10

- C

- i 

### APPENDIX 10

- C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND

EMISSIONS REDUCTIONS USING ALTERNATIVE PRODUCT PRICE FORECASTS

TABLE OF CO NTENTS

10

- C.1 INTRODUCTION

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

- C

- 1

10

- C.2 MICROWAVE OVEN STAND BY POWER COMBINED NP V RESULTS

USING ALTERNATIVE LE ARNING RATES

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

- C

- 4

LIST OF TABLES

Table 10

- C.2.1 Microwave Oven Standby Power: Annualized Present Value of

Consumer Impacts (3 Percent Discount Rate) and Annualized Present

Value of Monetized Benefits from CO 2 

### and NO X 

### Emissions

Reductions (3 Percent Discount Rate)

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

- C

- 4

Table 10

- C.2.2 Room Air Conditioners: Annualized Present Value of Consumer

Impacts (7 Percent Discount Rate) and Annualized Present Value of

Monetized Benefits from CO 2 

### and NO X 

### Emissions Reductions

(Discount Rate of 3% for CO 2 

### and 7% for NO X 

### )

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

- C

- 510

- C

- 1 

### APPENDIX 10

- C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND

EMISSIONS REDUCTIONS USING ALTERNATIVE PRODUCT PRICE FORECASTS

10

- C.1 INTRODUCTION

DOE investigated the impact of different learning rates on the combined net present value

( NPV ) for the considered TSLs for microwave ovens . The NPV results presented in chapter 10

are based on a learning rate for product prices of 28.9 % ( the “default” learning rate ) . DOE

considered five sensitivities: (1) a “low learning” rate; (2) a “high learning ” rate; (3) a

“ Microwave o nly ” learning rate, (4) an “AEO 2010 c hained price index forecast ”, and (5 ) a “ no

learning” rate , which assumes constant real prices over the entire forecast period. Refer to

appendix 8

- E for details on the development of the above learning rates.

DOE derived a price factor index, with 2010 equal to 1, to forecast prices in each future

year in the analysis period. The default index value in a given year is a function of the LR and

the cumulative production forecast through that year, which is based on the shipments forecast

described in chapter 9. Table 10

- C.1.1 presents the price factors used to fo recast product prices

for microwave ovens in each considered sensitivity

.10

- C

- 2 

### Table 10

- C.1.1 Microwave Oven Price Factors

Year Default

Learning

LR=28.9% Low

Learning

LR=19.2% High

Learning

LR=37.0% MWO Only

LR=39.6% AEO2010

Chained

Price Index

Forecast No

Learning

(constant

real prices)

2010 1.000 1.000 1.000 1.000 1.000 1.000

2011 0.981 0.986 0.979 0.968 0.989 1.000

2012 0.963 0.971 0.958 0.938 0.978 1.000

2013 0.946 0.958 0.939 0.909 0.964 1.000

2014 0.930 0.945 0.920 0.883 0.949 1.000

2015 0.914 0.933 0.903 0.859 0.932 1.000

2016 0.900 0.921 0.886 0.837 0.916 1.000

2017 0.886 0.910 0.871 0.817 0.899 1.000

2018 0.873 0.900 0.857 0.799 0.883 1.000

2019 0.861 0.890 0.842 0.781 0.866 1.000

2020 0.848 0.880 0.828 0.763 0.848 1.000

2021 0.836 0.870 0.814 0.745 0.829 1.000

2022 0.823 0.860 0.801 0.728 0.810 1.000

2023 0.812 0.850 0.788 0.711 0.791 1.000

2024 0.800 0.841 0.775 0.696 0.772 1.000

2025 0.790 0.832 0.763 0.681 0.754 1.000

2026 0.779 0.824 0.752 0.667 0.736 1.000

2027 0.770 0.816 0.741 0.654 0.719 1.000

2028 0.760 0.808 0.731 0.642 0.701 1.000

2029 0.751 0.800 0.721 0.630 0.684 1.000

2030 0.742 0.793 0.711 0.618 0.667 1.000

2031 0.733 0.785 0.702 0.607 0.651 1.000

2032 0.725 0.778 0.692 0.596 0.634 1.000

2033 0.716 0.771 0.683 0.585 0.619 1.000

2034 0.708 0.764 0.674 0.575 0.604 1.000

2035 0.700 0.757 0.665 0.565 0.589 1.000

2036 0.692 0.751 0.657 0.555 0.575 1.000

2037 0.685 0.745 0.649 0.546 0.561 1.000

2038 0.678 0.739 0.641 0.537 0.547 1.000

2039 0.670 0.733 0.633 0.529 0.534 1.000

2040 0.663 0.727 0.626 0.521 0.521 1.000

2041 0.657 0.721 0.618 0.513 0.508 1.000

2042 0.650 0.715 0.611 0.505 0.496 1.000

2043 0.643 0.709 0.604 0.497 0.484 1.000



### The results presented here combine the NPV of the consumer savings

, calculated for each

TSL using 3 and 7 percent discount rates, with the present value of the potential economic

benefits resulting from reduced CO 2 

### and NO X 

### emissions . For these results, the economic benefits

from reduced CO 2 

### emissions were calculated using a SCC value of $ 22.3 / metric ton in 2010 (in

20 10 $) for CO 2 

### , increasing at 3% per year, and a discount rate of 3%. The economic benefits

from reduced NO X 

### emissions were calculated using a value of $ 2,537 /ton (in 20 10 $), which is

the average of the low and high values used in DOE’s analysis , and either a 3% or 7% discount10

- C

- 3 

### rate

. See chapter 16 for information regarding the derivation of these values. All results refer to

lifetime impacts of products shipped in 2014

- 2043.

The results presented here are annua lized values. DOE used a two

- step calculation

process to convert the time

- series of costs and benefits into annualized values. First, DOE

calculated a present value in 2011, the year used for discounting the NPV of total consumer costs

and savings, for th e time

- series of costs and benefits using discount rates of three and seven

percent for all costs and benefits except for the value of CO 2 

### reductions. For the latter, DOE used

the discount rate appropriate for each SCC time series . From the present value, DOE then

calculated the fixed annual payment over a 30

- year period, starting in 2011, that yields the same

present value. The fixed annual payment is the annualized value. Although DOE calculated

annualized values, this does not imply that the time

- series of cost and benefits from which the

annualized values were determined would be a steady stream of payments.10

- C

- 4 

### 10

- C.2 MICROWAVE OVEN STAND BY POWER COMBINED NPV RESULTS

USING ALTERNATIVE LEARNI N G RATES

Table 10

- C.2.1 Microwave Oven Standby Power : Annualized Present Value of

Consumer Impacts (3 Percent Discount Rate) and Annualized Present

Value of Monetized Benefits from CO 2 

### and NO X 

### Emissions Reductions (3

Percent Discount Rate)

Trial

Standard

Level Default

Learning

LR=28.9% Low

Learning

LR=19. 2% High

Learning

LR=37.0% MWO Only

LR=39.6% AEO2010

Chained

Price

Index

Forecast No

Learning

(constant

real prices)

1 Billion 2010$

Incr. Installed Cost 0.002 0.002 0.002 0.002 0.002 0.003

Operating Cost

Savings 0.103 0.103 0.103 0.103 0.103 0.103

Value of Emissions

Reduction 0.019 0.019 0.019 0.019 0.019 0.019

Net Present Value 0.120 0.120 0.120 0.120 0.120 0.120

2 Incr. Installed Cost 0.007 0.008 0.007 0.006 0.007 0.009

Operating Cost

Savings 0.149 0.149 0.149 0.149 0.149 0.149

Value of Emissions

Reduction 0.027 0.027 0.027 0.027 0.027 0.027

Net Present Value 0.169 0.169 0.169 0.170 0.170 0.167

3 Incr. Installed Cost 0.022 0.023 0.021 0.019 0.020 0.027

Operating Cost

Savings 0.205 0.205 0.205 0.205 0.205 0.205

Value of Emissions

Reduction 0.038 0.038 0.038 0.038 0.038 0.038

Net Present Value 0.221 0.220 0.222 0.224 0.222 0.215

4 Incr. Installed Cost 0.079 0.083 0.076 0.068 0.074 0.099

Operating Cost

Savings 0.314 0.314 0.314 0.314 0.314 0.314

Value of Emissions

Reduction 0.058 0.058 0.058 0.058 0.058 0.058

Net Present Value 0.293 0.288 0.295 0.303 0.298 0.273

Parentheses indicate negative (

- ) values.10

- C

- 5 

### Table 10

- C.2.2 Room Air Conditioners: Annualized Present Value of Consumer Impacts

(7 Percent Discount Rate) and Annualized Present Value of Monetized

Benefits from CO 2 

### and NO X 

### Emissions Reductions (Discount Rate of 3%

for CO 2 

### and 7% for NO X 

### )

Trial

Standard

Level Default

Learning

LR=28.9% Low

Learning

LR=19.2% High

Learning

LR=37.0% M WO Only

LR=39.6% AEO2010

Chained

Price

Index

Forecast No

Learning

(constant

real prices)

1 Billion 2010$

Incr. Installed Cost 0.002 0.002 0.002 0.002 0.002 0.003

Operating Cost

Savings 0.084 0.084 0.084 0.084 0.084 0.084

Value of Emissions

Reduction 0.019 0.019 0.019 0.019 0.019 0.019

Net Present Value 0.101 0.101 0.101 0.101 0.101 0.100

2 Incr. Installed Cost 0.007 0.007 0.007 0.006 0.007 0.009

Operating Cost

Savings 0.121 0.121 0.121 0.122 0.121 0.121

Value of Emissions

Reduction 0.027 0.027 0.027 0.027 0.027 0.027

Net Present Value 0.141 0.141 0.142 0.142 0.142 0.140

3 Incr. Installed Cost 0.020 0.021 0.020 0.018 0.019 0.025

Operating Cost

Savings 0.167 0.167 0.167 0.167 0.167 0.167

Value of Emissions

Reduction 0.037 0.037 0.037 0.037 0.037 0.037

Net Present Value 0.184 0.183 0.184 0.186 0.185 0.179

4 Incr. Installed Cost 0.075 0.078 0.072 0.066 0.071 0.090

Operating Cost

Savings 0.256 0.256 0.256 0.256 0.256 0.256

Value of Emissions

Reduction 0.057 0.057 0.057 0.057 0.057 0.057

Net Present Value 0.238 0.235 0.241 0.247 0.242 0.223

Parentheses indicate negative (

- ) values.