### EE-RM/STD-98-440 

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### - - Attachment 1;part(b) oflettertodocket 

### Residential CentralAir Conditioners and HeatPumps: ' Efficiency Advocates' Request for Alternative Scenarios for the Life-Cycle . i :: Cost and National Energy Savings/Net PresentValue Analyses : U.S. Department ofEnergy November 2000 

### The U.S. Department of Energy (DOE) published a proposed rule to consider amending the conservation standards for residential central air conditioners and heat pumps on October 5,2000. In response to the proposed rule, efficiency advocates submitted a request to DOE to analyze alternative scenarios for the life-cycle cost (LCC) and national energy savings (NES)/net present value (NPV) analyses that were notincluded in the proposed rule or the accompanying Technical Support Document (TSD). This document describes the efficiency advocates' alternative scenarios 

### andprovides the LCC and NES/NPV results underthese scenarios. This document is being made , available to all interested partiesin advance ofthepublic hearingontheproposed rule scheduled for -; - November 16, 2000 so that all stakeholders can review the results and comment as to the ::-:~ reasonableness ofthe efficiency advocates' assumptions. 1.0 Summary ofEfficiency Advocates' Alternative Scenarios - The efficiency advocates' alternative scenarios consist ofrevisions to several oftheinputs to;the -' : LCC andNES/NPV analyses. There aretwo scenarios whichtheefficiency advocates proposedwith - each scenario consisting ofthe following revisions: Scenario "A" .- : 

### * Manufacturer costs developed with Reverse Engineering manufacturer cost '-=: multipliers. ' - * Marginal electricity prices increased by 1.86 0/kWh. * Emerging technology manufacturer cost reductions applied to efficiency levels 13 through 15 SEER. .* Manufacturer costs reduced by0.84% peryear to account forthe decline intherealcost ofairconditioners. -. -,,- - Scenario "B"
- - ;i 

### ·* · ' Apply all revisions as outlined in Scenario "A". i.;- : ,* Adjust nominal efficiency values to account for theincreased energy savings due to thermostatic expansion valves (TXV). Each ofthe revisions under scenarios "A" and "B" are described in greaterdetail aftertheLCC and . NES/NPV results are presented.

- : .EE-RM/STD-98-44O0d 7 | Revised LCC analyses were conducted based onthe revisions outlinedin scenarios "A" and "B"for:, . ;--, efficiency levels of 11, 12, 13, 14, and 15 SEER. Revised NES/NPV analyses were also conducted under scenarios "A" and "B" for six standard - - levels: Trial Standard Levels (TSL) 1 through 4 (as described in the proposed rule) as well as- II:- : standardlevels of"14 SEER" and "15 SEER". Each ofthe standardlevels were analyzed assuming . . an effective date ofJanuary 1,2006. For clarification purposes, the six standard levels are: : ' * TSL 1:11 SEER for all product classes, TSL 2:12 SEER for all product classes, TSL 3:12 SEER for air conditioners and 13 SEERfor heat pumps, TSL 4: 13 SEER for all product classes, * 14 SEER: 14 SEER for all product classes, and 15 SEER: 15 SEER for all product classes. Based on the revisions under scenarios "A" and "B", the efficiency advocates also requested .' !. additional NES/NPV analyses foracombination ofdifferent standardlevels and effective dates. As - ' suggested by the efficiency advocates, revised analyses were conducted based on the following :. combination of standard levels and effective dates: . -

.. :.. · Combo 1: TSL 2 (12 SEER standard) effective January 1, 2005 followed by a 14_;.:- ::' SEER standard effective January 1,2010. * Combo 2: TSL 1(11 SEER standard) effective January 1, 2004 followed by TSL-4 (13 SEER standard) effective January 1,2007. . . . ': '.- .* Combo 3: TSL 2 (12 SEER standard) effective January 1, 2004 followed by TSL4 -. (13 SEER standard) effective January 1,2007. - ': - : 2.0 LCC Results Summary Unlike the LCC results presented in the proposed rule, the revised LCC results presented here are based onthe use ofweighted-averageinput values rather than probability distributions. Thus, the ' LCC results presented here are averagevalues. Monte Carlo simulations using Microsoft Excel-..: spreadsheets combined with Crystal Ball were notperformed and, as a result,no attemptwas made to capture the variability and uncertainty ofthe inputs on the LCC results. . - Scenario "A" :; Tables 1and 2 and Figures 1through 4 show the LCC results based on the revisions outlined in . scenario "A". The results showthe average LCC values for the baseline level (10 SEER) and five ; -: efficiency levels (11 through 15 SEER) for each ofthe fourprimary product classes (split system air - conditioners, split systemheatpumps, singlepackage air conditioners, singlepackage heatpumps). - 2 · . - '--Y-,2 - :.7

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3' :.... .Table 1 LCC Results for Split and Package A/C under Scenario "A"

SpitA/C PackageA/C Nominal Aerage LCC Aerage L

SEER LCC Savings LCC Saings

10 $5,016

- $5,450 11 $4,903 ($113) $5,335 ($115) 12 $4,833 ($183) $5,217 ($233) 13 $4,792 ($224) $5,309 ($141) 14 $4,741 ($275) $5,216 ($234) 15 $4,772 ($244) $5,242 ($208)

$5,050 $5,500 5,00 $5,450 $4,950 o $4,850. % $5,400

, $4,900 \ m ^ $5,350 $4,850 '^ $5,300 $4,800 

## Z $4,750 $5,250 $4,700 . $5,200 . 10 1 11 12 13 14 15 : 10 11 12 13 14 15 NoninalSE No SEER onlSE ' : "Figure 1 Split A/C: Average LCC Results, Scenario "A' : :i" A , 2'' "k A',a ;I 'Figure Package /C: Average LCC Results, Scenario "A"

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'N··- · (~: l :. f · i ·: Table 2 LCC Results for Split and Package HP under Scenario "A" SlitHP PackageHP Nominal Nominal Aerage [C Awrage LCC

SEER HSPF LCC Saiangs LCC Savings o10 6.8 $9,431 $9,382 11 7.1 $9,135 ($296) $9,120 ($115) 12 7.4 $8,897 ($534) $8,853 ($233) 13 7.7 $8,805 ($626) $8,853 ($141) 14 8.0 $8,817 ($614) $8,732 ($234) 15 8.2 $8,802 ($629) $8,690 ($208)

$9,500 $9,500

, $9,400 $9,400

- $9,300 -\_ . x $9,300 ~ $9$200 I c $9,200 \$9 $\S9,100 N____________ $9,100 I \^•~~~~~~~~~~~~~ $9,000 CD
, z~ $ 9 , 0 0 0 -\-------- ----------------- $8,900 $8,900 $8,800 < $8,800 * $8,700 $8,700 $8,600 10 11 12 13 14 15 10 11 12 13 14 15 Noninal SEER Noninal SEER Figure3 Split HP: Average LCC Results, Scenario "A" 

### ;i; ..... Figure 4 Package HP: Average LCC Results, Scenario "A" 

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### EE-RM/STD-98-440O 7 l
- Scenario "B" - Tables 3 and 4 and Figures 5 through 8 show the LCC results based on the revisions outlined in : scenario "B". The results show the average LCC values for the baseline level (10 SEER) and five - . : :- :. efficiency levels (11 through 15 SEER) for each ofthe fourprimary product classes. Two sets:of :; results are presented for eachproduct class: one set which is described as "Field Degradation per : . ; Neal" and another set which is described as "w/o Field Degradation". The "Field Degradation perNeal" results arebased onadjustments tothe nominalSEER and HSPF values to account forthe degradation in system efficiency dueto fixed orifice flow control devices. The relative degradation dueto fixed orifice devices are based on dataprovided in a research paper writtenbyC. L.Neal.a Based onNeal's data, a fixedorifice-based system suffers a lossinefficiency of 19.3% compared to aTXV-based system. Based onthis efficiency loss, anewweighted-average effective efficiency for each standard level is calculated based onthe fraction ofunits identified in .. theReverse Engineering sample that contain fixed orifices (pleaserefer to Appendix B ofthe TSD).-. The effective SEER and HSPF values are provided in Tables 3 and 4. Thus, rather thanbasing the : energy savings and resulting operating cost savings onthe nominalSEERand HSPF values as was - - - : done under Scenario "A", the effective SEER and HSPF values are used. Since in most cases the: - - -: relative efficiency increase between the effectivebaseline efficiency (i.e., nominal 10 SEER)and the effective standard level efficiency is greater than the relative efficiency increase based onnominal : efficiencies, the energy savings andthe resulting LCC savings are greaterthanthose under Scenario "A".' - ': '' The "w/o FieldDegradation" analysis attempts to estimatethe additional energy savingsthat would :- 

### ,: result.ifTXVs were required at each standard level. Under this scenario, the nominalefficiencies -:,-:'; ateach.standard level ARE NOT adjusted downward asTXV-based systems are assumed to retain : ; their nominalefficiency. Although the standard level nominal efficiencies are not adjusted, the -'- - nominalbaseline efficiency (i.e., 10 SEER) is. This is done to account forthe mix offixed orificeand TXV-based systems that currently exist at 10 SEER in order thatthe additional energy savings due to TXVs at each standard level are properly calculated. Without this downward adjustment.at:-.;: ' 'at 10 SEER, the LCC results would be identical to those under Scenario "A". . - The assumptions behind the determination ofthe effective SEER and HSPF values are 

### explainedlater in this document in greater detail. . - -

'C. L.Neal,FieldAdjusted SEER [SEERFA] -ResidentialBuildings: Technologies,Design,AndPerformance ' - : Analysis. InACEEE1998SummerStudy onEnergyEfficiency inBuildings. 1998. Asilomar, CA:American Council : - ' for an Energy Efficient Economy. 1: p. 1.197-1.209.

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____ - .Table 3 ILCC Results for Split andPackage A/C underScenario "B" SplitA/C Package A/C HFeldDegradation perNeal Wo FeldDegradation eldDegradationperNeal o FeldDegradation Nominal Aerage LCC Aerage LCC Aerage LCC Aerage LCC

SEER SEER LCC Savings SEER LCC Savings SEER LCC Savings SEER LCC Savings

10 8.36 $4,995
- 8.36 $4,995
- 8.36 $5,430
- 8.36 $5,430
- 11 9.30 $4,859 -$136 11 $4,518 -$477 8.88 $5,398 -$32 11 $4,952 -$478 12 10.61 $4,704 -$291 12 $4,480 -$515 9.68 $5,274 -$156 12 $4,865 -$565 13 1200 $4,599 -$396 13 $4,467 -$528 10.49 $5,362 -$68 13 $4,985 -$445 14 1292 $4,562 -$433 14 $4,439 -$556 14 $4,915 -$515 14 $4,915 -$515 15 15 $4,491 -$504 15 $4,491 -$504 15 $4,962 -$468 15 $4,962 -$468

$5,100 $5,500

_ Field Deg'adatonperNeal _ Field DegradatperNeal $5,000 oFf Deg$ation 5,400 Wo Feld Degradatin $4,900 \ \ $5300 \ \4/ < \0 v $4,800 \ $5,200 $4,700 $5,100 o $4,600 \ $5,000 e $4,500 $4,900 $4,400 . -$4,800 . , , , ', : 9 10 11 12 13 14 15 169 10 12 13 14 5

. , . N nalSEER , ,,.; - . Nonal SEER · :NonmalSEER : , - Figure5 Split.AC: Average LCC Results Scenaio "B" ; ' Figure6 Package A/C: Average LCC Results, Scenario "B" :

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1 . '', - 'Table '4 LCC Results for Split and Package HP under Scenario "B" SpitHP~ Package Pi FlddeDegrafi per Ned . WoFiddDegrati -. FiddDegradai perNedl Wo ddDegradaim Norinal Nmin al A ge C Aerage LCC Aerage LC A ge CC SEER ESF SEER SaR F 'l= Sain/gs SEER EfPF LUC Sa S ng SER ESPF LCC Saings SEER HSPF LCC Saings 10 68 36 5.68 $9,381 $0 836 5.68 $9,381 8.46 5.75 $9,281 $0 8.46 5.75 $9,281 $0 11 7.1 &88 5.73 $9,287 -$94 11 7.1 $8,180 -$1,201 88 5.73 $9,289 $8 11 7.1 $8,180 -$1,101 12 7.4 9.68 5.97 $9,041 -$340 12 7.4 $7,998 -$1,383 9.68 5.97 $9,013 -$268 12 7.4 $7,969 -$1,312 13 7.7 1049 621 $8,941 -$440 13 7.7 $7,955 -$1,426 1049 6.21 $9,005 -$276 13 7.7 $8,018 -$1,263 14 80 1265 7.23 $8,429 -$952 14 80 $8,011 -$1,370 14 8.0 $7,940 -$1,341 14 8.0 $7,940 -$1,341 15 &2 15 8.2 $8029 -$1,352 15 82 $8029 -$1,352 15 82 $7,931 -$1,350 15 82 $7,931 -$1,350

$9,600
- $9,400 $9,400 FdDegdanperNal $9,2 Fiedd DegDdainenperNeal mT 5 ' '$9,200--o- Wwo Field Degradatin l m $9,2 - $9,000 ~0 $9,000 $9,000 -\ -- $8,800 Co £~ $8,800 \ \ $ ~~~~-~~~~~~~~~~~~~~~ $8,400 U $8,600 -0 " $8,400 ;\ $8,400 \ e $8,200 

# I $8,200 * $8,000 _ $8,000 $7,800 $7,800.

_ 9 10 11 12 13 14 15 16 - 9 10 11 12 13 14 15 16 NominalSER NoinalSEER . :' . F: Figure 7. Split HP: Average LCC Results, Scenario ."B"i,. . Figure 8 Package HP:Average LCC Results, Scenario "B",. . ; :' 

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. , ' , S X 0f ... . ;?!: "-' V i.... .. :!EE-RM/STD-98-440 -4 : 3.0 NES/NPV Results Summary Consistent with how the NES/NPV results were generated for the proposed rule, the revised - '-. ;L. NES/NPV results presented here are also based onthe use ofweighted-averageinput values rather '. :-:-i -;. than probability distributions. -:' - -" Scenario "A" Figures 9through 11 showtheNES/NPV resultsbased ontherevisions outlined in scenario "A" for TSLs 1through 4aswell asthe "14 SEER" and "15 SEER" standard levels. The NES results shown in Figure 9 are presented as cumulative savings from the assumed effective date ofthe standard (2006) through 2030. The NPVresults shown in Figures 10and 11 are alsopresented ascumulative benefits for the same time period. Consistent with how NPV results have been presented in the proposed rule's TSD, Figure 10 shows the total national equipment and operating costs under the base case and the six standards cases while Figure 11 shows the NPVs. - Figures 12 through 14 showthe NES/NPV resultsunder scenario "A" for the different combination , ofstandard levels and effective dates described in Section 1.0 ofthis document. The NES results - are shown in Figure 12 while the NPV results are shown in Figures 13 and 14. Scenario "B" Figures 15 through 17 show the NES/NPV results based on the revisions outlined in scenario "B"'. - - forTSLs 1through 4 as well asthe "14 SEER" and "15 SEER" standard levels. Both theNES and . NPV results are presented inthe same format as used inpresenting theresults forscenario "A". As:- ': -: with the LCC results, two sets ofNES and NPV results are provided under scenario "B": one set:, I-; which is described as "FieldDegradation perNeal" and another setwhich isdescribed as"w/o Field -: Degradation". , :.-.; : Figures 18 through 20 show the NES/NPV resultsunder scenario "B" forthe different combination : ofstandard levels and effective dates described in Section 1.0 ofthis document. The NES results are shown in Figure 18 while the NPV results are shown in Figures 19 and 20..7 - 6.8 7 5.7 4.5 4 3.6 3.1 2
E 0 TSLI TSL2 TSL3 TSL4 14SEER 15SEER Figure 9 NES Results under Scenario "A"

, $450 $8 _ _ __ 410 $406 $404 $404 $403 402 7.9402 o $400 $7 $6.4 $ 8350 8$5.9 m 

### $3oo 

# m $00 $250 $200 2I~~~~~~~ J·· ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~$2 . 'a $100 $ 

### ' $50 ,: . BaseCase 'ISLI TSL2: TSL3' TSL4 14SEER ISSEEK TSL1 TSL2 TSL3 TL4 4SEER '15 SEER :,iTi':/. 7 Figure 10 Tota!l Nationa! :Equipuent and:Operating Costs - Figure 11 National NPVs under Scenario "A" under Scenario "A" ;~i'

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5-~$450

________ $8 _4

ea $410 $402 $403 7 402 . $ 7.8 02

,$400 $8 5$350 $8 1o*A: $30 . 7 , '.',cao 

## rA i , - ,, ' ',, ' 8, ,,, '- ~~~~~~~~~~~~~~~~~. ,.$7.2 $250 $ . Oa aC $200.-$ $6.8 'B $200 $7 50 :$6

:::;::.:Std'· 16;vel Combinatio.~undda Scehario "All under Scenario "A" :": ;~ '$0 I : :': D '"'
:, .ie 0r:0.uNPS ea .:.

.. ,,. .. d -LevelU-C"".' '":" ; 'n. unde ' tScenar',io. "A" , ':' '

.. '.',' . : . . . ..... . - .',r,''.'.' '",;;.",. ".''i:".. '.:,. ,".'1 '10 9:4 A9 Field egradatn perNeal 84 ° 8 -lw/o Feld Degladatin 7.6 

### C,__n 7.6-l r 8 -___7.4 7 6.7 6 - 5.5 5.9 a- 4.9

. ,., 3.3 a TSLI TSL2 TSL3 TSL4 14 SER 15 SEER Figure 15 NES Results under Scenario "B" $ $20 : .D;2Field Degmda ;2 ; adai ;Neal a 5 $18 -w/oF Dew/daikxI $18'
$300 $200

-$8 o, ~D. $150 a$100 a a $50 -. :"' ~ a $0 $0 Base Case TSLI TSL2, TSL3 TL4 14SEER 15SEER Figure 16 Total'Nationhl Equipment and OperatingCosts. Figure 17 National!NPVs underScenario "B" :, under Scenario "B" ,

.. · 150 . ~ ... ,. . ... 6 .. ;.-.:' :,..',..',...7'.'..'.,.;..,:.':./:. a 8 7 |E °Fieb Degradation peral 9 w/oField Degradation 8 - 7.5__ §8~ ~ ^^ ~~~~~7.1 7 .3 5-s f~4

-$450 A-,-- B~ w co F 4
- 3 2 1 0 12/14SEER 11/13SEER 12/13 SEER Figure 18 NES Results for StandardLevel Combinations under Scenario "B" * FieklDegaidat per · F.ld Degidati r Neal co $450 Mw/ Field Degrat'im I w/o FieldDegradation $16 

### d %400 u u, $350 ~~~~'$143 $12o $250 a. >2 0 $10 $8
-- ~~~~~~~~~~~~~~~- 2$150 $6 co $4 

## °'~ $50 

### so 

# $0 ' Base Case 12/14 SEER 1113 SEER 12/13 SEER 12/14SEER 11/13 SEER 12/13 SEER .Figure 19 Total;.National Equipment and OperatingCosts. Figure 20 National NPVs for Standard Level Combinations
. , r , f

. .or Std Level Combinations,underScenario "B" underScenario "B"EE-RM/STD-98-440 / . 

### 4.0 Details ofRevisions The following provides a detailed explanation ofthe revisions comprising scenarios "A" and "B". - Reverse EngineeringManufacturer Costs 

### Manufacturer costs were based on the use of manufacturer cost multipliers from the Reverse Engineering analysis rather than data provided by the Air-Conditioning & Refrigeration Institute (ARI). Boththe average Reverse Engineering and ARI manufacturer costmultipliers and average manufacturer costswere provided in the proposedrule's TSD. The Reverse Engineering and ARI data are provided below in Tables 5and 6 so that direct comparisons can be made between thetwo sets ofdata. Table 5 ARI Shipment-Weighted Average and Reverse Engineering Average Manufacturer Cost Multipliers (1998$) Product Class Efficiency Level Split A/C SplitHeat Pump Package A/C Package Heat Pump - SEER ARI Rev Eng" ARI Rev Eng ARI Rev Eng ARI Rev Eng

11 1.16 1.12 1.10 1.05 1.19 1.09 1.14 1.08 12 1.36 1.28 1.24 1.13 1.30 1.16 1.28 1.13 13 1.63 1.44 1.44 1.30 1.63 1.43 1.60 - 1.38, .:. 14 2.03 1.82 1.64 1.79 1.87 1.74 1.75 1.74 15 2.40 1.99 2.09 1.94 2.23 1.87 2.13 1.86 a11, 12, and 13 SEER cost multipliers based on cased coil; 14 and 15 SEER cost multipliers based on fancoil. Source: TSD, Chapter 5,Table 5.3 for 11-13 SEER and 15 SEER ARI multipliers; ANOPR TSD, Chapter 5,Table 5.3 for li--. 14':- SEERmultiplier; TSD Chapter 4, Table 4.8 forReverse Engineering multipliers .::. .: Table 6 ARI Shipment-Weighted Average and Reverse Engineering Average- ; - -' Manufacturer Costs (1998$) Product Class Efficiency Level SplitA/C Split Heat Pump Package A/C Package Heat Pump SEER ARI Rev Eng ARI Rev Eng ARI Rev Eng ARI . Rev.Eng_.:

10 $394 a $394 a $572 $572 $511 $511 $5 593 .--. $593..... 11 $457 $441 $629 $602 $608 $555 $676 '$638-'-- 12 $536 $505 $709 $648 $664 $595 $759 . -$668- 13 $642 $568 $824 $743 $833 $730 $949 $820 14 $800 $717 $938 $1,023 $956 $889 $1,038 $1,029 15 $946 $784 $1,195 $1,107 $1,140 $955 $1,263 $1,100 aBaseline manufacturer costbased on aweighted-average calculation taking into account cased coil and fancoil units. Source: TSD, Chapter 5,Table 5.2 for 10 SEER manufacturer costs. .. ._ 

### * 14 * . - :'.'-'.: - -

_vi-~ I

### EE-RM/STD-98-440 7/ MarginalElectricity Prices
- 

### Weighted-averagemarginal electricity prices were increased by 1.86 0/kWh. As provided by the ; 

### :' efficiency advocates, this figure is based on the differential between summer and annual average: wholesale electric prices for four regional power systems in 1999 and 2000. -: The 1.86 ¢/kWh value was assumedtobein 1999$fortheyear 1999. SincetheLCC andNES/NPV analyses are conducted in 1998$, the differential value was converted to 1998$ forthe year 1998 by multiplying the 1.86 ¢/kWhvalue bytheratio ofthe 1998 and 1999 average electric utilityrevenues per kWhfor the residential sector.b The resulting value is 1.83 ¢/kWh. The 1.83 ¢/kWh differential valuewas addedtotheweighted-averagemarginal electricity pricesfor residential and commercial buildings with central air conditioners and heat pumps. Table 7 summarizes theweighted-average marginal electricityprices calculated fortheproposedruleaswell as the new marginal prices after the 1.83 ¢/kWh differential isadded.
- Table 7 Weighted-Average MarginalElectricity Prices with and without : - Price Increase (1998$) Residential Commercial forProposed Rule w/differential increase forProposed Rule w/ differential increase Product ¢/kWh ¢/kWh ¢/kWh ¢/kWh. : Central A/C 8.62 10.45 8.08 9.91 Heat Pumps 6.86 8.69 8.04" 9.87

Weighted-Average price based on cooling-side price (8.080/kWh) and the heating-side price (7.950/kWh).. Source: TSD, Chapter 5,Section 5.2.3.6 forproposed rule marginal electricity prices. . 

### Therelative change inelectricity prices forfuture years outtotheyear 2030 are still estimated with ' forecasts from the Energy Information Administration's AnnualEnergy Outlook2000, ReferenceCase. Emerging Technologies 

### The Reverse Engineering manufacturer costs were reduced to account for the incorporation of - emerging technologies. Emerging technology cost reductions were applied only to 13 through 15 SEER efficiency levels for split and package air conditioners and 14 through 15 SEER efficiency : levels for split and package heat pumps.- '

bEnergy Information Administration, FormEIA-826, "Monthly ElectricUtility SalesandRevenue Reportwith State Distributions," and Form EIA-861, "Annual Electric Utility Report." : - <http://www.eia.doe.gov/cneaf/electricity/epavl/ta6pl.html>. 

### 15EE-RM/STD-98-440 _,-;/.:'i 

### Onlythe largest reductions from any ofthe fouremerging technology options as listed inChapter : - 4, Table 4.17 ofthe TSD are applied to the manufacturer costs. These are the maximum possible :'- ^;.:- impacts achievable from choosing the most cost effective technology option at each level. Table 8summarizes the manufacturer costs for each product class before and after the emerging technology cost reductions are applied. Percentage reductions due to the emerging technology are;: ' noted. - Table 8 Reverse Engineering Manufacturer Costs with and without Emerging Technology Cost Reductions (1998$) Cost Split A/C Package A/C SplitHP Package HP SEER Reduction w/o Tech w/ Tech w/o Tech w/ Tech w/o Tech w/Tech w/o Tech w/Tech

10 $394 $394 $511 $511 $572 $572 $593 $593 11 $441 $441 $555 $555 $602 $602 $638 $638 12 - 505 $505 $595 $595 $648 $648 $668 $668 ;. 13 1%8 $568 $562 $730 $723 $743 $743 $820 $820: .- 14 22% $717 $560 $889 $694 $1,023 $799 $1,029 $805 15 23% $784 $604 $955 $736 $1,107 $854 $1,100 $849.
- . aNot appliedto Split and Package Heat Pumps. ; - ' - · Source: TSD, Chapter4, Table 4.17 for emerging technology costreductions. : ' : - ; Real PriceDecline Basedon CensusBureau Current Industrial Reports, the efficiency advocates claim thatthereal cost: 

### -:.:- ' 

### ofairconditioners has declined by 1.7% annually over the past five years. In order to account for : : this apparent decline, they have suggested to reduce the real cost of air conditioners-with-:a - conservative estimate of0.84% peryear (50% oftherealdeclineof 1.7%) from thebaseyear (1998) 

### -: :- ofthe analysis.

· - f- '::: ' ~" Z~b'. '.: ·. 

### A0.84% annual decline inthereal costofairconditioners wasincorporated intotheanalysis? Since: . 

### the decline is annual, the cumulative effect ofthe decline significantly reduces the real cost ofair - . : conditioners in future years. Table 9shows this effect on the total installed cost for theyear 2006 (the assumedeffective date ofnew standards) forthe fourproduct classes. The 1998 total installed - : costisprovided forcomparison purposes. Alltotal installed costsinTable 9include costreductions ; . resulting from the incorporation ofemerging technologies.

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### 16 - ;:- i- -;EE-RM/STD-98-440 

### A 11 -' Table 9 Reverse Engineering Weighted-Average Total Installed Costs with Emerging : ; - Technology Cost Reductions for the years 1998 and 2006 based on a 0.84% Decline in Real Costs (1998$) Split A/C Package A/C SplitHP Package HP SEER in 1998 in 2006 in 1998 in2006 in1998 in2006 in 1998 in2006

10 $2,236 $2,090 $2,607 $2,437 $3,668 $3,429 $3,599 $3,364 11 $2,327 $2,175 $2,696 $2,520 $3,723 $3,480 $3,691 $3,450 12 $2,449 $2,289 $2,765 $2,585 $3,812 $3,563 $3,748 $3,503 13 $2,560 $2,393 $3,018 $2,821 $4,000 $3,739 $4,034 $3,771 14 $2,555 $2,388 $2,960 $2,767 $4,106 $3,838 $4,008 $3,747 15 $2,641 $2,469 $3,042 $2,843 $4,214 $3,939 $4,094 $3,827 Forpurposes ofconducting the revised LCC analysis, the totalinstalled costintheyear 2006isused. In the revised NES/NPV analysis, for shipments which are forecasted to come into the market in years after the effective date ofthe standard (2006), the real price ofthose shipments continue to ; decrease at the rate of 0.84% per year. For example, for split system air conditioners, the total installed cost of 10 SEER equipment in 2006 is $2,090. But for split system air conditioning - equipment shipped in 2030, the real price decreases to avalue of$1,707. .. - It is also assumed that compressor replacement costs will be impacted -bythe real price decline.- Table 10 shows the effect ofthe 0.84% annual decline in real prices on compressor replacement costs. Inorder to see the impact ofthe real price decline, the compressor replacement costs in-1998- and 2006 are provided.

Table 10 Weighted-Average Compressor Replacement Costs for theyears 1998 and 2006 1 based on a 0.84% Decline in Real Costs (1998$)
- :... Split A/C Package A/C Split HP Package HP SEER in 1998 in2006 in 1998 in2006 in 1998 in2006 in 1998 in2006 .- 10 $278 $260 $278 $260 $283 $264 $283 ..._:'$264 -'.-. 11 $332 $311 $332 $311 $335 $313 $335 $313 12 $334 $312 $334 $312 $335 $313 $335 $313.: 13 $360 $336 $360 $336 $364 $340 $364 $340;.. 14 $360 $336 $360 $336 $466 $435 $466 .- $435 : 15 $458 $428 $458 $428 $564 $527 $564 :$527 .; Source: TSD, Chapter 5,Table 5.30 for compressor replacement costs in 1998. . : -

'~~ ~ ~ ~~17~i :: -. ',;: -

### EE-RM/STD-98-440O NominalEfficiencyAdjustments toAccount forFixedOrifice Flow ControlDevices Inorderto conducttheLCC andNES/NPV analyses under scenario "B", adjustmentstothe nominal. :' '' .- ' SEER and HSPF values were made to account forthe degradation in system efficiency dueto'fixed._' -- :. orifice flow control devices. ' ': As stated earlier, therelative degradation dueto fixed orifice devices are based on dataprovided:in-- '. - . aresearch paper written by C. L.Neal. Fromthe Neal paper, the drop in performance due-to fixed . . ::'- orifice devices relative to TXVs isbased on a 20% undercharging and restricted airflow condition. Under these conditions, the Neal paper estimates that fixed orifice performance is degraded by an average of21.5% and TXV performance is degraded by only 2.3%. Thus, Neal expects a fixed orifice-based system to suffer a loss in efficiency of 19.3% compared to a TXV-based system. Based onthe above fixed-orifice efficiency loss,it is assumed that TXV-based equipment performs atits rated ornominalefficiency during its lifetime,but that fixed-orifice equipment performs at an - . effective efficiency which is 19.3% below its nominalefficiency. Table 11 lists the nominaland !:'; effective efficiencies ofTXV-based andfixedorifice-based systems,respectively, forequipmentwith- - nominal SEERvalues of10through 13. Forheatpumpequipment, theloss intheheating-efficiency .: (HSPF) offixed orifice-based systems relative to TXV-based systems is also assumed to be 19.3%.- '- Table 11 Nominal andEffective Efficiencies ofTXV-based and Fixed Orifice-based Systems Nominal Efficiency ofTXV-based Systems Effective Efficiency ofFixed Orifice-based Systems.:- : SEER HSPF SEER HSPF':-... . :

10 6.8 8.1 5.5 

### 11 7.1 8.9 5.7 .:.:[ 12 7.4 9.7 .: 13 7.7 10.5 62 The effective efficiencies used in the LCC and NES/NPV analyses are based on the weighted- - ? averageeffective efficiencies for each standard level based onthe fraction ofunits identified in the : Reverse Engineering sample that utilize fixed orifice devices. For example, for split system air- . :-.. conditioners the weighted-averageeffective efficiencies at nominal SEER values of 10 and 12 are' :. I : ' determined as follows: 10 SEER (baseline): 85% of 10 SEER units have fixed orifices while 15% have TXVs. The ;::' weighted-averageeffective SEER equals 85%-10-(1-19.3%) + 15% -10, or 

### 8.36 SEER. . 12 SEER: 60% of 12 SEER units have fixed orifices while 40% have.TXVs. The ' weighted-averageeffective SEER equals 60% -12 (1-19.3%)+ 40% 12 or 10.61 SEER. 18 .; 

### EE"'RM/STD X l ' ~EE-RM/STD-98-440 

### -: 

### I Table 12 liststheweighted-average effective efficiencies foreachofthe fourprimary product classes :-.i based on the fraction ofunits identified with fixed orifice devices. InTable 12, the fraction ofunits. :-': . with fixed orifice devices are provided. : ' 

### Table 12 Weighted-Average Effective Efficiencies based on Fraction ofUnits with ' Fixed Orifice Devices SplitA/C Package A/C SplitHP Package HP Nominal Fraction Effect. Fraction Effect. Fraction Effective Fraction Effective SEER HSPF w/Orif SEER w/Orif SEER w/Orif SEER HSPF w/ Orif SEER HSPF

10 6.8 85% 8.36 85% 8.36 85% 8.36 5.68 80% 8.46 5.75 11 7.1 80% 9.30 100% 8.88 100% 8.88 5.73 100% 8.88 5.73 12 7.4 60% 10.61 100% 9.68 100% 9.68 5.97 100% 9.68 5.97 13 7.7 40% 12.00 100% 10.49 100% 10.49 6.21 100% 10.49 6.21 14 8.0 40% 12.92 0% 14.00 50% 12.65 7.23 0% 14.00 8.00 15 8.2 0% 15.00 0% 15.00 100% 15.00 8.20 0% 15.00 8.20- Source: TSD, Appendix B, Figures B.2, B.13, B.24, and B.35 for fraction ofunits with fixedorifice devices. -

- : ...- - Tables 13 through 16 showthe weighted-average annual energy savings that result from the use of theweighted-average effective efficiencies andthe nominal efficiencies foreach ofthe'four primary - product classes. Energy savings determined with the use of the weighted-average effective: . -- efficiencies are thebasis forthe LCC andNES/NPV results calculated under scenario "B", "Field , Degradation perNeal". Energy savings determined withthe use ofthenominalefficiencies arethe ': ; basis for the LCC and NES/NPV results calculated under scenario "B", "w/o FieldDegradation". ' ' : In order to calculate the energy savings for both ofthe above cases, the weighted-averageannual. ;': energy consumption andweighed-averageefficiencies associated with equipment in theresidential : and commercial building stockare required. Forpurposes ofdetermining the energy-savings under scenario "B", thenominalstockweighted-averageefficiencies mustbe degraded to account forthe ' presence offixed orifice devices. Tables 13 through 16 showthe effective stockweighted-average : efficiencies based on the assumption that all stock equipment have fixed orifice devices.

:19.- . ,

19 - -- -. *-* ., .. ,.

. . *', ; 'r~~ ~ ` . * .r . '. * :,s *'

### EE-RM/STD-98-440
. Table 13 Split A/C: Weighed-Average Annual Energy Savings for Scenario "B" .- -/

;- Savings based on fraction w/ Fixed Orifices Savings based on TXV-only ":.- : Energy Savings Energy Savings- : .' -

relative to 10 relative to 10 "' .' Nominal Effective Energy Use SEER Effective Energy Use SEER - :-''.

SEER SEER kWhyr kWhyr SEER kWh/yr kWhyr .'. /--'. 9.22a 7.63 2501 -7.63 2501

10 8.36 2283 -8.36 2283 11 9.30 2052 231 11 1735 548 12 10.61 1799 484 12 1590 693 ' 13 12.00 1591 692 13 1468 815 14 12.92 1477 806 14 1363 920 15 15.00 1272 1011 15 1272 1011 aStock efficiency value. ' . . . 

### Table 14 Package A/C: Weighed-Average Annual Energy Savings forScenario "B" ; Savings based on fraction w/ Fixed Orifices Savings based on TXV-only - :. Energy Savings : . Energy Savings.. .

relative to 10 relative-tol- . Nominal Effective Energy Use SEER Effective Energy Use SEER-' . -- - --

SEER SEER kWhyr kWh/yr SEER kWh/yr Wh/yr : 9.22a 7.63 2501

- 7.63 2501 -

10 8.36 2283 -8.36 2283 -- 11 8.88 2150 133 11 1735 548. - 12 9.68 1971 312 12 1590 693. 13 10.49 1819 464 13 1468 815 14 14.00 1363 920 14 1363 920 . 15 15.00 1272 1011 15 1272 1011 -: I : aStockefficiency value..--

. .20- . .- * : ' : * 2 0 ** .- : .- ', ... , . I -EE-RM/STD-98-440 ! Table 15 Split HP: Weighed-Average Annual Energy Savings for Scenario "B" . ' . Savings based on fraction w/ Fixed Orifices Savings based on TXV-only - Energy Energy ,-: Cooling Heating Savings Cooling Heating Savings -. Energy Energy relative to Energy Energy relative to ; -': Nominal Effective Use Use 10 SEER Effective Use Use -10 SEER ' SEER HSPF SEER HSPF kWh/yr kWh/yr kWh/yr SEER HSPF kWh/yr kWh/yr ;,-kWhyr - 9.39a 6.78a 7.77 5.61 2950 3794 - 7.77 5.61 2950 3794

10 6.8 8.36 5.68 2742 3743 - 8.36 5.68 2742 3743 - 11 7.1 8.88 5.73 2582 3713 189 11 7.1 2084 2997 1404 12 7.4 9.68 5.97 2367 3563 555 12 7.4 1910 2875 1699 13 7.7 10.49 6.21 2185 3424 876 13 7.7 1763 2763 1958 14 8.0 12.65 7.23 1812 2943 1729 14 8.0 1637 2659 2188 15 8.2 15.00 8.20 1528 2595 2362 15 8.2 1528 2595 2362 - - - aStock efficiency values.. . K . : Table 16 Package HP:Weighed-Average Annual Energy Savings for Scenario "B" Savings based on fraction w/ Fixed Orifices Savings based on TXV-only _: . ' Energy . ': Energy- '': Cooling Heating Savings Cooling Heating Savings. i-: - Energy Energy relative to Energy Energy relative to ' ' Nominal Effective Use Use 10 SEER Effective Use. -Use .10 SEER . . SEER HSPF SEER HSPF kWh/yr kWh/yr kWh/yr SEER HSPF kWh/yr kWRhyr -'kWh/yr" : 9.39' 6.78a 7.77 5.61 2950 3794 - 7.77 5.61 2950 3794

.

10 6.8 8.46 5.75 2714 3704 - 8.46 5.75 2714 3704 '- 11 7.1 8.88 5.73 2585 3717 116 11 7.1 2086 3000 1332 - : 12 7.4 9.68 5.97 2369 3566 482 12 7.4 1912 2878 1627 ' 13 7.7 10.49 6.21 2187 3427 803 13 7.7 1765 2766 1886 - - 14 8.0 14.00 7.23 1639 2662 2166 14 8.0 1639 2662 2116 ' 15 8.2 15.00 8.20 1530 2597 2290 15 8.2 1530 2597 2290 aStock efficiency values. 

### Finally,withregardtomanufacturer costs,theprice oftheTXV-based equipmentisnotadjusted for purposes ofcalculatingrevised LCCandNES/NPVresults.The efficiencylevel approaches assume : that equipment that achieve the same SEER rating cost the same, regardless ofthe design choices: 

### used. In otherwords, there isno costto change designs, as long asthe equipment tests atthe same ' .' . SEERrating. Ifamanufacturer were forcedto addaTXV withoutmaking anyotherdesign changes, : the cost would go up, butthe SEERrating would increase. To bringthe SEER ratingback-down!to-':.- "' -.' the baseline, the manufacturer would remove coil, purchase a lower efficiency compressorior do.,; .;: : 21EE-RM/STD-98-440 - | 

### something else to remove cost. Since some manufacturers prefer TXVs and some prefer fixed orifices at the same efficiency level, we conclude that there is no clear cost advantage (or: disadvantage) to adopting either choice.

22