Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines
Federal RegisterMay 25, 2023
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DEPARTMENT OF ENERGY
10 CFR Part 431
[EERE-2020-BT-STD-0014]
RIN 1904-AE68
Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines
AGENCY:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
ACTION:
Notice of proposed rulemaking and announcement of public meeting.
SUMMARY:
The Energy Policy and Conservation Act, as amended (EPCA), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including refrigerated bottled or canned beverage vending machines (BVMs). 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 result in significant energy savings. In this notice of proposed rulemaking (NOPR), DOE proposes amended energy conservation standards for BVMs, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results.
DATES:
Comments:
DOE will accept comments, data, and information regarding this NOPR no later than July 24, 2023.
Meeting:
DOE will hold a public meeting via webinar on Wednesday, June 7, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.
Comments regarding the likely competitive impact of the proposed standard should be sent to the U.S. Department of Justice (DOJ) contact listed in the
ADDRESSES
section on or before June 26, 2023.
ADDRESSES:
Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at
www.regulations.gov
under docket number EERE-2020-BT-STD-0014. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE-2020-BT-STD-0014, by any of the following methods:
Email: BVM2020STD0014@ee.doe.gov.
Include the docket number number EERE-2020-BT-STD-0014 in the subject line of the message.
Postal Mail:
Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 287-1445. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.
Hand Delivery/Courier:
Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.
No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section VII of this document.
Docket:
The docket for this activity, which includes
Federal Register
notices, 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
www.regulations.gov/docket/EERE-2020-BT-STD-0014.
The docket web page contains instructions on how to access all documents, including public comments, in the docket. See section VII of this document for information on how to submit comments through
www.regulations.gov.
EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The DOJ Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at
energy.standards@usdoj.gov
on or before the date specified in the
DATES
section. Please indicate in the “Subject” line of your email the title and docket number of this proposed rulemaking.
FOR FURTHER INFORMATION CONTACT:
Mr. Bryan Berringer, 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) 586-0371. Email:
ApplianceStandardsQuestions@ee.doe.gov.
Ms. Sarah Butler, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-1777. Email:
Sarah.Butler@hq.doe.gov.
For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
ApplianceStandardsQuestions@ee.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed 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 BVMs
C. Deviation From Process Rule
1. Framework Document
2. Public Comment Period
3. Amended Test Procedures
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. 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
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Equipment Classes
a. Combination A
2. Technology Options
a. Compressors
b. Alternative Refrigerants
c. Insulation
d. Fan Motors
e. Evaporators and Condensers
f. Glass Packs
g. Payment Mechanisms
h. Low Power Modes
i. Additional Concerns
B. Screening Analysis
1. Screened Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Energy Use
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Split Incentives
10. Payback Period Analysis
G. Shipments Analysis
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. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Manufacturer Markup Scenarios
3. Manufacturer Interviews
4. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
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. Direct 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 Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for BVM Standards
2. Annualized Benefits and Costs of the Proposed Standards
D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
1. Description of Reasons Why Action Is Being Considered
2. Objectives of, and Legal Basis for, Rule
3. Description on Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities
5. Duplication, Overlap, and Conflict with Other Rules and Regulations
6. Significant Alternatives to the Rule
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. Information Quality
VII. Public Participation
A. Participation in the Webinar
B. Procedure for Submitting Prepared General Statements for Distribution
C. Conduct of the Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Rule
The Energy Policy and Conservation Act, Public Law 94-163, as amended (EPCA),
1
authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part B
2
of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include BVMs, the subject of this proposed rulemaking. (42 U.S.C. 6295(v))
3
1
All references to EPCA in this document refer to the statute as amended through the Infrastructure Investment and Jobs Act, Public Law 117-58 (Nov. 15, 2021).
2
For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.
3
Because Congress included BVMs in Part A of Title III of EPCA, the consumer product provisions of Part A (rather than the industrial equipment provisions of Part A-1) apply to BVMs. DOE placed the regulatory requirements specific to BVMs in 10 CFR part 431, “Energy Efficiency Program for Certain Commercial and Industrial Equipment” as a matter of administrative convenience based on their type and will refer to BVMs as “equipment” throughout this document because of their placement in 10 CFR part 431. Despite the placement of BVMs in 10 CFR part 431, the relevant provisions of Title A of EPCA and 10 CFR part 430, which are applicable to all product types specified in Title A of EPCA, are applicable to BVMs.
See
74 FR 44914, 44917 (Aug. 31, 2009) and 80 FR 45758, 45759 (Jul. 31, 2015). The regulatory provisions of 10 CFR 430.33 and 430.34 and subparts D and E of 10 CFR part 430 are applicable to BVMs.
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 a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 3 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for BVMs. The proposed standards, which are expressed in maximum daily energy consumption as a function of refrigerated volume, if adopted, would apply to all BVMs listed in Table I.1 manufactured in, or imported into, the United States starting on the date 3 years after the publication of the final rule for this proposed rulemaking.
Table I.1—Proposed Energy Conservation Standards for BVMs
Equipment class
Maximum daily
energy consumption
(kilowatt hours per day)
Class A
0.029 × V * + 1.34.
Class B
0.029 × V * + 1.21.
Combination A
0.048 × V * + 1.50.
Combination B
0.052 × V * + 0.96.
* V is the representative value of refrigerated volume (ft
3
) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the proposed standards on consumers of BVMs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
4
The PBP is less than the average lifetime of BVMs, which is estimated to be 13.4 years (see section IV.F of this document).
4
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 or amended standards (see section IV.F.9 of this document). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline product (see section IV.C of this document).
Table I.2—Impacts of Proposed Energy Conservation Standards on Consumers of Refrigerated Bottled or Canned Beverage Vending Machines
Equipment class
Average LCC savings *
(2021$)
Simple
payback
period
(years)
Class A
(5.52)
5.7
Class B
206.01
1.2
Combination A
190.03
1.4
Combination B
287.16
2.2
* The savings represent the average LCC for affected consumers.
DOE's analysis of the impacts of the proposed 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 base year through the end of the analysis period (2028-2057). Using a real discount rate of 8.5 percent, DOE estimates that the INPV for manufacturers of BVMs in the case without amended standards is $85.5 million in 2021$. Under the proposed standards, the change in INPV is estimated to range from a loss of 2.2 percent to a gain 0.6 percent, which is approximately −$1.9 million to $0.5 million. In order to bring equipment into compliance with amended standards, it is estimated that the industry would incur total conversion costs of $1.5 million.
DOE's analysis of the impacts of the proposed standards on manufacturers is described in section IV.J of this document. The analytic results of the manufacturer impact analysis (MIA) are presented in section V.B.2 of this document.
C. National Benefits and Costs
5
5
All monetary values in this document are expressed in 2021 dollars.
DOE's analyses indicate that the proposed energy conservation standards for BVMs would save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for BVMs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2028-2057) amount to 0.09 quadrillion British thermal units (Btu or quads).
6
This represents a savings of 30 percent relative to the energy use of this equipment in the case without amended standards (referred to as the “no-new-standards case”).
6
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 of this document.
The cumulative net present value (NPV) of total consumer benefits of the proposed standards for BVMs ranges from $0.09 billion (at a 7-percent discount rate) to $0.25 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 BVMs purchased in 2028-2057.
In addition, the proposed standards for BVMs are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission reductions (over the same period as for energy savings) of 3.0 million metric tons (Mt)
7
of carbon dioxide (CO
2
), 1.4 thousand tons of sulfur dioxide (SO
2
), 4.7 thousand tons of nitrogen oxides (NO
X
), 21 thousand tons of methane (CH
4
), 0.03 thousand tons of nitrous oxide (N
2
O), and 0.009 tons of mercury (Hg).
8
7
A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO
2
are presented in short tons.
8
DOE calculated emissions reductions relative to the no-new-standards case, which reflects key assumptions in the
Annual Energy Outlook 2022
(
AEO2022
).
AEO2022
represents current federal and state legislation and final implementation of regulations as of the time of its preparation. See section IV.K of this document for further discussion of
AEO2022
assumptions that effect air pollutant emissions.
DOE estimates the value of climate benefits from a reduction in greenhouse gases (GHGs) using four different estimates of the social cost of CO
2
(SC-CO
2
), the social cost of methane (SC-CH
4
), and the social cost of nitrous oxide (SC-N
2
O). Together these represent the social cost of GHGs (“SC-GHGs”). DOE used interim SC-GHG values developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).
9
The derivation of these values is discussed in section IV.L of this document. For presentational purposes, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are estimated to be $0.14 billion. DOE does not have a single central SC-GHG point estimate and it emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.
9
To monetize the benefits of reducing GHG emissions this analysis uses the interim estimates presented in the
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG. (“February 2021 SC-GHG TSD”
). www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
DOE estimated the monetary health benefits of SO
2
and NO
X
emissions reductions using benefit per ton estimates from the scientific literature, as discussed in section IV.L of this document. DOE estimated the present value of the health benefits would be $0.10 billion using a 7-percent discount rate and $0.27 billion using a 3-percent discount rate.
10
DOE is currently only monetizing (for SO
2
and NO
X
) PM
2.5
precursor health benefits and (for NO
X
) ozone precursor health benefits, but will continue to assess the ability to monetize other effects, such as health benefits from reductions in direct PM
2.5
emissions.
10
DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of E.O. 12866.
Table I.3 summarizes the monetized benefits and costs expected to result from the proposed standards for BVMs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others. The monetization of climate and health benefits that have been quantified is explained in section IV.L of this document.
Table I.3—Summary of Monetized Benefits and Costs of Proposed Energy Conservation Standards for Refrigerated Bottled or Canned BVMs
[TSL 4]
Billion
($2021)
3% discount rate
Consumer Operating Cost Savings
0.33
Climate Benefits *
0.14
Health Benefits **
0.27
Total Benefits †
0.75
Consumer Incremental Product Costs ‡
0.08
Net Benefits
0.66
7% discount rate
Consumer Operating Cost Savings
0.14
Climate Benefits * (3% discount rate)
0.14
Health Benefits **
0.10
Total Benefits†
0.38
Consumer Incremental Product Costs‡
0.05
Net Benefits
0.33
Note:
This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO
2
), methane (SC-CH
4
), and nitrous oxide (SC-N
2
O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate) (see section IV.L of this document). Together these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** Health benefits are calculated using benefit per ton values for NO
X
and SO
2.
DOE is currently only monetizing (for SO
2
and NO
X
) PM
2.5
precursor health benefits and (for NO
X
) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM
2.5
emissions. See section IV.L of this document for more details.
† Total and net benefits include those consumer, climate, and health benefits that can be quantified and monetized. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but DOE does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.
‡ Costs include incremental equipment costs as well as installation costs.
The benefits and costs of the proposed standards 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 increase in product purchase prices and installation costs, plus (3) the value of climate and health benefits of emission reductions, all annualized.
11
11
To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2021, 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.,
2030), and then discounted the present value from each year to 2021. 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 equipment and are measured for the lifetime of BVMs shipped in 2028-2057. The benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of BVMs shipped in 2028-2057. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with a 3-percent discount rate. Estimates of SC-GHG values are presented for all four discount rates in section V.B.6 of this document.
Table I.4 presents the total estimated monetized benefits and costs associated with the proposed standard, expressed in terms of annualized values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced NO
X
and SO
2
emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the standards proposed in this rule is $5.8 million per year in increased equipment costs, while the estimated annual benefits are $16 million in reduced equipment operating costs, $8.5 million in climate benefits, and $12 million in health benefits. In this case. The net benefit would amount to $30 million per year.
Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards is $4.9 million per year in increased equipment costs, while the estimated annual benefits are $20 million in reduced operating costs, $8.5 million in climate benefits, and $16 million in health benefits. In this case, the net benefit would amount to $39 million per year.
Table I.4—Annualized Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines
[TSL 4]
Million 2021$/year
Primary
estimate
Low net benefits
estimate
High net benefits
estimate
3% discount rate
Consumer Operating Cost Savings
20
19
20
Climate Benefits *
8.5
8.5
8.5
Health Benefits **
16
16
17
Total Benefits †
44
44
45
Consumer Incremental Product Costs ‡
4.9
5.2
4.9
Net Benefits
39
38
40
7% discount rate
Consumer Operating Cost Savings
16
15
16
Climate Benefits * (3% discount rate)
8.5
8.5
8.5
Health Benefits **
12
12
12
Total Benefits †
36
35
36
Consumer Incremental Product Costs ‡
5.8
6.0
5.7
Net Benefits
30
29
31
Note: This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2022
Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to derive projected price trends are explained in sections IV.F.1 and IV.H.3 of this document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are shown; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** Health benefits are calculated using benefit per ton values for NO
X
and SO
2.
DOE is currently only monetizing (for SO
2
and NO
X
) PM
2.5
precursor health benefits and (for NO
X
) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM
2.5
emissions. See section IV.L of this document for more details.
† Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate.
‡ Costs include incremental equipment costs as well as installation costs.
DOE's analysis of the national impacts of the proposed standards is described in sections IV.H, IV.K, and IV.L of this document.
D. Conclusion
DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. Specifically, with regards to technological feasibility, equipment achieving these standard levels is already commercially available for all product classes covered by this proposal. As for economic justification, DOE's analysis shows that the benefits of the proposed standard exceed, to a great extent, the burdens of the proposed standards.
Using a 7-percent discount rate for consumer benefits and costs and NO
X
and SO
2
reduction benefits, and a 3-percent discount rate case for GHG social costs, the estimated cost of the proposed standards for BVMs is $5.8 million per year in increased equipment costs, while the estimated annual benefits are $16 million in reduced equipment operating costs, $8.5 million in climate benefits, and $12 million in health benefits. The net benefit amounts to $30 million per year.
The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.
12
For example, some covered products and equipment have substantial energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis.
12
The numeric threshold for determining the significance of energy savings established in a final rule published on February 14, 2020 (85 FR 8626, 8670) was subsequently eliminated in a final rule published on December 13, 2021 (86 FR 70892).
As previously mentioned, the standards are projected to result in estimated national energy savings of 0.09 quad full-fuel-cycle (FFC), the equivalent of the primary annual energy use of 2.4 million homes. In addition, they are projected to reduce CO
2
emissions by 3.0 Mt. Based on these findings, DOE has initially determined the energy savings from the proposed standard levels are “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the basis for these tentative conclusions is contained in the remainder of this document and the accompanying technical support document (TSD).
DOE also considered more stringent energy efficiency levels (ELs) as potential standards, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more stringent energy efficiency levels would outweigh the projected benefits.
Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.
II. Introduction
The following section briefly discusses the statutory authority underlying this proposed rule, as well as some of the relevant historical background related to the establishment of standards for BVMs.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number of
consumer products and certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include BVM equipment, the subject of this document. (42 U.S.C. 6295(v)) EPCA directed DOE to prescribe energy conservation standards for BVMs not later than 4 years after August 8, 2005. (42 U.S.C 6295(v)(1)) EPCA further provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))
The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and 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 EPCA. (
See
42 U.S.C. 6297(d))
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 42 U.S.C. 6295(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 procedures for BVMs appear at title 10 of the Code of Federal Regulations (CFR) part 431, subpart Q, appendix B.
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including BVMs. 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 (Secretary) determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(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 BVMs, 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)-(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 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 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 product 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 that 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 the 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))
Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140, 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)) DOE
reviewed the operating modes available for BVM equipment and determined that this equipment does not have operating modes that meet the definition of standby mode or off mode, as established at 42 U.S.C. 6295(gg)(3). Specifically, BVM equipment is typically always providing at least one main function—refrigeration. (42 U.S.C. 6295(gg)(1)(A)) DOE recognizes that in a unique equipment design, the low power mode includes disabling the refrigeration system, while for other equipment the low power mode controls only elevate the thermostat set point. Because low power modes still include some amount of refrigeration for most equipment, DOE believes that such a mode does not constitute a “standby mode,” as defined by EPCA, for BVM equipment. Therefore, DOE believes that BVM equipment does not operate under standby and off mode conditions as defined in EPCA, and that the energy use of BVM equipment would be captured in any standard established for active mode energy use. This NOPR does not specifically address standby and off mode energy consumption for this equipment.
B. Background
1. Current Standards
In the final rule published on January 8, 2016, DOE prescribed the current energy conservation standards for BVM equipment manufactured on and after January 8, 2019 (“January 2016 Final Rule”). 81 FR 1028. These standards are set forth in DOE's regulations at 10 CFR 431.296(b) and are repeated in Table II.1.
Table II.1—Federal Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines
Equipment class
Maximum daily
energy consumption
(kilowatt hours per day)
Class A
0.052 × V † + 2.43.
Class B
0.052 × V † + 2.20.
Combination A
0.086 × V † + 2.66.
Combination B
0.111 × V † + 2.04.
† “V” is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
2. History of Standards Rulemaking for BVMs
On June 10, 2020, DOE published a request for information (“June 2020 RFI”) that identified various issues on which DOE sought comment to inform its determination of whether the standards need to be amended. 85 FR 35394.
On April 26, 2022, DOE published a notice that announced the availability of the preliminary analysis (“April 2022 Preliminary Analysis”) it conducted for purposes of evaluating the need for amended energy conservation standards for BVM equipment. 87 FR 24469. In that notification, DOE sought comment on the analytical framework, models, and tools that DOE used to evaluate efficiency levels for BVM equipment, the results of preliminary analyses performed, and the potential energy conservation standard levels derived from these analyses, which DOE presented in the accompanying preliminary TSD (“April 2022 Preliminary TSD”).
On May 23, 2022, DOE held a public webinar in which it presented the methods and analysis in the April 2022 Preliminary Analysis and solicited public comment.
13
13
See
www.regulations.gov/document/EERE-2020-BT-STD-0014-0013
for a PDF version of the transcript.
DOE received comments in response to the April 2022 Preliminary Analysis from the interested parties listed in Table II.2.
Table II.2—April 2022 Preliminary Analysis Written Comments
Commenter(s)
Abbreviation
Comment No. in the docket
Commenter type
Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy
ASAP, ACEEE
15
Efficiency Organization.
National Automated Merchandising Association
NAMA
14
Trade Association.
A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.
14
To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the May 2022 public meeting, DOE cites the written comments throughout this document. Any oral comments provided during the webinar that are not substantively addressed by written comments are summarized and cited separately throughout this document.
14
The parenthetical reference provides a reference for information located in the docket of DOE's rulemaking to develop energy conservation standards for BVMs. (Docket No. EERE-2020-BT-STD-0014, which is maintained at
www.regulations.gov
). The references are arranged as follows: (commenter name, comment docket ID number, page of that document).
C. Deviation from Process Rule
In accordance with section 3(a) of 10 CFR part 430, subpart C, appendix A (“Process Rule”), DOE notes that it is deviating from the provision in the Process Rule regarding the pre-NOPR and NOPR stages for an energy conservation standards rulemaking.
1. Framework Document
Section 6(a)(2) of the Process Rule states that if DOE determines it is appropriate to proceed with a rulemaking, the preliminary stages of a rulemaking to issue or amend an energy conservation standard that DOE will undertake will be a framework document and preliminary analysis, or an advance notice of proposed rulemaking. While DOE published a preliminary analysis for this rulemaking (
see
87 FR 24469), DOE did not publish a framework document in conjunction with the preliminary analysis. DOE notes, however, that chapter 2 of the preliminary technical support document that accompanied the preliminary analysis—entitled
Analytical Framework, Comments from Interested Parties, and DOE Responses
—describes the general analytical framework that DOE uses in evaluating and developing potential amended energy conservation standards.
15
As such, publication of a separate Framework Document would be largely redundant of previously published documents.
15
The preliminary technical support document is available at
www.regulations.gov/document/EERE-2020-BT-STD-0014-0007.
2. Public Comment Period
Section 6(f)(2) of the Process Rule specifies that the length of the public
comment period for a NOPR will be not less than 75 calendar days. For this NOPR, DOE has opted instead to provide a 60-day comment period. DOE is opting to deviate from the 75-day comment period because stakeholders have already been afforded multiple opportunities to provide comments on this proposed rulemaking. As noted previously, DOE requested comment on various issues pertaining to this standards proposed rulemaking in the June 2020 RFI and provided stakeholders with a 60-day comment period. 85 FR 35394. Additionally, DOE initially provided a 60-day comment period for stakeholders to provide input on the analyses presented in the April 2022 Preliminary TSD. 87 FR 24469. The analytical assumptions and approaches used for the analyses conducted for this NOPR are similar to those used for the preliminary analysis. Therefore, DOE believes a 60-day comment period is appropriate and will provide interested parties with a meaningful opportunity to comment on the proposed rule.
3. Amended Test Procedures
NAMA requested that DOE finish the test procedure rulemaking before the standards rulemaking process begins. (NAMA, No. 14 at p. 16).
Section 8(d)(1) of the Process Rule specifies that test procedure rulemakings establishing methodologies used to evaluate proposed energy conservation standards will be finalized prior to publication of a NOPR proposing new or amended energy conservation standards. Additionally, new test procedures and amended test procedures that impact measured energy use or efficiency will be finalized at least 180 days prior to the close of the comment period for (1) a NOPR proposing new or amended energy conservation standards or (2) a notice of proposed determinaton that standards do not need to be amended. In the BVM test procedure final rule issued on April 25, 2023 (April 2023 Test Procedure Final Rule), DOE amended the test procedures for BVMs.
16
DOE determined that the amendments adopted will not alter (
i.e.,
will not impact) the measured efficiency of BVMs.
Id.
As such, the requirement that the amended test procedure be finalized at least 180 days prior to the close of the comment period for this NOPR do not apply.
16
See
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
III. General Discussion
DOE developed this proposal after considering oral and written comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters.
A. General Comments
This section summarizes general comments received from interested parties regarding rulemaking timing and process.
NAMA requested that DOE pay considerable attention to the economic impacts of new energy regulations on an industry under pressure due to factors such as the COVID-19 pandemic and the switch from hydrofluorocarbons (HFCs) to lower global warming potential (GWP) chemicals. (NAMA, No. 14 at p. 3)
NAMA commented to ask that DOE return to in-person meetings, stating that while electronic meetings provide value, they present challenges to full dialogue on these important subjects. (NAMA, No. 14 at p. 3)
NAMA commented that DOE should not discount the time and resources needed to evaluate and respond to all proposed test procedures and energy conservation standards for multiple products proposed over a short period, as is currently the case. (NAMA, No. 14 at p. 16) It noted that when these rulemakings occur simultaneously, as they are now and have in the past, the cumulative burden increases substantially.
Id.
NAMA commented that it requested an extension to the Cooperative Research and Development Agreement (CRADA) between the NAMA Foundation, DOE, and the Oak Ridge National Laboratory (ORNL) so that the remaining items revolving around energy efficiency gains can be studied, and asked that DOE wait until the CRADA is finished before pursuing a regulation. (NAMA, No. 14 at p. 9) NAMA also commented that in the preliminary analysis TSD, DOE recognizes the existence of the CRADA between NAMA, DOE, and ORNL; however, NAMA stated the status of this CRADA is not current or correct in the TSD.
Id.
NAMA stated that most of the activities of the 2019-2021 CRADA were directed toward reduction of the risk involved in a possible leak situation if it were ever to occur.
Id.
NAMA commented that ORNL did extensive testing on leak scenarios and proposed new methods to reduce the risk from such a leak in a public space.
Id.
NAMA stated that, in nearly all the scenarios tested by ORNL, this involved the use of additional fans to circulate air.
Id.
NAMA commented that the energy used by additional ventilation is not accounted for in the preliminary analysis TSD and that, according to the proposed DOE test procedure, BVM manufacturers would be penalized to use additional ventilation and thus to reduce the safety risk.
Id.
DOE has evaluated potential improvements to the energy efficiency of BVMs to support this NOPR through testing, teardowns, manufacturer interviews, market review, and comments submitted by stakeholders. DOE welcomes any additional comments and supporting data, including any additional results of the CRADA, in response to this NOPR.
In the April 2023 Test Procedure Final Rule, DOE determined to amend the test procedure to include additional instructions for refrigerant leak mitigation controls.
17
DOE specified that for refrigerant leak mitigation controls that are independent from the refrigeration or vending performance of the BVM, such controls must be disconnected, disabled, or otherwise de-energized for the duration of testing.
Id.
For refrigerant leak mitigation controls that are integrated into the BVM cabinet such that they cannot be de-energized without disabling the refrigeration or vending functions of the BVM or modifying the circuitry, such controls must be placed in an external accessory standby mode, if available, or their lowest energy-consuming state.
Id.
17
See
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
Section 2.5.1.1 of the preliminary analysis TSD states that DOE acknowledges the ongoing research at ORNL. DOE recognized that leak mitigation technologies are still under development and continues to request comment and data on the use of such technologies and how they may impact BVM energy use.
Id.
DOE acknowledged that ASHRAE 15-2019, ASHRAE 34-2019, and UL 541 specified limitations on placing beverage vending machines using propane refrigerant in hallways or corridors and that these industry standards are often adopted as part of local codes.
Id.
DOE noted that, since the initial publication of the standards, addenda
18
to ASHRAE 15 and 34 have been published to remove the limitations on placing beverage vending machines using propane in hallways or
corridors.
Id.
These addenda specify a maximum charge limit based on the lower flammability limit of a refrigerant.
Id.
For BVM equipment using propane, the maximum charge limit permitted under the addenda is 114 grams.
Id.
DOE determined in the preliminary analysis TSD that this charge limit would allow BVM units in all equipment classes and available sizes to transition to propane without restricting installation locations of BVM units for end users.
Id.
Similarly, DOE states that it has already observed in the market and tested BVM units utilizing flammable refrigerants, specifically R-290.
Id.
In this NOPR, DOE has tentatively determined, based on manufacturer interviews, test data, and teardown data, that BVM units in all equipment classes and available sizes can use a R-290 charge of 114 grams or less. DOE has not observed any refrigeration leak mitigation controls that consume additional energy on BVMs using flammable refrigerants and, based on interviews conducted in support of this NOPR, refrigeration leak mitigation controls on BVMs using R-290 are not required because all BVMs use less than 114 grams of R-290. See chapter 5 of the NOPR TSD for additional discussion.
18
ASHRAE 15-2019 Addendum C, published August 2020, and ASHRAE 34-2019 Addendum F, published December 2019, specifically address this issue and can be accessed at
www.techstreet.com/ashrae/standards/ashrae15-2019-packaged-w-34-2019?product_id=2046531.
B. Scope of Coverage
This NOPR covers equipment that meet the definition of a refrigerated bottled or canned beverage vending machine, as codified at 10 CFR 431.292.
A “refrigerated bottled or canned beverage vending machine” is defined as a commercial refrigerator (as defined in 10 CFR 431.62) that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment. 10 CFR 431.292.
See section IV.A.1 of this document for discussion of the equipment classes analyzed in this NOPR.
C. Test Procedure
EPCA sets forth generally applicable criteria and procedures for DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. DOE's current energy conservation standards for BVM equipment are expressed in terms of maximum daily energy consumption as a function of the refrigerated volume of the equipment; see 10 CFR 431.296(b).
D. 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. Sections 6(b)(3)(i) and 7(b)(1) of the Process Rule.
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; (3) adverse impacts on health or safety, and (4) unique-pathway proprietary technologies. Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section IV.B of this document discusses the results of the screening analysis for BVM equipment, 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 NOPR 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 BVM equipment 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.C.1.b of this document and in chapter 5 of the NOPR TSD.
E. Energy Savings
1. Determination of Savings
For each trial standard level (TSL), DOE projected energy savings from the application of the TSL to BVMs purchased in the 30-year period that begins in the year of compliance with the proposed standards (2028-2057).
19
The savings are measured over the entire lifetime of BVMs purchased in the previous 30-year 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 amended energy conservation standards.
19
Each TSL is composed of specific efficiency levels for each product class. The TSLs considered for this NOPR are described in section V.A of this document. DOE conducted a sensitivity analysis that considers impacts for products shipped in a 9-year period.
DOE used its national impact analysis (NIA) spreadsheet model to estimate national energy savings (NES) from potential amended or new standards for BVMs. The NIA spreadsheet model (described in section IV.H of this document) 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 NES in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. DOE also calculates NES in terms of 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.
20
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.1 of this document.
20
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).
NAMA commented that DOE overestimated energy savings over the 30 year analysis period. (NAMA, No. 14 at p. 14) DOE clarifies that the energy savings referenced are FFC energy savings, where the energy usage calculated by NAMA appears to be site energy usage. DOE also clarifies that energy savings are based on 30 years of shipments, but BVMs shipped in year
30 can continue to save energy until they are retired from service.
2. Significance of Savings
To adopt any new or amended 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))
The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.
21
For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis, taking into account the significance of cumulative FFC national energy savings, the cumulative FFC emissions reductions, and the need to confront the global climate crisis, among other factors. DOE has initially determined the energy savings from the proposed standard levels are “significant” within the meaning of 42 U.S.C. 6295(o)(3)(B).
21
The numeric threshold for determining the significance of energy savings established in a final rule published on February 14, 2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule published on 13 December 2021 (86 FR 70892).
F. Economic Justification
1. Specific Criteria
As noted previously, 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 proposed rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on manufacturers, DOE conducts an MIA, as discussed in section IV.J of this document. 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) 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 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 NPV of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a 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 analyses.
The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (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 analyses, 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 analyses 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 III.E of this document, DOE uses the NIA spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes and 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 proposed 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 proposed 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 proposed 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)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the DOJ provide its determination on this issue. DOE will publish and
respond to the Attorney General's determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the
ADDRESSES
section for information to send comments to DOJ.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water 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 proposed 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 proposed standards are likely to result in environmental benefits in the form of reduced emissions of air pollutants and 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 document. 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 previously, 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 effects that proposed energy conservation standards would have on the PBP for consumers. These analyses include, but are not limited to, the 3-year PBP 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 document.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this proposed rulemaking with regard to BVM equipment. Separate subsections address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the standards proposed 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 proposed rulemaking:
www.regulations.gov/docket/EERE-2020-BT-STD-0014.
For this NOPR analysis, the Energy Information Administration (EIA)
Annual Energy Outlook 2022
(
AEO2022
),
22
a widely known energy projection for the United States, was used for the life-cycle cost, emissions, and utility impact analyses, which was current for the analysis phase. However, near the time of publication of the NOPR, EIA released
AEO2023.
DOE plans to shift to
AEO2023
in the final rule analysis. A preliminary review of the electricity prices in
AEO2023
indicates lower electricity prices than
AEO2022
in the Reference case. Lower electricity prices could reduce the life-cycle savings and affect the related payback period calculations. DOE will update other variables and data sets in the final rule analysis in addition to use of
AEO2023,
as well as incorporate feedback from commenters.
22
U.S. Department of Energy-Energy Information Administration.
Annual Energy Outlook 2022.
Washington, DC. Available at
https://www.eia.gov/outlooks/archive/aeo22//.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. 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 equipment classes, and (2) technologies or design options that could improve the energy efficiency of BVM equipment. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the NOPR TSD for further discussion of the market and technology assessment.
1. Equipment Classes
When evaluating and establishing energy conservation standards, DOE may establish separate standards for a group of covered products (
i.e.,
establish a separate product class) if DOE determines that separate standards are justified based on the type of energy used, or if DOE determines that a product's capacity or other performance-related feature justifies a different standard. (42 U.S.C. 6295(q)) In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate.
Id.
DOE currently separates BVM equipment into four equipment classes categorized by physical characteristics
that affect equipment utility and equipment efficiency: (1) whether 25 percent or more of the surface area on the front side of the BVM is transparent and (2) whether two or more compartments of the BVM are separated by a solid partition that may or may not share a product delivery chute, in which at least one compartment is designed to be refrigerated—as demonstrated by the presence of temperature controls—and at least one compartment is not (
i.e.,
a combination vending machine). The equipment classes are defined as follows:
Class A
means a refrigerated bottled or canned beverage vending machine that is not a combination vending machine and in which 25 percent or more of the surface area on the front side of the beverage vending machine is transparent.
Class B
means a refrigerated bottled or canned beverage vending machine that is not considered to be Class A and is not a combination vending machine.
Combination A
means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine is transparent.
Combination B
means a combination vending machine that is not considered to be Combination A.
DOE currently sets forth energy conservation standards and relevant definitions for BVM equipment at 10 CFR 431.296 and 10 CFR 431.292, respectively, and the energy conservation standards are repeated in Table II.1.
a. Combination A
In the January 2016 Final Rule, DOE noted that the optional test protocol to determine the transparency of materials and the relative surface areas of transparent and non-transparent surfaces would be applicable to combination vending machines except that, the external surface areas surrounding the non-refrigerated compartment(s) would not be considered. 81 FR 1027, 1048. That is, all the surfaces that surround and enclose the compartment designed to be refrigerated (as demonstrated by the presence of temperature controls) as well as any surfaces that do not enclose any product-containing compartments (
e.g.,
surfaces surrounding any mechanical equipment or containing the product selection and delivery apparatus) would be considered in the calculation of transparent and non-transparent surface area for a BVM, as shown in Figure IV.1.
Id.
EP25MY23.000
DOE notes that the January 2016 Final Rule and Figure IV.1 do not mention the solid partition that separates two or more compartments in a combination vending machine. The definition of combination vending machine at 10 CFR 431.292 does not limit the size or shape of the solid partition that might separate refrigerated and non-refrigerated subcompartments. Based on BVM teardowns conducted in support of this NOPR, DOE has initially determined that the solid partition projected to the front surface would constitue a small portion of the overall transparent surface area calculation. DOE has observed solid partitions with a projected front surface area of 0.5 inches of thickness and span the width of the internal compartment resulting in approximately 1.0% of the front surface area. Therefore, in this NOPR, DOE proposes to clarify that the solid partition would be considered in the calculation of transparent and non-transparent surface area for BVM equipment up to the centerline of the solid partition projected to the front surface for the surfaces that surround and enclose the compartment designed to be refrigerated (as demonstrated by the presence of temperature controls).
The definition of Combination A requires that “25 percent or more of the surface area on the front side of the beverage vending machine is transparent.” 10 CFR 431.292. Consistent with the January 2016 Final Rule, DOE proposes to revise the definition of Combination A to clarify the exclusion of the external surface areas surrounding the non-refrigerated compartment(s) in the calculation of surface areas of transparent and non-transparent surfaces:
Combination A
means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine that surrounds the refrigerated compartment(s) is transparent.
DOE requests comment on its proposal to revise the definition of Combination A.
2. Technology Options
In the preliminary market analysis and technology assessment, DOE identified 29 technology options that would be expected to improve the efficiency of BVM equipment, as measured by the DOE test procedure and shown in Table IV.1.
Table IV.1—Technology Options for Refrigerated Bottled or Canned Beverage Vending Machines in the April 2022 Preliminary TSD
Insulation:
Improved resistivity of insulation (insulation type).
Increased insulation thickness.
Vacuum insulated panels.
Improved Glass Packs:
Low-E coatings.
Inert gas fill.
Vacuum insulated glass.
Additional panes.
Frame design.
Compressor:
Improved compressor efficiency.
Variable speed compressors.
Linear compressors.
Evaporator:
Increased surface area.
Tube and fin enhancements (including microchannel designs).
Low pressure differential evaporator.
Condenser:
Increased surface area.
Tube and fin enhancements (including microchannel designs).
Microchannel heat exchanger.
Fans and Fan Motors:
Evaporator fan motors.
Evaporator fan blades.
Evaporator fan controls.
Condenser fan motors.
Condenser fan blades.
Other Technologies:
Lighting.
Anti-sweat heater controls.
Defrost systems.
Expansion valve improvements:
Alternative refrigerants.
Low power payment mechanisms.
Low power states.
DOE received several comments in response to the April 2022 Preliminary Analysis regarding the technology options.
a. Compressors
NAMA commented that, at the present time, variable speed and two-speed compressors are not available for the size range of compressors for most BVMs. (NAMA, No. 14 at p. 24)
NAMA commented that when moving from single speed compressors to variable speed compressors, in order to take full advantage of this level of energy efficiency, other components, such as metering devices (
i.e.,
expansion valves and capillary tubes), must be changed. (NAMA, No. 14 at p. 24) NAMA added that a control system will have to be added to monitor the system of the compressor, the cycle, the temperatures, and environmental conditions, and that these changes must be factored into the total cost.
Id.
NAMA commented that it is necessary for DOE to understand that the refrigeration cycle is only on for 20-25 percent of the time and that any savings must be allocated across the full set of DOE test procedure measurements.
Id.
NAMA also commented that linear compressors are not available for BVMs and are many years away from concept design. In addition, NAMA commented that several manufacturers of linear compressors appear to have discontinued production. (NAMA, No. 14 at p. 24)
DOE has reviewed variable speed compressors available on the market and found that variable speed compressors are offered at the same cooling capacities as single speed compressors currently used in BVMs. All variable speed compressors observed had more than two speeds.
In this NOPR, DOE did not assume that additional components other than the variable speed compressor were required to reduce the energy use for the variable speed compressor design option. DOE is aware of refrigerant systems which use a capillary tube and a variable speed compressor which suggests that expansion valve changes are not necessary. Based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that control systems are already present in BVM equipment.
In the NOPR analysis, DOE considered the refrigeration cycle duration in the engineering analysis for the variable speed compressor design option. See chapter 5 of the NOPR TSD for additional details.
In the April 2022 Preliminary Analysis, DOE did not screen out linear compressors but did include linear compressors as a “design option not directly analyzed.” DOE included linear compressors as a technology option because compressor manufacturers had begun development on linear compressors for residential refrigerators. However, recent lawsuits and a lack of availability of linear compressors on the market have prevented further development of this technology for BVM equipment; therefore, DOE has tentatively determined that linear compressors meet the screening criterion of “impacts on product utility or product availability.” DOE has screened out linear compressors as a design option for improving the energy efficiency of BVM equipment. See section IV.B.1 of this document and chapter 4 of the NOPR TSD for additional details.
b. Alternative Refrigerants
NAMA commented that the changes necessary to adopt the lower GWP refrigerants are being made but have not been fully realized in all models of BVMs. (NAMA, No. 14 at p. 4) NAMA commented that DOE's statement that BVMs currently available on the market have already transitioned to R-290 refrigerant is incorrect. (NAMA, No. 14 at p. 16)
NAMA commented that the 114 grams of refrigerant that is allowed for the low GWP refrigerant is 36 grams less than what is allowed in a household or commercial refrigerator, which limits the size of the machine and restricts design options that require additional energy. (NAMA, No. 14 at p. 8)
DOE notes that the U.S. Environmental Protection Agency (EPA) proposed refrigerant restrictions pursuant to the American Innovation and Manufacturing Act (“AIM
Act”)
23
affecting BVM equipment in a NOPR published on December 15, 2022 (“December 2022 EPA NOPR”). 87 FR 76738. Specifically, EPA proposed prohibitions for new vending machines (EPA's term for this equipment) for the use of HFCs and blends containing HFCs that have a GWP of 150 or greater. 87 FR 76738, 76780. The proposal would prohibit manufacture or import of such vending machines starting January 1, 2025, and would ban sale, distribution, purchase, receive, or export of such vending machines starting January 1, 2026. 87 FR 76740. DOE considered the use of alternative refrigerants that are not prohibited for BVM equipment in the December 2022 EPA NOPR.
23
Under subsection (i) of the AIM Act, entitled “Technology Transitions,” the EPA may by rule restrict the use of hydrofluorocarbons (HFCs) in sectors or subsectors where they are used. A person or entity may also petition EPA to promulgate such a rule. “H.R.133—116th Congress (2019-2020): Consolidated Appropriations Act, 2021.”
Congress.gov,
Library of Congress, 27 December
2020,
www.congress.gov/bill/116thcongress/house-bill/133.
DOE notes that several manufactuerers currently rate BVM models to both ENERGY STAR
24
and DOE
25
with BVM equipment using R-290 and that manufacturers indicated in manufacturer interviews that the industry is planning to transition to R-290.
24
See
www.energystar.gov/productfinder/product/certified-vending-machines/results.
25
See
www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
DOE is aware of the 114 gram charge limit for R-290 in BVM equipment located in a public corridor or lobby as specified in Addendum C to ANSI/ASHRAE Standard 15-2019, “Safety Standard for Refrigeration Systems” and UL 60335-2-89, “Particular Requirements for Commercial Refrigerating Appliances and Ice-Makers with an Incorporated or Remote Refrigerant Unit or Motor-Compressor.” Based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that the 114 gram charge limit does not restrict the size of the machine nor any technology options considered in this NOPR. DOE has tentatively determined that all BVM equipment can use less than 114 grams of R-290.
In response to the December 2022 EPA NOPR, this NOPR reflects the alternative refrigerant design changes made by manufacturers at the baseline levels for BVM equipment, which incorporate a refrigerant conversion to R-290 (
i.e.,
the most efficient refrigerant DOE is currently aware of on the market for BVM equipment), instead of as a design option as presented in the April 2022 Preliminary Analysis.
See section IV.C.1.a and chapter 5 of the NOPR TSD for additional details.
NAMA recommended that this be the last rulemaking to raise the issue of CO
2
as a refrigerant, and provided many details on the design differences and challenges in using CO
2
as a refrigerant. (NAMA, No. 14 at pp. 24-25)
While DOE mentioned CO
2
refrigerants in the April 2022 Preliminary TSD as background information on the January 2016 Final Rule, DOE did not consider CO
2
refrigerant as a technology option in the April 2022 Preliminary TSD or this NOPR.
c. Insulation
NAMA commented that the term “extra insulation” is vague, and manufacturers have been using “extra” insulation since the inception of BVMs. (NAMA, No. 14 at p. 21)
In the April 2022 Preliminary TSD, DOE provided context that “extra insulation” refers to an extra
1/4
inch of insulation thickness. See chapter 5 of the April 2022 Preliminary TSD for additional details.
NAMA asserted that in low-volume manufacturing, with multiple variations of size, features, and designs, vacuum panels are not a feasible design option. (NAMA, No. 14 at p. 22) NAMA stated that vacuum panels often leak over time and return very little overall energy savings during the life of the product.
Id.
NAMA added that vacuum panels are very costly as individual parts, but even more so in tooling costs spread over very small volumes.
Id.
Vacuum insulated panels (VIPs) may require cabinet redesign and additional tooling costs to properly incorporate VIPs in BVMs without leaks or damage to the panel. DOE has considered the investments required in additional tooling, equipment, and processes for any cabinet redesign in the engineering analysis (sunk cost per unit) and manufacturer impact analysis (capital conversion costs). See chapter 5 and 12 of the NOPR TSD for additional discussion on VIPs.
d. Fan Motors
NAMA commented that manufacturers changing to R-290 have already incorporated electronically commutated fan motors (ECMs) into their machines and many did this years ago. (NAMA, No. 14 at p. 21) NAMA added that, with the change to R-290, manufacturers of BVMs must utilize ADAC controls and components (sometimes called “spark-proof” motors).
Id.
NAMA further stated that current designs of permanent split capacitor motors (PSCs) are much more energy efficient than they were 5 or 10 years ago, and that NAMA approximates the energy use of an ECM to be higher than the value provided in the April 2022 Preliminary TSD.
Id.
DOE considered the requirement for motors to be “spark-proof” for use with the R-290 refrigerant. DOE notes that, based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that manufacturers currently use shaded pole motors (SPMs), PSCs, and ECMs, although not all motor types are used in each BVM equipment class.
Based on feedback from commenters, market research, and additional testing, DOE has tentatively determined to update the fan motor efficiency assumptions in this NOPR. Consistent with commenters, DOE increased the assumed motor efficiency of SPMs and PSCs, and decreased the assumed motor efficiency of ECMs in this NOPR.
As noted in the April 2022 Preliminary TSD, DOE is also aware of an additional motor technology that is available for use in BVMs, permanent magnet synchronous (PMS) motors. PMS motor technology has shown the potential for motor efficiency improvement beyond ECMs, as indicated in a 2019 ORNL study comparing PMS motors and ECMs.
26
Due to the motor efficiency improvements PMS motors provide in comparison to ECMs, and based on DOE's updated fan motor efficiency assumptions (
i.e.,
ECM assumed efficiencies in this NOPR are less than the assumed PMS motor efficiencies), DOE has tentatively determined to include PMS motors as a design option for BVMs.
26
Permanent Magnet Synchronous Motors for Commercial Refrigeration: Final Report, available at:
info.ornl.gov/sites/publications/Files/Pub115680.pdf.
See chapter 5 of the NOPR TSD for additional details on fan motors.
e. Evaporators and Condensers
NAMA commented that true microchannel designs are prone to significant clogging and have been shown to exhibit pin-hole sized leaks, making them inadvisable with a flammable refrigerant. (NAMA, No. 14 at p. 23)
DOE acknowledges that microchannel condensers may experience clogging over the lifetime of a unit due to a lack of maintenance by the end user or other factors; however, DOE's BVM standards
consider the performance of the unit as measured by the DOE BVM test procedure, which measures the performance of new BVMs. Additionally, tube and fin condensers may also experience clogging over the lifetime of a unit and require proper maintence of the condenser.
DOE notes that microchannel heat exchangers are currently used in a variety of applications, including mobile air-conditioning, commercial air-conditioning, residential air-conditioning, and commercial refrigeration equipment. Although DOE acknowledges that some microchannel condenser designs could have the potential to leak, DOE has observed the use of microchannel condensers with flammable refrigerants in similar applications (
e.g.,
automatic commercial ice makers). Additionally, pin-hole sized leaks are not unique to microchannel heat exchangers. Furthermore, DOE notes that the CRADA was established, in part, to mitigate leak risks and assess potential hazards, including flammability.
27
27
See
www.energy.gov/eere/buildings/articles/five-new-cooperative-research-agreements-invest-efficiency-performance-and.
f. Glass Packs
NAMA commented that the change from double pane to triple pane glass would require a significant increase in the overall structural design of the machine. (NAMA, No. 14 at p. 22) NAMA noted that the doors would have to increase in size, thickness, and weight, and that the wall structure and frame would have to be increased to accommodate the hanging weight.
Id.
NAMA added that the overall machine weight would increase, thereby increasing shipping weight and the corresponding transportation costs (and thus the carbon footprint of the machine).
Id.
DOE observed both double pane and triple pane glass doors in BVM equipment and used the teardown analysis of units containing each door type to inform the NOPR analysis. DOE considered the additional cost related to structural changes when upgrading from double pane to triple pane glass doors. DOE did not receive any data which supported an increase in transporation costs when switching from double pane to triple pane glass doors. See chapter 5 of the NOPR TSD for additional detail.
g. Payment Mechanisms
ASAP and ACEEE encouraged DOE to include low-power coin and bill payment mechanisms as a design option in the engineering analysis, as BVMs are usually shipped with the payment mechanisms, and their energy consumption is captured in the test procedures. (ASAP & ACEEE, No. 15 at p. 1)
In the April 2023 Test Procedure Final Rule, DOE determined to maintain the current 0.20 kWh/day adder to account for the energy use of payment mechanisms.
28
The available information demonstrates that a wide (and growing) variety of payment systems are currently available on the market; the most common scenario is for the payment mechanism to be specified (and in some cases, provided) by the customer; and the customer may decide whether or not to have the payment mechanism installed by the BVM manufacturer at the time of sale.
Id.
Therefore, DOE did not consider low-power payment mechanisms as a design option in this NOPR. See chapter 5 of the NOPR TSD for additional details.
28
See
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
h. Low Power Modes
NAMA commented that it is unclear from the April 2022 Preliminary TSD exactly what DOE means by “automatic lighting controls.” (NAMA, No. 14 at pp. 19, 20) NAMA added that most of the machines sold today will go into a “sleep” mode after a period of inactivity, which is not the type of proximity control system used in display case products.
Id.
NAMA further commented that customers do not want a vending machine to go completely to “sleep,” because they want users to see the machine as fully functioning and not dark.
Id.
NAMA asserted that machines going completely “dark” is a change in utility of the machine and should be accounted for in a different category.
The “automatic lighting control” design option is based on the “accessory low power mode” section of the BVM test procedure which allows for 6 hours of operation in the accessory low power mode during the test (
i.e.,
the lowest energy-consuming lighting and control settings that constitute an accessory low power mode). Appendix B to subpart Q of 10 CFR part 431. Therefore, in the preliminary and NOPR analyses, DOE modeled 18 hours of light on time for the automatic lighting control design option and 6 hours of light off time.
“Accessory low power mode” is defined as a state in which a beverage vending machine's lighting and/or other energy-using systems are in low power mode, but that is not a refrigeration low power mode. Functions that may constitute an accessory low power mode may include, for example, dimming or turning off lights, but does not include adjustment of the refrigeration system to elevate the temperature of the refrigerated compartment(s).
Id.
DOE notes that there are currently 17 out of 53 Class A and Combination A models certified to DOE's Compliance Certification Database (CCD)
29
that use accessory low power mode. DOE also notes that manufacturers provide information on their low power mode operation in the unit's user manual for varying customer demands.
29
See
www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
(Accessed February 9, 2023).
NAMA commented that many BVMs can be programmed into an “energy saver” mode based on inactivity or schedule. (NAMA, No. 14 at p. 20) NAMA added that consumers can set the machine to somewhat reduce the refrigeration cycle during nighttime if the location is truly “shut down” for many hours, but that DOE only allows a credit of 3 percent for this feature.
Id.
NAMA stated that mandating some form of automatic low power mode is different and will be beneficial only if the low power mode period is significantly longer, adding that if it is short, the energy savings will be offset by the additional energy required to bring the product back to the lower temperature.
Id.
NAMA commented most current customers of BVMs do not want a low power mode that affects the holding temperature or lengthens the pulldown time, and that any change to this could have a direct effect on the utility and performance of the machine and should be avoided. (NAMA, No. 14 at p. 20)
DOE acknowledges that there is variability in customer location and activity and that some of the energy savings of the low power mode will be offset by the pulldown period to return to normal operation. As noted in the BVM test procedure NOPR published on August 11, 2014 (2014 BVM test procedure NOPR), DOE understands that refrigeration low power modes are extremely variable in terms of their control strategies and operation and, in addition, may require specific instructions from the manufacturer to precisely modify or adjust the control systems to accommodate the specific provisions of the DOE test procedure. 79 FR 46908, 46924-46925. As noted in BVM test procedure final rule published on July 31, 2015 (2015 BVM test procedure Final Rule), DOE's estimate of 3 percent energy savings due to the
operation of low power modes is based on the data available and that DOE believes 3-percent is representative of the common types of refrigeration low power modes DOE has observed in the market place. 80 FR 45758, 45786. In the April 2023 Test Procedure Final Rule, DOE maintained the existing test procedure provisions and 3-percent energy credit for refrigeration low power mode.
30
In this NOPR, DOE has tentatively determined that 3-percent continues to be representative of the common types of refrigeration low power modes DOE has observed in the marketplace. See chapter 5 of the NOPR TSD for additional details.
30
See
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
DOE notes that there are currently 55 out of 107 BVM models certified to DOE's CCD
31
that use refrigeration low power mode. DOE also notes that manufacturers provide information on their low power mode operation in the unit's user manual for varying customer demands.
31
See
www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
(Accessed February 9, 2023).
i. Additional Concerns
NAMA commented that several of the design options shown in the April 2022 Preliminary TSD (larger condensers or evaporators, more insulation, changes to type of glass) would require more space inside the machine, leading to a reduction in the overall capacity of the machine, which should be considered in the TSD. (NAMA, No. 14 at p. 11)
In this NOPR, DOE did not consider design options that expanded the size or footprint of BVM equipment (
e.g.,
larger condensers or evaporators, more insulation) because BVM equipment may be used in locations prioritizing smaller equipment footprints and an increase in cabinet sizes may adversely impact the availability of equipment at a given refrigerated volume. DOE assumed, based on feedback received during manufacturer interviews and from equipment teardowns, that the design options which changed the type of glass would not increase the door thickness but may require different frame materials or hinges, which DOE has considered as a cost adder to the design option in this NOPR. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that several of the design options (
e.g.,
lower wattage refrigeration systems, vacuum panel insulation, different evaporators or condensers, and lower wattage fan motors) could potentially affect the overall performance of the machine, and therefore should be reviewed in the TSD not only for their energy efficiency but also the ability to maintain the critial design features and performance of these machines. (NAMA, No. 14 at p. 12)
In this NOPR, DOE did not consider design options that changed the measured performance as compared with existing BVM equipment. See chapter 5 of the NOPR TSD for additional details.
B. Screening Analysis
DOE uses the following five 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 commercially viable, existing prototypes will not be considered further.
(2)
Practicability to manufacture, install, and service.
If it is determined that mass production of a technology in commercial products and reliable installation and servicing of the technology 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.
If a technology is determined to have a significant adverse impact on the utility of the product to subgroups of consumers, or 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)
Safety of technologies.
If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further.
(5)
Unique-pathway proprietary technologies.
If a technology has proprietary protection and represents a unique pathway to achieving a given efficiency level, it will not be considered further, due to the potential for monopolistic concerns.
See sections 6(b)(3) and 7(b) of the Process Rule.
In summary, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the listed five criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the following sections.
DOE did not receive any comments in response to the April 2022 Preliminary Analysis specific to the screening analysis.
1. Screened Out Technologies
For BVM equipment, the screening criteria were applied to the technology options to either retain or eliminate each technology for consideration in the engineering analysis.
In the April 2022 Preliminary Analysis, DOE did not screen out linear compressors but did include linear compressors as a “design option not directly analyzed.” DOE included linear compressors as a technology option because compressor manufacturers had begun development on linear compressors for residential refrigerators. However, recent lawsuits and a lack of availability of linear compressors on the market have prevented further development of this technology for BVM equipment; therefore, DOE has tentatively determined that linear compressors meet the screening criterion of “impacts on product utility or product availability.” DOE has tentatively determined to screen out linear compressors as a design option for improving the energy efficiency of BVM equipment in this NOPR. See chapter 4 of the NOPR TSD for additional details.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concluded that all of the other identified technologies listed in section IV.A.2 of this document met all five screening criteria to be examined further as design options in DOE's NOPR analysis. In summary, DOE did not screen out the technology options in Table IV.2.
Table IV.2—Retained Design Options for BVMs
Insulation
Condenser
Improved resistivity of insulation (insulation type)
Increased surface area.
Increased insulation thickness
Tube and fin enhancements (including microchannel designs).
Vacuum insulated panels
Microchannel heat exchanger.
Improved Glass Packs
Fans and Fan Motors
Low-E coatings
Evaporator fan motors.
Inert gas fill
Evaporator fan blades.
Vacuum insulated glass
Evaporator fan controls.
Additional panes
Condenser fan motors.
Frame design
Condenser fan blades.
Compressor
Other Technologies
Improved compressor efficiency
Lighting.
Variable speed compressors
Anti-sweat heater controls.
Defrost systems.
Evaporator
Expansion valve improvements
Increased surface area
Alternative refrigerants.
Tube and fin enhancements (including microchannel designs)
Low power payment mechanisms.
Low pressure differential evaporator
Low power states.
DOE has initially determined that these design options are technologically feasible because they are being used or have previously been used in commercially available equipment or working prototypes. DOE also finds that all of the remaining design options meet the other screening criteria (
i.e.,
practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, or safety, unique-pathway proprietary technologies). For additional details, see chapter 4 of the NOPR TSD.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of BVM equipment. There are two elements to consider in the engineering analysis: the selection of efficiency levels to analyze (
i.e.,
the “efficiency analysis”) and the determination of equipment cost at each efficiency level (
i.e.,
the “cost analysis”). In determining the performance of higher-efficiency equipment, DOE considers technologies and design option combinations not eliminated by the screening analysis. For each equipment class, DOE estimates the baseline cost, as well as the incremental cost for the equipment at efficiency levels above the baseline. The output of the engineering analysis is a set of cost-efficiency “curves” that are used in downstream analyses (
i.e.,
the LCC and PBP analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy efficiency levels for the engineering analysis: (1) relying on observed efficiency levels in the market (
i.e.,
the efficiency level approach) or (2) determining the incremental efficiency improvements associated with incorporating specific design options to a baseline model (
i.e.,
the design option approach). Using the efficiency level approach, the efficiency levels established for the analysis are determined based on the market distribution of existing equipment (
i.e.,
based on the range of efficiencies and efficiency level “clusters” that already exist on the market). Using the design option approach, the efficiency levels established for the analysis are determined through detailed engineering calculations and/or computer simulations of the efficiency improvements from implementing specific design options that have been identified in the technology assessment. DOE may also rely on a combination of these two approaches. For example, the efficiency level approach (based on actual equipment on the market) may be extended using the design option approach to “gap fill” levels (to bridge large gaps between other identified efficiency levels) and/or to extrapolate to the max-tech level (particularly in cases in which the max-tech level exceeds the maximum efficiency level currently available on the market).
In this proposed rulemaking, DOE relies on a design option approach, supported with testing and reverse engineering multiple analysis units. DOE generally relied on test data and reverse engineering to inform a range of design options used to reduce energy use. The design options were incrementally added to the baseline configuration and continued through the “max-tech” configuration (
i.e.,
implementing the “best available” combination of available design options).
Consistent with the January 2016 Final Rule analysis (see chapter 5 of the January 2016 Final Rule TSD), DOE estimated the performance of design option combinations using an engineering analysis spreadsheet model. This model estimates the daily energy consumption of BVM equipment in kWh/day at various performance levels using a design option approach. The model calculates energy consumption at each performance level separately for each analysis configuration.
For Class A and Class B, DOE analyzed machines of different sizes to assess how energy use varies with size via energy testing and reverse engineering. In this NOPR, representative volumes were chosen for each equipment class, based on current market offerings: medium and large for Class A and Class B BVMs, and medium for Combination A and Combination B. These equipment classes and representative unit volumes are listed in Table IV.3.
Table IV.3—Representative Refrigerated Volumes in the NOPR
Equipment class
Size
Representative volume
(ft
3
)
Class A
Medium
26
Large
35
Class B
Medium
22
Large
31
Combination A
Medium
11
Combination B
Medium
10
See chapter 5 of the NOPR TSD for additional detail on the different units analyzed.
a. Baseline Energy Use
For each equipment class, DOE generally selects a baseline model as a reference point for each class and measures changes resulting from potential energy conservation standards against the baseline. The baseline model in each equipment class represents the characteristics of equipment typical of that class (
e.g.,
capacity, physical size). Generally, a baseline model is one that just meets current energy conservation standards, or, if no standards are in place, the baseline is typically the most common or least efficient unit on the market.
For this NOPR, DOE considered the current standards for BVM equipment when developing the baseline energy use for each analyzed equipment class. For higher efficiency levels, DOE assessed BVM efficiencies as a percent improvement relative to the baseline. This provides a consistent efficiency comparison across each equipment class. DOE considered the efficiency improvements associated with implementing available design options beyond the baseline to the max-tech efficiency level.
In response to the April 2022 Preliminary Analysis, NAMA commented that most of the analysis appears to have been performed prior to 2020, yet the industry has been in the midst of considerable change from 2019 to 2022. (NAMA, No. 14 at p. 3)
NAMA commented that current machines on the market today that use low GWP refrigerants and incorporate most of the design options shown in Table 2.3 of the April 2022 Preliminary Analysis should be used together with current costs, and that these should be the baseline machines. (NAMA, No. 14 at p. 6) NAMA added that DOE should acknowledge the costs already incurred by manufacturers in order to meet the goals stated by the Biden Administration to reduce global warming.
Id.
DOE expects that NAMA is referring to the December 2022 EPA NOPR in its comment regarding the goals stated by the Biden Administration to reduce global warming. As recommended by stakeholders, DOE is considering the cost and impact of the December 2022 EPA NOPR on this NOPR. The proposed date of the proposed GWP limit on BVMs is 2 years earlier than the expected compliance date for any amended BVM standards associated with the proposals in this document. Hence, the proposed refrigerant prohibitions listed in the December 2022 EPA NOPR are assumed to be enacted for the purpose of DOE's analysis in support of this NOPR.
Refrigerants not prohibited from use in BVM equipment in the December 2022 EPA NOPR are presumed to be permitted for use in BVM equipment. As noted in section IV.A.2.b, several manufactuerers currently rate BVM models to both ENERGY STAR
32
and DOE
33
with BVM equipment using R-290, manufacturers indicated in manufacturer interviews that the industry is planning to transition to R-290, and DOE has tentatively determined that all BVM equipment can use less than 114 grams of R-290.
32
See
www.energystar.gov/productfinder/product/certified-vending-machines/results.
33
See
www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
DOE expects that the use of R-290 generally will improve efficiency as compared with the refrigerants currently in use (
e.g.,
R-134a), which are proposed to be prohibited by the December 2022 EPA NOPR, because R-290 has higher refrigeration cycle efficiency than the current refrigerants. Thus, DOE expects that the December 2022 EPA NOPR will require redesign that will improve efficiency of BVM equipment. Hence, the baseline levels for BVM equipment in this NOPR reflect the design changes made by manufacturers in response to the December 2022 EPA NOPR, which incorporate refrigerant conversion to R-290. The expected efficiency improvement associated with this refrigerant change varies by class and is presented in Table IV.4.
DOE's analysis considers that these efficiency improvements, equipment costs, and manufacturer investments required to comply with the December 2022 EPA NOPR will be in effect prior to the time of compliance for the proposed amended DOE BVM standards for all BVM equipment classes and sizes. DOE updated its baseline equipment costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research.
Table IV.4—Proposed December 2022 EPA NOPR R-290 Energy Use Baseline
Equipment class
Energy use
reduction
below DOE
standard
(%)
Class A
12.7
Class B
15.1
Combination A
19.6
Combination B
14.7
The expected efficiency improvement associated with this refrigerant change is based on R-290 single speed compressors currently available on the market suitable for BVM equipment. In this NOPR, DOE did not consider additional single speed compressor efficiency improvements beyond the baseline because DOE expects that the single speed compressors currently available on the market for refrigerants used to comply with the December 2022 EPA NOPR represent the maximum single speed compressor efficiency achievable for each respective equipment class.
NAMA commented that the improved evaporator coils design option seems to be indicating a high fin density and higher pitched coils, but any increase in fin density may increase the fan motor power required and energy
consumption. (NAMA, No. 14 at p. 20) NAMA added that current designs are optimized based on cost versus energy efficiency, and that changes would increase capital costs.
Id.
In the April 2022 Preliminary Analysis, DOE analyzed “baseline” and “high efficiency” evaporator and condenser design options, consistent with the January 2016 Final Rule. Based on stakeholder comments, interviews with manufacturers, and CoilDesigner simulation, DOE tentatively determined that the “high efficiency” evaporator and condenser design options are representative of current manufacturer designs. Therefore, DOE tentatively determined to analyze the “high efficiency” evaporator and condenser coil as “baseline” in this NOPR and remove the “high efficiency” evaporator and condenser design options in the NOPR. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that according to the Process Rule, DOE should not pursue a rulemaking if there were less than 0.30 quad of savings over 30 years, as the last published Process Rule dictates. (NAMA, No. 14 at p. 7) NAMA added that it doesn't believe there will be greater than 5-10 percent improvement in energy baseline by 2028 to justify the rule.
Id.
NAMA stated that, including the fact that many of the improvements in the design options have already been incorporated several years ago, the actual improvements it projected to be seen are much less than 10 percent.
Id.
DOE notes that on December 13, 2021, DOE published a Final Rule which revised the Process Rule NAMA is referring to in its comment,
34
and determinations of significance for energy savings are made on a case-by-case basis. 86 FR 70892, 70906. DOE discusses the walk-down analysis to determine the TSL that represents the maximum improvement in energy efficiency that is technologically feasible and economically justified as required under EPCA in section V.C.1.
34
See
www.regulations.gov/document/EERE-2021-BT-STD-0003-0075.
DOE requests comments on its proposal to use baseline levels for BVM equipment based upon the design changes made by manufacturers in response to the December 2022 EPA NOPR.
DOE further requests comment on its estimates of energy use reduction associated with the design changes made by manufacturers in response to the December 2022 EPA NOPR.
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level is the highest efficiency unit currently available on the market. DOE also defines a “max-tech” efficiency level to represent the maximum possible efficiency for a given equipment.
After conducting the screening analysis described in section IV.B of this document and chapter 4 of the NOPR TSD, DOE considered the remaining design options in the engineering analysis to achieve higher efficiency levels. See chapter 5 of the NOPR TSD for additional detail on the design options.
NAMA commented that although DOE estimates 25 percent energy savings for improved evaporator coils, their review of design options indicates that this is overstated by a factor of 10. (NAMA, No. 14 at p. 20)
DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. However, as discussed in section IV.C.1.a of this document, DOE tentatively determined to analyze the “high efficiency” evaporator coil as “baseline” in this NOPR and remove the “high efficiency” evaporator design option in the NOPR.
NAMA commented that for moving from single speed compressors to variable speed compressors, the promised energy savings is more in the area of 5-15 percent (depending on the model), rather than the 49 percent estimated in the April 2022 Preliminary Analysis TSD. (NAMA, No. 14 at p. 24)
DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE assumed an energy use reduction of 7-14% for variable speed compressors compared to single speed compressors, depending on the equipment class, which is consistent with NAMA's estimates. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that DOE's estimate of a 43 percent improvement in energy efficiency with the switch from double pane to triple pane glass is much higher than NAMA's estimate of 12-15 percent improvement in energy efficiency. (NAMA, No. 14 at p. 22)
DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE assumed an energy use reduction of 1-3% for triple pane glass pack compared to double pane glass pack, depending on the equipment class, which is lower than NAMA's estimates but is consistent with data collected from teardowns and DOE's modeling. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that when moving from triple pane glass to vacuum insulated glass, the efficiency improvements are in the vicinity of 2-3 percent gain. (NAMA, No. 14 at p. 24)
In this NOPR, DOE assumed an energy use reduction of approximately 1% for vacuum insulated glass compared to triple pane glass pack, which is consistent with NAMA's estimates. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that there is not sufficient space in a BVM to allow for the recommended change to insulation thickness. (NAMA, No. 14 at p. 21) NAMA stated that there is not sufficient space to allow for insulation to equate to a reduction of even 10 percent in energy, much less 31 percent, without impacting utility and performance.
Id.
DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE did not consider design options that expanded the size or footprint of BVM equipment (
e.g.,
more insulation) because BVM equipment may be used in locations prioritizing smaller equipment footprints and an increase in cabinet sizes may adversely impact the availability of equipment at a given refrigerated volume. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that it believes the 0.15 quad savings at max-tech is an inflated value based on errors in the engineering analysis, and asserted that the savings would in fact be considerably lower and no longer significant enough for the changes in regulation to be justified. (NAMA, No. 14 at p. 7)
In this NOPR, DOE estimates a combined total of 0.138 quads of FFC energy savings over the analysis period at the max-tech efficiency levels for BVM equipment. DOE has considered feedback from stakeholders, manufacturer interviews, and current market data to update its engineering analysis in this NOPR. See section V for additional details.
2. Cost Analysis
The cost analysis portion of the engineering analysis is conducted using one or a combination of cost approaches. The selection of cost approach depends on a suite of factors, including the availability and reliability
of public information, characteristics of the regulated equipment, and the availability and timeliness of purchasing the equipment on the market. The cost approaches are summarized as follows:
•
Physical teardowns:
Under this approach, DOE physically dismantles a commercially available equipment, component-by-component, to develop a detailed bill of materials for the equipment.
•
Catalog teardowns:
In lieu of physically deconstructing a equipment, DOE identifies each component using parts diagrams (available from manufacturer websites or appliance repair websites, for example) to develop the bill of materials for the equipment.
•
Price surveys:
If neither a physical nor catalog teardown is feasible (
e.g.,
for tightly integrated products such as fluorescent lamps, which are infeasible to disassemble and for which parts diagrams are unavailable) or cost-prohibitive and otherwise impractical (
e.g.,
large commercial boilers), DOE conducts price surveys using publicly available pricing data published on major online retailer websites and/or by soliciting prices from distributors and other commercial channels.
In the present case, DOE conducted the analysis using teardowns and feedback received from manufacturers during interviews. See chapter 5 of the NOPR TSD for additional details.
DOE received several comments in response to the April 2022 Preliminary Analysis regarding the cost analysis.
NAMA believes that DOE should factor the unprecedented increase in inflation of basic constituents of the BVM machine and its manufacturing into the costs shown for design options and the economic analysis. (NAMA, No. 14 at p. 10)
DOE used current prices when estimating the baseline manufacturer production costs and design option costs. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that the analyses in the April 2022 Preliminary TSD do not address the major changes necessary to the machines to utilize the lower GWP refrigerants (
e.g.,
R-290). (NAMA, No. 14 at p. 4) NAMA asserted that for low GWP, flammable A-3 refrigerants to be allowed for use in machines, redesign of the evaporator and condensor system and the use of new compressors and expansion valves would be necessary.
Id.
Additionally, NAMA noted that all switches, electrical components, motors (including robotic or vend motors), wiring, and connectors must be compliant with “spark-proof” connections to shield against the possibility of a leak of such refrigerant.
Id.
NAMA commented that neither this level of redesign nor the use of these expensive components was addressed in the April 2022 Preliminary TSD.
Id.
NAMA commented that the incremental cost given in the DOE chart of $11.28 to switch from an R-134 compressor to an R-290 compressor is inaccurate considering that the compressor is only one of many components that must change if the refrigerant is changed to an A-3 refrigerant. (NAMA, No. 14 at pp. 5, 19) NAMA stated that the increase in the cost of the compressor by itself is more than $40, and from their sample of five manufacturers, the cost of the change from R-134 to R-290 is approximately $200 per machine rather than $11.28 when all the components that must change are factored in.
Id.
As discussed in section IV.C.1.a of this document, DOE has analyzed R-290 as the baseline refrigerant for this NOPR, and as a result, DOE updated its baseline equipment costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, which includes the costs for component changes and additions related to R-290. DOE's analysis considers that these efficiency improvements, equipment costs, and manufacturer investments required to comply with the December 2022 EPA NOPR will be in effect prior to the time of compliance for the proposed amended DOE BVM standards for all BVM equipment classes and sizes. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that for moving from single speed compressors to variable speed compressors, the current data shows cost increases in other product categories much higher than the $103.12 shown, and that early cost estimates are more than $200 per machine. (NAMA, No. 14 at p. 24)
NAMA commented that DOE's estimate of $16.72 per machine for improved evaporator coils is significantly below NAMA's estimates of the parts alone, and that NAMA's initial estimate is double this amount and perhaps more when considering capital costs, design, and recertification. (NAMA, No. 14 at p. 20)
NAMA commented that DOE's estimated cost of $32.36 for the extra insulation likely does not factor in the cost of redesigning new tooling to encompass additional insulation. (NAMA, No. 14 at p. 21)
NAMA commented that the cost estimate of $15.31 for moving from tube and fin to microchannels is not realistic and is not borne out by discussion with vendors, as this change would require a complete redesign of all parts of the vending machine refrigeration system and would need to include a large associated capital cost. (NAMA, No. 14 at p. 23)
NAMA commented that the cost estimates its industry has seen are three to four times the cost of glass mentioned in the April 2022 Preliminary TSD when moving from triple pane glass to vacuum insulated glass. (NAMA, No. 14 at p. 24)
NAMA commented that the cost estimate of $72.84 with the switch to multiple panes of glass is about half of the total cost when considering increased structural components at extremely high volumes. (NAMA, No. 14 at p. 22) NAMA stated that because of these factors, most manufacturers would not realize this energy efficiency improvement and would see much higher costs for little or no energy improvement.
Id.
DOE notes that, as discussed in section IV.C.1.a of this document, DOE did not analyze evaporator improvements or extra insulation as design options.
DOE assumed, based on feedback received during manufacturer interviews and from equipment teardowns, that the design options which changed the type of glass may require different frame materials or hinges, which DOE has considered as a cost adder to these design options in this NOPR.
DOE updated its baseline and design option costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, stakeholder comments, and market research. See chapter 5 of the NOPR TSD for additional details.
To account for manufacturers' non-production costs and profit margin, DOE applies a multiplier (the manufacturer markup) to the MPC. The resulting manufacturer selling price (MSP) is the price at which the manufacturer distributes a unit into commerce. DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly traded manufacturers primarily engaged in equipment manufacturing and whose combined equipment range includes BVM equipment.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-efficiency data (or “curves”) in the form of daily energy
consumption (in kWh) versus MSP (in dollars). DOE developed six curves representing the four equipment classes. The methodology for developing the curves started with determining the energy consumption for baseline equipment and MPCs for this equipment. Above the baseline, design options were implemented until all available technologies were employed (
i.e.,
at a max-tech level). See chapter 5 of the NOPR TSD for additional detail on the engineering analysis and appendix 5B of the NOPR TSD for complete cost-efficiency results.
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 MSP estimates derived in the engineering analysis to consumer prices, which are then used in the LCC and PBP analyses and in the manufacturer impact analysis. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin.
For BVMs, the main parties in the distribution chain are manufacturers, wholesalers, and the end users.
DOE developed baseline and incremental markups for each actor in the distribution chain. Baseline markups are applied to the price of products with baseline efficiency, while incremental markups are applied to the difference in price between baseline and higher-efficiency models (the incremental cost increase). The incremental markup is typically less than the baseline markup and is designed to maintain similar per-unit operating profit before and after new or amended standards.
35
35
Because the projected price of standards-compliant products is typically higher than the price of baseline products, using the same markup for the incremental cost and the baseline cost would result in higher per-unit operating profit. While such an outcome is possible, DOE maintains that in markets that are reasonably competitive, it is unlikely that standards would lead to a sustainable increase in profitability in the long run.
DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups.
Chapter 6 of the NOPR TSD provides details on DOE's development of markups for BVMs.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual energy consumption of BVMs at different efficiencies in representative U.S. commercial and industrial buildings, and to assess the energy savings potential of increased BVM efficiency. For the NOPR analysis, DOE selected seven efficiency levels (ELs) for each equipment class, each characterized as a percentage of rated daily energy consumption from the baseline, up to the max-tech efficiency levels defined for each class in the engineering analysis. Each level with the corresponding percentage of baseline rated energy consumption varies by equipment class and can be found in Chapter 7 of the NOPR TSD.
The energy use analysis then estimates the range of energy use of BVMs 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 operating costs that could result from adoption of amended or new standards.
The energy use analysis assessed the estimated annual energy consumption of a BVM installed in the field. DOE recognizes that a variety of factors may affect the energy use of a BVM, including ambient conditions, use and stocking profiles, and other factors. However, very limited data exist on field energy consumption of BVMs. DOE estimated that the daily energy consumption produced by the DOE test procedure is representative of the average daily energy consumption of a BVM in an indoor environment. DOE developed a methodology to account for the impact of ambient conditions on the average annual energy consumption. To model the annual energy consumption of each BVM unit, DOE separately estimated the energy use of BVMs located indoors and outdoors to account for the impact of ambient conditions on installed BVM energy use. Chapter 7 of the NOPR TSD provides details on DOE's energy use analysis for BVMs.
In response to the April 2022 Preliminary Analysis, NAMA commented that the energy used by additional ventilation to reduce the risk of a leak in a public space was not accounted for in the April 2022 Preliminary TSD. (NAMA, No. 14 at p. 9)
In response to the NAMA comment, DOE notes that the NAMA concern regarding additional ventilation needs is due to the presumed use of hydrocarbon refrigerants. DOE notes that the analysis assumes hydrocarbon refrigerants at all efficiency levels analyzed, including the baseline, and any building energy impact due to additional ventilation requirements in spaces surrounding BVMs is the same at all efficiency levels and does not impact the differential energy consumption between efficiency levels or the subsequent economic calculations.
NAMA commented that although DOE has asserted that coin and bill payment systems are typically included with BVMs as shipped, its survey has indicated that this is not uniform and is unique to certain manufacturers and customers. (NAMA, No. 14 at p. 12) NAMA also questioned whether the approximation of 0.2 kWh per day is accurate for the energy consumption of a payment mechanism, although it considers the present solution to be preferable to the significant amount of time it would take testing in laboratories to determine a more accurate approximation resulting in a difference of a fraction of a kWh per day. (NAMA, No. 14 at p. 13)
In the April 2023 Test Procedure Final Rule, DOE determined to maintain the current 0.20 kWh/day adder to account for the energy use of payment mechanisms.
36
The available information demonstrates that a wide (and growing) variety of payment systems are currently available on the market; the most common scenario is for the payment mechanism to be specified (and in some cases, provided) by the customer; and the customer may decide whether or not to have the payment mechanism installed by the BVM manufacturer at the time of sale.
Id.
Therefore, DOE did not consider low-power payment mechanisms as a design option in this NOPR. See chapter 5 of the NOPR TSD for additional details.
36
See
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
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 BVMs. 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 is the total consumer expense of a 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, refurbishment, 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 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 BVMs 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 equipment.
For each considered efficiency level in each equipment class, DOE calculated the LCC and PBP for a nationally representative set of consumers. As stated previously, DOE developed consumer samples from the most recent industry reports. For each sample consumer, DOE determined the energy consumption for the BVM and the appropriate energy price. By developing a representative sample of consumers, the analysis captured the variability in energy consumption and energy prices associated with the use of BVMs.
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, refurbishment, and maintenance costs; equipment lifetimes; and discount rates. DOE created distributions of values for equipment 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 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 BVM user samples. For this rulemaking, the Monte Carlo approach is implemented in MS Excel together with the Crystal Ball
TM
add-on.
37
The model calculated the LCC for products at each efficiency level for 10,000 consumers per simulation run. The analytical results include a distribution of 10,000 data points showing the range of LCC savings for a given efficiency level relative to the no-new-standards case efficiency distribution. In performing an iteration of the Monte Carlo simulation for a given consumer, equipment efficiency is chosen based on its probability. If the chosen equipment efficiency is greater than or equal to the efficiency of the standard level under consideration, the LCC calculation reveals that a consumer is not impacted by the standard level. By accounting for consumers who already purchase more efficient equipment, DOE avoids overstating the potential benefits from increasing equipment efficiency.
37
Crystal Ball
TM
is commercially available software tool to facilitate the creation of these types of models by generating probability distributions and summarizing results within Excel, available at
www.oracle.com/technetwork/middleware/crystalball/overview/index.html
(last accessed July 6, 2018).
DOE calculated the LCC and PBP for consumers of BVMs as if each were to purchase a new BVM in the expected year of required compliance with new or amended standards. New and amended standards would apply to BVMs manufactured 3 years after the date on which any new or amended standard is published. (42 U.S.C. 6295(v)(3)) At this time, DOE estimates publication of a final rule in 2025. Therefore, for purposes of its analysis, DOE used 2028 as the first year of compliance with any amended standards for BVMs.
Table IV.5 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 NOPR TSD and its appendices.
Table IV.5—Summary of Inputs and Methods for the LCC and PBP Analyses*
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 component costs.
Installation Costs
Installation costs for BVMs are subsumed in the MSP and markup and not modeled as an incremental cost.
Annual Energy Use
The total annual energy use varies by equipment class and efficiency level. Based on engineering and energy use analyses.
Energy Prices
Electricity:
Based on EIA's Form 861 data for 2021.
Variability:
Energy prices determined for 50 states and the District of Columbia.
Energy Price Trends
Based on
AEO2022
price projections.
Variability:
Energy price trends vary by nine census regions.
Repair, Refurbishment and Maintenance Costs
Based on RS Means and United States Bureau of Labor Statistics data. Vary by efficiency level.
Product Lifetime
Average:
13.4 years.
Discount Rates
Approach involves identifying all possible debt or asset classes that might be used to purchase the considered equipment, or might be affected indirectly. Primary data source was Damodaran Online.
Compliance Date
2028.
* Not used for PBP calculation. References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the NOPR TSD.
In the April 2022 Preliminary Analysis, DOE requested comment on the overall methodology and results of the LCC and PBP analyses. In response to that request, NAMA made three comments.
NAMA stated that DOE should factor the unprecedented increase in inflation into the economic analysis in addition
to the design option costs. (NAMA No. 14, at p. 10)
DOE acknowledges the comment from NAMA and applies the annual implicit price deflators for gross domestic product (GDP) from the U.S. Bureau of Economic Analysis to the LCC and PBP analyses to capture the impact of price changes between the years of available cost data and the analysis year. Equipment and design option costs are developed in the engineering analysis and are incorporated into the LCC and PBP analyses by being reflected in the MPCs.
In response to the April 2022 Preliminary Analysis, NAMA commented to request that in the Economic Impact Analysis on the cost of labor, real cases from 2021 and 2022 are used rather than the cost of labor in 2018. (NAMA, No. 14 at p. 11)
DOE acknowledges the comment from NAMA and will use the most recent data available for the LCC and PBP analyses. If the most recent data available is from prior to 2021, the annual implicit price deflators for GDP from the U.S. Bureau of Economic Analysis will be used to reflect the costs in the year 2021.
NAMA commented that in the April 2022 Preliminary Analysis, the lower efficiency levels resulted in trivial energy savings and the higher efficiency levels showed a large portion of consumers experiencing a net cost in the LCC analysis. (NAMA, No. 14 at p. 15)
DOE acknowledges the comment from NAMA and will consider total energy savings and the portion of consumers experiencing net cost when proposing new energy efficiency standards.
In response to the April 2022 Preliminary Analysis, NAMA commented that it is only at low efficiency levels where consumers or business owners do not experience a net cost according to DOE's analysis, and that energy savings at those levels are trivial and do not justify DOE setting new energy efficiency standards for BVMs. (NAMA, No. 14 at p. 15)
DOE acknowledges the comment from NAMA and considers the percentage of customers that experience a net benefit ot net cost in addition to energy savings in the economic analysis to determine if the proposed rule is economically justified.
1. Equipment Cost
To calculate consumer equipment costs, DOE multiplied the MSPs developed in the engineering analysis by the markups described previously (along with sales taxes). DOE used different markups for baseline products and higher-efficiency equipment because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency equipment.
BVMs are made of many different components. DOE's research indicates flat future prices for a majority of the components of BVMs. DOE included future price reductions for semiconductor and similar technologies. Semiconductor technology price learning applies to efficiency levels that include design options with higher-efficiency evaporator and condenser fan motors (
i.e.,
ECM and permanent magnet synchronous (PMS) motors). Price learning applies to a proportion of the motor cost representing the semiconductor technology. Some variable speed compressors have price learning. Therefore, DOE applied price learning to compressor components in BVM equipment at efficiency levels that included variable speed compressors.
2. Installation Cost
Installation costs for BVMs are subsumed in the MSP and markup and not modeled as an incremental cost. DOE found no evidence that installation costs would be impacted with increased efficiency levels.
3. Annual Energy Consumption
For each sampled consumer, DOE determined the energy consumption for a BVM at different efficiency levels using the approach described previously in section IV.E of this document.
4. Energy Prices
DOE derived electricity prices from the EIA energy price data by sector and by state(EIA Form 861) for average electricity price data for the commercial and industrial sectors. DOE used projections of these electricity prices for commercial and industrial consumers to estimate future energy prices in the LCC and PBP analyses. EIA's
AEO2022
was used as the source of projections for future electricity prices.
DOE developed 2021 commercial and industrial retail electricity prices for each state and the District of Columbia based on EIA Form 861. To estimate energy prices in future years, DOE multiplied the 2021 energy prices by the projection of annual average price changes for each of the nine census divisions from the Reference case in
AEO2022,
which has an end year of 2050.
38
To estimate price trends after 2050, the 2041-2050 average was used for all years DOE used EIA's 2018 Commercial Building Energy Consumption Survey
39
(CBECS 2018) to determine the difference in commercial energy prices by building type. DOE applied the ratio of a specific building type's electricity prices to average commercial electricity prices in the LCC and PBP analyses.
38
EIA.
Annual Energy Outlook 2022 with Projections to 2050.
Washington, DC. Available at
www.eia.gov/forecasts/aeo/
(last accessed February 2023).
39
www.eia.gov/consumption/commercial/.
DOE's methodology allows electricity prices to vary by sector, state, region, and building type. In the analysis, variability in electricity prices is chosen to be consistent with the way the consumer economic and energy use characteristics are defined in the LCC analysis. Chapter 8 of the NOPR TSD provides more detail about DOE's approach to developing energy prices and price trends.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing equipment components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in equipment efficiency entail no, or only minor, changes in repair and maintenance costs compared to baseline efficiency equipment. The repair cost is the cost to the consumer for replacing or repairing BVM components that have failed. For the LCC analysis, repair costs also include refurbishment costs and the cost of replacing BVM components routinely within the lifetime of a BVM. The LCC analysis models compressors, evaporator fan motors and condenser fan motors being repaired or replaced twice in the lifetime of the BVM. The maintenance cost is the cost to the consumer of maintaining equipment operation. Chapter 8 of the NOPR TSD provides more detail about DOE's maintenance, repair, and refurbishment cost calculations.
DOE request comments on the frequency and nature of compressor and motor repairs or replacements in BVMs.
6. Equipment Lifetime
For BVMs, DOE used information from various literature sources and input from manufacturers and other interested parties to establish equipment lifetimes for use in the LCC and PBP analyses. This analysis assumes an average lifetime of 13.4 years based on refurbishments of major components occurring twice during the life of the equipment at an interval of 4.5 years. This estimate is based on a 2010
ENERGY STAR webinar,
40
which reported average lifetimes of 12 to 15 years, and data on the distribution of equipment ages in the stock of BVMs in the Pacific Northwest from the Northwest Power and Conservation Council 2007 Regional Technical Forum
41
(RTF), which observed the age of the units in service to be approximately 8 years on average.
40
EPA. “Always Count Your Change, How ENERGY STAR Refrigerated Vending Machines Save Your Facility Money and Energy.” 2010.
www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf.
41
Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott. Characterization and Energy Efficiency Opportunities in Vending Machines for the Northwestern US Market. Prepared for Northwest Power and Conservation Council Regional Technical Forum by Quantec, LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007.
In response to the April 2022 Preliminary Analysis, NAMA commented that DOE should develop a model showing what impact increasing the retail price of a new BVM has on purchasing refurbished machines and delaying purchases of new machines. (NAMA, No. 14 at p. 13) NAMA pointed out that any sale of a refurbished machine reduces the sales of a new machine designed to the new energy standards, thus increasing the amount of time that the overall impact on the net change to U.S. energy consumption of the United States by vending machines would occur.
Id.
DOE acknowledges this comment and uses the data available to determine the lifetime assumptions of BVMs in the LCC and PBP analyses. DOE models two refurbishment processes, each adding to the average lifetime of equipment. DOE does not have data available to support how higher MSPs would impact the lifetime of BVMs. DOE uses the latest industry report to determine shipments and amount of annual shipments and sales of new BVMs.
7. Discount Rates
The discount rate is the rate at which future expenditures are discounted to establish their present value. In the calculation of LCC, DOE determined the discount rate by estimating the cost of capital for purchasers of BVMs. Most purchasers use both debt and equity capital to fund investments. Therefore, for most purchasers, the discount rate is the weighted-average cost of debt and equity financing, or the weighted-average cost of capital (WACC), less the expected inflation.
To estimate the WACC of BVM purchasers, DOE used a sample of nearly 1,200 companies grouped to be representative of operators of each of the commercial business types (health care, lodging, foodservice, retail, education, food sales, and offices) drawn from a database of 6,177 U.S. companies presented on the Damodaran Online website. This database includes most of the publicly traded companies in the United States. The WACC approach for determining discount rates accounts for the current tax status of individual firms on an overall corporate basis. DOE did not evaluate the marginal effects of increased costs, and, thus, depreciation due to more expensive equipment, on the overall tax status.
DOE used the final sample of companies to represent purchasers of BVMs. For each company in the sample, DOE combined company-specific information from the Damodaran Online website, long-term returns on the Standard & Poor's 500 stock market index from the Damodaran Online website, nominal long-term Federal government bond rates, and long-term inflation to estimate a WACC for each firm in the sample.
For most educational buildings and a portion of the office buildings and cafeterias occupied and/or operated by public schools, universities, and State and local government agencies, DOE estimated the cost of capital based on a 40-year geometric mean of an index of long-term tax-exempt municipal bonds (≤20 years). Federal office space was assumed to use the Federal bond rate, derived as the 40-year geometric average of long-term (≤10 years) U.S. government securities.
See chapter 8 of the NOPR TSD for further details on the development of consumer discount rates.
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-new-standards case (
i.e.,
the case without amended or new energy conservation standards).
To estimate the energy efficiency distribution of BVMs for 2028, DOE relied on publicly available energy use data. Specifically, the market efficiency distribution was determined separately for each equipment class for which certification information was available in the DOE certification
42
and ENERGY STAR databases.
43
The estimated market shares for the no-new-standards case for BVMs are shown in Table IV.6. See chapter 8 of the NOPR TSD for further information on the derivation of the efficiency distributions.
42
See
www.regulations.doe.gov/ccms.
43
See
www.energystar.gov/productfinder/product/certified-vending-machines/results.
Table IV.6—Efficiency Level Distribution Within Each Equipment Class in No-New-Standards Case for Beverage Vending Machines
Equipment class
Efficiency level
0
(%)
1
(%)
2
(%)
3
(%)
4
(%)
5
(%)
6
(%)
7
(%)
Class A
67
17
0
11
0
0
0
6
Class B
44
44
0
11
0
0
0
0
Combo A
47
6
0
24
18
0
6
0
Combo B
100
0
0
0
0
0
0
0
The LCC Monte Carlo simulations draw from the efficiency distributions and randomly assign an efficiency to the BVMs purchased by each sample household in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions.
9. Split Incentives
DOE understands that, in most cases, the purchasers of BVMs (a bottler or a vending services company) do not pay the energy costs for operation and thus will not directly reap any energy cost savings from more efficient equipment. However, DOE assumes that BVM owners will seek to pass on higher equipment costs to the users who pay the energy costs, if possible. DOE
understands that the BVM owner typically has a financial arrangement with the company or institution on whose premises the BVM is located, in which the latter may pay a fee or receive a share of the revenue from the BVM. Thus, DOE expects that BVM owners could modify the arrangement to effectively pass on higher equipment costs. Therefore, DOE's LCC and PBP analyses uses the perspective that the company or institution on whose premises the BVM is located pays the higher equipment cost and receives the energy cost savings.
In response to the April 2022 Preliminary Analysis, NAMA commented that the purchaser of a refrigerated vending machine is typically not the company who will utilize the machine, and that the market explanation given in the April 2022 Preliminary Analysis TSD does not reflect this. (NAMA, No. 14 at p. 7)
DOE acknowledges the comment and agrees with NAMA that the purchaser of a BVM is not typically the same entity that utilizes the BVM and receives energy savings. DOE assumes in the LCC analysis that the increased purchase costs of higher-efficiency equipment
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