CHAPTER 5. ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION ........................................................................................................... 5­5

5.2 EQUIPMENT CLASSES ANALYZED.......................................................................... 5­6

5.2.1 Representative Cooling Capacities and Wall Sleeve Dimensions....................... 5­8

5.2.1.1 Standard Size PTAC and PTHP Representative Equipment ................... 5­8

5.2.1.2 Non­Standard Size PTAC and PTHP Representative Equipment ......... 5­10

5.3 METHODOLOGY OVERVIEW .................................................................................. 5­10

5.4 TEARDOWN ANALYSIS............................................................................................ 5­12

5.4.1 Selection of Units............................................................................................... 5­12

5.4.2 Generation of Bills of Materials ........................................................................ 5­12

5.5 DESIGN OPTIONS....................................................................................................... 5­13

5.5.1 Screened­In Technologies.................................................................................. 5­13

5.5.1.1 Higher Efficiency Compressors............................................................. 5­14

5.5.1.2 Increase Heat Exchanger Area............................................................... 5­14

5.5.1.3 Re­Circuiting Heat Exchanger Coils ..................................................... 5­14

5.6 COST MODEL AND DEFINITIONS........................................................................... 5­15

5.6.1 Cost Definitions................................................................................................. 5­15

5.6.2 Cost Model Overview........................................................................................ 5­16

5.6.3 Cost Model Assumptions Overview .................................................................. 5­17

5.6.4 Outsourcing Assumptions.................................................................................. 5­17

5.6.5 Factory Parameters Assumptions....................................................................... 5­18

5.6.6 Production Volumes Assumptions..................................................................... 5­19

5.6.7 Material Prices Assumptions............................................................................. 5­20

5.6.8 MPC Breakdown................................................................................................ 5­21

5.7 ENGINEERING MANUFACTURER INTERVIEWS................................................. 5­21

5.7.1 Key Issues Discussed......................................................................................... 5­22

5.8 MANUFACTURER MARKUP .................................................................................... 5­23

5.8.1 Manufacturer Financial Information Sources.................................................... 5­23

5.8.2 Manufacturing Production Cost......................................................................... 5­24

5.8.3 Manufacturer Selling Price ................................................................................ 5­25

5.8.4 Manufacturing Markup Calculation................................................................... 5­25

5.9 COST VERSUS EFFICIENCY CURVES.................................................................... 5­27

5.9.1 Baseline Unit...................................................................................................... 5­27

5.9.2 “Max Tech” Efficiency Levels .......................................................................... 5­29

5.9.3 Design Option Approach ................................................................................... 5­30

5.9.4 Cost­Efficiency Curves...................................................................................... 5­32

5.10 ALTERNATIVE REFRIGERANT ANALYSIS .......................................................... 5­37

5.10.1 Alternative Refrigerant Selection ...................................................................... 5­38

5.10.2 R­410A Feedback from Manufacturers............................................................. 5­38

5.10.3 R­410A Compressors......................................................................................... 5­39

5.10.4 ARI R­410A Study ............................................................................................ 5­40

5.10.5 R­410A Analysis Methodology ......................................................................... 5­40

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EERE-2007-BT-STD-0012 COMMENT 02
5.10.6 R­410A Analysis Assumptions.......................................................................... 5­42

5.10.7 Cost­Efficiency Curves...................................................................................... 5­43

5.11 HEAT PUMP EER TO HEAT PUMP COP.................................................................. 5­50

5.12 SENSITIVITY ANALYSES ......................................................................................... 5­52

5.13 ENGINEERING ANALYSIS SUMMARY OF RESULTS.......................................... 5­59

LIST OF TABLES

Table 5.2.1 Equipment Classes for PTACs ................................................................................ 5­6

Table 5.2.2 Equipment Classes for PTHPs................................................................................. 5­7

Table 5.5.1 Technologies Not Screened Out ............................................................................ 5­14

Table 5.5.2 Increase Heat Exchanger Area Design Options...................................................... 5­14

Table 5.6.1 Cost Model In­House Manufacturing Operation Assumptions.............................. 5­18

Table 5.6.2 Standard Size PTAC and PTHP Factory Parameter Assumptions........................ 5­19

Table 5.6.3 Non­Standard Size PTAC and PTHP Factory Parameter Assumptions................ 5­19

Table 5.6.4 Five­Year Metal Prices.......................................................................................... 5­20

Table 5.6.5 Resin Prices as of March 2007 .............................................................................. 5­21

Table 5.6.6 Total Equipment MPC Breakdown........................................................................ 5­21

Table 5.8.1 Gross Profit Margin for PTAC and PTHP Manufacturers* .................................. 5­26

Table 5.8.2 Calculated Manufacturer Markups ........................................................................ 5­27

Table 5.9.1 Market Baseline Units Characteristics................................................................... 5­28

Table 5.9.2 Baseline Unit EER................................................................................................. 5­29

Table 5.9.3 “Max Tech” Efficiency Levels (≥7,000 Btu/h and ≤15,000 Btu/h Equipment

Classes) ...................................................................................................................................... 5­30

Table 5.9.4 Standard Size PTAC 9,000 Btu/h Cooling Capacity Design Options................... 5­31

Table 5.9.5 Standard Size PTHP 9,000 Btu/h Cooling Capacity Design Options.................... 5­31

Table 5.9.6 Standard Size PTAC 12,000 Btu/h Cooling Capacity Design Options................. 5­31

Table 5.9.7 Standard Size PTHP 12,000 Btu/h Cooling Capacity Design Options ................. 5­32

Table 5.9.8 Non­Standard Size PTAC 11,000 Btu/h Cooling Capacities Design Options ...... 5­32

Table 5.9.9 Non­Standard Size PTHP 11,000 Btu/h Cooling Capacities Design Options....... 5­32

Table 5.9.10 Cost­Efficiency Curves and Corresponding Figures........................................... 5­33

Table 5.10.1 ARI Estimated R­410A System EER Degradation for PTACs and PTHPs........ 5­40

Table 5.10.2 ARI Estimated R­410A System COP Degradation for PTACs and PTHPs........ 5­40

Table 5.12.1 Annual Average 2006 Metal Prices..................................................................... 5­53

Table 5.12.2 Material Price Sensitivity Results......................................................................... 5­58

Table 5.13.1 MSP for R­22 and R­410A Standard Size PTACs with a 9,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­59

Table 5.13.2 MSP for R­22 and R­410A Standard Size PTHPs with a 9,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­59

Table 5.13.3 MSP for R­22 and R­410A Standard Size PTACs with a 12,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­59

Table 5.13.4 MSP for R­22 and R­410A Standard Size PTHPs with a 12,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­59

Table 5.13.5 MSP for R­22 and R­410A Non­Standard Size PTACs 11,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­60

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.13.6 MSP for R­22 and R­410A Non­Standard Size PTHPs 11,000 Btu/h Cooling

Capacity ..................................................................................................................................... 5­60

Table 5.13.7 Increase in MSP from R­22 to R­410A for the Various Equipment ................... 5­60

LIST OF FIGURES

Figure 5.2.1 Annual Number of Shipments for Standard Size PTACs by Cooling Capacity –

ARI, December 2006 ................................................................................................................... 5­9

Figure 5.2.2 Annual Number of Shipments for Standard Size PTHPs by Cooling Capacity –

ARI, December 2006 ................................................................................................................... 5­9

Figure 5.3.1 Flow Diagram of Engineering Analysis Methodology ......................................... 5­11

Figure 5.8.1 Full Production Costs............................................................................................ 5­24

Figure 5.9.1 Manufacturer Production Cost (2006$) versus Efficiency for Standard Size PTACs

with a Cooling Capacity of 9,000 Btu/h .................................................................................... 5­33

Figure 5.9.2 Manufacturer Production Cost (2006$) versus Efficiency for Standard Size PTHPs

with a Cooling Capacity of 9,000 Btu/h .................................................................................... 5­34

Figure 5.9.3 Manufacturer Production Cost (2006$) versus Efficiency for Standard Size PTACs

with a Cooling Capacity of 12,000 Btu/h .................................................................................. 5­35

Figure 5.9.4 Manufacturer Production Cost (2006$) versus Efficiency for Standard Size PTHPs

with a Cooling Capacity of 12,000 Btu/h .................................................................................. 5­35

Figure 5.9.5 Manufacturer Production Cost (2006$) versus Efficiency for Non­Standard Size

PTACs with a Cooling Capacity of 11,000 Btu/h...................................................................... 5­36

Figure 5.9.6 Manufacturer Production Cost (2006$) versus Efficiency for Non­Standard Size

PTHPs with a Cooling Capacity of 11,000 Btu/h...................................................................... 5­37

Figure 5.10.1 Manufacturer Production Cost (2006$) versus Efficiency for R­410A Standard

Size PTACs with a Cooling Capacity of 9,000 Btu/h................................................................ 5­44

Figure 5.10.2 Manufacturer Production Cost (2006$) versus Efficiency for R­410A Standard

Size PTACs with a Cooling Capacity of 9,000 Btu/h................................................................ 5­45

Figure 5.10.3 Manufacturer Production Cost (2006$) versus Efficiency for R­410A Standard

Size PTACs with a Cooling Capacity of 12,000 Btu/h.............................................................. 5­46

Figure 5.10.4 Manufacturer Production Cost (2006$) versus Efficiency for R­410A Standard

Size PTHPs with a Cooling Capacity of 12,000 Btu/h .............................................................. 5­47

Figure 5.10.5 Manufacturer Production Cost (2006$) versus Efficiency for R­410A NonStandard Size PTACs with a Cooling Capacity of 11,000 Btu/h .............................................. 5­48

Figure 5.10.6 Manufacturer Production Cost (2006$) versus Efficiency for R­410A NonStandard Size PTHPs with a Cooling Capacity of 11,000 Btu/h............................................... 5­49

Figure 5.11.1 COP versus EER for Standard Size PTHPs with 9,000 Btu/h Cooling Capacity

from 2006 ARI directory ........................................................................................................... 5­51

Figure 5.11.2 COP versus EER for Standard Size PTHPs with 12,000 Btu/h Cooling Capacity

from 2006 ARI directory ........................................................................................................... 5­51

Figure 5.11.3 COP versus EER for Non­Standard Size PTHPs All Cooling Capacity from 2006

ARI directory ............................................................................................................................. 5­52

Figure 5.12.1 Material Price Sensitivity for Standard Size PTACs with a Cooling Capacity of

9,000 Btu/h................................................................................................................................. 5­53

Figure 5.12.2 Material Price Sensitivity for Standard Size PTHPs with a Cooling Capacity of

9,000 Btu/h................................................................................................................................. 5­54

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EERE-2007-BT-STD-0012 COMMENT 02
Figure 5.12.3 Material Price Sensitivity for Standard Size PTACs with a Cooling Capacity of

12,000 Btu/h............................................................................................................................... 5­55

Figure 5.12.4 Material Price Sensitivity for Standard Size PTHPs with a Cooling Capacity of

12,000 Btu/h............................................................................................................................... 5­56

Figure 5.12.5 Material Price Sensitivity for Non­Standard Size PTACs with a Cooling Capacity

of 11,000 Btu/h .......................................................................................................................... 5­57

Figure 5.12.6 Material Price Sensitivity for Non­Standard Size PTHPs with a Cooling Capacity

of 11,000 Btu/h .......................................................................................................................... 5­58

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EERE-2007-BT-STD-0012 COMMENT 02
CHAPTER 5. ENGINEERING ANALYSIS

5.1 INTRODUCTION

The engineering analysis establishes the relationship between the manufacturer production

cost (MPC) and the energy efficiency of packaged terminal air conditioners (PTACs) and

packaged terminal heat pumps (PTHPs). The relationship between the MPC and energy

efficiency, or cost­efficiency relationship, serves as the basis for cost­benefit calculations in

terms of individual customers, manufacturers, and the Nation.

To establish the industry cost­efficiency curves, the U.S. Department of Energy (DOE)

used a design option approach. DOE gathered information using reverse engineering

methodologies, equipment information from manufacturer catalogs, and discussions with experts

and PTAC and PTHP manufacturers. The reverse engineering or cost assessment provides

useful information, including identification of potential technology paths manufacturers use to

increase efficiency. DOE generated a bill of materials (BOMs) by disassembling multiple

manufacturers’ PTACs and PTHPs that span a range of efficiency levels. The BOMs describe

the equipment in detail, including all manufacturing steps required to make and/or assemble each

part. Subsequently, DOE developed a cost model that converted the BOMs and the design

options identified in the screening analysis (Chapter 4) into MPCs. By applying derived

manufacturer markups to the MPCs, DOE calculated the manufacturer selling prices (MSPs) and

constructed industry cost­efficiency curves.

In a subsequent life­cycle cost analysis (Chapter 8), DOE used the industry costefficiency curves to determine customer prices for PTAC and PTHP equipment by applying

distribution channel markups.

The Energy Policy and Conservation Act of 1975 (EPCA) establishes energy

conservation standards for PTACs and PTHPs under 42 U.S.C. 6313(a)(3)(A) and (B). These

standards are measured and expressed in terms of energy­efficiency ratioa (EER) and coefficient

of performanceb (COP) under 42 U.S.C. 6314(a)(4)(A). In conducting the engineering analysis,

DOE only considered equipment that includes technologies and techniques that improve the EER

and COP of PTAC and PTHP equipment. As mentioned in the screening analysis (Chapter 4),

there are potential energy savings associated with certain technology options and techniques that

can reduce the annual energy consumption of the system, but these technologies generally have

little effect on EER. DOE did not consider technology options that reduce or have negligible

effects on EER and COP.

a According to the Air­Conditioning and Refrigeration Institute (ARI) 310/380­2004 Standard for Packaged

Terminal Air­Conditioners and Heat Pumps (ARI 310/380­2004) test procedure, EER is defined as “the ratio of the

produced cooling effect of an air conditioner or heat pump to its net work input, expressed in Btu/watt­hour.”

b COP is defined by ARI 310/380­2004 as “the ratio of the produced cooling effect of an air conditioner or heat

pump (or its produced heating effect, depending on the mode of operation) to its net work input, when both the

cooling (or heating) effect and the net work input are expressed in identical units of measurement.”

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EERE-2007-BT-STD-0012 COMMENT 02
As part of the engineering analysis, DOE analyzed the cost­efficiency relationship

associated with the use of an alternative refrigerant by the covered equipment. Using

information gathered from manufacturers, literature research, and current refrigerant costefficiency relationships, DOE made assumptions and estimates to calculate the cost­efficiency

relationship for the alternative refrigerant equipment.

In this chapter, DOE discusses the equipment classes analyzed, the identification of

representative equipment, the methodology used to generate bills of materials and MPCs, the

identification of baseline equipment, the process for constructing industry cost­efficiency curves,

the analysis of industry cost­efficiency curves of equipment that uses an alternative refrigerant,

and the sensitivity analysis completed for material prices of PTACs and PTHPs. The results of

the engineering analysis are several cost­efficiency curves that represent the average incremental

cost of increasing energy efficiency levels above the baseline levels.

5.2 EQUIPMENT CLASSES ANALYZED

Existing Federal energy conservation standards, shown in Tables 1 and 2 of the 10 CFR

Part 431.97, divide PTACs and PTHPs into six equipment classes. These equipment classes are

differentiated by equipment (i.e., air conditioner or heat pump) and by cooling capacity in British

thermal unit per hour (Btu/h). As presented in the market and technology assessment (MTA)

(Chapter 3), DOE proposes to subdivide EPCA’s existing classes for this equipment by wall

sleeve dimensions, consistent with the American Society of Heating, Refrigerating, and AirConditioning Engineers, Inc. (ASHRAE) and the Illuminating Engineering Society of North

America (IESNA) Standard 90.1­1999, “Energy Standard for Buildings Except Low­Rise

Residential Buildings” (ASHRAE/IESNA Standard 90.1­1999). Standard size PTACs and

PTHPs, as defined in the MTA, refer to equipment with wall sleeve dimensions greater than or

equal to 16 inches high or greater than or equal to 42 inches wide. Non­standard size PTACs

and PTHPs, as defined in the MTA, refer to equipment with wall sleeve dimensions less than 16

inches high and less than 42 inches wide. The twelve equipment classes covered by this

rulemaking for PTACs and PTHPs are listed in Table 5.2.1 and Table 5.2.2, respectively, and

correspond to those contained in ASHRAE/IESNA Standard 90.1­1999.

Table 5.2.1 Equipment Classes for PTACs

Equipment Class

Equipment Category Cooling Capacity

PTAC

Standard Size*

<7,000 Btu/h

≥7,000 Btu/h and

≤15,000 Btu/h

>15,000 Btu/h

Non­Standard Size**

<7,000 Btu/h

≥7,000 Btu/h and

≤15,000 Btu/h

>15,000 Btu/h * Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches

high, or greater than or equal to 42 inches wide. ** Wall sleeve dimensions less than 16 inches high and less than 42 inches wide.

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.2.2 Equipment Classes for PTHPs

Equipment Class

Equipment Category Cooling Capacity

PTHP

Standard Size*

<7,000 Btu/h

≥7,000 Btu/h and

≤15,000 Btu/h

>15,000 Btu/h

Non­Standard Size**

<7,000 Btu/h

≥7,000 Btu/h and

≤15,000 Btu/h

>15,000 Btu/h * Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches

high, or greater than or equal to 42 inches wide. ** Wall sleeve dimensions less than 16 inches high and less than 42 inches wide.

The current Federal energy conservation standards and the efficiency levels specified

by ASHRAE/IESNA Standard 90.1­1999 for PTACs and PTHPs are a function of the

equipment’s cooling capacity. Both standards have equations to calculate the efficiency levels

for PTACs and PTHPs between the 7,000 Btu/h and 15,000 Btu/h cooling capacity range for

each equipment class. For equipment with cooling capacities below 7,000 Btu/h and above

15,000 Btu/h, current Federal energy conservation standards and ASHRAE/IESNA Standard

90.1­1999 maintain a constant efficiency level equal to the value of the efficiency equation at

either 7,000 Btu/h or 15,000 Btu/h cooling capacity (e.g., the efficiency level for 6,000 Btu/h

cooling capacity equipment equals the efficiency level for 7,000 Btu/h cooling capacity

equipment, and the efficiency level for 16,000 Btu/h cooling capacity equipment equals the

efficiency level for 15,000 Btu/h cooling capacity equipment). In addition, the Air­Conditioning,

Heating, and Refrigeration Institutec (AHRI) provided DOE with annual PTAC and PTHP

industry shipment data that included equipment shipment quantities by cooling capacity and

equipment type. According to the data provided by AHRI from December 2006, over 73 percent

of PTACs and PTHPs fall within the 7,000 Btu/h to 15,000 Btu/h cooling capacity range.1

Therefore, based on the current Federal energy conservation standards, the standards specified by

ASHRAE/IESNA Standard 90.1­1999, and shipment data provided by AHRI, DOE directly

examined equipment with cooling capacities between 7,000 Btu/h and 15,000 Btu/h for standard

and non­standard size PTACs and PTHPs.

For the engineering analysis, DOE reviewed all twelve equipment classes covered by this

rulemaking. Since the wall sleeve dimensions effect the energy efficiency of the equipment,

DOE examined standard size and non­standard size PTACs and PTHPs separately. In addition,

since the energy­efficiency equations for PTACs and PTHPs established by EPCA and

ASHRA/IESNA Standard 90.1­1999 are a function of the equipment’s cooling capacity, DOE

The Air­Conditioning, Heating, and Refrigeration Institute (AHRI), formerly and throughout this notice referred to

as ARI, is the trade association representing PTAC and PTHP manufacturers. ARI and the Gas Appliance

Manufacturers Association (GAMA) announced on December 17, 2007, that their members voted to approve the

merger of the two trade associations to represent the interests of cooling, heating, and commercial refrigeration

equipment manufacturers. The merged association became AHRI on Jan. 1, 2008.

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EERE-2007-BT-STD-0012 COMMENT 02
examined specific cooling capacities for standard size and non­standard size PTACs and PTHPs,

which are referred to as representative cooling capacities. DOE reviewed the shipments data

provided by AHRI for the 2000 Screening Analysis and today’s rulemaking, and found the

majority of shipments have a cooling capacity within the 7,000 Btu/h to 15,000 Btu/h range.

5.2.1 Representative Cooling Capacities and Wall Sleeve Dimensions

Because of the large variations in equipment cooling capacity and performance within

each equipment class of standard and non­standard size PTACs and PTHPs, DOE analyzed some

of the cooling capacities individually. DOE used representative cooling capacities and wall

sleeve dimensions for the best representation of the PTAC and PTHP market within each

equipment class. The representative cooling capacities and wall sleeve dimensions, which

correspond to the equipment with the highest number of shipments, allowed DOE to analyze in

detail specific equipment that can provide information representative of the entire equipment

class. The representative cooling capacities and wall sleeve dimensions also allowed DOE to

establish baseline units that are used throughout the rulemaking analyses. The baseline units are

further discussed in section 5.9.1 of this analysis.

5.2.1.1 Standard Size PTAC and PTHP Representative Equipment

For standard size PTAC and PTHP equipment classes, DOE has identified two

representative cooling capacities and one representative wall sleeve dimension. The

representative cooling capacities for standard size PTACs and PTHPs are 9,000 Btu/h and

12,000 Btu/h. Both representative cooling capacities fall within the ≥7,000 and ≤15,000 Btu/h

cooling capacity range. The representative standard size wall sleeve dimension is 16 inches high

by 42 inches wide. The two representative cooling capacities and wall sleeve dimensions

correspond to the cooling capacities and wall sleeve dimensions with the highest number of

shipments. These were found using data gathered from the May 2006 ARI Directory of Certified

Performance2 (2006 ARI directory), the American Council for an Energy Efficient Economy

(ACEEE) database of equipment,3 as well as the shipment information provided to DOE in the

2000 Screening Analysis for EPACT­Covered Commercial Heating, Ventilating, and AirConditioning (HVAC) and Water­Heating Equipment report (commonly referred to as the 2000

Screening Analysis).4 Figure 5.2.1 and Figure 5.2.2 show number of shipments by equipment

class and cooling capacity for standard size PTACs and PTHPs, respectively.

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EERE-2007-BT-STD-0012 COMMENT 02
Number of Shipments

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

­

7.0 & Under 7.1 ­ 10.0 10.1 ­ 13.0 13.1 ­ 16.0 Over 16.0

Cooling Capacity Ranges (1000 Btu/h)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Figure 5.2.1 Annual Number of Shipments for Standard Size PTACs by Cooling Capacity

1 – ARI, December 2006

­

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Number of Shipments

7.0 & Under 7.1 ­ 10.0 10.1 ­ 13.0 13.1 ­ 16.0 Over 16.0

Cooling Capacity Ranges (1000 Btu/h)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Figure 5.2.2 Annual Number of Shipments for Standard Size PTHPs by Cooling Capacity

1 – ARI, December 2006

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EERE-2007-BT-STD-0012 COMMENT 02
The shipment data provided by AHRI shows that the chosen representative cooling capacities

fall within the cooling capacity ranges with the highest shipments.

The engineering analysis results for the two representative cooling capacities are used in

the remaining DOE analyses, including the life­cycle cost analysis and the national impact

analysis. DOE used the analytical results for the two representative cooling capacities to

examine the slope of the energy­efficiency equation (i.e., EER as a function of cooling capacity).

More details explaining how DOE extrapolates the proposed amended energy conservation

standards for the representative cooling capacities to the entire range of cooling capacities is

found in Chapter 9 of this TSD.

5.2.1.2 Non­Standard Size PTAC and PTHP Representative Equipment

For non­standard size PTAC and PTHP equipment classes, DOE has identified one

representative cooling capacity that corresponds to the middle of the cooling capacity range and

is not representative of any particular unit or manufacturer. DOE recognizes that non­standard

size equipment has size constraints and the refrigeration cycle components have to be sized to fit

inside the wall sleeve. This constrains the size of the compressor and heat exchangers and,

therefore, the cooling capacity and possible efficiencies. The non­standard size PTAC and

PTHP market also has a greater variety of shipments based on the customers and specialized

applications. Therefore, it is difficult to determine a representative wall sleeve dimensions with

the highest shipments. For the engineering analysis and subsequent analyses, DOE analyzed

non­standard size PTACs and PTHPs with 11,000 Btu/h cooling capacity.

Similarly, the energy efficiency equations for non­standard size PTACs and PTHPs are a

function of cooling capacity. DOE used the analytical results for the representative capacity of

non­standard PTACs and PTHPs and the existing slope of the ASHRAE/IESNA Standard 90.1­

1999 energy­efficiency equation to extrapolate the results to the entire span of cooling capacities.

More details explaining how DOE extrapolates the proposed amended energy conservation

standard for the representative cooling capacity of non­standard PTAC and PTHP equipment to

the entire range of cooling capacities is found in Chapter 9 of this TSD.

5.3 METHODOLOGY OVERVIEW

This section describes the analytical methodology used in the engineering analysis.

Figure 5.3.1 shows a flow diagram of this methodology and the corresponding sections in this

chapter. The results of the engineering analysis are several cost­efficiency curves, a material

price­sensitivity analysis, and an alternative refrigerant analysis.

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EERE-2007-BT-STD-0012 COMMENT 02
Virtual

Teardown

Analysis

(section 5.4)

BOMs

(section 5.4.2)

Design

Options

(section 5.5)

Cost Model

(section 5.6)

Manufacturer Material PriceMarkup Sensitivity

Analysis Analysis

(section 5.8) (section 5.11)

Cost­Efficiency Cost­Efficiency

Curves Relationship

(EER vs MPC) (EER vs MSP)

(section 5.9) (section 5.13)

Engineering Alternative

Manufacturer Refrigerant

Interviews Analysis

(section 5.6.8) (section 5.10)

Physical

Teardown

Analysis

(section 5.4)

Screening

Analysis

(Chapter 4)

Figure 5.3.1 Flow Diagram of Engineering Analysis Methodology

At the start of the process, DOE created BOMs for a sample of existing PTAC and PTHP

equipment using reverse engineering methods (see section 5.4). From the screening analysis,

DOE identified design options manufacturers use to increase the EER and COP of the

equipment. DOE calculated the incremental MPC for each design option in each equipment

class by using the BOMs and the design options in the manufacturing cost model (see section

5.6). DOE calculated the cost­effectiveness of each design option by dividing the incremental

cost by the associated increase in EER. The results were ranked by cost­effectiveness and added

to the baseline model MPC to produce cost­efficiency points above the baseline. DOE then

graphed each point and fit a cost­efficiency curve to the data (see section 5.8). During the

preparation of the cost­efficiency curves, DOE held interviews with manufacturers’ engineering

staff to gain insight into the PTAC and PTHP industry and request comments on the engineering

approach DOE used in the analysis (see section 5.6.8). DOE used the information gathered from

these interviews in the design options and the cost model, and then recalculated the costefficiency curves. Using publicly available PTAC and PTHP industry financial data, DOE

converted the MPCs from the cost­efficiency curves into MSPs (see section 5.8). Using market

information and data gathered from the interviews, DOE analyzed the effects of material price on

the cost­efficiency curves in a sensitivity analysis (see section 5.11). DOE also analyzed the

effects of using an alternative refrigerant on system performance and the cost­efficiency

relationship (see section 5.10).

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EERE-2007-BT-STD-0012 COMMENT 02
5.4 TEARDOWN ANALYSIS

To calculate the manufacturing costs of the different components in PTACs and PTHPs,

DOE disassembled multiple units into their components and estimated the material and labor

cost of each one. This process is referred to as a “physical teardown.” A supplementary method,

called a “virtual teardown,” uses published manufacturer catalogs and supplementary component

data to estimate the major physical differences between a piece of equipment that was physically

disassembled and a similar piece of equipment that was not. The teardown analysis for this

engineering analysis included several physical and virtual teardowns of standard and nonstandard size PTACs and PTHPs.

5.4.1 Selection of Units

DOE selected several standard and non­standard size PTAC and PTHP units to represent

the market, and used these for teardown in the engineering analysis. The selected equipment

exhibited the following four characteristics:

1. The selected equipment, taken together, evenly cover the full range of efficiency

levels considered in the analysis.

2. When possible, DOE selected one lower­efficiency unit and one higher­efficiency

unit from the same manufacturer. When possible, those units shared similar

characteristics (e.g., both from the same product line).

3. The equipment tended to be from manufacturers with relatively large shares of the

PTAC and PTHP markets, and thus was representative of typical design approaches.

4. The selected equipment included base units with few, if any, equipment features or

options that add cost without affecting equipment efficiency.

DOE did not explicitly identify the efficiency levels of the units it tore down because this

could expose sensitive information about individual manufacturers’ equipment.

Using the data gathered from the physical teardowns, DOE characterized each component

according to its weight, dimensions, material, quantity, and the manufacturing processes used to

fabricate and assemble it. For supplementary virtual teardowns, DOE gathered equipment data

from publicly available manufacturer catalogs, such as coil dimensions, weight, compressor type,

and fan motor configuration. DOE obtained information that was unavailable from the catalog

data, such as fan motor details, compressor specifications, or assembly details, from the physical

teardowns of a similar equipment or by estimations based on industry knowledge. DOE

collected additional component information during the engineering manufacturer interviews.

5.4.2 Generation of Bills of Materials

DOE developed structured BOMs for each of the physical and virtual teardowns.

Structured BOMs describe each equipment part and its relationship to the other parts in the

estimated order in which manufacturers assembled them. The BOMs describe each fabrication

and assembly operation in detail, including the type of equipment needed (e.g., presses, drills),

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the process cycle times, and the labor associated with each manufacturing step. The result is a

thorough and explicit model of the production process, which includes space, conveyor, and

equipment requirements by planned production level.

The BOMs incorporate all materials, components, and fasteners classified as either raw

materials or purchased parts and assemblies. The classifications into raw materials or purchased

parts were based on DOE’s previous industry experience, recent information in trade

publications, and discussions with high­ and low­volume original equipment manufacturers

(OEMs). DOE also visited manufacturing plants to reinforce its understanding of the industry’s

current manufacturing practices.

For purchased parts, the purchase price is estimated based on volume­variable price

quotations and detailed discussions with suppliers. For fabricated parts, the prices of “raw”

materials (e.g., tube, sheet metal) are estimated on the basis of 5­year averages (see section

5.6.7). The cost of transforming the intermediate materials into finished parts is estimated based

on current industry pricing. DOE shared major assumptions and estimates with manufacturers

during the engineering manufacturer interviews to gain feedback on the analysis, its

methodology, and preliminary results.

Multiple BOMs based on several PTAC and PTHP units, became the basis for the cost

model (see section 5.6). The other major inputs into the cost model are the design options, which

DOE identified in the screening analysis (Chapter 4). The following section defines the different

design options and describes their purpose in determining the cost­efficiency relationship for

PTACs and PTHPs.

5.5 DESIGN OPTIONS

Design options are technologies and design changes manufacturers use to improve

equipment performance. These options provide different ways to increase equipment efficiency

from the minimum (“baseline”) to the market maximum (“max­tech”).

For the engineering analysis, DOE calculated each efficiency level between the baseline

and max­tech using the design options. Using the teardown analysis and discussions with

manufacturers, DOE calculated the increase in EER from each design option. DOE fed the

design options and BOMs into the cost model to calculate all the MPCs, including the costs for

the baseline unit and each incremental design option. DOE averaged the design option costs to

normalize the data and prevent exposing sensitive information about individual manufacturers’

equipment. Once the MPC of each design option was determined, DOE could develop a design

option approach to calculate the cost­efficiency curves (see section 5.9.1).

5.5.1 Screened­In Technologies

Table 5.5.1 lists the technologies that DOE did not screen out in the screening analysis

(see Chapter 4).

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Table 5.5.1 Technologies Not Screened Out

Higher Efficiency Compressors

Increased Heat Exchanger Area

• Add one coil row (thus increasing the number of tubes and the overall heat

exchanger depth)

• Increase heat exchanger frontal area by 20 percent

Re­Circuiting Heat Exchanger Coils

The screened­in technologies became the design options. DOE further refined the design

options using knowledge from the teardown analysis, market research, and discussions with

manufacturers.

The design options and the technology levels for each design option are described below.

5.5.1.1 Higher Efficiency Compressors

The compressor’s efficiency has a significant impact on PTAC and PTHP EER. DOE

determined from the teardown analysis that manufacturers opt for either a low­ or highefficiency rotary compressor, depending on the product line (i.e., premium equipment carries the

high­efficiency compressor while baseline equipment carries the low­efficiency compressors).

From the teardown analysis, DOE estimated that the increase in EER for PTACs and PTHPs

from a low­ to high­efficiency compressor was approximately 0.8.

5.5.1.2 Increase Heat Exchanger Area

Increasing the heat exchanger frontal area in PTACs and PTHPs is a challenge because of

the wall sleeve’s size constraints. Manufacturers use creative approaches to maximize the heat

exchanger area inside the cabinet without surpassing the volume determined by the standard wall

sleeve dimensions or disrupting the vital airflows across the heat exchangers. Table 5.5.2

outlines these design options.

Table 5.5.2 Increase Heat Exchanger Area Design Options

Design Option EER Increase

Add a second tube row to the condenser heat

exchanger. (Subsequent coil row additions have a

lower EER impact.)

0.9

Increase overall heat exchanger frontal area by 20

percent. (Example: use “L” or “U” shape.) 0.5

5.5.1.3 Re­Circuiting Heat Exchanger Coils

PTAC and PTHP manufacturers can increase EER by adding coil circuits to both

evaporator and condenser heat exchangers. Re­circuiting a heat exchanger can reduce the

refrigerant pressure drop by running multiple circuits in parallel, improving the heat transfer, etc.

The gains are modest since these heat exchangers are optimized by design. However, recircuiting does allow a manufacturer to optimize one heat exchanger for use in units with varying

capacities. A variation on re­circuiting is using a coolant loop in the drain pan, transferring heat

from the refrigerant to any accumulated condensate. With the help of the teardown analysis and

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discussion with manufacturers, DOE calculated that re­circuiting the heat exchanger coils

increases the EER by about 0.1.

5.6 COST MODEL AND DEFINITIONS

Once DOE disassembled selected units, gathered information from manufacturer catalogs

on additional equipment, and identified design options, DOE created an appropriate

manufacturing cost model that could translate physical information into MPCs. The cost model

is based on production activities and divides factory costs into the following categories:

• Materials: Purchased parts (i.e. compressors, control boards, etc.), raw materials

(i.e., fin stock coils, sheet metal, etc.), and indirect materials.

• Labor: Fabrication, assembly, and indirect labor. Fabrication and assembly labor

cost are burdened with benefits and supervisory costs.

• Overhead: Equipment, tooling, and building depreciation, as well as utilities,

equipment and tooling maintenance, insurance, and property taxes.

5.6.1 Cost Definitions

Because there are many different accounting systems and methods to monitor costs, DOE

defined the above terms as follows:

• Direct material: Purchased parts (out­sourced) plus manufactured parts (made inhouse from raw materials).

• Indirect material: Material used during manufacturing (e.g., welding rods,

adhesives).

• Fabrication labor: Labor associated with in­house piece manufacturing.

• Assembly labor: Labor associated with final assembly and sub­assemblies.

• Indirect labor: Labor costs that scale with fabrication and assembly labor. This

includes the cost of technicians, manufacturing engineering support, stocking, etc.

that are assigned on a span basis.

• Overhead Labor: Costs associated with direct labor and span for floor supervisors,

plant managers, etc. Research and development, corporate management, general

administration, and maintenance labor costs are not included.

• Equipment and plant depreciation: Money allocated to pay for initial equipment

installation and replacement as the production equipment wears out.

• Tooling depreciation: Cost for initial tooling (including non­recurring engineering

and debugging of the tools) and tooling replacement as it wears out.

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• Building depreciation: Money allocated to pay for the building space and the

conveyors that feed and/or make up the assembly line.

• Utilities: Electricity, gas, telephones, etc.

• Maintenance: Annual money spent on maintaining tooling and equipment.

• Insurance: Appropriated as a function of unit cost.

• Property Tax: Appropriated as a function as unit cost.

5.6.2 Cost Model Overview

This section provides a basic overview of how the BOMs for PTACs and PTHPs are

transformed into cost information via the cost model.

The first step was to generate the equipment BOMs via multiple physical teardowns.

Within each BOM, all manufacturing and assembly steps are noted and the resultant equipment,

worker, and investment requirements are calculated. Subsequently, multiple databases were

created to capture the scope of PTAC and PTHP design options, such as heat exchanger

dimensions, compressor choices, and other factors.

To determine the MPCs for the BOMs and design options, DOE could follow two

different paths, depending on whether a subassembly was purchased (out­sourced) or produced

in­house. Section 5.6.3 describes the major assumptions and provides a list of all the purchased

subassemblies. For purchased parts, DOE gathered price quotations from major suppliers at

different production volumes.

For parts produced in­house, DOE reconstructed manufacturing processes for each part

using internal expertise and information gathered from engineering manufacturer interviews.

Using these resources, DOE assigned labor time, equipment use, and other important factors to

each subassembly in each of the equipment considered for this analysis.

The last step was converting this information into dollar values. To perform this task,

DOE collected information on labor rates, tooling costs, raw material prices, and other factors.

DOE assumed values for these parameters using internal expertise and confidential information

available to DOE contractors. Although most of the assumptions are manufacturer specific and

cannot be revealed, section 5.6.4 provides a discussion of the values used for each assumption.

In summary, DOE assigned costs of labor, materials, and overhead to each part whether

purchased or produced in­house. DOE then aggregated single­part costs into major assemblies

(e.g., compressor assembly, condenser heat exchange assembly, evaporator heat exchanger

assembly, controls, etc.) and summarized these costs in a worksheet. During engineering

interviews, DOE showed PTAC and PTHP manufacturers key assumptions and estimates from

the cost model and asked for feedback. DOE considered any information manufacturers gave

that was relevant to the cost model and incorporated into the analysis if appropriate.

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5.6.3 Cost Model Assumptions Overview

As discussed in the previous section, assumptions about manufacturer practices and cost

structure play an important role in estimating the final equipment cost. Some assumptions were

different for specific manufacturers, depending on their market position, manufacturing

practices, and size. DOE aggregated the final cost values to prevent disclosure of confidential

information.

In converting physical information about the equipment into cost information, DOE

reconstructed manufacturing processes for each component using internal expertise and

knowledge of the methods used by the industry. DOE used assumptions regarding the

manufacturing process parameters (e.g., equipment use, labor rates, tooling depreciation, and

cost of purchased raw materials) to determine the value of each component. DOE then summed

the values of the components into assembly costs and, finally, the total equipment cost. The

equipment cost included the material, labor, and overhead costs associated with the

manufacturing facility. The material costs included both direct and indirect materials. The labor

rates included fabrication, assembly, and indirect and labor rates, including overhead.

The labor costs were determined by the type of equipment (standard­ and non­standard

size PTACs and PTHPs) manufactured at the factory. Overhead costs included equipment

depreciation, tooling depreciation, building depreciation, utilities, equipment, tooling

maintenance, insurance, property, and taxes.

DOE presented an initial draft of the cost­efficiency curves to manufacturers during the

interviews. Using the information gathered from the interviews, DOE made significant updates

to the cost model to address manufacturer comments. These changes involved updating

component and material pricing, labor rates including overhead, and production volumes.

The next sections discuss specific assumptions about outsourcing, factory parameters,

production volumes, and material prices. When the assumptions are manufacturer­specific, they

are presented as industry averages to prevent disclosure of confidential information.

5.6.4 Outsourcing Assumptions

DOE characterized parts based on whether manufacturers purchase them from outside

suppliers or fabricate them in­house. For purchased parts, DOE estimated the purchase price.

For fabricated parts, DOE estimated the price of intermediate materials (e.g., tube, sheet metal)

and the cost of transforming them into finished parts. Whenever possible, DOE obtained price

quotes directly from suppliers of the manufacturers of the units being analyzed.

DOE based the manufacturing operations assumptions on internal expertise, interviews

with manufacturers, and manufacturing facilities site visits. According to manufacturers,

standard and non­standard size equipment basic manufacturing operations are the same. All of

the manufacturing operations are conducted in­house, as summarized in Table 5.6.1.

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Table 5.6.1 Cost Model In­House Manufacturing Operation Assumptions

Process In­House Sub­Process

Tube Forming Tube Cut

Tube Bend

Collar

Tube Coil

Sheet Metal Stamping

Press Brake

Blanking

Turret Punch

Welding Seam Welding

Spot Welding

Cutting Insulation Cut

Finishing Paint

Assembly Adhesive Bonding

Brazing

Press Fit

Fixture

Miscellaneous Assembly

Operation

Final Assembly Packaging

Quality Assurance

Charging Refrigerant Charging

Molding Injection Mold

The difference between standard and non­standard size PTAC and PTHP manufacturing

processes are in the purchased components. DOE assumed the majority of manufacturers of

standard size PTACs and PTHPs make their heat exchangers from raw material stock (i.e.,

manufacture heat exchangers at their own factories). DOE assumed that at least half of

manufacturers of non­standard size PTACs and PTHPs purchase their heat exchangers from

outside vendors. The reasoning behind purchasing heat exchangers is that manufacturers of nonstandard size PTACs and PTHPs would not only have to operate a coil shop with a wide scope of

equipment, but also at a very low scale. Given the very high cost of tooling and equipment,

manufacturers of non­standard size equipment lack the scale to justify the capital expenses

involved. Therefore, DOE estimated heat exchanger prices for non­standard size PTACs and

PTHPs based on the assumption that half of the manufacturers purchase their heat exchangers

and the other half manufacture the heat exchangers in house.

5.6.5 Factory Parameters Assumptions

Manufacturers of standard size and or non­standard size equipment will have different

factory parameters. Therefore, DOE used information gathered from the manufacturer

interviews and analysis of common industry practices to formulate factory parameters for both

kinds of manufacturers. DOE made assumptions about a set of preliminary factory parameters

before the manufacturer interviews. DOE revised the assumptions using comments and

information gathered during the interviews. Table 5.6.2 and Table 5.6.3 list DOE’s assumptions

for manufacturers of both standard and non­standard size equipment.

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Table 5.6.2 Standard Size PTAC and PTHP Factory Parameter Assumptions

Annual Production Volume (units/year) 100,000

Fabrication and Assembly Labor Wages ($/hr) 7

Burdened Fabrication and Assembly Labor Wage ($/hr) 9.10

Supervisor Wage Premium (over fabrication and assembly wage) 30%

Table 5.6.3 Non­Standard Size PTAC and PTHP Factory Parameter Assumptions

Annual Production Volume (units/year) 20,000

Fabrication and Assembly Labor Wages ($/hr) 14.64

Burdened Fabrication and Assembly Labor Wage ($/hr) 19.03

Supervisor Wage Premium (over fabrication and assembly wage) 30%

The main differences between the assumptions for standard and non­standard size PTACs

and PTHPs are the labor rates and production volumes. Labor rates for manufacturers of

standard size PTACs and PTHPs are based on the weighted averages of foreign and domestic

manufacturers. Certain large manufacturers of PTACs and PTHPs make their equipment in

foreign factories, where labor rates are significantly less than domestic rates. Foreign labor rates

are based on engineering manufacturer interviews, internal expertise, and industry literature

research. DOE assumed that all manufacturers of non­standard size PTACs and PTHPs are

domestic. Domestic labor rates are based on published labor rates for the HVAC manufacturing

industry from the U.S. Bureau of Labor.5

5.6.6 Production Volumes Assumptions

A manufacturer’s production volumes vary depending on several factors, including

market share, the type of equipment produced (i.e., standard versus non­standard), and if the

manufacturer produces other similar equipment (e.g., unitary air conditioners or heat pumps,

commercial air conditioners, etc.). DOE based production volume assumptions for standard and

non­standard size PTACs and PTHPs on industry knowledge and engineering manufacturer

interviews.

According to manufacturers of standard size equipment, large chain hotels and motels use

the industry standard wall sleeve dimensions in their construction. Orders of equipment can

reach several hundred units depending on the construction. As reported in the MTA, five

competitors hold the majority of the standard size equipment market share. Large production

volumes would be necessary for these five companies to service a large demand by large hotel

and motel chains. Based on the information provided by manufacturers and shipment

information provided by AHRI, DOE estimated that a manufacturer of standard size equipment

produces an average of 100,000 units per year.

Manufacturers of non­standard size equipment have significantly smaller production

volumes than manufacturers of standard size equipment. The main reason for the low production

volume is that the majority of new building construction uses the industry standard wall sleeve

dimension, leaving a small percentage of in the market for non­standard sizes. In addition, nonstandard size equipment comes in a variety of wall sleeve dimensions that require custom orders

for each application. Because of the customized orders, manufacturers of non­standard size

equipment do not hold a large inventory of equipment; therefore, annual outputs are significantly

less than for manufacturers of standard size equipment. In consideration of these factors, DOE

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estimated that a manufacturer of non­standard size equipment produces an average of 20,000

units per year.

5.6.7 Material Prices Assumptions

DOE determined the cost of raw materials using publicly available information such as

the American Metals Market,6 interviews with manufacturers, and direct discussions with

material suppliers. Common metals used in the fabrication of PTACs and PTHPs include plain

cold rolled steel (CRS), copper tubing, and aluminum. There have been drastic fluctuations in

metal prices over the last few years. To account for these fluctuations, DOE used a 5­year

average of metal prices from the Bureau of Labor Statistics Producer Price Indices (PPIs)

spanning 2002 to 2006 with an adjustment to 2006$.7 DOE used the PPIs for copper rolling,

drawing, and extruding and steel mill products, and made the adjustments to 2006$ using the

gross domestic product implicit price deflator.8 Table 5.6.4 shows the 5­year average metal

prices DOE used for the analysis.

Table 5.6.4 Five­Year Metal Prices

Metals Cost ($/lb)

(2006$)

Plain Cold Rolled Steel $0.44

Painted CRS $1.40

Galvanized CRS $1.01

Fin Aluminum $1.57

Plain Copper $1.49

Copper Tube – Plain $2.15

Copper Tube – Rifled $2.62

Between 2003 and 2006, the price of steel rose over 60 percent and the price of copper

rose over 140 percent. Because DOE used a 5­year average in material prices from 2002­2006,

these drastic increases are normalized to some extent to better represent long­term material price

averages. Because it is not clear if these material price trends will continue, DOE conducted a

sensitivity analysis to illustrate the effect of raw material price increases on the cost of PTACs

and PTHPs (see section 5.11). DOE used the results of this sensitivity analysis in the subsequent

life­cycle cost analysis (Chapter 8) to determine the overall economic impacts of various

efficiency levels on PTACs and PTHPs.

For resins used in the fabrication of PTACs and PTHPs, DOE used current resin prices

gathered from industry research, publicly available publications such as Plastics News,9 and

interviews with manufacturers. Resin prices are determined by quantity and supplier (i.e.,

contract specific) and therefore have no true fixed market price. For this analysis, DOE used

market resin prices current as of March 2007. The prices of resins have been constantly

increasing and closely follow petroleum prices. Table 5.6.5 shows the current resin prices used

in the analysis.

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Table 5.6.5 Resin Prices as of March 2007

Resins Cost ($/lb)

(2006$)

Polystyrene (PS) $0.63

Polypropylene (PP) $0.55

Polypropylene with glass fiber (PPGF) $0.80

Acrylonitrile Butadiene Styrene (ABS) $0.68

Nylon­6 (PA6) $1.45

Silicone $3.80

Styrofoam $0.63

Styrene­Butadiene Rubber (SBR) $0.75

Ethylene Propylene Diene Monomer (EPDM) $1.69

5.6.8 MPC Breakdown

After DOE incorporated all of the assumptions into the cost model, the different

production costs percentages were calculated. The equipment cost percentages are used as

validation of the assumptions by comparing them to manufacturers’ actual financial data that are

published in annual reports. DOE also used these figures in the manufacturer impact analysis

(MIA) (see chapter 12). DOE calculated the average equipment costs percentages by equipment

type (standard and non­standard size) due to the large variations in production volumes,

fabrication and assembly costs, and other assumptions that affect the calculation of the unit’s

total MPC. Table 5.6.6 shows the different percentages for the production costs that make up the

total equipment MPC.

Table 5.6.6 Total Equipment MPC Breakdown

Production Costs Percent of Total Equipment MPC

Standard Size

PTAC and PTHP

Non­Standard Size

PTAC and PTHP

Materials 84.70%  65.30% 

Labor 4.10%  11.85% 

Overhead 6.85%  9.75% 

Depreciation 4.35%  13.10% 

5.7 ENGINEERING MANUFACTURER INTERVIEWS

Throughout the rulemaking process, DOE seeks feedback and insight from stakeholders

to improve the information used in the analyses. For the engineering analysis, DOE discussed

the analysis assumptions and estimates, cost model, and preliminary cost­efficiency curves with

various PTAC and PTHP manufacturers. DOE considered all the information manufacturers

provided when refining the cost model. DOE incorporated equipment and manufacturing

process figures into the analysis in the form of averages to avoid disclosing sensitive information

about individual manufacturers’ equipment or manufacturing processes.

Before the interviews, DOE gave manufacturers an engineering package that included

possible questions to be asked during the interview and a spreadsheet with preliminary

assumptions, estimates, and results (cost­efficiency curves). DOE asked manufacturers to

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provide feedback if the data was representative of the market and to supply any data that could

improve DOE’s estimates and assumptions. DOE’s questions included the following:

• Which design features affecting energy use are generally incorporated into “baseline”

PTACs and PTHPs?

• What are the costs of attaining the individual efficiency levels selected? How do

these efficiency levels correspond to the various design options listed? What other

design options do you use to attain the various efficiency levels?

• Are the industry manufacturing costs we have calculated representative of your firm’s

costs for new construction as well as replacement units?

DOE also asked manufacturers to supply any engineering insight on the use of R­410A as

an alternative refrigerant. DOE used the information it gathered in various parts of the

engineering analysis, including the sensitivity and alternative refrigerant analyses.

5.7.1 Key Issues Discussed

By far, the major issue for all manufacturers affected by this rulemaking is the R­22

refrigerant phaseout and the methodology DOE is considering using to account for the phase­out

in its energy conservation standards rulemaking. Section 5.10 provides further details on the

refrigerant phase­out and related manufacturer feedback.

Some assumptions of component prices were lower than what manufacturers were

observing in the market. Specifically, some manufacturers said that the preliminary engineering

analysis compressor prices were a bit low. The main reasons manufacturers gave for having

higher compressor cost estimates include lower purchase volumes, increases in compressor

prices due to metal price fluctuations, and price differences due to the location of the compressor

manufacturer (i.e., domestic versus foreign). DOE revised its cost estimates after speaking with

both PTAC and PTHP manufacturers as well as compressor manufacturers about volume pricing

for this industry.

According to several manufacturers, the preliminary engineering analysis labor rates

were lower than what is commonly observed in both the standard and non­standard size PTAC

and PTHP industry. The most common reason manufacturers gave for the differences in labor

rates is the location of manufacturing. In the preliminary engineering analysis, DOE estimated

100 percent foreign labor rates based on other rulemakings and market research. Domestic

manufacturers also stated that observed labor rates differ significantly amounts between states,

which could distort the industry rates. DOE readjusted labor rates based on the information

manufacturers of standard and non­standard size PTACs and PTHPs provided to include both

domestic and foreign labor rates for the industry (for more information see section 5.6.5).

All manufacturers stated that the cost­efficiency relationship for PTACs and PTHPs

should follow an exponential or increasing curve (i.e., as the equipment efficiency increases, it

becomes increasingly difficult and more costly to manufacture). In addition, manufacturers also

stated their material prices were much higher than those reflected in DOE’s analysis. DOE’s

analysis uses a five­year average material price in the cost model. However, as a result of this

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feedback, DOE conducted a material price­sensitivity analysis with 2006 material prices to see

the affects on the cost­efficiency relationship with current pricing (see section 5.11).

5.8 MANUFACTURER MARKUP

To meet new or amended energy conservation standards, manufacturers often introduce

design changes to their product lines, which often result in increased MPCs. Depending on the

competitive environment for this particular equipment, some or all of the increased production

costs can be “passed­through” from manufacturers to retailers and eventually to customers in the

form of higher purchase prices. As production costs increase, manufacturers also typically incur

additional overhead at both the factory and corporate levels. The MSP must cover both of these

additional contributions to overhead if a company is to maintain its profitability. As discussed

previously, overhead costs within the DOE model are a function of investments, material costs,

labor costs, or total costs, depending on the overhead category. Together, materials, labor, and

factory overhead comprise the full production cost. DOE applies another multiplier to the full

production cost to account for corporate non­production costs and profit. This latter multiplier,

the non­production cost markup, is the focus of this section.

In this section, DOE presents its methodology for converting the MPCs to MSPs, referred

to as the non­production cost markup (“manufacturer markup”). The manufacturer markup is an

integral part of the overall markup. The overall markup also includes the markups in the

distribution chain (e.g., wholesalers, distributors, retailers, contractors, etc.). The distribution

chain markups convert MSP to customer price. The customer prices and installation costs are

key inputs to the life­cycle cost (LCC) analysis, payback period (PBP) analysis, and the national

impact analysis (NIA). Through the use of the manufacturer and distribution chain markups (and

installation costs), DOE can calculate the first costs that customers would face under the various

candidate standard levels evaluated. DOE evaluates the tradeoff between the increase in first

cost and the resulting energy cost savings at each candidate standard level in the LCC and PBP

analyses (see Chapter 8), and NIA analysis (see Chapter 10).

The manufacturer markup also has an important bearing on the manufacturers’

profitability. A high markup under a standards scenario suggests manufacturers can passthrough the increased variable costs and some of the capital and product conversion costs (the

one­time expenditures). A low markup implies that manufacturers will not be able to recover as

much of the necessary investment in plant and equipment.

5.8.1 Manufacturer Financial Information Sources

Publicly owned companies are required by law to disclose financial information on a

regular basis by filing different forms with the U.S. Securities and Exchange Commission (SEC).

The SEC form 10­K,d filed by companies on an annual basis, provides a comprehensive

overview of the company’s business and financial conditions. Relevant information in the 10­K

reports includes the company’s revenues and direct and indirect costs. For the manufacturer

d PTAC and PTHP manufacturers’ SEC 10­K reports are available as text or html files on the U.S. SEC webpage at

http://www.sec.gov/edgar.shtml.

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markups, DOE used 10­K reports from four publicly owned PTAC and PTHP companies. The

financial figures necessary for calculating the manufacturer markup are net sales, costs of sales,

and gross profit.e The income statement section of the 10­K reports often lists these figures.

5.8.2 Manufacturing Production Cost

The sum cost of materials, labor, and direct overhead used to manufacture a piece of

equipment is known as the MPC.f Figure 5.8.1 shows the general breakdown of costs associated

with manufacturing a piece of equipment.

Figure 5.8.1 Full Production Costs

The full cost of production is broken down into two main costs, the full production cost

or MPC, and the non­production cost. The non­production cost is equal to the manufacturer

markup minus profits.

Other than obtaining detailed manufacturing costs directly from a manufacturer, the most

accurate method for determining the MPC of a unit is by physical and virtual teardowns. As

described in previous sections, DOE derived manufacturing costs by physically tearing down

e Depending on the manufacturer, the gross profit is listed instead of the cost of sales figures. f When viewed from the company­wide perspective, the sum of all material, labor, and overhead costs equals the

company’s sales cost, also referred to as the cost of goods sold (COGS).

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PTACs and PTHPs and constructing a bill of materials for each unit. The MPC is used to

calculate the MSP.

5.8.3 Manufacturer Selling Price

The MSP is the price at which the manufacturer can recover all production and nonproduction costsg and earn a profit. DOE calculated the PTAC and PTHP MSP by multiplying

the MPCs by the calculated manufacturer markup, which is explained below.

5.8.4 Manufacturing Markup Calculation

A manufacturer markup is applied to the MPC of the equipment to arrive at the MSP. In

general, the manufacturer markup should ensure that the MSP of the equipment is high enough to

recover the full cost of the equipment (i.e., full production and non­production costs), and yield a

satisfactory profit.

DOE calculated the baseline manufacturer markups by using financial figures from

manufacturers’ SEC 10­K reports, such as the net sales (revenues) and cost of sales to calculate

gross profith and gross profit margins. DOE used averages of the financial figures spanning 1998

to 2005 and then calculated the markups.

DOE used the following equations to calculate the gross profit and gross profit margins:

Gross Profit = Net Sales – Cost of Sales .

Gross Profit

Gross Profit Margin = Net Sales

Table 5.8.1 contains the calculated gross profit margins for all manufacturers.

g Non­production costs include selling, general, and administration (SG&A) costs, the cost of research and

development, and interest. h This is the amount of money a company retains after subtracting the cost of sales from net sales.

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Table 5.8.1 Gross Profit Margin for PTAC and PTHP Manufacturers*

Manufacturer Financial Figure Year 2005 2004 2003 2002 2001 2000 

Net Sales $ 1,565,406 1,297,295 1,192,671 1,136,188 1,082,076

Cost of Sales $ 1,243,408 1,005,955 915,272 884,204 821,454

A** Gross Profit $ 321,998 291,340 277,399 251,984 260,622

Gross Profit Margin 20.6% 22.5% 23.3% 22.2% 24.1%

Average Gross Profit Margin 22.4%

Net Sales $ 805,732 870,854 867,704 

Cost of Sales $ 596,249 638,825 641,346 

B** Gross Profit $ 209,483 232,029 226,358 

Gross Profit Margin 26.0% 26.6% 26.1% 

Average Gross Profit Margin 26.1%

Net Sales $ 297,716 399,485 416,201 373,702 405,697 416,181 

Cost of Sales $ 258,040 344,035 329,510 290,652 336,997 311,353 

C Gross Profit $ 39,676 55,450 86,691 83,050 68,700 104,828 

Gross Profit Margin 13.3% 13.9% 20.8% 22.2% 16.9% 25.2% 

Average Gross Profit Margin 19.5%

Net Sales $ 10,264,400 9,508,800 8,567,600 7,795,400 7,465,300 7,598,400 

Cost of Sales $ 7,523,600 6,952,300 6,477,500 5,912,900 5,617,500 5,727,700 

D Gross Profit $

Gross Profit Margin

2,740,800 2,556,500 2,090,100 1,882,500 1,847,800 1,870,700 

26.7% 26.9% 24.4% 24.1% 24.8% 24.6% 

Average Gross Profit Margin 25.2%

Note: Figures in thousands of dollars

* 2000, 2002, 2003, 2004, and 2005, SEC 10­K reports.

** Data is not available for missing years

5­26

EERE-2007-BT-STD-0012 COMMENT 02
To calculate the time­average gross profit margin for each firm, DOE first

summed the gross profit for all the years and then divided the result by the sum of the net

sales for the same years. Each manufacturer’s non­production cost markup was

calculated as:

Gross Profit Margin Gross Profit

Non ­ production cost markup = = (1­ Gross Profit Margin) Cost of Sales

Table 5.8.2 shows the manufacturer markups using this method.

Table 5.8.2 Calculated Manufacturer Markups

Manufacturer Manufacturer Markup

Manufacturer A 1.29

Manufacturer B 1.35

Manufacturer C 1.24

Manufacturer D 1.34

Weighted Average* 1.29

* Weighted average takes into account the market share relevant to each manufacturer, rather than treating

each manufacturer equally.

DOE calculated the manufacturer markup for four manufacturers from the PTAC

and PTHP industry to range from 1.24 to 1.35. The variance in markups among

manufacturers can be attributed to (1) differences in part suppliers and part costs that

affect the overall material cost; (2) differences in worker wages; and (3) differences in

market share. Such differences can also be attributed to the fact that the manufacturers

DOE evaluated make a variety of equipment and the available financial information is

distorted by data on equipment other than PTACs and PTHPs.

The weighted average manufacturer markup was calculated by using publicly

available market share numbers (i.e., some manufacturers estimate their market shares

and report the data in the SEC 10K reports). The weighted average manufacturer markup

means that on average, PTAC and PTHP manufacturers sell their equipment to the next

party in the distribution channel at 29 percent above the full production cost. The 1.29

multiplier is used in the engineering analysis to determine the MSP for the baseline

equipment and for all equipment that is more efficient.

5.9 COST VERSUS EFFICIENCY CURVES

5.9.1 Baseline Unit

Using the equipment information gained from the teardown analysis and

engineering manufacturing interviews, DOE defined the characteristics of the market

baseline units for each representative cooling capacity within the different equipment.

These characteristics include dimensions, numbers of components, and other equipment

features that are necessary to calculate the EER and MPC of each unit within each

5­27

EERE-2007-BT-STD-0012 COMMENT 02
equipment class. The market baseline characteristics define the energy efficiency and

cost of the typical minimum technology equipment on the market. Table 5.9.1 shows the

characteristics defined for each baseline unit.

Table 5.9.1 Market Baseline Units Characteristics Equipment Classes Standard Size PTAC 9,000 Btu/h Standard Size PTHP 9,000 Btu/h

Standard Size PTAC 12,000 Btu/h

Standard Size PTHP 12,000 Btu/h

Non­Standard Size PTAC 11,000 Btu/h

Non­Standard Size PTHP 11,000 Btu/h

Characteristics

Lower efficiency rotary

compressor

X X X X X X

Simple electromechanical control

board (heat pump type) X X X

Simple electromechanical control

board (air conditioner type) X X X

Condenser heat exchanger with

single coil row

X X X X X X

Evaporator heat exchanger with

two coil rows

X X X X X X

Reversing valve X X X

High­efficiency PSC fan motor X X X X X X

DOE established baseline characteristics for each of the equipment classes

modeled in the engineering analysis by reviewing available manufacturer data, selecting

several representative units from available manufacturer data, and then aggregating the

physical characteristics of the selected units. This process created a representative unit

for each equipment class with average characteristics for physical parameters (e.g., heat

exchanger area), and minimum performance of energy­consuming components (e.g.,

motors, compressors).

DOE identified the market baseline units’ EER from current PTACs and PTHPs

on the market that use technologies commonly incorporated in the equipment design.

Table 5.9.2 shows the equipment classes, the representative cooling capacity for the

market baseline units, and their respective EER.

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.9.2 Baseline Unit EER

Equipment Class Cooling Capacity (Btu/h) Federal Minimum Energy

Conservation Standards (EER)

PTAC 9,000 9.7

(Standard Size) 12,000 9.2

PTHP 9,000 9.7

(Standard Size) 12,000 9.2

PTAC

(Non­Standard Size) 11,000 8.9

PTHP

(Non­Standard Size) 11,000 8.9

The market baseline unit identified in the engineering analysis represents the

energy efficiency and cost of the typical minimum technology equipment on the market.

Unlike the engineering analysis, DOE used the efficiency levels in ASHRAE/IESNA

Standard 90.1­1999 as the baseline efficiencies in order to estimate the impacts of

standards more stringent than ASHRAE/IESNA Standard 90.1­1999. ASHRAE/IESNA

Standard 90.1­1999 is the least stringent energy efficiency level DOE could adopt since

EPCA directs that if ASHRAE/IESNA Standard 90.1 is amended, DOE must adopt an

amended standard at the new level in Standard 90.1 unless, as indicated above, clear and

convincing evidence supports a determination that adoption of a more stringent level as a

national standard would produce significantly more energy savings and be

technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A))

Consequently, the minimum level DOE could adopt in this rulemaking proceeding would

be the efficiency levels contained in ASHRAE/IESNA Standard 90.1­1999. Thus, DOE

is evaluating in this rulemaking whether efficiency levels above those contained in

ASHRAE/IESNA Standard 90.1­1999 are technologically feasible and economically

justified.

5.9.2 “Max Tech” Efficiency Levels

DOE has determined the maximum improvement in energy efficiency that is

technologically feasible (“max tech”) for PTACs and PTHPs. Although EPCA does not

require DOE to adopt amended energy conservation standards for equipment covered by

ASHRAE/IESNA Standard 90.1 that achieve the maximum improvement in energy

efficiency that is technologically feasible and economically justified, DOE has chosen to

structure the analysis in a similar fashion to that for residential products required by

section 325(o) of EPCA. (42 U.S.C. 6295(o)) In particular, EPCA does not require DOE

to identify the “max tech” efficiency levels during its review of amended

ASHRAE/IESNA standards. DOE structured the analysis as outlined by EPCA in

section 325(o) because it provides a rationale methodology for considering different

amended energy conservation standard levels for various consumer products. DOE will

apply the same requirements in considering amended energy conservation standards as

found in section 325(o) of EPCA. (42 U.S.C. 6295(o)). Therefore, in reviewing the

amended ASHRAE/IESNA Standard 90.1 efficiency standards for PTACs and PTHPs,

DOE identified the “max tech” levels as part of the engineering analysis. At the present

time, those levels are the levels set forth in efficiency level 5. For the representative

cooling capacities within a given equipment class, PTACs and PTHPs utilizing R­22 with

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EERE-2007-BT-STD-0012 COMMENT 02
these efficiency levels already are being sold in small quantities. No working prototypes

of equipment at higher efficiency levels are currently available. Table 5.9.3 lists the

“max tech” levels that DOE determined for this rulemaking.

Table 5.9.3 “Max Tech” Efficiency Levels (≥7,000 Btu/h and ≤15,000 Btu/h

Equipment Classes)

Equipment

Type Equipment Class CoolingCapacity

“Max Tech”

Efficiency Level*

Standard Size**

9,000 Btu/h 12.0 EER

PTAC

12,000 Btu/h 11.5 EER

Non­standard Size† 11,000 Btu/h 11.2 EER

Standard Size**

9,000 Btu/h 12.0 EER

3.5 COP

PTHP 12,000 Btu/h 11.7 EER

3.3 COP

Non­standard Size† 11,000 Btu/h 11.4 EER

2.9 COP * For equipment rated according to the DOE test procedure, all EER values would be rated at 95oF outdoor

dry­bulb temperature for air­cooled products and evaporatively­cooled products and at 85oF entering water

temperature for water cooled products. All COP values must be rated at 47oF outdoor dry­bulb temperature

for air­cooled products, and at 70oF entering water temperature for water­source heat pumps. ** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16

inches high, or greater than or equal to 42 inches wide.

† Non­standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches

high and less than 42 inches wide.

5.9.3 Design Option Approach

DOE developed the cost­efficiency curves using a design option approach. DOE

used each design option identified in the screening analysis to improve the equipment’s

efficiency above the baseline based on its cost­effectiveness. While DOE recognizes that

manufacturers use many different design options and approaches to increase the

efficiency of PTACs and PTHPs, the presented design options and their ordering is one

possible way manufacturers could reach max­tech.

As described in section 5.6, DOE estimated the MPC of each design option and

the baseline units for each equipment class. DOE then calculated the ratio of incremental

MPC to the incremental EER for each design option (i.e., incremental MPC divided by

incremental EER). This calculation allowed DOE to rank each design option by costeffectiveness. DOE added the MPC of each ranked design option to the MPC of the

baseline unit to calculate the corresponding MPC at each efficiency level. DOE

multiplied the results by the manufacturer markups to calculate the MSPs. The result is a

5­30

EERE-2007-BT-STD-0012 COMMENT 02
list of efficiency levels and the corresponding incremental MSP for each equipment class

analyzed. Table 5.9.4 through Table 5.9.9 shows the efficiency levels and the

corresponding MPC of each design option for each equipment class.

Table 5.9.4 Standard Size PTAC 9,000 Btu/h Cooling Capacity Design Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $12.90

Design Option 2

(Replaced compressor with high efficiency

compressor)

0.8 $14.97

Design Option 3

(Increased heat exchanger area by 20 percent) 0.5 $10.82

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $4.19

Table 5.9.5 Standard Size PTHP 9,000 Btu/h Cooling Capacity Design Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $12.90

Design Option 2

(Replaced compressor with high efficiency

compressor)

0.8 $14.97

Design Option 3

(Increased heat exchanger area by 20 percent) 0.5 $10.82

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $4.19

Table 5.9.6 Standard Size PTAC 12,000 Btu/h Cooling Capacity Design Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $13.96

Design Option 2

(Increased heat exchanger area by 20 percent) 0.5 $14.16

Design Option 3

(Replaced compressor with high efficiency

compressor)

0.8 $23.64

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $4.27

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.9.7 Standard Size PTHP 12,000 Btu/h Cooling Capacity Design Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $13.96

Design Option 2

(Increased heat exchanger area by 20%) 0.5 $14.16

Design Option 3

(Replaced compressor with high efficiency

compressor)

0.8 $23.64

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $4.27

Table 5.9.8 Non­Standard Size PTAC 11,000 Btu/h Cooling Capacities Design

Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $10.61

Design Option 2

(Replaced compressor with high efficiency

compressor)

0.8 $18.17

Design Option 3

(Increased heat exchanger area by 20%) 0.5 $12.47

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $5.50

Table 5.9.9 Non­Standard Size PTHP 11,000 Btu/h Cooling Capacities Design

Options

Design Option EER Increase Incremental MPC

(2006$)

Design Option 1

(Added 1 row to condenser heat exchanger ­ 2x2

coil rows)

0.9 $10.61

Design Option 2

(Replaced compressor with high efficiency

compressor)

0.8 $18.17

Design Option 3

(Increased heat exchanger area by 20 percent) 0.5 $12.47

Design Option 4 (Max­tech)

(Re­circuiting coils) 0.1 $5.50

5.9.4 Cost­Efficiency Curves

The result of the engineering analysis is a set of cost­efficiency curves. DOE

created six curves corresponding to the representative cooling capacities within each

equipment class. Figure 5.9.1 through Figure 5.9.6 show the six cost­efficiency curves in

the form of EER versus MPC. Table 5.9.10 lists the curves and their corresponding

figure numbers.

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.9.10 Cost­Efficiency Curves and Corresponding Figures

Equipment Class Curve Shown in:

Standard Size PTACs 9,000 Btu/h Figure 5.9.1

Standard Size PTHPs 9,000 Btu/h Figure 5.9.2

Standard Size PTACs 12,000 Btu/h Figure 5.9.3

Standard Size PTHPs 12,000 Btu/h Figure 5.9.4

Non­Standard Size PTACs 11,000 Btu/h Figure 5.9.5

Non­Standard Size PTHPs 11,000 Btu/h Figure 5.9.6

As stated above, DOE used the cost­efficiency curves from the engineering

analysis as an input to subsequent LCC analysis to determine the customer price of

PTACs and PTHPs (see chapter 8, life­cycle cost and payback period analyses).

$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

M

a

n

ufa

cturer Pro

d

u

ctio

n

C

o

st

MPC = 3.06(EER)2 ­ 48.13(EER) + 495.72

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTAC 9,000 Btu/h ­ 5­Year Average Material Price

Figure 5.9.1 Manufacturer Production Cost (2006$) versus Efficiency for Standard

Size PTACs with a Cooling Capacity of 9,000 Btu/h

5­33

13

EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

Manufacturer Production Cost

MPC = 3.06(EER)2 ­ 48.13(EER) + 545.72

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTHP 9,000 Btu/h ­ 5­Year Average Material Price

Figure 5.9.2 Manufacturer Production Cost (2006$) versus Efficiency for Standard

Size PTHPs with a Cooling Capacity of 9,000 Btu/h

5­34

13

EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

Manufacturer Production Cost

MPC = 5.42(EER)2 ­ 87.77(EER) + 713.53

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTAC 12,000 Btu/h ­ 5­Year Average Material Price

Figure 5.9.3 Manufacturer Production Cost (2006$) versus Efficiency for Standard

Size PTACs with a Cooling Capacity of 12,000 Btu/h

$575

$550

Manufacturer Production Cost$525

$500

$475

$450

$425

$400

$375

$350

$325

$300

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5 13

System EER

MPC = 5.42(EER)2 ­ 87.77(EER) + 763.53

Standard Size PTHP 12,000 Btu/h ­ 5­Year Average Material Price

Figure 5.9.4 Manufacturer Production Cost (2006$) versus Efficiency for Standard

Size PTHPs with a Cooling Capacity of 12,000 Btu/h

5­35

13

EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

Manufacturer Production Cost

MPC = 5.57(EER)2 ­ 91.94(EER) + 827.13

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Non­Standard Size PTAC ­ 5­Year Average Material Price

Figure 5.9.5 Manufacturer Production Cost (2006$) versus Efficiency for NonStandard Size PTACs with a Cooling Capacity of 11,000 Btu/h

5­36

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

Manufacturer Production Cost

MPC = 5.57(EER)2 ­ 91.94(EER) + 877.13

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Non­Standard Size PTHP ­ 5­Year Average Material Price

Figure 5.9.6 Manufacturer Production Cost (2006$) versus Efficiency for NonStandard Size PTHPs with a Cooling Capacity of 11,000 Btu/h

The results show that the cost­efficiency curves are nonlinear. As efficiency

increases, manufacturing becomes more difficult and more costly for manufacturers. A

faster increase in the curve (i.e., steep slope) is evident for the standard size PTAC and

PTHP with 12,000 Btu/h cooling capacity compared to the standard size PTAC and

PTHP with 9,000 Btu/h cooling capacity. In addition, the increase in capacity between

9,000 Btu/h and 12,000 Btu/h causes an increase in the baseline unit MPC.

Similar results are present for the non­standard size PTAC and PTHP. Due to low

production volumes, higher labor rates, and other factory parameters, non­standard size

PTACs and PTHPs have a higher baseline MPC compared to standard size PTACs and

PTHPs of the same cooling capacity range. In addition, for non­standard size PTACs and

PTHPs, the steep slope of the cost­efficiency curves show that as efficiency increases,

manufacturing becomes increasingly difficult and costly.

5.10 ALTERNATIVE REFRIGERANT ANALYSIS

In 1987, the United Nations Environment Programme (UNEP) adopted the

Montreal Protocol on Substances that Deplete the Ozone Layer (“Montreal Protocol”),

which regulates the phaseout of ozone­depleting substances through a collaborative and

international effort. In 1988, the United States ratified the Montreal Protocol and thus

committed to the phaseout.

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EERE-2007-BT-STD-0012 COMMENT 02
In 1990, the Clean Air Act was amended to include Title VI, “Stratospheric Ozone

Protection,” to implement the Montreal Protocol. (42 U.S.C 7671, et seq.) Title VI

mandated the phaseout by 2020 of hydrochlorofluorocarbon (HCFC) refrigerants for use

in new air­conditioning systems. (42 U.S.C. 7671d) Title VI, however, also authorized

the Environmental Protection Agency (EPA) to accelerate this date if certain criteria were

met, (42 U.S.C. 7671e) and EPA subsequently adopted a rule on December 10, 1993 to

require the phaseout of HCFC refrigerants for use in new equipment by 2010. 58 FR

65018. R­22, the only refrigerant currently used by PTACs and PTHPs, is an HCFC

refrigerant. Phaseout of this refrigerant could have a significant impact on

manufacturing, performance, and cost of PTAC and PTHP equipment.

As part of the engineering analysis, DOE performed an alternative refrigerant

analysis to characterize the performance implications on PTACs and PTHPs. This

analysis included researching technical journal reports, discussion with industry experts

and manufacturers, and developing an analysis that used the methodology DOE used in

performing the engineering analysis as to equipment using the R­22 refrigerant.

5.10.1 Alternative Refrigerant Selection

Several alternative refrigerants are under consideration as substitutes for R­22.

While R­407C has similar pressure­temperature characteristics as R­22 and thus is more

easily adapted to existing R­22 designs, it is less efficient. R­410A, a hydrofluorocarbon

(HFC), operates at higher pressures than R­22, thus possibly requiring redesign of R­22

equipment. However, R­410A offers efficiency benefits relative to R­407C. In response

to publication of the March 13, 2006 notice of document availability (71 FR 12634), ARI

commented that R­410A is the most likely replacement refrigerant for R­22 in standard

and non­standard size PTACs and PTHPs. (Docket No. EE­RM/STD­03­100, EERM/STD­03­200, EE­RM/STD­03­300, ARI, No. 26 at pp. 2­3)i Every manufacturer

interview confirmed that the industry is planning to substitute R­410A for R­22 in

PTACs and PTHPs. Industry expressed a preference for R­410A due to its performance

similarities to R­22 and experience with other HVAC equipment use R­410A. Therefore,

DOE performed its alternative refrigerant analysis based on the use of R­410A.

5.10.2 R­410A Feedback from Manufacturers

Although some unitary air­conditioning equipment and mini­split systems using

R­410A are commercially available, no PTACs or PTHPs using R­410A were available

in the market as of July 2007. Many manufacturers stated their concerns about using R410A in existing equipment and continuing to meet Federal energy conservation

“ARI, No. 26 at pp 2 – 3” refers to (1) to a statement that was submitted by the Air Conditioning and

Refrigeration Institute and is recorded in the Resource Room of the Building Technologies Program in the

docket under “Energy Efficiency Program for Commercial and Industrial Equipment: Efficiency Standards

for Commercial Heating, Air­ Conditioning and Water Heating Equipment,” Docket Number EE­RM­STD03­100, EE­RM­STD­03­200, and EE­RM­STD­03­300, as comment number 26; and (2) a passage that

appears on pages 2 and 3 of that statement.

5­38

i

EERE-2007-BT-STD-0012 COMMENT 02
standards or ASHRAE/IESNA Standard 90.1 efficiency levels. A primary concern is the

lack of R­410A rotary compressors that work in PTACs and PTHPs.

Manufacturers also commented that the refrigerant phaseout would require

significant resources to redesign heat exchangers and convert manufacturing plants.

Manufacturers stated that thicker tubing could be needed to address the higher pressures

associated with R­410A equipment. The capital investments required for new heat

exchanger designs include redesigning the coil shops, retooling, and engineering research

and development, which could increase manufacturing costs. All manufacturers

interviewed agreed that there will be a need to redesign at least one aspect of their current

PTAC and PTHP equipment.

Manufacturers also expressed concern about the potential degradation of PTAC

and PTHP system performance as a result of switching to alternative refrigerants. Some

manufacturers expect to see up to a 10­percent degradation in R­410A system

performance. The main reason for the degradation in system performance conveyed by

manufacturers can be attributed to the currently available R­410A rotary compressors

applicable to PTACs and PTHPs that are inherently less efficient than R­22 rotary

compressors.

5.10.3 R­410A Compressors

According to manufacturers, there are several key differences between the design

and operation of R­22 and R­410A compressors for each refrigerant type, regardless of

the compressor type (e.g., scroll, rotary, or screw). Due to the thermodynamic and

physical properties of R­410A, the displacement of an R­22 compressor must be reduced

by 35 percent to 40 percent to function with R­410A and provide the same cooling

capacity. R­410A compressors must also be designed with thicker and stronger

compressor shells and components to withstand 50 percent to 60 percent more pressure

than R­22 compressors.10

Due to HFC chemical characteristics and the immiscibility of mineral oils, R410A compressors cannot use the mineral oils commonly found in R­22 compressors,.

Therefore, R­410A compressors are designed to use synthetic oils such as polyolester oil

(POE). Equipment that uses POE must be handled carefully since POE absorbs moisture

much faster than mineral oils.10 Accumulated moisture can lead to early equipment

failure.

Only a small percentage of the major manufacturers of R­22 rotary compressors

manufacture R­410A rotary compressors suitable for use in PTACs and PTHPs. When

comparing the performance of R­22 and R­410A compressors with 9,000 Btu/h cooling

capacity and comparable physical dimensions, compressor EER decreases by about four

to six percent. For compressors with 12,000 Btu/h cooling capacity and comparable

physical dimensions, the EER decreases by about six to eight percent.

Due to the limited availability of R­410A rotary compressors, DOE investigated

the scroll compressor industry, which has already experienced a similar refrigerant

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EERE-2007-BT-STD-0012 COMMENT 02
transition. When comparing the performance of R­22 and R­410A scroll compressors of

comparable cooling capacity and physical dimensions, compressor EER decreases by

about two to six percent. R­410A scroll compressors have been available for several

years and are widely used in residential air conditioners. However, even with years of

experience in the phaseout of R­22, manufacturers of residential air conditioner

compressors still experience performance degradation with R­410A compressors.

5.10.4 ARI R­410A Study

ARI conducted a study of R­410A as part of a response to ACEEE’s

ASHRAE/IESNA Standard 90.1­1999 Continuous Maintenance Proposal on Packaged

Terminal Equipment.11 In the analysis, ARI concluded that equipment performance of

PTACs and PTHPs would drop (close to 8 percent in certain cooling capacity ranges) if

R­410A were used as an alternative refrigerant. Table 5.10.1 and Table 5.10.2 show the

estimated equipment performance degradation for different capacity ranges.

Table 5.10.1 ARI Estimated R­410A System EER Degradation for PTACs and

11 PTHPs

Equipment Cooling Capacity System EER Degradation

< 7,000 Btu/h 5.17 %

≥ 7,000 But/h and < 10,000 Btu/h 6.32 %

≥ 10,000 Btu/h and < 13,000 Btu/h 7.55 %

≥ 13,000 Btu/h 6.32 %

Table 5.10.2 ARI Estimated R­410A System COP Degradation for PTACs and

11 PTHPs

Equipment Cooling Capacity System COP Degradation

< 7,000 Btu/h 7.00 %

≥ 7,000 But/h and < 10,000 Btu/h 7.00 %

≥ 10,000 Btu/h and < 13,000 Btu/h 11.16 %

≥ 13,000 Btu/h 8.91 %

ARI assessed the performance of prototype models (only those in the cooling

mode) that use R­410A rotary compressors.11 The analysis included computer

simulations based on manufacturer equipment performance literature for R­410A rotary

compressors. According to the analysis, if the calculated system performance

degradation were applied to standard and non­standard size PTACs and PTHPs, only a

fraction of the current market’s equipment would meet ASHRAE/IESNA Standard 90.1­

1999 efficiency levels.

5.10.5 R­410A Analysis Methodology

DOE identified the “max­tech” efficiency levels as described in section 5.9.2.

These “max­tech” efficiency levels are based on currently available R­22 PTACs and

PTHPs for a given representative cooling capacity within a given equipment class. In

order to analyze the impact of using R­410A in PTACs and PTHPs, DOE considered the

impact of using R­410A on PTAC component, past rulemaking experience, and markets

in which a similar transition occurred.

5­40

EERE-2007-BT-STD-0012 COMMENT 02
First, DOE expects that the phase­out of R­22 and the subsequent adoption of R­410A

refrigerants in PTACs and PTHPs will require the redesign of the sealed systems found

inside the PTAC and PTHP units. The sealed system consists of the indoor and outdoor

heat exchangers, the compressor, refrigerant flow­control devices, and any piping that

connects these components through which refrigerant flows during unit operation. Since

R­22 refrigerants have different operating characteristics than R­410A, the sealed system

in a PTAC or PTHP unit using R­410A will have to be redesigned to optimize the unit for

operation with R­410A. Specifically, equipment using R­410A operates at higher system

pressure requiring stronger sealed system walls and the use of different oils (i.e., R­410

equipment will use POE, while R­22 equipment uses mineral). In addition, R­410A

compressors must also be designed with thicker and stronger compressor shells and

components to withstand 50 percent to 60 percent more pressure than R­22 compressors.j

The loss in compressor efficiency can be overcome with optimized heat

exchanger design to a limited extent. As discussed in the market and technology

assessment (Chapter 3 of the TSD), different heat exchanger redesigns not currently

associated with compressors could increase overall system performance. According to

manufacturers, some redesigns, such as adding coils, re­circuiting, and increasing the

frontal heat exchanger surface area, are applicable to PTACs and PTHPs regardless of the

refrigerant used. However, DOE does not have sufficient information to predict with

precision the performance benefits of heat exchanger redesigns. Initially, DOE expects

any such redesigns to result in efficiency improvement insufficient to offset the efficiency

reductions resulting from the switch from R­22 to R­410A. Thus, DOE expects the

overall system efficiency of R­410A PTAC and PTHP equipment will be lower than if

that equipment used R­22, as predicted by manufacturer testing, ARI’s research,k

National Institute of Standards and Technology studies,l

and prior experience in the

residential air conditioning market. Optimizing the heat exchanger and HVAC circuits to

compensate could be costly, depending on whether a heat exchanger manufacturer needs

to change the fin tooling, expansion, and assembly systems.

Therefore, in this rulemaking, DOE is using an overall lower system performance

for PTAC and PTHP equipment with R­410A. For standard size PTACs and PTHPs with

9,000 Btu/h cooling capacity, DOE calculated an overall system performance degradation

consistent with ARI estimates of 6.3 percent. For standard size PTACs and PTHPs with

12,000 Btu/h cooling capacity, DOE calculated overall system performance degradation

consistent with ARI estimates of 7.6 percent. For non­standard size PTACs and PTHPs

of all cooling capacities, DOE calculated overall system performance degradation of 6.8

percent.

j

Emerson Climate Technologies. R410A Questions.

http://www.emersonclimate.com/faq_copeland.htm#R410A (Last accessed August 2, 2007.) k Air­Conditioning and Refrigeration Institute. Response to ASHRAE 90.1 Continuous Maintenance

Proposal on Package Terminal Equipment. May 18, 2006.

Payne, W., Domanski, P. A Comparison of an R22 and an R410A Air Conditioner Operating at High

Ambient Temperatures. National Institute of Standards and Technology Building Environment Division:

Thermal Machinery Group. http://www.fire.nist.gov/bfrlpubs/build02/PDF/b02186.pdf. (Last accessed

August 2, 2007.)

5­41

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EERE-2007-BT-STD-0012 COMMENT 02
Similar issues existed within the residential, central air conditioning industry.

Systems utilizing R­410A have been available in the residential air­conditioning market

for several years, and DOE believes the impact of the refrigerant transition on that

product foretells the potential impact of R­410A on PTACs and PTHPs and on the

manufacturers and purchasers of that equipment. The residential air conditioning market

is a much larger market than the PTAC and PTHP market, and thus offers greater

incentives for compressor manufacturers to make the necessary investments to produce

more­efficient R­410A compressors. Initially, DOE found that the R­410A compressors

available for use in residential, central air conditioning equipment were less efficient than

their R­22 counterparts they were replacing. DOE also found that residential, central air

conditioning manufacturers were able to develop technologies and redesign their

equipment, so that the R­22 phaseout has little effect in system efficiency when the

equipment eventually came onto the market.

Therefore, DOE is continuing to analyze, the higher R­22 efficiency levels

identified in section III.B.2 as the “max­tech” efficiency levels. DOE will give particular

attention to the PTAC and PTHP efficiency levels that cannot be met with current

technologies and practices with R­410A in weighing the benefits and burdens of the

various TSLs.

5.10.6 R­410A Analysis Assumptions

Because R­410A equipment is not available in the equipment classes considered

during the engineering analysis, DOE made several assumptions about the simulated R410A equipment. DOE based each assumption on detailed discussions with

manufacturers, technical journal reports, ARI’s R­410A analysis, and engineering

calculations for this rulemaking.

DOE assumed the same overall system performance degradation calculated by

ARI’s R­410A analysis. For standard size PTACs and PTHPs with 9,000 Btu/h cooling

capacity, DOE calculated an overall system performance degradation consistent with ARI

estimates of 6.3 percent. For standard size PTACs and PTHPs with 12,000 Btu/h cooling

capacity, DOE calculated overall system performance degradation consistent with ARI

estimates of 7.6 percent. For non­standard size PTACs and PTHPs of all cooling

capacities, DOE calculated overall system performance degradation of 6.8 percent.

DOE has no evidence that the incremental efficiency gains from the design

options used in the R­22 case would have a different effect on the system performance of

R­410A equipment. Therefore, DOE assumed the design options for the R­22 analysis

previously discussed are applicable to the alternative refrigerant analysis. DOE also

assumed that the corresponding incremental EER improvement for each design option in

the R­22 analysis would be the same in the alternative refrigerant analysis.

To derive the baseline MPCs for the R­410A PTACs and PTHPs, DOE revised

the cost model used for the R­22 engineering analysis. DOE assumed a 25 percent

increase in heat exchanger tubing thickness to account for the higher pressures of R5­42

EERE-2007-BT-STD-0012 COMMENT 02
410A. The working refrigerant in the cost model was switched to R­410A for which

DOE used current R­410A refrigerant prices. Several manufacturers stated that

compressor prices would increase between 10 percent and 20 percent from current R­22

rotary compressor prices. Subsequently, DOE estimated that R­410A­capable

compressor costs would be 15 percent higher than comparable R­22 units. Using the

above assumptions, DOE recalculated baseline equipment and design option MPCs to

establish the cost­efficiency relationship for R­410A equipment.

The physical differences between PTACs and PTHP are mainly in the reversing

valve and other minor components. The results from the engineering analysis showed

that the sum of the MPCs for reversing valves and other minor components are constant

across the cost­efficiency relationship for the R­22 case. Therefore, the cost­efficiency

relationship (i.e., cost­efficiency curves) of PTACs is the same as the cost­efficiency

relationship of PTHPs, minus the MPCs for the reversing valve and other minor

components at various cooling capacities. For the alternative refrigerant analysis, DOE

assumed that incremental cumulative MPCs for PTACs and PTHPs of the same

equipment class would be the same as in the R­22 case (i.e., both PTACs and PTHPs

have the same incremental cost­efficiency curves in the R­410A case).

To be consistent, DOE used the same cost model for the R­22 analysis to estimate

MPCs for different efficiency levels in the R­410A analysis.

5.10.7 Cost­Efficiency Curves

Figure 5.10.1 through Figure 5.10.6 present the results of this alternative

refrigerant analysis using R­410A (solid lines) and the results from the R­22 analysis

(dashed lines).

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 3.06(EER)2 ­ 44.38(EER) + 490.84

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTAC 9,000 Btu/h ­ 5­Year Average Material Price

Figure 5.10.1 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Standard Size PTACs with a Cooling Capacity of 9,000 Btu/h

5­44

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 3.06(EER)2 ­ 44.38(EER) + 540.84

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTHP 9,000 Btu/h ­ 5­Year Average Material Price

Figure 5.10.2 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Standard Size PTACs with a Cooling Capacity of 9,000 Btu/h

5­45

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 5.42(EER)2 ­ 80.24(EER) + 690.58

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTAC 12,000 Btu/h ­ 5­Year Average Material Price

Figure 5.10.3 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Standard Size PTACs with a Cooling Capacity of 12,000 Btu/h

5­46

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 5.42(EER)2 ­ 80.24(EER) + 740.58

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Standard Size PTHP 12,000 Btu/h ­ 5­Year Average Material Price

Figure 5.10.4 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Standard Size PTHPs with a Cooling Capacity of 12,000 Btu/h

5­47

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 5.57(EER)2 ­ 85.20(EER) + 801.26

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Non­Standard Size PTAC ­ 5­Year Average Material Price

Figure 5.10.5 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Non­Standard Size PTACs with a Cooling Capacity of 11,000 Btu/h

5­48

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

$625

Manufacturer Production Cost

MPC = 5.57(EER)2 ­ 85.20(EER) + 851.26

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Non­Standard Size PTHP ­ 5­Year Average Material Price

Figure 5.10.6 Manufacturer Production Cost (2006$) versus Efficiency for R­410A

Non­Standard Size PTHPs with a Cooling Capacity of 11,000 Btu/h

The results for standard size PTACs and PTHPs with 12,000 Btu/h cooling

capacity show that as the system EER increases, the incremental MPC increases more

rapidly than with standard size equipment with 9,000 Btu/h cooling capacity (i.e., the

cost­efficiency curve slope is greater in the 12,000 Btu/h cooling capacity case).

In addition, the standard size PTACs and PTHPs with 12,000 Btu/h cooling

capacity have a greater degradation of system EER than standard size PTACs and PTHPs

with 9,000 Btu/h cooling capacity. PTACs and PTHPs with R­22 as a refrigerant follow

the same pattern in efficiency.

For the R­22 case, 9,000 Btu/h cooling capacity rotary compressors are more

efficient than 12,000 Btu/h cooling capacity. DOE has no evidence that the same would

not hold true for the R­410A case.

Due to the increase in cooling capacity between 9,000 Btu/h and 12,000 Btu/h,

heat exchangers are modified (i.e., circuits may be added or width of fins increased),

which would make it more difficult to increase surface area of the coils inside the

constrained volume. Therefore, increasing the efficiency of standard size equipment with

12,000 Btu/h cooling capacity is more difficult and more costly than increasing the

efficiency of standard size equipment with 9,000 Btu/h cooling capacity. To reduce

costs, manufacturers will likely keep the efficiency of standard size equipment with

12,000 Btu/h cooling capacity to the Federal minimum. Manufacturers that cannot

5­49

13

EERE-2007-BT-STD-0012 COMMENT 02
achieve even the Federal minimum efficiency for the 12,000 Btu/h cooling capacity range

would be forced to discontinue offering equipment with that cooling capacity.

For the non­standard size equipment, the results also show a steeper increase in

incremental MSP as the system EER increases. In general, non­standard size PTACs and

PTHPs have lower system EERs than standard size PTACs and PTHPs of the same

cooling capacity range because smaller wall sleeve sizes constrain the size of the heat

exchangers.

DOE also expects that the refrigerant changeover to R­410A will economically

affect non­standard size equipment more than standard size equipment. To allow such a

changeover, all PTACs and PTHPs coils must be redesigned, requiring significant

research and development. Non­standard size equipment coils require a similar effort as

standard size equipment ones, but the shipment volumes that the conversion costs are

spread over are much lower for non­standard coils.

If the manufacturer makes the coils in­house, a further capital charge will be

incurred to convert the manufacturing facility. If coil manufacturing is outsourced, such

conversion costs are also typically borne by the buyer (either explicitly or by rolling them

into the purchase price). The magnitude of such expenses usually depends on whether

the vendor already makes similar coils.

5.11 HEAT PUMP EER TO HEAT PUMP COP

DOE used the analysis detailed in the sections above to determine the costefficiency relationship for cooling EER for PTACs and PTHPs. DOE also performed an

analysis to determine the heating efficiency (COP) that correspond to the cooling

efficiency (EER) analyzed.

DOE recognizes that this is a limited analysis; however, it believes that it is

sufficient and reveals the relationship between the cooling and heating efficiency metric.

DOE reviewed the 2006 ARI directory and surveyed all the PTHP units listed for 2006.

There were 675 units listed, which DOE separated into two groups based on wall sleeve

size (standard size and non­standard size). DOE then selected all the standard size 9,000

and 12,000 Btu/h cooling capacity units and further eliminated duplicate and/or

discontinued units. DOE constructed a listing of the standard size units including their

corresponding EER level and ranked them by COP level. For non­standard size units,

DOE selected all capacities and further eliminated repetitive and discontinued units.

DOE also constructed a listing of the non­standard size units including their

corresponding EER level and ranked them by COP level. DOE graphed each listing

(EER versus COP) and calculated the minimum, maximum, and average COPs. Figure

5.11.1 through Figure 5.11.3 show the results.

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EERE-2007-BT-STD-0012 COMMENT 02
COP = 0.2946(EER) ­ 0.0616

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

3.8

COP

7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5

EER

COP vs EER (Standard Size PTHP 9,000 Btu/h cooling capacity)

Figure 5.11.1 COP versus EER for Standard Size PTHPs with 9,000 Btu/h Cooling

Capacity from 2006 ARI directory

COP

3.8

3.6

3.4

3.2

3.0

2.8

2.6

2.4

2.2

2.0

COP = 0.1611(EER) + 1.4

7.5 8.5 9.5 10.5 11.5 12.5

EER

COP vs EER (Standard Size PTHP 12,000 Btu/h cooling capacity)

Figure 5.11.2 COP versus EER for Standard Size PTHPs with 12,000 Btu/h Cooling

Capacity from 2006 ARI directory

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EERE-2007-BT-STD-0012 COMMENT 02
COP

3.8

3.6

3.4

3.2

3

2.8

2.6

2.4

2.2

2

COP = 0.0403(EER) + 2.447

7.5 8.5 9.5 10.5 11.5 12.5

EER

COP vs EER (Non­Standard Size PTHP All cooling capacities)

Figure 5.11.3 COP versus EER for Non­Standard Size PTHPs All Cooling Capacity

from 2006 ARI directory

An upward trend is observed from all of the graphs by examining the different

COP points. These trends reveal a steady increase in COP with increased EER. DOE

associated the EER levels of each cooling capacity rage with the COP levels using a

linear regression fit, as shown in the graphs. The regression line attempts to quantify the

relationship between cooling EER and heating COP. This enabled DOE to determine a

comparable COP level for every air­conditioning efficiency level that it further

investigated.

5.12 SENSITIVITY ANALYSES

DOE conducted a sensitivity analysis on material prices to examine the effect of

spikes in metal prices that the industry has experienced over the past few years. The

sensitivity analysis used the annual average 2006 prices for various metals used in the

manufacturing of PTACs and PTHPs, shown on Table 5.12.1.

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.12.1 Annual Average 2006 Metal Prices

Metals Cost ($/lb)

(2006$)

Plain Cold Rolled Steel (CRS) $0.36

Painted CRS $0.81

Galvanized CRS $0.41

Fin Aluminum $1.57

Plain Copper $3.11

Copper Tube – Plain $3.68

Copper Tube – Rifled $4.15

Figure 5.12.1 through Figure 5.12.6 present the results of this sensitivity analysis

in 2006$. All graphs including the 5­year average material prices (dashed lines) and the

2006 annual average material prices (solid lines).

$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 4.04(EER)2 ­ 66.06(EER) + 587.20

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Figure 5.12.1 Material Price Sensitivity for Standard Size PTACs with a Cooling

Capacity of 9,000 Btu/h

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 4.04(EER)2 ­ 66.06(EER) + 637.20

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Figure 5.12.2 Material Price Sensitivity for Standard Size PTHPs with a Cooling

Capacity of 9,000 Btu/h

5­54

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 6.31(EER)2 ­ 101.36(EER) + 783.72

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Figure 5.12.3 Material Price Sensitivity for Standard Size PTACs with a Cooling

Capacity of 12,000 Btu/h

5­55

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 6.31(EER)2 ­ 101.36(EER) + 833.72

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Figure 5.12.4 Material Price Sensitivity for Standard Size PTHPs with a Cooling

Capacity of 12,000 Btu/h

5­56

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EERE-2007-BT-STD-0012 COMMENT 02
$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 5.29(EER)2 ­ 79.43(EER) + 750.76

8 8.5 9 9.5 10 10.5 11 11.5 12 12.5

System EER

Figure 5.12.5 Material Price Sensitivity for Non­Standard Size PTACs with a

Cooling Capacity of 11,000 Btu/h

5­57

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EERE-2007-BT-STD-0012 COMMENT 02
8 8.5 9 9.5 10 10.5 11 11.5 12 12.5 13

System EER

Figure 5.12.6 Material Price Sensitivity for Non­Standard Size PTHPs with a

Cooling Capacity of 11,000 Btu/h

According to the results, the increase in metal prices has resulted in various

percentage increases in normalized MPC over the range of normalized EER for the

different equipment classes. Table 5.12.2 shows the range of percent increase in price for

each equipment class due to metal price increases.

Table 5.12.2 Material Price Sensitivity Results

$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

$550

$575

$600

Manufacturer Production Cost

MPC = 5.57(EER)2 ­ 91.94(EER) + 877.13

Equipment Type Increase in MSP (%)

Standard Size PTACs with 9,000 Btu/h Cooling Capacity 3 – 5

Standard Size PTHPs with 9,000 Btu/h Cooling Capacity 3 – 5

Standard Size PTACs with 12,000 Btu/h Cooling Capacity 5 – 7

Standard Size PTHPs with 12,000 Btu/h Cooling Capacity 5 – 7

Non­Standard Size PTACs with 11,000 Btu/h Cooling Capacity 3 – 5

Non­Standard Size PTHPs with 11,000 Btu/h Cooling Capacity 3 – 5

According to manufacturers, the increase in copper prices has had a significant

impact on manufacturing costs. Because great quantities of copper are used in the

manufacture of heat exchangers and other components for PTACs and PTHPs, the sharp

increase in copper price corresponds to significant increases in PTAC and PTHP

equipment MPC. The results show that about a $1.50 (or about a 55­percent) increase in

copper prices could correspond to about a $10 (or about a 3­percent) increase in

equipment MPC.

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EERE-2007-BT-STD-0012 COMMENT 02
5.13 ENGINEERING ANALYSIS SUMMARY OF RESULTS

In the rulemaking process, the results from engineering analysis are used in the

LCC analysis to determine customer prices for PTAC and PTHP equipment. Using the

calculated manufacturer markup, DOE calculated the MSP of R­22 and R­410A

equipment at different efficiency levels, and list each on Table x through Table y.

Table 5.13.1 MSP for R­22 and R­410A Standard Size PTACs with a 9,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (10.6) $424.88 $469.73

Efficiency Level 1 (10.9) $431.71 $478.00

Efficiency Level 2 (11.1) $436.66 $483.92

Efficiency Level 3 (11.3) $441.93 $490.14

Efficiency Level 4 (11.5) $447.51 $496.69

Efficiency Level 5 (12.0) $462.85 $514.43

Table 5.13.2 MSP for R­22 and R­410A Standard Size PTHPs with a 9,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (10.4) $485.22 $529.12

Efficiency Level 1 (10.9) $496.21 $542.52

Efficiency Level 2 (11.1) $501.16 $548.43

Efficiency Level 3 (11.3) $506.43 $554.66

Efficiency Level 4 (11.5) $512.01 $561.20

Efficiency Level 5 (12.0) $527.35 $578.94

Table 5.13.3 MSP for R­22 and R­410A Standard Size PTACs with a 12,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (9.9) $484.46 $550.95

Efficiency Level 1 (10.2) $492.63 $562.03

Efficiency Level 2 (10.4) $498.77 $570.12

Efficiency Level 3 (10.6) $505.48 $578.77

Efficiency Level 4 (10.8) $512.74 $587.97

Efficiency Level 5 (11.5) $542.57 $624.59

Table 5.13.4 MSP for R­22 and R­410A Standard Size PTHPs with a 12,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (9.7) $544.21 $608.76

Efficiency Level 1 (10.2) $557.13 $626.53

Efficiency Level 2 (10.4) $563.27 $634.62

Efficiency Level 3 (10.6) $569.98 $643.27

Efficiency Level 4 (10.8) $577.24 $652.47

Efficiency Level 5 (11.7) $616.85 $700.82

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EERE-2007-BT-STD-0012 COMMENT 02
Table 5.13.5 MSP for R­22 and R­410A Non­Standard Size PTACs 11,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (8.6) $578.05 $619.52

Efficiency Level 1 (9.4) $586.57 $635.00

Efficiency Level 2 (9.7) $592.13 $643.17

Efficiency Level 3 (10.0) $598.99 $652.64

Efficiency Level 4 (10.7) $620.01 $679.75

Efficiency Level 5 (11.2) $639.33 $703.43

Table 5.13.6 MSP for R­22 and R­410A Non­Standard Size PTHPs 11,000 Btu/h

Cooling Capacity

Efficiency Level (EER) R­22 Equipment MSP

(2006$)

R­410A Equipment MSP

(2006$)

ASHRAE/IESNA 90.1­1999 Level (8.5) $642.13 $682.73

Efficiency Level 1 (9.4) $651.07 $699.50

Efficiency Level 2 (9.7) $656.63 $707.67

Efficiency Level 3 (10.0) $663.49 $717.14

Efficiency Level 4 (10.7) $684.51 $744.25

Efficiency Level 5 (11.4) $712.57 $778.40

The analysis results show that the R­410A equipment MSP is approximately 6 to

15 percent higher than R­22 equipment MSP depending on the equipment type,

efficiency level, and cooling capacity. Table 5.13.7 show the range of percent increase in

MSP for R­410A equipment in comparison to R­22 equipment.

Table 5.13.7 Increase in MSP from R­22 to R­410A for the Various Equipment

Equipment Class (Cooling Capacity) Increase in MSP from R­22 to R­410A

Standard Size PTACs 9,000 Btu/h 10.5% ­ 11.1%

Standard Size PTHPs 9,000 Btu/h 9.0% ­ 9.8%

Standard Size PTACs 12,000 Btu/h 13.5% ­ 15.1%

Standard Size PTHPs 12,000 Btu/h 11.8%­13.6%

Non­Standard Size PTACs 11,000 Btu/h 7.2%­10.0%

Non­Standard Size PTHPs 11,000 Btu/h 6.3%­9.2%

5­60

EERE-2007-BT-STD-0012 COMMENT 02
REFERENCES

1 Air­Conditioning and Refrigeration Institute. ARI PTAC and PTHP Shipment –

December 20, 2006. December, 2006.

2 Air­Conditioning and Refrigeration Institute. ARI Directory of Certified Performance.

2006. http://www.aridirectory.org/ari/ptac.php. (Last accessed August 2, 2007.)

3 Nadel, S. Form for Submittal of Proposed Change to ASHRAE Standard Under

Continuous Maintenance (Standard 90.1­2004). September 23, 2005.

4 U.S. Department of Energy­Office of Energy Efficiency and Renewable Energy.

Energy Conservation Program for Consumer Products: Screening Analysis for

EPACT­Covered Commercial HVAC and Water­Heating Equipment Screening

Analysis. April, 2000.

5 U.S. Department of Labor, Bureau of Labor Statistics, Wages by Area and Occupation,

http://www.bls.gov/bls/blswage.htm. (Last accessed August 2, 2007.)

6 American Metals Market, http://www.amm.com. (Last accessed August 2, 2007.)

7 U.S. Department of Labor, Bureau of Labor Statistics, Producer Price Indices,

http://www.bls.gov/ppi. (Last accessed August 2, 2007.)

8 U.S. Department of Commerce, Bureau Economic Analysis, Gross Domestic Product

Implicit Price Deflator, https://bea.gov/bea/dn/nipaweb/TableView.asp#Mid. (Last

accessed August 2, 2007.)

9 Plastic News, Resin Pricing. http://www.plasticsnews.com/subscriber/headlines.phtml.

(Last accessed August 2, 2007.)

10 Emerson Climate Technologies. R410A Questions.

http://www.emersonclimate.com/faq_copeland.htm#R410A (Last accessed August 2,

2007.)

11 Air­Conditioning and Refrigeration Institute. Response to ASHRAE 90.1 Continuous

Maintenance Proposal on Package Terminal Equipment. May 18, 2006.

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