AlisonWilliamsandKatieCoughlinApril29‐30,2014ASRACPumpsWorkingGroupLifeCycleCostAnalysis2Market &TechnologyScreeningAnalysisEngineeringAnalysisEnergy Use & EndUse LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisManufacturerImpactAnalysisRegulatoryImpactAnalysisEmploymentImpactAnalysisUtilityImpactAnalysisEnvironmentalImpactAnalysisNOPR Rulemaking Stage3MarkupsAnalysisPurpose• Determine consumer pump prices based on manufacturercosts prices, both for baseline and higher efficiencyequipment• Characterize pump distribution channelsMethod• Identify distribution channels• Estimate the consumer prices by applying markups tomanufacturer selling price4MarkupsAnalysis• Four primary distribution channels:Channel: FromManufacturer ShareofShipmentsPumpOEMtoDistributortoEndUser 87%PumpOEMtoOEMtoEndUser 8%PumpOEMtoEndUser 2%PumpOEMtoContractortoEndUser 1%•Doanyofthesedistributionchannelshaveintermediatestepsnotaccountedfor– i.e.,todistributortocontractortoenduser?•Arethereanymissingchannels?•Dotheshareslookreasonable?5MarkupsAnalysis•Sources:–Original equipment manufacturer (OEM) markups: U.S.Census Bureau, Manufacturing Industry Series data–Distributor markups: U.S. Census Bureau, BusinessExpenditure Survey–Contractor markups: RS Mean Electrical Cost Data–Sales tax rates: 2011 Sales Tax Clearinghouse•Outputs–Baseline and incremental markups6MarkupsAnalysis• Markups relate price to cost of goods sold (CGS).• Baseline markups relate priceto cost for baseline products.‒Baseline markups indicate a consumer price that covers all of aretailer’s or distributor’s expenses plus profit.• Incremental markups relate the incremental change in consumer priceto the incremental change in CGS for higher-efficiency products.‒Some costs remain constant as CGS increases.‒Incremental markups cover only expenses that vary with CGS –expenses that increase due to an increase in product efficiency.• Weighting the markup values for eachactor by the respective sharesof each channel yields an averageoverall baseline markup of 1.50and an overall incremental markup of 1.24.7NOPR Rulemaking StageMarket &TechnologyScreeningAnalysisEngineeringAnalysisEnergy Use & EndUse LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisManufacturerImpactAnalysisRegulatoryImpactAnalysisEmploymentImpactAnalysisUtilityImpactAnalysisEnvironmentalImpactAnalysis8EnergyUseCharacterizationPurpose• Develop annual energy use data for pumps based on field operatingconditionsMethod• Developed distributions of pump operating hours and duty points to accountfor variability in the field9AnnualEnergyUseCalculation•Pumpshaftpoweriscalculatedateachloadpointbasedonassumedloadprofilesandperformancecurves(frompumpsdatabase)•Amotorissizedbasedonthepowercurve–Motorlossesarecalculatedateachloadpoint(accordingtothemethoddevelopedforthetestprocedure)•Hoursofuseateachloadpointiscalculatedfromannualoperatinghoursandweightsateachloadpoint•Allpumpsareassumedtobethrottledinthisanalysis–Wewilldoasubgroupanalysisforvariablespeedpumpsinthefutureܻܲܪ ෍ ൌ ݁ݏܷ	ݕ݃ݎ݊݁ܧ	݈ܽݑ݊݊ܣ௜ܲ௜ܮ ൅௜௜10EnergyUseVariability•Annualenergyusedependsonanumberoffactorsthatdependontheuser,ratherthanthepump•Dutypoint–PowerPandflowQ•Loadprofile•Annualhoursofoperation–Dependsonapplication•Pumpsizing,hererepresentedbya“BEPoffset”–ݓ݋݈ܨ௨௧௬஽ൌݓ݋݈ܨ ݔ ൅ 1௉ா஻–Xischosenfromauniformdistributionbetween‐0.25to0.10–Thisreflectsthegenerallyacceptedoperatingrangeofpumps,from75%to110%ofBEP–Headandefficiencyarecalculatedfrompumpdata11EnergyUseDataSources•Informationondutypoints:–Ag/IrrigationFarmandRanchIrrigationSurvey(FRIS)•Estimatedutypointfromaverageflowandhead–WSUMotorsdatabasecontainsenergyauditdataforseveralthousandmotors,includingHP,hoursperyear,primaryapplication•Maybebiasedtowardlargermotors;mostlycomm &ind–PG&Epumptestdatacontainsdutypointsatasinglepointintime•Maybebiasedtolargerpumpsorthoseoperatingmorefrequently–WSUandPG&Earenotstatisticalsamples–UseMfr shipmentsdatatoestimatedistributionofpumpsinuse•Nodataonloadprofiles–Commercialbuildingsimulationforspaceconditioningapplications–Foursimpleloadshapetypesassignedrandomlytopumpusers12Example:DutyPointsforIrrigationfromFRIS0204060801001200 500 1000 1500 2000 2500 3000 3500 4000 4500

PowerFlowIrrigationPumpsonFarmsOtherThanforWells(FRIS2008)CaliforniaColoradoNebraskaArkansasIdahoOthers13EnergyUseLoadProfiles•PERcalculatedbasedon4typicalloadprofiles:–Flatload(LP0):100%loadpointonly–Flat/over‐sized(LP1):equallyweightedat75%and100%loadpoint–Variableload/over‐sized(LP2):increasingload,peakat100%loadpoint–Variableload/under‐sized(LP3):increasingload,peakat100%loadpoint,withoverloadat110%loadpoint•Shouldloadprofilesbeassociatedwithapplicationsratherthanrandomlyselected?14AnnualOperatingHours(1)• Distributionsofannualoperatinghoursbyapplication basedonaconsultantestimate• “Other”estimatebasedonaverageofdataforotherfiveapplications• Therangeofoperationaccountsforlead/lagpumpsituationsQuintile 1 Quintile 2 Quintile 3 Quintile4 Quintile5CoolingWater2500 3500 5000 6000 7500BoilerFeed 2000 3000 4000 5000 6000Circulation 2000 3000 4000 5000 6000PressureBoost300 600 1000 2500 4500Irrigation 300 600 1000 1500 2000Other 600 940 1500 3300 330015AnnualOperatingHours(2)• OnlyotherdatasourceistheWSUmotorsdatabase•Arethereanyotherdatasourcesthatwouldhelpquantifytherangeofoperatinghours?Application AveragefromWSUDataConsultantEstimateBoilerFeed 4800 4000Circulation 5800 4000CoolingWater 6600 5000Other 6800 1500PressureBoost 6400 100016NOPR Rulemaking StageMarket &TechnologyScreeningAnalysisEngineeringAnalysisEnergy Use & EndUse LoadCharacterizationShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod AnalysisManufacturerImpactAnalysisRegulatoryImpactAnalysisEmploymentImpactAnalysisUtilityImpactAnalysisEnvironmentalImpactAnalysis17LifeCycleCost(LCC)Analysis•Purpose• AssesstheLCCimpactsfortheconsumers(users)ofcommercialandindustrialpumpsundertheconsideredefficiencylevels.•Method• LCCequalstotalinstalledcostsplusthesumofannualoperatingcostsdiscountedtoaparticularbaseyear.• AnalysismodelstheuncertaintyandvariabilityofinputsusingaMonteCarloapproachandprobabilitydistributions.• Thisjustmeansthatmanyofthevariables(discountrate,operatinghoursperyear,totallifetimeoperatinghours,loadprofiletype)arechosenfromdistributions.• TheresultingLCCsamplecontains10,000uniquerows18LCC:OverviewTotalInstalledCostPaybackPeriodLifetimeOperatingCostLife‐CycleCostEnergyConsumptionElectricityPricesAnnualEnergyCostRepairCostMaintenanceCostElectricityPriceTrendAnnualOperatingCostLifetimeDiscountRatesCustomerPriceInstallationCostDataInputsIntermediateAnalysisOutputResultsFromEngineeringAnalysisDistributorMarkupContractorMarkupSalesTaxMarkupFromMarkupsAnalysisBaselineMSPStd‐levelMSPFromEngineeringAnalysisPriceisafunctionofefficiencyFromEnergyUseAnalysis19•10,000pumpinstallationsforeachLCCrun•Eachinstallationisthecombinationofapumpuserandapump•Usercharacteristicsarethesameforallefficiencylevels–Thisincludesthepumplifetimeandoperatinghours•Inthebasecase,pumpsaredistributedtousersaccordingtotheefficiencydistributionintheshipments•PumpcharacteristicschangewithELifandonlyiftheuser’sbasecasepumpdoesnotpasstheefficiencycriteriaforthatEL•Ifapumpfails,anewpumpischosenbasedonleastcost–Chooserandomlyamongallpumpswithina10%bandMechanicsoftheLCC(1)20MechanicsoftheLCC(2)RepresentativeUnits•KeyfeaturefortheLCCisadistributionofequivalentpumpsthatvaryonlybyefficiency(PER,C‐value,etc.)•TheLCCusesasetofrepresentativeunitsconstructedfrombinningthemanufacturersurveydata–9powerbinsx9flowbins,logarithmicallyspaced–Allefficiencieswithinabinareassumedavailablefortherepunit–Pumpcurve,efficiencycurve,basepriceandBEPefficiencyarenormalizedtothebinaveragespecificspeedandflow–C‐valuesarenotaffected21LCCRepresentativeUnits(1)22LCCRepresentativeUnits(2)C = constantC=FlowEffC=Flow Bin•Pumpdataarebinned•Thisensuresthatapumpremainsavailableatallefficiencylevels•Alsoprovidesadistributionofefficiencies•Surfaceswith“C=constant”defineequivalentefficienciesfordifferentpumpsizes23LCCRepresentativeUnits(3)C = constantC=FlowEffC=Bin Avg QC=Flow Bin•Withinabindefineshipment‐weightedaveragepumpcharacteristics–Specificspeed–BEPflow–Pumpcurve–Efficiencycurve•NormalizeefficienciesusingtheC‐valueequation•Pumppricemodeledasthebasepricefortheaveragepumpplusefficiencypremium24•BEP(flow,head)– Repunit•Pumpcurve(headasafunctionofflow)– Repunit•Efficiencycurve(asafunctionofflow)– Repunit•BEPpumpefficiency•Equipmentprice•Sector•Application•BEPoffset(dutypoint)•Loadprofile•Electricityprice•Discountrate•Lifetime•UserweightInstallation=Pump+PumpUseroftheLCC(2)Pump PumpUserFromenergyuseanalysis25PumpUserWeights(1)FlowChartWEIGHTSFractionoftotalsamplebypumptype,speed,power,flow,sector,andapplicationDistributionbypower,speed,applicationConsultant’sestimateDistributionbysectorManufacturersShipmentsDataDistributionofpumptype,speed,power,flowWSUMotorDatabase:Comm/IndPG&EPumpTestMunicipalUSDACensusAg/Irrigation26SectorApplication Commercial Industrial Agricultural MunicipalBoiler Feed X XCirculation X XCoolingWater X X XIrrigation XPressureBoost X X X XOther X X XPumpUserWeights(2)CalculationMethod• Eachproductclass(pumptypeandspeed)has10,000samplesintheLCC• Distributeacrosspowerandflowbinsbasedonshipments• Foragivenpowerandspeed,distributeacrossapplicationusingthemotors,pumptestoragriculturaldata• Limitsomeapplicationstosomesectors27PumpUserWeights(3)Sectors• Theavailabledataallowestimationofweightingbysector• Sectorweightsalsoprovidedfromaconsultantreport• Difficulttoisolatecleanwaterpumps•Dotheestimatesseemreasonable?•Are thereothersourcesofdata/informationtohelpinformthese?DataEst ConsultantEstAgriculture 7% 5%Commercial 60% 49%Industrial 30% 40%Municipal 3% 6%28LCCInputs:InstallationandRepairCosts•InstallationCosts:–DOEassumedthatinstallationcostswillnotchangeasafunctionofefficiency–Thesecostsarenotincludedinthemodel•AnnualizedRepairandMaintenance:–DOEassumedthatrepairandmaintenancecostswillnotchangeasafunctionofefficiency–Thesecostsarenotincludedinthemodel–Repairsaccountedforimplicitlyinlifetimeestimates•Will repair and maintenance costs change as a function ofefficiency (when considering only hydraulic redesign)?•Willinstallationcostschangeasafunctionofefficiency(whenconsideringonlyhydraulicredesign)?29LCCInputs:Lifetime•Adistributionofpumpmechanicallifetime(hours)byequipmentclasswasprovidedbyaconsultant.•Pumplifetimeinyearsisestimatedastheratioofmechanicallifetimetoannualoperatinghours.EquipmentClass AverageofMechanicalLife (Hours)ESCC180022,200ESCC360022,100ESFM180015,100ESFM360014,600IL180025,000IL360024,600•Are there cases where this assumption would not hold? Forexample, pumps with low hours of use?30LCCInputs:LifetimesintheLCCSampleof10,00031LCCInputs:EnergyPrices• Electricity prices are used to convert energy use to energy costs.• Use national average energy prices by sector, published in AEO2014• Commercial and industrial sectors only; use industrial prices for municipal andagricultural users• Price trend used to calculate energy costs over the pump lifetimeSector 2014ElectricityPrice(2013$/kwh)Commercial .10Industrial* .07*UsedforAgriculturalandMunicipalalso32LCCInputs:DiscountRates• DOE uses the discount rate to determine the present value of lifetimeoperating expenses.• DOE derived a distribution of discount rates for the applicable sectors.– These distributions were developed by estimating the weighted averagecost of capital (WACC) for commercial, industrial, and municipal consumersof pumps.– WACC includes:Financial cost of any debt incurred to purchase equipment.Opportunity cost of any equity to purchase equipment.Mean Std.Dev.Commercial 5.1% 1.3%Industrial* 5.2% 1.2%Municipal 4.5% 0.5%*UsedforAgricultural aswell33LCCBase‐CaseEfficiencyDistribution• Basecaseefficiencyassignmentaccountsforthemarketshareofpumpsatdifferentefficiencylevels.–LCCanalysisrecognizesthatconsumersalreadypurchasingpumpsatefficienciesgreaterthanorequaltoaprospectivestandardlevelarenotimpactedbythestandard.–Basecasedistributionbasedonshipmentdataprovidedbymanufacturers–AllefficiencylevelsarerepresentedtoafairlysignificantextentinthebasecasePER0 PER10 PER25 PER40 PER55 PER70 PER85 TOTALESCC180012% 15% 13% 12% 14% 19% 15%100%ESCC36002% 6% 7% 10% 4% 8% 62%100%ESFM18002% 19% 12% 25% 13% 24% 6%100%ESFM36004% 18% 12% 13% 8% 15% 30%100%IL180012% 18% 6% 10% 13% 18% 23%100%IL360026% 16% 5% 6% 9% 8% 29%100%34LCCExampleResults:Averagelife‐cyclecostPER_0 PER_10 PER_25 PER_40 PER_55 PER_70ESCC180012,51212,44612,30812,25512,14412,03436009,1129,0868,9888,9178,8468,757ESFM180014,74914,72114,55714,49414,28514,150360015,69215,59815,39315,23015,09114,894IL180013,17113,13712,96612,91312,82712,729360011,63311,16811,06911,02810,95210,80435LCCExampleResults:Averagelife‐cyclecostsavingsPER_10 PER_25 PER_40 PER_55 PER_70ESCC180066205257368478360026124195266355ESFM180028193255464599360094300462601798IL180034205257343441360046556360568082836LCCExampleResults:Distribution• Plot shows all product classes combined• At PER 40 about 60% of market is unaffected etc.37LCCExampleResults:Interpretation(1)•TheLCCisthesumofacostandabenefitwhicharecalculatedindependently(examplebelowESCC1800)•TheLCCbenefitprovidesanupperboundonthecostofefficiencythattheusercanpaywithouteconomiclosses38LCCExampleResults:Interpretation(2)•Thecostofimprovingefficiencyissummarizedinthe“costcurve”presentedbelowasproductcostvs.C‐valueforonerepresentativeunit(ESCC1800)39Extras40PumpUserWeightsResults(1800speed)1800RPMMotor‐DiValuesHPBins Buildings ‐ Boiler Feed Buildings ‐ Circulation Buildings ‐ Cooling Water Buildings ‐ Other Buildings ‐ Pressure Boost Industrial ‐ Boiler Feed Industrial ‐ Circulation Industrial ‐ Cooling Water Industrial ‐ Other Industrial ‐ Pressure Boost Municipal ‐ Other1.0024% 17% 2% 11% 25% 6% 8% 0% 3% 4% 0%1.8022% 28% 7% 13% 16% 44% 11% 11% 12% 12% 29%3.2522% 13% 19% 16% 11% 11% 6% 4% 14% 12% 21%5.8510% 23% 28% 26% 11% 11% 8% 14% 20% 24% 29%10.542% 6% 13% 8% 9% 0% 10% 11% 8% 17% 0%18.9810% 7% 19% 16% 5% 0% 16% 21% 14% 13% 0%34.2012% 4% 6% 7% 18% 6% 30% 0% 14% 5% 7%61.620% 0% 4% 1% 5% 11% 3% 11% 8% 8% 0%111.010% 1% 1% 2% 2% 11% 5% 11% 6% 6% 14%200.000% 0% 0% 0% 0% 0% 3% 18% 1% 0% 0%TOTAL 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%41PumpUserWeightsResults(3600speed)3600RPMMotor‐DiValuesHPBins Buildings ‐ Boiler Feed Buildings ‐ Circulation Buildings ‐ Cooling Water Buildings ‐ Other Buildings ‐ Pressure Boost Industrial ‐ Boiler Feed Industrial ‐ Circulation Industrial ‐ Cooling Water Industrial ‐ Other Industrial ‐ Pressure Boost Municipal ‐ Other1.0036% 0% 4% 2% 28% 29% 11% 0% 1% 3% 0%1.8016% 26% 21% 20% 32% 8% 37% 9% 6% 3% 0%3.2528% 23% 23% 12% 2% 13% 21% 9% 14% 19% 50%5.854% 14% 17% 24% 26% 16% 16% 64% 30% 12% 0%10.546% 11% 13% 10% 0% 0% 3% 9% 15% 13% 50%18.980% 26% 23% 19% 13% 13% 0% 9% 15% 16% 0%34.204% 0% 0% 12% 0% 8% 13% 0% 15% 24% 0%61.620% 0% 0% 0% 0% 8% 0% 0% 2% 9% 0%111.016% 0% 0% 0% 0% 5% 0% 0% 0% 1% 0%200.000% 0% 0% 1% 0% 0% 0% 0% 1% 0% 0%TOTAL 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%42CommercialBuildingSimulation•8760sdatafromEnergy+•Pumpsincludedinthesystem:–SWHSYS1PUMP–COOLSYS1PUMP–HEATSYS1PUMP–TOWERWATERSYSPUMP•AnalysisApproach:–5binsbetweenmin(flow>0)andmax(flow)•Example:–BuildingType=Hospital430%10%20%30%40%50%60%0% 20% 40% 60% 80% 100%

Percentage of 8760sPercentageofMax(Flow)SWHSYS1PUMPbin1bin2bin3bin4bin50%10%20%30%40%50%60%0% 20% 40% 60% 80% 100%

Percentage of 8760sPercentageofMax(Flow)COOLSYS1PUMPbin1bin2bin3bin4bin50%10%20%30%40%50%60%70%80%90%0% 20% 40% 60% 80%

Percentage of 8760sPercentageofMax(Flow)HEATSYS1PUMPbin1bin2bin3bin4bin50%10%20%30%40%50%60%70%80%90%100%0% 20% 40% 60% 80% 100%

Percentage of 8760sPercentageofMax(Flow)TOWERWATERSYSPUMPbin1bin2bin3bin4bin5