10-i

CHAPTER 10: NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION ......................................................................................................... 10-1

10.2 PROJECTED ENERGY EFFICIENCIES..................................................................... 10-2

10.3 NATIONAL ENERGY SAVINGS ............................................................................... 10-4

10.3.1 Definition of National Energy Savings.......................................................................... 10-4

10.3.2 Inputs to Calculation of National Energy Savings......................................................... 10-5

10.3.2.1 Annual Energy Consumption per Unit ........................................................ 10-5

10.3.2.2 Shipments and Product Stock ...................................................................... 10-7

10.3.2.3 National annual Energy Consumption......................................................... 10-7

10.3.2.4 Site-to-Power-Plant Energy Conversion Factors......................................... 10-8

10.3.2.5 Full-Fuel-Cycle Multipliers......................................................................... 10-9

10.3.2.6 Rebound Effect .......................................................................................... 10-10

10.4 NET PRESENT VALUE............................................................................................. 10-10

10.4.1 Definition of Net Present Value................................................................................... 10-10

10.4.2 Inputs to Calculation of Net Present Value.................................................................. 10-11

10.4.2.1 Total Installed Cost per Unit...................................................................... 10-12

10.4.2.2 Increase in Total Annual Installed Cost..................................................... 10-14

10.4.2.1 Annual Savings in Operating Costs per Unit............................................. 10-14

10.4.2.2 Total Savings in Annual Operating Costs.................................................. 10-15

10.4.2.3 Discount Factors ........................................................................................ 10-15

10.4.2.4 Present Value of Costs............................................................................... 10-16

10.4.2.5 Present Value of Savings........................................................................... 10-16

10.5 RESULTS .................................................................................................................... 10-16

10.5.2 National Energy Savings by Candidate Standard Level.............................................. 10-17

10.5.3 Annual Costs and Savings ........................................................................................... 10-18

10.5.4 Consumer Net Present Value by Candidate Standard Level ....................................... 10-19

LIST OF TABLES

Table 10.2.1 Portable ACs: Base-Case and Standards-Case Energy Efficiency 

Distributions in 2019.......................................................................................... 10-3

Table 10.3.1 Shipments-Weighted Average per-Unit Annual Energy Consumption in 

2014, Residential and Commercial Sectors....................................................... 10-6

Table 10.3.2 Full-Fuel-Cycle Energy Multipliers (based on AEO 2014)............................. 10-10

Table 10.4.1 Shipments-Weighted Average Total Installed Cost in 2019 ........................... 10-12

Table 10.5.1 Inputs to Calculating National Energy Savings and Net Present Value .......... 10-17

Table 10.5.2 Cumulative Primary National Energy Savings................................................ 10-18

Table 10.5.3 National Energy Savings for Full-Fuel-Cycle ................................................. 10-18

Table 10.5.4 Cumulative Consumer Net Present Value for Each CSL ................................ 10-20
10-ii

LIST OF FIGURES

Figure 10.2.1 Projected SWEERcms for the Base Case and Each Candidate Standard 

Case.................................................................................................................... 10-4

Figure 10.3.1 Projected Energy Consumption for the Base Case and Each Candidate 

Standards Case, Residential Settings................................................................. 10-6

Figure 10.3.2 Projected Energy Consumption for the Base Case and Each Candidate 

Standards Case, Commercial Settings ............................................................... 10-7

Figure 10.3.3 Site-to-Power Plant Conversion Factors for Electricity..................................... 10-9

Figure 10.4.1 Total Installed Cost Projected for the Base Case and Each Candidate 

Standard Case, Residential Settings................................................................. 10-13

Figure 10.4.2 Total Installed Cost Projected for the Base Case and Each Candidate 

Standards Case, Commercial Settings ............................................................. 10-14

Figure 10.5.2 Non-Discounted Changes in Annual Installed Cost and Operating Costs 

under CSL 1 ..................................................................................................... 10-19
10-1

CHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the methods the U.S. Department of Energy (DOE) used to 

conduct a national impacts analysis (NIA) of potential energy efficiency standard levels for 

portable air conditioners (ACs). DOE evaluated the following impacts: (1) national energy 

savings (NES) attributable to each standard, (2) monetary value of the energy savings for 

consumers of portable ACs, (3) increased total installed costs of portable ACs because of 

standards, and (4) the net present value (NPV), which is the difference between the value of

energy savings and of increased total installed costs for each standard considered.

DOE determined the NES and NPV for all the candidate standard levels (CSLs) 

considered for portable ACs. DOE performed all calculations using a Microsoft Excel 

spreadsheet model, which is accessible on the Internet at

(www.eere.energy.gov/buildings/appliance_standards/). The spreadsheet combines the 

calculations for determining the NES and NPV for each considered CSL with input from the 

appropriate shipments model. Details and instructions for using the NIA model are provided in 

appendix 10-A. 

Chapter 9 provides a detailed description of the shipments model that DOE used to 

project future purchases of portable ACs. Chapter 9 also includes descriptions of consumers’ 

sensitivities to total installed cost (purchase price plus installation costs) and operating costs, and 

how DOE captured those sensitivities within the model. 

DOE analyzed the benefits and burdens of four CSLs for portable ACs. The CSLs were 

derived from the energy efficiency levels for portable ACs that DOE developed in chapter 5 

analyzed in chapter 8. Table Error! Reference source not found. presents the CSLs, their

corresponding efficiency levels, and their cooling energy efficiency ratios (EERcms) at various

average capacities, which are given in British thermal units per hour (Btu/hr). CSL 4 represents 

the maximum technologically feasible (“max-tech”) improvement in energy efficiency for 

portable ACs. CSLs 2 and 3 represent intermediate efficiency levels between CSLs 1 and 4. CSL 

1 represents the first efficiency level considered that exceeds baseline efficiency.

Table 10.1.1 Candidate Standard Levels for Portable ACs

CSL Efficiency

Level

Average Capacity

Btu/hr

Average EERcm

Btu/Wh

-- Baseline 2,512 2.08

1 1 4,327 3.53

2 2 5,294 4.32

3 3 6,540 5.28

4 4 6,604 5.82
10-2

10.2 PROJECTED ENERGY EFFICIENCIES

A key component of DOE’s estimates of NES and NPV for portable ACs is the energy 

efficiencies projected for the base case (without new energy conservation standards) and each 

standards case (with new energy conservation standards). The projected energy efficiency

represents the annual shipments-weighted energy efficiency of portable ACs during the analysis 

period (that is, from the assumed effective date of a new standard to 30 years after that date).

Based on DOE’s implementation report for energy conservation standards activities submitted 

pursuant to Section 141 of the Energy Policy Act of 2005, a final rule for the portable air 

conditioners being considered for this standards rulemaking is scheduled for completion in 

August 2016.1 The effective date of any new energy efficiency standards for portable ACs would 

be 3 years after the final rule is published, or August 2019.

For calculating the NES, per-unit average annual energy consumption is a direct function 

of product energy efficiency. For the NPV, the per-unit total installed cost is a direct function of 

energy efficiency; the per-unit annual operating cost, because it is a function of per-unit annual 

energy consumption, is indirectly dependent on product energy efficiency. The above NES and 

NPV inputs, as well as all other inputs for the calculation of NES and NPV, are discussed further 

in sections 10.3 and 10.4.

To project the base-case energy efficiency for portable ACs, DOE used as a starting point 

the shipments-weighted cooling energy efficiency ratio (SWEERcm) for 2019 (the assumed date 

of compliance with a new standard). To represent the distribution of product energy efficiencies 

in 2019, DOE used the same market shares as used in the base case for the life-cycle cost 

analysis (described in chapter 8). To project efficiencies for the base case, DOE made 

assumptions regarding future improvements in efficiency, assuming an annual increase in 

efficiency of 0.25 percent between 2019 and 2048.

In order to project standards-case energy efficiencies for portable ACs, DOE used a “rollup” scenario to establish the shipments-weighted average energy efficiency for 2019. Using this 

approach, product energy efficiencies in the base case that do not meet the standard level under 

consideration would “roll up” to meet the new standard level. Product energy efficiencies in the 

base case that exceed the standard level under consideration would not be affected.

In addition to a “roll-up” scenario for standards cases, DOE developed a shift scenario in 

which DOE applied an annual growth rate in average energy efficiency to the SWEERcm, as done 

for the base case. To develop projected SWEERcms for standards cases, DOE developed growth 

trends for each candidate standard level that maintained, throughout the analysis period (2019–

2048), the same difference in per-unit average total installed cost as between the base case and 

each standards case found in 2019. DOE’s approach to developing standards-case SWEERcms 

assumes that the adoption of more efficient products under a standards case can occur only at a 

rate that ensures that the average difference in total installed cost between the standards case and 

base case is held constant throughout the analysis period. Because the total installed cost versus 

efficiency relationship demonstrates an increasing cost for more efficient products, the 
10-3

SWEERcm growth rate for each standards case is lower than the SWEERcm growth rate for the 

base case.

Table 10.2.1 shows the market shares of base- and standards-case products in 2019. The 

table also presents the energy efficiency ratios that DOE used in its NIA for portable ACs and

the SWEERcm for each considered candidate standard level.

Table 10.2.1 Portable ACs: Base-Case and Standards-Case Energy Efficiency 

Distributions in 2019

Efficiency 

Level

Average 

Capacity

Average 

EERcm

Market Share %

Base 

Case

Candidate Standard Level

Btu/h Btu/Wh 1 2 3 4

Baseline 2,512 2.08 90 0 0 0 0

1 4,327 3.53 5 95 0 0 0

2 5,294 4.32 5 5 100 0 0

3 6,540 5.28 0 0 0 100 0

4 6,604 5.82 0 0 0 0 100

SWEERcm Btu/Wh 2.26 3.57 4.32 5.28 5.82

0 illustrates the approach DOE used to estimate SWEERcms for portable ACs. The figure 

shows the EERcm-based historical base-case SWEERcms, the base-case projected energy 

efficiency trend, and the projected energy efficiency trend for each standards case for portable

ACs. As the figure illustrates, the growth rates in efficiency for the standards cases are slightly 

lower than for the base case. Note that for the standards cases, the efficiency trend does not 

increase past the max-tech level. 
10-4

Figure 10.2.1 Projected SWEERcms for the Base Case and Each 

Candidate Standard Case

10.3 NATIONAL ENERGY SAVINGS

DOE calculated the national energy savings associated with the difference between the 

base case and each candidate standard level for portable ACs. DOE calculated cumulative energy 

savings throughout the analysis period, from 2019 to 30 years after that date (through 2048).

10.3.1 Definition of National Energy Savings

The following equation shows that DOE calculated annual national energy savings 

(NES) as the difference between two projections: a base case (without new standards) and a 

standards case. Positive values of NES represent energy savings (that is, they show that national 

annual energy consumption (AEC) under a standards case is less than in the base case).

BASE STD NESy AEC AEC _



Cumulative energy savings are the sum of annual NES throughout the analysis period, 

from 2019 to through 2048. 

DOE calculated the national annual site energy consumption by multiplying the number 

or stock of the product (by vintage) by its unit energy consumption (UEC; also by vintage). 

National annual energy consumption is calculated using the following equation.

1.0

2.0

3.0

4.0

5.0

6.0

7.0

SWEER (Btu/Wh)

Base Case CSL 1 CSL 2 CSL 3 CSL 4
10-5

AECy STOCKVUECV

Where: 

AEC = annual national energy consumption each year in quadrillion Btus (quads), 

summed over vintages of the product stock, STOCKV;

NES = annual national energy savings (quads);

STOCKV = stock of product (millions of units) of vintage V that survive in the year for 

which DOE calculated annual energy consumption;

UECV = annual energy consumption of portable ACs in kilowatt-hours (kWh);

V = year in which the product was purchased as a new unit; and 

y = year in the forecast.

The stock of a product depends on annual shipments and the lifetime of the product. As 

described in chapter 9, DOE projected product shipments under the base case and standards 

cases. To avoid including savings attributable to shipments displaced (units not purchased) 

because of standards, DOE used the projected candidate standards-case shipments and, in turn, 

the standards-case stock, to calculate the AEC for the base case. 

10.3.2 Inputs to Calculation of National Energy Savings

The inputs for determining NES are:

 annual energy consumption per unit,

 shipments,

 product stock (considered along with shipments),

 national annual energy consumption, and

 site-to-primary conversion factor.

10.3.2.1 Annual Energy Consumption per Unit

DOE developed per-unit annual energy consumption as a function of product energy 

efficiency for portable ACs (Chapter 7, Energy Use Characterization, and Chapter 8, Life-Cycle 

Cost and Payback Period Analysis). Because per-unit annual energy consumption depends

directly on energy efficiency, DOE used the shipments-weighted energy efficiencies for the base 

and standards cases (presented in section 10.2), along with the annual energy use data presented 

in chapter 8, to estimate the shipments-weighted annual average per-unit energy consumption 

(SWAEU) under the base and standards cases. Table 10.3.1 shows the values of AEUs and 

average SWAEUs applied to shipments to both the residential and commercial sectors.
10-6

Table 10.3.1 Shipments-Weighted Average per-Unit Annual Energy Consumption in 

2014, Residential and Commercial Sectors

Efficiency 

Level

Annual Energy Use 

kWh/yr

Market Share %

Base 

Case

Candidate Standard Level

Residential Commercial 1 2 3 4

Baseline 724 1,713 90 0 0 0 0

1 525 1,411 5 95 0 0 0

2 473 1,330 5 5 100 0 0

3 434 1,274 0 0 0 100 0

4 400 1,173 0 0 0 0 100

SWAEU 

kWh/yr

Residential 701 522 473 434 400

Commercial 1,679 1,407 1,330 1,274 1,173

As noted in section 10.2, DOE applied a growth rate to the SWEERcm to project energy 

efficiencies under the base and standards cases. Because per-unit annual energy consumption is a 

function of energy efficiency, the values shown in Table 10.3.1 scale with the average SWAEU

throughout the analysis period. Figure 10.3.1 and Error! Reference source not found. show the 

evolution of the SWAEU for portable ACs in the base case and under each candidate standard 

level for residential and commercial settings, respectively.

Figure 10.3.1 Projected Energy Consumption for the Base Case and 

Each Candidate Standards Case, Residential Settings

350

400

450

500

550

600

650

700

750

SWAEU (kWh/yr)

Base Case CSL 1 CSL 2 CSL 3 CSL 4
10-7

Figure 10.3.2 Projected Energy Consumption for the Base Case and 

Each Candidate Standards Case, Commercial Settings

As Error! Reference source not found. illustrates, because the efficiency trend in the 

standards cases does not surpass the max-tech level, under CSL 4 the SWAEU stays constant and 

equal to the max-tech level.

10.3.2.2 Shipments and Product Stock

The product stock in a given year is the number of products shipped from earlier years 

that survive in that year. The NIA model tracks the number of units shipped each year. DOE

assumes that products have an increasing probability of retiring as they age. The probability of 

survival as a function of years since purchase is the survival function. Chapter 9 of this 

preliminary TSD provides additional details on the survival function that DOE used for portable 

ACs.

10.3.2.3 National annual Energy Consumption

The national annual energy consumption (AEC) is the product of the annual energy 

consumption per unit (UEC) and the number of units of each vintage (V). This method of 

calculation accounts for differences in unit energy consumption from year to year. DOE used the 

equation below (initially presented in section 10.3.1) to calculate annual energy consumption.

AEC STOCKV UECV

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

SWAEU (kWh/yr)

Base Case CSL 1 CSL 2 CSL 3 CSL 4
10-8

In determining national annual energy consumption, DOE first calculated annual energy 

consumption at the site, then applied a conversion factor, described below, to calculate primary 

energy consumption. 

10.3.2.4 Site-to-Power-Plant Energy Conversion Factors

In determining annual NES, DOE initially considered the annual energy consumption at a 

residence (for electricity, the energy in kWh consumed by a household). DOE then calculated 

primary (source) energy use from site energy consumption by applying a conversion factor to 

account for losses associated with the generation, transmission, and distribution of electricity.

The site-to-source conversion factor is a multiplicative factor used to convert site energy 

consumption into primary, or source, energy consumption, expressed in quadrillion Btu (quads).

DOE used annual site-to-power-plant conversion factors based on the version of the 

national energy modeling system (NEMS)athat corresponds to the DOE Energy Information 

Administration’s (EIA’s) Annual Energy Outlook 2014 (AEO 2014).

2 The factors are marginal 

values, which represent the response of the national power system to an incremental decrease in 

consumption. For electricity, the conversion factors change over time in response to projected 

changes in generation sources (the types of power plants projected to provide electricity).

Error! Reference source not found. shows the site-to-power-plant conversion factors 

for electricity between 2019 and 2040 for portable ACs. The conversion factors were generated 

by NEMS based on the load shape for portable ACs. NEMS output stops in 2040; DOE assumed 

that conversion factors remain constant at 2040 values through the end of the analysis period 

(2048).

 

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration 

documentation. A useful summary is National Energy Modeling System: An Overview 2000, DOE/EIA0581(2000), March 2000. EIA approves use of the name NEMS to describe only an official version of the model 

with no modification to code or data. Because this analysis entails minor code modifications, and the model is run 

under policy scenarios that are variations on EIA assumptions, DOE refers to the model as NEMS-BT (BT is 

DOE’s Building Technologies Program, under whose aegis this work was performed). NEMS-BT previously was 

called NEMS-BRS.
10-9

Figure 10.3.3 Site-to-Power Plant Conversion Factors for Electricity

10.3.2.5 Full-Fuel-Cycle Multipliers

The full-fuel-cycle (FFC) encompasses point-of-use (site) energy; the energy losses 

associated with generation, transmission, and distribution of electricity; and the energy 

consumed in extracting, processing, and transporting or distributing primary fuels. To estimate 

the FFC by including the energy consumed in extracting, processing, and transporting or 

distributing primary fuels, referred to as upstream activities, DOE developed FFC multipliersb

using the data and projections generated for AEO 2014. The AEO 2014 provides extensive 

information about the energy system, including projections of future oil, natural gas, and coal 

supplies; energy use for oil and gas field and refinery operations; and fuel consumption and 

emissions related to electric power production. The information can be used to define a set of 

parameters that represent the energy intensity of energy production. The method used to 

calculate FFC energy multipliers is described in appendix 10-B.

Table 10.3.2 shows the FFC energy multipliers used for portable ACs for selected years. 

The 2040 values were used for the years after 2040.

 

b FFC multipliers discussed in this chapter relate to the upstream part of the FFC process.

8.00

8.50

9.00

9.50

10.00

10.50

11.00

mn Btu/MWh

Year

Residential

Commercial
10-10

Table 10.3.2 Full-Fuel-Cycle Energy Multipliers (based on AEO 2014)

Electricity

(power plant energy use) 2019 2020 2025 2030 2035 2040

Residential 1.043 1.044 1.045 1.046 1.047 1.047

Commercial 1.043 1.044 1.045 1.046 1.047 1.047

10.3.2.6 Rebound Effect

A rebound effect may follow an energy conservation standard, in that consumers may 

increase usage of a product because it costs less to operate than previous models. A rebound 

effect reduces the energy savings attributable to a standard. DOE generally accounts for the 

direct rebound effect when estimating the NES. For this preliminary analysis, DOE used a 

rebound effect of zero. DOE welcomes data on rebound effects associated with portable ACs.

10.4 NET PRESENT VALUE

DOE calculated the net present value (NPV) of the increased product cost and reduced 

operating cost associated with the difference between the base case and each candidate standard 

level for portable ACs. 

10.4.1 Definition of Net Present Value

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

described by the equation:

NPV PVS PVC _

Where:

PVS = present value of operating cost savings, and 

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

installation costs). 

DOE determined the PVS and PVC according to the following expressions.

PVS ∑OCSyDFy

PVC ∑TICyDFy

Where: 
10-11

OCS = total annual savings in operating costs each year summed over vintages of the 

product stock, STOCKV;

DF = discount factor in each year;

TIC = total annual increases in installed cost each year summed over vintages of the 

product stock, STOCKV; and

y = year in the forecast.

DOE calculated the total annual consumer savings in operating costs by multiplying the 

number or stock of the product (by vintage) by its per-unit operating cost savings (also by 

vintage). DOE calculated the total annual increases in consumer product price by multiplying the 

number or shipments of the product (by vintage) by its per-unit increase in consumer cost (also 

by vintage). Total annual operating cost savings and total annual product price increases are 

calculated by the following equations.

OCSy∑STOCKV UOCSV

TICy∑SHIPyUTICy

Where:

STOCKV = stock of products of vintage V that survive in the year for which DOE 

calculated annual energy consumption,

UOCSV = annual operating cost savings per unit of vintage V,

V = year in which the product was purchased as a new unit;

SHIPy = shipments of the product in year y; and

UTICy = annual per-unit increase in installed product price in year y.

DOE determined the total increased product price for each year from 2019 to 2048. DOE

determined the present value of operating cost savings for each year from 2019 to the year when 

all units purchased in 2048 are estimated to retire (2077). DOE calculated costs and savings as 

the difference between a standards case and a base case without new standards. 

DOE developed a discount factor from the national discount rate and the number of years 

between the “present” (year to which the sum is being discounted) and the year in which the 

costs and savings occur. The NPV is the sum over time of the discounted net savings.

10.4.2 Inputs to Calculation of Net Present Value

The inputs to the calculation of NPV are:

 total installed cost per unit,

 total annual increases in installed cost,

 annual savings in operating cost per unit,
10-12

 total annual operating costs,

 discount factor,

 present value of costs, and

 present value of savings.

The increase in total annual installed cost is equal to the annual change in the per-unit 

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

shipments forecasted for the standards case. As when calculating the NES, DOE did not use 

base-case shipments to calculate total annual installed costs.

The total annual savings in operating costs are equal to the change in annual operating 

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

forecasted in the standards case. The annual operating cost includes energy, repair, and 

maintenance costs, as described in chapter 8.

10.4.2.1 Total Installed Cost per Unit

The per-unit total installed cost of portable ACs, described in chapter 8, is a function of 

product energy efficiency. Because the per-unit total annual installed cost depends directly on 

energy efficiency, DOE used the shipments-weighted energy efficiencies distribution of the base 

and standards cases described in section 10.2, in combination with the total installed costs 

developed in chapter 8, to estimate the shipments-weighted average annual per-unit total 

installed cost under the base and standards cases. Table 10.4.1 shows the shipment-weighted 

average consumer price for portable ACs in 2019 based on the efficiency distributions that

correspond to the base case and each standards case.

Table 10.4.1 Shipments-Weighted Average Total Installed Cost in 2019

Efficiency Level Unit Price 2013$ Market Share %

Base 

Case

Candidate Standard Level

Residential Commercial 1 2 3 4

Baseline 534 534 90 0 0 0 0

1 540 540 5 95 0 0 0

2 541 541 5 5 100 0 0

3 542 542 0 0 0 100 0

4 605 605 0 0 0 0 100

Total Installed 

Cost 2013$

Residential 534 540 541 542 605

Commercial 534 540 541 542 605

As discussed in chapter 8, DOE developed a price trend based on the producer price 

index series for “small electric household appliances, except fans” from 1983 to 2013. DOE used 

the price trend to project the prices of portable ACs sold in each year of the forecast period 

(2019–2048). The price in each year was estimated as an exponential function of the year, and 
10-13

DOE applied the same values to project prices at each CSL. For portable ACs, the estimated 

average annual rate of price decline is 1.99 percent. To investigate the effect of different product 

price projections on the consumer NPV for various efficiency levels, DOE also considered two 

alternative price trends. Details on how those alternative price trends were developed are 

documented in appendix 10-C, which also presents the results of DOE's analysis of price

sensitivities.

Figure 10.4.1 and Figure 10.4.2 show the projected trends in installed cost for portable air 

conditioner units in the residential and commercial sectors, respectively. 

Figure 10.4.1 Total Installed Cost Projected for the Base Case and 

Each Candidate Standard Case, Residential Settings

$250

$300

$350

$400

$450

$500

$550

$600

$650

Total Installed Price (2013$)

Base Case CSL 1 CSL 2 CSL 3 CSL 4
10-14

Figure 10.4.2 Total Installed Cost Projected for the Base Case and 

Each Candidate Standards Case, Commercial Settings

10.4.2.2 Increase in Total Annual Installed Cost

The increase in total annual installed cost for any given candidate standard level is the 

product of the total installed cost increase per unit under that standard and the number of units of 

each vintage. This approach accounts for differences in total installed cost from year to year.

DOE used the following equation (also presented in section 10.4.1) to determine the increase in 

total annual installed cost for a given CSL. 

TIC (y) ∑UTIC(y) S(y)

10.4.2.1 Annual Savings in Operating Costs per Unit

Per-unit annual operating costs encompass the annual costs for energy, repair, and 

maintenance. DOE determined the savings in per-unit annual energy cost by multiplying the 

savings in per-unit annual energy consumption by the appropriate energy price. Estimates of perunit annual energy consumption for the base case and each standards case were presented in 

section 10.3.2.1. DOE projected energy prices based on EIA’s AEO 2014. The energy prices and 

price trends are described in chapter 8.

$250

$300

$350

$400

$450

$500

$550

$600

$650

Total Installed Price (2013$)

Base Case CSL 1 CSL 2 CSL 3 CSL 4
10-15

10.4.2.2 Total Savings in Annual Operating Costs

The total savings in annual operating costs for a CSL is the product of the annual 

operating cost savings per unit under that standard and the number of units of each vintage. This 

approach accounts for differences in savings in annual operating costs from year to year. DOE 

used the following equation (also presented in section 10.4.1) to determine the total savings in 

annual operating cost for a given standards case. 

OCS(y) ∑UOCS(y) AffStock (y)

As discussed in section 10.3.1.6, a rebound effect may follow an energy conservation 

standard, in that consumers may increase usage of a product because it costs less to operate than 

previous models. The increase in energy consumption associated with the rebound effect 

represents increased value to consumers (e.g., a more comfortable indoor environment). The net 

effect is the sum of (1) the change in the cost of owning a product (that is, national consumer 

expenditures for total installed and operating costs) and (2) the increased value of the enhanced 

service from the product. DOE believes that, if the increased national value (to consumers)

produced by the rebound effect could be monetized, it would be similar to the monetary value of 

the foregone energy savings. For this analysis, DOE estimated that the increased value to 

consumers is equivalent to the monetary value of the energy savings that would have occurred 

without the rebound effect. The national economic impacts on consumers as measured by the 

NPV analysis, with or without the rebound effect, therefore are the same.

10.4.2.3 Discount Factors

DOE multiplies monetary values in future years by a discount factor to determine present 

values. The discount factor (DF) is described by the equation:

( )

_

(1 )

1

p

y y

r

DF





Where:

r = discount rate, 

y = year of the monetary value, and 

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

DOE uses both a 3-percent and a 7-percent real discount rate when estimating national 

impacts. Those discount rates were applied to product prices of portable ACs in accordance with 

the Office of Management and Budget (OMB)’s guidance to Federal agencies on developing

regulatory analyses (OMB Circular A-4, September 17, 2003, and section E., “Identifying and 

Measuring Benefits and Costs,” therein). DOE defines the present year as 2014.
10-16

10.4.2.4 Present Value of Costs

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

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

present and summed over the period for which DOE is considering the installed products (2019–

2048). The increase in total installed cost refers to both product and installation costs associated 

with the higher energy efficiency of products purchased under a standards case compared to the 

base case. DOE calculated annual increases in installed cost as the difference in total cost of new 

products installed each year, multiplied by the shipments in the standards case.

10.4.2.5 Present Value of Savings

The present value of savings in operating costs is the annual savings in operating cost 

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

summed over the period that begins with the effective date of standards and ends when the last 

installed unit is retired from service. Savings represent decreases in operating costs (including 

costs for energy, repair, and maintenance) associated with the higher energy efficiency of 

products purchased in a standards case compared to the base case. Total annual savings in 

operating costs are the savings per unit multiplied by the number of units of each vintage that 

survive in a particular year. Because a product consumes energy throughout its lifetime, the 

energy consumption for units installed in a given year includes energy consumed until the unit is 

retired from service.

10.5 RESULTS

The NIA model provides estimates of the NES and NPV associated with conservation

standards at different efficiency levels. The inputs to the NIA model were discussed in sections 

Error! Reference source not found. (NES Inputs) and 10.4.2 (NPV Inputs). DOE generated the 

NES and NPV results using a Microsoft Excel spreadsheet, which is accessible on the Internet at

(www.eere.energy.gov/buildings/appliance_standards/). Details and instructions for using the 

spreadsheet are provided in appendix 9-A, User Instructions for Shipments and National Energy 

Savings Spreadsheet Model, in the section titled, “NES and NPV Input Summary.” Table 10.5.1

summarizes inputs to the NIA model.
10-17

Table 10.5.1 Inputs to Calculating National Energy Savings and Net Present Value

Input Data Description

Shipments Annual shipments from shipments model (chapter 9).

Effective date of standard 2014.

Energy efficiency in base case SWEERcm determined for 2019. Annual growth rate of 0.25 

percent assumed for determining SWEERcm between 2019 and 

2048 (see section 10.2).

Energy efficiency in standards cases “Roll-up + shift” scenario assumed for determining SWEERcm

in 2019 for each standards case (see section 10.2).

Annual energy consumption per unit Annual weighted-average values are a function of shipmentsweighted UEC.

Total installed cost per unit Annual weighted-average values are a function of efficiency 

distribution. 

Energy cost per unit Annual weighted-average values are a function of the annual 

UEC and energy prices (see chapter 8 for energy prices).

Repair and maintenance costs per unit Annual values are a function of efficiency level (see chapter 8).

Trend in energy prices Based on EIA's AEO 2014 projection (to 2040) (see chapter 8).

Energy site-to-power plant conversion A time-series conversion factor that includes losses due to 

electricity generation, transmission, and distribution. 

Conversion, which changes yearly, is generated by DOE/EIA’s 

NEMS* program.

Full-fuel-cycle multiplier Developed to include the energy consumed in extracting, 

processing, and transporting or distributing primary fuels.

Discount rate 3 percent and 7 percent real.

Present year Future expenses are discounted to 2014.

* Section 10.3.2.4 provides more detail on NEMS.

10.5.2 National Energy Savings by Candidate Standard Level

This section provides results of calculating NES for each candidate standard level 

analyzed for portable ACs. NES results, which are cumulative to 2077 (the year in which 

products purchased in 2048 would be expected to be retired), are shown as savings in both 

primary and full-fuel-cycle energy. Because DOE based the inputs to the NIA model on 

weighted-average values, results are discrete point values, rather than a distribution of values as 

produced by the life-cycle cost and payback period analysis (chapter 8). Table 10.5.2 and Table 

10.5.4 show the primary and full-fuel-cycle energy savings, respectively, for the CSLs analyzed 

for portable ACs. 
10-18

Table 10.5.2 Cumulative Primary National Energy Savings

CSL

Portable ACs in 

Residential Sites, 

Primary Quads

Portable ACs in 

Commercial Sites, 

Primary Quads

Portable ACs in 

both Sectors, 

Primary Quads

1 0.526 0.007 0.534

2 0.675 0.010 0.684

3 0.797 0.011 0.809

4 0.917 0.015 0.932

Table 10.5.3 National Energy Savings for Full-Fuel-Cycle 

CSL

Portable ACs in 

Residential Sites 

Quads

Portable ACs in 

Commercial Sites 

Quads

Portable ACs in 

both Sectors 

Quads

1 0.551 0.008 0.558

2 0.706 0.010 0.716

3 0.834 0.012 0.846

4 0.959 0.016 0.975

10.5.3 Annual Costs and Savings

Figure 10.5.1 illustrates the basic inputs to calculating the NPV under CSL 1 for the nondiscounted annual increases in installed cost and annual savings in operating cost for portable

ACs. The annual product cost is the sum of the increase in total installed cost for products 

purchased each year during the analysis period. The annual savings in operating cost is the 

savings for products operating in each year. The figure also shows net savings, which is the 

difference between the savings and costs for each year. The NPV is the difference between the 

cumulative annual discounted savings and the cumulative annual discounted costs. DOE could 

create figures like Error! Reference source not found. for each CSL.
10-19

Figure 10.5.1 Non-Discounted Changes in Annual Installed Cost and 

Operating Costs under CSL 1

10.5.4 Consumer Net Present Value by Candidate Standard Level

This section provides results of calculating the net present value (NPV) of consumer 

benefits for each candidate standard level considered for portable ACs. Results, which are 

cumulative, are shown as the discounted value of the net savings in dollar terms. DOE based the 

inputs to the NIA model on weighted-average values, yielding results that are discrete point 

values, rather than a distribution of values as in the life-cycle cost and payback period analysis.

Table 10.5.4 shows the results of calculating the NPV for the CSLs analyzed for portable 

ACs. The table presents the NPV at both a 3-percent and a 7-percent discount rate.

-0.100

0.000

0.100

0.200

0.300

0.400

Billion 2013$

Operating Cost Savings

Equipment Cost

Net Savings
10-20

Table 10.5.4 Cumulative Consumer Net Present Value for Each CSL

CSL

NPV at 3% Discount Rate

Billion, 2013$

NPV at 7% Discount Rate

Billion, 2013$

Residential Commercial Total Residential Commercial Total

1 3.972 0.060 4.031 1.703 0.026 1.728

2 5.099 0.079 5.178 2.187 0.034 2.221

3 6.022 0.092 6.114 2.581 0.040 2.621

4 6.023 0.113 6.137 2.482 0.048 2.529
10-21

REFERENCES

 

1 U.S. Department of Energy. Implementation Report: Energy Conservation Standards 

Activities: Submitted Pursuant to Section 141 of the Energy Policy Act of 2005. August 

2006. (Last accessed September 9, 2014.) 

<http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/implementation_repor

t_0806.pdf>.

2 Energy Information Administration. Annual Energy Outlook 2014 with Projections to 

2040. April 2014. Washington, D.C. Report No. DOE/EIA-0383(2014). (Last accessed 

September 9, 2014.) <http://www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf>