CHAPTER 9. SHIPMENTS

TABLE OF CONTENTS

9.1 INTRODUCTION ..................................................... 9-1

9.2 SHIPMENTS MODEL EQUATION ...................................... 9-2

9.3 NEW HOUSING SHIPMENTS .......................................... 9-2

9.3.1 Approach .................... 9-2

9.3.2 New Housing Projections ......................................... 9-3

9.3.3 Market Shift Effects in New Housing ................................ 9-3

9.3.4 Market Shares of Other Product Classes in New Housing .............. 9-5

9.4 REPLACEMENTS .................................................... 9-6

9.4.1 Approach ...................................................... 9-6

9.4.2 Market Shift Effects in the Replacement Market ....................... 9-8

9.4.3 Conversions to Gas Heating ....................................... 9-8

9.5 MODEL CALIBRATION WITH ADDITIONAL SHIPMENTS CATEGORIES .... 9-9

9.6 PROJECTED SHIPMENTS ............................................ 9-10

9.6.1 Trial Standard Levels ............................................ 9-10

9.6.2 Non-Weatherized Gas Furnaces ................................... 9-11

9.6.3 Mobile Home Gas Furnaces ....................................... 9-12

9.6.4 Other Product Classes ........................................... 9-13

LIST OF TABLES

Table 9.3.1 Estimated Elasticity of Gas Furnace Market Share in New Housing in

Response to Change in Energy and Equipment Price Indices .............. 9-5

Table 9.3.2 Shares of Other Product Classes in Shipments to New Housing (million) .... 9-6

Table 9.4.1 Equipment Lifetime Values (years) .................................. 9-7

Table 9.6.1 Trial Standard Levels for Furnaces and Boilers ....................... 9-11

LIST OF FIGURES

Figure 9.5.1 Components of the Base Case Projection for Gas Furnaces .............. 9-10

Figure 9.6.1 Shipment Projections for Non-Weatherized Gas Furnaces for the

Base Case and Each Trial Standard Level ........................... 9-12

Figure 9.6.2 Shipments Projections for Mobile Home Furnaces for the

Base Case and Each Trial Standard Level ............................ 9-13

Figure 9.6.3 Shipment Projections for Other Product Classes ....................... 9-14

 EE-RM/STD-01-350 COMMENT 164

CHAPTER 9. SHIPMENTS 

TABLE OF CONTENTS 

9.1 INTRODUCTION ..................................................... 9-1 

9.2 SHIPMENTS MODEL EQUATION ...................................... 9-2 

9.3 NEW HOUSING SHIPMENTS .......................................... 9-2 

9.3.1 Approach .................... 9-2 

9.3.2 New Housing Projections ......................................... 9-3 

9.3.3 Market Shift Effects in New Housing ................................ 9-3 

9.3.4 Market Shares of Other Product Classes in New Housing .............. 9-5 

9.4 REPLACEMENTS .................................................... 9-6 

9.4.1 Approach ...................................................... 9-6 

9.4.2 Market Shift Effects in the Replacement Market ....................... 9-8 

9.4.3 Conversions to Gas Heating ....................................... 9-8 

9.5 MODEL CALIBRATION WITH ADDITIONAL SHIPMENTS CATEGORIES .... 9-9 

9.6 PROJECTED SHIPMENTS ............................................ 9-10 

9.6.1 Trial Standard Levels ............................................ 9-10 

9.6.2 Non-Weatherized Gas Furnaces ................................... 9-11 

9.6.3 Mobile Home Gas Furnaces ....................................... 9-12 

9.6.4 Other Product Classes ........................................... 9-13 

Table 9.3.1 

Table 9.3.2 

Table 9.4.1 

Table 9.6.1 

Figure 9.5.1 

Figure 9.6.1 

Figure 9.6.2 

Figure 9.6.3 

LIST OF TABLES 

Estimated Elasticity of Gas Furnace Market Share in New Housing in 

Response to Change in Energy and Equipment Price Indices .............. 9-5 

Shares of Other Product Classes in Shipments to New Housing (million) .... 9-6 

Equipment Lifetime Values (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7 

Trial Standard Levels for Furnaces and Boilers ....................... 9-11 

LIST OF FIGURES 

Components of the Base Case Projection for Gas Furnaces .............. 9-10 

Shipment Projections for Non-Weatherized Gas Furnaces for the 

Base Case and Each Trial Standard Level ........................... 9-12 

Shipments Projections for Mobile Home Furnaces for the 

Base Case and Each Trial Standard Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-13 

Shipment Projections for Other Product Classes ....................... 9-14 

9-i 
CHAPTER 9: SHIPMENTS

9.1 INTRODUCTION

Furnace and boiler shipments estimates are a necessary input to national energy savings

(NES) and net present value (NPV) calculations and the manufacturer impact analysis (MIA).

To provide projections of shipments, DOE constructed a shipments forecasting model that

accounts for equipment used to replace retired units, equipment shipped to new homes, and

equipment installed through conversion from a different heating fuel. This chapter describes

DOE's Shipments Model and presents the forecasts of future shipments in each product class.

The Shipments Model results are driven in part by historical shipments. Chapter 3,

Market and Technology Assessment, shows past trends in shipments of each product class. The

Shipments Model uses data from GAMA through 2003.' Shipments are increasing in general

because the number of houses is increasing, more equipment is reaching retirement age, and the

saturation of central heating in new homes is increasing.

DOE estimated the number of replacements based on past shipments, projected

shipments to new housing, and expected retirement rates. Forecasting future replacements

requires estimates of shipments to new housing, since new equipment will be needed 20-30

years from now to replace equipment shipped in the next few years. Consumers most commonly

replace equipment with equipment in the same product class, although some households switch

fuels if there are clear advantages for doing so.

DOE estimated the total number of shipments to new housing based on projections of

new housing completions and mobile home placements. Market shares of heating equipment

often reflect a choice that is influenced by relative fuel costs and equipment prices. For nonweatherized gas furnaces and mobile home furnaces, DOE developed a model to estimate

market-shift effects due to standards.

DOE projected annual shipments through 2038, which is the end year used in the current

rulemaking. The Shipments Model is in a Microsoft Excel spreadsheet format that is accessible

on the Internet from DOE's Furnace and Boiler Rulemaking page: http://

www.eere.energy.gov/buildings/appliance_standards/residential/ furnaces boilers.html. From

that page, follow the links to the final rule and then to the Analytical Tools.

The Shipments Model is contained within a larger spreadsheet called the Shipments and

NES Spreadsheet Model. The Shipments and NES Spreadsheet Model includes models for

forecasting shipments and calculating NES as well as consumer NPV. Details and instructions

for using the spreadsheet are discussed in Appendix S. The rest of this chapter explains the

Shipments Model in more detail. Section 9.2 presents the mathematical formulation of the

model, sections 9.3 through 9.5 describe the data inputs to the model, and section 9.6 presents

the shipments projections for different energy efficiency standard levels.

9-1

 EE-RM/STD-01-350 COMMENT 164

CHAPTER 9: SHIPMENTS 

9.1 INTRODUCTION 

Furnace and boiler shipments estimates are a necessary input to national energy savings 

(NES) and net present value (NPV) calculations and the manufacturer impact analysis (MIA). 

To provide projections of shipments, DOE constructed a shipments forecasting model that 

accounts for equipment used to replace retired units, equipment shipped to new homes, and 

equipment installed through conversion from a different heating fuel. This chapter describes 

DOE's Shipments Model and presents the forecasts of future shipments in each product class. 

The Shipments Model results are driven in part by historical shipments. Chapter 3, 

Market and Technology Assessment, shows past trends in shipments of each product class. The 

Shipments Model uses data from GAMA through 2003. 1 Shipments are increasing in general 

because the number of houses is increasing, more equipment is reaching retirement age, and the 

saturation of central heating in new homes is increasing. 

DOE estimated the number of replacements based on past shipments, projected 

shipments to new housing, and expected retirement rates. Forecasting future replacements 

requires estimates of shipments to new housing, since new equipment will be needed 20-30 

years from now to replace equipment shipped in the next few years. Consumers most commonly 

replace equipment with equipment in the same product class, although some households switch 

fuels if there are clear advantages for doing so. 

DOE estimated the total number of shipments to new housing based on projections of 

new housing completions and mobile home placements. Market shares of heating equipment 

often reflect a choice that is influenced by relative fuel costs and equipment prices. For nonweatherized gas furnaces and mobile home furnaces, DOE developed a model to estimate 

market-shift effects due to standards. 

DOE projected annual shipments through 2038, which is the end year used in the current 

rulemaking. The Shipments Model is in a Microsoft Excel spreadsheet format that is accessible 

on the Internet from DOE's Furnace and Boiler Rulemaking page: http:// 

www.eere.energy .gov/buildings/appliance _standards/residential/ furnaces _ boilers.html. From 

that page, follow the links to the final rule and then to the Analytical Tools. 

The Shipments Model is contained within a larger spreadsheet called the Shipments and 

NES Spreadsheet Model. The Shipments and NES Spreadsheet Model includes models for 

forecasting shipments and calculating NES as well as consumer NPV. Details and instructions 

for using the spreadsheet are discussed in Appendix S. The rest of this chapter explains the 

Shipments Model in more detail. Section 9.2 presents the mathematical formulation of the 

model, sections 9.3 through 9.5 describe the data inputs to the model, and section 9.6 presents 

the shipments projections for different energy efficiency standard levels. 

9-1 
9.2 SHIPMENTS MODEL, EQUATION

The Shipments Model is a mathematical description of furnace and boiler stock flows as

a function of year and age. Furnace and boiler shipments are in response to: (1) replacements of

retired units with the same type ("in-kind replacements"), (2) conversions at retirement to

another fuel type, and (3) installations in new homes. Total shipments for a product class are:

S(Y)crass = R(Y)crass + C(Y)class + NH(y)crss

where:

S(Y)class

R(Y)ciass

C(Y)crass

NH(Y)crass

total shipment per product class,

replacements of retired equipment with the same type equipment ("in-kind

replacements"),

equipment conversions at retirement to another fuel type, and

equipment installations in new homes.

9.3 NEW HOUSING SHIPMENTS

Gas furnaces were installed in nearly 60 percent of homes built between 1995 and 1999,

according to the U.S. Census Bureau's American Housing Survey.' Electric central heating

systems (heat pumps and electric furnaces) accounted for about 30 percent of the heating

systems installed . In the 2000-2003 period, however, the gas furnace share fell to 50 percent in

response to high natural gas prices, and the electric share rose to 40 percent. Oil-fired furnaces

and gas- or oil-fired boilers were installed in only about five percent of new homes in both

periods.

9.3.1 Approach

In the Shipments Model, the number of annual shipments of each product class going to

new housing units is equal to housing completions or mobile home placements for that year,

multiplied by the estimated market share for each product class:

NH(y)c,,,, = MS(Y)crass x HUC(y)

where HUC(y) is new housing completions. DOE used mobile home placements for HUC(y) to

calculate shipments of mobile home gas furnaces. For all other product classes , HUC(y) is the

sum of single-family and multi- family housing unit completions.

Homebuilders tend to be sensitive to the initial installed cost of heating equipment.

Market share data (presented below) suggest that changes in equipment cost and fuel costs have

had an effect in the past on the choice of installing either a gas furnace or an electric central

9-2

 EE-RM/STD-01-350 COMMENT 164

9.2 SHIPMENTS MODEL EQUATION 

The Shipments Model is a mathematical description of furnace and boiler stock flows as 

a function of year and age. Furnace and boiler shipments are in response to: (1) replacements of 

retired units with the same type ("in-kind replacements"), (2) conversions at retirement to 

another fuel type, and (3) installations in new homes. Total shipments for a product class are: 

where: 

S(Y)class 

R(Y)class 

C(Y)class 

NH(Y)class 

S(Y)class = R(Y)class + C(Y)class + NH(Y)class 

total shipment per product class, 

replacements of retired equipment with the same type equipment ("in-kind 

replacements"), 

equipment conversions at retirement to another fuel type, and 

equipment installations in new homes. 

9.3 NEW HOUSING SHIPMENTS 

Gas furnaces were installed in nearly 60 percent of homes built between 1995 and 1999, 

according to the U.S. Census Bureau's American Housing Survey.2 Electric central heating 

systems (heat pumps and electric furnaces) accounted for about 30 percent of the heating 

systems installed. In the 2000-2003 period, however, the gas furnace share fell to 50 percent in 

response to high natural gas prices, and the electric share rose to 40 percent. Oil-fired furnaces 

and gas- or oil-fired boilers were installed in only about five percent of new homes in both 

periods. 

9.3.1 Approach 

In the Shipments Model, the number of annual shipments of each product class going to 

new housing units is equal to housing completions or mobile home placements for that year, 

multiplied by the estimated market share for each product class: 

NH(Y)class = MS(Y)class x HUC(y) 

where HUC(y) is new housing completions. DOE used mobile home placements for HUC(y) to 

calculate shipments of mobile home gas furnaces. For all other product classes, HUC(y) is the 

sum of single-family and multi- family housing unit completions. 

Homebuilders tend to be sensitive to the initial installed cost of heating equipment. 

Market share data (presented below) suggest that changes in equipment cost and fuel costs have 

had an effect in the past on the choice of installing either a gas furnace or an electric central 

9-2 
heating system in new homes. Thus, for non-weatherized gas furnaces and mobile home gas

furnaces, DOE accounted for possible market-shift effects from changes in equipment prices

related to efficiency standards. DOE believes that there would be little if any market shift away

from gas for weatherized gas furnaces, since there are very few packaged units with electric

heating. For the other product classes, the current market shares in new housing are small, and

DOE assumed that their shares remain unchanged in the future.

9.3.2 New Housing Projections

New housing includes single- and multi-family units, referred to as new housing

completions, and mobile home placements. For new housing completions and mobile home

placements, DOE adopted the data and projections from the Energy Information Administration

(EIA)'s Annual Energy Outlook 2007 (AE02007) for the 2004-2030 period.' This forecast

shows housing completions staying between 1.8 million and 1.9 million in the 2015-2030

period. DOE assumed that completions grow at 0.5-percent rate until 2030. For mobile homes,

DOE assumed a constant rate of placements in the 2031-2038 period.

9.3.3 Market Shift Effects in New Housing

DOE estimated the future market shares of non-weatherized gas furnaces and mobile

home gas furnaces in alternative standards cases using historical relationships between gas and

electricity prices, gas and electric heating equipment prices, and gas furnace market shares,

combined with estimated increases in installed equipment cost associated with higher efficiency.

For the years 2004-2014, DOE's model predicts changes in gas furnace market share relative to

2003 produced by relative changes in gas and electricity prices. The 2003 shares are from U.S.

Census data.' The forecast for 2004-2014 also includes the impact on market share of the

Federal efficiency standard on heat pumps effective in 2006. DOE expects this standard to

increase heat pump prices, which induces a slight shift to gas furnaces in the model.

For 2015 and after, the model uses market-shift elasticity parameters to estimate changes

in market share produced by shifts in equipment prices due to furnace standards, as well as shifts

in energy prices. DOE developed a model within the Shipments Model to estimate the degree to

which an increase in gas furnace equipment cost due to standards will induce a shift in the

market toward electric heating. This market share model uses historical trends in residential gas

and electricity prices and heating equipment prices, and data on the gas furnace market share in

new housing. These data indicate equipment preference and its dependence on relative

equipment and energy prices.

In colder regions, electric heating is relatively expensive to operate. In the southern

region and in mobile homes, however, electric heating is often attractive, so more sensitivity to a

higher cost of gas furnaces is likely. Therefore, DOE independently estimated market shift

effects for three groups: single-family and multi-family (SF+MF) homes within the southern

census region, SF+MF homes in regions other than the southern census region, and mobile

9-3

 EE-RM/STD-01-350 COMMENT 164

heating system in new homes. Thus, for non-weatherized gas furnaces and mobile home gas 

furnaces, DOE accounted for possible market-shift effects from changes in equipment prices 

related to efficiency standards. DOE believes that there would be little if any market shift away 

from gas for weatherized gas furnaces, since there are very few packaged units with electric 

heating. For the other product classes, the current market shares in new housing are small, and 

DOE assumed that their shares remain unchanged in the future. 

9.3.2 New Housing Projections 

New housing includes single- and multi-family units, referred to as new housing 

completions, and mobile home placements. For new housing completions and mobile home 

placements, DOE adopted the data and projections from the Energy Information Administration 

(EIA)'s Annual Energy Outlook 2007 (AE02007) for the 2004-2030 period. 3 This forecast 

shows housing completions staying between 1.8 million and 1.9 million in the 2015-2030 

period. DOE assumed that completions grow at 0.5-percent rate until 2030. For mobile homes, 

DOE assumed a constant rate of placements in the 2031-2038 period. 

9.3.3 Market Shift Effects in New Housing 

DOE estimated the future market shares of non-weatherized gas furnaces and mobile 

home gas furnaces in alternative standards cases using historical relationships between gas and 

electricity prices, gas and electric heating equipment prices, and gas furnace market shares, 

combined with estimated increases in installed equipment cost associated with higher efficiency. 

For the years 2004-2014, DOE's model predicts changes in gas furnace market share relative to 

2003 produced by relative changes in gas and electricity prices. The 2003 shares are from U.S. 

Census data. 2 The forecast for 2004-2014 also includes the impact on market share of the 

Federal efficiency standard on heat pumps effective in 2006. DOE expects this standard to 

increase heat pump prices, which induces a slight shift to gas furnaces in the model. 

For 2015 and after, the model uses market-shift elasticity parameters to estimate changes 

in market share produced by shifts in equipment prices due to furnace standards, as well as shifts 

in energy prices. DOE developed a model within the Shipments Model to estimate the degree to 

which an increase in gas furnace equipment cost due to standards will induce a shift in the 

market toward electric heating. This market share model uses historical trends in residential gas 

and electricity prices and heating equipment prices, and data on the gas furnace market share in 

new housing. These data indicate equipment preference and its dependence on relative 

equipment and energy prices. 

In colder regions, electric heating is relatively expensive to operate. In the southern 

region and in mobile homes, however, electric heating is often attractive, so more sensitivity to a 

higher cost of gas furnaces is likely. Therefore, DOE independently estimated market shift 

effects for three groups: single-family and multi-family (SF+MF) homes within the southern 

census region, SF+MF homes in regions other than the southern census region, and mobile 

9-3 
homes. For consistency, DOE developed separate indices of gas-to-electricity price for the south

and non-south regions.

DOE obtained index data for gas furnace prices from the Bureau of Labor Statistics.'

Historical time-series data on heat pump prices are not available, so DOE used retail price data

on residential central air conditioners' as a proxy for retail heat pump prices. Historical timeseries data on retail electric furnace prices are also not available, so DOE used the price index

data on residential gas furnaces as a proxy for retail electric furnace prices. It then derived a

weighted-average index for electric heating equipment using the heat pump and electric furnace

indices. The last year for which the necessary data are available is 1995. While the inflationadjusted price of gas furnaces has declined over time, the estimated inflation-adjusted price of

electric heating equipment has dropped more rapidly, so the ratio of gas furnace price to electric

heating equipment price increased considerably from the early 1980s to 1995.

The gas furnace market shares in new housing are from data for different vintage groups

(which indicate the year of home construction) in the American Housing Survey.' Gas furnaces

not in mobile homes include both non-weatherized and weatherized furnaces.

The market share of gas furnaces in each of the three groups is described by the

following equation:

MSY = MSa x

where:

MSo =

F =

E _

eF and eE _

1+ e,;

AF)

`F0) + £E

Y

i

zE

KE0)Y]

market share in the reference year,

an index (ratio) of gas-to-electricity price,

an index (ratio) of gas-to-electric equipment price, and

"elasticities" that measure the change in market share that occurred in response to

changes in the gas-to-electricity price ratio and the gas-to-electric equipment

price ratio.

The terms AF/FO and AE/E

,

represent percentage increases in prices in a given year

relative to the reference period, which is 1960-1969.

Table 9.3.1 shows the estimated energy and equipment price elasticities for each group.

The elasticities are negative, since an increase in relative natural gas or gas furnace prices tends

to lower the gas furnace market share. As expected, the south shows a stronger response to

change in the equipment price index than non-south regions, and mobile homes show the greatest

response. In all three cases, the response to change in the energy price index is greater than the

response to change in the equipment price index.

9-4

 EE-RM/STD-01-350 COMMENT 164

homes. For consistency, DOE developed separate indices of gas-to-electricity price for the south 

and non-south regions. 

DOE obtained index data for gas furnace prices from the Bureau of Labor Statistics.4 

Historical time-series data on heat pump prices are not available, so DOE used retail price data 

on residential central air conditioners5 as a proxy for retail heat pump prices. Historical timeseries data on retail electric furnace prices are also not available, so DOE used the price index 

data on residential gas furnaces as a proxy for retail electric furnace prices. It then derived a 

weighted-average index for electric heating equipment using the heat pump and electric furnace 

indices. The last year for which the necessary data are available is 1995. While the inflationadjusted price of gas furnaces has declined over time, the estimated inflation-adjusted price of 

electric heating equipment has dropped more rapidly, so the ratio of gas furnace price to electric 

heating equipment price increased considerably from the early 1980s to 1995. 

The gas furnace market shares in new housing are from data for different vintage groups 

(which indicate the year of home construction) in the American Housing Survey.6 Gas furnaces 

not in mobile homes include both non-weatherized and weatherized furnaces. 

The market share of gas furnaces in each of the three groups is described by the 

following equation: 

where: 

market share in the reference year, 

an index (ratio) of gas-to-electricity price, 

an index (ratio) of gas-to-electric equipment price, and 

"elasticities" that measure the change in market share that occurred in response to 

changes in the gas-to-electricity price ratio and the gas-to-electric equipment 

price ratio. 

The terms LJF1Fo and iJE1Eo represent percentage increases in prices in a given year 

relative to the reference period, which is 1960-1969. 

Table 9.3.1 shows the estimated energy and equipment price elasticities for each group. 

The elasticities are negative, since an increase in relative natural gas or gas furnace prices tends 

to lower the gas furnace market share. As expected, the south shows a stronger response to 

change in the equipment price index than non-south regions, and mobile homes show the greatest 

response. In all three cases, the response to change in the energy price index is greater than the 

response to change in the equipment price index. 

9-4 
Table 9.3.1 Estimated Elasticity of Gas Furnace Market Share in New Housing in

South Region Regions Outside South Mobile Homes

Energy Price Equipment

Price

Energy Price Equipment

Price

Energy Price Equipment

Price

-0.84 -0.37 -0.34 -0.13 -1.06 -0.50

The base case forecast in the shipments analysis estimates the gas furnace market share

separately for each of the three groups using the energy price elasticities and the forecast

national natural gas and electricity prices from AE02007 (see Chapter 10, section 10.3.2).a DOE

calculated the national gas furnace market share (excluding mobile homes) according to the

estimated shares in the south and non-south regions, weighted by the fraction of new homes in

each region, as given in the AE02007 forecast.

DOE used the equipment price elasticities to estimate market share shifts due to increases

in total installed cost estimated for various efficiency levels in the engineering analysis (Chapter

6). In the south, for example, an efficiency level that raises the gas furnace installed cost by 10

percent causes a projected gas furnace market share change of 10 percent times -0.37, or -3.7

percent.

The model estimates the combined market share of non-weatherized and weatherized gas

furnaces in new housing completions. Based on data for the 1990s (see Chapter 3, section 3.4.1),

DOE used a market share of 10 percent for weatherized gas furnaces for all years in the forecast.

In the base case, DOE calculated the shipments of non-weatherized gas furnaces alone by

subtracting the estimated share of weatherized gas furnaces in the combined shipments. In the

higher-efficiency cases, the estimated market shift is attributed entirely to non-weatherized gas

furnaces, since a shift away from weatherized gas furnaces is unlikely (see section 9.4.1).

In the model, shifts from gas furnaces result in installation of electric heating equipment

(heat pumps and electric furnaces). For non-weatherized gas furnaces, DOE estimated that heat

pumps account for 54 percent of the additional electric heating equipment purchased due to

market shift, and electric resistance furnaces account for 46 percent. For mobile home gas

furnaces, the estimated shares of additional electric heating equipment purchased due to the

market shift are 41 percent for heat pumps and 59 percent for electric resistance furnaces. DOE

based these values on equipment shares in homes built in the 1999-2003 period with electric

space heating, as provided by the Residential Energy Consumption Survey (RECS) 2001. DOE

reviewed the projections of new heating equipment market shares in AE02007 and found that

they show little change in the national market shares of heat pumps and electric resistance

a DOE used national energy prices fromAE02007 rather than separate price forecasts for South and Non-South regions.

Response to Chan a in Energy and Equipment Price Indices

9-5

 EE-RM/STD-01-350 COMMENT 164

Table 9.3.1 Estimated Elasticity of Gas Furnace Market Share in New Housing in 

R esponse t 0 Ch angem . E d E nergyan ;qmpmen t P' nce I n d' Ices 

South Region Regions Outside South MobHeHomes 

Energy Price Equipment Energy Price Equipment Energy Price Equipment 

Price Price Price 

-0.84 -0.37 -0.34 -0.13 -1.06 -0.50 

The base case forecast in the shipments analysis estimates the gas furnace market share 

separately for each of the three groups using the energy price elasticities and the forecast 

national natural gas and electricity prices fromAE02007 (see Chapter 10, section 10.3.2)." DOE 

calculated the national gas furnace market share (excluding mobile homes) according to the 

estimated shares in the south and non-south regions, weighted by the fraction of new homes in 

each region, as given in the AE02007 forecast. 

DOE used the equipment price elasticities to estimate market share shifts due to increases 

in total installed cost estimated for various efficiency levels in the engineering analysis (Chapter 

6). In the south, for example, an efficiency level that raises the gas furnace installed cost by 10 

percent causes a projected gas furnace market share change of 10 percent times -0.37, or -3.7 

percent. 

The model estimates the combined market share of non-weatherized and weatherized gas 

furnaces in new housing completions. Based on data for the 1990s (see Chapter 3, section 3.4.1), 

DOE used a market share of 10 percent for weatherized gas furnaces for all years in the forecast. 

In the base case, DOE calculated the shipments of non-weatherized gas furnaces alone by 

subtracting the estimated share of weatherized gas furnaces in the combined shipments. In the 

higher-efficiency cases, the estimated market shift is attributed entirely to non-weatherized gas 

furnaces, since a shift away from weatherized gas furnaces is unlikely (see section 9.4.1). 

In the model, shifts from gas furnaces result in installation of electric heating equipment 

(heat pumps and electric furnaces). For non-weatherized gas furnaces, DOE estimated that heat 

pumps account for 54 percent of the additional electric heating equipment purchased due to 

market shift, and electric resistance furnaces account for 46 percent. For mobile home gas 

furnaces, the estimated shares of additional electric heating equipment purchased due to the 

market shift are 41 percent for heat pumps and 59 percent for electric resistance furnaces. DOE 

based these values on equipment shares in homes built in the 1999-2003 period with electric 

space heating, as provided by the Residential Energy Consumption Survey (RECS) 2001. DOE 

reviewed the projections of new heating equipment market shares in AE02007 and found that 

they show little change in the national market shares of heat pumps and electric resistance 

a DOE used national energy prices fromAE02007 rather than separate price forecasts for South and Non-South regions. 

9-5 
furnaces until 2030. Therefore, DOE assumed that the market shares given above remain

constant over the analysis period.

9.3.4 Market Shares of Other Product Classes in New Housing

DOE estimated the future market shares of oil-fired furnaces and gas- and oil-fired

boilers in total new housing completions based on their respective average shares in homes built

in the 1999-2003 period (Table 9.3.2). For new homes that use oil-fired equipment, gas is

generally not available, so DOE assumed that the market shares are independent of changes in

equipment price due to standards implementation. Gas boilers in new homes are associated with

specific types of heating systems, such as hydronic radiators or radiant floors, and substitution of

alternative equipment is unlikely, so here too DOE estimated that the market share is

independent of changes in equipment price due to standards.

Table 9.3.2 Shares of Other Product Classes in Shipments to New Housing (million

Product Class Market Share

(% of new housing)

Oil-fired furnaces 0.5

Gas boilers 4.1

Oil-fired boilers 1.8

9.4 REPLACEMENTS

9.4.1 Approach

Historical shipments of each product class influence the number of replacement units

entering the housing stock in each year. For each year, the Shipments Model estimates what

fraction of the historically shipped units are still in service, and how many will be replaced. The

model uses estimates of how long each type of equipment is expected to operate before it is

replaced. Depending on the age (vintage) of a piece of heating equipment, there is a certain

probability of its being replaced.

The model uses a replacement probability distribution based on minimum, mean, and

maximum expected equipment lifetimes (Table 9.4.1). Two basic assumptions influence the

probability distribution. First, DOE expects equipment to have a maximum probability of being

replaced at the mean lifetime. Second, replacement probability goes to zero in the minimum and

maximum lifetime years. Assuming a linear slope in probability produces a triangular

distribution.

9-6

 EE-RM/STD-01-350 COMMENT 164

furnaces until 2030. Therefore, DOE assumed that the market shares given above remain 

constant over the analysis period. 

9.3.4 Market Shares of Other Product Classes in New Housing 

DOE estimated the future market shares of oil-fired furnaces and gas- and oil-fired 

boilers in total new housing completions based on their respective average shares in homes built 

in the 1999-2003 period (Table 9.3.2). For new homes that use oil-fired equipment, gas is 

generally not available, so DOE assumed that the market shares are independent of changes in 

equipment price due to standards implementation. Gas boilers in new homes are associated with 

specific types of heating systems, such as hydronic radiators or radiant floors, and substitution of 

alternative equipment is unlikely, so here too DOE estimated that the market share is 

independent of changes in equipment price due to standards. 

Table 9.3.2 Shares of Other Product Classes in Shipments to New Housing (million) 

Product Class Market Share 

(% of new housing) 

Oil-fired furnaces 0.5 

Gas boilers 4.1 

Oil-fired boilers 1.8 

9.4 REPLACEMENTS 

9.4.1 Approach 

Historical shipments of each product class influence the number of replacement units 

entering the housing stock in each year. For each year, the Shipments Model estimates what 

fraction of the historically shipped units are still in service, and how many will be replaced. The 

model uses estimates of how long each type of equipment is expected to operate before it is 

replaced. Depending on the age (vintage) ofa piece of heating equipment, there is a certain 

probability of its being replaced. 

The model uses a replacement probability distribution based on minimum, mean, and 

maximum expected equipment lifetimes (Table 9.4.1). Two basic assumptions influence the 

probability distribution. First, DOE expects equipment to have a maximum probability of being 

replaced at the mean lifetime. Second, replacement probability goes to zero in the minimum and 

maximum lifetime years. Assuming a linear slope in probability produces a triangular 

distribution. 

9-6 
Table 9.4.1 Equipment Lifetime Values ears

Product Class Minimum Mean Maximum

Non-Weatherized Gas Furnace 10 20 30

Weatherized Gas Furnace 12 18 24

Mobile Home Furnace 14 19 23

Oil-Fired Furnace 10 15 20

Hot-Water Gas Boiler 20 25 30

Hot-Water Oil-Fired Boiler 20 25 30

Heat Pump 6 14 21

Electric Furnace 11 17 23

Sources: see Chapter 8, Table 8.2.3

Given the probability of replacement as a function of equipment vintage, the calculation of

expected replacements in any given year follows from past shipments. In a given year, the

number of replacements is equal to the portion of the previous year's shipments expected to retire,

plus the number of shipments from other past years expected to retire. The majority are

replacements-in-kind-consumers replace existing equipment with equipment of the same

product class.

Mathematically, the replacements in each year for each product class are given by

L max

Ry,ctass =

FRcrass (v) xS(y -

v)crass

v=L min

where:

Ry,crass = replacements,

v = equipment vintage,

S(y-v) = shipments in the year y-v, and

FRc,ass(v) = fraction of each cohort that will be replaced at each vintage.

The summation runs from the minimum to the maximum lifetime given in Table 9.4.1.

This replacement fraction has the property

L max

Rcrass (v) = 1

v=L min

9-7

 EE-RM/STD-01-350 COMMENT 164

Table 9.4.1 Equipment Lifetime Values (years) 

Product Class Minimum Mean Maximum 

Non-Weatherized Gas Furnace 10 20 30 

Weatherized Gas Furnace 12 18 24 

Mobile Home Furnace 14 19 23 

Oil-Fired Furnace 10 15 20 

Hot-Water Gas Boiler 20 25 30 

Hot-Water Oil-Fired Boiler 20 25 30 

Heat Pump 6 14 21 

Electric Furnace 11 17 23 

Sources: see Chapter 8, Table 8.2.3 

Given the probability of replacement as a function of equipment vintage, the calculation of 

expected replacements in any given year follows from past shipments. In a given year, the 

number of replacements is equal to the portion of the previous year's shipments expected to retire, 

plus the number of shipments from other past years expected to retire. The majority are 

replacements-in-kind-consumers replace existing equipment with equipment of the same 

product class. 

Mathematically, the replacements in each year for each product class are given by 

where: 

Ry.class 

v 

S(y-v) 

FRc/aslv) 

Lmax 

Ry,class = LFRclass(V)xS(y V) class 

v=Lmin 

replacements, 

equipment vintage, 

shipments in the year y-v, and 

fraction of each cohort that will be replaced at each vintage. 

The summation runs from the minimum to the maximum lifetime given in Table 9.4.1. 

This replacement fraction has the property 

Lmax 

L FRclassev) = 1 

v=Lmin 

9-7 
where v runs from the Lenin and Lmax, indicating that the entire cohort will be replaced by the

maximum lifetime.

9.4.2 Market Shift Effects in the Replacement Market

In most cases, a building owner will replace a retired unit with the same type of

equipment. However, building owners are somewhat sensitive to changes in relative fuel and

equipment prices between competing heating equipment choices. Thus, as it did for new housing

installations, DOE considered the impact on replacement fuel choice from increases in first costs

for non-weatherized gas furnaces and mobile home gas furnaces. The approach DOE took to

estimate replacement market shifts was similar to its approach for new housing. Unfortunately,

historical data tracking fuel share choice in the replacement market were not accessible, so a

parameterization of equipment price elasticities for replacements was not possible. Instead, DOE

used the same elasticities for the new construction and replacement market segments.

For the years 2015-2038, DOE adjusted the shipments to reflect market shift effects for

non-weatherized gas furnaces and mobile home gas furnaces. This adjustment was equal to the

base case replacements in each region multiplied by the appropriate elasticity for the region,

multiplied by the percentage increase in installed costs relative to the base case. For example, the

increase in installed cost for a condensing furnace results in some fraction of building owners

switching from gas to electric heating. Thus, gas furnace shipments in the replacement market

are lower in the case of a standard at the condensing level than in the base case.

9.4.3 Conversions to Gas Heating

Data from utility surveys conducted by the American Gas Association (AGA) report the

numbers of households that converted to natural gas space heating from another fuel in various

years.' DOE estimated the annual conversions to natural gas as a percentage of projected

replacements using the AGA data from the 1985-1995 period. These data indicate an average

rate of conversion at retirement of 35 percent for oil-fired equipment and 32 percent for electric

furnaces. DOE applied these percentages to retirements of oil-fired equipment and electric

furnaces for all years in the forecast. Since this period covers a range of variation in relative

energy prices, DOE believes its projection of conversions is consistent with projected future

energy prices.

DOE assumed that these conversions generally occur at the time of retirement; i.e., a

homeowner will opt to install gas heating equipment only when the installed oil or electric

equipment has reached the end of its lifetime. All conversions are to non-weatherized gas

furnaces.

 EE-RM/STD-01-350 COMMENT 164

where v runs from the Lmin and Lmax, indicating that the entire cohort will be replaced by the 

maximum lifetime. 

9.4.2 Market Shift Effects in the Replacement Market 

In most cases, a building owner will replace a retired unit with the same type of 

equipment. However, building owners are somewhat sensitive to changes in relative fuel and 

equipment prices between competing heating equipment choices. Thus, as it did for new housing 

installations, DOE considered the impact on replacement fuel choice from increases in first costs 

for non-weatherized gas furnaces and mobile home gas furnaces. The approach DOE took to 

estimate replacement market shifts was similar to its approach for new housing. Unfortunately, 

historical data tracking fuel share choice in the replacement market were not accessible, so a 

parameterization of equipment price elasticities for replacements was not possible. Instead, DOE 

used the same elasticities for the new construction and replacement market segments. 

For the years 2015-2038, DOE adjusted the shipments to reflect market shift effects for 

non-weatherized gas furnaces and mobile home gas furnaces. This adjustment was equal to the 

base case replacements in each region multiplied by the appropriate elasticity for the region, 

multiplied by the percentage increase in installed costs relative to the base case. For example, the 

increase in installed cost for a condensing furnace results in some fraction of building owners 

switching from gas to electric heating. Thus, gas furnace shipments in the replacement market 

are lower in the case of a standard at the condensing level than in the base case. 

9.4.3 Conversions to Gas Heating 

Data from utility surveys conducted by the American Gas Association (AGA) report the 

numbers of households that converted to natural gas space heating from another fuel in various 

years.? DOE estimated the annual conversions to natural gas as a percentage of projected 

replacements using the AGA data from the 1985-1995 period. These data indicate an average 

rate of conversion at retirement of 35 percent for oil-fired equipment and 32 percent for electric 

furnaces. DOE applied these percentages to retirements of oil-fired equipment and electric 

furnaces for all years in the forecast. Since this period covers a range of variation in relative 

energy prices, DOE believes its projection of conversions is consistent with projected future 

energy prices. 

DOE assumed that these conversions generally occur at the time of retirement; i.e., a 

homeowner will opt to install gas heating equipment only when the installed oil or electric 

equipment has reached the end of its lifetime. All conversions are to non-weatherized gas 

furnaces. 

9-8 
9.5 MODEL, CALIBRATION WITH ADDITIONAL SHIPMENTS CATEGO RIES

In the analysis for the advance notice of proposed rulemaking (ANOPR), DOE estimated

retirements based solely on past shipments and the assumed equipment lifetimes . For gas

furnaces (all three product classes together), the resulting total shipments in the 1993 -2001 period

were less than reported by GAMA. In the analysis for the notice of proposed rulemaking

(NOPR), DOE added two additional sources of gas furnace shipments in this period. This

addition brought the shipments estimated by the model into closer agreement with the GAMA

data.

The first additional source of gas furnace shipments is early retirement of non-condensing

furnaces and replacement with more-efficient condensing furnaces. Evidence for this trend can

be seen in the GAMA data, which show a large increase in condensing furnace shipments in

response to rising natural gas prices (see Chapter 10, section 10.2.3).

The second additional source of gas furnace shipments is conversion from non-central gas

heating (e.g., room heaters) to central heating with a gas furnace. There is evidence for this

conversion in data from the RECS, which show a large increase between 1993 and 2001 in homes

with central gas heat that were built before 1990.$ Since this increase is greater than can be

accounted for by conversions to gas heat from oil or electric heating, the data suggest there were

many conversions from non-central gas heating to central heating with a gas furnace. There is

also discussion of this phenomenon in the trade literature.'

DOE assumed that shipments from these additional sources follow a normal distribution,

rising gradually from 1993, reaching a maximum value, and then decreasing again. DOE chose

the size, peak year, and width of this distribution that minimized the discrepancy between

modeled shipments and the GAMA data. This calibration revealed that the additional shipment

sources result in a maximum of 603,000 units in 2005. DOE assumed that two-thirds of these

were due to early retirement of non-condensing furnaces and one-third were due to conversions to

central heating. DOE assumed that shipments from these additional sources gradually taper off

due to a smaller number of eligible homes with non-central heating equipment and a lessening of

the incentive for early retirement of non-condensing furnaces.

Figure 9.5.1 shows the components of the base case projection for all gas furnaces,

including the shipments from the sources discussed here. The shipments from these additional

sources are most likely to be non-weatherized gas furnaces, so DOE allocated them to this

product class.

 EE-RM/STD-01-350 COMMENT 164

9.5 MODEL CALIBRATION WITH ADDITIONAL SHIPMENTS CATEGORIES 

In the analysis for the advance notice of proposed mlemaking (ANOPR), DOE estimated 

retirements based solely on past shipments and the assumed equipment lifetimes. For gas 

furnaces (all three product classes together), the resulting total shipments in the 1993-2001 period 

were less than reported by GAMA. In the analysis for the notice of proposed mlemaking 

(NOPR), DOE added two additional sources of gas furnace shipments in this period. This 

addition brought the shipments estimated by the model into closer agreement with the GAMA 

data. 

The first additional source of gas furnace shipments is early retirement of non-condensing 

furnaces and replacement with more-efficient condensing furnaces. Evidence for this trend can 

be seen in the GAMA data, which show a large increase in condensing furnace shipments in 

response to rising natural gas prices (see Chapter 10, section 10.2.3). 

The second additional source of gas furnace shipments is conversion from non-central gas 

heating (e.g., room heaters) to central heating with a gas furnace. There is evidence for this 

conversion in data from the RECS, which show a large increase between 1993 and 2001 in homes 

with central gas heat that were built before 1990.8 Since this increase is greater than can be 

accounted for by conversions to gas heat from oil or electric heating, the data suggest there were 

many conversions from non-central gas heating to central heating with a gas furnace. There is 

also discussion of this phenomenon in the trade literature.9 

DOE assumed that shipments from these additional sources follow a normal distribution, 

rising gradually from 1993, reaching a maximum value, and then decreasing again. DOE chose 

the size, peak year, and width of this distribution that minimized the discrepancy between 

modeled shipments and the GAMA data. This calibration revealed that the additional shipment 

sources result in a maximum of 603,000 units in 2005. DOE assumed that two-thirds of these 

were due to early retirement of non-condensing furnaces and one-third were due to conversions to 

central heating. DOE assumed that shipments from these additional sources gradually taper off 

due to a smaller number of eligible homes with non-central heating equipment and a lessening of 

the incentive for early retirement of non-condensing furnaces. 

Figure 9.5.1 shows the components of the base case projection for all gas furnaces, 

including the shipments from the sources discussed here. The shipments from these additional 

sources are most likely to be non-weatherized gas furnaces, so DOE allocated them to this 

product class. 

9-9 
New Housing Installations

=Central Heating Upgrades

® Efficiency Upgrades

r---1 Oil / Electric Conversions

=Modeled Replacements

GAMA Data

Figure 9.5.1 Components of the Base Case Projection for Gas Furnaces

9.6 PROJECTED SHIPMENTS

DOE calculated total shipments in each product class by adding new housing shipments in

each year to replacements and conversions. For non-weatherized gas furnaces, DOE added

estimated shipments for early retirement/upgrades to condensing furnaces, and upgrades from

non-central gas heating to gas furnaces.

For non-weatherized gas furnaces and mobile home gas furnaces, the projected shipments

are affected by the installed cost of a furnace, which varies with efficiency. This section reports

the projected shipments at each trial standard level (TSL) considered for the Final Rule. The

subsection below describes the TSLs.

9.6.1 Trial Standard Levels

The criteria DOE used to develop TSLs in the furnace and boiler rulemaking

approximately match the following:

• TSL 1: Efficiency levels that are most common (highest level of shipments) in the current

market.

• TSL A: Efficiency levels that are representative of the maximum NPV using a sevenpercent discount rate. TSL A is the same as TSL 2 with the efficiency level for

9-10

 EE-RM/STD-01-350 COMMENT 164

5.00 r-----------------------------, 

4.50 _ New Housing Installations 

w::J Central Heating Upgrades 

IliiiiI Efficiency Upgrades 

4.00 =Oill Electric Conversions 

=Modeled Replacements 

·_ GAMAData 

3.50 - - --.. ---

3.00 +--- - - ---- -

2.50 +------""""''''''c. 

2.00 

1.50 

1.00 

0.50 

- - - ---.--

0.00 +--_,_-~--..,.--_--.,..._-_,_-~--...,.......-_--.,..._-_--' 

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 

Figure 9.5.1 Components of the Base Case Projection for Gas Furnaces 

9.6 PROJECTED SHIPMENTS 

DOE calculated total shipments in each product class by adding new housing shipments in 

each year to replacements and conversions. For non-weatherized gas furnaces, DOE added 

estimated shipments for early retirement/upgrades to condensing furnaces, and upgrades from 

non-central gas heating to gas furnaces. 

For non-weatherized gas furnaces and mobile home gas furnaces, the projected shipments 

are affected by the installed cost of a furnace, which varies with efficiency. This section reports 

the projected shipments at each trial standard level (TSL) considered for the Final Rule. The 

subsection below describes the TSLs. 

9.6.1 Trial Standard Levels 

The criteria DOE used to develop TSLs in the furnace and boiler rulemaking 

approximately match the following: 

• TSL 1: Efficiency levels that are most common (highest level of shipments) in the current 

market. 

• TSL A: Efficiency levels that are representative of the maximum NPV using a sevenpercent discount rate. TSL A is the same as TSL 2 with the efficiency level for 

9-10 
non-weatherized, gas-fired furnaces and gas-fired boilers reduced to eliminate safety

concerns.

• TSL 2: Efficiency levels that are representative of the maximum NPV using a sevenpercent discount rate.

• TSL B: Efficiency levels that are representative of the maximum NPV using a threepercent discount rate. TSL B is the same as TSL 4 with levels for gas boilers and oil-fired

furnaces reduced to eliminate safety concerns.

• TSL 4: Efficiency levels that are representative of the maximum NPV using a threepercent discount rate.

• TSL 5: Efficiency levels that correspond to the most energy efficient combination of

design options available on the market.

Table 9.6.1 shows the annual fuel utilization efficiency (AFUE) levels for the six product

classes at each TSL.

Table 9.6.1 Trial Standard Levels for Furnaces and Boilers

T i l St d d L l

NWGF WGF MHF OF GB OB

r a an ar eve s

AFUE % AFUE % AFUE % AFUE % AFUE % AFUE %

TSL 1 80 80 80 80 82 83

TSL A 80 81 80 82 82 83

TSL 2 81 81 80 82 84 83

TSL B 90 81 90 82 82 84

TSL 4 90 81 90 84 84 84

TSL 5 96 83 90 85 99 95

The current AFUE standard levels for the product classes are as follows:

• Non-weatherized gas furnace (NWGF) = 78 percent

• Weatherized gas furnace (WGF) = 78 percent

• Mobile home gas furnace (MHF) = 75 percent

• Oil-fired furnace (OF) = 78 percent

• Gas boiler (GB) = 80 percent

• Oil-fired boiler (OB) = 80 percent

9.6.2 Non-Weatherized Gas Furnaces

Figure 9.6.1 shows the projections for non-weatherized gas furnaces for the base case and

each TSL. The higher equipment prices associated with furnace standards have a sizeable effect

9-11

 EE-RM/STD-01-350 COMMENT 164

non-weatherized, gas-fired furnaces and gas-fired boilers reduced to eliminate safety 

concerns. 

• TSL 2: Efficiency levels that are representative of the maximum NPV using a sevenpercent discount rate. 

• TSL B: Efficiency levels that are representative of the maximum NPV using a threepercent discount rate. TSL B is the same as TSL 4 with levels for gas boilers and oil-fired 

furnaces reduced to eliminate safety concerns. 

• TSL 4: Efficiency levels that are representative of the maximum NPV using a threepercent discount rate. 

• TSL 5: Efficiency levels that correspond to the most energy efficient combination of 

design options available on the market. 

Table 9.6.1 shows the annual fuel utilization efficiency (AFUE) levels for the six product 

classes at each TSL. 

Table 9.6.1 Trial Standard Levels for Furnaces and Boilers 

NWGF WGF MHF OF GB OB 

Trial Standard Levels 

AFUE% AFUE% AFUE% AFUE% AFUE% AFUE% 

TSL 1 80 80 80 80 82 83 

TSLA 80 81 80 82 82 83 

TSL2 81 81 80 82 84 83 

TSLB 90 81 90 82 82 84 

TSL4 90 81 90 84 84 84 

TSL5 96 83 90 85 99 95 

The current AFUE standard levels for the product classes are as follows: 

• Non-weatherized gas furnace (NWOF) = 78 percent 

• Weatherized gas furnace (WOF) = 78 percent 

• Mobile home gas furnace (MHF) = 75 percent 

• Oil-fired furnace (OF) = 78 percent 

• Oas boiler (OB) = 80 percent 

• Oil-fired boiler (OB) = 80 percent 

9.6.2 Non-Weatherized Gas Furnaces 

Figure 9.6.1 shows the projections for non-weatherized gas furnaces for the base case and 

each TSL. The higher equipment prices associated with furnace standards have a sizeable effect 

9-11 
at TSLs 4and B, which include a standard at 90 percent AFUE. Compared to the base case,

shipments in 2015 are 3.1 percent (90,000 units) lower at TSL 4 and TSL B.

4.5

- Base Case

-L- Trial Standard Level 1 /A

4.0

--- Trial Standard Level 2

-Trial Standard Level 4 / B

Jf'

---Trial Standard Level 5 - t"

^J

3.5

o

f a

v

I-Ir

C

3.0

x/-

2 5. - -- _-__--

2.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

Year

Figure 9.6.1 Shipment Projections for Non-Weatherized Gas Furnaces for the

Base Case and Each Trial Standard Level

9.6.3 Mobile Home Gas Furnaces

Figure 9.6.2 shows the projections for mobile home gas furnaces for the base case and

each TSL. The higher equipment prices associated with furnace standards at TSL 4/B, which

include a standard at 90 percent AFUE, have a substantial effect on the shipments. Compared to

the base case, shipments in 2015 are 17 percent (33,000 units) lower at TSL 4 and TSL B. For

mobile home gas furnaces, the impact of higher equipment cost associated with furnace standards

is greater than the effect on non-weatherized gas furnaces because the estimated equipment price

elasticity is higher (see Table 9.3.1).

The downward trend after 2015 can be explained by mobile home placement patterns and

declining gas furnace market share. Mobile home placements peaked in 1996-1999 and then

dropped dramatically. This sharp decline leads to a low level of replacement shipments after

2020. The AE02007 forecast DOE used shows total placements flat after 2015, but the projected

share of gas furnaces declines due to rising natural gas prices. Based on the estimated energy

price elasticity for mobile home furnaces (see Table 9.3.1), the projected gas furnace share is very

9-12

 EE-RM/STD-01-350 COMMENT 164

at TSLs 4and B, which include a standard at 90 percent AFUE. Compared to the base case, 

shipments in 2015 are 3.1 percent (90,000 units) lower at TSL 4 and TSL B. 

4.5,------- ----------------------, 

-+-Base Case 

-tI-Trial Standard Level 1 I A 

4.0 --- Trial Standard Level 2 - --_ .. -... --.. -.. --- - - -

--iir Trial Standard Level 4 I B 

· __ Trial Standard Level 5 

'W 3.5 

~ 

i! 

~ <: 

E 

c. 

~ 3.0 I-----i--"~ ------_=:/ 

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 

Year 

Figure 9.6.1 Shipment Projections for Non-Weatherized Gas Furnaces for the 

Base Case and Each Trial Standard Level 

9.6.3 Mobile Home Gas Furnaces 

Figure 9.6.2 shows the projections for mobile home gas furnaces for the base case and 

each TSL. The higher equipment prices associated with furnace standards at TSL 41B, which 

include a standard at 90 percent AFUE, have a substantial effect on the shipments. Compared to 

the base case, shipments in 2015 are 17 percent (33,000 units) lower at TSL 4 and TSL B. For 

mobile home gas furnaces, the impact of higher equipment cost associated with furnace standards 

is greater than the effect on non-weatherized gas furnaces because the estimated equipment price 

elasticity is higher (see Table 9.3.1). 

The downward trend after 2015 can be explained by mobile home placement patterns and 

declining gas furnace market share. Mobile home placements peaked in 1996-1999 and then 

dropped dramatically. This sharp decline leads to a low level of replacement shipments after 

2020. The AE02007 forecast DOE used shows total placements flat after 2015, but the projected 

share of gas furnaces declines due to rising natural gas prices. Based on the estimated energy 

price elasticity for mobile home furnaces (see Table 9.3.1), the projected gas furnace share is very 

9-12 
sensitive to relative energy prices. Since the AE02007 forecast shows gas prices rising more than

electricity prices, the projected gas furnace market share in new mobile homes declines.

0 . 3

f Base Case

-Trial Standard Level 1 /A

Trial Standard Level 2

--X--Trial Standard Level 4 / B

-a -Trial Standard Level 5

0.2 ..-

AL

\^

0.1 JK

-At0.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

Year

Figure 9.6.2 Shipments Projections for Mobile Home Furnaces for the Base

Case and Each Trial Standard Level

9.6.4 Other Product Classes

Figure 9.6.3 shows the projections for the other product classes. Since DOE did not

estimate any change in shipments due to standards, the projections are the same for the base case

and each TSL.

9-13

 EE-RM/STD-01-350 COMMENT 164

sensitive to relative energy prices. Since the AE02007 forecast shows gas prices rising more than 

electricity prices, the projected gas furnace market share in new mobile homes declines. 

.. 

s::: 

~ 

0.3,.....----------------------------------, 

-+--_Base Case 

• -ll-Trial Standard Level 1 ! A 

Trial Standard Level 2 

Trial Standard Level4! B 

·----Trial Standard Level 5 

0'2 ~ 

!. . 

'* s::: 

E 

Co 

:E 

Ul 

0.1 

0.0 +---,_~~~_~~_~ __ ~~_~~_~ __ ~~_~~_~ __ ~~ 

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 

Year 

Figure 9.6.2 Shipments Projections for Mobile Home Furnaces for the Base 

Case and Each Trial Standard Level 

9.6.4 Other Product Classes 

Figure 9.6.3 shows the projections for the other product classes. Since DOE did not 

estimate any change in shipments due to standards, the projections are the same for the base case 

and each TSL. 

9-13 
0 6.

-tom Weatherized Gas Furnace

Oil-Fired Furnace

xd - -t1L NJ

0.5

-Hot-Water GasBoiler -•

Hot Water Oil Boilers

0 4 - Ay .

in

^ ^ ^ 7Fsc X t- a•:^Fi:

0 3

, e

a

fA f

02 .. x

0.1

0. 0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

Year

Figure 9.6.3 Shipment Projections for Other Product Classes

9-14

 EE-RM/STD-01-350 COMMENT 164

0.6r--------------------------------------------------------------------------------, 

0.5 -------

____ Weatherized Gas Furnace 

Oil-Fired Furnace 

Hot-Water Gas Boiler 

Hot Water Oil Boilers 

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 

Year 

Figure 9.6.3 Shipment Projections for Other Product Classes 

9-14 
REFERENCES

1. Gas Appliance Manufacturers Association (GAMA). Updated Shipment Data for

Residential Furnaces and Boilers . Personal communication. April 25, 2005.

2. U. S. Department of Commerce - Bureau of the Census. Characteristics of New HousingC25. 2003. U.S. Census. <http://www.census. gov/prod/1/constr/c25/>

3. U.S. Department of Energy - Energy Information Administration. Annual Energy Outlook

2007: With Projections Through 2030. February, 2007. Washington, DC. Report No.

DOE/EIA-0383(2007). <http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2007).pdf>

4. U.S. Department of Labor-Bureau of Labor Statistics. Producer Price Index: Series

wpu10620142. 2002. (Last accessed June 1, 2002.)

<ftp://ftp.bls.gov/pub/time.series/wp/wp,data. I l b.Metals 104-109>

5. Newell, R. G. Environmental Policy and Technology Change: The Effects of Economic

Incentives and Direct Regulation on Energy-Saving Innovation. May, 1997. Harvard

University. PhD Dissertation.

6. U.S. Department of Commerce-Bureau of the Census. American Housing Survey. 1995.

<http://www.census.gov/prod/2/constr/hl50/hl 5095rv.pdf>

7. American Gas Association. Gas Househeating Survey. various years. American Gas

Association. Arlington, VA.

8. U.S. Department of Energy - Energy Information Administration. Residential Energy

Consumption Survey: Household Energy Consumption and Expenditures 2001. 2001.

(Last accessed May 18, 2005.)

<http://www.eia.doe.gov/emeu/recs/recs200l/publicuse2OOl.html>

9. Air Conditioning. Air Conditioning, Heating & Refrigeration News. 1993.

 EE-RM/STD-01-350 COMMENT 164

REFERENCES 

1. Gas Appliance Manufacturers Association (GAMA). Updated Shipment Data for 

Residential Furnaces and Boilers. Personal communication. April 25, 2005. 

2. U. S. Department of Commerce - Bureau of the Census. Characteristics of New HousingC25. 2003. U.S. Census. <http://www.census.gov/prodll/constr/c25/> 

3. U.S. Department of Energy - Energy Information Administration. Annual Energy Outlook 

2007: With Projections Through 2030. February, 2007. Washington, DC. Report No. 

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