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Model Conservation Standards

Model Conservation Standards. Economic Analysis for New Single Family and Manufactured Home Construction May 5, 2009. What Are the “Model Conservation Standards”?. Act requires that Council’s Plan set forth model conservation standards (MCS) for: New and existing buildings

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Model Conservation Standards

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  1. Model Conservation Standards Economic Analysis for New Single Family and Manufactured Home Construction May 5, 2009

  2. What Are the “Model Conservation Standards”? • Act requires that Council’s Plan set forth model conservation standards (MCS) for: • New and existing buildings • Utility and government conservation programs • Other consumer actions slide 3

  3. Model Conservation Standards – Decision Criteria • The Act requires that the MCS be set at levels that: • achieve all regionally cost-effective power savings (i.e., cost less than new generation ); and, • that are economically feasible for consumers, taking into account financial assistance that may be made available through Bonneville slide 4

  4. Where Are We?(Thermal Shell Only)

  5. Where Are We?Other Measures • Oregon Code • Requires ~50% of lamps be “CFL” equivalent • Requires use of PTCS duct sealing or higher efficiency Heat Pump (HSPF 8.5) • Washington Code • Will require (July 2010) “duct sealing” or interior ducts • Montana & Idaho • “Scheduled” to adopt 2009 IECC which requires better insulated above grade and below grade walls, duct tightening (0.08 cfm/sq.ft) and limits some “loophole” equipment tradeoffs.

  6. Analytical Approach – Regional Cost Effectiveness • Use forecast of future market prices and load shape of savings to establish “energy value” • Include T&D Benefits to establish “capacity value” • Incorporate “risk” by adjusting future market value (+/-) based on portfolio analysis modeling results slide 9

  7. Analytical Approach –Economic Feasibility • Use “lowest life cycle cost” code compliant home for each heating zone as “base case,” independent of space conditioning system type and including lighting and water heating. • Compute life cycle ownership cost of new home with increased levels of efficiency, including HVAC, DHW & lighting • Use “Monte Carlo” model to identify lowest average “life-cycle” cost package for each climate zone by testing multiple (1500+) combinations of values for major input assumptions, e.g. mortgage rates, retail electric rates, marginal tax rates, thermal shell efficiency, HVAC equipment efficiency, lighting efficiency, etc.

  8. Scope of Analysis • New Single Family Construction • Analysis covers thermal shell, HVAC, Hot Water Heating & Lighting improvements to homes with: • Zonal Electric Heat • Air Source heat pumps • Electric Force-air furnaces with and without central air conditioning • Tested: • Eleven shell improvement measures • Three HVAC equipment efficiency levels • Three HVAC duct efficiency levels • Four Water Heating Efficiency Levels • Four lighting efficiency improvement levels

  9. Efficiency Packages – Site Built Homes

  10. Efficiency Packages – Manufactured Homes

  11. Life Cycle Cost – Input Assumptions • Mortgage Rate and Term (Based on 1985 – 2007 data) • Consumer Discount Rate • Downpayment (Based on 1985 -2005 data) • Private Mortgage Insurance (for less than 20% down) • Retail Electricity Price (2007 utility specific average revenue/kWh) • Retail Electricity Escalation Rate (6th Plan/Global Insights) • State and Federal Income Tax Rate (2009 Rates) • State Property Tax Rate (2008-09 rates) • Homeowner’s Insurance Rate • Measure Incremental Cost • Measure Incremental Savings slide 10

  12. Life Cycle Cost – “Uncertainty” Model • Problem • All of the major input assumptions are known to vary over a range, yet each new homebuyer will face unique combination of financial conditions • “Point estimates” for each assumption result in “Yes/No” answers, when the real conclusion is “sometimes OK, sometimes not so OK” • Solution • Use distributions of input assumptions that represent the “probability” that a specific value for each input will occur to compute the likelihood that a specific level of efficiency is economically feasible slide 11

  13. Consumer Life Cycle Cost Model Considers Uncertainty

  14. Life Cycle Cost (NPV 2006 000$) Cost for Input Set 2 Cost for Input Set 1 240 241 243 244 245 246 247 248 249 250 Distribution of Life Cycle Cost for A Single Upgrade Package Mean LCC Number of Observations

  15. Zone 1 – Life Cycle Cost Distribution for “Best Package”

  16. Base Case Life Cycle Cost – Single Family

  17. Base Case Life Cycle Cost – Manufactured Home

  18. Base Case Annual Energy Use* – Single Family *Includes space conditioning, water heating & lighting

  19. Base Case Energy Use* – Manufactured Home *Includes space conditioning, water heating & lighting

  20. Base vs Lowest Life Cycle Cost – Single Family

  21. Base vs Lowest Life Cycle Cost – Manufactured Home

  22. Single Family – Zone 1Energy Use

  23. Single Family – Zone 2Energy Use *Zone 2 HP higher than zonal due to addition of air conditioning

  24. Single Family – Zone 3Energy Use

  25. Manufactured Home – Zone 1Energy Use

  26. Manufactured Home – Zone 2Energy Use

  27. Manufactured Home – Zone 3Energy Use

  28. Base vs Lowest Life Cycle Cost – First Cost: Single Family

  29. Base vs Lowest Life Cycle Cost – First Cost: Manufactured Home

  30. Zone 1: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  31. Zone 1: Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 7,600 kWh/yr • LCC = $307,500 • LCC Savings = $6,748 ($6870 over HP Base) • First Cost Increase = $8,602 ($3,655 over HP Base) • Energy Savings = 8,310 kWh/yr (4,120 kWh/yr over HP Base)

  32. Zone 2: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  33. Zone 2: Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 10,460 kWh/yr • LCC = $315,460 • LCC Savings = $9,150 ($10,380 over HP Base) • First Cost Increase = $8,600 ($3,655 over HP Base) • Energy Savings = 9,090 kWh/yr (10,040 over HP Base)

  34. Zone 3: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  35. Zone 3: Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 12,455 kWh/yr • LCC = $242,300 • LCC Savings = $13,070 ($14,640 over HP Base) • First Cost Increase = $8,600 ($3655 over HP Base) • Energy Savings = 12,300 kWh/yr (12,425 kWh/yr over HP Base)

  36. Zone 1 – Manufactured Home Base CaseLowest Life Cycle Cost Code Compliant Package • HVAC System – Heat Pump HSPF 7.7/SEER 13 • DHW – EF90 • Average Use (kWh) = 10,130 • First Cost = $8,730 • Minimum LCC = $99,750

  37. Zone 1: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  38. Zone 1: Manufactured Home Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 5,430 kWh/yr • LCC = $93,705 • LCC Savings = $6,045 • First Cost Increase = $2,175 • Energy Savings = 4,700 kWh/yr

  39. Zone 2 – Manufactured Home Base CaseLowest Life Cycle Cost Code Compliant Package • HVAC System – Heat Pump HSPF 7.7/SEER 13 • DHW – EF90 • Average Use (kWh) = 14,530 • First Cost = $8,730 • Minimum LCC = $104,170

  40. Zone 2: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  41. Zone 2: Manufactured Home Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 7,165 kWh/yr • LCC = $95,625 • LCC Savings = $8,545 • First Cost Increase = $2,175 • Energy Savings = 7,360 kWh/yr

  42. Zone 3 – Manufactured Home Base CaseLowest Life Cycle Cost Code Compliant Package • HVAC System – Heat Pump HSPF 7.7/SEER 13 • DHW – EF90 • Average Use (kWh) = 17,160 • First Cost = $8,730 • Minimum LCC = $103,075

  43. Zone 3: Life Cycle Cost Minimum & Regional Cost-Effective Thermal Shell Packages

  44. Zone 3: Manufactured Home Life Cycle Cost MinimumHVAC, Lighting & DHW • HSPF 7.7 /SEER 13 Heat Pump w/ Interior Ducts & PTCS System Commissioning & Controls • Lighting Power Density = 0.6 Watts/sq.ft. • Heat Pump Water Heater • Average Use = 8,175 kWh/yr • LCC = $91,230 • LCC Savings = $11,845 • First Cost Increase = $2,375 • Energy Savings = 8,985 kWh/yr

  45. Background Slides

  46. What is the “Surcharge Policy”? • The Council’s Plan must contain a recommendation to the Administrator regarding whether the a utility’s failure to achieve MCS savings should be subject to a surcharge on all of a its power purchases from Bonneville • Surcharges may not be less than 10%, nor greater than 50% of Bonneville’s rate. slide 2

  47. The MCS - A Short History:Chapter 1 • Council adopted first MCS April 27, 1983 • Established space heating performance targets for new electrically heated residences for three Northwest Climate Zones • Less than 6,000 Heating Degree Day (HDD) • 6000 – 8000 HDD* • More than 8000 HDD* • MCS requirements were 40% better than toughest existing energy codes in region • Recommended that MCS be adopted by January 1, 1986 or BPA impose 10% surcharge on utilities serving non-complying areas slide 5 *Now Zone 2 = 6000 – 7499 HDD, Zone 3 = 7500 HDD and greater

  48. The MCS – A Short History: Chapter 2 • 1983 – 1991 • Council sued by Seattle Master Builders contesting legality and level of the MCS • Conclusion – Ninth Circuit Rules for Council • Utilities demand that Bonneville sponsor “R&D” project (RSPD) to test “cost-effectiveness” of MCS • Conclusion – Bonneville finds MCS cost-effective • Bonneville, following Council’s Plan, sponsors “early code” adoption and “energy efficient” new homes marketing program (Super Good Cents) • Conclusion – Tacoma adopts MCS, the Region follows . . . slide 6

  49. The MCS – A Short History: Chapter 3 • Current Status • Oregon and Washington have energy codes that meet or exceed the original MCS • Montana has adopted the 2003 International Energy Conservation Code (IECC) • Idaho jurisdictions commenced enforcement of 2006 the International Energy Conservation Code (IECC) on January 1, 2008 • The IECC codes require efficiency levels that are within 15% of the original MCS, meeting Council’s 85% “achievability” target. slide 7

  50. The MCS – A Short History: Chapter 4 • It’s Time for Another Cost-Effectiveness Review • Issues: • Are there additional thermal shell measures that are “regionally cost-effective” and “economically feasible”? (5th Plan did not identify any) • Are there non-thermal shell measures (e.g. HVAC equipment, lighting, water heating, appliances) that should be considered for inclusion? • Should the MCS consider carbon mitigation cost risk independent of the incorporating future energy cost into the economic analysis? slide 8

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