Energy Conservation Standards forCommercial Refrigeration EquipmentANOPR Public MeetingNational Impact AnalysisBuilding Technologies ProgramOffice of Energy Efficiency and Renewable EnergyU.S. Department of EnergyAugust 23, 2007ANOPR Analyses Flow DiagramFrameworkDocumentANOPRNOPRFinalRuleNationalImpactAnalysisEnergy UseizationTechnologyAnalysisAnalysisPricePaybackPeriod AnalysisShipmentsAnalysisCharacterMarket andAssessmentScreeningEngineeringMarkups forEquipmentDeterminationLife-CycleCost and2PurposeShipments Analysis•To estimate commercial refrigeration equipment shipments over time.National Impact Analysis•To estimate the National Energy Savings (NES) from commercial refrigerationequipment efficiency standards at different levels.•To estimate the national economic impact on the nation (or the Net PresentValue (NPV)) from equipment efficiency standards at different levels.Correction Note: The NPV results shown in the TSD and presented inthese slides differ from what is provided in the ANOPR as they include theimpact of corrections to the fuel escalation rates that were madesubsequent to the preparation of the ANOPR.3National Impact Analysis ProcessShipmentsEnergyEconomicImpactsLCCOther InputsModelNationalSavingsNationalAnalysisResults andNationalEnergy Savings(Quads)NationalNet Present Value(2006 US $, billion)National energy savings calculated for period from 2012-2042 (30 years)NPV calculated for period from 2012-20524ANOPR Issues for Public CommentCharacterizing the National Impact Analysis Base Case (Issue #10)Base Case and Standards Case Forecasts (Issue #11)Differential Impact of New Standards on Future Shipments byEquipment Classes (Issue #12)5Shipment AnalysisShipments Model InputsInputData Source/DescriptionCommercial Building DataForecasted New Construction: 2005-2030U.S. DOE-EIA,2006 Annual Energy Outlook,Food Sales BuildingsForecasted Stock: 2005-2030U.S. DOE-EIA,2006 Annual Energy Outlook,Food Sales BuildingsForecasted New Construction: 2031-2042Extrapolation of last 10years growth fromU.S. DOE-EIA,2006 AnnualEnergy Outlook, Food Sales BuildingsMarket Saturation Data(percent of floor spacewith commercial refrigeration equipment) andReplacementsNew and stock saturationAssumed identical for stock and new constructionReplacements driven by EquipmentLifetimeFrom Life-Cycle Cost Analysis (10 year average lifetime)Shipments by Product ClassRelative Shipments by Product ClassFrom 2005 ARI shipment data converted to linear feet of equipmentusing estimated average equipment class dimensions6Shipment AnalysisShipments Modell)ialillass% ShiCl (2005)NEMS Food Sa es BldgConstruction ForecastARI Estimate ofShipments (2005Init ReplacementShipmentsInit al Shipments to NewConstructionInitial CRE StockEstimated Lifetimeof CRE StockShipments to NewConstructionReplacementShipmentsTotaShipments ByProduct Cpments by ProductassCRE Stockby ProductClass7Shipment AnalysisShipments Model ResultsEquipment ClassThousands of Linear Feet Shipped by Year and Equipment Class20122015202020252030203520402042CumulativeVOP.RC.M42344649053859164971474217574VOP.RC.L*000000000VOP.SC.M28303336404448501182VCT.RC.M30323538424651531255VCT.RC.L42044348753558764570973717456VCT.SC.I1011121314161718430VCS.SC.I33334445107SVO.RC.M32334037441145149554556613405SVO.SC.M43454954596572751769SOC.RC.M8186941041141251371433379HZO.RC.M50525763697684872060HZO.RC.L1561641811982182392632736476HZO.SC.M44455666152HZO.SC.L8891011121313315HCT.SC.I34353943475257591397*Estimated shipments of this class were zero. The industry requested that this equipment class be included in the rulemaking8National Impact AnalysisInputsShipments•Annual linear feet of equipment by equipment class fromshipments analysisTotal Installed Cost•National average cost per linear footby equipment class and efficiency leveltaken from LCC analysisRepair and Maintenance Costs•Average annualized values per linear foot byequipment class and efficiency leveltaken from LCC analysisAnnual Energy Use•National average annual energy use perlinear foot by equipment class andefficiency levelMarket Shares by Efficiency Level•Estimated for base case using commercial customer risk-premium factors fromEIA NEMS model and CRE LCC analysis results•Developed for each standardscase using a roll-up approach -- base-case marketshares below a standard level are “rolled into” the market shares at the standardlevel9National Impact AnalysisInputs (cont.)Efficiency Trends•Future trends in average equipment efficiency improvementover time not forecastdue to lack of historical market dataEnergy Prices Escalation•2012 weighted-average CRE electricityprices taken from LCC analysis•Future electricity prices adjusted using2006 Annual Energy Outlook (2030-2042estimated using 2020-2030 forecast trends)Electricity Site-to-Source Conversion Factors•Conversion factors forecast using2006 Annual Energy Outlook (2030-2042estimated using 2020-2030 forecast trends)•Factors vary annually and account for generation, distribution, and transmissionlossesDiscount Rate•7% and 3% real from OMB’s Regulatory Analysis Guideline A-4•Future expenses discountedto 2007, reported in 2006$10Market Share in NIA BaselineNational Impact AnalysisExample Base Case Market Shares by Efficiency LevelVOP.RC.M25%20%15%10%5%0%Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8Efficiency Level11National Impact AnalysisCharacterizing the National Impact Analysis Base Case(Issue #10)Base case market shares by efficiency level are developed using aeconomic modelDOE does not have data with which to calibrate these marketshares to actual shipments by efficiency level.DOE invites comments on the proposed economic-based approach forestimating market shares.12National Impact AnalysisBase Case and Standards Case Forecasts(Issue #11)DOE did not have historical data to indicate how equipmentefficiencies have changed over time or might change in the future.Forecasted market shares for efficiencies above the candidatestandard level remain frozen at the 2012 efficiency level until theend of the forecast periodDOE invites comments on its basis for the forecasted base case andstandards case efficiencies and its prediction on how standards impactefficiency distributions in the year that standards take effect.1314Example Cumulative Energy Savings and Net PresentValue by Efficiency Level (VOP.RC.M)National Impact Analysis00.10.20.30.40.50.6 

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e v e l 800.050.10.150.20.250.30.350.40.450.5NPVCumulative Source Energy Savings and NPVStandard Level

Cumulative Energy Savings (Quads) NPV (Billion 2006$)Energy SavingsNational Impact AnalysisExample Net Present Value Results:(VOP.RC.M, EFF Level 6, 7 percent discount rate)00.020.040.060.080.10.120.140.16YeariiiDiNet Savings-0.06-0.04-0.022012 2016 2020 2024 2028 2032 2036 2040 2044 2048

Billion 2006$Undiscounted Total Annual Operat ng SavingsUnd scounted Annual Equipment Purchase Sav ngsscounted Total Net Annual Impact15National Impact AnalysisANOPR NIA ResultsNational Energy Savings (2012-2042) range from 0.12 quads at Level2 to 1.73 quads at maximum efficiency level analyzed (15 equipmentclasses)Range of NPV Savings was from $120 million to $1.4 Billiondepending on levels selected for all product classes at 7% discountrate$360 Million to $4.3 Billion at 3% discount rateApproximately 86% of estimated potential NPV savings and 84% ofenergy savings comes from 4 product classes (VOP.RC.M,VCT.RC.L, SVO.RC.M, HZO.RC.L)16National Impact AnalysisDifferential Impact of New Standards on Future Shipmentsby Equipment Classes(Issue #12)The shipments model used by DOE presumes that the relativemarket shares between equipment classes remains constant overtimeDOE is concerned that higher standards set for specific classes ofproducts could shift the market to use other equipment that mayhave greater energy consumptionDOE seeks stakeholder input on how the standards-setting processcan reduce or eliminate these potential market shiftsDOE invites comments regarding whether higher standard levels inspecific equipment classes are likelyto cause commercial refrigerationequipment customers to shift to using other, less-efficient equipmentclasses for displaying merchandise.17National Impact AnalysisOther IssuesDOE invites comments and recommendations from stakeholders onany other aspects related to the National Impacts Analysis.18