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Efficient Appliances Not As Costly As DOE Estimates

July 31, 2013 By Paul Nastu

Appliance price comparisonThe DOE has been over estimating the impact that energy efficiency appliance standards have on the appliance’s price, says the American Council for an Energy Efficient Economy.

In a report, Appliance Standards: Comparing Predicted and Observed Prices, the ACEEE and the  Appliance Standards Awareness Project (ASAP) say the DOE estimated appliances went up by $148 for 9 different appliance standards, but in reality, they had actually decreased by about $12. The ACEEE price comparison report studied the period between 1998 to 2010.

For example, Census Bureau data show a decrease of $224 for an average commercial air conditioning unit (11–15 ton cooling capacity) over the 2009–2010 period (2011 data are not available). This is -44 percent of DOE’s estimates, despite the fact that the price of copper, a significant air conditioner component, increased about 50 percent in 2006 and about 25 percent in 2010.

The report says that market data shows prices have typically gone down as energy efficiency improved and even when prices did go up, it was marginal, not as huge as the DOE estimates.

When appliance standards are developed, DOE estimates net savings for consumers by taking into account utility bill savings and cost impacts, primarily price increases to make appliances more efficient. DOE only sets standards that it finds are cost-effective for consumers, the report explains.

The report authors say the benefits of energy efficiency standards for consumers will also have to be revised. In 2012, the two organizations released a study estimating that standards for appliances and other equipment would save consumers more than $1 trillion cumulatively by 2035, even after subtracting estimated increases in product prices.

They note that in recent years the DOE has tried to improve the accuracy of its price estimates, but predicting price changes in dynamic markets is difficult, so despite the DOE improving its estimation techniques, its price predictions are still on the higher side.

In concluding, they suggest that the DOE should do additional research on estimating price rise and incorporate sensitivity analysis in its calculations.

In March, the California Energy Commission invited stakeholders in the electronics and appliance industries to weigh in as it considers establishing improved energy efficiency standards for a raft of products.  The Invitation to Participate sought market data from manufacturers, consumer rights groups, utility companies, energy efficiency advocates, industry associations and other interested parties to use toward the establishment of efficiency measures for 15 products in four categories — consumer electronics, lighting, water appliances, and other appliances.

Further product-specific investigations and analysis will be needed to better understand why actual prices are so much lower than DOE estimates. One theory is that as manufacturers redesign products and production lines to meet standards, they discover new lower cost ways to meet the standard than DOE examined.



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