EE-RMISTD-98-440 _

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-~

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Central A.C. Rulemaking June 30,1998 U.S. Department of Energy Office of Energy Efficiency and Renewable Energy

1000 Independence Avenue, SW Workshop Washington, DC 20585

F:

EE-RM-STD-98-440 COMMENT 01CC1 ,; -' 

Central A.C. Rulemaking 

Workshop 

EE-RM/STD-98-440 

June 30,1998 

cc 

u.s. Department of Energy 

Office of Energy Efficiency 

and Renewable Energy 

I 

1000 Independence Avenue, SW 

Washington, DC 20585 

-
EE-RMISTD-98-4 4 0- C--

Central Air Conditioner and Heat Pump Workshop

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· . . . June30, 1998 2

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EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO-98-440 ... CCr 1 

Central Air Conditioner and Heat Pump Workshop 

• 

• June 30, 1998 2 
EE-RM/STD-98-440

Introduction

Objective of the Workshop

V. To discuss the process and analytical methodologies to be used in a

rulemaking to revise the current energy conservation standards for

central air conditioners

V/ To review the Rulemaking Framework document

Vi To determine Product Classes

V/ To decide how baseline units will be selected

'V To discuss screening of design options

V To discuss analysis of heat pumps. Can simplified relationships of

cooling to heating be used?

June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 

Introduction 

Objective of the Workshop 

lJ To discuss the process and analytical methodologies to be used in a 

rulemaking to revise the current energy conservation standards for 

central air conditioners 

fil To review the Rulemaking Framework document 

\.iI To determine Product Classes 

rtJ To decide how baseline units will be selected 

ri/ To discuss screening of design options 

\t:. To discuss analysis of heat pumps. Can simplified relationships of 

cooling to heatin·g be used? 

Juna 30, 1998 3 
EE-RM/STD-98-440

Introduction

Proposed Schedule

V19 1998

Data Collection (manufacturing costs for Engineering Analysis)

begins in August

i 1999

' Complete Engineering Analysis in February

' Publish the Supplemental ANOPR in July

Data Collection for Manufacturer and other National Impact

Analysis begins in July

June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

-., 

EE-RM/STD-98-440 

Introduction 

Proposed Schedule 

:VJ 1998 

~ Data Collection (manufacturing costs for Engineering Analysis) 

begins in August 

::VJ 1999 

~ Complete Engineering Analysis in February 

~ Publish the Supplemental ANOPR in July 

~ Data Collection for Manufacturer and other National Impact 

Analysis begins in July 

June 30, 1998 4 
EE-RM/STD-98-440

Introduction

Proposed Schedule (cont'd)

V 2000

· Publish NOPR in March

' Complete Final Rule and submit for OMB approval

· Publish Final Rule in November

·iy Effective Date November 2005

June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

! 

I . 

I 

EE-RM/STD-98-440 

I ntrod uction 

Proposed Schedule (cont'd) 

f~ 2000 

~ Publish NOPR in March 

. ~ Complete Final Rule and submit for OMS approval 

.... .j 

fVj 

~ Publish Final Rule in November 

Effective Date November 2005 

June 30, 1998 5 
EE-RM/STD-98440 C CIntroduction

Proposed schedule will require Stakeholder inputs at various stages.

Central AC-HP Rulemaking Schedule

Key Dates for Manufacturers

c

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Framework Workshop

Collect data for Engineering/

LCC analyses

Notice for Engineering/ LCC

Workshop _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Engineering/ LCC Workshop

Publish ANOPR

Comment Period

ANOPR Workshop

Distribute MIA Survey

Analyze MIA Results

MIA Workshop

Comment Period

Publish NOPR

Comment Period _

NOPR Workshop

Publish Final Rule

June 30. 1998 6

* 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iiii~i~~

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 tt-l 

Introduction 

Proposed schedule will require Stakeholder inputs at various stages. 

I~ I~ I~ I, I~ Ii 16 I~ Il I~, dll't:vvork Workshop 

Iii Comment·Period 

IManufacturer Visits 

',::. 

Icoi~r Eng"""'""ul ~:;~:;;:;:::: . ILee '",,,,yses 

INotice for Engineeringl Lee 

IWorkshop 

Engineeringl Lee Workshop 

Comment Period 

Publish ANOPR 

Comment Period 

IANOPR Workshop 

Distribute MIA Survey 

IAnalyze MIA Results 

IMIA Workshop 

Comment Period 

Publish NOPR 

Comment Period 

'NOPR Workshop 

1Dublish Final Rule 

Central AC-HP Rulemaking Schedule 

Key Dates for Manufacturers 

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June 30, 1998 6 
EE-RM/STD-98-440 Cb~-

Introduction

The Department will rely on several resources throughout the

process.

OCS Team Leader - Ed Pollock

V Peer reviews

Frequent Stakeholder reviews

What Contractor capabilities are needed?

g,",,.,¢e I ' t ,,.J~ ~ c. June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 

Introduction 

The Department will rely on several resources throughout the 

process . 

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~V.) 

.:.j 

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.... j 

.VJ 

OCS Team" Leader - Ed Pollock 

Peer reviews 

Frequent Stakeholder reviews 

What Contractor capabilities are needed? 

June 30, 1998 7 
EE-RMISTD-98 W40 CC-,

Central Air Conditioner and Heat Pump Workshop

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EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - c:.c. J 

Central Air Conditioner and Heat Pump Workshop 

June 30, 1998 8 
EE-RM/STD-98-440 -<

Analytical Framework for Central A.C. Rulemaking Analysis

Approaces Key-Inputs Analysis Key-oututs

Industry Review Identify Firms/ Products * Preliminary Base Case AN Preliminary B eMarket ----------------------- ---- ^ Prpliminarv Markpt*- Shipment Forecast

Quantitative Analysis Historical Information Preliminary arket Shipment Forecast

1 ~~~~~~~~~& Technology Qualitative Analysis-nterviews i Market/ Firm Segmentation Characterization

I '

Existing Technology Options

Identification &

Prototype Designs , Screening Analysis

Design-Option Approach E

Cost Modeling Approach Cost IIIZZ--------i-~~'^. Cost I ! & Efficiency-Level Approach Efency/Perforance ··· ··· Efficiency/Performirance Engineering

Ii | * . Analysis '

Energy/Water rates I

Ii ---------- I IP I | *&

o Maintenance/Service Costs . , !

~ · ,l ~.~ *______A Average P______y Payback with Uncertainty

Market Survey Approach Marki eta SUey Approach c ..- Life-cycle , r 1 Cos Cost 5 .* Average Life-cycle with Uncertainty Market y --------- r ; S PriceF Retail Prices Ley Colyi Analysis Expert Forecasts. Base Case'

I . ·*Other i 

............. i. efficiencies

iii * Payback

i J ; '"""""""'! ................ .· EEnergy savings Expert Forecasts i Energy savings ______Expert _ __ _ jI- * S tRetail R etail Prices * Net Present Values --- hir ~ nts . ................................ Prelim N n al - I---Nt-Peset-V lue

Models-REM, REEPSetc '; i Ipmen Benefit Analysis

*Housing demand 7 *BaseCase

· Historical shipments i Other efficien ies

Product saturation i Efficency i

* Voluntary initiatives distribution

ANOPR t -...- ,. .. .. t ,t-' -.. . June30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO-98-440 - 0:::..1 

Analytical Framework for Central A.C. Rulemaklng Analysis 

Id n ustry R I evew 

QUantitative Analysis 

Qualitative Analysis--:-lntervlews 

Design-Option Approach 

Cost Modeling Approach 

Efficiency-Level Approach 

I 

Key-Inputs 

Id entl 'fy F' Irms / P d ro ucts 

Historical Information 

Market! Firm Segmentation 

Existing Technology Options I 

Prototype Designs 

Cost 

, ..... .I! i Efficiency/PerforlJlance i : : . ! Cl. ! I 

-- .!! 

., 

'8 

E 

.. 

I 

Analysis 

Preliminary Market 

& Technology 

Characterization 

~ Identification & 

Screening Analysis 

:g 

Engineering 

Analysis 

~ I 

1 : I:. ~ ~ • \ ....................................................... L ............. . I I ~ EnergylWater rates 1 ~ 1 i~ I ~g I ~~ ! I 0 Maintenance/Service Costs I ~ & 1 it !l 

Key-Outputs 

. P r . relmlnary Sa se C ase 

. • Shipment Forecast 

.. 

IT 

r2 

3 

• Average Payback with Uncertainty 

Market • Average Life-cycle with Uncertainty· Survey Approach I L.~.-----....., rrt R t '1 P . I! L_.... ...r---;L:-;i;:fe:--:Cy::c~VI:e-;C~o::s::t:---, -----------t+----+ I Price e al nces "i,---I!:o-l Analysis r ... s ...... ------t----------cExpert Forecasts i Ir--L~.....,..l!6!J1 I I -----------r...... . .1: . Base Case : • j I!' Other I i , ..................... ..! I;! elficlencies :: I I , ........ · .. · .. ·1 I 

:Ex~p::e::.:rt..:.F.:o.:.:re::c:as::t:.s ----.....:-.H-.:! -4'11 ---F::S:::h:";:ip:':m=-=e-=n=ts' . l!:!~~~.I)"~'~??~'~I""''''''''''~ Models-REM, REEPS etc:-= 1 

• Housing demand I I 1..--r __ ,.17 ... Base Case : 

: ~~~~~a!=~~~~~ts I I I : ~~~~~~~Clentes • Voluntary initiatives I ! distribution : 

I • 

V~ ANOPR 

, 

• Payback 

• Energy savings 

• Net Present Values Preliminary National 

Benefit Analysis rs1 

June 30. 1998 9 
EE-RM/STD-98-440 - ,

I I I I

II I

ij {: I . . . !

ANOPRi i i i

III

Ii

i Manu r Revised Pre-ANOPR ... . .... ............ A nalyses 

Average 1

Cos i Fuelt Types t i I · Payback Distribution i Consumer CLife-cycleDistribution 

i Ans is Demographics- t' Sub-group Analysis sI

Intervi ii si M anufacturer Prices__

i ............... .................... ........................... ........., ;I C -l

;s Industry Alyi Industry Cash-flow with Uncertainty

Average Cash-flow _ C osts ...... .. ...................... Cost (C) Price Case I II I* Stan dard Level Casesinana I . , . Employment Impacts f~ *~.· Efficiency Distribution I · Capacity Impacts

Emss for Cases all I UityRvneL s 

;I all Cases ;-Uti ~for · Competitive Impacts Interviews ___ ________ · ,,4UManufacturer _ . Cumulative Impacts

GRIM Analysis RULEeI Ipacts G RIM- A nalysis--- t I m p acts--* ----- 1; S ub-group C ash-flow s

Cost (C), Price (P),

Quantity (Q), Financial (F) i

I I tS !Utlma I

.B ------- ______V Peak-Demand Reductions_

-Emission rates - Environmental , ulilily Revenue Losses 

Utility load factors j j Analysis 1 Emissions I 1 -7 1

NOPR I I i I

I I

FINAL RULE Revise Analysis 1

I I

June 30, 1998 10

EE-RM-STD-98-440 COMMENT 01CC1

ANOPR 

Interviews 

GRIM Analysis 

NOPR 

FINAL RULE 

I I "", i I I : 

i i Manufacturer Prices I , 

:. .... · .. ··· .... ·······-Q· ........ ····· ...... ·· .... · .. · .. · .... · ........ f ........ ·~. 

·A~~·~~g·~············~ ....... · ... ·.·.~·.· ... · ..... · ............... · ............................................... t. ................ ~ .. Costs • Base Case I, 

I : • Standard Level Cases I i • Efficiency Distribution I i 

for all Cases : i I ' drr 

Cost (C). Price (P), 

Quantity (Q), Financial (F) 

Emission rates 

Utility load factors 

! 

~-

~ 

-

EE-RM/STD-98-440 -- <=c I 

Revised Pre-ANOPR 

Analyses ................ 

9 ; 

I 

• I 

Consumer I • Payback Distribution 

• life-cvcle Distribution 

Sub-group Analysis RO i 

I 

: 

........ 1 

~ 

Industry Industry Cash-flow with Uncertainty 

Cash-flow 

i 

I 

• • Employment Impacts 

• Capacity Impacts 

• Competitive Impacts 

Manufacturer • Cumulative Impacts 

Impacts r12 Sub-group Cash-flows 

V Peak-Demand Reductions 

Utility Impacts (i3 Environmental Utilitv Revenue Losses 

13 Analysis 114 Emissions 

! I 

1 

Revise Analysis 

June 30, 1998 1 0 
EE-RM/STD-98-440 -cc,

Review of Rulemaking Framework Market and Technology Assessment

The Department proposes to develop information on the present and

past industry structure and market characteristics

V./ Market Assessment

> What information should be in the market assessment?

· Should this information be distributed for stakeholder comment and

review by other interested parties?

) The Department will interview individual manufacturers to develop

a better understanding of the potential impacts of standards on

both individual firms and particular categories of firms

· The Department needs to collect baseline shipment data

' Technology Assessment

) Are there specific technologies that should or should not be

considered for central air conditioners and heat pumps?

^ *E'a i-^t.3 4:. '" June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO-98-440 ,-c::.c... I 

Review of Rulemaking Framework Market and Technology Assessment 

The Department proposes to develop information on the present and 

past industry structure and market characteristics 

l~ Market Assessment 

~ What information should be in the market assessment? 

~ Should this information be distributed for stakeholder comment and 

review by other interested parties? 

~ The Department will interview individual manufacturers to develop 

a better understanding of the potential impacts of standards on 

both individual firms and particular categories of firms 

~ The Department needs to collect baseline shipment data 

:~ Technology Assessment 

~ Are there specific technologies that should or should not be 

considered for central air conditioners arid heat pumps? 

June 30, 1998 11 
EE.RMISTD-98440 - c

Review of Rulemaking Framework Product Classes

Product classes are based on the type of energy used, and capacity

or performance-related features that provide utility to the consumer

and affect efficiency

i" Existing classes for central air conditioners and heat pumps

' Split system

· Single-package systems

VI Are new classes warranted?

' Classes based on cooling or heating capacity

Ductless split systems

Through-the-wall condensing units

' Limited temperature range heat pumps

' Combination space-conditioning/water-heating systems

Small-duct, high-velocity systems

June 30, 998 12

EE-RM-STD-98-440 COMMENT 01CC1

EE-RMlSTD-98-440 - c.c..., 

Review of Rulemaking Framework Product Classes 

Product classes are based on the type of energy used, and capacity 

or performance-related features that provide utility to the consumer 

and affect efficiency 

!~ Existing classes for central air conditioners and heat pumps 

~ Split system 

~ Single-package systems 

:iA Are new classes warranted? 

~ Classes based on cooling or heating capacity 

~ Ductless split systems 

~ Through-the-wall condensing units 

~ Limited temperature range heat pumps 

~ Combination space-conditioning/water-heating systems 

~ Small-duct, high-velocity systems 

June 30, 1998 12 
EE-RM/STD-98-440- cReview of Rulemaking Framework Baseline Units

The baseline unit is the starting point for analyzing efficiency

improvements and usually represents a model with the minimum

allowable energy efficiency

4/ Level of detail dependent on the approach used for the Engineering

Analysis

' Efficiency level approach requires only the baseline model's energy

efficiency

- Split systems: 10.0 SEER; 6.8 HSPF for heat pump heating performance

- Single-package systems: 9.7 SEER; 6.6 HSPF for heat pump heating performance

More detailed approaches (e.g., design option, reverse

engineering) require more detailed data

- Physical characteristics needed in addition to performance data

Jun 30, 1998 13

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - <::.<:.., 

Review of Rulemaking Framework Baseline Units 

The baseline unit is the starting point for analyzing efficiency 

improvements and usually represents a model with the minimum 

allowable energy effici.ency 

iV. Level of detail dependent on the approach used for the Engineering 

Analysis 

~ Efficiency level approach requires only the baseline model's energy 

efficiency 

- Split systems: 10.0 SEER; 6.8 HSPF for heat pump heating performance 

- Single-package systems: 9.7 SEER; 6.6 HSPF for heat pump heating 

performance 

~ More detailed approaches (e.g., design option, reverse 

engineering) require more detailed data 

- Physical characteristics needed in addition to performance data 

June 30, 1998 1 3 
EE-RM/STD-98-440 .-

Review of Rulemaking Framework Design Options

A list of design options will be developed from the technologies identified in the technology assessment

Only those design options meeting the following criteria will be

considered

' Practicable to manufacture

' Practicable to install and service

' No adverse impact on product utility or availability

· No adverse impact on health and safety

4$ Design options important for establishing maximum technologically feasible designs

4i Fuel-driven technologies not considered as design options

NAECA specifies that product must be "powered by single phase

electric current"

June 30, 1998 14

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ._ CC-, 

Review of Rulemaking Framework Design Options 

A list of design options will be developed from the technologies 

identified in the technology assessment 

".j 

v.,~ Only those design options meeting the following criteria will be 

considered 

~ Practicable to manufacture 

~ Practicable to install' and service 

~ No adverse impact on product utility or availability 

~ No adverse impact on health and safety 

:4/- Design options important for establishing maximum technologically 

feasible designs 

.,~ Fuel-driven technologies not considered as design options 

~ NAECA specifies that product must be "powered by single phase 

electric current" 

June 30,1998 14 
EE-RM/ST'D-98-440 _ C-,

Central Air Conditioner and Heat Pump Workshop

3E gieein Aalsil:t Cffo:ecion

June 30,198 g8

* _ _ irb.~~w g4

EE-RM-STD-98-440 COMMENT 01CC1

EE.-RM/STD-98-440 __ u::..., 

Central Air Conditioner and Heat Pump Workshop 

June 30, 1998 15 
EE-RM/STD-98-440 --

Engineering Analysis/Data Collection Introduction

The purpose of the Engineering Analysis is to estimate the energy

savings potential from increased equipment efficiency levels.

V1 Efficiency increases based upon the baseline units selected

At Cost-efficiency relationships developed to show the manufacturer cost

of achieving increased efficiency

Efficiency and cost data to be based upon manufacturer data

submittals

A Ranges and uncertainties in data to be accounted for

Three approaches for conducting Engineering Analysis are being

considered

' Efficiency Level

Design Option

' Reverse Engineering

.1 Engineering Analysis data to be combined with end-user (i.e.

installation, servicing etc.) costs in the Life-Cycle Cost Analysis

June 30, 1998 16

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - c:.c.. / 

Engineering AnalysislData Collection Introduction 

The purpose of the Engineering Analysis is to estimate the energy 

savings potential from increased equipment efficiency levels. 

:~ Efficiency increases based upon the baseline units selected 

.~ Cost-efficiency relationships developed to show the manufacturer cost 

of achieving increased efficiency 

.~ Efficiency and cost data to be based upon manufacturer data 

submittals 

:J. Ranges and uncertainties in data to be accounted for 

:J. Three approaches for conducting Engineering Analysis are being 

considered 

~ Efficiency Level 

~ Design Option 

~ Reverse Engineering 

:J. Engineering Analysis data to be combined with end-user (Le. 

installation, servicing etc.) costs in the Life-Cycle Cost Analysis 

June 30,1996 16 
EE-RM/STD-98-440 - c

Engineering Analysis/Data Collection Efficiency Level Approach

In the Efficiency Level Approach, a relationship between

manufacturer cost and increased efficiency is established at

predetermined efficiency levels.

i PROS

' Simple and straightforward

- Incremental cost data provided for incremental efficiency increases

- Cost-efficiency curves easily constructed

- Clearly identifies when significant cost impacts are incurred to raise

efficiency

' Unique and proprietary design strategies are not revealed

V CONS

' Cost verifications difficult as technological details are not provided

' Prototypical and Maximum Technologically Feasible designs

difficult to evaluate

' Application to heat pumps is more difficult

of, fd,~-. '', -n' -'; _ 2 June 30,1998 17

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - a::.. 

I 

Engineering Analysis/Data Collection Efficiency Leve/ Approach 

In the Efficiency Level Approach, a relationship between 

manufacturer cost and increased efficiency is established at 

predetermined efficiency levels. 

[~ PROS 

~ Simple and straightforward 

- Incremental cost data provided for incremental efficiency increases 

-.Cost-efficiency curves easily constructed . 

- Clearly identifies when significant cost impacts are incurred to raise 

efficiency 

~ Unique and proprietary design strategies are not revealed 

[~ CONS 

~ Cost verifications difficult ~s technological details are not provided, 

~ Prototypical and Maximum Technologically Feasible designs 

difficult to evaluate 

~ Application to heat pumps is more difficult 

June 30, 1998 17 
EE-RM/STD-98-440 _ -

Engineering Analysis/Data Collection Efficiency Level Approach

Heat pumps are available in a range of heating (HSPF) and cooling (SEER) efficiency combinations.

SEER/HSPF Combinations in Available Residential

Unitary Heat Pumps

Source: ARI Data Feb-Jul 1998

10

9.5-

9 S

8.5 .. ..

8 *In what ways could the efficiency level approach be applied to

I.A. 8 ee*- ,^(",. Vt~~~~~~~~i *P" 'June 318

(o 8

7.5

7

6.5

6

8 10 12 14 16 18

SEER

/ In what ways could the efficiency level approach be applied to

conveniently account for both efficiency ratings?

.... '-- ~ ~"~'~June30, 1998 18 ~; ~' .......... ', '~ ~~~~~ 18

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - c.~ I 

Engineering Analysis/Data Collection Efficiency Leve/ Approach 

Heat pumps are available in a range of heating (HSPF) and cooling 

(SEER) efficiency combinations. 

10 

9.5 

9 

8.5 

u. 

D-

(/) 8 

::J: 

7.5 

7 

6.5 

6 

8 

SEER/HSPF Combinations in Available Residential 

Unitary Heat Pumps 

Source: ARI Data Feb-Ju11998 

•• 

. _11' 

• 

10 12 14 16 

SEER 

18 

.; -In what ways could the efficiency level approach be applied to 

conveniently account for both efficiency ratings? 

June 30, 1998 18 
EE-RM/STD-98-440 - b_/

Engineering Analysis/Data Collection Design Option Approach

In the Design Option Approach, individual or combinations of design options are identified and added to the baseline model in ascending order of cost-effectiveness.

V PROS

' The impact of individual technologies on cost and efficiency is

explicit

· Able to incorporate prototypical designs and more easily establish

Maximum Technological Feasible designs

.I"C CONS

· Tends to be complex

- Individual technologies may be combined in ways not typically utilized by manufacturers

· Validation of Computer simulation models typically used to estimate

efficiency is time consuming

· Imperfect compatibility with Manufacturer Impact Analysis

- Other approaches may be required to derive manufacturing cost estimates

June30, 1998 19

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - ~I 

Engineering Analysis/Data Collection Design Option Approach 

In the Design Option Approach, individual or combinations of design 

options are identified and added to the baseline model in ascending 

order of cost-effectiveness. 

1./ PROS 

~ The impact of individual technologies on cost and efficiency is 

explicit .~ : 

~ Able to incorporate prototypical designs and more easily establish 

Maximum Technological Feasible designs 

:.~ CONS 

~ Tends to be complex 

- Individual technologies may be combined in ways not typically utilized by 

manufacturers 

~ Validation of Computer simulation models typically used to estimate 

efficiency is time consuming 

~ Imperfect-compatibility with Manufacturer Impact Analysis 

- Other approaches may be required to derive manufacturing cost estimates 

June 30,1998 19 
LBNL EE-RM/STD-98-440 C cc,

Engineering Analysis/Data Collection Reverse Engineering Approach

In the reverse engineering approach, equipment on the market is

disassembled and analyzed to identify the technologies and designs

used to increase efficiency and to determine their manufacturing cost

impacts.

A PROS

> "Real" market equipment used to establish which technologies

manufacturers use to attain various efficiency levels

' Multiple design variations can be addressed on an add and omit

basis

' "Bottoms-up" approach used to establish costs

C/ CONS

' Significant time and effort to analyze "real" equipment

- Several models from a diverse range of mfgs may need to be assessed

' Prototypical and Maximum Technologically Feasible designs difficult

to evaluate

June 30,1998 20

EE-RM-STD-98-440 COMMENT 01CC1

LBNL EE-RM/STD-98-440"'- Cc., 

Engineering Analysis/Data Collection Reverse Engineering Approach 

In the reverse engineering approach, equipment on the market is 

disassembled and analyzed to identify the technologies and designs 

used to increase efficiency and to determine their manufacturing cost 

impacts. 

:~ PROS 

~ "Real" market equipment used to establish which technologies 

manufacturers use to attain various efficiency levels 

~ Multiple design variations can be addressed on an add and omit 

basis 

~ "Bottoms-up" approach used to establish costs 

.~ CONS 

~ Significant time and effort to analyze "real" equipment 

- Several models from a diverse range of mfgs may need to be assessed 

~ Prototypical and Maximum Technologically Feasible designs difficult 

to evaluate 

June 30,1998 20 
EE-RM/STD-98-440 -cc,

Central Air Conditioner and Heat Pump Workshop

.::::,-,f::: ;.'. .- :.::~ : ~ g. g ... .. ........... v .: .... ' g -

-; l^^ : :; ^a: - . . - B .. : : : :: i:..:: . :i .. i. fi

3 Engineet.ring Analysis/Dtea Colaleto

7R ^ Energ Savings:^ilForeo sJ3

8g. Rfg nalnd h Efngineering Issuel:Brss

June 30,1998 21

EE-RM-STD-98-440 COMMENT 01CC1 .J 

EE-RM/STD-98~440 - C<:..., 

Central Air Conditioner and Heat Pump Workshop 

June 30.1998 21 
EE-RMnti,/S' -oS-440 -'-c

Manufacturing Costs Introduction

Manufacturing costs are used in:

[V Life-cycle-cost analysis (LCC)

Retail prices, which are used in LCC analysis, could be

obtained using manufacturing costs and "average" retail

mark-ups

[I Manufacturer Impact Analysis (MIA)-

Manufacturer prices, which are needed to perform cash

flow analysis, are obtained using manufacturing costs and

"average" manufacturer mark-ups

June 30,1998 22

EE-RM-STD-98-440 COMMENT 01CC1

Manufacturing Costs EE-p.ri:~/S-:-Q-C3-440 -c.....c I 

Manufacturing costs are used in: 

[iii Life-cycle-cost analysis (LCC) 

~ Retail prices, which are used in LCC analysis, could be 

obtained using manufacturing costs· and "average" retail 

mark-ups 

[iii Manufacturer Impact Analysis (MIA)-

Introduction 

~ Manufacturer prices, which are needed to perform cash 

flow analysis, are obtained using manufacturing costs and 

"average" manufacturer mark-ups 

June 30,1998 22 
EE-RM/STD-98-440 -c,

Manufacturing Costs Data Collection and Analysis

The Department proposes to collect and analyze manufacturer cost

data in a process similar to that used for the clothes washer and

water heater rulemakings.

Data Collection

0*oX , Best estimate

Manufacturers will be asked to provide

ranges of estimated fixed and variable I Minimum Maximum

costs for units having various

efficiencies and capacities.

Incremental Cost ($/Unit)

Data Analysis ' Percentile

/ -100%

The cost estimates from the various / -75%

manufacturers will be aggregated and / --50%

used to develop cost-efficiency E ~ - 25%

relationships for the industry. -oo%

IE A more detailed example from the

10 12 14 16 18 20 clothes washer rulemaking is 10 12 14 16 18 20

presented in the Appendix SEER

June 30,1998 23

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - c.c. I 

Manufacturing Costs Data Collection and Analysis 

The Department proposes to collect and analyze manufacturer cost 

data in a process similar to that used for the clothes washer and 

water heater rulemakings. . 

Data Collection' 

Manufa'cturers.,wHI be asked to provide 

ranges of estimated fixed and variable 

costs for units. having various 

efficiencies and capacities. 

f . 

Data Analysis 

. The cost estimates from the various 

manufacturers will be aggregated and 

used to develop cost-efficiency 

relationships for the industry. 

q A more detailed example from the 

clothes washer rulemaking is 

presented in the Appendix !!';r:·:t.tt~\2'l n~.7;';~'-;,:. ,; ':# 

g , / Best estimate 

:5 

~ Minimum Maximum 

~ \ 

.... 

til 

0 

0 

-~ CQ .- . .... c 

CD_ c~ 

E~ 

~ (.) 

c 

-

Incremental Cost ($/Unlt) 

10 12 14 16 18 20 

SEER 

Percentile 

--100% 

-=-75% 

--50%' 

--25% 

--0% 

June 30, 1998 23 
EE-RM/STD-98-440 - ,

Manufacturing Costs Data Collection and Analysis

Data sheets will be distributed to manufacturers to collect relevant

cost and efficiency information for the Life Cycle Cost and National

Benefits Analyses.

For a typical product in each class and at each candidate standard level,

manufacturers will be asked to provide the following information:

' Efficiency ratings - Cooling EER and COP's for heat pump heating

Sales volume - Number of units currently sold that meet the

standard level

' Variable costs - Additional per unit materials, labor, and overhead

' Fixed costs - Manufacturing conversion costs

· Uncertainty ranges - Maximum and minimum cost estimates

· Dealer price increase - Estimated per unit increase in dealer price

June 30,1998 24

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - Gt:::.., 

Manufacturing Costs Data Collection and Analysis 

Data sheets will be distributed to manufacturers to collect relevant 

cost and efficiency information for the Life Cycle Cost and National 

Benefits Analyses. 

: ./ For a typical product in each class and at each candidate standard level, 

manufacturers will be asked to provide the following information: 

~ Efficiency ratings - Cooling EER and COP's for heat pump heating 

~ Sales volume - Number of units currently sold that meet the 

standard level 

~ Variable costs - Additional per unit materials, labor, and overhead 

~ Fixed costs - Manufacturing conversion costs 

~ Uncertainty ranges - Maximum and minimum cost estimates 

~ Dealer price increase - Estimated per unit increase in dealer price 

June 30,1996 24 
EE-RM/STD-98-440, c_

Manufacturing Costs Data Collection and Analysis

The Department will attempt to maintain the quality of the analysis while collecting a minimum amount of data.

V Manufacturers will be asked to define and describe what they

consider to be the maximum technically feasible design.

V Each class will be represented by a unit having the average capacity

for that class.

The Department will define data categories thoroughly in attachments

accompanying the data sheets.

Are there data that cannot be provided or any additional data that

also should be considered?

- Sample data collection sheets are included in the Appendix

June 30.1998 25

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440,- G:::.. 

I 

Manufacturing Costs Data Collection and Analysis 

The Department will attempt to maintain the quality of the analysis 

while collecting a minimum amount of data. 

1'; Manufacturers will be asked to define and describe what th~y 

consider to be the maximum technically feasible design. 

ril Each class will be represented by a unit having the average capacity 

for that class. 

(~ The Department will define data categories thoroughly in attachments 

accompanying the data sheets. 

ltJ Are there data that cannot be provided or any additional data that 

also should be considered? 

... Sample data collection sheet~ are included in the Appendix 

June 30,1998 . 25 
EE-RM/STD-98-440 -o,

Manufacturing Costs Timetable

The Department intends to collect cost information from August

through November, 1998.

[I Is the data collection time frame reasonable ?

[l Can individual manufacturers submit data ? (Individual data is

required for manufacturer cash flow analysis.)

I=. Department prefers that individual manufacturer data sets be

submitted to a third party.

June 30, 1998 26

EE-RM-STD-98-440 COMMENT 01CC1

Manufacturing Costs 

EE-RM/STD-98-440 o-cc 

I 

Timetable 

The Department intends to collect cost information from August 

through November, 1998. 

[oJ.: Is the data collection time frame reasonable? 

[.J.: Can individual manufacturers submit data? (Individual data is 

required for manufacturer cash flow analysis.) 

I" Department prefers that individual manufacturer data sets be 

submitted to a third party. 

June 300 1998 26 
EE-RM/STD-98-440 - Cc

Central Air Conditioner and Heat Pump Workshop

BMW Intro'u:"! IJune 30, 19C Jue0 98 27

101i;~~~~~~~~~

iEF; 'Ll

w__iiiiiiiiilii~iii

''' '

g W~~~~~~~~~~~~~~~~~~~~~~

i.~~~:r~~:~~.~~~~I~~·:~~:;s······;:: ~ ~ ~ ~ ~ ~Jun 30198 2

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-9B-440 - C<.. 7 

Central Air Conditioner and Heat Pump Workshop 

June 30, 1998 27 
EE-RM/STD-98-440 -CC,

Price Introduction

Introduction

l' Prices are used in at least two analyses

- Life-cycle cost analysis (Consumer Prices)

- Manufacturer impact analysis (Manufacturer Prices)

/ Different approaches can be used to determine prices

I) Survey current market prices

II) Identify typical mark-ups and apply them to manufacturing costs

III) Gather expert forecasts

June 30, 198 28

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - ec , 

Price 

Introduction 

:VJ Prices are used in at least two analyses 

- Life-cycle cost analysis (Consumer Prices) 

- Manufacturer impact analysis (Manufacturer Prices) 

: ./ Different approaches can be used to determine prices 

. I) Survey current market prices 

Introduction 

II) Identify typical mark-ups and apply them to manufacturing costs 

III) Gather expert forecasts 

June 30, 1998 28 
LsEs-aW.STAo -,

Price Industry Structure

The Department is interested in studying the effects of the changing distribution chain on prices.

Manufacturer

Manufacturer

Price

Distributor Home Center | Consolidator Energy Service Co. j^^^^ .^^^^^^ ^^^^ i (Distributor-Contractor)

Distributor

Price _

Dealer Non-Dealer Consolidator

Contractor Contractor Contractor

Consumer

Price

Consumer Traditional

I Ad~ --- ~ II~^ product path

June 30.1998 29

EE-RM-STD-98-440 COMMENT 01CC1

Price Industry Structure 

The Department is interested in studying the effects of the changing 

distribution chain on prices . 

. Manufacturer 

Manufactu rer 

Price • • + • Distributor Home Center Consolidator Energy Service Co. 

(Distributor-Contractor) 

I 

" Distributor l... 

Price ., ,r ~, ! ~, 

Dealer Non-Dealer Consolidator 

Contractor Contractor Contractor 

Consumer 

Price ., , 

Consumer ~ Traditional 

product path 

June 30, 1998 29 
EE-RM/STD-98-440_ -C,

Price Surveys

A survey of market prices will provide a set of prices for units

currently being sold.

IV DOE has initiated a market assessment of the central air conditioner

industry. Cur;ent pricing of existing models will be researched.

4/ What data sources exist?

I/ What factors may limit the usefulness of this approach?

· Product;? ; in i . : or iii low quantities

' Efficiency features bundled with non-efficiency features

· Standards may commoditize features and thus alter pricing

June 30, 1998 30

EE-RM-STD-98-440 COMMENT 01CC1

EE-R M/STD-98-440 _ c:c 

I 

Price 

A survey of market prices will provide a set of prices for units 

currently being sold. 

Surveys 

rV" DOE has initiated a market assessment of the central air conditioner 

industry. Current pricing of existing models will be researched. 

tV What data sources exist? 

:V What factors may limit the usefulness of this approach? 

~ Product~: ':~': !n ~: ' ~. __ ~: or iii low quantities 

~ Efficiency features bundled with non-efficiency features 

~ Standards may commoditize features and thus alter pricing 

June 30, 1998 30 
EE-RM/STD-98-440 _ CC,

Price Markup Approach

Applying markups to manufacturing costs involves determining the

manufacturer markup and other markups in the distribution chain.

Manufacturer Cost

Manufacturer markup

Manufacturer Price

Distribution markups

Dealer Price

Consumer price can be obtained by adding sales tax to the

dealer price.

June 30,1998 31

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc., 

Price Markup Approach 

Applying markups to manufacturing costs involves determining the 

manufacturer markup and other markups in the distribution chain. 

Manufacturer Cost 

Man ufacturer markup 

" 

Manufacturer Price 

Distri bution markups 

,r 

Dealer Price 

... Consumer price can be obtained by adding sales tax to the 

dealer price. 

June 30, 1998 31 
EE-RM/STD-98-440 ._- c,

Price Distribution Markups

Distribution markups can be estimated from current and historical

prices of products at different points in the distribution chain.

Vt Consumer prices can be obtained from market studies or from other

data sources like Consumer Expenditure Surveys.

/ Manufacturer prices can be obtained from Current Industrial Reports

and from available trade association data.

Dealer Price

Distribution Markup = Manufacturer Price

June 30,1998 32

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 .-LC I 

Price Distribution Markups 

Distribution markups can be estimated from current and historical 

prices of products at different points in the distribution chain. 

~i/ Consumer prices can be obtained from market studies or from other 

. data sources like Consumer Expenditure Surveys . 

.. v.5 Manufacturer prices can be obtained from Current Industrial Reports 

and from available trade association data. 

Dealer Price 

Distribution Markup = Manufacturer Price 

June 30, 1998 32 
EE-RM/STD-98-440 - Cc

Price Manufacturer Markups

The Department proposes developing an industry cost structure from

publicly available financial information. The cost structure will be

used to estimate manufacturer markups.

Financing Profit

production Production

Cost Cost

~~~R&8 1 ~~~~~~D ~Materia I

Overhead

Manufacturer Markup

100%

~~~Labor ~ ~ It~ % Full Production Cost

Manufacturers mark up their production costs to recoup

their non-production costs and to realize profits.

June 30.1998 33

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - Cc. . , 

Price Manufacturer Markups 

The Department proposes developing an industry cost structure from 

publicly available financial information. The cost structure will be 

used to estimate manufacturer markups. 

Non- SG&A 

production 

Cost 

R&D 

Financing Profit 

Labor 

Full 

Production 

Cost 

Material 

Manufacturer Markup = 

100% 

% Full Production Cost 

Manufacturers mark up their production costs to recoup 

their non-production costs and to realize profits. 

June 30, 1998 33 
EE-RM/STD-98-440 c-,

Price Markup Approach Summary

Applying markups to manufacturing costs involves determining both

the manufacturer markup and the distribution markup.

Mnufaii.Wture iriisii iiibutori i l''''B'iii:' '''

Manufacturer _ r _Manufacturer | Distributor | _ Dealer | + Consumer

Cost ^ | Price I Price Price I Price

June 30,1998 34

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 -c-c-1 

Price Markup Approach Summary 

Applying markups to manufacturing costs involves determining both 

the manufacturer markup and the distribution markup. 

Manufacturer Distributor 

Cost t--......... -Pf Price t------.t Price ~ .... ~ 

Dealer 

Price 

Consumer 

Price 

June 30, 1998 34 
EE-RM/STD-98-440 - Cc,

Price Expert Forecasts

Forecasts by industry experts can provide valuable insights into post- standard industry pricing.

The Department can seek advice from manufacturers and other industry

experts in estimating pre- and post- standard prices.

Would manufacturers be willing to provide estimates of future

prices?

DOE will consider any additional forecasts received in comments

from other interested parties

June 30, 198 35

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - Cc:.. I 

Price Expert Forecasts 

Forecasts by industry experts can provide valuable insights into post-. 

standard industry pricing. 

The Department can seek advice from manufacturers and other industry 

experts in estimating pre- and post- standard prices. 

:-./ Would manufacturers be willing to provide estimates of future 

prices? 

.~ DOE will consider any additional forecasts received in comments 

from other interested parties 

June 30, 1998 35 
EE-RM/STD-98-440 - CC,

Price Summary

Since each price determination approach has its advantages and

disadvantages, multiple approaches may be used.

Convenient data Required sample

Market Survey format size may be large

1

Historical and - Highly aggregated

p objective - Complicated by

....... i-. Can take into account More su bjec tive

o projected market and may be highly

dynamics varied

June 30,1998 36

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - CC I 

Price Summary 

Since each price determination approach has its advantages and 

disadvantages, multiple approaches may be used. 

Convenient data 

format 

Historical and 

objective 

Required sample 

size may be large 

- Highly aggregated 

- Complicated by 

distribution chain 

Can take into account More subjective 

projected market and may be highly 

dynamics varied 

June 30, 1998 36 
EE-RM/STD-98-440 - cc,

Price Uncertainty

The Department will consider uncertainty in its price analysis.

./ Multiple price-determination approaches may be used for verification

of uncertainty ranges.

4i The price forecasts will be reported as probability distributions and

used as input to the Manufacturer Impact and Life-Cycle-Cost

analyses.

June 30,1998 37

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - ee.-I 

Price Uncertainty 

The Department will consider uncertainty in its price analysis. 

: ./ Multiple price-determination approaches may be used for verification 

of uncertainty ranges. 

:~ The price forecasts will be reported as probability distributions and 

used as input to the Manufacturer Impact and Life-Cycle-Cost 

analyses. 

June30,1998 37 
EE-RM/STD-98-440- c/

Central Air Conditioner and Heat Pump Workshop

EK~l^ _ ....... _.... ...... . .... ,.-.,.-..

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, .. .. ~.~~: ,,~~~.. /~.,.~/,'~~ ,~.. ..... ...".,=.

3t ||| I lEngineepingA yisi

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.......... 1 1 :. ....

June 30, 1998 38

............... ......

.. ... . ....... ... ... .. .. ........ ....... ::i::;O rc.r:-; . ........ ~ l·i:·:::::iii1

------------------- ii :-::::::::i::i:·~;iix~ ~ :

iiii:-;':"liidiiiii:Sii~~~~~~~~............. ........

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~~~~~~~~~~~~~lii~~~~~~~~~~~~~~~~~~~~~... . ..... ...

.... .. .. ........ ....... F'-:::::.:::::::::::::·:::i:::i;:i'::::: ~ ~ ~ ~ ~ ~ .......... .........

..... ....... 30 1BB 3

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 _ <:c 

I 

Central Air Conditioner and Heat Pump Workshop 

June 30, 1998 38 
EE-RM/STD-98-440 _-

Central Air Conditioner and Heat Pump Workshop

......... ~ii::i::iiiiii:: ................ - s:::....{.-......................... 

| EnlSgineering A nalyis|ata Collecton

ss s5ssss SssS .... ;s :iiiiiiiii!iiii............i..........ii ss n ,

.;.s.... iii:!iii!!iii.. -::. .. -i- , -- i.- - 4....... Ma.nuf.ct.r.e o s

June 30.S1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 _ ~ I 

Central Air Conditioner and Heat Pump Workshop 

June 30,1998 39 
EE-RM/STD-98-440- CC-I

Central Air Conditioner and Heat Pump Workshop

3 g..i neeriinAalySis/Dat ..

.!i ::;~ie i | Steps:iii 

June 30, 198 40

'S ~~~~~~~~~~~~~~~~~~~· IFi~ii~iii~ii~:o:i:~

I1E~~~~~~~~~~~~~~~~~~~~~~~~~- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ l Jn 30,1998 40~~:~i 

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440- CC-, 

Central Air Conditioner and Heat Pump Workshop 

Juna30, 1998 40 
EE-RM/STD-98-440 - - c,

Refrigerant and Other Engineering Issues

Current U.S. regulations mandate an end to the use of HCFC-22 in

new equipment by 2010.

!.* The most likely alternatives for HCFC-22 are HFC-407C * and HFC41 0A

Operates at similar - Loss of efficiency

pressures as HCFC-22, - Non-azeotropic behavior

.i: .. 2thus minimizing redesign makes fractionation a

.__.............. _concern

Higher pressure - may allow reduction Higher pressure requires

of coil size and enhance heat transfer, substantial system

thereby permitting cost-effective redesign

efficiency improvements

Is the industry consensus that HFC-410A will be the primary choice

for new systems while HFC-407C will be used mostly for service?

/ How should engineering analysis address the impending phase-out?

Are there any additional regulatory issues that should be considered

by the Department?

or newly developed HFC-407E

June30.1998 41

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - .c.c.., 

Refrigerant and Other Engineering Issues 

Current U.S. regulations mandate an end to the use of HCFC-22 in 

new equipment by 2010. 

l.t The most likely alternatives for HCFC-22 are HFC-407C * and HFC410A ' 

-:".J. 

~v.J 

tV; 

(tJ 

Operates at similar 

pressures as HCFC-22, 

thus minimizing redesign 

- Loss of efficiency 

- Non-azeotropic behavior 

makes fractionation a 

concern 

Higher pressure - may allow reduction Higher pressure requires 

'of coil size and enhance heat transfer, substantial system 

thereby permitting cost-effective redesign 

efficiency improvements 

Is the industry consensus that H FC-41 OA will be the primary choice 

for new systems while HFC-407C will be used mostly for service? 

How should engineering analysis address the impending phase-out? 

Are there any additional regulatory issues that should be considered 

by the Department? 

* or newly developed HFC-407E 

::::. ""' .1-1.. .'; ,.,,;:".~ 

L _' I;, .,.., '" • 

June 30, 1998 41 
EE-RM/STD-98-440 - cc,

Central Air Conditioner and Heat Pump Workshop

i g i! . in Yi. .E i. E--i- i. i. -. ,:::, ii~iiiii:~:~~---------i--ii.---- rM oManfatun 

June 30, 1998 42

EE-RM-STD-98-440 COMMENT 01CC1

/ 

EE-RM/STD-98-440 .- c.c... I 

Central Air Conditioner and Heat Pump Workshop 

IE . ~, .' 

June 30,1996 42 
EE-RM/STD-98-440 - <,

Next Steps

Some near-term activities will involve the Department and equipment manufacturers.

Manufacturers Both Department

July '98 T Submit comments - Select analysis

J on points tools and finalize

Aug discussed in this - Arrange plant data collection

workshop visits to discuss requirements Sep impacts

-Oct T Return data impacts sheets

Nov ,

Perform

Dec Prepare for Engineering/ LCC

Jan '99 m Engineering/LCC analysis workshop v

June30. 198 43

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 -"-, 

Next Steps 

Some near-term activities will involve the Department and equipment 

manufacturers. . 

Manufacturers Both Department 

July;98 J Submit comments 

I 

Select analysis 

on points tools and finalize 

Aug discussed in this -.- Arrange plant data collection 

workshop visits to discuss requirements Sep impacts 

Oct I Return data ~r 

sheets 

Nov -- Perform 

Dec T Prepare for Engineering/ Lee 

Jan'99 Engineering/Lee analysis 

workshop ~, 

, , ... " 

June 30, 1998 43 
-^RM/sroD8

APPENDIX

* Sample data collection sheets

* Clothes washer manufacturing cost data and analysis

* Clothes washer pricing

June 30, 1998 44

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO 

-98-440_ c...c. I 

APPENDIX 

• Sample data collection sheets 

• Clothes washer manufacturing cost data and analysis 

• Clothes .washer pricing 

June 30, 1998 44 
EE-RM/STD-98-440- cc,

Appendix Manufacturing Cost Data Sheet

Sample data sheets designed for the efficiency level approach illustrate the proposed data collection methodology.

IDraft Unitar Air Cond'itioner Manufaacturing Cost Data Sheet , ' ,, ,.,, ,... ......

For Illustration and Comment Ony ... ................ ;........................ . ...... .. ............ ...................................... ........................ ............................ ...................... ......... .............. Page 1 of 2

. ......... . ................ . ..................................

Capaci^ty:44,0(JBTU/h

-.. .... ......-.. .. -......... -......- . . ..-.

Efficiency Level Estimated Variable Costs

1998

________ Production

SEER EER units . per unit Uncertainty Range

Materials Labor Overhead Total +/- percentage (r)

.__ _____ ______ _____~._ Maxdmum Minimum

10 ___

11 ______ ______I ___ __________________ _____________

13 __________ _________ 30_98

14_________________________

15___________________________

Fill in data for Mainium Feasible Technology below _____

June 30. 8 4545

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - <:e., 

Appendix Manufacturing Cost Data Sheet 

Sample data sheets designed for the efficiency level approach 

illustrate the proposed data collection methodology. 

!'O'ratl"'U'n'lta'ry"Alr"Condiiione'r"Nj'anufa'ctu'ii'nii·C"o·st··Data··She·et·····l·························j· ......................... j , ..................................................... ··················································1··· ...................... ~ ......................... ~ ..... ·······················,·························t···· ..................... , 

l For Illustration and Comment Only l l l l l 

~~~--~~§~~"~~:~=-~~E:~~:I:;;;---~] :Ca~l~: ,44000BTUIh l ",:, 

r~~~~~--~~~~~~~--~~~~~r~:::~~~~~~:~~~~~~~~~~~F~~~~~~~~~~~~~~~~~~~~~~~F~~~~~~~~~~~~~:~~~~~~~~ ~~~~~~~~~~~~~~:~~~~~~~::T::~~~::::~~~:~:::~:~~~~F:·~:::~:~:~~·:~~~~:~~~~~F:~~~~~~~~~~~~~~~F~~~~~~~~~:~~~~~I 

Efficiency Level 

SEER EER 

Estimated 

1998 

Production 

Variable Costs 

units . $ per unit Uncertainty Range 

Materials Labor Overhead Total +1- percentage (r) ............................................................................................................................................................................. I--~!..--.;..,;..;.;..l~~~ 

Maximum Minimum 

lO 

11 

12 

13 

14 

15 

16 

17 

18 

Fill in data for Ma»mum Feasible Technology below 

June 30. 1998 45 
EE-RM/STD-98-440 - <c,

Appendix Manufacturing Cost Data Sheet

Draft Unitary Air Conditioner Manufacturing Cost Data Sheet ..

For Illustration and Comment Only

Page 2 of 2 : ......................................................................................................... ...................... .........................................................................................................................................................................

"ag ... 2 . .2I.......... . =-'- .......................................

I..C ............. : S p.. .. .................................................. ................................................................................................ .................................................................................... ....... Class:. Spfit

Capaci.....: 44,000 BTU/h

.................................................... ....................................................... .......................... ................................................................................................... .................................... .......................... .............................. ...............................

i ia - aa -

Efficiency Level Product Conversion Costs Estimated

increase in

Comments dealer price

SEER EER SEEToEEomillingoInvestment millions of $ Uncertainty Range $/unil of & Un eretainty Total (........................................................................................... +/-enige ............................... ..........$./y..n..!.t.......... 

Tooling Investment R&D Marketing Total +/-percentage (r)

Maximum Minimum

10

18

Fill in data for M axim Feasible Technology belo. _

June 30. 30.1998 1998 46

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 -- <.c:., 

Appendix Manufacturing Cost Data Sheet 

.' ................................................................................................................... , ........................................... , ........................................................................... : ............................................................................................................................ . 

:.p.r~~.yf1i~~ly~ir. .. c:.~~~i~i~~~r..I\IICl~~.~~~~.~f19..~()st.PCl~~ .. ~~.~et. : For Illustration and Comment Only . . 

: .. ~~.ij.~ ... 2. ... ~.(.~ ................................. ·.·.·.·.1.·.·.·.· .. ·.·.·.·.·.·.·.·.·.·.·.·.· ... · ........... · ... ; ................................................. ; ............................... . 

. .............. ; ... . 

...; ........ , ............. ) ......................... ~. ............. ............... .................... ..................... ............... .. . ............. .... . 

. ... " ' ........... ~;.... . ... -.. - " ........... "' .'.~ ..... : 

:9~.~.: ... : ........ :.~P.~t ...... · .. : ..... J.:.:.: ... ::: ... :::: ... : ... 1. .. :::::·: ............. 2 •.•....•.•......••...... j.. . .... · .. w ••••. ·• : CSl~i"'· : 44 (XX) BTUI11 ': :' : ..... : ........................ : ..................... ; ......................... :: .................................................................................................... ~ ................................. ·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.l. 

• -::r.= .~J.' · , ',. ................... ... .... . ............... .:. ........................ '............. ...... . ........................................................................................ . ........ ··············· .. ·····j·······························I .................................................................................................................... . 

Efficiency Level Product Conversion Costs Estimated 

. . 

mcrease m 

Co rrnren ts dealer price 

SEER EER 

............... .. 

millions 0/$ Uncertainty Range I----t--....:::..::.:....:....~II__-----.-----.-----::..-r-------.-::::---:---t--"-:.:;..:...:.:..;.;..;~...;:...::;..~'---tl················· .......................................................... . 

Investment R&D Marketing Total +/- percentage (r) I---...!..---r~---'-:""'--ll··· ......................................................................... . 

Maximum Minimum 

Tooling 

$/linit 

10 

II 

12 

13 

14 

15 

16 

17 

18 

Fill in data for MallinrumFeasible Technology belo 

II 

June 30. 1998 46 
EE-RM/STD-98-440 - -,

Appendix Manufacturing Cost Data Sheet

Draft Unitary Heat Pump Manufacturing Cost Data Sheet

For Illustration and Comment Only i

.Page 1 of 2 . . . . . .

itco :ngc i i it i i i ! -- .a g o f 2 .......................... ...................... .................. = ................................. .............. .......................................

Cooling Cap.ity: .44..0 BTU/li . . .. ........ ........ ......... ........................ ............... ...... .. . .... . .. . ...... .... ......... " ..... ............ ............ .................... .................. ......................... ....... ........................................................ .................... ............................................... .........................

Efficiency Level :: EFficiency Ratings Estimated Variable Costs

1998

Production

SEER HSPF EER HighTemp Heating LowTemp Heating units per unit_ Uncertainty Range

. C . ......................... ...... ......... .................. ........a ......... Capacity COP Capacity COP Materials Labor Overhead Total /-percentage (r)

BTU/h BTU/h______ _______ _____ Maximum Minimum

10 6.8

11 6.8

12 6.8

13 7.0 _

14 7.2_

15 7.4

16 7.6 _

17 7.8

18 8.0_____ _____

Fill in data for Maximum Feasible Technology below I

IE~ II,~ I I I I Ii~ II I 1 :~JuneI ~I~~ - I I 4

June 30, 1998 A7

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - ct:-, 

Appendix Manufacturing Cost Data Sheet 

Efficiency Level 

SEER HSPF 

10 6.8 

11 6.8 

12 6.8 

\3 7.0 

14 7.2 

15 7.4 

16 7.6 

17 7.8 

18 8.0 

_ ~ciency Ratings 

..... ;L ................... J ... . 

Estimated 

1998 

Production 

~ . 

Variable Costs 

EER HIgh Temp Heating LowTemp Heating units $ per unit Uncertainty Range 

......... __ ............ f~p.~~!o/. ............. ~9.~ ............ C;;!lp.~~!~ ............ C;;9.~........ ... ............. .......... ..M!l~~.~~.~~ ........ ~~.().~...... ..0.'~.rh..~~.~ .......... !.~~~ ....... ~_+-:/-...:..p_en_"Ce,.n_ta"':-ge-:-'-'(r)'---f BTUlh BTUlh Maximum Minimum 

Fill in data for Maximum Feasible Technology below 

II II 

June 30, 1998 47 
EE-RMSTD-98-440 - c,

Appendix Manufacturing Cost Data Sheet

Draft Unitary Heat Pump Manufacturing Cost Data Sheet

For Illustration and Comment Only

.............................................................. Page 2 of 2 ......... ............................................................

Class: Split

/ Capity: ...... '~ ' :S fit . ........... . . . . ..... ................. .... 44,000 BTU/h

Efficiency Level Product Conversion Costs Comments Estimated

increase in

dealer price

SEER HSPF millions of$ Uncertainty Range $/un

Tooling Investment R &D Marketing Total +/-percentage (r) ............ ........... ....... ........... ... ........ .. .... . ...... ... ....... ........ ...... .. ...... .. . . ...g. . ......... .. ........ Maximum Minimum

10 6.8

11 6.8 _____

12 7.0

13 7.2

14 7.4

15 7.6

16 7.8 _______

17 8.0

18 8.2 _ _

Fill in data for Maximum Feasible Technology below _____

June 30, 1998 48

EE-RM-STD-98-440 COMMENT 01CC1

EE-RMISTD .. 98-440 .- cc.., 

Appendix Manufacturing Cost Data Sheet 

:·'J"ratitiil·ita·iY··H·eat··j'-u·mp··jijj·ari"li"factu·rl·il·g·c·ost·Data··She·et········r············ .......... , ....................... ,.. .................. . ............................................................................. . 

!rf:.'~u;~atloll~lldc~"'mento,;ly' ............., .... ... .. , .. . . . ................ ...............: ..................., 

'~:::i~i;t.:·."·'·.:.··~·;1 

'·~·~·~9:·:······i·¥.!·~·?1Y.(~ . ............... ......................... : ................................. : ....................... :........ .................... . ....................... . 

··············r··· • ,', •••••••••••••••• H' •••••• ••••••••••••••••• • ............. ~.. • .......... ' •••••••• ';""" ••••••••••••••••••• • ••••••••••••••••••••••• '. • ••• ., •• ,. ..... -:.. .. •••••• ': 

Efficiency Level Product Conversion Costs Corrnnents Estimated 

. . mcrease ill 

dealer price 

SEER HSPF millions 0/$ $/unil 

................... ... ................... Tooling +1- percentage (r) I---..!.---,--"!-~:--ll············ .............. . 

Maximum Minimum 

Investment R&D Marketing Total . ........................................................................ , .. . 

10 6.8 

11 6.8 

12 7.0 

13 7.2 

14 7.4 

15 7.6 

16 7.8 

17 8.0 

18 8.2 

Fill in data for Maxirrrum Feasible Technology below 

II 

June 30. 1998 48 
EE-RM/STD-98-440 - dc,

Appendix Clothes Washer Manufacturing Costs

CASE STUDY

Data Collection and Presentation for the

Clothes Washer Rulemaking Analysis

p:'.J ..

30.SS r " 

4

June 30.1998 49

EE-RM-STD-98-440 COMMENT 01CC1

Appendix 

" 

EE-RM/STD-98-440 - c:c. J 

Clothes Washer Manufacturing Costs 

CASE STUDY 

Data Collection and Presentation for the 

Clothes Washer Rulemaking Analysis 

June 30,1998 49 
EE-RM/STD-98-440 -c

Appendix Clothes Washer Manufacturing Costs

Illustrative Cost Distributions for Incremental Manufacturing Costs as

provided by different manufacturers

Incremental manufacturing costs for Efficiency level "X"

Manufacturer A 0.- 6

0 1 2 3 4 6 6 7 8

In crem e n ta I C o st ($)

1 -

Manufacturer B 0 .

0 i 2 3 4 6 6 7 8

Increm ental Cost ()

Manufacturer C O .

0 1 2 3 4 6 6 7 8 9

In c rem e n tal Cost ($)

June 30, 1998 5050

EE-RM-STD-98-440 COMMENT 01CC1

£E-RM/STD-98-440 - <:::.G, 

Appendix Clothes Washer Manufacturing Costs 

Illustrative Cost Distributions for Incremental Manufacturing Costs as 

provided by different manufacturers 

Incremental manufacturing costs for Efficiency level "X" 

Manufacturer A o ,6 

0 j 1\ I . 

0 2 3 4 6 6 7 8 

Incremental Cost(S) 

Manufacturer B o ,6 

0 j ~, . I 

0 2 3 4 6 6 7 8 

Incremental Cost(S) 

Manufacturer C 

o 2 3 4 6 6 7 8 9 

Incremental Cost(S) 

June 30, 1998 50 
EE.RM/STD-98-440 - -,

Appendix Clothes Washer Manufacturing Costs

Characterizing Uncertainty and Variability in Manufacturing Costs

Samples were drawn from manufacturer distributions to create an

industry distribution at each efficiency level

Results are reported as distributions over entire range of costs and

for all efficiency levels

fI Incremental costs are reported for different percentile levels (0%,

10%, 25%, 50%, 75%, 90%, 100%)

A shipment weighted average of most likely costs was also reported

as a point value of incremental cost

June 30, 1998 51

EE-RM-STD-98-440 COMMENT 01CC1

E&-RM/STD-98-440 - t::..C- I 

Appendix Clothes Washer Manufacturing Costs 

Characterizing Uncertainty and Variability in Manufacturing Costs 

[

:.t .... j ~ 

:.t .... : ~ .. . .. j 

Samples were drawn from manufacturer distributions to create an 

industry distribution at each efficiency level 

Results are reported as distributions over entire range of costs and 

for all efficiency levels 

Incremental costs are reported for different percentile levels (0%, 

100/0,250/0,500/0,750/0, 900/0, 1000/0) 

~.-.i A shipment weighted average of most likely costs was also reported 

as a point value of incremental cost . 

June 30, 1998 51 
EE-RM/STD-98-440 - cc

Appendix Clothes Washer Manufacturing Costs

Incremental Manufacturing Costs represented using Probability Distribution

1 5 - Manufacturer A

Efficiency I Manufacturer B

Level X 0.5 50 \

0Mkt share Mkt. share

I fI ,I Incremental Cost ($) i

o ll l l l l l ~I ~-IIII -I

I________ I I I I I

0

2 -ii i[ Total Rel.

XJS 0 .- | Probability

m I = 1.0

1.00 2.75 4.50 6.24 8.00

Incremental Cost ($)

June 30, 1998 52

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - c<:'J 

Appendix Clothes Washer Manufacturing Costs 

Incremental Manufacturing Costs represented using Probability 

Distribution 

Efficiency 

Level X 

1.5 

1 

0.5 

0 

.-~ 

-:c 

ca 

.c 

e 

CL 

Q) 

> .-.... 

ca 

Gi 

0:: 

0 ~ I 

I 

~I 

01 

-I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

1.00 

Manufacturer A 

Manufacturer B 

I I 

I 

* 4 5 I t 

I I I 

_1_1 I 

~I ~I ~I 01 10 1 01 

:::'1 ~I el 

I I I 

- I 

I l l 

I I I 

I I I 

I I I 

I I I 

I I 

2.75 4.50 6.24 

" ~' " ., Incremental Cost ($) 

~ I 

-I 

~I 

81 

:::'1 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

I 

8.00 

Total Rei. 

Probability 

= 1.0 

June 30, 1998 52 
EE-RM/STD-98-440 - Cc,

Appendix Clothes Washer Manufacturing Costs

A cost-efficiency graph was developed using the industry cost

distribution (represented as percentile values) for each efficiency level

1.5 - Manufacturer A

Efficiency / Manufacturer B Manufacturer C

LevelX 0.5 .

0 1 2 3 4 5 6 7 8

Incremental Cost ($)

Cost-Efficiency Graph

100%

Percentile Incr. Manufacturing 1o%o 

Cost

0% $

10% $ E

% * 0% I90% | $ Level X

100% $ Efficiency (MEF)

June 30, 1998 53

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO-98-440 ,- CC-, 

Appendix Clothes Washer Manufacturing Costs 

A cQst-efficiency graph was developed using the industry cost 

distribution (represented as percentile values) for each efficiency level 

1 .5 Manufacturer A 

1 

0.5 

o 

o 1 

Percentile 

0% 

10% 

90% 

I 100% 

2 3 4 5 

Incremental Cost ($) 

Incr. Manufacturing 

Cost 

$ 

$ 

$ 

$ 

" ... ~ I .. 

I 

.,:,' 

6 

fit 

-

1ii 

o 

(J 

~ II) 

E 

e 

u 

.5 

Cost-Efficiency Graph 

o 100% 

o 

o 

o 

o 

o 

o 0% 

Level X 

Efficiency (MEF) 

June 30, 1998 53 
EE-RM/STD-98-440 -- C Appendix Clothes Washer Manufacturing Costs

AHAM data submittal was used to develop a cost-efficiency graph

AHAM Clothes Washer Data

450

400 . - 4. -

c 350

I%.

00

300 ~S10 E ;o

250 o 0o 100%

- o 90%

200 (B 75%

CS - I v 50%

E 150 N A25% °'- - 010%

4. - ;SWA

50 4

0 6 0 6 o - c- t-

(Baseline) (5%) (10%) (15%) (20%) (25%) (35%) (40%) (45%) (50%)

Modified Energy Factor

June 30. 1998 5454

EE-RM-STD-98-440 COMMENT 01CC1

Appendix 

EE-RM/STD-98-440 -cc.. I Clothes Washer Manufacturing Costs 

AHAM data submittal was used to develop a cost-efficiency graph 

AHAM Clothes Washer Data 

450 

400 -4 

-4' -4 

;350 

..... 

en 

~ 300 

-- 0 

~ 250 0 0 ::i( '~ -4100% 

0 090% 

! 200 ::i(75% 

c - )(50% CI) 

E ~~ 150 )( )( )( A25% 

CI) 010% '- - - (,) f <>0% .E 100 , {} -4. ~ ~ c -SWA ~ <> <> <> 

50 -4 

~ ;t, 

A 

0 WI 

- ~ ~ ~ 

- - ... ... ..,.. 

..... 00 .... .... 0) ..... N 1.1') ...,. .... co 0 co N 00 1.1') co 00 C") 

00 00 0) 0) 0 ~ C"! ~ ~ ~ 0 0 0 0 .... .... ,... ,... " -

(Baseline) (5%) (10%) (15%) (20%) (25%) (35%) (40%) (45%) (50%) 

Modified Energy Factor 

June 30, 1998 54 
EE-RM/STD-98-440 -Cc

Price Clothes Washer Rulemaking: Mark-up Approach

CASE STUDY

Mark-up Approach used in

Clothes Washer Rulemaking

June 30. 1998 55

EE-RM-STD-98-440 COMMENT 01CC1

Price 

EE-RM/STD-98-440 -cc I 

Clothes Washer Rulemaking: Mark-up Approach 

CASE STUDY 

Mark-up Approach used in 

Clothes Washer Rulemaking 

June 3D, 1998 55 
EE-RM/STD-98-440 - C

Price Clothes Washer Rulemaking: Mark-up Approach

Department of Energy proposed using a 2-step mark-up approach to

estimate the retail price of clothes washers

Manufacturer Retail

Mark-up Mark-up

Manufacturing --- --- I Manufacturer | v- Retail

Cost Price Price

Sales

Tax (5.2%)

Consumer <-

Price

E> Consumer Price is obtained by adding a sales tax to the retail

price

June 30,1998 56

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc-, 

Price Clothes Washer Rulemaking: Mark-up Approach 

Department of Energy proposed using a 2-step mark-up approach to 

estimate the retail price of clothes washers 

Manufacturer 

Mark-up 

Manufacturing --....... ~ --Ie:> Manufacturer 

Cost Price 

Retail 

Mark-up 

[:> 

Consumer 

Price 

Retail 

Price 

Sales 

Tax (5.2%) 

<"1- ~ 

c:> Consumer Price is obtained by adding a sales tax to the retail 

price 

f--

June 30, 1998 56 
EE-RM/STD-98-440 - c-c,

Price Clothes Washer Rulemaking: Mark-up Approach

Historical average retail and manufacturer prices from various data

sources were used to estimate retail mark-ups

iv Sources of average retail prices

- Consumer Expenditure Surveys (1986-1994)

- Dealerscope Merchandising's Annual Statistical Surveys

(1986-1995)

- ELCAP/lntellect sales data (1994-1997)

rI/ Sources of average manufacturer prices

- Current Industrial Reports (1986-1996)

-AHAM Fact Book (1986-1996)

June 30, 1998 57

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - ee-I 

Price Clothes Washer Rulemaking: Mark-up Approach 

Historical average retail and manufacturer prices from· various data 

sources were used to estimate retail mark-ups 

r./ Sources· of average retail prices 

- Consumer Expenditure Surveys (1986-1994) 

- Oealerscope Merchandising's Annual Statistical Surveys 

(1986-1995) . 

- ELCAP/lnteliect sales data (1994-1997) 

~.J:. Sources of average manufacturer prices 

. - Current Industrial Reports (1986-1996) 

-AHAM Fact Book (1986-1996) 

June 30, 1998 57 
EE-RM/STD-98-440 - c_

Price Clothes Washer Rulemaking: Mark-up Approach

Average retail price of clothes washers have remained around $400

over the past few years

Retail Prices Manufacturer Prices

$450 - $450

$400 - $400

$350 $350

$300 $300

$250 1 $250 --

1985 1990 1995 2000 1985 1990 1995 2000

-*-Consumer Expenditure Surveys Curret Il - -Current Industrial Reports -u-Dealerscope Merchandizing

. -^-F~~ E ~~-LC-AP -AHAM Fact Book

-o- ELCAP

June 30, 1998 58

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - LC 

I 

Price Clothes Washer Rulemaking: Mark-up Approach 

Average retail price of clothes washers have remained around $400 

over the past few years 

$450 

$400 

$350 

$300 

$250 

Retail Prices 

1985 1990 1995 2000 

-+-Consumer Expenditure Surveys 

......- Dealerscope Merchandizing 

. --&- ELCAP 

Manufacturer Prices 

$450 

$400 

$350 

$300 

$250 

1985 1990 1995 2000 

-+-Current Industrial Reports 

-e-AHAM Fact Book 

June 30, 1998 58 
EE-RM/STD-98- 44 0 -cc,

Price Clothes Washer Rulemaking: Mark-up Approach

Average retail mark-ups decreased in the 1986 to 1992 period, but

have not changed much since then

Year Retail Retail Retail Retail Retail Retail rag

Mark-up Mark-up Mark-up Mark-up Mark-up Mark-up ea

(Dealerscope) (Dealerscope) (CES) (CES) (ELCAP) (ELCAP) iMa

(AHAM) (CIR) (AHAM) (CIR) (AHAM) (CIR)

1986 1.65 1.61 1.55 1.51

1987 1.67 1.65 1.56 1.54 i

1988 1.64 1.68 1.55 1.59

1989 1.46 1.46 1.51 1.52

1990 1.43 1.47 1.47 1.52

1991 1.44 1.50 1.47 1.53i

1992 1.31 1.38 1.42 1.49 i

1993 1.31 1.35 1.36 1.40 .

1994 1.32 1.41 1.38 1.48 1.31 1.41 .iiiii

1995 1.30 1.44 1.23 1.36 i

1996 1.36 1.41

C> The Department proposes using a retail mark-up of 1.40 based on retail

mark-ups estimated from various data sources.

June 30, 1998 59

EE-RM-STD-98-440 COMMENT 01CC1

EE_RM/STD-98-440 -cc, 

Price Clothes Washer Rulemaking: Mark-up Approach 

Average retail mark-ups decreased in the·1986 to 1992 period, but 

have notchanged much since then 

Year Retail Retail Retail Retail Retail Retail 

Mark-up Mark-up Mark-up Mark-up Mark-up Mark-up 

(Dealers cope) (Dealers cope) (CES) (CES) (ELCAP) (ELCAP) 

(AHAM) HAM) (CI (AHAM (CIR) 

1986 1.65 1.61 1.55 1.51 

1987 1.67 1.65 1.56 1.54 

1988 1.64 1.68 1.55 1.59 

1989 1.46 1.46 1.51 1.52 

1990 1.43 1.47 1.47 1.52 

1991 1.44 1.50 1.47 1.53 

1992 1.31 1.38 1.42 1.49 

·1993 1.31 t.35 1.36 1.40 

1994 1.32 1.41 1.38 1.48 1.31 1.41 

1995 1.30 1.44 1.23 1.36 

1996 1.36 1.41 

c> The Department proposes using a retail mark-up of 1.40 based on retail 

mark-ups estimated from various data sources. 

June 30.1998 59 
EE-RM/STD-98-440 - _c,

Price Clothes Washer Rulemaking: Mark-up Approach

An average retail price of $400.25 was estimated from the available

information

1[/ This represents the average price of a high production volume vertical

axis washer with a high market share.

[4/ In the absence of specific price information for a baseline clothes

washer represented by 0.817 MEF, the Department proposes to use

$400.25 as the baseline retail price.

[// Sales tax @ 5.2% is added to baseline retail price to arrive at the

baseline consumer price.

[1/ A baseline manufacturer price of $285.90 is obtained using a baseline

retail price of $400.25 and a retail mark-up of 1.40.

June 30, 1998 60

EE-RM-STD-98-440 COMMENT 01CC1

Price 

EE-RM/STD-98-440 - C<... 

I Clothes Washer Rulemaking: Mark-up Approach 

An average retail price of $400.25 was estimated from the ava~lable 

information 

[:.; This represents the average price of a high production volume vertical 

axis washer with a high market share. 

[:.; In the absence of specific price information for a baseline clothes 

washer represented by 0.817 MEF, the Department proposes to use 

$400.25 as the baseline retail price. 

[:.; Sales tax @ 5.2% is added to baseline retail price to arrive at the 

baseline consumer price. 

[:.; A baseline manufacturer price of $285.90 is obtained using a baseline 

retail price of $400.25 and a retail mark-up of 1.40. 

June 30,1998 60 
EE-RM/STD-98-440 - CC,

Price Clothes Washer Rulemaking: Manufacturer Cost and Mark-up

A clothes washer industry cost structure was obtained from a topdown analysis of the appliance industry and used to estimate the full

production cost of a baseline clothes washer

Income

from

Operations Per Unit Cost ($)

6.0%

Material Cost 148.7

SG&A

18.3% l _ Cost 0Labor 29.3

Overhead Cost 33.5

R&D RD Full Production Cost 211.5

1.8%

Material

52.0%

Overhead

11.7%

Average Manufacturer mark-up

(over full production cost)

Labor 285.90

10.2% = 1.35 (= 211.50

June 30,1998 61

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - CL I 

Price Clothes Washer Rulemaking: Manufacturer Cost and Mark-up 

A clothes washer industry cost structure was obtained from a topdown analysis of the appliance industry and used to estimate the full 

production cost of a baseline clothes washer 

SG&A 

18.3% 

R&D 

1.8% 

11.7% 

Labor 

10.2% 

Income 

from 

Operations 

6.0% 

Material· 

52.0% 

Per Unit Cost ($) 

Material Cost 148.7 

Labor Cost 29.3 

Overhead Cost 33.5 

Full Production Cost 211.5 

-

Average Manufacturer mark-up 

(over full production cost) 

= 1.35 (_ 285.90 ) - 211.50 

June 30. 1998 61 

) 
EE-RM/STD-98-440 .- C/

Price Clothes Washer Rulemaking: Baseline Costs and Mark-ups Summary

Representative prices and mark-ups for a baseline vertical axis

clothes washer being sold in the U.S. marketplace were constructed

from available sources of price and industry data

Total Mark-up

1.35 x 1.40 x 1.052 = 1.990

l4 I ~

Manufacturer Retail Sales

Mark-up Mark-up Tax (5.2%)

1.35 1.40 1.052

Manufacturing Manufacturer Retail Consumer

Cost Price Price Price

$211.50 $285.90 $400.25 $421.10

June 30, 1998 6262

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ,- cc../ 

Price Clothes Washer Rulemaking: Baseline Costs and Mark-ups Summary 

Representative prices and mark-ups for a baseline vertical axis 

clothes washer being sold in the U.S. marketplace were constructed 

from available sources of price and industry data 

Total Mark-up 

1.35 x 1.40 x 1.052 = 1.990 

~ 1 tl 

I 

Manufacturer Retail 

Mark-up Mark-up 

1.35 1.40 

Manufacturing * [> Manufacturer * 

Cost ------- Price I----f--~-C> 

$211.50 $285.90 

Retail 

Price 

$400.25 

I 

Sales 

Tax (5.2%) 

1.052 

Consumer 

C> Price 

$421.10 

June 30, 1996 62 
EE-RM/STD-98-440 - CC,

National Energy Forecasting:

Central Air Conditioners

rrrrrri

Jim McMahon

JEMcMahon@lbl.gov

Ernest Orlando Lawrence Berkeley National Laboratory

To USDOE Workshop

JUne 30, 1998

((3

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc , 

National Energy Forecasting: 

Central Air Conditioners 

--------------------------------~ Jim McMahon 

JEMcMahon@lbl.gov . 

Ernest Orlando Lawrence Berkeley National Laboratory 

To USDOE Workshop 

June 30, 1998 
EE-RM/STD-98-440 -cc,

Discussion Topics

* Shipments Forecasts (under development)

- voluntary programs

- possible fuel competition (furnaces/electric heat pumps)

* New spreadsheet approach (NES)

- customize approach for each product

o ipler representation ior Ilajus i: iei Its i loiss

accessible end-use models (e.g., REM, REEPS)

- uses many elements of LCC spreadsheet

---------------- ~~~Central AC: National Energy Forecasting June 30, 1998

L4Y) -

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 -ee, 

Discussion Topics 

• S hi pments Forecasts (under development) 

- voluntary programs 

- possible fuel competition (furnaces/electric heat pumps) 

• New spreadsheet approach (NES) 

- customize approach for each product 

;,:,:~ ~itJler representation fur Inaja, uic: neHts ut !ci~S 

accessible end-use models (e.g., REM, REEPS) 

- uses many elements of Lee spreadsheet 

----------- Central AC: National Energy Forecasting --- June 30, 1998 2 
EE-RM/STD-98-440 -C-,

Shipments: Issues

* Historic central air conditioners

shipments

- Percent of homes with central a/c

- Housing construction

- Lifetime of central a/c

* Future shipments

* Future work: impact of standards

-~June --- 30~, ~Central 1998 AC: National Energy Forecasting June 30,1998 

3

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 _Cc. I 

Shipments: Issues 

e Historic central air conditioners 

. shipments 

- Percent of homes with central ale 

- Housing construction 

~ Lifetime of central ale 

• . Future shipments 

• . Future work: impact of standards 

--------Central AC: National Energy Forecasting-- June 30, 1998 3 
EE-RM/STD-98-440- cc,

Central Air Conditioner sales are expected to

increase with population increase

5.00

4.50

40 - Forecast Unitary A/C

4.00 - f DomesticShipments

* 350/ Asource: Appliance Mag.

3.00

E

2 2.50 Unitary Air Conditioner Domestic Shipments

' /y (excludes Unitary Air-Source Heat Pumps) E 2.00 source: ARI

1.50 -

1.00

0.50

0 O0 -------

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Year

'------------- Central AC: National Energy Forecasting June 30, 1998

(66D

EE-RM-STD-98-440 COMMENT 01CC1

(b.~ ") 

EE-RM/STD-98-440 - ee-I 

Central Air Conditioner sales are expected to 

increase with population increase 

r-----------~ ------------.. -.-.... ---,-------, 

5.00 ,..-----------------------------, 

4.50 -

4.00 

-

~ 3.50 

.2 

:: 3.00 

E 

-tn 2.50- ..., 

c: 

CI) E 2.00 

Q. 

~ 1.50 

1.00 

0.50 

Forecast Unitary Ale 

DomesticS hipments 

source: Appliance Mag. 

Unitary Air Conditioner Domestic Shipments 

(excludes Unitary Air-Source Heat Pumps) 

source: ARI 

o 00 .'---'-'" .... ---r----;--,...---,---

1980 1982 1984 1986 1988 199U 1992 1994 1996 1998 2000 2002 2004 

Year 

--------------- Central AC: National Energy Forecasting ---- June 30, 1998 
EE-RM/STD-98-440- Cr-,

Models of central a/c sales

* We are evaluating several approaches:

Model Vairables Accowted For:

Sales Ninber of Saturation Lifetime Price &

households Operating cost

ARIMA X

IVlti-variate X X

SaturatiornLife X X X X

Acounting X X X X X

Jun 0, 1 9Central AC: National Energy Forecasting June 30, 1998

IW~~~~~

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440- CC I 

Models of central ale sales 

• We are evaluating several approaches: 

NkxIeI . Vairables kcoll1ted Fa-: 

~Ies f\lniJerof Saturation Ufetime Prire& 

tDuseholds QJerating oost 

ftRl~ X 

M.llti-variate X X 

Saturation'Ufe X X X X 

~nting X X X X X 

----------- Central AC: National Energy Forecasting --~ June 30, 1998 
EE-RM/STD-98-440 - cc,

Example: Past and Future Clothes Washer

Shipments -- Visual Comparisons of Models

9500

9000 9000 - * CW sales

Accounting

8500 - ARIMA

8000 - Time Series

Sat/Life 1

7500 =Sat/Life - 2

7000

6500

. 6000 Jun 

' 5500.

5000

4500

4000

3500

3000

2500 I , -- ---.----. ... -. 

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

Central AC: National Energy Forecasting June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

9500 

9000 

8500 

8000 

7500 

7000 

-

~ 6500 

0 

0 

e, 6000 

rIl 

~ 

-~ 5500. 

00. 

5000 

4500 

4000 

3500 

3000 

2500 

EE-RM/STD-98-440 - eel 

Example: Past and Future Clothes Washer 

Shipments -- Visual Comparisons of Models 

• CW sales 

- Accounting 

-ARIMA 

-Time Series 

-Sat/Life 1 

-Sat/Life2 

1970 1975 1980 1985 1990 1995 2000 

Year 

2005 2010 2015 2020 2025 

--------------- Central AC: National Energy Forecasting ---- June 30, 1998 " . I " , '. 

2030 
EE-RM/STD-98-440 -

Energy forecasting: Major inputs

* Engineering analysis

- unit energy consumption

- purchase price

* Energy price scenarios

* Product lifetimes

* Housing construction

* Start year for standards (e.g., 2005)

Central AC: National Energy Forecasting June 30, 1998

6Cd9)

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc 

I 

Energy forecasting: Major inputs 

• Engineering analysis 

- unit energy consumption 

- purchase price 

• Energy price scenarios 

• Product lifetimes 

• Housing construction 

• Start year for standards (e.g., 2005) 

---------Central AC: National Energy Forecasting-- June 30, 1998 7 .- ' ¥ ,~. '. " 
EE-RM/STD-98.440 - Cc,

Major calculations

* Annual expenditures for appliance purchases

* Annual energy consumption

* Annual expenditures for energy

* Net Present Value

- net of purchase price and operating expense,

discounted and summed

Central AC: National Energy Forecasting June 30, 1998

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc 

, 

Major calcu lations 

• Annual expenditures for appliance purchases 

• Annual energy consumption 

• Annual expenditures for energy 

• Net Present Value 

- net of purchase price and operating expense; 

discounted and summed 

--------- Central AC: National Energy Forecasting -- June 30, 1998 8 
EE-RM/STD-98-440 - C,

Sample output: illustrative only

Energy Savning in Qads

Elec

from 2005

to 2010 0.31

to 2020 1.87

to 2030 3.84

Central AC: National Energy Forecasting June 30, 1998 9

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ,- CC, 

Sample output: illustrative only 

Energy-SavinginQuads -

Elec - -

from 2005 

to 2010 0.31 

to 2020 1.87 

to 2030 3.84 

-----------Central AC: National Energy Forecasting --- June 30, 1998 9 

(rf) 
EE-RM/STD-98-440- cC,

Sample output: illustrative only

2000 2005 2010 2015 2020 2025 2030

2.0

I IPrice Change

l /~ Energy Saving 1.5 - Net Saving

o.o HIUHU H H /

-0.5

-1.0

Central AC: National Energy Forecasting June 30, 1998 10

(W )

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ,- CC I 

Sample output: illustrative only 

~ ~ 

--e 

~ 

t--

Q'\ 

Q'\ 

~ 

e = 

:.: .• 

-

= 

2000 

2.0 

1.5 

1.0 

0.5 

0.0 

-0.5 

-1.0 

2005 2010 

c::::::J Price Change 

~Energy Sa\Ang 

--Net Sa\Ang 

% 

/ ". 

" ~ 

x ': ~ 

~ >- ; ~ I..- , ~~ ". 

\ "'" ~"'" I..-

~I..- I..-

2015 2020 2025 

/ % i < 

:~ % ~ , , x 

, x' , x ,x , " x , ~ 

" x 

x ~ r; 

"I-- ~ ~ , ; v. 

, i--" ~ " ~~I-- I-- , , ~ >- , , " >- 0 I-- ~ 

'" v. , , 

" , >- , " " " 

, , 

2030 

" 

i 

, 

>-

x 

--------------- Central AC: National Energy Forecasting ---- June 30, 1998 10 
EE-RM-STD-98-440 COMMENT 01CC1

Sample output: illustrative only 

Cost and Net Present Values 

Discounted at 7% to year 1997 

From 2005 to 2030 (in billion 1997$) 

Total Energy Saving 

Total Equipment Cost 

Net Present Benefit 

Benefit/Cost Ratio 

6.95 

4.75 

2.21 

1.46 

----------- Central AC: National Energy Forecasting --- June 30, 1998 11 
CY f-,m2 D -- 4 -bJf o) -,

Otb-86-' .S/WVU-33

6 I' ~ br 6

EE-RM-STD-98-440 COMMENT 01CC1

017tr86-01S/IfOJ-33 
EE-RM/STD-98-440 - cc,

Life Cycle Cost Analysis:

Central Air Conditioners

r rrrrf

Jim McMahon

JEMcMahon@lbl.gov

Ernest Orlando Lawrence Berkeley National Laboratory

To USDOE Workshop

June 30, 1998

67)

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - cc. I 

Life Cycle Cost Analysis: 

Central Air Conditioners 

-------------------------------~ Jim McMahon 

JEMcMahon@lbl.gov 

Ernest Orlando Lawrence Berkeley National Laboratory 

To USDOE Workshop 

June 30, 1998 
EE-RM/STD-98-440 - C.,

Discussion Topics

* Major input assumptions

* Uncertainty and variability

* Sample output: life cycle cost

* Sensitivity of results to major inputs

6-30-98 Central AC: Life Cycle Cost

6 9)8 2

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - Cc., 

Discussion Topics 

_ • Major input assumptions 

• Uncertainty and variability 

• Sample output: life cycle cost 

• Sensitivity of results to major inputs 

6-30-98 Central AC:- Life Cycle Cost 2 
EE-RM/STD-98-440.- cc,

Recent Development of LCC

* DOE Clothes Washer Workshop (July, 1997)

- First demonstration of draft Excel spreadsheet

* Informal demonstration of revised draft LCC

* Informal pilot training on draft LCC spreadsheets

* Public release of LCC spreadsheet

(DOE Web site, March, 1998)

* DOE Clothes Washer Workshop (March, 1998)

- Discussion of LCC spreadsheet and inputs

* DOE Central AC Workshop (June, 1998)

6-30-98 6-3093 Central AC: Life Cycle Cost 3

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440~ cc...J 

Recent Development of LCC 

• DOE Clothes Washer Workshop (July, 1997) 

- First demonstration of draft Excel spreadsheet, 

• Informal demonstration of revised draft LCC 

.- Informal pilot training. on draft LCC spreadsheets 

• Public release of LCC spreadsheet 

(DOE Web site, March, 1998) 

• DOE Clothes Washer Workshop (March, 1998) 

- Discussion of LCC spreadsheet and inputs 

• DOE Central AC Workshop (June, 1998) 

6-30-98 CentralAC: Life Cycle Cost 3 
EE-RM/STD-98-440 c-,

Major Elements

* Engineering analysis

* Energy prices

* Uncertainty & variability analysis

6-30-98 Central AC: Life Cycle Cost 4

r(.;W 4

EE-RM-STD-98-440 COMMENT 01CC1

EE_RM/STD-98-440 - CCI 

Major Elements 

• Engineering analysis 

• Energy prices 

• Uncertainty & variability analysis 

6-30-98 Central AC: Life Cycle Cost 4 
EE-RWSTD-98-440 - c.

Engineering analysis

*OLD * NEW (1998)

- Design options - Design Options /

Efficiency levels/

Reverse Engineer

(trade association data)

- Single value: - Cost Distribution:

average SWA (shipment weighted average) manufacturing cost weighted avera e)

6-308 or percentiles

6-30-98 '-----~ -Central AC: Life Cycle Cost

^ \-30985

EE-RM-STD-98-440 COMMENT 01CC1

L19 / 

EE-RM/STD-98-440 ,- ~ I 

Engineering analysis 

• OLD 

- Design options 

- Single value: 

average 

manufacturing cost 

• NEW (1998) . 

- Design Options I 

Efficiency levelsl 

Reverse Engineer 

(trade association data) 

- Cost Distribution: 

SWA (shipment 

weighted average) . 

or percentiles 

6-30-98 ~ .. ,. .." Central AC: Life Cycle Cost 5 
EE-RM/STD-98-440 - Cc

Input: Engineering Analysis

Baseline meets current

DOE standard

, * n Efficiency levels

, -3 I correspond to increased

J°·s~~~~ lSeasonal Energy

I S I Efficiency Ratio (SEER)

'* £. *· Incremental manufacturing

cost distribution by SEER

I 1|-- ,I i l 1Ii Eto come from ARI

SEER (figure is illustrative only)

~6-30-98 --- · ;''Central ~ AC: Life Cycle Cost 6 6-30-98 

6

EE-RM-STD-98-440 COMMENT 01CC1

C~D) . 

... 

en 

o 

(J 

c::n 

c 

'i: 

:s 

1:) 

J! 

:s 

c 

ca 

:E 

'-

(,) 

c 

-

EE-RM/STD-98-440 - eC, 

Input: Engineering Analysis 

SEER 

• Baseline meets current 

DOE standard 

• Efficiency levels 

correspond to increased 

Seasonal Energy 

Efficiency Ratio (SEER) 

• Incremental manufacturing 

cost distribution by SEER 

to come from ARI 

(figure is illustrative only) 

----------~ ... ~: ..... "G'ehtfal~AC: Life Cycle Cost 

6-30-98 6 
EE-RM/STD-98-440 - C-,

Input: Purchase Price

Baseline price = $$$$+tax

\ 1 ~*Incremental price for each

efficiency level includes:

05 ' - incremental

manufacturing cost

(from ARI)

- manufacturer

variable retail markup - retail variable markup

'+ 9 d - sales tax

6-30-98 g--Central AC: Life Cycle Cost 7

C16

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ,- Cc.. I 

Input: Purchase Price 

6-30-98 

• Baseline price = $$$$+tax 

• I ncremental price for each 

efficiency level includes: 

- incremental 

manufacturing cost 

(from ARI) 

- manufacturer 

variable markup 

- retail variable markup 

- sales tax 

Central AC: Life Cycle Cost t;: ... f'''' ~ .... .... .,.. ' 7 
EE-RM/STD-98-440 - cc,

Input: Energy consumption

Energy consumption

Z, Tl i , || I (kWh/year) vs SEER

I I I B I depends upon conditions:

1-l = I I | | I - central AC design

-weather

- consumer operation

SEER

6-30-98 Central AC: Life Cycle Cost 8

(6.7,-

EE-RM-STD-98-440 COMMENT 01CC1

('-A.7 ... ) . 

EE-RM/STD-9B-440 - Cc. J 

Input: Energy consumption 

SEER 

6-30-98 

• Energy consumption 

(kWh/year) vs SEER 

depends upon conditions: 

central AC design 

- weather 

- consumer operation 

Central AC: Life Cycle Cost 8 
EE-RM/STD-98-440 c,

Energy prices: variability

*OLD · NEW

- sample individual

- US average price households from

EIA RECS survey

- have central air

- utility energy prices

- household-specific annual

energy consumption from

conditional demand

6-30-98 - Central AC: Life Cycle Cost 9 6 -3 0 -9 8

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - Cc- I 

Energy prices: variability 

• OLD • NEW 

6-30-98 

- sample individual 

- US average price households from 

EIA RECS survey 

- have central air 

utility energy prices 

- household-specific annual 

energy consumption from 

conditional demand 

Central AC: Life Cycle Cost 9 
EE-RM/STD-98-440 - c,

Energy price: marginal

(OLD) * NEW) 1998

- Price = - Consumer

Revenues($) / marginal energy

Sales (kWh) rate = value of

(U.S. average) saved kWh (by

household or - as

proxy - by utility)

- Fixed charges

included - from rate schedule

and consumption

6-30-98 Central AC: Life Cycle Cost 10

(Nq)

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 - CC-I 

Energy price: marginal 

• (OLD) 

6-30-98 

- Price = 

Revenues($) I 

Sales (kWh) 

(U.S. average) 

- Fixed charges 

included 

• (NEW) 1998 

- Consumer. 

marginal energy 

rate = value of 

saved kWh (by 

household or - as 

proxy - by utility) 

- from rate schedule 

and consumption 

Central AC: Life Cycle Cost 10 
EE-RM/STD-98.440 - Cc,

Energy price: future trend

*(NEW) 1998

(OLD)

* Multiple scenarios: - Most recent EIA high, mid, low

Annual Energy (for example:

Outlook projection

- AEO 1998

* Reference Case

High Economic

Growth

Low Economic

Growth

- GRI 1998

6-30-98 Central AC: Life Cycle Cost

L^6~

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-9S-440 - e<-

I 

Energy price: future trend· 

• (OLD)· 

6-30-98 

.:. Most recent E IA 

Annual Energy 

Outlook projection 

• (NEW) 1998 

• Multiple scenarios: 

high, mid, low 

(for example: 

- AEO 1998 

• Reference Case 

• High Economic 

Growth 

• Low Economic. 

Growth 

- GRI1998 

Central AC: Life Cycle Cost 11 
EE-RIMV/S1 i-it-440 -rcI

Input: Electricity Prices

9 Electricity Price

8

g 6- - High Growth

-*-AEO 1998

5 - -GRI 1998

Low Growth

4-

'I95 2000 2 : 15 202U 20.: 0o

Central AC: Life Cycle Cost 6-30-98

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/SI D-~S-440 _eel 

Input: Electricity Prices 

6-30-98 

Ele ctricity Price 

--High Growth 

-.-AEO 1998 

5 --GRII998 

--Low Growth 

4 +-----~----~----~------r------~----~--~ 

! !) (} 5 2000 'i n -; 1\ ':;'V':;'·v 20 -' .. .... "~ 

Central AC: Life Cycle Cost 12 
EE-RM/STD-98-440- CC.

Operating expense vs SEER

Annual operating expense

-$o2kwh ($/a) vs SEER -$0.20/kWh

.|I I * Two examples:

S,. *I - 2 cents/kWh

'0'§ | | | I | - 20 cents/kWh

SEER

6-30-98 Central AC: Life Cycle Cost 13

6---30-98 13

EE-RM-STD-98-440 COMMENT 01CC1

Q) 

UJ 

C 

Q) 

C. 

>< W 

C) 

c 

;:; 

l! 

Q) 

c. 

o 

. EE-RM/STD-98-440 _ cc. 

I 

Operating expense vs SEER 

SEER 

6-30-98 

·lm$1~~1 • $O.2O'kV\h1 

• Annual operating expense 

($/a) vs SEER 

• Two examples: 

- 2 cents/kWh . 

- 20 cents/kWh 

Central AC: Life Cycle Cost 13 
EE-RM/STD-98-440 - Cc,

Cumulative Cash Flow vs SEER

* Cumulative cash flow $5,000

(CCF) is the sum of

purchase price plus annual 3 $4,o00

operating expenses over L

the appliance lifetime u $3,ooo

* Cash flow at year 0 is _ X $2,000 Base purchase price 10% Irrpr E

3 -A-/30% Ipr

* Slope is annual operating O $1,000 - 50%V Ir

expense $0 - I

* Chart shows baseline and 0 1 2 3 4 5 6 7 8 9 101112131415

10 q0,50% energy Years sin purchase

reduction

6-30-98 Central AC: Life Cycle Cost 14

f( .S6309

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440·- Cc I 

Cumulative Cash Flow vs SEER 

• Cumulative cash flow 

(CCF) is the sum of 

purchase price plus annual 

operating expenses over 

the appliance lifetime 

• Cash flow at year 0 is 

purchase price 

• Slope is annual operating 

expense 

• Chart shows baseline and 

10; 30 J 500/0 energy 

reduction 

6-30-98 

$5,000 

11. -

.c 

~ $3,000 

u 

CI) 

> 

~ $2,000 

::l 

E 

::l 

U $1,000 

$0 

~--------------~~~ 

-0-10% IITp" 

~ 3Jl1o IITp" 

+---------------------1-0--00% IITp" 

o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 

Years si~ fXl,rchase 

Central AC: Life Cycle Cost 14 
EE-RM/STD-98-440 -c,

Cumulative Cash Flow and LCC

* Cumulative cash flow $5,000

(CCF) is the sum of

purchase price plus annual $4,000

operating expenses over o

, $3,000 the appliance lifetime $3

X"(p~~~~~~ .- o -LCC@6%

* Life cycle cost (LCC) is the $2000

discounted sum $1,000

* Chart shows CCF and

$0 -I I I IIIIrt I LCC for baseline by years 0 1 2 3 4 5 6 7 8 9 101112131415 since purchase Yeas since purchase

6-30-98 -- Central AC: Life Cycle Cost 15

CC605)

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STO-98-440 - <-c I 

Cumulative Cash Flow and LCC 

• Cumulative cash flow 

(CCF) is the sum of 

purchase price plus annual 

operating expenses over 

the appliance lifetime 

• Life cycle cost (LCC) is the 

discounted sum 

• Chart shows CCF and 

LCC for baseline by years 

since purchase 

6-30-98 

$5,(XX) 

$4,000 

o 

o 

..J $3,000 

"C -+-CX::F 

C 

ca -;-0- Lex:;@6% 

~ $2,000 

o 

$1 ,(xx) 

$0 

o 1 2 3 4 5 6 7 8 910 11 12 13 14 1S 

Years since purchase 

Central AC: Life Cycle Co~t . 15 
EE-RM/STD-98-440 - Cc,

Central Air Conditioner:

LCC vs SEER (ILLUSTRATIVE)

* Simple LCC for each

SEER (purchase price

plus discounted sum of

annual operating

expenses over life) 0

* EXAMPLE: CcFiial air

conditioner purchased in

2005. Lifetime: 15 years. '

Discount rate: 6% real.

Energy prices: AE098 l , , 

Reference SEER

6-30-98 Central AC: Life Cycle Cost 16

(q&)~~~~~~~~~~~~~~~~~1

EE-RM-STD-98-440 COMMENT 01CC1

0) . 

EE-RM/STD-98-440 -. cc 

Central Air Conditioner: I 

LCC vs SEER (ILLUSTRATIVE) 

• Simple Lee for each 

SEER (purchase price 

plus discounted sum of 

annual operating 

expenses over life) 

-

?f!-

CD 

@) 

-... 

U) 

o 

o 

• EXAMPLE: Gtn Iteal air ~ ~ 

conditioner purchased in t? .! 

2005. Lifetime: 15 years. :::; 

Discount rate: 6% real. 

Energy prices: AE098 

Reference 

6-30-98 

SEER 

Central AC: Life Cycle Cost 16 
EE-RM/STD-98-440 - CC,

Uncertainty and variability

* Identify key uncertainties and variabilities - uncertainty: incomplete information

- variability: range of values

* Estimate input ranges rather than point values - minimum, likeliest, maximum values

* Conduct scenario ("what-if) analysis

* Simulate over input ranges

* Express output as ranges

- Percent of consumers having lower life cycle cost

6-30-98 Central AC: Life Cycle Cost 17

C(1)

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-9S-440 - CC I 

Uncertainty and variability 

• Identify key uncertainties and variabilities 

- uncertainty: incomplete information 

- variability: range of values 

• Estimate input ranges rather than point vaJues 

- minimum, likeliest, maximum values 

• Conduct scenario ("what-if') an~lysis 

• Simulate over input ranges 

• Express output as ranges 

- Percent of consumers having lower life cycle cost 

6-30-98 Central AC: Life Cycle Cost 17 
EE-RM/STD-98-440-Cc,

SCENARIO

* Start date (effective date of new standard)

* Standard level (SEER)

* Energy price trend

6-30-98 Central AC: Life Cycle Cost 18

CC z,2

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98_440 -- cc 

I 

SCENARIO 

• Start date (effective date of new standard) 

• Standard level (SEER) 

• Energy price trend 

6-30-98 Central AC: Life Cycle Cost 18 

C1~) . 
EE'RM/STD- 98. 4 4 0 SIMULATION '"""

* Select one household from RECS (weighted)

- have central air conditioner

- average price of electricity

- household annual energy consumption

* Adjust price of electricity

- consumer marginal energy rate

- apply time trend

* Sample given uncertainties

- incremental manufacturing cost, markup, lifetime,

discount rate

* Calculate LCC

6-30-98 Central AC: Life Cycle Cost 19

C^i31

EE-RM-STD-98-440 COMMENT 01CC1

SIMULATION Ee-RM/STO-98_440 - cc 

I 

• Select one household from RECS (weighted) 

- have central air conditioner 

- average price of electricity 

- . household annual energy consumption 

• Adjust price of electricity 

. - consumer marginal energy rate 

- apply time trend 

• Sample given uncertainties 

- incremental manufacturing cost, markup, lifetime, 

discount rate 

• Calculate LCC 

6-30-98 Central AC: Life Cycle Cost 19 
EE-RM/STD-98-440 cC,

Uncertainty and variability

(OLD) * (NEW) 1998

- SCENARIO - SCENARIOS

* start date

# start date date * standard level · standard level

* standard level . energy price trend

* energy price -SIMULATION * manufacturing cost

* markup * manufacturing costs

* lifetime * markups

. discount rate * households

* electricity rates

* lifetimes

* discount rates

6-30-98 Central AC: Life Cycle Cost 20

~CW t 6-0,

EE-RM-STD-98-440 COMMENT 01CC1

EE-RM/STD-98-440 ,..., eel 

Uncertainty and variability 

• (OLD) 

SCENARIO 

• start date 

• standard level 

• energy price 

• manufacturing cost 

• markup 

• lifetime 

• discount rate 

6-30-98 

• (NEW) 1998 

- SCENARIOS 

• start date 

• standard level 

• energy price trend 

- SIMULATION 

• manufacturing costs 

• markups 

• households 

• electricity rates 

• lifetimes 

• discount rates 

Central AC: Life Cycle Cost 20 
EE-RM-STD-98-440 COMMENT 01CC1

Cqr-) 

SAMPLE OUTPUT: EE-RM/STD-98-440 - <:::C I 

LCC Difference (ILLUSTRATIVE} 

• Simulation of U.S. 

households (10,000 trials) 

• Change in LCC from 20% 

efficiency improvement 

from baseline 

• Mean impact is LCC 

savings of $99 

• Range is from $2818 

savings to·$168 cost 

• Percent of sample 

- 590/0 decrease LCC 

- 41 % increase LCC 

6-30-98 

10,000 Trials 

Forecast: LCC Difference 

Frequency Chart 239 Outliers 

n?A,----------------~--~~~·2n 

~ .--

.021t-----------+--

1 .014+---------...,.,.. 

.CI 

CI tt .007+-------

($700) ($475) ($250) ($25) 

Certainty is 58.73% from -Infinity to $0 $ 

$200 

207.7 

." 

(; 

138 5~ I 

t'I 

69.25 ~ 

o 

10,000 Trials 

Forecast: LCC Difference 

Cumulative Chart 239 Outliers 

~------------~--~------~10000 

($700) ($475) ($250) ($25) $200 

Certainty is 58.73% from -Infinity to $0 $ 

Central AC: Life Cycle Cost 21 
EE-RM/STD-98-440

SAMPLE OUTPUT: Simple Payback (years)

20% efficiency increase - (ILLUSTRATIVE)

Forecast: Payback

10,000 Trials Frequency Chart 180 Outliers

.0 500- 496

.037 -------- 372

13. .025--1 -124 ,

k.

.-=1111111111111111 .2 . Cl

ean .0 0

0.0 11.3 22.5 338 45.0

years

6-30-98 Central AC: Life Cycle Cost 22

for.-3-9)2

EE-RM-STD-98-440 COMMENT 01CC1

rq~) 

EE-RM/STD-98-440 CL,J 

SAMPLE OUTPUT: Simple Payback (years) 

20% efficiency increase - (ILLUSTRATIVE) 

10,000 Trials 

.037 

.-~ 

.--.c 

(10 

.c 

0 

... 

a. 

. 0 ( Jl J-L--,-I 

0.0 11.3 

6-30-98 

Forecast: Payback 

Frequency Chart 

22.5 

years 

338 

180 Outliers 

- 496 

- 372 

" """IIJ 

C1 

248 .CI 

= C1 

= - 124 ~ 

45.0 

Central AC: Life Cycle Cost 22