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CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM 

INTERESTED PARTIES, AND DEPARTMENT OF ENERGY RESPONSES

TABLE OF CONTENTS

2.1 INTRODUCTION ............................................................................................... 2-1

2.2 BACKGROUND ................................................................................................. 2-2

2.3 MARKET AND TECHNOLOGY ASSESSMENT............................................ 2-2

2.3.1 Scope of Coverage ............................................................................................... 2-3

2.3.2 Product Classes.................................................................................................... 2-6

2.3.3 Market Assessment .............................................................................................. 2-7

2.3.4 Technology Assessment....................................................................................... 2-8

2.4 SCREENING ANALYSIS .................................................................................. 2-9

2.5 ENGINEERING ANALYSIS............................................................................ 2-10

2.5.1 Baseline Models................................................................................................. 2-13

2.5.2 Max-Tech Model ............................................................................................... 2-13

2.5.3 Manufacturing Cost Analysis ............................................................................ 2-14

2.6 MARKUPS ANALYSIS ................................................................................... 2-14

2.7 ENERGY USE ANALYSIS.............................................................................. 2-15

2.7.1 Samples of Residential Boiler Users.................................................................. 2-15

2.7.2 Energy Use Determination................................................................................. 2-16

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ....................... 2-18

2.8.1 Inputs to Installed Cost ...................................................................................... 2-19

2.8.2 Inputs to Operating Cost .................................................................................... 2-20

2.8.3 Other Inputs ....................................................................................................... 2-22

2.9 SHIPMENTS ANALYSIS ................................................................................ 2-22

2.10 NATIONAL IMPACT ANALYSIS.................................................................. 2-23

2.10.1 National Energy Savings Analysis..................................................................... 2-24

2.10.2 Net Present Value Analysis ............................................................................... 2-25

LIST OF TABLES

Table 2.3.1 Product Classes........................................................................................ 2-7

Table 2.5.1 AHRI Recommendations for Residential Boiler Efficiency Levels...... 2-12

Table 2.5.2 HTP Recommendations for Residential Boiler Efficiency Levels........ 2-12
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CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM 

INTERESTED PARTIES, AND DEPARTMENT OF ENERGY RESPONSES

2.1 INTRODUCTION

The Energy Policy and Conservation Act (EPCA), as amended (42 USC 6291 et. seq.), 

requires that when prescribing new or amended energy conservation standards for covered 

products, the U.S. Department of Energy (DOE) must promulgate standards that achieve the 

maximum improvements in energy efficiency that are technologically feasible and economically 

justified. (42 U.S.C. 6295(o)(2)(A)) This chapter provides a description of the analytical 

framework that DOE is using to evaluate amended energy conservation standards for residential 

boilers. This chapter sets forth the methodology, analytical tools, and relationships among the 

various analyses that are part of this rulemaking. 

The analyses performed are listed below.

• A market and technology assessment to characterize the relevant products, their markets,

and technology options for improving their energy efficiency, including prototype 

designs.

• A screening analysis to review each technology option and determine if it is 

technologically feasible; is practicable to manufacture, install, and service; would 

adversely affect product utility or product availability; or would have adverse impacts on 

health and safety.

• An engineering analysis to develop relationships that show the manufacturer’s cost of 

achieving increased efficiency.

• A markups analysis to develop distribution channel markups that relate the manufacturer 

production cost (MPC) to the cost to the consumer.

• An energy use analysis to determine the annual energy use of the considered products in 

a representative set of users.

• A life-cycle cost (LCC) and payback period (PBP) analysis to calculate the savings in 

operating costs at the consumer level throughout the life of the covered products 

compared with any increase in the installed cost for the products likely to result directly 

from imposition of a standard.

• A shipments analysis to forecast product shipments, which are then used to calculate the 

national impacts of standards on energy, net present value (NPV), and future 

manufacturer cash flows.

• A national impact analysis (NIA) to assess the aggregate impacts at the national level of

potential energy conservation standards for the considered products, as measured by the 

NPV of total consumer economic impacts and the national energy savings (NES).
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2.2 BACKGROUND

Amendments to title III of EPCA have given DOE the authority to regulate the energy 

efficiency of several products, including residential boilers — the products that are the focus of 

this document. (42 U.S.C. 6292(a)(5); 42 U.S.C. 6295(f)(4)(C))

DOE developed this analytical framework and documented its findings in the 

Rulemaking Framework Document for Residential Boilers (February 11, 2013). On that same 

day (February 11, 2013), DOE published the Notice of Public Meeting and Availability of the 

Framework Document for residential boilers in the Federal Register. 78 FR 9631. In 

conjunction, DOE posted the Framework Document to the DOE website.1 DOE presented the 

analytical approach to interested parties during a public meeting held on March 13, 2013. 

In response to the publication of the Framework Document and the Framework public 

meeting, DOE received comments from interested parties regarding DOE’s analytical approach. 

This chapter (chapter 2) summarizes the key comments DOE received from interested parties 

and presents DOE’s responses to those comments. In addition, in subsequent sections of this 

chapter, DOE has summarized any significant changes in analytical approach made since 

publishing the Framework Document that DOE used in its analyses. Lastly, in the Notice of 

Data Availability (NODA), DOE identified a number of issues on which it seeks public 

comment. DOE has explained each of those issues in the relevant analytical sections below.

2.3 MARKET AND TECHNOLOGY ASSESSMENT

When DOE begins an energy conservation standards rulemaking, it develops information 

that provides an overall picture of the market for the products considered, including the nature of 

the products, market characteristics, and industry structure. This activity consists of both 

quantitative and qualitative efforts based primarily on publicly-available information. The 

market assessment examined manufacturers, trade associations, and the quantities and types of 

products offered for sale.

DOE recognizes that there may be limited public information on national shipments, 

manufacturing costs, channels of distribution, and manufacturer market shares of residential 

boilers. This type of data is an important input for analyses that determine if energy 

conservation standards are economically justified and will result in significant energy savings. 

Therefore, DOE encourages interested parties to submit data that will improve DOE’s 

understanding of the residential boilers market. These data may be provided under a 

confidentiality agreement with DOE’s contractor responsible for this part of the rulemaking 

analysis, Navigant Consulting, Inc. (NCI). In other rulemakings, NCI works with confidential 

data provided by manufacturers and other organizations in preparing aggregated results for 

DOE’s analysis. These aggregated results do not divulge the sensitive, individual raw data, but 

enable other interested parties to comment on the aggregated dataset.

 

1 The February 11, 2013 residential boilers Framework Document is available at the following link:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=62.
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Alternatively, interested parties may submit confidential data to DOE, indicating in 

writing which data should remain confidential. Interested parties must submit confidential 

information to DOE according to the procedures outlined in 10 CFR 1004.11. Pursuant to 10 

CFR 1004.11, any person submitting information that he or she believes to be confidential and 

exempt by law from public disclosure should submit two copies. One copy of the document 

shall include all the information believed to be confidential, and the other copy shall have the 

information believed to be confidential deleted. DOE will make its own determination about the 

confidential status of the information and treat it accordingly.2

DOE reviewed relevant literature and interviewed manufacturers to develop an overall 

picture of the residential boiler industry in the United States. Industry publications and trade 

journals, government agencies, and trade organizations provided the bulk of the information, 

including: (1) manufacturers and their approximate market shares; (2) shipments by product type 

(e.g., gas-fired hot water, oil-fired hot water); (3) product information; and (4) industry trends. 

Subsequent sections of this chapter describe the comments DOE received in response to 

its review of the market for the Framework Document. The analyses developed as part of the 

market and technology assessment are described in chapter 3.

2.3.1 Scope of Coverage

In the Framework Document, DOE sought comment on the scope of coverage for this 

rulemaking and on whether any additional types of residential boilers should be added to the 

existing scope of coverage outlined in the Energy Independence and Security Act of 2007 (EISA 

2007). Specifically DOE requested comment on whether other products such as combination 

appliances (i.e., appliances used for both space heating and domestic hot water) and electric 

boilers should be included in the scope of coverage of this rulemaking. Stakeholders also 

provided comment on the analysis of standby mode and off mode standards, as well as the 

possibility of DOE imposing prescriptive design requirements on residential boilers. 

Many stakeholders stated that they support the inclusion of combination appliances in 

this rulemaking, as they believe that combination appliances are a growing trend that would 

benefit from a rating method and efficiency standards. (HTP, No. 7 at p. 3; Joint Efficiency 

Commenters, No. 8 at p. 8; NEEP, No.10 at p. 2; Lochinvar, Public Meeting Transcript, No. 5 at 

p. 27) However, several commenters also argued that the current Federal test method does not 

have a means to accurately measure the energy use and efficiency of combination products. 

(NEEP, No. 10 at p. 2, HTP, Public Meeting Transcript, No. 5 at p. 3) The Air-Conditioning, 

Heating, and Refrigeration Institute (AHRI) stated that a clearer definition of “combination 

 

2 Factors that DOE considers when evaluating requests to treat submitted information as confidential include: (1) a 

description of the items; (2) whether and why such items are customarily treated as confidential within the industry; 

(3) whether the information is generally known by or available from other public sources; (4) whether the 

information has previously been made available to others without obligation concerning its confidentiality; (5) an 

explanation of the competitive injury to the submitting person which would result from public disclosure; (6) a date 

after which such information might lose its confidential character; and (7) why disclosure of the information would 

be contrary to the public interest.
2-4

appliance” is needed before further discussion on the test procedure and associated regulations 

can take place. AHRI urged that the finalized test procedure rulemaking should provide 

definitive information on the status of DOE’s deliberations regarding combination appliances, 

including a clear definition covering such products. AHRI stated that it supports DOE’s 

tentative plan to maintain the current scope of coverage for residential boilers and does not 

recommend the creation of any new product classes for this rulemaking. (AHRI, No. 9 at p. 2-3)

DOE acknowledges that the current Federal test procedure for boilers does not have a 

means to accurately measure the energy use and energy efficiency of combination appliances.

On January 4, 2013, DOE published a Request for Information (RFI) (78 FR 675) that initiated a 

rulemaking to update the test procedure for determining the efficiency of residential furnaces and 

boilers as required by EISA 2007. (42 U.S.C 6293(b)(1)(A)) As part of that rulemaking, DOE is 

considering whether to adopt a separate test method specifically for determining the efficiency of

combination appliances; however, currently no test procedure has been proposed or adopted for 

this equipment. Therefore, until the test procedure issue is resolved, DOE has decided not to 

create a separate product class for combination space-heating and water-heating appliances as a 

type of boiler, and did not separately analyze these products in this analysis. Manufacturers 

currently certify combination appliances by rating the efficiency of the unit when performing 

their primary function (i.e., space heating for boiler/tankless coil combination units and 

boiler/indirect water heater units, or water heating for water heater/fan-coil units).

EPCA, as amended by EISA 2007, requires that any final rule for a new or amended 

energy conservation standard adopted after July 1, 2010 must address standby mode and off 

mode energy use pursuant to 42 U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) EISA 2007 also 

requires that such energy consumption be integrated into the overall energy efficiency, energy 

consumption, or other energy descriptor, unless the current test procedure already accounts for 

standby mode and off mode energy use. If an integrated metric is technically infeasible, DOE 

must prescribe a separate standby mode and off mode metric for the covered product, if 

technically feasible. (42 U.S.C. 6295(gg)(2)(A)) )). In 2010, DOE published a final rule that 

amended the test procedure for residential furnaces and boilers to include standby and off mode 

energy use. 75 FR 64621. This final rule found that an integrated test procedure is technically 

infeasible for furnaces and boilers. Specifically, DOE found that due to the relatively small 

magnitude of the standby mode and off mode electrical energy consumption in comparison to the 

active mode energy consumption and the rounding practices associated with rating the efficiency 

of residential furnaces and boilers, changes to reduce standby mode and off mode energy 

consumption would not result in any material change to the efficiency rating. Because the 

standby mode and off mode energy consumption would for all practical purposes be lost in such 

an approach, DOE determined and integrated metric is infeasible and prescribed a separate 

standby and off mode energy use test procedure for residential furnaces and boilers.

Several stakeholders stated that DOE should not regulate standby mode and off mode 

electrical power consumption on the basis that such consumption in boilers is insignificantly 

small and that any regulation of standby mode consumption will not result in significant energy 

savings. (AHRI, No. 9 at p. 2, Lochinvar, Public Meeting Transcript, No. 5 at p. 37) Lochinvar 

stated that electrical power consumption is approximately 0.15 percent of total boiler energy 

consumption. (Lochinvar, Public Meeting Transcript, No. 5 at p. 37) AHRI added that the 
2-5

current DOE test method does not consider heat loss through the jacket as an energy loss (for 

indoor units) since that heat is transmitted into the residence and any heat given off by the 

electronic controls in standby mode provides heat to the space where the unit is installed, so 

standby mode consumption should not be considered an energy loss. (AHRI, No. 9 at p. 2) US 

Boiler noted that the electrical standby loss tests are extremely burdensome, as they require more 

precision than the rest of the test method for a very small percentage of the actual energy 

consumption. (US Boiler, Public Meeting Transcript, No. 5 at p. 43) ACEEE asked if DOE 

would consider default values that are representative as acceptable in lieu of testing, given the 

relatively small amount of energy use as asserted by the manufacturers. ACEEE added that they 

would be willing to work with industry in supporting a default value if a rational program would 

prove less burdensome than testing each product. (ACEEE, Public Meeting Transcript, No. 5 at

p. 42)

The Northeast Energy Efficiency Partnerships (NEEP) stated that while standby mode 

and off mode energy use may make up a very small fraction of a boiler’s total energy use, this 

should not lead the Department to forego further analysis of savings potential, as the savings 

opportunities associated with standby mode/off mode requirements are not well document and 

should be investigated while maintaining sensitivity to any testing burden that these standards 

may exact on manufacturers. (NEEP, No. 10 at p. 2)

Even given the concerns with regulating standby mode and off mode energy consumption 

noted above, AHRI, Lochinvar, and HTP agreed that an analysis of off mode consumption 

should be conducted. (AHRI, No. 9 at p. 2; Lochinvar, Public Meeting Transcript, No. 5 at p. 

37; HTP, No. 7 at p. 4) 

After carefully considering these comments, DOE did analyze the standby mode and off 

mode energy consumption of residential boilers, because this analysis is required under the 

statute at 42 U.S.C. 6295(gg)(3). The analysis of standby mode and off mode energy 

consumption is described further in chapter 5.

Lastly, several commenters suggested that DOE consider whether additional prescriptive

design requirements are justified. The existing DOE residential furnace and boiler test procedure 

uses the AFUE metric to measure the efficiency of residential boilers. The on-going residential 

boiler (active mode) test procedure rulemaking does not consider an alternative metric, because 

EPCA requires that DOE use AFUE as the metric for boilers. (42 U.S.C. 6291(20)(C) and 

(22)(A)) However, there are energy efficiency improvement opportunities that are not captured 

by the current AFUE test method. Some such improvements were captured by the prescriptive 

requirements for residential boilers that were added to EPCA by EISA 2007 (see 42 U.S.C. 

6295(f)(3)). 

ACEEE and NEEP encouraged the Department to explore the adoption of additional 

prescriptive requirements for boilers, especially for efficiency opportunities that the AFUE 

metric does not capture. (ACEEE, Public Meeting Transcript, No. 5 at p. 16; NEEP, No. 10 at p. 

3) NEEP further specified that circulation pumps, along with other components, may be good 

candidates for new prescriptive requirements. (NEEP, No. 10 at p. 3) In contrast, AHRI 

commented that EISA 2007 did not alter any of the provisions of EPCA addressing DOE’s 
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authority to develop or revise standards for residential covered products, and therefore, this 

rulemaking should be limited to addressing revised minimum efficiency standards only. (AHRI, 

No. 6 at p.1-2)

DOE has tentatively determined that it lacks the legal authority to prescribe design 

requirements for residential boilers. Accordingly, this analysis only includes the consideration of 

amended efficiency (AFUE) standards.

2.3.2 Product Classes

When evaluating and establishing energy conservation standards, DOE generally divides 

covered products into product classes by the type of energy used, capacity, or other performancerelated features that affect efficiency. Different energy conservation standards may apply to 

different product classes. (42 U.S.C. 6295(q)) DOE then conducts its analysis for each product 

class and considers establishing standards that provide separate standard levels for each product 

class considered.

In the Framework Document, DOE indicated that it plans to maintain the existing product 

classes for residential boilers, which are currently denominated in EPCA at 42 U.S.C. 

6295(f)(3)(A) and the Code of Federal Regulations (CFR) at 10 CFR 430.32(e)(2)(ii).

3 For 

residential boilers, the existing product classes are based on fuel type and heat transfer medium. 

The type of energy used is explicitly identified as a criterion for creating a separate product class 

in EPCA. (42 U.S.C. 6295(q)) Further, DOE has tentatively determined that heat transfer 

medium is a performance-related characteristic that merits a separate product class due to the 

significantly different efficiency and performance characteristics of hot water and steam boilers.

In this analysis, DOE maintained the product classes established by EISA 2007 and analyzed six

product classes for this rulemaking, which are shown in Table 2.3.1. For gas-fired and oil-fired 

boilers, enough public data were readily available to conduct robust analyses, and DOE analyzed 

amended AFUE standards. The electric boiler product classes represent significantly fewer 

shipments and significantly less energy use. Further, according to DOE’s test procedure, electric 

boilers are assigned an AFUE rating of 100 percent, and, therefore, there are no design options 

available for improving the AFUE of these products. DOE analyzed only standby mode and off 

mode electrical use for the electric boilers product classes. 

 

3 EPCA includes a total of six product classes, which includes a product class for electric steam boilers. EPCA 

specifies the minimum AFUE and the design requirements as “none.” (42 U.S.C. 6295 (f)(3)(A)) Because there are 

no standards for electric steam boilers, this product class is not listed at 10 CFR 430.32(e)(2)(ii). However, DOE 

plans to maintain the electric steam boiler product class as specified by EPCA and to consider standby mode and off 

mode energy conservation standards.
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Table 2.3.1 Product Classes

Fuel Type Heat Transfer Medium

Gas

Steam

Hot Water

Oil Steam

Hot Water

Electric

Steam

Hot Water

In the Framework Document, DOE sought comment on its proposed product classes,

including whether capacity or any performance-related features warrant the creation of additional

product classes for residential boilers in accordance with the requirements of 42 U.S.C. 6295(q). 

DOE also sought comment to determine if it should undertake analysis and upgrade the 

efficiency standards for product classes with such low volumes of annual shipments.

AHRI recommended that DOE not create any new product classes for this rulemaking. 

(AHRI, No. 9 at p.3) In opposition to AHRI’s position on product classes, ACEEE stated its

belief that there is a regulatory gap for two emerging products, namely air-source and groundsource heat pumps whose functions are analogous to those of boilers. ACEEE suggested that the 

DOE should start thinking about how to develop standards to provide consumers with 

information to compare expected energy use of these new products with the energy use of 

traditional boilers. (ACEEE, Public Meeting Transcript, No. 5 at p. 22)

Additionally, ACEEE stressed the status of heat pump boilers as an emerging product. 

ACEEE differentiated between inherently limited niche products and emerging technologies.

ACEEE stated that although shipments for emerging technologies may be small, it is worth 

considering rating methods that will not handicap their acceptance. HTP supports the 

conceptualization of a new product class of “Emerging Market Products.” (ACEEE, Public 

Meeting Transcript, No. 5 at p. 22; HTP, No. 7 at p. 4)

DOE notes that while these air-to-water heat pumps for space heating are currently 

available to consumers, these technologies are not compatible with the current AFUE metric. As 

a result, DOE did not create a separate product class to analyze them for this analysis, but will 

consider them further in the ongoing test procedure rulemaking. Consequently, DOE maintained 

the product classes as proposed in the Framework Document.

2.3.3 Market Assessment

As part of the market and technology assessment, DOE developed information that 

provides an overall picture of the market for the products considered, including the nature of the 

products, market characteristics, and industry structure. DOE collected quantitative and 

qualitative information, primarily from publicly-available sources. The market assessment 

examined manufacturers, trade associations, and the quantities and types of products sold and 

offered for sale. DOE reviewed relevant literature and interviewed manufacturers to develop an 

overall picture of the residential boiler industry in the United States. Industry publications and 

trade journals, government agencies, and trade organizations provided the bulk of the 
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information, including: (1) manufacturers and their market shares; (2) shipments by product 

type; (3) product information; and (4) industry trends. The analyses developed as part of the 

market assessment are described in chapter 3. 

In the Framework Document, DOE sought comment on estimates of market shares, 

products, features, and trends related to energy efficiency of residential boilers covered in this 

rulemaking. DOE did not receive any public comments relating to these topics.

2.3.4 Technology Assessment

DOE typically uses information relating to existing and past technology options and 

prototype designs as inputs to determine what technologies manufacturers use to attain higher 

performance levels. In consultation with stakeholders, DOE develops a list of technologies for 

consideration. Initially, these technologies encompass all those DOE believes are 

technologically feasible. 

DOE developed its list of technologically feasible design options for the considered 

products through consultation with manufacturers of components and systems, and from trade 

publications and technical papers. Since many options for improving product efficiency are 

available in existing units, product literature and direct examination provided additional 

information. The technologies examined in the technology assessment are described in detail in 

chapter 3 of the attached data.

In the Framework Document, DOE sought comment on the technologies identified, as 

well as additional technology options which had not been identified. The Joint Efficiency 

Commenters suggested that DOE should further explore technology options that would increase 

the efficiency of electric boilers, including heat pump boilers. The Joint Efficiency Commenters

also suggested that DOE should consider technologies used internationally in the technology 

assessment, including absorption heat pumps. (Joint Efficiency Commenters, No. 8 at p. 2)

Again, DOE notes that the current test method assigns an AFUE value of 100 percent to 

electric boilers. Therefore, the test procedure currently does not give credit for any efficiency 

improvements for electric boilers, so DOE did not explore heat pump boilers as a technology 

option. DOE did consider any and all technologies that could possibly be used to improve the 

AFUE rating, and these technologies are described further in chapter 3 of the attached data.
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2.4 SCREENING ANALYSIS

The purpose of the screening analysis is to evaluate the technologies identified in the 

technology assessment to determine which technologies to consider further and which 

technologies to screen out. DOE consulted with industry, technical experts, and other interested 

parties in developing a list of energy-saving technologies for the technology assessment. DOE 

then applied the screening criteria to determine which technologies were unsuitable for further 

consideration in this rulemaking. Chapter 4, the screening analysis, contains details about 

DOE’s screening criteria.

As presented in further detail below, the screening analysis examines whether various 

technologies: (1) are technologically feasible; (2) are practicable to manufacture, install, and 

service; (3) have an adverse impact on product utility or availability; and (4) have adverse 

impacts on health and safety. In consultation with interested parties, DOE reviewed the list of 

residential boiler technologies according to these criteria. In the engineering analysis, DOE 

further considers the efficiency-enhancement technologies that it did not eliminate in the 

screening analysis.

1. Technological feasibility. DOE screens out technologies that are not incorporated in 

commercially-available products or working prototypes.

2. Practicability to manufacture, install, and service. If DOE determines that mass 

production of a technology in commercial products and reliable installation and 

servicing of the technology cannot be achieved on the scale necessary to serve the 

relevant market by the time of the compliance date of the standard, it will not consider 

that technology further.

3. Adverse impacts on product or equipment utility or availability. If DOE determines a 

technology has a significant adverse impact on the utility of the product for significant 

consumer subgroups or results in the unavailability of any covered product type with 

performance characteristics (including reliability), features, size, capacities, and 

volumes that are substantially the same as products generally available in the United 

States at the time, it will not consider that technology further.

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not consider that technology 

further.

In the Framework Document, DOE included a list of energy efficiency improvement 

technologies and sought comment on whether any should be screened out based on the four 

screening criteria. In addition, DOE sought comment from interested parties on how the four 

screening criteria might apply to any additional technology option(s) that an interested party 

recommends to DOE. DOE eliminated from further consideration the pulse combustion, ECM 

control relay, and modulation for steam boilers as technology options based on the third criteria, 

adverse impacts on product utility. Chapter 4 includes a detailed discussion regarding these 

screened-out technology options. 
2-10

Several comments suggested that DOE remove pulse combustion as a technology option,

as it has reliability issues, and there are superior pathways to reach a condensing appliance. 

(AHRI, No. 9 at p.3; U.S. Boiler, Public Meeting Transcript, No. 5 at p. 47) As noted, DOE 

agrees with these comments and has screened out this technology option.

HTP and AHRI recommended that electronic ignition be removed as a technology 

options, as the current DOE regulations have banned the use of continuous pilot lights. (AHRI, 

No. 9 at p. 3; HTP, No. 7 at p. 5) Again, DOE agrees with these and reflected this in the 

engineering analysis, as the baseline equipment was assumed to have electronic ignition.

Several stakeholders recommended that DOE remove control relays for BPM motors as a 

technology option, because it has the potential to increase product price and maintenance cost

and would have adverse impacts on product utility. (AHRI, No. 9 at p. 3; Lochinvar, Public 

Meeting Transcript, No. 5 at p. 46; HTP. No. 7 at p.5) As noted above, DOE agrees that this 

technology would have adverse impacts on product utility and has screened out control relays for 

BPM motors.

AHRI commented that using burner modulation is not a practical technology to increase 

AFUE for either oil or gas steam boilers because most residential steam systems are not zoned.

Reducing the burner input will, therefore, result in heat distribution problems in the system and 

would reduce produce utility. (AHRI, No. 9 at p. 4) DOE once again agrees with this comment, 

and has not considered this technology for product classes where it is not practical due to 

reduced utility.

Chapter 4 contains additional details about the screening analysis and the justification for 

screening out certain technologies. In addition, chapter 5 contains a description of the 

technologies considered at each efficiency level.

2.5 ENGINEERING ANALYSIS

The engineering analysis (chapter 5) establishes the relationship between manufacturing 

production cost and efficiency for each residential boiler. This relationship serves as the basis 

for cost-benefit calculations in terms of individual consumers, manufacturers, and the Nation. 

Chapter 5 discusses the product classes analyzed, representative baseline units, incremental 

efficiency levels, methodology used to develop manufacturing production costs, cost-efficiency 

curves, impact of efficiency improvements on the considered products, and methodology used to 

extend the analysis to low-shipment-volume product classes. To determine the cost to 

consumers of residential boilers at various efficiency levels, DOE estimated manufacturing costs, 

markups in the distribution chain, installation costs, and maintenance costs. Efficiency levels for 

products included in this rulemaking were calculated according to the current DOE test 

procedure. 

In the engineering analysis pertaining to residential boilers, DOE evaluated a range of 

product efficiency levels and associated manufacturing costs. The purpose of the analysis is to 

estimate the incremental increase to selling prices that would result from increasing efficiency 

levels above the baseline model in each product class. The engineering analysis considers 
2-11

technologies not eliminated in the screening analysis, although certain technologies were not 

analyzed due to other reasons, such as negligible incremental efficiency improvements, lack of 

information on efficiency improvement, or the inability of the existing DOE test procedures to 

measure any reduction in energy use. DOE considers the remaining technologies, as appropriate,

in developing the cost-efficiency curves, which are subsequently used for the LCC and PBP 

analyses.

DOE typically structures its engineering analysis around one of three methodologies: (1) 

the design-option approach, which calculates the incremental costs of adding specific design 

options to a baseline model; (2) the efficiency-level approach, which calculates the relative costs 

of achieving increases in energy efficiency levels without regard to the particular design options 

used to achieve such increases; and/or (3) the reverse-engineering or cost-assessment approach, 

which involves a “bottom-up” manufacturing cost assessment based on a detailed bill of 

materials derived from tear-downs of the equipment being analyzed.

For this analysis, DOE conducted the engineering analysis for residential boilers using a 

combination of the efficiency level and cost-assessment approaches for analysis of various 

energy efficiency levels. More specifically, DOE identified the efficiency levels for analysis and 

then used the cost-assessment approach to determine the manufacturing costs at those levels. 

This approach involved physically disassembling commercially-available products, consulting 

with outside experts, reviewing publicly-available cost and performance information, and 

modeling equipment cost. Chapter 5 describes the methodology and results of the efficiency 

level analysis used to derive the cost-efficiency relationships.

In the Framework Document, DOE presented plans for its engineering analysis and sought 

comment on its approach to calculating the cost-efficiency relationship for residential boilers by 

incrementally increasing efficiency from the baseline model to max-tech for characterizing the 

efficiencies of boilers currently offered for sale. In response to the approach outlined in the 

Framework Document, DOE received comments regarding the following issues: (1) the baseline 

products for residential boilers of various product classes; (2) the maximum technologically

feasible efficiency levels; and (3) the efficiency levels analyzed in the engineering analysis.

DOE sought input regarding the range of efficiency levels and any key efficiency levels 

that should be examined as part of its analysis. In the engineering analysis, DOE established 

energy efficiency levels for each product class to reflect the current residential boilers market. 

See Chapter 5 for details on the efficiency levels and the associated technologies. AHRI and 

HTP suggested that DOE should review and keep in mind the condensation concerns raised in 

the previous residential furnaces and boilers rule when selecting efficiency levels. (AHRI, No. 9 

at p. 1; HTP, No. 7 at p. 1)

AHRI suggested that DOE group products according to the following product classes and 

efficiency ranges shown in Table 2.5.1. (AHRI, No. 9 at p. 4)
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Table 2.5.1 AHRI Recommendations for Residential Boiler Efficiency Levels

Product 

Class

Additional Description

(Category Venting*)

General Efficiency Range

Gas-Fired Hot 

Water

Category I or III 82-83.5%

Category II or IV: Require metal 

venting but unlikely to condense in 

the heat exchanger.

83.6-87%

Category IV Require metal venting 87.1%-89.9%

Category IV Condensing products 

may be vented with non-metallic 

materials

90-95.2%

Oil-Fired Hot 

Water

84-87%

87.1-91.2%

Gas-Fired 

Steam

Category I or III 80-83.5%

Oil-Fired 

Steam

82-86%

* According to the National Fuel Gas Code (NFPA 54/ANSI 2223.1).

HTP suggested that DOE examine slightly different efficiency level ranges for gas-fired 

hot water boilers as shown in Table 2.5.2 (HTP, No. 7 at p. 5).

Table 2.5.2 HTP Recommendations for Residential Boiler Efficiency Levels

Product 

Class

Additional Description General Efficiency Range

Gas-Fired Hot 

Water

Includes products meeting minimum 

standard and not likely to condense in 

either product or vent system

82-85 %

Includes products which may 

experience condensation in the heat 

exchanger or venting system. 

85.1-89.9%

Includes condensing products 90+%

Additionally, DOE sought input on characteristics which may require multiple 

representative products within a single product class. AHRI and HTP both stated that DOE 

should consider the following characteristics that require multiple representative products within 

a single product class: heat exchanger material (stainless steel, copper, aluminum, cast iron), heat 

exchanger construction (single piece, sectional, water tube, fire tube), burner type (atmospheric, 

induced, premix), and venting system. (AHRI, No. 9 at p.5; HTP, No. 7 at p.6)

DOE considered the above comments when choosing efficiency levels and identifying 

representative equipment in each category. As described in detail chapter 5, the analysis 

encompasses many of the efficiency levels and product characteristics recommended by 

stakeholders.
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2.5.1 Baseline Models

In order to analyze technology options for energy efficiency improvements, DOE defined 

a baseline model unit for each residential boiler product class. A baseline model is a model with 

an efficiency that meets, but does not exceed, the existing energy conservation standard. In the 

Framework Document, DOE sought comment on the selection, appropriate features, and 

performance characteristics of baseline models for each product class. In response, AHRI 

recommended that DOE should review the baseline models that were used in the analysis 

conducted in 2004-2006 for DOE’s 2007 furnaces and boilers rulemaking and then determine 

whether any modifications to those baseline models are required. (AHRI, No. 9 at p.4-5)

Chapter 5 includes details on the baseline products for each product class.

2.5.2 Max-Tech Model

In the Framework Document, DOE sought input from stakeholders regarding the 

appropriate max-tech level for residential boilers. In response, AHRI recommended that for hot 

water boilers, DOE should only consider commercially-available boilers for which there is 

significant field experience in North America as the “max-tech.” AHRI reasoned that market 

forces are already driving manufacturers to develop higher-efficiency products in this class, and,

therefore, it is unlikely that DOE will identify a technology not already in commercial use that is 

safe, reliable, and cost-effective. (AHRI, No. 9 at p.4) HTP stated that the Department should 

also consider existing technologies available in other countries in the max-tech evaluation. 

(HTP, No.7 at p.6) 

AHRI stated that the practical “max-tech” level for a gas steam boiler should be limited

to an efficiency appropriate for Category I venting, because the existing installations of gas 

steam boilers are more likely than hot water boilers to present the situation where there are no 

practical alternatives to natural draft venting using a masonry chimney, particularly in urban 

areas. Similarly, AHRI added that the “max-tech” for oil-fired boilers should also be limited to 

that for natural draft venting in a masonry chimney. (AHRI, No. 9 at p. 4)

DOE considered the stakeholders’ comments and has tentatively determined the 

maximum improvement in energy efficiency that is technologically feasible (“max-tech”) for 

residential boilers, as required by 42 U.S.C. 6295(o)(2)(A). DOE identified the max-tech levels 

as part of the engineering analysis. Chapter 5 includes additional details on the max-tech levels 

DOE determined for this stage, including the reasoning for the selection of the max-tech level for 

each product class. In summary, the max-tech efficiency levels identified in the engineering 

analysis were the highest levels attainable with either a commercially-available product or a 

working prototype. For gas-fired hot water boilers, the level corresponded to the highest 

efficiency product available in the North American market at the time of the analysis. For oilfired boilers, DOE did not limit the max-tech level to only products that can utilize Category I 

venting as suggested by commenters, because DOE believes that such venting changes could be 

accommodated, although DOE recognizes that the installation costs would increase substantially. 

DOE has accounted for situations which would require additional installation costs in the 

installation cost portion of the LCC chapter, located in Chapter 8. 
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2.5.3 Manufacturing Cost Analysis

There are several ways to develop the relationship between cost and performance. As 

noted previously, DOE conducted this engineering analysis for residential boilers using a 

combination of the efficiency level and cost-assessment approaches for this analysis of the 

AFUE efficiency levels. More specifically, DOE identified the efficiency levels for analysis 

and then used the cost-assessment approach to determine the manufacturing costs at those 

levels.

DOE purchased “off-the-shelf” units commercially available on the market and 

dismantled them component by component to determine what technologies and designs 

manufacturers currently employ to increase residential boiler energy efficiency. DOE then used 

independent costing methods, along with manufacturer and component-supplier data, to 

estimate the costs of the components. DOE also used catalog data to “virtually” disassemble 

several units that were similar to ones that were physically purchased and torn down. DOE 

input the data from physical and virtual teardowns into a manufacturing cost model to estimate 

the manufacturing cost of the models that were analyzed, including the cost of the product 

components, labor, purchased parts and materials, and investment. DOE determined the 

efficiency levels corresponding to various design options from commercially-available 

information on products and data submitted by manufacturers. Additional detailed information 

on DOE’s manufacturing cost analysis is provided in Chapter 5. DOE did not receive any 

comments related to its planned methodology for this analysis in response to the Framework 

Document.

2.6 MARKUPS ANALYSIS

DOE uses manufacturer-to-customer markups to convert the manufacturer selling price 

estimates from the engineering analysis to customer prices, which are then used in the LCC and 

PBP analysis and in the manufacturer impact analysis. Retail prices are necessary for the 

baseline efficiency level and all other efficiency levels under consideration. 

Before developing markups, DOE defines key market participants and identifies 

distribution channels. Generally, the boiler distribution chain includes five market participants: 

(1) manufacturer; (2) wholesaler; (3) mechanical contractors; (4) general contractors; and (5) 

consumers. For the markups analysis, DOE used three types of distribution channels to describe 

how most residential boilers pass from the manufacturer to the consumer: (1) replacement 

market; (2) new construction, and (3) national accounts. The national accounts channel is an 

exception to the usual distribution channel that is only applicable to those residential boilers 

installed in the small to mid-size commercial buildings where the on-site contractor staff 

purchase equipment directly from the wholesalers at much lower prices due to the large volume 

of equipment purchased, and perform the installation themselves. These channels are explained 

in detail in Chapter 6.

After defining the participants and channels, DOE develops baseline and incremental 

markups to transform the manufacturer selling price into a consumer product price. DOE uses 

the baseline markups, which cover all of a distributor’s or contractor’s costs, to determine the 
2-15

sales price of baseline models. Incremental markups are coefficients that DOE applies to the 

incremental cost of higher-efficiency models. Because companies mark up the price at each 

point in the distribution channel, both baseline and incremental markups are dependent on the 

particular distribution channel. 

DOE requested comment on its proposed approach to developing estimates of future 

residential boiler retail prices; however, no comments were received regarding its planned

markups and methodology. Therefore, DOE chose to proceed with the proposed analysis as 

presented in the Framework Document. 

2.7 ENERGY USE ANALYSIS

The purpose of the energy use analysis is to determine the annual energy consumption of 

residential boilers used in representative U.S. single-family homes, multi-family residences, and 

commercial buildings. Additionally, the energy use analysis assesses the energy savings 

potential of increased boiler efficiency. DOE estimated the annual energy consumption of 

residential boilers at specified energy efficiency levels across a range of climate zones. The 

annual energy consumption includes the natural gas, liquid petroleum gas (LPG), oil, and/or 

electricity use by the boiler. The annual energy consumption of residential boilers is used in 

subsequent analyses, including the LCC and PBP analysis and the national impact analysis. 

2.7.1 Samples of Residential Boiler Users

For the residential sector, DOE consulted the Energy Information Administration’s (EIA) 

2009 Residential Energy Consumption Survey (RECS 2009) to establish a sample of households 

using residential boilers for each boiler product class.1 The RECS data provide information on 

the vintage of the home, as well as heating energy use in each household. The survey also 

includes household information such as the physical characteristics of housing units, household 

demographics, information about other heating and cooling products, fuel types used, energy 

consumption and expenditures, and other relevant data. DOE used the household samples not 

only to determine boiler annual energy consumption, but also as the basis for conducting the 

LCC and PBP analysis.

DOE used data from the American Housing Survey (AHS) 2011,

2 the U.S. Census 

Bureau’s Characteristics of New Housing,

3 and historical shipments by State4 to project 

household weights and household characteristics in 2020 − the expected compliance date of 

amended energy conservation standards for residential boilers. 

In the Framework Document, DOE requested comment on whether it should consider use 

of residential boilers in commercial and multi-family applications. AHRI stated that they 

question the need to consider commercial applications in the analysis because if a residential 

boiler is being used in a commercial application it is because the boiler can meet the load of that 

application. In effect, AHRI argued that the application is similar to a residential load, so 

considering it as something unique is unnecessary. However, AHRI stated that if DOE is 

considering commercial applications where multiple residential boilers are installed, those 

applications have no commonality with residential applications. As such, they should not be 
2-16

considered as a factor in establishing revised standards for residential products. The very nature 

of these standards is to focus on residential products as used for their primary intended 

application (i.e., installation in consumer’s residences). (AHRI, No. 9 at p. 6)

ACEEE expressed familiarity with a series of condensing residential boilers being used 

as a heating source for a multi-family apartment complex. (ACEEE, Public Meeting Transcript, 

No. 5 at p. 80) HTP also noted that they have witnessed a trend of residential boilers being 

packaged together to achieve the output of a commercial boiler. (HTP, No. 7 at p. 6)

DOE accounted for applications of residential boilers in multi-family housing and 

commercial buildings because the intent of the analysis of consumer impacts is to capture the full 

range of usage conditions for these products. In response to AHRI’s comment, DOE considered 

that the definition of “residential boiler” is limited only by its capacity and not by the application 

type. DOE determined that these applications represent about 14 percent of the residential gasfired boiler market and 11 percent of the residential oil-fired boiler market. DOE identified the 

types of multi-family and commercial buildings most likely to employ the use of boiler(s) that 

would meet the capacity requirements of residential products. 

For the commercial building sample, DOE used the EIA’s 2003 Commercial Building

Energy Consumption Survey5 (CBECS 2003) to establish a sample of commercial buildings 

using residential boilers for each boiler product class. The CBECS 2003 data provide 

information on the vintage of the building, building square footage, fuels used, heating energy 

use, and other relevant data. Criteria were developed to help size these boilers using several 

variables, including building square footage and estimated supply water temperature. For boilers 

used in multi-family housing, DOE used the RECS 2009 sample discussed above, accounting for 

situations where more than one residential boiler is used to heat a building. Chapter 7 includes 

details of the methodology to estimate the energy use of residential boilers in these applications.

2.7.2 Energy Use Determination

To estimate the annual energy consumption of boilers meeting higher efficiency levels,

DOE first calculated the heating load based on the RECS and CBECS estimates of the annual 

energy consumption of the boiler for each household. For each household with a boiler, RECS 

estimates the equipment’s annual energy consumption from the household’s energy bills using 

conditional demand analysis. DOE estimated the house heating load by reference to the existing 

boiler’s characteristics, specifically its capacity and efficiency (AFUE), as well as by the heat 

generated from the electrical components. The AFUE of the existing boilers was determined 

using the boiler vintage4 from RECS and historical data on the market share of boilers by 

AFUE.4 DOE then used the house heating load to determine the burner operating hours, which 

are needed to calculate the fossil fuel consumption and electricity consumption based on the 

DOE residential furnace and boiler test procedure. To calculate pump and other auxiliary 

components’ electricity consumption, DOE utilized data from manufacturer product literature.

See Appendix 7-B for details.

 

4 The term “vintage” refers to the year of installation of the equipment in question.
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Additionally, DOE adjusted the energy use to normalize for weather. This was 

accomplished by adjusting the RECS 2009 household energy consumption values based on 10-

year average heating degree-day (HDD) data (2002-2011) for each geographical region. DOE 

also accounted for the change in building shell characteristics between 2005 and 2020 by 

applying the building shell efficiency index in the National Energy Modeling System (NEMS)

based on EIA’s Annual Energy Outlook 2013 (AEO 2013).6

In the Framework Document, DOE discussed consideration of the “rebound effect” in its

analysis. A rebound effect occurs when a more-efficient piece of equipment is used more 

intensively, so that the expected energy savings from the efficiency improvement may not be 

fully realized.

AHRI stated that while they acknowledge that there is some rebound effect, there have 

not been definitive studies to address that topic. AHRI stated that at this point, whatever number 

DOE has used in the past for analysis is as good as any. (AHRI, Public Meeting Transcript, No. 

5 at p. 81) The Joint Efficiency Commenters stated that DOE should not consider any rebound 

effect in its life-cycle cost or payback period analyses, as any rebound associated with a moreefficient boiler is offset by an increase in the consumers’ utility. (Joint Efficiency Commenters, 

No. 8 at p. 4)

DOE conducted a review of information that included a 2009 study examining empirical 

estimates of the rebound effect.7 The authors of this study evaluated 12 studies of household 

heating that provide mean estimates of temperature take-back (i.e., the increase in indoor 

temperature in the period after improvement in efficiency) in the range from 0.14 ◦C to 1.6 ◦C. 

They also reviewed nine econometric studies of household heating, each of which includes 

elasticity estimates that may be used as a proxy for the direct rebound effect. The authors 

conclude that “the econometric evidence broadly supports the conclusions of the quasiexperimental studies, suggesting a mean value for the direct rebound effect for household heating 

of around 20%.”7 Based on the above review, DOE also concluded that the inclusion of a 

rebound effect of 20 percent for residential boilers was warranted for this analysis. However, 

DOE agrees with the point made by ACEEE, and for the purposes of the LCC and PBP analysis 

it assumes that any rebound associated with a more-efficient boiler is offset by an increase in the 

consumers’ utility.

Several commenters offered input on the issue of boilers used for space heating and 

domestic hot water applications. AHRI recommended that DOE distinguish between the 

different types of indirect water heating (e.g., boilers that supply water for indirect-fired water 

heaters, low-mass combination boilers, and high-mass boilers with integral heat exchangers); 

each type of combination product has unique characteristics that are likely to affect its annual 

energy consumption. (AHRI, No. 9 at p. 6) 

Lochinvar stated that it is very important that DOE segregate the data it collects on any 

boilers that provide hot water heating based on the type of boiler that is generating the hot water.

Lochinvar added that the standby energy losses are very different from a boiler that is circulating 

water to an indirect fired hot water storage tank versus a low-mass combination boiler with a 
2-18

small plate and frame heat exchanger installed in it versus a large high-mass boiler that has a 

copper coil installed in a way that requires the entire boiler to be maintained at higher 

temperatures. Lochinvar commented that there are very different standby loss characteristics for 

those three products. (Lochinvar, Public Meeting Transcript, No. 5 at p. 70)

DOE is aware that some residential boilers have the ability to provide both space heating 

and domestic water heating and that these products are widely available and may vary greatly in 

design. For these applications, DOE accounted for the boiler energy used for domestic water 

heating, which is part of the total annual boiler energy use. To accomplish this, DOE used the 

RECS 2009 and/or CBECS data to identify those boiler households or buildings that use the 

same fuel type for space and water heating and then assumed that a fraction of these identified 

households/buildings used the boiler for both applications. The water heating loads used for the 

determination of total energy used is provided by RECS or CBECS. Chapter 7 describes the 

details of the applied methodology.

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

In determining whether an energy efficiency standard is economically justified, DOE 

considers the economic impact of potential standards on consumers. The effect of new or 

amended standards on individual consumers usually includes a reduction in operating cost and an 

increase in purchase cost. DOE used the following two metrics to measure consumer impacts:

• LCC (life-cycle cost) is the total consumer cost of an appliance or product, generally over 

the life of the appliance or product, including purchase and operating costs. The latter 

consist of maintenance, repair, and energy costs. Future operating costs are discounted to 

the time of purchase and summed over the lifetime of the appliance or product.

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

assumed higher purchase price of a more energy-efficient product through reduced 

operating costs.

DOE analyzed the net effect of potential amended boiler standards on consumers by 

calculating the LCC and PBP using the engineering performance data, the energy-use data, and 

the markups. Inputs to the LCC calculation include the installed cost to the consumer (purchase 

price plus installation cost), operating expenses (energy expenses, repair costs, and maintenance 

costs), the lifetime of the product, and a discount rate. Inputs to the payback period calculation 

include the installed cost to the consumer and first-year operating costs.

DOE performed the LCC and PBP analyses using a spreadsheet model combined with 

Crystal Ball (a commercially-available software program used to conduct stochastic analysis 

using Monte Carlo simulation and probability distributions) to account for uncertainty and 

variability among the input variables. Each Monte Carlo simulation consists of 10,000 LCC and 

PBP calculations. The model performs each calculation using input values that are either 

sampled from probability distributions and household samples or characterized with single point 

values. The analytical results include a distribution of 10,000 data points showing the range of 

LCC savings and PBPs for a given efficiency level relative to the base case efficiency forecast.
2-19

In performing an iteration of the Monte Carlo simulation for a given consumer, product 

efficiency is chosen based on its probability. If the chosen product efficiency is greater than or 

equal to the efficiency of the standard level under consideration, the LCC and PBP calculation 

reveals that a consumer is not impacted by the standard level. By accounting for consumers who 

already purchase more-efficient products, DOE avoids overstating the potential benefits from 

increasing product efficiency.

DOE is also required to perform a PBP analysis to determine whether the rebuttable 

presumption of economic justification applies (where the higher installed cost of more energyefficient equipment is less than three times the value of the lowered operating costs in the first 

year of the energy conservation standard). (42 U.S.C. 6295(o)(2)(B)(iii)) The results of this 

analysis serve as the basis for DOE to definitively evaluate the economic justification for a 

potential standard level (thereby supporting or rebutting the results of any preliminary 

determination of economic justification).

2.8.1 Inputs to Installed Cost

Installation Costs

DOE estimated all the installation costs associated with fitting a boiler in a new housing 

unit or as a replacement for an existing boiler. This includes any additional costs, such as 

venting and piping modifications that would be required to install equipment at various 

efficiency levels.

AHRI commented that one aspect of the previous analysis that has changed relates to the 

households that have lower-efficiency natural draft units that would require extraordinary 

installation costs (significantly more than the standard drop-in replacement) if the minimum 

standard was set at a level that requires condensing boilers. (AHRI, No. 9 at p. 7) AHRI 

suggested that when DOE examines installation costs, especially in instances where a noncondensing boiler is replaced with a condensing boiler, DOE should consider the fact that many 

of the replacements which have been done have been the easy (inexpensive) replacements.

AHRI stated that it is important for DOE to realize that a percentage of the remaining population 

of houses that have not made the switch to a condensing boiler may face a difficult installation 

that would require rework of the site. (AHRI, Public Meeting Transcript, No. 5 at p. 91)

ACEEE responded to AHRI's statement that the easy installations had already been done by 

saying that in ACEEE's work with the American Gas Association regarding condensing furnaces,

they found that no one expected there to be a very high fraction of difficult installations. 

(ACEEE, Public Meeting Transcript, No. 5 at p. 92)

The Joint Efficiency Commenters stated that DOE should consider several factors in its 

analysis of installation costs for condensing boilers, including: (1) the experience of the United 

Kingdom, which mandated that all installations of gas-fired and oil-fired boilers be condensing 

products as of 2005 and 2007, respectively; (2) the ability to use code-approved flexible 

polypropylene for condensing installations; and (3) that venting issues related to “orphaned” hot 

water heaters are likely to occur in fewer boiler installations than for furnaces. (Joint Efficiency 

Commenters, No. 8 at p. 3)
2-20

HTP commented that increasing minimum efficiency requirements may increase the 

number of boilers in the near-condensing range, leading to higher average installation and 

maintenance costs, and safety concerns. (HTP, No. 7 at p. 2) Lochinvar stated that it is 

important to consider the costs associated with near-condensing installations. Such products 

may require corrosion-resistant metal venting material which is much more expensive compared 

to installation of a condensing appliance, which typically uses polymer venting. (Lochinvar, 

Public Meeting Transcript, No. 5 at p. 104)

In response to these comments, DOE conducted a detailed analysis of installation costs 

when a non-condensing gas boiler is replaced with a condensing gas boiler, with particular 

attention to venting issues in replacement cases. In these cases, DOE included a number of 

additional costs for a fraction of the sample households to account for proper flue and 

combustion venting, concealing vent pipes, orphaned water heaters, and condensate removal.

DOE also considered the factors mentioned by the Joint Efficiency Commenters. Chapter 8

describes in detail how DOE estimated the cost for installing condensing boilers in replacement 

installations.

With regards to near-condensing installations, DOE interprets “near-condensing” as 

meaning non-condensing products in the efficiency range 86%-88% AFUE. DOE has 

appropriately accounted for the installation and maintenance costs of the “near-condensing” 

products by considering additional cost to address the condensate problems. Further detail 

regarding the installation developed for these product efficiency levels can be found in chapter 8.

2.8.2 Inputs to Operating Cost

Energy Prices 

DOE derived average monthly natural gas, LPG, electricity, and fuel oil prices for the 30 

geographic areas in RECS 2009 and the 9 Census Divisions in CBECS 2003 by using the latest 

data from EIA and monthly energy price factors. For natural gas and electricity, DOE also 

derived marginal price factors, as explained below. DOE used average historical boiler 

shipments by State to derive energy prices for each region. DOE assigned an appropriate energy 

price to each household or commercial building in the sample, depending on its location. For 

future prices, DOE used the projected annual changes in average residential and commercial 

natural gas, LPG, electricity, and fuel oil prices in AEO 2013.

Maintenance and Repair Costs 

Typically, small incremental changes in product efficiency incur little or no change in 

repair and maintenance costs over baseline products. Products having efficiencies that are 

significantly higher than the baseline are more likely to incur increased repair and maintenance 

costs, because such products are more likely to incorporate technologies that are not widely 

available.

AHRI recommended that DOE rely on the most recent data it can obtain and consider 

projections based on trends regarding frequency and cost of maintenance and repair of various 

classes of product. (AHRI, No. 9 at pp. 6-7) HTP agreed with AHRI’s point that equating 
2-21

increased efficiency to increased cost of repair parts may not be accurate. It is expected that the 

cost of repair parts for baseline products has increased significantly (compared to DOE's last 

review), while repair parts for top tier products have remained fairly constant. (HTP, No. 7 at p. 

7)

ACEEE stated that there is a difference in the maintenance practices for the oil boiler 

market and the gas boiler market. Specifically, the service providers for oil boilers will likely 

continue to strongly recommend annual service to de-soot and check the combustion efficiency, 

at least until those manufacturers are comfortable with the ultra-low sulfur regulations.

(ACEEE, Public Meeting Transcript, No. 5 at p. 93)

In response, DOE estimated maintenance and repair costs for residential boilers at each 

considered efficiency level using a variety of sources, including 2013 RS Means,8 manufacturer 

literature, and information from expert consultants. DOE also accounted for regional differences 

in labor costs by weighting the national price factors by city or town population size using 2012 

Census data. DOE estimated the frequency of annual maintenance using data from a proprietary 

consumer survey. DOE also accounted for the difference in the maintenance practices for the oil 

boiler market and the gas boiler market. In particular, for oil-fired boilers, DOE applied the cost 

associated with an annual maintenance contract and also accounted for the costs of more frequent 

cleaning of the heat exchanger necessitated by the high quantity of sulfur in the fuel. Further 

detail regarding the maintenance costs developed for all product efficiency levels can be found in 

chapter 8.

Product Lifetime

Product lifetime is the age at which an appliance is retired from service. In the past, DOE 

used information from various literature sources, such as Appliance Magazine, handbooks 

published by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers 

(ASHRAE), and input from manufacturers and other stakeholders to determine a range for the 

lifetime of residential boilers.

AHRI commented that lifetime estimates need to be segregated by product class 

(including separation of condensing and non-condensing products) and that trends need to be 

considered to project shifts in life expectancy for each class. (AHRI, No. 9 at p. 7) AHRI and 

HTP suggested that DOE should seek information on average lifetimes of condensing boilers 

used in Europe, keeping in mind that the frequency of product maintenance is different in 

Europe. (AHRI, No. 9 at p. 7; HTP, No. 7 at p. 7) Lochinvar suggested that DOE should look at 

more recent data related to boiler longevity, arguing that there has been a change in products, a 

maturing of installation, and a maturing of water treatment chemicals that might provide longer 

lifetimes for condensing appliances. According to Lochinvar, there have similarly been changes 

in water quality that have negatively affected some steam boilers, which have historically had 

extremely long lifespans. (Lochinvar, Public Meeting Transcript, No. 5 at p. 86)

DOE conducted an analysis of boiler lifetimes using a combination of shipments data, the 

boiler stock, and RECS data on the age of the boilers in the homes. The data allowed DOE to 

develop a survival function, which provides an average and a median appliance lifetime. In 
2-22

addition, DOE reviewed a number of sources to validate the derived boiler lifetime, including

research studies (from the U.S. and Europe) and field data reports.5 The sources included data 

on lifetimes of condensing boilers used in Europe.

9 Chapter 8 and Appendix 8F include details 

about the lifetime derivation.

2.8.3 Other Inputs

DOE used discount rates to determine the present value of lifetime operating expenses.

The discount rate used in the LCC analysis represents the rate from an individual consumer’s 

perspective.6 Much of the data used for determining consumer discount rates comes from the 

Federal Reserve Board’s triennial Survey of Consumer Finances.7

To estimate the share of consumers affected by a standard at a particular efficiency level, 

DOE’s LCC and PBP analysis considers the projected distribution (i.e., market shares) of 

product efficiencies that consumers will purchase in the first compliance year under the base case 

(the case without amended energy conservation standards). 

AHRI commented that the percentage of condensing residential gas boilers shipped 

annually has steadily increased since 2003 and that most of those shipments went into 

replacement installations. (AHRI, Public Meeting Transcript, No. 5 at p. 91; AHRI, No. 9 at p. 

7) Additionally, AHRI stated that the continued existence of programs that provide incentives 

for the consumer to install more-efficient products will continue to increase the percentage of 

higher-efficiency boilers in the field. (AHRI, No. 9 at p. 8)

DOE accounted for the increasing market share of condensing residential gas boilers in 

its base-case projection. DOE acknowledges the existence and the impact of energy efficiency 

incentive programs. DOE’s projection used available data on recent market trends in boiler

efficiency and takes into account the potential impacts of the ENERGY STAR program and 

other policies that may affect the demand for more-efficient boilers. The base-case efficiency 

distributions can be found in chapter 8.

2.9 SHIPMENTS ANALYSIS

DOE used forecasts of product shipments to calculate the national impacts of standards 

on energy use, NPV, and future manufacturer cash flows. DOE developed these shipment 

forecasts based on an analysis of key market drivers for each product. 

DOE estimated boiler shipments by projecting shipments in three market segments: (1) 

replacements; (2) new housing; and (3) new owners in buildings that did not previously have a 

 

5 See Appendix 8F for specific references.

6 The consumer discount rate differs from the discount rates used in the national impact analysis, which are intended 

to represent the rate of return on capital in the U.S. economy, as well as the societal rate of return on private 

consumption.

7 Available at www.federalreserve.gov/econresdata/scf/scfindex.htm.
2-23

boiler. DOE also considered whether standards that require more-efficient boilers would have an 

impact on boiler shipments.

To project boiler replacement shipments, DOE developed retirement functions for boilers

from the lifetime estimates and applied them to the existing products in the housing stock. The 

existing stock of products is tracked by vintage and developed from historical shipments data.

To project shipments to the new housing market, DOE utilized a forecast of new housing 

construction and historic saturation rates of boiler product types in new housing. DOE used AEO 

2013 for forecasts of new housing. Boiler saturation rates in new housing are provided by the 

U.S. Census Bureau’s Characteristics of New Housing.

8

To estimate future shipments to new owners, DOE determined that on average, 3% of gas 

hot water boiler shipments are to new owners with no previous boiler. DOE also accounted for 

potential switching between different boiler product classes (steam to hot water and oil to gas).

See Chapter 7 for more details regarding the projection of boiler shipments.

Because the standards-case projections take into account the increase in purchase price 

and the decrease in operating costs caused by amended standards, projected shipments for a 

standards case typically deviate from those for the base case. Because purchase price tends to 

have a larger impact than operating cost on appliance purchase decisions, standards-case 

projections typically show a decrease in product shipments relative to the base case.

AHRI stated that unless a product class is eliminated, it is unlikely that the proposed

regulation would significantly affect the number of boilers sold. (AHRI, No. 9 at p. 8) DOE 

believes that, consistent with economic theory, it is reasonable to expect that standards that result 

in higher boiler prices will have some dampening effect on sales. Some consumers might choose 

to repair their existing boiler rather than purchase a new one. To estimate the impact of the 

projected price increase for the considered efficiency levels, DOE used the relative price 

elasticity approach that was applied in the 2011 furnace standards rulemaking. (76 FR 37408

(June 27, 2011)) This approach gives some weight to the operating cost savings from higherefficiency products. The impact of higher boiler prices (at higher efficiency levels) is expressed 

as a percentage drop in market share for each year during the analysis period.

2.10 NATIONAL IMPACT ANALYSIS

The NIA assesses the NES and the NPV from a national perspective of total consumer 

costs and savings expected to result from new or amended energy conservation standards at 

specific efficiency levels. DOE determined the NPV and NES for the standard levels considered 

for the boiler product classes analyzed. To make the analysis more accessible and transparent to 

all interested parties, DOE prepared a Microsoft Excel spreadsheet that uses typical values (as 

opposed to probability distributions) as inputs. To assess the effect of input uncertainty on NES 

 

8 Available at: http://www.census.gov/const/www/charindex.html.
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and NPV results, DOE has developed its spreadsheet model to conduct sensitivity analyses by 

running scenarios on specific input variables. 

Analyzing impacts of potential energy conservation standards for residential boilers 

requires comparing projections of U.S. energy consumption with amended energy conservation 

standards against projections of energy consumption without amended standards. The forecasts 

include projections of annual appliance shipments, the annual energy consumption of new 

appliances, and the purchase price of new appliances.

A key component of DOE’s NIA is the energy efficiencies forecasted over time for the 

base case (without new standards) and each of the standards cases. The forecasted efficiencies 

represent the annual shipment-weighted energy efficiency of the products under consideration 

during the forecast period (i.e., from the assumed compliance date of a new standard to 30 years 

after compliance is required). 

DOE developed a distribution of efficiencies in the base-case for 2020 (the assumed 

compliance date for new standards) for each residential boiler product class. In each standards 

case, a “roll-up” scenario approach was applied to establish the efficiency distribution for 2020. 

Under the “roll-up” scenario, DOE assumed: (1) product efficiencies in the base case that do not 

meet the standard level under consideration would “roll-up” to meet the new standard level; and 

(2) product efficiencies above the standard level under consideration would not be affected.

AHRI commented that the roll-up scenario is appropriate up to a point, but there are limits 

to the efficiency of some product classes and gaps in the efficiency offerings of gas-fired hot 

water boilers that may affect the roll-up. In the case of steam boilers, few, if any, condensing 

gas-fired steam or condensing oil-fired steam boilers exist. (AHRI, No. 9 at p. 8)

DOE reviewed the historical efficiency data for residential boilers from AHRI. The 

Department did not find any evidence to support a shift in the efficiency distribution in the year 

of compliance with amended standards. Therefore, for this analysis, DOE decided to utilize the 

roll-up scenario for boilers in order to forecast the impact of standards for the year of 

compliance.

2.10.1 National Energy Savings Analysis

The inputs for determining the national energy savings for each product analyzed are: (1) 

annual energy consumption per unit; (2) shipments; (3) product or equipment stock; (4) national 

energy consumption; and (5) site-to-source conversion factors. DOE calculated the national 

energy consumption by multiplying the number of units (stock) of each product (by vintage or 

age) by the unit energy consumption (also by vintage). Vintage represents the age of the 

product. DOE calculated annual NES based on the difference in national energy consumption 

for the base case (without new or amended efficiency standards) and for each higher efficiency 

standard. DOE estimated energy consumption and savings based on site energy and converted 

the electricity consumption and savings to source (primary) energy using annual conversion 

factors derived from the most recent version of the National Energy Modeling System (NEMS). 

Cumulative energy savings are the sum of the NES for each year over the timeframe of the 

analysis.
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DOE has historically presented NES in terms of primary energy savings. DOE has 

recently published a Statement of Policy regarding its intent to incorporate full-fuel-cycle (FFC) 

metrics into its analyses, and outlining a proposed approach. DOE stated that it intends to 

calculate FFC energy and emission impacts by applying conversion factors generated by the 

Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model to 

the NEMS-based results currently used by DOE. 76 FR 51281 (Aug. 18, 2011). Additionally, 

DOE will review alternative approaches to estimating these factors and may decide to use a 

model other than GREET to estimate the FFC energy and emission impacts in any particular 

future appliance efficiency standards rulemaking. For this analysis, DOE calculated FFC energy 

savings using a NEMS-based methodology described in appendix 10-B. Chapter 10 presents 

both the primary NES and the FFC energy savings for the analyzed efficiency levels.

The National Propane Gas Association (NPGA) strongly encouraged DOE to include a 

full-fuel-cycle analysis in its rulemaking for amended boiler energy conservation standards. 

NPGA states that the site measurement of energy consumption fails to provide a complete energy 

consumption and greenhouse gas profile because it does not account for the upstream energy use 

and emissions associated with delivering the fuel to its point of use. According to NPGA, FFC 

analysis is the most accurate way to calculate energy use and environmental emissions. (NPGA, 

No. 6 at p. 1-2) As stated above, DOE is incorporating FFC metrics in its analysis of potential 

amended standards for residential boilers.

2.10.2 Net Present Value Analysis

The inputs for determining NPV are: (1) total annual installed cost; (2) total annual 

savings in operating costs; (3) a discount factor to calculate the present value of costs and 

savings; (4) present value of costs; and (5) present value of savings. DOE determined the net 

savings for each year as the difference between the base case and each standards case in terms of 

total savings in operating costs versus total increases in installed costs. DOE calculated savings 

over the lifetime of products shipped in the forecast period. DOE calculated NPV as the 

difference between the present value of operating cost savings and the present value of total 

installed costs. DOE used a discount factor based on real discount rates of 3 and 7 percent to 

discount future costs and savings to present values.

For the NPV analysis, DOE calculates increases in total installed costs as the difference 

in total installed cost between the base case and standards case (i.e., once the standards take 

effect). Because the more-efficient products bought in the standards case usually cost more than 

products bought in the base case, cost increases appear as negative values in the NPV.

DOE expresses savings in operating costs as decreases associated with the lower energy 

consumption of products bought in the standards case compared to the base case. Total savings 

in operating costs are the product of savings per unit and the number of units of each vintage that 

survive in a given year.

DOE used the most recently available edition of EIA’s Annual Energy Outlook (AEO 

2013) as the source of projections for future energy prices. .
2-26

DOE estimates the NPV of consumer benefits using both a 3-percent and a 7-percent real 

discount rate. DOE uses these discount rates in accordance with guidance provided by the Office 

of Management and Budget (OMB) to Federal agencies on the development of regulatory 

analysis. (OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits 

and Costs”)
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REFERENCES

1. U.S. Department of Energy: Energy Information Administration, Residential Energy 

Consumption Survey: 2009 RECS Survey Data, 2013. (Last accessed March, 2013.) 

<http://www.eia.gov/consumption/residential/data/2009/>

2. U.S. Census Bureau: Housing and Household Economic Statistics Division, 2011 

American Housing Survey, 2011. <http://www.census.gov/housing/ahs/>

3. U. S. Department of Commerce - Bureau of the Census, Characteristics of New Housing, 

2013. U.S. Census. (Posted June 2, 2010) (Last accessed March 15, 2013.) 

<http://www.census.gov/construction/chars/>

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

Residential Furnaces and Boilers, personal communication. April 25, 2001, 2005.

5. U.S. Department of Energy: Energy Information Administration, Commercial Buildings 

Energy Consumption Survey, 2003. (Last accessed September, 2013.) 

<http://www.eia.doe.gov/emeu/cbecs/>

6. Energy Information Administration, Annual Energy Outlook 2013 with Projections to 

2040, 2013. Washington, DC. <http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf>

7. S. Sorrell, J. D., and M. Sommerville, Empirical estimates of the direct rebound effect: a 

review. Energy Policy, 2009. 37: pp. 1356–71 

8. RS Means Company Inc., RS Means Facilities Maintenance & Repair Cost Data. 2013. 

Kingston, MA.

9. Keman, R., M. v. Elburg, W. Li, and R. v. Holsteijn, Preparatory Study on Eco-design of 

Boilers, Task 2 (Final) Market Analysis, September 30, 2007. 

<http://www.ebpg.bam.de/de/ebpg_medien/001_studyf_07-11_part2.pdf>

10. Interagency Working Group on Social Cost of Carbon, Social Cost of Carbon for 

Regulatory Impact Analysis under Executive Order 12866, Technical Model Update for 

the Social Cost of Carbon (SCC): Internal EPA Draft, February 13, 2013. United States 

Government. 

11. U.S. Office of Management and Budget (OMB), 2006 Report to Congress on the Costs 

and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal 

Entities, 2006. Washington, DC. 

<http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_c

b_final_report.pdf>
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12. Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact of Sector Energy 

Technologies, 2005. Pacific Northwest National Laboratory. Richland, WA. Report No. 

PNNL- 15273.