10-C-i

APPENDIX 10-C. NATIONAL NET PRESENT VALUE OF CONSUMER BENEFITS AND 

EMISSIONS REDUCTIONS USING ALTERNATIVE PRODUCT PRICE FORECASTS

TABLE OF CONTENTS

10-C.1 INTRODUCTION ............................................................................................... 10-C-1

10-C.2 MICROWAVE OVEN STANDBY POWER COMBINED NPV RESULTS 

USING ALTERNATIVE LEARNING 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 CO2 and NOX 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 CO2 and NOX Emissions Reductions 

(Discount Rate of 3% for CO2 and 7% for NOX) .................................... 10-C-5
10-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 only” learning rate, (4) an “AEO 2010 chained 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 forecast 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 CO2 and NOX emissions. For these results, the economic benefits 

from reduced CO2 emissions were calculated using a SCC value of $22.3/metric ton in 2010 (in 

2010$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits 

from reduced NOX emissions were calculated using a value of $2,537/ton (in 2010$), which is 

the average of the low and high values used in DOE’s analysis, and either a 3% or 7% discount 
10-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 annualized 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 the time-series of costs and benefits using discount rates of three and seven 

percent for all costs and benefits except for the value of CO2 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 STANDBY POWER COMBINED NPV RESULTS 

USING ALTERNATIVE LEARNING 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 CO2 and NOX 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 CO2 and NOX Emissions Reductions (Discount Rate of 3% 

for CO2 and 7% for NOX) 

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 0.084 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.