GG· 

Life Cycle Cost Analysis: 

Clothes Washers 

-----------------~ Jim McMahon 

J EMcMahon@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 

weighted average) 

or percentiles 

(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 -

Iii Water Use 

-'-

~ -

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 of clothes 

washer & clothes dryer 

- fuel type of water heater 

- fuel type of clothes 

dryer 

- energy prices 

- persons per household 

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+Hoc Il)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 O is 

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) 

Electric Witer Ihlter+ Nectric fi)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 

• water price trend 

SIMULATION 

• markup 

• lifetime 

• discount rate 

• manufacturing cost 

• households 

-• energy & water prices 

Clothes Washer Life Cycle Cost 

~) 

22 
1!-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 

O Outliers 

10000 

' 0 

$150 

25 

.,, 

... 

n 

.Cl 

c 

n 

::I 

~