NATIONAL ENERGY SAVINGS

AND NET PRESENT VALUE ANALYSIS

James E. McMahon

(JEMcMahon@LBL.gov)

Ernest Orlando Lawrence Berkeley National Laboratory

U.S. DOE Workshop on Standards

for Commercial Unitary Air Conditioners and Heat

Pumps

September 12, 2001

EE-RM-STD-01-375 COMMENT 02LL

NATIONAL ENERGY SAVINGS 

AND NET PRESENT VALUE ANALYSIS 

James E. McMahon 

(JEMcMahon@LBL.gov) 

Ernest Orlando Lawrence Berkeley National Laboratory 

u.s. DOE Workshop on Standards 

for Commercial Unitary Air Conditioners and Heat 

Pumps 

September 12,2001 
.11 National Energy Saving and Net Present Value Analysis:

Overview

Energy consumption for commercial space cooling by

equipment class will be calculated for a base case and

standards cases

The difference between base case consumption and

consumption in each standards case represents energy

savings

Results will be reported in physical units (kwh site energy)

(quadrillion Btus source energy) and economic units

(dollars) for each year and cumulatively

The period of analysis is from start date of standard to

about 30 years later (ca. 2040)

III.G. I

EE-RM-STD-01-375 COMMENT 02LL

National Energy Saving and Net Present Value Analysis: 

Overview 

• ~ • r. ", .' ~ .' to: ''; 

• Energy consumption for commercial space cooling by 

. equipment class will be calculated for a base case and 

standards cases 

• The difference between base case consumption and 

consumption in each standards case represents energy . saVIngs 

• Results will be reported in physical units (kwh site energy) 

(quadrillion Btus source energy) and economic units 

(dollars) for each year and cumulatively 

• The period of analysis is from start date of standard to 

, about 30 years later (ca. 2040) 

III.O. I 
National Energy Saving and Net Present Value Analysis:

Methods for Forecasting Shipments

Extrapolate from time series

- No explicit accounting for number of buildings, percent

owning equipment, changes in installed cost or

operating expense

Forecast using accounting model

- New buildings and percent by equipment type

- Replacement as function of equipment lifetime

Consider impacts of existing non-regulatory

efforts on base case efficiencies in future years.

III.G.2

EE-RM-STD-01-375 COMMENT 02LL

National Energy' Saving and Net Present Value Analysis: 

Methods for Forecasting Shipments 

• Extrapolate from time series 

-' No explicit accounting for number of buildings, percent 

owning equipment, changes in installed cost or 

operating expense 

. • Forecast using accounting model 

- New buildings and percent by equipment type 

- Replacement as function of equipment lifetime 

• Consider impacts of existing non-regulatory 

. efforts on base case efficiencies in future years. 

III.G.2 
National Energy Saving and Net Present Value Analysis:

DOE Requests Input from

Stakeholders on Shipments

What other approaches should the

Department consider to establish the

forecasts for base case and standards

cases?

What information sources for past shipment

data by efficiency level are available?

What existing non-regulatory initiatives

should be considered in the base case?

III.G.3

EE-RM-STD-01-375 COMMENT 02LL

National Energy Saving and Net Present Value Analysis: 

DOE Requests Input from 

Stakeholders on Shipments .. . ...•.. "t '-r-" .. ~~1~:;::P~.:::.·~;:;·~~:~fr··€<'~;:· :r' 

• What other approaches should the 

Depa.rtment consider to establish the 

'. forecasts for base case and standards 

cases? 

• What information sources for past shipment 

. data by efficiency level are available? 

• What existing non-regulatory initiatives 

should be considered in the base case? 

III.G.3 
i|^ National Energy Saving and Net Present Value Analysis:

Consumer Economic Factors

Operating Operating Expenses Depend on

expenses: typically

thousands of o AC or HP a Equipment capacity

dollars per building * Climate * Energy prices

per year * Building loads and usage

Purchase Pese . tPurchase Expenses Depend on

expenses: typically

thousands of thousan *AC or HP * Equipment capacity dollars per * Location * Split or Single Package

installation · New or Replacement Construction

III.G.4

EE-RM-STD-01-375 COMMENT 02LL

National Energy Saving and Net Present Value Analysis: 

Consumer Economic Factors 

• Operating 

expenses: typically 

thousands of 

dollars per building 

per year 

• Purchase 

expenses: typically 

thousands of 

dollars per 

installation 

Operating Expenses Depend on 

• AC or HP 0 Equipment capacity 

• Climate • Energy prices 

. • Building loads and usage 

Purchase Expenses Depend on 

• AC or HP • Equipment capacity 

• Location • Split or Single Package 

• New or Replacement Construction 

III.GA 
National Energy Saving and Net Present Value Analysis:

Equipment Class Distribution

Chart at right shows0 : ?-:?: ,':,' : * SplitSystems

estimated equipment 1600

shipped tonnage from 1400 Single Packa

census -data (1997) a> l : 

DOE Needs to ' 1200 'I.G.

determine shipments - c 

to building type and n . o .

region for national : - ' . V) 400 ". energy savings

analysis 200

AC 65-135 HP 65-135 AC 135-240 HP 135-240

III.G.5

EE-RM-STD-01-375 COMMENT 02LL

/ 

National Energy Saving and Net Present Value Analysis: 

Equipment Class Distribution 

• Chart at right shows 

'estimated e'quipment 

shipped tonnage from 

census 'data (1997) 

• DOE Needs to 

determine shipments 

to building type and 

region for national 

• 

energy savIngs 

analysis 

. . . '. .' .;',::" ).-

1800 

1600 . 

1400 

>-

... m .. 'u- t: 1200 ," . . C'G 0< . a. f- . cu "C 1000 

Ot: 

"C ~ 800·. 

Q) ::l '. 

a. 

Co 0 600· .- ~ .t:fen - 4001':." .. < •• , ••••. , 

200 

o 

• Split Systems 

1m Single Package 

..... 

AC 65·135 HP 65-135 AC 135-240 HP 135-240 

III.G.5 
¥':~ National Energy Saving and Net Present Value Analysis:

tMethod: 3 Net Present Value (NPV)

For each year analyzed, calculate the difference in

installed costs and operating costs between the base

case and each standards case

Discount future values to the present

- Include operating costs over lifetime of equipment purchased

Sum over years to get NPV

- If present value of savings exceeds costs, NPV is positive.

- If present value of costs exceeds savings, NPV is negative.

III.G.6

EE-RM-STD-01-375 COMMENT 02LL

National Energy Saving and Net Present Value Analysis: 

Method: Net Present Value (NPV) •• .~. 10·, •• 

•• r.~ ~ ., • 

• For each ,year analyzed, calculate the difference in 

I installed costs and operating costs between the base 

case and each standards case 

• Discount future values to the present 

, - Include operating ~osts over lifetime of equipment purchased 

• I Sum over years to get NPV 

- If present value of savings exceeds costs, NPV is positive. 

- If pres~nt value of costs exceeds savings, NPV is negative. 

III.G.6