CHAPTER 11. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

11.1 INTRODUCTION ......................................................................................................... 11­1
 

11.2 NATIONAL ENERGY SAVINGS ............................................................................... 11­1
 

11.2.1 National Energy Savings Definition .................................................................. 11­1
 

11.2.2 National Energy Savings Inputs......................................................................... 11­2
 

11.3 NET PRESENT VALUE............................................................................................... 11­8
 

11.3.1 Net Present Value Definition............................................................................. 11­8
 

11.3.2 Net Present Value Inputs ................................................................................... 11­9
 

11.4 NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE RESULTS........ 11­14
 

11.4.1 National Energy Savings and Net Present Value Input Summary................... 11­14
 

11.4.2 National Energy Savings Results..................................................................... 11­14
 

11.4.3 Annual Costs and Savings ............................................................................... 11­16
 

11.4.4 Net Present Value Results................................................................................ 11­17
 

11.5 NET PRESENT VALUE SENSITIVITY TO LIGHT EMITTING DIODE (LED)

SYSTEM COSTS ........................................................................................................ 11­18
 

REFERENCES ........................................................................................................................ 11­20
 

LIST OF TABLES

Table 11.2.1 National Energy Saving Inputs.......................................................................... 11­2
 

Table 11.2.2 Risk Premiums by Risk Class (j) in the NEMS Commercial Model................. 11­4
 

Table 11.2.3 Shipment­Weighted Market Shares by Efficiency Level, Base Case................ 11­5
 

Table 11.2.4 Unit Energy Consumption by Efficiency Level................................................. 11­6
 

Table 11.2.5 Shipment­Weighted Average Annual Energy Consumption per Linear
 

Foot by Trial Standard Level ............................................................................. 11­6

Table 11.2.6 Site­to­Source Conversion Factors.................................................................... 11­8

Table 11.3.1 Net Present Value Inputs ................................................................................... 11­9

Table 11.3.2 Average Total Installed Cost per Linear Foot by Efficiency Level (2007$)... 11­10

Table 11.3.3 Shipment­Weighted Average Total Installed Cost per Linear Foot by Trial

Standard Level (2007$).................................................................................... 11­10

Table 11.3.4 Average Annual Repair Cost per Linear Foot (2007$).................................... 11­11

Table 11.3.5 Shipment­Weighted Average Annual Repair Cost per Linear Foot by Trial

Standard Level (2007$).................................................................................... 11­12

Table 11.3.6 Average Annual Maintenance Cost per Linear Foot by Efficiency Level

(2007$)............................................................................................................. 11­12

Table 11.3.7 Shipment­Weighted Average Annual Maintenance Cost per Linear Foot

by Trial Standard Level (2007$)...................................................................... 11­13

Table 11.4.1 NES and NPV Inputs....................................................................................... 11­15

Table 11.4.2 Cumulative National Energy Savings for Commercial Refrigeration

Equipment (2012­2042)................................................................................... 11­15
 

Table 11.4.3 Cumulative NPV Results Based on a Seven­Percent Discount Rate................. 11­17
 

Table 11.4.4 Cumulative NPV Results based on a Three­Percent Discount Rate.................. 11­18
 

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Table 11.5.1	 Cumulative NPV Results for 50 Percent LED Cost Reduction Based on a

Seven­Percent Discount Rate........................................................................... 11­19

Table 11.5.2	 Cumulative NPV Results for 50 Percent LED Cost Reduction Based on a

Three­Percent Discount Rate ........................................................................... 11­19

LIST OF FIGURES

Figure 11.4.1	 National Annual Costs and Savings for Trial Standard Level 3 (Efficiency

Level 5)............................................................................................................ 11­16

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CHAPTER 11. NATIONAL IMPACT ANALYSIS
 

11.1 INTRODUCTION
 

This chapter describes the method for estimating the magnitude and net present value

(NPV) of future national energy savings (NES) to customers from possible trial standards levels

(TSLs) for commercial refrigeration equipment (CRE). Results of the national impact analysis

(NIA) described here include national energy consumption and savings, monetary value of

energy savings to the Nation as a result of standards, increased total installed costs to the Nation

as a result of standards, and the NPV of energy savings (the difference between the present

monetary values of energy savings and the increased total installed costs).

The U.S. Department of Energy (DOE) determined both the NPV and the NES for each

candidate standard level it considered for each of the 15 equipment classes of commercial

refrigeration equipment it examined. DOE considered four TSLs for each equipment class.

DOE performed all calculations using a Microsoft Excelspreadsheet, which is accessible

on the Internet at (http://www.eere.energy.gov/buildings/appliance_standards/

commercial_products.html). Details and instructions for using the spreadsheet are discussed in

Appendix H of the Technical Support Document (TSD). A more detailed set of results is

available in Appendix I of the TSD. The important facets of national energy consumption for

each equipment class of commercial refrigeration equipment include shipments, stock or

inventory, national average electricity consumption, and the site­to­source conversion factor that

is used to translate the amount of electricity consumed at the site where it is used into the amount

of energy that must be consumed at the source where that electricity was produced. Chapter 10,

Shipments Analysis, provides a detailed description of the shipments analysis that DOE used to

forecast future purchases of commercial refrigeration equipment.

DOE was not able to obtain information that quantified how voluntary energy efficiency

programs affect equipment efficiencies on a national basis, although voluntary programs may

increase the share of energy efficient equipment prior to the implementation date of any new

standards. Consequently, DOE did not explicitly incorporate the impact of market­based

initiatives into the shipments forecasts detailed in Chapter 10 of this TSD.

11.2 NATIONAL ENERGY SAVINGS

11.2.1 National Energy Savings Definition

DOE calculates annual national energy savings as the difference between two scenarios:

a base case (without new standards) and a standards case (with new standards). Positive values

of NES correspond to net energy savings, i.e., national annual energy consumption (AEC) with

standards is less than AEC in the base case.

NESt =AEC base ­ AEC standard Eq. 11.1

Cumulative energy savings are the sum over a defined time period from the

implementation of a standard forward (from 2012 to 2042) of the annual national energy savings.

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NES cum = ∑t NESt Eq. 11.2

DOE calculated the AEC by multiplying the number or stock of commercial refrigeration

equipment (by vintage) by the unit energy consumption (also by vintage) as shown by the

following equation:

AEC = STOCKV x UECV x src_convt Eq. 11.3

For the above expressions, DOE defined the following quantities:

AEC = Annual national energy consumption each year in quadrillion British thermal units

(quads), summed over vintages of commercial refrigeration equipment stock, STOCKV,

NES = Annual national energy savings (quads),

STOCKV = Stock of commercial refrigeration equipment (millions of linear feet) of

vintage V surviving in the year for which DOE calculated annual energy consumption.

Vintages range from seven years to approximately 20 years, a consequence of an

assumed 10­year average lifetime of the equipment for equipment sold to large grocery

chains, and an assumed 15­year average lifetime for equipment sold to small,

independent grocery outlets

UECV = Annual unit energy consumption in kilowatt hours (kWh),

src_convt = Time­dependent conversion factor to convert from site energy (kWh) to

source energy (quads) (Btu/kWh),

V = Year in which the commercial refrigeration equipment was purchased as a new unit,

t = Year in the forecast (e.g., 2012 to 2042).

The stock of commercial refrigeration equipment is dependent on annual shipments and

the lifetime of the equipment. DOE believes that the shipment projections under the standards

cases could be lower than those in the base case projection, because the higher installed costs

would cause some customers to forego new equipment purchases. However, DOE has no

information that would allow a calculation of this effect. For the Notice of Proposed

Rulemaking (NOPR), the total shipments projections are the same in both the base case and

standards cases.

11.2.2 National Energy Savings Inputs

Table 11.2.1 lists the inputs for the determination of NES.

Table 11.2.1 National Energy Saving Inputs

Input

Annual Unit Energy Consumption (UEC) (quads)

Shipments

Equipment Stock (STOCKV)

Site­to­Source Conversion Factor (src_conv) (quads) (Btu/kWh)

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11.2.2.1 Annual Unit Energy Consumption

The annual unit energy consumption (UEC) is the site energy consumed by a commercial

refrigeration unit per year. UEC is directly tied to the efficiency of the unit. Thus, knowing the

efficiency of a commercial refrigeration unit determines the corresponding UEC. Because the

equipment classes analyzed represent equipment sold across a range of sizes, DOE’s “unit” in

the NES is actually expressed as a linear foot of equipment in an equipment class and not an

individual unit of commercial refrigeration equipment of a specific size. As described below,

DOE determined annual forecasted shipment­weighted average equipment efficiencies that, in

turn, enabled a determination of shipment­weighted annual energy consumption values.

DOE did not have data on the market shares within each of the equipment classes by

efficiency level. DOE used the 2005 commercial refrigeration equipment shipments by

equipment class provided by the industry to develop future market shares by equipment class.

DOE used these market shares and the estimates of future shipments for all commercial

refrigeration equipment to develop projections of shipments by equipment class. It then adapted

a cost­based method used in the National Energy Modeling System (NEMS) to estimate market

shares within each equipment class by efficiency level. DOE then extrapolated future scenarios

of the equipment efficiency both for a base­case (i.e., without new standards) and for various

standards­cases (i.e., with new standards) using the same cost­based method. The difference in

equipment efficiency between the base­case and standards­cases was the basis for determining

the reduction in UEC resulting from new standards.

The market share for each equipment class by efficiency level is defined as

EFF_Level_Share(i,y), for each equipment class, y, at each efficiency level, i. Because the

lifetime of each equipment class is presumed to be the same, and because DOE had no

information regarding future changes in market shares between equipment classes, DOE

assumed the market share for a particular equipment class to be constant over time. DOE

calculated the EFF_Level_Share(i,y) for each efficiency level i using the following formula,

based on the relative annualized cost of each efficiency level.

⎛ r ⎞

−v

IC ×⎜ j + OC ⎟ (i, y) −n (i. y) m ⎜1− (1+ r ) ⎟ ⎝ j ⎠ EFF _ Level _ Share(i, y) = ∑bj × −v Eq. 11.4

k j=1 ⎛ r ⎞

∑IC ) ×⎜

⎜ j

−n + OC ⎟

⎟ (i, y (i.y) 1− (1+ r ) i=1 ⎝ j ⎠

where

EFF_Level_Share(i,y) = the market share of equipment class y at TSL i,

IC(i, y) = installed costs of equipment class y at TSL i, i=1 to k ($),

OC(i,y) = annual operating cost (maintenance, repair, and energy cost) of equipment

class y at TSL i) ($),

rj = private, risk­adjusted discount rate for risk class j. Derived by adding a “time

preference premium” to the risk­free real rate of return in the marketplace (4.39 percent

long­term Treasury bond rate, minus the estimated long­term inflation rate of 2.2 percent

= 2.19 percent)

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bj = market share of equipment users with risk class j, j =1 to m,

v = risk penalty factor (also known as a measure of market heterogeneity),

n = equipment lifetime (years).

The components for IC and OC came from the same inputs as the life­cycle cost analysis

(see chapter 8, Life­Cycle Cost and Payback Period Analysis). The annualization factor

(rj/(1­(1+rj)

­n) converts installed cost into its annual equivalent, so that market shares are based

on the relative annual costs of each energy consumption level, with (generally) higher annualized

costs of higher energy consumption levels leading to lower relative market shares. This is

consistent with the approaches used in the Energy Information Administration (EIA)’s National

Energy Modeling System1 (NEMS) and in the Canadian Integrated Modeling System (CIMS)2a

.

The calibration constants are the private risk­based discount rates by risk class rj, taken from the

NEMS commercial model as shown in Table 11.2.2, the default value of v = 10, taken from the

CIMS, and the equipment lifetime of 7­20 years.

Table 11.2.2 Risk Premiums by Risk Class (j) in the NEMS Commercial Model

Percentage of Users in Class Time Preference Premium Implied Real Discount Rate

1%

2%

10%

15%

20%

25%

27%

100%

0.0%

13.6%

19.9%

30.9%

55.4%

152.9%

1000.0%

2.14%

15.79%

22.09%

33.09%

57.59%

155.09%

1002.19%

Source: NEMS Commercial Model

Table 11.2.3 provides estimated base­case market shipment­weighted shares for each of

the 15 equipment classes analyzed in this rulemaking.

To project changes in weighted­average efficiency as standards above the base­case

efficiency are introduced, DOE assumed that market shares below the minimum permitted

efficiency level would be reassigned to the new TSL level. For example, if a TSL 2 standard

(equivalent to efficiency Level 4 for this piece of equipment) were imposed in 2012 on the

VOP.RC.M equipment class, then the market shares for Levels 1, 2, and 3 would be assigned to

Level 4, which would result in a market share of

70.0% = (17.3% +18.0% +18.1% +17.6%) from the first four columns of the first row in

Table 11.2.3) for Level 4, beginning in 2012.

The market shares for Levels 5­8 would not be affected, since the market already has

made a choice of that equipment with Level 4 equipment also available. It was assumed that the

standard (efficiency Level 4) would not affect the relative attractiveness of equipment with

efficiencies higher than the standard level.

a The CIMS Model was originally known as the Canadian Integrated Modeling System, but because the model is

now being applied to other countries, the acronym is now used as its proper name.

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Table 11.2.3 Shipment­Weighted Market Shares by Efficiency Level, Base Case
 

Equipment

Class* Level 1

Shipment­Weighted Market Shares by Efficiency Level**,§

Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

17.3%

15.5%

17.0%

21.3%

19.9%

15.3%

11.9%

18.9%

16.2%

16.9%

19.8%

20.2%

13.2%

13.0%

17.6%

18.0% 18.1% 16.6% 14.2% 13.5% 2.4%

16.3% 16.4% 14.9% 14.5% 14.2% 8.2%

18.0% 17.4% 16.0% 14.3% 10.2% 3.7%

21.5% 21.1% 11.5% 11.2% 6.8% 6.6%

20.0% 19.7% 12.4% 12.2% 8.1% 7.7%

16.4% 16.5% 14.6% 11.2% 11.1% 7.7%

12.5% 13.1% 13.5% 13.6% 12.6% 11.6%

19.5% 19.6% 18.3% 16.3% 3.7% 3.6%

17.2% 17.0% 15.7% 14.7% 10.8% 4.4%

17.2% 17.3% 16.6% 16.1% 5.7% 5.5%

20.6% 20.9% 19.9% 18.8% 0.0% 0.0%

20.6% 20.5% 19.7% 18.9% 0.0% 0.0%

13.9% 14.0% 13.8% 13.3% 11.2% 10.9%

14.1% 14.1% 13.7% 13.6% 11.0% 10.8%

18.1% 18.1% 16.6% 16.1% 13.6% 0.0%

0.0%

0.0%

3.4%

0.0%

0.0%

7.2%

11.2%

0.0%

4.0%

4.6%

0.0%

0.0%

9.6%

9.8%

0.0%

* Equipment class designations consist of a combination (in sequential order separated by periods) of a equipment family code (VOP=vertical

open, SVO=semivertical open, HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical solid doors, HCT=horizontal transparent

doors, HCS=horizontal solid doors, or SOC=service over counter), an operating mode code (RC=remote condensing or SC=self­contained),

and a rating temperature code (M=medium temperature (38°F), L=low temperature (0°F), or I=ice­cream temperature (­15°F)). For example,

"VOP.RC.M refers to the "vertical open, remote condensing, medium temperature" equipment class. See Chapter 3, Market and Technology

Assessment, of the TSD for a more detailed explanation of the equipment class terminology

**A value of 0.0% means that no market share was calculated for this efficiency level. For example, the VOP.RC.M equipment class only had

seven possible efficiency levels, so no market share was allotted to efficiency level 8.

§Shares may not add to 100% exactly due to rounding.

As stated earlier, annual energy consumption values are tied directly to the efficiency of

the equipment. Table 11.2.4 presents the UEC values according to annual electricity use per

linear foot per year (kWh/linear foot/year). Electricity use per linear foot is how DOE expressed

the annual energy per unit in the NES spreadsheet model. Because projections of grocery

refrigeration and freezer space (expressed in linear feet) are the primary drivers used to estimate

future CRE shipments, DOE calculated the national refrigeration equipment energy expense by

expressing the per unit annual energy use on a linear­footage basis.

For the annual shipment­weighted efficiency levels specified in the base case and

standards case efficiency scenarios, DOE calculated the shipment weighted UEC values shown

in Table 11.2.5. For each equipment class, the value shown for a given efficiency level is the

shipment­weighted average UEC for each standard level from chapter 9 (Shipments Analysis),

after taking into account the non­availability of equipment at efficiency levels below the

minimum standard efficiency level shown.

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Table 11.2.4 Unit Energy Consumption by Efficiency Level
 

Equipment

Class

Annual Energy Consumption per Linear Foot (kWh/linear foot/year)

Level 1

(Base Case) Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

1,761 1,681 1,581 1,542 1,450 1,444 1,225

4,064 3,860 3,603 3,445 3,428 3,407 3,308

3,614 3,401 3,280 3,138 3,046 2,802 2,579

952 911 861 646 639 537 531

1,986 1,940 1,883 1,344 1,328 1,212 1,199

3,873 3,547 3,206 2,920 2,148 2,138 1,930

2,303 2,181 2,063 1,921 1,837 1,672 1,638

1,325 1,271 1,204 1,174 1,105 948 942

3,021 2,853 2,798 2,685 2,634 2,440 2,276

964 913 849 818 798 634 630

597 544 478 447 442 NA NA

1,167 1,126 1,074 1,016 1,003 NA NA

1,755 1,660 1,628 1,576 1,507 1,375 1,362

3,530 3,321 3,287 3,071 3,059 2,778 2,766

774 704 680 395 377 355 NA

NA

NA

2,571

NA

NA

1,899

1,619

NA

2,269

613

NA

NA

1,351

2,750

NA

*A value of NA means that no energy use was calculated for this efficiency level. For example, the VOP.RC.M only had seven possible

efficiency levels.

Table 11.2.5	 Shipment­Weighted Average Annual Energy Consumption per Linear Foot

by Trial Standard Level

Equipment Class

Shipment­Weighted AEC per Linear Foot (kWh/linear foot/year)

Level 1 (Base Case) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

1,578 1,529 1,508 1,444 1,444

3,615 3,502 3,426 3,399 3,308

3,203 3,125 2,987 2,786 2,786

798 789 767 625 531

1,673 1,641 1,320 1,309 1,199

2,893 2,597 2,112 1,928 1,899

1,908 1,865 1,769 1,619 1,619

1,199 1,163 1,146 1,094 1,094

2,719 2,673 2,583 2,426 2,426

831 822 801 771 771

502 492 465 446 442

1,079 1,049 1,014 1,003 1,003

1,542 1,521 1,461 1,361 1,351

3,098 3,062 2,966 2,764 2,750

561 540 387 374 355

1,225

3,308

2,571

531

1,199

1,899

1,619

942

2,269

613

442

1,003

1,351

2,750

355

11.2.2.2 Shipments

DOE forecasted shipments for the base case and all standards cases (see chapter 9,

Shipments Analysis).

11.2.2.3 Equipment Stock

The CRE stock in a given year is the total linear footage of commercial refrigeration

equipment shipped from earlier years which survive in the given year. The NES spreadsheet

model keeps track of the total linear footage of commercial refrigeration units shipped each year.

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For purposes of the NES and NPV analyses, DOE assumed that existing CRE units in large

grocery chains and multi­line retailers are retired by following a Weibull distribution with an

average lifetime of 10 years, and CRE units in small convenience stores and similar outlets are

retired following a Weibull distribution with an average lifetime of 15 years. The Weibull

distribution shows that approximately one percent of the existing units are retired from 2012 to

2019 (i.e., by year 7), retire rapidly through year 18, and then tail off gradually to less than one

percent per year by year 20. Retired units are replaced until 2042. For units shipped in 2042, any

units still remaining at the end of 2062 are replaced.

11.2.2.4 National Annual Energy Consumption

The national AEC is the product of the annual UEC and the stocks of CRE units of each

vintage. This approach accounts for differences in unit energy consumption from year to year.

Equation 11.3 above was used for determining the national annual energy consumption of CRE

equipment.

DOE initially calculated the AEC at the site (i.e., electricity in kWh consumed by the

CRE units). DOE then calculated primary energy consumption from site energy consumption by

applying a conversion factor to account for losses associated with the generation, transmission,

and distribution of electricity.

11.2.2.5 Site­to­Source Conversion Factor

The site­to­source conversion factor is the multiplicative factor used for converting site

energy consumption, expressed in kWh, into primary or source energy consumption, expressed

in quads. The site­to­source conversion factor accounts for losses in electricity generation,

transmission, and distribution. DOE used annual site­to­source marginal conversion factors

based on a detailed analysis contained in appendix H of the TSD. Theses factors take into

account the fact that energy savings that would occur as a result of adopting more efficient

equipment standard for commercial refrigeration equipment would be most likely to reduce

demand for energy from power plants used for peaking power and load following, and which

have heat rates lower than the U.S. average values. As shown in Table 11.2.6, the conversion

factors vary over time, due to projected changes in electricity generation sources (i.e., the power

plant types projected to provide electricity to the country). Detailed discussion on calculations of

marginal site­to­source conversion factors can be found in Appendix H.

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Table 11.2.6 Site­to­Source Conversion Factors
 

Year

Site­to­Source

Conversion Factor

Btu/kWh

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2029

2030

2031

2032­2062

7,570

7,570

7,570

7,570

7,570

7,570

7,570

7,570

7,570

7,570

7,570

7,668

7,411

7,320

7,305

8,361

8,493

8,976

8,631

8,631

For details, see Appendix H of the TSD.

11.3 NET PRESENT VALUE

11.3.1 Net Present Value Definition

The NPV is the value in the present of a time series of costs and savings. The NPV is

given by the equation:

NPV = PVS – PVC Eq. 11.5

where

PVS = present value of operating cost savings (including electricity, repair, and
 

maintenance costs) ($),
 

PVC = present value of increased total installed costs (including equipment and
 

installation) ($).
 

The PVS and PVC are determined according to the following expressions:
 

PVS = ∑ OCS t x DF t Eq. 11.6

PVC =∑TICt x DF t Eq. 11.7

where

OCS = total annual operating cost savings ($),

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TIC = total annual installed cost increases ($),
 

DF = discount factor,
 

t = year (PVS is summed over 2012­2062, and PVC is summed over 2012­2042).
 

DOE determined the contribution to PVC for each year, from the effective date of the

standard (2012) to the year 2042, discounted for the ANOPR analysis, to the year 2008. The

contribution to PVS was determined for each year, from the effective date of the standard (2012)

to the year when units purchased in 2042 retire (assumed to be 2062). DOE calculated costs and

savings as the difference between a standards case and a base case (i.e., without new standards).

DOE calculated a discount factor from the discount rate and the number of years between the

“present” (i.e., year to which the sum is being discounted) and the year in which the costs and

savings occur. DOE calculated the NPV as the sum over time of the discounted net savings

(which is equivalent to the approach shown in Eqations 11.5–11.7).

11.3.2 Net Present Value Inputs

Table 11.3.1 summarizes the inputs to the NPV calculation.

Table 11.3.1 Net Present Value Inputs

Input

Total Annual Installed Cost (TICt) ($)

Total Annual Operating Cost Savings (OCSt) ($)

Discount Factor

Present Value of Costs (PVC) ($)

Present Value of Savings (PVS) ($)

11.3.2.1 Total Annual Installed Cost

The increase in the total annual installed cost is equal to the annual change in the per­unit

total installed cost (difference between base case and standards case) multiplied by the shipments

forecasted in the standards case. The total installed cost includes both the equipment cost and

the installation price. DOE based average equipment costs on average manufacturer prices (see

chapter 8, Life­Cycle Cost and Payback Period Analysis) multiplied by average overall markup

values also shown in chapter 8). DOE based average installation prices on nationally

representative values for each equipment class (see chapter 8). Table 11.3.2 shows the resulting

average total installed costs per linear foot for each of the equipment classes of commercial

refrigeration units by efficiency level.

DOE developed base­case and standards­case energy efficiency scenarios as discussed in

section 11.2.2.1. For both the base­case and standards­case energy efficiency scenarios, DOE

calculated annual shipment­weighted average efficiencies. Associated with each annual

shipment­weighted average efficiency value, DOE assigned a total installed cost, based on

shipment­weighted total installed cost for all efficiency levels. DOE based the relationship

between efficiency and total installed cost for each CRE class on the data in Table 11.3.2. As

shown in Table 11.3.3, DOE estimated the shipments­weighted installed cost. DOE determined

forecasted average shipments­weighted total installed costs based on the annual shipments by

efficiency level.

11­9

 EE-2006-STD-0126 COMMENT 23.2
                         

                               

             

             

               

             

             

               

               

             

               

               

             

             

               

               

             

                                             

    

                       

     

   

                       

         

                               

                           

           

                   

                       

                        

                               

Table 11.3.2 Average Total Installed Cost per Linear Foot by Efficiency Level (2007$)
 

Equipment

Class Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$691

$963

$1,136

$944

$1,018

$1,595

$1,019

$640

$963

$1,094

$697

$702

$879

$994

$748

$694

$971

$1,143

$946

$1,021

$1,603

$1,022

$642

$968

$1,096

$699

$704

$882

$999

$751

$703

$990

$1,157

$953

$1,027

$1,627

$1,026

$647

$974

$1,102

$705

$710

$884

$1,000

$753

$711

$1,019

$1,184

$1,047

$1,146

$1,677

$1,034

$653

$995

$1,108

$712

$719

$890

$1,024

$793

$736

$1,023

$1,206

$1,051

$1,151

$1,827

$1,042

$671

$1,006

$1,114

$718

$725

$901

$1,025

$798

$741

$1,028

$1,293

$1,128

$1,227

$1,831

$1,071

$824

$1,072

$1,267

NA

NA

$936

$1,087

$817

$955

$1,120

$1,517

$1,134

$1,238

$1,951

$1,086

$829

$1,233

$1,272

NA

NA

$940

$1,091

NA

NA

NA

$1,534

NA

NA

$1,974

$1,094

NA

$1,250

$1,302

NA

NA

$957

$1,108

NA

*A value of NA means that no installed cost was calculated for this efficiency level. For example, the VOP.RC.L only had seven possible

efficiency levels.

Table 11.3.3	 Shipment­Weighted Average Total Installed Cost per Linear Foot by Trial

Standard Level (2007$)

Equipment

Class

Level 1

(Base Case) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$716

$1,008

$1,202

$995

$1,086

$1,720

$1,048

$663

$1,012

$1,131

$706

$712

$905

$1,036

$774

$720

$1,015

$1,208

$996

$1,089

$1,753

$1,050

$665

$1,015

$1,131

$706

$715

$906

$1,037

$776

$724

$1,029

$1,238

$998

$1,160

$1,848

$1,057

$669

$1,033

$1,133

$709

$720

$914

$1,047

$797

$741

$1,035

$1,309

$1,062

$1,164

$1,952

$1,094

$682

$1,086

$1,140

$713

$725

$942

$1,093

$800

$741

$1,120

$1,309

$1,134

$1,238

$1,974

$1,094

$682

$1,086

$1,140

$718

$725

$957

$1,108

$817

$955

$1,120

$1,534

$1,134

$1,238

$1,974

$1,094

$829

$1,250

$1,302

$718

$725

$957

$1,108

$817

11.3.2.2 Total Annual Operating Cost Savings

The annual operating cost savings to the Nation are equal to the change in the annual

operating costs (difference between base case and standards case) per unit multiplied by the

shipments forecasted in the standards case.

The annual operating cost includes electricity, repair, and maintenance costs.

Annual Electricity Cost Savings. As described in chapter 8, DOE calculated annual

electricity costs based on average State­level commercial electricity prices. To calculate annual

energy cost savings for a particular equipment class in a given year, DOE first calculated the

11­10

 EE-2006-STD-0126 COMMENT 23.2
                           

                             

                             

                              

                             

                              

                       

                         

             

                           

                        

                            

                             

                              

                             

                           

                   

                               

                                    

                                    

                                       

                                    

                                    

                                       

                                       

                                    

                                       

                                       

                              

                              

                                       

                                       

                                 

                                             

    

                   

                            

                           

                       

                              

                

           

annual energy costs in each forecast year at each standard level by multiplying the weightedaverage energy consumption at each efficiency level from Table 11.2.6 times the linear feet of

equipment stock in the equipment class in each year, and then times the sales­weighted national

average electricity prices for the four building types in Chapter 8. To determine energy savings,

the national energy costs at each efficiency level (Levels 2­8) were then subtracted from the

national energy costs at the baseline level (Level 1). Because projections of the stock of

commercial refrigeration equipment (expressed in linear feet) are the primary driver used to

estimate future CRE shipments, DOE calculated the national energy cost more readily by

expressing the AEC on a linear­footage basis.

Annual Repair Costs. DOE based average annual repair costs on the value of the

commercial refrigeration equipment (see chapter 8). Table 11.3.4 shows the average repair costs

per linear foot for the equipment classes of commercial refrigeration units. The NES spreadsheet

provides the capability to allow repair costs to differ by the price of the commercial refrigeration

equipment, and therefore by TSL. For the purposes of this NOPR analysis, DOE assumed the

repair costs to increase in each equipment class as the manufacturer selling price increases, as

shown in Table 11.3.4. Table 11.3.5 provides repair costs per linear foot by TSL.

Table 11.3.4 Average Annual Repair Cost per Linear Foot (2007$)

Equipment

Class Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8

VOP.RC.M $28.23 $28.28 $28.51 $28.51 $28.65 $28.65 $28.65 NA

VOP.RC.L $43.95 $44.05 $44.53 $44.64 $44.64 $44.64 $44.64 NA

VOP.SC.M $50.85 $50.90 $51.19 $51.31 $51.64 $52.18 $52.18 $52.18

VCT.RC.M $42.51 $42.56 $42.78 $43.26 $43.26 $43.26 $43.31 NA

VCT.RC.L $46.83 $46.87 $47.07 $47.64 $47.64 $47.64 $47.72 NA

VCT.SC.I $76.51 $76.54 $76.77 $76.95 $77.67 $77.76 $77.76 $78.04

VCS.SC.I $44.36 $44.39 $44.39 $44.61 $44.65 $44.85 $44.85 $45.12

SVO.RC.M $24.99 $25.03 $25.19 $25.19 $25.30 $25.30 $25.30 NA

SVO.SC.M $40.71 $40.73 $40.86 $40.95 $41.06 $41.46 $41.46 $41.46

SOC.RC.M $48.07 $48.10 $48.25 $48.25 $48.29 $48.29 $48.29 $48.52

HZO.RC.M $27.64 $27.68 $27.85 $27.89 $27.89 NA NA NA

HZO.RC.L $27.89 $27.92 $28.10 $28.15 $28.15 NA NA NA

HZO.SC.M $36.11 $36.11 $36.14 $36.31 $36.36 $36.54 $36.67 $36.67

HZO.SC.L $42.09 $42.09 $42.13 $42.32 $42.36 $42.68 $42.80 $42.80

HCT.SC.I $27.51 $27.51 $27.54 $27.70 $27.83 $27.83 NA NA

*A value of NA means that no installed cost was calculated for this efficiency level. For example, the VOP.RC.L only had seven possible

efficiency levels.

Annual Maintenance Costs. DOE determined average annual maintenance costs in two

parts: a preventative maintenance cost of $156/year per unit, regardless of cooling capacity or

efficiency level, and a lighting maintenance cost that varied with efficiency level or when

decreased energy consumption level was due to particular types of lighting measures

(see Chapter 8). Table 11.3.6 shows the resulting annual maintenance costs per linear foot by

efficiency level. Table 11.3.7 shows the corresponding shipments­weighted annual maintenance

cost per linear foot by TSL.

11­11

 EE-2006-STD-0126 COMMENT 23.2
                       

     

   

                   

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

                       

                                

               

               

               

               

               

               

               

               

               

               

               

               

               

               

                                             

    

Table 11.3.5 Shipment­Weighted Average Annual Repair Cost per Linear Foot by Trial

Standard Level (2007$)

Equipment

Class Baseline TSL 1

Standard Level

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$28.23

$43.95

$50.85

$42.51

$46.83

$76.51

$44.36

$24.99

$40.71

$48.07

$27.64

$27.89

$36.11

$42.09

$27.51

$28.51

$44.53

$51.19

$42.56

$47.07

$76.95

$44.39

$25.19

$40.86

$48.10

$27.68

$28.10

$36.14

$42.13

$27.54

$28.51 $28.65 $28.65

$44.64 $44.64 $44.64

$51.64 $52.18 $52.18

$42.78 $43.26 $43.31

$47.64 $47.64 $47.72

$77.67 $77.76 $78.04

$44.65 $45.12 $45.12

$25.19 $25.30 $25.30

$41.06 $41.46 $41.46

$48.25 $48.29 $48.29

$27.85 $27.89 $27.89

$28.15 $28.15 $28.15

$36.36 $36.67 $36.67

$42.36 $42.80 $42.80

$27.70 $27.83 $27.83

$28.65

$44.64

$52.18

$43.31

$47.72

$78.04

$45.12

$25.30

$41.46

$48.52

$27.89

$28.15

$36.67

$42.80

$27.83

Table 11.3.6 Average Annual Maintenance Cost per Linear Foot by Efficiency Level

(2007$)

Equipment

Class Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8

VOP.RC.M $21.73 $21.73 $21.73 $24.71 $24.71 $24.71 $34.95 NA

VOP.RC.L $16.76 $16.76 $16.76 $16.76 $18.04 $18.04 $22.43 NA

VOP.SC.M $48.76 $48.76 $48.76 $48.76 $51.82 $51.82 $61.02 $61.02

VCT.RC.M $20.02 $20.02 $20.02 $20.02 $20.02 $20.96 $20.96 NA

VCT.RC.L $19.99 $19.99 $19.99 $19.99 $19.99 $20.93 $20.93 NA

VCT.SC.I $47.80 $47.80 $47.80 $47.80 $47.80 $47.80 $49.20 $49.20

VCS.SC.I $36.38 $36.38 $36.38 $36.38 $36.38 $36.38 $36.38 $36.38

SVO.RC.M $19.25 $19.25 $19.25 $21.38 $21.38 $28.69 $28.69 NA

SVO.SC.M $45.80 $45.80 $45.80 $45.80 $47.96 $47.96 $54.76 $54.76

SOC.RC.M $19.25 $19.25 $19.25 $21.38 $21.38 $28.69 $28.69 $28.69

HZO.RC.M $13.04 $13.04 $13.04 $13.04 $13.04 NA NA NA

HZO.RC.L $13.04 $13.04 $13.04 $13.04 $13.04 NA NA NA

HZO.SC.M $39.11 $39.11 $39.11 $39.11 $39.11 $39.11 $39.11 $39.11

HZO.SC.L $39.11 $39.11 $39.11 $39.11 $39.11 $39.11 $39.11 $39.11

HCT.SC.I $45.74 $45.74 $45.74 $45.74 $45.74 $45.74 NA NA

*A value of NA means that no maintenance cost was calculated for this efficiency level. For example, the VOP.RC.M only had seven possible

efficiency levels.

11­12

 EE-2006-STD-0126 COMMENT 23.2
                     

       

   

                   

           

           

           

           

           

           

           

           

           

           

           

           

           

           

   

                           

                          

       

           

                   

                       

                                  

                           

                         

                         

                     

        

                             

                               

                             

                           

                           

                         

Table 11.3.7 Shipment­Weighted Average Annual Maintenance Cost per Linear Foot by

Trial Standard Level (2007$)

Equipment

Class Baseline TSL 1

Standard Level

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$23.36

$17.59

$50.38

$20.14

$20.14

$48.01

$36.38

$20.67

$47.10

$21.44

$13.03

$13.03

$39.11

$39.11

$45.74

$23.36

$17.59

$50.38

$20.14

$20.14

$48.01

$36.38

$20.67

$47.10

$21.44

$13.03

$13.03

$39.11

$39.11

$45.74

$24.95 $24.95 $24.95

$17.59 $18.40 $22.43

$52.47 $52.47 $52.47

$20.14 $20.14 $20.96

$20.14 $20.14 $20.93

$48.01 $49.20 $49.20

$36.38 $36.38 $36.38

$21.91 $21.91 $21.91

$48.53 $48.53 $48.53

$21.44 $22.53 $22.53

$13.03 $13.03 $13.03

$13.03 $13.03 $13.03

$39.11 $39.11 $39.11

$39.11 $39.11 $39.11

$45.74 $45.74 $45.74

$34.95

$22.43

$61.02

$20.96

$20.93

$49.20

$36.38

$28.69

$54.76

$28.69

$13.03

$13.03

$39.11

$39.11

$45.74

11.3.2.3 Discount Factor

DOE multiplied monetary values in future years by the discount factor in order to

determine the present value. The discount factor (DF) is described by the equation:

1 DF = Eq. 11.8 t−tp (1+ r)

where

r = discount rate (percent),
 

t = year of the monetary value,
 

tp = year in which the present value is being determined.
 

DOE estimated national impacts with both a three­percent and a seven­percent real

discount rate as the average real rate of return on private investment in the U.S. economy. These

discount rates are used in accordance with the Office of Management and Budget (OMB)’s

guidance to Federal agencies on the development of regulatory analysis (OMB Circular A­4,

September 17, 2003), and section E., “Identifying and Measuring Benefits and Costs,” therein.

DOE defined the present year as 2008 for the NOPR analysis.

11.3.2.4 Present Value of Costs

The present value of increased installed costs is the annual installed cost increase in each

year (i.e., the difference between the standards case and the base case), discounted to the present,

and summed for the time period over which DOE is considering the installation of commercial

refrigeration equipment (i.e., from the effective date of standards, 2012, to the year 2042).

The increase in total installed cost refers to both equipment cost and installation cost

associated with the higher energy efficiency of commercial refrigeration units purchased in the

11­13

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standards case compared to the base case. DOE calculated annual installed costs as the

difference in total installed cost for new equipment purchased each year, multiplied by the

shipments in the standards case.

11.3.2.5 Present Value of Savings

The present value of operating cost savings is the annual operating cost savings (i.e., the

difference between the base case and standards case) discounted to the year 2008, and summed

over the period from the effective date of the standard, 2012, to the time when the last unit

installed in 2042 is retired from service (assumed to be 2062). Savings are decreases in

operating costs (including electricity, repair, and maintenance) associated with the higher energy

efficiency of commercial refrigeration units purchased in the standards case compared to the

base case. Total annual operating cost savings is the savings per linear foot multiplied by the

number of linear feet of each vintage surviving in a particular year. Equipment consumes energy

over its entire lifetime, and for units purchased in 2042, the PVS includes energy consumed until

the last unit is retired from service at the end of 2062.

11.4 NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE RESULTS

The NES spreadsheet model provides estimates of the NES and NPV due to various

efficiency levels. The inputs to the NES spreadsheet have been discussed earlier in

sections 11.2.2 (National Energy Savings Inputs) and 11.3.2 (Net Present Value Inputs). DOE

generated the NES and NPV results using a Microsoft Excelspreadsheet, which is accessible on

the Internet

(http://www.eere.energy.gov/buildings/appliance_standards/commercial/commercial_refrigeratio

n.html). Details and instructions for using the spreadsheet are discussed in Appendix H of the

TSD.

11.4.1 National Energy Savings and Net Present Value Input Summary

Table 11.4.1 summarizes the inputs to the NES spreadsheet model. For each input a brief

description of the data source is given.

11.4.2 National Energy Savings Results

The following section provides NES results for each trial standard level considered for

the 15 equipment classes of commercial refrigeration equipment analyzed. Results are

cumulative to 2042 and are shown as primary energy savings in quads. Inputs to the NES

spreadsheet model are based on weighted­average values, yielding results that are discrete point

values, rather than a distribution of values as in the life­cycle cost (LCC) analysis.

Table 11.4.2 shows the NES results for the efficiency levels analyzed for each equipment

class of commercial refrigeration equipment.

11­14

 EE-2006-STD-0126 COMMENT 23.2
           

   

                    

       

                  

                    

                 

                 

       

   

               

                      

     

                                

                      

       

                         

                  

                           

                 

                              

         

                       

               

     

             

                  

                                       

             

             

                        

                   

Table 11.4.1 NES and NPV Inputs
 

Input Data Description

Shipments Annual shipments from shipments model (see chapter 9, Shipments

Analysis).

Effective Date of Standard 2012

Base­Case Efficiencies Distribution of base­case shipments by efficiency level.

Standards­Case Efficiencies Distribution of shipments by efficiency level for each standards case.

Standards­case annual market shares by efficiency level remain constant

over time for base case and each standards case.

Annual Energy Consumption per

Linear Foot

Annual weighted­average values are a function of efficiency level.

(Established from the Engineering Analysis, chapter 5). Converted to a per

linear foot basis.

Total Installed Cost per Linear Foot Annual weighted­average values are a function of efficiency level (see

chapter 8, Life­Cycle Cost and Payback Period Analysis). Converted to a

per linear foot basis.

Repair Cost per Linear Foot Annual weighted­average values are constant with efficiency level (see

chapter 8). Converted to a per linear foot basis.

Maintenance Cost per Linear Foot Annual weighted­average value equals $156 (see chapter 8), plus lighting

maintenance cost. Converted to a per linear foot basis.

Escalation of Electricity Prices 2007 EIA Annual Energy Outlook forecasts (to 2030) and extrapolation for

beyond 2030 (see chapter 8).

Electricity Site­to­Source Conversion Conversion varies yearly and is generated by DOE/EIA’s NEMS* program

(a time series conversion factor; includes electric generation, transmission,

and distribution losses).

Discount Rate 3 and 7 percent real.

Present Year Future costs are discounted to year 2008.

* Chapter 14 on the utility impact analysis and Chapter 15 on the environmental assessment provide more detail on NEMS.

Table 11.4.2	 Cumulative National Energy Savings for Commercial Refrigeration

Equipment (2012­2042)

Equipment Class

National Energy Savings (quads*) by Trial Standard Level

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

0.047 0.067 0.128 0.128 0.336

0.005 0.009 0.010 0.015 0.015

0.005 0.014 0.027 0.027 0.040

0.001 0.002 0.012 0.018 0.018

0.030 0.334 0.344 0.448 0.448

0.007 0.018 0.022 0.023 0.023

0.000 0.001 0.002 0.002 0.002

0.026 0.039 0.077 0.077 0.187

0.004 0.013 0.028 0.028 0.043

0.002 0.006 0.011 0.011 0.040

0.001 0.004 0.006 0.007 0.007

0.010 0.023 0.027 0.027 0.027

0.000 0.001 0.001 0.002 0.002

0.001 0.002 0.006 0.006 0.006

0.002 0.013 0.014 0.016 0.016

* 0.000 indicates savings are less than 0.0005 quadrillion Btu.

11­15

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Un        

       

                         

   

                       

                          

11.4.3 Annual Costs and Savings

As a prelude to providing the NPVs for each standard level in each equipment class, this

section presents the annual equipment cost (or total installed cost) increases and annual operating

cost savings at the national level.

Figure 11.4.1 shows the changes over time of the non­discounted annual equipment price

increases and the non­discounted operating cost savings for TSL 3 for the VOP.RC.M equipment

class, which corresponds to efficiency Level 5. The total net annual impact is the discounted

value of the difference between annual equipment purchases and annual operating costs at a

seven­percent discount rate. Appendix I of the TSD shows comparable figures for other

efficiency levels and other equipment classes. Each figure also shows the net annual impact,

which is the difference between the savings and costs for each year. The annual equipment price

change is the increase in equipment price for equipment purchased each year over the period

2012–2042. The annual operating savings is the savings in operating costs for equipment

purchased, and which have not been retired, for each year over the time period 2012–2062. DOE

determined the annual costs and savings presented in each figure based on the AEO 2007

Reference Case.3 The NPV is the difference between the cumulative annual discounted savings

and the cumulative annual discounted costs.

­0.02

­0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

Billion 2007$

2012 2016 2020

Net Savings

2024 2028 2032 2036 2040 2044 2048 2052 2056

Year

Undiscounted Total Annual Operating Savings

discounted Annual Equipment Purchase Savings

Discounted Total Net Annual Impact

2060

Figure 11.4.1	 National Annual Costs and Savings for Trial Standard Level 3 (Efficiency

Level 5)

Figure 11.4.1 initially shows smaller annual operating cost savings compared to the

increased equipment price costs (shown on Figure 11.4.1 as operating savings). For efficiency

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levels up through Level 7, operating cost savings increase with time, as more and more

equipment meeting the efficiency level comprises the CRE stock.

11.4.4 Net Present Value Results

The following section provides NPV results for the trial standard levels considered for

the equipment classes of commercial refrigeration units. Results are cumulative and are shown as

the discounted value of these savings in dollar terms. The inputs to the NES spreadsheet model

are based on weighted­average values yielding results that are discrete point values, rather than a

distribution of values as in the LCC analysis. The present value of increased total installed costs

is the total installed cost increase (i.e., the difference between the standards case and base case),

discounted to 2008, and summed over the time period in which DOE evaluates the impact of

standards (i.e., from the effective date of the standards, 2012, to the year 2062).

Savings are decreases in operating costs (including electricity, repair, and maintenance)

associated with the higher energy efficiency of commercial refrigeration units purchased in the

standards case compared to the base case. Total operating cost savings are the savings per unit

multiplied by the number of units of each vintage (i.e., the year of manufacture) surviving in a

particular year. Commercial refrigeration equipment consumes energy and must be maintained

over its entire lifetime. For units purchased in 2042, the operating cost includes energy

consumed and maintenance and repair costs incurred until the last unit is retired from service in

2062.

Table 11.4.3 shows the NPV results for the standard levels considered for commercial

refrigeration equipment based on a seven­percent discount rate. DOE based all results on

electricity price forecasts from the AEO 2007 Reference Case. Detailed results showing the

breakdown of the NPV into national equipment costs and national operating costs are provided in

Appendix I of the TSD.

Table 11.4.3 Cumulative NPV Results Based on a Seven­Percent Discount Rate

Equipment Class TSL 1

Trial Standard Level (Billion 2007$)*

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$0.11

$0.01

$0.01

$0.00

$0.07

$0.02

$0.00

$0.06

$0.01

$0.00

$0.00

$0.02

$0.00

$0.00

$0.00

$0.10 $0.19 $0.19

$0.02 $0.02 $0.01

$0.02 $0.04 $0.04

$0.00 $0.01 $0.00

$0.60 $0.62 $0.55

$0.04 $0.04 $0.04

$0.00 $0.00 $0.00

$0.06 $0.12 $0.12

$0.02 $0.04 $0.04

$0.01 $0.02 $0.02

$0.01 $0.01 $0.01

$0.05 $0.05 $0.05

$0.00 $0.00 $0.00

$0.01 $0.01 $0.01

$0.03 $0.03 $0.03

­$0.53

$0.01

­$0.01

$0.00

$0.55

$0.04

$0.00

­$0.26

­$0.01

­$0.09

$0.01

$0.05

$0.00

$0.01

$0.03

* 0.00 indicates savings are less than $0.005 billion.

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Table 11.4.4 provides the NPV results based on the three­percent discount rate and

electricity price forecasts from the AEO 2007 Reference Case. As with the NPV results based on

a seven­percent discount rate, detailed results showing the breakdown of the NPV into national

equipment costs and national operating costs based on a three­percent discount rate are provided

in Appendix I.

Table 11.4.4 Cumulative NPV Results based on a Three­Percent Discount Rate

Equipment

Class TSL 1

Trial Standard Level (Billion 2007$)*

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$0.28

$0.03

$0.03

$0.00

$0.16

$0.04

$0.00

$0.15

$0.03

$0.01

$0.01

$0.06

$0.00

$0.00

$0.01

$0.26 $0.52 $0.52

$0.05 $0.05 $0.03

$0.06 $0.11 $0.11

$0.01 $0.04 $0.03

$1.62 $1.67 $1.68

$0.10 $0.10 $0.10

$0.01 $0.01 $0.01

$0.15 $0.32 $0.32

$0.06 $0.11 $0.11

$0.03 $0.04 $0.04

$0.02 $0.03 $0.03

$0.12 $0.14 $0.14

$0.00 $0.01 $0.01

$0.01 $0.03 $0.03

$0.08 $0.08 $0.08

­$0.65

$0.03

$0.03

$0.03

$1.68

$0.10

$0.01

­$0.29

$0.04

­$0.12

$0.03

$0.14

$0.01

$0.03

$0.08

* 0.00 indicates savings are less than $0.005 billion.

11.5	 NET PRESENT VALUE SENSITIVITY TO LIGHT EMITTING DIODE (LED)

SYSTEM COSTS

As discussed in section 11.4, the base LCC analysis uses current (2007) cost data for

LED lighting both for the development of customer cost data as well as for replacement LED

fixtures. LED lighting costs for CRE are expected to decline rapidly over the next decade (See

TSD Appendix B discussion of LED and LED fixture cost projections). DOE projects that the

cost of LED fixtures could decline by as much as 50% by 2012, the effective date of the rule.

DOE performed a sensitivity analysis of the impact of a 50% reduction in LED fixture

cost in 2012 on the NPV analysis. This was accomplished by first modifying the manufacturer

for LED lighting systems in a special version of the engineering spreadsheet model to 50% of the

cost in the base analysis. From this, new MSPs for all efficiency levels with LED lighting were

developed resulting in revised cost­efficiency data for these equipment classes. The revised

MSP data was subsequently converted to customer prices using the distribution chain markups.

These new customer prices were then used in the LCC spreadsheet model. In addition, DOE

reduced by 50% the cost of the replacement LED fixtures used in development of the lighting

maintenance costs. DOE then recalculated the national average life­cycle cost for the equipment

incorporating LED lighting. In addition, it recalculated key cost parameters (per unit total

installed cost, per unit annual maintenance costs, per unit annual repair costs) that are outputs of

the LCC analysis and are used in the NIA spreadsheet

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DOE then used these recalculated cost parameters in the NIA spreadsheet, both to

calculate revised shipments by efficiency level (since customers are assumed to respond to the

revised customer costs) and to develop revised NES and NPV results based on the assumed 50

percent reduction in LED costs. Table 11.5.1 shows the resulting NPV and NES values at a

seven percent discount rate. Table 11.5.2 shows the resulting NPV values at a three percent

discount rate. At both seven and three percent discount rates, all equipment show a positive

NPV for TSL 5.

Table 11.5.1	 Cumulative NPV Results for 50 Percent LED Cost Reduction Based on a

Seven­Percent Discount Rate

Equipment Class TSL 1

Trial Standard Level (Billion 2007$)*

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$0.11

$0.01

$0.01

$0.00

$0.06

$0.02

$0.00

$0.06

$0.01

$0.00

$0.00

$0.02

$0.00

$0.00

$0.00

$0.10 $0.18 $0.18

$0.02 $0.02 $0.02

$0.02 $0.03 $0.03

$0.00 $0.01 $0.02

$0.57 $0.58 $0.80

$0.04 $0.05 $0.05

$0.00 $0.00 $0.00

$0.05 $0.11 $0.11

$0.02 $0.04 $0.04

$0.01 $0.01 $0.01

$0.01 $0.01 $0.01

$0.05 $0.05 $0.05

$0.00 $0.00 $0.00

$0.01 $0.01 $0.01

$0.03 $0.03 $0.03

$0.33

$0.02

$0.04

$0.02

$0.80

$0.05

$0.00

$0.18

$0.05

$0.01

$0.01

$0.05

$0.00

$0.01

$0.03

* 0.00 indicates savings are less than $0.005 billion

Table 11.5.2	 Cumulative NPV Results for 50 Percent LED Cost Reduction Based on a

Three­Percent Discount Rate

Equipment Class TSL 1

Trial Standard Level (Billion 2007$)*

TSL 2 TSL 3 TSL 4 TSL 5

VOP.RC.M

VOP.RC.L

VOP.SC.M

VCT.RC.M

VCT.RC.L

VCT.SC.I

VCS.SC.I

SVO.RC.M

SVO.SC.M

SOC.RC.M

HZO.RC.M

HZO.RC.L

HZO.SC.M

HZO.SC.L

HCT.SC.I

$0.26

$0.03

$0.03

$0.00

$0.16

$0.04

$0.00

$0.14

$0.03

$0.01

$0.01

$0.06

$0.00

$0.00

$0.01

$0.25 $0.50 $0.50

$0.05 $0.05 $0.07

$0.06 $0.10 $0.10

$0.01 $0.03 $0.07

$1.53 $1.57 $2.16

$0.09 $0.12 $0.12

$0.01 $0.01 $0.01

$0.13 $0.29 $0.29

$0.06 $0.11 $0.11

$0.03 $0.04 $0.04

$0.02 $0.03 $0.03

$0.12 $0.14 $0.14

$0.00 $0.01 $0.01

$0.01 $0.03 $0.03

$0.08 $0.08 $0.08

$1.10

$0.07

$0.14

$0.07

$2.16

$0.12

$0.01

$0.58

$0.15

$0.08

$0.03

$0.14

$0.01

$0.03

$0.08

* 0.00 indicates savings are less than $0.005 billion.

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REFERENCES
 

1 Energy Information Administration (EIA). National Energy Modeling System Commercial

Model (2004 Version).

2 ERG/MKJ. Energy Research Group & M.K. Jaccard & Associates. 2000. Integration of GHG

Emissions Reduction Options using CIMS. <<http://www.emrg.sfu.ca/reports/Rollup.pdf>>

(05 June 2001).

3 U.S. Department of Energy/Energy Information Administration (DOE/EIA), Annual Energy

Outlook 2007, February 2007. Washington, D.C. DOE/EIA­0383(2007).

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