CHAPTER 3 MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CONTENTS
3.1 INTRODUCTION ........................................................................................... 3-1 3.1 .1 Description of Products............................................................................ 3-1 3.1.2 Definitions................................................................................................ 3-2 3.1.3 Product Classes ........................................................................................ 3-5 3.1.4 Product Test Procedures .......................................................................... 3-7 3.2 MARKET ASSESSMENT .............................................................................. 3-8 3.2 .1 Trade Associations................................................................................... 3-8 3.2.2 Manufacturer Information...................................................................... 3-10 3.2.3 Distribution Channels ............................................................................ 3-14 3.2.4 Regulatory Programs ............................................................................. 3-16 3.2.5 Voluntary Programs............................................................................... 3-20 3.2.6 Historical Shipments.............................................................................. 3-24 3.2.7 Industry Cost Structure .......................................................................... 3-28 3.2.8 Equipment Lifetime ............................................................................... 3-29 3.2.9 Market Performance Data...................................................................... 3-30 3.3 TECHNOLOGY ASSESSMENT.................................................................. 3-45 3.3 .1 Baseline Equipment Components and Operation .................................. 3-45 3.3.2 Technology Options............................................................................... 3-47 3.3.3 Technologies that Do Not Affect Energy Efficiency as Measured........ 3-71

LIST OF TABLES Table 3.1.1 Product Classes for Residential Water Heaters ............................................ 3-5 Tab le 3.1.2 Product Classes for Direct Heating Equipment ............................................ 3-6 Table 3.1.3 Direct Heating Equipment Product Class Description Revision .................. 3-7 Table 3.2.1 Manufacturers Whose Products Are Included in the AHRI Directory......... 3-9 Table 3.2.2 Major and Other Residential Water Heater Manufacturers ........................ 3-10 Table 3.2.3 Residential Water Heater Manufacturers by Technology Type ................. 3-12 Table 3.2.4 Gas-Fired Direct Heating Equipment Manufacturers................................. 3-12 Table 3.2.5 Gas-Fired Pool Heater Manufacturers ........................................................ 3-13 Table 3.2.6 Small Business Manufacturers of Residential Water Heaters, Direct Heating Equipment, and Pool Heaters......................................................................................... 3-14 Table 3.2.7 Federal Energy Conservation Standards for Residential Water Heaters .... 3-17 Table 3.2.8 Federal Energy Conservation Standards for Direct Heating Equipment*.. 3-17 Table 3.2.9 California State Efficiency Standards for Residential Water Heaters ........ 3-18 Table 3.2.10 California State Energy Conservation Standards for Pool Heaters .......... 3-19 Table 3.2.11 Canadian Efficiency Standards for Residential Water Heaters ................ 3-19 Table 3.2.12 Mexican Efficiency Standards for Water Heaters .................................... 3-20 Table 3.2.13 ENERGY STAR Residential Water Heater Criteria Issued on April 1, 2008

............................................................................................................................... ......... 3-22

3-iTable 3.2.14 FEMP Gas-Fired Water Heater Performance Requirements.................... 3-23 Table 3.2.15 FEMP Electric Water Heater Performance Requirements ....................... 3-23 Table 3.2.16 Sample Rebate Programs.......................................................................... 3-23 Table 3.2.17 AHRI Residential Water Heater Industry Estimated Shipment Data (New Construction and Replacement)*................................................................................... 3-26 Table 3.2.18 Residential Water Heater Value of Shipments by Year ........................... 3-27 Table 3.2.19 AHRI Residential Direct Heating Equipment Industry Estimated Shipment Data (New Construction and Replacement)* ................................................................ 3-28 Table 3.2.20 Residential Gas-fired Pool Heater Shipments* ........................................ 3-28 Table 3.2.21 Industry Cost Structure Using SEC Data.................................................. 3-29 Table 3.2.22 Equipment Lifetimes................................................................................. 3-30 Table 3.2.23 Potential Revised Product Classes for Direct Heating Equipment........... 3-44

LIST OF FIGURES Figure 3.2.1 2006 Market Shares for the Domestic Residential Water Heaters ........... 3-11 Fi gure 3.2.2 Water Heaters Distribution Channel ......................................................... 3-15 Figure 3.2.3 Direct Heating Equipment Distribution Channel ...................................... 3-15 Figure 3.2.4 Pool Heater Distribution Channel ............................................................. 3-16 Figure 3.2.5 New Privately Owned Single-Family and Multifamily Housing Unit Starts in the United States, 1990-2006......................................................................................... 3-25 Figure 3.2.6 Residential Water Heater Industry Shipments (Domestic and Imported). 3-26 Figure 3.2.7 Distribution of Gas-Fired Storage-Type Water Heater Models by Energy Factor for All Storage Volumes..................................................................................... 3-31 Figure 3.2.8 Distribution of Gas-Fired Storage-Type Water Heater Models by Storage Capacity ......................................................................................................................... 3-32 Figure 3.2.9 Distribution of Oil-Fired Storage-Type Water Heater Models by Energy Factor for All Storage Volumes..................................................................................... 3-33 Figure 3.2.10 Distribution of Oil-Fired Storage-Type Water Heater Models by Storage Capacity ......................................................................................................................... 3-34 Figure 3.2.11 Distribution of Electric Storage-Type Water Heater Models by Energy Factor for All Storage Volumes..................................................................................... 3-35 Figure 3.2.12 Distribution of Electric Storage-Type Water Heater Models by Storage Capacity ......................................................................................................................... 3-36 Figure 3.2.13 Distribution of Instantaneous Gas-fired Water Heater Models by Energy Factor ............................................................................................................................. 3-37 Figure 3.2.14 Distribution of Instantaneous Gas-fired Water Heater Models by Input Capacity ......................................................................................................................... 3-38 Figure 3.2.15 Distribution of Wall Furnace Fan-Type Models by Input Rating and AFUE

............................................................................................................................... ......... 3-39 Figure 3.2.16 Distribution of Wall Furnace Gravity-Type Models by Input Rating and AFUE ............................................................................................................................. 3-40 Figure 3.2.17 Distribution of Floor Furnace Models by Input Rating and AFUE......... 3-41 Figure 3.2.18 Distribution of Room Heater Models by Input Rating and AFUE.......... 3-42

3-iiFigure 3.2.19 Distribution of Pool Heater Models by Input Capacity and Thermal Efficiency....................................................................................................................... 3-44

3-iii3.1 INTRODUCTION This chapter details the market and technology assessment that the U.S. D epartment of Energy (DOE) has conducted in support of the ongoing energy conservation standards rulemaking for residential water heaters, direct heating equipment, and pool heaters. This chapter consists of two sections: the market assessment and the technology assessment. The goal of the market assessment is to develop a qualitative and quantitative characterization of the residential water heater, direct heating equipment, and pool heater industries and market structures, based on publicly available information and data and other information that DOE received directly from manufacturers and other interested parties. Publicly available information includes the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Consumers' Directory of Certified Efficiency Ratings for Heating and Water Heating Equipment (formerly the Gas Appliance Manufacturers Association (GAMA) a equipment certification directory, as well as U.S. Census Bureau Current Industrial Reports (CIR) and Annual Survey of Manufactures (ASM), the appliance database from the California Energy Commission (CEC) , and information from the Federal Trade Commission (FTC). The market and technology assessmentaddresses manufacturer characteristics and market shares, existing regulatory and nonregulatory efficiency improvement initiatives, product classes, and trends in product markets and characteristics. DOE performs the technology assessment to develop a preliminary list of technologies (referred to as technology options) that could be used to improve the efficiency of residential water heaters, direct heating equipment, and pool heaters. 3.1.1 Description of Products
Re sidential water heaters are used primarily to provide hot water to residences for consumer use, appliances, and other functions. Some residential water heaters may also provide heated water to radiant heating systems. A basic gas storage residential water heater is comprised of a standing pilot ignition system, a burner, a combustion chamber, a flue baffle, a flue, an insulated water tank, a cold water inlet and hot water outlet, a sacrificial anode, a gas valve, a temperature and pressure relief valve, a thermostat, heat traps, and an outer case. A basic electric storage residential water heater is comprised of an electric resistance heating element, a sacrificial anode, an insulated water tank, a cold water inlet and a hot water outlet, a temperature and pressure relief valve, a thermostat with wire harness, heat traps, and an outer case. A basic oil storage residential water heater is comprised of a combustion chamber, a flue baffle, a flue, an insulated water tank, a cold water inlet and hot water outlet, a sacrificial anode, a power burner system, a thermostat, a temperature and pressure relief valve, and an outer case. A basic gas instantaneous residential water heater is comprised of a combustion chamber, a burner, a

a The Air-Conditioning and Refrigeration Institute (ARI) and GAMA merged on January 1, 2008 to become the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). For more information, please visit www.ahrinet.org.
3-1heat exchanger, a vent, a cold water inlet and hot water outlet, a gas valve, a standing pilot ignition system, a burner control thermostat, a flow detector, and an outer case. In the United States, 99.9 p ercent (106.9 million) of homes have water heaters (as of 2001). Energy consumption attributable to water heater operation represents 1.7 percent (1.68 quads) of total U.S. energy consumption. Within individual homes, water heating represents, on average, 17 percent of total annual household energy 1 consumption. Direct heating equipment is typically used to provide primary or supp lemental space heating within a single room in a building. Some direct heating equipment, including hearth products, serve an aesthetic purpose in addition to a heating feature. A basic residential gas wall fan-type heater consists of an outer case, an air circulation fan, a burner, a combustion chamber/heat exchanger, a standing pilot ignition system, a pilot light sensing control valve, a flue, a draft diverter, an air intake, and a burner control thermostat. A basic residential gas wall gravity-type heater consists of an outer case, a burner, a combustion chamber/heat exchanger, a standing pilot ignition system, a pilot light sensing control valve, a flue, a draft diverter, an air intake, and a burner control thermostat. Gravity provides air circulation as warm air rises ( i.e. , warm air, which is less dense, rises and cool air, which is more dense, descends due to buoyancy effects). A basic residential gas floor heater consists of an outer case, a burner, a combustion chamber/heat exchanger, a standing pilot ignition system, a pilot light sensing control valve, a flue, a draft hood, an air intake, a burner control thermostat, and a floor grate. A basic residential gas room heater consists of an outer case, a burner, a combustion chamber/heat exchanger, a standing pilot ignition system, a pilot light sensing control valve, a flue, a draft hood, an air intake, a burner control thermostat, and an outer case. Both basic residential gas floor and basic gas room heaters rely on gravity for air circulation. Basic residential wall gravity, floor, and room heaters differ primarily by the enclosure design and how they are installed. Residential pool heaters are used to raise the water temperature of pools, allowing use of the pool when ambient temperatures are low. A basic residential gas pool heater is comprised of an outer case, a combustion chamber with refractory, a standing pilot ignition system, a pilot light sensing control valve, a burner, a heat exchanger, an air intake, a flue/vent, a cold water inlet and hot water outlet, pressure and water safety switches, and a burner control thermostat with user interface.
3.1.2 Definitions The National Appliance Energy Conservation Act (NAECA) established the de finition of a “residential water heater,” (42 United States Code (U.S.C.) 6291(27)), as follows: Residential water heater means a product that uses oil, gas, or electricity to heat potable water for use outside the heater upo n demand, “including –

3-21. Storage-type units which heat and store water at a thermostatically controlled temperature, including as storage water heaters with an input of 75,000 British thermal units [Btu] per hour [h] or less, oil storage water heaters with an input of 105,000 Btu per hour or less, and electric storage water heaters with an input of 12 kilowatts [kW] or less; 2. Instantaneous-type units which heat water, bu t contain no more than one gallon of water per 4,000 Btu per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less, oil instantaneous water heaters with an input of 210,000 Btu per hour or less, and instantaneous electric water heaters with an input of 12 kilowatts or less; and 3. Heat pump-type units, with a maximum current rating of 24 amperes at a voltage no greater than 250 volts, which are products designed to transfer thermal energy from one temperature level to a higher temperature level for the purpose of heating water, including all ancillary equipment such as fans, storage tanks, pu mps, or controls necessary for the device to perform its function.” Section 430.2 of 10 Code of Federal Regulations (CFR). The definition of a residential water heater is further described in appendix E to subp art B of part 430 of 10 CFR as follows: 1. Gas-Fired Storage-Type Water Heater means a water heater that uses gas as the energy source, is designed to heat and store water at a thermostatically controlled temperature of less than 180 °F [degrees Fa hrenheit] (82 °C [degrees Celsius]), has a nominal input of 75,000 Btu (79 MJ [megajoules]) per hour or less, and has rated storage capacity of not less than 20 gallons (76 liters) nor more than 100 gallons (380 liters); 2. Oil-Fired Storage-Type Water Heater means a water heater that uses oil as the energy source, is designed to heat and store water at a thermostatically controlled temperature of less than 180 °F (82 °C), has a nominal inpu t of 105,000 Btu/h (110 MJ/h) or less, and has a manufacturer’s rated storage capacity of 50 gallons (90 liters) or less; 3. Electric Storage-Type Water Heater means a water heater that uses electricity as the energy source, is designed to heat and store water at a thermostatically controlled temperature of less than 180 °F (82 °C), has a nominal input of 12 kilowatts (40,956 Btu/h) or less, an has a rated storage capacity of not less than 20 gallons (76 liters) nor more than 120 gallons (450 liters); 4. Tabletop Water Heater means a water heater in a rectangular box enclosure de signed to slide into a kitchen countertop space with typical dimensions of 36 inches high, 25 inches deep and 24 inches wide; 5. Instantaneous Gas-fired water heater means a water heater that uses gas as the energy source, initiates heating based on sensing water flow, is designed to deliver water at a controlled temperature of less than 180 °F (82 °C), has an inpu t greater than 50,000 Btu/h (53 MJ/h) but less than 200,000 Btu/h (210 MJ/h), and has a manufacturer’s specified storage capacity of less than 2 gallons (7.6 liters); and 6. Instantaneous Ele ctric Water Heater–Reserved

3-3The energy conservation standards for residential water heaters are represented in terms of the energy factor (EF). Appendix E of subpart B, section 430 of 10 CFR. (42 U.S.C. 6295(e)(1)) The EF is the ratio of the heat delivered to the energy consumed according to the specific test procedure for residential water heaters. The EF accounts for both recovery efficiency and standby losses at prescribed patterns of hot-water draws totaling 64.3 gallons per day. In DOE’s regulations, four types of residential heating equipment are referred to as direct heating equipment. DOE defines vented home heating equipment as “home heating equipment, not including furnaces, designed to furnish warmed air to the living space of a residence, directly from the device, without duct connections (except that boots not to exceed 10 inches beyond the casing may be permitted) and includes: vented wall furnace, vented floor furnace, and vented room heater.” Section 430.2 of 10 CFR.
Section 430.2 d efines a vented wall furnace (gravity type and fan type), vented floor furnace, and vented room heater: 1. Vented wall furnace means a self-contained vented heater complete with grilles or the equivalent, designed for incorporation in, or permanent attachment to, a wall of a residence and furnishing heated air circulated by gravity or by a fan directly into the space to be heated through openings in the casing. 2. Vented floor furnace means a self-contained vented heater suspended from the floor of the space being heated, taking air from combustion from outside this space. The vented floor furnace supplies heated air circulated by gravity or by a fan directly into the space to be heated through openings in the casing. 3. Vented room heater means a self-contained, free standing, nonrecessed, vented heater for furnishing warmed air to the space in which it is installed. The vented room heater supplies heated air circulated by gravity or by a fan directly into the space to be heated through openings in the casing. As to direct heating equipment, be fore the enactment of NAECA, EPCA included “home heating equipment” in DOE’s appliance standards program. DOE construed this term as covering unvented as well as vented products, and prescribed a separate test procedure for each. 43 FR 20128, 20132 (May 2, 1978). However, when NAECA replaced the term “home heating equipment” with “direct heating equipment” in NAECA’s amendments to EPCA in 1987 (42 U.S.C. 6295(e)(3)), the new energyconservation standards for this equipment only affected gas products and the statutorilyprescribed standards used the AFUE descriptor, which applies to vented, but not unvented, equipment. Because of the limitation imposed by the statute's use of the AFUE descriptor, subsequent DOE actions concerning direct heating equipment have focused solely on vented products. The AFUE represents the heat transferred to the conditioned space divided by the fuel energy supplied.

3-4DOE defines “pool heaters” under NAECA as “an appliance designed for heating nonpotable water contained at atmospheric pressure, including heating water in swimming pools, spas, hot tubs and similar applications.” (42 U.S.C. 6291(25)) The energy conservation standard for pool heaters is r epresented by the thermal efficiency. Section 430.32(k) of 10 CFR. (42 U.S.C. 6295(e)(2)) Thermal efficiency represents the heat transferred to the nonpotable water divided by the fuel energy supplied.
3.1.3 Product Classes
DO E categorized the product types ( i.e. , residential water heaters, residential direct heating equipment, and pool heaters) into product classes and will formulate a separate energy conservation standard for each product class. The criteria for separation into different classes are type of energy used, capacity, and other performance-related features such as those that provide utility to the consumer or others deemed appropriate by the Secretary that would justify the establishment of a separate energy conservation standard. (42 U.S.C. 6295(q) and 6316(a)) For residential water heaters, the product classes are based on energy source ( i.e. , gas or electric) and design ( i.e. , storage-type, tabletop, and instantaneous or “tankless”). The product classes shown in Table 3.1.1 were established by the January 17, 2001, Energy Conservation Standards for Water Heaters; Final Rule (the January 2001 final rule) amending the energy conservation standards for residential water heaters and incorporated into section 430.32(d). 66 FR 4474, 4497 (January 17, 2001).
Table 3.1.1 Product Classes for Residential Water Heaters Residential Water Heater Type Characteristics Gas-Fired Storage Type Nominal input of 75,000 Btu/h or less; rated storage volume from 20 to 1 0 0 gallons Oi l-Fired Storage Type N o minal input of 105,000 Btu/h or less; rated storage volume of 50 g a llons or less Electric Storage Type No minal input of 12 kW (40,956 Btu/h) or less; rated storage volume f r om 20 to 120 gallons Tabl etop D i mensions of 36 inches high, 25 inches deep, and 24 inches wide
In stantaneous Gas-Fired N o minal input of over 50,000 Btu/h up to 200,000 Btu/h; rated storage
v o lume of 2 gallons or less Inst antaneous Electric I n put of 12 kW or le s s; contains no more than one gallon of water per 4,000 Btu/h of input Table 3.1.2 shows the product classes for direct heating equipment, as established by NAECA. (42 U.S.C. 6295(e)(3))

3-5Table 3.1.2 Product Classes for Direct Heating Equipment Direct Heating Equipment Type Heating Capacity (Btu/h) Gas Wall Fan Type Up to 42,000 O v er 42,000

Gas Wall Gravity Type U p to 10,000 O v er 10,000 up to 1 2,000 Over 12,000 up to 1 5,000 Over 15,000 up to 1 9,000 Over 19,000 up to 2 7,000 Over 27,000 up to 4 6,000 Over 46,000 Gas Fl oor U p to 37,000 O v er 37,000

Gas Room Up t o 18,000 O v er 18,000 up to 2 0,000 Over 20,000 up to 2 7,000 Over 27,000 up to 4 6,000 Over 46,000 Direct heating product class description. Vented hearth products, sold as either fireplaces, fireplace inserts, gas stoves, or log sets, can be used to provide residential space heating. When used to furnish heat to a living space, vented hearth products provide the same function and utility as vented heaters. The definition for vented home heating equipment (or vented heater) (10 CFR 430.2 ) states that this equipment is designed to furnish warmed air to the living space of the residence, directly from the device, without duct connections and includes vented wall furnaces, vented floor furnaces, and vented room heaters. Vented hearth products also furnish warmed air to the living space of a residence, directly from the device, without duct connections. Therefore, the vented heater definitions stated previously include vented hearth products. The energy conservation standards for direct heating equipment apply to a vented hearth product if the product has energy-saving features such as a blower or a thermostat, or if provides the same function and utility as vented heaters by supp lying space heating. Therefore, the energy conservation standards for gas wall fan or gravity-type furnaces apply to recessed vented hearth products and the energy conservation standards for gas room heaters apply to non-recessed vented hearth products. Fireplace heaters also provide the same utility and function as either gas wall furnaces or gas room heaters, and they do not utilize any specific technologies unique to themselves. As a result, the direct heating equipment product class descriptions could be revised to reflect the inclusion of vented hearth products within direct heating equipment. Tab le 3.1.3 shows potential direct heating equipment product class description revisions DOE is considering in the current rulemaking.

3-6Table 3.1.3 Direct Heating Equipment Product Class Description Revision Direct Heating Equipment Type Heating Capacity (Btu/h) Gas Wall Fan Type and Gas, Recessed, Fan-Type Hearth Products Up t o 42,000 O v er 42,000

Gas Wall Gravity Type a n d Gas, Recessed, Gravity-Type Hearth Products Up t o 10,000 O v er 10,000 up to 1 2,000 Over 12,000 up to 1 5,000 Over 15,000 up to 1 9,000 Over 19,000 up to 2 7,000 Over 27,000 up to 4 6,000 Over 46,000 Gas Fl oor U p to 37,000 O v er 37,000
Gas Room and Gas, Non-Recessed Heart h P roducts Up to 18,000 O v er 18,000 up to 2 0,000 Over 20,000 up to 2 7,000 Over 27,000 up to 4 6,000 Over 46,000
For pool heaters, the only product class is gas-fired pool heaters, which is established by NAECA. (42 U.S.C. 6295(e)(2))
3.1.4 Product Test Procedures
Tes t procedures exist for all three products covered by this rulemaking. DOE established test procedures for residential water heaters, residential direct heating equipment, and pool heaters through the rulemaking process, initially established by a final rule publ ished on October 17, 1990, codified at appendix E to subpart B of 10 CFR Part 430. 55 FR 42163. DOE amended the residential water heater test procedure on May 11, 1998, by adding the following provisions: (1) a revision to the method used in determining the first hour rating of storage-type water heaters, (2) an additional rating for electric and instantaneous gas-fired water heaters, and (3) a revision to the definition of a heat pump water heater. 63 FR 25996. On July 20, 1998, DOE published in the Federal Register a correction to the May 1998 final rule, which added residential water heater testing schematics. 63 FR 38737. Along with the amended energy conservation standards published in the January 2001 final rule, DOE also amended the test procedure by adding a definition for tabletop water heaters and reaffirming the test methods specified in appendix E to subpart B of 10 CFR Part 430. 66 FR 4476. DOE prescribed a test procedure for vented types of gas-fired direct heating eq uipment in a notice published in the Federal Register on May 2, 1978. 43 FR 20182. Thereafter, on May 12, 1997, DOE published a final test procedure rule that amended the test procedures for direct heating equipment, and, in particular, vented home heating equipment. 62 FR 26140. The May 1997 final rule included modified calculation procedures for the weighted-average steady-state efficiency and AFUE for certain manually controlled heaters, and added a procedure for calculating the annual energy consumption of fossil fuel and auxiliary electrical energy for these types of products.

3-7On May 12, 1997, DOE published in the Federal Register a final rule that amended the test procedure for pool heaters. 62 FR 26140. The May 1997 final rule updated the referenced American National Standards Institute (ANSI) standard for pool heaters from ANSI Standard Z21.56-1986, Gas-Fired Pool Heaters, to ANSI Standard Z21.56-1994, Gas-Fired Pool Heaters. This update added a procedure for calculating the annual energy consumption of fossil fuel auxiliary electrical energy for pool heaters and a seasonal efficiency descriptor. 62 FR 26141.
3.2 MARKET ASSESSMENT The following market assessment identifies the manufacturer trade associations, domestic and international manufacturers of residential water heaters, direct heating equipment and pool heaters and their corresponding market shares, and regulatory and non-regulatory programs. The market assessment also provides historical shipment data; describes the cost structure for the residential water heater, direct heating equipment, and pool heater industries; and summarizes relevant market performance data for each product type.
3.2.1 Trade Associations
DO E recognizes the importance of trade groups in disseminating information and providing growth to the industry that they support. To gain insight into the residential water heater, direct heating equipment, and pool heater industries, DOE researched various associations available to manufacturers, suppliers, and users of such equipment. DOE also used the member lists of these groups to construct a database of domestic manufacturers. DOE identified several trade groups that support, or have an interest in, the residential water heater, direct heating equipment, and pool heater industries, including AHRI, the Hearth, Patio & Barbecue Association (HPBA), and the Association of Pool and Spa Professionals (APSP). 3.2.1.1 Air-Conditioning, Heating, and Refrigeration Institute
AH RI b is a national trade association of manufacturers of residential, commercial, and industrial appliances and equipment, components and related products. AHRI was established in January of 2008 when the Air-Conditioning and Refrigeration Institute (ARI) merged with the Gas Appliance Manufacturers Association (GAMA). AHRI's scope includes gas-fired, oil-fired, and electric products and equipment. “[AHRI] members are responsible for more than 90 percent of space and water heating shipments in the United States” during 2007. 2 “[AHRI] helps its members stay abreast of relevant legislative and regulatory developments; supports the development of improved products and installation procedures; compiles statistical reports of industry shipments; sponsors and coordinates advertising and consumer education programs; and sponsors efficiency certification programs for space heating, water heating, air-conditioning, and refrigeration products and equipment” 3 . AHRI maintains the AHRI Efficiency Certification Program.

b For more information, please visit www.ahrinet.org.
3-8AHRI also maintains a database of products and equipment tested under its certification program on their website. The majority of heating products currently manufactured by
c both AHRI manufacturers and non-member manufacturers are included in this database. Table 3.2.1 shows manufacturers of products covered by this rulemaking represented in AHRI’s Consumers' Directory of Certified Efficiency Ratings for Heating and Water Heating Equipment (from this point forward referred to as the AHRI directory).

d Table 3.2.1 Manufacturers Whose Products Are Included in the AHRI Directory Residential Water Heaters Direct Heating Equipment Pool Heaters A.O. Smith Corporation CFM Corporation Hayward Industries, Inc. Bock Water Heaters, Inc. Empire Comfort Systems, Inc. Jandy Pool Products, Inc. Bradford White Corporation Lennox Hearth Products Lochinvar Corporation Bosch Water Heating Louisville Tin and Stove Co. Pentair, Inc. Heat Transfer Products, Inc. Rinnai Corporation Raypak Lochinvar Corporation Williams Furnace Company Rheem-Ruud Rinnai America Corporation Takagi Industrial Co. USA The majority of residential water heater, direct heating equipment, and pool heater manufacturers identified in section 3.2.2.1 are represented by AHRI. 3.2.1.2 Hearth, Patio & Barbecue Association
HP BA “includes manufacturers, retailers, distributors, manufacturers' re presentatives, service and installation firms, and other companies and individuals - all having business interests in and related to the hearth, patio, and barbecue products industries.” 4e 3.2.1.3 Association of Pool and Spa Professionals APSP is an “international trade association and leading industry advocate representing the swimming pool, spa, and hot tub i ndustry.” 5 APSP also delivers public relations, advertising, and water safety messages to consumers. It also maintains industry

c For more information, please visit www.gamapower.org. d A.O Smith Water Corporation refers to A. O. Smith Water Products Company, A. O. Smith Water Heaters, State Water Heaters, Reliance Water Heater Company, Apollo Hydroheat and Cooling, Maytag Water Heaters, American Water Heater Company, GSW Water Heating, and John Wood Water Heaters, Bosch Water Heating is a division of Bosch USA which is a branch of Bosch Group, Rheem-Ruud refers to Rheem Manufacturing Company, Ruud Water Heating, the Paloma Group, and Paloma Tankless, Rinnai America Corporation and Rinnai Corporation are subsidiaries of Rinnai Japan, Takagi Industrial Company USA is a division of Takagi, Lennox Hearth Products refers to Lennox International, Incorporated, Williams Furnace Company is a subsidiary of Continental Materials Corporation, Pentair refers to Pentair Water Pool and Spa, Incorporated, and Raypak refers to Raypak, Incorporated
e For more information, visit www.hpba.org/index.php?id=46.
3-9data and statistics regarding the pool and spa industries. Members can obtain information on the products available to consumers, historical and geographical pool and spa installation statistics, in addition to other types of data. Additionally, the APSP offers pool and spa professionals resources and tools to assist in business operations.
3.2.2 Manufacturer Information The following section provides information about manufacturers of residential water heaters, direct heating equipment, and pool heaters, including estimated market shares, po tential small business impacts, and product distribution channels.
3.2.2.1 Manufacturers and Market Shares
Us ing publicly available data ( e.g
. , Appliance Magazine and market assessments done by third parties), DOE estimates the market shares for manufacturers of each of the three products contained in this standards rulemaking. Manufacturers may offer multiple brand names. DOE estimates that there are approximately 26 domestic manufacturers of residential water heaters. 6 Nearly the entire domestic market—some 98 percent—is controlled by three domestic manufacturers: Rheem-Rudd, A.O. Smith/State Industries, American Water Heater (A.O. Smith subsidiary as of 2005 7 ), and Bradford-White. 8 Of the remaining domestic market share, eight manufacturers hold the majority, including: Bock Water Heaters, Inc.; Bosch Water Heating; GSW Water Heating Company (subsidiary of American Water Heater Company), Heat Transfer Products, Inc., Noritz America, Rinnai America Corporation, State Industries, Inc. (subsidiary of American Water Heater Company), and Takagi Industrial Co. USA. Table 3.2.2 lists these manufacturers by market shares. Table 3.2.2 Major and Other Residential Water Heater Manufacturers

Major Manufacturers* Other Manufacturers** Rheem-Ruud Bock Water Heaters, Inc. A. O. Smith Corporation Bosch Water Heating Bradford White Corporation Heat Transfer Products, Inc. Noritz America Rinnai America Corporation Takagi Industrial Co. USA * Manufacturers with 10 percent or more of market share. ** Manufacturers wit h less than 1 percent of market share. Figure 3.2.1 illustrates the 2006 market shares for the domestic residential water heater market as depicted in the September 2007 issue of Appliance Magazine

.

3-10Others Bradford-White 0.6%

American Water Heater 22.8%

A.O. Smith/State Industries

25.9% 9 Figure 3.2.1 2006 Market Shares for the Domestic Residential Water Heaters The residential water heater market can be further divided into manufacturers of gas-fired, oil-fired, and electric storage water heaters, and gas-fired or electric instantaneous water heaters. Table 3.2.3 shows manufacturers that produce these types of residential water heaters. Rheem 36.9% 13.8%

3-11Table 3.2.3 Residential Water Heater Manufacturers by Technology Type

Manufacturer Residential Water Heater TypeGasFired Storage Oil-Fired Storage Electric Storage Instantaneous Gas-Fired Instantaneous Electric A. O. Smith Corporation X X X Bock Water Heaters, Inc. X X B o sch Water Heating X X B r adford White C o rporation X X X
Heat Transfer Products , I nc. X X X Lochinvar Corporatio n X X N oritz X R

h eem-Ruud X X X Rinnai America C o rporation X Takagi Industr ia l Co. USA X
TOTALS 6 4 5 5 1 DOE estimates that there are 8 domestic manufacturers of direct heating equipment. f Table 3.2.4 lists these manufacturers. Table 3.2.4 Gas-Fired Direct Heating Equipment Manufacturers g

Direct Heating Equipment Manufacturers Major Manufacturers Other Manufacturers Empire Comfort Systems, Inc. C F M Corporation Louisville Tin and Stove Co. Rinnai Corporation Williams Furnace Company Lennox Hearth Products Heart h and Home Technologies M o nitor Products, Inc. Due to the small total size of the direct heating equipment market and confidentiality concerns, DOE was unable to disclose any market share data for direct heating equipment manufacturers. DOE divided direct heating equipment manufacturers into “major” and “other” based on the current industry characteristics and industry expertise. Major companies have larger market shares.
DOE identified five d o mestic manufacturers of residential gas-fired pool heaters. Table 3.2.5 lists these manufacturers.

f Estimate based on membership in AHRI (former GAMA members) and online product searches. g Williams Furnace Company is a subsidiary of Continental Materials Corporation, Rinnai Corporation is a subsidiary of Rinnai Japan, Lennox Hearth Products refers to Lennox International, Incorporated, and Hearth and Home Technologies is as subsidiary of HNI Corporation.
3-12h Table 3.2.5 Gas-Fired Pool Heater Manufacturers

Pool Heater Manufacturers Major Manufacturers Other Manufacturers Hayward Industries, Inc. Lochinvar Corporation Jandy Pool Products, Inc. Raypak Pentair Due to the small total size of the pool heater market and confidentiality concerns, DOE was unable to disclose any market share data for residential pool heater manufacturers. DOE divided pool heater manufacturers into “major” and “other” based on the current industry characteristics and industry expertise. Major companies have larger market shares. 3.2.2.2 Small Business Impacts DOE realizes that small businesses may be particularly affected by the promulgation of energy conservation standards for residential water heaters, direct heating equipment, and pool heaters. The Small Business Administration (SBA) defines small business manufacturing enterprises for residential water heaters, direct heating equipment, and pool heaters as those having 500 employees or fewer. 10 SBA lists small business size standards for industries as they are described in the North American Industry Classification System (NAICS). The size standard for an industry establishes the largest size that a for-profit entity can be for the particular industry and still qualify as a small business for Federal Government programs. These size standards are generally expressed in terms of the average annual receipts or the average employment of a firm. For residential water heaters, direct heating equipment, and pool heaters, the size standards matched to NAICS code 335228, Other Major Household Appliance Manufacturing and NAICS code 333414, Heat Equipment (Except Warm Air Furnaces) Manufacturing. The size standard is 500 employees or fewer. DOE will study the p o tential impacts on these small businesses during the manufacturer impact analysis, which will be conducted as a part of the Notice of Proposed Rulemaking (NOPR) analysis. Table 3.2.6 lists the small business residential water heaters, direct heating equipment, and pool heating manufacturers that DOE has identified.

h Raypak refers to Raypak, Incorporated and Pentair refers to Pentair Water Pool and Spa, Incorporated.
3-13Table 3.2.6 Small Business Manufacturers of Residential Water Heaters, Direct Heating Equipment, and Pool Heaters Water Heaters Direct Heating Equipment Pool Heaters Bock Water Heaters Empire Comfort Systems, Inc. Hayward Industries, Inc. Heat Transfer Products, Inc. Louisville Tin and Stove Co. Lochinvar Corporation Williams Furnace Company

3.2.3 Distribution Channels Analysis of the distribution channels of products covered by this rulemaking is an important facet of the market assessment. DOE gathered information regarding the distribution channels for residential water heaters, direct heating equipment, and pool heaters from publicly available sources.
The residential water heater market can be divided into two areas: replacement of e x isting units and new construction. Most residential water heaters (between 49 and 59 percent) are distributed through wholesalers. 11 These wholesalers then resell residential water heaters to contractors and plumbers, plumbing supply houses, local hardware stores, and other retail channels. For instantaneous gas-fired water heaters in particular, the wholesale distribution channel accounts for an even larger percentage. Residential 12 water heaters are also sold through retail distribution (between 41 and 51 percent). These residential water heaters are sold directly by residential water heater manufacturers to home improvements stores, chain hardware stores, and other large retailers. For the replacement market, according to DOE’s 2000 water heater technical support document (TSD), approximately 60 percent of replacements were sold through the retail distribution channel. 13 For new construction, new homebuilders or contractors and plumbers may then purchase these residential water heaters, or customers may purchase a residential water heater and install it themselves or hire a contractor to complete the installation. Appliance Magazine’s annual Share-of the-Market survey stated that 9.45 million residential water heaters were shipped in 2006. 14 According to the Northwest Energy Efficiency Alliance (NEEA)’s analysis of residential water heater distribution channels, 20 percent were purchased by homebuilders for use in new construction. The remaining 80 percent of sales were retrofit units replacing existing residential water heaters. Of these retrofit units, approximately 52 percent were purchased and installed by consumers, 15 and approximately 48 percent were installed by contractors and plumbers. For analysis purposes and based on the information found, DOE defined four d i stribution channels for residential water heaters.

3-143-15 Figure 3.2.2 Water Heaters Distribution Channel Consumer purchases and installations typically do not play role in the established distribution channels of direct heating equipment. For replacement applications, most sales go through distributors to contractors, and then to consumers. In new home applications, most sales go through distributors to contractors hired by the builder. Thus, DOE defined two distribution channels for analysis purposes. Figure 3.2.3 illustrates the direct heating equipment distribution channel.

Figure 3.2.3 Direct Heating Equipment Distribution Channel For pool heaters in replacement applications, most sales go through distributors or retailers to pool service companies. In most new home applications, the pool builder purchases the equipment from a distributor or wholesaler. Thus, DOE defined two distribution channels for analysis purposes.3-16 Figure 3.2.4 Pool Heater Distribution Channel
3.2.4 Regulatory Programs The following section details current regulatory programs mandating energy conservation standards for residential water heaters, direct heating equipment, and pool heaters. Section 3.2.4.1 discusses current Federal energy conservation standards, and section 3.2.4.2 provides an overview of existing State standards. Sections 3.2.4.3 and 3.2.4.4 review standards in both Canada and Mexico that may affect companies servicing the domestic market.
3.2.4.1 Current Federal Energy Conservation Standards NAECA established energy conservation standards for residential water heaters, direct heating equipment, i and pool heaters and required that DOE conduct two cycles of rulemakings to determine if more stringent standards are economically justified and technologically feasible for these products. (42 U.S.C. 6295 (e)(1) and (4)) On February 7, 1989 and October 17, 1990, DOE issued a final rule codifying the standards prescribed by NAECA, and thereby established the first set of energy conservation standards for residential water heaters, direct water heating equipment, and pool heaters. 54 FR 6077 (February 7, 1989) and 55 FR 42163 (October 17, 1990). Pursuant to 42 U.S.C. 6295(e)(4)(A), on January 17, 2001, DOE published in the Federal Register the January 2001 final rule, effective on January 20, 2004, amending the energy conservation standards for residential water heaters. 66 FR 4474.

i Initially, EPCA included vented and unvented home heating equipment in DOE’s appliance standards program. However, EPCA did not specifically use the term direct heating equipment. NAECA prescribed energy conservation standards for direct heating equipment instead of vented and unvented home heating equipment, but NAECA did not include a definition of the products covered under the direct heating equipment category. Since DOE has established test procedures to measure the energy efficiency of vented home heating equipment and the test procedures for unvented home heating equipment do not have an energy efficiency measure, DOE has determined that direct heating equipment only refers to vented home heating equipment for the purpose of this rulemaking.Table 3.2.7 Federal Energy Conservation Standards for Residential Water Heaters Residential Water Heater Class Minimum Energy Factor (EF) Gas-Fired Storage Type 0.67 – (0.0019 x Rated Storage Volume in gallons) Oil-Fired Storage Type 0

. 59 – (0.0019 x Rated Storage Volume in gallons) Electric Storage Type 0

. 97 – (0.00132 x Rated Storage Volume in gallons) Instantaneous Gas-Fired Type 0

. 62 – (0.0019 x Rated Storage Volume in gallons) Instantaneous Electric Type 0

. 93 – (0.00132 x Rated Storage Volume in gallons) Tabletop 0

. 93 – (0.00132 x Rated Storage Volume in gallons) DOE initially analyzed energy conservation standards for direct heating equipment as part of an eight-product standards rulemaking. When DOE analyzed direct heating equipment in these earlier proceedings, DOE only considered products categorized as vented home heating equipment. DOE issued a notice of proposed rulemaking (NOPR) on March 4, 1994, proposing to amend the energy conservation standards for direct heating equipment and other consumer products. 59 FR 10464. The Department of Interior and Related Agencies Appropriations Act for Fiscal Year 1996 (P.L. 104-134) provided for a moratorium on proposing or issuing final rules for appliance standards rulemakings for the remainder of Fiscal Year 1996, thereby preventing DOE from finalizing the 1994 proposed standards and leaving the existing NAECA efficiency levels in place. Table 3.2.8 presents these energy conservation standards for direct heating equipment. Table 3.2.8 Federal Energy Conservation Standards for Direct Heating Equipment* Direct Heating Equipment Design Type Product Class, by Input Rating (Btu/h) AFUE (%)

Gas Wall Fan Up to 42,000 7 3 O ver 42,000** 74

Gas Wall Gravity Up to 10,000 5 9 O ver 10,000 up to 1 2,000 60 Over 12,000 up to 1 5,000 61 Over 15,000 up to 1 9,000 62 Over 19,000 up to 2 7,000 63 Over 27,000 up to 4 6,000** 64 Over 46,000 65 Gas Floor U p to 37,000 5 6 O ver 37,000** 57

Gas Room Up t o 18,000 5 7 O ver 18,000 up to 2 0,000 58 Over 20,000, up to 2 7,000 63 Over 27,000 up to 4 6,000 64 Over 46,000** 65 *Includes al l of the product classes set forth in the Energy Policy and Conservation Act ( EPCA) and codified at 10 CFR Part 430.32(i). **Representative product classes that DOE intends to explicitly analyze. As with direct heating equipment, DOE initially analyzed standards for pool heaters as part of the eight-product standards rulemaking of 1994, 59 FR 10464, but never finalized the proposed standards (for reasons explained above). DOE has not amended the energy conservation standards for pool heaters since NAECA established them in 1987 and since the first standard went into affect in 1990. 42 U.S.C 6295 (e)(2)

3-17Existing energy conservation standards for residential pool heaters specify a thermal efficiency for pool heaters of no less than 78 percent. 10 CFR part 430.32(k). 3.2.4.2 State Energy Conservation Standards The following States have established appliance energy efficiency regulations: Arizona, California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. Of these, California is the only State that explicitly regulates equipment 16 covered in this rulemaking. The State of California mandates energy conservation standards for residential
w a ter heaters. State standard levels are identical to Federal standard levels for each covered product. California also has regulations that extend the scope of Federal standards including standards for products outside of the rated storage capacity range and input capacity range stated for the product types covered by Federal standards. Additionally, California has specific regulations for instantaneous oil-fired water heaters, which are similar to the Federal standards for oil-fired storage water heaters. 17 Table 3.2.9 provides California’s water heater standards.

18 Table 3.2.9 California State Efficiency Standards for Residential Water Heaters
Appliance Energy Source Input Rating Rates Storage Volume (gallons) Minimum Energy Factor

Storage Water Heaters Gas ≤ 75,000 Bt u/h < 2 0 0.62 – (0.0019 x Volum e) Storage Water H e aters Gas ≤ 75,000 Bt u/h > 1 00 0.62 – (0.0019 x Volum e) Storage Water H e aters Oi l ≤ 1 05,000 Btu/h > 50 0.59 – (0.0019 x Volum e) Storage Water H e aters El ectricity ≤ 1 2 kW > 120 0.93 – (0.00132 x Volum e) Instantaneous W a ter Heaters Gas ≤ 50,000 Bt u/h A n y 0.62 – (0.0019 x Volum e) Instantaneous W a ter Heaters Gas ≤ 200,000 Bt u /h ≥ 2 0.62 – (0.0019 x Volum e) Instantaneous W a ter Heaters Oi l ≤ 2 10,000 Btu/h A ny 0.59 – (0.00132 x Volum e) Instantaneous W a ter Heaters El ectricity ≤ 1 2 kW Any 0.93 – (0.00132 x Volum e) The State of California also mandates energy conservation standards for direct heating equipment. These standard levels are identical to the Federal energy conservation 19 standard levels for direct heating equipment. California also mandates energy conservation standards for pool heaters. The S t ate’s gas-fired pool heater standard is identical to the Federal standard level with an additional requirement that prohibits the use of constant burning pilots. 20 California also

3-18issues standards for oil-fired and electric heat pump pool heaters. Table 3.2.10 provides 21 these pool heater standards.

22 Table 3.2.10 California State Energy Conservation Standards for Pool Heaters Residential Pool Heater Type Standard Level Oil-Fired 78% Thermal Efficie ncy Heat Pump 3.5 Average Coeffic ie nt of Performance 3.2.4.3 Canadian Standards Association The Canadian Standards Association (CSA) is an independent standards-setting agency that establishes test procedures and efficiency standards that are typically adopted by the Canadian government.
Residential Water Heaters CSA has specified energy conservation standards for residential water heaters. The CSA standards divide residential water heaters into several categories and subcategories, summarized in Table 3.2.11 below.

23 Table 3.2.11 Canadian Efficiency Standards for Residential Water Heaters Water Heater Type Product Class Efficiency Standard Description Gas-Fired Storage Input rating ≤ 21.98 kW (7 5,000 Btu/h) and storage capacity 76 to 380 liters Mi nimum EF 0. 67 – 0.0005V Oil-Fired Storage In put rating ≤ 30.5 kW (1 07,000 kJ/h) and storage capacity ≤ 190 liters Mi nimum EF 0. 59 – 0.0005V Electric Storage B o ttom Inlet 50 to 270 liters M a ximum Stan dby Loss 40 + (0.20V) > 270 t o 454 liters M a ximum Stan dby Loss (0.472V) – 33.5 Top Inl et 5 0 to 270 liters M a ximum Stan dby Loss 35 + (0.20V) > 270 t o 454 liters M a ximum Stan dby Loss (0.472V) – 38.5 Not e: V=rated storage capacity in liters; EF=energy factor as defined by CSA P.3-04 for gasf ir ed water heaters and CAN/CSA-B211-00 for oil-fired water heaters. Direct Heating Equipment Canada has product classes for vented gas fireplaces and fireplace heaters. Vented gas fireplaces are primarily used for aesthetic purposes, while vented gas fireplace heaters are designed to provide heat to the space where they are installed. Canada has not issued energy conservation standards for either of these products classes and has no plans 24 to issue standards as of February 2008.

3-19Pool Heaters CSA has specified energy conservation standards for gas pool heaters similar to Federal energy conservation standards. This standard sets a minimum thermal efficiency of 78 percent. This standard only covers gas-fired pool heaters.
3.2.4.4 Mexico Mexico has specified energy conservation standards for gas-fired water heaters. The Mexican standards divide gas-fired water heaters into domestic and commercial categories, summarized in Table 3.2.11 below.

25 Table 3.2.12 Mexican Efficiency Standards for Water Heaters Water Heater Type Product Class Efficiency Standard Description
Gas-Fired Domestic Hot Water Heaters M in imum Thermal Efficiency 7 2 % Commercial Hot Water Heaters M in imum Thermal Efficiency 7 7 % 3.2.5 Voluntary Programs DOE reviewed several voluntary programs promoting energy-efficient residential water heaters, direct heating equipment, and pool heaters in the United States, including the American Council for an Energy Efficiency Economy (ACEEE), the Consortium for Energy Efficiency (CEE), the Environmental Protection Agency (EPA) ENERGY STAR program, the Federal Energy Management Program’s (FEMP) procurement program for energy-efficient products, various rebate programs offered by local utilities, and the Super Efficient Gas Water Heating Appliance Initiative (SEGWHAI). 3.2.5.1 American Council for an Energy Efficient Economy
ACEEE j is “dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection.” ACEEE conducts technical and policy assessments, advises policy makers and program managers, works collaboratively with businesses and public interest groups, organizes conferences, publishes books, 26 conference proceedings, and reports, and educates consumers and businesses. ACEEE works with industry to maintain a d a tabase of high efficiency residential water heaters and offers guidance to consumers on how to improve the efficiency of their residential water heaters. 3.2.5.2 Consortium for Energy Efficiency
CEE k , “a nonprofit public benefits corporation, develops initiatives for its North American members to promote the manufacture and purchase of energy-efficient

j For more information, please visit www.aceee.org. k For more information, please visit www.cee1.org.
3-20products and services. The goal of the organization is to induce lasting structural andbehavioral changes in the marketplace, resulting in the increased adoption of energyefficient technologies.” 27 CEE organizes a summary of utility sponsored rebate and incentive programs for efficient residential water heaters. This summary is available for free online in order to encourage consumers to purchase efficient residential water heaters, and take advantage of existing utility rebates.
3.2.5.3 ENERGY STAR

l ENERGY STAR, a voluntary labeling program backed by the U.S. Environmental Protection Agency (EPA) and DOE, identifies energy-efficient products through a qualification process. To qualify, a product must exceed Federal energy efficiency standards by a specified amount, or if no Federal standard exists, exhibit selected energy-saving features. The ENERGY STAR program qualifies the top quartile of products on the market, meaning that approximately 25 percent of products on the market meet or exceed the ENERGY STAR levels. On April 1, 2008, ENERGY STAR set requirements for gas-fired storage water heaters, whole-home gas tankless water heaters, gas condensing water heaters, heat pump water heaters, and solar water heaters.
ENERGY STAR released the c r iteria on April 1, 2008 and it will go into effect on January 1, 2009. The requirements are summarized in Table 3.2.13.

l For more information, please visit www.energystar.gov.
3-21Table 3.2.13 ENERGY STAR Residential Water Heater Criteria Issued on April 1, 2008 28 Product Type Criteria

Gas Storage Water Heater • Minimum EF of 0.62 (0.67 beginning S e ptember 1, 2010)

• Minimum first hour rating of 67 gallons

• Minimum 6 year warranty on sealed system

Whol e-Home Gas Tankless Water Heater • M inimum EF of 0.82

• M inimum Gallons per Minute of 2.5 over a 77oF rise

• Minimum 10 year warranty on heat exchanger and 5 years on parts
Gas Condensing St o r age Water Heater • Minimum EF of 0.80

• M inimum first hour rating of 67 gallons

• Minimum 8 year warranty on sealed system

Heat Pump Wate r Heater • Minimum EF of 2.0

• M inimum first-hour rating of 50 gallons per hour

• Minimum 6 year warranty on sealed system

Sol ar Water Heater • M inimum Solar Fraction of 0.5

• O G-300 certification from the SRCC (Solar Rating and Certification Corporation)

• Minimum 10 year warranty on solar collector, 6 years on storage tank, 2 years on controls, and 1 year for piping and parts 3.2.5.4 Federal Energy Management Program
“DOE’s FEMP m works to reduce the cost and environmental impact of the Federal Government by advancing energy efficiency and water conservation, promoting the use of distributed and renewable energy, and improving utility management decisions at Federal sites.” 29 FEMP helps Federal buyers identify and purchase energy-efficient equipment. FEMP designates standards for w a ter heaters purchased by the Federal Government. The designated FEMP gas-fired water heater standards levels appear in Table 3.2.14, and the FEMP electric water heater standards appear in Table 3.2.15.

m For more information, please visit www.eere.energy.gov/femp.
3-2230 Table 3.2.14 FEMP Gas-Fired Water Heater Performance Requirements Storage Tank Volume Energy Factor 50 gallons or less 0.62 or higher

31 Table 3.2.15 FEMP Electric Water Heater Performance Requirements Storage Tank Volume Energy Factor Less than 60 gallons 0.93 or higher 60 gallons or more 0

. 91 or higher 3.2.5.5 Rebate Programs Several local utilities offer rebate programs for high-efficiency residential water heaters. A small sample of these programs is listed in Table 3.2.16. Table 3.2.16 Sample Rebate Programs State Utility Product Requirement Value

California Pacific Gas and E le ctric Company (PG&E) 32 Water Heaters Gas Storage: EF ≥ 0.62 and C a pacity ≥ 30 gallons Electric Storage: EF ≥ 0.93 and Capacity ≥ 40 gallons $30

Fl orida C e ntral Florida Ga s 33 Gas Water Heaters Storage and tankless installation or replacement $350-$525 Il linois C it y Water Light an d Power 34 Water Heaters Electric installation or re placement $200-$400 Texas Austi n Energy 35 Water Heaters New replacement $1 00 3.2.5.6 Super-Efficient Gas Water Heating Appliance Initiative SEGWHAI “will develop and implement the next generation of cost-effective and high-efficiency storage-type gas-fired water heater. SEGWHAI will facilitate the development and commercialization of this next generation of standard water heater. SEGWHAI will develop a well funded incentive program to make mass commercialization possible for gas-fired storage water heater units that meet SEGWHAI performance specifications.” 36

3-233.2.6 Historical Shipments Annual product shipment trend data is an important aspect of the market assessment and the development of the standards rulemaking. Such data are used in the shipments analysis (chapter 9 of this TSD). As the number of new home starts and the percentage of consumers with multiple units of some appliances increases, unit shipments of most appliances are expected to increase as well.
3.2.6.1 New Home Starts Trends in new home starts may directly affect shipments of residential water heaters, direct heating equipment, and pool heaters. While there is certainly both a replacement and remodeling market for some of these products, residential water heaters are fixtures in virtually all new homes. Figure 3.2.5 presents the number of new single-family and multifamily housing
u n its started in the United States from 1990 to 2006. Over the 5-year period from 2000 to 2005, single-family home starts increased 39.4 percent and peaked at 1,716,000 units annually. That increase settled to a 19.1 percent rise when home starts decreased to 1,465,000 units in 2006. Multifamily unit starts have remained relatively flat over the 37 past 7 years, hovering around 350,000 units annually.

3-242000 1800 1600 1400 1200 1000

800 600 400 200

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Single-Family Units Multi-Family Units

**Year** Figure 3.2.5 New Privately Owned Single-Family and Multifamily Housing Unit Starts in the United States, 1990-2006 38 3.2.6.2 Shipments Information about annual equipment shipment trends allows DOE to estimate the impacts of energy conservation standards on the residential water heater, direct heating equipment, and pool heater industries. DOE has examined unit shipments and value of shipments for residential water heaters, direct heating equipment, and pool heaters using publicly available data from the U.S. Census Bureau’s Annual Survey of Manufactures (ASM) and Current Industrial Reports (CIR), and the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) and AHRI estimates. 3.2.6.3 Water Heater Unit Shipments The U.S. Census Bureau’s annual CIR provides annual unit shipments and value of shipments for various industries, including the residential water heater industry. The CIR however, does not separate shipments by new construction and replacement units. Figure 3.2.6 presents the annual shipments of the residential water heater industry 39 (domestic and imported shipments) from 2001 to 2006 based on the annual CIRs. The numbers show two trends that impact the residential water heater industry. O v erall, shipments of both electric water heaters and non-electric water heaters have declined since 2001. However, shipments of non-electric water heaters have declined more rapidly than shipments of electric water heaters, and in 2006, shipments of electric water heaters exceeded shipments of non-electric water heaters.**Housing Units Started (thousands)**

3-2510,000,000 Non-electric Water Heaters Electric Water Heaters 9,000,000 Total 8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000 2001 2002 2003 2004 2005 2006 **Year** Figure 3.2.6 Residential Water Heater Industry Shipments (Domestic and Imported) 40 Table 3.2.17 presents the annual shipments of the residential water heater industry from 2003 to 2007 as estimated by AHRI. Table 3.2.17 AHRI Residential Water Heater Industry Estimated Shipment Data (New Construction and Replacement)* 41**Units Shipped**

Year Electric, Storage Water Heaters (units) Gas-Fired, Storage Water Heaters (units) Oil-Fired, Storage Water Heaters**

(units) Instantaneous Gas-Fired Water Heaters † (units) Total (units)

2007 4,470,000 4,384,000 24,000 322,000 9,200,000 2006 4,792,000 4,654,000 22,000 242,000 9,710,000 2005 4,519,000 4,801,000 26,000 156,000 9,502,000 2004 4,573,000 5,054,000 23,000 85,000 9,735,000 2003 4,430,000 5,124,000 24,000 N/A 9,578,000 * Shipment s rounded to nearest 1,000 units * * Only showin g shipments for 30 and 32 gallon models † Shipment data not available for all years 3.2.6.4 Water Heater Value of Shipments Table 3.2.18 provides the value of shipments for the residential water heater industry from 2000 to 2006 using the U.S. Census Bureau CIRs. 42 The CIR expresses all dollar values in current dollars ( i.e. , 2003 data are expressed in 2003$, etc.). Using the

3-26Gross Domestic Product (GDP) Deflator, DOE converted each year’s value of shipments to 2007$; 2006 was the last year included in the CIR data set.

43 Table 3.2.18 Residential Water Heater Value of Shipments by Year
Year Value of Shipments ($ Millions) Value of Shipments in 2007$ ($ Millions) Non-Electric Electric To tal Non-Electric Ele ctric To tal 2006 902.8 651.9 1,554.8 924.3 667.4 1,591.7 2005 970.2 638.4 1,608.6 1,024.7 674.2 1,698.9 2004 884.1 545.3 1,429.4 971.4 599.2 1,570.6 2003 985.6 569.5 1,555.1 1,109.7 641.2 1,750.9 2002 842.0 576.0 1,418.0 965.3 660.4 1,625.7 2001 799.3 555.7 1,355.0 931.5 647.6 1,579.1 2000 843.6 572.7 1,416.3 1,006.7 683.5 1,690.2 According to the data, non-electric and electric water heaters have had a relatively constant value of shipments between 2000 and 2006. Although the number of shipments of electric water heaters exceeded the number of shipments of non-electric water heaters in 2006, the value of non-electric water heater shipments continued to exceed the value of electric water heater shipments even as the number of shipments of non-electric water heaters declined. 3.2.6.5 Direct Heating Equipment Shipments The direct heating industry does not report information about direct heating equipment shipments in as many details as the water heater industry due to confidentiality concerns. DOE received shipment data from AHRI regarding direct heating equipment. Information was not available for every year, and some information is omitted for confidentiality concerns. Generally, the direct heating product industry sees small volumes and a decline in shipments over this range of years. Some products, e.g. , floor furnaces, are sold strictly as replacement products and expansion of the consumer base to increase shipments is not likely because more consumers install central heating systems to heat their homes as an alternative to using direct heating methods in recent years. Table 3.2.19 presents the annual shipments of the residential direct heating e q uipment industry from 2002 to 2006 as estimated by AHRI.

3-27Table 3.2.19 AHRI Residential Direct Heating Equipment Industry Estimated Shipment Data (New Construction and Replacement)* 44

Year Vented Wall Furnace** Direct Vent Wall Furnace** Floor Furnaces Vented Room Heaters †, †† Total

2006 80,000 54,000 4,000 N/A 138,000 2005 81,000 65,000 4,000 18,000 168,000 2004 88,000 66,000 5,000 21,000 180,000 2003 85,000 66,000 5,000 23,000 179,000 2002 84,000 61,000 6,000 21,000 171,000 * Shipment s rounded to nearest 1,000 units * * Not specific to only fan-type or gravity-type direct heating equipment † Shipment data n ot available for all years †† Including fireplaces 3.2.6.6 Pool Heater Shipments The pool heater industry does not report information about pool heater shipments in as many details as the water heater industry due to confidentiality concerns. However, some information is still available. DOE estimated shipments for pool heaters in the national impacts analysis (NIA, chapter 10 of the preliminary TSD) and presents a sample of those shipments in Table 3.2.20. Generally, shipments increase for the years 2003 to 2010 at an average rate of approximately 13,000 units each year. Table 3.2.20 Residential Gas-fired Pool Heater Shipments* Year Pool Heater Shipments 2010 357,000 2009 338,000 2008 322,000 2007 314,000 2006 309,000 2005 297,000 2004 280,000 2003 262,000 * Shipment s rounded to nearest 1,000 units 3.2.7 Industry Cost Structure DOE developed the residential water heater, direct heating equipment, and pool heater industry cost structures from publicly available information from the ASM, Security Exchange Commission (SEC) 10-K reports filed by publicly owned manufacturers. Companies subject to SEC regulations report sales, costs of goods sold, gross profits, and various overhead costs in addition to overall performance and operations for the year. DOE analyzed SEC reports and developed a representative cost structure for the industries of each product type. DOE looked at SEC 10-K reports from 2000 to 2006. The c o st of materials as a percentage of revenues for each product can fluctuate as raw material costs change from year to year. The cost of payroll for production workers as a percentage of revenues for

3-28each product type has declined, pointing to the possibility of increasing production automation in the heating products industry. Finally, selling, general, and administrativecosts have shown a declining trend as manufacturers cut costs by reducing the nonproduction, support, and administrative employee base.
Table 3.2.21 presents the industry cost structure derived from the SEC 10-K
r e ports. n Each financial statement entry is presented as a percentage of total revenues. Table 3.2.21 Industry Cost Structure Using SEC Data Financial Statement Entry Percent of Total Revenues for Each Product Type Water Heaters Direct Heating Equipment Po ol Heaters Profit before Financing 6

. 0 9.2 7.2 Selling, General, and Administrative Expenses 1 4 .0 12.5 16.0 Research and Develo p ment 2.1 2.0 2.5 Overhead 15.4 16.0 16.0 Labor 10.1 9.4 10.0 Mat erial 5 2 .4 50.9 48.3 Total 1 0 0.0 100.0 100.0 The manufacturer impact analysis (MIA) (chapter 12 of this TSD) presents a detailed financial analysis of each of the three product types covered by this rulemaking. This analysis identifies key financial inputs, including cost of capital, working capital, depreciation, capital expenditures, etc. 3.2.8 Equipment Lifetime DOE reviewed available literature and consulted with manufacturers to establish typical equipment lifetimes (see life-cycle cost analysis, chapter 8 of this TSD). DOE combined these sources to develop average estimated lifetimes of the equipment covered by this rulemaking, listed in Table 3.2.22.

n For more information, please visit www.sec.gov.
3-29Table 3.2.22 Equipment Lifetimes Equipment Average Lifetime (years) Residential Water Heaters Gas-Fired Storage-Type Water Heater 1 2 O il-Fired Water Heater 9 E le ctric Storage-Type Water Heater 1 4 I nstantaneous Gas-Fired-Type Water Heater 2 0 D irect Heating Equipment C o nventional Direct Heating Equipment 1 5 H earth Heating Equipment 3 0 P ool Heaters Gas Pool Heate r 6 More information about residential water heater, direct heating equipment, and pool heater lifetimes can be found in the life-cycle cost and payback period analysis section (chapter 8) of the TSD.
3.2.9 Market Performance Data

46 DOE combined information from the AHRI directory, 45 the CEC, and the FTC with other publicly available data from manufacturers’ catalogs of residential water heaters, direct heating equipment, and pool heaters to develop an understanding of these industries and their markets. The databases contain information such as manufacturer name, model number, and efficiency.
Residential Water Heaters Figure 3.2.7 to Figure 3.2.14 show the distribution of energy factors of gas-fired storage, oil-fired storage, electric storage, and instantaneous gas-fired water heaters in the AHRI directory.

3-30400

350

300

250

200

150

100

50

- 19 58 38 24 12 282

118 140 251

89 49 73

14 343 Count: 1510 Average Gas EF: 0.60 Federal Standard for 40 Gallon Models (Representative Rated Capacity)Count

0 4

. 8

0

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Figure 3.2.7 Distribution of Gas-Fired Storage-Type Water Heater Models by Energy Factor for All Storage Volumes Gas-fired water heater energy factors are concentrated between 0.58 and 0.63 EF. The minimum standard level listed on Figure 3.2.7 represents the Federal standard for a 40-gallon gas-fired water heater, the representative volume for gas-fired water heaters. Chapter 5 of the TSD discusses the analysis of the representative volume. Figure 3.2.8 shows another distribution of models, and how the Federal standard, defined by energy factor, relates to rated storage capacity based on the equation in Table 3.2.7.

3-313-32 0.45 0.50 0.55 0.60 0.65 0.70

20 30 40 50 60 70 80 90 100 Rated Volume (Gallons)Energy Factor

Federal Standard

Figure 3.2.8 Distribution of Gas-Fired Storage-Type Water Heater Models by Storage Capacity3.5

2 3

1 2 3

1 1 Count: 13 A verage Oil EF: 0.58 Federal Standard for 30 Gallon Models (Representative Rated Capacity)
3

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86 Energy Factor Figure 3.2.9 Distribution of Oil-Fired Storage-Type Water Heater Models by Energy Factor for All Storage Volumes Oil-fired water energy factors are more diffused. The Federal standard level listed on Figure 3.2.9 represents the current Federal standard for a 30-gallon oil-fired water heater, the representative volume for oil-fired water heaters. Chapter 5 of the TSD discusses the analysis of the representative volume. Figure 3.2.10 shows another distribution of models, and how the Federal standard, defined by energy factor, relates to rated storage capacity based on the equation in Table 3.2.7.

3-330.45 0.50 0.55 0.60 0.65 0.70

Federal StandardEnergy Factor

30 32 34 36 38 40 42 44 46 48 50 Rated Volume (Gallons)
Figure 3.2.10 Distribution of Oil-Fired Storage-Type Water Heater Models by Storage Capacity

3-34Federal Standard for 50 Gallon Models 250

2 0 0

150

8 1 2 5 10 25 7 17 13 206

42

1 1 79

50 52 98 Count: 717 Average EF: 0.92 (Representative Rated Capacity)Count

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Figure 3.2.11 Distribution of Electric Storage-Type Water Heater Models by Energy Factor for All Storage Volumes Electric water heater energy factors are concentrated between 0.90 and 0.94. At the far right of Figure 3.2.11, two heat pump water heaters represent some of the maximum energy factors achieved in residential electric water heaters to date. The Federal standard level listed on Figure 3.2.11 represents the current Federal standard for a 50-gallon electric water heater, the representative volume for electric water heaters. Chapter 5 of the TSD discusses the analysis of the representative volume. Figure 3.2.12 shows another distribution of models, and how the Federal standard, defined by energy factor, relates to rated storage capacity based on the equation in Table 3.2.7. The two models rated at 0 gallons are add-on heat pump water heaters, which are not sold with storage tanks.

3-353-36 0.75 1.00 1.25 1.50 1.75 2.00 2.25

0 20 40 60 80 100 120 140 Rated Volume (Gallon)Energy Factor

Federal Standard

Figure 3.2.12 Distribution of Electric Storage-Type Water Heater Models by Storage Capacity Figure 3.2.13 shows the distribution of energy factors of instantaneous gas-fired water heaters in the AHRI, CEC, and FTC directories.60

6 4 2 2 4 4 2 5 4 6 6 5 20 55

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5 9 4 2 Count: 182 A verage EF: 0.79 Federal Standard 50

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Figure 3.2.13 Distribution of Instantaneous Gas-fired Water Heater Models by Energy Factor The instantaneous gas-fired water heater market is concentrated around units with energy factors ranging from 0.82 to 0.88. Figure 3.2.14 shows another distribution of instantaneous gas-fired water heaters and how energy factors relate to input capacity. The Federal standard line is based on the equation in Table 3.2.7 for existing Federal energy conservation standards as shown. The line is horizontal because energy factor does not depend on input capacity and because the rated storage volume for all instantaneous water heaters is 0 gallons.

3-370.95

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0.6 0 50 100 150 200 250 Count: 182 A verage EF: 0.79

Federal Standard

Input (kBtu/h)
Figure 3.2.14 Distribution of Instantaneous Gas-fired Water Heater Models by Input Capacity Direct Heating Equipment Figure 3.2.15, Figure 3.2.16, Figure 3.2.17 and Figure 3.2.18 show the input rating and AFUE of wall furnace fan-type, wall furnace gravity-type, floor furnace, and room heater direct heating equipment, respectively, listed in the AHRI directory and found through reviews of publicly available product literature.Energy Factor

3-3884

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72 0 10000 20000 30000 40000 50000 60000 70000 Count: 104 Average AFUE: 76.7

Federal Standard

Input Rating (Btu/hour)
Figure 3.2.15 Distribution of Wall Furnace Fan-Type Models by Input Rating and AFUE Some fan-type wall furnaces meet the Federal standard, while some exceed the Federal standard by over 10 absolute percentage points. There is no concentration of efficiencies. When fan-type wall furnaces are analyzed by input rating, efficiency varies across the range of AFUEs. For low efficiency products, efficiency increases with increasing input rating. For high efficiency products, efficiency decreases with increasing input rating.AFUE (percent)

3-3985

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55 0 10000 20000 30000 40000 50000 60000 Count: 65 Average AFUE: 66.1

Federal Standard

Input Rating (Btu/hour)
Figure 3.2.16 Distribution of Wall Furnace Gravity-Type Models by Input Rating and AFUE Some gravity-type wall furnaces meet the Federal standard, while some exceed the Federal standard by over 20 absolute percentage points. The majority of gravity-type wall furnaces have efficiencies below 70 percent AFUE. There is no discernible relationship between input rating and efficiency.AFUE (percent)

3-4058.5

58

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55.5 0 10 000 20000 30000 40000 50000 60000 70000 80000 Count: 23 A verage AFUE: 57.6

Federal Standard

Input Rating (Btu/hour)
Figure 3.2.17 Distribution of Floor Furnace Models by Input Rating and AFUE Some floor furnaces meet the Federal standard, while some exceed the Federal standard by only one absolute percentage point. Floor furnaces have efficiencies in a narrow range between 56 percent AFUE and 58 percent AFUE, with an increase in efficiency as input rating increases.AFUE (percent)

3-4195

90

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55 0 100 00 20000 30000 40000 50000 60000 70000 80000 Count: 123 A verage AFUE: 64.3

Federal Standard

Input Rating (Btu/hour)
Figure 3.2.18 Distribution of Room Heater Models by Input Rating and AFUE Some room heaters meet the Federal standard, while some exceed the Federal standard by approximately two absolute percentage points or more. Room furnaces have efficiencies in a range between 59 percent AFUE and 93 percent AFUE, with an increase in efficiency as input rating increases. The room heater rated at 93 percent AFUE was identified by DOE through review of publicly available product literature. AHRI does not list this product in their directory, however, DOE identified that this is currently available to consumers. Direct heating equipment product class organization. After reviewing the direct heating equipment markets DOE determined that a revision of the product classes originally established by NAECA could establish a more accurate representation of the market. Additionally, a revision could reduce the number of product classes of the Federal energy conservation standard. Currently, there are 16 product classes established for direct heating equipment.
For fan-type wall furnaces, the market data in Figure 3.2.15 demonstrates two s e parate trends based on the efficiency range of the products. For higher efficiency products ( i.e. , 78 percent AFUE and higher), efficiency decreases as capacity increases. For lower efficiency products ( i.e. , 73 to 77 percent AFUE), efficiency increases as capacity increases. Therefore, the two product classes for gas wall, fan-type direct heating equipment could remain to distinguish these two trends. For gravity-type wa ll furnaces, the market data in Figure 3.2.16 indicates that manufacturers are not offering products over the entire input capacity range. Therefore,AFUE (percent)

3-42some product classes may be unnecessary, and the five product classes labeled “up to 10,000 Btu/h,” “over 10,000 and up to 12,000 Btu/h,” “over 12,000 and up to 15, 000 Btu/h,” “over 15,000 and up to 19,000 Btu/h,” and “over 19,000 and up to 27,000 Btu/h” could be consolidated into a single product class labeled “up to 27,000 Btu/h.” This would leave three product classes for gas wall gravity type furnaces.
For floor furnaces, the AHRI directory lists only 23 products in Figure 3.2.17, and mo re than 75 percent of products are rated above 37,000 Btu/h. Additionally, only one of these products is rated with an AFUE below 57 percent, which is the Federal energy conservation standard for products rated above 37,000 Btu/h. However, DOE notes that when comparing the models with the highest AFUE rating between the two product classes, the energy savings potential increases as the input capacity range increases. This would suggest that, for gas floor-type furnaces, input capacity does affect the AFUE of the products. However, the two product classes for gas floor direct heating equipment could be combined into a single product class.
For room furnaces, the relationship between AFUE and input rating established b y the Federal energy conservation standards and shown in Figure 3.2.18 is generally similar to the trend found among products listed in the AHRI directory. The market data show a general trend of increasing AFUE with input capacity range. However, some of the input capacity ranges could be further consolidated based on the distribution of models in the AHRI directory. In particular, the two lower input capacity ranges could be consolidated into a single product class ( i.e. , input ratings up to 20,000 Btu/h) with a corresponding single amended energy conservation standard. As a result, four product classes for gas room heaters would be established for the amended energy conservation standards. A revision of the direct heating equipment product classes could result in a reduction of the overall number of product classes. As an example, DOE could revise the direct heating equipment to reflect the product classes shown in Table 3.2.23. DOE will further investigate direct heating equipment product class organization during the NOPR phase of this rulemaking

3-43Table 3.2.23 Potential Revised Product Classes for Direct Heating Equipment Direct Heating Equipment Type Heating Capacity (Btu/h) Gas Wall Fan Type Up to 42,000 O v er 42,000 Gas Wall Gravity Type U p to 27,000* O v er 27,000 up to 4 6,000 Over 46,000 Gas Fl oor A l l*

Ga s Room Up to 20,000* O v er 20,000 up to 2 7,000 Over 27,000 up to 4 6,000 Over 46,000 *Product classes consolidated
Pool Heaters Figure 3.2.19 shows the distribution and thermal efficiency of gas-fired pool heaters in the CEC and FTC directories.

100

Count: 193

95 Average AFUE: 82.3

90

85

80

Federal Standard 75 0 200 400 600 800 1000 1200 Input Rating (Btu/hour)
Figure 3.2.19 Distribution of Pool Heater Models by Input Capacity and Thermal Efficiency The majority of pool heaters are rated with an input capacity of 400,000 Btu/h or less. Of these pool heaters, all models exceed the Federal standard. The pool heaters rated at input capacities above 400,000 Btu/h are typically not marketed for residential use.Thermal Efficiency (percent)

3-443.3 TECHNOLOGY ASSESSMENT The purpose of the technology assessment is to develop a preliminary list of technology options manufacturers can use to improve the efficiency of residential water heaters, direct heating equipment, and pool heaters. The following assessment provides descriptions of those technology options that apply to all product classes. In preparation for t h e screening and engineering analyses, DOE identified several possible technology options and examined the most common efficiency-improving technologies used today. These technology options will provide a deeper understanding of the technological improvements used to increase the energy efficiency of residential water heaters, direct heating equipment, and pool heaters. 3.3.1 Baseline Equipment Components and Operation The baseline models serve as reference point for each product class against which it can measure changes resulting from energy conservation standards. DOE defines the baseline model in each product class as a product having an efficiency that just meets the existing Federal energy conservation standards. DOE also defines baseline models as having commonly available features.
3.3.1.1 Baseline Residential Water Heaters Gas-Fired Storage Water Heaters The baseline gas-fired storage water heater is a water heater that incorporates acomplete gas-fired water heating system in an individual package. Each baseline gasfired water heater consists of a glass-lined corrosion-resistant steel tank, insulation surrounding the top and sides of the tank, a dip tube that directs cold entering water to the bottom of the tank, a hot water outlet pipe, heat traps, a gas burner, a standing pilot ignition, a combustion chamber, a burner control thermostat, a gas valve, a sacrificial anode, a flue within the water tank, a baffle-type heat exchanger within the flue, a temperature and pressure-relief valve, an outer case, and packaging for shipment. Manufacturers may differentiate gas-fired water heaters by efficiency rating, input to burners, and storage capacity. Oil-Fired Storage Water Heaters The baseline oil-fired storage water heater is a water heater that incorporates a complete oil-fired water heating system in an individual package. Each baseline oil-fired water heater consists of a glass-lined corrosion-resistant steel tank, insulation surrounding the top and side of the tank, a dip tube that directs cold entering water to the bottom of the tank, a hot water outlet pipe, a combustion chamber, a sacrificial anode, a flue within the water tank, a baffle-type heat exchanger within the flue, an oil-fired power burner system, a burner control thermostat, a temperature and pressure-relief valve, an outer case, and packaging for shipment. Manufacturers may differentiate oil-fired water heaters by efficiency rating, input to burners, and storage capacity.

3-45Electric Storage Water Heater The baseline electric storage water heater is a water heater that incorporates a complete electric powered water heating system in an individual package. Each baseline electric water heater consists of a glass-lined corrosion-resistant steel tank, insulation surrounding the top and side of the tank, a dip tube that directs cold entering water to the bottom of the tank, a hot water outlet pipe, heat traps, electric resistive heating elements,a control thermostat and wire harness, a sacrificial anode, a temperature and pressurerelief valve, an outer case, and packaging for shipment. Manufacturers may differentiate electric water heaters by efficiency rating, input to the heating elements, and storage capacity.
Instantaneous Gas-Fired Water Heaters The baseline instantaneous gas-fired water heater is a water heater that incorporates a complete instantaneous gas-fired water heating system in an individual package. Each baseline instantaneous gas-fired water heater consists of a cold water inlet, a hot water outlet, a combustion chamber, a heat exchanger, a burner, a vent, a standing pilot ignition, a flow detection device, a gas valve, a burner control thermostat, an outercase, and packaging for shipment. Manufacturers may differentiate instantaneous gasfired water heaters by efficiency rating and input to the burners. 3.3.1.2 Baseline Direct Heating Equipment Gas Wall Fan Type The gas wall fan-type heater is a heater that incorporates a complete gas heating system in an individual package. Each baseline gas wall fan-type heater consists of a heat exchanger, a room air circulation blower, a standing pilot ignition system, a burner, a pilot light sensing control valve, a combustion chamber, a flue, an intake, a burner control thermostat, an outer case, and packaging for shipment. Manufacturers may differentiate gas wall fan-type heaters by efficiency rating and input rating. Gas Wall Gravity Type The gas wall gravity-type heater is a heater that incorporates a complete gas heating system in an individual package. Each baseline gas wall gravity-type heater consists of a heat exchanger, a standing pilot ignition system, a burner, a pilot light sensing control valve, a combustion chamber, a flue, an intake, a burner control thermostat, an outer case, and packaging for shipment. Manufacturers may differentiate gas wall gravity-type heaters by efficiency rating and input rating. Gas Floor Type The gas floor-type heater is a heater that incorporates a complete gas heating system in an individual package. Each baseline gas floor-type heater consists of a heat exchanger, a standing pilot ignition system, a burner, a pilot light sensing control valve, a

3-46combustion chamber, a flue, an intake, a burner control thermostat, a floor grate, an outer case, and packaging for shipment. Manufacturers may differentiate gas floor-type heaters by efficiency rating and input rating.
Gas Room The gas room-type heater is a heater that incorporates a complete gas heating system in an individual package. Each baseline gas room-type heater consists of a heat exchanger, a standing pilot ignition system, a burner, a pilot light sensing control valve, a combustion chamber, a flue, an intake, a burner control thermostat, an outer case, and packaging for shipment. Manufacturers may differentiate gas room-type heaters by efficiency rating and input rating. Manufacturers may also differentiate by outer case. Room heaters can be packaged as console and hearth-type heaters.
3.3.1.3 Baseline Pool Heaters A gas-fired pool heater incorporates a complete pool heating system in an individual package. Each baseline gas pool heater consists of a cold water inlet pipe, a hot water outlet pipe, a heat exchanger, a standing pilot ignition system, a burner, a pilot light sensing control valve, a combustion chamber, a flue/vent, an air intake, a burner control thermostat, an outer case, and packaging for shipment. Manufacturers may differentiate gas-fired pool heaters by efficiency rating or input rating. 3.3.2 Technology Options
3.3.2.1 Water Heaters DOE identified the following technology options as having the potential to improve the efficiency of water heaters: 1. Heat traps 2. Insulation improvements 3. Power vent (gas-fired and oil-fired only) 4

. Heat exchanger i m provements 5. Flue damper (electromechanical) 6

. Side arm heater 7

. Electronic ( o r interrupted) ignition 8. Heat pump water h e ater (electric only) 9. CO 2 heat pump water heater 10. Flue damper (buoyancy operated) 1 1 . Directly fired 12. Condensing 13. Condensing pulse c o mbustion 14. Thermophotovoltaic a n d thermoelectric generators 15. Reduced burner s i ze (slow recovery) 16. Timer control 1 7 . Two-phase t h ermosiphon (TPTS) 18. Modulating controls
3-4719. Intelligent controls 20. Self-cleaning.

3.3.2.1.1 Heat Traps (Oil-Fired) Residential water heaters lose heat by conduction and convection through the fittings (water pipes, drain valve, pressure relief valve, and thermostat), which contributes to standby losses. A heat trap is a device or arrangement of piping that keeps the buoyant hot water from circulating to the piping distribution system by natural convection, which leads to heat loss through uninsulated pipes to the surroundings. When there is no draw of hot water, a heat trap prevents water in the hot water outlet line from getting back into the tank as it cools off, and prevents hot water in the tank from circulating back into the cold water inlet line. Thus, by containing hot water in storage tanks, heat traps minimize standby loss. These devices can be integral to tank design or independently attached to inlet and outlet pipes during installation at the site. Insulating its exposed portion can increase the effectiveness of a heat trap. Multiple manufacturers include heat traps on their water heater models. Conventional heat traps come i n two styles. In the first style, a floating plastic ball blocks the cold water inlet. The buoyancy of the plastic holds it in place until water is drawn. The force of water is strong enough to push the ball out of the way as water enters the tank.
The second style is used for the hot water outlet. In this heat trap, the ball is d e nser than water, and the weight of the ball seals the outlet until hot water is drawn and the water pressure lifts it out of the way. A small bypass channel is left for water to escape back into the inlet line from the tank as it expands after a large draw fills the tank with cold water. Heat traps could also be of metallic design. Manufacturing costs appear to be roughly comparable between metal and plastic heat traps, but plastic heat traps are considerably more effective in reducing water heater standby losses.
Other heat trap designs have also been produced. These include U-shaped pipes, f l exible seals, flaps, springs, and other mechanisms. 3.3.2.1.2 Insulation Improvements (Gas-Fired, Oil-Fired, Electric Storage) Improvements to reduce standby losses can be accomplished by modifying water heater tank insulation. Increasing the thermal resistivity of the water heater jacket to reduce the amount of heat loss during standby periods increases the water heater energy factor. Improved insulation can be a c hieved by modifying the baseline design of the standard gas-fired storage water heater using (1) increased jacket insulation, (2) a plastic tank, (3) an insulated tank bottom (electric only), (4) advanced forms of insulation, and (5) foam insulation.
Increased Jacket Insulation . Manufacturers insulate gas-fired, electric, and oilfired storage water heaters by filling the cavity between the jacket and the tank (top and

3-48sides) with insulation. Most storage water heaters on the market today have at least 1- inch thick insulation; some models have 2- or 3-inch thick insulation. Increasing the diameter of the jacket insulation will reduce standby losses by increasing the thermal resistivity of the water heater jacket. Jacket losses represent a majority of the standby losses. Some manufacturers produce water heaters with increased insulation. Aftermarket insulating blankets are also commercially available to increase water heater insulation. Plastic Tank (electric only) . Plastic water heater storage tanks can be constructed using a seamless, blow-molded polybutylene inner tank with a filament-wound fiberglass outer tank. A second method consists of constructing a thin steel shell with an internal plastic tank. The steel exterior is constructed first; then, plastic powder is injected into the shell, and the tank is rotated in a furnace to coat the interior with the plastic. The steel exterior serves as the primary structural support for the tank. The lower heat conductivity of plastic compared to metal reduces the amount of heat conducted through the tank wall to the insulation and to the feed-throughs. However, the plastic tank cannot be used with standard center-flue gas-fired storage water heaters or with oil-fired storage water heaters because the plastic cannot withstand the high temperatures produced by the flames. Insulated Tank Bottom (electric only) . Insulated tank bottoms increase water heater efficiency by reducing standby losses. The standard water heater tank is not insulated on the bottom, where water temperature is lowest. However, the tank bottom is still conductive; therefore, adding insulation will reduce heat dissipation through the bottom of the tank. Advanced Forms of Insulation . Alternate ways of reducing the jacket losses without increasing the diameter of gas-fired, electric, and oil-fired storage water heaters include using advanced insulation materials or evacuated panels. Some of the advanced materials or methods of insulation considered here involve using vacuum insulation, inert gases, aerogel insulation, or partial vacuums.
Vacuum Insulation

. A “hard” vacuum between internal reflective surfaces is a very good insulator. It has been used for years in Thermos bottles and Dewar tanks for cryogenic applications. Durability and the difficulty of maintaining the seal over the life of the storage water heater are some manufacturing problems that have to be resolved.
Gas-filled Panels . Gas-filled panels are thermal insulating devices that retain a high concentration of a low-conductivity gas at atmospheric pressure within a multilayer infrared reflective baffle. The thermal performance of the panels depends on the type of gas fill and the baffle configuration. Gas-filled panels are flexible and self-supporting, and can be made in a variety of shapes and sizes to thoroughly fill most types of cavities. This technology has not been 47 demonstrated for water heater applications. Aerogel Insulation

. An example of advanced insulation materials is silica aerogel, which is composed of 96 percent air and 4 percent silicon dioxide. Aerogels are more efficient and weigh less than the polyurethane foam that is

3-49currently used in most water heaters. The R-value of the aerogel at atmospheric pressure is comparable to that of the polyurethane foam, but when 90 percent of the air is evacuated from a plastic-sealed aerogel packet, its resistance nearly triples. Another advantage of aerogel insulation over foam insulation is avoiding the use of chlorofluorocarbons to blow the polyurethane foam into the heater jacket. New manufacturing processes have been developed that can produce flexible blankets or clamshell forms of this material. The aerogel material is vulnerable to shock and vibration, however, and material handling is an issue. Because the aerogel is hygroscopic, it also requires a thorough sealing of the cavity between the water heater tank and the outside cover. The material has not been demonstrated for use with water heaters.
Evacuated Panels

. Other materials with a lightweight open structure can provide effective insulation combined with “soft” or low vacuums. The materials can be enclosed with metals or plastic. A vacuum is drawn in this panel before sealing, and a lightweight, rigid foam keeps the vacuum from compressing the panel. This technology has not been demonstrated for storage water heater applications.
Foam Insulation . Foam insulation can be used as an alternative to fiberglass insulation. Chlorofluorocarbon-free, water-blown polyurethane foam is a common alternative to high-density fiberglass blankets. Incorporating foam insulation of the samethickness in place of fiberglass insulation can increase overall efficiency of the storagetype water heater. Foam typically has an R-value up to two to three times greater than fiberglass. Additionally, foam can be blown into the cavity between the tank and the outer case and does not need to be cut to form as required by some fiberglass installation methods. This facilitates the filling of small spaces and constrictive geometries where the potential for heat loss still exists, and would otherwise be difficult to fill with fiberglass batts. Finally, manufacturing processes that use foam-blowing techniques are better suited for production line changes due to the shape-conforming characteristics of the foam. This allows additional technology options, methods, and advances to be incorporated into current designs with only minimal impacts on insulation installation techniques. 3.3.2.1.3 Power Vent (Gas-Fired and Oil-Fired Storage) The power vent technology option can increase the recovery efficiency, depending on the specific set-up of the technology. Power vents can be designed either as induced or forced draft systems. An induced draft fan is installed downstream of the draft diverter in the venting system and pulls flue gases through the flue. A forced draft fan is upstream of the combustion chamber and supplies the correct fuel-to-air ratio for combustion. Both methods improve efficiency by increasing turbulence in the flue gases. Typically, this technology is incorporated with a flue b a ffle that has a more restricted flow path. Induced and forced draft fans are capable of transmitting air through the restricted flue baffle, where a natural venting system would not be possible. This restriction of air flow increases mixing, which increases heat transfer, thermal efficiency,

3-50and recovery efficiency. When recovery efficiencies reach above 80 percent, condensation of flue gases is likely. Water heaters obtaining recovery efficiencies above 80 percent should include methods to properly dispose of condensate and be made of materials that resist corrosion caused by condensate. In addition to an increase in efficiency, there i s also a reduction in standby loss. The restrictions created by the stationary blower installed in either the intake or flue paths reduce the off-cycle standby loss. The blowers act like dampers.
Some manufacturers make water heaters with induced draft fans that, in addition to pulling the combustion products through the water heater, also draw excess air into the flue gases before venting. This is similar to a vent hood used in natural venting applications. Adding ambient air cools flue gases leaving the water heater to a low enough temperature so that standard plastic piping can be used for venting. This eliminates any problems with metal vent pipe corrosion. Plastic piping is often cheaper and easier to install than sheet metal or masonry chimneys.
3.3.2.1.4 Heat Exchanger Improvements (Gas-Fired, Oil-Fired Storage, and Instantaneous) Improvements of heat transfer from the flue gases to the water can be accomplished by improving the characteristics of the flue baffle or heat exchanger. The improved heat transfer leads to an increase in the thermal efficiency of the water heater. If the thermal efficiency is increased to about 84 percent, condensation of the flue gases begins to occur in the flue or vent pipe. Condensation may cause the surfaces of the flue and vent pipe to corrode. To avoid such problems, materials that resist corrosion and methods to properly collect and dispose of condensate are incorporated into water heat designs. An improved heat exchanger c a n be achieved by modifying the baseline design of the standard gas-fired storage water heater using (1) increased heat exchanger surface area, (2) an improved flue baffle, (3) a submerged combustion chamber, (4) multiple flues, (5) alternative flue geometry (helical), or (6) a u-tube flue. These approaches can increase recovery efficiency sufficiently, but may also cause condensation (and hence corrosion) to occur in venting systems. Increased Heat Exchanger Surface Area . The baseline design consists of a vertical flue located in the center of the gas-fired or oil-fired storage water heater tank. This design can be improved by increasing the surface area of the flue, which increases the amount of heat transfer and thermal efficiency. One way to accomplish this is by increasing the diameter of the flue. The overall tank diameter would need to be increased to maintain consistent volume. Tank height could also be increased to maintain the same volume, which would also add surface area to the flue. The flue baffle would most likely require modification in order to maintain the same amount of air flow restriction. Enhanced Flue Baffle . The standard flue baffle of a gas-fired and oil-fired storage water heater is a twisted strip of metal inserted into the flue that increases the turbulence

3-51of flue gases and improves heat transfer to the walls of the flue. The geometry of the flue baffle can be modified to increase its effectiveness. Improving the flue baffle so that air flow becomes more restricted and more turbulent can increase the amount of heat transfer, which increases the thermal efficiency. The baffle can be improved by increasing the length of the path that the flue gases travel and by including more turns in the flue gas path. This can be accomplished by including fins or some other form of extrusion from the flue wall, or by increasing the number of flow altering features in the baffle, which is typically constructed from a flat piece of sheet metal and inserted into the flue. These methods to enhance the flue baffle, which increase air flow restriction and turbulence, may also result in an increased surface area, which also increases heat transfer. Enhanced flue baffle technology can also reduce standby losses. Enhancements to the flue baffle typically create restrictions to the air flow, which decreases convective heat loss during standby periods. Submerged Combustion Chamber. The combustion chamber in a standard gasfired and oil-fired storage water heater is below the water tank, and the bottom of the tank (below the burners) is seldom insulated. Therefore, the water heater loses heat from below the tank. The sides and bottom of the combustion chamber are not surrounded by water. By inserting the combustion chamber into the storage tank, more of the combustion energy can be recovered. Standby losses are reduced somewhat because of restrictions on air flow through the combustion chamber and flue. Multiple Flues. The multiple flue design uses several smaller flues in place of one large central flue in the middle of the storage tank. The increased surface area for heat exchange between the flue gases and the water in the tank yields an increase in recovery efficiency. Alternative Flue Geometry (helical) . This technology option is most oftenassociated with condensing gas-fired storage water heaters, and is also applicable to oilfired storage water heaters. The technology incorporates both a helical or spiraling flue and a u-tube flue. This technology contributes to increased efficiency in two distinct ways. The surface area of the flue is increased, since it runs a helical path considerably longer than the height of the water tank, increasing heat transfer during steady-state operations. Also, when the burner is not operating, the multiple turns in the flue resists heat convection out of the flue, reducing standby losses. Directing the flue downward with a “U” shape allows the forming condensate to drain from the water heater flue properly. The flue usually exits the sidewall of the water heater. Safety concerns exist due to the corrosive and acidic nature of the flue gas condensate, and corrosion-resistant materials are used to mitigate this damage.
U-tube. A u-tube flue for a gas-fired and oil-fired storage water heater is a flue shaped like an inverted “U” within the water heater tank. This shape contributes to increased efficiency in two distinct ways. The surface area of the flue is increased, it runs twice the height of the water tank, increasing heat transfer during steady-state operation. This effect is similar to the increased heat exchanger surface area technology option. When the burner is not operating, the inverted u-shaped flue resists heat convection out

3-52of the flue, reducing standby losses. This effect is similar to the flue damper technology options.
Direct Vent . Another method to increase surface area includes a secondary heat exchanger. Combustion gases exiting through the vent are used to preheat incoming air before it passes through the primary heat exchanger. Manufacturers currently produce instantaneous water heaters that accomplish this by running the inlet and exhaust vents concentrically. This venting configuration is known as direct-vent. This set-up is similar to a shell-in-tube heat exchanger. Manufacturers currently produce w a ter heaters with heat exchanger improvement technologies. 3.3.2.1.5 Flue Damper (Electromechanical) (Gas-Fired Storage) Gas-fired storage water heaters are typically equipped with a draft hood connecting the flue pipes to a vent pipe or chimney. During off-cycle, the water heater loses heat by natural convection and conduction through the vent pipe or chimney. A damper can be installed either at the flue exit or in the vent pipe to minimize the off-cycle heat losses. A flue damper is installed upstream of the draft diverter, while the vent damper is installed downstream of the draft diverter.
Electric flue dampers are activated by an external source of electricity. The d a mpers open when combustion starts and close immediately after combustion stops. Therefore, there is a greater reduction in off-cycle losses compared to buoyancy-activated dampers. When the damper reaches the open position, an interlock switch energizes the solenoid and enables the gas ignition circuit. Therefore, the burner cannot be ignited when the damper is in the closed position. Because the dampers open and close immediately, no bypass is needed. However, a knockout is provided to vent the flue gases from a standing pilot. The electric flue damper needs an electric hookup and consumes power when the gas supply is off.
Flue and vent dampers have no effect on the steady-state performance of the
w a ter heater. However, flue and vent dampers can reduce standby losses of gas-fired storage water heaters, yielding improved energy efficiency. Flue dampers are used on some commercial water heaters. 3.3.2.1.6 Side Arm Heater (Gas-Fired, Oil-Fired Storage) The side arm heater technology option for gas-fired and oil-fired storage water heaters avoids large flue losses by removing the flue from the center of the storage tank. Water is withdrawn from the bottom of the tank and heated over a burner in a small, separate heat exchanger and returned to the top of the tank. A small circulation pump moves water through the heat exchanger when the burner is on. The burner could have electronic ignition, which would reduce the pilot light losses. Auxiliary power is supplied by a low-voltage transformer, which is fed by a standard 120 volt wall connection. Water heaters using this design are not currently on the market.

3-533.3.2.1.7 Electronic (or Interrupted) Ignition (Gas-Fired, Oil-Fired Storage and Instantaneous) The most commonly used ignition system in gas-fired and oil-fired storage water heaters and instantaneous water heaters is a standing pilot ignition system. The disadvantage of these water heaters is that they burn gas continuously at a rate of about 1000 Btu/hr, and only part of this heat is converted to useful energy. As an alternative tostanding pilots, three electronic ignition devices are sometimes used in gas-fired and oilfired storage water heater and instantaneous water heater products: Intermittent Pilot Ignition. This is a device that lights a pilot by generating a spark, which in turn lights the main burner. Intermittent Direct Ignition. This system lights the main burner directly by generating a spark. Hot Surface Ignition. This system lights the main burner directly via a sufficiently hot surface. Hydroelectric i g nition is another form of electronic ignition used in gas-fired products, particularly instantaneous water heaters. However, it is not as common as the three forms of ignitions above. For hydroelectric systems, a small turbine is spun by flowing water to produce electricity, which ignites a pilot. This is similar to intermittent pilot ignition.
Unlike standing pilot ignition systems that consume gas continuously, hy droelectric devices operate only at the beginning of each on-period. Although there is no increase in the steady-state efficiency with the use of electronic ignition devices, the overall fuel consumption is reduced. Burner on-time may increase, however, to make up for the heat the standing pilot would have supplied during standby periods.
The “interrupted ignition” system for an oil-fired burner activates the spark only un til a steady flame is established. This differs from “intermittent ignition” for oil-fired burners, where the energy source is activated during the entire burner operating cycle. The oil consumption is not affected by interrupted ignition, nor is there an improvement in the recovery efficiency of the water heater. However, this technology option not only reduces the igniter’s electricity consumption, but also reduces its maintenance costs because the electrodes do not have to be replaced as often. In addition to changes in controls, the igniter can be made from solid-state electronics, instead of an iron core transformer. This improves performance and also reduces power consumption. Manufacturers produce water heaters with electronic ignition. 3.3.2.1.8 Heat Pump Water Heater (Electric Storage) A heat pump water heater represents a merging of two otherwise unrelated technologies: an electric resistance storage water heater with tank and controls, and a refrigeration circuit similar to that found in a residential air-conditioner. Heat pump water heaters use existing heat pump technology to extract heat from the surroundings for use

3-54in heating stored water. For electric water heaters, this is an alternative to resistive heating. Heat pump water heaters transfer heat from air, typically at room temperature, to water at a higher temperature. The heated water can then be used to provide the residential hot water supply. Since heat does not naturally transfer from a low temperature to a higher temperature, a mechanical system consisting primarily of a closed refrigeration loop containing a refrigerant vapor compressor, an evaporator (a type of heat exchanger), a condenser (another heat exchanger), and an expansion device is used to transfer the heat. The working fluid in the loop, the refrigerant, extracts heat from the surrounding air. Typically, the evaporator captures heat from the ambient air, and the condenser delivers this heat to the water inside of a storage tank. The pump and expansion device facilitate pressure and phase changes to allow for these heat transfer processes. When used continuously, typical heat pumps appear t o heat water at roughly two and a half to three times the rate of energy input (in the form of electricity). In practice, actual tested residential heat pump water heater designs typically yield energy factors 48 from approximately 1.0 to 3.0, while a baseline electric storage water heater has an energy factor of 0.90. An energy factor range exists because of variations in design and ambient conditions. For example, differences in piping between the heat pump and storage tank, efficiencies of the individual components of the heat pump loop, and storage tank characteristics affect EF.
It should be noted that most U.S. homes are heated for substantial portions of the ye ar, and operating a heat pump water heater typically extracts heat from the household air and increases the load on the home heating system during these periods. Energy factors for heat pump water heaters, or any water heaters, do not consider home heating loads. For this reason, accounting for the net energy or energy cost impact of the heat pump water heater requires analyzing the energy cost impact on the entire house, not just the electrical energy input to the water heater.
There are two basic designs for residential heat pump water heaters: add-on and i n tegral. An add-on heat pump water heater is designed to be added to a separately manufactured storage tank, often a standard electric resistance water heater. A small pump circulates water from the tank through the heat pump. The heat pump and storage tank are combined in the field during installation. The second type of heat pump water heater is an integral heat pump water heater. In an integral design, the heat exchanger (condenser) is combined with the storage tank design during the manufacturing process. This eliminates the need for a circulation pump and increases efficiency. Both heat pump configurations typically supplement resistive, or traditional electric, storage water heaters where the elements operate only when the demand for hot water is greater than what the heat pump can supply. Both designs have a r e frigeration subsystem composed of at least an expansion device, evaporator, compressor, and a fan (to force air over the evaporator and enhance heat transfer). The refrigerant condenser, also part of the refrigeration loop, can be located with the rest of the subsystem as a separate unit (as is done with the add-on-type heat pump water heater), or be located integral to the tank as with the integral heat pump

3-55water heater design. In the add-on heat pump water heater, cold water is removed from the tank, heated, and pumped back into the tank. In the integral design, the heat pump compressor moves refrigerant from the condenser coil to the evaporator coil. The condenser coil is typically located either inside the tank or wrapped around the tanks exterior ( .e. , between the tank wall and the insulation). The evaporator coil is typically housed on top of the tank along with the remaining heat pump components. The compressor, evaporator coil, and evaporator fan mounted on top of the storage tank will add approximately 12 inches to the height of a traditional electric water heater tank. Regardless of design, the expansion device, evaporator, fan, and compressor must be located outside the tank. In the add-on design, components can be mounted on top of the tank or as a completely separate unit that can be placed on the floor or mounted on the wall. For higher efficiencies, the add-on heat pump water heater should be placed relatively close to the tank. As the unit is placed farther from the tank, the water heating efficiency degrades due to piping losses, predominantly the result of warm water left in the piping between on-cycles that results in heat transfer to the surroundings.
The heat pump water heater also produces condensate at the evaporator coil d u ring operation. Like all refrigeration devices, the temperature of the evaporator coil must be cold to extract heat from the surrounding air. When air blows across the coil, moisture in the air is condensed to liquid. The amount of liquid produced is a function of the humidity in the air blown across the coil, the temperature of the evaporator coil, and the hot water load. Locating the heat pump in the conditioned space of a residence does not eliminate all the condensate buildup unless the air conditioning system can be counted on to dehumidify all house air to a dew point below the coil temperature. Therefore, condensate drains are typically required to remove condensation that collects as a result of operation. A pump may also be needed to move condensate to a drain.
Another component that is incorporated in most residential heat pump water h e ater designs is electric resistance heating elements. These are needed because the heating capacity of the refrigeration system is limited due to the cost and space considerations of residential heat pump water heaters. Typical heat pump water heaters have between 40 percent and 80 percent of the heating capacity of typical electric resistance storage water heaters. To compensate for this reduced heating capacity and allow faster water heating and shorter recovery periods for the heat pump water heater during periods of high use, electric resistance heaters are employed that can heat the water in the tank faster than the heat pump unit. Larger capacity heat pump systems can be constructed, but the cost of larger systems generally outweighs the energy efficiency benefits to the average consumer. Additionally, removing large amounts of heat from a conditioned space during high use periods with a larger system may create unfavorable conditions in a residence. Instead, practical systems are designed to heat water gradually using the higher efficiency heat pump, but can, when required by the heating load, use a higher capacity electric resistance backup. Finally, the space in which the heat pump water heater is located must be large to p r ovide adequate air flow and must provide ready access for regular air filter changes on the heat pump evaporator coil. The refrigeration subsystem of a heat pump water heater needs sufficient flow of warm air across the evaporator coils to serve as a heat source.

3-56Without this heat source, the heat pump cannot function and must revert to electric resistance operation. Operation in heat pump mode will generally require on the order of 100 cubic feet per minute or more of warm air. Multiple manufacturers produce heat pump water heaters. Multiple manufacturers produce heat pump water heaters, conduct heat pump research, and develop prototype designs. 3.3.2.1.9 Carbon Dioxide (CO 2 ) Heat Pump Water Heater (Electric Storage)
CO 2 heat pump water heaters are similar to the aforementioned heat pump water heater technology. This technology uses carbon dioxide as a natural refrigerant to transfer heat from the surrounding air to the water stored in the tank through a heat pump loop. Current products and prototypes can achieve coefficients of performance as high as 3.0, which result in EFs ranging from approximately 1.0 to 3.0. This range accounts for differences in ambient air conditions, storage tank efficiency, and efficiencies of the components that make up the heat pump loop. Additionally, products are capable of functioning in cold weather without freezing pipes or frosting evaporators on outdoor installations. Typically, this technology is installed outdoors due to the size of components. Typical installations include a separately packaged heat pump and a separately packaged storage unit consisting of two tanks and supporting hardware. CO 2 heat pump water heaters also take advantage of load shifting strategies by heating water at night and storing it for use during the day. Products are predominantly available outside of U.S. markets where products have been made available by government subsidy 50 rebate programs. 3.3.2.1.10 Flue Damper (Buoyancy Operated) (Gas-Fired Storage) This flue damper is a small, very lightweight aluminum dome-shaped poppet that slides up and down in an enclosure placed at the top of the flue of gas-fired water heaters. The buoyancy of the combustion products lifts the poppet, allowing flue gases to enter the venting system. This technology option would reduce off-cycle s t andby losses by sealing the flue and preventing convection to the venting system, but would have no effect on recovery efficiency because it does not affect the rate of heat transfer. This flue damper may not work with high recovery efficiency water heaters because there may not be enough waste heat in the combustion products to provide sufficient buoyancy to lift the poppet.
The safety standard 51 for gas water heaters requires the burner to shut off if the flue gets blocked for some reason. Thus, the effects of a failure of the flue damper to open should be mitigated by the burner controls. 3.3.2.1.11 Directly Fired (Gas-Fired, Oil-Fired Storage) In this technology option, water is sprayed through a series of baffles above the burner of gas-fired and oil-fired storage water heaters. Burner flame and flue products are in direct contact with the water, which is re-pressurized by a circulating pump and returned to the storage tank. The direct contact process allows for more efficient heat transfer than conventional shell-and-tube gas-fired and oil-fired storage water heaters
3-57 49because the heat resistive barrier between the water and the flue products is eliminated. However, direct contact with flue products can lead to contamination of the domestic water. This can potentially cause health and safety problems for end users. This technology option can also cause conflict with local and uniform plumbing codes ( e.g. , International Association of Plumbing and Mechanical Officials (IAPMO) 1991) with respect to water quality. 3.3.2.1.12 Condensing (Gas-Fired, Oil-Fired Storage and Instantaneous) Energy efficiency of gas-fired and oil-fired storage and instantaneous water heaters can be increased by extracting more heat from the flue gases. More energy can be extracted by condensing the combustion products in the flue gas, which extracts more heat in the form of latent energy, leading to an increase in the thermal efficiency of the gas-fired and oil-fired storage and instantaneous water heater. Water heater technology options or a combination of technology options can be added to a water heater design to condense the combustion gases.
The flue-gas condensate is often acidic and corrosive. Therefore, special c o rrosion-resistant heat exchangers and vent linings are required for safe and reliable operation of the water heater. Corrosion due to condensation of combustion gases limits the thermal efficiency of a fuel-fired water heater with a standard flue and vent system. Using corrosion-resistant heat exchangers or sidewall venting, and lining the vent/masonry systems with corrosion-resistant material can extend the thermal efficiency. Condensing gas appliances can be o f t wo types: fully-condensing and nearcondensing. Fully condensing appliances have flue gas temperatures less than the dew point (130oF to 140oF) of the flue products. Condensation is expected in both the heat exchanger and the vent system. Near-condensing appliances have flue gas temperatures approaching the dew point of the flue gases, but still greater than the dew point. Condensation is expected in the vent system but not in the heat exchangers. The thermalefficiency of fully condensing water heaters can be as high as 99 percent. For nearcondensing water heaters, thermal efficiency is generally between 84 and 90 percent. Manufacturers produce residential and commercial condensing water heaters. 3.3.2.1.13 Condensing Pulse Combustion (Gas-Fired, Oil-Fired Storage and Instantaneous) Pulse combustion burners for gas-fired and oil-fired storage and instantaneous water heaters are another condensing technology. Pulse combustion burners operate on self-sustaining resonating pressure waves that alternately rarefy the combustion chamber (drawing a fresh fuel/air mixture into the chamber) and pressurize it (causing ignition by compression heating of the mixture to its flash point). This process is initiated by a blower supplying an initial fuel and air mixture to the combustion chamber. The mixture is ignited with a spark. Once resonance is initiated, the process becomes self-sustaining.
Pulse combustion systems feature high heat transfer rates, are capable of selfv e nting, and can draw outside air for combustion even when installed inside. Because the

3-58pulse combustion process is highly efficient, the burners are generally used with condensing appliances.3.3.2.1.14 Thermophotovoltaic and Thermoelectric Generators (Gas-Fired, OilFired Storage and Instantaneous) Heat and light energy can be extracted from the combustion process of gas-fired and oil-fired storage and instantaneous water heaters and converted into useful electrical energy. Thermophotovoltaic generator technology uses a special light-emitting burner coupled with silicon photovoltaic cells that generate auxiliary power that can run a fan, operate the electronic ignition and controls, and charge a battery. This avoids the requirement of an auxiliary electrical supply, while offering the efficiency advantages of electronic ignition and forced-draft combustion.
Another method of generating electricity at the water heater is based on t h ermoelectric technology. Thermoelectric generators use semiconductors to convert a temperature differential into a voltage source. This voltage source can provide power to run a fan, operate the electronic ignition and controls, and charge a battery, similar to the thermophotovoltaic generator. Thermoelectric generators are available, but none have been used to generate auxiliary power for water heaters. 3.3.2.1.15 Reduced Burner Size (Slow Recovery) (Gas-Fired, Oil-Fired Storage and Instantaneous) Reducing burner size for gas-fired and oil-fired storage and instantaneous water heaters while keeping flue baffle and tank geometry the same will increase the ratio of heat transfer surface area to energy input, thereby increasing the recovery efficiency. The lower energy input means that recovery would be slower than with conventional burners. 3.3.2.1.16 Timer Control (Electric Storage) This technology option limits the time of day when the elements of an electric storage water heater may be energized. This is most often used as part of an electric utility demand-side management program for load shifting (“demand avoidance strategy”). Energy savings are possible because the water in the tank remains at a reduced temperature for part of the day. However, the actual energy savings will depend on the end-use profile, lifestyle of the consumer, and a basic desire to save energy. Savings will be greater for water heaters where standby loss levels are high. These savings are achieved because the electric consumption, in response to the standby losses, is shifted from on-peak to off-peak times where electricity costs less.
Aftermarket timer c o ntrols for water heaters are commercially available. Some utilities also offer load-shifting controls for water heaters to reduce peak daytime demand.

3-593.3.2.1.17 Two-Phase Thermosiphon (TPTS) (Gas-Fired, Oil-Fired Storage) TPTS technology removes the flue from the center of gas-fired and oil-fired storage water heaters and places a heat exchanger external to the storage tank, reducingstandby losses. This is similar to the side-arm heater technology option. TPTSs are heatpipe mechanisms that transfer heat from the external burner to the storage tank. The TPTS is a closed loop device consisting of an evaporator, in which the working fluid (water) is heated by the burner, percolating liquid and vapor into the condenser where heat is transferred into the water storage tank. At the condenser, which is inside the storage tank, the vaporized working fluid is condensed and drains back through a separate restricted tube to the evaporator, where it is reheated. The restriction prevents the heated vapor and liquid from flowing to the condenser through the return path. During off-cycle, there is very little heat transfer through the TPTS system. This reduces standby losses to levels similar to those of electric water heaters. 3.3.2.1.18 Modulating Controls (Instantaneous) Modulating controls within an instantaneous water heater can reduce energy consumption, improve efficiency, and improve overall performance by changing the operating conditions in response to household demand. Basic controls ( i.e. , those without modulation) operate at either the minimum or the maximum output levels, based on simple inputs from either the user or the water heater. Alternatively, modulating controls can reduce output so that excess energy is not wasted when only small temperature differentials or low flow rates need to be satisfied. By modulating the controls, the demand can be met more precisely by the appropriate outputs. For example, a control will not open fully to correct a small differential; rather, the control will modulate to a lower, or stepped, position so that excess energy is not wasted. An added benefit to modulation is the elimination of stacking, the effect of overheating due to a succession of short hot water draws. Stacking can lead to scalding and other safety issues. Finally, duty cycling can be reduced, which can reduce the total amount of energy consumed. Several manufacturers currently include modulating controls in instantaneous water heaters. 3.3.2.1.19 Intelligent Controls (Gas-Fired, Oil-Fired, Electric Storage, and Instantaneous) Intelligent controls, self diagnostics, and electronic controls for storage and instantaneous water heaters minimize energy consumption and maximize hot water output. Monitoring functions typically operate to minimize operating cost while still meeting household demand. This can be achieved by tracking usage patterns and adjusting water heater operations to maximize efficiency. Also, water heaters may employ economizer modes to limit the maximum temperature so that energy consumption is reduced. Smart vacation settings operate to minimize energy usage while maintaining temperatures above freezing. Diagnostic software may also maintain the optimal burner conditions, valve positions, and air-to-fuel ratios to maximize efficiency, for example. Several storage- and instantaneous-type water heaters incorporate intelligent, self-diagnostic and electronic controls.

3-603.3.2.1.20 Self-Cleaning (Gas-Fired, Oil-Fired, Electric Storage) This technology option for storage water heaters is a modification of the conventional dip tube associated with the baseline storage water heater. Water exits a conventional dip tube with a weak diffusing action. Self-cleaning technology incorporates a method to introduce the inlet water at high turbulence. This is accomplished by modifying the exit orifice at the end of the dip tube to increase the inlet velocity of the water and create a spray pattern. Designs may also incorporate orifices along the length of the dip tube. These introduce inlet water at various points within the tank to increase mixing and overall tank turbulence. Further designs may turn the flow path of the inlet water to a horizontal angle to increase the amount of swirling, or rotational turbulence. This can be accomplished by simply bending the dip tube.
The benefit that accompanies this technology is a self-cleaning feature. However, t h is does not contribute to an increase in energy efficiency as measured by the DOE test procedure. By introducing the inlet water at higher velocities and with turbulence, naturally occurring sediment in the water is forced to remain in suspension. Therefore, the sediment can be drawn out of the tank when there is a call for hot water, instead of settling to the bottom. If long standby periods occur, the dip tube is designed to unseat any settled particles so that they can be withdrawn from the tank. This prevents the formation of permanent deposits, which degrade heat transfer. Deposits decrease water heater performance, can cause leaks, and reduce tank volume. 3.3.2.2 Direct Heating Equipment The following technology options were identified that could potentially improve the efficiency of direct heating equipment: 1. Heat exchanger i m provements 2. Electronic i g nition 3. Thermal vent damper 4. Electrical vent damper 5. Power burner 6

. Induced draft 7. Two stage a n d modulating operation 8. Improved fan or b l ower motor efficiency 9. Increased insulation (floor f u rnaces only) 10. Condensing 11. Condensing pulse c o mbustion 12. Air circulation fan 1 3 . Sealed combustion

3.3.2.2.1 Heat Exchanger Improvements (Fan Wall, Gravity Wall, Floor, Room) Improvements to heat transfer from the combustion gases to the air can be accomplished by improving the characteristics of the heat exchanger for fan wall, gravity

3-61wall, floor, and room heaters. The improved heat transfer leads to an increase in the thermal efficiency and AFUE of direct heating equipment. If the AFUE is increased to about 90 percent, condensation of the combustion gases begins to occur in the heat exchanger or vent pipe. Condensation typically occurs when the combustion gases are cooled to approximately 130 oF. Condensation may cause corrosion to the surfaces of the heat exchanger and vent pipe. To avoid such problems, materials that resist corrosion and methods to properly collect and dispose of condensate are incorporated into direct heating equipment designs. If a means to manage condensate are not included in the design, then the use of this technology option will be limited to an AFUE below 90 percent to avoid damage.
The technology option of improved heat exchanger can be achieved by modifying b a seline designs of standard gas-fired direct heating equipment using (1) increased heat exchanger surface area, (2) multiple flues, (3) multiple turns in flue, (4) direct vent, and (5) increased heat transfer coefficient. Increased Heat Exchanger Surface Area . The performance of the heat exchanger can be improved by simply increasing its surface area, which increases the amount of heat transfer occurring in the direct heating equipment. This, in turn, improves the direct heating equipments’ capability of extracting heat from combustion gases. The result is an increase in the steady-state efficiency of the unit, and thus, the AFUE. Multiple Flues . Heat exchanger surface area can also be increased by incorporating a multiple flue design. The heat exchanger heats room air by passing it through multiple tubes instead of a single tube. One manufacturer incorporates 15 tubes to increase the surface area and increase the rate of heat transfer. Multiple Turns in Flue . This technology increases heat exchanger surface area by including multiple turns in the flue pipe. Overall dimensions of the outer case do not necessarily need to increase to accommodate a longer flue path. The longer flue path increases heat exchanger surface area, which increases steady-state efficiency and AFUE of the unit. One manufacturer incorporates turns in a heat exchanger to increase surface area and AFUE.
Direct Vent . Another method to increase surface area includes a secondary heat exchanger. Combustion gases exiting through the vent are used to preheat incoming air before it passes through the primary heat exchanger. Manufacturers currently produce direct heating equipment that accomplishes this by running the inlet and exhaust vents concentrically. These units are known as direct-vent heaters. This set up is similar to a shell-in-tube heat exchanger. Increased Heat Transfer Coefficient . An alternative to increasing the size of the heat exchanger is enhancing the inside and outside heat transfer coefficients of the heat exchanger. This can be accomplished by modifying the surface of the heat exchanger material for the purpose of increasing turbulence in the air passing close to the exchanger’s surface, for example. Incorporating dimples or some other form of surface feature to enhance turbulence can increase the heat transfer coefficient when correctly

3-62designed. Also, the heat exchanger may be constructed of a material with a higher thermal conductivity than the standard copper that is typically used. 3.3.2.2.2 Electronic Ignition (Fan Wall, Gravity Wall, Floor, Room) All gravity-type heaters and the majority of fan-type heaters are equipped with a standing pilot ignition system. In direct heating equipment, standing pilots continuously burn gas. The efficiency of the fan wall, gravity wall, floor, and room heater can be improved by simply replacing the standing pilot ignition system with an electronic one, such as an intermittent pilot system or a hot surface ignition system. In either case, the need for the standing pilot is eliminated. In assessing the i m pact on energy consumption, it is important to account for the added electrical energy consumption of the electronic ignition device in addition to the reduction in gas energy consumption that results from eliminating the standing pilot.
The two standing pilot ignition systems for gravity heaters, hydraulic and mi llivolt, do not require an outside source of electricity to operate. Consequently, these gas valves are more complex and more costly than those of an ignition system requiring a separate power source. For both the hydraulic and millivolt systems, the small amount of electricity that is required by the gas valve and thermostat is generated by either a thermocouple or thermopile. The thermocouple or thermopile draws its power from the burning pilot, and only a small fraction of the heat energy is converted to electricity. The pilot burns at approximately 775 Btu/hr constantly, and the electrical power typically required is only around 1 Watt, or 3.5 Btu/hr. The remaining heat is lost or transferred to the room (even when there is no call for heating).
For fan wall furnaces that already require an outside source of electricity to o p erate the fan, the electronic ignition system is powered off the fan power supply. The power draw of the fan power supply transformer occurs continuously. For direct heating equipment that does not already require electricity, a means to supply power must be included in the design. Both types of el ectronic ignition devices considered above, hot surface and intermittent pilot, require an outside source of electricity to operate their components. The gas valve for each electronic ignition system typically only consumes power during a call for heat. The control module, which houses the electronic circuitry required to control the entire ignition system, typically only consumes power during a call for heat. Finally, the electronic thermostat draws power either when heat is or is not being called for. These power requirements in total are typically less than the pilot burn rate. Manufacturers currently produce direct heating equipment with electronic ignition. 3.3.2.2.3 Thermal Vent Damper (Fan Wall, Gravity Wall, Floor, Room) Vent dampers are installed between the draft hood and the vent pipe of fan wall, gravity wall, floor, and room heaters. Vent dampers improve efficiency by primarily reducing both off-cycle infiltration and off-cycle sensible heat losses. Vent dampers have no affect on steady-state efficiency because they do not improve heat transfer.
3-63Thermal vent dampers are activated by a pair of bi-metal coil springs. Heat created by combustion gases cause the two coil springs to contract and open the damper blade. Conversely, the springs cool and expand to close the damper after heating discontinues. Response time to open and close the damper varies and may be slow because the bi-metal coil spring does not heat up or cool down instantaneously. Thermal vent dampers can be installed on units using either a standing pilot or an electronic ignition system. In their closed position, thermal vent dampers allow some bypass to ensure that during start up combustion gases will not be trapped within the heat exchanger. The bypass also allows flue gases from a standing pilot to be vented. As a result of the addition of a bypass, the reduction in off-cycle losses can be reduced because the damper is only partially closed. Combustion products must maintain a c e rtain amount of heat in order to expand the bi-metal coil springs of the thermal vent damper. If all heat is transferred to a room by a high efficiency heater and a non-effective amount remains in the combustion gases on contact with the thermal vent damper, there will not be enough heat to open it. 3.3.2.2.4 Electrical Vent Damper (Fan Wall, Gravity Wall, Floor, Room) In direct heating equipment, vent dampers are installed between the draft hood and the vent pipe of fan wall, gravity wall, floor, and room heaters. Vent dampers improve efficiency by primarily reducing both off-cycle infiltration and off-cycle sensible heat losses. Vent dampers have no affect on steady-state efficiency. Vent dampers have no affect on steady-state efficiency because they do not improve heat transfer. Electrical vent dampers are op erated by an outside source of electricity. Sensors indicate when the burner is off allowing for fast closure of the damper. Because of this, there is a greater reduction in off-cycle losses compared to thermally activated vent dampers. Electric vent dampers are designed with safety interlocks to prevent burner operation when the damper is in other than a fully open position. Unlike thermal dampers, electric dampers do not allow for bypass since they can open immediately upon burner operation, except when standing pilot ignition is employed. When standing pilots are in use, a knockout is provided on the damper allowing standing pilot combustion gases to be vented when the damper is fully closed. Safety concerns do exist. A power f a ilure may cause the electrical damper to remain closed and not cycle open while the heater operates to meet heating demands. This issue is mitigated, however, by including safety interlocks that only allow operation of the burner when the damper is in the open position. Also, a spring return actuator that fails to the open position can be used. When the electric vent damper experiences a power loss, a spring forces the damper to the open position. Electrical dampers require a n electrical connection, but only a nominal amount of power during opening and closing. Spring return dampers, if installed, only require a nominal amount of power as well. Power is required while opening and holding closed during standby periods (to overcome the return spring).

3-643.3.2.2.5 Power Burner (Fan Wall, Gravity Wall, Floor, Room) Fan-assisted combustion systems for fan wall, gravity wall, floor, and room heaters can be designed with power burner technology. Power burners use blowers upstream of the combustion zone to supply a more efficient fuel-air mixture to the burner. Power burners also reduce off-cycle losses by restricting air flow and convection of warm air to the vent system, similar to a vent or combustion box damper.
The accompanying steady-state efficiency will also increase resulting from in creasing the amount of primary air to the burner. This is accomplished without further design modifications to the heater. Because the power burner can be designed to overcome relatively large pressure drops within the heat exchanger, further increases in steady-state efficiency can be attained by redesigning the heat exchanger system. The heat exchanger can be designed to be more compact with more restrictions so that more heat can be extracted from the combustion gases. As efficiency increases, condensation of combustion gases within the vent system becomes more likely. Condensation of combustion gases should be avoided unless the system is specifically designed to be fully condensing direct heating equipment. 3.3.2.2.6 Induced Draft (Fan Wall, Gravity Wall, Floor, Room) Fan-assisted combustion systems for fan wall, gravity wall, floor, and room heaters can be designed with induced draft technology. Induced draft fans are located downstream of the combustion zone (at the exit of the heat exchanger) and regulate the amount of primary air at the burner resulting in a higher combustion efficiency. Induced draft systems also reduce off-cycle losses. Since induced draft fans are located at the exit of the heat exchanger, they tend to reduce off-cycle infiltration losses more than power burners. The induced draft fan essentially acts as a vent damper to prevent heated room air from being drawn into the vent system.
The space allocated for the draft hood is large enough to accommodate an induced d r aft fan. The induced draft fan could also be located anywhere along the length of the vent pipe as long as a draft can be maintained. Some installations may even incorporate a fan in the vent cap at the end of the venting system. Besides increasing AFUE, the steady-state efficiency will also increase because of the increasing amount of primary air to the burner. This increase is accomplished without further design modifications to the heater. Because the induced draft fan can be designed to overcome relatively large pressure drops within the heat exchanger, further increases in steady-state efficiency can be attained by redesigning the induced draft heat exchanger system. The heat exchanger can be redesigned to be more compact with more restrictions so that a greater amount of heat can be extracted from the flue gases. As efficiency increases, condensation of combustion gases within the vent system becomes likely. Condensation of combustion gases should be avoided unless the system is specifically designed to be fully condensing direct heating equipment.

3-653.3.2.2.7 Two Stage and Modulating Operation (Fan Wall, Gravity Wall, Floor, Room) Two-stage or modulating operation allows fan wall, gravity wall, floor, and room heaters to meet heating load requirements more precisely. When low heating load conditions exist, the heater has the capability to operate at a reduced burner rate. This reduces cycling of the unit, which in turn, reduces large fluctuations in room temperature. Two-stage or modulating burners attempt to reduce cycling of the heater by
r e ducing the flow rate of gas at lower heating loads. Two-stage or modulating burners, which are currently manufactured, regulate the gas flow but not the air flow. Excess air is induced at lower gas flow rates resulting in lower combustion efficiencies when compared to a normal or maximum gas flow rate. Because of this, heaters equipped with two-stage or modulating burners will always have a lower energy efficiency, as measured by the DOE test procedure, than heaters equipped with single-stage burners.
In order to overcome this lower efficiency and achieve efficient two-stage or
m o dulating operation, a two-stage or modulating burner must be incorporated into an induced draft or forced draft system that uses a two-speed or variable speed combustion fan. With the multi-speed combustion fan, the excess air drawn into the burner at low gas flow rates can be reduced so that there is no decrease in the steady-state efficiency of theheater. Similarly, on forced-air two-stage and modulating direct heaters, the aircirculation fan must also be capable of two-stage or variable speed operation in order to avoid a similar decrease in energy efficiency. 3.3.2.2.8 Improved Fan or Blower Motor Efficiency (Fan Wall) For fan wall heaters equipped with air circulation fans, the fan or blower motor efficiency can be increased to reduce the electrical energy consumption of the unit. Typical fan motor s i zes are 1/20 horse power. Since the motor is so small, increases in efficiency would yield extremely small electrical energy savings. Presently, direct heating manufacturers are believed to use permanent split capacitor (PSC) fan motors. The next jump in motor efficiency would be to use a permanent magnet brushless DC (BLDC) motor. A brushless DC motor uses electronic controls to commutate the motor, eliminating brush friction and losses, and therefore increasing motor efficiency. BLDC motors also have longer lifetimes than electric motors containing brushes. 3.3.2.2.9 Increased Insulation (Floor) Floor furnaces are the only heater types that are installed directly within an unconditioned space. Floor furnaces are typically installed where the majority of the unit is below the subfloor of the first floor and in the crawlspace of a home. Therefore, DOE considered increasing or improving the insulation of a heater only for this product class of DHE. Since room heaters and wall furnaces are installed within the conditioned space, insulation within the cabinet would only serve to minimize cabinet hot spots and reduce the amount of radiated heat coming off the heater. Additionally, the DOE test procedure calls for the measurement of jacket losses only for floor furnaces. Increased or improved
3-66insulation would reduce the jacket losses of this type of DHE and increase the overall AFUE. The installation of insulation in a floor furnace is at the perimeter of the cabinet. 3.3.2.2.10 Condensing (Fan Wall, Gravity Wall, Floor, Room)If fan wall, gravity wall, floor, and room heaters are designed to have high steadystate efficiencies, enough heat will be extracted from the combustion gases so that condensing occurs within the heat exchangers. This type of heater is typically termed a condensing heater and AFUEs generally exceed 90 percent. One typical condensing design uses a high efficiency fan-assisted combustion system with additional heat exchanger surface area. As mentioned previously in the d i scussion of the power burner or induced draft technology option, this heater system can be designed to achieve high efficiencies. In the power burner or induced draft technology option description, condensation of the combustion gases within the vent system was not desired. Since condensation is now desired, the fan-assisted system is designed to extract as much heat as possible from the combustion gases. Typically, condensing systems exhaust their combustion gases through a direct-vent. Positive pressure can be maintained within the vent system to exhaust the low temperature combustion gases with a fan installed upstream of the combustion zone. Conversely, negative pressure can be maintain within the vent system to draw combustion gases from the combustion chamber with a fan installed downstream of the combustion zone. The combustion gases can be passed through a larger or improved heat exchanger to extract as much heat as possible. Condensing systems require some means to collect and drain the condensate that develops within the heat exchangers. Condensing systems can be designed to use secondary heat exchangers and air circulation fans as well. 3.3.2.2.11 Condensing Pulse Combustion (Fan Wall, Gravity Wall, Floor, Room)If a fan wall, gravity wall, floor, or room heater is designed to have a high steadystate efficiency, enough heat will be extracted from the flue gases so that condensing occurs within the heat exchanger. This type of heater is typically termed a condensing heater and AFUEs generally exceed 90 percent. One typical condensing design uses pulse combustion with additional heat exchanger area.
As mentioned in the di scussion of the power burner and induced draft technology option, the heater system can be designed to achieve high efficiencies. In the power burner or induced draft technology option description, condensation of the combustion gases within the vent system was not desired due to the corrosive nature of the condensate. However, in order to achieve high AFUEs, enough heat must be extracted from the combustion gases to the point where combustion gases condense. Condensing pulse combustion is designed to extract as much heat as possible from the combustion gases. Pulse combustion systems, like a direct-vent type heater, draw combustion airfrom the outside. Once ignition is accomplished, the pulse combustion process is selfsustaining. The turbulent nature of the pulse combustion process requires no mechanical

3-67devices ( e.g. , induced draft fans or power burners) to vent the combustion products to the outside atmosphere. Pulse combustion designs may use a secondary heat exchanger and an air circulation fan to increase steady-state efficiency. The secondary heat exchanger is usually located at the forced air blower outlet and before the combustion air enters the combustion chamber. Part of the efficiency gain comes from capturing the heat of vaporization of the combustion gases before they are expelled to the outside. Combustion gases condense because the temperature of the vented gases falls to about 130 °F. A condensate drain is needed to route the condensed moisture into a floor drain. 3.3.2.2.12 Air Circulation Fan (Floor, Room) Air circulation fans improve the steady-state efficiency of floor and room heaters by circulating air in a counter-current mode to the flow of combustion products. In gravity-type heaters, room air circulates co-current with the combustion products, driven only by the thermal buoyant forces. Counter-current heat exchangers are inherently moreefficient than co-flowing types. In addition, the higher air flow rates that occur in forcedair heaters result in higher heat transfer coefficients than for gravity-type heaters.
AFUE increases due t o air circulation fans are due solely from improving the steady-state efficiency of the heater. This technology option is only considered for room heaters and floor furnaces. Air circulation fans are known to be easily incorporated into currently available room heater models as manufacturers already provide consumers with the option of purchasing fans for these units. Though floor furnaces do not currently have the option of adding a circulation fan, DOE believes the cabinet is large enough to incorporate a fan without having to enlarge the cabinet. 3.3.2.2.13 Sealed Combustion (Fan Wall, Gravity Wall, Floor, Room) Fan wall, gravity wall, floor, and room heaters that pull air from the conditioned space to use for the combustion process waste heat. Removing energy in the form of heated air and exhausting it outside of the conditioned space is inherently less efficient than drawing outside air for the combustion process. Fan wall, gravity wall, floor, and room direct heating equipment having sealed combustion chambers prevents heat rejection from occurring. Using outside air for heating ensures that air within the conditioned space is not used for combustion.
Non-sealed combustion heaters induce n e gative pressure during operation, unlike sealed combustion heaters that do not induce any pressure. When air is exhausted from a conditioned space the removed air must be replaced in order to satisfy the induced pressure differential. This happens naturally by infiltration, or leaking, of cool outside air into the conditioned space. Sealed combustion does not contribute to exchanges of air between the interior conditioned spaces and exterior unconditioned spaces. Finally, sealed combustion provides inherent safety benefits. Sealing the combustion process prevents harmful combustion gases from mixing and accumulating in the c o nditioned space. Combustion products are exhausted outside of the space.

3-683.3.2.3 Pool Heaters The following technology options could improve the efficiency of pool heaters:
1. Electronic i g nition 2. Improved heat exchanger design 3. More effective insulation (combustion chamber) 4

. Power venting 5

. Sealed combustion 6. Condensing pulse c o mbustion 7. Condensing

3.3.2.3.1 Electronic Ignition One of the most common ways to reduce energy consumption by pool heaters is to eliminate the standing pilot light as a method of igniting the main burner. Pool heater manufacturers already make heaters with electronic ignition and many different variations in models are available. This technology has been well represented in the market. For example, since February 1984, California has required that pool heaters not have standing pilot lights, but instead use electronic ignition. Three electronic ignition devices are used in gas-fired pool heaters: Intermittent Pilot Ignition. This is a device that lights a pilot by generating a spark, which in turn lights the main burner. Intermittent Direct Ignition. This system lights the main burner directly by generating a spark. Hot Surface Ignition. This system lights the main burner directly from a sufficiently hot surface. Unlike standing pilot ignition systems that consume gas continuously, these d e vices operate only at the beginning of each on-period. Although there is no increase in the steady-state efficiency when using electronic ignition devices, the overall fuel consumption is reduced. Pool heater pilot lights typically consume approximately 1,100 Btu/hr on average. 3.3.2.3.2 Improved Heat Exchanger Design Pool heaters are currently capable of reaching the steady-state efficiency level where potentially damaging condensation will start to form on the heat exchanger. A small increase in heat exchanger size may be possible, without causing condensation of the combustion gases, by increasing the heat exchanger surface area. The burner configuration might also require adjustment. No blower would be required for this technology option, however.
The heat exchanger can also be increased while preventing condensation from f o rming by using a governor. The governor maintains pool water temperature and water

3-69flow so that condensation of combustion gases does not occur. The governor limits the efficiency of the heat exchanger so that the latent heat of the combustion gases is not transferred to the pool water. DOE is aware of a manufacturer making a pool heater with a condensing governor.
If condensation is desired to achieve a h i gh steady-state efficiency, then the pool heater design must properly manage and dispose of the potentially damaging condensate. This can be accomplished with corrosion-resistant materials and a condensate drain. 3.3.2.3.3 More Effective Insulation (Combustion Chamber) Combustion chambers for pool heaters are insulated with fiberglass blankets to prevent heat loss through the walls of the combustion chamber to the exterior of the pool heater. Manufacturers reduce the amount of heat loss to increase the thermal efficiency by using materials with more effective insulation properties. Manufacturers of pool heaters currently produce products that use Fiberfrax panels and refractory tiles to reduce the amount of heat loss through the combustion chamber walls. By lining the sides and bottom of the heat exchanger with these materials, manufacturers increase the amount of heat that is transferred from the combustion chamber to the heat exchanger. DOE identified several manufacturers that use insulation that is more effective than fiberglass blankets for pool heater combustion chambers. 3.3.2.3.4 Power Venting Fan-assisted combustion systems for pool heaters can be designed with power venting technology. Induced draft fans located downstream of the combustion zone (at the exit of the heat exchanger), or forced draft fans located upstream of the combustion zone (at the entrance to the combustion chamber) regulate the amount of primary air at the burner resulting in a higher combustion efficiency.
To increase the energy efficiency, a larger heat exchanger surface area (which in creases the heat transfer rate) is required with this technology. The larger heat exchanger typically increases the amount of restriction to the air flow path and the combustion gases are typically not buoyant enough to provide adequate draft. Therefore, the power vent forces combustion gases through the restricted heat exchanger area. Forcing the air increases turbulence and this increases the rate of heat transfer, which in turn increases steady-state efficiency and energy efficiency. Configuration of other parts of the pool heater, such as the combustion chamber and burner, can remain constant with the inclusion of this technology option. Additional alterations of the heat exchanger may be needed, however, if condensing occurs, which can corrode the heat exchanger.
3.3.2.3.5 Sealed Combustion Pool heater combustion processes require a regulated ratio of fuel to air in order to be efficient. The primary air for the combustion chamber must be supplied at a constant rate without any fluctuations. To maintain a specific supply of primary air, manufacturers seal the combustion chamber of the pool heater. Manufacturers produce pool heaters with seal combustion chambers and air intakes that operate at consistent energy efficiency
3-70levels regardless of outside conditions. Pool heaters, particularly those installed outdoors, without seal combustion chambers are susceptible to reductions in thermal efficiency if high wind conditions exist. Pressure and air flow variations caused by ambient conditions can vary the amount of primary air supplied to the burners, which can reduce the burner efficiency. Several manufacturers produce pool heaters with sealed combustion chambers. 3.3.2.3.6 Condensing Pulse Combustion To increase the energy efficiency of a pool heater, the water vapor in the combustion gases must be condensed in order to capture the heat of vaporization. Alterations of the heat exchanger are necessary for condensing operations to prevent condensate from corroding the heat exchanger. A condensate drain is also required. Condensing can be a c complished by using pulse combustion burners. Pulse combustion burners operate with self-sustaining resonating pressure waves that alternately ratify the combustion chamber (causing a fresh fuel/air mixture to enter the chamber) and pressurize it (causing ignition by compression of the mixture to its flash point). This process is initiated by a blower that supplies the initial fuel and air mixture to the chamber. The fuel and air mixture is ignited with a spark igniter. Once resonation is established, the process becomes self-sustaining. Pulse combustion systems feature high heat transfer rates through the heat exchanger due to increased turbulence of combustion gases. High-efficiency gas-fired boilers using pulse combustion are currently available. 3.3.2.3.7 Condensing To increase the efficiency of a pool heater, the water vapor in the combustion gases must be condensed in order to capture the heat of vaporization. Alterations of the heat exchanger are necessary for condensing operations to prevent condensate from corroding the heat exchanger. A condensate drain is also required. This technology option uses a r a diant burner, a modified heat exchanger to condense the combustion gases, and a burner located above the heat exchanger to prevent its corrosion due to contact with condensate. A ceramic matrix radiant burner is located above a series of finned heat exchanger tubes. A blower forces an air and gas mixture through the ceramic matrix burner and down past the heat exchanger. Most of the heat is radiated to the heat exchanger. By locating the burner above the heat exchanger and out of the way of any condensation, the burner does not require corrosion protection. The heat exchanger must still be corrosion-resistant, however, and a condensate drain must be installed. 3.3.3 Technologies that Do Not Affect Energy Efficiency as Measured DOE reviewed the technologies presented in the previous assessment and considered their impacts on DOE’s test procedure results in addition to their impacts on energy use. Since EF, AFUE, and thermal efficiency are the relevant performance metrics in the present rulemaking analyses, technologies having no effect on or do not increase EF, AFUE, and thermal efficiency are not beneficial in the rulemaking context.
3-71Of the technologies presented in the previous section, DOE removed several technologies from consideration as a result before conducting the screening analysis. Although these technologies were not considered in the analyses, DOE does not discourage manufacturers from using them because they may potentially reduce annual energy consumption. DOE provided an explanation of why these technologies do not affect EF, AFUE, or thermal efficiency.
3.3.3.1 Water Heaters The following technology options have no effect on or do not increase the EF of residential water heaters: timer controls, self-cleaning, intelligent controls, and modulating controls. 3.3.3.1.1 Timer Controls (Electric) Timer controls affect the time of day when the elements of an electric storage water heater may be energized. This feature has the potential to reduce energy use 52 because the water in the tank remains at a reduced temperature for part of the day. These savings are achieved because the electric consumption, in response to the standby losses, is shifted from on-peak to off-peak times when electricity costs less. However, the DO E test procedure for electric storage water heaters does not show the affects of timer controls, because the test specifies normal operation for the water heater during the entire testing period. Additionally, this technology affects the energy consumption pattern of the water heater and not energy efficiency because load is shifted, not reduced. The typical use of the average consumer is specified by the test procedure, and time of day and conditions of an electrical supply grid (on-peak or off-peak) are not factors. Although this technology can reduce peak energy demand and reduce overall energy costs to the consumer throughout the year, it does not increase EF under the DOE test procedure for electric storage water heaters because of the specified test conditions. Therefore, DOE does not consider timer controls as a technology for improving EF of electric storage water heaters. 3.3.3.1.2 Self Cleaning (Gas, Oil, Electric Storage) Self-cleaning incorporates a method to introduce the inlet water at high turbulence, so that the sediment occurring naturally in the water remains in suspension and does not settle to the bottom of the tank. Additionally, a self-cleaning dip tube unseats sediment that accumulates during long standby periods. Tank cleaning does not improve EF as measured by the DOE test procedures. The DOE test procedure to determine EF is 24 hours, and testing immediately follows manufacture. Sediment build up can reduce EF over the life of the water heater, but in a 24-hour period the amount of build up that could occur, if any, would not be enough to affect the test results. This technology facilitates the removal of deposits, which can build up over the life of a water heater, which is typically 9 to 15 years. Deposits decrease water heater performance, reduce tank volume, and can cause leaks. Self-cleaning improves tank life and reduces the required maintenance, but these are not determinants for EF. DOE does not consider

3-72self-cleaning as a technology for improving EF of electric, gas, or oil storage water heaters. 3.3.3.1.3 Intelligent Controls (Gas, Oil, Electric Storage) Intelligent controls and self-diagnostics minimize energy consumption and maximize hot water output. Several storage and instantaneous type water heaters currently on the market include self-diagnostics and electronic controls. Typically, varying the temperature of the heated water based on the household demand minimizes energy consumption. However, the DOE test procedure has a set draw pattern and usage for the water heater, and specifies an inlet and outlet temperature for the water. As a result of these specifications, there is no opportunity for varying temperatures to affect the EF calculation. Consequently, DOE does not consider intelligent controls as a technology for improving EF of electric storage, gas storage, and gas instantaneous water heaters. 3.3.3.1.4 Modulating Controls (Instantaneous) Modulating water heater controls can reduce energy consumption, improve energy efficiency, and improve overall performance by changing the operating conditions in response to household demand. Modulating controls can also reduce output so that excess energy is not wasted when only small temperature differentials or low flow rates need to be satisfied. Although modulating controls can increase energy efficiency over a broad operating range, they do not affect EF as measured by the DOE test procedure. Due to the specified test conditions, ( i.e. no variability in demand or delivery) there is no opportunity for varying operating conditions to affect the EF calculation. Therefore, DOE does not consider modulating controls as a technology for improving EF of instantaneous water heaters. 3.3.3.2 Direct Heating Equipment DOE has not identified any technologies that do not effect or do not increase AFUE for residential direct heating equipment as measured by DOE’s test procedure.
3.3.3.3 Pool Heaters The following technology options have no effect on or do not increase the thermal efficiency of residential pool heaters: electronic ignition. 3.3.3.3.1 Electronic Ignition Electronic ignition (intermittent pilot, intermittent direct, and hot surface ignition) reduces the energy consumption of gas-fired pool heaters by eliminating the standing pilot. Pool heater pilot lights burn continuously with a burn rate ranging from 1,000 Btu/h to 2,000 Btu/h during the pool heater operating season. Electronic ignition only uses energy when there is a call for heating and only until a flame has been established.

3-73Electronic ignition can be used to replace the standing pilot and reduce the overall energy consumption of the pool heater. However, the thermal efficiency descriptor specified by EPCA, and measured by DOE’s test procedure, does not take into account the energy efficiency benefits of ignition sources that are alternatives to standing pilots ( e.g. , electronic ignition). The thermal efficiency descriptor, as measured by the DOE test procedure, does not account for additional energy consumption of a continuous, standing pilot light when the burner is off because it is a steady-state test procedure and thermal efficiency is determined when the burner is on. That is, thermal efficiency only captures energy efficiency impacts that affect combustion and the transfer of energy to the water. The thermal efficiency descriptor does not account for any energy that a pool heater may use in the standby period. Therefore, standards expressed in terms of this descriptor cannot require use of such alternative ignition sources or capture the full energy savings benefit of their use. Therefore, DOE does not consider electronic ignition as a technology for improving thermal efficiency for pool heaters.

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12 Ibid.

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38 Ibid. 39 U.S. Census Bureau. Last accessed March 17, 2008. <http://www.census.gov/cir/www/>.
40 Ibid. 41 Stanonik, F. A. AHRI Heating Products Data Submission . Air Conditioning, Heating, and Refrigeration Institute, Arlington, VA. March 12, 2008.

3-7742 Ibid.
43 Ibid. 44 Ibid.
45 G AMA. GAMA Product Directories. Last accessed March 17, 2008. < http://www.gamanet.org/gama/inforesources.nsf/vAllDocs/Product+Directories? OpenDocument>.
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. 51 American National Standards Institute, Gas Water Heaters, Volume 1: Storage Water Heaters with Input Ratings of 75,000 Btu per Hour or Less , 1993. New York, NY. Report No. ANSI/AGA Z21.10.1-1993. 52 Energy Efficiency and Renewable E n ergy. Install a Timer and Use Off-Peak Power for Electric Water Heaters. Last accessed March 19, 2008. <http://www.eere.energy.gov/consumer/your_home/water_heating/index.cfm/mytopic=1 3110>.

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