CHAPTER 10 : NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION

................................ ................................ ................................ ......... 10

- 1

10.2 TRIAL STANDARD LEVEL S

................................ ................................ ..................... 10

- 1

10.3 BASE CASE AND STANDA RDS CASE PROJECTED E FFICIENCIES

.................. 10

- 2

10.4 NATIONAL ENERGY AND WATER SAVIN GS

................................ ...................... 10

- 4

10.4.1 Definition

................................ ................................ ................................ ....................... 10

- 4

10.4.2 National Energy Savings Inputs

................................ ................................ ..................... 10

- 6

10.4.2.1 Annual Energy and Water Consumption per Unit

................................ ....... 10

- 6

10.4.2.2 Shipments

................................ ................................ ................................ ..... 10

- 7

10.4.2.3 Equipment Stock

................................ ................................ .......................... 10

- 8

10.4.2.4 National Annual Energy and Water Consumption

................................ ...... 10

- 8

10.4.2.5 Site

- to

- Power

- Plant Energy Use Factors

................................ ..................... 10

- 8

10.4.2.6 Full

- Fuel

- Cycle Energy Factors

................................ ................................ ... 10

- 9

10.5 NET PRESENT VALUE

................................ ................................ ............................. 10

- 10

10.5.1 Net Present Value Definition

................................ ................................ ....................... 10

- 10

10.5.2 Net Present Value Inputs

................................ ................................ ............................. 10

- 11

10.5.2.1 Total Installed Cost per Unit

................................ ................................ ...... 10

- 12

10.5.2.2 Annual Operating Cost Savings per Unit

................................ ................... 10

- 13

10.5.2.3 Total Annual Installed Cost Increases

................................ ....................... 10

- 14

10.5.2.4 Total Annual Operating Cost Savings

................................ ....................... 10

- 15

10.5.2.5 Discount Factors

................................ ................................ ........................ 10

- 15

10.5.2.6 Present Value of Costs

................................ ................................ ............... 10

- 16

10.5.2.7 Present Value of Savings

................................ ................................ ........... 10

- 16

10.6 NATIONAL ENERGY AND WATER SAVINGS AND NE T PRESENT

VALUE RESULTS

................................ ................................ ................................ ...... 10

- 16

10.6.1 National Energy Savings and Net Present Value Input Summary

............................... 10

- 16

10.6.2 National Energy and Water Savings Results

................................ ............................... 10

- 17

10.6.3 Annual Costs and Savings

................................ ................................ ........................... 10

- 18

10.6.4 Net Present Value Results

................................ ................................ ............................ 10

- 19

LIST OF TABLES

Table 10.2.1 Trial Standard Levels for Commercial Clothes Washers

................................ .. 10

- 2

Table 10.3.1 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Efficiency Distributions in 2018

................................ ............................... 10

- 3

Table 10.3.2 Front

- Loading Commercial Clothes Washers: Base Case and Standards

Case E fficiency Distributions in 2018

................................ ............................... 10

- 4

Table 10.4.1 National Energy Saving Inputs

................................ ................................ .......... 10

- 6

10

- iTable 10.4.2 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annual Energy and Water Consumption in 2 018

................................ ................................ ......................... 10

- 7

Table 10.4.3 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annual Energy and Water Consumption in 2018

................................ ................................ ......................... 10

- 7

Table 10.4.4 Full

- Fuel

- Cycle Energy Multipliers (Based on AEO 2014)

............................ 10

- 10

Table 10.5.1 Net Present Value Inputs

................................ ................................ ................. 10

- 11

Table 10.5.2 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Total Installed Costs

................. 10

- 12

Table 10.5.3 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Total Installed Costs

................. 10

- 12

Table 10.5.4 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annual ized Repair Costs in

2018

................................ ................................ ................................ .................. 10

- 14

Table 10.5.5 Front

- Loading Commercial Clothes Washers: Base Case and Standards

Case Shipment

- Weighted Average Per

- Unit Annualized Repair Costs in

2018

................................ ................................ ................................ .................. 10

- 14

Table 10.6.1 NES and NPV Inputs

................................ ................................ ....................... 10

- 17

Table 10.6.2 Top

- Loading Commercial Clothes Washers: Cumulative NES and NWS

Results

................................ ................................ ................................ .............. 10

- 18

Table 10.6.3 Front

- Loading Commercial Clothes Washers: Cumulative NES and NWS

Results

................................ ................................ ................................ .............. 10

- 18

Table 10.6.4 Top

- Loading Commercial Clothes Washers: Cumulative NPV Results

based on Seven

- Percent and Three

- Percent Discount Rates

............................ 10

- 20

Table 10.6.5 Front

- Loading Commercial Clothes Washers: Cumulative NPV Results

based on Seven

- Percent and Three

- Percent Discount Rates

............................ 10

- 20

LIST OF FIGURES

Figure 10.4.1 Site

- to

- Power Plant Energy Use Factor for Commercial Clothes Washers

....... 1 0

- 9 Figure 10.6.1 Non

- Discounted Annual Installed Cost Increases and Annual Operating Cost Savings for Top

- Loading Cloth es Washers, TSL 2

................................ . 10

- 19

10

- iiCHAPTER 10. NATIONAL IMPACT ANAL YSIS

10.1 INTRODUCTION

This chapter describes the method for estimating national impacts for commercial clothes washers, i.e., the quantity and net value to consumers of future national energy savings (NES) and water savings from possible trial standard levels (TSL s ) . Results de scribed here include: (1) national energy and water consumption and savings, (2) monetary value of energy savings to the

Nation due to TSL s, (3) increased total installed costs to the Nation due to TSL s, and (4) the net present value (NPV) of energy savin gs (difference between value of energy savings and increased total installed costs). When NES is discussed throughout this chapter, it includes national water savings in addition to national energy savings.

The U.S. Department of Energy ( DOE ) determined both the NES and NPV for all of the

TSLs considered for commercial clothes washers. It performed all calculations for each of the considered products using a Microsoft Excel spreadsheet model, which is accessible on the Internet ( http://www.eere.energy.gov/buildings/appliance_standards/ ). The spreadsheet model, referred to as the National Impact Analysis (NIA) m odel, combined the calculations for determining the NES and NPV as well as input from the relevant s hipments m odel. Details and instructions for using each of the NIA m odels are provided in Appendix 10 B

.

The important facets of national energy consumption include: (1) shipments of the equipment, (2) customer response to changes in total installed cost ( i.e., purchase price plus installation costs), operating expense, and (3) voluntary programs promoting higher energy efficiency of equipment.

Chapter 9 provides a detailed description of the s hipments m odels that DOE used to project future purchases of commercial clothes washers . Included in the discussion are detailed descriptions of c ustomers’ sensitivities to total installed cost, operating expense, and price elasticities, and how DOE captured them within the model.

Concerning voluntary programs, although they may increase the share of energy efficient equipment prior to the implementation date of any new TSL , DOE was not able to obtain information that quantified how such programs affect equipment efficiencies on a national basis. Consequently, DOE did not explicitly incorporate the impact of market

- based initiatives into the shipments projections detailed in c hapter 9

.

10.2 TRIAL STANDARD LEVEL S

DOE analyzed the benefits and burdens of three TSLs for commercial clothes washers

. These TSLs were developed using combinations of efficiency levels for the front

- loading and

top

- loading product classes analyzed by DOE. Table 10.2.1 pre sents the TSLs and the

10-1corresponding efficiency levels for CCW . TSL 4 represents the maximum technologically feasible (“max

- tech”) improvements in energy efficiency for commercial clothes washers

. TSL 3

and TSL 2 were chosen as intermediate level s between TSL4 and TSL1. TSL 1 was set at efficiency level 1 for both f ront

- loading and t op

- loading product class.

Table 10.2.1 Trial Standard Levels for Commercial Clothes Washers

Equipment Type Efficiency Levels (MEF J2 /IWF)

Baseline

FL: EL0

TL: EL0 TSL1 TSL2 TSL3 TSL4

FL: EL1

TL: EL1 FL: EL2

TL: EL1 FL: EL 2

TL: EL2 FL: EL3

TL: EL2

Front Loading CCW Units 1.65/5.5 1.80/4.5 2.00/4.0 2.00/4.0 2.20/3.7

Top Loading CCW Units 1.15/8.9 1.35/8.8 1.35/8.8 1.55/6.9 1.55/6.9

10.3 BASE CASE AND STANDA RDS CASE PROJECTED EFFICIENCIES

A key component of DOE’s estimates of NES and NPV is the energy efficiencies projected over time for the base case (without new standards) and each of the standards cases (with new standards). The projected efficiencies represent the annual shipment

- weig hted energy efficiency of the products under consideration over the projection period ( i.e., from the assumed effective date of a new standard to 30 years after the standard becomes effective). Because key inputs to the calculation of the NES and NPV are dependent on the estimated efficiencies, these efficiencies are of great importance to the a nalysis. In the case of the N ES, the per

- unit annual energy and water consumption is a direct f unction of product efficiency. Chapter 7 , Energy and Water Use Determination, des cribes how the per

- unit energy and water consumption vary as a

function of equi pment efficiency. With regard to the NPV, two inputs, the per

- unit total installed cost and the per

- unit annual operating cost , are dependent on efficiency. The per

- unit total installed cost is a direct function of efficiency

, while the per

- unit annual op erating cost, because

it is a f unction of the per

- unit annual and water consumption, is indirectly dependent on product efficiency. Section 8.2.1 of c hapter 8, Life

- Cycle Cost (LCC) and Payback Period (PBP) Analysis, describes how per

- unit total installed costs vary as a function of efficiency for each of the considered products. The above NES and NPV inputs, as well as all other inputs to the calculation of the NES and NPV, are als o discussed in sections 10 .3.1 and 10 .4.1.

DOE based the development of t he product efficiencies in the base case on the assignment of equipment efficiencies in the base case for the year 2013 . In other words, DOE determined the distribution of product efficiencies currently in the marketplace to develop a shipment

- weigh ted ef ficiency for the year 2013 . For a complete discussion of the assignment of efficiencies in the base case for each of the considered products, refer to section 8.2.6 of c hapter

8.

10-2Using the shipment

- weight ed efficiency for the year 20 13 as a starting po int, DOE developed base case projected efficiencies based on assumptions regarding future efficiency growth. For the period spanning 2014

– 20 76 ( 2018 being the assumed effective date of a new standard), DOE assumed that there would be no growth in the ship ment

- weighted efficiency at the product class level ( i.e., no change in the distribution of product efficiencies).

For its determination of standards

- case projected efficiencies, DOE assumed a “roll

- up” scenario to establish the shipment

- weighted efficiency for the year that standards are assumed to become effective ( i.e., 201 8 ). DOE assumed that product efficiencies in the base case that did

not meet the standard under consideration would “roll up” to meet the new standard level. Also,

DOE assum ed that all product efficiencies in the base case that were above the standard under consideration would not be affected. Using the shipment

- weig hted efficiency in the year 2018 as a starting point, DOE developed standards

- case projected efficiencies base d on assumptions regarding future efficiency growth. DOE made the same assumptions regarding standards

- case efficiency growth rates as for the base case

— namely that projec ted effici encies would remain

frozen at the 2018 efficiency level until the end of the projection period. By maintaining the same growth rate for projected efficiencies in the standards case as in the base case ( i.e., zero growth), DOE retained a constant efficiency difference or gap between the two cases over the length of the projectio n period. Although frozen trends may not reflect what happens to base case and standards case product efficiencies in the future, DOE believes that maintaining a frozen efficiency difference between the base case and standards case provides a reasonable es timate of the impact that standards have on product efficiency.

Table 10.3.1 and Table 10.3.2 show the base case and TSL product efficienc y distributions in the year 2018 , corresponding to the integrated modified energy factor (MEF J2 )

and integrated water factor ( IWF) of top

- loading and front

- loading clothes washing equipment, respectively, that DOE used in its national impact analysis for commercial clothes washers. The

TSLs are comp o sed of efficiency levels analyzed in the LCC and PBP a nalysis. The TSLs are

also shown in these tables . Note that DOE considered all the candidate standard levels in the TSLs that it developed for commercial clothes washers. Also included in the table below is the shipment

- weighted energy factor ( SWEF ) associated with the base case and each TS L

.

Table 10.3.1 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Efficiency Distributions in 201 8

EL TSL Efficiencies Market Shares

Base

Case Trial Standard Level

MEF J2 IWF 1 2 3 4

Baseline

- 1.15 8.90 62.0% 0.0% 0.0% 0.0% 0.0%

1 1, 2 1.35 8.80 26.7% 88.7% 88.7% 0.0% 0.0%

2 3, 4 1.55 6.90 11.3% 11.3% 11.3% 100.0% 100.0%

SWEF (MEF J2 ) 1.25 1.37 1.37 1.55 1.55

SWEF (IWF) 8.65 8.59 8.59 6.90 6.90

10-3Table 10.3.2 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Efficiency Distributions in 201 8

EL TSL Efficiencies Market Shares

Base

Case Trial Standard Level

MEF J2 IWF 1 2 3 4

Baseline

- 1.65 5.20 0.0% 0.0% 0.0% 0.0% 0.0%

1 1 1.80 4.50 31.0% 31.0% 0.0% 0.0% 0.0%

2 2, 3 2.00 4.10 69.0% 69.0% 100.0% 100.0% 0.0%

3 4 2.20 3.90 0.0% 0.0% 0.0% 0.0% 100.0%

SWEF (MEF J2 ) 1.94 1.94 2.00 2.00 2.20

SWEF (IWF) 4.22 4.22 4.10 4.10 3.90

Based on the assumption of a zero

- percent growth rate in the projected efficiencies for the base case and all standards cases, DOE maintained the SWEFs shown above in Table 10.3.1

and Table 10.3.2 throughout the entire projection period, i.e., from 2018 to 2076

.

10.4 NATIONAL ENERGY AND WATER SAVINGS

DOE calculated the national energy and water savings associated with each potential

standard for commercial clothes washers. DOE calculated cumulative energy savings throughout the forecast period, which extends from 2018 to 2047. The equations shown calculate energy savings; DOE used similar equations to calculate water savings.

10.4.1 Definition

As shown in the following equation, DOE calculates annual national energy and water savings as the difference between two projections: a base case (without new standards) and a standards case (with new standards). Positive values of NES correspond to energ y savings ( i.e., national energy consumption with standards is less than national energy consumption in the base case).

STD BASE y 

### AEC AEC NES

_ 

### =

Cumulative energy and water savings are the sum over the projection period, extending

from the as sumed effecti ve date

— i.e., 2018

— to 30 years afte r the effective date

— i.e., 2047

— of

the analysis period . Th e calculation is represented by the following equation s :


# ∑

= y cumulative 

### NES NES



# ∑

= y cumulative 

### NWS NWS

10-4DOE calculated the national annual energy and water consumption by multiplying the number or stock of the given product (by vintage) by its unit energy and water consumption ( UEC or UWC; also by vintage). The calculation of the national annual energy and water consumption is represented by the following equ ation:



# ∑ × = V V y UEC STOCK AEC



# ∑ × = V V y UWC STOCK AWC

For the above expressions, DOE defined the various quantities as follows:

AEC = a nnual national energy consumption each year in quadrillion British thermal units (Btus)

– or quads

— summ ed over vintages of the product stock,

STOCK V , AWC= annual national water consumption each year in trillion gallons

— summed over vintages of the product stock, STOCK V ,

NES = a nnual national energy savings (quads),

NWS = annual national water savings (gallons),

STOCK V = s tock of product (millions of units) of vintage V surviving in the year for which DOE calculated annual energy consumption (vintages range from five to approximat ely 15.5 years, depending on the retirement function of the

washer based on its product application ),

UEC V = a nnual energy consumption per product in either kilowatt

- hours (kWh) or million Btus (MMBtu) (electricity and gas consumption are converted from site energy to source energy (quads) by applying a time

- dependent

convers ion factor),

U W C V = annual water consumption per product in gallons,

V = y ear in which the product was purchased as a new unit, and

y = y ear in the projection ( i.e., 2018 to 2047 ).

The stock of equipment is dependent on annual shipments and the li fetime of the equipment. As described in c hapter 9 , DOE conducted shipments projections under the base case and standards cases. DOE determined that the shipments projections under the standards cases were slightly lower than those in the base case project ion, due to the higher purchase prices of

the more

- efficient equipment. In other words, DOE believes that the higher purchase prices would cause some consumers to forego new equipment purchases.

10-5DOE assumed that any drop in shipments caused by standard s would result in the purchase of used machines. Therefore, DOE explicitly accounted for the energy and water consumption of the used washers in the standards cases.

10.4.2 N ational E nergy S avings Inputs

Table 10.4.1 lists the inputs for the determination of NES.

Table 10.4.1 National Energy Saving Inputs
Annual Energy and Water Consumption per Unit ( UEC and UWC )

Shipments

Equipment Stock ( STOCK V )

National Annual Energy and Water Consumption ( AEC and AWC )

Site

- to

- Source Conversion Factor ( src_conv )

10.4.2.1 Annual Energy and Water Consumption per Unit

DOE presen ted the per

- unit annual energy and water consumption as a function of product efficiency in chapter 7 , Energy and Wat er Use Determination, and section 8.2.2.1 of

c hapter 8. Beca use the per

- unit annual energy and water consumption is directly dependent on efficiency, DOE used the base case and standards case efficiency distribution presented in

section 10. 3 , in combinati on with the annual energy and water use data presented in c hapters 7 and 8, to estimate the shipment

- weighted average annual per

- unit energy and water consumption

under the base case and standards cases.

Using the relationship between clothes washer MEF J2 and IWF and annual energy and water consumption desc ribed in c hapter 8, Table 10.4.2 and Table 10.4.3 present the per

- unit annual electrical and gas energy use, and water consumption, based on the efficiency distribution corresponding to the base case and each TSL for top

- loading and front

- loading washers, respectively

. Because establishments that use commercial clothes washers use either electric or gas water heaters and dryers, the per

- unit annual energy use values in the se table s are provided by fuel type. The energy and water use values shown in these tables are weighted

- average values reflecting the market share of washers in multi

- family buildings (85 percent) and laundromats (15 percent), as provided by the Consortium for Energy Efficiency (CEE). 1 The

water

- heating and drying energy consumption da ta reflect the percentage of gas and electric water heaters and dryers in the combined multi

- family and laundromat market. Based on data from the CEE, in the combined market, 22 and 78 percent of water heaters are electric and gas, respectively, while 34 a nd 66 percent of dryers are electric and gas, respectively. 3

As described in c hapter 9 , section 9 .3, DOE assumed that market share of washers in

multi

- family buildings and laundromats will remain constant at current levels.

10-6Table 10.4.2 Top

- Loading Commercial Clo thes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annual Energy and Water Consumption in 2018

Base Case Trial Standard Level

1 2 3 4

SWEF (MEF J2 ) 1.25 1.37 1.37 1.55 1.55

SWEF (IWF) 8.65 8.59 8.59 6.90 6.90

Annual Energy

Use Electric (kWh/yr) 1,019 914 914 780 780

Gas (MMBtu/yr) 7.11 6.45 6.45 6.09 6.09

Annual Water Use (1000 gal/ yr) 30.53 30.32 30.32 25.16 25.16

Table 10.4.3 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annual Energy and Water Consumption in 201 8

Base Case Trial Standard Level

1 2 3 4

SWEF (MEF J2 ) 1.94 1.94 2.00 2.00 2.20

SWEF (IWF) 4.22 4.22 4.10 4.10 3.90

Annual Energy

Use Electric (kWh/yr) 581 581 574 574 571

Gas (MMBtu/yr) 4.25 4.25 4.05 4.05 4.41

Annual Water Use (1000 gal/ yr) 13.72 13.72 13.32 13.32 14.64

As noted in section 10 .2, DOE assumed that projected efficiencies in the base case and

standards cases would remain frozen at the efficiency levels in 2018 . Therefore, as the per

- unit annual energy and water consumption are a function of efficiency, DOE held the va lues shown in

Table 10.4.2 and Table 10.4.3 constan t over the projection period of shipments ( 2018

– 2047 ).

10.4.2.2 Shipments

DOE projected shipments for the base case and all standards cases. Several fac tors, including total installed costs (purchase price plus installation costs), operating cost, and equipment lifetime, all impact projected shipments. Chapter 9 , Shipments Analysis, describes, in detail, the method DOE used to calculate and generate the s hipments projections for each product class.

10-710.4.2.3 Equipment Stock

The equipment stock in a given year is the number of products shipped from earlier years that survive in the given year. The NIA m odels kee p track of the number of units shipped each

year . DOE assumes that the 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. See c hapter

9 , Shipments Analysis, for further details on the survival functions that DOE used in its analysis

.

10.4.2.4 National Annual Energy and Water Consumption

The national annual energy and water consumption (AEC or AWC) is the product of the annual energy and water consumption per unit and the number of units of each vintage. This

app roach accounts for differences in unit energy consumption from year to year. The equation for determining the annual energy consumption was shown in section 1 0 .3.1 and is repeated

here

. As stated previously, the equation for water consumption are the same as the equation for energy consumption.



# ∑ × = V V 

### UEC STOCK AEC

In determining national annual energy consumption, DOE initially calculated the annual energy consumption at the site and then applied a conversion factor to calculate primary energy

consum ption (see section 1 0 .3.2.5).

10.4.2.5 Site

- to

- Power

- Plant Energy Use Factors

In determining national annual energy consumption, DOE initially calculated the annual energy consumption at the site (for electricity, the energy in kWh consumed at the household or establishment). It then used site energy consumption to calculate primary (source) energy consumption by applying a conversion factor to account for losses associated with the generation, transmission, and distribution of electrici ty

. Th e site

- to

- power plant conversion factor is a multiplicative factor used to convert site energy consumption into primary or source energy consumption, expressed in quads (quadrillion Btus). DOE used annual site

- to

- power plant

conversion factors based on t he version of the National Energy Modeling System (NEMS) a that corresponds to EIA’s Annual Energy Outlook 20 14 ( AEO 20 14 ). 2 The factors are marginal

a For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000

, DOE/EIA

- 0581(2000), March 2000. EIA approves use of the name NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications

and the model is r un under various policy scenarios that are variations on EIA assumptions, DOE refers to the model by the name NEMS

- BT (BT is DOE’s Building Technologies Program, under whose aegis this work has been performed). NEMS

- BT was previously called NEMS

- BRS.

10-8values, which represent the response of the system to an incremental decrease in consumption. For electricity, the conversion factors change over time in response to projected changes in generation sources ( i.e., the types of pow er plants projected to provide electricity to the Nation ). Figure 10.4.1 s hows the site

- to

- power plant factor s from 201 8 to the end of the forecast period.

The value reported in AEO f or year 20 40 (the last year available in AEO 2014 ) was extrapolated through the end of the projection period

.

Figure 10.4.1 Site

- to

- Power Plant Energy Use Factor for Commercial Clothes Washers

10.4.2.6 Full

- Fuel

- Cycle Energy Factors

The full

- fuel

- cycle (FFC) includes 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 es timate the FFC by including the energy consumed in extracting, processing, and transporting or distributing primary fuels, which we refer to as “upstream” activities, DOE developed FFC multipliers b using the data and projections generated for AEO201 4 . The AEO201 4 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 prod uction. This 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

- A

.

b FF C multipliers discussed in this chapter relate to the upstream part of the FFC process. 8.000 8.500 9.000 9.500 10.000 10.500 11.000mn Btu/MWh

10-9Table 10.4.4 shows the FFC energy multipliers used for commercial clothes washers for selected years. The method used to calculate FFC energy multipliers is described in appendix 10

- A

.

Table 10.4.4 Full

- Fue l

- Cycle Energy Multipliers (Based on AEO 2014 )

20 18 2020 2025 2030 2035 2040 Electricity (power plant energy use) 1. 04 3 1. 04 4 1. 04 5 1. 04 6 1. 04 7 1. 04 7

Natural Gas (site) 1. 10 8 1. 10 9 1. 1 11 1. 113 1. 114 1. 1 14

10.5 NET PRESENT VALUE

10.5.1 N et P resent V alue Definition

The NPV is the value in the present of a time series of costs and savings. The NPV is described by the equation:



### PVC PVS NPV

_ 

### =

W here:

PVS = p resent value of operating cost savings (including energy, water, repair, and maintenance costs), and

PVC = p resent value of increased total installed costs (including equipment and installation).

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



## ∑

y y DF OCS PVS × =



## ∑

y y DF TIC PVC × =

DOE calculated the total annual operating cost savings by multiplying the number or stock of the given product (by vintage) by its per

- unit operating cost savings (also by vintage). DOE calculated the total annual installed cost increases by multiplying the number or stock of

th e given product (by vintage) by its per

- unit total installed cost increase (also by vintage). The calculation of the annual operating costs savings and total annual installed cost increases is represented with the following equations:



## ∑

V V y UOCS STOCK OCS × =

10-10

## ∑

y y y UTIC SHIP TIC × =

For the above expressions, DOE defined the various quantities as follows:

OCS y = t otal annual operating cost savings in a given year y summed over vintages of the product stock, STOCK V , TIC y = t otal annual installed cost in year y summed over shipments the product in

year y , S HIP y , DF y = d iscount factor in year y , STOCK V = s tock of product (millions of units) of vintage V surviving in the year for which DOE calculated annual energy consumption ( vintages range from five to approximately 15.5 years, depending on the retirement function of the washer based on its product application ),

UOCS V = a nnual operating cost savings per unit of vintage V

, UTIC y = a nnual total installed cost increase per un it in year y , V = y ear in which the product was purchased as a new unit, and

y = y ear in the projection

.

DOE determined the PVC for each year, from the effective date of the standard to the

year the last unit shipped retires . DOE calculated costs and savings as the difference between a standards case and a base case ( i.e., without new standards).

DOE calculated a discount factor from the discount rate and the number of years between the “present” ( i.e., 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.

10.5.2 N et P resent V alue Inputs

Table 10.5.1 summarizes the inputs to the NPV calculation.

Table 10.5.1 Net Present Value Inputs

Total Installed Cost per Unit

Annual Operating Cost Savings per Unit

Total Annual Installed Cost Increases

Total Annual Operating Costs

Discount Factor

Present Value of Costs

Present Value of Savings

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

- unit total installed cost (difference between base case and standards case) multiplied by the shipments

10-11projected in the standards c ase. As with the calculation of the NES, DOE assumed that any drop in shipments caused by standards would result in the purchase of used machines.

The total annual operating cost savings are equal to the change in the annual operating costs (difference between base case and standards case) per unit multiplied by the shipments projected in the standards case. The annual operating cost includes energy, water, repair, and

maintenance costs.

10.5.2.1 Total Installed Cost per Unit

DOE first presented the per

- unit total installed cost as a function of product efficiency in

section 8.2.1 .5 of c hapter 8. Because the per

- unit total annual installed cost is directly dependent on efficiency, DOE used the base case and standards case SWEFs presented in section 10 .2, in combination with the total installed costs presented in c hapter 8, to estimate the shipment

weighted average annual per

- unit total installed cost under the base case and standards cases.

The total installed cost includes both the equipment price and the installation cost. DOE based average equipment prices on average manufacturer co sts multiplied by average overall markup values. Using the relationship between commercial clothes washer MEF J2 and WF and total installed cost pres ented in c hapter 8, Table 10.5.2 and Table 10.5.3 show the per

- unit total installed cost based on the SWEFs corresponding to the base case and each TSL for top

- loading

and front

- loading washers, respectively

.

Table 10.5.2 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Total Installed Costs

Base Case Trial Standard Level

1 2 3 4

SWEF (MEF J2 ) 1.25 1.37 1.37 1.55 1.55

SWEF (IWF) 8.65 8.59 8.59 6.90 6.90

Total Installed Cost (201 3 $) $1,236 $1,236 $1,236 $1,293 $1,293

Table 10.5.3 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Total Installed Costs

Base Case Trial Standard Level

1 2 3 4

SWEF (IMEF J2 ) 1.94 1.94 2.00 2.00 2.20

SWEF (IWF) 4.22 4.22 4.10 4.10 3.90

Total Installed Cost (2013$) $1,817 $1,817 $1,818 $1,818 $1,848

10-12As noted in section 10 .2, DOE assumed that projected efficiencies in the base case and

TSLs remain frozen at the efficiency levels in 2018 . Therefore, because the per

- unit total installed costs are a function of efficiency, DOE held the values constan t over the projection period ( 2018

– 2047 ).

10.5.2.2 Annual Operating Cost Savings per Unit

The per

- unit annual operating cost includes the energy, water, repair, and maintenance

costs.

Annual Energy and Water Costs
DOE determined the per

- unit annual energy and water cost savings by taking the per

- unit annual energy (and water) consumption savings developed for each product and multiplying it by the appropriate energy (and water) price.

For all of the considered products, estimates of the per

- unit annual energy an d water consumption for the base case and each standards case were presented earlier in section 10 .3.2.1. As described previously, DOE projected the per

- unit annual energy (and water) consumption for the base case and each standards case for all products by freezing the consumption at levels estimated for the year 2018

.

Energy and water prices are described in section 8.2.2.2 of c hapter 8. DOE projected energy prices based on EIA’s AEO2014 . DOE projected water prices based on trends in the

national water price index as provided by the Bureau of Labor Statistics. 3 The energy and water price trends are described in section 8.2.2.3 of c hapter 8.

Annual Repair and Maintenance Costs

As described in section 8.2.2.4 of c hapter 8, DOE estimated increased repair and

maintenance costs for comm ercial clothes washers

. DOE estimated that repair costs would increase as a function of equipment efficiency. Using the relationship between clothes washer

MEF J2 and I WF and repair desc ribed in c hapter 8, Table 10.5.4 and Table 10.5.5 present the per

unit annualized repair cost based on the SWEFs corresponding to t he base case and each TSL for

top

- loading and front

- loading washers, respectively . The repair costs are weighted

- average values reflecting the market share of washers in multi

- family buildings (85 percent) and laundromats (15 percent), as provided by the C onsortium for Energy Efficiency (CEE)

.

10-13Table 10.5.4 Top

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annualized Repair Costs in

2018

Base Case Trial Standard Level

1 2 3 4

SWEF (MEF J2 ) 1.25 1.37 1.37 1.55 1.55

SWEF (WF) 8.65 8.59 8.59 6.90 6.90

Annualized Repair Cost (2013$) $50 $50 $50 $53 $53

Table 10.5.5 Front

- Loading Commercial Clothes Washers: Base Case and Standards Case Shipment

- Weighted Average Per

- Unit Annualized Repair Costs in

2018

Base Case Trial Standard Level

1 2 3 4

SWEF (MEF J2 ) 1.94 1.94 2.00 2.00 2.20

SWEF (WF) 4.22 4.22 4.10 4.10 3.90

Annualized Repair Cost (2013$) $79 $79 $79 $79 $80

As noted in section 11 .2, DOE assumed that projected efficiencies in the base case and

TSLs remain frozen at the effic iency levels in 2013 . Therefore, because the per

- unit total installed costs are a function of efficiency, DOE held the values constan t over the projection period ( 2018

– 2047 ).

10.5.2.3 Total Annual Installed Cost Increases

The total annu al installed cost increase for any given standards case is the product of the total installed cost increase per unit due to the standard and the number of units of each vintage. This approach accounts for differences in total installed cost from year to y ear. The equation for determining the total annual installed cost increase for a given standards case was shown in

section 1 0 .4.1 and is repeated here

. 

## ∑

V V UTIC STOCK TIC × =

As noted earlier for commercial clothes washers, DOE accounted for the total installed cost of those establishments that were forced into purchasing used clothes washers due to standards. Therefore, the total annual installed cost increase takes into account the total installed cost of the used washers that were purchased in lieu of the purchase of new washers.

10-14For reasons discussed in chapter 8 (section 8.2.1.7), DOE used a constant price assumption for the default projection in the NIA. To investigate the impact of different equipment price projections on the consumer net prese nt value (NPV) for different efficiency levels, DOE also considered two alternative price trends. Details on how these alternative price trends were developed are in appendix 10

- D, which also presents the results of the sensitivity analysis.

10.5.2.4 Total Annual O perating Cost Savings

The total annual operating cost savings for any given standards case is the product of the annual operating cost savings per unit due to the standard and the number of units of each vintage. This approach accounts for differences in annual operating cost savings from year to year. The equation for determining the total annual operating cost savings for a given standards

case was shown previously and is repeated here

. 

## ∑

V V UOCS STOCK OCS × =

As noted earlier , DOE accounted for th e energy and water use of those establishments that were forced into purchasing used washers due to standards. Therefore, the total annual operating cost savings take into account the energy and water costs of the used washers that were purchased in lieu of the purchase of new washers.

10.5.2.5 Discount Factors

DOE multiplies monetary values in future years by a discount factor to determine the present value. The discount factor (DF) is described by the equation:

) ( ) 1 ( 1

yp y r DF

− + =

W here:

r = discount rate,

y = year of the monetary value, and

y P = year in which the present value is being determined.

DOE estimated national impacts with both a three

- percent and a seven

- percent real discount rate as the average real rate of return on private investment in the U.S. economy. It used these discount rates in accordance with the Office of Management and Budget (OMB)’s guidance to Federal agencies on the development of regulatory analysis (OMB Circular A

- 4, September 17, 2003), and section E., “Id entifying and Measuring Benefits and Costs,” therein.

DOE defines the present year as 2013

.

10-1510.5.2.6 Present Value of Costs

The present value of increased installed costs is the annual installed cost increase in each year ( i.e., the differe nce between the standards case and base case), discounted to the present, and summed for the time period over which DOE is considering the installation of equipment ( i.e., from the e ffective date of standards, 2018 , to the year 2047 ).

The increase in tot al installed cost refers to both equipment cost and installation cost associated with the higher energy efficiency of equipment purchased in the standards case compared to the base case. DOE calculated annual increases in installed costs as the difference in total installed cost for new equipment purchased each year, multiplied by the shipments in the

standards case.

10.5.2.7 Present Value of Savings

The present value of operating cost savings is the annual operating cost savings ( i.e., the difference between the base case and standards case) discounted to the present and summed over the peri od from the effective date, 2018 , to the time when the last unit installed in 2047 is retired

from service.

Savings are decreases in operating cos ts (including electricity, repair, and maintenance costs) associated with the higher energy efficiency of equipment purchased in the standards case compared to the base case. Total annual operating cost savings are the savings per unit multiplied by the n umber of units of each vintage surviving in a particular year. Equipment consumes energy over its entire lifetime and

, for units purchased in 2047 , the consumption includes energy consumed until the unit is retired from service.

10.6 N ATIONAL E NERGY AND WATER S AVINGS AND N ET P RESENT

V ALUE RESULTS

The NIA Model provides estimates of the NES and NPV due to various candidate standards levels. The inputs to the NIA m odel have been discussed earlier in sections 10 .3.2 (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 ( http://www.eere.energy.gov/buildings/ appliance_standards/). Details and i nstructions for using the spreadsheet are provided in Appendix 10B

.

10.6.1 National Energy Savings and Net Present Value Input Summary

Table 1 0 .6 .1 summarizes the inputs to the NIA m odel. For each input a brief description

of the data sour ce is given.

10-16Table 10.6.1 NES and NPV Inputs

Input Data Description
Shipments Annual shipments from Shipments Model. (S ee c hapter 9

. )

Effective Date of Standard 2018

. Base Case Forecasted Efficiencies SWEF determined in the year 2013 . SWEF held const ant over forecast period of 2013

– 2047 . (See s ection 10 .2.)

Standards Case Efficiencies Roll

- up scenario assumed for d etermining SWEF in the year 2018 for each standards case and for each of the considered products. SWEF

held constant ov er forecast period of 2018

– 2047 . (See s ection 10 .2.)
Annual Energy Consumption per Unit Annual weighted

- average values are a function of SWEF. (See

s ection 10 .3.2.1.)
Total Installed Cost per Unit Annual weighted

- av erage values are a function of SWEF. (See

s ection 10 .4. 2.1.)
Energy and Water Cost per Unit Annual weighted

- average values are a function of the annual energy consumption per unit and energy (and water) prices. (See s ection

8.2.2.3 of c hapter 8 for energy and water prices.)
Repair Cost and Maintenance Cost per Unit A nnual weighted

- average values are a function of SWEF. (See

s ection 8.2.2.4 of c hapter 8 for repair and maintenance costs.)

Escalation of Energy and Water Prices Energy Prices: EIA AEO20 14 forecasts (to 2040 ) and extrapolation to

2047 . (See s ec tion 8.2.2.3 of c hapter 8.) Water Prices: Linear extrapolation off historical trend in national water price index. (See s ection 8.2.2.3 of c hapter 8.)

Energy Site

- to

- Source Conversion Conversion varies yearly and is generated by DOE/EIA’s NEMS* program ( a time series conversion factor; includes electric generation, transmission, and distribution losses).

Discount Rate 3 percent and 7 percent real.

Present Year Future expenses are discounted to yea r 2014

.

* Chapter 1 5 on the Utility Impact Analysis and the Environmental Assessment Report provide more detail on NEMS.

10.6.2 National Energy and Water Savings Results

The followin g sections provide NES results and national water savings (NWS) results for

the TSLs analyzed for commercial clothes washers . NE S resul ts are cumulative to 2076 and are

sh own as primary energy savings. NWS results are expressed in tr illions of gallons. DOE based the inputs to the NIA m odel on weighted

- average values, yielding results that are discrete point values, rather than a distribut ion of values as in the LCC and PBP Analysis.

Table 10.6.2 and Table 10.6.3 show the NES and NWS results for the TSL s analyzed for

commercial clothes washers. The results are based on the estimate that multi

- family buildings and laundromats comprise 85 percent and 15 percent of the commercial clothes washer market,

respec tively.

10-17Table 10.6.2 Top

- Loading Commercial Clothes Washers: Cumulative NES and NWS

Results

Trial Standard Levels Top

- loading

TSL 1 TSL 2 TSL 3 TSL 4

Primary Energy Saving 2018 to 20 76 (quads) 0.06 0.06 0.14 0.13

FFC Energy Saving 2018 to 20 76 (quads) 0.06 0.06 0.15 0.14

Water Saving (2018 to 20 76 ) (trillion gallon) 0.01 0.01 0.21 0.20

Table 10.6.3 Front

- Loading Commercial Clothes Washers: Cumulative NES and NWS

Results

Trial Standard Levels Front

- loading

TSL 1 TSL 2 TSL 3 TSL 4

Primary Energy Saving 2018 to 20 76 (quads) 0.00 0.01 0.00

- 0.01

FFC Energy Saving 2018 to 20 76 (quads) 0.00 0.01

- 0.01

- 0.01

Water Saving (2018 to 20 76 ) (trillion gallon) 0.00 0.01

- 0.01

- 0.03

10.6.3 Annual Costs and Savings

To illustrate the basic inputs to the NPV calculations, Figure 10

. 6 .1 presents the non

discounted annual installed cost increases and annual operating cost savings at the national level

for TSL 3 for top

- loading washers . The figure also shows the net savin gs, which is the difference between the savings and costs for each year. The annual equipment cost is the increase in the total installed cost for products purchase d each year over the period 2018

– 2047 . The annual operating cost savings is the savings in operating costs for products operating in each year. The NPV is the difference between the cumulative annual discounted savings and the cumulative annual discounted costs. DOE could create figures like the one shown below for each of the

standard cases.

10-18Figure 10.6.1 Non

- Discounted Annual Installed Cost Increases and Annual Operating Cost Savings for Top

- Loading Clothes Washers

, TSL 2

10.6.4 Net Present Value Results

The following sections provide NPV results for the candidate standards levels considered for the product classes of commercial clothes washers

. Results are cumulative and are shown as

the discounted value of these savings in dollar terms. DOE based the inp uts to the NIA m odel on weighted

- average values, yielding results that are discrete point values, rather than a distribution of values as in the LCC and PBP Analysis.

The present value of increased total installed costs is the total annual installed cost increase ( i.e., the difference between the standards case and base case), discounted to the present, and summed over the time period in which DOE evaluates the impact of standards ( i.e., from the

e ffective date of standards, 2018 , to the year 2047 ).

Savings are decreases in operating costs (including energy and water) associated with the higher energy efficiency of equipment purchased in the standards case compared to the base

case. Total operating cost savings are the savings per unit multiplied by t he number of units of each vintage ( i.e., the year of manufacture) surviving in a particular year. Energy and water consumption are taken into account over the equipment’s entire lifetime. For units purchased through 2047 , the operating cost includes energ y and water consumed until the last unit is retired

from service. -0.01 0.01 0.03 0.05Billion 2013$

Operating Cost Savings Increased Equipment Cost Net Savings

10-19Table 10.6.4 and Table 10.6.5 present the NPV results for the trial standard levels considered commercial clothes washers. As with the NES results, NPV results are presented by

TSL for each product class.

Table 10.6.4 Top

- Loading Commercial Clothes Washers: Cumulativ e NPV Results

based on Seven

- Percent and Three

- Percent Discount Rates

Trial Standard Levels Top

- loading

TSL 1 TSL 2 TSL 3 TSL 4

NPV @ 3% ( billion 2013$ ) 0.44 0.43 2.05 1.87

NPV @ 7% ( billion 2013$) 0.20 0.20 0.92 0.84

Table 10.6.5 Front

- Loading Commercial Clothes Washers: Cumulative NPV Results

based on Seven

- Percent and Three

- Percent Discount Rates

Trial Standard Levels Front

- loading

TSL 1 TSL 2 TSL 3 TSL 4

NPV @ 3% ( billion 2013$ ) 0.00 0.10

- 0.12

- 0.30

NPV @ 7% ( billion 2013$) 0.00 0.04

- 0.05

- 0.13

10-20REFERENCES

1. Consortium for Energy Efficiency, Commercial Family

- Sized Washers: An Initiative Description of the Consortium for Energy Efficiency , 1998. Boston, MA.

2. Energy Information Administration, Annual Energy Outlook 201 4 with Projections to

2040

, 201 4 . Washington, DC. Report No. DOE/EIA

- 0383.

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

3. U.S. Department of Labor

- Bureau of Labor Statistics, Consumer Price Indexes, Item: Water and sewerage maintenance, Series Id: CUUR0000SEHG01, U.S. city average (not seasonally adjusted) , 2013. Washington, DC. < http://www.bls.gov/cpi/home.htm#data >

10-21