energy efficiency standards for refrigerators in brazil: a methodology for impact evaluation

1

Energy efficiency standards for refrigerators in Brazil: a methodology

for impact evaluation

*Conrado Augustus de Melo

**Gilberto de Martino Jannuzzi

* Núcleo Interdisciplinar de Planejamento Energético NIPE, University of

Campinas

** Faculty of Mechanical Engeneering, University of Campinas - UNICAMP

Rua Mendeleyev, 200 Campinas - CEP:13083-860 – São Paulo

Email: [email protected] Tel: 55 61 98151877

Email: [email protected] Tel: 55 19 3289-3125

Abstract

In Brazil energy efficiency standards for cold appliances was established in 2007.

A specified single set of MEPS (Minimum Energy Performance Standards) for

refrigerators, freezers and freezer refrigerators was implemented without

evaluation of its impacts and estimation of potential electricity savings. This paper

presents a methodology for assessing the impacts of the Brazilian MEPS for cold

appliances. It uses a bottom-up approach to estimate residential end-use

consumption and to evaluate the energy saving potential for refrigerators. The

household electricity consumption is projected by modeling appliance ownership

using an econometric approach based on recent household survey data. A cost-

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benefit analysis for more stringent standards is presented from the perspective of

society and electricity customers. The results showed that even considering the

current market conditions (high discount rate for financing new efficient

equipment) some MEPS options are advantageous for customers. The analysis

also demonstrates significant cost-effective saving potential from the society

perspective that could reach 21 TWh throughout the period of 2010-2030 – about

25% of current residential consumption.

Keywords: Energy efficiency, refrigerators, impacts evaluation.

1. Introduction

Minimum energy performance standards (MEPS) are mechanisms of public

policy that prohibits the commercialization of products which do not comply with

specific limits of energy consumption. MEPS have been implemented in many

countries (Harrington & Damnics, 2004) and are an effective mechanism to

promote energy savings and market transformation (Rosenquist et al, 2006;

Schiellerup, 2002).

The international experience shows that the adoption of these energy standards

requires the implementation of some steps such as technology assessment, market

assessment, price-efficiency relationship, life-cycle costs and also a prospective

evaluation of impacts is required. As an example, McMahon (2004) compares the

establishment of MEPS in the USA and Australia. This comparative analysis

shows the existence of similar steps in the processes adopted and an evident

concern with impacts of the adoption of the standards under the perspective of the

consumers (the life cycle costs), of the society (national benefits and costs), and

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also considering the views of trader associations and manufacturers (industry,

competition and commercial issues).

In Brazil energy efficiency standards policy formally begins with the ‘‘Energy

Efficient Act’’ enacted in 2001 (Brazil, 2001). The specified set of MEPS for

refrigerators, freezers and fridge freezers and air conditioning devices was

adopted only 6 years after the Law (MME, 2007). Criteria to specify the first

MEPS for residential refrigerators were based on the experience of the Brazilian

Labeling Program (PBE). Through the PBE, Brazilian manufacturers, CEPEL1

and INMETRO2 decided to eliminate the last label classes on a voluntary basis.

The standard prohibits manufacturers and importers from placing F and G rated

appliances on the Brazilian market. Table 1 shows the equations used for

estimating the MEPS for the existing refrigerator models in the country.

Table 1 – MEPS of ordinance 362/2007

Equations for maximum consumption levels (MCL - kWh/month) Categories

R141B Cyclopentane Refrigerator MCL= 0.0422 × AV + 23.3227 NMC = 0.0416 × AV + 22.9786 Combined

refrigerator/freezer MCL = 0.1118 × AV + 20.8413 NMC = 0.1101 × AV + 20.5338

Combined refrigerator/freezer

frost free MCL = 0.1292 × AV + 9.1322 NMC = 0.1258 × AV + 8.8936

Vertical freezers MCL = 0.0257 × AV + 47.8582 NMC = 0.0254 × AV + 47.1521 Vertical freezers

frost free MCL = 0.0217× AV + 71.6286 NMC = 0.0214× AV + 70.5718

Horizontal freezers MCL = 0.0925× AV + 15.9759 NMC = 0.0911× AV + 15.7402 Source: MME, 2007. Note: R141B and Cyclopentane are refrigerants. AV is adjusted volume.

Nevertheless, estimates of energy savings potential by adopting the proposed the

standards adopted were not made. The Brazilian Ministry of Mines and Energy

justified that there was not enough information about replacements of old

appliances by new equipments (MME, 2006a and MME, 2006b). The lack of this

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type of analysis makes a precise assessment of energy efficiency potential

impracticable in the context of national energy planning. The estimates of energy

saving potential through MEPS could assist in the identification of cost-effective

opportunities to reduce the requirements for power sector expansion. The National

Energy Plan 2030 (MME & EPE, 2007) does not consider specifically the

potential impacts of energy efficiency mechanisms in the behavior of the

projected electricity demand.

The main goal of this paper is to present a model for impact evaluation of MEPS

in Brazil for the case of home cold appliances. The model is conceived to examine

the economic and energy impacts considering the consumer and society’s

perspective.

2. Refrigeration energy projections: methodology

The proposed methodology combines a bottom up approach based on detailed

engineering appliance data with a stock forecast model which considers the

growth rate of appliance ownership in the residential sector and sales. The

ownership of basic appliances, such as refrigerators, is dynamic and depends

mainly on household income level and the appliance prices. The model utilizes

population forecasts in combination with an econometric parameterization to

estimate the national ownership rate for each year in the forecast. In the horizon of

this study, occurring in the year 2030, the estimated total population of Brazil's

237 million inhabitants while in the year 2005 this value was about 180 million.

The projected scenarios follow the basic assumptions adopted by National Plan of

Energy 2030 (MME & EPE, 2007). The potentials of energy conservation are

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estimated from the differences between the projections of two scenarios: 1) the

BASE Scenario, which reflects the continuity of the current refrigerators energy

consumption, called “BASE Scenario” and; 2) “MEPS Scenarios”, where more

stringent MEPS options are applied. In both scenarios we have considered the

national average tariff of Brazilian the residential sector at US$123.04/MWh

(Brazilian Electricity Regulatory Agency - ANEEL, 2006).

2.1 Data Sources

Three main data bases are used in the present research:

1) For the historical series of GDP/per capita (Gross Domestic

Product/population) and index of appliances prices (IPA-OG) IPEADATA was

used. Available in http://www.ipeadata.gov.br/

2) In the case of the historical series of equipment rate of ownership, as well as,

the number of residences and projection of the population were used the data from

IBGE (Brazilian Institute of Geography and Statistics, 2005). Available in:

http://www.sidra.ibge.gov.br

3) The detailed description of the stock appliances in the household sector was

based on the survey done by ELETROBRAS (2005).

2.2 Refrigerator energy consumption and MEPS options

Refrigerators have undergone significant reductions in electricity consumption

over the last two decades in Brazil. A 27% decrease in electricity consumption

was observed in models with volumes between 250-300 liters (most popular

models) since 1990. (MME & EPE, 2007). Table 2 provides detailed assumptions

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for the models used in this paper. The data used to estimate baseline energy

consumption for the equivalent refrigerators was collected from a national survey

(ELETROBRAS, 2005). Information from a total of 49 refrigerator models from 8

different manufactures was used to establish the three equivalent models adopted

by the authors (Table 2).

Table 2 – MEPS assumed for equivalent models.

Equivalent Model Market share

(Brazil)

BASE consumption (kWh/year)

Energy Efficiency Design Options Assumed (V=volume;

C= consumption)

One-door 201-300 (Liters) Procel Label C

32,59% 326 Refrigerator Europe, 2“Star”1

V=204 liters, C=335 kWh/year

1 door 301-400 (Liters) Procel Label A

25,46% 483 Refrigerator, Brazil, 1“Star”2

V=320 liters, C=360 kWh/year

Combined “Frost Free” 301- 400 (Liters) Procel Label A

14,18% 580 Refrigerator, Europe, 4“Star”1 V=355 liters, C=591 kWh/year

1 Source: CLASP (2006).

2 Source: Queiroz et al. (2005)

In order to calculate the potential for energy efficiency improvement from MEPS

for each equivalent model presented in Table 2, the authors used literature data

from Queiroz et al (2005) and CLASP (2006), whose design and class

configuration is similar to the equivalent model. These proxy data, although not

accurate, provides a solid basis for the projection of prices and efficiency savings

at the household and national level (CLASP, 2006).

Tables 3, 4 and 5 present the engineering data used in the estimates for each

equivalent model. The engineering data considers up to seven combinations of

efficiency improvement options in order to increase energy efficiency. Design

options combinations are cumulative: each subsequent option includes all

measures of the previous combination and an additional one. For instance, for the

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equivalent model 1-door 200-300 liters presented in Table 3, the efficiency can be

improved up to 107%, which is equivalent to a 51% reduction in electricity

consumption and to a corresponding price increase of 16%.

Table 3 – Engineering Parameters for equivalent model – 1 door 200 – 300 liters

Design Number Design Option Efficiency

Improvement Purchase

Price (US$)

Electricity Consumption

(kWh/year) 0 Baseline 0% 417 326

1 Baseline + increased door insulation (+15mm) 12% 421 291

2 1 + decreased door leakage 14% 421 286

3 2 + optimized compressor 30% 433 251

4 3 + increased cabinet insulation (+15mm) 64% 450 199

5 4 + increased door insulation (+15mm) 75% 454 186

6 5 + increased cabinet insulation (+15mm) 102% 475 161

7 6 + double evap. Heat cap. 107% 483 157 1 2,4 R$/US$ as for 2005 (Bacen, 2006).

Source: based on CLASP (2006)

Table 4 – Engineering Parameters for equivalent model – 1 door 301 - 400 liters

Design Number

Design Option Efficiency


Price (US$)1

Electricity Consumption (kWh/year)

0 Baseline 0% 583 483

1 Baseline + more efficient

compressor 21%

636 399

2 1 + increase of door insulating

thermal thickness 1.27 cm 25%

648 386

3 2 + increase of wall insulating


706 347



723 343



764 320

1 2,4 R$/US$ as for 2005 (Bacen, 2006).

Source: Queiroz (2003).

Table 5 – Engineering Parameters for equivalent model – 2 doors 301 - 400 liters Frost Free

Design Number Design Option Efficiency


Price (US$)1

Electricity Consumption

(kWh/year) 0 Base 0% 750 580

1 Base + improved compressor 14% 758 509

2 1 + increase of door insulating (35/ 65 mm)

19% 765

487

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3 2 + increase of door insulating (50/80) mm 23% 773 472

4 3 + decreased door leakage 24% 773 468

5 4 + increased cabinet insulation (45/65mm) 38% 795 420

6 5 + increased cabinet insulation (60/80mm) 48% 810 392

7 6 + doubled cond. Surface 71% 848 339 1 2,4 R$/US$ as for 2005 (Bacen, 2006).

Source: based on CLASP (2006)

The main factor affecting the life-cycle cost of each design option is the degree to

which the first cost increases with the improved efficiency. The relation between

the product efficiency and its cost is based on the cost incurred to manufacturers

to implement a particular energy-saving design. The model assumes retail price

scales, in percentage terms, as the manufacturer’s incremental costs. This

assumption allows the estimate of retail prices by using a price estimate of current

baseline models in combination with fractional price increases (CLASP, 2006).

2.3 Stock forecast

A forecast of the total number of products operating in Brazil in each year, and the

rate at which old, inefficient products are replaced with new, efficient ones must

be made in order to determine the national-level impacts of MEPS. The general

form of the econometric parameterization of product rate of ownership is given by

Equation 1.

βαPYkS ××= (1)

where S, is the appliance rate of ownership in the household sector. Y is the

income (GDP), P is the appliance prices, and k is a constant. The parameters α and

β represents the impacts of the income and price respectively on equipment

ownership.

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A least squares fit to the data for each appliance was performed and the results

are given in Table 6 and showed in figure 1. The strong correlation between

ownership with income and appliance prices is evident. The results are relatively

well modeled indicating the resolving power of the other variables, income (proxy

is GDP/per capita) and index of appliances prices.

Table 6 – Model Parameters for cold Appliances ownership

Parameters Refrigerator α 0,05666 β -0,00791 R2 0,95034

0,89

0,89

0,90

0,90

0,91

0,91

0,92

0,92

0,93

0,93

0,94

0,94

2001 2002 2003 2004 2005 2006

Rat

e o

f O

wn

ers

hip

Data

Model

Figure 1 – Refrigerator rate of ownership: model and actual data

2.4 Refrigerators sales model

The sales model determines the fraction of appliances that will be affected by

efficiency programs at any point in the forecast. The determination of

economically-driven appliance ownership rates allows for the calculation of the

total stock of appliances and product sales. Sales are driven by the increase in

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households owning appliances, or by the replacement of retired appliances. In

Brazil there is a combined effect of economic growth and increase of number of

household, which the “first purchase” component is a considerable driver of sales.

Sales due to increased ownership are given by Equation 2.

( ) ( ) ( ) ( ) ( )1-×1--×= ySyNRySyNRyPC (2)

where PC stands for first purchase, NR(y) is the number of households in each

year, S(y) is the function presented in the equation 1.

In addition to first purchases, the model describes the replacement of an appliance

in terms of an annual retirement probability that varies as a function of the

appliance age. It is given by Equation 3.

( )

−−

+

=Did

VuIde

e

IdP

1

1 (3)

where P(Id) is the probability of retirement at a given appliance age (Id), Vu is the

average lifetime of the product, and where Did is the mean deviation of

replacement ages, assumed to be two years. In this way, the appliances

replacement in each year is given by Equation 4.

( ) ( ) ( )∑=

×−=30

1

,1Id

e IdPIdystockySub (4)

where Sub(y) is the number of equipment replaced in year y. Stock(y-1, Id) is the

number of products of vintage Id remaining in each year. Id equal 30 is the

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maximum age of refrigerators in the stock in each year. At last, the total sales (TS)

for the each year are given by Equation 5.

)()()( yPCySubyTS += (5)

2.5 Customers point of view

This perspective is a critical factor in the decision for which MEPS is appropriate

minimum efficiency level. Then for each household is provided an estimate of the

financial impacts of minimum efficiency standards at the unit level through Life

Cycle Cost (LCC) methodology. There are two main components in this analysis

which are the equipment cost and the operation costs. The method is given by

Equation 6.

( )∑+

+=n

R

OCEqLCC

1 (6)

where Eq is equipment cost (retail price), n is the year since purchase and OC is

the annual operating cost. Operating cost is summed over each year of the lifetime

of the appliance. Operating cost is calculated as follows in the equation (7):

TariffEnCOC ×= (7)

where EnC [kWh/year] is Energy consumption and Tariff is the price of electricity

[US$/kWh].

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2.6 Societal point of view

Under the societal perspective the method consists in calculating the total energy

savings resulted from the difference in energy consumption between the BASE

and the MEPS scenarios. In the BASE case, all products are assumed to be

operating at the current efficiency baseline characterized by the current appliances

stock. In the MEPS case, those products, purchased after the MEPS

implementation, are assumed to operate at the efficiency determined by specific

MEPS options. In this method MEPS affects only new products, not those already

installed before the implementation year. In the first implementing year of

standards, therefore, savings are small, since the standard only has an effect on the

products purchased in that year. As time goes on, more and more of the product

stock is impacted by standards. The total energy saving is given by Equation 8.

( ) ( ) ( )BASE MEPSES y CE y CE y= - (8)

where ES is the total energy saving, CE is the energy consumption in each

scenario given by Equation 9:

( ) ( ) ( )∑=

×=30

1

,Id

ypCeIdystockyCE (9)

where Ce is determined according to the year of purchase (yp). The Ce differs

between the BASE and the MEPS scenarios for year after the MEPS option

implementation.

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The benefits for society are accounted as the total economic savings occurred

from electricity savings. Equation 10 illustrates the model of accounting of the

benefits (BS).

( ) ( ) TariffyESyBS ×= (10)

On the other hand the national costs in year (y) are the sum of equipment costs

equal to the retail price times the total number of sales in each scenario. Equation

11 illustrates the model of accounting of the costs (CS).

( ) ( ))(×)(-)(×)(=)( yEqyTSyEqyTSyCS BASEBASEMEPSMEPS (11)

where TS is the total units sold and Eq is the equipment price.

The Net Present Value of the MEPS option is then defined as the sum over a

particular forecast period of the net national savings in each year, multiplied by

the appropriate national policy discount rate as given for Equation 12.

( ) ( )( )( )

( )∑

+×−= −

yn

yy

ryCSyBSVPL

0

1

1 (12)

where r is the discounting rate considered 8%3 in the simulations.

3. Model Results and Impacts

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The energy saving potential and the economic evaluation front to the perspective

of the consumers and the society are described as follow. These results pursue the

premises of economic growth of the B1 scenarios (rate of 4.1% per year)

presented in the National Energy Plan (2030) (EPE & MME, 2007).

3.1 Maximum energy saving potential

The aggregation of all energy efficiency design options for each equivalent model

represents the maximum energy saving potential, i.e the highest level of energy

saving is achieved through the most stringent MEPS for refrigerators. The

electricity demand projections for each equivalent model studied are presented in

Table 7. The savings are the difference between the projected scenarios.

Electricity savings increase steeply after the year of program implementation

(2010) as more and more efficient refrigerators are brought into the stock due to

the replacement of old appliances. While in the base case the total consumption

still rises from 21.38 TWh in 2010 to 26,74 TWh in 2025, in the MEPS scenario

the consumption reduces from 20,96 TWh to 15.52 TWh in 2025. By this year,

when the stock will be completely replaced by efficient products, MEPS will have

reduced refrigerator consumption by about 42% compared to the base case4. This

corresponds to about 10% of the current (2007) total residential electricity

consumption.

Table 7 – Results: Consumption and savings potential. Brazil 2010 2015 2020 2025 2030

Models Consumption (TWh/year)

201-300 7,3 8,19 8,28 9,13 9,85

301-400 8,44 9,47 9,58 10,56 11,39

BASE

301-400 FF 5,64 6,33 6,4 7,05 7,61

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Total 21,38 23,99 24,26 26,74 28,85

Models Consumption (TWh/year)

201-300 7,12 6,85 5,23 4,42 4,74

301-400 8,31 8,45 7,26 6,98 7,51

301-400 FF 5,53 5,5 4,5 4,12 4,44

MEPS

Total 20,96 20,8 16,99 15,52 16,69

Models Energy Saving (TWh/year)

201-300 0,18 1,34 3,05 4,71 5,11

301-400 0,13 1,02 2,32 3,58 3,88

301-400 FF 0,11 0,83 1,9 2,93 3,17

Total 0,42 3,19 7,27 11,22 12,16

Saving Potential

% 1,96% 13,30% 29,97% 41,96% 42,15%

3.2 Customer perspective

The life cycle cost analysis gives a trade-off between maximum efficiency and

incremental cost associated with the improvements. The Brazilian retail market

practices a high discount rate 63,6%5 and this reflects directly in the viability

analysis. However, even in these conditions we found options that are still cost-

effective for two equivalent models. While the technical innovations increasing

the retail price the appliance energy consumption (kWh/year) decreases as long as

more innovations are incorporated in the refrigerator. In the case of 1 door (301 –

400 liters) no design options proved to be economically viable, due high costs of

technical innovations when compared to another options. Figure 2 shows the

results obtained from life cycle cost analysis performed. Table 8 summarizes the

results of analysis for each equivalent model. The total cumulative electricity

saving during the period analyzed (2010-2030) is 7 TWh under the customer

perspective.

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400

500

600

700

800

900

1000

100 200 300 400 500 600

kWh/year

US$

1 door 301 -400 l iters

1 door 200 - 300 l iters

Frost free 300 - 400 l iters

Figure 2 – Life cycle cost analysis.

Table 8 - Cost-effectively efficiency improvement and energy saving potential

Model equivalent (liters)

Cost effective technical innovations

Energy efficiency improvement

Cumulative Energy saving (2010-2030)

1 door (201-300) Increase of door insulating (15mm) + decreased door

leakage 14% 4,9 TWh

1 door (301-400) - - -

Combined “Frost Free” (301-400)

improved compressor + increase of door insulating (35/65 mm)

19% 2,1TWh

3.3 Societal Perspective

The societal perspective is here considered as the projection of the total national

expenses taking into account the costs of energy efficiency improvements and the

benefits from the energy savings. This exercise indicates the existence of a bigger

role that more stringent MEPS could play. The net present value for each design

option is given by Table 9. For instance, under the customer perspective for the

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case of the equivalent model 1 door 201-300 liters, the improvement in energy

efficiency is cost-effective up to “design option 2”. On the other hand, under the

societal perspective all design options considered for this case resulted in positive

net present values (NPV). Even the most expensive option has a positive net

present value, which is US$ 183 million throughout the period of 2010 the 2030.

Considering only the cost-effective options presented in Table 6 (option 7 dor the

1-door 200 - 300 liters model, option 2 for the combined frost-free 301 - 400 liters

model) the total energy savings are 20,9 TWh, corresponding to US$ 264 million.

Table 9 – Net Value Present (NPV) in 2010 for each design option

1 door (201-300 liters)

(US$ million) 1 door (301-400 liters)

(US$ million) Combined “Frost Free”

(301-400 liters) (US$ million)

Design option

PVB PVC NPV PVB PVC NPV PVB PVC NPV

1 719 -238 481 1.338 -2.522 -1.184 623 -505 117

2 845 -285 560 1.535 -3.083 -1.547 830 -749 81

3 1.551 -724 827 2.170 -5.881 -3.711 960 -992 -33

4 2.626 -1.661 965 2.283 -6.720 -4.438 1.016 -1.100 -84

5 2.885 -1.899 985 2.648 -8.678 -6.029 1.423 -2.022 -598

6 3.386 -2.814 571 1.690 -2.943 -1.253

7 3.479 -3.295 183 2.165 -4.861 -2.696 Note: NPV is the Net Present Value, PVC is the Present Value of Costs and PVB is the Present Value of Benefits.

4 Conclusions

The methodology presented based on econometric approach and engineering data

for refrigerator ownership and performance provides a practical instrument for

impact evaluation of the minimum energy performance standards for Brazilian

refrigerators. In the Brazilian current policy context it can be a useful tool for

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energy planning, since we have not yet evaluated the effects of adopted MEPS

into the future energy projections.

The simulations prove that there is a substantial economic savings to consumers

and society as a whole. The actual societal benefits should in fact be greater if

socio-economic externalities of the saved electricity were included.

In conclusion, we believe that the analysis presented gives an estimate to date of

the level of refrigerator efficiency savings that could be used for police makers in

the process of MEPS enforcement that still in its initial control stage in Brazil. We

also present here a method to estimate future savings due to implementation of

MEPS.

Acknowledgements

The author Conrado Augustus de Melo would like thanks to CNPq (National

Counsel of Technological and Scientific Development) the opportunity to realize

studies for the PhD at the Energy Planning Program of FEM/UNICAMP.

References

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energy efficiency standards for refrigerators in brazil: a methodology for impact evaluation

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