1. © ABB BU Transformers - 1 Ramifications of the New Transformer Efficiency Standards Wes Patterson VP of Technology Transformers North America 2008 Rural Electric Power Conference Charleston, SC

2. © ABB BU Transformers - 2 - ABB BU Transformers The National Efficiency Standard Liquid & Dry Distribution Transformers Domestic and Imported production Manufactured in or imported into the United States and its territories* on or after Jan 1, 2010 Product – ABB Operational Impact: Overhead – Athens Pads, Secd’y Unit Sub & Networks – Jefferson City & So.Boston Dry Type - Bland Industry Impact: Utility Industrial Construction * Note: Apply to Puerto Rico, Guam, and all other territories and possessions

3. © ABB BU Transformers - 3 - ABB BU Transformers Impact to the Customer Increased size & weight Increased price of transformer Financial valuation & justification  A/B factors related to National Standard Transition strategy  Wait to last minute or move now Potential pre-buy decision based on applicable date Risk of delayed projects that cross the applicable date

4. © ABB BU Transformers - 4 - ABB BU Transformers Footprint Variation relative to TSL0 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.10

5. © ABB BU Transformers - 5 - ABB BU Transformers Weight Variation relative to TSL0 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.29

6. © ABB BU Transformers - 6 - ABB BU Transformers Impact of A/B factors Loss Evaluation Cost Of Losses (COL) = (A x No Load Loss) + (B x Load Loss) ($/watt x watts) + ($/watt x watts) Total Owning Cost (TOC) = Transformer Price + COL A & B factors result in most cost-effective design over product life cycle based on customers’ cost of energy ABB & PPI recommend customers’ re-evaluate and/or establish factors at or above the national efficiency standards Note: A = PW Inflation x Annual $/kW x n yrs; B = A x (load p.u.) 2 x Conductor Temp Correction

7. © ABB BU Transformers - 7 - ABB BU Transformers Price Variation relative to TSL0 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.33

8. © ABB BU Transformers - 8 - ABB BU Transformers Price Variation relative to TSL1 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.16

9. © ABB BU Transformers - 9 - ABB BU Transformers TOC Variation relative to TSL0 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.33

10. © ABB BU Transformers - 10 - ABB BU Transformers TOC Variation relative to TSL1 Liquid-Filled 1ph 10-167 kVA Pad Max: 1.16

11. © ABB BU Transformers - 11 - ABB BU Transformers Impact to the Customer Increased size & weight Increased price of transformer Financial valuation & justification  A/B factors related to National Standard Transition strategy  Wait to last minute or move now Potential pre-buy decision based on applicable date Risk of delayed projects that cross the applicable date Manufactured in or imported into the United States and its territories* on or after Jan 1, 2010 * Note: Apply to Puerto Rico, Guam, and all other territories and possessions

12. © ABB BU Transformers - 12 - ABB BU Transformers Impact to Manufacturer Redesign and re-optimize Material selection and availability Impact of unit weight and size Compliance & Enforcement

13. © ABB BU Transformers - 13 - ABB BU Transformers What is transformer efficiency? %Efficiency = 100 x Output Watts / Input Watts Output being less than input due to losses in form of heat % Efficiency = L. kVA. COS . 10 5 L. kVA. COS . 10 3 + Fe + L 2. (LL) L (pu) = Load V r No-Load Losses (A) Load Losses (B) Note: National Standard Efficiency calculated using load at 50% & PF (COS θ) = 1

14. © ABB BU Transformers - 14 - ABB BU Transformers Transformer Losses Total Loss = No-Load Loss + Load Loss No Load Losses - Core Loss Hysteresis Loss - steel chemistry, coating, processing Eddy Loss - steel thickness Load Losses - Conductor loss I 2 R Loss - material (CU vs. AL), size and length Eddy Loss - geometry, proximity to steel parts

15. © ABB BU Transformers - 15 - ABB BU Transformers No Load Losses – Material Impact M3 M2 M6

16. © ABB BU Transformers - 16 - ABB BU Transformers Where Rated voltage and number of turns refer to either the high voltage or low voltage coil Induction is a function of the electrical steel limited by its saturation value f is the frequency No Load Losses – Design Impact

17. © ABB BU Transformers - 17 - ABB BU Transformers Load Losses – Conductor I 2 R I = Rated Current R = Resistance of the conductor Resistivity - property of the material Copper = 0.017 Aluminium = 0.028

18. © ABB BU Transformers - 18 - ABB BU Transformers Load Losses - Conductor Eddy Loss Less of an impact than I 2 R Eddy loss in the conductor Thin conductors have less eddy loss Eddy loss in adjacent ferrous metal LV Lead close to tank wall sets up eddy currents in the tank

19. © ABB BU Transformers - 19 - ABB BU Transformers How to Reduce Losses? Ways to Reduce No-Load Loss Ways to Reduce Load Loss Use better grade of core steel Use copper rather than aluminum Use thinner core steel laminations Use a conductor with a larger area Use more turns in the coilUse fewer turns in the coil Use a core with larger leg area

20. © ABB BU Transformers - 20 - ABB BU Transformers Impact to Manufacturer Redesign and re-optimize Material selection and availability Impact of unit weight and size Compliance & Enforcement

21. © ABB BU Transformers - 21 - ABB BU Transformers Greatest impact on transformer costs of all commodities Limited worldwide production Extreme shortage of higher grade materials Expanding global demand US producers are raising prices to match world levels DOE Energy Efficiency Levels will have a significant impact on electrical steel requirements Electrical Steel in the MOST Critical

22. © ABB BU Transformers - 22 - ABB BU Transformers Design Impact - Materials All M6 tonnage shifts to other grades 23D becomes 1% of the Total ES 27D becomes 6% of the Total ES M2 becomes 8% of the Total ES 16% Increase in Total Core Steel Tonnage M3 becomes 75% of the Total ES M4 becomes 6% of the Total ES 18% Increase in Total Conductor Tonnage 19% Increase in Aluminum 16% Increase in Copper

23. © ABB BU Transformers - 23 - ABB BU Transformers Global Supply Base 2007

24. © ABB BU Transformers - 24 - ABB BU Transformers GOES Demand-Supply Sensitivity From 2007 thru 2010…. E-steel req 25.0/3.0 = CN CAGR=25%, all others 3.0% E-steel req 20.0/3.0 = CN CAGR=20%, all others 3.0% E-steel req 15.0/2.7 = CN CAGR=15%, all others 2.7% E-steel req 9.2/2.7 = CN CAGR=9.2%, all others 2.7%

25. © ABB BU Transformers - 25 - ABB BU Transformers Impact to Manufacturer Redesign and re-optimize Material selection and availability Impact of unit weight and size Compliance & Enforcement

26. © ABB BU Transformers - 26 - ABB BU Transformers Design Impact Increase in conductor cross section Copper consumption for overheads Copper and aluminum for pads Average oil volume per unit increases due to wider & deeper tanks not being offset by reduction in tank height Some cases higher efficiency leads to lower losses, less heating and a reduction or elimination of radiators Weights and dimensions increase in most cases Transportation cost increase as less units per truck load

27. © ABB BU Transformers - 27 - ABB BU Transformers Impact to Manufacturer Redesign and re-optimize Material selection and availability Impact of unit weight and size Compliance & Enforcement

28. © ABB BU Transformers - 28 - ABB BU Transformers National Standard Compliance Manufacturer determines efficiency of a basic model either by testing or by an Alternative Efficiency Determination Method (AEDM).  Basic model being same energy consumption along with electrical features being kVA, BIL, voltage and taps  Calculated load at 50% & PF=1; NL 20°C & LL 55°C (liquid- filled) LL 75°C (dry-type)  Auxiliary devices – circuit breakers, fuses and switches – excluded from calculation of efficiency AEDM approach is offered in 10 CFR 431 “to ease the burden on manufacturers” Note: testing shall be per Appendix A to Subpart K of 10 CFR 431

29. © ABB BU Transformers - 29 - ABB BU Transformers Distribution of efficiencies for all units of a basic model Standard Level for Efficiency per Table I.1. of 10 CFR 431; example, 99.08% for 50 kVA Single Phase Higher Efficiency Similar to quoting average losses today The mean efficiency of a basic model will be at the standard DOE Compliant

30. © ABB BU Transformers - 30 - ABB BU Transformers Distribution of efficiencies for all units of a basic model Standard Level for Efficiency per Table I.1. of 10 CFR 431; example, 99.08% for 50 kVA Single Phase Higher Efficiency The mean efficiency of a basic model will be above the standard mean Specified Minimum Efficiency >> DOE

31. © ABB BU Transformers - 31 - ABB BU Transformers Specified Minimum Efficiency >> DOE 100% of the units to meet or exceed efficiency standard Customer should clearly state in its specification Suggested wording could be, “The tested efficiency of all units shipped by serial number and/or stock code must meet or exceed the values in 10 CFR 431, Table I.1. for liquid-immersed distribution transformers. Certified test data by serial number must be provided to confirm compliance with this requirement.”

32. © ABB BU Transformers - 32 - ABB BU Transformers National Standard Enforcement Standard requires the manufacturer to comply no matter country of origin Enforcement depends on third party or other source reporting suspected ‘violators’ to the DOE DOE meets with suspect manufacturer reviewing its underlying test data as to the models in question DOE commences enforcement testing procedures if previous step does not resolve compliance issues Non-compliance results in manufacturer “ceasing distribution of basic model” until dispute resolution DOE might seek civil penalties

34. © ABB BU Transformers - 34 - ABB BU Transformers Product Class / Design Lines / Combo Lines

35. © ABB BU Transformers - 35 - ABB BU Transformers The National Efficiency Standard Liquid & Dry Transformers 60 Hz, < 34.5 kV Input & < 600 V Output Oil-filled Capacity 1Φ10 to 833 kVA 3Φ15 to 2500 kVA Dry-type Capacity 20-45 kV BIL : 15 to 833 (1Φ) & 2500 (3Φ) kVA 46-95 kV BIL : 15 to 833 (1Φ) & 2500 (3Φ) kVA > 95kV BIL: 75 to 833 (1Φ) & 225 to 2500 (3Φ) kVA

36. © ABB BU Transformers - 36 - ABB BU Transformers National Standard - Exclusions Autotransformer Drive (isolation) Grounding Machine-tool (control) Non-ventilated Rectifier Regulating Sealed Special Impedance* Step-up Transformers Testing Tap range > 20% Uninterruptible power supply Welding * Note: Standard Impedances

37. © ABB BU Transformers - 37 - ABB BU Transformers Evolution of a National Standard DOE publishes Notice of Proposed Rulemaking (NOPR) Defined 6 levels of efficiency - 8/4/06 TSL1 = NEMA TP1 TSL2 = 1/3 difference between TSL1 and TSL4 TSL3 = 2/3 difference between TSL1 and TSL4 TSL4 = minimum LCC (Life Cycle Cost) TSL5 = maximum efficiency with no change in the LCC TSL6 = theoretical maximum possible efficiency Recommended that TSL2 become the National Standard Set Sep 2007 target for establishing the Final Rule Solicited comments from concerned parties TSL = Trial Standard Level

38. © ABB BU Transformers - 38 - ABB BU Transformers Transition between NOPR to Final Rule DOE received numerous comments to liquid-filled Technical discrepancy in liquid 3Φ curves 3-1Φ would be less efficient than one equivalent 3Φ liquid DOE resolution creates 4 new efficiency levels for liquid called Design Lines (DL) combining TSL levels: TSLA: DL1-TSL5 & DL3-TSL4 TSLB: DL4-TSL2 & DL5-TSL4 TSLC: DL4-TSL2 & DL5-TSL3 TSLD: DL1-TSL4, DL3-TSL2, DL4-TSL2 & DL5-TSL3

39. © ABB BU Transformers - 39 - ABB BU Transformers NOPR Liquid-Filled 3Φ Discontinuity The efficiency of the 300/500 kVA being more than the 750/1000/1500 kVA’s would artificially disrupt the markets of the 300/500 kVA units

40. © ABB BU Transformers - 40 - ABB BU Transformers NOPR Liquid-Filled 1Φ vs 3Φ Below 750 kVA, the higher efficiency of the three-phase units might artificially shift the markets to (3) single-phase equivalents

41. © ABB BU Transformers - 41 - ABB BU Transformers NOPR Dry, 20-45 BIL, 1-ph versus 3-ph With Dry there was no discrepancy between the single-phase and three- phase efficiencies

42. © ABB BU Transformers - 42 - ABB BU Transformers NOPR Dry, 46-95 BIL, 1-ph versus 3-ph With Dry there was no discrepancy between the single-phase and three- phase efficiencies

43. © ABB BU Transformers - 43 - ABB BU Transformers NOPR Dry, >95 BIL, 1-ph versus 3-ph With Dry there was no discrepancy between the single-phase and three- phase efficiencies

44. © ABB BU Transformers - 44 - ABB BU Transformers Final Rule – The National Standard Final Rule Published Oct 12, 2007 Federal Register - 72 FR 58190 DOE Final Selection TSLC for 1Φ and 3Φ Liquid-filled TSL2 for Dry-types Liquid and dry-type distribution transformers manufactured in or imported into the United States and its territories on or after Jan 1, 2010

45. © ABB BU Transformers - 45 - ABB BU Transformers National Standard - Liquid-filled Note: National Standard Efficiency calculated using load at 50% & PF (COS θ) = 1

46. © ABB BU Transformers - 46 - ABB BU Transformers National Standard - Dry-type Note: National Standard Efficiency calculated using load at 50% & PF (COS θ) = 1

47. © ABB BU Transformers - 47 - ABB BU Transformers Benefits of The National Energy Standard Saves 2.74 quads (10 15 BTU’s) of energy over 29 years Energy of 27 million US households in a single year Eliminating need for 6 new 400 MW power plants Reduce greenhouse gas emission of ~238 million tons of CO 2 Equivalent to removing 80% of all light vehicles for one year Others emission reductions not included in final justification Greater than 46 thousand tons (kt) of nitrous oxide (NO 2 ) Greater than 4 tons of mercury (Hg) Payback ranges from 1 to 15 years based on design line Net present value of $1.39 billion using a 7% discount rate Net present value of $7.8 billion using a 3% discount rate Cumulative from 2010 to 2073 in 2006$