# GG· Life Cycle Cost Analysis: Clothes Washers



# -----------------**~** Jim McMahon JEMcMahon@lbl.gov 

### Ernest Orlando Lawrence Berkeley National Laboratory To USDOE Workshop March 11-12, 1998

# Discussion Topics • What's changed since July, 1997 • Major input assumptions • Uncertainty and variability • Sample output: life cycle cost • Sensitivity of results to major inputs

3/11-12/98 Clothes Washer Life Cycle Cost 2

# Recent Developments • DOE Workshop (July, 1997)

- Demonstration of first draft LCC spreadsheet 

### • Informal demonstration of revised draft LCC • Informal pilot training on two draft LCC spreadsheets • Release of draft LCC spreadsheet via DOE Web site - • DOE Workshop (March, 1998)

- Discussion of LCC spreadsheet and inputs
3/11-12/98 Clothes Washer Life Cycle Cost 3

# Major changes • Engineering analysis • Energy prices •Water and sewage costs • Uncertainty 

# &variability analysis

- 311- 1_1- 2198 ------ Clothes Washer Life Cycle Cost 4

# Engineering analysis
• OLD (1997 July)

- Design options

- Single value: average manufacturing cost 

## • NEW(1998 March)

- Efficiency levels (AHAMdata) (energy reduction levels:**~1~1~2~2~3~4~4~50%)**



## - Cost Distribution: 

## SWA (shipment weightedaverage) 

## orpercentiles (0, 10,25,50,75,90, 100%)
3/11-12/98 Clothes Washer Life Cycle Cost 5

# Input: Engineering Analysis $m**~·**$175 

### I Iii Ira Mgilit

### I**~** e$i:n**~** tll 8$125**~$1CD** 

# ·-



# - "6 $75**~** 

# s $:i) c=**~** $25 

### SD -+-------1----l---+--J=l---l-a=l-+- Q82**Q~** Q91 Q% 1.02 l.Q) l.'.!i 1.36 1.4) l.ffi MF 

### • Modified Energy Factor (MEF) includes: machine electricity

- water heating

- clothes drying 

### • Baseline washer meets current DOE standard (equivalent to MEF=0.817) • Incremental manufacturing cost (distribution from AHAM, SWA shown here) vs MEF

- 31- 11-_ 1 - 21- 98---------Clothes Washer Life Cycle Cost 6

# Input: Purchase Price**082Q~Q91** Q% 1.02 l.(J) 126 l\ff' . 1.36 1.49 1.63

3/11-12/98 Hgh I*an Mni.rup Low 

### • Baseline price = 

### $400 +tax • Incremental price for each efficiency level includes: incremental manufacturing cost (AHAM)

- manufacturer variable markup

- retail fixed markup (1.40)

- sales tax (5.2°/o)
Clothes Washer Life Cycle Cost 7

# Input: Energy and water use**~** 3.5 Cl) 3.0 -- c.s**~** i::Q**~** V'l 0**~** 

# -**~** V'l 

# - 0 N**~** - V'l N**~** - V'l (")

-

- 0.0 I I N \0 

# - \0 N °' \0 00 00 °' °'**~ ~**  C"! 0 0 0 0 

# - - 

# - l\1EF

3/11-12/98 -**~FnergyUse** - IiiWaterUse -'-**~** -

0**~** ""'"**~** V'l ""'" 0
- V'l

-

-

- \0 °' (") C'l '<:!:**~** 

# - - - 40 35 30 'Cj'**~** 25 ::;**~** ..._, 20**~ ~**  15 t 

# -**~** 10**~** 5 0 

### • Energy consumption (kWh/cycle) vs MEF includes: machine electricity

- water heating

- clothes drying 

### • Water consumption (gal/cycle) includes hot and cold • Energy reduction levels are labeled (Base - 

### 5 to 

### 50°/o) Clothes Washer Life Cycle Cost 8

# Energy prices: variability
• OLD (1997 July)

- US average price

3111-12/98 • NEW(1998 March)

- 4,350 households from EIA RECS survey 1993

- ownership ofclothes washer

### & clothes dryer

- fuel type ofwaterheater

- fuel type ofclothes dryer

- energyprices

- persons perhousehold Clothes Washer Life Cycle Cost 9

# Energy price: Fixed charges • (OLD) 1997 July

- Price= Revenues($) 

## I Sales 

## (kWh) (U.S. average)

- Fixed charges included

3/11-12/98 

## • (NEW) 1998 March

- Price 

## = Cost of 1000 kWh 

## or 1000 

## cubic feet (by utility) [from EIA 

## RECS 1993]

- Subtract fixed charges (US average: electric 7.5% gas 12%) Clothes Washer Life Cycle Cost 

### . .,

10

# Energy price: Time trend
• (OLD) 1997 July

- AEO 1997

- GRI 1997

- GRI 1996 

## • (NEW) 1998 March

- AEO 1998 • Reference Case • High Economic Growth • Low Economic Growth



## - GR/ 1998

- 311 - 1_- 12- 198 ------- Clothes Washer Life Cycle Cost ..

11

# Input: Energy Prices

9 Electricity Price 6.5 Gas Price . gh G h -H1 rowt w/o fixed cost w/o fixed cost --+-AEO 1998 8 6.0 -GRI 1998**~** 7 = -Low Growth 

## = 5.5 

## -------**~** 6**~** 

## ----·--**~** 5.0 (j .,.. _,,.._,..._**_.GS~..;-** 5 4.5 -Low Growth 

## ----·-- 4 4.0 1995 2000 2005 2010 2015 2020 2025 2030 1995 2000 2005 2010 2015 2020 2025 2030 9.0 Oil Price 8.5 8.0 = 7.5 .... 

# = 

# i 7.0 6.5 -High Growth -+-AEO 1998 6.0 -Low Growth 5.5 -GRI 1998 5.0 1995 2000 2005 2010 2015 2020 2025 2030 3/11-12/98 Clothes Washer Life Cycle Cost 12

# Input: Water and sewage costs
• (OLD) 1997 July

- Constant at U.S. average in 1994 

### • (NEW) 1998 March

- 1994 weighted distribution

- Default escalation rate 

## = 0% real. MORE RESEARCH NEEDED

- 3, 1 -1_- 121 - 98 ------- Clothes Washer Life Cycle Cost 13•· 

# Fuel type: water heater/clothes dryer

• (OLD) 1997 July 

## • (NEW) 1998 March

- each of 6 groups 

## - U.S. Mix or
• electric/electric 

### - each of 6 groups • electric/gas • gas/electric • electric/electric • gas/gas • electric/gas • oil/electric • gas/electric • oil/gas • gas/gas • oil/electric • oil/gas

- 31- 11-_ 1-

219 - 8-------- Clothes Washer Life Cycle Cost 14•, 

# Annual operating expense $14) llViltfr 

## • Baseline annual operating (]]Ci$ $1J) mas$ 

### expense ($/a) in year 2003 Elie$ 

### vs fuel used for water**~m** 

### heating and clothes drying I:"-- O'.**~$!)** 

## • Depends on Water Heater ..._**~** S9 

### SID**~** 

### and Dryer combination: Q.

- cycles per year

### ~${) - fuel(s) used $D - energy pnces

- water and sewage rates 

# so 1hilk lhiGs Gslik Gs'Gs CJIJh; Cl'Gs WerHUtr/Il)R

- 3,- 11-_ 1 - 2,- 98--------- Clothes Washer Life Cycle Cost 15$1-0 

# Operating expense vs MEF

mi&;\\H+HocIl)6" []Of;\\H+Gf; Ily


### II 082 Oal 091 0% lffi l(J)**1~** 1?6 14) 161 MIB 

### • Annual operating expense ($/a) vs 

### MEF • Two examples:

- electric water heater + electric clothes dryer

- gas water heater +gas dryer

3/11-12/98 Clothes Washer Life Cycle Cost 16

# Cumulative Cash Flow vs MEF
• Cumulative cash flow (CCF) is the sum of purchase price plus annual operating expenses over the appliance lifetime • Cash flow at year Ois purchase price • Slope is annual operating expense • Chart shows baseline and 

### 20,35,50°/o energy reduction 0 1 2 3 4 5 6 7 8 9 ID ll ll B M**¥as~pnhR**

- 31- 11-_ 1-

219 - 8--------- Clothes Washer Life Cycle Cost-- 1-

7

# Cumulative Cash Flow and LCC
• Cumulative cash flow (CCF) is the sum of purchase price plus annual operating expenses over the appliance lifetime • Life cycle cost (LCC) is the discounted sum • Chart shows CCF and LCC for baseline by years since purchase 0 1 2 3 4 5 6 7 8 9 ID ll llB W**leas~**

### J.Illhtie 3/11-12/98 Clothes Washer Life Cycle Cost 18

# Clothes Washer LCC vs MEF • Simple LCC for each MEF (pu_rchase price plus discounted sum of annual operating expenses over life) • EXAMPLE: Clothes washer purchased in 2003, 

### using electric water heater and electric dryer. Lifetime: 14 years. Discount rate: 

### 6°/o real. Energy prices: AE098 Reference less fixed charges (7

### .5°/o) ElectricWiterIhlter+Nectricfi)er $1,(ffi $1,400 V; $1,XD r-...**~** $1,(ll)**~** 

# --**~** S8D f:'-l 

### 5 Sfffi**~ ~** **~** $400 $m SU

### ~**~**

082 oa:> 091 0% 1.02 I.OJ 1.26**l.~** 1.4) 1.61 l\1EF
3111-12/98 Clothes Washer Life Cycle Cost 19 •.

# Clothes Washer LCC vs MEF
• Simple LCC for each MEF (purchase price plus discounted sum of annual operating expenses over life) • EXAMPLE: Clothes washer purchased in 2003, using gas water heater and gas dryer. ·Lifetime: 14 years.

Discount rate: 

### 6°/o real. Energy prices: 

### AE098 less fixed charges 

### (12°/o). $1,(ffi $1,400**~$1,n> ~** **~** $1,ffi) ,.... -.._...**~** S3X> 1:1.l

### ~ S'lill**~ ~**  $400 $ID SD

### ~**~**

082 OF6 091 0% 102 l(J) 1J5 1:6 149 16.1 l\1EF 3/11-12/98 Clothes Washer Life Cycle Cost 20

# Uncertainty and variability
• Identify key uncertainties and variabilities

- uncertainty: incomplete information

- variability: range of values 

### • Estimate input ranges rather than point values

- minimum, likeliest, maximum values 

### • Conduct scenario ("what-if") analysis • Simulate over input ranges • Express output as ranges

- Percent of consumers having lower life cycle cost
3/11-12/98 Clothes Washer Life Cycle Cost .,

21

# Uncertainty and variability
• (OLD) 1997 July

- SCENARIOS • energy price trend • start date • standard level • discount rate



### - SIMULATION • markup • lifetime

3/11-12/98 

## • (NEW) 1998 March

- SCENARIOS • energy price trend • start date • standard level • energy fixed charges • waterprice trend 

### SIMULATION • markup • lifetime • discount rate • manufacturing cost • households

- • energy & waterprices Clothes Washer Life Cycle Cost**~)**

221!-1 

# SCENARIO
• Energy price trend • Energy fixed charges (percent of total bill) • Start date (effective date of new standard) • Standard level (MEF) • Water price trend (real escalation rate)

3/11-12/98 Clothes Washer Life Cycle Cost 23

# SIMULATION • Select one household from RECS (weighted)

- fuel type for water heater

- fuel type for clothes dryer

- price of energy

- persons per house determines cycles per year 

### • Adjust price of energy

- subtract fixed charges for electricity and gas

- apply time trend 

### • Sample given uncertainties

- incremental manufacturing cost, markup, water and sewage rate, lifetime, discount rate 

### • Calculate LCC 3/11-12/98 Clothes Washer Life Cycle Cost 24

# SAMPLE OUTPUT: LCC Difference • Simulation of U.S. households (

### 10,000 samples) • Change in LCC from reducing energy 

### 20°/o from baseline • Mean impact is LCC savings of $57 • Range is from $358 savings to $125 cost • Percent of sample

- 86°/o decrease LCC

- 14°/o increase LCC 10,000 Trials .053 .040**~** .ci .027 «I .ci Q ""' .013 a. .00 ($400) 10,000 Trials

.ci «I .ci Q ... a. ($400) Forecast: LCC Difference Frequency Chart

($263) ($125) $13 Certainty is 85.55% from ($400) to $0 $

Forecast: LCC Difference Cumulative Chart

($263) ($125) $13 Certainty is 85.55% from ($400) to $0 $ 3111-12/98 Clothes Washer Life Cycle Cost 0 Outliers 530 397.5 

## .,, ... n 265**~** n ::I 132.5**~** $150 OOutliers 10000

' 0 $150 25 

### .,, ... n .Cl c n ::I**~**