# Request for Comment

Item 3-5 DOE welcomes comment on the technologies listed above. Specifically, are there any that DOE should not consider because of their impacts on safety, performance, or consumer utility of the product? Item 3-6 DOE welcomes comment on whether there are other unlisted technologies that DOE should consider as design options and what, if any, impacts would the design options be expected to have on safety, performance, and consumer utility.

41

# Steps in the Standards Rulemaking: ANOPR

Framework Document

Engineering Analysis

Preliminary Manufacturer Impact Analysis ANOPR

Markups for Equipment Price Determination

Energy Use Determination NOPR Final Rule Effective

Date

Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

42

# Screening Analysis

• Purpose - Screen out technology options that DOE will not consider in the engineering analysis for residential clothes dryers and room air conditioners.


## • Method: - DOE will evaluate each technology option based on the following criteria: Technological feasibility Practicability to manufacture, install and service Impacts on product utility or availability to consumers

Impacts on health or safety 43

### Id Renewable Energy



# Steps in the Standards Rulemaking: ANOPR

Market & Technology Screening Analysis Framework Document

Engineering Analysis

Preliminary Manufacturer Impact Analysis ANOPR

Markups for Equipment Price Determination

Energy Use Determination Final Rule Effective

Date

Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

44

# Engineering Analysis

• Purpose: - To characterize the relationship between manufacturer cost and energy efficiency. Manufacturer Cost - Efficiency Relationship

2
Efficiency Level 

### Downstream Rut Analyse - Ii 

### • Life-Cycle Cost and Payback Period • Manufacturer Impact Analysis • National Impacts

45U.. DeparhnentofEww



### Energy Efficiency and Renewable Energy 

# Engineering Analysis Methodology

Define Baseline Models

ReverseEngineering 

### F

Data Collection, & Interviews
Develop Engineering Analysis Curves 

### a Determine characteristics of common or typical models which

will serve as reference points to assess changes due to energy conservation standards. Baseline models typically just meet existing minimum energy conservation standards. Perform detailed product disassembly to determine technologies and design features associated with each efficiency level, and the manufacturing costs associated with them. A "green-field" model of the subject unit and factory can be aggregated to produce industry-wide estimates. a Collect manufacturer cost data on efficient clothes dryer and room air conditioner designs. Conduct interviews with manufacturers to enhance understanding of efficiency improvements and associated costs. a Determine manufacturing cost-efficiency curves based on reverse-engineering and industry-supplied cost data. Qualify cost-efficiency relationships with interview information and publicly available data. 46

### :nergy Efficiency and Renewable Energy ringing you a prosperous future where energy is clean, abundant, reliable, and affordable 

### Engineering Analysis 

# Development of Cost-Efficiency Curves 0 engineering defines incremental 

# 0 ReverseBaseline unit manufacturing costs efficiencies are defined. associated with raising efficiency to each level above the baseline.

BASELINE Efficiency 

# © DOE reviews & qualifies manufacturing cost data with additionalmanufacturersupplied data pointsand publiclyavailable data.

47

# Residential Clothes Dryer Baseline Models

t o

### r (EF) (I

b

### lkWh) 1. Electric, Standard (4.4 cubic feet (ft3) or greater capacity) 3.01 2. Electric, Compact (120 volts (v)) (less than 4.4 ft3 capacity) 3.13 3. Electric, Compact (240 v) (less than 4.4 ft3 capacity) 2.90 4. Gas 2.67

5. Electric, Compact (240 v) (less than 4.4 ft3 capacity) N/A* 6. Electric, Combination Washer/Dryer N/A*
* DOE is unable to establish a baseline efficiency for these product classes because they cannot be measured by the current test procedure.

48

# Room Air Conditioner Baseline Models

1. Less than 6,000 Btu/h* 9.7 2. 6,000 to 7,999 Btu/h 9.7 3. 8,000 to 13,999 Btu/h* 9.8 4. 14,000 to 19,999 Btu/h 9.7 5. 20,000 Btu/h or more* 8.5

6. Less than 6,000 Btu/h 9.0 7. 6,000 to 7,999 Btu/h 9.0 8. 8,000 to 13,999 Btu/h 8.5 9. 14,000 to 19,999 Btu/h 8.5 10. 20,000 Btu/h or more 8.5 * Product classes DOE proposes to analyze 11. Less than 20,000 Btu/h 9.0 12. 20,000 Btu/h or more 8.5

13. Less than 14,000 Btu/h 8.5 14. Cas 15. 20,000 Btu/h or more ement Casement-Only 8.0

8.7 16. Casement-Slider 9.5

49

### Energy Efficiency and Renewable Energy Bringing you a prosperous future M we energy dean, abundant, reliable, and at able



# Request for Comment
Item 5 -1 DOE welcomes input from stakeholders on whether the above energy efficiency levels are appropriate for characterizing the performance of baseline units. Item 5-2 Specifically for residential clothes dryers, DOE welcomes input on appropriate baseline unit efficiencies for vent-less clothes dryers, assuming the DOE test procedure is revised so as to be capable of measuring the performance of these units. Item 5-3 DOE welcomes information regarding the specific technological characteristics of the baseline model for each product class, including the technologies described in the market and technology section.

50

### Energy Efficiency and Renewable Energy Bringing you a prosperous future Owe energy is dean, abundant, reliable, and affordable 

### Analysis 

# Design
-Option Approach for Residential Clothes Dryers • DOE proposes to use a design-option approach for residential clothes dryers due to the fact that data indicate minimal variation in EF among units on the market that are currently rated. • Reverse-engineering will be used to identify cost and efficiency impacts of each technology above the baseline. • Limited testing will be conducted to establish control strategies and design option combinations for different platforms. • DOE will seek incremental cost data from manufacturers for each design option, supplemented with stakeholder interviews and publicly available data. • Cost-efficiency curves will be generated from design options/design option combinations used to achieve efficiency levels. 51

# Efficiency-Level Approach for Room Air Conditioners

• DOE proposes to use an efficiency-level approach for room air conditioners because data indicates a significant range of efficiencies for most of the product classes. • Reverse-engineering will be used to identify cost and efficiency impacts at efficiency levels including, at minimum, baseline and Energy Star EERs. • Limited testing will establish the link between specific technologies and efficiency levels. • DOE will seek incremental cost data from manufacturers for each efficiency level, supplemented with stakeholder interviews and publicly available data. • Cost-efficiency curves will be generated from incremental costs for each efficiency level.
52

# Reverse
-Engineering Methodology

ateirials

Fabrics Proce Finished

Materials
Assembly Processes Manufacturing

53

# Industry Cost Submittal

Direct material 

### Sales & marketing

• Direct labor • Research &

• Factory overhead development

• Depreciation • Building

• Tooling/Equipment Engineering Analysis



## • Costs will be provided on a shipment-weighted, industryaggregated basis. • Data will not be provided for product classes and/or efficiency levels representing fewer than three manufacturers. • DOE will request information about the depreciation method manufacturers use to expense conversion capital. 54

# Request for Comment Engineering Analysis



### Item 5 -4 DOE welcomes comment on the use of a design-option approach to determine the relationship between manufacturer cost and energy efficiency for residential clothes dryers. Item 5-5 DOE welcomes comment on the use of an efficiency-level approach to determine the relationship between manufacturer cost and energy efficiency for room air conditioners.

55

# Efficiency Levels

• DOE will conduct the engineering analysis (and LCC and PBP analyses) on all product classes for which it suggests efficiency levels. • DOE is required to analyze maximum technologically feasible ("max tech") efficiency levels - In some cases, DOE defines the highest efficiency level based on maximum available efficiency currently on the market. - "Max available" may not correspond to "max tech" if, for example, some design options are not yet commercially available. - DOE will seek stakeholder input to resolve this potential discrepancy.

56

# Efficiency Levels for Residential Vented Clothes Dryers

Baseline DOE Standard 3.01 3.13 2.90 2.67 1 Gap Fill* 3.10 3.23 2.98*** 2.75 2 Gap Fill* 3.16 ** 3.07*** 2.77 3 Maximum Available* 3.39 3.79 3.23*** 3.02 * Source: CEC residential clothes dryer product direct as of June 2007, except as noted. ** DOE is unable to obtain efficiency information for any models at this level, and therefore is unable to set this value. *** DOE estimated these values based on data contained within the NRCan electric clothes dryer database. 57

### Engineering Analysis



# Efficiency Levels for Room Air Conditioner (Representative Product Classes)

Baseline DOE Standard 9.1 9.8 8.5 1 Gap Fill 10.2 10.3 9.0 2 Energy Star 10.7 10.8 9.4 3 CEE Tier 1 11.2 11.3 9.8 4 CEE Tier 2 11.6** 11.8 10.2**

Maximum 5 Available* N/A** 12.0 N/A** * Source: Energy Star-qualified room air conditioners as of June 2007. ** The maximum available efficiency, as listed in the June 2007 Energy Star-qualified product listing, is an EER of 11.2 for <6,000 Btu/h and 9.9 for 20,000 Btu/h or more. 58e_.Za+i:;.w.a^sxxss„Z j`.fxs.b:u,,.me^*^Z 

# Request for Comment

Item 5 -6 DOE welcomes comment on the efficiency levels it proposes to use for collecting incremental cost data from manufacturers of residential clothes dryers and room air conditioners. DOE also welcomes input from stakeholders on appropriate maximum technologically-feasible efficiency levels.

59

# Proprietary Designs

• DOE will evaluate all design options that are commercially available or present in a working prototype, including proprietary designs and technologies. • Proprietary designs will only be considered if they do not present a unique path to a given efficiency level. • The confidentiality of manufacturers will be maintained.

60

# Request for Comment

Item 5-7 DOE welcomes comment on whether there are proprietary designs or technologies of which DOE should be aware for either of the products under consideration in this rulemaking. If so, how should DOE acquire the cost data necessary for evaluating these designs?

61

# Outside Regulatory Changes

• Consider the effects on manufacturers of other regulatory changes outside of the standards rulemaking process. • Example: phase-out of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) in all new equipment for sale in the U.S. by 2010 - Room air conditioners most commonly use R22, which will likely be replaced by R-410A. - Refrigerant changes will require design changes, and there are fewer compatible low-capacity rotary compressors on the market. - Research suggests an efficiency decrease of at least 5 - 7% due to the changeover.

62

# Request for Comment

Item 5 -8 DOE welcomes comment on whether there are additional outside regulatory issues that it should consider in its analysis of residential clothes dryers and room air conditioners.

63

# Steps in the Standards Rulemaking: ANOPR

Market & Technology Screening Analysis Framework Document

Engineering Analysis

Preliminary Manufacturer Impact Analysis ANOPR

Markups for Equipment Price Determination

Energy Use Determination Final Rule Effective

Date

Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

64

### Energy Efficier fringing you a prosperous fuh 

# Legislative Requirements • The Manufacturer Impact Analysis (MIA) fulfills a legislative requirement to determine if a proposed standard is economically justified. - EPCA provides 7 factors to evaluate in determining whether an efficiency standard is justified. Two factors are addressed in the MIA: • Economic impact of standards on manufacturers • Impacts of any lessening of competition in the industry - MIA format changes described in the 2006 report to Congress, at: http://www.eere.energy.gov/buildings/appliance_standards/2006_schedule_setting.html 

### • DOE will collect, evaluate, and report preliminary MIA data in the ANOPR, if manufacturers can supply the requisite information • Preliminary data include: anticipated conversion capital expenditures by efficiency level and anticipated direct employment impacts

65

# Methodology

• The MIA consists of three main phases. In the ANOPR, the preliminary MIA focuses on Phase 1

ANOPR Phase 1 Phase 2 Phase 3

* Government Regulatory Impact Model (GRIM) NOPR

66

### pact Analysis



# Preliminary Manufacturer Impact Analysis
• Purpose: - Provide initial discussion on any potential impacts of energy conservation standards on manufacturers of residential clothes dryers and room air conditioners. - Provide an opportunity to verify DOE market information and engineering design options.

67U.S. Deprbmnt Of Energy



### Energy Efficiency and Renewable Energy Bringing you a prosperous future where energy is clean abundant reliable and affordable Preliminary Manufacturer 

### pact Analysis



# Methodology: Phase 1 • Consists of the industry profile and preliminary manufacturer impact analysis interviews
Industry Profi Evaluate current and past industry structure and market characteristics Produce an industry profile report with aggregated findings and characteristics Identify critical issues that require special consideration in the MIA, for example: Types or groups of manufacturers Access to technology Potential regulatory scenarios 

### Preliminary MIA Intervie Occurs during the engineering analysis Topics include: Shipment projections Conversion costs Product mix and profitability Market shares and industry consolidation Cumulative regulatory burden

68

# Steps in the Standards Rulemaking: ANOPR

Market & Markups for Technology Engineering Equipment Screening Analysis Price Determination Analysis

Energy Use Determination Preliminary Manufacturer Impact Analysis Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

69

### arkups for Equipment Price Determination



# Markups for Equipment Price Determination • DOE uses markups to convert manufacturer costs from the engineering analysis into consumer retail prices. • DOE needs retail prices for the life-cycle cost and payback period analysis. • DOE must characterize distribution channels for each product. - DOE understands that over 93% percent of consumer products are distributed from manufacturers directly to retailers. 

## • DOE develops markups for each party involved in product distribution. • SEC 10-K reports provide data for calculating manufacturer markups. • U.S. Census Bureau provides data for calculating retailer markups. • DOE may collect retail price data for validation purposes. • DOE will investigate the variability of retail prices.

70

# Request for Comment

Item 7-1 DOE welcomes suggestions and comments concerning its proposed approach for developing estimates of future retail prices.

71

# Steps in the Standards Rulemaking: ANOPR

Market & Technology Screening Analysis Framework Document

Engineering Analysis

Preliminary Manufacturer Impact Analysis ANOPR

Markups for Equipment Price Determination

Energy Use Determination Final \ Effective Rule Date

Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

72

# Energy Use Determination

• Purpose: - Develop annual energy use data for the life-cycle cost and payback period analyses to calculate annual operating costs. 

## • Method: - Develop household samples for each product from DOE-EIA's Residential Energy Consumption Survey (RECS). - Use RECS data along with Engineering Analysis data to develop annual energy use

73

# Energy Use Determination Approach

• Clothes Dryers
Annual Usage per household (cycles/year) from RECS

EF by efficiency level from Engineering Analysis Per household Annual Energy Use by efficiency 10..01 • Room Air Conditioners Annual Energy Use per household (kWh/year) from RECS EER per household (deduced from `equipment age') from RECS Cooling Capacity per household (Btulhr) (deduced from `cooled square footage') from RECS Annual Usage per Household (hours/yr) Per household

Annual Energy Use by efficiency level

EER& Cooling Capacity by efficiency level from Eng. Analysis

74

# Request for Comment

Item 6-1 DOE seeks stakeholder input on the approaches presented for estimating the typical annual energy consumption of residential clothes dryers and room air conditioners. Specifically, DOE is interested in stakeholder input on using RECS as the primary source of information for establishing annual energy use.

75

# Steps in the Standards Rulemaking: ANOPR

Market & Technology Screening Analysis Engineering

Analysis

Preliminary Manufacturer Impact Analysis Markups for Equipment Price Determination

Energy Use Determination Life-Cycle Cost and Payback Period Analysis

Shipments Analysis National Impact Analysis

76

### :fe-Cycle Cost and Payback Period Analys;



# Life-Cycle Cost and Payback Period Analysis • Purpose: - Assess the net life-cycle cost (LCC) impacts of differing efficiency levels on the consumer. 

## • Method: - LCC equals consumer price plus the sum of annual operating costs (including repair and maintenance costs) discounted to a particular base year. - Economic evaluation from the consumer perspective. - Analysis Implemented in an Excel® spreadsheet. - Results are expressed as LCC difference (baseline minus standard level). - Simple Payback (years) is also calculated and reported in this analysis.

77

# Approach

• Monte Carlo simulation analysis to be used. - Characterize the variability and uncertainty associated with the inputs using probability distributions. - RECS household samples will be used to characterize the variability in annual energy use and energy prices. - Probability distributions will be used to characterize the uncertainty in other operating cost inputs (e.g., discount rates , equipment lifetimes) and manufacturing costs. 

## • One LCC and PBP analysis result per product class. - Clothes dryers: Intend to analyze all six product classes. - Room air conditioners: Intend to analyze three product classes. • Without reverse cycle and with louvered sides, Less than 6,000 Btu/h • Without reverse cycle and with louvered sides, 8,000 to 13,999 Btu/h • Without reverse cycle and with louvered sides, 20,000 Btu/h or more 

## • Develop base case efficiency distributions to avoid overstating the benefits from increasing product efficiency.
78

## Base Case Efficiency Distributions

• Avoids overstating the benefits from increasing product efficiency. - Market share data (or base case efficiency distributions) show the percentage of consumers already purchasing efficient products. - Requesting market share data for specific efficiency bins. Clothes Dryers i
oil 3.01-3.09 3.13-3.19 2.90-2.96 2.67-2.74 3.10-3.19 3.20-3.29 2.97-3.0 22.75-2.84 3.20-3.29 3.30-3.39 3.07-3.17 2.85-2.94 I > >3.39 >3.17 Room Air Conditioners

9.7-10.0 9.8-10.0 8.5-8.9 10.1-10.5 10.1-10.5 9.0-9.4 10.6-11.0 10.6-11.0 9.5-9.9 > 11.0 > 11.0 > 9.9 79

# Request for Comment

Item 8 -1 DOE seeks stakeholder input on the planned approach of using Monte Carlo simulation and probability distributions to conduct the LCC and PBP analysis. sJ



## Item 8-2 DOE requests data from stakeholders to characterize the current mix of residential clothes dryer and room air conditioner efficiencies in the market.

80