10-i

CHAPTER 10. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

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

10.2 NATIONAL ENERGY SAVINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2

10.2.1 NES Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2

10.2.2 NES Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

10.2.2.1 Annual Energy Consumption per Unit . . . . . . . . . . . . . . . . . . . . . 10-3

10.2.2.2 Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-10

10.2.2.3 Equipment Stock (STOCKV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-10

10.2.2.4 National Annual Energy Consumption (AEC) . . . . . . . . . . . . . . . 10-11

10.2.2.5 Site-to-Source Conversion Factor (src_conv) . . . . . . . . . . . . . . . 10-11

10.3 NET PRESENT VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-13

10.3.1 Net Present Value Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-13

10.3.2 Net Present Value Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-14

10.3.2.1 Total Annual Installed Cost (TICy) . . . . . . . . . . . . . . . . . . . . . . . 10-15

10.3.2.2 Total Annual Operating Cost Savings (OCSy) . . . . . . . . . . . . . . . 10-16

10.3.2.3 Discount Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-20

10.3.2.4 Present Value of Costs (PVC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-21

10.3.2.5 Present Value of Savings (PVS) . . . . . . . . . . . . . . . . . . . . . . . . . . 10-21

10.4 NES AND NPV RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-21

10.4.1 NES and NPV Input Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-22

10.4.2 National Energy Savings Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-23

10.4.3 Annual Costs and Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-24

10.4.4 Net Present Value Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-31

10.4.5 “Max Tech” Sensitivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-34

LIST OF TABLES

Table 10.2.1 National Energy Saving Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

Table 10.2.2 Average Annual Energy Consumption per Unit . . . . . . . . . . . . . . . . . . . . . . . 10-9

Table 10.2.3 Site-to-Source Conversion Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12

Table 10.3.1 Net Present Value Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-14

Table 10.3.2 Average Total Installed Cost per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15

Table 10.3.3 Average Annual Energy Expense per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17

Table 10.3.4 Average Annual Repair Cost per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-19

Table 10.4.1 NES and NPV Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-22

Table 10.4.2 Cumulative National Energy Savings for Commercial Unitary Air 

Conditioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-23

Table 10.4.3 Cumulative NPV Results based on a Seven percent Discount Rate 

(billion 2001$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-32

Table 10.4.4 Cumulative NPV Results based on a Three percent Discount Rate 

(billion 2001$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-33
10-ii

LIST OF FIGURES

Figure 10.2.1 Residential and Commercial Air Conditioner Actual, Historical, and 

Forecasted Shipment-Weighted Efficiencies . . . . . . . . . . . . . . . . . . . . . . . . 10-5

Figure 10.2.2 $65,000 Btu/h to <135,000 Btu/h: Base Case and Standards Case 

Forecasted Efficiency Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-7

Figure 10.2.3 $135,000 Btu/h to <240,000 Btu/h: Base Case and Standards Case 

Forecasted Efficiency Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8

Figure 10.2.4 Average Annual Energy Consumption per Unit . . . . . . . . . . . . . . . . . . . . . 10-10

Figure 10.3.1 Average Total Installed Cost per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-16

Figure 10.3.2 Average Annual Electricity Expense per Unit . . . . . . . . . . . . . . . . . . . . . . 10-18

Figure 10.3.3 Average Annual Repair Cost per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-20

Figure 10.4.1 Cumulative National Energy Savings for Commercial Unitary Air 

Conditioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-24

Figure 10.4.2 $65,000 Btu/h to <135,000 Btu/h: National Annual Costs and Savings 

for ASHRAE/IESNA 90.1-1999 Candidate Standard Level . . . . . . . . . . . 10-25

Figure 10.4.3 $65,000 Btu/h to <135,000 Btu/h: National Annual Costs and Savings 

for 10.5 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-26

Figure 10.4.4 $65,000 Btu/h to <135,000 Btu/h: National Annual Costs and Savings 

for 11.0 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-26

Figure 10.4.5 $65,000 Btu/h to <135,000 Btu/h: National Annual Costs and Savings 

for 11.5 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-27

Figure 10.4.6 $65,000 Btu/h to <135,000 Btu/h: National Annual Costs and Savings 

for 12.0 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-27

Figure 10.4.7 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for ASHRAE/IESNA 90.1-1999 Candidate Standard Level . . . . . . . . . . . 10-28

Figure 10.4.8 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for 10.0 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-29

Figure 10.4.9 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for 10.5 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-29

Figure 10.4.10 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for 11.0 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-30

Figure 10.4.11 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for 11.5 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-30

Figure 10.4.12 $135,000 Btu/h to <240,000 Btu/h: National Annual Costs and Savings 

for 12.0 EER Candidate Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-31

Figure 10.4.13 Cumulative NPV at a Seven percent Discount Rate for Commercial 

Unitary Air Conditioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-32

Figure 10.4.14 Cumulative NPV at a Three percent Discount Rate for Commercial 

Unitary Air Conditioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-34
10-1

CHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the method for estimating the quantity and net value to consumers

of future national energy savings (NES) from possible candidate standard levels. Results

described here include: 1) national energy consumption and savings, 2) monetary value of

energy savings to the nation due to standards, 3) increased total installed costs to the nation due

to standards, and 4) the net present value (NPV) of energy savings (difference between value of

energy savings and increased total installed costs). 

The Department determined both the NPV and NES for all of the candidate standard

levels considered for the two equipment classes of commercial unitary air conditioners. 

Candidate standard levels of 10.5, 11.0, 11.5, and 12.0 EER are being considered for the $65,000

Btu/h to <135,000 Btu/h equipment class while candidate standard levels of 10.0, 10.5, 11.0,

11.5, and 12.0 EER are being considered for the $135,000 Btu/h to <240,000 Btu/h equipment

class. In addition, the Department determined the NES and NPV due to quick adoption of the

American Society of Heating, Refrigerating and Air-Conditioning Engineers

(ASHRAE)/Illuminating Engineering Society of North America (IESNA) 90.1-1999 candidate

standard levels. Quick adoption in this case is defined as an effective date of 2004 as opposed to

an assumed effective date of 2008 for the more stringent standard levels currently under

consideration by the Department. In this way, the Department can assess the national benefits of

adopting more stringent standards at a later effective date relative to adopting the

ASHRAE/IESNA 90.1-1999 standard levels almost immediately. 

The Department performed all calculations using a Microsoft Excel® spreadsheet, which

is accessible on the Internet

(http://www.eere.energy.gov/buildings/appliance_standards/commercial/ac_hp.html). Details

and instructions for using the spreadsheet are discussed in Appendix R. A more detailed set of

results is available in Appendix S. 

The important facets of national energy consumption of commercial unitary air

conditioners include: 1) shipments of the equipment, 2) customer response to changes in total

installed cost (i.e., purchase price), operating expense, and business income, and 3) voluntary

programs promoting higher energy efficiency of equipment.

Chapter 9 provides a detailed description of the Shipments Model that DOE used to

forecast future purchases of commercial unitary air conditioners. Included in the discussion are

detailed descriptions of customers’ sensitivities to total installed cost, operating expense, and

income (otherwise known as 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 standards, DOE was not able to obtain
a

 For the ASHRAE 90.1-1999 standards case, the defined time period is 2004-2035.

10-2

AEC STOCK UEC = ∑ V V ⋅

NES AEC AEC y = base − s dard tan

NES NES cum y = ∑

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 forecasts detailed in Chapter 9.

10.2 NATIONAL ENERGY SAVINGS

10.2.1 NES Definition

The Department calculates annual national energy 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 energy savings (i.e., national energy consumption with

standards is less than national energy consumption in the base case).

Cumulative energy savings are the sum over a defined time period (2008 to 2035)a

 of the annual

national energy savings.

The Department calculated the national annual energy consumption by multiplying the number

or stock of commercial air conditioners (by vintage) by the unit energy consumption (also by

vintage). The calculation of the national annual energy consumption is represented with the

following equation:

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

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

summed over vintages of commercial air conditioner stock, STOCKV.

NES = Annual national energy savings (quads).

STOCKV = Stock of commercial air conditioners (millions of units) of vintage V

surviving in the year for which DOE calculated annual energy consumption. 

Vintages range from 1 to approximately 30 years, depending on the lifetime

of the equipment.

UECV = Annual energy consumption per commercial air conditioner (kWh). 

Electricity consumption is converted from site energy (kWh) to source

energy (quads) by applying a time-dependent conversion factor (Btu/kWh). 
b

 Although directly tied to the efficiency of the unit, the unit’s annual energy consumption was determined through

a building simulation analysis and is also a function of the building type, building activity, and weather. Refer to

Chapter 6 for more details on how the Department conducted the building simulation analysis.

10-3

V = Year in which the commercial air conditioner was purchased as a new unit.

y = Year in the forecast (e.g., 2008 to 2035).

The stock of commercial air-conditioning equipment is dependent on annual shipments

and the lifetime of the equipment. As described in Chapter 9, the Department conducted

shipments projections under the base case and standards cases for a variety of possible

equipment efficiency scenarios and equipment efficiency growth trends. The Department

determined that the shipment projections under the standards cases were lower than those in the

base case projection, due to the higher installed cost of the more-efficient equipment. In other

words, the Department believes that the higher installed costs would cause some customers to

forego new equipment purchases. Hence, DOE used the standards-case shipments projection

and, in turn, the standards case stock to determine the NES, to avoid the inclusion of savings due

to displaced shipments.

10.2.2 NES Inputs

Table 10.2.1 lists the inputs for the determination of NES.

Table 10.2.1 National Energy Saving Inputs

Input

Annual Energy Consumption per Unit (UEC)

Shipments

Equipment Stock (STOCKV)

National Annual Energy Consumption (AEC)

Site-to-Source Conversion Factor (src_conv)

10.2.2.1 Annual Energy Consumption per Unit

The annual energy consumption per unit (UEC) is the site energy consumed by a

commercial air-conditioning unit per year. The annual energy consumption is directly tied to the

efficiency of the unit. Thus, knowing the efficiency of a commercial air-conditioning unit

enables a determination of the corresponding annual energy consumption.b

 As described below,

the Department determined annual historical and forecasted shipment-weighted average

equipment efficiencies that, in turn, enabled a determination of shipment-weighted annual energy

consumption values.
c

 The Air-Conditioning and Refrigeration Institute (ARI) provided historical efficiency data for the years 1999,

2000, and 2001.

10-4

The Department based historical shipment-weighted average efficiency trends for

commercial unitary air conditioners upon a combination of 1999-2001 commercial air

conditioner efficiency data and residential central air conditioner efficiency trends. Then, from

those historical data and trends, DOE extrapolated future trends of commercial unitary air

conditioner equipment efficiency both for a base case (i.e., without new standards) and various

standards cases (i.e., with new standards). The difference in equipment efficiency between the

base and standards cases was the basis for determining the reduction in per-unit annual energy

consumption that could result from new standards.

Because of the limited availability of historical efficiency data for commercial unitary air

conditioners,c the Department used the historical efficiency trends of residential central air

conditioners as a basis for formulating the historical trends for commercial unitary air

conditioners dating back to 1975. Figure 10.2.1 shows the historical shipment-weighted

efficiencies of residential central air conditioners,1 the shipment-weighted efficiencies of

commercial unitary air conditioners for the three years for which data are available (1999

through 2001), and the estimated historical and forecasted efficiency trends for commercial

unitary air conditioners. Note that the efficiency data are disaggregated into two equipment

classes ($65,000 Btu/h to <135,000 Btu/h, and $135,000 Btu/h to <240,000 Btu/h). 
10-5

5

6

7

8

9

10

11

12

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Year

SEER or EER

Actual '76-'81 Res Central A/C (SEER)

Actual '82-'91 Res Central A/C (SEER)

Actual '92-'99 Res Central A/C (SEER)

Historical Estimate '82-'98 65-135 kBtu/h

Historical Estimate '82-'98 135-240 kBtu/h

Actual '99-'01 65-135 kBtu/h

Actual '99-'01 135-240 kBtu/h

Forecasted Estimate '02-'35 65-135 kBtu/h

Forecasted Estimate '02-'35 135-240 kBtu/h

y = 0.1255x - 240.29

R2 = 0.9861

y = 0.0649x - 118.78

R2 = 0.8706

Figure 10.2.1 Residential and Commercial Air Conditioner Actual, Historical, and

Forecasted Shipment-Weighted Efficiencies

In Figure 10.2.1, DOE provides linear fits (and their corresponding correlation

coefficients) for the residential central air conditioner shipment-weighted efficiency trends from

1982 to 1991 and 1992 to 1999. The Department used the growth rates (i.e., the slopes) from the

linear fits to estimate the historical efficiency trends for commercial unitary air conditioners. It

attributed the jump in residential central air-conditioner efficiency observed between 1991 and

1992 to Federal energy conservation standards for this equipment, which became effective in

1991. The Department assumed that an equivalent percentage jump in shipment-weighted

commercial air conditioner efficiency occurred when minimum standards for this equipment

became effective in 1994. Thus, the Department used the rate of increase from 1992 to 1999 for

residential air conditioners to estimate the historical efficiency trend from 1994 to 1998 for

commercial air conditioners.

The Department chose a growth rate for its forecasted base case efficiency trends to be

one-half of the growth rate observed from the historical residential air conditioner efficiency

trend during 1992 through 1999. The Department made this decision based on observed trends

in the historical commercial air-conditioner efficiency data. The three years’ worth of
10-6

commercial air conditioner efficiency data revealed a significant shift to higher equipment

efficiencies from the year 2000 to 2001. Although the ASHRAE/IESNA 90.1-1999 standards

are not mandatory, it appears that their effect has been to move the commercial air conditioner

market to higher equipment efficiencies. The ASHRAE/IESNA 90.1-1999 standards’ impact on

transforming the market is assumed to be most significant in the short term. Therefore, the

growth rate of the efficiency trend in the long term (i.e., for years after 2001) should be much

lower than the shift in equipment efficiencies observed between 2000 and 2001. Because the

Department believes that future commercial air conditioner efficiencies will grow at a modest

rate, a growth rate equal to one-half of the historical residential equipment’s efficiency trend was

chosen. Appendix T provides the energy efficiency ratio (EER) values corresponding to the

historical and forecasted base case efficiency trends shown in Figure 10.2.1.

The Department based its standards case forecasts (i.e., forecasts of efficiency trends

after standards take effect) on the use of a roll-up efficiency scenario and parallel growth trend. 

Under a roll-up scenario all equipment at efficiency levels below a prospective standard are

moved or rolled-up to the minimum efficiency level allowed under the new standard. The

distribution of equipment at efficiency levels above the prospective standards is unaffected (i.e.,

this equipment remains at its pre-standard efficiency levels). The roll-up efficiency scenario

dictates how DOE determined efficiency distributions in the first year a new standard takes

effect, but does not define how equipment efficiency will be distributed in the future. Under the

parallel growth trend, the Department assumed that the standards case efficiency trend parallels

the base case efficiency trend. In other words, the initial jump in shipment-weighted efficiency

that occurs when the standard first becomes effective is maintained throughout the forecast. 

The 11.5 EER and 12.0 EER standards case efficiency trends are notable exceptions to

the use of the parallel growth trend for the entire time span of the forecast (i.e., through 2035). 

As noted in Chapter 5, the maximum technologically feasible design, otherwise known as “max

tech,” is 12.0 EER. Because “max tech” is 12.0 EER, the maximum shipment-weighted

efficiency for any given year is 12.0 EER. As a result, because the efficiency trend for the 11.5

EER standards case achieves a shipment-weighted efficiency of 12.0 EER in the year 2023, the

forecasted efficiency trend remains flat from the year 2023 through 2035. In the case of the 12.0

EER standards case, a shipment-weighted efficiency of 12.0 EER is realized immediately after

the standard becomes effective. Thus, the efficiency trend is flat (i.e., stays fixed at 12.0 EER)

through out the entire forecast. 

Figures 10.2.2 and 10.2.3 show the forecasted efficiency trends for the base case and all

standards cases, including the ASHRAE/IESNA 90.1-1999 standards case.
10-7

10.0

10.2

10.4

10.6

10.8

11.0

11.2

11.4

11.6

11.8

12.0

2000 2005 2010 2015 2020 2025 2030 2035 2040

Year

EER

Base Case

ASHRAE

10.5 EER

11.0 EER

11.5 EER

12.0 EER

Figure 10.2.2 $65,000 Btu/h to <135,000 Btu/h: Base Case and Standards Case

Forecasted Efficiency Trends
10-8

9.6

9.8

10.0

10.2

10.4

10.6

10.8

11.0

11.2

11.4

11.6

11.8

12.0

2000 2005 2010 2015 2020 2025 2030 2035 2040

Year

EER

Base Case

ASHRAE

10.0 EER

10.5 EER

11.0 EER

11.5 EER

12.0 EER

Figure 10.2.3 $135,000 Btu/h to <240,000 Btu/h: Base Case and Standards

Case Forecasted Efficiency Trends

Appendix T provides the EER values corresponding to all the standards case efficiency

trends. As noted earlier, the Department developed standards case efficiency trends for the

following standards cases: ASHRAE/IESNA 90.1-1999, 10.0 EER, 10.5 EER, 11.0 EER, 11.5

EER, and 12.0 EER. Note that the Department did not analyze 10.0 EER for the $65,000 Btu/h

to <135,000 Btu/h equipment class, because the baseline efficiency level for this class equals

10.1 EER.

As stated earlier, annual energy per-unit values are tied directly to the efficiency of the

equipment. Table 10.2.2 provides weighted-average annual energy consumption values for

specific EER levels for both equipment classes. As detailed in Chapter 6, the Department

conducted whole-building simulations on a representative sample of commercial buildings that

use commercial unitary air-conditioning equipment. From that representative set of buildings,

DOE performed a weighted-average calculation to arrive at the values presented in Table 10.2.2.

The Department based the weighting not only on the representativeness of the building, but also

on the representativeness of the electric utility to which the building was assigned, as well as the

number of air-conditioning units that would be required to meet the simulated cooling load.

Table 10.2.2 presents the annual energy per-unit values according to three different metrics: 

annual electricity use per year in kilowatt-hours (kWh/year), annual electricity use per ton per

year (kWh/ton/year), and annual electricity use per building square foot per year
10-9

(kWh/sq.ft./year). The last metric, electricity use per square foot, is how DOE expressed the

annual energy per unit in the NES spreadsheet model. Because projections of commercial floor

space (expressed in square feet) and business income (expressed as leased dollars per square

foot) are two primary drivers used to estimate future air conditioner shipments, DOE calculated

the national energy expense by expressing the per unit annual energy use on a square-footage

basis. 

Table 10.2.2 Average Annual Energy Consumption per Unit

Annual Energy per unit Annual Energy per

unit per ton*

Annual Energy per

$65,000 to <135,000 $135,000 to <240,000 unit per floor area*

EER kWh/year kWh/year kWh/ton/year kWh/sq.ft./year

9.5 - 33,953 2186 5.74

10.0 - 32,442 2091 5.49

10.1 16,079 - 2073 5.44

10.5 15,543 31,085 2005 5.26

11.0 14,927 29,854 1928 5.06

11.5 14,366 28,733 1857 4.87

12.0 13,857 27,714 1793 4.70

* Values are the same for both commercial air conditioner equipment classes.

For the annual shipment-weighted efficiency levels specified in the base case and

standards case efficiency trends, the Department assigned the appropriate annual energy per-unit

value from Table 10.2.2. When necessary, the Department used interpolation and extrapolation

to assign the appropriate energy use value, based on the regression fits presented in Figure 10.2.4

for each of the two equipment classes.
10-10

Energy Use = -2488.9 * EER + 57386

R2

 = 0.9949

Eenrgy Use = -1168.8 * EER + 27835

R2

 = 0.9973

10000

15000

20000

25000

30000

35000

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5

EER

Annual Energy Use per Unit (kWh/yr)

65-135 

kBtu/h

135-240

kBtu/h

Figure 10.2.4 Average Annual Energy Consumption per Unit

10.2.2.2 Shipments

The Department forecasted shipments for the base case and all standards cases (see

Chapter 9). Several factors, including total installed costs, business income, operating cost, and

equipment lifetime, all impact forecasted shipments. Of the above factors, total installed costs

were the primary driver in forecasting the impact of standards on shipments. As noted earlier,

the increased installed cost of more-efficient equipment causes some customers to forego

equipment purchases. Consequently, shipments forecasted under the standards cases are lower

than under the base case. An extensive description of the methodology for conducting and

generating the shipments forecasts can be found in Chapter 9. 

10.2.2.3 Equipment Stock (STOCKV)

The commercial unitary air-conditioner stock in a given year is the number of unitary air

conditioners shipped from earlier years and which survive in the given year. The NES

spreadsheet model keeps track of the number of commercial unitary air conditioners shipped

each year. The Department assumes that commercial unitary air conditioners have an increasing

probability of retiring as they age. The probability of survival as a function of years-sincepurchase is the survival function. Commercial unitary air-conditioner lifetimes range from one

to approximately 30 years, with an average lifetime of 15.4 years (see Chapter 8, section 8.2.3.9,
10-11

AEC STOCK UEC = ∑ V V ⋅

Lifetime, for further details). Note that the stock of unitary air conditioners under all standards

cases is less than the stock under the base case because of the lower number of shipments

forecasted for the standards cases.

10.2.2.4 National Annual Energy Consumption (AEC)

The national energy consumption is the product of the annual energy consumption per air

conditioner and the number of commercial unitary air conditioners of each vintage. This

approach accounts for differences in unit energy consumption from year to year. The equation

for determining the annual energy consumption of unitary air conditioners was shown above and

is repeated below. 

In determining national annual energy consumption, DOE initially calculated the annual

energy consumption at the site (i.e., electricity in kWh consumed by the commercial unitary airconditioning unit within the building it is serving). The Department then calculated primary

energy consumption from site energy consumption by applying a conversion factor to account

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

10.2.2.5 Site-to-Source Conversion Factor (src_conv)

The source conversion factor is the multiplicative factor used for converting site energy

consumption, expressed in kWh, into primary or source energy consumption, expressed in quads. 

The source conversion factor accounts for losses in generation, transmission, and distribution. 

The Department used annual source conversion factors based on U.S. average values for

the commercial sector, calculated from the 2003 Annual Energy Outlook (AEO), Table A4.2

 As

shown in Table 10.2.3, the average conversion factors vary over time, due to projected changes

in generation sources (i.e., the power plant types projected to provide electricity to the country).
10-12

Table 10.2.3 Site-to-Source Conversion Factors

Site-to-Source Conversion Factor

Year Btu/kWh

2000 11,180

2001 11,031

2002 10,852

2003 10,797

2004 10,759

2005 10,744

2006 10,722

2007 10,700

2008 10,647

2009 10,589

2010 10,523

2011 10,463

2012 10,397

2013 10,354

2014 10,298

2015 10,260

2016 10,231

2017 10,191

2018 10,153

2019 10,120

2020 10,098

2021 10,057

2022 10,022

2023 9,981

2024 9,948

2025 9,917

For analyses conducted for the Notice of Proposed Rulemaking (NOPR), the Department

intends to use marginal conversion factors specific to the type of generation sources (e.g., power

plants) displaced, due to decreases in national energy consumption that would result from the use

of more-efficient commercial unitary air conditioners. To derive marginal conversion factors,

DOE would use the following methodology:

1. Start with an integrated projection of electricity supply and demand (e.g., the National

Energy Modeling System (NEMS) AEO Reference Case), and extract the source energy

consumption. 
d

 The marginal heat rate is another name for the site-to-source conversion factor. As just described, the marginal

heat rate is calculated by imposing a load reduction to the end-use of the appliance being analyzed in NEMS and

observing the change in primary energy use. 

10-13

NPV = PVS − PVC

2. Estimate projected energy savings and system load impacts as a result of possible

standards for each year (e.g., using the NES spreadsheet model).

3. Enter these energy savings and system load impacts back into NEMS as a new

scenario—specifically, a deviation from the Reference Case—to obtain the

corresponding source energy consumption. 

4. Obtain the difference between source energy consumption using this standards-level

scenario and the Reference Case.

5. Divide the source energy savings in Btu, adjusted for transmission and distribution

losses, by the site energy savings in kWh, to provide the time series of conversion factors

in Btu per kWh.

Because NEMS cannot adjust for class-specific transmission losses, this information

would be gathered from sources outside of NEMS. For commercial electricity customers,

transmission losses might be three percent (from the site of the electricity generation to a

substation) and distribution losses might be seven percent (from that substation to a particular

house). For the above case, the conversion factor would be the site-to-source conversion factor,

otherwise called the marginal heat rate,d multiplied by 1.10 (the extra 10 percent due to the

addition of transmission (three percent) and distribution (seven percent) losses).

The resulting conversion factors will change over time, and will account for the

displacement of generation sources. Furthermore, the NES spreadsheet models will include a

clearly defined column of conversion factors, one for each year of the projection.

10.3 NET PRESENT VALUE

10.3.1 Net Present Value Definition

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

described by the equation:

where:

PVS = present value of operating cost savings (including electricity, repair, and

maintenance costs), and 
10-14

PVS OCS DF y y = ⋅ ∑

PVC TIC DF y y = ⋅ ∑

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

installation). 

The PVS and PVC are determined according to the following expressions:

where:

OCS = total annual operating cost savings, 

TIC = total annual installed cost increases, 

DF = discount factor, and

y = year for which PVS and PVC are determined. 

The Department determined the PVC for each year, from the effective date of the

standard to the year 2035. The PVS was determined for each year, from the effective date of the

standard to the year when units purchased in 2035 retire.

 The Department calculated costs and savings as the difference between a standards case

and a base case (i.e., without new standards). 

The Department 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 net present value is the sum over time of the discounted

net savings.

10.3.2 Net Present Value Inputs

Table 10.3.1 summarizes the inputs to the NPV calculation. 

Table 10.3.1 Net Present Value Inputs

Input

Total Annual Installed Cost (TICy)

Total Annual Operating Cost Savings (OCSy)

Discount Factor

Present Value of Costs (PVC)

Present Value of Savings (PVS)
10-15

10.3.2.1 Total Annual Installed Cost (TICy)

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

forecasted in the standards case. As with the calculation of the NES, the Department used the

standards case shipments forecast to avoid miscounting the reduction in shipments as a reduction

in total installed costs.

The total installed cost includes both the equipment cost and the installation price. The

Department based average equipment costs on average manufacturer prices (see Chapter 8,

sections 8.2.2.1 and 8.2.2.2) multiplied by average overall markup values (see Chapter 8, section

8.2.2.3). The Department based average installation prices on nationally representative values of

$1585 for the $65,000 Btu/h to <135,000 Btu/h equipment class and $2142 for the $135,000 and

<240,000 Btu/h equipment class (see Chapter 8, Section 8.2.2.4). Table 10.3.2 shows the

resulting per-unit average total installed costs for the two equipment classes of commercial

unitary air conditioners The total installed cost values in Table 10.3.2 are presented not only in

absolute terms but also on a per-ton and per-square-foot basis.

Table 10.3.2 Average Total Installed Cost per Unit

$65,000 Btu/h to <135,000 Btu/h $135,000 Btu/h to <240,000 Btu/h

Per Unit

Per Unit

per Ton

Per Unit

per sq.ft. Per Unit

Per Unit

per Ton

Per Unit

per sq.ft.

EER 2001$ 2001$/ton 2001$/sq.ft. kWh/year 2001$/ton 2001$/sq.ft.

9.5 - - - $11,299 $753 $2.06

10.0 - - - $11,497 $766 $2.10

10.1 $6,440 $859 $2.35 - - -

10.5 $6,542 $872 $2.39 $11,757 $784 $2.14

11.0 $6,722 $896 $2.45 $12,121 $808 $2.21

11.5 $6,995 $933 $2.55 $12,656 $844 $2.31

12.0 $7,422 $990 $2.70 $13,472 $898 $2.45

As discussed earlier in section 10.2.2.1, the Department developed base case and

standards case energy efficiency trends. The Department based its standards case forecasts (i.e.,

forecasts of efficiency trends after standards take effect) on the use of a roll-up efficiency

scenario and parallel growth trend. For both the base case and standards case energy-efficiency

trends, the Department calculated annual shipment-weighted average efficiencies. Associated

with each annual shipment-weighted average efficiency value, the Department assigned a total

installed cost, based on the relationship between efficiency and total installed cost. The

Department based the relationship between efficiency and total installed cost for each

commercial unitary air conditioner equipment class on the data in Table 10.3.2. As shown in

Figure 10.3.1, DOE plotted the installed cost and efficiency data and determined regression fits

to establish the relationship between installed cost and efficiency for each equipment class. The 

Department determined historical and forecasted average total installed costs based on the annual
10-16

Total Inst. Cost = 95.929 * EER3 - 2794.4 * EER2 

 + 27541 * EER - 80399; R2 = 0.9999

Total Inst. Cost = 66.951* EER3 - 2010.8 * EER2 

 + 20370 * EER - 63160; R2 = 1

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5

EER

Total Installed Cost per Unit (2001$)

65-135 kBtu/h

135-240 

kBtu/h

Figure 10.3.1 Average Total Installed Cost per Unit

shipment-weighted efficiency levels specified in the base case and standards case efficiency

trends.

10.3.2.2 Total Annual Operating Cost Savings (OCSy)

The annual operating cost savings to the Nation are equal to the change in the annual

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

shipments forecasted in the standards case. The Department used the standards case shipments

forecast, in order to avoid miscounting the reduction in shipments as an operating cost savings.

The annual operating cost includes electricity, repair, and maintenance costs.

Annual Electricity Cost Savings. As described in Chapter 8, section 8.2.3.1, the

Department calculated annual electricity expenses based on two approaches: 1) a tariff based

approach, and 2) an hourly based approach. The hourly based approach resulted in annual

energy expenses which were, on average, less than one percent different than those from the

tariff-based analysis (see Chapter 8, Table 8.2.14). Thus, because the resulting national customer

economic impacts from the two approaches would not be significantly different, the Department

decided to present only the results from the tariff-based approach.
10-17

Table 10.3.3 provides weighted-average annual energy expense values for specific EER

levels for both equipment classes. As detailed in Chapter 6, the Department conducted wholebuilding simulations on a representative sample of commercial buildings using commercial

unitary air-conditioning equipment. The Department assigned tariff-based electricity rates to

each building to determine the annual energy expense for unitary air-conditioning in that

building. From the representative set of buildings, DOE performed a weighted-average

calculation to determine the values presented in Table 10.3.3. It based the weighting not only on

the representativeness of the building, but also on the representativeness of the electric utility to

which the building was assigned, as well as the number of unitary air-conditioning units that

were required to meet the simulated cooling load. Table 10.3.3 presents values according to

three different metrics: (1) annual electricity expense per year (2001$/year), (2) annual

electricity expense per ton per year (2001$/ton/year), and (3) annual electricity expense per

building square foot per year (2001$/sq.ft./year). The last metric, electricity expense per square

foot, is how DOE expressed the annual energy expense per unit in the Shipments and NES

spreadsheet models. Because projections of commercial floor space (expressed in square feet)

and business income (expressed as leased dollars per square foot) are two of the primary drivers

used to estimate future unitary air conditioner shipments, DOE calculated the national energy

expense more readily by expressing the per-unit annual energy expense on square-footage basis. 

Table 10.3.3 Average Annual Energy Expense per Unit

Annual Energy Expense per unit Annual Energy

Expense per unit

per ton

Annual Energy

Expense per unit

per floor area $65 to <135 kBtu/h $135 to <240 kBtu/h

EER 2001$/year 2001$/year 2001$/ton/year 2001$/sq.ft./year

9.5 - $2,853 $209 $0.52

10.0 - $2,707 $200 $0.50

10.1 $1,340 - $198 $0.49

10.5 $1,288 $2,576 $191 $0.48

11.0 $1,228 $2,457 $183 $0.46

11.5 $1,174 $2,349 $176 $0.44

12.0 $1,125 $2,251 $169 $0.42

As with the installed cost data, the Department developed historical and forecasted

annual energy expenses based on the annual shipment-weighted energy-efficiency levels

specified in the base case and standards case energy-efficiency trends. For the base case

efficiency trends and each of the standards case efficiency trends, DOE provides annual

shipment-weighted average efficiencies. Associated with each annual shipment-weighted

average energy efficiency value, the Department assigned an annual electricity expense, based

on the relationship between efficiency and electricity expense. The Department based the

relationship between energy efficiency and annual electricity expense on the data in Table 10.3.3 

As shown in Figure 10.3.2, DOE plotted the annual electricity expense and efficiency data and

determined regression fits to establish the relationship between electricity expense and energy
10-18

Electricity Expense = -240.14* EER + 5113.3

R2

 = 0.9949

Electricity Expense = -112.74 * EER + 2473.5

R2

 = 0.9973

$1,000

$1,400

$1,800

$2,200

$2,600

$3,000

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5

EER

Annual Electricity Expense per Unit (2001$)

65-135 kBtu/h

135-240 

kBtu/h

Figure 10.3.2 Average Annual Electricity Expense per Unit

efficiency With that relationship defined, the Department determined historical and forecasted

electricity expenses for the base case and standards case efficiency trends. Because DOE

characterized each possible new standard with three efficiency scenarios and three efficiency

growth trends, it developed annual electricity expense trends for nine cases for each possible

new standard. 

Annual Repair Costs. The Department based average annual repair costs on the physical

weight of the commercial unitary air-conditioning equipment (see Chapter 8, section 8.2.3.3). 

Table 10.3.4 shows the average per-unit repair costs for the two equipment classes of

commercial unitary air conditioners. The Department presents the repair costs in Table 10.3.4

not only in absolute terms, but also on a per-ton and per-square-foot basis.
10-19

Table 10.3.4 Average Annual Repair Cost per Unit

$65,000 Btu/h to <135,000 Btu/h $135,000 Btu/h to <240,000 Btu/h

Per Unit

Per Unit

per Ton

Per Unit

per sq.ft. Per Unit

Per Unit

per Ton

Per Unit

per sq.ft.

EER 2001$ 2001$/ton 2001$/sq.ft. kWh/year 2001$/ton 2001$/sq.ft.

9.5 - - - $297 $19.82 $0.054

10.0 - - - $302 $20.13 $0.055

10.1 $158 $21.02 $0.058 - - -

10.5 $161 $21.49 $0.587 $310 $20.64 $0.056

11.0 $168 $22.41 $0.061 $322 $21.49 $0.059

11.5 $180 $23.94 $0.065 $343 $22.89 $0.063

12.0 $198 $26.45 $0.072 $378 $25.19 $0.069

As with the installed cost and electricity expense data in Tables 10.3.2 and 10.3.3,

respectively, the Department developed historical and forecasted annual repair costs based on the

annual shipment-weighted efficiency levels specified in the base case and standards case

efficiency trends. For the base case efficiency trends and each of the standards case efficiency

trends, the Department provides annual shipment-weighted average energy efficiencies. 

Associated with each annual shipment-weighted average energy efficiency value, the

Department assigned an annual repair cost, based on the relationship between efficiency and

repair cost. It based the relationship between efficiency and annual repair cost on the data in

Table 10.3.4. As shown in Figure 10.3.3, DOE plotted the annual repair cost and efficiency data

and determined regression fits to establish the relationship between repair cost and energy

efficiency. With that relationship defined, the Department determined historical and forecasted

repair costs for the base case and standards case energy efficiency trends. Because the

Department characterized each possible new standard with three efficiency scenarios and three

efficiency growth trends, it developed annual repair cost trends for nine cases for each possible

new standard. 
10-20

Repair Cost = 4.6293 * EER3 - 134.85 * EER2

 + 1319.4 * EER - 4035.5; R2

 = 0.9999

Repair Cost = 3.2309 * EER3 - 97.036 * EER2

 + 979.54 * EER - 3165.9; R2

 = 1

$150

$200

$250

$300

$350

$400

9.0 9.5 10.0 10.5 11.0 11.5 12.0 12.5

EER

Annual Repair Cost per Unit (2001$)

65-135 kBtu/h

135-240 

kBtu/h

Figure 10.3.3 Average Annual Repair Cost per Unit

DF

r y yP = + −

1

( ) 1 ( )

Annual Maintenance Costs. The Department determined average annual maintenance

costs to be $200, regardless of cooling capacity or efficiency level (see Chapter 8, section

8.2.3.4). Thus, annual maintenance costs do not factor into the determination of the total

operating cost savings.

10.3.2.3 Discount Factor

The Department multiplies monetary values in future years by the discount factor in order

to determine the present value. The discount factor (DF) is described by the equation:

where:

r = discount rate, 

y = year of the monetary value, and 

yP = year in which the present value is being determined.
10-21

The Department 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. 

These discount rates are used 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., “Identifying and Measuring Benefits and Costs,”

therein. The Department defines the present year as 2001 for consistency with the year in which

the Department collected manufacturer cost data.

10.3.2.4 Present Value of Costs (PVC)

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

year (i.e., the difference 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 commercial

unitary air conditioners (i.e., from the effective date of standards, 2008, to the year 2035).

The increase in total installed cost refers to both equipment cost and installation cost

associated with the higher energy efficiency of commercial unitary air conditioners purchased in

the standards case compared to the base case. The Department calculated annual installed costs

as the difference in total installed cost for new equipment purchased each year, multiplied by the

shipments in the standards case. 

10.3.2.5 Present Value of Savings (PVS)

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 period from the effective date, 2008, to the time when the last unit installed in 2035 is retired

from service.

Savings are decreases in operating costs (including electricity, repair, and maintenance)

associated with the higher energy efficiency of commercial unitary air conditioners purchased in

the standards case compared to the base case. Total annual operating cost savings is the savings

per unit multiplied by the number of units of each vintage surviving in a particular year. 

Equipment consumes energy over its entire lifetime, and for units purchased in 2035, the

consumption includes energy consumed until the unit is retired from service.

10.4 NES AND NPV RESULTS

The NES spreadsheet model provides estimates of the NES and NPV due to various

candidate standards levels. The inputs to the NES spreadsheet have been discussed earlier in

sections 10.2.2 (NES Inputs) and 10.3.2 (NPV Inputs). The Department 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/commercial/ac_hp.html). Details

and instructions for using the spreadsheet are discussed in Appendix R. 
10-22

10.4.1 NES and NPV Input Summary

Table 10.4.1 summarizes the inputs to the NES spreadsheet model. For each input a brief

description of the data source is given.

Table 10.4.1 NES and NPV Inputs

Input Data Description

Shipments Annual shipments from shipments model (see Chapter 9).

Effective Date of Standard 2008 (2004 for the ASHRAE/IESNA 90.1-1999 standards case).

Base Case Efficiencies Annual shipment-weighted efficiencies based on historical residential

central air conditioner shipment-weighted efficiency trends and limited

commercial unitary air conditioner shipment-weighted efficiencies. Prior

to 1993: Efficiency trend equivalent to 1982-1991 residential equipment

efficiency trend. 1993-1994: Efficiency jump equivalent to 1991 to 1992

residential equipment efficiency jump. 1994-1998: Efficiency trend

equivalent to 1992-1999 residential equipment efficiency trend. 1999-

2001: Actual shipment weighted efficiencies from ARI. 2002-2030: 

Efficiency trend growth rate equivalent to 1⁄2 of 1992-1999 residential

equipment efficiency trend.

Standards Case Efficiencies Annual shipment-weighted efficiencies based on the use of one of a Rollup efficiency scenario and a Parallel growth trend.

Annual Energy Consumption per Unit Annual weighted-average values are a function of efficiency level

(established from the building simulation analysis, Chapter 6).

Total Installed Cost per Unit Annual weighted-average values are a function of efficiency level

(established from the life-cycle cost analysis, Chapter 8).

Electricity Expense per Unit Annual weighted-average values are a function of the annual energy

consumption and electricity prices (established form the life-cycle cost

analysis, Chapter 8). Only expenses based on tariff-based electricity prices

are used in the NES spreadsheet model.

Repair Cost per Unit Annual weighted-average values are a function of efficiency level

(established from the life-cycle cost analysis, Chapter 8).

Maintenance Cost per Unit Annual weighted-average value equals $200 (established from the lifecycle cost analysis, Chapter 8).

Escalation of Electricity Prices 2003 EIA Annual Energy Outlook forecasts (to 2025) and extrapolation for

2025 and beyond (see the life-cycle cost analysis , Chapter 8).

Electricity 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 and 7 percent real.

Present Year Future expenses are discounted to year 2001.

* Chapter 13 on the utility impact analysis and Chapter 14 on the environmental assessment provide more detail

on NEMS.
10-23

10.4.2 National Energy Savings Results

The following section provides NES results for the efficiency levels considered for the

two equipment classes of commercial unitary air conditioners. Results are cumulative to 2035

and are shown as primary energy savings. Inputs to the NES spreadsheet model are based on

weighted-average values yielding results which are discrete point values, rather than a

distribution of values as in the LCC analysis.

Table 10.4.2 and Figure 10.4.1 show the NES results for the candidate standard levels

analyzed for both equipment classes of commercial unitary air conditioners. The Department

based all the results on electricity price forecasts from the AEO2003 Reference Case. Note that

DOE projects the base case energy consumption (i.e., the national cumulative energy

consumption without standards) to be 13.2 quads for the $65,000 Btu/h to <135,000 Btu/h

equipment class and 10.8 quads for the $135,000 Btu/h to <240,000 Btu/h equipment class.

Table 10.4.2 Cumulative National Energy Savings for Commercial Unitary Air

Conditioners

$65 kBtu/h to <135 kBtu/h $135 kBtu/h to <240 kBtu/h

Candidate Standard Level Effective Date NES (Quads) NES (Quads)

ASHRAE/IESNA 90.1-1999 2004 0.31 0.20

10.0 EER 2008 - 0.31

10.5 EER 2008 0.39 0.53

11.0 EER 2008 0.70 0.79

11.5 EER 2008 0.98 1.02

12.0 EER 2008 1.08 1.09

Note: Cumulative national energy consumption for the base case: 13.2 Quads for $65 kBtu/h to <135 kBtu/h;

10.8 Quads for $135 kBtu/h to <240 kBtu/h.
10-24

0.00

0.20

0.40

0.60

0.80

1.00

1.20

ASHRAE 10.0 10.5 11.0 11.5 12.0

Standards Case

Cumuative National Energy Savings (Quads)

>65 to <135 kBtu/h

>135 to <240 kBtu/h

Figure 10.4.1 Cumulative National Energy Savings for Commercial Unitary Air

Conditioners

10.4.3 Annual Costs and Savings

As a prelude to providing the NPVs for each candidate standard level in each equipment

class, this section presents the annual equipment cost (or total installed cost) increases and

annual operating cost savings at the national level.

For the $65,000 Btu/h to <135,000 Btu/h equipment class, Figures 10.4.2–10.4.6 show

the changes over time of the non-discounted annual equipment price increases and the nondiscounted operating cost savings at each of the five candidate standard levels: 

ASHRAE/IESNA 90.1-1999, and 10.5, 11.0, 11.5, and 12.0 EER. Each figure also shows the

net annual impact, which is the difference between the savings and costs for each year. The

annual equipment price change is the increase in equipment price for equipment purchased each

year over the period 2008–2035 (the start year for the ASHRAE standards case is 2004). The

annual operating savings is the savings in operating costs for equipment purchased, and which

have not been retired, for each year over the time period. The Department determined the annual

costs and savings presented in each figure based on the AEO2003 Reference Case. The NPV is

the difference between the cumulative annual discounted savings and the cumulative annual

discounted costs.
10-25

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.2 $65,000 Btu/h to <135,000 Btu/h: National Annual

Costs and Savings for ASHRAE/IESNA 90.1-1999

Candidate Standard Level

Figures 10.4.3 through 10.4.6 initially show smaller annual operating cost savings

compared to the increased equipment price costs. For candidate standard levels up through 11.0

EER, operating cost savings increase with time, as more and more equipment meeting the

efficiency standard comprises the commercial unitary air conditioner stock. But for the 11.5

EER and 12.0 EER standards cases, operating cost savings begin to decrease after the early

2020s. There are two reasons for this decrease: 1) the equipment stock becomes saturated with

air-conditioning units meeting the energy efficiency standard, and 2) the rate of increase in the

efficiency of equipment under the standards case is slower than in the base case. Refer back to

Figure 10.2.2 for details on the efficiency trends for the base case and standards cases. The

disparity in the rate of the equipment energy efficiency increase between the standards case and

base case also explains the smaller equipment price change in later years.
10-26

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.3 $65,000 Btu/h to <135,000 Btu/h: National Annual

Costs and Savings for 10.5 EER Candidate Standard

Level

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.4 $65,000 Btu/h to <135,000 Btu/h: National Annual

Costs and Savings for 11.0 EER Candidate Standard

Level
10-27

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.5 $65,000 Btu/h to <135,000 Btu/h: National Annual

Costs and Savings for 11.5 EER Candidate Standard

Level

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.6 $65,000 Btu/h to <135,000 Btu/h: National Annual

Costs and Savings for 12.0 EER Candidate Standard

Level
10-28

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.7 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for ASHRAE/IESNA 90.1-1999

Candidate Standard Level

For the $135,000 Btu/h to <240,000 Btu/h equipment class, Figures 10.4.7–10.4.12 show

the changes over time of the non-discounted annual equipment price increases and the nondiscounted operating cost savings at each of the six candidate standard levels: ASHRAE/IESNA

90.1-1999, and 10.0, 10.5, 11.0, 11.5, and 12.0 EER. Each figure also shows the net annual

impact, which is the difference between the savings and costs for each year. The annual

equipment price change is the increase in equipment price for equipment purchased each year

over the period 2008 to 2035 (the start year for the ASHRAE standards case is 2004). The

annual operating savings is the savings in operating costs for equipment purchased, and which

have not been retired, for each year over the time period. The Department determined the annual

costs and savings presented in each figure based on the AEO2003 Reference Case. The NPV is

the difference between the cumulative annual discounted savings and cumulative annual

discounted costs. The operating cost savings and equipment price increases for each of the

efficiency levels for the $135,000 Btu/h to <240,000 Btu/h equipment class behave in a manner

similar to that presented earlier for the $65,000 Btu/h to <135,000 Btu/h equipment class

(Figures 10.4.2–10.4.6).
10-29

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.8 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for 10.0 EER Candidate Standard

Level

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.9 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for 10.5 EER Candidate Standard

Level
10-30

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.10 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for 11.0 EER Candidate Standard

Level

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.11 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for 11.5 EER Candidate Standard

Level
10-31

-$0.5

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

$0.5

2004 2008 2012 2016 2020 2024 2028 2032

Year

Billion 2001$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Figure 10.4.12 $135,000 Btu/h to <240,000 Btu/h: National Annual

Costs and Savings for 12.0 EER Candidate Standard

Level

10.4.4 Net Present Value Results

The following section provides NPV results for the candidate standards levels considered

for the two equipment classes of commercial unitary air conditioners. Results are cumulative

and are shown as the discounted value of these savings in dollar terms. The inputs to the NES

spreadsheet model are based on weighted-average values yielding results which are discrete

point values, rather than a distribution of values as in the LCC analysis.

The present value of increased total installed costs is the total 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 effective

date of standards, 2008 (or 2004 for the ASHRAE/IESNA 90.1-1999 standards case), to the year

2035).

Savings are decreases in operating costs (including electricity, repair, and maintenance)

associated with the higher energy efficiency of commercial unitary air conditioners purchased in

the standards case compared to the base case. Total operating cost savings are the savings per

unit multiplied by the number of units of each vintage (i.e., the year of manufacture) surviving in

a particular year. Commercial unitary air-conditioning equipment consumes energy and must be

maintained over its entire lifetime. For units purchased in 2035, the operating cost includes

energy consumed and maintenance and repair costs incurred until the last unit is retired from

service.
10-32

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

ASHRAE 10.0 10.5 11.0 11.5 12.0

Standards Case

Cumuative NPV (billion 2001$)

>65 to <135 kBtu/h

>135 to <240 kBtu/h

Figure 10.4.13 Cumulative NPV at a Seven percent Discount Rate for

Commercial Unitary Air Conditioners

Table 10.4.3 and Figure 10.4.13 show the NPV results for the standard levels considered

for commercial unitary air conditioners based upon a seven percent discount rate. The

Department based all results on electricity price forecasts from the AEO2003 Reference Case. 

Note that the cumulative national equipment and operating costs of unitary air conditioners

under the base case (i.e., without standards) equals $58 billion for the $65,000 Btu/h to <135,000

Btu/h equipment class and $43 billion for the $135,000 Btu/h to <240,000 Btu/h equipment

class. Detailed results showing the breakdown of the NPV into national equipment costs and

national operating costs are provided in Appendix S.

Table 10.4.3 Cumulative NPV Results based on a Seven percent Discount Rate (billion

2001$)

$65 kBtu/h to <135 kBtu/h $135 kBtu/h to <240 kBtu/h

Candidate Standard Level Effective Date NPV (billion 2001$) NPV (billion 2001$)

ASHRAE/IESNA 90.1-1999 2004 0.52 0.38

10.0 EER 2008 - 0.51

10.5 EER 2008 0.57 0.83

11.0 EER 2008 0.93 1.12

11.5 EER 2008 1.08 1.24

12.0 EER 2008 1.02 1.20

Note: Cumulative national energy consumption for the base case: $58 billion for $65 kBtu/h to <135 kBtu/h;

$43 billion for $135 kBtu/h to <240 kBtu/h.
10-33

Table 10.4.4 and Figure 10.4.14 provide the NPV results based on the three percent

discount rate and electricity price forecasts from the AEO2003 Reference Case. There is an

increase in the total national costs of operating commercial unitary air conditioners in the base

case ($125 billion and $94 billion at a three percent discount rate as opposed to $58 billion and

$43 billion at a seven percent discount rate for the $65,000 Btu/h to <135,000 Btu/h to $135,000

Btu/h to <240,000 Btu/h equipment classes, respectively). As with the NPV results based upon a

seven percent discount rate, detailed results showing the breakdown of the NPV into national

equipment costs and national operating costs based upon a three percent discount rate are

provided in Appendix S.

Table 10.4.4 Cumulative NPV Results based on a Three percent Discount Rate (billion

2001$)

$65 kBtu/h to <135 kBtu/h $135 kBtu/h to <240 kBtu/h

Candidate Standard Level Effective Date NPV (billion 2001$) NPV (billion 2001$)

ASHRAE/IESNA 90.1-1999 2004 1.25 0.90

10.0 EER 2008 - 1.33

10.5 EER 2008 1.52 2.19

11.0 EER 2008 2.53 3.02

11.5 EER 2008 3.06 3.44

12.0 EER 2008 3.05 3.44

Note: Cumulative national energy consumption for the base case: $125 billion for $65 kBtu/h to <135 kBtu/h;

$94 billion for $135 kBtu/h to <240 kBtu/h.
10-34

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

ASHRAE 10.0 10.5 11.0 11.5 12.0

Standards Case

Cumuative NPV (billion 2001$)

>65 to <135 kBtu/h

>135 to <240 kBtu/h

Figure 10.4.14 Cumulative NPV at a Three percent Discount Rate for

Commercial Unitary Air Conditioners

10.4.5 “Max Tech” Sensitivity

As discussed earlier, the maximum technologically feasible design (i.e., “max tech”) is

12.0 EER. In anticipation that a “max tech” level could be justified beyond 12.0 EER, the

Department ran a sensitivity case to determine the impact on the NES and NPV from a “max

tech” design that is greater than 12.0 EER. Under this sensitivity case, the “max tech” design is

allowed to be two EER rating points higher than the standard. Under the ASHRAE/IESNA

Standard 90.1-1999 and 10.0 EER candidate standard levels, the forecasted efficiency trend

remains unchanged as the “max tech” design remains at 12.0 EER. But under all other candidate

standard levels, the forecasted efficiency trends are impacted as the “max tech” design is greater

than 12.0 EER (i.e., 12.5 EER for the 10.5 EER candidate standard level, 13.0 EER for the 11.0

EER candidate standard level, 13.5 EER for the 11.5 EER candidate standard level, and 14.0

EER for the 12.0 EER candidate standard level). Although the “max tech” design is allowed to

be greater than 12.0 EER, it is gradually phased in over time resulting in efficiency trends that

are not dramatically different than those developed with a 12.0 EER “max tech” design. As a

result, only the NES and NPV results for the12.0 EER candidate standard levels are significantly

different from those results based on a “max tech” design of 12.0 EER. Appendix U provides

the details on the efficiency trends and the NES and NPV results for the “max tech” sensitivity.
10-35

1. Air-Conditioning and Refrigeration Institute (ARI), 2000 Statistical Profile, 2000.

Arlington, VA.

2. U.S. Department of Energy-Energy Information Administration, Annual Energy Outlook

2003, January 2003. Washington, DC. Report No. DOE/EIA-0383(2003).

REFERENCES