7-1

CHAPTER 7: NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE

ANALYSIS

7.1 INTRODUCTION

This chapter describes the method for estimating the quantity and value of future national

energy savings (NES) from possible standards. The two metrics discussed in this chapter are:

• National Energy Savings, and

• Net Present Value (NPV) of National Energy Savings.

All calculations are performed on a series of Microsoft Excel spreadsheets which are accessible over

the Internet. Basic outputs from the spreadsheet calculations are discussed in section 7.4. A more

detailed set of results are available in Appendix F. Access to and basic instructions for the

spreadsheets are discussed in section 7.5. 

7.1.1 Methodology and Definitions

Among the important drivers of energy consumption of central air conditioners and heat

pumps are: 1) shipments of air conditioners and heat pumps, 2) how consumers respond to any

change in purchase price, operating expense, and household income, and 3) voluntary programs

promoting higher energy efficiency products. 

The number of air conditioners and heat pumps purchased in future years (shipments) and

the effect that purchase price, operating expense, and income has on these purchases are an important

component of any estimate of future energy savings. Chapter 6 provides a detailed description of

the Shipments Model that are used to forecast future air conditioner and heat pump purchases.

Included in the discussion are detailed descriptions of consumers’ sensitivities to price, operating

expense, and income (otherwise known as elasticities) and how they are captured within the Models.

The reader is referred to Chapter 6 for more details regarding the Shipments Model. 

As noted in the Chapter 6, for purposes of forecasting shipments, only the residential housing

market is considered. Although ignored in the shipments analysis, commercial building applications

are accounted for in the NES and NPV analysis by adjusting the annual energy consumption of

central air-conditioning and heat pump equipment to reflect their use in commercial buildings. 

With regard to voluntary programs, they may increase the share of energy efficient products

prior to the implementation date of any new standards. Information from parties involved in marketbased initiatives for increasing the sales of high-efficiency models were reviewed but provided no

quantifiable measure as to how these programs impact product efficiencies on a national basis1

.

Thus, the impact of market-based initiatives were not explicitly incorporated into any shipments

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AEC STOCK UEC V V = ⋅ (7.3)

NES AEC AEC y base s dard = − tan (7.1)

NES NES cum = y (7.2)

forecast.

Preliminary results are also described here including: energy consumption, monetary value

of energy savings, increased purchase prices, and the net present value (difference between value of

energy savings and increased purchase prices).

7.2 NATIONAL ENERGY SAVINGS (NES)

7.2.1 NES Definition

This section provides the definition of national energy savings. 

National annual energy savings are calculated as the difference between two projections: a

base case (without new standards) and a standards case (Eqn 7.1). Positive values of NES

correspond to energy savings, that is, energy consumption with standards is less than energy

consumption in the base case.

Cumulative energy savings are the sum over some period (e.g., 2006-2030) of the annual national

energy savings.

The national annual energy consumption is calculated according to the following equation:

For the above expressions, the following quantities are required:

AEC = Annual energy consumption each year (Quads), summed over

vintages of air conditioner or heat pump stocks, STOCKV.

NES = Annual national energy savings (Quads)

STOCKV = Stock of air conditioners or heat pumps (millions of units) of vintage

V surviving in the year for which annual energy consumption is being

calculated. Vintages range from 1- to 24-years old.

UECV = Annual energy consumption per air conditioner or heat pump (kWh).

[NOTE: electricity consumption is converted from site energy (kWh)

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to source energy (Quads) by applying a time dependent conversion

factor (Btu/kWh). See discussion of Source Conversation Factor in

Section 7.2.2.3 below.] 

V = Year in which the air conditioner or heat pump was purchased as a

new unit.

y = year in the forecast (e.g., 2006-2030)

7.2.2 NES Inputs

This section provides information about the quantities and assumptions used to calculate

NES due to central air conditioner and heat pump standards. For each quantity, the discussion

includes:

• definition;

• approach; and

• current assumptions.

The inputs into the NES are listed in Table 7.1 below.

Table 7.1 National Energy Saving Inputs

Input

National Annual Energy Consumption (AEC)

National Annual Energy Savings (NES)

Source conversion factor (src_conv)

Stock of air conditioners or heat pumps (STOCKV)

Annual Energy per Unit (UEC)

Shipments

7.2.2.1 National Annual Energy Consumption (AEC)

Definition

National energy consumption associated with residential central air conditioners and heat

pumps. 

Approach

National energy consumption is the product of energy consumption per air conditioner or heat

pump multiplied by the number of air conditioners or heat pumps of each vintage. This approach

accounts for differences in unit energy consumption from year to year. The calculation procedure

for determining the annual energy consumption of air conditioners and heat pumps was shown

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AEC STOCK UEC V V = ⋅

NES AEC AEC y base s dard = − tan

previously in Eqn 7.3 and is repeated below. 

Assumptions

Energy consumption is calculated at the site (i.e., electricity in kWh consumed in the

household or commercial building). Primary energy consumption is calculated from site energy

consumption by applying a conversion factor to account for losses, such as those associated with the

generation, transmission and distribution of electricity. See Section 7.2.2.3, Source Conversion

Factor, below.

7.2.2.2 National Energy Savings (NES)

Definition

Energy savings attributable to the new standards.

Approach

As shown previously in Eqn 7.1, energy savings are calculated as the difference between

projected energy consumption in the base case (having no new standards) and the projected energy

consumption in the standards case. The equation is repeated below.

Assumptions

Simple subtraction between two projections.

7.2.2.3 Source Conversion Factor

Definition

For electricity, this is the factor by which site kWh is multiplied to obtain primary (source)

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

Approach

After calculating energy savings at the site, multiply those site energy savings by a

conversion factor to obtain primary energy consumption, usually expressed in Quads (quadrillion

Btu). This conversion permits comparison across fuels by taking account of the heat content of

different fuels and the efficiency of different energy conversion processes.

Assumptions

Based on recommendations of the Advisory Committee on Appliance Energy Efficiency

Standards, conversion factors have been determined according to the following method:

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

National Energy Modeling System (NEMS) Annual Energy Outlook reference case),

and extract the source energy consumption. 

2. Estimate projected energy savings due to possible standards for each year (e.g., using

the National Energy Savings (NES) spreadsheet model).

3. Feed these energy savings back to NEMS as a new scenario, specifically a deviation

from the reference case, to obtain the corresponding source energy consumption. 

4. Obtain the difference in source energy consumption between this standard level

scenario and the reference case.

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

distribution losses, by the site energy savings in kilowatt-hours to provide the time

series of conversion factors in Btu per kilowatt-hour.

NEMS cannot adjust for class specific transmission losses, and assumes overall transmission

and distribution losses of 10%. Based on the above losses, the conversion factor would be the

marginal plant heat rate times 1.10. 

The base conversions were based on the maximum energy savings possible (i.e., 18 SEER

standard-level) to avoid “noise” within NEMS. At small differences in energy savings, the accuracy

within NEMS is less. NEMS drops the least efficient power producers (cost wise) first, which are

not necessarily the least polluting power plants.

Table 7.2 shows the resulting conversion factors and how they change over time.

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Table 7.2 Site-to-Source Conversion Factors

Site-to-Source Conversion Factor

Year Btu/kWh

2000 11,500

2001 11,500

2002 11,500

2003 11,500

2004 11,500

2005 11,500

2006 11,450

2007 11,350

2008 11,100

2009 10,453

2010 8,846

2011 7,239

2012 6,892

2013 6,792

2014 6,792

2015 6,724

2016 6,308

2017 5,714

2018 5,519

2019 5,519

2020 5,519

7.2.2.4 Stock of Air Conditioners and Heat Pumps by Vintage (STOCKV)

Definition

Number of air conditioners or heat pumps purchased in a particular year that survive in a later

year. The vintage is the age of the air conditioner or heat pump (1-year old up to 24-year old).

Approach

The NES spreadsheet models keep track of the number of air conditioners or heat pumps

purchased each year. Air conditioners and heat pumps are assumed to have an increasing probability

of retiring as they age. The probability of survival as a function of years since purchase is the

survival function. The lifetime was based on a survey performed for the Electric Power Research

Institute of 2,184 heat pump installations in a seven-state region of the United States2

. 

Assumption

For air conditioners and heat pumps, lifetimes range from 1 to 24 years, with an average of

18.4 years (see Chapter 5, Section 5.2.3.10, Lifetime and Compressor Replacement Costs). The

retirement or survival function is presented below in Figure 7.1.

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 5 10 15 20 25

Age (year)

% Surviving

Figure 7.1 Retirement Function for Central Air Conditioners

and Heat Pumps

UEC UEC

SEER

SEER CAC V CAC stock

CAC stock

CAC V , ,

,

,

= ⋅ (7.4)

7.2.2.5 Annual Energy per Unit (UEC)

Definition

Energy consumed per air conditioning or heat pump unit.

Approach

Energy consumed per unit varies from year to year due to the change in the level of efficiency

of new units being shipped. The energy consumption for a particular year is calculated relative to

the energy use and efficiency associated with the existing equipment stock equipment. For central

air conditioners, the following equation is used to determine the annual energy use per unit for a

particular year. 

Where,

UECCAC,V = annual energy consumption of a central air conditioner in a particular

vintage year,

UECCAC,stock = annual energy consumption of central air conditioners based on the building

stock equipped with central air conditioners,

SEERCAC,stock = SEER of central air conditioners based on building stock equipped with

central air conditioners, and 

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UEC UEC

SEER

SEER

UEC

HSPF

HSPF HP V HP stock cool

HP stock

HP V

HP stock heat

HP stock

HP V , ,

,

, ,

,

,

= ⋅+ ⋅ − − (7.5)

SEERCAC,V = shipment weighted-average SEER in a particular vintage year.

For heat pumps, the following equation is used to determine the annual energy use per unit for a

particular year. 

Where,

UECHP,V = annual energy consumption of a heat pump in a particular vintage year,

UECHP,stock-cool = annual space-cooling energy consumption of heat pumps based on the

building stock equipped with heat pumps,

SEERHP,stock = SEER of heat pumps based on the building stock equipped with heat

pumps,

SEERHP,V = shipment weighted-average SEER of heat pumps in a particular vintage

year,

UECHP-stock-heat = annual space-heating energy consumption of heat pumps based on the

building stock equipped with heat pumps,

HSPFHP,stock = HSPF of heat pumps based on the building stock equipped with heat

pumps, and

HSPFHP,V = shipment weighted-average HSPF of heat pumps in a particular vintage

year.

The above equations are used to derive annual energy consumption values for each of the

four primary product classes: split air conditioners, split heat pumps, single package air conditioners,

and single package heat pumps.

As described in Chapter 5, both the energy use and efficiency associated with existing

equipment stock in residential buildings are based on data from the 1997 Residential Energy

Consumption Survey (RECS) while the commercial building analysis provides the energy use and

efficiency associated with exiting equipment stock in commercial buildings. The residential energy

use and efficiency data are disaggregated by Census Division while nationally representative values

are used for the commercial equipment stock. 

Shipment weighted-average efficiencies (variables SEERCAC,V, SEERHP,V, and HSPFHP,V) are

derived from a distribution of efficiencies (i.e., the percentage of shipments which occur in

incremental SEER bins over the range from the minimum standard to 18 SEER). Unique efficiency

distributions are defined for each of the four primary product classes. As a result, forecasted energy

savings and NPVs can be disaggregated by product class. For years preceding 1992 (1951 through

1991), we assume a distribution of efficiency levels which is normally distributed and constrained

to have efficiencies between 5 and 18 SEER, inclusive. The normal distribution function is assumed

to have a standard deviation of 1.5 SEER and an average efficiency of 8.8 SEER in 1991. Between

the years 1992 and 1997, equipment efficiencies have remained relatively constant based on Air-

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Conditioning & Refrigeration Institute (ARI) data. Thus, efficiencies are assumed to remain constant

from 1992 to the year in which new standards are assumed to become effective (i.e., 2006).

Equipment efficiency distributions in the years after new standards take effect are modeled with the

following three efficiency scenarios: NAECA, Roll-up, and Shift. Post-standard equipment

efficiency distributions are assumed to remain constant through the year 2030. Each of the efficiency

scenarios are described in more detail later.

Assumptions

Table 7.3 shows the energy use and efficiency associated with the existing equipment stock.

Residential energy use and efficiency are disaggregated into the nine Census Divisions while only

nationally representative values are shown for commercial applications. Weighted-average values

for the entire equipment stock are also presented and are based on the share captured by each

residential Census Division and the commercial sector. Residential Census Division shares are

based on data from the 1997 RECS3. Based on the assumption that 10% of the equipment stock are

used in commercial applications, the residential Census Division shares are normalized to total 90%

of the entire equipment stock. The weighted-average energy use and efficiency values are more

extensively described in Chapter 5 (see Chapter 5, Sections 5.2.3.1, Baseline Annual Space-Cooling

Energy Use and 5.2.3.3, Baseline Annual Space-Heating Energy Use).

Table 7.3 Annual Energy Use and Efficiencies for Residential and 

Commercial Equipment Stock

Residential Disaggregated by Census Division

WeightedAverage 1 2 3 4 5 6 7 8 9 Comm. a

Central Air Conditioners

Share 0.9% 8.5% 18.6% 10.1% 17.7% 7.0% 15.7% 3.9% 7.7% 10.0% -

UEC (kWh/yr) 812 1403 1232 1820 2913 2859 3760 2823 1313 5824 2637

SEER 8.76 9.19 9.11 9.07 9.01 9.23 9.15 9.18 8.79 9.05 9.08

Heat Pumps

Share 0.3% 3.5% 2.6% 0.8% 55.5% 10.7% 7.1% 4.3% 5.3% 10.0% -

Cooling UEC

(kWh/yr) 503 1781 1385 2651 2484 3242 4033 2917 733 5824 2877

Heating UEC

(kWh/yr) 6868 6010 7449 821 3054 5550 3291 4475 4347 2654 3640

SEER 8.55 8.83 9.73 8.88 9.30 9.42 9.31 8.82 9.21 9.11 9.26

HSPF 6.50 6.59 6.90 6.61 6.80 6.81 6.74 6.58 6.74 6.70 6.77

a Weighted-average values differ from those used in LCC analysis. Residential households excluded from the LCC analysis

based on indeterminable marginal electricity prices are included in the NES and NPV analysis.

Table 7.4 shows the efficiency distributions used in the NES and NPV analysis for central

air conditioners and heat pumps for the years 1992 through 2006. As noted earlier, efficiency

distributions are based on ARI data and are defined for each product class. Shipment-weighted

efficiency values are also provided in Table 7.4. Shipment weighted efficiencies are more

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extensively described in Chapter 5 (see Chapter 5, Sections 5.2.3.1, Baseline Annual Space-Cooling

Energy Use and 5.2.3.3, Baseline Annual Space-Heating Energy Use). But note, the shipmentweighted efficiencies resulting from the distributions below are different from those used in LCC

analysis due to the simplifying assumption for the NES and NPV analyses that efficiencies have

remained constant between 1992 through 2006.

Table 7.4 Assumed Product Class Efficiency Distributions for the years 1992 through

2006

SEER Bins

9 - 9.9 10 - 10.9 11 - 11.9 12 - 12.9 13 - 13.9 14 - 14.9 15 - 15.9 WeightedHSPF Bins Efficiency

Product Class 6.5 - 6.7 6.8 - 7.0 7.1 - 7.3 7.4 - 7.6 7.7 - 7.9 8.0 - 8.1 8.2 - 8.3 SEER HSPF

Split A/C 0.0% 79.7% 4.1% 13.7% 1.5% 0.9% 0.1% 10.7 -

Package A/C 7.2% 77.9% 4.2% 8.2% 2.5% 0.0% 0.0% 10.5 -

Split HP 0.1% 62.3% 7.7% 24.7% 4.1% 0.9% 0.3% 11.0 7.1

Package HP 2.0% 68.6% 5.1% 24.3% 0.0% 0.0% 0.0% 10.8 7.1

Equipment efficiency distributions for the years after new standards take effect are modeled

with the following three efficiency scenarios:

• NAECA: The NAECA scenario is named after the legislation which promulgated minimum

efficiency standards for central air conditioners and heat pumps. The NAECA scenario

forecasts that equipment efficiencies after adoption of new standards would change in the

same pattern as the efficiency changes that occurred in 1992 when minimum efficiency

standards first took effect.

• Roll-up: The Roll-up scenario simply moves equipment from efficiency levels that exist

below the modeled standard level to the SEER value of the new standard. For example, in

the case of a 12 SEER standard, if 60% of shipments have efficiencies below 12 SEER, all

those shipments are moved to the 12 SEER level without affecting the efficiency distribution

above 12 SEER.

• Shift: The Shift scenario retains the pattern of the existing efficiency distribution but simply

re-orients that distribution at and above the new minimum standard that is being modeled.

Tables 7.5 through 7.7 show the efficiency distributions under each of the above efficiency

scenarios for standard-levels of 11 through 13 SEER, respectively. Post-standard equipment

efficiency distributions are assumed to remain constant through the year 2030. Because the

maximum technologically feasible efficiency level is assumed to be 18 SEER, efficiencies are not

allowed to extend past the “18-18.9 SEER” efficiency bin. Thus, in modeling an18 SEER standardlevel, the entire efficiency distribution for all product classes regardless of efficiency scenario is

assumed to reside in the “18-18.9 SEER” bin. 

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Table 7.5 Post-Standard Product Class Efficiency Distributions: 11 SEER Standard-Level

SEER Bins

11 - 11.9 12 - 12.9 13 - 13.9 14 - 14.9 15 - 15.9 16 - 16.9 17 - 17.9 WeightedHSPF Bins Efficiency

Product Class 7.1 - 7.3 7.4 - 7.6 7.7 - 7.9 8.0 - 8.1 8.2 - 8.3 8.4 - 8.5 8.6 - 8.7 SEER HSPF

NAECA Efficiency Scenario

Split A/C 77.8% 15.7% 3.5% 2.9% 0.1% 0.0% 0.0% 11.6 -

Package A/C 83.4% 10.2% 4.5% 2.0% 0.0% 0.0% 0.0% 11.5 -

Split HP 64.1% 26.7% 6.1% 2.9% 0.3% 0.0% 0.0% 11.7 7.4

Package HP 69.7% 26.3% 2.0% 2.0% 0.0% 0.0% 0.0% 11.6 7.3

Roll-up Efficiency Scenario

Split A/C 83.8% 13.7% 1.5% 0.9% 0.1% 0.0% 0.0% 11.4 -

Package A/C 89.4% 8.2% 2.5% 0.0% 0.0% 0.0% 0.0% 11.4 -

Split HP 70.1% 24.7% 4.1% 0.9% 0.3% 0.0% 0.0% 11.6 7.3

Package HP 75.7% 24.3% 0.0% 0.0% 0.0% 0.0% 0.0% 11.5 7.3

Shift Efficiency Scenario

Split A/C 79.7% 4.1% 13.7% 1.5% 0.9% 0.1% 0.0% 11.7 -

Package A/C 84.0% 4.6% 8.8% 2.7% 0.0% 0.0% 0.0% 11.6 -

Split HP 62.3% 7.7% 24.7% 4.1% 0.9% 0.3% 0.0% 12.0 7.4

Package HP 70.0% 5.2% 24.7% 0.0% 0.0% 0.0% 0.0% 11.8 7.4

Table 7.6 Post-Standard Product Class Efficiency Distributions: 12 SEER Standard-Level

SEER Bins

12 - 12.9 13 - 13.9 14 - 14.9 15 - 15.9 16 - 16.9 17 - 17.9 18 - 18.9 WeightedHSPF Bins Efficiency

Product Class 7.4 - 7.6 7.7 - 7.9 8.0 - 8.1 8.2 - 8.3 8.4 - 8.5 8.6 - 8.7 8.8 - 8.9 SEER HSPF

NAECA Efficiency Scenario

Split A/C 91.5% 3.5% 2.9% 2.1% 0.0% 0.0% 0.0% 12.4 -

Package A/C 91.5% 4.5% 2.0% 2.0% 0.0% 0.0% 0.0% 12.4 -

Split HP 88.8% 6.1% 2.9% 2.3% 0.0% 0.0% 0.0% 12.5 7.6

Package HP 94.0% 2.0% 2.0% 2.0% 0.0% 0.0% 0.0% 12.4 7.5

Roll-up Efficiency Scenario

Split A/C 97.5% 1.5% 0.9% 0.1% 0.0% 0.0% 0.0% 12.3 -

Package A/C 97.5% 2.5% 0.0% 0.0% 0.0% 0.0% 0.0% 12.3 -

Split HP 94.8% 4.1% 0.9% 0.3% 0.0% 0.0% 0.0% 12.3 7.5

Package HP 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 12.3 7.5

Shift Efficiency Scenario

Split A/C 79.7% 4.1% 13.7% 1.5% 0.9% 0.1% 0.0% 12.7 -

Package A/C 84.0% 4.6% 8.8% 2.7% 0.0% 0.0% 0.0% 12.6 -

Split HP 62.3% 7.7% 24.7% 4.1% 0.9% 0.3% 0.0% 13.0 7.7

Package HP 70.0% 5.2% 24.7% 0.0% 0.0% 0.0% 0.0% 12.8 7.6

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NPV PVS PV = − C (7.6)

Table 7.7 Post-Standard Product Class Efficiency Distributions: 13 SEER Standard-Level

SEER Bins

13 - 13.9 14 - 14.9 15 - 15.9 16 - 16.9 17 - 17.9 18 - 18.9 Weighted-Average

HSPF Bins Efficiency

Product Class 7.7 - 7.9 8.0 - 8.1 8.2 - 8.3 8.4 - 8.5 8.6 - 8.7 8.8 - 8.9 SEER HSPF

NAECA Efficiency Scenario

Split A/C 93.0% 2.9% 2.1% 2.0% 0.0% 0.0% 13.4 -

Package A/C 94.0% 2.0% 2.0% 2.0% 0.0% 0.0% 13.4 -

Split HP 92.9% 2.9% 2.3% 2.0% 0.0% 0.0% 13.4 7.8

Package HP 94.0% 2.0% 2.0% 2.0% 0.0% 0.0% 13.4 7.8

Roll-up Efficiency Scenario

Split A/C 99.0% 0.9% 0.1% 0.0% 0.0% 0.0% 13.3 -

Package A/C 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.3 -

Split HP 98.9% 0.9% 0.3% 0.0% 0.0% 0.0% 13.3 7.8

Package HP 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.3 7.8

Shift Efficiency Scenario

Split A/C 79.7% 4.1% 13.7% 1.5% 0.9% 0.1% 13.7 -

Package A/C 84.0% 4.6% 8.8% 2.7% 0.0% 0.0% 13.6 -

Split HP 62.3% 7.7% 24.7% 4.1% 0.9% 0.3% 14.0 8.0

Package HP 70.0% 5.2% 24.7% 0.0% 0.0% 0.0% 13.8 7.9

7.2.2.6 Shipments

See Chapter 6 for an extensive discussion of how shipment forecasts for central air

conditioners and heat pump were conducted.

7.2.3 Results

See section 7.4.

7.3 NET PRESENT VALUE (NPV)

7.3.1 NPV Definition

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

is described by the equation:

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PVS Total Operating Cost Savings Discount Factor y y = ⋅ (7.7)

PVC Total Equipment Cost Discount Factor y y = ⋅ (7.8)

Where,

PVS = present value of electricity savings and

PVC = present value of equipment costs including installation.

PVS and PVC are determined according to the following expressions:

Where,

y = years (from effective date of standard to the year when units purchased in 2030 retire)

The net present value is calculated from the projections of national expenditures for central

air conditioners and heat pumps, including purchase price (including equipment and installation

price) and operating costs (including electricity, repair, and maintenance costs). Costs and savings

are calculated as the difference between a new standards case and a base case without those new

standards. Future costs and savings are discounted to the present.

A discount factor is calculated from the discount rate and the number of years between the

“present” (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.

Assumptions regarding NPV are contained in the terms PVC and PVS, which are discussed

below. NPV is the value today of a future stream of savings less expenditures. 

 

7.3.2 NPV Inputs

This section provides information about the quantities and assumptions used to calculate

NPV due to central air conditioner and heat pump standards. For each quantity, the discussion

includes:

• definition;

• approach; and

• current assumptions.

Table 7.8 summarizes the inputs to the NPV calculation. 

 EE-RM-STD-98-440 COMMENT 312
a

 Referred to in the NES spreadsheets as Net Present Benefit.

b

 Referred to in the NES spreadsheet as Total Equipment Cost (discounted).

c

 Referred to in the NES spreadsheet as Total Operating Saving (discounted).

d

 Used by DOE in previous rulemaking for the National Impact Analysis. Higher and lower values can be used

as sensitivities (i.e., to bound a range of discount rates).

7-14

Discount Factor

Discout Rate = year present year + −

1

( ) 1 ( ) (7.9)

Table 7.8 Net Present Value Inputs

Input

Discount Factor

Net Present Value (NPV)

a

Present Value of Costs (PVC)

b

Present Value of Savings (PVS)

c

Total Equipment Costy

Total Operating Cost Savingsy

7.3.2.1 Discount Factor

Definition

The factor by which to multiply monetary values in one year, in order to determine the

present value in a different year. Discount Factor is also described by the equation:

Approach

For example, to discount monetary values in the year 2000 to the value in year 1998

assuming a discount rate of 7% equals 1/(1.07)2

 or 0.873.

Assumptions

The discount rate is assumed to be 7% reald. The present year is defined to be 1998, for

consistency with the year in which the manufacturing cost data were collected.

7.3.2.2 Present Value of Costs (PVC)

Definition

Total equipment cost, discounted to the present, and summed over the time period (from

assumed effective date of standards (2006) to the year 2030).

 EE-RM-STD-98-440 COMMENT 312
e

 Counting the reduction in energy consumption from a reduction in shipments as a savings would be incorrect.

If standards cause a decrease in shipments, then using the lower shipments in the standards case reduces the NPV

appropriately. To illustrate with an extreme example, if standards cause shipments to be zero, then NPV is zero, no

matter what the shipments were in the base case. Using the shipments from the standards case avoids miscounting any

reduction in shipments due to standards as a savings. 

f

 In the NES spreadsheet, Total Equipment Costs are expressed as a negative number (the difference between

the base case and the standards case) then summed with Total Operating Cost Savings (the difference between base case

and the standards case).

7-15

Approach

Costs are typically increases in purchase price (including both equipment and installation

price) associated with the higher energy efficiency of central air conditioners and heat pumps

purchased in the standards case compared to the base case. Total Equipment Costs are calculated

as the difference in purchase price for new equipment purchased each year, multiplied by the

shipments in the standards casee.

Assumptions

The primary assumption made in calculating PVC lies in determining the discount factor to

be applied. Here the discount factor is taken to be 7% (see also Section 7.3.2.1, Discount Factor,

above). In addition, see Section 7.3.2.4, Total Equipment Cost, below.

7.3.2.3 Present Value of Savings (PVS)

Definition

Annual operating cost savings (difference between base case and standards case) discounted

to the present, and summed.

Approach

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

and compressor replacement) associated with the higher energy efficiency of central air conditioners

and heat pumps purchased in the standards case compared to the base case. Total Operating Cost

Savings is the product of savings per unit times number of units of each vintage surviving in a

particular year. Equipment consume energy over their entire lifetime, in some cases including energy

consumed after year 2030. 

Net savings each year are calculated as the difference between Total Operating Cost Savings

and Total Equipment Costs.

f

 The savings are calculated over the life of the appliance, accounting

for the energy rates each year. 

Assumptions

As with PVC, the primary assumption made in calculating PVS lies in determining the

discount factor to be applied. Here the discount factor is taken to be 7% (see also Section 7.3.2.1,

 EE-RM-STD-98-440 COMMENT 312
7-16

Discount Factor, above). In addition, see Section 7.3.2.5, Total Operating Cost Savings, below.

7.3.2.4 Total Equipment Cost

Definition

Annual change in purchase price (difference between base case and standards case),

multiplied by shipments in the standards case.

Approach

Purchase price per central air conditioner or heat pump in the standards case is subtracted

from purchase price per central air conditioner or heat pump in the base case for one year. The result

is multiplied by the projected shipments in that year. 

Assumptions

The purchase price includes both the equipment and installation price. For purposes of

calculating the annual change in purchase price, mean equipment and installation prices are used.

Mean equipment prices are based on mean manufacturer costs (see Chapter 5, Sections 5.2.2.1,

Baseline Manufacturer Cost and 5.2.2.2, Standard-Level Manufacturer Cost Multipliers) multiplied

by mean markup values and the mean sales tax (see Chapter 5, Sections 5.2.2.3, Manufacturer

Markup, 5.2.2.4, Distributor Markup, and 5.2.2.5, Dealer Markup, Section 5.2.2.6, Builder Markup

and Section 5.2.2.7, Sales Tax). Installation prices are based on the mean values associated with the

installation of split system and single package central air conditioners and split system and single

package heat pumps and are assumed not to vary with efficiency (see Chapter 5, Section 5.2.2.8,

Installation Cost). Table 7.9 shows the resulting mean purchase prices (also known as total installed

consumer cost) for split system and single package central air conditioners and heat pumps by

standard level. Note that for efficiencies between 15 and 18 SEER, mean purchase prices are

identical. Because manufacturer cost multipliers were provided only up through 15 SEER, higher

efficiency equipment was assumed to have the same purchase price.

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Table 7.9 Mean Purchase Prices for Central Air Conditioners and Heat Pumps

Split A/C Package A/C Split HP Package HP

Standard Level ARI ARI ARI ARI 

SEER 1998$ 1998$ 1998$ 1998$

10 $2,236 $2,607 $3,668 $3,599

11 $2,357 $2,795 $3,779 $3,760

12 $2,510 $2,903 $3,933 $3,920

13 $2,715 $3,229 $4,155 $4,287

14a $3,020 $3,466 $4,376 $4,458

15 $3,302 $3,822 $4,873 $4,894

16 $3,302 $3,822 $4,873 $4,894

17 $3,302 $3,822 $4,873 $4,894

18 $3,302 $3,822 $4,873 $4,894

a Based on ARI shipment-weighted mean cost data. The manufacturer cost multipliers for 14 SEER are: 2.03 for

splt a/c, 1.87 for package a/c, 1.64 for split heat pump, and 1.75 for package heat pump.

As part of the calculation of the annual change in purchase price, historical and future

purchase prices are determined for years dating back to 1951. The resulting weighted-average

purchase price is determined through a matrix multiplication based on the efficiency distribution for

that year (refer back to Section 7.2.2.5, Annual Energy per Unit (UEC)) and the purchase price

corresponding to each incremental efficiency bin within the distribution. For equipment efficiencies

below the existing minimum efficiency (i.e., 10 SEER), the purchase price is assumed to equal that

of the existing minimum efficiency equipment in 1998$ as reported in Table 7.9. Note, that although

equipment cost data are determined for years preceding the effective date of the standard (i.e., 2006),

only the post-standard equipment cost data are critical for determining the national NPV. 

Assumptions regarding shipments and the development of shipments forecasts are

extensively discussed in Chapter 6.

7.3.2.5 Total Operating Cost Savings

Definition

Annual national operating cost savings, calculated as the difference between total operating

cost in the base case minus total operating cost in the standards case.

Approach

Operating expense per central air conditioner or heat pump in the standards case is subtracted

from operating expense per central air conditioner or heat pump in the base case for one year. The

result is multiplied by the projected shipments in that year. Positive values are savings (e.g.,

operating costs in the standards case are lower than in the base case). 

 EE-RM-STD-98-440 COMMENT 312
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Assumptions

Operating costs consist of annual electricity, repair, and maintenance costs. In addition,

compressor replacement costs are taken into account. For purposes of calculating the annual national

operating cost savings, the mean annual electricity, repair, maintenance, and compressor replacement

costs for each efficiency level are used.

Mean annual electricity costs for any given year are based upon the annual energy

consumption per central air conditioner or heat pump unit for that year (see Section 7.2.2.5, Annual

Energy per Unit (UEC)) multiplied by the associated energy price. Marginal electricity prices rather

than average electricity prices are used in the calculation of the operating cost savings (see Chapter

5, Section 5.2.3.6, Marginal Electricity Price). For future years beyond 1998 and to the year 2030,

electricity price trends as forecasted in the Annual Energy Outlook (AEO) 2000 are used to estimate

the marginal energy price for those years (see Chapter 5, Section 5.2.3.7, Electricity Price Trend).

Mean annual repair, maintenance, and compressor replacement costs are reported in Chapter

5. Since repair costs are assumed to be a function of equipment price, these costs vary with

efficiency (see Chapter 5, Section 5.2.3.8, Repair Cost). Compressor replacement costs, although

not a function of equipment price, do vary with efficiency (see Chapter 5, Section 5.2.3.10, Lifetime

and Compressor Replacment Cost). As noted in Chapter 5, compressor replacement is assumed to

take place in the 14th year of the central air conditioner or heat pump’s life. Maintenance costs are

assumed to remain constant Compressor (see Chapter 5, Section 5.2.3.9, Maintenance Cost). 

As part of the calculation of the annual change in electricity, repair, maintenance, and

compressor replacement cost, historical and future costs are determined for years dating back to

1951. The resulting weighted-average costs are determined through a matrix multiplication based

on the efficiency distribution for that year (refer back to Section 7.2.2.5, Annual Energy per Unit

(UEC), Table 7.4) and the costs corresponding to each incremental efficiency bin within the

distribution. For equipment efficiencies below the existing minimum efficiency (i.e., 10 SEER), the

repair, maintenance, and compressor replacement costs are assumed to equal that of the existing

minimum efficiency equipment in 1998$ as reported in Table 7.9. Note, that although electricity,

repair, maintenance, and compressor replacement cost data are determined for years preceding the

effective date of the standard (i.e., 2006), only the post-standard cost data are critical for determining

the national NPV. 

Assumptions regarding shipments and the development of shipments forecasts are

extensively discussed in Chapter 6.

7.4 NES AND NPV RESULTS

The NES spreadsheets offer a range of possible outputs, all of which depend on the

assumptions used in deriving the results. Table 7.10 summarizes the assumptions used in the NES

calculations for this analysis. Most of the assumptions have been discussed earlier in Sections 7.2.2,

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NES Inputs, and 7.3.2, NPV Inputs.

7.4.1 Assumptions

Assumptions regarding the inputs to the NES model are summarized in Table 7.10.

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g

 EIA approves use of the names NEMS (National Energy Modeling System) only to describe an AEO version

of the model without any modification to code or data. Since, in this work, there will be some minor code modifications,

the name NEMS-BRS is used to describe the model as used here. Chapter 11 on the Utility Impact Analysis and the

Environmental Assessment provide more detail on NEMS-BRS.

7-20

Table 7.10 NES Model Inputs and Assumptions

Parameter Data Description

Shipments Annual shipments from shipments model.

Effective Date of Standard 2006.

Historical Efficiencies (extending through

the assumed effective date of a new

standard (2006))

Based on the use of efficiency distributions. 1951-1991: Assumed

efficiency trend of 0.1 SEER per year. 1992-2006: Based on ARI data

and assumed to remain constant over the time period with resulting

weighted-average efficiencies of 10.4 SEER for split a/c, 10.3 SEER for

package a/c, 10.9 SEER / 7.1 HSPF for split heat pump, and 10.8 SEER

/ 7.1 HSPF for package heat pump. 

Future Efficiencies (2006-2030) Based on the use of efficiency distributions assuming one of three

different efficiency scenarios: NAECA, Roll-up, and Shift. Assumed to

remain constant over the time period. Resulting weighted-average

efficiencies are greater than the minimum efficiency allowed by the new

standard level.

Total Installed Consumer Cost Mean values for each efficiency level taken from life-cycle cost

analysis. Annual weighted-average values are determined through a

matrix multiplication based on the efficiency distribution for the given

year and the total installed cost corresponding to each incremental

efficiency bin within the distribution.

Repair, Maintenance, and Compressor

Replacement Costs

Mean values for each efficiency level taken from life-cycle cost

analysis. Annual weighted-average values are determined through a

matrix multiplication based on the efficiency distribution for the given

year and the costs corresponding to each incremental efficiency bin

within the distribution.

Unit Annual Energy Consumption (UEC) For any given year, the UEC is determined by multiplying the stock

equipment annual energy use by the ratio of the stock equipment

efficiency to the efficiency of shipments in that year. Stock energy use

and efficiency values are based on the 1997 RECS and the commercial

building analysis. Annual shipment efficiencies based on the historical

and future efficiency distributions described above.

Electricity Prices Based on the weighted-average marginal electricity price determined

in the life-cycle cost analysis.

Escalation of Electricity Prices 2000 EIA Annual Energy Outlook forecasts (to 2020) and extrapolation

from 2020 to 2030.

Electricity Site-to-Source Conversion Conversion varies yearly and is generated by DOE/EIA’s NEMS-BRSg

program (a time series conversion factor; includes electric generation

transmission and distribution losses). Conversion factors developed in

line with recommendations from the Advisory Committee on Appliance

Energy Efficiency Standards.

Discount Rate 7% real.

Present Year Future expenses are discounted to year 1998. 

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7.4.2 Trial Standard Levels

NES and NPV results are generated based on Trial Standard Levels (TSL). The TSLs are

based on the following: 1) efficiency levels identified in the supplemental Advance Notice of

Proposed Rulemaking (ANOPR) published in November, 1999, 2) the efficiency level identified as

the Maximum Technologically Feasible level, and 3) a combination of efficiency levels for different

product classes that has potentially positive impacts on consumers and the Nation.

Based on the preliminary analyses performed in the supplemental ANOPR, it was observed

that uniform efficiency levels for all product classes ranging from 11 to 13 SEER appeared to result

in the greatest economic benefits to both consumers and the Nation. Consequently, it was announced

in the supplemental ANOPR to further consider and conduct analyses for 11 SEER,12 SEER, and

13 SEER, for each product class.

In selecting candidate standard levels, the Process Rule requires the consideration of

equipment which has the most energy efficient combination of design options. The highest efficiency

level that is “technologically feasible and economically justified” is known as “Max Tech.” The

Maximum Technologically Feasible level for each product classis assumed to be 18 SEER. As has

been noted in Chapters 4 and 5 of this TSD, in conducting the economic analyses for this “Max

Tech” standard level, the greatest production cost multiplier data for each product class and

efficiency level available was 15 SEER. Extrapolation of 15 SEER data to 18 SEER was believed

to be unjustified. Consequently, the economic analyses for the 18 SEER case are all based on the 15

SEER cost multipliers, therefore, the economic results represent, at best, a lower bound to the actual

values.

In addition to considering equipment which has the most energy efficient combination of

design options, other criteria for selecting candidate standard levels include: the combination of

design options with the lowest life-cycle costs; and standard levels that incorporate noteworthy

technologies or fill in large gaps between efficiency levels of other candidate standards levels. In

this case the LCC results for different product classes show positive savings for consumers (although

not necessarily the minimum savings) and fill in the gap between uniform efficiency levels for the

candidate standard levels. 

 

Based on these criteria, NES and NPV results are presented for the following five TSLs:

• TSL 1: 11 SEER for all product classes,

• TSL 2: 12 SEER for all product classes,

• TSL 3: 12 SEER for air conditioners and 13 SEER for heat pumps,

• TSL 4: 13 SEER for all product classes, and

• TSL 5: 18 SEER for all product classes.

 EE-RM-STD-98-440 COMMENT 312
h

 NES and NPV results provided in this TSD are different than those results posted on DOE’s web site as of

June 30, 2000. The NES spreadsheet models available from DOE’s web site utilize different site-to-source conversion

factors than provided in this Chapter. 

7-22

7.4.3 NES Results

The following section provides NES results from the NES spreadsheet models for TSLs 1

through 5 h

. Results are cumulative to 2030 and are shown as absolute energy savings. It should be

reiterated that although efficiency distributions are utilized in the NES spreadsheet models, results

are based on weighted-average values yielding discrete point-values rather than a distribution of

values as in the LCC Analysis.

Table 7.11 and Figure 7.2 show the NES results for the five TSLs based on electricity price

forecasts from the Annual Energy Outlook (AEO) 2000 Reference Case. Three sets of results are

provided based on the NAECA, Roll-up, and Shift efficiency scenarios. The Shift efficiency

scenario yields the greatest energy savings while the Roll-up efficiency scenario yields the least

energy savings.

Table 7.11 Cumulative NES Results based on AEO2000 Reference Case (2006 - 2030)

Efficiency Scenario

NAECA Roll-up Shift

Trial Standard Level Quads Quads Quads

1 1.7 1.5 1.9

2 3.0 2.9 3.4

3 3.5 3.3 3.9

4 4.3 4.2 4.7

5 8.3 8.3 8.3

 EE-RM-STD-98-440 COMMENT 312
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0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

NAECA

Roll-up

Shift

Figure 7.2 Cumulative NES Results based on AEO2000 Reference Case

(2006 -2030)

7.4.3.1 NES Sensitivity to AEO2000 Forecasts

Sensitivities were conducted on the impact of different AEO2000 forecasts on the NES.

Table 7.12 and Figure 7.3 show the NES results based on the AEO2000 Low Growth Case while

Table 7.13 and Figure 7.4 show the results based on the AEO2000 High Growth Case. NES results

based on the Low Growth Case show slightly lower energy savings relative to the Reference Case

forecast while the High Growth Case show slightly greater energy savings.

Table 7.12 Cumulative NES Results based on AEO2000 Low Growth Case (2006 - 2030)

Efficiency Scenario

NAECA Roll-up Shift

Trial Standard Level Quads Quads Quads

1 1.7 1.5 1.9

2 2.9 2.8 3.4

3 3.4 3.3 3.8

4 4.2 4.1 4.6

5 8.1 8.1 8.1

 EE-RM-STD-98-440 COMMENT 312
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0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

NAECA

Roll-up

Shift

Figure 7.3 Cumulative NES Results based on AEO2000 Low Growth

Case (2006 - 2030)

 

Table 7.13 Cumulative NES Results based on AEO2000 High Growth Case (2006 - 2030)

Efficiency Scenario

NAECA Roll-up Shift

Trial Standard Level Quads Quads Quads

1 1.8 1.6 2.0

2 3.2 3.0 3.6

3 3.6 3.5 4.1

4 4.5 4.4 4.9

5 8.7 8.7 8.7

 EE-RM-STD-98-440 COMMENT 312
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0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

NAECA

Roll-up

Shift

Figure 7.4 Cumulative NES Results based on AEO2000 High Growth

Case (2006 - 2030)

7.4.4 Annual Costs and Savings

As a prelude to providing the NPVs for each TSL, the annual equipment cost increases and

annual operating cost savings at the National level are presented. Figures 7.5 through 7.9 show the

changes over time of the non-discounted annual equipment price increases and the non-discounted

operating cost savings at each of the five TSLs. The Net Annual Impact, which is the difference

between the savings and costs for each year, is also shown in each of the figures. The Annual

Equipment Price Change is the increase in equipment price for products purchased each year over

the period 2005 to 2030. The Annual Operating Savings is the savings in operating costs for

products purchased, and which have not been retired, for each year over the period 2005 to 2030.

The annual costs and savings presented in each figure were determined only according to the

NAECA efficiency scenario based on the AEO2000 Reference Case. Note that the NPV is the

difference between the cumulative annual discounted savings and cumulative annual discounted

costs.

Figures 7.5 through 7.9 show smaller annual operating cost savings initially compared to

increased equipment price costs. Operating cost savings increase with time as more and more

equipment meeting the efficiency standard comprises the central air conditioner and heat pump

stock. In later years the operating savings start to level off as the equipment stock becomes saturated

with systems meeting the standard. Upon closer inspection of the figures, there is a noticeable dip

in the operating cost savings occurring in 2020, fourteen years after the standard’s effective date.

TSL 5 (Figure 7.9) demonstrates this drop more dramatically than any other TSL. The drop in 2020

 EE-RM-STD-98-440 COMMENT 312
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-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030

Billion 98$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Savings Costs

Figure 7.5 National Annual Costs and Savings for TSL 1, NAECA

Efficiency Scenario, AEO2000 Reference Case

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030

Billion 98$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Savings Costs

Figure 7.6 National Annual Costs and Savings for TSL 2, NAECA

Efficiency Scenario, AEO2000 Reference Case

corresponds to the costs associated with replacing the original compressor that are assumed to take

place in the 14th year of the system’s life.

 EE-RM-STD-98-440 COMMENT 312
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-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030

Billion 98$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Savings Costs

Figure 7.7 National Annual Costs and Savings for TSL 3, NAECA

Efficiency Scenario, AEO2000 Reference Case

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030

Billion 98$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Savings Costs

Figure 7.8 National Annual Costs and Savings for TSL 4, NAECA

Efficiency Scenario, AEO2000 Reference Case

 EE-RM-STD-98-440 COMMENT 312
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-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030

Billion 98$

Annual Operating Savings

Annual Equipment Price Change

Net Annual Impact

Savings Costs

Figure 7.9 National Annual Costs and Savings for TSL 5, NAECA

Efficiency Scenario, AEO2000 Reference Case

7.4.5 NPV Results

The following section provides NPV results from the NES spreadsheet models for TSLs 1

through 5. Results are cumulative to 2030 and are shown as the discounted value of these savings

in dollar terms. It should be reiterated that although efficiency distributions are utilized in the NES

spreadsheet models, results are based on weighted-average values yielding discrete point-values

rather than a distribution of values as in the LCC Analysis.

Table 7.14 and Figures 7.10 and 7.11 show the NPV results for the five TSLs based on

electricity price forecasts from the Annual Energy Outlook (AEO) 2000 Reference Case. As with

the NES results, three sets of results are provided based on the the NAECA, Roll-up, and Shift

efficiency scenarios.

In Table 7.14, the total national equipment and operating costs for all central air-conditioning

and heat pump equipment under the base case (i.e., in the absence of new efficiency standards) are

shown. The total costs are estimated at $381 billion. The range of total costs and NPVs varies from

approximately $381 billion total cost for the NAECA and Shift efficiency scenarios at TSL 1 and

an NPV of $1 billion or less, to $403 billion total cost for all efficiency scenarios at TSL 5 and an

NPV of >$22 billion. For TSLs 2 and 3, under the NAECA efficiency scenario the total costs are

$382 billion and $383 billion and the NPVs are >$1 billion and >$2 billion, respectively. Figure

7.10 shows the NPV results in the context of the total equipment and operating costs for central air

conditioners and heat pumps.

 EE-RM-STD-98-440 COMMENT 312
7-29

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

NAECA

Roll-up

Shift

Figure 7.10 Cumulative Total National Equipment and Operating Costs

based on AEO2000 Reference Case (2006 -2030)

The NPV is calculated by taking the difference between two relatively large numbers; the

baseline cost and the cost under new standards. It is doubtful that a relatively small difference

between two large numbers is significant. We have chosen 2% of the base case cost as a significant

value for comparison purposes. This value is consistent with the LCC analysis where consumers with

life-cycle costs within ±2% of the baseline LCC were considered to be insignificantly impacted by

an increase in the standard. Table 7.14 shows the NPV results relative to the total baseline costs, and

indicates that the NPVs for TSLs 1 through 4 are relatively small. Figure 7.11 shows the NPV

results relative to ±2% of the baseline LCC.

Table 7.14 Cumulative NPV Results based on AEO2000 Reference Case (2006 - 2030)

Base

Case

Efficiency Scenario

NAECA Roll-up Shift

Total Total NPV Total NPV Total NPV

TSL billion 98$ billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

1 $381 $381 $0 0.0% $381 $1 0.2% $385 $0 -0.1%

2 $381 $382 ($1) -0.3% $381 $0 0.0% $388 ($3) -0.9%

3 $381 $383 ($2) -0.5% $382 ($1) -0.2% $390 ($5) -1.4%

4 $381 $387 ($5) -1.4% $386 ($4) -1.1% $395 ($10) -2.5%

5 $381 $403 ($22) -5.8% $403 ($22) -5.8% $407 ($22) -5.8%

 EE-RM-STD-98-440 COMMENT 312
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-$25

-$20

-$15

-$10

-$5

$0

$5

$10

12345

Trial Standard Level

National NPV (billion 98$)

NAECA

Roll-up

Shift

2%

-2%

Figure 7.11 Cumulative National NPVs relative to ±2% of Total National

Base Case Costs based on AEO2000 Reference Case (2006 -2030)

7.4.5.1 NPV Sensitivity to AEO2000 Forecasts

Sensitivities were conducted on the impact of different AEO2000 forecasts on the NPV.

Table 7.15 and Figures 7.12 and 7.13 show the NPV results based on the AEO2000 Low Growth

Case while Table 7.16 and Figures 7.14 and 7.15 show the results based on the AEO2000 High

Growth Case. 

Table 7.15 Cumulative NPV Results based on AEO2000 Low Growth Case (2006 -2030)

Base

Case

Efficiency Scenario

NAECA Roll-up Shift

Total Total NPV Total NPV Total NPV

TSL billion 98$ billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

1 $369 $369 $0 0.0% $369 $1 0.1% $370 ($1) -0.2%

2 $369 $370 ($1) -0.3% $369 $0 0.0% $373 ($4) -1.0%

3 $369 $371 ($2) -0.5% $370 ($1) -0.2% $375 ($5) -1.5%

4 $369 $375 ($6) -1.5% $373 ($4) -1.2% $379 ($10) -2.6%

5 $369 $391 ($22) -5.9% $391 ($22) -5.9% $391 ($22) -5.9%

 EE-RM-STD-98-440 COMMENT 312
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$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

NAECA

Roll-up

Shift

Figure 7.12 Cumulative Total National Equipment and Operating Costs based

on AEO2000 Low Growth Case (2006 - 2030)

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

12345

Trial Standard Level

National NPV (billion 98$)

NAECA

Roll-up

Shift

2%

-2%

Figure 7.13 Cumulative National NPVs relative to ±2% of Total National Base

Case Costs based on AEO2000 Low Growth Case (2006 -2030)

 EE-RM-STD-98-440 COMMENT 312
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$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

NAECA

Roll-up

Shift

Figure 7.14 Cumulative Total National Equipment and Operating Costs based

on AEO2000 High Growth Case (2006 -2030)

Table 7.16 Cumulative NPV Results based on AEO2000 High Growth Case (2006 -2030)

Base

Case

Efficiency Scenario

NAECA Roll-up Shift

Total Total NPV Total NPV Total NPV

TSL billion 98$ billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

billion 98$ billion 98$

as % of

Base Case

Total

1 $404 $404 $0 0.1% $403 $1 0.2% $404 $0 -0.1%

2 $404 $405 ($1) -0.2% $404 $1 0.1% $408 ($3) -0.8%

3 $404 $406 ($1) -0.4% $404 $0 0.0% $409 ($5) -1.3%

4 $404 $409 ($5) -1.3% $408 ($4) -0.9% $414 ($10) -2.4%

5 $404 $426 ($22) -5.4% $426 ($22) -5.4% $426 ($22) -5.4%

 EE-RM-STD-98-440 COMMENT 312
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-$25

-$20

-$15

-$10

-$5

$0

$5

$10

12345

Trial Standard Level

National NPV (billion 98$)

NAECA

Roll-up

Shift

2%

-2%

Figure 7.15 Cumulative National NPVs relative to ±2% of Total National Base

Case Costs based on AEO2000 High Growth Case (2006 -2030)

7.4.6 NES and NPV Scenarios

Although in most cases TSLs 1 through 4 exhibit negative NPVs, they are small relative to

the total costs to the Nation of owning and operating central air conditioners and heat pumps.

Further, NPV is calculated by taking the difference between two relatively large numbers; the

baseline cost and the cost under new standards. Associated with each of these total costs is an

uncertainty which arises from uncertainty and variability in assumptions in both the LCC and NES

analyses. Thus, changes in some key input inputs such as the manufacturer cost, equipment lifetime,

discount rate, electricity price forecasts, and cooling load operating hours could turn the negative

NPVs into positive values. Consequently, as was performed in the LCC Analysis, key uncertainties

are examined as different scenarios. 

7.4.6.1 Manufacturer Cost Scenario

Because competitive pressures may likely force manufacturers to produce equipment at costs

lower than the shipment-weighted mean estimates provided by ARI, scenarios are performed to

determine the impact of different manufacturer cost estimates on the NES and NPV.

A scenario analysis was performed to determine the manufacturer costs at each trial standard

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level yielding an NPV of zero under the NAECA efficiency scenario and AEO2000, Reference Case.

The “Zero NPV” cost values are compared to the ARI shipment-weighted mean estimates and those

from the reverse engineering analysis. Refer to Chapter 5 for the manufacturer cost multipliers

derived from the reverse engineering analysis (Section 5.2.4.5, LCC Scenarios).

Figures 7.16 through 7.19 show these manufacturing cost comparisons for each of the four

product classes. In the case of TSL 1, no change was necessary since the NPV is greater than zero.

At TSLs 2 and 3, the “Zero NPV” value lies between the ARI shipment-weighted mean cost figures

and the values from the Reverse Engineering Analysis. Specifically, for TSL 2 the “Zero NPV”

value represents a decrease of approximately 3% in the ARI manufacturer cost multipliers, while for

TSL 3 it represents a decrease of approximately 5% in the ARI multipliers. Assuming that the

manufacturer costs will be bounded by the ARI and Reverse Engineering values, it appears that

estimated NPVs of zero for TSLs 2 and 3 would result from reasonable decreases in the ARI

manufacturer cost estimates.

The adjustments required to attain NPVs of zero for TSLs 4 and 5 resulted in values outside

the bounds of the ARI and Reverse Engineering values.

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2345

Trial Standard Level

Comparison of Manufacturer Cost Multipliers

100%125%150%175%200%225%250%

12345

Trial Standard Level

Manufacturer Cost Multiplier

ARI MeanZero NPVRev Eng

Figure 7.17 Split HP: Comparison of Manufacturer Cost Multipliers

2345

Trial Standard Level

omparison of Manufacturer Cost Multipliers

100%125%150%175%200%225%250%

12345

Trial Standard Level

Manufacturer Cost Multiplier

ARI MeanZero NPVRev Eng

Figure 7.19 Pack. HP: Comparison of Manufacturer Cost Multipliers

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$379 $378 $377 $378 $379 $390

$0

$50

$100

$150

$200

$250

$300

$350

$400

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

Figure 7.20 Cumulative Total National Operating and Equipment Costs

based on Reverse Engineering Manufacturer Cost Scenario (2006

- 2030)

To further investigate the sensitivity to manufacturer costs, NPVs are generated based on

replacing the ARI-based manufacturer costs with those determined through the reverse engineering

analysis. Table 7.17 and Figures 7.20 and 7.21 demonstrate that manufacturer costs based on the

reverse engineering analysis yield NPVs which are greater than or equal to zero for TSLs 1 through

4 based on the NAECA efficiency scenario and AEO2000 Reference Case.

Table 7.17 Cumulative NPV Results (2006 -2030): Reverse Engineering 

Manufacturer Cost Scenario

TSL

Base Case Total

billion 98$

TSL Total

billion 98$

TSL NPV

billion 98$

as % of Base Case

Total

1 $379 $378 $2 0.4%

2 $379 $377 $2 0.5%

3 $379 $378 $1 0.4%

4 $379 $379 $0 0.0%

5 $379 $390 ($10) -2.7%

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$2 $2 $1

$0

-$10

-$12

-$10

-$8

-$6

-$4

-$2

$0

$2

$4

$6

$8

$10

12345

Trial Standard Level

National NPV (billion 98$)

2%

-2%

Figure 7.21 Cumulative National NPVs based on Reverse Engineering

Manufacturer Cost Scenario (2006 - 2030)

NES results based on the NAECA efficiency scenario and AEO2000 Reference Case under

the reverse engineering manufacturer cost scenario are shown in Figure 7.22.

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1.7

3.0

3.5

4.3

8.7

0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

Figure 7.22 Cumulative NES Results based on Reverse Engineering

Manufacturer Cost Scenario (2006 - 2030)

7.4.6.2 Lifetime Scenario

A shorter lifetime is investigated based on the assumption that most, if not all, consumers

when faced with replacing a failed compressor would choose to replace the entire system rather than

replace the compressor in a relatively old system. In order to determine the impact of a shorter

lifetime, a lifetime scenario is investigated where a retirement function yielding an average lifetime

of 14 years is used instead of the function that results in a 18.4 year average life. In addition,

compressor replacement costs are no longer considered.

Table 7.18 and Figures 7.23 through 7.24 show the NPV results based on the NAECA

efficiency scenario and the AEO2000 Reference Case when the “18.4 year” retirement function is

replaced with one yielding a 14 year average life. The results based on the 14 year average lifetime

are very similar to those based on the “18.4 year” retirement function (e.g., small negative NPVs

result for TSLs 1 through 4). 

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$363 $364 $365 $366 $370

$389

$0

$50

$100

$150

$200

$250

$300

$350

$400

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

Figure 7.23 Cumulative Total National Equipment and Operating Costs

based on 14-year Average Lifetime Scenario (2006 -2030)

Table 7.18 Cumulative NPV Results (2006 - 2030): 14-year Average Lifetime Scenario

TSL

Base Case Total

billion 98$

TSL Total

billion 98$

TSL NPV

billion 98$

as % of Base Case

Total

1 $363 $364 $0 0.0%

2 $363 $365 ($2) -0.5%

3 $363 $366 ($3) -0.8%

4 $363 $370 ($7) -1.9%

5 $363 $389 ($25) -6.9%

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$0

-$2 -$3

-$7

-$25

-$30

-$25

-$20

-$15

-$10

-$5

$0

$5

$10

12345

Trial Standard Level

National NPV (billion 98$)

2%

-2%

Figure 7.24 Cumulative National NPVs based on 14-year Average Lifetime

Scenario (2006 -2030)

NES results based on the NAECA efficiency scenario and AEO2000 Reference Case under

the 14-year average lifetime scenario are shown in Figure 7.25.

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1.7

2.9

3.4

4.2

8.2

0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

Figure 7.25 Cumulative NES Results based on 14-year Average Lifetime

Scenario (2006 - 2030)

7.4.6.3 Discount Rate Scenario

To determine how sensitive the NPV is to discount rate, results were generated with a

discount rate of 3% rather than a value of 7%. A value of 7% has been traditionally used to represent

the Nation’s societal discount rate. In “Guidelines to Standardize Measures of Costs and Benefits

and the Format of Accounting Statements”, the Office of Management and Budget (OMB) recently

advised Federal agencies to use the 3% value as a sensitivity for calculating the national economic

impacts of regulatory policies. Table 7.19 and Figures 7.26 and 7.27 provide the NPV results based

on a discount rate of 3% under the NAECA efficiency scenario and AEO2000 Reference Case. Note

the dramatic increase in the total national costs of operating central air conditioners and heat pumps

in the base case ($712 billion at a 3% discount rate as opposed to $381 billion at a 7% discount rate).

As a a result, all NPVs are less than 1% of the total base case national costs (with the exception TSL

5). 

It is important to note, that the discount rate described here is not the same as the market

discount rate used in describing consumer decisions and, in turn, forecasting shipments (refer to

Chapter 6, Section 6.3.4.2, Market Discount Rate). Thus, a change in the discount rate from 7% to

3% does not impact shipment forecasts.

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$712 $708 $708 $708 $714

$746

$0

$100

$200

$300

$400

$500

$600

$700

$800

Base Case 1 2 3 4 5

Trial Standard Level

Total National Equipment and Operating Costs 

(billion 98$)

Figure 7.26 Cumulative Total National Equipment and Operating Costs

based on 3% Discount Rate Scenario (2006 -2030)

Table 7.19 Cumulative NPV Results (2006 - 2030): 3% Discount Rate Scenario

TSL

Base Case Total

billion 98$

TSL Total

billion 98$

TSL NPV

billion 98$

as % of Base Case

Total

1 $712 $708 $3 0.5%

2 $712 $708 $4 0.5%

3 $712 $708 $3 0.4%

4 $712 $714 ($3) -0.4%

5 $712 $746 ($35) -4.9%

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$3 $4 $3

-$3

-$35

-$40

-$30

-$20

-$10

$0

$10

$20

12345

Trial Standard Level

National NPV (billion 98$)

2%

-2%

Figure 7.27 Cumulative National NPVs based on 3% Discount Rate Scenario

(2006 - 2030)

NES results based on the NAECA efficiency scenario and AEO2000 Reference Case under

the 3% discount rate scenario are shown in Figure 7.28.

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1.7

3.0

3.5

4.3

8.3

0

1

2

3

4

5

6

7

8

9

12345

Trial Standard Level

National Energy Savings (Quads)

Figure 7.28 Cumulative NES Results based on 3% Discount Rate Scenario

(2006 - 2030)

7.4.7 NES and NPV Results as shown in Spreadsheet Model

To illustrate how the NES and NPV results are presented in the NES spreadsheet models,

Figures 7.29 through 7.31 are provided for the case of a 12 SEER efficiency-level for split system

central air conditioners. In this example, Figure 7.29 shows the cumulative national electricity

savings from the assumed effective date of the standard (2006) to three specific dates; 2010, 2020,

and 2030. Figure 7.30 presents the discounted value of savings and costs to the year 1998 for the

time period 2006 to 2030 (in billion 1998$). The value of total energy savings is $5.73 billion, the

total equipment cost is $7.06 billion, and the resulting net present value is -$1.32 billion. The

corresponding ratio of benefits to costs is 0.81.

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CAC/HP Standards in 2006: 12 SEER

Cost and Net Present Values (in billion 1998$)

Cumulative for Split A/C Purchased from 2006 to 2030

Discounted at 7% to year 1998

 Total Operating Savings 5.73 

 Total Equipment Cost 7.06 

 Net Present Benefit -1.32 

 Benefit/Cost Ratio 0.81

Figure 7.30 NES for Split System A/C based on a 12 SEER Efficiency-Level

Energy Saving in Quads

Total Elec Gas Oil LPG

from 2006

 to 2010 0.11 0.11 0.00 0.00 0.00

 to 2020 0.78 0.78 0.00 0.00 0.00

 to 2030 1.83 1.83 0.00 0.00 0.00

Figure 7.29 NES for Split System A/C based on a 12 SEER

Efficiency-Level

Figure 7.31, below, illustrates the typical pattern of national savings and costs resulting from

standards over time. This figure is nearly identical to the information shown previously in Figures

7.5 through 7.9. The heavy line running just below the energy savings bars indicates the

undiscounted net national consumer impact of standards over time. Figure 7.31 shows the nature

of net savings for a 12 SEER standard for split system central air conditioners relative to the

baseline. Alternate standard levels would yield different values. Appendix E contains the detailed

results for all standard level and product class combinations.

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Cost and Saving of CAC

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

Billion 1998 Dollars

2000 2005 2010 2015 2020 2025 2030

Price Change

Operating Savings

Net Saving

Figure 7.31 Annual Values of a 12 SEER Efficiency-Level for Split A/C

 

7.5 USER INSTRUCTIONS FOR NES SPREADSHEET

It is possible to examine and reproduce the detailed results obtained in this part of the

analysis using a Microsoft Excel spreadsheet available on the U.S. Department of Energy Office of

Codes and Standards website at: http://www.eren.doe.gov/buildings/codes_standards/. 

The NES spreadsheet allows the user to perform NES and NPV analyses of split or single

package central air conditioner or heat pumps. The Shipments Model, as described in Chapter 6, is

incorporated into the NES spreadsheet. The spreadsheets posted on the DOE website represent the

latest versions of the applicable models, and have been tested with version of Excel 2000 and lower.

The NES spreadsheet or workbook consists of the following worksheets:

Welcome NES This worksheet is the main user page. It provides six list boxes that allow

the user to choose a range of scenarios, plus two additional input boxes

(highlighted in yellow) where the user can type in a desired input value

directly. The five list boxes allow the user to choose the following: 1)

growth projection for energy prices and housing, 2) the standard case

design, 3) the type of system (i.e., split or package air conditioner or heat

pump) to be analyzed, 4) the price option (i.e., ARI or Rev Eng), 5) the

price projection and 6) the efficiency scenario. The additional input boxes

allow the user to change the discount rate and the start year of the standard.

For heat pumps, the user can select different cooling and heating efficiency

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values (i.e., SEER and HSPF) than the default values. Different elements

of the national energy savings are illustrated, including total electricity

savings, the dollar value of energy savings, and the benefit/cost ratio for the

standard case.

Welcome Ship This worksheet is the user page for specifying the type of price/income

elasticity that should be used in the Shipments Model. Shipments

information is summarized here with the following figures and tables: 1)

a figure showing the historical and forecasted shipments for the type of

system selected in the Welcome NES worksheet, 2) tables summarizing the

average impacts on new shipments, new sales, mean equipment age, mean

lifetime, repairs, and early replacements from the standard level, 3) a figure

showing the Shipment Model’s fit to historical data, and 4) figures showing

how the mean equipment age and the age of products retired change over

time.

Inputs The Inputs sheet contains the detailed parametric inputs to the shipments

forecast model. These inputs include the elasticities and initial market

shares for each of the market segments. The user can change the individual

model elasticities which are highlighted in yellow. Note, that if one makes

changes in elasticities on the Input sheet, this likely will affect the

historical base case. The non-highlighted cells in this worksheet are

protected to help the user avoid erroneous modifications.

Shipment Forecast The Shipment Forecast worksheet provides the detailed estimates and

accounting of central air conditioner or heat pump populations. This sheet

contains the core of the shipments calculation and the tables which specify

the estimates of each type of central air conditioner or heat pump purchase.

The tables in the sheet provide accounting of each type of central air

conditioner or heat pump ownership category, and each type of central air

conditioner or heat pump for each age category of central air conditioner or

heat pump. This worksheet also calculates the standard case energy use and

monetary costs. The sheet contains the estimates of the population of

central air conditioners in each age category and each forecast year for the

standard case selected by the user on the Welcome worksheet. It then uses

this information to calculate the standard case energy consumption and

operating cost. It also computes the operating and equipment costs for each

year.

Base Case The Base Case worksheet stores the base case energy use and monetary

costs (i.e., what is projected to happen in the absence of an efficiency

standard). The sheet contains the base case estimates of the population of

central air conditioners or heat pumps in each age category and in each

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year. It also stores the base case energy consumption and operating cost

for each year. The data in the Base Case worksheet is copied from the

Shipment Forecast worksheet when the user clicks the Reset Base Case

button on the Welcome NES worksheet. 

Savings This worksheet calculates the difference between the standards case and

base case energy use (i.e., National Energy Savings) and monetary costs

(i.e., Net Present Value) forecasts.

Econ Inputs This worksheet calculates and summarizes the economic inputs (i.e.,

product price and operating cost) necessary for determining the base case

and standards case monetary costs. Costs are determined on an annual

basis for each of the four primary product classes. 

Energy Inputs This worksheet calculates and summarizes the energy use data necessary

for determining the operating costs for the Econ Inputs worksheet. Energy

use information is calculated by product class and Census Division (for the

residential market only). Efficiency distributions are incorporated into this

worksheet from MS Efficiency worksheet that is described below.

Projections Contains the tables that provide the energy price and housing data for

different projection scenarios. These scenarios include the Annual Energy

Outlook (AEO) 2000 high-growth, low-growth and reference cases

(http://www.eia.doe.gov/oiaf/aeo2000/homepage.html). There is also an

option for constant energy prices, and an estimate from the Gas Research

Institute (GRI). Also included here are the weighted-average marginal

electricity prices.

Engineering This worksheet contains the data on total installed prices and annual repair,

maintenance, and compressor replacement costs for central air conditioners

and heat pumps meeting different standard levels. The data from this sheet

are used to calculate the per unit installation price and repair, maintenance,

and compressor replacement costs for each standard level. The type of

system selected in the Welcome worksheet dictates which set of data are

analyzed.

MS Region Product This worksheet provides the product type market shares as a function of

year. 

MS Efficiency Here we provide the calculation of the market shares of the different

efficiency levels as a function of year. 

MS New Homes Here we provide the market share calculation for the new housing market

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based on the logit probability of purchase model. A logit probability of

purchase model estimates how purchase probabilities change as a function

of price, operating cost savings, and income changes.

MS Early Repl Here we provide the market share calculation for the early replacement

market based on the logit probability of purchase model, and an initial

probability of purchase that is a linear function of central air conditioner or

heat pump age. 

MS non-owner This sheet provides the market share calculation for the non-owners who

purchase central air conditioners and heat pumps and become new

equipment owners. Note that this market is currently modeled through a

remodel market that is correlated with the new housing market. But we

keep this market in the spreadsheet for the benefit of users who may want

to examine alternatives for modeling the purchases of the non-ower market.

MS Replace This worksheet calculates the probability of replacement vs. repair as a

function of economic decision parameters for each year. The annual

probability of replacement is calculated for each age category of central air

conditioner or heat pump.

Retirement Function The worksheet shows the fraction of central air conditioners or heat pumps

that are expected to retire as a function of years since the central air

conditioner or heat pump was purchased new. (Repairs may extend the life

of the equipment and are accounted for in the worksheet Shipment

Forecast.) 

The NES spreadsheet provide an estimate of the national energy and monetary savings of

different air conditioner and heat pump efficiency standards as well as shipments forecasts. The

spreadsheet uses estimates of future air conditioner or heat pump sales and stock from the Shipments

Model within the spreadsheet for the chosen standard level to estimate potential savings from the

standard. It also calculates the dollar value of these savings year-by-year. It estimates the amount

of energy that will be saved at the source by considering transmission and distribution losses. It also

calculates the monetary savings that can result from a standard and the net present value of such

savings. The following provides basic instructions for operating the NES spreadsheets.

1. Once you have downloaded the NES files from the Web, open one of the files using

Excel. At the bottom, click on the tab for the worksheet labeled Welcome NES.

2. The screen will display two tables (Energy Savings in Quads and Cost and Net

Present Values) and a chart (Cost and Savings of CAC/HP). (Use Excel's

View/Zoom commands to change the size of the display to make it fit your monitor.)

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3. To run different scenarios, simply select the energy price and housing projection, the

standard level, the price option (either based on ARI or reverse engineering

manufacturer costs), the type of system (either split or package), and the efficiency

scenario from the appropriate list box. The user may also input values for the

discount rate and start year by directly typing the desired values into the appropriate

input box, highlighted in yellow.

With regard to the standard case design, the user can input either a single tier

efficiency standard or a two tier efficiency standard. If a single tier standard is

desired, the tier #1 and tier #2 efficiencies as well as the tier #1 and tier #2 start years

need to be set to identical values. If a two tier standard is desired, the tier #1 and tier

#2 efficiencies and start years should be set to different values. The tier #1 and tier

#2 efficiencies are drawn from a list of options ranging from 10 to 18 SEER while

the tier #1 and tier #2 start years require the user to type in a value. 

The user is also allowed to customize the SEER/HSPF combination for split or

package heat pumps. In the table entitled “Heat Pump Standard Level

Customization”, the base levels are shown in the first two columns. The last two

columns provide the option of defining new SEER and HSPF values for the

particular standard level of interest. For example, to achieve the same national

energy savings for level 2 (12 SEER and 7.4 HSPF) but with a lower SEER value and

a higher HSPF value, the user simply needs to type in the desired SEER and HSPF

values in the customized input cells immediately to the right of the base level values.

The user will need to go through a “trial and error” sequence to determine the exact

SEER and HSPF values that will result in energy savings equivalent to the base level

values.

4. Select the standard level for the Base Case (10 SEER). Click the Reset Base Case

button to store the base case information in the Base Case worksheet. Then select the

standard level of interest. 

5. There are two calculation buttons for determining the energy savings and NPVs for

a particular standard case. 

The first button is called Calculate Results Relative to 10 SEER. This is the button

that is recommend for use. Simply click on this button to calculate the energy

savings and NPV results for the defined standard case. Clicking on this button

generates results that are relative to a base case design where 10 SEER is the

minimum efficiency standard (9.7 SEER for package systems). 

The second button, Reset Base Case, should only be used if the user want to generate

results relative to a base case design that IS NOT based on a minimum standard of

10 SEER. For example, a user might want to generate results for a 12 SEER standard

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relative to an 11 SEER standard. If this were the case, the user would need to specify

both tier #1 and tier #2 efficiency levels at 11 SEER for a particular start year. Then

the user would need to click on the Reset Base Case button. Then the user would

need to change the efficiency levels to 12 SEER. After changing the efficiency

levels, the energy savings and NPV results generated would reflect the difference

between 11 and 12 SEER standards.

The spreadsheets provide output as charts, summary statistics, and detailed tables. Summary

figures and charts are provided on the Welcome NES worksheet. For each year from the standard

start date to 2030, the Costs and Savings of CAC/HP chart shows the additional cost (labeled Price

Change) to consumers to purchase the higher efficiency central air conditioners or heat pumps

mandated by the standard, vs. the amount saved by consumers in reduced energy (labeled Operating

Savings). The net saving to consumers is the difference between the money saved in energy bills

minus the additional money spent on higher efficiency space-conditioning equipment. This net

saving is shown as a red line labeled Net Saving on this chart.

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1. Neme, C., J. Peters, and D. Rouleau, Promoting High Efficiency Residential HVAC

Equipment: Lessons Learned from Leading Utility Programs. In ACEEE 1998 Summer Study

on Energy Efficiency in Buildings. 1998. Asilomar, CA: American Council for an EnergyEfficient Economy, 2: p. 2.153-2.164.

2. Bucher, M.E., C.M. Grastataro, and W.R. Coleman, Heat Pump Life and Compressor

Longevity in Diverse Climates. ASHRAE Transactions, 1990. 96(1): p. 1567-1571.

3. U.S. Department of Energy-Energy Information Administration, A Look at Residential

Energy Consumption in 1997, 1999. Washington, DC. Report No. DOE/EIA-0632(97).

EIA website: <http://www.eia.doe.gov/pub/pdf/consumption/063297.pdf>

REFERENCES

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