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** 

**11­i 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** 

**11­ii**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 Excel**  **spreadsheet, 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.**

NES

t =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.**

**11­1**NES

cum = ∑

t NES

t 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

= STOCK

V **x** UEC

V **x** src_conv

t 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,** STOCK

V **,**

NES

**= Annual**  **national energy**  **savings (quads),** 

STOCK

V **= 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**

UEC

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

src_conv

t **= 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**  **(** STOCK

V **)**

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

**11­2**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 **)**

= 

# ∑ b

j ×

− 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) **($),**

r j = **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)**

**11­3**b j = **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** 

(r

j /(1­(1+r j ) ­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**  **System 1**  **(NEMS) and**  **in the**  **Canadian Integrated**  **Modeling System**  **(CIMS) 2**  **a**

**. The**  **calibration constants**  **are the**  **private risk­based**  **discount rates**  **by risk**  **class** r j , **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.**

**11­4**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.**

**11­5**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.**

**11­6 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.** 

**11­7**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 

### = 

# ∑ TIC

t **x** 

### DF

t Eq. 11.7

**where**

OCS

**= total**  **annual operating**  **cost savings**  **($),**

**11­8**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**  **(** TIC t ) **($)**

**Total Annual**  **Operating Cost**  **Savings (**  OCS t **) ($)** 

**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**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 annual**  **energy costs**  **in each**  **forecast year**  **at each**  **standard level**  **by multiplying**  **the weighted** 

**average 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**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**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,** 

t p **= 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 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 Excel**  **spreadsheet, 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**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**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**

**11­16 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.** 

**11­17 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** 

**11­18 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.** 

**11­19**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).**

**11­20**