Techno-Economic Analysis of Indian Draft Standard Levels for Room Air Conditioners

The Indian Bureau of Energy Efficiency (BEE) finalized its first set of efficiency standards and labels for room air conditioners in July of 2006. These regulations followed soon after the publication of levels for frost-free refrigerators in the same year. As in the case of refrigerators, the air conditioner program introduces Minimum Efficiency Performance Standards (MEPS) and comparative labels simultaneously, with levels for one to five stars. Also like the refrigerator program, BEE defined several successive program phases of increasing stringency.

In support of BEE's refrigerator program, Lawrence Berkeley National Laboratory (LBNL) produced an analysis of national impacts of standards in collaboration with the Collaborative Labeling and Standards Program (CLASP). That analysis drew on LBNL's experience with standards programs in the United States, as well as many other countries. Subsequently, as part of the process for setting optimal levels for air conditioner regulations, CLASP commissioned LBNL to provide support to BEE in the form of a techno-economic evaluation of air conditioner efficiency technologies. This report describes the methodology and results of this techno-economic evaluation. The analysis consists of three components:

• Cost effectiveness to consumers of efficiency technologies relative to current baseline.
• Impacts on the current market from efficiency regulations.
• National energy and financial impacts.

The analysis relied on detailed and up-to-date technical data made available by BEE and industry representatives. Technical parameters were used in conjunction with knowledge about air conditioner use patterns in the residential and commercial sectors, and prevailing marginal electricity prices, in order to give an estimate of per-unit financial impacts. In addition, the overall impact of the program was evaluated by combining unit savings with market forecasts in order to yield national impacts. LBNL presented preliminary results of these analyses in May 2006, at a meeting of BEEs Technical Committee for Air Conditioners. This meeting was attended by a wide array of stakeholder, including industry representatives, engineers and consumer advocates. Comments made by stakeholders at this meeting are incorporated into the final analysis presented in this report.

The current analysis begins with the Rating Plan drafted by BEE in 2006, along with an evaluation of the market baseline according to test data submitted by manufacturers. MEPS, label rating levels, and baseline efficiencies are presented in Section 2. First, we compare Indian MEPS with current standards in other countries, and assess their relative stringency. Baseline efficiencies are then used to estimate the fraction of models likely to remain on the market at each phase of the program, and the impact on market-weighted efficiency levels.

Section 3 deals with cost-effectiveness of higher efficiency design options. The cost-benefit analysis is grounded in technical parameters provided by industry representatives in India. This data allows for an assessment of financial costs and benefits to consumers as a result of the standards and labeling program. A Life-Cycle Cost (LCC) calculation is used to evaluate the impacts of the program at the unit level, thus providing some insight into the appropriateness of the levels chosen, and additional opportunities for further ratcheting. In addition to LCC, we also calculate payback periods, cost of conserved energy (CCE), and return on investment (ROI).

Finally, Section 4 covers national impacts. This is an extension of unit level estimates in the two previous sections. Extrapolation to the national level depends on a forecast of air conditioner purchases (shipments), which we describe here. Following the cost-benefit analysis, we construct several efficiency scenarios including the BEE plan, but also considering further potential for efficiency improvement. These are combined with shipments through a stock accounting model in order to forecast air conditioner energy consumption in each scenario, and associated electricity savings and carbon emission mitigation. Finally, financial costs and savings are scaled to the national level to evaluate net fiscal benefits.