CHAPTER 9. SHIPMENTS ANALYSIS

TABLE OF CONTENTS

9.1 INTRODUCTION

................................ ................................ .................................................... 1

9.2 METHODOLOGY

................................ ................................ ................................................... 1

9.1.1 Mathematical Formulation of the Shipments Model

................................................. 2

9.1.2 Historical Shipments

................................ ................................ .................................... 2

9.1.3 Stock Events

................................ ................................ ................................................. 2

9.1.3.1 Replacement Equipment

................................ ................................................... 3

9.1.3.2 New Equipment

................................ ................................ ................................ . 3

9.2 MODEL INPUTS

................................ ................................ ..................................................... 4

9.2.1 New Construction

................................ ................................ ........................................ 4

9.2.2 Replacements

................................ ................................ ............................................... 6

9.3 RESULTS

................................ ................................ ................................ ................................ . 7

LIST OF TABLES

Table 9.2.1 Historical and Projected New Construction (million sq ft) for the Shipments Model for PTAC and PTHP Equipment*

.......................................... 5

Table 9.2.2 Historical PTAC and PTHP Shipments with New Construction Floor Space Values Used to Calculate Saturation*

....................................................... 6

Table 9.3.1 PTAC and PTHP Equipment Class Shipment Distribution

................................ 7

LIST OF FIGURES

Figure 9.2.1 PTAC Survival Function

................................ ....................................................... 7 Figure 9.3.1 Historical and Projected PTAC Shipments by Equipment Class

....................... 8 Figure 9.3.2 Projected PTAC and PTHP Shipments

................................ ................................ 8

9-iCHAPTER 9. SHIPMENTS ANALYSIS

9.1 INTRODUCTION

The U.S. Department of Energy (DOE) analyzes shipments of affected equipment as part of every rulemaking regarding new or amended energy efficiency standards for appliances or commercial and industrial equipment. Estimates of equipmen t shipments are a necessary input for calculating national energy savings (NES) and net present value (NPV) of the investment, which are required to justify potential new or amended energy efficiency standards. Shipments also are a necessary input to t he m anufacturer impact analysis (MIA) . This chapter describes DOE’s method and results of projecting annual shipments for packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs)

.

To project sh ipments of PTAC and PTHP equipment , D OE considered specific factors

that drive equipment shipments . DOE developed shipments forecasts by accounting for: (1) the growth in the building stock of hotel/motel, healthcare, and small office buildings that are the primary end users of PTACs and PTH Ps; (2) market segments; (3) equipment failure; and (4) equipment age

.

The shipments models are prepared as Microsoft Excel spreadsheets that are accessible on the Internet ( www.eere.energy.gov/buildings/appliance_standards/ ). The rest of this chapter explains the shipments model in more detail. Section 9.2 describes the methodology that underlies development of the model; section 9. 3 describes the input data used to develop t he shipments model ; and section 9. 4 discusses the results in terms of base

- case and standards

- case shipments.

9.2 METHODOLOGY

This section outlines the methodology used to develop the shipments model that provides projections of shipments for PT AC and PT HP equipment classes defined in C hapter 5

. First, a brief summary of the basic framework is provided in the following section.

PTAC and PTHP shipments are driven primarily by two market segments : new construction and replacements. For new construction sh ipments, DOE combined new

construction floor space forecasts with a constant market saturation of the equipment in new

construction floor space . DOE estimated replacement shipments using an equipment retirement function that it developed based on equipment lifetimes. DOE designed its shipments model by developing a single shipments model for all PTACs and PTHPs and then disaggregating the shipme nts into six equipment classes. The shipments model assumes that, in each year, each existing PTAC or PTHP either ages by one year or breaks down, and that equipment that breaks down is replaced. In addition, new equipment can be shipped into new commercial building floor

space

.

9-19.1.1 Mathematical Formulation of the Shipments Model

DOE determines the yearly stock based on replacement and new shipments of PTAC and PTHP equipment

. The total stock of equipment U of an age a in a given year t is accounted for

and is modified by the shipments of new stock in a given year

, Uship ( t, a ) , as desc ribed below

.

U ( t + 1, a ) = U ( t

, a ) + Us h ip ( t , 0) | for each t and for each a

Eq. 9.1

W here:

U ( t,a ) = total stock of equipment of an age a in a given year t

, Uship ( t ,0) = total shipments of new stock

,

a = age of stock in years

, t = year.

By definition, the age of the equipment is zero in the year that it is shipped , so Uship ( t, a ) = Uship ( t , 0 ) . The total stock of equipment is initialized for the year 2013 after the initial stock is built up, as described below.

U ( 2013

, a ) = U 0( 2013

, a )

Eq. 9.2

W here:

U 0(2013

, a ) = total stock of equipment for year after based on the build

- up of the initial

stock

.

9.1.2 Historical Shipments

DOE received confidential historical shipments from AHRI for the years 2005

- 2012. In addition, AHRI provided 1998

- 2004 data that were published in the 2008 PTAC and PTHP rulemaking. 1 T he aver age of the historical shipments (1998

- 2012) was used as the constant value for shipments for the years 1993

- 2012 to build up the initial stock for 2013.

9.1.3 Stock Events

In the transition from year t to year ( t +1 ) , two things could happen to the equipment

st ock :

• existing equipment could break or be removed during a building renovation and be replaced, or

• the stock could simply age by one year.

Such stock events as shipments for replacement equipment and shipments for new equipment are modeled into the shipments of new stock Uship ( t ):

9-2Us h ip ( t ) = UR ( t ) + UN ( t ) Eq. 9.3

W here :

Uship ( t ,0 ) = total shipments of new stock in year t

UR ( t ) = units replaced in year t

UN ( t

) = the number of units going into new buildings in year t

In the model, early replacements ( i.e., existing equipment that is replaced before the end of its useful life) are not considered, and all broken equipment are assumed to be replaced. The following sections present the equations used to represent each possible event.

9.1.3.1 Replacement Equipment

DOE determined the probability that equipment of average age a from the stock of existing units

U will break, UB ( t ), and replaced on a one

- to

- one basis, UR ( t ) using a function PB ( a ), based on a

Weibull statistical distribution of retirements with a 10

- year average life and maximum life of 20 years. The inputs for the Weibull distribution that attains these lifetime characteristics are a scale parameter of 1 1 .2 a nd shape parameter of 3. 2. These probabilities do not depend on the model

year t . DOE defines the quantities of replaced equipment as

UR ( t ) = UB ( t ) = � PB ( a ) ∙ U ( t

, a ) a=1

all a Eq. 9.4

W here :

UR ( t ) = units replaced

, UB ( t ) = units broken

, PB ( a ) = probability that stock of existing units will break

, U

( t, a ) = total stock of equipment of an age a in a given year t

,

a = average age of stock in years

, t = year.

All broken units are assumed to be replaced.

9.1.3.2 N ew Equipment

New PTAC and PTHP equipment will be purchased to replace the units described above . In addition, new equipment will be purchased to install in newly constructed buildings. Available information suggests that the purchase of new equipment that would go into new buildings is driven by the rate of construction of hotels/motels, health care facilities, and office floor space.

9-3The number of PTAC and PTHP units intended for new buildings is:

UN ( t ) = A 0 x NFS ( t )

Eq. 9.5

W here :

UN ( t

) = the number of units going into new buildings in year t

, A0 = the market saturation that accounts for the number of units per new commercial floor space

, NFS ( t ) = the projected new commercial floor space

.

DOE has limited information on the variation in the market saturation of PTAC and PTHP equipment by building type or over time. Therefore, in the model, the purchase of new equipment is driven by the construction of new floor space, and broken or removed e quipment is replaced on a one for one basis.

9.2 MODEL INPUTS

As described in Eq. 9.3 , t he market for PTACs and PTHPs comprises replacement units for equipment that h as been retired and un its for new construction. The following sections

discuss both the new construction and re placement markets in further detail.

9.2.1 New Construction

To develop shipments to new construction, DOE combined new construction floor space

forecasts with a constant market saturation of the equipment in new construction. DOE used new construction floor sp ace forecasts for the healthcare, lodging, and small office sectors from the Energy Information Administration (EIA)’s Annual Energy Outlook 2013 ( AEO2013 ) for 2013

– 2040. 2 Table 9.2 .1 presents these forecasts . The data for 2041 through 2048 are based on an extrapolation of the trend from 2 030 through 20 40

.

9-4Table 9.2 .1 Historical and Projected New Construction (million sq ft ) for the Shipments

Model for PTAC and PTHP Equipment *

Year Healthcare Lodging Small Office Year Healthcare Lodging Small Office

2013 66 147 97 2031 71 161 148

2014 66 138 110 2032 71 168 158

2015 67 144 136 2033 72 185 174

2016 67 148 166 2034 72 192 192

2017 68 162 190 2035 73 207 210

2018 67 164 208 2036 74 216 224

2019 66 172 222 2037 74 214 229

2020 65 178 228 2038 75 208 227

2021 63 181 230 2039 76 200 219

2022 62 183 226 2040 76 190 207

2023 61 187 219 2041 77 187 198

2024 61 186 210 2042 78 184 189

2025 63 181 199 2043 78 181 181

2026 65 171 185 2044 79 177 173

2027 67 165 172 2045 80 174 165

2028 69 155 158 2046 81 171 158

2029 71 152 148 2047 81 168 151

2030 71 150 144 2048 82 166 144

*Sour ce: AEO2013 ; data for 2041-2048 are extrapolated.

To derive the saturation of PTACs and PTHPs (combined) in new construction, DOE used data on shipments to new construction and commercial new construction floor space provided in the 2008 rulemaking, as shown in Table 9.2 .2 . DOE divided the new construction shipments by the total new construction floor space and used this saturation as the constant saturation for the analysis period.

9-5Table 9.2 .2 Historical PTAC and PTHP Shipments with New Construction Floor Space

Values Used to Calculate Saturation *

Year Health care ( million s.f.) Lodging ( million s.f.) Smal l Office ( million s.f.) Total ( million s.f.) New

Construction Shipments Saturation ( units/

million s.f.)

2000 68 172 179 419 66,407 6,315

*Source: DOE 2008 PTAC and PTHP Energy Conservation Standards Rulemaking.

For new commercial buildings acquiring equipment, shipments are estimated by multiplying new construction floor space in each projection year by the saturation value.

9.2.2 Replacements

To determine shipments to the replacement market, DOE used a n accounting method that tracks the total stock of units by vintage. DOE estimated a stock of PTACs and PTHPs by using the average of the available historical shipments (1998

- 2012) as the constant value for shipments for the years 1993

- 2012. Over time, som e units break and are removed from the stock, triggering

the one

- for

- one shipment of a replacement unit. Depending on the vintage, a certain percentage of units will fail and need to be replaced. All PTACs and PTHPs are presumed to be replaced by

a unit of the same equipment class and capacity , but of an age of zero

. To estimate how long a unit will function before failing, DOE used a survival function based on the distributions of equipment lifetime. The survival function that DOE used had an average lifet ime of 10 years and a maximum lifetime of 20 years, consistent with the lifetime used in the previous rulemaking

. Figure 9.2 .1 shows the survival function DOE used to estimate replacement shipments.

9-6Figure 9.2 .1 PTAC Survival Function

9.3 RESULTS

For each year in the analysis period, DOE distributed total PTAC and PTHP shipments into the individual equipment classes using the average of the 1998

- 2004 shipments by equipment class provided by AHRI for the previous rulemaking

. Since the data did not perceptibly indicate an increasing or decreasing trend, DOE assumed the distribution to persist throughout projection years. Table 9.3 .1 shows the distribution of PTAC and PTHP shipments by equipment class

. Since shipments are not expected to change with efficiency level, results are presented only for the base case.

Table 9.3 .1 PTAC and PTHP Equipment Class Shipment Distribution

PTAC PTHP

<7,000

Btu/h ≥7,000

- ≤15,000

Btu/h >15,000

Btu/h <7,000

Btu/h ≥7,000

- ≤15,000

Btu/h >15,000

Btu/h

1998

- 2004 Average Shipments 12

, 898 205

, 355 15

, 407 7

, 702 168

, 068 13

, 534

Percent 3% 48.5% 3.7% 1.8% 39.8% 3.2%

Figure 9.3 .1 shows the projected shipments of PTAC s and PTHP s by equipment class and the historical shipments DOE used to develop the initial stock that drove the replacement shipment projection for the b ase

- case scenario

. Figure 9.3 .2 shows total shipments (aggregated from individual equipment classes) broken into new construction and replacement shipments. This figure starts in 2013, as historical shipments are not disaggregated into new construction and replacements. For the NOPR anal ysis, DOE assumed that the total number of shipments do

not cha nge with trial standard levels. The distribution of the efficiencies of shipments may change over time

, but DOE did not change the total number of PTACs and PTHPs shipped based

on standard leve ls.

9-7Figure 9.3 .1 Historical and Projected PTAC Shipments by Equipment Class

Figure 9.3 .2 Projected PTAC and PTHP Shipments 0 50000 100000 150000 200000 250000 300000 3500001993199519971999200120032005200720092011201320152017201920212023202520272029203120332035203720392041204320452047Shipments

Year

PTAC <7 PTAC 7-15 PTAC > 15 PTHP <7 PTHP 7-15 PTHP >15

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000Shipmnets

Year

New Construction Replacements

9-8REFERENCES

1. U.S. Department of Energy

– Office of Energy Efficiency and Renewable Energy, Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation
Standards., 2007. (Last accessed June, 2014.)

< http://www.regulations.gov/#!docketDetail;D=EERE

- 2007 -BT- STD

- 0012 >

2. U.S. Department of Energy/Energy Information Admini stration, Annual Energy Outlook

2013 , 2013. Washington, D.C. Report No. DOE/EIA0383.

9-9