ES

- i EXECUTIVE SUMMARY

TABLE OF CONTENTS

ES.1 Introduction

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

ES.2 Summary of Rulemaking Process

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

ES.3 Preliminary Activities

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

ES.4 Key Analyses and results

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

ES.4.1 Market and Technology Assessment

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

ES.4.2 Screening Analysis

................................ ................................ ................................ ............... 4

ES.4.3 Engineering Analysis

................................ ................................ ................................ ........... 4

ES.4.3.1 Product Classes Analyzed

................................ ................................ ................. 4

ES.4.3.2 Efficiency Levels Defined

................................ ................................ ................ 5

ES.4.3.3 Manufacturer Costs and Selling Prices

................................ ............................. 7

ES.4.4 Markups to Determine Product Price

................................ ................................ ................... 8

ES.4.5 Energy Use Characterization

................................ ................................ ............................... 9

ES.4.6 Life

- Cycle Cost and Payback Period Analysis

................................ ................................ .. 11

ES.4.7 Shipments Analysis

................................ ................................ ................................ ............ 14

ES.4.8 National Impact Analysis

................................ ................................ ................................ ... 15

ES.4.8.1 Efficiency Trend

................................ ................................ ............................. 15

ES .4.8.2 National Energy Savings

................................ ................................ ................. 16

ES.4.8.3 Net Present Value

................................ ................................ ........................... 17

ES.4.9 Preliminary Manufacturer Impact Analysis

................................ ................................ ....... 18

ES.5 Issues on which the Department Seeks Public Comment

................................ .................. 19

ES.5.1 Portable AC Product Classes

................................ ................................ ............................. 19

ES.5.2 Efficiency Levels

................................ ................................ ................................ ............... 19

ES.5.3 Design Options and Cost Estimates

................................ ................................ ................... 19

ES.5.4 Lifetime of Portable ACs

................................ ................................ ................................ ... 19

ES.5.5 Energy Use Determination

................................ ................................ ................................ . 19

ES.5.6 Operating Hours for a Standards Case

................................ ................................ ............... 20

ES.5.7 Commercial Use of Portable ACs

................................ ................................ ...................... 20

ES.5.8 Historical Shipments of Portable ACs

................................ ................................ ............... 20ES

- ii LIST OF TABLES Table ES.4.3.1 Portable AC Efficiency Level Characteristics

................................ ........................ 5 Table ES.4.3.2 Portable AC Efficiency Level Equation Coefficients

................................ ............. 6

Table ES.4.3.3 Incremental Portable AC Manufacturer Production Costs

................................ ...... 8 Table ES.4.4.1 Markups for Determining Portable AC Product Price

................................ ............ 8 Table ES.4.5.1 Portable ACs: Average Annual Energy Use by Efficiency Level

........................ 11

Table ES.4.6.1 Summary of LCC and PBP Results by Efficiency Level for Portable ACs

at Residential Sites

................................ ................................ ................................ . 13 Table ES.4.6.2 Summary of Life

- Cycle Costs Relative to the Base

- Case Efficiency

Distribution for Portable ACs at Residential Sites

................................ ................ 13 Table ES.4.6.3 Summary of LCC and PBP Results by Efficiency Level for Portable ACs

at Commercial Sites

................................ ................................ ............................... 14 Table ES.4.6.4 Summary of Life

- Cycle Costs and Savings Relative to the Base

- Case

Efficiency Distribution for Portable ACs at Commercial Sites

............................. 14

Table ES.4.8.1 Portable ACs: Distributions of Base

- and Standards

- Case Efficiencies in

2019 for Residential and Commercial Sectors

................................ ....................... 16 Table ES.4.8.2 Cumulative Primary National Energy Savings

................................ ..................... 17 Table ES.4.8.3 National Energy Savings for Full

- Fuel

- Cycle

................................ ....................... 17

Table ES.4.8.4 Cumulative NPV Results Based on 3

- Percent and 7

- Percent Discount

Rates

................................ ................................ ................................ ....................... 18

LIST OF FIGURES Figure ES.4.3.1 Efficiency Level Curves by Cooling Capacity

................................ ...................... 7 Figure ES.4.7.1 Portable ACs Historical Base

- Case Shipments and Project ion

........................... 15ES

- 1 EXECUTIVE SUMMARY

ES.1 I ntroduction

T his preliminary technical support document (TSD) describes in detail the approaches to and results of preliminary activities that the U.S. Department of Energy ( DOE ) performed in investigating potential energy conservation standards for porta ble air conditioners (ACs) . This executive summary summarizes DOE’s preliminary activities and results. Additionally, this executive summary delineates issues identified during the analyses about which DOE seeks comments from interested parties. Those issu es are highlighted in the public meeting presentation and are discussed further in chapter 2 of the preliminary TSD.

ES.2 S ummary of R ulemaking P rocess

Section 6295(o)(2)(A) of the Energy Policy and Conservation Act (EPCA), Pub. L. 94

- 163, 42 U.S.C. 6291 et seq

. requires DOE to establish energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified . DOE establishes those standards during rulemakings for energy

consuming consumer products and commercial and industrial equipment . For each rulemaking, DOE typically first develops a framework document that describes the approaches and methods DOE will use in evaluating the need for new or amended standards. Fo r this rulemaking, DOE began the rulemaking process by publishing a notice of proposed determination (NOPD) in the Federal Register on July 5, 2013 (hereinafter the “July 2013 NOPD”)

. 78 FR 40403. After the framework stage, or in this case the NOPD, DOE th en presents the initial analytical results in a preliminary TSD such as this one. DOE publishes in the Federal Register a notice that announces the date and place of a public meeting, as well as the availability of the preliminary

TSD and presentation materials that interested parties may review before the meeting. The notice also highlights the major analyses DOE performed in the preliminary stage of the rulemaking.

ES.3 Preliminary A ctivities

There are currently no DOE test procedures or energy conservation standards for portable

AC s. In the July 2013 NOPD, DOE outlined its tentative determination that portable AC s fulfill the criteria for being classified as a covered product pursuant to 42 U.S.C. 6292(b)(1). 78 FR 40403, 40404 (Jul. 5 , 2013). DOE may classify a consumer product as a covered product if (1) classifying products of such type as covered products is necessary and appropriate to carry out the purposes of EPCA; and (2) the average annual per

- household energy use by products o f such type is likely to exceed 100 kilowatt

- hours ( kWh ) (or its British thermal unit ( Btu ) equivalent)

per year. 42 U.S.C. 6292(b)(1). DOE estimated in the July 2013 NOPD that 973.7 thousand units were shipped in North America in 2012, with a projected gr owth to 1743.7 thousand units byES

- 2

2018, representing nearly 80

- percent growth in 6 years. a C omments from interested parties in response to the July 2013 NOPD were generally supportive of including portable AC s as a covered product under EPCA.

In the July 2013 NOPD, DOE proposed a definition for portable AC s to be added in the Code of Federal Regulations to clarify coverage of any potential test procedure or energy conservation standards for these products. DOE proposed defining a portable AC as “a consumer product, other than a ‘packaged terminal air conditioner,’ which is powered by a single phase electric current and which is an encased assembly designed as a portable unit that may rest on the floor or other elevated surface for the purpose of providing d elivery of condit i oned air to an enclosed space. It includes a prime source of refrigeration and may include a means for ventilating and heating.” DOE also noted that this proposed definition is mutually exclusive to

the definition for a room AC , which is “designed as a unit for mounting in a window or through

the wall.” 79 FR 40403, 40404 (Jul. 5, 2013).

Because portable AC s are not curre ntly covered under EPCA, there are no DOE test procedure s for these products. In response to the July 2013 NOPD, inter ested parties commented on appropriate test procedures for portable AC s, and on technical issues DOE should address in any potential DOE test procedures for these products. Based on this feedback, DOE conducted initial investigative testing. On May 9, 2014 , DOE published a notice of data availability (hereinafter the “May 2014 NODA”) to present the results of the initial testing and to request feedback on potential testing options. 79 FR 26639. Based on feedback received in response to the May 2014 NODA and further investigative testing, DOE proposed a test procedure for portable AC s in a notice of proposed rulemaking (NOPR) issued on February 12, 2015 (hereinafter the “ February 2015 T est P rocedure NOPR”)

. b I n the February 2015 Test Procedure
NOPR, DOE also proposed an update d portable AC definition. The newly proposed definition

would provide additional clarification regarding the scope of products that would be considered portable AC s , and would align wi th the definitions for dehumidifiers and room ACs . The newly proposed definition for “portable air conditioner” is as follows:

An encased assembly , other than a “packaged terminal air conditioner,” “room air conditioner,” or “dehumidifier,” designed as a portable unit for delivering cooled, conditioned air to an enclosed space, that is powered by single

- phase electric current

, which may rest on the

floor or other elevated surface . It includes a source of refrigeration and may include a dditional

means for air circulation and heating.

DOE will consider comments and information received from interested parties on the revised portable AC definition proposed in the Febru ary 2015 Test Procedure NOPR, and expects to establish the final definition in a future determination of coverage.

a Transparency Media Research, Air Conditioning Systems Market

- Global Scenario, Trends, Industry Analysis,
Size, Share and Forecast, 2012

– 2018 , January 2013.

b The test procedure is available at: http://www1.eere.energy.gov/buildings/app liance_standards/product.aspx/productid/79

.ES

- 3

Chapter 1 of this preliminary TSD summarizes DOE’s appliance standards program and how it applies to this rulemaking, and then outlines the structure of this document. Chapter 2 of the preliminary TSD summarizes the analytical framework for this rulemaking , the comments received in response to the July 2013 NOPD , and DOE’s responses to those comments. Subsequent chapters describe in detail the preliminary analyses performed for this stage of the rulemaking. Descriptions include inputs, sources, methods, and results.

ES.4 Key Analys e s and results

The following sections summarize the key analyses DOE performed and the results obtained in developing this preliminary TSD.

ES.4.1 Market and Technology Assessment

When initiating an analysis of potential energy conservation standards for appliances, DOE obtains information on the present and past industry structure and market characteristics for the products concerned. DOE assesses industries and products both quantitatively and qualitatively, based on publicly a vailable information.

For this rulemaking, DOE addressed (1) manufacturer market share and characteristics

, (2) existing regulatory and non

- regulatory initiatives for improving product efficiency, and (3) trends in product characteristics and retail mar kets . Th e s e data and resource material were used throughout the analysis.

DOE reviewed available public literature and interviewed manufacturers to develop an overall understanding of the portable AC industr y in the United States. In particular, DOE soug ht

information on: (1) manufacturers and their market share; ( 2 ) product information; and ( 3 ) industry trends. Chapter 3 of the preliminary TSD describes the market analysis and resulting

information.

DOE typically uses information about existing and pas t technology options and working prototype designs to determine which technologies and combinations of technologies manufacturers use to attain higher performance levels. In consultation with interested parties, DOE develops a list of technologies to be co nsidered.

DOE developed a list of technologies for portable AC s from trade publications, technical papers, manufacturer literature

, and through consultation with manufacturers. Because existing products contain many technologies for improving product ef ficiency, product literature and direct examination provided additional information.ES

- 4

ES.4.2 Screening Analysis

The screening analysis (chapter 4 of the preliminary TSD ) examines whether technologies identified in the technology assessment (1) are technologicall y feasible; (2) are practicable to manufacture, install, and service; (3) have an adverse impact on product utility or availability; and/or (4) have adverse impacts on health and safety. DOE conducted this screening analysis in consultation with interested parties. In the subsequent engineering analysis, DOE

further examined the technology options that it did not remove from consideration in the screening analysis.

ES.4.3 Engineering Analysis

The engineering analysis (chapter 5 of the preliminary TSD ) establishes the relationship between the costs of manufacturing portable AC s and their efficiencies. These relationships serve as the basis for calculating costs and benefits of modified product designs for consumers, manufacturers, and the nation. Chapter 5 describe s the product classes DOE analyzed, the representative baseline units

, the efficiency levels DOE considered, the methodology DOE used to develop the manufacturing production cost model, and the cost

- efficiency results.

ES.4.3.1 Product Classes Analyzed

Because portable air condition er s are not currently covered under EPCA , there are no existing product classes for these products.

For this preliminary analysis, DOE considered whether it should separate portable AC s into separate product classes based on two ch aracteristics: duct configuration and cooling capacity (hereinafter referred to as “capacity”) . Portable AC s are typically available with two types of duct configurations that affect product performance. Single

- duct units draw all of the

condenser inlet ai r directly from the conditioned space without the means of a duct, and discharge the hot condenser outlet air to the unconditioned space through a duct. Dual

- duct units draw some or all of the condenser inlet air from the unconditioned space through a duct , and may draw additional condenser inlet air directly from the conditioned space. The condenser outlet air is discharged to the unconditioned space by means of a separate duct. Portable ACs of a third type of duct configuration, s pot coolers

, draw and di scharge all evaporator and condenser air to and from the conditioned space, and typically direct the evaporator outlet air to a localized space within the conditioned space. The February 2015 Test Procedure NOPR does not include measures of spot coolers pe rformance , so DOE conducted this preliminary analysis only on single

- duct and dual

- duct portable ACs.

Single

- duct units typically create more net negative pressure within the conditioned space

than dual

- duct units, leading to more infiltration airflow from outside the conditioned space. This typically leads to lower single

- duct unit efficiencies than for comparable dual

- duct units when measured according to the method proposed in the February 2015 Test Procedure NOPR.ES

- 5

Although duct configuration impacts unit performance, DOE determined that duct configuration does not require separate product classes because there is no unique consumer utility associated with either configuration.

Additionally, portable AC efficiencies are a function of product capacity. Higher

- capacity units typically achieve a higher cooling energy efficiency ratio (EER
c m ) than lower

- capacity units when measured according to the method proposed in the February 2015 Test Procedure

NOPR. DOE observed from its test data that t his relationship between EER c m and capacity is

consistent across the range of measured capacities for products that implement the same technologies. DOE did not identify any inherent differences in efficiency for different ranges of capacity that would pro duce a different efficiency

- capacity relationship. Therefore, DOE is not proposing separate portable AC pr oduct classes based on capacity

. I nstead, DOE is proposing equations to relate EER c m to capacity.

Accordingly, DOE did not separate portable AC s into any additional product classes for

this preliminary analysis.

ES.4.3.2 Efficiency Levels Defined

DOE based its preliminary analysis for portable AC s on EER c m as proposed in the February 2015 Test Procedure NOPR. Although this metric is an intermediate s tep in determining the combined energy efficiency ratio ( C EER), DOE focused its preliminary analysis

on efficiency improvements in the cooling mo de operation because this is the primary functio n of a portable AC

. In the NOPR phase of this rulemaking, DOE expects to base the analysis on

C EER to account for portable AC op eration in additional modes, including off

- cycle, inactive or off mode, and heating mode, when available

.

As discussed in section ES.4.3.1 , DOE developed equations relating EER
c m to cooling capacity. According to the procedure proposed in the February 2015 Test Procedure NOPR,

DOE observed that measured EER
c m and capacity ar e dependent on a unit’s duct configuration

and airflow optimization to minimize infiltration air ( i.e. , the volume of condenser inlet air

drawn from either the conditioned space or from the unconditioned space through the condenser inlet duct, if available ). DOE determined that appropriate efficiency levels for the analysis would first be based on incremental changes to the duct configuration and airflow pattern, with a maximum EER
c m efficiency level that accounts for efficiency gains associated with a dual

- duct configuration with an optimal airflow pattern and additional design options. Table ES.4.3

. 1 below describes the incremental changes associate d with each an alyzed efficiency level.

Table ES.4.3

. 1 Portable AC Efficiency Level Characteristics Efficiency

Level Product Characteristics

Baseline Single

- duct unitES

- 6

EL1 Dual

- duct unit with 50 percent of condenser inlet air drawn from the

conditioned space ( i.e.

, 50 percent infiltration air)

EL2 Dual

- duct unit with 25 percent of condenser inlet air drawn from the

conditioned space ( i.e.

, 25 percent infiltration air)

EL3 Dual

- duct unit with condenser inlet air drawn entirely from unconditioned

space via condenser inlet duct ( i.e.

, no infiltration air)

EL4 EL3 unit with improved compressor efficiency, heat exchangers, blower

efficiencies, and low

- standby

- power controls.

DOE relied on its investigative testing and modeled data to deter mine product EER
c m and cooling capacity at each of the efficiency levels. These data resulted in a range of product efficiencies for each efficiency level depending on the individual product capacities. DOE

evaluated the relationships between cooling capacity and EER c m at each efficiency level configuration, and developed the following equation to describe the representative EER
c m for a given ca pacity at each efficiency l evel :

EER c m = Cooling Capacity

( A × Cooling Capacity + B )

Table ES.4.3

. 2 below provides the coefficients A and B for each analyzed efficie ncy level which would be used to determine EER
c m in Btu per watt

- hour (Btu/Wh) , and Figure

ES.4.3

. 1 plots each efficiency level curve for cooling capacities from 0 to 10,000 Btu per hour (Btu/h)

.

Table ES.4.3

. 2 Portable AC Efficiency Level Equation Coefficients

Efficiency Level A Coefficient (Wh/Btu) B Coefficient (W)

Baseline 0.113 855.5

EL1 0.1201 685.4

EL2 0.1222 566.3

EL3 0.1256 426.9

EL4 0.1205 355.1ES

- 7 Figure ES.4.3

. 1 Efficiency Level Curves by Cooling Capacity

Chapter 5 of this preliminary TSD includes additional details on how DOE developed the efficiency levels for its analysis

.

ES.4.3.3 Manufacturer Costs and Selling Prices

DOE used a hybrid approach of the design

- option and reverse

- engineering approaches for its engineering analysis

. This analysis consist s of disassembling repre sentative units, analyzing the materials and manufacturing processes, analyzing the design approaches manufacturers use, and developing a spreadsheet model to ascribe costs to the various designs . DOE also obtained input from interested parties on the manu facturing cost model inputs. Chapter 5 of the preliminary TSD includes information on the inputs used to determine the manufactur er production cost (MPC) , including material, labor, and overhead prices. DOE then considered the design options manufacturers would likely use to achieve higher product efficiencies. DOE considered the efficiency level changes described in Table ES.4.3

. 1 in estimating the incremental

MPC at each efficiency level. Chapter 5 also includes information on the various components and features incorporated into designs for portable AC s , as well as certain design options that were retained in the screening analysis but were not considered in the engi neering analysis due to negligible energy savings potential or inability to be m easured according to the test procedure proposed in the February 2015 Test Procedure NOPR

.

The output of DOE’s engineering analysis is a cost

- efficiency curve that relates incremental MPC to efficiency for portable AC s

. The incremental MPC represents the average increase in MPC required to improve a baseline

- efficiency product to each of the consideredES

- 8

efficiency levels for each of the products in DOE’s teardown sample

. For efficiency levels 1 through 3, the design changes DOE considered increase product capacity with relatively constant energy consumption. Accordingly, the average MPCs for these efficiency levels corre spond to

in crease s in bot h EER
c m and cooling capacity. Table ES.4.3

. 3 present s the results of the engineering analysis for portable AC s

.

Table ES.4.3

. 3 Incremental Portable AC Manufactur er Production Costs

Efficiency Level Incremental MPC (2013$)

EL1 $ 4.09

EL2 $ 4.67

EL3 $ 5.26

EL4 $ 47.76

ES.4.4 Markups to Determine Product Price

In chapter 6 of this preliminary TSD, DOE calculates the markups to manufacturer selling prices that occur throughout the distribution channels for portable AC s, converting the estimated manufacturer costs derived from the engineering analysis to consumer prices. In calculating markups, DOE identified the distribution channels for port able AC s and the markup associated with each step in the channels. The manufacturer markup converts MPC to manufacturer selling price (MSP). DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10

- K reports filed by publicly traded manufacturers primarily engaged in appliance manufacturing. DOE estimated the markups taken by retailers and also included sales taxes. DOE developed separate retailer markups for baseline products (baseline markups) and fo r the incremental cost attributable to more expensive, more efficient products (incremental markups). Table ES.4.4

. 1 summarizes the markups DOE developed for the prices consumers pay for portable AC s.

Table ES.4.4

. 1 Markups for Determining P ortable AC Product Price

Distribution Step Markup

Baseline Incremental

Manufacturer 1.42

Retailer 1.36 1.11

Sales Tax 1.07

Overall 2

. 07 1. 69ES

- 9

ES.4.5 Energy Use Characterization

DOE assessed the energy savings potential of higher

- efficiency portable AC s in order to develop energy savings values to be used in the life

- cycle cost and subsequent analyses. The goal of the energy use characterization is to generate a range of energy use values that reflect real

world portable AC use in American homes and businesses. By in corporating data on how portable AC products actually are used by U.S. consumers, DOE can estimate the energy that would be consumed (or potentially saved) by products having various efficiency levels. As part of the energy use analysis, certain engineerin g assumptions and data are required, including how often the product is operated and in which mode of operation (cooling, fan

- only, or standby/off), the size of the area to be cooled, installation conditions, and climate conditions. Because DOE

found few r eal

- world data to approximate portable AC energy use, DOE had to make various assumptions to perform the energy use analysis.

Critical to DOE’s energy use analysis was room AC data from the Energy Information Administration’s (EIA’s) 2009 Residential En ergy Consumption Survey ( RECS 2009) and 2003 Commercial Buildings Energy Survey ( CBECS 2003), the most recent surveys available at the time of DOE’s analysis. Both surveys collect nationally representative information related to consumers’ appliance use an d energy consumption, including the use of window

- or wall

mounted room ACs . The two surveys collect data on annual energy costs for cooling, along with

climate

- related characteristics. DOE’s assumptions include the following considerations.

 Ownership of a window

- or wall

- mounted room AC used in a RECS 2009 household

or CBECS 2003 enterprise could be used to approximate the ownership of a portable

AC

.

 The portable AC was installed according to manufacturer instructions (for example, a

dual

- duct portable AC would have both ducts installed and properly insulated).

 The number of operating hours spent in cooling mode for a window

- or wall

- mounted

room AC used in a RECS household or CBECS enterprise could be used to approximate the hours a portable AC spends in c ooling mode.

 The upper limit of total hours of portable AC operation in either cooling or fan

- only mode were estimated assuming that a portable AC would be operated only in months having 5 or more coo ling

- degree days that exceed 65 degrees Fahrenheit (° F )

.

 For rooms measuring less than 250 square feet, the portable AC setpoint can be reached (the cooling load is constant) and operating hours would decrease with a higher

- capacity portable AC

.

 For rooms measuring 250 square feet or more, the cooling load could not be met by increasing the capacity of the portable AC and, therefore, cooling operation would continue until the user turned off the unit. The operating hours spent in cooling mode would remain constant for any portable AC operating at any efficie ncy level

.

 The average capacity at each efficiency level reflects the full range of capacities at

that efficiency level

.ES

- 10

The energy use analysis requires DOE to establish a range of total annual operating hours as well as hours for each mode of operati on (cooling or fan

- only). DOE utilized RECS 2009 and

CBECS 2003 data to establish the upper limit of portable AC annual operating hours for both modes of operation. To estimate annual portable AC use and energy consumption, DOE began by assigning each RECS household and CBECS commercial enterprise that uses a room AC to

one of the 321 weather stations operated by the National Oceanic and Atmospheric Administration (NOAA). DOE identified which weather station best matched the heating and cooling degree

- days in the RECS 2009 data set or the CBECS 2003 data set. The climate data

obtained f rom NOAA’s National Climatic Data Center helped DOE determine the maximum

amount of time the portable AC would be operated annually and apportion the annual electricity

use for portable AC s in various geographic areas among the months of the year. DOE assu med a portable AC would be operated in cooling mode only during months having 5 or more cooling

degree days that exceed 65 °F.

DOE was able to use RECS 2009 and CBECS 2003 room AC data to estimate the range of annual operating hours a portable AC sp ends in cooling mode based on the method used in DOE’s 2011 final energy conservation standards rulemaking for room AC s. DOE assumed the operating hours calculated for households and businesses having a room AC represent operating hours spent in cooling mo de for a baseline portable AC unit. The energy use of a portable AC motor during cooling mode was calculated using the method for determining rated capacity and efficiency stipulated in the February 2015 Test Procedure NOPR

. The distribution of operating hours spent in fan

- only mode is based on a preliminary analysis of field

- metered data (Burke et
al. c ), in which DOE assumed that fan

- only time was proportional to cooling

- mode time. DOE estimated that time spent in fan

- only mode was about 30 percent of the time spent in cooling

mode.

An additional factor in DOE’s energy use analysis is the square footage of the room the portable AC attempts to cool. In cases where the baseline portable AC adequately meets the

cooli ng load of a room, a higher

- capacity unit will reduce the hours of operation in cooling mode. If the baseline unit cannot handle the cooling load, however, field metering data indicate the compressor will remain running until a user turns the unit off. (Bu rke, et al. ). A study of portable AC performance conducted by Consumer Reports d found that portable AC s tested in a

250

- square

- foot room labored to provide adequate cooling. Based on those observations, DOE assumed households using a higher

- effici ency (and thus higher

- capacity) portable AC in a room measuring less than 250 square feet would experience a reduction in hours of operation in cooling mode, assuming a fixed load. In areas that meet or exceed 250 square feet the hours

c T. Burke, et al. , Using Field

- Metered Data to Quantify Annual Energy Use of Portable Air Conditioners, Lawrence Berkeley National Laboratory, Report No. LBNL

- 6868E (December 2014). Available at: www.osti.gov/scitech/servlets/purl/1166989

. d June 12, 2014 06:00 AM, http://www.consumerreports.org/cro/news/2014/06/are

- portableair

- conditioner

- claims

- a

lot

- of

- hot

- air/index.htmES

- 11

spent in each mode w ould not change, because no portable AC would be able to cool the room adequately and therefore would never cycle off the compressor

.

Table ES.4.5

. 1 presents the ene rgy use estimated at each efficiency level that DOE is considering for portable AC s. E fficiency level s that exceed the baseline level correspond to technology options that increase both the EER
c m and cooling capacity of portable AC s. When the hours spent i n cooling mode decreased in a potential standards case compared to the base case,

DOE allocated the time difference to fan

- only mode.

Table ES.4.5

. 1 Portable AC s: Average Annual Energy Use by Efficiency Leve l

EL Average EER c m

( Btu/ W h ) Average Cooling

Capacity ( Btu/h ) Average Annual

Residential Energy Use (kWh/year) Average

Annual Commercial Energy

Use ( kWh/year )

Baseline 2.08 2,512 724 1,7 13

1 3.53 4,327 52 5 1,4 11

2 4.32 5,293 47 3 1,33 0

3 5.28 6,539 43 4 1,2 74

4 5. 82 6,604 40 0 1,1 73

ES.4.6 Life

- Cycle Cost and Payback Period Analysis

DOE analyzed the net financial effect on consumers of potential standards for portable

AC s by evaluating the life

- cycle cost (LCC) and payback period (PBP) of the product (chapter 8 of this preliminary analysis TSD ). In performing this analysis, DOE used the cost

- efficiency relationship derived from the engineering and markups analys e s, along with the energy costs derived from the energy use characterization. Because the op erating costs of a more expensive, higher

- efficiency product may decrease in response to new standards, at some time in the life of that product the net savings in operating costs since the time of purchase equal the increase in the purchase price of the p roduct. The time required for a product to reach that cost

- equivalency point is known as the PBP . DOE’s analysis produces a simple PBP based on using single

- point average values to estimate the purchase price and undiscounted first

- year operating cost.

D OE identified several inputs for estimating the LCC and simple PBP, including retail prices and installation costs, energy prices, discount rates, and product lifetimes. For portable

AC s, no information was found to indicate that more efficient portable AC s would have greater repair or maintenance costs, so DOE assumed no additional costs would occur. The LCC and simple PBP analysis utilized values that reflect unit energy consumption in the field. DOE used EIA’s energy price data to determine the range and variability of prices for electricity in 2012,ES

- 12

then used projections of those prices from EIA’s Annual Energy Outlook 2014 to estimate future electricity prices. DOE developed discount rates by estimating the finance cost for consumers to purchase major a ppliances.

Assuming that portable AC s have the same lifetime as room AC s, DOE applied the lifetime parameters derived for room AC s to portable AC s. The average lifetime assumed is 10 .5

years.

To estimate the percentage of consumers who would be affected by a standard at each efficiency level , the LCC analysis considered the projected distribution of efficiencies for portable AC s purchased under the base case (the case without new energy efficie ncy standards). Lacking industry

- supplied data, DOE developed distributions from models and efficiencies listed in publically available databases. DOE projected the base

- case distributions to the year that compliance with any standards would be required (2 019). To account for the variability in energy consumption and electricity price among users, DOE developed samples of individual households and commercial enterprises that use portable AC s. Using the projected distribution of efficiencies for each product class, DOE assigned a specific product efficiency to each sample household or enterprise. If a household was assigned a product efficiency that equaled or exceeded the efficiency of the efficiency level under consideration, the LCC calculation showed

that the household would be unaffected by that standard level.

Operating cost savings are a direct function of the size of the room being cooled. Households using a portable AC in a room smaller than 250 square feet see relatively large LCC savings from the reduction in operating hours. As discussed previously, h ouseholds using a portable AC in a room larger than 250 square feet have fixed operating hours at all efficiency levels (ind ependent of cooling capacity). T hese households incur a net cost from purchasing a higher efficiency unit with greater first costs and higher operating costs since the cooling

- mode power consumption increases with efficiency. This population of households ( approximately 30

percent of the sample) has a negative LCC savings. T he simple payback uses the average installed cost and first year operating cost and reflects the 70 percent of households that see large LCC savings from implementation of a standard.

Table ES.4.6

. 1 through Table ES.4.6

. 4 show the LCC and simple PBP results for portable

AC s by efficiency level . The cooling capacities and EER c m ’ s are presented in chapter 5, based on

the February 2015 Test P rocedure NOPR . DOE determined the median values for the simple PBPs by dividing the change in installed cost by the change in first

- year operating cost. Figures presented in chapter 8 show the range of LCC savings for all the efficiency level s considered.ES

- 13

Table ES.4.6

. 1 Summary of LCC and PBP Results by Efficiency Level for Portable AC s at
Residential Sites

EL Average Costs
(2013$) Simple Payback

(Years) Installed

Cost First Year

Operating

Cost Lifetime

Operating

Cost LCC

Baseline 534 101 861 1,394

--

1 540 72 617 1,156 0.21

2 541 64 553 1,094 0.19

3 542 59 505 1,046 0.19

4 605 53 461 1,066 1.52

Note: The average LCC, LCC savings, and simple PBP for each efficiency level are calculated assuming that all consumers use products having the given efficiency level . Thus results for all efficiency level s can be compared

under the same conditions.

Table ES.4.6

. 2 Summary of Life

- Cycle Costs Relative to the Base

- Case Efficiency

Distribution for Portable AC s at Residential Sites

EL Life

- Cycle Costs and Savings

Average Savings
(2013$) Percent of Consumers Who

Experience Net Cost

1 21 2 32

2 27 1 3 4

3 3 19 35

4 30 0 3 7

Note: The LCC savings for each efficiency level are calculated relative to the base

- case efficiency distribution. The calculation includes households that experience zero LCC savings (no impact).ES

- 14

Table ES.4.6

. 3 Summary of LCC and PBP Results by Efficiency Level for Portable AC s at
Commercial Sites

EL Average Costs
(2013$) Simple Payback

(Years) Installed

Cost First Year’s

Operating

Cost Lifetime

Operating

Cost LCC

Baseline 534 190 1,351 1884

--

1 540 150 1,066 1606 0.15

2 541 139 9,90 1531 0.13

3 542 131 938 1480 0.13

4 605 117 836 1441 0.98

Note: The average LCC, LCC savings, and simple PBP for each efficiency level are calculated assuming that all consumers use products having the given efficiency level . Thus the results for all efficiency level s can be compared

under the same conditions.

Table ES.4.6

. 4 Summary of Lif e

- Cycle Costs and Savings Relative to the Base

- Case Efficiency Distribution for Portable AC s at Commercial Sites

EL Life

- Cycle Costs and Savings

Average Savings 2013$ Percent of Consumers Who

Experience Net Cost

1 25 3 50

2 3 26 52

3 3 76 55

4 4 15 30

Note: The LCC savings for each efficiency level are calculated relative to the base

- case efficiency distribution. The calculation includes households that experience zero LCC savings (no impact).

ES.4.7 Shipments Analysis

DOE projects product shipments to calculate the national impacts of potential standards on energy use, net present value (NPV) of costs and savings, and manufacturers. DOE used historical shipments data for room AC s to populate and calibrate its shipments model for portable AC s. DOE assumed that shipments of portable AC s account for approximately 10 percent of total shipments of room AC s. DOE’s shipments model for portable AC s considers shipments to replace existing units and to first

- time owners. DOE used an accounting method that tracks the total stock of units by vintage to determine shipments to the replacement market.ES

- 15

Figure ES.4.7

. 1 shows the projected shipments in the base case and the historical shipments DOE used to calibrate those projected shipments.

Figure ES.4.7

. 1 Portable ACs Historical Base

- Case Shipments and Projection

DOE estimated that annually 0.17 percent of households that have no portable AC would purchase one during 2019─2048. Chapter 9 of this preliminary TSD provides additional details regarding the shipments analysis.

ES.4.8 National Impact Analysis

The national impact analysis (NIA) estimates impa cts on the nation of potential energy efficiency standards for portable AC s. Those impacts encompass:

1. national energy savings (NES) attributable to standards;

2. the monetary value of energy savings attributable to standards;

3. the increased total installed costs attributable to standards; and

4. the NPV of the energy savings attributable to standards (the difference between the value of the energy savings and the total installed costs).

ES.4.8.1 Efficiency Trend

A key component of DOE’s N IA is the projected energy efficiencies of products under the base case and each standards case. For the base case, DOE assumed shipments would increase annually by 0.25 percent between 2019 and 2048. To examine efficiencies under theES

- 16

potential standards c ases, in addition to a “roll

- up” scenario (whereby the efficiencies of all

lower

- efficiency portable AC s roll up to meet a new standard), DOE developed a shift scenario. In the shift scenario DOE applies an annual increase in average energy efficiency to t he shipment

- weighted cooling energy efficiency ratio (SWEER
c m ), as done for the base case. To develop projected SWEER
c m ’ s for standards cases, DOE developed growth trends for each efficiency level that maintained the same per

- unit average total installed cost difference for 2019 between the base case and each standards case throughout the analysis period (2019

– 2048). In developing standards

- case SWEER
c m ’ s, DOE assumed that the rate of adoption of more efficient products under a standards case can occur onl y at a rate that ensures a constant average total installed cost difference between the standards case and base case throughout the analysis period. Because the total installed cost versus efficiency relationship demonstrates an increasing cost for

more ef ficient products, the SWEER
c m growth rate for each standards case is lower than the

SWEER
c m growth rate for the base case.

Table ES.4.8

. 1 shows the distributions of b ase

- case and efficiency level s in 2019, based

on the EER
c m for each efficiency level that DOE is considering. The efficiency level s are analyzed in the LCC and simple PBP analysis (chapter 8). Also included in the tables are the

SWEER
c m ’ s associated with t he base case and each efficiency level

.

Table ES.4.8

. 1 Portable AC s: Distributions of Base

- and Standards

- Case Efficiencies in

2019 for Residential and Commercial Sectors

EL Average

Capacity Average

EER c m Market Share (%)

Base

Case EL

(Btu/h) (Btu/Wh) 1 2 3 4

Baseline 2,512 2.08 90 0 0 0 0

1 4,327 3.53 5 95 0 0 0

2 5,294 4.32 5 5 100 0 0

3 6,540 5.28 0 0 0 100 0

4 6,604 5.82 0 0 0 0 100

SWEER c m 2.26 3.57 4.32 5.28 5.82

ES.4.8.2 National Energy Savings

DOE calculated annual NES as the difference between national energy consumption in

the base case and under each efficiency level . DOE estimated energy consumption and savings based on site energy use. DOE then converted site energy consump tion and savings to the primary energy consumed at power stations to provide the site electricity. Cumulative energy savings are the sum of the annual NES.ES

- 17

The NES results, shown in Table ES.4.8

. 2 , are cumulative during the period in which units shipped in 2019

– 2048 are operating. The energy savings, given in quadrillion Btu (quads), are shown as primary energy savings.

Table ES.4.8

. 2 Cumulative Primary National Energy Savings

EL Portable ACs in

Residential Sites, Primary (Quads) Portable ACs in

Commercial Sites, Primary (Quads) Portable ACs in both

sectors, Primary (Quads)

1 0.526 0.007 0.534

2 0.675 0.010 0.684

3 0.797 0.011 0.809

4 0.917 0.015 0.932

On August 18, 2011, DOE published a statement of policy in the Federal Register announcing its intention to start using full

- fuel

- cycle (FFC) measures of energy use and greenhouse gas and other emissions in the national impact and emissions analyses in energy conservation standards rulemakings. 76 FR 51281; amended by 77 FR 49701 (Au g

. 17, 2012).

Table ES.4.8

. 3 summarizes the NES for the full

- fuel cycle.

Table ES.4.8

. 3 National Energy Savings for Ful l

- Fuel

- Cycle

EL Portable ACs in Residential Sites, FFC

(Quads) Portable ACs in

Commercial Sites, FFC (Quads) Portable ACs in both sectors, FFC (Quads)

1 0.551 0.008 0.558

2 0.706 0.010 0.716

3 0.834 0.012 0.846

4 0.959 0.016 0.975

ES.4.8.3 Net Present Value

DOE calculated the NPV of monetary savings for consumers in each year after potential standards would take effect for the base case and each standards case. DOE calculated savings throughout the lifetime of products shipped in 2019

– 2048. DOE used discount rates of 7 percent and 3 percent, respectively, to discount future costs and savings to the present. DOE calculated the NPV as the difference between the present value of operating cost savings and the present

value of total installed costs. The NPV result s for portable AC s are shown in Table ES.4.8

. 4 . As with the NES results, NPV results are presented as a function of EL.ES

- 18

Table ES.4.8

. 4 Cumulative NPV Results Based on 3

- Percent and 7

- Percent Discount Rates

EL Discounted NPV
(Billion 2013$)

3% 7%

Residential Commercial Total Residential Commercial Total

1 3.972 0.060 4.031 1.703 0.026 1.728

2 5.099 0.079 5.178 2.187 0.034 2.221

3 6.022 0.092 6.114 2.581 0.040 2.621

4 6.023 0.113 6.137 2.482 0.048 2.529

ES.4.9 Preliminary Manufacturer Impact Analysis

DOE conduct s the manufacturer impact analysis ( MIA ) in three phases and further tailor s the analytical framework based on comments received from interested parties

. In Phase 1

, DOE

creates an industry profile to characterize the industry and conducts preliminary manufacturer

interviews to identify important issues that require special consid eration. The preliminary analysis TSD presents the results of the Phase 1 analysis. In Phase 2

, DOE prepares an industry

cash

- flow model and an interview questionnaire to guide subsequent discussions. In Phase 3

, DOE interviews manufacturers and assesses t he impacts of new or amended energy conservation standards both quantitatively and qualitatively. The NOPR TSD presents the results of Phase 2 and Phase 3 analyses.

During the preliminary MIA for this rule

, DOE identified potential impacts to
manufacturers of portable ACs through confidential stakeholder interviews . Chapter 12 of the preliminary TSD includes details on the key issues identified by DOE during the preliminary

MIA.

To summarize, DOE identified the following key areas of impact for manufacturers of portable ACs :

 Impact on profitability, product mix, and shipments

 Market share, industry consolidation, and competition

 Impact on consumer utility

 Cumulative regulatory burdenES

- 19

ES.5 Issues on which the Department Seeks Public Comment

DOE is interested in receiving comments from interested parties on all aspects of this preliminary TSD, especially comments or data that might improve DOE’s analys e s. DOE welcomes data or information that will help resolve the following specific issues , wh ich were raised during preparation of this preliminary TSD.

ES.5.1 Portable AC Product Classes

DOE requests comment on the proposed single product class for portable AC s. Specifically, DOE seeks feedback on whether its determination that neither duct configurat ion nor product cooling capacity warrant separate product classes, or if there are other product characteristics for which multiple product classes would be appropriate.

ES.5.2 Efficiency Levels

DOE developed efficiency levels based on a set of design options wh ich DOE concluded

would be used at each level and the observed relationship between efficiency and capacity for tested and modeled data at each efficiency level configuration. DOE requests comment from interested parties on whether these efficiency levels are appropriate for this rulemaking analysis.

ES.5.3 Design Options and Cost Estimates

As discussed further in chapters 3 through 5 of the preliminary TSD, DOE developed a preliminary list of technology options for improving portable AC efficiencies. DOE request s feedback on whether there are additional technologies available that may improve portable AC performance. DOE also seeks comment on whether the MPCs at each efficiency level are appropriate given the associated incremental changes manufacturers would lik ely make to meet

these levels.

ES.5.4 Lifetime of Portable AC s

DOE found few data regarding portable AC lifetimes. Currently, DOE assumes that the

lifetime of a portable AC is equal to the 10

- year lifetime of a room AC . One could assume that, given their comparatively lower usage, p ortable ACs would have longer lifetimes than room AC s. DOE requests input on its proposed lifetime for portable ACs.

ES.5.5 Energy Use Determination

DOE’s literature review performed to establish a distribution of energy use values fo r portable ACs revealed few data pertaining to how portable ACs are operated in the field. DOE relied on usage information for room AC s to establish operating hours for portable ACs. DOE

assumed that the distribution of hours of use calculated for room AC s represented the hours ofES

- 20

use in cooling mode for a baseline portable AC unit. DOE requests input on its proposed method for determining usage hours and energy use.

ES.5.6 Operating Hours for a Standards Case

In its energy use calculation DOE assumed that the sq uare footage of the room being cooled would affect the operating hours of a portable AC in a standards case in which a higher

capacity unit replaces a lower

- capacity unit. DOE assumed that if the room was smaller than 250 square feet, the portable AC’s ope rating hours in cooling mode would be reduced; if the room was larger than 250 square feet, operating hours in cooling mode would not change in response to a higher

- capacity unit. DOE requests input regarding this assumption.

ES.5.7 Commercial Use of Portable AC s

DOE’s data and literature review revealed no information on energy use of portable ACs in commercial enterprises or on shipments of portable ACs to commercial enterprises. DOE requests that interested parties provide data and lite rature to characterize the market saturation and energy use of portable ACs in commercial settings.

ES.5.8 Historical Shipments of Portable AC s

DOE’s review of data and literature uncovered no information on shipments of portable

ACs. DOE requests that interested parties provide any available data and literature for characterizing historical shipments of portable ACs.