigerators and Recycled Refrigerators in 20 10
Utility/Organization * Rebate Level

Ameren Illinois Utilities $35 (recycling)

Avista Utilities $25 ( ENERGY STAR ) BC Hydro $50 (ENERGY STAR ), $ 3 0 (recycling)

Bonneville Power Administration $25 ( ENERGY STAR ), $125 (recycling) City of Palo Alto Utilities $50 ( ENERGY STAR ), $35 (recycling)

Commonwealth Edison $50 ( ENERGY STAR ) Efficiency Maine $75 ( ENERGY STAR ) Efficiency Vermont $25 ( ENERGY STAR ), $ 50 (CEE Tier 2) , $30 (recycling)
Energy Trust of Oregon $50 ( ENERGY STAR and CEE Tier 1 )
Eugene Water & Electric Board $25 ( ENERGY STAR ), $30 (recycling)
Idaho Power Company $30 ( ENERGY STAR ) Long Island Power Authority $75 ( ENERGY STAR ), $35 (recycling)
Midwest Energy Efficiency Alliance

– Illinois 15% off ( ENERGY STAR ), $75 (recycling)

Midwest Energy Efficiency Alliance

– Indiana $30 (recycling)

Public Service Company of New Mexico $30 (recycling)
Puget Sound Energy $30 (recycling) San Diego Gas and Electric $25 ( ENERGY STAR ) Seattle City Light $30 (recycling) Snohomish Public Utility District $50 ( ENERGY STAR ), $30 (recycling)

Tacoma Power $30 (recycling)

* The table includes those programs listed as providing specified rebates for ENERGY STAR refrigerators in the publication “ Summary of Residential Appliance Programs in the United States and Canada ,” by CEE

, April 2010

. Additional programs may exist.3-24 3.2.5.7 State Tax Incentives for Highly Energy

- Efficient Products

According to the Database of State Incentives for Renewables & Efficiency (DSIRE ) 26

3.2.6 H istorical Shipments and Efficiencies , Michigan and Oregon offer personal tax credits for the purchase of premium

- efficiency refrigerators. Missouri, North Carolina, Virginia, and West Virginia offer sales tax incentives for premium

- efficiency refrigerators by offering 100% sales tax exempt ions at certain times throughout the year

.

3.2.6.1 Historical Shipments

Two public sources of information provide historical shipments data on residential refrigerators, refrigerator

- freezers, and freezers: Appliance magazine 27

9 and the AHAM Fact

B ook

. Appliance magazine breaks down refrigerator and refrigerator

- freezer shipments into three groups: (1) standard

- size units, (2) built

- in units, and (3) compact units. Both sources break

down f reezer shipments into chest and upright units. Unfortunately, neither source provides any further level of disaggregation. As discussed below, standard

- size shipments can be broken down into two broad groups: (1) top

- and bottom

- mount refrigerators and ref rigerator

- freezers, and (2)

side

- mount units.

Figure 3.2

. 1 shows historical shipments of refrigerators and refrigerator

- freezers. Figure

3.2

. 2 show s historical shipments of freezers

. In the past decade, annual shipments of standard refrigerator

- freezers have grown from 8 million to 11 million, although shipments have dropped

off significantly in 2007 and 2008 in response to poor economic conditions. A nnual shipments of compact refrigerators gr e w from one million to roughly 3 million , but shipments dropped starting

in 2006. Note that the data for refrigerators include products use d in non

- residential settings (e.g., hotels and offices), but the size of this market segment is unknown.

S hipments of chest and upright freezers have grown less rapidly than those of standard refrigerator

- freezers . These shipments rose from 1.5 million in 1997 to 2.5 million in 2002, but shipments dropped starting in 2005 and are now at 2 million annually. Shipments of compact freezers are roughly 0.5 million.3-25 Figure 3.2

. 1 Annual Shipments of Refrigerator s and Refrigerator

- Freezers

Figure 3.2

. 2 Annual Shipments of Freezers 0 2 4 6 8 10 121990199119921993199419951996199719981999200020012002200320042005200620072008Annual Shipments (millions)

Year Standard

- Size

Compact

0.0 0.5 1.0 1.5 2.0 2.5 3.01990199119921993199419951996199719981999200020012002200320042005200620072008Annual Shipments (millions)

Year Standard

- Size

Compact3-26 For DOE’s 2005 technical analysis of amended energy conservation standards for residential refrigerator

- freezers

, AHAM provided histor ical shipments data for the time period

1998

– 2004

, broken down into three broad groups: (1) top

- and bottom

- mount refrigerator

freezers, (2) side

- mount units, and (3) single

- door units. 28 Table 3.2

. 21 below shows market

share data for only two of the above three groups

— top

- or bottom

- mount refrigerator

- freezers

and side

- mount refrigerator

- freezers. According to DOE’s 2005 technical analysi s, t hese two prod uct groupings account for over 99 percent of standard

- size refrigerator

- freezer shipments. Data provided by AHAM as part of the pre

- NOPR phase shows that in recent years single

- door units accounted for 0.2% or less of shipments of standard

- size refrigerators and refrigerator

freezers. This data also shows a strong shift towards bottom

- mount refrigerator

- freezers in the last few years, coinciding with reduction in market share of both side

- mount and top

- mount refrigerator

- freezers.

Table 3.2

. 21 Market Shares of Standard Refrigerator

- Freezer Product Classes

Year Top

- Mount Refrigerator

- Freezer (percent) Bottom

- Mount Refrigerator

- Freezer (percent) Side

- Mount Refrigerator

Freezer (percent)

1998 69. 3 29.9

1999 68.8 30. 8

2000 68.3 31.3

2001 67.5 32. 1

2002 66. 6 32. 8

2003 63.7 34.5

2004 63.4 35. 1

2005 62.5 2.0 35.2

2006 54.5 10.6 34.6

2007 53.9 13.6 32.4

Source: AHAM

Based on data from The NPD Group for 2004

, 29 DOE estimated that (1) top

- mount refrigerator

- freezers without TTD ice service in the size category range of 14 to 21 ft 3 b

3.2.6.2 Historical Efficiencies comprise

81 percent of total top

- and bottom

- mount refrigerators , an d (2) side

- mount refrigerator

- freezers with TTD ice service in the size category range of 2 1 to 30 ft 3 comprise 98 percent of total side

mount refrigerator

- freezer shipments.

The average efficiency of new refrigerators and freezers has increased greatly since the

1980s. Figure 3.2

. 3 below (which shows annual electricity consumption) indicates the changes in efficiency resulting from the Federal standards that took effect in 1990, 1993, and 2001. Note that the average efficiency trends shown in the chart reflect changes in product size and features as well as changes in the efficiency within specific types of products. In particular, the growing

b Size category is based on ft 3 of total refrigerated volume (fresh food volume plus freezer volume).3-27 market share of side

- mount refrigerator

- freezers placed upward pressure on the average annual electricity use of new refrigerator

- freezers.

Figure 3.2

. 3 Average Annual Electricity Use of New Refrigerator

- Freezers and Freezers

Source: AHAM

ENERGY STAR sales data are an indicator of the demand for very energy

- efficient products

. The market share of ENERGY STAR labeled refrigerator

- freezers grew from 17 percent in 2001 to 33 percent in 2004 ( Table 3.2

. 22 ) and held steady in the low 30 percent range in the following two years

. 30

Table 3.2

. 22 Sales of ENERGY STAR Labeled Refrigerator

- Freezers

Year Energy Star Criteria Percent of Total

1998 20% below 1993 Standard 19%

1999 24%

2000 27%

2001 10% below 2001 Standard 17%

2002 20%

2003 26%

2004 15% below 2001 Standard 33%

2005 33%

2006 31%

Source: ENERGY STAR 0 200 400 600 800 1000 1200 1400 1600 1800

1970 1975 1980 1985 1990 1995 2000 2005 2010

YearAnnual Energy Use (kWh/year) Standard-Sized Refrigerator-Freezer

Freezer

1990

Standards

announced

1993

Standards

2001

Standards3-28 3.2.6.3 Imports and Exports

The share of domestic shipments of refrigerator s and freezers accounted for by imports

grew significantly in the 1994

- 2004 period. Refrigerator imports totaled nearly six million units

in 2004. Over one

- third of the imports came from Mexico. Freezer imports totaled around one

million units in 2004. 9

Annual refrigerator exports

— mostly to Canada

— were in the 1.0 to 1.1 million units range in the 1994

- 2004 period, while annual freezer exports ranged between 200 ,000 and

250 ,000 units

. 9

3.2.7 S aturation in U.S. H omes

Saturation refers to the percen tage of homes with a given product

. DOE used f our primary sources of information on the saturation and ownership of refrigerators, refrigerator

freezers, and freezers in U.S. homes : (1) a 2001 report prepared for AHAM by NFO Research,
Inc., 31 (2) Appliance magazine , (3) the Energy Information Administration (EIA)’s Residential Energy Consumption Survey (RECS), 32

, 33

, 34 and (4) a 2005 AHAM report entitled Major Appliance Saturation & Marketing Factors Study. 35 Only RECS provides market saturations for recently

- built housing; this information is usefu l for forecasting future shipments to new housing.

The saturation of standard refrigerators has been close to 100 percent for two decades ( Table 3.2.23 ). The RECS data show that the share of households with two or more refrigerators grew from 13 percent in 1993 to 15 percent in 2001 and to 19 percent in 2005 (the current percentage with two or more is likely even higher).3-29 Table 3.2

. 23 Standard Refrigerator Saturation in U.S. Homes in 1987

– 200 8 Period

Year Refrigerators, Standard
Appliance Magazine NFO 2001 RECS

All 1 unit 2 or more

1987 99.9%

1988

1989

1990 96.7%

1991

1992 99.0%

1993 99.3% 98.6% 85.8% 12.8%

1994 99.5%

1995 99.7%

1996 99.8% 93.9%

1997 99.8% 98.9% 85.8% 13.2%

1998 99.8%

1999 99.8%

2000 99.9%

2001 99.0% 93.1% 99.3% 82.9% 14.6%

2002 99.0%

2003 99.0%

2004 99.0%

2005 99.0% 99.9% 77.7% 19.2%

2006 99.0%

2007 99.0%

2008 99.0%

The data on saturation of compact refrigerators vary greatly ( Table 3.2.24 ). The estimates

for 200 5 vary from a low of 3. 7 percent (RECS) to a high of 1 7

. 0 percent ( Appliance magazine). Comparatively, NFO’s estimate for 2001 is 5.6 percent.3-30 Table 3.2

. 24 Compact Refrigerator Saturation in U.S. Homes in 1987

– 200 8 Period

Year Refrigerators, Compact
Appliance Magazine NFO 2001 RECS

All 1 unit 2 or more

1987

1988

1989

1990 7.4%

1991

1992 7.4%

1993 8.7% 3.2% 3.2% 0.0%

1994 9.2%

1995 9.7%

1996 11.2% 5.8%

1997 12.1% 2.8% 2.8% 0.1%

1998 12.6%

1999 14.5%

2000 16.0%

2001 16.5% 5.6% 3.1% 3.0% 0.1%

2002 16.5%

2003 16.5%

2004 17.0%

2005 17.0% 3.7% 3.1% 0.6%

2006 18.0%

2007 19.0%

2008 19.0%

The data on freezer saturation are also somewhat varied ( Table 3.2.2 5). Appliance magazine reports that freezer saturation has risen from 40 percent in 1993 to 45 percent in 2005, but the NFO study reports that the 2001 level (41 percent) was lower than in 1990 (45 percent). RECS shows a much lower freezer saturation in 2001 (32 percen t) than the other sources, and also shows a declining trend.3-31 Table 3.2

. 25 Freezer Saturation in U.S. Homes in 1987

- 200 8 Period

Year Freezers
App liance Mag azine NFO 2001 RECS

All 1 unit 2 or more

1987 40.7%

1988

1989

1990 45.4%

1991

1992 38.2%

1993 40.0% 34.5% 30.5% 4.0%

1994 40.0%

1995 41.2%

1996 42.5% 42.4%

1997 42.4% 33.2% 30.2% 2.9%

1998 42.8%

1999 42.9%

2000 44.0%

2001 47.0% 41.0% 32.0% 28.8% 3.2%

2002 47.5%

2003 47.5%

2004 47.0%

2005 45.0% 31.6% 29.0% 2.6%

2006 43.0%

2007 42.0%

2008 43.0%

As shown in Table 3.2.26

, RECS data indicate that i n n ew h ousing (1) the saturation of freezers is lower, and (2) the share of households with two or more refrigerator s is higher in recently

- built homes than in the total population of homes. For freezers, this result is in accordance with the declining saturation of f reezers in t he total population seen in Tab le 3.2.25

.3-32 Table 3.2

. 26 Refrigerator and Freezer Saturation in New U.S. Homes

Year Standard Refrigerators Freezers

New Homes* New Homes*

All 1 unit 2 or more All 1 unit 2 or more

1993 99.7% 90.4% 9.2% 30.3% 27.8% 2.5%

1994

1995

1996

1997 99.6% 85.8% 13.8% 35.9% 33.1% 2.6%

1998

1999

2000

2001 100% 82.5% 15.6% 28.4% 26.3% 2.1%

2002

2003

2004

2005 100% 75.0% 26.1% 27.2% 23.9% 3.3%

Source: RECS surveys; * “New homes” refers to homes built in the 1988

- 1993 period for the 1993 RECS, the

1992

- 1997 period for the 1997 RECS, and the 1996

- 2001 period for the 2001 RECS, and the 2001

- 2005 period for

the 2005 RECS.

3.2.8 P roduct Retail Prices

3.2.8.1 Historical Retail Prices

AHAM has reported average consumer retail prices for refrigerator

- freezers and freezers in past Fact B ooks. Table 3.2

. 27 lists the prices for eight years spanning 1980

– 2002. The real price of refrigerator

- fr eezers and freezers (expressed in 2008 $) declined during the 1980s and

1990s. However, in 2002 , the prices of both types of products increased relative to the year 1998

.

Table 3.2

. 27 Refrigerator

- Freezer and Freezer Average Retail Prices

Product Price Year

1980 1985 1986 1991 1993 1994 1998 2002
Refrigerat or

Freezers nominal $ $598 $702 $684 $732 $692 $713 $657 $788

2008 $ $1,563 $1,405 $1,344 $1,157 $1,031 $1,036 $868 $943

Freezers nominal $ $426 $479 $449 $434 $334 $344 $315 $405

2008 $ $1,113 $958 $882 $686 $498 $500 $416 $485

Source: AHAM Fact B ooks.

3.2.8.2 Refrigerator

- Freezer 2004 Retail Prices

DOE’s most recent technical analysis of amended energy conservation standards for residential refrigerator

- freezers publish ed in October 2005 provided the retail price of the two largest product classes of re frigerator

- freezers: top

- mount refrigerator

- freezers without TTD

features and side

- mount refrigerator

- freezers with TTD features

. 28 The analysis al so established the retail price of products meeting existing ENERGY STAR levels.3-33 Baseline Retail Prices

DOE determined the retail price of baseline

- efficiency top

- mount refrigerator

- freezers

without TTD featur es and side

- mount refrigerator

- freezers with TTD features from data purchased from NPD Group. The NPD Group dataset included information about the average price of more than 2000 refrigerator models sold in 2004 in the United States. c Table 3.2

. 28

below summarizes the retail price data for three capacity sizes for each of the product types

. The retail prices correspond to baseline

- efficiency products, i.e. , products that just meet the existing

energ y conservation standards.

Table 3.2

. 28 Baseline Unit Retail Prices from 2005 DOE Report (2004$)

Product Type 14

- 17 f t 3 18

- 20 ft 3 21

- 22 ft 3

Top

- Mount without TTD $329 $386 $457

21

- 23 ft 3 24

- 26 ft 3 27

- 30 ft 3

Side

- Mount with TTD $702 $789 $926

Source: The NPD Group/NPD Houseworld

– POS.

Price of ENERGY STAR

DOE’s October 2005 report also provided incremental retail price estimates of ENERGY

STAR products relative to baseline products. At the time, ENERGY STAR levels specified 15 percent lower energy consumption than the federal energy standard level

. DOE used two approaches to estimate the retail prices: (1) the application of manufacturer and retailer markups to manufacturer costs, and (2) a retail price analysis of ENERGY STAR compliant products based on data from the NPD Group. Table 3.2

. 29 below summarizes the retail price increments associated with meeting ENERGY S TAR relative to baseline models of several different capacity sizes. Note that the two approaches yield roughly the same average retail price increment of meeting ENERGY STAR with the exception of the 27

– 30 ft 3 side

- mount refrigerator.

Table 3.2

. 29 Average Retail Price Increment of ENERGY STAR from 2005 DOE Report (2004$)

Product Type Approach 14

- 17 ft 3 18

- 20 ft 3 21

- 22 ft 3

Top

- Mount without

TTD Markups $38 $35 $42

Retail Prices $ 28 $49 $63

Product Type Approach 21

- 23 ft 3 24

- 26 ft 3 27

- 30 ft 3

Side

- Mount with TTD Markups $ 54 $35 $183

Retail Prices $47 $ 66 $ 88

Source: DOE, 2005.

c The data also include d information about the refrigerator brand, manufacturer, attributes (e.g., total refrigerated volume, number and type of shelves), and sales, and whether each model has an Energy Star rating. The data cost $25,000 to purchase.3-34 3.2.8.3 2007 Manufacturer

- Suggested Retail Prices

DOE collected retail price data for several refrigerator

- freezer and freezer models from five manufacturers’ Internet web sites: General Electric, Whirlpool, Frigidaire, Maytag, and LG

Electronics. The price data reflect manufacturer

- suggested retail prices and, therefore, may not reflect actual sales prices. Even so, DOE c onducted a statistical analysis of the data to determine

the e ffect of certain attributes, including the impact of meeting existing ENERGY STAR levels.

DOE collected data on 1,268 refrigerator

- freezer and freezer models. The collected data

set included i nformation about the retail price and model number of refrigerator

- freezers and freezers sold in 2007 in the U.S., coupled with information about the brand, attributes ( i.e.

, color, stainless steel, built

- in, French doors), and whether the product met exis ting ENERGY STAR

levels. DOE sorted the data into the following product types: (1) side

- mount refrigerator

- freezers consisting of 523 models, (2) top

- mount refrigerator

- freezers consisting of 340 models, (3)

bottom

- mount refrigerator

- freezers consisting of 281 models, (4) chest freezers consisting of 46 models, and (5) upright freezers consisting of 54 models.

Figure 3.2

. 4 through Figure 3.2

. 8 present price distributions for each product type

, showing variation in price of products which do not meet ENERGY STAR criteria as well as variation in price for products with comply with ENERGY STAR. The price distributions of

side

- mount and top

- mount refrigerator

- freezers in Figure 3.2

. 4 and Figure 3.2

. 5 indicate that

ENERGY STAR generally increase s the price and that there is a wider price variation for

ENERGY STAR produc t s

. Also, both refrigerator

- freezer types exhibit skewed price

distribu tions

, i.e. , more models are low

- priced with relatively few high

- priced models ( as an example , fewer than 10 models we re priced above $1,300 for top

- mounts). The price

distributions for bottom

- mount refrigerator

- freezers

, Figure 3.2

. 6 below, show that French

- door configurations are more of a factor in contributing to high price than ENERGY STAR efficiency

levels. M ost bottom

- mount models already meet ENERGY STAR , and t hose models configured with French doors are distinctly more expensive. The price distributions for upright freezers

show that ENERGY STAR models are generally more expensive ( Figure 3.2

. 7 ). For chest freezers, there are several models with and without ENERGY STAR that are priced similarly,

but there are no low

- priced models that qualify for ENERGY STAR ( Figure 3.2

. 8 ).3-35 Figure 3.2

. 4 2007 Manufacturer

- Suggested Retail Price Distribution of Side

- Mount Refrigerator

- Freezers with and without ENERGY STAR (2007$ ) 7 0 0 0 6 0 0 0 5 0 0 0 4 0 0 0 3 0 0 0 2 0 0 0 1 0 0 0 9 0

8 0

7 0

6 0

5 0

4 0

3 0

2 0

1 0

0

R e t a i l P r i c e p e r U n i t ( $ )#ofModels 0

1 E s

t a r D i s t r i b u t i o n o f S i d e
- M o u n t R e f r i g e r a t o r M o d e l s

E S t

a r 0 r e f e r s t o N o n

- E n e r g y S t a r m o d e l s 1 r e f e r s t o E n e r g y S t a r m o d e l s

.3-36 Figure 3.2

. 5 2007 Manufacturer

- Suggested Retail Price Distribution of Top

- Mount Refrigerator

- Freezers with and without ENERGY STAR (2007$)

Figure 3.2.6 2007 Manufacturer

- Suggested Retail Price

Distribution of Bottom

- Mount Refrigerator

- Freezers

with and without ENERGY STAR (2007$) 1 8 0 0 1 6 0 0 1 4 0 0 1 2 0 0 1 0 0 0 8 0 0 6 0 0 4 0 0 6 0

5 0

4 0

3 0

2 0

1 0

0

R e t a i l P r i c e p e r U n i t ( $ )#ofModels 0

1 E S t

a r D i s t r i b u t i o n o f T o p
- M o u n t R e f r i g e r a t o r M o d e l s

E S t a r 0 r e f e r s t o N o n

- E n e r g y S t a r m o d e l s a n d 1 r e f e r s t o E n e r g y S t a r m o d e l s

.

2 8 0 0 2 4 0 0 2 0 0 0 1 6 0 0 1 2 0 0 8 0 0 2 0

1 5

1 0

5

0

R e t a i l P r i c e p e r U n i t ( $ )#ofModels 0 0

0 1

1 0

1 1 S t

a r E n e r g y

D o o r s F r e n c h D i s t r i b u t i o n o f B o t t o m
- M o u n t R e f r i g e r a t o r M o d e l s

0 r e f e r s t o a f e a t u r e b e i n g a b s e n t a n d 1 r e f e r s t o a f e a t u r e b e i n g p r e s e n t

.3-37 Figure 3.2

. 6 2007 Manufacturer

- Suggested Retail Price Distribution of Upright

Freezers with and without ENERGY STAR (2007$)

Figure 3.2

. 7 2007 Manufacturer

- Suggested Retail Price Distribution of Chest

Freezers with and without ENERGY STAR (2007$) 1 5 0 0 1 2 0 0 9 0 0 6 0 0 3 0 0 1 6

1 4

1 2

1 0

8

6

4

2

0

R e t a i l P r i c e p e r U n i t ( $ )#ofModels 0

1 S t

a r E n e r g y D i s t r i b u t i o n o f U p r i g h t F r e e z e r M o d e l s

0 r

e f e r s t o N o n

- E n e r g y S t a r m o d e l s a n d 1 r e f e r s t o E n e r g y S t a r m o d e l s

.

8 0 0 7 0 0 6 0 0 5 0 0 4 0 0 3 0 0 2 0 0 9

8

7

6

5

4

3

2

1

0

R e t a i l P r i c e p e r U n i t ( $ )#ofModels 0

1 S t

a r E n e r g y D i s t r i b u t i o n o f C h e s t F r e e z e r M o d e l s

0 r

e f e r s t o N o n

- E n e r g y S t a r m o d e l s a n d 1 r e f e r s t o E n e r g y S t a r m o d e l s

.3-38 DOE also performed regression analysis on each of the five product types to estimate the incremental price of the different attributes. For the regression analysis, DOE confined the sample to models with prices within two standard deviations of the mean value. DOE did this to remove outliers from the sample. R emoving the outliers lowered the sample size to 92 to 95 percent of the original size, depending on the product type. Specifically, the side

- mount refrigerator

- freezer sample was reduced from 523 to 502, the top

- mount refrigerator

- freezer sample was reduce d from 340 to 321, the bottom

- mount refrigerator

- freezer sample was reduced from 281 to 272, the upright freezer sample was reduced from 54 to 53, and the chest freezer sample was reduced from 46 to 43. DOE performed the regression analysis with two types of regression equations that it formulated to determine the price increment due to each attribute: (1)

a ‘basic’ equation where price is a function of only ENERGY STAR qualifying levels (the focus variable) ; and (2) a ‘complete variable’ equation where pri ce is a function of ENERGY STAR (the focus variable), product attribute s (stainless steel, built

- in, French doors), and the brand.

Table 3.2

. 30 presents the summar y results of the regression analysis. The first column in

the table indicates the product type and the second column presents the ‘constant’ price (i.e., the price without any of the attributes under consideration, also referred to as a baseline model) for each product type. The ‘coefficients’ represent the price adder for a product with a specific attribute ( i.e.

, ENERGY STAR , French doors for bottom

- mount products , stainless steel cabinet, and brand). If the value is positive, than the ‘coefficient’ for t he attribute is added to the ‘constant’ price. If the value is negative, than the ‘coefficient’ for the attribute is subtracted from the ‘constant’ price. For example, for side

- mount refrigerator

- freezers, the ‘coefficient’ for

ENERGY STAR is $208. Therefo re, the added retail price of an ENERGY STAR side

- mount refrigerator

- freezer is $208, raising the baseline price from $1128 to $1336. Also presented in

Table 3.2

. 30 are the adjusted R

- squared value and the number in the sample. In a multiple linear regression model, adjusted R square measures the proportion of the variation in the dependent variable (retail price) accounted for by the explanatory variables. d

DOE f ound that the incremental price effect of meeting ENERGY STAR levels is significant at a 95 percent confidence level for all product types with the exception of bottom

mount refrigerator

- freezers. In the case of side

- mount refrigerator

- freezers, qualifying for

ENERGY STAR adds $208 to the price of the baseline model, while for top

- mount refrigerator

freezers it adds $63. These price increments are significantly higher than those from DOE’s October 2005 technical report (see Table 3.2

. 2 9 above). Because the analysis conducted for the 2005 technical report was more rigorous (for example, DOE conducted the 2005 retail price analysis using sales

- weighted point

- of

- sale data), the price increments for meeting ENERGY

STAR based on the 2007 manufacturer suggested retail price data are likely not as accurate a price indication of meeting ENERGY STAR

. Rather, the analysis based on the 2007 prices simply confirms that ENERGY STAR pr oducts are more expensive than baseline products. In the case of upright and chest freezers, the analysis shows that the price increase associated with meeting ENERGY STAR is $107 and $121, respectively.

d Unlike R squared, adjusted R squared allows for the degrees of freedom associated with the sum s of the squares in its calculation. Therefore, even though the residual sum of squares decreases or remains the same as new explanatory variables are added, the residual variance does not. For this reason, adjusted R square is generally

considered to be a more accurate goodness

- of

- fit measure than R square.3-39 For bottom

- mount refrigerator

- freezers, meeting EN ERGY STAR levels is not a significant factor at a 95 percent confidence level. T he French door attribute is significant and adds over $330 to the price of a baseline unit. This is consistent with the price distributions of

bo ttom

- mount models presented in Figure 3.2

. 6 above.

The analysis suggests that stainless steel plays a significant role in the price of side

mount, top

- mount, and bottom

- mount refrigerator

- freezers and upright freezers. The ‘coefficie nt’ of brand suggests an effect similar to stainless steel. Brand is significant for the three refrigerator

- freezer product types but is not significant in the case of freezers.

Table 3.2

. 30 Regression Analy sis of the Incremental Price of ENERGY STAR and other

Attributes based on 2007 Manufacturer

- Suggested Retail Prices (2007$)

Product Type Constant (Baseline) Coefficients (Price Adder)

Adj

R 2 N umber

in Sample Energy

Star French

Door Stain

less Brand
Frigidaire GE Whirlpool Maytag LG

Side

Mount $1128 $ 20 8 NA $ 156

- 245 $ 37 5

- $ 23 1

- $ 252 $ 43 1 0.65 502

Top

Mount $660 $63 NA $97

- $54 $80 $28 $49 NA 0.40 321

Bottom

Mount $1285

- $ 3 1 * $ 33 2 $ 14 3 NA $ 283

- $ 8 3 $ 70

- $ 212 0.58 272

Uprig ht

Freezer $495 $ 10 7 NA $ 215 $ 5 6 * $40 *

- $ 41 *

- $40 * NA 0.35 53

Chest

Freezer $352 $ 12 1 NA NA $ 116 * $ 116 *

- $ 100 *

- $ 99 * NA 0.17 43

* Although numerical values are provided, the regression analysis indicated that the se attributes were not significant

factor s in determining the incremental product price a t a 95 percent confidence interval.

3.2.8.4 Refrigerator

- Freezer and Freezer 2008 Retail Price s

To determine retail prices for the year 2008, DOE drew upon proprietary retail price data collected by The NPD Group

. 36 These data reflect prices and sales at many retail outlets in the United States, representing more than 50 percent of retai l sales nationwide. The data include model number, refrigerated volume, configuration of doors and ice

- making, and whether the unit is an ENERGY STAR product. Based on these data DOE developed a sales

- weighted price

distribution for non

- ENERGY STAR applian ces for seven of the 20 product class es

. e Additional details about this price data are provided in Chapter 8 of this TSD . The average baseline retail prices before sales tax for each of the seven product class es are shown in Table 3.2.31

. With the exception of product class 3 (top

- mount refrigerator

- freezers), the retail prices in Table 3.2.31 are relatively close to the manufacturer

- suggested retail prices in Table 3.2.30.

e DOE assumed that prices for non

- ENERGY STAR models are a reasonable approximation of prices for the

baseline models.3-40 Table 3.2

. 31 Residential Refrigeration Products: Average Baseline Retail Price

Product Class Baseline Retail Price
2008$

Product class 3: Top

- mount refrigerator

- freezer 1,005

Product class 5: Bottom

- mount refrigerator

- freezer 1,313

Product class 7: Side

- by

- side refrigerator

- freezer with TTD* 1,333

Product class 9: Upright freezer 469

Product class 10: Chest freezer 483

Product class 11: Compact refrigerator 151

Product class 18: Compact freezer 193

* Through

- the

- door ice service.

3.3 TECHNOLOGY ASSESSMEN T

This section provides a technology assessment for refrigerators, refrigerator

- freezers, and

freezers

. Contained in this technology assessment are details about product operation s and

components (section 3.3.1 ) , an examination of possible technological improve ments for each product (section 3.3.2 ), and a characterization of the product efficiency levels currently commercially available (section 3.3.3 ).

3.3.1 Product Operation and Components

This section provides a brief description of the compo nents and operation of refrigerators, refrigerator

- freezers, and freezers

. These descriptions provide a basis for understanding the technologies used to improve product efficiency.

3.3.1.1 Product Operation

Refrigerators, refrigerator

- freezers, and freezers are h ousehold appliances designed for the refrigerated storage of food products. Definitions for these product types and their operating temperature ranges are discussed in section 3.2.1.

Figure 3.3

. 1 shows a schematic representation of a typical refrigeration circuit used in residential refrigeration products. As described by the American Society of Heating, Refrigerating and Air

- Conditioning Engineers (ASHRAE) Refrigeration Handbook

, 37 the refrigerati on process consists of the following steps :

1. Electrical energy is supplied to a motor that drives a compressor, which draws cold, low

pressure refrigerant vapor for the evaporator and compresses it.

2. The resulting hig h

- pressure, high

- temperature discharge gas then passes through the condenser, where it is cooled to saturation condition, condensed to a liquid , and possibly

subcooled while heat is rejected to the ambient air.

3. Liquid refrigerant passes through a metering (pressure

- reducing) capillary tube to the evaporator, which is at low pressure.3-41 4. The low

- pressure, low

- temperature liquid in the evaporator absorbs heat from its surroundings, evaporating to a gas, which is again withdrawn by the compressor.

Figure 3.3

. 1 Refrigeration Circuit

In Figure 3.3

. 1 above, the metering or flow control device picture d is a non

- adiabatic capillary tube. In this configuration, the capillary tube is soldered to the suction line to evaporate
the residual liquid in the suction line and warm the vapor . This suction line heat exchanger (or

the non

- adiabatic capillary) increases the refrigeration capacity of the system by the amount of heat being transferred from the capillary to the suction side. Non

- adiabati c capillary tubes are the most common type of metering device in refrigerator

- freezers. The other type of metering device, an a diabatic capillary tube

, is used in some refrigeration products. In this configuration

, the capillary tube does not exchange heat with the suction line and the refrigerant expands from the high pressure to the low pressure adiabatically.

3.3.1.2 Primary Components

The illustration in Figure 3.3

. 2 (from RemodelGuide.com 38 ) show s the components and layout of a typical top

- mount refrigerator

- freezer

. The components and layout are similar in side

mount and bottom

- mount refrigerator

- freezers. Freezers also have a similar layout and components, but are slightly less complicated due to the fact that they have no fresh food

compartment. The text that follows describes the following operations or components: automatic defrost, cooling, temperature control, lighting, ice maker, ice and water dispenser, and d oor seals and hinges. CONDENSER EVAPORATOR

COMPRESSOR

SUCTION LINE CAPILLARY TUBE

HEAT EXCHANGER STRAINER-DRIER3-42 Source: RemodelGuide .com Figure 3.3

. 2 Top

- Mount Refrigerator

- Freezer Components

Automatic defrost

Almost all standard

- size ref rigerator

- freezers are self

- defrosting. Manual defros t is still used in chest freezers, some upright freezers, and in compact refrigerator s and freezers. Self

defrosting refrigerator

- freezers and freezers automatically melt frost that accumulates in the freezer compartment. The typical automatic defrost system has three functional components: a d efrost timer , a d efrost heater , and a d efrost thermostat.

• Defrost timer : The timer is a clock that is energized with the compressor. The timer initiates defrost after a set interval of compressor operation, typic ally twelve hours.

• Defrost heater : The defrost heater is an electric resistance heating element. It is located just beneath or on the side of the evaporator coil, which is concealed behind a panel in the freezer compartment. The heater melts any ice or f rost that builds up. A heater is typically also energized in the drip pan to prevent freeze of melted condensate and clogging of the drip pan drain.3-43 • As the frost and ice melt, the resulting water drips into a drip pan . The pan is connected

to a tube that drains the water into a shallow pan at the bottom of the refrigerator

- freezer

or freezer . The water is then evaporated by air which is drawn by a fan through the condenser and over the compressor shell. In some products which do not use forced

convection c ondensers, particularly freezers, a special pan is mounted on top of the

compressor shell and the water is evaporated using heat from the compressor.

• Defrost thermostat : The process ends when the defrost thermostat mounted on the evaporator tubing s enses that a sufficiently high temperature has been attained

.

Cooling

All residential refrigerators, refrigerator

- freezer s, and freezers work by removing heat

from the air in the cabinet

. They all have the key components shown in Figure 3.3

. 1 : a

c ompressor , a c ondenser

, a m etering or flow control d evice ( usually a c apillary t ube) , and a n

e vaporator

.

• Compressor : The compressor compresses refrigerant, providing the energy i nput necessary to drive the cycle. In most residential refrigeration products, the compressor is

located at the bottom rear of the unit. In built

- in refrigerator

- freezer s the compressor is

often located on top of the refrigerator behind a grill o r grate. The compressor runs whenever the refrigerator thermostat calls for cooling.

• Condenser : The condenser is a heat exchanger located on the outside of the unit

. The three most prevalent condenser configurations are as follows:

– Forced

- convention condensers u se fans to move air through them to provide cooling. These condensers are usually located u nder the unit near the compressor

. They can be fabricated of steel tubes with steel wire fins or copper tubes with aluminum fins.

– Natural convection “static” condens ers which don’t use fans are m ounted to the back

of the unit

. They generally have steel tubes and steel wire fins

.

– Hot wall condensers are i ntegrated in to the outer shell of the unit

. A serpentine of tubing is attached to the inside of the shell and provid ed with good thermal contact to

the shell. This is the common configuration in freezers and it is common in compact refrigerator s

.

• Metering or Flow Control Device (Capillary Tube) : The metering device in most household refrigerator

- freezer s is a capillary tube. As discussed above in section 3.3.1.1

, there are two common types of capillary tubes

— adiabatic and non

- adiabatic , although

non

- adiabatic are the most common

. The capillary tube controls the pressure and flow of the refrigerant as it enters the evaporator.

• Evaporator : The evaporator is a heat exchanger l ocated inside the unit

. Similar to the condenser, there are three main configurations for evaporators:

– Forced convection evaporators use fans to move air through them to provide cooling. They are constructed of aluminum tubes and aluminum fins or copper tubes and

aluminum fins. They are generally located on the rear wall of the freezer3-44 compartment behind a panel

. They can also be located in the mullion separating the

freezer and f resh food compartments, as shown in Figure 3.3

. 2

. The evaporator fan

circulate s air through the evaporator and into both the freezer and fresh food

compartments. Because the evaporator absorbs heat, it is very cold

, thereby causing

any water vapor in the air to freeze on it as frost. Most refrigerator

- freezers using this type of evaporator employ automatic defrost.

– Roll bond evaporators fabricated from layers of al uminum sheet primarily use natural convection cooling. The refrigerant passages are formed into the evaporator walls.

The y are used in single

- door refrigerators and are configured either as a flat plate at
the rear of the cabinet or a rectangular box

. In t he latter configuration, the interior of the box is the freezer compartment. While these evaporators generally use natural

convection and do not use a n evaporator fan , some products with rear

- mounted flat roll bond evaporators use fans for performance enha ncement. Manual defrosting is required to defrost the se evaporator s

.

– Cold wall evaporators are i ntegrated w ithin the walls of the freezer

. This

co nfiguration i s used in nearly all chest freezer s and in many upright freezers

. The evaporator consists of tube s erpentines attached to the insulation side of the cabinet interior liner. These evaporators use n atural convection heat transfer.

Temperature control

All refrigerators , refrigerator

- freezers, and freezers have a thermostat or electronic temperature control to maintain the proper temperature. The rmostats are mechanical devices

which interrupt the electricity connection to the compressor when the temperature is sufficiently

low

. Electronic control systems generally use thermistors as temperature sensors, using relays mounted on the circuit boards to activate the compressor and other components such as the evaporator and condenser fans.

Lighting

Refrigerators , refrigerator

- freezers, and freezers with internal lighting no rmally have only

one functional lighting component

— the switch

— w hich is usually a white push

- button mounted to be depressed by operation of the door. Closing the door turns off the light. Refrigerators traditionally use d standard appliance incande scent ligh t bulb s , but many new designs are using LED lighting.

Ice maker

Many standard

- size refrigerator

- freezers come equipped with an ice maker , and nearly all

are convertible to installation of an ice maker

. The ice maker is a located within the freezer

compa rtment

. Ice maker systems have two basic functional components: the icemaker itself, and

the water fill valve. T he most common ice maker s operat e as follows :

• The ice maker sends a signal to the water fill valve (normally located on the outside back

of the refrigerator, near the bottom) to open and let water into the ice maker tray (or mold)

. Water fill control is usually by timed opening of the valve ( usually 7

- 10 seconds)

.3-45 • When the ice has frozen and reached a sufficiently low temperature (10 to 15 °F), s ense d

with a thermostat located in thermal connection with the ice tray, the ice maker begins to harvest (eject) the cubes.

• To harvest the cubes, the ice maker first turns on a small heater beneath the tray. The heater warms the tray

, to help release the ice cubes. Then a sweep fork rotates and pushes the cubes up and out of the tray.

• While the ice maker is dumping the cubes into a the ice storage bin, a metal wire similar to a coat hanger swings up to let the cubes drop below it. When the cu bes have dropp ed,

the wire rotates back down. If the holding bin is full of ice, the wire rotate far enough, which stops further production of ice. If the sensing wire can rotate down fully, the ice maker refills with water and repeats the process.

Ice and water dispens er

Many standard

- size refrigerator

- freezers have a through

- the

- door ( TTD ) ice and/or water dispenser. There are several different systems for delivering ice and water through the refrigerator door. What follows is an explanation of the common attributes o f all of the systems.

• Ice dispenser : For a refrigerator

- freezer to provide ice through the door, the ice maker first dumps the ice it produces into a large bin , as discussed above . To request ice at the door, the user presses a lever that activates a swit ch. The switch turns on a motor that

rotates a n auger which pushes ice out of the bin, through a chute to the user. Some dispensers also have blades which chop the ice to allow delivery of crushed ice.

• Water dispenser : The water dispenser is activated much like the ice dispenser. To req uest water at the door, the user presses a lever on the front of the refrigerator that activates a switch. The switch turns on an electric water valve at the back of the refrigerator

- freezer

. Water flows through the valve int o a tube, then flows into a reservoir located in the fresh food compartment in which the water is chilled. As new water enters the reservoir , the water that is displaced flows through a separate tube through the dispenser

.

Door S eals

All refrigerator, refrigerator

- freezer , and freezer doors have a seal

— a vinyl gasket

attached to the door (s)

. T he seal prevents infiltration of warm ambient air into the cabinet. The seal is lined with a magnet which helps to hold the door closed and create a tight seal. Th e magnetic portion of the gasket is aligned to face the steel extension of the cabinet’s external shell which wraps partially around the front face of the cabinet. Some gasket systems use opposing magnets on the cabinet side to improve door sealing force.

3.3.2 Technology Options

Table 3.3

. 1 lists the technology options for improving the efficiency of residential refrigerat ion products

. The technology options are categoriz ed by the ir associated component or
system

. Each technology option category and the options available for improving the component or system category are discussed below.3-46 Table 3.3

. 1 Technology Options for Refrigerators, Refrigerator

- Freezers, and Freezers

Insulation Expansion Valve

Improved resistivity of i nsulation Improved expansion v alves

Increased insulation t hickness Cycling Losses

Vacuum

- insulated p anels F luid control or solenoid v alve

Gas

- filled p anels Defrost System

Gasket and Door Design Reduced energy for automatic d efrost

Improved g askets Adaptive d efrost Double door g askets Improved door face f rame Condenser hot g as Reduc ed heat load for TTD f eature Control System

Anti

- Sweat Heater Temperature c ontrol

Condenser hot g as Air

- d istribution c ontrol

Electric heater s izing Other Technologies

Electric heater c ontrols Alternative r efrigerants Compressor Component l ocation

Improved c ompressor e fficiency

Variable

- speed c ompressors Alternative Refrigeration Cycles

Linear c ompressors Lorenz

- Meutzner c ycle
Evaporator Dual

- loop s ystem

Increased surface area Two

- stage system Improved heat exchange Control valve system

Condenser Ejector r efrigerator

Increased surface area Tandem s ystem Improved heat exchange Alternative Refrigeration Systems

Force convection condenser Stirling cycle

Fans and Fan Motor Thermoelectric

Evaporator fan and fan motor improvements Thermoacoustic Condenser fan and fan motor improvements

3.3.2.1 Insulation

The primary thermal load on a refrigerator or freezer is the heat transfer through the walls

and doors into the cabinet

. In one study of an 18.6 ft 3 top

- mount refrigerator

- freezer, the wall and

door heat load s were estimated to account for almost 60 percent of the total thermal load. 39

Nearly all residential refrigeration products use p olyurethane (PU) foam insulation for

both the cabinets and the doors

. Through the 1980s, CFC

- 11, a chlorofluorocarb on (CFC), was used as a blowing agent in almost all PU foam insulation. However, under the Montreal Protocol, all CFCs were banned from use by the mid 1990s due to their high ozone depletion potential (ODP). In the 1990s, most manufacturers adopted use of HCFC

- 141b, a hydrochlorofluorocarbon (HCFC), which has significantly less ODP. However, because HCFC

141b has non

- zero ODP, it was banned from production in the U.S. after January 1, 2003. In response to the phase

- out of HCFC

- 141b, AHAM’s Appliance Researc h Consortium (ARC) investigated several alternatives, including two hydrofluorocarbons (HFC s ), HFC

- 134a and

HFC

- 245fa, and cyclopentane, a hydrocarbon (HC). HFCs and HCs both have zero ODP

. HCs have a much lower global warming potential (GWP) than HFCs , bu t they are flammable

. ARC, DOE, and EPA sponsored research at Oak Ridge National Laboratory (ORNL) to determine the3-47 thermal conductivities of the three alternatives and of HCFC

- 141b. Based on thermal conductivity, ORNL identified HFC

- 245fa as the most attractive substance because it had the lowest energy penalty relative to HCFC

- 141b (see Table 3.3

. 2 ). 40 In addition, accelerated lifetime performance tests conducted by ORNL indicated that the thermal conductivity of HFC

245fa foam insulation increase s by a smaller percentage than either HFC

- 134a or cyclopentane

foams . Finally, despite the fact that HC s are used in Europe, flammability and volatile organic compound concerns led ARC to determine that HFCs were a more suitable replacement blowing

agent. 41 As a result, many manufacturers are currently using HFC

- 245fa blowing agent for PU

foam insulation

. Ho wever, refrigerators and freezers sold in the U.S. also are using HFC

- 134a, cyclopentane, and HCFC

- 141b blowing agent. The HCFC blowing agent is still allowed for refrigerators imported into the U.S.

Table 3.3

. 2 Thermal Conductivity of Freshly

- Sliced Foam Specimens at 75 oF (23.9 oC)

Blowing Agent Slice Thickness

0.4 in ch (1.0 c m) 1.5 in (3.8 cm)

Btu

- in/ h r

- ft

2

- oF mW/ m

- K Btu

- in/hr

- ft

2

- oF mW/m

- K

HCFC

- 141b 0.132 19.0 0.128 18.4

HFC

- 245fa 0.138 19.9 0.132 19.0
Cyclopentane 0.150 21.6 0.145 20.9

HFC

- 134a 0.160 23.1 0.155 22.3

Source: ORNL, 2003. 40

Improved Resistivit y of Insulation

Past research has investigated improving t he resistivity of PU foam insulation through the

use of additives in the foam.

Research conducted in 1996 demonstrated that adding carbon bla ck provides a means of improving the thermal insulation properties of PU foam

. The research showed that PU foam systems using carbon black in conjunction with either HCFC

- 141b or cyclopentane wa s able to

lower k

- factors by six to nine percent in panels and in cabinets. 42

Increased Insulation Thickness

Based on DOE’s 1995 technical support document (TSD) for refrigerators, refrigerator

freezers, and freezers, the insulation thickness range for re frigerator

- freezers in the mid

- 1990s

was 1.5 to 2.75 inches ( 3.81 to 7.0 cm ) in the doors and 1.5 to 3 inches (3.81 to 7.62 cm) in the

cabinet walls. Walls of freezers and freezer compartments tend ed to be near the higher end while

walls of refrigerators a nd fresh food compartments were nearer the lower end. 43

Also b ased on the DOE 1995 TSD, adding 0.5 to 1 inch ( 1.27 to 2.54 cm ) more insulation increases the overall efficiency of the product. Energy reductions associated with these wall

thickness increases range from a few percent to over 10 percent. Therefore, DOE considered the addition of more insulation as a technology option to improve efficiency. Although the technology to implement this change is readily available, manufacturers indicated during the rulemaking leading to the April 27, 1997 final rule establishing the current minimum efficiency

levels that adding insulation would not be the first technology option they would choose to impr ove efficiency. Significant investments would be required in foaming systems, tooling, and3-48 molding to accommodate thicker insulation. Increased packaging and shipping costs must also be

considered. Greater insulation thickness results in either decreased i nterior volumes, increased exterior dimensions, or some combination of both. Since kitchen dimensions and designed spaces for refrigerator

- freezers are limited, there are restrictions on increasing the exterior size of the product. Reducing interior volume is considered undesirable because it impacts consumer utility.

Vacuum

- Insulated Panel s

Vacuum

- insulated panel (VIP s ) technology is based on the reduction in conductivity which occurs in a low vacuum, the same concept which is used to reduce heat leakage in thermos bottles. VIPs used in refrigeration products consist of a sealed package with a fill material which provides support to prevent the panel from collapsing and interferes with molecular mean free path as the intermolecular spacing increases at lo wer vacuum levels. VIPs can be foamed in place between the cabinet liner and wrapper to decrease the heat leakage and energy required to maintain the cabinet at low temperature. Different configurations are commercially available through advances in manufa cturing technologies. As a result, VIPs are available in a variety of geometries ( e.g. , flat, curved, cylindrical) with added features ( e.g. , holes, cut

- outs). 44 Typical

VIPs generally consist of a core material and an airtight envelope . Some VIPs also incl ude

absorber to absorb gas which leaks through the envelope

.

Several core materials have been used in the manufacture of VIPs including polystyrene,

open

- cell PU, silica powder, and glass fiber. Research sponsored by the European Commission

has evaluate d these core materials based on their cost and characteristics, including density and manufacturing time. Table 3.3

. 3 below summarizes the VIP characteristics manufactured with

the above core materials. 45 Each of the core materials has associated advantages and disadvantages that dictate their acceptability for an appliance application.

Table 3.3

. 3 Comparison of Var ious VIP Core Materials

Property Polystyrene Open

- cell PU Silica Powder Glass Fiber

Thermal Conductivity

at 10 Pascals ( Pa ) abs. (0.1 millibar ( mbar ) ) ( mW/m

- K ) 4.8

– 5.8 9.7 5.8 2.4

( Btu

- in/hr

- ft

2

- oF ) 0.033

– 0.040 0.067 0.040 0.017

Manufacturing Time Fast Medium Medium Long
Density ( kilogram ( kg ) /

cubic meter ( m 3 ) ) 80

– 144 64 192 128
Drying Need No Yes Yes No
Thermal Stability Low Medium Good Very Good
Recyclability Yes Difficult Yes NA

Cost Low Medium High Very High

Source: European Commission, 2000. 45

ORNL also has evaluated the performance of three types of VIPs: a silica p owder filler encapsulated in a polymer barrier film; a fibrous glass insulation filler encapsulated in a stainless steel barrier; and an undisclosed insulation filler encapsulated in a stainless steel barrier. 46 Table

3.3

. 4 summarizes the center

- of

- panel thermal conductivities of the panels. For the silica powder and glass fiber filled VIPs, the thermal conductivities in Table 3.3

. 4 are comparable to those in

Table 3.3

. 3

.3-49 Table 3.3

. 4 Center

- of

- Panel Thermal Conductivity of VIPs

Property Silica Powder Glass Fiber Unknown

Thermal Conductivity* ( mW/m

- K ) 5.2

– 5.4 2.0

– 2.6 2.7

– 3.1
( Btu

- in/hr

- ft

2

- oF ) 0.034

– 0.038 0.014

– 0.018 0.019

– 0.022

* For each filler, the reported thermal conductivities are a range of values from nine separate VIPs.

Source: Vineyard et al , 1998. 46

ORNL also determined the thermal performance of the VIPs it studied as part of a composite panel. The composite panel consisted of a one

- inch VIP surrounded by PU foam

insulation to form a two

- inch

- thick panel. The PU foam insulation was blown with a variety of bowing agents, but, due to the age of the study (from the mid

- 1990s), ORNL considered neither

HFC

- nor HC

- based blowing agents. For the three VIPs presented in Table 3.3

. 4 , silica power, glass fiber, and unknown, the average composite panel thermal resistances were 21.5, 20.7, and

20.9 hr

- ft 2

- oF /Btu, respectively. 46 The lower thermal conductivities reported in Table 3.3

. 4 for the glass fiber and unknown filled VIPs relative to the silica powder VIP were offset by the heat conduction through their stainless steel encapsulation material.

Of significant concern for VIPs is their long

- term thermal conductivity integrity. VIP thermal conductivity increases dramatically as the pressure within the VIP exceeds 100 Pa abs. (1 mbar). The pressure increase in the VIP over time is related to several factors, including: residual gases in the VIP after vacuum, degassing from the VIP co re material, and gas diffusion through the envelope pores. Improved envelopes and absorbers have been developed to prevent pressure increases from occurring in VIPs. For example, for the three composite VIPs that it analyzed, ORNL measured only a five

- perc ent reduction in overall thermal resistance over a three

- year period. ORNL demonstrated that this reduction in thermal resistance was less than the corresponding reduction for a panel without any VIPs, i.e. , panels consisting only of PU foam

insulation. 46

R ecent announcement s regarding VIPs include the following. Matsushita’s VIP technology (trade name of “U

- Vacua”) was awarded the Minister of Economy, Trade and Industry Prize at the 17th Energy Conservation Awards sponsored by the Energy Conservation Center of Japan in January, 2007. 47 Matsushita claims that its VIP technology has achieved the world’s highest level of insulation efficiency with a thermal conductivity of 1. 2 mW/m

- K (0.008

Btu

- in/hr

- ft 2

- oF ) at 24 oC ( 75 .2 oF )

. 48 Electrolux announced in 2003 the use of VIP technology in a freezer that they claimed reduced energy use by 35 percent relative to PU foam insulation. 49

Va

- Q

- tek has recently introduced its v a

- Q

- plus VIP technology. 50

Gas

- Filled Panels

Gas

- f illed panels (GFPs) use thin polymer films and low

- conductivity gas to create a

device with excellent thermal insulation properties. GFPs are essentially hermetic plastic bags that can take on a variety of shapes and sizes. Inside the outer barrier is a cell ular structure called

a baffle which is filled with the low

- conductivity gas.

Research conducted at LBNL in the mid

- 1990s has demonstrated the effectiveness of GFPs based on the use of different gases, including x enon and krypton. Table 3.3

. 5 below

summarizes th e thermal performance characteristics of different GFPs, based on their center

- of

-3-50 panel and whole

- panel performance. 51 LBNL has also conducted research to demonstrate that GFPs, when used in refrigerator

- freezers, can reduce energy consumption by approximat ely eight percent relative to PU foam insulation. 52

Table 3.3

. 5 Comparison of Various Gas

- Filled Panel Core Materials

Gas Fill Center of Panel

Performance Whole Panel Performance
Thermal Conductivity Panel Thickness Mean Temp. Thermal Conductivity

mW/m

- K Btu

- in/hr

- ft

2

- oF mm inches oC oF mW/m

- K Btu

- in/hr

- ft

2

- oF

Xenon 7.4 0.051 24.1 0.95 6.8 44.2 7.4 0.051

Krypton 11.6 0.080 25.2 0.99 11.9 53.4 10.77 0.074

49.8 1.96 12.3 54.1 1.17 0.008
Argon 19.9 0.138 NA NA NA NA NA NA

Air 28.1 0.195 NA NA NA NA NA NA

Source: LBNL 51

In addition, ORNL determined the thermal conductivity of an insulation panel containing radiation baffles within a polymer barrier film and filled with krypton gas at atmospheric

pressure. The range of thermal conductivities of nine of these GFPs ranged from 0.088 to 0.092

Btu

- in/hr

- ft 2

- oF (12.6 to 13.2 mW/m

- K ). ORNL also analyzed the GFPs as part of a composite assembly consisting of a one

- inch panel surrounded by PU foam insulation to for m a two

- inch

thick panel. T he average com posite panel thermal resistance was determined to be 18.2 hr

- ft 2

- oF /Btu. Finally, ORNL measured only a five

- percent reduction in overall thermal resistance over a three

- year period, which was less than the reduction observed in a panel consisting only of PU

foam insulation. 46

Although research has demonstrated that GFPs have better thermal performa nce than PU foam insulation, no known refrigeration products are using the technology. A significant problem in using GFPs is the ir lack of structural integrity in the resulting product.

3.3.2.2 G asket and Door Design

A significant portion of the heat gain to re frigerators and freezers occurs around the edges of the doors and through the gaskets on the door edges. An analysis of thermal loads on an 18.6

ft 3 top

- mount refrigerator

- freezer revealed that over 28 percent of the total heat load into the cabinet came from ‘edge’ loads, i.e.

, loads due to heat transfer into the food compartments via paths around the perimeter of the cabinet aperture. 39 Table 3.3

. 6 summarizes the various ‘edge’

loads as well as the heat loads through the walls and doors and other sources. If the ‘edge’ effect

losses can be reduced, the efficiency of the refrigerator can be increased. This section only addresses the ‘edge’ effect loads from the wall and door flanges and the door gasket. Heat loads

from the anti

- sweat heaters are discussed in the following section (section 3. 11.2.3).3-51 Table 3.3

. 6 Overall Cabinet Loads
Component Percent of Total ‘Edge’ Effect Loads 28.5%

Heat g ain due to conduction along the wall steel flange 5.3%

Heat i nput due to conduction along the door steel flange 7.1% Heat conduction directly through the door gasket or seal 2.7%

Heat i nput due to conduction in the mullion region 1.7% Heat input due to mullion region anti

- sweat heater 7.7% Heat input due to cabinet anti

- sweat condenser tube 4.0%

Wall and Door Loads 59.1%

Miscellaneous Loads (heat inputs due to evap fan, defrost heaters, and compressor) 12.4%

Source: Boughton et al, 1996. 39

Improved Gaskets

Design of door gaskets is a balance between improving the thermal

- efficiency performance of the gasket and ensuring that the door is not difficult to open. If the gasket magnet force is too strong , it becomes difficult to open the door. Based on a European Commission study, door handles have been designed specifically to facilitate door openings by providing leverage and relieving the pressure differential which can build up by freeing a small section of the gasket before the door is opened. 45 Although materials and designs for improving the air tigh tness of door gaskets exist, apparently no general criteria have been established to enable different designs to be classified.

An EPA report from 1992 describes theoretical modeling and experimenta l research on gasket heat loads and concludes that repla cing about half of either the metal door flange or cabinet flange with plastic can reduce the heat flow t hrough the gasket region by 25 percent. 53

43 However, this study did not address the impacts on the convection on the cabinet side of the gasket associated with different geometries of the “throat” region between the door dikes and the cabinet wedge or with different evaporator air flow rates. Based on DOE’s 1995 TSD, improvements in gasket design can reduce refrigerator

- freezer annual energy consumption by one to three percent. Due to the age of bo th the EPA and DOE research, it is uncertain how

much further gaskets can be improved.

Double Door Gask et s
A double door gasket is an additional inner door seal gasket that is added to the gasket design. This further reduces heat leakage and infiltration into the refrigerator and freezer.

B ased on information drawn from DOE’s 1995 TSD, manufacturers did not introduce double door gaskets in the mid

- 1990s because of performance problems and cost. Ice can form between the gaskets, greatly reducing their effectiveness. In addition, the gaskets are visually unattractive and they increase the difficult y of mee t ing safety regulations for minimum door

opening force.3-52 Improved Door Face Frame

As discussed above, cabinet heat loads stem not only from conduction though the refrigerator walls but also from conduction along the external metal casing. The metal shell provides the structural integrity; however, its presence means that heat loads are transferred along the metal shell into the cabinet. This heat transfer into the cabinet is also referred to as the ‘edge effect.’

Using a plastic cover on the internal fla nge can reduce the ‘edge effect’ heat losses by approximately 50 percent. 39 It is expected that the use of low

- conductivity plastics to reduce

cond uction losses in this area are already being employed in most current U.S. refrigerator

freezer designs.

Reduced Heat Load for TTD Feature

Through

- the

- door features that provide ice and/or water service displace insulation in the

door. These features can make it difficult to apply foam in the doors. This technology option, which is applicable only to those product classes that include TTD ice service, utilizes improved design methods to reduce the heat load of TTD features.

Based on the DOE 1995 TSD, doo r

- design improvements that reduce the heat load from TTD features can reduce refrigerator

- freezer annual energy consumption from two to four

percent. 43 The TSD provided little explanation of the details of these design changes, citing only “foam insulation” and “improved design methods”

.

3.3.2.3 Anti

- Sweat Heater

Anti

- sweat heaters are commonly used in standard

- size refrigerator

- freezers. In general,

compa ct refrigerators, compact refrigerator

- freezers, and compact freezers do not use anti

- sweat
heat. These heaters apply heat to external surfaces near door gaskets, including the mullion region between the freezer and fresh food compartments and along the pe rimeter of the cabinet

. If electric resistance heaters are used for this purpose, t he heaters contribute to energy consumption both with their wattage input and with the heat load they generate that enters the

cabinet. Most modern refrigerator

- freezers use refrigerant tubes inserted in the cabinets in close proximity to the regions requiring heat. Both hot discharge gas from the compressor and warm liquid leaving the condenser are used to provide this heat, although a ma jority of products use warm liquid. As reported above in section 3. 11.2.2, the heat loads from both electric and refrigerant type anti

- sweat heaters can be significant. For the example illustrated in Table 3.3

. 6

, the contribution of the mullion anti

- sweat heater represents 7.7 percent of the total cabinet heat

load. However, the load associated with the anti

- sweat heater of modern designs may be lower

due to evolution o f design practices to reduce such loads.

Hot Gas or Warm Liquid

The direct electricity consumption of the anti

- sweat heater s can be eliminated by using a hot gas or warm liquid refrigerant loop to warm external surfaces to eliminate moisture buildup.

This approach is used extensively in residential refrigerator

- freezers to reduce energy use

— the technology is already part of all or nearly all standard

- size refrigerator

- freezers

.3-53 Electric Heater S izing

For those products using electric resistance anti

- sweat heaters, unnecessarily high

wattage heaters may be used. Therefore, energy use can be decreased by reducing the heater

wattage. For those products that still use electric resistance anti

- sweat heaters, DOE is unaware to what extent the wattage of the heat er is excessive.

Electric Heater Controls including Variable Antisweat

For those products using electric resistance anti

- sweat heaters, control schemes can be used to limit the amount of energy used. One option, which is included on some current refrigerator

- freezer models, is to use an on

- off switch that allows the user to turn off the heater if “sweating” is not an issue. T he DOE Energy test procedure calls for testing with the switch in the on position in order to measure annual energy use. 54 However, DOE understands that most manufacturers measure annual energy use as an average of a test with the heater on and a test

with the heater off.

Another option is to control the anti

- sweat heater based on temperature and humidity

conditions. As dis cussed in section 3.2.2

, DOE is considering incorporating into the test procedure for refrigerators and refrigerator

- freezers an adaptation of a test procedure for which a waiver was granted to GE. The waiver provides a method for calculating the annual energy use

contribution of electric anti

- sweat heaters which are controlled to operate only as much as needed to avoid moisture accumulation, based on the input of a mbient temperature and/or humidity sensors. 73 FR 10425 (February 27, 2008)

3.3.2.4 Compressor

The compressor is the primary energy

- consuming component in a refrigerator, refrigerator

- freezer, or freezer. Therefore, technologies that can advance compressor effic iency have a significant effect on overall product efficiency.

Residential refrigeration products use positive

- displacement compressors in which the

entire motor

- compressor is hermetically sealed in the welded steel shell. T wo types of

compressors have be en used in residential refrigeration products over the years

— re ciprocating and rotary. However, predominantly reciprocating compressors are now used in U.S. products.

Almost all compressors are directly driven by two

- pole squirrel

- cage induction motors

r unning at approximately 3,000 rpm on 60 Hz power

. Three types of induction motors have been

u s ed in refrigerator compressors: resistance start/induction run ( RSIR )

, capacitor start/induction run ( CSIR ), and resistance start/capacitor run (RSCR). Of the three motor types, the RSIR motor

is the least efficient. A s a result of the U.S. energy efficiency standards that took effect in 1993

and 2001 , the vast majority of compressor motors now use the RSCR type

.

Refrigerator compressor capacities range from as low as 1 25 Btu/h r (for compact refrigerators) to as high as 2

, 000 Btu/h r , although maximum capacities are more typically 950

Btu/h r for U.S. residential refrigerator

- freezers. Two organizations have established conditions for rating the performance of r efrigerator compressors: ASHRAE and Comité Européen des3-54 Constructeurs de Matériel Frigorifique (CECOMAF). f Table 3.3

. 7 below shows the rating

conditions of these two organizations. The rating conditions are almost identical, except for the liquid temperature

— this is the temperature leaving the condenser or any subcooling loop such as

an anti

- sweat heating loop. Because the CECOMAF liquid temperature is higher, compress or capacities and efficiencies under ASHRAE rating conditions are approximately 30 percent higher than for CECOMAF conditions. The actual operating conditions for compressors in residential refrigeration products under DOE energy test conditions can be significantly different than these rating conditions. Most notably, the condensing temperatures are generally significantly lower than 130  ̊F.

Table 3.3

. 7 Compressor Rating Conditions
Rating Condition ASHRAE CECOMAF Evaporator

- 10 oF (

- 23.3 oC)

- 10 oF (

- 23.3 oC)

Condenser 130 oF (54.4 oC) 131 oF (55 oC)

Ambient 90 oF (32.2oC) 89.6 oF (32 oC)

Suction Gas 90 oF (32.2oC) 89.6 oF (32 oC) Liquid 90 oF (32.2 oC) 131 oF (55 oC)

Compressor efficiency is also a function of refrigeration capacity. Based on data from DOE’s 1995 TSD, maximum expected compressor efficiencies for the year 1998 demonstrated that efficiency drops off with decreasing cooling capacity. 43 The expected maximum compressor efficiencies for the year 1998 as reported in the 1995 TSD are shown below in Table 3.3

. 8

below

. A year 2000 European Commission study to support energy standards of domestic refrigeration appliances also noted the drop in efficiency as capacity drops

. 45 T h e reduced efficiency for lower

- capacity compressors has been attributed to optimization of performance for higher

- capacity compressors 55 and to the higher importance of mechanical losses and losses

associated with re

- expansion of gases left in the clearance volume as the swept volume of the reciprocating piston decreases.

f CECOMAF is a European appliance manufacturer trade association formed in 1958. It merged with EUROVENT in 1996 to become EUROVENT/CECOMAF. This organization is now called EUROVENT.3-55 Table 3.3

. 8 Estimated 1998 Maximum Compressor Efficiencies

Product Class Served Capacity Range * Maximum Efficiency by 1998 *

W Btu/h r Coefficient of Performance ( COP ) Energy Efficiency Ratio ( EER )

, Btu/hr

- W The Five Standard Refrigerator

Freezers 220 to 278 750 to 950 1.64 5.60

176 to 205 600 to 700 1.60 5.45

Auto Defrost Upright Freezers 250 to 278 850 to 950 1.64 5.60 Manual Defrost Upright Freezers 161 to 176 550 to 600 1.51 5.15

Manual Defrost Chest Freezers 147 to 161 500 to 550 1.45 4.95

Compacts 117 400 1.38 4.70

103 350 1.26 4.30

59 200 1.04 3.55

41 140 0.76 2.6

Source: DOE, 1995 TSD. * Performance based on ASHRAE rating conditions. Performance based on the use of refrigerant R

- 134a.

More recent compressor performance data was collected as part of the engineering analysis, and the results of this investigation is presented in Chapter 5. The highest efficiency single

- speed compressors available for standard

- size refrigerator

- freezers have EER near 6.25

Btu/hr

- W.

Improved Compressor Efficiency

Conversion to high

- efficiency compressor s is fairly stra ightforward for manufacturers to implement as long as the appropriate compressors are available

. As indicated above , maximum efficiencies for compressors that are utilized in the most common types of U.S. refrigerator

freezers range to near 6.25 Btu/hr

- W

.

Variable

- Speed Compressors

Variable

- speed compressors allow efficiency improvement as compared to single

- speed compressors since they can provide a better match of thermal loads during the vast majority of

hours when the loads are low. Mo st of the time, the compressor would operate at low speed with a high percentage of on

- time. This would lower energy consumption by reducing off

- cycl e losses

and by allowing the heat exchangers to operate with lower mass flow, thus boosting their effectiveness. However, careful consideration must be given to how variable speed compressors are implemented, because increased fan run times could negate compressor energy savings.

Electronics are used by variable

- speed compressors to vary the speed. They use either inverter

d riven induction motors or permanent magnet motors. Most U.S. residential refrige ration products do not currently use variable

- speed compressors, but the use of these compressors is becoming more common.

Various past studies have illustrated a range of energy savings achievable through use of variable speed compressors. Arthur D. Little reported savings of approximately 25 percent compared to single

- speed motor systems in 1999

. 56 Research conducted by Tecum seh Products Company demonstrated that energy savings of 15 percent as well as reduction of sound and3-56 vibration levels. 57 Simulation analyses conducted at the University of Illinois demonstrated that steady

- energy savings ranging from four to 14 percent cou ld be realized through the use of a

two

- speed compressor in concert with multiple

- speed evaporator and condenser fans. The research also demonstrated that an additional 0.5 to four percent in energy consumption could be saved through the reduction of cycli ng frequency , i.e. the number of starts

. 58

Embraco has developed its third generation variable

- speed compressor that utilizes a

permanent magnet motor c ontrolled by a programmable electronic unit. 59 Table 3.3

. 9 presents the rated performance of some of Embraco’s variable

- speed compressors. The rated efficiencies

of th ese variable

- speed compressors are not necessarily higher than the best efficiencie s of single

- speed compressors

-- evaluation of the benefits of variable

- speed compressors requires consideration of the system performance rather than just rated performance.

Table 3.3

. 9 Efficiencies of Some o f Embraco’s Variable

- Speed Compressor Models

Model Capacity Range * Efficiency*

W Btu/h r COP EER
VEGY6H (1600

- 4500 revolutions per minute ( rpm ) ) 98

– 281 676

– 959 Up to 1.78 Up to 6.07

VEGY7H (1600

- 4500 rpm) 111

– 314 379

– 1071 Up to 1.81 Up to 6.18
VEGY8C (1600

- 4000 rpm) 132

– 319 450

– 1088 Up to 1.79 Up to 6.11

Source: Embraco, 2006.
* Performance based on ASHRAE rating conditions. Models utilize refrigerant R

- 134a.

Linear Compressors

Linear compressors employ a different design than either reciprocating or rotary compressors and are reportedly more efficient than either. These compressors use a linear rather than rotary motor, thus eliminating the crankshaft and linkage which converts the rotary motion

to the linear motion of the piston of a reciprocating compressor. Elimination of the mechanical linkage reduces friction and side

- forces. The linear motor requires power electronics and a controller to assure proper piston throw. Most linear compressor designs use a free pist on arrangement and can be controlled for a range of capacities through adjustment of piston displacement

. Early work on the concept suggested that the compressors can operate without requiring oil, which could provide additional energy benefit by improving heat transfer in the

evaporator. Refrigerator noise levels can also be reduced by utilizing linear compressors in the same way that this can be done with variable

- speed compressors, by operating most of the time at low capacity. 60

An early version of the linear compressor design was developed by Sunpower for integration into refrigerators for the European market using isobutene (R

- 600a) as a refrigerant. 61
LG has developed a linear compressor for household refrigerator s which does require use of oil

. LG cla ims that its line of linear compressors is up to 20 percent more efficient than reciprocating designs. 62 Table 3.3

. 10 presents the rated effi ciencies of LG’s linear co mpressors. 63 LG reports the efficiency of its linear compressors only at “LG Reference Conditions,” which are significantly different than the ASHRAE rating conditions. Under ASHRAE conditions, compressors are rated with evaporating and condensing temperatu res of

- 10oF (

- 23.3oC) and 130oF (54.4oC), respectively, while the “LG Reference Conditions” are based on evaporating and3-57 condensing temperatures of

- 14.8oF (

- 26oC) and 100.4oF (38oC), respectively. It is not clear what the liquid and suction vapor temperatures for the LG conditions are

— these temperatures also impact capacity and power input. At the same evaporating and condensing temperatures and with liquid and suction vapor conditions consistent wi th the ASHRAE test conditions, a high efficiency rotating

- shaft reciprocating compressor such as the Embraco EGX70HLC would have an operating EER of about 6.9 Btu/hr

- W. Hence, the LG linear compressor may be about 9%

more efficient than the best current

- te chnology rotating

- shaft reciprocating compressors.

Table 3.3

. 10 Efficiencies of LG’s Current Linear Compressor Models

Model Capacity Range * Efficiency*

W Btu/h r COP EER

DLF81LACT 310 1058 2.14 7.3

FA81LACT 293 1000 2.20 7.5

FA72LACT 276 941 2.20 7.5

FA63LACT 241 823 2.20 7.5

FA54LACT 207 706 2.20 7.5

Source: LG , 2007.

* Performance based on ‘LG Reference’ rating conditions. Models utilize refrigerant R

- 134a.

In the trade press, LG has expressed willingness to license the linear compressor technology to competitors. 64

3.3.2.5 Evaporator However, because the LG design is proprietary, the widespread use of linear compressors is uncertain.

The evaporator is a key component of the ref rigeration system. As d iscussed earlier in

section 3.11.2 , there are three basic evaporator designs depending on the refrigeration product:

standard

- size refrigerator

- freezers and upright freezers with automatic defrost typically use a forced

- convection fi nned

- tube design; compact refrigerators and refrigerator

- freezers and small

size standard refrigerator

- freezers generally use a roll

- bond design; and chest freezers and upright freezers with manual defrost typically use a coil design that is integrated wit hin the walls

of the unit. Some manual defrost freezers also use evaporators which are integrated with the wire shelving. In the case of the finned

- tube designs used in standa rd

- size refrigerator

- freezers, design, modeling, and experimental studies have been conducted to evaluate their heat transfer performance. 65

, 66

Increased Surface Area Evaporator performance can be enhanced by increasing the heat exchanger surface area or improving the heat exchange performance.

Increasing the heat exchanger surface area can be achieved by increasing the face area of the evaporator or adding more tube rows. These measures are limited by the geometry of the refrigeration product. There is a tradeoff between increasing the volume occupied by the heat exchanger and reduc ing the interior volume of the refrigerator.

In its 1995 TSD, DOE considered increasing the evaporator surface area for most of the product classes analyzed; this resulted in an estimated one to two percent reduction in annual energy consumption. 43 In the 1995 TSD, DOE based cost and efficiency improvements for this3-58 technology on estimates by manufacturers. No details were provided on how exactly the evaporator surface area was increased. Therefore, it is uncertain to what extent design efforts to increase the evaporator surface area have been employed in current U.S. refrigerator

- freezer designs.

Improved Heat Exchange

Improving heat exchanger performance can be achieved through the use of enhanced fins

and/or tubes. These types of fin and tube enhancements are common in air

- conditioning applications where slit and louvered designs are used to enhance the fin surface and different types of inter nally

- grooved surfaces are used to enhance the tubing. In its 1995 TSD, DOE considered enhancing the evaporator’s heat exchange performance for many of the product classes analyzed; this resulted in an estimated one to two percent reduction in annual energ y consumption. 43 In the 1995 TSD, DOE based cost and efficiency improvements for this technology on estimates by manufacturers. No details were pr ovided on how exactly the evaporator heat exchange performance was enhanced. Therefore, it is uncertain to what extent design efforts to enhance the evaporator heat exchange performance have been employed in current U.S. refrigerator, refrigerator

- freezer, and freezer designs.

Heat exchanger techn o logies that could potentially improve evaporator performance are microchannel heat exchangers, electrohydrodynamic enhance ment, and the adoption of phase

change materials. In the case of microchannel heat exchangers, past research has demonstrated that the use of such heat exchangers in domestic refrigerators can provide system efficiencies comparable to current technologies while reducing refrigerant charge. 67

45 Electrohydrodynamic enhancement employs h igh

- voltage fields to improve the heat exchange performance. However, safety issues involved in using such high voltages in domestic appliances have not yet been

resolved. In addition, no prototypes are available to test and evaluate this technology for

do mestic refrigerators and freezers. Finally, with regard to phase

- change materials, Thomson (a French manufacturer) has integrated into its heat exchangers a phase

- change material that enables higher average evaporation temperatures than conventional design s, thereby yielding energy savings. It is unclear for any of these technologies whether they will ever achieve widespread use in refrigerator

- fre ezers.

Research has also been conducted on the use of a ground

- source heat exchanger as a means of rejecting heat from the cabinet and improving the efficiency of a refrigerator

- freezer. Although the use of such a design reduced energy consumption consid erably, it is likely not practical for most domestic refrigeration products. 68

3.3.2.6 Condenser

The condenser, like the evaporator, is a key component of the refrigeration system and is

located on the outside of the unit. As discussed in section 11.1.2, there are three basic condenser designs depending on the refrigeration product: Standard

- size refrigerator

- freezers typically use a

forced

- convection finned

- tube design; compact refrigerators and refrigerator

- freezers generally

use a wire

- and

- tube “static” design w hich uses natural convection cooling ; and freezers typically

use a hot wall condenser tha t is integrated within the shell of the unit. In the case of the static

condensers used in compact units, modeling studies have been conducted to evaluate their heat3-59 t ransfer performance. 69 Modeling studies have also been performed on hot

- wall condensers. 70

, 71

Increased Surface Area Condenser performance can be enhanced by increasing the heat exchanger surface area or improving the heat exchange performance.

Increasing the heat exchanger surface area can be achieved by increasing the face area of the condenser or adding more tube rows. These measures can be limited by the geometry of the refrigeration product. There may be a tradeoff between increasing the volume occupie d be by the heat exchanger and reducing the interior volume of the refrigerator.

In its 1995 TSD, DOE considered increasing the condenser surface area for many of the product classes analyzed; this resulted in an estimated one to two percent reduction in annual energy consumption. 43 In the 1995 TSD, DOE based cost and efficiency improvements for this technology on estimates by manufacturers. No det ails were provided on how exactly the

condenser surface area was increased. Therefore, it is uncertain to what extent design efforts to increase the condenser surface area have been employed in current U.S. refrigerator

- freezer designs.

Improved Heat Excha nge
Improving heat exchanger performance can be achieved through the use of enhanced fins

and/or tubes. These types of fin and tube enhancements are common in air

- conditioning applications where slit and louvered designs are used to enhance the fin surfac e and different types of internally grooved surfaces are used to enhance the tubing. In its 1995 TSD, DOE considered enhancing the condenser’s heat exchange performance for some freezer and compact unit product classes; this resulted in approximately a two percent estimated reduction in annual energy consumption. 43 In the 1995 TSD, DOE based cost and efficiency improvements for this technology on es timates by manufacturers. No details were provided on how exactly the condenser heat exchange performance was enhanced. Therefore, it is uncertain to what extent design efforts to enhance the condenser heat exchange performance have been employed in

curren t U.S. refrigerator, refrigerator

- freezer, and freezer designs.

As with evaporators, other heat exchanger technologies could be employed to improve condenser performance. Microchannel heat exchangers, electrohydrodynamic enhancement, and the adoption of phase

- change materials are all applicable to condensers, although phase

- change materials have only been used in evaporators. It is unclear for any of these technologies whether they will ever achieve widespread use in refrigerator

- freezers.

The same rese arch that investigated the use of ground

- source heat exchangers as means of rejecting heat for the cabinet also examined its application for rejecting heat from the

condenser. The technology was demonstrated to be effective at reducing the energy use of a refrigerator

- freezer, but is likely not practical for most domestic refrigeration products. 45

Forced

- Convection Condenser

Most standard

- size refrigerator

- freezers use forced

- convection condensers. In contrast, most

standard

- size freezers use hot wall condensers. The forced convection configuration can provide3-60 higher heat transfer effectiveness. However, space for housing a fo rced convection condenser and its associated fan is not always available. The consideration of conversion to forced

convection condensers will depend on whether a particular product class is designed in a way that allows housing of the condenser and fan in a suitable location.

3.3.2.7 Fan and Fan Mo tor

Fans are used to increase evaporator and condenser heat transfer. Because most refrigerator

- freezers use forced

- convection condensers which rely on fans for air movement , fan

and fan

- motor technology options for the condenser are applicable. However, many manual

defrost refrigerators and freezers

— specifically chest freezers and small, under

- counter

- type refrigerators

— use static condenser s and/or natural convection evaporator s and, as a result, do not

use fans and fan motors.

For those refrigeration products that do utilize fans, refrigerator manufacturers purchase

fans and fan motors from outside vendors. Therefore, conversion to more

- efficient fan motors can be accomplished relatively easily when more

- efficient fan s and fan motors are available.

Fan and Fan Motor Improvements

Evaporator can condenser fans are typically of axial design. Evaporator fan blades are typically either 100mm or 110mm in diameter. Because the evaporator fan and fan motor are
located within the refrigerated cabinet and the electric energy input adds to the refrigeration load

,

more

- efficient evaporator fan or evaporator fan motor designs contribute to efficiency improvements in two ways: (1) reducing the power consumption of the fan motor and (2) reducing the power consumption of the compressor due to decreased heat losses into the cabinet

from the fan motor.

One source of inefficiency for axial fans lies in their tendency to throw air outward . The Pax GroupTM has developed a fan (PAX fan) th at employ s streamlined blades with patented geometrical shapes which reportedly provid e better airflow direction and improved efficiency. Tests performed with the PAX fan have demonstrated a reduction in fan

- motor power of 23 percent and an overall reduction in refrigerator energy consumption of 3.9 percent relative to a refrigerator with a typical axial fan blade design. 72 However, because t he PAX fan is proprietary, the widespread use of the design is highly uncertain.

Before the 1993 U.S. energy efficiency standards took effect, most evaporator and

condenser fan motors were shaded pole induction designs , with efficiencies between 10 and 15 percent and power input of about 15 Watts (W). Higher

- efficiency motor designs include permanent split capacitor motors ( PSC ) induction motors with 20 to 30 percent efficiency

, and

brushless DC motors , with near 65 percent efficiency

.

3.3.2.8 Expansion Valve

Th e metering device in most household refrigerator

- freezers is a capillary tube. As discussed above in section 11.1.1, there are two common types of capillary tubes

— adiabatic and

non

- adiabatic. In the non

- adiabatic configuration, the capillary tube is solder ed to the suction line3-61 to evaporate the residual liquid in the suction line and to warm the vapor to near

- ambient

temperature

. Th e suction line heat exchanger (or the non

- adiabatic capillary) improves efficiency because it increases the refrigeration capac ity of the system by the amount of heat being transferred from the capillary to the suction side. Non

- adiabatic capillary tubes are the most common type of metering device in refrigerator

- freezers. The other type of metering device, an adiabatic capillary tube, is used in some refrigeration products. In this configuration , the capillary tube does not exchange heat with the suction line and the refrigerant expands from the high pressure to the low pressure adiabatically. Research has been conducted to develo p models to study the performance of both types of capillary tubes. 73

, 74

Improved Expansion Valve

Automatic, adjustable thermostatic or electronic expansion valves may provide improved performance. The technology for this design option is available; however, a modification in system design is required. DOE has not be able to identify any data demonstrating that improved expansion val v es will save energy in domestic refrigerators.

3.3.2.9 Cycling Losses

Off

- cycle refrigerant migration reduces a refrigeration product’s efficiency by transferring heat from outside the cabinet into the evaporator. Changes in refrig erator design that reduce this aspect of cycling losses can increase the unit’s efficiency

.

Fluid Control or Solenoid Va lve

A fluid control or soleno id valve installed after the condenser to effectively isolate the evaporator from the condenser during the off

- cycle can be used to prevent any refrigerant migration. Research has demonstrated that solenoid valves can yield substantial energy savings. 75

3.3.2.10 Defrost System How ever, there are drawbacks to using solenoid valves. First, refrigeration migration allows the system pressure to equalize, reducing the required starting torque of the compressor

motor. A solenoid valve would increase the required starting torque of the co mpressor motor. Second, adding such a valve could negatively affect system reliability.

Section 3. 11.1.2 provides a description of typical automatic defrost systems for refrigerator

- freezers. Most units use electric heaters to defrost the i ce buildup on the evaporator located in the freezer section of a refrigerator

- freezer. Energy use associated with defrost includes the energy input for the heater and also the refrigeration system energy used to remove

the defrost heat from the cabinet.

R educed Energy for Automatic Defrost

In some cases, the defrost heat supplied is more than required. Thus, energy savings can be achieved by reducing the defrost heat by either using a smaller heater, reducing the heater on

time, reducing the frequency of defrost, or a combination of these.

In its 1995 TSD, DOE found that most manufacturers had already significantly reduced the electric heat for auto defrost in order to comply with the energy efficiency standards that3-62 became effective in 1993. 43 There may be limited additional energy savings possible through optimization of automatic defrost.

Adaptive Defrost

To reduce the energy used for defrost, adaptive defrost c an be used. An ada ptive defrost

system can control both the defrost time and the amount of defrost heat. Adaptive defrost systems make use of controls to adjust the time between defrost cycles to the appropriate amount for the door opening frequency, ambient conditions, and other consumer usage patterns which

affect the introduction of moisture into the cabinet. In a typical automatic defrost system, a mechanical timer initiates defrost after a specified time period, usually 10 to 12 hours of

compressor on

- time. By allowing adjustment of the time between defrosts, energy use can be

reduced. The DOE energy test procedure includes modified test procedures for evaluating the energy use of products with adaptive defrost. In its 1995 TSD, DOE estimated that energy consumption can be reduced by three to four percent with adaptive defrost. 43 It is unclear what percentage of the refrigerator market currently uses adaptive defr ost.

Condenser Hot Gas

Another method of reducing the energy required for defrost is to eliminate the need for electric heaters by substituting condenser hot gas in their place. In a condenser hot gas defrost system, the compressor continues to run and a valve opens allowing hot compressed refrigerant to flow to the evaporator. Man y frost

- free refrigerator

- freezers in the 1960s and 1970s used such a defrost system.

3.3.2.11 Control System

The control systems discussed here pertain to those controlling the tempera ture and air

distribution within the refrigeration product.

Temperature Control

Conventional thermostats are thermomechanical devices that are not very accurate. The inaccuracy of these devices may produce large temperature fluctuations within the cabine t and, in turn, thermodynamic inefficiencies. Electronic thermostats are available that can provide more precise and repeatable temperature control than conventional thermostats. This can result in improved efficiency. Electronic thermostat systems can also account for more parameters than just the cabinet temperature, such as the room temperature, to better regulate product operation and reduce compressor run times.

Air

- Distribution Control

For refrigerator

- freezers, better air distribution between th e freezer and fresh food compartments can improve temperature control and reduce energy consumption. Improving the distribution of cold air within the refrigerator

- freezer allows the temperature difference between the air and foodstuffs to be minimized, en abling the evaporation temperature to be raised and, thereby, reducing energy consumption. It is uncertain to what degree the air distribution control in current refrigerator

- freezer models can be improved. However, the fact that several patents3-63 have been issued in the U.S. since 1995 regarding air distribution implies that improvements in air distribution control are possible. 45

3.3.2.12 Other Technologies

Alternative refrigerants and changing the location of refrigeration components can also improve the efficiency of refrigeration products. These two technology options are discussed

below.

Alternative Refrigerants

Through the 1980s, CFC

- 12, a chlorofluor ocarbon, was used as the refrigerant in almost all refrigerators, refrigerator

- freezers, and freezers. However, under the Montreal Protocol, all CFCs were banned from use by the mid

- 1990s due to their high ozone depletion potential ( ODP )

. In the early 1990 s, many alternative refrigerants were evaluated as a replacement for CFC

- 12. Of the alternatives considered, the industry settled on HFC

- 134a as the replacement for CFC

- 12. Although initial research demonstrated that HFC

- 134a as a drop

- in replacement yield ed efficiencies which were four to 10 percent less than CFC

- 12, further work showed that with the appropriate superheat and subcooling taken into consideration, HFC

- 134a could yield essentially equivalent system efficiencies as CFC

- 12. 76

Because HFC

- 134a exhibits some global warming potential ( GWP ) , research continued to find an alternative refrigerant with less or no GWP. For example, R

- 152a has a lower GWP

than HFC

- 134a but, primarily due to flammability concerns and the potential liability issues it

pos ed to refrigerator manufacturers, it was dismissed as a potential alternative.

Naturally occurring substances such as carbon dioxide, ammonia, and hydrocarbons are all considered to be environmentally safe refrigerants with very low GWP. Hydrocarbons in particular are attractive due to their similar thermodynamic properties to CFC

- 12. Much research has been conducted showing the efficiency benefits of hydrocarbons. For example, the performance of propane/isobutane and propane/butane mixtures in domestic refrigerators has been shown to be equal to or better than products using CFC

- 12. 77

, 78 H ydrocarbon flammability has been pointed out as a significant drawback and has prevented their adoption in U.S. products.

In con trast, European refrigerator manufacturers started manufacturing products with isobutane

in the 1990s. However, recently the General Electric Company announced the intention to introduce this refrigerant in the U.S. 79

Component Location

In its 1995 TSD, DO E saw energy savings potential in more optimal placement of certain

components. For example, if the compressor and condenser are located on the top of the refrigerator

- freezer, DOE determined that they can operate more efficiently because heat is more

read ily convected away from the system and, in addition, the condenser fan can be eliminated. As described previously, traditionally, the compressor and condenser are located at the bottom rather than the top of the refrigerator

- freezer so the user can have ea sy access to the food

compartments , to key center of gravity low, and to provide air flow and a heat source near the tray which collects defrost water to assure quick re

- evaporation of water

. Locating the condenser and compressor at the top of the unit wou ld require modification of traditional practice and3-64 consumer preference. It would also require product redesign, which could potentially increase manufacturing costs.

Another option is to locate the evaporator fan motor outside the cabinet to reduce internal loads

from the heat loss of the motor. However, it is difficult to prevent air leakage where the motor shaft penetrates the cabinet wall. The 1995 TSD concluded that the lack of experimental data prevented the evaluation of component relocation. 43

3.3.2.13 Alternative Refrigeration Cycles

Alternative refrigeration cycles may have the potential to improve system efficiency

. Several alternative refri geration cycles for refrigerator

- freezers are described below. Dual

- loop refrigerator

- freezers using two independent refrigeration cycles (one for the fresh food compartment and the other for the freezer compartment) are available on the market. Also, dual

evaporator units likely utilizing a control valve system are also being marketed. The other

alternatives listed below have be en demonstrated in prototypes to reduce energy consumption but it is uncertain as to whether they can be mass produced as a pr actical alternative to today’s

current conventional refrigeration systems.

Lorenz

- Meutzner Cycle

In a conventional refrigerator

- freezer, the temperature of the freezer and fresh food compartments are around 5oF (

- 15oC) and 38oF (3.3oC), respectively. This suggests that the fresh food compartment with a smaller temperature lift (i.e., the temperature difference between the evaporator and condenser) can operate with a higher efficiency than that of the freezer. By using zeotropic g refrigerant mixtures, the L orenz

- Meutzner cycle exploits the inherent thermodynamic advantages of the temperature glide exhibited during evaporation or condensation of the refrigerant mixture. By choosing a refrigerant mixture with very wide temperature glide, the refrigerant mixtur e can pass sequentially through the freezer and fresh food compartment

evaporators , providing refrigeration at the two evaporating temperature levels using a single

compressor. As compared to a conventional refrigerator

- freezer, the hardware differences

in clude a high

- temperature evaporator for the fresh food compartment and a low

- temperature heat exchanger between the fresh food and freezer evaporators. Lorenz and Meutzner in their research determined that their cycle using an R

- 22/R

- 11 refrigerant mixture (50 percent of each) achieved up to 20 percent energy savings compared to a conventional refrigerator

- freezer using

R

- 12 only

. 80

Subsequent research validated Lorenz and Meutzner’s findings and demonstrated the viability of the cycle based on the use of different zeotropic refrigerant mixtures, including mixtures composed of hydrocarbons. For example, as compared to a conventional refrigerator

fre ezer, experimentation on an 18 ft 3 top

- mount refrigerator

- freezer demonstrated that a modified

g A zeotropic mixture consists of two or more refrigerant components. Zeotropic mixtures have what is referred to as a temperature glide when they boil and condense: at a fixed pressure, the temperature is higher for higher quality (i.e. vapor fraction). Unlike zeotropes, azeotropic mixtures consist of two or more refrigerant components that behave like a single refrigerant, exhibiting no temperature glide.3-65 Lorenz

- Meutzner cycle yielded 16.6 percent, 14.6 percent, and 16.7 percent energy savings with binary mixtures of R

- 22/R

- 123, propane/n

- pentane, and propane/n

- butane, respectively. 81

Because the industry settled on the use of HFC

- 134a to replace CFC

- 12 , interest in th e
Lorenz

- Meutzner cycle as an alternative to conventional refrigeration cycles declined.

Dual

- Loop System

One of the best methods to reduce the thermodynamic irreversibilities resulting from the operation with a single evaporator in a refrigerator

- freezer is to employ two separate refrigeration cycles. This system, referred to as a dual

- loop system, has two completely separate refrigeration cycles which provide cooling for the freezer and fresh food compartments independently. In practice, the theoretical b enefits of such a cycle are not achieved due to the use of two compressors that are smaller and less efficient than the original single compressor. Also,

dual

- loop systems are physically larger and would either increase the product’s external

dimensions or decrease the usable refrigerator volume.

Research has demonstrated that the energy savings due to a dual

- loop system are a function of the cabinet load ratio (defined as the ratio of the fresh food to the freezer cabinet loads) and the ratio of the free zer and refrigerator cycle efficiencies. Depending on these two parameters, a dual

- loop system using HFC

- 134a can reduce energy consumption by up to 30 percent compared to a conventional refrigerator

- freezer. 82

There are numerous products currently on the market that incorporate dual

- compressor systems, including Bosch’s Integra line of bottom

- mount refrigerator

- freezers

, 83 Sun Frost’s RF19 model, 84 Northland’s 48

- inch side

- mount refrigerator

- freezer, 85 Sub

- Zero’s built

- in line of refrigerator

- freezers

, 86 Liebh err refrigerators, 87

Two

- Stage System etc.

The two

- stage system employs one condenser, two evaporators, two compressors, and at

least one suction

- line heat exchanger. The increased efficiency of this system over a conventional system is obtained due to a smaller work requirement that results from the low

pressure ratio for each of the two compressors. 88

Control Valve System The two

- stage system offers the advantage of having one fewer component (a condenser) than the dual

- loop system, but has many of the same disadvantages (e.g ., either increased external dimensions or decreased internal volume).

The control valve system has two evaporators, one for the fresh food compartment and one for the freezer compartment, but only one compressor and one condenser. T wo different length capillary tubes and a control valve are installed between the fresh food and freezer evaporator inlets and the condenser outlet. The valve directs the flow of the refrigerant through one of the evaporators at a time. That is, only one o f the two compartments is cooled at any given time. With this configuration, the fresh food compartment is cooled at a higher evaporator temperature than the freezer compartment

. Experimental research conducted on this system configuration indicated that t he energy efficiency can be improved by 8.5 percent over that of a conventional refrigerator

- freezer

. 893-66 GE offers a refrigerator

- freezer system called the ClimateKeeper2TM system that uses two

evaporators. 90 Also, KitchenAid and Jenn

- Air both offer under

- counter compact refrigerator

freezers that use dual evaporators. 91 92

Ejector Refrigerator The system details of none of these products is clearly described in the product literature.

One of the intrinsic losses in a conventional refrigeration cycle is the throttling of the refrigerant in the capillary tube. Throttling is an isenthalpic process in which work that could be extracted in the expansion process is not captured. In the ejector refrigerator , some of this work can be captured and used to rais e the pressure of refrigerant entering the compressor above that of the evaporator

. Simulation research has been conducted on an ejector refrigerator that consists of one compressor, one condenser, two capillary tubes, two evaporators (one for the fresh fo od compartment and the other for the freezer compartment), and an ejector. In this refrigerator, saturated liquid refrigerant exits the condenser and expands in the capillary tube to the fresh food

evaporator. In the fresh

- food compartment, the refrigerant is partially evaporated. At the outlet of the evaporator, the liquid refrigerant is separated from the vapor in a separator. The vapor flows to the ejector , where it is accelerated to high velocity. The liquid expands in a second capillary

tube to the fre ezer evaporator

, where it evaporates entirely

. Th e vapor leaving the freezer evaporator is entrained in the high

- velocity flow of the vapor which left the fresh food evaporator. The mixed flow is decelerated to increase its pressure. The mixed flow higher pressure flow passes to the compressor suction port to be compressed. This particul ar ejector refrigerator was shown to have an efficiency which is 12.4 percent higher than a conventional refrigerator

- freezer. 93

Tandem System

Like the control valve system and the ejector refrigerator, the tandem system uses two evaporators (one for the fresh food compartment and another for the freezer compartment), one condenser, and one compressor. Refrigerant flows in series first through the fresh food evaporator, then the freezer evaporator, and it passes a second time through the fresh food

evaporator

. The warm liquid refrigerant leaves the condenser and flows to fresh food evaporator without a first expansion

. In the fresh food evaporator the refrigerant liquid undergoes heat exchange with the evaporating refrigerant which has passed through the freezer evaporator. The

temperat ure of the liquid is reduced by this heat exchange. The liquid then passes through the capillary tube where its pressure is reduced. The two

- phase refrigerant then passes through the freezer evaporator and absorb s heat from the freezer compartment. This vaporization process only occurs when the freezer evaporator fan is turned on by the fre ezer thermostat

. The refrigerant then passes back through the fresh food evaporator. Here, if the refrigerant has not already been vaporized (i.e., the freezer compartment does not require cooling), it vaporizes as a result of absorbing heat from the fresh food compartment and the warm liquid. The superheated refrigerant then flows to the compressor suction port

. At the beginning of the compressor run , the

fresh

- food compartment fan is turned on first. Thus, the fresh food compartment is cooled before

the s ystem reaches steady state. As a result, the system uses the pull

- down period of each cycle, which is generally not suitable for cooling the freezer , to cool the fresh food compartment. This particular tandem system w as shown to reduce energy use by 18 per cent compared to a conventional refrigerator

- freezer. 943-67 3.3.2.14 Alternative Refrigeration Systems

Alternative refrigeration systems do not use vapor compression to provide refrigeration. Three alternative refrigeration systems are discussed below: the Stirling cyc le, thermoelectric cooling, and thermoacoustic cooling. Although research and development has been conducted on each of these systems, and thermoelectric compact refrigerators and wine coolers are currently being marketed, none are a viable alternative for standard

- size refrigerators, refrigerator

- freezers,

and freezers.

Stirling Cycle

A Stirling

- cycle machine is a device that operates on a closed regenerative thermodynamic cycle, with cyclic compression and expansion of the working fluid at different

temp erature levels, and where the flow is controlled by volume changes, so that there is a net

conversion of heat to work or vice versa

. ‘Regenerative’ refers to the use of an internal heat exchanger, the regenerator, which is an essential part of the Stirling cycle

. A Stirling refrigeration cycle compresses and expands an inert gas in a single cylinder. Heat is rejected at one end of the cylinder and absorbed at the opposite end. In the absence of all thermodynamic losses, the efficiency c ould be higher than for vapor compression systems, but there are various technical difficulties that have so far limited the use of Stirling

- cycle cooling to small prototype domestic refrigerators. There is no circulating refrigerant fluid and the hot and cold heat areas are relatively small, which creates heat exchange challenges for any but the lowest

- capacity systems.

Thermoelectric

Thermoelectric cooling occurs when a current is passed across the junction of two

dissimilar metals. One side of the devi ce becomes hot and the other cold. Materials (semiconductors) have relatively recently been developed that have allowed for the use of this type of cooling in some applications. Thermoelectric cooling devices have no moving parts, do not age, and have extr emely long lifetimes. There are several compact refrigerators and wine coolers using thermoelectric cooling that are being marketed, including several models offered by Avanti Products. 95

Thermoacoustic However, they have very low efficiency and are not yet suitable for

s tandard

- size domestic refrigerator

- freezers.

Acoustic cooling uses a sound generator inside a closed tube to vibrate a gas and cause alternate compression and expansion and therefore heating and cooling. The efficiency of

prototyp es have n ot been as high as vapo r compression systems and the devices have been physically large for the amount of cooling produced.

3.3.3 Energy Efficiency

DOE gathered data on the energy efficiency of residential refrigerators, refrigerator

freezers, and freezers curre ntly available in the marketplace. DOE created a database of the current models by surveying manufacturers’ websites. The data provide an overview of the energy ef ficiency of each product class covered by this rulemaking.3-68 For the models in the DOE databa se, Figure 3.3

. 3 through Figure 3.3

. 22 present by product class the relationship between rated annual energy use and adjusted volume. In each figure, lines representing the maximum allowable energy consumption (i.e., the current

m inimum efficiency standard) and the current ENERGY STAR level ( that took effect in April

2008 for standard

- size refrigerators and refrigerator

- freezers)

, are provided. This allows for a quick visual inspection of the number of models that met the ENERGY ST AR level

.

The data representing all

- refrigerators are highlighted in the figures for product classes 1, 3, 11, and 13

. For product classes 1 and 11, the products which are not all

- refrigerators could be either basic refrigerators or manual defrost refrig erator

- freezers. For product classes 3 and 13, the products which are not all

- refrigerators are refrigerator

- freezers. The percentage of all

refrigerators is high for product class 11 and very high for product class 13.

The DOE survey found no current mod els in prod uct class 6

, top

- mount refrigerator

freezers with through the door ice and with automatic defrost

. DOE still provides a figure for this

class to show the maximum allowable energy consumption for this product class. Many of the other product classes also have few products.3-69 Figure 3.3

. 3 Annual Energy Consumption for Refrigerators and Refrigerator

- Freezers with Manual Defrost (Product Class 1)

Figure 3.3

. 4 Annual Energy Consumption for Refrigerator

- Freezers with Partial Automatic Defrost (Product Class 2) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum Standard

Energy Star

All

- Refrigerators

Basic Refrigerators & Refrigerator

- Freezers

0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-70 Figure 3.3

. 5 Annual Energy Consumption for Top

- Moun t Refrigerator

- Freezers with

Auto matic Defrost without TTD Ice Service and All

- Refrigerators with Auto matic Defrost (Product Class 3)

Figure 3.3

. 6 Annual Energy Consumption for Side

- Mount Refrigerator

- Free zers with

Automatic Defrost without TTD Ice Service (Product Class 4) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum Standard

Energy Star

Refrigerator

- Freezers

All

- Refrigerators

0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-71 Figure 3.3

. 7 Annual Energy Consumption for Bottom

- Mount Refrigerator

- Freezers with Automatic Defrost without TTD Ice Service (Product Class 5)

Figure 3.3

. 8 Annual Energy Consumption for Bottom

- Mount Refrigerator

- Freez ers with

Automatic Defrost with TTD Ice Service (Product Class 5A) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star

0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-72 Figure 3.3

. 9 Annual Energy Consumption for Top

- Mount Refrigerator

- Freezers with

Automatic Defrost with TTD Ice Service (Product Class 6)

Figure 3.3

. 10 Annual Energy Consumption for Side

- Mount Refrigerator

- Freezers with Automatic Defrost with Through

- the

- Door Ice Service (Product Class 7) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Note that no current products within this category could be found.

0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume ft 3 ) Federal Minimum

Standard

Energy Star3-73 Figure 3.3

. 11 Annual Energy Consumption for Upright Freezers with Manual Defrost (Product Class 8)

Figure 3.3

. 12 Annual Energy Consumption for Upright Freezers with Automatic Defrost (Product Class 9) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star

0 100 200 300 400 500 600 700 800 900 1000

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-74 Figure 3.3

. 13 Annual Energy Consumption for Chest Freezers and all other Freezers except Compact Freezers (Product Class 10)

Figure 3.3

. 14 Annual Energy Cons umption for Chest Freezers with Automatic Defrost (Product Class 10A) 0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star

0 100 200 300 400 500 600 700 800

0 5 10 15 20 25 30 35 40 45Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-75 Figure 3.3

. 15 Annual Energy Consumption for Compact Refrigerators and Refrigerator

Freezers with Manual Defrost (Product Class 11)

Fi gure 3.3

. 16 Annual Energy Consumption for Compact Refrigerator

- Freezers with Partial Automatic Defrost (Product Class 12) 0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum Standard

Energy Star

All

- Refrigerators

Basic Refrigerators & Refrigerator

- Freezers

0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-76 Figure 3.3

. 17 Annual Energy Consumpt ion for Compact Top

- Mount Refrigerator

- Freezers

with Auto matic Defrost and All

- Refrigerators with Auto matic Defrost (Product Class 13)

Figure 3.3

. 18 Annual Energy Consumption for Compact Side

- Mount Refrigerator

- Freezers with Automatic Defrost (Product Class 14) 0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum Standard

Energy Star

All

- Refrigerators

Refrigerator

- Freezers

0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-77 Figure 3.3

. 19 Annual Energy Consumption for Compact Bottom

- Mount Refrigerator

Freezers with Automatic Defrost (Product Class 15)

Figure 3.3

. 20 Annual Energy Consumption for Compact Upright Freezers with Manual Defrost (Product Class 16) 0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star

0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star3-78 Figure 3.3

. 21 Annual Energy Consumption for Compact Upright Freezers with Automatic Defrost (Product Class 17)

Figure 3.3

. 22 Annual Energy Consumption for Compact Chest Freezers (Product Class 18) 0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

Energy Star

0 100 200 300 400 500 600 700 800

0 2 4 6 8 10 12 14Annual Energy Consumption (kWh/yr)

Adjusted Volume (ft 3 ) Federal Minimum

Standard

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- i CHAPTER 4

. SCREENING ANALYSIS

TABLE OF CONTENTS

4.1 INTRODUCTION

................................ ................................ ................................ ........... 4

- 1

4.2 SCREENED

- OUT TECHNOLGIES

................................ ................................ ............... 4

- 2

4.2.1 Improved Resistivity of Insulation

................................ ................................ ....... 4

- 2

4.2.2 Gas

- Filled Panels

................................ ................................ ................................ . 4

- 3

4.2.3 Improved Gaskets, Double Gaskets, Improved Door Face Frame

...................... 4

- 3

4.2.4 Reduced Heat Load for TTD Feature

................................ ................................ .. 4

- 3

4.2.5 Warm Liquid or Hot Gas Refrigerant Anti

- Sweat Heating

................................ . 4

- 4

4.2.6 Electric Anti

- Sweat Heater Sizing

................................ ................................ ....... 4

- 4

4.2.7 Linear Compressors

................................ ................................ ............................. 4

- 4

4.2.8 Improved Evaporator Heat Exchange

................................ ................................ .. 4

- 5

4.2.9 Improved Condenser Heat Exchange

................................ ................................ ... 4

- 5

4.2.10 Fan Blade Improvements

................................ ................................ ..................... 4

- 6

4. 2.11 Improved Expansion Valve

................................ ................................ .................. 4

- 6

4.2.12 Off

- Cycle Valve

................................ ................................ ................................ ... 4

- 7

4.2.13 Reduced Energy for Automatic Defrost

................................ .............................. 4

- 7

4.2.14 Condenser Hot Gas Defrost

................................ ................................ ................. 4

- 7

4.2.15 Electronic Temperature Control

................................ ................................ .......... 4

- 8

4.2.16 Air

- Distribution Control

................................ ................................ ...................... 4

- 8

4.2.17 Alternative Refrigerants

................................ ................................ ....................... 4

- 9

4.2.18 Component Location

................................ ................................ ............................ 4

- 9

4.2.19 Lorenz

- Meutzner Cycle

................................ ................................ ..................... 4

- 10

4.2.20 Dual

- Loop System

................................ ................................ ............................. 4

- 10

4.2.21 Two

- Stage System

................................ ................................ ............................. 4

- 10

4.2.22 Control Valve System and Tandem System

................................ ...................... 4

- 10

4.2.23 Ejector Refrigerator

................................ ................................ ........................... 4

- 11

4.2.24 Stirling Cycle

................................ ................................ ................................ ..... 4

- 11

4.2.25 Thermoelectric

................................ ................................ ................................ ... 4

- 12

4.2.26 T hermoacoustic

................................ ................................ ................................ .. 4

- 12

4.3 REMAINING TECHNOLOGI ES

................................ ................................ ................. 4

- 13

LIST OF TABLES

Table 4.2.1 LG Linear Compressor Performance Data

................................ ............................... 4

- 5

LIST OF FIGURES

Figure 4.2.1 Comparison of Stirling and Vapor Compression Technologies

............................ 4

- 124

- 1 CHAPTER 4. SCREENING ANALYSIS

4.1 INTRODUCTION

This chapter details the screening analysis that the U.S. Department of Energy (DOE)

conducted in support of the ongoing energy conservation standards rulemaking s for refrigerators, refrigerator

- freezers, and freezers

.

In c hapter 3, the market and technology assessment (MTA)

, DOE presented an initial list of technolog ies that can improve the energy efficiency of residential refrigerat ion products

. The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies to consider further and which to screen out. DOE consulted with a range of parti es, including industry, technical experts, and others to develop a list of technologies for consideration. DOE evaluated t he technolog ies pursuant to the criteria set

out in t he Energy Policy and Conservation Act (EPCA), as amended

. (42 U.S.C

. 6311

- 6317 )

Section 325(o) EPCA establishes criteria for prescribing new or amended standards designed to achieve the maximum improvement in energy efficiency

. Further, EPCA directs the Secretary of Energy to determine whether a standard is technologically feasible an d economically justified

. (42 U.S.C

. 6295(o)(2)(A), as directed by 42 U.S.C. 6316(a)(1)

- (3) )

. EPCA also establishes guidelines for determining whether a standard is economically justified. (42 U.S.C. 6295(o)(2)(B)) A ppendix A to subpart C of Title 10

, Code of Federal Regulations

, Part 430 (10 CFR Part 430), “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” (the Process Rule) , sets forth procedures to guide DOE in its consideration and promulgation of new or revised equipment energy conservation standards. These procedures elaborate on the statutory criteria provided in

42 U.S.C

. 6295(o) and

, in part

, eliminate problematic technologies early in the process of prescribi ng or amending an energy efficiency standard

. In particular sections 4(b)(4) and 5(b) of

the Process Rule g uid e DOE in determin ing whether to eliminate from consideration any technology that presents unacceptable problems with respect to the following crit eria:

Technological feasibility. Technologies incorporated in commercial equipment or in working prototypes will be considered technologically feasible.

Practicability to manufacture, install, and service. If mass production of a technology

in commercial e quipment and reliable installation and servicing of the technology could be achieved on the scale necessary to serve the relevant market at the time of the effective date of the standard, then that technology will be considered practicable to manufacture, install, and

service.

Impacts on equipment utility or equipment availability

. If a technology is determined to have significant adverse impact on the utility of the equipment to significant subgroups of customers, or result in the unavailability of any cov ered equipment type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will

not be considered further.4

- 2 Ad verse impacts on health or safety

. If it is determined that a technology will have significant adverse impacts on health or safety, it will not be considered further.

In sum, if DOE determines that a technology, or a combination of technologies, has unacceptable impacts on the policies stated in section 5(b) of the Process Rule, it will be

eliminated from consideration. If a particular technology fails to meet one or more of the four criteria, it will be screened out. Section 4.2 document s the reasons for eliminating any technology

.

4.2 S CREENED

- O UT T ECHNOLG IES

This section describes the techn olog ies that DOE eliminated for failure to meet one of the following four factors: ( 1) technological feasibility; ( 2) practicability to manufacture, install, and service; ( 3) impacts on equipment utility or equipment availability ; and ( 4) adverse impacts on

health or safety.

DOE also eliminated some technologies that were dete rmined to provide little or no potential for energy use reduction for one of the following additional reasons: (a) technology already used in baseline products and incapable of generating additional energy efficiency or reducing energy consumption, (b) tec hnology does not reduce energy use, and (c) insufficient data available demonstrating benefit of the technology.

4.2.1 Improved Resistivit y of Insulation

Past research has demonstrated that the resistivity of polyurethane ( PU ) foam insulation can be improved through the use of additives that reduce the thermal conductivity of the foam.

Research conducted in 1996 demonstrated that adding carbon black provides a means of improving the thermal insulation properties of PU foam us ing both HCFC

- 141b or cyclopentane blowing agents

. 1 However, DOE is not aware that this process has been adopted by any supplier of PU foam insulation or any refrigerator manufacturer . Manufacturers have reported that it darkens the interior of a refrigera tor lined with white plastic, and it stains anything it contacts

.

Discussion with PU foam insulation vendors indicates that there is work ongoing which may lead to improvement in insulation performance but that any such technology would not likely be rea dy for introduction to the market by 2014. Discussion with manufacturers has confirmed that there are no available options for improvement in PU foam insulation performance (other than reverting to use of banned blowing agents)

. Due to the lack of availabl e information and predictions that there is no significant benefit to be expected from PU foam improvements, DOE has eliminate d this option from consideration in the engineering analysis.

Stakeholders at the preliminary analysis public meeting indicated t hat DOE should consider in the analysis a trend away from use of HFC blowing agents, in response to concerns about their global warming potential (GWP), and the possibility that climate change legislation may be enacted that would limit use of HFCs. DOE ha s put an analytic structure in place to4

- 3 allow for the rapid evaluation of efficiency improvement and trial standard levels for products using alternative foam insulation materials, if legislation banning HFCs should be enacted.

4.2.2 Gas

- Filled Panels

Investiga tion of the status of gas

- filled panels suggests that there has been some evaluation of this technology by manufacturers of residential refrigeration equipment, but that no

manufacturers are using it in their products. The costs are reported to be as high as for vacuum insulation panels (VIPs), with less reduction in thermal load. DOE has not been able to identify a credible supplier that would provide gas filled panel products to the refrigeration industry. DOE

has eliminate d this technology from further c onsideration.

4.2.3 Improved Gaskets , Double Gaskets, Improved Door Face Frame

Past investigation on reduction of heat load in the gasket and door face frame area has focused on (1) limiting the conduction of heat through metal casing material passing underneath the gasket magnet on the cabinet side or in the region of the gasket clip on the door side into the cabinet interior, (2) using a gasket which provides additional cover of frame surfaces towards the interior of the magnet to prevent cold air from reaching the high

- conductivity metal casing near the gasket magnet , and (3 ) providing a long thin “throat” area between the gasket and the interior

to limit convection heat transfer. Most current designs are effective in addressing these issues.

Limited information is publicly available which would allow quantification of additional improvement potential for the door frame/gasket area of refrigerators. Some manufacturers use

extra

- strong gasket magnets to limit infiltration and thermal loss, but i t is unclear whether significant thermal improvement is possible with such systems

. Manufacturers indicated during

pre

- NOPR discussions that properly designed and installed gasket systems provide a tight seal

a nd that there isn’t any further reduction in a ir leakage that could be achieved with improvements in the gasket system such as increasing the magnetic force

. In addition, consumer safety laws preclude use of excessive door sealing force

.

B ased on information drawn from DOE’s 1995 TSD, double door ga skets were not adopted by many manufacturers in the mid

- 1990s because of performance problems and cost. Ice has a tendency to form between the gaskets, greatly reducing their effectiveness. In addition, the gaskets tend to be visually unattractive and they make it more difficult to meet the consumer safety regulations for minimum door

- opening force.

It is expected that incremental improvement may be possible for some products, however, the lack of good quantified information on general improvement potentia l in this area makes this technology option unsuitable for consideration as a design option

.

4.2.4 Reduced Heat Load for TTD Feature

During Pre

- NOPR analysis discussions, m anufacturers indicated that there is little or no

reduction in load which can be achieved through redesign of TTD features. DOE inspected the TTD system of a side

- by

- side refrigerator and concluded that the load impact of this feature is

modest. The door insulation thickness is maintained behind the recess except within an inch or4

- 4 two of the ch ute opening, and low

- conductivity plastic is used on all surfaces. The chute door closes reliably. A calculation of the thermal load suggests that it is on the order of 3 W (1 0 Btu/hr). The reverse engineering of this feature shows that a 2W electric anti

- s weat heater is used to prevent condensation of the exterior surfaces nearest the ice chute opening. Manufacturers indicated that these load levels are typical for TTD features. Even if the chute door w as insulated

with 1⁄2

- inch of insulation (which would lik ely interfere with chute door operation) , the load impact would be minimal, due to the very low surface area of this door. Based on the very low potential for improvement, DOE has eliminated reduced heat load TTD features as an option for further analysis.

4.2.5 Warm Liquid or Hot Gas Refrigerant Anti

- Sweat Heat ing

Although some refrigerators do still use electric anti

- sweat heating, the typical anti

- sweat heater for baseline units, according to the reverse engineering work and discussion with

manufacturers , is warm liquid refrigerant. A possible exception is French door refrigerators. In these products, providing heat to the gasket surfaces which seal between the French doors (or to the flip

- mullion used in some designs for sealing in this region) is not possibl e using warm refrigerant liquid or hot gas. French door refrigerators may use electric anti

- sweat heaters in this region, but for these products conversion to refrigerant line ant i

- sweat is impractical. Due to the current use of refrigerant

- line anti

- sweat in situations where it can be used, DOE has eliminated this option from further consideration.

4.2.6 Electric Anti

- Sweat Heater Sizing

Because the baseline products considered in the engineering analysis predominantly use warm liquid anti

- sweat , the considerat ion of adjustment of the sizing of electric anti

- sweat
heaters is not relevant.

4.2.7 Linear Compressors

While promising potential has been reported for linear compressors, there is very little

information available for commercialized linear compressors that all ows confident prediction of performance and cost impacts of this technology. Information for some LG linear compressors has been reported at “LG Reference Conditions,” which are significantly different than the standard ASHRAE rating conditions. Under ASHR AE conditions, compressors are rated at

- 10 oF (

- 23.3 oC) evaporating temperature and 130 oF (54.4 oC) condensing temperature

. T he “LG

Reference Conditions” are based on

- 14.8 oF (

- 26 oC) evaporating and 100.4 oF (38 oC) condensing temperatures

. It is not clear what the liquid and suction vapor temperatures for the

LG conditions are

— these temperatures also impact capacity and power input

. The performance of some of LG’s linear compressors at the LG conditions is presented in Table 4.2

. 1 below. At the same evaporating and condensing temperatures and with liquid and suction vapor conditions

consistent with the ASHRAE test conditions , a high efficiency rotating

- shaft reciprocating compressor such as the Embraco EGX70HLC would have an operating EER of about 6.9 Btu/hr

W. Hence, the LG linear compressor may be about 9% more efficient than the best current

technology rotating

- shaft reciprocating compressors

.4

- 5 Table 4.2

. 1 LG Linear Compressor Performance Data

Model Capacity Range * Efficiency*

W Btu/h r COP EER

DLF81LACT 310 1058 2.14 7.3

FA81LACT 293 1000 2.20 7.5

FA72LACT 276 941 2.20 7.5

FA63LACT 241 823 2.20 7.5

FA54LACT 207 706 2.20 7.5

Source: LG, 2007.

* Performance based on ‘LG Reference’ rating conditions. Models utilize refrigerant R

134a.

In the trade press, LG has expressed willingness to license the linear compressor technology to competitors. 2

4.2.8 Improved Evaporator Heat Exchange However, because the LG design is proprietary, the widespread use of linear compressors is highly uncertain. Use of linear compressors in LG refrigerators is less explicit in LG product data than it was a few years ago, so it is unclear how m any products are actually using these compressors. Other compressor manufacturers who have indicated that they have investigated linear technology have stated that linear compressor technology does not provide a clear path to improved efficiency , and some have indicated that they are no longer actively pursuing this technology

. Hence, availability of linear compressor technology as an option for improved efficiency is uncertain. Further, DOE was not able to obtain cost estimates for linear compressors. For these reasons, DOE has eliminated linear compressors from further consideration in the analyses.

Improving heat exchanger performance can be achieved through the use of enhanced fins

and/or tubes. These types of fin and tube enhancements are common in air

- conditioning applications where slit and louvered designs are used to enhance the fin surface and different types of internally

- grooved surfaces are used to enhance the tubing. Application of similar enhancements in refrig erator evaporators is complicated by frost accumulation on the

evaporators. Effectiveness of the fine slit and louver features for refrigerator evaporators is dubious because they would be blocked quickly with frost. In order to avoid the energy use

associ ated with frequent defrost, fin spacing in refrigerator evaporators is comparatively sparse. This allows the evaporator to work effectively without blocking airflow with a considerable

accumulation of frost. During defrost, the typical flat fin design of t hese evaporators assures that the frost slides rapidly off the fins and doesn’t get stuck on fin enhancement features. During discussions with manufacturers, little indication was provided that efficiency could significantly be enhanced through the use of fin or tube enhancements. DOE has eliminated this option from consideration in subsequent an a lysis.

4.2.9 Improved Condenser Heat Exchange

Use of heat exchanger enhancements for the condenser is complicated by the need for adequate performance when the heat exchanger has not been cleaned. Most refrigerator condensers (other than hot wall condensers integrated into the outer shells of the products) are

made of steel tubes and steel wire fins. These condensers have a very open construction which4

- 6 allows dust to flow through easily and which reduces blockage of air flow if dust does collect on

the condenser surfaces. Flat fin condensers used in refrigerators are known to require more careful attention to cleaning. Use of high fin densities is more accepted in air

- conditioning applications because periodic maintenance is expected and because size would get enormous if aggressive fin spacing wasn’t employed , whereas cleaning of refrigerator condensers occurs infrequently or never , and the loads are small enough so th at maximizing use of space is not

critical

. DOE has eliminated this option from consideration in subsequent analysis.

4.2.10 Fan Blade Improvements

Refrigerator fan blades use an axial design

. They are typically injection molded plastic

with a three

- dimensional shape for improved performance as compared with older stamped sheet metal designs. One source of inefficiency for axial fans lies in their tendency to throw air outward, necessitating a shroud to collect and redirect airflow along the axis as i ntended. The Pax GroupTM has developed a fan (PAX fan) that employ s streamlined blades with patented geometrical shapes derived from a naturalistic design approach, providing better airflow direction and improved efficiency. Tests performed when replacing existing moto r combinations

with A.O.Smith motors and PAX fan blades show power input reduction s in the range of roughly

10% to 35%. 3

4.2.11 Improved Expansion Valve It is impossible to tell how much of this benefit is associated with the fan blade

and how much with the motor. Also , because the PAX f an is proprietary, the widespread use of the design is highly uncertain. There is in general little data available to quantify the energy benefit possible with improvement in fan blade design in today’s refrigeration products. Fan performance is highly dep endent on details of integration with the system: orifice geometry, tolerance of blade/orifice gap, match of system flow impedance to fan performance, etc. Hence, making credible estimates of energy savings potential through fan blade replacement requires testing fan blade swaps in baseline products. The cost of fabrication of improved fan blade geometries should be low , so most of the cost increase associated with this technology option would be associated with paying for the blade development and/or licen sing fees. It is very difficult to predict what these costs would be unless specific vendors of high efficiency fan blades can be identified who provide complete information. During discussions with manufacturers, no information was provided which would al low credible calculation of savings and costs associated with improved fan blades. Hence, DOE has eliminated this option from

further consideration.

Residential refrigeration products exclusively use capillary tubes for refriger ant flow metering. These tubes are inexpensive and they lend themselves easily to low

- cost fabrication of suction line heat exchangers by brazing the capillary to the suction line. Automatic, adjustable thermostatic or electronic expansion valves are avail able , but they generally are oversized for residential refrigeration. Furthermore, it is unclear whether there is any potential for energy savings using alternative expansion devices. The DOE Energy test is conducted with a single set of standardized tempe ratures for the ambient air (90 °F) and for the compartments. A capillary tube can be designed to provide optimized performance for this set of temperatures. Systems are generally designed to operate with evaporator exit conditions having little or no supe rheat during energy testing, thus maximizing use of the evaporator. In the lower ambient temperature typical in homes, the pressure available to move refrigerant through the capillary tube is lower, thus4

- 7 possibly leading to increased superheat and less tha n optimum performance. An automatic valve could provide optimum performance for a wider range of operating conditions, but such improvement is not reflected in current energy testing. DOE has eliminated this option from

further consideration.

4.2.12 Off

- Cycl e Val ve

Off

- cycle refrigerant migration reduces a refrigeration product’s efficiency by allowing warm and/or vapor

- phase refrigerant to pass into the cabinet. A fluid control or solenoid valve installed after the condenser to effectively isolate the evaporator from the condenser during the

off

- cycle can be used to prevent refrigerant migration. Research has demonstrated that solenoid valves can yield substantial energy savings. 4

4.2.13 Reduced Energy for Automatic Defrost Such a solenoid valve represents a possible reliability issue, although many wine s torage products use similar solenoid valves to allow control of multiple compartments with a single compressor. Also

, operation with an off

- cycle valve requires that the compressor motor can start up against a substantial pressure difference. The starting windings of compressors that can do this reliably over the life of a refrigerator draw more power and hence reduce the compressor’s steady

- state efficiency. The different efficiency levels of commercial refrigeration compressors designed for instant restar t versus restart after pressure equalization have EER ratings which differ by 10% or more. Such a difference would be expected for residential compressors operating with an off cycle valve, and this difference would more than neutralize any benefit accrued from using the off

- cycle valve. Hence, DOE has eliminated this option from further consideration.

In some cases, the defrost heat supplied is more than required. Thus, energy savings can be achieved by reducing the defrost heat by either using smaller heaters, reducing the heater on

time, reducing the frequency of defrost, or a combination of these. In its 1995 TSD, DOE found that most manufacturers had already significantly reduced the electric heat for auto defrost in order to comply with the energy efficiency standards that became effective in 1993. 5

4.2.14 Con denser Hot Gas Defrost The percent of energy represented by defrost for the refrigerator

- freezers tested as part of this rulemaking ranged from 4% to 5% for products without adaptive defrost and from 1% to 5% for products with adaptive defrost. I t is unlikely that significant energy savings are achievable by further reducing the energy for automatic defrost without compromising defrost performance, except through use of adaptive defrost

.

Another method of reducing the energy required for defrost is to eliminate the need for electric heaters by substituting condenser hot gas in their place. In a condenser hot gas defrost system, the compressor continues to run and a valve opens allowing hot compressed refrigerant to flow to the evaporator. M any frost

- free refrigerator

- freezers in the 1960s and 1970s used a condenser hot gas defrost system. In its 1995 TSD, DOE was not able to identify data that

demonstrate d that the c ondenser hot gas method was more cost

- effective than adaptive defrost. Therefore, DOE dropped the condenser gas defrost as a technology option in favor of adaptive

defrost. 6 Hot gas defrost would potentially save energy because a large portion of the heat for defrost could be provided by heat generated by the compressor motor during the on

- cycle rather4

- 8 than from new electricity use

. The compressor is at an elevated temperature with respect to ambient during the on

- cycle and is certainly much warmer than fr eezing temperature. The heat would be transported to the evaporator with circulating refrigerant during the defrost cycle

. However, in spite of this potential reduction in use of electricity to provide defrost heat, the energy savings potential is not well documented. Also, there are concerns regarding reliability of the required valve.

4.2.15 Electronic Temperature Control

DOE has not identified any relevant information showing the energy benefit of electronic temperature control. Potential benefits of electroni c control when operating with single

- speed compressors are fine

- tuning of the run times and fine

- tuning of the cut

- in and cut

- out
temperatures. While there may be potential for incremental improvement associated with such

fine

- tuning, the lack of data supp orting claims for energy savings make it difficult to properly analyze this option.

4.2.16 Air

- Distribution Control

Air temperature distribution in refrigeration products with fan

- forced evaporator air flow is generally good, in contrast with some products with cold wall or roll bond evaporators. Hence, it is not clear that improvements in air distribution will provide significant reduction in energy

use. Redirection of air flows in a cabinet could potentially provide a false indication of efficient operation, fo r instance if the coldest air from the evaporator discharge is directed at the locations used for the energy test thermocouples. It is conceivable that valid reduction in energy use could occur if the air flow distribution keeps cold air away from the wall s of the cabinet. However, there is insufficient information regarding the designs of air flow distribution systems to quantify potential energy savings.4

- 9 4.2.17 Alternative Refrigerants

DOE eliminated alternative refrigerants as a design option for most product classes because the available alternatives are either banned, have lower thermodynamic efficiencies, or, as in the case of hydrocarbons, are only allowed in limited quantities due to safety regulations.

Isobutane is t he most logical alternative to HFC

- 134a , the refrigerant currently used in U.S. residential refrigeration products. Isobutane is a hydrocarbon refrigerant with a higher theoretical efficiency than that of HFC

- 134a . It has been used for many years in refrigeration products in Europe and other foreign countries. The U.S. refrigeration industry has not adopted hydrocarbon refrigerants ( likewise for the U.S. air conditioning industry) due to concerns regarding flammability.

UL Standard 250, “Household Refrigerators and Freezers”, includes requirements for use of hydrocarbon refrigerants in residential refrigeration products, including a limit of 50 g that can be released in case of a breach of the sealed refrigeration syst em. 7

4.2.18 Component Location I sobutane has not yet been placed on EPA’s Significant New Alternatives Program (SNAP) list of allowed alternative refrigerants. However, EPA recently published a notice proposing inclusion of isobutane on this list. 75 FR 25799 (May 10, 2010) The pro posal limits the total charge of isobutane to 57 g. This quantity is nearly equivalent to the current UL 250 requirement, which specifies maximum leaked charge

— some of the refrigerant remains in the system, thus accounting for the higher total charge speci fied in the EPA proposal. DOE estimated that the 57 g limit is sufficient to allow use in compact refrigerators, but use of heat exchangers with reduced internal volume would be required for this limit to be sufficient for the other product classes analyze d. Hence, DOE considered conversion to isobutane as a design option, but only for compact refrigerators.

Locating the compressor at the top of the refrigerator was noted as a potential technology option. However, this change would incre ase structural requirement for the refrigerator cabinet, increase risk of product tip

- over, and provide much less practical use of space from the consumer perspective. It also makes design for re

- evaporation of defrost water more challenging. It is

unlikel y that the savings would justify all of these drawbacks.

Another option is to locate the evaporator fan motor outside the cabinet to reduce internal

loads from the heat loss of the motor. Evaporator fan motor input wattages are now in the range 3W to 7W, with fan blade efficiency in the range 20% to 30% and motor efficiency in the range

20% to 50%

. Hence, load reduction, associated with moving the motor loss outside the cabinet, is only in the range 1W to 5W for the typically less than 50% of the time tha t the evaporator fan is in operation. The loss associated with the added infiltration and conduction is likely to be comparable to this level. Additional issues with this approach include reliability, reduced design flexibility, and the fact that reduction of motor losses (by using more efficient fan motors) may be a more effective approach to reducing the impact of the fan motor power input.

No options for relocation of components have been identified which merit further consideration in the engineering analysis.4

- 10 4.2.19 Lorenz

- Meutzner Cycle

Research on Lorenz

- Meutzner cycles reported in the literature involve binary mixtures

HCFC

- 22/CFC

- 11

, HCFC

- 22/HCFC

- 123, propane/n

- pentane, and propane/n

- butane. These systems achieved efficiency levels from 15 to 20 percent better than the baseline systems with which they were compared. 8

, 9

4.2.20 Dual

- Loop System Because the industry settled on the use of HFC

- 134a to replace

CFC

- 12, interest in the Lorenz

- Meutzner cycle as an alternative to conventional refrigeration cycles declined. All of the refr igerant combinations discussed above have specific problems, the

first two with phaseout of constituent refrigerants CFC

- 11 and HCFC

- 22, and the last two with flammability of the hydrocarbon blends involved. While it is possible that HFC mixtures could

be developed to create a viable Lorenz

- Meutzner cycle refrigerator, DOE is not aware that such a prototype has been built and tested successfully. Hence, DOE has not considered this technology in the engineering analysis.

Dual

- loop systems ha ve difficulty achieving their theoretical improvement potential due

to the significant ly reduced efficiency for smaller

- capacity compressors. If the two compressors

of a dual

- loop system serving a refrigerator

- freezer were sized appropriately for their res pective loads, the freezer compressor capacity would nominally be roughly half that of a single

- system

compressor . A fresh food compressor typically operates at a capacit y significantly higher than its nominal capacity because of the higher evaporating tem perature when cooling just the fresh food

compartment . Hence, the nominal capacity of a fresh food compartment compressor serving a

dual

- loop system is generally 30 to 40 percent that of the single

- system compressor. Even with the efficiency improvement as sociated with higher evaporating temperature operation of the fresh food compartment compressor, this compressor still would not operate at an efficiency

level better than that of the single

- system compressor for freezer conditions. Hence, with the

efficie ncy characteristics of available compressors, it is not clear that the dual

- loop architecture will provide any energy savings. Hence, DOE has not considered this technology in the engineering analysis.

4.2.21 Two

- Stage System

In practice, a two

- stage system woul d suffer the same disadvantages associated with a

dual

- loop system. Furthermore, it is not clear that a suitable compressor is available for the lower stage of such a system. DOE is not aware of any prototypes of such a system using compressors

which their manufacturers would warrantee for such a product. Hence, DOE has not considered this technology in the engineering analysis.

4.2.22 Control Valve System and Tandem System

There are many patent s covering dual

- evaporator refrigerator designs

. It is not clear how many of these were developed to improve system efficiency, since one of the benefits of using dual evaporators is avoiding excessively low humidity levels in the fresh food compartment. While there is research involving laboratory testi ng which shows that th ese technology option s can save energy, DOE is not aware of any commercialized refrigerators using either of th e s e approach es

. In discussions with manufacturers none identified th e s e option s as being interesting4

- 11 approach es for energy use reduction. Further, due to the extensive patent literature discussing

dual

- evaporator systems, it is likely that products requiring dual evaporator designs would be restricted to the patentholders. Hence, DOE has not considered this technology in the

e ngineering analysis.

4.2.23 Ejector Refrigerator

Energy savings have been reported for use of an ejector system in laboratory testing. In discussions with manufacturers there was limited familiarity with this concept and no acknowledgement that it has been prove n through prototype testing and/or that it is an interesting concept for improving efficiency. Hence, DOE has not considered this technology in the engineering analysis.

4.2.24 Stirling Cycle

In principle, the efficiency of Stirling cycles c ould be higher than f or vapor compression systems, but there are various technical difficulties that have so far limited the use of Stirling

- cycle cooling to small prototype domestic refrigerators. There is no circulating refrigerant fluid and the hot and cold end areas are ve ry small, which creates heat exchange

difficulties. Heat pipes may be required to transfer heat to and from the system. A comparison of the performance of Stirling cycle with vapor compression compressors is shown in Figure 4.2

. 1

below

. The Stirling cycle data was obtained from the Global Cooling website 10 and from data presented at the Purdue Refrigeration Conference in 2002. 11 The figure shows that Stirling technology is not currently ready to improve upon the efficiency of conventional technology. Hence, DOE has not considered this technology in the engineering analysis.4

- 12 Figure 4.2

. 1 Comparison of Stirling and Vapor Compression Technologies

4.2.25 Thermoelectric

Thermoelectric cooling technologies currently do not achieve efficiency levels which make them attractive as a design option for improving residential refrigeration energy efficiency. As an example, DOE tested a thermoelectric refrigerator as part of the reverse engineering effort of this rulemaking

. This refrigerator was a Haier model HRT02WNC, a 1.7 cu bic f oo t all

refrigerator

. In an 80 °F ambient with the system operating at full power, this unit was able to cool the interior to 47 °F while drawing 50W total. The fans serving the inside and outside heat sinks of the thermoelectric unit are rated at a voltage of 12 Volts and currents of 0.13 Amps and 0.16 Amps respectively, and a control board power input of 1W is assumed. The thermal load for

the cabinet was estimated as 12 W. Hence the thermoelectric module EER was 0.9 at a temperature lift of at most 33 ° F, an order of magnitude less than is achieved by conventional

techn ology. Hence, DOE has not considered this technology in the engineering analysis.

4.2.26 Thermoacoustic

While research suggests that thermoacoustic cooling systems could achieve respectable efficiencies, the technology has not reached a level of maturity sufficient for serious

consideration as the basis for efficiency improvement in residential refrigeration products. Hence, DOE has not considered this technology in the engineering analysis. 0 2 4 6 8 10 12

40 60 80 100 120 140 160

Temperature Lift (F)EER (Btu/hr-W)

Conventional: Danfoss TTE4.6FK, Nominal 4.62 EER

Conventional: Tecumseh TPG1370YXA, Nominal 5.82 EER
Stirling: Purdue 2002 Paper
Stirling: Global Cooling M1004

- 13 4.3 R EMAINING TECHNOLOGIES

After eliminating those technologies that have no effect or do not increase EER and screening out those technologies that that do not meet the requ irements of sections 4(a)(4) and 5(b) of the Process Rule, DOE is considering the technologies in the following list.

**•** Increased Insulation Thickness

**•** Vacuum Insulation Panels (VIPs)

**•** Variable Anti

- sweat Heating

**•** Improved Compressor Efficiency

**•** Variable Speed C ompressors

**•** Increased h eat e xchanger a rea ( e xtension of s urface a rea or a ddition of c oil r ows)

.

**•** Use of forced convection condenser (for upright freezers)

**•** Improved efficiency fan motors (brushless DC)

**•** Adaptive Defrost

During the preliminary analysis public meeting, stakeholders commented on several aspects of VIP technology, suggesting that this technology should be screened out. DOE’s investigation of

one of the se issues , uncertainty of VIP supply, is presented in a ppendix 4

- A.4

- 14 REFERENCES

1 Pisipati, J.S. and Godbey, J.A. “Performance of Carbon Black

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2 American Council for an Energy

- Efficient Economy. " One kWh/day Refrigerator, " Emerging Technologies & Practices , 2004. Washington, DC.

3 Belko, John. Novel Fan Design Offers Energy Savings to Refrigeratio n Market , 2007. A.O. Smith Electrical Products Company.

< http://www.aosmithmotors.com/pdf/documents/pax%20fan%20evap%20%20technical%20

pa per%20_j%20belko_

- 2007.pdf > (Accessed September 26, 2007.)

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- Freezers,” ASHRAE Transactions , 1997. Vol. 103, Pt. 1.

5 U.S. Department of Energy

- Office of Codes and Standards. Technical Support Document: Energy Efficiency Standards for Consumer Products: Refrigerators, Refrigerator

- Freezers,

and Freezers , July 1995. Washington, DC. DOE/EE

- 0064. p. 3

- 8.

6 U.S. Department of Energy

- Office of Codes and Standards. Technical Support Document: Energy Efficiency Standards for Consumer Products: Refrigerators, Refrigerator

- Freezers,

and Freezers , July 1995. Washington, DC. DOE/EE

- 0064. p. 3

- 8.

7 Underwriters Laboratories, Standard 250, “Household Refrigerators and Freezers”, Edition 10, November 1, 1993.

8 Lorenz, A. and Meutzner, K. “On application of non

- azeotropic two component refrigerants in domestic refrigerator and home freezers,” Proceedings of the XIV International Congress of Refrigera tion , 1975. Moscow.

9 Liu, Z., Haider, I., and Radermacher, R. “Simulation and Test Results of Hydrocarbon

Mixtures in a Modified

- Lorenz

- Meutzner Cycle Domestic Refrigerator,” HVAC&R

Research , Vol. 1, No. 2, April,, 1995.

10 http://www.globalcooling.nl/technologyoverview.html#perform

11 Janssen, M. and P.Beks, “Measurement and Application of Performance Characteristics of a Free Piston Stirling Cooler”, presented at the Ninth International Refrigeration and Air Conditioning Conference at Purdue, 2002.5

- i CHAPTER 5: ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION

................................ ................................ ................................ ........... 5

- 1

5.2 PRODUCT CLASSES ANAL YZED

................................ ................................ .............. 5

- 1

5. 3 METHODOLOGY OVERVIEW

................................ ................................ .................... 5

- 2

5.4 EFFICIENCY LEVELS

................................ ................................ ................................ ... 5

- 4

5.4.1 Baseline Units based on the Current Test Procedure

................................ ........... 5

- 4

5.4.2 Baseline Efficiency Definitions Based on the Proposed Test Procedure

............ 5

- 6

5.4.2.1 Data Illustrating the Impact of Test Procedure Changes

......................... 5

- 7

5.4.2.2 Establishment of Baseline Energy

— Adjusted Volume Relationships

Based on the New Test Procedure

................................ ................................ ..... 5

- 11

5.4.2.3 Preliminary Investigation of the Slope of the Energy Use Curve

.......... 5

- 15

5.4.2.4 Energy Use Curve Slope Changes for Product Classes 4, 5, and 5A

.... 5

- 16

5.4.2.5 Adjusted Baseline Energy Use Equations

................................ .............. 5

- 20

5.4.3 Incremental Efficiency Levels

................................ ................................ ........... 5

- 20

5.4.4 Maximum Technology Level

................................ ................................ ............. 5

- 22

5.5 DATA COLLECTION

................................ ................................ ................................ .. 5

- 24

5.5.1 Manufacturer

- Submitted Shipment and Cost Data from AHAM

...................... 5

- 24

5.5.2 Component Vendor Data

................................ ................................ ................... 5

- 25

5.5.3 Reverse Engineering

................................ ................................ .......................... 5

- 26

5.5.3.1 Selection of Products for Reverse Engineering

................................ ..... 5

- 26

5.5.3.2 Collection of Energy Modeling Data

................................ ..................... 5

- 27

5.5.4 Manufacturer Interviews

................................ ................................ .................... 5

- 29

5.5.5 Energy testing

................................ ................................ ................................ .... 5

- 29

5.6 MANUFACTURING COST M ODELING

................................ ................................ ... 5

- 31

5.6.1 Generation of Bills of Materials

................................ ................................ ........ 5

- 31

5.6.2 Cost Structure of the Spreadsheet Models

................................ ......................... 5

- 31

5.6.3 Cost Model and Definitions

................................ ................................ ............... 5

- 32

5.6.3.1 Cost Definitions

................................ ................................ ..................... 5

- 32

5.6. 4 Cost Model Assumptions Overview

................................ ................................ .. 5

- 33

5.6.4.1 Fabrication Estimates

................................ ................................ ............. 5

- 34

5.6.4.2 Production Volumes Assumptions

................................ ......................... 5

- 34

5.6.4.3 Factory Parameters Assumptions

................................ ........................... 5

- 35

5.6.4.4 Material Cost Assumptions

................................ ................................ .... 5

- 35

5.6.5 Manufacturing Production Cost

................................ ................................ ......... 5

- 35

5.6.6 Incremental Cost Estimates

................................ ................................ ................ 5

- 36

5.6.6.1 Overhead and Depreciation Costs

................................ .......................... 5

- 37

5.6.6.2 Depreciation Costs for Insulation Thickness Increases

......................... 5

- 38

5.6.6.3 G&A and Profit

................................ ................................ ...................... 5

- 39

5.7 ENERGY MODELING

................................ ................................ ................................ . 5

- 39

5.7.1 En ergy Model development

................................ ................................ ............... 5

- 40

5.7.2 Supplemental Spreadsheet Models

................................ ................................ .... 5

- 41

5.7.3 Development and Calibration of ERA Current Energy Test Models

................ 5

- 425

- ii 5.7.4 Adjustments to Energy Models to Represent Baseline Products Tested Under the Proposed Test Procedure

................................ ................................ ................................ 5

- 46

5.8 DESIGN OPTIONS

................................ ................................ ................................ ....... 5

- 48

5.8.1 Increased Insulation Thickness

................................ ................................ .......... 5

- 49

5.8.2 Isobutane Compressor

................................ ................................ ........................ 5

- 50

5.8.3 Vacuum

- Insulated Panels

................................ ................................ ................... 5

- 52

5.8.4 Improved Compressor Efficiency

................................ ................................ ...... 5

- 53

5.8.5 Variable

- Speed Compressor

................................ ................................ .............. 5

- 56

5.8.6 Increased Evaporator Surface Area

................................ ................................ ... 5

- 58

5.8.7 Increased Condenser Surface Area

................................ ................................ .... 5

- 59

5.8.8 Brushless DC Fan Motors

................................ ................................ .................. 5

- 59

5.8.9 Adaptive Defrost

................................ ................................ ................................ 5

- 60

5.8.10 Variable Anti

- Sweat Heater Control

................................ ................................ .. 5

- 61

5.8.11 Forced Convection Condenser

................................ ................................ ........... 5

- 62

5.9 ENGINEERING ANALYSIS RESULTS

................................ ................................ ..... 5

- 62

5.9.1 DOE Cost

- Efficiency Curves

................................ ................................ ............. 5

- 62

LIST OF TABLES

Table 5.2.1 Product Classes Analyzed in Engineering Analysis

................................ ................. 5

- 2 Table 5.4.1 Refrigeration Product Current Energy Conservation Standards (Baseline Energy Use under Current Test Procedure)

................................ ................................ ................................ ..... 5

- 5 Table 5.4.2 Proposed Cabinet Temperature Changes for the DOE Test Procedure

.................... 5

- 6 Table 5.4.3 Volume Adjustment Factors

................................ ................................ ..................... 5

- 6 Table 5.4.4 Compartment Volume Calculation Changes

................................ ............................ 5

- 7 Table 5.4.5 Compartment Temperature and Adjusted Volume Change Data provided by

AHAM

— Current Test

................................ ................................ ................................ ................. 5

- 8 Table 5.4.6 Compartment Temperature and Adjusted Volume Change Data provided by AHAM

-

- Proposed Test

................................ ................................ ................................ ............................. 5

- 9 Table 5.4.7 Compartment Temperature and Adjusted Volume Change Data provided by

AHAM

— Impact

................................ ................................ ................................ ........................ 5

- 10 Table 5.4.8 Energy Use Impact of Compartment Temperature Changes: Data Developed by DOE

................................ ................................ ................................ ................................ .................... 5

- 10 Table 5.4.9 Approach for Establishing Baseline Energy

-- Adjusted Volume Relationships

..... 5

- 12

Table 5.4.10 Preliminary Baseline Energy Consumption based on Proposed Test Procedure

.. 5

- 14 Table 5.4.11 DOE Preliminary Assessment of the Slope of the Energy Use Curve

................. 5

- 15 Table 5.4.12 Adjusted Baseline Energy Use Equations

................................ ............................ 5

- 20 Table 5.4.13 Incremental Efficiency Levels for Freestanding Products (% Energy Use Less than Baseline)

................................ ................................ ................................ ................................ .... 5

- 21 Table 5.4.14 Incremental Efficiency Levels for Built

- In Products

................................ ............ 5

- 21 Table 5.4.15 Maximum Available Levels (%Energy Use Less than Baseline)

........................ 5

- 22

Table 5.4.16 Maximum Technology Levels and Design Options

................................ ............. 5

- 24 Table 5.5.1 Component Vendors Contacted by DOE during Engineering Analysis

................. 5

- 26

Table 5.5.2 Selected Units for Reverse

- Engineering and Energy Testing

................................ 5

- 275

- iii Table 5.5.3 Additional Thermocouple Locations for Preliminary Analysis Energy Tests

........ 5

- 30 Table 5.5.4 High

- Efficiency Refrigeration Product Test Results

................................ .............. 5

- 31

Table 5.6.1 Cost Model In

- House Manufacturing Operation Assumptions

.............................. 5

- 34 Table 5.6.2 Refrigerator & Freezer Factory Parameter Assumptions

................................ ....... 5

- 35 Table 5.6.3 Preliminary Analysis Overhead and Depreciation Cost Ratios

.............................. 5

- 38 Table 5.6.4 Greenfield Depreciation Costs per Product

................................ ............................ 5

- 39 Table 5.8.1 Design Options by Product Class

................................ ................................ ........... 5

- 49 Table 5.8.2 Teardown Product Fan Power Input

................................ ................................ ....... 5

- 60 Table 5.9.1 Incremental Manufacturer Selling Price Results for Standard

- Size Refrigerator

Freezers

................................ ................................ ................................ ................................ ...... 5

- 63 Table 5.9.2 Incremental Manufacturer Selling Price Results for Standard

- Size Freezers

......... 5

- 63 Table 5.9.3 Incremental Manufacturer Selling Price Results for Compact Refrigerators and

Freezers

................................ ................................ ................................ ................................ ...... 5

- 64 Table 5.9.4 Incremental Manufacturer Selling Price Results for Built

- In Refrigeration Products

................................ ................................ ................................ ............... 5

- 64

LIST OF FIGURES

Figure 5.3.1 Flow Diagram of Engineering Analysis Methodology

................................ ........... 5

- 3 Figure 5.4.1 Comparison of Preliminary and Adjusted

- Slope Energy Use Curves (Product Class 4)

................................ ................................ ................................ ........................ 5

- 17 Figure 5.4.2 Product Class 5 Energy Use Equation Slope Data

................................ ................ 5

- 18 Figure 5.4.3 Comparison of Preliminary and Adjusted

- Slope Energy Use Curves (Product Class 5)

................................ ................................ ................................ ........................ 5

- 19 Figure 5.4.4 Maximum Efficiency Levels Available by Product Class

................................ .... 5

- 23 Figure 5.6.1 Full Production Costs

................................ ................................ ............................ 5

- 36 Figure 5.7.1 ERA Analysis for Refrigerator

- Freezers Compared with EnergyGuide Labels and Energy Test Measurements

................................ ................................ ................................ ........ 5

- 44 Figure 5.7.2 ERA Analysis for Freezers Compared with EnergyGuide Labels and Energy Test

Measurements

................................ ................................ ................................ ............................ 5

- 45 Figure 5.7.3 ERA Analysis for Compact Refrigerators and Freezers Compared with EnergyGuide Labels and Energy Test Measurements

................................ ............................... 5

- 45 Figure 5.8.1 Energy Benefit of Isobutane Compared with HFC

- 134a

................................ ...... 5

- 51 Figure 5.8.2 Compressor Efficiency Data

................................ ................................ .................. 5

- 54 Figure 5.8.3 Incremental Cost for Single

- Speed Compressors for Standard

- Size Products

...... 5

- 55 Figure 5.8.4 Efficiency Curve for Low Capacity Compressors

................................ ................. 5

- 565

- 1 CHAPTER 5. ENGINEERING ANALYSIS

5.1 INTRODUCTION

The engineering analysis establishes the relationship between manufacturer production cost and energy consumption for the refrigerators, refrigerator

- freezers, and freezers covered in this rulemaking. Th e “cost

- efficiency” relationship serves as the basis for cost

benefit calculations in terms of individual customers, manufacturers, and the Nation, from which the most economically

- justified, technically feasible standard level is ultimately determined.

Th e inputs into the engineering analysis include baseline characteristics for each product class addressed in the market and technology assessment (chapter 3), the design options from the screening analysis (chapter 4), as well as cost and energy use data co llected from manufacturers, component vendors, reverse

- engineering, and energy testing. The output of the engineering analysis is the cost

- efficiency relationship for each product class independent of cabinet volume, which will be used in the life

- cycle an d payback period analyses ( c hapter 8 ).

This chapter covers the product classes DOE analyzed, and the methodology used by DOE to develop manufacturing costs, energy consumption, and extend the analysis to

low

- volume product classes, as well as the results o f these analyses.

5.2 PRODUCT CLASSES ANAL YZED

In the preliminary engineering analysis, DOE analyzed the seven product classes listed in the top portion of Table 5.2.1

. DOE considers t hese classes to be representative of products currently shipped by the residential refrigerator, freezer, and refrigerator

- freezer industry based on total shipments. These product classes represent close to 90% of the shipments of refrigerators, refrigerator

- freezers, and freezers. DOE did not directly analyze all covered product classes in order to carry out the analysis as efficiently as possible. DOE proposes extrap olation of energy standards to the remaining product

classes as described in section 2.15 of c hapter 2 of the TSD (this discussion of extrapolation of the standards, initially presented in the preliminary TSD, has been revised to reflect the proposed appro ach for the NOPR)

.

DOE also analyzed four product classes of built

- in products for the NOPR analysis . DOE selected one representative built

- in product for analysis for each of these product classes. DOE judged the representativeness of these product selec tions based on discussions with manufacturers regarding design option groupings required to meet key efficiency levels

with built

- in products.5

- 2 Table 5.2

. 1 Product Classes Analyzed in Engineering Analysis

Product

Class Equipment Description

Product Classes Analyzed in Preliminary Analysis

3 Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

- door ice service

5 Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

- door ice service

7 Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service

9 Upright freezers with automatic defrost

10 Chest freezers and all other freezers except compact freezers

11 Compact refrigerators and refrigerator

- freezers with manual defrost

18 Compact chest freezers Additional Product Classes Analyzed in NOPR Analysis

3A

- BI Built

- in a ll

- refrigerators

— automatic defrost

5

- BI Built

- i n r efrigerator

- freezers

— automatic defrost with bottom

- mounted freezer

without an automatic icemaker

7

- BI Built

- i n r efrigerator

- freezers

— automatic defrost with side

- mounted freezer

with through

- the

- door ice servic e
9

- BI Built

- i n u pright freezers with automatic defrost without an automatic icemaker

5.3 METHODOLOGY OVERVIEW

This section describes the analytical methodology DOE used in the engineering analysis. In this rulemaking, DOE has adopted a combined e fficiency level / design option /reverse engineering approach to developing cost

- efficiency curves. DOE established efficiency

levels defined as percent energy use lower than that of baseline efficiency product s , considering just the energy use that is not as sociated with production of ice. DOE took this approach in order to allow comparison of information developed from different sources. However, DOE’s analysis is based on the efficiency improvements associated with groups of design options. Also, DOE develo ped manufacturing cost models based heavily on reverse engineering of products to calculate some of the incremental costs associated with improvement of efficiency.

Figure 5.3.1 presents the steps in the analysis and illustrates how they contribute d to develop ing the cost

- efficiency curves. The process began with data collection and ended

with the incremental cost curve results.

As input to the analysis, DOE requested incremental cost

- efficiency data from the industry. The Association of Home Appliance Manufacturers (AHAM) provided aggregated incremental cost data for a number of the product classes under analysis. Questions about the collection and aggregation process for this data arose during the preliminary analysis public meeting and comment period, thus increasing the emphasis for use of the DOE analysis results for the downstream rulemaking analyses. Th e DOE5

- 3 engineering anal ysis consisted of analytically

- derived cost

- efficiency curves for the product classes listed in Table 5.2.1

.

To develop the analytically

- derived cost

- efficiency curves, DOE collected information from various sources on the manufacturing cost and energy use reduction characteristics of each of the design options. DOE reviewed product literature, conducted reverse

engineering of current products, and inte rviewed component vendors of compressors, fan motors, insulation, and heat exchangers. For the built

- in product classes analyzed, DOE obtained detailed design data and specifications for the products analyzed from their manufacturer rather than conducting reverse engineering on purchased products. DOE

also conducted interviews with manufacturer s, the first during the preliminary analysis and the second in conjunction with the manufacturer impact analysis interviews. The engineering questionnaire s associate d with both of these sets of discussions are reproduced in appendix 12

- A.

Figure 5.3

. 1 Flow Diagram of Engineering Analysis Methodology

C ost information from the vendor interviews and engineering question naires provided input to the manufacturing cost model. Incremental costs associated with specific design options were calculated using the cost model

. Energy use reduction was modeled with a modified version of the established E PA Refrigerator Analysis (E RA ) program which was used in the previous refrigerator rulemaking. T he reverse engineering , vendor interviews, and manufacturer interviews provided input for the energy analysis. The

incremental cost estimates and the energy modeling results together cons titute the energy efficiency curves presented in this chapter.5

- 4 5.4 EFFICIENCY LEVELS

5.4.1 Baseline Units based on the Current Test Procedure

DOE selected baseline units as reference points for all of the product class es , against

which DOE determined changes resulting from use of energy saving design options . The baseline unit in each product class represents the basic characteristics of equipment in

that class. A baseline unit is a unit that just meets current required energy conservation

standards an d provides basic consumer utility.

As discussed in c hapter 3, DOE has proposed revis ing the energy test procedure for refrigerators, refrigerator

- freezers, and freezers. Some of the proposed changes to the test procedure such as changes in compartment tem peratures would result in changes in the measured energy consumption. The proposed test procedure change s would also affect the measured size of the refrigerators, expressed as adjusted volume. Since the maximum energy use for residential refrigeration pro ducts is expressed as a function of adjusted volume, the change in adjusted volume also would affect the definition of baseline products. This section discusses definition s of baseline units for the engineering analysis based on the current test procedure, while the next section discusses modified definitions for baseline refrigeration products based on the proposed revised test procedure.

For this rulemaking, DOE established baseline efficiency levels as the current federal energy conservation standards, e xpressed as maximum annual energy consumption as a function of the product’s adjusted volume , as shown in Table 5.4.1. These definitions are based on testing according to the current energy test procedure. The table does not show

all of the product classes proposed for this rulemaking. The baseline energy use characteristics for the product classes DOE proposes to separate from their current product classes (all

- refrigerators, built

- in products, and products with automatic icemakers) cannot be distinguished from other products of their current product classes because there is no baseline energy difference under the current test procedure.5

- 5 Table 5.4

. 1 Refrigerat ion Product Current Energy Conserva tion Standards ( Baseline Energy Use under Current Test Procedure)

Product Class Equations for Maximum Energy Use (kWh/yr)

1. Refrigerators and refrigerator

- freezers with manual defrost. 8.82AV + 248.4

0.31av + 248.4

2. Refrigerator

- freezer

— partial automatic defrost. 8.82AV + 248.4

0.31av + 248.4
3. Refrigerator

- freezer

— automatic defrost with top

- mounted freezer without through

- the

- door ice service and all

- refrigerator

— automatic defrost. 9.80AV + 276.0

0.35av + 276.0
4. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without through

- the

- door ice service. 4.91AV + 507.5

0.17av + 507.5
5. Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer

without through

- the

- door ice service. 4.60AV + 459.0

0.16av + 459.0
6. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice service. 10.20AV + 356.0

0.36av + 356.0
7. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.10AV + 406.0

0.36av + 406.0

8. Upright freezers with manual defrost. 7.55AV + 258.3

0.27av + 258.3

9. Upright freezers with automatic defrost. 12.43AV + 326.1

0.44av + 326.1

10. Chest freezers and all other freezers except compact freezers. 9.88AV + 143.7

0.35av + 143.7

11.Compact refrigerators and refrigerator

- freezers with manual defrost. 10.70AV + 299.0

0.38av + 299.0

12. Compact refrigerator

- freezer

— partial automatic defrost. 7.00AV + 398.0

0.25av + 398.0
13. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer and compact all

- refrigerator

— automatic defrost. 12.70AV + 355.0

0.45av + 355.0
14. Compact refrigerator

- freezers

— automatic defrost with side

- mounted

freezer. 7.60AV + 501.0

0.27a v + 501.0
15. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted

freezer. 13.10AV + 367.0

0.46av + 367.0

16. Compact upright freezers with manual defrost. 9.78AV + 250.8

0.35av + 250.8

17. Compact upright freezers with automatic defrost. 11.40AV + 391.0

0.40av + 391.0

18. Compact chest freezers. 10.45AV + 152.0

0.37av + 152.0

5A . Refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. 5.0AV + 539.0

0.18av + 539.0

10A . Chest freezers with automatic defrost. 14.76AV + 211.5

0.52av + 211.5
AV= adjusted volume in cubic feet; av = adjusted volume in liters; Refrigerator

- Freezers: AV = fresh food internal volume + 1.63 * freezer internal volume

Freezers: AV = 1.73 * freezer internal volum e Refrigerators (single

- door): AV = fresh food internal volume + 1.44 * freezer internal volume

All

- Refrigerators: AV = internal volume5

- 6 5.4.2 Baseline Efficiency Definitions Based on the Proposed Test Procedure

As discussed in c hapter 3, DOE has propose d revisions in the energy test procedure to harmonize with expected test temperatures under consideration for IEC test procedure 62552 and to simplify calculation of refrigerated volumes. The proposed test temperature changes are summarized in Table 5.4

. 2 below.

Table 5.4

. 2 Proposed Cabinet Temperature Changes for the DOE Test Procedure Equipment Type Fresh Food Compartment Temperature ° F Freezer Compartment Temperature ° F

Current Proposed Current Proposed Refrigerator

- Freezer 45 39 5 0

All

- Refrigerator 38 39 Not Applicable Refrigerator w/ Freezer Compartment 45 39 15 15 (No Change)

Freezer Not Applicable 0 0 (No Change)

The temperature changes also impact the volume adjustment factor used to determine the adjusted volume. This factor is multiplied by the freezer compartment volume in the adjusted volume calculation. Current and proposed volume adjustment factors are

summarized in Table 5.4

. 3 below.

Table 5.4

. 3 Volume Adjustment Factors

Product Current Tes t Procedure Proposed Test Procedure

Revisions Refrigerator

- Freezer 1.63 1.76 Basic Refrigerator * 1.44 1.47

Freezer 1.73 1.76

All

- Refrigerator* * 1.00 1.00

* A basic refrigerator is a refrigerator with a freezer compartment with volume greater

than 0.5 ft 3

. ** An all

- refrigerator can have a freezer compartment with volume less than 0.5 ft 3

.

The key changes in the volume measurement calculation between the current test procedure (which references the volume calculation procedure in AHAM standard HRF

1

- 197 9) and the proposed revised t est procedure (which references the new procedure in

AHAM standard HRF

- 1

- 2008) are summarized in Table 5.4.4 below. Adjusted volume

would be impacted both by the change in the volume adjustment factor discussed above

and the ch ange in the volume measurement.5

- 7 Table 5.4

. 4 Compartment Volume Calculation Changes

Item AHAM HRF

- 1

- 1979 AHAM HRF

- 1

- 2008 Expected

Effect on

Volume

Automatic Ice M aker

S torage B in Included (4.2.1.1a) Would be included

under “removable

contai ners” but dispenser MAY NOT

be i ncluded None*

Ice Makers Included (4.2.1.1a) No Mention None*

Water Coolers Included (4.2.1.1a) No Mention None*

Door Shelf Fronts and

B ottoms Included (4.2.1.1b) Shelves molded into

th e inner door panel NOT included (4.2.2) Decrease

Volume between the

Deductible D oor Dikes

and C abinet Breaker Strips or A djacent

Liner W all Not Included (4.2.1.2d) No mention of exclusion, so probably

included. Increase

Shelf Hangers & Shelf

and Pan Rails Not included for fixed projections if

collective volume is

> 0.05 ft 3 (4.2.1.2e) Could be interpreted as part of shelving and

would thus be

i ncluded. Increase

*AHAM HRF

- 1

- 2008 doesn’t mention this item or is not fully clear regarding its

treatment for the volume calculation, but it is expected that manufacturers would use the

AHAM HRF

- 1

- 1979 approach. The proposed test procedure revision explicitly inclu des the automatic icemaker and storage bin in the volume calculation.

5.4.2.1 Data Illustrating the Impact of Test Procedure Changes

The different compartment temperatures of the proposed revised energy test procedure

would change test e nergy use for refrigerators and refrigerator

- freezers . In addition, both the impact of the modified temperatures on the adjusted volume and the modified volume

calculation method would change adjusted volumes . For these reasons, it is necessary to establish modified relationships between energy use and adjusted volume to define baseline products. AHAM provided data for a number of t he product classes, presented in

Table 5.4

. 5 through Table 5.4

. 7 below (this is referred to as the AHAM TP Change data). The data illustrates the impact of the compartment temperature changes and the volume calculation method changes of the proposed new test procedure, but does not consider energy use associated with production of ice, which has been integrated with the proposed test procedure energy use metric.

The AHAM TP Change data for product classes 11 and 13 both show energy use reductions, indicating that the products represented by these data are primarily all

-5

- 8 refrigerato rs. AHAM was not able to separately provide data for the all

- refrigerators and the refrigerators of these product classes that hav e freezer compartments larger than 0.5

cu. ft. , because insufficient data was provided by manufacturers for separate aggregation.

Additional data sources which provide indication of the impacts of the test temperature changes for standard

- size refrigerator

- freezers include (1) energy test measurements for the refrigerator

- freezers tested as part of this rulemaking, and ( 2) calculat ion of the energy impacts using ERA , the energy model ing tool use d for this rulemaking . The energy use impacts indicated by these sources are shown in Table 5.4.8. DOE conducted

t hese energy tests and calculations for three product s of each of the seven product classes analyzed during the preliminary analysis (see Section 5.5.3.1 for discussion on selection of products for reverse engineering and energy testing )

.

Table 5.4

. 5 Compartment Temperature and Adjusted Volume Change Data provided by

AHAM

— Current Test

Product

Class Fresh Food

Volume Freezer

Volume Adjusted

Volume Energy

Use

3 (R

- F) Average

Standard Deviation Number of Samples 12.82 5.02 20.92 420

3.54 1.82 6.53 55

19 19 19 19

3A (AR) Average

Standard Deviation Number of Samples 19.26

Not Applicable 19.26 374

3.4 3.4 54

11 11 11

5 Average

Standard Deviation Number of Samples 14.21 5.15 22.62 493

1.85 1.02 3 55

18 18 18 18

7 Average

Standard Deviation Number of Samples 15.77 9.32 30.95 617

1.61 0.87 2.53 68

24 24 24 24

9 Average

Standard Deviation Number of Samples Not Applicable 16.85 29.14 603

4.88 8.45 136

18 18 18

11 Average

Standard Deviation Number of Samples 4.38

Not

Provided 4.65 334

1.38 1.38 44

13 13 13

13 Average

Standard Deviation Number of Samples 4.75

Not

Provided 4.77 296

1.18 1.15 77

12 12 12

Note: R

- F refers to refrigerator

- freezers; AR refers to all

- refrigerators.5

- 9 Table 5.4

. 6 Compartment Temperature and Adjusted Volume Change Data provided by AHAM

-- Proposed Test

Product

Class Fresh Food

Volume Freezer

Volume Adjusted

Volume Energy

Use

3 (R

- F) Average

Standard Deviation Number of Samples 12.79 4.96 21.44 472

3.51 1.78 6.59 53

19 19 19 18

3A (AR) Average

Standard Deviation Number of Samples 19.51

Not Applicable 19.51 364

3.51 3.51 53

11 11 11

5 Average

Standard Deviation Number of Samples 14.42 5.25 23.12 582

1.88 1 3.01 68

18 18 18 18

7 Average

Standard Deviation Number of Samples 15.95 9.01 31.45 702

1.79 0.75 2.49 82

24 24 24 24

9 Average

Standard Deviation

Number of Samples Not Applicable 16.84 29.47 603

5.04 8.73 136

18 18 18

11 Average

Standard Deviation Number of Samples 4.34

Not

Provided 4.61 324

1.36 1.36 48

13 13 13

13 Average

Standard Deviation Number of Samples 4.8

Not

Provided 4.83 285

1.23 1.2 73

12 12 12

Note: R

- F refers to refrigerator

- freezers; AR refers to all

- refrigerators.5

- 10 Table 5.4

. 7 Compartment Temperature and Adjusted Volume Change Data provided by AHAM

— Impact

Product

Class Fresh Food

Volume Freezer

Volume Adjusted

Volume Energy

Use

3 (R

- F) Average

Standard Deviation Number of Samples - 0.1%

- 1.1% 2.8% 12.4%

0.6% 0.9% 2.3% 6.9%

19 19 19 18

3A (AR) Average

Standard Deviation Number of Samples 1.2%

Not Applicable 1.2%

- 2.6%

1.0% 1.0% 1.1%

11 11 11

5 Average

Standard Deviation Number of Samples 1.5% 2.2% 2.2% 18.2%

1.2% 2.2% 1.2% 3.7%

18 18 18 18

7 Average

Standard Deviation Number of Samples 1.0%

- 3.1% 1.6% 14.0%

2.0% 4.6% 2.0% 6.7%

24 24 24 24

9 Average

Standard Deviation Number of Samples Not Applicable - 0.4% 0.9% 0.0%

2.5% 2.2% 0.0%

18 18 18

11 Average

Standard Deviation Number of Samples - 0.7%

Not

Provided - 0.6%

- 3.1%

1.9% 1.6% 1.4%

13 13 13

13 Average

Standard Deviation Number of Samples 0.9%

Not

Provided 1.0%

- 3.6%

1.6% 1.4% 0.8%

12 12 12

Note: R

- F refers to refrigerator

- freezers; AR refers to all

- refrigerators.

Table 5.4

. 8 Energy Use Impact of Compartment Temperature Change s: Data Developed by DOE

Product

Class Product Description Impact based on e nergy

measurements Impact based on ERA modeling

3 16 ft 3 Top

- Mount R

- F 19.1% 14.2%

21 ft 3 Top

- Mount R

- F 27.7% 15.5 %

21 ft 3 E* Top

- Mount R

- F 26.6% 14.1%

5 18.5 ft 3 E* Bottom

- Mount R

- F 12.5% 13.6 %

25 ft 3 E* Bottom

- Mount R

- F 1 27.6% 13.8%

25 ft 3 E* Bottom

- Mount R

- F 2 17.3% 14.4%

4 22 ft 3 Side

- Mount R

- F† 17.7% 12.5%

7 26 ft 3 Side

- Mount R

- F 24.5% 12. 9 %

26 ft 3 E* Side

- Mount R

- F 25.0% 12.2%

11 1.7 ft 3 Compact Refrigerator

- 4.5%

- 2. 3 %

4.0 ft 3 Compact Refrigerator No t T est ed 13. 7 % †This product was thought to be product class 7 when purchased.5

- 11 The AHAM TP Change data shows reasonable agreement with the DOE modeled energy use impacts. However, the DOE energy measurements indicate a higher sensitivity to the temperature change of the new test procedure. The AHAM data shows that there can be significant variation in the sensitivity of different refrigerator

- freezer products to the test temperature change s, particularly for product classes 3 and 7. The two compact refrigerators of Table 5.4.8 e xhibit different responses to the compartment temperature change because the 1.7 ft 3 refrigerator has a freezer compartment smaller than 0.5 ft 3 and

is tested as an all

- refrigerator, while the 4.0 ft 3 refrigerator has a freezer compartment just larger than 0.5 ft 3 , requiring that it be tested as a basic refrigerator.

5.4.2.2 Establishment of Baseline Energy

— Adjusted Volume Relationships Based on

the New Test Procedure

The av ailable data to inform the establishment of baseline energy versus adjusted volume relationships based on the proposed revised test procedure is discussed in Section 5.4.2.1

. While this data does not address every product class, DOE proposes to use it as the basis for establishing the baseline relationships. The approach DOE used to develop these relationships for all the product classes is summarized in Table 5.4.9 b elow. Note that product classes 1, 3, 11, and 13 are split because, while the all

- refrigerators have reduced energy use with the proposed new test procedure, the products which include freezers have significantly higher energy use. This applies to many p roducts of product class 11 and some of product class 1 that have freezer compartments smaller than 0.5 ft 3 , which

allows them to be classified and tested as all

- refrigerators rather than basic refrigerators. The test procedure impact of this classification is that the refrigerator compartment

temperature would be raised for all

- refrigerators, while it would be reduced for basic refrigerators under the proposed test procedure.5

- 12 Table 5.4

. 9 Approach for Establishing Baseline Energy

-- Adjusted Volume Relationships

Product Class Approach

1 Use modeling with ERA for temperature, assume negligible adjusted volume impact based on AHAM data for PC11.

1A (All

- Refrigerators) Use AHAM TP Change aggregated data of product class 3 all

refrigerators. 3 (Refrigerator

Freezers) Use AHAM TP Change aggregated data.

3A (All

- Refrigerators) Use AHAM TP Change aggregated data.

4 Use AHAM TP Change aggregated data of product class 7. **

5 Use AHAM TP Change aggregated data. **

5A Use AHAM TP Change aggregated data of product class 5. **

6 Use AHAM TP Change aggregated data of product class 3 refrigerator

- freezers.

7 Use AHAM TP Change aggregated data. 8 (volume only) Assume negligible volume impact due to simplicity of manual

defrost freezer interior. 9 (volume only) Use AHAM TP Change aggregated data. 10 (volume only) Assume negligible impact due to simplicity of manual defrost

freezer interior. 10A (volume only) Use AHAM TP Change aggregated data for PC9.

11 Use modeling with ERA for temperature, assume negligible adjusted volume impact based on AHAM data.*

11 A (All

- Refrigerators) Use modeling with ERA for temperature, assume negligible adjusted volume impact based on AHAM data.* 13 (Refrigerator

Freezers) Use AHAM TP Change aggregated data of product class 3 refrigerator

- freezers.*

13A (All

- Refrigerators) U se AHAM TP Change aggregated data of product class 3 all

refrigerators.*

14 Use AHAM TP Change aggregated data of product class 7.

15 Use AHAM TP Change aggregated data of product class 5. 16 (volume only) Assume negligible volume impact due to simplicity of manual

defrost freezer interior. 17 (volume only) Use AHAM TP Change aggregated data for PC9. 18 (volume only) Assume negligible volume impact due to simplicity of manual

defrost freezer interior. *The AHAM energy use increase data cannot be used for this product class, because it is not known how many of the products represented by the AHAM data are all

- refrigerators.

** DOE subsequently modified t he proposed baseline energy use equation s for these product classes to adjust their slope s (se e section s 5.4.2.4 and 5.4.2.5 below).5

- 13 Note: For product classes 8, 10, 16, and 18, while the volume impact is assumed to be negligible, the adjusted volume increases according to the increase in the volume adjustment factor.

The methodology for determining new baseline energy

— adjusted volume curves given the data indicating the impacts on the energy use and adjusted volume for a given product class is as follows. The proposed energy use and the current energy use for a product are represented as being proportional using an Energy Standard Adjustment Factor (ESAF).

CURTP NEWTP BEC ESAF BEC **× =**  Equation 5.4

. 1

Where:

BEC NEWTP = Baseline energy consumption using the new test p rocedure;

BEC CURTP = Baseline energy consumption using the current test procedure.

The ESAF is considered to be a function only of product class. Dependence on adjusted

volume or efficiency level cannot be determined based on the available data.

Similarly, the adjusted volume for a product under the proposed test procedure is related to the adjusted volume under the current test procedure using a Volume Calculation Adjustment Factor (VCAF).

CURTP NEWTP AV VCAF AV **× =**  Equation 5.4

. 2

Where:

AV NEWTP = Adjusted Volume using the new test procedure;

AV CURTP = Adjusted Volume using the current test procedure.

The VCAF, like the ESAF, is considered to be a function only of product class. Baseline

energy use for the current test procedure is expressed as follows, where the constants A and B are a function of product class.

B AV A BEC CURTP CURTP **+ ×**  **=** Equation 5.4

. 3

Combining Equations 5.4.1 through 5.4.3 gives the following relationship for the baseline energy consumption based on the new test procedure.


## ( **)** B ESAF AV A VCAF ESAF B VCAF AV A ESAF BEC NEWTP NEWTP

NEWTP 

### × **+ ×**  ** **  ** **  ** ** 

**× =**  ** **  ** **  ** ** 

**+ ×**  **× =** 

Hence, the baseline energy consumption for the product class for the new test procedure can be represented as a straight

- line relationship based on new constants A NEW and B NEW , where the new constants are related to the current constants as follows.5

- 14 B ESAF B A VCAF ESAF A NEW

NEW **× =**  **× **  ** **  ** **  ****

**=** ;

The baseline energy use based on the expected revised test procedure is presented in

Ta ble 5.4

. 10 below for each of the product classes. This baseline energy use includes energy use not associated with icemaking. A placeholder with a value of 84 kWh/year has been integrated in the proposed test procedure as a dditional energy use for production

of ice . This placeholder would be added to the baseline energy curves for products with through

- the

- door ice to obtain the total baseline energy use of these product classes. Also,

the placeholder would be added to some of the product classes (those which may or may

Table 5.4

. 10 Preliminary Baseline Energy Consumption based on Proposed Test

Procedure

Product Class ESAF VCAF Current Baseline Energy Use (kWh/year) Proposed Test Procedure Baseline Energy Use not Including Icemaking Energy Use (kWh/year)

1 1.132 1 8.82 AV + 248.4 9.98 AV + 281 .2

1A 0.974 1.012 8.82 AV + 248.4 8.49 AV + 241.9

2 1.132 1 8.82 AV + 248.4 9.98 AV + 281 .2

3 , 3I

, 3

- BI, 3I

- BI 1.124 1.028 9.8 0 AV + 276 .0 10.72 AV + 310.2

3A , 3A

- BI 0.974 1.012 9.8 0 AV + 276 .0 9.43 AV + 268.8

4 , 4I, 4

- BI, 4 I

- BI 1.14 1.0 1 6 4.91 AV + 507.5 5. 51 AV + 578. 6

5 , 5I, 5

- BI, 5I

- BI 1.182 1.022 4.6 0 AV + 459 .0 5.32 AV + 542.5

5A , 5A

- BI 1.182 1.022 5 .00 AV + 539 .0 5.78 AV + 637.1

6 1.124 1.028 10.2 0 AV + 356 .0 11.15 AV + 400.1

7 , 7

- BI 1.14 1.0 1 6 10.1 0 AV + 406 .0 1 1.33 AV + 462.8

8 1 1.017 7.55 AV + 258.3 7.42 AV + 258.3

9 , 9

- BI 1 1.009 12.43 AV + 326.1 12.32 AV + 326.1

10 1 1.017 9.88 AV + 143.7 9.71 AV + 143.7

10A 1 1.009 14.76 AV + 211.5 14.63 AV + 211.5

11 1.125 1 10.7 0 AV + 299 .0 12.04 AV + 336. 4

11 A 0.977 1 10.7 0 AV + 299 .0 10.45 AV + 292.1

12 1.125 1 7.00 AV + 398.0 7.88 AV + 447.8

13 1.124 1.028 12.7 0 AV + 355 .0 1 3.89 AV + 3 99.0

13A 0.974 1.012 12.7 0 AV + 355 .0 12. 2 2 AV + 34 5. 8

14 1.14 1.0 1 6 7.6 0 AV + 501 .0 8. 53 AV + 571.1

15 1.182 1.022 13.1 0 AV + 367 .0 15.15 AV + 433. 8

16 1 1.017 9.78 AV + 250.8 9.61 AV + 250.8

17 1 1.009 11.4 0 AV + 391 .0 11.3 0 AV + 391 .0

18 1 1.017 10.45 AV + 152 .0 10.27 AV + 152 .0

Note: In the “Current Bas e line” equations, AV is calculated using the current volume calculation method and adjustment factor, while in the “Proposed” equations, AV is calculated using the proposed volume calculation method and adjustment factor (see

Table 5.4.3 )5

- 15 not have an icemaker) to represent the total baseline energy use for the corresponding product classes that have automatic icemakers. For example, the baseline energy use equation for product class 3I is equal to 84 kWh/year plus the baseline energy use

equat ion for product class 3. The baseline energy use equations for built

- in products are equal to the baseline equations for their corresponding freestanding product classes.

5.4.2.3 Preliminary Investigation of the Slope of the Energy Use Curve

During the preliminar y analysis, DOE conducted calculations to confirm whether the slopes of the baseline energy use

— adjusted volume curves for the product classes analyzed in depth as part of the engineering analysis are representative of the energy use of typical products. D OE conducted t hese analyses based on the proposed revised test procedure. The analysis started with an energy model of a minimally

- compliant product

and examined the trend in calculated energy use as the product size changes with constant

insulation thickn ess

. For the analysis of compact refrigerators, DOE considered the change in efficiency of typically available compressors sized appropriately for the product. For standard

- size products

, the DOE used a constant compressor efficiency in the analysis, based on observation that compressor efficiency does not vary significantly in the capacity range suitable for most standard

- size products (this is discussed in greater

detail in section 5.8.4 ). The energy

— adjusted volume slopes calculated in th is analysis are presented in Table 5.4

. 11 below . The table also shows the slopes of the proposed baseline energy use

— adjusted volume relationships of Table 5.4

. 10 above

. T he comparison provides an indication of whether adjustment might be required to the proposed baseline energy use relationships, which are based on the current energy conservation standards and the expected impacts of the expected revised test procedure.

Table 5.4

. 11 DOE Preliminary Assessment of the Slope of the Energy Use Curve

Product Class Calculated Energy Curve Slope from

ERA Models* Slope from Proposed Baseline Energy Use Equat ion ( Table 5.4.10 )

3 13.3 10.7

5 12.3 5.3

7 11. 9 1 1.3

9 9.4 12.3

10 7.7 9.7

11 16.4 12.0

11A 20 to 35** 10.5

18 4.5 10. 3 * Analysis was conducted for both the small and large units analyzed for product

class es 3, 5, 7, 9, 10, 18 . Values shown are averages of slopes for the two ERA

models. ** The energy use

— adjusted volume relationship is nonlinear, with higher slope

at lower volumes. The slopes indicated are applicable for a range of adjusted

volumes from 1.7 to 3.6 ft 3

.5

- 16 DOE requested comment on the need for adjustment of the energy use curve slopes and requested information supporting such comments during the preliminary analysis phase of the rulemaking.

5.4.2.4 Energy Use Curve Slope Change s for Product Class es 4

, 5 , and 5A

DOE adjusted the energy equation slopes for product classes 4 (refrigerator

- freezers

— automatic defrost with side

- mounted freezers without through

- the

- door ice service) and 5 (refrigerator

- freezers

— automatic defrost with bottom

- mounted freezers without through

the

- door ice service) . This section describes the development of the modified baseline energy use equations for these products.

Product Class 4

DOE did not obtain data to allow determination of the appropriate slope of the energy use equation for product class 4. However, DOE proposes that the slope of the baseline energy use equation for product class 7 (refrigerator

- freezers

— automatic defrost with

side

- mounted freezers with through

- the

- door ice service) is appropriate also for product class 4. This slope is equal to 11.3 (see Table 5.4

. 10 above).

DOE observed that the range of product total volumes for these products is 20 to 30 cu. ft. , (based on the database used to develop the information in TSD Chapter 3, section 3.3.3) representing a range of adjusted volume from 25.1 to 37.7 cu. ft. using the current test procedure.

DOE selected a new intercept for the baseline energy use equation for product class 4 so

that the average energy use impact would be neutral. Since shipment data for the product class correlated with volume was not available, DOE selected an intercept that would result in the same average energy use for the products at the ends of the size range for th e product class described above. The resulting equation is 11.3 × AV + 395.3. The new curve is compared with the current energy standard and with the preliminary curve in Figure 5.4

. 1 below.5

- 17 Figure 5.4

. 1 Comparison of Preliminary and Adjusted

- Slope Ene rgy Use Curves (Product Class 4)

Product Class 5

For this product class, DOE obtained data for two pairs of products which allowed determination of the energy/adjusted volume slope. For each of these product pairs, (1) the refrigeration system designs of the two products of the pair are identical, (2) wall thicknesses in correspond ing portions of the cabinet are identical, and (3) the two products of the pair have different total and adjusted volume. The energy use slope associated with these pairs of products is compared with the current energy standard in Fig ure 5.4

. 2 below. The product data shows that the energy use dependence on adjusted volume (i.e. the appropriate slope of the baseline energy use line) is at least twice as high as expressed by the current standard. 0 100 200 300 400 500 600 700 800 900

20 25 30 35 40Annual Energy Usage (kWh/year)

Adjusted Volume (cubic feet) Current Standard

Preliminary Analysis New Test Baseline

New Test With Adjusted Slope Slope 4.91 Slope 11.3

Slope 5.515

- 18 Figure 5.4

. 2 Product Class 5 Energy Use Equation Slope Data

When adjusted for the new test procedure, the slope of 4.6 of the current standard increases to 5.32 (see Table 5.4

. 10 above). In contrast, the slopes for other standard

- size refrigerator

- freezer product classes such as 3 (refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

- door ice service) and 7 (refrigerator

freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service) are 10.72 and 11.33. DOE proposes to adjust the slope of the baseline energy use equation to 1 1.0 for product class 5, nearly equal to the average of the slopes for these other two product classes.

DOE further proposes to adjust the intercept for the baseline energy use equation for product class 5 to a level that would result in neutral impact on the average energy use of products within this class. DOE does not have shipment data for every configuration of product of the class and for this reason cannot determine exactly the appropriate intercept that would provide the same shipment weighted avera ge baseline energy use for both

low

- slope and adjusted

- slope equations. Instead, DOE chose an intercept so that the average energy use of the two reverse engineered products for product class 5 (with total volumes 18.5 and 25 cu. ft.) was the same for th e preliminary baseline curve and the new adjusted

- slop e curve. The adjusted

- slope curve is shown in Figure 5.4

. 3 below. The adjusted slope equation is 11.0 × AV + 394.2. 0 100 200 300 400 500 600 700

18 20 22 24 26Annual Energy Usage (kWh/year)

Adjusted Volume (cubic feet) Product Group 1

Product Group 2

Current Standard Slope 4.6

Slopes 10.4, 13.15

- 19 Figure 5.4

. 3 Comparison of Preliminary and Adjusted

- Slope Energy Use Curves (Produc t Class 5)

Product Class 5A

DOE proposes adjustment of the slope for product class 5A (refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service) based on the adjusted baseline energy use equation for product cl ass 5. DOE made this adjustment in the same way that the current energy standard for this product class was established for product class 5A through the exception relief process administered by the Office of Hearings and Appeals. 1

1 See, for example , the Decision and Order of the Office of Hearings and Appeals in case TEE

- 0022, Maytag Corporation, published August 11, 2005 This adjustment involves adding to the energy use of product class 5 the difference in energy use between product classes 6 (refrigerator

freezer

— automatic defrost with top

- mounted freezer with through

- the

- door ice service) and 3 (refrigerator

- freezer

— automatic defrost with top

- mo unted freezer without through

the

- door ice service) . The resulting baseline energy use equation for product class 5A is

11.44 × AV + 484.1. 0 100 200 300 400 500 600 700 800

15 20 25 30 35Annual Energy Usage (kWh/year)

Adjusted Volume (cubic feet) Current Standard

Preliminary Analysis New Test Baseline

New Test With Adjusted Slope Slope 4.6 Slope 11

Slope 5.3

The small arrows show the energy use curve adjustment for the reversed engineered products5

- 20 5.4.2.5 Adjusted Baseline Energy Use Equations

The adjusted baseline energy use equations are summarized in Table 5.4

. 12 below. DOE

made c hanges in the equations as compared with Table 5.4

. 10 for the following product

classes.

**•** 4 (see discussion of slope change above)

**•** 5 (see discussion of slope change above)

**•** 5A (see discussion of slope change above)

**•** 16, 18 (adjustment made due to r ound

- off errors in previous calculation)

Table 5.4

. 12 Adjusted Baseline Energy Use Equations

Product Class Proposed Test Procedure Baseline Energy Use not Including Icemaking Energy Use (kWh/year)

1 9.98 AV + 281 .2

2 9.98 AV + 281 .2

1A 8.49 AV + 241.9

3 , 3I , 3

- BI, 3I

- BI 10.72 AV + 310.2

3A , 3A

- BI 9.43 AV + 268.8

4 , 4I, 4

- BI, 4I

- BI 11.30 AV + 395.3

5 , 5I, 5

- BI, 5I

- BI 11.00 AV + 394.2

5A , 5A

- BI 11.44 AV + 484.1

6 11.15 AV + 400.1

7 , 7

- BI 1 1.33 AV + 462.8

8 7.42 AV + 258.3

9 , 9

- BI 12.32 AV + 326.1

10 9.71 AV + 143.7

10A 14.63 AV + 211.5

11 12.04 AV + 336. 4

11 A 10.45 AV + 292.1

12 7.88 AV + 447.8

13 1 3.89 AV + 3 99.0

13A 12. 2 2 AV + 34 5.8

14 8. 53 AV + 571.1

15 15.15 AV + 433. 8

16 9.6 2 AV + 250.8

17 11.3 0 AV + 391 .0

18 10.2 8 AV + 152 .0

5.4.3 Incremental Efficiency Levels

DOE established a series of incremental efficiency levels, for which it has developed incremental cost data and quantified the cost

- efficiency relationship for each of the seven analyzed product classes. The incremental efficiency levels for freestanding products are shown in Table 5.4

. 13 below

. The energy use reductions indicated in t his table represent reductions only in the energy use not associated with icemaking. Maximum available5

- 21 efficiency levels for the analyzed product classes, which are based on a survey of product databases and manufacturer websites, are tabulated in Table 5.4

. 15 below. Maximum

t echnology levels , which are based on DOE energy modeling using all applicable design options , are discussed in Section 5.4.4.

Table 5.4

. 13 Incremental Efficiency Levels for Freestanding Products (% Energy

Use Less than Baseline)

Level Standard

- Size Refrigerator

- Freezers Standard

- Size

Freezers Compact Refrigerators

and Freezers

PC3 PC5 PC7 PC9 PC10 PC11 PC18

1 1 0 % 1 0 % (Current

ENERGY STAR ) 1 0 %

2 15% (Former

E NERGY STAR ) 15% 15%

3 20% (Current

ENERGY STAR *) 20% 20% (Current

ENERGY STAR *)

4 25% (CEE Tier 2) 25% 25% (CEE Tier 2)

5 30% (CEE Tier 3) 30% 30% (CEE Tier 3)

6 3 6 % 33% 35% 35%

7 40% 41% 40% 42%

8 44% 45%

50%

59% *Current ENERGY STAR is equivalent to CEE Tier 1 for standard

- size refrigerators and refrigerator

- freezers and for all compact products.

Table 5.4

. 14 Incremental Efficiency Levels for Built

- In Products

Product Class

Level 3A

- BI

All

- Refrigerator 5

- BI

Bottom

- Mount Refrigerator

Freezer 7

- BI

Side

- Mount Refrigerator

Freezer 9

- BI Upright Freezer

1 1 0 % 1 0 % 1 0 % 1 0 % (Current

ENERGY STAR)

2 15% 15% 15% 15%

3 20% (Current

ENERGY STAR) 20% (Current

ENERGY STAR) 20% (Current

ENERGY STAR) 20%

4 25% 25% 22 % 25%

5 29% 27% 27%5

- 22 Table 5.4

. 15 Maximum Available Levels (% Energy Use Less than Baseline)

P roduct

C lass Maximum Available Level

Percent Volume (ft 3 ) Brand & Model Number

3 30 % 18 Frigidaire LGUI1849L*

5 33 % 21 LG LFC21776**

7 32 % 26 Whirlpool GSS26C4XX*0*

9 , 9

- BI 27 % 9 Gaggenau RF411700

10 15 % 11 Summit CF11ES

11 27 % 3 Avanti RM3251B

- 1

18 23 % 7 Haier ESCM071EA

3A

- BI 31% 13 Thermador T24BR70***

5

- BI 27% 17 Sub

- Zero BI30US*

7

- BI 21% 22 Fisher & Paykel RX216*T*XV2

Source s : ENERGY STAR Refrigerator & Freezer Database ( 7 / 29 /20 10 ), ENERGY STAR

Freezer Database ( 7 / 19 /20 10 )

, CEE Database ( 7/15 /20 10 ), CEC Database (4/ 28 /20 10 ),

Manufacturer websites

5.4.4 Maximum Technology Level

DOE defines a maximum technology level to represent the theoretical maximum possible efficiency if all available design options are incorporated. The maximum technology

level is not to be confused with the maximum a vailable level, which is the highest efficiency unit currently available on the market. In many cases the max imum tech nology

level is not commercially available because it is not economically feasible. Figure 5.4

. 4 below shows the maximum available efficiency levels, based on the ENERGY STAR

database s from 7/19/10 (freezers) and 7/29/1 0 (refrigerators and freezers) , w ith adjustments including deleting products which are no longer for sale based on the CEC

database and manufacturers’ and retailers’ websites.

As mentioned, the maximum technology level may not represent available products because they may not be economically feasible. DOE determined maximum technology levels using energy modeling. The energy models for the maximum technology levels were based on use of all design options applicable for the specific product classes . While these product configur ations have not likely been tested as prototypes, all of the individual design options have been incorporated in available products. The maximum technology efficiency levels for the analyzed product classes are presented i n T able

5.4.14 below. These effici ency levels are in some cases higher than the maximum available products. The cost s of the maximum technology efficiency level designs are also quite high, being based on extensive use of high

- cost design options such as vacuum insulating panels as well as all applicable lower

- cost design options. Table 5.4.14 indicates which design options were used for each of the product classes.5

- 23 Figure 5.4

. 4 Maximum Efficiency Levels Available by Product Class

*No active model available with better than baseline efficiency 3%
0%
51%
30%
72%
23%
33%
30%
28%
32%
20%
27%
15%
27%
27%
31%
0%
52%

2%
21%
36%
29%
23%

0% 10% 20% 30% 40% 50% 60% 70% 80% 1 1A*

2

3

3A

4

5

5A

6

7
8

9

10

11

11A

12 13*

13A

14

15
16

17
18

Efficiency Level (%)Product Class5

- 24 Table 5.4

. 16 Maximum Technology Level s and Design OptionsProduct Class% Lower Energy Design Options UsedBrushlessDC FansForced ConvectionCondenserLargerEvaporatorLarger CondenserThicker InsulationVIPsVariable SpeedCompressorAdaptive DefrostVariable AntiSweatIsobutaneRefrigerant

3 3 6%      

5 36 %       

7 33 %       

9 44 %       

10 41 %     

11 59 %      

18 42 %   

3A

- BI 29%    

5

- BI 27%     

7

- BI 22%      

9

- BI 27%     

Note: Levels indicated are the average of the levels determined for the two products of each product class analyzed in detail for product classes 3, 5, 7, 9, 10, 11, and 18

.

5.5 DATA COLLECTION

DOE collected data from a number of sources to support the engineering analysis. The key sources include the following.

**•** AHAM

**•** Component Vendors

**•** Reverse

- Engineering of Products

**•** Manufacturer Interviews

**•** Energy Tests

The data collection process is described in greater detail in the following sections.

5.5.1 Manufacturer

- Submitted Shipment and Cost Data from AHAM

DOE included draft data requests sheets to su pport the engineering and other DOE analys e s in the framework document as Tables A 1 through A 10 of that document. Some

of t hese tables were revised based on comments received during the framework comment period . For example, incremental cost data was provided for up to 35% efficiency level,

and include d a 10% efficiency level, which replaced the 15% efficiency level of the draft

tables. Other requests DOE made to AHAM in addition to the requests made in the

fram ework document include the following.5

- 25 **•** Historical shipment data for Wine Coolers, broken out by key types: manual

defrost/auto defrost.

**•** Historical shipment data for Built

- in Refrigerators, disaggregated by product class.

**•** Recent shipment data for products i ncorporating a wine cooler compartment with either (1) a fresh food compartment, (2) a freezer compartment, or (3) both a fresh food and a freezer compartment.

**•** Recent shipment data for French Door refrigerators broken out between products with

and without through

- the

- door ( TTD ) ice service.

**•** Recent shipment data for convertible

- bottom

- drawer refrigerators (products with three doors configured as a side

- by

- side arrangement on top with a single drawer below, and for which the upper compartments are freezer and fresh food compartments and the drawer is convertible).

**•** Percent of refrigerator

- freezers shipped with ice makers for applicable product classes (3, 4, 5, 13, 14, 15), historical data if possible.

**•** Total shipments of ice makers (any breakdown by (a) install ed at factory, (b) installed by dealer, (c) installed by homeowner?), historical data if possible.

**•** For as many refrigerator, refrigerator

- freezer, and freezer models as practical, data on the impact of the proposed changes in compartment temperature and vo lume

calculation method:

**•** Compartment Volumes: volumes calculated according to the current procedure and according to the new procedure, with indication of product class.

**•** Energy use (for refrigerators and refrigerator

- freezers only): Annual energy use

measu rements for units tested for both temperatures (i.e. not Energy Label data

— this should be energy test values calculated based on test data for the old temperatures and the new temperatures for sequential tests of the same unit. This will typically require three tests to make sure that both sets of temperatures are bracketed.

**•** It is anticipated that data for product classes 3 and 13 would be separated according to whether the product is a refrigerator

- freezer or all

- refrigerator.

AHAM supported the rulemakin g by supplying much of this data. AHAM supplied DOE with aggregated shipment

- weighted average data for many of the submittals in order to avoid divulging data submitted by individual manufacturers.

5.5.2 Component Vendor Data

DOE directly contacted major suppli ers of key refrigerator and freezer components to obtain performance and cost data to support its design option analysis. The data received from vendors was compared with information received from manufacturers during the

manufacturer interviews in order t o develop input values for performance and cost parameters for the energy modeling and manufacturing cost modeling. This vendor solicitation effort consisted of phone interviews, email correspondence, and in

- person interviews. Table 5.5.1 lists the vendors contacted.

DOE also obtained from t he compressor vendors or their websites complete performance

data for compressors used in many of the energy analy ses, including analyses for baseline and improved

- efficiency configurations.5

- 26 Table 5.5

. 1 Component Vendors Con tacted by DOE during Engineering Analysis Component Type Vendors Compressors Embraco

Tecumseh

Matsushita

Danfoss

LG Huayi

ACC (ZEL) Jiangsu Baixue Electric Appliances Co.,Ltd

Fan Motors Matsushita

VIPs v a

- Q

- tec
Matsushita

Porextherm

ThermoCor

NanoPore Insulation LLC Glacier Bay

Thermal Visions

Foam Insulation BASF Foam Supplies Aerogel Insulation Aspen Aerogels Heat Exchangers Brazeway

5.5.3 Reverse Engineering

DOE purchased a number of representative refrigerators and freezers as part of the engineering analysis in order to examine design and fabrication details. This reverse

engineering included detailed measurement of dimensions, system and component

- level

pow er measurements, measurement of air flows for products with forced convection heat exchangers, and physical teardowns. The results of the reverse engineering process were used as input to the manufacturing cost modeling and the energy use modeling. This

se ction describes the selection of products for reverse

- engineering as well as some of the measurements made to support subsequent modeling. Section 5.6 provides a more thorough description of the physical teardown process used to support manufacturing cost modeling.

5.5.3.1 Selection of Products for Reverse Engineering

Table 5.5.2 below lists descriptions of the products selected for reverse engineering and indicates for which products DOE conducted energy tests (see Section 5.5.5 for more on energy testing). DOE perform ed reverse engineering on units rated at baseline and improved (i.e., ENERGY STAR ) energy consumption levels for the seven analyzed product clas ses. DOE chose at least one representat ive small

- size and one large

- size unit to cover the range of volumes within each product class. In order to best examine the design choices associated with efficiency improvements, DOE selected baseline5

- 27 Table 5.5

. 2 Selected Units for Reverse

- Engineering and Energy Testing

PC Product Description Energy %

Less than

Baseline Energy

Test Physical

Teardown Energy Use

Model

3 16 ft 3 Top

- Mount R

- F 0%   

21 ft 3 Top

- Mount R

- F 0%   

21 ft 3 E* Top

- Mount R

- F 20 %   

4 22 ft 3 Side

- Mount R

- F† 0%   

5 1 8.5 ft 3 E* Bottom

- Mount R

- F 15 % *   

25 ft 3 E* Bottom

- Mount R

- F 1 20%  

25 ft 3 E* Bottom

- Mount R

- F 2 20%  

5A 25 ft 3 French Door E* Bottom

Mount R

- F 20% 

26 ft 3 French Door E* Bottom

Mount R

- F 20%

7 26 ft 3 Side

- Mount R

- F 0%   

26 ft 3 E* Side

- Mount R

- F 20%   

9 14 ft 3 Upright Freezer 0%  

20 ft 3 Upright Freezer 2%   

20 ft 3 E* Upright Freezer 1 12%  

20 ft 3 E* Upright Freezer 2 10%

10 15 ft 3 Chest Freezer 1%   

15 ft 3 E* Chest Freezer 11%  

20 ft 3 Chest Freezer 0%  

11 1.7 ft 3 Compact Refrigerator 7%   

4 ft 3 C ompact Refrigerator 2%  

4 ft 3 E* Compact Refrigerator 22%  

18 3.4 ft 3 Compact Chest Freezer 0%  

7 ft 3 Compact Chest Freezer 1 1%  

7 ft 3 Compact Chest Freezer 2 1%  
*Exact efficiency level is not known because product literature did not include indication of separate compartment volumes. †This product was thought to be product class 7 when purchased.

efficiency/ENERGY STAR product pairs if possible, for which the two products were identical other than the differences necessary for the ENERGY STAR

- rated product to achieve higher efficiency. Such product pairs included the 21 ft 3 Top

- Mount re frigerator

freezers, the 26 ft 3 Side

- Mount refrigerator

- freezers, the 20 ft 3 upright freezers, and the 4

ft 3 compact refrigerators.

5.5.3.2 Collection of Energy Modeling Data

DOE examined each unit prior to teardown to record details to be used as input for the energy modeling. The key measurements are described in this section.5

- 28 The rated refrigerated volume s for each product ’s compartments and its rated energy use

w ere based on product literature or the ENERGY GUIDE . In the case of the 3.4 ft 3 chest freezer, the product literature did not provide an indication of energy use, and the product did not arrive with an ENERGY GUIDE. For this product, DOE assumed that energy use was exactly equal to maximum allowable energy use for the product class.

Power input for the product was measured for a period of 24 or more hours. This measurement was not intended to be an energy test, but provided useful information regarding the product controls, including off

- cycle wattage, def rost heater on

- time, and defrost interval (or indication of variable defrost). The power measurements for the products were made in the reverse engineering test laboratory, whose ambient temperature may have covered a broad range from 65  ̊F to 85  ̊F during the time that these measurements were carried out. Also, careful attention was not paid to the

temperature set points for this measurement

— the set points generally were left in the as

shipped position s

.

Component

- level power measurements were carried out for fans, defrost heaters, and manual defrost controls for the products which had these components. Power was also measured for some products’ anti

- sweat heaters.

Air flow measurements were made for all forced

- convection heat exchangers. These

measurements were made with a hot wire anemometer. The location of these measurements varied depending on the heat exchanger type and configuration. The determination of air flows based on these measurements is not very reliable, so this

measurement was us ed as an indication of air flow trends more than exact indication of air flow for the various products.

Details of the cabinet size and insulation thickness were based on direct physical measurements. Most of these measurements were made prior to the teard own, but measurements of some parameters, such as outer shell thickness, inner liner thickness, and insulation thickness, were made during the teardown process. Use of insulation other than polyurethane foam was noted as part of the teardown process. Frame area details including gasket details were observed, and recorded with pictures as part of the teardown process.

Heat exchanger details were recorded, including type, configuration, numbers of tubes and fins, dimensions, etc. For cold wall and hot wall h eat exchangers this data was recorded during the product teardown process. The details of anti

- sweat heaters were also determined during the teardown process, including the layout for refrigerant anti

- sweat loops. The details of suction line heat exchanger s were similarly determined during

teardown.

Component manufacturer and model data were recorded for key components such as

compressor s , fans, and controls.

Design data for the analyzed built

- in products were obtained directly from a built

- in product manu facturer.5

- 29 The energy modeling data for the teardown products are presented in detail in appendix

5

- A.

5.5.4 Manufacturer Interviews

DOE’s contractor discussed engineering issues with manufacturers during the pre

- NOPR interviews. The engineering questions were c onsolidated into an engineering questionnaire, which guided the interview process for all of these discussions. The engineering questionnaire is shown in appendix 5

- A . Key technical topics addressed during these discussions include the following:

**•** Typical c haracteristics of components and typical design details (i.e. such as insulation thicknesses) used for key product classes.

**•** Typical design differences between baseline and ENERGY STAR products.

**•** Differences in design pathways and incremental costs across different product classes

**•** Viability of technology options, and their typical costs.

All of these interviews were conducted under non

- disclosure agreements with the manufacturers. Hence, none of the individual responses can be reported. However, values

for many of the parameters and costs used in the engineering analysis were based on aggregated input from these discussions.

After the preliminary analysis comment period, DOE’s contractor again visited manufacturers and discussed engineering issues. Some of this discussion responded directly to comments made during the preliminary analysis public meeting and in written submittals from stakeholders. Some of the technical data discussed during the preliminary analysis discussions was revisited. Much of the disc ussion also addressed differences between DOE’s preliminary analysis results and the manufacturers’ information regarding the design changes required to achieve higher efficiency levels , including the 30% efficiency levels achieved by some standard

- size re frigerator

- freezer products.

These discussions were also conducted under non

- disclosure agreements and hence the findings cannot be reported in detail. However, DOE adjusted many of its engineering analysis model inputs for better consistency with the info rmation obtained during these

interviews.

5.5.5 Energy testing

DOE conducted energy testing to verify energy use of many of the products obtained for reverse engineering

, to provide refrigeration system data to support energy use modeling,

and to evaluate the di fference in energy use between current energy test c ompartment temperatures and the new temperatures associated with the expected revised test procedure.

Twelve of the 24 units were tested, as indicated in Table 5. 5.2 , including all of the refrigerator

- freezer models and one each of the upright freezers, chest freezers, and compact refrigerators. No compact chest freezers were tested.5

- 30 Energy testing wa s carried out by an independent test lab according to the DOE Energy Test Procedure as described in 10 CFR Part 430 Subpart B, Appendix A1 or B1, with

reference to AHAM Standard HRF

- 1

- 1979 as applicable. In addition to the standard energy test results, DOE requested specific temperature measurements to be taken in various locations during the test to better understand the refrigeration system operating characteristics. Specifically, l ow

- mass thermocouple s were mounted in good thermal

contact with the surfac e o f refrigerant tubing, insulated externally from local ambient air.

Table 5.5.3 lists the additional measurements.

Table 5.5

. 3 Additional Thermocouple Locations for Preliminary Analysis Energy

Test s

Thermocouple Location Refrigerator

Freezers Upright

Freezer Chest

Freezer Compact Refrigerator Discharge 4” from shell    

Condenser Inlet 

Condenser Mid 

Condenser Outlet    
Evaporator Inlet   
Evaporator Outlet    

Suction 4” from shell    

Condenser Air Inlet 

Pan Heater In 

Pan Heater Out 

Hot Wall Condenser

Surface   

Compressor Compartment Air   

Cold Wall Evaporator

Surface  

Note: Two units of the 1. 7 ft 3 compact refrigerator were tested because the first of these was not able to hold proper internal temperatures.

During the NOPR phase of the work, DOE also arranged for testing of some products having efficiency levels at or near the max available. These tests, conducted only according to the current test procedure and not incorporating the additional measurements

d escribed in Table 5.5

. 3 , confirmed that these products achieved their rated efficiency

levels. The results of the tests are summarized in Table 5.5

. 4 below.5

- 31 Table 5.5

. 4 High

- Efficiency Refrigeration Product Test Results

Product

Class Total

Volume (cu. ft.) Adjusted

Volume 1
(cu. ft.) Rated Energy (kWh/year) Rated

Percent

Below

Standard Measured Energy Use (kWh/year)

3 18.89 22.04 343 30% 336

5 18.51 22.03 392 30% 371

7 22.11 26.66 473 30%

3A 16.14 16.14 204 53%

1 As measured during test.

5.6 MANUFACTURING COST M ODELING

5.6.1 Generation of Bills of Materials

The end result of each teardown is a structured bill of materials (BOM). DOE developed structured BOMs for each of the physical teardowns. Structured BOMs describe each product part and its relationship to the other parts in the estimated order in which

manufactu rers assembled them. The BOMs describe each fabrication and assembly operation in detail, including the type of equipment needed (e.g., presses, drills), the process cycle times, and the labor associated with each manufacturing step. The result is

a thorou gh and explicit model of the production process, which includes space, conveyor, and equipment requirements by planned production level.

The BOMs incorporate all materials, components, and fasteners classified as either raw materials or purchased parts and assemblies. The classifications into raw materials or purchased parts were based on DOE’s previous industry experience, recent information in trade publications, and discussions with high

- and low

- volume original equipment manufacturers (OEMs). DOE also v isited manufacturing plants to reinforce its understanding of the industry’s current manufacturing practices for each of the three product categories.

For purchased parts, the purchase price is estimated based on volume

- variable price quotations and detail ed discussions with manufacturers and component suppliers. For fabricated parts, the prices of “raw” metals (e.g., tube, sheet metal) are estimated on the

basis of 5

- year averages (see S ection 5.6.4.4 ) while all other materials and purchased parts reflect current market costs . The cost of transforming the intermediate materials into finished parts is estimated based on current industry pri cing. DOE shared major estimates with manufacturers during the engineering manufacturer interviews to gain feedback on the analysis, its methodology, and preliminary results.

5.6.2 Cost Structure of the Spreadsheet Models

The manufacturing cost assessment method ology used is a detailed, component

- focused technique for calculating the manufacturing cost of a product (direct materials, direct5

- 32 labor, and the overhead costs associated with production). The first step in the manufacturing cost assessment was the creat ion of a complete and structured BOM from the disassembly of the units selected for teardown. The units were dismantled, and each part was characterized according to weight, manufacturing processes used, dimensions, material, and quantity. The BOM incorpor ates all materials, components, and fasters with estimates of raw material costs and purchased part costs. Assumptions on the sourcing of parts and in

- house fabrication were based on industry experience, information in trade publications, and discussions w ith manufacturers. Interview and plant visits were conducted with manufacturers to add industry experience on the methodology and pricing.

The last step was to convert this information into dollar values. To perform this task,

DOE collected information on labor rates, tooling costs, raw material prices, and other factors. DOE assumed values for these paramete rs using internal expertise and confidential information available to DOE contractors. Although most of the assumptions are manufacturer specific and c anno t be revealed, S ection 5.6.4.3 provides a discussion of the values used for each assumption.

In summary, DOE assigned costs of labor, materials, and overhead to each part whether purchased or produced in

- house. DOE then aggregated single

- part costs into major assemblies ( e.g., door assembly, heat exchanger assembly, shelving, packaging, controls, bottom components assembly, wiring harnesses, inner/outer wrapper a ssembly , etc .) and summarized these costs in a worksheet. During engineering interviews with manufacturers, DOE showed key estimates from the cost model and asked for feedback. DOE considered any information manufacturers gave that was relevant to the cost model and incorporated it into the analysis, if appropriate.

5.6.3 Cost Model and Definitions

Once DOE disassembled selected units, gathered information from manufacturer catalogs on additional products, and identified technologies, DOE created an appropriate

m anufacturing cost model that could translate physical information into manufacturer production costs ( MPCs ) . The cost model is based on production activities and divides factory costs into the following categories:

**•** Materials: Purchased parts ( i.e. compress or, fan motors , c ontrol boards, door handles, shelf frames, etc.), raw materials ( i.e., cold rolled steel, copper tube, etc. ), and indirect materials that are used for processing and fabrication.

**•** Labor: Fabrication, assembly, indirect, and supervisor labor. Fabrication and assembly labor cost are burdened with benefits and supervisory costs.

**•** Overhead: Equipment, tooling, and building depr eciation, as well as utilities, equipment and tooling maintenance, insurance, and property taxes.

5.6.3.1 Cost Definitions

B ecause there are many different accounting systems and methods to monitor costs, DOE

defined the above terms as follows:5

- 33 **•** Direct material: Purchased parts (out

- sourced) plus manufactured parts (made in

house from raw materials).

**•** Indirect material: Material used during manufacturing (e.g., welding rods, adhesives).

**•** Fabrication labor: Labor associated with in

- house piece manufacturing.

**•** Assembly labor: Labor associated with final assembly.

**•** Indirect labor: Labor costs that scaled with fabrication and assembly la bor. This included the cost of technicians, manufacturing engineering support, stocking, etc. that were assigned on a span basis.

**•** Equipment and plant depreciation: Money allocated to pay for initial equipment installation and replacement as the production equipment wears out.

**•** Tooling depreciation: Cost for initial tooling (including nonrecurring engineering and debugging of the tools) and tooling replacement as it wears out.

**•** B uilding depreciation: Money allocated to pay for the building space and the

convey ors that feed and/or make up the assembly line.

**•** Utilities: Electricity, gas, telephones, etc.

**•** Maintenance: Annual money spent on maintaining tooling and equipment.

**•** Insurance: Appropriated as a function of unit cost.

**•** Property Tax: Appropriated as a function as unit cost.

5.6.4 Cost Model Assumptions Overview

As discussed in the previous section, assumptions about manufacturer practices and cost structure played an important role in estimating the final product cost. Some assumptions were different for specific man ufacturers, depending on their market position, manufacturing practices, and size.

In converting physical information about the product into cost information, DOE reconstructed manufacturing processes for each component using internal expertise and

knowled ge of the methods used by the industry. DOE used assumptions regarding the manufacturing process parameters (e.g., equipment use, labor rates, tooling depreciation, and cost of purchased raw materials) to determine the value of each component. DOE

then sum med the values of the components into assembly costs and, finally, the total product cost. The product cost included the material, labor, and overhead costs associated with the manufacturing facility. The material costs included both direct and indirect

ma terials. The labor costs included fabrication, assembly, indirect, direct, and supervisor labor rates, including the associated overhead.

The labor costs included assembly, fabrication, supervisor, and indirect labor . Overhead costs included equipment depr eciation, tooling depreciation, building depreciation, utilities, equipment, tooling maintenance, insurance, property, and taxes.

DOE used the information gathered from manufacturer interviews to make updates to the cost model. These changes involved updating component and material pricing.

The next sections discuss specific assumptions about outsourcing, factory parameters, production volumes, and material prices. When the assumptions are manufacturer

-5

- 34 specific, they are presented as industry averages to prevent disclosure of confidential

inf ormation.

5.6.4.1 Fabrication Estimates

DOE characterized parts based on whether manufacturers purchased them from outside suppliers or fabricated them in

- house. For purchased parts, DOE estimated the purchase price. For fabricated parts, DOE estimated the price of raw materials (e.g., tube, sheet metal) and the cost of transforming them into finished parts. Whenever possible, DOE obtained price quotes directly from th e manufacturers’ suppliers.

DOE based the manufacturing operations assumptions on internal expertise, interviews with manufacturers, and manufacturing facilities site visits. The major manufacturer processes identified and developed for the spreadsheet mod el are listed in Table 5.6

. 1

. Fabrication process cycle times were estimated and entered into the BOM.

Table 5.6

. 1 Cos t Model In

- House Manufacturing Operation Assumptions

Fabrication Finishing Assembly/Joining Quality Control Fixturing Stamping/Pressing

Turret Punch Tube Forming Brake Forming Cutting & Shearing Insulating &

Insulation Injection

Tube/ Wire Bending Brazing Vacuum Forming Blow Molding Washing Painting Powder Coating

De

- burring Polishing Refrigerant Charging Adhesive Bonding Spot Welding Seam Welding Packaging Inspecting & Testing

5.6.4.2 Production Volumes Assumptions

A manufacturer’s production volumes vary depending on several factors, including market share, the type of product produced (i.e., standard

- s ize refrigerator

- freezer, compact refrigerator

- freezer, etc. )

, and if the manufacturer produces other similar prod ucts. DOE based production volume assumptions for these residential refrigeration products on shipment data, industry knowledge

, and engineering manufacturer

interviews. The manufacturing plant annual production capacities used for the analyses differ by p roduct class as follows.

**•** Product Classes 3 and 6: 1.5 million

**•** Product Classes 5 and 5A: 0.5 million

**•** Product Classes 4 and 7: 1 million

**•** Product Class 9: 150,000

**•** Product Class 10: 100,0005

- 35 **•** Product Class 11: 0.5 million

**•** Product Class 18: 100,000

5.6.4.3 Factory Parame ters Assumptions

DOE used information gathered from publicly available literature, manufacturer interviews, and analysis of common industry practices to formulate factory parameters for each type of manufacturer. DOE first made assumptions about a set of p reliminary factory parameters before the manufacturer interviews. DOE then revised the assumptions using comments and information gathered during the interviews. Table 5.6.2

list s DOE’s assumptions for refrigerator manufacturers.

Table 5.6

. 2 Refrigerator & Freezer Factory Parameter Assumptions

Parameter Assumption Plant Capacity (units/yr) see section 5.6.4.2 Actual Annual Production Volume (units/yr) 5/6 of plant capacity Fabrication Labor Wages ($/hr) 16.00 Fringe Benefits Ratio 5 0%

5.6.4.4 Material Cost Assumptions

DOE determined the cost of raw materials using publicly available information such as

the American Metals Market 2 , interviews with manufacturers, and direct discussions with material suppliers. Common metals used in the fabrication of residential refrigerator products include plain cold rolled steel (CRS), copper tubing, and aluminum. There have

been large fluctuations in metal prices over the last few years. To account for these fluctuations, DO E used a 5

- year average of metal prices from the Bureau of Labor Statistics Producer Price Indices (PPIs) spanning 2003 to 2008 with an adjustment to

2008 $. 3 DOE used the PPIs for copper rolling, drawing, and extruding and steel mill products, and made the adjustments to 2008 $ using the gross domestic product implicit price deflator. 4 For resins used in the fabrication of these refrigerat ion product s, D OE used current resin prices gathered from industry research, publications such as Plastics

News

, 5

5.6.5 Manufacturing Production Cost and int erviews with manufacturers.

Once the cost estimate for each teardown unit was finalized, a detailed summary was prepared for relevant components, subassemblies, and processes. The BOM thus details all aspects of product costs . DOE totaled the cost of materials, labor, and direct overhead

2 American Metals Market. Last accessed November 2008. <http://www.amm.com>.

3 U.S. Department of Labor, Bureau of Labor Statistics, Producer Price Indices. Last accessed November 2008. <http://www.bls.gov/ppi>.

4 U.S. Department of Commerce, Bureau Economic Analysis, Gross Domestic Product Implicit Price Deflator. Last accessed November 2008. <https://bea.gov/bea/dn/nipaweb/TableView.asp#Mid>.

5 Plastic News, Resin Pricin g. Last accessed March 21, 2008. <http://www.plasticsnews.com/subscriber/headlines.phtml>.5

- 36 used to manufacture a product in order to calculate the manufacturing production cost

. 6
Figure 5.6

. 1 shows the general breakdown of costs associated with manufacturing a product.

Figure 5.6

. 1 Full Production Costs

The full cost of product is broken down into two main costs, the full production cost or MPC, and the non

- production cost. The non

- production cost is equal to the manufacturer markup minus profits.

Technologies used in the units subject to teardown are noted in the summary sheet of

each cost model and are cost

- estimated individually. Thus, various implementations of technologies can be accommodated, ranging from assemblies that are entirely purchased to units that are entirely from raw materials. Hybrid assemblies, consisting of purchased parts and parts made on site are thus also accommodated.

5.6.6 Inc remental Cost Estimates

Incremental costs were determined for design options applied to the baseline

- efficiency refrigerator models. The approach for estimating the incremental costs varied depending

6 When viewed from the companywide perspective, the sum of all material, labor, and overhead costs equals the company’s sales cost, also referred to as the cost of g oods sold (COGS). Manufacturer Selling Price

Full Cost of

Product

Manufacturer

Production Cost

Direct

Labor Direct

Material Overhead

Indirect Labor

Indirect Material

Maintenance

Depreciation

Taxes

Insurance related

to assets Non

- Production

Cost

Selling

Market

Research

Advertising

POS Promotion

Salesperson Comp & Travel

Logistics (Warehousing, Delivery, Record

Keeping, Order

Processing) General &

Admin.

Costs of

Service &
Staff Units

General
Corporate

Costs (Comp, etc) R & D

Costs associated with finding new

and improved

products or

processes

Code Compliance

Modernization Interest

Cost of borrowing

funds Profit5

- 37 on the design option. Details in this calculation which are specific to individual design options are discussed in Section 5.8 , which discusses design options. Aspe cts of the incremental cost calculation which were generally applied to multiple design options are

discussed in this section.

Many of the design options involve replacement of a current component with a higher

efficiency component. For these design option s, the increased price paid by the OEM for the new component represents the manufacturing cost increase

— other elements of product cost such as overhead and capital expenditures would be insignificantly affected by these design changes. The appropriate pric e increases are discussed in Section 5.8 by design option.

For some design changes, calculating the cost impact of the design change required direct

use of the manufacturing cost model to determine changes to a number of parts. The baseline manufacturing cost was subtracted from the manufacturing cost of the modified design to determine the incremental cost of the design option. This approach was used in particul ar for insulation thickness increases and heat exchanger size increases for cold wall and hot wall heat exchangers.

5.6.6.1 Overhead and Depreciation Costs

Some design options involve costs in addition to the price increase associated with a new component. For suc h options, there may be overhead and capital expenses which must be added to the direct costs associated with the design option. Estimates of typical additional costs associated with overhead and depreciation for manufacture of refrigeration products

were made for the reverse

- engineering models, using estimates of these costs provided by the manufacturing cost model. These calculations were carried out based on proposed typical production plant capacities, with actual production volumes estimated to be 5/6 of plant capacities. The annual plant capacities for the product classes used in these

calculations are as indicated in section 5.6.4.2

.

The additional costs are p resented as percentage of direct material and labor costs in

Table 5.6

. 3 below. The averages for the listed product class categories were used to

increase direct mate rial and labor costs for some design options for which this adjustment

was necessary. DOE initially conducted t his calculation during the preliminary analysis. As a result of changes to the manufacturing cost model during the NOPR phase, some of

the number s changed slightly. However, the overall average percent cost ratios did not change significantly. DOE continued use of the values calculated for these parameters during the preliminary analysis

.5

- 38 Table 5.6

. 3 Preliminary Analysis Overhead and Depreciation Cost Ratios

Product Class Group Product

Class Product Percent

Cost

Ratio Average

Percent Cost

Ratio for

Product Class Group

Standard

Size Refrigerator

Freezers 3 16 ft 3 Top

- Mount R

- F 31.2%

23.4% 21 ft 3 Top

- Mount R

- F 23.2%

21 ft 3 E* Top

- Mount R

- F 23.2%

4 22 ft 3 Side

- Mount R

- F† 22.0%

5 19 ft 3 E* Bottom

- Mount R

- F 23.5%

25 ft 3 E* Bottom

- Mount R

- F 1 20.9%

25 ft 3 E* Bottom

- Mount R

- F 2 23.3%

7 26 ft 3 Side

- Mount R

- F 20.7%

26 ft 3 E* Side

- Mount R

- F 22.5%

Standard

Size Freezers 9 14 ft 3 Upright Freezer 28.6%

28.5% 20 ft 3 Upright Freezer 26.2%

20 ft 3 E* Upright Freezer 1 25.0%

10 15 ft 3 Chest Freezer 35.5%

15 ft 3 E* Chest Freezer 33.2%

20 ft 3 Chest Freezer 22.5% Compact Refrigerators, Refrigerator

Freezers, and

Freezers 11 1.7 ft 3 Compact Refrigerator 40.2%

39.2% 4 ft 3 Compact Refrigerator 35.6%

4 ft 3 E* Compact Refrigerator 36.5%

18 3.4 ft 3 Compact Chest Freezer 42.3%

7 ft 3 Compact Chest Freezer 1 36.6%

7 ft 3 Compact Chest Freezer 2 44.2%

The manufacturing cost model estimates are consistent with overall industry trends. Census data shows that the average value of this cost adder for NAICS code 335222 (Household Refrigerator and Home Freezer Manufacturing ) is 27.7%.

5.6.6.2 Depreciation Costs for Insulation Thickness Increases

DOE considered that increases in cabinet wall and door thicknesses would require redesign of the entire refrigerator or freezer platform and would likely lead to the building of a new production plant. This conservative approach to the analysis was based on input from manufacturers. For such design changes, the difference in Greenfield costs 7

7 Greenfield costs are defined as the costs associated with building a new manufacturing facility, to be distinguished from the costs required to upgrade or modify a facility. of two designs would not capture the depreciation costs which would be incurr ed by the manufacturer and which would add to the product cost after such a platform conversion. DOE conservatively used the Greenfield depreciation costs per product determined by the manufacturing cost model as an additional cost for wall thickness incre ases. The5

- 39 calculation of manufacturing costs for all of the teardown products based on typical plant capacities described above was used as the basis for the determination of Greenfield depreciation costs per product. The results of the calculations are su mmarized in Table

5.6

. 4 below. Average depreciation costs were applied in the engineering analyses for all of the analyzed products of a product class. The depreciatio n costs also were separately allocated to the cabinet or door, as indicated in the table.

Table 5.6

. 4 Greenfi e l d Depreciation Costs per Product

Product

Class Product Depreciation Cost

Total Average Average

Cabinet Average Door(s)

9 14 ft 3 Upright Freezer $29.48 $30 $23 $7

20 ft 3 Upright Freezer $31.40

20 ft 3 E* Upright

Freezer 1 $30.44

10 15 ft 3 Chest Freezer $32.70 $33 $26 $7

15 ft 3 E* Chest Freezer $34.12

20 ft 3 Chest Freezer $30.73

18 3.4 ft 3 Compact Chest

Freezer $ 35.99 $32 $26 $6

7 ft 3 Compact Chest

Freezer 1 $ 30.99

7 ft 3 Compact Chest

Freezer 2 $ 29.68

11 1.7 ft 3 Compact Refrigerator $11.95 $13 $10 $3

4 ft 3 Compact Refrigerator $13.27

4 ft 3 E* Compact Refrigerator $13.27

5.6.6.3 G&A and Profit

DOE estimated the further addition to the manufacturer selling price associated with G&A and profit for the appliance industry as 26% of manufacturer production cost. This adder was applied to all of the MPC estimates in order to determine manufacturer selling price ( MSP ) numbers. This markup is described in more detail in chapter 6.

5.7 ENERGY MODELING

DOE carried out detailed energy modeling of representative baseline and ENERGY

STAR refrigeration products

, and on design variations of these products that included one or more of the design options considered for the engineering analysis. This energy modeling work served as the basis of estimates of energy savings potential associated with the design options. T he products selected for reverse engineering provided the basis5

- 40 for the energy modeling. Energy model input was determined for these products from the data collected during the reverse engineering work, described in Section 5.5.3 . Additional

data

, used both as input

, and for calibration of individual product energy models

, was provided by energy testing as described in Section 5.5.5 . Using the energy modeling results and manufacturing cost modeling results for these designs allowed DOE to develop incremental cost estimates for multiple efficiency levels based on each of the baseline products analyzed.

DOE carried out energy modeling during this rulemaking using an improved version of the EPA Refrigerator Analysis (ERA) program, earlier versions of which have been used in previous refrigerator rulemakings. Section 5.7.1 describes the ERA model development briefly. A more detailed description of the program and its recent development is presented in appendix 5

- B

.

5.7.1 Energy Model development

ERA is a s teady

- state energy model that calculates heat leakage into a cabinet and determines the energy needed by the refrigeration system to maintain the interior temperatures as specified by the user. Total energy used includes the energy from the compressor, fan motors, defrost heater, electronic control, and anti

- sweat heaters, if applicable. See a ppendix 5

- B for a detailed explanation of the ERA model.

The DOS version of ERA was developed initially under EPA

- sponsorship during the late

1980s. This was undertak en by the EPA as part of its involvement in the establishment of energy standards for refrigerators, refrigerator

- freezers, and freezers under the National Appliance Energy Conservation Act of 1987 (NAECA). A developmental version of the program was used b y the DOE as a partial basis for the energy standard established in 1989 (effective in 1993). The work also involved extensive testing of the model against

manufacturer

- supplied refrigeration appliance design and test data. Based on these comparisons and m anufacturer review comments through its industry organization (AHAM), development of the model continued until its release in 1997. 1

ERA combined an analysis of the refrigeration load requirements of the cabinet with a simulation of the capacity and effi ciency of the refrigeration cycle. The cabinet loads module was a modest enhancement of a program developed for the DOE during the late 1970s, 2 including the consideration of door

- opening effects on the load and an ability to deal with complex insulation s ystems. The cycle module was a derivative of the NIST CYCLE 7 program, 3 which used the CSD equation of state to represent the thermodynamic properties of pure and mixed refrigerants, 4 adapting routines for calculating refrigerant properties from REFPROP3. 5 The program, and its User’s Manual, were first released to the public in 1993, and for a few years were downloadable

from the EPA website. 6

1 Subsequent to the 1993 final rule, DOE published updated standards for refrigerators, refrigerator

- freezers and fre ezers in 1997, becoming effective

in 2001. Analysis carried out in support of the 1997 final rule involved use of the final

released EPA version of ERA.5

- 41 The DOS version of ERA was subsequently modified as described in appendix 5

- B , but these revisions were not made available to the public. During the course of this rulemaking, further development of the model was carried out in order to allow use of the model for calculation of energy use of modern residential refrigeration products and to allow a modern version of the program to be made available to stakeholders to validate DOE analysis. Key modifications made include the following.

**•** Enhancement of the user

- interface to a Windows environment

**•** Employment of the most current refrigerant property routines

**•** Incorporation of a broad range of evaporator and condenser algorithms that correspond to the technologies now found in modern refrigerators

**•** Improved compressor modeling, with built

- in procedures for validating supplied

compressor maps

**•** Improvements where desirable in the cabinet loads analysis and cycle performance algorithms.

**•** Preparation of internal documentation of the program through extensive contex t

sensitive Help files.

DOE made m any of the preliminary analysis phase energy model calculations described in this chapter using a DOS version of the ERA program prior to the completion of the

Windows version. During the NOPR phase of this rulemaking, DO E converted all of the original energy model calculations used for development of cost

- efficiency curves to the

Windows version of ERA.

The development history and capabilities of the program are described in more detail in

a

ppendix 5

- B

.

5.7.2 Supplemental Spr eadsheet Models

Spreadsheet analysis tools were developed and used as part of some of the energy model development and calculations in order to (1) calculate airside heat transfer performance of spine fin evaporators, (2) determine appropriate composite i nsulated wall thermal resistivity when calculating cabinet thermal performance using vacuum panel insulation

, (3) adjust of ERA analysis results of vacuum panel design options , and (4) calculate the

condenser fan energy consumption for condensers serving t wo refrigeration circuits.

.

Spine fin evaporator airside heat transfer performance was calculated using a spreadsheet. Equations for the model were based on the work of Holtzapple and Carranza. 7

, 8

When modeling use of vacuum insulation panels (VIPs), the cabinet walls or door have two regions of differing thermal resistivity. Average values of resistivity were calculated The ERA heat exchanger models (the ERAEVAP program) provide d heat transfer coefficients for refrigerant

- side heat transfer in the two

- phase and superheated regimes. Using these values, the spreadsheet model provided the overall heat transfer coefficients for the two regimes of the evaporator and the effective heat transfer area, which were the input s for

DOS version of ERA.5

- 42 and entered into ERA to model these composite insulation systems. In addition, as

discussed in section 5.8.3 , energy benefits reported by manufacturers using vacuum panels have generally been less than calculated in this fashion by ERA. Adjustments were made to the ERA results to compensate for this difference. This is discussed in greater

detail in section 5.8.3

.

For some product classes (e.g. 3A

- BI, 5

- BI, 7

- BI), the representative products selected for energy modeling featured dual

- loop refrigeration systems

, i.e. two s eparate refrigeration circuits shar ing a single dual

- circuit condenser with a single fan. ERA calculates energy use for dual

- loop systems, but assumes that these systems have no

common components. In order to model the dual

- circuit condenser s of the select ed products

, the condenser model for each refrigeration system was based on only that portion of the condenser tubing and fins allocated to it. Because of overlap of system operation, proper calculation of condenser fan run time was not possible using ERA. Instead, the condenser fan run time and power input was calculated separately, taking into consideration the run time of each of the two systems. This calculation assumed that there was no correlation between one system’s duty cycle and whether the other system was running.

.

5.7.3 Development and Calibration of ERA Current Energy Test Models

ERA modeling during the engineering analysis involved the following three phases.

**•** Modeling of existing reverse

- engineered products based on the current energy test procedure.

**•** Adjustment of models to represent baseline products tested under the expected

revised test procedure. DOE made some adjustments in this step in product designs to adjust from the reverse

- engineered product configuration to the desired configurat ions to represent the analyzed product classes (e.g. adjustment of efficiency level, conversion to French doors, addition of a through

- the

- door ice service feature)

.

**•** Iterative modeling with multiple series of adjustments to calculate the energy savings

wh ich can be achieved with different combinations of design options.

This section focuses on the first phase of the ERA modeling work, namely establishing models for the teardown products based on the current energy test procedure. These

models were later ad justed to represent baseline energy use under the new test procedures, and these models were used subsequently to calculate energy savings potential. The baseline analysis results were compared with available data to assure that the models provide accurate representation of product energy use. This section discusses the creation and calibration of the ERA energy models, the metrics which were compared, and the adjustments which were made in some cases in order to improve

calibration.

Input data for energy modeling was collected during the reverse engineering phase of the project. Collection of this data is discussed in Section 5.5.3.2 above. For products which5

- 43 DOE a rranged to have energy tested, additional information was available for certain model parameters, such as defrost heater on times, compressor run time between defrosts, evaporator exit superheat, etc. Performance data was obtained from compressor vendors

f or the compressors used in the teardown products, as well as for compressors which

could be considered as alternative options to reduce energy use.

Initial energy models were created, and the models were subsequently adjusted to provide a best match with available data for product performance. Key sources of information used for calibration of the energy models were the product EnergyGuide labels and data from energy tests carried out for a number of the reverse

- engineered units (Section 5.5.5 )

. Energy test parameters besides energy use which wer e examined include compressor running power input, duty cycle, evaporating temperature, and condensing temperature. Since not all ERA input parameters can be determined definitively based on available information, some of the inputs were adjusted within re asonable ranges in order to provide good matches between model results and other performance indicators. It is recognized that energy levels reported in the EnergyGuide can be conservative to provide margin for variation in the production process. Hence, i t is expected that ERA results would more likely be lower than the EnergyGuide value than higher.

In some cases the directly modeled energy use was initially significantly lower than actual product energy use

. In some of these cases in which the system ope rating parameters could be well calibrated based on test data, DOE attributed the high actual duty cycle and energy use to high actual cabinet thermal load

. A number of factors could possibly explain such results, including greater impact than expected of thermal short circuits associated with wiring harness es and other design details, excess gasket region load, and consistently lower insulation thermal performance than expected. A consistently underperforming compressor model could also explain such a disc repancy, but DOE concluded that this explanation is less likely than factors which would increase cabinet thermal load. Hence, for these cases, additional cabinet load was added to result in an energy use and compressor duty cycle which provided reasonable agreement with

the available data. The side

- mount refrigerator

- freezers (product classes 4 and 7) were adjusted using this approach , for example

.

In some cases

, DOE concluded that ERA was not modeling particular heat exchanger s properly. DOE a djust ed the calculated effective surface area of the heat exchanger upwards or downwards to represent heat transfer performance different than modeled to achieve more reasonable match of evaporating or condensing temperatures , as measured during energy test work

. DOE made s imilar adjustments in some cases to evaporator pressure drop to adjust for an apparent discrepancy between measured evaporator surface temperature and compressor power input.

The ERA analysis results after adjustments of the model input for the seven key product classes analyzed are compared with the EnergyGuide data and Energy test results in Figure 5.7.1 for refrigerator

- freezers

, in Figure 5.7

. 2 for standard

- size freezers

, and in Figure 5.7.3 for compact refrigerators and freezer s

. Energy testing was performed on a limited group of freezers and compact products: one upright freezer, one chest freezer,5

- 44 and one compact refrigerator. For these figures, the energy use of the freezers has been adjusted consistent with the energy test b y applying the 0.85 correction factor for upright

freezers and the 0.7 correction factor for chest freezers. The energy models are within a few percent of the EnergyGuide label ed energy

.

Figure 5.7

. 1 ERA Analysis for Refrigerator

- Freezers Compared with EnergyGuide Labels and Energy Test Measurements 0.0 0.5 1.0 1.5 2.0 2.516 ft3 Top Mount21 ft3 Top Mount21 ft3 E* Top Mount18.5 ft3 E* BottomMount25 ft3 E* BottomMount 125 ft3 E* BottomMount 222 ft3 Side Mount26 ft3 Side Mount26 ft3 E* SideMountDaily Energy Use (kWh/day) ERA Energy Guide Energy Test5

- 45 Figure 5.7

. 2 ERA Analysis for Freezers Compared with EnergyGuide Labels and Energy Test Measurements

Figure 5.7

. 3 ERA Analysis for Compact Refrigerators and Freezers Compared with EnergyGuide Labels and Energy Test Measurements 0.0 0.5 1.0 1.5 2.0 2.514 ft3 Upright Freezer20 ft3 Upright Freezer20 ft3 E* Upright Freezer15 ft3 Chest Freezer15 ft3 E* Chest Freezer20 ft3 Chest FreezerDaily Energy Use (kWh/day) ERA Energy Guide Energy Test

0.0 0.2 0.4 0.6 0.8 1.0 1.21.7 ft3 CompactRefrigerator4 ft3 CompactRefrigerator4 ft3 E* CompactRefrigerator3.4 ft3 Compact ChestFreezer7 ft3 Compact ChestFreezer 17 ft3 Compact ChestFreezer 2Daily Energy Use (kWh/day) ERA Energy Guide Energy Test5

- 46 5.7.4 Adjustments to Energy Models to Represent Baseline Products Tested Under the Prop osed Test Procedure

This section discusses adjustment of the calibrated baseline ERA models to address two issues: (1) modification of some of the modeled product designs so they represent

baseline

- efficiency products of the desired product classes , and (2 ) adjustment for the proposed test procedure changes.

Modifications were made to some of the modeled product designs so that they represent baseline products of the product classes of interest with appropriate typical characteristics. The changes made are discussed in the following paragraphs.

Some of the teardown products purchased were not available as baseline

- efficiency products, i.e. products with energy use that is minimally compliant with the current energy standards. This was true primarily for prod uct class 5, refrigerator

- freezers with

automatic defrost and bottom

- mounted freezers without TTD ice service. As indicated

above in Table 5.5

. 2 , one of these product s had energy use roughly 15% below the maximum allowable energy use (the former ENERGY STAR level), and the others had energy use at 20% below (the current ENERGY STAR level). In order to allow the engineering analysis to examine the cost associated with t he efficiency improvement

from the 0% to the 15% and 20% efficiency levels, DOE created baseline model s for product s which would be minimally compliant with the standards. DOE did t his by carrying out the analysis in reverse, removing the less cost

- effecti ve design options first, in order to achieve calculated energy levels consistent with the baseline energy standard.

For product class 5, DOE established baseline models represent ing products with French

Doors. Comments made at the framework meeting and submitted to DOE as part of the framework comment period addressed this issue, as discussed in chapter 2 of the preliminary TSD . Most of the teardown products were purchased prior to the framework meeting, so DOE was not a ble to consider this issue when selecting these products. The two French Door products (see Table 5.5

. 2 ) were purchased later, to allow investigation

of the different design details for these products. However, these French Door products are not product class 5, since they have TTD ice service. During the preliminary manufacturer interviews, DOE learned that more than half the sales of product class 5 currently have Fre nch Doors. As a result, DOE used a French Door design as the basis for the engineering analysis for this product class. Because n either the products initially purchased for teardown

, nor the French Door products purchased later

, strictly fit the

intended b aseline design configuration, DOE made adjustments to establish product class 5 French Door designs for the engineering analysis. DOE did this for one of the 25 ft 3
product class 5A reverse engineered units by “removing” the TTD features

, and for the

18.5 ft 3 product by “ adding ” French Door design features

. Additional detail regarding

d evelopment of the product class 5 French Door models is discussed below.

French door refrigerator

- freezers generally require electric anti

- sweat heaters to prevent

condensat ion of moisture on the gaskets and/or flip

- mullions which seal between the French doors, since refrigerant

- line anti

- sweat heating is not possible in this region. DOE5

- 47 set t he electric anti

- sweat heater average power input to 2.5 W for the 18.5 ft 3 model and

2 W for the 25 ft 3 model . These averages are based on a 10W heater load cycling with the compressor, and averaging to account for test procedure treatment of electric anti

- sweat heaters ( energy use is the average of tests with the anti

- sweat heat er on during one test and off during another )

. The compressor duty cycle was close to 40% for the 25 ft 3 m odel

and close to 50% for the 18.5 ft 3 model. These loads were not present for the models representing the reverse engineered products because the 18. 5 ft 3 product had a single

door and because DOE understands that the 25 ft 3 product was tested with the anti

- sweat heater not energized.

DOE adjusted the per

- length g asket load for the fresh food compartment s for the preliminary analysis energy model s of p roduct class 5 to account for the additional gasket region length associated with the French Doors

. The modified Windows version of the ERA model used in the NOPR analysis did not require this adjustment, since it includes a provision to indicate that the product has French D oors.

The freezer compartment of the 25 ft 3 product class 5A teardown model had two drawers. Hence, the preliminary analysis energy model representing this product as received incorporated an increase in the freezer compartment per

- le ngth gasket load to account for the increased gasket length. The Windows version of the energy model

allows indication that the freezer has a double drawer. When establishing the baseline ERA model for subsequent design option analysis, DOE readjusted the model for consistency with a single

- drawer design. DOE took this step in order to establish a baseline model representing a single freezer drawer.

DOE eliminated t he loads associated with the TTD ice system of the 25 ft 3 product class

5A baseline to create the 25 ft 3 product class 5 with French Doors model. This includes the loads of the ice chute penetration, as well as the loads associated with the duct which conveys cold freezer air to the ice maker compartment. Additio nal loads and energy use associated with heaters in the region of this duct never entered into the model, because DOE understands that the teardown product was tested in a fashion which prevented

activation of these heaters.

After adjustment for the design features for consistency with the desired feature set to represent the product class, D OE selected d ifferent compressor efficiency levels and/or

different fan motor types for the baseline energy models in order to achieve modeled energy use consistent wit h the energy conservation standard.

DOE obtained the product class 4 teardown unit (refrigerator

- freezer with automatic

defrost and side

- mounted freezer without TTD ice service) with the understanding that it

had TTD ice service. To address this discrepanc y in the energy modeling work, t he initial baseline model for the product was modified to represent product class 7 (refrigerator

freezer with automatic defrost and side

- mounted freezer with TTD ice service). DOE did

t his by adding load and additional elec tric anti

- sweat heat appropriate for the TTD

feature.5

- 48 DOE conducted t he engineering analysis based on the expected revised energy test procedure, which includes modified cabinet temperatures as discussed in Section 5.4.2

. After calibration of the ERA models with EnergyGuide and energy test data according to the current energy test procedure, and after the adjustment to the models to better represent the products unde r investigation as described above, DOE adjusted the ERA models to represent operation under the new energy test procedure. This adjustment did not apply to the freezers, since there are no proposed changes to the freezer compartment temperatures. The calc ulated impact of the compartment temperature changes on the

energy use is discussed in Section 5.4.2.1 and is shown in Table 5.4

. 8 of that section. This calculated impact of the temperature changes is fairly consistent with the results provided by AHAM, although it is less than the impact measured during DOE testing of

t he teardown products.

5.8 DESIGN OPTIONS

After conducting the screening analysis described in c hapter 4, DOE considered the remaining technologies in the design option analysis. Table 5.8.1 l ists the design options

DOE considered for each product classes. Some design options are only applicable to certain types of equipment. Following the table is a description of how DOE applied each of the design options during the engineering analysis. See c hapter 3 for background descriptions of the technologies.5

- 49 Table 5.8

. 1 Design Options by Product Class

Design Option PC3 PC5 PC7 PC9 PC10 PC11 PC18

Increased Insulation

Thickness 

1 in 

1 in 

3/4 in 

3/4 in

Isobutane Refrigerant 

Vacuum

- Insulated

Panels       

Improved Compressor Efficiency       

Variable

- Speed Compressor       

Increased Evaporator

Surface Area      

Increased Condenser

Surface Area     

Forced Convection

Condenser 

Brushless DC Evaporator Fan    

Brushless DC

Condenser Fan    

Adaptive Defrost    

Variable Anti

- Sweat

Heater Control  

5.8.1 Increased Insulation Thickness

Manufacturers stated during discussions that the potential for insulation thickness

increases is very limited for many product classes. Greater insulation thickness would result in either decreased interior volumes, increased exterior dimensions, or some combination of both. They cited the high percentage of the market associated with replacements and the fixed sizes available for replacement refrigerators in consumers’ kitchens. The 1995 TSD supporting the 1997 refrigerator energy conservation standard final rule provided information regarding the reduction in served market associated with

exterior size increases. 9

There is some more flexibility in the potential to increase insulation thickness for freezers, since freezers are less likely to be placed in fixed

- dimension spaces in kitchens. Reduction in internal volume is undesirable because this is a key selling feature. As a result, DOE did not consider insulation thickness increase in the analysis for standard

- size refrigerator

- freezers.5

- 50 DOE consider ed insulation thickness increase s of up to 1 inch for standard

- size freezers

, with a limitation on m aximum wall thickness of 3.5 inches

.

Compact refrigerators often have limitations on potential for size increase. However, many compact refrigerator products current ly have insulation thickness no more than an inch. The potential energy benefit of insulati on thickness increases for these products is significant. Hence, DOE considered increases of up to 3/4 inch for these products. DOE considered increase up to 3⁄4 inch also for compact freezers.

A manufacturer’s approach to implementing insulation thickness i ncrease would likely

involve a combination of reduced internal volume and increased external dimensions

. DOE used just external dimension increase

, to assure that the product size (represented by adjusted volume) and the associated baseline energy use for the product did not change for different groups of design options

.

DOE calculated c osts associated with insulation thickness increases using the manufacturing cost model. As discussed in Section 5.6.6 , DOE applied a conservative treatment of depreciation costs in which it added the additional cost equal to the

Greenfield depreciation cost per product in order to reflect the likely build of a new production facility . DOE assumed that the depreciation cost would be incurred for any increase in insulation thickness. However, DOE allowed for increases in the door thickness without applying depreciation costs associated with the cabinet, and vice versa. The development o f these depreciation costs is discussed in section 5.6.6.2 above.

5.8.2 Isobutane Compressor

C omments received at the preliminary public meeting and during the subsequent comment period called for use of alternative refrigerants as a design option. As mentioned in Chapter 3, R

- 600a (isobutane) is used predominantly for residential refrigeration products in Europe, and it is also use d extensively in Asia. Isobutane has the potential for higher efficiency tha n the HFC

- 134a refrigerant that is used in residential refrigeration products in the U.S . DOE did not consider isobutane as a design option in its preliminary analyses because it i s a hydrocarbon

, is subject to charge limits by UL, and is not currently on EPA’s Significant New Alternatives Program (SNAP) list of allowed refrigerant alternatives to CFCs and HCFCs. DOE has considered isobutane in its NOPR analysis b ecause EPA has prop osed to add isobutane to the SNAP list

. 75 FR 25799 (May 10, 2010) However, the EPA proposal allows use of isobutane under a charge limit ation of 57 grams for residential refrigeration products. While this quantity of refrigerant is not

sufficient for mos t residential refrigeration products manufactured for the U.S. market without significant redevelopment of heat exchangers, it is sufficient for use in c ompact refrigerator s. Hence, DOE applied this design option only to compact refrigerators (Product Clas s 11).

DOE conducted a theoretical analysis across a range of evaporating and condensing temperatures to compare the performance of isobutane refrigerant with HFC

- 134a. DOE5

- 51 conducted t his analysis using the REFPROP database developed by NIST 10

**•** Equal compressor efficiencies for both refrigerants (ratio of power input for adiabatic isentropic compress ion to actual power input). , with the

fo llowing assumptions.

**•** Liquid and return gas temperatures both 90  ̊ F.

The results are shown in Figu re 5.8

. 1 below

.

Figure 5.8

. 1 Energy Benefit of Isobutane Compared with HFC

- 134a

DOE also obtained information regarding the efficiency improvement potential using isobutane from compressor vendors and manufacturer discussions. Based on the results of its theoretical analysis and the additional information received , DOE assigned a five percent energy benefit to the conversion to isobutane compressors . DOE implemented this in the ERA analysis by reducing the compressor power multiplier from 1.0 to 0.95

for the HFC

- 134a compressor model

.

Based on discussions with compressor vendors, DOE c oncluded that the cost impact associated with use of isobutane compressors is negligible. Further, DOE concluded that the cost impact on the remainder of the sealed system is also negligible. DOE considered a cost increase of $1 per product for this design option associated with plant and equipment modifications to allow safe charging of isobutane refrigerant. DOE also5

- 52 considered cost increases for use of sealed electrical components in order to safeguard against electrical sparks within the electrical comp onents providing an ignition source in case of a refrigerant leak. DOE used in its analysis cost increases of $4 per product for the baseline simple thermostatic control and an additional $4 to address additional

electrical content if a variable

- speed comp ressor system is used in the product.

5.8.3 Vacuum

- Insulated Panels

Vacuum

- insulated panels (VIPs) increase efficiency by significantly increasing the thermal resistivity of the cabinet walls, and therefore decreasing heat penetration into the

cabinet. DOE con sidered the addition of 1⁄2

- inch thick VIPs to the walls and doors of the cabinet for all product classes, and the remainder of the insulation thickness was filled with PU foam. Data for VIP thermal characteristics and costs were provided by va

- Q

- tec

, a VIP manufacturer . The cost information was confirmed through discussions with manufacturers. In these discussions, manufacturers pointed out that edge effects can result in actual performance significantly less than predicted. However, DOE considers

that therm al performance estimates based on the v a

- Q

- tec technology are more accurate than for other VIP options because this technology has a more modest mid

- panel thermal resistance and a significantly thinner metallic layer than other options. The mid

- panel

condu ctivity of this VIP technology is 3.5 mW/m

- C (0.024 Btu

- in/sqft

- hr

-  ̊F). 11

As mentioned in Section In contrast, the conductivity of PU foam is in the range 0.13 to 0.14 Btu

- in/sqft

- hr

-  ̊F.

5.7.2

, DOE modeled the thermal performance of composite walls including VIPs using composite wall average thermal resistivities. The composite wall resistivity R

w was calculated as follows.



## ( **) (**  **)**

PU VIP PU PU VIP VIP

w t t t R t R R

**+ +** 

**=**

Where R VIP and R PU are the thermal resistivities of the VIP and the PU foam, and t VIP and

t PU are the thicknesses of the VIP and PU foam layers. The thermal resistivities for the

materials are the inverses of the conductivities.

DOE analysis using ERA of cabinet load reduct ion achievable through the use of VIPs using this analysis approach is consistent with analysis carried out by va

- Q

- tec and also consistent with prototype testing using VIP technology. The reduction in cabinet load possible using VIPs for a refrigerator

- fr eezer with typical wall thickness is roughly 30%

, which is consistent with results reported by Electrolux for use of vacuum insulation in

freezers

. 12 However, during NOPR phase discussions with manufacturers, DOE learned

that different manufacturers have ha d widely varying levels of success in applying VIPs to refrigeration products. The levels of performance benefit reported by manufacturers ranged roughly from 0 to 100 percent of the levels predicted by the ERA analysis. DOE used a performance degradation factor of 50% in its NOPR analysis to account for this variation in experience.5

- 53 The quantity of VIP that can be added to the cabinet is limited by the structural design requirements. Based on discussions with manufacturers, DOE applied a limit of 50% of

th e cabinet surface area in its analysis

. DOE allowed full (100%) coverage of door

surface area.

The following cost information, which v a

- Q

- tec provided and/or which DOE developed based on subsequent discussions, formed the basis of the applied costs for VIPs.

**•** Average panel cost $3.08/ft 2 at 1.2 cm thickness.

**•** Fill cost as a percent of panel cost 60%.

**•** Added glue cost for adhering the panel to cabinet surfaces 5% of panel cost.

**•** Cost savings associated with displaced PU foam 2.5% of panel cost. In order to allow calculation of costs for other VIP thicknesses, DOE considered the fill

cost to be proportional to the thickness, and the remaining cost per square foot to be constant. In addition, DOE calculated direct labor cost associated with applica tion of the panel to cabinet and door surfaces based on the $ 24 /hr wage rate (including fringe benefits) discussed in section 5.6

, and time for application of 10 m inutes for a compartment and 1 minute for a door. The direct material and labor costs associated with use of the VIP must be adjusted to account for capital expenses and overhead associated with incorporation of VIPs into the production process. Because th e material cost of VIPs is currently high in relation to the costs of other materials used in the manufacture of refrigerators and freezers, the cost adders for overhead and depreciation discussed in

Section 5.6.6.1 and shown in Table 5.6

. 3 were divided by two in order to provide more reasonable representation of these costs for this technology. Hence, DOE used the following percent additions: 11.7% for standard

- size refrigerator

- freezers, 14.2% for

standard

- size freezers, and 19.6% for compact refrigerators.

See a ppendix 4

- A for information developed in response to preliminary a nalysis phase comments questioning the ability of VIP suppliers to meet the demand for VIPs that might be required by potential DOE standards.

5.8.4 Improved Compressor Efficiency

DOE considered the substitution of higher efficiency compressors for all product c lasses. DOE often applied t his design option in two stages if there was a large gap between the baseline energy efficiency ratio (EER) and the maximum available EER for a given compressor capacity. DOE acquired compressor performance data from compressor

v endors for use in the energy analysis, including capacity and power input for the applicable range of combinations of suction and discharge pressure conditions. As an example of the potential for improvement, standard

- size baseline refrigerator

- freezers

ty

pically use compressors with a rated EER of 5.0 to 5.5 Btu/h

- W. DOE considered improved EERs of 5.75 through 6.25 Btu/h

- W.

DOE considered improved

- efficiency compressors with EER s up to roughly 6.25 Btu/h

W for standard

- size refrigerator

- freezers. The range of available compressor efficiencies

is illustrated in Figure 5.8

. 2 below.5

- 54 The peak available efficiency level does not vary signifi cantly for the range of capacities typical for standard

- size refrigerator

- freezers (600 to 800 Btu/h ). However, efficiency level drops off considerably for smaller capacity compressors that are generally used in compact refrigerators and freezers.

Figure 5.8

. 2 Compressor Efficiency Data

DOE received e stimates for increased cost of higher

- efficiency compressors used for

standard

- size refrigerator

- freezers and standard

- size freezers from compressor vendors.

T hese estimates were also discussed with manufacturers. Based on this information, DOE developed a curve for the cost premium associated with higher efficiency compressors.

This curve is shown in Figure 5.8

. 3 below. 0 1 2 3 4 5 6 7

0 200 400 600 800 1000EER (Btu/h-W)

Capacity (Btu/h) Single Speed

Variable Speed at Lowest Speed

Variable Speed at 3000 rpm5

- 55 Figure 5.8

. 3 Incremental Cost for Single

- Speed Compressors for Standard

- Size

Products

When considering compressor efficiency improvement for standard

- size products, DOE used the performance data of specific higher

- efficiency compressors in the energy analysis. DOE selected t he alternative compressors to have nearly the same capacity as

the baseline compressors, in order to assure nearly identical performance except for compressor power input.

In the analysis of compressor efficiency improvements for compact products, DOE used an approach that addressed the reduction of compressor efficiency as the capacity is

reduced. DOE developed a curve roughly representing the maximum available EER for smaller compressors . This curve is compared in Figure 5.8. 4 below with the data for commercially available compressors.5

- 56 Figure 5.8

. 4 Efficiency Curve for Low Capacity Compressors

To model energy use of higher efficiency low

- capacity compressors, DOE reduced the power input data for the baseline compressor by a selected factor so that the rated EER matches the maximum EER of the above curve. The baseline compressors of the products analyzed had EERs typically 0.5 to 1 Btu/h

- W lower than the maximum curve shown in the figure above.

DOE received vendor cost estimates for efficiency improvements for low

- capacity compressors. DOE also received information on the typical cost increase du ring discussions with manufacturers of products which use these compressors. A representative cost estimate of $10 per 1.0 Btu/h

- W efficiency improvement was used in the analysis.

5.8.5 Variable

- Speed Compressor

Variable speed compressors (VSC s ) operate at multi ple speeds to allow variation of compressor capacity. They also generally use permanent magnet motors, which can be

more efficient than induction motors for the power level required for residential refrigerator compressors. They improve efficiency by (1) u se of the higher

- efficiency motor technology, (2) increasing the operating effectiveness of heat exchangers because there is lower mass flow being cooled or warmed by a fixed

- size heat exchanger, and (3) reducing cycling losses by reducing the number of cy cles. VSC technology has been 

## 0 1 2 3 4 5 6

0 100 200 300 400 500 600EER (Btu/h-W)



## Capacity (Btu/h) Compressor Data

Maximum EER Curve5

- 57 available for many years and a number of refrigerator

- freezer products currently use the technology. Currently nearly all of these products use Embraco VSCs. DOE obtained compressor performance data for the range of sizes of E mbraco VSCs. This information was used in the energy analysis. DOE selected VSC s so that the VSC capacity when operating at 3

, 000 rpm nearly match ed the capacity of the replaced single speed compressor. The lowest available speed for the Embraco VSCs is 1, 600 rpm. The compressor typically cycles at the low speed to maintain internal set points for energy test conditions. DOE primarily used the performance data for 1,600 rpm in the energy analyses. The performance of VSCs at the lowest speed and at 3,000 rpm is shown in Figure 5.8

. 2 above.

In order to maximize the energy benefit of a VSC, a design needs to address the potential increase in energy use associated with longer fan run time. The increase in fan energy use can negate much of the reduction in compressor energy use. As a result, it is often

necessary to use brushless DC fan motors. In addition, brushless DC fan motors can operate at different speeds , dependi ng on the design configuration. DOE is not aware of brushless DC fan motors designed for 120 VAC power input at representative capacities for refrigerator duty that allow adjustment of fan speed, although such a design should be viable. Most designs incorp orating fan speed control use DC

- input power for the fans and require a control system which can provide the DC power and vary it to adjust fan speed. DOE’s analysis did not involve optimization of fan speed and power with the variable speed compressor sys tem. Instead, DOE selected a fan speed to achieve roughly 50% power input , using t he cube law for fan power to calculate power input ( The cube law states that for a given fan and air flow system geometry, air flow is proportion al to fan speed and power inp ut is proportional to the cube of fan speed )

.

DOE obtained estimates of the cost increase for s witch ing to VSCs from Embraco, and

from discussions with manufacturers. An average of the estimates of this cost increase provided by the manufacturers weighted by manufacturer market share is near $5 6 . This includes the compressor and its motor controller, but does not include additional changes which might be required to implement a variable speed system. DOE used the $5 6 cost increase in the analyses. Additiona l costs associated with conversion of a refrigeration system to variable speed operation are associated with a switch to brushless DC fan motors and the use of a control system sophisticated enough to provide adequate or optimized control. The Embraco VSC design includes a control system that can be used with a conventional mechanical thermostat. This system has been implemented in a commercially available freezer. 13 The Embraco control adjusts speed based on the response of the mechanical thermostat. DOE co nsiders that this approach is suitable for products with manual defrost. For products with automatic defrost and especially adaptive defrost, it is not reasonable to expect that the Embraco system alone would be

suitable. DOE included in cost estimates an additional $ 30 for addition of an electronic control system for products with automatic defrost . For product classes for which a significant portion of current models already have electronic control (product classes 5 and 7), analysis was conducted for an electronic control unit and a mechanical control

unit. DOE also considered use of brushless DC fan motors necessary when switching to VSCs. However, the DOE analysis incorporated switch to brushless DC fan motors as a5

- 58 design option earlier than VSCs in the progressive layering of design options, b ecause brushless DC fan motors are more cost effective than a full conversion to variable speed.

DOE also considered the additional standby power consumptio n associated with the electronic control board required for conversions to variable speed operation . DOE attributed 1.5 W of standby power to electronic controls. Use of electronic controls with a VSC makes dedicated controllers for adaptive defrost and va riable anti

- sweat unnecessary. In cases where a VSC was added after either the adaptive defrost or variable

anti

- sweat design options were utilized, DOE removed the 0.5 W of standby power

assumed for each of these self

- contained controllers

. The costs of t he self

- contained controllers were then also removed, assuming these design options preceded implementation of VSCs in the analysis

.

DOE also adjusted the compressor run time between defrosts when applying a VSC

. Since the compressor duty cycle typically i ncrease s significantly when switching to a

VSC , the appropriate compressor run time between defrosts should increase to maintain equivalent defrost performance. DOE increased this parameter in the ERA model to achieve the same defrost frequency when applyi ng the VSC design option.

5.8.6 Increased Evaporator Surface Area

The evaporator is necessary for transferring heat from the cabinet to the refrigerant. Larger surface area allows the heat transfer to occur more efficiently. DOE considered an increase in evapo rator surface area for all products analyzed. In some cases the size increase was limited by available space . This was true especially for the chest freezers and compact refrigerato rs. DOE reviewed the space available in the teardown products

that served as the basis for the energy modeling to determine how much size increase would be possible without requiring significant modifications to the cabinet design . In some cases, DOE determined that no size increase was possible.

In the preliminary analyses , ev aporator size increases were implemented in the energy analysis for forced convection evaporators through the use of adjustment factors applied

to the overall UA factor ( heat transfer coefficient times surface are a ) and to the refrigerant side pressure dro p. These factors were proportional to the intended heat exchanger surface area increases. DOE modified t his methodology in the NOPR stage

, using instead direct adjustment of the input parameters describing the evaporator

geometry

. DOE increased either the number or length of tube rows as appropriate for the space available for size increase. In cases where DOE increased the length of the evaporator in the direction of airflow, it also increased the fan power input by a factor equal to half the evaporator size increase (this reflects evaporator pressure drop increase proportional to the size increase and an assumption that the evaporator pressure drop represents half of the system airside pressure drop).

Treatment of the cost of the evaporator size increase depended on the evaporator type. For forced convention and roll bond evaporators, DOE adjusted the baseline costs of the5

- 59 evaporators upwards by the size increase factor. For cold wall evaporators, DOE directly

calculated the cost i ncrease using the manufacturing cost model by increas ing the tube lengths and materials associated with providing good tube/liner thermal contact.

5.8.7 Increased Condenser Surface Area

The condenser transfers heat from the refrigerant to the ambient air. Larger surface area allows the heat transfer to occur more efficiently. DOE considered increase in condenser surface area for all products analyzed. In some cases the size increase was limited by available space. This was true especially for hot wall or static c ondensers. DOE reviewed the space available in the teardown products that served as the basis for the energy modeling to determine how much size increase would be possible without requiring significant modifications to the cabinet design. In some cases, DO E determined that no size increase was possible.

In the preliminary analyses, condenser size increases were implemented in the energy analysis for forced convection condensers through the use of adjustment factors applied to the overall UA factor (heat tr ansfer coefficient times surface are a s) and to the refrigerant side pressure drop. These factors were proportional to the intended heat exchanger surface area increases. DOE modified this methodology in the NOPR stage, using instead direct adjustment of th e input parameters describing the condenser geometry. DOE increased either the number or length of tube rows as appropriate for the space available for size increase. In cases where DOE increased the length of the condenser in the direction of airflow, it also increased the fan power input by a factor equal to the condenser size increase (this reflects condenser pressure drop increase proportional to the size increase and an assumption that the condenser pressure drop represents all of the system airside pr essure drop).

Treatment of the cost of the condenser size increase depended on the condenser type. For forced convention and static condensers, DOE adjusted the baseline costs of the condensers upwards by the size increase factor. For hot wall condensers, DOE directly

calculated the cost increase us in g the manufacturing cost model by increas ing the tube lengths and materials associated with providing good tube/shell thermal contact.

5.8.8 Brushless DC Fan Motors

Brushless DC fan motors are more efficient than th e shaded pole motors which are often used in baseline model refrigerators.

For the 1997 refrigerator energy conservation standard final rule, DOE analysis included

reduction of motor power input from initial values in a rang e from 8 to 12 W for shaded pol e fan motors to 4.5 W for brushless DC motors. 9 This is a reduction in power ranging

from 44 to 57%.

The fan power input measured for the teardown products are summarized in Table 5.8

. 2 below. For the baseline/ENERGY STAR product pairs, the table presents power input for5

- 60 both sets of each applicable fan. The fan motor power reduction associated with the switch to brushless DC motors based on this data is in the range 60% to 65%.

Table 5.8

. 2 Teardown Product Fan Power Inpu t

Product Evaporator Fans Condenser Fans

Shaded Pole Brushless

DC Shaded Pole Brushless

DC

21 ft 3 Top

- Mount** 5.7, 6.1 NA 9.4 3.3

26 ft 3 Side

- Mount** 5.6, 5.8 NA 8.5 3.4

25 ft 3 Bottom Mount 1 6.5 NA NA 3.7

18.5 ft 3 Bottom Mount 6.2 NA NA 3.8

25 ft 3 Bottom Mount 2 NA 3.25* NA 2.2*

22 ft 3 Side

- Mount NA 3.25* 9.1 NA

20 ft 3 Upright Freezer** 11.5 4.5 NA NA

14 ft 3 Upright Freezer 7.4 NA NA NA

*DC

- input fan. The listed wattage is nominal. **Data provided for a baseline/ENERGY STAR product pair.

DOE also obtained information on typical fan motor power reduction associated with a switch to brushless DC motors during discussions with manufacturers. The responses indicated that the reductions would be more modest than suggested by the 1995 TSD

values or the measurements of teardown products. DOE selected a compromise power reduction of 50% when the possible reduction was not already clearly illustrated by the

measurements of the baseline/ENERGY STAR teardown product pairs under analysis.

DOE obtained i ncremental cost estimates for the switch to brushless DC motor s through

discussion with Matsushita , a key vendor supplying these motors, and through
discussions with manufacturers. DOE used incremental cost estimates of $ 4.30 for
condenser fans and $ 4.10 for evaporator fans.

5.8.9 Adaptive Defrost

An adaptive defrost system adjusts the time interval between defrosts based on some indication of the need for defrost. A common indicator is the length of time required to complete the previous defrost. Other indicato rs could include the number of door openings or a measurement of ambient humidity. DOE considered this design option for product classes which have automatic defrost (product classes 3, 5, 7, and 9). The ERA model allows input of compressor run time betwee n defrost. To model this option, DOE increased the compressor run time between defrosts to 24 hours, as compared to the typical range for baseline products of 10

- 15 hours. For the preliminary analyses, DOE used a compressor run time between defrosts of 38 hours. The 38 hours is the default

time interval specified by the test procedure assuming default values of the minimum and maximum compressor run intervals of 12 and 84 hours, allowed if an algorithm does not have specific values of these parameters

. Manu facturer interviews conducted during the NOPR stage suggested that minimum and maximum intervals of 6 and 96 hours a re more5

- 61 reflective of adaptive defrost systems . Using these minimum and maximum compressor run values in the test procedure yields the 24 ho urs used in the NOPR analyses.

In cases in which DOE applied adaptive defrost in the analysis to a product that did not already have electronic controls, DOE assumed use of a standalone adaptive defrost

controller. DOE used a standby power consumption of 0.5 W for th is type of controller. Based on discussions with manufacturers, DOE used an incremental cost of $8 in the energy analysis for adaptive defrost , if a standalone adaptive defrost controller was used

. Refrigerators which already have electronic co ntrol can implement adaptive defrost with programming changes which incur no per

- unit cost.

In cases where both adaptive defrost and variable speed compressor design options were analyzed, the cost of the adaptive defrost was eliminated, because the intro duction of electronic controls would make use of a standalone adaptive defrost controller

unnecessary.

5.8.10 Variable Anti

- Sweat Heater Control

Variable anti

- sweat heater control adjusts the time

- average wattage of an electric anti

sweat heater based on ambient temperature and humidity conditions so that all surfaces are just above the ambient dew point. DOE considered this option for bottom

- mount
French

- door refrigerator

- freezers ( product class 5) and for side

- mount refrigerator

freezers with TTD ice ( product cl ass 7)

. French

- door products generally use electric anti

sweat heaters in the region of the seal between the two fresh food doors to control condensation because warm liquid anti

- sweat heating cannot easily be applied in this region. Similarly, products with TTD ice generally use electric anti

- sweat heaters in the region around the ice dispenser opening. Most modern refrigeration products use warm liquid anti

- sweat heating in most regions susceptible to condensation of moisture (i.e. t he door gaskets and nearby door frame areas ) . However, the French Door and TTD dispenser regions mentioned above are typical exceptions . To model the energy use reduction associated with this design option, DOE established a curve representing the heater p ower input as a function of ambient humidity. DOE then calculated annual average electric anti

- sweat heater wattage based on the frequency distribution of humidity levels established in the GE waiver describing a test procedure for this control

scheme. 14

Implementation of variable anti

- sweat heater control requires use of a humidity sensor

and an ele ctronic controller which can adjust the time

- average heater wattage appropriately. For products which already have electronic control, DOE used the cost just of a humidity sensor. DOE used a cost of $9.48 for a Honeywell humidity sensor based on high

- quant ity pricing. Th e selected DOE curve s are based on power levels of 0W at 50 % RH and 9W

at 100% RH for product class 5 and 0W at 50% RH and 2W at 100% RH for product

class 7

.

15 No product currently exists which provides standalone

variable anti

- sweat heater control. However, DOE considers the $8 example of the standalone adaptive defrost controller to be representative of the incremental cost of such a product. DOE also considered standby power consumption for this design option in the5

- 62 revised NOPR analysis: 0.2 W of standby power consumption for the humidity sensor, and 0.5 W of standby power consumption for a self

- contained electronic controller. For

the case of a product already having electronic controls, DOE added just the 0.2 W standby power load associated with the sensor.

5.8.11 Forced Convection Condenser

A forced convection condenser can be more efficient than a hot wall condenser, because it enables more effective heat transfer from the refrigerant to the ambient air. DOE considered this option for upright freezers only (product class 9). This conversion involves the addition of a typical wire

- tube condenser, a fan assembly, wiring to power the fan, and a warm liquid anti

- sweat heating loop, and the elimination of hot wall tubing on the insulation side of the outer shell. In the case of the upright freezer products examined for the reverse engineering work, there was ample space underneath the cabinet for the condenser and fan assembly. In addition, these products incorporated hot gas condensate pan heaters. These heaters could be eliminated in a forced

- con vection arrangement, because the condenser heat and air flow of the forced convection arrangement would be sufficient to evaporate the condensate, as is generally done for refrigerator

- freezers. DOE used a net incremental cost of $ 12 for this conversion

,

a ssuming use of a brushless DC fan motor

— most of the cost of the added components would be saved through elimination of the hot wall condenser. DOE analyzed this design option both with shaded pole and brushless DC condenser fans. The option provided an

ene rgy benefit in combined design option analysis only when using the brushless DC fan

motor.

5.9 ENGINEERING ANALYSIS RESULTS

This section shows the incremental cost curves developed by DOE

.

5.9.1 DOE Cost

- Efficiency Curves

DOE generated cost

- efficiency curves for t wo product volumes in each of the seven analyzed freestanding (non

- built

- in) product classes based on combinations of individual design options. For the built

- in product classes, DOE analyzed one product of each class.

DOE normalized t he curves by converting to costs at specific efficiency levels (every 5% energy use reduction up to max tech ) for simplified downstream analysis.

Conversion of cost curves to the specified efficiency levels was complicated by the

characteristics of the de sign options required to provide further efficiency improvement. Some design options can be partially applied, while others cannot. For instance, t he cost for compressor efficiency improvement, illustrated in Figure 5.8

. 3 , varies as the efficiency varies. Because intermediate efficiency level compressors are generally available, the cost to achieve a portion of the efficiency improvement calculated in the energy model w ould be a portion of the total design option cost. However, i n some cases, such as implementation of a variable speed compressor, the design option cannot be partially implemented. For these cases, DOE applied the entire cost of the design option5

- 63 at the in termediate efficiency level, even though the design might overshoot th e efficiency level. This causes some of the incremental cost curves to have slope s which don’t increase monotonically.

The DOE incremental MSP costs are presented in the tables below: Table 5.9

. 1 for

standard

- size refrigerator

- freezers, Table 5.9

. 2 for standard

- si ze freezers, Table 5.9

. 3 for compact refrigeration products, and Table 5.9

. 4 for built

- in products. DOE analyzed two sizes of each product for all but the built

- in products. DOE averaged the results for each of these pairs of products to derive the final values presen ted in the tables.

Table 5.9

. 1 Incremental Manufacturer Selling Price Results for Standard

- Size Refrigerator

- Freezers

Efficiency Level (percent less than baseline energy use) Product Class
3: Refrigerator

f reezers

— automatic defrost with top

- mounted

freezer without TTD

ice service 5: Refrigerator

freezers

— automatic defrost

with bottom

mounted freezer

without TTD ice

service 7: Refrigerator

freezers

— automatic defrost

with side

- mounted

freezer with TTD

ice service

10% $11.81 $12.99 $9.90

15% $19.73 $21.64 $19.03

20% $73.13 $37.54 $42.45

25% $106.73 $89.52 $94.21

30% $180.46 $175.05 $206.85

Max Tech (%

-- Cost) 36%

-- $286.19 36%

-- $293.47 33%

-- $295.21

Table 5.9

. 2 Incremental Manufacturer Selling Pri ce Results for Standard

- Size

Freezers

Efficiency Level (percent less than baseline energy use) Product Class
9: Upright freezers with

automatic defrost 10: Chest freezers and all other freezers except compact freezers

10% $11.19 $6.44

15% $28.46 $14.68

20% $43.77 $24.19

25% $67.00 $62.33

30% $88.22 $79.17

35% $135.70 $127.07

40% $201.92

Max Tech (%

-- Cost) 44%

-- $348.61 41%

-- $223.555

- 64 Table 5.9

. 3 Incremental Manufacturer Selling Price Results for Compact Refrigerators and Freezers

Efficiency Level (percent less than baseline energy use) Product Class

11: Compact refrigerators and refrigerator

- freezers with

manual defrost 18: Compact chest freezers

10% $4.64 $5.99

15% $8.17 $16.70

20% $13.19 $52.73

25% $23.22 $61.54

30% $31.20 $87.84

35% $53.61 $94.47

40% $60.14

45% $87.47

50% $102.35
Max Tech (%

-- Cost) 59%

-- $155.96 42%

-- $157.09

Table 5.9

. 4 Incremental Manufacturer Selling Price Results for Built

- In Refrigeration Products

Efficiency Level (percent less than

baseline energy use) Product Class

3A

- BI: Built

In All

Refrigerators 5

- BI: Built

- In

Bottom

- Mount

Refrigerator

Freezers

without TTD

ice service 7

- BI: Built

- In

Side

- Mount Refrigerator

Freezers with

TTD ice

service 9

- BI: Built

- In Upright

Freezers

10% $7.14 $21.47 $51.45 $15.68

15% $18.90 $85.82 $123.47 $27.44

20% $127.10 $165.89 $281.53 $99.23

25% $272.09 $295.28 $211.74

Max Tech (%

-- c ost) 29%

-- $381.70 2 7 %

-- $370.22 22%

-- $371.27 27%

-- $297.565

- 65 5.9.2 REFERENCES

1 “ERA 1.2E, EPA Refrigerator Analysis Program, User’s M anual, Report to the Environmental Protection Agency Atmospheric Pollution Prevention Division,” Arthur D. Little, Inc., February 1997

2 "Engineering Computer Models for Refrigerators, Freezers, Furnaces, Water Heaters, Room and Central Air Conditioners," Report to U.S. DOE, by Arthur D. Little, Inc.,

November 1982.

3 McLinden, M., "Theoretical Vapor Compression Cycle, CYCLE7," unpublished.

4 Morrison, G., and McLinden, M., "Application of a Hard Sphere Equation of State to Refrigerants and Refrigerant Mixt ures," National Bureau of Standards Technical Note 1218, 1986.

5 "NIST Standard Reference Database 23: NIST Thermodynamic Properties of Refrigerants and Refrigerant Mixtures Database, Version 3.0," NIST, December 1991.

6 EPA Refrigerator Analysis (ERA) Pro gram: User’s Manual, Version 1.0. United States Environmental Protection Agency. EPA

- 430

- R

- 93

- 007. June 1993. with Version 1.2 Update, November 1994.

7 M. T. Holtzapple and R. G. Carranza, “Heat Transfer and Pressure Drop of Spined Pipe

in Cross

- Flow

– Par t I: Pressure Drop Studies”, ASHRAE Transactions, 1990.

8 Holtzapple, M.T., A.L.Allen, and K.Lin, “Heat Transfer and Pressure Drop of Spined Pipe in Cross

- Flow

– Part II: Heat Transfer Studies, AHSRAE Transactions, 1990.

9 U.S. Department of Energy

- Office of Codes and Standards. Technical Support Document: Energy Efficiency Standards for Consumer Products: Refrigerators, Refrigerator

- Freezers, and Freezers, July 1995. Washington, DC. DOE/EE

- 0064.

10 REFPROP, “Reference Fluid Thermodynamic and Transport Pr operties”, NIST Standard Reference Database 23, Version 8.0, E.W. Lemmon, M.L. Huber, and M.O. McLinden, Physical and Chemical Properties Division, U.S. Secretary of Commerce,

2007.

11 Va

- q

- plus data sheet, http://www.va

- q

- tec.com/produkte/en/pplus/prod/va

- q

plus_pdb_en.pdf

12 “ Electrolux's New Vacuum Insulated Freezer Technology ,” Appliance Magazine

,

August 2003

. < http://www.appliancemagazine.com/new_products.php?article=4971&zone=204&first=1 >5

- 66 13 Personal communication with Embraco, March 2009.

14 Energy Conservation Program for Consumer Products: Decision and Order Granting a

Waiver to the General Electric Company From the Department of Energy Residential Refrigerator and Refrigerator

- Freezer Test Procedure, Notice of decision and order, February 27, 2008. 73 FR 10425

.6

- i CHAPTER 6

. MARKUPS FOR PRODUCT PRICE DETERMINATION

TABLE OF CONTENTS

6.1 INTRODUCTION

................................ ................................ ................................ ........... 6

- 1

6.1.1 Distribution Channels

................................ ................................ ................................ ...... 6

- 1

6.1.2 Markup Calculation Procedure

................................ ................................ ........................ 6

- 1

6.2 MANUFACTURER MARKUP

................................ ................................ ...................... 6

- 2

6.3 RETAILER MARKUP

................................ ................................ ................................ .... 6

- 3

6.3.1 Approach for Retailer Markups

................................ ................................ ....................... 6

- 3

6.3.1.1 Baseline Retailer Markup

................................ ................................ .............. 6

- 3

6.3.1.2 Incremental Retailer Markup

................................ ................................ ......... 6

- 4

6.4 SALES TAXES

................................ ................................ ................................ ............... 6

- 8

6.5 SUMMARY OF M ARKUPS

................................ ................................ .......................... 6

- 8

LIST OF TABLES

Table 6.2.1 Major Appliance Manufacturer Markups

................................ ............................ 6

- 2

Table 6.3.1 Data for Baseline Markup Calculation: Electronics and Appliance Stores (2002)

................................ ................................ ................................ ................... 6

- 4

Table 6.3.2 Data for Incremental Markup Calculation: Electronics and Appliance Stores (2002)

................................ ................................ ................................ ........ 6

- 6

Table 6.3.3 Electronics and Appliance Stores, Concentration by Four Large Firms

............. 6

- 7

Table 6.4.1 Average Sales Tax Rates by Census Division and Large State

........................... 6

- 8

Table 6. 4.2 Average Sales Tax Rates by Product

................................ ................................ ... 6

- 8

Table 6.5.1 Summary of Markups

................................ ................................ .......................... 6

- 96-1 CHAPTER 6. MARKUPS FOR PRODUCT PRICE DETERMINATION

6.1 INTRODUCTION

To carry out its analyses, DOE needed to determi ne the cost to the consumer of baseline product s and the cost of more

- efficient units. As discussed in chapter 8, DOE developed retail prices for baseline products using proprietary retail price data collected by The NPD Group . For products with higher

- than

- baseline e fficiency, DOE estimated the consumer prices b y applying appropriate markup s to the incremental manufacturing costs estimated in the engineering analys is.

6.1.1 Distribution Channels

The appropriate markups for determining consumer equipment price s depend on the type of distribution channels through which products move from manufacturers to purchasers

. At each point in the distribution channel, companies mark up the price of the equipment to cover

the ir business costs and profit margin.

D ata from the Association of Home Appliance Manufacturers (AHAM) 1

6.1.2 Markup Calculation Procedure indicate that an overwhelming majority of residential appliances are sold through retail outlets. Because DOE is not aware of any other distribution channel that plays a significant role for residential refrigeration products , DOE assumed that all of the refrigeration products are purchased by consumers from retail outlets. DOE did not include a separa te distribution channel for refrigeration products included as part of a new home, as it did not have information on the extent to which these products are “pre

- installed” by builders in new homes.

As just discussed, at each p oint in the distribution channel, companies mark up the price of the equipment to cover their business costs and profit margin. In financial statements, gross margin is the difference between the company revenue and the company cost of sales or cost of

go ods sold ( CGS ). T he gross margin includes the expenses of companies in the distribution

channel

— including overhead costs (sales, general, and administration); research and development (R&D) and interest expenses; depreciation, and taxes

— and company profi ts

. T o cover costs and to contribute positively to company cash flow, the price of product s must include

a mark up. P roducts command lower or higher markup s , depending on company expenses associated with the prod u ct and the degree of market competition. I n develo ping markups for

manufacturers and retailers , DOE obtained data about the revenue, CGS , and expenses of firms that produce and sell the products of interest.6-2 6.2 MANUFACTURER MARKUP

DOE uses manufacturer markups to transform a manufacturer’s produc tion costs into a

manufacturer selling price. DOE used CGS and gross margin to calculate the manufacturer markup ( MU MFG ) with the following equation:

MFG MFG MFG

MFG CGS GM CGS MU +

=

where:

MU MFG = Manufacturer markup,

CGS MFG = Manufacturer’s cost of goods sold or Manufacturer Production Cost ( MPC ), and

GM MFG = Manufacturer’s gross margin.

The manufacturer’s CGS (or MPC ) plus its GM equals the manufacturer selling price ( MSP ).

In developing the initial baseline manufacturer markup, DOE used the same markup as the 2009 cooking products final rule and the 2010 commercial clotheswashers final rule . DOE used this baseline manufacturer markup b ecause all publicly traded companies that manufacture residential refrigeration equipment also manufacture a number of ot her appliances, and because the 1.26 baseline manufacturer markup had already been vetted during the rulemakings for these other products . DOE developed this average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10

- K reports filed by three publicly

- traded manufacturers primarily engaged in appliance manufacturing. 2 Because these companies are typically diversified, producing a range of different appliances, an industry average markup was assumed by DOE to be representa tive for the manufacture of refrigeration products. DOE

evaluated m arkups for the years 1999 ─2006

. Table 6

. 2 .1 lists the average corporate gross margin during the years 1999 ─200 6 , and corresponding markups, for each of the three manufacturers.

Table 6.2.1 Major Appl iance Manufacturer Markups

Mfr A Mfr B Mfr C

Average Net Revenues (Million) $ 290 $ 4,444 $ 12,499

Average Cost of Goods Sold $215 $3,150 $10,017

Markup 1. 35 1. 41 1. 35

Source: SEC 10

- K reports ( 1999

- 200 6 )

The average markup value based on these three companies is 1.26, which is the initial

value that DOE used for standard

- size refrigerator

- freezers, standard

- size freezers, and compact refrigeration products. DOE requested manufacturer feedback on the accuracy of this estimate

and other financial assumptions during DOE’s confidential manufacturer impact analysis

interviews and continues to use this value for the NOPR

. For built

- in refrigeration products,6-3 DOE used a baseline manufacturer markup of 1.40. DOE calculated the built

- in re frigeration manufacturer markup using the weighted average market share of information also submitted during manufacturer interviews.

6.3 RETAILER MARKUP

6.3.1 Approach for Retailer Markups

DOE based the retailer markups for residential refrigeration products on financial data for Electronics and Appliance Stores from the 2002 U.S. Census Business Expenditure Survey (BES), which is the most recent available survey

. 3 DOE organized the financial data into

s tatements that break down cost components incurred by firms in this category

. DOE assumes

that the income statements faithfully represent the various average costs incurred by firms selling home appliances. Although E lectronics and Appliance Stores handle multiple commodity lines, the data provide the most accurate available indication of expenses for selling home appliances.

The BES data provided for Electronics and Appliance Stores only contain total sales and

deta iled operating expenses. In order to construct a complete data set to estimate markups, DOE needed to estimate CGS and gross margin. The 1997 Business Expenses Survey provides total sales, gross margin and detailed operating expenses of Household Appliance Stores. The CGS and gross margin account for around 70% and 30% of the total sales

, respectively. DOE found that gross margin as percent of sales has been roughly constant in this category from 1993 to

2007

. a

6.3.1.1 Baseline Retailer Markup Therefore, DOE assum ed that the fractions of CGS and gross margin as percent of sales

in 2002 are the same as in 1997. Following this assumption, DOE calculate d the CGS

, gross margin and net profit for Electronics and Appliance Stores in the 2002 BES

.

b

The baseline markup relates the manufacturer sales price of baseline products to the retailer sales price. DOE considers baseline models to be equipment sold under existing market conditions (i.e., without new energy efficiency standards). DOE calculated the baseline markup ( MU BASE ) for retailers as an average markup using the following equation:

RTL RTL RTL

BASE CGS GM CGS MU **+**

**=**

where:

a U

. S

. Census, 2007 Annual Retail Trade Report: Electronics and Appliance Stores Sales and Gross Margin

b As described in section 6.1, the baseline retail markup was not used in the analysis for refrigeration products. DOE presents the derivation of this markup so it can be contrasted with the incremental retail markup.6-4 MU BASE = Baseline retailer markup,

CGS RTL = Retailer’s cost of goods sold,

GM RTL = Retailer’s gross margin,

Table 6. 3 .1 shows the calculation of the baseline retailer markup.

Table 6.3.1 Data for Baseline Markup Calculation: Electronics and Appliance Stores (2002)

Kind of business item Amount ($1,000)

Sales $83,896,811 Cost of Goods Sold (CGS) $57,888,800
Gross Margin (GM) $26,008,011
Baseline Markup = (CGS+GM)/CGS 1.45

Source: U.S. Census, 2002 Business Expenses Survey (for Sales) and 1997 Business Expenses Survey (for CGS and GM shares)

6.3.1.2 Incremental Retailer Markup

Incremental markups are coefficients that relate the change in the manufacturer sales price of higher

- efficiency models to the chang e in the retailer sales price. DOE considers higher

efficiency models to be equipment sold under market conditions with new efficiency standards.

Th e incremental markup reflects a situation in which the retailer faces an increase in CGS for a particular product due to new or amended standards.

Unfortunately, empirical evidence regarding appliance retailer markup practices when a product increases in cost (due to increased efficiency or other factors) is lacking. DOE

understands that real

- world markup practices will vary depending on the market conditions faced by retailers

, on the magnitude of the change in CGS associated with an efficiency increase and on any associated changes in retail costs. Pricing in retail stores may also involve rules of thumb that are difficult to know and to incorporate into DOE’s analysis.

Given the uncertainty about actual markup practices in appliance retailing, DOE uses an approach that reflects the following k ey concepts:

1. Changes in the efficiency of the goods sold are not expected to increase economic profits. Thus, DOE calculates m arkups/gross margins to allow cost recovery for retail companies

i n the distribution chain (including changes in the cost of capital) without changes in company profits.6-5 2. E fficiency improvements impact some distribution costs but not others . DOE sets markups and retail prices to cover the distribution costs expected to change with efficiency but not the distribution costs that are not expected to change with efficiency.

The incremental markup approach is described in more detail in Dale et al. (2004). 4

T o estimate incremental retailer markups

, DOE divides retailers ’ operating expenses into two categories: (1) Those that do not change when CGS increases due to amended efficiency standards (“fixed”), and (2) Those that increase proportionately with CGS (“variable”). DOE

define s fixed costs to include labor and occupan cy expenses because these costs are not likely to increase as a result of a rise in CGS due to amended efficiency standards. All other expenses, as well as the net profit, are assumed to vary in proportion to CGS. Although it is possible that

some of the other expenses may not scale with CGS, DOE is inclined to take a more conservative position and include these as variable costs. (Note: Under DOE’s approach, a high fixed cost component yields a low incremental markup.)

DOE calculated the incremental markup ( MU INCR ) for retailers using the following equation:

RTL RTL RTL

INCR CGS VC CGS MU **+**

**=**

where:

MU INCR = Incremental retailer markup,

CGS RTL = Retailer’s cost of goods sold, and

VC RTL = Retailer’s variable costs.

Table 6. 3

. 2 shows the breakdown of operating expenses using the 2002 BES data. T he incremental markup is calculated as 1.17.6-6 Table 6.3.2 Data for Incremental Markup Calculation: Electronics and Appliance Stores (2002)

Amount ($1,000)

Sales $83,896,811
Cost of Goods Sold (CGS) $57,888,800

Gross Margin (GM) $26,008,011

Labor & Occupancy Expenses (“Fixed”)
Annual payroll $10,267,605
Employer costs for fringe benefit $1,407,970
Contract labor costs including temporary help $160,094

Purchased utilities, total $427,809
Cost of purchased repair and maintenance services $308,789 Cost of purchased management consulting administrative services and other professional services $300,548

Purchased communication services $400,598
Lease and rental payments $2,655,286

Taxes and license fees (mostly income taxes) $385,538

Subtotal: $16,314,237

Other Operating Expenses & Profit (“Variable”)
Expensed computer related supplies $86,751
Cost of purchased packaging and containers $41,866
Other materials and supplies not for resale $611,361
Cost of purchased transportation, shipping and warehousing services $500,233
Cost of purchased printing services $285,012
Cost of purchased advertising and promotional services $1,840,898
Cost of purchased legal services $90,020

Cost of purchased accounting, auditing, and bookkeeping services $86,292 Cost of purchased custom coded original software (expensed) including adaption of

off

- the

- shelf software $18,944
Cost of system support design and services including web design $35,748

Cost of insurance $393,201 Cost of data processing and other purchased computer services, except

communications $41,056
Depreciation and amortization charges $1,229,110
Commissions paid $106,061
Other operating expenses $2,929,906

Cost of contract work $21,955
Net profit before taxes $1,375,360

Subtotal: $9,693,774

Incremental Markup = (CGS+Total Other Operating Expenses and Profit)/CGS 1.17

Source: U.S. Census, 2002 Business Expenses Survey

By dividing expenses into fixed and variable components, the incremental markup approach envisions that retailers cover costs without changing profits. Although retailers may be6-7 able to reap higher profits for a time, DOE’s approach assumes that competition in the appliance retail market, combined wi th relatively inelastic demand ( i.e., the demand is not expected to decrease significantly with a relatively small increase in price ), will tend to pressure retail margins back down.

To measure the degree of competition in appliance retailing, DOE estim ated the four firm concentration ratio (FFCR) of major appliance sales in three retail channels: Electronics and Appliance Stores, Building and Material and Supplies Dealers, and General Merchandise Stores. The FFCR represents the market share of the four largest firms in the relevant sector

. G enerally,

an FFCR of less than 40% indicates that the sector is not concentrated and an FFCR of more than

70% indicates that a sector is highly concentrated. c d

The FFCR of sub

- sector appliance sales within each channel is equal to the sector FFCR times the percent of total sales within each channel accounted for by major appliances. As shown

in Table 6. 3

. 3 , t he results indi cate that appliance sales in Electronics and Appliance Stores, Household Applia nce Stores, Building Material Supplies Dealers and General Merchandise

Stores have a FFCR well under the 40% threshold. Moreover, the Electronics and Appliance Stores sector includes “Household Appliance Stores” as a subsector. Because there are many

store s in this subsector, it has a FFCR of only 16.8%.

Table 6.3.3 Electronics and Appliance Stores, Concentration by Four Large Firms

Sector Four Firm

Concentration Ratio (Percent of Sector Sales) Percent of Sales Accounted for by Major Appliance s Four Firm

Concentration Ratio

(Percent of Major Appliance Sales)

Electronics and Appliance

Stores 43.9 39.4 17.3

Household Appliance

Stores subsector 16.8

- -

Building Material and Supplies Dealers 41.7 15.7 6.5

General Merchandise

Stores 65.1 35.4 23.0

Source: U.S. Economic Census, Establishment and Firm Size: (Including Legal Form of Organization), 1997, 2002. *Note: The assumption used here is that major appliance sales are uniformly distributed within all firms in each

sector.

c University of Maryland University College http://info.umuc.edu/mba/public/AMBA607/IndustryStructure.html

d Quick MBA http://www.quickmba.com/econ/micro/indcon.shtml6-8 6.4 SALES TAXES

The sales tax represents state and local sales taxes that are applied to the consumer

equ ipment price. The sales tax is a multiplicative factor that increases the consumer equipment price.

DOE derived state and local taxes from data provided by the Sales Tax Clearinghouse

. 5
DOE derived population

- weighted average tax values for each Census division and la rge state, as
shown in Table 6

. 4 .1

.

Table 6.4.1 Average Sales Tax Rates by Census Division and Large State

Census Division/State Tax Rate

New England 6.1%

Mid Atlantic 6.6%

East North Central 6.9%

West North Central 6.9%

South Atlantic 6.6%

East South Central 7.9%

West South Central 8.4%

Mountain 6.8%

Pacific 7.5%

New York State 8.5%

California 9.2%

Texas 8.1%

Florida 6.7%

DOE then derived U.S. average tax values for each product (as shown in T able 6. 4 .2 below) based on the product’s saturation within each Census division and large state. It

determined the saturations from the DOE Energy Informa tion Administration (EIA)’s 2005 Residential Energy Consumption Survey. 6

Table 6.4.2 Average Sales Tax Rates by Product

Product Tax Rate

Refrigerators (Standard

- size and compact) 7. 3 %

Freezers (Standard

- size and compact) 7.2%

6.5 SUMMARY OF MARKUPS

Table 6. 5

. 1 summarizes the markups at each stage in the distribution channel and the

average sales tax.6-9 Table 6.5.1 Summary of Markups

Markup Baseline Incremental

Manufacturer 1.26

Retailer 1.45 1.17

Sales Tax 1.0 736-10 REFERENCES

1 Association of Home Appliance Manufacturers. AHAM 2003 Fact Book

, 2003. Washington,

DC. p. 25.

2 Security Exchange Commission, SEC 10

- K Reports, Various dates, 1999

- 2006, Security Exchange Commission. < http://www.sec.gov/ >

3 U.S. Census Bureau. 2002 Economic Census, Business Expenses Survey, Retail Trade, Household Appliance Stores , 2002. Washington, DC.

< http://www.census.gov/csd/bes/bes97.htm >

4 Dale, Larry et al., “An Analysis of Price Determination and Markups in the Air

- Conditioning and Heating Equipment Industry”, LBNL

- 52791, J anuary 2004.

5 Sales Tax Clearinghouse, Inc. State sales tax rates along with combined average city and

county rates

. < http://thestc.com/STrates.stm >

6 U.S. Department of Energy

- Energy Information Administration. Residential Energy Consumption Survey , 2005Public Use Data Files . Washington, DC.

< http://www.eia.doe.gov/emeu/recs/re cspubuse05/pubuse05.html >7

- i CHAPTER 7 . ENERGY USE ANALYSIS

TABLE OF CONTENTS

7.1 INTRODUCTION

................................ ................................ ................................ ........... 7

- 1

7.1.1 Overview of Approach Used in the Preliminary Analysis

................................ .... 7

- 1

7.1.2 Overview of Approach Used for the NOPR

................................ .......................... 7

- 2

7.2 HOUSEHOLD SAMPLES FO R REFRIGERATION PROD UCTS

............................... 7

- 3

7.3 FIELD METERED DATASE TS AND UAF FUNCTION DETERMINATION

........... 7

- 6

7.3.1 Field Metered Data Sources

................................ ................................ .................. 7

- 6

7.3.2 Determination of Test Energy Use of Field Units

................................ ................. 7

- 7

7.3.3 Field

- Metered UAF Regressions

................................ ................................ ........... 7

- 8

7.3.3.1 Temperature Regressions

................................ ................................ ....... 7

- 8

7.3.3.2 Primary Refrigerator

- Freezers

................................ .............................. 7

- 11

7.3.3.3 Secondary Refrigerator

- Freezers

................................ .......................... 7

- 14

7.3.3.4 Standard

- Sized Freezers

................................ ................................ ....... 7

- 15

7.4 ESTIMATING FIELD ENE RGY USE FOR NEW STAN DARD

- SIZE

PRODUCTS

................................ ................................ ................................ ................... 7

- 16

7.4.2 Usage Adjustment Factors of Standard

- Size Products in RECS Households

..... 7

- 18

7.4.2.1 Conversion to Secondary Refrigerators

................................ ............... 7

- 18

7.4.2.2 UAF Results by Product Class

................................ ............................. 7

- 19

7.4.3 Test Energy Consumption of Standard

- Size Products in RECS Households

..... 7

- 21

7.4.3.1 Determination of Total Interior Volume or “Size”

.............................. 7

- 22

7.4.3.2 Calculation of Adjusted Volume

................................ .......................... 7

- 23

7.4.3.3 Calculation of Test Energy Consumption

................................ ............ 7

- 24

7.5 ENERGY USE OF COMPAC T REFRIGERATION PROD UCTS

.............................. 7

- 24

7.6 ANNUAL ENERGY CONSUM PTION BY EFFICIENCY LEVEL

........................... 7

- 25

LIST OF TABLES

Table 7.2.1 Refrigeration Products in Households by Product Class

................................ ..... 7

- 4

Table 7.3.1 Field Metered Datasets

................................ ................................ ........................ 7

- 7

Table 7.3.2 Temperature Parameters

................................ ................................ .................... 7

- 10

Table 7.3.3 Final UAF Regression Model for Primary Standard

- Si zed Refrigerator

Freezers

................................ ................................ ................................ .............. 7

- 14

Table 7.3.4 Final UAF Model for Secondary Standard

- Sized Refrigerator

- Freezers

.......... 7

- 15

Table 7.3.5 Final UAF Model for Standard

- Sized Freezers

................................ ................. 7

- 16

Table 7.4.1 Efficiency Standard Adjustment Factors (ESAF) for Refrigerator

- Freezers

and Freezers

................................ ................................ ................................ ....... 7

- 17

Table 7.4.2 Comparison of Usage Adjustment Factors in Preliminary and Current Analysis

................................ ................................ ................................ .............. 7

- 197

- ii Table 7.4.3 Size Bins for Refrigerators and Freezers

................................ ........................... 7

- 22

Table 7.4.4 Scalin g Ratios of Total Interior Volumes for Standard

- Size Refrigerator

Freezers (cu. ft.)

................................ ................................ ................................ . 7

- 23

Table 7.4.5 Parameters for Calculating Adjusted Volume from Total Interior Volume of Refrigerator

- Freezers

................................ ................................ ..................... 7

- 23

Table 7.4.6 Energy Conservation Standards for Refrigeration Products

.............................. 7

- 24

Table 7.5.1 Parameters for Calculating Adjusted Volume from Total Volume for Compact Refrigerators

................................ ................................ ....................... 7

- 25

Table 7.6. 1 Standard

- Size Refrigerator

- Freezers: Average Annual Energy Use by Efficiency Level

................................ ................................ ................................ . 7

- 25

Table 7.6.2 Standard

- Size Freezers: Average Annual Energy Use by Efficiency Level

...... 7

- 26

LIST OF FIGURES

Figure 7.1.1 Flowchart for Determining Field Energy Consumption

................................ ...... 7

- 3 Figure 7.4.1 Product Class 3, Top Mount Refrigerator

- Freezers: Distribution of UAF in the first year of the Refrigerator

................................ ................................ ......... 7

- 20 Figure 7.4.2 Product Class 3, Top Mount Refrigerator

- Freezers: Distribution of UAF in

the 20 th year of the Refrigerator

................................ ................................ ......... 7

- 20 Figure 7.4.3 Product Class 3, UAF as a Function of Age

................................ ...................... 7

- 21 Figure 7.4.4 Product Class 9, Upright Freezers: Distribution of UAF

................................ ... 7

- 217

- 1 CHAPTER 7. ENERGY USE ANALYSIS

7.1 INTRODUCT ION

To perform the life

- cycle cost (LCC) and payback period (PBP) calculations described in chapter 8, the U.S. Department of Energy (DOE) determines the savings in operating cost that consumers would result from more efficient products. DOE uses data on annual energy consumption, along with energy prices, to develop the most significant component of consumer operating cost. (Maintenance and repair costs are the other components.) This chapter describes how DOE determined the annual energy consumption of r efrigeration products for the LCC and PBP analysis.

The goal of the energy use analysis is to generate a range of energy use values that reflects actual product use in American homes. The analysis uses information on use of actual products in the field t o estimate the energy that would be used by new products at various efficiency levels.

The DOE test procedure produces standardized results that can be used to assess or compare the performance of products operating under specified conditions. Actual ene rgy usage in the field often differs from that estimated by the test procedure because of variation in operating conditions, the behavior of users, and other factors. In the case of refrigerator

- freezers,

researchers have conducted studies that measure the field consumption and compare it to the DOE test results for the measured models. DOE’s review of several such studies, which is described in appendix 7

- A, confirmed that energy use measured in the field often differs considerably from the usage measured by the DOE test procedure.

7.1.1 Overview of Approach Used in the Prel i minary Analysis

In its preliminary analysis, DOE treated the field energy consumption reported for

households in the Energy Information Administration ’s 2005 Residential Energy Consumption Survey (RECS) 1 as the actual consumption of the refrigeration product(s) in that household. RECS queries a national sample of households to collect statistical information on household consumption of and expenditures for energy, along with data on energy

- r elated characteristics of the housing units and households. RECS provides enough information to establish the type of refrigerat ion product (the product class) used in each household , and provides an estimate of the household energy consumption attributabl e to refrigerators or freezers

. DOE estimated the test energy use of the refrigerators or freezers in RECS homes, and then derived a “ usa ge adjustment factor’ (UAF) as the ratio of the reported field energy consumption for each sample household to

the esti mated test energy use. DOE develop ed such UAFs for standard

- size units, but not for compact units because many of those products are used outside the residential sector, such as in college dormitories, hotels and motels, and offices.7

- 2 For each considered e fficiency level, DOE calculated field

- adjusted annual energy consumption for each home by multiplying the tested energy consumption of a new refrigeration product, measured using the existing test procedures, by the efficiency standard adjustment factor (E SAF) and the UAF for that household.

7.1.2 Overview of Approach Used for the NOPR

During the preliminary analysis, stakeholders raised several concerns over the use of the field energy consumption reported in RECS to derive UAFs

. T herefore, for the NOPR, DOE

de veloped a new approach to derive UAFs for the RECS sample households. This approach

involved collection of field metered electricity use data for residential refrigeration products.

DOE was able to obtain data from seven studies , including about 100 dat a points that

DOE collected itself. A total of 1,9 67 data points were collected that included units from all representative product classes except compact freezers, and spanned a variety of collection years, unit ages, U.S. locations and household populati ons, including some units used in commercial settings (e.g., offices and hotels). DOE made various adjustments to the raw data, including extrapolation to annual electricity consumption where necessary.

From identifying information about each unit, its test energy consumption was estimated and the UAF was calculated as the ratio of metered energy use to test energy use. The data we re pooled into four categories: primary refrigerators, secondary refrigerators, freezers and compact refrigerators. Although DOE considered including data for compact refrigerators in the final analysis, it decided not to include those data due to concerns over data quality and representativeness.

For each category, DOE performed weighted least

- squares regressions on numerou s variables of potential interest in order to construct a function that predicts the UAF based on

household and climate variables. DOE selected for final evaluation a small number of variables for which the regression results had sufficient statistical sig nificance, and that could be obtained or reasonably inferred from RECS variables. Within each of the three product categories

modeled , DOE used the appropriate set of regression coefficients , along with values for the relevant variables specific to each household, to generate UAF estimates for each RECS

household . For compact refrigeration products, a UAF of 1 was used.

Using the UAF derived for each RECS household, DOE determine d the field energy consumption in each household of a new refrigeration pro duct at each considered efficiency level using the following equation:

FEC EL = F EC RECS • ( 1

– R ) = UAF RECS • T EC RECS • ( 1

– R ) Eq. 7.1

where:7

- 3 FEC EL = new refrigeration product’s field energy consumption at a given efficiency level;

F

EC RECS = new refrigeration product’s field energy consumption at baseline efficiency level;

R = reduction in energy consumption (expressed as fraction ) due to efficiency improvements;

UAF RECS = usage adjustment factor specific to RECS household;

T

EC RECS = maximum al lowable test energy consumption for the new baseline refrigeration product.

Figure 7.1 .1 illustrates the data analysis process flow graphically. The items in rectangles represent data sets, while the items in circles represent major calculation procedures.

Figure 7.1.1 Flowchart f or Determining Field Energy Consumption

7.2 HOUSEHOLD SAMPLES FO R REFRIGERATION PRODUCTS

DOE developed household samples for refrigeration products from the 2005 RECS. The

survey , which sampled 4,382 housing units

, was constructed to represent the household population throughout the United States.

RECS results indicate whether a household uses a standard

- size refrigerator or freezer.

For households that have a standard

- size refrigerator, RECS specifies whether the freezer is top

or bottom

- mounted

, or is side

- mounted. U nits in the sample that have top

- mounted freezers7

- 4 ( product class 3 ) cannot be distinguished from those having bottom

- mounted freezers ( product

class 5 ). Therefore, DOE used the same household sample for product class es 3 and 5. For a household’s primary (or “first”) refrigerator

, RECS specifies whether there is through

- the

- door (TTD) ice service. For households that have standard

- size freezers, RECS specifies whether the unit is upright or a chest

- type. With the above data, DOE was able to assign each product class considered for potential new efficiency standards to a set of household records (Table 7 .2 .1). For each of the representative built

- in product classes, DOE used the sample that cor responds most closely to the type of built

- in product (e.g., for product class 3A

- BI, DOE used the sample for product class 3).

Table 7.2.1 Refrigeration Products in Households by Product Class

Product Class Number of

Household

Records* Percent of Total

Household

Rec ords* Relative Standard

Error Due to

Sampling*

3. Refrigerator

- freezer: automatic defrost with top

mounted freezer and no TTD †

ice service 2,303 52.6% 2.1% 5. Refrigerator

- freezer:

automatic defrost with

bottom

- mounted freezer and

no TTD ice service

7. Refrigerator

- freezer:

automatic defrost with side

mounted freezer and TTD ice

service 1,026 23.4% 3.1%

9. Upright freezer with

automatic defrost 248 5.7% 6.4%

10. Chest freezer and all other freezers except compact

models 369 8.4% 5.2%

* From the Energy Information Administration’s 2005 Residential Energy Consumption Survey (RECS).

† T hrough

- the

- door.

The relative standard errors associated with the subsamples that contain specific product

classes are not considered so large as to affect the validity of the derived results presented in this chapter. Specifically, the relative standard error of a sample of size N , expressed as a percentage,

is approximated closely as 100 divided by the square root of ( N

- 1 ) . For the fu ll 2005 RECS sample

, the associated relative standard error due to sampling is 1.5 percent. For the subsamples containing product classes 9 and 10 , the associated relative standard errors are 6. 4 percent and

5.2 percent, respectively. Although the standard error for the smallest sub sample is more than

four times the error for the entire 2005 RECS, it still is less than 10 percent , a relative standard

error considered small enough to yield meaningful results. Therefore, DOE believes the results generated fro m the household samples for refrigeration products are representative of U.S. households using th o se appliances.7

- 5 For the NOPR analysis, DOE made adjustments to the statistical weightings of RECS samples for product classes 3 and 5 based on relationships between income and product class ownership provided by AHAM. a Therefore, even though the same RECS households are used to represent both product classes 3 and 5, the statistical contribution of these households to the economic analyses differed. Table 7. 2. 2 provides the resulting shares by income group

.

Table 7.2.2 RECS Shares of Top

- Mount and Bottom

- Mount Refrigerator

- Freezers Values Used in NOPR Analysis

Annual Income Values Used in Preliminary Analysis for Top

- and Bottom

- Mount

Refrigerator

- Freezer s Top

- Mount Refrigerator

Freezer s (Product Class 3) Bottom

- Mount Refrigerator

Freezer s (Product Class 5) <$25,000 36.9% 40.1% 25.1 % $25,000

- $49,000 29.4% 3 1

. 1% 30.0 % $50,000

- $99,999 24.2% 21.5% 28.7 % $100,000

- $119,999 3.9% 3.1% 6.6 % $120,000+ 5.6% 4.2%* 9.6 %*

Sum 100.0% 100.0% 100.0%

* Because AHAM data only provided ownership fractions in two bins ($100,000

- $149,999 and $150,000+), ownership for the $120,000+ income level was calculated by weighting data from these above two bins by data from

the American Hou sing Survey (2005) indicating the fraction of households in each bin (62% between $100,000

- $149, 999 , and 38% at $150,000 or above).

For built

- in products (product classes 3A

- BI, 5

- BI, 7

- BI and 9

- BI), DOE used a single relationship between income and buil t

- in ownership provided by AHAM to weight the RECS ownership of each built

- in product class, shown in Table 7.2.3.

Table 7.2.3 Ownership Fraction of Built

- In Refrigeration Equipment

Annual Income Ownership Fraction of

Built

- ins <$25,000 2% $25,000

- $49,000 2% $50,000

- $99,999 2% $100,000

- $119,999 3% $120,000+ 6%*

* Because AHAM data only provided ownership fractions in two bins ($100,000

- $149,999 and $150,000+), ownership for the $120,000+ income level was calculated by weighting data from these above two bins by data from the American Housing Survey (2005) indicating the fraction of households in each bin (62% between $100,000

- $149, 999 , and 38% at $150,000 or above).

a Association of Home Appliance Manufacturers (AHAM), “Product Saturation by Income,” personal communication, April 1, 2010.7

- 6 7.3 FIELD METERED DATASE TS AND UAF FUNCTION DETERMINATION

DOE used field

- metered energy use data, combined with estimates of the test energy use

of each field

- metered unit, t o calculate the UAF for each data point from the following formula:

UAF i = FEC i / TEC i Eq. 7.2

Where:

UAF i = usage adjustment factor specific to the field

- metered data point;

FEC i = field

- metered annualized electricity use;

TEC i = test energy consumption annual electricity use.

DOE divided the data into four categories: standard

- sized primary refrigerator

- freezers,

standard

- sized secondary refrigerator

- freezers, stan dard

- sized freezers, and compact refrigerators. For each category, DOE performed weighted least

- squares regressions on numerous variables of potential interest in order to construct a function that predicts the UAF

based on household and climate variables. DOE selected for final evaluation a small number of

variables for which the regression results had sufficient statistical significance and that could be obtained or reasonably inferred from RECS variables

.

7.3.1 Field Metered Data Sources

DOE obtained metered electricity use data on refrigeration products from seven datasets,

shown in Table 7. 3 .1 below, including more than 100 data points which DOE c ollected itself. A total of 1,967 data points were collected that included units from all representative product classes except compact freezers, and spanned a variety of collection years, unit ages, U.S. locations and household populations, including some units used in commercial settings (e.g., offices and hotels).7

- 7 Table 7.3.1 Field Metered Datasets

I n addition to metered elec tricity use, the data sets included some identifying information about each unit (such as brand, model number, year manufactured, door style, presence/absence

of through

- the

- door ic e service, and interior volume), as well as some household characteristics and geo graphic location

. DOE omitted about 16% of the data points due to missing information and/or data quality issues. For compact refrigerators, all 96 data po ints were analyzed but DOE decided not to use the resulting fits in the final analysis due to a concern that the data were not sufficiently representative.

7.3.2 Determination of Test Energy Use of Field Units

The test (i.e., rated) energy use for each unit in the analysis was determined by a two

tiered process. Number of data points

Study Popula

- tion State Period

metered Average

duration Average unit age (years) Standard

- sized refrigerator

freezers Standard

sized

freezers Compact

refri

gerators Total

Primary

units Second

ary units

Proctor Engineering Group New

rebated

units CA 1992

- 1993 8 mos. 0.5 129 0 0 0 129

Comelec General MA 1995

- 1996 2.2 hrs. 9.2 802 93 52 0 947

Dalhoff &

Associates Low

income IA 1998

- 1999 10 days 5.3 44 2 10 0 56

Energy

Center of

Wisconsin Single

family

homes WI 1999 2.4 hrs. 7.4 204 17 123 0 344

Energy

Center of

Wisconsin Renters WI 2003 2.0 hrs. 7.9 186 0 0 0 186

NSTAR General MA

+ RI 2003

- 2004 21 days 14.4 141 41 0 0 182

LBNL Offices/

hotels CA 2009

- 2010 8 days 6.5 27 0 0 96 123

Total 1,533 153 185 96 1,967

Total used for analysis 1,358 109 185 0 1,6527

- 8 First, DOE looked up the recorded model number of each study unit in several published databases of test results. Data sources included the California Energy Commission, the Federal Trade Commission, the Environmental Protection Agency, and a compilation database hosted by Home Energy Magazine. Given the possibilities of typographical errors in the recorded model numbers and the use of wildcard values by manufacturers within model numbers, a fuzzy st ring matching algorithm was employed to identify the closest matches to each reported model number. These matches were then checked based on product class, volume, and year of manufacture in addition to manual inspection. This process resulted in confirme d matches for

63% of all units : 1

, 235 of the total 1

, 967. The overall matching rate was 70% for the analysis sample ( since some units were omitted ) and 76% for the primary refrigerators.

For units that could not be matched based on the recorded model number, the Federal efficiency standard for the year of manufacture was used as the estimate, calculated based on product class, adjusted volume and year of manufacture. For units manufactured prior to the 1990 standards, the 1990 standards values were m ultiplied by year

- specific efficiency factors

from AHAM. Since the efficiency standard is a maximum value for energy use, it may over

estimate the actual rated use of the units. The extent of the over

- estimation was assessed by comparing reported values for matched units to the standards. This analysis found that the average unit built in 1990 or later was rated to use 6.1% less than the Federal standard. For units built prior to 1990 that included a vintage multiplier, the actual rated use averaged just 0.7% less

than this estimate. However, in neither case were the rated energy use results scaled or altered.

7.3.3 Field

- Metered UAF Regressions

7.3.3.1 Temperature R egressions

Because of the primary role that temperature plays in refrigerator/freezer electricity use ( from thermodynamics, about 2.5% to 3.0% per °F temperature difference between inside and outside the unit), it was desirable to obtain correlations of energy use with ambient (indoor) temperature. However, such data were only available for a limited number of data points. By contrast, heating and cooling degree

- days were readily available for all data from a historic U

. S

. weather database, and is already included in RECS data. Previous work including the NSTAR study listed in the table, has found a consiste nt relationship between indoor and outdoor temperatures that varies with whether space conditioning is needed and used. In addition, the Proctor Engineering study found a similar relationship between refrigerator energy use and outdoor temperature. At ou tdoor temperatures below approximately 60°F, average indoor temperature decreases by about 0.02 to 0.05°F per outdoor °F, whereas above 70°F, average indoor temperature increases by about 0.1 to 0.4°F per outdoor °F depending on the use of air conditioning . In the range of about 60°F to 70°F, indoor temperature tends to more closely follow outdoor temperature variations as space conditioning is often not used and windows may be open.7

- 9 Given these relationships between weather, indoor temperature, and refr igerator energy use, DOE decided to model refrigerator energy use using three climate variables: heating degree days base 59°F (HDD59), average outdoor temperature (minus 65°F to approximately center the values), and cooling degree days base 70°F (CDD70). However, RECS provided only heating and cooling degree days calculated with base of 65°F (HDD65 and CDD65, respectively), which unfortunately falls right in the middle of the sensitive portion of the indoor

- outdoor temperature relationship. Therefore, DOE developed a model to convert HDD65 and CDD65 values into estimates of HDD59 and CDD70. The average outdoor temperature was also easily obtained

from the difference between HDD65 and CDD65.

The estimation of CDD70 and HDD59 from CDD65 and HDD65 was based on calculating each of these four values for each of the 1,020 weather stations included in the Typical Meteorological Year (TMY) 3 weather datasets produced by the National Renewable Energy Laboratory. Regression models of HDD59 and CDD70 were developed that included HDD65, CDD65 and the square roots of each of these values. The resulting regression models provided an excellent fit to the data with R

- squared values of 0.9957 for CDD70 and 0.9995 for HDD59. These equations were then used with the RECS da ta on HDD65 and CDD65 to model the weather impacts of the units. Note that heating and cooling degree days (per year) were converted to heating or cooling degrees (denoted by HD or CD, respectively) by dividing the quantity by the average number of days in a year. Table 7.3.2 shows the temperature parameters.7

- 10 Table 7.3.2 Temperature Parameters Symbol Coefficient Standard deviation (1 **σ** )

HD59 (°F)

parameters T

- value

Constant a H - 2.30145 0.057953

- 39.7 HD65 (°F) b H 1.1933 0.003702 302.3 CD65 (°F) c H - 0.21377 0.008593

- 24.9

HD 65 ( **°** F ) d H - 1.32905 0.028216

- 47.1

CD 65 ( **°** F ) e H 1.500784 0.027742 54.1

CD70 (°F)

parameters

Constant a C - 1.714641 0.0502549

- 34.1 HD65 (°F) b C - 0.0977721 0.0032106

- 30.5 CD65 (°F) c C 1.038835 0.0074511 139.4

HD 65 ( **°** F ) d C 0.8797741 0.0244682 36.0

CD 65 ( **°** F ) e C

- 1.008089 0.0240571

- 41.9

Average outside

temperature (T out

)

minus 65°F

parameters

Constant a T 0 Not applicable HD65 (°F) b T - 1 Not applicable CD65 (°F) c T 1 Not applicable

Formulas:

HD65 (°F) = HDD65 (°F days) / 365 .25 days Eq. 7.3

CD65 (°F) = CDD65 (°F days) / 365 .25 days Eq. 7.4

HD59 (°F) = a H + b H • HD65 (°F) + c H • CD65 (°F)

+ d H • HD 65 ( **°** F ) + e H • CD 65 ( **°** F ) Eq. 7.5

CD70 (°F) = a C + b C • HD65 (°F) + c C • CD65 (°F)

+ d C • HD 65 ( **°** F ) + e C • CD 65 ( **°** F ) Eq. 7.6

T

out – 65 (°F) = a T + b T • HD65 (°F) + c T • CD65 (°F)

= CD65 (°F)

– HD65 (°F) Eq. 7.77

- 11 7.3.3.2 Primary Refrigerator

- Freezers

For standard

- sized primary refrigerator

- freezers, which contained the largest number of sample points, the following primary predictor variables were used in the final model: unit age, heating and cooling degree days, outdoor temperature, presence/absence of a TTD icemaker, and number of household occupants. All variables except the last one were obtained from the full set of primary refrigerator

- freezer data.

In add ition to these predictor variables, the model included control variables to capture other factors related to metered refrigerator energy use including a dummy variable to indicate units manufactured prior to 1993, a dummy variable to indicate units metered for less than a day (typically 2

- 3 hours), and a dummy variable to indicate a low

- income household (identified in just two of the studies). The analysis found that each of these factors was associated with a

difference in UAF.

Units built prior to 19 93 tended to have a lower UAF than those built later by about 15%.

Units that were only metered for a few hours tended to use about 10% more energy relative to their rating than those metered for longer periods. This finding is believed to reflect a

b ias from short

- term metering since all such metering occurs during the daytime and when occupants are home.

Units in low income households (all units in the Dalhoff Iowa study and some units in the ECW single family Wisconsin study) use on average abou t 17% more relative to their rating than those not identified as low income. It was concluded that the bias must reflect the prevalence in

low

- income households of units that are bought used, and tend to run less efficiently than similarly

- aged models that were bought new. However, there may have also been a bias in the sample of households metered, because the purpose of the metering program was to identify households with high energy

- consumption units in order to qualify them for free replacement.

DOE dec ided not to include this effect as a predictive variable for new units , because it was felt that any “low income” effect in the general population is likely to be much lower than that observed in a sample of high energy use units among low income residents

.

DOE explored a number of regression modeling approaches. For the approach finally selected, data were weighted based on the duration of metering, with the weight defined as the square root of the number of metered hours. This weighting reflects the greater variability

inherent in short

- term data, separate from the bias previously discussed.

The impact of unit age on energy use was explored using several approaches. The data generally supported the hypothesis that a decrease in performance (e.g., increa se in energy use) manifested quickly approximately over the first year, and over subsequent years a steady but slower decrease occurred. This type of degradation should be expected due to the degradation in

effective R

- value of the foam insulation. One d ataset (Proctor Engineering Group) provided a little less than a year of continuous data on 129 newer refrigerators. A regression analysis of that data found a first year annual degradation rate of 8.9% (±2.4% at 1 **σ** confidence interval). But7

- 12 the result v aried under differing model specifications. Some long

- term data on a smaller sample of refrigerators provided by BC Hydro (not included in Table 7.3.1 ) revealed an annual degradation rate of about 1% per year for older existing units. But the largest sam ple size and most consistent estimate of degradation came from including an age variable into the larger

cross

- sectional regression model. The model estimated an annual degradation rate of 1.60% (±0.20%). This figure is fairly close to the 1.37% estimate d by Pratt and Miller (“The New York Power Authority’s Energy

- Efficient Refrigerator Program for the New York City Housing Authority

— 1997 Savings Evaluation”, PNNL

- 11990, 1998). Attempts to fit differing degradation rates at differing ages were not succes sful, most likely due to a lack of metered data from refrigerators between 1 and 5 years old.

About half of the primary refrigerator data contained information about the number of household occupants. DOE performed a regression on this subset to obta in a relationship between UAF and number of occupants. DOE tested a regression model where each occupant received its own separate coefficient, and found that the correlation with UAF was linear for 1

- 3 occupants. Above 3 occupants, the correlation was ver y weak and inconsistent depending on other variable choices, so that variable was dropped. The final model consisted of a single coefficient times the number of occupants up to 3. Results are shown below in Table 7.3.3

.

The presence of through

- the

- door ( TTD) icemaking was found to be statistically significant. While a percentage energy use model was considered, DOE found that slightly better model agreement resulted when TTD icemaking was fitted in absolute (energy) terms, so this

variable was treated som ewhat differently from the other variables

The TTD variable is strongly correlated with the side

- by

- side door variable (denoting product class 7), but separate correlations with door style (side

- by

- side or otherwise) are extremely weak, and were therefore not included in the final model. The large magnitude of the TTD coefficient (about twice the placeholder energy consumption value of 84 kWh/yr associated with the proposed new test procedure) is indicative of older units; but represents approximately

12% of non

- TTD icemaking energy consumption as m easured by UEC test , consistent with previous estimates of the size of this term

. 2

The UAF function was calculated in two stages, using the set of best

- fit coefficients

shown in Table 7.3.3 . The first stage was based entirely on deterministic variables de rived from

RECS:

UAF int (%) = a P + b P • AGE + c P • HD59 + d P • CD70 + e P • ( T out – 65 °F )

+ f P • OCCUP3 + ( g

P / TEC RECS ) • TTD Eq. 7. 8

Where:

UAF int = intermediate UAF function for primary refrigerators;

AGE = age of refrigerator in years;

HD59 = as defined above;7

- 13 CD70 = as defined above;

T

out = as defined above;

OCCUP3 = number of occupants up to and including three;

TTD = presence of through

- the

- door icemaking (=1);

TEC RECS = test energy consumption of unit (kWh).

The UAF int function did not capture all the observed variability in the metered data. In order to represent this additional variability, a Weibull function was fitted to the residual

distribution of ratios of predicted to observed UAF values. DOE used this function as a probability distribution to sample from, and multiplied the resulting scaling factor by the above

UAF function:

UAF P (%) = UAF int • r P Eq. 7.9

Where:

UAF P = UAF of primary refrigerators;

r

P = random draw from residual Weibull distribution (with standard parameters).7

- 14 Table 7.3.3 Final UAF Regression Model for Primary Standard

- Sized Refrigerator

Freezers Symbol Coefficient Standard

deviation (1 **σ** )

Parameter s T

- value

Constant a P 72.9% 4.33% 16.83 Unit age (years) b P 1.60% 0.20% 8.16 Heating degrees base 59°F (HD59) c P 1.89% 0.54% 3.47

Cooling degrees base 70°F (CD70) d P - 0.81% 0.89%

- 0.91

Average outside temperature (T out ) minus 65°F e P 2.00% 0.46% 4.37

Number of occupants ≤ 3 f P 12.09% 2.48% 4.87 Through

- the

- door (TTD) icemaking (= 1) g P * 170.5 kWh 43.5 kWh 3.92

Residual r P See below

Dummy p arameters ( not used

in RECS UAF calculations ) Unit built before 1993 (= 1) h P - 12.51% 4.05%

- 3.09

Low income (= 1) i P 16.64% 6.35% 2.62

Short

- term ( ≤ 1 day) metering (= 1) j P 10.25% 2.36% 4.34

Residual Weibull parameters
Scale **α** P 1.0234 Not available Shape **β** P 4.0343 Not available

* Note that for new refrigerators, rather than this icemaking energy coefficient, the placeholder energy consumption value of 84 kWh/yr was used.

7.3.3.3 Secondary Refrigerator

- Freezers

For secondary refrigerator

- freezers, the number of statistically significant variables was much smaller, and there was no correlation with number of household occupants. The location of the unit in the home, which is frequently in a room other than the kit chen and often experiences a different mean annual temperature, was found to be statistically important. After exploring a number of alternate models, DOE chose a model based on the presence of a basement and/or heated space . If a basement exists in the ho me, the secondary unit was assumed to reside there, with RECS data providing information on whether the basement is heated or not. If no basement exists, a probability of being located in a heated space was used, based on a statistical

distribution derived from the metered data.7

- 15 The UAF function was calculated from the set of best

- fit coefficients shown in Table

7.3.4 , and multiplied by a residual scaling factor as for primary refrigerator

- freezers:

UAF S (%) = [ a S + b S • ( T out – 65°F) + c S • ( T out – 65 °F) • BASEMENT

+ d S • HEATED ] • r S Eq. 7. 10

Where:

UAF S = UAF of secondary refrigerator;

T

out = as defined above;

BASEMENT = existence of a basement (=1) ; HEATED = heated space, defined as follows: if BASEMENT = 1, defined as 1 if basement is heated, 0 if unheated. If BASEMENT = 0, probability of 1 is 75% (random draw) ;

r

S = random draw from residual Weibull distribution (with standard parameters).

Table 7.3.4 Final UAF Model for Secondary Standard

- Sized Refrigerator

- Fre ezers Symbol Coefficient Standard deviation (1 **σ** )

Parameter s T

- value

Constant a S 100.5% 7.5% 13.5 Average outside temperature minus 65°F b S 0.76% 0.36% 2.13

Average outside temperature minus 65°F times Basement (= 1) c S - 0.32% 0.39%

- 0.82

Heated space (= 1) * d S 21.5% 9.4% 2.29

Residual r S See below

Residual Weibull

parameters
Scale **α** S 0.9809 Not available Shape **β** S 2.6767 Not available

*See equation 7.10

.

7.3.3.4 Standard

- Sized Freezers

For standard

- sized freezers, DOE found very few variables with statistical significance, and only a single heated space variable was used in the final model. The heated space variable was treated similarly to that for secondary refrigerator

- freezers, but w ith a different probability for being in a heated space if not in a basement (again based on the metered data).

The UAF function was calculated from the set of best

- fit coefficients shown in Table

7.3.5 , and multiplied by a residual scaling factor as for primary refrigerator

- freezers:7

- 16 UAF F (%) = ( a F + b F • HEATED) • r F Eq. 7. 11

Where:

UAF F = UAF of freezer;

HEATED = h eated space, defined as follows: if b asement exists (= 1), def ined as 1 if basement is heated, 0 if unheated. If b asement is not present , probability of 1 is

46% (random draw);

r

F = random draw from residual Weibull distribution (with standard parameters).

Table 7.3.5 Final UAF Model for Standard

- Sized Freezers Symbol Coefficient Standard deviation (1 **σ** )

Parameter s T

- value

Constant a F 80.2% 3.8% 21.1 Heated space (= 1)* b F 14.3% 7.7% 1.86

Residual r F See below

Residual Weibull

parameters
Scale **α** F 1.0787 Not available Shape **β** F 2.5535 Not available

*See equation 7.11.

7.4 ESTIMATING FIELD ENE RGY USE FOR NEW STAN DARD

- SIZE

PRODUCTS

To determine the field energy consumption in each RECS household of a new refrigeration product at each considered efficiency level, DOE used the following equation:

FEC EL = F EC RECS • ( 1

– R ) = UAF RECS • T EC RECS • ( 1

– R ) Eq. 7.1 2

where:

FEC EL = new refrigeration product’s field energy consumption at a given efficiency level;

F

EC RECS = new refrigeration product’s field energy consumption at baseline efficiency level;

R = reduction in energy consumption (expressed as fraction ) due to efficiency improvements;

UAF RECS = usage adjustment factor specific to RECS household;

T

EC RECS = maximum allowable test energy consumption for the new baseline refrigeration product

.7

- 17 Note that, for standard

- size refrigerator

- freezers, UAF RECS , and hence F EC RECS and FEC EL , are functions of time.

DOE conduct ed its analysis with an awareness of proposed revisions to the DOE test procedure for refrigerator

- freezers, which will stipulate lower temperatures for the fresh food

compartment and the freezer than those the currently prescribed

. DOE has not identified how the tested energy consumption under the new procedure will compare to that determined under the current procedure , but expects this adjustment to take the form of a multiplicative fact or termed

the “ efficiency standard adjustment factor ,” or ESAF . The ESAF is expected to be multiplicative, because the energy use for a refrigeration unit is close to proportional to the difference between its interior and exterior temperatures. For the cu rrent analysis, DOE assumed that this factor is constant for each product class, and does not vary with product efficiency or adjusted volume, with the exception of product class 5. For product class 5, the ESAF is a function of adjusted

volume. See chapte r 5 for a complete discussion of the derivation of these values. To be general, therefore, the ESAF is referred to by ESAF ( AV ) in subsequent equations.

Table 7.4.1 provides the value of the ESAF for refrigerator

- freezers and freezers.

Table 7.4.1 Efficiency Standar d Adjustment Factors (ESAF) for Refrigerator

Freezers and Freezers

Product

Class ESAF

3 1.124

5 1.125*

7 1.140

9 1.000

10 1.000 * At average adjusted volume (24.68 cu. ft.) for this product class.

Fundamentally, the value of the ESAF does not affect estimates of field energy use, because changes in the test procedure do not affect consumer behavior or operation of an appliance within a household. Field energy consumption of future appliances built to meet a national standard, however, may be affected by the test procedure used to define the standard. For this reason, DOE assumed that the effects of consumer behavior and operating conditions, characterized by the UAF , are separate from the effects of the test procedure, characterized by

the ESAF . However, in order to convert to the new test energy consumption while keeping the derived field energy consumption FEC RECS the same, an adjustment needed to be made to

e quation 7.12 :

FEC EL = UAF NEW

– RECS • T EC NEW

– RECS • (1

– R ) Eq. 7.13

Where :7

- 18 UAF NEW

**−** RECS **=** UAF RECS ESAF ( AV ) Eq. 7.14

T

EC NEW

– RECS = ESAF ( AV ) • T EC RECS Eq. 7. 1 5

DOE assumed that the UAF for a given household would be the same for products that meet some future energy efficiency standard as it is for their current appliance. In conducting the

life

- cycle cost analysis (chapter 8 ), DOE substitute d the refrigeration product recorded in RECS

with a new product of identical product class and size that the household is assumed to purchase in the year when the new standard goes into effect.

If R is the reduction (expressed as a percent) in energy use by the new standard from the

current standard ( e .g

. , a 10

- percent effi c iency imp rovement would mean R = 0.1 ) , then assuming

the ESAF is a multiplicative factor, as DOE did for this analysis, the field energy consumption scales simply with (1

– R ) , regardless of the value of ESAF ( AV ). A multiplicative ESAF therefore is not needed to calculate energy savings related to a higher efficiency standard.

7.4.2 Usage Adjustment Factor s of Standard

- Size Products in RECS Households

To determine UAF NEW

– RECS for each RECS household, DOE used the appropriate set of

regr ession coefficients (primary refrigerator

- freezer, secondary refrigerator

- freezer, or freezer)

, along with values for the necessary variables for the specific household, to generate a UAF estimate for each type of refrigeration product , using equations 7.8 to 7.11 (UAF definitions) and

7.14 (ESAF correction).

7.4.2.1 Conversion to Second ary Refrigerators

When a household purchases a new refrigerator, some first units become second units. ( See c hapter 8 for a discussion of how DOE modeled the conversion of refrigerators from first to

second units. ) A second refrigerator, generally located in a basement or garage, enters a new operating environment and may be used less than year

- round. For those units tha t become a second refrigerator, therefore, the annual energy consumption changes, presumably remaining at

the new level for the rest of its lifetime.

The UAF over a refrigerator’s lifetime can be expressed as the sum of two components :

) ( , ), (

) ( AV ESAF y y UAF y y y UAF

y UAF conv S conv P ** **  ****

**≥ <** 

**=** Eq. 7.1 6

Where:7

- 19 UAF ( y ) = overall usage a djustment f actor (year

- dependent);

UAF P (

y ) = usage a djustment f actor for primary refrigerator phase (year

- dependent);

UAF S = usage a djustment f actor for secondary refrigerator phase b

y conv = year of conversion from primary to secondary refrigerator; (year

- independent);

ESAF ( AV ) = ESAF correction factor.

7.4.2.2 UAF Results by Product Class

Table 7 .4.2 show s average overall UAFs , as well as UAFs in year 1 and year 20

, by product class for th e current analysis . For comparison, it also shows average UAFs by product

class used in the preliminary analysis

. Note UAFs have been divided by ESAF ( AV ) to reflect the new test procedure.

Table 7.4.2 Comparison of Usage Adjustment Factors in Preliminary and Current Analysis

Product Class Sample

Size Current Analysis Preliminary Analysis

Mean UAF Mean UAF

Top

- mount refrigerator

- freezer (PC 3) 2,303 0.93 (0.82 to 1.04)* 1.2 3

Bottom

- mount refrigerator

freezer (PC 5) 2,303 0.92 (0.81 to 1.02)* 1.0 9

Side

- by

- side refrigerator

freezer with TTD (PC 7) 1,026 0.94 (0.84 to 1.03)* 1.4 4

Upright freezer (PC 9) 248 0.85 1.37

Chest freezer (PC 10) 369 0.89 1.4 8

Top

- mount built

- in refrigerator

freezer (PC 3A

- BI) 2,303 0.94 (0.83 to 1.07)* N/A

Bottom

- mount built

- in refrigerator

- freezer (PC 5

- BI) 2,303 0.96 (0.85 to 1.07)* N/A

Side

- by

- side built

- in refrigerator

- freezer (PC 7

- BI) 1,026 0.94 (0.84 to 1.03)* N/A

Upright built

- in freezer (PC 9

- BI) 248 0.85 N/A

* Averages are based on lifetime distribution and include conversion to 2nd refrigerators. Range indicates average UAF in year 1 (minimum) and year 20 (maximum).

b This UAF accounts for the changed operating environment during the second phase

.7

- 20 Figures 7.4.1 and 7.4.2 show the distribution of UAF s for the RECS households in the subsample for product class 3 (top

- mount refrigerator

- freezers) in year 1 and year 20, respectively. Each figure shows the distribution of UAFs used for the LCC analysis

. For other

standard

- size product classes, the UAF dis tributions appear very similar. Figure 7.4.3 shows the average UAF by year for product class 3. Figure 7.4.4 shows the distribution of UAF s for the RECS households in the subsample for product class 9 (upright freezers), which is the same for all years. Th e UAF distribution for product class 10 (chest freezers) is almost identical.

Figure 7.4.1 Product Class 3, Top Mount Refrigerator

- Freezers: Distribution of UAF in the first year of the R efrigerator

Figure 7.4.2 Product Class 3, Top Mount Refrigerator

- Freezers: Distribution of UAF

in the 20 th year of the R efrigerator7

- 21 Figure 7.4.3 Product Class 3, UAF as a F unction of A ge

Figure 7.4.4 Product Class 9, Upright Freezers: Distribution of UAF

7.4.3 Test Energy Consumption of Standard

- Size Products in RECS Households

It was necessary to develop a unique T EC RECS value for each RECS household because DOE assumed that the new refrigeration product has the same characteristics as the existing

- in

2005 product with respect to total interior volum e (also referred to as “size”)

, door style, and presence of TTD ice service. The latter two items determine the product class and hence the formula to calculate test energy consumption. The size is a variable in the formula. 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10

0 5 10 15 20 25 30 35Mean UAF

Age7

- 22 7.4.3.1 Determination of Total Interior Volume or “Size”

The possible answers to the RECS question regarding the size of the first refrigerator or

freezer are shown in Table 7.4.3. The distribution of actual sizes is not uniform within the RECS

size bins. To estimate the actual size of each u nit, DOE estimated the distribution of sizes within each bin. To approximate that distribution, DOE used data on refrigerator models from the 2009 California Energy Commission (CEC) appliance model database. The figures in a ppendix 7

- B show the number of models by size within each RECS size bin for each considered product classes. The size assigned to a sample refrigerator within a RECS size bin was assigned randomly using probabilities derived from the CEC data.

Table 7.4.3 Size Bins for Refrige rator s and Freezers

Bin* Total Interior Volume ( Size ) of First Refrigerator
cu ft †

1 Very small (10 or fewer)

2 Small (11 to 14)

3 Medium (15 to 18)

4 Large (19 to 22)

5 Very large (more than 22)

* Bins defined in Residential Energy Consumption Survey, 2005. † Cubic feet.

DOE noted significant differences in the average total interior volume of product classes 5 and 7 as obtained from the above approach, relative to consumer data provided by CEC and

other sources

. c , d Therefore, DOE scaled the resulting average total interior volumes for these product classes by the ratios shown in Table 7.4.4

.

c The NPD Group, Inc., The NPD Group/NPD Houseworld

– POS, Refrig erators, January 2007

– December 2008. Port Washington, NY.

d Association of Home Appliance Manufacturers (AHAM), “Additional data request from DOE/LBNL,” personal communication with DOE, May 14, 2010.7

- 23 Table 7.4.4 Scaling Ratios of Total Interior Volumes for Standard

- Size Refrigerator

Freezers (cu. ft.)

Product

class Data source : Preliminary analysis (RECS an d CEC) CEC NPD AHAM

Correction

factor for

RECS/CEC (using NPD data) Full data

range : 2005 (RECS),

1998

- 2009

(CEC) 1998

- 2009 2007

- 2008 2005

- 2008 Range used for

average : 1998

- 2009 2007

- 2009 2007

- 2008 2007

- 2008

5 17.96 20.75 20.87 21.59 1.16

7 21.07 24.58 24.76 n/a 1.18

7.4.3.2 Calculation of Adjusted Volume

For a refrigerator

- freezer, the adjusted volume is defined as the interior volume of the fresh food compartment plus 1.63 times the interior volume of the freezer compartment. 3 Using the CEC database, DOE used the following linear regression to calculate the adjusted volume
( Vol adj ) from the total interior volume ( Vol tot , defined as the sum of fresh food and freezer interior volumes) :

Vol adj = Vol tot • Slope + Intercept Eq. 7 .1 7

Table 7.4.5 Parameters for Calculating Adjusted Volume from Total Interior Volume of Refrigerator

- Freezers

Product Class Slope Intercept R 2 † Count

3. Refrigerator

- freezers: automatic defrost with top

- mounted freezer and no TTD* ice

service 1.2205

- 1.1049 0.9691 1,803

5. Refrigerator

- freezers: automatic defrost

with bottom

- mounted freezer and no TTD

ice service 1.1851 0.0159 0.9929 778

7. Refrigerator

- freezers: automatic defrost

with side

- mounted freezer and TTD ice

service 1.3170

- 1.9992 0.9906 1,866

*Through

- the

- door.

† R 2 is the coefficient of determination , a measure of how well the model fits the data.7

- 24 7.4.3.3 Calculation of Test Energy Consumption

The RECS door style and TTD ice service variables together determine the product class, aside from disting uishing top

- from bottom

- mount refrigerator

- freezers. Table 7.4.6 lists the current energy efficiency standards. The formula that expresses the standard is for maximum allowable kWh per year as a linear function of adjusted volume (AV). 4

, 5

Table 7.4.6 Energy Conse rvation Standards for Refrigerat ion Products

Product Class 2001 Standard 3. Top

- mount refrigerator

- freezers

without TTD* ice service 9.80AV+276.0

5. Bottom

- mount refrigerator

- freezers

without TTD ice service 4.6AV+459.0

7. Side

- by

- side refrigerator

- freezers

with TTD ice service 10.10AV+406.0

9. Upright freezers with automatic

defrost 12.43AV+326.1

10. Chest freezers 9.88AV+143.7
*Through

- the

- door.

7.5 ENERGY USE OF COMPAC T REFRIGERATION PROD UCTS

As mentioned in the introduction to this chapter, compact refrigerators and freezers are used in homes, college dormitories, hotels and motels, and some commercial buildings. While DOE was able to collect about 100 sample points from compact refrigerators used in hotel rooms, concerns over data quality and representativeness prevented DOE from using the data to help determine field energy use. It therefore assumed that the average field energy use of compact refrigerators (and freezers) of a given size is t he same as the maximum energy use allowed by the DOE standard, as measured in the DOE test procedure. In effect, DOE assumed

that variation in field energy use of compact products is a function solely of volume. To represent the distribution of volumes in the field, DOE used data from the 2008 CEC appliance

model database. Figures in a ppendix 7

- B show the distribution of appliance sizes represented

within the database.

DOE used the CEC database to develop a linear equation relating listed total volume to adjusted volume for product class 11. The parameters of the equation are listed in Table 7.5.1. For compact freezers, the adjusted volume is equal to 1.73 times the volume. 3 DOE then used the relation between adjusted volume and energy use described by the DOE test procedure to relate the distribution of volumes in the CEC database to a distribution of energy use values.7

- 25 Table 7.5.1 Parameters for Calculat ing Adjusted Volume from Total Volume for Compact Refrigerator s Product Category Slope Intercept R 2 Count Compact Refrigerators 1.0458

- 0.0905 0.9822 187

7.6 ANNUAL ENERGY CONSUM PTION BY EFFICIENCY LEVEL

This section reports the annual energy consumption calculated for refrigeration products at various efficiency levels if they were used in RECS 2005 homes.

As discussed in chapter 5 , DOE analyzed specific efficiency levels for the considered product classes. Tables 7

. 6 .1 through 7

. 6.4 show the considere d efficiency levels and corresponding average annual energy consumption for each representative product class.

Table 7.6.1 Standard

- Size Refrigerator

- Freezers: Average Annual Energy Use by Efficiency Level

Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- by

- Side Refrigerator

- Freezer

with TTD*

Efficiency Level ( % less than baseline

energy use ) kWh ** Efficiency Level ( % less than baseline

energy use ) kWh ** Efficiency Level ( % less than baseline

energy use ) kWh **

Baseline 501 Baseline 613 Baseline 768

1 (10) 451 1 (10) 551 1 (10) 691

2 (15) 426 2 (15) 521 2 (15) 653

3 (20) 401 3 (20) 490 3 (20) 614

4 (25) 376 4 (25) 459 4 (25) 576

5 (30) 351 5 (30) 429 5 (30) 538

6 (3 6 ) 323 6 (36) 391 6 (33) 515

*Through

- the

- door ice service. **Average energy use calculated over the lifetime of the product , not including icemaker energy ( for product class

7 )

.7

- 26 Table 7.6.2 Standard

- Size Freezers: Average Annual Energy Use by Efficiency Level

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Efficiency Level ( % less than baseline energy use ) kWh * Efficiency Level ( % less than baseline energy use ) kWh *

Baseline 600 Baseline 370

1 (10) 5 40 1 (10) 333

2 (15) 510 2 (15) 315

3 (20) 480 3 (20) 296

4 (25) 450 4 (25) 278

5 (30) 420 5 (30) 259

6 (35) 390 6 (35) 241

7 (40) 360 7 (41) 217

8 (4 4 ) 338

*Average energy use calculated over the lifetime of the product.

Table 7.6.3 Compact Refrigeration Products: Average Annual Energy Use by Efficiency

Level

Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Efficiency Level ( % less than baseline energy

use ) kWh * Efficiency Level ( % less than baseline energy

use ) kWh *

Baseline 32 5 Baseline 31 3

1 (10) 292 1 (10) 281

2 (15) 276 2 (15) 266

3 (20) 260 3 (20) 250

4 (25) 244 4 (25) 235

5 (30) 227 5 (30) 219

6 (35) 211 6 (35) 203

7 (40) 195 7 (42 ) 182

8 (45) 179

9 (50) 162

10 (59) 134

*Average energy use calculated over the lifetime of the product.7

- 27 Table 7.6.4 Built

- In Refrigeration Products: Average Annual Energy Use by Efficiency

Level

Product Class 3A

- BI:

Built

- in All Refrigerator Product Class 5

- BI:

Built

- In Bottom

- Mount

Refrigerator

- Freezer Product Class 7

- BI:

Built

- In Side

- by

- Side Refrigerator

- Freezer with

TTD* Product Class 9

- BI:

Built

- In Upright Freezer

Efficiency

Level ( % less than

baseline

energy use ) kWh * Efficiency

Level ( % less than

baseline

energy use ) kWh * Efficiency

Level ( % less than

baseline

energy use ) kWh * Efficiency

Level ( % less than

baseline

energy use ) kWh *

Baseline 519 Baseline 619 Baseline 758 Baseline 580

1 (10) 467 1 (10) 557 1 (10) 681 1 (10) 522

2 (15) 441 2 (15) 526 2 (15) 643 2 (15) 493

3 (20) 415 3 (20) 495 3 (20) 605 3 (20) 464

4 (25) 389 4 (25) 464 4 (22) 594 4 (25) 435

5 (29 ) 370 5 (27) 450 5 (27) 421

*Average energy use calculated over the lifetime of the product , not including icemaker energy ( for product class 7

- BI )

.7

- 28 REFERENCES

1 U.S. Department of Energy

– Energy Information Ad ministration. Residential Energy Consumption Survey, 2005 Public Use Data Files

. 2009. U.S. Department of Energy: Washington, D

. C. < www.eia.doe.gov/emeu/recs/recspubuse05/pubuse05.html >

2 Meier, A. and M. Martinez. Energy Use of Icemaking in Domestic Refrigerators. ASHRAE Transactions: Symposia

. 1996. AT

- 96

- 19

- 2.

3 Title 10

— Energy, Chapter II

— Department of Energy, Part 430

— Energy Conservation Program for Consumer Products, Subpart B

— Test Procedures

, Appendix A1 and B1.

4 U.S. Department of Energy

– Office of Energy Efficiency and Renewable Energy

. Energy

Conservation Program for Consumer Products: Proposed Rulemaking Regarding Energy Conservation Standards for Refrigerators, Refrigerator

- Freezers, and Freezers

. Federal Register. July 20, 1995

. 60 FR 37388

.

5 U.S. Department of Energy

– Office of Energy Efficiency and Renewable Energy

. Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator

- Freezers

, and Freezers; Final Rule

. Finding of No Significant Impact; Notice

. Federal Register

. April 28, 1997

. 62 FR 23102.

< www.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrig_final.pdf >8

- i CHAPTER 8. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

................................ ................................ ................................ ........... 8

- 1

8.1.1 Approach

................................ ................................ ................................ .......................... 8

- 1

8.1.2 Summary of Inputs

................................ ................................ ................................ ........... 8

- 2

8.2 INPUTS TO LIFE

- CYCLE COST ANALYSIS

................................ ............................. 8

- 7

8.2.1 Inputs to Product Cost

................................ ................................ ................................ ...... 8

- 8

8.2.1.1 Baseline Retail Prices

................................ ................................ .................... 8

- 8

8.2.1.2 Increases in Manufacturer Selling Price

................................ ........................ 8

- 9

8.2.1.3 Markup and Sales Tax

................................ ................................ ................. 8

- 12

8.2.1.4 Installation Cost

................................ ................................ ........................... 8

- 12

8.2.1.5 Consumer Product Cost

................................ ................................ ............... 8

- 12

8.2.2 Inputs to Operating Cost

................................ ................................ ................................ 8

- 14

8.2.2.1 Annual Energy Consumption

................................ ................................ ....... 8

- 15

8.2.2.2 Energy Prices

................................ ................................ ............................... 8

- 18

8.2.2.3 Energy Price Trends

................................ ................................ ..................... 8

- 19

8.2.2.4 Repair and Maintenance Costs

................................ ................................ ..... 8

- 19

8.2.3 Product Lifetimes

................................ ................................ ................................ ........... 8

- 25

8.2.3.1 Estimated Survival Function

................................ ................................ ........ 8

- 25

8.2.3.2 Conversion of First to Second Refrigerators

................................ ............... 8

- 31

8.2.3.3 Standard

- Size Freezers

................................ ................................ ................. 8

- 33

8.2.3.4 Compact Refrigeration Products

................................ ................................ .. 8

- 35

8.2.4 Discount Rates

................................ ................................ ................................ ............... 8

- 36

8.2.4.1 Di scount Rates for Residential Consumers

................................ .................. 8

- 36

8.2.4.2 Assignment of Discount Rates to Sample Households

................................ 8

- 39

8.2.4.3 Discount Rates for Commercial Purchasers

................................ ................ 8

- 39

8.2.5 Compliance Date of Standard

................................ ................................ ........................ 8

- 42

8.2.6 Base

- Case Energy Efficiencies

................................ ................................ ...................... 8

- 43

8.3 INPUTS TO PAYBACK PE RIOD ANALYSIS

................................ ........................... 8

- 47

8.4 RESULTS OF ANALYSES

................................ ................................ .......................... 8

- 48

8.4.1 Standard

- Size Refrigerator

- Freezers

................................ ................................ .............. 8

- 49

8.4.1.1 Summary of Results

................................ ................................ ..................... 8

- 49

8.4.1.2 Distributions of Impacts

................................ ................................ ............... 8

- 50

8.4.2 Standard

- Size Freezers

................................ ................................ ................................ ... 8

- 55

8.4.2.1 Summary of Results

................................ ................................ ..................... 8

- 55

8.4.2.2 Distributions of Impacts

................................ ................................ ............... 8

- 56

8.4.3 Compact Refrigeration Products

................................ ................................ .................... 8

- 60

8.4.3.1 Summary of Results

................................ ................................ ..................... 8

- 60

8.4.3.2 Distributions of Impacts

................................ ................................ ............... 8

- 61

8.4.4 Built

- In Refrigeration Products

................................ ................................ ...................... 8

- 65

8.4.4.1 Summary of Results

................................ ................................ ..................... 8

- 65

8.4.4.2 Distributions of Impacts

................................ ................................ ............... 8

- 678

- ii 8.5 REBUTTABLE PAYBACK P ERIOD

................................ ................................ .......... 8

- 73

8.5.1 Results

................................ ................................ ................................ ............................ 8

- 74

LIST OF TABLES

Table 8.1.1 Standard

- Size Refrigerator

- Freezers: Summary of Inputs to Calculations

.......... 8

- 5

Table 8.1.2 Standard

- Size Freezers: Summary of Inputs to Calculations

.............................. 8

- 6

Table 8.1.3 Compact Refrigeration Products: Summary of Inputs to Calculations

................ 8

- 7

Table 8.2.1 Residential Refrigeration Products: Average Baseline Retail Price

.................... 8

- 9

Table 8.2.2 Standard

- Size Refrigerator

- Freezers: Increase in Manufacturer Selling

Prices Relative to Baseline

................................ ................................ ................. 8

- 10

Table 8.2.3 Standard

- Size Freezers: Increases in Manufacturer Selling Prices Relative

to Baseline

................................ ................................ ................................ .......... 8

- 10

Table 8.2.4 Compact Refrigeration Products: Increases in Manufacturer Selling Prices

Relative to Baseline

................................ ................................ ........................... 8

- 11

Table 8.2.5 Built

- In Refrigeration Products: Increases in Manufacturer Selling Prices

Relative to Baseline

................................ ................................ ........................... 8

- 11

Table 8.2.6 Standard

- Size Refrigerator

- Freezers: Average Consumer Cost

........................ 8

- 12

Table 8.2.7 Standard

- Size Freezers: Average Consumer Cost

................................ ............. 8

- 13

Table 8.2.8 Compact Refrigeration Products: Average Consumer Cost

.............................. 8

- 13

Table 8.2.9 Built

- In Refrigeration Products: Average Consumer Cost

................................ 8

- 13

Table 8.2.10 Standard

- Size Refrigerator

- Freezers: Average Annual Energy Use by Efficiency Level

................................ ................................ ................................ . 8

- 16

Table 8.2.11 Standard

- Size Freezers: Average Annual Energy Use by Efficiency Level

...... 8

- 16

Table 8.2.12 Compact Refrigeration Products: Average Annual Energy Use by Efficiency Level

................................ ................................ ................................ . 8

- 17

Table 8.2.13 Built

- In Refrigeration Products: Average Annual Energy Use by Efficiency Level

................................ ................................ ................................ . 8

- 17

Table 8.2.14 Average Electricity Prices in 2007

................................ ................................ .... 8

- 18

Table 8.2.15 Repair Rates Estimated From Commercial Refrigeration Rulemaking

............. 8

- 20

Table 8.2.16 Rates of Repair by Product Class and Year, With Icemaking Separately

Calculated

................................ ................................ ................................ .......... 8

- 21

Table 8.2.17 Annual Repair Rates Estimated for Residential Refrigerator

- Freezers

............. 8

- 21

Table 8.2.18 Markups Used in Determining Incremental Repair Costs

................................ . 8

- 22

Table 8.2. 19 Average National Baseline Repair Costs for Standard

- Sized Residential Refrigerator

- Freezers

................................ ................................ ......................... 8

- 22

Table 8.2.20 Baseline Annual Repair Cost Estimates

................................ ............................ 8

- 23

Table 8.2.21 Annual Repair Cost For Standard

- Size Refrigerator

- Freezers

.......................... 8

- 23

Table 8.2.22 Annual Repair Cost Fo r Standard

- Size Freezers

................................ ............... 8

- 24

Table 8.2.23 Annual Repair Cost For Compact Refrigeration Products

................................ 8

- 24

Table 8.2.24 Annual Repair Cost For Built

- In Refrigeration Products

................................ .. 8

- 24

Table 8.2.25 Standard

- Size Refrigerator

- Freezers: Comparison of Survey and Shipments Data with Modeled Stock

................................ ................................ . 8

- 298

- iii Table 8.2.26 Standard

- Size Freezers: Comparison of Survey and Shipments Stock to

Modeled Stock

................................ ................................ ................................ ... 8

- 34

Table 8.2.27 Percent of Total Value for Considered Household Debt and Equity Classes

.... 8

- 37

Table 8.2.28 Average Nominal Interest Rates for Household Debt

................................ ....... 8

- 37

Table 8.2.29 Average Real Effective Interest Rates for Household Debt

.............................. 8

- 38

Table 8.2.30 Average Nom inal and Real Interest Rates for Household Equity

..................... 8

- 38

Table 8.2.31 Average Interest on Household Debt and Equity

................................ .............. 8

- 39

Table 8.2.32 Data for Calculating Weighted

- Average Cost of Capital for Commercial

Sectors

................................ ................................ ................................ ................ 8

- 41

Table 8.2.33 Weighted

- Average Cost of Capital for Commercial Sectors

............................. 8

- 42

Table 8.2.34 Discount Rates for Commercial Sectors

................................ ............................ 8

- 42

Table 8.2.35 Standard

- Size Refrigerato r

- Freezers: Historic and Base

- Case Efficiency

Distributions

................................ ................................ ................................ ....... 8

- 44

Table 8.2.36 Standard

- Size Freezers: Historic and Base

- Case Efficiency Distributions

....... 8

- 45

Table 8.2.37 Compact Refrigeration Products: Historic and Base

- Case Efficiency

Distributions

................................ ................................ ................................ ....... 8

- 46

Table 8.2.38 Market Share of ENERGY STAR Products

................................ ...................... 8

- 47

Table 8.4.1 Product Class 3, Top

- Mount Refrigerator

- Freezers: LCC and PBP Results

..... 8

- 49

Table 8.4.2 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: LCC and PBP

Results

................................ ................................ ................................ ................ 8

- 49

Table 8.4.3 Product Class 7, Side

- by

- Side Refrigerator

- Freezers with Through

- the

Door Ice Service: LCC and PBP Results

................................ ........................... 8

- 50

Table 8.4.4 Product Class 9, Upright Freezers: LCC and PBP Results

................................ 8

- 55

Table 8.4.5 Product Class 10, Chest Freezer: LCC and PBP Results

................................ ... 8

- 55

Table 8.4.6 Product Class 11, Compact Refrigerators: LCC and PBP Results

.................... 8

- 60

Table 8.4.7 Product Class 18, Compact Freezers: LCC and PBP Results

............................ 8

- 60

Table 8.4.8 Prod uct Class 3A

- BI, Built

- In All Refrigerators: LCC and PBP Results

.......... 8

- 65

Table 8.4.9 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: LCC

and PBP Results

................................ ................................ ................................ . 8

- 66

Table 8.4.10 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: LCC and PBP Results

................................ ...... 8

- 66

Table 8.4.11 Product Class 9

- BI, Built

- In Upright Freezers: LCC and PBP Results

............. 8

- 67

Table 8.5.1 Standard

- Size Refrigerator

- Freezers: Rebuttable Payback Periods

................... 8

- 74

Table 8.5.2 Standard

- Size Freezers: Rebuttable Payback Periods

................................ ........ 8

- 75

Table 8.5.3 Compact Refrigeration Products: Rebuttable Payback Periods

......................... 8

- 75

Table 8.5.4 Built

- In Ref rigeration Products: Rebuttable Payback Periods

........................... 8

- 76

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for Life

- Cycle Cost and Payback Period Analyses

...... 8

- 4 Figure 8.2.1 Residential and Commercial Electricity Price Tren ds Indexed on 2007

Price

................................ ................................ ................................ ................... 8

- 19 Figure 8.2.2 Comparison of Modeled Refrigerator Age Distribution with Data from Residential Energy Consumption Surveys

................................ ......................... 8

- 308

- iv Figure 8.2.3 Survival Function for Standard

- Size Refrigerator

- Freezers

.............................. 8

- 30 Figure 8.2.4 Function for Conversion of First to Second Refrigerator

- Freezers

................... 8

- 33 Figure 8.2.5 Survival Function for Standard

- Size Freezers

................................ ................... 8

- 35 Figure 8.4.1 Product Class 3, Top

- Mount Refrigerator

- Freezers: Distribution of Life

Cycle Cost Impacts for Efficiency Level 4

................................ ........................ 8

- 51 Figure 8.4.2 Product C lass 3, Top

- Mount Refrigerator

- Freezers: Distribution of Payback Periods for Efficiency Level 4

................................ ............................. 8

- 51 Figure 8.4.3 Product Class 3, Top

- Mount Refrigerator

- Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ...... 8

- 52 Figure 8.4.4 Product Class 5, Bottom

- Mou nt Refrigerator

- Freezers: Range of Life

Cycle Cost Savings by Efficiency Level

................................ ........................... 8

- 52 Figure 8.4.5 Product Class 7, Side

- by

- Side Refrigerator

- Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ...... 8

- 53 Figure 8.4.6 Product Class 3, Top

- Mount Refrigerat or

- Freezers: Range of Payback Periods by Efficiency Level

................................ ................................ ............... 8

- 53 Figure 8.4.7 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: Ra nge of Payback Periods by Efficiency Level

................................ ................................ ............... 8

- 54 Figure 8.4.8 Product Class 7, Side

- by

- Side Refrigerator

- Freezers: Range of Payback

P eriods by Efficiency Level

................................ ................................ ............... 8

- 55 Figure 8.4.9 Product Class 9, Upright Freezers: Distribution of Life

- Cycle Cost Impacts for Efficiency Level 7

................................ ................................ .......... 8

- 56 Figure 8.4.10 Product Class 9, Upright Freezers: Distribution of Payback Periods for Efficiency Level 7

................................ ................................ .............................. 8

- 57 Figure 8.4.11 Product Class 9, Upright Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ................................ . 8

- 58 Figure 8.4.12 Product Class 10, Chest Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ................................ . 8

- 58 Figure 8.4.13 Product Class 9, Upright Freezers: Range of Payback Periods by Efficiency Level

................................ ................................ ................................ . 8

- 59 Figure 8.4.14 Product Class 10, Chest Freezers: Range of Payback Periods by Efficiency

Level

................................ ................................ ................................ .................. 8

- 59 Figure 8.4.15 Product Class 11, Compact Refrigerators: Distribution of Life

- Cycle Cost Impacts for Efficiency Level 5

................................ ................................ .......... 8

- 61 Figure 8.4.16 Product Class 11, Compact Refrigerators: Distribution of Payback Period for Efficiency Level 5

................................ ................................ ........................ 8

- 62 Figure 8.4.17 Product Class 11, Compact Refrigerators: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ .............. 8

- 63 Figure 8.4.18 Product Class 18, Compact Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ............................ 8

- 63 Figure 8.4.19 Product Class 11, Compact Refrigerators: Range of Payback Periods by Efficiency Level

................................ ................................ ................................ . 8

- 64 Figure 8.4.20 Product Class 18, Compact Freezers: Range of Payback Periods by Efficiency Level

................................ ................................ ................................ . 8

- 65 Figure 8.4.21 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers:

Distribution of Life

- Cycle Cost Impacts for Efficiency Level 1

....................... 8

- 678

- v Figure 8.4.22 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers: Distribution of Payback Period for Efficiency Level 1

................................ ..... 8

- 68 Figure 8.4.23 Product Class 3A

- BI, Built

- In All Refrigerators: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ .............. 8

- 69 Figure 8.4.24 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: Range

of Life

- Cycle Cost Savings by Efficiency Level

................................ ............... 8

- 69 Figure 8.4.25 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ ................................ . 8

- 70 Figure 8.4.26 Product Class 9

- BI, Built

- In Upright Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

................................ ................................ .............. 8

- 71 Figure 8.4.27 Product Class 3A

- BI, Built

- In All Refrigerators: Range of Payback Periods by Efficiency Level

................................ ................................ ............... 8

- 71 Figure 8.4.28 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: Range of Payback Periods by Efficiency Level

................................ ............................ 8

- 72 Figure 8.4.29 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: Range of Payback Periods by Efficiency

Level

................................ ................................ ................................ .................. 8

- 73 Figure 8.4.30 Product Class 9

- BI, Built

- In Upright Freezers: Range of Payback Periods by Efficiency Level

................................ ................................ ............................ 8

- 738-1 CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

8.1 INTRODUCTION

This chapter describes the Department of Energy (DOE)’s method and metrics for analyzing the economic impacts on individual consumers of potential energy efficiency standards for refrigeration products. The effects of standards on individual consumers incl ude a change (usually a decrease) in operating cost and a change (usually an increase) in product cost. For each of the 11 representative product classes analyzed in this rulemaking, DOE examined the

life

- cycle cost, payback period, and rebuttable payback period of all of the considered efficiency

levels . The terms used in this analysis are defined below.

**•** Life

- cycle cost (LCC) is the total cost consumers incur during the life of an appliance, including purchase and operating costs (including energy expend itures). DOE discounts future operating costs to the time of purchase, and sums them over the lifetime of a product.

**•** Payback period (PBP) measures the amount of time it takes consumers to recover the assumed higher purchase cost of more energy efficient pr oducts through lower operating costs.

**•** Rebuttable payback period

, a special case of the payback period, is based on laboratory conditions (specifically, those that reflect the DOE test procedure) for energy use. Its other inputs (including electricity price s) reflect representative real

world operating conditions.

Inputs to the LCC and the PBP are discussed in sections 8.2 and 8.3, respectively, of this chapter. Results of the LCC and PBP analyses are presented in section 8.4. The rebuttable PBP is

discuss ed in section 8.5. Key variables and calculations are presented for each of the three metrics listed above. DOE performed the calculations discussed here using a series of Microsoft Excel spreadsheets that are accessible on the Internet ( www.eere.energy.gov/buildings/appliance_standards/ ). Details regarding and instructions for using the spreadsheets are discussed in appendix 8

- A.

8.1.1 Approach

Recognizing that several inputs to the analysis of consumer LCC and PBP are either variable or uncertain, DOE used Monte Carlo simulation and probability distributions to model both the uncertainty and variability of inputs. Appendix 8

- B provides a detaile d explanation of Monte Carlo simulation and the use of probability distributions. DOE developed LCC and PBP spreadsheet models that incorporate both Monte Carlo simulation and probability distributions by using Microsoft Excel ® spreadsheets combined with Crystal Ball ® , a commercially available

add

- in program.8-2 In addition to using probability distributions to characterize several of the inputs to the calculation, DOE developed samples of individual households that use standard

- size refrigeration products. DOE performed the LCC and PBP calculations for each household in the sample to account for the variability in energy consumption and/or energy price associated with a range of households.

As described in chapter 7, DOE used the DOE Energy Information Administration (EIA)’s 2005 Residential Energy Consumption Survey (RECS) to develop household samples

for standard

- size refrigeration products. 1 EIA constructed the 2005 RECS to represent the range of households throughout the Un it ed States.

DOE used the 2005 RECS to establish the variability in the annual energy use of refrigeration products and in energy prices. DOE was able to assign a unique annual energy use and/or energy price to each household in the sample. Because of the large sample of households considered in the LCC and PBP analyses, annual energy use and/or energy prices vary greatly. Thus, although the annual energy use and/or energy prices are known for any particular household, their variability across all house holds contributes to the range of LCCs and PBPs calculated for any particular possible standard.

DOE did not develop a household sample for compact refrigeration products, because many such products are used in lodging, dormitories, and other commercial establishments. DOE estimated the fractions of shipments of compact refrigeration products used in the residential and commercial sectors, then used appropriate inputs for those fractions.

DOE displays LCC and PBP results as distributions of impacts comp ared to baseline conditions. Results, presented in section 8.4, were derived from 10,000 samples for each Monte Carlo simulation run. To illustrate the implications of the analysis, DOE generated a frequency chart that depicts the variation in LCC and PBP for each standard level considered for refrigeration products.

8.1.2 Summary of Inputs

The LCC represents the total consumer cost during the life of a product, including purchase and operating costs (including energy expenditures). DOE discounts future operating cost to the time of purchase, then sums them over the lifetime of each product. The PBP is the change in purchase cost due to an increased efficiency standard divided by the change in annual operating cost that results from the standard. The PBP represents the number of years it will take the customer to recover the increased purchase cost through decreased operating cost.

DOE uses two types of inputs to the calculation of LCC and PBP: (1) inputs for establishing the purchase cost, otherwise known as the consumer product cost, and (2) inputs for determining the operating cost.8-3 The following are the primary inputs for establishing the consumer product cost at each efficiency level.

**•** Baseline selling price : The price at which a manufacturer sells a product identified as

a baseline model.

**•** Increases in manufacturer selling price (M SP) : The change in manufacturer selling price associated with product that meets a particular efficiency level.

**•** Markups and sales tax : The costs associated with converting increases in the MSP into consumer product cost.

The following are the primary inputs for calculating the operating cost at each efficiency

level.

**•** Product energy consumption : The site energy use associated with operating a given product.

**•** Energy prices : The prices consumers paid for energy (electricity) in a recent year.

**•** Energy pri ce trends . Energy prices forecasted into the future.

**•** Repair and maintenance costs : Repair costs are associated with repairing or replacing components that fail. Maintenance costs are associated with maintaining the operation of a product.

**•** Lifetime : The ag e at which a product is retired from service.

**•** Discount rate : The rate at which DOE discounted future expenditures to establish their present value.

Figure 8.1.1 graphically depicts the relationships among the inputs for installed cost and operating c ost used to calculate the LCC and PBP. The yellow boxes in Figure 8.1.1 indicate inputs; the green boxes indicate intermediate outputs; and the blue boxes indicate the final outputs of LCC and PBP.8-4 Figure 8.1.1 Flow Diagram of Inputs for Life

- Cycle Cost and Payback Period Analyses

Tables 8.1.1 through 8.1.3 summarize the input values that DOE used to calculate the LCC and PBP for refrigeration products. The inputs for calculating total installed and operating costs included the product lifetime, discount rate, and energy price trends. DOE used single

- point values to characterize all inputs to total cost, but used probability distributions to capture the uncertainty and/or variability of several inputs to operating cost. For those inputs characterized using probabili ty distributions, the values in the following tables are average or typical values. Baseline

Manufacturer Selling Price

Std-Level

Manufacturer Selling Price Retailer Markup

Sales Tax

Installation

Cost Total Installed

Cost

Energy Consumption Equipment

Price

Lifetime Operating

Cost Annual Energy

Cost

Product

Lifetime Repair and

Maintenance

Cost

Discount Rate

Energy Price

Trends Annual Operating

Cost Payback

Period Life-Cycle

Cost

Energy Prices8-5 Table 8.1.1 Standard

- Size Refrigerator

- Freezers: Summary of Inputs to Calculations

Input Product Class Average or Typical Value Characterization

Baseline retail price * Top

- mount refrigerator

freezer 49 6 200 9 $ Custom distribution

Bottom

- mount refrigerator

- freezer 8 49 200 9 $ Custom distribution

Side

- by

- side refrigerator

freezer with TTD † 1,0 46 200 9 $ Custom distribution

Increase in

manufacturer selling price ** All Varies by efficiency level Single

- point value

Retailer markup All Baseline = 1.45

Incremental = 1.17 Single

- point value

Sales tax All 7.3% Varies depending on region

Annual energy

use Top

- mount refrigerator

freezer Baseline use = 501 kWh‡ Varies depending on age and usage

Bottom

- mount refrigerator

- freezer Baseline use = 613 kWh Varies depending on age and usage

Side

- by

- side refrigerator

freezer with TTD † Baseline use = 768 kWh Varies depending on age and usage

Energy prices All 11.4 cents per kWh Varies depending on region

Energy price

trend All AEO 2010 reference case Two additional scenarios: AEO high and low growth §

Lifetime All 16.2 years (median) Weibull distribution

Discount rate All 5.1% Custom distribution

* Retail price before sales tax. † Through

- the

- door ice service.

** Includes manufacturer markup. ‡ Kilowatt hours § See section 8.2.2.3.8-6 Table 8.1.2 Standard

- Size Freezers: Summary of Inputs to Calculations

Input Product Class Average or Typical Value Characterization

Baseline retail price * Upright 51 8 20 09 $ Custom distribution

Chest 37 8 200 9 $ Custom distribution

Increase in manufacturer selling price † All Varies by efficiency level Single

- point value

Retailer markup All Baseline = 1.45

Incremental = 1.17 Single

- point value

Sales tax All 7.2% Varies depending on region

Annual energy use Upright Baseline use = 600 kWh ** Varies depending on usage

Chest Baseline use = 370 kWh Varies depending on usage

Energy prices All 11.4 cents per kWh Varies depending on region

Energy price trend All AEO 2010 reference case Two additional scenarios: AEO high and low growth ‡

Lifetime All 21.7 years (median) Weibull distribution

Discount rate All 5.1% Custom distribution

* Retail price before sales tax. † Includes manufacturer markup.

** Kilowatt hours. ‡ See section 8.2.2.3.8-7 Table 8.1.3 Compact Refrigeration Products: Summary of Inputs to Calculations

Input Product Class Average or Typical Value Characterization

Baseline retail price * Refrigerator 139 200 9 $ Custom distribution

Freezer 188 200 9 $ Custom distribution

Increase in manufacturer selling price † All Varies by efficiency level Single

- point value

Retailer markup All Baseline = 1.45

Incremental = 1.17 Single

- point value

Sales tax All 7.3% Varies depending on region

Annual energy use Refrigerator Baseline use = 32 5 kWh ** Varies depending on usage

Freezer Baseline use = 31 3 kWh Varies depending on usage

Energy prices All 10.8 cents per kWh Varies depending on region

Energy price trend All AEO 2010 reference case Two additional scenarios: AEO high

- and low

growth ‡

Lifetime Refrigerator 5.6 years (mean) Weibull distribution

Freezer 7.5 years (mean) Weibull distribution

Discount rate All 5.1% (residential users) 6.2% (commercial users) Custom distribution

* Retail price before sales tax. † Includes manufacturer markup

. ** Kilowatt

- hours. ‡ See section 8.2.2.3.

8.2 INPUTS TO LIFE

- CYCLE COST ANALYSIS

Life

- cycle cost (LCC) is the total consumer cost during the life of an appliance, including purchase and operating costs (including energy costs). DOE discounts future operating costs to the time of purchase, then sums them over the lifetime of the product . DOE uses the following equation to define LCC.



## ( **)** 

# ∑

**=** 

### + **+ =**  N

t t t



### r OC PC LCC

1 

### 1

Where:

LCC = life

- cycle cost in dollars;

PC = consumer product cost in dollars;8-8 ∑
= sum over the lifetime, from year 1 to year N ;
N = lifetime of appliance in years;

OC = operating cost in dollars;

r = discount rate; and

t = year for which operating cost is being determined.

DOE expresses dollar values in 2009$ because it gathered most of its data for the LCC and PBP analysis in 2009.

8.2.1 Inputs to Product Cost

DOE calcul ated the cost consumers pay for baseline products based on the following equation.



### ) ( ) ( TAX RSP PC BASE BASE 

### × **=**

Where:

PC BASE = consumer cost for baseline product,

RSP BASE = retail selling price for baseline product, and

TAX= sales tax.

DOE calculated the consumer cost for products having higher efficiency levels based on the following equation.



### ) ( TAX MU MSP PC PC RETINCR STD BASE STD 

### × **× ∆**  **+ =** 

Where:

PC STD = consumer product cost for higher

- efficiency products,

PC BASE = consumer cost for baseline product

Δ MSP STD = change in MSP for more efficient model,

MU RET_INCR = incremental retailer markup,

TAX= sales tax.

8.2.1.1 Baseline Retail Prices

DOE’s engineering analysis (see chapter 5) did not attempt to estimate the manufacturing sales price (MSP) for baseline models. Instead, it developed incremental increases in MSP associated with increases in efficiency level. This approach required DOE to estimate retail prices for the baseline model in each product class.8-9 DOE drew upon proprietary retail price data collected by The NPD Group. 2 These data reflect prices and sales at many retail outlets in the United States, representing more than 50

perce nt of retail sales nationwide. The data include model number, refrigerated volume, configuration of doors and ice

- making, and whether the unit is an ENERGY STAR product. Based on these data DOE developed a sales

- weighted price distribution for non

- ENERGY S TAR appliances in each product class. a For the LCC and PBP analyses of standard

- sized products, DOE assigned a baseline price from that distribution to each household sampled from the EIA’s 2005 Residential Energy Consumption Survey (RECS). 1 For compact pr oduct classes, DOE assigned a baseline price from the distribution to each sampled product. Appendix 8

- C presents the distribution histograms DOE developed for each product class. The average baseline retail prices before sales tax for each refrigeration p roduct class are shown in Table 8.2.1.

Table 8.2.1 Residential Refrigeration Products: Average Baseline Retail Price

Product Class Baseline Retail Price *
2009$

Product class 3: Top

- mount refrigerator

- freezer 496

Product class 5: Bottom

- mount refrigerator

- freezer 849

Product class 7: Side

- by

- side refrigerator

- freezer with TTD † 1046

Product class 9: Upright freezer 518

Product class 10: Chest freezer 378

Product class 11: Compact refrigerator 139

Product class 18: Compact freezer 188

Product class 3A

- BI: Built

- in all refrigerator 4434

Product class 5

- BI: Built

- in bottom

- mount refrigerator

- freezer 4965

Product class 7

- BI: Built

- in side

- by

- side refrigerator

- freezer

with TTD † 7187

Product class 9

- BI: Built

- in upright freezer 4048

* Retail price before sales tax. † Through

- the

- door ice service.

8.2.1.2 Increases in Manufacturer Selling Price

DOE used a combination of cost data submitted by the Association of Home Appliance Manufacturers (AHAM) 3

a DOE assumed that prices for non

- ENERGY STAR models are a reasonable approximation of

prices for the baseline models. and a reverse engineering analysis to estimate increases to manufacturing cost associated with increases in efficiency levels for refrigeration products. Refer to chapter 5, Engineering Analysis, for details. Adding the manufacturer markup described in chapte r 6 yielded the MSP increases for each considered efficiency level and product class shown in Tables 8.2.2 through 8.2.5.8-10 Table 8.2.2 Standard

- Size Refrigerator

- Freezers: Increase in Manufacturer Selling Prices

Relative to Baseline

Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- Mount Refrigerator

Freezer with TTD* ice Efficiency

Level

( % less than

baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency

Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency

Level

( % less than

baseline energy use) Increase in

Manufacturer

Selling Price (2009$) 1 (10) $11.81 1 (10) $12.99 1 (10) $9.90 2 (15) $19.73 2 (15) $21.64 2 (15) $19.03 3 (20) $73.13 3 (20) $37.54 3 (20) $42.45 4 (25) $106.73 4 (25) $89.52 4 (25) $94.21 5 (30) $180.46 5 (30) $175.05 5 (30) $206.85 6 (36) $286.19 6 (36) $293.47 6 (33 ) $295.21
* Through

- the

- door.

Table 8.2.3 Standard

- Size Freezers: Increases in Manufacturer Selling Prices Relative to

Baseline

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$)

1 (10) $11.19 1 (10) $6.44

2 (15) $28.46 2 (15) $14.68

3 (20) $43.77 3 (20) $24.19

4 (25) $67.00 4 (25) $62.33

5 (30) $88.22 5 (30) $79.17

6 ( 35 ) $135.70 6 ( 35 ) $127.07

7 ( 40 ) $201.92 7 ( 41 ) $223.55

8 ( 44 ) $348.618-11 Table 8.2.4 Compact Refrigeration Products: Increases in Manufacturer Selling Prices

Relative to Baseline

Product Class 11: Compact Refrigerator or Refrigerator

- Freezer Product Class 18: Compact Chest Freezer

Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer Selling Price (2009$)

1 (10) $4.64 1 (10) $5.99

2 (15) $8.17 2 (15) $16.70

3 (20) $13.19 3 (20) $52.73

4 (25) $23.22 4 (25) $61.54

5 (30) $31.20 5 (30) $87.84

6 (35) $53.61 6 (35) $94.47

7 (40) $60.14 7 ( 4 2) $157.09

8 (45) $87.47

9 (50) $102.35

10 (59) $155.96

Table 8.2.5 Built

- In Refrigeration Products: Increases in Manufacturer Selling Prices

Relative to Baseline

Product Class 3A

- BI: Built

- in All Refrigerators Product Class 5

- BI: Built

- in Bottom

Mount Refrigerator

- Freezers Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) 1 (10) $7.14 1 (10) $21.47 2 (15) $18.90 2 (15) $85.82 3 (20) $127.10 3 (20) $165.89 4 (25) $272.09 4 (25) $295.29 5 (29 ) $381.70 5 ( 27) $370.21

Product Class 7

- BI: Built

- in Side

- by

Side Refrigerator

- Freezers Product Class 9

- BI: Built

- in Upright

Freezers Efficiency Level

( % less than baseline energy use) Increase in

Manufacturer

Selling Price (2009$) Efficiency Level

( % less than

baseline energy use) Increase in

Manufacturer

Selling Price (2009$) 1 (10) $51.45 1 (10) $15.688-12 2 (15) $123.47 2 (15) $27.44 3 (20) $281.53 3 (20) $99.23 4 ( 22 ) $371.27 4 (25) $211.73 5 ( 27) $297.56

8.2.1.3 Markup and Sales Tax

To derive the incremental increase in consumer product cost for each efficiency level, DOE applied an incremental retail markup and sales tax to the MSP increases shown above. Refer to Chapter 6, Markups for Equipment Price Determination, for details. DOE also applied

sales tax to the basel ine retail prices.

8.2.1.4 Installation Cost

Because the cost to install refrigeration products does not change as efficiency increases, DOE did not incorporate installation costs in its analysis.

8.2.1.5 Consumer Product Cost

Tables 8.2.6 through 8.2.9 present the shipment

- weighted consumer product cost at each considered efficiency standard level for the refrigeration product classes under consideration for new standards. These costs reflect the market efficiency distributions discussed in section 8.2.6.

Table 8.2.6 Standard

- Size Refrigerator

- Freezers: Average Consumer Cost

Product Class 3: Top

- Mount Refrigerator

- Freezer Product Class 5: Bottom

Mount Refrigerator

- Freezer Product Class 7: Side

- by

Side Refrigerator

- Freezer

Efficiency Level

(

% less than baseline energy

use ) Average

Consumer Cost (2009$) Efficiency

Level

(

% less than baseline energy

use ) Average

Consumer

Cost (2009$) Efficiency

Level

(

% less than

baseline

energy use ) Average

Consumer

Cost (2009$)

Baseline $543 Baseline $945 Baseline $1,152

1 (10) $555 1 (10) $947 1 (10) $1,155
2 (15) $563 2 (15) $949 2 (15) $1,160
3 (20) $624 3 (20) $955 3 (20) $1,179
4 (25) $667 4 (25) $1,020 4 (25) $1,244
5 (30) $759 5 (30) $1,127 5 (30) $1,385
6 (36) $892 6 (36) $1,276 6 (33 ) $1,4968-13 Table 8.2.7 Standard

- Size Freezers: Average Consumer Cost

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer Efficiency Level

(

% less than baseline

energy use ) Average Consumer

Cost (2009$) Efficiency Level

(

% less than baseline

energy use ) Average Consumer

Cost (2009$)

Baseline $560 Baseline $407

1 (10) $571 1 (10) $414
2 (15) $592 2 (15) $424
3 (20) $611 3 (20) $436
4 (25) $640 4 (25) $483
5 (30) $667 5 (30) $504

6 ( 35 ) $727 6 ( 35 ) $565

7 ( 40 ) $810 7 (4 1 ) $687
8 ( 44 ) $994

Table 8.2.8 Compact Refrigeration Products: Average Consumer Cost

Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Efficiency Level

(

% less than baseline

energy use ) Average Consumer

Cost (2009$) Efficiency Level

(

% less than baseline energy

use ) Average Consumer

Cost (2009$)

Baseline $146 Baseline $202

1 (10) $151 1 (10) $209
2 (15) $156 2 (15) $223
3 (20) $162 3 (20) $268
4 (25) $174 4 (25) $279
5 (30) $184 5 (30) $312

6 ( 35 ) $212 6 ( 35 ) $320

7 ( 40 ) $221 7 (42) $399
8 ( 45 ) $255
9 (50) $274
10 (55) $341

Table 8.2.9 Built

- In Refrigeration Products: Average Consumer Cost

Product Class 3A

- BI : Built

- in All Refrigerators Product Class 5

- BI: Built

- in Bottom

Mount Refrigerator

- Freezers8-14 Efficiency Level

(

% less than baseline energy

use ) Average

Consumer Cost (2009$) Efficiency Level

(

% less than baseline energy

use ) Average

Consumer Cost (2009$)

Baseline $4,676 Baseline $5,386

1 (10) $4,683 1 (10) $5,390 2 (15) $4,696 2 (15) $5,401 3 (20) $4,826 3 (20) $5,435 4 (25) $5,017 4 (25) $5,607 5 (29) $5,162 5 (27 ) $5,706

Product Class 7

- BI: Built

- in Side

- by

Side Refrigerator

- Freezers Product Class 9

- BI: Built

- in Upright

Freezers Efficiency Level

(

% less than baseline energy

use ) Average

Consumer Cost (2009$) Efficiency Level

(

% less than baseline energy

use ) Average

Consumer Cost (2009$)

Baseline $7,887 Baseline $4,383

1 (10) $7,902 1 (10) $4,400 2 (15) $7,947 2 (15) $4,415 3 (20) $8,078 3 (20) $4,509 4 (22 ) $8,197 4 (25) $4,657 5 (27 ) $4,770

8.2.2 Inputs to Operating Cost

DOE defines operating cost ( OC ) by the following equation.



### MC RC EC OC **+ +**  **=** Where:

EC = energy cost associated with operating the product,

RC = repair cost associated with component failure, and

MC = cost for maintaining appliance operation.

DOE used the following equation to calculate the annual operating cost for baseline products.

BASE BASE ENERGY BASE BASE 

### MC RC PRICE AEC OC **+ +**  **× =**  )

(

Where:

OC BASE = operating cost for baseline product,

AEC BASE = annual energy consumption for baseline product,8-15 PRICE ENERGY = energy price,

RC BASE = repair costs asso ciated with component failure for baseline product, and

MC BASE = maintenance costs for baseline product.

DOE used the following equation to calculate the annual operating cost for higher efficiency products.

STD STD ENERGY STD STD 

### MC RC PRICE AEC OC **+ +**  **× =**  )

(

Where:

OC STD = operating cost of higher

- efficiency product,

AEC STD = annual energy consumption of higher

- efficiency product,

PRICE ENERGY = energy price in each year,

RC STD = repair costs associated with component failure for higher

- efficiency product,

and

MC STD = maintenance costs for higher

- efficiency product.

8.2.2.1 Annual Energy Consumption

As described in Chapter 7, Energy Use Determination, DOE developed samples of

individual households that use each of the standard

- sized refrigeration products considered herein. By developing the samples, DOE was able to calculate the LCC and PBP for each household to account for the variability in both energy use and energy price associated with that

household.

Tables 8.2.10 through 8.2.13 are derived from the analysis describ ed in chapter 7. The values shown for annual energy consumption are averages in the field. For compact products, DOE did not use the RECS sample, and the energy consumption is as measured using the DOE test procedure. DOE captured the variability in energy consumption by using a range of values in its LCC and PBP analyses.8-16 Table 8.2.10 Standard

- Size Refrigerator

- Freezers: Average Annual Energy Use by Efficiency Level

Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- by

- Side Refrigerator

Freezer with TTD *
Efficiency Level (% less than baseline energy use) Energy

Use

kWh Efficiency Level (% less than baseline energy use) Energy

Use

kWh Efficiency Level (% less than baseline energy use) Energy

Use

kWh †

Baseline 501 Baseline 613 Baseline 768

1 (10) 451 1 (10) 551 1 (10) 691
2 (15) 426 2 (15) 521 2 (15) 653
3 (20) 401 3 (20) 490 3 (20) 614
4 (25) 376 4 (25) 459 4 (25) 576
5 (30) 351 5 (30) 429 5 (30) 538
6 (36) 323 6 (36) 391 6 (33) 515

* Through

- the

- door ice service.

† Not including ice maker energy.

Table 8.2.11 Standard

- Size Freezers: Average Annual Energy Use by Efficiency Level

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer
Efficiency Level (% less than baseline energy use) Energy Use

kWh Efficiency Level (% less than baseline energy use) Energy Use

kWh

Baseline 600 Baseline 370

1 (10) 540 1 (10) 333
2 (15) 510 2 (15) 315
3 (20) 480 3 (20) 296
4 (25) 450 4 (25) 278
5 (30) 420 5 (30) 259
6 (35) 390 6 (35) 241
7 (40) 360 7 (41) 217
8 ( 44 ) 3388-17 Table 8.2.12 Compact Refrigeration Products: Average Annual Energy Use by Efficiency

Level

Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer
Efficiency Level (% less than baseline energy use) Energy Use

kWh Efficiency Level (% less than baseline energy use) Energy Use

kWh

Baseline 325 Baseline 313

1 (10) 292 1 (10) 281
2 (15) 276 2 (15) 266
3 (20) 260 3 (20) 250
4 (25) 244 4 (25) 235
5 (30) 227 5 (30) 219
6 (35) 211 6 (35) 203
7 (40) 195 7 (42) 182

8 ( 45 ) 179
9 ( 50 ) 162
10 ( 5 9) 134

Table 8.2.13 Built

- In Refrigeration Products: Average Annual Energy Use by Efficiency

Level

Built

- in All Refrigerators (3A

- BI) Built

- in Bottom

- Mount Refrigerator

Freezers ( 5

- BI) Efficiency Level

(% less than

baseline energy use) Energy Use ( kWh) Efficiency Level

(% less than baseline energy use) Energy Use ( kWh)

Baseline 519 Baseline 619

1 (10) 467 1 (10) 557 2 (15) 441 2 (15) 526 3 (20) 415 3 (20) 495 4 (2 5 ) 389 4 (25) 464 5 (29) 370 5 (27) 450

Built

- in Side

- by

- Side Refrigerator

Freezers (7

- BI) Built

- in Upright Freezers (9

- BI) Efficiency Level

(% less than baseline energy use) Energy Use ( kWh) * Efficiency Level

(% less than baseline energy use) Energy Use ( kWh)

Baseline 758 Baseline 580

1 (10) 681 1 (10) 522 2 (15) 643 2 (15) 493 3 (20) 605 3 (20) 4648-18 4 ( 22 ) 594 4 (25) 435 5 (27) 521 * Not including ice maker energy.

8.2.2.2 Energy Prices

Using data from EIA Form 861 4 , DOE derived average energy prices for 13 geographic

areas in the United States: the nine U.S. Census divisions, plus four large states (New York, Florida, Texas, and California) considered individually. For Census divisions containing one of those large states, DOE left out data for the large state when calculating average regional value s. For example, the Pacific region average excludes California, and the West South Central region

excludes Texas. Using the modified regional data, DOE assigned an appropriate energy price to each household in the sample.

DOE used data from EIA to esti mate electricity prices for residential consumers in each of the 13 geographic areas These data, which are published annually, include annual electricity sales in kilowatt hours (kWh), revenues from electricity sales, and number of consumers by

sector for every utility that serves final consumers. The calculation of an area

- average residential or commercial electricity price proceeds in two steps.

1. For each utility, an average sector (residential or commercial) price is estimated by dividing sector revenues by sector sales.

2. An average regional price is calculated, whereby each utility having customers in a region is weighted by the number of residential consumers served in that region.

The calculation used the most recent EIA data available at the time the analysis was conducted. Table 8.2.14 shows the average residential and commercial electricity price in 2007 for each Census division and large state.

Table 8.2.14 Average Electricity Prices in 2007

Geographic Area Average Residential Price

200 9 $/kWh Average Commercia l Price

200 9 $/kWh

New England 0.162 $0.153

Middle Atlantic 0.127 $0.111

East North Central 0.102 $0.091

West North Central 0.088 $0.075

South Atlantic 0.09 8 $0.085

East South Central 0.087 $0.086

West South Central 0.093 $0.085

Mountain 0.097 $0.083

Pacific 0.099 $0.094

New York State 0.178 $0.168

California 0.150 $0.1368-19 Texas 0.128 $0.118

Florida 0.11 6 $0.101

Source: U.S. Department of Energy

– Energy Information Administration EIA Form 861.

8.2.2.3 Energy Price Trends

To estimate energy prices in future years, DOE multiplied the average prices listed in Table 8.2.14 by the forecast of annual average price changes in EIA’s Annual Energy Outlook 2010 (AEO 2010 5 ). To estimate the trend after 2035, DOE followed guidelines t hat the EIA had provided to the Federal Energy Management Program, which called for using the average rate of change for electricity during 2025

– 2035.

Figure 8.2.1 shows the projected trends in residential and commercial electricity prices

based on the A EO 2010 reference case. For the LCC results presented in this chapter, DOE used only the energy price forecasts from the AEO reference case.

Source: Energy Information Administration, Annual Energy Outlook. 2010

.

Figure 8.2.1 Residential and Commercial Electric ity Price

Trends I ndexed on 2007 P rice

8.2.2.4 Repair and Maintenance Costs

DOE estimated the increase in repair costs due to the use of specific technology in some higher efficiency design options. DOE found no evidence that maintenance costs change as the efficiency of refrigeration products increases, however, and thus excluded those costs from its analysis.

The estimated average repair cost can be expressed as the product of two elements: the average rate of repair of a component times the incremental c ost of repair or replacement compared to the baseline. While detailed incremental component costs were readily available Electricity Price Trends

0.8 0.9 1.0 1.1 1.2

2000 2005 2010 2015 2020 2025 2030 AEO 2010 Reference Res Elec

AEO 2010 Reference Com Elec8-20 from the detailed engineering cost models that DOE developed for two sizes per product class, DOE needed to estimate component repair r ates.

DOE obtained relative component repair rates from a prior rulemaking for commercial refrigeration equipment. b In this rulemaking, the total repair rates of the compressor, evaporator, condenser, evaporator fan, and condenser fan were reported over the 10

- year equipment lifetime. These were converted to constant annual rates, and a rate for electronics component repair was estimated to be the same as that of the compressor. Table 8.2.15 shows the assumed annual repair rates.

Table 8.2.15 Repair Rates Estimate d From Commercial Refrigeration Rulemaking Component 10

- year repair

rate Assumed annual repair

rate Compressor 25% 2.5% Evaporator +

condenser* 5% 0.5%

Evaporator fan 50% 5.0%

Condenser fan 25% 2.5%

Electronics** 2.5%

Total 13%

*DOE assumed these repair rates are equally shared between evaporator and condenser, e.g., each at a 0.25% annual

rate. **Assumed same repair rate as compressor.

To evaluate whether the above commercial total repair rate (sum of individual rates) is applicable for residential refrigerator

- freezers, DOE sought data for total repair rates from Consumers Union, which conducts an annual survey of approximately 100,000 members in the U.S. The survey gathered in April

- June 2009 provided total repair rates for standard

- siz e refrigerator

- freezer product classes, both with and without automatic icemaking, for units sold in 2005 or later. For products with automatic icemaking, repairs due to icemaking were separated in the data, and could be subtracted from total repairs to ob tain a non

- icemaking total repair rate for the first 4.4 years of a product’s life. Icemaking repair rates, while important to consumers, were not needed for this analysis since this rulemaking does not specifically address icemaking energy

reductions and the design options do not change any icemaking

- specific components.

Consumers Union provided cumulative rates of repair in 2005

- 2009 by asking consumers whether the appliance “has ever been repaired,” and from this data DOE was able to extract

annual rat es of repair by year. Because there was no consistent trend in repair rates over time,

b Commercial Refrigeration Equipment Final Rule Technical Support Document . Available at: http://www1.eere.energy.gov/buildings/appliance_ standards/commercial/refrig_equip_final_rule _tsd.html8-21 DOE assumed that annual repair rates were constant. Without additional data, this assumption was also extended to ages 5 years and beyond for subsequent analysis.

DOE used the total annual non

- icemaking repair rates to scale the commercial refrigerator component

- specific repair rates (Table 8.2.15) to obtain residential component

specific repair rates for standard

- size refrigerator

- freezer product classes (3, 5 and 7). The scaling factor is the ratio of the average annual non

- icemaking repair rate to the total commercial refrigerator repair rate (13%). To derive the scaling factor for standard

- size freezers and compact refrig products, DOE used the shipment

- weighted aver age repair rate for product classes 3, 5 and 7. Total repair rates excluding icemaking ranged from 2.1%/yr for PC3 to 5.7%/yr for PC5, equivalent to about 16

- 44% of the commercial refrigeration equipment total repair cost. See

Table 8.2.16.

Table 8.2.16 Rates of Repair by Product Class and Year, With Icemaking Separately

Calculated

Non

- icemaking annualized repair rate

Product

class 2008

- 2009 (17 months) 2007 2006 2005 Average Scaling

factor for

commercial

rates*

3 3.8% 1.9% 0.6% 1.5% 2.12% 0.163

5 4.0% 8.0% 7.2% 4.2% 5.68% 0.437

7 3.9% 3.5% 3.5% 4.5% 3.86% 0.297 Weighted Average 3.9% 4.4% 3.4% 3.2% 3.75% 0.288

Icemaking annualized repair rate

3 0.8% 0.6% 0.5% 0.6% 0.64%

5 1.1% 2.0% 1.8% 1.3% 1.51%

7 3.9% 3.5% 3.5% 4.5% 3.86%

Table 8.2. 17 shows the annual repair rates estimated for residential refrigerator

- freezers.

Table 8.2.17 Annual Repair Rates Estimated for Residential Refrigerator

- Freezers

Component Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- Mount Refrigerator

Freezer with

TTD* ice maker Other Product

Classes Compressor 0.41% 1.09% 0.74% 0.72% Evaporator 0.04% 0.11% 0.07% 0.07% Evaporator fan 0.82% 2.18% 1.48% 1.44%

Condenser 0.04% 0.11% 0.07% 0.07%

Condenser fan 0.41% 1.09% 0.74% 0.72%8-22 Electronics 0.41% 1.09% 0.74% 0.72%

Total 2.12% 5.68% 3.86% 3.75%
* Through

- the

- door

Component repair costs were estimated from the incremental cost models developed in Chapter 5, and multiplied by the above repair rates to come up with annual costs by component for each size and product class. Incremental manufacturer’s costs were scaled by the manufacturer markup, incremental retail markup, average sales tax markup and repair markup representative of t he residential repair and maintenance industry and provided by RSMeans. See

Table 8.2.18.

Table 8.2.18 Markups Used in Determining Incremental Repair Costs

Type of Markup Value

Reference Conventional Built

- in Manufacturer markup 1.26 1.40 TSD Chapter 6

Incremental retail markup 1.17 TSD Chapter 6

Sales tax markup 1.069 TSD Chapter 6 Repair markup 1.10 RSMeans 2010 Total markup 1.734 1.926

Finally, baseline repair costs were obtained from data provided by Best Buy Co., Inc. [ 2010, “Geek Squad Black Tie Protection,” data provided by Chartis Insurance]; they reflect average national repair cost. No markups were applied to these end

- consumer based costs. See

Table 8.2. 19

.

Table 8.2.19 Average National Base line Repair Costs f or Standard

- Siz ed Residential Refrigerator

- Freezers Component Repair cost Compressor $535 Evaporator fan $215

Condenser $310

Condenser fan $215

Thermostat $205

Icemaker $295 Source: Best Buy, 2010, "Geek Squad Black Tie Protection". Data provided by Chartis Insurance ( www.chartisinsurance.com ). Pricing reflects average national repair cost.

Average annual repair costs were obtained by multiplying the base line repair costs by the repair rate for product classes 3 , 5, and 7. As the Best Buy data was only applicable to product classes 3, 5 and 7, DOE extrapolated to other product classes by examining the ratio of annual cost to initial purchase price for product classes 3, 5, and 7. DOE found that for all three prod uct8-23 classes, this ratio was close to 1%. Therefore, DOE assumed a similar ratio holds for product classes 9, 10, 11 and 18, and used these to assign annual base line repair costs to these product

classes. For built

- in product classes 3A, 5, 7 and 9, DOE use d the same annual repair costs as for the corresponding conventional product classe s 3, 5, 7 and 9, respectively. See Table 8.2.20.

Tables 8.2.21 through 8.2.24 show the estimated annual repair costs by efficiency level for each product group.

Table 8.2.20 Base line Annual Repair Cost Estimates

Product class Annual repair cost excluding

icemaking Icemaking repair cost Total

annual repair cost

3 $5.77 $1.89 $ 7.66

5 $15.47 $4.45 $1 9.92

7 $10.51 $11.39 $21.90

9 $4.37 $4.37

10 $2.83 $2.83

11 $1.43 $1.43

18 $1.80 $1.80

Table 8.2.21 Annual Repair Cost For Standard

- Size Refrigerator

- Freezers

Product Class 3: Top

- Mount Refrigerator

- Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- Mount Refrigerator

Freezer with TTD*

ice making Efficiency

Level

(% less than

baseline energy use) Total annual repair cost Efficiency

Level

(% less than baseline energy use) Total annual repair cost Efficiency

Level

(% less than

baseline energy use) Total

annual repair cost 1 ( 10 ) $7.70 1 ( 10 ) $20.14 1 ( 10 ) $21.99 2 ( 15 ) $7.74 2 ( 15 ) $20.25 2 ( 15 ) $22.11 3 ( 20 ) $8.03 3 ( 20 ) $20.35 3 ( 20 ) $22.26 4 ( 25 ) $8.06 4 ( 25 ) $20.68 4 ( 25 ) $22.62 5 ( 30 ) $8.09 5 ( 30 ) $21.24 5 ( 30 ) $22.99 6 ( 3 6) $8.34 6 ( 3 6) $21.68 6 ( 3 3) $22.99

* Through

- the

- door8-24 Table 8.2.22 Annual Repair Cost For Standard

- Size Freezers

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer Efficiency Level

(% less than baseline energy use) Total annual repair

cost Efficiency Level

(% less than baseline energy use) Total annual repair

cost 1 ( 10 ) $4.53 1 ( 10 ) $2.89 2 ( 15 ) $4.66 2 ( 15 ) $2.93 3 ( 20 ) $4.74 3 ( 20 ) $2.95 4 ( 25 ) $4.74 4 ( 25 ) $2.95 5 ( 30 ) $4.74 5 ( 30 ) $2.95 6 ( 3 5) $5.17 6 ( 3 5) $3.54 7 ( 4 0) $5.65 7 (41) $3.54 8 (44) $5.65

Table 8.2.23 Annual Repair Cost For Compact Refrigeration Products

Product Class 11: Compact Refrigerator or Refrigerator

Freezer Product Class 18: Compact Chest Freezer Efficiency Level

(% less than baseline energy use) Total annual repair

cost Efficiency Level

(% less than baseline energy use) Total annual repair

cost 1 ( 10 ) $1.47 1 ( 10 ) $1.86 2 ( 15 ) $1.50 2 ( 15 ) $1.88 3 ( 20 ) $1.50 3 ( 20 ) $1.88 4 ( 25 ) $1.50 4 ( 25 ) $1.88 5 ( 30 ) $1.50 5 ( 30 ) $2.50 6 ( 3 5) $1.82 6 ( 3 5) $2.50 7 ( 4 0) $1.82 7 (42) $2.50 8 (44) $2.15 9 ( 50 ) $2.15 10 (59) $2.15

Table 8.2.24 Annual Repair Cost For Built

- In Refrigeration Products

Product Class 3A

- BI: Built

- in All Refrigerators Product Class 5

- BI: Built

- in Bottom

- Mount Refrigerator

- Freezers Efficiency Level

(% less than baseline energy use) Total annual repair

cost Efficiency Level

(% less than baseline energy use) Total annual repair

cost 1 ( 10 ) $7.73 1 ( 10 ) $20.168-25 2 ( 15 ) $7.83 2 ( 15 ) $21.26 3 ( 20 ) $7.83 3 ( 20 ) $21.26 4 ( 25 ) $8.30 4 (25) $22.51 5 (29) $8.76 5 (27) $22.51

Product Class 7

- BI: Built

- in Side

- by

- Side Refrigerator

- Freezers Product Class 9

- BI: Built

- in Upright Freezers Efficiency Level

(% less than baseline energy use) Total annual repair

cost Efficiency Level

(% less than baseline energy use) Total annual repair

cost 1 ( 10 ) $22.38 1 ( 10 ) $4.54 2 ( 15 ) $23.32 2 ( 15 ) $4.72 3 ( 20 ) $23.32 3 ( 20 ) $5.38 4 (22) $23.32 4 (25) $5.38 5 (27) $5.38

8.2.3 Product Lifetimes

DOE estimated product lifetime s by fitting a survival probability function to data of historical shipments and age distributions of products. DOE performed separate modeling for standard size refrigerator

- freezers, standard size freezers, and compact refrigeration products. The conversion from primary to secondary refrigerator

- freezers was also modeled as part of the

lifetime determina tion for standard size refrigerator

- freezers.

8.2.3.1 Estimated Survival Function

The Energy Information Agency (EIA)’s Residential Energy Consumption Survey (RECS) 1 of occupied primary housing units records the presence of various appliances in each household, and places the age of each appliance into bins comprising several years. Data from

the U.S. Census’s American Housing Survey (AHS), 6 which surveys all housing including vacant and second homes, enabled DOE to adjust the RECS data to reflect some appliance use outside of primary residences. By combining the results of both surveys with the known history of appliance shipments (collected from Appliance magazine or directly from manufacturer trade associations), DOE estimated the percentage of appliances of a given age still in operation. This survival function, which DOE assumed has the form of a cumulative Weibull distribution, provides an average and a median appliance lifetime.

The Weibull distribution is a probability distribution commonly used to measure failure

rates. c

c For reference on the Weibull distribution, see sections 1.3.6.6.8 and 8.4. 1.3 of the

NIST/SEMATECH e

- Handbook of Statistical Methods

, < Its form is similar to an exponential distribution, which models a fixed failure rate, except

www.itl.ni st.gov/div898/handbook/ >

.8-26 that a Weibull distribution allows for a failure rate that changes over time in a particular fashion.

The cumulative Weibull distribution takes the form:



# e x



### x P **β**

**α**

**θ ** 

** **  ** **  ****

**−**

**−**



### = ) ( for x > θ and

P(x) = 1 for x ≤ θ

Where:

P(x) = probability that the appliance is still in use at age x ;

x = appliance age;

α = scale parameter, which would be the decay length in an exponential distribution;
β = shape parameter, which determines the way in which the failure rate changes through time; and

θ = delay parameter, which allows for a delay before any failures occur.

When β = 1, the failure rate is constant over time, giving the distribution the form of a
cumulative exponential distribution. In the case of appliances, β commonly is greater than 1, reflecting an increasing failure rate as appliance s age.

The RECS survey is DOE’s primary resource for appliance ages. For several appliances, including refrigerators and freezers, the survey asks respondents to identify the appliance’s age

as:

**•** less than 2 years old,

**•** 2 to 4 years old,

**•** 5 to 9 years old

,

**•** 10 to19 years old, or

**•** more than 20 years old.

The RECS survey has been conducted every three or four years for the past several decades. For this analysis, DOE used the surveys conducted in 1990, 1993, 1997, 2001, and

2005. DOE used the AHS count of ho using units that contain refrigerators to scale the RECS

data to better match the total installed stock. The U.S. Census AHS does not include data on

freezers. DOE used the RECS micro

- data to exclude from this analysis refrigerators that are both

“half

- hei ght” and less than 10 cubic feet in capacity, because such refrigerators are not standard

sized. To determine overall refrigerator lifetime, DOE included all appropriately sized refrigerators, whether the household’s first (primary) or second refrigerator. Households that did not know the age of their appliance were allocated among the remaining age bins according to the distribution of respondents who did report the appliance age.

Refrigerator ownership exhibits complex consumer behavior, which is not ad equately reflected in AHS. In particular, AHS records only whether a housing unit contains a refrigerator, not the number of refrigerators. In addition, AHS may record a unit as containing a refrigerator8-27 when it contains a compact, rather than standard

- siz e, appliance. Therefore, DOE used AHS only to scale the number of first refrigerators recorded by RECS. The baseline number of refrigerators reported in each RECS age bin is the sum of the AHS

- scaled first refrigerators and the un

- scaled,

standard

- size sec ond refrigerators.

DOE adjusted the RECS survey data to account for the fact that the RECS survey begins its reference year with July, whereas shipments data are provided for each calendar year. DOE adjusted the data by using the survival function to mod el the additional retirement and replacement of appliances that takes place in the latter half of a survey year (after a given respondent is surveyed).

DOE used the RECS data on appliance ages, combined with the history of appliance shipments, to develop survival functions for refrigeration products. For example, DOE summed the total shipments from 5 to 9 years before each RECS survey, then compared this number with the number of units still in use at the time of the survey to approximate the percentage of surviving appliances within that age bin. By combining the age bins from the five RECS surveys with shipments data, DOE had enough data to use a least

- s quares method to build a fit to a Weibull distribution and find the parameters ( α , β

, θ ) that best approximate the number of surviving units. Because the first two (youngest) RECS bins tend to have a large scatter relative to the shipments in those years, DOE combined the RECS and shipments data in the first two bins. Refrigerators and freezers generally do not fail during their first four years, so combining bins did not lower appreciably the accuracy of the distribution. DOE weighted each bin’s

contributi on to the sum of squares by the inverse of the variance in RECS survey results, which controls for the changes in sample size between bins and through time. d RECS has a complex error model. DOE used only the error due to finite sample size to determine the variance for weighting the age bins. The equation for the sum of squares that DOE minimized is:



## ( **)** 

## ∑ **−**

i RECS i i i Surv RECS

2

, 2

**σ** ,

Where:

i = the identifier for a bin from a single RECS;

RECS i = the number of appliances reported by RECS in bin I ; Surv i = the number of surviving appliances in bin i predicted by the Weibull distribution applied to the number of appliances shipped (a function of α , β , and θ ); and

σ i,RECS = the standard error (square root of the variance) of the RECS data point for bin i.

T able 8.2.25 shows the RECS data for refrigerators, the associated total shipments, and

the best

- fit Weibull calculation of stock by age bin. Figure 8.2.2 plots the data from the third and

fourth columns of Table 8.2.25 against each other to show the quality of the fit. DOE allowed the

d See sections 4.1.4.3, 4.4.3.2, and 4.4.5.2 of NIST/SEMATECH e

- Handbook of Statistical

Methods

, <www.itl.nist.gov/div898/handbook/>

.8-28 delay parameter, θ , to vary only between 1 and 5 years, which corresponds to common warranty periods (see discussion b elow). For refrigerators and freezers, the best fit within this range is 5

years.

The Weibull distribution, shown in Figure 8.2.3 , is characterized by the parameters α = 13.91, β = 1.68, and θ = 5.0. This distrib ution has a mean refrigerator lifetime of 17.43 years and a median lifetime of 16.18 years.8-29 Table 8.2.25 Standard

- Size Refrigerator

- Freezers: Comparison of Survey and Shipments

Data with Modeled Stock

RECS 2005 All Refrigerators Second Refrigerators

Age Bin years Shipments RECS Stock Modeled

Stock RECS Stock Modeled

Stock

0 to 4 51,119,128 56,880,896 51,119,128 5,311,005 3,041,016

5 to 9 42,988,500 40,150,841 41,031,292 4,983,112 3,524,129

10 to 19 68,088,000 36,771,769 40,997,548 8,672,157 6,942,353

20 or more 165,800,000 10,337,608 12,039,872 4,139,841 4,628,220

RECS 2001 All Refrigerators Second Refrigerators

Age Bin years Shipments RECS Stock Modeled

Stock RECS Stock Modeled

Stock

0 to 4 44,319,100 46,312,479 44,319,100 2,460,510 2,637,703

5 to 9 36,982,000 39,491,335 35,298,172 3,868,224 3,031,985

10 to 19 60,556,000 35,970,898 36,813,807 6,572,685 6,198,453

20 or more 144,325,000 11,301,203 11,920,574 3,955,496 4,580,842

RECS 1997 All Refrigerators Second Refrigerators

Age Bin years Shipments RECS Stock Modeled

Stock RECS Stock Modeled

Stock

0 to 4 38,185,000 44,356,564 38,185,000 2,047,982 2,274,485

5 to 9 32,698,000 36,760,359 31,123,487 2,782,204 2,695,071

10 to 19 56,244,000 31,056,224 33,972,064 5,078,190 5,724,270

20 or more 122,660,000 10,989,427 11,832,244 3,879,197 4,475,841

RECS 1993 All Refrigerators Second Refrigerators

Age Bin years Shipments RECS Stock Modeled

Stock RECS Stock Modeled

Stock

0 to 4 33,088,000 37,322,759 33,088,000 1,605,544 1,972,965

5 to 9 31,584,000 35,001,768 30,138,108 2,289,052 2,591,010

10 to 19 52,400,000 32,735,032 30,891,143 4,695,960 5,348,774

20 or more 101,577,000 13,119,858 11,723,329 5,708,862 4,296,210

RECS 1990 All Refrigerators Second Refrigerators

Age Bin years Shipments RECS Stock Modeled

Stock RECS Stock Modeled

Stock

0 to 4 32,670,000 38,098,670 32,670,000 1,784,095 1,950,717

5 to 9 26,419,000 30,724,176 25,249,353 2,227,766 2,158,527

10 to 19 56,584,000 34,088,557 33,242,186 5,316,297 5,767,417

20 or more 82,797,000 12,571,836 10,159,632 4,869,236 3,737,018
Source: U.S. Department of Energy

– Energy Information Agency. Residential Energy Consumption Survey. 1990, 1993, 1997, 2001, and 2005.8-30 Figure 8.2.2 Comparison of Modeled Refrigerator Age Distribution with Data from Residential Energy Consumption Surveys

Figure 8.2.3 Survival Function for Standard

- Size Refrigerator

- Freezers 0 10000000 20000000 30000000 40000000

0 10000000 20000000 30000000 40000000

RECS reported number of refrigerators by binCalculated number of refrigerators by bin

bins

ideal

16.18

17.43

0.0 0.2 0.4 0.6 0.8 1.0 1.2

0 5 10 15 20 25 30 35 40 45 50

Age (years)Fraction surviving Survival function

Median lifetime

Mean lifetime8-31 The method DOE used to calculate product lifetimes incorporates several assumptions:

• Appliance lifetime can be modeled by a survival function. In particular, a Weibull distribution is an appropriate survival function.

• The appliance survival function does not change through time.

• The survival function is independent of other household factors (such as household size or geographic region) as well as product class (within standard

- size refrigerators or freezers).

• RECS respondents neither systematically overestimated nor underestimated the current age of their appliance.

• The historical shipment data are accurate.

• The shipped appliances are i nstalled exclusively (or almost exclusively) in residences.

• The Weibull delay parameter, θ , is limited to between 1 and 5 years.

Three of these assumptions reflect analytical choices made by DOE. The first is the assumption that a Weibull distribution is the appropriate distribution to use for rates of appliance retirement. This distribution is the standard one used in lifetime analyses, but it is not guaranteed

to reflect actual real

- world experience. The second assumption is that consumer behavior and

me chanical appliance lifetime have not changed over time. This assumption required DOE to treat equally all data from the several RECS surveys. Using only recent surveys (which may better reflect recent consumer behavior and appliance lifetime) would provide only a few data points for attempting least

- squares fits, producing large statistical uncertainty.

The third assumption concerns the Weibull delay parameter. DOE limited the delay parameter to between 1 and 5 years to reflect the range of common appliance warranties. A delay of less than 1 year would imply that some appliances fail or are replaced withi n their first year of use. A delay of more than 5 years would imply that no appliances are replaced for some time after the end of the longest standard warranty. Fits using θ > 5 also commonly show nonsensical behavior, with sharp changes in consumer behav ior or appliance survival immediately following the delay period.

8.2.3.2 Conversion of First to Second Refrigerators

When a household purchases a new refrigerator, sometimes it uses its original unit as a secondary appliance in the basement or garage. DOE modele d the process by which first refrigerators are converted to second refrigerators as a Weibull process having a cumulative

distribution of the form:



###  ** **  ** **  ** **  ****

**− ×** 

**− +**  **= **  ** **  ** **  ****

**−**

**−** 

# e x



### x P **β**

**α**

**θ** 

### δ **δ** 1 ) 1 ( ) ( for x > θ and

P(x) = δ for x ≤ θ8-32 Where:

P(x) = probability that the appliance has been converted at age x ;

x = appliance age;

α = the scale parameter, which would be the decay length in an exponential distribution;
β = the shape parameter, which determines the way in which the conversion rate change s through time;

δ = the percentage of shipments that are used immediately as second refrigerators; and

θ = the delay parameter, which allows for a delay before any conversions occur.

Rather than comparing second refrigerators to shipments, DOE compared them with the existing total installed base of refrigerators of a certain age, as measured by RECS. As with calculating appliance lifetime, the RECS data were adjusted with AHS data. In essence, DOE

constructed a Weibull distribution to model a conversion function rather than a survival function. In addition, the model allows for the direct purchase of a new second refrigerator. A refrigerator bought to be a second refrigerator is modeled as being converted from first to second immediately at purchase; the offset parameter δ represents those units. Refrigerators commonly are bought to be second units, as indicated by the relatively large number of young second refrigerators reported by in RECS surveys.

DOE fit the conversion function using results from the 1990, 1993, 1997, 2001, and 2005

RECS. The RECS micro

- data again enabled removing refrigerators that are not standard size, which has a significant effect given that many compact refrig erators are used as second units. In

Table 8.2.25 the fifth column shows the RECS

- derived stock of second refrigerators by age bin,

and the sixth column shows the best fit from a Weibull distribution. Figure 8.2.4 shows the

Weibull distribution. The best

- fit Weibull parameters for the conversion function are α = 38.12,
β = 2.03, and θ = 0.0, with an offset of 5.6 percent (meaning that 5.6 percent of shipments are

sold as new s econd refrigerators). Roughly 1.5 percent of surviving refrigerators are converted from first to second refrigerator status each year, and roughly 20 percent of surviving refrigerators are converted to second refrigerators before they reach 15 years of age

.8-33 Figure 8.2.4 Function for Conversion of First to Second Refrigerator

- Freezers

8.2.3.3 Standard

- Size Freezers

DOE assumed relatively simple consumer behavior related to freezers. DOE did not model the conversion from first to second freezer for households having more than one freezer, but simply used all freezer data from RECS. Standard

- sized freezers were assumed to have a capacity greater than 10 cubic feet. As with refrigerators, RECS bins were adjusted for units replaced in the second half of a year to synchronize the RECS and shipments data. RECS did not collect freezer lifetime data in 1990, so DOE used results from only the 1993, 1997, 2001, and 2005 surveys. The U.S. Census AHS survey does not report data on freezers, so the RECS bins were not scaled by the AHS tota l as for refrigerators. Before 2005, RECS reported the age distribution only for a household’s first freezer, so DOE assumed that second and third freezers have the same age distribution as first freezers.

The best

- fit Weibull parameters for freezer life time are α = 19.49, β = 2.40, and θ = 5.0. The resulting calculated mean freezer lifetime is 22.28 years; the median is 21.73 years.

Table 8.2.26 lists the (adjusted) number of freezers reported in each RECS age bin , along with

the modeled stock based on the best

- fit Weibull survival function and the manufacturer

- provided shipments history. Figure 8.2.5 shows the survival function used for standard

- size freezers in the LCC and national impact analyses. 0.0 0.2 0.4 0.6 0.8 1.0

0 10 20 30 40 50

Age (years)Fraction converted to 2nd refrigerator
Conversion function8-34 Table 8.2.26 Standard

- Size Freezers: Comparison of Survey and Shipments Stock to

Modeled Stock

RECS 2005 Age Bin years Shipments RECS Stock Modeled Stock

0

– 4 12,003,000 9,378,328 12,003,000

5

– 9 8,617,000 8,118,709 8,557,502

10

– 19 13,571,000 9,886,011 11,269,325

20 or more 47,672,000 7,607,227 6,973,305

RECS 2001 Age Bin years Shipments RECS Stock Modeled Stock

0

– 4 9,284,000 8,462,128 9,284,000

5

– 9 7,615,000 6,939,187 7,557,289

10

– 19 12,648,000 12,144,649 10,366,534

20 or more 42,528,000 7,494,606 7,817,703

RECS 1997 Age Bin years Shipments RECS Stock Modeled Stock

0

– 4 7,580,000 7,192,449 7,580,000

5

– 9 6,578,000 7,527,447 6,529,381

10

– 19 13,920,000 12,591,552 11,241,688

20 or more 36,203,000 6,561,157 8,045,004

RECS 1993 Age Bin years Shipments RECS Stock Modeled Stock

0

– 4 6,700,000 6,018,630 6,700,000

5

– 9 6,250,000 6,924,204 6,202,243

10

– 19 17,801,000 13,279,168 14,110,780

20 or more 27,388,000 8,277,900 6,374,9218-35 Figure 8.2.5 Survival Function for Standard

- Size Freezers

8.2.3.4 Compact Refrigeration Products

As mentioned previously, compact refrigeration products are used in the residential and

commercial sectors. RECS micro

- data identify households that have refrigerators that are “half

height” and less than 10 cubic feet in capacity. DOE considered those hou seholds as potentially using compact refrigerators. EIA’s Commercial Building Energy Consumption Survey (CBECS) survey of 2003 7 notes the presence of a residential

- style refrigerator in an establishment. However, CBECS provides no further detail regarding the size of the refrigerator. Thus, RECS and CBECS data together do not provide enough detail on compact refrigerators to develop a survival function similar to the ones developed for standard

- sized refrigerator

- freezers and

freezers.

DOE assumed that a Weibull distribution remains the appropriate functional form to represent retirement rates of compact refrigeration products. DOE initially used the average value of lifetime and historical shipments data from Appliance magazine to estimate Weibull

parame ters for compact refrigerators. When DOE applied the average lifetime of 10 years, given

in Appliance magazine, to historical shipments, the model yielded a stock of compact refrigerators that was more than double the stock indicated by RECS and CBECS. DOE 21.73

22.28

0.0 0.2 0.4 0.6 0.8 1.0 1.2

0 5 10 15 20 25 30 35 40 45 50

Age (years)Fraction surviving Survival function

Median lifetime

Mean lifetime8-36 therefore calibrated the average lifetime to match the stock of compact refrigerators as reported by the surveys (see chapter 9 for further details).

The estimated Weibull parameters for compact refrigerator lifetime are α = 5.75 and β

= 1.75. The resul ting calculated mean lifetime is 5.62 years. For determining the lifetime of compact freezers, DOE used a scaling factor proportional to the ratio of the lifetimes of standard

sized refrigerators and standard

- sized freezers. The calculated mean lifetime of a compact freezer is 7.46 years.

8.2.4 Discount Rates

To discount future operating cost expenditures to establish their present value, DOE uses consumer (or customer) d iscount rates. DOE derived discount rates for the LCC and PBP analyses from estimates of the cost to finance purchase of the considered products. In addition to estimating discount rates for appliances bought directly by residential consumers, DOE also

estimated discoun t rates for purchasers of compact refrigerators and freezers in the commercial

sector.

8.2.4.1 Discount Rates for Residential Consumers

Households use various methods to finance the purchase of major appliances. In principle, one could estimate the interest rates on the actual financing vehicles used to purchase appliances. The frequency with which each financing vehicle is used to purchase an appliance is unknown, however.

DOE’s approach involves identifying all possible debt or asset classes that might be use d to purchase the considered appliances or that might be affected indirectly. An indirect effect would arise if a household sold assets in order to pay off a loan or credit card debt that might have been used to finance the appliance purchase.

To develo p a weighting for the debt or asset classes, DOE estimated the average percentage shares of the various types of debt and equity in the average U.S. household using

data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1989, 1992,

199 5, 1998, 2001, 2004, and 2007. 8 (The survey is conducted every three years.) DOE excluded debt from primary mortgages and assets considered non

- liquid (such as retirement accounts), because the magnitude of these classes is great, and they are unlikely to be used for or affected by purchase of appliances. Table 8.2.27 shows the average percentages of each considered type of debt or equity in each survey, as well as the mean percentage of each source of financing throughout the 7 years surveyed. The mean sha res are the basis for the weight given to each

class.8-37 Table 8.2.27 Percent of Total Value for Considered Household Debt and Equity Classes

Type of Debt or Equity 1989 % 1992 % 1995 % 1998 % 2001 % 2004 % 2007 % Mean %

Home equity loan 4.3 4.5 2.7 2.8 2.8 4.4 4.6 3.7

Credit card 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1

Other installment loan 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.6

Other residential loan 4.4 6.9 5.2 4.3 3.1 5.8 7.1 5.3

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.5

Checking account 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.4

Savings or money market

account 19.2 18.8 14.0 12.8 14.2 15.1 13.0 15.3

Certificate of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 8.6

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 1.4

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 9.5

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 29.0

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 18.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and

2007.

The source for interest rates for loans, credit cards, and lines of credit was the Federal

Reserve Board’s SCF for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Table 8.2.28 shows the average nominal rates in each year and the inflation factors used to cal culate real rates. DOE calculated effective interest rates for home equity loans by taking into account that interest on such loans is tax deductible. Table 8.2.29 shows the average effective real rates in each year and the mean rate across years. Because the interest rates for each type of household debt reflect economic conditions throughout numerous years, they are expected to be representative of rates that may be in effect in 2014.

Table 8.2.28 Average Nominal Interest Rates for Household Debt

Type of Debt 1989 % 1992 % 1995 % 1998 % 2001 % 2004 % 2007 % Mean %

Home equity loans 11.5 9.6 9.6 9.8 8.7 5.7 7.9% 9.0%

Credit cards*

- - 14.2 14.5 14.2 11.7 12.6% 13.4%

Other installment loans 9.0 7.8 9.3 7.8 8.7 7.4 10.4% 8.6%

Other residential loans 8.8 7.6 7.7 7.7 7.5 6.0 6.3% 7.4%

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 12.7% 12.6%

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and

2007.

* No data on interest rates available for credit cards in 1989 or 1992.8-38 Table 8.2.29 Average Real Effective Interest Rates for Household Debt

Type of Debt 1989 % 1992 % 1995 % 1998 % 2001 % 2004 % 2007 % Mean %

Home equity loans 3.8 4.3 4.4 5.8 3.8 1.9 3.3 3.9

Credit cards*

- - 11.0 12.7 11.1 9.1 9.7 10.7

Other installment loans 4.9 5.8 7.0 6.6 6.1 5.4 5.8 6.0

Other residential loans 4.0 4.7 4.8 6.0 4.6 3.3 3.4 4.4

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 9.7 8.8

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

* No data on interest rates available for credit cards in 1989 or 1992.

Rate data are not available from the SCF for classes of assets, so DOE derived a

distribution of rates for each class from other sources. The interest rates associated with certificates of deposit, 9 savings bonds, 10 and bonds (AAA corporate bonds) 11 were collected

from Federal Reserve Board time

- s eries data for 1977

– 2008. DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts came from Cost of Savings Index data covering 1984

– 2008. 12 The rates for stocks are the annual returns on the Standard and

Poor’s 500 for 1977

– 2008. 13 Rates for mutual funds are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight) in each year for 1977

– 2008. DOE adjusted the nominal rates to real rates using the annual inflation rate for each year.

Average nominal and real interest rates for the classes of household assets are listed in Table 8.2.30. Because the interest and return rates for each type of asset reflect economic conditions throughout numerous years, they are expected to be represent ative of rates that may

be in effect in 2014.

Table 8.2.30 Average Nominal and Real Interest Rates for Household Equity

Type of Equity Average Nominal Rate % Average Real Rate %

Checking accounts

- 0.0

Savings and money market 5.4 2.2

CDs 6.6 2.3

Savings bonds 7.7 3.3

Bonds 8.5 4.1

Stocks 11.6 7.1

Mutual funds 10.3 5.8

Table 8.2.31 summarizes the mean real effective rates of each type of equity or debt, and also shows the weights for each class derived from the SCF data. The average rate across all types of household debt and equity, weighted by the share of each type, is 5.1 percent.8-39 Table 8.2.31 Average Interest on Household Debt and Equity

Type of Debt or Equity Average % of Household Debt plus Equity* Mean Effective Real Rate

% **

Home equity loan 3.7 3.0%

Credit card 2.1 3.9%

Other installment loan 1.6 10.7%

Other residential loan 5.3 6.0%

Other line of credit 0.5 4.4%

Checking account 4.4 0.0%

Savings and money market account 15.3 2.3%

Certificate of deposit 8.6 2.2%

Savings bond 1.4 3.4%

Bonds 9.5 4.1%

Stocks 29.0 7.7%

Mutual funds 18.6 6.2%

Total/weighted

- average discount rate 100.0 5.1%

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, tax deduction of interest.

8.2.4.2 Assignment of Discount Rates to Sample Households

To account for variations among households, DOE assigned each sampled RECS household a rate from the distribution of rates developed for each type of debt and equity. Appendix 8

- D presents the distributions that DOE used in the LCC and PBP analyses.

8.2.4.3 Discount Rates for Commercial Purchasers

DOE derived the discount rate for commercial

- sector compact refrigeration products from the cost of capital of publicly

- traded firms in the sectors that purchase those products (lodging and other commercial sectors). e The firms typically finance equipment purchases through debt and/or equity capital. DOE estimated the cost of the firms’ capital as the weighted average of the cost of equity fin ancing and the cost of debt financing for each year between 2001 and 2008. The costs of debt and equity financing are publicly available for firms in the sectors that purchase compact refrigeration products.

DOE estimated the cost of equity using the ca pital asset pricing model (CAPM). 14

e The “other commercial” sector includes financial institutions and all services other than lodging

(SIC 6

- 8). The CAPM assumes that the cost of equity ( k

e ) for a given company is proportional to the systematic risk faced by that company, whereby high risk is associated with a high cost of equity and low

risk is associated with a low cost of equity. The systematic risk facing a firm is determined by8-40 several variables: the risk coefficient of the firm ( β ), the expected return on risk

- free assets ( R

f ), and the equity risk premium ( ERP ). The risk coefficient of a firm describes the ri sk associated with that firm represented by standard deviations in the firm’s stock price. The expected return on risk

- free assets is defined by the yield on long

- term government bonds. The

ERP represents the difference between the expected stock market re turn and the risk

- free rate. To estimate the expected return on risk

- free assets and the equity risk premium, DOE used stock and bond data from Damodaran Online, a widely used source of information about debt and equity financing for most types of firms. 15

, 16 The Damodaran Online data were adjusted for annual inflation using deflator data for the gross domestic product from the Bureau of Economic Analysis’ National Income and Product Accounts Tables

. 17

The cost of equity financing is estimated using the fol lowing equation:



### ( **)** ERP R k f

e **× +**  **= β** 

Where:

k

e = cost of equity,

R

f = inflation

- adjusted expected return on risk

- free assets, f

β = risk coefficient of the firm, and

ERP = equity risk premium.

The cost of debt financing ( k d

) is the interest rate paid on money a company borrows. The cost of debt is estimated by adding a risk adjustment factor ( R

a ) to the risk

- free rate. This risk adjustment factor depends on the variability of stock returns represented by standard deviations in the firm’s stock pr ice. Thus for firm i , the cost of debt financing is:

ai f di R R k **+ =** 
Where:

k

d = cost of debt financing for firm i

, R

f = expected return on risk

- free assets, and

R ai = risk adjustment factor to risk

- free rate for firm i

.

DOE estimates the we ighted

- average cost of capital using the following equation.

d d e e 

### w k w k WACC **× +**  **× =** 

Where:

WACC = weighted average cost of capital,

f Ibbotson Associates argues that the arithmetic mean equates the expected future value with the

present va lue and should be used in calculating the risk

- free rate and equity risk premium when using CAPM to estimate discount rates ( Stocks, Bonds, Bills, and Inflation 2009 Yearbook

, Ibbotson Associates, p. 60).8-41 w e = proportion of equity financing, and

w d = proportion of debt financing.

The values of the parameters used in the calculations are shown in Table 8.2.32.

Table 8.2.32 Data for Calculating Weighted

- Average Cost of Capital for Commercial

Sectors

Sector Year β R f % ERP

% R

a % w e % w d %

Lodging 2001 1.18 3.25 5.17 1.50 88 12

2002 1.27 3.55 3.66 1.50 89 11

2003 1.71 3.40 4.70 1.25 93 7

2004 0.98 3.43 4.34 1.00 89 11

2005 1.45 3.36 4.08 1.25 93 7

2006 1.24 3.36 4.13 1.25 93 7

2007 1.25 3.54 4.33 1.00 96 4

2008 1.23 4.10 2.33 2.00 86 14

Other

Commercial 2001 0.87 3.25 5.17 3.50 77 23

2002 0.92 3.55 3.66 3.50 77 23

2003 0.87 3.40 4.70 1.50 81 19

2004 0.90 3.43 4.34 1.25 84 16

2005 0.88 3.36 4.08 1.50 82 18

2006 0.91 3.36 4.13 2.00 84 16

2007 0.87 3.54 4.33 1.25 79 21

2008 0.93 4.10 2.33 3.00 68 32

Note: Parameters are defined on the preceding two pages.

Using the procedure described above and the data in Table 8.2.32, DOE developed the real weighted

- average cost of capital for the two commercial sectors that purchase compact refrigeration products. Those costs are listed in Table 8.2.33.8-42 Table 8.2.33 Weighted

- Average Cost of Capital for Commercial Sectors

Year Lodging % Other Commercial %

2001 5.69 6.75

2002 5.11 6.21

2003 5.49 6.64

2004 5.82 6.62

2005 5.95 6.24

2006 6.04 6.46

2007 6.42 6.40

2008 5.74 5.60

Sector average 5.78 6.37

DOE developed a distribution of discount rates within each sector. The standard deviation of the distribution for each sector is provided in Table 8.2.34. Weighting each sector’s discount rate by its share of compact refrigerator purchases, g DOE estimated that the average discount rate for companies that purchase compact refrigeration products is 6.2 percent.

Table 8.2.34 Discount Rates for Commercial Sectors

Sector Discount Rate

% of Purchases Average % Max. % Min. % Standard Deviation %

Lodging 5.78 11.98 2.35 1.26 29

Other commercial 6.37 15.65 2.48 1.72 71

Weighted average 6.20

- - - 100

To account for variations in discount rates within each sector, DOE applied a normal probability distribution to the average values and standard deviations in Table 8.2.34. DOE truncated the normal distribution using the maximum and minimum values presented in Table

8.2.34.

8.2.5 Compliance Date of Standard

The compliance date of a potential new standard is the date when it would become operative. Based on DOE’s implementation report for energy conservation standards activities submitted pursuant to section 141 of the Energy Policy Act of 2005, a final rule pertaining to the appliances being considered for this rulemaking is scheduled for December 2010. 18

g The approach for estimating the share of total pu rchases by each of the two commercial sectors

is described in chapter 9. The compliance date of a ny new energy efficiency standards for the products is 3 years after the final rule is published, or January 2014. The Department calculated the LCC and PBP for all consumers as if each would purchase a new appliance in 2014.8-43 8.2.6 Base

- Case Energy Efficiencie s

To estimate the percentage of consumers who would be affected by a standard at any of the potential efficiency levels, in its LCC analysis DOE considers the projected distribution of efficiencies for products that consumers purchase under the base case (the case without new energy efficiency standards). DOE refers to this distribution of product energy efficiencies as the

base

- case efficiency distribution. Using the projected distribution of efficiencies for each product class, DOE assigned a specific ef ficiency to each sample household. If a household is assigned an efficiency that is greater than or equal to the efficiency of the standard level under consideration, the LCC calculation would show that this household would not be affected by that

standard level.

DOE began with the distribution (market shares) of energy efficiency levels for refrigeration products in 2007 and, where available, 2008, based on data provided by AHAM ( see Table 8.2.35). 19 In 2007, efficiency level 2 for refrigerator

- freezers (15 percent less energy use than the DOE standard) corresponded to the efficiency required for ENERGY STAR certification. In 2008, the criteria changed so that efficiency level 3 (20 percent less energy use than the DOE standard) corresponded to the effic iency required for ENERGY STAR

certification.

Efforts to promote ENERGY STAR refrigerator

- freezers through various means, including consumer rebates, are expected to increase their market share by 2014. Although it is difficult to predict appliance sale s in 2014, it is not unreasonable to assume that the increase in market shares of ENERGY STAR products will generally follow a similar pattern as it did in the period before 2008. However, because the ENERGY STAR efficiency level is higher than it was

befo re, the growth in market share may be slower. Thus, DOE assumed that the projected market share of ENERGY STAR models in 2014 (under current requirements) is equal to the average of ENERGY STAR market shares in 2007 (under the old requirements) and 2008 (u nder current requirements). In this way, the ENERGY STAR market shares for product classes 3 and 5 grow more slowly between 2008 and 2014 than they had grown under the old requirements before 2008. For product class 7, the method yields a slight decline in share because a large share of sales already qualified for ENERGY STAR in the first year of the current requirements (2008).8-44 Table 8.2.35 Standard

- Size Refrigerator

- Freezers: Historic and Base

- Case Efficiency

Distributions

Product Class 3: Top

- Mount Refrigerator

- Freezer Product Class 5:

Bottom

- Mount Refrigerator

- Freezer

Efficiency Level

(% less than baseline energy use) Market Share

% Efficiency Level

(% less than baseline energy use) Market Share

%

2007 2008 2014 2007 2008 2014

Baseline 80.6 75.7 78.2 Baseline 11.8 14.2 13.0

1 (10) 5.9 2.4 4.2 1 (10) 0.1 0.0 0.1

2 (15) 13.2 18.7 9.4 2 (15) 69.8 38.6 19.3

3 (20) † 0.2 3.2 8.3 3 (20) † 18.3 47.2 67.7

4 (25) 0.0 0.0 0.0 4 (25) 0.0 0.0 0.0

5 (3 6 ) 0.0 0.0 0.0 5 (36 ) 0.0 0.0 0.0

Product Class 7:

Side

- by

- Side Refrigerator

- Freezer with TTD*

Efficiency Level

(% less than baseline energy use) Market Share

%

2007 2008 2014

Baseline 25.0 18.4 21.7

1 (10) 43.0 9.7 26.4

2 (15) 30.3 30.1 15.0

3 (20) † 1.7 41.9 37.0

4 (25) 0.0 0.0 0.0

5 (33 ) 0.0 0.0 0.0

* Through

- the

- door ice service.

† Meets current (2008) ENERGY STAR criteria.

ENERGY STAR requirements for standard

- size freezers and compact products were initiated in 2003, and have not changed since then. Those ENERGY STAR requirements correspond to efficiency level 1 for standard

- size freezers and level 3 for compact products. Because the ENERGY STAR requirements for these products have not changed and because these products are less impacted by rebate programs than standard

- size refrigerator

- freezers, DOE assumed that the market shares of ENERGY STAR products would remain the same between 2007 (or, for product class 11, the average of 2007 and 2008) h

h 2008 AHAM data was only avail able for one product class (11)

. and 2014 (Tables 8.2.36 and 8.2.37).8-45 Table 8.2.36 Standard

- Size Freezers: Historic and Base

- Case Efficiency Distributions

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Efficiency Level

(% less than baseline energy use) Market Share

% Efficiency Level

(% less than baseline energy use) Market Share

%

2007 2014 2007 2014

Baseline 81.5 81.5 Baseline 84.6 84.6

1 (10)* 17.0 17.0 1 (10)* 14.3 14.3

2 (15) 1.0 1.0 2 (15) 0.8 0.8

3 (20) 0.1 0.1 3 (20) 0.0 0.0

4 (25) 0.2 0.2 4 (25) 0.0 0.0

5 (30) 0.2 0.2 5 (30) 0.0 0.0

6 (35) 0.0 0.0 6 (35) 0.4 0.4

7 (40) 0.0 0.0 7 (41) 0.0 0.0

8 (44) 0.0 0.0

* Meets current ENERGY STAR criteria.8-46 Table 8.2.37 Compact Refrigeration Products: Historic and Base

- Case Efficiency

Distributions

Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Efficiency Level

(% less than baseline energy use) Market Share

% Efficiency Level

(% less than baseline energy use) Market Share

%

2007 2008 2014 2007 2014

Baseline 97.1 99.8 98.5 Baseline 95.4 95.4

1 (10) 0.3 0.2 0.3 1 (10) 4.6 4.6

2 (15) 0.0 0.0 0.0 2 (15) 0.0 0.0

3 (20)* 0.9 0.0 0.5 3 (20)* 0.0 0.0

4 (25) 0.2 0.0 0.1 4 (25) 0.0 0.0

5 (30) 1.5 0.0 0.8 5 (30) 0.0 0.0

6 (35) 0.0 0.0 0.0 6 (35) 0.0 0.0

7 (40) 0.0 0.0 0.0 7 (42) 0.0 0.0

8 (45) 0.0 0.0 0.0

9 (50) 0.0 0.0 0.0

10 (59) 0.0 0.0 0.0

Although RECS 2005 provides information on ownership of ENERGY STAR refrigerators purchased between 2001 and 2005, the data seem to greatly overestimate the stock of ENERGY STAR refrigerators compared to data regarding shipments made during those years.

In assigning product efficiencies to the households in the sample for each product class, DOE

therefore developed a method that predicts ENERGY STAR ownership in the RECS sample based on annual average market shares of ENERGY STAR refrigerators and on househ old

income. DOE based its approach on a study from Natural Resources Canada 20 that reported ENERGY STAR buyers based on three income categories. DOE assumed that the relative behavior of each income category is the same in the United States as for Canadian consumers. After matching the three income categories to RECS income bins, DOE assigned a probability of owning an ENERGY STAR unit to each household record as a function of its income. This probability was then scaled to reflect income levels in the RECS sample and national ENERGY STAR sales. The following equation was used.

)

_ _ _ ( high high mid mid low low year year Estar P F Estar P F Estar P F scale Estar **× +**  **× +**  **× ×**  **=**

Where:

Estar year = percent of annual national refrigerator sales that were ENERGY STAR qualified;8-47 F

low|mid|high = percent of weighted number of RECS 2005 households in low, medium, and high income bins; P_Estar low|mid|high = probability of households in an income bin buying an ENERGY STAR appliance; and

scale year = scaling factor to obtain the appropriate percen t of ENERGY STAR refrigerators for each vintage.

Table 8.2.38 shows the market shares of ENERGY STAR refrigerators ( Estar year ), which were obtained from the ENERGY STAR program. 21 The market shares of ENERGY STAR freezers

are estimates.

Table 8.2.38 Market Share of ENERGY STAR Products

Year 1997 1998 1999 2000 2001 2002 2003 2004 2005

Refrigerators 25.3% 19.0% 25.0% 27.0% 17.3% 20.1% 25.7% 33.2% 32.9%

Freezers

- - - - - - 10% 10% 10%

The scaling factor for each year was calculated as:

) (



### _ _ _ high high mid mid low low year year 

### Estar P F Estar P F Estar P F Estar scale

**× +**  **× +**  **× =** 

A household in the low

- income bin that purchased a refrigerator in a given year was a assigned a probability Scale year times P_Estar low for having an ENERGY STAR refrigerator

. A similar approach was taken for households in the mid

- and

- high income bins.

8.3 INPUTS TO PAYBACK PE RIOD ANALYSIS

The payback period (PBP) refers to the time it takes a consumer to recover, through lower operating costs, the assumed higher purchase cost of more energy efficient products. Numerically, the PBP is the ratio of th e increase in purchase cost (from a less to a more efficient design) to the decrease in annual average operating cost. This calculation does not use a discount rate to discount future operating costs.

The equation for determining PBP is:



### OC IC PBP **∆ ∆** 

=8-48 Where:

Δ IC = the difference in total installed cost between the more efficient design based on a potential standard level and the base case product, and

Δ OC = the difference in annual average operating cost between the two products.

Payback periods are expressed in years. Payback periods greater than the life of a product mean that the increase in total installed cost is not recovered through reduced operating cost.

The data inputs to calculating PBP are the total installed cost to the con sumer for each product at each efficiency level and the average annual operating cost for each efficiency level. The inputs to calculating total installed cost are the product and installation costs. The inputs to calculating operating cost are the annual energy, repair, and maintenance costs. The annual average operating cost includes an annualized value for repair and maintenance costs.

8.4 RESULTS OF ANALYSES

This section presents the results of the life

- cycle cost (LCC) and payback period (PBP) analyses f or the considered efficiency levels for the representative refrigeration product classes. As discussed in section 8.1.1, DOE’s approach to the LCC analysis involved developing a sample of consumers who use each product. DOE also used probability distributi ons to characterize the uncertainty in many of the analytical inputs. DOE used a Monte Carlo simulation technique to perform the LCC calculations on data pertaining to the consumers in each sample. For each set of sample consumers who use the appliance in each product class, DOE calculated the average LCC, the LCC savings, and the median PBP for each standard level.

LCC and PBP calculations were performed 10,000 times on the sample of consumers developed for each product. Each calculation was performed on a single consumer who was selected from the sample based on its weight in the RECS . Each LCC and PBP calculation also sampled from the probability distributions that DOE developed to characterize many of the inputs to the analysis.

Based on the Mon te Carlo simulations that DOE performed, for each efficiency level, DOE calculated the percentage of consumers who would experience a net LCC benefit, a net LCC cost, or no impact. DOE considered a consumer to receive no impact at a given efficiency

level if the base

- case product DOE assigned to that consumer had the same or higher efficiency than that of the new standard being evaluated. Note that the average LCC savings and the median PBP at each efficiency level are relative to the base

- case efficiency d istribution, not the baseline efficiency level. For that reason, average LCC impacts are not equal to the difference between the LCC of a specific efficiency level and the LCC of the baseline product. DOE calculated the average LCC savings and median PBPs at each efficiency level by excluding those households that would not be affected by the standard.8-49 The following subsections summarize results of the LCC and PBP analyses for each representative product class. Tables present average results. Figures show the distribution of LCC impacts and the distribution of PBPs (probabilities of occurrence) for specific efficiency levels. Other figures showing show the range of LCC savings and PBPs for all the efficiency levels considered for each product class.

8.4.1 Standard

- Size Refrigerator

- Freezers

8.4.1.1 Summary of Results

Tables 8.4.1 through 8.4.3 show the LCC and PBP results for each standard

- size refrigerator

- freezer representative product cla ss.

Table 8.4.1 Product Class 3, Top

- Mount Refrigerator

- Freezers: LCC and PBP

Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $543 $750 $1,293

1 (10) $555 $696 $1,251 $42 1. 7 % 21. 6 % 76. 8 % 2.7

2 (15) $563 $668 $1,231 $62 2.3% 17.4% 80. 3 % 3.0

1, 2 3 (20) $624 $640 $1,264 $29 42.3% 8. 1 % 49. 6 % 9.2

3 4 (25) $667 $605 $1,272 $22 54. 9 % 0.0% 45.1% 10.9

4 5 (30) $759 $571 $1,330

- $37 73.8% 0.0% 26.2% 15.4

5 6 (36) $892 $535 $1,427

- $133 85.4% 0.0% 14. 6 % 20.5

Table 8.4.2 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: LCC and PBP

Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating LCC Average Savings % of Households that Experience Median8-50 energy use ) Cost 2009$ Net

Cost No Impact Net

Benefit

Baselin e $945 $917 $1,862

1 (10) $947 $908 $1,856 $8 0.2% 86. 9 % 12.9% 2.5

2 (15) $949 $904 $1,853 $12 0. 3 % 86. 9 % 12. 9 % 2.7

1, 2 ,3 3 (20) $955 $892 $1,847 $19 4.5% 67. 8 % 27.7% 4.9

4 (25) $1,020 $853 $1,873

- $8 7 5

. 0 % 0.0% 25.0% 17.5

4 5 (30) $1,127 $817 $1,945

- $79 88.2% 0.0% 11.8% 24.8

5 6 (36) $1,276 $770 $2,046

- $180 93. 3 % 0.0% 6.7% 29.0

Table 8.4.3 Product Class 7, Side

- by

- Side Refrigerator

- Freezers with Through

- the

Door Ice Service: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baselin e $1,152 $1,178 $2,330

1 (10) $1,155 $1,156 $2,310 $20 0. 1 % 78. 1 % 21.8% 1.5

2 (15) $1,160 $1,132 $2,292 $40 0. 5 % 51. 7 % 47.8% 2.4

1 3 (20) $1,179 $1,100 $2,279 $53 7.3% 36.9% 55. 8 % 4.8

2, 3 4 (25) $1,244 $1,051 $2,295 $37 50. 8 % 0.0% 49.2% 10.9

4 5 (30) $1,385 $1,002 $2,387

- $55 77.7% 0.0% 22.3% 18.6

5 6 (33) $1,496 $970 $2,466

- $134 86. 2 % 0.0% 13. 9 % 22.6

8.4.1.2 Distributions of Impacts

Figure 8.4.1 presents a frequency chart that shows the distribution of LCC impacts for the

case of efficiency level 4 for top

- mount refrigerator

- freezers. DOE could generate a similar frequency chart for every efficiency level.8-51 Figure 8.4.1 Product Class 3, Top

- Mount Refrigerator

- Freezers: Distribution of

Life

- Cycle Cost Impacts for Efficiency Level 4

Figure 8.4.2 is an example of a frequency chart showing the distribution of payback periods for efficiency level 4 for top

- mount refrigerator

- freezers. DOE could generate a similar frequency chart for every efficiency level.

Figure 8.4.2 Product Class 3, Top

- Mount Refrigerator

- Freezers: Distribution of Payback Periods for Efficiency Level 4

Figures 8.4.3 through 8.4.5 show the range of LCC savings for all the efficiency levels considered for each refrigerator

- freezer product class. For each efficiency level, the t op and bottom of the box in the figure indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median: 50 percent of households have LCC savings that exceed

this value. The horizontal lines above and below each box indicate the 95 th and 5 th percentiles, respectively. The small box indicates the average LCC savings for each efficiency level.8-52 Figure 8.4.3 Product Class 3, Top

- Mount Refrigerator

- Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

Figure 8.4.4 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: Range of Life

Cycle Cost Savings by Efficiency Level Life-Cycle Cost Savings

-350 -300 -250 -200 -150 -100

-50

0 50 100 150 200

1 2 3 4 5 6

Efficiency Level($2009

25% 75% Median Average

Life-Cycle Cost Savings

-300 -250 -200 -150 -100

-50

0 50 100 150

1 2 3 4 5 6

Efficiency Level($2009

Median

Average8-53 Figure 8.4.5 Product Class 7, Side

- by

- Side Refrigerator

- Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

Figures 8.4.6 through 8.4.8 show the range of PBPs for all efficiency levels considered for each analyzed refrigerator

- freezer product class. For each efficiency level, the top and bottom of the box in the figure indicate the 75 th and 25 th percentiles, respectively. The bar at the middle

of the box in dicates the median: 50 percent of the households have a PBP above this value. The

horizontal lines above and below each box indicate the 95 th and 5 th percentiles, respectively. The small box indicates the average PBP for each efficiency level.

Figure 8.4.6 Product Class 3, Top

- Mount Refrigerator

- Freezers: Range of Payback Periods by Efficiency Level - 300 - 200 - 100 0 100 200 300

1 2 3 4 5 6Cost ($2009)

Efficiency Level Life

- Cycle Cost Savings

75%

Media

n

Payback Period

0 10 20 30 40 50 60

1 2 3 4 5 6
Efficiency LevelYears 75%

Median

25%

Mean8-54 Figure 8.4.7 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: Range of Payback Periods by Efficiency Level Payback Period

0 10 20 30 40 50 60 70 80

1 2 3 4 5 6
Efficiency LevelYears 25% Median

75% Mean

Payback Period

0 10 20 30 40 50 60

1 2 3 4 5 6
Efficiency LevelYears 75%

Median

25%

Mean8-55 Figure 8.4.8 Product Class 7, Side

- by

- Side Refrigerator

- Freezers: Range of Payback Periods by Efficiency Level

8.4.2 Standard

- Size Freezers

8.4.2.1 Summary of Results

Tables 8.4.4 and 8.4.5 show the LCC and PBP results for each representative standard

size freezer product class.

Table 8.4.4 Product Class 9, Upright Freezers: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $560 $969 $1,529

1 (10) $571 $897 $1,468 $62 1. 7 % 19. 9 % 78. 5 % 2.3

2 (15) $592 $852 $1,445 $85 9.7% 1. 7 % 88. 6 % 4.3

1 3 (20) $611 $807 $1,418 $111 11. 7 % 0. 6 % 87. 8 % 4.8

4 (25) $640 $760 $1,401 $128 16.2% 0.4% 83. 4 % 5.8

2 5 (30) $667 $714 $1,381 $148 18. 7 % 0.2% 81.1% 6.2

3 6 (35) $727 $673 $1,399 $130 30.8% 0.0% 69. 2 % 8.4

4 7 (40) $810 $632 $1,442 $87 45.0% 0.0% 5 5

. 0 % 11.0

5 8 (44) $994 $599 $1,593

- $63 70. 2 % 0.0% 29.8% 17.4

Table 8.4.5 Product Class 10, Chest Freezer: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $407 $578 $9858-56 1 (10) $414 $533 $946 $38 0.0% 16. 2 % 83.8% 2.1

2 (15) $424 $506 $930 $55 0.7% 1. 2 98.1% 3.4

1 3 (20) $436 $479 $915 $70 1. 6 % 0.2% 98.2% 4.2

2 4 (25) $483 $451 $935 $50 25. 8 % 0.2% 74.0% 8.7

3 5 (30) $504 $424 $928 $56 28.3% 0.2% 71. 5 % 9.1

4 6 (35) $565 $404 $968 $17 53.5% 0.0% 46. 5 % 13.1

5 7 (41) $687 $369 $1,055

- $71 7 9

. 0 % 0.0% 21.0% 19.3

8.4.2.2 Distributions of Impacts

Figure 8.4.9 presents a frequency chart showing the distribution of LCCs for the case of standard level 7 for upright freezers. DOE could generate a similar frequency chart for every efficiency level.

Figure 8.4.9 Product Class 9, Upright Freezers: Distribution of Life

- Cycle Cost Impacts for Efficiency Level 7

Figure 8.4.10 presents a frequency char t showing the distribution of payback periods for standard level 7 for upright freezers. DOE could generate a similar frequency chart for every efficiency level within each product class.8-57 Figure 8.4.10 Product Class 9, Upright Freezers: Distribution of Payback Periods for Efficiency Level 7

Figures 8.4.11 and 8.4.12 show the range of LCC savings for the efficiency levels considered for each freezer product class. For each standard level, the top and bottom of the box

indicate the 75 th and 25 th percentiles, re spectively. The bar at the middle of the box indicates the median: 50 percent of the households have LCC savings that exceed this value. The horizontal

lines above and below the box indicate the 95 th and 5 th percentiles, respectively. The small box

shows the average LCC savings for each efficiency level.

Life-Cycle Cost Savings

-400 -200 0 200 400 600 800

1 2 3 4 5 6 7 8

Efficiency LevelCost ($2009) 75%

Median

25%

Mean8-58 Figure 8.4.11 Product Class 9, Upright Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

Figure 8.4.12 Product Class 10, Chest Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

Figures 8.4.13 and 8.4.14 show the range of PBPs for the efficiency levels considered for each freezer product class. For each standard level, the top and bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the m edian: 50 percent of the households have PBPs that exceed this value. The horizontal lines above and

below the box indicate the 95 th and 5 th percentiles, respectively. The small box shows the average PBP for each efficiency level. Life-Cycle Cost Savings

-250 -200 -150 -100

-50

0 50 100 150 200 250

1 2 3 4 5 6 7

Efficiency LevelCost ($2009)

75%

Median

25%

Mean8-59 Figure 8.4.13 Product Class 9, Upright Freezers: Range of Payback Periods by Efficiency Level

Figure 8.4.14 Product Class 10, Chest Freezers: Range of Payback Periods by Efficiency Level Payback Period

0 10 20 30 40 50 60

1 2 3 4 5 6 7 8
Efficiency LevelYears 75%

Median

25%

Mean

Payback Period

0 5 10 15 20 25 30 35

1 2 3 4 5 6 7
Efficiency LevelYears8-60 8.4.3 Compact Refrigeration Products

8.4.3.1 Summary of Results

Tables 8.4.6 and 8.4.7 show the results of LCC and PBP analyses for compact refrigerators and freezers.

Table 8.4.6 Product Class 11, Compact Refrigerators: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $146 $165 $311

1 (10) $151 $150 $301 $10 11. 9 % 1.6% 86.5% 2.0

2 (15) $156 $142 $297 $13 17.0% 1. 4 % 81. 6 % 2.3

1 3 (20) $162 $134 $296 $15 24.4% 1. 4 % 74. 2 % 2.8

2 4 (25) $174 $126 $300 $10 43.3% 1.0% 55. 7 % 3.9

3 5 (30) $184 $118 $302 $8 50. 6 % 0.9% 48.5% 4.4

6 (35) $212 $111 $324

- $13 77.2% 0.0% 22. 8 % 6.7

4 7 (40) $221 $103 $324

- $13 76.1% 0.0% 23. 9 % 6.5

8 (45) $255 $97 $351

- $41 87.4% 0.0% 12.6% 8.6

9 (50) $274 $88 $362

- $51 88.8% 0.0% 11. 2 % 9.0

5 10 (59) $341 $75 $416

- $105 93. 8 % 0.0% 6.2% 11.6

Table 8.4.7 Product Class 18, Compact Freezers: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $202 $200 $402

1,2 1 (10) $209 $182 $391 $11 9.9% 4.7% 85.4% 2.58-61 3 2 (15) $223 $172 $395 $7 40.6% 0.0% 59.4% 4.6

3 (20) $268 $163 $430

- $29 91.1% 0.0% 8.9% 10.9

4 4 (25) $279 $153 $432

- $30 88.5% 0.0% 11.5% 10.0

5 (30) $312 $146 $458

- $57 94.6% 0.0% 5.4% 12.6

6 (35) $320 $137 $457

- $55 92.7% 0.0% 7.3% 11.5

5 7 (42) $399 $124 $523

- $121 97.8% 0.0% 2.3% 15.9

8.4.3.2 Distributions of Impacts

Figure 8.4.15 presents a frequency chart showing the distribution of LCCs for the case of efficiency level 5 for compact refrigerators. DOE could generate a similar frequency chart for each efficiency level.

Figure 8.4.15 Product Class 11, Compact Refrigerators: D istribution of Life

- Cycle Cost Impacts for Efficiency Level 5

Figure 8.4.16 presents a frequency chart showing the distribution of payback periods for efficiency level 5 for compact refrigerators. DOE could generate a similar frequency chart for

each co nsidered efficiency level for each product class.8-62 Figure 8.4.16 Product Class 11, Compact Refrigerators: Distribution of Payback Period for Efficiency Level 5

Figures 8.4.17 and 8.4.18 show the range of LCC savings for the standard levels considered for compact refrigerators and freezers. For each standard level, the top and bottom of

the box indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median: 50 percent of the households have LCC savings that exceed this value. The

horizontal lines above and below the box indicate the 95 th and 5 th percentiles, respectively. The

s mall box shows the average LCC savings for each efficiency level. Figures 8.4.19 and 8.4.20 show the range of PBPs for each efficiency level considered.8-63 Figure 8.4.17 Product Class 11, Compact Refrigerators: Range of Life

- Cycle Cost Savings by Efficiency Level

Figure 8.4.18 Product Class 18, Compact Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level

Figures 8.4.19 and 8.4.20 show the range of PBPs for the standard levels considered for compact refrigerators and freezers. For each standard level, the top and bottom of the box Life-Cycle Cost Savings

-200 -150 -100

-50

0 50 100

1 2 3 4 5 6 7 8 9 10

Efficiency LevelCost ($2009)

75%

Median

25%

Mean

Life-Cycle Cost Savings

-200 -150 -100

-50

0 50

1 2 3 4 5 6 7

Efficiency LevelCost ($2009)

75%

Median

25%

Mean8-64 indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median: 50 percent of the households have PBPs that exceed this value. The horizontal lines

above and below the box indicate the 95 th and 5 th percentiles, respectively. The small box shows the average PBP for each efficiency level.

Figure 8.4.19 Product Class 11, Compact Refrigerators: Range of Payback Periods by Efficiency Level Payback Period

0 2 4 6 8 10 12 14 16

1 2 3 4 5 6 7 8 9 10
Efficiency LevelYears 75%

Median

25%

Mean8-65 Figure 8.4.20 Product Class 18, Compact Freezers: Range of Payback Periods by Efficiency Level

8.4.4 Built

- In Refrigeration Products

8.4.4.1 Summary of Results

Tables 8.4.8 through 8.4.11 show the results of LCC and PBP analyses for the representative built

- in refrigeration product classes.

Table 8.4.8 Product Class 3A

- BI, Built

- In All Refrigerators: LCC and PBP Result s

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $4,676 $776 $5,451

1 1 (10) $4,683 $721 $5,404 $47 0. 3 % 22. 6 % 77. 2 % 1.6

2 2 (15) $4,696 $693 $5,388 $63 2.6% 18. 4 % 79.0% 3.0

3 3 (20) $4,826 $660 $5,486

- $34 69. 1 % 9.1% 21. 9 % 15.9 Payback Period

0 5 10 15 20 25

1 2 3 4 5 6 7
Efficiency LevelYears8-66 4 4 (25) $5,017 $629 $5,646

- $195 94. 5 % 0.0% 5.5% 29.7

5 5 (29) $5,162 $607 $5,769

- $318 97. 2 % 0.0% 2.8% 36.7

Table 8.4.9 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: LCC

and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $5,386 $908 $6,294

1 1 (10) $5,390 $899 $6,289 $7 1. 2 % 87.1% 11.7% 4.4

2 ,3 2 (15) $5,401 $906 $6,307 $0 8.2% 87.0% 4. 8 % 12.9

3 (20) $5,435 $892 $6,328

- $21 29. 3 % 67. 5 % 3. 3 % 26.2

4 4 (25) $5,607 $864 $6,471

- $164 9 9

. 0 % 0.0% 1. 1 % 62.8

5 5 (27) $5,706 $845 $6,551

- $244 99.3% 0.0% 0. 7 % 61.8

Table 8.4.10 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $7,887 $1,293 $9,180

1,2 1 (10) $7,902 $1,276 $9,178 $7 8.0% 78.5% 13.5% 8.7

2 (15) $7,947 $1,261 $9,208

- $18 39.8% 52.4% 7.8% 21.0

3,4 3 (20) $8,078 $1,228 $9,306

- $116 60.2% 37.2% 2.5% 36.7

5 4 (22) $8,197 $1,211 $9,409

- $219 98.8% 0.0% 1.2% 60.08-67 Table 8.4.11 Product Class 9

- BI, Built

- In Upright Freezers: LCC and PBP Results

Trial

Standard

Level Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings
2009$ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $4,383 $947 $5,330

1 1 (10) $4,400 $876 $5,276 $54 4.3% 19.9% 75. 8 % 3.4

2 (15) $4,415 $834 $5,249 $82 8.6% 1.7% 89. 7 % 4.3

2 3 (20) $4,509 $797 $5,306 $24 53.1% 0. 6 % 46. 3 % 12.8

3, 4 4 (25) $4,657 $752 $5,409

- $78 78. 2 % 0. 5 % 21.3% 21.1

5 5 (27) $4,770 $730 $5,500

- $169 87.1% 0. 3 % 12. 6 % 26.8

8.4.4.2 Distributions of Impacts

Figure 8.4.21 presents a frequency chart showing the distribution of LCCs for the case of efficiency level 1 for built

- in side

- by

- side refrigerator

- freezers. DOE could generate a similar frequency chart for every efficiency level.

Figure 8.4.21 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers: Distribution of Life

- Cycle Cost Impacts for Efficiency Level 18-68 Figure 8.4.22 presents a frequency chart showing the distribution of payback periods for efficiency level 1 for built

- in side

- by

- side refrigerat or

- freezers. DOE could generate a similar frequency chart for every efficiency level within each product class.

Figure 8.4.22 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

Freezers: Distribution of Payback Period for Efficiency Level 1

Figures 8.4.23 through 8.4.30 show the range of LCC savings for the efficiency levels

considered for built

- in refrigeration products. For each efficiency level, the top and bottom of the

box indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of t he box indicates the median: 50 percent of the households have LCC savings that exceed this value. The

horizontal lines above and below the box indicate the 95 th and 5 th percentiles, respectively. The small box shows the average LCC savings for each effici ency level. Figures 8.4.19 through 8.4.20 show the range of PBPs for each efficiency level considered.8-69 Figure 8.4.23 Product Class 3A

- BI, Built

- In All Refrigerators: Range of Life

- Cycle Cost Savings by Efficiency

Level

Figure 8.4.24 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: Range of Life

- Cycle Cost Savings by Efficiency Level - 500 - 400 - 300 - 200 - 100 0 100 200

1 2 3 4 5Cost ($2009)

Efficiency Level Life

- Cycle Cost Savings

75%

Median

25%

Mean

- 400 - 350 - 300 - 250 - 200 - 150 - 100

- 50

0 50 100

1 2 3 4 5Cost ($2009)

Efficiency Level Life

- Cycle Cost Savings

75%

Median

25%

Mean8-70 Figure 8.4.25 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: Range of Life

- Cycle Cost Savings by Efficiency Level - 450 - 400 - 350 - 300 - 250 - 200 - 150 - 100

- 50

0 50 100

1 2 3 4Cost ($2009)

Efficiency Level Life

- Cycle Cost Savings

75%

Median

25%

Mean

- 400 - 300 - 200 - 100 0 100 200 300

1 2 3 4 5Cost ($2009)

Efficiency Level Life

- Cycle Cost Savings

75%

Median

25%

Mean8-71 Figure 8.4.26 Product Class 9

- BI, Built

- In Upright Freezers: Range of Life

- Cycle Cost Savings by Efficiency

Level

Figure 8.4.27 Product Class 3A

- BI, Built

- In All Refrigerators: Range of Payback Periods by Efficiency Level 0 20 40 60 80 100 120

1 2 3 4 5Years

Efficiency Level Payback Period

75%

Median

25%

Mean8-72 Figure 8.4.28 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: Range of Payback Periods by Efficiency Level 0 50 100 150 200 250 300

1 2 3 4 5Years

Efficiency Level Payback Period

75%

Median

25%

Mean

0 20 40 60 80 100 120 140 160 180

1 2 3 4Years

Efficiency Level Payback Period8-73 Figure 8.4.29 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: Range of Payback Periods by Efficiency

Level

Figure 8.4.30 Product Class 9

- BI, Built

- In Upright Freezers: Range of Payback Periods by Efficiency Level

8.5 REBUTTABLE PAYBACK P ERIOD

DOE presents rebuttable PBPs to provide information for considering the legally established rebuttable presumption that an energy efficiency standard is economically justified if

the additional product costs attributed to the standard are less than three times the value of the

first

- year savings in energy costs. (42 U.S.C. §6295 (o)(2)(B)(iii))

The basic equation for rebuttable PBP is the same as that shown in section 8.3, Inputs to Analysis o f Payback Period. Unlike the analyses described in sections 8.2 and 8.3, however, the rebuttable PBP is not based on the use of household samples and probability distributions. Rather, it is based on discrete, single

- point values. For example, although DOE uses a probability distribution of regional energy prices in the analysis of payback period, it uses only the national 0 10 20 30 40 50 60 70 80 90 100

1 2 3 4 5Years

Efficiency Level Payback Period

75%

Median

25%

Mean8-74 average energy price to determine the rebuttable PBP. DOE calculated rebuttable PBPs for each standard level relative to the purchase an d operating costs of an average baseline product.

Other than the use of single

- point values, the key difference between the distribution PBP and the rebuttable PBP is the latter’s reliance on the DOE test procedure to determine a product’s annual energy consumption.

8.5.1 Results

Table 8.5.1 through Table 8.5.4 present the rebuttable PBPs for each group of refrigeration products.

Table 8.5.1 Standard

- Size Refrigerator

- Freezers: Rebuttable Payback Periods

Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- by

- Side Refrigerator

- Freezer

with TTD*

Efficiency Level ( % less than baseline

energy use ) PBP

years Efficiency Level ( % less than baseline

energy use ) PBP

years Efficiency Level ( % less than baseline

energy use ) PBP

years 1 (10) 2.4 1 (10) 2.1 1 (10) 1.4

2 (15) 2.6 2 (15) 2.4 2 (15) 1.7

3 (20) 7.3 3 (20) 3.1 3 (20) 2.9

4 (25) 8.5 4 (25) 5.9 4 (25) 5.1

5 (30) 12.0 5 (30) 9.6 5 (30) 9.4

6 (36) 16.1 6 (36) 13.3 6 (33) 12.2

*Through

- the

- door ice service.8-75 Table 8.5.2 Standard

- Size Freezers: Rebuttable Payback Periods

Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Efficiency Level ( % less than baseline

energy use ) PBP

years Efficiency Level ( % less than baseline

energy use ) PBP

years 1 (10) 1.9 1 (10) 1.8

2 (15) 3.3 2 (15) 2.7

3 (20) 3.8 3 (20) 3.3

4 (25) 4. 7 4 (25) 6. 9

5 (30) 5.1 5 (30) 7. 3

6 (35) 6. 8 6 (35) 10.0

7 (40) 8. 8 7 (39) 14.9

8 (43) 13. 9

Table 8.5.3 Compact Refrigeration Products: Rebuttable Payback Periods

Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Efficiency Level ( % less than baseline

energy use ) PBP

years Efficiency Level ( % less than baseline

energy use ) PBP

years 1 (10) 1.8 1 (10) 2.0

2 (15) 2.1 2 (15) 3.8

3 (20) 2.5 3 (20) 9.0

4 (25) 3.6 4 (25) 8.4

5 (30) 4.0 5 (30) 10.0

6 (35) 5.9 6 (35) 9.2

7 (40) 5.7 7 (4 2 ) 12. 9

8 (45) 7.4

9 (50) 7.8

10 (5 9 ) 8.58-76 Table 8.5.4 Built

- In Refrigeration Products: Rebuttable Payback Periods

Product Class 3A

- BI:

Built

- in All Refrigerator Product Class 5

- BI:

Built

- In Bottom

- Mount

Refrigerator

- Freezer Product Class 7

- BI:

Built

- In Side

- by

- Side Refrigerator

- Freezer

with TTD* Product Class 9

- BI:

Built

- In Upright Freezer

Efficiency

Level ( % less than

baseline

energy use ) PBP

years Efficiency

Level ( % less than

baseline

energy use ) PBP

years Efficiency

Level ( % less than

baseline

energy use ) PBP

years Efficiency

Level ( % less than

baseline

energy use ) PBP

years

1 (10) 1.5 1 (10) 3.8 1 (10) 7.4 1 (10) 2.7

2 (15) 2.6 2 (15) 10.2 2 (15) 11.9 2 (15) 3.1

3 (20) 13.1 3 (20) 14.8 3 (20) 20.4 3 (20) 8.4

4 (25) 22.5 4 (25) 21.1 4 (22) 25.0 4 (25) 14.3

5 (29) 27.4 5 (27) 24.3 5 (27) 18.48-77 REFERENCES

1 U.S. Department of Energy

– Energy Information Administration. Residential Energy Consumption Survey, 2005 Public Use Data Files. 2009. U.S. Department of Energy: Washington, D.C. < www.eia.doe.gov/emeu/recs/recspubuse05/pubuse05.html >

2 The NPD Group, Inc., The NPD Group/NPD Houseworld

– POS, Refrig erators, January

– December 2007 , 2007 . Port Washington, NY.

3 Association of Home Appliance Manufacturers. Aggregated Refrigerator

‐ Freezer Incremental Cost Data for DOE Refrigerator

‐ Freezer Energy Efficiency Standards Rulemaking

, March 2 , 2009

. Memo to Detlef Westphalen, Navigant Consulting, Inc.

4 U.S. Department of Energy

– Energy Information Administration. Form EIA

- 861

. Washington, D.C. < www.eia.doe.gov/cneaf/electricit y/page/eia861.html >

5 U.S. Department of Energy

– Energy Information Administration. Annual Energy

Outlook 20 10 with Projections to 203 5 . April 2010. U.S. DOE

– EIA: Washington, D

. C

. DOE/EIA

- 0383( 2010 ).

6 U.S. Census Bureau, Housing and Household Economic Statistics Division. American Housing Survey . Washington, DC.

< http://www.census.gov/hhes/www/housing/ahs/ahs.html >

7 U.S. Department of Energy

– Energy Information Administration. Commercial Building Energy Consumption Survey, 200 3 Public Use Data Files. 2008 . U.S. Department of Energy: Washington, D.C.

< http://www.eia.doe .gov/emeu/cbecs/cbecs2003/public_use_2003/cbecs_pudata2003.ht

ml >

8 The Federal Reserve Board. Survey of Consumer Finances . 1989, 1992, 1995, 1998, 2001,

and 2004. < www.federalres erve.gov/pubs/oss/oss2/scfindex.html >

9 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs (secondary market), Maturity: 6

- month, Frequency: Annual, Description: Average rate on 6

- mo nth negotiable certificates of deposit (secondary market), quoted on an investment basis . 2009. Washington, D.C.

< www.federalreserve.gov/releases/H15/data.htm >

10 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20

- year, Frequency: Monthly, Description: Bond buyer go 20

- bond municipal bond index . 2009. Washington, D.C.

< www.federalreserve.gov/releases/H15/data.htm >8-78 11 The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: Corporate bonds/Moody’s Seasoned AAA , Frequency: Annual, Description: Moody’s yield on seasoned corporate bonds

— all industries, AAA . 2009. Washington, D.C. < www.federalreserve.gov/releases/H15/data.htm >

12 Mortgage

- X, Mortg age Information Service. Cost of Savings Index (COSI), Index History

. 2009. < http://mortgage

- x.com/general/indexes/default.asp > (Last accessed, February 25, 2009.)

13 Damodaran Online. The D ata Page: Historical Returns on Stocks, Bonds, and Bills

— United

States . 2009. < http://pages.stern.nyu.edu/~adamodar/ >

14 Ibbotsons Associates. SBBI Valuation Edition 2009 Yearbook . 2009. Chicago, IL. p p. 45

– 48.

15 Damodaran Online. The Data Page: Cost of Capital by Industry Sector . 2001

– 2008.

< http://pages.stern.nyu.edu/~adamodar/ >

16 Damodaran Online. The Data Page: Historical Returns on Stocks, Bonds and Bills

— United

States . < http://pages.stern.nyu.edu/~adamodar/ >

17 Bureau of Economic Analysis

– National Income and Product Accounts Tables. Table 1.1.9. Implicit Price Deflators for Gross Domestic Product.

< www.bea.gov/national/nipaweb/SelectTable.asp?Selected=N >

18 U.S. Department of Energy. Implementation Report: Energy Conservation Standards

Activities. Submitted Pursuant to Section 141 of the Energy Policy Act of 2005 . August 2006. Washington, D.C.

< www.eere.energy.gov/buildings/appliance_standards/pdfs/imple mentation_report_0806.pdf

>

19 Association of Home Appliance Manufacturers. Aggregated Refrigerator

‐ Freezer Shipments and Efficiency Data for DOE Refrigerator

‐ Freezer Energy Efficiency Standards Rulemaking , January 16, 2009 . Memo to Detlef Westphalen, Na vigant Consulting, Inc.

20 Ipsos

- Reid Corporation

. Tracking Study: Awareness of ENERGY STAR/EnerGuide Symbols Final Report

. Natural Resources Canada

. September 2006

21 Karney, R. ENERGY STAR Criteria for Refrigerators: Overview of ENERGY STAR Criteria Setting Process and History of Refrigerator Criteria . June 4, 2007. (Last accessed April 15, 2009.)

< www .energystar.gov/ia/partners/prod_development/revisions/downloads/refri g/Karney_RefrigeratorCriteriaRevision_6.4.07.pdf >9

- i CHAPTER 9. SHIPMENTS ANALYSIS

TABLE OF CONTENTS

9.1 INTRODUCTION

................................ ................................ ................................ ........... 9

- 1

9.2 SHIPMENTS MODEL GENE RAL METHODOLOGY

................................ ................ 9

- 1

9.2.1 Stock Accounting Approach

................................ ................................ ............................ 9

- 2

9.2.2 Market Segments

................................ ................................ ................................ ............. 9

- 2

9.3 PRODUCT

- SPECIFIC MODELS

................................ ................................ ................... 9

- 3

9.3.1 Standard

- Size Refrigerator

- Freezers

................................ ................................ ................ 9

- 4

9.3.1.1 Market Segments

................................ ................................ ........................... 9

- 4

9.3.1.2 Disaggregation into Refrigerator

- Freezer Product Classes

............................ 9

- 7

9. 3.2 Standard

- Size Freezers

................................ ................................ ................................ ... 9

- 13

9.3.2.1 Market Segments

................................ ................................ ......................... 9

- 14

9.3.2.2 Disaggregation into Freezer Product Classes

................................ .............. 9

- 16

9.3.3 Compact Refrigerators

................................ ................................ ................................ ... 9

- 17

9.3.3.1 Market Segments

................................ ................................ ......................... 9

- 17

9.3.3.2 Disaggregation into Compact Refrigerator Product Classes

....................... 9

- 20

9.3.4 Compact Freezers

................................ ................................ ................................ ........... 9

- 21

9.3.4.1 Market Segments

................................ ................................ ......................... 9

- 21

9.3.4.2 Disaggregation into Compact Freezer Product Classes

............................... 9

- 23

9.4 IMPACT OF ENERGY CON SERVATION STANDARDS ON SHIPMENTS

.......... 9

- 24

9.4.1 Application of Relative Price Elasticity

................................ ................................ ......... 9

- 26

9.5 AFFECTED STOCK

................................ ................................ ................................ ..... 9

- 26

9.6 SHIPMENTS FORECASTS IN STANDARDS CASES

................................ .............. 9

- 27

LIST OF TABLES

Table 9.3.1 Market Shares of Side

- by

- Side Refrigerator

- Freezers

................................ ......... 9

- 8

Table 9.3.2 Modeled Homeowner Side

- by

- Side Market Share

................................ .............. 9

- 9

Table 9.3.3 Product Class Market Shares for Standard

- size Freezers

................................ .. 9

- 17

Table 9.3.4 Product Class Market Shares of Compact Refrigerators

................................ ... 9

- 21

Table 9.3.5 Product Class Market Shares of Compac t Freezers

................................ ........... 9

- 24

Table 9.4.1 Change in Relative Price Elasticity Following a Purchase Price Change

......... 9

- 26

LIST OF FIGURES

Figure 9.3.1 Historical and Forecasted U.S. Housing Starts

................................ .................... 9

- 4 Figure 9.3.2 Standard

- size Refrigerator

- Freezers: Survival and Retirement Functions

.......... 9

- 59

- ii Figure 9.3.3 Standard

- Size Refrigerator

- Freezers: Historical and Base Case Shipments Forecast by Market Segment

................................ ................................ ............... 9

- 7 Figure 9.3.4 Projected Market Share of Side

- and Bottom

- Freezer Product Classes

............ 9

- 11 Figure 9.3.5 Standard

- size Refrigerator

- Freezers: Base Case Shipments Forecast by Product Class Group

................................ ................................ .......................... 9

- 13 Figure 9.3.6 Standard

- size Freez ers: Survival and Retirement Functions

............................. 9

- 15 Figure 9.3.7 Standard

- Size Freezers: Historical and Base Case Shipments Forecast by

Mark et Segment

................................ ................................ ................................ . 9

- 16 Figure 9.3.8 Compact Refrigerators: Survival and Retirement Functions

............................. 9

- 18 Figure 9.3.9 Forecast of Saturation of Compact Refrigerators in New Construction Market Segments

................................ ................................ ............................... 9

- 19 Figure 9.3.10 Compact Refrigerators: Base Case Shipments Forecast by Market Segment

................................ ................................ ................................ .............. 9

- 20 Figure 9.3.11 Compact Freezers: Survival and Retirement Functions

................................ ..... 9

- 22 Figure 9.3.12 Compact Freezers: Historical and Base Case Shipments Forecast by Market Segment

................................ ................................ ................................ . 9

- 23 Figure 9.6.1 Standard

- Size Refrigerator

- Freezers: Base Case and Standards Case Shipments Forecasts

................................ ................................ ........................... 9

- 28 Figure 9.6.2 Standard

- size Freezers: Base Case and Standards Case Shipments

Forecasts

................................ ................................ ................................ ............ 9

- 29 Figure 9.6.3 Compact Refrigerators: Base Case and Standards Case Shipments

Forecasts

................................ ................................ ................................ ............ 9

- 309-1 CHAPTER 9. SHIPMENTS ANALYSIS

9.1 INTRODUCTION

Estimates of future product shipments are a necessary input to calculations of the national energy savings (NES) and net present value (NPV), as well as to the manufacturer impact analysis (MIA). This chapter describes t he data and methods the U.S. Department of Energy (DOE) used to forecast annual product shipments and presents results for each of the refrigeration product classes being considered in this analysis.

DOE defined four refrigeration product types, and deve loped models to estimate shipments for each type. The four types are: (1) standard

- size refrigerator

- freezers, (2) standard

size freezers, (3) compact refrigerators, and (4) compact freezers. Each model considers specific market segments to estimate shipme nts of each product type. The results from these segments are aggregated to estimate total shipments for each product type. DOE then used various data and assumptions to disaggregate total shipments into the product classes considered in this rulemaking. N ote that built

- in refrigeration products are initially included in the models for

standard

- size refrigerator

- freezers and standard

- size freezers, and then are separated out from the

forecast.

To estimate the effects of potential standard levels on produc t shipments, each shipments model accounts for the combined effects on consumer purchase decisions of changes in product price, annual operating cost, and household income.

The shipments models we re developed as Microsoft Excel spreadsheets that are

accessible on the Internet ( http://www1.eere.energy.gov / buildings/appliance_standards / residential/refrigerators

_ freezers.ht

ml ). Appendix 10

- A discusses how to access and utilize the shipments model spreadsheets, which are integrated into spreadsheets for the National Impact Analysis. The rest of this chapter explains the shipments models in more detail. Section 9.2 presents methodology behind the models; section 9.3 describes the data inputs and calibration of each model; section 9.4 discusses impacts on shipments from standards; sec tion 9.5 discusses the affected stock; and section 9.6 presents the shipments forecast for different energy conservation standard levels.

9.2 SHIPMENTS MOD EL GENERAL METHODOLOGY

DOE developed a model of the national stock of in

- service appliances for estimating annual shipments for each of the product types considered for this standards rulemaking. Rather than simply extrapolating a shipments trend

, the shi pments models used in this rulemaking take an accounting approach, tracking the vintage of units in the existing stock.9-2 9.2.1 Stock Accounting Approach

Stock accounting provides an estimate of the age distribution of product stocks for all years, using product shipments, a retirement function, and initial product stock as inputs. The age distribution of product stocks is a key input to both the NES and NPV calculations because the operating costs for any year depend on the age distribution of the stock. Older, l ess efficient units may have higher operating costs, while younger, more

- efficient units have lower operating costs.

DOE calculates the total stock of each product by integrating historical shipments data beginning with a specific year. The start year de pends on the historical data available for the product. As units are added to the stock, some of the older ones retire and exit the stock. To estimate future shipments, DOE developed a series of equations that define the dynamics and accounting of stocks. For new units, the equation is:

) 1 ( ) 1

, (

_ j Ship age j Stock **= =** 

Where:

Stock(j, age) = number of units of a particular age,
j = year for which the stock is being estimated, and Ship ( j

) = number of units purchased in year j

.

The above equation states that the number of one

- year

- old units is simply equal to the number of new units purchased the previous year. Slightly more complicated equations, such as the following equation, describe how the model accounts for the existing stock of units. 

# [ **]** ) ( 1 )

, ( ) 1

, 1 (

_ 

### age prob age j Stock age j Stock
Rtr 

### × **= +**  **+**

In this equation, as the year is incremented from j to j+1 , the age is also incremented

from age to age+1 . Over time, a fraction of the stock is removed; that fraction is determined by a retirement probability function, p rob Rtr (age) , which is described below

.

9.2.2 Market Segments

The model considers specific market segment s in developing a shipments foreca st. The two primary market segments are replacements and installations in new homes.

For common appliances that have been used by U.S. consumers for a long time, replacements typically constitute the majority of shipments. To estimate shipments of replacement units, the models utilize shipments data from previous years and estimates of the lifetime of each product. Estimated shipments of replacement units in a given year are equal to the total stock of the appliance minus those units shipped in previous years that rem ain in the stock. DOE determines the useful service life of each product c lass to estimate the number of9-3 years products are likely to remain in the stock. The following equation shows how DOE estimates shipments of replacement units.

) ( ) 1 ( ) ( 

## ∑ ∑

0 1

_ _ _ age prob Ship j Stock j Rpl
Rtr ageMax

age j

N j j p p **× =** 

**= =** 

Where:

Stock p (j

- 1) = total stock of appliances in year j

- 1

, prob Rtr ( age) = probability that an appliance of a particular age will be retired, and

N = year in which the model begins its stock accounting.

To forecast annual shipments for the new construction market, the model uses forecasts

of new housing and the saturation of the product in new housing. The forecast of market shares involves knowledge of historical trends, as well as the important drivers of consumer choice and their relative impacts.

For many products, DOE models a third market segment. For standard

- size refrigerator

freezers, DOE estimated purchases driven by the conversion of an existing unit from first to second refrigerator. For standard

- size freezers, DOE estimated purchases driven by existing

households who enter the market as new owners.

9.3 PRODUCT

- SPECIFIC MODELS

This section describes the models used to forecast shipments of the four refrigeration product types described in section 9.1. For each model, the section describes the sources for historical shipments data , the market segments considered, the approach for disaggregating total shipments into the appropriate product classes, and presents the forecast of base case shipments.

Forecasts of new housing are used in the shipments models. New housing includes newl y constructed single

- and multi

- family units, termed “new housing completions,” and mobile home placements. For new housing completions and mobile home placements, DOE used recorded data through 200 7, and adopted the projections from the DOE Energy Informa tion Administration (EIA)’s Annual Energy Outlook 2010 ( AEO2010 ) for the period 2008

– 2035. 1
Figure 9.3. 1 presents historical and forecasted new housing starts. For 2031 −2043, DOE kept completions at the 2035 level.9-4 Figure 9.3.1 Historical and Forecasted U.S. Housing Starts

9.3.1 Standard

- Size Refrigerator

- Freezers

DOE’s shipments model uses the aggregate shipments of standard

- size refrigerator

freezers as the basis for its forecasts. For the shipments analysis, the category “standard

- size refrigerator

- freezers” i ncludes built

- in refrigerator

- freezers. DOE used various data and assumptions to disaggregate total shipments of standard

- size refrigerator

- freezers into the product classes of standard

- size refrigerator

- freezers and built

- in refrigerator

- freezers consider ed in its analysis.

To start, DOE used the following sources to establish historical shipments for standard

size refrigerator

- freezers : Appliance magazine’s Statistical Review, 2

, 3

, 4 AHAM Factbook s , 5

, 6 and

an Association of Home Appliance Manufacturers ( AHAM ) data submittal related to this rulemaking. 7

9.3.1.1 Market Seg ments The shipments data from 1990 onward are shown in Figure 9.3.2 below

. (The complete historical time series may be found in the shipments model spreadsheet for standard

size refrigerator

- freezers.)

The market for standard

- size refrigerator

- freezers is primarily comprised of units for new construction, replacement units for products that have been retired, and additional refrigerator purchases driven by conversion of a first refrigerator to a s econd refrigerator. Total shipments are represented by the following equation: 0.00 0.50 1.00 1.50 2.00 2.50 3.00

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035Millions Historical and Reference Case

High Economic Growth Case

Low Economic Growth Case9-5 ) ( ) ( ) ( ) ( j Conv j NH j Rpl j Ship SRRF SRRF SRRF SRRF **+ +**  **=**

W here :

Ship SRRF (j) = t otal shipments of standard

- size refrigerator

- freezers in year j

, Rpl SRRF (j) = replacement shipments in year j

, N

H SRRF (j) = shipments to new homes in year j , and

Conv SRRF (j) = shipments due to additional refrigerator purchase (conversion of first to second refrigerator) in year j

.

The following sections discuss these three market segments in further detail.

Replacements. DOE determined refrigerator

- freezer shipments to the replacement market using an accounting method that tracks the total stock of units by vintage. Over time, s ome units

are retired and removed from the stock, thereby trig gering the shipment of replacemen t unit s

. A certain percentage of unit s will fail each year and need to be replaced. To determine when a unit fails, DOE used a survival function based on a product lifetime distribution with an average

value of 17.1 years. Chapter 8 provides a discussion of product lifetime

. Figure 9.3. 2 shows the survival and retirement functions that DOE used to estimate replacement shipments for standard

size refrigerator

- freezers

.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 5 10 15 20 25 30 35 40 45 50

Age % Surviving

% Retiring

Figure 9.3.2 Standard

- size Refrigerator

- Freezers: Survival and Retirement

Functions9-6 New Construc tion Shipments. To estimate shipments for new residential construction, DOE multiplied the housing starts forecast for each year by the estimated saturation of standard

size refrigerator

- freezers in new housing. DOE estimated the saturation in 2008 to be 1 .3 per new home based on the calculated appliance stock from shipments data and the retirement function. DOE used the 2008 saturation for the entire forecast period. The following equation describes the method used for calculating saturation for new constr uction:

) ( / ) ( ) ( j HStock j Stock j Sat NC **=**

2008 ) 2008 ( ) ( **> ∀**  **=** j

Sat j Sat NC NC W here :

Sat NC (j) = market saturation of standard

- size refrigerator

- freezers in the new housing market

segment in year j

, Stock(j) = total stock of standard

- size refrigerator

- freezers in year j

, HStock(j) = total number of housing units in year j , and

Sat NC ( 2008 ) = market saturation of standard

- size refrigerator

- freezers in the new housing market segment in 2008.

Shipments Due to Additional Refrigerator Purchase. DOE included a market segme nt corresponding to purchase s of additional standard

- size refrigerator

- freezers that are not intended as replacements. Because such purchases involve converting a first unit to a second refrigerator, DOE estimated shipments to this market segment by applyi ng the probability of conversion (developed in chapter 8) to the stock of surviving refrigerators. To determine when a household converts a first refrigerator to a second one, DOE used a conversion function based on the total

instal led stock of refrigerato rs of a certain age . C hapter 8 provides a detailed discussion of the

conversion function

. The following equation shows how DOE calculated shipments to this market segment.

) ( ) ( ) ( 

## ∑ ∑

0 1

_ age prob age Stock C j SNew

conv ageMax

age j

N j j j SRRF **× ×**  **=**

**= =** 

Where:

SNew SRRF (j ) = shipments due to additional refrigerator purchase (conversion of first to second refrigerator) in year j

, C

j = a calibration factor , equal to the ratio of new shipments in year j to the installed stock in that year, and

Prob

conv (age) = p robability that the refrigerator has been co nverted at a given age9-7 Shipments Forecast by Market Segment

. Figure 9.3.3 shows the forecasted shipments in the base case (without new energy conservation standards) and the historical shipments (through 2008). The figure presents shipments due to retirements, shipments to new housing, and shipments due to conversi on from first to second units.

Figure 9.3.3 Standard

- Size Refrigerator

- Freezers: Historical and Base Case Shipments Forecast by Market Segment

9.3.1.2 Disaggregation into Refrigerator

- Freezer Product Classes

DOE examined the historical trends in the market shares of various refrigerator

- freezer configurations to disaggregate the total shipments of refrigerator

- freezers into shipments to each of the three considered refrigerator

- freezer product categories (top

- mount, bottom

- mount and

side

- by

- side configurations). The m arket share of side

- by

- side refrigerator

- freezers models has grown significantly during the past two decades. Bottom

- freezer models historically had a small market share, but that share has grown in recent years. To forecast the market share for these

thre e configurations throughout the 30

- year analysis period (beginning in 2014), DOE built a simple model of aggregate consumer behavior, fit its model to the historical growth in side

- by

side market share, and then used its model to estimate future market sha res for all three configurations.

DOE assumed that bottom

- freezer models were an insignificant portion of the market prior to 2005, and that consumer behavior related to these models in the future would mirror behavior regarding side

- by

- side models. The refore, DOE forecast the combined market share for9-8 side

- by

- side and bottom

- freezer products , and assumed that the ratio between the market share s of bottom

- mount and side

- by

- side products would remain fixed at its 2008 value.

DOE based its model on the m arket share of each product category as reported by households in the Energy Information Administration’s Residential Energy Consumption Survey 8 (RECS) and as reported by AHAM. 7 RECS reports whether a household owns a side

by

- side refrigerator, but does no t distinguish between top

- and bottom

- mount units. For the purpose of this model, DOE assumed that all recently

- purchased top

- or

- bottom

- mount refrigerators reported in the RECS surveys conducted in 1990, 1993, 1997, 2001, and 2005 are

top

- mount units.

D OE used RECS data first to estimate the maximum (“limiting”) market share that side

by

- side and bottom

- mount product classes would attain in the future. RECS reports the income of each household in its sample. DOE assumed that households that have annual i ncomes greater than $100,000 and that own their own homes are able to select the appliance that best meets their needs and preferences. The market share of side

- by

- side units in these households is significantly higher than the current overall market share of side

- by

- side products. DOE determined market shares for recent purchases from RECS by considering only households which reported purchasing their appliance within two years prior to the survey. The market share of side

- by

- side refrigerator purchases in the selected household group from each RECS survey is shown in Table 9.3.3. Over time, DOE assumed that all homeowners will be free to choose the product of their choice, as DOE assumed high

- income homeowners can today. As a result, DOE assumed that

marke t share of side

- by

- side units among all homeowners will increase until it equals the mean market share among high

- income home

- owning households, 66.4 percent.

Table 9.3.1 Market Shares of Side

- by

- Side Refrigerator

- Freezers

RECS Survey Year Market Share of Side

- by

- Si de Units for High

Income Homeowners ( %)

1990 57.7

1993 71.7

1997 73.4

2001 61.6

2005 67.5

Mean 66.4

Source : EIA, Residential Energy Consumption Survey, for the years listed.

DOE used RECS to determine what percent of side

- by

- side units is sold to home

- owners in order to convert a limiting market share among home

- owning households into a market share for all shipments. This percentage was roughly constant in the five most recen t RECS surveys, and DOE assumed that it would remain equal to their mean, 90.9 percent, throughout the forecast period. DOE also assumed that the percent of American households that own their home would return to its historical level of roughly 65 percent by 2025. (Home ownership ranged between 639-9 percent and 66 percent from 1962 to 1997, peaked at 69 percent in 2004, and fell to 67.8 percent in 2008.)

DOE combined the three factors (the observed preference of high

- income consumers, percent of side

- by

- sid e refrigerator

- freezers purchased by homeowners, and homeownership) to predict the limiting market share for the side

- and bottom

- freezer product classes. This limit is

% 45

. 47 **= ×** 

**= −** 

**−** HO LIM LIM HO

LIM SF SF HO MS MS

Where :

MS SF

- LIM = limiting market share for side

- by

- side and bottom

- mount product classes,

MS HO

- LIM = limiting market share for side

- by

- side and bottom

- mount product classes among homeowners (66.4 percent),

HO LIM = DOE’s assumed value for the eventual percentage of households that will own their own home (65 per cent), and

SF HO = the percentage of side

- by

- side and bottom

- mount products sold to homeowners (90.9 percent).

DOE modeled the approach to this limiting value as a logistic curve, and fit the model parameters to data from RECS and AHAM in order to deter mine the rate at which the market will approach the limit. RECS micro

- data enabled DOE to determine the approximate market

share of side

- by

- side products among all homeowners in the years preceding each RECS survey (1989, 1992, 1996, 2000, and 2004). DOE a lso calculated the market share among homeowners from the AHAM data by multiplying by 90.9 percent ( SF HO ) and dividing by the homeownership ( HO ) for each year. The resulting estimates for market shares of side

- by

- side products among

homeowners are shown in Table 9.3.2.

Table 9.3.2 Modeled Homeowner Side

- by

- Side Market Share
Survey Year Market Share

AHAM 1998 41.0%

1999 41.9%

2000 42.2%

2001 43.0%

2002 43.9%

2003 45.9%

2004 46.2%

2005 49.1%

2006 59.8%

2007 61.4%

2008 65.1%

RECS 1989 32.5%9-10 Survey Year Market Share

1992 31.9%

1996 41.1%

2000 48.9%

2004 53.0%

DOE fit a logistic curve to the data in Table 9.3.2, approaching the limiting value MS SF

LIM :

**( )**  

## e year LIM HO

year HO MS MS

**− −** 

**− +**  **= β**  **α** 1 ,

Where:

MS HO

- year = market share of side

- by

- side and bottom

- mount refrigerator

- freezers among all homeowners in a given year , α, β = fit parameters, and

MS HO

- LIM = limiting market share for side

- and bottom

- freezer product classes among homeowners (66.4 percent).

The best fi t parameters are: α = 0.10504 and β = 1992.38.

The R

- squared value for the fit is 0.795, indicating that the model is a relatively good fit. DOE multiplied the best

- fit estimate of MS HO

- year by homeownership in each year, and then divided by SF HO to acc ount for side

- and bottom

- mount refrigerators sold to non

- homeowners.

The results are estimated market shares of side

- by

- side or bottom

- mount products throughout the analysis period. This estimate, along with the markets shares derived from the RECS and AH AM data, is shown in Figure 9.3.4

.9-11 0.2 0.25

0.3 0.35

0.4 0.45

0.5

1985 1995 2005 2015 2025 2035 2045

YearSide- and Bottom-freezer Market Share

Forecast market share

AHAM Shipments Share

RECS Side-freezer

Limiting fraction

Figure 9.3.4 Projected Market Share of Side

- a nd Bottom

- Freezer

Product Classes

DOE disaggregated the side and bottom

- mount freezer cla sses into their respective product classes based on the AHAM data submittal for 2005

- 2008. For future years, DOE maintained the market shares of the product classes within each considered category of side

- by

side and bottom

- mount, and top

- mount refrigerato r

- freezer as they existed in 2008.

For built

- in product classes, DOE assumed that the market shares will move in step with market shares of the closest corresponding conventional product class (e.g., product class 3A

- BI follows conventional product clas s 3), and it maintained the ratios between built

- in and conventional products found in 2008.

Table 9.3.3 presents the market share forecast DOE used to disaggregate total standard

size refrigerator

- freezer shipments.9-12 Projected Product Class Market Shares of Standard

- Size Refrigerator

- Freezers

Year PC3 (Top) PC1+PC2

+PC6 (Top) PC4 (S/S) PC7 (S/S) PC5 (Bottom) PC5A (Bottom) PC4

- BI+

PC7

- BI (Built

- in S/S) PC3A

- BI+

PC5

- BI (Built

- in)

2008 50.6% 0.7% 0.8% 26.9% 12.5% 5.7% 1.6% 1.2%

2009 54.5% 0.7% 0.8% 24.7% 11.5% 5.2% 1.5% 1.1%

2010 58.0% 0.8% 0.7% 22.8% 10.6% 4.8% 1.3% 1.0%

2011 57.7% 0.8% 0.7% 23.0% 10.7% 4.9% 1.3% 1.0%

2012 57.5% 0.8% 0.7% 23.1% 10.8% 4.9% 1.4% 1.1%

2013 57.2% 0.8% 0.7% 23.3% 10.8% 4.9% 1.4% 1.1%

2014 56.9% 0.8% 0.7% 23.4% 10.9% 5.0% 1.4% 1.1%

2015 56.6% 0.8% 0.7% 23.6% 11.0% 5.0% 1.4% 1.1%

2016 56.4% 0.8% 0.7% 23.7% 11.1% 5.0% 1.4% 1.1%

2017 56.1% 0.8% 0.7% 23.9% 11.1% 5.1% 1.4% 1.1%

2018 55.9% 0.8% 0.7% 24.0% 11.2% 5.1% 1.4% 1.1%

2019 55.7% 0.8% 0.7% 24.1% 11.2% 5.1% 1.4% 1.1%

2020 55.4% 0.7% 0.7% 24.2% 11.3% 5.1% 1.4% 1.1%

2021 55.3% 0.7% 0.7% 24.3% 11.3% 5.2% 1.4% 1.1%

2022 55.1% 0.7% 0.7% 24.4% 11.4% 5.2% 1.4% 1.1%

2023 55.0% 0.7% 0.8% 24.5% 11.4% 5.2% 1.4% 1.1%

2024 54.8% 0.7% 0.8% 24.6% 11.4% 5.2% 1.4% 1.1%

2025 54.7% 0.7% 0.8% 24.7% 11.5% 5.2% 1.4% 1.1%

2026 54.5% 0.7% 0.8% 24.8% 11.5% 5.2% 1.5% 1.1%

2027 54.3% 0.7% 0.8% 24.8% 11.6% 5.3% 1.5% 1.1%

2028 54.2% 0.7% 0.8% 24.9% 11.6% 5.3% 1.5% 1.1%

2029 54.0% 0.7% 0.8% 25.0% 11.7% 5.3% 1.5% 1.1%

2030 53.9% 0.7% 0.8% 25.1% 11.7% 5.3% 1.5% 1.1%

2031 53.7% 0.7% 0.8% 25.2% 11.7% 5.3% 1.5% 1.1%

2032 53.6% 0.7% 0.8% 25.2% 11.8% 5.3% 1.5% 1.1%

2033 53.5% 0.7% 0.8% 25.3% 11.8% 5.4% 1.5% 1.1%

2034 53.4% 0.7% 0.8% 25.4% 11.8% 5.4% 1.5% 1.1%

2035 53.3% 0.7% 0.8% 25.4% 11.8% 5.4% 1.5% 1.1%

2036 53.2% 0.7% 0.8% 25.5% 11.9% 5.4% 1.5% 1.1%

2037 53.1% 0.7% 0.8% 25.5% 11.9% 5.4% 1.5% 1.1%

2038 53.0% 0.7% 0.8% 25.6% 11.9% 5.4% 1.5% 1.1%

2039 52.9% 0.7% 0.8% 25.6% 11.9% 5.4% 1.5% 1.1%

2040 52.8% 0.7% 0.8% 25.7% 12.0% 5.4% 1.5% 1.1%

2041 53.1% 0.7% 0.8% 25.5% 11.9% 5.4% 1.5% 1.1%

2042 52.8% 0.7% 0.8% 25.7% 12.0% 5.4% 1.5% 1.1%

2043 52.7% 0.7% 0.8% 25.8% 12.0% 5.5% 1.5% 1.1%9-13 Shipments Forecast by Market Segment

. Figure 9.3.5 presents forecasted refrigerator

freezer shipments disaggregated by product class group.

Figure 9.3.5 Standard

- size Refrigerator

- Freezers: Base Case Shipments Forecast by Product Class Group

9.3.2 Standard

- Size Freezers

DOE’s shipments model uses the aggregate shipments of standard

- size freezers as the basis for its forecasts. For the shipments analysis, the category “standard

- size freezers” includes

built

- in freezers. DOE used various data and assumptions to disaggregate total shipments of

standard

- si ze freezers into the product classes of standard

- size freezers and built

- in freezers considered in its analysis.

To start, DOE used data on historical shipments (i.e., domestic shipments and imports)

from Appliance magazine’s Statistical Review

, 9 AHAM Fac tbook

, 5 and an AHAM data

submittal 7 to populate and calibrate its shipments model. The shipments data from 1990 onward are shown in Figure 9.3.7 below

. (The complete historical time series may be found in the shipments model spreadsheet for standard

- size freezers.)9-14 9.3.2.1 Market Segments

The shipments market for standard

- size freezers is primarily comprised of replacement units for products that have been retired and units in new homes. DOE’s shipments model also

assumes that some households enter the market as new freezer owners. Total shipments are represented by the following equation:

) ( ) ( ) ( ) ( j EHA j NH j Rpl j Ship SF SF SF SF **+ +**  **=**

W here :

Ship SF (j) = t otal shipments of standard

- size freezers in year j

, Rpl SF (j) = replacement shipments in year j

, N

H SF (j) = shipments to new households in year j , and

EHA SF (j) = shipments to existing households without the appliance in year j

.

The following sections discuss all three of these markets in further detail.

Replacements

. DOE determined shipments to the replacement market using an accounting method that tracks the total stock of units by vintage. Over time, some units are retired and removed from the stock, trig gering the shipment of a replacement unit. A certain percentage (depending on the age) of units will fail each yea r and need to be replaced. To determine when a unit fails, DOE used a survival function based on a product lifetime

distribution that had an average value of 22.7 years. C hapter 8 describes the derivation of the

lifetime of standard

- size freezer s

. Figure 9 .3. 6 shows the survival and retirement functions that DOE used to estimate shipments of replacement freezers.9-15 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 5 10 15 20 25 30 35 40 45 50

Age % Surviving

% Retiring

Figure 9.3.6 Standard

- size Freezers: Survival and Retirement Functions

New Construction

. To forecast the shipments of standard

- size freezers for new construction for any given year, DOE multiplied the forecasted housing starts by the forecasted

saturation of standard

- size freezers for new housing. DOE determined the saturation in new homes by using a sample of RECS household records whose home is less than 5 years old, with freezers of age less than 5 years. DOE used the growth in saturation between the 2001 and 2005 RECS surveys 8 to estimate saturation in 2007 new homes of 12%. It used that level for the entire forecast period

.

New Owners. D OE introduced a third market segment that consists of households that currently do not own a freezer. DOE estimated historical shipments to this market segment as the residual shipments after modeled shipments for new housing and replacements were subtract ed

from total actual shipments. DOE used a moving average of the previous 3 year s of the percent

of households who purchase freezers as new owners to estimate the percent f or each year in

2008

- 2043. The following equation illustrates the calculations.

Where:

EHA SF (j) = number of freezers shipped to existing households without the appliance in year j

, Stock Sat j = stock saturation of freezers in year j

, HStock j = housing stock in year j , and EHAfrac j = fraction of housing units without the appliance who obtain a freezer in year j

. j j j SF EHAfrac HStock StockSat j EHA **× ×** 

**− =**  ) 1 ( ) (9-16 Shipments Forecast by Market Segment

. Figure 9.3.7 shows the forecasted shipments of

standard

- size freezers in the base case (without amended energy conservation standards), disaggregated into the three modeled market segments, and the historical shipments, which DOE

used to calibrate the forecast.

Figure 9.3.7 Standard

- Size Freezers: Historical and Base Case Shipments Forecast by Market Segment

9.3.2.2 Disaggregation into Freezer Product Classes

To disaggregate the total shipments of standard

- size freezers into shipments of each of the freezer product classes, DOE used the market share information submitted by AHAM. 7

These data provided an aggregated market share in 2007 of 50.6 percent for product classes 8, 10 and 10A. Using data from the 2005 AHAM Fact Book 5 and Appliance magazine, 2 DOE concluded that the market shares for product classes 8 and 10A are near zero. Therefo re, DOE attributed the combined market share of product classes 8, 10 and 10A from the AHAM data submittal (50.6 percent) entirely to product class 10. The remainder, 49.4 percent, is comprised of shipments of upright freezers with auto defrost. Based on t he AHAM data submittal, DOE

estimated that built

- in freezers (product class 9

- BI) account for 2.2% of total shipments of upright freezers with auto defrost.9-17 Table 9.3.4 presents the market shares used for disaggregating modeled shipments of

standard

- size freezers. Because a reliable method for projecting market share changes was lacking, DOE used these estimated market shares throughout the forecast period.

Table 9.3.3 Prod uct Class Market Shares for Standard

- size Freezers

PC8 PC9 PC10 PC10A PC9

- BI

0.0% 4 8.3 % 50.6% 0.0% 1.1

9.3.3 Compact Refrigerators

DOE’s shipments model uses the aggregate shipments of compact refrigerators as the

basis for its forecasts. DOE used various data and assumptions to disaggregate total shipments into the five product classes of compact refrigerators considered in this analysis.

To start, DOE developed historical shipments data (domestic shipments and imports) based on data submitted by AHAM 7 a nd various issues of Appliance magazine

. 2,9 These data are shown in Figure 9.3.9 below

.

9.3.3.1 Market Segments

The market for compact refrigerators is primarily comprised of units that replace products that have been retired from service, and units installed in new housing, new lodging in the commercial sector (such as hotel rooms and dormitories), and in other new construction in the commercial sector. Total compact refrigerator shipments are represented by the following equation:

) ( ) ( ) ( ) ( ) ( j NOthComm j NLodg j NH j Rpl j Ship CRRF CRRF CRRF CRRF CRRF **+ +**  **+ =** 

W here :

Ship CRRF (j) = t otal shipments of compact refrigerators in year j

, Rpl CRRF (j) = replacement shipments in year j

, N

H

CRRF (j) = shipments to new households in year j

, NLodg CRRF (j) = shipments to new lodging units in year j , and

N

OthComm CRRF (j) = shipments to other new commercial establishments in year j

.

The following sections discuss these markets.

Replacements. DOE determined shipments to the replacement market using an accounting method that tracks the total stock of units by vintage. Over time, some of the units are retired and removed from the stock, triggering the shipment of a new unit. A certain percentage of units will fail each year and need to be replaced. To determine when a compact refrigerator fails, DOE used a product survi val function based on a lifetime distribution with an average9-18 value of 5.6 years. Chapter 8 presents a more thorough discussion of product lifetimes for compact refrigerators . Figure 9.3. 8 shows the survival and retirement functions that DOE used to

estima te replacement shipments.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 5 10 15 20 25 30

Age % Surviving

% Retiring

Figure 9.3.8 Compact Refrigerators: Survival and Retirement

Functions

New Housing. To estimate shipments to new housing in each year , DOE multiplied

forecasted housing starts by the estima ted saturation of compact refrigerators in new ho using

units

. DOE estimated market saturation for this segment using the saturation of compact refrigerators in newly

- built homes in RECS 2001 and RECS 2005 (2.7 percent and 3.2 percent, respectively). For years beyond 2005, DOE maintained the growth in new housing saturation

measured between 2001 and 2005.

New Lodging and Other C ommercial N ew C onstruction

. To estimate shipments to new

commercial establishments

, DOE used forecasts of new construction in lodging and other commercial establishments coupled with saturation data (in terms of units per building). DOE

used total

- stock saturation data from the American Lodging Association (ALA) 10 and the EIA’s Commercial Building Energy Consumption Survey (CBECS). 11 For lodging, DO E used saturations from ALA for the years 1998, 2003, and 2008. For future years, DOE maintained the growth in saturation rates seen between 200 3 and 200 8

. For other commercial applications, DOE used saturations from CBECS for the years 1999 and 2003. DOE maintained the growth in

saturation seen between 1999 and 200 3 for subsequent years

.9-19 Figure 9.3.9 presents the forecast for saturation of compact refrigerators (in terms of percent of new buildings with 1 or more units) for the three market segments for new construction.

2003 - 72%

2003 - 48%

2005 - 3.2%

0% 20% 40% 60% 80% 100% 120%199019931996199920022005200820112014201720202023202620292032203520382041 Lodging

Other Commercial

Residential

Figure 9.3.9 Forecast of Saturation of Compact Refrigerators in New Construction Market Segments

Model Calibration. To better match modeled shipments with the historical shipments data, DOE first estimated the compact refrigerator stock (number of units) for 2003. DOE estimated the 2003 residential stock from various years of RECS. As mentioned earlier, DOE obtained the compact refrigerator saturation data for the lodging sector from the ALA

. For other commercial applications, DOE utilized saturations from CBECS for the years 1999 and 2003. CBECS data does not specify the size of the residential style refrigerators in commercial establishments. In order to put an upper bound on the saturations , DOE considered the case wherein all residential style refrigerators in these establishments are compact refrigerators. This upper bound determined the maximum possible stock of compact refrigerators in other

commercial establishments.

Using the above stock estimate, DOE estimated the maximum average life of a compact refrigerator to be 5.6 years. a

a In DOE’s stock accounting model based on historical shipments and stock in residential and lodging sectors, a lower saturation of compacts in other commercial establishments would imply a shorter average life for a compact refrigerator. In the absence of additional information, DOE made the9-20 conservative assumption of 5.6 years as the average life of a compact refrigerator. This lifetime

pr ovides a better match between modeled and historical shipments (see figure below).

Based on the above sources, DOE estimated that in 2003 the compact refrigerator stock was split 30 percent, 18 percent, and 52 percent between residential, lodging, and ot her commercial sectors, respectively

.

Shipments Forecast by Market Segment

. Figure 9.3.10 shows the forecasted shipments of compact refrigerators in the base case, disaggregated into modeled market segments, along with the historical shipments. DOE did not attempt to match its total modeled shipments with the spike in historical shipments seen in 2003

- 2006.

Figure 9.3.10 Compact Refrigerators: Base Case Shipments Forecast by Market Segment

9.3.3.2 Disaggregation into Compact Refrigerator Product Classes

DOE based its pro duct class market shares for compact refrigerator s on data submitted by

AHAM 7 and California Energy Commission ( CEC ) data 12

Table 9.3. 5 on available compact refrigerator

models. presents the market share forecast used for disaggregating total modeled shipments. DOE used the se estimated market share s throughout the forecast period.9-21 Table 9.3.4 Product Class Market Shares of Compact Refrigerators

Year PC11 PC12 PC13 PC13 A PC14 PC15

2008 84.4% 5.9% 0.9% 8

. 1 % 0.3% 0.3%

9.3.4 Compact Freezers

DOE’s shipments model uses the aggregate shipments of compact freezers as the basis for its forecasts. DOE used various data and assumptions to disaggregate total shipments into the three product classes of compact freezers considered in this analysis.

To start, DOE developed historical shipments data (domestic shipments and imports) based on data submitted by AHAM 7 and various issues of Appliance magazine

. 2,9 These data are shown in Figure 9.3.1 2 below

.

9.3.4.1 Market Segments

The market for compact freezers is primarily comprised of replacement units for products that have been retired from service and units purchased by new owners (not just new construction) in both residential and commercial sectors. Total c ompact freezer shipments are represented by the following equation:

) ( ) ( ) ( ) ( j NC j NR j Rpl j Ship CF CF CF CF **+ +**  **=**

Where:

Ship C F (j) = t otal shipments of compact freezers in year j

, Rpl CF (j) = replacement shipments in year j

, N

R C F (j) = shipments to new residential owners in year j , and

NC CF (j) = shipments to new commercial owners in year j

.

The following sections discuss these markets in further detail.

Replacements

. DOE determined shipments to the replacement market using an

accou nting method that tracks the total stock of units by vintage. DOE integrated historical shipments to estimate each year’s stock of compact freezers by vintage. Over time, some units

are retired and removed from the stock, triggering the shipment of a repla cement unit. A certain percentage of units will fail each year and need to be replaced. To determine when a compact
freezer fails, DOE used a product survival function based on a lifetime distribution with an average value of 7.5 years. Chapter 8 provides a more thorough discussion of product lifetimes for compact freezers. Figure 9.3.1 1 shows the survival and retirement functions that DOE used to

estimate shipments of replacement units

.9-22 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 5 10 15 20 25 30

Age % Surviving

% Retiring

Figure 9.3.11 Compact Freezers: Survival and Retirement Functions9-23 New Owners

. In the absence of data on saturation of compact freezers in homes or commercial applications, DOE estimated historical shipments to new owners based on the difference between total historical shipments of compact freezers and estimated replacement shipment s. DOE forecast new owner shipments in each year using a 3

- year moving average method. DOE assumed an even split between residential and commercial new owners for this

segment.

Shipments Forecast by Market Segment

. Figure 9.3.1 2 shows the forecasted sh ipments of compact freezer s in the base case (without amended energy conservation standards), disaggregated into modeled market segments, along with the historical shipments.

Figure 9.3.12 Compact Freezers: Historical and Base Case Shipments Forecast by Market Segmen t

9.3.4.2 Disaggregation into Compact Freezer Product Classes

DOE used CEC data on the number of available freezer models 13 to estimate market shares of product classes 16, 17, and 18. Table 9.3. 6 presents the market share forecast used throughout the forecast period for disaggregating total modeled shipments.9-24 Table 9.3.5 Product Class Market Shares of Compact Freezers

PC16 PC17 PC18

50.0% 30.0% 20.0%

9.4 IMPACT OF ENERGY CON SERVATION STANDARDS ON SHIPMENTS

DOE projects that appliance standards often result in an increase in the price of the product. Economic theory suggests that, all else being equal, an increase in the price of a normal good would lead to a decrease in demand for it. DOE conducted a litera ture review and an analysis of appliance price and efficiency data to estimate the effects on product shipments from increases in product price. DOE also considered the decreases in operating costs from higher energy efficiency and changes over time in hou sehold income. Appendix 9

- A provides a detailed explanation of the methodology DOE used to quantify the impacts of these variables on shipments

.

In the literature, DOE found only a few studies of appliance markets that are relevant to

the issue at hand. DOE identified no studies that use time

- series data of product price and shipments data after 1980. The information that can be summarized from the literature suggests that the demand for appliances is price

- inelastic. Other information in the literature s uggests that appliances are a normal good, such that rising incomes incre ase the demand for appliances. Finally, the literature suggests that market behavior indicates relatively high “ implicit discount

rates ” when comparing appliance prices and appliance operating costs

. b

DOE found insufficient data on product purchase price and operating cost to perform a thorough analysis of dynamic changes in the appliance market. Instead, it use d purchase price and efficiency data specific to residential refrigerato rs, clothes washers

, and dishwashers over the period 1980

– 2002 to evaluate broad market trends and conduct simple regression analyse s. These data indicate that there has been a rise in appliance shipments and a decline in appliance purchase price and opera ting cost s over the time period. Household income has also risen during

this time

.

To simplify the analysis, DOE combined the available economic information into one variable, termed the relative price , and used this variable in an analysis of market tr ends, as well

as to conduct a regression analysis. The relative price is defined with the following expression:

Income PVOC PP

Income TP RP +

= =

b A high implicit d iscount rate with regard to operating costs means that, based on market behavior, consumers appear to put relatively low economic value on the operating cost savings realized from more

- efficient appliances. A high value may indicate lack of information, ri sk aversion and other factors as well as the value consumers place on savings accrued in the future.9-25 Where:

RP = Relative price,

TP = Total price,

Income = Household income,

PP = Appliance purchase price, and

PVOC = Present value of operating cost.

DOE used an “implicit discount rate” of 37 percent to determine the present value of operating costs. This value is an average from values derived by several studies described in a 1985 journal article. 14

DOE’s regression analysis yields a relative price elasticity of demand , averaged over the three appliances, of

- 0.34. For example, a relative price increase of 10 percent results in a 3.4 percent decrease in shipments. Note that because the relative price elast icity incorporates the impacts from three effects (i.e., purchase price, operating cost, and household income), the impact from any single effect is somewhat mitigated by changes from the other two effects.

T he relative price elasticity of

- 0.34 is cons istent with estimates in the literature. Nevertheless, DOE stress es that the measure is based on a small data set, using simple statistical analysis. More important ly , the measure is based on an assumption that economic variables, including purchase price, operating costs, and household income , explain most of the trend in appliances per household in the United States since 1980. Changes in appliance quality and consumer preferences may have occurred during this period, but DOE did not account for them

in t his analysis. Despite these uncertainties, DOE believes that its estimate of the relative price elasticity of demand provides a reasonable assessment of the impact that purchase price, operating cost, and household income have on product shipments.

DOE c onsiders the relative price elasticity provided by the preceding analysis to be a

short

- run value. Because DOE’s forecasts of shipments and national impacts due to standards is

over a 30

- year time period, it needed to consider how the relative price elasti city is affected once a new standard takes effect. It was unable to identify sources specific to household durable goods, such as appliances, to indicate how short

- run and long

- run price elasticities differ. To

estimate how the relative price elasticity ch anges over time, DOE relied on a study pertaining to

automobiles. 15 This study shows that the automobile price elasticity of demand changes in the years following a purchase price change. With increasing years after the purchase price change, the price elas ticity becomes smaller (more inelastic) until it reaches a terminal value around the tenth year after the price change. Table 9.4. 7 shows the relative change in the price elasticity of demand for automobiles over time. DOE developed a time series of relati ve price elasticities for home appliances based on the relative change in the automobile price elasticity of demand. For years not shown in the table, DOE performed a linear interpolation to obtain the relative price elasticity.9-26 Table 9.4.1 Change in Relative Price E lasticity Following a Purchase Price Change
Years Following Price Change

1 2 3 5 10 20
Change in Elasticity

Relative to 1 st year 1.00 0.78 0.63 0.46 0.35 0.33

Relative Price Elasticity

- 0.34

- 0.26

- 0.21

- 0.16

- 0.12

- 0.11

9.4.1 Application of Relative Price Elasticity

DOE estimated shipments in each standards case using the relative price elasticities described above, along with the change in the relative price between a standards case and the

base case. Because household income is the same in the standard s case and the base case, it does not figure into the calculation of the change in the relative price

. Note that in the following equation, the relative price and the relative price elasticity are functions of the year because both change with time. c


# ( **)** 

# ( **)** ) ( ) ( 1 ) ( ) ( ) ( ) (

_

_ _ _ _ j RP j e j M j NI j Rpl j Ship
RP p BASE p BASE p BASE p STD **∆ ×**  **× +**  **+ =** 

Where:

Ship STD_p (j) = t otal shipments under the standards case of product p in year j

, Rpl BASE_p (j) = units of product p under the base case retired and replaced in year j

, NI BASE_p (j) = number of new construction installations un der the base case of product p in year
j

, M BASE_p (j) = units installed in market M under the base case of product p in year j ( M
represents purchases for existing homes for standard

- size freezers, and purchase of an additional refrigerator for standard

- size refrigerators),

e

RP (j)= r elative price elasticity in year j (equals

- 0.34 for year 1), and

ΔRP(j)= change in relative price due to a standard level in year j

.

9.5 AFFECTED STOCK

In addition to the forecast of product shipments under both the b ase case and the standards case, the affected stock is a key output of DOE’s shipments models. The affected stock (stock that is affected by a standards level) consists of those in

- service units that are purchased in or after the year the standard has take n effect, as described by the following equation:



# ∑ _

1 _ ) ( ) ( ) ( yr Std j

age p p p age Stock j Ship j Stock Aff

**= +**  **=**

c The relative price changes slightly over time because the lifetime operating costs are different for each vintage in the forecast period. Operating costs change slightly because forecasted energy prices are changing.9-27 Where:

Aff Stock p (j) = affected stock of units of product p of all vintages that are in service in year j

, Ship p (j) = shipments of product p in year j

, Stock p (j) = stock of units of product p of all vintages that are in service in year j

, age = age of the units (years), and Std_yr = effective date of the standard.

For its analysis, DOE assumed that amended energy conservation standards will become effective in 2014. Thus, all appliances purchased starting in 2014 are affected by the standard

level.

9.6 SHIPMENTS FORECASTS IN STANDARDS CASES

This section presents the s hipments forecasts for the trial standard levels that DOE considered for each of the refrigeration product types, as well as for the base case. The TSLs, which consist of a combination of specific efficiency levels for each product class, are described

in chapter 10. The differences between the base case and standards case shipments forecasts represent the annual shipments reductions attributable to the standard levels.

Figure 9.6.1 shows the standard

- size refrigerator

- freezer shipment forecasts for the b ase case and for two standard levels for which an impact is evident.9-28 Figure 9.6.1 Standard

- Size Refrigerator

- Freezers: Base Case and Standards Case Shipments Forecasts

Figure 9.6.2 shows the standard

- size freezer shipment forecasts for the base case and for

s everal standard levels for which an impact is evident.9-29 Figure 9.6.2 Standard

- size Freezers: Base Case and Standards C a se Shipments Forecasts

Figure 9.6.3 shows the compact refrigerator shipment forecasts for the base case and the considered TSLs. Similar impac ts are seen for compact freezers (details may be found in the NIA spreadsheet for compact freezers).9-30 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041Miliions CSL6

CSL7

CSL8

Base

Figure 9.6.3 Compact Refrigerators: Base Case and Standards Case Shipments Forecasts9-31 REFERENCES

1 U.S. Department of Energy

- Energy Information Administration. Annual Energy Outlook

20 10 With Projections to 2035. April 2010. Washington, DC

. DOE/EIA

- 0383(2010)

. < http://www.eia.doe.g ov/oiaf/aeo/pdf/0383 ( 2010 ) .pdf >

2 Statistical Review. Appliance Magazine , April, 1993.

3 Statistical Review. Appliance Magazine , April, 1990

.

4 Statistical Review. Appliance Magazine , April, 1982

.

5 Association of Home Appliance Manufacturers. AHAM 200 5 Fact Book

, 2005. Washington,

DC

.

6 Association of Home Appliance Manufacturers. AHAM 2003 Fact Book , 2003. Washington,

DC.

7 Association of Home Appliance Manufacturers. Aggregated Refrigerator

‐ Freezer Shipments and Efficiency Data for DOE Refrigerator

‐ Freezer Energy Efficiency Standards Rulemaking , January 16, 2009

. Memo to Detlef Westphalen, Navigant Consulting, Inc.

8 U.S. Department of Energy

– Energy Information Administration. Residential Energy Consumption Survey. Washington, D.C. Surveys for 1990, 1993, 1997, 2001, and 2005.

< www.eia.doe.gov/emeu/recs/contents.html >

9 Statistical Review. Appliance Magazine , April, 1997

.

10 American Hotel & Lodging Association. 2008 Lodging Survey: Lodging S ervices, Facilities,

and Trends , 2008 . Washington, DC. p. 52, Percentage of Hotels with Refrigerators in

Room.

11 U.S. Department of Energy

– Energy Information Administration. Commercial Building Energ y Consumption Survey. Washington, D.C. Surveys for 1999 and 2003. <http://www.eia.doe.gov/emeu/cbecs/>

12 California Energy Commission. Appliances Database

— Refrigeration.

< www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/ > (Last accessed April 25, 2009.)

13 California Energy Commission. Appliances Database

— Refrigeration.

< www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/ > (Last accessed April 25, 2009.)

14 Train, K., "Discount Rates in Consumers' Energy

- Related De cisions," Energy: The International Journal, Vol. 10, No. 12, 1985, pp. 1243

- 1253.9-32 15 S. Hymans. Consumer Durable Spending: Explanation and Prediction, Brookings Papers on Economic Activity , 1971. Vol. 1971, No. 1, pp. 234

- 239.10

- i CHAPTER 10: NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION

................................ ................................ ................................ .......... 10

- 1

10.1.1 Alternative Scenarios

................................ ................................ ................................ ..... 10

- 2

10.2 FORECASTED EFFICIENC IES FOR BASE AND STA NDARDS CASES

............... 10

- 2

10.2.1 Method and Assumptions

................................ ................................ .............................. 10

- 3

10.2.1.1 Base Case

................................ ................................ ................................ ...... 10

- 3

10.2.1.2 Standards Cases

................................ ................................ ............................ 10

- 7

10.3 NATIONAL ENERGY SAVI NGS

................................ ................................ .............. 10

- 14

10.3.1 Definition

................................ ................................ ................................ ..................... 10

- 14

10.3.2 Inputs

................................ ................................ ................................ ............................ 10

- 15

10.3.2.1 Shipments

................................ ................................ ................................ .... 10

- 16

10.3.2.2 Equipment Stock

................................ ................................ ......................... 10

- 16

10.3.2.3 Annual Energy Consumption per Unit

................................ ....................... 10

- 16

10.3.2.4 National Annual Energy Consumption

................................ ....................... 10

- 17

10.3.2.5 Site

- to

- Source Conversion Factors

................................ ............................. 10

- 17

10.4 NET PRESENT VALUE

................................ ................................ .............................. 10

- 18

10.4.1 Definition

................................ ................................ ................................ ..................... 10

- 18

10.4.2 Inputs

................................ ................................ ................................ ............................ 10

- 20

10.4.2.1 Average Annual Product Cost

................................ ................................ .... 10

- 20

10.4.2.2 Annual Operating Cost Savings per Unit

................................ .................... 10

- 22

10.4.2.3 Total Annual Increases in Product Cost

................................ ...................... 10

- 22

10.4.2.4 Total Annual Savings in Operating Cost

................................ .................... 10

- 22

10.4.2.5 Discount Factor

................................ ................................ ........................... 10

- 22

10.4.2.6 Present Value of Costs

................................ ................................ ................ 10

- 23

10.4.2.7 Present Value of Savings

................................ ................................ ............ 10

- 23

10.5 NES AND NPV RESULTS

................................ ................................ .......................... 10

- 23

10.5.1 Summary of Inputs

................................ ................................ ................................ ....... 10

- 23

10.5.2 National Energy Savings Results by Efficiency Level

................................ ................ 10

- 24

10.5.3 Annual Costs and Savings

................................ ................................ ........................... 10

- 29

10.5.4 Consumer Net Present Value Results by Efficiency Level

................................ ......... 10

- 30

10.6 NES AND NPV RESULTS BY TRIAL STANDARD LE VEL

................................ .. 10

- 32

10.6.1 Trial Standard Levels

................................ ................................ ................................ ... 10

- 32

10.6.2 National Energy Savings Results by Trial Standard Level

................................ .......... 10

- 35

10.6.3 Consumer Net Present Value Results by Trial Standard Level

................................ ... 10

- 37

LIST OF TABLES

Table 10.2.1 Standard

- Size Refrigerator

- Freezers: Average Payback Period Relative to Current Standard Level by Efficiency Level

................................ ..................... 10

- 310

- ii Table 10.2.2 Standard

- Size Freezers: Average Payback Period Relative to Current Standard Level by Efficiency Level

................................ ................................ .. 10

- 4

Table 10.2.3 Compact Refrigeration Products: Average Payback Period Relative to Current Standard Level by Efficiency Level

................................ ..................... 10

- 5

Table 10.2.4 Standard

- Size Refrigerator

- Freezers: Base

- Case Efficiency Distributions

....... 10

- 5

Table 10.2.5 Standard

- Size Freezers: Base

- Case Efficiency Distributions

............................ 10

- 6

Table 10.2.6 Compact Refrigeration Products: Base

- Case Efficiency Distributions

............. 10

- 7

Table 10.2.7 Top

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 for

Standards Cases

................................ ................................ ................................ . 10

- 8

Table 10.2.8 Top

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2021 for

Candidate Standard Levels

................................ ................................ ................ 10

- 9

Table 10.2.9 Bottom

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 for

Candidate Standard Levels

................................ ................................ ................ 10

- 9

Table 10.2.10 Bottom

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2021 for

Candidate Standard Levels

................................ ................................ .............. 10

- 10

Table 10.2.11 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2014 for

Candidate Standard Levels

................................ ................................ .............. 10

- 1 0

Table 10.2.12 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2021 for

Candidate Standard Levels

................................ ................................ .............. 10

- 11

Table 10.2.13 Upright Freezers: Efficiency Distributions in 2014 for Candidate Standard

Levels

................................ ................................ ................................ ............... 10

- 11

Table 10.2.14 Upright Freezers: Efficiency Distributions in 2021 for Candidate Standard

Levels

................................ ................................ ................................ ............... 10

- 12

Table 10.2.15 Chest Freezers: Efficiency Distributions in 2014 for Candidate Standard

Levels

................................ ................................ ................................ ............... 10

- 12

Table 10.2.16 Chest Freezers: Efficiency Distributions in 2021 for Candidate Standard

Levels

................................ ................................ ................................ ............... 10

- 12

Table 10.2.17 Compact Refrigerators: Efficiency Distributions in 2014 and 2021 for

Candidate Standard Levels

................................ ................................ .............. 10

- 13

Table 10.2.18 Compact Freezers: Efficiency Distributions in 2014 and 2021 for

Candidate Standard Levels

................................ ................................ .............. 10

- 13

Table 10.3.1 Standard

- Size Refrigerator

- Freezers: Shipment

- Weighted Average Annual Energy Use in 2014 for Base and Standards Cases

................................ ......... 10

- 16

Table 10.3.2 Standard

- Size Freezers: Shipment

- Weighted Average Annual Energy Consumption in 2014 for Base and Standards Cases

................................ ....... 10

- 17

Table 10.3.3 Compact Refrigeration Products: Shipment

- Weighted Average Energy Consumption in 2014 for Base and Standards Cases

................................ ....... 10

- 17

Table 10.4.1 Standard

- Size Refrigerator

- Freezers: Shipment

- Weighted Average

Product Cost in 2014 for Base and Candidate Standard Levels

...................... 10

- 20

Table 10.4.2 Standard

- Size Freezers: Shipment

- Weighted Average Product Cost in

2014 for Base and Candidate Standard Levels

................................ ................ 10

- 21

Table 10.4.3 Compact Refrigerators and Freezers: Shipment

- Weighted Average

Product Cost in 2014 for Base and Candidate Standard Levels

...................... 10

- 21

Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value

...... 10

- 24

Table 10.5.2 Standard

- Size Refrigerator

- Freezers: Cumulative National Energy Savings

.. 10

- 2510

- iii Table 10.5.3 Standard

- Size Refrigerator

- Freezers: Discounted Cumulative National Energy Savings

................................ ................................ ................................ 10

- 25

Table 10.5.4 Standard

- Size Freezers: Cumulative National Energy Savings

....................... 10

- 26

Table 10.5.5 Standard

- Si ze Freezers: Discounted Cumulative National Energy Savings

.... 10

- 26

Table 10.5.6 Compact Refrigeration Products: Cumulative National E nergy Savings

........ 10

- 27

Table 10.5.7 Compact Refrigeration Products: Discounted Cumulative National Energy Savings

................................ ................................ ................................ ............. 10

- 27

Table 10.5.8 Built

- In Refrigeration Products: Cumulative National Energy Savings

.......... 10

- 28

Table 10.5.9 Built

- In Refrigeration Products: Discounted Cumulative National Energy Savings

................................ ................................ ................................ ............. 10

- 28

Table 10.5.10 Standard

- Size Refrigerator

- Freezers: Cumulative Net Present Value of

Consumer Benefit

................................ ................................ ............................ 10

- 30

Table 10.5.11 Standard

- Size Freezers: Cumulative Net Present Value of Consumer

Benefit

................................ ................................ ................................ .............. 10

- 31

Table 10.5.12 Compact Refrigeration Products: Cumulative Net Present Value of

Consumer Benefit

................................ ................................ ............................ 10

- 31

Table 10.5.13 Built

- In Refrigeration Products: Cumulative Net Present Value of

Consumer Benefit

................................ ................................ ............................ 10

- 32

Table 10.6.1 Trial Standard Levels for Standard

- Size Refrigerator

- Freezers

...................... 10

- 33

Table 10.6.2 Trial Standard Levels for Standard

- Size Freezers

................................ ........... 10

- 34

Table 10.6.3 Trial Standard Levels for Compact Refrigeration Products

............................ 10

- 34

Table 10.6.4 Trial Stand ard Levels for Built

- in Refrigeration Products

.............................. 10

- 35

Table 10.6.5 Standard

- Size Refrigerator

- Freezers: Cumulative National Energy Savings in Quads

................................ ................................ ................................ ........... 10

- 36

Table 10.6.6 Standard

- Size Freezers: Cumulative National Energy Savings in Quads

....... 10

- 36

Table 10.6.7 Compact Refrigeration Products: Cumulative National Energy Savings in Quads

................................ ................................ ................................ ............... 10

- 36

Table 10.6.8 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads

................................ ................................ ................................ ............... 10

- 37

Table 10.6.9 Cumulative Net Present Value of Con sumer Benefits for Standard

- Size Refrigerator

- Freezers, 3

- Percent Discount Rate

................................ .............. 10

- 37

Table 10.6.10 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Refrigerator

- Freezers, 7

- Percent Discount Rate

................................ .............. 10

- 38

Table 10.6.11 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Freezers, 3

- Percent Discount Rate

................................ ................................ ... 10

- 38

Table 10.6.12 Cumulative Net Present Value of Consum er Benefits for Standard

- Size
Freezers, 7

- Percent Discount Rate

................................ ................................ ... 10

- 38

Table 10.6.13 Cumulative Net Present Value of Consumer Benefit s for Compact Refrigeration Products, 3

- Percent Discount Rate

................................ ............ 10

- 39

Table 10.6.14 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7

- Percent Discount Rate

................................ ............ 10

- 39

Table 10.6.15 Cumulative Net Present Value of Consumer Benefits for Built

- In Refrigeration Products, 3

- Percent Discount Rate

................................ ............ 10

- 40

Table 10.6.16 Cumulative Net Present Value of Consumer Benefits for Built

- In Refrigeration Products, 7

- Percent Discount Rate

................................ ............ 10

- 4010

- iv LIST OF FIGURES

Figure 10.5.1 Non

- Discounted Annual Increases in Installed Cost and Savings in Operating Cost for Product Class 3 at Efficiency Level 3

............................... 10

- 2910-1 CHAPTER 10. NATIONAL IMPACT ANAL YSIS

10.1 INTRODUCTION

This chapter describes the method the U.S. Department of Energy (DOE) used to conduct

a national impacts analysis (NIA) of potential standard levels for residential refrigeration products. DOE evaluated the following impacts: (1) national energy savings (NES) attributable to each possible standard, (2) monetary value of those energy savings to consumers of the considered products, (3) i ncreased total installed cost of the products because of standards, and (4) net present value (NPV) of energy savings (the difference between the value of energy savings and increased total installed cost).

DOE determin ed both the NES and NPV for all t he efficiency levels considered for residential refrigeration products. DOE performed all calculations for each considered pro duct using a Microsoft Excel spreadsheet model, which is accessible on the Internet

. < www.eere.energy.gov/buildings/appliance_standards/ > The spreadsheets combine the calculations for determining the NES and NPV for each considered product with input from the appropriate s hipments model. As discussed in chapter 1 6, the NIA model also performs the calculations for the Regulatory Impact Analysis. Details and instructions for using the NIA

model are provided in a ppendix 10

- A.

Chapter 9 provides a detailed description of the shipments models that DOE used to

forec ast future purchases of the considered products. Chapter 9 includes a description of the sensitivity of shipments to total installed cost and operating cost, and how DOE captured those

sensitivities within the model.

In its NOPR analysis, DOE studied 11 representative product classes in detail. For the

NIA , each of these classes represents a product category that also contains other product classes. DOE assigned each of the product classes to one of these 11 product categories. To estimate the

national impacts of potential standards for all the product classes considered in this rulemaking, DOE applied the product cost and annual energy consumption of each representative product class to all product classes within its category. The following list indica tes which product classes are associated with each product category for purposes of analysis. In each case, the cost curve for the representative product class provided the best match for the other classes with which it is

associated.

• Top

- mount refrigerator

- freezers: product classes 1, 1A, 2, 3, 3A, 3I and 6; represented by product class 3.

• Bottom

- mount refrigerator

- freezers: product classes 5 , 5A and 5 I ; represented by product class 5.

• Side

- by

- side refrigerator

- freezers: product classe s 4 , 4I and 7; represented by product

class 7.

• Upright freezers: product class 9 only.10-2 • Chest freezers: product classes 8

, a

• Compact refrigerators: product classes 11, 11A, and 12; represented by product class

11

. 10, and 10A; represented by product class 10.

• Compact freezers: product classes 16, 17, and 18 , and also 13, 13A, 14, and 15 b

• Built

- in all refrigerators: product class 3A

- BI only. ; represented by product class 18.

• Built

- in bottom

- mount refrigerator

- freezers: product classes 5

- BI and 5I

- BI; represented by product class 5

- BI.

• Built

- in side

- by

- side refrigerator

- freezers: product classes 4

- BI, 4I

- BI and 7

- BI; represented by product class 7

- BI.

• Built

- in upright freezers: product class 9

- BI only.

In the presentation of NIA results, DOE groups th e product classes according to type of refrigeration product and door style. That is, upright freezers are all grouped together, as are compact refrigerators.

10.1.1 Alternative Scenarios

The results in this chapter were calculated using selected inputs from the Reference case

in EIA’s Annual Energy Outlook 2010 ( AEO 2010 )

. 1

10.2 FORECASTED EFFICIENC IES FOR BASE AND STA NDARDS CASES DOE also calculated NIA results using inputs from the High Economic Growth case and the Low Economic Growth case in AEO 2010

. Appendix 10

- B presents the NIA results in the alternative economic growth cases.

A key factor in estimating NES and NPV is the trend in energy efficiency forecasted for the base case (without new standards) and each of the standards cases. In calculating the NES,

per

- unit annual energy consumption is a direct function of product efficiency. For the NPV, two inputs depend on efficiency. The first input, the per

- unit total installed cost, is a direct function of efficiency. The per

- unit annual operating cost, be cause it is a function of the per

- unit annual consumption, is indirectly dependent on product efficiency. This section describes the method DOE used to forecast the energy efficienc y distribution of the considered products under the base

case and each of the potential standards cases

.

a Product class 8, “upright freezers with manual defrost,” is grouped with the “chest freezer” category because products in this class are more technologically similar to chest freezers.

b Product classes 13, 13A, 14, and 15 (compact refrigerators and refrigerator

- freezers) are grouped with the “compact freezer” category because products in this class are more technologically similar to compact freezers.10-3 10.2.1 Method and Assumptions

10.2.1.1 Base Case

The bas e

- case efficiency distribution projected for 2014 was described in chapter 8. The

distribution was largely based on ENERGY STAR market shares for each product class. To project the di stribution after 2014, DOE considered the potential for changes in ENERGY STAR qualification levels

. DOE assumed that, in the absence of a new standard, t he ENERGY STAR

program would consider revis ion of its qualification levels regardless of the market sh are in

2014. The ENERGY STAR program uses several criteria when setting a minimum product efficiency level for qualification

. O ne important factor is that the average payback period compared to the current standard level should not exceed 5 years. Using th e payback period calculation described in chapter 8, DOE applied this criterion to all product classes in order to evaluate whether the current ENERGY STAR efficiency levels might be increased in the future

.

Tables 10.2.1, 10.2.2 and 10.2.3 show the pa yback period relative to the baseline efficiency level (current standard). For standard

- sized refrigerator

- freezers, the highest efficiency level with a payback period of 5 years or less correspond s to the current ENERGY STAR level for product classes 5 and 7, but for product class 3, it correspond s to the 15% efficiency level,

which is lower than the current ENERGY STAR level

. Because it is unlikely that the ENERGY STAR program would reduce its qual ifying efficiency level, DOE assumed the efficiency level

would not be reduced (from 20% less than baseline) for product class 3

. Thus, for standard

- sized refrigerator

- freezers, DOE assumed no change in the ENERGY STAR levels in the base case.

Table 10.2.1 Standard

- Size Refrigerator

- Freezers: Average Payback Period R elative to

C urrent S tandard L evel by Efficiency Level

Payback period (years)

Efficiency Level

(% less than baseline

energy use Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- by

- Side Refrigerator

- Freezer

with TTD

1 (10) 2.2 1.9 2. 3

2 (15) 2.5 †† 2.1 2.3

3 (20)* 7.0 2.9 †† 3.5 ††

4 (25) 8.1 5.4 5.7

5 (30) 11.3 8.7 9.3

6 ( 36/36/33) † 12.7 9.8 10. 1

* Meets current ENERGY STAR criteria.

† E nergy savings relative to baseline varies with product class.

†† Indicates maximum efficiency level with payback period of 5 years or less.10-4 For standard

- sized freezers, DOE found that an efficiency level of 20% below baseline was justified using the 5

- year payback criterion, higher than the cu rrent ENERGY STAR level of

10%

. Thus, for standard

- sized freezers, DOE assumed the ENERGY STAR efficiency level would increase to level 3 starting in 2014.

For compact refrigeration prod ucts, DOE found that for product class 11, an efficiency

level of 30% below baseline was justified using the 5

- year payback criterion, higher than the

current 20% qualifying level. F or product class 18, an efficiency level of only 15% was justified.

Howeve r, as for product class 3 above, DOE assumed the ENERGY STAR level for product

class 18 would not be reduced from the current 20% level. Thus, DOE assumed the ENERGY STAR efficiency level will increase to level 5 for product class 11, but will not change f or product class 18.

Table 10.2.2 Standard

- Size Freezers: Average Payback Period R elative to C urrent

S tandard L evel by Efficiency Level

Payback period (years)

Efficiency Level

(% less than baseline

energy use Product Class 9 : Upright Freezer Product Class 10 : Chest Freezer

1 (10)* 2.3 3.1

2 (15) 3.9 3.9

3 (20) 4.5 ** 4.5 **

4 (25) 5.5 8.9

5 (30) 6.0 9.1

6 (35) 8.1 13.0

7 (40 / 41 ) † 10.8 16.5

8 (4 4 ) 16.4 n/a

* Meets current ENERGY STAR criteria.
** Indicates maximum efficiency level with payback period of 5 years or less.

† Energy savings relative to baseline varies with product class10-5 Table 10.2.3 Compact Refrigeration Products: Average Payback Period R elative to

C urrent S tandard L evel by Efficiency Level

Payback period (years)

Efficiency Level (% less than baseline energy use ) Product Class 11 : Compact Refrigerators Product Class 18 : Compact Freezer s 1 (10) 1.9 2.2

2 (15) 2.2 4.1 **

3 (20)* 2.7 9.6

4 (25) 3.8 9.0

5 (30) 4.3 ** 8.6

6 (35) 6.3 8.1

7 (40 /42 ) † 6.2 11.4

8 (4 5 ) 8.0 n/a

9 (50) >8.0 n/a

10 (5 9 ) >8.0 n/a

* Meets current ENERGY STAR criteria.

** Indicates maximum efficiency level with payback period of 5 years

or less.

† Energy savings relative to baseline varies with product class

In projecting the market shares for ENERGY STAR standard

- sized refrigerator

- freezers beyond 2014, DOE examined historical trends, and estimated that ENERGY STAR market shares would reach the 2007 levels (at the older ENERGY STAR efficiency level) by 2021, except in the case of product class 7, where the projected 2014 market share exceeds the 2007

market share. In the latter case, DOE assumed no change in ENERGY STAR market shares. Th e projected shares are given in Table 10.2.4

.

Table 10.2.4 Standard

- Size Refrigerator

- Freezers: Base

- Case Efficiency Distributions

Eff iciency

Level

(% less

than

baseline

energy

use) Product Class 3: Top

- Mount Refrigerator

- Freezer Product Class 5:

Bottom

- Mount Refrigerator

Freezer Product Class 7:

Side

- by

- Side Refrigerator

Freezer with TTD*

Market Share

% Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021 2007 2014 202110-6 Baseline 80.6 78.2 80.6 11.8 13.0 11.8 25.0 21.7 21.7

1 (10) 5.9 4.2 5.9 0.1 0.1 0.1 43.0 26.4 26.4

2 (15) 13.2 9.4 0.1 69.8 19.3 0.0 30.3 15.0 15.0

3 (20) 0.2 † 8.3 † 13.4 † 18.3 † 67.7 † 88.1 † 1.7 † 37.0 † 37.0 †

4 (25) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

5 and higher 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

* Through

- the

- door ice service.

† Meets current (2008) ENERGY STAR criteria.

For standard

- sized freezers, DOE assumed there would be a linear increase in ENERGY STAR market share, reaching in 2021 the average of the 2007 shares (at the older ENERGY STAR efficiency level) and the projected new ENERGY STAR market share levels in 2014

. See

Table 10. 2.5

.

Table 10.2.5 Standard

- Size Freeze rs: Base

- Case Efficiency Distributions
Efficiency

Level

(% less

than

baseline

energy

use) Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021

Baseline 81.5 81.5 81.5 84.6 84.6 84.6

1 (10) 17.0 * 17.0 8.5 14.3 * 14.3 7.2

2 (15) 1.0 1.0 0.5 0.8 0.8 0.4

3 (20) 0.1 0.1 † 9.1 † 0.0 0.0 † 7.6 †

4 (25) 0.2 0.2 0.2 0.0 0.0 0.0

5 (30) 0.2 0.2 0.2 0.0 0.0 0.0

6 (35) 0.0 0.0 0.0 0.4 0.4 0.4

7 and higher 0.0 0.0 0.0 0.0 0.0 0.0

* Meets current ENERGY STAR criteria.

† Meets projected new ENERGY STAR criteria.

For compact refrigeration products, for product class 11, DOE assumed there would be only a slight increase in ENERGY STAR market share between 2014 and 2021 because of the relatively high ENERGY STAR level (30% below baseline). For product class 18, DOE assumed no change in market share b eyond 2014. See Table 10. 2.6

.10-7 Table 10.2.6 Compact Refrigeration Products: Base

- Case Efficiency Distributions
Efficiency

Level

(% less

than

baseline

energy

use) Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021

Baseline 97.1 98.5 98.5 95.4 95.4 95.4

1 (10) 0.3 0.3 0.3 4.6 4.6 4.6

2 (15) 0.0 0.0 0.0 0.0 0.0 0.0

3 (20) 0.9 * 0.5 0.2 0.0 * 0.0 * 0.0 *

4 (25) 0.2 0.1 0.1 0.0 0.0 0.0

5 (30) 1.5 0.8 † 1.0 † 0.0 0.0 0.0

6 and higher 0.0 0.0 0.0 0.0 0.0 0.0

* Meets current ENERGY STAR criteria.

† Meets projected new ENERGY STAR criteria.

For all product classes, rather than make long

- run projections based on limited information, DOE assumed there would be no further change in market shares between 2021 and the end of the forecast period. DOE recognizes that some change in shares is likely to occur in reality. However, since DOE uses the same assumption in the standards cases, the accuracy of the assumption makes no difference to the analysis of energy savings.

10.2.1.2 Standards C ase s

To determine efficiency distribution s for cases in which a potential st andard applies for 2014 and beyond, DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to meet the new standard in 2014. DOE further assumed that the ENERGY STAR program will continue to promote high

- efficiency appliances

after revised standards are introduced in 2014 , and that product market shares above a given standard level may shift.

As it did for the base case, DOE assumed that in the case of amended standards, the ENERGY STAR pro gram would re

- evaluate its qualifying levels for all product classes in 2014 using the 5

- year payback period criterion. For each candidate standard level (CSL) , DOE identified the maximum efficiency level with a payback of 5 years or less, relative to the lowest efficiency level at each CSL. If such a level was below the current ENERGY STAR level, DOE

maintained the current level. At higher CSLs, there becomes a point at which no efficiency level

has a payback period of less than 5 years. DOE assumed that the ENERGY STAR program

would be suspended with standards at higher CSLs on a product

- class specific basis. This occurs for all product classes at CSL 3 and above; for product classes 9 and 10, it oc curs at lower CSLs.10-8 In projecting ENERGY STAR market shares beyond 2014, DOE used a similar approach

as described above for the base case

. To maintain consistency with the base case, for the

standards cases DOE assumed that after 2021 the market shares a t each efficiency level would

remain constant at the 2021 values.

Tables 10.2.7 through 10.2.12 show the efficiency distributions for 2014 and 2021 that

DOE used for the standard

- size refrigerator

- freezer product classes under each standards case.

The t ables include the shipment

- weighted energy use factor (SWEUF) associated with each

standards case

.

Table 10.2.7 Top

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 for

Standards Cases
Efficiency

Level ( % less

than

baseline energy use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level :

1 2 3 4 5 6

Baseline 1.0 0 7 8 .2

- - - - - -

1 (10 ) 0.90 4.2 8 2.3

- - - - - 2 (15 ) 0.85 9.4 9.4 91.7

- - - - 3 (20 ) 0.80 8.3 8.3 8.3 100 .0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100 .0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100 .0

- 6 (3 6 ) 0.6 4 0.0 0.0 0.0 0.0 0.0 0.0 100 .0

SWEUF 0.965 0.887 0.846 0.800 0.750 0.700 0.6 4 010-9 Table 10.2.8 Top

- Mount Refrigerator

- Freezer s: Efficiency Distributions in 2021 for

Candidate Standard Level s Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1.0 0 80.6

- - - -

1 (10 ) 0.90 5.9 86.5

- - - - 2 (15 ) 0.85 0.1 0.1 86.6

- - - - 3 (20 ) 0.80 13.4 13.4 13.4 100 .0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100 .0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100 .0

- 6 (3 6 ) 0.6 4 0.0 0.0 0.0 0.0 0.0 0.0 100 .0

SWEUF 0.967 0.887 0.843 0.800 0.750 0.700 0.6 4 0

Table 10.2.9 Bottom

- Mount Refrigerator

- Freezer s : Efficiency Distributions in 2014 for

Candidate Standard Level s Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1. 0 0 1 3

. 0

- - - - - -

1 (10 ) 0.90 0.1 13.1

- - - - - 2 (15 ) 0.85 19.3 19.3 32.4

- - - - 3 (20 ) 0.80 67.7 67.7 67.7 100.0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (3 6 ) 0.6 4 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.836 0.823 0.816 0.800 0.750 0.700 0.6 4 010-10 Table 10.2.10 Bottom

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2021

for Candidate Standard Levels
Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1. 0 0 11.8

- - - -

1 (10 ) 0.90 0.1 11.9

- - - - 2 (15 ) 0.85 0.0 0.0 11.9

- - - - 3 (20 ) 0.80 88.1 88.1 88.1 100.0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (3 6 ) 0.6 4 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.824 0.812 0.806 0.800 0.750 0.700 0.6 4 0

Table 10.2.11 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2014 for

Candidate Standard Levels
Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1.0 0 2 1

. 7

- - - - - -

1 (10 ) 0.90 26.4 4 8. 1

- - - - - 2 (15 ) 0.85 15.0 15 .0 6 3

. 1

- - - - 3 (20 ) 0.80 37.0 37.0 37.0 100.0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (33 ) 0.6 7 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.877 0.856 0.832 0.800 0.750 0.700 0.6 7 010-11 Table 10.2.12 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2021 for

Candidate Standard Levels
Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1.0 0 2 1

. 7

- - - - - -

1 (10 ) 0.90 26.4 4 8. 1

- - - - - 2 (15 ) 0.85 15.0 15 .0 6 3

. 1

- - - - 3 (20 ) 0.80 37.0 37.0 37.0 100.0

- - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (3 3 ) 0.6 7 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.877 0.856 0.832 0.800 0.750 0.700 0.6 7 0

Tables 10.2.13 through 10.2. 16 show the efficiency distributions in 2014 and 2021 that

DOE used for each standards case for the standard

- sized freezer product classes. The tables include the shipment

- weighted energy use factor (SWEUF) associated with each standards case

.

Table 10.2.13 Upright Freezers : Efficiency Distributions in 2014 for Candidate

Standard Level s Efficiency

Level ( % less

than

baseline energy use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8

Baseline 1.0 0 81.5

- - - - - - - -

1 (10 ) 0.90 17.0 98.5

- - - - - - - 2 (15 ) 0.85 1.0 1.0 99.5

- - - - - - 3 (20 ) 0.80 0.1 0.1 0.1 99.6

- - - - - 4 (25 ) 0.75 0.2 0.2 0.2 0.2 99.8

- - - - 5 (30 ) 0.70 0.2 0.2 0.2 0.2 0.2 100.0

- - - 6 (35 ) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - 7 (40 ) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 8 (4 4 ) 0.5 6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.980 0.899 0.849 0.80 0 0.75 0 0.70 0 0.65 0 0.60 0 0.5 6 010-12 Table 10.2.14 Upright Freezers : Efficiency Distributions in 20 21 for Candidate

Standard Level s Efficiency

Level ( % less

than

baseline energy use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8

Baseline 1. 0 0 81.5

1 (10 ) 0.90 8.5 98.5 2 (15 ) 0.85 0.5 1.0 99.5 3 (20 ) 0.80 9.1 0.1 0.1 99.6 4 (25 ) 0.75 0.2 0.2 0.2 0.2 99.8 5 (30 ) 0.70 0.2 0.2 0.2 0.2 0.2 100.0 6 (35 ) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0 7 (40 ) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 8 (4 4 ) 0.5 6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.971 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.5 6 0

Table 10.2.15 Chest Freezers: Efficiency Distributions in 2014 for Candidate Standard

Level s Efficiency

Level ( % less

than

baseline energy use) Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7

Baseline 1.0 0 84.6

1 (10 ) 0.90 14.3 98.9 2 (15 ) 0.85 0.8 0.8 99.7 3 (20 ) 0.80 0.0 0.0 0.0 99.7 4 (25 ) 0.75 0.0 0.0 0.0 0.0 99.7 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 99.7 6 (35 ) 0.65 0.4 0.4 0.4 0.4 0.4 0.4 100.0 7 (41 ) 0. 59 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.98 3 0. 899 0.8 49 0. 799 0.750 0.70 0 0.650 0. 59 0

Table 10.2.16 Chest Freezers: Efficiency Distributions in 20 21 for Candidate Standard

Level s

Efficiency

Level ( % less than Energy

Use

Factor Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 710-13 baseline energy use)

Baseline 1. 0 0 84.6

1 (10 ) 0.90 7.2 98.8 2 (15 ) 0.85 0.4 0.8 99.6 3 (20 ) 0.80 7.6 0.0 0.0 99.6 4 (25 ) 0.75 0.0 0.0 0.0 0.0 99.6 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 99.6 6 (35 ) 0.65 0.4 0.4 0.4 0.4 0.4 0.4 100.0 7 (41 ) 0. 59 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.97 6 0.899 0.849 0.799 0.750 0.700 0.650 0. 59 0

Tables 10.2.17 and 10.2. 18 show the efficiency distributions in 2014 and 2021 that DOE

used for all potential standards case s for compact refrigeration product classes. The tables include the shipment

- weighted energy use factor (SWEUF) associated with each standards case

.

Table 10.2.17 Compact Refrigerators: Efficiency Distributions in 2014 and 2021 for

Candidate Standard Level s

Table 10.2.18 Compact Freezers: Efficiency Distributions in 2014 and 2021 for

Candidate Standard Level s Efficiency Energy Market Share % Efficiency

Level ( % less

than

baseline

energy

use) Energy

Use

Factor Market Share ( % )

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8 9 10

Baseline 1.0 0 98.5

- - - - - - - - - -

1 (10 ) 0.90 0.3 98.7

- - - - - - - - - 2 (15 ) 0.85 0.0 0.0 98.7

- - - - - - - - 3 (20 ) 0.80 0.5 0.5 0.5 99.2

- - - - - - - 4 (25 ) 0.75 0.1 0.1 0.1 0.1 99.3

- - - - - - 5 (30 ) 0.70 0.8 0.8 0.8 0.8 0.8 100.0

- - - - - 6 (35 ) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - - - 7 (40 ) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - - 8 (45 ) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - 9 (50) 0.50 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 10 (59) 0.41 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.996 0.898 0.849 0.799 0.750 0.700 0.650 0.600 0.550 0.500 0.41010-14 Level ( % less than

baseline energy use) Use

Factor

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7

Baseline 1.0 0 95.4

- - - - - - -

1 (10 ) 0.90 4.6 100.0

- - - - - - 2 (15 ) 0.85 0.0 0.0 100.0

- - - - - 3 (20 ) 0.80 0.0 0.0 0.0 100.0

- - - - 4 (25 ) 0.75 0.0 0.0 0.0 0.0 100.0

- - - 5 (30 ) 0.70 0.0 0.0 0.0 0.0 0.0 100.0

- - 6 (35 ) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 7 (42 ) 0. 58 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0. 58 0

10.3 NATIONAL ENERGY SAVI NGS

DOE calculated the national energy savings associated with the difference between the

base case and the case associated with each potential standard for the refrigeration products considered herein. DOE calculated cumulative energy savings throughout the forecast period,

which extends from 2014 to 2044.

10.3.1 Definition

The following equation shows that DOE calculated annual national ene rgy savings (NES) as the difference between two projections: a base case (without new standards) and a standards case. Positive values of NES represent energy savings (that is, national annual energy consumption (AEC) under a standard is less than in the b ase case).

STD _ BASE y 

### AEC AEC NES =

Cumulative energy savings are the sum of annual national energy savings throughout the forecast period, which extends from the assumed effective date of new standards (2014) to 30 years after that date ( through 204 3 ).

DOE calculated the national annual site energy consumption by multiplying the number or stock of each product class (by vintage) by its unit energy consumption (UEC; also by vintage). The calculation of national annual energy consumption is represented b y the following equation.



# ∑ **× =**  V V y 

### UEC STOCK AEC

DOE defined the quantities for the above expressions as follows.10-15 AEC = national annual energy consumption each year in quadrillion British thermal units (quads), summed over vintages of the product stoc k, STOCK V ; NES = annual national energy savings (quads);

STOCK V = stock of product (millions of units) of vintage V that survive in the year for which DOE calculated annual energy consumption;

UEC V = annual energy consumption per product in kilowatt

- hours (kWh);

V = year in which the product was purchased as a new unit; and

y = year in the forecast.

Electricity consumption is converted from site energy to source energy (quads) by applying a

time

- dependent conversion factor.

The stock of a product depends on annual shipments and the lifetime of the product. As described in chapter 9, DOE projected product shipments under the base case and the standards cases. DOE projected that shipments under the standards cases would be slig htly lower than under the base case, because DOE believes that the higher purchase cost of more efficient products would cause some consumers to forego purchasing new products.

To avoid including savings attributable to shipments displaced because of s tandards, DOE used the projected standards

- case shipments and, in turn, the standards

- case stock, to calculate the annual energy consumption for the base case.

10.3.2 Inputs

The inputs to the calculation of national energy savings (NES) are:

• Shipments;

• produ ct stock ( STOCK V );

• annual energy consumption per unit ( UE C );

• national annual energy consumption ( AEC ); and

• site

- to

- source conversion factor ( src_conv ).10-16 10.3.2.1 Shipments

DOE forecasted shipments of each considered product class under the base case and all standards cases. Several factors affect forecasted shipments, including purchase cost

, operating cost, and household income. As noted earlier, the increased cost of more efficient products causes some consumers to forego buying the products. Consequently, shipments forecasted

under the standards cases are lower than under the base case. The method DOE used to calculate and generate the shipments forecasts for each considered product class is described in detail in Chapter 9, Shipments Analysis.

10.3.2.2 Equipment St ock

The equipment stock in a given year is the number of products shipped from earlier years

that survive in th at year. The NIA model track s the number of the number of units shipped each

year . DOE assumes that products have an increasing probability of retiring as they age. The probability of survival as a function of years since purchase is the survival function. Chapter 9 provides additional details on the survival functions that DOE used for each product

.

10.3.2.3 Annual Ener gy Consumption per Unit

DOE used the shipment

- weighted energy use factors (SWEUFs) presented in section 10.2

for the base case and standards cases, along with the data on annual energy consumption presented in chapters 7 and 8, to estimate the shipment

- we ighted average annual per

- unit energy consumption under the base and each standards case. The average annual per

- unit energy consumption projected for 2014 for each product category is shown in Tables 10 .3. 1 through

10.3 .3.

Table 10.3.1 Standard

- Size Refrigerator

- Freezers: Shipment

- Weighted Average Annual Energy Use in 2014 for Base and Standards Cases

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 Top

- Mount

SWEUF 0.965 0.887 0.846 0.800 0.750 0.700 0.640 Avg. Energy Use (kWh) * 520 478 456 431 404 377 347

Bottom

- Mount

SWEUF 0.836 0.823 0.816 0.800 0.750 0.700 0.640 Avg. Energy Use (kWh) * 556 548 543 533 499 466 425

Side

- by

- Side

SWEUF 0.877 0.856 0.832 0.800 0.750 0.700 0.670 Avg. Energy Use (kWh) * 717 699 679 654 613 572 547

SWEUF = shipment

- weighted energy use factor * Before applying UAF correction (which varies with product age)

.10-17 Table 10.3.2 Standard

- Size Freezers: Shipment

- Weighted Average Annual Energy Consumption in 2014 for Base and Standards Cases

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8

Upright

SWEUF 0.980 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.560

Avg. Energy Use (kWh) 588 539 510 480 450 420 390 360 338

Chest

SWEUF 0.983 0.899 0.849 0.799 0.750 0.700 0.650 0.590

- Avg. Energy Use (kWh) 364 333 314 296 278 259 241 217

-

SWEUF = shipment

- weighted energy use factor

Table 10.3.3 Compact Refrigerat ion Products : Shipment

- Weighted Average Energy Consumption in 2014 for Base and Standards Cases

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8 9 10 Refrigerator

SWEUF 0.996 0.898 0.849 0.799 0.750 0.700 0.650 0.600 0.550 0.500 0.410 Avg. Energy Use (kWh) 324 292 276 260 244 227 211 195 179 162 134

Freezer

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0. 58 0

- - - Avg. Energy Use (kWh) 311 281 266 250 235 219 203 182

- - -

SWEUF = shipment

- weighted energy use factor

10.3.2.4 National Annual Energy Consumption

The national annual energy consumption (AEC) is the product of the annual energy consumption per unit and the number of units of each vintage. This method of calculation accounts for differences in unit energy consumption from year to year. In determining national annual energy consumption, DOE first calcul ated annual energy consumption at the site

, then applied a conversion factor, described below, to calculate primary energy consumption.

10.3.2.5 Site

- to

- Source Conversion Factors

In determining national annual energy consumption, DOE initially calculated the annu al energy consumption at the site (for electricity, the energy in kWh consumed at the household or establishment). It then used site energy consumption to calculate primary (source) energy consumption by applying a conversion factor to account for losses a ssociated with the10-18 generation, transmission, and distribution of electrici ty

. Th e site

- to

- source conversion factor is a multiplicative factor used to convert site energy consumption into primary or source energy consumption, expressed in quads (quadrillion Btu ’s ). DOE used annual site

- to

- source conversion factors based on the version of the National Energy Modeling System (NEMS) c

10.4 NET PRESENT VALUE that corresponds

to AEO 2010 . The factors are marginal values, which represent the response of the system to an

incremental decre ase in consumption. For electricity, the conversion factors change over time in response to projected changes in generation sources ( i.e., the types of power plants projected to provide electricity to the Nation ). The values derived from the AEO2010 NEMS end in 2035.

DOE assumed that conversion factors remain at the 203 5 values throughout the rest of the

forecas t.

DOE calculated the net present value (NPV) of the increased product cost and reduced operating cost associated with the difference between the base case and each potential standards case for the considered refrigeration products.

10.4.1 Definition

The NPV is the value in the present of a time

- series of costs and savings. The NPV is described by the equation:



### PVC PVS NPV

_ 

### =

Where:

PVS = present value of savings in operating cost, and

PVC = present value of increased total product cost to consumers.

DOE determined the PVS and PVC according to the following expressions.



## ∑

y y DF OCS PVS **× =** 



## ∑

y y DF TIC PVC **× =** 

c For more information on NEMS, please refer to the U.S. Department of E nergy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000

, DOE/EIA

- 0581(2000), March 2000. EIA approves use of the name NEMS to describe only an official version of

the model without an y modification to code or data. Because this analysis entails some minor code modifications and the model is run under various policy scenarios that are variations on EIA assumptions, DOE refers to the model by the name NEMS

- BT (BT is DOE’s Building Techn ologies Program, under whose aegis this work has been performed). NEMS

- BT was previously called NEMS

- BRS.10-19 W here:

OCS = total annual savings in operating cost each year summed over vintages of the product stock, STOCK V ; TIC = total annual increases in produc t cost each year summed over years of the product shipments, S HIP y ;
DF = discount factor in each year; and

y = year in the forecast.

DOE calculated the total annual consumer savings in operating cost by multiplying the number or stock of a given product class (by vintage) by its per

- unit operating cost savings (also by vintage). DOE calculated the total annual increases in consumer product cost by multiplying

the number or shipments of the given product class (by v intage) by its per

- unit increase in

consumer produc t cost (also by vintage). The calculation of total annual operating cost savings and total annual produc t cost increases is represented by the following equations.



## ∑

V V y UOCS STOCK OCS **× =** 



## ∑

y y y UTIC SHIP TIC **× =** 

Where:

STOCK V = stock of product s of vintage V that survive in the year for which DOE calculated annual energy consumption,

UOCS V = annual per

- unit savings in operating cost,

V = year in which the product was purchased as a new unit

, SHIP y = shipments of products in year y , an d

UTIC y = annual per

- unit increase in installed product cost in year y

.

DOE determined the total inc reased product cost for each year from the effective date of a potential standard to 2044. It determined the present value of operating cost savings for each year from the effective date of the standard to the year when all units purchased by 2044 have been retired. DOE calculated costs and savings as the difference between a standards case and a

base case without new standards.

DOE develop ed a discount factor from the national discount rate and the number of years between the present ( i.e. , year to which the sum is being discounted) and the year in which the costs and savings occur. The NPV is the sum over time of the discounted net savings.10-20 10.4.2 Inputs

The inputs to calculation of the net present value (NPV) are:

• Average annual product cost;

• average annual savings in operating cost,;

• total annual increases in product cost;

• total annual savings in operating cost;

• discount factor;

• present value of costs; and

• present value of savings.

The increase in total annual product cost is equal to the annual change in the average annual product cost (difference between base case and standards case) multiplied by the shipments forecasted in the standards case. As with the calculation of the NES, DOE did not calculate total annual product costs using base

- case shipments. To avoid including savings due to displaced shipments (by consumers deciding not to buy higher

- cost products), DOE used the

standards

- case projecti on of shipments and, in turn, the standards

- case stock, to calculate product

costs.

The total annual savings in operating cost are equal to the change in annual operating cost (difference between base case and standards case) per unit multiplied by the shipments

forecasted in the standards case.

10.4.2.1 Average Annual Product Cost

The average annual product cost is directly dependent on efficiency. DOE therefore used the SWEUFs presented in section 10.2 for the base case and each standards case, along with t he product costs at various efficiency levels ( presented in chapter 8), to estimate the shipment

weighted average annual product cost under the base and standards cases

. Tables 10.4.1 through

10.4.3 show the shipment

- weighted average consumer product cost based on the SWEUFs that correspond to the base case and each standards case in 2014

.

Table 10.4.1 Standard

- Size Refrigerator

- Freezers: Shipment

- Weighted Average

Product Cost in 2014 for Base and Candidate Standard Levels

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6
Top

- Mount

SWEUF 0.965 0.887 0.846 0.800 0.750 0.700 0.640
Avg. Prod Cost ( 2009$ ) $543 $555 $563 $625 $667 $759 $892

Bottom

- Mount

SWEUF 0.836 0.823 0.816 0.800 0.750 0.700 0.64010-21 Avg. Prod Cost (2009$) $948 $950 $952 $958 $1,024 $1,131 $1,280

Side

- by

- Side

SWEUF 0.877 0.856 0.832 0.800 0.750 0.700 0.670
Avg. Prod Cost ( 2009$ ) $1,152 $1,155 $1,160 $1,179 $1,244 $1,385 $1,496

Table 10.4.2 Standard

- Size Freezers: Shipment

- Weighted Average Product Cost in

2014 for Base and Candidate Standard Levels

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8

Upright

SWEUF 0.980 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.560

Avg. Prod Cost ( 2009$ ) $558 $570 $591 $610 $639 $666 $725 $809 $993

Chest

SWEUF 0.983 0.899 0.849 0.799 0.750 0.700 0.650 0.590

- Avg. Prod Cost ( 2009$ ) $407 $414 $424 $436 $484 $505 $565 $687

-

Table 10.4.3 Compact Refrigerators and Freezers: Shipment

- Weighted Average

Product Cost in 2014 for Base and Candidate Standard Levels

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8 9 10 Refrigerator

SWEUF 0.996 0.898 0.849 0.799 0.750 0.700 0.650 0.600 0.550 0.500 0.410 Avg. Prod Cost (2009$) $146 $151 $156 $162 $174 $184 $212 $221 $255 $274 $341

Freezer

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0.580

- - - Avg. Prod Cost (2009$) $202 $209 $222 $268 $279 $312 $320 $399

- - -10-22 10.4.2.2 Annual Operating Cost Savings per Unit

The average annual operating cost includes the costs for energy, repair, and maintenance.

As described in chapter 8, for all the considered products DOE assumed that potential standards would produce no increase in maintenance or repair costs. For all the considered products, therefore, DOE determined the per

- unit annual savings in operating cost based only on the savings in energy costs attributable to a standard. DOE determined the per

- unit annual savings in operating cost by multiplying the per

- unit annu al savings in energy consumption developed for each product class by the appropriate energy price. As described in chapter 8, DOE forecasted energy prices based on EIA’s AEO2010

.

10.4.2.3 Total Annual Increases in Product Cost

The total annual increase in produ ct cost for any given standards case is the product of the average cost increase per unit due to the standard and the number of units of each vintage shipped. This method accounts for differences in product cost from year to year. The equation for determining the total annual increase in product cost for a given standards case, which was shown in section 10.4.1, is repeated here.



## ∑

y y y UTIC SHIP TIC **× =** 

10.4.2.4 Total Annual Savings in Operating Cost

The total annual savings in operating cost for any given standards case is the product of the annual savings in operating cost per unit attributable to the standard and the number of units of each vintage. This method accounts for differences in annual sav ings in operating cost from year to year. The equation for determining the total annual savings in operating cost for a given standards case, which was presented in section 10.4.1, is repeated here.



## ∑

V V UOCS STOCK OCS **× =** 

10.4.2.5 Discount Factor

DOE multiplied monetary values in future years by a discount factor to determine the present value. The discount factor (DF) is described by the equation:

) yp y (

_ ) r ( DF

+ 1 1

=

Where:

r = discount rate,

y = year in which the monetary value exists, and

y

P = year in which the present value is being determined.10-23 Although DOE used consumer discount rates to determine the life

- cycle cost of refrigeration products (chapter 8), it used national discount rates to calculate national NPV. DOE estimated NPV using both a 3

- percent and a 7

- percent real discount rate, in accordance with the Office of Management and Budget’s guidance to Federal agencies on the development of regulatory analysis, particularly section E therein: Identifying and Measuring Benefits and

Costs

. 2

10.4.2.6 Present Value of Costs DO E defined the present year as 20 10

.

The present value of increased product costs is the annual total cost increase in each year (the difference between a standards case and the base case), discounted to the present and summed throug hout the period in which DOE is considering the installation of products (2014 through 2044). DOE calculated annual increases in installed cost as the difference in total product cost for new appliances purchased each year, multiplied by the shipments in t he

standards case.

10.4.2.7 Present Value of Savings

The present value of savings in operating cost is the annual savings on operating cost (the difference between the base case and a standards case), discounted to the present and summed

from the effective date to the time when the last unit installed in 204 3 is retired from service. Savings are decreases in operating cost associated with the higher energy efficiency of products purchased in the standards case compared to the base case. Total annual savings in oper ating cost are the savings per unit multiplied by the number of units of each vintage that survive in a particular year.

10.5 NES AND NPV RESULTS

The NIA model produces estimates of the NES and NPV attributable to a given candidate standard level. The input s to the NIA model were discussed in sections 10.3.2 ( inputs to NES) and 10.4.2 ( inputs to NPV ). DOE generated the NES and NPV results using a Microsoft Excel spreadsheet, which is accessible on the Internet

< www.eere.energy.gov/buildings/appliance_standards/ > Details regarding and instructions for using the spreadsheet are provided in appendix 10

- A

.

Appendix 10

- B presents the NIA results calculated using inputs from the High Economic

Growth case and the Low Economic Growth case fr om AEO 2010

.

10.5.1 Summary of Inputs

Table 10.5.1 summarizes the inputs to the NIA model

.10-24 Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value

Input Description
Shipments Annual shipments from shipments model. (See chapter 9.)

Compliance date of standard 2014.

Base

- case forecasted efficiencies See section 10.2.

Standards

- case efficiencies See section 10.2.

Annual energy consumption per unit Annual weighted

- average values are a function of SWEUF. (See section 10.3.2.1.)

Total installed cost per unit Annual weighted

- average values are a function of the efficiency distribution. (See section 10.4.2.1.)

Energy cost per unit Annual weighted

- average values are a function of annual energy consumption per unit and energy prices. (See chapter 8 for energy prices.)

Repair and maintenance costs per unit Annual weighted

- average values are a function of the efficiency distribution

. Forecast of energy prices Energy prices: EIA AEO20 10 forecasts (to 203 5 ) and extrapolation thereafter. (See chapter 8.)

S ite

- to

- source conversion factor A time

- series conversion factor that includes electr ic generation, transmission, and distribution losses. Conversion, which changes yearly, is generated by DOE

- EIA’s NEMS*

program.

Discount rates 3% and 7% real.

Present year Future expenses are discounted to 20 10

. * Chapter 13, Utility Impact Analysis, provides more detail on the National Energy Modeling System (NEMS).

10.5.2 National Energy Savings Results by Efficiency Level

The following section provide s results of calculating NES for standards at each of the efficiency levels analyzed for the considered products. NES results, which are cumulative from

2014 through 204 3 , are expressed as primary energy savings. DOE based the inputs on weighted

average values, yielding results that are discrete point values, rather than a distribution of values

as in the life

- cycle cost and payback period analyses. The results in this section represent all the product classes that DOE included in each of the 11 representative product categories, not on ly the primary product c lass that accounts for the bulk of shipments in each category. This section also presents results that show the magnitude of the NES if the savings are discounted at rates of 3 percent and 7 percent.10-25 Table 10.5.2 Standard

- Size Refrigerator

- Freezers: Cumulative Nation al Energy Savings

Efficiency Level

(% less than baseline energy use) Top

- Mount Refrigerator

Freezers* quads Bottom

- Mount Refrigerator

Freezers** quads Side

- by

- Side Refrigerator

Freezers† quads

1 (10 ) 0.79 0.04 0.15

2 (15 ) 1.21 0.0 7 0.3 2

3 (20 ) 1.6 2 0.09 0.5 4

4 (25 ) 2.0 8 0.27 0.8 8

5 (30 ) 2.49 0.4 5 1.20

6 (36/36/33) †† 2.90 0.65 1.3 9

* Includes product classes 1, 1A, 2, 3A, 3I and 6 as well as product class 3. ** Includes product class es 5A and 5I as well as product class 5. † Includes product class es 4 and 4I as well as product class 7. †† Energy savings relative to baseline varies with product class

.

Table 10.5.3 Standard

- Size Refrigerator

- Freezers: Discounted Cumulative National Energy Savings

Efficiency

Level (% less than

baseline energy use) Top

- Mount

R efrig erator

- Freezers* quads Bottom

- Mount Refrigerator

- Freezers** quads Side

- by

- Side Refrigerator

- Freezers† quads

3%

Discount

Rate 7%

Discount

Rate 3%

Discount

Rate 7%

Discount

Rate 3%

Discount

Rate 7%

Discount

Rate

1 (10 ) 0.4 2 0. 20 0.02 0.01 0.08 0.0 4

2 (15 ) 0.64 0.30 0.0 4 0.0 2 0.1 7 0.0 8

3 (20 ) 0.86 0.4 1 0.05 0.02 0.28 0.13

4 (25 ) 1. 10 0.52 0.15 0.0 7 0.46 0.2 2

5 (30 ) 1.3 2 0.62 0.2 4 0.11 0.63 0. 30

6 (3 6/36/33 ) †† 1.53 0.72 0.34 0.16 0.7 3 0.34

* Includes product classes 1, 1A, 2, 3A, 3I and 6 as well as product class 3. ** Includes product class es 5A and 5I as well as product class 5. † Includes product class es 4 and 4I as well as product class 7. †† Energy savings relative to baseline varies wi th product class

.10-26 Table 10.5.4 Standard

- Size Freezers: Cumulative National Energy Savings

Efficiency Level (% less than baseline energy use) Upright Freezers* quads Chest Freezers** quads

1 (10) 0.19 0.13

2 (15) 0.31 0.21

3 (20) 0.43 0.28

4 (25) 0.54 0.36

5 (30) 0.66 0.43

6 (35) 0.77 0.49

7 (40/41) † 0.86 0.56

8 (44) 0.89

* Includes product class 8 as well as representative product class 9. ** Includes product class 10A as well as representative product class 10. † Energy savings relative to baseline varies with product class

.

Table 10.5.5 Standard

- Size Freezers: Discounted Cumulative National Energy Savings

Efficiency Level (% less than baseline energy use) Upright Freezers* quads Chest Freezers** quads

3% Discount

Rate 7% Discount

Rate 3% Discount

Rate 7% Discount

Rate

1 (10) 0.10 0.05 0.07 0.03

2 (15) 0.16 0.08 0.11 0.05

3 (20) 0.22 0.10 0.15 0.07

4 (25) 0.28 0.13 0.19 0.09

5 (30) 0.34 0.16 0.22 0.10

6 (35) 0.40 0.19 0.26 0.12

7 (40/41) † 0.45 0.21 0.29 0.13

8 (44) 0.46 0.21

* Includes product class 8 as well as representative product class 9. ** Includes product class 10A as well as representative product class 10. † Energy savings relative to baseline varies with product class

.10-27 Table 10.5.6 Compact Refrigeration Products: Cumulative National Energy Savings

Efficiency Level (% less than baseline energy use) Compact Refrigerators* quads Compact Freezers** quads

1 (10 ) 0.1 5 0.03

2 (15 ) 0.2 2 0.04

3 (20 ) 0.28 0.05

4 (25 ) 0.34 0.07

5 (30) 0.40 0.07

6 (35 ) 0.4 4 0.09

7 (40/42) † 0.48 0.09

8 (45) 0.49

9 (50) 0.5 2

10 (59) 0.50

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11. ** Includes product classes 16 and 17 as well as product class 18. † Energy savings relative to baseline varies with product class

.

Table 10.5.7 Compact Refrigeration Products : Discounted Cumulative National Energy Savings

Efficiency Level

(% less than baseline energy use) Compact Refrigerators* quads Compact Freezers** quads

3% Discount

Rate 7% Discount

Rate 3% Discount

Rate 7% Discount

Rate

1 (10 ) 0.08 0.04 0.02 0.01

2 (15 ) 0.12 0.06 0.02 0.01

3 (20 ) 0.16 0.0 8 0.03 0.02

4 (25 ) 0.19 0. 10 0.04 0.02

5 (30 ) 0.22 0.11 0.04 0.02

6 (35 ) 0.24 0.12 0.05 0.03

7 (40/42) † 0.2 7 0.1 4 0.05 0.03

8 (45) 0.27 0.14

9 (50) 0.29 0.1 5

10 (59) 0.28 0.14

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11. ** Includes product classes 16 and 17 as well as product class 18. † Energy savings relative to baseline varies with product class

.10-28 Table 10.5.8 Built

- In Refrigeration Products: Cumulative National Energy Savings

Efficiency Level

(% less than baseline energy use) Built

- in All Refrigerators (3A

- BI)

quads Built

- in

Bottom

Mount Refrigerator

Freezers* quads Built

- in Side

by

- Side Refrigerator

Freezers** quads Built

- in Upright Freezers (9

- BI) quads

1 (10 ) 0.00 0.00 0.0 1 0.00

2 (15 ) 0.01 0.00 0.02 0.01

3 (20 ) 0.01 0.01 0.03 0.01

4 (25 ) 0.01 0.01 0.04 0.01

5 ( 29/27/22/27 ) † 0.01 0.02 0.01

* Includes product class 5I

- BI as well as product class 5

- BI

. ** Includes product class es 4

- BI and 4I

- BI as well as product class 7

- BI

. † Energy savings relative to baseline varies with product class

.

Table 10.5.9 Built

- In Refrigeration Products: Discounted Cumulative National Energy Savings

Efficiency Level

(% less than baseline energy use) Built

- in All Refrigerators (3A

- BI) quads Built

- in Bottom

- Mount Refrigerator

- Freezers* quads

3% Discount

Rate 7% Discount

Rate 3% Discount Rate 7% Discount

Rate

1 (10 ) 0.00 0.00 0.00 0.00

2 (15 ) 0.00 0.00 0.00 0.00

3 (20 ) 0.00 0.00 0.00 0.00

4 (25 ) 0.01 0.00 0.01 0.00

5 (29/27 ) † 0.01 0.00 0.01 0.01

Efficiency Level

(% less than baseline energy use) Built

- in Side

- by

- Side Refrigerator

Freezers** quads Built

- in Upright Freezers (9

- BI) quads

3% Discount

Rate 7% Discount

Rate 3% Discount Rate 7% Discount

Rate

1 (10 ) 0.00 0.00 0.00 0.00

2 (15 ) 0.01 0.00 0.00 0.00

3 (20 ) 0.02 0.01 0.01 0.00

4 ( 22/25 ) † 0.02 0.01 0.01 0.00

5 (27 ) 0.01 0.00

* Includes product class 5I

- BI as well as product class 5

- BI

. ** Includes product class es 4

- BI and 4I

- BI as well as product class 7

- BI

. † Energy savings relative to baseline varies with product class

.10-29 10.5.3 Annual Costs and Savings

Figure 10. 5 .1 illustrates the basic inputs to the calcula tion of net present value (NPV) by showing the non

- discounted annual increases in product cost and annual savings in operating cost at the national level for efficiency level 3 for product class 3 (r efrigerator

- freezers

– automatic defrost with top

- mounted f reezer and without through

- the

- door ice service ). The figure also shows the net savings, which is the difference between the savings and costs for each year. The annual increase in product cost is the tota l cost for products purchased each year in the

fore cast period. The annual savings in operating cost applies to products operating in each year. The NPV is the difference between the cumulative annual discounted savings and cumulative annual discounted costs. DOE could create figures like Figure 10. 5 .1 for each of the considered efficiency levels for each product class

.

Figure 10.5.1 Non

- Discounted Annual Increases in Installed Cost and Savings

in Operating Cost for Product Class 3 at Efficiency Level 3 -0.5

0 0.5

1 1.5

2 2.5

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070

YearBillions of 2008 Dollars Operating Cost Savings

Incremental Product Cost
Net Savings10-30 10.5.4 Consumer Net Present Value Results by Efficiency Level

This section provides results of calculating net present value (NPV) of consumer benefit

for standards at each of the considered efficiency levels for the considered refrigeration products. Results, which are cumulative, are shown as the discounted value o f the net savings in dollar terms. DOE based the inputs to the NIA model on weighted

- average values, yielding results that are discrete point values, rather than a distribution of values as in the life

- cycle cost and payback period analysis.

The present value of increased total installed cos t is the total annual increase in installed cost (the difference between the standards case and base case), discounted to the present an d summed throughout the period for which DOE evaluate d the impact of standards.

Savings are decreases in operating cost associated with the higher energy efficiency of products purchased in the standards case compared to the base case. Total savings in operating cost are the savings per unit multiplied by the number of units of each v intage ( i.e., year of manufacture) that s urvive in a particular year. T he operating cost includes expenditures until the

last unit purchased during the forecast period is retired from service.

Tables 10.5. 10 though 10.5.1 3 show the consumer NPV associated with standards at the considered efficiency levels for each group of refrigeration products. As was the case with NES results, the results for NPV refer to all the product classes that DOE included in each of the representative product class categories, not simply to the primary product class that accounts for the bulk of shipments in each case

.

Table 10.5.10 Standard

- Size Refrigerator

- Freezers: Cumulative Net Present Value of

Consumer Benefit

Efficiency

Level (% less than baseline energy use) Top

- Mount Refrigerator

- Freezers* Bottom

- Mount Refrigerator

- Freezers** Side

- by

- Side Refrigerator

- Freezers†

3%

Discount

Rate 7%

Discount

Rate 3%

Discount

Rate 7%

Discount

Rate 3%

Discount

Rate 7%

Discount

Rate

billion 2009$

1 (10 ) 7.43 2.66 0.42 0.15 1.59 0.59

2 (15 ) 11.02 3.88 0.61 0.22 3.14 1.14

3 (20 ) 6.68 0.85 0.79 0.27 4.37 1.42

4 (25 ) 5.99 ( 0.33 ) (0.23) ( 0.57 ) 3.62 0.46

5 (30 ) ( 1.95 ) ( 5.36 ) ( 3.22 ) ( 2.43 ) ( 2.35 ) ( 3.26 )

6 (36/36/33 ) †† ( 14.63 ) ( 12.8 7) ( 7.32 ) ( 4.95 ) ( 7.38 ) ( 6.26 )

* Includes product classes 1, 1A, 2, 3A, 3I and 6 as well as product class 3. ** Includes product class es 5A and 5I as well as product class 5. † Includes product class es 4 and 4I as well as product class 7.10-31 †† Energy savings relative to baseline varies with product class

.

Table 10.5.11 Standard

- Size Freezers: Cumulative Net Present Value of Consumer

Benefit

Efficiency Level (% less than baseline energy use) Upright Freezers* Chest Freezers**

3% Discount

Rate 7% Discount

Rate 3% Discount

Rate 7% Discount

Rate

billion 2009$

1 (10 ) 2.03 0.72 1.41 0.50

2 (15 ) 2.93 0.9 7 2.09 0.71

3 (20 ) 3.91 1.25 2.74 0.90

4 (25 ) 4.63 1.39 2.37 0.54

5 (30 ) 5.42 1.57 2.75 0.59

6 (35) 5.1 3 1.22 1.82 ( 0.00 )

7 (40/41 ) † 4.20 0.55 ( 0.16 ) ( 1.21 )

8 (44 ) 0.67 ( 1.42 )

* Includes product class 8 as well as representative product class 9

. ** Includes product class 10A as well as representative product class 10. † Energy savings relative to baseline varies with product class

.

Table 10.5.12 Compact Refrigerat ion Products : Cumulative Net Present Value of

Consumer Benefit
Efficiency Level

(% less than baseline energy use) Compact Refrigerators* Compact Freezers**

3% Discount

Rate 7% Discount

Rate 3% Discount

Rate 7% Discount

Rate

billion 2009$

1 (10 ) 0.83 0.3 6 0.17 0.0 7

2 (15 ) 1.07 0.4 4 0.14 0.0 5

3 (20 ) 0.9 7 0.35 ( 0.25 ) ( 0.18 )

4 (25 ) 0.67 0.16 ( 0.25 ) ( 0.19 )

5 (30 ) 0.42 0.00 ( 0.50 ) ( 0.33 )

6 (35 ) ( 0.8 3) ( 0.6 7) ( 0.46 ) ( 0.32 )

7 (40/42 ) † ( 1.0 7) ( 0.8 3) ( 0.96 ) ( 0.60 )

8 (45 ) ( 2.40 ) ( 1.5 4)

9 (50) ( 2. 80) ( 1.76 )

10 (59) ( 4.49 ) ( 2.6 8)10-32 * Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11

. ** Includes product classes 16 and 17 as well as product class 18. † Energy savings relative to baseline varies with product class

.

Table 10.5.13 Built

- In Refrigeration Products: Cumulative Net Present Value of

Consumer Benefit

Efficiency Level

(% less than baseline energy use) Built

- in All Refrigerators (3A

- BI) Built

- in Bottom

- Mount Refrigerator

- Freezers*

3% Discount

Rate 7% Discount

Rate 3% Discount Rate 7% Discount

Rate

billion 2009$

1 (10 ) 0.03 0.01 0.02 0.01

2 (15 ) 0.05 0.02 (0.00 ) (0.00)

3 (20 ) (0.01) (0.02) (0.02) (0.02)

4 (25 ) (0.10) (0.07) (0.36) (0.21)

5 (29/27 ) † (0.17) (0.11) (0.54) (0.32)

Efficiency Level

(% less than baseline energy use) Built

- in Side

- by

- Side Refrigerator

Freezers** Built

- in Upright Freezers (9

- BI)

3% Discount

Rate 7% Discount

Rate 3% Discount Rate 7% Discount

Rate

billion 2009$

1 (10 ) 0.04 0.01 0.04 0.02

2 (15 ) (0.05) (0.06) 0.07 0.02

3 (20 ) (0.43) (0.28) 0.04 0.00

4 (25/22) † (0.83) (0.51) (0.02) (0.03)

5 (27) (0.07) (0.06)

* Includes product class 5I

- BI as well as product class 5

- BI

. ** Includes product classes 4

- BI and 4I

- BI as well as product class 7

- BI. † Energy savings relative to baseline varies with product class

.

10.6 NES AND NPV RESULTS BY TRIAL STANDARD LE VEL

10.6.1 Trial Standard Levels

In considering amended standards for the NOPR, DOE created t rial standard levels ( TSLs) that combine specific efficiency levels across product classes. DOE analyzed the benefits and burdens of a number of TSLs for the refrigeration products that are the subject of this10-33 rulemaking

. A description of each TSL DOE analyzed is provided below . DOE attempted to

limit the number of TSLs con sidered for the NOPR by exclud ing efficiency levels that do not exhibit significantly different economic and/or engineering characteristics from the efficiency levels already selected as a TSL.

Table 10.6.1 presents the TSLs and the corresponding product class efficiencies for

standard

- size refrigerator

- freezers. TSL 1 consists of those efficiency levels that meet current ENERGY STAR criteria. TSL 2 consists of the highest efficiency levels for which the cons umer NPV is positive, using a 7

- percent discount rate. TSL 3 consists of the highest efficiency levels for which the consumer NPV is positive, using a 3

- percent discount rate , as well as the levels

recommended in the Joint Comments. d TSL 4 consists of thos e efficiency levels that yield energy use 30 percent below the baseline products . TSL 5 consists of the max

- tech efficiency

levels.

Table 10.6.1 Trial Standard Levels for Standard

- Size Refrigerator

- Freezers

Trial

Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

Efficiency Level (% less than baseline energy use)

1 3 (20) 3 (20) 3 (20)

2 3 (20) 3 (20) 4 (25)

3 4 (25) * 3 (20) 4 (25)

4 5 (30) 5 (30) 5 (30)

5 6 (36) 6 (36) 6 (33)

* L evel f or p roduct classes 1, 1A, and 2 is 20%.

Table 10.6. 2 presents the TSLs and the corresponding product class efficiencies for

standard

- size freezers. TSL 1 consists of those efficiency levels that yield energy use 20 percent below the baseline products. TSL 2 consists of the levels recommended in the Joint Comments. TSL 3 consists of incrementally higher efficiency levels than the preceding TSL. TSL 4 cons ists

of the efficiency levels for which the consumer NPV is positive, using a 7

- percent discount rate.

TSL 5 consists of the max

- tech efficiency levels, which are also the efficiency levels for which the consumer NPV is positive, using a 3

- percent discount rate.

d DOE received comment from a group of refrigerator manufacturers, electric utilities, and energy conservation advocates (referred to as the “Joint C omments”) who, acting on its own initiative, negotiated intensively for several months to develop a common recommendation for an energy conservation standard that meets the EPCA requirements for refrigerators, refrigerator

- freezers and freezers.10-34 Table 10.6.2 Trial Standard Levels for Standard

- Size Freezers

Trial Standard

Level Upright Freezers Chest Freezers

Product class 9 Product class 8 Product classes

10 and 10A

Efficiency Level (% less than baseline energy use)

1 3 (20) 3 (20) 3 (20)

2 5 (30) 4 (25) 4 (25) *

3 6 (35) 5 (30) 5 (30)

4 7 (40) 6 (35) 6 (35)

5 8 (44) 7 (41) 7 (41)

* L evel for product class 10A is 30%.

Table 10.6.3 presents the TSLs and the corresponding product class efficiencies for compact refrigeration products. TSL 1 consists of efficiency levels that meet current ENERGY STAR criteria for compact refrigerators, and efficiency levels that are 10 percent below the baseline energy use for compact freezers. TSL 2 consists of the levels recommended in the Joint Comments. TSL 3 consists of the highest efficiency levels for which the consumer NPV is positive, using both a 3

- percent and a 7

- percent discount rate. TSL 4 c onsists of incrementally higher efficiency levels than TSL 3. TSL 5 consists of the max

- tech efficiency levels.

Table 10.6.3 Trial Standard Levels for Compact Refrigeration Products

Trial Standard

Level Compact Refrigerators and Refrigerator

- Freezers Compact Freezers

Product classes 11, 11A, 12, and

13A Product classes 13, 14,and 15 Product classes 16, 17, 18

Efficiency Level (% less than baseline energy use)

1 3 (20) 1 (10) 1 (10)

2 4 (25) 2 (15)* 1 (10)

3 5 (30) 2 (15) 2 (15)

4 7 (40) 4 (25) 4 (25)

5 10 (5 9) 7 (42) 7 (42)

* L evel for product class 14 is 20%.10-35 Table 10.6.4 presents the TSLs and the corresponding product class efficiencies for built

in refrigeration products. TSL 1 consists of the efficiency levels that are 10 percent better than the current standard. TSL 2 consists of the highest efficiency levels for which the consumer NPV is positive, using both a 3

- percent and a 7

- percent discount rate. TSL 3 consists of the levels

recommended in the Joint Comments. TSL 4 consists of incre mentally higher efficiency levels

than TSL 3. TSL 5 consists of the max

- tech efficiency levels.

Table 10.6.4 Trial Standard Levels for Built

- in Refrigeration Products

Trial Standard

Level Built

- in All

Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

Efficiency Level (% less than baseline energy use)

1 1 (10) 1 (10) 1 (10) 1 (10)

2 2 (15) 2 (15) 1 (10) 3 (20)

3 3 (20) 2 (15) 3 (20) 4 (25)

4 4 (25) 4 (25) 3 (20) 4 (25)

5 5 (29) 5 (27) 4 (22) 5 (27)

10.6.2 National Energy Savings Results by Trial Standard Level

The tables below show the cumulative national energy savings associated with standards at the considered TSLs for each group of refrigeration products.10-36 Table 10.6.5 Standard

- Size Refrigerator

- Freezers: Cumulative National Energy Savings in Quads

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 1.62 0.09 0.54

2 1.62 0.09 0.88

3 2.07 0.09 0.88

4 2.49 0.45 1.20

5 2.90 0.65 1.39

Table 10.6.6 Standard

- Size Freezers: Cumulative National Energy Savings in Quads

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

1 0.43 0.28

2 0.66 0.36

3 0.77 0.43

4 0.86 0.49

5 0.89 0.56

Table 10.6.7 Compact Refrigeration Products: Cumulative National Energy Savings in Quads

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 0.27 0.03

2 0.3 4 0.03

3 0.39 0.04

4 0.47 0.07

5 0.50 0.0910-37 Table 10.6.8 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads

Trial Standard

Level Built

- in All Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class 3A

BI Product classes 5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 0.00 0.00 0.0 1 0.00

2 0.0 1 0.00 0.0 1 0.0 1

3 0.0 1 0.00 0.03 0.01

4 0.0 1 0.01 0.03 0.01

5 0.01 0.0 2 0.0 4 0.01

10.6.3 C onsumer Net Present Value Results by Trial Standard Level

T he tables below show the consumer NPV associated with standards at the considered TSLs for each group of refrigeration products.

Table 10.6.9 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Refrigerator

- Freezers, 3

- Percent Discount Rate

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

billion 2009 dollars

1 6.68 0.79 4.37

2 6.68 0.79 3.62

3 6.00 0.79 3.62

4 ( 1.95 ) ( 3.22 ) ( 2.35 )

5 ( 14.63 ) ( 7.32 ) ( 7.38 )

* Values in parentheses are negative values.10-38 Table 10.6.10 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Refrigerator

- Freezers, 7

- Percent Discount Rate

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

billion 2009 dollars

1 0.85 0.27 1.42

2 0.85 0.27 0.46

3 ( 0.32 ) 0.27 0.46

4 ( 5.36 ) ( 2.43 ) ( 3.26 )

5 ( 12.86 ) ( 4.95 ) ( 6.26 )

* Values in parentheses are negative values.

Table 10.6.11 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Freezers, 3

- Percent Discount Rate

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars

1 3.91 2.74

2 5.42 2.37

3 5.13 2.75

4 4.20 1.82

5 0.67 ( 0.16 )

* Values in parentheses are negative values.

Table 10.6.12 Cumulative Net Present Value of Consumer Benefits for Standard

- Size Freezers, 7

- Percent Discount Rate

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars10-39 1 1.25 0.90

2 1.57 0.54

3 1.22 0.59

4 0.55 0.00

5 ( 1.42 ) ( 1.21 )

* Values in parentheses are negative values.

Table 10.6.13 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 3

- Percent Discount Rate

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

billion 2009 dollars

1 1.25 0.17

2 0. 69 0.17

3 0.82 0.14

4 ( 0.64 ) ( 0.25 )

5 ( 4.49 ) ( 0.96 )

* Values in parentheses are negative values.

Table 10.6.14 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7

- Percent Discount Rate

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

billion 2009 dollars

1 0.50 0.07

2 0. 18 0.07

3 0.22 0.04

4 ( 0.59 ) ( 0.19 )

5 ( 2.68 ) ( 0.60 )

* Values in parentheses are negative values.10-40 Table 10.6.15 Cumulative Net Present Value of Consumer Benefits for Built

- In Refrigeration Products, 3

- Percent Discount Rate

Trial Standard

Level Built

- in All Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class 3A

BI Product classes 5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

billion 2009 dollars

1 0.03 0.0 2 0.0 4 0.04

2 0.0 5 0.00 0.0 4 0.0 4

3 ( 0.0 1) 0.00 ( 0.43 ) ( 0.0 2)

4 ( 0.10 ) ( 0.3 6) (0.43) ( 0.0 2)

5 ( 0.17 ) ( 0.54 ) ( 0.83 ) ( 0.0 7)

* Values in parentheses are negative values.

Table 10.6.16 Cumulative Net Present Value of Consumer Benefits for Built

- In Refrigeration Products, 7

- Percent Discount Rate

Trial Standard

Level Built

- in All Refrigerators (3A

- BI) Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers (9

- BI)

Product class 3A

BI Product classes 5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

billion 2009 dollars

1 0.01 0.0 1 0.0 1 0.0 2

2 0.0 2 ( 0.00 ) 0.0 1 0.00

3 (0.02) ( 0.00 ) (0.28) ( 0.0 3)

4 ( 0.07 ) ( 0.21 ) ( 0.28 ) ( 0.03 )

5 ( 0.11 ) ( 0.32 ) ( 0.5 1) ( 0.06 )

* Values in parentheses are negative values.10-41 REFERENCES

1 U.S . Department of Energy

– Energy Information Administration. Annual Energy Outlook

20 10 with Projections to 203 5 . April 2010. U.S. DOE

– EIA: Washington, D

. C

. DOE/EIA

0383( 2010 ).

2 Off ice of Management and Budget. OMB Circular A

- 4, Regulatory Analysis

. 2003. OMB: Washington, D .C. September 17, 2003.

< www.whitehouse.gov/omb/assets/omb/circulars/a004/a

- 4.pdf >11

- i CHAPTER 11

. CONSUMER SUBGROUP ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION

................................ ................................ ................................ ......... 11

- 1

11.2 SUBGROUPS DESCRIPTIO N

................................ ................................ ..................... 11

- 1

11.2.1 Senior

- Only Households

................................ ................................ ................................ 11

- 1

11.2.2 Low

- Income Households

................................ ................................ ............................... 11

- 1

11.2.3 Multi

- Family Households

................................ ................................ .............................. 11

- 2

11.2.4 Subgroup Populations

................................ ................................ ................................ .... 11

- 2

11.3 RESULTS

................................ ................................ ................................ ...................... 11

- 3

11.3.1 Standard

- Size Refrigerator

- Freezers

................................ ................................ .............. 11

- 3

11.3.2 Standard

- Size Freezers

................................ ................................ ................................ ... 11

- 6

11.3.3 Buil t

- In Refrigeration Products

................................ ................................ ...................... 11

- 911-1 CHAPTER 11. CONSUMER SUBGROUP ANALYSIS

11.1 INTRODUCTION

The consumer subgroup analysis evaluates impacts on any identifiable groups or customers who may be disproportionately aff ected by any national energy conservation standard. DOE evaluates impacts on particular sub

- groups of consumers primarily by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For the NOPR, DOE analyzed the i mpacts of the considered standard levels on low

- income consumers and

senior citizens for standard

- size refrigerator

- freezers and freezers . DOE did not estimate impacts for compact refrigeration products because the household sample sizes were not large eno ugh to yield meaningful results.

DOE determine s the impact on consumer subgroups using the LCC Spreadsheet Model. Chapter 8 explains in detail the inputs to the model used in determining LCC impacts and PBPs.

This chapter describes the subgroup identific ation in further detail and gives the results of the LCC and PBP analyses for the considered subgroups.

11.2 SUBGROUPS DESCRIPTIO N

11.2.1 Senior

- Only Households

Senior

- only households have occupants who are all at least 65 years of age. Based on the DOE Energy Infor mation Administration (EIA)’s Residential Energy Consumption Survey of 2005 (RECS), senior

- only households comprise 17 percent of the country’s households. 1

11.2.2 Low

- Income Households

As defined in the RECS survey, low

- income households are considered to be those at or below the “poverty line.” The “poverty line” varies with household size, head of household age, and family income. Table 11.2.1 summarizes the income level baselines for selecting low

income households from the RECS sample. The RECS survey classifies 15 p ercent of the country’s households as low

- income.11-2 Table 11.2.1 RECS 2005 Definitions of Low

- Income Households by Yearly Income Average Income in $

Household Size 48 Contiguous States

and D.C. Alaska Hawaii

1 9,570 11,950 11,010

2 12,830 16,030 14,760

3 16,090 20 ,100 18,510

4 19,350 24,190 22,260

5 22,610 28,270 26,010

6 25,870 32,350 29,760

7 29,130 36,430 33,510

8 32,390 40,510 37,260

9 35,650 44,590 41,010

10 38,910 48,670 44,760

11 42,170 52,750 48,510

12 45,430 56,830 52,260

13 48,690 60,910 56,010

14 51,950 64,990 59,760

15 55,210 69,070 63,510

11.2.3 Multi

- Family Households

Multi

- family households are located in buildings with 2 or more units. According to the RECS survey, multi

- family households comprise 22 percent of the country’s households. This

s ubgroup was only analyzed for water heaters. It comprises 11.1 percent of the sample used for

gas

- fire storage water heaters, and 17.2 percent of the sample used for electric storage water

heaters.

11.2.4 Subgroup Populations

Table 11.2.2 summarizes the subgroup populations for standard

- size refrigerator

- freezers and freezers, while Table 11.2.3 summarizes the average annual energy use for the households analyzed in the consumer subgroup analyses. These values are compared against the average

values for the nation al sample.

Table 11.2.2 Household Population Data for Refrigeration Products

Standard

- Size Refrigerator

Freezers Standard

- Size

Freezers

Count Weight Count Weight

All Households 3329 84,886,289 616 15,329,541

Senior Only 505 16211-3 10,526,643 3,045,340

Senior Only % 15% 12% 26% 20%

Low Income

535 8,606,765 83 1,589,276

Low Income % 16% 10% 13% 10%

Table 11.2.3 Average Annual Energy Use for Baseline Refrigeration Products

Standard

- Size

Top

- Mount Refrigerator

Freezers *

(kWh) Standard

- Size Upright Freezers (kWh)

Senior Only 403 600

Low Income 443 575

All Households 444 600

* In first year of operation.

11.3 RESULTS

11.3.1 Standard

- Size Refrigerator

- Freezers

Tables 11.4.1 through 11.4.6 summarize the LCC and PBP results for low

- income

consumers and senior citizens for the standard

- size refrigerator

- freezer representative product classes. Table 11.4.7 compares the average LCC savings at each efficiency level for the two consumer subgroups with the average LCC savings for the entir e sample for each representative product class.

Table 11.3.1 Product Class 3, Top

- Mount Refrigerator

- Freezers: LCC and PBP

Results for Senior

- Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Per iod (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $540 $704 $1,245

1 (10) $552 $653 $1,205 $40 1.80% 19.19% 79.01% 2.9

2 (15 ) $561 $626 $1,187 $58 2.83% 14.93% 82.24% 3.311-4 3 (20) $624 $599 $1,223 $22 47.38% 5.24% 47.38% 10.0

4 (25) $667 $567 $1,233 $12 58.86% 0.00% 41.14% 11.7

5 (30) $759 $535 $1,294

- $49 76.74% 0.00% 23.26% 16.4

6 (3 6 ) $892 $502 $1,394

- $149 87.86 % 0.00% 12.14% 22.0

Table 11.3.2 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: LCC and PBP

Results for Senior

- Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $911 $910 $1,820

1 (10) $926 $842 $1,768 $53 0.00% 0.00% 100.00% 2.5

2 (15) $935 $808 $1,743 $77 0.0 0% 0.00% 100.00% 2.7

3 (20) $957 $774 $1,731 $90 0.00% 0.00% 100.00% 3.8

4 (25) $1,016 $743 $1,758 $62 0.00% 0.00% 100.00% 7.0

5 (30) $1,109 $713 $1,822

- $2 55.97% 0.00% 44.03% 11.3

6 (3 6 ) $1,154 $695 $1,849

- $29 84.99% 0.00% 15.01% 12.7

Table 11.3.3 Product Cla ss 7, Side

- by

- Side Refrigerator

- Freezers with Through

- the

Door Ice Service: LCC and PBP Results for Senior

- Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $1,149 $1,178 $2,327

1 (10) $1,152 $1,156 $2,308 $20 0.09% 78.09% 21.82% 1.5

2 (15) $1,157 $1,132 $2 ,289 $40 0.49% 51.69% 47.82% 2.4

3 (20) $1,176 $1,100 $2,276 $53 7.31% 36.90% 55.79% 4.8

4 (25) $1,241 $1,051 $2,292 $37 50.78% 0.00% 49.22% 10.9

5 (30) $1,383 $1,002 $2,384

- $55 77.70% 0.00% 22.30% 18.6

6 (3 3 ) $1,494 $970 $2,463

- $134 86.15% 0.00% 13. 85% 22.611-5 Table 11.3.4 Product Class 3, Top

- Mount Refrigerator

- Freezers: LCC and PBP

Results for Low

- Income Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $541 $766 $1,307

1 (10) $553 $709 $1,263 $44 1.53% 19.33% 79.14% 2.6

2 (15) $562 $680 $1,242 $65 2.24% 15.00% 8 2.76% 3.0

3 (20) $625 $650 $1,275 $32 43.58% 5.29% 51.13% 9.1

4 (25) $668 $615 $1,283 $25 53.99% 0.00% 46.01% 10.6

5 (30) $760 $580 $1,340

- $33 71.67% 0.00% 28.33% 14.9

6 (3 6 ) $893 $543 $1,436

- $129 84.69% 0.00% 15.31% 19.9

Table 11.3.5 Product Class 5, Bottom

- Mount Refrigerator

- Freezers: LCC and PBP

Results for Low

- Income Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Averag e Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $953 $916 $1,870

1 (10) $956 $907 $1,863 $9 0.24% 86.21% 13.55% 2.5

2 (15) $957 $902 $1,860 $13 0.36% 86.14% 13.50% 2.8

3 (20) $964 $889 $1, 853 $20 4.90% 65.28% 29.82% 4.9

4 (25) $1,030 $851 $1,880

- $7 74.35% 0.00% 25.65% 17.4

5 (30) $1,137 $815 $1,952

- $78 88.09% 0.00% 11.91% 24.6

6 (3 6 ) $1,286 $767 $2,053

- $180 93.24% 0.00% 6.76% 29.0

Table 11.3.6 Product Class 7, Side

- by

- Side Refrigerator

- Freezers with Through

- the

Door Ice Service: LCC and PBP Results for Low

- Income Households

Efficiency

Level

(% less than

baseline Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating LCC Averag e Savings % of Households that Experience Median11-6 energy use ) Cost 200 9 $ Net

Cost No Impact Net

Benefit

Baseline $1,147 $1,138 $2,286

1 (10) $1,150 $1,115 $2,265 $21 0.02% 76.16% 23.82% 1.6

2 (15) $1,156 $1,090 $2,246 $41 0.54% 46.76% 52.70% 2.5

3 (20) $1,177 $1,056 $2,233 $55 8.78% 30.32% 60.90% 5.0

4 (25) $1,242 $1,010 $2,252 $36 50.56% 0.00% 49.44% 11.0

5 (30) $1,384 $963 $2,347

- $59 78.74% 0.00% 21.26% 18.9

6 (3 3 ) $1,495 $933 $2,428

- $140 87.34% 0.00% 12.66% 23.0

Table 11.3.7 Standard

- Size Refrigerator

- Fre ezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less than

baseline energy use) Top

- Mount Refrigerator

Freezer s (PC 3) Bottom

- Mount Refrigerator

Freezer s (PC 5) Si de

- by

- Side Refrigerator

Fre ezers (PC 7)

Senior Low

Income All Senior Low

Income All Senior Low

Income All

1 (10) $40 $44 $42 $53 $9 $8 $20 $21 $20

2 (15) $58 $65 $62 $77 $13 $12 $40 $41 $40

3 (20) $22 $32 $29 $90 $20 $19 $53 $55 $53

4 (25) $12 $25 $22 $62

- $7

- $8 $37 $36 $37

5 (30)

- $49

- $33

- $37

- $2

- $78

- $79

- $55

- $59

- $55

6 (3 6/36/33 )

- $149

- $129

- $133

- $29

- $180

- $180

- $134

- $140

- $134

11.3.2 Standard

- Size Freezers

Tables 11.4.8 through 11.4.11 summarize the LCC and PBP results for low

- income

consumers and senior citizens for the standard

- size freezer representative product classes. Table 11.4.12 compares the average LCC savings at each efficiency level for the two consumer subgroups with the average LCC savings for the entire sample for each representative product

class.11-7 Table 11.3.8 Pr oduct Class 9, Upright Freezers: LCC and PBP Results for Senior

Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $559 $969 $1,528

1 (10) $570 $897 $1,466 $62 1.68% 19.85% 78.47% 2.3

2 (15) $591 $852 $1,443 $85 9.74% 1.67% 88.59% 4.3

3 (20) $610 $807 $1,41 7 $111 11.65% 0.59% 87.76% 4.8

4 (25) $639 $760 $1,400 $128 16.24% 0.41% 83.35% 5.8

5 (30) $666 $714 $1,380 $148 18.66% 0.22% 81.12% 6.2

6 (35) $725 $673 $1,398 $130 30.83% 0.00% 69.17% 8.4

7 (40) $809 $632 $1,441 $87 45.02% 0.00% 54.98% 11.0

8 (4 4 ) $ 993 $599 $1,591

- $63 70.19% 0.00% 29.81% 17.4

Table 11.3.9 Product Class 10, Chest Freezer: LCC and PBP Results for Senior

- Only

Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Inst alled

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $407 $578 $985

1 (10) $413 $533 $946 $38 0.00% 16.18% 83.82% 2.1

2 (15) $424 $506 $930 $55 0.7 1% 1.18% 98.11% 3.4

3 (20) $436 $479 $914 $70 1.56% 0.22% 98.22% 4.2

4 (25) $483 $451 $935 $50 25.76% 0.22% 74.02% 8.7

5 (30) $504 $424 $928 $56 28.30% 0.22% 71.48% 9.1

6 (35) $564 $404 $968 $17 53.52% 0.00% 46.48% 13.1

7 ( 41 ) $686 $369 $1,055

- $71 78 .99% 0.00% 21.01% 19.3

Table 11.3.10 Product Class 9, Upright Freezers: LCC and PBP Results for Low

Income Households

Efficiency

Level

Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)11-8 (% less than

baseline

energy use ) Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $559 $969 $1,478

1 (10) $570 $897 $1,420 $58 1.82% 19.07% 79.11% 2.4

2 (15) $592 $852 $1,400 $79 10.44% 1.60% 87.96% 4.5

3 (20) $611 $807 $1,376 $102 12.31% 0.58% 87.11% 5.0

4 (25) $640 $760 $1,361 $117 17.49% 0.42% 82.09% 6.0

5 (30) $666 $714 $1,344 $134 19.99% 0.21% 79.80% 6.5

6 (35) $726 $673 $1,365 $113 33.06% 0.00% 66.94% 8.7

7 (40) $809 $632 $1,410 $68 47.85% 0.00% 52.15% 11.4

8 (4 4 ) $994 $599 $1,563

- $85 72.25% 0.00% 27.75% 18.0

Table 11.3.11 Product Class 10, Chest Freezer: LCC and PBP Results for Low

- Income

Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Pa yback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $407 $578 $973

1 (10) $414 $533 $936 $37 0.00% 16.05% 83.95% 2.1

2 (15) $424 $506 $920 $53 0.85% 1.19% 97.96% 3.4

3 (20) $436 $479 $905 $68 1.68% 0.23% 98.09% 4.2

4 (25) $484 $451 $926 $47 26.98% 0.23% 72.79% 8.6

5 (30) $505 $424 $920 $53 29.21% 0.23% 70.56% 9.0

6 (35) $566 $404 $961 $12 55.24% 0.00% 44.76% 12.9

7 ( 4 1 ) $688 $369 $1,049

- $76 80.02% 0.00% 19.98% 19.1

Table 11.3.12 Standard

- Size Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less than

baseline energy use) Upright Freezers (PC 9) Chest Freezers (PC 10)

Senior Low

- All Senior Low

- All11-9 Income Income

1 (10) $62 $58 $62 $38 $37 $38

2 (15) $85 $79 $85 $55 $53 $55

3 (20) $111 $102 $111 $70 $68 $70

4 (25) $12 8 $117 $128 $50 $47 $50

5 (30) $14 8 $13 4 $148 $5 6 $53 $5 6

6 (3 5 ) $13 0 $11 3 $130 $17 $12 $17

7 (4 0/41) $8 7 $6 8 $87

- $ 7 1

- $ 7 6

- $ 7 1

8 (44)

- $ 63

- $ 85

- $63

11.3.3 Built

- In Refrigeration Products

Tables 11.4.13 through 11.4.20 summarize the LCC and PBP results for low

- income

consumers and senior citizens for the built

- in refrigeration product representativ e product classes. Table 11.4.21 compares the average LCC savings at each efficiency level for the two consumer subgroups with the average LCC savings for the entire sample for each representative product class

.

Table 11.3.13 Product Class 3A

- BI, Built

- In All Refriger ators: LCC and PBP Results

for Senior

- Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Househo lds that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $4,768 $710 $5,479

1 (10) $4,776 $659 $5,435 $44 0.32% 19.55% 80.13% 1.8

2 (15) $4,789 $632 $5,421 $58 3.42% 15.35% 81.23% 3.3

3 (20) $4,924 $602 $5,526

- $47 75.7 0% 5.50% 18.80% 17.6

4 (25) $5,116 $574 $5,690

- $211 95.86% 0.00% 4.14% 32.1

5 ( 29 ) $5,260 $555 $5,816

- $337 98.07% 0.00% 1.93% 39.9

Table 11.3.14 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: LCC

and PBP Results for Senior

- Only Households

Ef ficiency

Level

(% less than

baseline Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating LCC Average Savings % of Households that Experience Median11-10 energy use ) Cost 200 9 $ Net

Cost No Impact Net

Benefit

Baseline $5,491 $841 $6,333

1 (10) $5,495 $834 $6,329 $6 1.80% 86.08% 12.12% 4.9

2 (15) $5,507 $841 $6,348

- $3 10.11% 86.03% 3.86% 14.7

3 (20) $5,544 $828 $6,372

- $26 31.95% 65.59% 2.46% 28.5

4 (25) $5,715 $804 $6,518

- $173 99.35% 0 .00% 0.65% 72.1

5 ( 27 ) $5,813 $787 $6,600

- $255 99.66% 0.00% 0.34% 70.2

Table 11.3.15 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: LCC and PBP Results for Senior

- Only

Households

Efficiency

Level

(% less than

bas eline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $7,900 $1,293 $9,193

1 (10) $7,915 $1,276 $9,191 $7 8.01% 78.49% 13.50% 8.7

2 (15) $7,960 $1,261 $9,222

- $18 39.80% 52.43% 7.77% 21.0

3 (20) $8,092 $1,228 $9,319

- $116 60.24% 37.23% 2.53% 36.7

4 (2 2 ) $8,210 $1,211 $9,422

- $219 98.82% 0.00% 1.18% 60.0

Table 11.3.16 P roduct Class 9

- BI, Built

- In Upright Freezers: LCC and PBP Results for

Senior

- Only Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $4,350 $947 $5,297

1 (10) $4,366 $876 $5,242 $54 4.34% 19.90% 75.76% 3.4

2 (15) $4,381 $834 $5,215 $82 8.63% 1.70% 89.67% 4.3

3 ( 20) $4,476 $797 $5,273 $24 53.14% 0.57% 46.29% 12.8

4 (25) $4,623 $752 $5,375

- $78 78.19% 0.49% 21.32% 21.1

5 ( 27 ) $4,737 $730 $5,466

- $169 87.14% 0.27% 12.59% 26.811-11 Table 11.3.17 Product Class 3A

- BI, Built

- In All Refrigerators: LCC and PBP Results

for Low

- Income Hou seholds

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No

I mpact Net

Benefit

Baseline $4,775 $776 $5,551

1 (10) $4,783 $719 $5,502 $49 0.23% 18.98% 80.79% 1.7

2 (15) $4,796 $690 $5,486 $65 3.04% 14.54% 82.42% 3.0

3 (20) $4,933 $656 $5,588

- $37 72.47% 4.75% 22.78% 16.3

4 (25) $5,124 $625 $5,74 9

- $198 94.15% 0.00% 5.85% 29.4

5 ( 29 ) $5,269 $603 $5,873

- $321 97.15% 0.00% 2.85% 36.2

Table 11.3.18 Product Class 5

- BI, Built

- In Bottom

- Mount Refrigerator

- Freezers: LCC

and PBP Results for Low

- Income Households

Efficiency

Level

(% less than

baseline

energy us e ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $5,501 $911 $6,412

1 (10) $5,505 $902 $6,407 $7 1.47% 85.94% 12.59% 4.5

2 (15) $5,517 $908 $6,425

- $1 9.15% 85.89% 4.96% 13.2

3 (20) $5,554 $894 $6,448

- $24 31.65% 65.07% 3.28% 26.1

4 (25) $5,725 $866 $6,591

- $167 98.87% 0.00% 1.13% 62.2

5 ( 27 ) $5,824 $847 $6,671

- $247 99.31% 0.00% 0.69% 61.3

Table 11.3.19 Product Class 7

- BI, Built

- In Side

- by

- Side Refrigerator

- Freezers with Through

- the

- Door Ice Service: LCC and PBP Results for Low

- Income

Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycl e Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that Experience

Median Net

Cost No Impact Net

Benefit

Baseline $7,884 $1,242 $9,12611-12 1 (10) $7,900 $1,224 $9,124 $6 10.20% 75.93% 13.87% 9.2

2 (15) $7,951 $1,208 $9,159

- $24 45.73% 46.86% 7.41% 22.9

3 (20) $8,097 $1,173 $9,270

- $135 67.94% 30.06% 2.00% 39.0

4 (2 2 ) $8,216 $1,158 $9,374

- $239 98.99% 0.00% 1.01% 59.4

Table 11.3.20 Product Class 9

- BI, Built

- In Upright Freezers: LC C and PBP Results for

Low

- Income Households

Efficiency

Level

(% less than

baseline

energy use ) Life

- Cycle Cost 200 9 $ Life

- Cycle Cost Savings Payback

Period (years)

Installed

Cost Discounted Operating

Cost LCC Average Savings

200 9 $ % of Households that

E xperience

Median Net

Cost No Impact Net

Benefit

Baseline $4,351 $885 $5,236

1 (10) $4,368 $819 $5,186 $50 5.04% 18.99% 75.97% 3.7

2 (15) $4,383 $779 $5,162 $74 9.89% 1.63% 88.48% 4.5

3 (20) $4,477 $746 $5,223 $13 57.04% 0.54% 42.42% 13 .6

4 (25) $4,625 $703 $5,329

- $93 81.53% 0.47% 18.00% 22.4

5 ( 27 ) $4,738 $683 $5,422

- $185 89.56% 0.25% 10.19% 28.3

Table 11.3.21 Built

- In Refrigerat ion Products : Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less t han

baseline energy use) Built

- in All Refrigerators

(PC 3A

- BI) Built

- in Bottom

- Mount Refrigerator

- Freezers (PC 5

- BI) Built

- in Side

- by

- Side Refrigerator

- Freezers (PC 7

- BI) Built

- in Upright

Freezers (PC 9

- BI)

Senior Low

Income All Senior Low

Incom e All Senior Low

Income All Senior Low

Income All

1 (10) $ 44 $ 49 $ 47 $ 6 $ 7 $ 7 $ 7 $ 6 $ 7 $ 54 $ 50 $ 54

2 (15) $ 58 $ 65 $ 63

- $ 3

- $ 1 $ 0

- $ 18

- $ 24

- $ 18 $ 82 $ 74 $ 82

3 (20)

- $ 47

- $ 37

- $ 34

- $ 26

- $ 24

- $ 21

- $ 116

- $ 135

- $ 116 $ 24 $ 13 $ 24

4 (25)

- $ 211

- $ 198

- $ 195

- $ 17 3

- $ 167

- $ 164

- $ 219

- $ 239

- $ 219

- $ 78

- $ 93

- $ 78

5 (29/27/22/27 )

- $ 337

- $ 321

- $ 318

- $ 255

- $ 247

- $ 244

- $ 169

- $ 185

- $ 16912

- i CHAPTER 12. MANUFACTURER IMPACT ANALYSIS

12.1 INTRODUCTION

................................ ................................ ............................. 12

- 1

12.2 METHODOLOGY

................................ ................................ ............................ 12

- 1

12.2.1 Phase I: Industry Profile

................................ ................................ ............. 12

- 2

12.2.2 Phase II: Industry Cash

- Flow Analysis and Interview Guide

.................... 12

- 3

12.2.2.1 Industry Cash

- Flow Analysi s

................................ ....................... 12

- 3

12.2.2.2 Interview Guides

................................ ................................ ........... 12

- 3

12.2.3 Phase III: Subgroup Analysis

................................ ................................ ..... 12

- 4

12.2.3.1 Manufacturing Interviews

................................ ............................. 12

- 4

12.2.3.2 Revised Industry Cash

- Flow Analysis

................................ .......... 12

- 4

12.2.3.3 Manufacturer Subgroup Analysis

................................ ................. 12

- 4

12.2.3.3.1 Small

- Business Manufacturer Subgroup

....................... 12

- 5

12.2.3.3.2 Built

- in Refrigeration Manufacturer Subgroup

............. 12

- 6

12.2.3.4 Manufacturing Capacity Impact

................................ ................... 12

- 6

12.2.3.5 Employment Impact

................................ ................................ ...... 12

- 6

12.2.3.6 Cumulative Regulatory Burden

................................ .................... 12

- 7

12.3 MANUFACTURER IMPACT ANALYSIS KEY ISSUES

.............................. 12

- 7

12.3.1 Potential for Significant Changes to Manufacturing Facilities

................... 12

- 7

12.3.2 VIPs

................................ ................................ ................................ ........ 12

- 8

12.3.3 Impact on U.S. Production and Jobs

................................ ........................... 12

- 8

12.3.4 Impacts to Product Utility

................................ ................................ ........... 12

- 8

12.3.5 Technical Difficulty to Achieve New Standards

................................ ........ 12

- 9

12.3.6 Changes in Consumer Behavior

................................ ................................ . 12

- 9

12.3.7 Separate Product Classes for Built

- In Products

................................ ........ 12

- 10

12.3.8 Test Procedure Concerns

................................ ................................ .......... 12

- 10

12.4 GRIM INPUTS AND ASSU MPTIONS

................................ .......................... 12

- 10

12.4.1 Overview of the GRIM

................................ ................................ ............. 12

- 11

12.4.2 Sources for GRIM Inputs

................................ ................................ .......... 12

- 11

12.4.2.1 Corporate Annual Reports

................................ .......................... 12

- 11

12.4.2.2 Standard and Poor Credit Ratings

................................ ............... 12

- 12

12.4.2.3 Shipment Model

................................ ................................ .......... 12

- 12

12.4.2.4 Engineering Analysis

................................ ................................ .. 12

- 12

12.4.2.5 Manufacturer Interviews

................................ ............................. 12

- 13

12.4.3 Financial Paramete rs

................................ ................................ ................. 12

- 13

12.4.4 Corporate Discount Rate

................................ ................................ ........... 12

- 15

12.4.5 Trial Standard L evels

................................ ................................ ................ 12

- 17

12.4.6 NIA Shipment Forecast

................................ ................................ ............ 12

- 21

12.4.6.1 Shipments Fore cast

................................ ................................ ..... 12

- 22

12.4.6.2 Default Standards

- Case NIA Scenario

................................ ....... 12

- 27

12.4.7 Production Costs

................................ ................................ ....................... 12

- 28

12.4.8 Conversion Costs

................................ ................................ ...................... 12

- 32

12.4.8.1 Capita l Conversion Costs

................................ ........................... 12

- 33

12.4.8.2 Product Conversion Costs

................................ ........................... 12

- 44

12. 4.9 Markup Scenarios

................................ ................................ ..................... 12

- 5512

- ii 12.4.9.1 Flat Markup Scenario

................................ ................................ . 12

- 55

12.4. 9.2 Preservation of Operating Profit Scenario

................................ .. 12

- 56

12.4.10 Federal Production Tax Credits

................................ .................... 12

- 63

12.5 INDUSTRY FINANCIAL I MPACTS

................................ ............................ 12

- 63

12.5.1 Introduction

................................ ................................ ............................... 12

- 63

12.5.2 Industry Financial Impacts

................................ ................................ ....... 12

- 65

12.6 IMPACTS ON SMALL RES IDENTIAL REFRIGERATI ON

MANUFACTURERS

................................ ................................ ...................... 12

- 71

12.7 OTHER IMPACTS

................................ ................................ .......................... 12

- 72

12.7.1 Employment

................................ ................................ .............................. 12

- 72

12.7.1.1 Methodology

................................ ................................ ............... 12

- 72

12.7.1.2 Standard

- Size Refrigerator

- Freezers Employment Impacts

....... 12

- 74

12.7.1.3 Standard

- Size Freezers Employment Impacts

............................ 12

- 76

12.7.1.4 Compact Refrigeration Products Employment Impacts

............. 12

- 78

12.7.1.5 Built

- In Refrigeration Products Employment Impacts

............... 12

- 79

12.7.2 Production Capacity

................................ ................................ .................. 12

- 81

12.7.3 Cumulative Regulatory Burden

................................ ................................ 12

- 81

12.7.3.1 DOE Regulations for Other Products P roduced by Residential Refrigeration Manufacturers

................................ ......................... 12

- 82

12.7.3.2 Other Federal Regulations

................................ .......................... 12

- 85

Unites States Clean Air Act

................................ ..................... 12

- 85 Potential Climate Change and Greenhouse Gas Legislation

... 12

- 86

12.7.3.3 Other Regulations That Could Impact Residential Refrigeration

Manufacturers

................................ ................................ ............... 12

- 86 State Energy Conservation Standards

................................ ...... 12

- 86 International Energy Conservation Standards

......................... 12

- 87

12.8 CONCLUSION

................................ ................................ ................................ 12

- 87

12.8.1 Standard

- Size Refrigerator

- Freezers

................................ ........................ 1 2

- 88

12.8.2 Standard

- Size Freezers

................................ ................................ ............. 12

- 92

12.8.3 Compact Refrigeration Produc ts

................................ ............................... 12

- 95

12.8.4 Built

- In Refrigeration Products

................................ ................................ 12

- 99

LIST OF TABLES

Table 12.2.1 SBA and NAICS Classification of Small Businesses Potentially Affected by This Rulemaking

................................ ................................ ................................ ............ 12

- 5

Table 12.4.1 GRIM Financial Parameters Based on 1999

– 2006 Weighted Company

Financial Data

................................ ................................ ................................ .............. 12

- 14 Table 12.4.2 GRIM Freestanding Residential Refrigeration Industry Financial Parameters

................................ ................................ ................................ ................................ ...... 12

- 14

Table 12.4.3 GRIM Built

- In Refrigeration Industry Financial Parameters

................. 12

- 15 Table 12.4.4 Cost of Equity Calculation

................................ ................................ ...... 12

- 16

Table 12.4.5 Cost of Debt Calculation

................................ ................................ ......... 12

- 17

Table 12.4.6 Trial Standard Levels for Standard

- Size Refrigerator

- Freezers

............. 12

- 18

Table 12.4.7 Trial Standard Levels for Standard

- Size Freezers

................................ .. 12

- 1912

- iii Table 12.4.8 Trial Standard Levels for Compact Refrigeration Products

................... 12

- 20

Table 12.4.9 Trial Stand ard Levels for Built

- in Refrigeration Products

..................... 12

- 21 Table 12.4.10 Total Base Case NIA Shipments Forecast in 2014 in the Main NIA Shipment Scenario

................................ ................................ ................................ ....... 12

- 22

Table 12.4.11 Standard

- Size Refrigerator

- Freezers: Base

- Case Efficiency Distributions

................................ ................................ ................................ ................................ ...... 12

- 23 Table 12.4.12 Top

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level

................................ ................................ ................................ ........... 12

- 23

Table 12.4.13 Bottom

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level

................................ ................................ ................................ ........... 12

- 24

Table 12.4.14 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level

................................ ................................ ................................ ........... 12

- 24

Table 12.4.15 Standard

- Size Freezers: Base

- Case Efficiency Distributions

............... 12

- 25 Table 12.4.16 Upright Freezers: Efficiency Distributions in 2014 by Efficiency Level

. 12

- 25

Table 12.4.1 7 Chest Freezers: Efficiency Distributions in 2014 by Efficiency Level 12

- 26 Table 12.4.18 Compact Refrigeration Products: Base

- Cas e Efficiency Distributions 12

- 26 Table 12.4.19 Compact Refrigerators: Efficiency Distributions in 2014 by Efficiency

Level

................................ ................................ ................................ ............................ 12

- 27 Table 12.4.20 Compact Freezers: Efficiency Distributions in 2014 by Efficiency Level 12

- 27 Table 12.4.21 MPC Breakdown for Refrigerator

- Freezers for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer without Through

- the

- Door Ice Service)

............. 12

- 29 Table 12.4.22 MPC Breakdown for Refrigerator

- Freezers for Product Class 5 (Automatic

Defrost with Bottom

- Mounted Freezer without T hrough

- the

- Door Ice Service)

........ 12

- 29 Table 12.4.23 MPC Breakdown for Refrigerator

- Freezers for Product Class 7 (Automatic

Defrost wit h Side

- Mounted Freezer with Through

- the

- Door Ice Service)

.................. 12

- 30 Table 12.4.24 MPC Breakdown for Product Class 9 (Upright Freezers wi th Automatic Defrost)

................................ ................................ ................................ ........................ 12

- 30 Table 12.4.25 MPC Breakdown for Product Class 10 (Chest Freezers and All Other Freezers Except Compact F reezers)

................................ ................................ ............. 12

- 30 Table 12.4.26 MPC Breakdown for Product Class 11 (Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost)

................................ ............................... 12

- 31 Table 12.4.27 MPC Breakdown for Product Class 18 (Compact Chest Freezers)

...... 12

- 31

Table 12.4.28 MPC Breakdown for Product Class 3A

- BI (Built

- In All

- Refrigerators

Automatic Defrost)

................................ ................................ ................................ ...... 12

- 31

Table 12.4.29 MPC Breakdown for Product Class 5

- BI (Built

- In Refrigerator

- Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without an Automatic Icemaker)

. 12

- 32

Table 12.4.30 MPC Breakdown for Product Class 7

- BI (Built

- In Refrigerator

- Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door Ice Service) 12

- 32

Table 12.4.31 MPC Breakdown for Product Class 9

- BI (Built

- In Upright Freezers with Automatic Defrost Without an Automatic Icemaker)

................................ .................. 12

- 32 Table 12.4.32 Capital Conversion Costs for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer Without Through

- the

- Door Ice Service) by TSL

.................... 12

- 35 Table 12.4.33 Capital Conversion Costs for Product Class 5 (Automatic Defrost with

Bottom

- Mounted Freezer without Through

- the

- Door Ice Service) by TSL

................ 12

- 3612

- iv Table 12.4.34 Capital Conversion Costs for Product Class 7 (Automatic Defrost with

Side

- Mounted Freezer with Through

- the

- Door Ice Service) by TSL

.......................... 12

- 37 Table 12.4.35 Capital Conversion Costs for Product Class 9 (Upright Freezers with Automatic Defrost) by TSL

................................ ................................ ......................... 12

- 38 Table 12.4.36 Capital Conversion Costs for Product Class 10 (Chest Freezers and All

Other Freezers E xcept Compact Freezers) by TSL

................................ ..................... 12

- 39 Table 12.4.37 Capital Conversion Costs for Product Class 11 (Compact Refrigerators and Refrige rator

- Freezers with Manual Defrost) by TSL

................................ .................. 12

- 40 Table 12.4.38 Capital Conversion Costs for Product Class 18 (Compact Chest Freezer s) by TSL

................................ ................................ ................................ ......................... 12

- 41 Table 12.4.39 Capital Conversion Costs for Product Class 3A

- BI (Built

- In All

Refrigerators

- Automatic Defrost) by TSL

................................ ................................ ... 12

- 42 Table 12.4.40 Capital Conversion Costs for Product Class 5

- BI (Built

- In Refrigerator

Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without an Automatic Icemaker) by TSL

................................ ................................ ................................ ........ 12

- 43 Table 12.4.41 Capital Conversion Costs for Product Class 8

- BI (B uilt

- In Refrigerator

Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door Ice Service) by TSL

................................ ................................ ................................ ........... 12

- 43

Table 12.4 .42 Capital Conversion Costs for Product Class 9

- BI (Built

- In Upright Freezers with Automatic Defrost Without an Automatic Icemaker)

........................... 12

- 44 Table 12.4.43 Product Conversion Costs for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer Without Through

- the

- Door Ice Service) by TSL

.................... 12

- 46 Table 12.4.44 Product Conversion Costs for Product Class 5 (Automatic Defrost with

Bottom

- Mounted Freezer without Through

- the

- Door Ice Service) by TSL

................ 12

- 47 Table 12.4.45 Product Conversion Costs for Product Class 7 (Automatic Defrost with

Side

- Mounted Freezer with Through

- the

- Door Ice Service) by TSL

.......................... 12

- 48 Table 12.4.46 Product Conversion Costs for Product Class 9 (Upright Freezers with Automatic Defrost) by TSL

................................ ................................ ......................... 12

- 49 Table 12.4.47 Product Conversion Costs for Product Class 10 (Chest Freezers and All Other Freezers Except Compact Freezers) by TSL

................................ ..................... 12

- 50 Table 12.4.48 Product Conversion Costs for Product Class 11 (Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost) by TSL

................................ ............ 12

- 51 Table 12.4.49 Product Conversion Costs for Product Class 18 (Compact Chest Freezers) by TSL

................................ ................................ ................................ ......................... 12

- 52

Table 12.4.50 Product Conversion Costs for Product Class 3A

- BI (Built

- In All

Refrigerators

- Automatic Defrost) by TSL

................................ ................................ ... 12

- 53

Table 12.4.51 Product Conversion Costs for Product Class 5

- BI (Built

- In Refrigerator

Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without an Automatic Icemaker) by TSL

................................ ................................ ................................ ........ 12

- 54

Table 12.4.52 Product Conversion Costs for Product Class 7

- BI (Built

- In Refrigerator

Freezers

— Automatic Defr ost with Side

- mounted Freezer with Through

- the

- Door Ice Service) by TSL

................................ ................................ ................................ ........... 12

- 54

Table 12.4.53 Product Conversion Costs for Product Cla ss 9

- BI (Built

- In Upright Freezers with Automatic Defrost Without an Automatic Icemaker) by TSL

.............. 12

- 55

Table 12.4.54 Preservation of Operating Profit Markups for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer Without Through

- the

- Door Ice Service)

............ 12

- 5712

- v Table 12.4.55 Preservation of Operating Profit Markups for Product Class 5 (Automatic

Defrost with Bottom

- Mounted Freezer without Through

- the

- Door Ice Service)

........ 12

- 57 Table 12.4.56 Preservation of Operating Profit Markups for Product Class 7 (Automatic

Defrost with Side

- Mounted Freezer with Through

- the

- Door Ice Service)

.................. 12

- 58 Table 12.4.57 Preservation of Operating Profit Markups for Product Class 9 (Upright Freezers with Automatic Defrost)

................................ ................................ ................ 12

- 58 Table 12.4.58 Preservation of Operating Profit Markups for Product Class 10 (Chest Freezers and All Other Freezers Except Compact Freezers)

................................ ....... 12

- 59 Table 12.4.59 Preservation of Operating Profit Markups for Product Class 11 (Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost)

................................ ... 12

- 60 Table 12.4.60 Preservation of Operating Profit Markups for Product Class 18 (Compact Chest Freezers)

................................ ................................ ................................ ............. 12

- 61 Table 12.4.61 Preservation of Operating Profit Markups for Product Class 3A

- BI (Built

In All

- Refrigerators

- Automatic Defrost)

................................ ................................ ..... 12

- 61 Table 12.4.62 Preservation of Operating Profit Markups for Product Class 5

- BI (Built

- In Refrigerator

- Freezers

— Automatic Defrost with Bottom

- Mounted Freezer with out an Automatic Icemaker)

................................ ................................ ................................ ... 12

- 62 Table 12.4.63 Preservation of Operating Profit Markups for Product Class 7

- BI (Built

- In Refrigerat or

- Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

Door Ice Service)

................................ ................................ ................................ ......... 12

- 62 Table 12.4.64 Preservation of Oper ating Profit Markups for Product Class 9

- BI (Built

- In Upright Freezers with Automatic Defrost Without an Automatic Icemaker)

.............. 12

- 63 Table 12.5.1 Changes in Industry Net Present Value for Standard

- Size Refrigerator

Freezers (Flat Markup Scenario)

................................ ................................ ................. 12

- 65 Table 12.5.2 Changes in Industry Net Present Value for Standard

- Size Refrigerator

Freezers (Preservation of Operating Profit Markup Scenario)

................................ .... 12

- 65 Table 12.5.3 Changes in Industry Net Present Value for Standard

- Size Freezers (Flat Markup Scenario)

................................ ................................ ................................ ......... 12

- 67 Table 12.5.4 Changes in Industry Net Present Value for Standard

- Size Freezers (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 67 Table 12.5.5 Changes in Industry Net Present Value for Compact Refrigeration Products (Flat Markup Scenario)

................................ ................................ ................................ 12

- 68 Table 12.5.6 Changes in Industry Net Present Value for Compact Refrigeration Products (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 68 Table 12.5.7 Changes in Industry Net Present Value for Built

- In Refrigeration Products (Flat Markup Scenario)

................................ ................................ ................................ 12

- 70 Table 12.5.8 Changes in Industry Net Present Value for Built

- In Refrigeration Products (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 70 Table 12.7.1 Potential Changes in the Total Number of Domestic Standard

- Size Refrigerator

- Freezers Production Workers in 2014

................................ ..................... 12

- 75 Table 12.7.2 Potential Changes in the Total Number of Domestic Standard

- Size Freezers

Production Workers in 2014

................................ ................................ ........................ 12

- 77 Table 12.7.3 Potential Changes in the Total Number of Domestic Compact Refrigeration

Products Production Workers in 2014

................................ ................................ ......... 12

- 78 Table 12.7.4 Potential Changes in the Total Number of Domestic Built

- In Refrigeration

Products Production Workers in 2014

................................ ................................ ......... 12

- 8012

- vi Table 12.7.5 Other DOE and Federal Actions Affecting the Residential Refrigeration Industry

................................ ................................ ................................ ........................ 12

- 83 Table 12.7.6 DOE Regulations on Products For Which Residential Refrigeration Manufacturers Hold Significant Market Share

................................ ............................ 12

- 85

LIST OF FIGURES

Figure 12.4.1 Using the GRIM to Calculate Cash Flow

................................ .............. 12

- 11 Figure 12.5.1 Annual Industry Net Cash Flows for Standard

- Size Refrigerator

- Freezers (Flat Markup Scenario)

................................ ................................ ................................ 12

- 66 Figure 12.5.2 Annual Industry Net Cash Flows for Standard

- Size Refrigerator

- Freezers (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 66 Figure 12.5.3 Annual Industry Net Cash Flows for Standard

- Size Freezers (Flat Markup Scenario)

................................ ................................ ................................ ...................... 12

- 67 Figure 12.5.4 Annual Industry Net Cash Flows for Standard

- Size Freezers (Preservation of Operating Profit Markup Scenario)

................................ ................................ ......... 12

- 68 Figure 12.5.5 Annual Industry Net Cash Flows for Compact Refrigeration Products (Flat Markup Scenario)

................................ ................................ ................................ ......... 12

- 69 Figure 12.5.6 Annual Industry Net Cash Flows for Compact Refrigeration Products (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 69 Figure 12.5.7 Annual Industry Net Cash Flows for Built

- In Refrigeration Products (Flat Markup Scenario)

................................ ................................ ................................ ......... 12

- 70 Figure 12.5.8 Annual Industry Net Cash Flows for Built

- In Refrigeration Products (Preservation of Operating Profit Markup Scenario)

................................ ................... 12

- 71 Figure 12.7.1 Total Standard

- Size Refrigerator

- Freezers Industry Domestic Employment by Year

................................ ................................ ................................ ......................... 12

- 75 Figure 12.7.2 Total Standard

- Size Freezers Industry Domestic Employment by Year

... 12

- 77 Figure 12.7.3 Total Compact Refrigeration Products Industry Domestic Employment by

Year

................................ ................................ ................................ .............................. 12

- 79 Figure 12.7.4 Total Built

- In Refrigeration Products Industry Domestic Employment by

Year

................................ ................................ ................................ .............................. 12

- 8012

- 1 CHAPTER 12. MANUFACTURER IMPACT ANALYSIS

12.1 INTRODUCTION

In determining whether a standard is economically justified, the U.S. Department of Energy (DOE) is required to consider “the economic impact of the standard on the manufacturers and on the consumers of the products subject to such a standard.” (42

U.S.C. 63 13(a)(6)(B)(i)) The law also calls for an assessment of the impact of any lessening of competition as determined in writing by the Attorney General. Id . DOE conducted a manufacturer impact analysis (MIA) to estimate the financial impact of

amended energy c onservation standards on manufacturers of residential refrigerators, freezers, and refrigerator

- freezers , and assessed the impact of such standards on direct employment and manufacturing capacity.

The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (GRIM), an industry cash

- flow model adapted for each product in this rulemaking. The GRIM inputs include information on industry cost structure, shipments, and pricing strategies. The GRIM’s key output is the industry net present value (INPV). The model estimates the financial impact of more stringent energy conservation standards for each product by comparing changes in INPV between a base case and the various trial st andard levels (TSLs) in the standards case . The qualitative part of the MIA addresses product characteristics, manufacturer characteristics , market and product trends, as well as the impact of standards on subgroups of manufacturers.

12.2 METHODOLOGY

DOE condu cted the MIA in three phases. Phase I, “Industry Profile,” consisted of preparing an industry characterization for the residential refrigerators, freezers, and refrigerator

- freezers industr y , including data on market share, sales volumes and trends, pricin g, employment, and financial structure. In Phase II, “Industry Cash Flow,” DOE used the GRIM to assess the impacts of amended energy conservation standards on four major product types for this rulemaking:

1) Standard

- Size Refrigerator

- Freezers 2) Standard

- Size F reezers 3) Compact Refrigeration Products 4) Built

- in Refrigeration Products

In Phase II, DOE created a GRIM for residential refrigeration products and an interview guide to gather information on the potential impacts on manufacturers. DOE presented the MIA results for standard

- size refrigerator

- freezers, standard

- size freezers,

compact refrigeration products , and built

- in refrigeration products separately. Each of the four groups of product classes and results is based on a unique set of considered TSLs.

These TSLs are described in Section 12.4.5 below

.12

- 2 In Phase III, “ Subgroup Impact Analysis,” DOE interviewed manufacturers representing more than 9 5 percent of standard

- size refrigerator

- freezer sales, approximately 95 percent of standard

- size freezer sales, about 75 percent of compact refrigeration product sales , and mo re than 95 percent of built

- in refrigeration products

sales . Interviewees included large and small manufacturers with various market shares

and market focus , providing a representative cross

- section of the industries. During interviews, DOE discussed finan cial topics specific to each manufacturer and obtained each manufacturer’s view of the industry. The interviews provided DOE with valuable information for evaluating the impacts of amended energy conservation standards on manufacturer cash flows, investmen t requirements, and employment.

DOE groups the MIA results by product classes that are made by the same

manufacturers. As stated above, DOE presents separate results for standard

- size refrigerator

- freeze rs, standard

- size freezers, compact refrigeration products , and built

- in refrigeration products

.

12.2.1 Phase I: Industry Profile

In Phase I of the MIA, DOE prepared a profile of the residential refrigeration industry that built upon the market and technology assessment prep ared for this rulemaking. (See c hapter 3 of this Technical Support Document (TSD).) Before initiating the detailed impact studies, DOE collected information on the present and past structure and market characteristics of each industry. This information included market share data, product shipm ents, manufacturer markups, and the cost structure for various manufacturers. The industry profile includes: (1) further detail on the overall market and product characteristics; (2) estimated manufacturer market shares; (3) financial parameters such as ne t plant, property, and equipment; selling, general and administrative (SG&A) expenses; cost of goods sold, etc.; and (4) trends in the number of firms, market, and product characteristics. The industry profile included a top

- down cost analysis of

residenti al refrigeration manufacturers that DOE used to derive preliminary financial inputs for the GRIM ( e.g., revenues, depreciation, SG&A, and research and development (R&D) expenses).

DOE also used public information to further calibrate its initial character ization of

the residential refrigeration industr y , including Securities and Exchange Commission (SEC) 10

– K reports

, 1 Standard & Poor’s (S&P) stock reports

, 2 corporate annual reports,

and the U.S. Census Bureau’s 200 7 Annual Survey of Manufacturers (200 7 AS M)

. 3 DOE also characterized these industries using information from its engineering analysis and

the life

- cycle cost analysis.12

- 3 12.2.2 Phase II: Industry Cash

- Flow Analysis and Interview Guide

Phase II focused on the financial impacts of potential amended energy

c onservation standards on manufacturers of standard

- size refrigerator

- freeze rs, standard

size freezers, compact refrigeration products , and built

- in refrigeration products

. More stringent energy conservation standards can affect manufacturer cash flow s in three distinct ways: (1) c reate a need for increased investment, (2) raise production costs per unit, and (3) alter revenue due to higher per

- unit prices and /or possible changes in sales

volumes. To quantify these impacts, DOE used the GRIM to perform a cash

- flow analysis for residential refrigerators, freezers, and refrig erator

- freezers. In performing these analyses, DOE used the financial values derived during Phase I and the shipment

scenarios used in the NIA. In Phase II, DOE performed these prelimi nary industry cash

flow analyses and prepared written guides for manufacturer interviews.

12.2.2.1 Industry Cash

- Flow Analysis

The GRIM uses several factors to determine a series of annual cash flows from the announcement year of amended energy conservation standar ds until several years

after the standards’ compliance date. These factors include annual expected revenues, costs of sales, SG&A, taxes, and capital expenditures related to the amended standards. Inputs to the GRIM include manufacturing production costs

, selling prices

, and shipments forecasts developed in other analyses. DOE derived the manufacturing costs from the engineering analysis and information provided by the industry and estimated typical manufacturer markups from public financial reports and int erviews with manufacturers. DOE developed alternative markup scenarios for each GRIM based on discussions with manufacturers. DOE’s shipments a nalysis, presented in c hapter 9 of this TSD, provided the basis for the shipment projections in the GRIM. The fin ancial parameters were developed using publicly available manufacturer data and were revised with information submitted confidentially during manufacturer interviews. The GRIM results are compared to base case projections for the industry. The financial im pact of amended energy conservation standards is the difference between the discounted annual

cash flows in the base case and standards case at each TSL

.

12.2.2.2 Interview Guides

During Phase III of the MIA, DOE interviewed manufacturers to gather

information on the effects of amended energy conservation on revenues and finances, direct employment, capital assets, and industry competitiveness. Before the interviews, DOE distributed an interview guide for the residential refrigeration industry . The interview guide provided a starting point to identify relevant issues and help identify the impacts of amended energy conservation standards on individual manufacturers or subgroups of manufacturers. Most of the information DOE received from these meetings is protected by non

- disclosure agreements and resides with DOE’s contractors. Before each telephone interview or site visit, DOE provided company representatives with an interview guide that included the topics for which DOE sought input. The MIA interview topics include d (1) key issues to this rulemaking; (2) a company overview and organizational characteristics; (3) engineering and life cycle cost analysis follow

- up; (4 )12

- 4 manufactur er markups and profitability; (5 ) shipment projections and market shares; (6 )

financial pa rameters; (7) conversion costs; (8 ) cumulative regulatory burden; (9) impacts of potential HFC regulations; (10) direct employment impact assessment; (11) exports, foreign competition, and outsourcing; (12) consolidation; and (13) impacts on small

business . The interview guides are presented in appendix 1 2

- A

.

12.2.3 Phase III: Subgroup Analysis

For its analysis, DOE presented the impacts on standard

- size refrigerator

- freeze rs, standard

- size freezers, c ompact refrigeration products, and built

- in refrigeration products separately. While conducting the MIA, DOE interviewed a representative cross

- section of residential refrigeration manufacturers. The MIA interviews broadened the discussion to

include busin ess

- related topics. DOE sought to obtain feedback from industry on the approaches used in the GRIMs and to isolate key issues and concerns. During interviews, DOE defined two manufacturer subgroups (small businesses and built

- in refrigeration

manufacturers ) that could be disproportionately impacted by amended energy conservation standards. These subgroups are described in detail below.

12.2.3.1 Manufacturing Interviews

The information gathered in Phase I and the cash

- flow analysis performed in Phase II are suppleme nted with information gathered from manufacturer interviews in Phase III. The interview process provides an opportunity for interested parties to express their views on important issues privately, allowing confidential or sensitive information

to be consid ered in the rulemaking process.

DOE used these interviews to tailor the GRIM to reflect unique financial characteristics of each product group. Within each manufacturer group, DOE contacted companies from its database of manufacturers. Small and large comp anies, subsidiaries and independent firms, and public and private corporations were interviewed to provide a representation of the industry. Interviews were scheduled well in advance to provide every opportunity for key individuals to be available for comm ent. Although a written response to the questionnaire was acceptable, DOE sought interactive interviews, which help clarify responses and identify additional issues. The resulting information provides valuable inputs to the GRIM developed for the product c lasses.

12.2.3.2 Revised Industry Cash

- Flow Analysis

In Phase II of the MIA, DOE provided manufacturers with preliminary GRIM input financial figures for review and evaluation. During the interviews, DOE requested comments on the values it selected for the paramete rs. DOE revised its industry cash

flow models based on this feedback. Section 12.4.3 provides more information on how DOE calculated the parameters.

12.2.3.3 Manufacturer Subgroup Analysis

Using average cost assumptions to develop an industry

- cash

- flow estimate may not adequately assess differential impacts of amended energy conservation standards12

- 5 among manufacturer subgroups. For example, small m anufacturers, niche players, or manufacturers exhibiting a cost structure that largely differs from the industry average could be more negatively affected. To address this possible impact, DOE used the results of the industry characterization analysis in P hase I to group manufacturers that exhibit similar characteristics. During the manufacturer interviews, DOE discussed fina ncial topics specific to each manufacturer and obtained each manufacturer’s view of the industry as a whole. As described in section 12.2.3 , DOE presents the industry impacts by major product groupings. DOE presents the industry impacts by the major product types ( standard

- size refrigerator

- freezers, standard

- size freezers, compact refrigeration products, and built

- in refrigeration products). These product groupings represent markets that are served by the same manufacturers. By segmenting the results into these product types, D OE is able to discuss how these subgroups of manufacturers will be impacted by amended energy conservation standards. Grouping these product categories reduced the need for a subgroup analysis to the consideration of built

- in refrigeration product

manufact urers because the impacts of each group are characterized by the MIA separately. DOE identified one small business manufacturer but did not analyze a separate subgroup of small business manufacturers for the reasons discussed below.

12.2.3.3.1 Small

- Business Manufact urer Subgroup

DOE investigated whether small business manufacturers should be analyzed as a manufacturer subgroup. DOE used the Small Business Administration (SBA) small business size standards published on August 22, 2008, as amended, and the North

Americ an Industry Classification System (NAICS) code, presented in Table 12.2.1 , to determine whether any small entities would be affected by the rulemakin g. a

Table 12.2

. 1 SBA and NAICS Classification of Small Businesses Potentially Affected by This Rulemaking For the product classes under review, the SBA bases its small business definition on the total number of employees for a business, its subsidiaries, and its parent companies. An aggregated business entity with fewer employees than the listed limit is c onsidered a

small business.

Industry Description Revenue Limit Employee Limit NAICS Household Refrigerator and Home Freezer Manufacturing N/A 1,000 335222

DOE used the Association of Home Appliance Manufacturers 4 member directory to identify manufacturers of residential refrigeration products. DOE also reviewed public

certification databases such as the Federal Trade Commission 5 database. DOE asked interested parties and industry representatives if they were aware of other small business manufacturers. Then, DOE consulted publicly available data, product databases like

ENERGY STAR 6 and the California Energy Commission (CEC) 7

a The size standards are available on the SBA’s website at www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. , and manufacturers to

determine which manufacturers meet SBA’s definition of a small busine ss.12

- 6 During its research, DOE identified only one company which manufactures products covered by this rulemaking and qualifies as small business per the applicable SBA definition. DOE contacted the small business to solicit feedback on the potential impact s of energy conservation standards. In addition to posing the standard MIA interview questions, DOE solicited data from other manufacturers on differential impacts

this company and other small compan ies might experience from amended energy

conservation sta ndards. Because only one manufacturer qualified as a small business, DOE did not analyze a separate subgroup of small business manufacturer for this NOPR.

12.2.3.3.2 Built

- in Refrigeration Manufacturer Subgroup

B uilt

- in refrigeration product manufacturers are a secon d potential subgroup

. However, because DOE is establishing separate product classes for built

- in products, DOE is already presenting separate results and impacts for this potential manufacturer subgroup. The impacts on the manufacturers of these niche prod ucts are therefore already characterized in the broader MIA and do not require an explicit subgroup analysis.

12.2.3.4 Manufacturing Capacity Impact

One significant outcome of amended energy conservation standards could be the obsolescence of existing manufacturing assets, including tooling and investment. The manufacturer interview guides have a series of questions to help identify impacts of amended standards on manufacturing capacity, specifically capacity utilization and plant

location decisions in the United St ates and North America, with and without amended standards; the ability of manufacturers to upgrade or remodel existing facilities to accommodate the new requirements; the nature and value of any stranded assets; and estimates for any one

- time changes to e xisting plant, property, and equipment (PPE).

DOE’s estimates of the one

- time capital changes and stranded assets affect the cash flow

estimates in the GRIM. These estimates can be found in section 12.4.8 ; DOE’s discussion of the capacity impact can be found in section 12.7.2

.

12.2.3.5 Employment Impact

The impact of amended energy conservation standards on employment is an important consideration in the rulemaking process. To assess how domestic direct employment patterns might be affected, the interviews explored current employment

trends in the residential refrigeration industry . The interviews also solicited manufacturer views on changes in employment patterns that may result from more stringent stand ards. The employment impacts section of the interview guide focused on current employment levels associated with manufacturers at each production facility, expected future employment levels with and without amended energy conservation standards, and

differ ences in workforce skills and issues related to the retraining of employees. The employment impacts are reported in section 12.7.1

.12

- 7 12.2.3.6 Cumulative Regu latory Burden

DOE seeks to mitigate the overlapping effects on manufacturers due to amended energy conservation standards and other regulatory actions affecting the same products. DOE analyzed the impact on manufacturers of multiple, product

- specific regul atory actions. Based on its own research and discussions with manufacturers, DOE identified regulations relevant to residential refrigeration manufacturers, such as State regulations

and other Federal regulations that impact other products made by the same

manufacturers . Discussion of the cumulative regulatory burden can be found in section

12.7.3

.

12.3 MANUFACTURER IMPACT ANALYSIS KEY ISSUES

Each MIA in terview starts by asking: “What are the key issues for your company regarding the energy conservation standard rulemaking?” This question prompts manufacturers to identify the issues they feel DOE should explore and discuss further during the interview. Th e following sections describe the most significant issues identified by manufacturers . These summaries are provided in aggregate to protect manufacturer confidentiality.

12.3.1 Potential for Significant Changes to Manufacturing Facilities

A number of manufacture rs indicated that conversion costs would be exponentially greater if the adopted standards require significant rather than incremental

increases in efficiency. While DOE does not analyze design options that would lower consumer utility, manufacturers indic ated that for some product classes they would consider wall thickness increases if they resulted in lower per unit costs. However,

manufacturers also indicated that wall thickness increases in response to more stringent energy standards would be extremely capital intensive

. Changing the wall thickness would require extensive investments to completely replace injection molding equipment, interior fabrication feeder lines and equipment, and foaming fixtures on every production line. Such substantial changes w ould require many times the investment of incremental efficiency improvements. By comparison, the design and implementation of a new heat exchanger design would only possible require new fabrication tooling for the component and slight adjustments to produ ction line tooling but would leave most of the existing production equipment intact. Smaller manufacturers were generally concerned that

conversion costs would disproportionately impact their operations since comparable product and capital conversion costs would be spread over a smaller shipment volume

.

Additionally, several manufacturers stated that new standards could increase the total steady state invested capital necessary to maintain current production levels. As an example, many plan ts leverage economies of scope by utilizing a shared front end of production (cabinet and door bending, for example) to serve multiple product lines. These economies would be forfeited if amended standards disproportionately affected one product class util izing the shared front end. As such, manufacturing plants could have relatively lower capital intensity following standards.12

- 8 12.3.2 VIPs

Manufacturers were also concerned about potential issues with a standard that effectively required the widespread adoption of VIPs. In particular, the material costs of VIPs would add significant costs to the products, especially at the retail level. Manufacturers were concerned that using this design option in product classes that historically have been low

- cost options could h ave unintended consequences such as inducing consumers to prolong the life of the products or switch to less profitable products. Manufacturers were also concerned about the additional labor that is required to

install VIPs. Additional production steps wou ld be required with VIPs, which require greater care in handling to prevent damaging the components. While less of a concern on lower volume products, the additional production steps on high

- speed production lines would add tremendous complexity. The addit ional production steps and slower line rates would lengthen the production lines and require additional equipment.

Manufacturers were also concerned about the ability of VIP suppliers to ramp up production to meet necessary demand from more stringent stan dards . Finally, manufacturers indicated that their experience with VIPs has shown a range of efficiency improvements lower than the theoretical benefit of VIPs. They are also concerned about the degradation of the panels over the lifetime of their products . Because of the range of efficiency improvements in practice, some manufacturers indicated they could elect to employ other design pathways that would eliminate these potential problems with the technology.

12.3.3 Impact on U.S. Production and Jobs

Manufacturer s generally agreed that standards that required substantial capital

conversion costs would lower U.S. production and employment. Depending on the level of these expenditures, some manufacturers stated that new investments would not be made in the U.S., giv en the lower labor costs overseas . Margins are already thin for certain product classes, and manufacturers believed that higher standards could further

reduce profitability. The lower labor costs could offset some of the impact on profitability, especially for their lower margin product lines. Some manufacturers stated they could also choose to source or drop altogether certain product lines they currently

manufacture if they d id not believe they could recoup the capital investments required to

meet amended energy conservation standards on those lines

. Any decision to drop or source more product lines would also lead to less domestic production and jobs.

12.3.4 Impact s to Product Utility

Several manufacturers expressed concern that more stringent energy standards could impact the utility of their products. Most residential kitchens have standardized size openings for refrigerators, which would force any wall thickness growth inward and lower internal volume. While this was not analyzed as a design option for all p roducts, manufacturers indicated some in the industry could elect to use thicker walls to meet new standards for full size refrigerator

- freezers. Finally, several manufacturers indicated that other product features currently available may have to be remove d in order to both meet12

- 9 new standard levels and maintain product prices that would be acceptable to consumers. Examples of these features include ice and water dispensers, glass doors, soda can dispensers, crisper compartments, anti

- sweat features, and foo d preservation capabilities.

Manufacturers are also concerned that the energy savings from more stringent energy conservation standards would not be great enough to justify passing through the added costs to consumers. Currently, manufacturers bundle highe r efficiency with other desirable features to justify higher prices for those ENERGY STAR models. According to manufacturers, if amended standards cause prices to rise even higher, the lower operating costs do not justify higher prices, since the savings a s a percentage of the purchase price are very low. Therefore, the increased cost of meeting efficiency requirements may cause manufacturers to reduce the amount of other features bundled with these products in order to retain a reasonable price point, caus ing consumer utility to

decline.

The value of future ENERGY STAR levels is also a concern for manufacturers. Many retailers and other distribution channels require ENERGY STAR products. Since the features bundled with ENERGY STAR are the biggest justificat ion of the added costs, manufacturers were concerned that a higher ENERGY STAR level after standards would offer less value to consumers. Consumers would save less energy relative to the added efficiency costs or would have a product with fewer features.

M anufacturers also stated that the financial burden of developing products to meet amended energy conservation standards has an opportunity cost due to limited capital and R&D dollars. Investments incurred to meet amended standards reflect foregone

investme nts in innovation and the development of new features that consumers value and on which manufacturers earn a premium.

12.3.5 Technical Difficulty to Achieve New Standards

Many manufacturers expressed concerns about the technical difficulty to achieve

new standard s that are significantly more stringent than current levels. Supply of particular components , notably high efficiency compressors and VIPs, were a concern for all product classes, especially at higher efficiency levels that would increase the demand

for these components many times over current levels . They also stated that there are

fewer low

- cost technology improvements available than there were during past rulemakings. C ompact units, in general, pose a n additional challenge because there are

fewer low

- c apacity compressors with sufficiently high EER ratings . Specifically, compact freezers were cited as a product class in which it will be especially difficult to make significant energy improvements. The standards for compact freezers are already

more strin gent relative to capacity than are standards for compact refrigerators.

12.3.6 Changes in Consumer Behavior

Several manufacturers noted that higher prices to consumers resulting from amended energy conservation standards could result in product switching between lines

of standard

- size refrigerator

- freezers. Currently, top

- mount ed refrigerator

- freezers are12

- 10 inexpensive commodity products, on which manufacturers said they make little to no profit margin. Instead, manufacturers earn a profit on more expensive and mor e feature

loaded side

- mount ed and bottom

- mount ed refrigerator

- freezers. Manufacturers are concerned that if amended energy conservation standards cause retail prices to increase across product classes, many consumers will no longer be willing to pay the pr emium for

side

- mount ed and bottom

- mount ed refrigerator

- freezers and will switch to buying the less expensive and less profitable top

- mount ed refrigerator

- freezers.

Similarly, a number of manufacturers expressed concern that higher retail prices

could alter consumers’ decisions to repair or replace their standard

- size refrigerator

freezers. Many consumers who in the base case would buy a new refrigerator when their current unit fails would instead opt to repair their existing units in the standards case due to the higher cost of purchasing a new unit. This decision would result in lower shipments for manufacturers and would leave less efficient units in the existing stock.

12.3.7 Separate Product Classes for Built

- In Products

Most manufacturers expressed their suppo rt for separate product classes for built

in refrigerators and freezers. Manufacturers stated that b uilt

- in units are inherently less

efficient than their free

- standing counterparts for several reasons, including more limited

air flow. Because of the limit ations, the incremental costs of improving efficiency are higher at every efficiency level. Built

- in manufacturers also believed that their

components costs per unit were higher than for conventional products due to less bulk purchasing power. Built

- in man ufacturers also argued that their products offer distinct utility, justifying the need for separate product classes for built

- ins. Without separate product classes for built

- ins, depending on the stringency of new standards, some or all

built

- in models cou ld be obsolesced

. B uilt

- in manufacturers also suggested that an average correction off of conventional products could be an appropriate means of accounting for the inherently lower efficiency of built

- in products

.

12.3.8 Test Procedure Concerns

Many manufacturers expressed concerns over the test procedures for refrigerators

and freezers. Several stated that icemaking energy use , which represents a large portion of unit energy consumption, should be included in the amended test procedure to reward

m ore efficient ic emakers. However, manufacturers acknowledged that testing icemaker

energy use is difficult . All manufacturers want to ensure that test s for icemaking energy are repeatable and implemented correctly. Manufacturers also do not want a test for icemaking energy use to result in the elimination of TTD unit s.

12.4 GRIM INPUTS AND ASSU MPTIONS

The GRIM serves as the main tool for assessing the impact s on industry due to amended energy conservation standards. DOE relies on several sources to obtain inputs

for the GRIM. Data and assumptions from these sources are then fed into an accounting

model that calculates the industry cash flow both with and without amended energy

conservation standards

.12

- 11 12.4.1 Overview of the GRIM

The basic structure of the GRIM, illustrated in Figure 12.4.1 , is an annual cash flow analysis that uses manufacturer prices, manufacturing costs, shipments, and industry financial information as inp uts, and accepts a set of regulatory conditions such as changes in costs, investments, and associated margins. The GRIM spreadsheet uses a number of inputs to arrive at a series of annual cash flows, beginning with the base year of the analysis, 2010, and continuing to 2043 . The model calculates the INPV by summing the

str eam of annual discounted cash flows during this period and adding a discounted

terminal value

. 8

Figure 12.4

. 1 Using the GRIM to Calculate Cash Flow

The GRIM projects cash flows using standard accounting principles and compares changes in INPV between the base case and the standard

- case scenario induced by amended energy conservation standards. The difference in INPV between the base case and the standard case(s) represents the estimated financial impact of the amended energy

conservation standard on manufacturers. Appendix 12

- B prov ides more technical details

and user information for the GRIM.

12.4.2 Sources for GRIM Inputs

The GRIM uses several different sources for data inputs in determining industry cash flow. These sources include corporate annual reports, company profiles, Census data, credit ratings, the shipments model, the engineering analysis, and the manufacturer

interviews.

12.4.2.1 Corporate Annual Reports

Corporate annual reports to the SEC (SEC 10

- Ks) provided many of the initial financial inputs to the GRIM. These reports exist for pub licly held companies and are freely available to the general public. DOE developed initial financial inputs to the GRIM by examining the annual SEC 10

- K reports filed by publicly

- traded manufacturers that

manufactur e residential refrigeration products and whose combined product range

includes standard

- size refrigerator

- freeze rs, standard

- size freezers, compact refrigeration12

- 12 products , and built

- in refrigeration products

. Since these companies do not provide detailed information about their individual product lines, DOE used the financial information for the entire companies as its initial estimates of the financial parameters in

the GRIM analys i s

. These primary figures wer e derived using the same information used to develop the financial parameters for commer cial clothes washers and cooking products, since no other publicly available SEC 10

- K reports for refrigeration product

manufactu r ers were available. These figures were later revised using feedback from interviews to be representative of manufacturing for each product grouping . D OE used corporate annual reports to derive the following initial inputs to the GRIM:

• Tax rate • Working capital

• SG&A

• R&D • Depreciation • Capital expenditures

• Net PPE

12.4.2.2 Standard and Poor Credit Ratings

S&P provides independent credit ratings, research, and financial information. DOE relied on S&P reports to determine the industry’s average cost of debt when calculating the cost of capital.

12.4.2.3 Shipment Model

The GRIM used shipment projections derived from DOE’s shipments model in the national impact analysis (NIA). The model relied on historical shipments data for

standard

- size refrigerator

- freezers, standard

- size freezers, and compact refrigeration products . Chapter 9 of the TSD describes the methodology and analytical m odel DOE used to forecast shipments.

12.4.2.4 Engineering Analysis

The engineering analysis establishes the relationship between manufacturer production cost and energy consumption for the products covered in this rulemaking. DOE has adopted a combined efficiency level /design option/reverse engineering approach to developing cost

- efficiency curves. DOE established efficiency levels defined

as percent age energy use lower than that of baseline efficiency products. To develop the analytically

- derived cost

- efficiency curves, DOE collected information from various sources on the manufacturing cost and energy use reduction characteristics of each of the design options. Energy use reduction was modeled with a modified version of the established EPA Refrigerator Analysis (ERA) program which was used in the previous refrigerator rulemaking. DOE used the reverse engineering information in combination

with the incre mental costs for each design option to derive the labor, materials, overhead, and total production costs for products at each efficiency level. The engineering analysis

also estimated a manufacturer markup to provide the manufacturer selling price (MSP)12

- 13 fo r each product at every efficiency level

. See c hapter 5 for a complete discussion of the engineering analysis.

12.4.2.5 Manufacturer Interviews

During the course of the MIA, DOE conducted interviews with a representative

cross

- section of manufacturers. DOE also in terviewed manufacturers representing a significant portion of sales in every product class . During these discussions, DOE obtained information to determine and verify GRIM input assumptions in each industry. Key topics discussed during the interviews and r eflected in the GRIM include:

• capital conversion costs (one

- time investments in PPE);

• product conversion costs (one

- time investments in research, product development, testing, and marketing);

• product cost structure, or the portion of the MPCs rela ted to materials, labor, overhead, and depreciation costs;

• possible profitability impacts ; and

• cost

- efficiency curves calculated in the engineering analysis.

12.4.3 Financial Parameters

In the manufacturer interviews, DOE used the financial parameters from t he April 2009 cooking products final rule and the January 2010 commercial clothes washers final

rule b

Table

12.4

. 1 as a starting point for determining the residential refrigeration industry financial

parameters

. These initial estimates were used because the same white goods manufacturers produce both clothes washers , cooking products, and refrigeration products and no other publicly available SEC 10

- K reports for refrigeration product

manufactu r ers were available

. These financial parameters were determined by averaging the values in the annual reports of three publicly traded companies engaged in manufacturing and selling clothes washers over an 8

- year period (1999

- 2006). below shows the data used to determine the initial financial parameter estimates.

b The final rule for commercial clothes washers was published in the Federal Register on January 8, 2010 (75 FR1122). The final rule for cooking products was published in the Federal Register on April 8, 2009 (74 FR 16040). More information on these rulemakings can be found at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html and http://www1.eere.energy.gov/buildings/appliance_standards/residential/cooking_products.html.12

- 14 Table 12.4

. 1 GRIM Financial Parameters Based on 1999

– 2006 Weighted Company

Financial Data

Parameter Industry

Weighted Average Manufacturer

A B C

Tax Rate (% of Taxable Income) 33.9 6.6 34.1 34.5 Working Capital (% of Revenue) 2.9 9.6 5.6 2.0

SG&A (% of Revenue) 12.5 12.7 12.3 13.2

R&D (% of Revenues) 2. 2 2.3 2.0 2.4 Depreciation (% of Revenues) 3.4 3.9 3.4 3.3 Capital Expenditures (% of Revenues) 3.5 1.9 3.4 3.6 Net Property, Plant, and Equipment (% of Revenues) 19.9 17.3 21.6 19.4

During interviews, residential refrigeration manufacturers were asked to provide their own figures for the parameters listed in Table 12.4

. 1 . Where applicable, DOE adjusted the parameters in the GRIM using this feedback and data from publicly traded companies to reflect manufacturing residenti al refrigeration products

. Table 12.4

. 2 presents the revised residential refrigeration parameters for freestanding refrigeration product manufacturers. Many freestanding residential refrigeration product manufacturers

sell standard

- size refrigerator

- freezers, standard

- size freezers, and compact refrigeration products . DOE used one set of financial parameters to characterize all three of these produc t group ings

.

Table 12.4

. 2 GRIM Freestanding Residential Refrigeration Industry Financial

Parameters

Parameter Revised Estimate (excluding Built

- In

Product Classes )

Tax Rate % of taxable income 33.9 Working Capital % of revenues 2.9

SG&A % of revenues 12.5

R&D % of revenues 2.2 Depreciation % of revenues 3.3 Capital Expenditures % of revenues 3.6

Net PPE % of revenues 19.9

For built

- in refrigeration product manufacturers, DOE developed separate estimates for financial parameters. The built

- in refrigeration product market is served by

a different set of manufacturers . Even where manufacturers produce both freestanding

and bui lt

- in products, the manufacturing process is sufficiently different to warrant a varying cost structure from larger freestanding residential refrigeration product

manufacturers. As such, DOE revised its estimates to utilize different financial

parameters t o analyze the impacts of amended energy conservation standards on built

- in refrigeration products in the GRIM. These estimates were revised based on feedback

from built

- in refrigeration manufacturers during manufacturer interviews and are shown

in Table 12.4

. 3 below.12

- 15 Table 12.4

. 3 GRIM Built

- In Refrigeration Industry Financial Parameters

Parameter Revised Estimate for

Built

- In Refrigeration

Products

Tax Rate % of taxable income 33.9 Working Capital % of revenues 2.9

SG&A % of revenues 19.0

R&D % of revenues 3.5 Depreciation % of revenues 4.5 Capital Expenditures % of revenues 4.7

Net PPE % of revenues 23.0

12.4.4 Corporate Discount Rate

DOE used the weighted

- average cost of capital (WACC) as the discount rate to calculate the INPV. A company’s assets are financed by a combination of debt and equity. The WACC is the total cost of debt and equity weighted by their re spective proportions in the capital structure of the industry. DOE estimated the WACC for the

residential refrigeration industry based on several representative companies, using the following formula:

WACC = After

- Tax Cost of Debt x (Debt Ratio) + Cost of Equity x (Equity Ratio) Eq. 1

The cost of equity is the rate of return that equity investors (including, potentially, the company) expect to earn on a company’s stock. These expectations are reflected in the market price of the company’s stock. The capital asset pricing model (CAPM) provides one widely used means to estimate the cost of equity. According to the CAPM, the cost of equity (expected return) is:

Cost of Equity = Riskless Rate of Return + β x Risk Premium Eq. 2

where:

Riskless rate of return is t he rate of return on a “safe” benchmark investment, typically considered the short

- term Treasury Bill (T

- Bill) yield.

Risk premium is the difference between the expected return on stocks and the

riskless rate.

Beta (β) is the correlation between the moveme nt in the price of the stock and that of the broader market. In this case, Beta equals one if the stock is perfectly correlated

with the S&P 500 market index. A Beta lower than one means the stock is less volatile

than the market index.

DOE determined that the industry average cost of equity for the residential refrigeration industry is 17 .9 percent ( Table 12.4.4 ). The representative data was taken12

- 16 from the commercial clothes washers final rule since several of the representative manufacturers are the same as in the residential refrigeration industry.

Table 12.4

. 4 Cost of Equity Calculation

Parameter Industry

Weighted Average

% Manufacturer

A B C

(1) Average Beta (2002

- 2006 year) 1.31 1.0* 1.77 1.17

(2) Yield on 10

- Year

T

- Bill (1990

- 2006) 5.9

- - -
(3) Market Risk Premium (1926

- 1999) 9.2

- - -
Cost of Equity (2)+[(1)*(3)] 17.9

- - - Equity/Total Capital 37.2 23.7

- 49.8 64.6

* Estimated Beta

Bond ratings are a tool to measure default risk and arrive at a cost of debt. Each bond rating is associated with a particular spread. One way of estimating a company’s cost of debt is to treat it as a spread (usually expressed in basis points) over the ri sk

- free

rate. DOE used this method to calculate the cost of debt for all three manufacturers by using S&P ratings and adding the relevant spread to the risk

- free rate.

In practice, investors use a variety of different maturity Treasury bonds to

estimate t he risk

- free rate. DOE used the 10

- year Treasury bond return because it captures long

- term inflation expectations and is less volatile than short

- term rates. The risk free rate is estimated to be approximately 6 percent, which is the average 10

- year
Treasu ry bond return between 1990 and 200 6 (the analysis period used in the initial estimate for commercial clothes washers)

.

For the cost of debt, S&P’s Credit Services provided the average spread of corporate bonds for the three public manufacturers between 2 002 and 2006

. As stated above, the representative data was taken from the commercial clothes washers final rule since several of the representative manufacturers are the same as in the residential refrigeration industry. DOE added the industry

- weighted ave rage spread to the average T

Bill yield over the same period. Since proceeds from debt issuance are tax deductible, DOE adjusted the gross cost of debt by the industry average tax rate to determine the net cost of debt for the industry. Table 12.4.5 presents the derivation of the cost of debt and the capital structure of the industry ( i.e. the debt ratio (debt/total capital) )

.12

- 17 Table 12.4

. 5 Cost of Debt Calculation

Parameter Industry

Weighted Average

% Manufacturer

A B C

S&P Bond Rating

-- B

- BBB BBB

(1) Yie ld on 10

- Year

T

- Bill (1990

- 2006) 5.9

- - -

(2) Gross Cost of Debt 8.2 13.9 8.1 8.1

(3) Tax Rate 34 6.6 34.1 34.5

Net Cost of Debt (2) x ((1)

- (3)) 5.4

- - -

Debt/Total Capital 62.8 76.3 149.8 35.4

Using public information for these three companies from the commercial clothes

washers final rule , the initial estimate for the residential refrigeration industry’s WACC

was approximately 10.1 percent. Subtracting an inflation rate of 2.9 percent over the analysis period used in the initial estimate , the inflation

- adjusted WACC and the initial

estimate of the discount rate used in the straw

- ma n GRIM is 7.2 percent. DOE also asked

for feedback on the 7.2 percent discount during manufacturer interviews and used this feedback to determine that 7.2 percent was an appropriate discount rate for use in the

GRIM.

12.4.5 Trial Standard Levels

DOE developed TS Ls for standard

- size refrigerator

- freez ers, standard

- size freezers, compact refrigeration products , and built

- in refrigeration products

. Consistent with the engineering analysis, DOE analyzed representative product classes for each product grouping. For freestanding products, DOE analyzed seven product classes that comprise approximately 90 percent of all shipments. DOE also analyzed four built

- in product classes. Table 12.4

. 6 through Table 12.4

. 9 show the TSLs for the product groupings analyzed by DOE. For each representative product class, DOE considered percentage decreases fro m the baseline energy usage according to the proposed test procedure, up to max

- tech efficiency levels. DOE extrapolates the amended energy standards to the remaining product classes a s described in section 2.15 of c hapter 2 of the

TSD. Table 12.4

. 6 through Table 12.4

. 9 also show which unanalyzed product classes are grouped with eac h analyzed product

. Chapter 2 explains this process in greater detail.

Table 12.4.6 through Table 12.4

. 9 present the efficiency level at each TSL used in

the GRIM. Table 12.4.6 presents the TSLs and the corresponding product class

efficiencies for standard

- size refrigerator

- freezers. TSL 1 consists of those efficiency levels that meet current ENERGY STAR criteria. TSL 2 consists of the highest efficiency levels for which the consumer NPV is p ositive, using a 7

- percent discount rate. TSL 3 consists of the highest efficiency levels for which the consumer NPV is positive, using a12

- 18 3

- percent discount rate , as well as the levels recommended in the Joint Comments c

. TSL

4 consists of those efficiency levels that yield energy use 30 percent below the baseline products . TSL 5 consists of the max

- tech efficiency levels.

Table 12.4

. 6 Trial Standard Levels for Standard

- Size Refrigerator

- Freezers

Trial

Standard

Level Representative Product Class

3 ( automatic defrost with top

mounted freezer without through

- the

- door ice service) 5 ( automatic defrost with

bottom

- mounted freezer without through

- the

- door ice

service ) 7 ( automatic defrost with side

mounted freezer with through

- the

- door ice service)

Scaled Product Classes

1, 1A, 2, 3A, 3I and 6 5A and 5I 4 and 4I

Efficiency Level (% less than baseline energy use)

1 3 (20) 3 (20) 3 (20)

2 3 (20) 3 (20) 4 (25)

3 4 (25) * 3 (20) 4 (25)

4 5 (30) 5 (30) 5 (30)

5 6 (36) 6 (36) 6 (33)

* Efficiency l evel f or p roduct classes 1, 1A, and 2 is 20%.

Table 12.4

. 7 presents the TSLs and the corresponding efficiencies for standard

size freezers. TSL 1 consists of those efficiency levels that yield energy use 20 percent below the baseline products. TSL 2 consists of the levels recommended in the Joint

Comments . TSL 3 c onsists of incrementally higher efficiency levels than the preceding

TSL. TSL 4 consists of the efficiency levels for which the consumer NPV is positive, using a 7

- percent discount rate. TSL 5 consists of the max

- tech efficiency levels, which

are also the efficiency levels for which the consumer NPV is positive, using a 3

- percent
discount rate.

c The Joint Comments were s ubmitted by a group of interested parties representing a number of different interests and throughout DOE’s standards rulemaking process. The Joint Comments included recommended levels for the product classes covered by this rulemaking. The Joint Comments is Comment

49 submitted to D OE Docket No. EERE

- 2008

- BT

- STD

- 0012. DOE considered the Joint Comments to supersede earlier comments by the listed parties regarding issues subsequently discussed in the Joint

Comments.12

- 19 Table 12.4

. 7 Trial Standard Levels for Standard

- Size Freezers

Trial Standard

Level Representative Product Class

9 (upright freezers with

automatic defrost) 10 ( chest freezers and all other freezers except

compact freezers )

Scaled Product Classes

- 8, 10A

Efficiency Level (% less than baseline energy use)

1 3 (20) 3 (20)

2 5 (30) 4 (25) *

3 6 (35) 5 (30)

4 7 (40) 6 (35)

5 8 (44) 7 (41)

* Efficiency l evel for product class 10A is 30%.

Table 12.4

. 8 presents the TSLs and the corresponding product class efficiencies for compact refrigeration products. TSL 1 consists of efficiency levels that meet current ENERGY STAR criteria for compact r efrigerators, and efficiency levels that are 10 percent below the baseline energy use for compact freezers. TSL 2 consists of the levels

recommended in the Joint Comments . TSL 3 consists of the highest efficiency levels for which the consumer NPV is positi ve, using both a 3

- percent and a 7

- percent discount rate. TSL 4 consists of incrementally higher efficiency levels than TSL 3. TSL 5 consists

of the max

- tech efficiency levels.12

- 20 Table 12.4

. 8 Trial Standard Lev els for Compact Refrigeration Products

Trial Standard

Level Representative Product Class

11 ( compact refrigerators and refrigerator

- freezers with manual defrost) 18 (compact chest freezers)

Scaled Product Class es

11A, 12 13, 13A, 14, 15 16, 17

Efficiency Level (% less than baseline energy use)

1 3 (20) 1 (10)

2 4 (25) 1 (1 0 )*

3 5 (30) 2 (15)

4 7 (40) 4 (25)

5 10 (5 9) 7 (42)

* Efficiency l evel for product class 1 3 and 15 is 15 % , efficiency level for product class 14 is 20%, and efficiency level for product class 13A is 25%.

Table 12.4

. 9 presents the TSLs and the corresponding product class efficiencies

for built

- in refrigeration products. TSL 1 consists of the efficiency levels that are 10 percent better than the current standard. TSL 2 consists of the highest efficiency levels for which the consumer NPV is positive, using both a 3

- percent and a 7

- percent discount

rate. TSL 3 consists of th e levels recommended in the Joint Comments . TSL 4 consists of incrementally higher efficiency levels than TSL 3. TSL 5 consists of the max

- tech efficiency levels.12

- 21 Table 12.4

. 9 Trial Standard Levels for Built

- i n Refrigeration Products

Trial Standard

Level Representative Product Class

3A

- BI ( built

- in all

refrigerators

— automatic defrost) 5

- BI (built

- in refrigerator

freezers

— automatic defrost

with bottom

mounted freezer

without an

automatic icemaker) 7

- BI ( built

- in refrigerator

freezers

— automatic

defrost with side

mounted freezer with through

- the

- door ice service) 9

- BI ( built

- i n upright

freezers with

automatic defrost

without an

automatic

icemaker )

Scaled Product Classes

3

- BI 5I

- BI 4

- BI and 4I

- BI

Efficiency Level (% less than baseline energy use)

1 1 (10) 1 (10) 1 (10) 1 (10)

2 2 (15) 2 (15) 1 (10) 3 (20)

3 3 (20) 2 (15) 3 (20) 4 (25)

4 4 (25) 4 (25) 3 (20) 4 (25)

5 5 (29) 5 (27) 4 (22) 5 (27)

12.4.6 NIA Shipment Forecast

The GRIM estimates manufacturer revenues based on total

- unit

- shipment forecasts and the distribution of these values by efficiency level. Changes in the efficiency mix at each standard level are a key driver of manufacturer finances. For this analysis, the GRIM used the NIA shipments forecasts. However, only the shipments in

2010 and beyond have an impact on INPV because 2010 is the base year to which future cash flows are summed. Chapter 9 of the TSD explains DOE’s calculations of total shipments in detail

. Table 12.4

. 10 shows total shipments forecasted in the shipment analysis for standard

- size refrigerator

- freezers, standard

- size freezers, compact refrigeration produc ts, and built

- in refrigeration products in 2014 . In order to aggregate shipments in the GRIM, DOE assigned each of the product classes to one of the 11 representative product classes shown in Table 12.4

. 6 to Table 12.4

. 9 . DOE aggregated the shipments for all the scaled product classes under the corresponding representative product class and used the cost curve for the representative product class with which it is

associated.12

- 22 Table 12.4

. 10 Total Base Case NIA Shipments Forecast in 2014 d

Analyzed

Product Class in the Main NIA Shipment Scenario

Product Class Description Total Industry Shipments (thousands)

3 Automatic defrost with top

- mounted freezer without through

- the

door ice service 7, 081

5 Automatic defrost with bottom

- mounted freezer without through

- the

door ice service 1,9 50

7 Automatic defrost with side

- mounted freezer with through

- the

- door

ice service 2.9 66

9 Upright freezers with automatic defrost 1,1 71

10 Chest freezers and all other freezers except compact freezers 1,2 28

11 Compact refrigerators and refrigerator

- freezers with manual defrost 2, 547

18 Compact chest freezers 87 9

3A

- BI Built

- in all

- refrigerators

— automatic defrost 28

5

- BI Built

- in refrigerator

- freezers

— automatic defrost with bottom

mounted freezer without an automatic icemaker 10 2

7

- BI Built

- in refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service 1 69

9

- BI Built

- in upright freezers with automatic defrost without an automatic

icemaker 2 6

12.4.6.1 Shipments Forecast

As part of the shipment s analysis, DOE estimated the base

- case shipment distribution by efficiency level for standard

- size refrigerator

- freezers, standard

- size freezers, compact refrigeration products, and built

- in refrigeration products. In the standards case, DOE determine d eff iciency distributions for cases in which a potential standard applies for 2014 and beyond. DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to meet the new

standard in 2014. DOE further assumed that the ENERGY STAR program will continue to promote high

- efficiency appliances after revised standards are introduced in 2014, and that product market shares above a given standard level may shift. DOE describes how it

calculated the ENERGY STAR and standards

- case distribution in c hapter 10. The efficiency distributions used in the base and standards case are shown in Table 12.4

. 11 through Table 12.4

. 20 below.

d The compliance date for the residential refrigeration energy conservation standard is estimated to be January 2014.12

- 23 Table 12.4

. 11 Standard

- Size Refrigerator

- Freezers: Base

- Case Efficiency

Distributions

Efficiency

Level

(% less

than

baseline

energy

use) Product Class 3: Top

- Mount Refrigerator

- Freezer Product Class 5:

Bottom

- Mount Refrigerator

- Freezer Product Class 7:

Side

- by

- Side Refrigerator

Freezer with TTD*

Market Share

% Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021 2007 2014 2021

Baseline 80.6 78.2 80.6 11.8 13.0 11.8 25.0 21.7 21.7

1 (10) 5.9 4.2 5.9 0.1 0.1 0.1 43.0 26.4 26.4

2 (15) 13.2 9.4 0.1 69.8 19.3 0.0 30.3 15.0 15.0

3 (20) 0.2 † 8.3 † 13.4 † 18.3 † 67.7 † 88.1 † 1.7 † 37.0 † 37.0 †

4 (25) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

5 (30) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

6 (Max

Tech) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

* Through

- the

- door ice service.

† Meets current (2008) ENERGY STAR criteria.

Table 12.4

. 12 Top

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level

Efficiency

Level ( % less

than

baseline energy use) Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 7 8 .2

- - - - - -

1 (10 ) 4.2 8 2.3

- - - - - 2 (15 ) 9.4 9.4 91.7

- - - - 3 (20 ) 8.3 8.3 8.3 100 .0

- - - 4 (25 ) 0.0 0.0 0.0 0.0 100 .0

- - 5 (30 ) 0.0 0.0 0.0 0.0 0.0 100 .0

- 6 (36 ) 0.0 0.0 0.0 0.0 0.0 0.0 100 .012

- 24 Table 12.4

. 13 Bottom

- Mount Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level
Efficiency

Level ( % less than

baseline energy use) Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 1 3

. 0

- - - - - -

1 (10 ) 0.1 13.1

- - - - - 2 (15 ) 19.3 19.3 32.4

- - - - 3 (20 ) 67.7 67.7 67.7 100.0

- - - 4 (25 ) 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (36 ) 0.0 0.0 0.0 0.0 0.0 0.0 100.0

Table 12.4

. 14 Side

- by Side Refrigerator

- Freezers: Efficiency Distributions in 2014 by Efficiency Level

Efficiency

Level ( % less

than

baseline energy use) Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6

Baseline 2 1

. 7

- - - - - -

1 (10 ) 26.4 4 8. 1

- - - - - 2 (15 ) 15.0 15 .0 6 3

. 1

- - - - 3 (20 ) 37.0 37.0 37.0 100.0

- - - 4 (25 ) 0.0 0.0 0.0 0.0 100.0

- - 5 (30 ) 0.0 0.0 0.0 0.0 0.0 100.0

- 6 (33 ) 0.0 0.0 0.0 0.0 0.0 0.0 100.012

- 25 Table 12.4

. 15 Standard

- Size Freezers: Base

- Case Efficiency Distributions
Efficiency

Level

(% less

than

baseline

energy

use) Product Class 9: Upright Freezer Product Class 10:

Chest Freezer

Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021

Baseline 81.5 81.5 81.5 84.6 84.6 84.6

1 (10) 17.0* 17.0 8.5 14.3* 14.3 7.2

2 (15) 1.0 1.0 0.5 0.8 0.8 0.4

3 (20) 0.1 0.1 † 9.1 † 0.0 0.0 † 7.6 †

4 (25) 0.2 0.2 0.2 0.0 0.0 0.0

5 (30) 0.2 0.2 0.2 0.0 0.0 0.0

6 (35) 0.0 0.0 0.0 0.4 0.4 0.4

7 (40;41) 0.0 0.0 0.0 0.0 0.0 0.0

8 (44) 0.0 0.0 0.0

- - -

* Meets current ENERGY STAR criteria.

† Meets projected new ENERGY STAR criteria.

Table 12.4

. 16 Upright Freezers: Efficiency Distributions in 2014 by Efficiency Level

Efficiency

Level ( % less

than

baseline energy use) Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8

Baseline 81.5

- - - - - - - -

1 (10 ) 17.0 98.5

- - - - - - - 2 (15 ) 1.0 1.0 99.5

- - - - - - 3 (20 ) 0.1 0.1 0.1 99.6

- - - - - 4 (25 ) 0.2 0.2 0.2 0.2 99.8

- - - - 5 (30 ) 0.2 0.2 0.2 0.2 0.2 100.0

- - - 6 (35 ) 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - 7 (40 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 8 (4 4 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.012

- 26 Table 12.4

. 17 Chest Freezers: Efficiency Distributions in 2014 by Efficiency Level

Efficiency

Level ( % less

than

baseline energy use) Market Share %

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7

Baseline 84.6

1 (10 ) 14.3 98.9 2 (15 ) 0.8 0.8 99.7 3 (20 ) 0.0 0.0 0.0 99.7 4 (25 ) 0.0 0.0 0.0 0.0 99.7 5 (30 ) 0.0 0.0 0.0 0.0 0.0 99.7 6 (35 ) 0.4 0.4 0.4 0.4 0.4 0.4 100.0 7 (41 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

Table 12.4

. 18 Compact Refrigeration Products: Base

- Case Efficiency Distributions
Efficiency

Level

(% less

than

baseline

energy

use) Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer

Market Share

% Market Share

%

2007 2014 2021 2007 2014 2021

Baseline 97.1 98.5 98.5 95.4 95.4 95.4

1 (10) 0.3 0.3 0.3 4.6 4.6 4.6

2 (15) 0.0 0.0 0.0 0.0 0.0 0.0

3 (20) 0.9* 0.5 0.2 0.0* 0.0* 0.0 *

4 (25) 0.2 0.1 0.1 0.0 0.0 0.0

5 (30) 1.5 0.8 † 1.0 † 0.0 0.0 0.0

6 (35) 0.0 0.0 0.0 0.0 0.0 0.0

7 (40;42) 0.0 0.0 0.0 0.0 0.0 0.0

8 (45) 0.0 0.0 0.0

- - - 9 (50) 0.0 0.0 0.0

- - - 10 (59) 0.0 0.0 0.0

- - -

* Meets current ENERGY STAR criteria.
† Meets projected new ENERGY STAR criteria.12

- 27 Table 12.4

. 19 Compact Refrigerators: Efficiency Distributions in 2014 by Efficiency

Level
Efficiency Level

( % less than baseline energy use) Market Share ( % )

Base Case Standard at Efficiency Level:

1 2 3 4 5 6 7 8 9 10

Baseline 98.5

- - - - - - - - - -

1 (10 ) 0.3 98.7

- - - - - - - - - 2 (15 ) 0.0 0.0 98.7

- - - - - - - - 3 (20 ) 0.5 0.5 0.5 99.2

- - - - - - - 4 (25 ) 0.1 0.1 0.1 0.1 99.3

- - - - - - 5 (30 ) 0.8 0.8 0.8 0.8 0.8 100.0

- - - - - 6 (35 ) 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - - - 7 (40 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- - - 8 (45 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 9 (50) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 10 (5 9 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

Table 12.4

. 20 Compact Freezers: Efficiency Distributions in 2014 by Efficiency

Level

Efficiency

Level ( % less than

baseline energy use) Market Share ( % )

Base

Case Standard at Efficiency Level:

1 2 3 4 5 6 7

Baseline 95.4

- - - - - - -

1 (10 ) 4.6 100.0

- - - - - - 2 (15 ) 0.0 0.0 100.0

- - - - - 3 (20 ) 0.0 0.0 0.0 100.0

- - - - 4 (25 ) 0.0 0.0 0.0 0.0 100.0

- - - 5 (30 ) 0.0 0.0 0.0 0.0 0.0 100.0

- - 6 (35 ) 0.0 0.0 0.0 0.0 0.0 0.0 100.0

- 7 (42 ) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

12.4.6.2 Default Standards

- Case NIA Scenario

DOE used the default NIA scenario to calculate the INPV results presented in this chapter. The default NIA scenario used selected inputs from the Reference case in EIA’s Annual Energy Outlook 2010

. 9 The default NIA scenario also accounts for a relative price elasticity of

- 0.34. For example, a relative price increase of 10 percent results in a 3.4 percent decrease in shipments. In the GRIM, the user can also calculate INPV impacts without inco rporating the elasticity effect. See c hapter 9 for a description of the relative price elasticity

.12

- 28 12.4.7 Production Costs

M anufacturing a higher

- efficiency product is typically more costly than manufacturing a baseline product due to the use of more complex comp onents and higher

- cost raw materials. The changes i n the MPC s of the analyzed products can affect

revenues , gross margins , and cash flow of the industry, making these data a key GRIM input for DOE’s analysis.

For the MIA, DOE used the cost efficiency curves derived in the engineering analysis (detailed in c hapter 5 and appendix 5

- A of the TSD) using appropriate production volume estimates. For instance, more efficient products sold under existing energy conservation standards are manufactured at lower production volumes than baseline efficiency products. Enacting more stringent energy conservation standards will increase production volumes for more efficient units. Because DOE developed two cost efficiency curves for most product classes based on a smal ler

- sized unit and a larger

sized unit, the cost estimates in these two curves were averag ed for each product class to

obtain a representative MPC

.

To calculate baseline MPCs, DOE followed a three step process. First, DOE derived each of the baseline prod ucts’ retail prices from NPD market data (described in

c hapter 8 of the TSD). Next, DOE discounted these baseline retail prices by the sales tax and retail markup to arrive at the baseline MSPs. Next, DOE discounted the baseline MSPs by the manufacturer ma rkup to arrive at the average baseline MPCs. For all non

built

- in product classes, DOE used a 1.26 manufacturer markup to calculate baseline

MPCs and MSPs. Because built

- in product classes are high

- end products that are made in much lower production volume s, DOE used a different cost structure for these products than for the other product classes. DOE used information submitted during manufacturer interviews to estimate that a typical baseline manufacturer markup for built

- in products is

1.40. To calculate baseline MPCs for the built

- in product classes, DOE discounted the NPD baseline retail prices by the 1.40 manufacturer markup and also a distributor markup to account for products sold through that distribution chain.

DOE also used the information from it s tear

- down analysis to verify the accuracy of the markup information and cost data for the units it tore down. In addition, DOE used

the tear

- down cost data to disaggregate the MPCs into material, labor, and overhead

costs. DOE developed different depreci ation values for freestanding products and built

- in refrigeration products by using a deprec i ation value that is consistent with historical

information in SEC 10

- Ks. The remainder of total overhead was allocated to factory

overhead. To calculate the increm ental MPCs for products above the baseline, DOE added the incremental material, labor, and overhead costs from the engineering cost efficiency curves to the baseline MPCs. Because DOE did not tear down built

- in refrigeration products, DOE based its materia l, labor, and overhead estimates on the most

similar freestanding product class es . DOE also assumed that the labor content was twice as great for built

- in refrigeration products compared to the most similar freestanding product class es

.12

- 29 As stated in sec tion 12.4.6 , DOE allocated shipments for the unanalyzed product classes to the product class for which the amended energy conservation standard is scaled. That way, the total revenue and INPV impacts for each representative product class is also representative of the INPV impacts on the un an alyzed product classes used

to promulgate the amended energy conversation standards

.

Table 12.4.21 through Table 12.4

. 31 show the production cost estimates used in

the GRIM for each analyzed product class.

Table 12.4

. 21 MPC Breakdown for Refrigerator

- Freezers for Product Class 3 ( Automatic Defrost with Top

- Mounted Freezer without Through

- the

- Door Ice

Service )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 47.92 181.04 32.06 11.32 272.34 1.26 343.15

TSL 1 EL 3 (20) 47.92 239.08 29.64 13.74 330.38 1.26 416.28

TSL 2 EL 3 (20) 47.92 239.08 29.64 13.74 330.38 1.26 416.28

TSL 3 EL 4 ( 25 ) * 50.00 261.09 31.11 14.85 357.05 1.26 449.88

TSL 4 EL 5 (30) 53.24 310.65 34.39 17.28 415.56 1.26 523.61

TSL 5 EL 6 (36) 55.28 387.29 36.14 20.77 499.48 1.26 629.34

* Efficiency level for product classes 1, 1A, and 2 is 20%

.

Table 12.4

. 22 MPC Breakdown for Refrigerator

- Freezers for Product Class 5 ( Automatic Defrost with Bottom

- Mounted Freezer without Through

- the

- Door Ice

Service )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 70.79 335.96 39.87 19.38 465.99 1.26 587.15

TSL 1 EL 3 (20) 70.79 365.76 38.63 20.62 495.79 1.26 624.70

TSL 2 EL 3 (20) 70.79 365.76 38.63 20.62 495.79 1.26 624.70

TSL 3 EL 3 (20) 70.79 365.76 38.63 20.62 495.79 1.26 624.70

TSL 4 EL 5 (30) 73.29 467.28 39.21 25.15 604.92 1.26 762.20

TSL 5 EL 6 (36) 79.95 544.76 45.14 29.06 698.91 1.26 880.6312

- 30 Table 12.4

. 23 MPC Breakdown for Refrigerator

- Freezers for Product Class 7 ( Automatic Defrost with Side

- Mounted Freezer with Through

- the

- Door Ice Service )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 97.48 415.42 37.36 23.87 574.13 1.26 723.40

TSL 1 EL 3 (20) 97.69 447.90 36.96 25.27 607.82 1.26 765.85

TSL 2 EL 4 (25) 98.29 487.55 36.08 26.98 648.90 1.26 817.61

TSL 3 EL 4 (25) 98.29 487.55 36.08 26.98 648.90 1.26 817.61

TSL 4 EL 5 (30) 101.94 566.95 38.72 30.70 738.30 1.26 930.26

TSL 5 EL 6 (33) 106.65 625.01 43.15 33.61 808.43 1.26 1,018.62

Table 12.4

. 24 MPC Breakdown for Product Class 9 ( Upright Freezers with

Automatic Defrost )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 45.72 198.99 27.22 11.80 283.73 1.26 357.50

TSL 1 EL 3 (20) 45.72 230.23 29.28 13.24 318.47 1.26 401.27

TSL 2 EL 5 (30) 45.72 239.00 54.31 14.71 353.75 1.26 445.72

TSL 3 EL 6 (35) 45.72 276.69 52.74 16.28 391.43 1.26 493.20

TSL 4 EL 7 (40) 45.84 327.80 51.88 18.46 443.98 1.26 559.42

TSL 5 EL 8 (44) 48.22 427.36 61.52 23.30 560.40 1.26 706.11

Table 12.4

. 25 MPC Breakdown for Product Class 10 ( Chest Freezers and All Other Freezers Except Compact Freezers )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 29.43 149.40 19.71 8.61 207.16 1.26 261.02

TSL 1 EL 3 (20) 29.43 161.60 25.91 9.41 226.36 1.26 285.22

TSL 2 EL 4 (25)* 29.43 165.87 50.66 10.67 256.63 * 1.26 323.36

TSL 3 EL 5 (30) 29.74 177.84 51.20 11.23 270.00 1.26 340.20

TSL 4 EL 6 (35) 29.43 217.25 48.52 12.81 308.01 1.26 388.10

TSL 5 EL 7 (41) 31.24 282.66 54.69 15.99 384.58 1.26 484.57

* Efficiency level for product class 10A is 30%

.12

- 31 Table 12.4

. 26 MPC Breakdown for Product Class 11 ( Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline

energy

use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 2.33 61.15 5.61 3.00 72.10 1.26 90.84

TSL 1 EL 3 (20) 2.33 68.62 8.18 3.43 82.57 1.26 104.04

TSL 2 EL 4 (25) 2.33 71.08 13.35 3.76 90.53 1.26 114.06

TSL 3 EL 5 (30) 2.33 72.42 18.08 4.03 96.86 1.26 122.05

TSL 4 EL 7 (40) 2.33 101.38 11.13 4.98 119.83 1.26 150.99

TSL 5 EL 10 (59) 6.92 159.57 21.25 8.14 195.88 1.26 246.80

Table 12.4

. 27 MPC Breakdown for Product Class 18 ( Compact Chest Freezers )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline energy use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 2.74 82.38 13.51 4.28 102.90 1.26 129.66

TSL 1 EL 1 (10) 2.74 87.13 13.31 4.48 107.65 1.26 135.64

TS L 2 EL 1 (10)* 2.74 87.13 13.31 4.48 107.65 * 1.26 135.64

TSL 3 EL 2 (15) 2.74 89.63 18.96 4.83 116.16 1.26 146.36

TSL 4 EL 4 (25) 3.43 97.72 44.29 6.31 151.75 1.26 191.20

TSL 5 EL 7 (42) 4.54 168.19 45.39 9.46 227.58 1.26 286.75

* Efficiency level for product class 13 and 15 is 15%, efficiency level for product class 14 is 20%, and efficiency level for product class 13A is 25%

.

Table 12.4

. 28 MPC Breakdown for Product Class 3A

- BI ( Built

- In All

- Refrigerators

Automatic Defrost )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline energy use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 95.84 1,615.36 208.81 115.41 2,035.42 1.40 2,849.59

TSL 1 EL 1 (10) 95.84 1,620.46 208.52 115.70 2,040.52 1.40 2,856.73

TSL 2 EL 2 (15) 95.84 1,628.86 208.05 116.17 2,048.92 1.40 2,868.49

TSL 3 EL 3 (20) 98.73 1,695.16 211.76 120.56 2,126.21 1.40 2,976.69

TSL 4 EL 4 (25) 104.59 1,787.89 210.87 126.43 2,229.77 1.40 3,121.68

TSL 5 EL 5 (29) 105.00 1,863.42 208.77 130.87 2,308.06 1.40 3,231.2812

- 32 Table 12.4

. 29 MPC Breakdown for Product Class 5

- BI ( Built

- In Refrigerator

Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without an Automatic

Icemaker )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline energy use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Bas e line 141.57 1,847.90 160.55 129.23 2,279.26 1.40 3,190.97

TSL 1 EL 1 (10) 141.64 1,862.79 160.06 130.10 2,294.60 1.40 3,212.44

TSL 2 EL 2 (15) 141.57 1,909.20 157.08 132.71 2,340.56 1.40 3,276.79

TSL 3 EL 2 (15) 141.57 1,909.20 157.08 132.71 2,340.56 1.40 3,276.79

TSL 4 EL 4 (25) 146.16 2,044.43 158.40 141.19 2,490.18 1.40 3,486.25

TSL 5 EL 5 (27) 150.74 2,087.76 160.97 144.23 2,543.70 1.40 3,561.18

Table 12.4

. 30 MPC Breakdown for Product Class 7

- BI ( B uilt

- In Refrigerator

Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door

Ice Service )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline energy use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 194.97 2,812.72 168.15 190.89 3,366.73 1.40 4,713.43

TSL 1 EL 1 (10) 195.22 2,847.34 167.95 192.98 3,403.48 1.40 4,764.88

TSL 2 EL 1 (10) 195.22 2,847.34 167.95 192.98 3,403.48 1.40 4,764.88

TSL 3 EL 3 (20) 199.55 2,997.40 168.57 202.30 3,567.83 1.40 4,994.96

TSL 4 EL 3 (20) 199.55 2,997.40 168.57 202.30 3,567.83 1.40 4,994.96

TSL 5 EL 4 (22) 204.13 3,050.21 171.65 205.93 3,631.93 1.40 5,084.70

Table 12.4

. 31 MPC Breakdown for Product Class 9

- BI ( Built

- In Upright Freezers

with Automatic Defrost Without an Automatic Icemaker )

TSL (Efficiency Level) Efficiency

Level (% less

than

baseline energy use) Labor
$ Material
$ Overhead
$ Depreciation
$ MPC
$ Manufacturer Markup MSP
$

Baseline Baseline 91.45 1,558.58 154.61 108.47 1,913.11 1.40 2,678.35

TSL 1 EL 1 (10) 91.45 1,569.78 153.97 109.11 1,924.31 1.40 2,694.03

TSL 2 EL 3 (20) 91.51 1,628.82 151.16 112.49 1,983.99 1.40 2,777.58

TSL 3 EL 4 (25) 94.84 1,697.43 155.02 117.05 2,064.35 1.40 2,890.09

TSL 4 EL 4 (25) 94.84 1,697.43 155.02 117.05 2,064.35 1.40 2,890.09

TSL 5 EL 5 (25) 100.62 1,746.54 157.97 120.52 2,125.65 1.40 2,975.91

12.4.8 Conversion Costs

Amended energy conservation standards typically cause manufacturers to incur

one

- time conversion costs to bring their production facilities and product designs into12

- 33 compliance with new regulations. For the MIA, DOE classified these one

- ti me conversion costs into two major groups: capital conversion costs and product conversion costs. Capital conversion costs are one

- time investments in PPE to adapt or change existing production facilities so that new product designs can be fabricated and a ssembled under the new regulation. Product conversion costs are one

- time investments in research, development, testing, marketing and other costs to make product designs comply with amended energy conservation standards. The following sections describe the inputs DOE used in the GRIM in greater detail.

12.4.8.1 Capital Conversion Costs

To calculate industry cash flow impacts DOE evaluated the level of capital conversion costs manufacturers would incur to comply with amended energy

conservation standards. This evaluation drew from multiple data sources and methodologies

. Table 12.4.32 through Table 12.4

. 42 show DOE’s estimates of the capital

conversion costs necessary for each product class at each TSL

. The methodology DOE used to calculate the capital conversion costs is described below

.

During the MIA interviews, DOE asked manufacturers to estimate the capital conversion costs required to expand the production of higher

- efficiency products that may be required by standards. In turn, many manufacturers provided estimates and descriptions of the required tooling and plan t changes that would be necessary to upgrade product lines to meet various potential efficiency level s. DOE based its capital

conversion cost estimates on the information gathered in these interviews as well as assumptions from the engineering analysis.

U sing the interviews and the engineering analysis ’s design options at each efficiency level for each product class, DOE determine d what changes would be required at existing production facilities if manufacturers implemented those design options. DOE

used i nformation from manufacturer interviews to determine the level of capital conversion costs that these changes would require. For all freestanding product classes, DOE segmented its capital conversion costs equally between the two product sizes analyzed in the engineering analysis to get a representative total capital conversion cost for each efficiency level for each analyzed product class

. Because DOE analyzed one product for the built

- in product classes, DOE calculated the capital conversion costs for

eac h built

- in product class using the design options for the one analyzed product.

For each product at each efficiency level, DOE assumed that most component

swaps , while requiring moderate product conversion costs, would not require changes to existing prod uction lines and equipment, and therefore not require additional capital expenditures. However, for larger condensers and evaporators DOE calculated the tooling investment required for both the fabrication equipment and the tooling changes because these op tions would cause slight changes to the interiors of existing products

. These tooling changes would likely include purchasing new dies or molds for a small change in internal dimensions or shelving.

DOE assumed the major capital conversion costs would occu r when12

- 34 manufacturers would have to redesign their existing product lines

. For standard

- size freezers and compact refrigeration products, DOE analyzed design options that would require changes to insulation thickness , an instance explicitly requiring the re design of existing lines . For these product classes, DOE used information from manufacturer

interviews to determine the cost of the production equipment necessary to implement complete redesigns. DOE allocat ed these costs to both product sizes analyzed in the engineering analysis for each product class and assumed that one quarter of the total redesign cost would be required for changes to door insulation thickness while the remaining three

- quarters of the redesign cost would be required for changes to wall

insulation thickness

. For standard

- size refrigerator

- freezers and built

- in refrigeration products, DOE understands that a limited number of existing products currently use VIPs. For freestanding standard

- size refrigerator

- freezers, DOE notes that thes e current products benefited from a tax credit that allowed a more labor

- intensive solution and slower production speed. How e ver, i f the standard were set at levels that necessitated

VIPs , it would be extremely disruptive to current operations , even those facilities that make a limited number of products with VIPs , due to the high production volumes required. Incorporating VIPs in high volume production would require major changes to

the manufacturing processes and equipment currently used for the low

- volu me products

that use VIPs . Therefore, DOE assumed that if the energy conservation standard were set

at levels that were analyzed with VIPs as design options

, the changes to production

facilities would be substantial despite some limited current use of the technology

. Because of the changes required to implement these design options would greatly change existing products, DOE expects that the capital conversion costs would approximate the purchase of new production equipment. DOE used the implementation of t he first VIP as a proxy for the l evel that would require new production lines.

For all product classes, DOE used the assumptions from the engineering analysis about the incremental depreciation costs associated with additional VIPs to calculate the

additi onal production equipment that would be required to add additional steps in the manufacturing process. DOE used the incremental per unit depreciation cost assumptions in the engineering analysis for additional VIPs and multiplied that figure by each

manufa cturer ’ s estimated shipments over an average equipment lifetime of 15 years.

DOE calculated each manufacturer ’ s estimated shipments using market share data for each product class that was also requested during manufacturer interviews.

DOE followed this methodology for each product class that interviewed manufacturers produced. DOE then scaled its estimates to account for the rest of the market. DOE interviewed an average of 90 percent of the market across the seven freestanding and four built

- in product classes analyzed.

Finally, DOE assumed that the design options that would require capital conversion costs would strand PPE that was not fully depreciated and would have had a longer life if the amended energy conservation standards were not implemented. DOE did not receive quantitative information on the magnitude of stranded assets. However,

because net PPE is approximately half of gross PPE in a mature industry and because not

all exi s ting assets would need to be replaced if products w ere completely redesigned, DOE assumed that stranded assets would be 50 percent of the capital conversion costs at12

- 35 each efficiency level.

DOE’s estimates of the capital conversion costs for all of the residential refrigeration products can be found in Table 12.4.32 through Table 12.4

. 42 below.

Table 12.4

. 32 Capital Conversion Costs for Product Class 3 ( Automatic Defrost with Top

- Mounted Freezer Without Through

- the

- Door Ice Service) by TSL

TS

L Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the

16 Cubic Foot PC 3

Unit Capital

Conversion

Costs for the

16 Cubic Foot

PC 3 Unit
2009$ millions Design Option s Considered for the

21 Cubic Foot PC 3

Unit Capital

Conversion

Costs for the

21 Cubic Foot

PC 3 Unit
2009$ millions

TSL

1

, TSL

2 EL 3 (20) Increase Condenser Size by 100%
Increase Compressor

EER from 5.55

to 6. 26

Brushless DC

Condenser Fan

Motor

Increase Evaporator Size by 14%
Adaptive Defrost
Variable Speed Compressor $26.0 Increase Compressor

EER from 5.94 to

6.08

Increase Evaporator Size by 25%

Brushless DC

Condenser Fan

Motor $11.6

TSL

3 EL 4 (25)* TSL 1, TSL 2 Design Options +
12.2 sqft VIP in

FZR Cabinet $252.3 TSL 1, TSL 2 Design Options +

Brushless DC Evaporator Fan

Motor $11.6

TSL

4 EL 5 (30) TSL 3 Design Options + 2.9 sqft VIP in FZR

Door
7.1 sqft VIP in FF

Door
6.7 sqft VIP in FF

Cabinet $39 5 .4 TSL 3 Design Options

+ Adaptive Defrost
3.6 sqft VIP in FZR

Door
7.6 sqft VIP in FZR

Cabinet $ 298. 3

TSL

5 EL 6 (36) TSL 4 Design Options +
1.9 sqft more VIP in

FF $41 2

. 2 TSL 4 Design Options

+ Variable Speed Compressor
8.5 sqft VIP in FF

Door
10.9 sqft VIP in FF

Cabinet $4 88.9

* Efficiency level for product classes 1, 1A and 2 is 20%

.1 2

- 36 Table 12.4

. 33 Capital Conversion Costs for Product Class 5 ( Automatic Defrost with

Bottom

- Mounted Freezer without Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the

18.5 Cubic Foot PC 5

Unit Capital

Conversion

Costs for the

18.5 Cubic Foot

PC 5 Unit
2009$ millions Design Option s Considered for the 25

Cubic Foot PC 5 Unit Capital

Conversion

Costs for the

25 Cubic Foot

PC 5 Unit
2009$ millions

TSL 1

, TSL 2,

TSL 3 EL 3 (20) Increase Compressor

EER from 5.61 to

6.26

Brushless DC Evaporator Fan

Motor
Adaptive Defrost

Brushless DC

Condenser Fan

Motor

Variable Antisweat

Heat Control

Increase Evaporator Size by 25% $11.9 Increase Compressor

EER from 5.00 to

6.26 -

TSL 4 EL 5 (30) TSL 1, 2, 3 Design Options +

Variable Speed Compressor

4.8 sqft VIP in FZR

Door
6.8 sqft VIP in FF

Door
13.7 sqft VIP in FZR

Cabinet $262.1 TSL 1, 2, 3 Design Options +

Brushless DC Evaporator Fan

Motor

Variable Anti

- Sweat

Heater Control

Brushless DC

Condenser Fan

Motor
Variable Speed Compressor -

TSL 5 EL 6 (36) TSL 4 Design Options

+ 7.2 sqft VIP in FF

Cabinet $280.4 TSL 4 Design Options

+ 9.2 sqft VIP in FF

Door
5.9 sqft VIP in FZR

Door
14.8 sqft VIP in FZR

Cabinet

10.3 sqft VIP in FF

Cabinet $265.212

- 37 Table 12.4

. 34 Capital Conversion Costs for Product Class 7 ( Automatic Defrost with

Side

- Mounted Freezer with Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the

22 Cubic Foot PC 7

Unit Capital

Conversion

Costs for the

22 Cubic Foot

PC 7 Unit

2009$

millions Design Option s Considered for the

26 Cubic Foot PC 7

Unit Capital

Conversion

Costs for the

26 Cubic Foot

PC 7 Unit

2009$

millions

TSL 1 EL 3 (20) Increase Compressor

EER from 5.51 to

6.26

Brushless DC

Condenser Fan

Motor

Increase Evaporator

Area 19%

Increase Condenser Size by 27%

Variable Anti

- Sweat

Heater Control for Ice Dispenser
5.1 sqft VIP in FZR

Door $179.3 Increase Compresso r EER from 5.21

to 6.11

Brushless DC Evaporator Fan

Motor

Brushless DC

Condenser Fan

Motor -

TSL 2,

TSL 3 EL 4 (25) TSL 1 Design Options +
Remove 5.1 sqft VIP

FZR Door
Variable Speed Compressor
3.0 sqft VIP in FZR

Cabinet $179.3 TSL 1 Design Options +
Increase Compressor

EER from 6.11

to 6.26

Variable Anti

- Sweat

Heater Control

for Ice Dispenser

Increase Condenser Size by 10%
6.2 sqft VIP in FZR

Door $164.4

TSL 4 EL 5 (30) TSL 2 and 3 Design Options +
7.4 sqft more VIP in

FZR Cabinet
5.1 sqft VIP in FZR

Door
8 sqft VIP in FF Door
7.8 sqft VIP in FF

Cabinet $275.8 TSL 2 and 3 Design Options +
Variable Speed Compressor
2.6 sqft VIP in FZR

Cabinet $173.1

TSL 5 EL 6 (33 ) TSL 4 Design Options +
4.9 sqft more VIP in

FF Cabinet $293.0 TSL 4 Design Options +
9.1 sqft more VIP in

FZR Cabinet
8.2 sqft VIP in FF $273.212

- 38 Door
13.4 sqft VIP in FF

Cabinet

Table 12.4

. 35 Capital Conversion Costs for Product Class 9 ( Upright Freezers with

Automatic Defrost ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 14

Cubic Foot PC 9 Unit Capital

Conversion

Costs for the

14 Cubic Foot

PC 9 Unit
2009$ millions Design Option s Considered for the 20

Cubic Foot PC 9 Unit Capital

Conversion

Costs for the

20 Cubic Foot

PC 9 Unit
2009$ millions

TSL 1 EL 3 (20) Brushless DC Evaporator

Fan Motor

Increase Compressor EER

from 5.04 to 6.08

Add 1 inch Insulation to

Door
Adaptive Defrost $9.6 Brushless DC Evaporator Fan

Motor

Increase Compressor

EER from 5.73 to

6.24
Adaptive Defrost
Increase Evaporator Size by 22%

Forced Convection

Condenser with

Brushless DC

Condenser Fan $11.2

TSL 2 EL 5 (30 ) TSL 1 Design Options +

Add 0.56 inch Insulation

to Cabinet $38.4 TSL 1 Design Options +

Add 0.7 inch Insulation

to Door

Add 0.5 inch Insulation

to Cabinet $48.8

TSL 3 EL 6 (35 ) TSL 2 Design Options +

Remove 0.06 inch

Cabinet Insulation
Variable Speed Compressor $38.4 TSL 2 Design Options +

Add 0.5 inch Insulation

to Cabinet $48.8

TSL 4 EL 7 (40 ) TSL 3 Design Options +

Add 0.5 Inch Insulation to

Cabinet
5.7 sqft VIP in Door $46.6 TSL 3 Design Options +
Variable Speed Compressor $48.8

TSL 5 EL 8 (44 ) TSL 4 Design Options +
4.6 sqft more VIP in Door
18.9 sqft VIP in Cabinet $81.3 TSL 4 Design Options +
14.4 sqft VIP in Door
23.1 sqft VIP in Cabinet $103.812

- 39 Table 12.4

. 36 Capital Conversion Costs for Product Class 10 ( Chest Freezers and All Other Freezers Except Compact Freezers ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 15

Cubic Foot PC 10 Unit Capital

Conversion

Costs for the

15 Cubic Foot

PC 10 Unit
2009$ millions Design Option s Considered for the 20

Cubic Foot PC 10 Unit Capital

Conversion

Costs for the

20 Cubic Foot

PC 10 Unit
2009$ millions

TSL 1 EL 3 (20) Increase Compressor EER

from 4.92 to 6.08

Add 0.24 inch Insulation

to Door $9.8 Increase Condenser Size by 24%

Increase Compressor

EER from 5.71 to

6.25

Convert Door Insulation

to PU Foam

Add 1 inch Insulation to

Door $19.6

TSL 2 EL 4 (25)* TSL 1 Design Options +

Add 0.76 inch Insulation

to Door

Add 0.15 inch Insulation

to Cabinet $39.0 TSL 1 Design Options +

Add 0.35 inch Insulation

to Cabinet $48.8

TSL 3 EL 5 (30 ) TSL 2 Design Options +

Add 0.35 inch Insulation

to Cabinet $39.0 TSL 2 Design Options +

Add 0.4 inch Insulation

to Cabinet 4.5 sqft VIP in Bottom

Wall $55.9

TSL 4 EL 6 (35 ) TSL 3 Design Options +
Variable Speed Compressor $39.0 TSL 3 Design Options +
Remove 4.5 sqft VIP

Bottom Wall
Variable Speed Compressor $48.8

TSL 5 EL 7 (41 ) TSL 4 Design Options +

Add 0.25 inch Insulation

to Cabinet
8.2 sqft VIP on bottom
8.8 sqft VIP on door $51.7 TSL 4 Design Options +
10.2 sqft VIP in Bottom

Wall
12 sqft VIP in Door $83.0

* Efficiency level for product class 10A is 30%

.12

- 40 Table 12.4

. 37 Capital Conversion Costs for Product Class 11 ( Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 1.7

Cubic Foot PC 11 Unit Capital

Conversion

Costs for the

1.7 Cubic Foot

PC 11 Unit
2009$ millions Design Option s Considered for the 4

Cubic Foot PC 11 Unit Capital

Conversion

Costs for the

4 Cubic Foot

PC 11 Unit
2009$ millions

TSL 1 EL 3 (20) Increase Evaporator Size by 20%

Increase Compressor EER

from 3.02 to 3.47

Increase Condenser Size by 19%

Add 3/4 inch Insulation in

Door $12.4 Increase Compressor

EER from 4.57 to

5.3

Increase Condenser Size by 22%

Add 3/4 inch Insulation

to Door $11.2

TSL 2 EL 4 (25) TSL 1 Design Options +

Add 0.18 inch Insulation

in Cabinet $34.6 TSL 1 Design Options +

Convert to Isobutane Refrigerant

Add 1/4 inch Insulation

to Door $11.2

TSL 3 EL 5 (30 ) TSL 2 Design Options +

Add 0.57 inch Insulation

in Cabinet $34.6 TSL 2 Design Options +

Add 0.22 inch Insulation

to Cabinet

Remove 1/4 inch

Insulation from

Door $33.4

TSL 4 EL 7 (4 0) Eliminate all previous Design Options
Variable Speed Compressor

Convert to Isobutane Refrigerant - TSL 3 Design Options +

Add 0.53 inch Insulation

to Cabinet $33.4

TSL 5 EL 10 (59 ) TSL 4 Design Options +
Increase Evaporator Size by 20%

Increase Condenser Size by 19%

Add 3/4 inch Insulation in

Door

Add 3/4 inch Insulation in

Cabinet
Add 4.7 sqft VIP in

Cabinet
Add 2.2 sqft VIP in Door $71.8 TSL 4 Design Options +
Variable Speed Compressor

Remove 0.2 inch Cabinet

Insulation
7.2 sqft VIP Cabinet
4.2 sqft VIP Door $90.912

- 41 Table 12.4

. 38 Capital Conversion Costs for Product Class 18 ( Compact Chest

Freezers ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 3.4

Cubic Foot PC 18 Unit Capital

Conversion

Costs for the

3.4 Cubic Foot

PC 18 Unit
2009$ millions Design Option s Consi dered for the 7

Cubic Foot PC 18 Unit Capital

Conversion

Costs for the

7 Cubic Foot

PC 18 Unit
2009$ millions

TSL 1

, TSL 2 EL 1 (1 0) * Increase Compressor EER

from 3.74 to 4.17 - Increase Compressor

EER from 4.50 to

5.02 -

TSL 3 EL 2 (1 5) TSL 1 and 2 Design Options +
Increase Compressor EER

from 4.17 to 4.29

Add 1 inch Insulation to

Door $4.2 TSL 1 and 2 Design Options +
Increase Compressor

EER from 5.02 to

5.27

Add 0.12 inch Insulation

to Door $4.2

TSL 4 EL 4 (25 ) TSL 3 Design Options +

Remove 1/4 inch

Insulation from Door

Add 0.75 inch Insulation

to Cabinet
Add 2.1 sqft VIP in

Bottom Wall $20.5 TSL 3 Design Options +

Add 0.63 inch Insulation

to Door

Add 0.62 inch Insulation

to Cabinet $16.9

TSL 5 EL 7 (42 ) Remove all previous Design Options
Variable Speed Compressor

Add 0.75 inch Insulation

to Door

Add 0.75 inch Insulation

to Cabinet
Add 2.1 sqft VIP in

Bottom Wall
Add 3.3 sqft VIP in Door $22.8 Remove all previous Design Options
Variable Speed Compressor

Add 0.76 inch Insulation

to Cabinet

Add 3/4 inch Insulation

to Door
Add 4.1 sqft VIP to

Cabinet Bottom
Add 5.1 sqft VIP to Door $34.9

* Efficiency level for product class 13 and 15 is 15%, efficiency level for product class 14 is 20%, and efficiency level for product class 13A is 25%

.12

- 42 Table 12.4

. 39 Capital Conversion Costs for Product Class 3A

- BI (Built

- In All

Refrigerators

- Automatic Defrost ) by TSL

TSL Efficiency Level (% reduction from

baseline energy use) Design Option s Considered for the PC 3A

BI Unit Capital Conversion

Costs for the PC 3A

- BI

Unit
2009$ millions

TSL 1 EL 1 (10 ) Decrease Both Compressor Capacity (same EER)

10% Increase to Condenser Area

Brushless DC Evaporator Fan Upper Evaporator $0.5

TSL 2 EL 2 (1 5) TSL 1 Design Options +

Brushless DC Evaporator Fan Lower Evaporator

Brushless DC Condenser Fan $0.5

TSL 3 EL 3 (20 ) TSL 2 Design Options +

Full VIP

-- Upper Door

Partial VIP

-- Lower Cabinet $14.9

TSL 4 EL 4 (25 ) TSL 3 Design Options +

Full VIP

-- Lower Cabinet

Full VIP

-- Upper Cabinet

Upper System V ariable Speed Compressor $15.5

TSL 5 EL 5 (29 ) TSL 4 Design Options +

Full VIP

-- Lower Door

Lower System V ariable Speed Compressor $15.812

- 43 Table 12.4

. 40 Capital Conversion Costs for Product Class 5

- BI ( Built

- In Refrigerator

- Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without

an Automatic Icemaker ) by TSL

TSL Efficiency Level (% reduction from

baseline energy use) Design Option s Considered for the PC 5

- BI

Unit Capital Conversion

Costs for the PC 5

- BI

Unit
2009$ millions

TSL 1 EL 1 (10) Decrease FF Compressor Capacity (same EER)

10% Increase to Condenser Area
Increase FRZ Compressor EER to 6.26
1.0 sqft VIP

-- FRZ Door $16.9

TSL

2

, TSL 3 EL 2 (15) TSL 1 Design Options +
Remove 1.0 sqft VIP

-- FZR Door
FRZ Variable Speed Compressor with

B rushless DC Condenser Fan $0.6

TSL 4 EL 4 (25) TSL 2 and 3 Design Options +
14.6 sqft VIP

-- FRZ Cabinet (Partial Coverage)
Add 3.6 sqft VIP

-- FZR Cabinet (Full Coverage)
6.0 sqft VIP

-- FRZ Door (Full Coverage)
FF Variable Speed Compressor with B rushless

DC Condenser Fan $19.1

TSL 5 EL 5 (27) TSL 4 Design Options +
9.4 sqft VIP

-- FF Door (Full Coverage)
3.8 sqft VIP

-- FF Cabinet (Full Coverage) $22.5

Table 12.4

. 41 Capital Conversion Costs for Product Class 8

- BI ( Built

- In Refrigerator

- Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction from baseline energy use) Design Option s Considered for PC 7

- BI Unit Capital Conversion Costs

for the PC 7

- BI Unit
2009$ millions

TSL 1

, TSL 2 EL 1 (1 0) High Efficiency Compressor
Heat Exchanger Improvement

Variable Anti

- S weat Heater Control

Partial VIP to Freezer Door $22.4

TSL 3,

TSL 4 EL 3 (20 ) TSL 1 and 2 Design Options +

Eliminate VIP to Freezer Door
Variable Speed Compressor

VIP to Freezer Door

VIP to Freezer Cabinet $23.8

TSL 5 EL 4 (22 ) TSL 3 and 4 Design Options +

VIP to Fresh Food Cabinet

VIP to Fresh Food Door $29.312

- 44 Table 12.4

. 42 Capital Conversion Costs for Product Class 9

- BI (Built

- In Upright

Freezers with Automatic Defrost Without an Automatic Icemaker )

TSL Efficiency Level (%

reduction from baseline energy use) Design Option s Considered for PC 9

- BI Unit Capital Conversion Costs

for the PC 9

- BI Unit
2009$ millions

TSL 1 EL 1 (1 0) Increase Compressor EER to 6.29

-

TSL 2 EL 3 (20 ) TSL 1 Design Options +

B rushless DC Fan for Evaporator

B rushless DC Fan for Condenser

10% Increase to Condenser Area
Variable Speed Compressor with B rushless DC

Fans
1.5 sqft VIP Upper Door $14.3

TSL 3

, TSL 4 EL 4 (25) TSL 2 Design Options +
VIP Upper Door (Full Coverage)
13.1 sqft VIP Lower Cabinet $15.3

TSL 5 EL 5 (27 ) TSL 3 and 4 Design Options +
VIP Lower Cabinet (Full Coverage)

VIP

-- Lower Door

VIP

-- Upper Cab inet $16.1

12.4.8.2 Product Conversion Costs

DOE based its estimates of the product conversion costs that would be required to meet each TSL on information obtained from manufacturer interviews, the design pathways analyzed in the engineering analysis, and market information about the number of platf orm and product families for each manufacturer. Similar to how it calculated capital conversion costs, for all freestanding product classes DOE segmented product conversion costs equally between the two product sizes analyzed in the engineering analysis fo r each efficiency level for each analyzed product class. Because DOE analyzed one product for the built

- in product classes, DOE calculated the product conversion costs

for each built

- in product class using the design options for the one analyzed product.

DOE assigned estimates for the total product development required for each design option based on the necessary engineering resources required to implement each design option across a product platform. DOE assumed that each estimate of the product developm ent effort included engineering resources for R & D , testing, trade costs, and marketing costs to re cast product literature. DOE multiplied the estimate by the number of platforms and product families for each manufacturer. DOE assumed that more

efficient co mpressors, larger condensers, more efficient fan motors, adaptive defrost, and

variable anti

- sweat would be the least costly design options to implement across a product plat f o rm because they constitute direct component swapouts. However, DOE

assumed that forced convection and larger evaporators would take a slightly greater effort. DOE assumed that variable speed compressors would be a more difficult component to implement because of the interaction with other systems. DOE assigned a greater weight to thi s design option and also added engineering time if the baseline unit12

- 45 analyzed in the engineering analysis did not have electronic controls. DOE also added a significant cost for manufacturers to train servicers if isobutane were used as a design option. DO E also assumed that VIP use and/or wall thickness increases would require more significant changes to existing platforms than the above

- mentioned design options that amount to component swaps . For wall thickness increases, DOE used product development efforts that were analogous to designing a new platform. Because VIPs are not currently common at large scale to most products in the industry, DOE assumed more substantial product development co sts for that than other component swaps . However, DOE also assumed that manufacturers’ recent experience with the technology would require less effort than designing completely new products , and implementing additional VIPs would require a less substantial effort than the first VIP panel.

Finally, DOE estimated industry product conversion costs by extrapolating the interviewed manufacturers’ product conversion costs for each product class to account for the market share of companies that were not interview ed. DOE’s estimates of the product conversion costs for all of the refrigeration products addressed in this rulemaking

can be found in Table 12.4

. 43 through Table 12.4

. 53 below.12

- 46 Table 12.4

. 43 Product Conversion Costs for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer With out Through

- the

- Door Ice Service) by TSL

TSL Efficiency Level (%

reduction

from

baseline

energy

use) Design Option s Considered for the

16 Cubic Foot PC 3

Unit Product

Conversion

Costs for the

16 Cubic Foot

PC 3 Unit
2009$ millions Design Option s Considered for the

21 Cubic Foot PC 3

Unit Product

Conversion

Costs for the

21 Cubic Foot

PC 3 Unit
2009$ millions

TSL

1

, TSL 2 EL 3 (20) Increase Condenser Size by 100%
Increase Compressor

EER from 5.55

to 6. 26

Brushless DC

Condenser Fan

Motor

Increase Evaporator Size by 14%
Adaptive Defrost
Variable Speed Compressor $45.2 Increase Compressor

EER from 5.94 to

6.08

Increase Evaporator Size by 25%

Brushless DC

Condenser Fan

Motor $21.7

TSL 3 EL 4 (25)* TSL 1, TSL 2 Design Options +
12.2 sqft VIP in

FZR Cabinet $72.2 TSL 1, TSL 2 Design Options +

Brushless DC Evaporator Fan

Motor $26.7

TSL 4 EL 5 (30) TSL 3 Design Options +
2.9 sqft VIP in FZR

Door
7.1 sqft VIP in FF

Door
6.7 sqft VIP in FF

Cabinet $88.5 TSL 3 Design Options

+ Adaptive Defrost
3.6 sqft VIP in FZR

Door
7.6 sqft VIP in FZR

Cabinet $61.6

TSL 5 EL 6 (36) TSL 4 Design Options +
1.9 sqft more VIP in

FF $88.5 TSL 4 Design Options

+ Variable Speed Compressor
8.5 sqft VIP in FF

Door
10.9 sqft VIP in FF

Cabinet $85.1

* Efficiency level for product classes 1, 1A, and 2 is 20%

.12

- 47 Table 12.4

. 44 Product Conversion Costs for Product Class 5 ( Automatic Defrost

with Bottom

- Mounted Freezer without Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction

from baseline

energy use) Design Option s Considered for

the 18.5 Cubic

Foot PC 5 Unit Product

Conversion

Costs for the

18.5 Cubic Foot

PC 5 Unit
2009$ millions Design Option s Considered for

the 25 Cubic

Foot PC 5 Unit Pro duct

Conversion

Costs for the 25

Cubic Foot PC 5

Unit
2009$ millions

TSL 1

, TSL 2,

TSL 3 EL 3 (20) Increase Compressor

EER from

5.61 to 6.26

Brushless DC Evaporator

Fan Motor
Adaptive Defrost

Brushless DC

Condenser

Fan Motor

Variable

Antisweat

Heat Control

Increase Evaporator Size by 25% $20.8 Increase Compressor

EER from

5.00 to 6.26 $4.9

TSL 4 EL 5 (30) TSL 1, 2, 3 Design Options +
Variable Speed Compressor

4.8 sqft VIP in

FZR Door
6.8 sqft VIP in

FF Door
13.7 sqft VIP in

FZR Cabinet $45.0 TSL 1, 2, 3 Design Options +

Brushless DC Evaporator

Fan Motor

Variable Anti

Sweat Heater

Control

Brushless DC

Condenser

Fan Motor
Variable Speed Compressor $18.9

TSL 5 EL 6 (36) TSL 4 Design Options +
7.2 sqft VIP in

FF Cabinet $47.6 TSL 4 Design Options + 9.2 sqft VIP in

FF Door
5.9 sqft VIP in

FZR Door
14.8 sqft VIP in

FZR Cabinet

10.3 sqft VIP in

FF Cabinet $41.412

- 48 Table 12.4

. 45 Product Conversion Costs for Product Class 7 ( Automatic Defrost

with Side

- Mounted Freezer with Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the

22 Cubic Foot PC 7

Unit Product

Conversion

Costs for the

22 Cubic Foot

PC 7 Unit

2009$

millions Design Option s Considered for the

26 Cubic Foot PC 7

Unit Product

Conversion

Costs for the

26 Cubic Foot

PC 7 Unit

2009$

millions

TSL 1 EL 3 (20) Increase Compressor

EER from 5.51 to

6.26

Brushless DC

Condenser Fan

Motor

Increase Evaporator

Area 19%

Increase Condenser Size by 27%

Variable Anti

- Sweat

Heater Control for Ice Dispenser
5.1 sqft VIP in FZR

Door $45.6 Increase Compresso r EER from 5.21

to 6.11

Brushless DC Evaporator Fan

Motor

Brushless DC

Condenser Fan

Motor $15.4

TSL 2,

TSL 3 EL 4 (25) TSL 1 Design Options +
Remove 5.1 sqft VIP

FZR Door
Variable Speed Compressor
3.0 sqft VIP in FZR

Cabinet $57.7 TSL 1 Design Options +
Increase Compressor

EER from 6.11

to 6.26

Variable Anti

- Sweat

Heater Control

for Ice Dispenser

Increase Condenser Size by 10%
6.2 sqft VIP in FZR

Door $46.4

TSL 4 EL 5 (30) TSL 2 and 3 Design Options +
7.4 sqft more VIP in

FZR Cabinet
5.1 sqft VIP in FZR

Door
8 sqft VIP in FF Door
7.8 sqft VIP in FF

Cabinet $72.3 TSL 2 and 3 Design Options +
Variable Speed Compressor

2.6 sqft VIP in FZR

Cabinet $62.0

TSL 5 EL 6 (33) TSL 4 Design Options +
4.9 sqft more VIP in

FF Cabinet $72.3 TSL 4 Design Options +
9.1 sqft more VIP in

FZR Cabinet
8.2 sqft VIP in FF $70.912

- 49 Door
13.4 sqft VIP in FF

Cabinet

Table 12.4

. 46 Product Conversion Costs for Product Class 9 ( Upright Freezers with

Automatic Defrost ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 14

Cubic Foot PC 9 Unit Product

Conv ersion

Costs for the

14 Cubic Foot

PC 9 Unit
2009$ millions Design Option s Considered for the 20

Cubic Foot PC 9 Unit Product

Conversion

Costs for the

20 Cubic Foot

PC 9 Unit
2009$ millions

TSL 1 EL 3 (20) Brushless DC Evaporator

Fan Motor

Increase Compressor EER

from 5.04 to 6.08

Add 1 inch Insulation to

Door
Adaptive Defrost $6.1 Brushless DC Evaporator Fan

Motor

Increase Compressor

EER from 5.73 to

6.24
Adaptive Defrost
Increase Evaporator Size by 22%

Forced Convection

Condenser with

Brushless DC

Condenser Fan $7.6

TSL 2 EL 5 (30) TSL 1 Design Options +

Add 0.56 inch Insulation

to Cabinet $12.8 TSL 1 Design Options +

Add 0.7 inch Insulation

to Door

Add 0.5 inch Insulation

to Cabinet $16.5

TSL 3 EL 6 (35) TSL 2 Design Options +

Remove 0.06 inch

Cabinet Insulation
Variable Speed Compressor $15.6 TSL 2 Design Options +

Add 0.5 inch Insulation

to Cabinet $16.5

TSL 4 EL 7 (40) TSL 3 Design Options +

Add 0.5 Inch Insulation to

Cabinet
5.7 sqft VIP in Door $16.5 TSL 3 Design Options +
Variable Speed Compressor $19.3

TSL 5 EL 8 (44) TSL 4 Design Options +
4.6 sqft more VIP in Door
18.9 sqft VIP in Cabinet $17.5 TSL 4 Design Options +
14.4 sqft VIP in Door
23.1 sqft VIP in Cabinet $21.212

- 50 Table 12.4

. 47 Product Conversion Costs for Product Class 10 ( Chest Freezers and All Other Freezers Except Compact Freezers ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 15

Cubic Foot PC 10 Unit Product

Conversion

Costs for the

15 Cubic Foot

PC 10 Unit
2009$ millions Design Option s Considered for the 20

Cubic Foot PC 10 Unit Product

Conversion

Costs for the

20 Cubic Foot

PC 10 Unit
2009$ millions

TSL 1 EL 3 (20) Increase Compressor EER

from 4.92 to 6.08

Add 0.24 inch Insulation

to Door $3.9 Increase Condenser Size by 24%

Increase Compressor

EER from 5.71 to

6.25

Convert Door Insulation

to PU Foam

Add 1 inch Insulation to

Door $4.9

TSL 2 EL 4 (25)* TSL 1 Design Options +

Add 0.76 inch Insulation

to Door

Add 0.15 inch Insulation

to Cabinet $10.4 TSL 1 Design Options +

Add 0.35 inch Insulation

to Cabinet $11.5

TSL 3 EL 5 (30) TSL 2 Design Options +

Add 0.35 inch Insulation

to Cabinet $10.4 TSL 2 Design Options +

Add 0.4 inch Insulation

to Cabinet 4.5 sqft VIP in Bottom

Wall $12.4

TSL 4 EL 6 (35) TSL 3 Design Options +
Variable Speed Compressor $13.2 TSL 3 Design Options +
Remove 4.5 sqft VIP

Bottom Wall
Variable Speed Compressor $14.3

TSL 5 EL 7 (41) TSL 4 Design Options +

Add 0.25 inch Insulation

to Cabinet
8.2 sqft VIP on bottom
8.8 sqft VIP on door $14.8 TSL 4 Design Options +
10.2 sqft VIP in Bottom

Wall
12 sqft VIP in Door $16.2

* Efficiency level for product class 10A is 30%

.12

- 51 Table 12.4

. 48 Product Conversion Costs for Product Class 11 ( Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 1.7

Cubic Foot PC 11 Unit Product

Conversion

Costs for the

1.7 Cubic Foot

PC 11 Unit
2009$ millions Design Option s Considered for the 4

Cubic Foot PC 11 Unit Product

Conversion

Costs for the

4 Cubic Foot

PC 11 Unit
2009$ millions

TSL 1 EL 3 (20) Increase Evaporator Size by 20%

Increase Compressor EER

from 3.02 to 3.47

Increase Condenser Size by 19%

Add 3/4 inch Insulation in

Door $7.1 Increase Compressor

EER from 4.57 to

5.3

Increase Condenser Size by 22%

Add 3/4 inch Insulation

to Door $4.7

TSL 2 EL 4 (25) TSL 1 Design Options +

Add 0.18 inch Insulation

in Cabinet $10.3 TSL 1 Design Options +

Convert to Isobutane Refrigerant

Add 1/4 inch Insulation

to Door $20.8

TSL 3 EL 5 (30) TSL 2 Design Options +

Add 0.57 inch Insulation

in Cabinet $10.3 TSL 2 Design Options +

Add 0.22 inch Insulation

to Cabinet

Remove 1/4 inch

Insulation from

Door $24.6

TSL 4 EL 7 (40) Eliminate all previous Design Options
Variable Speed Compressor

Convert to Isobutane Refrigerant $8.2 TSL 3 Design Options +

Add 0.53 inch Insulation

to Cabinet $24.6

TSL 5 EL 10 (59) TSL 4 Design Options +
Increase Evaporator Size by 20%

Increase Condenser Size by 19%

Add 3/4 inch Insulation in

Door

Add 3/4 inch Insulation in

Cabinet
Add 4.7 sqft VIP in

Cabinet
Add 2.2 sqft VIP in Door $17.3 TSL 4 Design Options +

Variable Speed Compressor

Remove 0.2 inch Cabinet

Insulation
7.2 sqft VIP Cabinet
4.2 sqft VIP Door $30.512

- 52 Table 12.4

. 49 Product Conversion Costs for Product Class 18 ( Compact Chest

Freezers ) by TSL

TSL Efficiency Level (%

reduction

from

baseline energy use) Design Option s Considered for the 3.4

Cubic Foot PC 18 Unit Product

Conversion

Costs for the

3.4 Cubic Foot

PC 18 Unit
2009$ millions Design Option s Considered for the 7

Cubic Foot PC 18 Unit Product

Conversion

Costs for the

7 Cubic Foot

PC 18 Unit
2009$ millions

TSL 1

, TSL 2 EL 1 (10)* Increase Compressor EER

from 3.74 to 4.17 $1.3 Increase Compressor

EER from 4.50 to

5.02 $2.3

TSL 3 EL 2 (15) TSL 1 and 2 Design Options +
Increase Compressor EER

from 4.17 to 4.29

Add 1 inch Insulation to

Door $2.8 TSL 1 and 2 Design Options +
Increase Compressor

EER from 5.02 to

5.27

Add 0.12 inch Insulation

to Door $3.6

TSL 4 EL 4 (25) TSL 3 Design Options +

Remove 1/4 inch

Insulation from Door

Add 0.75 inch Insulation

to Cabinet
Add 2.1 sqft VIP in

Bottom Wall $8.0 TSL 3 Design Options +

Add 0.63 inch Insulation

to Door

Add 0.62 inch Insulation

to Cabinet $7.4

TSL 5 EL 7 (42) Remove all previous Design Options
Variable Speed Compressor

Add 0.75 inch Insulation

to Door

Add 0.75 inch Insulation

to Cabinet
Add 2.1 sqft VIP in

Bottom Wall
Add 3.3 sqft VIP in Door $8.5 Remove all previous Design Options
Variable Speed Compressor

Add 0.76 inch Insulation

to Cabinet

Add 3/4 inch Insulation

to Door

Add 4.1 sqft VIP to

Cabinet Bottom
Add 5.1 sqft VIP to Door $10.4

* Efficiency level for product class 13 and 15 is 15%, efficiency level for product class 14 is 20%, and efficiency level for product class 13A is 25%

.12

- 53 Table 12.4

. 50 Product Conversion Costs for Product Class 3A

- BI (Built

- In All

Refrigerators

- Automatic Defrost ) by TSL

TSL Efficiency Level (% reduction from

baseline energy use) Design Option s Considered for the PC 3A

BI Unit Product Conve rsion

Costs for the PC 3A

- BI

Unit
2009$ millions

TSL 1 EL 1 (10) Decrease Both Compressor Capacity (same EER)

10% Increase to Condenser Area

Brushless DC Evaporator Fan Upper Evaporator $4.2

TSL 2 EL 2 (15) TSL 1 Design Options +

Brushless DC Evaporator Fan Lower Evaporator

Brushless DC Condenser Fan $6.2

TSL 3 EL 3 (20) TSL 2 Design Options +

Full VIP

-- Upper Door

Partial VIP

-- Lower Cabinet $12.2

TSL 4 EL 4 (25) TSL 3 Design Options +

Full VIP

-- Lower Cabinet

Full VIP

-- Upper Cabinet

Upper System V ariable Speed Compressor $14.2

TSL 5 EL 5 (29) TSL 4 Design Options +

Full VIP

-- Lower Door

Lower System V ariable Speed Compressor $16.212

- 54 Table 12.4

. 51 Product Conversion Costs for Product Class 5

- BI ( Built

- In Refrigerator

- Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without

an Automatic Icemaker ) by TSL

TSL Efficiency Level (% reduction from

baseline energy use) Design Option s Considered for the PC 5

- BI

Unit Product Conversion

Costs for the PC 5

- BI

Unit
2009$ millions

TSL 1 EL 1 (10) Decrease FF Compressor Capacity (same EER)

10% Increase to Condenser Area
Increase FRZ Compressor EER to 6.26
1.0 sqft VIP

-- FRZ Door $12.6

TSL

2

, TSL 3 EL 2 (15) TSL 1 Design Options +
Remove 1.0 sqft VIP

-- FZR Door
FRZ Variable Speed Compressor with

B rushless DC Condenser Fan $7.7

TSL 4 EL 4 (25) TSL 2 and 3 Design Options +
14.6 sqft VIP

-- FRZ Cabinet (Partial Coverage)
Add 3.6 sqft VIP

-- FZR Cabinet (Full Coverage)
6.0 sqft VIP

-- FRZ Door (Full Coverage)

FF Variable Speed Compressor with B rushless

DC Condenser Fan $15.8

TSL 5 EL 5 (27) TSL 4 Design Options +
9.4 sqft VIP

-- FF Door (Full Coverage)
3.8 sqft VIP

-- FF Cabinet (Full Coverage) $19.1

Table 12.4

. 52 Product Conversion Costs for Product Class 7

- BI ( Built

- In Refrigerator

- Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door Ice Service ) by TSL

TSL Efficiency Level (%

reduction from baseline energy use) Design Option s Considered for PC 7

- BI Unit Product Conversion

Costs for the PC 7

- BI

Unit
2009$ millions

TSL 1

, TSL 2 EL 1 (10) High Efficiency Compressor
Heat Exchanger Improvement

Variable Anti

- S weat Heater Control

Partial VIP to Freezer Door $22.3

TSL 3,

TSL 4 EL 3 (20) TSL 1 and 2 Design Options +

Eliminate VIP to Freezer Door
Variable Speed Compressor

VIP to Freezer Door

VIP to Freezer Cabinet $29.0

TSL 5 EL 4 (22) TSL 3 and 4 Design Options +

VIP to Fresh Food Cabinet

VIP to Fresh Food Door $33.512

- 55 Table 12.4

. 53 Product Conversion Costs for Product Class 9

- BI (Built

- In Upright

Freezers with Automatic Defrost Without an Automatic Icemaker ) by TSL

TSL Efficiency Level (%

reduction from baseline energy use) Design Option s Considered for PC 9

- BI Unit Product Conversion

Costs for the PC 9

- BI

Unit
2009$ millions

TSL 1 EL 1 (10) Increase Compressor EER to 6.29 $2.2

TSL 2 EL 3 (20) TSL 1 Design Options +

B rushless DC Fan for Evaporator

B rushless DC Fan for Condenser

10% Increase to Condenser Area
Variable Speed Compressor with B rushless DC

Fans
1.5 sqft VIP Upper Door $14.7

TSL 3,

TSL 4 EL 4 (25) TSL 2 Design Options +
VIP Upper Door (Full Coverage)
13.1 sqft VIP Lower Cabinet $15.9

TSL 5 EL 5 (27) TSL 3 and 4 Design Options +

VIP Lower Cabinet (Full Coverage)

VIP

-- Lower Door

VIP

-- Upper Cab inet $18.4

12.4.9 Markup Scenarios

DOE used several standards case markup scenarios to represent the uncertainty about the impacts of amended energy conservation standards on prices and profitability. In the base case, DOE used the same baseline markups calculated in the engineering analysi s for all product classes. In the standards case, DOE modeled two markup scenarios to represent the uncertainty about the potential impacts on prices and profitability following the implementation of amended energy conservation standards : (1)

a flat markup scenario, and (2) a preservation of operation profit scenario. These scenarios lead to different markups values, which, when applied to the inputted MPCs, result in varying revenue and cash flow impacts.

12.4.9.1 Flat Markup Scenario

The flat markup scenario assumes that the cost of goods sold for each product is marked up by a flat percentage to cover standard SG&A expenses, R&D expenses, and profit. The flat markup scenario uses the baseline manufacturer markup (d iscussed in

c hapter 6 ) for all products in bo th the base case and the standards case. To derive this percentage, DOE evaluated publicly available financial information for manufacturers of white goods. DOE also requested feedback on this value during manufacturer interviews. DOE used a markup of 1.26 for freestanding refrigeration products ( standard

- size refrigerator

- freezers, standard

- size freezers, and compact refrigeration products ) and 1.40

for built

- in refrigeration products. This scenario represents the upper bound of industry12

- 56 profitability in t he standards case because manufacturers are able to fully pass through

additional costs due to standards to their customers.

12.4.9.2 Preservation of Operating Profit Scenario

DOE also modeled a lower bound profitability scenario. During interviews, multiple manufa cturers stated that the higher production costs could severely harm profitability. Because of the highly competitive market, several manufacturers suggested that the additional costs required at higher efficiencies could not be fully passed through

to c ust omers. In particular, several manufacturers noted their customer base is composed of a limited number of retailers that have substantial buying power and are resistant to price increases. They also noted that the average costs of refrigeration products hav e been fairly constant or fallen within product classes even as new products and additional features have been added. Finally, manufacturers noted that retail customers price products at fixed price points with jumps in feature bundles accounting for the d ifferent price points.

Because of the market dynamics among manufacturers and retailers and because of the pressure to keep the current price points fixed for a given bundle, DOE also modeled the preservation of operating profit markup scenario. In this sc enario, the

manufacturer markups are lowered so that, in the standards case, manufacturers are only

able to maintain the base

- case total operating profit in absolute dollars , despite higher product costs and investment. DOE implemented this scenario in the GRIM by lowering

the manufacture r markups at each TSL to yield approximately the same earnings before

interest and taxes in the standards case in the year after the compliance date of the amended standards, as in the base case

. This scenario represents th e lower bound of industry profitability following amended energy conservation standards because higher production costs and the investments required to comply with the amended energy

conservation standard do not yield additional operating profit.

DOE impl emented this scenario by calculating a markup that yielded the same EBIT in the base case and the standards case for each product class. For most TSLs, DOE only calibrated a lower markup for the efficiency level that was minimally compliant to

the amended energy conservation standards (since products that exceed the standard would not be impacted by the standards). However, for TSLs that analyzed the levels recommended in the Joint Comments, shipments for some of the unanalyzed product classes corresponded to different percentage reductions in baseline energy use. For these TSLs, DOE calculated a markup for each efficiency level impacted by an efficiency level that was different than the analyzed product class. Each of these markups maintained the

base case EBIT for the analyzed product class at the efficiency level recommended by the Joint Comments. In this way, amended energy conservation standards would also impact the profitability of these products in the preservation of operating profit scenario.

Howeve r, for all TSLs the base case operating profit is maintained as production costs rise, leading to profitability impacts in the standard case under the preservation of operating profit markup scenario. Table 12.4

. 54 through Table 12.4

. 64 lists the products DOE analyzed with the corresponding markups at each TSL

.12

- 57 Tab le 12.4

. 54 Preservation of Operating Profit Markups for Product Class 3 (Automatic Defrost with Top

- Mounted Freezer Without Through

- the

- Door Ice Service)

E fficiency Level (% reduction

from baseline

energy use ) Baseline T SL 1 TSL 2 TSL 3 * TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

EL 3 ( 20 ) 1.2600 1.2464 1.2464 1.2446

- -

EL 4 ( 25 ) 1.2600 1.2600 1.2600 1.2409

- -

EL 5 ( 30 ) 1.2600 1.2600 1.2600 1.2600 1.2312

-

EL 6 ( 36 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.2213

* Efficiency level for product classes 1, 1A, and 2 is 20%.

Table 12.4

. 55 Preservation of Operating Profit Markups for Product Class 5 (Automatic Defrost with Bottom

- Mounted Freezer without Through

- the

- Door Ice Service)

E fficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

EL 3 ( 20 ) 1.2600 1.2590 1.2590 1.2590

- -

EL 4 ( 25 ) 1.2600 1.2600 1.2600 1.2600

- -

EL 5 ( 30 ) 1.2600 1.2600 1.2600 1.2600 1.2433

-

EL 6 ( 36 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.233812

- 58 Table 12.4

. 56 Preservation of Operating Profit Markups for Product Class 7 (Automatic Defrost with Side

- Mounted Freezer with Through

- the

- Door Ice Service)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

EL 3 ( 20 ) 1.2600 1.2576

- - - -

EL 4 ( 25 ) 1.2600 1.2600 1.2522 1.2522

- -

EL 5 ( 30 ) 1.2600 1.2600 1.2600 1.2600 1.2425

-

EL 6 ( 33 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.2364

Table 12.4

. 57 Preservation of Operating Profit Markups for Product Class 9 (Upright Freezers with Automatic Defrost)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

E L 3 ( 20 ) 1.2600 1.2510

- - - -

EL 4 ( 25 ) 1.2600 1.2600

- - - -

EL 5 ( 30 ) 1.2600 1.2600 1.2432

- - -

EL 6 ( 35 ) 1.2600 1.2600 1.2600 1.2364

- -

EL 7 ( 40 ) 1.2600 1.2600 1.2600 1.2600 1.2288

-

EL 8 ( 44 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.217112

- 59 Table 12.4

. 58 Preservation of Operating Profit Markups for Product Class 10 (Chest Freezers and All Other Freezers Except Compact Freezers)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 * TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

EL 3 ( 20 ) 1.2600 1.2529

- - - -

EL 4 ( 25 ) 1.2600 1.2600 1.2434

- - -

EL 5 ( 30 ) 1.2600 1.2600 1.2396 1.2399

- -

EL 6 ( 35 ) 1.2600 1.2600 1.2600 1.2600 1.2317

-

EL 7 ( 41 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.2199

* Efficiency level for product class 10A is 30%.12

- 60 Table 12.4

. 59 Preservation of Operating Profit Markups for Product Class 11 (Compact Refrigerators and Refrigerator

- Freezers with Manual Defrost)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 (10) 1.2600

- - - - -

EL 2 (15 ) 1.2600

- - - - -

EL 3 ( 20 ) 1.2600 1.2489

- - - -

EL 4 ( 25 ) 1.2600 1.2600 1.2422

- - -

EL 5 ( 30 ) 1.2600 1.2600 1.2600 1.2378

- -

EL 6 ( 35 ) 1.2600 1.2600 1.2600 1.2600

- -

EL 7 ( 40 ) 1.2600 1.2600 1.2600 1.2600 1.2253

-

EL 8 ( 45 ) 1.2600 1.2600 1.2600 1.2600 1.2600

-

EL 9 ( 50 ) 1.2600 1.2600 1.2600 1.2600 1.2600

-

EL 10 ( 58 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.204712

- 61 Table 12.4

. 60 Preservation of Operating Profit Markups for Product Class 18 (Compact Chest Freezers)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 * TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.2600

- - - - -

EL 1 ( 10 ) 1.2600 1.2564 1.2564

- - -

EL 2 ( 15 ) 1.2600 1.2600 1.2500 1.2502

- -

EL 3 ( 20 ) 1.2600 1.2600 1.2347 1.2600

- -

EL 4 ( 25 ) 1.2600 1.2600 1.2318 1.2600 1.2319

-

EL 5 ( 30 ) 1.2600 1.2600 1.2600 1.2600 1.2600

-

EL 6 ( 35 ) 1.2600 1.2600 1.2600 1.2600 1.2600

-

EL 7 ( 42 ) 1.2600 1.2600 1.2600 1.2600 1.2600 1.2121

* Efficiency level for product class 13 and 15 is 15%, efficiency level for product class 14 is 20%, and efficiency level for product class 13A is 25%.

Table 12.4

. 61 Preservation of Operating Profit Markups for Product Class 3A

- BI (Built

- In All

- Refrigerators

- Automatic Defrost)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.4000

- - - - -

EL 1 ( 10 ) 1.4000 1.3997

- - - -

EL 2 ( 15 ) 1.4000 1.4000 1.3994

- - -

EL 3 ( 20 ) 1.4000 1.4000 1.4000 1.3958

- -

EL 4 ( 25 ) 1.4000 1.4000 1.4000 1.4000 1.3909

-

EL 5 ( 29 ) 1.4000 1.4000 1.4000 1.4000 1.4000 1.387512

- 62 Table 12.4

. 62 Preservation of Operating Profit Markups for Product Class 5

- BI (Built

- In Refrigerator

- Freezers

— Automatic Defrost with Bottom

- Mounted Freezer without an Automatic Icemaker)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.4000

- - - - -

EL 1 ( 10 ) 1.4000 1.3993

- - - -

EL 2 ( 15 ) 1.4000 1.4000 1.3987 1.3987

- -

EL 3 ( 20 ) 1.4000 1.4000 1.4000 1.4000

- -

EL 4 ( 25 ) 1.4000 1.4000 1.4000 1.4000 1.3948

-

EL 5 ( 27 ) 1.4000 1.4000 1.4000 1.4000 1.4000 1.3926

Table 12.4

. 63 Preservation of Operating Profit Markups for Product Class 7

- BI (Built

- In Refrigerator

- Freezers

— Automatic Defrost with Side

- mounted Freezer with Through

- the

- Door Ice Service)

Efficiency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.4000

- - - - -

EL 1 ( 10 ) 1.4000 1.3995 1.3995

- - -

EL 2 ( 15 ) 1.4000 1.4000 1.4000

- - -

EL 3 ( 20 ) 1.4000 1.4000 1.4000 1.3968 1.3968

-

EL 4 ( 22 ) 1.4000 1.4000 1.4000 1.4000 1.4000 1.394912

- 63 Table 12.4

. 64 Preservation of Operating Profit Markups for Product Class 9

- BI (Built

- In Upright Freezers with Automatic Defrost Without an Automatic Icemaker)

Effici ency Level (% reduction

from baseline

energy use ) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Baseline ( 0 ) 1.4000

- - - - -

EL 1 ( 10 ) 1.4000 1.3995

- - - -

EL 2 ( 15 ) 1.4000 1.4000

- - - -

EL 3 ( 20 ) 1.4000 1.4000 1.3962

- - -

EL 4 ( 25 ) 1.4000 1.4000 1.4000 1.3921 1.3921

-

EL 5 ( 27 ) 1.4000 1.4000 1.4000 1.4000 1.4000 1.3892

12.4.10 Federal Production Tax Credits

In the GRIM, DOE allows the user to include the estimate s of the benefit of the Federal production tax credits found in title I section 1334 (c)(1)(B) of the Energy Policy Act of 2005 and updated by the Energy Improvement and Extension Act of 2008 (Pub. L.

No. 110

- 343)

. For the results presented in this chapter, DOE included these benefits as a direct cash benefit to the industry in 2010. See a ppendix 12

- C for a description of how DOE estimated the Federal production tax credits and its impacts on INPV results.

12.5 INDUSTRY FINANCIAL I MPACTS

Using the inputs and scenarios described in the previous sections, the GRIM estimated indicators of financial impacts on the residential refrigeration industr y . The following sections detail additional inputs and assumptions for standard

- size refrigerator

freeze rs, standard

- size freezers, compact refrigeration products , and built

- in refrigeration products . The main results of the MIA are also reported in this section. The MIA consists of two key financial metrics: INPV and annual cash flows.

12.5.1 Introduction

Th e INPV measures the industry value and is used in the MIA to compare the economic impacts of different TSLs in the standards case . The INPV is different from

DOE’s net present value , which is applied to the U.S. economy. The INPV is the sum of

all net cash flows discounted at the industry’s cost of capital

, or discount rate. The residential refrigeration products GRIM estimates cash flows from 20 10 to 204 3

. This

timeframe models both the short

- term impacts on the industry from the announcement of

the standard until the compliance date ( 2010 until an estimated compliance date of12

- 64 January 2014) and a long

- term assessment over the 30 year analysis period used in the

NIA (2014

– 2043)

.

In the MIA, DOE compares the INPV of the base case (no amended energy

c onservation standards) to that of each TSL in the standards case . The difference between the base case and a standards case INPV is an estimate of the economic impacts that implementing that particular TSL would have on the industry. For the residential

re frigeration industry , DOE examined the two markup scenarios described above: the flat markup and the preservation of operating profit. While INPV is useful for evaluating the long

- term effects of amended energy conservation standards, short

- term changes in cash flow are also important indicators of the industry’s financial situation. For example, a large investment over one or two years could strain the industry’s access to capital. Consequently, the sharp drop in financial performance could cause investors to flee, even though recovery may be possible. Thus, a short

- term disturbance can have long

- term effects that the INPV cannot capture. To get an idea of the behavior of annual net cash flows, Figure 12.5

. 1 through Figure 12.5

. 8 below present the annual net or free cash

flows from 2010 through 2024 for the base case and different TSLs in the standards case

.

Because the same markup scenarios are used for each group o f refrig eration products , each of the figures below has a similar shape. A nnual cash flows are discounted

to the base year , 2010 . Between 2010 and the 2014 compliance date of the amended energy conservation standard, cash flows are driven by the level of c onversion costs and the proportion of these investments spent every year. After the standard announcement

date ( i.e. , the publication date of the final rule) , industry cash flows begin to decline as companies use their financial resources to prepare for th e amended energy conservation standard. The more stringent the amended energy conservation standard, the greater the impact on industry cash flows in the years leading up to the compliance date, as product

conversion costs lower cash in flows from operations and capital conversion costs increase cash outflows for capital expenditures

.

Free cash flow in the year the amended energy conservation standards take effect is driven by two competing factors. In addition to capital and product conversion cos ts, amended energy conservation standards could create stranded assets, i.e. , tooling and equipment that would have enjoyed longer use if the energy conservation standard had not made them obsolete. In this year, manufacturers write down the remaining book value of existing tooling and equipment whose value is affected by the amended energy

conservation standard. This one time write down acts as a tax shield that alleviates

decreases in cash flow from operations in the year of the write

- down . In this year, there is also an increase in working capital that reduces cash flow from operations. A large increase in working capital is needed due to more costly production components and materials, higher inventory carrying to sell more expensive products, and higher accounts receivable for more expensive products. Depending on these two competing factors, cash flow can either be positively or negatively affected in the year the standard takes effect.

In the years following the compliance date of the standard, the im pact on cash flow depends on the operating revenue. More stringent TSLs typically have a positive impact on cash flows relative to the base case under the flat markup scenario because12

- 65 manufacturers are able to earner higher operating profit at each TSL in the standards case, which increases cash flow from operations

. There is very little impact on cash flow from operations under the preservation of operating profit scenario because this scenario

is calibrated to have the same operating income in the standar ds case at each TSL as the base case as in the year after the standard takes effect. In this scenario, the industry value is impacted because production costs increase, but operating profit remains approximately equal to the base case which decreases profi t margins as a percentage of

revenue.

12.5.2 Industry Financial Impacts

Table 12.5.1 through Table 12.5.8 provide the INPV estimates for the residential refrigeration industry. Figure 12.5

. 1 t hrough Figure 12.5

. 8 present the annual net cash

flows for standard

- size refrigerator

- freeze rs, stan dard

- size freezers, compact refrigeration products , and built

- in refrigeration products under each markup scenario.

Table 12.5

. 1 Changes in Industry Net Present Value for Standard

- Size Refrigerator

Freezers ( Flat Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 3,173 3,088 2,997 2,886 2,530 2,344

Change

in INPV ( 2009$ millions) - (84.8) (175.9) (287.5) (643.0) (828.9)

(%)

- - 2.7%

- 5.5%

- 9.1%

- 20.3%

- 26.1%

*For tables in section 12.5.2 , values in parenthesis indicate negative numbers

Table 12.5

. 2 Changes in Industry Net Present Value for Standard

- Size Refrigerator

Freezers (P reservation of Operating Profit Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 3,173 2,871 2,713 2,511 1,676 1,018

Change

in INPV ( 2009$ millions) - (301.7) (459.8) (662.1) (1,496.8) (2,154.7)

(%)

- - 9.5%

- 14.5%

- 20.9%

- 47.2%

- 67.9%12

- 66 Figure 12.5

. 1 Annual Industry Net Cash Flows for Standard

- Size Refrigerator

Freezers (Flat Markup Scenario)

Figure 12.5

. 2 Annual Industry Net Cash Flows for Standard

- Size Refrigerator

Freezers (Preservation of Operating Profit Markup Scenario) - 800.00 - 600.00 - 400.00 - 200.00 0.00 200.00 400.00 600.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Flat Markup Selected Products: Standard

- Size Refrigerator

Freezers

- 800.00 - 600.00 - 400.00 - 200.00 0.00 200.00 400.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Preservation of Operating Profit Selected Products: Standard

- Size Refrigerator

Freezers12

- 67 Table 12.5

. 3 Changes in Industry Net Present Value for Standard

- Size Freezers ( Flat Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 403 378 292 308 344 300

Change

in INPV ( 2009$ millions) - (24.9) (110.6) (94.5) (59.0) (102.4)

(%)

- - 6.2%

- 27.5%

- 23.5%

- 14.6%

- 25.4%

Table 12.5

. 4 Changes in Industry Net Present Value for Standard

- Size Freezers (Preservation of Operating Profit Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 403 345 217 202 184 37

Change

in INPV ( 2009$ millions) - (57.3) (186.0) (201.1) (218.9) (365.1)

(%)

- - 14.2%

- 46.2%

- 49.9%

- 54.4%

- 90.7%

Figure 12.5

. 3 Annual Industry Net Cash Flows for Standard

- Size Freezers ( Flat Markup Scenario) - 140.00 - 120.00 - 100.00

- 80.00 - 60.00 - 40.00 - 20.00

0.00 20.00 40.00 60.00 80.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Flat Markup Selected Products: Standard

- Size Freezers12

- 68 Figure 12.5

. 4 Annual Industry Net Cash Flows for Standard

- Size Freezers (Preservation of Operating Profit Markup Scenario)

Table 12.5

. 5 Changes in Industry Net Present Value for Compact Refrigeration

Products ( Flat Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 200 185 169 143 170 67

Change

in INPV ( 2009$ millions) - (14.3) (30.8) (56.8) (29.6) (133.0)

(%)

- - 7.2%

- 15.4%

- 28.4%

- 14.8%

- 66.6%

Table 12.5

. 6 Changes in Industry Net Present Value for Compact Refrigeration

Products (Preservation of Operating Profit Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 200 168 133 101 85 (96)

Change

in INPV ( 2009$ millions) - (32.1) (66.7) (99.2) (114.4) (295.6)

(%)

- - 16.1%

- 33.4%

- 49.6%

- 57.3%

- 148.0% - 140.00 - 120.00 - 100.00

- 80.00 - 60.00 - 40.00 - 20.00

0.00 20.00 40.00 60.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Preservation of Operating Profit Selected Products: Standard

- Size Freezers12

- 69 Figure 12.5

. 5 Annual Industry Net Cash Flows for Compact Refrigeration Products ( Flat Markup Scenario)

Figure 12.5

. 6 Annual Industry Net Cash Flows for Compact Refri geration Products (Preservation of Operating Profit Markup Scenario) - 120.00 - 100.00

- 80.00 - 60.00 - 40.00 - 20.00

0.00 20.00 40.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Flat Markup Selected Products: Compact Refrigeration Products

- 120.00 - 100.00

- 80.00 - 60.00 - 40.00 - 20.00

0.00 20.00 40.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Preservation of Operating Profit Selected Products: Compact Refrigeration Products12

- 70 Table 12.5

. 7 Changes in Industry Net Present Value for Built

- In Refrigeration

Products ( Flat Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 658 607 604 593 579 574

Change

in INPV ( 2009$ millions) - (51.7) (54.7) (65.8) (79.7) (84.9)

(%)

- - 7.9%

- 8.3%

- 10.0%

- 12.1%

- 12.9%

Table 12.5

. 8 Changes in Industry Net Present Value for Built

- In Refrigeration

Products (Preservation of Operating Profit Markup Scenario)

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV ( 2009$ millions) 658 606 601 578 555 538

Change

in INPV ( 2009$ millions) - (52.9) (57.0) (80.5) (103.0) (120.3)

(%)

- - 8.0%

- 8.7%

- 12.2%

- 15.6%

- 18.3%

Figure 12.5

. 7 Annual Industry Net Cash Flows for Built

- In Refrigeration Products ( Flat Markup Scenario) - 20.00 - 10.00

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Flat Markup Selected Products: Built

- In Refrigeration Products12

- 71 Figure 12.5

. 8 Annual Industry Net Cash Flows for Built

- In Refrigeration Products (Preservation of Operating Profit Markup Scenario)

12.6 IMPACTS ON SMALL RESIDENTIAL REFRIGER ATION

MANUFACTURERS

DOE conducted a more focused inquiry of the companies that could be small

business manufacturers of products covered by this rulemaking. During its market survey, DOE used all available public information to identify potential small

manufacturers. DOE’s re search involved industry trade association membership

directories (including AHAM ), product databases ( e.g.

DOE initially identified at least 65 distinct brands of residential refrigeration products sold in the U.S. by 47 parent companies. Out of these 47 companies, DOE determined that the majority (31 of 47) were distributors or sold branded products (were

not the original equipment manufacturer) . Of the 16 manufacturers, DOE found 15 to , FTC

, The Thomas Register, CEC, and ENERGY STAR databases), individual company websites, and marketing

research tools like Dun and Bradstreet report s to create a list of every company that

manufactures or sells residential refrigeration products covered by this rulemaking. DOE also asked stakeholders and industry representatives if they were aware of any other small manufacturers during manufacturer i nterviews and at previous DOE public meetings. DOE reviewed all publicly

- available data and contacted select companies on its list, as necessary, to determine whether they met the SBA’s definition of a small business

manufacturer of covered residential ref rigeration products . DOE screened out companies that did not offer products covered by this rulemaking, did not meet the definition of a

“ small business, ” or are foreign owned and operated. - 20.00 - 10.00

0.00 10.00 20.00 30.00 40.00 50.00 60.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20242009$ Millions

Year Net Cash Flow Totals

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Markup Scenario:

Energy Conservation Standards Compliance Date January 2014 Preservation of Operating Profit Selected Products: Built

- In Refrigeration Products12

- 72 exceed the SBA’s size limit or were foreign

- owned and operated. Thus , DOE identified one small residential refrigeration product manufacturer that produces covered products

and can be considered a small business.

Based on its market research, the one small business manufacturer of residential refrigeration products identified by DOE is a niche manufacturer that produces premium undercounter units. Undercounter refrigerator and freezers are high

- end products that are meant to be either freestanding or recessed. The small business manufacturer identified by DOE primarily manufactures products that are covered by this rulemaking, such as undercounter refrigerators and refrigerator

- freezers, plus several products outside of the scope of coverage for this rulemaking, such as ice makers and wine coolers. However,

most compact refrigeration products are imported with market share split among multiple domestic and foreign manufacturers. Several manufacturers who still produce compact products domestically focus on the premium niche market of undercounter refrigerators

and freezers.

DOE did not conduct a more in

- depth analysis of the potential impacts on small

business manufacturers bec ause only one small business manufacturer would potentially be impacted by the proposed energy conservation standards. In addition, that manufacturer would not likely be differentially harmed by the proposed energy

conservation standard s compared to its mo st direct competitors

. The small business manufacturer has the largest market share of undercounter refrigerator and freezers. Since undercounter units are a very small segment of compact refrigerators and freezers, the

small business manufacturer is the m arket leader of a very small segment of compact products. Many of the other undercounter manufacturers, while not technically small businesses by the SBA definition, also have low overall production volumes. Finally, the

undercounter market is a niche mark et that does not compete with overall compact refrigeration sales

. Undercounter products are luxury items purchased by consumers that typically are less concerned about first costs compared to purchasers of other residential refrigeration products. While m ost compact sales are inexpensive products with retail prices in the low hundreds of dollars, undercounter products typically cost many times that. While this niche market is small, the much higher sales price and lower volumes indicate that profit margins could be higher than the industry average

.

12.7 OTHER IMPACTS

12.7.1 Employment

12.7.1.1 Methodology

To quantitatively assess the impacts of amended energy conservation standards on

residential refrigeration manufacturing employment, DOE used the GRIM to estimate the

domesti c labor expenditures and number of domestic production workers in the base case

and at each TSL from 2010 to 204 3. DOE used statistical data from the most recent U.S.

Census Bureau ’s 2007 Economic Census , the results of the engineering analysis, and

interv iews with manufacturers to determine the inputs necessary to calculate industry

wide labor expenditures and domestic employment levels. Labor expenditures involved12

- 73 with the manufacture of the product are a function of the labor intensity of the product

, th e sales volume, and an assumption that wages remain fixed in real terms over time.

In the GRIM, DOE used the labor content of each product and the MPCs from the engineering analysis to estimate the annual labor expenditures for each product grouping

. In the GRIMs, the labor expenditures in each year are calculated by multiplying the MPCs by the labor percentage of each product from the engineering analysis

. DOE used Census data and interviews with manufacturers to estimate the portion of the total labo r expenditures that is attributable to U.S. ( i.e.

The estimates of production workers in this section only cover workers up to the

line

- supervisor level that are directly involved in fabricating and assembling a product

within the Origin al Equipment Manufacturer (OEM) facility. Workers that perform services that are closely associated with production operations, such as material handing with a forklift, are also included as production labor. DOE’s estimates only account for production wor kers who manufacture the specific products covered by this rulemaking. For example, a worker on a wine cooler line would not be included with the estimate of

the number of re sidential refrigeration workers. , domestic) labor

.

DOE multiplied the total annual labor expenditure s in the GRIM by the percentage of U.S. production for domestic consumption to calculate domestic labor expenditures for production labor in each industry. The domestic annual labor expenditures in the GRIM were converted to domestic production employment levels by dividing production labor expenditures by the annual payment per production worker (production worker hours times the labor rate found in the 2007 ASM )

. e

DOE calculated the domestic annual labor expenditures and employment levels for the base case and at each TSL. The impacts on domestic employment due to standards can be assessed by comparing the employment results in the base case to the results at

each T SL. In the GRIM analyses, the estimates shown are the maximum potential employment in the industry because they assume manufacturers would continue to produce the same scope of covered products in the same production facilities. Consequently, t he upper bou nd of the employment impacts calculated in the GRIM assumes that domestic production is not shifted to lower

- labor

- cost countries

. Because there is a real risk of manufacturers exiting the market or no longer offering the same scope of covered products in response to amended energy conservation standards, the lower end of the range of employment results in this section include the estimate of the total number of U.S. production workers in the industry that could lose their job s if all existing production we re to no longer be made domestically. Consequently, the lower DOE calculated

the number of non

- production employees by multiplying the number of productio n workers by the ratio of non

- production workers to production workers calculated using the employment data in the 2007 ASM

.

e The labor rates and production hours per year per employee found in the Census Bureau’s 2007 report are similar to figures reported in the engineering analysis. DOE used 2007 AS M figures to ensure a consistent set of publicly available data for the manufacturing employment analysis.12

- 74 bound of the potential negative employment analysis does not account for some manufacturers’ dependence on the total production volume of all products produced in a facility to achieve an adequate scale. For example, should a standard

- size refrigerator

freezers manufacturer move part of its product ion abroad, its domestic production facility may no longer have the manufacturing scale to get volume discounts on its purchases or be able to justify maintaining major capital equipment. Thus, the impact on a manufacturing facility due to a line closure c an affect far more employees than just the production workers directly associated with a covered product.

While the results present a range of employment impacts following the compliance date of amended energy conservation standards, the discussion below also includes a qualitative discussion of the likelihood of negative employment impacts at the

various TSLs.

12.7.1.2 Standard

- Size Refrigerator

- Freezers Employment Impacts

The GRIM forecasts the standard

- size refrigerator

- freezers domestic labor expenditure for p roduction labor in 2014 will be approximately $ 322 million. Using the
$ 18.60 wage rate and 2,032 production hours per year per employee found in the 2007

ASM , the GRIM estimates there will be approximately 8,517 domestic production employees involved in ma nufacturing standard

- size refrigerator

- freezers covered by this rulemaking. In addition, DOE estimates that 1, 113 non

- production employees in the United States will support standard

- size refrigerator

- freezers production. f

Table 12.7.1 The employment spreadsheet of the GRIM shows the annual domestic employment impacts in further detail. Approximately 42 percent of standard

- size refrigerator

- freezers sold in the United States are manufactured domestically.

illustrates the range of potential impact s of amended energy

conservation standards on domestic production employment levels at each TSL for the

standard

- size refrigerator

- freezers market.

f As defined in the 2007 ASM, production workers number include “workers (up through the line

supervisor level) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping (but not delivering), maintenance, repair, janitorial and guard services, product development, auxiliary production for plant's own use ( e.g. , power plant), recordkeeping, and other services closely associated with these production operations at the establishment covered by the report. Employees above the working

- supervisor level are excluded

from this item.” Non

- production workers are defined as “employees of the manufactu ring establishment including those engaged in factory supervision above the line

- supervisor level. It includes sales (including driver

- salespersons), sales delivery (highway truck drivers and their helpers), advertising, credit, collection, installation an d servicing of own products, clerical and routine office functions, executive, purchasing, financing, legal, personnel (including cafeteria, medical, etc.), professional, and technical employees. Also included are employees on the payroll of

the manufactur ing establishment engaged in the construction of major additions or alterations utilized as a separate work force.”12

- 75 Table 12.7

. 1 Potential Changes in the Total Number of Domestic Standard

- Size Refrigerator

- Freezers Production Workers in 2014

Trial Standard Level

Base Case 1 2 3 4 5

Total Number of Dom estic

Production Workers in

2014 (without changes in production locations) 8,517 8,300 8,258 8,309 8,236 8,088

Potential Changes in

Domestic Production

Workers in 2014* - (217)

- ( 8,517 ) (259)

- ( 8,517 ) (208)

- ( 8,517 ) (281)

- ( 8,517 ) (429)

- ( 8,517 )

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative

numbers.

Figure 12.7

. 1 below shows total annual domestic employment levels for each TSL calculated by the GRIM.

Figure 12.7

. 1 To tal Standard

- Size Refrigerator

- Free zers Industry Domestic Employment by Year

All examined TSLs show relatively minor impacts on domestic employment levels at the lower end of the range. Most of the design options used in the engineering analysis involve the swapping of components in baselin e units with more efficient parts for top

- mounted, side

- by

- side, and bottom

- mounted refrigerator

- freezers. These component swaps for these design options add primarily material costs and do not greatly impact the labor content of the baseline products. The relatively small decreases in domestic production employment for the lower end of the range of the employment impacts arise from higher product prices lowering shipments the year the standard 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000Total Domestic Employment (# of workers)

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Energy Conservation Standards Compliance Date January 201412

- 76 becomes effective. At these higher TSLs, the effects of lower s hipments more than offset the additional product labor that is required to manufacture products that use VIP panels.

During interviews, manufacturers indicated that their domestic employment levels could be impacted under two scenarios: (1) the widespread adoption of VIPs or (2) significant capital conversion costs that would force them to consider non

- domestic manufacturing locations once the compliance date for the amended energy conservation standards arrive. The widespread adoption of VIPs would increa se the labor content of today’s products. The labor content of products with VIPs increases because of the extra handling steps that would be required to ensure that VIPs are not damaged during production. Because of the competitive nature of the industry, manufacturers believed the extra labor costs could force them to move their remaining domestic production to Mexico to take advantage of the cheaper labor.

Manufacturers also indicated that large conversion costs would likely force them

to consider inves ting in lower

- labor

- cost countries. For most product categories, there is a range of efficiency levels that can be met with relatively low

- cost components (as analyzed in the engineering analysis). Beyond these levels, manufacturers would need to

decide to follow the MPC design options analyzed in the engineering analysis for each product category. Manufacturers indicated the analyzed design options the use multiple VIPs would involve significant capital conversion costs and add very large material cost

to their products and would likely result in relocation. However, manufacturers indicated they would face even larger capital conversion costs at lower efficiencies if they redesigned their products with thicker walls. While not analyzed as a design option fo r standard

- size refrigerator

- freezers, increasing wall thickness would likely result in moving domestic production outside of the U.S. at lower efficiency levels.

12.7.1.3 Standard

- Size Freezers Employment Impacts

The GRIM calculates that the standard

- size freezer s domestic labor expenditure for production labor in 2014 will be approximately $ 72 million. Using the $ 18.60 wage rate and 2,032 production hours per year per employee found in the 200 7 ASM, the GRIM estimates there will be approximately 1, 904 U.S. production employees involved in manufacturing standard

- size freezers covered by this rulemaking. In addition, DOE

estimates that 249 non

- production employees in the United States will support standard

size freezers production and manufacturer sales. The employment spreadsheet of the GRIM shows the annual domestic employment impacts in further detail. Approximately

80 percent of standard

- size freezers sold in the United States are manufactured domestically.

Ta ble 12.7.2 illustrates the range of potential impact s of amended energy

conservation standards on domestic production employment levels at each TSL for the

standard

- size freezers market.12

- 77 Tabl e 12.7

. 2 Potential Changes in the Total Number of Domestic Standard

- Size

Freezers Production Workers in 2014

Trial Standard Level

Base Case 1 2 3 4 5

Total Number of

Domesti c Production

Workers in 2014 (without changes in production locations) 1, 904 1, 850 1, 781 1, 734 1, 634 1, 508

Potential Changes in

Domestic Production

Workers in 2014* - (54)

- ( 1,904 ) (123)

- ( 1,904 ) (170)

- ( 1,904 ) (270)

- ( 1,904 ) (396)

- ( 1,904 )

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative

numbers.

Figure 12.7

. 2 below shows total annual domestic employment le vels for each TSL calculated by the GRIM.

Figure 12.7

. 2 To tal Standard

- Size Freezers Industry Domestic Employment by Year

Similar to standard

- size refrigerator

- freezers, there are relatively small decreases in employment at the lower end of the range of employment impacts. These slight declines are caused by higher prices that drive lower shipments once manufacturers must meet the amended energy conservation standard. Standard

- size freezers manufact urers also indicated that domestic production could be shifted abroad a ny efficiency level that required large capital conversion costs. At TSL 1 , DOE does not expect substantial changes to domestic employment in the standard

- size freezer market if manufac turers use
the design options listed in the engineering analysis to reach the efficiency requirements

at this TSL

. However, at TSL 2 through TSL 5, manufacturers indicated that there could 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000Total Domestic Employment (# of workers)

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Energy Conservation Standards Compliance Date January 201412

- 78 be domestic employment impacts depending on the design pathway used to reach the required efficiencies. At TSL 2 and above, the engineering analysis assumes that manufacturers would have to use wall thickness changes to reach the required efficiencies. Manufacturers indicated that because these products are typically low

- end, they would likely follow the design pathways in the engineering analysis and increase the wall insulation thickness to reach higher efficiencies in order to avoid having to pass large price increases on to consumers. While this would result in extreme ly large conversion costs and would more likely lead to manufacturers moving production offshore, manufacturers believed this strategy would help to maintain sales volumes.

12.7.1.4 Compact Refrigeration Products Employment Impacts

DOE’s research suggests that a li mited percentage of compact refrigerators and refrigerator

- freezers are ma de domestically . The overwhelming majority of products are imported. Manufacturers with domestic manufacturing facilities tend to source or import their compact products. The small e mployment numbers are mostly from remaining domestic production of compact chest freezers. As a result, amended energy conservation standards for compact refrigerators or refrigerator

- freezers are unlikely to noticeably alter domestic employment levels.

Table 12.7

. 3 illustrates the range of potential impact s of amended energy

conservation standards on domestic production employment levels at each TSL for the

compact re frigeration products market.

Table 12.7

. 3 Potential Changes in the Total Number of Domestic Compact Refrigeration Products Production Workers in 2014

Trial Standard Level

Base

Case 1 2 3 4 5

Total Number of

Domesti c Production

Workers in 2014 (without changes in production locations) 31 30 29 29 28 46

Potential Changes in

Domestic Production

Workers in 2014* - (1)

- (31) ( 2 )

- (31) (2)

- (31) (3)

- (31) 15

- (31)

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative

numbers.

Figure 12.7

. 3 below shows total annual domestic employment levels for each TSL calculated by the GRIM.12

- 79 Figure 12.7

. 3 To tal Compact Refrigeration Products Industry Domestic Employment by Year

12.7.1.5 Built

- In Refrigeration Products Employment Impacts

The GRIM forecasts the built

- in refrigeration products domestic labor expenditure for production labor in 2014 will be approximately $ 50 million. Using the $ 18.60 wage rate and 2,032 production hours per year per employee found in the 200 7 ASM, the GRIM estimates there will be approximately 1, 32 0 U.S. production employees involved in manufacturing built

- in refrigeration products covered by this rulemaking. In addition,

D OE estimates that 173 non

- production employees in the United States will support

built

- in refrigeration products production. The employment spreadsheet of the GRIM shows the annual domestic employment impacts in further detail. Approximately 94 percent of built

- in refrigeration products sold in the United States are manufactured domestically.

Table 12.7

. 4 illustrates the range of potential impact s of amended energy

cons ervation standards on domestic production employment levels at each TSL for the

built

- in refrigeration products market. 0 20 40 60 80 100 120Total Domestic Employment (# of workers)

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Energy Conservation Standards Compliance Date January 201412

- 80 Table 12.7

. 4 Potential Changes in the Total Number of Domestic Built

- In Refrigeration Pr oducts Production Workers in 2014

Trial Standard Level

Base

Case 1 2 3 4 5

Total Number of

Domestic Production Workers in 2014 (without changes in production locations) 1,320 1,320 1,319 1,327 1,331 1,357

Potential Changes in

Domestic Production

Workers in 2014* - 0

- (1,320) (1)

- (1,320) 7

- (1,320) 11

- (1,320) 37

- (1,320)

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative

numbers.

Figure 12.7

. 4 below shows total annual domestic employment levels for each TSL calculated by the GRIM.

Figure 12.7

. 4 To tal Built

- In Refrigeration Products Industry Domestic Employment by Year

Employment in the built

- in refrigeration market follows a pattern similar to that

seen in the market for standard

- size refrigerator

- freezers and standard

- size freezers at

lower TSLs. At TSL 1 and TSL 2, higher prices result in fewer shipments, and a consequent reduction in labor expenditures that more than offsets the additional labor required to manufacturer products with VIPs. However, at TSL 3 and above, the use of

additional VIPs i n built

- in refrigeration products requires enough additional labor to cause a slight increase in the number of domestic production workers. Because built

- in 0 500 1,000 1,500 2,000 2,500 3,000Total Domestic Employment (# of workers)

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Energy Conservation Standards Compliance Date January 201412

- 81 products are high

- end products with far fewer shipments, it is less likely that

manufacturers would chose to move all production facilities in response to amended energy conservation standards. The higher margins and profit earned in this market also make it more likely that manufacturers could earn a return on the investments required to

reach the amen ded energy conservation standards and invest in existing facilities rather than move production.

12.7.2 Production Capacity

Manufacturers indicated that design changes involving thicker walls or multiple VIP panels would require substantial changes to their curre nt manufacturing process. While these technologies would require the purchase of millions of dollars of production equipment, most manufacturers indicated they could likely make the required changes in between the announcement of the final rule and complia nce date of an amended energy conservation standard. For most product classes, the design changes and investments required by the proposed rule are similar in magnitude to the introduction of a new product line. Manufacturers have experience with the desig n options involving VIPs, but not at the scale that would be required if the proposed rule’s provisions are adopted . The primary capacity concern of manufacturers is the ability of their suppliers, particularly

manufacturers of VIP s and more efficient comp ressors, to ramp up production in time to meet the amended energy conservation standard. DOE analyzed VIP supply in appendix

4

- A

.

12.7.3 Cumulative Regulatory Burden

While any one regulation may not impose a significant burden on manufacturers,

the combined effe cts of several impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. For the cumulative regula tory burden analysis, DOE looks at other significant product

- specific regulations that could affect residential refrigeration manufacturers that will take effect 3 years before or after the compliance date of amended energy conservation standards for

these products. g

12.7.3.3 In addition to the amended energy conservation regulations on

residential refrigeration products , several other Federal regulations apply to these products and other equipment produced by the same manufacturers. While the cumulative regulatory burden focuses on the impacts on manufacturers of other Federal requirements, DOE also has described a number of other regulations in section

because it re cognizes that these regulations also impact the products covered by this rulemaking.

Companies that produce a wide range of regulated products may be faced with more capital and product development expenditures than competitors with a narrower scope of pr oducts. Regulatory burdens can prompt companies to exit the market or reduce

g The compliance date for residential refrigeration products is 3 years from the date of publication of the final rule (approximately Janua ry 2014).12

- 82 their product offerings, potentially reducing competition. Smaller companies in particular can be affected by regulatory costs since these companies have lower sales volumes over which they can amortize the costs of meeting new regulations. A proposed standard is not economically justified if it contributes to an unacceptable level of cumulative regulatory

burden.

12.7.3.1 DOE Regulations for Other Products Produced by Residential Refriger ation Manufacturers

In addition to the amended energy conservation standards on residential refrigeration products , several other Federal regulations and pending regulations apply to other products produced by the same manufacturers. DOE recognizes that each regulation can significantly affect a manufacturer’s financial operations. Multiple regulations affecting the s ame manufacturer can quickly strain manufacturers’ profits and possibly

cause an exit from the market. Table 12.7.5 list s the other DOE energy conserva tion

standards that could also affect manufacturers of residential refrigeration products in the 3 years leading up to and after the compliance date of amended energy conservation standards for these products.12

- 83 Table 12.7

. 5 Other DOE and Federal Actions Affecting the Residential Refrigeration Industry

Regulation Approximate Compliance

Date* Number of Impacted Companies from the Market and Technology Assessment (MTA) (See C hapter 3) Estimated Total Industry

Con version Costs

ASHRAE Products 2012 1 N/A Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps 2012 5 $17.3 million (2007$) h

Cooking Products 2012 13 $22.6 million (2006$) i

Residential Boilers 2012 0 N/A †

General Service

Fluorescent Lamps and

Incandescent Reflector Lamps 2012 2 $363.1 million (2008$) j

Dehumidifiers 2012 5 N/A††† Beverage Vending

Machines 2012 1 $14.5 million (2008$) k

Commercial Clothes

Washers 2013 4 $20.4 million (2008$) l

Direct Heating Equipment 2013 0 $5.39 million (2009$) m

h Estimated industry conversion expenses were pu blished in the TSD for the October 2008 packaged terminal air conditioners and packaged terminal heat pumps final rule. 73 FR 58772 . The TSD for the 2008 packaged terminal air conditioners and pack aged terminal heat pumps final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/ptacs_pthps_final_tsd.html

. i Estimated industry conversion expenses were pu blished in the TSD for the April 2009 residential cooking

p roducts final rule. 74 FR 16040 . The TSD for the 2009 residential cooking products final rule can be

found at http://www1.eere.energy.gov/buildings/appliance_standards/residential/cooking_products_final_rule_tsd.ht

ml

. j Estimated industry conversion expens es were pu blished in the TSD for the July 2009 general service fluorescent lamps and incandescent reflector lamps final rule. 74 FR 3408 0 . The TSD for the 2009 lamps

final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps_standards_fina l_rule_tsd.html

. k Estimated industry conversion expenses were pu blished in the TSD for the August 2009 beverage vending

machines final rule. 74 FR 44914 . The TSD for the 2009 beverage vending machines final rule can be

found at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines_final_rule_ts

d.html

. l Estimated industry conversion expenses were pu blished in the TSD for t he January 2010 commercial

clothes washers final rule. 75 FR 1122 . The TSD for the 2010 commercial clothes washers final rule can be

found at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers_ecs_final_rule_t

sd.html

m Est imated industry conversion expenses were pu blished in the TSD for the April 2010 heating products

final rule. 75 FR 20112 . The TSD for the 2010 heating products final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/residentia l/heating_products_fr_tsd.html

.12

- 84 Residential Pool Heaters 2013 0 $0.3 million (2009$) n Battery Chargers and External Power Supplies 2013* 4 N/A ††

Room Air Conditioners 2014* 9 N/A ††

Residential Clothes Dryers 2014* 9 N/A ††

Fluorescent Lamp Ballasts 2014* 2 N/A ††

Walk

- In Freezers and

Coolers 2015* 0 N/A ††

Metal Halide Lamp

Fixtures 2015* 0 N/A ††

Residential Clothes

Washers 2015* 10 N/A ††

Small Electric Motors 2015 0 $51.2 million (2009$) o

Residential Water Heaters 2015 2 $95.9 million (2009$) p

Commercial Electric

Motors 2015* 2 N/A ††

Residential Furnaces 2015* 2 N/A ††

Commercial Distribution

Transformers 2016* 2 N/A ††

Commercial Refrigeration Equipment 2016* 1 N/A ††

Residential Central Air

Conditioners 2016* 3 N/A ††

*The dates listed are an approximation. The exact dates are pending final DOE action. † Energy conservation standards and compliance dates for residential boilers can be found at 10 CFR 430.32(e)(2)(ii)

- (iv). †† For energy conservation standards for rulemakings awaiting DOE final action, DOE does not have a finalized estimated total industry conversion cost. ††† For minimum performance requirements prescribed by the Energy Independence and Security Act of 2007 (EISA 2007), DOE did not estimate total industry conversion costs beca use an MIA was not completed as part of a rulemaking. Pub. L. 110

- 140. EISA 2007 made numerous amendments to t he Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94

- 163, (42 U.S.C. 6291

– 6309) , which established an energy conservation program for major household appliances and industrial and commercial equipment.

Some Federal DOE regulations have a more significant impact on manufacturers of residential refrigeration products than others because manufacturers hold a significant

market share in th ose covered products. Table 12.7

. 6 below shows the DOE energy conservation standards with compliance dates within three years of residential refrigeration products where manufacturers are expected to be most impacted due to their

n Estimated industry conversion expenses were pu blished in the TSD for the April 2010 heating products

final rule. 75 FR 20112 . The TSD for the 2010 heating products final rule can be found at http://www1.eere.energy.gov/bui ldings/appliance_standards/residential/heating_products_fr_tsd.html

.

o Estimated industry conversion expenses were pu blished in the TSD for the March 2010 small motors final

rule. 75 FR 10874 . The TSD for the 2010 small motors final rule can be found at

ht tp://www1.eere.energy.gov/buildings/appliance_standards/commercial/sem_finalrule_tsd.html

. p Estimated industry conversion expenses were pu blished in the TSD for the April 2010 heating products

final rule. 75 FR 20112 . The TSD for the 2010 heating products final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/residential/heating_products_fr_tsd.html

.12

- 85 market positions. For these rulemakings, residential refrigeration manufacturers would likely be burdened by a significant portion of the estimated industry conversion costs

. In some cases, specific market share data was not available, but manufacturers were identified as major or minor manufacturers in the given market when this information was publicly available

.

Table 12.7

. 6 DOE Regulations on Products For Which Residential Refrigeration Manufacturers Hold Significant Market Share

Manufacturer Market Share in DOE Regulated Product

Regulation Estimated Industry

Total

Conversion

Expenses (millions) GE Whirlpool Electrolux LG Samsung Haier

Packaged Terminal

Air Conditioners and Packaged

Terminal Heat Pumps $17.3

million (2007$) N/A (major ) N/A (major) N/A (major)

Ranges and Ovens $22.6

million (2006$) 47% (electric);

37% (gas) 29% (electric); 25% (gas) 8% (electric); 23% (gas) N/A (major) N/A (minor) N/A (minor)

General Service Fluorescent Lamps

and Incandescent Reflector Lamps $363.1

million (2008$) N/A (major)

Dehumidifiers N/A 35% 6% 35% 3%

Commercial

Clothes Washers $20.4

million (2008$) N/A (major) N/A (major) N/A (minor) N/A (minor)

Room Air

Conditioners N/A 13% 13% 32% 5% 8%

Residential Clothes Dryers N/A 16% (electric);

10% (gas) 70% (electric); 74% (gas) 8% (electric); 5% (gas) N/A (minor) N/A (minor) N/A (minor)

Fluorescent Lamp

Ballasts N/A N/A (major)

Residential Clothes

Washers N/A 16% 64% 6% 6%

12.7.3.2 Other Federal Regulations

Unites States Clean Air Act

The Clean Air Act is defines the EPA's responsibilities for protecting and improving the nation's air quality and the stratospheric ozone layer. The most significant of these additional regulations are the EPA mandated phase

- out of hydro

chlorofluorocarbon s (HCFCs). The Act demands on a quarterly basis that any person who produced, imported, or exported certain substances, including HCFC refrigerants, must12

- 86 report the amount produced, imported and exported. Additionally, effective January 1, 2015, selling, m anufacturing, and using any such substance is banned unless such substance has been used, recovered, and recycled; is used and entirely consumed in the production of other chemicals; or is used as a refrigerant in appliances manufactured prior to January 1 , 2020. Finally, production phase

- outs will continue until January 1, 2030 when such production will be illegal. These bans could trigger design changes to natural or low global warming potential refrigerants and could impact the insulation used in product s covered by this rulemaking.

Potential Climate Change and Greenhouse Gas Legislation

Many manufacturers expressed concern about potential climate change legislation. O ne proposed regulation that would exacerbate the manufacturer burden caused by more stri ngent energy conservation standards on refrigeration products is H.R. 2454, the American Clean Energy and Security Act of 2009. This legislation would initiate a phase

- down of hydrofluorocarbons (HFCs) and would make the amended energy conservation standard levels considered in this rulemaking more difficult to

achieve . C onverting facilities to use cyclopentane would be disruptive to manufacturing facilities because of the plant changes required to use a flammable foam blowing age nt safely.

A further complication of an HFC phase

- down for manufacturers is that

isobutane , the most likely refrigerant replacement of HFCs, is itself currently restricted by UL safety rules. UL 250 limits the amount of charge in refrigerators and would

pr event its use in most residential refrigeration products. While isobutane is more efficient than typical HFC refrigerants, some manufacturers were concerned that its adoption would cause a significant cost to train their servicers to avoid safety problems with the new refrigerant. Several other manufacturers would like to see the current charge limits increased, allowing them consistency with factories overseas that already use these

more flammable h ydrocarbons

.

12.7.3.3 Other Regulations That Could Impact Resident i al Refrigeration

Manufacturers

While the cumulative regulatory burden focuses on the impacts on manufacturers of other Federal requirements, in this section DOE has described a number of other regulations below that could also impact the residential refrig eration products covered by this rulemaking

State Energy Conservation Standards

Manufacturers indicated that California has several programs that are either already in place or are currently in development that affect manufacturers of residential refrigera tion products. Various building, electrical, mechanical, and plumbing codes in California affect residential refrigeration products, and products are also subject to California’s laws on the Restriction on the use of certain Hazardous Substances (RoHS).

Ca lifornia’s RoHS law took effect January 1, 2007 and was modeled after the EU’s12

- 87 directive (described below), which bans certain hazardous substances from electrical and electronic equipment. California and Washington also have energy conservation

standards for wine chillers. Connecticut, Maine, Minnesota, New York, Rhode Island, Vermont, and Washington all prohibit the sale or distribution of products containing intentionally

- added mercury without a label. In Oregon, Penta

- and Octa

- BDE have been

restricted since 2006, and Oreg o n banned Deca

- BDE in June 2009. These substances belong to a group of brominated flame retardants (BFRs) commonly known as Polybrominated Diphenyl Ethers (PBDEs). In Maryland, a ban on Deca

- BDE will be phased

- in beginning October 1, 20 10.

International Energy Conservation Standards

Residential refrigeration manufacturers that sell products outside of the United States are subject to several international energy conservation standards. In the European Union, refrigerators and other appli ances must carry the EU Energy Label. The energy efficiency of the product is rated in energy levels ranging from A to G on the outside label, with ‘A’ being the most energy efficient. Recently, A+ and A++ qualifications were also introduced for refrigerat ed appliances. This labeling system enables consumers to compare the energy efficiency of products, and it incentivizes manufacturers to improve the energy performance of their products. In the EU, products are also subject to RoHS. This regulation bans th e sale of new equipment in the EU that contains more than agreed levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl (PBB) and PBDE flame retardants. Waste Electrical and Electronic Equipment (WEEE) and the Registration, Evaluati on, Authorization, and restriction of Chemicals (REACH) are additional regulations that create compliance costs for manufacturers that compete in Europe. REACH deals with chemicals and their safe use and has provisions that will be phased

- in over eleven ye ars, beginning June 1, 2007. The EU also sets limits for the amount of energy consumed by equipment when it is in standby mode and off mode. Additionally, HFCs are banned in refrigerants in several countries, such as Austria, Denmark, and Switzerland.

Cana da also has several regulations that affect manufacturers of residential refrigeration products. Ontario’s Product Safety Regulation 438/07 ensures the safety of electrical products and equipment sold and used in Ontario. The manufacture of PBDE is

banned in Canada, including the controversial Deca

- BDE. The import of products containing Octa

- BDE and Penta

- BDE is also banned.

Several other foreign countries, such as Australia and South Korea, have energy conservation standards in place for residential refrig eration products or are in the process of establishing standards for these products. Other countries, such as India and Saudi Arabia, have labeling requirements for refrigerators.

12.8 CONCLUSION
The following sections summarize the impacts for the scenarios DO E believes are most likely to capture the range of impacts on residential refrigeration product manufacturers as a result of amended energy conservation standards. DOE also notes that while these scenarios bound the range of most plausible impacts on manuf acturers, there12

- 88 potentially could be circumstances which cause manufacturers to experience impacts outside of this range

.

12.8.1 Standard

- Size Refrigerator

- Freezers

TSL 1 represents the current ENERGY STAR level for standard

- size refrigerator

freezers or a 20 pe rcent reduction in measured energy consumption over the current energy conservation standards for the analyzed product class 3 ( automatic defrost with

top

- mounted freezer without through

- the

- door ice service )

, product class 5 ( automatic

defrost with bottom

- mounted freezer without through

- the

- door ice service ) , and product class 7 ( automatic defrost with side

- mounted freezer with through

- the

- door ice service )

. At TSL 1, DOE estimates impacts on INPV to range

- $84.8 million to

- $301.7 million, or

a chan ge in INPV of

- 2.7 percent to

- 9.5 percent. At this proposed level, industry free cash flow is estimated to decrease by approximately 64.8 percent to $ 71.3 million, compared to the base

- case value of $ 202.6 million in the year leading up to the proposed

en ergy conservation standards.

The INPV impacts at TSL 1 are relatively minor, in part because the vast majority of manufacturers produce ENERGY STAR units in significant volumes, particularly for product class 5 and 7. Approximately 42 percent of product class 7 shipments and 47

percen t of product class 5 shipments currently meet this TSL. By contrast, the vast majority of product class 3 shipments are baseline units. Additionally, most of the design options DOE analyzed at this proposed level are one

- for

- one component swaps, including more efficient compressors and brushless DC condenser and evaporator fan motors, which require only modest changes to the manufacturing process at TSL 1. As such, DOE estimated total product conversion costs of $153 million and capital conversion costs of
$229 million.

While substantial on a nominal basis, the total conversion costs are relatively low compared to the industry value of $3.2 billion. The total conversion costs at TSL 1 are mostly driven by the design options that manufacturers could use to i mprove the efficiency of the smaller

- sized units of the product classes analyzed. For example, the analyzed design options for the 22 cubic foot product class 7 unit included a VIP in the freezer door, while the 26 cubic foot product class 7 unit only anal yzed less costly component swaps. VIP implementation would require significant capital and product conversion costs because additional production steps are required to hold and bind each panel in its location before the product is foamed. Each additional s tep requires more equipment to lengthen production lines and, because of lower throughput, more production lines for each manufacturer to maintain similar shipment volumes. Some manufacturers have experience with VIPs, but DOE expects substantial engineeri ng and testing resources would be required for their use in new platforms and/or at higher production volumes.

Similarly, the 16 cubic foot product class 3 unit uses a variable speed compressor as a design option. While not a capital intensive solution, v ariable speed compressors would require substantial engineering time to integrate the complex component, especially if electronic control systems would also be required. Because these changes12

- 89 are more complex than the other analyzed design options, more th an three

- quarters of the conversion costs for TSL 1 are attributable to the use of the VIPs and variable speed compressors in the smaller

- volume product class 7 and product class 3 units, respectively.

The flat markup scenario shows slightly negative impa cts at TSL 1, indicating that the outlays for conversion costs marginally outweigh any additional profit earned on incrementally higher variable costs. On a shipment

- weighted basis, the average MPC for

standard

- size refrigerator

- freezers increases by 10 pe rcent at TSL 1. These small component cost changes are not significant enough to fully recoup these investments even if manufacturers earn additional profit on these costs, as the flat markup scenario assumes. Hence, there is a slight negative impact, even in the upper

- bound scenario, at

TSL 1.

The efficiency requirements for product class 3 and product class 5 refrigerator

freezers are the same at TSL 2 as TSL 1. However, the efficiency requirements for product class 7 increase to a 25 percent reduction i n measured energy consumption from current energy conservation standards. DOE estimates the INPV impacts at TSL 2 range from

- $175.9 million to

- $459.8 million, or a change in INPV of

- 5.5 percent to

- 14.5 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 102.8 percent to

- $ 5.7 million, compared to the base

- case value of $ 202.6 million in the year leading up to the proposed energy conservation standard

.

The additional impacts at TSL 2 relative to TSL 1 result from the further improvements manufacturers must make to product class 7 refrigerator

- freezers to achieve a 25 percent energy reduction, as very few shipments of product class 7 currently exceed the ENERGY STAR level. Specifically, for the 22

- cubic foot pr oduct, the design options DOE analyzed include a variable speed compressor and a VIP in the freezer cabinet, instead of the door as in TSL 1. For the 26

- cubic foot product class 7 unit, the design options analyzed include a VIP in the freezer door in addit ion to additional component swaps and the component swaps needed to meet TSL 1. Total conversion costs increase by $208 million compared to TSL 1, which is largely driven by the initial

use of VIPs in the 26

- cubic foot product class 7 unit. Besides these s pecific changes to

side

- by

- side units, at TSL 2 most production lines of standard

- size refrigerator

- freezers do not use of VIPs or other very costly components, mitigating some of the disruption to current facilities. Consequently, the INPV impacts, while greater than at TSL 1, are still relatively moderate compared to the value of the industry.

At TSL 2, the INPV in the flat markup is lower than at TSL 1, which means the

additional conversion costs to add more VIPs leaves manufacturers worse off even if t hey can earn additional profit on these costly components. In the preservation of operating profit markup scenario, the industry earns no additional profit on this greater investment, lowering cash flow from operations in the standards case and resulting i n greater INPV impacts.

The efficiency requirements for product class 5 and product class 7 refrigerator

freezers are the same at TSL 3 as TSL 2. However, the efficiency requirements for product class 3 increase to a 25 percent reduction in measured energ y consumption from12

- 90 current energy conservation standards. TSL 3 represents a 25 percent reduction in measured energy consumption over the current energy conservation standards both product class 3 and product class 7. In addition, TSL 3 represents a 20 per cent reduction in measured energy consumption for the unanalyzed product classes 1, 1A, and 2. DOE estimates the INPV impacts at TSL 3 to range from

- $ 287.5 million to

- $ 662.1 million, or a change in INPV of

- 9.1 percent to

- 20.9 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 151.6 percent to

- $ 104.5 million,

compare d to the base

- case value of $202.6 million in the year leading up to the standards.

T he additional negative impacts on industry cash flow resu lt from the changes to product class 3 refrigerator

- freezers to reach a 25 percent reduction in energy use (side

by

- side products met this proposed level at TSL 2). Specifically, the design options DOE analyzes at TSL 3 for 16 cubic foot top

- mount refriger ator

- freezers include the use of VIPs for the first time (in the freezer cabinet), in addition to the component swaps discussed above. In total, DOE estimates product conversion costs of $229 million and capital conversion costs of $620 million at TSL 3. T he high cost to purchase new production equipment and the large engineering effort to manufacture new platforms for

these smaller

- sized product class 3 units drive the vast majority of this additional $258

million in conversion costs that DOE estimates man ufacturers would incur at TSL 3. Because the smaller size top

- mounts account for a large percentage of total shipments, the production equipment necessary to implement new platforms for these products is costly.

While production of units meeting TSL 3 is fairly limited, several manufacturers have introduced products that meet this proposed level in response to Federal production tax credits. This experience mitigates some of the product conversion costs by giving manufacturers some experience with the newe r technologies. However, the more severe impacts at TSL 3, relative to TSL 2, are due to the incremental outlays for conversion costs to make the changes described above. In particular, any experience with VIPs on some products does not lower the substanti al capital conversion necessary to purchase production equipment necessary to manufacturer products that are substantially different from existing products.

As mentioned above, the preservation of operating profit markup scenario assumes no additional pro fit is earned on the higher production costs, which lower profit margins as a percentage of revenue and leads to worse impacts on INPV. In the flat markup scenario, the impact of the investments is mitigated by the assumption that

manufacturers can earn a similar profit margin as a percentage of revenues on their higher variable costs. At TSL 3 MPCs increase by an average of 16 percent over the base case, leading to additional per

- unit profit in this scenario in this scenario. However, the magnitude of the conversion investments still leads to negative INPV impacts even if additional profit is earned on the incremental manufacturing costs. The lower industry shipments driven by the relative price elasticity assumption account for approximately 19 percent of the impact in the flat markup scenario.

TSL 4 represents a 30 percent reduction in measured energy consumption over the current energy conservation standards for product class 3

, product class 5 , and product12

- 91 class 7 . DOE estimates the INPV impa cts at TSL 4 to range from

- $643.0 million to

- $1,496.8 mil lion, or a change in INPV of

- 20.3 percent to

- 47.2 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately a factor of 3.2 to

- $449.6 million, compare d to the base

- case value of $202

. 6 million in the year leading up

to the proposed energy conservation standards.

At TSL 4, significant changes to the manufacturing process are necessary for all refrigerator

- freezers. A 30 percent reduction in energy consumption is the max available

top

- mount on the market; the maximum available side

- by

- side and bottom

- mount only slightly exceed a 30 percent reduction. The design options DOE analyzed for all

standard

- size products

— with the exception of the 25 cubic foot product class 5 u nit

— use multiple VIPs in the fresh food compartment, freezer doors, and cabinets to reach 30 percent efficiency level. The design options also include the use of variable speed compressors for all units analyzed except the 21 cubic foot product class 3 uni t. These product changes substantially increase the variable costs across nearly all platforms at

this TSL.

While products that meet the efficiency requirements of TSL 4 are not in widespread production, several manufacturers produce units at these effici encies due to tax credit incentives. However, at TSL 4 most manufacturers expect to completely redesign existing production lines if the proposed energy conservation standards were set at levels that necessitated these changes across most or all of their p roducts. Manufacturers would need to purchase injection molding equipment, cabinet bending equipment, and other equipment for interior tooling as they would need to create new molds for these production lines. These changes drive DOE’s estimate of the larg e product and capital conversion costs at TSL 4 ($348 million and $1,405 million, respectively). The significant incremental investment relative to TSL 3 results, in large part, from the design option of adding VIPs to the 21 cubic foot analyzed product cl ass 3 unit. This top

- mounted refrigerator

- freezer represents a substantial portion of the market and manufacturers would have to completely redesign these platforms.

As a result of the large investment necessary to meet this proposed level, some

manufactu rers could move production to Mexico or other lower

- labor

- costs countries to achieve cost savings for labor expenditures. In addition to the large capital conversion costs, the shipment

- weighted average MPC increases by approximately 36 percent at TSL

4 co mpared to the base case. However, the magnitude of the conversion costs at TSL 4 are so large that even if manufacturers can reap additional profit from these higher product costs (as in the flat markup scenario), they would still be substantially impacted

, as shown by the negative INPV results in the flat markup scenario. Additionally, the 36 percent increase in MPC drives shipments lower due to the price elasticity. Lower industry volume due to the decline in shipments accounts for approximately one

- quart er of the change in industry value in the flat markup scenario. The large, negative impact on INPV is even greater under the preservation of operating profit markup scenario due to the inability to pass on the higher costs of expensive design options such as variable speed compressors and VIPs.12

- 92 TSL 5 represents max tech for all standard

- size refrigerator

- freezers. The max

tech level corresponds to reductions in measured energy consumption of 3 6 percent, 3 6 percent, and 3 3 percent over the current energy c onservation standards for product class 3, product class 5, and product class 7 , respectively. DOE estimates the INPV impacts at TSL 5 to range from

- $ 828.9 million to

- $2,154.7 million, or a change in INPV of

- 26.1
percent to

- 67.9 percent. At this proposed level, the industry cash flow is estimated to decrease by a factor of approximately 4.5 to

- $ 707.8 million, compared to the base

- case value of $ 202.6 million in the year leading up to the proposed energy conservation

standards.

No products that m eet TSL 5 are currently offered on the U.S. market. At TSL 5, the changes required to meet this proposed level are similar to those at TSL 4, as complete redesigns of all platforms would be required.TSL 5 requires much more extensive use of VIPs, however. The higher conversion costs at TSL 5 are primarily due to the use of VIPs in additional locations in the door, cabinet and freezer, whereas at TSL 4 some of the analyzed design options of the larger

- sized units included limited or no VIP

use. This would re quire manufacturers to further lengthen assembly lines and even modify or move their entire facilities, driving the $2,419 million conversion cost estimate at this proposed level. As with TSL 4, at TSL 5 some manufacturers could elect to move production ou t of the U.S. to offset some of the addition product costs. At TSL 5, DOE estimates MPCs increase by approximately 58 percent compared to the base case. Similar to TSL 4, this substantially reduces shipments due to the price elasticity effect and

exacerbat es the industry impacts in both markup scenarios.

As with other TSLs, the impact on INPV is mitigated under the flat markup scenario because manufacturers are able to fully pass on the large increase in MPC to consumers, thereby increasing manufacturers’ g ross profit in absolute terms. However, even assuming manufacturers could earn the same gross margin percentage per unit on those higher costs, the capital and product conversion costs cause negative INPV impacts, as shown by the 26.15 percent decline in I NPV in the flat markup scenario. This large impact even in the lower bound scenario demonstrates that the large conversion costs to redesign all existing platforms results in substantial harm even if manufacturers earn a historical margin on these addition al costs. Due to the extremely large cost increases at

the max

- tech level, it is more unlikely at TSL 5 that manufacturers could fully pass through the increase production costs. If margins are impacted, TSL 5 would result in a

substantial INPV loss under this scenario.

12.8.2 Standard

- Size Freezers

TSL 1 represents a 20 percent reduction in measured energy use over the current energy conservation standards for the analyzed product class 9 (u pright freezers with

automatic defrost ) and product class 10 (c hest fr eezers and all other freezers except compact freezers ) . DOE estimates the INPV impacts at TSL 1 to range from

- $ 2 4.9

million to

- $ 57.3 million, or a change in INPV of

- 6.2 percent to

- 14.2 percent. At this proposed level, the industry cash flow is estimate d to decrease by approximately 100.412

- 93 percent to

- $ 0.1 million, compared to the base

- case value of $ 25.7 million in the year leading up to the proposed energy conservation standards.

While products meeting TSL 1 are only currently produced in limited volum es, the changes in the manufacturing process would not require completely new platforms to meet the energy requirements at this TSL. For most standard

- size freezer platforms, the design options DOE analyzed include the use of brushless DC evaporator fan mo tors and compressors with higher EERs. However, the design options to meet this efficiency level also include increasing door insulation thickness for all analyzed products except the 20 cubic foot product class 10 unit. Increasing door insulation thicknes s drives the majority of the conversion cost outlay DOE estimates manufacturers would incur at TSL 1. To increase door insulation thickness, manufacturers would need to purchase new equipment tooling equipment for their door assembly. DOE estimates that th ese changes would result in product conversion costs of $22 million and capital conversion costs of $50 million at TSL 1. However, the conversion costs are somewhat mitigated at TSL 1 because the design options analyzed would not change the production equi pment for the

cabinet.

At TSL 1, variable costs increase by approximately 10 percent relative to base case MPCs. The flat markup scenario shows less severe impacts because it assumes manufacturers can pass on these substantially higher product costs and maintain gross margin percentages. Additionally, the reduction in shipments due to the price elasticity has only a marginally negative effect at this proposed level. The relatively large conversion costs decrease industry value under both markup scenarios and account for a substantial portion of the INPV impacts especially if manufacturers are not able to earn any additional profit on the higher production costs (the preservation of operating profit scenario).

TSL 2 represents a 30 percent reduction in meas ured energy consumption over the current energy conservation standards for product class 9 and 25 percent for product class

10

. TSL 2 also represents a 25 percent reduction in measured energy consumption for the unanalyzed product class 8 (upright freezers with manual defrost) and a 30 percent reduction for the analyzed product class 10A (chest freezers with automatic defrost). DOE estimates the INPV impacts at TSL 2 to range from

- $ 110.6 million to

- $ 186.0 million, or a change in INPV of

- 27.5 percent to

- 46.2 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately a factor of 3.2 to

- $ 57.5 million, compared to the base

- case value of $ 2 5.7 million in the year leading up to the proposed energy conservation standards.

The vast majority of the standard

- size freezer market does not currently meet the efficiency requirements at TSL 2. DOE’s design options assume that, in addition to the component swaps noted above, manufacturers would increase the insulation thickness of both the door and cabinet. As a result, product redesigns are expected across most platforms, which could substantially disrupting current manufacturing processes. These changes account for the majority of DOE’s estimates for total product conversion cost s of $51 million and capital conversion costs of $175 million, an increase over TSL 1 of $29 million and $125 million, respectively. The magnitude of the investments, relative to the12

- 94 industry value, results in severe INPV impacts. Even if manufacturers are able to pass on the estimated 24 percent increase in product costs onto their customers, the large product and capital conversion costs resulting from increased insulation thickness decrease INPV. If manufacturers are not able to pass on these costs, as s hown by the preservation of operating profit scenario, INPV impacts are projected to be severe.

TSL 3 represents a 35 percent reduction in measured energy use over the current energy conservation standards for product class 9 and a 30 percent reduction for product

class 10 . DOE estimates the INPV impacts at TSL 3 to range from

- $ 94.5 million to

- $ 201.1 million, or a change in INPV of

- 23.5 percent to

- 49.9 percent. At this proposed level, the industry cash flow is estimated to decrease by a factor of approx imately 3.4 to

- $ 61.3 million, compared to the base

- case value of $ 25.7 million in the year leading up to

the proposed energy conservation standards.

The efficiency requirements at TSL 3 are more stringent than the max available products in the market for product class 9 and product class 10. The impacts at TSL 3 are similar to those at TSL 2 because the design options analyzed by DOE already required

p latform redesigns at TSL 2. However, the additional design options analyzed at TSL 3 also include a variable speed compressor in the 14

- cubic foot product class 9 unit and

VIPs in the bottom wall of the 20

- cubic foot product class 10 unit. These design opt ions substantially increase the variable costs associated with these products but do not greatly change the product and capital conversion costs. The average MPC of a standard

- size freezer shipped at TSL 3 is estimated to be approximately 34 percent more e xpensive than in the base case, leading to a 9 percent decline in shipments due to the price elasticity assumption in 2014 alone.

The impacts at TSL 3 under the flat markup scenario become less severe than at

TSL 2 because the scenario assumes manufacture rs can fully pass on the added cost to consumers, while investments do not significantly increase from TSL 2 to TSL 3. However, under the preservation of operating profit markup scenario, manufacturers do not receive any extra profit on units of higher cos t, resulting in worse INPV impacts at

TSL 3 than at TSL 2.

TSL 4 represents a 40 percent reduction in measured energy use over the current energy conservation standards for product class 9 and a 35 percent reduction for product

class 10 . DOE estimates the INPV impacts at TSL 4 to range from

- $ 59.0 million to

- $ 218.9 million, or a change in INPV of

- 14.6 percent to

- 54.4 percent. At this proposed level, the industry cash flow is estimated to decrease by a factor of approximately 3.5 to

- $ 64.0 million, compa red to the base

- case value of $ 25.7 million in the year leading up to

the proposed energy conservation standards.

At TSL 4, the design options DOE analyzed include the addition of a variable speed compressor for the 20

- cubic foot product class 9 unit, the 15

- cubic foot product class 10 unit, and the 20

- cubic foot product class 10 unit. For the 14 cubic foot product class 9 unit, the design options analyzed were even thicker wall cabinet insulation and the implementation of VIPs.12

- 95 The relative impacts at TSL 4 are also caused by the incremental MPCs compared to the conversion costs to implement these design options. Outlays for conversion costs increase only slightly at TSL 4 (by 4 percent, compared to TSL 3) while variable costs increase substantially (by approximately 50 percent compared to the baseline) due to the addition of variable speed compressors and VIPs. Because manufacturers earn incrementally more profit on each unit at TSL 4 compared to TSL 3 in the flat markup

scenario

— without substantial cha nges to conversion costs

— further declines in industry value, though still substantial, are mitigated in this scenario. However, manufacturers expressed skepticism that such large cost increases could be passed on. This view is reflected by the severely neg ative results in the preservation of operating profit scenario.

TSL 5 represents max tech for the standard

- size freezer product classes. This TSL

reflects a 4 4 percent reduction in measured energy use for product class 9 and a 41
percent reduction for prod uct class 10 . DOE estimates the INPV impacts at TSL 5 to range from

- $ 102.4 million to

- $ 365.1 million, or a change in INPV of

- 25.4 percent to

- 90.7 percent. At this proposed level, the industry cash flow is estimated to decrease by a factor of approximat ely 5.7 to

- $ 120.3 million, compared to the base

- case value of $ 25.7 million in the year leading up to the proposed energy conservation standards.

To achieve the max

- tech level at TSL 5, DOE analyzed design options that include the widespread implementatio n of multiple VIPs on all standard

- size freezers, in addition to the use of more efficient components and thicker insulation already necessary to achieve the efficiency requirements at TSL 4. DOE estimated that TSL 5 would require product and capital conve rsion costs of $70 million and $320 million, respectively. These large conversion costs result from the changes associated with multiple VIP implementation and wall thickness increases. In addition, DOE estimates that product costs would almost double base

- case MPCs, driven by the use of variable speed compressors and VIPs in the doors and cabinet of all product lines. As a result, INPV decreases substantially from TSL 4 to TSL 5.

12.8.3 Compact Refrigeration Products

TSL 1 represents a 20 percent reduction in me asured energy use over the current energy conservation standards for product class 11 (c ompact refrigerators and refrigerator

- freezers with manual defrost ) and a 10 percent reduction for product class 18 (c ompact chest freezers ). DOE estimates the INPV im pacts at TSL 1 to range from

- $ 14.3 million to

- $ 32.1 million, or a change in INPV of

- 7.2 percent to

- 16.1 percent. At

this proposed level, industry cash flow is estimated to decrease by approximately 112.9
percent to

- $ 1.5 million, compared to the base

- c ase value of $ 11 .9 million in the year leading up to the proposed energy conservation standards. A small percentage of product class 18 shipments currently meet this TSL, but most product class 11 shipments are

baseline units.

The design options analyzed by DOE at TSL 1 assumed that more significant changes in the manufacturing process would be required for product class 11, while product class 18 would only require increased compressor efficiency. For product class 11, DOE anal yzed several design options that represent component changes, such as a12

- 96 more efficient compressor and increased heat exchanger area, which do not have a significant impact on consumer prices or conversion costs. However, DOE also analyzed increasing door i nsulation thickness for product class 11, which drives the bulk of the estimated $15 million and $24 million outlays for product conversion and capital conversion costs, respectively. As described for standard

- size refrigerator

- freezers and

standard

- size f reezers, increasing insulation thickness requires manufacturers to invest in injection molding equipment and other equipment for interior tooling to manufacturer products with different door dimensions. The overall impacts at TSL 1 are relatively

moderate because the conversion costs are still small compared to the industry value of
$200 million.

The higher production costs at TSL 1 do not have a substantial impact on INPV at TSL 1. The MPC of compact refrigeration products on a shipment

- weighted basis

inc reases 11 percent over the base case at TSL 1. The combined INPV impacts are greater under the preservation of operating profit scenario since manufacturers cannot pass on any of the added cost to consumers under that scenario, resulting in lower cash

flo ws from operations. However, because production costs do not greatly increase at TSL 1, the impacts on INPV are relatively low under this scenario as well.

TSL 2 represents a 25 percent reduction in measured energy use over the current energy conservation standards for product class 11 and a 10 percent reduction for product

class 18

. TSL 2 also represents a 15 percent reduction in measured energy consumption for the analyzed product classes 13 and 15, and a 20 percent reduction for the unanalyzed product c lass 14. DOE estimates the INPV impacts at TSL 2 to range from

- $ 30.8 million

to

- $ 66.7 million, or a change in INPV of

- 15.4 percent to

- 33.4 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 230.1 percent t o

- $ 15.4 million, compared to the base

- case value of $ 11.9 million in the year leading up to

the proposed energy conservation standards.

At TSL 2, further changes are required for product class 11. In addition to component swaps, the design options analyz ed by DOE also include thicker cabinet insulation. As discussed for TSL 1, increasing insulation thickness significantly impacts product and capital conversion costs, but much more so when adding insulation to the cabinet (as opposed to the door). To incre ase the insulation thickness of the cabinet, manufacturers must replace virtually all stamping equipment which greatly increases the capital conversion costs. Additionally, DOE analyzed the use of isobutane refrigerant as a design option for the 4

- cubic fo ot product class 11 unit. At TSL 2, a substantial portion of the investment to reach TSL 2 would likely go towards training service technicians to handle the explosive refrigerant. As a result of thicker cabinet insulation and conversion to isobutane, prod uct conversion and capital conversion costs roughly double at TSL 2 (to $35 million for product conversion costs and $46 million for capital conversion costs). The shipment

- weighted MPC increased 22 percent at TSL 2 compared to baseline costs,

which also c ontributed to the more severe impacts projected under the preservation of operation profit scenario if manufacturers do not earn additional profit on these higher

costs.12

- 97 TSL 3 represents a 30 percent reduction in measured energy use over the current

ener gy conservation standards for product class 11 and a 15 percent reduction for product

class 18 . DOE estimates the INPV impacts at TSL 3 to range from

- $ 56.8 million to

- $ 99.2 million, or a change in INPV of

- 28.4 percent to

- 49.6 percent. At this proposed level, the industry cash flow is estimated to decrease by a factor of approximately 3.5 to

- $ 29.4 million, compared to the base

- case value of $ 11 .9 million in the year leading up to

the proposed energy conservation standards.

At TSL 3, the design options analyzed for both product class 18 units include thicker door insulation, which further increases the capital conversion costs over TSL 1 and TSL 2, where this was not analyzed as a design option. The additional impacts at TSL 3 are also due to more string ent requirements for product class 11. A 30 percent reduction for product class 11 is greater than the most efficient units on the market today. For both analyzed sizes of product class 11, DOE analyzed the design option of thicker

insulation in the cabine t for both units analyzed. The net effect is a large increase in

conversion costs due to the much higher cost of the equipment necessary to manufacture the cabinet. At TSL 3, DOE estimated total product conversion costs of $41 million and capital conversio n costs of $76 million, a 46 percent total increase in conversion costs over TSL 2. The effect of the design changes at TSL 3 on shipment

- weighted unit cost is a 27 percent increase over the baseline MPC. The magnitude of the investments relative

to the in dustry value leads to significant impacts, although they are moderated somewhat in the flat markup because manufacturers earn additional profit on the investments.

TSL 4 represents a 40 percent reduction in measured energy use over the current

energy conse rvation standards for product class 11 and a 25 percent reduction for product

class 18 . DOE estimates the INPV impacts at TSL 4 to range from

- $ 29.6 million to

- $ 114.4 million, or a change in INPV of

- 14.8 percent to

- 57.3 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 344.1 percent to

- $ 29.0 million, compared to the base

- case value of $ 11 .9 million in the year leading up to

the proposed energy conservation standards.

The design options analyzed at TSL 4 would also severely disrupt current manufacturing processes. For the 1.7

- cubic foot product class 11 unit, DOE analyzed a variable speed compressor and isobutane refrigerant as design options. For the 4 cubic foot product class 11 unit and the 7

- cubi c foot product class 18 unit, DOE analyzed

thicker insulation in the cabinets. For 3.4

- cubic foot product class 18 unit, DOE analyzed both an increase to cabinet insulation thickness and VIPs in the bottom wall as design options. Although increasing insula tion thickness, converting to isobutane, and implementing VIPs all would necessitate large conversion costs, capital conversion costs decrease slightly from TSL 3 to TSL 4 because of the removal of all previous design options in the 1.7

- cubic foot unit. In other words, the design options analyzed for this unit cause less substantial changes to existing production equipment, but would also require a large investment by manufacturers to train service technicians to deal with the explosive refrigerant. Because this would require a large outlay for product conversion costs, total conversion costs are roughly the same at TSL 3 and TSL 4. The addition of a variable speed compressor in the smaller product class 11 unit analyzed also has a substantial impact on unit price because of its high component cost. At TSL 4, the shipment

-12

- 98 weighted MPC is 60 percent higher than the baseline MPC. These cost increases are projected to cause a 16 percent decrease in shipments at TSL 4 in 2014 alone. Over time, the decline in ship ments is a big contributor to the negative impacts on INPV in both markup scenarios.

The large conversion costs and higher prices leading to lower shipments cause a decrease in INPV from TSL 3 to TSL 4 under the preservation of operating profit markup

sc enario (since this scenario assumes higher production costs are not passed on to consumers). However, under the flat markup scenario, manufacturers are able to earn additional profit on the new high

- cost components such as variable speed compressors,

resul ting in an increase in INPV from TSL 3 to TSL 4.

TSL 5 represents max tech for both product classes 11 and 18. The max

- tech level corresponds to a 5 9 percent and 4 2 percent reduction in measured energy use for product

class 11 and product class 18 , respec tively. DOE estimates the INPV impacts at TSL 5 to range from

- $ 133.0 million to

- $ 295.6 million, or a change in INPV of

- 66.6 percent to

- 148.0 percent. At this proposed level, the industry cash flow is estimated to decrease approximately nine

- fold to

- $ 9 5.7 million, compared to the base

- case value of $ 11 .9

million in the year leading up to the proposed energy conservation standards.

The design options DOE analyzed include the use of VIPs for all analyzed product class 11 and 18 units to reach max

- tech ef ficiency levels. Additionally, the design options analyzed for some products also included other costly changes. For the

1.7

- cubic foot product class 11 unit, the design options analyzed included multiple VIPs, a larger heat exchanger, and thicker insulat ion. The design options analyzed for the 4

- cubic foot product class 11 unit also included a variable speed compressor and thicker insulation. For product class 18, DOE assumed that manufacturers would remove the design options necessary to meet TSLs 1 thro ugh 4 and add a variable speed compressor and thicker insulation for both analyzed products. These significant changes greatly increase the investment required to manufacture standards

- compliant products. DOE estimated that product conversion costs would b e $67 million at TSL 5, an increase of almost 40 percent over TSL 4. DOE also estimated that capital conversion costs would be $220 million, a more than three

- fold increase over TSL 4. This drastic increase in

conversion costs demonstrates the significant investments required by implementing widespread use of VIPs and increasing wall thickness.

At TSL 5, the shipment

- weighted MPC increases by over 150 percent over the baseline due to the high material costs of VIPs and variable speed compressors. These

lar ge jumps cause shipments to decrease by 42 percent due to the price elasticity in 2014 alone. As a result of lower industry shipments and extremely high conversion costs,

INPV decreases substantially from TSL 4 to TSL 5 and becomes negative under the

prese rvation of operating profit scenario, which indicates the industry loses more than its

base

- case value in the standards case under this scenario.12

- 99 12.8.4 Built

- In Refrigeration Products

TSL 1 represents a 10 percent reduction in measured energy use over the current energy conservation standards for product class 3A

- BI (built

- in a ll

- refrigerators

— automatic defrost ), product class 5

- BI (built

- in r efrigerator

- freezers

— automatic defrost

with bottom

- mounted freezer without an automatic icemaker ), product class 7

- BI (b uilt

i n r efrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

door ice service ), and product class 9

- BI (built

- in u pright freezers with automatic defrost

without an automatic icemaker ). DOE estimates the INPV impac ts at TSL 1 to range

from

- $ 51.7 million to

- $ 52.9 million, or a change in INPV of

- 7.9 percent to

- 8.0 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 63.9 percent to $ 15.0 million, compared to the base

- ca se value of $ 41.5 million in the year leading up to the proposed energy conservation standards.

At TSL 1, the design options that DOE analyzes result in moderate changes in the manufacturing process for built

- in refrigeration products. For product classes 3A

- BI and

9

- BI, the design options that DOE analyzed to reach TSL 1 included the use of more efficient components that do not require significant changes to the manufacturing process. However, for product class 5

- BI and product class 7

- BI, the design opti ons DOE analyzed also include the use of VIPs in the freezer door. While these components add to the overall costs of production, the added costs represent a small percentage of the total

cost of a built

- in refrigeration product. These cost deltas are low compared to the overall cost of the products and result in small impacts even if no additional profit is earned on the incremental MPCs. The estimated product conversion costs for all built

- in refrigeration products at TSL 1 are $41 million and the estimat ed capital conversion costs are $40 million. The implementation of VIPs represents a substantial part of the conversion costs, but several built

- in refrigeration manufacturers have products that use similar technology, which helps to mitigate some of the p roduct conversion costs that would be required to design products from the ground up.

TSL 2 represents a 15 percent reduction in measured energy use for product class

3A

- BI and product class 5

- BI. For product classes 7

- BI and 9

- BI , TSL 2 represents a redu ction of 10 percent and 20 percent, respectively. DOE estimates the INPV impacts at TSL 2 to range from

- $ 54.7 million to

- $ 57.0 million, or a change in INPV of

- 8.3
percent to

- 8.7 percent. At this proposed level, the industry cash flow is estimated to

de crease by approximately 68.0 percent to $ 13.3 million, compared to the base

- case value of $ 41.5 million in the year leading up to the proposed energy conservation

standards.

The efficiency requirements for product class 7

- BI refrigerator

- freezers do not

c hange from TSL 1 to TSL 2, but the efficiency requirements for all other analyzed built

in product classes increase. The design options that DOE analyzes at TSL 2 for product

classes 3A

- BI and 7

- BI still only include component swaps to reach a 15 percent

e fficiency improvement. Product class 5

- BI uses a variable speed compressor in the freezer with a brushless DC condenser fan motor, but no longer use the VIPs used to reach TSL 1. The design options analyzed for product class 9

- BI include a brushless DC

eva porator and condenser fan motor, a larger condenser, a variable speed compressor,12

- 100 and a VIP in the upper door. Because product class 5

- BI no longer uses VIPs and fewer changes to existing products are necessary, the overall impact is a slight decrease in

c apital conversion costs from $40 million at TSL 1 to $38 million at TSL 2. Product conversion costs increase to $51 million at TSL 2 because additional engineering time would be required to implement the additional component changes. However, because

the c omplexity of the changes to the products and production facilities are similar at TSL 1 and TSL 2, there is only a small decrease in INPV from TSL 1 to TSL 2.

TSL 3 represents a 20 percent reduction in measured energy use for product class

3A

- BI and product class 7

- BI. For product classes 5

- BI and 9

- BI , TSL 2 represents a reduction of 15 percent and 25 percent, respectively. DOE estimates the INPV impacts at TSL 3 to range from

- $ 65.8 million to

- $ 80.5 million, or a change in I NPV of

- 10.0
percent to

- 12.2 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 93.0 percent to $ 2.9 million, compared to the base

- case value
of $ 41.5 million in the year leading up to the proposed energy con servation standards.

The efficiency requirements for product class 5

- BI do not change from TSL 2 to TSL 3. However, the design options for all other built

- in refrigeration products at TSL 3 include the implementation of VIPs. The widespread implementation of VIPs increases product and capital conversion costs, which are est imated to be $65 million and $55 million at TSL 3, respectively. Substantial changes to existing production facilities would be required to manufacture products that meet the required ef ficiencies at TSL 3. Most of the capital conversion costs involve purchasing new production equipment and would result in high stranded assets. The extensive changes that manufacturers would be required to make to existing facilities and the projected eros ion of profitability if the additional production cost of implementing VIP s does not yield additional profit result in

a projected decrease in INPV from TSL 3 to TSL 4. However, the industry value is high relative to the required capital conversion costs a nd the cost of the additional VIP panels is relatively small compared to the overall cost of the products, which helps to mitigate some of the negative impacts caused by these changes.

TSL 4 represents a 25 percent reduction in measured energy use over the current energy conservation standards for the following product classes: 3A

- BI

, 5

- BI , and 9

- BI

. For product class 7

- BI , TSL 4 represents a 20 percent reduction in measured energy use

from current energy conservation standards. DOE estimates the INPV impac ts at TSL 4 to range from

- $ 79.7 million to

- $ 103.0 million, or a change in INPV of

- 12.1 percent to

- 15.6 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 117.8 percent to

- $ 7.4 million, compared to the bas e

- case value of $ 41.5 million in the year leading up to the proposed energy conservation standards.

The efficiency requirements for product class 7

- BI do not change from TSL 3 to TSL 4. The design options for the other built

- in refrigeration products all include the addition of more VIPs to reach TSL 4. The design options analyzed for product classes

3A

- BI and 5

- BI also include using a variable speed compressor. The complexity of implementing multiple component swaps and the additional production equipment necessary to use additional VIPs increases both the product and capital conversion costs.12

- 101 These cost s are estimated to be $75 million and $74 million at TSL 4, respectively, and

result in a decrease in INPV from TSL 3 to TSL 4.

TSL 5 represents max tech for the four built

- in product classes. This proposed

level represents a reduction in measured energy u se of 29 percent, 27 percent, 22 percent, and 27 percent, respectively, for product classes 3A

- BI, 5

- BI, 7

- BI, and 9

- BI

. DOE estimates the INPV impacts at TSL 5 to range from

- $ 84.9 million to

- $ 120.3 million, or a change in INPV of

- 12.9 percent to

- 18.3 percent. At this proposed level, the industry cash flow is estimated to decrease by approximately 135.1 percent to

- $ 14.6 million, compared to the base

- case value of $ 41.5 million in the year leading up to the proposed energy conservation standards

.

The de sign options analyzed by DOE include the widespread use of VIPs to

achieve the max

- tech efficiency levels at TSL 5. Additionally, product class 3A

- BI uses multiple variable speed compressors. Since the implementation of VIPs is both research and capital in tensive, product and capital conversion costs increase to $87 million and $84 million, respectively. The complexity of implementing multiple component swaps and the additional production equipment necessary to use additional VIPs increases both the product and capital costs.12

- 102 REFERENCES

1 Securities and Exchange Commission, Annual 10

- K Reports, Various Years, Washington DC. <www.sec.gov >.

2 Standard and Poors Financial Services LLC, Company Credit Ratings, Various Companies, New York, NY. < www2.standardandpoors.com >.

3 Annual Survey of Manufacturing: 2007. American FactFinder. 2010. Bureau of

the Census. < http://factfinder.census.g ov/servlet/IBQTable?_bm=y&

- ds_name=EC0731I1&

- ib_type=NAICS2007&

- NAICS2007=335222 >.

4 Association of Home Appliance Manufacturers. Current Members. Last Accessed December 2, 2009. < http://www.aham.org/ht/d/Organizations/divisions/Y/pid/2344 >.

5 Federal Trade Commission. Appliance Energy Data.

< http:// www.ftc.gov/bcp/conline/edcams/eande/appliances/fridge.htm>

6 ENERGY STAR. Qualified Refrigerators & Freezers. <http://www.energystar.gov/index.cfm?fuseaction=refrig.display_products_html>

7 California Energy Commission. Appliance Efficiency Database.

< http://www.appliances.energy.ca.gov/QuickSearch.aspx >

8 Mc Kinsey & Company, Inc. Valuation: Measuring and Managing the Value of Companies , 3rd Edition, Copeland, Koller, Murrin. New York: John Wiley & Sons,

2000.

9 U.S. Department of Energy

– Energy Information Administration. Annual Energy

Outlook 20 10 with Projections to 203 5 . April 2010. U.S. DOE

– EIA: Washington,

D

. C

. DOE/EIA

- 0383( 2010 ).13

- i CHAPTER 1 3

. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION

................................ ................................ ................................ ......... 13

- 1

13.2 ASSUMPTIONS

................................ ................................ ................................ ............ 13

- 1

13.3 METHODOLOGY

................................ ................................ ................................ ........ 13

- 1

13.4 RESULTS

................................ ................................ ................................ ...................... 13

- 2

LIST OF TABLES

Table 13.4.1 Standard

- Size Refrigerator

- Freezers Net National Change in Employment

... 13

- 12

Table 13.4.2 Standard

- Size Freezers Net National Change in Employment

........................ 13

- 13

Table 13.4.3 Compact Refrigeration Products Net National Change in Employment

......... 13

- 13

Table 13 .4.4 Built

- in Refrigeration Products Net National Change in Employment

........... 13

- 13

LIST OF FIGURES

Figure 13.4.1 Refrigerator

- Freezer Employment Impact of Increased Equipment Cost

......... 13

- 3 Figure 13.4.2 Co mpact Refrigeration Products Employment Impact of Increased Equipment Cost

................................ ................................ ................................ .. 13

- 3 Figure 13.4.3 Freezer Employment Impact of Increased Equipment Cost

.............................. 13

- 4 Figure 13.4.4 Built

- in Refrigeration Products Employment Impact of Increased Equipment Cost

................................ ................................ ................................ .. 13

- 4 Figure 13.4.5 Refrigerator

- Freezer Employment Impact of Operating Cost Savings

.............. 13

- 5 Figure 13.4.6 Compact Refrigeration Products Employment Impact of Operating Cost Savings

................................ ................................ ................................ ............... 13

- 6 Figure 13.4.7 Freezer Employment Impact of Operating Cost Savings

................................ .. 13

- 6 Figure 13.4.8 Built

- in Refrigeration Products Employment Impact of Operating Cost Savings

................................ ................................ ................................ ............... 13

- 7 Figure 13.4.9 Refrigerator

- Freezer Employment Impact of Operations and Maintenance

Cost Increase

................................ ................................ ................................ ...... 13

- 8 Figure 13.4.10 Compact Refrigeration Products Employment Impact of Operations and

Maintenance Cost Increase

................................ ................................ ................ 13

- 8 Figure 13.4.11 Freezer Employment Impact of Operations and Maintenance Cost Increase

.... 13

- 9 Figure 13.4.12 Built

- in Refrigeration Products Employment Impact of Operations and

Maintenance Cost Increase

................................ ................................ ................ 13

- 9 Figure 13.4.13 Standard

- Size Refrigerator

- Freezers Net National Change in Employment

... 13

- 10 Figure 13.4.14 Standard

- Size Freezers Net National Change in Employment

........................ 13

- 11 Figure 13.4.15 Compact Refrigeration Products Net National Change in Employment

......... 13

- 11 Figure 13.4.16 Built

- in Refrigeration Products Net National Change in Employment

........... 13

- 1213

- 1 CHAPTER 13. EMPLOYMENT IMPACT AN ALYSIS

13.1 INTRODUCTION

DOE conducted an employment impact analysis for the NOPR. DOE’s employment impact analysis is designed to estimate indirect national job creation or elimination resulting from possible standards, due to reallocation of the associated expenditures for purc hasing and operating residential refrigeration products.

13.2 ASSUMPTIONS

DOE expects energy conservation standards to decrease energy consumption, and therefore to reduce energy expenditures. The savings in energy expenditures may be s pent on new investment or not at all (i.e., they may remain “saved”). The standards may increase the purchase price of appliances , including the retail price plus sales tax, and increase installation

costs.

Using an input/output econometric model of the U.S. economy, this analysis estimated the year

- to

- year effect of these expenditure impacts on net economic output and employment. DOE intends this analysis to quantify the indirect employment impacts of these expenditure changes. It evaluated direct employment impacts at manufacturers’ facilities in the manufacturer impact analysis (see Chapter 12 ).

13.3 METHODOLOGY

The Department based its analysis on an input/output model of the U.S. economy that

estimates the effects of standards on major sectors of the economy related to buildings and the net impact of standards on jobs. The Pacific Northwest National Laboratory developed the
model, ImSE T 3. 1. 1 1 ( Im pact of S ector E nergy T echnologies) as a successor to ImB uild 2 , a special

- purpose version of the IMPLAN 3 national input/output model. Im SET esti mates the employment and income effects of building energy technologies. In comparison with simple economic multiplier approaches, Im SET allows for more complete and automated analysis of the economic impacts of energy

- efficiency investments in buildings.

In an input/output model, the level of employment in an economy is determined by the relationship of different sectors of the economy and the spending flows among them. Different sectors have different levels of labor intensity and so changes in the level of spending (e.g., due to the effects of an efficiency standard) in one sector of the economy will affect flows in other sectors, whic h affects the overall level of employment.

ImSET uses a 187

- sector model of the national economy to predict the economic effects of residential and commercial buildings technologies. ImSET collects estimates of initial investments, energy savings, and ec onomic activity associated with spending the savings resulting from standards (e.g., changes in final demand in personal consumption, business investment and spending, and government spending). It provides overall estimates of the change in national output for each input

- output sector. The model applies estimates of employment and13

- 2 wage income per dollar of economic output for each sector and calculates impacts on national employment and wage income.

Energy

- efficiency technology primarily affects the U.S. economy along three spending pathways. First, general investment funds are diverted to sectors that manufacture, install, and maintain energy

- efficient appliances. The increased cost of appliances leads to higher employment in the appliance manufacturing s ectors and lower employment in other economic sectors. Second, commercial firm and residential spending are redirected from utilities toward firms that supply production inputs. Third, electric utility sector investment funds are released

for use in other sectors of the economy. When consumers use less energy, electric utilities experience relative reductions in demand which leads to reductions in utility sector investment and employment.

13.4 RESULTS

The results in this section refer to impacts of residential refrigeration product standards relative to the base case for each appliance. DOE dis aggregated the impact of standards on employment into three component effects : increased capital investment costs, decreased energy and water costs, and changes in operati ons and maintenance costs

. These component effects and a summary impact are presented for residential standard

- size refrigerator

- freezers, standard

- size freezers, compact refrigerat ion products

, and built

- in refrigeration products

.

Figures 13.4.1

- 13.4.4 s ummarize the employment impacts of the increased investment and spending on higher

- efficiency equipment. Because appliance manufacturing is relatively capital

- intensive compared to other sectors of the economy, the net result is a small loss of employmen t.13

- 3 Figure 13.4.1 Refrigerator

- Freezer Employment Impact of Increased Equipment Cost

Figure 13.4.2 Compact Refrigeration Products Employment Impact of Increased Equipment Cost - 25 - 20 - 15 - 10

- 5 0

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

- 3.0 - 2.5 - 2.0 - 1.5 - 1.0 - 0.5 0.0

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 4 Figure 13.4.3 Freezer Employment Impact of Increased Equipment Cost

Figure 13.4.4 Built

- in Refrigeration Products Employment Impact of Increased Equipment Cost - 4.5 - 4.0 - 3.5 - 3.0 - 2.5 - 2.0 - 1.5 - 1.0 - 0.5 0.0

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2, 3

TSL 4

TSL 5

- 0.7 - 0.6 - 0.5 - 0.4 - 0.3 - 0.2 - 0.1 0.0

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 5 Figure s 1 3 .4. 5

- 1 3 .4. 8 show the employment impact of redirected spending made possible by appliance operating cost saving s. In this case, the employment impact is strongly positive.

Figure 13.4.5 Refrigerator

- Freezer Employment Impact of Operating Cost Savings 0 5 10 15 20 25 30 35

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 6 Figure 13.4.6 Compact Refrigeration Products Employment Impact of Operating Cost Savings

Figure 13.4.7 Freezer Employment Impact of Operating Cost Savings 0.0 0.5 1.0 1.5 2.0 2.5 3.0

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

0 1 2 3 4 5 6 7 8 9 10

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2, 3

TSL 4

TSL 513

- 7 Figure 13.4.8 Built

- in Refrigeration Products Employment Impact of Operating Cost Savings

Figures 1 3 .4

. 9

– 1 3 .4

. 12 show the employment impacts of non

- energy operations and

maintenance cost increases for residential refrigeration products. 0.0 0.1 0.2 0.3 0.4 0.5 0.6

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 8 Figure 13.4.9 Refrigerator

- Freezer Employment Impact of Operations and Maintenance

Cost Increase

Figure 13.4.10 Compact Refrigeration Products Employment Impact of Operations and

Maintenance Cost Increase - 0.14 - 0.12 - 0.10 - 0.08 - 0.06 - 0.04 - 0.02 0.00

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

- 0.008 - 0.006 - 0.004 - 0.002 0.000

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

- 3

TSL 4

TSL 513

- 9 Figure 13.4.11 Freezer Employment Impact of Operations and Maintenance Cost Increase

Figure 13.4.12 Built

- in Refrigeration Products Employment Impact of Operations and

Maintenance Cost Increase - 0.040 - 0.035 - 0.030 - 0.025 - 0.020 - 0.015 - 0.010 - 0.005 0.000

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2, 3

TSL 4

TSL 5

- 0.005 - 0.004 - 0.003 - 0.002 - 0.001 0.000

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 10 Figures 14.4.1 3

- 14.4.1 6 show the estimated net national employment impacts of the

residential refrigeration product trial standard levels. For any given year, these figures show the net change in the number of jobs in the economy relative to if there were no change in standards (and thus no resulting change in spending and cash flow patterns throughout the economy). These figures show the combined effects of equipment cost, operations and maintenance cost, and energy use changes due to standards.

Figure 13.4.13 Sta ndard

- Size Refrigerator

- Freezer s Net National Change in Employment - 15 - 10

- 5 0 5 10 15

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 11 Figure 13.4.14 Standard

- Size Freezers Net National Change in Employment

Figure 13.4.15 Compact Refrigeration Products Net National Change in Employment - 2 - 1 0 1 2 3 4 5 6 7

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2, 3

TSL 4

TSL 5

- 1.5 - 1.0 - 0.5 0.0 0.5 1.0 1.5

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 12 Figure 13.4.16 Built

- in Refrigeration Products Net National Change in Employment

Tables 1 3 .4.1

- 1 3 .4. 4 show the net national employment impact in specific years for each product . The initial decrease in net employment is caused by the dominance of capital costs in early years, while the impacts of operating cost savings from reduced energy use build up slowly over time, resulting in a net positive impact on employment in later years.

Table 13.4.1 Standard

- Size Refrigerator

- Freezer s Net National Change in Employment

Trial Standard

Level 201 4 (thousands) 2020 (thousands) 2030 (thousands) 204 3 (thousands)

1

- 1.80 1.30 6.39 10.99

2

- 2.39 1.07 6.83 12.05

3

- 3.21 0.74 7.47 13.49

4

- 7.31

- 2.87 5.60 12.95

5

- 11.16

- 7.16 2.34 10.34 - 0.40 - 0.30 - 0.20 - 0.10 0.00 0.10 0.20

2014 2019 2024 2029 2034 2039Incremental Jobs (1000)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 513

- 13 Table 13.4.2 Standard

- Size Freezers Net National Change in Employment

Trial Standard

Level 201 4 (thousands) 2020 (thousands) 2030 (thousands) 204 3 (thousands)

1

- 0.19 0.72 2.44 4.34

2

- 0.53 0.69 3.11 5.79

3

- 0.53 0.69 3.11 5.79

4

- 1.22 0.18 3.34 6.77

5

- 2.01

- 0.97 2.29 5.80

Table 13.4.3 Compact Refrigeration Products Net National Change in Employment

Trial Standard

Level 201 4 (thousands) 2020 (thousands) 2030 (thousands) 204 3 (thousands)

1

- 0.05 0.46 0.78 1.24

2

- 0.18 0.43 0.78 1.26

3

- 0.22 0.49 0.89 1.44

4

- 0.56 0.29 0.70 1.21

5

- 1.16

- 0.45

- 0.11 0.14

Table 13.4.4 Built

- in Refrigeration Products Net National Change in Employment

Trial Standard

Level 2014 (thousands) 2020 (thousands) 2030 (thousands) 204 3 (thousands)

1

- 0.01 0.02 0.06 0.10

2

- 0.02 0.01 0.07 0.13

3

- 0.15

- 0.10

- 0.01 0.08

4

- 0.24

- 0.18

- 0.07 0.01

5

- 0.36

- 0.31

- 0.20

- 0.1313

- 14 REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET 3.1 : Impact of Sector Energy Technologies , 200 8 . Pacific Northwest National Laboratory. Richland, WA. Report No.

PNNL

- 1 8412

.

2. Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy Efficiency Programs, April, 1998. Pacific Northwest National Laboratory. Richland, WA. Report No. PNNL

- 11884. Prepared for the U.S. Department of Energy under Contract

DE

- AC06

- 76RLO 1830.

3. Minnesota IMPLAN Gro up Inc., IMPLAN Professional: User's Guide, Analysis Guide,

Data Guide , 1997. Stillwater, MN.14

- i CHAPTER 1 4

. UTILITY IMPACT ANALYSIS

TABLE OF CO NTENTS

14.1 INTRODUCTION

................................ ................................ ................................ ......... 14

- 1

14.2 METHOD

................................ ................................ ................................ ...................... 14

- 1

14.3 RESULTS

................................ ................................ ................................ ...................... 14

- 2

14.4 SUMMARY OF UTILITY I MPACT ANALYSIS

................................ ..................... 14

- 24

14.5 IMPACT OF STANDARDS ON ELECTRICITY PRICE S AND ASSOCIATED

BENEFITS FOR CONSUME RS

................................ ................................ ................. 14

- 24

14.5.1 Impact on Electricity Prices

................................ ................................ ......................... 14

- 25

14.5.2 Impact of Changes in Electricity Price on Electricity Users

................................ ........ 14

- 26

14.5.3 Discussion of Savings in Electricity Expenditures

................................ ...................... 14

- 27

LIST OF TABLES

Table 14.3.1 AEO2010 Reference Case Forecast

................................ ................................ ... 14

- 3

Table 14.3.2 Standard

- Size Refrigerator

- Freezers Trial Standard Level 1 Forecast

.............. 14

- 4

Table 14.3.3 Standard

- Size Refrigerator

- Freezers Trial Standard Level 2 Forecast

.............. 14

- 5

Table 14.3.4 Standard

- Size Refrigerator

- Freezers Trial Standard Level 3 Forecast

.............. 14

- 6

Table 14.3.5 Standard

- Size Refrigerator

- Freezers Trial Standard Level 4 Forecast

.............. 14

- 7

Table 14.3.6 Standard

- Size Refrigerator

- Freezers Trial Standard Level 5 Forecast

.............. 14

- 8

Table 14.3.7 Standard

- Size Freezers Trial Standard Level 1 Forecast

................................ ... 14

- 9

Table 14.3.8 Standard

- Size Freezers Trial Standard Level 2 Forecast

................................ . 14

- 10

Table 14.3.9 Standard

- Size Freezers Trial Standard Level 3 Forecast

................................ . 14

- 11

Table 14.3.10 Standard

- Size Freezers Trial Standard Level 4 Forecast

................................ . 14

- 12

Table 14.3.12 Standard

- Size Freezers Trial Standard Level 5 Forecast

................................ . 14

- 13

Table 14.3.13 Co mpact Refrigeration Products Trial Standard Level 1 Forecast

.................. 14

- 14

Table 14.3.14 Compact Refrigeration Products Trial Standard Level 2 Forecast

.................. 14

- 15

Table 14.3.15 Compact Refrigeration Products Trial Standard Level 3 Forecast

.................. 14

- 16

Table 14.3.16 Compact Refrigeration Products Trial Standard Level 4 Forecast

.................. 14

- 17

Table 14.3.17 Compact Refrigeration Products Trial Standard Level 5 Forecast

.................. 14

- 18

Table 14.3.18 Built

- In Refrigeration Products Trial Standard Level 1 Forecast

.................... 14

- 19

Table 14.3.19 Built

- In Refrigeration Products Trial Standard Level 2 Forecast

.................... 14

- 20

Table 14.3.20 Built

- In Refrigeration Products Trial Standard Level 3 Forecast

.................... 14

- 21

Table 14.3.21 Built

- In Refrigeration Products Trial Standard Level 4 Forecast

.................... 14

- 22

Table 14.3.22 Built

- In Refrigeration Products Trial Standard Level 5 Forecast

.................... 14

- 23

Table 14.4.1 Reduction in Total U.S. Electricity Generation in 2043 Under Refrigeration Produc t TSLs

................................ ................................ ............. 14

- 24

Table 14.4.2 Reduction in Electric Generating Capacity in 2043 Under Refrigeration

Product TSLs

................................ ................................ ................................ ... 14

- 24

Table 14.5.1 Cumulative NPV of the Economy

- Wide Savings in Electricity Expenditures Due to the Projected Decline in Electricity Prices Resulting

fro m Amended Standards for Refrigerators*

................................ ................... 14

- 2714

- ii LIST OF FIGURES

Figure 14.5.1 Change in U.S. Electricity Consumption Associated with Proposed Refrigeration Product Energy Conservation Standards

................................ ... 14

- 25 Figure 14.5.2 Effect of Proposed Refrigeration Product Energy Conservation Standards on Average U.S. Electricity Price (All Users)

................................ ................. 14

- 2614-1 CHAPTER 14. UTILITY IMPACT ANALY SIS

14.1 INTRODUCTION

DOE analyzed the effects of residential refrigerator standard levels on the electric utility industry using a variant of the DOE/Energy Information Administration (EIA) ’s National Energy Modeling System (NEMS)

. a NEMS is a public domain, multi

- sectored , partial equilibrium model of the U.S. energy sector. Each year, DOE/EIA uses NEMS to produce a n energy forecast

for the U nited States , the Annual Energy Outlook (AEO)

. The AEO for 2010 (AEO2010 ) forecasts energ y supply and demand through 2035

. 1 DOE used a variant of this model, referred

to here as NEMS

- BT

, b to account for the impacts of refrigerator energy conservation standards. DOE’s utility impact analysis consists of a comparison between model results for the AEO20 10

Reference Case and for c ases in which standards are in place, and applies the same basic set of assumptions as the AEO20 10

. The AEO20 10 reference case corresponds to medium economic growth.

The utility impact analysis reports the changes in electric installed capacity and generation that result for each trial standard level (TSL) by plant type , as well as changes in

residen tial electricity consumption.

NEMS

- BT has several advantages that have led to its adoption as the forecasting tool in the analysis of energy conserva tion standards. NEMS

- BT uses a set of assumptions that are well known and fairly transparent, due to the exposure and scrutiny each AEO receives. In addition, the comprehensiveness of NEMS

- BT permits the modeling of interactions among the various

energy su pply and demand sectors, producing a complete picture of the effects of energy

conservation standards. Perhaps most importantly, NEMS

- BT can be used to estimate marginal effects, which yield a better estimate of the actual impact of energy conservation sta ndards than considering only average effects.

14.2 METHOD

The utility impact analysis uses the assumptions of the AEO20 10 and treat s refrigeration conservation standards as variations in policy. The effect s of the policy are calculated as the

difference between the AEO20 10 Reference Case and each proposed standard case , which is described as a trial standard level (TSL)

.

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration

documentation. A useful summary is National Energy Modeling System: An Overview 2003 , DOE/EIA

- 0581(2003), March, 2003.

b DOE/EIA approves use of the nam e NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications and the model is run under various policy scenarios that are variations on DOE/EIA assumptions, D OE refers to it by the name NEMS

BT (BT is DOE’s Building Technologies Program, under whose aegis this work has been performed). NEMS

- BT was previously called NEMS

- BRS.14-2 DOE used the site energy savings developed in the national impact analysis ( chapter 10)

for each TSL as input to NEMS

- BT. The magnitude of the energy decrement that would be required for NEMS

- BT to produce stable results out of the range of numerical noise is larger than the highest efficiency standard under consideration. Therefore, DOE estimated results

c orresponding to each TSL using interpolation. DOE ran higher energy use reduction levels in

NEMS

- BT, representing multipliers of each TSL, and used these outputs to linearly interpolate the results to estimate actual changes in generation and capacity due to the standard.

Policy runs are executed by redu cing electricity consumption in the NEMS

- BT

Residential Demand Module. Energy use reductions are applied to the refrigeration end use

. The

reductions are divided amongst the nine U.S. Census divisions based upon the share of

re frigeration and freezer energy end use consumption in each division , as given in NEMS

.

Although the current time horizon of NEMS

- BT is 2035 , o ther parts of the energy conservation standards analysis extend to the year 204 3

. It is not feasible to extend the forecast period of NEMS

- BT for the purposes of this analysis, nor does DOE/EIA have an approved method for extrapola tion of many outputs beyond 2035

. While it might seem reasonable to make simple linear extrapolations of results, in practice this is not advisable because outputs could be contradictory. An analysis of various trends sufficiently detailed to guarantee consistency is beyond the scope of this work, and, i n any case, would involve a great deal of uncertainty.

Therefore , all extrapolations beyond 2035 are simple replications of year 2035 results. To emphasize the extrapolated results wherever they appear, they are shaded in gray to distinguish

them from actu al NEMS

- BT results.

14.3 RESULTS

This utility impact analysis reports NEMS

- BT forecasts for residential

- sector electricity consumption , total electricity generation by fuel type, and installed electricity generation capacity by fuel type

. Results are presented in f ive

- year increments to year 2035

. Beyond year

2035 , an extrapolation to 204 3 for each proposed TSL represents a sim ple replication of the year

2035 results.

The results from the AEO20 10 Reference Case are shown in Table 14 .3 .1.

A separate set of TSLs is modeled for each product grouping . The results for the

standard

- size refrigerator

- freezer TSLs are presented in Tables 1 4

. 3 .2 through 1 4

. 3

. 6 , the results

for standard

- size freezer TSLs are presented in Tables 1 4

. 3

. 7 through 1 4

. 3

. 12

, the results for the compact refrigeration product TSLs are presented in Tables 1 4

. 3

. 13 through 1 4

. 3

. 17 , and the

results for the built

- in refrigeration product TSLs are presented in Tables 14.3.18 to 14.3.22

. Each table shows forecasts using interpolated results, as de scribed in section 14.2

, for total U.S. electricity generation and installed capacity.14-3 The considered residential refrigerator TSLs reduce only electricity consumption compared to the AEO20 10 Reference Case. The electricity savings predicted by the NIA Mo del for all refrigeration products considered range from 1.26 to 2.73 percent of total residential

elec tricity consumption in the year 2035.

Table 14.3.1 AEO2010 Reference Case Forecast



### NEMS-BT Results: AEO2010 Reference

2005 2010 2015 2020 2025 2030 2035

Residential Sector Energy Consumption 1

Electricity Sales (TWh) 2 1,359 1,388 1,400 1,472 1,553 1,637 1,707

Total U.S. Electric Generation 3

Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305

Gas (TWh) 759 857 690 769 886 1,018 1,095

Petroleum (TWh) 122 45 46 47 48 48 49

Nuclear (TWh) 782 813 834 883 886 886 895

Renewables (TWh) 358 462 649 714 797 850 890

Total (TWh) 4 4,034 4,005 4,257 4,503 4,746 5,012 5,234

Installed Generating Capacity 5

Coal (GW) 314 321 325 326 326 330 337

Other Fossil (GW) 6 439 468 445 446 467 501 534

Nuclear (GW) 100 102 105 111 111 111 113

Renewables (GW) 99 133 171 177 186 196 209

Total (GW) 7 952 1,024 1,046 1,059 1,091 1,138 1,192

1 Comparable to Table A2 of AEO2010: Energy Consumption, Residential

2 Comparable to Table A8 of AEO2010: Electricity Sales by Sector

3 Comparable to Table A8 of AEO2010: Electric Generators and Cogenerators

4 Excludes "Other Gaseous Fuels" cogenerators and "Other" cogenerators

5 Comparable to Table A9 of AEO2010: Electric Generators and Cogenerators Capability

6 Includes "Other Gaseous Fuels" cogenerators

7 Excludes Pumped Storage and Fuel Cells14-4 Table 14.3.2 Standard

- Size Refrigerator

- Freezers : Trial Standard Level 1 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,399 1,466 1,544 1,625 1,693 Electricity Sales (TWh) 0.00 0.00 -1.40 -5.36 -9.25 -12.41 -14.86 -16.79 -17.81

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,089 2,128 2,206 2,301 Coal (TWh) 0.00 0.05 0.21 -1.06 -1.58 -3.31 -3.59 -3.59 -3.59
Gas (TWh) 759 858 691 767 880 1,012 1,089 Gas (TWh) 0.00 0.37 0.88 -1.84 -5.37 -5.87 -5.98 -5.98 -5.98
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.02 -0.03 -0.06 -0.07 -0.07 -0.07
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.57 -0.57 -0.57
Renewables (TWh) 358 462 646 711 794 847 886 Renewables (TWh) 0.00 -0.40 -2.59 -2.51 -3.17 -3.28 -4.31 -4.31 -4.31
Total (TWh) 4,034 4,005 4,256 4,497 4,736 4,999 5,219 Total (TWh) 0.00 0.01 -1.51 -5.42 -10.16 -12.51 -14.52 -14.52 -14.52

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.090 -0.080 -0.082 -0.174 -0.145 -0.145 -0.145
Other Fossil (GW) 439 468 445 445 466 500 533 Other Fossil (GW) 0.000 -0.001 -0.246 -0.364 -0.788 -1.005 -1.091 -1.091 -1.091
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.078 -0.078 -0.078
Renewables (GW) 99 133 171 176 186 195 208 Renewables (GW) 0.000 -0.117 -0.727 -0.734 -0.680 -0.717 -0.971 -0.971 -0.971
Total (GW) 952 1,024 1,045 1,058 1,089 1,136 1,190 Total (GW) 0.000 -0.118 -1.064 -1.178 -1.549 -1.896 -2.285 -2.285 -2.285 Extrapolation14-5 Table 14.3.3 Standard

- Size Refrigerator

- Freezers : Trial Standard Level 2 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,399 1,465 1,543 1,623 1,690 Electricity Sales (TWh) 0.00 0.00 -1.60 -6.13 -10.61 -14.28 -17.13 -19.40 -20.61

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,089 2,128 2,205 2,301 Coal (TWh) 0.00 0.05 0.24 -1.21 -1.81 -3.81 -4.14 -4.14 -4.14
Gas (TWh) 759 858 691 767 879 1,011 1,088 Gas (TWh) 0.00 0.42 1.00 -2.10 -6.16 -6.75 -6.90 -6.90 -6.90
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.02 -0.04 -0.07 -0.08 -0.08 -0.08
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.65 -0.65 -0.65
Renewables (TWh) 358 462 646 711 793 846 885 Renewables (TWh) 0.00 -0.46 -2.96 -2.87 -3.64 -3.77 -4.98 -4.98 -4.98
Total (TWh) 4,034 4,005 4,255 4,496 4,734 4,997 5,217 Total (TWh) 0.00 0.01 -1.72 -6.21 -11.66 -14.40 -16.75 -16.75 -16.75

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.10 -0.09 -0.09 -0.20 -0.17 -0.17 -0.17
Other Fossil (GW) 439 468 445 445 466 500 533 Other Fossil (GW) 0.00 0.00 -0.28 -0.42 -0.90 -1.16 -1.26 -1.26 -1.26
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.09 -0.09 -0.09
Renewables (GW) 99 133 171 176 185 195 208 Renewables (GW) 0.00 -0.13 -0.83 -0.84 -0.78 -0.82 -1.12 -1.12 -1.12
Total (GW) 952 1,024 1,045 1,058 1,089 1,136 1,190 Total (GW) 0.00 -0.13 -1.21 -1.35 -1.78 -2.18 -2.63 -2.63 -2.63 Extrapolation14-6 Table 14.3.4 Standard

- Size Refrigerator

- Freezers : Trial Standard Level 3 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,398 1,464 1,541 1,620 1,687 Electricity Sales (TWh) 0.00 0.00 -1.87 -7.21 -12.48 -16.80 -20.15 -22.81 -24.21

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,089 2,128 2,205 2,300 Coal (TWh) 0.00 0.06 0.28 -1.42 -2.14 -4.48 -4.86 -4.86 -4.86
Gas (TWh) 759 858 691 767 878 1,010 1,087 Gas (TWh) 0.00 0.49 1.17 -2.47 -7.25 -7.94 -8.11 -8.11 -8.11
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.03 -0.05 -0.08 -0.10 -0.10 -0.10
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.77 -0.77 -0.77
Renewables (TWh) 358 462 645 710 793 846 884 Renewables (TWh) 0.00 -0.54 -3.45 -3.37 -4.28 -4.44 -5.85 -5.85 -5.85
Total (TWh) 4,034 4,005 4,255 4,495 4,732 4,995 5,214 Total (TWh) 0.00 0.01 -2.01 -7.29 -13.72 -16.94 -19.70 -19.70 -19.70

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.12 -0.11 -0.11 -0.24 -0.20 -0.20 -0.20
Other Fossil (GW) 439 468 445 445 466 500 532 Other Fossil (GW) 0.00 0.00 -0.33 -0.49 -1.06 -1.36 -1.48 -1.48 -1.48
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.11 -0.11 -0.11
Renewables (GW) 99 133 171 176 185 195 208 Renewables (GW) 0.00 -0.16 -0.97 -0.99 -0.92 -0.97 -1.32 -1.32 -1.32
Total (GW) 952 1,024 1,045 1,057 1,089 1,136 1,189 Total (GW) 0.00 -0.16 -1.42 -1.58 -2.09 -2.57 -3.10 -3.10 -3.10 Extrapolation14-7 Table 14.3.5 Standard

- Size Refrigerator

- Freezers : Trial Standard Level 4 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,398 1,462 1,537 1,614 1,680 Electricity Sales (TWh) 0.00 0.00 -2.46 -9.65 -16.87 -22.85 -27.51 -31.24 -33.20

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,088 2,127 2,203 2,298 Coal (TWh) 0.00 0.08 0.37 -1.91 -2.89 -6.09 -6.64 -6.64 -6.64
Gas (TWh) 759 858 692 766 876 1,007 1,084 Gas (TWh) 0.00 0.63 1.54 -3.31 -9.80 -10.80 -11.08 -11.08 -11.08
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.04 -0.06 -0.11 -0.14 -0.14 -0.14
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -1.05 -1.05 -1.05
Renewables (TWh) 358 462 644 709 791 844 882 Renewables (TWh) 0.00 -0.70 -4.54 -4.51 -5.79 -6.03 -7.99 -7.99 -7.99
Total (TWh) 4,034 4,005 4,255 4,493 4,727 4,989 5,207 Total (TWh) 0.00 0.01 -2.64 -9.76 -18.54 -23.03 -26.90 -26.90 -26.90

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.16 -0.14 -0.15 -0.32 -0.27 -0.27 -0.27
Other Fossil (GW) 439 468 445 445 466 499 532 Other Fossil (GW) 0.00 0.00 -0.43 -0.66 -1.44 -1.85 -2.02 -2.02 -2.02
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.14 -0.14 -0.14
Renewables (GW) 99 132 170 175 185 194 208 Renewables (GW) 0.00 -0.20 -1.28 -1.32 -1.24 -1.32 -1.80 -1.80 -1.80
Total (GW) 952 1,024 1,044 1,057 1,088 1,135 1,188 Total (GW) 0.00 -0.21 -1.87 -2.12 -2.83 -3.49 -4.23 -4.23 -4.23 Extrapolation14-8 Table 14.3.6 Standard

- Size Refrigerator

- Freezers : Trial Standard Level 5 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,397 1,460 1,533 1,610 1,674 Electricity Sales (TWh) 0.00 0.00 -2.82 -11.34 -20.02 -27.27 -32.94 -37.48 -39.87

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,039 2,088 2,126 2,202 2,297 Coal (TWh) 0.00 0.09 0.43 -2.24 -3.43 -7.27 -7.95 -7.95 -7.95
Gas (TWh) 759 858 692 765 874 1,005 1,082 Gas (TWh) 0.00 0.72 1.76 -3.88 -11.63 -12.89 -13.27 -13.27 -13.27
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.04 -0.08 -0.13 -0.16 -0.16 -0.16
Nuclear (TWh) 782 813 834 883 886 886 893 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -1.26 -1.26 -1.26
Renewables (TWh) 358 462 643 708 790 843 881 Renewables (TWh) 0.00 -0.79 -5.21 -5.31 -6.87 -7.20 -9.57 -9.57 -9.57
Total (TWh) 4,034 4,005 4,254 4,491 4,724 4,984 5,202 Total (TWh) 0.00 0.02 -3.03 -11.47 -22.00 -27.49 -32.21 -32.21 -32.21

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.18 -0.17 -0.18 -0.38 -0.32 -0.32 -0.32
Other Fossil (GW) 439 468 445 445 466 499 531 Other Fossil (GW) 0.00 0.00 -0.50 -0.77 -1.71 -2.21 -2.42 -2.42 -2.42
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.17 -0.17 -0.17
Renewables (GW) 99 132 170 175 185 194 207 Renewables (GW) 0.00 -0.23 -1.46 -1.55 -1.47 -1.58 -2.15 -2.15 -2.15
Total (GW) 952 1,024 1,044 1,056 1,087 1,134 1,187 Total (GW) 0.00 -0.23 -2.14 -2.49 -3.35 -4.16 -5.07 -5.07 -5.07 Extrapolation14-9 Table 14.3.7 Standard

- Size Freezer s : Trial Standard Level 1 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,470 1,551 1,633 1,703 Electricity Sales (TWh) 0.00 0.00 -0.41 -1.53 -2.70 -3.84 -4.81 -5.60 -5.98

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,208 2,303 Coal (TWh) 0.00 0.01 0.06 -0.30 -0.46 -1.02 -1.16 -1.16 -1.16
Gas (TWh) 759 857 691 769 884 1,016 1,093 Gas (TWh) 0.00 0.11 0.26 -0.52 -1.57 -1.81 -1.94 -1.94 -1.94
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.02 -0.02 -0.02 -0.02
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.18 -0.18 -0.18
Renewables (TWh) 358 462 648 713 796 849 889 Renewables (TWh) 0.00 -0.12 -0.76 -0.71 -0.93 -1.01 -1.40 -1.40 -1.40
Total (TWh) 4,034 4,005 4,257 4,501 4,743 5,008 5,229 Total (TWh) 0.00 0.00 -0.44 -1.55 -2.97 -3.87 -4.71 -4.71 -4.71

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.027 -0.023 -0.024 -0.054 -0.047 -0.047 -0.047
Other Fossil (GW) 439 468 445 446 467 501 533 Other Fossil (GW) 0.000 0.000 -0.073 -0.104 -0.230 -0.310 -0.353 -0.353 -0.353
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.025 -0.025 -0.025
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.035 -0.215 -0.209 -0.199 -0.222 -0.315 -0.315 -0.315
Total (GW) 952 1,024 1,046 1,059 1,090 1,137 1,191 Total (GW) 0.000 -0.035 -0.314 -0.336 -0.453 -0.586 -0.740 -0.740 -0.740 Extrapolation14-10 Table 14.3.8 Standard

- Size Freezer s : Trial Standard Level 2 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,470 1,551 1,633 1,703 Electricity Sales (TWh) 0.00 0.00 -0.41 -1.53 -2.70 -3.84 -4.81 -5.60 -5.98

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,208 2,303 Coal (TWh) 0.00 0.01 0.06 -0.30 -0.46 -1.02 -1.16 -1.16 -1.16
Gas (TWh) 759 857 691 769 884 1,016 1,093 Gas (TWh) 0.00 0.11 0.26 -0.52 -1.57 -1.81 -1.94 -1.94 -1.94
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.02 -0.02 -0.02 -0.02
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.18 -0.18 -0.18
Renewables (TWh) 358 462 648 713 796 849 889 Renewables (TWh) 0.00 -0.12 -0.76 -0.71 -0.93 -1.01 -1.40 -1.40 -1.40
Total (TWh) 4,034 4,005 4,257 4,501 4,743 5,008 5,229 Total (TWh) 0.00 0.00 -0.44 -1.55 -2.97 -3.87 -4.71 -4.71 -4.71

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.027 -0.023 -0.024 -0.054 -0.047 -0.047 -0.047
Other Fossil (GW) 439 468 445 446 467 501 533 Other Fossil (GW) 0.000 0.000 -0.073 -0.104 -0.230 -0.310 -0.353 -0.353 -0.353
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.025 -0.025 -0.025
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.035 -0.215 -0.209 -0.199 -0.222 -0.315 -0.315 -0.315
Total (GW) 952 1,024 1,046 1,059 1,090 1,137 1,191 Total (GW) 0.000 -0.035 -0.314 -0.336 -0.453 -0.586 -0.740 -0.740 -0.740 Extrapolation14-11 Table 14.3.9 Standard

- Size Freezer s : Trial Standard Level 3 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,469 1,549 1,631 1,699 Electricity Sales (TWh) 0.00 0.00 -0.67 -2.54 -4.54 -6.48 -8.14 -9.46 -10.11

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,208 2,303 Coal (TWh) 0.00 0.02 0.10 -0.50 -0.78 -1.73 -1.97 -1.97 -1.97
Gas (TWh) 759 857 691 768 883 1,015 1,092 Gas (TWh) 0.00 0.17 0.42 -0.87 -2.64 -3.06 -3.28 -3.28 -3.28
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.02 -0.03 -0.04 -0.04 -0.04
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.31 -0.31 -0.31
Renewables (TWh) 358 462 647 713 795 848 888 Renewables (TWh) 0.00 -0.19 -1.23 -1.19 -1.56 -1.71 -2.37 -2.37 -2.37
Total (TWh) 4,034 4,005 4,256 4,500 4,741 5,005 5,226 Total (TWh) 0.00 0.00 -0.72 -2.57 -4.99 -6.53 -7.96 -7.96 -7.96

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.04 -0.04 -0.04 -0.09 -0.08 -0.08 -0.08
Other Fossil (GW) 439 468 445 446 467 501 533 Other Fossil (GW) 0.00 0.00 -0.12 -0.17 -0.39 -0.52 -0.60 -0.60 -0.60
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.04 -0.04 -0.04
Renewables (GW) 99 133 171 176 186 195 209 Renewables (GW) 0.00 -0.06 -0.35 -0.35 -0.33 -0.37 -0.53 -0.53 -0.53
Total (GW) 952 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) 0.00 -0.06 -0.51 -0.56 -0.76 -0.99 -1.25 -1.25 -1.25 Extrapolation14-12 Table 14.3.10 Standard

- Size Freezer s : Trial Standard Level 4 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,399 1,469 1,548 1,630 1,698 Electricity Sales (TWh) 0.00 0.00 -0.74 -2.85 -5.14 -7.36 -9.25 -10.74 -11.47

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,207 2,302 Coal (TWh) 0.00 0.02 0.11 -0.56 -0.88 -1.96 -2.23 -2.23 -2.23
Gas (TWh) 759 857 691 768 883 1,015 1,091 Gas (TWh) 0.00 0.19 0.46 -0.98 -2.99 -3.48 -3.72 -3.72 -3.72
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.02 -0.03 -0.05 -0.05 -0.05
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.35 -0.35 -0.35
Renewables (TWh) 358 462 647 712 795 848 888 Renewables (TWh) 0.00 -0.21 -1.36 -1.34 -1.76 -1.94 -2.69 -2.69 -2.69
Total (TWh) 4,034 4,005 4,256 4,500 4,740 5,004 5,225 Total (TWh) 0.00 0.00 -0.79 -2.89 -5.65 -7.42 -9.04 -9.04 -9.04

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.05 -0.04 -0.05 -0.10 -0.09 -0.09 -0.09
Other Fossil (GW) 439 468 445 445 467 501 533 Other Fossil (GW) 0.00 0.00 -0.13 -0.19 -0.44 -0.60 -0.68 -0.68 -0.68
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.05 -0.05 -0.05
Renewables (GW) 99 133 171 176 186 195 209 Renewables (GW) 0.00 -0.06 -0.38 -0.39 -0.38 -0.42 -0.60 -0.60 -0.60
Total (GW) 952 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) 0.00 -0.06 -0.56 -0.63 -0.86 -1.12 -1.42 -1.42 -1.42 Extrapolation14-13 Table 14.3.12 Standard

- Size Freezers : Trial Standard Level 5 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,399 1,469 1,548 1,629 1,697 Electricity Sales (TWh) 0.00 0.00 -0.74 -3.00 -5.48 -7.88 -9.92 -11.50 -12.25

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,207 2,302 Coal (TWh) 0.00 0.02 0.11 -0.59 -0.94 -2.10 -2.39 -2.39 -2.39
Gas (TWh) 759 857 691 768 882 1,014 1,091 Gas (TWh) 0.00 0.19 0.46 -1.03 -3.19 -3.73 -3.99 -3.99 -3.99
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.02 -0.04 -0.05 -0.05 -0.05
Nuclear (TWh) 782 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.38 -0.38 -0.38
Renewables (TWh) 358 462 647 712 795 848 887 Renewables (TWh) 0.00 -0.21 -1.37 -1.40 -1.88 -2.08 -2.88 -2.88 -2.88
Total (TWh) 4,034 4,005 4,256 4,500 4,740 5,004 5,224 Total (TWh) 0.00 0.00 -0.80 -3.03 -6.02 -7.95 -9.70 -9.70 -9.70

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.00 0.00 -0.05 -0.04 -0.05 -0.11 -0.10 -0.10 -0.10
Other Fossil (GW) 439 468 445 445 467 501 533 Other Fossil (GW) 0.00 0.00 -0.13 -0.20 -0.47 -0.64 -0.73 -0.73 -0.73
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 0.00 -0.05 -0.05 -0.05
Renewables (GW) 99 133 171 176 186 195 209 Renewables (GW) 0.00 -0.06 -0.39 -0.41 -0.40 -0.46 -0.65 -0.65 -0.65
Total (GW) 952 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) 0.00 -0.06 -0.56 -0.66 -0.92 -1.20 -1.53 -1.53 -1.53 Extrapolation14-14 Table 14.3.13 Compact Refrigeration Products : Trial Standard Level 1 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,471 1,552 1,635 1,706 Electricity Sales (TWh) 0.000 0.000 -0.365 -1.029 -1.327 -1.539 -1.759 -1.991 -2.136

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,304 Coal (TWh) 0.000 0.012 0.055 -0.203 -0.227 -0.410 -0.425 -0.425 -0.425
Gas (TWh) 759 857 691 769 885 1,017 1,094 Gas (TWh) 0.000 0.097 0.228 -0.352 -0.771 -0.728 -0.708 -0.708 -0.708
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 -0.001 -0.004 -0.005 -0.007 -0.009 -0.009 -0.009
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.067 -0.067 -0.067
Renewables (TWh) 358 462 648 713 796 850 890 Renewables (TWh) 0.000 -0.107 -0.673 -0.481 -0.455 -0.406 -0.511 -0.511 -0.511
Total (TWh) 4,034 4,005 4,257 4,502 4,744 5,010 5,232 Total (TWh) 0.000 0.002 -0.391 -1.041 -1.459 -1.551 -1.720 -1.720 -1.720

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.023 -0.015 -0.012 -0.022 -0.017 -0.017 -0.017
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.064 -0.070 -0.113 -0.125 -0.129 -0.129 -0.129
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.009 -0.009 -0.009
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.031 -0.189 -0.141 -0.098 -0.089 -0.115 -0.115 -0.115
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.032 -0.277 -0.226 -0.222 -0.235 -0.271 -0.271 -0.271 Extrapolation14-15 Table 14.3.14 Compact Refrigeration Products : Trial Standard Level 2 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,470 1,552 1,635 1,705 Electricity Sales (TWh) 0.00 0.00 -0.44 -1.25 -1.60 -1.85 -2.11 -2.38 -2.55

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) 0.00 0.01 0.07 -0.25 -0.27 -0.49 -0.51 -0.51 -0.51
Gas (TWh) 759 857 691 769 885 1,017 1,094 Gas (TWh) 0.00 0.12 0.28 -0.43 -0.93 -0.87 -0.85 -0.85 -0.85
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.08 -0.08 -0.08
Renewables (TWh) 358 462 648 713 796 850 890 Renewables (TWh) 0.00 -0.13 -0.81 -0.58 -0.55 -0.49 -0.61 -0.61 -0.61
Total (TWh) 4,034 4,005 4,257 4,501 4,744 5,010 5,232 Total (TWh) 0.00 0.00 -0.47 -1.26 -1.76 -1.86 -2.06 -2.06 -2.06

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.028 -0.019 -0.014 -0.026 -0.021 -0.021 -0.021
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.077 -0.085 -0.136 -0.150 -0.155 -0.155 -0.155
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.011 -0.011 -0.011
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.038 -0.228 -0.171 -0.118 -0.107 -0.138 -0.138 -0.138
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.038 -0.334 -0.274 -0.268 -0.283 -0.324 -0.324 -0.324 Extrapolation14-16 Table 14.3.15 Compact Refrigeration Products : Trial Standard Level 3 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,470 1,551 1,635 1,705 Electricity Sales (TWh) 0.00 0.00 -0.52 -1.49 -1.91 -2.19 -2.49 -2.80 -2.99

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) 0.00 0.02 0.08 -0.29 -0.33 -0.59 -0.60 -0.60 -0.60
Gas (TWh) 759 857 691 769 884 1,017 1,094 Gas (TWh) 0.00 0.14 0.33 -0.51 -1.11 -1.04 -1.00 -1.00 -1.00
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.10 -0.10 -0.10
Renewables (TWh) 358 462 648 713 796 850 890 Renewables (TWh) 0.00 -0.15 -0.97 -0.70 -0.65 -0.58 -0.72 -0.72 -0.72
Total (TWh) 4,034 4,005 4,257 4,501 4,744 5,010 5,231 Total (TWh) 0.00 0.00 -0.56 -1.51 -2.10 -2.21 -2.44 -2.44 -2.44

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.034 -0.022 -0.017 -0.031 -0.024 -0.024 -0.024
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.092 -0.101 -0.163 -0.178 -0.183 -0.183 -0.183
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.013 -0.013 -0.013
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.045 -0.272 -0.204 -0.140 -0.127 -0.163 -0.163 -0.163
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.045 -0.398 -0.327 -0.320 -0.335 -0.383 -0.383 -0.383 Extrapolation14-17 Table 14.3.16 Compact Refrigeration Products : Trial Standard Level 4 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,470 1,551 1,634 1,704 Electricity Sales (TWh) 0.00 0.00 -0.67 -1.92 -2.44 -2.76 -3.09 -3.43 -3.64

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) 0.00 0.02 0.10 -0.38 -0.42 -0.74 -0.75 -0.75 -0.75
Gas (TWh) 759 857 691 768 884 1,017 1,094 Gas (TWh) 0.00 0.18 0.42 -0.66 -1.42 -1.31 -1.24 -1.24 -1.24
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.02 -0.02 -0.02
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.12 -0.12 -0.12
Renewables (TWh) 358 462 647 713 796 849 889 Renewables (TWh) 0.00 -0.19 -1.23 -0.90 -0.84 -0.73 -0.90 -0.90 -0.90
Total (TWh) 4,034 4,005 4,256 4,501 4,743 5,009 5,231 Total (TWh) 0.00 0.00 -0.72 -1.94 -2.68 -2.79 -3.02 -3.02 -3.02

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.043 -0.029 -0.022 -0.039 -0.030 -0.030 -0.030
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.001 -0.117 -0.131 -0.208 -0.224 -0.227 -0.227 -0.227
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.016 -0.016 -0.016
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.056 -0.346 -0.263 -0.179 -0.160 -0.202 -0.202 -0.202
Total (GW) 952 1,024 1,045 1,059 1,090 1,138 1,192 Total (GW) 0.000 -0.057 -0.506 -0.423 -0.409 -0.422 -0.475 -0.475 -0.475 Extrapolation14-18 Table 14.3.17 Compact Refrigeration Products : Trial Standard Level 5 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,399 1,469 1,551 1,634 1,704 Electricity Sales (TWh) 0.00 0.00 -0.73 -2.26 -2.80 -3.04 -3.29 -3.55 -3.70

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,129 2,208 2,304 Coal (TWh) 0.00 0.02 0.11 -0.45 -0.48 -0.81 -0.79 -0.79 -0.79
Gas (TWh) 759 857 691 768 884 1,017 1,094 Gas (TWh) 0.00 0.18 0.45 -0.77 -1.62 -1.44 -1.33 -1.33 -1.33
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.02 -0.02 -0.02
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 0.00 -0.13 -0.13 -0.13
Renewables (TWh) 358 462 647 713 796 849 889 Renewables (TWh) 0.00 -0.20 -1.34 -1.06 -0.96 -0.80 -0.96 -0.96 -0.96
Total (TWh) 4,034 4,005 4,256 4,500 4,743 5,009 5,231 Total (TWh) 0.00 0.00 -0.78 -2.28 -3.07 -3.07 -3.22 -3.22 -3.22

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 336 Coal (GW) 0.000 0.000 -0.047 -0.034 -0.025 -0.043 -0.032 -0.032 -0.032
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.001 -0.127 -0.153 -0.238 -0.246 -0.242 -0.242 -0.242
Nuclear (GW) 100 102 105 111 111 111 112 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.017 -0.017 -0.017
Renewables (GW) 99 133 171 176 186 196 209 Renewables (GW) 0.000 -0.058 -0.377 -0.309 -0.206 -0.176 -0.215 -0.215 -0.215
Total (GW) 952 1,024 1,045 1,058 1,090 1,138 1,192 Total (GW) 0.000 -0.058 -0.551 -0.497 -0.469 -0.465 -0.506 -0.506 -0.506 Extrapolation14-19 Table 14.3.18 Built

- In Refrigeration Products : Trial Standard Level 1 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,472 1,553 1,637 1,707 Electricity Sales (TWh) 0.000 0.000 -0.011 -0.042 -0.073 -0.099 -0.121 -0.138 -0.148

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305 Coal (TWh) 0.000 0.000 0.002 -0.008 -0.012 -0.026 -0.029 -0.029 -0.029
Gas (TWh) 759 857 690 769 885 1,018 1,095 Gas (TWh) 0.000 0.003 0.007 -0.014 -0.042 -0.047 -0.049 -0.049 -0.049
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.001
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.005 -0.005 -0.005
Renewables (TWh) 358 462 648 714 797 850 890 Renewables (TWh) 0.000 -0.003 -0.021 -0.020 -0.025 -0.026 -0.035 -0.035 -0.035
Total (TWh) 4,034 4,005 4,257 4,503 4,746 5,012 5,234 Total (TWh) 0.000 0.000 -0.012 -0.042 -0.080 -0.100 -0.118 -0.118 -0.118

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.002 -0.003 -0.006 -0.008 -0.009 -0.009 -0.009
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.001
Renewables (GW) 99 133 171 177 186 196 209 Renewables (GW) 0.000 -0.001 -0.006 -0.006 -0.005 -0.006 -0.008 -0.008 -0.008
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.001 -0.008 -0.009 -0.012 -0.015 -0.019 -0.019 -0.019 Extrapolation14-20 Table 14.3.19 Built

- In Refrigeration Products : Trial Standard Level 2 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,472 1,553 1,637 1,707 Electricity Sales (TWh) 0.000 0.000 -0.016 -0.060 -0.105 -0.144 -0.176 -0.202 -0.216

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305 Coal (TWh) 0.000 0.001 0.002 -0.012 -0.018 -0.038 -0.043 -0.043 -0.043
Gas (TWh) 759 857 690 769 885 1,018 1,095 Gas (TWh) 0.000 0.004 0.010 -0.021 -0.061 -0.068 -0.071 -0.071 -0.071
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.001 -0.001
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.007 -0.007 -0.007
Renewables (TWh) 358 462 648 714 797 850 890 Renewables (TWh) 0.000 -0.005 -0.029 -0.028 -0.036 -0.038 -0.051 -0.051 -0.051
Total (TWh) 4,034 4,005 4,257 4,503 4,746 5,012 5,234 Total (TWh) 0.000 0.000 -0.017 -0.061 -0.115 -0.145 -0.172 -0.172 -0.172

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.001 -0.001 -0.001 -0.002 -0.002 -0.002 -0.002
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.003 -0.004 -0.009 -0.012 -0.013 -0.013 -0.013
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.001
Renewables (GW) 99 133 171 177 186 196 209 Renewables (GW) 0.000 -0.001 -0.008 -0.008 -0.008 -0.008 -0.012 -0.012 -0.012
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.001 -0.012 -0.013 -0.018 -0.022 -0.027 -0.027 -0.027 Extrapolation14-21 Table 14.3.20 Built

- In Refrigeration Products : Trial Standard Level 3 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,471 1,553 1,637 1,707 Electricity Sales (TWh) 0.000 0.000 -0.032 -0.120 -0.210 -0.288 -0.351 -0.403 -0.431

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305 Coal (TWh) 0.000 0.001 0.005 -0.024 -0.036 -0.077 -0.085 -0.085 -0.085
Gas (TWh) 759 857 690 769 885 1,018 1,095 Gas (TWh) 0.000 0.008 0.020 -0.041 -0.122 -0.136 -0.141 -0.141 -0.141
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.002 -0.002 -0.002
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.013 -0.013 -0.013
Renewables (TWh) 358 462 648 714 797 850 890 Renewables (TWh) 0.000 -0.009 -0.058 -0.056 -0.072 -0.076 -0.102 -0.102 -0.102
Total (TWh) 4,034 4,005 4,257 4,502 4,746 5,011 5,233 Total (TWh) 0.000 0.000 -0.034 -0.122 -0.230 -0.290 -0.343 -0.343 -0.343

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.002 -0.002 -0.002 -0.004 -0.003 -0.003 -0.003
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.006 -0.008 -0.018 -0.023 -0.026 -0.026 -0.026
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.002 -0.002 -0.002
Renewables (GW) 99 133 171 177 186 196 209 Renewables (GW) 0.000 -0.003 -0.016 -0.016 -0.015 -0.017 -0.023 -0.023 -0.023
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.003 -0.024 -0.026 -0.035 -0.044 -0.054 -0.054 -0.054 Extrapolation14-22 Table 14.3.21 Built

- In Refrigeration Products : Trial Standard Level 4 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,471 1,553 1,637 1,707 Electricity Sales (TWh) 0.000 0.000 -0.040 -0.151 -0.262 -0.357 -0.435 -0.498 -0.532

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305 Coal (TWh) 0.000 0.001 0.006 -0.030 -0.045 -0.095 -0.105 -0.105 -0.105
Gas (TWh) 759 857 690 769 885 1,018 1,095 Gas (TWh) 0.000 0.010 0.025 -0.052 -0.152 -0.169 -0.175 -0.175 -0.175
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 0.000 -0.001 -0.001 -0.002 -0.002 -0.002 -0.002
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.017 -0.017 -0.017
Renewables (TWh) 358 462 648 714 797 850 890 Renewables (TWh) 0.000 -0.012 -0.074 -0.071 -0.090 -0.094 -0.126 -0.126 -0.126
Total (TWh) 4,034 4,005 4,257 4,502 4,746 5,011 5,233 Total (TWh) 0.000 0.000 -0.043 -0.153 -0.288 -0.360 -0.425 -0.425 -0.425

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.003 -0.002 -0.002 -0.005 -0.004 -0.004 -0.004
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.007 -0.010 -0.022 -0.029 -0.032 -0.032 -0.032
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.002 -0.002 -0.002
Renewables (GW) 99 133 171 177 186 196 209 Renewables (GW) 0.000 -0.003 -0.021 -0.021 -0.019 -0.021 -0.028 -0.028 -0.028
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.003 -0.030 -0.033 -0.044 -0.055 -0.067 -0.067 -0.067 Extrapolation14-23 Table 14.3.22 Built

- In Refrigeration Products : Trial Standard Level 5 Forecast



### NEMS-BT Results: Difference from AEO2010 Reference Case

2005 2010 2015 2020 2025 2030 2035 2005 2010 2015 2020 2025 2030 2035 2040 2043
Residential Sector Energy Consumption Residential Sector Energy Consumption
Electricity Sales (TWh) 1,359 1,388 1,400 1,471 1,553 1,637 1,707 Electricity Sales (TWh) 0.000 0.000 -0.047 -0.180 -0.313 -0.427 -0.520 -0.596 -0.637

Total U.S. Electric Generation Total U.S. Electric Generation
Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305 Coal (TWh) 0.000 0.002 0.007 -0.036 -0.054 -0.114 -0.126 -0.126 -0.126
Gas (TWh) 759 857 690 769 885 1,018 1,095 Gas (TWh) 0.000 0.012 0.030 -0.062 -0.182 -0.202 -0.209 -0.209 -0.209
Petroleum (TWh) 122 45 46 47 48 48 49 Petroleum (TWh) 0.000 0.000 0.000 -0.001 -0.001 -0.002 -0.003 -0.003 -0.003
Nuclear (TWh) 782 813 834 883 886 886 895 Nuclear (TWh) 0.000 0.000 0.000 0.000 0.000 0.000 -0.020 -0.020 -0.020
Renewables (TWh) 358 462 648 714 797 850 890 Renewables (TWh) 0.000 -0.014 -0.088 -0.084 -0.107 -0.113 -0.151 -0.151 -0.151
Total (TWh) 4,034 4,005 4,257 4,502 4,746 5,011 5,233 Total (TWh) 0.000 0.000 -0.051 -0.182 -0.344 -0.431 -0.509 -0.509 -0.509

Installed Generating Capacity Installed Generating Capacity
Coal (GW) 314 321 325 326 326 330 337 Coal (GW) 0.000 0.000 -0.003 -0.003 -0.003 -0.006 -0.005 -0.005 -0.005
Other Fossil (GW) 439 468 445 446 467 501 534 Other Fossil (GW) 0.000 0.000 -0.008 -0.012 -0.027 -0.035 -0.038 -0.038 -0.038
Nuclear (GW) 100 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 0.000 -0.003 -0.003 -0.003
Renewables (GW) 99 133 171 177 186 196 209 Renewables (GW) 0.000 -0.004 -0.025 -0.025 -0.023 -0.025 -0.034 -0.034 -0.034
Total (GW) 952 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) 0.000 -0.004 -0.036 -0.040 -0.052 -0.065 -0.080 -0.080 -0.080 Extrapolation14-24 14.4 SUMMARY OF UTILITY I MPACT ANALYSIS

The following tables present a summary of utility impact results for all refrigeration product TSLs in the final year of the analysis period , 2043

. Table 14.4.1 presents the reduction in

total U.S. e lectricity g eneration in 2043 . Table 14.4.2 presents the reduction in t otal U.S. e lectric

g enerating c apacity in 2043

.

Table 14.4.1 Reduction in Total U.S. Electricity Generation in 2043 Under Refrigeration Product TSLs

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Standard

- Size Refrigerator

- Freezers TWh

14. 5 16. 7 19. 7 2 6.9 32.2

Standard

- Size Freezers 4. 71 4. 71 7. 96 9.04 9. 70 Compact Refrigeration Products 1. 72 2. 06 2. 44 3. 02 3. 22

Built

- In Refrigeration Products 0.11 8 0.17 2 0.34 3 0.42 5 0.50 9

Table 14.4.2 Reduction in Electric Generating Capacity in 2043 Under Refrigeration

Product TSLs

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Standard

- Size Refrigerator

- Freezers Gigawatts

2.28 2.63 3.10 4.23 5.07

Standard

- Size Freezers 0.740 0.740 1.25 1.42 1.53 Compact Refrigeration Products 0.271 0.324 0.383 0.475 0.506

Built

- In Refrigeration Products 0.019 0.027 0.054 0.067 0.080

14.5 IMPACT OF STANDARDS ON ELECTRICITY PRICES AND ASSOCIATE D

BENEFITS FOR CONSUMERS

Using the framework of the utility impact analysis

, DOE analyzed the potential impact on electricity prices res ulting from the proposed standards o n refrigeration products . A ssociated benefits for all electricity users in all sectors of the economy are then derived from these price impacts

.

DOE’s analysis of energy price impacts used NEMS

- BT in a similar man ner as described

in section 14 .2 . Like other widely

- used energy

- econ omic models, NEMS uses elasticities to estimate the energy price change that would result from a change (increase or decrease) in energy demand. The elasticity of price to a decrease in demand is the “inverse price elasticity.”

The ca lculated inverse price elasticity based on NEMS

- BT simulations differs throughout the forecast period in response to the dynamics of supply and demand for electricity

.14-25 14.5.1 Impact on Electricity Prices

DOE analyzed the electricity price effect of all refriger ation products together. The

results for the proposed TSL for each of the four refrigeration product types were summed together to produce combined energy savings. c This allows for a single regression that represents the total impact of all refrigeration p roducts. After generating results using higher decrements to electricity consumption, a regressed interpolation toward the origin derived the price effects associated with the combined energy savings of the proposed TSLs.

Figure 14.5.1 shows the annual change in U.S. electricity consumption for the proposed

standard s , relative to the base case which involves no new standards.

Figure 14.5.1 Change in U.S. Electricity Consumption Associated

with Proposed Refrigeration Product Energy

Conservation Standar ds

c The proposed standards consist of TSL 3 for standard

- size refrigerator

- freezer s, TSL 2 for standard

- size freezer s, TSL 2 for compact refrigeration product s, and TSL 3 for built

- in refrigeration product s. - 30.0 - 25.0 - 20.0 - 15.0 - 10.0

- 5.0 0.0

2015 2020 2025 2030 2035TWH 

### Change in Electricity Consumption

Proposed14-26 Figure 14.5.2 shows the annual change in average U.S. price for electricity , relative to the

Reference case, projected to result from the proposed standard s . The price reduction averages

0 .0 11 cents per k Wh (in 2009$) . This average price reduction equal s 0. 11 percent.

Figure 14.5.2 Effect of Proposed Refrigeration Product Energy Conservation Standards on Average U.S. Electricity Price (All Users)

14.5.2 Impact of Changes in Electricity Price on Electricity Users

Using the estimated electricity price impacts

, DOE calculated the nominal savings in total electricity expenditures in each year by multiplying the annual change in the average

- user price

for electricity by the total annual U.S. electricity consumption forecast by NEMS

, adjusted for the impact of the standards . The amended standards would continue to reduce demand for electricity after 2035 (which is the last year in the NEMS forecast ). DOE’s estimate for 2036

– 2043 (the period used to estimate the NPV of the national cons umer benefits from amended standards) multiplied the average electricity price reduction in 2015

– 2035 by estimated total

annual electricity consumption in 2036

– 2043

. d DOE then discounted the stream of reduced expenditures to calculate a NPV.

d The estimation of el ectricity consumption after 2035 uses the av erage annual growth rate in 2031

- 2035 of total U.S. electricity consump tion forecasted by NEMS. This forecast includes the impact of the standards. - 0.00025 - 0.00020 - 0.00015 - 0.00010 - 0.00005 0.00000 0.00005

2015 2020 2025 2030 20352009$/KWH 

### Change in Electricity Prices

Proposed14-27 Table 14.5.1 shows the calculated NPV of the economy

- wide savings in electricity expenditures for each considered TSL at 3

- percent and 7

- percent discount rates. The need to extrapolate price effects and electricity consumption beyond 2035 suggests that one should

inter pret the post

- 2035 results as a rough indication of the benefits to electricity users in the post

2035 period.

Table 14.5.1 Cumulative NPV of the Economy

- Wide Savings in Electricity Expenditures Due to the Projected Decline in Electricity Prices Resulting

from the Proposed Standards for Refrigeration Products *

Discount Rate billion $200 9

3 percent 7.77 8 7 percent 3.66 7

* Impacts for units sold from 201 4 to 204 4

14.5.3 Discussion of Savings in Electricity Expenditures

Although the aggregate benefits for all electricity users are potentially large, there may be negative effects on the actors involved in electricity supply. The electric power industry is a complex mix of power plant providers, fuel suppliers, electricity generators, and electricity distributors. While the distribution of electricity is regulated everywhere, the institutional structure of the power sector varies, and has changed over time. For these reasons, an assessment of impacts on the actors involved i n electricity supply from reduction in electricity demand associated with energy conservation standards is beyond the scope of this rulemaking.

In considering the potential benefits to electricity users, DOE takes under advisement the provided by the Office of Management and Budget (OMB) to Federal agencies on the development of regulatory analysis (OMB Circular A

- 4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs”). Specifically, at page 38, Circular A

- 4 instructs that

transf ers should be excluded from the estimates of the benefits and costs of a regulation. DOE is continuing to investigate the extent to which change in electricity prices projected to result from

standards represents a net gain to society.14-28 REFERENCES

1. Energy Information Administration, Annual Energy Outlook 2010 with Projections to

2035 , 2010 . Washington, DC. Report No. DOE/EIA

- 0383(2010 ).

< http://www.eia.doe.gov/oiaf/aeo/ >15

- i CHAPTER 1 5

. ENVIRONMENTAL IMPACTS ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION

................................ ................................ ................................ ............... 1

15.2 AIR EMISSIONS ANALYS IS

................................ ................................ ............................ 1

15.2.1 Air Emissions Desc riptions

................................ ................................ ................ 1

15.2.2 Air Quality Regulation

................................ ................................ ....................... 4

15.2.3 Global Climate Change

................................ ................................ ...................... 5

15.2.4 Analytical Methods for Air Emissions

................................ .............................. 9

15.2.5 E ffects on Power Plant Emissions

................................ ................................ ... 10

15.2.6 Effects on Upstream Fuel

- Cycle Emissions

................................ .................... 14

15.3 SOCIAL COST OF CARBO N DIOXIDE EMISSIONS

................................ .................. 15

15.3.1 Social Cost of Carbon Values Used in Past Regulatory Analyses

................... 17

15.3.2 Approach and Key Assumptions

................................ ................................ ..... 18

15.4 WETLAND, ENDANGERED AND THREATENED SPECI ES, AND

CULTURAL RESOURCES

................................ ................................ .............................. 19

15.5 SOCIOECONOMIC IMPACT S

................................ ................................ ........................ 19

15.6 ENVIRONMENTAL JUSTIC E IMPACTS

................................ ................................ ...... 20

15.7 NOISE AND AESTHETICS

................................ ................................ ............................. 20

15.8 SUMMARY OF ENVIRONME NTAL IMPACTS

................................ ........................... 20

LIST OF TABLES

Table 15.2.1 Reduction in Cumulative Energy

- Related Emissions of CO 2 from 2014 through 2043 from Residential Refrigeration Products Energy

Conservation Standards

................................ ................................ ..................... 15

- 8

Table 15.2.2 Power Sector Emissions Forecast from AEO2010 Refer ence Case

................. 15

- 10

Table 15.2.3 Power Sector Emissions Impacts Forecasts for Standard

- Size Refrigerator

Freezer TSLs

................................ ................................ ................................ .... 15

- 11

Table 15.2.4 Power Sector Emissions Impact Forecasts for Standard

- Size Freezer TSLs

... 15

- 12

Table 15.2.5 Power Se ctor Emissions Impact Forecasts for Compact Refrigeration

Product TSLs

................................ ................................ ................................ ... 15

- 13

Table 15.2.6 Power Sector Emissions Impact Forecasts for Built

- In Refrigeration

Product TSLs

................................ ................................ ................................ ... 15

- 14

Table 15.2.7 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct

Power Plant Combustion Emissions

................................ ................................ 15

- 15

Table 15.3.1 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

................................ ......... 15

- 17

Table 15.8.1 Cumula tive Emissions Reductions Under Refrigeration Product TSLs*

........ 15

- 2115

- 1 CHAPTER 15. ENVIRONMENTAL IMPACTS ANALYSIS

15.1 INTRODUCTION

This chapter describes potential environmental effects that may result from amended energy conservation standards for residential refrigeration products . The U.S. Department of Energy (DOE)’s energy conservation standards are not site

- specific, and would a pply to all 50 States and U.S. territories. Therefore, none of the standards would impact land uses, cause any direct disturbance to the land, or directly affect biological resources in any one area.

All of the trial standard levels (TSLs) are expected to reduce energy consumption in comparison to the base case. These changes in energy consumption are the primary drivers in analyzing environm ental effects. The estimates of energy savings that serve as inputs to t he environmental impacts analysis can be f ound in the utility impact analysis in chapter 14 of this technical support document (TSD).

The primary impact of the TSLs is on air emissions resulting from power plant operations. Therefore, much of this chapter descr ibes the air emissions analysis, a nd t he latter part of the chapter describes potential impacts to other environmental resources.

15.2 AIR EMISSIONS ANALYS IS

A primary focus of the environmental analysis is the impact on air emissions of amended energy conservation standards for residential refrigeration products . The outcomes of the environmental analysis are largely driven by changes in power plant types and quantities of electricity generated under each of the alternatives. Changes in electricity generation are

described in the utili ty imp act analysis in chapter 14

.

15.2.1 Air Emissions Descriptions

For each of the TSLs, DOE calculated total power

- sector emissions based on output from

t he NEMS

- BT model (see chapter 14 for description of the model). This analysis considers three pollutants: sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg). An air pollutant is any substance in the air that can cause harm to humans or the environment. Pollutants may be

natura l or man

- made (i.e., anthropogenic) and may take the form of solid particles (i.e., particulates or particulate matter), liquid droplets, or gases. a This analysis also considers carbon dioxide (CO 2 ).

Sulfur Dioxide. Sulfur dioxide, or SO 2 , belongs to th e family of sulfur oxide gases (SOx). These gases dissolve easily in water. Sulfur is prevalent in all raw materials, including crude oil, coal, and ore that contains common metals like aluminum, copper, zinc, lead, and iron. SOx gases are formed when fuel containing sulfur, such as coal and oil, is burned, and when gasoline is extracted from oil, or metals are extracted from ore. SO 2 dissolves in water vapor to

a More information on air po llution characteristics and regulations is available on the U.S. Environment Protection Agent (EPA)’s website at www.epa.gov.15

- 2 form acid, and interacts with other gases and particles in the air to form sulfates and other

pr oducts that can be harmful to people and their environment. 1

DOE has determined tha t SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that create uncertainty about the standard s’ impact on SO 2 emissions. Title IV of the Clean Air Act sets an

annual emissions cap on SO 2 for all affected EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (D.C.) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005), which creates

an allowance

- based trading program that will gradually replace the Title IV program in those States and D.C. (The recent legal history surrounding CAIR is discussed below.) The attainment of the emissions caps is flexible among EGUs and is en forced through the use of emissions

a llowances and tradable permits. Under existing EPA regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit o ffsetting increases in SO 2 emissions by any regulated EGU. However, if the standard resulted in a permanent increase in the quantity of unused emission allowances, there would be an overall reduction in SO 2 emissions from the standards. While

there remai ns some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS

- BT modeling system that

DOE use s to forecast emissions reductions currently indicates that no physical reductions in power sector emissions would occur for SO 2.

Even if there is no significant reduction in the overall emissions of SO2 that results from the standard, there may still be some economic benefit from reduced demand for SO 2 emission

allowances that is no t fully reflected in the cost savings experienced by individual consumers. Electricity savings that decrease the overall demand for SO 2 emissions allowances could lower allowance prices and thereby result in some economic benefits for all electricity consu mers, not just those that reduced their electricity use as a result of an efficiency standard. DOE does not plan to monetize this particular benefit because the effect on the SO 2 allowance price from any single energy conservation standard is likely to be small and highly uncertain.

Nitrogen Oxides. Nitrogen oxides

, or NO X , is the generic term for a group of highly reactive gases, all of which contain nitrogen and oxygen in varying amounts. Many of the nitrogen oxides are colorless and odorless. However, one common pollutant, nitrogen dioxide (NO 2 ), along with particles in the air can often be seen as a reddish

- brown layer over many urban

areas. NO 2 is the specific form of NO X reported in this document. NO X is one of the main ingredients involved in the formation of ground

- level ozone, which can trigger serious respiratory problems. It can contribute to the formation of acid rain, and can impair visibility in areas such as national parks. NO X also contributes to the formation of fine particles that can

im pair human health. 1

Nitrogen oxides form when fossil fuel is burned at high tempe ratures, as in a combustion process. The primary manmade sources of NO X are motor vehicles, electric utilities, and other industrial, commercial, and residential sources that burn fossil fuels. NO X can also be formed naturally. Electric utilities account f or about 22 percent of NO X emissions in the United States. 215

- 3 Mercury. Coal

- fired power plants emit mercury (Hg) found in coal during the burning process. While coal

- fired power plants are the largest remaining source of human

- generated Hg emissions in the United States, they contribute very little to the global Hg pool or to

contamination of U.S. waters. 1 U.S. coal

- fired power plants emit Hg in three different forms: oxidized Hg (likely to deposit within the United States); elemental Hg, which can travel thousands of miles before depositing to land and water; and Hg that is in particulate form. Atmospheric Hg is then deposited on land, lakes, rivers, and estuaries through rain, snow, and dry deposition. Once there, it can transform into methylme rcury and accumulate in fish tissue through bioaccumulation.

Americans are exposed to methylmercury primarily by eating contaminated fish. Because the developing fetus is the most sensitive to the toxic effects of methylmercury, women of childbearing a ge are regarded as the population of greatest concern. Children exposed to methylmercury before birth may be at increased risk of poor performance on neurobehavioral tasks, such as those measuring attention, fine motor function, language skills, visual

- spa tial abilities, and verbal memory. 3

Carbon Dioxide. Carbon dioxide (CO 2 ) is not a criteria pollutant (see below), but it is of interest because of its classification as a greenhouse gas (GHG). GHGs trap the sun’s radi ation inside the Earth’s atmosphere and either occur naturally in the atmosphere or result from human activities. Naturally occurring GHGs include water vapor, CO 2 , methane (CH 4 ), nitrous oxide (N 2 O), and ozone (O 3 ). Human activities, however, add to the l evels of most of these naturally occurring gases. For example, CO 2 is emitted to the atmosphere when solid waste, fossil fuels (oil, natural gas, and coal), wood, and wood products are burned. In 2007, over 90 percent of anthropogenic (i.e., human

- made) CO 2 emissions resulted from burning fossil fuels. 4

Concentrations of CO 2 in the atmosphere are naturally regulated by num erous processes, collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and the land and oceans is dominated by natural processes, such as plant photosynthesis. While these natural processes can absorb some of the anthropog enic CO 2 emissions produced each year, billions of metric tons are added to the atmosphere annually. In the United States, in 2007, CO 2 emissions from electricity generation accounted for 39 percent of total U.S. GHG emissions. 4

Particulate Matter . Particulate matter (PM) also known as particle pollution, is a complex mixture of extremely small particles and liquid droplet s. Particle pollution is made up of a number of components, including acids (such as nitrates and sulfates), organic chemicals, metals, and soil or dust particles.

PM impacts are of concern due to human exposures that can impact health. Particle pollut ion

- especially fine particles

- contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. Numerous scientific studies have linked particle pollution exposure to a variety of problems, including: increased respiratory symptoms, such as irritation of the airways, coughing, or difficulty breathing, for example; decreased lung function; aggravated asthma; development of chronic15

- 4 bronchitis; irregular heartbeat; nonfatal heart attac ks; and premature death in people with heart or lung disease.

Power plant emissions can have either direct or indirect impacts on PM. A portion of the pollutants emitted by a power plant are in the form of particulates as they leave the smoke stack.

Th ese are direct PM emissions. In addition, other pollutants such as SO 2 and NO X interact with other elements in the atmosphere to produce PM at some distance from the power plant.

In general, the relative impacts of direct PM emissions reduction compared to other pollutants on PM exposures are much more difficult to estimate than other emissions reductions. This is due to the complex interactions between PM, other power plant emissi ons, meteorology and atmospheric chemistry that impact human exposure to particulates. Human exposure to PM usually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance they undergo highly complex atmospheric chemical reactions and the proportion of impacts and exposures attributable to different emissions can vary dramatically for different emissions sources and types of particulate precursors. The se variations in emissions impacts depend on the distance to the source, land use and land cover, and the local and regional meteorology responsible for pollutant transport, deposition and atmospheric chemistry.

The Environmental Protection Agency (EPA) has compiled and summarized technical studies regarding PM source apportionment. 5 In this compilation of studies, sources are classified into seven categories: (1) Secondary sulfate/coal, (2) Secondary organic matter/mobile sources, (3) Nitrate dominated sources, (4) Biomass burning, (5) Industr ial, (6) Crustal and salt (7) Other. In these studies, the PM exposures attributed to coal power plants are not disaggregated between direct particulate emissions and SO 2 emissions from these power plants.

This is because both SO 2 and direct PM emissions aggregate and interact with water droplets and emissions from other sources to create final particulates that are a complex mixture of different

constituents. Both the SO 2 and direct PM are emitted from the power plant at the same time and

if the final ae rosol particle contains both sulfur compounds and other PM components it is not possible to attribute that aerosol particle to one source or the other. Therefore, DOE is not currently able to perform modeling that can make reliable estimates of the impact of direct PM emissions on air quality at this time.

15.2.2 Air Quality Regulation

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required

to control. 6 EPA has set national air quality standards for six common pollutants (also referred to as “criteria” pollutants), two of which are SO 2 and NO X . Also, the Clean Air Act Amendments of 1990 gave EPA the authority to control acidification and to req uire operators of electric power plants to reduce emissions of SO 2 and NO X . Title IV of the 1990 amendments established a cap

and

- trade program for SO 2 intended to help control acid rain. 6 This cap

- and

- trade program serves as a model for more recent programs with similar features.15

- 5 In 2005, EPA issued the Clean Air Interstate Rule (CAIR) under sections 110 and 111 of the Clean Air Act (40 CFR Parts 51, 96, and 97). 7 b CAIR will permanently cap emissions of

SO 2 and N O X in eastern States of the United States. CAIR achieves large reductions of SO 2 and/or NO X emissions across 28 eastern States and the District of Columbia. States must achieve the required emission reductions using one of two compliance options: 1) meet a n emission budget for each regulated state by requiring power plants to participate in an EPA

- administered interstate cap

- and

- trade system that caps emissions in two stages, or 2) meet an individual state emissions budget through measures of the state’s ch oosing. Phase 1 caps for NO X have been in place since 2009. Phase 1 caps for SO 2 are to be in place beginning in 2010. The Phase 2 caps for

both NO X and SO 2 are due in 2015.

Also in 2005, EPA issued the final rule entitled “Standards of Performance for New and Existing Stationary Sources: Electric Steam Generating Units,” under sections 110 and 111 of the Clean Air Act (40 CFR Parts 60, 63, 72, and 75) 8 . This rule, called the Clean Air Mercury Rule (CAMR), was closely related to the CAIR and established standards of performance for Hg emissions from new and existing coal

- fired electric utility steam gene rating units. The CAMR regulated Hg emissions from coal

- fired power plants.

On February 8, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in State of New Jersey, et al. v. Environmental Protect ion Agency

, c in which the Court, among other actions, vacated the CAMR referenced above.

On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Age ncy

, which vacated the CAIR issued by the U.S. Environmental Protection Agency on March 10, 2005. d
CAIR was the vehicle for capping NO X emissions

. e On December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is replaced by a r ule consistent with the court’s earlier opinion. North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). f

15.2.3 Global Climate Change

Climate change has evolved into a matter of global concern because it is expected to have widespread, adv erse effects on natural resources and systems. A growing body of evidence points to anthropogenic sources of greenhouse gases, such as carbon dioxide (CO 2 ), as major contributors to climate change. Because this Rule, if finalized, will likely decrease CO 2 emission rates from the fossil fuel sector in the United States, the Department here examines the impacts and causes of climate change and then the potential impact of the Rule on CO 2 emissions and global warming.

b See http://www.epa.gov/cleanairinterstaterule/.

c 517 F.3d 574, 583 (D.C. Cir. 2008).

d See http://www.epa.gov/cleanairintersta terule/.

e See id. at 903.

f State of North Carolina, et al. v. Environmental Protection Agency, 550 F.3d 1176 (D.C. Cir. 2008 ).15

- 6 Impacts of Climate Change on the Enviro nment. Climate is usually defined as the average weather, over a period ranging from months to many years. Climate change refers to a change in the state of the climate, which is identifiable through changes in the mean and/or the variability of its proper ties (e.g., temperature or precipitation) over an extended period, typically decades or longer. 9

The World Meteorological Organization and United Nations Environment Programme (UNEP) established the Intergovernmental Panel on Climate Change (IPCC) to provide an objective source of informa tion about climate change. According to the IPCC Fourth Assessment Report (IPCC Report), published in 2007, climate change is consistent with observed changes to the world’s natural systems; the IPCC expects these changes to continue. 9

Changes that are consistent with warming include warming of the world’s oceans to a depth of 3000 meters; global average sea level rise at an average rate of 1.8 mm per year from 1961 to 2003; loss of annual average Arctic sea ice at a rate of 2.7 percent per decade, changes in wind patterns that affect extra

- tropical storm tracks and temperature patterns, increases in intense precipitation in some parts of the world, as well as increased drought and more frequent heat waves in many locations worldwide, and numerous ecological changes. 9

Looking forward, the IPCC describes continued globa l warming of about 0.2 °C per decade for the next two decades under a wide range of emission scenarios for carbon dioxide (CO 2 ), other greenhouse gases (GHGs), and aerosols. After that period, the rate of increase is less certain. The IPCC Report describes increases in average global temperatures of about 1.1 °C to 6.4 °C at the end of the century relative to today. These increases vary depending on the model

and emissions scenarios. 9

The IPCC Report describes incremental impacts associated with the rise in temperature. At ranges of increme ntal increases to the global average temperature, IPCC reports, with either high or very high confidence, that there is likely to be an increasing degree of impacts such as coral reef bleaching, loss of wildlife habitat, loss to specific ecosystems, and ne gative yield impacts for major cereal crops in the tropics, but also projects that there likely will be some beneficial impacts on crop yields in temperate regions.

Causes of Climate Change. The IPCC Report states that the world has warmed by about

0.74 °C in the last 100 years. The IPCC Report finds that most of the temperature increase since

the mid

- 20th century is very likely due to the increase in anthropogenic concentrations of CO 2 and other long

- lived greenhouse gases such as methane and nitrous ox ide in the atmosphere,

rather than from natural causes.

Increasing the CO 2 concentration partially blocks the earth’s re

- radiation of captured solar energy in the infrared band, inhibits the radiant cooling of the earth, and thereby alters the energy ba lance of the planet, which gradually increases its average temperature. The IPCC15

- 7 Report estimates that currently, CO 2 makes up about 77 percent of the total CO 2 - equivalent g global warming potential in GHGs emitted from human activities, with the vast major ity (74 percent) of the CO 2 attributable to fossil fuel use. 10 For the future, the IPCC Report describes a wide range of GHG emissions scenarios, but under each scenario CO 2 would continue to comprise above 70 percent of the total global warming potential. 10

Stabilization of CO 2 Concentrations. Unlike many traditional air pollutants, CO 2 mixes thorough ly in the entire atmosphere and is long

- lived. The residence time of CO 2 in the atmosphere is long compared to the emission processes. Therefore, the global cumulative

emissions of CO 2 over long periods determine CO 2 concentrations because it takes hundred s of years for natural processes to remove the CO 2 . Globally, 49 billion metric tons of CO 2

– equivalent of anthropogenic (man

- made) greenhouse gases are emitted every year. Of this annual
total, fossil fuels contribute about 29 billion metric tons of CO 2

. 11 h

Researchers have focused on considering atmospheric CO 2 concentr ations that likely will result in some level of global climate stabilization, and the emission rates associated with achieving the “stabilizing” concentrations by particular dates. They associate these stabilized

CO 2 concentrations with temperature increas es that plateau in a defined range. For example, at the low end, the IPCC Report scenarios target CO 2 stabilized concentrations range between 350 ppm and 400 ppm (essentially today’s value)

— because of climate inertia, concentrations in this

low

- end range would still result in temperatures projected to increase 2.0 °C to 2.4 °C above pre

industrial levels i (about 1.3 °C to 1.7 °C above today’s levels). To achieve concentrations between 350 ppm to 400 ppm, the IPCC scenarios present that there would have to be a rapid downward trend in total annual global emissions of greenhouse gases to levels that are 50 to 85 percent below today’s annual emission rates by no later than 2050. Since it is assumed that there would continue to be growth in global population an d substantial increases in economic production, the scenarios identify required reductions in greenhouse gas emissions intensity (emissions per unit of output) of more than 90 percent. However, even at these rates, the scenarios describe some warming and s ome climate change is projected due to already

accumulated CO 2 and GHGs in the atmosphere. 12

The Beneficial Impact of the Rule on CO 2 Emissions. It is anticipated that the Rule will reduce energy

- related CO 2 emissions, particularly those associated with energy consumption in buildings. The U .S. Energy Information Administ ration (EIA) reports in its 2010 Annual Energy Outlook ( AEO20 10 ) 13 that U.S. annual energy

- related emissions of CO 2 in 2007 were about 6.0 billion metric tons, of which 1.2 billion tons were attributed to the residential buildings sector

g GHGs differ in their warming influence (radiative forcing) on a global climate system due to their different

radiative properties and lifetimes in the atmosphere. These warming influences may be expressed through a common metric based on the radiative forcing of CO 2 , i.e., CO 2 - equivalent. CO 2 equivalent emission is the amount of CO 2 emission that would cause the same

- tim e integrated radiative forcing, over a given time horizon, as an emitted amount of other long

- lived GHG or mixture of GHGs.

h Other non

- fossil fuel contributors include CO 2 emissions from deforestation and decay from agriculture biomass; agricultural and industrial emissions of methane; and emissions of nitrous oxide and fluorocarbons.

i IPCC Working Group 3 Table TS 215

- 8 (including related energy

–

using products such as r esidential refrigeration products ). Most of the greenhouse gas emissions attributed to residential buildings are emitted from fossil fuel

- fired power plants that generate electricity used in this sector. In the AEO2010 Reference Case, EIA projected that annual energy

- related CO 2 emissions would grow from 5.7 billion metric tons in

2015 to 6.3 billion metric tons in 2035 , an increase of 10 percent (see AEO20 10 ), while residential emissions would grow to from 1.2 billion metric tons to 1.3 billion metric to ns, an increase of 12 percent.

The estimated cumulative CO 2 emission reductions from residential refrigeration products efficiency standard s (shown a s a range of alternative TSLs) during the 30

- year analysis period are indicated in Table 15 .2.1. Estimat ed CO 2 emission reductions in Table 15 .2.1 only

come from electricity generation (i.e., power plants)

. The estimated CO 2 emission reductions from electricity generation are calc ulated using the NEMS

- BT model.

Table 15.2.1 Reduction in Cumulative Energy

- Related Emissio ns of CO 2 from 2014 through 2043 from Residential Refrigeration Products Energy Conservation Standards

Trial Standard Levels

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Million Metric Tons

Standard

- Size Refrigerator

Freezers 154 177 208 283 338

Standard

- Size Freezers 48.0 68.8 81.1 92.0 98.5

Compact Refrigeration Product s 19.6 23.6 28.0 35.2 38.8

Built

- In Refrigeration Product s 1.23 1.79 3.58 4.45 5.32

Total 223 271 321 415 481

Percent of Total Cumulative Emissions Reduction compared

with the AEO2010 Reference

Case in 2015

- 2043 0. 30 0.36 0.4 3 0. 56 0.65

The Incremental Impact of the Rule on Climate Change. It is difficult to correlate specific emission rates with atmospheric concentrations of CO 2 and specific atmospheric

concentrations with future temperatures because the IPCC Report describes a clear lag in the climate system between any given concentration of CO 2 (even if maintained for long periods) and the subsequent average worldwide and regional temperature, precipitation, and extreme

w eather regimes. For example, a major determinant of climate response is “equilibrium climate sensitivity”, a measure of the climate system response to sustained radioactive forcing. It is defined as the global average surface warming following a doubling o f carbon dioxide concentrations. The IPCC Report describes its estimated, numeric value as about 3 °C, but the likely range of that value is 2 °C to 4.5 °C, with cloud feedbacks the largest source of uncertainty. Further, as illustrated above, the IPCC Rep ort scenarios for stabilization rates are15

- 9 presented in terms of a range of concentrations, which then correlates to a range of temperature changes. Thus, climate sensitivity is a key uncertainty for CO 2 mitigation scenarios that aim to meet specific temper ature levels.

Because of how complex global climate systems are, it is difficult to know to what extent and when particular CO 2 emissions reductions will impact global warming. However, as Table

15 .2.1 indicates, the rule is expected to reduce CO 2 emissions associated with energy consumption in buildings.

15.2.4 Analytical Methods for Air Emissions

NEMS

- BT incorporates capabilities to assess compliance with SO 2 restrictions specified in the Clean Air Act and its amendments. Clean Air Act provisions inc lude New Source Performance Standards, and Revised New Source Performance Standards. The version of

NEMS

- BT in 2008 included provisions for the CAIR, which imposes stricter restrictions on SO 2 and NO X for some states, and the CAMR, which imposed a nationa l Hg constraint. As discussed

earlier is section 15 .2.2, on December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is replaced by a rule consistent with the court’s earlier opinion. Carolina v. Environmental Protection Agenc y , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). But

, EPA has not promulgated a rule to replace CAMR, which the D.C. Circuit vacated in 2008

. Thus, the version of NEMS

- BT used in this analysis does not include provisions for the CAMR.

Coal

- fire d electric generation is the single largest source of electricity in the United States. Because the mix of coals used significantly affects the emissions produced, the model includes a detailed representation of coal supply. The model considers the rank of the coal as well as the sulfur contents of the fuel used when determining optimal dispatch. 14

Within the NEMS

- BT mode l, planning options for achieving emissions restrictions in the Clean Air Act Amendments include installing pollution control equipment on existing power plants and building new power plants with low emission rates. These methods for reducing

emission are compared to dispatching options such as fuel switching and allowance trading. Environmental regulations also affect capacity expansion decisions. For instance, new plants are

not allocated SO 2 emissions allowances according to the Clean Air Act Amendments. Consequently, the decision to build a particular capacity type must consider the cost (if any) of obtaining sufficient allowances. This could involve purchasing allowances or over complying at an existing unit.

DOE’s analysis assumed the presence of nati onwide emission caps on SO 2 and caps on

NO X emissions in the 28 States covered by the CAIR. A ny emissions reductions in NO X calculated by the NEMS

- BT modeling system that DOE plans to use are in addition to the regulatory emissions reductions modeled in AE O

. The NEMS

- BT modeling system currently indicates that no physical reductions in power sector emissions would occur for SO 2. However, remaining uncertainty prevents DOE from estimating or reporting SO 2 reductions from energy conservation standards at thi s time. It should be noted that t he standards could put slight downward pressure on the prices of emissions allowances in cap

- and

- trade markets.15

- 10 In contrast to the modeling forecasts of NEMS

- BT that SO 2 emissions reductions will remain at the cap, during the years 2007 and 2008, SO 2 emissions have been below the trading

cap. The difference between the emissions levels that NEMS

- BT forecasts and those that EPA

forecasts is an indicator of the uncertaintie s associated with long

- range energy sector forecasts. Because of such uncertainties, DOE is unable to estimate the economic and physical benefit from

SO 2 emissions reductions at this time.

As noted in chapter 14 , NEMS

- BT model forecasts end in year 2035. Emissions impacts beyond 2035 are assumed to be equal to the impacts in 2035

.

15.2.5 Effects on Power Plant Emissions

Table 15.2.2 shows AEO2010 reference case power plant emissions in selected years.

The Reference Case emission s are the emissions shown by the NEMS

- BT model to result if none of the TSLs are promulgated (the base case).

Table 15.2.2 Power Sector Emissions Forecast from AEO2010 Reference Case

NEMS

- BT Results 2010 2015 2020 2025 2030 2035

CO 2 (million metric tons) 2,218 2,278 2,341 2,421 2,534 2,636

NO X (million tons) 2.24 2.06 2.02 2.03 2.06 2.07

Hg (tons) 40.6 30.6 30.1 30.0 30.2 30.3

Table 15.2. 3 through Table 15.2. 6 show the estimated changes in power plant emissions

of CO 2 , NO X, and Hg in selected years for each of the TSLs. As in Table 15.2.2, values are given

in metric tons

.15

- 11 Table 15.2.3 Power Sector Emissions Impact s Forecasts for Standard

- Size Refrigerator

Freezer TSLs

NEMS-BT Results* Difference from AEO2010 Reference Case

Total

2010 2015 2020 2025 2030 2035 2040 2043 2014-2043

Standard Level 1

CO2 (Mt/yr) 0.33 0.89 -2.35 -5.52 -7.15 -7.37 -7.37 -7.37 -154

NOx (kt/yr) 0.34 0.81 -2.02 -4.64 -5.80 -5.78 -5.78 -5.78 -124

Hg (t/yr) 0.00 0.00 -0.02 -0.02 -0.04 -0.04 -0.04 -0.04 -0.787

Standard Level 2
CO2 (Mt/yr) 0.38 1.02 -2.69 -6.34 -8.22 -8.50 -8.50 -8.50 -177
NOx (kt/yr) 0.38 0.92 -2.32 -5.32 -6.67 -6.66 -6.66 -6.66 -142
Hg (t/yr) 0.00 0.00 -0.02 -0.02 -0.05 -0.05 -0.05 -0.05 -0.91

Sandard Level 3
CO2 (Mt/yr) 0.44 1.19 -3.16 -7.46 -9.67 -10.00 -10.00 -10.00 -208
NOx (kt/yr) 0.45 1.07 -2.72 -6.26 -7.85 -7.83 -7.83 -7.83 -168
Hg (t/yr) 0.00 0.00 -0.03 -0.02 -0.05 -0.05 -0.05 -0.05 -1.07

Standard Level 4
CO2 (Mt/yr) 0.58 1.56 -4.23 -10.07 -13.15 -13.65 -13.65 -13.65 -283
NOx (kt/yr) 0.58 1.41 -3.64 -8.46 -10.68 -10.70 -10.70 -10.70 -228
Hg (t/yr) 0.01 -0.01 -0.04 -0.03 -0.07 -0.07 -0.07 -0.07 -1.45

Standard Level 5
CO2 (Mt/yr) 0.66 1.79 -4.97 -11.96 -15.70 -16.34 -16.34 -16.34 -338
NOx (kt/yr) 0.66 1.62 -4.28 -10.05 -12.74 -12.81 -12.81 -12.81 -272
Hg (t/yr) 0.01 -0.01 -0.04 -0.04 -0.09 -0.09 -0.09 -0.09 -1.73

*CO 2 results are in metric tons, NO X and Hg results are in short tons. Extrapolation15

- 12 Table 15.2.4 Power Sector Emissions Impact Forecasts for Standard

- Size Freezer TSLs

NEMS-BT Results* Difference from AEO2010 Reference Case

Total

2010 2015 2020 2025 2030 2035 2040 2043 2014-2043

Standard Level 1

CO2 (Mt/yr) 0.10 0.26 -0.67 -1.61 -2.21 -2.39 -2.39 -2.39 -48.0

NOx (kt/yr) 0.10 0.24 -0.58 -1.36 -1.79 -1.87 -1.87 -1.87 -38.6

Hg (t/yr) 0.001 -0.001 -0.006 -0.005 -0.012 -0.013 -0.013 -0.013 -0.245

Standard Level 2
CO2 (Mt/yr) 0.14 0.37 -0.95 -2.30 -3.16 -3.42 -3.42 -3.42 -68.8
NOx (kt/yr) 0.14 0.33 -0.82 -1.94 -2.57 -2.68 -2.68 -2.68 -55.3
Hg (t/yr) 0.002 -0.001 -0.008 -0.007 -0.018 -0.019 -0.019 -0.019 -0.351

Sandard Level 3
CO2 (Mt/yr) 0.16 0.42 -1.11 -2.71 -3.73 -4.04 -4.04 -4.04 -81.1
NOx (kt/yr) 0.16 0.38 -0.96 -2.28 -3.03 -3.17 -3.17 -3.17 -65.1
Hg (t/yr) 0.002 -0.002 -0.009 -0.008 -0.021 -0.022 -0.022 -0.022 -0.413

Standard Level 4
CO2 (Mt/yr) 0.17 0.47 -1.25 -3.07 -4.23 -4.59 -4.59 -4.59 -92.0
NOx (kt/yr) 0.18 0.42 -1.08 -2.58 -3.44 -3.60 -3.60 -3.60 -73.9
Hg (t/yr) 0.002 -0.002 -0.010 -0.010 -0.024 -0.025 -0.025 -0.025 -0.469

Standard Level 5
CO2 (Mt/yr) 0.17 0.47 -1.31 -3.27 -4.54 -4.92 -4.92 -4.92 -98.5
NOx (kt/yr) 0.17 0.43 -1.13 -2.75 -3.68 -3.86 -3.86 -3.86 -79.2
Hg (t/yr) 0.002 -0.002 -0.011 -0.010 -0.026 -0.027 -0.027 -0.027 -0.501

*CO 2 results are in metric tons, NO X and Hg results are in short tons. Extrapolation15

- 13 Table 15.2.5 Power Sector Emissions Impact Forecasts for Compact Refrigeration

Product TSLs

NEMS-BT Results* Difference from AEO2010 Reference Case

Total

2010 2015 2020 2025 2030 2035 2040 2043 2014-2043

Standard Level 1

CO2 (Mt/yr) 0.089 0.232 -0.451 -0.793 -0.886 -0.872 -0.872 -0.872 -19.6

NOx (kt/yr) 0.090 0.210 -0.389 -0.666 -0.719 -0.684 -0.684 -0.684 -15.8

Hg (t/yr) 0.001 -0.001 -0.004 -0.002 -0.005 -0.005 -0.005 -0.005 -0.104

Standard Level 2
CO2 (Mt/yr) 0.107 0.280 -0.546 -0.956 -1.065 -1.046 -1.046 -1.046 -23.6
NOx (kt/yr) 0.108 0.253 -0.470 -0.803 -0.864 -0.820 -0.820 -0.820 -19.0
Hg (t/yr) 0.001 -0.001 -0.005 -0.003 -0.006 -0.006 -0.006 -0.006 -0.125

Sandard Level 3
CO2 (Mt/yr) 0.127 0.333 -0.652 -1.140 -1.263 -1.235 -1.235 -1.235 -28.0
NOx (kt/yr) 0.128 0.301 -0.562 -0.958 -1.026 -0.968 -0.968 -0.968 -22.5
Hg (t/yr) 0.001 -0.001 -0.005 -0.004 -0.007 -0.007 -0.007 -0.007 -0.148

Standard Level 4
CO2 (Mt/yr) 0.160 0.424 -0.842 -1.457 -1.590 -1.533 -1.533 -1.533 -35.2
NOx (kt/yr) 0.161 0.384 -0.726 -1.224 -1.291 -1.202 -1.202 -1.202 -28.3
Hg (t/yr) 0.002 -0.002 -0.007 -0.005 -0.009 -0.008 -0.008 -0.008 -0.186

Standard Level 5
CO2 (Mt/yr) 0.165 0.462 -0.990 -1.670 -1.753 -1.633 -1.633 -1.633 -38.8
NOx (kt/yr) 0.166 0.418 -0.853 -1.403 -1.423 -1.280 -1.280 -1.280 -31.4
Hg (t/yr) 0.002 -0.002 -0.008 -0.005 -0.010 -0.009 -0.009 -0.009 -0.206

*CO 2 results are in metric tons, NO X and Hg results are in short tons. Extrapolation15

- 14 Table 15.2.6 Power Sector Emissions Impact Forecasts for Built

- In Refrigeration Product

TSLs

15.2.6 Effects on Upstream Fuel

- Cycle Emissions

Upstream fuel

- cycle emissions refer to the emissions associated with the amount of energy used in the upstream production and downstream consumption of electricity, including energy used at the power plant. 17 Upstream processes include the mining of coal or extraction of natural gas, physical preparatory and cleaning processes, and transportation to the power plant.

The NEMS

- BT does a thorough accounting of emissions at the power plant due to downstream energy consumption, but does not account for upstream emissions (i.e., emissions from energy losses during coal and natural gas production). Thus, this analysis reports only power plant

emissions.

However, previous DOE environmental assessment documents have developed approximate estimates of effects on upstream fuel

- cycle emissions. These emissions factors provide the reader with a sense of the possible magnitude of upstream eff ects. These upstream

emissions would be in addition to emissions from direct combustion. NEMS-BT Results* Difference from AEO2010 Reference Case

Total

2010 2015 2020 2025 2030 2035 2040 2043 2014-2043

Standard Level 1

CO2 (Mt/yr) 0.003 0.007 -0.018 -0.043 -0.057 -0.060 -0.060 -0.060 -1.23

NOx (kt/yr) 0.003 0.006 -0.016 -0.036 -0.046 -0.047 -0.047 -0.047 -0.99

Hg (t/yr) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.006

Standard Level 2
CO2 (Mt/yr) 0.004 0.010 -0.026 -0.062 -0.083 -0.087 -0.087 -0.087 -1.79
NOx (kt/yr) 0.004 0.009 -0.023 -0.052 -0.067 -0.068 -0.068 -0.068 -1.44
Hg (t/yr) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.009

Sandard Level 3
CO2 (Mt/yr) 0.008 0.020 -0.053 -0.125 -0.166 -0.174 -0.174 -0.174 -3.58
NOx (kt/yr) 0.008 0.018 -0.045 -0.105 -0.134 -0.137 -0.137 -0.137 -2.88
Hg (t/yr) 0.000 0.000 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.018

Standard Level 4
CO2 (Mt/yr) 0.010 0.025 -0.066 -0.156 -0.206 -0.216 -0.216 -0.216 -4.45
NOx (kt/yr) 0.010 0.023 -0.057 -0.131 -0.167 -0.169 -0.169 -0.169 -3.58
Hg (t/yr) 0.000 0.000 -0.001 0.000 -0.001 -0.001 -0.001 -0.001 -0.023

Standard Level 5
CO2 (Mt/yr) 0.011 0.030 -0.079 -0.187 -0.246 -0.258 -0.258 -0.258 -5.32
NOx (kt/yr) 0.011 0.027 -0.068 -0.157 -0.200 -0.202 -0.202 -0.202 -4.28
Hg (t/yr) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.027

*CO 2 results are in metric tons, NO X and Hg results are in short tons. Extrapolation15

- 15 Relative to the entire fuel cycle, estimates based on the work of Dr. Mark DeLuchi, and reported in earlier DOE environmental assessment documents, find that an amo unt approximately equal to eight percent, by mass, of emissions (including SO 2 ) from coal production are due to mining, preparation that includes cleaning the coal, and transportation from the mine to the power plant. 18 Transportation emissions include emissions from the fuel used by the mode of transp ortation that moves the coal from the mine to the power plant. In addition, based on Dr. DeLuchi’s work, DOE estimated that an amount equal to approximately 14 percent of emissions from natural gas production result from upstream processes.

Emission fac tor estimates and corresponding percentages of contributions of upstream emissions from coal and natural gas production, relative to power plant emissions, are shown in

Table 15.2. 7 for CO 2 and NO X . The percentages provide a means to estimate upstream emis sion savings based on changes in emissions from power plants. This approach does not address Hg

emissions.

Table 15.2.7 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct

Power Plant Combustion Emissions

Pollutant Percent of Coal

Combustion Emiss ions Percent of Natural Gas

Combustion Emissions

CO 2 2.7 11.9

NO X 5.8 40

15.3 SOCIAL COST OF CARBO N DIOXIDE EMISSIONS

The “social cost of carbon” ( SCC ) is an estimate of the monetized damages

associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the social cost of carbon are provided in dollars per metric ton of carbon dioxide. j

When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of serious challenges. A recent report from the National

Research Council (Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academies Press. 2009) points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in climate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages. As a result, any effort to q uantify and monetize

j In this document, DOE present s all values of the SCC as the cost per metric ton of CO 2 emissions. Alternatively, one could report the SCC as the cost per metric ton of carbon emissions. The multiplier for translating between mass

of CO 2 and the mass of carbon is 3.67 (the molecular weight of CO 2 divided by the molecular weight of carbon = 44/12 = 3.67).15

- 16 the harms associated with climate change will raise serious questions of science, economics, and ethics and should be viewed as provisional.

Despite the serious limits of both quantification and monetization, SCC estimates can be

u seful in estimating the social benefits of reducing carbon dioxide emissions. Under Executive Order 12866, agencies are required, to the extent permitted by law, “to assess both the costs and the benefits of the intended regulation and, recognizing that s ome costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the SCC estimates presented here is to make it possible for agencies to incorporate the social benefits from reducing carbon dioxide

emissions into cost

- benefit analyses of regulatory actions that have small, or “marginal,” impacts on cumulative global emissions. Most federal regulatory actions can be expected to h ave marginal impacts on global emissions.

For such policies, the benefits from reduced (or costs from increased) emissions in any future year can be estimated by multiplying the change in emissions in that year by the SCC value appropriate for that year . The net present value of the benefits can then be calculated by multiplying each of these future benefits by an appropriate discount factor and summing across all affected years. This approach assumes that the marginal damages from increased emissions are constant for small departures from the baseline emissions path, an approximation that is reasonable for policies that have effects on emissions that are small relative to cumulative global carbon dioxide emissions. For policies that have a large (non

- marginal) impact on global cumulative emissions, there is a separate question of whether the SCC is an appropriate tool for calculating the benefits of reduced emissions; DOE do es not attempt to answer that question

here.

An interagency group convened on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key inputs and assumptions in order to generate SCC estimates. Agencies that actively participated in the interagency process include

the Enviro nmental Protection Agency, and the Departments of Agriculture, Commerce, Energy, Transportation, and Treasury. This process was convened by the Council of Economic Advisers and the Office of Management and Budget, with active participation and regular inp ut from the Council on Environmental Quality, National Economic Council, Office of Energy and Climate Change, and Office of Science and Technology Policy. The main objective of this process was to develop a range of SCC values using a defensible set of in put assumptions that are grounded in the existing literature. In this way, key uncertainties and model differences can more transparently and consistently inform the range of SCC estimates used in the rulemaking process.

The interagency group selected four SCC estimates for use in regulatory analyses. For 2010, these estimates are $ 4.7 , $21 .4 , $35 .1 , and $6 4.9 (in 2007 dollars). The first three estimates are based on the average SCC across models and socio

- economic and emissions scenarios at the 5, 3, and 2.5 percent discount rates, respectively. The fourth value is included to represent the higher

- than

- expected impacts from temperature change further out in the tails of the SCC distribution. For this purpose, t he interagency group selected the SCC val ue for the 95th percentile at a 3 percent discount rate.15

- 17 The “ central ” value is the average SCC across models at the 3 percent discount rate. For purposes of capturing the uncertainties involved in regulatory impact analysis, we emphasize the importan ce and value of considering the full range. These SCC estimates also grow over time (see Table 15.3.1). For instance, the central value increases to $24 per ton of CO 2 in 2015 and $26 per ton of CO 2 in 2020.

Appendix 15

- A presents the interagency repor t “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,” which provides further information.

Table 15.3.1 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

Discount Rate

5% 3% 2.5% 3%

Year Avg Avg Avg 95th

2010 4.7 21.4 35.1 64.9

2015 5.7 23.8 38.4 72.8

2020 6.8 26.3 41.7 80.7

2025 8.2 29.6 45.9 90.4

2030 9.7 32.8 50.0 100.0

2035 11.2 36.0 54.2 109.7

2040 12.7 39.2 58.4 119.3

2045 14.2 42.1 61.7 127.8

2050 15.7 44.9 65.0 136.2

It is important to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on society improves over time. Specifically, the interagency group set a prelimi nary goal of revisiting the SCC values within two years or at such time as substantially updated models become available, and to continue to support research in this area. In the meantime, we will continue to explore the issues raised by this analysis and consider public comments as part of the ongoing interagency process.

15.3.1 Social Cost of Carbon Values Used in Past Regulatory Analyses

To date, economic analyses for Federal regulations have used a wide range of values to

estimate the benefits associated wi th reducing carbon dioxide emissions. In the final model year 2011 CAFE rule, the Department of Transportation (DOT) used both a “domestic” SCC value of $2 per ton of CO 2 and a “global” SCC value of $33 per ton of CO 2 for 2007 emission reductions (in 2007 dollars), increasing both values at 2.4 percent per year. It also included a sensitivity analysis at $80 per ton of CO 2 . A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in carbon dioxide em issions, while a global SCC value is meant to reflect the value of damages worldwide.15

- 18 A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton CO 2 (in 2006 dollars) for 2011 emission reductions (with a range of $0

- $14 for sensitivity analysis), also increasing at 2.4 percent per year. A regulation finalized by DOE in October of 2008 used a domestic SCC range of $0 to $20 per ton CO 2 for 2007 emission reductions (in 2007 dollars). In addition, EPA’s 2008 Advance Notice of Proposed Rul emaking for Greenhouse Gases identified what it described as “very preliminary” SCC estimates subject to revision. EPA’s global mean values were $68 and $40 per ton CO 2 for discount rates of approximately 2 percent and 3 percent, respectively (in 2006 doll ars for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carbon dioxide emissions. To ensure consistency in how benefits are evaluated across agencies, th e Administration sought to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO 2 emissions. The interagency group did not undertake any original analysis. Instead, it combined SCC estimates from the existing literature to use as interim values until a more comprehensive analysis could be conducted.

The outcome of the preliminary assessment by the interagency group was a set of five interim values: globa l SCC estimates for 2007 (in 2006 dollars) of $55, $33, $19, $10, and $5 per

ton of CO 2 . The $33 and $5 values represented model

- weighted means of the published estimates produced from the most recently available versions of three integrated assessment

mo dels

— DICE, PAGE, and FUND

— at approximately 3 and 5 percent discount rates. The $55 and $10 values were derived by adjusting the published estimates for uncertainty in the discount rate (using factors developed by Newell and Pizer (2003)) at 3 and 5 percent discount rates, respectively. The $19 value was chosen as a central value between the $5 and $33 per ton estimates. All of these values were assumed to increase at 3 percent annually to represent growth in incremental damages over time as the magnitude o f climate change increases.

These interim values represent the first sustained interagency effort within the U.S. government to develop an SCC for use in regulatory analysis. The results of this preliminary effort were presented in several proposed and final rules and were offered for public comment in connection with proposed rules, including the joint EPA

- DOT fuel economy and CO 2 tailpipe emission proposed rules.

15.3.2 Approach and Key Assumptions

Since the release of the interim values, interagency group reconvened on a regular basis to generate improved SCC estimates considered for this final rule. Specifically, the group considered public comments and further explored the technical literature in relevant fields.

It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since they will evolve with improved scientific and economic understanding. The inte ragency group also recognizes that the existing models are imperfect and incomplete. The National Academy of Science (2009) points out that there is tension between the goal of producing quantified estimates of the economic15

- 19 damages from an incremental ton of carbon and the limits of existing efforts to model these effects. There are a number of concerns and problems that should be addressed by the research community, including research programs housed in many of the agencies participating in the interagen cy process to estimate the SCC.

The U.S. Government will periodically review and reconsider estimates of the SCC used

for cost

- benefit analyses to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling. In this context, statements recognizing the limitations of the analysis and calling for further research take on exceptional significance. The interagency group offers the new SCC values with all due humility about the uncertainties

embedded i n them and with a sincere promise to continue work to improve them.

In summary, in considering the potential global benefits resulting from reduced CO 2 emissions, DOE used the most recent values identified by the interagency process, adjusted to
2009$ usi ng the standard GDP deflator values for 2008 and 2009. For each of the four cases specified, the values for emissions in 2010 used were approximately $4.9, $22.1, $36.3, and
$67.1 per metric ton avoided (values expressed in 2009$). To monetize the CO 2 emi ssions reductions expected to result from amended standards for refrigeration products , DOE used the values identified in Table A1 of the “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, ” which is reprinted in Appendix 15

- A , appropriately escalated to
2009$.

15.4 WETLAND, ENDANGERED AND THREATENED SPECI ES, AND

CULTURAL RESOURCES

Beca use residential refrigeration products are not water

- consuming products, more

efficient refrigeration would not reduce the amount of water discharg ed into the waste stre am. As a result, refrigeration energy conservation standards do not have the effect of improving the quality of wetlands, nor threatened or endangered species that reside in these wetlands. This action is also not expected to impact c ultural resources such as historical or archaeological sites.

15.5 SOCIOECONOMIC IMPACT S

DOE's analysis has shown that the increase in the first cost of purchasing more efficient refrigeration products at the proposed standard levels is , in most cases, comple tely offset by a

reduction in the life

- cycle cost (LCC) of owning a more efficient product for the average consumer. In other words, the consumer will pay less operating costs over the life of the product even through the first cost increases. The complete LCC analysis and its conclusions are presented in chapter 8 of the TSD.

For subgroups of low

- income and senior consumers that purchase refrigeration products, DOE determined that the average LCC impact of the standards is similar to that for the full

sa mple of consumers. Therefore, DOE concludes that the proposed standards would have no significant adverse socioeconomic impact. For a complete discussion on the LCC impacts on consumer subgroups, see chapter 11 of the TSD.15

- 20 15.6 ENVIRONMENTAL JUSTIC E IMPACTS

In view of Executive Order 12898 of February 11, 1994, “Federal Actions to Address Environmental Justice in Minority Populations and Low

- Income Populations,” DOE examined the effect of the energy conservation standards on low

- income households. As described in the LCC subgroup analysis in Chapter 11 of the TSD, DOE found that there were no disproportionately high and adverse human health or environmental effects on low

- income populations that would result from the proposed energy conservation standards.

15.7 NOISE AND AESTHETICS

Improvements in efficiency of residential refrigerators are expected to result from changes in the choice of components and other design features. These changes are described in chapter 5 o f this TSD. These design changes are not expected to change noise levels in comparison to products in today’s market. Products that are currently manufactured in the existing market that would meet the standards are no louder than less efficient products. Changes to the design to improve the efficiency levels are not anticipated to affect the product aesthetics.

15.8 SUMMARY OF ENVIRONME NTAL IMPACTS

Table 15 .8 .1 summarize s the estimated emissions impacts for each of the TSLs for refrigeration products

. It show s cumulative changes in emissions for CO 2 , NO X , and Hg for 2014 through 2043 for each of the refrigeration product TSLs

. C umulative CO 2 , NO X , and Hg

e missions are reduced compared to the R eference case for all TSLs. For comparison, t he cumulative power sect or emissions in the AEO 2010 R eference case, over the period 2014 through 2043

, ar e 74,571 Mt for CO 2 , 61,625 kt for NO X , and 917 tons for H g

.

Upstream fuel cycle emission of CO 2 and NO X are described but not quantified in section

15.2.6 . The text describes potential reductions in fuel cycle emissions as percentage of decreases in power plant emissions. This approach suggests that upstream fuel cycle emissions would decrease and provides a sense for the magnitude of effects; however DOE d oes not report actual

estimates of the effects.

For subgroups of low

- income and senior consumers that purchase refrigeration products, DOE determined that the average LCC impact of the standards is similar to that for the full sample of consumers. Ther efore, DOE concludes that the proposed standards would have no significant adverse socioeconomic impact.

No impacts are anticipated in the area s of environmental justice, wetlands, endangered and threatened species, and cultural reso urces; or noise and aesthetics.15

- 21 Table 15.8.1 Cumulative Emissions Reductions Under Refrigeration Product TSLs *

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Standard

- Size Refrigerator

- Freezers

CO 2 (Mt)

NO X (kt) Hg (t) 154

124

0.79 177

142

0.91 208

168

1.07 283

228

1.45 338

272

1.73

Standard

- Size Freezers

CO 2 (Mt)

NO X (kt) Hg (t) 48

39

0.24 5 69

55

0.3 51 81

65

0. 413 92

74

0.4 69 99

79

0. 501 Compact Refrigeration Products

CO 2 (Mt)

NO X (kt) Hg (t) 20

16

0.1 0 24

19

0.12 28

23

0.1 5 35

28

0.1 9 39

31

0. 21

Built

- In Refrigeration Products

CO 2 (Mt)

NO X (kt) Hg (t) 1.2 3

0.99

0.006 1.79

1.44

0.009 3.5 8

2.88

0.018 4.45

3.58

0.0 23 5.32

4.28

0.02 7

* Values for CO 2 are in metric tons ; values for NO X and Hg are in short tons

.15

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Use Change And Forestry , 2000.

< http://www.grida.no/publications/other/ipcc_sr/?src=/Climate/ipcc/land_use/index.htm >

12. Intergovernmental Panel On Climate Change, IPCC Fourth Assessment Report CLimate Change 2007: Working Group III Report "Mitigation of Climate Change" , 2007.

< http://www.ipcc.ch/pdf/assessment

- report/ar4/wg3/ar4

- wg3

- ts.pdf >15

- 23 13. Energy Informati on Administration, Updated Annual Energy Outlook 2009 Reference Case Service Report , 2009. Washington, DC. Report No. DOE/EIA

- 0383(2009).

< http://www.eia.doe.gov/oiaf/aeo/ >

14. Environmental Protection Agency

, Human

- Related Sources and Sinks of Carbon
Dioxide, 2009. < http://www.epa.gov/climatechange/emissions/co2_human.html >

15. U.S. Environmental Protection Agency, Emission Inventory Im provement Program, Technical Report Series Volume 3, Area Sources,

< http://www.epa.gov/ttn/chief/eiip/techreport/volume03/ >

16. American Gas Association, Source Energy and Emission Fact ors for Residential Energy Consumption, August, 2000. Washington, DC.

< http://www.aga.org/NR/rdonlyres/F17F15FC

- FC7D

- 4469

- B8E2

- 14F26FFAC440/0/0008ENERGYEMISSIONFACTORSRESCONSUMPTION.pdf >

17. Herzog, H. a. K. S., IPCC Special Report on Carbon dioxide Capture and Storage. Chapter 8: Cost and economic potential , 2005. Intergovernmental Panel on Climate Change. Cambridge.

18. DeLuchi, M. A., Emissions of Greenhouse Gases from the Use of Transportation Fuels and Electricity, Volume 2: Appendixes A

- S, November, 1993. Argonne National Laboratory. Argonne, IL. Report No. ANL/ESD/TM

- 22

- Vol.2.16

- i CHAPTER 16

. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION

................................ ................................ ................................ ... 16

- 1

16.2 NON

- REGULATORY POLICIES

................................ ................................ .......... 16

- 2

16.2.1 Methodology

................................ ................................ ................................ ............ 16

- 2

16.2.2 Assumptions Regarding Non

- Regulatory Policies

................................ .................. 16

- 3

16.2.3 Policy Interactions

................................ ................................ ................................ ... 16

- 5

16 .3 NON

- REGULATORY POLICIES

................................ ................................ .......... 16

- 5

16.3.1 No New Regulatory Action

................................ ................................ ..................... 16

- 6

16.3.2 Consumer Rebates

................................ ................................ ................................ ... 16

- 6

16.3.2.1 Standard

- Size Refrigerator

- Freezers

................................ ...................... 16

- 7

16.3.2.2 Stan dard

- Size Freezers

................................ ................................ ......... 16

- 11

16.3.2.3 Compact Refrigeration Products

................................ .......................... 16

- 13

16.3.2.4 Built

- In Refrigeration Products

................................ ............................ 16

- 15

16.3.3 Consumer Tax Credits

................................ ................................ ........................... 16

- 17

16.3.4 Manufacturer Tax Credits

................................ ................................ ...................... 16

- 20

16.3.5 Voluntary Energy Efficiency Targets

................................ ................................ .... 16

- 22

16.3.5.1 Standard

- Size Refrigerator

- Freezers

................................ .................... 16

- 23

16.3.5.2 Standard

- Size Freezers

................................ ................................ ......... 16

- 24

16.3.5.3 Compact Refrigeration Products

................................ .......................... 16

- 24

16.3.5.4 Built

- in Refrigeration Products

................................ ............................ 16

- 24

16.3.6 Early Replacement

................................ ................................ ................................ . 16

- 25

16.3.7 Bulk Government Purchases

................................ ................................ .................. 16

- 29

16.3.7.1 Standard

- Size Refrigerator

- Freezers

................................ .................... 16

- 30

16.3.7.2 Standard

- Size Freezers

................................ ................................ ......... 16

- 31

16.3.7.3 Compact Refrigeration Products

................................ .......................... 16

- 31

16.3.7.4 Built

- in Refrigeration Products

................................ ............................ 16

- 32

16.4 IMPACTS OF NON

- REGULATORY ALTERNATI VES

................................ ... 16

- 32

16.5 SUMMARY OF RESULTS F OR NON

- REGULATORY ALTERNATI VES

.... 16

- 36

16.6 SUPER

- EFFICIENT VOLUNTARY TARGETS

................................ ................. 16

- 39

LIST OF TABLES

Table 16.1.1 Non

- Regulatory Alternatives to National Standards

................................ ... 16

- 1

Table 16.2.1 Efficiency Levels in Proposed Standard Levels for S tandard

- Size Refrigerator

- Freezers

................................ ................................ ................... 16

- 4

Table 16.2.2 Efficiency Levels in Proposed Standard Levels for Standard

- Size

Freezers

................................ ................................ ................................ ........ 16

- 4

Table 16.2.3 Efficiency Levels in Proposed Standard Levels for Compact Refrigeration Products

................................ ................................ ................. 16

- 4

Table 16.2.4 Efficiency Levels in Proposed Standard Levels for Built

- In Refrigeration Products

................................ ................................ ................. 16

- 516

- ii Table 16.3.1 Benefit/Cost Ratios Without and With Rebates for Standard

- Size Refrigerator

- Freezers (2009$)

................................ ................................ ..... 16

- 8

Table 16.3.2 Market Penetrations in 2014 Without and With Rebates for Standard

Size Refrigerator

- Freezers

................................ ................................ ......... 16

- 11

Table 16.3.3 Benefit/Cost Ratios Without and With Rebates for Standard

- Size

Freezers

................................ ................................ ................................ ...... 16

- 12

Table 16.3.4 Market Penetration in 2014 Without and With Rebates for Standard

Size Freezers

................................ ................................ .............................. 16

- 13

Tabl e 16.3.5 Benefit/Cost Ratios Without and With Rebates for Compact Refrigeration Products (PC 11)

................................ ................................ .. 16

- 14

Table 16.3.6 Market Penetrat ion in 2014 Without and With Rebates for Compact Refrigeration Products

................................ ................................ ............... 16

- 15

Table 16.3.7 Benefit/Cost Ratios Without and With Reba tes for Built

- in Refrigeration Products (2009$)

................................ ................................ .. 16

- 16

Table 16.3.8 Market Penetrations in 2014 Without and With Rebates for Built

- in Refrigeration Products

................................ ................................ ............... 16

- 17

Table 16.3.9 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Standard

- Size Refrigerator

- Freezers

................................ .......................... 16

- 19

Table 16.3.10 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Standard

- Size Freezers

................................ ................................ ............... 16

- 19

Table 16.3.11 Market Penetrations in 2014 Attributable to Consumer Tax Credits for Compact Refrigeration Products

................................ ................................ 16

- 19

Table 16.3.12 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Built

- in Refrigeration Products

................................ ................................ .. 16

- 20

Table 16.3.13 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Standard

- Size Refrigerator

- Freezers

................................ .................... 16

- 21

Table 16.3.14 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Standard

- Size Freezers

................................ ................................ ......... 16

- 21

Table 16.3.15 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits for Compact Refrigeration Products

................................ .......................... 16

- 22

Table 16.3.16 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Built

- in Refrigeration Products

................................ ............................ 16

- 22

Table 16.5.1 Impacts of Non

- Regulatory Alternatives for Standard

- Size Refrigerator

- Freezers that Meet the Proposed Standard (TSL 3)

.............. 16

- 37

Table 16.5.2 Impacts of Non

- Regulatory Alternatives for Standard

- Size Freezers that Meet the Proposed Standard (TSL 2)

................................ .................. 16

- 37

Table 16.5.3 Impacts of Non

- Regulatory Alternatives for Compact Refrigeration Products that Meet the Proposed standard (TSL 2)

................................ ... 16

- 38

Table 16.5.4 Impacts of Non

- Regulatory Alternatives for Built

- in Refrigeration Products that Meet the Proposed standard (TSL 3)

................................ ... 16

- 38

Table 16.5.5 Summary of Impacts of Non

- Regulatory Alternatives for All Refrigeration Products that Meet the Proposed Standards

........................ 16

- 39

Table 16.6.1 Super

- efficient Voluntary Targets Program Parameters for Standard

Size Refrigerator

- Freezers

................................ ................................ ......... 16

- 4016

- iii Table 16.6.2 Super

- efficient Voluntary Targets Program Incremental Manufacturer Selling Price for Standard

- Size Refrigerator

- Freezers

.............................. 16

- 41

Table 16.6.3 Super

- efficient Voluntary Targets Program: Additional Savings Relative to Proposed Standards for Standard

- Size Refrigerator

Freezers

................................ ................................ ................................ ...... 16

- 41

LIST OF FIGURES

Figure 16.3.1 Market Penetration Curve for Top

- Mount Refrigerator

- Freezers

............... 16

- 9 Figure 16.3.2 Market Penetration Curve for Bottom

- Mount Refrigerator

- Freezers

........ 16

- 10 Figure 16.3.3 Market Penetration Curve for Side

- by

- Side Refrigerator

- Freezers

........... 16

- 10 Figure 16.3.4 Estimated Replacement Shipments of Standard

- Size Refrigerator

Freezers With and Without an Early Replacement Program

..................... 16

- 27 Figure 16.3.5 Estimated Replacement Shipments of Standard

- Size Freezers With and Without an Early Replacement Program

................................ ................... 16

- 28 Figure 16.3.6 Estimated Replacement Shipments of Compact Refrigerators With and Without an Early Replacement Program

................................ ................... 16

- 29 Figure 16.3.7 Estimated Replacement Shipments of Compact Freezers With and Without an Early Replacement Program

................................ ................... 16

- 29 Figure 16.4.1 Market Penetration of Standard

- Size Refrigerator

- Freezers Meeting Target Level in Policy Cases

................................ ................................ ..... 16

- 33 Figure 16.4.2 Market Penetration of Standard

- Size Freezers Meeting Target Level in Policy Cases

................................ ................................ ............................... 16

- 34 Figure 16.4.3 Market Penetration of Compact Refrigeration Products Meeting Target Level in Policy Cases

................................ ................................ ................. 16

- 35 Figure 16.4.4 Market Penetration of Built

- in Refrigeration Products Meeting Target Level in Policy Cases

................................ ................................ ................. 16

- 3616

- 1 CHAPTER 16. REGULATORY IMPACT AN ALYSIS

16.1 INTRODUCTION

The U.S. Department of Energy (DOE) has determined that energy conservation

standards for residential refrigerators, refrigerator

- freezers, and freezers constitute an “economically significant regulatory action” under Executive Order (E.O.) 12866

, Regulato ry Planning and Review. 58 FR 51735, Volume 58, No. 190, page 51735. (October 4, 1993). Under 10 CFR part 430, subpart C, appendix A, section III.12, DOE committed to evaluating non

regulatory alternatives to proposed standard s by performing a regulatory i mpact analysis (RIA). 61 FR 36981, Volume 61, No. 136, page 36978. (July 15, 1996)

. This RIA, which DOE has prepared pursuant to E.O. 12866 , evaluates potential non

- regulatory alternatives, comparing the

costs and benefits of each to those of the proposed standard s. 58 FR 51735, page 51741. As

noted in E.O. 12866, t his RIA is subject to review by the Office of Management and Budget’s Office of Information and Regulatory Affairs. 58 FR 51735, page 51740.

For this R egulatory Impact Analysis , DOE used an int egrated NIA

- RIA integrated model

built on the NIA model discussed in chapter 10 for its analysis. DOE studied the impacts of the

non

- regulatory policies on the 11 representative product classes analyzed for the NOPR . It then applied the assumptions of the impacts of each policy on these representative product classes to the shipments of the remaining product classes associated with each representative class . Thus, the savings reported in this chapter represent the savings for all the considered produ ct classes.

DOE identified six non

- regulatory policy alternatives that feasibly could provide

incentives for the same energy efficiency levels as the proposed standard s for the products that are the subject of this rulemaking. The non

- regulatory policy a lternatives are listed in Table

1 6 .1.1. DOE evaluated each alternative in terms of its ability to achieve significant energy savings at a reasonable cost, and compared the effectiveness of each to the effectiveness of the proposed standard

.

Table 16.1.1 Non

- Regulator y Alternatives to National Standards No New Regulatory Action

Consumer Rebates

Consumer Tax Credits

Manufacturer Tax Credits
Voluntary Energy Efficiency Targets
Early Replacement

Bulk Government Purchases

In addition to the above six non

- regulatory policy alternatives, specifically for this rulemaking DOE evaluated a super

- efficient voluntary targets (SEV T) program. Sections 16.2

and 16.3 discuss the analysis of the six policies listed above, with a description of the SEVT policy in section 16.3.8. Sections 16.4 and 16.5 present the results of the six policy alternatives

, and s ection 16.6 describes the analysis of the SEVT policy and presents the results

.16

- 2 16.2 NON

- REGULATORY POLICIES

This section d escribes the method DOE used to analyze the energy savings and cost

effectiveness of the six non

- regulatory policy alternatives (excluding the alternative of no new regulatory action) for the identified residential refrigerators, refrigerator

- freezers, and freezers

. This section also describes the assumptions underlying the analysis.

16.2.1 Methodology

DOE used its integrated national impact analysis

– regulatory impact analysis (NIA

- RIA) spreadsheet model s to calculate the national energy savings (NES) and net present value (NPV)

associated with each non

- regulatory policy alternative . Chapter 10 of the technical support document (TSD) describes the NIA spreadsheet models. Appendix 16

- A , section s 16

- A.2 and

16

- A.3, document the new NIA

- RIA integrated model approa ch.

DOE quantified the effect of each alternative on the purchase of products that meet target
levels , which are defined as the efficiency levels in the proposed standard s. After establishing the quantitative assumptions underlying each alternative, DOE appropriately revised inputs to the

NIA

- RIA spreadsheet models. The primary model inputs revised were market shares of prod ucts meeting target efficiency levels and equipment replacement rates. The shipments of products for any given year reflect a di stribution of efficiency levels. DOE assumed that the proposed

standard s would affect 100 percent of the shipments of products that did not meet target levels in the base case, a whereas the non

- regulatory policies would affect a smaller percentage of those shipments. DOE made certain assumptions about the percentage of shipments affected by each alternative policy

. DOE used those percentages to calculate the shipment

- weighted average energy consumption and costs of residential refrigerators, refrigerator

- fr eezers, and freezers attributable to each policy alternative.

Increasing the efficiency of a product often increases its average installed cost. On the other hand, operating costs generally decrease because energy consumption declines. DOE

therefore ca lculated an NPV for each non

- regulatory alternative in the same way it did for the proposed standard s. In some scenarios, increases in total installed cost are mitigated by government rebates or tax credits. Because DOE assumed that consumers would re

- pay credits and rebates in some way (such as additional taxes), DOE did not include rebates or tax credits as a consumer benefit when calculating national NPV. DOE’s analysis also excluded any

administrative costs for the non

- regulatory policies; including suc h costs would decrease the NPVs slightly.

The following are key measures for evaluating the impact of each alternative.

**•** National energy savings, given in quadrillion Btus (quads), describes the cumulative national primary energy savings for products bo ught during the period from the effective date of the policy (2104) through the end of the analysis period ( 2043 ).

a T he base case for the NIA is a market

- weighted average of units at several efficiency levels.16

- 3 **•** Net present value represents the value in 2009$ (discounted to 2010) b of net monetary savings from products bought during the period from the effective date of the policy ( 2014 ) through the end of the analysis period ( 2043 ).

**•** DOE calculated the NPV as the difference between the present value of installed equipment cost and operating expenditures in the base case and the present value of

th o se costs in each policy case. DOE calculated operating expenses (including energy

costs ) for the life of the product.

16.2.2 Assumptions Regarding Non

- Regulatory Policies

The effects of non

- regulatory policies are by nature uncertain, because they depend on program implementation and marketing efforts and on consumers’ responses to a program. Because the projected effects depend on assumptions regarding the rate of consumer participation, they are subject to more uncertainty than are the impacts of mandatory standards, which DOE assumes will meet with full compliance. To increase the robustness of the analysis, DOE conducted a literature review regarding each non

- regulatory policy and consulted with recognized experts to gath er information on similar incentive programs that have been implemented in the United States. By studying experiences with the various types of programs, DOE sought to make credible assumptions regarding potential market impacts. Section 16 .3 presents the sources DOE relied on in developing assumptions about each alternative policy and reports DOE’s conclusions as they affected the assumptions that underlie the modeling of each policy.

Each non

- regulatory policy that DOE considered would improve the average efficiency

of new residential refrigerators, refrigerator

- freezers, and freezers relative to their base case efficiency scenarios (which involve no new regulatory action). The analysi s considered that each alternative policy would induce consumers to purchase units having the same efficiency levels as required by the proposed standard s (the target levels ). As opposed to the standards case, however, the policy cases may not lead to 100 percent market penetration of units that meet target levels.

Tables 16 .2.1 through 16 .2. 4 show the efficiency levels stipulated in the proposed

standard s for the products in this rulemaking

.

b The Final Rule for refrigeration products is expected to be published in 2010.16

- 4 Table 16.2.1 Efficiency Levels in Proposed Standard Levels for Standard

- Si ze Refrigerator

- Freezers

Trial

Standard

Level Top

- Mount Refrigerator

- Freezer s Bottom

- Mount Refrigerator

- Freezer s Si de

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I, and 7

Efficiency Level (% less than baseline energy use)

3 4 (25) * 3 (20) 4 (25)

* L evel f or p roduct classes 1, 1A, and 2 is 20%.

Table 16.2.2 Efficiency Levels in Proposed Standard Levels for Standard

- Size

Freezers

Trial

Standard

Level Upright Freezers Chest Freezers

Product class 9 Product class 8 Product classes

10 and 10A

Efficiency Level (% less than baseline energy use)

2 5 (30) 4 (25) 4 (25) *

* L evel for product class 10A is 30%.

Table 16.2.3 Efficiency Levels in Proposed Standard Levels for Compact Refrigeration

Products

Trial

Standard

Level Compact Refrigerator s and Refrigerator

Freezer s Compact Freezers

Product classes 11,

11A, 12, and 13A Product classes 13, 14,and 15 Product classes 16, 17,

18

Efficiency Level (% less than baseline energy use)

2 4 (25) 2 (15)* 1 (10)

* L evel for product class 14 is 20%.16

- 5 Table 16.2.4 Effic iency Levels in Proposed Standard Levels for Built

- In Refrigerat ion

Products

Trial

Standard

Level Built

- in All

Refrigerator s Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

- Side Refrigerator

- Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI , 4I

- BI and

7

- BI Product class

9

- BI

Efficiency Level (% less than baseline energy use)

3 3 (20) 2 (15) 3 (20) 4 (25)

In addition to the above policy alternatives, DOE evaluated a policy where a new, two

tiered voluntary efficiency target s program was implemented in addition to the proposed standards. These voluntary efficiency targets would feature speculative “ super

- efficient” products at efficiency level s abov e the current max

- tech levels. The program would target consumers in the highest electricity price regions of the c ountry, to make the products maximally

cost

- effective. For the purpose of evaluating the program, only standard

- sized refrigerator

freezers were considered.

DOE assumed that the effects of non

- regulatory policies would last from the effective

date of st andards

— 2014

— through the end of the analysis period, which is 2043

.

16.2.3 Policy Interactions

DOE calculated the effects of each non

- regulatory policy separately from those of the other policies. In practice, some policies are most effective when implemented in combination, such as early replacement implemented with consumer rebates, or early repla cement implemented with bulk government purchases. However, DOE attempted to make conservative assumptions to avoid double

- counting policy impacts. The resulting policy impacts are not

additive: the combined effect of several or all policies cannot be inf erred from summing their

results.

Section 16 .3 presents graphs that show the market penetration estimated under each non

regulatory policy for residential refrigerators, refrigerator

- freezers, and freezers

.

16.3 NON

- REGULATORY POLICIES

The following subsec tions describe DOE’s analysis of the impacts of the six non

regulatory policy alternatives to proposed standard s for refrigerators, refrigerator

- freezers, and

freezers

. (Because the alternative of No New Regulatory Action has no energy or NPV impacts,

esse ntially representing the NIA base case, DOE did not perform additional analysis for that alternative.) DOE developed estimate s of the market penetration of high

- efficiency products both

with and without each of the non

- regulatory policy alternatives

.16

- 6 16.3.1 No New Regulatory Action

The case in which no new regulatory action is taken with regard to the energy efficiency

of residential refrigeration products constitutes the base case, as described in c hapter 10, National Impact Analysis. The base case provides the basis of comparison for all other policies. By definition, no new regulatory action yields zero energy savings and an NPV of zero dollars.

16.3.2 Consumer Rebates

DOE considered this scenario in which the Federal government would provide financial

incentives in the form of rebate s to consumers for purchasing energy efficient appliances

. This policy provides a consumer rebate for purchasing refrigeration products that op erate at (or above) the same efficiencies as stipulated in proposed standard s (target levels)

.

To inform its estimate of the market impacts of consumer rebates, DOE performed a thorough search for existing rebate programs nationwide . It gathered data on hundreds of utility or agency rebates for refrigeration products throughout the count ry . DOE also reviewed the current State Energy Efficient Appliance Rebate Program (SEEARP) funded by the American Recovery and Reinvestment Act (ARRA)

. 1

, c This program may be considered a combination of a consumer rebate and an early replacement program, with intention to induce appliance sales during the economic recession. DOE analyzed summary material from DOE on SEEARP rebates for refrigerators and freezers. 2

DOE based its evaluation methodology for consumer rebates on a comprehensive study

of California ’s potential for achieving energy efficiency . This study, performed by XENERGY,
Inc., d summarize d experience s with various utility rebate programs. 3 XENE RGY’s analytical

method utilized graphs, or penetration curves , that estimate the market penetration of a technology based on its benefit/cost (B/C) ratio. DOE consulted wi th experts and reviewed other methods of estimating the effect of consumer rebate programs on the market penetration of

efficient technologies. The other methods, developed after the referenced XENERGY report was published, 4, 5, 6, 7, 8 ,9 used different approaches: other economic parameters (e.g., payback period), expert surveys, or calibration of a model with specific program data rather than using generic penetration curves. Some models in use by energy efficiency program evaluation experts were so

client

- specific that generic relationships between economic parameters and consumer res ponse
could not be established. 4 DOE decided that the most appropriate available method for this RIA analysis was the XENER GY approach of penetration curves based on B/C ratio, which incorporates lifetime operating cost savings

.

c DOE provided funding for State

- run rebate programs for consumer purchases of new ENERGY STAR ® qualified home appliances. The resulting SEEARP was implemented beginning in late 2009 by the 50 States and six U.S. territories, each selecting its own appliances, rebate levels, efficiency levels, appliance recycling requirements, and eligible populations.

d XENER GY is now owned by KEMA, Inc. ( www.kema.com )16

- 7 XENERGY’s model estimates market impacts induced by financial incentives based on the premise that two types of information diffusion drive the ado ption of new technologies.

Internal sources of information encourage consumers to purchase new products primarily through word

- of

- mouth from early adopters. External sources affect consumer purchase decisions through marketing efforts and information from outside the consumer group. Appendix

16

- A, section 16

- A.3 , contains additional details on internal and external information diffusion.

XENERGY’s model equation accounts for the influences of both internal and external sources of information by superimposing the two components. Combining the two mechanisms for information diffusion, XENERGY’s model generates a set of penetration (or implementation)

curves for a me asure. XENERGY then calibrated the curves based on participation data from utility rebate programs. The curves illustrate the increased penetration (i.e., increased market share) of efficient products driven by consumer response to changes in B/C ratio ind uced by rebate programs. The penetration curves depict various diffusion patterns based on perceived barriers (from no barriers to extremely high barriers ) to consumer purchase of high

- efficiency products.

DOE adjusted the XENERGY penetration curves base d on expert advice founded on more recent utility program experience. 7, 10 DOE also devised an interpo lation method to create penetration curves based on relationships between the actual base case market penetrations and

actual B/C ratios for each represent ative product class. Appendix 16

- A, section s 16

- A.3 .2 and

16

- A.3.3, contain discussion on DOE’s methodology for adjusting and interpolating the curves.

DOE modeled the effects of a consumer rebate policy for refrigerators, refrigerator

freezers, and free zers by determining the increase in market penetration of products meeting the target level relative to their market penetration in the base case. It did this using the interpolated penetration curve s created for each representative product class based on the XENERGY methodology to best reflect the market barrier levels faced by each product class. The next section (on standard

- size refrigerator

- freezers) shows examples of these interpolated curves. Appendix 16

- A, section 16

- A.3 .4

, displays the curves developed for the remaining product

groups. e

16.3.2.1 Standard

- Size Refrigerator

- Freezers

For standard

- size refrigerator

- freezer s , DOE estimated the effect of increasing the B/ C

ratio via a rebate that would pay part or all of the incr eased installed cost of a un it that met the target efficiency level compared to one meeting the baseline efficiency l evel

. f

e The four product groups are Standard

- Size Refrigerator

- Freezers, Standard

- Size Freezers, Compact Refrigeration Products, and Built

- in Refrigeration Products. DOE based the

rebate amount s on a large sample of utility and agency rebate programs for refrigerator

- freezer s.

f The baseline te chnology for each product class is defined in the e ngineering a nalysis , chapter 5 , as the technology that represents the basic characteristics of products in that class

. A baseline unit typically is one that just meets current Federal energy conservation standards and provides basic consumer utility

.16

- 8 For standard

- size refrigerator

- freezer s, DOE gathered data on 129 rebate programs initiated by 1 15 utilities or agencies in State s throughout the country. ( Appendix 16

- A , section

16

- A.5 .1, identifies the rebate programs .) To repr esent the rebate level for standard

- size refrigerator

- freezer s, DOE used t he simple average of the rebate amounts in these 12 9 programs

. DOE assumed that t his average would apply to models at all efficiency levels at or above the target level for each representative product class . For each of these efficiency levels, the r ebate

amount represented a certain percent of the increase in total installed cost

.

Since nearly all the utility /agency re bate programs had an efficiency requirement at the ENERGY STAR level, while the proposed standard levels for standard

- size refrigerators were set at a higher efficiency level, D OE sought data on rebates requiring levels higher than

ENERGY STAR to determine whether to adjust this average rebate level amount

. The sample size of utility/agency rebates above the ENERGY STAR level was very small . From the set of

SEEARP rebates for State s whose programs included refrigerators, DOE compared th e average rebate amounts for units meeting ENERGY STAR levels to the average rebate amounts for units meeting CEE Tier 2 and C EE Tier 3 levels

. It found that the nationa l average rebate amounts for

ENERGY STAR refrigerators were actually higher than those for rebates at either of the CEE levels (both of which comprised a much smaller sample than the set of SEEARP rebates for the ENERGY STAR level)

. Based on this anomalous result, DOE did not perform an adjustment to the utility/agency rebate amount reported above , but rather assumed that the average rebate

amount would not vary significantly by efficiency level

.

DOE assumed th at rebates would remain in effect at the same levels throughout the forecast period ( 2014

– 2043 ).

For standard

- size refrigerator

- freezers

, DOE first calculated B/C ratios without a rebate using the difference in total installed costs and lifetime operating cost savings between the unit meeting the target level and the baseline unit. It then calculated B/C ratio s given a rebate for the unit meeting the target efficiency level

. Because the rebate reduced the incremental cost, the u nit receiving the rebate had a l arger B/C ratio. Table 16 .3.1 shows the effects of consumer rebates

on B /C ratios for standard

- size refrigerator

- freezers

. Each B/C ratio value for units with rebates

represen ts a weighted average g of the values for the effi ciency levels at or above the target level

to which the rebate would apply

.

Table 16.3.1 Benefit/Cost Ratios Without and W ith Rebates for Standard

- Size Refrigerator

- Freezers ( 2009$ )

Top

- Mount Refrigerator

Freezers Bottom

- Mount Refrigerator

Freezers Side

- by

- Side Refrigerator

Freezers

B/C Ratio W ith out Rebate 3.7 9.3 10.2

Rebate Amount $52 $52 $52

g The weighting factor is the 2014 base case market share of each of the corresponding efficiency levels.16

- 9 B/C Ratio W ith Rebate 8.6 Inf

. Inf

.

Calculated Market Barrier C urve Moderate

– High No

- Low Moderate

- High
Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used the B/C ratios along with the penetration curve s shown in Figures 16 .3.1 through 16 .3. 3 to estimate the percentage of consumers who would purchase standard

- size refrigera tor

- freezers that meet the target levels bo th with and without a rebate incentive.

Figure 16.3.1 Market Penetration Curve for Top

- Mount Refrigerator

Freezer s16

- 10 Figure 16.3.2 Market Penetration Curve for Bottom

- Mount Refrigerator

Freezer s

Figure 16.3.3 Market Penetration Curve for Si de

- by

- Side Refrigerator

Freezers16

- 11 The curve calculated b y DOE to represent the market behavior for top

- m ount refrigerator

- freezers was in between t he moderate barriers and high barriers penetration curve s

. F or bottom

- mount refrigerator

- freezers the curve was close to the low barriers penetration curve.

F or side

- by

- side refrigerator

- freezers the curve was between the moderate and high barriers penetration curve s

.

For each product class, DOE next estimated the percent increase represented by the change in penetration rate shown on the penetration curve. It then added that percent increase to

t he market share of units that meet the target level in the base case to obtain the market share of units that meet the target level in the rebate case. Table 16 .3.2 summarizes the market shares of

standard

- size refrigerator

- freezers in 2014

.

Table 16.3.2 Market Penetrations in 2014 W ith out and W ith Rebates for Standard

Size Refrigerator

- Freezers
Top

- Mount Refrigerator

Freezers Bottom

- Mount Refrigerator

-

Freezers % % Side

- by

- Side Refrigerator

Freezers

Base

- Case Market Share of Units that Meet Target Levels %

0 68 0

Market Share of Unit s that Meet Target

Levels With Rebate s 18 82 28

Increased Market Share of Un its that Meet Target Level With Rebate s 18 14 28

See Appendix 16

- A, Table 16

- A.4 .1 , for the annual increases in market shares for

standard

- size refrigerator

- freezers meeting target efficiency levels under a rebate policy. DOE

used the se increase s in market shares as inputs t o represent the policy case scenarios in its NIA

RIA model. Section 16 .4 presents the resulting efficiency trends for the policy case of consumer

rebates for refrigerator

- freezers

.

16.3.2.2 Standard

- Size Freezers

For standard

- size freezers , DOE estimated the effect of increasing the B/ C ratio via a

rebate that would pay pa rt or all of the increased installed cost of a unit that met the target efficiency level compared to the cost of a unit meeting the baseline level . DOE based the rebate

amount s on a large sample of utility and agency rebate programs for standard

- size freez ers

.

DOE gathered data on 62 rebate programs provided by 59 utilities or agencies in various

States . (Appendix 16

- A, section 16

- A .5 .2 , identifies the rebate programs.) To repre sent the

rebate level for standard

- size freezers, DOE used t he simple average of the rebate amounts in

these 62 programs. DOE assumed that t his average amount would apply to models at all efficiency levels at or above the target level for each representative product class . For each of these efficiency levels, the rebate amou nt represented a certain percent of the increase in total

installed cost

. Since all of the utility/agency rebates were for freezers at the ENERGY STAR level, while the proposed standard levels for standard

- size freezers were set at a higher efficiency

leve l, DOE again sought data on rebates requiring levels higher than ENERGY STAR to16

- 12 determine w hether to adjust this average rebate level amount. However, all o f the SEEARP

freezer rebates were also for the ENE RGY STAR efficiency level . Hence DOE did not have any data with which to adjust the rebate amount , but rather assumed th at the average rebate amount

would not vary significantly by efficiency level

.

DOE assumed that rebates would remain in effect until the market had been transformed; that is, the shift in market share of efficient units seen in the first year of the rebate program would be maintained thro ughout the forecast period ( 2014

– 2043 ).

For standard

- size freezers

, DOE first calculated B/C ratio s without a rebate using the

difference in lifeti me operating costs and total installed costs between the unit meeting the target

level and the baseline unit. It then calculated B/C ratio s given a rebate for the unit meeting the

target efficiency

. Because the rebate reduced the incremental cost, the unit receiving the rebate had a larger B/C ratio. Table 16 .3.3 shows the effects of consumer rebates on B/C ratios for

standard

- size f reezers

. Each B/C ratio value for units with rebates represent s a weighted average h
of the values for the efficiency levels at or above the target level to which the rebate would apply.

Table 16.3.3 Benefit/Cost Ratios Without and W ith Rebates for Standard

- S ize

F reezers

Upright

Freezers Chest Freezers

B/C Ratio W ithout Rebate 5.4 7.6

Rebate Amount $43 $43

B/C Ratio W ith Rebate 8.9 Inf.

Calculated Market Barrier C urve Extremely High Extremely High
Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used the se B/C ratios

, along with the penetration curves shown in Appendix 16

- A,

section 1 6

- A.3.4

, to estimate the percentage of consumers who would purchase standard

- size

freezers that meet the target efficiency level both with and without a rebate incentive. The curve s calculated by DOE to represent the market behavior for upright freezers and for chest freezers

were close to the extremely high barriers penetration curve.

For each product class, DOE next estimated the percent increase represented by the change in penetration rate shown on the penetration curve. It then added that percent increase to the market share of units that meet the target level in the base case to obtain the market share of

units that meet the ta rget level in the rebate case. Table 16.3.4 summarizes market shares of

target

- level standard

- size freezers estimated for 2014.

h The weighting factor is the 2014 base case mar ket share of each of the corresponding efficiency levels.16

- 13 Table 16.3.4 Market Penetration in 2014 Without and W ith Rebates for Standard

- S ize

F reezers Upright

Freezers

% Chest

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 0 .2 0.4

Market Share of Uni ts that Meet Target Levels With Rebate s 3 .2 46.5

Increased Market Share of Un its that Meet Target Level With Rebate s 3 .0 46.1

See Appendix 16

- A, Table 16

- A.4 .1 , for the annual increases in market shares for

standard

- size freezers meeting target efficiency levels under a rebate policy. DOE used the

increased market shares att ribut able to the rebate policy as inputs to the NIA

- RIA model. Section

16 .4 presents the resulting efficiency trends for the policy case of consumer rebates for standard

size freezers

.

16.3.2.3 Compact Refrigeration Products

For compact refrigeration products , DOE estimated the effect of increasing the B/ C ratio

via a rebate that would pay part or all of the increased installed cost of a unit that met the target efficiency level compared to the cost of a unit meeting the baseline level . DOE based the rebate

amount s on a sample of utility and agency rebate programs for compact refrigeration products.

For compact refrigerators, DOE gathered data on 12 rebate programs provided by utilities or agencies in several S tates. (Appendix 16

- A, section s 16

- A. 5 .1 and 16

- A 5. 2, identify the rebate programs.) To represent the rebate level for compact refrigerators, DOE used t he simple average of the rebate amounts in these 12 programs. For compact freezers, the corresponding sample included only two rebate program s, whose simpl e average was higher than the average rebate for compact refrigerators ; in contrast

, the average rebate for standard

- size freezers was lower than

that for standard

- size refrigerator

- freezers . Rather than rely on such a small sample, DOE instead

estimated t he compact freezer rebate amount by multiplying the compact refrigerator amount ($37) by the ratio of the standard

- size freezer rebate amount to the standard

- s ize refrigerator

freezer rebate amount, resulting in an estimate of $30. DOE assumed that these rebate amounts would apply to models at all efficiency levels at or above the target level for each representative product class . For each of these efficiency levels, the rebate amount represented a certain percent

of the increase in total installed cost.

DOE assumed that rebates would remain in effect until the market had been transformed; that is, the shift in market share of efficient units seen in the first year of the rebate program would be maintained thro ughout the forecast period (2014

– 204 3 ).

For compact refrigeration products, DOE first calculated B/C ratio s without a rebate using the difference in lifetime operating costs and total installed costs between the unit meeting the target level and the baseline unit. It then calculated B/C ratio s given a rebate for the unit16

- 14 meeting the target efficiency

. Because the rebate reduced the incremental cost, the unit receiving the rebate had a larger B/C ratio. Tables 16.3.5 show s the effects of consumer rebates on B/C ratios for compact refrigera tion products

. Each B/C ratio value for units with rebates represent s a weighted average i of the values for the efficiency levels at or above the target level to which the rebate would apply.

Table 16.3.5 Benefit/Cost Ratios Without and W ith Rebates for Compact Refrigeration P roducts (PC 11)

Compact Refrigerators (PC 11) Compact Refrigerators (PC13 , PC14 ) Compact

Freezers

B/C Ratio Without Rebate 10.5 12

. 6 13.0

Rebate Amount $3 8 $3 8 $31

B/C Ratio With Rebate Inf. Inf. Inf.

Calculated Market Barrier Curve Extremely High Extremely High Extremely High
Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used the se B/C ratios, along with the penetration curves shown in Appendix 16

- A,

section 16

- A.3.4

, to estimate the percentage of consumers who would purchase compact refrigeration products that meet the target efficiency level both with and without a rebate

incentive. The curve s calculated by DOE to represent the market behavior for compact refrigerator s and for compact freezer s were close to the extremely high barriers penetration

curve.

For each product class, DOE next estimated the percent increase represented by the change in penetration rate shown on the penetration curve. It then added that percent increase to the market share of units that meet the target level in the base case to obtain the market share of units that meet the target level in the rebate case. Table 16.3.7 summarizes market shares of

target

- level compact refrigeration pr oducts estimated for 2014.

i The weighting factor is the 2014 base case market share of each of the corresponding efficiency levels.16

- 15 Table 16.3.6 Market Penetration in 2014 Without and With Rebates for Compact Refrigeration P roducts
Compact Refrigerators (PC11) % Compact Refrigerators (PC13 , PC14 )

% Compact

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 1 0 4.6 Market Share of Units that Meet Target

Levels With Rebate s 44 41 4 5.2

Increased Market Share of Units that Meet Target Level With Rebate s 43 41 4 0.6

See Appendix 16

- A, Table 16

- A.4 .1 , for the annual increases in market shares for compact refrigeration products meeting target efficiency levels under a rebate policy. DOE used the increased market shares attributable to the rebate policy as inputs to the NIA

- RIA model.

Section 16 .4 presents the resulting efficiency trends for the policy case of consumer rebates for

standard

- size freezers

.

16.3.2.4 Built

- In Refrigeration Products

For built

- in refrigeration products , DOE estimated the effect of increasing the B/ C ratio

via a rebate that would pay part or all of the incr eased installed cost of a unit meeting the target efficiency level compared to one meeting the baseline level

. DOE based the rebate amount s on the same sample of utility and agency rebate programs as it used for standard

- size refrigerator

freezers , shown in Appendix 16

- A, section 16

- A.5.1

. Since this sample did not indicate separate

rebates for built

- in products, DOE assumed that the rebate amount would be the same as that

calculated for stand ard

- si ze refrigerator freezers

. DOE assumed that this rebate amount would apply to models at all efficiency levels at or above the target level for each representative product class. For each of these efficiency levels , the rebate amount represented a certain pe rcent of the

increase in total installed cost

.

DOE assumed th at rebates would remain in effect at the same levels throughout the forecast period ( 2014

– 204 3 ).

For built

- in refrigeration products, DOE first calculated B/C ratios without a rebate using the difference in total installed costs and lifetime operating cost savings between the unit meeting the target level and the baseline unit. It then calculated B/C ratio s given a rebate for the unit meeting the target efficiency level

. Beca use the rebate reduced the incremental cost, the unit receiving the rebate had a l arger B/C ratio. Table 16 .3. 8 shows the effects of consumer rebates

on B/C ratios for built

- in refrigeration products that meet target efficiency levels

. Each B/C ratio

value for units with rebates represent s a weighted average j of the values for the efficiency levels at or above the target level to which the rebate would apply.

j The weighting factor is the 2014 base case market share of each of the corresponding efficiency levels.16

- 16 Table 16.3.7 Benefit/Cost Ratios Without and W ith Rebates for Built

- in Refrigeration

P roducts ( 2009$)

Built

- in All Refrigerators Built

- in

Bottom

Mount Refrigerator

Freezers Built

- in Side

by

- Side Refrigerator

Freezers Built

- in Upright

Freezers

B/C Ratio with out Rebate 2.2 1.9 1.4 1.5

Rebate Amount $52 $52 $52 $43

B/C Ratio with Rebate 3.2 2.8 1.6 1.7

Calculated Market Barrier C urve Low

Moderate No No

- Low High

- Ext. High
Inf. = infinite B/C ratio, which occurs when the rebate pays the full incremental cost.

DOE used the se B/C ratios, along with the penetration curves shown in Appendix 16

- A,

sectio n 16

- A.3.4

, to estimate the percentage of consumers who would purchase built

- in refrigeration products that meet the target efficiency level both with and without a rebate

incentive. The curve calculated by DOE to represent the market behavior for built

- in top

- m ount refrigerator

- freezers was close to t he moderate barriers penetration curve. For built

- in bottom

mount refrigerator

- freezers and for built

- in sid e

- by

- side refrigerator

- freezers the curve was close

to the no barriers penetration curve. For built

- in side

- by

- side refrigerator

- freezers the curve was

between the no and low barriers penetration curves. F or built

- in up right freezers the curve was between the high barriers and extremely high barriers penetration curve.

For each product class

, using the penetration curves, DOE estimated that a rebate policy would result in a certain percent market share of products that meet the target efficiency level.

DOE estimated the percent market share increase represented by the change in penetration rate shown on the penetration curve. It then added that percent increase to the market share of units

that meet the target level in the base case to obtain the market share of units that meet the target

lev el in the rebate case.

Table 16.3. 9 summarizes market shares of target

- level built

- in refrigeration products

estimated for 2014.16

- 17 Table 16.3.8 Market Penetrations in 2014 W ith out and With Rebates for Built

- in Refrigeration P roducts

Built

- in All Refrigerators Built

- in

Bottom

Mount Refrigerator

- Freezers Built

- in

Side

- by

- Side Refrigerator

- Freezers Built

- in Upright

Freezers

Base

- Case Market Share of Units that Meet Target Levels 8 87 37 0.4 0

Market Share of Unit s that Meet Target Levels With

Rebate s 15 96 40 0.5 5

Increased Market Share of

Un its that Meet Target Level

With Rebate s 7 9 4 0.1 5

See Appendix 16

- A, Table 16

- A.4 .1 , for the annual increases in market shares for built

- in refrigeration products meeting target efficiency levels under a rebate policy. DOE used the se increase s in market shares as inputs t o represent the policy case scenarios in its NIA

- RIA model.

Section 16 .4 presents the resulting efficiency trends for the policy case of consumer rebates for

built

- in refrigerator

- freezers

.

16.3.3 Consumer Tax Credits

DOE estimated the effects of tax credits on consumer purchases based on its previous analysis of consumer participation in tax credits. DOE supported its approach using data from Oregon State’s tax cred it program for energy efficient appliances. DOE also incorporated previous research that disaggregated the effe ct of rebates and tax credits into a direct price effect

, which deriv es from the savings in purchase price

, and an announcement effect , which is independent of the amount of the incentive

. 11 , 1 2 The announcement effect derives from the credibility that a technology receives from being included in an incentive program, as well as changes in product marketing and modifications in markup and pricing. DOE assumed that the

rebate and consumer tax c redit policies would encompass both dire ct price effect s and

announcement effect s, and that half the increase in market penetration associated with either policy would be due to the direct price effect and ha lf to the announcement effect.

In estimat ing th e effects of a tax credit on purchases of consumer products that meet new efficiency standards, DOE assumed the amount of the tax credit s for each product class would be

the same as the corresponding rebate amounts discussed above

.

DOE estimated that few er consumers would participate in a tax credit program than would take advantage of a rebate. Research has shown that the delay required for a consumer to receive a tax credit, plus the added time and cost in preparing the tax return, make a tax credit

inc entive less effective than a rebate received at the time of purchase. Based on previous analyses, DOE assumed that only 60 percent of the consumers who would take advantage of a rebate would take advantage of a tax credit. 1 316

- 18 In preparing its assumptions , DOE also reviewed other tax credit programs that have been

offered at both the Fede ral and State levels for energy efficient appliances.

The Energy Policy Act of 2005 (EPACT 2005 ) included Federal tax credits for

consumers who purchase energy efficient equipment, including water heaters, furnaces, and

furnace fans for new or existing homes. 1 4 Those tax credits were in effect in 2006 and 2007, expired in 2008, and were r einstated for 2009

– 2010 by ARRA. 1 , 15 DOE reviewed Internal

Revenue Service data on the numbers of taxpayers who claimed the tax credits during tax years

2006 and 2007. DOE also reviewed data from an earlier Federal energy conservation tax credit program in place in the 1980s. However, DOE did not find data specific enough to refrigerators to warrant adjusting its analysis method f or the Consumer Tax Credits policy case. Appendix 16

- A, section 16

- A.6 .1

, contains more information on Federal consumer tax credits.

DOE reviewed data on Oregon State ’s tax credit program for standard

- size refrigerators

. However, the d ata series for this product exhibited too much annual variation

, due to periodic updates in efficiency requirements and other program changes

, to show a meaningful trend

.

DOE also reviewed its previous analysis on Oregon’s tax credits for clothes washers. 1 6

DOE compared the market shares of ultra

- high efficiency (UHE) residential clothes washers in Oregon, which offered both State tax credits and utility rebates, with those in Washington State,

which offered only utility rebates during the same period. Based on this analysis, DOE estimated

that in Oregon the impact of tax credits was 62 percent of the impact of rebates for UHE clothes

washers having equivalent efficiency. This finding supports the original as sumption that participation in a tax credit program would be about 60 percent of participation in a rebate

program. Additional discussion of State tax credits for Oregon and other states is in Appendix

16

- A, section 16

- A.6 .3

.

In summary, DOE identified n o data on Federal or State consumer tax credits for refrigeration products to directly use in estimating the impacts of consumer tax credits for those products. As mentioned above, howeve r, DOE used its analysis of Oregon data for residential

clothes washe rs as support for its assumption that tax credits induce the participation of about 60

pe rcent as many consumers as rebates inspire . DOE used that percentage in its analysis of

consumer tax credits for all refrigeration products.

DOE applied the assumed 60 percent participation described above to the penetration rates estimated for the rebate policy to estimate penetration rates attributable to consumer tax credits. In doing so, DOE incorporated the assumptions for consumer respons e to financial incentives from the penetration curves selected for each product class.

Table s 16 .3. 10 through 16.3.13 summarize DOE’s assumptions for each refrigeration product group r egarding the market penetration of units in 2014 tha t meet target eff iciency levels given a consumer tax credit.16

- 19 Table 16.3.9 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Standard

- Size Refrigerator

- Freezers

Top

- Mount Refrigerator

Freezers Bottom

Mount Refrigerator

Freezers % % Side

- by

- Side Refrigerator

Freezers

Base

- Case Market Share of Units that Meet Target Levels %

0 68 0 Market Share of Units that Meet Target

Levels With Consumer Tax Credits 11 76 17

Increased Market Share of Units that Meet Target Level With Consumer Tax Credits 11 8 17

Table 16.3.10 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Standard

- Size Freezers

Upright

Freezers

% Chest

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 0 .2 0 .4 Market Share of Units that Meet Target

Levels With Consumer Tax Credits 2 .0 28 .1

Increased Market Share of Units that Meet Target Level With Consumer Tax Credits 1.8 2 7.7

Table 16.3.11 Market Penetrations in 2014 Attributable to Consumer Tax Credits for Compact Refrigeration Products
Compact Refrigerators (PC11) % Compact Refrigerators (PC13 , PC14 )

% Compact

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 1 0 5 Market Share of Units that Meet Target

Levels With Consumer Tax Credits 27 25 29

Increased Market Share of Units that Meet Target Level With Consumer Tax Credits 26 25 2416

- 20 Table 16.3.12 Market Penetrations in 2014 Attributable to Consumer Tax Credits for

Built

- in Refrigeration Products

Built

- in All Refrigerators Built

- in

Bottom

Mount Refrigerator

- Freezers Built

- in

Side

- by

- Side Refrigerator

- Freezers Built

- in Upright

Freezers

Base

- Case Market Share of Units that Meet Target Levels 8 87 37 0.4 0

Market Share of Unit s that Meet Target Levels With

Consumer Tax Credits 12 92 39 0. 49

Increased Market Share of

Un its that Meet Target Level

With Consumer Tax Credits 4 5 2 0. 09

DOE assumed that this policy would transform the market permanently, so that the

increase in market share seen in the first year of the program for refrigeration products would be maintained throughout the forecast period. See Appendix 16

- A, Table 16

- A.4 .1 , for the annual

increases in market shares for refrigeration products that meet target efficiency levels.

The increased market shares attributable to consumer tax credit s shown in Table s 16 .3.10 through 16.3.13 and 16

- A. 4 .1 were used as inputs to the NIA

- RIA model. Section 16

. 4 presents the resulting efficiency trends for the policy case of consumer tax credits for refrige ration products that meet target efficiency levels

.

16.3.4 Manufacturer Tax Credits

To analyze the potential effects of a policy that offers tax credits to manufacturers that produce refrigeration products that meet target ef ficiency levels, DOE assumed that a manufacturer tax credit would lower the consumer’s purchase cost by an amount equivalent to that provided by the consumer rebates or tax credits described above. DOE further assumed that

manufacturers would pass on some of their reduced costs to consumers, causing a direct price effect. DOE assumed that no announcement effect would occur, because the program would not

be visible to consumers. k Because the direct price effect is approximately equiva lent to the

announcement effect. 1 1 DOE estimated that a manufacturer tax credit would induce half the number of consumers assumed to take advantage of a consumer tax credit to purchase more efficient products. This assumed participation rate is equal to 30 percent of the number o f consumers who would participate in a rebate program.

k Note that this is a conservative assumption, since it is possible that manufacturers or utility/agency efficiency programs might promote the models for which manufacturers increase production due to the tax credits, which in turn might induce some announcement effect. However, DOE found no data on such programs on which to base an estimate of the magnitude of this possible announcement effect on consu mer behavior.16

- 21 DOE attempted to in vestigate manufacturer response to the Energy Efficient Appliance Credits for manufacturers mandated by EPACT 2005. 1 7 Those manufacturer tax credits were in effect for models produced in 2006 and 2007 a nd reinstated for 2009 and 2010 . DOE was unable to locate data from the Internal Revenue Service or other sources on manufacturer response to the Federal credits. Appendix 16

- A, section 16

- A.6 .2, presents det ails on Federal manufacturer

tax credits.

DOE applied the assumption of 30 percent participation to the penetration rates predicted for the rebate policy to estimate the effects of a manufacturer tax credit policy. In doing so, the Department incorporated the assumptions for consumer response to financial incentives from the penetration curves selected for each product class.

Table s 16 .3.14 through 16.3.17 summarize DOE’s assumptions for each refrigeration product group regarding the market penetration o f units in 2014 meeting target efficiency levels given a manufacturer tax credit.

Table 16.3.13 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Standard

- Size Refrigerator

- Freezers

Top

- Mount Refrigerator

Freezers Bottom

Mount Refrigerator

Freezers % % Side

- by

- Side Refrigerator

Freezers

Base

- Case Market Share of Units that Meet Target Levels %

0 68 0 Market Share of Units that Meet Target

Levels With Manufacturer Tax Credits 5 72 8

Increased Market Share of Units that Meet Target Level With Manufacturer Tax Credits 5 4 8

Table 16.3.14 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Standard

- Size Freezers

Upright

Freezers

% Chest

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 0 .2 0.4 Market Share of Units that Meet Target

Levels With Manufacturer Tax Credits 1 .1 14.2

Increased Market Share of Units that Meet Target Level With Manufacturer Tax

Credits 0.9 13.816

- 22 Table 16.3.15 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Compact Refrigeration Products
Compact Refrigerators (PC11) % Compact Refrigerators (PC13 , PC14 )

% Compact

Freezers

%

Base

- Case Market Share of Units that Meet Target Levels 1 0 5
Market Share of Units that Meet Target

Levels With Manufacturer Tax Credits 14 12 17

Increased Market Share of Units that Meet Target Level With Manufacturer Tax

Credits 13 12 12

Table 16.3.16 Market Penetrations in 2014 Attributable to Manufacturer Tax Credits

for Built

- in Refrigeration Products

Built

- in All Refrigerators Built

- in

Bottom

Mount Refrigerator

- Freezers Built

- in

Side

- by

- Side Refrigerator

- Freezers Built

- in Upright

Freezers

Base

- Case Market Share of

Units that Meet Target Levels 8 87 37 0. 4 0

Market Share of Unit s that Meet Target Levels With

Manufacturer Tax Credits 10 90 38 0. 4 4

Increased Market Share of

Un its that Meet Target Level

With Manufacturer Tax

Credits 2 3 1 0 .04

DOE assumed that this policy would transform the market permanently, so that the increase in market share seen in the first year of the program for refrigeration products would be maintained throughout the forecast period. See Appendix 16

- A, Table 16

- A.4

. 1 , for the annual

increases in market shares for units that meet target efficiency levels.

The increased market shares attributable to a manufacturer tax credit, shown in Table s 16 .3.14 through 16.3.17 and 16

- A.4.1 were used as inputs to the NIA

- RIA mode l. Section 16 .4
presents the resulting efficiency trends for the policy case of manufacturer tax credits for refrigeration products.

16.3.5 Voluntary Energy Efficiency Targets

For each product, DOE assumed th at voluntary energy efficiency targets would be achieved as manufacturers gradually stopped producing units that operated below the target16

- 23 efficiency levels. DOE assumed that the impetus for phasing out production of low

- efficiency units would be a program similar to the ENERGY STAR labeling program conducted by the Environmental Protection Agency (EPA) and DOE. The ENERGY STAR program specifie s the minimum energy efficienc ies that various products, including refrigeration products , must have

to receive the ENERGY STAR label . ENERGY STAR encourages consumers to purchase efficient products via marketing that promotes consumer label recognition, various incentive programs that adopt the ENERGY STAR specifications, and manufacturers’ promotion of their qualifyi ng appliances. ENERGY STAR projects market penetration of compliant appliances and estimates the percentage of sales of compliant appliances that are attributable to the ENERGY STAR program.

Researchers have analyzed the ENERGY STAR program’s effects o n sales of several consumer products. Program efforts generally involve a combination of information dissemination and utility or agency rebates. The analyses have been based on State

- specific data

on percentages of shipments of various appliances that meet ENERGY STAR specifications. The analyses generally have concluded that the market penetration of ENERGY STAR

- qualifying appliances is higher in regions or States where ancillary promotional programs have been

a ctive. 18

, 19

, 2 0

16.3.5.1 Standard

- Size Refrigerator

- Freezers

To model the effe cts of a voluntary energy efficiency policy for standard

- size refrigerator

- freezers , DOE assumed that such a program would be an expansion of existing ENERGY STAR efforts for this product. The ENERGY STAR program dev eloped projections

for 1996

– 2025 of increased market penetration attributable to its program for standard

- size refrigerators

. 21 DOE estimated that an expanded ENERGY STAR prog ram would increase the annual market share of efficient units by 50 percent more than the increase that was attributable to the existing ENERGY STAR program for refrigerators, which began in 1996

. Using

ENERGY STAR’s forecast for 1996

– 2025

, DOE first performed a linear regression to smooth

out fluctuations due to periodic program specification updates. From this adjusted forecast, DOE

calculated the annual percent increases in market share for refrigerators represented by an additional 50 per cent market share that would result from an enhanced program

. DOE added those percent increases to the market share s of standard

- size refrigerator

- freezers that meet the target level in the RIA base case

, l starting in 2014

, to obtain the annual market share s of units meeting the target efficiency level in the voluntary efficiency targets policy case. DOE assumed

that the programs resulting from th e expanded voluntary efficiency targets policy would produce

the projected increases in market share shown i n Appendix 16

- A, Table 16

- A.4 .2

.

DOE estimated that the programs developed in support of the voluntary efficiency targets policy would increase market shares of efficient units by the percentages shown in Appendix 16

- A, Table 16

- A. 4 .2

. Section 16.4 pre sents the resulting efficiency trends for the policy case of

l The base case projections for refrigeration products incorporate assumptions on the percentage of qualifying shipments under the current ENERGY STAR program.16

- 24 voluntary energy efficiency targets for standard

- size refrigerator

- freezers that meet target efficiency levels.

16.3.5.2 Standa rd

- Size Freezers

While there is an ENERGY STAR program for standard

- size freezers that began in 2003

, DOE was unable to obtain a projection of the program impacts for this product . DOE instead based its estimates of market penetration for standard

- size freezers on the ENERGY STAR projections for standard

- size ref rigerators of market penetration attributable to its program for

2003

– 2025

. 2 1 DOE estimated that the percentage of market shares attributable to the existing

ENERGY STAR program for standard

- size freezers would be half of the percentages attributable

to st andard

- size refrigerator

- freezers , based on the relative size of the market shares for these two products in its shipments analysis for the national impact analysis. DOE then estimated that an expanded ENERGY STAR program for standard

- size freezers would increase the annual market share of efficient units by 50 percent more than the incr ease attributable to the existing ENERGY STAR program , starting in 2003, in the projection that was calculated as described above

. It assumed that an enhanced program would pro duce the same pattern s of annual increases in

ma rket penetration beginning in 2014 ; from 2037

– 2043 the market penetration is extrapolated

as equivalent to the penetration in 2036. From this forecast DOE calculated the annual percent

increases in mark et share for units represented by the shipments attributed to ENERGY STAR

. DOE added those percent increases to the market share s of standard

- size freezers that me t the target level s in the RIA base case , starting in 2014

, to obtain the annual market share s of units meeting the target efficiency level in the voluntary efficiency targets case. Appendix 16

- A, Table

16

- A

. 4 .2

, shows the annual projected increases in market shares of standard

- size freezers that would result from a voluntary energy efficiency pol icy. Section 16 .4 presents the resulting efficiency trends for the policy case of voluntary energy efficiency targets for standard

- size

freezers

.

16.3.5.3 Compact Refrigeration Products

DOE did not analyze the potential effects of voluntary energy efficiency targets for compact refrigeration products because it was unable to obtain an ENERGY STAR forecast for

th ese product s

.

16.3.5.4 Built

- in Refrigeration Products

DOE did not analyze the potential effects of voluntary energy efficiency targets on built

in refrigeration products because it was unable to obtain an ENERGY STAR forecast for th ese product s

.16

- 25 16.3.6 Early Replacement

The non

- regulatory policy of early replacement refers to a program to replace residential appliances before the ends of their useful lives. The purpose of such a policy is to replace old, inefficient units with higher efficiency units. The economic feasibility of early replacement depends on the vintage of the unit being replaced, the installed cost of th e new unit , and the energy cost savings.

DOE examin ed several reports on field experience with early replacement programs to inform its analysis of th e policy

. The most recent set of reports evaluated residential appliance recycling programs conducted by California utilities that targeted ref rigerators and

freezers

. 2 2 ,2 3 ,2 4 These studies evaluated data from programs carried out by Southern California Edison, Pacific Gas and Electric

, and San Diego Gas and Electric in 2004

- 2008 . DOE analyzed

the number of units collected by the se program s and compared them to the eligible population of refrigerators or freezers in each utility service territory to estimate the percentage reached by

each program. For refrigerators, the percentages for the three utilities ranged from 7.1 percent to 1.3 percent, with an average of 4.2 percent. For freeze rs, the percentages for the three utilities ranged from 4.1 percent to 0.6 percent, with an average of 2.8 percent.

Another report detailed the Connect icut Retirement Program (ARP) , which was

conducted June through December 2004 by Nexus Market Research, Inc., and RLW Analytics, Inc., for Northeast Utilities

– Connecticut Light and Power and the United Illuminating Company’s State programs. 2 5 The purpose of the ARP was to help Connecticut utility customers overcome barriers to recycling room air conditioners (RACs), second ary refrigerators, and freezers. The program picked up used appliances at customers’ homes or at turn

- in events, paid participants to retire their units, and educated customers about the costs of operating older appliances. In addition, the program provide d consumers with financial incentives to replace

inefficient RACs with ENERGY STAR

- qualified units. DOE considered the RAC program to most closely resemble the early replacemen t policy scenario for the four refrigeration products considered herein, because consumers replaced primary units rather than retiring second units. Nexus/RLW used program data and surveys to estimate the number of RACs retired by ARP participants, the percentage of retired units that were replaced with an ENERGY STAR model,

and the n umber of RACs replaced by non

- participants during the program. According to the Nexus/RLW analysis, about 7 percent of all RACs retired during the program were retired through the ARP, and 63 percent of those were replaced with ENERGY STAR models. Thus the program resulted directly in about 4 percent of total eligible RAC consumers deciding on early replacement of inefficient units.

In 2006, GDS Associates, Inc performed a study of the potentials for electric energy efficiency for the State of Vermont. 26 The report estimated the potentials for reducing electricity

use and peak demand through energy efficiency and fuel conversion measures. The study took an aggressive, multi

- program approach, one aspect of which was early replacement of appliances. GDS c onsidered that under the program residential appliances, including RACs,

would be replaced during four years ( 2006

– 2009). GDS estimated a chievable market penetrations assuming that consumers would receive a financial incentive equal to 50 percent of16

- 26 the in cremental cost of each measure. GDS assumed an 80 percent penetration limit. For early replacement of RACs, GDS estimated a maximum achievable participation of 5 percent of eligible single

- family or multi

- family homes in the year before the program began ( 2005).

DOE also reviewed a n earlier study it conducted in the 1990s, under Energy Policy Act of 1992 ( EPACT 1992 ) , which analyzed the feasibility of a Federal program to promote early replacement of appliances. 27 Th e study identified policy options for early replacement that included a direct national program ; replacement of Federally

- owned appliances ; and promotion through equipment manufacturers, consumer incentives, incentives to utilities, and building regulations. m

While the SEE ARP rebate program has been an early replacement program, the program was still in process during the preparation of this TSD. T he amount of money available for

rebates for each State , apportioned between several appliances per State

, may not have been adequate to demonstrate the f ull market potential of an early replacement program targeted at one appliance

.

For this RIA analysis, DOE analyzed a program that would target installed units having efficiency levels that are lower than target level s and encourag e their early replacement with products that perform at target level s

. For each product, DOE modeled th e effects of the early replacement policy by increasing by a certain percent age per year the retirement rate of units that

were in the stock in the first year of the analysis period ( 2014 )

. For standard

- sized and compact refrigerators DOE used the 4 .2 percen t rate from the California studies

, because they were based

on the recent actual program experience, noting that this rate was bounded by the Connecticut and the Vermont analysis results. For standard

- sized and compact freezers, DOE assumed that

the accele rated replacement rate would by 2.8 percent, based on the recent California experience with freezer replacement programs.

DOE assumed that the early replacement program would continue until it had facilitated the replacement of all eligible residential refrigerators, refrigerator

- freezers, and freezers in the stock in the year the program began ( 2014 ). S hipments of new units in 2014 and beyond were not affected by th e program , but remained at base

- case efficiency levels. After the stock of

inefficient units was completely replaced, the policy would produce no additional impacts.

An early replacement policy would create a fairly i mmediate jump in shipments of products that meet target efficiency levels relative to the base case, as shown in Figures 16 .3.4 through 16 .3.7 . High

- efficiency units would be brought quic kly into the stock, leading to an immediate gain in the market share of efficient units compared to the base case. As opposed to the policy cases discussed previously, however, an early replacement policy results in market

m The analysis concluded that, although cost

- effective opportunities for early rep lacement exist, a widespread

Federal program was not justified economically. Because early retirement means that a unit may be replaced by an appliance less efficient than the eventual replacement would have been, energy savings would be less than anticipa ted. Early replacement programs also could increase long

- term sales volatility by encouraging a temporary increase in production

, followed by a lull in demand. Early replacement could be economical in localities subject to high energy costs or environmenta l constraints ; when replacement appliances are much more efficient than existing

stock ; or when a major technology breakthrough has occurred, creating the need for a ready market.16

- 27 shares of efficient units returning to base

- case percentages as the eligible market is depleted. In

ad dition, as the figures illustrate, because units removed early from the stock would have been replaced later (at the ends of their useful lives) without the program, the number of shipments in later years drops slightly below the base

- case shipments foreca st for a period of years . The shipments shown in Figures 16 .3.4 through 16 .3.7 represent units that replace existing units (replacement shipments). Section 16 .4 presents the resulting efficiency trends for the policy case of early replacement for refrigera tion products

. (Note that built

- in refrigeration products were analyzed together with standard

- size refrigerator

- freezers and standard

- size freezers for this policy, so separate shipment gr aphs are not available for built

- ins.)

Appendix 16.A, Table 16

- A. 4.2, shows the projected market shares due to the early replacement policy.

Figure 16.3.4 Estimated Replacement Shipments of Standard

- Size Refrigerator

- Freezers W ith and Without an Early Replacement Program 0.0 2.0 4.0 6.0 8.0 10.0 12.0

2010 2015 2020 2025 2030 2035 2040Millions Shipments

- Early Replacement vs Base Case

Base Case

Early Replacement16

- 28 Figure 16.3.5 Estimated Replacement Shipments of Standard

- Size Freezers

W ith and Without an Early Replacement Program 0.8 1.0 1.2 1.4 1.6 1.8 2.0

2010 2015 2020 2025 2030 2035 2040Millions Shipments

- Early Replacement vs Base Case

Base Case

Early Replacement

0.00 0.01 0.01 0.02 0.02 0.03

2010 2015 2020 2025 2030 2035 2040Millions Shipments

- Early Replacement vs Base Case

Base Case

Early Replacement16

- 29 Figure 16.3.6 Estimated Replacement Shipments of Compact Refrigerators

W ith and Without an Early Replacement Program

Figure 16.3.7 Estimated Replacement Shipments of Compact Freezers W ith

and Without an Early Replacement Program

16.3.7 Bulk Government Purchases

DOE assumed that a policy requiring bulk government purchases would lead to Federal, State, and local governments purchasing products that meet target efficiency levels. Combining

the market demands of multiple public sectors also would provide a market signal to

manufacture rs and vendors that some of their largest customers seek products that meet an efficiency target at favorable prices. Such a program also could induce “market pull,” whereby manufacturers and vendors would achieve economies of scale for high

- efficiency pro ducts.

Most of the previous bulk government purchase (procurement) initiatives at the Federal, State, and municipal levels have not tracked data on number of purchases or degree of compliance with procurement specifications. In many cases, procurement programs are decentralized, being part of larger State or regional initiatives. DOE based its assumptions regarding the effects of a policy calling for bulk government purchases on studies the Federal Energy Management Program (FEMP) performed regarding th e savings potential of its procurement specifications for appliances and other equipment. FEMP, however, does not track purchasing data, because of the range of complex the purchasing systems, number of vendors, etc. States, counties, and municipalities ha ve demonstrated increasing interest and activity in 0.20 0.25 0.30 0.35 0.40 0.45

2010 2015 2020 2025 2030 2035 2040Millions Shipments

- Early Replacement vs Base Case

Base Case

Early Replacement16

- 30 “green purchasing." Although many of the programs target office equipment, the growing infrastructure for developing and applying efficient purchasing specifications indicates that bulk government purchas e programs are feasible. 28

, 29

DOE assumed that government agencies, such a s the Department of Housing and Urban Development, would administer a bulk purchasing program for refrigeration products. The bulk purchasing policy also could be incorporated at the Federal level into the FEMP program, which has established procurement gu idelines. Federal construction requirements include the FEMP guidelines for installing or replacing equipment. The FEMP program currently has procurement guidelines in place for standard

- size and compact refrigerators and for standard

- size and compact

free zers. 3 0

DOE also reviewed its own previous research on the potential for market transformation through bulk government purchases. Its major study analyzed several scenarios based on the assumption that 20 percent of Federal equipment purchas es in the year 2000 already incorporated energy efficiency requirements based on FEMP guidelines. One scenario in the DOE report showed energy efficient Federal purchasing ram ping up during 10 years from 20 percent to 80 percent of all Federal purchases. 3 1

16.3.7.1 Standard

- Size Refrigerator

- Freezers

Based on its study described above, DOE estimated that a bulk government purchas e program instituted within a 10

- year period would result in 80 percent of government

- purchased

standard

- size refrigerator

- freezers meeting target efficiency levels.

DOE assumed that bulk government purchases would affect a subset of housing unit s for which government agencies purchase d or influence d the purchase of standard

- size refrigerator

fre ezers . This subset would consist primari ly of public housing and housing on military bases. DOE defined this subset based on publicly owned housing identified in the American Housing Survey (AHS) for 2009, which was 1.8 million households, or about 1.4 per cent of all U.S.

households

. 3 2 ( T he AHS reports 130.0 million U.S. households

. 3 7 ) According to the 2005 Residential Energy Consumption Survey ( RECS 2005), 97 .5 percent of publicly owned

househol ds had refrigerator s

. 3 4 DOE the refore estimated that 1.4 percent of U

. S

. hous ing units

represent publicly owned households using standard

- size refrigerator

- freezers

, which constitute s the populations to which this policy would apply.

Based on the above percentages, DOE estimated that

, by the end of the fir st year of the bulk government purchase policy ( 2014 ), an additional 0.1 percent of shipments of government

purchased standard

- size refrigerator

- freezers beyond t he base case would meet target efficiency levels. DOE estimated that by 2024 bulk government purchasing programs would result in 80 percent of the standard

- size refrigerator market for publicly owned housing meeting target levels. DOE modeled the bulk government purchase program assuming that the market share for each product achieved in 2024 would be maintaine d throughout the rest of the forecast period . Section

16 .4 presents the resulting efficiency trends for the policy case of bulk government purchase of16

- 31 standard

- size refrigerator

- freezers

. Appendix 16 .A, Table 16

- A. 4 .2 , s hows the projected market shares due to the bulk government purchases policy.

16.3.7.2 Standard

- Size Freezers

DOE did not analyze the potential effects of bulk government purchases of standard

- size freezers, because the market share of those products in publicly ow ned housing is small. According to RECS 2005, only 6.4 percent of publicly owned housing units use standard

- si ze freezers

.

16.3.7.3 Compact Refrigeration Products

DOE analyzed the market for compact refrigeration products and determined that compact refrigerators are sold to the residential, commercial lodging, and commercial “other” building types. DOE did not analyze the potential impacts of bulk government purchases of compact freezers, because it assumed that the penetration of this product in publicly owned buildings was very small. RECS 2005 report s that the percentage of compact freezers in use in publicly owned housing units is very low and DOE lacked data to estimate the ir percentages in publicly owned commercial buildings.

Based on its study described above, DOE estimated that a bulk government purchas e program instituted within a 10

- year period eventually would result in 80 percent of government

purchased compact refrigerators meeting target efficiency levels.

For the residential sector, DOE assum ed that bulk government purchases would affect a subset of housing units for which government agencies purcha se d or influence d the purchase of

compact refrigerators

. DOE defined this subset based on publicly owned housing identified in the American Housing Survey (AHS) for 2009, which was 1.8 million households, or about 1.4 percent of all U.S. households

. 3 2 ( T he AHS reports 130.0 million U.S. households. 3 3 ) According

to the 2005 Residential Energy Consumption Survey ( RECS 2005), 2.6 percent of publicly

owned households used compact refrigerators

. 3 4 DOE therefore estimated that 0.04 percent of

U

. S

. hous ing units represent publicly owned households using compact refrigerators

, to which this policy would apply.

For the commercial sector, DOE a ssumed that bulk government purchases would affect a subset of buildings for which government agencies purchase d or influence d the purchase of compact refrigerators

. DOE defined this subset based on publicly owned buildings identified in

the 2003 Commercia l Buildings Energy Consumption Survey

. 3 5 DOE assumed that compact refrigerators were used in lodging (including hotels, motels, and dormitories) and in “other

commercial” building types, such as offices. According to CBECS, 0.3 percent of lodging buildings’ floor space and 24 percent of other commercial buildings’ floor space was p ublicly owned. From CBECS, 39 percent of publicly owned lodging building floor space and 63 percent

of publicly owned other commercial building floor space had compact re frigerators

. DOE

therefore estimated that 0.1 percent of U

. S

. lodging floor space and 15 percent of U

. S . other16

- 32 commercial building floor space represent publicly owned building floor space using compact refrigerators

, to which this policy would apply.

DOE further calculated that of the 2014 building stock with compact refrigerators, 29 percent were in the residential sector, 18 percent in commercial lodging and 54 percent in other

commercial buildings. Using stoc k as a proxy for shipments, and the publi c building percentages

and saturations reported above, DOE estimated that 0.7 percent of shipments of compact refrigerators beyond the base case would meet target efficiency levels in the fir st year of the bulk government purchase policy (2014 ) for each pr oduct class . DOE estimated that by 2024 bulk government purchasing programs would result in 80 percent of the compact refrigerator m arket for publicly owned buildings meeting target levels. DOE modeled the bulk government purchase program assuming that the market share for each product achieved in 2024 would be maintaine d throughout the rest of the forecast period . Section 16 .4 presents the resulting efficiency trends for the policy case of bulk government purchase of compact refrigerators

. Appendix 16.A, T able 16

- A. 4 .2 , shows the projected market shares due to the b ulk government purchases policy.

16.3.7.4 Built

- in Refrigeration Products

DOE did not analyze the potential impacts of bulk government purchases of built

- in

refrigeration products , because those products are not used in publicly owned housing. RECS 2005 does not report any built

- in

- refrigeration products in use in publicly owned housing units.

16.4 IMPACT S OF NON

- REGULATORY ALTERNATI VE S

Figures 16 .4.1 through 16 .4.4 show the effects of each of the non

- regulatory policy cases on market shares of units meeting the target level for standard

- size refrigerator

- freezers,

standard

- size freezers, compact refrigeration products and built

- in refrigeration pr oducts

, respectively.

Figure 16 .4.1 shows the effects of each non

- regulatory policy on market penetration for

standard

- size refrigerator

- freezers. Note that the market share of products that meet the target

level is forecasted to increase over time in t he base case (i.e., the case with neither standards nor

non

- regulatory policies ). Relative to the base case, e very policy case increases the market share of products that meet the target level. As shown in Figure 16 .4.1, c onsumer r ebates are most
effective in increas ing the market share of standard

- size refrigerators that meet the target level

, while e arly r eplacement is least effective. Recall that the standards (not shown in Figure 16 .4.1) would result in a 100 percent market penetration of products that meet target efficiency levels.16

- 33 Figure 16.4.1 Market Penetration of Standard

- Size Refrigerator

- Freezers Meeting Target Level in Policy Cases 0% 5% 10% 15% 20% 25% 30% 35% 40%201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Base Case Rebate Cons Tax Cred

Manf Tax Cred Vol Eff Target Early Repl

Bulk Purch16

- 34 Figure 16 .4.2 shows the effects of each non

- regulatory policy on market penetration for

standard

- size freezers . The market sha re of products that meet the target level is forecasted to

increase over time in the base case . Relative to the base case, a ll policy cases increase the market

share of standard

- size freezers that meet the target level, with c onsumer r ebates being the most

effective and early replacement the least effective of the policy cases analyzed . Recall that the proposed standard s (not shown in Figure 16 .4.2) would result in a 100 percent market penetration of products that meet the target effici ency level.

Figure 16.4.2 Market Penetration of Standard

- Size Freezers Meeting Target

Level in Policy Cases 0% 5% 10% 15% 20% 25% 30%201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Base Case Rebate Cons Tax Credit

Manf Tax Credit Vol Eff Target Early Repl16

- 35 Figure 16 .4.3 shows the effects of each non

- regulatory policy on the market penetration

for compact refrigeration products . In the base case, the market share of products that meet the target level is forecasted to be constant over time. Relative to the base case, a ll policy cases

increase the market share of compact refrigeration products that meet target efficiency level s , with c onsumer r ebates being the most effective throughout the forecast period and e arly

r eplacement the least effective. Recall that the proposed standard s (not shown in Figure 16 .4.3) would result in a 100 percent market penetration of products that meet the target efficiency level.

Figure 16.4.3 Market Penetration of Compact Refrigeration Products Meeting Target Level in Policy Cases 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Base Case Rebate Cons Tax Credit

Manf Tax Credit Early Repl Bulk Purch16

- 36 Figure 16 .4.4 shows the effects of each non

- regulatory policy on the market penetration

for built

- in refrigeration products . In the base case, the market share of products that meet the target level is forecasted to be constant over time. Relative to the base case, the non

- regulatory policy cases increase the market share of build

- in refrigeration products that meet the target efficiency level. Consumer rebates are the most effective policy throughout the forecast period, and early replacement is the least effective. Recall that the proposed standard s (not shown in Figure 16 .4.4) would result in a 100 percent market penetration of products that meet the target efficiency level.

Figure 16.4.4 Market Penetration of Built

- in Refrigeration Products Meeting Target Level in Policy Cases

16.5 SUMMARY OF RESULTS F OR NON

- REGULATORY ALTERNATI VES

Tables 16 .5 .1 through 16 .5. 4 show the national energy savings and net present value (NPV) for each of the six non

- regulatory polic ies analyzed in detail for residential refrigerators, refrigerator

- freezers, and freezers

, where the target level for each policy equal s the efficiency

level in the corresponding proposed standard

. Table 16.5.5 shows the results for all refrigeration products together.

The cases in which no regulatory action is taken with regard to residential refrigerators, refrigerator

- freezers, and freezers constitute the base case s (or "No New Regulatory Action"

scenarios ) , in which energy savings and NPV zero by definition. For comparison, the tables include the impacts of the proposed standard s. Energy savings are given in quadrillion British thermal units (quads). The NPV s shown in Tables 16 .5.1 through 16 .5.5 are based on two

discount rates, 7 percent and 3 percent

. Negative NPVs are shown in parentheses. 42% 44% 46% 48% 50% 52% 54% 56%201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043

Base Case Rebate Cons Tax Cred

Manf Tax Cred Early Repl16

- 37 Table 16.5.1 Impacts of Non

- Regulatory Alternatives for Standard

- Size Refrige rator

Freezers that Meet the Proposed S tandard ( TSL 3 )

Policy Alternative Primary Energy Savings Net Present Value*

quads 7% discount

rate billion 200 9 $

3% discount

rate

Consumer Rebates 0.7 1 0.30 2.81

Consumer Tax Credits 0.43 0.20 1.75

Manufacturer Tax Credits 0.2 2 0.10 0.8 8
Voluntary Energy Efficiency Targets 0.3 3 0.0 7 1.2 3
Early Replacement 0.001 0.000 1 0.002

Bulk Government Purchases 0.0 3 0.0 1 0.10
Proposed Standards 3.0 5 0.4 1 10.40

* For products shipped in 2014 ─ 2043

Table 16.5.2 Impacts of Non

- Regulatory Alternatives for Standard

- Size Freezers t hat

Meet the Proposed Standard (TSL 2 )

Policy Alternative Primary Energy Savings Net Present Value*

quads 7% discount

rate billion 200 9 $

3% discount

rate

Consumer Rebates 0.2 6 0.0 5 1.0 5

Consumer Tax Credits 0.1 6 0.0 3 0.63

Manufacturer Tax Credits 0.0 8 0.01 0.3 2
Voluntary Energy Efficiency Targets 0.0 7 0.1 4 0.5 2
Early Replacement 0.0001 0.0002 0.0004

Bulk Government Purchases †

Proposed Standards 1.01 2.12 7.78

* For products shipped in 2014 ─ 2043
† DOE did not evaluate the b ulk government purchase policy for standard

- size freezers because the market share

associated with publicly owned housing is minimal.16

- 38 Table 16.5.3 Impacts of Non

- Regulatory Alternatives for Compact Refrigeration

Products t hat Meet the Prop osed S tandard ( TSL 2 )

Policy Alternative Primary Energy Savings Net Present Value*

quads 7% discount

rate billion 200 9 $

3% discount

rate

Consumer Rebates 0.19 0.13 0.45

Consumer Tax Credits 0.1 2 0.08 0.2 8

Manufacturer Tax Credits 0.0 6 0.04 0.14
Voluntary Energy Efficiency Targets †

Early Replacement 0.00002 0.00003 0.00006

Bulk Government Purchases 0.02 0.0 2 0.0 6
Proposed Standards 0.37 0.25 0.86

* For products shipped in 2014 ─ 2043
† DOE did not evaluate the voluntary energy efficiency target policy for compact refrigeration products because it

had no market data on which to base an analysis

.

Table 16.5.4 Impacts of Non

- Regulatory Alternatives for Built

- in Refrig er ation

Products t hat Meet the Proposed S tandard (TSL 3 )

Policy Alternative Primary Energy Savings Net Present Value*

quads 7% discount

rate billion 200 9 $

3% discount

rate

Consumer Rebates 0.005

- 0.0 3

- 0.036

Consumer Tax Credits 0.003

- 0.0 2

- 0.021

Manufacturer Tax Credits 0.002

- 0.0 1

- 0.011

Voluntary Energy Efficiency Targets

Early Replacement 0.00001

- 0.00005 1

- 0.0000 48

Bulk Government Purchases †

Proposed Standards 0.053

- 0.33

- 0.45

* For products shipped in 2014 ─ 2043
† DOE did not evaluate the b ulk government purchase alternative for built

- in refrigeration products because the

market share associated with publicly owned housing is minimal.16

- 39 Table 16.5.5 Summary of Impacts of Non

- Regulatory Alternati ves for All

R efrigerat ion Products that Meet the Proposed Standard s

Policy Alternative Primary Energy Savings Net Present Value*

quads 7% discount

rate billion 200 9 $

3% discount

rate

Consumer Rebates 1.162 0.444 4.266

Consumer Tax Credits 0.709 0.288 2.640

Manufacturer Tax Credits 0.356 0.145 1.325
Voluntary Energy Efficiency Targets 0.40 7 0.186 1.770
Early Replacement 0.001 0.000 0.002

Bulk Government Purchases 0.048 0.021 0.155
Proposed Standards 4.657 2.261 18.905

* For products shipped in 2014 ─ 2043

16.6 SUPER

- EFFICIENT VOLUNTARY TARGETS

In addition to the above policy alternatives, DOE evaluated a policy where a new, two

tiered voluntary efficiency target program was implemented in addition to the proposed standards. The voluntary efficiency targets would feature speculative “super

- efficient” products

at tw o efficiency level s ( designated Tier 1 and Tier 2 ) ab ove the current max

- tech levels . The program would target consumers in the highest electricity price regions of the country, to make the products maximally cost

- effective. For the purpose of evaluating t he program, only standard

sized refrigerator

- freezers were considered. Table 16.6.1 shows the targeted efficiency levels and

assumed market shares of shipments in 2014 and in 2019 and beyond , as well as the assumed level of electricity prices relative to t he national average

. 3 6

, 3716

- 40 Table 16.6.1 Super

- efficient V oluntary T argets Program Parameters for Standard

Size Refrigerator

- Freezers

Product Class

Top

- Mount Refrigerator

Freezer s* Bottom

- Mount Refrigerator

Freezer s** Side

- by

- Side Refrigerator

Freezer s†

Efficiency Level (% below baseline)

Proposed Standards (TSL 3) 25% 20 % 25%

Super

- efficient Tier 1 35% 35% 35%

Super

- efficient Tier 2 45% 45% 41%

Market share of shipments

2014

Super

- efficient Tier 1 4% 4% 4%

Super

- efficient Tier 2 2% 2% 2%

2019+

Super

- efficient Tier 1 20% 20% 20%

Super

- efficient Tier 2 10% 10% 10%

Relative electricity price (% of national average)

Super

- efficient Tier 1 120% 120% 120%

Super

- efficient Tier 2 150% 150% 150%

* Includes product classes 1, 1A, 2, 3A, 3I and 6 as well as product class 3 ** Includes product class es 5A and 5I as well as product class 5 † Includes product class es 4 and 4I as well as product class 7

Because the products modeled under this super

- efficient voluntary targets program rely

on advanced technology, DOE adopted a learning model approach whereby the cost of the advanced technology (“high

- tech”) components decreases as a function of cumulative production of these products , but the mature technology (“low

- tech”) components remain

constant ov er time:

∆ C total = ∆ C high

- tech (declining) + ∆ C low

- tech (constant)

∆ C high

- tech = ∆ C high

- tech,0 • ( Q / Q 0 ) b

Where:

∆ C total = Total incremental cost ; ∆ C high

- tech = High

- tech incremental cost ; ∆ C low

- tech = Low

- tech incremental cost (at proposed standard level);16

- 41 ∆ C high

- tech,0 = High

- tech incremental cost in 2014 ; Q = Cumulative production of Tier 1 + Tier 2 products since 2014 ; Q 0 = Production of Tier 1 + Tier 2 products in 2014 ; b = Learning rat e coefficient (<0), equal to ln( PR )/ln(2), where PR = progress ratio = 85%.

Table 16.6.2 shows the total incremental manufacturer selling price of super

- efficient products in selected model years.

Table 16.6.2 Super

- efficient V oluntary T argets Program Incremental Manufacturer Selling Price for Stan dard

- Size Refrigerator

- Freezers

Product Class

Incremental Manufacturer Selling Price (MSP) Top

- Mount Refrigerator

Freezer s* Bottom

Mount Refrigerator

- Freezer s** Side

- by

- Side Refrigerator

Freezer s†

Proposed Standards ( TSL 3 ) (constant) $106 $ 37 $94

Super

- efficient Tier 1

2014 $1 60 $16 6 $19 5

2019 $11 9 $12 5 $1 24

2029+ $10 6 $11 3 $102

Super

- efficient Tier 2

2014 $33 0 $367 $328

2019 $20 4 $22 4 $190

2029+ $16 6 $1 1 2 $149

* Includes product classes 1, 1A, 2, 3A, 3I and 6 as well as product class 3 ** Includes product class es 5A and 5I as well as product class 5 † Includes product class es 4 and 4I as well as product class 7

Additional savings from the super

- efficient voluntary targets program in addition to the proposed standards (TSL 3) are shown in Table 16.6.3 . Overall, D OE estimates that an additional 1.68 quads of energy savings and an add itional NPV of consumer benefit of $7.66

billion (at 7 percent discount rate) would be realized under this program beyond the savings

from the propo sed standards

.

Table 16.6.3 Super

- efficient Voluntary T argets Program: Additional Savings Relative to Proposed Standards for Standard

- Size Refrigerator

- Freezers [changes made to this table]

Product Class16

- 42 Top

- Mount Refrigerator

- Freezer s Bottom

Mount Refrigerator

Freezer s Side

- by

- Side Refrigerator

- Freezer s All Standard

Sized Refrigerator

Freezer s *

Energy Savings (Cumulative through 2043) (quads) 0.92 0.27 0.49 1.68

Discounted Incremental Equipment Cost (billion 2009$) † 1.83 1.64

- 1.74 1.73

Discounted Operating Cost Savings (billion 2009$) † 5.33 1.27 2.80 9.40

Net Present Value (billion 2009$) † 3.49

- 0.37 4.54 7.66

* Includes product classes 1, 1A, 2, 3, 3A, 3I

, 4, 4I, 5, 5A , 5I , 6 as well as product class 7

† Using 7

- percent discount rate16

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. ( Customer count data by utility )4

- A

- i APPENDIX 4

- A. INVESTIGATION OF VIP SUPPLY

TABLE OF CO NTENTS

4

- A.1 INTRODUCTION

................................ ................................ ................................ . 4

- A

- 1

4

- A.2 VIP DEMAND

................................ ................................ ................................ ....... 4

- A

- 1

4

- A.3 ABILITY OF VIP SUPPL IERS TO MEET DEMAND

................................ ....... 4

- A

- 4

LIST OF TABLES

Table 4

- A

- 1: U.S. Demand at Proposed Standard Levels

................................ ....................... 4

- A

- 2

Table 4

- A

- 2: Current and Projected VIP Demand

................................ ................................ ... 4

- A

- 3

Table 4

- A

- 3: New Manufacturing Facility Ramp

- Up Time

................................ .................... 4

- A

- 54

- A

- 1 APPENDIX 4

- A. INVESTIGATION OF VIP SUPPLY

4

- A.1 INTRODUCTION

This appendix discusses DOE ’s investigation of potential supply issues for vacuum

insulated panels (VIPs) , a consideration in deciding that this technology passes screening and can

be considered as a design option in the engineering analysis. DOE had received comments

co ncerning the viability of VIPs as a design option fol lowing the preliminary analysis. In particular, stakeholders pointed out that achieving cost

- effective efficiency levels as determined by the DOE preliminary analysis depended on increase of VIP supply to a level of millions of panels per year, which stakeholders asserted the VIP industry could not achieve and/or would lead to sign ificant price increase. DOE conducted an assessment of the VIP market and the required ramp

- up of VIP production and concluded that the market does not show ramp

- up to be a critical issue leading to price pressure.

DOE contacted several VIP suppliers to better assess the current production capacity and the ability of the industry to ramp up to expected demand by 2014. These suppliers include Porextherm (Germany) 1 , Va

- Q

- tec (Germany) 2 , ThermoCor (U.S.) 3 , NanoPore Insulation LLC (U.S.) 4 , Glacier Bay (U.S.) 5 , and ThermalVisions (U.S.) 6

4

- A.2 VIP DEMAND . DOE did not receive a response from any Asian companies it attempted to contact during this phase, but Porextherm estimated that there are five VIP producers based in China and Japan.

VIPs have been used in refrig erators for more than 20 years, but only in high

- end models until recent years

. In the U.S., major refrigerator manufacturers have started using VIPs in commodity models, driven by the manufacturer tax credit available in 2008

- 2010

. a DOE

estimates that the current worldwide VIP market is in the range of 2 .5 to 5 million square meters based on input from VIP manufacturers . This is a wide range due to the variation in estimates provided by vendors providing information and also due to the lack of informati on obtained from Asian suppliers, particularly from Japan, which is reported to have experienced the greatest use

of VIPs to date . Va

- Q

- tec estimated that world production is approximately 2 million square

meters. ThermoCor estimated it to be about 5 milli on square meters. Other vendors interviewed declined to provide estimates.

DOE used its NOPR analysis results to estimate the projected VIP demand in the U.S. in

2014 based on the proposed standard level s

. DOE first estimated the VIP surface area required per unit for each of the eleven directly

- analyzed product classes at the proposed standard level.

The estimates are based on use of VIPs as determined in the engineering analysis

.

a Energy Improvement and Extension Act of 2008 (EIEA 2008; Pub lic L aw 110

- 343)

. Manufacturers can receive $200 per unit for units at least 30 percent more efficient than the standard.4

- A

- 2 For the conventional products, DOE conducted thorough energy and cost analysis for two products of each product class. The reported estimate of VIP demand for these product classes is

based on the average of the surface area s required at the proposed standard level for the two analyzed products. For built

- in products, D OE assumed that the product analyzed in the engineering analysis was representative of all products in that class. DOE used the product shipment projections for 2014 as calculated in the shipments analysis to convert the per

- unit

demand to national demand in terms of VIP surface area

. The resulting demand estimate is 5. 8 million square meters of VIPs in 2014

. Table 4

- A

- 1 shows the breakdown of this estimate by product c lass. The demand could be lower or higher depending on the decisions manufacturers make regarding use of design options in designs to meet the new standards.

Table 4

- A

- 1 : U.S. Demand at Proposed Standard Levels

Product Class es Estimated Total VIP

Demand in 2014 (million m 2 )

3 4.0

5 0.0

7 1.3

9 0.0

10 0.0

11 0.0

18 0.0

3

- B uilt

- I n 0.1

5

- B uilt

- I n 0.0

7

- B uilt

- I n 0.3

9

- B uilt

- I n 0.2

Total: 5.8

DOE also considered the potential increase in dema nd for VIPs in Europe and India . As part of this examination, DOE reviewed European directives aimed at improving energy efficiency. The European Energy Labeling Directive (94/2/EC) for cold appliances, which was issued by the European C ommission on Januar y 21, 1994, established 7 efficiency levels for these products, from least efficient G to most efficient A. In 2003, additional higher efficiency levels A+ and A++ were established. These levels all represent different percentage s of reference

energy use, called Energy Efficiency Index (EEI), from less than 30 for A++ (the most efficient) to 125 for G. The European Union established efficiency standards for residential refrigeration products with EU Council Directive 96/57/EC dated 3 September 1996. Maximum energy use standards were established for 10 “product categories”, the equivalent to different product classes associated with DOE regulations. Commission Regulation (EC) No 643/2009 requires that the maximum allowable EEI will become 55 starting July 1, 2010. This level will drop to 44 on July 1, 2012, and to 42 (equivalent to current efficiency level A+) on July 1, 2014.

DOE received estimates from various VIP manufacturers that European demand is expected to rise to a level in a range from 2 to 5 mil lion square meters in response to the new4

- A

- 3 standards. Information obtained from a manufacturer that has used VIPs in multiple products suggests that VIPs will be used primarily for A++ products, which may be considered the equivalent of the current U.S. ENE RGY STAR products. The 2 to 5 million square meter estimate is consistent with the use of VIPs primarily for A++ products, assuming that these products will represent 10 to 20 percent of the market

.

Along similar lines, India introduced a labeling program in 2006 that was initially voluntary but became mandatory in January 2010

. The program establishes efficiency levels represented by ranges of energy use. The product label is required to indicate the product’s efficiency level. The allowable maximum energ y use values associated with the efficiency levels are scheduled to be reduced in three steps between 2010 and 2014. However, b ased on discussions with manufacturers, India’s proposed standards for 2014 are not expected to be as stringent as in the U.S. or Europe and are not expected to require use of VIPs.

Taking into account the markets discussed above

, worldwide VIP demand is expected to

reach a level in the range 10 to 1 5 million square meters , based on available information as shown in Table 4

- A

- 2

. DOE ’s understanding of the Asian market is limited

. DOE expects that

demand will be small in other markets such as Australia and New Zealand and India due to less stringent standards and/or much lower population.

Table 4

- A

- 2 : Current and Projected VIP Demand Key Markets Current Demand

in 2010 (million m 2 ) Projected Demand in 2014 (million m 2 )

United States 1 to 3 6 Europe 0.5 2 to 5

Asia 1 to 2 2 to 4

Total 2 .5 to 5 .5 10 to 1 54

- A

- 4 4

- A.3 ABILITY OF VIP SUPPL IERS TO MEET DEMAND

The projected demand of 10 to 1 5 million m 2 represents a growth factor in the range of 2

to 6 , depending on which ends of the current and projected ranges are most accurate . While th e high end of this range represents dramatic growth, it is not inconsistent with the growth that the market has experienced recently for which VIP vendors have successfully ramped up their production

.

Several VIP manufacturers are currently expanding their facilities, while others have plans to expand if the demand becomes more reliable. Overall, the VIP manufacturers interviewed were confident that neither the time nor the capital investment is a l imiting factor as long as they have a stable backlog. Five of the manufacturers commented on their recent expansion efforts:

**•** Manufacturer 1 has increased its production capacity by 10 times between 2008 and Spring 2010 to reach a level of about 1. 5 millio n m 2

.

**•** Manufacturer 2 h as doubled its capacity to about 12 0,000 m 2 in the last 6 months.

**•** Manufacturer 3 has doubled its capacity to about 1 million m 2 in the last 9 months.

**•** Manufacturer 4 has taken 1.5 years to reach capacity of about 300,000 m 2

.

**•** Manufacturer 5 has recently doubled its capacity and has plans to expand to 0.9 million

m 2 capacity by 2010.

In total, the production capacity of the VIP vendors that participated in the discussions

has increased from about 0.1 million m 2 prior to 2008 to about 3 million m 2 in 2010, suggesting

an order

- of

- magnitude increase at a rate of nearly 1.5 million m 2 per year , not including vendors from whom DOE did not receive capacity growth information

. In order to meet the estimates of projected demand above, an overall growth rate of production capacity serving the US and EU

markets of 1.5 to 4 million m 2 per year is needed.

Estimates by VIP manufacturers of the time required to bring a new minimum

- capacity

efficient plant on

- line ra nge from 6 to 18 months , as shown in Table 4

- A

- 3

. b If each of the six

manufacturers interviewed expanded at their stated minimum rate, they could generate an

increase of over 9 million m 2 by 2014 . This estimated expansion falls within the range of estimates of required ramp

- up without considering other existing manufacturers, or factoring in the potential for new manufacturers to enter the mar ket

.

b A minimum

- capacity efficien t plant is a plant with a capacity at the low end of the range needed to achieve costs that are sufficiently minimized to be competitive.4

- A

- 5 Table 4

- A

- 3 : New Manufacturing Facility Ramp

- Up Time

Minimum

- Capacity

Efficient Plant Size (million m 2 annual capacity ) Time to Bring On

- line (months)

Manufacturer 1 1.5 12

Manufacturer 2 0.2 6

Manufacturer 3 0.4 9

Manufacturer 4 0.3 12

Manufacturer 5 0.5 18

The variation in the time to build a new plant depends on whether existing production technology is replicated, or whether further improvements in production technology are designed into new plants. Possible improvements to lower cost and increase production capacity include more automation of the panel assembly and a switch to continuous processing. Automation may

be applied to the drying of the core material and the cutting of the bag and core. DOE visited a VIP production facility during the course of this investiga tion and concluded that the estimates provided by VIP vendors of time required to bring new production capacity online are consistent with the production process, given the equipment used.

Several VIP manufacturers have considered joint ventures and lice nsing opportunities with refrigerator manufacturers. Manufacturers of VIPs suggest that transferring the knowledge and expertise of VIP production would be a straightforward process. A new VIP fabrication facility would need to have a production capacity b etween 300,000 and 1.5 million square meters per year to be cost

- effective at today’s VIP price levels. The capacity will typically vary based on the manufacturer, the panel type, and the facility location.

VIP manufacturers do not anticipate the supply of raw materials to be an issue as production ramps up. The industry uses multiple suppliers for both the barrier film and the fill

material. Materials used for the fill include glass fiber, fumed silica, and aerogel. Glass fiber is produced for a wide ra nge of applications worldwide. Fumed silica, used as fill by some VIP manufacturers, is currently produced on a much smaller scale. Asked if the more limited range of uses of fumed silica could present material supply issues due to capacity ramp

- up delays or intellectual property issues, Porextherm noted that intellectual property would not be a barrier for suppliers to building new fumed silica plant s , citing several new production facilities that have come online recently in Asia

. They also noted that the solar collector business in particular is helping to expand the production of pure silica, of which fumed silica is a by

- product. Va

- Q

- tec
estimates that there is enough fumed silica production today to produce 100 million m 2 of VIPs

, and a new fumed silica plant would require 2.5 years to be built . Thermal Visions did not anticipate suppliers needing more than one year to respond to the ramp

- up in production.

In summary, DOE concludes that the VIP industry has the ability to ramp up to meet the

po tential demand for VIPs within the three year gap between the rulemaking final rule and the

date the standard takes effect.4

- A

- 6 1 Personal communication with Porextherm, February & August 2010.

2 Personal communication with Va

- Q

- tec, February & August 2010.

3 Personal communication with ThermoCor, February & August 2010.

4 Personal communication with NanoPore, March 2010.

5 Personal communication with Glacier Bay, February 2010.

6 Personal communication with Thermal Visions, February & August 2010.5

- A

- i APPENDIX 5

- A. ENGINEERING DATA

TABLE OF CO NTENTS

5

- A.1 INTRODUCTION

................................ ................................ ................................ . 5

- A

- 1

5

- A.2 ERA INPUTS

................................ ................................ ................................ ......... 5

- A

- 1

5

- A.3 INCREMENTAL COST DET AIL

................................ ................................ ...... 5

- A

- 45

5

- A.4 PRELIMINARY ANALYSIS ENGINEERING QUESTIONNAIRE

................ 5

- A

- 64

LIST OF TABLES

Table 5

- A.2.1: ERA Inputs for Top

- Mount Refrigerator

- Freezers (Product Class 3)

............. 5

- A

- 3

Table 5

- A.2.2: ERA Inputs for Built

- in All

- Refrigerators (Product Class 3A

- BI)

................. 5

- A

- 7

Table 5

- A.2.3: ERA Inputs for Bottom

- Mount Refrigerator

- Freezers (Product Class 5)

..... 5

- A

- 12

Table 5

- A.2.4: ERA Inputs for Built

- In Bottom

- Mount Refrigerator

- Freezers (Product

Class 5

- BI)

................................ ................................ ............................... 5

- A

- 16

Table 5

- A.2.5: ERA Inp uts for Bottom

- Mount Refrigerator

- Freezers w/TTD Ice (Product Class 5A)

................................ ................................ ................................ .. 5

- A

- 21

Table 5

- A.2.6: ERA Inputs for Side

- Mount Refrigerator

- Freezers (Product Classes 4 and 7)

................................ ................................ ................................ .............. 5

- A

- 25

Table 5

- A.2.7: ERA Inputs for Upright Freezers with Automatic Defrost (Produ ct Class 9)

................................ ................................ ................................ .............. 5

- A

- 29

Table 5

- A.2.8: ERA Inputs for Built

- In Upright Freezers (Product Class 9

- BI)

................... 5

- A

- 32

Table 5

- A.2.9: ERA Inputs for Chest Freezers with Manual Defrost (Product Class 10)

..... 5

- A

- 36

Table 5

- A.2.10: ERA Inputs for Compact Refrigerators (Product Class 11)

........................ 5

- A

- 39

Table 5

- A.2.11: ERA Inputs for Compact Chest Freezers (Product Class 18)

...................... 5

- A

- 42

Table 5

- A.3.1: Incremental Cost Detail for 16 ft 3 Top

- Mount Refrigerator

- Freezer (Product Class 3)

................................ ................................ ...................... 5

- A

- 46

Table 5

- A.3.2: Incremental Cost Detail for 21 ft 3 Top

- Mount Refrigerator

- Freezer (Product Class 3)

................................ ................................ ...................... 5

- A

- 47

Table 5

- A.3.3: Incremental Cost Detail for 21 ft 3 Built

- in All

- Refrigerator (Product Class

3A

- BI)

................................ ................................ ................................ ...... 5

- A

- 48

Table 5

- A.3.4: Incremental Cost Detail for 18.5 ft 3 Bottom

- Mount Refrigerator

- Freezer (Product Class 5)

................................ ................................ ...................... 5

- A

- 49

Table 5

- A.3.5: Incremental Cost Detail for 25 ft 3 Bottom

- Mount Refrigerator

- Freezer (Product Class 5)

................................ ................................ ...................... 5

- A

- 50

Table 5

- A.3.6: Incremental Cost Detail for 21 ft 3 Built

- In Bottom

- Mount Refrigerator

Freezer (Product Class 5

- BI)

................................ ................................ ... 5

- A

- 51

Table 5

- A.3.7: Incremental Cost Detail for 22 ft 3 Side

- Mount Refrigerator

- Freezer with TTD Ice (Product Class 7)

................................ ................................ ....... 5

- A

- 52

Table 5

- A.3.8: Incremental Cost Detail for 26 ft 3 Side

- Mount Refrigerator

- Freezer with TTD Ice (Product Class 7)

................................ ................................ ....... 5

- A

- 535

- A

- ii Table 5

- A.3.9: Incremental Cost Detail for 28 ft 3 Built

- In Side

- Mount Refrigerator

Freezer with TTD ice service (Product Class 7

- BI)

................................ . 5

- A

- 54

Table 5

- A.3.10: Incremental Cost Detail for 14 ft 3 Upright Freezer with Auto Defrost (Product Class 9)

................................ ................................ ...................... 5

- A

- 55

Table 5

- A.3.11: Incremental Cost Detail for 20 ft 3 Upright Freezer with Auto Defrost (Product Class 9)

................................ ................................ ...................... 5

- A

- 56

Table 5

- A.3.12: Incremental Cost Detail for 22 ft 3 Built

- In Upright Freezer (Product

Class 9

- BI)

................................ ................................ ............................... 5

- A

- 57

Table 5

- A.3.13: Incremental Cost Detail for 15 ft 3 Chest Freezer (Product Class 10)

.......... 5

- A

- 58

Table 5

- A.3.14: Incremental Cost Detail for 20 ft 3 Chest Freezer (Product Class 10)

.......... 5

- A

- 59

Table 5

- A.3.15: Incremental Cost Detail for 1.7 ft 3 Compact Refrigerator (Product Class 11)

................................ ................................ ................................ ............ 5

- A

- 60

Table 5

- A.3.16: Incremental Cost Detail for 4.0 ft 3 Compact Refrigerator (Product Class 11)

................................ ................................ ................................ ............ 5

- A

- 61

Table 5

- A.3.17: Incremental Cost Detail for 3.4 ft 3 Compact Chest Freezer (Product Class 18)

................................ ................................ ................................ ... 5

- A

- 62

Table 5

- A.3.18: Incremental Cost Detail for 7.0 ft 3 Compact Chest Freezer (Produ ct Class 18)

................................ ................................ ................................ ... 5

- A

- 635

- A

- 1 APPENDIX 5

- A. ENGINEERING DATA

5

- A.1 INTRODUCTION

The Energy

- efficient Refrigerator Analysis Program (ERA) was used to calculate energy use for baseline and energy

- saving configurations for the various product classes of refrigeration products. Inputs to this program were generated from reverse

- engineerin g teardowns of select refrigerator and refrigerator

- freezer models currently available. The values for the input variables

are shown in tabular format in section 5

- A.2

. The input is provided to the extent possible in the format required for the Windows version of ERA. Because analysis was carried out with the

DOE version of ERA for most of the products , in some cases the input format may not translate directly, and the output values may not match exactly.

The incremental cost curves describing costs to attain each analyzed efficiency level are based on the energy use output from the ERA program. Development of costs for these curves is described in chapter 5. The t ables in section 5

- A.3 show these incremental cost curves in tabular format, with identification of the design options required to reach each efficiency level shown

.

As part of the engineering analysis, DOE solicited input from manufacturers on a range of technical topics affecting energy use in refrigeration products. The questionnaire used to
facilitate these interviews is shown in section 5

- A.4

.

5

- A.2 ERA INPUTS

The ERA inputs for each of the units selected for reverse

- engineering analysis are shown

below. Some general notes regarding the data include th e following:

1. Compressor compartment insulation thickness is specified directly in Windows ERA,

while DOS ERA used bottom wall thickness.

2. The ERA input for door openings is not provided, since DOE conducted analysis

based on closed doors.

3. W indows E RA incl udes separate input for the air in the compressor compartment. DOS ERA used the air temperature underneath the cabinet for this region.

4. DOE conducted all analyse s using single evaporator system configuration with HFC

134a refrigerant.

5. The tube and fin heat exchanger configuration implies forced convection air flow.

6. See the Windows ERA program for definitions of air flow directions for forced

convection wire fin condensers.5

- A

- 2 7. Some products analyzed had spine fin evaporators, which are not supported by ERA. Inp ut for a separate spine fin analysis spreadsheet calculation is provided in the tables below for these products.

8. Windows ERA does not allow superheat or subcooling input of 0  ̊C, although DOS ERA does. Suggested input is 0.5  ̊C in cases where input of 0  ̊C is indicated.5

- A

- 3 Table 5

- A.2

. 1 : ERA Inputs for Top

- Mount Refrigerator

- Freezers (Product Class 3) Top

- Mount Refrigerator

- Freezers 16 ft 3 Baseline 21 ft 3 Baseline 21 ft 3 E*

General Data

Fresh Food Volume ( ft 3 ) 11. 6 15.3 15.3 Freezer Volume ( ft 3 ) 4.1 5.3 5.3 Total Volume (ft 3 ) 15.7 20.6 20.6 Adjusted Volume ( ft 3 ) 18. 3 23.9 23.9 Rated Energy Use (kWh/yr) 455 509 408 Calculated Max. Energy Use (kWh/yr) 455 511 51 1 Rated Energy Use Below Maximum (%) 0 .0 0.3 20.1

Cabinet Dimensions Category Top

- mount Top

- mount Top

- mount Cabinet Height (cm) 146.7 165. 6 165. 6 Cabinet Width (cm) 70.8 75. 3 75. 3 Depth, from Door Flange (cm) 62.6 74.3 74.3 Depth, from Door Outer Surface (cm) 71.1 80. 7 80. 7

Liner Properties Outer Liner Thickness (mm) 0. 4 0. 4 0. 4 Outer Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 1.0 1.5 2.0 Liner Conductivity (W/m

- C) 0.16 0.16 0.16 Compressor Compartment Dimensions Top Depth (cm) 12.7 12.4 12.4 Bottom Depth (cm) 21. 6 25.8 25.8 Height (cm) 26.0 16. 0 16. 0 Wall (vertical) (cm) 43 5.9 5.9 Wall (horizontal) (cm) 4.3 6.4 6.4

Freezer Section

Insulation Thickness

Top Wall (cm) 5. 3 7.1 7.1 Side Wall (cm) 5.5 7. 5 7. 5 Back Wall (cm) 7.0 7. 9 7. 9 Door (cm) 6.2 7.2 7.2 Insulation Resistivity

All Wall s (m2

- C/W

- cm) 0.50 0.50 0.50 Wedge/Flange Dimensions

Freezer Wedge Depth (cm) 7.6 7.0 7.0 Freezer Flange Width (cm) 3.8 3.8 3.8

Heat Paths

Freezer Gasket Heat Leak (W/m

- 100C) 9.0 9.0 9.0

Fzr Cabinet Penetration Heat Leak (W) 1.5 0.0 0.0

Fresh Food Section

Insulation Thickness

Side Wall (cm) 3.8 4.8 4.85

- A

- 4 Top

- Mount Refrigerator

- Freezers 16 ft 3 Baseline 21 ft 3 Baseline 21 ft 3 E* Back Wall (cm) 5.0 4. 9 4. 9 Bottom Wall (cm) 4.3 5. 1 5. 1 Door (cm) 4. 1 4. 7 4. 7 Insulation Resistivity

All Wall s (m2

- C/W

- cm) 0.50 0.50 0.50 Wedge/Flange Dimensions

Fresh Food Wedge Depth (cm) 0

. 1 7.6 7.6 Fresh Food Flange Width (cm) 3.8 3.8 3.8

Heat Paths

FF Gasket Heat Leak (W/m

- 100C) 9.0 9.0 9.0

FF Cabinet Penetration Heat Leak (W) 1.5 0.0 0.0

Mullion Distance to Top (cm) 44. 5 50.8 50.8 Thickness w/Liners (cm) 5.7 7.1 7.1 Resistivity w/Liners (m2

- C/W

- cm) 0. 5 0.5 0.5 Air and Cabinet Temperatures Room Air (°C) 32.2 32.2 32.2 Freezer Section (°C)

- 15

- 15

- 15 Fresh Food Section (°C) 7.2 7.2 7.2 Air Under Cabinet (°C) 35.0 35.0 35.0 Compressor Compartment (  ̊C) 35.0 35. 0 35. 0 Air Entering Condenser (°C) 32.2 33.0 33.0 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Automatic Automatic Timer Interval (Hr) 14 .0 10.5 10.5

Heater On

- Time (Min) 8 .0 4.8 4.8 Defrost Power (W) 390 413 413 Other Cycle

- Dependent Loads Freezer Section (W) 0 0 0 Fresh Food Section (W) 0.3 0.3 0.3 Outside Cabinet (W) 0 0 0

Constant Electrical Loads Freezer Section (W) 0 0 0 Fresh Food Section (W) 0 0 0 Outside Cabinet (W) 0 0 0 Liquid Refrigerant Line Anti

- Sweat Freezer Door Flange Cycle Average Energy (W) 4 3. 8 3. 8 Fraction Heat Leak (0

- 1) 0.5 0.3 0.3

Fresh Food Door Flange Cycle Average Energy (W) 0 0 0 Fraction Heat Leak (0

- 1) 0 0 0

Mullion5

- A

- 5 Top

- Mount Refrigerator

- Freezers 16 ft 3 Baseline 21 ft 3 Baseline 21 ft 3 E* Cycle Average Energy (W) 1.5 1. 3 1. 3 Heat Leak to Freezer (0

- 1) 0 .25 0.25 0.25 Heat Leak to Fresh Food (0

- 1) 0 .25 0.25 0.25 Evaporator Design Exit Superheat 2 2 0 Fin Type ( plain , wavy, herringbone) Spine Plain Plain

Fan Motor Type AC

- Input

BLDC Shaded Pole Shaded Pole

Fan Power (W) 3.5 6.1 5.7 Air Flow Rate (Liter/s) 16. 6 21.3 21.3

Tube Characteristics

Width of Tube Row 52.1 45.7 45.7 Tube OD (mm) 9. 4 7. 9 7. 9 Tube Wall Thickness (mm) 0. 76 0.6 0.6 # of Tubes Deep 7 4 4 Tube Pitch (cm) 2. 5 3.8 3.8

# of Tubes Normal to Airflow 2 6 6 Normal Tube Pitch (cm) 2.5 1.9 1. 9

Fin Characteristics Fin Thickness (mm) 0. 25 0.1 3 0.1 3 Fin Pitch (mm) 9.5 6. 3 6. 3 Fin Conductivity (W/m

- K) 190 190 190 Fraction Finned (0

- 1) 0.9 3 0. 8 9 0. 8 9 Spine Fin Input Data Spine Height (mm) 10.5 NA NA Spine Width (mm) 0. 79 NA NA Condenser Design a a Exit Subcooling (°C) 2 0 0 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin Tube & Fin Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Wire Wire Wire

Fan Motor Type Shaded Pole Sha d ed Pole AC

- input

BLDC Fan Power (W) 11.2 9.4 3.3 Air Flow Rate (Liter/s) 30 .0 26.0 31.2

Tube Characteristics Airflow Direction (W, L, H) W W W Tube OD (mm) 4.8 4.8 4.8 Tube Wall Thickness (mm) 0. 8 0.6 0.6

a Surface areas calculated by the condenser routine were increased by a factor of 2.56 for the 21 ft 3 top

- mount refrigerators to calibrate with test data for condensing temperatures.5

- A

- 6 Top

- Mount Refrigerator

- Freezers 16 ft 3 Baseline 21 ft 3 Baseline 21 ft 3 E* Length of Tube in “L” Direction 59.6 2 0.1 2 0.1

# of Tubes in H Direction 1 8 8

Tube Pitch (cm) 2.5 2.5 2.5

# of Tubes in W Direction 1 4 6 6

Tube Pitch (cm) 2.5 2.5 2.5 Fraction Air through Exchanger (0

- 1) 0.6 0.9 0.9

Fin Characteristics Wire OD (mm) 1.5 1. 1 1. 1

# of Wires on 1

- side per layer 95 29 29 Wire Mounting (1

- side, 2

- sides) 2

- sides 2

- sides 2

- sides Wire Fin Pitch (mm) 5. 1 5.1 5.1 Wire Length (cm) 34.9 14.0 14.0 Wire Conductivity (W/m

- K) 44.7 44.7 44.7 Compressor Data

Manufacturer Matsushita Matsushita Matsushita

Model # DGS57C84RAU SF51C97RAU6 DHS57C85RAU Cycles per hour 1.0 1.0 1.0 Interchanger Effectiveness (0

- 1) 0.9 0.95 0.9 5 Component Adjustment Factors Condenser UA Multiplier 1.0 2.56 2.565

- A

- 7 Table 5

- A.2

. 2 : ERA Inputs for Built

- in All

- R efrigerators (Product Class 3 A

- BI )

Built

- in All

- R efrigerators 21 ft 3 E*

General Data Upper Compartment Volume ( ft 3 ) 13.4 Lower Compartment Volume ( ft 3 ) 7.5 Total Volume ( ft 3 ) 20.9 Adjusted Volume ( ft 3 ) 20.9 Rated Energy Use (kWh/yr) 376 Calculated Max. Energy Use (kWh/yr) 480 Rated Energy Use Below Maximum (%) 21.7

Cabinet Dimensions Category (from ERA selection) Bottom

- Mount Cabinet Height (cm) 172.9 Cabinet Width (cm) 90.8 Depth, from Door Flange (cm) 57.2 Depth, from Door Outer Surface (cm) 61.0 Liner Properties Outer Liner Thickness (mm) 1.5 Outer Liner Conductivity (W/m

- C) 44.7 Inner Liner Thickness (mm) 0.9 Liner Conductivity (W/m

- C) 190 Lower Compartment Cabinet

Insulation Thickness

Side Wall (cm) 4.9 Back Wall (cm) 4.4 Bottom (cm) 4.2 Door (cm) 5.2 Insulation Resistivity

Side Wall (m2

- C/W

- cm) 0.73 Back Wall (m2

- C/W

- cm) 0.88 Bottom (m2

- C/W

- cm) 0.76 Door (m2

- C/W

- cm) 0.68 Wedge/Flange Dimensions

Lower Compartment Flange Width (cm) 3.6 Lower Compartment Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Lower Compartment Gasket Heat Leak (W/m

- 100C) 9.0

Lower Compartment Penetration Heat Leak (W) 0.0

Upper Compartment Cabinet

Insulation Thickness

Top Wall (cm) 3.65

- A

- 8 Built

- in All

- R efrigerators 21 ft 3 E* Side Wall (cm) 4.9 Back Wall (cm) 4.4 Door (cm) 3.6 Insulation Resistivity

Top Wall (m2

- C/W

- cm) 0.5 0 Side Wall (m2

- C/W

- cm) 0.5 0 Back Wall (m2

- C/W

- cm) 0.5 0 Door (m2

- C/W

- cm) 0.87 Wedge/Flange Dimensions

Upper Compartment Flange Width (cm) 3.6 Upper Compartment Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Upper Gasket Heat Leak (W/m

- 100C) 9.0 Upper Cabinet Penetration Heat Leak (W) 0.0

Mullion Distance to Top (cm) 102.9 Thickness w/Liners (cm) 10.1 Resistivity w/Liners (m2

- C/W

- cm) 0.5 0 Air and Cabinet Temperatures Room Air (°C) 32.2 Lower Compartment Section (°C) 3.3 Upper Compartment Section (°C) 3. 4 Air Under Cabinet (°C) 33.0 Compressor Compartment (  ̊C) 33.0 Air Entering Condenser (°C) 32.2 Defrost and Controls Energy Defrost Type (Automatic, Manual) Manual Other Cycle

- Dependent Loads

Lower Compartment Section (W) 0 Upper Compartment Section (W) 0 Outside Cabinet (W) 0

Constant Electrical Loads

Lower Compartment Section (W) 0 Upper Compartment Section (W) 0 Outside Cabinet (W) 1.3 Liquid Refrigerant Line Anti

- Sweat Lower Compartment Door Flange

Cycle Average Energy (W) 2.9 Fraction Heat Leak (0

- 1) 0.5 Upper Compartment Door Flange

Cycle Average Energy (W) 3 .0 Fraction Heat Leak (0

- 1) 0.55

- A

- 9 Built

- in All

- R efrigerators 21 ft 3 E*

Mullion

Cycle Average Energy (W) 1.8 Heat Leak to Lower Compartment (0

- 1) 0.4 Heat Leak to Upper Compartment (0

- 1) 0.4 Cycle Parameters Cycle Type Dual loop Cycling Losses YES Cycles/hr 1.5 Refrigerant R

- 134a Evaporator Design (Lower Compartment) Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) AC

- Input BLDC

Fan Power (W) 3.1 Air Flow Rate (Liter/s) 20. 2

Tube Characteristics

Width of Tube Row 48.8 Tube OD (mm) 9. 3 Tube Wall Thickness (mm) 0.6 4

# of Tubes Normal to Airflow 2 Normal Tube Pitch (cm) 1. 1 # of Tubes Deep 9 Tube Pitch (cm) 1.9

Fin Characteristics

Fin Thickness (mm) 0.1 3 Fin Pitch (mm) 5. 1 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.90 Evaporator Design (Upper Compartment) Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) AC

- Input BLDC

Fan Power (W) 3.1 Air Flow Rate (Liter/s) 13.5

Tube Characteristics

Width of Tube Row 48.8 Tube OD (mm) 9. 3 Tube Wall Thickness (mm) 0.6 4

# of Tubes Normal to Airflow 2 Normal Tube Pitch (cm) 1. 1 # of Tubes Deep 95

- A

- 10 Built

- in All

- R efrigerators 21 ft 3 E* Tube Pitch (cm) 1.9

Fin Characteristics

Fin Thickness (mm) 0.1 3 Fin Pitch (mm) 5. 1 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.90 Condenser Design (Lower Compartment) Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Plain

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) AC

- Input BLDC

Fan Power in Fan Energy Calculations (W) 4 1

Air Flow Rate (Liter/s) 16.4

Tube Characteristics

Width of Tube Row 34.0 Tube OD (mm) 6. 4 Tube Wall Thickness (mm) 0.46 # of Tubes Deep 8 Tube Pitch (cm) 1.3

# of Tubes Normal to Airflow 2 Normal Tube Pitch (cm) 2.2 Faction of Air through Condenser 1

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 3.6 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0. 86 Condenser Design (Upper Compartment) Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Plain

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- In put BLDC) AC

- Input BLDC

Fan Power in Fan Energy Calculations (W) 4 1

Air Flow Rate (Liter/s) 16.4

Tube Characteristics

Width of Tube Row 34.0 Tube OD (mm) 6.45

- A

- 11 Built

- in All

- R efrigerators 21 ft 3 E* Tube Wall Thickness (mm) 0.46 # of Tubes Deep 8 Tube Pitch (cm) 1.3

# of Tubes Normal to Airflow 2 Normal Tube Pitch (cm) 2.2 Faction of Air through Condenser 1

Fin Characteristics

Fin Thickness (mm) 0.19 Fin Pitch (mm) 3.6 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.86 Compressor Data (Lower Compartment)

Manufacturer Embraco

Model E M2 0HSC Capacity Multiplier 1.0 Power Multiplier 1.0 Speed Multiplier 1.0 Compressor Data (Upper Compartment)

Manufacturer Embraco

Model E M2 0HSC Capacity Multiplier 1.0 Power Multiplier 1.0 Speed Multiplier 1.0 Interchanger s Effectiveness (0

- 1, Lower Compartment) 0.75 Effectiveness (0

- 1, Upper Compartment) 0.75 Compressor Shell Inlet Temperature (°C) Calculated

1 This product has a single condenser with a separate circuit for each of the two refrigeration systems. The single fan operates when one or two of the compressors are operating. The condenser fan power was set to 0W for each of these systems in ERA, and a p ost

- processing spreadsheet was used to calculate fan energy use with consideration of the overlap of the two system on

- cycles.5

- A

- 12 Table 5

- A.2

. 3 : ERA Inputs for Bottom

- Mount Refrigerator

- Freezers (Product Class 5)

Bottom

- Mount Refrigerator

- Freezers 18.5 ft 3 25 ft 3 E* , #1 25 ft 3 E* , #2

General Data Fresh Food Volume ( ft 3 ) 13. 1 17.8 17.6 Freezer Volume ( ft 3 ) 5.4 7.3 7.7 Total Volume ( ft 3 ) 18.5 25.1 25.3 Adjusted Volume ( ft 3 ) 2 1.9 29.6 30.2 Rated Energy Use (kWh/yr) 476 475 478 Calculated Max. Energy Use (kWh/yr) 56 0 595 59 8 Rated Energy Use Below Maximum (%) 15. 0 20.2 20.0

Cabinet Dimensions Category Bottom

- Mount Bottom

- Mount Bottom

- Mount Cabinet Height (cm) 160.7 168.3 168.0 Cabinet Width (cm) 75.3 90.5 90.8 Depth, from Door Flange (cm) 69.2 72.4 71.3 Depth, from Door Outer Surface (cm) 76.8 79.4 78.3 Liner Properties Outer Liner Thickness (mm) 0.5 0.6 0.5 Outer Liner Conductivity (W/m

- C) 44.7 43.3 44.7 Inner Liner Thickness (mm) 1.3 1.9 1.4 Liner Conductivity (W/m

- C) 0.16 0.16 0.16 Compressor Compartment Dimensions Top Depth (cm) 16.5 17.1 12.7 Bottom Depth (cm) 27.0 27.3 25.4 Height (cm) 24.5 24.1 22.9 Wall (vertical) (cm) 7.0 6.9 6.6 Wall (horizontal) (cm) 7.0 6.9 6.6

Freezer Cabinet

Insulation Thickness

Side Wall (cm) 6.9 7.5 6.8 Back Wall (cm) 7.9 6.5 7.6 Bottom (cm) 7.0 6.9 6.6 Door (cm) 6.3 6.0 6.9 Insulation Resistivity

All Walls (m2

- C/W

- cm) 0.50 0.50 0.53 Wedge/Flange Dimensions

Freezer Flange Width (cm) 3.8 3.8 5.4 Freezer Wedge Depth (cm) 5.1 6.4 5.1 Resistivity (m2

- C/W

- cm) 0.5 0.5 0.5

Heat Paths

Freezer Gasket Heat Leak (W/m

- 100C) 9.5 8.0 8.0

Fzr Cabinet Penetration Heat Leak (W) 5 3 0

Fresh Food Cabinet

Insulation Thickness5

- A

- 13 Bottom

- Mount Refrigerator

- Freezers 18.5 ft 3 25 ft 3 E* , #1 25 ft 3 E* , #2 Top Wall (cm) 5.2 3.9 4.2 Side Wall (cm) 4.2 5.1 3.5 Back Wall (cm) 5.7 6.8 4.1 Door (cm) 4.3 4.9 6.9 Insulation Resistivity

All Walls (m2

- C/W

- cm) 0.50 0.50 0.53 Wedge/Flange Dimensions

Fresh Food Flange Width (cm) 3.8 3.8 3.4

Fresh Food Wedge Depth (cm) 10.2 11.4 0.0

Resistivity (m2

- C/W

- cm) 0.5 0.5 0.5

Heat Paths

FF Gasket Heat Leak (W/m

- 100C) 9.5 8.0 8.0

FF Cabinet Penetration Heat Leak (W) 0.0 3.0 0.0

Mullion Distance to Top (cm) 92.7 100.0 94.3 Thickness w/Liners (cm) 5.4 5.4 7.3 Resistivity w/Liners (m2

- C/W

- cm) 0.50 0.51 0.5 Air and Cabinet Temperatures Room Air (°C) 32.2 32.2 32.2 Freezer Section (°C)

- 15.0

- 15 .0

- 15 .0 Fresh Food Section (°C) 7.2 7.2 7.2 Air Under Cabinet (°C) 36.6 35.0 35.0 Compressor Compartment (  ̊C) 36.6 35.0 35.0 Air Entering Condenser (°C) 32.2 33.0 34.5 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Automatic Automatic

Timer Interval (Hr) 7.5 38.0 38.0

Heater On

- Time (Min) 7.0 7.0 24.0 Defrost Power (W) 375 450 440 Other Cycle

- Dependent Loads

Freezer Section (W) 0 0 0 Fresh Food Section (W) 3 0 0 Outside Cabinet (W) 0 0 0

Constant Electrical Loads

Freezer Section (W) 0.7 0.0 4.2 Fresh Food Section (W) 0.0 0.4 0.0 Outside Cabinet (W) 0.0 0.0 1.5 Liquid Refrigerant Line Anti

- Sweat Freezer Door Flange

Cycle Average Energy (W) 1.0 3.8 3.0 Fraction Heat Leak (0

- 1) 0.75 0.5 0.75 Fresh Food Door Flange

Cycle Average Energy (W) 0 0 05

- A

- 14 Bottom

- Mount Refrigerator

- Freezers 18.5 ft 3 25 ft 3 E* , #1 25 ft 3 E* , #2

Mullion

Cycle Average Energy (W) 2 1.3 1.0 Heat Leak to Freezer (0

- 1) 0.75 0.5 0.5 Heat Leak to Fresh Food (0

- 1) 0.15 0.25 0.25 Evaporator Design Exit Superheat (°C) 0.8 4.0 1.0 Fin Type ( plain , wavy, herringbone) Plain Plain Spine Fin Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) Shaded Pole Shaded Pole DC

- Input

BLDC Fan Power (W) 6.2 6.5 3.8 Air Flow Rate (Liter/s) 20 30 16.6

Tube Characteristics

Width of Tube Row 48.9 b 71.1 c 76.2 Tube OD (mm) 7.9 7.9 9.7 Tube Wall Thickness (mm) 0.5 0.5 1.1 # of Tubes Deep 4.5 b 4.5 c 7 Tube Pitch (cm) 3.8 3.6 2.5

# of Tubes Normal to Airflow 4 4 2 Normal Tube Pitch (cm) 1.9 1.9 2.5

Fin Characteristics Fin Thickness (mm) 0.13 0.13 0.25 Fin Pitch (mm) 5.1 5.1 9.5 Fin Conductivity (W/m

- K) 190 190 190 Fraction Finned (0

- 1) 0.98 0.89 1.0 Spine Fin Input Data Spine Height (mm) NA NA 10.5 Spine Width (mm) NA NA 0.8 Condenser Design Exit Subcooling (°C) 0.7 1.0 1.5 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin Tube & Fin Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Wire Wire Wire

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) AC

- Input

BLDC AC

- Input

BLDC DC

- Input

BLDC Fan Power (W) 3.8 3.7 2.6 Air Flow Rate (Liter/s) 30 30.8 23.7

Tube Characteristics

b Number of tubes in the air flow direction alternate 4 and 5, averaging 4.5. ERA analysis was conducted by selecting 4 rows deep and increasing the tube row width to 55.0 c m to compensate for the missing tubes.

c Number of tubes in the air flow direction alternate 4 and 5, averaging 4.5. ERA analysis was conducted by selecting 4 rows deep and increasing the tube row width to 80.0 cm to compensate for the missing tubes.5

- A

- 15 Bottom

- Mount Refrigerator

- Freezers 18.5 ft 3 25 ft 3 E* , #1 25 ft 3 E* , #2 Airflow Direction (W, L, H) L L H Tube OD (mm) 4.8 4.8 5.0 Tube Wall Thickness (mm) 0.5 0.6 0.64 Length of Tube in “L” Direction (cm) 34.9 34.9 52.4

# of Tubes in H Direction 2 2 3 Tube Pitch (cm) 2.2 3.8 0.8

# of Tubes in W Direction 26 30 10 Tube Pitch (cm) 2.2 2.2 2.5 Fraction Air through Exchanger (0

- 1) 0.8 1.0 1

Fin Characteristics

Wire OD (mm) 1.3 1.3 1.4

# of Wires on 1

- side 55 51 206 Wire Mounting (1

- side, 2

- sides) 2

- sides 2

- sides 2

- sides Wire Fin Pitch (mm) 4.8 4. 8 2.5 Wire Length (cm) 57.1 66.7 23.5 Wire Conductivity (W/m

- K) 44.7 44.7 44.7 Compressor Data

Manufacturer Embraco Tecumseh Embraco

Model EMX70HSC TPG1370YXA VEGY 8H Cycles per hour 1.0 1.5 0.45 Interchanger Effectiveness (0

- 1) NA 0.95 0.98 Compressor Shell Inlet Temperature (°C) 33.3 Unspecified Unspecified5

- A

- 16 Table 5

- A.2

. 4 : ERA Inputs for Built

- In Bottom

- Mount Refrigerator

- F reezers (Product

Class 5

- BI )

Built

- In B ottom

- M ount Refrigerator

- F reezer 21 ft 3 Baseline

General Data Fresh Food Volume ( ft 3 ) 13.3 Freezer Volume ( ft 3 ) 7.1 Total Volume ( ft 3 ) 20.4 Adjusted Volume ( ft 3 ) 24.9 Rated Energy Use (kWh/yr) 562 Calculated Max. Energy Use (kWh/yr) 573 Rated Energy Use Below Maximum (%) 1.9

Cabinet Dimensions Category (from ERA selection) Bottom

- Mount Cabinet Height (cm) 172.9 Cabinet Width (cm) 90.8 Depth, from Door Flange (cm) 57.2 Depth, from Door Outer Surface (cm) 61.0 Liner Properties Outer Liner Thickness (mm) 1.5 Outer Liner Conductivity (W/m

- C) 44.7 Inner Liner Thickness (mm) 0.9 Liner Conductivity (W/m

- C) 190

Freezer Cabinet

Insulation Thickness

Side Wall (cm) 4.9 Back Wall (cm) 4.4 Bottom (cm) 4.2 Door (cm) 4.6 Insulation Resistivity

Side Wall (m2

- C/W

- cm) 0.5 0 Back Wall (m2

- C/W

- cm) 0.5 0 Bottom (m2

- C/W

- cm) 0.5 0 Door (m2

- C/W

- cm) 0.5 0 Wedge/Flange Dimensions

Freezer Width (cm) 3.6

Freezer Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Freezer Gasket Heat Leak (W/m

- 100C) 9.0

Freezer Penetration Heat Leak (W) 0.0

Fresh Food Cabinet

Insulation Thickness

Top Wall (cm) 3.6 Side Wall (cm) 4.95

- A

- 17 Built

- In B ottom

- M ount Refrigerator

- F reezer 21 ft 3 Baseline Back Wall (cm) 4.4 Door (cm) 4.6 Insulation Resistivity

Top Wall (m2

- C/W

- cm) 0.5 0 Side Wall (m2

- C/W

- cm) 0.5 0 Back Wall (m2

- C/W

- cm) 0.5 0 Door (m2

- C/W

- cm) 0.5 0 Wedge/Flange Dimensions

Fresh Food Flange Width (cm) 3.6

Fresh Food Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Fresh Food Gasket Heat Leak (W/m

- 100C) 9.0

Fresh Food Cabinet Penetration Heat Leak (W) 0.0

Mullion Distance to Top (cm) 102.9 Thickness w/Liners (cm) 10.1 Resistivity w/Liners (m2

- C/W

- cm) 0.5 0 Air and Cabinet Temperatures Room Air (°C) 32.2 Freezer Section (°C)

- 15.0 Fresh Food Section (°C) 7.2 Air Under Cabinet (°C) 33.0 Compressor Compartment (  ̊C) 33.0 Air Entering Condenser (°C) 32.2 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Timer Interval (hr) 24

Heater On

- time (min) 10.0 Defrost Power (W) 484.2 Other Cycle

- Dependent Loads

Freezer Section (W) 0 Fresh Food Section (W) 0 Outside Cabinet (W) 0

Constant Electrical Loads

Freezer Section (W) 0 Fresh Food Section (W) 0 Outside Cabinet (W) 1.3 Liquid Refrigerant Line Anti

- Sweat Freezer Door Flange

Cycle Average Energy (W) 3.7 Fraction Heat Leak (0

- 1) 0.5 Fresh Food Door Flange5

- A

- 18 Built

- In B ottom

- M ount Refrigerator

- F reezer 21 ft 3 Baseline Cycle Average Energy (W) 2.2 Fraction Heat Leak (0

- 1) 0.5

Mullion

Cycle Average Energy (W) 1.7 Heat Leak to Freezer (0

- 1) 0.5 Heat Leak to Fresh Food (0

- 1) 0.3 Cycle Parameters Cycle Type Dual loop Cycling Losses YES Cycles/hr 1.5 Refrigerant R

- 134a Evaporator Design (Freezer) Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) AC

- Input

BLDC Fan Power (W) 4 Air Flow Rate (Liter/s) 16.5

Tube Characteristics

Width of Tube Row 46.4 Tube OD (mm) 9. 5 Tube Wall Thickness (mm) 0.6 4

# of Tubes Normal to Airflow 2 Normal Tube Pitch (cm) 1. 8 # of Tubes Deep 14 Tube Pitch (cm) 1. 3

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 4.2 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0. 88 Evaporator Design (Fresh Food) Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) AC

- Input

BLDC Fan Power (W) 3.1 Air Flow Rate (Liter/s) 14.2

Tube Characteristics

Width of Tube Row 50.6 Tube OD (mm) 9. 3 Tube Wall Thickness (mm) 0.6 4 # of Tubes Deep 25

- A

- 19 Built

- In B ottom

- M ount Refrigerator

- F reezer 21 ft 3 Baseline Tube Pitch (cm) 1. 1

# of Tubes Normal to Airflow 9 Normal Tube Pitch (cm) 1.9

Fin Characteristics

Fin Thickness (mm) 0.1 3 Fin Pitch (mm) 5. 1 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.90 Condenser Design (Freezer) Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Plain

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) Shaded Pole

Fan Power in Fan Energy Calculations (W) 6 1

Air Flow Rate (Liter/s) 18.9

Tube Characteristics

Width of Tube Row 34.0 Tube OD (mm) 6. 4 Tube Wall Thickness (mm) 0.46

# of Tubes Normal to Airflow 8 Normal Tube Pitch (cm) 1.3 # of Tubes along Airflow 2 Along Tube Pitch (cm) 2.2 Fraction Air through Exchanger (0

- 1) 1

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 3.6 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0. 86 Condenser Design (Fresh Food) Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Plain

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) Shaded Pole

Fan Power in Fan Energy Calculations (W) 6 1

Air Flow Rate (Liter/s) 18.9

Tube Characteristics5

- A

- 20 Built

- In B ottom

- M ount Refrigerator

- F reezer 21 ft 3 Baseline

Width of Tube Row 34.0 Tube OD (mm) 6. 4 Tube Wall Thickness (mm) 0.46

# of Tubes Normal to Airflow 8 Normal Tube Pitch (cm) 1.3 # of Tubes along Airflow 2 Along Tube Pitch (cm) 2.2 Fraction Air through Exchanger (0

- 1) 1

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 3.6 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0. 86 Compressor Data (Freezer)

Manufacturer Embraco

Model EGU70HL C Capacity Multiplier 1.0 Power Multiplier 1.0 Speed Multiplier 1.0 Compressor Data (Fresh Food)

Manufacturer Embraco

Model EMT30HSC Capacity Multiplier 1.0 Power Multiplier 1.0 Speed Multiplier 1.0
Interchanger s Effectiveness (0

- 1, Freezer) 0. 9 5 Effectiveness (0

- 1, Fresh Food) 0. 9 5 Compressor Shell Inlet Temperature (°C) Calculated

1 This product has a single condenser with a separate circuit for each of the two refrigeration systems. The single fan operates when one or two of the compressors are operating. The condenser fan power was set to 0W for each of these systems in ERA, and a p ost

- processing spreadsheet was used to calculate fan energy use with consideration of the overlap of the two

system on

- cycles.5

- A

- 21 Table 5

- A.2

. 5 : ERA Inputs for Bottom

- Mount Refrigerator

- Freezers w/TTD Ice (Product

Class 5 A )

Bottom

- Mount Refrigerator

- Freezers w/TTD Ice 25 ft 3

General Data

Fresh Food Volume (ft 3 ) 17.6

Freezer Volume (ft 3 ) 7.1 Total Volume (ft 3 ) 24.7 Adjusted Volume (ft 3 ) 29.2 Rated Energy Use (kWh/yr) 547 Calculated Max. Energy Use (kWh/yr) 68 5 % Rated Energy Use Below Maximum (%) 20.0

Cabinet Dimensions Category Bottom

- Mount Cabinet Height (cm) 171.1 Cabinet Width (cm) 91.4 Depth, from Door Flange (cm) 68. 6 Depth, from Door Outer Surface (cm) 76.2 Liner Properties Outer Liner Thickness (mm) 0.5 Outer Liner Conductivity (W/m

- C) 44.7 Inner Liner Thickness (mm) 1.4 Liner Conductivity (W/m

- C) 0.16 Compressor Compartment Dimensions Top Depth (cm) 13.5 Bottom Depth (cm) 26. 7 Height (cm) 24. 5 Wall (vertical) (cm) 6.8 Wall (horizontal) (cm) 6.8

Freezer Cabinet

Insulation Thickness

Side Wall (cm) 6. 8 Back Wall (cm) 7. 9 Bottom (cm) 6. 8 Door (cm) 7.1 Insulation Resistivity

All Walls (m2

- C/W

- cm) 0.4 8 d

Wedge/Flange Dimensions

Freezer Flange Width (cm) 4. 5 Freezer Wedge Depth (cm) 2.5 Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Freezer Gasket Heat Leak (W/m

- 100C) 8 e

d Pr oduct has insulation using cyclopentane blowing agent.5

- A

- 22 Bottom

- Mount Refrigerator

- Freezers w/TTD Ice 25 ft 3

Freezer Cabinet Penetration Heat Leak (W) 0

Fresh Food Cabinet

Insulation Thickness

Top Wall (cm) 5.2 Side Wall (cm) 5. 1 Back Wall (cm) 4.7 Door (cm) 5. 1 Insulation Resistivity

All Walls (m2

- C/W

- cm) 0.4 8 Wedge/Flange Dimensions

Fresh Food Flange Width (cm) 4. 8 Fresh Food Wedge Depth (cm) 11.4

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Fresh Food Gasket Heat Leak (W/m

- 100C) 8 f

Fresh Food Cabinet Penetration Heat Leak (W) 3.0

Mullion Distance to Top (cm) 102.2 Thickness w/Liners (cm) 5. 1 Resistivity w/Liners (m2

- C/W

- cm) 0.47 Air and Cabinet Temperatures Room Air (°C) 32.2 Freezer Section (°C)

- 15 .0 Fresh Food Section (°C) 7.2 Air Under Cabinet (°C) 35 .0 Compressor Compartment (  ̊C) 35.0 Air Entering Condenser (°C) 32.2 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic

Timer Interval (Hr) 38 .0

Heater On

- Time (Min) 12. 7 Defrost Power (W) 396 Other Cycle

- Dependent Loads

Freezer Section (W) 0 Fresh Food Section (W) 0 Outside Cabinet (W) 0

Constant Electrical Loads

Freezer Section (W) 0 Fresh Food Section (W) 0

e The checkbox indicating that the product has two drawers is checked.

f The checkbox indicating that the product has French doors is checked.5

- A

- 23 Bottom

- Mount Refrigerator

- Freezers w/TTD Ice 25 ft 3
Outside Cabinet (W) 4.0 Liquid Refrigerant Line Anti

- Sweat Freezer Door Flange

Cycle Average Energy (W) 3. 8

Fraction Heat Leak (0

- 1) 0.5 Fresh Food Door Flange

Cycle Average Energy (W) 0 Fraction Heat Leak (0

- 1) 0

Mullion

Cycle Average Energy (W) 1. 3 Heat Leak to Freezer (0

- 1) .5 Heat Leak to Fresh Food (0

- 1) .25 Evaporator Design Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) DC

- Input BLDC Fan Power (W) 1.5 Air Flow Rate (Liter/s) 16.0

Tube Characteristics

Width of Tube Row 70. 5 g Tube OD (mm) 7. 9 Tube Wall Thickness (mm) 0.7 # of Tubes Deep 4.5 g Tube Pitch (cm) 3.8

# of Tubes Normal to Airflow 4 Normal Tube Pitch (cm) 2.5

Fin Characteristics

Fin Thickness (mm) 0.15 Fin Pitch (mm) 5. 1 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.9 0 Condenser Design Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Wire

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

- Input BLDC) DC

- Input BLDC Fan Power (W) 1.56 Air Flow Rate (Liter/s) 24.0

Tube Characteristics

g Number of tubes in the air flow direction alternate 4 an d 5, averaging 4.5. ERA analysis was conducted by selecting 4 rows deep and increasing the tube row width to 79.3 cm to compensate for the missing tubes.5

- A

- 24 Bottom

- Mount Refrigerator

- Freezers w/TTD Ice 25 ft 3
Airflow Direction (W, L, H) W Tube OD (mm) 5.0 Tube Wall Thickness (mm) 0.6 4 Length of Tube in “L” Direction (cm) 15.2

# of Tubes in H Direction 12 Tube Pitch (cm) 2.2

# of Tubes in W Direction 10 Tube Pitch (cm) 2.5 Fraction Air through Exchanger (0

- 1) 0.9

Fin Characteristics

Wire OD (mm) 1.4

# of Wires on 1

- side 22 Wire Mounting (1

- side, 2

- sides) 2

- sides Wire Fin Pitch (mm) 6.4 Wire Length (cm) 18.0 Wire Conductivity (W/m

- K) 44.7 Compressor Data

Manufacturer Embraco

Model # E G X90HLC _BM25 Cycles per Hour 1.0 Interchanger Effectiveness (0

- 1) 0.955

- A

- 25 Table 5

- A.2

. 6 : ERA Inputs for Side

- Mount Refrigerator

- Freezers (Product Class es 4 and 7)

Side

- Mount Refrigerator

- Freezers PC7 26 ft 3 PC7 26 ft 3 E* PC4 22 ft 3

General Data Fresh Food Volume ( ft 3 ) 16.5 16.5 14.8

Freezer Volume (ft 3 ) 9.5 9.5 7.0 Total Volume (ft 3 ) 26.0 26.0 Adjusted Volume (ft 3 ) 32.0 32.0 26.3 Rated Energy Use (ft 3 ) 728 582 635 Calculated Max. Energy Use (kWh/yr) 729 729 637 % Rated Energy Use Below Maximum (%) 0.2 20.2 0.3

Cabinet Dimensions Category Side

- Mount Side

- Mount Side

- Mount Cabinet Height (cm) 165.9 165.9 162.6 Cabinet Width (cm) 90.2 90.2 85.1 Depth, from Door Flange (cm) 72.0 72.0 69.3 Depth, from Door Outer Surface (cm) 80.3 80.3 77.8

Liner Properties Outer Shell Thickness (mm) 0.5 1 0.4 Shell Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 0.5 1 0.4 Liner Conductivity (W/m

- C) 0.16 0.16 44.7 Compressor Compartment Dimensions Top Depth (cm) 15.9 15.9 24.1

Bottom Depth (cm) 27.9 27.9 30.5 Height (cm) 23.5 23.5 25.1 Wall (vertical) (cm) 8.3 8.3 5.8 Wall (horizontal) (cm) 8.3 8.3 5.8

Freezer Cabinet

Insulation Thickness

– Freezer

Top Wall (cm) 7.2 7.2 6.2 Side Wall (cm) 5.7 5.7 7.3 Back Wall (cm) 7.8 7.8 5.7 Bottom (cm) 8.3 8.3 5.8 Door (cm) 6.4 6.4 5.7 Insulation Resistivity

- Freezer All Walls (m2

- C/W

- cm) 0.50 0.50 0.5 Wedge/Flange Dimensions Freezer Wedge Depth (cm) 0.1 0.1 7.0 Freezer Flange Width (cm) 5.7 5.7 3.8

Heat Paths

Fzr Gasket Heat Leak (W/m

- 100C) 9.0 9.0 9.0

Fzr Cabinet Penetration Heat Leak (W) 7 .0 7 .0 8 .05

- A

- 26 Side

- Mount Refrigerator

- Freezers PC7 26 ft 3 PC7 26 ft 3 E* PC4 22 ft 3

Fresh Food Cabinet

Insulation Thickness

– Fresh Food

Top Wall (cm) 4.0 4.0 4.0 Side Wall (cm) 3.6 3.6 3.8 Back Wall (cm) 3.6 3.6 4.8 Bottom (cm) 6.2 6.2 4.7 Door (cm) 6.4 6.4 5.7 Insulation Resistivity

– Fresh Food

All Walls (m2

- C/W

- cm) 0.50 0.50 0.5 Wedge/Flange Dimensions

Fresh Food Wedge Depth (cm) 0.1 0.1 11.4 Fresh Food Flange Width (cm) 3.6 3.6 3.8

Heat Paths

FF Gasket Heat Leak (W/m

- 100C) 9.0 9.0 9.0

FF Cabinet Penetration Heat Leak (W) 4.0 4.0 5.0

Mullion

Distance to Right Side Wall (cm) 49.2 49.2 49.4 Thickness w/Liners (cm) 3.5 3.5 3.7 Resistivity w/Liners (m2

- C/W

- cm) 0.53 0.53 0.52 Air and Cabinet Temperatures Room Air (°C) 32.3 32.2 32.3 Freezer Section (°C)

- 15.0

- 15.0

- 15.0 Fresh Food Section (°C) 7.2 7.2 7.2 Air Under Cabinet (°C) 35.0 35.0 35 .0 Compressor Compartment (  ̊C) 35.0 35.0 35.0 Air Entering Condenser (°C) 33.0 33.0 33 .0 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Automatic Automatic Timer Interval (Hr) 24.0 24 .0 24

Heater On

- Time (Min) 5.0 5.0 18.0 Defrost Power (W) 500 500 535 Other Cycle

- Dependent Loads Freezer Section (W) 0 0 0 Fresh Food Section (W) 0 0 0 Outside Cabinet (W) 0 0 0

Constant Electrical Loads Freezer Section (W) 0 0 0 Fresh Food Section (W) 0.5 0.4 0 Outside Cabinet (W) 0 0 1.3

Electric Anti

- Sweat Heat Freezer Door Flange Cycle Average Energy (W) 2.1 2.1 0 Fraction Heat Leak (0

- 1) 0.5 0.5 0.55

- A

- 27 Side

- Mount Refrigerator

- Freezers PC7 26 ft 3 PC7 26 ft 3 E* PC4 22 ft 3

Liquid Refrigerant Line Anti

- Sweat Freezer Door Flange Cycle Average Energy (W) 3.0 3.0 3. 8 Fraction Heat Leak (0

- 1) 0.5 0.5 0.5 Fresh Food Door Flange Cycle Average Energy (W) 0 0 0 Fraction Heat Leak (0

- 1) 0 0 0

Mullion Cycle Average Energy (W) 3.0 3.0 1. 3 Heat Leak to Freezer (0

- 1) 0.5 0.5 0.25 Heat Leak to Fresh Food (0

- 1) 0.25 0.25 0.25 Evaporator Design Exit Superheat (°C) 4.0 4.0 2.0

Fin Type ( plain , wavy, herringbone) Plain Plain Specify air

- side

area and heat

transfer Fan Motor Type (Shaded Pole, AC

Input BLDC, DC

- Input BLDC) Shaded Pole Shaded Pole DC

- Input BLDC

Fan Power (W) 5.8 5.8 3.3 Air Flow Rate (Liter/s) 21.3 21.3 21.3

Tube Characteristics

Width of Tube Row 27.9 h 27.9 h 24.1 Tube OD (mm) 7.9 7.9 9.3 Tube Wall Thickness (mm) 0.7 0.7 0.8 # of Tubes Deep 7.5 h 7.5 h 16 Tube Pitch (cm) 3.8 3.8 2.9

# of Tubes Normal to Airflow 8 8 2 Normal Tube Pitch (cm) 1.3 1.3 5.1

Fin Characteristics Fin Thickness (mm) 0.2 0.2 0.25 Fin Pitch (mm) 5.1 5.1 9.5 Fin Conductivity (W/m

- K) 190 190 190 Fraction Finned (0

- 1) 0.77 0.77 1 Fin Data (for spine fin only)

Air

- side effective area (m 2 ) NA NA 1.52

Air

- side U

- Value (W/m 2

- C) NA NA 30 Condenser Design i i j

h Number of tubes in the air flow direction alternate 7 and 8, averaging 7.5. ERA analysis was condu cted by selecting 8 rows deep and decreasing the tube row width to 26.2 cm to compensate for the added tubes.

i Surface areas calculated by the condenser routine were increased by a factor of 2.63 for the 26 ft 3 side

- mount refrigerators to calibrate with t est data for condensing temperatures.5

- A

- 28 Side

- Mount Refrigerator

- Freezers PC7 26 ft 3 PC7 26 ft 3 E* PC4 22 ft 3
Exit Subcooling (°C) 0.0 0.0 0.0 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin Tube & Fin Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Wire Wire Wire

Fan Motor Type (Shaded Pole, AC

Input BLDC, DC

- Input BLDC) Shaded Pole AC

- Input

BLDC Shaded Pole

Fan Power (W) 8.5 3.4 9.1 Air Flow Rate (Liter/s) 26 26 26

Tube Characteristics Airflow Direction (W, L, H) W W H Tube OD (mm) 4.8 4.8 4.7 Tube Wall Thickness (mm) 0.6 0.6 0.63 Length of Tube in “L” Direction 18.2 18.2 58.0

# of Tubes in H Direction 9 9 2 Tube Pitch (cm) 2. 3 2. 3 2.5

# of Tubes in W Direction 10 10 10 Tube Pitch (cm) 2.5 2.5 2.5

Fin Characteristics Wire OD (mm) 1.1 1.1 1.3

# of Wires on 1

- side 23 23 111 Wire Mounting (1

- side, 2

- sides) 2

- sides 2

- sides 2

- sides Wire Fin Pitch (mm) 5.6 5.6 5.2 Wire Length (cm) 24.1 24.1 23.5 Wire Conductivity (W/m

- K) 44.7 44.7 44.7 Fraction Air through Exchanger (0

- 1) 1 1 1 Compressor Data

Manufacturer Tecumseh Embraco Matsushita

Model # TSA1374YAS EGX70HLC DC57C84RCU6 Cycles per Hour 1.12 1.16 0.7
Interchanger Effectiveness (0

- 1) 0.95 0.95 0.85 Component Adjustment Factors Condenser UA Multiplier 2.63 2.63 1.4

j Surface area calculated by the condenser routine was increased by a factor of 1.4 for the 22 ft 3 side

- mount refrigerator to calibrate with test data for condensing temperatures.5

- A

- 29 Table 5

- A.2

. 7 : ERA Inputs for Upright Freezers with Automatic Defrost (Product Class 9) Upright Freezers 14 ft 3 Baseline 20 ft 3 Baseline 20 ft 3 E*

General Data

Freezer Volume (ft 3 ) 13.7 20.1 20.1 Adjusted Volume (ft 3 ) 23.7 34. 8 34. 8 Rated Energy Use (kWh/yr) 621 745 671 Calculated Max. Energy Use (kWh/yr) 621 758 758

% Rated Energy Use Below Maximum (%) 0.0 1.8 11.5

Cabinet Dimensions Category Upright Freezer Upright Freezer Upright Freezer Cabinet Height (cm) 130. 2 156.2 156.2 Cabinet Width (cm) 71. 3 83.8 83.8 Depth, from Door Flange (cm) 66.7 6 4.5 6 4.5 Depth, from Door Outer Surface (cm) 72. 4 71.1 71.1 Liner Properties Outer Liner Thickness (mm) 0.4 0. 9 0. 9 Outer Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 0. 4 2. 2 2. 2 Liner Conductivity (W/m

- C) 44.7 0.16 0.16 Compressor Compartment Compressor Compartment part of

cabinet? NO NO NO

Insulation

Insulation Thickness

Top Wall (cm) 6. 4 4. 8 4. 8 Side Wall (cm) 6. 4 5.7 5.7

Back Wall (cm) 6. 4 5. 1 5. 1 Bottom Wall (cm) 6. 2 6.2 6.2 Door Average Thickness (cm) 3.8 7.1 7.1 Insulation Resistivity

All Wall s (m2

- C/W

- cm) 0.50 0.50 0.50 Wedge/Flange Dimensions

Wedge Depth (cm) 9.5 8. 9 8. 9 Flange Width (cm) 5.9 4.7 4.7

Heat Paths

Gasket Heat Leak (W/m

- 100C) 12 9 9 Cabinet Penetration Heat Leak (W) 8 17 17 Air and Cabinet Temperatures Room Air (°C) 32.2 32.2 32.2 Air Under Cabinet (°C) 35.0 35.5 35.5 Air Entering Condenser (°C) 32.2 32.2 32.2 Compressor Compartment (  ̊C) 35.0 35.5 35.55

- A

- 30 Upright Freezers 14 ft 3 Baseline 20 ft 3 Baseline 20 ft 3 E* Cabinet (°C)

- 17. 8

- 17. 8

- 17. 8

Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Automatic Automatic Timer Interval (Hr) 12 .0 9 .0 9 .0

Heater On

- Time (Min) 5.1 18 .0 18 .0 Defrost Power (W) 425 370 370 Other Cycle

- Dependent Loads Outside Cabinet (W) 0 0 0 Cabinet (W) 1.6 0.3 0.3

Constant Electrical Loads Outside Cabinet (W) 0 0 0 Cabinet (W) 0 0 0 Refrigerant Line Anti

- Sweat None None None Evaporator Design Exit Superheat 5.0 0.0 0.0 Fin Type ( plain , wavy, herringbone) Plain Plain Plain Fan Motor Type (Shaded Pole, AC

Input BLDC, DC

- Input BLDC) Shaded Pole Shaded Pole AC

- Input BLDC

Fan Power (W) 7.4 11.2 4.5 Air Flow Rate (Liter/s) 26.0 23.7 23. 7

Tube Characteristics

Width of Tube Row 55.9 k 50. 2 50. 2 Tube OD (mm) 7.8 8.6 8.6 Tube Wall Thickness (mm) 0. 8 0.9 0. 9 # of Tubes Deep 4.5 k 9 9 Tube Pitch (cm) 3.8 3.2 3.2

# of Tubes Normal to Airflow 4 2 2 Normal Tube Pitch (cm) 1.3 2.5 2.5

Fin Characteristics Fin Thickness (mm) 0. 18 0.2 4 0.2 4 Fin Pitch (mm) 4.6 5. 1 5. 1 Fin Conductivity (W/m

- K) 190 190 190 Fraction Finned (0

- 1) 0. 9 0.9 0.9 Condenser Design Exit Subcooling (°C) 3 1 1 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Hot

- wall Hot

- wall Hot

- wall

Design Data Total Area (sides) (m 2 ) 2.0 2. 1 2. 1

Width

, Side Normal to Tubes (cm) 288 333 333

k Number of tubes in the air flow dire ction alternate 4 and 5, averaging 4.5. ERA analysis was conducted by selecting 4 rows deep and increasing the tube row width to 62.9 cm to compensate for the missing tubes.5

- A

- 31 Upright Freezers 14 ft 3 Baseline 20 ft 3 Baseline 20 ft 3 E* Number of Legs 26 30 30 Length of Tubing on Wall (m) 20.3 22.0 22.0 Tube OD (mm) 4.7 6. 4 6. 4 Tube Wall Thickness (mm) 0. 8 0.8 0.8 Thickness of Liner (mm) 0. 38 0. 9 0. 9 Thermal Conductivity (W/m

- K) 44.7 44.7 44.7 Number of other Hot Walls (0

- 2) 1 1 1 Second Hotwall (Top) Total Area (m 2 ) 0.47 0.52 0.52

Width

, Side Normal to Tubes (cm) 71 84 84 Number of Legs 7 8 8 Length of Tubing on Wall (m) 5.4 5.8 5.8 Compressor Data

Manufacturer Embraco Matsushita Matsushita

Model # EMY60HER DG73C12RAU6 DG73C12RAU6 Cycles per Hour 1.4 1.5 1.5 Interchanger Effectiveness (0

- 1) 0.7 0.98 0.985

- A

- 32 Table 5

- A.2

. 8 : ERA Inputs for Built

- In Upright F reezers (Product Class 9

- BI )

Built

- In Upright F reezer 21 ft 3 E*

General Data Upper Compartment Volume ( ft 3 ) 13.6 Lower Compartment Volume ( ft 3 ) 7. 9 Total Volume ( ft 3 ) 21.5 Adjusted Volume ( ft 3 ) 37.1 Rated Energy Use (kWh/yr) 613 Calculated Max. Energy Use (kWh/yr) 787 Rated Energy Use Below Maximum (%) 22.1

Cabinet Dimensions Category (from ERA selection) Bottom

- Mount Cabinet Height (cm) 172.9 Cabinet Width (cm) 90.8 Depth, from Door Flange (cm) 57.2 Depth, from Door Outer Surface (cm) 61.0 Liner Properties Outer Liner Thickness (mm) 1.5 Outer Liner Conductivity (W/m

- C) 44.7 Inner Liner Thickness (mm) 0.9 Liner Conductivity (W/m

- C) 190 Lower Compartment Cabinet

Insulation Thickness

Side Wall (cm) 4.9 Back Wall (cm) 4.4 Bottom (cm) 4.2 Door (cm) 5.2 Insulation Resistivity

Side Wall (m2

- C/W

- cm) 0.73 Back Wall (m2

- C/W

- cm) 0.88 Bottom (m2

- C/W

- cm) 0.76 Door (m2

- C/W

- cm) 0.68 Wedge/Flange Dimensions

Lower Compartment Flange Width (cm) 3.6 Lower Compartment Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Lower Compartment Gasket Heat Leak (W/m

- 100C) 9.0 Lower Compartment Penetration Heat Leak (W) 0.0 Upper Compartment Cabinet

Insulation Thickness

Top Wall (cm) 3.6 Side Wall (cm) 4.9 Back Wall (cm) 4.45

- A

- 33 Built

- In Upright F reezer 21 ft 3 E* Door (cm) 3.6 Insulation Resistivity

Top Wall (m2

- C/W

- cm) 0.5 0 Side Wall (m2

- C/W

- cm) 0.5 0 Back Wall (m2

- C/W

- cm) 0.5 0 Door (m2

- C/W

- cm) 0.87 Wedge/Flange Dimensions

Upper Compartment Flange Width (cm) 3.6 Upper Compartment Wedge Depth (cm) 6.7

Resistivity (m2

- C/W

- cm) 0.5

Heat Paths

Upper Gasket Heat Leak (W/m

- 100C) 9.0 Upper Cabinet Penetration Heat Leak (W) 0.0

Mullion Distance to Top (cm) 102.9 Thickness w/Liners (cm) 10.1 Resistivity w/Liners (m2

- C/W

- cm) 0. 001 Air and Cabinet Temperatures Room Air (°C) 32.2 Lower Compartment Section (°C)

- 17.7 Upper Compartment Section (°C)

- 17.8 Air Under Cabinet (°C) 33.0 Compressor Compartment (  ̊C) 33.0 Air Entering Condenser (°C) 32.2 Defrost and Controls Energy Defrost Type (Automatic, Manual) Automatic Timer Interval (hr) 24

Heater On

- time (min) 10.0 Defrost Power (W) 762 Other Cycle

- Dependent Loads

Lower Compartment Section (W) 0 Upper Compartment Section (W) 0 Outside Cabinet (W) 0

Constant Electrical Loads

Lower Compartment Section (W) 0 Upper Compartment Section (W) 0 Outside Cabinet (W) 1.3 Liquid Refrigerant Line Anti

- Sweat Lower Compartment Door Flange

Cycle Average Energy (W) 3.7 Fraction Heat Leak (0

- 1) 0.5 Upper Compartment Door Flange

Cycle Average Energy (W) 3.75

- A

- 34 Built

- In Upright F reezer 21 ft 3 E* Fraction Heat Leak (0

- 1) 0.5

Mullion

Cycle Average Energy (W) 2.2 Heat Leak to Lower Compartment (0

- 1) 0.4 Heat Leak to Upper Compartment (0

- 1) 0.4 Cycle Parameters

Cycle Type Single Evaporator Cycling Losses YES Cycles/hr 1.5 Refrigerant R

- 134a Evaporator Design Exit Superheat (°C) 0.8 Fin Type ( plain , wavy, herringbone) Plain Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) AC

- Input

BLDC Fan Power (W) 3.1 Air Flow Rate (Liter/s) 2 1

. 2

Tube Characteristics

Width of Tube Row 65.1 Tube OD (mm) 9. 5 Tube Wall Thickness (mm) 0. 31

# of Tubes Normal to Airflow 1 Normal Tube Pitch (cm) 2.5 # of Tubes Deep 20 Tube Pitch (cm) 2.5

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 4.2 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0.9 2 Condenser Design Exit Subcooling (°C) 0.7 Configuration (Static, Hot

- wall, Tube & Fin, Microchannel) Tube & Fin

Air

- side Configuration (wire, plain, smooth wavy, herringbone, slit, louver) Plain

Fan Motor Type (Shaded Pole, AC

- Input BLDC, DC

Input BLDC) AC

- Input

BLDC Fan Power (W) 4 Air Flow Rate (Liter/s) 37.8

Tube Characteristics

Width of Tube Row 46.25

- A

- 35 Built

- In Upright F reezer 21 ft 3 E* Tube OD (mm) 6. 4 Tube Wall Thickness (mm) 0.46

# of Tubes Normal to Airflow 8 Normal Tube Pitch (cm) 1.3 # of Tubes along Airflow 2 Along Tube Pitch (cm) 2.2 Fraction Air through Exchanger (0

- 1) 1

Fin Characteristics

Fin Thickness (mm) 0.1 9 Fin Pitch (mm) 3.6 Fin Conductivity (W/m

- K) 190 Fraction Finned (0

- 1) 0. 87 Compressor Data

Manufacturer Embraco

Model EGX90HL C Capacity Multiplier 1.0 Power Multiplier 1.0 Speed Multiplier 1.0 Interchanger s Effectiveness (0

- 1) 0. 9 5 Compressor Shell Inlet Temperature (°C) Calculated5

- A

- 36 Table 5

- A.2

. 9 : ERA Inputs for Chest Freezers with Manual Defrost (Product Class 10)

Chest Freezers 15 ft 3 Baseline 15ft 3 E* 20 ft 3 Baseline

General Data Freezer Volume ( ft 3 ) 14. 8 14. 8 19.9 Adjusted Volume (ft 3 ) 25.6 25.6 34.4 Rated Energy Use (kWh/yr) 394 354 480 Calculated Max. Energy Use (kWh/yr) 397 397 48 4 Rated Energy Use Below Maximum (%) 0. 7 10.8 0.8

Cabinet Dimensions Category (from ERA selection) Chest Freezer Chest Freezer Chest Freezer Cabinet Height (cm) 116.8 116.8 155. 9 Cabinet Width (cm) 68. 6 68. 6 69. 9 Depth, from Door Flange (cm) 81.1 81.1 81.6 Depth, from Door Outer Surface (cm) 86.8 86.8 87.0 Liner Properties Outer Liner Thickness (mm) 0.5 0.5 0.5 Outer Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 1. 3 1. 3 0. 4 Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Compressor Compartment Dimensions l
Height (cm) 27.9 27.9 22. 9 Depth (cm) 9.1 9.1 22. 2 Fractional width of compartment (cm) 1 1 1 Top Wall Insulation Thickness (cm) 6.9 6.9 7.7

Front Wall Insulation Thickness (cm) 5.1 5.1 7.7

Insulation Thickness Side Wall (cm) 6.6 6.6 6. 7 Bottom (cm) 6. 4 6. 4 7.0 Door (cm) 4. 8 4. 8 5. 1 Insulation Resistivity

All Wall s (m2

- C/W

- cm) 0. 5 0.5 0.5 Door (m2

- C/W

- cm) 0.5 0.5 0.33 Wedge/Flange Dimensions

Wedge Depth (cm) 1. 3 1. 3 1.0 Flange Width (cm) 4.6 4.6 5.4 Wedge Depth (cm) 1. 3 1. 3 1.0

Resistivity (m2

- C/W

- cm) 0.5 0.5 0.5

Heat Paths

Gasket Heat Leak (W/m

- 100C) 9 9 9 Cabinet Penetration Heat Leak (W) 0.0 0.0 6.5 Air and Cabinet Temperatures

l Windows ERA allows incorporation of the compressor compartment either into the long or the short wall. DOS ERA allowed incorporation only into the short wall, so the short wall option should be entered for Windows ERA.5

- A

- 37 Chest Freezers 15 ft 3 Baseline 15ft 3 E* 20 ft 3 Baseline Room Air (°C) 32.2 32.2 32.2 Air Under Cabinet (°C) 38.0 38 .0 36.0 Air Entering Condenser (°C) 32.2 32.2 33.0 Compressor Compartment (°C) 38.0 38.0 36.0 Cabinet (°C)

- 17. 8

- 17. 8

- 17. 8

Defrost and Controls Energy Defrost Type (Automatic, Manual) Manual Manual Manual Other Cycle

- Dependent Loads

Outside Cabinet (W) 0 0 0 Inside Cabinet (W) 0 0 0

Constant Electrical Loads

Outside Cabinet (W) 0 .4 0.4 0.1 Inside Cabinet (W) 0 0 0 Refrigerant Line Anti

- Sweat None None None Evaporator Design (Cold Wall) Exit Superheat 0 .5 0.5 0.5 Tube OD (mm) 6. 4 6. 4 7. 9 Tube Wall Thickness (mm) 0. 8 0. 8 0. 8 Side Walls (perimeter)

Total Area of Side Walls (m 2 ) 1. 57 1. 57 2.73 Number of Tube Legs 9 9 9

Width Normal to Tubes 49.1 49.1 73 Liner Thickness (mm) 1.3 1.3 0.4 Liner Conductivity (W/mK) 44.7 44.7 44.7

Bottom Surface Area of Bottom Surface (m 2 ) 0.17 0.17 0.3 Number of Tube Legs 3 3 2

Width Normal to Tubes 16.4 16.4 15 Condenser Design Exit Subcooling (°C) 0 .5 0 .5 0 .5 Configuration Hot

- wall Hot

- wall Hot

- wall Total Area (m 2 ) 2. 0 2. 0 2.6 Width of Side Normal to Tubes (cm) 53.3 53.3 50.6 Number of Legs 6 6 6 Length of Tubing on Wall (m) 22.3 22.3 32.2 Tube OD (mm) 4.8 4.8 4.8 Tube Wall Thickness (mm) 0. 8 0. 8 0. 8 Thickness of Liner (mm) 0.5 0.5 0.5 Thermal Conductivity (W/m

- K) 44.7 44.7 44.7 Number of other Hot Walls (0

- 2) 0 0 0

Second Hotwall None None None Compressor Data

Manufacturer Matsushita Matsushita Matsushita5

- A

- 38 Chest Freezers 15 ft 3 Baseline 15ft 3 E* 20 ft 3 Baseline

Model # SF51C97RAU6 DG57C84RAU6 DGH66C94RAU Cycles per Hour 1.0 1.0 1.0 Interchanger Effectiveness (0

- 1) 0.9 0.9 0.75

- A

- 39 Table 5

- A.2

. 10 : ERA Inputs for Compact Refrigerator s (Product Class 11) Compact Refrigerator s 4 ft 3 Baseline 4 ft 3 E* 1.7 ft 3

General Data Fresh Food Volume ( ft 3 ) 3.3 3. 65 1.5

Freezer Volume ( ft 3 ) 0.7 m 0.4 4 0.2 Total Volume ( ft 3 ) 4.0 4.1 1.7 Adjusted Volume ( ft 3 ) 4. 3 4.3 1.7 n Rated Energy Use (kWh/yr) 340 270 296 Calculated Max. Energy Use (kWh/yr) 345 345 317 Rated Energy Use Below Maximum (%) 1.5 22 6.8

Cabinet Dimensions

Category Single Door

w/ Ice Box Single Door

w/ Ice Box Single Door

w/ Ice Box Cabinet Height (cm) 83.5 83.8 47.0 Cabinet Width (cm) 47.3 49.5 44.5 Depth, from Door Flange (cm) 40.4 45.6 40.6 Depth, from Door Outer Surface (cm) 44.5 50.2 44.8 Liner Properties Outer Liner Thickness (mm) 0.8 0.5 0.4 Outer Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 1.3 1.1 1.3 Liner Conductivity (W/m

- C) 0.16 0.16 0.16 Compressor Compartment Dimensions Height (cm) 21.6 20.3 19.1

Horizontal Wall Thickness (cm) 3.4 4.3 3.8 Top Depth (cm) 16.2 12.7 13.0

Vertical Wall Thickness (cm) 3.3 3 .0 2.8 Bottom Depth (cm) 16.2 12.7 13.0

Insulation Thickness

– Fresh Food Top Wall (cm) 2.5 4.1 3.4 Side Wall (cm) 2.7 4.1 3.4 Back Wall (cm) 3.3 5.8 3.5 Bottom (cm) 2.5 4.8 3.1 Door (cm) 2.8 4.3 3.3 Insulation Resistivity

– Fresh Food

All Wall s (m2

- C/W

- cm) 0.50 0.5 0 0.50 Wedge/Flange Dimensions Fresh Food Flange Width (cm) 2.3 3.3 2.5 Fresh Food Wedge Depth (cm) 0 0 0.6

m The rated freezer volume is 0.7 ft 3 as indicated, but the volume based on observed freezer dimensions is 0.4 ft 3

n This product is classified as an all

- refrigerator for testing and rating purposes, since its freezer compartment is less

than 0.5 ft 3 in volume. It is not clear wheter the 4 ft 3 E* product was also rated as an all

- refrigerator based on

available data. DO E analyzed both 4 ft 3 products as basic refrigerators and the 1.7 ft 3 product as an all

- refrigerator.5

- A

- 40 Compact Refrigerator s 4 ft 3 Baseline 4 ft 3 E* 1.7 ft 3
Resistivity (m2

- C/W

- cm) 0.5 0.5 0.5

Heat Paths Gasket Heat Leak (W/m

- 100C) 12.0 9.0 12.0 Cabinet Penetration Heat Leak (W) 0 0 2.5 Air and Cabinet Temperatures Room Air (°C) 32.2 32.2 32.2 Freezer Section (°C)

- 9.4

- 9.4

- 3.9 Fresh Food Section (°C) 7.2 7.2 3.3 Air Under Cabinet (°C) 35.0 36.6 35.0 Compressor Compartment (°C) 35.0 36.6 35.0 Air Entering Condenser (°C) 32.2 32.2 32.2 Defrost and Controls Energy Defrost Type (Manual, Cycle ) Manual Manual Manual Cycle

- Dependent Loads

Inside Cabinet (W) 0 0 0 Outside Cabinet (W) 0 0 0

Constant Electrical Loads

Inside Cabinet (W) 0 0 0 Outside Cabinet (W) 0 0 0

Anti

- Sweat Heat None None None Evaporator Design Exit Superheat (°C) 0.5 0.1 2.0

Tube Height (mm) Width (mm) Hydraulic Diameter (mm) 4.4

9 .5

6.1 4.7

9.5

6.3 4.3

9.5

5.9 Refrigerant Tube Length (m) 6. 7 6. 1 3.1 Number of Legs 11 1 0 8 Freezer Surfaces: Present (Y/N), Spacing to Cabinet Wall (cm) Top N N N

Left Y 1.4 Y 1.6 Y 1 5 Right Y 1.4 Y 1.6 Y 1.3

Freezer Box Dimensions

Width (cm) 38.7 38.4 21.0 Height (cm) 11.4 12.7 8.9 Depth (cm) 25.4 24.8 2 1 .0 Inner Door (Y or N) Y Y Y Condenser Design Exit Subcooling (°C) 1 .0 1.0 0. 5 Heat Transfer Type (Static, Hot

- wall, Tube & Fin, Microchannel) Static Static Hot

- wall

Static Condenser Details

Fin Type Wire Wire NA5

- A

- 41 Compact Refrigerator s 4 ft 3 Baseline 4 ft 3 E* 1.7 ft 3
Tube OD (mm) 4.8 4.8 NA Tube Wall Thickness (mm) 0.6 0.6 NA

Number of Tube Rows 9 9 NA Tube Pitch (mm) 6.0 6.0 NA Width of Tube Row (cm) 43.2 43.2 NA Wire OD (mm) 1.5 1.5 NA Wire Length (cm) 60.3 60.3 NA

# of Wires 98 98 NA Wire Conductivity (W/m

- K) 44.7 44.7 NA

Hot Wall Condenser Details First Hot Wall (sides)

Total Area of Side Panels (m2) NA NA 0.3 3 Width of Side Normal to Tubes (cm) NA NA 94.0 Number of Legs NA NA 16 Length of Tubing on Wall (m) NA NA 6. 0 Tube OD (cm) NA NA 3.9 Tube Wall (mm) NA NA 0.76 Liner Thickness (mm) NA NA 0.38

Thermal Conductivity (W/mK) NA NA 44.7 Second Hot Wall (top)

Total Area (m2) NA NA 0. 10 Width Normal to Tubes (cm) NA NA 23.5 Number of Legs NA NA 4 Length of Tubing on Wall (m) NA NA 1.7 Compressor Data

Manufacturer ZEL LG Huayi

Model # GVT44AD NSA36LACG AES25DS Cycles per Hour 4.0 5.0 3.0 Interchanger Effectiveness (0

- 1) 0.8 0. 9 8 0.75

- A

- 42 Table 5

- A.2

. 11 : ERA Inputs for Compact Chest Freezers (Product Class 18) Compact Chest Freezers 3.4 ft 3 7.0 ft 3 , #1 7.0 ft 3 , #2

General Data

Freezer Volume ( ft 3 ) 3.4 7.0 7.0 Adjusted Volume (ft 3 ) 5.9 12.1 12.1 Rated Energy Use (kWh/yr) 213 277 276 Calculated Max. Energy Use (kWh/yr) 213 279 279 Rated Energy Use Below Maximum (%) 0 0.6 0.9

Cabinet Dimensions Category Chest Freezer Chest Freezer Chest Freezer

Cabinet Length (cm) 53.3 92.7 94.0 Cabinet Width (cm) 58.4 51.8 58.4 Depth, from Door Flange (cm) 76.2 74.6 73.3 Depth, from Door Outer Surface (cm) 81.3 80.0 78.7 Liner Properties Outer Liner Thickness (mm) 0.5 0.6 0.9 Outer Liner Conductivity (W/m

- C) 44.7 44.7 44.7 Inner Liner Thickness (mm) 0.4 0.4 1.0 Liner Conductivity (W/m

- C) 190 190 190 Compressor Compartment Dimensions o Height (cm) 21.0 28.6 22.9 Depth (cm) 19.7 18.1 22.9 Fractional width of compartment (0

- 1) 1 1 1 Top Wall Insulation Thickness (cm) 6. 6 7.0 6.4 Front Wall Insulation Thickness (cm) 6. 4 7.0 7.3

Location Short Wall Short Wall Short Wall

Insulation Thickness

– Freezer Side Wall (cm) 6.7 6.0 6.4 Bottom Wall (cm) 6.3 5.1 7.3 Door (cm) 5.8 6.4 5.5 Insulation Resistivity

– Freezer All Walls (m2

- C/W

- cm) 0.5 0.5 0.53 Wedge/Flange Dimensions Wedge Depth (cm) 1.0 1.0 1.9 Flange Width (cm) 3.8 4.0 4.4

Heat Paths

Gasket Heat Leak (W/m

- 100C) 7.5 7.5 7.5 Cabinet Penetration Heat Leak (W) 0 0 0 Air and Cabinet Temperatures Room Air (°C) 32.2 32.2 32.2 Air Under Cabinet (°C) 35.0 35.0 35.0

o Windows ERA allows incorporation of the compressor compartment either into the long or the short wall. DOS ERA allowed incorporation only into the shor t wall, so the short wall option should be entered for Windows ERA.5

- A

- 43 Compact Chest Freezers 3.4 ft 3 7.0 ft 3 , #1 7.0 ft 3 , #2 Air Entering Condenser (°C) 32.2 32.2 32.2 Compressor Compartment (°C) 35.0 35.0 35.0 Cabinet Setpoint (°C)

- 17.8

- 17.8

- 17.8 Defrost and Controls Energy Defrost Type (Manual, Auto) Manual Manual Manual Cycle

- Dependent Loads Inside Cabinet (W) 0 0 0 Outside Cabinet (W) 0 0 0

Constant Electrical Loads Inside Cabinet (W) 0 0 0 Outside Cabinet (W) 0.4 0.2 0.1

Anti

- Sweat Heat None None None Evaporator Design Exit Superheat (°C) 0.5 0.5 0.0 Tube OD (mm) 8.0 7.6 6.4 Tube Wall Thickness (mm) 0.6 0.6 0.6 Liner Thickness (mm) 0.4 0.4 1.0 Liner Conductivity (W/m

- K) 190 190 190 Total Area of Side Walls (m2) 1. 1 1. 43 1.5 Number of Legs 10 9 12 Width Normal to Tubes (cm) 68.3 72 64.8 Condenser Design Exit Subcooling (°C) 0.5 0.5 0.0 Heat Transfer Type (Static, Hot

- wall, Tube & Fin, Microchannel) Static Hot

- wall Hot

- wall

Static Condenser Details Fin Type Wire NA NA Tube OD (mm) 6.0 NA NA Tube Wall Thickness (mm) 0.64 NA NA

Number of Tube Rows 14 NA NA Tube Pitch (mm) 4.6 NA NA Width of Tube Row (cm) 47.0 NA NA Wire OD (mm) 1.4 NA NA Wire Length (cm) 64.5 NA NA

# of Wires 110 NA NA Wire Conductivity (W/m

- K) 44.7 NA NA

Hot Wall Condenser Details

Total Area of Side Panels (m2) NA 1.5 1.72 Width of Side Normal to Tubes (cm) NA 53.3 241 Number of Legs NA 7 32 Length of Tubing on Wall (m) NA 20.2 19.6 Tube OD (mm) NA 4.6 3.9 Tube Wall Thickness (mm) NA 0.6 0.55

- A

- 44 Compact Chest Freezers 3.4 ft 3 7.0 ft 3 , #1 7.0 ft 3 , #2 Liner Thickness (mm) NA 0.64 0.9 Thermal Conductivity (W/mK) NA 44.7 44.7 Compressor Data

Manufacturer Jiangsu Baixu e p Danfoss ZEL

Model # QDH3511G TTE4.6GFK GVY44AD Cycles per Hour 2.25 1.3 2.0 Interchanger Effectiveness (0

- 1) 0.95 0.95 0.95

p Jiangsu Baixue Electric Appliances Co. Ltd.5

- A

- 45 5

- A.3 INCREMENTAL COST DET AIL

The tables in this section identify the groups of design options and their associated costs for all analyzed efficiency levels for the reverse

- engineering units for which the full incremental cost analysis was conducted

.5

- A

- 46 Table 5

- A.3

. 1 : Incremental Cost Detail for 16 ft 3 Top

- Mount Refrigerator

- Freezer (Product Class 3)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Condenser Size by

100% $8.46 $0.00 $0.00 $0.00 $2.20 $10.66 $20.44 $20.44 Increase Compressor EER from

5.55 to 6.1 $7.76 $0.00 $0.00 $0.00 $2.02 $9.78

15% Increase Compressor EER from

6.1 to 6.26 $3.00 $0.00 $0.00 $0.00 $0.78 $3.78 $9.20 $29.64

Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42

20% Increase Evaporator Size by

14% $0.84 $0.00 $0.00 $0.00 $0.22 $1.06
$95.85 $125.50 Adaptive Defrost $8.00 $0.00 $0.00 $0.00 $2.08 $10.08 Variable Speed Compressor $67.23 $0.00 $0.00 $0.00 $17.48 $84.71

25% 12.2 sqft VIP in FZR Cabinet $39.92 $4.17 $5.16 $12.80 $62.05 $62.05 $187.54

30% 2.9 sqft VIP in FZR Door $9.50 $0.42 $1.16 $2.88 $13.96
$82.58 $270.12 7.1 sqft VIP in FF Door $23.08 $0.42 $2.75 $6.82 $33.07 6.7 sqft VIP in FF Cabinet $22.00 $3.25 $2.96 $7.34 $35.55

30.6% 1.9 sqft more VIP in FF Cabinet $6.19 $0.91 $0.83 $2.06 $9.99 $9.99 $280.125

- A

- 47 Table 5

- A.3

. 2 : Incremental Cost Detail for 21 ft 3 Top

- Mount Refrigerator

- Freezer (Product Class 3)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

4.92 to 5.57 $2.52 $0.00 $0.00 $0.00 $0.66 $3.18 $3.18 $3.18

15% Increase Compressor EER from

5.57 to 5.96 $5.27 $0.00 $0.00 $0.00 $1.37 $6.63 $6.63 $9.81

20% Increase Compressor EER from

5.94 to 6.08 $2.38 $0.00 $0.00 $0.00 $0.62 $3.00

$10.95 $20.76 Increase Evaporator Size by

25% $2.01 $0.00 $0.00 $0.00 $0.52 $2.53

Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42

25% Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17 $5.17 $25.92

30% Adaptive Defrost $8.00 $0.00 $0.00 $0.00 $2.08 $10.08
$64.87 $90.80 3.6 sqft VIP in FZR Door $11.73 $0.42 $1.42 $3.53 $17.09 7.6 sqft VIP in FZR Cabinet $24.82 $1.97 $3.13 $7.78 $37.70

35.5% Remove 0.9 sqft VIP FZR

Cabinet - $2.79

- $0.22

- $0.35

- $0.87

- $4.23 $81.24 $172.03 Variable Speed Compressor $67.84 $0.00 $0.00 $0.00 $17.64 $85.47

40.5% 7.6 sqft VIP in FZR Cabinet $18.73 $1.49 $2.37 $5.87 $28.45
$120.24 $292.27 8.5 sqft VIP in FF Door $27.76 $0.42 $3.30 $8.18 $39.65 10.9 sqft VIP in FF Cabinet $35.56 $1.48 $4.33 $10.76 $52.135

- A

- 48 Table 5

- A.3

. 3 : Incremental Cost Detail for 21 ft 3 Built

- in All

- R efrigerator (Product Class 3 A

- BI )

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Decrease Both Compressor Capacit ies (same EER) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$7.14 $7.14 10% Increase to Condenser Area $1.00 $0.00 $0.00 $0.00 $0.40 $1.40 BLDC Evaporator Fan Upper Evaporator $4.10 $0.00 $0.00 $0.00 $1.64 $5.74

15% BLDC Evaporator Fan Lower Evaporator $4.10 $0.00 $0.00 $0.00 $1.64 $5.74 $11.76 $18.90

BLDC Condenser Fan $4.30 $0.00 $0.00 $0.00 $1.72 $ 6.02

20% VIP

-- Upper Door $30.80 $0.42 $3.65 $13.95 $48.82 $108.20 $127.10 VIP

-- Lower Cabinet $35.49 $2.48 $4.44 $16.97 $59.38

25% VIP

-- Lower Cabinet $24.20 $1.69 $3.03 $11.57 $40.48
$144.99 $272.09 VIP

-- Upper Cabinet $12.53 $4.17 $1.95 $7.46 $26.11
Upper System VSC $56.00 $0.00 $0.00 $0.00 $22.40 $78.40

29 % VIP

-- Lower Doors $19.54 $0.42 $2.33 $8.92 $31.20 $109.60 $381.70 Lower System VSC $56.00 $0.00 $0.00 $0.00 $22.40 $78.405

- A

- 49 Table 5

- A.3

. 4 : Incremental Cost Detail for 18.5 ft 3 Bottom

- Mount Refrigerator

- Freezer (Product Class 5)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

5.61 to 6.26 $9.98 $0.00 $0.00 $0.00 $2.60 $12.58

$20.89 $20.89 Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17

Increase Evaporator Size by

25% $2.50 $0.00 $0.00 $0.00 $0.65 $3.15

15% Adaptive Defrost $8.00 $0.00 $0.00 $0.00 $2.08 $10.08

$12.35 $33.24 Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42

Remove Evaporator Size

Increase - $2.50 $0.00 $0.00 $0.00

- $0.65

- $3.15

20% Variable Antisweat Heat Control $17.48 $0.00 $0.00 $0.00 $4.54 $22.02
$25.17 $58.42 Increase Evaporator Size by

25% $2.50 $0.00 $0.00 $0.00 $0.65 $3.15

25% Variable Speed Compressor $60.02 $0.00 $0.00 $0.00 $15.60 $75.62 $86.84 $145.26 2.4 sqft VIP in FZR Door $7.76 $0.21 $0.93 $2.31 $11.22

30% 6.8 sqft VIP in FF Door $22.09 $0.42 $2.63 $6.54 $31.68
$111.75 $257.01 2.4 sqft more VIP in FZR Door $7.76 $0.21 $0.93 $2.31 $11.22 13.7 sqft VIP in FZR Cabinet $44.76 $4.17 $5.72 $14.21 $68.86

32 % 7.2 sqft VIP in FF Cabinet $23.49 $4.17 $3.24 $8.03 $38.93 $38.93 $295.945

- A

- 50 Table 5

- A.3

. 5 : Incremental Cost Detail for 25 ft 3 Bottom

- Mount Refrigerator

- Freezer (Product Class 5)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

5.00 to 5.67 $4.04 $0.00 $0.00 $0.00 $1.05 $5.08 $5.08 $5.08

15% Increase Compressor EER from

5.67 to 5.97 $3.93 $0.00 $0.00 $0.00 $1.02 $4.95 $4.95 $10.03

20% Increase Compressor EER from

5.97 to 6.26 $5.27 $0.00 $0.00 $0.00 $1.37 $6.64 $6.64 $16.67

25% Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17
$17.11 $33.78 Variable Anti

- Sweat Heater

Control $9.48 $0.00 $0.00 $0.00 $2.46 $11.94

30% Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42 $59.30 $93.09 Variable Speed Compressor $42.77 $0.00 $0.00 $0.00 $11.12 $53.89

40.5% 9.2 sqft VIP in FF Door $30.12 $0.42 $3.57 $8.87 $42.98

$197.92 $291.01 5.9 sqft VIP in FZR Door $19.34 $0.42 $2.31 $5.74 $27.81 14.8 sqft VIP in FZR Cabinet $48.43 $4.17 $6.15 $15.28 $74.03 10.3sqft VIP in FF Cabinet $33.57 $4.17 $4.41 $10.96 $53.105

- A

- 51 Table 5

- A.3

. 6 : Incremental Cost Detail for 21 ft 3 Built

- In Bottom

- Mount Refrigerator

- F reezer (Product Class 5

- BI )

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Decrease FF Compressor Capacity (same EER) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$21.47 $21.47 10% Increase to Condenser Area $1.00 $0.00 $0.00 $0.00 $0.40 $1.40

Increase F reezer Compressor

EER to 6.26 $10.71 $0.00 $0.00 $0.00 $4.28 $14.99

1.0 sqft VIP

-- FZR Door $3.18 $0.07 $0.38 $1.45 $5.09

15% Remove 1.0 sqft VIP

-- FZR Door

- $3.18

- $0.07

- $0.38

- $1.45

- $5.09 $64.35 $85.82 F ZR System V SC $49.60 $0.00 $0.00 $0.00 $19.84 $69.43

20% 14.6 sqft VIP

-- FZR Compartment $47.86 $3.34 $5.99 $22.88 $80.07 $80.07 $165.89

25% Add 3.6 sqft VIP

-- FZR Compartment $11.83 $0.83 $1.48 $5.65 $19.79
$129.39 $295.28 6.0 sqft VIP

-- FZR Door $19.54 $0.42 $2.33 $8.92 $31.20

FF System V SC $56.00 $0.00 $0.00 $0.00 $22.40 $78.40

27% 9.4 sqft VIP

-- FF Door $30.80 $0.42 $3.65 $13.95 $48.82 $74.93 $370.22 3.8 sqft VIP

-- FF Cabinet $12.53 $4.17 $1.95 $7.46 $26.115

- A

- 52 Table 5

- A.3

. 7 : Incremental Cost Detail for 22 ft 3 Side

- Mount Refrigerator

- Freezer with TTD Ice (Product Class 7)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

5.51 to 5.85 $4.45 $0.00 $0.00 $0.00 $1.16 $5.60

$12.54 $12.54 Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42

Increase Evaporator Area 19% $1.21 $0.00 $0.00 $0.00 $0.31 $1.52

15% Increase Compressor EER from

5.85 to 6.22 $6.09 $0.00 $0.00 $0.00 $1.58 $7.68 $7.68 $20.22

20% Increase Compressor EER from

6.22 to 6.26 $0.75 $0.00 $0.00 $0.00 $0.20 $0.95

$41.92 $62.14 Increase Condenser Size by 27% $3.91 $0.00 $0.00 $0.00 $1.02 $4.92

Variable Anti

- Sweat Heater Control for Ice Dispenser $9.48 $0.00 $0.00 $0.00 $2.46 $11.94

5.1 sqft VIP in FZR Door $16.71 $0.42 $2.00 $4.98 $24.11

25% Remove 5.1 sqft VIP FZR Door

- $16.71

- $0.42

- $2.00

- $4.98

- $24.11
$47.49 $109.64 Variable Speed Compressor $44.71 $0.00 $0.00 $0.00 $11.62 $56.34 3.0 sqft VIP in FZR Cabinet $9.66 $1.19 $1.27 $3.15 $15.27

30% 7.4 sqft more VIP in FZR

Cabinet $24.15 $2.98 $3.17 $7.88 $38.17

$139.49 $249.13 5.1 sqft VIP in FZR Door $16.71 $0.42 $2.00 $4.98 $24.11 8 sqft VIP in FF Door $26.28 $0.42 $3.12 $7.75 $37.57 7.8 sqft VIP in FF Cabinet $25.60 $2.56 $3.30 $8.18 $39.64

31% 4.9 sqft more VIP in FF Cabinet $16.08 $1.61 $2.07 $5.14 $24.89 $24.89 $274.025

- A

- 53 Table 5

- A.3

. 8 : Incremental Cost Detail for 26 ft 3 Side

- Mount Refrigerator

- Freezer with TTD Ice (Product Class 7)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

5.21 to 5.86 $5.76 $0.00 $0.00 $0.00 $1.50 $7.26 $7.26 $7.26

15% Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17 $10.58 $17.84

Brushless DC Condenser Fan

Motor $4.30 $0.00 $0.00 $0.00 $1.12 $5.42

20% Increase Compressor EER from

5.86 to 6.11 $3.90 $0.00 $0.00 $0.00 $1.01 $4.91 $4.91 $22.75

25% Increase Compressor EER from

6.11 to 6.26 $2.82 $0.00 $0.00 $0.00 $0.73 $3.55

$56.03 $78.78 Variable Anti

- Sweat Heater Control for Ice Dispenser $17.48 $0.00 $0.00 $0.00 $4.54 $22.02

Increase Condenser Size by 10% $1.21 $0.00 $0.00 $0.00 $0.31 $1.53 6.2 sqft VIP in FZR Door $20.14 $0.42 $2.41 $5.97 $28.93

30% Variable Speed Compressor $57.55 $0.00 $0.00 $0.00 $14.96 $72.51 $85.79 $164.57 2.6 sqft VIP in FZR Cabinet $8.51 $0.93 $1.10 $2.74 $13.29

35% 9.1 sqft more VIP in FZR

Cabinet $29.71 $3.24 $3.86 $9.57 $46.38
$151.83 $316.41 8.2 sqft VIP in FF Door $26.65 $0.42 $3.17 $7.86 $38.09 13.4 sqft VIP in FF Cabinet $43.70 $4.17 $5.60 $13.90 $67.365

- A

- 54 Table 5

- A.3

. 9 : Incremental Cost Detail for 2 8 ft 3 Built

- In Side

- Mount Refrigerator

- F reezer with TTD ice service (Product

Class 7

- BI )

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulativ

e

10% High Efficiency Compressor $7.31 $0.00 $0.00 $0.00 $2.92 $10.23

$51.45 $51.45 Heat Exchanger Improvement $2.00 $0.00 $0.00 $0.00 $0.80 $2.80

Variable Anti

- sweat $9.50 $0.00 $0.00 $0.00 $3.80 $13.30

Partial VIP to Freezer Door $15.81 $0.25 $1.88 $7.18 $25.12

15% Eliminate VIP to Freezer Door

- $15.81

- $0.25

- $1.88

- $7.18

- $25.12 $72.02 $123.47 V ariable Speed Compressor $69.38 $0.00 $0.00 $0.00 $27.75 $97.14

20% VIP to Freezer Door $26.36 $0.42 $3.13 $11.96 $41.86 $158.06 $281.53 VIP to Freezer Cabinet $70.14 $4.17 $8.69 $33.20 $116.20

22% VIP to Fresh Food Cabinet $11.59 $4.17 $1.84 $7.04 $24.64 $89.74 $371.27 VIP to Fresh Food Door $41.22 $0.42 $4.87 $18.60 $65.105

- A

- 55 Table 5

- A.3

. 10 : Incremental Cost Detail for 14 ft 3 Upright Freezer with Auto Defrost (Product Class 9)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17
$10.40 $10.40 Increase compressor efficiency

from 5.04 to 5.69 $4.15 $0.00 $0.00 $0.00 $1.08 $5.23

15% Increase compressor efficiency

from 5.69 to 6.08 $9.03 $0.00 $0.00 $0.00 $2.35 $11.38
$21.14 $31.54 Door Insulation Thickness

Increase of 0.21 inches $0.75 $0.00 $0.00 $7.00 $2.02 $9.77

20% Door Insulation Thickness

Increase of 0.79 inches $2.83 $0.00 $0.00 $0.00 $0.74 $3.56 $13.64 $45.18 Adaptive Defrost $8.00 $0.00 $0.00 $0.00 $2.08 $10.08

25% Add 0.22" Insulation to Walls $2.59 $0.00 $0.00 $23.00 $6.65 $32.24 $32.24 $77.43

30% Add 0.34" more Insulation to

Walls $3.92 $0.00 $0.00 $0.00 $1.02 $4.94 $4.94 $82.37

35% Remove 0.06" Wall Insulation

- $0.68 $0.00 $0.00 $0.00

- $0.18

- $0.86 $85.18 $167.56 Variable Speed Compressor $68.29 $0.00 $0.00 $0.00 $17.76 $86.05

40% Add 0.5" Wall Insulation $5.76 $0.00 $0.00 $0.00 $1.50 $7.26 $34.16 $201.71 5.7 sqft VIP in Door $18.46 $0.23 $2.65 $5.55 $26.90

43 % 4.6 sqft more VIP in Door $14.94 $0.19 $2.15 $4.49 $21.76 $113.38 $315.09 18.9 sqft VIP in Cabinet $61.59 $2.08 $9.04 $18.90 $91.615

- A

- 56 Table 5

- A.3

. 11 : Incremental Cost Detail for 20 ft 3 Upright Freezer with Auto Defrost (Product Class 9)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Brushless DC Evaporator Fan

Motor $4.10 $0.00 $0.00 $0.00 $1.07 $5.17 $11.98 $11.98 Increase Compressor EER from

5.73 to 6.1 $5.41 $0.00 $0.00 $0.00 $1.41 $6.82

15% Increase Compressor EER from

6.1 to 6.24 $2.63 $0.00 $0.00 $0.00 $0.68 $3.31 $13.39 $25.37

Adaptive Defrost $8.00 $0.00 $0.00 $0.00 $2.08 $10.08

20% Increase Evaporator Size by

22% $1.47 $0.00 $0.00 $0.00 $0.38 $1.86
$16.98 $42.35 Forced Convection Condenser

with Brushless DC Condenser

Fan $12.00 $0.00 $0.00 $0.00 $3.12 $15.12

25% Add 0.9 inch Insulation to Door $4.28 $0.00 $0.00 $7.00 $2.93 $14.22 $14.22 $56.57

30% Remove 0.2 inch Insulation from

Door - $0.95 $0.00 $0.00 $0.00

- $0.25

- $1.20 $37.50 $94.06

Add 0.5 inch Insulation to

Cabinet $7.71 $0.00 $0.00 $23.00 $7.98 $38.69

35% Add 0.5 inch Insulation to

Cabinet $7.76 $0.00 $0.00 $0.00 $2.02 $9.78 $9.78 $103.84

40% Variable Speed Compressor $78.00 $0.00 $0.00 $0.00 $20.28 $98.28 $98.28 $202.12

44.0% 14.4 sqft VIP in Door $46.97 $0.42 $6.73 $14.07 $68.18 $180.00 $382.12 23.1 sqft VIP in Cabinet $75.63 $2.08 $11.03 $23.07 $111.825

- A

- 57 Table 5

- A.3

. 12 : Incremental Cost Detail for 22 ft 3 Built

- In Upright Freezer (Product Class 9

- BI)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER to

6.29 $11.20 $0.00 $0.00 $0.00 $4.48 $15.68 $15.68 $15.68

15% BLDC Fan for Evaporator $4.10 $0.00 $0.00 $0.00 $1.64 $5.74 $11.76 $27.44 BLDC Fan for Condenser $4.30 $0.00 $0.00 $0.00 $1.72 $6.02

20% 10% Increase to Condenser Area $1.00 $0.00 $0.00 $0.00 $0.40 $1.40
$71.80 $99.23 Variable Speed Compressor $44.80 $0.00 $0.00 $0.00 $17.92 $62.72 1.5 sqft VIP Upper Door $4.84 $0.07 $0.57 $2.19 $7.67

25% VIP Upper Door (Full Coverage) $25.96 $0.35 $3.08 $11.76 $41.15 $112.50 $211.74 13.1 sqft VIP Lower Cabinet $42.65 $2.98 $5.34 $20.39 $71.36

27% VIP Lower Cabinet (Full Coverage) $17.04 $1.19 $2.13 $8.14 $28.50
$85.82 $297.56 VIP

-- Lower Door $19.54 $0.42 $2.33 $8.92 $31.20

VIP

-- Upper Cab inet $12.53 $4.17 $1.95 $7.46 $26.115

- A

- 58 Table 5

- A.3

. 13 : Incremental Cost Detail for 15 ft 3 Chest Freezer (Product Class 10)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

4.92 to 5.48 $1.74 $0.00 $0.00 $0.00 $0.45 $2.19 $2.19 $2.19

15% Increase Compressor EER from

5.48 to 5.81 $4.39 $0.00 $0.00 $0.00 $1.14 $5.53 $5.53 $7.72

20% Increase Compressor EER from

5.81 to 6.08 $3.99 $0.00 $0.00 $0.00 $1.04 $5.02 $14.66 $22.39

Add 0.24 inch Insulation to Door $0.65 $0.00 $0.00 $7.00 $1.99 $9.64

25% Add 0.76 inch Insulation to Door $2.11 $0.00 $0.00 $0.00 $0.55 $2.66
$37.50 $59.89 Add 0.15 inch Insulation to

Cabinet $1.66 $0.00 $0.00 $26.00 $7.19 $34.85

30% Add 0.35 inch Insulation to

Cabinet $3.78 $0.00 $0.00 $0.00 $0.98 $4.77 $4.77 $64.66

35% Variable Speed Compressor $46.15 $0.00 $0.00 $0.00 $12.00 $58.14 $58.14 $122.80

4 4 % Add 0.25 inch Insulation to

Cabinet $2.65 $0.00 $0.00 $0.00 $0.69 $3.33
$85.87 $208.67 8.2 sqft VIP on bottom $26.66 $1.39 $3.98 $8.33 $40.36 8.8 sqft VIP on door $28.89 $0.42 $4.16 $8.70 $42.175

- A

- 59 Table 5

- A.3

. 14 : Incremental Cost Detail for 20 ft 3 Chest Freezer (Product Class 10)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Condenser Size by 24% $1.68 $0.00 $0.00 $0.00 $0.44 $2.12
$10.68 $10.68 Increase Compressor EER from

5.71 to 6.16 $6.80 $0.00 $0.00 $0.00 $1.77 $8.56

15% Increase Compressor EER from

6.16 to 6.25 $1.69 $0.00 $0.00 $0.00 $0.44 $2.13
$10.95 $21.63 Convert Door Insulation to PU

Foam $0.00 $0.00 $0.00 $7.00 $1.82 $8.82

20% Add 1 inch Insulation to Door $3.47 $0.00 $0.00 $0.00 $0.90 $4.37 $4.37 $26.00

25% Add 0.35 inch Insulation to
Cabinet $4.77 $0.00 $0.00 $26.00 $8.00 $38.78 $38.78 $64.78

30% Add 0.4 inch Insulation to

Cabinet $5.32 $0.00 $0.00 $0.00 $1.38 $6.70 $28.91 $93.69 4.5 sqft VIP in Bottom Wall $14.82 $0.62 $2.19 $4.58 $22.21

35% Remove 4.5 sqft VIP Bottom

Wall - $14.82

- $0.62

- $2.19

- $4.58 - $22.21 $37.65 $131.34 Variable Speed Compressor $47.51 $0.00 $0.00 $0.00 $12.35 $59.87

39% 10.2 sqft VIP in Bottom Wall $33.46 $1.39 $4.95 $10.35 $50.14 $107.09 $238.43 12 sqft VIP in Door $39.16 $0.42 $5.62 $11.75 $56.955

- A

- 60 Table 5

- A.3

. 15 : Incremental Cost Detail for 1.7 ft 3 Compact Refrigerator (Product Class 11)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Evaporator Size by

20% $0.27 $0.00 $0.00 $0.00 $0.07 $0.34
$2.61 $2.61 Increase Compressor EER from

3.02 to 3.20 $1.80 $0.00 $0.00 $0.00 $0.47 $2.27

15% Increase Compressor EER from

3.20 to 3.47 $2.70 $0.00 $0.00 $0.00 $0.70 $3.40 $3.40 $6.01

20% Increase Condenser Size by 19% $0.39 $0.00 $0.00 $0.00 $0.10 $0.49 $5.12 $11.13 Add 3/4 inch Insulation in Door $0.67 $0.00 $0.00 $3.00 $0.95 $4.62

25% Add 0.18 inch Insulation in

Cabinet $0.60 $0.00 $0.00 $10.00 $2.76 $13.36 $13.36 $24.49

30% Add 0.57 inch Insulation in

Cabinet $2.00 $0.00 $0.00 $0.00 $0.52 $2.51 $2.51 $27.00

35% Eliminate all previous Design Options - $8.43 $0.00 $0.00

- $13.00

- $5.57 - $27.00 $43.56 $70.56

Variable Speed Compressor $56.00 $0.00 $0.00 $0.00 $14.56 $70.56

40% Convert to Isobutane Refrigerant $8.00 $0.00 $0.00 $1.00 $2.34 $11.34 $11.34 $81.90

45% Increase Evaporator Size by

20% $0.27 $0.00 $0.00 $0.00 $0.07 $0.34
$5.46 $87.36 Increase Condenser Size by 19% $0.39 $0.00 $0.00 $0.00 $0.10 $0.49

Add 3/4 inch Insulation in Door $0.67 $0.00 $0.00 $3.00 $0.95 $4.62

50% Add 3/4 inch Insulation in

Cabinet $2.60 $0.00 $0.00 $10.00 $3.28 $15.88 $15.88 $103.23

55% Add 4.7 sqft VIP in Cabinet $15.38 $4.17 $3.83 $6.08 $29.45 $41.06 $144.29 Add 2.2 sqft VIP in Door $7.29 $0.42 $1.51 $2.39 $11.615

- A

- 61 Table 5

- A.3

. 16 : Incremental Cost Detail for 4.0 ft 3 Compact Refrigerator (Product Class 11)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

4.57 to 5.1 $5.30 $0.00 $0.00 $0.00 $1.38 $6.68 $6.68 $6.68

15% Increase Compressor EER from

5.1 to 5.3 $2.30 $0.00 $0.00 $0.00 $0.60 $2.90 $3.65 $10.32 Increase Condenser Size by 22% $0.59 $0.00 $0.00 $0.00 $0.15 $0.75

20% Add 3/4 inch Insulation to Door $0.92 $0.00 $0.00 $3.00 $1.02 $4.94 $4.94 $15.26

25% Convert to Isobutane Refrigerant $4.00 $0.00 $0.00 $1.00 $1.30 $6.30 $6.69 $21.95 Add 1/4 inch Insulation to Door $0.31 $0.00 $0.00 $0.00 $0.08 $0.39 $14.23

30% Add 0.22 inch Insulation to

Cabinet $0.98 $0.00 $0.00 $10.00 $2.86 $13.84
$13.45 $35.40 Remove 1/4 inch Insulation from

Door - $0.31 $0.00 $0.00 $0.00

- $0.08

- $0.39

35% Add 0.22 inch Insulation to

Cabinet $0.99 $0.00 $0.00 $0.00 $0.26 $1.25 $1.25 $36.66

40% Add 0.31 inch Insulation to

Cabinet $1.37 $0.00 $0.00 $0.00 $0.36 $1.73 $1.73 $38.38

45% Variable Speed Compressor $52.40 $0.00 $0.00 $0.00 $13.62 $66.02
$49.20 $87.59 Remove 3/4 inch Cabinet

Insulation - $3.35 $0.00 $0.00

- $10.00

- $3.47 - $16.82

50% Add 0.23 inch Insulation to

Cabinet $1.02 $0.00 $0.00 $10.00 $2.87 $13.89 $13.89 $101.47

62% Add 0.32 inch Insulation to

Cabinet $2.33 $0.00 $0.00 $0.00 $0.61 $2.93
$66.16 $167.63 7.2 sqft VIP Cabinet $23.57 $4.17 $5.44 $8.62 $41.79 4.2 sqft VIP Door $13.81 $0.42 $2.79 $4.42 $21.435

- A

- 62 Table 5

- A.3

. 17 : Incremental Cost Detail for 3.4 ft 3 Compact Chest Freezer (Product Class 18)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

3.74 to 4.17 $4.30 $0.00 $0.00 $0.00 $1.12 $5.42 $5.42 $5.42

15% Increase Compressor EER from

4.17 to 4.29 $1.20 $0.00 $0.00 $0.00 $0.31 $1.51 $10.45 $15.87

Add 1 inch Insulation to Door $1.09 $0.00 $0.00 $6.00 $1.84 $8.94

20% Remove 1/4 inch Insulation from

Door - $0.27 $0.00 $0.00 $0.00

- $0.07

- $0.34 $35.22 $51.09

Add 0.48 inch Insulation to

Cabinet $2.23 $0.00 $0.00 $26.00 $7.34 $35.57

25% Add 0.27 inch Insulation to

Cabinet $1.22 $0.00 $0.00 $0.00 $0.32 $1.54 $13.96 $65.05 Add 2.1 sqft VIP in Bottom

Wall $6.85 $1.39 $1.62 $2.56 $12.42

30% Remove all design options through 25% Level - $16.62

- $1.39

- $33.62

- $13.42

- $65.05 $5.51 $70.56 Variable Speed Compressor $56.00 $0.00 $0.00 $0.00 $14.56 $70.56

35% Add 0.75 inch Insulation to Door $0.82 $0.00 $0.00 $6.00 $1.77 $8.59 $8.59 $79.15

43.3% Add 0.75 inch Insulation to

Cabinet $3.45 $0.00 $0.00 $26.00 $7.66 $37.11

$66.56 $145.71 Add 2.1 sqft VIP in Bottom

Wall $6.85 $1.39 $1.62 $2.56 $12.42

Add 3.3 sqft VIP in Door $10.89 $0.42 $2.22 $3.51 $17.035

- A

- 63 Table 5

- A.3

. 18 : Incremental Cost Detail for 7.0 ft 3 Compact Chest Freezer (Product Class 18)

Efficiency

Level Design Options Added Design Option Costs Incremental Costs

Material Labor Overhead Depreciation G&A,

Profit Total Added Cumulative

10% Increase Compressor EER from

4.50 to 5.02 $5.20 $0.00 $0.00 $0.00 $1.35 $6.55 $6.55 $6.55

15% Increase Compressor EER from

5.02 to 5.27 $2.50 $0.00 $0.00 $0.00 $0.65 $3.15 $10.98 $17.53

Add 0.12 inch Insulation to Door $0.22 $0.00 $0.00 $6.00 $1.62 $7.83

20% Add 0.63 inch Insulation to Door $1.14 $0.00 $0.00 $0.00 $0.30 $1.44
$36.84 $54.37 Add 0.26 inch Insulation to

Cabinet $2.09 $0.00 $0.00 $26.00 $7.30 $35.39

25% Add 0.36 inch Insulation to

Cabinet $2.91 $0.00 $0.00 $0.00 $0.76 $3.66 $3.66 $58.03

30% Remove all design options through 25% Level - $14.06 $0.00 $0.00

- $32.00

- $11.97

- $58.03

$47.08 $105.11 Variable Speed Compressor $56.00 $0.00 $0.00 $0.00 $14.56 $70.56

Add 0.18 inch Insulation to

Cabinet $1.42 $0.00 $0.00 $26.00 $7.13 $34.55

35% Add 0.47 inch Insulation to

Cabinet $3.71 $0.00 $0.00 $0.00 $0.96 $4.67 $4.67 $109.79

40% Add 0.11 inch Insulation to

Cabinet $0.85 $0.00 $0.00 $0.00 $0.22 $1.07

$58.69 $168.47 Add 3/4 inch Insulation to Door $1.36 $0.00 $0.00 $6.00 $1.91 $9.27 Add 4.1 sqft VIP to Cabinet

Bottom $13.50 $1.39 $2.92 $4.63 $22.43

Add 5.1 sqft VIP to Door $16.78 $0.42 $3.37 $5.35 $25.915

- A

- 64 5

- A.4 PRELIMINARY ANALYSIS EN GINEERING QUESTIONNA IRE

DOE used t he preliminary analysis engineering questionnaire as a guide for engineering discussions during manufacturer interviews

. Some of the information provided in the questionnaire has been redacted to protect vendor information.5

- A

- 65 DESIGN FOR ENERGY IMPROVEMENT INFORMATION REQUEST

DOE would like to confirm information on the incremental costs of increasing product efficiency by understanding the design options involved in the efficiency improvement.

1. Market Share of products you sell To help DOE discover manufacturer sub

- groups an d the relative importance of various product classes to specific manufacturers, please disaggregate your annual unit shipments for each product category as shown below. Please also indicate whether you purchase these products from other manufacturers (i.e. private label), and whether the factory that supplies the product

is located in the USA.

Product C lass (response for PC1 through PC20 not including built

- in products) % Private

Label ? % Made

in USA? Yearly Unit Shipments

1. Refrigerators and refrigerator

- freezers with

manual defrost.

2. Refrigerator

- freezer

— partial automatic defrost.

3 a

. Refrigerator

- freezer

— automatic defrost with top

mounted freezer without through

- the

- door ice

service

3b. A ll

- refrigerator

— automatic defrost.

4. Refrigerator

- freezers

— automatic defrost with

side

- mounted freezer without through

- the

- door

ice service.

5. Refrigerator

- freezers

— automatic defrost with

bottom

- mounted freezer without through

- the

- door

ice service.

6. Refrigerator

- freezers

— automatic defrost with

top

- mounted freezer with through

- the

- door ice

service.

7. Refrigerator

- freezers

— automatic defrost with

side

- mounted freezer with through

- the

- door ice

service.

8. Upright freezers with manual defrost.

9. Upright freezers with automatic defrost. 10. Chest freezers and all other freezers except compact freezers. 11. Compact refrigerators and refrigerator

- freezers

with manual defrost. 12. Compact refrigerator

- freezer

— partial automatic

defrost.

13 a . Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer compact all

refrigerator

— automatic defrost.

13b. C ompact all

- refrigerator

— automatic defrost.5

- A

- 66 14. Compact refrigerator

- freezers

— automatic defrost

with side

- mounted freezer. 15. Compact refrigerator

- freezers

— automatic defrost

with bottom

- mounted freezer. 16. Compact upright freezers with manual defrost. 17. Compact upright freezers with automatic defrost. 18. Compact chest freezers. 19. Refrigerator

- freezer

— automatic defrost with

bottom

- mounted freezer with through

- the

- door

ice service.

20. Chest freezers with automatic defrost.

21. Wine Coolers

22. Built

- in Refrigerators, Refrigerator

- Freezers, and

Freezers (please provide percentage breakdown by Product Class for units presenting at least 5% of unit sales)

a. What percentage of products classified as product class 4 or 7 (side

- by

- sides) have convertible

bottom drawers?

b. What percentage of product class 5 and what percentage of product class 19 products are

French

- door?

2. Product Technical Description s

The following series of exhibits and questions address technical characteristics of key refrigerator and freezer components for both baseline and improved

- efficiency products.

Compressors

Please comment on the typical capacities of compressors used in the indicated products.5

- A

- 67 • Should there be differences in capacity levels for auto

- defrost and manual defrost freezers?

• What capacity/volume relationship is representative for st andar d

- sized manual

- defrost refrigerators?

Please comment on the indicated typical EER of compressors used in standard and Energy Star products.

• Should there be differences between compressor EER used in auto

- defrost and manual def rost
freezers?

Typical EER trend for compressors used in compact refrigerators and freezers:5

- A

- 68 • Is variation in compressor EER in compact products dependent primarily on capacity, as illustrated in the line in the plot below?

• Note that while a range of EER is offered by compressor vendors, it is not clear that the range of EER’s actually being used in products is as broad

-- Is this driven by cost pressures for compact products?5

- A

- 69 Is the Illustrated Typical Cost vs. Capacity for Baseline Product compress ors accurate?

Is the Illustrated Curve for incremental cost for higher EER compressors for standard

- sized refrigerator

- freezers accurate?5

- A

- 70 **•** What percentage of your baseline unit shipments use variable

- speed compressors, and what percentage of Energy Star

- rated products do?

**•** If you use variable

- speed compressors in your products, do you run them at two or three speeds, or do you modulate the speed based on demand?

**•** Is $30 an appropriate cost increase for a variable

- speed compressor as compared to a base line efficiency single

- speed compressor purchased from the vendor for standard

- sized refrigerator

- freezers? What other costs need to be considered?

Evaporator Heat Exchanger Characteristics In the following table, please comment on the typical key detail s of evaporator heat exchangers.
Product Type Type Core

Volume

(cuft) Tube

Outer Dia (inch) Tube Length (ft) Fin Surface

or cold

plate

surface

(sqft)

Standard

- Sized Refrigerator

Freezers Forced

Convection 0.21 0.33 (0.008 wall) 37 18

Standard

- Sized Upright Freezers Forced

Convection 0.18 0.33 (0.008 wall) 32 18

Product Type Type Tube

Outer Dia (inch) Specific

Tube Length (inch per

Btu/hr

compressor

capacity) Fin Surface (sqin per

Btu/hr

compressor

capacity)

Standard

- Sized

Chest Freezers Cold Wall 0.3 1.7

Compact Basic Refrigerators Roll Bond Channels 0.18 high

x 0.38

wide 0.55 0.6

Compact Chest

Freezers Cold Wall 0.3 2.0

**•** All forced

- convention evaporators use aluminum tubes?

**•** Typical forced

- convection evaporator fin style is flat aluminum with oval gaps to slide over tube serpentine?

**•** Any use of internally

- enhanced tubes?

**•** Any use of enhanced fins?

**•** What percentage of refrigerator/freezers use more than one evaporator?

**•** What percentage of refrigerator/freezers use other than forced

- con vection evaporators?

**•** Do you employ wide fin spacing and lack of fin surface enhancements for frost tolerance and quick melt runoff?5

- A

- 71 **•** Is there a typical evaporator air flow rate vs. compressor capacity relationship? If so, can you

detail it?

**•** Are you aware o f any further significant system improvements that may be possible through evaporator heat exchanger changes? (for example, via eggcrate evaporators, spine

- fin?)

**•** If you use spine

- fin heat exchangers, is their performance for volume/fan power better than

f or flat

- fin heat exchangers? Or was your decision driven by cost? What about frost

tolerance and internal enhancements?

Condenser Heat Exchanger Characteristics In the following table, please comment on the typical key details of evaporator heat exchang ers. Product Type Type Tube

Outer

Dia (inch) Tube Length (ft) Wire Fin

Diameter

(inch) Wire Fin Total Length (ft)

Standard

- Sized Refrigerator

Freezers Forced

Convection

Steel Tube

Wire Fin 0.19 (0.025 wall) 50 0.05 300

Product Type Type Tube

Outer

Dia (inch) Tube

Wall (inch) Specific Tube Length (inch per

Btu/hr

compressor

capacity) Specific Wire Fin Length

(foot per

Btu/hr

compressor

capacity)

Standard

- Sized Upright Freezers Hot Wall 0.19 0.03 1.0 N/A

Standard

- Sized

Chest Freezers Hot Wall 0.19 0.03 1.3 N/A

Compact Basic Refrigerators Static or

Hot Wall 0.19 0.025 Hot Wall 1.5

Static 0.4 0.4

Compact Chest

Freezers Hot Wall

or Static 0.19 0.025 Hot Wall 1.7

Static 0.9 0.7

**•** Any use of internally

- enhanced tubes?

**•** Most external condenser heat exchangers designs appear to be based on steel wire fins. What are the key drivers leading to this design choice?

o Is in

- field dust

- covered performance a consideration?

o Are enhanced

- surface designs too expensive?

o Or perhaps not worthwhile because there is enough space for lower

- cost wire fin design?

o Performance degradation when dirty?

o Or can’t do better than wire fin for a given volume and the typically low fan power?

**•** Is there a relationship between typical c ondenser air flow rate vs. the compressor capacity? If so, can you detail it?5

- A

- 72 **•** During teardowns we noted that some manufacturers use “rolled up” heat exchangers vs. the typical flat external condenser heat exchangers. What are the benefits and drawbacks of such heat exchangers?

Evaporator and Condenser Fans

• Are the indicated characteristics for fan motors typical for refrigerator

- freezers?

**•** Is there any room for further, significant energy efficiency improvement via fan blade/air flow path design improvements (i.e. PAX fan)?

**•** Do you consider PSC fan motors a viable intermediary step between SP and BLDC fan

motors?

**•** Do any of your fans run at multiple speeds, for example to match the output of a variable

speed compressor?

**•** What are the benefits or dra wbacks associated with using BLDC motors that are based on

DC

- power input vs. AC

- power input? What is the cost difference between such motors?

Cabinet Insulation Characteristics (as applicable) In the following table, please comment on the typical average insulation thicknesses.
Product Type Insulation Thickess (inches)

Standard

- Sized Refrigerator

- Freezers with

Automatic Defrost

— Fresh Food Compartment 1.9

Standard

- Sized Refrigerator

- Freezers with

Automatic Defrost

— Freezer Compartment 2.7

Standard

- Sized Upright Freezers 2.3

Standard

- Sized Chest Freezers 2.5 Compact Basic Refrigerators 1.2 Compact Chest Freezers 2.5

What typical insulation thickness would be used for the following product types?

**•** Standard

- sized refrigerator with manual or partial automatic defrost?

**•** Compact refrigerator

- freezers?5

- A

- 73 **•** Standard

- sized all

- refrigerators?

**•** Compact all

- refrigerators?

**•** Differences in typical average insulation thicknesses for built

- in products?

**•** Is the state

- of

- the

- art current insulation system based on HFC

- 245f a blowing agent with cabinet preheating and high pressure injection? Is the conductivity typically achieved for this system 0.13 Btu

- in/hr

- ft 2

- oF at room temperature? Do you use any other insulation systems?

**•** Is there any significant further cabinet load reduction possible through lower conductivity

foam?

**•** Have you considered switching to low Global

- Warming

- Potential (GWP) blowing agents? If so, what are the drivers for these changes? What are the conductivi ty, cost impacts?

**•** Are you using any vacuum

- insulated panels (VIPs) in any products?

**•** If you have or were considering the adoption of VIPs can you detail how you would incorporate them into your products, what the capital costs, and what the marginal produ ct costs of such a step would be?

**•** Have you considered gas

- filled panels? If so, what drove you to adopt, or not to adopt them?

Door Frame:

**•** What are the key aspects of good state

- of

- the

- art door frame/gasket area design? To what extent does a typical p roduct adhere to this? What is the range of load impact of poor door frame region designs (i.e. in Btu/hr

- ft)?

**•** Is there any value to using double

- gaskets?

**•** Some refrigerators have extra

- strong magnets requiring special handle designs to assist with

door

- op ening. How much load reduction is possible with such an approach?

Through

- the

- Door Dispensers:

**•** Today’s TTD systems don’t appear to represent thermal loads as high as suggested by the energy allowance associated with this feature, based for example on m ax energy difference between product classes 7 and 4. Is there more to the energy impact than the thermal load

difference? How much anti

- sweat heating wattage is typically used around your TTDs?

Anti

- sweat Heaters:

**•** Most anti

- sweat heaters appear to use hot liquid. Is this correct? Is there any continued use of hot gas anti

- sweat systems?

**•** Is there data available indicating average duty cycle of such heaters for typical in

- home installation? Does this depend on use of anti

- sweat heater for freezer door frame, mullion door frame, ducts, etc.?

**•** For example, do your products use resistance heaters within the fresh food return air duct to prevent frost accumulation? If so, is it always on or controlled based on humidity?

Defrost:

**•** What are your thoughts abo ut benefits and drawbacks of precool prior to the defrost cycle?5

- A

- 74 **•** The DOE energy test energy impact of defrost is small, particularly with variable defrost. Is this a good reflection of in

- field defrost impacts?

**•** Are dedicated controllers available to allow variable defrost to be used in products which

otherwise use non

- electronic controls?

Expansion Devices:

**•** Is there any performance improvement potential with expansion devices other than capillary

tube? What about for variable

- speed compressor systems?

**•** Do you use any expansion device besides capillary tubes?

Energy Efficiency Conversion Costs

**•** What design changes are typically associated with converting ba seline products mentioned above in Question 1 to Energy Star ?

**•** What are the marginal costs of the individual design options selected?

**•** When considering energy efficiency improvements to achieve or exceed Energy Star, do different product classes take different pathways or are pathways similar?

**•** Are the cost increments higher for some classe s than others for a given performance improvement over baseline? (think 10%, 15%, 20%, 25%, 30%, 35%, 35+ improvement over today’s baseline)

Thoughts/feedback on alternative refrigeration cycles /implementations:

**•** Dual

- evaporator systems attempting to coo l fresh food compartment at higher evaporator

temperatures.

**•** Ejector system.

**•** Stirling.

**•** Thermoacoustic.

**•** Thermoelectric.7 A

- i APPENDIX 7

- A. LITERATURE SURVEY OF ENERGY CONSUMPTION BY

RESIDENTIAL REFRIGER ATOR

- FREEZERS

TABLE OF CO NTENTS

7

- A.1 INTRODUCTION

................................ ................................ ................................ . 7

- A

- 1

7

- A.2 TEST PROCEDURE AND F IELD STUDIES

................................ ...................... 7

- A

- 2

7A. 2.1 DOE Test Procedure

................................ ................................ .............................. 7

- A

- 2

7A.2.2 Field Studies

................................ ................................ ................................ ........... 7

- A

- 3

7A.2.2.1 KEMA

- Xenergy Findings

................................ ................................ .... 7

- A

- 3

7

- A.3 LITERATURE ANALYSIS

................................ ................................ .................. 7

- A

- 5

7

- A.4 SUMMA RY

................................ ................................ ................................ ........... 7

- A

- 6

7

- A.5 BIBLIOGRAPHY

................................ ................................ ................................ .. 7

- A

- 6

LIST OF TABLES

Table 7

- A.2.1 Refrigerator Energy Consumption Data by Year

................................ ....... 7

- A

- 3

Table 7

- A.2.2 Literature summary

................................ ................................ .................... 7

- A

- 47-A-1 APPENDIX 7

- A. LITERATURE SURVEY OF ENERGY CONSUMPTION B Y

RESIDENTIAL REFRIGER ATOR

- FREEZERS

7

- A.1 INTRODUCTION

Efficient refrigerator

- free zers reduce peak energy consumption as well as total household energy use. As a result, electric utilities regard replacement programs for these appliances as an attractive and effective way to reduc e residential energy consumption. To estimate the amount of electricity savings attributable to an energy

- efficient refrigerator

- freezer program, utilities must evaluate the difference between the pre

- and post

- program energy consumption of the appliance stock. The challenge to accurately estimate the electrici ty savings of a refrigerator

- freezer replacement program lies in estimating the real

- life consumption of the original and replacement

units.

Estimation of appliance energy consumption may be undertaken in three ways, all of which are represented in the l iterature: A) The labeled energy consumption on a new appliance, based on the U.S. Department of Energy (DOE) test procedure undertaken on a sample of several identical appliances, and reported by the appliance manufacturer B) The DOE test procedure applied to a particular appliance (often not a new appliance),

and C) Measurement for some period of time in situ in a household. Most studies compare two of these measurements in order to evaluate energy use. For example, a study might compare the results of the DOE te st procedure on an old refrigerator with the labeled energy consumption when new to isolate the effect of appliance age, while eliminating possible effects due to user behavior. This appendix refers to such a study as comparing (B) to (A).

Researchers ha ve conducted studies that measure the field consumption of refrigerator

freezers to compare in situ measurements to the DOE test results, represented either by the labeled results ((C) to (A)), or through direct testing under DOE conditions ((C) to (B)). W hen such field studies are evaluated, the lack of consistency among study conditions (such as geographic location, housing type, and the number and type of units), limited time of direct measurements, and the degradation of efficiency throughout the lifeti me of a refrigerator

- freezer contribute to the challenge of estimating potential energy consumption savings from new units.

This appendix summarizes available literature regarding the comparison of different measurement methods for refrigerator

- freezers in order to evaluate reasonable possible values for the ‘usage adjustment factor’ (UAF), which is an estimate of the ratio of (C) to (A). There are very few published measurements of freezers or compact appliances, so DOE addresses only refrigerator

- freeze rs in this summary. Section 2 summarizes the DOE test procedure and lists and characterizes the field studies which DOE used in its analyses. Section 3 discusses these studies and their implications for the UAF parameter used in Chapter 6, particularly reg arding variation with season and climate, and efficiency degradation with unit age.7-A-2 7

- A.2 TEST PROCEDURE AND F IELD STUDIES

This section describes the DOE test procedure, then lists field studies of energy consumption by refrigerator

- freezers and distills their r esults

.

7A.2.1 DOE Test Procedure

“The DOE test is a compromise between realism and minimizing the costs of performing a reliable, repeatable laboratory test” (Meier, 1993). The DOE procedure for evaluating the annual energy consumption of refrigerator

- freezers comprises the following features (10 CFR, Chapter II, Part 430, Appendix A1).

• The standard test temperature for the fresh food compartment is 45°F.

• The standard test temperature for the freezer compartment is 5°F.

• The test is performed in a chamber that is maintained at an ambient temperature of 90°F.

• The temperatures of the freezer and fresh food compartments are measured using three independent thermocouples, one for each compartment. Five thermocouples are used when the refrigerator height is over 40”.

• T he appliance’s energy consumption is calculated by interpolating test results that

bracke t the standard freezer temperature (5°F). Interpolation is done around the 5°F temperature (freezer compartment) and the 45°F temp erature (fresh food compartment).

• Amb ient relative humidity is not specified.

• Doors are not opened during the test.

• The fresh food and freezer compartments are empty.

• Ice making capability, if present, is not powered on or evaluated by the test.

The DOE test procedure is currently undergoing a rulemaking process which may change some of the above details. In particular, changes have been proposed to the test temperatures for the refrigerator and freezer compartments.

The DOE test procedure does not measure the effects of door opening, coolin g warm food, or ice making. However, this test procedure provides standardized results that can serve as the basis for comparing the performance of appliances

. Although the DOE test does not precisely mirror any single unit’s performance in situ

, it serves as a foundation to which field measurements may be compared to develop estimates that account for a range of real

- life circumstances (KEMA, 2004).

A summary of new refrigerator

- freezer unit energy consumption values provided by manufacturers by year sho ws the annual variation of shipment

- weighted refrigerator energy consumption from 1960s to the year 2006 (Table 2.1). These data are based on “nameplate” values. For the model years before the DOE energy standards (1989 and earlier), the test

conditions ar e unknown in which energy consumption quantities were measured, although it is likely that manufacturers used the American Home Appliance Manufacturers (AHAM) test procedure or the test procedure prescribed by California state energy conservation standards

.7-A-3 Table 7

- A.2.1 Refrigerator Energy Consumption Data by Year

Model Year Shipment Weighted Average Use (kWh/yr) Model Year Shipment Weighted Average Use (kWh/yr)

2006 564 1990 988

2005 550 1989 1006

2004 559 1988 1049

2003 589 1987 1052

2002 576 1986 1 165

2001 611 1985 1147

2000 779 1984 1139

1999 762 1983 1160

1998 738 1982 1191

1997 728 1981 1190

1996 708 1980 1278

1995 693 1975

– 1979 1530 †

1994 693 1970

– 1974 1730 †

1993 699 1965

– 1969 154 0 †

1992 877 1961

– 1964 1150 †

1991 918

Source: AHAM Fact Bo oks †: Approximate

7A.2.2 Field Studies

In situ conditions account for several important factors including: ambient air temperature; the number and duration of door openings; the temperature of food loaded into the unit; the placement of the unit in relation t o walls, ovens, and stoves; the temperature setting in the field; and the ice maker setting in the field.

Since the early 1980s, utilities and government agencies have collected data on field

measured refrigerator

- freezer energy consumption in order to evaluate the effects of refrigerator “early replacement” programs. The collected data varies tremendously by sample size, the type of refrigerator

- freezer studied, the length of time each appliance was monitored, and their operating conditions. The studies summarized in Table 2.2 describe the performance of refrigerator

- freezers as measured in various ways.

7A.2.2.1 KEMA

- Xenergy Findings

The private consulting f i rm KEMA

- Xenergy in 2002 reviewed numerous reports of in

situ performance studies for Southern Californi a Edison. Several reports were summarized by

KEMA

- Xenergy but are not available to be reviewed by DOE. These reports are indicated by a

“#” in Table 2.2.7-A-4 Table 7

- A.2.2 Literature summary

Authors(s) Year Ratio Average a Ratio Range Comparison Type Location Refrigerator T ype Adjusted for

climate or season No. of Refrigerators

Arthur D. Little, Inc. **#** 1982 >1.2 C to A Florida unknown No unknown
Topping & Vineyard 1982 0.85 to 1.5 b C to A Norfolk, VA New No a 47

Meier & Jansky 1993 0.85 is “typical” 0.56 to 1.17 C to A C old climates (many in Pacific Northwest) Relatively new No 209

Meier et al. 1993 B to A: 0.99,

C to A: 0.87 B to A: 0.89 to

1.10 B and C to A Rochester, NY New, “energy efficient”, frost

- free No 20

Bos # 1993 “considerably” > 1 B to A Sacramento, CA At replacement N/A 79

Quantum Consulting 1994 0.87 for “high

efficiency”, 1 for “super

- efficiency” 95% between roughly 0.7

and 1.25 C to A Southern CA (SCE) 1

- 3 years old No 98

Proctor Engineering (Dutt et al.) 1994 Between 0.86 and 0.9 c C to A Northern CA (PG&E) New, “energy

efficient” Yes d 256

Goett # 1995 approx. 1 Unknown CA (PG&E and SCE) New No unknown

Barakat & Chamberlin

# 1996 “significantly more”

than 1 B to A Unknown At replacement N/A unknown

Miller & Pratt 1998 1.1 0.72 to 1.2 e C to A New York City (multi

family public housing) Some new, some

older No 324

Kinney & Belshe 2001 0.96 (new); 1.3 (mixture) C to A New York City (multi

family public housing) 220 old, 56 new No 276

ICF Consulting 2003 approx. 0.5 C to statistical

model of C CA (Bay Area) At replacement No 40

Mowris # 2003 1.06 wide variation C to A Northern CA (6 cities) At replacement unknown 91

KEMA 2004 1.46 (median) 0.85 to > 3 B to A California At replacement N/A 136

Peterson et al. 2007 median 1.4, mean 1.5 B to A Cali fornia At replacement N/A 193

ADM, Athens, et al. 2008 0.81 to 0.88, depending on weather

model C to B California At replacement Yes 184

a A value greater than 1 for this ratio for a C to A comparison implies that energy use in the field (C) was greater tha n the labeled energy consumption (A).

**#** KEMA

- Xenergy (2004) is DOE’s only reference for the results of this study.

b Seasonal variation for a single model

c Ratio of average C to average A over sample

d Adjusted for typical meteorological year (TMY) at loc ation

e Variation in the mean of various types of refrigerators in various use environments7

- A

- 5 7

- A.3 LITERATURE ANALYSIS

DOE’s interest in surveying the refrigerator

- freezer energy use literature is to evaluate the range of possible appropriate values for the ‘usage adjustment factor’, or UAF. The UAF is a “(C) to (A)”

- type measurement, relating energy use in situ to the DOE test result for a new appliance.

Studies of new appliances include Meier & Jansky (1993), Meier et al. (1993), Dutt et al. (1994), Quantum (1994), Goett (1995), Miller & Pratt (1998), and Kinney & Belshe (2001). The average (or typical) values of the ratio of (C) to (A) for these studies range from 0.85 to 1.1, and there is significant variatio n, with ratios ranging from 0.56 to 1.25. The majority of these studies are not adjusted for ambient temperature variations or climate (although several use year

- long samples to eliminate seasonal effects). The only of these studies which is adjusted (Dutt et al.) is normalized to the climate of the particular location of the measurements, rather than to a national average climate model. Taken collectively, these studies do not allow DOE to draw conclusions regarding possible national variation in new

- refri gerator energy use, particularly due to variations in climate. They do indicate that the labeled energy consumption of a new appliance is likely to be accurate in situ to within 40%, as suggested by Meier (1995).

Studies of refrigerators at the time of r eplacement by utility programs show higher energy use relative to the labeled energy consumption than do new refrigerators. For older refrigerators, studies predominantly take two forms: (B) to (A) or (C) to (A). (B) to (A) studies isolate the

effects of age from any other effects (such as behavior or ambient temperature in situ ), while (C) to (A) studies give a direct indication of the ‘UAF’ of old appliances. These studies are not necessarily representative of all older refrigerators, because they study only those units and households participating in utility refrigerator recycling programs.

Test

- procedure

- only comparison studies include Bos (1993), Barakat & Chamberlin (1996), KEMA (2004) and Peterson et al. (2007). All four of these studies show sign ificant energy use increase in the DOE test procedure; KEMA and Peterson both indicate an energy use increase of close to 50%, with wide variation. Only 7% of the refrigerators measured by KEMA used less than their labeled consumption. 25% of the refrigera tors measured by Peterson et al. used more than 70% more that their labeled consumption.

Miller & Pratt (1998), Kinney & Belshe (2001), and Mowris (2003) undertook direct

evaluation of the ratio of in situ to labeled consumption for older refrigerators. The average ratio in all three studies was measured to be larger than one, although smaller than the test

- procedure

based comparisons. Mowris indicated wide variation in energy use relative to the label, and

Miller & Pratt’s sub

- categories show a range of energy consumptions from 28% below the label

to 20% above.

Only one study reviewed by DOE compared in situ energy use to the DOE test on the same appliance (ADM, Athens, et al., 2008), a (C) to (B) comparison. Depending on the weather7

- A

- 6 model used to adju st the in situ measurements, they found that on average the DOE test procedure overestimated the in situ use by 13 to 23%. This study does not include an indication of how the DOE test consumption compared with the labeled consumption.

Testing has confir med that age, in combination with other refrigerator characteristics, accounts for the degradation of refrigerator energy efficiency (KEMA, 2004; Peterson, 2007). Therefore, energy efficiency degradation is a factor in calculating the savings between new a nd replacement units. Energy use increases when barriers to cabinet air and heat leakage degrade. For example, door seals no longer close tightly, damaged walls allow air flow, and wet or degraded insulation no longer performs its function.

Two studies ( KEMA, 2004 and Miller & Pratt, 1998) used regression analysis to measure the average effect of annual degradation on appliance energy use. KEMA determined an energy use growth rate of roughly 40 kWh/year, depending on model characteristics. Miller & Pratt’ s regression model predicts a 1.37% increase in energy use each year. Smit (2006) reports that Athens (1998) calculated a degradation rate of 0.6% per year.

7

- A.4 SUMMARY

This appendix summarizes current literature pertaining to the difference between DOE

test b ased measurements (when new or at retirement) and field

- based measurements of refrigerator

- freezer energy consumption. In situ energy use was found to be close to labeled consumption for new refrigerators, but higher than labeled at the time of replacement . This appendix has examined the mean values and variability from the literature; the variability across a national sample is likely much greater than the range addressed here.

Degradation of the refrigerator unit contributes to the discrepancy between th e DOE test and field measured energy consumption data. However, the precise rate of efficiency decrease (and particularly its variability) cannot be determined from the literature.

7

- A.5 BIBLIOGRAPHY

ADM Associates, Inc. 2004. Southern California Edison 1994 Re sidential Appliance Efficiency Incentive Program Ninth Year Retention Study . CEC Study ID #546A. Prepared for Southern California Edison Company. July 2004.

ADM Associates, Inc.; et al. 2008. Evaluation Study of the 2004

- 05 Statewide Residential Appliance Recycling Program; 2004

- 2005 Programs #1114, #1157, #1232 and #1348 Final Report and Appendices. Prepared by ADM Associates, Inc.; Athens Research; Hiner & Partners; and Innovologie LLC. Prepared for Southern California Edison. April,

2008.7

- A

- 7 Athens Resear ch , 1998. Refrigerator/Freezer UEC Estimation, 1996 ARCA/SCE Turn

- In Program . In Support of Xenergy Inc’s Evaluation of the 1996 Appliance Recycling Program.

Dohrmann, Donald R. et al. Net Savings Estimation in Appliance Recycling Programs: A Review

and E mpirical Analysis with Recent California Data ADM Associates, Inc., Athens

Researc h, Innovologie LLC for Southern California Edison.

Dutt, Guatam, et al., 1994. “Large Scale Residential Refrigerator Field Metering”, in 1994 ACEEE Summer Study in Energy Ef ficiency in Buildings , pp. 2.77.

ICF Consulting, 2003. Evaluation of the Energy and Environmental Effects of the California Appliance Early Retirement and Recycling Program : Final Report. Prepared for: California Public Utilities Commission and Appliance Recycling Centers of America. May 12, 2003.

KEMA

. 2004. 2003 EM&V RARP Study:Degradation and Market Potential Analysis

. Prepared

for Southern California Edison

, Rosemead, CA . Prepared by KEMA Inc.

, Madison, WI. December 23, 2004

. CALMAC STUDY ID SCE0205 m a:project:scee0015 rarp 03 evaluation:report:title

.

KEMA, 2004. Final Report: Measurement and Evaluation Study of the 2002 Statewide Residential Appliance Recycling Program. February, 2004. Prepared for: Southern California Edison. February 13, 2004.

Kin ney, Larry and Rana Belshe. 2001. Refrigerator Replacement in the Weatherization Program: Putting a Chill on Energy Waste: A special report for the Weatherization Assistance Program . E Source. September, 2001.

Market Transformation Programme. 2007. BNC11: Domestic Refrigerator Test Standard Vs

Real

- Use Energy Consumption . April 30, 2007. http://www.mtprog.com/SelectProductStrategy.aspx?intSelection=1&intSector=1

M eier, Alan, 1995. “Refrigerator energy use in the laboratory and in the field,” Energy and Buildings , 22, pp. 233

- 243.

Meier, A

. . and R. Jansky. Field Performance of Residential Refrigerators: A Comparison with the Laboratory Test

. 1991. Lawrence Berkeley Laboratory : Berkeley, CA. Report No.

LBL

- 31795

.

Meier, A. and M. Martinez. Energy Use of Icemaking in Domestic Refrigerators. ASHRAE Transactions: Symposia

. 1996. AT

- 96

- 19

- 2.7

- A

- 8 Meier . A., A. Megowan, B. Litt, and B. Pon. The New York State Residential Ref rigerator Electrical Energy Monitoring Project: Final Report . 1993. Lawrence Berkeley National Laboratory: Berkeley, CA. Report No. LBL

- 33708.

Miller, J.D. and R.G. Pratt. Estimates of Refrigerator Loads in Public Housing Based on Metered Consumption Data

. 199 8. Pacific Northwest National Laboratory. Report No. PNNL

11991

.

Peterson, J., D. Dohrmann, T. Alereza, S. Samiullah, S. Westberg, and J.H. Redd. Gross S avings

E stimation for Appliance R ecycling P rograms: t he L ab V ersus in situ M easurement

I mbroglio and R elated I ssues. Proceedings of the 2007 International Energy Performance Evaluation Conference (IEPEC)

. 2007. Chicago, IL. August. Report 653. 17 pp.

Quantum Consulting. 1994. 1991 Refrigerator Rebate Program Metering Study for Southern California Edi son, Final Report . P646.070.

Smit, Kevin L. 2006. 2005 Refrigerator/Freezer Recycling Program Evaluation . Snohomish County Public Utility District No. 1. March.

Topping, Richard F. and Edward A. Vineyard. 1982. Field Test of a High

- Efficiency, Automatic

Defrost Refrigerator Freezer . Prepared by AD Little and ORNL for the ASHRAE Semi

Annual Meeting, Toronto Canada. June 27

- July 1, 1982.7 B

- i APPENDIX 7

- B. DATA FOR ESTIMATING DISTRIBUTION OF

REFRIGERATOR AND FRE EZER SIZE IN THE REC S SAMPLE

TABLE OF CO NTENTS

7

- B.1 INTRODUCTION

................................ ................................ ................................ . 7

- B

- 1

7

- B.2 RESULTS

................................ ................................ ................................ .............. 7

- B

- 1

LIST OF FIGURE

Figure 7

- B.2.1 Models of Top Mount Freezer without through

- the

- door ice (Product Class 3)

................................ ................................ ................................ ....... 7

- B

- 2 Figure 7

- B.2.2 Models o f Bottom Mount Freezer without through

- the

- door ice (Product Class 5)

................................ ................................ ........................ 7

- B

- 3 Figure 7

- B.2.3 Models of Side Mount Freezer with through

- the

- door ice (Product Class 7)

................................ ................................ ................................ ....... 7

- B

- 4 Figure 7

- B.2.4 Models of Upright Freezer with automatic defrost (Product Class 9)

....... 7

- B

- 5 Figure 7

- B.2.5 Models of Chest Freezers (Product Class 10)

................................ ............ 7

- B

- 6 Figure 7

- B.2.6 Models of Compact Refrigerator and Refrigerator

- Freezer with manual defrost (Product Class 11)

................................ ................................ .......... 7

- B

- 7 Figure 7

- B.2.7 Models of Compact Chest Freezer (Product Class 18)

.............................. 7

- B

- 87

- B

- 1 APPENDIX 7

- B. DATA FOR ESTIMATING DISTRIBUTION OF REFR IGERATOR

AND FREEZER SIZE IN THE RECS SAMPLE

7

- B.1 INTRODUCTION

DOE used the California Energy Commission (CEC) applianc e database 1 to determine the distribution of refrigerator and freezer volumes in the market. The Energy Information Administration’s (EIA) Residential Energy Consumption Surveys (RECS) 2 provides the volumes of household refrigerators only within bins (rang es). In order to estimate the labeled energy consumption of a household’s standard

- sized appliance, DOE selected a volume from within the appropriate RECS bin. DOE then selected a more precise volume randomly from the distribution

of volumes within the REC S bin, basing the probability of selecting each volume on the number

of models in the CEC database having that volume. The figures in this appendix show the volume distributions by number of models in the CEC database (narrower, solid bars in figures)

and the distributions of refrigerator volumes reported by RECS respondents (wider, empty bars in figures). For each standard

- sized refrigeration product DOE first identified the appropriate RECS bin and product class, then chose a more precise volume from the relevant part of the CEC

distribution.

For compact products (product classes 11 and 18), for which DOE did not use a household sample, DOE used the distribution of volumes from the CEC database to characterize

the distribution of volumes sold in the mark et and determine the distribution of energy use.

7

- B.2 RESULTS

Figures 7

- B.2.1 through 7

- B.2.7 depict the volume distributions on the number of models in the CEC database and the distribution of refrigerator and freezer volumes reported in RECS.7

- B

- 2 0 100 200 300 400 500 600 700

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Total Volume ( **cu ft** )Frequency CEC directory

RECS bins

Figure 7

- B.2.1 Models of Top Mount Freezer without through

- the

door ice (Product Class 3)7

- B

- 3 0 20 40 60 80 100 120 140 160

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Total Volume ( **cu ft** )Frequency CEC directory

RECS bins

Figure 7

- B.2.2 Models of Bottom Mount Freezer without through

the

- door ice (Product Class 5)7

- B

- 4 0 100 200 300 400 500 600 700 800 900

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Total Volume ( **cu ft** )Frequency CEC directory

RECS bins

Figure 7

- B.2.3 Models of Side Mount Freezer with through

- the

door ice (Product Class 7)7

- B

- 5 0 5 10 15 20 25 30 35 40 45 50

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Total Volume ( **cu ft** )Frequency CEC directory

RECS bins

Figure 7

- B.2.4 Models of Upright Freezer with aut omatic defrost (Product Class 9)7

- B

- 6 0 10 20 30 40 50 60 70

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Total Volume ( **cu ft** )Frequency CEC directory

RECS bins

Figure 7

- B.2.5 Models of Chest Freezers (Product Class 10)7

- B

- 7 0 10 20 30 40 50 60 70

1 2 3 4 5 6 7 8 9 10

Total Volume ( **cu ft** )Frequency CEC directory

Figure 7

- B.2.6 Models of Compact Refrigerator and Refrigerator

Freezer with manual defrost (Product Class 11)7

- B

- 8 0 5 10 15 20 25 30

1 2 3 4 5 6 7 8 9 10

Total Volume ( **cu ft** )Frequency CEC directory

Figure 7

- B.2.7 Models of Compact Chest Freezer (Product Class 18)7

- B

- 9 REFERENCES

1 California Energy Commission. Appliances Database

— Refrigeration.

< www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/ > (Last a ccessed April 25,

2009 .)

2 U.S. Department of Energy

– Energy Information Administration. Residential Energy Consumption Survey, 2005 Publ ic Use Data Files

. 2009. U.S. Department of Energy: Washington, D

. C. < www.eia.doe.gov/emeu/recs/recspubuse05/pubuse05.html >8 A

- i APPENDIX 8

- A. USER INSTRUCTION S FOR LCC AND PBP SPRE ADSHEETS

TABLE OF CO NTENTS

8

- A.1 INTRODUCTION

................................ ................................ ................................ . 8

- A

- 1

8

- A.1.1 Standard Size Refrigerator

- Freezers and Freezers

................................ ................. 8

- A

- 1

8

- A.1.2 Compact Refrigerators and Compact Freezers

................................ ...................... 8

- A

- 2

8

- A.2 BASIC INSTRUCTIONS

................................ ................................ ...................... 8

- A

- 38

- A

- 1 APPENDIX 8

- A. USER INSTRUCTION S FOR LCC AND PBP SPRE ADSHEETS

8

- A.1 INTRODUCTION

It is possible to examine and reproduce the detailed res ults of the life

- cycle cost ( LCC ) and payback period ( PBP ) analyses using Microsoft Excel spreadsheet s available on the U.S. Department of Energy’s website at: To fully execute the spreadsheet s req uires both Microsoft Excel and Crysta l Ball software. Both applications are comme rcially available. Crystal Ball is available at : http://www.eere.energy.gov/buildings/appliance_standards/

.

http://www.decisioneering.com

.

The seven spreadsheet s post ed on the DOE webs ite represent the latest version s and have

b een tested with Microsoft Excel 200 3

.

8

- A.1.1 Standard Size Refrigerator

- Freezers and Freezers

The Standard Size Refrigerator

- Freezers and Freezers LCC and PBP spreadsheet s or workb ooks consist of the following workshe ets:

LCC Summary Contains the input selections and a summary table of energy use, operating costs, LCC, and Payback. This worksheet also works as an interface between user inputs and the rest of the worksheets

— do not modify this sheet.

RECS Households For each RECS household being s ampled , contains the equipment usage data , along with product characteristics ( i.e., size, volume, product a ge) and household characteristics ( e.g., Census division,

income )

.

RECS UAF Contains the u nit a djustment f actor ca lculation which convert s tested energy consumption into field energy consumption

.

Base Case Eff Dist Contains market efficie ncy distribution in the year the standard

takes effect

.

Equipment Price Contains manufacturer price data for the considered design options. Also includes the manufacturer and retail mark

- ups, sales

tax.

Energy Use Contains unit energy use data (tested and field)

.

Energy Price Contains regional electricity prices for the reference year.8

- A

- 2 Energy Price Trend Contains the electricity p rice trends for the reference, high, and low economic growth scenarios based on AEO 2009

.

Discount Rate Contains data from which an average discount rate and a

distribution of discount rates are determined.

Lifetime Contains the survival function and average lifetime in years.

Standards Contains past and existing standards by product class along with historical trends of energy consumption prior to first standards.

AV Equations Contains average relation between volume and adjusted volume by product class.

ESAF Contains efficiency standard adjustment factor

.

UAF Range Contains parameters allowing for th e sample selection, and

minimum and maximum UAF assignments.

EStarModel Contains Energy Star model assigning energy star to households

based o n income.

8

- A.1.2 Compact Refrigerators and Compact Freezers

The Compact Refrigerators and Compact Freezers LCC and PBP spreadsheet or workbook consists of the following worksheets:

LCC Summary Contains the input selections and a summary table of energy use,

ope rating costs, LCC, and Payback. This worksheet also works as an interface between user inputs and the rest of the worksheets

— do not modify this sheet.

Base Case Eff Dist Contains market efficie ncy distribution in the year the standard

takes effect.

Di vision Contains number of customers for residential and commercial sector by region.

Equipment Price Contains manufacturer price data for the considered design options. Also includes the manufacturer and retail mark

- ups, sales

tax.

Energy Use Contains unit energy use data (tested and field)

.

Energy Price Contains regional electricity prices for the reference year.8

- A

- 3 Energy Price Trend Contains the electricity price trends for the reference, high, and low economic growth scenarios based on AEO 2009.

Dis count Rate Contains data from which an average discount rate and a

distribution of discount rates are determined.

Lifetime Contains the survival function and average lifetime in years.

AV Equations Contains average relation between volume and adjuste d volume by product class.

8

- A.2 BASIC INSTRUCTIONS

Basic instructions for operating the LCC spreadsheets are as follows:

1. Once you have downloaded the LCC file from the Web, open the file using Excel. At the bottom, click on the tab for sheet ‘ LCC Summary ’

.

2. Use Excel’s “View/Zoom” commands at the top menu bar to change the size of the display to make it fit your monitor.

3. The user interacts with the spreadsheet by clicking choices or entering data using the graphical interface that comes with the spreadsheet. Select choices from the various inputs listed under "User Options" heading.

4. Under the "User Options" heading, select choices from the selection buttons and boxes for the following: (1) type of calculation (Sample or Crystal Ball®), (2) energy price

Trend , (3) start year, and (4) efficiency market share scenario

. By overwriting the code in the LCC summary sheet, a new discount rate or lifetime can be entered if a value other than the default value is wanted . The Department does not recommend saving the

sp readsheet after the code is changed.

5. To change inputs listed under "User Input ", select the input you wish to change by either clicking on the appropriate button or selecting the appropriate input from the i nput box.

6. This spreadsheet gives the user two types of calculation methods:

a. If the "Sample Calc" is selected, then all calculations are performed for single input values, usually an average. The new results are shown on the same sheet as soon as

the new values are entered.

b. Alternately, if the " CB C alculation" is selected, the spreadsheet generates results that are distributions. Some of the inputs are also distributions. The results from the LCC distribution are shown as single values and refer only to the results from the last8

- A

- 4 Monte Carlo sample an d are therefore not meaningful. To run the distribution version of the spreadsheet, the Microsoft Excel® add

- in software called Crystal Ball® must

be enabled.

To produce sensiti vity results using Crystal Ball , simply select Run from the Run menu (on the menu bar). To make basic changes in the run sequence, including altering the number of trials, select Run Preferences from the Run menu. After each simulation run, the user needs to select Reset (also from the Run menu) before Run can be se lected again. On ce Crystal Ball has completed its run sequence it will produce a series of distributions. Using the menu bars on the distribution results, it is possible to obtain further statistical information. The time taken to complete a run sequence can be reduced by minimizing the Crystal Ball window in Microsoft

Excel . A step

- by

- step summary of the procedure for running a distribution analysis is outlined

below:

1. Find the Crystal Ball toolbar (at top of screen)

2. Click on Run from the menu bar

3. Select Run Preference s and choose from the following choices:

a. Monte Carlo a

b. Latin Hypercube (recommended)

c. Initial seed choices and whether you want it to be constant between runs

d. Select number of Monte Carlo Trials ( DOE suggests 10,000).

4. To run the simulation, follow the follo wing sequence (on the Crystal Ball toolbar)

Run

Reset

Run

5. Now wait until the program informs you that the simulation is completed.

The following instructions are provided to view the o utput generated by Crystal Ball

.

1. After the simulation has finished, to see the distribution charts generated, click on the

Windows tab b ar that is labeled Crystal Ball

.

2. The life

- cycle cost savings and payback periods are defined as Forecast cells. The frequency charts display the results of the simulations, or trials, pe rformed by Crystal

Ball . Click on any chart to bring it into view. The charts show the low and high endpoints

of the forecasts. The Vie w selection on the Crystal Ball toolbar can be used to specify whether you want cumulative or frequency plots shown.

a Because of the nature of the program, there is some variation in results due to random sampling when Monte Carlo or Latin Hypercube sampling is used

.8

- A

- 5 3. To calculate the probability that a particular value of LCC savings will occur, either type 0 in the box by the left arrow, or move the arrow key with the cursor to 0 on the scale. The value in the Certainty box shows the likelihood that the LCC savings will occur. To calculate the certainty of payback period being below a certain number of years, choose that value as the high endpoint.

4. To generate a printout report, select Create Report from the Run menu. The toolbar choice of Forecast Windows allows you to select the charts and statistics in which you

are interested. For furt her information on Crystal Ball outputs, please refer to Understanding the For ecast Chart in the Crystal Ball manual.8 B

- i APPENDIX 8

- B. UNCERTAINTY AND VARIABILITY IN LCC ANALYSIS

TABLE OF CO NTENTS

8

- B.1 INTRODUCTION

................................ ................................ ................................ . 8

- B

- 1

8

- B.2 UNCERTAINTY

................................ ................................ ................................ ... 8

- B

- 1

8

- B.3 VARIABILITY

................................ ................................ ................................ ...... 8

- B

- 1

8

- B.4 APPROACHES TO UNCERT AINTY AND VARIABILIT Y

............................. 8

- B

- 2

8

- B.5 PROBABILITY ANALYSIS AND THE USE OF CRYST AL BALL

................. 8

- B

- 2

LIST OF FIGURE S

Figure 8

- B.5.1 Normal Probability Distribution

................................ ................................ 8

- B

- 3 Figure 8

- B.5.2 Triangular Probability Distribution

................................ ............................ 8

- B

- 3 Figure 8

- B. 5.3 Uniform Probability Distribution

................................ ............................... 8

- B

- 38

- B

- 1 APPENDIX 8

- B. UNCERTAINTY AND VARI ABILITY IN LCC ANALYSIS

8

- B.1 INTRODUCTION

Analysis of an energy

- efficiency standard involves calculations of impacts, for example, the impact of a standard on consumer life

- cycle cost (LCC). In order to perform the calculation, the analyst must first: 1) specify the equation or model that will be used; 2) defi ne the quantities in the equation; and 3) provide numerical values for each quantity. In the simplest case, the equation is unambiguous (contains all relevant quantities and no others), each quantity has a single numerical value, and the calculation resul ts in a single value. However, unambiguity and precision are rarely the case. In almost all cases, the model and/or the numerical values for each quantity in the model are not completely known (i.e., there is uncertainty) or the model and/or

the numerica l values for each quantity in the model depend upon other conditions (i.e., there is variability).

Thorough analysis involves accounting for uncertainty and variability. While the simplest analysis involves a single numerical value for each quantity in a calculation, arguments can arise about what the appropriate value is for each quantity. Explicit analysis of uncertainty and variability is intended to provide more complete information to the decision

- making process.

8

- B.2 UNCERTAINTY

When making observations of past events or speculating about the future, imperfect knowledge is the rule rather than the exception. For example, the energy actually consumed by a particular appliance type (such as the average U.S. commercial air condition er or heat pump) is not directly recorded, but rather estimated based upon available information. Even direct laboratory measurements have some margin of error. When estimating numerical values expected for quantities at some future date, the exact outco me is rarely known in advance.

8

- B.3 VARIABILITY

Variability means that different applications or situations produce different numerical values when calculating a quantity. Specifying an exact value for a quantity may be difficult

because the value depends on something else. For example, the number of hours an air conditioner is operated by a household depends upon the specific circumstances and behaviors of the occupants (e.g., number of persons, personal habits about how comfortable the person wants to be, etc.). Variability makes specifying an appropriate population value more difficult in as much as any one value may not be representative of the entire population. Surveys can be helpful here, and analysis of surveys can relate the var iable of interest (e.g., hours of use) to other variables that are better known or easier to forecast (e.g., persons per household).8

- B

- 2 8

- B.4 APPROACHES TO UNCERT AINTY AND VARIABILIT Y

This section describes two approaches to uncertainty and v ariability:

• scenario analysis, and

• probability analysis.

Scenario analysis uses a single numerical value for each quantity in a calculation, then changes one (or more) of the numerical values and repeats the calculation. A number of

calculations are done, which provide some indication of the extent to which the result depends upon the assumptions. For example, the life

- cycle cost of an appliance could be calculated for energy rates of 2, 8, and 14¢ per kWh.

The advantages of scenario analysis are that each calculation is simple; a range of estimates is used; and crossover points can be identified. (An example of a crossover point is the energy rate above which the life

- cycle cost is reduced, holding all other inputs constant. That is,

the crossove r point is the energy rate at which the consumer achieves savings in operating expense that more than compensate for the increased purchase expense.) The disadvantage of scenario analysis is that there is no information about the likelihood of each scenari o.

Probability analysis considers the probabilities within a range of values. For quantities with variability (e.g., electricity rates in different households), surveys can be used to generate a frequency distribution of numerical values (e.g., the numb er of households with electricity rates at particular levels) to estimate the probability of each value. For quantities with uncertainty, statistical or subjective measures can be used to provide probabilities (e.g., manufacturing cost to improve energy e fficiency to some level may be estimated to be $10 ± $3).

The major disadvantage of the probability approach is that it requires more information, namely information about the shapes and magnitudes of the variability and uncertainty of each quantity. The advantage of the probability approach is that it provides greater information about the outcome of the calculations, that is, it provides the probability that the outcome will be in a particular range.

Scenario and probability analysis provide some indication of the robustness of the policy given the uncertainties and variability. A policy is robust when the impacts are acceptable over a wide range of possible conditions.

8

- B.5 PROBABILITY ANALYSIS AND THE USE OF CRYST AL BALL

To qua ntify the uncertainty and variability that exist in inputs to the engineering, LCC, and payback period (PBP) analyses, the Department used Microsoft Excel spreadsheets combined with Crystal Ball, a commercially available add

- in, to conduct probability anal yses. The probability analyses used Monte Carlo simulation and probability distributions.8

- B

- 3 Simulation refers to any analytical method meant to imitate a real

- life system, especially when other analyses are too mathematically complex or too difficult to r eproduce. Without the aid of simulation, a spreadsheet model will only reveal a single outcome, generally the most likely or average scenario. Spreadsheet risk analysis uses both a spreadsheet model and simulation to automatically analyze the effect of va rying inputs on outputs of the modeled system. One type of spreadsheet simulation is Monte Carlo simulation, which randomly generates values for uncertain variables again and again to simulate a model. Monte Carlo simulation was named for Monte Carlo, Mon aco, where the primary attractions are casinos containing games of chance. Games of chance such as roulette wheels, dice, and slot machines, exhibit random behavior. The random behavior in games of chance is similar to how Monte

Carlo simulation selects v ariable values at random to simulate a model. When you roll a die, you know that either a 1, 2, 3, 4, 5, or 6 will come up, but you do not know which for any particular roll. It's the same with the variables that have a known range of values but an uncerta in value for any particular time or event (e.g., equipment lifetime, discount rate, and installation cost).

For each uncertain variable (one that has a range of possible values), possible values are defined with a probability distribution. The type of distribution selected is based on the conditions surrounding that variable. Probability distribution types include:

Figure 8

- B.5.1 Normal Probability Figure 8

- B.5.2 Triangular Figure 8

- B .5.3 Uniform Probability

Distribution Probability Distribution

Distribution

During a simulation, multiple scenarios of a model are calculated by repeatedly sampling values from the probability distributions for the uncertain variables and using those values for the cell. Crystal Ball simulations can consist of as many trials (or scenarios) as desired

— hundreds or even thousands. During a single trial, Crystal Ball randomly selects a value from the defined possibilities (the range and shape of the probability distribution) for each uncertain variable and

then recalculates the spreadsheet. NORMAL TRIANGULAR UNIFORM8 C

- i APPENDIX 8

- C. CONSUMER RETAIL PRIC E DISTRIBUTIONS FOR

BASELINE REFRIGERATO R

- FREEZERS AND FREEZER S

TABLE OF CONTENTS

8

- C.1 INTRODUCTION

................................ ................................ ................................ . 8

- C

- 1

8

- C.2 DISTRIBUTION HISTOGR AMS

................................ ................................ ......... 8

- C

- 2

LIST OF FIGURES

Figure 8

- C.2.1 Baseline Retail Price Distribution for Product Class 3 (Standard

- sized Top

- mount Ref rigerator

- Freezers without Through

- the

- door Service)

..... 8

- C

- 2 Figure 8

- C.2.2 Baseline Retail Price Distribution for Product Class 5 (Standard

- sized

Bottom

- mount Refrigerator

- Freezers without Through

- the

- door Service)

................................ ................................ ................................ ...... 8

- C

- 3 Figure 8

- C.2.3 Baseline Retail Price Distribution for Product Class 7 (Standard

- sized

Side

- mount Refrigerator

- Freezers with Throug h

- the

- door Service)

......... 8

- C

- 4 Figure 8

- C.2.4 Baseline Retail Price Distribution for Product Class 9 (Standard

- sized Upright Freezers)

................................ ................................ ....................... 8

- C

- 5 Figure 8

- C.2.5 Baseline Retail Price Distribution for Product Class 10 (Standard

- sized Chest Freezers)

................................ ................................ ........................... 8

- C

- 6 Figure 8

- C.2.6 Baseline Retail Price Distribution for Product Class 11 (Compact Refrigerators)

................................ ................................ ............................. 8

- C

- 7 Figure 8

- C.2.7 Baseline Retail Price Distribution for Product Class 18 (Compact Freezers)

................................ ................................ ................................ ..... 8

- C

- 88

- C

- 1 APPENDIX 8

- C. CONSUMER RETAIL PRIC E DISTRIBUTIONS FOR BASELINE

REFRIGERATOR

- FREEZERS AND FREEZER S

8

- C.1 INTRODUCTION

DOE’s engineering analysis did not attempt to estimate the manufacturing cost for baseline models. Instead, it developed incremental increases in manufacturer selling price associated with increases in efficiency levels. This approach required DOE to estim ate retail prices for the baseline model in each product class.

DOE drew upon proprietary retail price data collected by The NPD Group. 1 These data reflect retail prices and sales at a large number of retail outlets in the United States (including

over 5 0 percent of retail sales), and include information regarding model number, refrigerated volume, configuration of doors and ice

- making, and whether the unit is an ENERGY STAR product. The data include enough information to assign each model to the correct product class.

Standard

- size refrigerators and freezers only contain models with capacity greater than 7.75 cubic feet, whereas compact refrigerators consist of any types of refrigerators with capacity less

than 7.75 cubic feet. DOE first converted all the selling prices to 2008 dollar value and then developed a sales

- weighted price distribution for non

- ENERGY STAR appliances in each product class from this data. For the purpose of developing retail price distribution for baseline products only, DOE exclude d the built

- in models under product classes 5, 7 and 9. a DOE grouped models by selling price in bins of varying width (generally $25 for compact products
and $50 to $100 for standard

- sized products) in order to balance the accuracy and usability of the

dis tributions. These distributions are shown in the following section.

DOE assumed that prices for non

- ENERGY STAR models are a reasonable approximation of prices for the baseline models. These models may be “baseline” in efficiency, but span a wide range o f other features and materials, and therefore have a broad distribution of prices. DOE also excluded sales above price threshold that was considered similar to built

- in prices for product classes 7 and 11 (at $4,950 and $550 respectively), which removed le ss than 1 percent of sales in each case. DOE chose not to develop volume

- dependent baseline retail prices because the data did not show a strong relationship between volume and retail price. The price distributions within most volume ranges and product cla sses are almost as broad as the volume

independent distributions DOE chose to use, and regression analysis indicated very weak dependence of average price on volume.

a Based on the guidance from industry experts, built

- ins include all models from Subzero, Viking and Thermador.

Other manufacturers of built

- ins also produce non

- built

- in products, so those could not be excluded based on brand,

and were included in the di stributions.8

- C

- 2 8

- C.2 DISTRIBUTION HISTOGR AMS

Figure 8

- C.2.1 Baseline Retail Price Distribution for Product Class

3 (Standard

- sized Top

- mount Refrigerator

- Freezers without Through

- the

- door Service) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%$150$250$350$450$550$650$750$850$950$1,050$1,150$1,250$1,350$1,450$1,550$1,650$1,750$1,850$1,950$2,050$2,150$2,250$2,350$2,450$2,550$2,650$2,750$2,850$2,950$3,500$4,500**Percent of Sales**

**Selling Price**8

- C

- 3 Figure 8

- C.2.2 Baseline Retail Price Distribution for Product Class 5 (Standard

- sized Bottom

- mount Refrigerator

Freezers without Through

- the

- door Service) 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00%$150$350$550$750$950$1,150$1,350$1,550$1,750$1,950$2,150$2,350$2,550$2,750$2,950$3,150$3,350$3,550$3,750$3,950$4,150$4,350$4,550$4,750$4,950$5,300$5,700**Percent of Sales**

**Selling Price**8

- C

- 4 Figure 8

- C.2.3 Baseline Retail Price Distribution for Product Class 7 (Standard

- sized Side

- mount Refrigerator

- Freezers with Through

- the

- door Service) 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00%$150$350$550$750$950$1,150$1,350$1,550$1,750$1,950$2,150$2,350$2,550$2,750$2,950$3,150$3,350$3,550$3,750$3,950$4,150$4,350$4,550$4,750$4,950**Percent of Sales**

**Selling Price**8

- C

- 5 Figure 8

- C.2.4 Baseline Retail Price Distribution for Product Class 9 (Standard

- sized Upright Freezers) 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%$75$175$275$375$475$575$675$775$875$975$1,075$1,175$1,275$1,375$1,475$1,650$1,850$2,050$2,250$2,450$2,650$2,850$3,250$4,250$5,250$6,250**Percent of Sales**

**Selling Pirce**8

- C

- 6 Figure 8

- C.2.5 Baseline Retail Price Distribution for Product Class 10 (Standard

- sized Chest Freezers) 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%**Percent of Sales**

**Selling Price**8

- C

- 7 Figure 8

- C.2.6 Baseline Retail Price Distribution for Product Class 11 (Compact Refrigerators) 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%**Percent of Sales**

**SellingPrice**8

- C

- 8 Figure 8

- C.2.7 Baseline Retail Price Distribution for Product Class 18 (Compact Freezers) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%$25$50$75$100$125$150$175$200$225$250$275$300$325$350$375$400$425$450$475$500$750$1,500$2,500$3,500**Percent of Sales**

**Selling Price**8

- C

- 9 REFERENCES

1 The NPD Group, Inc., The NPD Group/NPD Houseworld

– POS, Refrigerators, Freezers January

– December 200 7 , 2008 . Port Washington, NY.8

- D

- i APPENDIX 8

- D. DISTRIBUTIONS USED F OR DISCOUNT RATES

TABLE OF CO NTENTS

8

- D.1 INTRODUCTION

................................ ................................ ................................ . 8

- D

- 1

8

- D.2 DISTRIBUTION OF MORT GAGE INTEREST RATES

................................ .... 8

- D

- 1

8

- D.3 DISTRIBUTION OF RATE S FOR TYPES OF DEBT AND EQUITY USED

TO FINANCE REPLACEME NT HEATING PRODUCTS

................................ . 8

- D

- 1

8

- D.4 DISTRIBUTION OF RATE S FOR TYPES OF EQUIT Y USED TO

FINANCE REPLACEMENT HEATING PRODUCTS

................................ ....... 8

- D

- 4

LIST OF FIGURES

Figure 8

- D.2.1 Distribution of New Home Mortgage Interest Rates

................................ . 8

- D

- 1 Figure 8

- D.3.1 Distribution of Home Equity Loan Interest Rates

................................ ..... 8

- D

- 2 Figure 8

- D.3.2 Distribution of Credit Card Interest Rates

................................ ................. 8

- D

- 2 Figure 8

- D.3.3 Distribution of Installment Loan Interest Rates

................................ ......... 8

- D

- 3 Figure 8

- D.3.4 Distribution of Other Residence Loan Interest Rates

................................ 8

- D

- 3 Figure 8

- D.3.5 Distribution of Other Lines of Credit Loan Interest Rates

........................ 8

- D

- 4 Figure 8

- D.4.1 Distribution of Annual Rate of Return on CDs

................................ ......... 8

- D

- 5 Figure 8

- D.4.2 Distribution of Annual Rate of Return on Savings Bonds

......................... 8

- D

- 5 Figure 8

- D.4.3 Distribution of Annual Rate of Return on Corporate AAA Bonds

............ 8

- D

- 6 Figure 8

- D.4.4 Distribution of Annual Rate of Savings Accounts

................................ ..... 8

- D

- 6 Figure 8

- D.4.5 Distribution of Annual Rate of Return on S&P 500

................................ .. 8

- D

- 7 Figure 8

- D.4.6 Distribution of Annual Rate of Return on Mutual Funds

.......................... 8

- D

- 78

- D

- 1 APPENDIX 8

- D. DISTRIBUTIONS USED F OR DISCOUNT RATES

8

- D.1 INTRODUCTION

DOE derived discount rates for the LCC analysis using data on interest or return rates for various types of debt and equity. To account for variation among households in rates for each of the types, DOE sampled a rate for each household from a distribution of rates for each debt and equity type. This appendix desc ribes the distributions used.

8

- D.2 DISTRIBUTION OF MORT GAGE INTEREST RATES

Figure 8

- D.2.1 shows the distribution of real interest rates for new h ome mortgages. The data source DOE used for mortgage interest rates is the Federal Reserve Board’s Survey of Consumer Finances (SCF) in 19 89, 1992, 1995, 1998, 2001, 2004

, and 2007

. 1 Using the appropriate SCF data for each year, DOE adjusted the nominal mortgage interest rate for each

relevant household in the SCF for mortgage tax deduction and inflation. In cases where the effective interest rate is equal to or below the inflation rate (resulting in a negative real interest rate), DOE set the real effective interest rate to zero.

Figure 8

- D.2.1 Distribution of New Home Mortgage Interest Rates

8

- D.3 DISTRIBUTION OF RATE S FOR TYPES OF DEBT AND EQUITY USED

TO FINANCE REPLACEME NT HEATING PRODUCTS

Figure 8

- D.3.1 through Figure 8

- D.3.5 show the distribution of real interest rates for different types of debt used to finance replacement heating products

. The data source for the 0% 5% 10% 15% 20% 25% 30%Probability

Real Interest Rate8

- D

- 2 interest rates for home eq uity loans, credit cards, installment loans, other residence loans, and

other lines of credit is the Federal Reserve Board’s SCF in 19 89, 1992, 1995, 1998, 2001, 2004

, and 2007

. 1 DOE adjusted the nominal rates to real rates using the annual inflation rate in each

year. For home equity loans, DOE calculated effective interest rates in a similar manner as for mortgage rates, since interest on such loans is tax deductible.

Figure 8

- D.3.1 Distribution of Home Equity Loan Interest Rates

Figure 8

- D.3.2 Distribution of Credit Card Interest Rates 0% 5% 10% 15% 20% 25% 30%Probability

Real Interest Rate

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%Probability

Real Interest Rate8

- D

- 3 Figure 8

- D.3.3 Distribution of Installment Loan Interest Rates

Figure 8

- D.3.4 Distribution of Other Residence Loan Interest Rates

0% 5% 10% 15% 20% 25% 30% 35% 40%Probability

Real Interest Rate

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%Probability

Real Interest Rate8

- D

- 4 Figure 8

- D.3.5 Distribution of Other Lines of Credit Loan Interest

Rates

8

- D.4 DISTRIBUTION OF RATE S FOR TYPES OF EQUIT Y USED TO

FINANCE REPLACEMENT HEATING PRODUCTS

Figure 8

- D.4.1 t hrough Figure 8

- D.4.6 show the distribution of real interest rates for different types of equity used to finance replacement furnaces. Data for equity classes are not
available from the Federal Reserve Board’s SCF , so DOE derived data for these classes from

national

- level historical data. The interest rates associated with certificates of deposit (CDs), 2

savings bonds, 3 and AAA corporate bonds 4 are from Federal Reserve Board time

- series data covering 1977 to 200 9

. DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts are from Cost o f Savings Index data covering 1984 to 200 9

. 5 The

rates for stocks are the a nnual returns on the Standard and Poor’s (S&P) 500 from 1977 to 200 9

. 6

The mutual fund rates are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight) in each year from 1977 to 200 9

. DOE adjusted the nominal rates to real rates using the annual inflation rate in each year. 0% 2% 4% 6% 8% 10% 12% 14%Probability

Real Interest Rate8

- D

- 5 Figure 8

- D.4.1 Distr ibution of Annual Rate of Return on CDs

Figure 8

- D.4.2 Distribution of Annual Rate of Return on Savings

Bonds - 2% 0% 2% 4% 6% 8%Annual Rate of Return

Year

- 2% 0% 2% 4% 6% 8%Annual Rate of Return

Year8

- D

- 6 Figure 8

- D.4.3 Distribution of Annual Rate of Return on Corporate

AAA Bonds

Figure 8

- D.4.4 Distribution of Annual Rate of Savings Accounts - 2% 0% 2% 4% 6% 8%Annual Rate of Return

Year

- 2% 0% 2% 4% 6% 8%Annual Rate of Return

Year8

- D

- 7 Figure 8

- D.4.5 Distribution of Annual Rate of Return on S&P 500

Figure 8

- D.4.6 Distribution of Annual Rate of Return on Mutual

Funds - 40% - 30% - 20% - 10%

0% 10% 20% 30% 40%Annual Rate of Return

Year

- 30% - 20% - 10%

0% 10% 20% 30%Annual Rate of Return

Year8

- D

- 8 REFERENCES

1. The Federal Reserve Board, Survey of Consumer Finances 1989, 1992, 1995, 1998, 2001,
2004, 2007 . < http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html >

2. The Federal Reserve Board, Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs ( secondary market), Maturity: 6

- month, Frequency: Annual, Description: Average rate on 6

- month negotiable certificates of deposit (secondary market), quoted on an investment basis, 2010. (Last accessed 2/25/10,

< http://www.federalreserve.gov/releases/H15/data.htm >

3. The Federal Reserve Board, Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20

- year, Frequency:

Month ly, Description: Bond buyer go 20

- bond municipal bond index, 2010. (Last accessed 2/25/10, < http://www.federalreserve.gov/releases/H15/data.htm >

4. The Federal Reserve Board, Federal Rese rve Statistical Release, Selected Interest Rates, Historical Data, Instrument: Corporate bonds/Moody's Seasoned AAA, Frequency: Annual, Description: Moody's yield on seasoned corporate bonds

- all industries, AAA,

2010. (Last accessed 2/25/10, < http://www.federalreserve.gov/releases/H15/data.htm >

5. Mortgage

- X

- Mortgage Information Service, Cost of Savings Index (COSI) Index History, 2010. (Last accessed February 25, 2010.) < http://mortgage

x.com/general/indexes/default.asp >

6. Damodaran Online Data Page, Historical Returns on Stocks, Bonds and Bills

- United
States, 2010. Damodaran. (Last accessed February 25, 2010.)

< http://pages.stern.nyu.edu/~adamodar/ >9

- A

- i APPENDIX 9

- A. RELATIVE PRICE ELAST ICITY OF DEMAND FOR

APPLIANCE S

TABLE OF CO NTENTS

9

- A.1 INTRODUCTION

................................ ................................ ................................ . 9

- A

- 1

9

- A.2 LITERATURE REVIEW

................................ ................................ ...................... 9

- A

- 1

9

- A.2.1 Price

................................ ................................ ................................ ....................... 9

- A

- 1

9

- A.2.2 Income

................................ ................................ ................................ .................... 9

- A

- 1

9

- A.2.3 Appliance Efficiency and Discount Rates

................................ ............................. 9

- A

- 2

9

- A.3 VARIABLES DESCRIBING THE MARKET FOR REFRI GERATORS, CLOTHES WASHERS, AND DISHWASHERS

................................ ................. 9

- A

- 3

9

- A.3.1 Physical Household/Appliance Variables

................................ .............................. 9

- A

- 3

9

- A.3.2 Economic Variables

................................ ................................ ............................... 9

- A

- 3

9

- A.4 REGRESSION ANALYSIS OF VARIABLES AFFECTI NG APPLIANCE

SHIPMENTS

................................ ................................ ................................ ......... 9

- A

- 4

9

- A.4.1 Broad Trends

................................ ................................ ................................ .......... 9

- A

- 5

9

- A.4.2 Model Specification

................................ ................................ ............................... 9

- A

- 8

9

- A.4.3 Model Discussion

................................ ................................ ................................ ... 9

- A

- 9

9

- A.4.4 Analysis Results

................................ ................................ ................................ ..... 9

- A

- 9

9A.4.4.1 Individual Appliance Model

................................ ................................ 9

- A

- 9

9A.4.4.2 Combined Appliance Model

................................ .............................. 9

- A

- 10

9

- A.4. 5 Additional Regression Specifications and Results

................................ .............. 9

- A

- 11

9A.4.5.1 Lower Consumer Discount Rate

................................ ........................ 9

- A

- 11

9A.4.5.2 Disaggregated Variables

................................ ................................ .... 9

- A

- 11

9

- A.5 LONG RUN IMPACTS

................................ ................................ ....................... 9

- A

- 12

9

- A.6 SUMMARY

................................ ................................ ................................ ......... 9

- A

- 13

9

- A.7 DATA USED IN THE ANA LYSIS

................................ ................................ .... 9

- A

- 14

LIST OF TABLES

Table 9

- A.2.1 Estimates of the Impact of Price, Income and Efficiency on Automobile and Appliance Sales

................................ ............................... 9

- A

- 2

Table 9

- A.3.1 Physical Household/Appliance Variables

................................ .................. 9

- A

- 3

Table 9

- A.3.2 Economic Variables

................................ ................................ ................... 9

- A

- 4

Table 9

- A.4.1 Simple Estimate of Total Price Elasticity of Demand

............................... 9

- A

- 7

Table 9

- A.4.2 Tabular Estimate of Relative Price Elasticity of Appliance Demand

........ 9

- A

- 8

Table 9

- A.4.3 Individual Appliance Model Results

................................ ....................... 9

- A

- 10

Table 9

- A.4.4 Combined Appliance Model Result

................................ ......................... 9

- A

- 10

Table 9

- A.4.5 Combined and Individual Results, 20 percent discount rate

.................... 9

- A

- 11

Table 9

- A.4.6 Disaggregated Regression Results, 37 percent discount rate

................... 9

- A

- 129

- A

- ii Table 9

- A.5.1 Change in Price Elasticity of Demand for Automobiles following a Purchase Price Change

................................ ................................ ............. 9

- A

- 13

Table 9

- A.5.2 Change in Relative Price Elasticity for Home Appliances following a Purchase Price Change

................................ ................................ ............. 9

- A

- 13

LIST OF FIGURE

Figure 9

- A.3.1 Trends in Appliance Shipment, Housing Starts and Replacements

........... 9

- A

- 4 Figure 9

- A.4.1 Residual Shipments and Appliance Price

................................ .................. 9

- A

- 79

- A

- 1 APPENDIX 9

- A. RELATIVE PRICE ELAST ICITY OF DEMAND FOR APPLIANCES

9

- A.1 INTR ODUCTION

This appendix summarizes DOE’s study of the price elasticity of demand for home appliances, including refrigerators, clothes washers and dishwashers. DOE chose t his particular

set of appliances because of the availability of data to determine a price elasticity. This appendix begin s with a review of the existing economics literature describing the impact of economic

variables on the sa le of durable goods in section 9A .2 . In section 9A .3 , the market for home appliances and changes in it over the past 20 years is described. In s ection 9A .4

, DOE

summarize s the results of its regression analysis and present s estimates of the price elasticity of demand for the three appliances. In section 9A.5, DOE presents development of an ‘effective’ purchase pr ice elasticity. DOE’s interpretation of its re sults is presented in s ection 9A .6

. Finally, section 9A.7 describes the data used in DOE’s analysis.

9

- A.2 LITERATURE REVIEW

There are relatively few studies measuring the impact of price, income and efficiency o n the sale of household appliances. In this section DOE provide s a short review of this literature which suggests the likely importance of these variables.

9

- A.2.1 Price

The goal of many of the studies covered in this review is to measure the impact of price

on sales in a dynamic market. One study of the automobile market prior to 1970 finds the price elasticity of demand to decline over time. The author explains this as the result of buyers delaying purchases after a price increase but eventua lly making the pu rchase (Table 9A.2.1 ). 1 A contrasting study of household white goods also prior to 1970, finds the elasticity of demand to increase over time as more price

- conscious buyers enter the market. 2 A recent analysis of refrigerator market survey data finds th at consumer purchase probability decreases with survey asking price. 3 Estimates of the price elasticity of demand for different brands of the same product tend to vary. A review of 41 studies of the impact of price on market share found the average pric e elasticity to be

- 1.75. 4

9

- A.2.2 Income The average estimate of price elasticity of demand reported

in these studies is

- 0 .33 in the appliance market and

- 0 .47 in the combined automobile and appliance markets.

Higher income households are more likely to own household appliances. 5 The impact of income on appliance shipments is explored in two econometric studies of the automobile and appliance markets. 1

, 2 The average income elasticity of demand is 0 .50 in the appliance study cited in the literature review, much larger in the automobile study (Table 9.A.2.1 ).9

- A

- 2 9

- A.2.3 Appliance Efficiency and Discount Rates

Many studies estimate the impact of appliance efficiency on consumer appliance choice. Typically, this impact is summarized by the implicit discount rate, i.e., t he rate consumers appear

to use to compare future appliance operating cost savings against an appliance purchase price premium. a One early and much cited study co ncludes that consumer behavior reflects a 20
percent implicit discount rate when purchasin g r oom air conditioners (Table 9A.2.1 ). 6 A survey of several studies of different appliances suggests that the consumer implicit discount rate has a broad range and averages about 37 percent

. 7

Table 9

- A.2.1 Estimates of the Impact of Price, Income and Efficiency on Auto mobile and Appliance Sales

Durable Good Price Elasticity Income Elasticity Brand

Price Elasticity Implicit

Discount

Rate Model Data

Years Time

Period

Automobiles 1

- 1.07 3.08

- - Linear Regression, stock adjustment - Short run

Automobiles 1

- 0.36 1.02

- - Linear Regression, stock adjustment - Long run

Clothes Dryers 2

- 0.14 0.26

- - Cobb

- Douglas, diffusion 1947

- 1961 Mixed

Room Air

Conditioners 2 - 0.37 8 0.45

- - Cobb

- Douglas, diffusion 1946

- 1962 Mixed

Dishwashers 2

- 0.42 0.79

- - Cobb

- Douglas, diffusion 1947

- 1968 Mixed

Refrigerators 3

- 0.37

- - 39% Logit probability, survey

data 1997 Short run

Various 4

- - - 1.76 9

- Multiplicative regression

- Mixed

Room Air

Conditioners 5 - - - 1.72

- Non

- linear diffusion 1949

- 1961 Short run

Clothes Dryers 5

- - - 1.32

- Non

- l inear diffusion 1963

- 1970 Short run

Room Air

Conditioners 6 - - - 20% Qualitative choice, survey

data - -

Household Appliances 7 - - - 37% 10 Assorted

- -

Sources: 1 S. Hymens. 1971; 2 P. Golder and G. Tellis, 1998; 3 D. Revelt and K. Train, 1997;

4 G. Te llis, 1988; 5 D. Jain and R. Rao; 6 J. Hausman; 7 K. Train, 1985.

Notes: 8 Logit probability results are not directly comparable to other elasticity estimates in this table.

9 Average brand price elasticity across 41 studies.

10 Averaged across severa l household appliance studies referenced in this work.

a A high implicit discount rate with regard to operating costs means that, ba sed on market behavior, consumers appear to put relatively low economic value on the operating cost savings realized from more

- efficient appliances. A high value may indicate lack of information, risk aversion and other factors as well as the value consume rs place on savings accrued in the future.9

- A

- 3 9

- A.3 VARIABLES DESCRIBING THE MARKET FOR REFRI GERATORS,

CLOTHES WASHERS, AND DISHWASHERS

In this section DOE evaluate s variables that appear to account for refrigerator, clothes washer and dishwasher ship ments, including physical household/appliance variables, and

economic variables.

9

- A.3.1 Physical Household/Appliance Variables

Several variables influence the sale of refrigerators, clothes washers and dishwashers. The most important for explaining appliance sa les trends are the annual number of new households formed (housing starts) and the number of appliances reaching the end of their operating life (replacements). Housing starts influence sales because new homes are often provided with, or soon receive, new appliances, including dishwashers and refrigerators. Replacements are correlated with sales because new appliances are typically purchased when old ones wear out. In principle, if households maintain a fixed number of appliances, shipments should equal housing starts plus appliance replacements.

9

- A.3.2 Economic V ariables

Appliance price, appliance operating cost and household income are important economic variables affecting shipments. Low prices and costs encourage household appliance purchases

and a rise i n income increases householder ability to purchase appliances. In principle, changes in economic variables should explain changes in the number of appliances per household.

During the 1980

– 2002 study p eriod, annual shipments grew 69 percent for cloth es washers, 81 percent for refrigerators a nd 105 percent for dishwashers (Table 9A.3.1 ). This rising shipments trend is explained in part by housing starts, which increased 6 percent and by appliance repl acements, which rose between 49 percent and 90 perc ent, depending on the appliance, over the period (Table 9A.3.1 ). b For mature markets such as these, replacements exceed appliance sales associated with new housing construction.

Table 9

- A.3.1 Physical Household/Appliance Variables

Shipments 1 (millions) Housing Star ts 2 (millions) Replacements 3 (millions)
Appliance 1980 2002 Change 1980 2002 Change 1980 2002 Change
Refrigerators 5.124 9.264 81% 1.723 1.822 6% 3.93 5.84 49%

Clothes Washers 4.426 7.492 69% 1.723 1.822 6% 3.66 5.50 50%

Dishwashers 2.738 5.605 105% 1. 723 1.822 6% 1.99 3.79 90%

1 Shipments: Number of units sold. Sources: AHAM Fact Book and Appliance Magazine.

2 Housing Starts: Annual number of new homes constructed. Source: U.S. Census.

3 Replacements: Average of annual lagged shipments, with lag equa l to expected appliance operating life, ± 5 years.

b Appliance replacements are determined from the expected operating life of refrigerators (19 years), clothes washers (14 years), and dishwashers (12 years) and from past shipments. Replace ments are further discu ssed in

section 9A .3.9

- A

- 4 Nevertheless, it is apparent that appliance shipments increased somewhat more rapidly than housing starts and replacements. This is shown by comparing the beginning and end points of lines representing “starts plus replacements” (uppermost solid line in Figure 9A.3.1 ) and “shipment s” (diamond linked line in Figure 9A.3.1). In 1980 the “shipment” line begins below the “starts plus replacements” line. In 2002, the “shipments” line ends above the “starts plus replacements” line. This more rapid increase in shipments, compared to housing starts plus replacements, suggests that the appliance per household ratio increased over the study period.

Refrigerator Shipments

0 1 2 3 4 5 6 7 8 9 10

1980 1984 1988 1992 1996 2000Millions New Housing

Retirements

Shipments Clothes Washer Shipments

0 1 2 3 4 5 6 7 8

1980 1984 1988 1992 1996 2000Millions Dishwasher Shipments

0 1 2 3 4 5 6

1980 1984 1988 1992 1996 2000Millions

Figure 9

- A.3.1 Trends in Appliance Shipment, Housing Starts and Replacemen ts

Economic variables, including price, cost and income, may explain this increase in appliances per household. Over the period , appliance prices decreased 40 percent to 50 percent

, operating costs fell between 33 percent and 72 percent, and median hous ehold income rose 16

percent (Table 9A.3.2 ).

Table 9

- A.3.2 Economic Variables

Price 1 (1999$) Operating Cost 2 (1999$) Household Income 3 (1999$)
Appliance 1980 2002 Change 1980 2002 Change 1980 2002 Change
Refrigerators 1208 726

- 40% 333 94

- 72% 37,447 43,381 16 %

C lothes Washers 779 392

- 50% 262 175

- 33% 37,447 43,381 16 %

Dishwashers 713 369

- 48% 183 95

- 48% 37,447 43,381 16 %

1 Price: Shipment weighted retail sales price. Sources: AHAM Fact Book and Appliance Magazine.

2 Operating Cost: Annual electricity price ti mes electricity consumption. Source: AHAM Fact Book.

3 Income: Mean Household income. Source: U.S. Census.

9

- A.4 REGRESSION ANALYSIS OF VARIABLES AFFECTI NG APPLIANCE

SHIPMENTS

Little data is available for estimating the impact of economic variables on the d emand for appliances. Industry operating cost data is incomplete

— appliance energy use data is available9

- A

- 5 for only 12 years of the 1980

- 2002 study period. Industry price data is also incomplete

— available for only 8 years of the study period for each of the appliances.

The lack of data suggests that regression analysis can at best evaluate broad data trends, utilizing relatively few explanatory variables. This section begin s by describing broad trends apparent in the economic and physical household data sets and then specifies a simple regression model to measure these trends, making assumptions to minimize the number of explanatory variables. Finally, results are presented of the regression analysis and the estimate of the price elasticity of demand fo r appliances. In this section (specifically section 9A. 4.5)

, DOE also

present s the results of regression analysis performed with more complex models, and used to test assumptions made to specify the simple model. These results support the simple model

sp ecification, and estimates of the price elasticity of appliance demand measured with that

model.

9

- A.4.1 Broad Trends

In this section DOE review s trends in the physical household and economic data sets and posit a simple approach for estimating the price elasti city of appliance demand. As noted above, the physical household variables (starts and appliance replacements), explain most of the variability in appliance shipments over the period. c DOE assume s the rest of the variability in shipments ( referred to as “ residual shipments ” ) is explained by economic variables, and present a tabular method for measuring price elasticities described below.

To illustrate this tabular approach, DOE define s two new variables

— residual shipments and total price. Residual sh ipments are defined as the difference between shipments and physical household demand (starts plus replacements). Total price , represented by the following equation, is defined as appliance price plus the present value of lifetime appliance operating

cost : d

PVOC PP TP + =

where:

TP = Total price,

PP = Appliance purchase price, and

PVOC = Present value of operating cost.

c A log regression of the form: Shipments = a + b • Housing Starts + c • Retirements, indicates that these two variables explain 89 percent of the variation in refrigerator shipments, 97 percent of the variation in clothes washer

shi pments, and 97 percent of the variation in dishwasher shipments.

d Present value operating cost is calculated assuming a 19 year operating life for refrigerators, 14 year operating life for clothes washers, and a 12 year operating life for dishwashers. A 37 percent discount rate is used to sum annual operating costs into a present value operating cost.9

- A

- 6 Over the study period, residual shipments increase 30 percent for refrigerators, 19 percent for

clothes washers

, a nd 23 per cent for dishwashers in proportion to total shipments. At the sam e time, total prices decline 47 percent, 45 percent and 48 percent for refrigerators, clothes washers

, and dishwashers, respectively. Assuming that total price explains the entire change in per household appliance usage, a rough estimate is calculated of the total price elasticity of demand equal to

- 0 .48 for refrigerators,

- 0 .32 for clothes washers a nd

- 0 .37 for dishwashers (Table

9A.4.1 ).9

- A

- 7 Table 9

- A.4.1 Simple Estimate of Total Price Elasticity of De mand

Residual Shipments (millions) Total Price (199$)
Elasticity Appliance 1980 2002 Difference Change 1980 2002 Change
Refrigerators

- 0.5 1.6 2.1 30% 1541 820

- 61%

- 0.48

Clothes Washers

- 1.0 0.2 1.1 19% 1042 567

- 59%

- 0.32

Dishwashers

- 1.0

- 0.01 1.0 23% 896 464

- 64%

- 0.37

The negative correlation between total price and residual shipments suggested by these negative price elasticities is illustrated in a graph of residual shipments on the y

- axis and to tal price on the x

- axis (Figure 9A.4.1 ).

Refrigerators

400 800 1200 1600 2000

-2.0 -1.0 0.0 1.0 2.0

Total PriceResidual Shipments Clothes Washers

400 600 800 1000 1200

-1.5 -1.0 -0.5 0.0 0.5

Total PriceResidual Shipments Dishwashers

200 400 600 800 1000

-2.0 -1.5 -1.0 -0.5 0.0 0.5

Total PriceResidual Shipments

Y ellow points are observed price data; red points are interpolated price data. Figure 9

- A.4.1 Residual Shipments and Appliance Price

Household income rose during the study period, making it easier for households to purchase appliances. Assuming that a rise in income has a similar impact on shipments as a decline in price, the impact of income is incorporated by defining a third variable, termed

relative price, calculated as total price divided by household income and represented by the following equation: e

Income TP RP =

where:

R P = Relative price,

T

P = Total price, and

Income = Household income.

e Recall that the income elasticity of demand cited in the literature review is 0.50 and the price elasticity of demand cited in the review averages

- 0.35. This suggests that combining the effects of income and price will yield an elasticity less negative than price elasticity alone.9

- A

- 8 The percent decline in relative price for the three appliances divided by the percent decline in residual shipments suggests a rough estimate of relative price el asticity equal to

- 0 .40 for refrigerators,

- 0 .26 for clothes washers a nd

- 0 .30 for dishwashers (Table 9A.4.2 ).

Table 9

- A.4.2 Tabular Estimate of Relative Price Elasticity of Appliance Demand

Residual Shipments (millions) Relative Price (1999$)
Elasticity Appliance 1980 2002 Change 1980 2002 Change
Refrigerators

- 0.532 1.597 30% 0.041 0.019

- 74%

- 0.40

Clothes Washers

- 0.953 0.174 19% 0.028 0.013

- 72%

- 0.26

Dishwashers

- 0.974

- 0.005 23% 0.024 0.011

- 76%

- 0.30

9

- A.4.2 Model Specification

The limited price data suggests us ing a simple regression model to estimate the impact of economic variables on shipments, using few explanatory variables. The following equation chosen for this analysis includes one physical household variable (starts plus replacements) and

one relative price variable (the sum of purchase price plus ope rating cost, divided by income).



## [ ] Rplc Starts c RP b a Ship + × + × + = Eq. 9A.1

where:

Ship = Quantity of appliance sold,

R P = Relative price,

Starts = Number of new homes, and Rplc = Numbe r of appliances at the end of their operating life.

The natural logs are taken of all variables so that the estimated coefficients for each variable in the model may be interpreted as the percent change in shipments associated with the percent change in the variable. Thus, the coefficient b in this model is interpreted as the relative price elasticity of demand for the three appliances.

The following combined regression equation is used to estimate an average price elasticity of demand across the thr ee appliances, using pool ed data in a single regression. A combined regression specification is justified, given limited data availability and similarity in price and shipment behavior across appliances ( see Figure 9A.4.1 ). Thus, the model represented by the combined regression equation is considered the basic model in DOE’s analysis of appliance shipments.



## [ ] DW e CW d Rplc Starts c RP b a Ship × + × + + × + × + = Eq. 9A.2

where:

CW = Quantity of clothes washers sold, and

DW = Quantify of dishwashers sold.9

- A

- 9 9

- A.4.3 Model Discussion

The most important assumption used to specify this model is that changes in economic variables over the study period

— income, price

, and operating cost

— are responsible for all observed growth in residual appliance shipments. In other words, DO E assume s other possible explanations, such as changing consumer preferences and increases in the quality of appliances

— had no impact. This assumption seems unlikely but without additional data, the impact of this assumption on the price elasticity of dem and cannot be measured. DOE effectively

assume s that changes in consumer preferences and appliance characteristics, while affecting which specific models are purchased, have relatively little impact on the total number of appliances purchased in a year.

Three additional assumptions used to specify this model deserve comment. The relative price variable is specified in the model, assuming that (1) the correct implicit discount rate is used to combine appliance price and operating cost and that (2) rising income has the same impact on shipments as falling total price. The “ starts + replacements ” variable is specified, assuming (3) that starts and replacements have similar impacts on shipments.

To investigate the first assumption about discount rates, D OE calculated “present v alue operating cost” using a 20 percent implicit discount rate and performed a second regression analysis based on the models described in equations. 9A.1 and 9A.2. The results of this analysis, presented in section 9A. 4. 5 , indicat e that the elasticity of relative price is relatively insensitive to changes in the discount rate.

To investigate the second and third assumptions, DOE specified a regression model separating income from total price and replacements from starts, thus a dding two additional explanatory variables to the basic mo del as shown in the following equation:

DW g CW f Rplc e Start d Incone c TP b a Ship × + × + × + × + × + × + = Eq. 9A.3

The results of the regression analysis of this model are also presented in section 9A. 4. 5

. These results sugges t that the elasticity of total price (coefficient b) is relatively insensitive to changes i n the treatment of income and “starts + r eplacements ” in the model.

9

- A.4.4 Analysis Results

9A.4.4.1 Individual Appliance Model

The individual appliance regression eq uations are specified as followed (as shown earlier as Eq. 9A.1) :


## [ ] Rplc Starts c RP b a Ship + × + × + =

In regression analysis of this model, the elasticity of relati ve price (b) is estimated to be9

- A

- 10 - 0 .4 0 for refrigerators,

- 0 .31 for clothes washers and

- 0 .32 for dishwashers (T ab le 9A.4.3 ), averaging

- 0 .35. These elasticities are similar to those reported in the literatur e survey for appliances (Table 9A.2.1 ). They are remarkably similar to the price elasticity calculated using a

tabular a pproach presented above (Table 9A.4.2 ).

The estimated coefficient associated with the “s tarts + r eplacements ” variable is close to one. A coefficient equal to one for this variable would imply that shipments increase in direct proportion to an increase in “s tarts + r eplacements ” , holding e conomic variables constant. The high R squared values (above 95) and t statistics (above 5) in the results provide a measure of confidence in this analysis, despite the very small data set.

Table 9

- A.4.3 Individual Appliance Model Results

Refrigerator Clothes Washer Dishwasher

Variable Coefficient t

- stat Coefficient t

- stat Coefficient t

- stat
Intercept

- 1.51

- 7.26

- 1.47

- 8.23

- 2.08

- 16.78

Relative Price

- 0.40

- 6.60

- 0.31

- 5.69

- 0.32

- 7.03
Starts + Replacements 1.05 5.90 1.08 6.41 1.35 11.46

R 2 0.954 0.954 0.975

Observations 23 23 23

9A.4.4.2 Combined Appliance Model

The combined appliance regression equation is specified as follows (as shown earlier as Eq. 9A.2) : 

## [ ] DW e CW d Rplc Starts c RP b a Ship × + × + + × + × + =

This regression analysis indicates that the model fits the existing shipments dat a well (high R squared) and that the variables included in the model are st atistically significant (Table

9A.4.4 ). The elasticity of relative price estimated with this model is

- 0 .34, close to the average value estimated in the individual appliance models (

- 0 .35). It is also similar to elasticity estimates reported in the literature survey and calculated using the tabular approach above.

Table 9

- A.4.4 Combined Appliance Model Result

Variable Coefficient t

- stat
Intercept

- 1.60

- 15.54

Relative Price

- 0.34

- 10.74

Sta rts + Replacements 1.21 13.95

CW

- 0.20

- 9.04

DW

- 0.32

- 6.58

R 2 0.983

Observations 699

- A

- 11 9

- A.4.5 Additional Regression Specifications and Results

As described above in section 9A.4.3, DOE used three assumptions to specify its appliance models. The first is tha t the implicit price variable in the basic regressio n model is specified using a 37 percent implicit discount rate, to aggregate appliance price and operating

cost. The second states that the implicit price variable is defined assuming that rising income has the same impact on shipments as falling total price. The third states that the “s tarts +

r eplacements ” variable is defined assuming that housing starts have a similar impact on shipments as appliance replacements.

9A.4.5.1 Lower Consumer Discount Rate

To investigate the first assumption about discount rates, DOE calculated “present value operating cost” using a 20 percent implicit discount rate and performed a second regression analysis based on the models described in equations 9A.1 and 9A.2 . The estima ted coefficient

associated with the relative price variable in these regressions is almost identical to the coefficients estimated for same variable reported above using a 37 percent implicit discount rate. The elasticity of relative price calculated usi ng a 20 percent discount rate is

- 0 .33 in the

c ombined regression and averages

- 0 .35 f or the three appliances (Table 9A.4.5 ). The elasticity

o f price calculated using a 37 percent discount rate is

- 0 .34 in the combined regression and

averages

- 0.35 for th e three appliances. DOE conclude s from this analysis that the elasticity of

relative price is relatively insensitive to changes in the discount rate.

Table 9

- A.4.5 Comb ined and Individual Results, 20 percent discount rate

Three Appliances

Variable Coefficient t-Stat
Intercept -1.53 -14.61

Total Price / Income -0.33 -10.69

Starts + Retirements 1.20 13.65

CW -0.18 -8.69

DW -0.32 -6.57

R 2 0.982

Observations 69

Refrigerator Clothes Washers Dishwasher

Variable Coefficient t-Stat Coefficient t-Stat Coefficient t-Stat
Intercept -1.36 -6.26 -1.41 -7.49 -2.04 -17.23

Total Price / Income -0.38 -6.50 -0.32 -5.29 -0.33 -7.30

Starts + Retirements 1.04 5.73 1.06 5.83 1.34 11.64

R 2 0.953 0.950 0.977

Observations 23 23 23

9A.4.5.2 Disaggregated Variables

To investigate th e second and third assumptions, DOE constructed a regression model separating income from total price and replacements from starts, thus adding two additional explanatory variables to the basic model ( as shown earlier as Eq. 9A.3 ).9

- A

- 12 DW g CW f Rplc e Start d Incone c TP b a Ship × + × + × + × + × + × + =

The estimated coefficient associated with the total price variable in these regressions is

almost identical to the coefficients estimated for the relative price variable reported above. The elasticity of total price in the above equation is

- 0 .36 in th e combined appliance regression and

averages

- 0 .35 f or the three appliances (Table 9A.4.6 ). The elasticity of relative price based on the model described in equation 9A.2 is

- 0 .34 in the combined regression (Table 9A.4.4) and

averages

- 0 .35 across t he ind ividual appliances (Table 9A.4.3 ). DOE conclude s that the price elasticity calculated in this analysis is relatively insensitive to the specifi cation of household

income and “s tarts + r eplacements ” variables in the model.

Table 9

- A.4.6 Disag gregated Regression Result s, 37 percent discount rate

Three Appliances

Variable Coefficient t-Stat
Intercept -2.92 -1.26

Income 0.58 2.92

Total Price -0.36 -7.06 Housing Starts 0.44 10.02

Retirements 0.62 8.12

CW -0.24 -9.25

DW -0.46 -7.68

R 2 0.985

Observations 69

Refrigerator Clothes Washers Dishwasher

Variable Coefficient t-Stat Coefficient t-Stat Coefficient t-Stat Intercept -6.19 -2.24 -6.64 -1.63 1.00 0.23

Income 0.89 3.80 0.87 2.31 0.20 0.52

Total Price -0.35 -5.48 -0.27 -2.51 -0.43 -5.18 Housing Starts 0.41 7.38 0.25 3.29 0.62 8.24

Retirements 0.56 6.06 0.56 2.09 0.65 5.86

R 2 0.984 0.958 0.979

Observations 23 23 23

9

- A.5 LONG RUN IMPACTS

As noted above in Table 9A.2.1 in section 9A.2, the literature review provides price elasticities over short and long time periods, also referred to as short run and long run price

elasticities. As noted in the first two rows of Table 9A.2.1, one source (i.e., Hymans) shows that the price elasticity of demand is significantly different over the short run and long run for

automobiles

. 1 Because DOE’s forecasts of shipments and national impacts due to standards is

over a 30

- year time period, consideration must be given as to how the relative price elasticity is

affected once a new standard takes effect.

DOE considers the relative price elasticities determined above in section 9A.4 to be short

run elastcities

. DOE was unable to identify sources specific to household durable goods, such as appliances, to indicate how short run and long run price elasticities differ. Therefore, to estimate

how the relative price elasticity changes over time, DOE relied on the Hymans study pertaining

to automobiles. Based on the Hymans study, Table 9A.5.1 shows how the automobile price9

- A

- 13 elasticity of demand changes in the years following a purchase price change. With increasing years after the price change, the price elasticity becomes more inelastic until it reaches a terminal value around the tenth year after the price change.

Table 9

- A.5.1 Change in Price Elasticity of Demand for Automobiles following a Purchase Price Change
Years Following Price Change

1 2 3 5 10 20
Price Elasticity of Demand

- 1.20

- 0.93

- 0.75

- 0.55

- 0.42

- 0.40
Relative Change in Elasticity to 1 st year 1.00 0.78 0.63 0.46 0.35 0.33

Source: Hymans, 1971.

Based on the relative change in the automobile price elasticity of demand shown in Table 9A.5.1, DOE developed a time series of relative price elasticities for home appliances . Table 9A.5.2 presents the time series.

Table 9

- A.5.2 Change in Relative Price Elasticity for Home Appliances following a Purchase Price Change
Years Following Price Change

1 2 3 5 10 20

Relative C hange in Elasticity to 1 st year 1.00 0.78 0.63 0.46 0.35 0.33

Relative Price Elasticity

- 0.34

- 0.26

- 0.21

- 0.16

- 0.12

- 0.11

9

- A.6 SUMMARY

This appendix describes the results of a literature search, tabular analysis and regression analysis of the impact of pri ce and other variables on appliance shipments. In the literature,

DOE find s only a few studies of appliance markets that are relevant to this analysis, and no studies using time series price and shipments data after 1980. The information that can be

summ arized from the literature, suggests that the demand for appliances is price inelastic. Other information in the literature suggests that appliances are a normal good, such that rising incomes increase the demand for appliances. Finally, the literature s uggests that consumers use relatively high implicit discount rates, when comparing appliance prices and appliance operating costs.

There is not enough price and operating cost data available to perform complex analysis of dynamic changes in the applianc e market. In this analysis, DOE use s data available for refrigerators, clothes washers and dishwashers to evaluate broad market trends and to perform simple regression analysis.

These data indicate that there has been a rise in appliance shipments and a decline in appliance price and operating cost over the period. Household income has also risen during this time. To simplify the analysis, DOE combined the available economic information into one9

- A

- 14 variable, termed relative price, and used this variable in a tabular analysis of market trends, and a regression analysis.

DOE’s tabular analysis of trends in the number of appliances per household suggests that the price elasticity of demand for the three appliances is inelastic. Our regression analysis of

t hese same variables suggests that the relative price elasticity of demand is

- 0 .34 . The price elasticity is consistent with estimates in the literature. Nevertheless, DOE stress es that the measure is based on a small data set, using very simple statisti cal analysis. More important, the measure is based on an assumption that economic variables, including price, income and operating costs, explain most of the trend in appliances per household in the United States since 1980. Changes in appliance quality a nd consumer preferences may have occurred during this period, but they are not accounted for in this analysis.

9

- A.7 DATA USED IN THE ANA LYSIS

• Appliance Shipments : Shipments are defined as the annual number of units shipped in

millions. These data were colle cted from the Association of Home Appliance Manufacturers ( AHAM ) 8 and Appliance Magazine 9 as annual values for each year, 1980

– 2002

. AHAM was used for the period 1989

– 2002 while Appliance Magazine was used for the period 1980

– 1988.

• Appliance Price : Pric e is defined as the shipments weighted retail sales price of the unit in 1999 dollars. Price values for 1980, 1985, 1986, 1991, 1993, 1994, 1998 , and 2002 were

collected from AHAM Fact B ook s

. 10 Price values for other years were interpolated from these eigh t years of data.

• Housing Starts : Housing starts data were collected from U.S. Census construction statistics (C25 reports) as annual values for each year, 1980

– 2002. 11

• Replacements : Retirement

- driven replacements are estimated with the assumption that so me fraction of sales arise from consumers replacing equipment at the end of its useful life. Since each appliance has a different expected lifespan (19 years for refrigerators 12 , 14 years for

clothes washers 13 , 12 years for dishwashers 14 ), replacements are c alculated differently for each appliance type. Replacements are estimated as the average of shipments 14

– 24 years previous for refrigerators, 9

– 19 years prev ious for clothes washers, and 7

– 17 years previous for dishwashers. Historical shipments data were collected from AHAM and Appliance Magazine.

• Annual Electricity Consumption : Electricity Use (UEC) is defined as the energy consumption of the unit in kilowatt

- hours. Electricity consumption is dependent on appliance capacity and efficiency. These data were provided by AHAM for 1980, 1990

– 1997 and

1999

– 2002. 15 Data were interpolated in the years for which data were not available.9

- A

- 15 • Operating Cost : Operating Cost is the present value of the electricity consumption of an appliance over its expected lifespa n. The lifespans of refrigerators, clothes washers and dishwashers are assumed to be 19, 14, and 12 years resp ectively. Discount rates of 20

percent 6 and 37 percent 16 were used, producing similar estimates of price elasticity. A study by Hausman recommen d ed a discount rate of “about 20 percent ” in its introduction, and

pres ented results ranging from 24.1 percent to 29 percent based on his calculations for room air conditioners. A study by Train suggests a range of impli cit discount rates averaging 35

per cent for appliances.

• Income : Median annual household income in 2003 dollars. This data was collected for each year, 1980

– 2002, from Table H

- 6 of the U.S. Census

. 179

- A

- 16 REFERENCES

1 S. Hyma ns

. Consumer Durable Spendi ng: Explan ation and Prediction, Brookings Papers on Economic Activity , 1971. Vol. 1971, No. 1, pp. 234

- 239.

2 P. Golder and G. Tellis. Beyond Diffusion: An Affordability Model of the Growth of New Consumer Durables, Journal of Forecasting

, 1998.

3 D. Revelt and K. Train. Mixe d Logit with Repeated Choices: Household's Choice of Appliance Efficiency Level, Review of Economics and Statistics

, 1997

.

4 G. Tellis. The Price E lasticity of Selective Demand: A Meta

- Analysis of Econome tric Models of Sales, Journal of Mar keting Research

, 1988.

5 U.S. Department of Energy

- Energy Information A gency. The Effect of Income on Appliances

in U.S. Households, 2002. Washington, DC.

< http://www.eia.doe.g ov/emeu/recs/appliances/appliances.html >

6 J. Hausman. Individual discount rates and the purchase and utiliza tion of energy using durables, The Bell Journal of Economics

, 1979.

7 K. Train. Discount rates in consumer' energy related decisio ns: a review of the literature, Energy

, Vol. 10, No. 12, 1985, pp. 1243

- 1253

.

8 Association of Home Appliance M anufacturers. AHAM Fact Books , 2000 and 2003. Washington, DC.

9 Statistical Review. Appliance Magazine , April, 1990.

10 Association of Home Appliance Manufacturers. AHAM Fact Book s , 1987, 1988, 1993, 1995, 2000, and 2003. Washington, DC.

11 U.S. Census Bureau. Current Construction Reports, C25

– New One

- Family Houses Sold. Washington, DC. < http://www.census.gov/prod/www/abs/c25.html >

12 Du emling, Reubin. Product Life of Refrigerators , 1999. University of California, Berkeley, Energy and Resources Group masters thesis.

13 U.S. Department of Energy

- Office of Building Research and Standar ds. Final Rule Technical Support Document (TSD): Energy Efficiency Standards for Consumer Products: Clothes
Washers, December, 2000. Washington, DC. Chapter 7.

14 U.S. Department of Energy

- Office of Codes and Standards. Technical Support Document: Energy Conservation Standards for Consumer Products: Dishwashers, Clothes Washers, and Clothes Dryers, December, 1990. Washington, DC . DOE/CE

- 02999P. Chapter 4.9

- A

- 17 15 Association of Home Appliance Manufacturers. AHAM 2003 Fact Book , 2003. Washington,

DC.

16 K. E. Train and T. Atherton. Rebates, loans, and customers’ choice of appliance efficiency level: combining stated

- and revealed

- preference data

. The Energy Journal

, Vol. 16, No. 1,

1995 , pp. 55

- 69

.

17 U.S. Census Bureau. Income, Historical Income Tables

– Households, Table H

- 6

. Washington, DC. < http://www.census.gov/hhes/www/income/histinc/inchhtoc.html >10 A

- i APPENDIX 10

- A. USER INSTRUCTIONS FO R SHIPMENTS AND NIA

SPREADSHEETS

TABLE OF CO NTENTS

10

- A.1 INTRODUCTION

................................ ................................ ............................... 10

- A

- 1

10

- A.1.1 Standard

- Size Refrigerator

- Freezers

................................ ................................ .... 10

- A

- 1

10

- A .1.2 Standard

- Size Freezers

................................ ................................ ......................... 10

- A

- 2

10

- A.1.3 Compact Refrigerators

................................ ................................ ......................... 10

- A

- 3

10

- A.1.4 Compact Freezers

................................ ................................ ................................ . 10

- A

- 4

10

- A.2 BASIC INSTRUCTIONS

................................ ................................ .................... 10

- A

- 510

- A

- 1 APPENDIX 10

- A. USER INSTRUCTIONS FO R SHIPMENTS AND NIA

SPREADSHEET S

10

- A.1 INTRODUCTION

The results obtained for the shipments analysis and the national impact analysis (NIA) can be examined and reproduced using the Microsoft Excel spreadsheet available on the U.S.

D epartment of Energy Building Technologies website

at: http://www.eere.energy.gov/buildings/appliance_standards/

.

There are a total of four NIA spreadsheets, one each for the fol lowing product types:

standard

- size refrigerator

- freezers

, standard

- size freezers

, compact refrigerators , and commercial compact freezers

. The four spreadsheet s post ed on the DOE website represent the latest version s and have b een tested with Microsoft Ex cel 2003

.

To execute the sprea dsheet requires Microsoft Excel 2003 or a later version. The N IA spreadsheet performs calculations to forecast the change in national energy use and net present value due to an energy conservation standard. The energy use a nd associated costs for a given standard are determined first by calculating the shipments and then calculating the energy use and costs for all equipment shipped under that standard. The differences between the standards

and base cases can then be compare d and the overall energy savings and present values

determined.

10

- A.1.1 Standard

- Size Refrigerator

- Freezers

The standard

- size refrigerator

- freezer N IA spreadsheet or workbook consists of the following worksheets:

Input and Summary C ontains user input selection s under “User Inputs” an d a s ummary table, Cumulative Energy Savings and NPV for the selected standard level efficiency distribution

. The sheet contains the efficiency levels being considered for standard

- size refrigerator

freezers and the associated incre mental prices. This sheet also contains base and standards case efficiency trends for standard

- size refrigerator

- freezers , and efficiency weighted average energy use and equipment price for the base and standards cases.

Historical Shipmen t & Contains dat a for historical sales of standard

- size refrigerator

Market Share freezers by product class

. The forecast market share between top

mount and side/bottom

- mount refrigerator

- freezers is provided.

Base Case Contains the calculations for determining the shipments, energy consumption , and operating costs for the base case. The sheet starts with the stock accounting of the equipment and uses the survival10

- A

- 2 function to calculate the surviving stock. It then performs calculations of replacements, and shipments going into new housing . The sheet calculates replacement units, shipments going

into new units

, and early replacement shipments

, and aggregates

them into total shipments

.

Base Energy Ca lc Contains additional stock accounting calculations to properly

allo cate shipments, energy use, and costs to top

- mount and

side/bottom

- mount refrigerator

- freezers for the base case

.

Standards Case Contains stock accounting of the equipment that calculate s annual shipments estimates, energy savings

, and operating cost sav ings for

the standards case. The energy and cost savings in a single year are

the difference between the base case energy use and costs and the standard case energy use and costs for that year

.

Standards Energy Ca lc Contains additional stock accounting ca lculations to properly allocate shipments, energy use, and costs to top

- mount and

side/bottom

- mount refrigerator

- freezers for the stan d ards case.

Housing Projections Contains the projected new housing c onstruction starts and total housing stock for the t hree economic scenarios (Reference, Low Growth, and High Growth)

. Also provides the early replacement

rate.

Fuel Prices Contains projected average energy prices for the three economic

scenarios.

Heat Rates Contains the marginal site to source conver sion factors that are used in the source energy savings calculations, for both electricity and gas.

Lifetime C ontains the probability of survival of a standard

- size refrigerator

freezer at a given age and the average lifetime of a unit

.

10

- A.1.2 Standard

- Size Fr eezers

The standard

- size freezer N IA spreadsheet or workbook consists of the following

worksheets:

Input and Summary C ontains user input selections under “User Inputs” an d a s ummary table, Cumulative Energy Savings and NPV for the selected

standard leve l efficiency distribution

. The sheet contains the efficiency levels being considered for standard

- size freezers and the associated incremental prices. This sheet also contains base10

- A

- 3 and standards case efficiency trends for standard

- size freezers, and

effic iency weighted average energy use and equipment price for

the base and standards cases.

Historical Shipmen t C ontains data for historical sales of standard

- size freezers by product class.

Base Case Contains the calculations for determining the shipmen ts, energy consumption, and operating costs for the base case. The sheet starts with the stock accounting of the equipment and uses the survival function to calculate the surviving stock. It then performs calculations of replacements, and shipments going i nto new housing

. The sheet calculates replacement units, shipments going into new units, and shipments going to first time owners (existing households that do not already own the product)

, and aggregates them into total shipments

.

Standards Case Contains stock accounting of the equipment that calculates annual shipments estimates, energy savings, and operating cost savings for

the standards case. The energy and cost savings in a single year are

the difference between the base case energy use and costs and the standard case energy use and costs for that year

.

Housing Projections Contains the projected new housing c onstruction starts and total housing stock for the three economic scenarios (Reference, Low Growth, and High Growth). Also provides the early r eplacement

rate.

Fuel Prices Contains projected average energy prices for the three economic

scenarios.

Heat Rates Contains the marginal site to source conversion factors that are used in the source energy savings calculations, for both electricity and gas.

Lifetime Contains the probability of survival of a standard

- size refrigerator

freezer at a given age and the average lifetime of a unit.

10

- A.1.3 C ompact Refrigerator s

The compact refrigerator N IA spreadsheet or workbook consists of the following

works heets:

Input and Summary C ontains user input selections under “User Inputs” an d a s ummary table, Cumulative Energy Savings and NPV for the selected10

- A

- 4 standard level efficiency distribution

. The sheet contains the efficiency levels being considered for comp act refrigerators and the associated incremental prices. This sheet also contains base and standards case efficiency trends for compact refrigerators , and efficiency weighted average energy use and equipment price for

the base and standards cases.

Histor ical Shipmen t C ontains data for historical sales of compact refrigerators by product class. Also provides historical saturations of compact refrigerators in lodging, residential, and commercial buildings.

Base Case Contains the calculations for deter mining the shipments, energy consumption, and operating costs for the base case. The sheet starts with the stock accounting of the equipment and uses the survival function to calculate the surviving stock. It then performs calculations of replacements, and shipments going into new housing , new lodging, and new commercial buildings

, and aggregates them into total shipments

.

Standards Case Contains stock accounting of the equipment that calculates annual shipments estimates, energy savings, and operating co st savings for

the standards case. The energy and cost savings in a single year are

the difference between the base case energy use and costs and the standard case energy use and costs for that year

.

Housing & Comm Flrspc C ontains the projected new housin g c onstruction starts, total Project housing stock , projected new commercial floorspace projections, and total lodging and commercial floorspace stock for the three economic scenarios (Reference, Low Growth, and High Growth).

Fuel Prices Contains proj ected average energy prices for the three economic

scenarios.

Heat Rates Contains the marginal site to source conversion factors that are used in the source energy savings calculations, for both electricity and gas.

Lifetime Contains the probability of survival of a standard

- size refrigerator

freezer at a given age and the average lifetime of a unit.

10

- A.1.4 Compact Freezer s

The compact freezer N IA spreadsheet or workbook consists of the following worksheets:10

- A

- 5 Input and Summary C ontains user input selectio ns under “User Inputs” an d a s ummary table, Cumulative Energy Savings and NPV for the selected standard level efficiency distribution

. The sheet contains the efficiency levels being considered for compact freezers and the associated incremental prices. Th is sheet also contains base and standards case efficiency trends for compact freezers, and efficiency weighted average energy use and equipment price for

the base and standards cases.

Historical Shipmen t C ontains data for historical sales of compact fre ezers by product

class.

Base Case Contains the calculations for determining the shipments, energy consumption, and operating costs for the base case. The sheet starts with the stock accounting of the equipment and uses the survival

function to calculat e the surviving stock. It then performs calculations of replacements, and shipments going to first time owners (existing households that do not already own the product)

, and aggregates them into total shipments

.

Standards Case Contains stock accounting o f the equipment that calculates annual shipments estimates, energy savings, and operating cost savings for

the standards case. The energy and cost savings in a single year are

the difference between the base case energy use and costs and the

standard case energy use and costs for that year

.

Housing Projections Contains the projected new housing c onstruction starts and total housing stock for the three economic scenarios (Reference, Low Growth, and High Growth). Housing data used solely to determine

a com pact freezer saturation in new housing.

Fuel Prices Contains projected average energy prices for the three economic

scenarios.

Heat Rates Contains the marginal site to source conversion factors that are used in the source energy savings calculations , for both electricity and gas.

Lifetime Contains the probability of survival of a standard

- size refrigerator

freezer at a given age and the average lifetime of a unit.

10

- A.2 BASIC INSTRUCTIONS

Basic instructions for operating the NIA spreadsheet s are as fol lows:10

- A

- 6 1. Once the N IA spreadsheet s have been downloaded from the Web, open the file using

Excel. A t the bottom, click on the tab for the worksheet ‘ Input and Summary ’

.

2. Use Excel’s View/Zoom commands at the top menu bar to change the size of the display

to make it fit your monitor.

3. The user can change the model parameters listed in the grey box labelled “User Inputs ”. The parameters are:

a. Lifetime: To change value, type in the desired value that lies within the maximum

lifetime indicated.

b. Discounting future values: To change the value used for discounting NPV and national energy savings, and the year in which to discount to.

c. Relative Price Elasticity: To change value, use the drop

- down arrow and select the desired impact (this parameter is not considered in the cooking products analysis).

d. Economic Growth: To the change value, use the drop

- down arrow and select the desired Growth level (Reference, Low, or High).

4. Once the parameters have been set, there are two options;

a. Click the “Select CSL’ button to choose which candidate standard level to analyze. The associated efficiency distributions and growth trends are fixed as specified in Chapter 10 of this preliminary technical support document. Once the CSL has been selected, click the “OK” button to make your s elected CSL

effective. (This option is not available for compact freezers.)

b. C lick the “Set base case/Standards Case” button and define the efficiency distribution of the market, and the efficiency growth rate for both the base case

and the standards case. Once the distribution and the growth rate have been set, click the “update” button to make your defined distribution effective.

5. The results are automatically updated and are reporte d in the summary table for each product class to the right of the “User I n puts” box.10

- B

- i APPENDIX 10

- B. NATIONAL ENERGY SAVI NGS AND NET PRESENT

VALUE USING ALTERNAT IVE ECONOMIC GROWTH SCENARIOS

TABLE OF CONTENTS

10

- B.1 INTRODUCTION

................................ ................................ ................................ ............... 1

10

- B.2 NIA RESULTS IN HIGH ECONOMIC GROWTH SCEN ARIO

................................ ...... 2

10

- B.2.1 NES Results in High Economic Growth Scenario

................................ ............. 2

10

- B.2.2 NPV Results in High Economic Growth S cenario

................................ ............ 4

10

- B.3 NIA RESULTS IN LOW E CONOMIC GROWTH SCENA RIO

................................ ....... 8

10

- B.3.1 NES Results in Low Economic Growth Scenario

................................ ............. 8

10

- B.3.2 NPV Results Using Low Economic Growth Scenario

................................ ...... 9

LIST OF TABLES

Table 10

- B.2.1 Standard

- Size Refrigerator

- Freezers: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

................................ .. 3

Table 10

- B.2.2 Standard

- Size Freezers: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

................................ ............................ 3

Table 10

- B.2.3 Compact Refrigeration Products: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

................................ .............. 3

Table 10

- B.2.4 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

................................ .............. 4

Table 10

- B.2.5 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigerator

- Freezers, 3

- Percent Discount Rate, High Economic Growth Scenario

................................ ................................ ............ 4

Table 10

- B.2.6 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigerator

- Freezers, 7

- Percent Discount Rate, High Economic Growth Scenario

................................ ................................ ............ 5

Table 10

- B.2.7 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 3

- Percent Discount Rate, High Economic

Growth Scenario

................................ ................................ ................................ ...... 5

Table 10

- B.2.8 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 7

- Percent Discount Rate, High Economi c Growth Scenario

................................ ................................ ................................ ...... 5

Table 10

- B.2.9 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 3

- Percent Discount Rate, High

Economic Growth Scenario

................................ ................................ ..................... 6

Table 10

- B.2.10 Cumulative Net Present Value of Consumer Benefits for Compact Refrig eration Products, 7

- Percent Discount Rate, High

Economic Growth Scenario

................................ ................................ ..................... 6

Table 10

- B.2.11 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigeration Products, 3

- Percent Discount Rate, High

Economic Growth Scenario

................................ ................................ ..................... 710

- B

- ii Table 10

- B.2.12 Cumulative N et Present Value of Consumer Benefits for Built

In Refrigeration Products, 7

- Percent Discount Rate, High

Economic Growth Scenario

................................ ................................ ..................... 7

Table 10

- B.3.1 Standard

- Size Refrigerator

- Freezers: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

................................ .. 8

Table 10

- B.3.2 Standard

- Size Freezers: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

................................ ............................ 8

Table 10

- B.3.3 C ompact Refrigeration Products: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

................................ ............... 8

Table 10

- B.3.4 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

................................ ............... 9

Table 10

- B.3.5 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigerator

- Freezers, 3

- Percent Discount Rate,

Low Economic Growth Scenario

................................ ................................ ............. 9

Table 10

- B.3.6 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigerator

- Freezers, 7

- Percent Discount Rate,

Low Economic Growth Scenario

................................ ................................ ........... 10

Table 10

- B.3.7 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 3

- Percent Discount Rate, Low Economic

Growth Scenario

................................ ................................ ................................ .... 10

Table 10

- B.3.8 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 7

- Percent Discount Rate, Low Economic

Growth Scenario

................................ ................................ ................................ .... 10

Table 10

- B.3.9 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 3

- Percent Discount Rate, Low

Economic Growth Scenario

................................ ................................ ................... 11

Table 10

- B.3.10 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7

- Percent Discount Rate, L ow Economic Growth Scenario

................................ ................................ ................... 11

Table 10

- B.3.11 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigeration Product s, 3

- Percent Discount Rate, Low

Economic Growth Scenario

................................ ................................ ................... 12

Table 10

- B.3.12 Cumulative Net Present Value of Consumer Benefits for Bu ilt

In Refrigeration Products, 7

- Percent Discount Rate, Low

Economic Growth Scenario

................................ ................................ ................... 12

LIST OF FIGURES

Figure 10

- B.1.1 Housing Starts Forecast Under Alternative AEO2010

Economic Growth Scenarios

................................ ................................ .................... 1 Figure 1 0

- B.1.2 Average Residential Electricity Price Forecasts under

Alternative AEO2010 Economic Growth Scenarios

................................ ................ 210

- B

- 1 APPENDIX 10

- B. NATIONAL ENERGY SAVI NGS AND NET PRESENT

VALUE USING ALTERNAT IVE ECONOMIC GROWTH SCENARIOS

10

- B.1 INTRODUCTION

This appendix presents national energy savings (NES) and net present value (NPV) results using inputs from alternative economic growth scenarios . The scenarios use the energy price and housing starts forecasts in the High Economic Growth case and

the Low E conomic Growth case fr om EIA’s Annual Energy Outlook 2010 ( AEO 2010 )

. i

Figures 10

- B.1.1 and 10

- B.1.2 show the forecasts for housing starts and residential electricity prices under the different economic growth scenarios. AEO2010 provides a forecast to 2035. To estimate the trend after 2035, DOE followed guidelines that the EIA had provided to the Federal Energy Management Program, which called for using the average rate of change for electricity during 2025

– 2035.

Figure 10

- B.1.1 Housing Starts Forecast Under Alternative

AEO2010 Economic Growth Scenarios 0.00 0.50 1.00 1.50 2.00 2.50 3.00

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035Millions Historical and Reference Case

High Economic Growth Case

Low Economic Growth Case10

- B

- 2 Figure 10

- B.1.2 Average Residential Electricity Price

Forecasts under Alternative AEO2010

Economic Growth Scenarios

10

- B.2 NIA RESULTS IN HIGH ECONOMIC GROWTH SCEN ARIO

10

- B.2.1 NES Results in High Econom ic Growth Scenario 0 2 4 6 8 10 12 14

2005 2010 2015 2020 2025 2030 2035cts/kWh Reference High Growth Low Growth10

- B

- 3 Table 10

- B.2.1 Standard

- Size Refrigera tor

- Freezers: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I, and 7

1 1.72 0.10 0.57

2 1.72 0.10 0.94

3 2.21 0.10 0.94

4 2.66 0.48 1.28

5 3.09 0.70 1.48

Table 10

- B.2.2 Standard

- Size Freezers: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

1 0.44 0.29

2 0.68 0.37

3 0.79 0.44

4 0.89 0.51

5 0.92 0.58

Table 10

- B.2.3 Compact Refrigerat ion Products: Cumulative National Energy Savings in Quads, High Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 0.30 0.03

2 0.37 0.03

3 0.42 0.04

4 0.52 0.07

5 0.55 0.0910

- B

- 4 Table 10

- B.2.4 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads

, High Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 0.00 0.00 0.0 1 0.00

2 0.0 1 0.00 0.0 1 0.01

3 0.0 1 0.00 0.03 0.01

4 0.0 1 0.0 2 0.03 0.01

5 0.01 0.02 0.0 4 0.01

10

- B.2.2 NPV Results in High Economic Growth Scenario

Table 10

- B.2.5 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigera tor

- Freezers, 3

- Percent Discount Rate

, High Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 billion 2009 dollars

8.55 0.92 5.15

2 8.55 0.92 4.65

3 8.22 0.92 4.65

4 0.10 ( 3.05 ) ( 1.44 )

5 ( 13.10 ) ( 7.25 ) ( 6.66 )10

- B

- 5 Table 10

- B.2.6 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigera tor

- Freezers, 7

- Percent Discount Rate, High Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 billion 2009 dollars

1.40 0.31 1.68

2 1.40 0.31 0.77

3 0.30 0.31 0.77

4 ( 4.93 ) ( 2.45 ) ( 3.09 )

5 ( 12.78 ) ( 5.07 ) ( 6.23 )

Table 10

- B.2.7 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 3

- Percent Discount Rate, High

Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars

1 4.45 3.10

2 6.23 2.78

3 6.03 3.25

4 5.16 2.35

5 1.52 0.35

Table 10

- B.2.8 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 7

- Percent Discount Rate, High

Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars10

- B

- 6 1 1.42 1.01

2 1.83 0.67

3 1.50 0.75

4 0.83 0.15

5 ( 1.19 ) ( 1.08 )

Table 10

- B.2.9 Cumulative Net Present Value of Consumer Benefits for Compact Refrigerat ion Products, 3

- Percent Discount Rate

, High Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 billion 2009 dollars

1.54 0.19

2 0.99 0.19

3 1.16 0.16

4 (0.37) (0.21)

5 (4.57) (0.90)

Table 10

- B.2.10 Cumulative Net Present Value of Consumer Benefits for Compact Refrigerat ion Products, 7

- Percent Discount Rate, High Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 billion 2009 dollars

0.62 0.08

2 0.29 0.08

3 0.35 0.06

4 ( 0.50 ) ( 0.17 )

5 ( 2.76 ) ( 0.58 )10

- B

- 7 Table 10

- B.2.11 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigerat ion Products, 3

- Percent Discount Rate, High

Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 billion 2009 dollars

0.0 4 0.02 0.0 5 0.05

2 0.05 0.0 1 0.0 5 0.0 5

3 ( 0.00 ) 0.0 1 ( 0.43 ) ( 0.0 1)

4 ( 0.10 ) ( 0.37 ) ( 0.43 ) ( 0.0 1)

5 ( 0.1 8) ( 0.5 7) ( 0.8 6) ( 0.0 6)

Table 10

- B.2.12 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigerat ion Products, 7

- Percent Discount Rate, High

Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators (3A

- BI) Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers (9

- BI)

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 billion 2009 dollars

0.01 0.01 0.01 0.02

2 0.02 ( 0.00 ) 0.01 0.01

3 ( 0.02 ) ( 0.00 ) ( 0.29 ) ( 0.03 )

4 ( 0.07 ) ( 0.22 ) ( 0.29 ) ( 0.03 )

5 ( 0.12 ) ( 0.33 ) ( 0.53 ) ( 0.06 )10

- B

- 8 10

- B.3 NIA RESULTS IN LOW ECONOMIC GROWTH SCEN ARIO

10

- B.3.1 NES Results in Low Economic Growth Scenario

Table 10

- B.3.1 Standard

- Size Refrigera tor

- Freezers: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 1.52 0.09 0.50

2 1.52 0.09 0.82

3 1.94 0.09 0.82

4 2.33 0.42 1.12

5 2.72 0.61 1.30

Table 10

- B.3.2 Standard

- Size Freezers: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

1 0.41 0.27

2 0.64 0.34

3 0.74 0.41

4 0.83 0.48

5 0.86 0.54

Table 10

- B.3.3 Compact Refrigerat ion Products: Cumulative National Energy Savings in Quads, Low Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 0.25 0.03

2 0.31 0.03

3 0.35 0.04

4 0.43 0.07

5 0.45 0.0910

- B

- 9 Table 10

- B.3.4 Built

- In Refrigeration Products: Cumulative National Energy Savings in Quads , Low Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 0.00 0.00 0.01 0.00

2 0.01 0.00 0.01 0.01

3 0.01 0.00 0.03 0.01

4 0.01 0.01 0.03 0.01

5 0.01 0.02 0.03 0.01

10

- B.3.2 N PV Results in Low Economic Growth Scenario

Table 10

- B.3.5 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigera tor

- Freezers, 3

- Percent Discount Rate

, Low Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 billion 2009 dollars

4.81 0.65 3.58

2 4.81 0.65 2.58

3 3.78 0.65 2.58

4 ( 4.00 ) ( 3.39 ) ( 3.26 )

5 ( 16.18 ) ( 7.40 ) ( 8.10 )10

- B

- 10 Table 10

- B.3.6 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Refrigera tor

- Freezers, 7

- Percent Discount Rate,

Low Economic Growth Scenario

Trial Standard

Level Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

Freezers

Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A,

and 5I Product classes 4, 4I,

and 7

1 billion 2009 dollars

0.31 0.22 1.17

2 0.31 0.22 0.17

3 (0.91) 0.22 0.17

4 (5.77) (2.41) (3.41)

5 (12.92) (4.83) (6.28)

Table 10

- B.3.7 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 3

- Percent Discount Rate, Low

Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars

1 3.33 2.35

2 4.55 1.92

3 4.16 2.21

4 3.18 1.26

5 (0.25) (0.72)

Table 10

- B.3.8 Cumulative Net Present Value of Consumer Benefits for

Standard

- Size Freezers, 7

- Percent Discount Rate, Low

Economic Growth Scenario

Trial Standard

Level Upright Freezers Chest Freezers

Product classes 8 and 9 Product classes 10 and 10A

billion 2009 dollars10

- B

- 11 1 1.07 0.77

2 1.31 0.41

3 0.93 0.44

4 0.25 ( 0.16 )

5 ( 1.66 ) ( 1.35 )

Table 10

- B.3.9 Cumulative Net Present Value of Consumer Benefits for Compact Refrigerat ion Products, 3

- Percent Discount Rate

, Low

Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 billion 2009 dollars

0.96 0.15

2 0.41 0.15

3 0.50 0.11

4 ( 0.89 ) ( 0.29 )

5 ( 4.38 ) ( 1.02 )

Table 10

- B.3.10 Cumulative Net Present Value of Consumer Benefits for Compact Refrigerat ion Products, 7

- Percent Discount Rate, Low

Economic Growth Scenario

Trial Standard

Level Compact Refrigerators Compact Freezers

Product classes 11, 11A, 12, 13, 13A, 14, and 15 Product classes 16, 17, 18

1 billion 2009 dollars

0.39 0.07

2 0.07 0.07

3 0.10 0.03

4 ( 0.67 ) ( 0.20 )

5 ( 2.58 ) ( 0.62 )10

- B

- 12 Table 10

- B.3.11 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigerat ion Products, 3

- Percent Discount Rate, Low

Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright

Freezers

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 billion 2009 dollars

0.0 3 0.01 0.0 3 0.0 4

2 0.0 4 ( 0.00 ) 0.0 3 0.0 3

3 ( 0.01 ) ( 0.00 ) ( 0.4 3) ( 0.0 3)

4 ( 0.10 ) ( 0.3 5) ( 0.4 3) ( 0.0 3)

5 ( 0.17 ) ( 0.52 ) ( 0.8 1) ( 0.0 8)

.

Table 10

- B.3.12 Cumulative Net Present Value of Consumer Benefits for Built

In Refrigerat ion Products, 7

- Percent Discount Rate, Low

Economic Growth Scenario

Trial Standard

Level Built

- in All Refrigerators (3A

- BI) Built

- in

Bottom

- Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers (9

- BI)

Product class

3A

- BI Product classes

5

- BI and 5I

- BI Product classes

4

- BI, 4I

- BI and

7

- BI Product class

9

- BI

1 billion 2009 dollars

0.01 0.0 1 0.00 0.01

2 0.01 ( 0.0 1) 0.0 0 ( 0.00 )

3 ( 0.0 2 ) ( 0.0 1) ( 0.27 ) ( 0.0 4)

4 ( 0.0 7) ( 0.20 ) ( 0.27 ) ( 0.0 4)

5 ( 0.1 1) ( 0.3 1) ( 0.4 9) ( 0.0 7)10

- B

- 13 REFERENCES

i U.S. Department of Energy

– Energy Information Administration. Annual Energy

Outlook 20 10 with Projections to 203 5 . April 2010. U.S. DOE

– EIA: Washington,

D

. C

. DOE/EIA

- 0383( 2010 ).12

- A

- i APPENDIX 12

- A. MANUFACTURER IMPACT ANALYSIS INTERVIEW G UIDE S

TABLE OF CONTENTS

12

- A.1 RESIDENTIAL REFRIGERATION PRODUCTS MANUFACTURER IMPACT

ANALYSIS INTERVIEW GUIDE

................................ ................................ ................................ 1

12

- A.2 COMPACT REFRIGERATORS AND FREEZERS MANUFACTURER IMPACT

ANALYSIS INTERVIEW GUIDE

................................ ................................ .............................. 14

12

- A.3 STANDARD SIZE REFRIGERATION PRODUCTS MANUFACTURER IMPACT

ANALYSIS INTERVIEW GUIDE

................................ ................................ .............................. 271 2

- A

- 1 APPENDIX 12

- A MANUFACTURER IMPACT ANALYSIS INTERVIEW G UIDES

12

- A.1 RESIDENTIAL REFRIGER ATION PRODUCTS MANUFACTURE R IMPACT

ANALYSIS INTERVIEW G UIDE

January 13, 20101 2

- A

- 2 T he Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) a s part of the rulemaking process for amended energy conservation standards for refrigerators, refrigerator

freezers, and freezers. In this analysis, DOE uses publicly available information and information provided by manufacturers during interviews to assess possible impacts on manufacturers due to amended energy conser vation standards.

DOE explicitly analyzes the seven product classes in the tables below. For all product classes, DOE is currently considering eight efficiency levels (EL s ) that correspond to percentage improvements over the existing standards

. In respon ding to this questionnaire, please refer to the efficiency levels in the table below. DOE explains how it intends to determine the minimum efficiencies for the remaining product classes in the engineering chapter of the technical support

document. 1

Baseline Efficiencies for Analyzed Product Classes

Product

Class

Number Product Type Product Class Description Equation for maximum energy use (kWh/yr))*

3 Refrigerator

- Freezers A utomatic D efrost with T op

- M ounted

F reezer W ithout Through the Door (TTD)

Ice S ervice 10.72 AV + 310.2

5 Refrigerator

- Freezers A utomatic D efrost with B ottom

- M ounted

F reezer W ithout TTD Ice S ervice 5.32 AV + 542.5

7 Refrigerator

- Freezers A utomatic D efrost with S ide

- M ounted

F reezer With TTD Ice S ervice 11.33 AV + 462.8

9 Freezers Upright Freezers with Automatic D efrost 12.32 AV + 326.1

10 Freezers Chest Freezers and all Other Freezers Except Compact F reezers 9.71 AV + 143.7

11 Compact Refrigerators

and Freezers Compact Refrigerators and Refrigerator

Freezers with Man ual D efrost 12.04 AV + 336.4

18 Compact Refrigerators

and Freezers Compact Chest Freezers 10.27 AV + 152

AV= adjusted volume in cubic feet * These definitions are based on testing according to the current energy test procedure. DOE expects to propose revisions in the energy test procedure to harmonize with expected test temperatures under consideration for IEC test procedure 62552 and will ad just the equations accordingly. However, for the purpose of identifying the efficiency levels of products in the table below, it is assumed that the percent efficiency level (i.e. the difference between baseline energy use and improved product energy use d ivided by baseline energy use and multiplied by 100%) does not depend on which test procedure is used to determine energy use.

Efficiency Levels Under Consideration for all Product Classes

Percentage Decrease in kWh/yr from Calculated Baseline Efficiency

EL 1 EL 2 EL 3 EL 4 EL 5 EL 6 EL 7 EL 8

10% 15% 20% 25% 30% 35% 40% 45%

1 Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers_prelim_tsd_mtg.html for a complete description.1 2

- A

- 3 1 KEY ISSUES

1.1 In general, w hat are the key issue s for your company regarding amended energy

conservation standards for residential refrigeration products and this rulemaking?

1.2 For the issues identified, does the severity change for different product classes? Do some

issues become more significant at higher efficiency levels ? Are certain issues more of a concern for certain product classes?

1.3 How can DOE most effectively incorporate these issues in the MIA ?

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interest ed in understanding manufacturer impacts at the plant or profit center level directly pertinent to residential refrigeration production. However, the context within which the plant operates and the details of plant production and costs are not always readily available from public sources. Therefore, DOE invites you to provide these details confidentially in your own

words to the extent possible and practical. Understanding the organizational setting around the

residential refrigeration industry profit center will help DOE understand the probable future of the manufacturing activity with and without amended energy conservation sta ndards.

2.1 Do you have a parent company , and/or any subsidiaries relevant to the residential refrigeration industry?

2.2 Do you manufacture any products other than residential refrigeration products? If so, what other products do you manufacture? What percentag e of your total manufacturing revenue corresponds to residential refrigeration products?

2.3 What product classes of refrigeration products do you manufacturer?

2.4 Where are your residential refrigeration production facili ties located, and what types of products are manufactured at each location? Could you provide annual shipment figures for your company’s residential refrigeration manufacturing at each location by product line (i.e., top

mount refrigerator

- freezers, bottom

- mount refrigerator

- freezers, etc.) ?

2.5 At your manufacturing facilities, would potential residential refrigeration product redesigns be difficult to implement? If so, would your company modify the existing facility or develop a new facility?

2.6 What are your employment levels at each of these facilities?

2.7 What is your company’s approximate market share in the standard

- size refrigerator

-1 2

- A

- 4 freezer, standard

- size freezer, and compact refrigerator and freezers markets?

3 ENGINEERING AND LIFE CYCLE COST ANALYSIS FOLLOW

- UP

3.1 For the products directly analyzed for the Engineering Analysis that represent the bulk of residential refrigeration product sales , can you comment on the progressive use of design options for achieving the successively higher efficien cy levels (compare d with the design option information presented by efficiency level in Appendix 5A of the preliminary TSD)?

3.2 Are the incremental design opti on costs used in the Engineering A nalysis and described in Chapter 5 of the preliminary TSD represe ntative of costs your company pays for these design options? If not, please provide a quantitative indication of the differences.

3.3 How would the cost

- efficiency curves of low

- production

- volume product classes differ from those developed for the directly

- an alyzed product class es most closely related to them? The table below provides an indication of expectations for representation of low

- volume product

classes. Please commen t for your key products of the low

- volume product classes.

Low

- volume

Product

Classe s 1A, 1, 2,

3A 4 5A 6 8 10A 11A, 12, 13, 13A, 14, 15 16,17

Representative

Product Class 3 7 5 3 10 9 11 18

3.4 Do you sell any standard

- size all

- refrigerators with manual (not off

- cycle) defrost?

3.5 Do you sell any compact upright freezers with automatic defrost (PC 17)? If so, can you describe your product line (s) for this class and provide shipment estimates?

3.6 Do you have warrantee and/or maintenance cost data illustrating the impact of any of the following design options on maintenance cost: e lectronic controls, high

- efficiency single

- speed compressors, variable

- speed compressors, brushless DC fans, VIPs, and humidity sensors?

3.7 What are the expected differences in cost per unit area of VIP applied to a product between application to the door and applica tion to the cabinet? Are these costs differences for labor costs, material costs, capital costs, or other types of costs?

3.8 What is your company’s level of operation ( by shipment volume ) in other world markets where significant reductions in energy use have been or are expected to be mandated, particularly India and the EU?

3.9 How would repair and maintenance costs be impacted by more stringent energy

conservation standards? How would the frequency of repair and maintenance be affected? How1 2

- A

- 5 would the natur e of the repair and maintenance work needed change with more stringent energy

conservation standards?

3.10 Can you provide any information on consumer placement of built

- in undercounter products and built

- in upright freezers and on implications of possible wal l thickness increases?

3.11 For standard size refrigerator

- freezers, what percent reduction in internal volume would you implement prior to use of VIPs in order to maintain external dimensions?

3.12 Which product classes might be candidates for energy/adjusted vol ume curve slope changes? Do you have any information that would inform DOE’s development of a response to

this issue?

3.13 What information can be provided to provide a better understanding of the variation of costs to achieve efficiency levels? What informati on can be provided to provide a better understanding of how cost

- efficiency curves for the low

- volume product classes not directly analyzed are different?

3.14 What platform differences exist between product class 4 and product class 7? Between product class 6 and product class 3? Between product class 5 and product class 5A?

3.15 Can you provide engineering details for baseline efficiency built

- in units and ENERGY

STAR built

- in units, such as typical wall thickness, insulation used, evaporator and condenser

descri ption, fan types and wattages, and compressor model or capacity? Can you provide specific data for a representative model for each applicable product class?

3.16 Do you see any possible loopholes in the proposed AHAM built

- in definition? “Refrigerators, freeze rs and refrigerators with freezer units that are 7.75 cubic feet or greater; are totally encased by cabinetry or panels by either accepting a custom front panel or being equipped with an integral factory

- finished face; are intended to be securely fastened to adjacent cabinetry, walls or floor; has sides which are not fully finished and are not intended to be visible after

installation.”

3.17 Can you provide any data showing how much of the expected benefits of VIPs are actually achieved in prototypes or manufac tured products? Can you provide any data regarding panel failures in the field? Can you provide any data on scrap rates at the factory (what percentage of delivered VIPs must be scrapped)? Can you provide any data regarding resistivity decline of “good” pa nels over a span of years up to typical product lifetime?

3.18 How do the design option costs for your company compare to the values DOE used in its analysis as described in the preliminary TSD?

3.19 How do the bulk materials costs for your company compare to the values DOE used in its analysis as described in the preliminary TSD?1 2

- A

- 6 3.20 For variable anti

- sweat heaters, what is the typical maximum wattage for a French door product and what is a typical control algorithm?

3.21 For variable defrost used with single

- compressor/dual

- evaporator systems, is it common to have more than one defrost cycle? How is this treated in the energy test? For products with more than one defrost cycle, do the defrost cycles ever overlap?

4 MARKUPS AND PROFITABILITY

DOE estimat ed the manufacturer product ion costs for the seven analyzed product classes of refrigeration products

. DOE defines manufacturer production cost as all direct costs associated with manufacturing a product. It includes direct labor, direct materials, and ove rhead (which includes depreciation costs )

.

Manufacturer selling price is the average cost manufacturers charge their first consumers, but

does not include additional costs along the distribution channels. The manufacturer selling price

includes non

- produ ction costs including research and development; selling, general, and administrative expense s ; shipping cost ; and profit. The manufacturer markup is a multiplier applied to manufacturer production cost to cover these non

- production costs and yield a profit

. DOE estimated a baseline markup of 1.26 for refrigeration products.

One of the primary objectives of the MIA i s to assess the impact of amended energy

conservation standards on industry pro fitability. In this section, DOE would like to understan d the current markup structure of the industry and how setting an amended energy conservation

standard would impact your company’s markup structure and profitability.

4.1 Is there a significant difference between the baseline markup DOE calculated and your

c ompany’s baseline markups for standard

- size refriger ator

- freezers, standard

- size freezers, and compact refrigerators and freezers? Is the 1.26 baseline markup factor representative of an average industry markup?

4.2 Do profit levels currently vary by produc t class or product line?

4.3 DOE would like to understand how the baseline manufacturer markup changes at higher efficiency levels. Do you currently earn a premium for more efficient products (i.e., ENERGY STAR or higher)? Please explain why or why not.

4.4 Does your markup change with selected design options? Is the markup on incremental

cost s for more efficient designs different than the markup on the baseline models ( as is assumed for retailer markup s used in the analyses ) ?

4.5 Would you expect changes in your estimated profitabil ity following an amended energy

conservation standard? If so, please explain why.1 2

- A

- 7 5 SHIPMENT PROJECTIONS

An amended energy conservation standard can change overall shipments by altering product attributes, marketing approaches, product availability, and price s

. The industry revenue

calculations are based on the shipment projections developed in DOE’s shipments model. The shipments model includes forecasts for the base case shipments (i.e., total industry shipments absent amended energy conservation standards) and the standards case shipments (i.e., total industry shipments with amended energy conservation standards)

.

To determine efficiency distributions after the effective date of the standard

, DOE used a “roll

up + market shift” scenario for 2014 and subsequent years. DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to

meet the new standard in 2014. DOE further assumed that the ENERGY STAR program would continue to promote efficient appliances after revised standards are introduced in 2014

, result ing in a gradual market shift to higher efficiencies after the compliance date of the standard

.

5.1 How do you think amended energy co nservation standards will impact the sales of more efficient products? For example, would customers continue to buy products that exceed the energy conservation standard level? Would your response change for higher mandated efficiency

levels?

5.2 DOE assumed that revised standards would cause product purchase prices to increase, resulting in reduced demand or shipments (price elasticity effect). DOE assumed an elasticity

coefficient of

- 0.40, meaning a 10% increase in price would result in a 4% decrease in

shi pments. Do you agree with this assumption? How sensitive do you think shipments will be to price changes? Does it vary with product class?

6 FINANCIAL PARAMETERS

DOE’s contractor has developed a “strawman” model of the residential refrigeration products industry financial performance called the Government Regulatory Impact Model (GRIM) using publicly available data. This section attempts to understand how your company’s financial

situation differs from the industry aggregate picture.

6.1 Please compare your financial parameters to the GRIM parameters tabulated below.1 2

- A

- 8 Table 6

. 1 Financial Parameters for Residential Refrigeration Product Manufacturers

GRIM Input Definition Industry

Estimated

Value Your Actual (If Significantly

Different from

DOE’s Estimate)

Income Tax

Rate Corporate effective income tax paid (percentage of earnings before taxes, EBT) 33.9

Discount Rate Weighted average cost of capital (inflation

adjusted weighted average of corporate cost of debt and return on equity) 7.2

Working Capital Current assets less current liabilities (percentage of revenues) 2.9

Net PPE Net plant property and equipment (percentage of revenues) 19.9

SG&A Selling, general, and administrative expenses (percentage of revenues) 12.5

R&D Research and development expenses (percentage of revenues) 2.2

Depreciation Amortization of fixed assets (percentage of revenues) 3.4

Capital Expenditures Outlay of cash to acquire or improve capital assets (percentage of revenues, not including acquisition or sale of business units) 3.5

Cost of Goods

Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 79.4

6.2 Are the figures in Table 6

. 1 representative of residential refrigeration manufacturing?

6.3 D o any of the financial parameters in Table 6

. 1 change based on product type or product class? Please describe any differences.

6.4 How would you expect an amended energy conservation standard to impact any of the financial parameters for the industry?

7 CONVERSION COSTS

A mended energy conservation standards may cause your company to incur capital and product

conversion costs to redesign existing products and make changes to existing production lines to be compliant with the amended energy conservation standard

. C apital conversion c osts are o ne

time investments in plant, property, and equipment (PPE) necessitated by an amended energy conservation standard. These may be incremental changes to existing PPE or the replacement of existing PPE. In addition to capital conversion costs, p roduct conversion costs are costs related research, pr oduct development, testing, marketing and other costs for redesigning products necessitated by an amended energy conservation standard . Depending on their magnitude, the

conversion costs can have a subs tantial impact on the outputs used by DOE to evaluate the industry impacts. Understanding the nature and magnitude of the conversion costs is critical1 2

- A

- 9 portion of the MIA. Table 7

. 1 shows the design options used to research higher efficiencies for the major product categories covered by this rulemaking. Please refer to Table 7

. 1 when considering your response to the following questions.

Table 7

. 1 Design Options Used to Improve Efficiency for each Major Product Category
Product Type Desi gn Options

Top

- Mount Refrigerator

Freezers M ore efficient compressors, larger evaporators, larger condensers, brushless DC fan motors, adaptive defrost, and VIPs in the cabinet

Side

- Mount Refrigerator

Freezers M ore efficient compressors, brushless DC fan motors, adaptive defrost, larger evaporators, larger condensers, VIPs in the cabinet, VIPs in the door, and variable speed compressors

Bottom

- Mount Refrigerator

Freezers M ore efficient compressors, brushless DC fan motors, variable anti

- sweat heater control, adaptive defrost, larger condensers, larger evaporators, and VIPs in the

cabinet Upright Freezers B rushless DC fan motors, thicker insulation, adaptive defrost, more efficient compressors, larger evaporators, forced convection condensers, VIPs in the cabinet, and VIPs in the door

Chest Freezers L arger condensers, larger evaporators, thicker insulation, more efficient compressors, variable speed compressors, VIPs in the bottom wall, and VIPs in

the door Compact Refrigerator

- Freezers L arger evapor ators, thicker insulation, more efficient compressors, larger condensers, VIPs in the cabinet, and VIPs in the door Compact Chest Freezers M ore efficient compressors, thicker insulation, VIPs in the bottom wall, and variable speed compressors

7.1 Are there certain efficiency levels for which the design changes would require relatively minor changes to existing products? Are there certain efficiency levels where the capital or product conversion costs significantly increase? Would your answer change for different product categories? Please describe these changes qualitatively.

7.2 For each of the product categories shown in Table 7.1 , which design options could be made within existing cabinet designs and which would result in major product redesigns?

7.3 For the design options in Table 7.1 , what kind of changes would need to be implement ed

to production line s for each major product category ? How much would these changes and other capital expenses cost?

7.4 Would the changes in 7.3 be similar across all of your production lines and factories for each product category ?

7.5 For each of the product categories, please qualify the number of and cost of new production equipment , molds, foaming fixtures, etc. that would be required to implement the specified design changes. Please consider which design changes would require changes to existing cavity designs/wrapper shells.1 2

- A

- 10 7.6 What level of product development and other product co nversion costs would you expect to incur for each of these design changes for each major product category?

7.7 For any design changes that would require new production equipment, please describe how much downtime would be required. What impact would downtime have on your business? Are there any design changes that could not be implemented before the compliance date of the

final rule for certain product classes?

7.8 Please provide additional qualitative information to help DOE understand the types and nature of your investments , including the plant and tooling changes and the product development effort required at different efficiency levels

.

8 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from over lapping effects of

n ew or revised DOE standards, voluntary standards, and/or other regulatory actions affecting the

same product or indust ry.

8.1 Are there other recent or impending regulations that residential refrigeration

manufacturers face (from DOE or otherwise)? If so, could you identify the regulation and the corresponding possible effective dates for those regulations? Below is a list of regulations that could possibly affect manufacturers of residential refrigerators, refrigerator

- freezer s , and

freezer s . Please provide any comments on the listed regulations in addition to other regulations.

Table 8

. 1 Other Regulations Identified by DOE

Regulation Estimated or Actual Effective

Date (s) Comments

DOE’s Energy Conservation Standards for Other Products and Equipment
International Energy

- Efficiency Standards Climate Change Legislation limiting or banning hydrofluorocarbons (discussed in

section 9 )

8.2 What level of expense are you expecting to incur as a result of these regulations?

8.3 Under what circumstances would you be able to coordinate any expenditure related to

these other regul ations with an amended energy conservation standard, thereby lessening the

cumulative burden?

8.4 DOE research has identified the production tax credits in Table 8.2 for manufacturers of residential refrigeration products. Similar tax credits have also been proposed in the current version of the House energy bill. Has your company received benefit from th e tax credits under the Energy Policy Act of 2005 (EPACT 2005) and Energy Improvement and Extension Act of1 2

- A

- 11 2008 (EIEA 2008) ? Do you know of any current or future tax credits or other benefits available to your company for manufacturing more efficient refri geration products? If so, please describe.

Table 8

. 2 Federal Production Tax Credits Identified by DOE

Tax Credit

Program Effective Date Rolling Average

Basis Efficiency Improvement Requirements Tax Credit per Unit

Start End

EPACT 2005 2006 2006 3 years 15% $75

2006 2007 3 years 20% $125

2006 2007 3 years 25% $175

EIEA 2008 2008 2008 2 years 20% $50

2008 2009 2 years 23% $75

2008 2010 2 years 25% $100

2008 2010 2 years 30% $200

9 IMPACTS OF POTENTIAL HFC REGULATIONS

9.1 Do you have data indicating the thermal performance of insulation foam using cyclopentane blowing agent? How does this compare with information you have seen regarding

the performance of foam blown with HFC

- 245fa?

9.2 What are your expectations regarding the shift away from HFC foam blowing agents and away from HFC

- 134a refrigerant? Please indicate the percent age of your production using each of these as a function of year. If this depends on a specific key event, such as passage of greenhouse gas legislation, please provide an alternative curve assuming the occurrence of this

event.

9.3 What are your expectations regarding the UL initiative to reconsider HC limits in refrigeration products? Can you comment on the efficienc y of refrigerators that use HCs compared to those that do not?

9.4 What are your expectations of added capital and one

- time costs associated with full conversion away from HFC blowing agents? Added capital and one

- time costs associated with

full conversion aw ay from HFC

- 134a refrigerant? Added per

- product cost associated with each

of these conversions? What kinds of changes to your existing factories would be required to handle the blowing agents or refrigerants required if you stopped using HFCs? What would t hese changes cost? What level of product development would such a change require and what would

this effort cost?1 2

- A

- 12 10 DIRECT EMPLOYMENT IMPACT ASSESSMENT

The impact of amended energy conservation standards on employment is an important

consideration in the rulemaking process. This section of the interview guide seeks to explore

current trends in refrigerator, refrigerator

- freezer, and freezer employment and solicit manufacturer views on how domestic employment patterns might be a ffected by amended energy

con servation standards.

10.1 Would your domestic employment levels be expected to ch ange significantly under amended energy conservation standards? If so, please explain how they would change if higher efficiency levels are required.

10.2 Would the workforce skills neces sary under amended energy conservation standards require extensive retraining or replacement of employees at your manufacturing facilities ?

10.3 Would amended energy conservation standards require extensive retraining of your

service/field technicians? If so, could you expand on how your service infrastructure would be impacted in general as a result of amended energy conservation standards?

11 EXPORTS / FOREIGN COMPETITION / OUTSOURCING

Disparity between domestic and foreign energy conservation standards could impact exports or imports. Labor content and material changes, result ing from amended energy conservation standards, may impact sourcing decisions.

11.1 What percentage of your company’s residential refrigeration sales are in the United

States ? What percentage of your residential refrigeration sales are produced in the United

States?

11.2 Are there any foreign companies with North American production facilities?

11.3 Would amended energy conservation standards impact your domestic vs. foreign manufacturing or sourcing decision s ? Is there an efficiency level that would cause you to move exiting domestic production facilities outside the U.S.?

11.4 What percentage of the U.S. market for residential refrigera tor

- freezers, standard

- size freezers, and compact refrigerators and freezers manufacturers is made outside the U.S. ?

12 CONSOLIDATION

Amended energy conservation standards can alter the competitive dynamics of the market. This can include prompting companies to enter or exi t the market, or to merge. DOE and the1 2

- A

- 13 Department of Justice are both interested in any potential reduction in competition that wo uld result from an amended energy conservation standard.

12.1 Please comment on industry consolidation an d related trends over the last 5 years.

12.2 In the absence of amended energy conservation standards, do you expect any further industry consolidation? Please describe your expectations.

12.3 How would amended energy conservation standards affect your or other companies’ ability to compete?

13 IMPACTS ON SMALL BUS INESS

13.1 The Small Business A dministration (SBA) denotes a small business in the residential refrigeration manufacturing industry as having less than 1

, 000 total employees , including the

parent company and all subsidiaries. 2 By this definition, is your company considered a small

business?

13.2 Are there any reasons that a small business manufacturer might be at a disadvantage relative to a larger business under amended energy conservation standards? Please consider such factors as technical expertise, access to capital, bulk purchasing power for materials/components, engineering resources, and any other relevant issues.

13.3 Are there any niche manufacturers , small businesses manufacturers, and/or compone nt
manufacturers for which the adoption of amended energy conservation standards would have a severe impact ? If so, would manufacturers of th ese products have different incremental impacts

from implemented amended energy conservation standards than from the rest of the industry?

2 DOE uses the small business size standards published on August 22, 2008, as amended, by the SBA to determine

wh ether a company is a small business. To be categorized as a small business, a household refrigerator and home freezer manufacturers and its affiliates may employ a maximum of 1,000 employees. The 1,000 employee threshold includes all employees in a busines s’s parent company and any other subsidiaries.1 2

- A

- 14 12

- A.2 COMPACT REFRIGERATOR S AND FREEZERS MANUF ACTURER IMPACT

ANALYSIS INTERVIEW G UIDE

January 13, 20101 2

- A

- 15 T he Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) a s part of the rulemaking process for amended energy conservation standards for refrigerators, refrigerator

freezers, and freezers. In this analysis, DOE uses publicly available information and information provided by manufacturers during interviews to assess possib le impacts on manufacturers due to amended energy conservation standards.

DOE explicitly analyzes the compact product classes in the tables below. For all product classes, DOE is currently considering eight efficiency levels (EL s ) that correspond to perc entage improvements over the existing standards

. In responding to this questionnaire, please refer to the efficiency levels in the table below. DOE explains how it intends to determine the minimum efficiencies for the remaining product classes in the engin eering chapter of the technical support

document. 3

Baseline Efficiencies for Analyzed Product Classes

Product

Class

Number Product Type Product Class Description Equation for maximum energy use (kWh/yr))*

11 Compact Refrigerators

and Freezers Compact Refrigerators and Refrigerator

Freezers with Manual D efrost 12.04 AV + 336.4

18 Compact Refrigerators

and Freezers Compact Chest Freezers 10.27 AV + 152

AV= adjusted volume in cubic feet * These definitions are based on testing according to the current energy test procedure. DOE expects to propose revisions in the energy test procedure to harmonize with expected test temperatures under consideration for IEC test procedure 62552 and will ad just the equations accordingly. However, for the purpose of identifying the efficiency levels of products in the table below, it is assumed that the percent efficiency level (i.e. the difference between baseline energy use and improved product energy use d ivided by baseline energy use and multiplied by 100%) does not depend on which test procedure is used to determine energy use.

Efficiency Levels Under Consideration for all Product Classes

Percentage Decrease in kWh/yr from Calculated Baseline Efficiency

EL 1 EL 2 EL 3 EL 4 EL 5 EL 6 EL 7 EL 8

10% 15% 20% 25% 30% 35% 40% 45%

1 KEY ISSUES

1.1 In general, w hat are the key issue s for your company regarding amended energy

conservation standards for residential refrigeration products and this rulemaking?

3 Please see http://www1.eere.energy.gov/buildings/appliance_standards/residentia l/refrigerators_freezers_prelim_tsd_mtg.html for a complete description.1 2

- A

- 16 1.2 For the issues identified, does the severity change for different product classes? Do some

issues become more significant at higher efficiency levels ? Are certain issues more of a concern for certain product classes?

1.3 How can DOE most effectively incorporate these issues in the MIA ?

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interest ed in understanding manufacturer impacts at the plant or profit center level directly pertinent to residential refrigeration production. However, the context within which the plant operates and the details of plant production and costs are not always readily available from public sources. Therefore, DOE invites you to provide these details confidentially in your own

words to the extent possible and practical. Understanding the organizational setting around the

residential refrigeration industry profit center will help DOE understand the probable future of the manufacturing activity with and without amended energy conservation sta ndards.

2.1 Do you have a parent company , and/or any subsidiaries relevant to the residential refrigeration industry?

2.2 Do you manufacture any products other than residential refrigeration products? If so, what other products do you manufacture? What percentage of your total manufacturing revenue corresponds to residential refrigeration products?

2.3 What product classes of refrigeration products do you manufacturer?

2.4 Where are your residenti al refrigeration production facili ties located, and what types of products are manufactured at each location? Could you provide annual shipment figures for your company’s residential refrigeration manufacturing at each location by product line ?

2.5 At your ma nufacturing facilities, would potential residential refrigeration product redesigns be difficult to implement? If so, would your company modify the existing facility or develop a new facility?

2.6 What are your employment levels at each of these facilities?

2.7 What is your company’s approximate market share in the compact refrigerator and

freezers markets?

3 ENGINEERING AND LIFE CYCLE COST ANALYSIS FOLLOW

- UP

3.1 For the products directly analyzed for the Engineering Analysis that represent the bulk of

residential refrigeration product sales , can you comment on the progressive use of design options for achieving the successively higher efficiency levels (compare d with the design option1 2

- A

- 17 information presented by efficiency level in Appendix 5A of the preliminary TSD)?

3.2 Are the incremental design opti on costs used in the Engineering A nalysis and described in Chapter 5 of the preliminary TSD representative of costs your company pays for these design options? If not, please provide a quantitative indication of the differe nces.

3.3 How would the cost

- efficiency curves of low

- production

- volume product classes differ from those developed for the directly

- analyzed product class es most closely related to them? The table below provides an indication of expectations for representati on of low

- volume product

classes. Please commen t for your key products of the low

- volume product classes.

Low

- volume

Product

Classes 11A, 12, 13, 13A, 14, 15 16,17

Representative

Product Class 11 18

3.4 Do you sell any standard

- size all

- refrigerators with manual (not off

- cycle) defrost?

3.5 Do you sell any compact upright freezers with automatic defrost (PC 17)? If so, can you describe your product line (s) for this class and provide shipment estimates?

3.6 Do you have warrantee and/or maintenance cost data illus trating the impact of any of the following design options on maintenance cost: e lectronic controls, high

- efficiency single

- speed compressors, variable

- speed compressors, brushless DC fans, VIPs, and humidity sensors?

3.7 What are the expected differences in cost per unit area of VIP applied to a product between application to the door and application to the cabinet? Are these costs differences for labor costs, material costs, capital costs, or other types of costs?

3.8 What is your company’s level of operation ( by shipment volume ) in other world markets where significant reductions in energy use have been or are expected to be mandated, particularly India and the EU?

3.9 How would repair and maintenance costs be impacted b y more stringent energy

conservation standards? How would the frequency of repair and maintenance be affected? How would the nature of the repair and maintenance work needed change with more stringent energy

conservation standards?

3.10 Can you provide any inf ormation on consumer placement of built

- in undercounter products and built

- in upright freezers and on implications of possible wall thickness increases?

3.11 Which product classes might be candidates for energy/adjusted volume curve slope changes? Do you have any information that would inform DOE’s development of a response to1 2

- A

- 18 this issue?

3.12 What information can be provided to provide a better understanding of the variation of costs to achieve efficiency levels? What information can be provided to provide a bette r understanding of how cost

- efficiency curves for the low

- volume product classes not directly analyzed are different?

3.13 Can you provide engineering details for baseline efficiency built

- in units and ENERGY

STAR built

- in units, such as typical wall thickness , insulation used, evaporator and condenser description, fan types and wattages, and compressor model or capacity? Can you provide specific data for a representative model for each applicable product class?

3.14 Do you see any possible loopholes in the propose d AHAM built

- in definition? “Refrigerators, freezers and refrigerators with freezer units that are 7.75 cubic feet or greater; are totally encased by cabinetry or panels by either accepting a custom front panel or being equipped with an integral factory

- fi nished face; are intended to be securely fastened to adjacent cabinetry, walls or floor; has sides which are not fully finished and are not intended to be visible after

installation.”

3.15 Can you provide any data showing how much of the expected benefits of V IPs are actually achieved in prototypes or manufactured products? Can you provide any data regarding panel failures in the field? Can you provide any data on scrap rates at the factory (what percentage of delivered VIPs must be scrapped)? Can you provide a ny data regarding resistivity decline of “good” panels over a span of years up to typical product lifetime?

3.16 How do the design option costs for your company compare to the values DOE used in its analysis as described in the preliminary TSD?

3.17 How do the bul k materials costs for your company compare to the values DOE used in its analysis as described in the preliminary TSD?

3.18 For variable defrost used with single

- compressor/dual

- evaporator systems, is it common to have more than one defrost cycle? How is this treated in the energy test? For products with more than one defrost cycle, do the defrost cycles ever overlap?

4 MARKUPS AND PROFITABILITY

DOE estimated the manufacturer product ion costs for the analyzed product classes of refrigeration products

. DOE defines manufacturer production cost as all direct costs associated with manufacturing a product. It includes direct labor, direct materials, and overhead (which includes depreciation costs )

.

Manufacturer selling price is the average cost manufacturers c harge their first consumers, but1 2

- A

- 19 does not include additional costs along the distribution channels. The manufacturer selling price

includes non

- production costs including research and development; selling, general, and administrative expense s ; shipping cos t ; and profit. The manufacturer markup is a multiplier applied to manufacturer production cost to cover these non

- production costs and yield a profit.

DOE estimated a baseline markup of 1.26 for refrigeration products.

One of the primary objectives of the MIA i s to assess the impact of amended energy

conservation standards on industry pro fitability. In this section, DOE would like to understan d the current markup structure of the industry and how setting an amended energy conservation

standard would imp act your company’s markup structure and profitability.

4.1 Is there a significant difference between the baseline markup DOE calculated and your company’s baseline markups for compact refrigerators and freezers? Is the 1.26 baseline markup factor representat ive of an average industry markup?

4.2 Do profit levels currently vary by product class or product line?

4.3 DOE would like to understand how the baseline manufacturer markup changes at higher efficiency levels. Do you currently earn a premium for more effici ent products (i.e., ENERGY STAR or higher)? Please explain why or why not.

4.4 Does your markup change with selected design options? Is the markup on incremental

cost s for more efficient designs different than the markup on the baseline models ( as is assumed for retailer markup s used in the analyses ) ?

4.5 Would you expect changes in your estimated profitabil ity following an amended energy

conservation standard? If so, please explain why.

5 SHIPMENT PROJECTIONS

An amended energy conservation standard can change overall shipments by altering product attributes, marketing approaches, product availability, and price s

. The industry revenue

calculations are based on the shipment projections developed in DOE’s shipments model. The shipments model includes forecasts for the base case shipments (i.e., total industry shipments absent amended energy conservation standards) and the standards case shipments (i.e., total industry shipments with amended energy conservation standards)

.1 2

- A

- 20 To determine effici ency distributions after the effective date of the standard, DOE used a “roll

up + market shift” scenario for 2014 and subsequent years. DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to
meet the new standard in 2014. DOE further assumed that the ENERGY STAR program would continue to promote efficient appliances after revised standards are introduced in 2014

, result ing in a gradual market shift to higher efficiencies after the complian ce date of the standard

.

5.1 How do you think amended energy conservation standards will impact the sales of more efficient products? For example, would customers continue to buy products that exceed the energy conservation standard level? Would your response change for higher mandated efficiency

levels?

5.2 DOE assumed that revised standards would cause product purchase prices to increase, resulting in reduced demand or shipments (price elasticity effect). DOE assumed an elasticity

coefficient of

- 0.40, meaning a 10% increase in price would result in a 4% decrease in shipments. Do you agree with this assumption? How sensitive do you think shipments will be to price changes? Does it vary with product class?

6 FINANCIAL PARAMETERS

DOE’s contractor has developed a “ strawman” model of the residential refrigeration products industry financial performance called the Government Regulatory Impact Model (GRIM) using publicly available data. This section attempts to understand how your company’s financial

situation differs from the industry aggregate picture.

6.1 Please compare your financial parameters to the GRIM parameters tabulated below.1 2

- A

- 21 Table 6

. 1 Financial Parameters for Residential Refrigeration Product Manufacturers

GRIM Input Definition Industry

Estimated

Value Your Actual (If Significantly

Different from

DOE’s Estimate)

Income Tax

Rate Corporate effective income tax paid (percentage of earnings before taxes, EBT) 33.9

Discount Rate Weighted average cost of capital (inflation

adjusted weighted average of corporate cost of debt and return on equity) 7.2

Working Capital Current assets less current liabilities (percentage of revenues) 2.9

Net PPE Net plant property and equipment (percentage of revenues) 19.9

SG&A Selling, general, and administrative expenses (percentage of revenues) 12.5

R&D Research and development expenses (percentage of revenues) 2.2

Depreciation Amortization of fixed assets (percentage of revenues) 3.4

Capital Expenditures Outlay of cash to acquire or improve capital assets (percentage of revenues, not including acquisition or sale of business units) 3.5

Cost of Goods

Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 79.4

6.2 Are the figures in Table 6

. 1 representative of residential refrigeration manufacturing?

6.3 D o any of the financial parameters in Table 6

. 1 change based on product type or product class? Please describe any differences.

6.4 How would you expect an amended energy conservation standard to impact any of the financial parameters for th e industry?

7 CONVERSION COSTS

A mended energy conservation standards may cause your company to incur capital and product

conversion costs to redesign existing products and make changes to existing production lines to be compliant with the amended energy conservation standard

. C apital conversion c osts are o ne

time investments in plant, property, and equipment (PPE) necessitated by an amended energy conservation standard. These may be incremental changes to existing PPE or the replacement of existing PPE. In addition to capital conversion costs, product conversion costs are costs related research, pr oduct development, testing, marketing and ot her costs for redesigning products necessitated by an amended energy conservation standard . Depending on their magnitude, the conversion costs can have a substantial impact on the outputs used by DOE to evaluate the industry impacts. Understanding the natu re and magnitude of the conversion costs is critical1 2

- A

- 22 portion of the MIA. Table 7

. 1 shows the design options used to research higher efficiencies for the major compact product categories covered by this rulemaking. Please refer to Table 7

. 1 when considering your response to the following questions.

Table 7

. 1 Design Options Used to Improve Efficiency for each Major Compact Product Category
Product Type Design Options

Compact Refrigerator

- Freezers L arger evaporators, thicker insulation, more efficient compressors, larger condensers, VIPs in the cabinet, and VIPs in the door Compact Chest Freezers M ore efficient compressors, thicker insulation, VIPs in the bottom wall, and variable speed compressors

7.1 Are there certain efficiency levels for which the design changes would require relatively minor changes to existing products? Are there certain efficiency levels where the capital or product conversion costs significantly increase? Would your answer change for different product categories? Please describe these changes qualitatively.

7.2 For each of the product categories shown in Table 7.1 , which design options could be made within existing cabinet designs and which would result in major product redesigns?

7.3 For the design options in Tab le 7.1 , what kind of changes would need to be implement ed

to production line s for each major product category ? How much would these changes and other capital expenses cost?

7.4 Would the changes in 7.3 be similar across all of your production lines and factories for each product category ?

7.5 For each of the product categories, please qualify the numb er of and cost of new production equipment, molds, foaming fixtures, etc. that would be required to implement the specified design changes. Please consider which design changes would require changes to existing cavity designs/wrapper shells.

7.6 What level o f product development and other product conversion costs would you expect to incur for each of these design changes for each major product category?

7.7 For any design changes that would require new production equipment, please describe

how much downtime woul d be required. What impact would downtime have on your business? Are there any design changes that could not be implemented before the compliance date of the

final rule for certain product classes?

7.8 Please provide additional qualitative information to help DOE understand the types and nature of your investments , including the plant and tooling changes and the product development effort required at different efficiency levels

.1 2

- A

- 23 8 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of

n ew or revised DOE standards, voluntary standards, and/or other regulatory actions affecting the

same product or indust ry.

8.1 Are there other recent or impending regulations that residential refrigeration

manufacturers face (from DOE or otherwise)? If so, could you identify the regulation and the corresponding possible effective dates for those regulations? Below is a list of regulations that could possibly affect manufacturers of residential refrigeration products. Please provide any comments on the listed regulations in addition to other regulations.

Table 8

. 1 Other Regulations Identified by DOE

Regulation Estimated or Actual Effective

Date (s) Comments

DOE’s Energy Conservation Standards for Other Products and Equipment
International Energy

- Efficiency Standards Climate Change Legislation limiting or banning hydrofluorocarbons (discussed in

section 9 )

8.2 What level of expense are you expecting to incur as a result of these regulations?

8.3 Under what circumstances would you be able to coordinate any expenditure related to

these other regulations with an amended energy conservation standard, thereby lessening the

cumulative burden?

8.4 DOE research has identified the production tax credits in Table 8.2 for manufacturers of residential refrigeration products. Similar tax credits have also been proposed in the current version of the House energy bill. Has your company received benefit from th e tax credits under the Energy Policy Act of 2005 (EPACT 2005) and Energy Improvement and Extension Act of

2008 (EIEA 2008) ? Do you know of any current or future tax credits or other benefits available to your company for manufacturing more efficient refri geration products? If so, please describe.1 2

- A

- 24 Table 8

. 2 Federal Production Tax Credits Identified by DOE

Tax Credit

Program Effective Date Rolling Average

Basis Efficiency Improvement Requirements Tax Credit per Unit

Start End

EPACT 2005 2006 2006 3 years 15% $75

2006 2007 3 years 20% $125

2006 2007 3 years 25% $175

EIEA 2008 2008 2008 2 years 20% $50

2008 2009 2 years 23% $75

2008 2010 2 years 25% $100

2008 2010 2 years 30% $200

9 IMPACTS OF POTENTIAL HFC REGULATIONS

9.1 Do you have data indicating the thermal performance of insulation foam using cyclopentane blowing agent? How does this compare with information you have seen regarding

the performance of foam blown with HFC

- 245fa?

9.2 What are your expectations regarding the shift away from HFC foam blowing agents and away from HFC

- 134a refrigerant? Please indicate the percent age of your production using each of these as a function of year. If this depends on a specific key event, such as passage of greenhouse gas legislation, please provide an alternative curve assuming the occurrence of this

event.

9.3 What are your expectations regarding the UL initiative to reconsider HC limits in refrigeration products? Can you comment on the efficienc y of refrigerators that use HCs compared to those that do not?

9.4 What are your expectations of added capital and one

- time costs associated with full conversion away from HFC blowing agents? Added capital and one

- time costs associated with

full conversion aw ay from HFC

- 134a refrigerant? Added per

- product cost associated with each

of these conversions? What kinds of changes to your existing factories would be required to handle the blowing agents or refrigerants required if you stopped using HFCs? What would t hese changes cost? What level of product development would such a change require and what would

this effort cost?

10 DIRECT EMPLOYMENT IMPACT ASSESSMENT

The impact of amended energy conservation standards on employment is an important

consideration in the rulemaking process. This section of the interview guide seeks to explore1 2

- A

- 25 current trends in employment and solicit manufacturer views on how domestic employment patterns might be a ffected by amended energy conservation standards.

10.1 Would your domestic employ ment levels be expected to ch ange significantly under amended energy conservation standards? If so, please explain how they would change if higher efficiency levels are required.

10.2 Would the workforce skills neces sary under amended energy conservation standards require extensive retraining or replacement of employees at your manufacturing facilities ?

10.3 Would amended energy conservation standards require extensive retraining of your service/field technicians? If so, could you expand on how your service i nfrastructure would be impacted in general as a result of amended energy conservation standards?

11 EXPORTS / FOREIGN COMPETITION / OUTSOURCING

Disparity between domestic and foreign energy conservation standards could impact exports or imports. Labor content and material changes, result ing from amended energy conservation standards, may impact sourcing decisions.

11.1 What percentage of your company’s residential refrigeration sales are in the United

States ? What percentage of your residential refrigeratio n sales are produced in the United

States?

11.2 Are there any foreign companies with North American production facilities?

11.3 Would amended energy conservation standards impact your domestic vs. foreign manufacturing or sourcing decision s ? Is there an efficiency level that would cause you to move exiting domestic production facilities outside the U.S.?

11.4 What percentage of the U.S. market for compact refrigerators and freezers manufacturers

is made outside the U.S. ?

12 CONSOLIDATION

Amended energy conservation standards can alter the competitive dynamics of the market. This can include prompting companies to enter or exi t the market, or to merge. DOE and the Department of Justice are both interested in any potential reduction in competition that wo uld result from an amended energy conservation standard.

12.1 Please comment on industry consolidation and related trends over the last 5 years.

12.2 In the absence of amended energy conservation standards, do you expect any further1 2

- A

- 26 industry consolidation? Please describe your expectations.

12.3 How would amended energy conservation standards affect your or other companies’ ability to compete?

13 IMPACTS ON SMALL BUS INESS

13.1 The Small Business A dministration (SBA) denotes a small business in the residential refrigeration manufacturing industry as having less than 1

, 000 total employees , including the parent company and all subsidiaries. 4 By this definition, is your company considered a small

business?

13.2 Are there any reasons that a small business manufacturer m ight be at a disadvantage relative to a larger business under amended energy conservation standards? Please consider such factors as technical expertise, access to capital, bulk purchasing power for materials/components, engineering resources, and any othe r relevant issues.

13.3 Are there any niche manufacturers , small businesses manufacturers, and/or component

manufacturers for which the adoption of amended energy conservation standards would have a severe impact ? If so, would manufacturers of th ese products have different incremental impacts

from implemented amended energy conservation standards than from the rest of the industry?

4 DOE uses the small business size standards published on August 22, 2008, as amended, by the SBA to determine whether a company is a small business. To be categorized as a small bu siness, a household refrigerator and home freezer manufacturers and its affiliates may employ a maximum of 1,000 employees. The 1,000 employee threshold includes all employees in a business’s parent company and any other subsidiaries.1 2

- A

- 27 12

- A.3 STANDARD SIZE REFRIG ERATION PRODUCTS MAN UFACTURER IMPACT

ANALYSIS INTERVIEW G UIDE

January 13, 20101 2

- A

- 28 T he Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) a s part of the rulemaking process for amended energy conservation standards for refrigerators, refrigerator

freezers, and freezers. In this analysis, DOE uses publicl y available information and information provided by manufacturers during interviews to assess possible impacts on manufacturers due to amended energy conservation standards.

DOE explicitly analyzes the standard

- size product classes in the tables below. F or all product classes, DOE is currently considering eight efficiency levels (EL s ) that correspond to percentage improvements over the existing standards

. In responding to this questionnaire, please refer to the efficiency levels in the table below. DOE explains how it intends to determine the minimum efficiencies for the remaining product classes in the engineering chapter of the technical support

document. 5

Baseline Efficiencies for Analyzed Product Classes

Product

Class

Number Product Type Produc t Class Description Equation for maximum energy use (kWh/yr))*

3 Refrigerator

- Freezers A utomatic D efrost with T op

- M ounted

F reezer W ithout Through the Door (TTD)

Ice S ervice 10.72 AV + 310.2

5 Refrigerator

- Freezers A utomatic D efrost with B ottom

- M ounted

F reezer W ithout TTD Ice S ervice 5.32 AV + 542.5

7 Refrigerator

- Freezers A utomatic D efrost with S ide

- M ounted

F reezer With TTD Ice S ervice 11.33 AV + 462.8

9 Freezers Upright Freezers with Automatic D efrost 12.32 AV + 326.1

10 Freezers Chest Freezers and all Other Freezers Except Compact F reezers 9.71 AV + 143.7

AV= adjusted volume in cubic feet * These definitions are based on testing according to the current energy test procedure. DOE expects to propose revisions in the energy test procedur e to harmonize with expected test temperatures under consideration for IEC test procedure 62552 and will adjust the equations accordingly. However, for the purpose of identifying the efficiency levels of products in the table below, it is assumed that the percent efficiency level (i.e. the difference between baseline energy use and improved product energy use divided by baseline energy use and multiplied by 100%) does not depend on which test procedure is used to determine energy use.

Efficiency Levels Under Consideration for all Product Classes

Percentage Decrease in kWh/yr from Calculated Baseline Efficiency

EL 1 EL 2 EL 3 EL 4 EL 5 EL 6 EL 7 EL 8

10% 15% 20% 25% 30% 35% 40% 45%

1 KEY ISSUES

5 Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers_prelim_tsd_mtg.html for a complete descrip tion.1 2

- A

- 29 1.1 In general, w hat are the key issue s for your company regarding amended energy

conservation standards for residential refrigeration products and this rulemaking?

1.2 For the issues identified, does the severity change for different product classes? Do some

issues become more significant at higher efficiency levels ? Are certain issues more of a concern for certain product classes?

1.3 How can DOE most effectively incorporate these issues in the MIA ?

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interest ed in understanding manufacturer impacts at the plant or profit center level directly pertinent to residential refrigeration production. However, the context within which the plant operates and the details of plant production and costs are not always readily available from public sources. Therefore, DOE invites you to provide these details confidentially in your own

words to the extent possible and practical. Understanding the organizational setting around the

residential refrigeration industry profit center will help DOE understand the probable future of the manufacturing activity with and without amended energy conservation standards.

2.1 Do you have a parent company , and/or any subsidiaries relevant to the residential refrigeration industry?

2.2 Do you manufacture any products other than residential refrigeration products? If so, what other products do you manufacture? What percentage of your total manufacturing revenue corresponds to residential refrigeration products?

2.3 What product classes of refrigeration products do you manufacturer?

2.4 Where are y our residential refrigeration production facili ties located, and what types of products are manufactured at each location? Could you provide annual shipment figures for your company’s residential refrigeration manufacturing at each location by product line (i.e., top

mount refrigerator

- freezers, bottom

- mount refrigerator

- freezers, etc.) ?

2.5 At your manufacturing facilities, would potential residential refrigeration product redesigns be difficult to implement? If so, would your company modify the existing facility or develop a new facility?

2.6 What are your employment levels at each of these facilities?

2.7 What is your company’s approximate market share in the standard

- size refrigerator

freezer and standard

- size freezer markets?1 2

- A

- 30 3 ENGINEERING AND LIFE CYCLE COST ANALYSIS FOLLOW

- UP

3.1 For the products directly analyzed for the Engineering Analysis that represent the bulk of residential refrigeration product sales , can you comment on the progressive use of design options for achieving the successively higher efficiency levels (compare d with the design option information presented by efficiency level in Appendix 5A of the preliminary TSD)?

3.2 Are the incremental design opti on costs used in the Engineering A nalysis and described in Chapter 5 of the preliminary TSD representative of costs your company pays for these design options? If not, please provide a quantitative indication of the differences.

3.3 How would the cost

- efficiency curves of low

- production

- volume product classes differ from those developed for the dir ectly

- analyzed product class es most closely related to them? The table below provides an indication of expectations for representation of low

- volume product

classes. Please commen t for your key products of the low

- volume product classes.

Low

- volume

Produc t

Classes 1A, 1, 2,

3A 4 5A 6 8 10A

Representative

Product Class 3 7 5 3 10 9

3.4 Do you sell any standard

- size all

- refrigerators with manual (not off

- cycle) defrost?

3.5 Do you sell any compact upright freezers with automatic defrost (PC 17)? If so, can you describe your product line (s) for this class and provide shipment estimates?

3.6 Do you have warrantee and/or maintenance cost data illustrating the impact of any of the following design options on maintenance cost: e lectronic controls, high

- efficiency single

- speed compressors, variable

- speed compressors, brushless DC fans, VIPs, and humidity sensors?

3.7 What are the expected differences in cost per unit area of VIP applied to a product between application to the door an d application to the cabinet? Are these costs differences for labor costs, material costs, capital costs, or other types of costs?

3.8 What is your company’s level of operation ( by shipment volume ) in other world markets where significant reductions in energ y use have been or are expected to be mandated, particularly India and the EU?

3.9 How would repair and maintenance costs be impacted by more stringent energy

conservation standards? How would the frequency of repair and maintenance be affected? How

would the nature of the repair and maintenance work needed change with more stringent energy

conservation standards?1 2

- A

- 31 3.10 Can you provide any information on consumer placement of built

- in undercounter products and built

- in upright freezers and on implications of possible wall thickness increases?

3.11 For standard size refrigerator

- freezers, what percent reduction in internal volume would you implement prior to use of VIPs in order to maintain external dim ensions?

3.12 Which product classes might be candidates for energy/adjusted volume curve slope changes? Do you have any information that would inform DOE’s development of a response to

this issue?

3.13 What information can be provided to provide a better understan ding of the variation of costs to achieve efficiency levels? What information can be provided to provide a better understanding of how cost

- efficiency curves for the low

- volume product classes not directly analyzed are different?

3.14 What platform differences exist between product class 4 and product class 7? Between product class 6 and product class 3? Between product class 5 and product class 5A?

3.15 Can you provide engineering details for baseline efficiency built

- in units and ENERGY

STAR built

- in units, such as typical wall thickness, insulation used, evaporator and condenser description, fan types and wattages, and compressor model or capacity? Can you provide specific data for a representative model for each applicable product class?

3.16 Do you see any possible loopholes in the proposed AHAM built

- in definition? “Refrigerators, freezers and refrigerators with freezer units that are 7.75 cubic feet or greater; are totally encased by cabinetry or panels by either accepting a custom front panel or being equipped

wi th an integral factory

- finished face; are intended to be securely fastened to adjacent cabinetry, walls or floor; has sides which are not fully finished and are not intended to be visible after

installation.”

3.17 Can you provide any data showing how much of the expected benefits of VIPs are actually achieved in prototypes or manufactured products? Can you provide any data regarding panel failures in the field? Can you provide any data on scrap rates at the factory (what percentage of delivered VIPs must be sc rapped)? Can you provide any data regarding resistivity decline of “good” panels over a span of years up to typical product lifetime?

3.18 How do the design option costs for your company compare to the values DOE used in its analysis as described in the prelim inary TSD?

3.19 How do the bulk materials costs for your company compare to the values DOE used in its analysis as described in the preliminary TSD?

3.20 For variable anti

- sweat heaters, what is the typical maximum wattage for a French door product and what is a t ypical control algorithm?1 2

- A

- 32 3.21 For variable defrost used with single

- compressor/dual

- evaporator systems, is it common to have more than one defrost cycle? How is this treated in the energy test? For products with more than one defrost cycle, do the defrost cyc les ever overlap?

4 MARKUPS AND PROFITABILITY

DOE estimated the manufacturer product ion costs for the analyzed product classes of refrigeration products

. DOE defines manufacturer production cost as all direct costs associated with manufacturing a product. It includes direct labor, direct materials, and overhead (which includes depreciation costs )

.

Manufacturer selling price is the average cost manufacturers charge their first consumers, but

does not include additional costs along the distribution channel s. The manufacturer selling price

includes non

- production costs including research and development; selling, general, and administrative expense s ; shipping cost ; and profit. The manufacturer markup is a multiplier applied to manufacturer production cost to cover these non

- production costs and yield a profit.

DOE estimated a baseline markup of 1.26 for refrigeration products.

One of the primary objectives of the MIA i s to assess the impact of amended energy

conservation standards on industry pro fitability. In this section, DOE would like to understan d the current markup structure of the industry and how setting an amended energy conservation

standard would impact your company’s markup structure and profitability.

4.1 Is there a significant difference between the baseline markup DOE calculated and your company’s baseline markups for standard

- size refriger ator

- freezers and standard

- size freezers ? Is the 1.26 baseline markup factor representative of an average industry markup?

4.2 Do profit levels currently vary by product class or product line?

4.3 DOE would like to understand how the baseline manufacturer markup changes at higher efficiency levels. Do you currently earn a premium for more efficient products (i.e., ENERGY STAR or higher)? Please explain why or why not.

4.4 Does your markup change with selected design options? Is the markup on incremental

cost s for more efficient designs different than t he markup on the baseline models ( as is assumed for retailer markup s used in the analyses ) ?

4.5 Would you expect changes in your estimated profitabil ity following an amended energy

conservation standard? If so, please explain why.

5 SHIPMENT PROJECTIONS

An amended energy conservation standard can change overall shipments by altering product1 2

- A

- 33 attributes, marketing approaches, product availability, and price s

. The industry revenue

calculations are based on the shipment projections developed in DOE’s shipment s model. The shipments model includes forecasts for the base case shipments (i.e., total industry shipments absent amended energy conservation standards) and the standards case shipments (i.e., total industry shipments with amended energy conservation stan dards)

.

To determine efficiency distributions after the effective date of the standard, DOE used a “roll

up + market shift” scenario for 2014 and subsequent years. DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to

meet the new standard in 2014. DOE further assumed that the ENERGY STAR program would continue to promote effic ient appliances after revised standards are introduced in 2014

, result ing in a gradual market shift to higher efficiencies after the compliance date of the standard

.

5.1 How do you think amended energy conservation standards will impact the sales of more efficient products? For example, would customers continue to buy products that exceed the energy conservation standard level? Would your response change for higher mandate d efficiency

levels?

5.2 DOE assumed that revised standards would cause product purchase prices to increase, resulting in reduced demand or shipments (price elasticity effect). DOE assumed an elasticity

coefficient of

- 0.40, meaning a 10% increase in price wo uld result in a 4% decrease in shipments. Do you agree with this assumption? How sensitive do you think shipments will be to price changes? Does it vary with product class?

6 FINANCIAL PARAMETERS

DOE’s contractor has developed a “strawman” model of the re sidential refrigeration products industry financial performance called the Government Regulatory Impact Model (GRIM) using publicly available data. This section attempts to understand how your company’s financial

situation differs from the industry aggregate picture.

6.1 Please compare your financial parameters to the GRIM parameters tabulated below.1 2

- A

- 34 Table 6

. 1 Financial Parameters for Residential Refrigeration Product Manufacturers

GRIM Input Def inition Industry

Estimated

Value Your Actual (If Significantly

Different from

DOE’s Estimate)

Income Tax

Rate Corporate effective income tax paid (percentage of earnings before taxes, EBT) 33.9

Discount Rate Weighted average cost of capital (inflation

adjusted weighted average of corporate cost of debt and return on equity) 7.2

Working Capital Current assets less current liabilities (percentage of revenues) 2.9

Net PPE Net plant property and equipment (percentage of revenues) 19.9

SG&A Selling, general, and administrative expenses (percentage of revenues) 12.5

R&D Research and development expenses (percentage of revenues) 2.2

Depreciation Amortization of fixed assets (percentage of revenues) 3.4

Capital Expenditures Outlay of cash to acquire or improve capital assets (percentage of revenues, not including acquisition or sale of business units) 3.5

Cost of Goods

Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 79.4

6.2 Are the figures in Table 6

. 1 representative of residential refrigeration manufacturing?

6.3 Do any of the financial parameters in Table 6

. 1 change based on product type or product class? Please describe any differences.

6.4 How would you expect an amended energy conservation standard to impact any of the financial paramet ers for the industry?

7 CONVERSION COSTS

A mended energy conservation standards may cause your company to incur capital and product

conversion costs to redesign existing products and make changes to existing production lines to be compliant with the amended energy conservation standard

. C apital conversion c osts are o ne

time investments in plant, property, and equipment (PPE) necessitated by an amended energy conservation standard. These may be incremental changes to existing PPE or the replacement of existing PPE. In addition to capital conversion costs, product conversion costs are costs related research, pr oduct development, testing, marketing and ot her costs for redesigning products necessitated by an amended energy conservation standard . Depending on their magnitude, the conversion costs can have a substantial impact on the outputs used by DOE to evaluate the industry impacts. Understanding the natu re and magnitude of the conversion costs is critical1 2

- A

- 35 portion of the MIA. Table 7

. 1 shows the design options used to research higher efficiencies for the major product categories covered by this rulemaking. Please refer to Table 7

. 1 when considering your response to the following questions.

Table 7

. 1 Design Options Used to Improve Efficiency for each Major Standard

- Size Product Category
Product Type Design Options

Top

- Mount Refrigerator

Freezers M ore efficient compressors, larger evaporators, larger condensers, brushless DC fan motors, adaptive defrost, and VIPs in the cabinet

Side

- Mount Refrigerator

Freezers M ore efficient compressors, brushless DC fan motors, adaptive defrost, larger evaporators, larger condensers, VIPs in the cabinet, VIPs in the door, and variable sp eed compressors

Bottom

- Mount Refrigerator

Freezers M ore efficient compressors, brushless DC fan motors, variable anti

- sweat heater control, adaptive defrost, larger condensers, larger evaporators, and VIPs in the

cabinet Upright Freezers B rushless DC fan motors, thicker insulation, adaptive defrost, more efficient compressors, larger evaporators, forced convection condensers, VIPs in the cabinet, and VIPs in the door

Chest Freezers L arger condensers, larger evaporators, thicker insulation, more efficient compressors, variable speed compressors, VIPs in the bottom wall, and VIPs in

the door

7.1 Are there certain efficiency levels for which the design changes would require relatively minor changes to existing products? Are there certain efficiency levels wher e the capital or product conversion costs significantly increase? Would your answer change for different product categories? Please describe these changes qualitatively.

7.2 For each of the product categories shown in Table 7.1 , which design options could be made within existing cabinet designs and which would result in major product redesigns?

7.3 For the design options in Table 7.1 , what kind of changes would need to be implement ed

to production line s for each major standard

- size product category ? How much would these changes and other capital expenses cost?

7.4 Would the changes in 7.3 be similar across all of your production lines and factories for each product category ?

7.5 For e ach of the standard

- size product categories, please qualify the number of and cost of new production equipment, molds, foaming fixtures, etc. that would be required to implement the specified design changes. Please consider which design changes would requi re changes to existing cavity designs/wrapper shells.

7.6 What level of product development and other product conversion costs would you expect to incur for each of these design changes for each major standard

- size product category?

7.7 For any design changes t hat would require new production equipment, please describe how much downtime would be required. What impact would downtime have on your business?1 2

- A

- 36 Are there any design changes that could not be implemented before the compliance date of the

final rule for c ertain product classes?

7.8 Please provide additional qualitative information to help DOE understand the types and nature of your investments , including the plant and tooling changes and the product development effort required at different efficiency levels

.

8 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of

n ew or revised DOE standards, voluntary standards, and/or other regulatory actions affecting the

same product or indust ry.

8.1 Ar e there other recent or impending regulations that residential refrigeration

manufacturers face (from DOE or otherwise)? If so, could you identify the regulation and the corresponding possible effective dates for those regulations? Below is a list of regulations that could possibly affect manufacturers of residential refrigeration products. Please provide any

comments on th e listed regulations in addition to other regulations.

Table 8

. 1 Other Regulations Identified by DOE

Regulation Estimated or Actual Effective

Date (s) Comments

DOE’s Energy Conservation Standards for

Other Products and Equipment
International Energy

- Efficiency Standards Climate Change Legislation limiting or banning hydrofluorocarbons (discussed in

section 9 )

8.2 What level of expense are you expecting to incur as a result of these regulations?

8.3 Under what circumstances would you be able to coordinate any expenditure related to

these other regulations with an amended energy conservation standard, thereby lessening the

cumulative burden?

8.4 DOE research has identified the production tax credits in Table 8.2 for manufacturers of residential refrigeration products. Similar tax credits have also been proposed in the current version of the House energy bill. Has your company received benefit from th e tax credits under the Energy Policy Act of 2005 (EPACT 2005) and Energy Improvement and Extension Act of

2008 (EIEA 2008) ? Do you know of any current or future tax credits or other benefits available to your company for manufacturing more efficient refri geration products? If so, please describe.1 2

- A

- 37 Table 8

. 2 Federal Production Tax Credits Identified by DOE

Tax Credit

Program Effective Date Rolling Average

Basis Efficiency Improvement Requirements Tax Credit per Unit

Start End

EPACT 2005 2006 2006 3 years 15% $75

2006 2007 3 years 20% $125

2006 2007 3 years 25% $175

EIEA 2008 2008 2008 2 years 20% $50

2008 2009 2 years 23% $75

2008 2010 2 years 25% $100

2008 2010 2 years 30% $200

9 IMPACTS OF POTENTIAL HFC REGULATIONS

9.1 Do you have data indicating the thermal performance of insulation foam using cyclopentane blowing agent? How does this compare with information you have seen regarding

the performance of foam blown with HFC

- 245fa?

9.2 What are your expectations regarding the shift away from HFC foam blowing agents and away from HFC

- 134a refrigerant? Please indicate the percent age of your production using each of these as a function of year. If this depends on a specific key event, such as passage of greenhouse gas legislation, please provide an alternative curve assuming the occurrence of this

event.

9.3 What are your expectations regarding the UL initiative to reconsider HC limits in refrigeration products? Can you comment on the efficienc y of refrigerators that use HCs compared to those that do not?

9.4 What are your expectations of added capital and one

- time costs associated with full conversion away from HFC blowing agents? Added capital and one

- time costs associated with

full conversion aw ay from HFC

- 134a refrigerant? Added per

- product cost associated with each

of these conversions? What kinds of changes to your existing factories would be required to handle the blowing agents or refrigerants required if you stopped using HFCs? What would t hese changes cost? What level of product development would such a change require and what would

this effort cost?

10 DIRECT EMPLOYMENT IMPACT ASSESSMENT

The impact of amended energy conservation standards on employment is an important

consideration in the rulemaking process. This section of the interview guide seeks to explore1 2

- A

- 38 current trends in residential refrigeration employment and solicit manufacturer views on how domestic employment patterns might be a ffected by amended energy conservation standards.

10.1 Would your domestic employment levels be expected to ch ange significantly under amended energy conservation standards? If so, please explain how they would change if higher efficiency levels are required.

10.2 Would the workforce skills neces sary under amended energy conservation standards require extensive retraining or replacement of employees at your manufacturing facilities ?

10.3 Would amended energy conservation standards require extensive retraining of your service/field technicians? If so, could you expand o n how your service infrastructure would be impacted in general as a result of amended energy conservation standards?

11 EXPORTS / FOREIGN COMPETITION / OUTSOURCING

Disparity between domestic and foreign energy conservation standards could impact exports or imports. Labor content and material changes, result ing from amended energy conservation standards, may impact sourcing decisions.

11.1 What percentage of your company’s residential refrigeration sales are in the United

States ? What percentage of your residential refrigeration sales are produced in the United

States?

11.2 Are there any foreign companies with North American production facilities?

11.3 Would amended energy conservation standards impact your domestic vs. foreign manufacturing or sourcing decision s ? Is there an efficiency level that would cause you to move exiting domestic production facilities outside the U.S.?

11.4 What percentage of the U.S. market for standard size refrige rators, refrigerator

- freezers,

and freezers is made outside the U.S. ?

12 CONSOLIDATION

Amended energy conservation standards can alter the competitive dynamics of the market. This can include prompting companies to enter or exi t the market, or to merge. DOE and the Department of Justice are both interested in any potential reduction in competition that wo uld result from an amended energy conservation standard.

12.1 Please comment on industry consolidation and related trends over the last 5 years.

12.2 In the absence of amended energy conservation standards, do you expect any further1 2

- A

- 39 industry consolidation? Please describe your expectations.

12.3 How would amended energy conservation standards affect your or other companies’ ability to compete?

13 IMPACTS ON SMALL BUS INESS

13.1 The Small Business A dministration (SBA) denotes a small business in the residential refrigeration manufacturing industry as having less than 1

, 000 total employees , including the parent company and all subsidiaries. 6 By this definition, is your company considered a small

business?

13.2 Are there any reasons that a small business manufacturer might be at a disadvantage relative to a larger business under amended energy conservation standards? Please consider such

factors as technical expertise, access to capital, bulk purchasing power for materials/components, engineering resources, and any other relevant issues.

13.3 Are there any niche manufacturers , small businesses manufacturers, and/or component

manufacturers for which the a doption of amended energy conservation standards would have a severe impact ? If so, would manufacturers of th ese products have different incremental impacts

from implemented amended energy conservation standards than from the rest of the industry ?

6 DOE uses the small business size standards published on August 22, 2008, as amended, by the SBA to determine whether a company is a small business. To be categorized as a small business, a household refrigerator and home

freezer manufacturers and its affiliates may employ a maximum of 1,000 employees. The 1,000 employee threshold includes all employees in a business’s parent company and any other subsidiaries.12

- B

- i APPENDIX 12

- B. GOVERNMENT REGULATOR Y IMPACT MODEL (GRIM )

OVERVIEW

TABLE OF CONTENTS

12

- B.1 INTRODUCTION AND PUR POSE

................................ ................................ .................. 1

12

- B.2 MODEL DESCRIPTION

................................ ................................ ................................ ... 1

12

- B.3 D ETAILED CASH FLOW EX AMPLE

................................ ................................ ............. 412

- B

- 1 APPENDIX 1 2

- B

. GOVERNMENT REGULATOR Y IMPACT MODEL (GRIM )

OVERVIEW

12

- B.1 INTRODUCTION AND PURPOSE

The purpose of the Government Regulatory Impact Model (GRIM) is to help quantify the impacts of energy conservation standards and other regulations on manufacturers. The basic mode of analysis is to estimate the change in the value of the industry or manufacturers(s) following a regulation or a series of regulations. The model structure also allows an analy sis of multiple products with regulations taking effect over a period of time, and of multiple regulations on the same products.

Industry net present value is defined, for the purpose of this analysis, as the discounted sum of industry free cash flows plu s a discounted terminal value. The model calculates the actual cash flows by year and then determines the present value of those cash flows both without an energy conservation standard ( i.e. , the base case) and under different trial standard levels (TSLs) ( i.e. , the standards case).

Output from the model consists of summary financial metrics, graphs of major variables, and, when appropriate, access to the complete cash flow calculation.

12

- B.2 MODEL DESCRIPTION

The basic structure of the GRIM is a standard annual cash flow analysis that uses manufacturer selling prices, manufacturing costs, a shipments forecast, and financial parameters as inputs and accepts a set of regulatory conditions as changes in costs and investments. The cash flow analysis is separated int o two major blocks: income and cash flow. The income calculation determines net operating profit after taxes. The cash flow calculation converts net operating profit after taxes into an annual cash flow by including investment and non

- cash items. Below

are definitions of listed items on the printout of the output sheet (see Section 12A.6.3).

(1) Unit Sales: Total annual shipments for the industry were obtained from the National Impact Analysis Spreadsheet;

(2) Revenues: Annual revenues

- computed by multiplying pro ducts’ unit prices at each efficiency level by the appropriate manufacturer markup;

(3) Labor: The portion of cost of goods sold (COGS) that includes direct labor, commissions, dismissal pay, bonuses, vacation, sick leave, social security contributions, fringe , and assembly labor up

- time;

(4) Material: The portion of COGS that includes materials;12

- B

- 2 (5) Overhead: The portion of COGS that includes indirect labor, indirect material, energy use, maintenance, depreciation, property taxes, and insurance related to assets. Whi le included in overhead, the depreciation is shown as a separate line item;

(6) Depreciation: The portion of overhead that includes an allowance for the total amount of fixed assets used to produce that one unit. Annual depreciation computed as a percentage of

COGS. While included in overhead, the depreciation is shown as a separate line item;

(7) Stranded Assets: In the year the standard becomes effective, a one time write

- off of stranded assets is accounted for;

(8) Standard SG&A: Selling, general, and administrative costs are computed as a percentage of Revenues (2) ;

(9) R&D: GRIM separately accounts for ordinary research and development (R&D) as a percentage of Revenues (2) ;

(10) Product Conversion Costs : Product conversion costs are one

- time investments in research,

devel opment, testing, marketing, and other costs focused on making products designs comply with the new energy conservation standard. The GRIM allocates these costs over the period between the standard’s announcement and compliance dates;

(11) Earnings Before Inter est and Taxes (EBIT): Includes profits before deductions for interest paid and taxes;

(12) EBIT as a Percentage of Sales (EBIT/Revenues) : GRIM calculates EBIT as a percentage of sales to compare with the industry’s average reported in financial statements;

(13) Tax es: Taxes on EBIT (11) are calculated by multiplying the tax rate contained in Major Assumptions by EBIT (11)

.

(14) Net Operating Profits After Taxes (NOPAT): Computed by subtracting Cost of Goods Sold ((3) to (6))

, SG&A ( 8

)

, R&D ( 9

)

, Product Conversion Costs (10 ) , and Taxes (13)

from Revenues (2)

.

(15) NOPAT repeated : NOPAT is repeated in the Statement of Cash Flows;

(16) Depreciation repeated : Depreciation and Stranded Assets are added back in the Statement of Cash Flows because they are non

- cash expenses;

(17) Change in Wo rking Capital : Change in cash tied up in accounts receivable, inventory, and other cash investments necessary to support operations is calculated by multiplying working capital (as a percentage of revenues) by the change in annual revenues.

(18) Cash Flow From Operations : Calculated by taking NOPAT (15) , adding back non

- cash

items such as a Depreciation (16) , and subtracting the Change in Working Capital (17) ;12

- B

- 3 (19) Ordinary Capital Expenditures: Ordinary investments in property, plant, and equipment to

maintain and replace existing production assets, computed as a percentage of Revenues (2) ;

(20) Capital Conversion Costs : Capital conversion costs are one

- time investments in property, plant, and equipment to adapt or change existing production facilities so that new produc t designs can be fabricated and assembled under the new regulation; The GRIM allocates these costs over the period between the standard’s announcement and compliance dates;

(21) Capital Investment: Total investments in property, plant, and equipment are compute d by adding Ordinary Capital Expenditures (19) and Capital Conversion Costs (20) ;

(22) Free Cash Flow: Annual cash flow from operations and investments; computed by subtracting Capital Investment (2 1 ) from Cash Flow from Operations (18) ;

(23) Terminal Value: Estimate of the continuing value of the industry after the analysis period. Computed by growing the Free Cash Flow at the beginning of 2045 at a constant rate in perpetuity;

(24) Present Value Factor: Factor used to calculate an estimate of the present value o f an amount to be received in the future;

(25) Discounted Cash Flow: Free Cash Flows (2 2 ) multiplied by the Present Value Factor (2 4 ) . For the end of 2043, the discounted cash flow includes the discounted Terminal Value (2 3 ) ; and

(26) Industry Value thru the end of 2043 : The sum of Discounted Cash Flows (2 5 )

.12

- B

- 4 12

- B.3 DETAILED CASH FLOW E XAMPLE

Standards Case Income and Cash Flow Statements

This tab computes key parameters from an income statement based on unit sales, revenues and COGS, and initial financial inputs (parameters as a % of revenue). It also computes an INPV based on a discounted cash flow model.

Base Year Announcement

Year Standard Year

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Industry Income Statement (Base Case)

Unit Sales 9.061 8.990 9.639 10.683 11.356 11.743 9.926 10.637 11.196 11.572 11.966 12.252 12.516 12.708 12.918 13.166 13.400

Revenues 4,645.8 $ 4,487.3 $ 4,692.5 $ 5,212.5 $ 5,552.0 $ 5,753.0 $ 7,527.5 $ 8,046.3 $ 8,457.7 $ 8,739.9 $ 9,036.4 $ 9,258.8 $ 9,465.2 $ 9,614.1 $ 9,776.7 $ 9,968.3 $ 10,151.5 $

Cost of Sales

Labor 601.6 $ 583.0 $ 611.7 $ 679.3 $ 723.3 $ 749.3 $ 728.1 $ 777.7 $ 817.1 $ 844.3 $ 872.9 $ 894.6 $ 914.7 $ 929.1 $ 944.9 $ 963.6 $ 981.4 $

Material 2,618.3 $ 2,520.8 $ 2,628.0 $ 2,920.0 $ 3,111.0 $ 3,224.4 $ 4,748.9 $ 5,076.5 $ 5,336.3 $ 5,514.4 $ 5,701.5 $ 5,841.7 $ 5,971.8 $ 6,065.6 $ 6,168.2 $ 6,289.0 $ 6,404.5 $

Overhead 314.0 $ 309.4 $ 329.7 $ 365.7 $ 388.9 $ 402.3 $ 392.9 $ 420.6 $ 442.4 $ 457.3 $ 472.8 $ 484.3 $ 494.9 $ 502.5 $ 510.9 $ 520.9 $ 530.2 $

Depreciation 153.3 $ 148.1 $ 154.9 $ 172.0 $ 183.2 $ 189.8 $ 254.7 $ 272.2 $ 286.2 $ 295.7 $ 305.7 $ 313.3 $ 320.2 $ 325.3 $ 330.8 $ 337.2 $ 343.4 $

Stranded Assets

- $

- $

- $

- $

- $

- $ 1,006.5 $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

Selling, General, & Administrative Expenses

Standard SG&A 580.7 $ 560.9 $ 586.6 $ 651.6 $ 694.0 $ 719.1 $ 940.9 $ 1,005.8 $ 1,057.2 $ 1,092.5 $ 1,129.6 $ 1,157.4 $ 1,183.1 $ 1,201.8 $ 1,222.1 $ 1,246.0 $ 1,268.9 $

R&D 102.2 $ 98.7 $ 103.2 $ 114.7 $ 122.1 $ 126.6 $ 165.6 $ 177.0 $ 186.1 $ 192.3 $ 198.8 $ 203.7 $ 208.2 $ 211.5 $ 215.1 $ 219.3 $ 223.3 $

Product Conversion Costs

- $

- $

- $ 99.4 $ 139.2 $ 159.1 $ 8.1 $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

Earnings Before Interest and Taxes (EBIT) 275.7 $ 266.3 $ 278.5 $ 209.9 $ 190.3 $ 182.3 $ (718.1) $ 316.5 $ 332.5 $ 343.5 $ 355.1 $ 364.0 $ 372.3 $ 378.2 $ 384.7 $ 392.3 $ 399.7 $

EBIT/Revenues 5.9% 5.9% 5.9% 4.0% 3.4% 3.2% -9.5% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9%

Taxes 93.5 $ 90.3 $ 94.4 $ 71.2 $ 64.5 $ 61.8 $

- $ 107.3 $ 112.7 $ 116.5 $ 120.4 $ 123.4 $ 126.2 $ 128.2 $ 130.4 $ 133.0 $ 135.5 $

Net Operating Profit after Taxes (NOPAT) 182.3 $ 176.0 $ 184.1 $ 138.8 $ 125.8 $ 120.5 $ (718.1) $ 209.2 $ 219.8 $ 227.1 $ 234.7 $ 240.6 $ 246.1 $ 250.0 $ 254.3 $ 259.3 $ 264.2 $

Cash Flow Statement (Base Case)

NOPAT 182.3 $ 176.0 $ 184.1 $ 138.8 $ 125.8 $ 120.5 $ (718.1) $ 209.2 $ 219.8 $ 227.1 $ 234.7 $ 240.6 $ 246.1 $ 250.0 $ 254.3 $ 259.3 $ 264.2 $

Depreciation 153.3 $ 148.1 $ 154.9 $ 172.0 $ 183.2 $ 189.8 $ 1,261.1 $ 272.2 $ 286.2 $ 295.7 $ 305.7 $ 313.3 $ 320.2 $ 325.3 $ 330.8 $ 337.2 $ 343.4 $

Change in Working Capital 134.7 $ 4.6 $ (6.0) $ (15.1) $ (9.8) $ (5.8) $ (51.5) $ (15.0) $ (11.9) $ (8.2) $ (8.6) $ (6.4) $ (6.0) $ (4.3) $ (4.7) $ (5.6) $ (5.3) $

Cash Flow from Operations 470.3 $ 328.7 $ 333.0 $ 295.7 $ 299.1 $ 304.5 $ 491.6 $ 466.4 $ 494.0 $ 514.6 $ 531.9 $ 547.4 $ 560.3 $ 570.9 $ 580.3 $ 591.0 $ 602.3 $

Ordinary Capital Expenditure (167.2) $ (161.5) $ (168.9) $ (187.6) $ (199.9) $ (207.1) $ (271.0) $ (289.7) $ (304.5) $ (314.6) $ (325.3) $ (333.3) $ (340.7) $ (346.1) $ (352.0) $ (358.9) $ (365.5) $

Capital Conversion Costs

- $

- $

- $ (503.2) $ (704.5) $ (805.2) $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

Capital Investments (167.2) $ (161.5) $ (168.9) $ (690.9) $ (904.4) $ (1,012.3) $ (271.0) $ (289.7) $ (304.5) $ (314.6) $ (325.3) $ (333.3) $ (340.7) $ (346.1) $ (352.0) $ (358.9) $ (365.5) $

Federal Production Tax Benefit 36.56 $

Free Cash Flow 303.0 $ 167.2 $ 200.6 $ (395.2) $ (605.3) $ (707.8) $ 220.6 $ 176.7 $ 189.5 $ 199.9 $ 206.6 $ 214.1 $ 219.6 $ 224.8 $ 228.4 $ 232.1 $ 236.8 $

Terminal Value

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

- $

Present Value Factor 0.00 0.00 1.00 0.93 0.87 0.81 0.76 0.71 0.66 0.61 0.57 0.53 0.50 0.47 0.43 0.41 0.38

Discounted Cash Flow

- $

- $ 200.6 $ (368.7) $ (526.7) $ (574.5) $ 167.0 $ 124.8 $ 124.9 $ 122.9 $ 118.4 $ 114.5 $ 109.6 $ 104.6 $ 99.1 $ 94.0 $ 89.5 $

Industry Value through 2043 1,018.29 $1 2

- C

- i APPENDIX 12

- C

. FEDERAL PRODUCTION TAX CREDIT

TABLE OF CONTENTS

12

- C.1 INTRODUCTION

................................ ................................ ................................ ............... 1

12

- C.2 ELIGIBILITY REQUIREM ENTS

................................ ................................ ...................... 1

12

- C.3 ELIGIBLE REFRIGERATI ON PRODUCTS

................................ ................................ ..... 2

12

- C.4 ESTIMATED FEDERAL TA X CREDIT BENEFITS

................................ ........................ 3

12

- C.5 IMPACTS ON INDUSTRY NET PRESENT VALUE

................................ ....................... 3

LIST OF TABLES

Table 12

- C.2.1 Refrigerator Tax Credit Eligibility Requirements

................................ .................. 2

Table 12

- C5.1 Industry Net Present Value for Standard Size Refrigerator

- Freezers Including Federal Production Tax Credits (Flat Markup Scenario)

........................ 4

Table 12

- C5.2 Industry Net Present Value for Standard Size Refrigerator

- Freezers Excluding Federal Production Tax Credits (Flat Markup Scenario)

....................... 4

Table 12

- C5.3 Industry Net Present Value for Standard Size Refrigerator

- Freezers Including Federal Production Tax Credits (Preservation of Operating Profit Markup Scenario)

................................ ................................ .......................... 4

Table 12

- C5.4 Industry Net Present Value for Standard Size Refrigerator

- Freezers Excluding Federal Production Tax Credits (Preservation of Operating Profit Markup Scenario)

................................ ................................ .......................... 5

Table 12

- C5.5 Industry Net Present Value for Built

- In Refrigeration Products Including Federal Production Tax Credits (F lat Markup Scenario)

................................ ......... 5

Table 12

- C5.6 Industry Net Present Value for Built

- In Refrigeration Products Excluding

Federal Production Ta x Credits (Flat Markup Scenario)

................................ ......... 5

Table 12

- C5.7 Industry Net Present Value for Built

- In Refrigeration Products Including

Federal P roduction Tax Credits (Preservation of Operating Profit Markup Scenario)

................................ ................................ ................................ .................. 5

Table 12

- C5.8 Industry Net Present Value for Built

- In Re frigeration Products Excluding Federal Production Tax Credits (Preservation of Operating Profit Markup Scenario)

................................ ................................ ................................ .................. 61 2

- C

- 1 A PPENDIX 1 2

- C

. FEDERAL PRODUCTION T AX CREDIT

12

- C.1 IN TRODUCTIO N

The purpose of this appendix is to clarify how the Department of Energy ( DOE ) made its

estimates of the Federal production tax credits (“tax credit s ”) that would benefit residential refrigeration manufacture r s. These tax credits have been made available to residential refrigeration manufacturers by the enactment of the Energy Improvement and Extension Act of 2008 (EIEA 2008), Pub. L. No. 110

- 343, Div. B, Sec. 305 (Oct. 3, 2008). EIEA To make its estimates, DOE relied primarily on market research and information provided by manufacturers

.

12

- C.2 ELIGIBILITY REQUIREM ENTS

Multiple tax credit programs have been enacted in order to stimulate the adoption of higher efficiency products and equipment. The first to impact th e residential refrigeration industry wa s the Energy Policy Act of 2005 (EPACT 2005), followed by EIEA 2008 . Both programs share some eligibility requirements:

**•** EPACT 2005 included a $75 million cap on the total tax credit that any one manufacturer

can recei ve across all eligible products and equipment it manufactures during the effective dates of the program. For refrigerators that consume at least 15 percent but not

more than 20 percent less kilowatt hours per year than the 2001 energy conservation

standard s , the aggregate amount of the credit cannot exceed $20 million

. EIEA 2008 also

ha s a $75 million limit per taxpayer for all taxable years beginning after December 31,

2007 . However, refrigerators qualifying for the highest tier are not counted towards the

cap.

**•** A ppliance s or equipment that meet the efficiency requirements must be manufactured in

the United States. The tax credit only applies to the original equipment manufacturer ; i.e.

tax

- credits for private

- labeled goods sourced from other domestic m anufacturers accrue to the source, not the re seller.

**•** Tax credits accrue on the basis of how many additional eligible appliances the manufacturer has sold than in years past. The calculation is based on a rolling average of qualifying shipments , the length of which varies by the tax credit program.

**•** Products or e quipment must meet certain efficiency metrics that vary by program. For refrigerators , targets were set based on a percentage reduction of energy usage of the 2001 energy conservation standards.

**•** Only residential model automatic defrost refrigerator

- freezer s with an internal volume of

at least 16.5 cubic feet meet the definition of “refrigerator” for the purpose of these tax

credits.1 2

- C

- 2 Some differences between the tax credits in EPACT 2005 and EIEA 2008 are shown in

Table 12

- C.2.1

. Principal differences include the effective dates, the length of the rolling average period over which marginal qualifying units are calculated, the minimum efficiency requirements

, and the per

- unit tax credits that accrue to the original equipment manufacturer.

Table 12

- C

. 2

. 1 Refrigerator Tax Credit Eligibility Requirements

Tax Credit

Program Effective Date Rolling Average

Basis Efficiency Requirements Tax Credit per

Unit

Start End

EPACT 2005 2006 2006 3 years 15% $75

2006 2007 3 years 20% $125

2006 2007 3 years 25% $175

EIEA 2008 2008 2008 2 years 20% $50

2008 2009 2 years 23% $75

2008 2010 2 years 25% $100

2008 2010 2 years 30% $200

12

- C.3 ELIGIBLE REFRIGERATION PRODUCTS

For the residential refrigeration products rulemaking, DOE sums the discounted annual cash flows from the base year through the end of the 30 year analysis period ( 2010 to 2043 )

. Because 2010 is the base year to which industry cash flows are discounted, any Federal production tax credit s prior to 2010 are not considered in the industry net present value ( INPV ) analysis that analyzes the impact of amended energy conservation standards on manufacturers

. How ever, any tax benefit in 2010 falls within the timeframe that impacts INPV and hence increases industry value (potentially decreasing the impacts on manufacturers due to energy conservation standards). Therefore, DOE is only concerned with the tax benefit of EPACT 2005

and EIEA 2008 in 2010. In 2010, units that qualify for tax credits are those that meet efficiency

levels of 25 percent and 30 percent , as shown in Table 12

- C. 2

. 1

.

DOE used a Consortium for Energy Efficiency (CEE) database a

a http://www.cee1.org/resid/seha/refrig/refrig

- main.php3 to identify refrigerator

models that are at least 25 percent and 30 percent more efficient than baseline efficiency levels

, since these are the levels at which tax credits can be earned in 2010 . CEE promotes energy

efficient refrigerators by identifying models that exist at certain tiers: Tier 1 designates models that are at least 20 percent more efficient than the federal minimum s tandard, Tier 2 designates models that are at least 25 percent more efficient, and Tier 3 designates models that are at least 30 percent more efficient. Therefore, DOE used the CEE database to identify models that meet CEE Tier 2 (25 percent efficiency imp rovement over baseline) and Tier 3 (30 percent efficiency improvement over baseline. DOE identified one qualifying model at the 25 percent effic iency level. Qualifying models must be manufactured in the U.S. and must have internal volume of at

least 16.5 c ubic feet. The CEE database also provided product specifications which DOE used to establish which models met the volume criteria. DOE used information it obtained during1 2

- C

- 3 manufacturer interviews to determine which models were manufactured domestically

. Sev eral

models that meet these criteria exist on the market at the 25 percent efficiency level, but DOE

assumed that all major U.S. manufacturers met their total tax benefit cap of $75 million prior to

2010

. DOE identified o nly one manufacturer who had not me t this c ap and produced a qualifying

model.

Using the same CEE database discussed above and information from manufacturer interviews, DOE also identified 63 qualifying models at the 30 percent efficiency level. Even though each of these models is made by a major U.S. manufacturer, these models all qualify for

the tax credit under EIEA 2008 because the $75 million benefit cap does not apply to the highest efficiency tier.

12

- C.4 ESTIMATED FEDERAL TAX CREDIT B ENEFIT S

DOE used several information sources to calculate the benefits received by residential refrigeration manufacturers from the tax credit programs in 2010. DOE first estimated the qualifying manufacturers’ market shares for each product class for which they h ad qualifying models by using publicly available information and information obtained from manufacturer interviews. DOE then totaled the shipments estimated for each product class in 2010 in the NIA.

Each manufacturer’s 2010 s hipments for a product class w ere calculated by multiplying its market share in that product class by total 2010 shipments.

DOE then estimated the percentage of qualifying shipments for each manufacturer by dividing the total number of qualifying models according to the CEE database of higher efficiency products by the total number of models offered by the manufacturer in that product class according to a Federal Trade Commission ( FTC ) product database b

12

- C.5 IMPACTS ON IND USTRY NET PRESENT VA LUE . DOE used the FTC product database to determine the total number of models for eac h product class for manufacturers that also produced qualifying products in 2010. DOE then calculated the total number of qualifying shipments for each manufacturer and product class by multiplying the manufacturer’s total 2010 shipments by the percentage of qualifying shipments. Since each unit

at the 25 percent efficiency level receives a $100 tax credit and each unit at the 30 percent efficiency level receives a $200 tax credit, DOE multiplied these values where appropriate by the total number of qualify ing shipments to determine the total benefit of the tax credits for the industry

. DOE’s estimates suggest that manufacturers will collect approximately $ 36.6 million in Federal production tax credits in 2010 from the provisions of EIEA 2008.

To determine the impacts of the tax credit on the INPV , DOE implemented the tax credit

in the Government Regulatory Impact Model (GRIM)

. The calculated tax credit was added as a

cash flow item in the base case and standards case. Th e impact of the Federal production tax
credit is included in the main MIA results shown in Chapter 12 of the TSD. Of the $36.6 million

b http://www.ftc.gov/bcp/conline/edcams/eande/appliances/fridge.htm1 2

- C

- 4 total tax benefit anticipated to be collected by the residential refrigeration industry, $36.566 million is expected to b e earned by standard size refrigerator

- freezer manufacturers from the 63 identified qualifying 30 percent models , and $0.042 million is expected to be earned by built

- in refrigeration product manufacturers from the one identified qualifying 25 percent mode l . The tax credit does not apply to the remaining two subgroups of manufacturers, standard size freezer manufacturers and compact refrigeration product manufacturers. Table 12

- C 5

. 1 through Table

12

- C 5

. 8 provide the INPV estimates for the two manufacturer subgroups impacted by tax c redits

under the two markup scenarios analyzed with and without the incorporation of tax credits.

Table 12

- C 5

. 1 Industry Net Present Value for S tandard Size Refrigerator

- Freezers

I ncluding Federal Production Tax Credits ( Flat Markup Scenario )

Flat Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 3,173 3,088 2,997 2,886 2,530 2,344

Change in INPV (2009 $ millions) - (84.8) (175.9) (287.5) (643.0) (828.9)

(%)

- - 2.7%

- 5.5%

- 9.1%

- 20.3%

- 26.1%

Table 12

- C 5

. 2 Industry Net Present Value for Standard Size Refrigerator

- Freezers

Ex cluding Federal Production Tax Credits ( Flat Markup Scenario )

Flat Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 3,136 3,052 2,961 2,849 2,493 2,308

Change in INPV (2009 $ millions) - (84.8) (175.9) (287.5) (643.0) (828.9)

(%)

- - 2.7%

- 5.6%

- 9.2%

- 20.5%

- 26.4%

Table 12

- C 5

. 3 Industry Net Present Value for Standard Size Refrigerator

- Freezers

I ncluding Federal Production Tax Credits ( Preservation of Operating Profit Markup

Scenario )

Preservation of Operating Profit Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 3,173 2,871 2,713 2,511 1,676 1,018

Change in INPV (2009 $ millions) - (301.7) (459.8) (662.1) (1,496.8) (2,154.7)

(%)

- - 9.5%

- 14.5%

- 20.9%

- 47.2%

- 67.9%1 2

- C

- 5 Table 12

- C 5

. 4 Industry Net Present Value for Standard Size Refrigerator

- Freezers Excluding Federal Production Tax Credits ( Preservation of Operating Profit Markup

Scenario )

Preservation of Operating Profit Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 3,136 2,835 2,677 2,474 1,640 982

Change in

INPV (2009 $ millions) - (301.7) (459.8) (662.1) (1,496.8) (2,154.7)

(%)

- - 9.6%

- 14.7%

- 21.1%

- 47.7%

- 68.7%

Table 12

- C 5

. 5 Industry Net Present Value for Built

- In Refrigeration Products I ncluding Federal Production Tax Credits (Flat Markup Scenario )

Flat Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 658 607 604 593 579 574

Change in

INPV (2009 $ millions) - (51.7) (54.7) (65.8) (79.7) (84.9)

(%)

- - 7.9%

- 8.3%

- 10.0%

- 12.1%

- 12.9%

Table 12

- C 5

. 6 Industry Net Present Value for Built

- In Refrigeration Products Ex cluding Federal Production Tax Credits (Flat Markup Scenario )

Flat Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 658 607 604 593 579 573

Change in

INPV (2009 $ millions) - (51.7) (54.7) (65.8) (79.7) (84.9)

(%)

- - 7.9%

- 8.3%

- 10.0%

- 12.1%

- 12.9%

Table 12

- C 5

. 7 Industry Net Present Value for Built

- In Refrigeration Products I ncluding

Federal Production Tax Credits ( Preservation of Operating Profit Markup Scenario )

Preservation of Operating Profit Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 658 606 601 578 555 538

Change in

INPV (2009 $ millions) - (52.9) (57.0) (80.5) (103.0) (120.3)

(%)

- - 8.0%

- 8.7%

- 12.2%

- 15.6%

- 18.3%1 2

- C

- 6 Table 12

- C 5

. 8 Industry Net Present Value for Built

- In Refrigeration Products Ex cluding Federal Production Tax Credits ( Preservation of Operating Profit Markup Scenario )

Preservation of Operating Profit Markup Scenario

Units Base

Case Trial Standard Level

1 2 3 4 5

INPV (2009 $ millions) 658 605 601 578 555 538

Change in

INPV (2009 $ millions) - (52.9) (57.0) (80.5) (103.0) (120.3)

(%)

- - 8.0%

- 8.7%

- 12.2%

- 15.6%

- 18.3%

The results from the GRIM show that the estimated Federal production tax c redit has a minimal impact on residential refrigeration INPV impacts in the standards case

. Depending on

the markup scenario and product class es analyzed , the tax credit lowers the impacts of energy conservation standards by up to 0.8 percent

. This small decrease is not enough to substantially mitigate the impacts on the residential refrigeration industry due to energy conservation

standards

.15

- A

- i APPENDIX 1 5

- A. SOCIAL COST OF CARBO N FOR REGULATORY IMP ACT

ANALYSIS UNDER EXECU TIVE ORDER 12866

TABLE OF CONTENTS

15

- A.1 EXECUTIVE SUMMARY

................................ ................................ ................. 15

- A

- 1

15

- A.2 MONETIZING CARBON DIOXIDE EMISS IONS

................................ ........... 15

- A

- 2

15

- A.3 SOCIAL COST OF CARBO N VALUES USED IN PAS T REGULATORY

ANALYSES

................................ ................................ ................................ ......... 15

- A

- 4

15

- A.4 APPROACH AND KEY ASS UMPTIONS

................................ ........................ 15

- A

- 5

15

- A.4.1 Integrated Assessment Models

................................ ................................ ............ 15

- A

- 6

15

- A.4.2 Global versus Domestic Measures of SCC

................................ ........................ 15

- A

- 12

15

- A.4.3 Valuing Non

- CO 2 Emissions

................................ ................................ ............. 15

- A

- 14

15

- A.4.4 Equilibrium Climate Sensitivity

................................ ................................ ........ 15

- A

- 14

15

- A.4.5 Socio

- Economic and Emissions Trajectories

................................ ..................... 15

- A

- 17

15

- A.4.6 Discount Rate

................................ ................................ ................................ ..... 15

- A

- 20

15

- A .5 REVISED SCC ESTIMATE S

................................ ................................ ........... 15

- A

- 27

15

- A.6 LIMITATIONS OF THE A NALYSIS

................................ .............................. 15

- A

- 33

15

- A.7 A FURTHER DISCUSSION OF CATASTROPHIC IMPA CTS AND

DAMAGE FUNCTIONS

................................ ................................ .................. 15

- A

- 35

15

- A.8 CONCLUSION

................................ ................................ ................................ .. 15

- A

- 38

15

- A.9 ANNEX

................................ ................................ ................................ .............. 15

- A

- 44

15

- A.9.1 Other (non

- CO2) gases

................................ ................................ ...................... 15

- A

- 45

15

- A.9.2 Extrapolating Emissions Projections to 2300

................................ .................... 15

- A

- 47

LIST OF TABLES

Table 15

- A.1.1 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

................................ . 15

- A

- 2

Table 15

- A.4.1 Summary Statistics for Four Calibrated Climate Sensitivity

Distributions

................................ ................................ ........................... 15

- A

- 15

Table 15

- A.4.2 Socioeconomic and Emissions Projections from Select EMF

- 22

Reference Scenarios

................................ ................................ ............... 15

- A

- 19

Table 15

- A.5.1 Disaggregated Social Cost of CO 2 Values by Model, Socio

- Economic Trajectory, and Discount Rate for 2010 (in 2007 dollars)

..................... 15

- A

- 30

Table 15

- A.5.2 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

............................... 15

- A

- 32

Table 15

- A.5.3 Changes in the Average Annual Growth Rates of SCC Estimates

between 2010 and 2050

................................ ................................ ......... 15

- A

- 32

Table 15

- A.7.1 Probabilities of Various Tipping Points from Expert Elicitation

........... 15

- A

- 36

Table 15

- A.9.1 Annual SCC Values: 2010

– 2050 (in 2007 dollars)

............................... 15

- A

- 44

Table 15

- A.9.2 2010 Global SCC Estimates at 2.5 Percent Discount Rate (2007$/ton

CO 2 )

................................ ................................ ................................ ....... 15

- A

- 54

Table 15

- A.9.3 Table A3. 2010 Global SCC Estimates at 3 Percent Discount Rate (2007$/ton CO 2 )

................................ ................................ ..................... 15

- A

- 55

Table 15

- A.9.4 2010 Global SCC Estimates at 5 Percent Discount Rate (2007$/ton

CO 2 )

................................ ................................ ................................ ....... 15

- A

- 5615

- A

- ii Table 15

- A.9.5 Additional Summary Statistics of 2010 Global SCC Estimates

............ 15

- A

- 57

LIST OF FIGURES

Figure 15

- A.4.1 Annual Consumption Loss as a Fraction of Global GDP in 2100 Due to an Increase in Annual Global Temperature in the DICE, FUND, and

PAGE models

................................ ................................ ......................... 15

- A

- 11 Figure 15

- A.4.2 Annual Consumption Loss for Lower Temperature Changes in DICE, FUND, and PAGE

................................ ................................ ................. 15

- A

- 12 Figure 15

- A.4.3 Estimates of the Probability Density Function for Equilibrium Climate Sensitivity (°C)

................................ ................................ ...................... 15

- A

- 17 Figure 15

- A.5.1 Level of Global GDP across EMF Scenarios

................................ ........ 15

- A

- 31 Figure 15

- A.9.1 Sulphur Dioxide Emission Scenarios

................................ ..................... 15

- A

- 47 Figure 15

- A.9.2 Global Population, 2000

- 23 00 (Post

- 2100 extrapolations assume the population growth rate changes linearly to reach a zero growth rate by 2200.)

................................ ................................ ................................ ..... 15

- A

- 49 Figure 15

- A.9.3 World GDP, 2000

- 2300 (Post

- 2100 extrapolations assume GDP per capita growth declines linearly, reaching zero in the year 2300)

.......... 15

- A

- 50 Figure 15

- A.9.4 Global Fossil and Industrial CO 2 Emissions, 2000

- 2300 (Post

- 2100 extrapolations assume growth rate of CO 2 intensity (CO 2 /GDP) over

2090

- 2100 is maintained through 2300.)

................................ ............... 15

- A

- 50 Figure 15

- A.9.5 Global Net Land Use CO 2 Emissions, 2000

- 2300 (Post

- 2100 extrapolations assume emissions decline linearly, reaching zero in the year 2200)

................................ ................................ .............................. 15

- A

- 51 Figure 15

- A.9.6 Global Non

- CO 2 Radiative Forcing, 2000

- 2300 (Post

- 2100 extrapolations assume constant non

- CO 2 radiative forcing after 2100) 15

- A

- 52 Figure 15

- A.9.7 Global CO 2 Intensity (fossil & industrial CO 2 emissions/GDP), 2000

- 2300 (Post

- 2100 extrapolations assume decline in CO 2 /GDP growth

rate over 2090

- 2100 is maintained through 2300)

................................ . 15

- A

- 53 Figure 15

- A.9.8 Histogram of Global SCC Estimates in 2010 (2007$/ton CO 2 ), by

discount rate

................................ ................................ ........................... 15

- A

- 5615

- A

- 1 APPENDIX 15

- A. SOCIAL COST OF CARBO N FOR REGULATORY IMP ACT

ANALYSIS UNDER EXECU TIVE ORDER 12866

Interagency Working Group on Social Cost of Carbon, United States Government

With participation by

Council of Economic Advisers

Council on Envi ronmental Quality Department of Agriculture Department of Commerce

Department of Energy Department of Transportation Environmental Protection Agency

National Economic Council Office of Energy and Climate Change

Office of Management and Budget Office of Science and Technology Policy Department of the Treasury

15

- A.1 EXECUTIVE SUMMARY

Under Executive Order 12866, agencies are required, to the extent permitted by law, “to assess both the costs and the benefits of the intended regulation and, recognizi ng that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the “social cost of carbon” (SCC) estimates present ed here is to allow agencies to incorporate the social benefits of reducing carbon dioxide (CO 2 ) emissions into cost

- benefit analyses of regulatory actions that have small, or “marginal,” impacts on cumulative global emissions. The estimates are presented with an acknowledgement of the many uncertainties involved and with a clear understanding that they should be updated over time to reflect increasing knowledge of the science and economics of climate impacts.

The SCC is an estimate of the monetized dama ges associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosyst em services due to climate change.

This document presents a summary of the interagency process that developed these SCC estimates. Technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical litera ture in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures.15

- A

- 2 In thi s way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking process.

The interagency group selected four SCC values for use in regulatory analyses. Three

values are based on the average SCC from three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth value, which represents the 95 th percentile SCC estimate across all three models at a 3 percent discount rate, is included to represent higher

- than

- expected impacts from temperature change further out in the tails of the SCC distribution.

Table 15

- A.1.1 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

Discount Rate

5% 3% 2.5% 3%

Year Avg Avg Avg 95th

2010 4.7 21.4 35.1 64.9

2015 5.7 23.8 38.4 72.8

2020 6.8 26.3 41.7 80.7

2025 8.2 29.6 45.9 90.4

2030 9.7 32.8 50.0 100.0

2035 11.2 36.0 54.2 109.7

2040 12.7 39.2 58.4 119.3

2045 14.2 42.1 61.7 127.8

2050 15.7 44.9 65.0 136.2

15

- A.2 MONETIZING CARBON DIOXIDE EMISS IONS

The “social cost of carbon” (SCC) is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from

increased flood risk, and the value of ecosystem services. We report estimates of the social cost of carbon in dollars per metric ton of carbon dioxide throughout this document. 1

When attempting to assess the incremental economic impacts of carbon dioxide

emis sions, the analyst faces a number of serious challenges. A recent report from the National Academies of Science (NRC 2009) points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of gree nhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in climate

1 In this document, we present all values of the SCC as the cost per metric ton of CO 2 emissions. Alternatively, one could report the SCC as the cost per metric ton of carbon emissions. The multiplier for translating between mass of

CO 2 and the mass of carbon is 3.67 (the molecular weight of CO 2 divided by the molecular weight of carbon = 44/12 = 3.67).15

- A

- 3 on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages. As a result, a ny effort to quantify and monetize the harms associated with climate change will raise serious questions of science, economics, and ethics and should be viewed as provisional. Despite the serious limits of both quantification and monetization, SCC estim ates can be useful in estimating the social benefits of reducing carbon dioxide emissions. Under Executive Order 12866, agencies are required, to the extent permitted by law, “to assess both the costs and the benefits of the intended regulation and, recog nizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the SCC estimates presented here is to

make it possible for agencies to incorporate the social benefits from reducing carbon dioxide

emissions into cost

- benefit analyses of regulatory actions that have small, or “marginal,” impacts on cumulative global emissions. Most federal regulatory actions can be expected to have marginal impacts on global emissions.

For such policies, the benefits from reduced (or costs from increased) emissions in any future year can be estimated by multiplying the change in emissions in that year by the SCC value appropriat e for that year. The net present value of the benefits can then be calculated by multiplying each of these future benefits by an appropriate discount factor and summing across all affected years. This approach assumes that the marginal damages from incre ased emissions are constant for small departures from the baseline emissions path, an approximation that is reasonable for policies that have effects on emissions that are small relative to cumulative global carbon dioxide emissions. For policies that hav e a large (non

- marginal) impact on global cumulative emissions, there is a separate question of whether the SCC is an appropriate tool for calculating the benefits of reduced emissions; we do not attempt to answer that question here.

An interagency group convened on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key inputs and assumptions in order to generate SCC estimates. Agencies that actively participated in the interagency process includ e the Environmental Protection Agency, and the Departments of Agriculture, Commerce, Energy, Transportation, and Treasury. This process was convened by the Council of Economic Advisers and the Office of Management and Budget, with active participation and regular input from the Council on Environmental Quality, National Economic Council, Office of Energy and Climate Change, and Office of Science and Technology Policy. The main objective of this process was to develop a range of SCC values using a defensib le set of input assumptions that are grounded in the existing literature. In this way, key uncertainties and model differences can more transparently and consistently inform the range of SCC estimates used in the rulemaking process.

The interagency group selected four SCC estimates for use in regulatory analyses. For 2010, these estimates are $5, $21, $35, and $65 (in 2007 dollars). The first three estimates are based on the average SCC across models and socio

- economic and emissions scenarios at the 5, 3, and 2.5 percent discount rates, respectively. The fourth value is included to represent the higher

than

- expected impacts from temperature change further out in the tails of the SCC distribution. For this purpose, we use the SCC value for the 95 th percentile at a 3 percent discount rate. The central value is the average SCC across models at the 3 percent discount rate. For purposes of capturing the uncertainties involved in regulatory impact analysis, we emphasize the importance15

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- 4 and value of cons idering the full range. These SCC estimates also grow over time. For instance, the central value increases to $24 per ton of CO 2 in 2015 and $26 per ton of CO 2 in 2020. See Appendix A for the full range of annual SCC estimates from 2010 to 2050.

It is i mportant to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on society improves over time. Specifically, we have set a preliminary goal of revisiti ng the SCC values within two years or at such time as substantially updated models become available, and to continue to support research in this area. In the meantime, we will continue to explore the issues raised in this document and consider public comm ents as part of the ongoing interagency

process.

15

- A.3 SOCIAL COST OF CARBO N VALUES USED IN PAS T REGULATORY

ANALYSES

To date, economic analyses for Federal regulations have used a wide range of values to estimate the benefits associated with reducing carbon di oxide emissions. In the final model year 2011 CAFE rule, the Department of Transportation (DOT) used both a “domestic” SCC value of $2 per ton of CO 2 and a “global” SCC value of $33 per ton of CO 2 for 2007 emission reductions (in 2007 dollars), increasing both values at 2.4 percent per year. It also included a sensitivity analysis at $80 per ton of CO 2 . A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in carbon dioxide emissions, while a glob al SCC value is meant to reflect the value of damages worldwide.

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton CO 2 (in 2006 dollars) for 2011 emission reductions (with a range of $0

- $14 for sensitivity analysis),

also inc reasing at 2.4 percent per year. A regulation finalized by DOE in October of 2008 used a domestic SCC range of $0 to $20 per ton CO 2 for 2007 emission reductions (in 2007 dollars). In addition, EPA’s 2008 Advance Notice of Proposed Rulemaking for Greenho use Gases identified what it described as “very preliminary” SCC estimates subject to revision. EPA’s global mean values were $68 and $40 per ton CO 2 for discount rates of approximately 2 percent and 3 percent, respectively (in 2006 dollars for 2007 emissi ons).

In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carbon dioxide emissions. To ensure consistency in how benefits are evaluated across agencies, the Administration so ught to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO 2 emissions. The interagency group did not undertake any original analysis. Instead, it combi ned SCC estimates from the existing literature to use as interim values until a more comprehensive analysis could be conducted.

The outcome of the preliminary assessment by the interagency group was a set of five interim values: global SCC estimates for 2007 (in 2006 dollars) of $55, $33, $19, $10, and $5 per

ton of CO 2. The $33 and $5 values represented model

- weighted means of the published estimates produced from the most recently available versions of three integrated assessment

models

— DICE, PAGE, an d FUND

— at approximately 3 and 5 percent discount rates. The $5515

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- 5 and $10 values were derived by adjusting the published estimates for uncertainty in the discount rate (using factors developed by Newell and Pizer (2003)) at 3 and 5 percent discount rates,

re spectively. The $19 value was chosen as a central value between the $5 and $33 per ton estimates. All of these values were assumed to increase at 3 percent annually to represent growth in incremental damages over time as the magnitude of climate change in creases. These interim values represent the first sustained interagency effort within the U.S. government to develop an SCC for use in regulatory analysis. The results of this preliminary effort were presented in several proposed and final rules and were offered for public comment in connection with proposed rules, including the joint EPA

- DOT fuel economy and CO 2 tailpipe emission proposed rules.

15

- A.4 APPROACH AND KEY ASS UMPTIONS

Since the release of the interim values, interagency group has reconvened on a regular basis to generate improved SCC estimates. Specifically, the group has considered public comments and further explored the technical literature in relevant fields. This section details the several choices and assumptions that underlie the resultin g estimates of the SCC.

It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Academy of Science (2009) points out that there is tension between the goal of producing quantified estimates of the economic damages from an incrementa l ton of carbon and the limits of existing efforts to model these effects. Throughout this document, we highlight a number of concerns and problems that should be addressed by the research community, including research programs housed in many of the

agenc ies participating in the interagency process to estimate the SCC

.

The U.S. Government will periodically review and reconsider estimates of the SCC used

for cost

- benefit analyses to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling. In this context, statements recognizing the limitations of the analysis and calling for further research take on exceptional significance. The interagency group offers the new SCC values with all due humility about the uncertainties embedded in them and with a sincere promise to continue work to improve them.15

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- 6 15

- A.4.1 Integrated Assessment Models

We rely on three integrated assessment models (IAMs) commonly used to estimate the SCC: the FUND, DICE, and PAGE models. 2 These models are frequently cited in the peer

reviewed literature and used in the IPCC assessment. Each model is given equal weight in the SCC values developed through this process, bearing in mind their different limitations (discussed below).

These models are useful because they combine climate processes, economic growth, and feedbacks between the climate and the global economy into a single modeling framework. At the same time, they gain this advantage at the expense of a more detailed repres entation of the underlying climatic and economic systems. DICE, PAGE, and FUND all take stylized, reduced

form approaches (see NRC 2009 for a more detailed discussion; see Nordhaus 2008 on the possible advantages of this approach). Other IAMs may better reflect the complexity of the science in their modeling frameworks but do not link physical impacts to economic damages. There is currently a limited amount of research linking climate impacts to economic damages,

which makes this exercise even more diffi cult. Underlying the three IAMs selected for this exercise are a number of simplifying assumptions and judgments reflecting the various modelers’ best attempts to synthesize the available scientific and economic research characterizing these relationships

.

The three IAMs translate emissions into changes in atmospheric greenhouse concentrations, atmospheric concentrations into changes in temperature, and changes in temperature into economic damages. The emissions projections used in the models are based on specified socio

- economic (GDP and population) pathways. These emissions are translated into concentrations using the carbon cycle built into each model, and concentrations are translated into warming based on each model’s simplified representation of th e climate and a key parameter, climate sensitivity. Each model uses a different approach to translate warming into damages. Finally, transforming the stream of economic damages over time into a single value requires judgments about how to discount them.

Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. In PAGE, for example, the consumption

- equivalent damages in each period are calculated as a fraction of GDP, depending on the temperatur e in that period relative to the pre

- industrial average temperature in each region. In FUND, damages in each period also depend on the rate of temperature change from the prior period. In DICE, temperature affects both consumption and investment. We des cribe each model in greater detail here. In a later section, we discuss key gaps in how the models account for various scientific and

2 The DICE (Dynamic Integrated Climate and Economy) model by William Nordhaus evolved from a series of energy models and was first presented in 1990 (Nordhaus and Boyer 2000, Nordhaus 2008). The PAGE (Policy Analysis of the Greenhouse Effec t) model was developed by Chris Hope in 1991 for use by European decision

makers in assessing the marginal impact of carbon emissions (Hope 2006, Hope 2008). The FUND (Climate Framework for Uncertainty, Negotiation, and Distribution) model, developed by Ri chard Tol in the early 1990s, originally to study international capital transfers in climate policy. is now widely used to study climate impacts (e.g., Tol 2002a, Tol 2002b, Anthoff et al. 2009, Tol 2009).15

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- 7 economic processes (e.g. the probability of catastrophe, and the ability to adapt to climate change and the physical chan ges it causes).

The parameters and assumptions embedded in the three models vary widely. A key objective of the interagency process was to enable a consistent exploration of the three models while respecting the different approaches to quantifying damag es taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: climate sensitivity, socio

- economic and emissions trajectories, and discount rates. A probability di stribution for climate sensitivity was specified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio

economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model developers’ best estimates and judgments. In DICE, these parameters are handled deterministically and represented by fixed constants; in PAGE, most parameters are represented by probability distributions. FUND was als o run in a mode in which parameters were treated probabilistically.

The sensitivity of the results to other aspects of the models (e.g. the carbon cycle or damage function) is also important to explore in the context of future revisions to the SCC but

ha s not been incorporated into these estimates. Areas for future research are highlighted at the

end of this document.

The DICE Model

The DICE model is an optimal growth model based on a global production function with an extra stock variable (atmospheri c carbon dioxide concentrations). Emission reductions are treated as analogous to investment in “natural capital.” By investing in natural capital today through reductions in emissions

— implying reduced consumption

— harmful effects of climate change can be avoided and future consumption thereby increased.

For purposes of estimating the SCC, carbon dioxide emissions are a function of global GDP and the carbon intensity of economic output, with the latter declining over time due to technological progress. The DICE damage function links global average temperature to the overall impact on the world economy. It varies quadratically with temperature change to capture the more rapid increase in damages expected to occur under more extreme climate change, and is calibrated to include the effects of warming on the production of market and nonmarket goods and services. It incorporates impacts on agriculture, coastal areas (due to sea level rise), “other vulnerable market sectors” (based primarily on changes in e nergy use), human health (based on

climate

- related diseases, such as malaria and dengue fever, and pollution), non

- market amenities (based on outdoor recreation), and human settlements and ecosystems. The DICE damage function also includes the expected v alue of damages associated with low probability, high impact “catastrophic” climate change. This last component is calibrated based on a survey of experts (Nordhaus 1994). The expected value of these impacts is then added to the other market

and non

- mark et impacts mentioned above.

No structural components of the DICE model represent adaptation explicitly, though it is included implicitly through the choice of studies used to calibrate the aggregate damage function.15

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- 8 For example, its agricultural impact estimates assume that farmers can adjust land use decisions in response to changing climate conditions, and its health impact estimates assume improvements in healthcare over time. In addition, the small impacts on forestry, water systems, construction, f isheries, and outdoor recreation imply optimistic and costless adaptation in these sectors (Nordhaus and Boyer, 2000; Warren et al., 2006). Costs of resettlement due to sea level rise are incorporated into damage estimates, but their magnitude is not clea rly reported. Mastrandrea’s (2009) review concludes that “in general, DICE assumes very effective adaptation, and largely ignores adaptation costs."

Note that the damage function in DICE has a somewhat different meaning from the damage functions in FUND and PAGE. Because GDP is endogenous in DICE and because damages in a given year reduce investment in that year, damages propagate forward in time and reduce GDP in future years. In contrast, GDP is exogenous in FUND and PAGE, so damages in any given year do not propagate forward. 3

The PAGE Model

PAGE2002 (version 1.4epm) treats GDP growth as exogenous. It divides impacts into economic, non

- economic, and catastrophic categories and calculates these impacts separately for eight geographic regions. Damag es in each region are expressed as a fraction of output, where the fraction lost depends on the temperature change in each region. Damages are expressed as power functions of temperature change. The exponents of the damage function are the same in

all re gions but are treated as uncertain, with values ranging from 1 to 3 (instead of being fixed at 2 as in DICE).

PAGE2002 includes the consequences of catastrophic events in a separate damage sub

function. Unlike DICE, PAGE2002 models these events probab ilistically. The probability of a “discontinuity” (i.e., a catastrophic event) is assumed to increase with temperature above a specified threshold. The threshold temperature, the rate at which the probability of experiencing a discontinuity increases abo ve the threshold, and the magnitude of the resulting catastrophe are all modeled probabilistically.

Adaptation is explicitly included in PAGE. Impacts are assumed to occur for temperature increases above some tolerable level (2°C for developed countries and 0°C for developing countries for economic impacts, and 0°C for all regions for non

- economic impac ts), but adaptation is assumed to reduce these impacts. Default values in PAGE2002 assume that the developed countries can ultimately eliminate up to 90 percent of all economic impacts beyond the tolerable 2°C increase and that developing countries can ev entually eliminate 50 percent of their economic impacts. All regions are assumed to be able to mitigate 25 percent of the non

economic impacts through adaptation (Hope 2006).

3 Using the default assumptions in DICE 2007, this effect generates an approximately 25 percent increase in the SCC relative to damages calculated by fixing GDP. In DICE2007, the time path of GDP is endogenous. Specifically, the path of GDP depends on the rate of saving and level of abatement in each per iod chosen by the optimizing representative agent in the model. We made two modifications to DICE to make it consistent with EMF GDP trajectories (see next section): we assumed a fixed rate of savings of 20%, and we re

- calibrated the exogenous path of tot al factor productivity so that DICE would produce GDP projections in the absence of warming that exactly matched the EMF scenarios.15

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- 9 The FUND Model

Like PAGE, the FUND model treats GDP growth as exogenous. It includes separately calibrated damage functions for eight market and nonmarket sectors: agriculture, forestry, water, energy (based on heating and cooling demand), sea level rise (based on the value of land lost and the cost of protection), ecosystems, hum an health (diarrhea, vector

- borne diseases, and cardiovascular and respiratory mortality), and extreme weather. Each impact sector has a different functional form, and is calculated separately for sixteen geographic regions. In some impact sectors, the f raction of output lost or gained due to climate change depends not only on the absolute temperature change but also on the rate of temperature change and level of regional

income. 4 In the forestry and agricultural sectors, economic damages also depend on CO 2 concentrations.

Tol (2009) discusses impacts not included in FUND, noting that many are likely to have a relatively small effect on damage estimates (both positive and negative). However, he characterizes several omitted impacts as “big unknowns”: f or instance, extreme climate scenarios, biodiversity loss, and effects on economic development and political violence. With regard to potentially catastrophic events, he notes, “Exactly what would cause these sorts of changes or what effects they would ha ve are not well

- understood, although the chance of any one of them happening seems low. But they do have the potential to happen relatively quickly, and if they did, the costs could be substantial. Only a few studies of climate change have examined

these issues.”

Adaptation is included both implicitly and explicitly in FUND. Explicit adaptation is seen in the agriculture and sea level rise sectors. Implicit adaptation is included in sectors such as energy and human health, where wealthier populations a re assumed to be less vulnerable to climate impacts. For example, the damages to agriculture are the sum of three effects: (1) those due to the rate of temperature change (damages are always positive); (2) those due to the level of temperature change (dam ages can be positive or negative depending on region and temperature); and (3) those from CO 2 fertilization (damages are generally negative but diminishing to zero).

Adaptation is incorporated into FUND by allowing damages to be smaller if climate

chan ge happens more slowly. The combined effect of CO 2 fertilization in the agricultural sector, positive impacts to some regions from higher temperatures, and sufficiently slow increases in temperature across these sectors can result in negative economic damages from climate change.

Damage Functions

To generate revised SCC values, we rely on the IAM modelers’ current best judgments of how to represent the effects of climate change (represented by the increase in global

- average surface temperature) on th e consumption

- equivalent value of both market and non

- market goods

4 In the deterministic version of FUND, the majority of damages are attributable to increased air conditioning
demand, whil e reduced cold stress in Europe, North America, and Central and East Asia results in health benefits in those regions at low to moderate levels of warming (Warren et al., 2006).15

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- 10 (represented as a fraction of global GDP). We recognize that these representations are incomplete and highly uncertain. But given the paucity of data linking the physical impacts to

econo mic damages, we were not able to identify a better way to translate changes in climate into net economic damages, short of launching our own research program.15

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- 11 Figure 15

- A.4.1 Annual Consumption Loss as a Fraction of Global

GDP in 2100 Due to an Increase in Annual Global Temperature in the DICE, FUND, and PAGE

models 5

The damage functions for the three IAMs are presented in Figures 16A.4.1 and 16A.4.2

, using the modeler’s default scenarios and mean input assumptions. There are significant

differences between the three models both at lower (figure 16A.4.2 ) and higher (figure 16A.4.1 ) increases in global

- average temperature.

The lack of agreement among the models at lower temperature increases is underscored by the fact that the damages from FUND are well below the 5 th percentile estimated by PAGE, while the damages estimated by DICE are roughly equal to the 95 th percentile estimated by PAGE. This is significant because at higher discount rates we expect that a greater proportion of

the SCC value is due to dama ges in years with lower temperature increases. For example, when the discount rate is 2.5 percent, about 45 percent of the 2010 SCC value in DICE is due to damages that occur in years when the temperature is less than or equal to 3 °C. This increases to

a

pproximately 55 percent and 80 percent at discount rates of 3 and 5 percent, respectively.

These differences underscore the need for a thorough review of damage functions

— in particular, how the models incorporate adaptation, technological change, and catastrophic

5 The x

- axis represents increases in annual, rather than equilibrium, temperat ure, while the y

- axis represents the annual stream of benefits as a share of global GDP. Each specific combination of climate sensitivity, socio

economic, and emissions parameters will produce a different realization of damages for each IAM. The damage

f unctions represented in Figures 1A and 1B are the outcome of default assumptions. For instance, under alternate assumptions, the damages from FUND may cross from negative to positive at less than or greater than 3 °C.15

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- 12 damages. Gaps in the literature make modifying these aspects of the models challen ging, which highlights the need for additional research. As knowledge improves, the Federal government is committed to exploring how these (and other) models can be modified to incorporate more accurate estimates of damages.

Figure 15

- A.4.2 Annual Consumption Loss f or Lower Temperature Changes in DICE, FUND, and PAGE

15

- A.4.2 Global versus Domestic Measures of SCC

Because of the distinctive nature of the climate change problem, we center our current attention on a global measure of SCC. This approach is the same as that ta ken for the interim values, but it otherwise represents a departure from past practices, which tended to put greater emphasis on a domestic measure of SCC (limited to impacts of climate change experienced within U.S. borders). As a matter of law, consider ation of both global and domestic values is generally permissible; the relevant statutory provisions are usually ambiguous and allow

selection of either measure. 6

Global SCC

6 It is true that federal statutes ar e presumed not to have extraterritorial effect, in part to ensure that the laws of the United States respect the interests of foreign sovereigns. But use of a global measure for the SCC does not give

extraterritorial effect to federal law and hence does no t intrude on such interests.1 5

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- 13 Under current OMB guidance contained in Circular A

- 4, analysis of economica lly significant proposed and final regulations from the domestic perspective is required, while analysis from the international perspective is optional. However, the climate change problem is highly unusual in at least two respects. First, it involves a global externality: emissions of most greenhouse gases contribute to damages around the world even when they are emitted in the United States. Consequently, to address the global nature of the problem, the SCC must incorporate the full (global) damages ca used by GHG emissions. Second, climate change presents a problem that the United States alone cannot solve. Even if the United States were to reduce its greenhouse gas emissions to zero, that step would be far from enough to avoid

substantial climate ch ange. Other countries would also need to take action to reduce emissions if significant changes in the global climate are to be avoided. Emphasizing the need for a global solution to a global problem, the United States has been actively involved in seeki ng international agreements to reduce emissions and in encouraging other nations, including emerging major economies, to take significant steps to reduce emissions. When these considerations are taken as a whole, the interagency group concluded that a glob al measure of the benefits from reducing U.S. emissions is preferable.

When quantifying the damages associated with a change in emissions, a number of analysts (e.g., Anthoff, et al. 2009a) employ “equity weighting” to aggregate changes in consumption a cross regions. This weighting takes into account the relative reductions in wealth in different regions of the world. A per

- capita loss of $500 in GDP, for instance, is weighted more heavily in a country with a per

- capita GDP of $2,000 than in one with a per

- capita GDP of $40,000. The main argument for this approach is that a loss of $500 in a poor country causes a greater reduction in utility or welfare than does the same loss in a wealthy nation. Notwithstanding the theoretical claims on behalf of equi ty weighting, the interagency group concluded that this approach would not be appropriate for estimating a SCC value used in domestic regulatory analysis. 7 For this reason, the group concluded that using the global (rather than domestic) value, without eq uity weighting, is the appropriate approach.

Domestic SCC

As an empirical matter, the development of a domestic SCC is greatly complicated by the relatively few region

- or country

- specific estimates of the SCC in the literature. One potential

source of estimates comes from the FUND model. The resulting estimates suggest that the ratio of domestic to global benefits of emission reductions varies with key parameter assumptions. For example, with a 2.5 or 3 percent discount rate, the U.S. benefit is abou t 7

- 10 percent of the global benefit, on average, across the scenarios analyzed. Alternatively, if the fraction of GDP lost due to climate change is assumed to be similar across countries, the domestic benefit would be proportional to the U.S. share of g lobal GDP, which is currently about 23 percent. 8

7 It is plausible that a loss of $X inflicts more serious harm on a poor nation than on a wealthy one, but development of the appropriate "equity weight" is challenging. Emissions reductions also impose costs, and hence a full account would have to consider that a given cost of emissions reductions imposes a greater utility or welfare loss on a poor nation than on a wealthy one. Even if equity weighting

— for both the costs and benefits of emissions reductions

— is appropriate when considering the utility or welfare effects of international action, the interagency group concluded that it should not be used in developing an SCC for use in regulatory policy at this time.

8 Based on 2008 GDP (in current US dollars) from the World Ba nk Development Indicators Report

.15

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- 14 On the basis of this evidence, the interagency workgroup determined that a range of values from 7 to 23 percent should be used to adjust the global SCC to calculate domestic effects. Reported domestic values should use this range. It is recognized that th ese values are approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time. Further, FUND does not account for how damages in other regions could affect the United States (e.g., global migration, economic and political destabilization). If more accurate methods for calculating the domestic SCC become available, the Federal government will examine these to determine whether to update its approach.

15

- A.4.3 Valuing Non

- CO 2 Emissions

While CO 2 is the most prevalent greenhouse gas emitted into the atmosphere, the U.S. included five other greenhouse gases in its recent endangerment finding: methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafl uoride. The climate impact of these gases is commonly discussed in terms of their 100

- year global warming potential (GWP). GWP measures the ability of different gases to trap heat in the atmosphere (i.e., radiative forcing per unit of mass) over a partic ular timeframe relative to CO 2 . However, because these gases differ in both radiative forcing and atmospheric lifetimes, their relative damages are not constant over time. For example, because methane has a short lifetime, its impacts occur primarily in the near term and thus are not discounted as heavily as those caused by longer

- lived gases. Impacts other than temperature change also vary across gases in ways that are not captured by GWP. For instance, CO 2 emissions, unlike methane and other greenhous e gases, contribute to ocean acidification. Likewise, damages from methane emissions are not offset by the positive effect of

CO 2 fertilization. Thus, transforming gases into CO 2 - equivalents using GWP, and then multiplying the carbon

- equivalents by the S CC, would not result in accurate estimates of the

social costs of non

- CO 2 gases.

In light of these limitations, and the significant contributions of non

- CO 2 emissions to climate change, further research is required to link non

- CO 2 emissions to economi c impacts. Such work would feed into efforts to develop a monetized value of reductions in non

- CO 2 greenhouse gas emissions. As part of ongoing work to further improve the SCC estimates, the interagency group hopes to develop methods to value these other greenhouse gases. The goal is to develop these estimates by the time we issue revised SCC estimates for carbon dioxide

emissions.

15

- A.4.4 Equilibrium Climate Sensitivity

Equilibrium climate sensitivity (ECS) is a key input parameter for the DICE, PAGE, and

F UND models. 9

9 The equilibrium climate sensitivity includes the response of the climate system to increased greenhouse gas concentrations over the short to medium term (up to 100

- 200 years), but it does not include long

- term feedback effects due to possible large

- scale changes in ice sheets or the biosphere, which occur on a time scale of many hundreds to thousands of years (e.g. Hansen et al. 2007). It is defined as the long

- term increase in the annual global

- average surface15

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- 15 temperature from a doubling of atmospheric CO 2 concentration relative to pre

- industrial levels (or stabilization at a concentration of approximately 550 parts per mi llion (ppm)). Uncertainties in this important parameter have received substantial attention in the peer

- reviewed literature.

The most authoritative statement about equilibrium climate sensitivity appears in the Fourth Assessment Report of the Intergovern mental Panel on Climate Change (IPCC):

Basing our assessment on a combination of several independent lines of evidence...including observed climate change and the strength of known feedbacks simulated in [global climate models], we conclude that the global mean equilibrium warming for doubling CO 2 , or ‘equilibrium climate sensitivity’, is likely to lie in the range 2 °C to 4.5 °C, with a most likely value of about 3 °C. Equilibrium climate sensitivity is very likely larger than 1.5 °C. 10

For fundamental physical reasons as well as data limitations, values substantially higher than 4.5 °C still cannot be excluded, but agreement with observations and proxy data is generally worse for those high values than for values in the 2 °C to 4.5 °C ra nge. (Meehl et al., 2007, p 799)

After consulting with several lead authors of this chapter of the IPCC report, the interagency workgroup selected four candidate probability distributions and calibrated them to

be consistent with the above statement: Ro e and Baker (2007), log

- normal, gamma, and Weibull.

Table 1 6A.4.1 included below gives summary statistics for the four calibrated distributions.

Table 15

- A.4.1 Summary Statistics for Four Calibrated Climate Sensitivity Distributions

Roe & Baker Log

- normal Gamma Weibull Pr(ECS < 1.5°C) 0.013 0.050 0.070 0.102 Pr(2°C < ECS < 4.5°C) 0.667 0.667 0.667 0.667

5 th percentile 1.72 1.49 1.37 1.13

10 th percentile 1.91 1.74 1.65 1.48

Mode 2.34 2.52 2.65 2.90 Median (50 th percentile) 3.00 3.00 3.00 3.00

Mean 3.50 3.28 3.19 3.07

90 th percentile 5.86 5.14 4.93 4.69

95 th percentile 7.14 5.97 5.59 5.17

Each distribution was calibrated by applying three constraints from the IPCC:

10 This is in accord with the judgment that it “is likely to lie in the range 2 °C to 4.5 °C” and the IPCC definition of

“l ikely” as greater than 66 percent probability (Le Treut et al.2007). “Very likely” indicates a greater than 90 percent probability.15

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- 16 (1) a median equal to 3°C, to reflect the judgment of “a most likely value of about 3 °C”; 11
(2) two

- thirds probability that the equilibrium climate sensitivity lies between 2 and 4.5 °C;

and (3) zero probability that it is less than 0°C or greater than 10°C (see Hegerl et al. 2006, p. 721).

We selected the calibrated Roe and Baker distribution from the four candidates for two reasons. First, the Roe and Baker distribution is the only one of the four that is based on a theoretical understanding of the response of the climate system to increased greenhouse gas concentrations (Roe and Baker 2007, Roe 2008 ). In contrast, the other three distributions are mathematical functions that are arbitrarily chosen based on simplicity, convenience, and general shape. The Roe and Baker distribution results from three assumptions about climate response: (1) absent fee dback effects, the equilibrium climate sensitivity is equal to 1.2 °C; (2) feedback factors are proportional to the change in surface temperature; and (3) uncertainties in feedback factors are normally distributed. There is widespread agreement on the firs t point and the second and third points are common assumptions.

Second, the calibrated Roe and Baker distribution better reflects the IPCC judgment that “values substantially higher than 4.5°C still cannot be excluded.” Although the IPCC made no quantit ative judgment, the 95 th percentile of the calibrated Roe & Baker distribution (7.1 °C) is much closer to the mean and the median (7.2 °C) of the 95 th percentiles of 21 previous studies summarized by Newbold and Daigneault (2009). It is also closer to the mean (7.5 °C) and median (7.9 °C) of the nine truncated distributions examined by the IPCC (Hegerl, et al., 2006)

than are the 95 th percentiles of the three other calibrated distributions (5.2

- 6.0 °C).

Finally, we note the IPCC judgment that the equilib rium climate sensitivity “is very likely larger than 1.5°C.” Although the calibrated Roe & Baker distribution, for which the probability of equilibrium climate sensitivity being greater than 1.5°C is almost 99 percent, is not

inconsistent with the IPCC def inition of “very likely” as “greater than 90 percent probability,” it reflects a greater degree of certainty about very low values of ECS than was expressed by the

IPCC.

11 Strictly speaking, “most likely” refers to the mode of a distribution rather than the median, but common usage

would allow the mode, median, or mean to serve as candidates for the central or “most likely” value and the IPCC report is not specific on this point. For the distributions we considered, the median was between the mode and the

mean. For the Roe and Baker distributi on, setting the median equal to 3°C, rather than the mode or mean, gave a 95 th

percentile that is more consistent with IPCC judgments and the literature. For example, setting the mean and mode equal to 3°C produced 95 th percentiles of 5.6 and 8.6 °C, resp ectively, which are in the lower and upper end of the range in the literature. Finally, the median is closer to 3°C than is the mode for the truncated distributions selected by the IPCC (Hegerl, et al., 2006); the average median is 3.1 °C and the average mode is 2.3 °C, which is most consistent with a Roe and Baker distribution with the median set equal to 3 °C.15

- A

- 17 Figure 15

- A.4.3 Estimates of the Probability Density Function for Equilibrium Climate Sensitivity (°C)

To show how the calibrated Roe and Baker distribution compares to different estimates of the probability distribution function of equilibrium climate sensitivity in the empirical literature, Figure 16A.4.3 (above ) overlays it on Figure 9.20 from the IPCC Fourth Assessment Report. These functions are scaled to integrate to unity between 0 °C and 10 °C. The horizontal bars show the respective 5 percent to 95 percent ranges; dots indicate the median estimate. 12

15

- A.4.5 Socio

- Economic and Emissions Trajector ies

Another key issue considered by the interagency group is how to select the set of socio

economic and emissions parameters for use in PAGE, DICE, and FUND. Socio

- economic pathways are closely tied to climate damages because, all else equal, more and wealthier people tend to emit more greenhouse gases and also have a higher (absolute) willingness to pay to avoid climate disruptions. For this reason, we consider how to model several input parameters in tandem: GDP, population, CO 2 emissions, and non

- C O 2 radiative forcing. A wide variety of scenarios have been developed and used for climate change policy simulations (e.g., SRES 2000,

12 The estimates based on instrumental data are from Andronova and Schlesinger (2001), Forest et al. (2002; dashed line, anthropogenic forcings onl y), Forest et al. (2006; solid line, anthropogenic and natural forcings), Gregory et al. (2002a), Knutti et al. (2002), Frame et al. (2005), and Forster and Gregory (2006). Hegerl et al. (2006) are based on multiple palaeoclimatic reconstructions of north hemisphere mean temperatures over the last 700 years. Also shown

are the 5

- 95 percent approximate ranges for two estimates from the last glacial maximum (dashed, Annan et al. 2005; solid, Schneider von Deimling et al. 2006), which are based on models with different structural properties.15

- A

- 18 CCSP 2007, EMF 2009). In determining which scenarios are appropriate for inclusion, we

aimed to select scenarios that s pan most of the plausible ranges of outcomes for these variables.

To accomplish this task in a transparent way, we decided to rely on the recent Stanford Energy Modeling Forum exercise, EMF

- 22. EMF

- 22 uses ten well

- recognized models to

evaluate substan tial, coordinated global action to meet specific stabilization targets. A key advantage of relying on these data is that GDP, population, and emission trajectories are internally consistent for each model and scenario evaluated. The EMF

- 22 modeling effort also is preferable to the IPCC SRES due to their age (SRES were developed in 1997) and the fact that 3 of 4 of the SRES scenarios are now extreme outliers in one or more variables. Although the

EMF

- 22 scenarios have not undergone the same level of scrut iny as the SRES scenarios, they are

recent, peer

- reviewed, published, and publicly available.

To estimate the SCC for use in evaluating domestic policies that will have a small effect on global cumulative emissions, we use socio

- economic and emission trajectories that span a range of plausible scenarios. Five trajectories were s elected from EMF

- 22 (see Table 16A.4.2 below). Four of these represent potential business

- as

- usual (BAU) growth in population, wealth, and emissions and are associated with C O 2 (only) concentrations ranging from 612 to 889 ppm in 2100. One represents an emissions pathway that achieves stabilization at 550 ppm

CO 2 e (i.e., CO 2 - only concentrations of 425

– 484 ppm or a radiative forcing of 3.7 W/m 2 ) in 2100, a lower

- than

- BAU tr ajectory. 13 Out of the 10 models included in the EMF

- 22 exercise, we selected the trajectories used by MiniCAM, MESSAGE, IMAGE, and the optimistic scenario from MERGE. For the BAU pathways, we used the GDP, population, and emission trajectories

from each of these four models. For the 550 ppm CO 2 e scenario, we averaged the GDP, population, and emission trajectories implied by these same four models.

13 Such an emissions path would be consistent with widespread action by countries to mitigate GHG emissions, though it could also result from technological advances. It was chosen because it represents the most stringent c ase analyzed by the EMF

- 22 where all the models converge: a 550 ppm, not to exceed, full participation scenario.15

- A

- 19 Table 15

- A.4.2 Socioeconomic and Emissions Projections from Select EMF

- 22 Reference

Scenarios

Reference Fossil and Indus trial CO 2 Emissions (GtCO 2 /yr)

EMF

– 22 Based Scenarios 2000 2010 2020 2030 2050 2100

IMAGE 26.6 31.9 36.9 40.0 45.3 60.1 MERGE Optimistic 24.6 31.5 37.6 45.1 66.5 117.9

MESSAGE 26.8 29.2 37.6 42.1 43.5 42.7
MiniCAM 26.5 31.8 38.0 45.1 57.8 80.5

550 ppm average 26.2 31.1 33.2 32.4 20.0 12.8

Reference GDP (using market exchange rates in trillion 2005$) 14

EMF

– 22 Based Scenarios 2000 2010 2020 2030 2050 2100

IMAGE 38.6 53.0 73.5 97.2 156.3 396.6 MERGE Optimistic 36.3 45.9 59.7 76.8 122.7 268.0

MESSAGE 38.1 52.3 69.4 91.4 153.7 334.9
MiniCAM 36.1 47.4 60.8 78.9 125.7 369.5 550 ppm average 37.1 49.6 65.6 85.5 137.4 337.9

Global Population (billions)

EMF

– 22 Based Scenarios 2000 2010 2020 2030 2050 2100

IMAGE 6.1 6.9 7.6 8.2 9.0 9.1

MERGE Optimistic 6.0 6.8 7.5 8.2 9.0 9.7

MESSAGE 6.1 6.9 7.7 8.4 9.4 10.4
MiniCAM 6.0 6.8 7.5 8.1 8.8 8.7 550 ppm average 6.1 6.8 7.6 8.2 8.7 9.1

We explore how sensitive the SCC is to various assumptions about how the future will

evolve without prejudging what is likely to occur. The interagency group considered formally assigning probability weights to different states of the world, but this proved challenging to do in an analytically rigorous way given the dearth of information on the likeliho od of a full range of

future socio

- economic pathways.

14 While the EMF

- 22 models used market exchange rates (MER) to calculate global GDP, it is also possible to use purchasing power parity (PPP). PPP takes into account the different price levels across countries, so it more accurately describes relative standards of living across countries. MERs tend to make low

- income countries appear poorer than they actually are. Because many models assume conv ergence in per capita income over time, use of

MER

- adjusted GDP gives rise to projections of higher economic growth in low income countries. There is an ongoing debate about how much this will affect estimated climate impacts. Critics of the use of MER a rgue that it leads to overstated economic growth and hence a significant upward bias in projections of greenhouse gas emissions, and unrealistically high future temperatures (e.g., Castles and Henderson 2003). Others argue that convergence of the emission s

- intensity gap across countries at least partially offset the overstated income gap so that differences in exchange rates have less of an effect on emissions (Holtsmark and Alfsen, 2005; Tol, 2006). Nordhaus (2007b) argues that the ideal approach is to us e superlative PPP accounts (i.e., using cross

- sectional PPP measures for relative incomes and outputs and national accounts price and quantity indexes for time

- series extrapolations). However, he notes that it important to keep this debate in perspective; it is by no means clear that exchange

- rate

- conversion issues are as important as uncertainties about population, technological change, or the many geophysical uncertainties.15

- A

- 20 There are a number of caveats. First, EMF BAU scenarios represent the modelers’ judgment of the most likely pathway absent mitigation policies to reduce greenhouse gas emissions, rather than the w ider range of possible outcomes. Nevertheless, these views of the most likely outcome span a wide range, from the more optimistic (e.g. abundant low

- cost, low

carbon energy) to more pessimistic (e.g. constraints on the availability of nuclear and

renewabl es). 15 Second, the socio

- economic trajectories associated with a 550 ppm CO 2 e concentration scenario are not derived from an assessment of what policy is optimal from a

benefit

- cost standpoint. Rather, it is indicative of one possible future outcome. The emission trajectories underlying some BAU scenarios (e.g. MESSAGE’s 612 ppm) also are consistent with some modest policy action to address climate change. 16 We chose not to include socio

economic trajectories that achieve even lower GHG concentrations at this time, given the difficulty many models had in converging to meet these targets.

For comparison purposes, the Energy Information Agency in its 2009 An nual Energy Outlook projected that global carbon dioxide emissions will grow to 30.8, 35.6, and 40.4 gigatons in 2010, 2020, and 2030, respectively, while world GDP is projected to be $51.8, $71.0 and $93.9 trillion (in 2005 dollars using market exchange r ates) in 2010, 2020, and 2030, respectively. These projections are consistent with one or more EMF

- 22 scenarios. Likewise, the United Nations’ 2008 Population Prospect projects population will grow from 6.1 billion people in 2000 to 9.1 billion people in 2050, which is close to the population trajectories for the IMAGE, MiniCAM, and MERGE models.

In addition to fossil and industrial CO 2 emissions, each EMF scenario provides projections of methane, nitrous oxide, fluorinated greenhouse gases, and net lan d use CO 2 emissions out to 2100. These assumptions also are used in the three models while retaining the default radiative forcings due to other factors (e.g. aerosols and other gases). See the Appendix for greater detail.

15

- A.4.6 Discount Rate

The choice of a discount rate, especially over long periods of time, raises highly contested and exceedingly difficult questions of science, economics, philosophy, and law. Although it is well understood that the discount rate has a large influence on the current value o f future damages, there is no consensus about what rates to use in this context. Because carbon dioxide emissions are long

- lived, subsequent damages occur over many years. In calculating the SCC, we first estimate the future damages to agriculture, human health, and other market and

non

- market sectors from an additional unit of carbon dioxide emitted in a particular year in terms of reduced consumption (or consumption equivalents) due to the impacts of elevated temperatures, as represented in each of the three IAMs. Then we discount the stream of future

15 For instance, in the MESSAGE model’s reference case total primary energy product ion from nuclear, biomass,

and non

- biomass renewables is projected to increase from about 15 percent of total primary energy in 2000 to 54 percent in 2100. In comparison, the MiniCAM reference case shows 10 percent in 2000 and 21 percent in 2100.

16 For e xample, MiniCAM projects if all non

- US OECD countries reduce CO 2 emissions to 83 percent below 2005 levels by 2050 (per the G

- 8 agreement) but all other countries continue along a BAU path CO 2 concentrations in 2100 would drop from 794 ppmv in its referenc e case to 762 ppmv.15

- A

- 21 damages to its present value in the year when the additional unit of emissions was released using the selected discount rate, which is intended to reflect society's marginal rate of substitution

between co nsumption in different time periods.

For rules with both intra

- and intergenerational effects, agencies traditionally employ constant discount rates of both 3 percent and 7 percent in accordance with OMB Circular A

- 4.

As Circular A

- 4 acknowledges, h owever, the choice of discount rate for intergenerational problems raises distinctive problems and presents considerable challenges. After reviewing those challenges, Circular A

- 4 states, “ If your rule will have important intergenerational benefits

or cos ts you might consider a further sensitivity analysis using a lower but positive discount rate in addition to calculating net benefits using discount rates of 3 and 7 percent.” For the specific purpose of developing the SCC, we adapt and revise that approa ch here.

Arrow et al. (1996) outlined two main approaches to determine the discount rate for climate change analysis, which they labeled “descriptive” and “prescriptive.” The descriptive approach reflects a positive (non

- normative) perspective based on observations of people’s

actual choices

— e.g., savings versus consumption decisions over time, and allocations of savings among more and less risky investments. Advocates of this approach generally call for inferring

the discount rate from market rates of return “because of a lack of justification for choosing a social welfare function that is any different than what decision makers [individuals] actually use” (Arrow et al. 1996).

One theoretical foundation for the cost

- benefit analyses in which the soc ial cost of carbon

will be used

— the Kaldor

- Hicks potential

- compensation test

— also suggests that market rates should be used to discount future benefits and costs, because it is the market interest rate that would govern the returns potentially set aside to day to compensate future individuals for climate damages that they bear (e.g., Just et al. 2004)

. As some have noted, the word “potentially” is an important qualification; there is no assurance that such returns will actually be set aside to provide compe nsation, and the very idea of compensation is difficult to define in the intergenerational context. On the other hand, societies provide compensation to future generations through investments in human capital and the resulting increase in knowledge, as

we ll as infrastructure and other physical capital.

The prescriptive approach specifies a social welfare function that formalizes the normative judgments that the decision

- maker wants explicitly to incorporate into the policy

evaluation

— e.g., how inter

- pers onal comparisons of utility should be made, and how the welfare of future generations should be weighed against that of the present generation. Ramsey (1928), for example, has argued that it is “ethically indefensible” to apply a positive pure rate of tim e preference to discount values across generations, and many agree with this view.

Other concerns also motivate making adjustments to descriptive discount rates. In particular, it has been noted that the preferences of future generations with regard t o consumption versus environmental amenities may not be the same as those today, making the current market rate on consumption an inappropriate metric by which to discount future climate

related damages. Others argue that the discount rate should be below market rates to correct for market distortions and uncertainties or inefficiencies in intergenerational transfers of wealth,15

- A

- 22 which in the Kaldor

- Hicks logic are presumed to compensate future generations for damage (a potentially controversial assumption, as noted above) (Arrow et al. 1996, Weitzman 1999).

Further, a legitimate concern about both descriptive and prescriptive approaches is that they tend to obscure important heterogeneity in the population. The utility function that underlies the prescrip tive approach assumes a representative agent with perfect foresight and no credit constraints. This is an artificial rendering of the real world that misses many of the frictions that characterize individuals’ lives and indeed the available descriptive evi dence supports this. For instance, many individuals smooth consumption by borrowing with credit cards that have relatively high rates. Some are unable to access traditional credit markets and rely on payday lending operations or other high cost forms of s moothing consumption. Whether one puts greater weight on the prescriptive or descriptive approach, the high interest rates that

credit

- constrained individuals accept suggest that some account should be given to the discount rates revealed by their behavio r.

We draw on both approaches but rely primarily on the descriptive approach to inform the choice of discount rate. With recognition of its limitations, we find this approach to be the most defensible and transparent given its consistency with the stan dard contemporary theoretical

foundations of benefit

- cost analysis and with the approach required by OMB’s existing guidance. The logic of this framework also suggests that market rates should be used for discounting future consumption

- equivalent damages. Regardless of the theoretical approach used to derive the appropriate discount rate(s), we note the inherent conceptual and practical difficulties of adequately capturing consumption trade

- offs over many decades or even centuries. While relying primaril y on the descriptive approach in selecting specific discount rates, the interagency group has been keenly aware of the deeply normative dimensions of both the debate over discounting in the intergenerational context and the consequences of selecting one di scount rate
over another.

Historically Observed Interest Rates

In a market with no distortions, the return to savings would equal the private return on investment, and the market rate of interest would be the appropriate choice for the social discount rate. In the real world risk, taxes, and other market imperfection s drive a wedge

between the risk

- free rate of return on capital and the consumption rate of interest. Thus, the literature recognizes two conceptual discount concepts

— the consumption rate of interest and the opportunity cost of capital.

According to O MB’s Circular A

- 4, it is appropriate to use the rate of return on capital when a regulation is expected to displace or alter the use of capital in the private sector. In this case, OMB recommends Agencies use a discount rate of 7 percent. When regulation is expected to primarily affect private consumption

— for instance, via higher prices for goods and services

— a lower discount rate of 3 percent is appropriate to reflect how private individuals trade

- off current and future consumption.

The interagency gro up examined the economics literature and concluded that the consumption rate of interest is the correct concept to use in evaluating the benefits and costs of a15

- A

- 23 marginal change in carbon emissions (see Lind 1990, Arrow et al 1996, and Arrow 2000). The

con sumption rate of interest also is appropriate when the impacts of a regulation are measured in consumption (

- equivalent) units, as is done in the three integrated assessment models used for estimating the SCC.

Individuals use a variety of savings instr uments that vary with risk level, time horizon, and tax characteristics. The standard analytic framework used to develop intuition about the discount rate typically assumes a representative agent with perfect foresight and no credit

constraints. The risk

- free rate is appropriate for discounting certain future benefits or costs, but the benefits calculated by IAMs are uncertain. To use the risk

- free rate to discount uncertain benefits, these benefits first must be transformed into "certainty equivalents," that is the maximum certain amount that we would exchange for the uncertain amount. However, the calculation of the certainty

- equivalent requires first estimating the correlation between the benefits of the policy and baseline consumption.

If the IAM projections of future impacts represent expected values (not certainty

equivalent values), then the appropriate discount rate generally does not equal the risk

- free rate. If the benefits of the policy tend to be high in those states of the world in which consumption is low, then the certainty

- equivalent benefits will be higher than the expected benefits (and vice versa). Since many (though not necessarily all) of the important impacts of climate change will flow through market sectors such as agriculture and energy, and since willingness to pay for environmental protections typically increases with income, we might expect a positive (though not necessarily perfect) correlation between the net benefits from climate policies and market

returns. This line o f reasoning suggests that the proper discount rate would exceed the riskless rate. Alternatively, a negative correlation between the returns to climate policies and market returns would imply that a discount rate below the riskless rate is appropriate.

This discussion suggests that both the post

- tax riskless and risky rates can be used to capture individuals’ consumption

- equivalent interest rate. As a measure of the post

- tax riskless rate, we calculate the average real return from Treasury notes over th e longest time period available (those from Newell and Pizer 2003) and adjust for Federal taxes (the average marginal rate from tax years 2003 through 2006 is around 27 percent). 17 This calculation produces a real interest rate of about 2.7 percent, which is roughly consistent with Circular A

- 4’s recommendation to use 3 percent to represent the consumption rate of interest. 18

17 The literature argues for a risk

- free rate on government bonds as an appropriate measure of the consumption rate of interest. Arrow (2000) suggests that it is roughly 3

- 4 percent. OMB cites evidence of a 3.1 percent pre

- tax rate
for 10

- year Treasury notes in the A

- 4 guidance. Newell and Pizer (2003) find real interest rates between 3.5 and 4 percent for 30

- year Treasury securities. A measure of the post

- tax risky rate for investments wh ose returns are positively correlated with overall equity

18 The positive approach reflects how individuals make allocation choices across time, but it is impor tant to keep in mind that we wish to reflect preferences for society as a whole, which generally has a longer planning horizon.15

- A

- 24 market returns can be obtained by adjusting pre

- tax rates of household returns to risky investments (approximately 7 percent) for taxes yields a real rate of roughly 5 percent. 19

The Ramsey Equat ion

Ramsey discounting also provides a useful framework to inform the choice of a discount rate. Under this approach, the analyst applies either positive or normative judgments in selecting values for the key parameters of the Ramsey equation: η ( coeffi cient of relative risk aversion or elasticity of the marginal utility of consumption) and ρ ( pure rate of time preference). 20 These

are then combined with g (growth rate of per

- capita consumption) to equal the interest rate at which future monetized damage s are discounted: ρ + η ∙g

. 21 In the simplest version of the Ramsey model, with an optimizing representative agent with perfect foresight, what we are calling the “Ramsey discount rate,” ρ + η ∙g, will be equal to the rate of return to capital, i.e., the

mar ket interest rate.

A review of the literature provides some guidance on reasonable parameter values for the Ramsey discounting equation , based on both prescriptive and descriptive approaches.

**•** η. Most papers in the climate chan ge literature adopt values for η in the range of 0.5 to 3 (Weitzman cites plausible values as those ranging from 1 to 4), although not all authors articulate whether their choice is based on prescriptive or descriptive reasoning. 22
Dasgupta (2008) argues that η should be greater than 1 and may be as high as 3, since η equal to 1 suggests savings rates that do not conform to observed behavior.

19 Cambell et al (2001) estimates that the annual real return from stocks for 1900

- 1995 was about 7 percent. The

annual real rat e of return for the S&P 500 from 1950

– 2008 was about 6.8 percent. In the absence of a better way to population

- weight the tax rates, we use the middle of the 20

– 40 percent range to derive a post

- tax interest rate (Kotlikoff and Rapson 2006).

20 The parameter ρ

 measures the pure rate of time preference : people’s behavior reveals a preference for an increase in utility today versus the future. Consequently, it is standard to place a lower weight on utility in the future. The

parameter η captures diminishing marginal utility : consumption in the future is likely to be higher than consumption today, so diminishing marginal utility of consumption implies that the same monetary damage will cause a smaller reduction of utility for wealthier in dividuals, either in the future or in current generations. If η = 0, then a one dollar increase in income is equally valuable regardless of level of income; if η = 1, then a one percent increase in income is equally valuable no matter the level of income; and if η > 1, then a one percent increase in income is less valuable

to wealthier individuals.

21 In this case, g could be taken from the selected EMF socioeconomic scenarios or alternative assumptions about the rate of consumption growth.

22 Empirical est imates of η span a wide range of values. A benchmark value of 2 is near the middle of the range of values estimated or used by Szpiro (1986), Hall and Jones (2007), Arrow (2007), Dasgupta (2006, 2008), Weitzman (2007, 2009), and Nordhaus (2008). However, Chetty (2006) developed a method of estimating η using data on labor supply behavior. He shows that existing evidence of the effects of wage changes on labor supply imposes a tight upper bound on the curvature of utility over wealth (CRRA < 2) with the m ean implied value of 0.71 and concludes that the standard expected utility model cannot generate high levels of risk aversion without contradicting established facts about labor supply. Recent work has jointly estimated the components of the Ramsey equati on. Evans and Sezer (2005) estimate η = 1.49 for 22 OECD countries. They also estimate ρ = 1.08 percent per year using data on mortality rates. Anthoff, et al. (2009b) estimate η = 1.18, and ρ = 1.4 percent. When they multiply the bivariate probability d istributions from their work and Evans and Sezer (2005) together, they find η = 1.47, and ρ = 1.07.15

- A

- 25 **•** ρ. With respect to the pure rate of time preference, most papers in the climate change literature adopt values for ρ in the range of 0 to 3 percent per year. The very low rates tend to follow from moral judgments involving intergenerational neutrality. Some have argued th at to use any value other than ρ = 0 would unjustly discriminate against future generations (e.g., Arrow et al. 1996, Stern et al. 2006). However, even in an inter

generational setting, it may make sense to use a small positive pure rate of time preference because of the small probability of unforeseen cataclysmic events (Stern et al. 2006).

**•** g. A com monly accepted approximation is around 2 percent per year. For the socio

economic scenarios used for this exercise, the EMF models assume that g is about 1.5

- 2 percent to 2100.

Some economists and non

- economists have argued for constant discount rates below 2 percent based on the prescriptive approach. When grounded in the Ramsey framework, proponents of this approach have argued that a ρ of zero avoids giving preferential treatment to one generatio n over another. The choice of η has also been posed as an ethical choice linked to the value of an additional dollar in poorer countries compared to wealthier ones. Stern et al. (2006) applies this perspective through his choice of ρ = 0.1 percent per year

, η = 1 and g = 1.3 percent per year, which yields an annual discount rate of 1.4 percent. In the context of permanent income savings behavior, however, Stern’s assumptions suggest that individuals would save 93 percent of their income. 23

Recently, Stern (2008) revisited the values used in Stern et al. ( 2006), stating that there is a case to be made for raising η due to the amount of weight lower values place on damages far in the future (over 90 percent of expected damages occur after 2200 with η = 1). Using Stern’s assumption that ρ = 0.1 percent, combined with a η of 1.5 to 2 and his original growth rate, yields a discount rate greater 2 percent.

We conclude that arguments made under the prescriptive approach can be used to justify discount rates between roughly 1.4 and 3.1 percen t. In light of concerns about the most appropriate value for η , we find it difficult to justify rates at the lower end of this range under the Ramsey framework.

Accounting for Uncertainty in the Discount Rate

While the consumption rate of interest is an important driver of the benefits estimate, it is uncertain over time. Ideally, we would formally model this uncertainty, just as we do for climate sensitivity. Weitzman (1998, 2001) showed theoretically and Newell and Pizer (2003) and Groom et al. (20 06) confirm empirically that discount rate uncertainty can have a large effect on net present values. A main result from these studies is that if there is a persistent element to the uncertainty in the discount rate (e.g., the rate follows a random walk), then it will result in an effective (or certainty

- equivalent) discount rate that declines over time. Consequently, lower

23 Stern (2008) argues that building in a positive rate of exogenous technical change over time reduces the implied savings rate and that η at or above 2 ar e inconsistent with observed behavior with regard to equity . (At the same time, adding exogenous technical change

— all else equal

— would increase g as well.)15

- A

- 26 discount rates tend to dominate over the very long term (see Weitzman 1998, 1999, 2001; Newell and Pizer 2003; Groom et al. 2006; Gol lier 2008; Summers and Zeckhauser 2008; and Gollier and Weitzman 2009).

The proper way to model discount rate uncertainty remains an active area of research. Newell and Pizer (2003) employ a model of how long

- term interest rates change over time to

f orecast future discount rates. Their model incorporates some of the basic features of how interest rates move over time, and its parameters are estimated based on historical observations of long

- term rates. Subsequent work on this topic, most notably Gro om et al. (2006), uses more general models of interest rate dynamics to allow for better forecasts. Specifically, the volatility of interest rates depends on whether rates are currently low or high and variation in the level of persistence over time.

W hile Newell and Pizer (2003) and Groom et al (2006) attempt formally to model uncertainty in the discount rate, others argue for a declining scale of discount rates applied over time (e.g., Weitzman 2001, and the UK’s “Green Book” for regulatory analysis). This approach uses a higher discount rate initially, but applies a graduated scale of lower discount rates further

out in time. 24 A key question that has emerged with regard to both of these approaches is the

trade

- off between potential time inconsistenc y and giving greater weight to far future outcomes (see the EPA Science Advisory Board’s recent comments on this topic as part of its review of

their Guidelines for Economic Analysis ). 25

The Discount Rates Selected for Estimating SCC

In light of disagreement in the literature on the appropriate market interest rate to use in this context and uncertainty about how interest rates may change over time, we use three discount rates to span a plausible range of certainty

- equivalent constant discount rates: 2.5, 3, and 5 percent per year. Based on the review in the previous sections, the interagency workgroup determined that these three rates reflect reasonable judgments under both descriptive and prescriptive approaches.

The central value, 3 percent, is consistent with estimates provided in the economics

literature and OMB’s Circular A

- 4 guidance for the consumption rate of interest. As previously mentioned, the consumption rate of interest is the correct discounting concept to use when fu ture damages from elevated temperatures are estimated in consumption

- equivalent units. Further, 3 percent roughly corresponds to the after

- tax riskless interest rate. T he upper value of 5 percent is

24 For instance, the UK applies a discount rate of 3.5 percent to the first 30 years; 3 percent for years 31

- 75; 2.5 percent for years 76

- 125; 2 percent for years 126

- 200; 1.5 percent for years 201

- 300; and 1 percent after 300 years. As a sensitivity, it recommends a di scount rate of 3 percent for the first 30 years, also decreasing over time.

25 Uncertainty in future damages is distinct from uncertainty in the discount rate . Weitzman (2008) argues that Stern’s choice of a low discount rate was “right for the wrong reaso ns.” He demonstrates how the damages from a low probability, catastrophic event far in the future dominate the effect of the discount rate in a present value calculation and result in an infinite willingness

- to

- pay for mitigation today. Newbold and Daignea ult, (2009) and Nordhaus (2009) find that Weitzman’s result is sensitive to the functional forms chosen for climate sensitivity, utility, and consumption. Summers and Zeckhauser (2008) argue that uncertainty in future damages can also work in

the other dir ection by increasing the benefits of waiting to learn the appropriate level of mitigation required.15

- A

- 27 included to represent the possibility that climate dama ges are positively correlated with market returns. Additionally, this discount rate may be justified by the high interest rates that many consumers use to smooth consumption across periods.

The low value, 2.5 percent, is included to incorporate the concern that interest rates are highly uncertain over time. It represents the average certainty

- equivalent rate using the mean

reverting and random walk approaches from Newell and Pizer (2003) sta rting at a discount rate of 3 percent. Using this approach, the certainty equivalent is about 2.2 percent using the random walk model and 2.8 percent using the mean reverting approach. 26

15

- A.5 REVISED SCC ESTIMATE S Without giving preference to a particular model, the average of the two rates is 2.5 percent. Further, a rate below the riskless rate would be justified if climate investments are negatively correlated with the overall market rate of return. Use of this lower value also responds to certain judgments using the prescriptiv e or normative approach and to ethical objections that have been raised about rates of 3 percent or higher.

Our general approach to estimating SCC values is to run the three integrated assessment models (FUND, DICE, and PAGE) using t he following inputs agreed upon by the interagency

group:

**•** A Roe and Baker distribution for the climate sensitivity parameter bounded between 0 and 10 with a median of 3 °C and a cumulative probability between 2 and 4.5 °C of two

thirds.

**•** Five sets of GDP, p opulation and carbon emissions trajectories based on EMF

- 22.

**•** Constant annual discount rates of 2.5, 3, and 5 percent.

Because the climate sensitivity parameter is modeled probabilistically, and because PAGE and FUND incorporate uncertainty in other model parameters, the final output from each model run is a distribution over the SCC in year t

.

For each of the IAMS, the basic computational steps for calculating the SCC in a particular year t

are:

1. Input the path of emissions, GDP, and population from the s elected EMF

- 22 scenarios, and the extrapolations based on these scenarios for post

- 2100 years.

2. Calculate the temperature effects and (consumption

- equivalent) damages in each year resulting from the baseline path of emissions.

a. In PAGE, the consumption

- equivalent damages in each period are calculated as a fraction of the EMF GDP forecast, depending on the

26 Calculations done by Pizer et al. using the original simulation program from Newell and Pizer (2003).15

- A

- 28 temperature in that period relative to the pre

- industrial average temperature in each region.

b. In FUND, damages in each perio d depend on both the level and the rate of temperature change in that period.

c. In DICE, temperature affects both consumption and investment, so we first adjust the EMF GDP paths as follows: Using the Cobb

- Douglas production function with the DICE2007 param eters, we extract the path of exogenous technical change implied by the EMF GDP and population paths, then we recalculate the baseline GDP path taking into account climate damages resulting from the baseline emissions path.

3. Add an additional unit of car bon emissions in year t. (The exact unit varies by model.)

4. Recalculate the temperature effects and damages expected in all years beyond t resulting from this adjusted path of emissions, as in step 2.

5. Subtract the damages computed in step 2 from those i n step 4 in each year. (DICE is run in 10 year time steps, FUND in annual time steps, while the time steps in PAGE vary.)

6. Discount the resulting path of marginal damages back to the year of emissions using the agreed upon fixed discount rates.

7. Calculat e the SCC as the net present value of the discounted path of damages computed in step 6, divided by the unit of carbon emissions used to shock the models in step 3.

8. Multiply by 12/44 to convert from dollars per ton of carbon to dollars per ton of

CO 2 (2 007 dollars) in DICE and FUND. (All calculations are done in tons of CO 2 in PAGE).

The steps above were repeated in each model for multiple future years to cover the time horizons anticipated for upcoming rulemaking analysis. To maintain consistency acro ss the three IAMs, climate damages are calculated as lost consumption in each future year.

It is important to note that each of the three models has a different default end year. The default time horizon is 2200 for PAGE, 2595 for DICE, and 3000 for the latest version of FUND.

This is an issue for the multi

- model approach because differences i n SCC estimates may arise simply due to the model time horizon. Many consider 2200 too short a time horizon because it could miss a significant fraction of damages under certain assumptions about the growth of marginal damages and discounting, so each mod el is run here through 2300. This step required a small adjustment in the PAGE model only. This step also required assumptions about GDP, population, and greenhouse gas emission trajectories after 2100, the last year for which these

data are available fr om the EMF

- 22 models. (A more detailed discussion of these assumptions is included in the Appendix.)15

- A

- 29 This exercise produces 45 separate distributions of the SCC for a given year, the product of 3 models, 3 discount rates, and 5 socioeconomic scenarios. This is clearly too many separate distributions for consideration in a regulatory impact analysis.

To produce a range of plausible estimates that still reflects the uncertainty in the estimation exercise, the distributions from each of the models and scenarios are equally weighed and combined to produce three separate probability distributions for SCC in a given year, one for each assumed discount rate. These distributions are then used to define a range of point estimates for the global SCC. In this way, no integrated assessment model or socioeconomic scenario is given greater weight than another. Becau se the literature shows that the SCC is quite sensitive to assumptions about the discount rate, and because no consensus exists on the appropriate rate to use in an intergenerational context, we present SCCs based on the average values across models

and so cioeconomic scenarios for each discount rate.

The interagency group selected four SCC values for use in regulatory analyses. Three values are based on the average SCC across models and socio

- economic and emissions scenarios at the 2.5, 3, and 5 percent discount rates. The fourth value is included to represent the higher

than

- expected economic impacts from climate change further out in the tails of the SCC distribution. For this purpose, we use the SCC value for the 95 th percentile at a 3 percent discou nt rate. ( The full set of distributions by model and scenario combination is included in the Appendix.) As noted above, the 3 percent discount rate is the central value, and so the central value that emerges is the average SCC across models at the 3 perc ent discount rate. For purposes of capturing the uncertainties involved in regulatory impact analysis, we emphasize the importance and value of considering the full range.

As previously discussed, low probability, high impact events are incorporated into the SCC values through explicit consideration of their effects in two of the three models as well as the use of a probability density function for equilibrium climate sensitivity. Treating climate sensitivity probabilistically results in more high temper ature outcomes, which in turn lead to higher projections of damages. Although FUND does not include catastrophic damages (in contrast to the other two models), its probabilistic treatment of the equilibrium climate sensitivity parameter will directly affe ct the non

- catastrophic damages that are a function of the rate of temperature change.

In Table 16A.5.1 , we begin by presenting SCC estimates for 2010 by model, scenario, and discount rate to illustrate the variability in the SCC across each of these inpu t parameters. As expected, higher discount rates consistently result in lower SCC values, while lower discount rates result in higher SCC values for each socioeconomic trajectory. It is also evident that there

are differences in the SCC estimated across the three main models. For these estimates, FUND produces the lowest estimates, while PAGE generally produces the highest estimates.15

- A

- 30 Table 15

- A.5.1 Disaggregated Social Cost of CO 2 Values by Model, Socio

- Economic Trajectory, and Discount Rate for 2010 (in 2007 dollars )

Discount rate: 5% 3% 2.5% 3%

Model Scenario Avg Avg Avg 95thDICE IMAGE 10.8 35.8 54.2 70.8

MERGE 7.5 22.0 31.6 42.1

Message 9.8 29.8 43.5 58.6

MiniCAM 8.6 28.8 44.4 57.9

550 Average 8.2 24.9 37.4 50.8PAGE IMAGE 8.3 39.5 65.5 142.4

MERGE 5.2 22.3 34.6 82.4

Message 7.2 30.3 49.2 115.6

MiniCAM 6.4 31.8 54.7 115.4

550 Average 5.5 25.4 42.9 104.7FUND IMAGE

- 1.3 8.2 19.3 39.7

MERGE

- 0.3 8.0 14.8 41.3

Message

- 1.9 3.6 8.8 32.1

MiniCAM

- 0.6 10.2 22.2 42.6

550 Average

- 2.7

- 0.2 3.0 19.4

These results are not surprising when compared to the estimates in the literature for the latest versions of each model. For example, adjusting the values from the literature that were used to develop interim SCC values to 2007 dollars for the year 2010 (assuming, as we did for the interim process, that SCC grows at 3 percent per year), FUND yields SCC estimates at or near zero for a 5 percent discount rate and around $9 per ton for a 3 percent discount rate. There are far fewer estimates using the lates t versions of DICE and PAGE in the literature: Using similar adjustments to generate 2010 estimates, we calculate a SCC from DICE (based on Nordhaus 2008) of around $9 per ton for a 5 percent discount rate, and a SCC from PAGE (based on Hope 2006, 2008) cl ose to $8 per ton for a 4 percent discount rate. Note that these comparisons are only approximate since the literature generally relies on Ramsey discounting,

while we have assumed constant discount rates. 27

27 Nordhaus (2008) runs DICE2007 with ρ = 1.5 and η = 2. The default approach in PAGE2002 (version 1.4epm) treats ρ and η as random parameters, specified using a triangular distribution such that the min, mode, and max = 0.1, 1, and 2 for ρ, and 0.5, 1, and 2 for η, respectively. The FUND default value fo r η is 1, and Tol generates SCC estimates for values of ρ = 0, 1, and 3 in many recent papers (e.g. Anthoff et al. 2009). The path of per

- capita consumption growth, g, varies over time but is treated deterministically in two of the three models. In DICE, g is15

- A

- 31 The SCC estimates from FUND are sensitive to dif ferences in emissions paths but relatively insensitive to differences in GDP paths across scenarios, while the reverse is true for DICE and PAGE. This likely occurs because of several structural differences among the models. Specifically in DICE and PAGE , the fraction of economic output lost due to climate damages increases with the level of temperature alone, whereas in FUND the fractional loss also increases with the rate of temperature change. Furthermore, in FUND increases in income over time

decreas e vulnerability to climate change (a form of adaptation), whereas this does not occur in DICE and PAGE. These structural differences among the models make FUND more sensitive to the path of emissions and less sensitive to GDP compared to DICE and PAGE.

Figure 16A.5.2 shows that IMAGE has the highest GDP in 2100 while MERGE Optimistic has the lowest. The ordering of global GDP levels in 2100 directly corresponds to the rank ordering of SCC for PAGE and DICE. For FUND, the correspondence is less clear, a result that is to be expected given its less direct relationship between its damage function and GDP.

Figure 15

- A.5.1 Level of Global GDP across EMF Scenarios

Table 16A.5.2 shows the four selected SCC values in five year increments from 2010 to 2050. Values for 2010, 2020, 2040, and 2050 are calculated by first combining all outputs (10,000 estimates per model run) from all scenarios and models for a given discount rate. V alues for the years in between are calculated using a simple linear interpolation.

endogenous. Under Ramsey discounting, as economic growth slows in the future, the large damages from climate change that occur far out in the future are discounted at a lower rate than impacts that occur in the nearer term. 0 50 100 150 200 250 300 350 400 450

2000 2010 2020 2030 2050 2100 Global

GDP (trillions

of U.S.
dollars) IMAGE

MERGE Optimistic

MESSAGE

MiniCAM

3.7 W/m2 radiative forcing15

- A

- 32 Table 15

- A.5.2 Social Cost of CO 2 , 2010

– 2050 (in 2007 dollars)

Discount 5% 3% 2.5% 3%

Year Avg Avg Avg 95th

2010 4.7 21.4 35.1 64.9

2015 5.7 23.8 38.4 72.8

2020 6.8 26.3 41.7 80.7

2025 8.2 29.6 45.9 90.4

2030 9.7 32.8 50.0 100.0

2035 11.2 36.0 54.2 109.7

2040 12.7 39.2 58.4 119.3

2045 14.2 42.1 61.7 127.8

2050 15.7 44.9 65.0 136.2

The SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change. Note that this approach allows us to estimate the growth rate of the SCC directly using DICE, PAGE, and FUND rather than assuming a constant annual growth rate as was done for the interim estimates (using 3 percent). This helps to ensure that the estimates are internally consistent with other modeling assumption s. Table 16A.5.3 illustrates how the growth

rate for these four SCC estimates varies over time. The full set of annual SCC estimates between 2010 and 2050 is reported in the Appendix.

Table 15

- A.5.3 Changes in the Average Annual Growth Rates of SCC Estimates between

20 10 and 2050

Average Annual Growth Rate (%) 5% 3% 2.5% 3.0%
Avg Avg Avg 95th

2010

- 2020 3.6% 2.1% 1.7% 2.2%

2020

- 2030 3.7% 2.2% 1.8% 2.2%

2030

- 2040 2.7% 1.8% 1.6% 1.8%

2040

- 2050 2.1% 1.4% 1.1% 1.3%

While the SCC estimate grows over time, the future monetized value of emissions reductions in each year (the SCC in year t multiplied by the change in emissions in year t ) must be discounted to the present to determine its total net present value for use i n regulatory analysis. Damages from future emissions should be discounted at the same rate as that used to calculate the SCC estimates themselves to ensure internal consistency

— i.e., future damages from climate change, whether they result from emissions t oday or emissions in a later year, should be discounted using the same rate. For example, climate damages in the year 2020 that are15

- A

- 33 calculated using a SCC based on a 5 percent discount rate also should be discounted back to the analysis year using a 5 perc ent discount rate. 28

15

- A.6 LIMITATIONS OF THE A NALYSIS

As noted, any estimate of the SCC must be taken as provisional and subject to further refinement (and possibly significant change) in accordance with evolving scientific, economic,

and ethical understandin gs. During the course of our modeling, it became apparent that there are several areas in particular need of additional exploration and research. These caveats, and additional observations in the following section, are necessary to consider when interpret ing and applying the SCC estimates.

Incomplete treatment of non

- catastrophic damages. The impacts of climate change are expected to be widespread, diverse, and heterogeneous. In addition, the exact magnitude of these impacts is uncertain because of the inherent complexity of climate processes, the economic behavior of current and future p opulations, and our inability to accurately forecast technological change and adaptation. Current IAMs do not assign value to all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature (so me of which are discussed above) because of lack of precise information on the nature of damages and because the science incorporated into these models understandably lags behind the most recent research. Our ability to quantify and monetize impacts will undoubtedly improve with time. But it is also likely that even in future applications, a number of potentially significant damage categories will remain non

- monetized. (Ocean acidification is one example of a potentially large damage from CO 2 emissions not quantified by any of the three models. Species and wildlife loss is another example that is exceedingly difficult to monetize.)

Incomplete treatment of potential catastrophic damages. There has been considerable

recent discussion of the risk of catastr ophic impacts and how best to account for extreme scenarios, such as the collapse of the Atlantic Meridional Overturning Circulation or the West Antarctic Ice Sheet, or large releases of methane from melting permafrost and warming oceans. Weitzman (2009) suggests that catastrophic damages are extremely large

— so large, in fact, that the damages from a low probability, catastrophic event far in the future dominate the effect of the discount rate in a present value calculation and result in an infinite willin gness

- to

- pay for mitigation today. However, Nordhaus (2009) concluded that the conditions under which Weitzman's results hold “are limited and do not apply to a wide range of potential uncertain

scenarios."

Using a simplified IAM, Newbold and Daigneaul t (2009) confirmed the potential for large catastrophe risk premiums but also showed that the aggregate benefit estimates can be highly sensitive to the shapes of both the climate sensitivity distribution and the damage function at high temperature changes

. Pindyck (2009) also used a simplified IAM to examine high

-

28 However, it is possible that other benefits or costs of proposed regulations unrelated to CO 2 emissions will be discounted at rates that differ from those used to develop the SCC estimates.15

- A

- 34 impact low

- probability risks, using a right

- skewed gamma distribution for climate sensitivity as well as an uncertain damage coefficient, but in most cases found only a modest risk premium.

Give n this difference in opinion, further research in this area is needed before its practical significance can be fully understood and a reasonable approach developed to account for such risks in regulatory analysis. (The next section discusses the scientifi c evidence on catastrophic impacts in greater detail.)

Uncertainty in extrapolation of damages to high temperatures: The damage functions in these IAMs are typically calibrated by estimating damages at moderate temperature increases (e.g., DICE was cali brated at 2.5 °C) and extrapolated to far higher temperatures by assuming that damages increase as some power of the temperature change. Hence, estimated damages are far more uncertain under more extreme climate change scenarios.

Incomplete treatment of adaptation and technological change: Each of the three integrated assessment models used here assumes a certain degree of low

- or no

- cost adaptation. For instance, Tol assumes a great deal of adaptation in FUND, including widespread reliance on

air co nditioning ; so much so, that the largest single benefit category in FUND is the reduced electricity costs from not having to run air conditioning as intensively (NRC 2009).

Climate change also will increase returns on investment to develop technologie s that allow individuals to cope with adverse climate conditions, and IAMs to do not adequately account for this directed technological change. 29 For example, scientists may develop crops that are better able to withstand higher and more variable temperatu res. Although DICE and FUND have both calibrated their agricultural sectors under the assumption that farmers will change land use practices in response to climate change (Mastrandrea, 2009), they do not take into account technological changes that lower the cost of this adaptation over time. On the other hand, the calibrations do not account for increases in climate variability, pests, or diseases, which could make adaptation more difficult than assumed by the IAMs for a given temperature change.
Hence, models do not adequately account for potential adaptation or technical change that might alter the emissions pathway and resulting damages. In this respect, it is difficult to determine whether the incomplete treatment of adaptation and technological cha nge in these IAMs under or overstate the likely damages.

Risk aversion: A key question unanswered during this interagency process is what to assume about relative risk aversion with regard to high

- impact outcomes. These calculations do

not take into account the possibility that individuals may have a higher willingness to pay to

reduce the likelihood of low

- probability, high

- impact damages than they do to reduce the likelihood of higher

- probability but lower

- impact damages with the same expected cost. (The

inclusion of the 95 th percentile estimate in the final set of SCC values was largely motivated by this concern.) If individuals do show such a higher willingness to pay, a further question is whether that fact should be taken into account for regul atory policy. Even if individuals are not

risk

- averse for such scenarios, it is possible that regulatory policy should include a degree of

risk

- aversion.

29 However these research dollars will be diverted from whatever their next best use wou ld have been in the absence of climate change (so productivity/GDP would have been still higher).15

- A

- 35 Assuming a risk

- neutral representative agent is consistent with OMB’s Circular A

- 4,

which advises t hat the estimates of benefits and costs used in regulatory analysis are usually based on the average or the expected value and that “emphasis on these expected values is appropriate as long as society is ‘risk neutral’ with respect to the regulatory altern atives. While this may not always be the case, [analysts] should in general assume ‘risk neutrality’ in [their] analysis.”

Nordhaus (2008) points to the need to explore the relationship between risk and income in the context of climate change across mo dels and to explore the role of uncertainty regarding various parameters in the results. Using FUND, Anthoff et al (2009) explored the sensitivity of the SCC to Ramsey equation parameter assumptions based on observed behavior. They conclude

that “the assu med rate of risk aversion is at least as important as the assumed rate of time preference in determining the social cost of carbon.” Since Circular A

- 4 allows for a different assumption on risk preference in regulatory analysis if it is adequately justifie d, we plan to continue investigating this issue.

15

- A.7 A FURTHER DISCUSSION OF CATASTROPHIC IMPA CTS AND

DAMAGE FUNCTIONS

As noted above, the damage functions underlying the three IAMs used to estimate the SCC may not capture the economic effects of all possibl e adverse consequences of climate change and may therefore lead to underestimates of the SCC (Mastrandrea 2009). In particular, the models’ functional forms may not adequately capture: (1) potentially discontinuous “tipping point” behavior in Earth system s, (2) inter

- sectoral and inter

- regional interactions, including global security impacts of high

- end warming, and (3) limited near

- term substitutability between damage to natural systems and increased consumption.

It is the hope of the interagency grou p that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory analysis by the Federal government will continue to evolve with improvements in modeling. In the meantime, we

discuss some of the availabl e evidence.

Extrapolation of climate damages to high levels of warming

The damage functions in the models are calibrated at moderate levels of warming and should therefore be viewed cautiously when extrapolated to the high temperatures found in the

uppe r end of the distribution. Recent science suggests that there are a number of potential climatic “tipping points” at which the Earth system may exhibit discontinuous behavior with potentially severe social and economic consequences (e.g., Lenton et al, 20 08, Kriegler et al., 2009). These tipping points include the disruption of the Indian Summer Monsoon, dieback of the Amazon Rainforest and boreal forests, collapse of the Greenland Ice Sheet and the West Antarctic Ice Sheet, reorganization of the Atlantic Meridional Overturning Circulation, strengthening of El Niño

- Southern Oscillation, and the release of methane from melting permafrost. Many of these tipping points are estimated to have thresholds between about 3 °C15

- A

- 36 and 5 °C (Lenton et al., 2008). Proba bilities of several of these tipping points were assessed through expert elicitation in 2005

– 2006 by Kriegler et al. (2009); results from this study are highlighted in Table 16A.7.1 . Ranges of probability are averaged across core experts on each topic.

As previously mentioned, FUND does not include potentially catastrophic effects. DICE assumes a small probability of catastrophic damages that increases with increased warming, but the damages from these risks are incorporated as expected values (i.e., ig noring potential risk aversion). PAGE models catastrophic impacts in a probabilistic framework (see Figure 16A.4.1 ), so the high

- end output from PAGE potentially offers the best insight into the SCC if the world were to experience catastrophic climate chan ge. For instance, at the 95 th percentile and a 3 percent discount rate, the SCC estimated by PAGE across the five socio

- economic and emission trajectories of $113 per ton of CO 2 is almost double the value estimated by DICE, $58 per ton in

2010. We cannot evaluate how well the three models account for catastrophic or non

catastrophic impacts, but this estimate highlights the sensitivity of SCC values in the tails of the distribution to the assumptions made about catastrophic impacts.

Table 15

- A.7.1 Probabilities of Var ious Tipping Points from Expert Elicitation

Possible Tipping Points Duration before effect is fully realized (in years) Additional Warming by 2100

0.5

- 1.5 C 1.5

- 3.0 C 3

- 5 C

Reorganization of Atlantic Meridional Overturning Circulation about 100 0

- 18% 6

- 39% 18

- 67%

Greenland Ice Sheet collapse at least 300 8

- 39% 33

- 73% 67

- 96%

West Antarctic Ice Sheet collapse at least 300 5

- 41% 10

- 63% 33

- 88%

Dieback of Amazon rainforest about 50 2

- 46% 14

- 84% 41

- 94%

Strengthening of El Niño

- Southern Oscillation about 100 1

- 13% 6

- 32% 19

- 49%

Dieback of boreal forests about 50 13

- 43% 20

- 81% 34

- 91%

Shift in Indian Summer Monsoon about 1 Not formally assessed

Release of methane from melting permafrost Less than 100 Not formally assessed.

PAGE treats the possibility of a catastrophic event probabilistically, while DICE treats it deterministically (that is, by adding the expected value of the damage from a catastrophe to the aggregate damage function). In part, this results in different pro babilities being assigned to a catastrophic event across the two models. For instance, PAGE places a probability near zero on a catastrophe at 2.5 °C warming, while DICE assumes a 4 percent probability of a catastrophe at 2.5 °C. By comparison, Kriegler e t al. (2009) estimate a probability of at least 16

- 36 percent of crossing at least one of their primary climatic tipping points in a scenario with temperatures

about 2

- 4 °C warmer than pre

- Industrial levels in 2100.15

- A

- 37 It is important to note that crossin g a climatic tipping point will not necessarily lead to an economic catastrophe in the sense used in the IAMs. A tipping point is a critical threshold across which some aspect of the Earth system starts to shifts into a qualitatively different state (for

i nstance, one with dramatically reduced ice sheet volumes and higher sea levels). In the IAMs, a catastrophe is a low

- probability environmental change with high economic impact.

Failure to incorporate inter

- sectoral and inter

- regional interactions

The da mage functions do not fully incorporate either inter

- sectoral or inter

- regional interactions. For instance, while damages to the agricultural sector are incorporated, the effects of changes in food supply on human health are not fully captured and depend on the modeler’s choice of studies used to calibrate the IAM. Likewise, the effects of climate damages in one region of the world on another region are not included in some of the models (FUND includes the effects of migration from sea level rise). These inter

- regional interactions, though difficult to quantify, are the basis for climate

- induced national and economic security concerns (e.g., Campbell et al., 2007; U.S. Department of Defense 2010) and are particularly worrisome at higher levels of warming. High

- end warming scenarios, for instance, project water scarcity affecting 4.3

- 6.9 billion people by 2050, food scarcity affecting about 120 million additional people by 2080, and the creation of millions of climate refugees (Easterling et al., 2007; Camp bell et al., 2007).

Imperfect substitutability of environmental amenities

Data from the geological record of past climate changes suggests that 6 °C of warming may have severe consequences for natural systems. For instance, during the Paleocene

- Eocene Thermal Maximum about 55.5 million years ago, when the Earth experienced a geologically rapid release of carbon associated with an approximately 5 °C increase in global mean temperatures, the effects included shifts of about 400

- 900 miles in the range of p lants (Wing et al., 2005), and dwarfing of both land mammals (Gingerich, 2006) and soil fauna (Smith et al., 2009).

The three IAMs used here assume that it is possible to compensate for the economic consequences of damages to natural systems through incr eased consumption of non

- climate goods, a common assumption in many economic models. In the context of climate change, however, it is possible that the damages to natural systems could become so great that no increase in consumption of non

- climate goods wo uld provide complete compensation (Levy et al., 2005). For instance, as water supplies become scarcer or ecosystems become more fragile

and less bio

- diverse, the services they provide may become increasingly more costly to replace. Uncalibrated attempts to incorporate the imperfect substitutability of such amenities into IAMs (Sterner and Persson, 2008) indicate that the optimal degree of emissions abatement can be considerably greater than is commonly recognized.15

- A

- 38 15

- A.8 CONCLUSION

The interagency group selec ted four SCC estimates for use in regulatory analyses. For 2010, these estimates are $5, $21, $35, and $65 (in 2007 dollars). The first three estimates are based on the average SCC across models and socio

- economic and emissions scenarios at the 5, 3,

and 2 .5 percent discount rates, respectively. The fourth value is included to represent the higher

than

- expected impacts from temperature change further out in the tails of the SCC distribution. For this purpose, we use the SCC value for the 95 th percentile at a 3 percent discount rate. The central value is the average SCC across models at the 3 percent discount rate. For purposes of capturing the uncertainties involved in regulatory impact analysis, we emphasize the importance and value of considering the fu ll range. These SCC estimates also grow over time. For instance, the central value increases to $24 per ton of CO 2 in 2015 and $26 per ton of CO 2 in 2020.

We noted a number of limitations to this analysis, including the incomplete way in which the integrated assessment models capture catastrophic and non

- catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in t he extrapolation of damages to high temperatures, and assumptions regarding risk aversion. The limited amount of research linking climate impacts to economic damages makes this modeling exercise even more difficult. It is the hope of the interagency grou p that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory analysis by the Federal government will continue to evolve with improvements in modeling.15

- A

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- 44 15

- A.9 A NNEX

Table 15

- A.9.1 Annual SCC Values: 2010

– 2050 (in 2007 dollars)

Discount Rate 5% 3% 2.5% 3%

Year Avg Avg Avg 95th

2010 4.7 21.4 35.1 64.9

2011 4.9 21.9 35.7 66.5

2012 5.1 22.4 36.4 68.1

2013 5.3 22.8 37.0 69.6

2014 5.5 23.3 37.7 71.2

2015 5.7 23.8 38.4 72.8

2016 5.9 24.3 39.0 74.4

2017 6.1 24.8 39.7 76.0

2018 6.3 25.3 40.4 77.5

2019 6.5 25.8 41.0 79.1

2020 6.8 26.3 41.7 80.7

2021 7.1 27.0 42.5 82.6

2022 7.4 27.6 43.4 84.6

2023 7.7 28.3 44.2 86.5

2024 7.9 28.9 45.0 88.4

2025 8.2 29.6 45.9 90.4

2026 8.5 30.2 46.7 92.3

2027 8.8 30.9 47.5 94.2

2028 9.1 31.5 48.4 96.2

2029 9.4 32.1 49.2 98.1

2030 9.7 32.8 50.0 100.0

2031 10.0 33.4 50.9 102.0

2032 10.3 34.1 51.7 103.9

2033 10.6 34.7 52.5 105.8

2034 10.9 35.4 53.4 107.8

2035 11.2 36.0 54.2 109.7

2036 11.5 36.7 55.0 111.6

2037 11.8 37.3 55.9 113.6

2038 12.1 37.9 56.7 115.5

2039 12.4 38.6 57.5 117.4

2040 12.7 39.2 58.4 119.3

2041 13.0 39.8 59.0 121.0

2042 13.3 40.4 59.7 122.7

2043 13.6 40.9 60.4 124.4

2044 13.9 41.5 61.0 126.1

2045 14.2 42.1 61.7 127.8

2046 14.5 42.6 62.4 129.4

2047 14.8 43.2 63.0 131.1

2048 15.1 43.8 63.7 132.8

2049 15.4 44.4 64.4 134.5

2050 15.7 44.9 65.0 136.2

This Appendix also provides additional technical information about the non

- CO 2 emission projections used in the modeling and the method for extrapolating emissions forecasts through 2300, and shows the full distribution of 2010 SCC estimates by model and scenario

combination.15

- A

- 45 15

- A.9.1 Other (non

- CO2) gases

In addition to fossil and industrial CO 2 emissions, each EMF scenario provides projections of methane (CH 4 ), nitrous oxide (N 2 O), fluorinated gases, and net land use CO 2 emissions to 2100. These assumptions are used in all three IAMs while retaining each model’s

default radiative forcings (RF) due to other factors (e.g., aerosols and other gases). Specifically,

to obtain the RF associated with the non

- CO 2 EMF emissions only, we calculated the RF associated with the EMF atmospheric CO 2 concentrations and subtracted them from the EMF

total RF. 30 This approach respects the EMF scenarios as much as possible and at the same time takes account of those components not included in the EMF projections. Since each model treats

non

- CO 2 gases diff erently (e.g., DICE lumps all other gases into one composite exogenous input), this approach was applied slightly differently in each of the models.

FUND : Rather than relying on RF for these gases, the actual emissions from each

scenario were used in FU ND. The model default trajectories for CH 4 , N 2 0, SF 6 , and the CO 2 emissions from land were replaced with the EMF values.

PAGE : PAGE models CO 2 , CH 4 , sulfur hexafluoride (SF 6 ), and aerosols and contains an "excess forcing" vector that includes the RF f or everything else. To include the EMF values, we

removed the default CH 4 and SF 6 factors 31 , decomposed the excess forcing vector, and constructed a new excess forcing vector that includes the EMF RF for CH 4 , N 2 0, and fluorinated gases, as well as the mode l default values for aerosols and other factors. Net land use CO 2 emissions were added to the fossil and industrial CO 2 emissions pathway.

DICE : DICE presents the greatest challenge because all forcing due to factors other than

industrial CO 2 emissions is embedded in an exogenous non

- CO 2 RF vector. To decompose this exogenous forcing path into EMF non

- CO 2 gases and other gases, we relied on the references in DICE2007 to the Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report (AR 4) and the discussion of aerosol forecasts in the IPCC’s Third Assessment Report (TAR) and in AR4, as explained below. In DICE2007, Nordhaus assumes that exogenous forcing from all non

- CO 2 sources is

- 0.06 W/m 2 in 2005, as reported in AR4, and increases linearly to 0.3 W/m 2 in 2105, based on GISS projections, and then stays constant after that time.

According to AR4, the RF in 2005 from CH 4 , N 2 0, and halocarbons (approximately

similar to the F

- gases in the EMF

- 22 scenarios) was 0.48 + 0.16 + 0.34 = 0.98 W/m 2 and RF

from total aerosols was

- 1.2 W/m 2 . Thus, the

- .06 W/m 2 non

- CO 2 forcing in DICE can be decomposed into: 0.98 W/m 2 due to the EMF non

- CO 2 gases,

- 1.2 W/m 2 due to aerosols, and the remainder, 0.16 W/m 2 , due to other residual forcing.

30 Note EMF did not provide CO 2 concentrations for the IMAGE reference scenario. Thus, for this scenario, we fed the fossil, industrial and land CO 2 emissions into MAGICC (considered a "neutral arbiter" model, which is tuned to emulate the major global climate models) and the resulting CO 2 concentrations were used. Note also that MERGE assumes a neutral biosphere so net land CO 2 emissions are set to zero for a ll years for the MERGE Optimistic reference scenario, and for the MERGE component of the average 550 scenario (i.e., we add up the land use emissions from the other three models and divide by 4).

31 Both the model default CH 4 emissions and the initial atmos pheric CH 4 is set to zero to avoid double counting the effect of past CH 4 emissions.15

- A

- 46 For subsequent years, we calculated the DICE default RF from aerosols and other non

CO 2 gases based on the following two assumptions:

(1) RF from aerosols declines linearly from 2005 to 2100 at the rate projected by the TAR and then stays constant thereafter, and (2) With respect to RF from non

- CO 2 gases not included in the EMF

- 22 scenarios, the share

of non

- aerosol RF matches the share implicit in the AR4 summary statistics cited above and

remains constant over time

.

Assumption (1) means that the RF from aerosols in 2100 equals 66 percent of that in 2000, which is the fraction of the TAR projection of total RF from aerosols (including sulfates, black carbon, and organic carbon) in 2100 vs. 2000 under the A1B SRES emissions scenario. Since the SRES marker scenarios were not updated for the AR4, the TAR provides the most recent IPCC projection of aerosol forcing. We rely on the A1B projection from the TAR because it provides one of the lower aerosol forecasts amon g the SRES marker scenarios and is more consistent with the AR4 discussion of the post

- SRES literature on aerosols:

Aerosols have a net cooling effect and the representation of aerosol and aerosol precursor emissions, including sulphur dioxide, black car bon and organic carbon, has improved in the

post

- SRES scenarios. Generally, these emissions are projected to be lower than reported in SRES. {WGIII 3.2, TS.3, SPM}. 32

Assuming a simple linear decline in aerosols from 2000 to 2100 also is more consistent

w ith the recent literature on these emissions. For example, Figure A1 shows that the sulfur dioxide emissions peak over the short

- term of some SRES scenarios above the upper bound

estimates of the more recent scenarios. 33 Recent scenarios project sulfur em issions to peak earlier and at lower levels compared to the SRES in part because of new information about present and planned sulfur legislation in some developing countries, such as India and China. 34
The lower bound projections of the recent literature h ave also shifted downward slightly compared to the SRES scenario (IPCC 2007).

With these assumptions, the DICE aerosol forcing changes from

- 1.2 in 2005 to

- 0.792 in

2105 W/m 2 ; forcing due to other non

- CO 2 gases not included in the EMF scenarios decline s from

0.160 to 0.153 W/m 2

.

32 AR4 Synthesis Report, p. 44, http://www.ipcc.ch/pdf/assessment

- report/ar4/syr/ar4_syr.pdf

33 S ee Smith, S.J., R. Andres, E. Conception, and J. Lurz, 2004: Historical sulfur dioxide emissions, 1850

- 2000: methods and results. Joint Global Research Institute, College Park, 14 pp.

34 See Carmichael, G., D. Streets, G. Calori, M. Amann, M. Jacobson, J. H ansen, and H. Ueda, 2002: Changing trends in sulphur emissions in Asia: implications for acid deposition, air pollution, and climate. Environmental Science and Technology, 36(22):4707

- 4713; Streets, D., K. Jiang, X. Hu, J. Sinton, X.

- Q. Zhang, D. Xu, M.

J acobson, and J. Hansen, 2001: Recent reductions in China’s greenhouse gas emissions. Science, 294(5548): 1835

- 1837.15

- A

- 47 . Figure 15

- A.9.2 Sulphur Dioxide Emission Scenarios

Notes: Thick colored lines depict the four SRES marker scenarios and black dashed lines show the median, 5 th and 95 th percentile of the frequency distribution for the full ensemble of 40 SRES scenarios. The blue area (and the thin dashed lines in blue) illustrates individual scenarios and the range of Smith et al. (2004). Dotted lines indicate

the minimum and maximum of SO 2 emissions scenarios developed pre

- SRES. Source: IPCC (2007), AR4 WGIII 3.2, http://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch3

- ens3

- 2

- 2

- 4.html

.

Although other approaches to decomposing the DICE exogenous forcing vector are possible, initial sensitivity analysis suggests that the differences among reasonable alternative approaches are likely to be minor. For example, adjusting the TAR aerosol projection above to assume that aerosols will be maintained at 2000 levels through 2100 reduces average SCC values (for 2010) by approximately 3 percent (or less than $2); assuming all aerosols are phased out by 2100 increases average 2010 SCC values by 6

- 7 percent (or $0.50

- $3)

– depending on the discount rate. These differences increase slightly for SCC values in later years but are still well within 10 percent of each other as far out as 2050.

Finally, as in PAGE, the EMF net land use CO 2 emissions are added to the fos sil and

industrial CO 2 emissions pathway.

15

- A.9.2 Extrapolating Emissions Projections to 2300

To run each model through 2300 requires assumptions about GDP, population, greenhouse gas emissions, and radiative forcing trajectories after 2100, the last year for which these projections are available from the EMF

- 22 models. These inputs were extrapolated from

2100 to 2300 as follows:

1. Population growth rate declines linearly, reaching zero in the year 2200. 2. GDP/ per capita growth rate declines linearly, re aching zero in the year 2300.15

- A

- 48 3. The decline in the fossil and industrial carbon intensity (CO 2 /GDP) growth rate over

2090

- 2100 is maintained from 2100 through 2300.

4. Net land use CO 2 emissions decline linearly, reaching zero in the year 2200.

5. Non

- CO 2 radiative forcing remains constant after 2100.

Long run stabilization of GDP per capita was viewed as a more realistic simplifying assumption than a linear or exponential extrapolation of the pre

- 2100 economic growth rate of

each EMF scenario. This is based on the idea that increasing scarcity of natural resources and the degradation of environmental sinks available for assimilating pollution from economic production activities may eventually overtake the rate of technological progress. Thus, the

ov erall rate of economic growth may slow over the very long run. The interagency group also considered allowing an exponential decline in the growth rate of GDP per capita. However, since this would require an additional assumption about how close to zero the growth rate would get by 2300, the group opted for the simpler and more transparent linear extrapolation to zero by

2300.

The population growth rate is also assumed to decline linearly, reaching zero by 2200. This assumption is reasonably consistent with the United Nations long run population forecast, which estimates global population to be fairly stable after 2150 in the medium scenario (UN 2004). 35 The resulting range of EMF population trajectories (Figure A2) also encompass the

UN medi um scenario forecasts through 2300

– global population of 8.5 billion by 2200, and 9 billion by 2300.

Maintaining the decline in the 2090

- 2100 carbon intensity growth rate (i.e., CO 2 per dollar of GDP) through 2300 assumes that technological improvements and innovations in the areas of energy efficiency and other carbon reducing technologies (possibly including currently unavailable methods) will continue to proceed at roughly the sam e pace that is projected to occur towards the end of the forecast period for each EMF scenario. This assumption implies that total cumulative emissions in 2300 will be between 5,000 and 12,000 GtC, which is within the range of the total potential global c arbon stock estimated in the literature.

Net land use CO 2 emissions are expected to stabilize in the long run, so in the absence of any post 2100 projections, the group assumed a linear decline to zero by 2200. Given no a priori reasons for assuming a long run increase or decline in non

- CO 2 radiative forcing, it is assumed to remain at the 2100 levels for each EMF scenario through 2300.

Figures A2

- A7 show the paths of global population, GDP, fossil and industrial CO 2 emissions, net land CO 2 emissio ns, non

- CO 2 radiative forcing, and CO 2 intensity (fossil and

industrial CO 2 emissions/GDP) resulting from these assumptions.

35 United Nations. 2004. World Population to 2300

. http://www.un.org/esa/population/publications/longrange2/worldpop2300final.pdf15

- A

- 49 Figure 15

- A.9.3 Global Population, 2000

- 2300 (Post

- 2100 extrapolations assume the population growth rate changes linearly to reach a zero gro wth rate by 2200.)

Note: In the fifth scenario, 2000

- 2100 population is equal to the average of the population under the 550 ppm CO 2 e, full

- participation, not

- to

- exceed scenarios considered by each of the four

models. 5.5 6.5 7.5 8.5 9.5 10.5 11.5

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scenario

ExtrapolationsGlobal Population [billion]

Year15

- A

- 50 Figure 15

- A.9.4 World GDP, 2000

- 2300 (Post

- 2100 extrapolations assume GDP per capita growth declines linearly, reaching zero in the year 2300)

Note: In the fifth scenario, 2000

- 2100 GDP is equal to the average of the GDP under the 550 ppm CO 2 e, full

- participation, not

- to

- exceed scenarios considered by each of the four models.

Figure 15

- A.9.5 Global Fossil and Industrial CO 2 Emissions, 2000

- 2300 (Post

- 2100 extrapolations assume growth rate

of CO 2 intensity (CO 2 /GDP) over 2090

- 2100 is maintained through 2300.) 0 500 1000 1500 2000

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scenario

Extrapolations

YearWorld GDP [$trillion]

0 50 100 150 200

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scenario

ExtrapolationsFossil&Industrial CO2 Emissions [GtCO2/decade]

Year15

- A

- 51 Note: In the fifth scenario, 2000

- 2100 emissions are equal to the average of the emissions under the 550 ppm CO2e, full

- participation, not

- to

- exceed scenarios considered by each of the four

models.

Figure 15

- A.9.6 Global Net Land Use CO 2 Emissions, 2000

- 2300 (Post

- 2 100 extrapolations assume emissions decline linearly, reaching zero in the year 2200 ) 36

Note: In the fifth scenario, 2000

- 2100 emissions are equal to the average of the emissions under the 550 ppm CO2e, full

- participation, not

- to

- exceed scenarios considere d by each of the four

models.

36 MERGE assumes a neutral biosphere so net land CO 2 emissions are set to zero for all years for the MERGE Optimistic reference scenario, and for the MERGE component of the average 550 scenario (i.e., we add up the land

use emissions from the other three models and divide by 4). -3.00 -2.00 -1.00 0.00 1.00 2.00 3.00 4.00

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scneario

ExtrapolationsNet land CO2 emissions [GtCO2/yr]

Year z15

- A

- 52 Figure 15

- A.9.7 Global Non

- CO 2 Radiative Forcing, 2000

- 2300 (Post

- 2100 extrapolations assume constant non

- CO 2 radiative forcing after 2100 )

Note: In the fifth scenario, 2000

- 2100 emissions are equal to the average of the emissions under the 550 ppm CO2e, full

- participation, not

- to

- exceed scenarios considered by each of the four

models. 0.00 0.75 1.50 2.25 3.00 3.75

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scenario

ExtrapolationsnonCO2 RF [W/m^2]

Year15

- A

- 53 Figure 15

- A.9.8 Global CO 2 Intensity (fossil & industrial CO 2 emissions/GDP), 2000

- 2300 (P ost

- 2100 extrapolations assume decline in CO 2 /GDP growth

rate over 2090

- 21 00 is maintained through 2300 )

Note: In the fifth scenario, 2000

- 2100 emissions are equal to the average of the emissions under the 550 ppm CO 2 e, full

- participation, not

- to

- exceed scenarios considered by each of the four

models. 0 0 0 0 0 1 1 1 1

2000 2050 2100 2150 2200 2250 2300 IMAGE

MERGE

MESSAGE

MiniCAM

5th scenario

ExtrapolationsFossil & Industrial CO2 intensity [GtCO2/trillion $]

Year15

- A

- 54 Table 15

- A.9.2 2010 Global SCC Estim ates at 2.5 Percent Discount Rate (2007$/ton CO 2 )

Percentile 1st 5th 10th 25th 50th Avg 75th 90th 95th 99th

Scenario PAGE

IMAGE 3.3 5.9 8.1 13.9 28.8 65.5 68.2 147.9 239.6 563.8 MERGE optimistic 1.9 3.2 4.3 7.2 14.6 34.6 36.2 79.8 124.8 288.3 Message 2.4 4.3 5.8 9.8 20.3 49.2 50.7 114.9 181.7 428.4

MiniCAM base 2.7 4.6 6.4 11.2 22.8 54.7 55.7 120.5 195.3 482.3

5th scenario 2.0 3.5 4.7 8.1 16.3 42.9 41.5 103.9 176.3 371.9

Scenario DICE

IMAGE 16.4 21.4 25 33.3 46.8 54.2 69.7 96.3 111.1 130.0 MERGE optimistic 9.7 12.6 14.9 19.7 27.9 31.6 40.7 54.5 63.5 73.3 Message 13.5 17.2 20.1 27 38.5 43.5 55.1 75.8 87.9 103.0

MiniCAM base 13.1 16.7 19.8 26.7 38.6 44.4 56.8 79.5 92.8 109.3

5th scenario 10.8 14 16.7 22.2 32 37.4 47.7 67.8 80.2 96.8

Scenario FUND

IMAGE

- 33.1

- 18.9

- 13.3

- 5.5 4.1 19.3 18.7 43.5 67.1 150.7 MERGE optimistic

- 33.1

- 14.8

- 10

- 3 5.9 14.8 20.4 43.9 65.4 132.9 Message

- 32.5

- 19.8

- 14.6

- 7.2 1.5 8.8 13.8 33.7 52.3 119.2

MiniCAM base

- 31.0

- 15.9

- 10.7

- 3.4 6 22.2 21 46.4 70.4 152.9

5th scenario

- 32.2

- 21.6

- 16.7

- 9.7

- 2.3 3 6.7 20.5 34.2 96.815

- A

- 55 Table 15

- A.9.3 Table A3. 2010 Global SCC Estimates at 3 Percent Discount Rate (2007$/ton CO 2 )

Percentile 1st 5th 10th 25th 50th Avg 75th 90th 95th 99th

Scenario PAGE

IMAGE 2.0 3.5 4.8 8.1 16.5 39.5 41.6 90.3 142.4 327.4 MERGE optimistic 1.2 2.1 2.8 4.6 9.3 22.3 22.8 51.3 82.4 190.0 Message 1.6 2.7 3.6 6.2 12.5 30.3 31 71.4 115.6 263.0

MiniCAM base 1.7 2.8 3.8 6.5 13.2 31.8 32.4 72.6 115.4 287.0

5th scenario 1.3 2.3 3.1 5 9.6 25.4 23.6 62.1 104.7 222.5

Scenario DICE

IMAGE 11.0 14.5 17.2 22.8 31.6 35.8 45.4 61.9 70.8 82.1 MERGE optimistic 7.1 9.2 10.8 14.3 19.9 22 27.9 36.9 42.1 48.8 Message 9.7 12.5 14.7 19 26.6 29.8 37.8 51.1 58.6 67.4

MiniCAM base 8.8 11.5 13.6 18 25.2 28.8 36.9 50.4 57.9 67.8

5th scenario 7.9 10.1 11.8 15.6 21.6 24.9 31.8 43.7 50.8 60.6

Scenario FUND

IMAGE

- 25.2

- 15.3

- 11.2

- 5.6 0.9 8.2 10.4 25.4 39.7 90.3 MERGE optimistic

- 24.0

- 12.4

- 8.7

- 3.6 2.6 8 12.2 27 41.3 85.3 Message

- 25.3

- 16.2

- 12.2

- 6.8

- 0.5 3.6 7.7 20.1 32.1 72.5

MiniCAM base

- 23.1

- 12.9

- 9.3

- 4 2.4 10.2 12.2 27.7 42.6 93.0

5th scenario

- 24.1

- 16.6

- 13.2

- 8.3

- 3

- 0.2 2.9 11.2 19.4 53.615

- A

- 56 Table 15

- A.9.4 2010 Global SCC Estimates at 5 Percent Discount Rate (2007$/ton CO 2 )

Percentile 1st 5th 10th 25th 50th Avg 75th 90th 95th 99th

Scenario PAGE

IMAGE 0.5 0.8 1.1 1.8 3.5 8.3 8.5 19.5 31.4 67.2 MERGE opti mistic 0.3 0.5 0.7 1.2 2.3 5.2 5.4 12.3 19.5 42.4 Message 0.4 0.7 0.9 1.6 3 7.2 7.2 17 28.2 60.8

MiniCAM ba se 0.3 0.6 0.8 1.4 2.7 6.4 6.6 15.9 24.9 52.6

5th scenar io 0.3 0.6 0.8 1.3 2.3 5.5 5 12.9 22 48.7

Scenario DICE

IMAGE 4.2 5.4 6.2 7.6 10 10.8 13.4 16.8 18.7 21.1

MERGE optimistic 2.9 3.7 4.2 5.3 7 7.5 9.3 11.7 12.9 14.4 Message 3.9 4.9 5.5 7 9.2 9.8 12.2 15.4 17.1 18.8

MiniCAM base 3.4 4.2 4.7 6 7.9 8.6 10.7 13.5 15.1 16.9

5th scenar io 3.2 4 4.6 5.7 7.6 8.2 10.2 12.8 14.3 16.0

Scenario FUND

IMAGE

- 11.7

- 8.4

- 6.9

- 4.6

- 2.2

- 1.3 0.7 4.1 7.4 17.4

MERGE optimistic

- 10.6

- 7.1

- 5.6

- 3.6

- 1.3

- 0.3 1.6 5.4 9.1 19.0 Message

- 12.2

- 8.9

- 7.3

- 4.9

- 2.5

- 1.9 0.3 3.5 6.5 15.6

MiniCAM base

- 10.4

- 7.2

- 5.8

- 3.8

- 1.5

- 0.6 1.3 4.8 8.2 18.0

5th scenar io

- 10.9

- 8.3

- 7

- 5

- 2.9

- 2.7

- 0.8 1.4 3.2 9.2

Figure 15

- A.9.9 Histogram of Global SCC Estimates in 2010 (2007$/ton CO 2 ), by discount rate

* The distribution of SCC values ranges from

- $5,192 to $66,116 but the X

- axis has been truncated at approximately the 1 st and 99 th percentiles to better show the data. 0 2000 4000 6000 8000 10000 12000 14000 16000-25-12114274053667992105118131144157170183196209222235248261274

All 2010, 5.0% All 2010, 3.0% All 2010, 2.5%15

- 15-A-57 Table 15

- A.9.5 Additional Summary Statistics of 2010 Global SCC Estimates

Discount 5% 3% 2.5%

Scenario Mea Varianc Skewnes Kurtosi Mea Varianc Skewnes Kurtosi Mea Variance Skewnes Kurtosi

DICE 9.0 13.1 0.8 0.2 28.3 209.8 1.1 0.9 42.2 534.9 1.2 1.1

PAGE 6.5 136.0 6.3 72.4 29.8 3,383.7 8.6 151.0 49.3 9,546.0 8.7 143.8

FUND

- 1.3 70.1 28.2 1,479.0 6.0 16,382.

5 128.0 18,976.

5 13.6 150,732.

6 149.0 23,558.

316

- A

- i APPENDIX 1 6

- A

. REGULATORY IMPACT AN ALYSIS : SUPPORTING

MATERIAL S

TABLE OF CONTENTS

16

- A.1 INTRODUCTION

................................ ................................ ............................ 16

- A

- 1

16

- A.2 NIA

- RIA INTEGRATED MODEL

................................ ................................ .. 16

- A

- 1

16

- A.3 CONSUMER REBATE POLI CY MARKET PENETRATIO N CURVES

..... 16

- A

- 2

16

- A.3.1 Introduction

................................ ................................ ................................ ....... 16

- A

- 2

16

- A.3.2 Adjustment of XENERGY Penetration Curves

................................ ................ 16

- A

- 3

16

- A.3.3 Interpolation of Penetration Cur ves

................................ ................................ .. 16

- A

- 4

16

- A.3.3.1 Market Implementation Rate Function and Curves

..................... 16

- A

- 5

16

- A.3.3.2 Calibrating the Market Implementation Rate Function

............... 16

- A

- 8

16

- A.3.3.3 Limits to the Interpolation Approach

................................ ......... 16

- A

- 10

16

- A.3.4 Interpolated Penetration Curves for Standard

- Size Freezers, Compact Refrigeration Products, and Built

- in Refrigeration Products

.......................... 16

- A

- 11

16

- A.4 MARKET SHARE ANNUAL INCREASES BY POLICY

........................... 16

- A

- 16

16

- A.5 UTILITY REBATE PROGR AMS

................................ ................................ . 16

- A

- 19

16

- A.5.1 Rebate Programs for Standard

- Size Refrigerator

- Freezers and Compact Refrigerator

- Freezers

................................ ................................ ...................... 16

- A

- 19

16

- A.5.2 Rebate Programs for Standard

- Size Freezers and Compact Freezers

............. 16

- A

- 26

16

- A.6 FEDERAL AND STATE TA X CREDITS

................................ .................... 16

- A

- 30

16

- A.6.1 Federal Tax Credits for Consumers of Residen tial Appliances

...................... 16

- A

- 30

16

- A.6.2 Federal Tax Credits for Manufacturers

................................ ........................... 16

- A

- 31

16

- A.6.3 State Tax Credits

................................ ................................ ............................. 16

- A

- 31

LIST OF TABLES

Table 16

- A.3.1 Parameter Values for Reference Curves

................................ .................. 16

- A

- 6

Table 16

- A.3.2 Correspondence between Discrete and Continuous Values of Market

Barrier Levels

................................ ................................ ........................... 16

- A

- 8

Table 16

- A.3.3 Coefficients of Continuous

- value Functions of max , mid

, fit and r

......... 16

- A

- 9

Table 16

- A.4.1 Annual Increases in Market Shares Attributable to Rebate and Tax Credit Policies for Refrigeration Products

................................ ............. 16

- A

- 17

Table 16

- A.4.2 Annual Increases in Market Shares Attributable to Voluntary Energy Efficiency Targets, Early Replacement, and Bulk Government

Purchases Policies for Refrigeration Products

................................ ....... 16

- A

- 18

Table 16

- A.5.1 Rebates for Standard

- Size and Compact Refrigerator

- Freezers

............ 16

- A

- 20

Table 16

- A.5.2 Rebates for Standard

- Size and Compact Freezers

................................ . 16

- A

- 27

LIST OF FIGURES

Figure 16

- A.3.1 S

- Curves Showing Effects of External and Internal Sources on Adoption of New Technologies

................................ ............................... 16

- A

- 316

- A

- ii Figure 16

- A.3.2 Market Implementation Curves for Five Market Barriers Reference

Levels

................................ ................................ ................................ ....... 16

- A

- 5 Figure 16

- A.3.3 Discrete

- value Functions of Parameters Driving Implementation Curve Shape

................................ ................................ ................................ ........ 16

- A

- 7 Figure 16

- A.3.4 Continuous

- value Functions of Parameters Driving Implementation Curve Shape

................................ ................................ ........................... 16

- A

- 10 Figure 16

- A.3.5 Market Penetration Curve for Upright Freezers

................................ .... 16

- A

- 12 Figure 16

- A.3.6 Market Penetrati on Curve for Chest Freezers

................................ ........ 16

- A

- 12 Figure 16

- A.3.7 Market Penetration Curve for Compact Refrigerators (PC11)

.............. 16

- A

- 12 Figure 16

- A.3.8 Market Penetration Curve for Compact Refrigerators (PC13 & PC14) 16

- A

- 13 Figure 16

- A.3.9 Market Penetration Curve for Compact Freezers

................................ .. 16

- A

- 13 Figure 16

- A.3.10 Market Penetration Curve for Built

- in All Refrigerators

....................... 16

- A

- 14 Figure 16

- A.3.11 Market Penetration Curve for Built

- in Bottom

- Mount Refrigerator

Freezers

................................ ................................ ................................ .. 16

- A

- 14 Figure 16

- A.3.12 Market Penetration Curve for Built

- in Side

- by

- Side Refrigerator

Freezers

................................ ................................ ................................ .. 16

- A

- 15 Figure 16

- A.3.13 Market Penetration Curve for Built

- in Upright Freezer

........................ 16

- A

- 1516

- A

- 1 APPENDIX 16

- A. REGULATORY IMPACT AN ALYSIS : SUPPORTING

MATERIAL S

16

- A.1 INTRODUCTION

This appendix contains sections discussing the following topics:

**•** NIA

- RIA Integrated Model s

**•** X ENERGY penetration curves used to analyze consumer rebates , including:

o Background material,

o DOE’s adjustment of these curves for this analysis

,

o DOE’s new method for interpolating the curves , and

o P resentation of the interpolated curves by product class

**•** Projections of annual market share increases for the six alternative policies

**•** Detailed tables of rebates offered for the considered products

**•** Background material on Federal and state tax credits for appliances

16

- A.2 NIA

- RIA INTEGRATED MODEL

For this analysis, DOE developed an integrate d NIA

- RIA a model approach that built on

the NIA model s discussed in Chapter 10 and documented in Appendix 10

- A

. The resulting four

NIA

- RIA models (one for each product group) b

a NIA = national impact analysis; RIA = regulatory impact analysis featured both the NIA analysis inputs and results

and t he RIA inputs with capability to generate results for each of the RIA policies. A separate module produced summaries of inputs for the rebate policy, generated their penetration curve s (discussed in section 16

- A.3.3 below), reported shipment and market sha re increase data by product class, and produced summary tables for the national energy savings and net present

value results reported in chapter 16 , sections 16.4 and 16.5 . This module also generated tables of market share increases for each policy reporte d in section 16

- A. 4 of this Appendix

.

b The four product groups are Standard

- Size Refrigerator

- Freezers, Standard

- Size Freezers, Compact Refrigeration Products, and Built

- i n Refrigeration Products.16

- A

- 2 16

- A.3 CONSUMER REBATE POLI CY MARKET PENETRATION CURVES

This section first discusses the theoretical basis for the market penetration curves that DOE used to analyze the Consumer Rebates policy. Next it discusses the adjustm ent s it made to the maximum penetration rates. It then presents the method it developed to create interpolated penetration curves for each specific product class and efficiency level in the analysis. Examples of the resulting curves for sta ndard

- size refri gerator

- freezer product classes ar e in the chapter’s

section 16.3.2.1. T he curves for the product classes in the remaining product groups

-- standard

size freezers, compact refrigeration products, and built

- in refrigeration products

-- are in section

16

- A. 3.4 below.

16

- A.3.1 Introduction

XENERGY, Inc. c

, developed a re

- parameterized, mixed

- source information diffusion model to estimate market impacts induced by financial incentives for purchasing energy efficient appliances. 1 The basic premise of th e mixed

- source model is that information diffusion drives the adoption of technology.

Extensive economic literature describes the diffusion of new products as technologies evolve. Some research focuses primarily on developing analytical models of diffusi on patterns applicable to individual consumers or to technologies from competing firms. 2, 3, 4 One study records researchers’ attemp ts to investigate the factors that drive diffusion processes. 5 Because a new product generally has its own distinct characteristics, few studies have been able conclusively to conclusively develop a universally applicable model. Some key findings, however, generally are accepted in academia and industry.

One accepted finding is that, regardless of their economic benefits and technological merits, new technologies are unlikely to be adopted by all potential users. For many products, a ceiling must be plac ed on the adoption rate. A second conclusion is that not all adopters purchase new products at the same time: some act quickly after a new product is introduced; others wait for the product to mature. Third, diffusion processes can be characterized approxi mately by asymmetric S

- curves that depict three stages of diffusion: starting, accelerating, and decreasing (as the adoption ceiling is approached).

A so

- called epidemic model of diffusion is used widely in marketing and social studies. The epidemic mode l assumes that (1) all consumers place identical value on the benefits of a new product, and (2) the cost of a new product is constant or declines monotonically over time. What induces a consumer to purchase a new product is information about the availabil ity and benefits of the product. In other words, information diffusion drives consumers’ adoption of a new product. 3 The model incorporates information diffusion from both internal sources (spread by word of mouth from early adopters to prospective adopter s) and external sources (the “announcement effect” produced by government agencies, institutions, or commercial

c XENERGY is now owned by KEMA, Inc. ( www.kema.com )16

- A

- 3 advertising ). The model incorporates both internal and external sources by combining a logistic function with an exponential function. 4

, 5

The relative degree of influence from the internal and external sources determines the general shape of the diffusion curve for a specific product. 4, 5 If adoption of a product is influenced primarily by external sources of information (the announcement ef fect), for instance, a high rate of diffusion occurs at the beginning of the process. In this scenario, external sources provide immediate information exposure to a significant number of prospective adopters. In contrast, internal sources (such as a networ k of prospective adopters) are relatively small in size and reach, producing a more gradual exposure to prospective adopters. Graphically speaking, information diffusion dominated by external sources is represented by a concave curve (the exponential curve in Figure 16

- A. 3. 1). If adoption of a new product is influenced most strongly by internal sources of information, the number of adopters increases gradually, forming a convex curve (the logistic curve in Figure 16

- A.3.1 ).

Figure 16

- A.3.1 S

- Curves Showing Effects of Ext ernal and Internal Sources on Adoption of New Technologies

16

- A.3.2 Adjustment of XENERGY Penetration Curves

In consultation with the primary author s of the 2002 XENERGY study who later conducted similar California studies, DOE made some adjustments to XENERGY’s original16

- A

- 4 implementation ( penetration ) curves. 6 The experiences with utility programs since the XENERGY study indicate that incentive programs have difficulty achieving penetratio n rates as high as 80 percent . Consumer response is limited by barriers created by consumer utility issues

and other non

- economic factors . DOE therefore adjusted the maximum penetration parameters for some of the curves from 80 percent to the following levels:

Moderate Barriers: 70% High Barriers: 6 0% Extremely High Barriers: 50%

The low barriers and no barriers curves (the latter used only when a product has a very high base

- case

- market share) remained , respectively, with 80 percent and 100 percent as the ir maximum penetration rate s . For the int erpolated penetration curves (discussed below) , DOE set

the no barriers and extremely high barriers curves as the upper and lower bounds, respectively, for any benefit/cost ratio points higher or lower than the curves. It set another constraint such

that t he policy case market share cannot be great than 100 percent, as might occur for products with high base case market shares of the target

- level technology.

16

- A.3.3 Interpolation of Penetration Curves

As discussed above, the XENERGY penetration (implementation) cur ves followed a functional form to estimate the market implementation rate caused by energy efficiency

measures such as consumer rebates

. d The XENERGY report present s five reference market implementation curves that vary according to the level of market barriers to technology penetration. 1 Such curves have been used by DOE in the Regulatory Impact Analyse s for rulemaking s for appliance energy efficiency standards to estimate market share increase s in response to rebate programs. e They provide a framework for evaluating technology penetration, yet require matching the studied market to the curve that best represent s it . This approximate matching can introduce some inaccuracy to the analysis.

This section presents an alternative approach to such evaluation : a method to estimate market implementation rates more accurately by performing interpolation s of the reference curves. The following describes the market implementation rate function and the reference curves ; the

method to calibrate the function to a giv en market ; and the limitations of the method.

d The RIA chapter refers to these curves as penetration curves . This section, in references to the original source, uses

the term implementation curve

.

e DOE has also used this method to estimate market share increase s resulting from consumer tax credit and manufacturer tax credit programs, since the effects of tax credits on market s can be considered proportional to the

rebate impacts

.16

- A

- 5 16

- A.3.3.1 Market Implementation Rate Function and Curves

The XENERGY curves employ the following functional form to estimate the percentage of

the informed market f that will accept each energy

- efficiency measure based on the participant’s

benefit/cost ratio:

[1]

where:

imp implementation rate

bc benefit/cost ratio

max maximum annual acceptance rate for the technology

mid inflection point of the curve fit parameter that determines the general shape (slope) of the curve.

In recent efficiency standards rulemakings , DOE has been adopting a slightly different functional form of Equation [1], where the constant value 1/4 is rep laced by a parameter r

. By

i ntroducing this parameter in Equation [1] and rewriting it without the exponential and logarithmic operators, the market implementation rate of rebate programs can be evaluated using the following equation :

[2]

In XENERGY’s report, Equation [1] is used to generate five primary (reference) curves. These curves produce initial theoretical results that are calibrated to actual measure implementation results associated with the first year of major utility energy efficiency programs.

Different curves , generated using distinct values of the parameters max , mid

, fit and r , reflect

different levels of market barriers for different efficiency measures

.

DOE has been using similar curves in the appliance efficiency standards rulemaking. The curves characterize market implementation rates for five reference levels of market barriers: No

Barriers

, Low Barriers

, Moderate Barriers

, High Barriers

, and Extremely High Barriers . Figure

16

- A.3.2 presents the five reference curves.

Figure 16

- A.3.2 Market Implementation Curves for Five Market Barriers

Reference Levels

f The informed market refers to the portion of the market aware and informed about the energy efficiency measure

.16

- A

- 6 No Barriers

Low Barriers

Moderate

Barriers

High Barriers

Extremely High

Barriers

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

0 20 40 60 80 100implementation rate

benefit

- cost ratio

They build on the following functional form:

[3]

where:

b d = [barrier type]

and max d ( b d ), mid d ( b d ), fit d ( b d ) and r d ( b d ) are as shown in Table 16

- A.3.1. The four parameters are also presented in Figure 16

- A.3.3 as discrete

- value functions.

Table 16

- A.3.1 Parameter Values for Reference Curves

Market Barrier s Level

No Barriers Low Barriers Moderate

Barriers High Barriers Extremely High

Barriers16

- A

- 7 max d 1.0 0.8 0.7 g 0.6 g 0.5

mid d 10 2 0.3 0.1 0.04

fit d 1 1.7 1.7 1.7 1.7

r

d 1 0.5 0.25 0.25 0.25

0.0 0.2 0.4 0.6 0.8 1.0 1.2

No Low Moderate High X

- High Max

0.0 2.0 4.0 6.0 8.0 10.0 12.0

No Low Moderate High X

- High Mid

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

No Low Moderate High X

- High Fit

0.0 0.2 0.4 0.6 0.8 1.0 1.2

No Low Moderate High X

- High r

Figure 16

- A.3.3 Discrete

- value Functions of Parameters Driving Implementation Curve Shape

To estimate the barrier level of a given market, in the past DOE sought the reference curve that most closely represented the pair (base case market share, benefit/cost ratio) of the technology co rresponding to the mandatory standard’s chosen efficiency level. It then estimated the effect of a rebate program on the technology market penetration using that curve. For this estimation, DOE calculated the increase in market share that an increase in th e benefit/cost ratio

– driven by a rebate program

– would produce. It then assumed that the relative increase in

market share calculated from the reference curve was a proxy to the effects of a rebate program

on the studied market.

g DOE adopted these parameters after consultation with the implementation curve authors. For the RIAs for the rulemakings for Cooking Products and C ommercial Clothes Washers the max value adopted for the moderate

barriers and high barriers market barrier levels was 0.5. RIAs developed during prior rulemakings for Furnaces and Boilers, Commercial Unitary Air Conditioners and Heat Pumps, and Distributio n Transformers adopted a max value

of 0.8 for all but the no barriers curve, based on the original penetration curve values from XENERGY’s report.16

- A

- 8 16

- A.3.3.2 Calibrating the Market Implementation Rate Function

The procedure previously described lacks accuracy when the studied market penetration point based on the actual benefit/cost ratio does not lie close to one of the reference curves. This section presents an interpolation approa ch to eliminate such inaccuracy. The interpolation process provides intermediate, continuous values for the four parameters ( max , mid

, fit and r ) driving the market implementation curves. These intermediate values are obtained after linear interpolation of their corresponding reference values.

The four parameters ( max , mid

, fit and r ) were previously defined as discrete

- value functions ( max d ( b d )

, mid d ( b d )

, fit d ( b d ) and r d ( b d ) ) of the market barriers level (Table 16

- A.3.1 , Figure 16

- A.3.2 ). To facilitate t he interpolation, it is necessary to transform the four discrete

- value functions into continuous functions, the latter being thus capable of associating each of the four parameters to a real number denoting the market barrier level ( b

c **∈** R ). A numeric, continuous

scale for the market barriers level is proposed, ranging from 0 to 5 ( b

c **∈** [0,5]).The correspondence between the discrete

- values of market barrier levels and b

c are shown in Table

16

- A.3. 2.

Based on the continuous

- value market barriers level, the parameters max , mid

, fit and r are interpolated using the following functions:

[4]

[5]

[6]

[7]

where and are given by Table 16

- A.3.3.

The continuous

- value functions defined for max , mid

, fit and r , as expressed by Equations [4]

- [7], are then substituted in Equation [3], leading to the following functional form for the market implementation rate of rebate programs:

[8]

Table 16

- A.3.2 Correspondence between Discrete and Continuous Values of Market

Barrier Levels

Market Barrier s Level

No

Barriers Low

Barriers Moderate

Barriers High

Barriers Extremely High

Barriers16

- A

- 9 b

c 0.0 1.0 2.5 4.0 5.0

Table 16

- A.3.3 Coefficients of Continuous

- value Functions of max , mid

, fit and r

Market Barrier s Level Intervals

No

- Low

Barriers Low

- Moderate

Barriers Moderate

- High

Barriers High

- Extremely High Barriers

b **∈** [0,1] b **∈** [1,2.5] b **∈** [2.5,4] b **∈** [4,5]

m ax

- 0.200

- 0.075

- 0.075

- 0.075

1.000 0.875 0.875 0.875

m id

- 8.000

- 1.133

- 0.133

- 0.060

10.000 3.133 0.633 0.340

f

it

0.700 0.000 0.000 0.000

1.000 1.700 1.700 1.700

r

- 0.500

- 0.167 0.000 0.000

1.000 0.667 0.250 0.250

Figure 16

- A.3.4 presents the four continuous

- value functions.

0.0 0.2 0.4 0.6 0.8 1.0 1.2

0 1 2 3 4 5 Max

0 2 4 6 8 10 12

0 1 2 3 4 5 Mid16

- A

- 10 1.0 1.2 1.4 1.6 1.8 2.0

0 1 2 3 4 5 Fit

0.0 0.2 0.4 0.6 0.8 1.0 1.2

0 1 2 3 4 5 r

Figure 16

- A.3.4 Continuous

- value Functions of Parameters Driving Implementation Curve Shape

Hence, estimating the market effects of a rebate program relies on finding the interpolated implementation curve that best represents the studied market. In other words, it involves finding

b

c such that the pair ( imp ( b

c , bc ), bc ) equals the pair (base case market share, benefit/cost ratio) of the technology corresponding to the mandatory stan dard’s efficiency level. Once the appropriate value of b

c is found (e.g. ), the market penetration of the technology under a rebate program can be calculated by the following equation:

[9]

where:

market barriers level corresponding to the studied market

benefit/cost ratio with rebate.

16

- A.3.3.3 Limits to the Interpolation Approach

The approach presented above increases the accuracy of the estimate of the market implementation rate resulting from a rebate program. Consequently, it improves the analysis of the market effects of rebate programs. However , whereas it is feasible to develop interpolated implementatio n curves between the reference ones, there is no empirical support to extrapolate them beyond the No Barriers and the Extremely High Barriers curves. In fact, the theoretical

boundaries for the market barriers level would be:

(a) Zero Barriers ( b 0 ): With the assumption of the rational consumer, a tiny increase in the benefit/cost ratio of a technology with that ratio greater than 1 would be sufficient to make the technology widely adopted. h This would result in the following implementation rate function:

h When the benefit/cost ratio is 1 the participant is indifferent to adopting the technology or not , and the implementation rate, in this case, would be undetermined.16

- A

- 11 (b) Infinite Barriers ( b

∞ ): In this case, even an extremely high benefit/cost ratio would not be sufficient to cause the market to adopt a technology. This would result in the following implementation rate function:

However, notwithstanding the existence of such theoretical boundaries, the analysis of market implementation rates in cases of markets where the base case market share is either higher than the market share in the No Barriers curve (for the corresponding benefit/cost ratio),

or lower than the one in the Extremely High Barriers curve (idem), should follow the former analysis approach (as d escribed at the end of section 16

- A.3.3.2 ). It should rely, respectively, on

the No Barriers or the E xtremely High Barriers curves to estimate a relative market increase due to the rebate program.

16

- A.3.4 Interpolated Penetration Curves for Standard

- Size Freezers, Compact Refrigeration Products, and Built

- in Refrigeration Products

Figures 16

- A.3.5 through 16

- A .3. 13 show the interpolated penetration curves for the product classes in the product group s of Standard

- Size Freezers, Compact Refrigeration Products, and Built

- in Refrigeration Products. Chapter 16, Figures 16.3.1 through 16.3.3 show the interpolated pen etration curves for the product classes of Standard

- Size Refrigerator

Freezers.16

- A

- 12 Figure 16

- A.3.5 Market Penetration Curve for Upright Freezers

Figure 16

- A.3.6 Market Penetration Curve for Chest Freezers

Figure 16

- A.3.7 Market Penetration Curve for Compact Refrigerators (PC11)16

- A

- 13 Figure 16

- A.3.8 Market Penetration Curve for Compact Refrigerators (PC13 &

PC14 )

Figure 16

- A.3.9 Market Penetration Curve for Compact Freezers16

- A

- 14 Figure 16

- A.3.10 Market Penetration Curve for Built

- in All Refrigerators

Figure 16

- A.3.11 Market Penetration Curve for Built

- in Bottom

- Mount Refrigerator

- Freezers16

- A

- 15 Figure 16

- A.3.12 Market Penetration Curve for Built

- in Side

- by

- Side Refrigerator

Freezers

Figure 16

- A.3.13 Market Penetration Curve for Built

- in Upright Freezer16

- A

- 16 16

- A.4 M ARKET SHARE ANNUAL I NCREASES BY POLICY

For the consumer rebate, consumer tax credit, and manufacturer t ax credit policies, Table

16

- A.4 .1 shows the annual increases in market shares for refrigeration product s meeting target efficiency levels. DOE used these market share increases as inputs to the NIA

- RIA spreadsheet

model.16

- A

- 17 Table 16

- A.4.1 Annual Increases in Market Shares Attributable to Rebate and Tax

Credit Polic ies for Refrigeration Products

Year Consumer

Rebates Consumer

Tax Credits Manufacturer

Tax Credits

Std

Size

R/F

% Std

Size

Frz

% Com

pact

% Built

in % Std

Size

R/F % Std

Size

Frz

% Com

pact

% Built

in % Std

Size

R/F

% Std

Size

Frz

% Com

pact

% Built

in %

2014 18.3 43.3 42.6 6.6 10.5 26.0 25.6 3.9 4.9 12.9 12.8 2.0

2015 18.2 43.3 42.6 6.6 10.5 26.0 25.6 3.9 4.9 12.9 12.8 2.0

2016 18.0 43.4 42.6 6.6 10.4 26.0 25.6 3.9 4.9 12.9 12.8 2.0

2017 17.8 43.4 42.6 6.6 10.4 26.0 25.6 3.9 4.8 12.9 12.8 2.0

2018 17.6 43.4 42.7 6.6 10.3 26.0 25.6 3.9 4.8 12.9 12.8 2.0

2019 17.4 43.4 42.7 6.6 10.3 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2020 17.2 43.4 42.7 6.6 10.3 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2021 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2022 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2023 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2024 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2025 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2026 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2027 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2028 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2029 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2030 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2031 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2032 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2033 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2034 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2035 16.9 43.4 42.7 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2036 16.9 43.4 42.8 6.6 10.2 26.0 25.6 4.0 4.8 12.9 12.8 2.0

2037 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2038 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2039 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2040 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2041 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2042 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

2043 16.9 43.4 42.8 6.6 10.2 26.0 25.7 4.0 4.8 12.9 12.8 2.0

For the voluntary efficiency targets, early replacement and bulk government purchases policies, Table 16

- A.4.2 shows the annual increases in market shares for refrigeration products meeting target efficiency levels. DOE did not consider the voluntary effic iency targets policy for compact refrigeration products nor for built

- in refrigeration products. It did not consider the bulk government purchases policy for standard

- size freezers nor for built

- in refrigeration products.

DOE used these market share increa ses as inputs to the NIA

- RIA spreadsheet model.16

- A

- 18 Table 16

- A.4.2 Annual Increase s in Market Share s Attributable to Voluntary Energy Efficiency Targets , Early Replacement, and Bulk Government Purchases

Policies for Refrigerat ion Products

Year Voluntary Energy Efficiency Targets Early Replacement Bulk Government Purchases

Std

Size

R/F

% Std

Size

Frz

% Com

pact

% Built

in % Std

Size

R/F % Std

Size

Frz

% Com

pact

% Built

in % Std

Size

R/F

% Std

Size

Frz

% Com

pact

% Built

in %

2014 1.5 4.2 1.6 1.7 3.2 1.2 0.0 0.4

2015 1.8 4.5 1.2 1.5 2.2 1.0 0.0 0.9

2016 2.1 4.8 1.0 1.4 1.3 0.9 0.1 1.5

2017 2.4 5.1 0.8 1.3 0.6 0.8 0.1 2.1

2018 2.7 5.4 0.6 1.2 0.2 0.7 0.1 2.7

2019 3.0 5.7 0.5 1.1 0.0 0.6 0.1 3.3

2020 3.3 6.0 0.3 1.0 0.0 0.5 0.1 4.0

2021 3.6 6.3 0.2 0.9 0.0 0.4 0.2 4.6

2022 3.9 6.6 0.1 0.8 0.0 0.3 0.2 5.3

2023 4.3 6.9 0.1 0.7 0.0 0.2 0.2 5.9

2024 4.7 6.9 0.0 0.6 0.0 0.1 0.2 5.9

2025 5.1 6.9 0.0 0.5 0.0 0.0 0.2 5.9

2026 5.5 6.9 0.0 0.4 0.0 0.0 0.2 5.9

2027 5.9 6.9 0.0 0.2 0.0 0.0 0.2 5.9

2028 6.3 6.9 0.0 0.1 0.0 0.0 0.2 6.0

2029 6.7 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2030 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2031 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2032 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2033 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2034 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2035 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2036 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2037 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2038 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.0

2039 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.1

2040 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.1

2041 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.1

2042 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.1

2043 7.1 6.9 0.0 0.0 0.0 0.0 0.2 6.116

- A

- 19 16

- A.5 UTILITY REBATE PROGRAMS

This section presents data on rebate programs in effect nationwide for refrigeration products. The two tables organize the data for the rebates offered for refrigerators/refrigerator

freezers and for freezers.

16

- A.5.1 Rebate Programs for Standard

- Size Refrigerato r

- Freezers and Compact Refrigerator

- Freezers

DOE found 115 organizations, comprising el ectric utilities and municipal and regional agencies, that have rebat e programs for refrigerator

- freezers . The o rganizations offer more than

127 rebates for models that meet vario us efficiency criteria. Table 16

- A. 5 .1 provides the organizations’ names, states, rebate amounts, whether the rebate applies to standard

- size or compact units, efficiency levels, and program websites. If there is more tha n one entry for an organization, that organization offers different rebate amounts depending on efficiency level

. Some rebate programs include both standard

- size and compact refrigerators, as shown in the

table. The average rebate amount s for standard

- size refrigerators and for compact refrigerators

, g iven in 2009$ at the end of the table, are simple averages of the individual amounts (rather than being population

- weighted).16

- A

- 20 Table 16

- A.5.1 Rebates for Standard

- Size and Compac t Refrigerator

- Freezers

Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website

LADWP CA 65 √ E* http://www.ladwp.com/ladwp/cms/ladwp000478.jsp

SCE CA 50 √ E* http://www.sce.com/residential/rebates

- savings/appliance/fridge

- freezer

recycling.htm

SDG&E CA 25 √ E* http://www.sdge.com/residential/refrigerators.shtml

Alameda Municipal Power CA 100 √ E* http://www.alamedamp.com/index.php?option=com_content&view=article&id= 52:refrigerator

- rebate

- program&catid=18:save

- energy

- at

- home

- &Itemid=46

Anaheim Public Utilities CA 50 √ E* http://www.anaheim.net/utilities/adv_svc_prog/nrg_star/flyer.pdf

Burbank Water & Power CA 150 √ E* http://www.burbankwaterandpower.com/download/Home

- Rewards

- Rebate

Form

- Web.pdf

Burbank Water & Power CA 100 √ E* http://www.burbankwaterandpower.com/download/Home

- Rewards

- Rebate

Form

- Web.pdf
City of Palo Alto Utilities CA 50 √ E* http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=4365

Glendale Water and Power CA 60 √ E* http://www.glendalewaterandpower.com/save_money/residential/sh_energy_sav ing_rebates.aspx

Glendale Water and Power CA 80 √ E* http://www.glendalewaterandpower.com/save_money/residential/sh_energy_sav ing_rebates.aspx
Hercules Municipal Utility CA 100 √ E* http://www.ci.hercules.ca.us/index.aspx?page=157

IID Energy CA 80 √ E* http://www.iid.com/Media/rewards_instruct_residential10_Eng.pdf
Lassen Municipal Utility District CA 50 √ E* http://www.lmud.org/documents/appliancerebate.pdf

Lodi Electric Utility CA 50 √ E* http://lodielectric.com/residential/rebateoffer.asp?id=2

Pacific Power CA 20 √ E* http://www.homeenergysavings.net/Downloads/CA_ApplianceForm2010a.pdf

Pasadena Water and Power CA 150 √ E* http://ww2.cityofpasadena.net/waterandpower/EnergyStar/default.asp

Plumas

- Sierra REC CA 125 √ E* http://www.psrec.coop/energy_rebates.php?sec=enersol&pag=enerreb
Redding Electric CA 75 √ E* http://www.reupower.com/energysvc/documents/2010/Jan10EnergyStar.pdf
Redding Electric CA 35 √ E* http://www.reupower.com/energysvc/documents/2010/Jan10EnergyStar.pdf

Riverside Public Utilities CA 200 √ E* http://www.riversideca.gov/utilities/resi

- energystar.asp

Roseville Electric CA 100 √ E* http://www.roseville.ca.us/electric/home/rebates/appliances.asp
Silicon Valley Power CA 85 √ E* http://www.siliconvalleypower.com/pdf/res_rebates_09.pdf

Truckee Donner Public Utility

District CA 100 √ E* http://www.tdpud.org/pdf/Rebate%20program%20pamphlet,5

- 09.pdf
Turlock Irrigation District CA 35 √ E* http://www.tid.org/stellentdmz/groups/public/documents/tidweb_content/tidweb16

- A

- 21 Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website _energy_efficiency_broch.pdf

Delta

- Montrose Electric

Association CO 40 √ E* http://www.dmea.com/Portals/0/refrigeratorrebate1

- 20

- 2010.pdf
Gunnison County Electric CO 20 √ E* http://www.gcea.coop/EE/rebate_program.cfm
Holy Cross Energy CO 75 √ E* http://www.holycross.com/green

- programs/appliance

- rebates

La Plata Electric Association CO 40 √ E* http://www.lpea.coop/programs_services/ApplianceRebate.pdf
Morgan County REA CO 75 √ E* http://www.mcrea.org/Services/Electric_Appliances.html

United Power CO 40 √ √ E* http://www.unitedpower.com/ApplianceRebate.aspx#recycle

Groton Utilities CT 60 √ E* http://www.grotonutilities.com/files/conservation_forms/Appliance_Rebate.pdf

Norwich Public Utilities CT 60 √ E* http://www.norwichpublicutilities.com/energyefficiency/efficiency

res.html#res

- electric
City of Tallahassee Utilities FL 75 √ E* http://www.talgov.com/you/energy/energy_programs.cfm#appl

Lake Worth Utilities FL 100 √ E* http://www.lakeworth.org/vertical/Sites/%7B5E6FE119

- 0228

- 4C9B

- B2DB

067168049C16%7D/uploads/%7B5348F2F5

- 5F25

- 464C

- 873C

87948A60D480%7D.PDF

Ames Electric Department IA 100 √ E* http://www.cityofames.org/SmartEnergy/Documents/EfficientApplianceClaimF orm%207.9.09.pdf

Ames Electric Department IA 50 √ E* http://www.cityofames.org/SmartEnergy/Documents/EfficientApplianceClaimF orm%207.9.09.pdf

Ames Electric Department IA 25 √ √ E* http://www.cityofames.org/SmartEnergy/Documents/EfficientApplianceClaimF orm%207.9.09.pdf

Interstate Power and Light IA 50 √ E* http://alliantenergy.com/wcm/groups/wcm_internet/@int/documents/contentpag e/022811.pdf

Linn County REC IA 25 √ E* http://www.linncountyrec.com/cgi

script/csarticles/uploads/334/Energy%20Star%20Appliances%20LCREC.pdf
MidAmerican Energy IA 50 √ E* http://www.midamericanenergy.com/ee/include/pdf/ia_res_equip_brochure.pdf

Muscatine Power and Water IA 75 √ E* http://www.mpw.org/residential_rebates.aspx
Waverly Light & Power IA 150 √ √ E* http://wlp.waverlyia.com/appliance_programs.asp

Idaho Falls Power ID 25 √ E* http://www.idahofallsidaho.gov/city/city

- departments/idaho

- falls

- power/energy

efficiency/energy

- star

- appliance

- program.html

Idaho Power ID 30 √ √ E* http://www.idahopower.com/EnergyEfficiency/Residential/Programs/HomePro

ducts/default.cfm

Kootenai Electric Cooperative ID 25 √ √ E* http://www.kec.com/rebates.php
Rocky Mountain Power ID 20 √ E* http://www.homeenergysavings.net/Downloads/ID_ApplianceForm2010.pdf16

- A

- 22 Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website

City Water Light and Power IL 50 √ http://www.cwlp.com/energy_services/ESO_services_programs/refrigerator_reb

ate.htm

Commonwealth Edison IL 50 √ E*

Munihelps https://www.comed.com/sites/HomeSavings/Pages/appliancerecycling.aspx; http://www.cee1.org/files/CEEApplianceProgramSummaryApril2010.pdf

MA 50 √ E* http://www.munihelps.org/2010%20rebate%20forms/MailinformAshburnham.p

df

Belmont Municipal Light Department MA 100 √ E* http://www.town.belmont.ma.us/public_documents/BelmontMA_LightNews/A nnouncements/2010%20Appliance%20Rebate%20Program%20&%20Form%2 0Brochure.pdf
Concord Municipal Light Plant MA 100 √ E* http://www.concordma.gov/Pages/ConcordMA_LightPlant/appliance
Mansfield Municipal Electric MA 100 √ E*
Marblehead Light Department http://www.mansfieldelectric.com/consumerforms/Appliance

- Rebate

- App.pdf

MA 100 √ E* http://www.marbleheadelectric.com/9

- 6_Rebate_guide_for_MMLD.pdf NSTAR (part of Cape Light Compact) MA 50 √ E*
Reading Municipal Light http://www.nstaronline.com/docs3/ee

- rebate

forms/fridge.pdf?unique=20100402200503

MA 50 √ E* Shrewsbury Electric & Cable Operations http://www.rmld.com/Pages/rmldma_residential/rebate.pdf

MA 50 √ E* Wakefield Municipal Gas & Light Department http://www.shrewsbury

- ma.gov/egov/docs/1263402562_742065.pdf

MA 50 √ E*
Allegheny Power http://www.wakefield.ma.us/Public_Documents/WakefieldMA_MGLD/WMGL DRebateForm.pdf

MD 50 √ E* http://www.nxtbook.com/nxtbooks/garrisonhughes/empowermaryland2010/#/4

Baltimore Gas & Electric Company MD 50 √ E*

Delmarva Power http://conservation.bgesmartenergy.com/residential/lighting

appliances/appliance

- rebates

MD 50 √ E*

PEPCO http://www.delmarva.com/energy/conservation/appliance/default.aspx

MD 50 √ √ E* http://homeenergysavings.pepco.com/dc/appliance

- rebate
Efficiency Maine ME 75 √ E* http://www.efficiencymaine.com/at

- home/appliance_rebate_program

Anoka Municipal Utility MN 25 √ E* http://www.ci.anoka.mn.us/index.asp?Type=B_BASIC&SEC={03DDAD7B

EC66

- 4214

- 97D8

- EB42DA396059} Southern Minnesota Municipal Power Agency MN 25 √ E* http://www.smmpa.org/upload/Res%202010%20Rebate%20Program%20Fact%

20Sheet

- BP.pdf

City of North St. Paul Electric Utility MN 25 √ E* http://www.ci.north

- saint

paul.mn.us/index.asp?Type=B_BASIC&SEC={F5C1E5FE

- 1ADD

- 49AF

ACD8

- 59C3FB4192FF}
Crow Wing Power MN 100 √ E* http://www.cwpower.com/heatingcoolingoptions.shtml

Minnesota Power MN 25 √ E* http://www.mnpower.com/powerofone/one_home/energystar/special_offers/ind ex.php16

- A

- 23 Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website
Shakopee Public Utilities MN 35 √ E* http://www.shakopeeutilities.com/Residential_Rebate_Packet.pdf

Stearns Electric MN 50 √ E* https://www.stearnselectric.org/energystarres.htm

Stearns Electric MN 75 √ E* https://www.stearnselectric.org/energystarres.htm

New Ulm Public Utilities MN 30 √ E* http://www.ci.new

- ulm.mn.us/index.asp?Type=B_BASIC&SEC={743A5650

- 3018

- 4B6E

- B7B0

- 662834287912}&DE={89E00F68

- 1EF5

- 4A75

- BECE

E3DE07703621}

New Ulm Public Utilities MN 10 √ √ E* http://www.ci.new

- ulm.mn.us/index.asp?Type=B_BASIC& SEC={743A5650

- 3018

- 4B6E

- B7B0

- 662834287912}&DE={89E00F68

- 1EF5

- 4A75

- BECE

E3DE07703621} White River Valley Electric Cooperative MO 75 √ E* http://whiteriver.org/residential_rebate_program.aspx

Flathead Electric MT 25 √ E* http://www.flatheadelectric.com/energy/Rebates.html Yellowstone Valley Electric Cooperative MT 25 √ E* http://www.yvec.com/UserFiles/File/Energy%20Star%20Rebate.pdf

Four

- County EMC NC 150 √ E* http://www.fourcty.org/news.php?id=39&p=7

South River EMC NC 25 √ E* http://www.sremc.com/ESRebates.aspx

Central New Mexico Electric Cooperative NM 80 √ E* http://www.cnmec.org/pdfs/waterheater_rebate_guidelines.pdf
Long Island Power Authority NY 75 √ E* http://www.lipower.org/residential/efficiency/rebates/rebates

- refrigerators.html
Ashland Electric Utility OR 25 √ E* http://www.ashland.or.us/Files/RefridgeratorRebateForm.pdf

Ashland Electric Utility OR 35 √ CEE

Tier

3 http://www.ashland.or.us/Files/RefridgeratorRebateForm.pdf
Central Electric Cooperative OR 25 √ E* http://www.cec

- co.com/custserv/energy_info/brochures/energy_star.pdf Central Lincoln People's Utility

District OR 70 √ E* http://www.clpud.org/pdf/Rebate%20Forms/CLPUD%20Applnc%20Rebate%2

0form%2005

- 09.pdf

Columbia River PUD OR 25 √ E* http://www.crpud.net/residential/efficiency/appliances

Consumers Power, Inc OR 25 √ E* http://www.cpi.coop/rebates/appliance.php
Douglas Electric Cooperative OR 25 √ E* http://www.douglaselectric.com/programs/Rebate_Form.pdf

Emerald P.U.D. OR 25 √ E* http://www.epud.org/documents/ApplianceRebate_000.pdf

Energy Trust of Oregon OR 50 √ E* http://energytrust.org/residential/incentives/Appliances/NewRefrigeratorsandFre

ezers Eugene Water & Electric Board OR 25 √ E* http://www.eweb.org/public/documents/energy/home_appliance_rebate.pdf

Forest Grove L&P OR 50 √ E* http://www.forestgrove

-16

- A

- 24 Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website or.gov/images/stories/services/lightandpower/pdf/mar2010appliancerebateform. pdf

Idaho Power OR 30 √ E* http://www.idahopower.com/EnergyEfficiency/Residential/Programs/HomePro

ducts/default.cfm
McMinnville Water and Light OR 25 √ E* http://www.mc

- power.com/rebates.aspx
Midstate Electric Cooperative OR 25 √ E* http://www.midstateelectric.coop/Refrig%20Rebate%20Form.pdf

Monmouth Power & Light OR 25 √ E* http://www.ci.monmouth.or.us/vertical/Sites/%7BCE78EAE1

- 6CA4

- 4610

- BDB0

- A9B3B0A8BB71%7D/uploads/%7BF66F3203

- CD45

- 406C

- 89BF

ADE93D1D975D%7D.PDF

OTEEC OR 25 √ E* http://www.otecc.com/residentialprograms.aspx

Salem Electric OR 60 √ E* http://www.salemelectric.com/residential/pdfs/rebates_programs/ApplianceBroc hure.pdf

Springfield Utility Board OR 25 √ E* http://www.subutil.com/files/static_page_files/E3DD085D

- 078B

- 420B

267070C0638CD317/RebateForm10.pdf
Tillamook County PUD OR 50 √ E* http://www.tpud.org/nrg_appliance.html

Allegheny Power PA 50 √ E* http://www.alleghenypower.com/EngConserv/PA/WattWatchers/RebateREF.as

p Duquesne Light PA 10 √ E* http://www.duquesnelight.com/wattchoices/#RE

PPL Electric Utilities PA 50 √ E* http://www.rebate

- zone.com/ppl/pdf/PEJ.pdf

National Grid RI 50 √ E* https://www.powerofaction.com/rirefridge/ Guadalupe Valley Electric Cooperative TX 100 √ E* http://www.gvec.org/safety_con/Home%20Improvement.pdf

City of St. George UT 20 √ E* http://www.sgcity.org/energyservices/ES%20Appliance%20Rebate%20Applicat ion.pdf
Rocky Mountain Power UT 20 √ √ E* http://www.homeenergysavings.net/Downloads/UT_ApplianceForm2010.pdf

Efficiency Vermont VT 25 √ √ E* http://efficiencyvermont.com/pages/Residential/Lightingandappliances/ENERG YSTARAppliances/RefrigeratorsandFreezers/

Efficiency Vermont VT 50 √ √ CEE

Tier

2 http://efficiencyvermont.com/pages/Residential/Lightingandappliances/ENERG YSTARAppliances/RefrigeratorsandFreezers/

Avista Utilities WA 25 √ E* https://www.avistautilities.com/savings/rebates/Documents/HighEfficiencyReba te_OREnergyStar

- R2.1.5.2009.pdf

Benton PUD WA 25 √ E* http://www.bentonpud.org/pdf/CRC/REEP/October%201,%202009/Appliance %20Rebate%20Application%209

- 1

- 09.pdf

Clallam PUD WA 50 √ E* http://www.clallampud.net/uploadedFiles/conservation/documents/energy_star_16

- A

- 25 Utility or Agency State Amount

Std 2009$ Cpct Eff ic Website appliance_rebate.pdf

Clark Public Utilities WA 25 √ E* http://www.clarkpublicutilities.com/yourhome/conservation/rebates

Columbia Rural Electric

Association WA 25 √ E* http://www.columbiarea.com/programs/Res%20Rebate%20Application.pdf
Cowlitz County PUD WA 25 √ E* http://www.cowlitzpud.org/pdf/RebateBrochureRevised10

- 6

- 08.pdf

Franklin PUD WA 25 √ E* http://www.franklinpud.com/pdfs/REBATE_PROGRAM_V_10.2.pdf Grant County Public Utility

District WA 25 √ E* http://www.gcpud.org/conservation/rebates/index.htm

Grays Harbor PUD WA 25 √ E* https://www.ghpud.org/index.php?option=com_content&task=view&id=89&Ite

mid=113
Inland Power and Light Co WA 25 √ E* http://www.inlandpower.com/pdf/appliancerebateform.pdf

Mason PUD WA 25 √ E* http://www.masonpud3.org/powerSupply/applianceRebates.aspx
Okanogan PUD WA 25 √ E* http://www.okanoganpud.org/consrebates.htm Orcas Power and Light Cooperative WA 25 √ E* http://www.opalco.com/energy

- efficiency/rebates/

Pacific Power WA 20 √ √ E* http://www.homeenergysavings.net/Washington/appliances/refrigerators.html
City of Port Angeles WA 100 √ E* https://www.cityofpa.us/pwConserv.htm
Richland Energy Services WA 25 √ E* http://www.ci.richland.wa.us/RICHLAND/Electric/index.cfm?PageNum=89 Snohomish County Public Utility District No. 1 WA 50 √ E* http://www.snopud.com/conservation/appliances.ashx?p=1139
Barron Electric Cooperative WI 25 √ √ E* http://www.barronelectric.com/Appliance%20&%20Lighting%20Program.pdf
Eau Claire Energy Cooperative WI 25 √ E* http://www.ecec.com/programs/incentives
Riverland Energy Cooperative WI 25 √ E* http://riverlandenergy.com/RIVERLAND%20HOMEPAGE/rebates.htm

Montana

- Dakota Utilities WY 10 √ E* http://www.montana

dakota.com/Wyoming/Conservation/Pages/ElectricIncentivePrograms.aspx
Rocky Mountain Power WY 20 √ √ E* http://www.homeenergysavings.net/Wyoming/appliances/refrigerators.html Average Rebate Amount (2009$) 52 3416

- A

- 26 16

- A.5.2 Rebate Programs for Standard

- Size Freezers and Compact Freezers

DOE found 59 organizations, comprising electric utilities and municipal and regional agencies

that offered 62 rebate programs for standard

- size and compact freezers . The organizations offer rebates for units that meet a range of e fficiency criteria. Table 16

- A.5 .2 lists the organizations’ n ames, states, rebate amounts, whether the rebate applies to standard

- size or compact units, efficiency levels, and program websites. Some rebate programs include both standard

- size and compact refrigerators, as

shown in the table. If there is more than one entry for an organization, that organization offers different

re bates based on efficiency level

. The average rebate amounts, given in 2009$ at the end of the table, are simple averages of the individual amounts (rather than being population

- weighted). The table also shows the adjusted rebate amount for compact freezers, as discussed in chapter 16, section 16.3.2.3.16

- A

- 27 Table 16

- A.5.2 Rebates for Standard

- Size and Compact Freezers

Utility State Rebate

Amount

Std

2009$ Cpct Effic Website

Montana

- Dakota Utilities WY 10 √ E* http://www.montana

dakota.com/Wyoming/Conservation/Pages/ElectricIncentivePrograms.aspx
Barron Electric Cooperative WI 25 √ E* http://www.barronelectric.com/Appliance%20&%20Lighting%20Program.pdf Eau Claire Energy Cooperative WI 25 √ E* http://www.ecec.com/programs/incentives Riverland Energy Cooperative WI 25 √ E* http://riverlandenergy.com/RIVERLAND%20HOMEPAGE/rebates.htm

Avista Utilities WA 20 √ E* https://www.avistautilities.com/savings/rebates/Documents/HighEfficiencyRebate _OREnergyStar

- R2.1.5.2009.pdf

Clallam PUD WA 25 √ E* http://www.clallampud.net/uploadedFiles/conservation/documents/energy_star_ap pliance_rebate.pdf

Clark Public Utilities WA 25 √ E* http://www.clarkpublicutilities.com/yourhome/conservation/rebates

Columbia Rural Electric

Association WA 25 √ E* http://www.columbiarea.com/programs/Res%20Rebate%20Application.pdf
Cowlitz County PUD WA 25 √ E* http://www.cowlitzpud.org/pdf/RebateBrochureRevised10

- 6

- 08.pdf

Franklin PUD WA 25 √ E* http://www.franklinpud.com/pdfs/REBATE_PROGRAM_V_10.2.pdf Grant County Public Utility

District WA 25 √ E* http://www.gcpud.org/conservation/rebates/index.htm

Grays Harbor PUD WA 25 √ E* https://www.ghpud.org/index.php?option=com_content&task=view&id=89&Itemi

d=113
Inland Power and Light Co WA 25 √ E* http://www.inlandpower.com/pdf/appliancerebateform.pdf

Mason PUD WA 25 √ E* http://www.masonpud3.org/powerSupply/applianceRebates.aspx Orcas Power and Light Cooperative WA 25 √ E* http://www.opalco.com/energy

- efficiency/rebates/ Guadalupe Valley Electric Cooperative TX 100 √ E* http://www.gvec.org/safety_con/Home%20Improvement.pdf

National Grid RI 50 √ E* https://www.powerofaction.com/rirefridge/
Allegheny Power PA 25 √ E* http://www.alleghenypower.com/EngConserv/PA/WattWatchers/RebateFR.asp
Duquesne Light PA 11 √ E* http://www.duquesnelight.com/wattchoices/#RE
Central Electric Cooperative OR 25 √ E* http://www.cec

- co.com/custserv/energy_info/brochures/energy_star.pdf Central Lincoln People's Utility District OR 70 √ E* http://www.clpud.org/pdf/Rebate%20Forms/CLPUD%20Applnc%20Rebate%20f

orm%2005

- 09.pdf

Columbia River PUD OR 25 √ E* http://www.crpud.net/residential/efficiency/appliances16

- A

- 28 Utility State Rebate

Amount

Std

2009$ Cpct Effic Website

Consumers Power, Inc OR 25 √ E* http://www.cpi.coop/rebates/appliance.php

Emerald P.U.D. OR 25 √ E* http://www.epud.org/documents/ApplianceRebate_000.pdf

Energy Trust of Oregon OR 50 √ √ E* http://energytrust.org/residential/incentives/Appliances/NewRefrigeratorsandFreez

ers Eugene Water & Electric

Board OR 25 √ E* http://www.eweb.org/public/documents/energy/home_appliance_rebate.pdf

Forest Grove L&P OR 50 √ E* http://www.forestgrove

or.gov/images/stories/services/lightandpower/pdf/mar2010appliancerebateform.pd

f

McMinnville Water and Light OR 25 √ E* http://www.mc

- power.com/rebates.aspx

Monmouth Power & Light OR 25 √ E* http://www.ci.monmouth.or.us/vertical/Sites/%7BCE78EAE1

- 6CA4

- 4610

- BDB0

- A9B3B0A8BB71%7D/uploads/%7BF66F3203

- CD45

- 406C

- 89BF

ADE93D1D975D%7D.PDF

OTEEC OR 25 √ E* http://www.otecc.com/residentialprograms.aspx

Salem Electric OR 60 √ E* http://www.salemelectric.com/residential/pdfs/rebates_programs/ApplianceBroch ure.pdf

Springfield Utility Board OR 25 √ E* http://www.subutil.com/files/static_page_files/E3DD085D

- 078B

- 420B

267070C0638CD317/RebateForm10.pdf
Tillamook County PUD OR 50 √ E* http://www.tpud.org/nrg_appliance.html

Four

- County EMC NC 150 √ E* http://www.fourcty.org/news.php?id=39&p=7

South River EMC NC 25 √ E* http://www.sremc.com/ESRebates.aspx

Central New Mexico Electric Cooperative NY 80 √ E* http://www.cnmec.org/pdfs/waterheater_rebate_guidelines.pdf

Flathead Electric MT 25 √ E* http://www.flatheadelectric.com/energy/Rebates.html Yellowstone Valley Electric Cooperative MT 25 √ E* http://www.yvec.com/UserFiles/File/Energy%20Star%20Rebate.pdf

Anoka Municipal Utility MN 50 √ E* http://www.ci.anoka.mn.us/index.asp?Type=B_BASIC&SEC={03DDAD7B

EC66

- 4214

- 97D8

- EB42DA396059}

Southern Minnesota Municipal Power Agency MN 26 √ http://www.smmpa.org/upload/Res%202010%20Rebate%20Program%20Fact%20

Sheet

- BP.pdf
Crow Wing Power MN 100 √ E* http://www.cwpower.com/heatingcoolingoptions.shtml
Shakopee Public Utilities MN 35 √ E* http://www.shakopeeutilities.com/Residential_Rebate_Packet.pdf

Stearns Electric MN 50 √ E* https://www.stearnselectric.org/energystarres.htm

Stearns Electric MN 75 √ E* https://www.stearnselectric.org/energystarres.htm16

- A

- 29 Utility State Rebate

Amount

Std

2009$ Cpct Effic Website

Cape Light Compact MA 50 √ E* http://myenergystar.com/documents/RebateForms/2010/MA_FridgeFreezer_Rebat e_CLC.pdf Concord Municipal Light

Plant MA 100 √ E* http://www.concordma.gov/Pages/ConcordMA_LightPlant/appliance
Allegheny Power MD 25 √ E* http://www.nxtbook.com/nxtbooks/garrisonhughes/empowermaryland2010/#/4

Ames Electric Department IA 50 √ √ E* http://www.cityofames.org/SmartEnergy/Documents/EfficientApplianceClaimFor m%207.9.09.pdf

Interstate Power and Light IA 50 √ E* http://alliantenergy.com/wcm/groups/wcm_internet/@int/documents/contentpage/ 022811.pdf

Linn County REC IA 25 √ E* http://www.linncountyrec.com/cgi

script/csarticles/uploads/334/Energy%20Star%20Appliances%20LCREC.pdf
MidAmerican Energy IA 25 √ E* http://www.midamericanenergy.com/ee/include/pdf/ia_res_equip_brochure.pdf

Idaho Falls Power ID 25 √ E* http://www.idahofallsidaho.gov/city/city

- departments/idaho

- falls

- power/energy

efficiency/energy

- star

- appliance

- program.html

Kootenai Electric Cooperative ID 25 √ E* http://www.kec.com/rebates.php
City of Tallahassee Utilities FL 40 √ E* http://www.talgov.com/you/energy/energy_programs.cfm#appl

Groton Utilities CT 60 √ E* http://www.grotonutilities.com/files/conservation_forms/Appliance_Rebate.pdf

Norwich Public Utilities CT 60 √ E* http://www.norwichpublicutilities.com/energyefficiency/efficiency

- res.html#res

electric

Delta

- Montrose Electric

Association CO 40 √ E* http://www.dmea.com/Portals/0/refrigeratorrebate1

- 20

- 2010.pdf
Gunnison County Electric CO 20 √ E* http://www.gcea.coop/EE/rebate_program.cfm
Morgan County REA CO 75 √ E* http://www.mcrea.org/miscellaneous/pdf/APPLIANCE.pdf

United Power CO 40 √ E*

Burbank Water & Power http://www.unitedpower.com/ApplianceRebate.aspx#recycle

CA 150 √ E* http://www.burbankwaterandpower.com/download/Home

- Rewards

- Rebate

- Form

Web.pdf

Burbank Water & Power CA 100 √ E* http://www.burbankwaterandpower.com/download/Home

- Rewards

- Rebate

- Form

Web.pdf
Averages (2009$) 43 50
Adjusted Average (2009$) 2816

- A

- 30 16

- A.6 FEDERAL A ND STATE TAX CREDITS

This section summar izes the Federal and State tax credits available to consumers who purchase energy efficient appliances. This section also describes tax credits available to

manufactur ers who produce certain energy efficien t appliances.

16

- A.6.1 Federal Tax Credits for Consu mers of Residential Appliances

EPACT 2005 included Federal tax credits for consumers who installed efficient air conditioners or heat pumps; gas or oil furnaces; furnace fans; and/or gas, oil, or electric heat pump water heaters in new or existing homes. 7

, 8 The se tax credits were in eff ect in 2006 and 2007, expired in 2008, and were reinstated for 2009

– 2010 by the American Recovery and

Rein vestment Act (ARRA)

. 9 These tax credits did not apply to consumers who purchased energy efficient refrigerators or freezers.

Although this tax credit did not include efficient refrigeration products

, in an effort to evaluate the potential impact of a Fed eral appliance tax credit program, DOE reviewed I nternal Revenue Service (I RS ) data on the numbers of taxpayers who claimed the tax credits during tax years 2006 and 2007. It estimated the percentage of taxpayers who filed Form 5695, Residential Energy Credits. 10 It also estimated the percentage of taxpayers with entries under Form 5695’s

Line 3

, Residential energy property costs , which include d (3a) energy

- efficient building property (including water heaters) , (3b) qualified natural gas, propane, or oil furnace or hot water boiler

, and (3c) advanced main air circulating fan used in a natural gas, propane, or oil furnace . While

none of these three items corresponds exactly to refrigeration products, DOE reasoned that the

percentage of taxpayers with at le ast one entry under Line 3 could serve as a rough indication of the potential of t axpayer participation in a Federal tax credit program for an efficient appliance during the initial program years. It found that of all residential taxpayers filing tax retur ns in 2006 and 2007, 2.1 percent each year claimed at least one credit under Line 3. DOE further found that the percentages of those filing Form 5695 for any qualifyi ng energy property expenditure ( which also include d installation of efficient windows, doo r s and roofs) were 3.1 and 3.2 percent in 2006 and 2007 respectively.

DOE also reviewed data from an earlier Federal energy conservation tax credit program in place in the 1980s. While this tax credit was available from 1979 through 1985, DOE located

d ata for only the fi rst three years of the program. 11, 12, 13 For those three years, the percentages of taxpayers filing Form 5695 were 6.4 percent, 5.2 percent, and 4.9 percent in 1979, 1980, and

1981 . Given that the data from this earlier tax credit progr am were not disaggregated by type of energy property, this data series served only to ind icate a possible trend of greater participation in the initial program year, followed by slightly smaller participation in subsequent years. However, DOE did not find detailed analysis of this program to indicate the possible reasons for

such a trend . Also, this trend varies from the more stable trend shown in the EPAct 2005 energy tax credit program data for its first two program years. As discussed in chapter 16, sec tion 16.3.3, DOE analyzed the percentage of participation in consumer tax credit programs using its estimates of consumer participation in rebate programs

that was based on benefit/cost data specific to each refrigeration product class. Hence it was16

- A

- 31 diffic ult to compare these detailed estimates to the more general data analysis described above from the existing Federal tax credit program , or to use the IRS data analysis in its consumer tax credit analysis.

16

- A.6.2 Federal Tax Credits for Manufacturers

EPACT 2005 p rovided Federal Energy Efficient Appliance Credits to manufacturers that produced high

- efficiency refrigerators, clothes washers, and dishwashers in 2006 and 2007. 1 4

The Emergency Economic Stabilization Act of 2008 1 5 amended the credits and extended them through 2010. Manufacturers receive the cre dits for increasing their production of qualifying appliances relative to a two

- year rolling baseline. Each manufacturer is limited to a certain

amount for all credits. Manufacturers we re eligible for Energy Efficient Appliance Credits for qualifying model s of residential refrigerators, residential and commercial clothes washers, , and

residential dishwashe rs. The credits listed below were available for refrigerator models produced in 2008, 2009, and 2010. These c redit amounts and criteria applied to manufa cturers who produce these appliances

. The amounts listed are for each unit manufactured

. However, the

maximu m credit that a manufacturer could rec eive for qualifying equipment was $75 million for

2008

– 2010, with the exceptions that the most efficient refrigerator (30 percent) mo dels we re not subject to the cap. 1 6

**•** $50 for models manufactured in 2008 that consume at least 20 percent but not more than 22.9 percent fewer kilowatt hours per year than the 2001 energy conservation

standards.

**•** $75 for models manufactured in 2008 or 2009 th at consume at least 23 percent but no more than 24.9 percent fewer kilowatt hours per year than the 2001 energy

conservation standards.

**•** $100 for models manufactured in 2008, 2009, or 2010 that consume at least 25 percent but not more than 29.9 percent few er kilowatt hours per year than the 2001 energy conservation standards.

**•** $200 for models manufactured in 2008, 2009, or 2010 that consume at least 30 percent less energy than the 2001 energy conservation standards.

16

- A.6.3 State Tax Credits

The States of Oregon an d Montana have offered consumer tax credits for efficient appliances for several years, and the States of Indiana, Kentucky and Michigan began offering such credits in 2009. The Oregon Department of Energy (ODOE) has disaggregated data on taxpayer particip ation in credits for eligible products. (See the discussion in chapter 16, section 16.3.3, on data for refrigerators and clothes washers.) Montana’s Department of Revenue does not disaggregate participation data by appliance, although DOE reviewed Montana' s overall participation trend that were congruent with its analysis of Oregon's clothes washer tax credits. DOE was unable to obtain state tax credit data from Indiana, Kentucky or Michigan.16

- A

- 32 Oregon’s Residential Energy Tax Credit (RETC) was created in 1977 . After the Oregon

l egislature expanded the RETC program in 1997 to include residential refrigerators, clothes washers, and dishwashers, participation in the program increased significantly. For standard

sized refrigerators the program offers two level s of rebates for units between 12 and 30 ft.3 The required efficiency levels are 20 percent above Federal standard (ENERGY STAR) and 30 percent above Federal standard (CEE Tier 3). The program subsequently added credits for high

efficiency heat pump system s, air conditioners, and water heaters (2001); furnaces and boilers (2002); and duct/air sealing, fuel cells, heat recovery, and renewable energy equipment. For heating, ventilating, and air conditioning equipment; residential appliances; and water heaters

, the credit is $0.40 per kilowatt saved in the first year, or 25 percent of the net purchase price, whichever is less. The credit limit for energy efficient appliances and heating and cooling systems is $1,000 per calendar year; excess credit may be carri ed forward for 5 years. 1 7

Montana has had an Energy Conservation Tax Credit for resi dential measures since

1998. 1 8 , 1 9 The tax credit covers various residential energy and water efficient products, including ENERGY STAR heating/cooling equipment, water heaters, low

- flow showerheads and faucets, and light fixtures and controls. In 2002 the amount of the credit was i ncreased from 5 percent of product costs ( up to $150 ) to 25 percent ( up to $500 ) per taxpayer. The credit can be used for products installed in new construction or remodeling projects. The tax credit covers only that

part of the cost and materials that exceed established standards of construction.

Beginning in 2009 Indiana offer ed a tax credit to individuals and small businesses for costs associated with purchasing ENERGY STAR

- qualified central air conditioners, room air conditioners, furnaces, programm able thermostats, and water heaters. The credit may be claimed against state income tax, insurance premium tax, or financial institutions tax. The amount of the credit is 20 percent of the expenditure for qualified heating and cooling equipment, to a

maxim um of $100 per taxable year. The credit applies to expenditures made in 2009 and 2010; there is no carryover. 20

, 21

B eginning in 2009 Kentucky offered a 30 percent state income tax credit for taxpayers who install certain energy efficiency measures i n their principal residence or residential rental property. The q ualif ying products inc lude water heaters, heat pumps, central air conditioners, and

adv anced main air circulating fans. A product must meet the same energy efficiency guidelines

as specified for the F ederal tax credit for that residential product. The tax credit may not exceed $250. The credit, which applies to products purchased in taxable years 2009

– 2015, may be carried forward for 1 year. 22

, 23

Beginning in 2009 , certain Michigan low

- income taxpayers became eligible for a tax credit for the purchase and installation of qualifying energy efficient home improvements. The definition of qualifying home improvements is limited to the following categories: insulation

, water heaters, furnaces , windows, refrigerators, clothe swashers, and dishwashers

. All equipment must meet the EPA Energy Star efficiency criteria. The amount of the credit is 10% of the installed cost of each improvement, up to $75 for single filers and $150 for joint filers. A taxpayer may not make more than one claim under each equipment category during a single tax16

- A

- 33 year. The credit only applies to equipment purchased in 2009

- 2011

. If the amount of the credit exceeds a taxpayer's tax liability for a given year, the balance is refunded. 24

, 2516

- A

- 34 REFERENCES

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