CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS 

TABLE OF CONTENTS 

8.1 INTRODUCTION .............................................................................................. 8-1


8.1.1 General Approach for LCC and PBP Analysis................................................................ 8-1


8.1.2 Overview of LCC and PBP Inputs................................................................................... 8-3


8.1.3 New Construction and Replacement Fractions of Heating Product Shipments ............ 8-11


8.2 TOTAL INSTALLED COST INPUTS .............................................................. 8-12


8.2.2 Water Heaters................................................................................................................. 8-13


8.2.2.1 Baseline Manufacturer Cost......................................................................... 8-13


8.2.2.2 Standard-Level Manufacturer Cost Increases.............................................. 8-14


8.2.2.3 Overall Markup............................................................................................ 8-15


8.2.2.4 Installation Cost ........................................................................................... 8-16


8.2.2.5 Total Installed Cost...................................................................................... 8-22


8.2.3 Direct Heating Equipment ............................................................................................. 8-24


8.2.3.1 Baseline Manufacturer Cost......................................................................... 8-24


8.2.3.2 Standard-Level Manufacturer Cost Increases.............................................. 8-24


8.2.3.3 Overall Markup............................................................................................ 8-25


8.2.3.4 Installation Cost ........................................................................................... 8-26


8.2.3.5 Total Installed Cost...................................................................................... 8-27


8.2.4 Gas-Fired Pool Heaters.................................................................................................. 8-29


8.2.4.1 Baseline Manufacturer Cost......................................................................... 8-29


8.2.4.2 Standard-Level Manufacturer Cost Increases.............................................. 8-29


8.2.4.3 Overall Markup............................................................................................ 8-30


8.2.4.4 Installation Cost ........................................................................................... 8-30


8.2.4.5 Total Installed Cost...................................................................................... 8-31


8.3 OPERATING COST INPUTS -- OVERVIEW................................................... 8-32


8.4 ANNUAL ENERGY CONSUMPTION ............................................................. 8-34


8.4.1 Accounting for the Rebound Effect ............................................................................... 8-34


8.5 ENERGY PRICES AND ENERGY PRICE TRENDS........................................ 8-35


8.5.1 Residential Natural Gas Prices....................................................................................... 8-35


8.5.2 Residential Electricity Prices ......................................................................................... 8-36


8.5.3 Residential Oil Prices..................................................................................................... 8-37


8.5.4 Residential LPG Prices .................................................................................................. 8-38


8.5.5 Energy Price Trends....................................................................................................... 8-39


8.6 MAINTENANCE AND REPAIR COSTS ......................................................... 8-41


8.6.1 Water Heaters................................................................................................................. 8-42


8.6.1.1 Gas-Fired Storage Water Heaters ................................................................ 8-42


8.6.1.2 Electric Storage Water Heaters.................................................................... 8-42


8.6.1.3 Oil-Fired Storage Water Heaters ................................................................. 8-43


8.6.1.4 Gas-Fired Instantaneous Water Heaters....................................................... 8-43


8.6.2 Gas-Fired Pool Heaters.................................................................................................. 8-44


8.6.3 Direct Heating Equipment ............................................................................................. 8-44


8.7 PRODUCT LIFETIME ..................................................................................... 8-45


8.7.1	 Water Heaters................................................................................................................. 8-45


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8.7.2 Direct Heating Equipment ............................................................................................. 8-47


8.7.3 Gas-Fired Pool Heaters.................................................................................................. 8-47


8.8 DISCOUNT RATES ......................................................................................... 8-48


8.8.1 Discount Rate for New Home Products......................................................................... 8-48


8.8.2 Discount Rate for Replacement Products ...................................................................... 8-49


8.9 EFFECTIVE DATE OF ENERGY CONSERVATION STANDARDS ............... 8-52


8.10 PRODUCT ENERGY EFFICIENCY IN THE BASE CASE............................... 8-52


8.10.1 Water Heaters................................................................................................................. 8-53


8.10.2 Direct Heating Equipment ............................................................................................. 8-54


8.10.3 Gas-Fired Pool Heaters.................................................................................................. 8-55


8.11 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS ............................. 8-56


8.11.1 Water Heaters................................................................................................................. 8-57


8.11.1.1 Base Case LCC Distributions ...................................................................... 8-57


8.11.1.2 Standard-Level Distributions of LCC Impacts ............................................ 8-58


8.11.1.3 Standard-Level PBP Distributions............................................................... 8-60


8.11.1.4 LCC and PBP Results .................................................................................. 8-62


8.11.2 Gas-Fired Pool Heaters.................................................................................................. 8-69


8.11.2.2 Standard-Level Distributions of LCC Impacts ............................................ 8-70


8.11.2.3 Standard-Level PBP Distributions............................................................... 8-70


8.11.2.4 LCC and PBP Results .................................................................................. 8-71


8.11.3 Direct Heating Equipment ............................................................................................. 8-73


8.11.3.1 Base Case LCC Distributions ...................................................................... 8-73


8.11.3.2 Standard-Level Distributions of LCC Impacts ............................................ 8-75


8.11.3.3 Standard-Level PBP Distributions............................................................... 8-77


8.11.3.4 LCC and PBP Results .................................................................................. 8-79


8.12 REBUTTABLE PAYBACK PERIOD ............................................................... 8-86


8.12.1 Approach....................................................................................................................... 8-86


8.12.2 Inputs............................................................................................................................ 8-86


8.12.3 Results.......................................................................................................................... 8-87


LIST OF TABLES 

Table 8.1.1 Water Heaters: LCC and PBP Input Summary.............................................. 8-6


Table 8.1.2 Direct Heating Equipment: LCC and PBP Input Summary........................... 8-8


Table 8.1.3 Gas-Fired Pool Heaters: LCC and PBP Input Summary ............................. 8-10


Table 8.1.4 Fraction of Shipments Going to New Construction and Replacement


Applications................................................................................................. 8-11


Table 8.2.1 Inputs for Total Installed Cost ..................................................................... 8-12


Table 8.2.2 Water Heaters: Baseline Manufacturer Costs.............................................. 8-14


Table 8.2.3 Gas-Fired Storage Water Heaters: Standard-Level Manufacturer Cost


Increases....................................................................................................... 8-14


Table 8.2.4 Electric Storage Water Heaters: Standard-Level Manufacturer Cost


Increases....................................................................................................... 8-15


Table 8.2.5 Oil-Fired Storage Water Heaters: Standard-Level Manufacturer Cost


Increases....................................................................................................... 8-15


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Table 8.2.6 Gas-Fired Instantaneous Water Heaters: Standard-Level Manufacturer 

Cost Increases .............................................................................................. 8-15


Table 8.2.7 Water Heaters: Overall Markups ................................................................. 8-16


Table 8.2.8 Average Installation Cost for Gas-Fired Storage Water Heaters................. 8-17


Table 8.2.9 Average Installation Cost for Electric Storage Water Heaters .................... 8-19


Table 8.2.10 Average Installation Cost for Oil-Fired Storage Water Heaters.................. 8-20


Table 8.2.11 Average Installation Cost for Gas-Fired Instantaneous Water Heaters....... 8-22


Table 8.2.12 Gas-Fired Storage Water Heater: Consumer Product Price, Installation


Cost, and Total Installed Cost...................................................................... 8-22


Table 8.2.13 Electric Storage Water Heater: Consumer Product Price, Installation


Cost, and Total Installed Cost...................................................................... 8-23


Table 8.2.14 Oil-Fired Storage Water Heater: Consumer Product Price, Installation


Cost, and Total Installed Cost...................................................................... 8-23


Table 8.2.15 Gas-Fired Instantaneous Water Heater: Consumer Product Price,


Installation Cost, and Total Installed Cost................................................... 8-23


Table 8.2.16 Direct Heating Equipment: Baseline Manufacturer Cost ............................ 8-24


Table 8.2.17 Gas Wall Fan DHE: Standard-Level Manufacturer Cost Increases............. 8-24


Table 8.2.18 Gas Wall Gravity DHE: Standard-Level Manufacturer Cost Increases ...... 8-24


Table 8.2.19 Gas Floor DHE: Standard-Level Manufacturer Cost Increases................... 8-25


Table 8.2.20 Gas Room DHE: Standard-Level Manufacturer Cost Increases.................. 8-25


Table 8.2.21 Direct Heating Equipment: Overall Markups.............................................. 8-26


Table 8.2.22 Average Installation Cost for Gas Wall Fan DHE....................................... 8-26


Table 8.2.23 Average Installation Cost for Gas Wall Gravity DHE................................. 8-27


Table 8.2.24 Average Installation Cost for Gas Floor DHE............................................. 8-27


Table 8.2.25 Average Installation Cost for Gas Room DHE............................................ 8-27


Table 8.2.26 Gas Wall Fan DHE: Consumer Product Price, Installation Cost, and


Total Installed Cost...................................................................................... 8-28


Table 8.2.27 Gas Wall Gravity DHE: Consumer Product Price, Installation Cost,


and Total Installed Cost ............................................................................... 8-28


Table 8.2.28 Gas Floor DHE: Consumer Product Price, Installation Cost, and Total


Installed Cost ............................................................................................... 8-28


Table 8.2.29 Gas Room DHE: Consumer Product Price, Installation Cost, and Total


Installed Cost ............................................................................................... 8-29


Table 8.2.30 Gas-Fired Pool Heaters: Baseline Manufacturer Cost................................. 8-29


Table 8.2.31 Gas-Fired Pool Heaters: Standard-Level Manufacturer Cost Increases ...... 8-30


Table 8.2.32 Gas-Fired Pool Heaters: Overall Markups................................................... 8-30


Table 8.2.33 Average Installation Cost for Pool Heaters ................................................. 8-31


Table 8.2.34 Gas-Fired Pool Heaters: Consumer Product Price, Installation Cost,


and Total Installed Cost ............................................................................... 8-32


Table 8.3.1 Inputs for Operating Cost............................................................................. 8-32


Table 8.5.1 Average Annual Residential Natural Gas Prices ......................................... 8-36


Table 8.5.2 Average Annual Residential Electricity Prices............................................ 8-37


Table 8.5.3 Annual Average Residential Oil Prices ....................................................... 8-38


Table 8.5.4 Average Annual Residential LPG Prices..................................................... 8-39


Table 8.7.1 Water Heaters: Product Lifetime Estimates and Sources ............................ 8-46


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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.7.2 Water Heaters: Average, Minimum, and Maximum Product Lifetimes 

Used in LCC Analysis ................................................................................. 8-47


Table 8.7.3 Direct Heating Equipment: Average, Minimum, and Maximum


Product Lifetimes Used in LCC Analysis.................................................... 8-47


Table 8.7.4 Gas-Fired Pool Heaters: Product Lifetime Estimates and Sources.............. 8-47


Table 8.7.5 Gas-Fired Pool Heaters: Average, Minimum, and Maximum Product


Lifetimes Used in LCC Analysis ................................................................. 8-48


Table 8.8.1 Data Used to Calculate Real Effective Mortgage Rates .............................. 8-49


Table 8.8.2 Average Shares of Considered Household Debt and Equity Types ............ 8-50


Table 8.8.3 Average Nominal Interest Rates for Household Debt ................................. 8-50


Table 8.8.4 Average Real Effective Interest Rates for Household Debt Types.............. 8-51


Table 8.8.5 Average Nominal and Real Interest Rates for Household Equity Types..... 8-51


Table 8.8.6 Shares and Interest or Return Rates Used for Household Debt and


Equity Types ................................................................................................ 8-52


Table 8.10.1 Water Heaters: Base Case Energy Efficiency Market Shares ..................... 8-54


Table 8.10.2 Direct Heating Equipment: Energy Efficiency Market Shares in the


Base Case ..................................................................................................... 8-55


Table 8.10.3 Gas-Fired Pool Heaters: Energy Efficiency Market Share by Ignition


Type in the Base Case.................................................................................. 8-55


Table 8.11.1 Gas-Fired Storage Water Heaters: LCC and PBP Results........................... 8-63


Table 8.11.2 Electric Storage Water Heaters: LCC and PBP Results .............................. 8-64


Table 8.11.3 Oil-Fired Water Heaters: LCC and PBP Results ......................................... 8-64


Table 8.11.4 Gas-Fired Instantaneous Water Heaters: LCC and PBP Results................. 8-64


Table 8.11.5 Gas-Fired Pool Heaters: LCC and PBP Results .......................................... 8-72


Table 8.11.6 Gas Wall Fan DHE: LCC and PBP Results................................................. 8-80


Table 8.11.7 Gas Wall Gravity DHE: LCC and PBP Results........................................... 8-80


Table 8.11.8 Gas Floor DHE: LCC and PBP Results....................................................... 8-81


Table 8.11.9 Gas Room DHE: LCC and PBP Results...................................................... 8-81


Table 8.12.1 Water Heaters: Rebuttable Payback Periods................................................ 8-87


Table 8.12.2 Gas-Fired Pool Heaters: Rebuttable Payback Periods................................. 8-87


Table 8.12.3 Direct Heating Equipment: Rebuttable Payback Periods ............................ 8-87


LIST OF FIGURES 

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ................. 8-5


Figure 8.5.1 Residential Natural Gas Price Trends in AEO2008..................................... 8-40


Figure 8.5.2 Residential Electricity Price Trends in AEO2008 ....................................... 8-40


Figure 8.5.3 Residential Oil Price Trends in AEO2008................................................... 8-41


Figure 8.5.4 Residential LPG Price Trends in AEO2008 ................................................ 8-41


Figure 8.11.1 Gas-Fired Storage Water Heaters: Base Case LCC Distribution................. 8-57


Figure 8.11.2 Electric Storage Water Heaters: Base Case LCC Distribution .................... 8-57


Figure 8.11.3 Oil-Fired Storage Water Heaters: Base Case LCC Distribution.................. 8-58


Figure 8.11.4 Gas-Fired Instantaneous Water Heaters: Base Case LCC Distribution....... 8-58


Figure 8.11.5 Gas-Fired Storage Water Heaters: Distribution of LCC Impacts for


Efficiency Level 2........................................................................................ 8-59


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Figure 8.11.6 Electric Storage Water Heaters: Distribution of LCC Impacts for


Efficiency Level 4........................................................................................ 8-59


Figure 8.11.7 Oil-Fired Storage Water Heaters: Distribution of LCC Impacts for


Efficiency Level 5........................................................................................ 8-60


Figure 8.11.8 Gas-Fired Instantaneous Water Heaters: Distribution of LCC Impacts


for Efficiency Level 5 .................................................................................. 8-60


Figure 8.11.9 Gas-Fired Storage Water Heaters: Distribution of PBPs for Efficiency


Level 2 ......................................................................................................... 8-61


Figure 8.11.10 Electric Storage Water Heaters: Distribution of PBPs for Efficiency


Level 4 ......................................................................................................... 8-61


Figure 8.11.11 Oil-Fired Storage Water Heaters: Distribution of PBPs for Efficiency


Level 5 ......................................................................................................... 8-62


Figure 8.11.12 Gas-Fired Instantaneous Water Heaters: Distribution of PBPs for


Efficiency Level 5........................................................................................ 8-62


Figure 8.11.13 Range of LCC Savings for Gas-Fired Storage Water Heaters..................... 8-65


Figure 8.11.14 Range of LCC Savings for Electric Storage Water Heaters ........................ 8-66


Figure 8.11.15 Range of LCC Savings for Oil-Fired Storage Water Heaters...................... 8-66


Figure 8.11.16 Range of LCC Savings for Gas-Fired Instantaneous Water Heaters........... 8-67


Figure 8.11.17 Range of Payback Periods for Gas-Fired Storage Water Heaters................ 8-67


Figure 8.11.18 Range of Payback Periods for Electric Storage Water Heaters ................... 8-68


Figure 8.11.19 Range of Payback Periods for Oil-Fired Storage Water Heaters................. 8-68


Figure 8.11.20 Range of Payback Periods for Gas-Fired Instantaneous Water Heaters...... 8-69


Figure 8.11.21 Gas-Fired Pool Heaters: Base Case LCC Distribution ................................ 8-69


Figure 8.11.22 Gas-Fired Pool Heaters: Distribution of LCC Impacts for Efficiency


Level 4 ......................................................................................................... 8-70


Figure 8.11.23 Gas-Fired Pool Heaters: Distribution of PBPs for Efficiency Level 4 ........ 8-71


Figure 8.11.24 Range of LCC Savings for Gas-Fired Pool Heaters .................................... 8-72


Figure 8.11.25 Range of Payback Periods in Years for Gas-Fired Pool Heaters................. 8-73


Figure 8.11.26 Gas Wall Fan DHE: Base Case LCC Distribution....................................... 8-73


Figure 8.11.27 Gas Wall Gravity DHE: Base Case LCC Distribution ................................ 8-74


Figure 8.11.28 Gas Floor DHE: Base Case LCC Distribution............................................. 8-74


Figure 8.11.29 Gas Room DHE: Base Case LCC Distribution............................................ 8-75


Figure 8.11.30 Gas Wall Fan DHE: Distribution of LCC Impacts for Efficiency Level


3.................................................................................................................... 8-76


Figure 8.11.31 Gas Wall Gravity DHE: Distribution of LCC Impacts for Efficiency


Level 3 ......................................................................................................... 8-76


Figure 8.11.32 Gas Floor DHE: Distribution of LCC Impacts for Efficiency Level 3........ 8-77


Figure 8.11.33 Gas Room DHE: Distribution of LCC Impacts for Efficiency Level 4....... 8-77


Figure 8.11.34 Gas Wall Fan DHE: Distribution of PBPs for Efficiency Level 3 .............. 8-78


Figure 8.11.35 Gas Wall Gravity DHE: Distribution of PBPs for Efficiency Level 3 ........ 8-78


Figure 8.11.36 Gas Floor DHE: Distribution of PBPs for Efficiency Level 3..................... 8-79


Figure 8.11.37 Gas Room DHE: Distribution of PBPs for Efficiency Level 4 ................... 8-79


Figure 8.11.38 Range of LCC Savings for Gas Wall Fan DHE........................................... 8-82


Figure 8.11.39 Range of LCC Savings for Gas Wall Gravity DHE .................................... 8-82


Figure 8.11.40 Range of LCC Savings for Gas Floor DHE................................................. 8-83


Figure 8.11.41 Range of LCC Savings for Gas Room DHE................................................ 8-83


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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Figure 8.11.42 Range of Payback Periods for Gas Fan Wall DHE...................................... 8-84


Figure 8.11.43 Range of Payback Periods for Gas Wall Gravity DHE ............................... 8-84


Figure 8.11.44 Range of Payback Periods for Gas Floor DHE............................................ 8-85


Figure 8.11.45 Range of Payback Periods for Gas Room DHE........................................... 8-85


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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS 

8.1 INTRODUCTION 

This chapter describes the Department of Energy (DOE)’s methodology for analyzing the 

economic impacts of possible energy conservation standards on individual consumers. The effect 

of energy conservation standards on individual consumers includes a change in operating 

expense (usually decreased) and a change in purchase price (usually increased). This chapter 

describes three metrics DOE used in the consumer analysis to determine the effect of energy 

conservation standards on individual consumers: 

•	 Life-cycle cost (LCC) is the total consumer expense over the life of an appliance, 

including purchase expense and operating costs (including energy expenditures). DOE 

discounts future operating costs to the time of purchase, and sums them over the lifetime 

of the equipment. 

•	 Payback period (PBP) measures the amount of time it takes consumers to recover the 

estimated higher purchase price of more energy efficient equipment through lower 

operating costs. 

•	 Rebuttable payback period is a special case of the PBP. Where LCC and PBP are 

estimated over a range of inputs reflecting actual conditions, rebuttable payback period is 

based on laboratory conditions, specifically DOE test procedure inputs. 

Results for the LCC and PBP analysis are presented in section 8.11, while the rebuttable 

PBP is discussed in section 8.12. Key variables and calculations are presented for each metric. 

DOE performed the calculations discussed here using a series of Microsoft Excel spreadsheets 

which are accessible on the Internet at 

(http://www.eere.energy.gov/buildings/appliance_standards/). Details and instructions for using 

the spreadsheets are discussed in Appendix 8-H, User Instructions for the LCC Analysis 

Spreadsheet. 

8.1.1 General Approach for LCC and PBP Analysis 

Life-cycle cost is the total consumer expense over the life of an appliance, including 

purchase expense and operating costs (including energy expenditures). DOE discounts future 

operating costs to the time of purchase, and sums them over the lifetime of the equipment. DOE 

defines LCC by the following equation: 

N OC LCC = IC +∑ t

t (1+ r)

Where: 

t =1 

LCC = Life-cycle cost in dollars,


IC = Total installed cost in dollars,


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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
∑ = Sum over the lifetime, from year 1 to year N,


N = Lifetime of appliance in years,


OC = Operating cost in dollars,


r = Discount rate, and


t = Year for which operating cost is being determined.


The payback period is the amount of time it takes the consumer to recover the estimated 

higher purchase expense of more energy efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase expense (i.e., from a less energy 

efficient design to a more energy efficient design) to the decrease in annual operating 

expenditures. This type of calculation is known as a “simple” payback period, because it does 

not take into account changes in operating expense over time or the time value of money; i.e., the 

calculation is done at an effective discount rate of zero percent. 

The equation for PBP is: 

ΔIC 

PBP = ΔOC 

Where: 

ΔIC = Difference in the total installed cost between the more energy efficient 

design and the baseline design, and 

ΔOC = difference in annual operating expenses. 

Payback periods are expressed in years. Payback periods greater than the life of the 

product indicate that the increased total installed cost is not recovered with the reduced operating 

expenses. 

Because DOE gathered most of its data for the LCC and PBP analysis in 2007, DOE 

expresses dollar values in 2007$. 

Recognizing that several inputs to the determination of consumer LCC and PBP are 

either variable or uncertain, DOE conducted the LCC and PBP analysis by modeling both the 

uncertainty and variability in the inputs using Monte Carlo simulation and probability 

distributions. A detailed explanation of the use of probability distributions is included in this 

chapter. DOE developed LCC and PBP spreadsheet models incorporating both Monte Carlo 

simulation and probability distributions by using Microsoft Excel spreadsheets combined with 

Crystal Ball (a commercially available add-in program). 

In addition to characterizing several of the inputs to the analysis with probability 

distributions, DOE also developed a sample of individual households that use each of the 

appliances. By developing household samples, DOE was able to perform the LCC and PBP 

calculations for each household to account for the variability in energy consumption and/or 

energy price associated with each household. As described in Chapter 7, Energy Use 

Determination, DOE used the DOE Energy Information Administration (EIA)’s 2001 Residential 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Energy Consumption Survey (RECS) to develop household samples for each of the above three 

1 products.

By using RECS, DOE was able to assign a unique annual energy use and/or energy price 

to each household in the sample. Due to the large sample of households considered in the LCC 

and PBP analysis, the range of annual energy use and/or energy prices is quite large (the actual 

ranges of energy consumption were presented and discussed in Chapter 5). Thus, although the 

annual energy use and/or energy prices are not uncertain for any particular household, their 

variability across all households contributes to the range of LCCs and PBPs calculated for any 

particular energy conservation standard level. 

DOE displays the LCC and PBP results as distributions of impacts compared to the 

baseline conditions. Results are presented at the end of this chapter and are based on 10,000 

samples per Monte Carlo simulation run. To illustrate the implications of the analysis, DOE 

generated a frequency chart depicting the variation in LCC and PBP for each energy 

conservation standard level considered. 

8.1.2 Overview of LCC and PBP Inputs 

The LCC is the total consumer expense over the life of the equipment, including purchase 

expense and operating expense (including energy expenditures). DOE discounts future operating 

expenses to the time of purchase and sums them over the lifetime of the equipment. The PBP is 

the change in purchase expense due to an increased energy conservation standard divided by the 

change in annual operating expense that results from the energy conservation standard. It 

represents the number of years it will take the consumer to recover the increased purchase 

expense through decreased operating expenses. 

DOE categorizes inputs to the LCC and PBP analysis as follows: (1) inputs for 

establishing the purchase expense, otherwise known as the total installed cost, and (2) inputs for 

calculating the operating cost. 

The primary inputs for establishing the total installed cost are: 

•	 Baseline manufacturer cost: The costs incurred by the manufacturer to produce


equipment meeting existing minimum energy conservation standards.


•	 Standard-level manufacturer cost increases: The change in manufacturer cost associated 

with producing equipment to meet a particular energy conservation standard level. 

•	 Markups and sales tax: The markups and sales tax associated with converting the


manufacturer cost to a consumer equipment price. The markups and sale tax are


described in detail in Chapter 6, Markups to Determine Product Price.


•	 Installation cost: The cost to the consumer of installing the equipment. The installation 

cost represents all costs required to install the equipment other than the marked-up 

consumer equipment price. The installation cost includes labor, overhead, and any 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
miscellaneous materials and parts. Thus, the total installed cost equals the consumer 

equipment price plus the installation cost. 

The primary inputs for calculating the operating cost are: 

•	 Energy consumption: The energy consumption is the site energy use associated with 

operating the equipment. Chapter 7, Energy Use Determination, details how DOE 

determined the equipment energy consumption based on various data sources. 

•	 Energy efficiency: The product energy efficiency dictates the equipment energy 

consumption associated with standard-level equipment (i.e., equipment with energy 

efficiencies greater than baseline equipment). Chapter 7, Energy Use Determination, 

details how energy consumption changes with increasing equipment energy efficiency. 

•	 Energy prices: Energy prices are the prices paid by consumers for energy (i.e., electricity, 

gas, or oil). DOE determined current energy prices based on data from the DOE- EIA. 

•	 Energy price trends: DOE used the EIA Annual Energy Outlook (AEO) 2008 to forecast 

energy prices into the future. For the results presented in this chapter, DOE used the 

AEO2008 reference case to forecast future energy prices. 

•	 Repair and maintenance costs: Repair costs are associated with repairing or replacing 

components that have failed. Maintenance costs are associated with maintaining the 

operation of the equipment. 

•	 Lifetime: The age at which the equipment is retired from service. 

•	 Discount rate: The rate at which DOE discounted future expenditures to establish their 

present value. 

The data inputs to PBP are the total installed cost of the equipment to the consumer for 

each energy efficiency level and the annual (first year) operating expenditures for each energy 

conservation standard level. The inputs to the total installed cost are the equipment price and the 

installation cost. The inputs to the operating costs are the annual energy cost, the annual repair 

cost, and the annual maintenance cost. The PBP uses the same inputs as the LCC analysis, except 

that energy price trends and discount rates are not required. Since the PBP is a “simple” payback, 

the required energy price is only for the year in which a new energy conservation standard is to 

take effect. The energy price DOE used in the PBP calculation was the price projected for that 

year. Discount rates are also not required for the simple PBP calculation. 

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating 

cost inputs for the calculation of the LCC and PBP. In the figure below, the yellow boxes 

indicate the inputs, the green boxes indicate intermediate outputs, and the blue boxes indicate the 

final outputs (the LCC and PBP). 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Baseline 

Manufacturer 

Cost 

Std-Level 

Manufacturer 

Cost 

Manufacturer 

Markup 

Retailer or 

Distributor 

Markup 

Sales Tax 

Installation 

Cost 

Energy 

Consumption 

Equipment 

Price 

Lifetime 

Operating 

Expense 

Annual Energy 

Expense 

Lifetime Repair and 

Maintenance 

Cost 

Discount Rate 

Energy Price 

Trends 

Annual 

Operating 

Expense 

Payback 

Period 

Life-Cycle 

Cost 

Energy Prices 

Total Installed 

Cost 

Figure 8.1.1	 Flow Diagram of Inputs for the Determination of 

LCC and PBP 

Tables 8.1.1 through 8.1.3 summarize the input values that DOE used to calculate the 

LCC and PBP for the three types of heating products. Each table summarizes the total installed 

cost inputs and the operating cost inputs including the lifetime, discount rate, and energy price 

trends. DOE characterized all of the total cost inputs with single-point values, but characterized 

several of the operating cost inputs with probability distributions that capture the input’s 

uncertainty and/or variability. For those inputs characterized with probability distributions, the 

values provided in the following tables are the average or typical values. Also listed in the 

following tables is the section of the technical support document (TSD) where more detailed 

information on the inputs can be found. 

8-5


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.1.1 Water Heaters: LCC and PBP Input Summary


Input Product Class 

Average or Typical 

Value Characterization 

TSD Chapter 

Reference 

Total Installed Cost Inputs 

Baseline 

Manufacturer 

Cost 

Gas-Fired storage-type 40 gal = $160 

Single-Point Value 

8 

Electric storage-type 50 gal = $122 8 

Oil-Fired storage-type 32 gal = $510 8 

Gas-Fired Instantaneous 199 Kbtu/h = $225 8 

Standard-Level 

Manufacturer 

Cost Increase 

Gas-Fired storage-type 

(40 gal) 

0.62 EF = $7.00 

0.63 EF = $15.0 

0.64 EF = $116 

0.65 EF = $123 

0.66 EF = $131 

0.77 EF = $265 

Single-Point Value 8 

Electric storage-type (50 

gal) 

0.91 EF = $6.00 

0.92 EF = $10.0 

0.93 EF = $14.0 

0.94 EF = $22.0 

0.95 EF = $38.0 

2.20 EF = $368 

Single-Point Value 8 

Oil-Fired storage-type 

(32-gal) 

0.54 EF = $8.00 

0.56 EF = $19.0 

0.58 EF = $29.0 

0.60 EF = $24.0 

0.62 EF = $37.0 

0.66 EF = $30.0 

0.68 EF = $41.0 

Single-Point Value 8 

Gas-Fired Instantaneous 

(199 Kbtu/h) 

0.69 EF = $10.0 

0.78 EF = $45.0 

0.80 EF = $118 

0.82 EF = $136 

0.84 EF = $154 

0.85 EF = $163 

0.92 EF = $418 

Single-Point Value 8 

Manufacturer 

Markup 

Storage Water Heaters 1.38 Single-Point Value 6 

Gas-Fired Instantaneous 1.45 Single-Point Value 6 

Retailer Markup All Baseline=1.45; 

Incremental=1.15 Single-Point Value 6 

Distributor 

Markup 

Gas-Fired, Oil-Fired 

Storage WH, Gas-Fired 

Instantaneous WH 

Baseline = 1.35; 

Incremental = 1.11 Single-Point Value 6 

Electric Storage WH Baseline = 1.28; 

Incremental = 1.10 Single-Point Value 6 

Contractor 

Markup All 1.10 Single-Point Value 6 

Builder Markup All Baseline = 1.31; 

Incremental = 1.26 Single-Point Value 6 

Sales Tax All 1.068 Variability based on region 6 

Installation Cost Gas-Fired storage-type $601 Single-Point Value 8 

8-6


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
(baseline) Electric storage-type $409 8 

Oil storage-type $625 8 

Gas-Fired Instantaneous $987 8 

Operating Cost Inputs 

Annual Energy 

Use (baseline)* 

Gas-Fired storage-type Gas = 16.9 MMBtu 

Variability determined from 

household sample. 

7 

Electric storage-type Elec = 2,703 kWh 7 

Oil-Fired storage-type Oil = 19.4 MMBtu 

Elec = 56 kWh 7 

Gas-Fired Instantaneous Gas = 16.9 MMBtu 7 

Energy Prices All 

Elec = 10.88 ¢/kWh 

Gas = 11.89 $/MMBtu 

Oil = 15.15 $/MMBtu 

LPG= 25.64 $/MMBtu 

Variability based on region. 8 

Repair and 

Maintenance 

Costs (baseline) 

Gas-Fired storage-type Repair = $94 

Maintenance = $0 

Repair-variability based on 

product failure 

Maintenance - Single-Point 

Value 

8 

Electric storage-type Repair = $0 

Maintenance = $0 8 

Oil-Fired storage-type Repair = $0 

Maintenance = $153 8 

Gas-Fired Instantaneous Repair = $147 

Maintenance = $85 8 

Lifetime 

Gas-Fired storage-type 12 years Weibull distribution = 

7 to 20 years 8 

Electric storage-type 14 years Weibull distribution = 

6 to 20 years 8 

Oil-Fired storage-type 9 years Weibull distribution = 

5 to 13 years 8 

Gas-Fired Instantaneous 20 years Weibull distribution = 

8 to 30 years 8 

Discount Rate 

Gas-Fired storage-type 4.0% 

Custom distribution 

8 

Electric storage-type 5.9% 8 

Oil-Fired storage-type 4.0% 8 

Gas-Fired Instantaneous 5.3% 8 

Energy Price 

Trend All AEO2008 Reference 

Case 

Two sensitivities: 

High & Low Growth Cases 8 

* Annual use provided for baseline product only. Annual use decreases with increased product energy efficiency. 

8-7


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.1.2 Direct Heating Equipment: LCC and PBP Input Summary


Input Product Class 

Average or Typical 

Value Characterization 

TSD Chapter 

Reference 

Total Installed Cost Inputs 

Baseline 

Manufacturer 

Cost 

Gas Wall Fan DHE 74% AFUE = $355 Single-Point Value 8 

Gas Wall Gravity DHE 64% AFUE = $198 Single-Point Value 8 

Gas Floor DHE 57% AFUE = $338 Single-Point Value 8 

Gas Room DHE 64% AFUE = $221 Single-Point Value 8 

Standard-Level 

Manufacturer 

Cost Increase 

Gas Wall Fan DHE 

75% AFUE = $27.0 

76% AFUE = $41.0 

77% AFUE = $58.0 

80% AFUE = $113 

Single-Point Value 8 

Gas Wall Gravity DHE 

66% AFUE = $26.0 

68% AFUE = $33.0 

71% AFUE = $61.0 

72% AFUE = $86.0 

75% AFUE = $139 

Single-Point Value 8 

Gas Floor DHE 

58% AFUE = $15.0 

61% AFUE = $30.0 

62% AFUE = $45.0 

65% AFUE = $72.0 

78% AFUE = $130 

Single-Point Value 8 

Gas Room DHE 

65% AFUE = $16.0 

66% AFUE = $31.0 

67% AFUE = $46.0 

68% AFUE = $61.0 

70% AFUE = $86.0 

78% AFUE = $140 

93% AFUE = $331 

Single-Point Value 8 

Manufacturer 

Markup All 1.38 Single-Point Value 6 

Distributor 

Markup All Baseline=1.35; 

Incremental=1.11 Single-Point Value 6 

Contractor 

Markup All Baseline=1.32; 

Incremental=1.32 Single-Point Value 6 

Builder Markup All Baseline=1.31; 

Incremental=1.26 Single-Point Value 6 

Sales Tax All 1.075 Single-Point Value 6 

Installation Cost 

(baseline) 

Gas Wall Fan DHE $793 

Single-Point Value 

8 

Gas Wall Gravity DHE $793 8 

Gas Floor DHE $1118 8 

Gas Room DHE $793 8 

Operating Cost Inputs 

Annual Gas 

Usage* 

Gas Wall Fan DHE 27.1 MMBtu Variability determined 

from household sample. 

7 

Gas Wall Gravity DHE 29.6 MMBtu 7 

Gas Floor DHE 30.4 MMBtu 7 

8-8


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Gas Room DHE 22.0 MMBtu 7 

Annual Electric 

Usage* 

Gas Fan DHE 35 kWh 

Variability determined 

from household sample. 

7 

Gas Wall Gravity 0 kWh 7 

Gas Floor DHE 0 kWh 7 

Gas Room DHE 0 kWh 7 

Energy Prices All 

Elec = 10.98 ¢/kWh 

Gas = 12.17 $/MMBtu 

LPG = 25.97 $/MMBtu 

Oil = 16.05 $/MMBtu 

Variability based on 

region 8 

Repair and 

Maintenance 

Costs (baseline, 

average) 

Gas Wall Fan DHE Repair =$323 

Maintenance = $43 

Repair-variability based 

on product failure 

Maintenance - SinglePoint Value 

8 

Gas Wall Gravity DHE Repair =$131 

Maintenance = $43 8 

Gas Floor DHE Repair =$131 

Maintenance = $43 8 

Gas Room DHE Repair =$131 

Maintenance = $43 8 

Lifetime All 15 years Uniform distribution = 

10 to 20 years 8 

Discount Rate 

Gas Wall Fan DHE 8.7% 

Custom distribution 

8 

Gas Wall Gravity DHE 2.5% 8 

Gas Floor DHE 8.7% 8 

Gas Room DHE 2.5% 8 

Energy Price 

Trend All AEO2008 Reference 

Case 

Two sensitivities: 

High & Low Growth 

Cases 

8 

* Annual use provided for baseline product only. Annual consumption decreases with increased product energy efficiency. 

8-9


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.1.3 Gas-Fired Pool Heaters: LCC and PBP Input Summary


Input Average or Typical Value Characterization 

TSD Chapter 

Reference 

Total Installed Cost Inputs 

Baseline Manufacturer Cost 0.78 Et (pilot) = $520 

0.78 Et (elect. Ignt.) = $523 Single-Point Value 8 

Standard-Level 

Manufacturer Cost Increase 

79% Et (pilot) = $11 

79% Et (electr. Ignt.) = $11 

81% Et (pilot) = $24 

81% Et (electr. Ignt.) = $24 

82% Et (pilot) = $39 

82% Et (electr. Ignt.) = $55 

83% Et (pilot) = $128 

83% Et (electr. Ignt.) = $125 

84% Et (pilot) = $144 

84% Et (electr. Ignt.) = $141 

86% Et (pilot) = $171 

86% Et (electr. Ignt.) = $168 

90% Et (pilot) = $383 

90% Et (electr. Ignt.) = $380 

95% Et (pilot) = $441 

95% Et (electr. Ignt.) = $438 

Single-Point Value 8 

Manufacturer Markup 1.38 Single-Point Value 6 

Distributor Markup Baseline = 1.35; 

Incremental = 1.11 Single-Point Value 6 

Contractor Markup Baseline = 1.10; 

Incremental = 1.10 Single-Point Value 6 

Builder Markup (assumed 

same as homebuilders) 

Baseline = 1.31; 

Incremental = 1.26 Single-Point Value 6 

Sales Tax 1.066 Variability based on region 6 

Installation Cost (baseline) $1,150 Single-Point Value 8 

Operating Cost Inputs 

Annual Gas Usage* 53.8 MMBtu Variability based on usage 7 

Annual Electricity Usage* 2 kWh Variability based on usage 7 

Energy Prices 

Elec = 10.98 ¢/kWh 

Gas = 12.17 $/MMBtu 

LPG = 25.97 $/MMBtu 

Oil = 16.05 $/MMBtu 

Variability based on region 8 

Repair and Maintenance 

Costs (baseline) 

Repair = $27 

Maintenance = $29 

Repair-variability based on product 

failure 

Maintenance - Single-Point Value 

8 

Lifetime 6 years Weibull distribution = 3 to 20 years 8 

Discount Rate 4.0% Custom distribution 8 

Energy Price Trend AEO2008 Reference Case Two sensitivities: High & Low Growth 

Cases 8 

** Annual use provided for baseline product only. Annual use decreases with increased product energy efficiency. 

8-10 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.1.3 New Construction and Replacement Fractions of Heating Product Shipments 

The LCC and PBP analysis uses separate values for new construction applications and 

replacement applications for some variables, as the type of application influences these variables. 

Such variables are markups, installation costs, and discount rates. The derivation of the 

appropriate values in each case for new construction applications and replacement applications is 

given in Chapter 6 for markups, and in this chapter for installation costs and discount rates. 

The analysis requires assignment of the values for new construction applications and 

replacement applications to specific households in the household sample for each heating 

product. For water heaters and pool heaters, DOE based the assignment on the estimated 

fractions of shipments going to new construction and replacement applications in the effective 

year from the Shipments Analysis (see Chapter 9). For direct heating equipment, the Shipments 

Analysis does not separately estimate shipments for these two market segments. DOE estimated 

that for floor furnaces all shipments go to replacements and for the remaining DHE products 90 

percent go to replacements. For the vented gas fireplace heaters that DOE added to the gas wall 

fan DHE and gas room DHE product classes (see discussion in Chapter 9), DOE estimated that 

half of the shipments go to new construction and half to replacements. 

Table 8.1.4 shows the fractions used in the analysis for each heating product. To best 

approximate newly-built homes, DOE assigned the values associated with new construction 

applications to RECS housing units that were built in the 1996-2001 period. 

Table 8.1.4	 Fraction of Shipments Going to New Construction and Replacement 

Applications 

Heating Product Share of Replacement 

Applications (%) 

Share of New 

Construction 

Applications (%) 

Water Heaters 

Gas-Fired Storage 

Electric Storage 

Oil-Fired Storage 

Gas-Fired Instantaneous 

80 

80 

85 

70 

20 

20 

15 

30 

Pool Heaters 67 33* 

DHE 

Gas Wall Fan 

Gas Wall Gravity 

Gas Floor 

Gas Room 

82 

90 

100 

58 

18 

10 

0 

42 

* These values include the pool heaters for new homes (7%) as well as those for “first-time owners” in existing 

homes (26%). 

8-11


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.2 TOTAL INSTALLED COST INPUTS 

DOE defines the total installed cost using the following equation: 

IC = EQP + INST 

Where: 

IC = Total installed cost, and 

EQP = Equipment price (i.e., consumer price for the equipment only), expressed in 

dollars, and 

INST = Installation cost or the consumer price to install equipment (i.e., the cost for 

labor and materials), also in dollars. 

The equipment price is based on how the consumer purchases the equipment. As 

discussed in Chapter 6, Markups to Determine Product Price, DOE defined markups and sales 

taxes for converting manufacturing costs into consumer equipment prices. 

Table 8.2.1 summarizes the inputs for the determination of total installed cost. 

Table 8.2.1 Inputs for Total Installed Cost 

Baseline Manufacturer Cost 

Standard-Level Manufacturer Cost 

Distribution Chain Markups 

Sales Tax (replacement applications) 

Installation Cost 

The baseline manufacturer cost is the cost incurred by the manufacturer to produce 

equipment meeting existing minimum energy conservation standards. Standard-level 

manufacturer cost increases are the change in manufacturer cost associated with producing 

equipment at an energy conservation standard level. Markups and sales tax convert the 

manufacturer cost to a consumer equipment price. The installation cost is the cost to the 

consumer of installing the equipment and represents all costs required to install the equipment 

other than the marked-up consumer equipment price. The installation cost includes labor, 

overhead, and any miscellaneous materials and parts. Thus, the total installed cost equals the 

consumer equipment price plus the installation cost. DOE calculated the total installed cost for 

baseline products based on the following equation: 

IC BASE = EQP BASE + INST BASE 

= COST MFG × MU OVERALL _ BASE + INST BASE 

Where: 

8-12


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
ICBASE = Baseline total installed cost,


EQPBASE = Consumer equipment price for baseline models,


INSTBASE = Baseline installation cost,


COSTMFG = Manufacturer cost for baseline models, and


MUOVERALL_BASE = Baseline overall markup (product of manufacturer markup, other markups,


and (for replacement applications) sales tax). 

DOE calculated the total installed cost for standard-level products based on the following 

equation: 

IC STD = EQP STD + INST STD 

= (EQP BASE + ΔEQP STD )+ (INST BASE + ΔINST STD ) 

= (EQP BASE + INST BASE )+ (ΔEQP STD + ΔINST STD ) 

= IC BASE + (ΔCOST MFG × MU OVERALL _ INCR + ΔINST STD ) 

Where:


ICSTD = Standard-level total installed cost,


EQPSTD = Consumer equipment price for standard-level models,


INSTSTD = Standard-level installation cost,


EQPBASE = Consumer equipment price for baseline models,


ΔEQPSTD = Change in equipment price for standard-level models,


INSTBASE = Baseline installation cost,


ΔINSTSTD = Change in installation cost for standard-level models,


ICBASE = Baseline total installed cost,


ΔCOSTMFG = Change in manufacturer cost for standard-level models, and


MUOVERALL_INCR = Incremental overall markup (product of manufacturer markup, other


markups, and (for replacement applications) sales tax). 

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the total installed cost for the three heating products. 

8.2.2 Water Heaters 

8.2.2.1 Baseline Manufacturer Cost 

DOE developed the baseline manufacturer costs for water heaters as described in Chapter 

5, Engineering Analysis. The baseline manufacturer costs are shown in Table 8.2.2. 

8-13


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
1

2

3

4

5

Table 8.2.2 Water Heaters: Baseline Manufacturer Costs


Product Class Rated Volume 

(gal) 

Energy Factor Manufacturer Cost 

(2007$)* 

Gas-Fired storage 30 0.61 $151 

40 0.59 $160 

50 0.58 $169 

75 0.53 $195 

Electric storage 30 0.93 $102 

40 0.92 $ 12 

50 0.90 $1 2 

66 0.88 $1 7 

75 0.86 $1 2 

Oil-Fired storage 32 0.53 $ 10 

50 0.50 $538 

Gas-Fired 

Instantaneous 

0** 0.62 $225 

*Values represent 5- yr average cost. 

** 199 kbtu/h rated input. 

8.2.2.2 Standard-Level Manufacturer Cost Increases 

DOE developed manufacturer cost increases associated with increases in product energy 

efficiency levels as described in Chapter 5, Engineering Analysis. Tables 8.2.3 through 8.2.6 

present the standard-level manufacturer cost increases for the four product classes. 

Table 8.2.3	 Gas-Fired Storage Water Heaters: Standard-Level Manufacturer Cost 

Increases 

Energy 

Efficiency Level Manufacturer Cost Increase (2007$) 

30 gal 40 gal 50 gal 75 gal 

1 4 7 10 19 

2 11 15 19 31 

3 114 116 120 127 

4 119 123 127 137 

5 126 131 136 148 

6 256 265 266 287 

8-14


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
1

2

3

4

5

6

Table 8.2.4 Electric Storage Water Heaters: Standard-Level Manufacturer Cost 

Increases 

Energy 

Efficiency Level Manufacturer Cost Increase (2007$) 

30 gal 40 gal 50 gal 66 gal 75 gal 

5 5 6 7 11 

9 10 10 13 16 

12 13 14 17 21 

18 20 22 26 31 

31 34 38 45 51 

361 364 368 374 380 

Table 8.2.5 Oil-Fired Storage Water Heaters: Standard-Level Manufacturer Cost 

Increases 

Energy 

Efficiency Level Manufacturer Cost Increase (2007$) 

32 gal 50 gal 

1 8 8 

2 19 21 

3 29 28 

4 24 28 

5 37 41 

6 30 29 

7 41 42 

Table 8.2.6 Gas-Fired Instantaneous Water Heaters: Standard-Level Manufacturer 

Cost Increases 

Energy 

Efficiency Level 

Manufacturer Cost 

Increase (2007$) 

1 10 

2 45 

3 118 

4 136 

5 154 

6 163 

7 418 

8.2.2.3 Overall Markup 

The overall markup is the value determined by multiplying the manufacturer and other 

markups and the sales tax together to arrive at a single markup value. Table 8.2.7 shows the 

overall baseline and incremental markups for gas-fired water heaters. Refer to Chapter 6, 

Markups to Determine Product Price, for details. 

8-15


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.7 Water Heaters: Overall Markups


Product Class Baseline Cost Markup Incremental Cost Markup 

New Construction Replacement New Construction Replacement 

Gas-Fired Storage 2.56 2.16 1.90 1.74 

Electric Storage 2.43 2.11 1.89 1.73 

Oil-Fired Storage 2.56 2.16 1.90 1.74 

Gas-Fired Instantaneous 2.49 2.29 2.00 1.88 

8.2.2.4 Installation Cost 

The installation cost is the cost to the consumer of installing the water heater and is not 

considered part of the retail price. The cost of installation covers all labor and material costs 

associated with the replacement of an existing water heater or the installation of a water heater in 

a new home, as well as delivery, removal, and permit fees. Some design options may require 

unique installation costs. DOE’s analysis recognizes these potential situations and incorporates 

the additional costs in the total installation cost for those designs. 

Gas-fired storage water heater. DOE developed installation costs for gas-fired storage water 

heaters using data from RS Means and other sources.2, 3, 4, 5, 6 For water heaters in new homes, 

the installation cost includes adding a gas line branch, installing a vent system, and adding water 

piping, in addition to the cost of putting in place and setting up the new water heater. In the 

venting costs, DOE accounted for both commonly-vented water heaters (together with a central 

furnace) and isolated water heaters (separately vented). For replacement cases, the installation 

cost includes the labor costs for disconnecting and removing the old water heater, 

removal/disposal fees, permit fees, as well as the cost of putting in place and setting up the new 

water heater. See Appendix 8-A, Installation Cost Determination, for details. 

DOE estimated that all installations would require a drain pan. Some houses may require 

a replacement drain pan of a larger size when a wider (due to increased insulation thickness) 

water heater is installed. Manufacturers recommend that the drain pan diameter be two inches 

2 larger than the diameter of the water heater. Therefore, DOE applied on average an additional 

drain pan cost of $2 to water heater designs with 2-in. insulation. 

The efficiency levels that include electronic ignition, power vent, and condensing design 

have an increased installation cost relative to the baseline. For installation of water heaters with 

electronic ignition, DOE added an additional installation cost. For all new construction, DOE 

used the cost of the electrical outlet installation from the installation model developed for 

3 residential furnaces. This approach yields an average cost of about $49 for adding an additional 

electrical outlet. For replacement installations, DOE added an additional cost for labor and 

wiring for installing an electrical outlet for houses that do not have electricity close to the water 

heater. DOE estimated that all households that do not have a gas furnace or boiler would require 

4 an electrical outlet and calculated the additional cost of the outlet using RS Means. This yields 

8-16


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
an average cost of $168 for adding an additional electrical outlet. DOE estimated that grounding 

5 for an electrical outlet is needed for houses build before 1960. This yields an additional average 

cost of $32 for grounding. 

The incremental installation cost for the power vent design includes the cost of the 

electricity outlet and venting requirements. The venting systems are configured to exit a side 

wall of a dwelling and are composed of plastic vent pipes. For replacement installations, DOE 

accounted for the installation of a new vent system and, for the commonly vented water heaters, 

for disconnecting from the existing common system. 

The installation cost for the condensing design is the same as for the power vent design 

with the additional cost of the condensate disposal. This approach reflects the currently available 

condensing water heater design that utilizes a single pipe power vent design. The condensate 

disposal includes the cost of the condensate neutralizer filter, which is required by some codes. 

The average and incremental installation costs for gas-fired storage water heaters are 

shown in Table 8.2.8. 

Table 8.2.8 Average Installation Cost for Gas-Fired Storage Water Heaters 

Energy 

Efficiency 

Level 

EF Description Installation Options Average 

Installation 

Cost 

(2007$)* 

Incremental 

Installation 

Cost (2007$) 

0 0.59 Standing Pilot, 1” ins baseline, drain pan $601 --

1 0.62 Standing Pilot, 1.5” ins baseline, drain pan $601 $0 

2 0.63 Standing Pilot, 2” Ins baseline, large drain pan $603 $2 

3 

0.64 

Electronic ignition, 1” 

ins, power vent 

baseline, drain pan, 

electricity, plastic vent $929 $328 

4 

0.65 

Electronic ignition, 1.5” 

ins, power vent 

baseline, drain pan, 

electricity, plastic vent $929 $328 

5 

0.66 

Electronic ignition, 2” 

ins, power vent 

baseline, large drain pan, 

electricity, plastic vent $931 $330 

6 

0.77 

Condensing, 2” ins, 

power vent 

baseline, large drain pan, 

electricity, plastic vent, 

condensate filter $940 $339 

*Average installation cost represents the weighted average cost for replacement and new construction applications. 

Electric storage water heater. DOE developed installation cost data for electric storage water 

heaters using data from RS Means and other sources.2, 4, 5, 6 Some houses may require a larger 

drain pan when a wider (due to increased insulation thickness) water heater is installed. For 

electric water heaters, DOE used the same approach as for gas-fired water heaters, and applied 

an average drain pan cost of $2 to all water heaters with 2-in. and 2.25-in. insulation, and a cost 

of close to $6 to all water heaters with 2.25 to 4-in. insulation. 

In some houses, the original water heater location may be too small to accommodate a 

replacement water heater of the same rated volume when the new water heater’s insulation 

thickness is 2.5, 3 or 4 inches. When such space constraints exist, some households are assumed 

8-17


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
to use the next smaller standard-size water heater, and increase the water heater setpoint to 

compensate for the lower storage volume. DOE used RECS 2001 to identify which households 

would have such space constraints. DOE estimated that such constraints would only exist in 

cases where the water heater is installed in conditioned space (e.g., not in a garage or an 

unconditioned basement), and the water heater is in a small house or apartment with a floor area 

of less than 1,000 ft2

. 

For houses with space constraints, DOE adjusted the setpoint of the smaller water heater 

upward so that the total energy content of the water that could be delivered is the same as could 

have been delivered by the original water heater at a lower temperature. DOE added the cost of a 

tempering valve if the new setpoint is >140o

F. DOE used an average cost of close to $22 for 

adding tempering and check valves. The details of the space constraint approach as well as the 

tempering valve costs are described in Appendix 8-A, Installation Cost Determination. 

Efficiency levels that include 3-in. insulation require an additional cost in some 

replacement applications to account for certain installation impacts (e.g., to disassemble and 

reassemble doorjambs). DOE added a $219 cost for removal and replacement of door jambs for 

half of all water heaters located in the indoor conditioned space. Using RECS 2001, DOE 

determined that 44 percent of water heaters are located in an indoor conditioned space. The 

average cost for all design options that include 3-in. insulation is $36. 

For heat pump water heater installation, DOE applied additional labor and materials 

costs. The labor cost to install a heat pump water heater takes into account one additional hour of 

6 labor for the extra time to install this equipment. For one-fourth of the replacement installations, 

DOE included the cost for adding a condensate pump and longer water line to the drain at an 

average cost $153. Also for indoor replacement installations, DOE added the cost for making 

adjustments to accommodate the heat pump water heater in the case of space constraints 

(including adding ventilation using a fully-louvered closet door). DOE estimated that this cost, 

which averages $346, occurs in half of indoor replacement installations. DOE also applied an 

additional drain pan cost of $2 to account for the larger 2-in. insulation for this product. The 

average total additional cost to install a heat pump water heater is $181 in replacement 

installations, and $71 in new home installations. 

The average and incremental installation costs for electric storage water heaters at each 

considered energy efficiency level are shown in Table 8.2.9. 

8-18


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.9 Average Installation Cost for Electric Storage Water Heaters


Energy 

Efficiency 

Level 

EF Description Installation Options Average 

Installation 

Cost (2007$)* 

Incremental 

Installation 

Cost (2007$) 

0 0.90 1.5 in (Baseline) Baseline $409 --

1 0.91 2 in baseline, large drain pan $410 $2 

2 0.92 2.25 in baseline, large drain pan $410 $2 

3 

0.93 2.5 in 

baseline, large drain pan, 

tempering valves $431 $23 

4 

0.94 3 in 

baseline, large drain pan, 

tempering valves, space 

constraints $468 $59 

5 

0.95 4 in 

baseline, large drain pan, 

tempering valves, space 

constraints $468 $59 

6 

2.20 

Heat Pump Water Heater 

Integrated Design 

baseline, large drain pan, 

space constraints $568 $160 

*Average installation cost represents the weighted average cost for replacement and new construction applications. 

Oil-fired storage water heater. DOE developed installation cost data for the baseline oil2 fired water heater using information from the 2001 water heater rulemaking. An oil-fired water 

heater installation requires hot and cold water connections, oil supply, electrical power 

connection, a vent connection and an oil-burner that consists of oil pump, blower, ignition 

device, and controls. All design options that have 2 and 2.5 in. insulation and that require 

specialized venting at higher energy efficiency may incur an additional installation cost. 

Residential oil-fired water heaters are typically sold and installed by local residential 

heating oil dealers. For the 2001 rulemaking, DOE gathered installation cost information from 

seven dealers in the northeastern U.S. These data show a very wide range of installation costs, 

which vary significantly in different areas depending on the size of the markets. The typical 

installation cost for a new oil-fired water heater ranges from $462 to $981 (2007$), with an 

average cost of $625. 

In the 2001 water heater analysis, DOE estimated that there is an additional cost 

associated with oil-fired water heaters with 2 and 2.5 in. of insulation. For replacement 

installations, DOE added a cost to account for installing a burner kit, which consists of a longer 

air tube and a longer nozzle assembly to fit the existing burner to the new wider tank. DOE 

estimated that 50 percent of the installations will require an oil burner modification kit. DOE 

applied an average additional installation cost of $23 for designs with 2 and 2.5 in. insulation. 

For new construction, DOE estimated that there is no additional installation cost. 

3 Similarly to the analysis performed for residential oil-fired furnaces and boilers (which 

considered NFPA 31 recommendations), the installation cost for oil-fired water heaters assumes 

that, depending on the energy efficiency, oil-fired water heaters would be vented using Type L 

vents or using 316-grade stainless steel vents. All installations using oil-fired water heaters at 

0.62 EF or lower that are vented are assumed to use type “L” vents. Following the assumptions 

8-19


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
in the oil-fired furnaces and boilers rulemaking, this analysis assumes that half of the 

installations at 0.66 EF and 75 percent of the installations at 0.68 EF will require 316-grade 

stainless steel vent systems. Based on the furnace and boiler oil-fired equipment analysis, DOE 

estimated that the 316-grade stainless steel installations cost about 85 percent more than the 

baseline installations. 

Table 8.2.10 presents the average installation cost for oil-fired storage water heaters at 

the different energy efficiency levels. 

Table 8.2.10 Average Installation Cost for Oil-Fired Storage Water Heaters 

Energy 

Efficiency 

Level 

EF Description Installation 

Options 

Average 

Installation 

Cost (2007$)* 

Incremental 

Installation 

Cost (2007$) 

0 0.53 Electronic Ignition, 1” ins 

(fiberglass) 

Baseline 625 --

1 0.54 Electronic Ignition, 1.5” ins 

(fiberglass) 

Baseline 625 0 

2 0.56 Electronic Ignition, 2” ins 

(fiberglass) 

baseline, burner 

modification kit 

644 19 

3 0.58 Electronic Ignition, 2.5” ins 

(fiberglass) 

baseline, burner 

modification kit 

644 19 

4 0.60 Electronic Ignition, 2” ins 

(foam) 

baseline, burner 

modification kit 

644 19 

5 0.62 Electronic Ignition, 2.5” ins 

(foam) 

baseline, burner 

modification kit 

644 19 

6 0.66 Electronic Ignition, 1” ins 

(fiberglass), enhanced flue 

baffle 

baseline, 50% w/ 

85% AFUE 

Venting Adder 

889 264 

7 0.68 Electronic Ignition, 1” ins 

(foam), enhanced flue baffle 

baseline, 75% w/ 

85% AFUE 

Venting Adder 

1022 397 

*Average installation cost represents the weighted average cost for replacement and new construction applications. 

Gas-fired instantaneous water heater. DOE developed installation cost data for gas-fired 

instantaneous water heaters using several sources.2, 3, 5, 6 In the analysis, all replacements are 

assumed to be conversions from gas-fired storage water heaters (this reflects the small number of 

instantaneous water heaters installed during the 1980s and 1990s and the long lifetime of these 

products). It can be difficult to use instantaneous water heaters as a replacement technology in 

some existing homes, since physically accommodating their installation can add considerable 

7 expense. DOE’s derivation of installation cost does not consider extreme installation 

configurations. 

For new construction applications, the installation cost includes adding a gas line branch 

(since in most cases it is not possible to connect the water heater to the existing house gas line, 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
which is too small), installing a vent system, adding water piping, as well as the cost of putting in 

place and setting up the new water heater. For replacement cases, the installation cost includes 

the labor for disconnecting and removing the old water heater, removal/disposal fee, permit fee, 

as well as the cost of putting in place and setting up the new instantaneous water heater, 

including the venting system. The analysis for both new construction and replacements assumes 

Category I vertical venting using non-stainless steel vents. See Appendix 8-A, Installation Cost 

Determination, for details. 

The efficiency levels that include electronic ignition, power vent, and condensing design 

have an increased installation cost relative to the baseline. As it did for gas storage water heaters, 

for installation of water heaters with electronic ignition DOE added an additional installation 

cost. For all new construction, DOE used the cost of the electrical outlet installation from the 

3 installation model developed for residential furnaces. This approach yields an average cost of 

about $49 for adding an additional electrical outlet. For replacement installations, DOE added an 

additional cost for labor and wiring for installing an electrical outlet for houses that do not have 

electricity close to the water heater. DOE estimated that all households that do not have a gas 

furnace or boiler would require an electrical outlet and calculated the additional cost of the outlet 

4 using RS Means. This yields an average cost of $168 for adding an additional electrical outlet. 

5 DOE estimated that grounding for an electrical outlet is needed for houses build before 1960.

This yields an additional average cost of $32 for grounding. 

The incremental installation cost for the power vent design includes the cost of the 

electricity outlet and the required venting. The cost reflects Category III horizontal venting using 

stainless steel vents. For replacement installations, DOE estimated that half of the installations 

will use vertical vents and half will use horizontal vents. For replacement installations, DOE 

accounted for the installation of a new vent system, and for commonly-vented water heaters, for 

disconnecting from the existing common system. The installation cost for the condensing design 

further includes plastic vents and the cost of the condensate disposal. 

The average and incremental installation costs for gas-fired instantaneous water heaters 

are shown in Table 8.2.11. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.11 Average Installation Cost for Gas-Fired Instantaneous Water Heaters


Energy 

Efficiency 

Level 

EF Description Installation 

Options 

Average 

Installation 

Cost (2007$)* 

Incremental 

Installation 

Cost (2007$) 

0 

0.62 Standing pilot (Baseline) 

Natural Draft 

Venting $986 --

1 

0.69 Standing Pilot, Improved HX 

Natural Draft 

Venting $986 $0 

2 

0.78 Electronic Ignition, Improved HX 

Forced Draft 

Venting, Electricity $1,093 $107 

3 

0.80 

Electronic Ignition, Induced Draft 

(Power Vent) 

Forced Draft 

Venting, Electricity $1,093 $107 

4 

0.82 

Electronic Ignition, Improved 

HX, Induced Draft (Power Vent) 

Forced Draft 

Venting, Electricity $1,093 $107 

5 

0.84 

Electronic Ignition, Improved 

HX, Induced Draft (Power Vent) 

Forced Draft 

Venting, Electricity $1,093 $107 

6 

0.85 

Electronic Ignition, Improved 

HX, Induced Draft (Power Vent) 

Forced Draft 

Venting, Electricity $1,093 $107 

7 

0.92 Condensing 

Condensing 

(plastic venting), 

Electricity $896 -$89 

*Average installation cost represents the weighted average cost for replacement and new construction installations. 

8.2.2.5 Total Installed Cost 

The total installed cost is the sum of the consumer product price and the installation cost. 

Refer back to section 8.2 to see the equations that DOE used to calculate the total installed cost 

for baseline and standard-level products. 

Tables 8.2.12, 8.2.13, 8.2.14, and 8.2.15 present the average consumer product price, 

installation costs, and total installed costs for each product class. Prices and costs are presented at 

the baseline level and each considered energy efficiency level. 

Table 8.2.12	 Gas-Fired Storage Water Heater: Consumer Product Price, Installation 

Cost, and Total Installed Cost 

Energy 

Efficiency Level 

Energy 

Factor 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed Cost 

(2007$) 

Baseline 0.59 366 601 967 

1 0.62 381 601 982 

2 0.63 396 603 998 

3 0.64 577 929 1,506 

4 0.65 590 929 1,519 

5 0.66 605 931 1,536 

6 0.77 842 940 1,782 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.13 Electric Storage Water Heater: Consumer Product Price, Installation Cost, 

and Total Installed Cost 

Energy 

Efficiency Level 

Energy 

Factor 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed Cost 

(2007$) 

Baseline 0.90 253 409 662 

1 0.91 263 410 674 

2 0.92 271 410 682 

3 0.93 278 431 709 

4 0.94 291 468 759 

5 0.95 318 468 786 

6 2.20 906 568 1,475 

Table 8.2.14 Oil-Fired Storage Water Heater: Consumer Product Price, Installation Cost, 

and Total Installed Cost 

Energy 

Efficiency Level 

Energy 

Factor 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed Cost 

(2007$) 

Baseline 0.53 1,133 625 1,757 

1 0.54 1,147 625 1,771 

2 0.56 1,167 644 1,811 

3 0.58 1,184 644 1,828 

4 0.60 1,176 644 1,820 

5 0.62 1,199 644 1,843 

6 0.66 1,186 889 2,075 

7 0.68 1,205 1,022 2,227 

Table 8.2.15 Gas-Fired Instantaneous Water Heater: Consumer Product Price, 

Installation Cost, and Total Installed Cost 

Energy 

Efficiency Level 

Energy 

Factor 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed Cost 

(2007$) 

Baseline 0.62 544 986 1,529 

1 0.69 563 986 1,549 

2 0.78 632 1,093 1,724 

3 0.80 775 1,093 1,867 

4 0.82 810 1,093 1,902 

5 0.84 845 1,093 1,938 

6 0.85 863 1,093 1,955 

7 0.92 1,361 896 2,258 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.2.3 Direct Heating Equipment 

8.2.3.1 Baseline Manufacturer Cost 

Table 8.2.16 shows the baseline manufacturer cost for each of the four direct heating 

equipment product classes, estimated as described in Chapter 5, Engineering Analysis. 

Table 8.2.16 Direct Heating Equipment: Baseline Manufacturer Cost 

Product Class 

Baseline 

AFUE 

Baseline Cost 

(2007$) 

Gas Wall Fan DHE 74% 355 

Gas Wall Gravity DHE 64% 198 

Gas Floor DHE 57% 338 

Gas Room DHE 64% 221 

8.2.3.2 Standard-Level Manufacturer Cost Increases 

DOE developed manufacturer cost increases associated with increases in energy 

efficiency levels of direct heating equipment as described in Chapter 5, Engineering Analysis. 

Tables 8.2.17, 8.2.18, 8.2.19, and 8.2.20 summarize the standard-level manufacturer cost 

increases for each direct heating equipment product class. 

Table 8.2.17 Gas Wall Fan DHE: Standard-Level Manufacturer Cost Increases 

Level AFUE 

Manufacturer Cost 

Increase (2007$) 

1 75% 27 

2 76% 41 

3 77% 58 

4 80% 113 

Table 8.2.18 Gas Wall Gravity DHE: Standard-Level Manufacturer Cost Increases


Level AFUE 

Manufacturer Cost 

Increase (2007$) 

1 66% 26 

2 68% 33 

3 71% 61 

4 72% 86 

5 75% 139 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.19 Gas Floor DHE: Standard-Level Manufacturer Cost Increases


Level AFUE 

Manufacturer Cost 

Increase (2007$) 

1 58% 15 

2 61% 30 

3 62% 45 

4 65% 72 

5 78% 130 

Table 8.2.20 Gas Room DHE: Standard-Level Manufacturer Cost Increases


Level AFUE 

Manufacturer Cost 

Increase (2007$) 

1 65% 16 

2 66% 31 

3 67% 46 

4 68% 61 

5 70% 86 

6 78% 140 

7 93% 331 

8.2.3.3 Overall Markup 

The overall markup is the value determined by multiplying the manufacturer and other 

markups and the sales tax together to arrive at a single markup value. In turn, DOE multiplied 

the overall markup by the baseline or standard-level manufacturer cost to arrive at the price paid 

by the consumer for the product. DOE divided the overall markup into a baseline markup (i.e., a 

markup used to convert the baseline manufacturer cost into a consumer price) and an incremental 

markup (i.e., a markup used to convert an incremental manufacturer cost due to a standard level 

into an incremental consumer price). Table 8.2.21 shows the overall markups for direct heating 

equipment. Refer to Chapter 6, Markups to Determine Product Price, for details. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.21 Direct Heating Equipment: Overall Markups


Product Class Replacement Applications New Home Applications 

Baseline Incremental Baseline Incremental 

Gas Wall Fan 2.64 2.17 3.22 2.55 

Gas Wall Gravity 2.64 2.17 3.22 2.55 

Gas Floor 2.64 2.17 3.22 2.55 

Gas Room 2.64 2.17 3.22 2.55 

8.2.3.4 Installation Cost 

DOE derived baseline installation costs for direct heating equipment using the approach 

8 from the 1993 TSD. For gas wall gravity DHE, gas floor DHE and gas room DHE, DOE added 

an additional installation cost for the design options that require electricity. This was done for the 

replacement market only, since in new construction the wiring is considered part of the general 

electrical work. This yields an average cost of $168 for adding an additional electrical outlet. 

5 DOE estimated that grounding for an electrical outlet is needed for houses build before 1960.

This yields an average cost of $32 for grounding. 

Tables 8.2.22, 8.2.23, 8.2.24, and 8.2.25 summarize the average installation costs for 

each product class. Average installation cost represents the weighted average cost for 

replacement and new construction applications. 

Table 8.2.22 Average Installation Cost for Gas Wall Fan DHE 

Energy 

Efficiency 

Level 

AFUE Description Installation 

Options 

Average 

Installation 

Cost (2007$) 

Incremental 

Installation 

Cost (2007$) 

0 74% Standing Pilot Baseline $793 --

1 75% Electronic ignition, two-speed 

blower Baseline $793 $0.00 

2 76% Electronic ignition, improved 

HX Baseline $793 $0.00 

3 77% Electronic ignition, two-speed 

blower, improved HX Baseline $793 $0.00 

4 80% Electronic ignition, induced 

draft Baseline $793 $0.00 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.23 Average Installation Cost for Gas Wall Gravity DHE


Energy 

Efficiency 

Level 

AFUE Description Installation Options Average 

Installation 

Cost (2007$) 

Incremental 

Installation 

Cost (2007$) 

0 64% Standing pilot Baseline $793 --

1 66% Standing pilot, improved HX Baseline $793 $0.00 

2 68% Standing pilot, improved HX Baseline $793 $0.00 

3 71% Standing pilot, improved HX Baseline $793 $0.00 

4 72% Electronic ignition 

Baseline, Electrical 

Outlet $983 $190 

5 75% Induced draft 

Baseline, Electrical 

Outlet $983 $190 

Table 8.2.24 Average Installation Cost for Gas Floor DHE


Energy 

Efficiency 

Level 

AFUE Description Installation 

Options 

Average 

Installation 

Cost (2007$) 

Incremental 

Installation 

Cost (2007$) 

0 57% Standing pilot Baseline $1,118 --

1 58% Standing pilot, improved HX Baseline $1,118 $0.00 

2 61% Standing pilot, improved HX Baseline $1,118 $0.00 

3 62% Standing pilot, improved HX Baseline $1,118 $0.00 

4 65% Electronic ignition, improved 

HX 

Baseline, Electrical 

Outlet $1,309 $190 

5 78% Induced draft 

Baseline, Electrical 

Outlet $1,309 $190 

Table 8.2.25 Average Installation Cost for Gas Room DHE


Energy 

Efficiency 

Level 

AFUE Description Installation 

Options 

Average 

Installation 

Cost (2007$) 

Incremental 

Installation 

Cost (2007$) 

0 64% Standing Pilot Baseline $793 --

1 65% Standing pilot, improved HX Baseline $793 $0.00 

2 66% Standing pilot, improved HX Baseline $793 $0.00 

3 67% Standing pilot, improved HX Baseline $793 $0.00 

4 68% Standing pilot, improved HX Baseline $793 $0.00 

5 70% Electronic ignition Baseline, Electrical 

Outlet $971 $178 

6 78% Induced draft Baseline, Electrical 

Outlet $971 $178 

7 93% Condensing Baseline, Electrical 

Outlet $971 $178 

8.2.3.5 Total Installed Cost 

The total installed cost is the sum of the consumer product price and the installation cost. 

Refer back to section 8.2 to see the equations DOE used to calculate the total installed cost for 

baseline and standard-level products. 

8-27 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Tables 8.2.26, 8.2.27, 8.2.28, and 8.2.29 present the consumer product prices, installation 

costs, and total installed costs for the four direct heating equipment product classes. 

Table 8.2.26	 Gas Wall Fan DHE: Consumer Product Price, Installation Cost, and Total 

Installed Cost 

Energy 

Efficiency Level AFUE 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed 

Cost (2007$) 

Baseline 74% 976 793 1,769 

1 75% 1,037 793 1,830 

2 76% 1,068 793 1,861 

3 77% 1,106 793 1,899 

4 80% 1,230 793 2,023 

Table 8.2.27 Gas Wall Gravity DHE: Consumer Product Price, Installation Cost, and 

Total Installed Cost 

Energy 

Efficiency Level AFUE 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed 

Cost (2007$) 

Baseline 64% 581 793 1,374 

1 66% 642 793 1,435 

2 68% 659 739 1,452 

3 71% 725 793 1,518 

4 72% 784 983 1,767 

5 75% 909 983 1,893 

Table 8.2.28 Gas Floor DHE: Consumer Product Price, Installation Cost, and Total 

Installed Cost 

Energy 

Efficiency Level AFUE 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed 

Cost (2007$) 

Baseline 57% 895 1,118 2,013 

1 58% 927 1,118 2,046 

2 61% 960 1,118 2,078 

3 62% 992 1,118 2,111 

4 65% 1,051 1,309 2,360 

5 78% 1,177 1,309 2,486 

8-28


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.29 Gas Room DHE: Consumer Product Price, Installation Cost, and Total 

Installed Cost 

Energy 

Efficiency Level AFUE 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed 

Cost (2007$) 

Baseline 64% 637 793 1,430 

1 65% 674 793 1,467 

2 66% 709 793 1,502 

3 67% 744 793 1,537 

4 68% 779 793 1,572 

5 70% 837 971 1,808 

6 78% 963 971 1,933 

7 93% 1,407 971 2,378 

8.2.4 Gas-Fired Pool Heaters 

8.2.4.1 Baseline Manufacturer Cost 

DOE developed the baseline manufacturer costs for gas-fired pool heaters shown in Table 

8.2.30 as described in Chapter 5, Engineering Analysis. 

Table 8.2.30 Gas-Fired Pool Heaters: Baseline Manufacturer Cost 

Energy Efficiency Level Manufacturer Cost (2007$) 

78% - Standing Pilot 520 

78% - Electronic Ignition 523 

8.2.4.2 Standard-Level Manufacturer Cost Increases 

DOE developed manufacturing cost increases associated with increases in product energy 

efficiency levels for gas-fired pool heaters (Table 8.2.31) as described in Chapter 5, Engineering 

Analysis. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.31 Gas-Fired Pool Heaters: Standard-Level Manufacturer Cost Increases


Energy Efficiency Thermal Manufacturer Cost Increase (2007$) 

Level Efficiency Standing Pilot Electronic Ignition 

1 79% 11 11 

2 81% 24 24 

3 82% 39 55 

4 83% 128 125 

5 84% 144 141 

6 86% 171 168 

7 90% 383 380 

8 95% 441 438 

8.2.4.3 Overall Markup 

The overall markup is the value determined by multiplying the manufacturer and other 

markups and the sales tax together to arrive at a single markup value. Table 8.2.32 shows the 

overall baseline and incremental markups for gas-fired pool heaters. Refer to Chapter 6, Markups 

to Determine Product Price, for details. 

Table 8.2.32 Gas-Fired Pool Heaters: Overall Markups 

Replacement Applications New Home Applications 

Baseline Incremental Baseline Incremental 

Overall 2.18 1.80 2.44 1.93 

8.2.4.4 Installation Cost 

4 DOE derived installation cost data for the baseline pool heater using RSMeans and 

9 information in a consultant report. There are two design options considered for this analysis that 

increase the installation cost relative to the baseline: electronic ignition and condensing design. 

The baseline unit represents a pool heater with a pilot light. For new construction 

applications, the installation cost includes adding a gas line from the gas meter to the pool heater 

(in most cases it is not possible to connect the pool heater to the existing house gas line as it is 

too small). It also includes adding PVC lines from the pool pump to the inlet and outlet water 

headers of the pool heater (thermal isolation - non - PVC pipe is usually part of this line to 

prevent pool pump overheating). The installation cost also includes setting, connection and startup fees. For the replacement applications, the installation cost includes disconnecting and 

removing the old pool heater, putting in place the new unit and reconnecting the gas and PVC 

lines. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
For units with electronic ignition, DOE included an additional installation cost to account 

for adding an electrical line (115V) and a separate junction box. These are needed since the pool 

heater requires lower amperage than the pool pump. 

The incremental installation cost for the condensing design includes the cost of the 

condensate drain piping that goes from the pool heater to a P-trap devicea located at the sewer 

9 line entrance.

Table 8.2.33 shows the average installation cost for pool heaters at each energy efficiency 

level. Average installation cost represents the weighted average cost for replacement and new 

constructions. 

Table 8.2.33 Average Installation Cost for Pool Heaters 

Energy 

Efficiency 

Level 

EF Description Installation Options Average 

Installation 

Cost (2007$) 

Incremental 

Installation 

Cost (2007$) 

0 78% Baseline -pilot or elect. Ignition Baseline $1,150 --

1 79% Improved HX Baseline $1,150 $0.00 

2 81% Improved HX Baseline $1,150 $0.00 

3 82% Improved HX Baseline $1,150 $0.00 

4 83% Power Venting Baseline, Electrical 

Outlet $1,150 $0.00 

5 84% Power Venting, improved HX Baseline, Electrical 

Outlet $1,173 $23.1 

6 86% Sealed Combustion, improved 

HX 

Baseline, Electrical 

Outlet $1,173 $23.1 

7 90% Sealed combustion, condensing 

Baseline, Electrical 

Outlet, Condensing 

Adder 

$1,173 $23.1 

8 95% Sealed combustion, 

condensing, improved HX 

Baseline, Electrical 

Outlet, Condensing 

Adder 

$1,273 $123 

8.2.4.5 Total Installed Cost 

The total installed cost is the sum of the consumer product price and the installation cost. 

Refer back to section 8.2 to see the equations that DOE used to calculate the total installed cost 

for baseline and standard-level products. Table 8.2.34 presents the consumer product price, 

installation costs, and total installed costs for pool heaters at each considered energy efficiency 

level. 

a A “P-trap” is required by many city codes. It helps to isolate the condensate from back-flowing into the pool water 

and prevents the sewer gas from back-flowing. 

8-31


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.2.34 Gas-Fired Pool Heaters: Consumer Product Price, Installation Cost, and 

Total Installed Cost 

Energy 

Efficiency Level 

Thermal 

Efficiency 

Product Price 

(2007$) 

Installation Cost 

(2007$) 

Total Installed 

Cost (2007$) 

Baseline 78% 1,185 1,150 2,335 

1 79% 1,205 1,150 2,356 

2 81% 1,229 1,150 2,380 

3 82% 1,278 1,150 2,428 

4 83% 1,417 1,150 2,567 

5 84% 1,446 1,173 2,620 

6 86% 1,496 1,173 2,670 

7 90% 1,887 1,173 3,060 

8 95% 1,993 1,273 3,267 

8.3 OPERATING COST INPUTS -- OVERVIEW 

DOE defines the operating cost by the following equation: 

OC = EC + RC + MC 

Where: 

EC = Energy expenditure associated with operating the product,


RC = Repair cost associated with component failure, and


MC = Service cost for maintaining product operation.


Table 8.3.1 shows the inputs for determining the operating costs. The inputs listed are 

also necessary for determining lifetime operating expenses, which include the energy price 

trends, product lifetime, discount rate, and effective date of the energy conservation standard. 

Table 8.3.1 Inputs for Operating Cost 

Annual Energy Consumption 

Energy Prices and Price Trends 

Repair and Maintenance Costs 

Product Lifetime 

Discount Rate 

Effective Date of Energy conservation standard 

The annual energy consumption is the site energy use associated with operating the 

product. The annual energy consumption varies with the product energy efficiency. That is, the 

energy consumption associated with standard-level products is less than the consumption 

associated with baseline products. Energy prices are the prices paid by consumers for electricity, 

8-32


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
__ 

gas, or oil. Multiplying the annual energy consumption by the appropriate energy prices yields 

the annual energy cost. DOE used energy price trends to forecast energy prices into the future 

and, along with the product lifetime and discount rate, to establish the lifetime energy costs. 

Repair costs are associated with repairing or replacing components that have failed. Maintenance 

costs are associated with maintaining the operation of the product. The product lifetime is the age 

at which the product is retired from service. The discount rate is the rate at which DOE 

discounted future expenditures to establish their present value. 

DOE calculated the operating cost for baseline products based on the following equation: 

OC BASE = EC BASE + RC BASE + MC BASE 

= AEC BASE × PRICE ENERGY + RC BASE + MC BASE 

Where: 

OCBASE = Baseline operating cost,


ECBASE = Energy expenditure associated with operating the baseline product,


RCBASE = Repair cost associated with component failure for the baseline


product,


MCBASE = Cost for maintaining baseline product operation,


AECBASE = Annual energy consumption for baseline product,


PRICEENERGY = Energy price.


DOE calculated the operating cost for standard-level products based on the following 

equation: 

OC STD = EC STD + RC STD + MC STD 

= AEC STD × PRICE ENERGY + RC STD + MC STD 

= (AEC BASE ΔAEC STD )× PRICE ENERGY 

+ (RC BASE + ΔRC STD ) + (MC BASE + ΔMC STD )

Where:


OCSTD = Standard-level operating cost,


ECSTD = Energy expenditure associated with operating standard-level products,


RCSTD = Repair cost associated with component failure for standard-level products,


MCSTD = Service cost for maintaining standard-level product operation,


AECSTD = Annual energy consumption for standard-level products,


PRICEENERGY = Energy price,


ΔAECSTD = Change in annual energy consumption caused by standard-level products,


ΔRCSTD = Change in repair cost caused by standard-level products, and


ΔMCSTD = Change in maintenance cost caused by standard-level products.


8-33


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
As the above equations show, DOE multiplied the annual energy consumption by the 

energy price to derive the energy component of operating costs. For pool heaters and DHE, it 

used annual average energy prices. For water heaters, DOE estimated energy consumption on a 

monthly basis, so it developed monthly average energy prices. 

The following sections provide information about each of the above input variables that 

DOE used to calculate the operating costs for heating products. 

8.4 ANNUAL ENERGY CONSUMPTION 

Chapter 7, Energy Use Determination, details how DOE determined the annual energy 

consumption for baseline and standard-level products. As described in Chapter 7 and the 

beginning of this chapter in section 8.1.1, DOE developed a sample of individual households that 

use each of the considered products. By developing household samples, DOE was able to 

account for the variability in both energy use and energy price associated with each household. 

DOE used RECS 2001 to develop the household samples and, in turn, to establish the variability 

in annual energy consumption. Refer back to Chapter 7 to review the parameters that define the 

variability of annual energy consumption for the heating products as well as the annual energy 

consumption results. 

8.4.1 Accounting for the Rebound Effect 

A rebound effect (also called a take-back effect or offsetting behavior) refers to increased 

energy consumption that results from actions that increase energy efficiency and reduce 

consumer costs. The logic behind the rebound effect is that more energy efficient products lower 

the marginal cost of the end-use service relative to lower energy efficient products. Because the 

marginal cost of the service is reduced, a service demand response occurs. For example, a home 

insulation program that reduces heat losses by 50 percent does not usually result in a full 50 

percent reduction in energy consumption, because residents of insulated homes find that they can 

afford to keep their homes warmer. As a result, they reinvest a portion of potential energy 

savings on comfort. 

To determine the impact of the rebound effect on energy efficiency improvement for the 

heating products considered in this rulemaking, DOE searched the literature on the rebound 

effect, and also considered how the National Energy Modeling System (NEMS), which is used 

for developing EIA's Annual Energy Outlook (AEO), incorporates a rebound effect. 

For water heaters, DOE found that NEMS does not incorporate a rebound factor. It 

reviewed a summary of studies regarding the rebound effect that concluded “technical 

improvements for residential hot water heating will be between 60 and 90 percent effective in 

10 reducing energy consumption for this service" (implying a rebound effect of 10-40 percent).

Another study examining the rebound effect cites a best-guess value for “other services” (which 

11 include water heating) of <20 percent, but with a low degree of confidence. Based on the 

available information, DOE used a rebound effect of 10 percent for all water heaters. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
For pool heaters, DOE found no mention of a rebound effect in the literature. However, 

since economic theory suggests that there should be some take-back associated with a reduction 

in the marginal cost of service, DOE included a rebound effect of 10 percent for pool heaters in 

its analysis. 

For direct heating equipment, DOE considered a summary of studies regarding the 

10 rebound effect in relation to space heating products. Based on five studies chosen for their 

robust methodology, the summary concluded that, for a 100 percent increase in fuel efficiency, 

values of "take-back" or rebound for space heating are between 10 and 30 percent of the energy 

consumption savings. It noted that NEMS incorporates a rebound effect for space heating that 

results in a 0.15-percent increase in energy consumption for a one-percent increase in energy 

efficiency. In keeping with the approach in NEMS, DOE chose to apply a rebound effect of 15 

percent (for a 100 percent increase in energy efficiency) in its analysis of direct heating 

equipment energy conservation standards. 

The take-back in energy consumption associated with the rebound effect provides 

consumers with increased value (e.g., a warmer indoor environment). The net impact on 

consumers is thus the sum of the change in the cost of owning the heating products (i.e., lifecycle cost) and the increased value for the warmer indoor environment. DOE believes that, if it 

were able to monetize the increased value to consumers added by the rebound effect, this value 

would be similar in value to the foregone energy savings. For this analysis, DOE estimated that 

this value is equivalent to the monetary value of the energy savings that would have occurred 

without the rebound effect. Therefore, the economic impacts on consumers with or without the 

rebound effect, as measured in the LCC analysis, are the same. 

8.5 ENERGY PRICES AND ENERGY PRICE TRENDS 

Using data from EIA, DOE calculated average annual energy prices for each of 13 

geographic areas: the nine U.S. Census divisions, and four large States (New York, California, 

Texas, and Florida) treated separately. For Census divisions containing one of these large States, 

DOE calculated the regional average values leaving out data for the large State—for example, 

the Pacific region average does not include California, and the West South Central region does 

not include Texas. 

To be able to examine seasonal prices, DOE developed monthly energy price factors for 

each fuel. For a detailed discussion of the development of monthly energy price factors, see 

Appendix 8-E, Monthly Energy Price Factor Calculations. 

As noted earlier, DOE used RECS to develop a sample of individual households that use 

each of the appliances. By developing household samples, DOE was able to perform the LCC 

and PBP calculations for each household to account for the regional variability in energy prices. 

8.5.1 Residential Natural Gas Prices 

12 DOE collected 2006 natural gas prices from EIA’s Natural Gas Navigator, which 

includes monthly natural gas prices for residential, commercial, and industrial consumers by 

8-35


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
State. DOE weighted the average residential natural gas prices for each State by the US Census 

13 Bureau’s 2006 population estimates, and transformed the values from units of $/tcf to 

$/MMBtu. Finally, DOE aggregated and averaged the prices by 13 geographic areas: the nine US 

Census Divisions and four large states (Table 8.5.1). 

Table 8.5.1 Average Annual Residential Natural Gas Prices 

Geographic Area Average (2007$/MMBtu) 

CD 1 - New England 17.63 

CD 2 - Middle Atlantic (excludes NY) 16.78 

CD 3 - East North Central 12.94 

CD 4 - West North Central 13.64 

CD 5 - South Atlantic (excludes FL) 18.37 

CD 6 - East South Central 16.51 

CD 7 - West South Central (excludes TX) 15.48 

CD 8 - Mountain 14.09 

CD 9 - Pacific (excludes CA) 16.15 

CD 10 - New York 15.92 

CD 11 - California 11.49 

CD 12 - Texas 14.20 

CD 13 - Florida 21.83 

CD 14 - United States 14.14 

8.5.2 Residential Electricity Prices 

14 DOE collected 2006 electricity prices using EIA Form 861 data. These data are 

published annually and include annual electricity sales, revenues from electricity sales, and 

number of consumers, for the residential, commercial, and industrial sectors. DOE calculated 

regional electricity prices by weighing each utility’s average price by the percentage of the 

region served, for all utilities. Finally, DOE aggregated and averaged the prices by 13 geographic 

areas (Table 8.5.2). 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.5.2 Average Annual Residential Electricity Prices


Geographic Area Average (2007$/kWh) 

CD 1 - New England 0.165 

CD 2 - Middle Atlantic (excludes NY) 0.118 

CD 3 - East North Central 0.095 

CD 4 - West North Central 0.085 

CD 5 - South Atlantic (excludes FL) 0.092 

CD 6 - East South Central 0.084 

CD 7 - West South Central (excludes TX) 0.092 

CD 8 - Mountain 0.093 

CD 9 - Pacific (excludes CA) 0.092 

CD 10 - New York 0.180 

CD 11 - California 0.148 

CD 12 - Texas 0.132 

CD 13 - Florida 0.117 

CD 14 - United States 0.112 

8.5.3 Residential Oil Prices 

15 DOE collected 2006 oil prices from EIA’s Petroleum Navigator, which includes 

monthly oil prices for residential, commercial, industrial, and transportation consumers by 

Petroleum Administration for Defense Districts (PADD). The first four PADD follow the US 

Census Divisions. However, Arizona is not included in the PADD for the Pacific Region and 

New Mexico is excluded altogether. In addition, data was not provided for the East South 

Central region, West South Central region, Florida, Texas, and California so national averages 

were used for these regions. DOE weighted the average residential oil prices for each PADD by 

13 the US Census Bureau’s 2006 population estimates. DOE then transformed the data in units of 

cents/gallon to $/MMBtu. Finally, the prices were aggregated and averaged by nine geographic 

areas (Table 8.5.3). The EIA data do not include taxes, so DOE determined the average tax rate 

16 for the four Census Regions (Northeast, South, Midwest, and West) and applied it to the annual 

average data. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.5.3 Annual Average Residential Oil Prices


Geographic Area Average (2007$/MMBtu) 

CD 1 - New England 18.56 

CD 2 - Middle Atlantic (excludes NY) 18.62 

CD 3 - East North Central 18.57 

CD 4 - West North Central 18.39 

CD 5 - South Atlantic (includes FL) 17.73 

CD 6 - East South Central* 18.66 

CD 7 - West South Central * 18.66 

CD 8 - Mountain 18.54 

CD 9 - Pacific (includes CA) 19.34 

CD 10 - New York 19.38 

CD 11 - California* 18.66 

CD 12 - Texas* 18.66 

CD 13 - Florida* 18.66 

CD 14 - United States 18.66 

*National average 

8.5.4 Residential LPG Prices 

DOE collected 2005 average LPG prices from EIA’s 2005 State Energy Consumption, 

17 Price, and Expenditures Estimates (SEDS). SEDS includes annual LPG prices for residential, 

commercial, industrial, and transportation consumers by State. DOE weighted the average 

13 residential LPG prices for each State by the US Census Bureau’s 2006 population estimates.

Finally, DOE aggregated and averaged the prices by 13 geographic areas (Table 8.5.4). The EIA 

data were collected without taxes, so DOE determined the average tax rate for the four Census 

16 Regions (Northeast, South, Midwest, and West) and applied it to the annual average data. To 

present the LPG price data for the same year as the other fuels (2006), DOE scaled the 2005 

prices using data in AEO2008 (see section 8.5.5). 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.5.4 Average Annual Residential LPG Prices


Geographic Area Average (2007$/MMBtu) 

CD 1 - New England 33.90 

CD 2 - Middle Atlantic (excludes NY) 32.46 

CD 3 - East North Central 25.33 

CD 4 - West North Central 22.40 

CD 5 - South Atlantic (excludes FL) 30.53 

CD 6 - East South Central 28.85 

CD 7 - West South Central (excludes TX) 28.93 

CD 8 - Mountain 28.29 

CD 9 - Pacific (excludes CA) 31.73 

CD 10 - New York 31.33 

CD 11 - California 32.79 

CD 12 - Texas 30.56 

CD 13 - Florida 35.29 

CD 14 - United States 28.06 

8.5.5 Energy Price Trends 

18 DOE used price forecasts from EIA’s Annual Energy Outlook 2008 (AEO2008) to 

estimate the trends in natural gas, oil, and electricity prices. To arrive at prices in future years, it 

multiplied the average prices described in the preceding section by the forecast of annual average 

price changes in AEO2008. To estimate the trend after 2030, DOE used the average rate of 

change during 2020–2030 for electricity and the average rate of change during 2015–2030 for 

natural gas, LPG and oil. 

DOE calculated LCC and PBP using three separate projections from AEO2008: 

Reference, Low Economic Growth, and High Economic Growth. The early release of AEO2008 

only forecasts the reference case, so DOE calculated the high and low growth price trends based 

19 on the three scenarios presented in AEO2007. These three cases reflect the uncertainty of 

economic growth in the forecast period. The high and low growth cases show the projected 

effects of alternative growth assumptions on energy markets. Figures 8.5.1, 8.5.2, 8.5.3 and 8.5.4 

show the residential electricity, natural gas, oil and LPG price trends, respectively. For the LCC 

results presented in this chapter, DOE used only the energy price forecasts from the AEO 

Reference case. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
11.00 

11.50 

12.00 

12.50 

13.00 

13.50 

14.00 

14.50 

2005 

2007 

2009 

2011 

2013 

2015 

2017 

2019 

2021 

2023 

2025 

2027 

2029 

Year 

2007$/MMBtu 

High Grow th 

Reference 

Low Grow th 

Figure 8.5.1 Residential Natural Gas Price Trends in AEO2008


9.50 

10.00 

10.50 

11.00 

11.50 

12.00 

2005 

2007 

2009 

2011 

2013 

2015 

2017 

2019 

2021 

2023 

2025 

2027 

2029 

Year 

cents(2007$)/kWh

High Growth 

Reference 

Low Growth 

Figure 8.5.2 Residential Electricity Price Trends in AEO2008


8-40


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
13.00 

15.00 

17.00 

19.00 

21.00 

23.00 

2005 2007 

2009 

2011 2013 2015 2017 2019 2021 2023 

2025 

2027 

2029 

Year 

2007$/MMBtu 

High Grow th 

Reference 

Low Grow th 

Figure 8.5.3 Residential Oil Price Trends in AEO2008


19.00 

21.00 

23.00 

25.00 

27.00 

29.00 

2005 

2007 

2009 

2011 

2013 

2015 

2017 

2019 

2021 

2023 

2025 

2027 

2029 

Year 

2007$/MMBtu

High Grow th 

Reference 

Low Grow th 

Figure 8.5.4 Residential LPG Price Trends in AEO2008 

8.6 MAINTENANCE AND REPAIR COSTS 

The maintenance cost is the price of regular scheduled product maintenance ($/year). The 

repair cost is the cost to repair the product when it fails ($/year). These costs cover all labor and 

material costs associated with the maintenance or repair. The determination of the repair cost 

involves determining the cost and the service life of the components that are likely to fail. The 

component lifetime is presented as a distribution. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.6.1 Water Heaters 

8.6.1.1 Gas-Fired Storage Water Heaters 

DOE did not include any maintenance cost for gas-fired water heaters. Although 

manufacturers recommend that water heaters be drained and flushed annually to minimize 

deposition of sediment, maintain operating efficiency, and prolong product life, the available 

20 evidence indicates that this practice is seldom done.

The repair cost reflects the cost for a service call when the product fails. In some cases, if 

a gas-fired water heater fails, residential consumers tend to replace the unit rather than having it 

repaired. However, there are four design options considered for the gas-fired water heater 

analysis that may encounter repair cost during the lifetime of the water heater: pilot ignition, 

electronic ignition, power vent, and condensing design. The energy efficiency levels that include 

power vent or condensing design encounter both power vent as well as electronic ignition repair 

costs. 

DOE estimated that the repair cost for the pilot ignition, a design option associated with 

the baseline water heater, is $145, and that such replacement occurs at most once, on average in 

the tenth year of the product lifetime.8, 21 DOE estimated that the repair cost for the electronic 

ignition (hot surface type) is $187, and that such replacement occurs at most once, on average in 

the fifteenth year of the product lifetime.8, 21 The repair cost of the power vent represents the cost 

of replacing the fan. DOE estimated that the average fan repair cost is $206, and that the power 

21 vent fan fails on average in the fifteenth year of operation.

8.6.1.2 Electric Storage Water Heaters 

DOE determined that there is virtually no maintenance or repair of electric resistance 

water heaters. For a heat pump water heater, maintenance includes annual cleaning of the air 

filter and a preventative maintenance cost to check the evaporator and refrigeration system. The 

literature recommends that no professional help is needed for this maintenance.22, 23 DOE 

believes there are instances in which such help is needed; thus, for certain heat pump water 

heater installations it added a preventative maintenance cost to check the evaporator and 

refrigeration system. For locations where the heat pump water heater might be more exposed to 

the outdoor environment, such as garages and crawlspaces, DOE applied a 5-year preventative 

maintenance cost based on Australian heat pump water heater outdoor installations24, 25 DOE 

estimated that 27% of these exposed installations would require this maintenance, based on a 

26 survey conducted for central air conditioners. For heat pump water heaters that are located 

indoors or in basements, the maintenance requirements are considered to be the same as other 

similar indoor appliances such as refrigerators and room heaters, which don’t have any additional 

maintenance costs 8, 27 For this maintenance cost, labor hours and costs are based on RS Means4, 

28 and are equal to $81. 

The repair cost of the heat pump water heater represents the cost of replacing the 

compressor and the evaporator fan. The estimated average compressor repair cost is $273 and the 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
estimated average fan repair cost is $124. Based on available information,27, 29 DOE estimated 

that the compressor and the fan fail on average in the 19th year of operation.b Appendix 8-B 

provides the details of DOE’s accounting of heat pump water heater repair costs. 

8.6.1.3 Oil-Fired Storage Water Heaters 

Oil-fired water heaters and burners are cleaned and maintained regularly. Maintenance is 

most frequently performed under annual maintenance contracts, which typically includes repair 

of failed components. These contracts are very common in the northeast, where most of the oilfired heating products are located. 

DOE estimated the average cost of separate maintenance/repair contracts only for water 

heaters as $153 per year. This mean value comes from a collection of annual maintenance 

contract prices, which were gathered from web sites that represent oil-fired product suppliers in 

the eastern U.S. This cost varies widely, depending on the presence of other oil-fired products in 

the residence (see Appendix 8-B). Costs may go down if multiple oil-fired appliances in a 

household are on the same contract. The maintenance contracts apply to all energy efficiency 

levels. 

8.6.1.4 Gas-Fired Instantaneous Water Heaters 

Gas-fired instantaneous water heaters may incur maintenance costs for addressing the 

fouling of the heat exchanger from hard water, periodic sensor inspections and filter changes. All 

manufacturers recommend that these water heaters be de-limed annually to minimize deposition 

of sediment, maintain operating efficiency and prolong product life. DOE’s analysis used an 

average maintenance cost of $85 per year for all energy efficiency levels of instantaneous water 

heaters.7, 30 

The repair cost for gas instantaneous water heaters is similar to the cost for gas-fired 

storage water heaters. Design options that may encounter repair cost during the lifetime of the 

water heater include pilot ignition, electronic ignition, and power vent. DOE estimated that the 

average repair cost for the pilot ignition, a design option associated with the baseline design, is 

$145, and that such replacement occurs at most once, on average in the tenth year of the product 

lifetime.8, 31 It estimated that the average repair cost for the electronic ignition is $187, and that 

such replacement occurs at most once, on average in the tenth year of the product lifetime.8, 31 

The repair cost of the power vent represents the cost of replacing the fan. The estimated average 

31 fan repair cost is $206, with fan failure occurring on average in the fifteenth year of operation.

The energy efficiency levels that include power vent or condensing design encounter 

power vent as well as electronic ignition repair cost. 

b DOE uses an average lifetime of 14 years for heat pump water heaters (see section 8.7.1). DOE used a lifetime 

distribution for the compressor and evaporator fan ranging averaging 19 years. In total, around 17 percent of heat 

pump water heaters encounter this repair, which represents an upper bound. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.6.2 Gas-Fired Pool Heaters 

Most pool owners do not perform any pool heater maintenance except when the heater 

does not come on. In such situations, the maintenance work includes checking controls, cleaning 

burners, cleaning heat exchanger, starting the heater and measuring water temperature rise, and 

DOE used an average cost of $351. For power vent and condensing design options, maintenance 

also includes measuring combustion differential pressure, yielding an average maintenance cost 

of $491. DOE estimated that the maintenance occurs in the fifth year of the pool heater lifetime 

32 (if the pool heater lifetime in a given home is six years or longer).

Design options considered that may encounter repair cost during the lifetime of the pool 

heater include pilot ignition, electronic ignition, and power vent. DOE estimated that the average 

repair cost for the pilot ignition is $145, and that such replacement occurs at most once, on 

average in the tenth year of the product lifetime.8, 31 It estimated that the repair cost for the 

electronic ignition equals $187, and that such replacement occurs at most once, on average in the 

fifteenth year of the product lifetime.8, 31 DOE estimated that the repair cost of the power vent 

includes replacing the fan at an average cost of $206, with estimated product failure on average 

31 in the fifteenth year of operation. The energy efficiency levels that include power vent or 

condensing design encounter both power vent as well as electronic ignition repair cost. 

8.6.3 Direct Heating Equipment 

For direct heating equipment, DOE used the maintenance cost data from the recent 

3 furnace/boiler rulemaking. The costs were derived from a field survey sponsored by several gas 

utilities that repair and service furnace and boiler equipment. The survey estimated the average 

cost per service call as the average total service charge (parts, labor, and other charges), which 

DOE estimated to be $214. DOE used a maintenance frequency of once every five years for all 

direct heating equipment products. 

DOE determined the repair cost using an approach that reflects the cost and the service 

life of the components that are likely to fail. Designs considered for the direct heating equipment 

analysis that may encounter repair cost during the lifetime of the product include pilot ignition, 

electronic ignition, circulating blower, and induced draft. DOE estimated that the repair cost for 

the pilot ignition is $145, and that such replacement occurs at most once, on average in the tenth 

year of the product lifetime.8, 31 It estimated that the repair cost for the electronic ignition equals 

$187, and that such replacement occurs at most once, on average in the tenth year of the product 

lifetime.8, 31 The repair cost of the air circulation blower represents the cost of replacing the fan. 

DOE estimated the average fan repair cost to be $206, with power vent fan failure on average in 

31 the 12th year of operation. DOE estimated the average repair cost of the induced draft fan to be 

31 $206, with fan failure on average in the fifteenth year of operation.

The average repair cost of the condensing design includes electronic ignition, circulation 

blower and induced draft components. 

8-44


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.7 PRODUCT LIFETIME 

The lifetime is the period of time that a water heater, direct heating equipment, or a pool 

heater will provide service. 

8.7.1 Water Heaters 

Table 8.7.1 presents the sources found by DOE to provide estimates of the lifetime of 

water heaters. The available information suggests that LPG storage water heaters have a lifetime 

equivalent to that of gas-fired storage water heaters. 

Table 8.7.2 shows the average, minimum and maximum lifetime values used in the LCC 

analysis. For gas-fired and electric storage water heaters, DOE chose averages based on the 

values in the middle of the range for the identified sources: 12 years for gas and 14 years for 

electric. For a minimum lifetime, DOE used seven years for gas-fired storage water heaters, 

which is the value given by Appliance magazine, and six years for electric storage water heaters.c 

For oil-fired storage water heaters, DOE used the average, minimum and maximum lifetime 

values from the 2001 water heater rulemaking. For gas-fired instantaneous water heaters, DOE 

used 20 years as the average lifetime based on the estimates in Table 8.7.1. 

For each product class, DOE characterized the product lifetime using a Weibull 

probability distribution that ranged from the minimum to maximum lifetime estimates shown in 

the table. The analysis assumes that the lifetime distributions are the same for all energy 

efficiency levels within each product class. 

Some advanced water heater designs may apply design options that effectively increase or decrease the lifetime of 

the equipment. For example, gas water heater designs that utilize electricity may incorporate electrical anodes that 

may prolong the lifetime of the water heater heat exchanger. 

8-45


c 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.7.1 Water Heaters: Product Lifetime Estimates and Sources


Typical Lifetime or Range (years) Source 

Gas-Fired Storage 

13 U.S. Department of Energy33 

11 to 13 National Association of Home Builders34 

13 American Council for an Energy Efficient Economy 35 

Average =11; Low = 7; High = 15 Appliance magazine29 

5 to 13 Residential Water Heaters Final Rule 200136 

13 DEER37 

Electric Storage 

13 U.S. Department of Energy33 

14 National Association of Home Builders34 

13 American Council for an Energy Efficient Economy35 

Mean = 13; Low = 4; High = 20 Appliance magazine29 

6 to 21 Residential Water Heaters Final Rule 200136 

15 DEER37 

Oil-Fired Storage 

8 American Council for an Energy Efficient Economy35 

5 to 13 Residential Water Heaters Final Rule 200136 

Gas-Fired Instantaneous 

20 DEER37 

20 Low Energy Systems38 

20 National Association of Home Builders39 

15 to 20 Builders Websource40 

20 American Council for an Energy Efficient Economy35 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.7.2 Water Heaters: Average, Minimum, and Maximum Product Lifetimes Used 

in LCC Analysis 

Product Class 

Minimum 

years 

Average 

years 

Maximum 

years 

Gas-Fired/LPG Storage 7 12 20 

Electric Storage 6 14 20 

Oil-Fired Storage 5 9 13 

Gas-Fired Instantaneous 8 20 30 

8.7.2 Direct Heating Equipment 

Limited information is available on the lifetime of direct heating equipment. Therefore, 

8 DOE used the average, minimum and maximum lifetime values from the 1993 TSD, p.1-45, as 

shown in Table 8.7.3. DOE characterized the product lifetime using a Weibull probability 

41 distribution that ranged from the minimum to maximum lifetime.

Table 8.7.3	 Direct Heating Equipment: Average, Minimum, and Maximum Product 

Lifetimes Used in LCC Analysis 

Product Class Category Minimum 

years 

Average 

years 

Maximum 

years 

Gas Wall Fan DHE 10 15 20 

Gas Wall Gravity DHE 10 15 20 

Gas Floor DHE 10 15 20 

Gas Room DHE 10 15 20 

8.7.3 Gas-Fired Pool Heaters 

Table 8.7.4 presents the sources found by DOE to provide estimates of the lifetime of 

gas-fired pool heaters. The available information suggests that LPG-fired pool heaters have a 

lifetime equivalent to that of gas-fired pool heaters. 

Table 8.7.4	 Gas-Fired Pool Heaters: Product Lifetime Estimates and Sources 

Typical Lifetime 

(years) 

Source 

5 U.S. Department of Energy: Energy Efficiency and Renewable 

Energy42 

5 Illinois Propane Gas Association43 

6 Pool Quest44 

10* The Spa Specialist Inc.45 

* Refers to spa heaters. 

8-47 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Based on the information collected, DOE used six years for average lifetime of gas-fired 

pool heaters, and estimated minimum and maximum lifetime values of three and 20 years (Table 

8.7.5). DOE characterized the product lifetime using a Weibull probability distribution that 

ranged from the minimum to maximum lifetime estimates. 

Table 8.7.5	 Gas-Fired Pool Heaters: Average, Minimum, and Maximum Product 

Lifetimes Used in LCC Analysis 

Minimum Average Maximum 

(years) (years) (years) 

3 6 20 

8.8 DISCOUNT RATES 

DOE derived the discount rates for the LCC and PBP analysis from estimates of the 

finance cost of purchasing the considered products. Following financial theory, the finance cost 

of raising funds to purchase appliances can be interpreted as: (1) the financial cost of any debt 

incurred to purchase products, or (2) the opportunity cost of any equity used to purchase 

products. For the residential products, the purchase of products for new homes entails different 

finance costs for consumers than the purchase of replacement products.d Thus, DOE used 

different discount rates for new construction and replacement installations. 

8.8.1 Discount Rate for New Home Products 

New-home products are purchased as part of the home, which is almost always financed 

with a mortgage loan. DOE estimated discount rates for new-housing products using the 

effective real (after-inflation) mortgage rate for homebuyers. This rate corresponds to the interest 

rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation 

(using the Fisher formula).e For example, a six-percent nominal mortgage rate has an effective 

nominal rate of 4.5 percent for a household at the 25-percent marginal tax rate. When adjusted 

for inflation of two percent, the effective real rate becomes 2.45 percent. 

The data source DOE used for mortgage interest rates is the Federal Reserve Board’s 

46 Survey of Consumer Finances (SCF) in 1989, 1992, 1995, 1998, 2001, and 2004. Using the 

appropriate SCF data for each year, DOE adjusted the mortgage interest rate for each relevant 

household in the SCF for mortgage tax deduction and inflation (see Table 8.8.1). In cases where 

the effective interest rate is equal to or below the inflation rate (resulting in a negative real 

interest rate), DOE set the real effective interest rate to zero. 

The average nominal mortgage rate carried by homeowners in these six years was 8.1 

percent. Since the mortgage rates carried by households in these years were established over a 

d For pool heaters, it is not typical for a pool to be included in the price of a new home. Rather, the pool is typically 

installed by the home owner after the purchase. Therefore, DOE considers the appropriate finance cost to be that for 

replacement applications rather than that for new construction applications. 

e Fisher formula is given by: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)] – 1. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
range of time, DOE believes they are representative of rates that may be in effect at the effective 

date of new energy conservation standards. After adjusting for inflation and interest tax 

deduction, effective real interest rates on mortgages across the six surveys averaged 3.2 percent. 

Table 8.8.1 Data Used to Calculate Real Effective Mortgage Rates 

Year 

Average 

Nominal Interest 

Rate (%) 

Inflation Rate 47 

(%) 

Marginal Tax Rate 

Applicable to Mortgage 

Interest 48 (%)* 

Average Real 

Effective Interest 

Rate (%) 

1989 9.7 4.82 23.7 2.5 

1992 9.1 3.01 22.9 3.9 

1995 8.2 2.83 23.8 3.4 

1998 7.9 1.56 23.7 4.4 

2001 7.6 2.85 22.6 3.0 

2004 6.2 2.66 19.6 2.3 

Average 8.1 3.2 

* The values given are the inverse of the marginal tax rate on mortgage interest. 

To account for variation among new home situations, DOE sampled a rate for each 

household from a probability distribution of rates that DOE developed based on the SCF data 

(see Appendix 8-D). 

8.8.2 Discount Rate for Replacement Products 

Households use a variety of methods to finance replacement products. In principle, one 

could estimate the interest rates on the actual financing vehicles used to purchase replacement 

products. The shares of different financing vehicles in total replacement product purchases are 

unknown, however. 

DOE’s approach involves identifying all possible debt or asset classes that might be used 

to purchase replacement products, including household assets that might be affected indirectly.f 

DOE did not include debt from primary mortgages and equity of assets considered non-liquid 

(such as retirement accounts), since these would likely not be affected by replacement product 

purchases. DOE estimated the average shares of the various debt and equity types in the average 

U.S. household equity and debt portfolios using SCF data for 1989, 1992, 1995, 1998, 2001, and 

2004. Table 8.8.2 shows the average shares of each considered type. DOE used the mean share 

of each type across the six years as a basis for estimating the effective finance cost for 

replacement products. 

f An indirect effect would arise if a household sold some assets in order to pay off a loan or credit card debt that 

might have been used to finance the actual appliance purchase. 

8-49


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.8.2 Average Shares of Considered Household Debt and Equity Types


Type 

1989 

SCF (%) 

1992 

SCF (%) 

1995 

SCF (%) 

1998 

SCF (%) 

2001 

SCF (%) 

2004 

SCF (%) 

Mean 

(%) 

Home equity loans 4.3 4.5 2.7 2.8 2.8 4.4 3.6 

Credit cards 1.6 2.1 2.6 2.2 1.7 2.0 2.0 

Other installment loans 2.8 1.7 1.4 1.7 1.1 1.3 1.7 

Other residential loans 4.4 6.9 5.2 4.3 3.1 5.8 4.9 

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.5 

Checking accounts 5.8 4.7 4.9 3.9 3.6 4.2 4.5 

Savings & money market 19.2 18.8 14.0 12.8 14.2 15.1 15.7 

Certificate of deposit (CD) 14.5 11.7 9.4 7.0 5.4 5.9 9.0 

Savings bonds 2.2 1.7 2.2 1.1 1.2 0.9 1.5 

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 10.0 

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 29.1 

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 17.5 

Total 100 100 100 100 100 100 100 

DOE estimated interest or return rates associated with each type of equity and debt. The 

data source for the interest rates for loans, credit cards, and lines of credit is the SCF in 1989, 

1992, 1995, 1998, 2001, and 2004. Table 8.8.3 shows the average nominal rates in each year, and 

the inflation rates used to calculate real rates. For home equity loans, DOE calculated effective 

interest rates in a similar manner as for mortgage rates, since interest on such loans is tax 

deductible. Table 8.8.4 shows the average effective real rates in each year and the mean rate 

across the years. Since the interest rates for each debt carried by households in these years were 

established over a range of time, DOE believes they are representative of rates that may be in 

effect in the 2013-2015 period. 

Table 8.8.3 Average Nominal Interest Rates for Household Debt 

Type 

1989 

SCF (%) 

1992 

SCF (%) 

1995 

SCF (%) 

1998 

SCF (%) 

2001 

SCF (%) 

2004 

SCF (%) 

Mean 

(%) 

Home equity loans 11.5 9.6 9.6 9.8 8.7 5.7 9.2 

Credit cards* - - 14.2 14.5 14.2 11.7 13.6 

Other installment loans 9.0 7.8 9.3 7.8 8.7 7.4 8.3 

Other residential loans 8.8 7.6 7.7 7.7 7.5 6.0 7.5 

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 12.5 

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 

* No interest rate data were available for credit cards in 1989 or 1992. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.8.4 Average Real Effective Interest Rates for Household Debt Types


Type 

1989 

SCF (%) 

1992 

SCF (%) 

1995 

SCF (%) 

1998 

SCF (%) 

2001 

SCF (%) 

2004 

SCF (%) 

Mean 

(%) 

Home equity loans 3.8 4.3 4.4 5.8 3.8 1.9 4.0 

Credit cards* - - 11.0 12.7 11.1 9.1 11.0 

Other installment loans 4.9 5.8 7.0 6.6 6.1 5.4 6.0 

Other residential loans 4.0 4.7 4.8 6.0 4.6 3.3 4.6 

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 8.7 

* No interest rate data were available for credit cards in 1989 or 1992. 

To account for variation among households, DOE sampled a rate for each household 

from a distribution of rates for each of the above debt classes. DOE developed a probability 

distribution of interest rates for each debt class based on the SCF data (see Appendix 8-D). 

Similar rate data are not available from the SCF for the asset types, so DOE derived data 

for these classes from national-level historical data. The interest rates associated with certificates 

49 50 51 of deposit (CDs), savings bonds, and bonds (AAA corporate bonds) are from Federal 

Reserve Board time-series data covering 1977–2007. Rates on savings and money market 

52 accounts are from Cost of Savings Index data covering 1984–2007. The rates for stocks are the 

53 annual returns on the Standard and Poor’s (S&P) 500 in the 1977–2007 period. The mutual 

fund rates are a weighted average of the stock rates (two-thirds weight) and the bond rates (onethird weight) in each year of the 1977–2007 period. DOE adjusted the nominal rates to real rates 

using the annual inflation rate in each year. DOE estimated real rates on checking accounts to be 

zero. Average nominal and real interest rates for the classes of assets are shown in Table 8.8.5. 

Since the interest and return rates for each asset type cover a range of time, DOE believes they 

are representative of rates that may be in effect in the 2013-2015 period. 

Table 8.8.5 Average Nominal and Real Interest Rates for Household Equity Types 

Type Average Nominal Rate (%) Average Real Rate (%) 

Checking accounts - 0.0 

Savings and money market 5.4 2.3 

CDs 6.8 2.4 

Savings bonds 7.8 3.4 

Bonds 8.6 4.1 

Stocks 13.2 8.6 

Mutual funds 11.4 6.8 

To account for variation among households, DOE sampled a rate for each household 

from a distribution of rates for each of the above asset types. DOE developed a normal 

probability distribution of interest rates for each asset type by using the mean value and standard 

deviation from the distribution (see Appendix 8-D). 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.8.6 summarizes the mean real effective rates of each type of equity or debt. DOE 

determined the average share of each debt and asset type using SCF data for 1989, 1992, 1995, 

1998, 2001, and 2004. Each year of SCF data provides the debt and asset shares for U.S. 

households. DOE averaged the debt and asset shares over the six years of survey data to arrive at 

the shares shown in Table 8.8.6 below. The average rate across all types of household debt and 

equity, weighted by the shares of each class, is 5.5 percent. 

Table 8.8.6	 Shares and Interest or Return Rates Used for Household Debt and Equity 

Types 

Type 

Average Share of Household 

Debt plus Equity (%)* 

Mean Effective Real Rate 

(%)** 

Home equity loans 3.6 4.0 

Credit cards 2.0 11.0 

Other installment loans 1.7 6.0 

Other residential loans 4.9 4.6 

Other line of credit 0.5 8.7 

Checking accounts 4.5 0.0 

Savings and money market accounts 15.7 2.3 

CDs 9.0 2.4 

Savings bonds 1.5 3.4 

Bonds 10.0 4.1 

Stocks 29.1 8.6 

Mutual funds 17.5 6.8 

Total/Weighted-average discount rate 100 5.5 

* Not including primary mortgage or retirement accounts.


** Adjusted for inflation and, for home equity loans, loan interest tax deduction.


8.9 EFFECTIVE DATE OF ENERGY CONSERVATION STANDARDS 

The effective date is the future date when a new energy conservation standard becomes 

operative. A final rule for the products being considered for this energy conservation standards 

rulemaking is scheduled for completion in 2010. Therefore, the effective date of any new energy 

conservation standards for these products will be three years after the final rule is published for 

gas-fired pool heaters and direct heating equipment (2013), and five years after the final rule is 

published for water heaters (2015). DOE calculated the LCC for all consumers as if they each 

would purchase a new product in the year the energy conservation standard takes effect. 

8.10 PRODUCT ENERGY EFFICIENCY IN THE BASE CASE 

For each product class, DOE analyzed a number of energy efficiency levels greater than 

the baseline energy efficiency level. However, some consumers already purchase products with 

energy efficiencies greater than the baseline levels. Thus, to accurately estimate the percentage 

of consumers that would be affected by a standard at a particular efficiency level, DOE took into 

account the distribution of product energy efficiencies that consumers are expected to purchase 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
under the base case (i.e., the case without new energy conservation standards). In other words, 

rather than analyzing the impacts of a particular standard level assuming that all consumers are 

currently purchasing products at the baseline level, DOE conducted the analysis by taking into 

account the full breadth of product energy efficiencies that consumers are expected to purchase 

under the base case. 

As noted in section 8.1.1, DOE’s approach for conducting the LCC analysis for heating 

products relied on developing samples of households that use each of the products, and using a 

Monte Carlo simulation technique to perform the LCC calculations on the households in the 

sample. DOE assigned each household in the sample a unique product energy efficiency taken 

from the estimated distribution of product energy efficiencies in the effective year. The energy 

efficiency distributions used for each heating product are presented below. 

8.10.1 Water Heaters 

To estimate the market shares of different water heater energy efficiency levels in the 

54 base case, DOE began with fractions based on data for recent years provided by AHRI. Since 

these data did not cover all of the energy efficiency levels under consideration, DOE 

supplemented them with data on the number of water heater models at different energy 

efficiency levels, as given in the March 2007 GAMA directory for gas-fired storage water 

55 heaters, electric storage water heaters, and oil-fired storage water heaters, as well as March 

56 57 2008 GAMA directory and June 2007 FTC Directory for gas-fired instantaneous water 

heaters. DOE then took account for the estimated market impact of the new ENERGY STAR 

58 efficiency levels for water heaters. The requirements that become effective in 2010 set the 

following minimum Energy Factors for ENERGY STAR designation: 0.80 EF for gas-fired 

storage water heaters and 2.20 EF for electric storage water heaters. These levels correspond to 

the MaxTech efficiency levels considered in this rulemaking. DOE estimated that the market 

penetrations of these products would be half of the goals set by the ENERGY STAR program. 

The resulting market penetration in 2015 is 2.5 percent for gas-fired storage water heaters and 5 

percent for electric storage water heaters. 

Table 8.10.1 presents the market shares of the energy efficiency levels in the base case 

for the four water heater product classes that DOE considered. These market shares represent the 

products that households would purchase in the year 2015 in the absence of new energy 

conservation standards. 

8-53


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.10.1 Water Heaters: Base Case Energy Efficiency Market Shares


Energy 

Efficiency 

Gas-Fired Storage Electric Storage Oil-Fired Storage Gas-Fired 

Instantaneous 

Level EF Market Share 

(%)* EF Market Share 

(%)* EF Market Share 

(%)* EF Market Share 

(%)* 

Baseline 0.59 82.5 0.90 36.2 0.53 30 0.62 0 

1 0.62 5.6 0.91 25.6 0.54 0 0.69 0 

2 0.63 2.7 0.92 8.7 0.56 0 0.78 0.6 

3 0.64 1.4 0.93 19.5 0.58 0 0.80 13.1 

4 0.65 1.5 0.94 2.5 0.60 20 0.82 57.0 

5 0.66 3.8 0.95 2.5 0.62 30 0.84 14.6 

6 0.77 2.5 2.20 5.0 0.66 10 0.85 11.7 

7 0.68 10 0.92 2.9 

100% 100% 100% 100% 

* The shares are for 40-gal GSWH, 50-gal ESWH, and 32-gal OSWH. 

8.10.2 Direct Heating Equipment 

Very little is known regarding the distribution of direct heating equipment energy 

efficiencies that consumers in the United States currently purchase. To estimate the market 

shares of different energy efficiency levels in the base case, DOE used data on the number of 

direct heating equipment models at different energy efficiency levels, as given in the March 2007 

55 GAMA directory. The market shares in Table 8.10.2 represent the products that households 

would purchase in the year 2013 in the absence of new energy conservation standards. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.10.2 Direct Heating Equipment: Energy Efficiency Market Shares in the Base 

Case 

Energy 

Efficiency 

Level 

Gas Wall Fan Gas Wall Gravity Gas Floor Gas Room 

AFUE 

(%) 

Market 

Share 

(%) 

AFUE 

(%) 

Market 

Share 

(%) 

AFUE 

(%) 

Market 

Share 

(%) 

AFUE 

(%) 

Market 

Share 

(%) 

Baseline 74 48 64 46 57 22 64 40 

1 75 12 66 21 58 78 65 25 

2 76 19 68 33 61 0 66 15 

3 77 19 71 0 62 0 67 11 

4 80 2 72 0 65 0 68 5 

5 75 0 78 0 70 2 

6 78 2 

7 93 0 

100% 100% 100% 100% 

8.10.3 Gas-Fired Pool Heaters 

Data on the distribution of gas-fired pool heater shipments by energy efficiency level are 

not available. To estimate the market shares of different energy efficiency levels in the base case, 

DOE used data on the number of gas-fired pool heater models at different energy efficiency 

59 levels given in the May 2007 FTC directory. The market shares in Table 8.10.3 represent the 

products at each efficiency level that households would purchase in the year 2013 in the absence 

of new energy conservation standards by ignition type. 

Table 8.10.3	 Gas-Fired Pool Heaters: Energy Efficiency Market Share by Ignition Type in 

the Base Case 

Energy Efficiency 

Level 

Thermal 

Efficiency (%) 

Market Share 

Pilot Light (%) Electronic 

Ignition (%) Total (%) 

Baseline 78 0 0 1 

1 79 5 8 13 

2 81 5 16 21 

3 82 13 20 33 

4 83 7 7 14 

5 84 0 12 12 

6 86 0 6 6 

7 90 0 0 0 

8 95 0 1 1 

Total 29 71 100 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.11 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS 

This section presents the LCC and PBP results for the three types of heating products. As 

discussed in section 8.1.1, DOE’s approach for conducting the LCC analysis relied on 

developing samples of households that use each of the products. DOE also characterized the 

uncertainty of many of the inputs to the analysis with probability distributions. DOE used a 

Monte Carlo simulation technique to perform the LCC calculations on the households in the 

sample. For each set of sample households using the products in each product class, DOE 

calculated the average LCC and LCC savings and the median and average PBP for each of the 

potential standard levels. 

DOE calculated LCC savings and PBPs at each efficiency level relative to the base case 

products that it assigned to the households. For some households, DOE assigned base case 

products that are more energy efficient than some of the standard levels. If a household was 

assigned a product energy efficiency that is greater than or equal to the energy efficiency of the 

standard level under consideration, the LCC calculation would reveal that this household is not 

impacted by an increase in product energy efficiency that is equal to the standard level. For that 

reason, the average LCC impacts are not equal to the difference between the LCC of a specific 

standard level and the LCC of the baseline products. 

In the subsections below, DOE presents figures showing the distribution of LCCs in the 

base case for each product class. Also presented below for a specific standard level are figures 

showing the distribution of LCC impacts and the distribution of PBPs. The figures are presented 

as frequency charts that show the distribution of LCCs, LCC impacts, and PBPs with their 

corresponding probability of occurrence. DOE generated the figures for the distributions from a 

Monte Carlo simulation run based on 10,000 samples. 

LCC and PBP calculations were performed 10,000 times on the sample of households 

established for each residential product. Each LCC and PBP calculation was performed on a 

single household that was selected from the sample. The selection of a household was based on 

its weight (i.e., how representative a particular household is of other households in the 

distribution). Each LCC and PBP calculation also sampled from the probability distributions that 

DOE developed to characterize many of the inputs to the analysis. 

For each standard level, DOE calculated the share of households with a net LCC benefit, 

with a net LCC cost, and with no impact. DOE considered a household to receive no impact at a 

given standard level if DOE assigned it base case products that are the same as or are more 

energy efficient than the standard level. To illustrate the range of LCC and PBP impacts among 

the sample households, the sections below present figures that provide such information for each 

product class. 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.11.1 Water Heaters 

8.11.1.1 Base Case LCC Distributions 

Figures 8.11.1, 8.11.2, 8.11.3 and 8.11.4 show the frequency charts for the base case LCC 

for the water heater product classes that DOE analyzed. The figures show the mean LCC of the 

base case distribution as well as the full range of LCCs. 

Frequency Chart 

$ 

Mean=$2,984 .000 

.007 

.013 

.020 

.026 

0 

65 

130 

195 

260 

$1,243 $2,578 $3,913 $5,248 $6,583 

10,000Trials 9,752 Displayed 

Forecast:LCC- level 0 

Figure 8.11.1 Gas-Fired Storage Water Heaters: Base Case LCC 

Distribution 

Frequency Chart 

$ 

Mean= $3,520 .000 

.006 

.012 

.018 

.024 

0 

60.5 

121 

181.5 

242 

$803 $2,752 $4,702 $6,652 $8,602 

10,000Trials 9,750 Displayed 

Forecast:LCC- level 0 

Figure 8.11.2 Electric Storage Water Heaters: Base Case LCC 

Distribution 

8-57


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Frequency Chart 

$ 

Mean= $4,996 

.000 

.006 

.012 

.018 

.023 

0 

58.5 

117 

175.5 

234 

$2,763 $4,047 $5,332 $6,616 $7,901 

10,000 Trials 9,816 Displayed 

Forecast: LCC- level 0 

Figure 8.11.3 Oil-Fired Storage Water Heaters: Base Case LCC 

Distribution 

Frequency Chart 

$ 

Mean=$5,787 

.000 

.006 

.012 

.018 

.024 

0 

60 

120 

180 

240 

$2,375 $4,666 $6,956 $9,246 $11,536 

10,000 Trials 9,746 Displayed 

Forecast: LCC- level 0 

Figure 8.11.4	 Gas-Fired Instantaneous Water Heaters: Base Case 

LCC Distribution 

8.11.1.2 Standard-Level Distributions of LCC Impacts 

Figures 8.11.5 is an example of a frequency chart showing the distribution of LCC 

differences for the case of Efficiency Level 2 for gas-fired storage water heaters. The large 

‘spike’ in the left part of the figure represents the percentage of households that are not impacted 

by an increase in the standard level, i.e., households that purchase gas-fired storage water heaters 

with energy efficiencies greater than or equal to the standard level. DOE can generate a 

frequency chart like the one shown in Figure 8.11.5 for every standard level. Figures 8.11.6 

through 8.11.9 are examples of frequency charts showing the distribution of payback periods for 

the other water heater product classes. 

8-58


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Frequency Chart 

$ 

Mean= $115 

.000 

.030 

.059 

.089 

.118 

0 

295.5 

591 

886.5 

1182 

$0 $89 $178 $267 $355 

10,000 Trials 9,788 Displayed 

Forecast: LCCSaving - level 2 

Figure 8.11.5 Gas-Fired Storage Water Heaters: Distribution of


LCC Impacts for Efficiency Level 2


Frequency Chart 

$ 

Mean= $28 

.000 

.021 

.042 

.063 

.084 

0 

210.7 

421.5 

632.2 

843 

($339) ($154) $30 $215 $400 

10,000 Trials 9,960 Displayed 

Forecast: LCCSaving - level 4 

Figure 8.11.6 Electric Storage Water Heaters: Distribution of


LCC Impacts for Efficiency Level 4


8-59


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Frequency Chart 

$ 

Mean= $121 

.000 

.113 

.225 

.338 

.451 

0 

4509 

$0 $136 $271 $407 $543 

10,000 Trials 9,880 Displayed 

Forecast: LCCSaving - level 5 

Figure 8.11.7 Oil-Fired Storage Water Heaters: Distribution of 

LCC Impacts for Efficiency Level 5 

Frequency Chart 

$ 

Mean= $14 

.000 

.078 

.157 

.235 

.314 

0 

784.7 

3139 

($102) ($44) $13 $71 $128 

10,000 Trials 9,711 Displayed 

Forecast: LCCSaving - level 5 

Figure 8.11.8	 Gas-Fired Instantaneous Water Heaters: 

Distribution of LCC Impacts for Efficiency Level 5 

8.11.1.3 Standard-Level PBP Distributions 

Figure 8.11.9 is an example of a frequency chart showing the distribution of payback 

periods for Efficiency Level 2 for gas-fired storage water heaters. DOE can generate a frequency 

chart like the one shown in Figure 8.11.9 for every Efficiency Level within each product class. 

Figures 8.11.10 through 8.11.12 are examples of frequency charts showing the distribution of 

payback periods for the other water heater product classes. The large ‘spike’ at the left in Figures 

8.11.11 and 8.11.12 indicates the percentage of households with oil-fired storage water heaters 

and gas-fired instantaneous water heaters that are not impacted by an increase in the standard 

level, i.e., households that already use oil-fired storage water heaters and gas-fired instantaneous 

water heaters with energy efficiencies equal to or greater than Efficiency Level 5. 

8-60


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast:Payback- level 2


10,000 Trials Frequency Chart 8,717 Displayed 

.060 604 

.045 453 

.030 302 

.015 151 

.000 0 

-1.8 -0.1 1.7 3.5 5.3 

Figure 8.11.9	 Gas-Fired Storage Water Heaters: Distribution of


PBPs for Efficiency Level 2


Frequency Chart 

.000 

.033 

.066 

.099 

.133 

0 

331.2 

662.5 

993.7 

1325 

-2.0 8.2 18.4 28.7 38.9 

10,000 Trials 9,774 Displayed 

Forecast: Payback- level 4 

Figure 8.11.10 Electric Storage Water Heaters: Distribution of 

PBPs for Efficiency Level 4 

8-61


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Frequency Chart 

.000 

.113 

.225 

.338 

.451 

0 

4509 

-2.0 -0.6 0.7 2.1 3.4 

10,000 Trials 9,999 Displayed 

Forecast: Payback- level 5 

Figure 8.11.11 Oil-Fired Storage Water Heaters: Distribution of 

PBPs for Efficiency Level 5 

Frequency Chart 

.000 

.073 

.146 

.219 

.293 

0 

731.5 

2926 

-2.0 8.2 18.4 28.6 38.8 

10,000 Trials 9,815 Displayed 

Forecast: Payback- level 5 

Figure 8.11.12	 Gas-Fired Instantaneous Water Heaters: 

Distribution of PBPs for Efficiency Level 5 

8.11.1.4 LCC and PBP Results 

Tables 8.11.1, 8.11.2, 8.11.3 and 8.11.4 show the LCC and PBP results for water heaters. 

As mentioned earlier, for some households, DOE assigned products in the base case that are 

more energy efficient than some of the energy efficiency levels under consideration. For that 

reason, the average LCC impacts are not equal to the difference between the LCC of a specific 

energy efficiency level and the LCC of the baseline product. For example, in the case of gasfired storage water heaters, Efficiency Level 2 (0.63 energy factor) shows an average LCC 

savings of $116. Note that for this level, six percent of the housing units are estimated to 

purchase a water heater at this level or higher in the base case, and thus have zero savings (no 

impact) due to the standard. If one compares the LCC of the baseline design to Efficiency Level 

2, then the average LCC savings are $138. But since the base case includes households that 

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EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
purchase a unit with higher efficiency than the baseline, the average savings over all of the 

households is less than $138. Similarly with regard to the PBPs shown below, DOE determined 

the median and average values by excluding the percentage of households not impacted by the 

energy conservation standard. 

For gas-fired storage water heaters, Efficiency Level 2 (0.63 energy factor) has the 

highest average LCC savings and a median PBP of 1.9 years.g For electric storage water heaters, 

Efficiency Level 6 (2.20 energy factor) has the highest average LCC savings and a median PBP 

of 8.3 years. For oil-fired storage water heaters, Efficiency Level 5 (0.62 energy factor) has the 

highest average LCC savings and a median PBP of 1.7 years. For gas-fired instantaneous water 

heaters, Efficiency Level 6 (0.85 energy factor) has the highest average LCC savings and a 

median PBP of 12 years. 

Table 8.11.1 Gas-Fired Storage Water Heaters: LCC and PBP Results 

Efficiency 

Level ID 

Energy 

Factor 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 0.59 967 1,978 2,945 - - - - - -

1 0.62 982 1,849 2,830 95 0% 18% 82% 1.1 1.1 

2 0.63 998 1,808 2,807 116 0% 11% 89% 1.9 2.0 

3 0.64 1,506 1,829 3,335 -368 73% 9% 18% 41.4 54.0 

4 0.65 1,519 1,790 3,309 -343 73% 7% 20% 34.1 43.0 

5 0.66 1,536 1,753 3,288 -324 73% 6% 22% 28.8 32.8 

6 0.77 1,782 1,489 3,271 -307 75% 2% 22% 17.5 18.1 

g Large differences in the average and median values for PBP are due to outliers in the distribution of results. A 

limited number of excessively long PBPs produce an average PBP that is very long. Therefore, in these cases, the 

median PBP is a more representative value to gauge the length of the PBP. 

8-63 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
d

Table 8.11.2 Electric Storage Water Heaters: LCC and PBP Results 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Payback Perio 

(years) 

Households with 

Efficiency 

Level ID 

Energy 

Factor 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Net 

Cost 

No 

Impact 

Net 

Benefit Median Average 

Baseline 0.90 662 2,836 3,498 - - - - - -

1 0.91 674 2,787 3,461 20 0% 46% 54% 2.5 2.6 

2 0.92 682 2,740 3,422 50 0% 23% 77% 2.1 2.1 

3 0.93 709 2,694 3,403 65 9% 18% 73% 2.3 3.9 

4 0.94 759 2,648 3,407 61 18% 7% 75% 2.8 6.9 

5 0.95 786 2,604 3,390 78 18% 6% 76% 3.8 6.7 

6 2.20 1,475 1,759 3,233 229 45% 5% 50% 8.3 22.2 

Table 8.11.3 Oil-Fired Water Heaters: LCC and PBP Results 

Efficiency 

Level ID 

Energy 

Factor 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 0.53 1,757 3,238 4,996 - - - - - -

1 0.54 1,771 3,187 4,659 10 0% 73% 27% 2.0 2.0 

2 0.56 1,811 3,089 4,900 30 0% 66% 34% 2.7 2.7 

3 0.58 1,828 2,998 4,826 55 0% 66% 34% 2.1 2.2 

4 0.60 1,820 2,914 4,734 89 0% 63% 37% 1.4 1.3 

5 0.62 1,843 2,834 4,678 121 0% 45% 55% 1.7 1.7 

6 0.66 2,075 2,722 4,797 23 36% 18% 47% 5.1 10.4 

7 0.68 2,227 2,671 4,898 -68 53% 9% 38% 8.6 13.1 

Table 8.11.4 Gas-Fired Instantaneous Water Heaters: LCC and PBP Results


Efficiency 

Level ID 

Energy 

Factor 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 0.62 1,529 4,264 5,793 - - - - - -

1 0.69 1,549 4,075 5,623 0 0% 100% 0% -2.0 -2.0 

2 0.78 1,724 3,461 5,185 0 0% 100% 0% -2.0 -2.0 

3 0.80 1,867 3,407 5,274 -1 1% 99% 0% 40.7 56.7 

4 0.82 1,902 3,353 5,255 2 6% 86% 8% 11.3 14.9 

5 0.84 1,938 3,301 5,239 14 30% 29% 41% 11.3 14.5 

6 0.85 1,955 3,276 5,231 20 37% 14% 49% 12.0 14.8 

7 0.92 2,258 3,117 5,375 -119 79% 3% 18% 25.2 35.8 

8-64


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Figures 8.11.13 through 8.11.16 show the range of LCC savings for the standard levels 

for the water heater product classes. For each standard level, the top and the bottom of the box 

indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the 

median; 50 percent of the households have LCC savings above this value. The ‘whiskers’ at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. Figures 8.11.17 through 8.11.20 show the range of 

PBPs for the four water heater product classes. 

LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-800 

-600 

-400 

-200 

0 

200 

400 

Standing Pilot, 

1.5” ins 

Standing Pilot, 

2” Ins 

Electronic 

ignition, 1” ins, 

pow er vent 

Electronic 

ignition, 1.5” 

ins, pow er 

vent 

Electronic 

ignition, 2” ins, 

pow er vent 

Condensing, 2” 

ins, pow er 

vent 

median 

Average 

Figure 8.11.13 Range of LCC Savings for Gas-Fired Storage Water 

Heaters 

8-65


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-1000 

-500 

0 

500 

1000 

1500 

2000 

2" ins 2.25"ins 2.5" ins 3" ins 4" ins Heat Pump 

Water Heater 

median 

Average 

Figure 8.11.14 Range of LCC Savings for Electric Storage Water 

Heaters 

LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-500 

-400 

-300 

-200 

-100 

0 

100 

200 

300 

400 

500 

600 

Electronic 

Ignition, 1.5” 

Ins 

(fiberglass) 

Electronic 

Ignition, 2” 

Ins 

(fiberglass) 

Electronic 

Ignition, 2.5” 

Ins 

(fiberglass) 

Electronic 

Ignition, 2” 

Ins (foam) 

Electronic 

Ignition, 2.5” 

Ins (foam) 

Electronic 

Ignition, 1” 

Ins 

(f iberglass), 

enhanced 

flue baffle 

Electronic 

Ignition, 1” 

Ins (foam), 

enhanced 

flue baffle 

median 

Average 

Figure 8.11.15 Range of LCC Savings for Oil-Fired Storage Water 

Heaters 

8-66


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-400 

-300 

-200 

-100 

0 

100 

200 

300 

Standing 

Pilot, 

Improved HX 

Electronic 

Ignition, 

Improved HX 

Electronic 

Ignition, 

Induced 

Draft (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draf t (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draft (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draft (Pow er 

Vent) 

Condensing 

median 

Average 

Figure 8.11.16 Range of LCC Savings for Gas-Fired Instantaneous 

Water Heaters 

Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

20 

40 

60 

80 

100 

120 

140 

Standing Pilot, 

1.5” ins 

Standing Pilot, 

2” Ins 

Electronic 

ignition, 1” ins, 

pow er vent 

Electronic 

ignition, 1.5” 

ins, pow er 

vent 

Electronic 

ignition, 2” ins, 

pow er vent 

Condensing, 2” 

ins, pow er 

vent 

median 

Average 

Figure 8.11.17	 Range of Payback Periods for Gas-Fired Storage 

Water Heaters 

8-67 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

20 

40 

60 

80 

2" ins 2.25"ins 2.5" ins 3" ins 4" ins Heat Pump 

Water Heater 

median 

Average 

Figure 8.11.18 Range of Payback Periods for Electric Storage 

Water Heaters 

Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

10 

20 

30 

40 

50 

Electronic 

Ignition, 1.5” 

Ins 

(f iberglass) 

Electronic 

Ignition, 2” 

Ins 

(f iberglass) 

Electronic 

Ignition, 2.5” 

Ins 

(fiberglass) 

Electronic 

Ignition, 2” 

Ins (f oam) 

Electronic 

Ignition, 2.5” 

Ins (f oam) 

Electronic 

Ignition, 1” 

Ins 

(fiberglass), 

enhanced 

flue baff le 

Electronic 

Ignition, 1” 

Ins (foam), 

enhanced 

flue baff le 

median 

Average 

Figure 8.11.19 Range of Payback Periods for Oil-Fired Storage 

Water Heaters 

8-68


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

30 

60 

90 

120 

150 

Standing 

Pilot, 

Improved HX 

Electronic 

Ignition, 

Improved HX 

Electronic 

Ignition, 

Induced 

Draft (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draft (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draft (Pow er 

Vent) 

Electronic 

Ignition, 

Improved 

HX, Induced 

Draf t (Pow er 

Vent) 

Condensing 

median 

Average 

Figure 8.11.20	 Range of Payback Periods for Gas-Fired


Instantaneous Water Heaters


8.11.2 Gas-Fired Pool Heaters 

Figure 8.11.21 shows the frequency chart for the base case LCC for gas-fired pool 

heaters. The figure shows the mean LCC of the base case distribution as well as the full range of 

LCCs. 

Forecast: Life Cycle Cost - level00 

10,000 Trials Frequency Chart 9,667 Displayed 

Mean= $7,300 

.000 

.012 

.024 

.036 

.048 

0 

119.5 

239 

358.5 

478 

$1,884 $8,390 

$ 

$14,895 $21,401 $27,907 

Figure 8.11.21 Gas-Fired Pool Heaters: Base Case LCC 

Distribution 

8-69


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.11.2.2 Standard-Level Distributions of LCC Impacts 

Figure 8.11.22 is an example of a frequency chart showing the distribution of LCC 

differences for the case of standard level 4 for gas-fired pool heaters. The large ‘spike’ in Figure 

8.11.22 represents the percentage of households that are not impacted by an increase in the 

standard level, i.e., households that already use pool heaters with energy efficiencies greater than 

or equal to the standard level. DOE can generate a frequency chart like the one shown in Figure 

8.11.22 for every standard level. 

Forecast: LCCSavings - level04 

10,000 Trials Frequency Chart 9,706 Displayed 

Mean= $39 

.000 

.083 

.165 

.248 

.330 

0 

825 

3300 

($190) $43 $277 $511 $745 

$ 

Figure 8.11.22	 Gas-Fired Pool Heaters: Distribution of LCC 

Impacts for Efficiency Level 4 

8.11.2.3 Standard-Level PBP Distributions 

Figure 8.11.23 is an example of a frequency chart showing the distribution of payback 

periods of Efficiency Level 4 for gas-fired pool heaters. The large ‘spike’ at the left indicates the 

percentage of households with pool heaters that are not impacted by an increase in the standard 

level, i.e., households that purchase pool heaters with energy efficiencies equal to or greater than 

then standard level. DOE can generate a frequency chart like the one shown in Figure 8.11.23 for 

every standard level. 

8-70


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast: Payback- level04 

10,000 Trials Frequency Chart 9,721 Displayed 

.322 

-2.0 12.9 27.7 42.6 57.5 

3224 

.242 

.161 

.081 806 

.000 0 

$ 

Figure 8.11.23	 Gas-Fired Pool Heaters: Distribution of PBPs for 

Efficiency Level 4 

8.11.2.4 LCC and PBP Results 

Table 8.11.5 shows the LCC and PBP results for gas-fired pool heaters. As mentioned 

earlier, for some households, DOE assigned base case products that are more energy efficient 

than some of the standard levels. For that reason, the average LCC impacts are not equal to the 

difference between the LCC of a specific standard level and the LCC of the baseline products. 

Efficiency level 4 (83 percent thermal efficiency) shows an average LCC savings of $39. Note 

that for this level, 32 percent of the housing units are estimated to have already purchased a pool 

heater in the base case at this level and thus have zero savings (no impact) due to the energy 

conservation standard. If one compares the LCC of the baseline unit at 78 percent efficiency to 

the Level 4 case at 83 percent efficiency, then the average LCC savings are $162. But since the 

base case includes a significant number of households that are not impacted by the energy 

conservation standard, the average savings over all of the households is $39. Similarly with 

regard to the PBPs shown below, DOE determined the median and average values by excluding 

the percentage of households not impacted by the energy conservation standard. 

For pool heaters, the average LCC savings are roughly similar for Efficiency Levels 4 

through 6, but the median PBP is lowest in Efficiency Level 6. 

8-71


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Table 8.11.5 Gas-Fired Pool Heaters: LCC and PBP Results


Efficiency 

Level ID 

Thermal 

Efficiency 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 78% 2,335 4,965 7,300 - - - - - -

1 79% 2,356 4,905 7,261 0 0% 99% 1% 2.8 3.8 

2 81% 2,380 4,790 7,169 13 2% 86% 12% 1.7 2.3 

3 82% 2,428 4,734 7,163 14 19% 65% 15% 5.4 7.8 

4 83% 2,567 4,570 7,138 39 43% 32% 24% 9.2 16.0 

5 84% 2,620 4,518 7,137 36 53% 19% 28% 7.5 11.3 

6 86% 2,670 4,464 7,133 40 62% 7% 31% 5.5 7.7 

7 90% 3,060 4,273 7,333 -157 84% 1% 15% 10.3 14.0 

8 95% 3,267 4,057 7,324 -148 82% 1% 17% 9.0 12.5 

Figure 8.11.24 shows the range of LCC savings for all of the standard levels considered 

for gas-fired pool heaters. For each standard level, the top and the bottom of the box indicate the 

75th and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 

percent of the households have LCC savings above this value. The ‘whiskers’ at the bottom and 

the top of the box indicate the 5th and 95th percentiles. The small box shows the average LCC 

savings for each standard level. Figure 8.11.25 shows the range of PBPs. 

LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-800 

-400 

0 

400 

800 

1200 

Improved H X Impro ved H X Impro ved H X Po wer 

Venting 

P o wer 

Venting, 

impro ved HX 

Sealed 

C o mbustio n, 

improved HX 

Sealed 

co mbust io n, 

condensing 

Sealed 

co mbust io n, 

co ndensing, 

impro ved H X 

median 

Average 

Figure 8.11.24 Range of LCC Savings for Gas-Fired Pool Heaters


8-72


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

10 

20 

30 

40 

50 

Improved HXImproved HXImproved HX Power 

Venting 

Pow er 

Venting, 

improved HX 

Sealed 

Combustion, 

improved HX 

Sealed 

combustion, 

condensing 

Sealed 

combustion, 

condensing, 

improved HX 

median 

Average 

Figure 8.11.25	 Range of Payback Periods in Years for Gas-Fired 

Pool Heaters 

8.11.3 Direct Heating Equipment 

8.11.3.1 Base Case LCC Distributions 

Figures 8.11.26 through 8.11.29 show the frequency charts for the base case LCC for the 

four direct heating equipment product classes. The figures show the full range of LCCs of the 

base case distribution. 

Forecast:Life Cycle Cost - level0 

10,000 Trials Frequency Chart 9,600 Displayed 

.041 

Mean=$6,294	

408 

.031 306 

.020 204 

.010 102 

.000 0 

$2,074 $6,030 $9,986 $13,941 $17,897 

$ 

Figure 8.11.26 Gas Wall Fan DHE: Base Case LCC Distribution 

8-73


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast:Life Cycle Cost - level0 

10,000 Trials Frequency Chart 9,594 Displayed 

Mean= $6,301 

.000 

.010 

.020 

.030 

.040 

0 

100.2 

200.5 

300.7 

401 

$1,745 $6,123 

$ 

$10,501 $14,879 $19,257 

Figure 8.11.27 Gas Wall Gravity DHE: Base Case LCC 

Distribution 

Forecast:Life Cycle Cost - level0 

10,000 Trials Frequency Chart 9,679 Displayed 

.045 

Mean=$6,664 

449 

.034 336.7 

.022 224.5 

.011 112.2 

.000 0 

$2,234 $6,638 $11,043 $15,448 $19,852 

$ 

Figure 8.11.28 Gas Floor DHE: Base Case LCC Distribution 

8-74


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast:Life Cycle Cost - level0 

10,000 Trials Frequency Chart 9,679 Displayed 

.043 

Mean=$5,803 

429 

.032 321.7 

.021 214.5 

.011 107.2 

.000 0 

$1,640 $5,555 $9,470 $13,385 $17,300 

$ 

Figure 8.11.29 Gas Room DHE: Base Case LCC Distribution 

8.11.3.2 Standard-Level Distributions of LCC Impacts 

Figures 8.11.30 is an example of a frequency charts showing the distribution of LCC 

differences for the case of standard level 3 for gas wall fan DHE. DOE can generate a frequency 

chart like the one shown in Figure 8.11.30 for every standard level within each product class. 

Similarly, Figures 8.11.31 through 8.11.33 are examples of frequency charts showing the 

distribution of LCC differences for different standard levels. 

8-75


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast: LCCSavings - level 3 

10,000 Trials Frequency Chart 9,676 Displayed 

Mean= $95 

.000 

.059 

.118 

.176 

.235 

0 

587.7 

2351 

($151) $28 $206 $385 $564 

$ 

Figure 8.11.30	 Gas Wall Fan DHE: Distribution of LCC Impacts 

for Efficiency Level 3 

Forecast: LCCSavings - level 3 

10,000 Trials Frequency Chart 9,683 Displayed 

Mean= $208 

.000 

.014 

.028 

.042 

.056 

0 

141 

282 

423 

564 

($144) $203 

$ 

$549 $896 $1,243 

Figure 8.11.31 Gas Wall Gravity DHE: Distribution of LCC 

Impacts for Efficiency Level 3 

8-76


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast: LCCSavings - level 3 

10,000 Trials Frequency Chart 9,667 Displayed 

Mean= $201 

.000 

.013 

.025 

.038 

.050 

0 

125.5 

251 

376.5 

502 

($90) $196 

$ 

$482 $768 $1,054 

Figure 8.11.32 Gas Floor DHE: Distribution of LCC Impacts for 

Efficiency Level 3 

Forecast: LCCSavings - level 4 

10,000 Trials Frequency Chart 9,681 Displayed 

.113 

Mean=$54	

1133 

.085 849.7 

.057 566.5 

.028 283.2 

.000 0 

($149) $28 $205 $383 $560 

$ 

Figure 8.11.33	 Gas Room DHE: Distribution of LCC Impacts for 

Efficiency Level 4 

8.11.3.3 Standard-Level PBP Distributions 

Figures 8.11.34 through 8.11.37 are examples of a frequency chart for direct heating 

equipment products showing the distribution of payback periods for different standard levels. 

DOE can generate frequency charts like these for every standard level within each product class. 

The large ‘spike’ at the left in Figures 8.11.34 and 8.11.37 indicates the percentage of 

households with gas wall fan DHE and gas room DHE that are not impacted by an increase in the 

standard level, i.e., households that already use gas wall fan DHE and gas room DHE with 

energy efficiencies equal to or greater than standard level 3 or 4. 

8-77


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast:Payback- level 3 

10,000 Trials Frequency Chart 9,655 Displayed 

.214 

-2.0 13.6 29.2 44.8 60.3 

2142 

.161 

.107 

.054 535.5 

.000 0 

$ 

Figure 8.11.34	 Gas Wall Fan DHE: Distribution of PBPs for


Efficiency Level 3


Forecast:Payback- level 3 

10,000 Trials Frequency Chart 9,646 Displayed 

.069 

-1.0 11.8 24.6 37.5 50.3 

687 

.052 515.2 

.034 343.5 

.017 171.7 

.000 0 

$ 

Figure 8.11.35	 Gas Wall Gravity DHE: Distribution of PBPs for


Efficiency Level 3


8-78


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Forecast:Payback- level 3 

10,000 Trials Frequency Chart 9,791 Displayed 

.084 844 

.063 633 

.042 422 

.021 211 

.000 0 

0.4 10.4 20.4 30.4 40.4 

$ 

Figure 8.11.36	 Gas Floor DHE: Distribution of PBPs for Efficiency 

Level 3 

Forecast:Payback- level 4 

10,000 Trials Frequency Chart 9,768 Displayed 

.091 908 

.068 681 

.045 454 

.023 227 

.000 0 

-2.0 19.5 41.0 62.5 84.0 

$ 

Figure 8.11.37	 Gas Room DHE: Distribution of PBPs for Efficiency 

Level 4 

8.11.3.4 LCC and PBP Results 

Tables 8.11.6 through 8.11.9 show the LCC and PBP results for DHE. As mentioned 

earlier, for some households, DOE assigned base case products that are more energy efficient 

than some of the standard levels. For that reason, the average LCC impacts are not equal to the 

difference between the LCC of a specific standard level and the LCC of the baseline products. 

For example, in the case of gas wall fan DHE, energy efficiency level 4 shows an average LCC 

savings of $130. Note that for this level, 50 percent of the housing units are estimated to have 

already purchased gas wall fan DHE of at least 80 percent AFUE in the base case and thus have 

zero savings (no impact) due to the energy conservation standard. If one compares the LCC of 

the baseline at 74 percent AFUE to level 4 at 80 percent AFUE, then the average LCC savings 

are $193. But since the base case includes a significant number of households that are not 

8-79


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
impacted by the energy conservation standard, the average savings over all of the households is 

$130. Similarly with regard to the PBPs shown below, DOE determined the median and average 

values by excluding the percentage of households not impacted by the energy conservation 

standard. 

For gas wall fan DHE, Efficiency Level 4 (80 percent AFUE) has the highest average 

LCC savings and a median PBP of 10.3 years. For gas wall gravity DHE, Efficiency Level 3 (71 

percent AFUE) has the highest average LCC savings and a median PBP of 6.7 years. For gas 

floor DHE, Efficiency Level 5 (78 percent AFUE) has the highest average LCC savings and a 

median PBP of 6.7 years. For gas room DHE, Efficiency Level 7 (93 percent AFUE) has the 

highest average LCC savings and a median PBP of 12.6 years. 

Table 8.11.6 Gas Wall Fan DHE: LCC and PBP Results 

Efficiency 

Level ID AFUE 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 74% 1,769 4,525 6,294 - - - - - -

1 75% 1,830 4,311 6,141 74 3% 44% 52% 3.5 3.8 

2 76% 1,861 4,259 6,121 86 10% 50% 40% 4.5 7.1 

3 77% 1,899 4,209 6,108 95 23% 55% 21% 6.1 13.3 

4 80% 2,023 4,078 6,101 130 48% 50% 2% 10.3 24.4 

Table 8.11.7 Gas Wall Gravity DHE: LCC and PBP Results


Efficiency 

Level ID AFUE 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 64% 1,374 4,972 6,301 - - - - - -

1 66% 1,435 4,796 6,231 32 20% 54% 26% 9.5 15.1 

2 68% 1,452 4,673 6,125 102 16% 33% 51% 4.5 8.7 

3 71% 1,518 4,501 6,019 208 32% 0% 68% 6.7 11.8 

4 72% 1,767 4,352 6,120 107 54% 0% 46% 12.1 18.4 

5 75% 1,893 4,221 6,113 114 60% 0% 40% 13.9 22.7 

8-80


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
1

2

3

4

5

Table 8.11.8 Gas Floor DHE: LCC and PBP Results


Efficiency 

Level ID AFUE 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 57% 2,013 4,652 6,664 - - - - - -

58% 2,046 4,581 6,627 8 10% 78% 12% 8.2 11.4 

61% 2,078 4,385 6,463 172 17% 0% 83% 3.6 6.2 

62% 2,111 4,323 6,434 201 25% 0% 75% 5.0 9.0 

65% 2,360 3,991 6,351 284 31% 0% 69% 8.3 13.2 

78% 2,486 3,414 5,901 735 27% 0% 73% 6.7 12.1 

Table 8.11.9 Gas Room DHE: LCC and PBP Results


Efficiency 

Level ID AFUE 

Life-Cycle Cost (2007$) Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Price 

Average 

Operating 

Cost 

Average 

LCC 

Average 

Savings 

(2007$) 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 64% 1,430 4,373 5,803 - - - - - -

1 65% 1,467 4,315 5,782 8 21% 60% 19% 11.4 16.2 

2 66% 1,502 4,259 5,761 22 34% 35% 31% 11.1 18.7 

3 67% 1,537 4,205 5,741 37 43% 20% 38% 11.7 20.6 

4 68% 1,572 4,152 5,723 54 49% 9% 42% 12.1 21.6 

5 70% 1,807 3,912 5,719 58 53% 4% 44% 11.7 27.9 

6 78% 1,933 3,577 5,510 264 45% 2% 53% 10.1 25.2 

7 93% 2,377 3,066 5,443 330 55% 0% 45% 12.6 25.8 

Figures 8.11.38 through 8.11.41 show the range of LCC savings for the standard levels 

for the direct heating equipment product class category. For each standard level, the top and the 

bottom of the box indicate the 75th and 25th percentiles, respectively. The bar at the middle of the 

box indicates the median; 50 percent of the households have LCC savings above this value. The 

‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th percentiles. The small 

box shows the average LCC savings for each standard level. Figures 8.11.42 through 8.11.45 

show the range of PBPs for the direct heating equipment product class category. 

8-81


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
LCC Savings Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

-200 

-100 

0 

100 

200 

300 

400 

500 

600 

700 

800 

75% - Electronic 

ignition, tw o-speed 

blow er 

76% - Electronic 

ignition, improv ed HX 

77% - Electronic 

ignition, tw o-speed 

blow er, improved HX 

80% - Electronic 

ignition, induc ed draft 

median 

Average 

Figure 8.11.38 Range of LCC Savings for Gas Wall Fan DHE


LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-400 

-200 

0 

200 

400 

600 

800 

1000 

1200 

1400 

58% - Standing 

pilot, improved HX 

61% - Standing 

pilot, improved HX 

62% - Standing 

pilot, improved HX 

65% - Electronic 

ignition, improved 

HX 

78% - Induced 

draft 

median 

Average 

Figure 8.11.39 Range of LCC Savings for Gas Wall Gravity DHE


8-82


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-500 

0 

500 

1000 

1500 

2000 

2500 

3000 

3500 

58% - Standing 

pilot, improved HX 

61% - Standing 

pilot, improved HX 

62% - Standing 

pilot, improved HX 

65% - Electronic 

ignition, improved 

HX 

78% - Induced 

draft 

median 

Average 

Figure 8.11.40 Range of LCC Savings for Gas Floor DHE


LCC Savings Ranges by Efficiency Level 

Median; B ox 25%-75%; Whisker: 5%-95% 

-1000 

-500 

0 

500 

1000 

1500 

2000 

2500 

3000 

65% ­

Standing 

pilot, 

improved HX 

66% ­

Standing 

pilot, 

improved HX 

67% ­

Standing 

pilot, 

improved HX 

68% ­

Standing 

pilot, 

improved HX 

70% ­

Electronic 

ignition 

78% ­

Induced 

draft 

93% ­

Condensing 

median 

Average 

Figure 8.11.41 Range of LCC Savings for Gas Room DHE


8-83


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

20 

40 

60 

80 

100 

120 

58% - Standing pilot, 

improved HX 

61% - Standing pilot, 

improved HX 

62% - Standing pilot, 

improved HX 

65% - Electronic 

ignition, improved HX 

median 

Average 

Figure 8.11.42 Range of Payback Periods for Gas Fan Wall DHE


Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

10 

20 

30 

40 

50 

60 

58% - Standing 

pilot, improved HX 

61% - Standing 

pilot, improved HX 

62% - Standing 

pilot, improved HX 

65% - Electronic 

ignition, improved 

HX 

78% - Induced 

draft 

median 

Average 

Figure 8.11.43 Range of Payback Periods for Gas Wall Gravity 

DHE 

8-84


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

10 

20 

30 

40 

58% - Standing 

pilot, improved HX 

61% - Standing 

pilot, improved HX 

62% - Standing 

pilot, improved HX 

65% - Electronic 

ignition, improved 

HX 

78% - Induced 

draft 

median 

Average 

Figure 8.11.44 Range of Payback Periods for Gas Floor DHE


Payback Period Ranges by Efficiency Level 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

30 

60 

90 

120 

150 

180 

65% ­

Standing 

pilot, 

improved HX 

66% ­

Standing 

pilot, 

improved HX 

67% ­

Standing 

pilot, 

improved HX 

68% ­

Standing 

pilot, 

improved HX 

70% ­

Electronic 

ignition 

78% ­

Induced 

draft 

93% ­

Condensing 

median 

Average 

Figure 8.11.45 Range of Payback Periods for Gas Room DHE


8-85


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.12 REBUTTABLE PAYBACK PERIOD 

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption 

that an energy conservation standard is economically justified if the additional product costs 

attributed to the energy conservation standard are less than three times the value of the first-year 

energy cost savings. (42 U.S.C. §6295 (o)(2)(B)(iii)) 

8.12.1 Approach 

The basic equation for rebuttable PBP is the same as that shown in section 8.1.2, Payback 

Period Inputs. Unlike the analyses described in sections 8.2 and 8.3, however, the rebuttable PBP 

is not based on the use of household samples and probability distributions. Rather than 

distributions, the rebuttable PBP is based on discrete single-point values. For example, while 

DOE uses regional energy prices in the distributional payback period analysis, it uses only the 

national average energy price to determine the rebuttable PBP. 

Other than the use of single-point values, the most notable difference between the 

distribution PBP and the rebuttable PBP is the latter’s reliance on the DOE test procedure to 

determine a product’s annual energy consumption. Thus, for some of the products (e.g., water 

heaters) the rebuttable PBPs differ from the average distribution PBP calculated in the LCC and 

PBP analysis. 

8.12.2 Inputs 

Inputs for the rebuttable PBP differ from the distribution PBP in that the calculation uses 

discrete values, rather than distributions, for inputs. Note that for the calculation of distribution 

PBP, because inputs for the determination of total installed cost were based on single-point 

values, only the variability and/or uncertainty in the inputs for determining operating cost 

contributed to variability in the distribution PBPs. The following summarizes the single-point 

values that DOE used in the determination of the rebuttable PBP. 

•	 Manufacturing costs, markups, sales taxes, and installation costs are all based on the 

single-point values used in the distributional LCC and PBP analysis. 

•	 As described in section 8.4, annual energy consumption is based on the DOE test


procedure.


•	 Energy prices are based on national average values for the year that new energy


conservation standards are estimated to take effect.


•	 An average discount rate or lifetime is not required in the rebuttable PBP calculation. 

•	 The effective date of the energy conservation standard is assumed to be 2013 for pool 

heaters and direct heating equipment, and 2015 for water heaters. 

8-86


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
8.12.3 Results 

DOE calculated rebuttable PBPs for each standard level relative to the distribution of 

product energy efficiencies estimated for the base case. In other words, DOE did not determine 

the rebuttable PBP relative to the baseline energy efficiency level, but relative to the distribution 

of product energy efficiencies DOE determined for the base case (i.e., the case without new 

energy conservation standards). 

Table 8.12.1 presents the rebuttable PBPs for the four product classes of water heaters 

that DOE analyzed. Table 8.12.2 presents the rebuttable PBPs for pool heaters. Table 8.12.3 

presents the rebuttable payback periods for gas gravity DHE and gas floor DHE. For gas wall fan 

DHE and gas room DHE, there were no payback periods under three years. 

Table 8.12.1 Water Heaters: Rebuttable Payback Periods 

Product Class Energy Factor (EF) PBP (years) 

Gas-Fired Storage Water Heaters 0.62 0.8 

0.63 1.5 

Electric Storage Water Heaters 0.91 2.4 

0.92 1.8 

0.93 2.9 

2.20 2.7 

Oil-Fired Storage Water Heaters 0.54 1.8 

0.56 2.3 

0.58 1.9 

0.60 1.2 

0.62 1.4 

Gas-Fired Instantaneous Water Heaters 0.69 0.7 

Table 8.12.2 Gas-Fired Pool Heaters: Rebuttable Payback Periods


Thermal Efficiency PBP (years) 

79% (Electronic Ignition) 2.8 

81% (Electronic Ignition) 2.7 

Table 8.12.3 Direct Heating Equipment: Rebuttable Payback Periods


Product Class AFUE PBP (years) 

Gas Gravity DHE 68% 3.0 

58% 2.9 

Gas Floor DHE 61% 1.5 

62% 1.9 

78% 2.8 

8-87


EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 32.2
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