1 | Energy Efficiency and Renewable Energy eere.energy.gov

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Miscellaneous Refrigeration Products

Working Group Negotiations

July 15-16, 2015

Joseph Hagerman

Department of Energy

Building Technologies Program
2

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
3

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
4

Recap

• See separate document with FMCS recap.
5

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
6

Definitions

• See separate document with working definitions.
7

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
8

Test Procedure Issues

• The group agreed to:

• 90°F ambient temperature for testing all coolers and combination cooler 

products.

• 0.55 usage factor for all coolers and combination cooler products.

• A 0.69 volume adjustment factor for cooler compartments within 

combination cooler products.

• Outstanding issue – how to address coolers not meeting 55°F during 

testing.

• Products would currently meet the cooler definition.

• Potential solution: use cold setting energy use as the test result and 

apply adjustment to allowed energy use under the standard.

• Working Group members planned to review the test procedure NOPR in 

greater detail to identify any other potential issues that may require 

discussion or revision.
9

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
10

Combination Cooler Product Categories

• In the preliminary analysis, DOE defined 40 categories of hybrid (now 

combination cooler) products, consistent with the 40 product categories 

for refrigerators, refrigerator-freezers, and freezers. 

• However, DOE noted that products in only four of these forty product 

classes were actually available on the market.

• Working Group members agreed to review the market to determine if 

the updated combination cooler product definition would result in 

products available in additional product classes.
11

Combination Cooler Products: Potential Standards

• With the updated combination cooler product definition, as cooler 

compartment volume approaches 0%, the product becomes a 

refrigerator; as it approaches 100%, the product becomes a cooler.

• Issue for discussion: how to develop appropriate standards for 

combination cooler products without an opportunity for circumvention 

at the configuration endpoints.

• Note – combination cooler products would have a 0.55 usage factor, 

consistent with coolers. Refrigerators have a usage factor of 1.

• The next slide shows how refrigerators and coolers compare for a 6 cubic 

foot product.
12

Combination Cooler Product Example – 6 ft3

EL4-10

All-refrigerator Cooler

Key Question: What efficiency levels would 

bridge the range of products from allrefrigerators to coolers and would be 

appropriate for combination cooler products?

Combination cooler product

Cooler efficiency 

levels
13

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
14

Standards Analysis – Coolers

• In the preliminary analysis, DOE analyzed various technology options 

available – such as improved insulation, higher-efficiency compressors, 

fans, etc. – and used reverse engineering and modeling to estimate the 

potential energy efficiency improvements and associated costs for each 

product type.

• DOE used this information to develop cost-efficiency curves, which show 

the energy use and incremental manufacturer costs at the following 

efficiency levels: 

• Baseline (the least efficient product available)

• Multiple gap fill levels (a % improvement over baseline)

• Max-available (most efficient determined during testing)

• Max-tech (where possible, determined via modeling)
15

Standards Analysis – Coolers

• DOE developed an updated engineering analysis for coolers based on the 

suggested product classes (including updates made since the last 

meetings).

• DOE relied on the following assumptions:

• Adjusted preliminary analysis cost estimates based on manufacturer 

feedback.

• Relied on the same sets of design options identified through testing and 

teardowns from the preliminary analysis to establish estimates for 

certain ELs.

• Where no teardown information was available, developed MPCs based 

on market retail prices using manufacturer and retailer markups or by 

interpolating/extrapolating costs of torn down products.

• Assumed freestanding products were typically 5% more efficient than 

similar built-in models.
16

Standards Analysis – Micro-Compact Coolers

EL

% CEC Equivalent Freestanding

Basis 1.7 ft3

Baseline MPC $ 98.69 

EL 0 132% $ - 

EL 1 120% $ 1.06 

EL 2 110% $ 1.94 

EL 3 100% $ 5.21 

EL 4 90% $ 9.07 

EL 5 80% $ 12.94 

EL 6 70% $ 16.80 

EL 7 60% $ 20.66 

EL 8 50% $ 24.74 

EL 9 45% $ 26.67 

• Tested units at 132% and 54% of CEC 

equivalent.

• Note – the only TE units capable of 

maintaining 55°F included solid doors.

• Higher efficiency units incorporate 

increased insulation and a heat pipe.

• One unit incorporating high-efficiency 

features tested at 190% of CEC 

equivalent. DOE did not consider this a 

baseline unit because it maintained 

temperature below 49°F and had 

construction similar to the maxavailable unit.

*Micro-compact would cover coolers < 1.7 ft3; 

but the costs were developed based on units 

with 1.68 and 1.7 ft3 volumes.
17

Standards Analysis – Compact Coolers

EL

% CEC Equivalent Compact

Basis 2 ft3 6 ft3

Baseline MPC $ 143.80 $ 295.84 

EL 0 299% $ - $ - 

EL 1 250% $ - $ 15.13 

EL 2 200% $ - $ 30.57 

EL 3 150% $ - $ 46.01 

EL 4 100% $ 53.47 $ 61.45 

EL 5 90% $ 56.68 $ 65.43 

EL 6 80% $ 63.38 $ 70.18 

EL 7 70% $ 72.45 $ 82.66 

EL 8 60% $ 83.07 $ 93.10 

EL 9 50% $ 99.42 $ 109.45 

EL 10 40% $ 147.41 $ 198.39 

EL 11 32% $ 236.85 $ 282.36 

• DOE tested one TE cooler near 6 ft3

volume that tested at 299% of CEC. It 

did not reach 55°F, but maintained 

temperature near 60°F. Its performance 

and cost should reflect a baseline TE 

unit capable of maintaining 55°F.

• At 100% of CEC, DOE assumed a switch 

to VC refrigeration.

• Units were tested and torn down at 

100%, 75%, and 48% of CEC. 32% 

represents max-tech with additional 

design options.
18

Standards Analysis – Coolers

EL

% CEC Equivalent Freestanding Built-In

Basis 12 ft3 16 ft3 12 ft3 16 ft3

Baseline MPC $ 393.19 $ 700.09 $ 550.78 $ 708.54 

EL 0 299% $ - $ - $ - $ - 

EL 1 250% $ 36.97 $ - $ - $ - 

EL 2 200% $ 74.69 $ - $ - $ - 

EL 3 150% $ 112.42 $ - $ - $ - 

EL 4 100% $ 150.14 $ - $ - $ - 

EL 5 90% $ 155.65 $ 6.04 $ 8.36 $ 9.18 

EL 6 80% $ 161.36 $ 12.49 $ 14.12 $ 15.80 

EL 7 70% $ 185.92 $ 40.64 $ 42.99 $ 49.09 

EL 8 60% $ 198.03 $ 54.22 $ 56.07 $ 62.40 

EL 9 50% $ 214.38 $ 70.57 $ 73.48 $ 81.30 

EL 10 40% $ 287.51 $ 151.85 $ 277.41 $ 312.34 

EL 11 32%-Freestanding

37%-Built-In $ 484.69 $ 373.46 $ 342.00 $ 381.91 

• Assumed similar 299% 

baseline for 12 ft3

freestanding class based on 

compact test unit.

• Switch to VC at 100% (EL4).

• Tested and tore down units 

only at the mid to high 

efficiencies. 

• For baseline MPCs, DOE 

either extrapolated from the 

6 ft3 product class or backcalculated from retail prices 

using markups.

• Assumed similar design 

option pathway and efficiency 

improvements as for compact 

products.
19

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
20

Overview of standards economic analysis inputs

• Step through economic analyses.

• Outline all inputs used.

• Things to highlight 

– Comments from preliminary analysis.

– Changes since preliminary analysis.

– Outstanding questions.

• Focus on coolers.

• Also highlight questions for combination cooler products.

• Will skip background material if everyone familiar with it.
21

Markups Analysis

Energy Use Analysis

Shipments

Analysis

National

Impact

Analysis Life-Cycle

Cost and

Payback 

Period Analysis

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Markups 

Analysis

Preliminary 

Manufacturer 

Impact 

Analysis
22

Markups Analysis

• Purpose

• Characterize product distribution channels and market segments.

• Determine consumer prices under a standards scenario based on 

manufacturer production cost.

• Method

• Manufacturer markups based on manufacturer feedback.

• Retailer markups are based on the “Electronics and Appliance 

Stores” industry data from the U.S. Census 2007 Annual Retail 

Trade Survey (ARTS).

• Sales tax by state came from Sales Tax Clearinghouse.
23

Markups Analysis

• Distribution channels

• Preliminary analysis used single distribution channel.

• Manufacturer interviews highlighted a second distribution 

channel for high-end products. (8% of Compact, 50% of Built-in)

• Questions:

• What is nature of the second distribution channel?

• Do products purchased through this channel have a higher retail 

price than products sold through the first channel?

• Is there also a second channel for combination cooler products?

Manufacturer Retailer Consumer

Manufacturer Distributor Retailer Consumer
24

Markups Analysis 

Retail Markup Types

• Baseline Markups

– Relate the manufacturer selling price of product with baseline 

efficiency to the consumer purchase price.

– Cover all of retailer’s expenses plus profit.

• Incremental Markups

– Relate the incremental change in manufacturer selling price of 

products with higher efficiency to the increase in consumer 

purchase price.

– Cover only the expenses that increase due to an increase in 

efficiency.
25

Markups Analysis

Overall Markups

Product Scenario Mfr

Markup

Distrib’r

Markup

Retailer 

Markup

Sales 

Tax

Overall 

1-tier

Markup

Overall 

2-tier

Markup

Micro 

Coolers

Baseline

1.23

N/A 1.36

1.07

1.79 N/A

Incremental N/A 1.11 1.46 N/A

Compact 

Coolers

Baseline

1.25

1.32 1.36 1.82 2.40

Incremental 1.18 1.11 1.49 1.75

Standard 

& Built-in 

Coolers, 

Combo 

Coolers

Baseline

1.41

1.32 1.36 2.05 2.71

Incremental 1.18 1.11 1.68 1.98
26

Energy Use Analysis

Energy Use Analysis

Shipments

Analysis

National

Impact

Life-Cycle Analysis

Cost and

Payback 

Period Analysis

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Markups 

Analysis

Preliminary 

Manufacturer 

Impact 

Analysis
27

Energy Use Analysis 

• Purpose 

• Estimate distributions of annual site energy use 

representative of consumers in U.S. 

• Method

• Develop distributions of volumes.

• Determine efficiency market distributions.
28

Energy Use Analysis

Cooler Volume Market Shares 

• Data sources used 

• Results of a study that used online surveys. (LBNL study)*

• CEC and NRCan databases. 

• Binned to match volumes to the representative cost curves:

• Micro: all households use 1.7 ft3 curve (only cost curve)

• Compact: 78% use 2 ft3, 22% use 6 ft3

• Standard and Built-in: 44% use 12 ft3, 56% use 16 ft3

• Question: are these ratios acceptable?

* Greenblatt et al., U.S. Residential Miscellaneous Refrigeration Products: Results from Amazon 

Mechanical Turk Surveys, Lawrence Berkeley National Laboratory, LBNL-6537E, November 

2013.
29

Energy Use Analysis

Cooler Efficiency Market Shares

• DOE used CEC and NRCan databases, retailer and manufacturer websites, 

laboratory and field tests, to determine efficiency market shares. 

Compact

Micro

0%

5%

10%

15%

20%

25%

70% 80% 90% 100% 130% 160% 200% 267% 345%

% of CEC-equivalent (bins are upto and including)

0%

5%

10%

15%

20%

25%

60% 70% 80% 90% 100% 130% 160% 200% 267% 288%

Fraction of products

% of CEC-equivalent (bins are up to and including)
30

Energy Use Analysis

Cooler Efficiency Market Shares

• Question: are these efficiency market shares acceptable?

Standard

0%

10%

20%

30%

40%

50%

60%

60% 70% 80% 90% 100% 485%

Fraction of products

% of CEC-equivalent (bins are up to and including)

Built-in

0%

10%

20%

30%

40%

50%

60%

60% 70% 80% 90% 100%

Fraction of products

% of CEC-equivalent (bins are up to and including)
31

Energy Use Analysis

Combination Cooler Products

• In preliminary analysis, DOE reviewed manufacturer 

websites to determine the capacities and energy use of 

hybrid products. 

• DOE identified four product classes in preliminary analysis.

Product 

Class

Adjusted 

volume (AV) 

(cu. ft.)*

2014 Standard 

Equation

Maximum energy use 

of standard (kWh/yr)

Estimated annual 

energy use 

(kWh/yr)

Ratio

H-3A-BI 13.4 8.02AV + 228.5 336 516 154%

H-11A 4.5 7.84AV + 219.1 254 365 143%

H-13A 5.7 9.17AV + 259.3 312 441 142%

H-9I-BI 15.7 9.86AV + 344.9 500 413 83%
32

Life-Cycle Cost (LCC) and Payback Period (PBP)

Energy Use Analysis

Shipments

Analysis

National

Impact

Analysis Life-Cycle

Cost and

Payback 

Period Analysis

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Markups 

Analysis

Preliminary 

Manufacturer 

Impact 

Analysis
33

Life-Cycle Cost (LCC) and Payback Period (PBP)

• Purpose

• Provide an economic evaluation from the end-user’s perspective.

• Life-Cycle Cost (LCC) is the total purchaser cost over the life of a product. 

• Payback Period (PBP) is the time required to recover the increased purchase 

price of more energy-efficient products through reduced operating costs.

• Method

• Use 10,000 sample purchasers.

• Determine total installed costs for each EL.

• Determine operating costs for first year and lifetime of product.

• Calculate PBP by dividing average increase in installed cost by average 

decrease in first-year operating cost.

• Calculate LCC by adding installed cost and lifetime operating costs.

• Calculate LCC savings by subtracting LCC of each EL from LCC of the EL that 

would be purchased in the absence of a new standard. 
34

LCC and PBP

• Monte Carlo sample of 10,000 purchasers.

• DOE developed sample from respondents to the LBNL study.

• 2260 households that own a cooler.

• Each household assigned a volume from the representative 

cost curves.

• From the volume market shares.

• Each household assigned an EL that it would purchase in 

absence of standards.

• From the efficiency market shares.

Purchaser Samples
35

LCC and PBP

• Baseline and standard EL purchase prices came from the 

representative cost curves. 

• Marked up as stated in markups analysis.

• Constant price trend used for all prices.

• Estimate costs in 2021 based on costs in 2015.

• Sales tax determined by State of purchaser.

• Installation costs not included.

• Did not find evidence that installation costs vary with efficiency level.

• Question: are there any installation costs that vary with efficiency 

level?

Installed Cost
36

Price trends background

• Manufacturing costs have been observed to decrease with the 

cumulative quantity manufactured

• Goal of price trend:

– Estimate the rate of decrease

– Use that rate to estimate future changes in costs
37

Method

• Information needed

– Historical prices 

– Historical shipments

– As far back as possible, preferably to first production

• Process

– Fit model to data: price as function of cumulative shipments

– Use fit to estimate future price trend as function of predicted cumulative 

shipments

• Alternative model

– Time-based, like Moore’s law for integrated circuits

– Does not require historical shipments
38

Refrigerators

• Long history of PPI and CPI price indices

• Long history of shipments

• Able to estimate price trend using shipments
39

Miscellaneous Refrigeration Products

• No specific PPI index or other historical price trend

– Refrigerators is closest

• No history of shipments

– Need to estimate as function of time

• Preliminary analysis estimates

– 1.9% to 2.5% price reduction per year

• Decided against including in main preliminary analysis

– Too many uncertainties to be confident in predictions

• Component-based

– Have not identified a good price trend

– Compressors PPI: industrial compressors

– Refrigerator parts and attachments PPI: not clear on this one

• Current recommendation: do not include in main analysis

– Can look into it further before August mtgs
40

Operating Cost: Lifetime

• In preliminary analysis, DOE estimated mean lifetime of 4.3 years 

for CCs and NCRs.

• Several stakeholders indicated that this was too short.

• Some stakeholders indicated that lifetime should be similar to lifetime of 

refrigerators and freezers.

• Some stakeholders suggested using the lifetimes estimated for the 2011 

Final Rule for refrigerators and freezers.

• Mean lifetimes from 2011 refrigerator-freezer Final Rule:

• Compact refrigerator: 5.6 years. (Use for Micro and Compact) 

• Standard refrigerator: 17.4 years. (Use for Standard and Built-in)

• Question: 

• Are the 2011 Final Rule lifetimes acceptable?

• Does it make sense that standard-size lifetime is much longer than 

compact for coolers?

LCC and PBP
41

LCC and PBP

• Annual energy consumption

• Based on volume, CEC wine chiller equation, and adjustment factor.

• Electricity price based on data from Edison Electric Institute and 

EIA.

• Estimated price based on geographic location.

• Average and marginal prices.

• Discount rates

• Used to discount operating costs to year of purchase (i.e., 2021).

• Used a distribution of debt and assets used for purchasing 

appliances.

• Repair and maintenance costs not included.

• Did not find evidence that these costs vary with efficiency level.

• Question: are there any repair and maintenance costs that vary with 

efficiency level?

Operating Cost
42

LCC and PBP for combination cooler products: outstanding items

• Household sample

• Initial plan: use same sample of households used for coolers

• Question: is this acceptable?

• Lifetime

• Use lifetime for analogous refrigerator or freezer products from 2011 Final 

Rule?
43

LCC and PBP

Sample Results for Coolers

EL

% of CECequivalent 

energy 

use

Average Costs 

(2013$) Simple 

Payback 

Period

(years)

Average 

Lifetime 

Installed Cost (years)

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 267 292 86 357 649 --- 4.3

1 200 318 65 269 587 1.2 4.3

2 160 334 53 217 551 1.2 4.3

3 130 346 43 177 524 1.2 4.3

4 100 358 34 138 496 1.2 4.3

5 90 365 30 125 490 1.3 4.3

6 80 385 27 112 497 1.6 4.3

7 70 407 24 99 506 1.8 4.3

8 60 425 21 86 511 2.0 4.3

9 50 443 18 73 516 2.2 4.3

10 40 531 15 60 591 3.3 4.3

11 32 615 12 49 664 4.3 4.3
44

LCC and PBP

Sample Results for Coolers

EL

% of CECequivalent 

energy use

% of Consumers that 

Experience a Net Cost

Average Life-Cycle 

Cost Savings

(2013$)

0 267 0 0

1 200 0 3

2 160 0 9

3 130 0 19

4 100 0 33

5 90 2 39

6 80 22 32

7 70 44 23

8 60 51 18

9 50 58 13

10 40 87 -61

11 32 95 -135
45

LCC and PBP

Sample Distribution of Results for Coolers
46

Shipments Analysis

Energy Use Analysis

Shipments

Analysis

National

Impact

Analysis Life-Cycle

Cost and

Payback 

Period Analysis

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Markups 

Analysis

Preliminary 

Manufacturer 

Impact 

Analysis
47

Shipments Analysis

• Purpose

• Estimate current shipments for each product.

• Project future shipments.

• Estimate the impact of new standards on future shipments.

• Methodology

• DOE estimated current shipments from the LBNL study and 

model availability.

• Shipment projections are disaggregated into 

• New construction

• Replacements

• Shipments to hotels (absorption refrigerators only)

• The impact of new standards on future shipments was 

projected using price elasticity.
48

Shipments Analysis

Base Case Shipments Projection 

• Depicts the situation where new standards are not adopted.

• Shipments in 2014 were derived from estimated stock, 

estimated product lifetime, and the distribution of models. 

• Shipment projections in new construction were derived by 

multiplying new housing starts from AEO 2014 by household 

saturations. 

• DOE assumed that household saturations of MREF products 

would remain constant.

• Shipments for replacements account for the balance of 

shipments. 
49

Shipments Analysis

Coolers 

• In preliminary analysis, DOE estimated shipments in 2014:

• 2.9 M cooled cabinets.

• 1.2 M non-compressor refrigerators.

• Total 4.1 M shipments of current coolers.

• No comments on these numbers from stakeholders.

• DOE has revised estimates of shipments in 2014:

• 2.1 M (formerly known as) cooled cabinets.

• 0.5 M (formerly known as) non-compressor refrigerators.

• Total 2.6 M shipments of current coolers.

• Revisions: updated survey results* and revised lifetimes.

* Donovan et al., U.S. Ice-Making in the U.S.: Results from an Amazon Mechanical Turk Survey, 

Lawrence Berkeley National Laboratory, LBNL-183899, July 2015.
50

Shipments Analysis

Coolers Questions 

• Initial feedback from manufacturers on coolers shipments (not 

including former non-compressor refrigerators) are lower than 

current DOE estimates.

• Current DOE estimates (2014 shipments):

• Micro and Compact and VC: 490,000

• Micro and Compact and TE: 1,560,000

• Standard and Built-in: 40,000

• Initial manufacturer feedback (2014 shipments):

• Micro and Compact and VC: 60,000 (possibly an underestimate)

• Micro and Compact and TE: 440,000 (based on single mfr’s est)

• Standard and Built-in: 20,000

• Question: are current DOE estimates acceptable?

• Question: are there additional data available? 
51

Shipments Analysis

Coolers Questions 2

• Question: What fraction of coolers >= 7.75 ft3 fit into the built-in 

class?

• Ensure that we are using same definition determined by working 

group.

• Information we find is not consistent:

• 2011 Refrigerator-Freezer Final Rule: 2.5% built-in.

• CEC database models: 18% built-in.

• NPD market research data: 32% built-in. 
52

Shipments Analysis

Combination Cooler Products 

• In preliminary analysis, DOE estimated shipments for 2014:

• 4 product classes.

• 425 K combination cooler (hybrid) products.

• No comments on these numbers from stakeholders.

• DOE will revise estimates of shipments for 2014:

• Awaiting feedback on the products to be included.

• Determine product classes.

• Determine lifetimes.
53

Shipments Analysis

Standards Impacts on Shipments

• Standards-case projections use purchase price increases and 

operating cost savings to estimate shipments impacts.

• A price elasticity factor, derived from a literature review of 

other household appliances, was used to determine if 

shipments would decrease due to increased purchase price. 
54

National Impact Analysis

Energy Use Analysis

Shipments

Analysis

National

Impact

Analysis Life-Cycle

Cost and

Payback 

Period Analysis

Market & 

Technology

Screening

Analysis

Engineering

Analysis

Markups 

Analysis

Preliminary 

Manufacturer 

Impact 

Analysis
55

National Impact Analysis

• Purpose

• Assess the national-level impacts at each efficiency level as 

measured by:

• National Energy Savings (NES) full-fuel-cycle results

• Net Present Value (NPV) of total consumer economic impacts

• Methodology

• Use the shipments model to estimate the total stock of each 

MREF product. 

• Aggregate the costs and energy use per unit in each year.

• The difference between the base case and standards case in each 

year yields the NES and the NPV of consumer economic impacts.

• Account for the time-value of money through defined discount 

rates. 
56

National Impact Analysis Process

• NES and NPV calculated for MREF products shipped over the 

period from 2021 - 2050 (30 years of shipments).

Shipments 

Model

National 

Energy 

Savings

National

Economic

Impacts

LCC 

Analysis 

Results and 

Other Inputs

National 

Energy Savings 

(Quads)

National 

Net Present Value 

(2013 US $, billion)
57

National Energy Savings Flow Diagram
58

National Consumer Net Present Value Flow Diagram
59

National Impact Analysis Inputs

Input Description

Total Installed Cost Total installed cost from the LCC analysis.

Annual Energy Use Annual energy use from the LCC analysis.

Base-Case 

Efficiencies

Shipments-weighted efficiencies determined for the effective year. Based on 

base-case efficiency distribution from LCC analysis. 

Standards-Case 

Forecasted 

Efficiencies

Roll-up scenario assumed for determining shipment-weighted efficiency for 

each standards case.

Energy Prices Average prices and forecasted energy prices from EIA AEO 2014 forecasts 

(to 2040) and extrapolation to 2080.

Full Fuel Cycle Multipliers to convert site energy to full-fuel cycle energy.

Discount Rate 7 percent and 3 percent real from OMB’s Regulatory Analysis Guideline A-4.

Present Year Future expenses are discounted to the year 2014.
60

NOPR Stage Additional Analyses

Framework 

Document

Final 

Rule

Preliminary

Analysis

NOPR

Manufacturer

 Impact 

 Analysis

Utility

 Impact 

Analysis

Employment

 Impact

 Analysis

Consumer 

Subgroup 

Analysis

Revise

Preliminary 

Analysis

Emissions 

Analysis

Regulatory

 Impact 

Analysis

Engineering

Analysis

Life-Cycle

Cost &

Payback 

Period

Analysis

National

 Impact

Analysis
61

NOPR Analyses

• LCC Subgroup Analysis

• Effects on various national consumer subgroups.

• Manufacturer Impact Analysis 

• Continue work begun in the preliminary MIA.

• Emissions Analysis and Monetization of Emission Reduction 

Benefits 

• Effects on airborne pollutant emissions.

• Utility Impact Analysis 

• Model effects on generation capacity of utilities using NEMS.

• Employment Impact Analysis 

• Indirect effects on national employment.

• Regulatory Impact Analysis 

• Potential for non-regulatory approaches.
62

Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
63

Purpose: 

• Assess the impacts of potential energy conservation standards on 

manufacturers.

Methodology:

• Use Government Regulatory Impact Model (GRIM), a industry discounted cash 

flow model

– The primary output is Industry Net Present Value (INPV)

– By comparing the no-standards case INPV to the standards case INPV, DOE is able to estimate 

impacts to manufacturers

• Interview manufacturers to refine inputs to the GRIM, develop subgroup 

analyses, and address qualitative issues.

Manufacturer Impact Analysis
64

GRIM Overview
65

Markups & Pricing

Coolers Baseline Markup

Micro-Compact 1.23

Compact 1.25

Standard Free-Standing 1.41

Built-In 1.41

 MSP = MPC x Manufacturer Markup

 Manufacturer Markup covers non-production costs (SG&A, R&D, interest) 

and profit

Combination Cooler Product Baseline Markup

Cooler-Refrigerator 1.41

Cooler-All-Refrigerator 1.41

Cooler-Refrigerator-Freezer 1.41

Cooler-Freezer 1.41
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Manufacturer Markup Scenarios

Change in manufacturer markup reflects the industry’s ability to increase 

prices as manufacturing costs increase.

 Upper Bound: Flat Markup

• Recovery of incremental MPCs.

• Manufacturers maintain the same markup (and gross margin %) before and 

after standards.

 Lower Bound: Preservation of Operating Profit Markup

• Additional MPCs of higher minimum efficiency products can not be fully 

passed through to customers, and thus minimally compliant products lose a 

fraction of the baseline markup. 

• Industry can only maintain its operating profit in absolute dollars after the 

standard. Operating margin in percentage terms is reduced between the base 

case and standards case.

Markups & Pricing
67

GRIM Input Definition Value

Income Tax Rate Corporate effective income tax paid 35.0%

Discount Rate Weighted average cost of capital 7.7%

Working Capital Current assets less current liabilities 

(% of revenues) 5.8%

SG&A Selling, general, and administrative expenses 

(% of revenues) 13.2%

R&D Research and development expenses 

(% of revenues) 1.6%

Depreciation Amortization of fixed assets 

(% of revenues) 3.9%

Capital Expenditures Outlay of cash to acquire or improve capital assets 

(% of revenues) 3.9%

Industry Financial Metrics
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Design Option Average Capital 

Conversion Costs

Average Product Conversion 

Costs

One-time investments in 

PP&E

One-time investments in 

R&D, testing, and 

marketing*

Brushless DC Condenser Fan 

Motor $295,886

Heat Pipe (for TE units) ? ?

Increased Insulation Thickness $337,500 $220,886

Improved Compressor COP $260,886

Forced Convection Evaporator $194,515

Improved Glass Door Resistivity $300,000 $269,515

Variable Speed Compressor $250,000

Vacuum Insulated Panels $371,250 $220,886

Average Conversion Costs per Cabinet Size

• *$50,000 per manufacturer for updates to marketing/product literature

• Opportunities for coordination of conversion costs when implementing multiple 

 design options at once? 

• Do these costs reflect all the one-time costs of starting a new standards program?
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Agenda

1. Introduction/Opening Remarks

2. Recap

3. Definitions

4. Test Procedure

5. Combination Cooler Product Categories 

6. Coolers Engineering Analysis 

7. Inputs to LCC Analysis

8. Inputs to MIA Analysis

9. Wrap-Up
70

Public Comment

• Opportunity for public comments from non-members.
71

Tasks for Next Meeting 

• Discuss action items to complete before next meetings.

• Identify goals and agenda for next meetings.