Energy Conservation Program: Energy Conservation Standards for Uninterruptible Power Supplies
Federal RegisterJan 10, 2020
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket Number EERE-2016-BT-STD-0022]
RIN 1904-AD69
Energy Conservation Program: Energy Conservation Standards for Uninterruptible Power Supplies
AGENCY:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
ACTION:
Final rule.
SUMMARY:
The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including battery chargers. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting new energy conservation standards for uninterruptible power supplies, a class of battery chargers. It has determined that the new energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.
DATES:
The effective date of this rule is March 10, 2020. Compliance with the new standards established for uninterruptible power supplies in this final rule is required on and after January 10, 2022.
ADDRESSES:
The docket for this rulemaking, which includes
Federal Register
notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at
www.regulations.gov.
All documents in the docket are listed in the
www.regulations.gov
index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.
The docket web page can be found at
http://www.regulations.gov/#!docketDetail;D=EERE-2016-BT-STD-0022.
The docket web page contains simple instructions on how to access all documents, including public comments, in the docket.
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
ApplianceStandardsQuestions@ee.doe.gov.
FOR FURTHER INFORMATION CONTACT:
Jeremy Dommu, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-9870. Email:
ApplianceStandardsQuestions@ee.doe.gov.
Celia Sher, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 287-6122. Email:
Celia.Sher@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for UPSs
III. General Discussion
A. Test Procedure
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared To Increase in Price (LCC and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
E. Compliance Date
F. General Comments
1. Proposed Standard Levels
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Testing
2. Representative Units and Efficiency Levels
3. Cost Analysis
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
1. Shipment Projections in the No-New-Standards Case
2. Shipments in a Standards Case
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. GRIM Analysis and Key Inputs
a. Capital and Product Conversion Costs
b. Manufacturer Production Costs
c. Shipment Scenarios
d. Markup Scenarios
3. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Current Approach and Key Assumptions
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for UPSs Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Final Rule
Title III, Part B
1
of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.
2
These products include battery chargers, the subject of this rulemaking.
1
For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.
2
All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (April 30, 2015).
Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed in this document, DOE is adopting new energy conservation standards for uninterruptible power supplies (hereafter referred to as “UPSs”), a class of battery chargers. The adopted standards, which are expressed in average load adjusted efficiency, are shown in Table I-1. These standards apply to all products listed in Table I-1 and manufactured in, or imported into, the United States starting on and after two years after the publication of this final rule that utilize a NEMA 1-15P or 5-15P input plug and have an AC output.
Table I-1—Energy Conservation Standards for UPSs
[Compliance starting January 10, 2022]
UPS product class
Rated output power
Minimum efficiency
Voltage and Frequency Dependent
0
W
<
P
rated
≤300
W
−1.20E-06 *
P
2
rated
+ 7.17E-04 *
P
rated
+ 0.862.
300
W
<
P
rated
≤700
W
−7.85E-08 *
P
2
rated
+ 1.01E-04 *
P
rated
+ 0.946.
P
rated
>700
W
−7.23E-09 *
P
2
rated
+ 7.52E-06 *
P
rated
+ 0.977.
Voltage Independent
0
W
<
P
rated
≤300
W
−1.20E-08 *
P
2
rated
+ 7.19E-04 *
P
rated
+ 0.863.
300
W
<
P
rated
≤700
W
−7.67E-08 *
P
2
rated
+ 1.05E-04 *
P
rated
+ 0.946.
P
rated
>700
W
−4.62E-09 *
P
2
rated
+ 8.54E-06 *
P
rated
+ 0.979.
Voltage and Frequency Independent
0
W
<
P
rated
≤300
W
−3.13E-08 *
P
2
rated
+ 1.96E-04 *
P
rated
+ 0.543.
300
W
<
P
rated
≤700
W
−2.60E-08 *
P
2
rated
+ 3.65E-04 *
P
rated
+ 0.764.
P
rated
>700
W
−1.70E-08 *
P
2
rated
+ 3.85E-06 *
P
rated
+ 0.876.
A. Benefits and Costs to Consumers
Table I-2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of UPSs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
3
The average LCC savings are positive for all product classes, and the PBP is less than the average lifetime of UPSs, which is estimated to be between 5 and 10 years (see section IV.F).
3
The average LCC savings refer to consumers that are affected by a standard and are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of new standards (see section IV.F.8). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline product (see section IV.C).
Table I-2—Impacts of Adopted Energy Conservation Standards on Consumers of UPSs
Product class
Description
Average LCC
savings
(2015$)
Simple
payback
period
(years)
10a
VFD UPS
$32
* 0.0
10b
VI UPS
12
3.7
10c
VFI UPS
36
4.4
* The payback period is 0 due to the negative incremental cost at this efficiency level. More expensive and less efficient baseline units continue to exist in the market, likely because some consumers are familiar with their well-established performance. These consumers are reluctant to purchase newer, more efficient products that are just as reliable because they are unfamiliar with them. See section IV.C.3 for more details.
DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the reference year through the end of the analysis period (2016-2048). Using a real discount rate of 6.1 percent, DOE estimates that the INPV for manufacturers of UPSs in the case without new standards is $2,575 million in 2015$. Under the adopted standards, DOE expects the change in INPV to range from −15.9 percent to 6.3 percent, which is approximately −$409 million to $162 million. In order to bring products into compliance with adopted standards, DOE expects the industry to incur total conversion costs of $36 million.
DOE's analysis of the impacts of the adopted standards on manufacturers is described in section IV.J and section V.B.2 of this document.
C. National Benefits and Costs
4
4
All monetary values in this document are expressed in 2015 dollars and, where appropriate, are discounted to 2016 unless explicitly stated otherwise.
DOE's analyses indicate that the adopted energy conservation standards for UPSs would save a significant amount of energy. Relative to the case without new standards, the lifetime energy savings for UPSs purchased in the 30-year period that begins in the anticipated year of compliance with the new standards (2019-2048), amount to 0.94 quadrillion British thermal units (Btu), or quads.
5
This represents a savings of 15 percent relative to the energy use of these products in the case without new standards (referred to as the “no-new-standards case”).
5
The quantity refers to full-fuel-cycle (FFC) energy savings. FFC energy savings includes the energy consumed in extracting, processing, and transporting primary fuels (
i.e.,
coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy efficiency standards. For more information on the FFC metric, see section IV.H.1.
The cumulative net present value (NPV) of total consumer benefits of the standards for UPSs ranges from $1.3 billion (at a 7-percent discount rate) to $3.0 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for UPSs purchased in 2019-2048.
In addition, the adopted standards for UPSs are projected to yield significant environmental benefits. DOE estimates that the standards will result in cumulative emission reductions (over the same period as for energy savings)
of 49 million metric tons (Mt)
6
of carbon dioxide (CO
2
), 39 thousand tons of sulfur dioxide (SO
2
), 63 thousand tons of nitrogen oxides (NO
X
), 238 thousand tons of methane (CH
4
), 0.73 thousand tons of nitrous oxide (N
2
O), and 0.13 tons of mercury (Hg).
7
The estimated cumulative reduction in CO
2
emissions through 2030 amounts to 12 Mt, which is equivalent to the emissions resulting from the annual electricity use of 1.8 million homes.
6
A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO
2
are presented in short tons.
7
DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the
Annual Energy Outlook 2016
(
AEO2016
).
AEO2016
represents current federal and state legislation and final implementation of regulations as of the end of February 2016.
AEO2016
incorporates implementation of the Clean Power Plan (CPP). DOE is using the
AEO2016
No-CPP case as a basis for its analysis because the standards finalized in this rulemaking will take effect before the requirements of the CPP. The standards finalized in this rulemaking will reduce the projected burden on the States to meet the requirements of the CPP since these standards are not included in the
AEO2016
Reference Case.
The value of the CO
2
reduction is calculated using a range of values per metric ton (t) of CO
2
(otherwise known as the “social cost of CO
2
,” or SC-CO
2
) developed by a Federal interagency working group.
8
The derivation of the SC-CO
2
values is discussed in section IV.L.1. Using discount rates appropriate for each set of SC-CO
2
values, DOE estimates that the present value of the CO
2
emissions reduction (not including CO
2
equivalent emissions of other gases with global warming potential) is between $0.37 billion and $5.0 billion, with a value of $1.7 billion using the central SC-CO
2
case represented by $47.4/metric ton (t) in 2020. DOE also estimates the present value of the NO
X
emissions reduction to be $0.06 billion using a 7-percent discount rate, and $0.12 billion using a 3-percent discount rate.
9
DOE is still investigating appropriate valuation of the reduction in other emissions, and therefore did not include any such values in the analysis for this final rule.
8
United States Government—Interagency Working Group on Social Cost of Carbon.
Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866.
May 2013. Revised July 2015.
https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
9
DOE estimated the monetized value of NO
X
emissions reductions associated with electricity savings using benefit per ton estimates from the
Regulatory Impact Analysis for the Clean Power Plan Final Rule,
published in August 2015 by EPA's Office of Air Quality Planning and Standards. Available at
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.
See section IV.L.2 for further discussion. The U.S. Supreme Court has stayed the rule implementing the Clean Power Plan until the current litigation against it concludes.
Chamber of Commerce, et al.
v.
EPA, et al.,
Order in Pending Case, 577 U.S. __ (2016). However, the benefit-per-ton estimates established in the Regulatory Impact Analysis for the Clean Power Plan are based on scientific studies that remain valid irrespective of the legal status of the Clean Power Plan. To be conservative, DOE is primarily using a lower national benefit-per-ton estimate for NO
X
emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski
et al.
2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele
et al.
2011), the values would be nearly two-and-a-half times larger.
Table I-3 summarizes the economic benefits and costs expected to result from the adopted standards for UPSs.
Table I-3—Selected Categories of Economic Benefits and Costs of Adopted Energy Conservation Standards for UPSs *
Category
Present
value
(billion 2015$)
Discount
rate
(percent)
Benefits
Consumer Operating Cost Savings
2.8
7
5.6
3
CO
2
Reduction (using avg. SC-CO
2
at 5% discount rate) **
0.37
5
CO
2
Reduction (using avg. SC-CO
2
at 3% discount rate) **
1.7
3
CO
2
Reduction (using avg. SC-CO
2
at 2.5% discount rate) **
2.6
2.5
CO
2
Reduction (using 95th percentile SC-CO
2
at 3% discount rate) **
5.0
3
NO
X
Reduction †
0.06
7
0.12
3
Total Benefits ‡
4.5
7
7.3
3
Costs
Consumer Incremental Installed Costs
1.4
7
2.6
3
Total Net Benefits
Including CO
2
and NO
X
Reduction Monetized Value ‡
3.1
7
4.8
3
* This table presents the costs and benefits associated with UPSs shipped in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019-2048. The incremental installed costs include incremental equipment cost as well as installation costs. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the proposed standards, some of which may be incurred in preparation for the rule. The CO
2
reduction benefits are global benefits due to actions that occur domestically.
** The interagency group selected four sets of SC-CO
2
values for use in regulatory analyses. Three sets of values are based on the average SC-CO
2
from the integrated assessment models, at discount rates of 5 percent, 3 percent, and 2.5 percent. For example, for 2020 emissions, these values are $13.5/t, $47.4/t, and $69.9/t, in 2015$, respectively. The fourth set ($139/t in 2015$ for 2015 emissions), which represents the 95th percentile of the SC-CO
2
distribution calculated using a 3-percent discount rate, is included to represent higher-than-expected impacts from climate change further out in the tails of the SC-CO
2
distribution. The SC-CO
2
values are emission year specific. See section IV.L.1 for more details.
† DOE estimated the monetized value of NO
X
emissions reductions associated with electricity savings using benefit per ton estimates from the
Regulatory Impact Analysis for the Clean Power Plan Final Rule,
published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.
) See section IV.L.2 for further discussion.
To be conservative,
DOE is primarily using a national benefit-per-ton estimate for NO
X
emitted from the electricity generating sector based on an estimate of premature mortality derived from the ACS study (Krewski
et al.
2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele
et al.
2011), the values would be nearly two-and-a-half times larger.
‡ Total Benefits for both the 3-percent and 7-percent cases are presented using the average SC-CO
2
with 3-percent discount rate.
The benefits and costs of the adopted standards, for UPSs sold in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO
2
and NO
X
emission reductions, all annualized.
10
10
To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2016, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (
e.g.,
2020 or 2030), and then discounted the present value from each year to 2016. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO
2
reductions, for which DOE used case-specific discount rates, as shown in Table I-3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.
The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of UPSs shipped in 2019-2048. The benefits associated with reduced CO
2
emissions achieved as a result of the adopted standards are also calculated based on the lifetime of UPSs shipped in 2019-2048. Because CO
2
emissions have a very long residence time in the atmosphere, the SC-CO
2
values for CO
2
emissions in future years reflect impacts that continue through 2300. The CO
2
reduction is a benefit that accrues globally. DOE maintains that consideration of global benefits is appropriate because of the global nature of the climate change problem.
Estimates of annualized benefits and costs of the adopted standards are shown in Table I-4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO
2
reduction, (for which DOE used a 3-percent discount rate along with the SC-CO
2
series that has a value of $47.4/t in 2020),
11
the estimated cost of the standards in this rule is $131 million per year in increased equipment costs, while the estimated annual benefits are $255 million in reduced equipment operating costs, $90 million in CO
2
reductions, and $5.1 million in reduced NO
X
emissions. In this case, the net benefit amounts to $219 million per year. Using a 3-percent discount rate for all benefits and costs and the SC-CO
2
series has a value of $47.4/t in 2020, the estimated cost of the standards is $140 million per year in increased equipment costs, while the estimated annual benefits are $301 million in reduced operating costs, $90 million in CO
2
reductions, and $6.6 million in reduced NO
X
emissions. In this case, the net benefit amounts to $257 million per year.
11
DOE used a 3-percent discount rate because the SC-CO
2
values for the series used in the calculation were derived using a 3-percent discount rate.
Table I-4—Selected Categories of Annualized Benefits and Costs of Adopted Standards for UPSs *
Discount rate
(percent)
Primary
estimate
Low-net-
benefits
estimate
High-net-
benefits
estimate
(million 2015$/year)
Benefits
Consumer Operating Cost Savings
7
255
231
284.
3
301
270
341.
CO
2
Reduction (using avg. SC-CO
2
at 5% discount rate) **
5
27
24
30.
CO
2
Reduction (using avg. SC-CO
2
at 3% discount rate) **
3
90
80
101.
CO
2
Reduction (using avg. SC-CO
2
at 2.5% discount rate) **
2.5
131
116
148.
CO
2
Reduction (using 95th percentile SC-CO
2
at 3% discount rate ) **
3
273
242
308.
NO
X
Reduction †
7
5.1
4.6
13.
3
6.6
5.9
17.
Total Benefits ‡
7 plus CO
2
range
287 to 533
260 to 478
327 to 606.
7
349
316
398.
3 plus CO
2
range
335 to 581
300 to 519
388 to 666.
3
397
356
459.
Costs
Consumer Incremental Product Costs
7
131
118
145.
3
140
124
157.
Net Benefits
Total ‡
7 plus CO
2
range
156 to 402
142 to 361
182 to 460.
7
219
198
253.
3 plus CO
2
range
195 to 441
176 to 394
231 to 509.
3
257
231
302.
* This table presents the annualized costs and benefits associated with UPSs shipped in 2019-2048. These results include benefits to consumers which accrue after 2048 from the UPSs purchased from 2019-2048. The incremental installed costs include incremental equipment cost as well as installation costs. The results account for the incremental variable and fixed costs incurred by manufacturers due to the proposed standards, some of which may be incurred in preparation for the rule. The CO
2
reduction benefits are global benefits due to actions that occur nationally. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO 2016
No-CPP case, Low Economic Growth case, and High Economic Growth case, respectively. Shipment projections are also scaled based on the GDP index in the Low and High Economic Growth cases. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
** The CO
2
reduction benefits are calculated using four different sets of SC-CO
2
values. The first three use the average SC-CO
2
calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The fourth represents the 95th percentile of the SC-CO
2
distribution calculated using a 3-percent discount rate. The SC-CO
2
values are emission year specific. See section IV.L.1 for more details.
† DOE estimated the monetized value of NO
X
emissions reductions associated with electricity savings using benefit per ton estimates from the
Regulatory Impact Analysis for the Clean Power Plan Final Rule,
published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.
) See section IV.L.2 for further discussion. For the Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates for NO
X
emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski
et al.
2009). For the High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele
et al.
2011); these are nearly two-and-a-half times larger than those from the ACS study.
‡ Total Benefits for both the 3-percent and 7-percent cases are presented using the average SC-CO
2
with 3-percent discount rate. In the rows labeled “7% plus CO
2
range” and “3% plus CO
2
range,” the operating cost and NO
X
benefits are calculated using the labeled discount rate, and those values are added to the full range of CO
2
values.
DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this final rule.
D. Conclusion
Based on the analyses culminating in this final rule, DOE found the benefits to the nation of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some users of these products). DOE has concluded that the standards in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy.
II. Introduction
The following section briefly discusses the statutory authority underlying this final rule, as well as some of the relevant historical background related to the establishment of standards for battery chargers. DOE's regulations define “battery charger” as a device that charges batteries for consumer products, including battery chargers embedded in other consumer products. 10 CFR 430.2.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (codified as 42 U.S.C. 6291-6309) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”), which includes battery chargers.
Section 309 of the Energy Independence and Security Act of 2007 (“EISA 2007”) amended EPCA by directing DOE to prescribe, by rule, definitions and test procedure for the power use of battery chargers (42 U.S.C. 6295(u)(1)), and to issue a final rule that prescribes energy conservation standards for battery chargers or classes of battery chargers or determine that no energy conservation standard is technologically feasible and economically justified. (42 U.S.C. 6295(u)(1)(E)). DOE finalized energy conservation standards for some classes of battery chargers on June 13, 2016 (81 FR 38266), and the standards prescribed in this final rule for other classes of battery chargers represent an extension of those requirements.
Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for battery chargers appears at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix Y.
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including battery chargers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including battery chargers, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not
technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)and (B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate.
Id.
Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))
Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).
Finally, pursuant to the amendments contained in EISA 2007), any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)).
B. Background
1. Current Standards
In a final rule published on June 13, 2016, DOE prescribed the current energy conservation standards for battery chargers manufactured on and after July 13, 2018. 81 FR 38266. These standards, which do not cover UPSs, are set forth in DOE's regulations at 10 CFR 430.32 and are repeated in Table II-1.
Table II-1—Federal Energy Efficiency Standards for Battery Chargers
Product class
Product class
description
Battery energy
watt-hours
(Wh)
Special
characteristic or
battery voltage
Adopted standard as a
function of battery energy
(kWh/yr)
1
Low-Energy
≤5 Wh
Inductive Connection in Wet Environments
3.04.
2
Low-Energy, Low-Voltage
<100 Wh
<4 V
0.1440 * E
batt
+ 2.95.
3
Low-Energy, Medium-Voltage
4-10 V
For E
batt
<10Wh, 1.42 kWh/y E
batt
≥10 Wh, 0.0255 * E
batt
+ 1.16.
4
Low-Energy, High-Voltage
>10 V
0.11 * E
batt
+ 3.18.
5
Medium-Energy, Low-Voltage
100-3000 Wh
<20 V
0.0257 * E
batt
+ .815.
6
Medium-Energy, High-Voltage
≥20 V
0.0778 * E
batt
+ 2.4.
7
High-Energy
>3000 Wh
0.0502 * E
batt
+ 4.53.
2. History of Standards Rulemaking for UPSs
DOE originally proposed energy conservation standards for battery chargers including UPSs in the battery charger energy conservation standards NOPR published on March 27, 2012 (March 2012 NOPR). In this NOPR, DOE proposed to test all covered battery chargers, including UPSs, using the battery charger test procedure finalized on June 1, 2011 and to regulate them
using a unit energy consumption (“UEC”) metric. See 77 FR 18478.
DOE issued a battery charger energy conservation standards supplemental notice of proposed rulemaking (“SNOPR”) to propose revised energy standards for battery chargers on September 1, 2015. See 80 FR 52850. This notice did not propose standards for UPSs because of DOE's intention to regulate UPS as part of the separate rulemaking for computer and battery backup systems. DOE also issued a battery charger test procedure NOPR on August 6, 2015, which proposed to exclude backup battery chargers, including UPSs, from the scope of the battery charger test procedure. See 80 FR 46855. DOE held a public meeting on September 15, 2015 to discuss both of these notices.
During 2014, DOE explored whether to regulate UPSs as “computer systems.” See,
e.g.,
79 FR 11345 (Feb. 28, 2014) (proposed coverage determination); 79 FR 41656 (July 17, 2014) (computer systems framework document). DOE received a number of comments in response to those documents (and the related public meetings) regarding testing of UPSs and the appropriate venue to address these devices.
Additionally, DOE received a number of stakeholder comments on the August 2015 battery charger test procedure NOPR and the September 2015 battery charger energy conservation standard SNOPR regarding regulation of UPSs. After considering these comments, DOE reconsidered its position and found that since a UPS meets the definition of a battery charger, it is more appropriate to regulate UPSs as part of the battery charger rulemaking, rather than the computers rulemaking. While the changes proposed in the August 2015 battery charger test procedure NOPR and the September 2015 energy conservation standard SNOPR were finalized on May 20, 2016 (81 FR 31827) and June 13, 2016 (81 FR 38266), respectively, DOE continues to conduct rulemaking activities to consider test procedures and energy conservations standards for UPSs as part of ongoing and future battery charger rulemaking proceedings.
DOE published a notice of proposed rulemaking on May 19, 2016 to amend the battery charger test procedure to include specific testing requirements for UPSs (“UPS test procedure NOPR”). See 81 FR 31542. Subsequently, DOE proposed energy conservation standards for UPSs as part of the battery charger regulations in the NOPR published on August 5, 2016 (August 2016 NOPR). See 81 FR 52196. On December 12, 2016, DOE finalized the addition of specific testing provisions for UPSs in the UPS test procedure final rulemaking. See 81 FR 89806. DOE is now finalizing energy conservation standards for UPSs as part of the battery charger regulation in this final rule.
III. General Discussion
In response to the August 2016 NOPR, DOE received written comments from 8 interested parties, including manufacturers, trade associations, standards development organizations and energy efficiency advocacy groups. Table III-1 lists the entities that commented on the August 2016 NOPR. These comments are discussed in further detail below. The full set of comments on the August 2016 NOPR can be found at:
https://www.regulations.gov/docket?D=EERE-2016-BT-STD-0022.
Table III-1—Interested Parties That Provided Written Comments on the August 2016 NOPR
Commenter
Acronym
Organization
type/affiliation
Comment No.
(docket
reference)
Appliance Standards Awareness Project, Alliance to Save Energy, Northwest Energy Efficiency Alliance, Natural Resources Defense Council, Northeast Energy Efficiency Partnerships, and Northwest Power and Conservation Council
ASAP et al
Efficiency Organizations
0020
California Investor Owned Utilities
CA IOUs
Utility Association
0016
Edison Electric Institute
EEI
Utility Association
0021
Industrial Energy Consumers of America
IECA
Manufacturer Association
0015
National Electrical Manufacturers Associations and Information Technology Industry Council
NEMA & ITI
Manufacturer Associations
0019
Philips Lighting
Philips Lighting
Manufacturer
0022
Schneider Electric
Schneider Electric
Manufacturer
0017
U.S. Chamber of Commerce, American Coke and Coal Chemicals Institute, American Forest & Paper Association, American Fuel & Petrochemical Manufacturers, American Petroleum Institute, Association of Home Appliance Manufacturers, Brick Industry Association, Council of Industrial Boiler Owners, National Association of Manufacturers, National Mining Association, National Oilseed Processors Association, and Portland Cement Association
Associations
Manufacturer Associations
0018
A number of interested parties also provided oral comments at the September 16, 2016, public meeting. These comments can be found in the public meeting transcript (Pub. Mtg. Tr., No. 0014) which is available on the docket.
A. Test Procedure
DOE published the UPS test procedure final rule on December 12, 2016. 81 FR 89806. DOE advises all stakeholders to review that final rule.
B. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i)
After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv) Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. Section IV.B of this final rule discusses the results of the screening analysis for UPSs, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule technical support document (TSD).
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for UPSs, using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.B of this final rule and in chapter 5 of the final rule TSD.
C. Energy Savings
1. Determination of Savings
For each trial standard level (TSL), DOE projected energy savings from application of the TSL to UPSs purchased in the 30-year period that begins in the year of compliance with the adopted standards (2019-2048).
12
The savings are measured over the entire lifetime of UPSs purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for a product would likely evolve in the absence of new energy conservation standards.
12
DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period.
DOE used its national impact analysis (NIA) spreadsheet models to estimate national energy savings (NES) from potential new standards for UPSs. The NIA spreadsheet model (described in section IV.H of this final rule) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. For natural gas, the primary energy savings are considered to be equal to the site energy savings. DOE also calculates NES in terms of full-fuel-cycle (FFC) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (
i.e.,
coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy conservation standards.
13
DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H.2 of this final rule.
13
The FFC metric is discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012).
2. Significance of Savings
To adopt any new standards for a covered product, DOE must determine that such action would result in significant energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, for the District of Columbia Circuit in
Natural Resources Defense Council
v.
Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that are not “genuinely trivial.” The energy savings for all the TSLs considered in this rulemaking, including the adopted standards, are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.
D. Economic Justification
1. Specific Criteria
As noted in this preamble, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential amended standards on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include (1) industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the changes in LCC and payback period (PBP) associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP)
EPCA requires DOE to consider the savings in operating costs throughout
the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.
c. Energy Savings
Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H, DOE uses the NIA spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this document would not reduce the utility or performance of the products under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (DOJ) in making such a determination, DOE transmitted copies of its proposed rule and the NOPR TSD to the Attorney General for review, with a request that the DOJ provide its determination on this issue. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for UPS are unlikely to have a significant adverse impact on competition. DOE is publishing the Attorney General's assessment at the end of this final rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards are likely to provide improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the Nation's needed power generation capacity, as discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The adopted standards are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases (GHGs) associated with energy production and use. DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document; the estimated emissions impacts are reported in section V.B.6 of this final rule. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this final rule.
E. Compliance Date
The compliance date is the date when a covered product is required to meet a new or amended standard. In the August 2016 NOPR, DOE proposed a compliance period of two year following the publication date of a final UPS
standard, which would result in a 2019 compliance date.
CA IOUs suggested that DOE align the compliance date for the UPS energy conservation standards with the June 2018 battery charger standards compliance date. (CA IOUs, No.0016 at p.1) After considering this recommendation, DOE believes that a two-year compliance interval is necessary to ensure that manufacturers have sufficient time to comply with the standards DOE is adopting for UPSs. UPSs were considered in the initial battery charger rulemaking efforts, which set a two year compliance period, and DOE feels that adopting an identical two year compliance period in this rulemaking is appropriate. 81 FR 38266.
CA IOUs additionally stated their understanding that the current California Title 20 UPS standards will remain in effect in California until the compliance date for the federal UPS standards in 2019. (CA IOUs, No.0016 at p.2) DOE clarifies that state energy conservation standards for UPSs prescribed or enacted before publication of this final rule, will not be preempted until the compliance date of the Federal energy conservation standards for UPSs. (42 U.S.C. 6295(ii)(1)) DOE further notes that the final DOE test procedure for UPSs preempts any state regulation regarding the testing of the energy efficiency of UPSs. See 42 U.S.C. 6297(a)(1).
F. General Comments
During the September 16, 2016 public meeting, and in subsequent written comments responding to the NOPR, stakeholders provided input regarding general issues pertinent to the rulemaking, such as issues regarding the proposed standard levels. These issues are discussed in this section.
1. Proposed Standard Levels
Schneider Electric disagreed with DOE's proposed standards, stating that the combination of broad scope and excessive minimum requirements, particularly for VI UPSs, will likely result in less consumer choice and a higher cost of compliance than estimated by DOE. (Schneider Electric, No. 0017 at p. 3) Schneider Electric also expressed concern that the proposed standard for VI UPSs is higher than that of VFD UPSs. (Schneider Electric, No. 0017 at p. 15) In contrast, ASAP et al. recommended that DOE adopt TSL 3 instead of TSL 2, in order to increase energy savings. They noted that TSL 3 would increase FFC energy savings by 6.8 percent and CO
2
savings by 6.4 percent. ASAP et al. believe that DOE's proposal of TSL 2 over TSL 3 is influenced by overly conservative assumptions in its analysis. (ASAP et al., No. 0020 at pp. 1-2)
The Department appreciates the stakeholder comments with regard to its proposed standards. In selecting a given standard, DOE must choose the level that achieves the maximum energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE must consider, to the extent practicable, the benefits and burdens based on the seven criteria described in EPCA (see 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)). DOE's weighing of the benefits and burdens based on the final rule analysis and rationale for the standard selection is discussed in section V of this document. With regard to TSL 3, DOE notes that the NOPR analysis showed a negative net present value using a 7 percent discount rate for VFD UPSs at TSL 3, and marginally negative average LCC savings for VFD UPSs at TSL 3.
14
For this reason, DOE determined in the NOPR that TSL 3 was not economically justified.
14
See chapters 8 and 10 of the NOPR technical support document, available at:
https://www.regulations.gov/document?D=EERE-2016-BT-STD-0022-0001
.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this rulemaking with regard to UPSs. Separate subsections address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the standards adopted in this document. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments projections and calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE website for this rulemaking:
http://www.regulations.gov/#!docketDetail;D=EERE-2016-BT-STD-0022.
Additionally, DOE used output from the latest version of the Energy Information Administration's (EIA's)
Annual Energy Outlook
(
AEO
) for the emissions and utility impact analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include (1) a determination of the scope of the rulemaking and product classes, (2) manufacturers and industry structure, (3) existing efficiency programs, (4) shipments information, (5) market and industry trends, and (6) technologies or design options that could improve the energy efficiency of UPSs. The key findings of DOE's market assessment are summarized in this section IV.A. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
In the August 2016 NOPR, DOE proposed to maintain the scope of coverage for UPS energy conservation standards as defined by its proposal for the UPS test procedure. 81 FR 52206.
NEMA and ITI contended that DOE has misclassified UPSs as battery chargers and that the primary function of UPSs is equipment protection rather than charging batteries. A majority of UPSs fall outside the scope of the standalone battery charging systems and therefore should not be defined as battery chargers. (NEMA and ITI, No. 0019 at p. 2) As explained in section III.A of the UPS test procedure NOPR published on May 19, 2016, DOE notes that UPSs meet the statutory definition of battery charger as stated in 10 CFR 430.2. UPSs may provide various types of power conditioning and monitoring functionality depending on their architecture and input dependency. They also maintain the fully-charged state of lead acid batteries with high self-discharge rates so that in the event of a power outage, they are able to provide backup power instantly to the connected load. Maintaining the lead acid battery therefore directly affects a UPS's overall energy efficiency. In 10 CFR 430.2, a battery charger is defined as a device that charges batteries for consumer products. The definition of battery charger does not state that the primary function of the device must be to charge batteries for consumer
products. Because UPSs that are in the scope of this rulemaking maintain lead acid batteries, DOE concludes that UPSs meet the definition of battery charger. 81 FR 31545.
During the public meeting held on September 16, 2016, Schneider Electric noted that households in the North America are generally wired for 12A at 120V, which gives them an approximate upper power limit of 1440W. Schneider Electric requested that DOE limit the scope of UPS rulemaking to a rounded up value of 1500W. (Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 12-13) DOE notes that the December 12, 2016 UPS test procedure final rulemaking revised the scope of the UPS test procedure based on stakeholder comments received on the UPS test procedure NOPR. The UPS test procedure only applies to UPSs that use battery(s) as their energy storage systems, use a standardized NEMA 1-15P or 5-15P input plug and have an AC output. 81 FR 89806. NEMA 1-15P or 5-15P input plugs are capable of handling up to 15A at 125V, which gives them an upper power limit of 1875 W. In subsequent written comments since the public meeting, both NEMA and ITI, and Schneider Electric have expressed implicit support in favor of DOE's adoption of NEMA 1-15P and 5-15P input plugs to limit the scope of UPS rulemaking, but have requested that this limitation be added to both the test procedure and energy conservation standards. (NEMA and ITI, No. 0019 at p. 4; Schneider Electric, No. 0017 at p. 1) DOE agrees with NEMA and ITI and Schneider Electric and is therefore updating the scope such that any product that meets the definition of a UPS, utilizes a NEMA 1-15P or 5-15P input plug and has an AC output is covered under the energy conservation standard being adopted in this final rule. DOE notes that this harmonizes with the scope of the recent UPS test procedure. 81 FR 89806.
Philips Lighting requested that DOE clarify whether the proposed energy conservation standards only apply to consumer UPSs. Further, Philips Lighting requested DOE to state that emergency UPS systems,
i.e.
those listed in UL 924
Standard for Emergency Lighting and Power Equipment,
are non-consumer products and are not subject to the proposed energy conservation standards. (Philips Lighting, No. 0022 at p. 1) Lastly, Philips Lighting inquired if certain lighting products such as lighting inverters and backup battery systems will be subject to the proposed energy conservation standards. (Philips Lighting, Pub. Mtg. Tr., No. 0014 at pp. 68-69)
DOE notes that its authority to implement energy conservation standards for battery chargers under EPCA extends only to consumer products. Thus, this rule applies to those UPSs that are of a type which, to any significant extent, are distributed into commerce for personal use or consumption. See 42 U.S.C. 6291(1). Additionally, the battery charger energy conservation standards, of which the UPS energy conservation standards are a subset, explicitly exclude from scope all back-up battery chargers except those that meet the definition of a UPS, utilize battery(s) as their energy storage system, use a standardized NEMA 1-15P or 5-15P input plug and have an AC output.
2. Technology Options
In the July 2014 computer and battery backup systems (computer systems) framework document, DOE identified three technology options for UPSs that would be expected to improve the efficiency of UPSs. The technologies options are: semiconductor improvements, digital signal processing and space vector modulation, and transformer-less UPS topologies.
15
Since the July 2014 framework document for computer systems, DOE has identified the following additional technology options from stakeholder comments and manufacturer interviews for UPSs: use of core materials with high magnetic permeability such as Sendust and Litz wiring in inductor design, wide band gap semiconductors such as silicon carbide and gallium arsenide, capacitors with low equivalent series resistance (ESR), printed circuit boards (PCBs) with higher copper content, and variable speed fan control.
15
See
July 2014 computer and battery backup systems framework document, pp. 48-49.
DOE's further research into space vector modulation technology for UPSs has shown that it may have limited advantage in the scope of this rule and is intended primarily for higher power applications. Therefore, DOE did not consider this technology.
After identifying all potential technology options for improving the efficiency of UPSs, DOE performed the screening analysis (See section IV.B of this document and chapter 4 of the Final Rule TSD) on these technologies to determine which to consider further in the analysis and which to eliminate.
B. Screening Analysis
DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:
(1)
Technological feasibility.
Technologies that are not incorporated in commercial products or in working prototypes will not be considered further.
(2)
Practicability to manufacture, install, and service.
If it is determined that mass production and reliable installation and servicing of a technology in commercial products could not be achieved on the scale necessary to serve the relevant market at the time of the projected compliance date of the standard, then that technology will not be considered further.
(3)
Impacts on product utility or product availability.
If it is determined that a technology would have significant adverse impact on the utility of the product to significant subgroups of consumers or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not be considered further.
(4)
Adverse impacts on health or safety.
If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further.
10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b)
In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the above four criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the subsequent sections of this preamble.
The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.
1. Screened-Out Technologies
Transformer-Less UPS designs
Transformer-less UPS designs offer some of the highest efficiencies in the industry with lowered weight, wider input voltage tolerances, near unity input power factor, reduced harmonic distortion and need for components that mitigate electromagnetic interference (EMI) generated by the device. However, interviews with manufacturers have shown this to be a limited access
technology with select manufacturers holding the intellectual property required for effective implementation. DOE therefore did not consider this technology for this rule.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concludes that all of the other identified technologies listed in section IV.A.2 of this document met all four screening criteria to be examined further as design options in DOE's final rule analysis. In summary, DOE did not screen out the following technology options: use of materials with high magnetic permeability such as Sendust for the inductor core and Litz wiring in indictor coils, silicon carbide, gallium arsenide and other wide band gap semiconductors, capacitors with low ESR, PCBs with higher copper content and variable speed fan control.
DOE determined that these technology options are technologically feasible because they are being used or have previously been in commercially-available products or working prototypes. DOE also finds that all of the remaining technology options meet the other screening criteria. For additional details, see chapter 4 of the Final Rule TSD.
NEMA and ITI contended that the remaining technology options combined will result in less than one percent increase in UPS efficiency at optimum performance and the burden of redesigning and testing for sub-percent improvement in UPS efficiency is not justified. (NEMA and ITI, No. 0019 at pp. 5-6) Schneider Electric argued that of all the remaining technologies, only higher copper content in PCBs and line cords has the potential of offering significant improvement in UPS efficiency only at the 100 percent loading point, which accounts for 30 percent of the average load adjusted efficiency. Further, Schneider Electric noted DOE is effectively limiting market participation to companies who own or have access to the fundamental intellectual property required to produce high efficiency UPSs by pushing UPS energy efficiency requirements well above the ENERGY STAR requirements. (Schneider Electric, No. 0017 at p. 3)
DOE notes that all remaining technology options were identified in consultation with manufacturers and other interested parties. These parties identified all remaining technology options as viable options for improving UPS efficiencies across all three product classes. Thus, while these remaining technologies may have varying effects on UPS efficiencies in each of the three product classes, DOE disagrees with Schneider Electric's written comment that only higher copper content in PCBs will likely create significant UPS efficiency gains and that all remaining technology options combined will improve UPS efficiency by less than one percent. Further, DOE notes that all remaining technology options satisfied the screening criteria, which ensures that the technology options are not protected by intellectual property laws and are readily available to all UPS manufacturers. Manufacturers may use any of the remaining technology options or their combination to improve the average load adjusted efficiencies of their UPS basic models. Lastly, DOE points out that per a stakeholder comment from ICF International at the September 16, 2016 public meeting, 78% of all UPS available in commerce are ENERGY STAR compliant, which demonstrates that technology options required to attain high levels of energy efficiency are readily available to multiple UPS manufacturers. (ICF, Pub. Mtg. Tr., No. 0014 at p. 24)
NEMA and ITI noted that VFD and VI UPSs typically do not have constantly rotating fans and argued that variable speed fan control technology will have limited effect on VFD and VI UPS efficiencies. Further, NEMA and ITI argued that wide band gap semiconductors are only useful in VFI UPS design with little usefulness in VI UPS designs and no usefulness in VFD UPS designs. NEMA and ITI contended that wide band gap semiconductors typically offer 0.25 percent improvement in UPS efficiency in applicable designs while costing up to three times more than traditional semiconductors. Lastly, NEMA and ITI argued that the use of Sendust and Litz wiring is limited to transformer-less UPS designs, which are not being pursued due to intellectual property limitations and requested that DOE consult with DOJ if the use of such designs is pursued. (NEMA and ITI, No. 0019 at p. 5)
DOE notes that of all the representative units across all three product classes, only the representative unit corresponding to EL 0 for VFI UPSs utilized variable speed fan control. None of the other representative units, including those used to generate EL 1 and EL 2 for VFI UPSs, utilized variable speed fan control or wide band gap semiconductors. While these two technology options were identified in consultation with manufacturers and other interested parties as viable options for improving UPS efficiencies across all three product classes, the efficiency levels being adopted in this final rule can be achieved without these two technology options as demonstrated by the representative units in VFD and VI UPS product classes. DOE disagrees with NEMA and ITI's claim that Sendust and Litz wiring technology options are limited to transformer-less UPS designs. UPSs across all three product classes incorporate a battery charger to keep their internal batteries fully charged. At the least, Sendust and Litz wiring may be used in the core and winding of transformers and inductors in these battery chargers to improve its efficiency which will improve the overall UPS efficiency.
Lastly, NEMA and ITI noted that some of the remaining technology options coupled with the high proposed energy conservation standards will tread into patent-protected areas, potentially lessening competition. NEMA and ITI noted that DOE is obliged to consult with DOJ regarding the potential competition effects and marketplace issues. (NEMA and ITI, No. 0019 at p. 16) As explained in section IV.B, DOE identified these technologies in consultation with manufacturers and other interested parties. These technology options have been screened for intellectual property protection and are readily available to all UPS manufacturers. Therefore, DOE disagrees with the stakeholder claim that these technology options will tread into patent-protected areas. Further, DOJ concluded that the proposed energy conservation standards for UPSs are unlikely to have a significant adverse impact on competition. DOJ's assessment letter is attached to the end of this rule.
C. Engineering Analysis
In the engineering analysis, DOE establishes the relationship between the manufacturer production cost (MPC) and improved UPS efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option, (2) efficiency level, or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiency-improving design changes to the baseline product to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency
and determining cost from a detailed bill of materials (BOM) derived from reverse engineering representative products. The efficiency ranges from that of the least-efficient UPS sold today (
i.e.,
the baseline) to the maximum technologically feasible efficiency level. At each efficiency level examined, DOE determines the MPC; this relationship is referred to as a cost-efficiency curve.
DOE used a combination of the design-option and efficiency-level approach when determining the efficiency curves for UPSs. UPSs are composed of a single highly integrated PCB consisting of control and power conversion circuitry without any interchangeable components. The efficiency-level approach therefore is more suited to creating the cost-efficiency relationship since components cannot be removed to understand their impact on overall power consumption. However, DOE did use the design-option approach to determine the maximum technologically feasible EL because these products are not available on the market currently.
DOE began its analysis by completing a comprehensive study of the market for units that are in scope. A review of retail sales data, the ENERGY STAR qualified product list of compliant devices and manufacturer interviews aided DOE in identifying the most prevalent units in the market as well as those that are the least and most expensive and efficient. DOE then used a combination of purchased units for in-house efficiency testing as well as efficiency data directly from the ENERGY STAR database of compliant devices. The data from testing and the ENERGY STAR database allowed DOE to choose representative units and create multiple ELs for each product class.
1. Testing
In taking the hybrid efficiency-level and design option approach, DOE chose multiple units of the same product class striving to ensure variations between successive units (
e.g.
LCDs, communication ports, etc.) were removed. The resultant efficiency values and data obtained from manufacturers were then curve-fitted and extrapolated to the entire power range (defined by the scope) to create multiple ELs. For example, DOE tested several VFD representative units and identified additional ones from the ENERY STAR data in the 300-500W range to create four ELs for VFD UPSs, which when compared against the device's MPC demonstrated a direct positive correlation.
NEMA and ITI and Schneider Electric noted that because of differences between DOE's proposed test procedure and ENERGY STAR's test procedure for UPSs, DOE must adjust the average load adjusted efficiency of representative units whose efficiency data were collected from ENERGY STAR data by 0.2 to 0.4 percent. (NEMA and ITI, No. 0019, pp. 9-10, Schneider Electric, No. 0017 at p. 15) Similarly, during the public meeting held on September 16, 2016, ICF International stated that the differences between the two test procedures would produce a variance between 0.1 to 0.3 percent in the average load adjusted efficiency of UPSs. (ICF International, Pub. Mtg. Tr., No. 0014 at pp. 93). NEMA and ITI requested in written comments that if the DOE persists on pursuing the strict ELs as proposed in the NOPR, DOE must either mathematically determine the impacts of the proposed new UPS test procedure and adjust the ENERGY STAR data accordingly or undertake an extensive amount of additional physical testing and base the standard on these new data. (Schneider Electric, No. 0019 at p. 2)
DOE identifies in Table IV-1 the representative units that were tested as well as those whose efficiency values were collected from the ENERGY STAR database. DOE has revised its analysis for all ELs identified in Table IV-1 for which the efficiency value of representative units were collected from the ENERGY STAR database to account for the differences between DOE's test procedure and the ENERGY STAR test procedure for UPSs. Further, Table IV-1 shows that among the ELs proposed as energy conservation standards during the NOPR and finalized in this rulemaking, EL 1 for VFD UPSs and EL 1 for VI UPSs use a representative unit where the efficiency value was collected from the ENERGY STAR database and therefore did not have a battery connected during test. DOE is adopting the EL 1 for VFD UPSs and EL 1 for VI UPSs but notes that because DOE has revised its analysis to account for the differences between DOE's test procedure and the ENERGY STAR test procedure for UPSs, the standard equations have been slightly altered. For VFI UPSs, DOE is finalizing the proposed standard equation at EL 1 because the representative units for this EL was tested using DOE's proposed test procedure which automatically captures the losses due to a connected battery, and thus, no adjustments are necessary. The test data and the corresponding analysis for this EL therefore does not require an update.
Table IV-1—Test Procedure Used For Each Representative Unit
Product class
EL 0
EL 1
EL 2
EL 3
VFD UPS
DOE
ENERGY STAR
DOE
Not Applicable.
VI UPS
DOE
ENERGY STAR
DOE
Not Applicable.
VFI UPS
DOE
DOE
ENERGY STAR
Not Applicable.
2. Representative Units and Efficiency Levels
Individual ELs for a UPS product class were created by curve-fitting and extrapolating the efficiency values of either a test unit or that of a unit identified from the ENERGY STAR database as explained in the previous section, IV.C. Each of the ELs are labeled EL 0 through EL 3 and reflect increasing efficiency due to technological advances. EL 0 represents baseline performance, EL 1 is described as the minimum required efficiency to be ENERGY STAR compliant, EL 2 is the best technology currently available in the market and EL 3 is the maximum efficiency theoretically achievable. As such, a representative unit for EL 0 was selected from the least efficient market segment of a particular product class. EL 1 and EL 2 were then represented by the least and most efficient ENERGY STAR unit respectively in the same power range. While DOE derived EL 0 through EL 2 via testing and using the online ENERGY STAR database, DOE created EL 3 from data obtained during manufacturer interviews.
Schneider Electric disagreed with DOE's approach of deriving an EL extending to the entire output power range of the scope based on the test result of a single representative unit. Schneider Electric further contended that DOE's selection of representative units appears arbitrary, that the corresponding ELs fail to account for fixed core losses that dominate at lower
output power ranges and the shape of the ELs in all three product classes does not align with either the data provided by DOE or the ENERGY STAR database. Similarly, NEMA and ITI argued that the DOE offers no proof of why a curve makes more sense, or why it offers sufficient improvement over the well-established flat-bar requirements of ENERGY STAR. NEMA and ITI also argued that a curve based approach unfairly prejudices products that have a slightly lower efficiency because they are satisfying consumer demanded secondary functions like USB charge ports, wireless connectivity etc. Schneider Electric also argued that DOE's data set appears statistically insignificant in terms of the number of units tested, feature sets and power levels when compared to the consumer UPS market and underrepresents UPSs with rated output powers less than 300W, which incur higher fixed losses. Specifically, Schneider Electric disagreed with DOE's methodology of determining ELs for VFD UPSs with rated output power greater than 700W, VI UPSs with rated output power less than 300W, and VFI UPSs with rated output power less than 700W without testing UPSs in these output power ranges. If DOE were to select and test representative units in these ranges, Schneider Electric asserted DOE would find that there are not enough models in the marketplace for all UPSs under 300W, VFD UPSs greater than 1000W and VFI units under 600W to establish statistically valid baselines from which to derive requirements. However, Schneider Electric did note other units with lower efficiencies among DOE's test data set that had a lower average weighted efficiency and these would have been more suited as the representative unit for baseline efficiency, EL 0. (NEMA and ITI, No. 0019 at pp. 6-7; Schneider Electric, No. 0017 at pp. 2, 4, 6-9; Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 50-51)
As explained earlier in this section, DOE did not select representative units nor establish ELs based on a statistical analysis of the efficiency distributions of the UPS market. DOE selected representative units on the basis of a unit's ability to achieve a certain average load adjusted efficiency at a particular cost while ensuring that the technology used to arrive at that efficiency passes DOE's screening analysis and is readily available to all manufacturers. In selecting representative units, DOE intentionally strived to minimize additional feature sets so that they would have minimal impact on the unit's efficiency measurement. Similarly, DOE attempted to keep the output power range constant between successive representative units of the same product class, ensuring that the resultant efficiency levels can be reasonably compared to one another without additional variables. Therefore, contrary to Schneider Electric's comment, DOE's selection of representative units were not arbitrary and were carefully selected.
Further, in measuring the input and output powers of a single representative unit at multiple loading points, DOE also effectively captured the energy performance of UPSs across the entire output power range. For example, measuring a 400W VFD UPS at 25% load successfully captures how fixed losses dominate at lower power levels. DOE's proposed ELs, each of which was derived using a single representative unit, is shown in Figure IV-1 through Figure IV-3. The shape of these ELs demonstrate less stringent efficiency requirements at lower output power levels since high efficiency values are harder to achieve where fixed losses dominate. DOE therefore believes that its use of a single representative unit to derive ELs for the entire output power range of the scope is accurate and reiterates that the ELs were not generated to conform to all the units tested by DOE for the NOPR analysis or to the publically available ENERGY STAR database. To expect the ELs to align with these data is to have misunderstood how DOE's engineering analysis and testing were performed. Finally in response to NEMA and ITI's comment regarding a preference for a flat line standard similar to that of ENERGY STAR, DOE believes that would be inaccurate in that it would treat UPSs of all power ranges equally, incentivizing secondary features across certain power ranges while excluding them from others.
While DOE did not derive ELs using statistical analysis of the efficiency distribution of the UPS market, DOE did use efficiency distribution data in its downstream analyses to evaluate what proportion of the UPS market would shift in response to a certain EL as well as each EL's cost and benefit to the individual consumer, the manufacturer and the Nation.
Lastly, in response to Schneider Electric's argument that there are units among DOE's dataset with a lower average load adjusted efficiency than the ones selected by DOE as representative units for establishing EL 0 for VFD and VI UPSs, DOE clarifies that while EL 0 establishes a baseline, its intention is not to represent the absolute least efficient units in the marketplace. Instead EL 0 simply represents a market segment that demonstrates a generally lower efficiency trend and the bulk of UPS shipments below EL 1. This is because, in the absence of preexisting Federal energy conservation standards, which is the case for UPSs, the absolute least efficient unit available in the market can be as inefficient as a certain UPS manufacturer desires, making it an outlier instead of a representation of the general least efficient market segment. Therefore, selecting the least efficient units found in commerce as EL 0 representative units is not an accurate representation of the general least efficient market segment.
Figure IV-1 through Figure IV-3 are graphical representations of the ELs for VFD UPS, VI UPS and VFI UPS types respectively.
16
Each EL is subdivided into power ranges for simplicity and is a piecewise approximation of the unit's overall efficiency across the entire power range as shown in the figures. Chapter 5 of the Final Rule TSD has additional detail on the curve-fit equations for each EL and UPS product class.
16
These figures are also available in Docket No. EERE-2016-BT-STD-0022
BILLING CODE 6450-01-P
ER10JA20.000
ER10JA20.001
BILLING CODE 6450-01-C
Schneider Electric noted that five VFD UPSs tested by DOE pass DOE's proposed energy conservation standard for the VFD UPS product class within the margin of gauge R&R variances for the test equipment at Schneider Electric, indicating a marginal failure. Further, Schneider Electric noted that none of the VI UPS units tested by DOE as part of the NOPR analysis or any of the compliant VI UPSs with rated output power less than 1000W listed in the ENERGY STAR database meet DOE's proposed EL 2 for the VI UPS product class. Schneider Electric argued that adoption of EL 2 for the VI UPS product class will eliminate VI UPSs with rated output powers less than 1000W, which
would be a violation of clause 325(o)(4) of EPCA. Lastly, Schneider Electric argued that there is no evidence in the NOPR TSD or the ENERGY STAR database to support that VFI UPSs with rated output powers less than 700W will pass DOE's proposed EL 1 for the VFI UPS product class. (Schneider Electric, No. 0017 at pp. 4, 9-10, 11-12)
DOE notes that that compliance certification sampling provisions outlined in 10 CFR part 429 provide the necessary allowance in certified rating to accommodate small part to part variations such as gauge R&R variances. In response to Schneider Electric's comment that none of the units tested by DOE passes the proposed standard, DOE clarifies that this is due to the best-fit curves overshooting at certain data points resulting in a set of equations that are marginally more stringent than intended by as much as one-tenth of a percent. Among the test data published in the August 2016 NOPR were the efficiency values for the VI UPS EL 2 representative unit. Because EL 2 for VI UPSs was created using this representative unit's efficiency values, the unit itself would only pass the standard if it remained exactly as derived. However, due to the over approximation by the best fit curves as explained above, the EL appeared more stringent at certain data points causing the representative unit to demonstrate a marginal fail. DOE has adjusted the standard equations to account for this over approximation in this final rule which will resolve the issue with the EL 2 representative unit not passing the very EL it helped create. Additionally, the lack of a VI UPS unit in the ENERGY STAR database does not necessarily mean products that can achieve the required efficiency does not exist in the marketplace. ENERGY STAR is a voluntary program with stringent testing and compliance requirements, which manufacturers may not choose to undergo. The EL 2 representative unit for VI UPSs is again such an example. Similarly, as of October 10, 2016, there are five compliant VFI UPSs in the ENERGY STAR database under 700W, of which three units pass the EL 1 standard for VFI UPSs with significant margin to account for differences between DOE's test procedure and ENERGY STAR's. This refutes Schneider Electric's argument that there are currently no VFI UPSs under 700W in the ENERGY STAR database and continues to demonstrate that technology options are readily available to UPS manufacturers to produce VFI UPSs that meet DOE's adopted energy conservation standard.
It is also important to note that, In addition to the changes made to the analysis discussed in the previous two sections, IV.C.1 and IV.C.2, DOE updated its analysis with AEO2016 data as explained in section IV.H.2. In selecting a given standard, DOE must choose the level that achieves the maximum energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE found that TSL 2 is no longer economically justified as a result of the above changes. Therefore, as described in section V.C, DOE is adopting TSL 1 in this final rule, which includes a less stringent standard for VI UPSs than initially proposed, and accordingly alleviates objections from Schneider Electric on the stringency of the proposed level for this product class.
Schneider Electric and NEMA and ITI also requested that DOE thoroughly examine the performance of secondary features that are unrelated to battery charging. All three stakeholders commented that these secondary features which include services such as USB charging ports, wired and wireless connectivity, displays, communications and other functions provide significant added utility to the consumer and DOE risks eliminating these consumer demanded utilities from UPS products by only considering cost versus electrical efficiency relationship. Further Schneider Electric provided a list of these consumer requested features along with what their corresponding allowance should be and proposed an alternate adjusted efficiency metric that accommodates the suggested allowances in place of the average load adjust efficiency metric proposed by DOE in the UPS test procedure. (NEMA and ITI, No. 0019 at pp. 3; Schneider Electric, No. 0017 at pp. 1-2, 13)
After careful review of the stakeholder comments summarized above, DOE is including provisions in the UPS test procedure to allow the limiting of secondary features that do not contribute to the maintenance of fully charged battery(s) or delivery of load power, similar to the provisions in place in the test procedure for all other battery chargers. See the December 12, 2016 UPS test procedure final rulemaking. 81 FR 89806. This will allow manufacturers to disable these secondary features in order to reduce or eliminate the impact that the energy consumption of these features has on the measured efficiency metric. However, DOE is not adopting the proposed alternative calculation that Schneider Electric proposed at this time. DOE does note that there are provisions in place, as outlined in 10 CFR 430.27, for an interested party to submit a petition for a test procedure waiver for a basic model of a covered product if the basic model's design prevents it from being tested according to the test procedure or if the results of the test procedure yield materially inaccurate or unrepresentative comparative data. When a waiver or interim waiver is granted, manufacturers are permitted to use an alternative test method to evaluate the performance of their product type in a manner representative of the energy consumption characteristics of the basic model. Accordingly, manufacturers may pursue this approach to petition DOE to allow the use of an alternative test method, which may include an alternative method for calculating the efficiency metric used to certify compliance with applicable energy conservation standards. More information on the waiver process is available on DOE's website:
http://energy.gov/eere/buildings/test-procedure-waivers.
3. Cost Analysis
For UPSs, DOE developed average manufacturer and distribution markups for ELs by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly-traded UPS manufacturers and distribution chains and further verified during stakeholder interviews. DOE used these validated markups to convert consumer prices into manufacturer selling prices (MSPs) and then into MPCs.
In general, DOE's cost analysis of representative units demonstrated a direct correlation between MPC and average load adjusted efficiency (see Figure 5.5.1 through 5.5.3 in chapter 5 of the Final Rule TSD). However, the one exception to this correlation was the EL 1 representative unit for VFD UPSs. This representative unit has a higher output power rating and average load adjusted efficiency, but a lower MPC compared to the EL 0 representative unit of the same product class.
In addition to the two representative units discussed here, DOE has found other VFD UPSs that demonstrate this negative correlation between MPC and average load adjusted efficiency between EL 0 and EL 1.
DOE believes that this exception to the otherwise direct correlation between MPC and average load adjusted efficiency of UPSs has several possible explanations. For the VFD UPSs in scope of this rulemaking, DOE believes consumers may typically be more concerned with the reliability of the
protection the product provides, than its energy efficiency. Despite the presence of less expensive and more efficient units, DOE believes less efficient legacy units continue to be sold in the marketplace because consumers are familiar with these models and trust the level of protection and safety they offer even if more energy efficient UPS models with similar functionality and dependability are available at lower prices. Additionally, an unproven model that is more efficient yet less expensive may be perceived by consumers as less reliable. This perceived negative correlation between reliability and price of UPSs may take away an incentive from UPS manufacturers to improve the design of these models that have established a reputation of being dependable. Further, DOE's own analysis and consultation with subject matter experts, and stakeholders comments have confirmed that increases in UPS efficiency using the technology options identified in section IV.B.2 will not negatively impact the reliability of the product.
It is also worth noting that the difference in MSP between the VFD UPS EL 0 and EL 1 representative units is $5.10 and while this can be significant on its own, it may only be a small fraction of the cost of the connected equipment that it is protecting or the potential loss in productivity if said connected equipment were to lose power. DOE believes this is one of the reasons why devices at EL 0 continue to exist in the market place at a price higher than more efficient EL 1 models.
However, negative costs are unexpected in an economic theory that assumes a perfect capital market with perfect rationality of agents having complete information. In such a market, because more efficient UPSs save consumers money on operating costs compared to the baseline product, consumers would have an incentive to purchase them even in the absence of standards. For these reasons, DOE discussed perceived lower reliability of less expensive models as a possible explanation for the exception to the otherwise direct correlation between MPC and average load adjusted efficiency of UPSs and requested comments on its understanding of why less efficient UPSs continue to exist in the market at a price higher than more efficient units. DOE also requested comments on the impact that energy conservation standards for UPSs will have on the costs and efficiencies of existing UPS models, including various aspects of the inputs to the installed cost analysis, such as assumptions about consumers' response to first cost versus long-term operating cost, assumptions for manufacturer capital and product conversion costs, and other factors.
NEMA and ITI responded to this request for comment by stating their agreement with DOE's analysis that less efficient VFD units continue to sell in the marketplace at a higher price due to perceived reliability. However, NEMA and ITI also stated that DOE did not analyze the high likelihood that these products include other features such as USB charging ports, wired and wireless connectivity, integrated on-board data displays, or other performance features in the NOPR TSD. Taken in this context, the DOE's statement can be followed to a logical conclusion that consumers will accept slightly lower efficiency and higher cost for greater functionality and utility. Similarly, Schneider Electric commented that less efficient UPSs continue to exist in the market at a higher price due to various factors such as but not limited to form factor, display functionality, legibility, outlet quantity, position, line cord length, battery runtime, surge protection rating, environmentally friendly materials and packaging, communication and software capability, brand reputation and reliability and product warranty. (NEMA and ITI, No. 0019 at p. 13; Schneider Electric, No. 0017 at p. 16)
DOE appreciates the feedback from NEMA and ITI and Schneider Electric and generally agrees with some of the features highlighted such as brand reputation, product warranty, form factor, materials and packaging as possible reasons for why less efficient units continue to exist in the market at a higher price. DOE has therefore kept the cost analysis intact from the NOPR.
D. Markups Analysis
The markups analysis develops appropriate markups (
e.g.,
retailer markups, distributor markups, contractor markups) in the distribution chain and sales taxes to convert the consumer prices, derived in the engineering analysis, into the MSPs for each product class and EL. The MSPs calculated in the markups analysis are then used as inputs to the MIA. The prices derived in the engineering analysis are marked up to reflect the distribution chain of UPSs. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin. For UPSs, the main parties in the distribution chain are retailers. The final prices, which also include sales taxes, are then used in the LCC and PBP analyses.
For retailers, DOE developed separate markups for baseline products (baseline markups) and for the incremental cost of more-efficient products (incremental markups). Incremental markups are coefficients that relate the change in the MSP of higher-efficiency models to the change in the retailer sales price. DOE relied on economic data from the U.S. Census Bureau
17
to estimate average baseline and incremental markups.
17
U.S. Census Bureau. Annual Retail Trade Survey, Electronics and Appliance Stores. 2012.
www.census.gov/retail/arts/historic_releases.html.
The manufacturer markups, which convert MSPs to MPCs are calculated as part of the MIA and are not presented in the markups analysis. DOE developed average manufacturer markups by examining the annual SEC 10-K reports filed by publicly traded UPS manufacturers then refining these estimates based on manufacturer feedback.
Chapter 6 of the final rule TSD provides details on DOE's development of markups for UPSs.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual energy consumption of UPSs at different efficiencies in representative U.S. single-family homes, multi-family residences, and commercial buildings, and to assess the energy savings potential of increased UPS efficiency. The energy use analysis estimates the range of energy use of UPSs in the field (
i.e.,
as they are actually used by consumers). The energy use analysis provides the basis for other analyses DOE performed, particularly assessments of the energy savings and the savings in consumer operating costs that could result from adoption of amended or new standards.
To develop energy use estimates, DOE multiplied UPS power loss as a function of rated output power, as derived in the engineering analysis, by annual operating hours. In the NOPR, DOE assumed that UPSs are operated for 24 hours per day, 365 days per year, at a typical load specific to each product class. DOE assumed average loading for VFD UPSs to be 25 percent, average loading for VI products to be 50 percent, and average loading for VFI products to be 75 percent.
CA IOUs agreed with DOE's loading assumption of 25% for VFD UPSs, but noted that existing computer usage data suggest this loading is likely to be low. Furthermore, CA IOUs disagreed with DOE's loading assumption of 50% for VI UPSs, arguing that these products are much more likely to be utilized with
servers instead of desktop computers, and that average loading is more likely to be similar to VFI UPS. CA IOUs requested DOE assume a similar loading assumption for VI UPSs as in the ENERGY STAR UPS specification. (CA IOUs, No. 0016 at pp. 2-3) In the absence of energy use field data for UPSs, Schneider supports the average loading conditions used in ENERGY STAR. (Schneider Electric, No. 0017 at p. 16)
In response to these comments, DOE has adjusted its loading assumptions for all product classes in the energy use analysis to match those in the ENERGY STAR UPS specification and in the DOE UPS test procedure. For VFD UPSs with rated output power of 1500 W or less, the weighted average loading assumption uses the following weights: 0.2 at 25 percent loading, 0.2 at 50 percent loading, 0.3 at 75 percent loading, and 0.3 at 100 percent loading. For all other UPSs, the weighted average loading assumption uses the following weights: 0.3 at 50 percent loading, 0.4 at 75 percent loading, and 0.3 at 100 percent loading. DOE agrees that little field data exist on the energy use of UPSs, and that in the absence of such data, it is preferable to rely upon the consensus loading assumptions agreed upon as part of the ENERGY STAR specification development.
CA IOUs additionally requested that DOE consider the efficiency degradation of UPSs which may occur over the lifetime of a product. Age-induced battery degradation and elevated self-discharge rates would lead to an increase in energy use with age. (CA IOUs, No. 0016 at p. 3) DOE notes that no data are available, nor were they submitted, on how the energy use of UPSs may change with age. Furthermore, it is possible to regularly replace UPS batteries over the lifetime of a UPS, eliminating the potential efficiency degradation due to an aging battery. The battery replacement cost is assumed to be the same across all efficiency levels in the analysis, and therefore was not included in the LCC analysis. For these reasons, DOE did not include efficiency degradation with age in its energy use analysis for the final rule.
CA IOUs further requested that DOE revise its energy use analysis to take into account the usage of UPSs that can act as mobile battery packs. CA IOUs contend that the energy usage of such devices is significantly different from other UPSs, since the device undergoes far more discharge cycles and is likely to operate more frequently with a partially discharged battery, increasing energy use. (CA IOUs, No. 0016 at pp. 4-5) DOE notes that devices that act only as a mobile battery pack, and are not designed to provide continuity of load in case of input power failure, do not meet the definition of a UPS. Additionally, any UPS that only has outputs providing direct current (
e.g.,
USB ports) is outside the scope of this rulemaking. Many products classified as mobile battery packs would therefore not be subject to energy conservation standards for UPSs. DOE's market analysis suggests that hybrid devices that meet the definition of a UPS, include AC outputs, and can additionally act as a mobile battery pack, constitute a very small minority of the total UPS market. There are a limited number of models meeting this description available on the market. Furthermore, these devices are far less likely to be regularly used as a mobile battery pack, given that removing the mobile battery pack (including the battery component) for remote device charging negates the UPS functionality of the device to provide continuity of load in case of input power failure. DOE assumes that consumers would only occasionally use the mobile battery pack with such devices. For these reasons, DOE believes that the energy usage of such devices is likely to be very similar to traditional UPSs, and has not adjusted its energy use analysis with respect to UPSs that can act as mobile battery packs.
EEI requested that the energy use analysis be revised to account for the energy consumption of the UPS components only, and not include the energy usage of connected loads. (EEI, No. 0021 at p. 4) DOE clarifies that its energy use analysis only considers the energy consumed by the UPS device itself, including energy conversion losses that occur while providing power to a connected load. The energy use analysis does not include energy that merely passes through the UPS. However, in order to calculate this energy consumption by the UPS, it is necessary to assume the energy going through the UPS to the connected end-use equipment. It is for this reason that DOE considers the type of connected equipment when determining the average loading condition assumptions. In the absence of any field data for UPSs, DOE is relying on the ENERGY STAR loading assumptions for the final rule.
To capture the diversity of products available to consumers, DOE collected data on the distribution of UPS output power rating from product specifications listed on online retail websites. DOE then developed product samples for each UPS product class based on a market-weighted distribution of product features found to impact efficiency as determined by the engineering analysis.
Chapter 7 of the final rule TSD provides details on DOE's energy use analysis for UPSs.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for UPSs. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost. DOE used the following two metrics to measure consumer impacts:
• The LCC (life-cycle cost) is the total consumer expense of an appliance or product over the life of that product, consisting of total installed cost (manufacturer selling price, distribution chain markups, sales tax, and installation costs) plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.
• The PBP (payback period) is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of UPSs in the absence of new or amended energy conservation standards. In contrast, the PBP for a given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of housing units, as well as one for commercial buildings. For each sample household and commercial building, DOE determined the energy consumption for the UPS and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of UPSs.
DOE was unable to locate a survey sample specific to UPS users for either the residential or commercial sector. However, as mentioned in the previous section, manufacturer interviews indicate that most VFD products are used with personal computers, around three quarters of low-end VI products are used with computers and workstations, and around three quarters of higher-end VI and VFI products are used with servers. DOE thus created residential and commercial samples for desktop computers as a proxy for the sample of VFD and VI UPS owners, and a sample for servers as a proxy for the sample of VFI UPS owners.
DOE developed its residential sample from the set of individual responses to the Consumer Electronics Association's (CEA's)
16th Annual CE Ownership and Market Potential Study.
18
CEA administered the survey to a random, nationally representative sample of more than 2,000 U.S. adults in January and February 2014. The individual-level survey data that CEA provided to DOE were weighted to reflect the known demographics of the sample population; weighting by geographic region, gender, age, and race were used to make the data generalizable to the entire U.S. adult population. From this dataset, DOE constructed its household sample for UPSs by considering the number of desktop computers per household in conjunction with 2013 household income and state of residence.
18
Available for purchase at
http://store.ce.org/Default.aspx?TabID=251&productId=782583.
To create a commercial building sample, DOE relied on EIA's Commercial Buildings Energy Consumption Survey (CBECS), a nationally representative survey with a rich dataset of energy-related characteristics of the nation's stock of commercial buildings.
19
Individual survey responses from the most recent survey in 2012 allowed DOE to consider how the commercial penetration of servers and desktop computers varies by principal building activity and by Census Division. DOE used these microdata to construct the commercial sample of UPSs, which are assumed to back up and condition power for servers and desktop computers.
19
U.S. Department of Energy—U.S. Energy Information Administration. Commercial Buildings Energy Consumption Survey (CBECS). 2012 Public Use Microdata File. 2015. Washington, DC.
http://www.eia.gov/consumption/commercial/data/2012/index.cfm?view=microdata.
Inputs to the calculation of total installed cost include the cost of the product—which includes MPCs, manufacturer markups, retailer and distributor markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, product lifetimes, and discount rates. DOE created distributions of values for product lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and UPS user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 housing units and 10,000 commercial buildings per simulation run.
DOE calculated the LCC and PBP for all consumers of UPSs as if each were to purchase a new product in the first year of required compliance with new standards. Any new standards would apply to UPSs manufactured two years after the date on which any new standard is published. Therefore, for purposes of its analysis, DOE used 2019 as the first year of compliance with any new standards for UPSs.
Table IV-2 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 of the final rule TSD and its appendices.
Table IV-2—Summary of Inputs and Methods for the LCC and PBP Analysis *
Inputs
Source/method
Product Cost
Derived by multiplying MPCs by manufacturer and retailer markups and sales tax, as appropriate. Used historical data to derive a price scaling index to project product costs.
Installation Costs
Assumed no change with efficiency level.
Annual Energy Use
Power loss (a function of rated output power) multiplied by annual operating hours. Average number of hours at a typical load based on ENERGY STAR load profile. Variability: Distribution of rated power from online retail websites.
Energy Prices
Electricity: Based on 2014 marginal electricity price data from the Edison Electric Institute. Variability: Electricity prices vary by season, U.S. region, and baseline electricity consumption level.
Energy Price Trends
Based on
AEO2016
price projections.
Repair and Maintenance Costs
Assumed no change with efficiency level.
Product Lifetime
Based on literature review and manufacturer interviews. Variability: Based on a Weibull distribution.
Discount Rates
Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board's Survey of Consumer Finances.
Compliance Date
2019.
* References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the final rule TSD.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs developed in the engineering analysis by the markups described above (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency product. The prices used in the LCC and PBP analysis are MPC in the compliance year, as described in chapter 5 of the TSD.
Examination of historical price trends for a number of appliances that have been subject to energy conservation standards indicates that an assumption of constant real prices and costs may overestimate long-term trends in appliance prices. Economic literature and historical data suggest that the real costs of these products may in fact trend downward over time according to
“learning” or “experience” curves. On February 22, 2011, DOE published a notice of data availability (NODA) stating that DOE may consider refining its analysis by addressing equipment price trends. 76 FR 9696. It also raised the possibility that once sufficient long-term data are available on the cost or price trends for a given product subject to energy conservation standards, DOE would consider these data to forecast future trends. However, DOE found no data or manufacturer input to suggest appreciable price trends for UPSs, and thus assumed no price trend for UPSs.
ASAP et al. noted that DOE has included price trends in its analyses for several other products, including mature products, and implied that DOE should incorporate a price trend for UPSs. (ASAP et al., No. 0020 at p. 3) DOE notes that its methodology for determining appropriate price trends for a given product relies on collecting sufficient historical data on shipments and prices to perform the necessary analysis. DOE reiterates that it was unable to find any such data for UPSs. In the absence of data, DOE assumed no price trend for UPSs in the final rule.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE found no evidence that installation costs would be impacted with increased efficiency levels for UPSs. DOE received no comments on installation costs for UPSs.
3. Annual Energy Consumption
For each sampled household and commercial building, DOE determined the energy consumption for a UPS at different efficiency levels using the approach described in section IV.E of this document.
4. Energy Prices
DOE used marginal electricity prices to characterize the incremental savings associated with ELs above the baseline. The marginal electricity prices vary by season, region, and baseline household electricity consumption level for the LCC. DOE estimated these prices using data published with the Edison Electric Institute (EEI) Typical Bills and Average Rates reports for summer and winter 2014.
20
DOE assigned seasonal marginal prices to each household or commercial building in the LCC sample based on its location and its baseline monthly electricity consumption for an average summer or winter month. For a detailed discussion of the development of electricity prices, see appendix 8D of the final rule TSD.
20
Edison Electric Institute.
Typical Bills and Average Rates Report.
Winter 2014 published April 2014, Summer 2014 published October 2014.
http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
To estimate electricity prices in future years, DOE multiplied the average regional prices by annual energy price factors derived from the forecasts of annual average residential and commercial electricity price changes by region that are consistent with cases described on p. E-8 in
AEO 2016.
21
AEO 2016
has an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2020 to 2040. DOE received no comments on its estimation of energy prices.
21
EIA.
Annual Energy Outlook 2016 with Projections to 2040.
Washington, DC. Available at
www.eia.gov/forecasts/aeo/.
The standards finalized in this rulemaking will take effect a few years prior to the 2022 commencement of the Clean Power Plan compliance requirements. As DOE has not modeled the effect of CPP during the 30 year analysis period of this rulemaking, there is some uncertainty as to the magnitude and overall effect of the energy efficiency standards. These energy efficiency standards are expected to put downward pressure on energy prices relative to the projections in the AEO 2016 case that incorporates the CPP. Consequently, DOE used the electricity price projections found in the AEO 2016 No-CPP case as these electricity price projections are expected to be lower, yielding more conservative estimates for consumer savings due to the energy efficiency standards.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. For UPSs, DOE assumed that small incremental increases in product efficiency produce no, or only minor, changes in repair and maintenance costs compared to baseline efficiency products. DOE received no comments on maintain or repair costs.
6. Product Lifetime
For UPSs, DOE performed a search of the published literature to identify minimum and maximum average lifetimes from a variety of sources. DOE also considered input from manufacturer interviews conducted in early 2015. Table IV-3 summarizes the UPS lifetimes that DOE compiled from the literature and manufacture interviews. Where a range for lifetime was given, DOE noted the minimum and maximum values; where there was only one figure, DOE recorded this figure as both the minimum and maximum value. DOE computed mean lifetime by averaging these values across the product class.
Table IV-3—UPS Product Lifetimes From Literature and Manufacturer Input
Product class
Description
Lifetimes (years)
Minimum
Mean
Median
Maximum
10a
VFD UPS
3
5
5
7
10b
VI UPS
5
6.3
6
8
10c
VFI UPS
8
10
10
12
Using these minimum, maximum, and mean lifetimes, DOE constructed survival functions for the various UPS product classes. No more than 10 percent of units were assumed to fail before the minimum lifetime, and no more than 90 percent of units were assumed to fail before the maximum lifetime. DOE assumed these survival functions have the form of a cumulative Weibull distribution, a probability distribution commonly used to model appliance lifetimes. Its form is similar to that of an exponential distribution, which models a fixed failure rate, except a Weibull distribution allows for a failure rate that can increase over time as appliances age. DOE received no comments on its estimate of UPS lifetimes. For additional discussion of UPS lifetimes, refer to chapter 8 of the final rule TSD.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for UPSs based on
consumer financing costs and the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.
22
DOE notes that the LCC does not analyze the appliance purchase decision, so the implicit discount rate is not relevant in this model. The LCC estimates net present value over the lifetime of the product, so the appropriate discount rate will reflect the general opportunity cost of household funds, taking this time scale into account. Given the long time horizon modeled in the LCC, the application of a marginal interest rate associated with an initial source of funds is inaccurate. Regardless of the method of purchase, consumers are expected to continue to rebalance their debt and asset holdings over the LCC analysis period, based on the restrictions consumers face in their debt payment requirements and the relative size of the interest rates available on debts and assets. DOE estimates the aggregate impact of this rebalancing using the historical distribution of debts and assets.
22
The implicit discount rate is inferred from a consumer purchase decision between two otherwise identical goods with different first cost and operating cost. It is the interest rate that equates the increment of first cost to the difference in net present value of lifetime operating cost, incorporating the influence of several factors: Transaction costs; risk premiums and response to uncertainty; time preferences; interest rates at which a consumer is able to borrow or lend.
To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings. It estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's Survey of Consumer Finances
23
(SCF) for 1995, 1998, 2001, 2004, 2007, 2010, and 2013. Using the SCF and other sources, DOE developed a distribution of rates for each type of debt and asset by income group to represent the rates that may apply in the year in which amended standards would take effect. DOE assigned each sample household a specific discount rate drawn from one of the distributions. The average rate across all types of household debt and equity and income groups, weighted by the shares of each type, is 4.3 percent. DOE received no comments on its estimate of residential discount rates. See chapter 8 of the final rule TSD for further details on the development of consumer discount rates.
23
Board of Governors of the Federal Reserve System.
Survey of Consumer Finances.
Various dates. Washington, DC.
http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html.
To establish commercial discount rates for the LCC analysis, DOE estimated the cost of capital for companies that purchase a UPS. The weighted average cost of capital is commonly used to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so their cost of capital is the weighted average of the cost to the firm of equity and debt financing, as estimated from financial data for publicly traded firms in the sectors that purchase UPSs. For this analysis, DOE used Damodaran online
24
as the source of information about company debt and equity financing. The average rate across all types of companies, weighted by the shares of each type, is 5.2 percent. DOE received no comments on its estimate of commercial discount rates. See chapter 8 of the final rule TSD for further details on the development of commercial discount rates.
24
Damodaran, A.
Cost of Capital by Sector.
January 2014. (Last accessed September 25, 2014.) New York, NY.
http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-standards case (
i.e.,
the case without amended or new energy conservation standards). To estimate the efficiency distribution of UPSs for 2019, DOE examined a recent ENERGY STAR qualified product list. Although these model lists are not sales-weighted, DOE assumed they were a reasonable representation of the market.
The estimated market penetration of ENERGY STAR-qualified UPSs was 78 percent in 2013, the most recent year for which data were available.
25
During the public meeting held on September 16, 2016, ICF International confirmed that ENERGY STAR compliant UPSs have an estimated 78 percent market penetration. (ICF International, Pub. Mtg. Tr., No. 0014 at p. 24) DOE assumed market penetration to be 78 percent for all three UPS product classes, as the 2013 Unit Shipment Data report does not distinguish between UPS architectures. In order to assess how qualified products fit into proposed efficiency levels, DOE analyzed a qualified product list downloaded on February 16, 2016, after cross-checking inconsistencies in reported UPS product type with product specifications on retail websites. For the 266 qualified in-scope models, DOE compared average efficiency to the efficiency required for each EL, as determined in the engineering analysis. Finally, DOE assumed that the market share represented by non-ENERGY-STAR-qualified products would belong to the least-efficient efficiency level analyzed. The estimated market shares for the no-new-standards case for UPSs are shown in Table IV-4. DOE received no other comments on the estimated market shares for the no-new-standards case. See chapter 8 of the final rule TSD for further information on the derivation of the efficiency distributions.
25
Environmental Protection Agency—ENERGY STAR Program.
Certification Year 2013 Unit Shipment Data.
2014. Washington, DC.
https://www.energystar.gov/index.cfm?c=partners.unit_shipment_data.
Table IV-4—Estimated Market Shares (%) in Each Efficiency Level for No-New-Standards Case
Product class
Description
Efficiency level
EL 0
(baseline)
EL 1
EL 2
EL 3
10a
VFD UPS
31
47
21
1.5
10b
VI UPS
65
29
6.4
0.0
10c
VFI UPS
71
23
5.8
0.0
These market shares in each efficiency level were estimated based on national data. Regional data are not available. All other factors being the same, it would be anticipated that higher efficiency purchases in certain regions in the no-standards case would correlate positively with higher energy prices. To the extent that this occurs, it would be expected to result in some lowering of the consumer operating cost savings from those calculated in this final rule.
9. Payback Period Analysis
The payback period is the amount of time it takes the consumer to recover the additional installed cost of more-efficient products, compared to baseline products, through energy cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the product mean that the increased total installed cost is not recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed.
As noted above, EPCA, as amended, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the first year's energy savings by calculating the energy savings in accordance with the applicable DOE test procedure, and multiplying those savings by the average energy price projection for the year in which compliance with the new standards would be required.
G. Shipments Analysis
DOE uses projections of annual product shipments to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows.
26
Because UPSs back up and condition power for electronics, whose technology evolves more rapidly than many other appliances, DOE did not rely on a stock accounting approach common to other appliances. Instead, DOE largely elected to extrapolate forecasted trends from market research data. Data from Frost & Sullivan
27
and ENERGY STAR unit shipments
28
provided the foundation for DOE's shipments analysis for UPSs. DOE calculated shipment values for 30 years, from 2019, the first year of compliance, through 2048, the last year of the analysis period.
26
DOE uses data on manufacturer shipments as a proxy for national sales, as aggregate data on sales are lacking. In general one would expect a close correspondence between shipments and sales.
27
Cherian, A.
Analysis of the Global Uninterruptible Power Supplies Market: Need for Greater Power Reliability Driving Growth.
Frost & Sullivan. 2013. San Antonio, TX.
http://www.frost.com/c/10077/sublib/display-report.do?id=NC62-01-00-00-00.
28
Environmental Protection Agency—ENERGY STAR Program.
Certification Year 2013 UPS Unit Shipment Data.
2013. Washington, DC.
https://www.energystar.gov/index.cfm?c=partners.unit_shipment_data.
1. Shipment Projections in the No-New-Standards Case
DOE relied on data from Frost & Sullivan and ENERGY STAR to develop the shipments in the no-standards case for UPSs.
29
Frost & Sullivan provide global UPS unit shipments from 2009 to 2019 for the relevant output range <1000 W. Because the next output power range for which shipments are provided is 1-5 kilo-watts (kW), and only UPSs with a NEMA 1-15P or 5-15P plug (approximately corresponding to a rated output power <1800 W) are in scope, DOE excluded this power range from the shipments analysis. Doing so results in a more conservative shipment projection. For <1000 W, Frost & Sullivan supply North American revenue as a percent of global revenue for 2009 to 2019, so DOE assumed that the percent of revenue is a reasonable proxy for percent of shipments. Multiplying global shipments by the North American percentage of revenue, and then by 0.9 under the assumption that the United States makes up 90 percent of the North American market, yielded U.S. UPS shipments.
29
Cherian, A.
Analysis of the Global Uninterruptible Power Supplies Market: Need for Greater Power Reliability Driving Growth.
Frost & Sullivan. 2013. San Antonio, TX.
http://www.frost.com/c/10077/sublib/display-report.do?id=NC62-01-00-00-00.
Frost & Sullivan provide no classification by type of UPS within the relevant power range. However, the 2013 ENERGY STAR unit shipment data collection process
30
provides such a breakdown; in that year, market penetration of UPSs was 78 percent,
31
so DOE assumed these data are representative of the market. DOE used these data to determine how <1000 W UPSs are apportioned among different topologies for 2013 to 2019, assuming this allocation stays constant: 50 percent VFD, 39 percent VI, and 12 percent VFI. The Frost & Sullivan data indicate that the commercial sector dominates UPS revenue in the <1000 W market segment; therefore, DOE assumed a split of 90 percent commercial and 10 percent residential shipments.
30
Environmental Protection Agency—ENERGY STAR Program.
Certification Year 2013 UPS Unit Shipment Data.
2013. Washington, DC.
https://www.energystar.gov/index.cfm?c=partners.unit_shipment_data.
31
Ibid.
To project UPS shipments from 2020-2048, DOE extrapolated the linear trends forecasted by Frost & Sullivan from 2014 to 2019. In conjunction with the 2013 fixed split between topologies and a fixed portion of 0.9 for the United States relative to North American shipments, DOE projected the increasing linear trend in global UPS shipments <1 kW and the decreasing linear share of North American revenue to forecast shipments from 2019 to 2048.
NEMA and ITI noted that ENERGY STAR shipment data for UPSs indicate an 18 percent decline in shipments from 2014 and 2015. They also note that shipment projections of desktop computers show a declining market. NEMA and ITI state that DOE's shipments analysis is in error, and relies on historical data which is no longer applicable. (NEMA and ITI, No. 0019 at p. 13) In response to DOE's request for shipment data in the NOPR, Schneider also noted that ENERGY STAR shipment volume estimates have been in decline, but did not provide any shipment data due to confidentiality restrictions. (Schneider Electric, No. 0017 at p. 16)
DOE clarifies that its shipment analysis does not depend on historical data gathered independently, but rather relies on the analysis provided by the market research firm Frost & Sullivan. Frost & Sullivan provide their own market projections out to 2019 (partially based on its own historical data), after which DOE linearly extrapolated the shipment trends. DOE has no reason to suspect the Frost & Sullivan analysis is flawed, and continues to rely on it for the final rule. DOE acknowledges that there may have been short-lived market impacts in the past year or two due to various economic factors, and that the ENERGY STAR shipment data may reflect this dynamic. However, DOE notes that the penetration of ENERGY STAR products in the market may fluctuate, and ENERGY STAR shipment estimates do not provide a complete picture of the market. DOE further emphasizes that its shipment analysis is a long term projection over 30 years starting in 2019.
DOE acknowledges that desktop computer shipments are in decline, but notes that server shipments are not. Furthermore, Schneider acknowledged during the public meeting held on September 16, 2016, that there are growing applications of UPSs other than desktop computers and servers (
e.g.,
voice over internet Protocol, modems, routers, other wired and wireless network devices). (Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 83-84; ASAP et al., No. 0020 at p. 2) DOE therefore believes it is reasonable to assume that the UPS market will grow during the time period of its analysis, as supported by Frost & Sullivan's analysis, even if the desktop computer market declines.
DOE acknowledges that there is some uncertainty regarding the future market growth of UPSs, and few analyses exist in the literature over the time period in DOE's analysis. As a result, DOE performed a sensitivity scenario of the national impact analysis assuming lower shipment growth over the 30-year analysis period. This sensitivity scenario is described in appendix 10B of the final rule TSD. While the absolute value of the energy savings estimates vary using this alternate shipments scenario, the relative comparison of the different trial standard levels analyzed does not.
2. Shipments in a Standards Case
Increases in product prices resulting from standards may affect shipment volumes. To DOE's knowledge, price elasticity estimates are not readily available in existing literature for UPSs, and hence DOE assumed a price elasticity of demand of zero.
During the public meeting held on September 16, 2016, Schneider inquired if price elasticity was factored into the analysis. (Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 64-65) Schneider believes that DOE's analysis overestimates the market's willingness to absorb costs. (Schneider Electric, No. 0017 at p. 16) EEI similarly inquired as to how prices could increase without having a negative effect on shipments and manufacturer profits. (EEI, Pub. Mtg. Tr., No. 0014 at p. 66) NEMA and ITI disagreed with DOE's underlying assumption that consumers will continue to purchase UPSs of specific topologies regardless of price impacts. They stated that consumers of UPSs are very price-conscious. (NEMA and ITI, No. 0019 at p.6) NEMA and ITI also stated that as mobile computing and cloud computing services have grown relative to desktop computing, consumers can more easily opt to switch to these options instead of purchasing a more expensive UPS. Therefore, the price elasticity for UPSs is non-zero. (NEMA and ITI, No. 0019 at p. 14) No data were provided, however, to support the above statements.
DOE assumes that UPSs are not discretionary electronic devices, and consumers purchase UPSs for power continuity, power reliability, safety, and security needs which cannot be addressed by other products. Consumers with such critical needs are unlikely to forgo or delay the purchase of a UPS. DOE further assumes that in response to a modest price increase in UPSs, consumers are very unlikely to respond by switching from desktop computing to a much more expensive mobile computing platform with similar performance. DOE therefore believes that the UPS market is price inelastic, and continues to assume a price elasticity of demand of zero in its analysis in the absence of any data suggesting otherwise. Furthermore, there are many features available in specific UPS product classes (
e.g.,
power conditioning, precise voltage regulation) that provide important utility. DOE believes it is unlikely that a consumer would substitute or interchange different UPS topologies. Schneider confirmed DOE's understanding during the public meeting held on September 16, 2016, that the different product classes are not substitutes for one another and provide different utility. (Schneider Electric, Pub. Mtg. Tr., No. 0014 at p. 104) DOE therefore continues to assume in its analysis a cross-elasticity of demand of zero, and that there is no product class switching in response to energy conservation standards.
See chapter 9 of the final rule TSD for further details on the development of shipments projections. In response to the above comments regarding the price elasticity of demand, DOE acknowledges that no data exist to inform the analysis for UPSs. As a result, DOE performed a sensitivity scenario of the national impact analysis assuming a non-zero price elasticity of demand in the residential sector. DOE did not perform a sensitivity scenario using a non-zero price elasticity in the commercial sector, as DOE believes business requirements for safety and security result in an inelastic market. A price elasticity developed for household appliances was used in the absence of any literature estimates specific to UPSs. This sensitivity scenario is described in appendix 10B of the final rule TSD. While the absolute value of the energy and operating cost savings estimates vary using this alternate price elasticity scenario, the relative comparison of the different trial standard levels analyzed does not.
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the national net present value (NPV) from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.
32
(“Consumer” in this context refers to consumers of the product being regulated.) DOE calculates the NES and NPV for the potential standard levels considered based on projections of annual product shipments, along with the annual energy consumption and total installed cost data from the energy use and LCC analyses. For the present analysis, DOE projected the energy savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of UPSs sold from 2019 through 2048.
32
The NIA accounts for impacts in the 50 states and U.S. territories.
DOE evaluates the impacts of new or amended standards by comparing a case without such standards with standards-case projections. The no-new-standards case characterizes energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (
i.e.,
the TSLs or standards cases) for that class. For the standards cases, DOE considers how a given standard would likely affect the market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. Interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs.
Table IV-5 summarizes the inputs and methods DOE used for the NIA analysis for the final rule. Discussion of these inputs and methods follows the
table. See chapter 10 of the final rule TSD for further details.
Table IV-5—Summary of Inputs and Methods for the National Impact Analysis
Inputs
Method
Shipments
Annual shipments from shipments model.
Compliance Date of Standard
2019.
Efficiency Trends
No-New-Standards case: no efficiency trend Standard cases: “roll-up” scenario.
Annual Energy Consumption per Unit
Annual weighted-average values are a function of energy use at each TSL.
Total Installed Cost per Unit
Annual weighted-average values are a function of cost at each TSL. Incorporates projection of future product prices based on historical data.
Annual Energy Cost per Unit
Annual weighted-average values as a function of the annual energy consumption per unit and energy prices.
Repair and Maintenance Cost per Unit
Annual values do not change with efficiency level.
Energy Prices
AEO2016
projections (to 2040) and extrapolation through 2048.
Energy Site-to-Primary and FFC Conversion
A time-series conversion factor based on
AEO2016.
Discount Rate
Three and seven percent.
Present Year
2016.
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency projected for the no-new-standards case and each of the standards cases. Section IV.F.8 of this rule describes how DOE developed an energy efficiency distribution for the no-new-standards case (which yields a shipment-weighted average efficiency) for each of the considered product classes for the year of anticipated compliance with an amended or new standard. To project the trend in efficiency for UPSs over the entire shipments projection period, DOE examined past improvements in efficiency over time. Little data exist to suggest that UPS efficiencies would improve in the 30 years following 2019 in the no-standards case. The approach is further described in chapter 10 of the final rule TSD.
Schneider submitted a figure showing that UPS efficiency has improved from 1995 to 2016 in the absence of a mandatory energy conservation standard, due to consumer demand and the impact of voluntary programs such as ENERGY STAR. (Schneider Electric, No. 0017 at p. 17) Similarly, NEMA and ITI stated that there is little relevant historic efficiency trend information because the UPS market has already been transformed by the ENERGY STAR UPS program. (NEMA and ITI, No. 0019 at 14) In contrast, CA IOUs agreed with DOE's assessment that UPS efficiencies would not improve in the no-new-standards case, as evidenced by the reported average maintenance-mode power consumptions of UPSs in the California Energy Commission (CEC) appliance database from 2013-to-date. (CA IOUs, No. 0016 at pp. 3-4) DOE notes that the figure submitted by Schneider was for a 1500 VA VFI UPS only, and was not accompanied by the underlying data, nor were any details provided regarding how the data were assembled. It is unclear whether the figure is representative of all UPSs, of all VFI UPSs, of only a subset of VFI UPSs at this rated output power, or of only a single UPS with a specific set of unchanging features. Schneider did not provide data on the efficiency trend for all product classes of UPSs. Given these limitations with the figure submitted by Schneider, and the available data found in the CEC appliance database, there is not sufficient data to suggest UPS efficiency has improved in the absence of an energy conservation standard. DOE continues to assume no efficiency improvement in the no-new-standards case for the final rule.
For the standards cases, DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year that standards are assumed to become effective (2019). In this scenario, the market shares of products in the no-standards case that do not meet the standard under consideration would “roll up” to meet the new standard level, and the market share of products above the standard would remain unchanged. To develop standards case efficiency trends after 2019, DOE implemented the same trend as in the no-standards case: Zero percent for UPSs.
2. National Energy Savings
The national energy savings analysis involves a comparison of national energy consumption of the considered products between each potential standards case (TSL) and the case with no new or amended energy conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy consumption (also by vintage). DOE calculated annual NES based on the difference in national energy consumption for the no-new-standards case and for each higher efficiency standard case. DOE estimated energy consumption and savings based on site energy and converted the electricity consumption and savings to primary energy (
i.e.,
the energy consumed by power plants to generate site electricity) using annual conversion factors derived from
AEO2016.
Cumulative energy savings are the sum of the NES for each year over the timeframe of the analysis.
In 2011, in response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use full-fuel-cycle (FFC) measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in which DOE explained its determination that EIA's National Energy Modeling System (NEMS) is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector
33
that EIA uses to prepare its
Annual Energy Outlook.
The FFC factors incorporate losses in production and delivery in the case of natural gas (including fugitive
emissions) and additional energy used to produce and deliver the various fuels used by power plants. The approach used for deriving FFC measures of energy use and emissions is described in appendix 10A of the final rule TSD.
33
For more information on NEMS, refer to
The National Energy Modeling System: An Overview 2009,
DOE/EIA-0581(2009), October 2009. Available at
http://www.eia.gov/forecasts/aeo/index.cfm.
EEI disagreed with DOE's use of
AEO2015
in the analysis for the NOPR, stating that the site-to-primary and FFC conversion factors do not take into account the latest estimates available in
AEO2016.
(EEI, No. 0021 at pp. 5-6) DOE has updated its analysis with
AEO2016
for the final rule.
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits experienced by consumers are (1) total annual installed cost, (2) total annual operating costs (energy costs and repair and maintenance costs), and (3) a discount factor to calculate the present value of costs and savings. DOE calculates net savings each year as the difference between the no-new-standards case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculates operating cost savings over the lifetime of each product shipped during the projection period.
The operating cost savings are energy cost savings, which are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate electricity prices in future years, DOE multiplied the average regional prices by annual energy price factors derived from the forecasts of annual average residential and commercial electricity price changes by region that are consistent with cases described on p. E-8 in
AEO 2016.
34
AEO 2016
has an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2020 through 2040. As part of the NIA, DOE also analyzed scenarios that used inputs from variants of the
AEO2016
that have lower and higher economic growth and lower and higher energy price trends. NIA results based
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