1

- i CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT

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1.2 OVERVIEW OF STANDARD S FOR COMMERCIAL PAC KAGED BOILERS

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1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

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1.4 STRUCTURE OF THE DOC UMENT

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LIST OF TABLES

Table 1.3.1 Rulemaking Analysis Stages

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- 41-1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT

This preliminary technical support document ( preliminary TSD) is a stand

- alone report that provides the technical analyses and results supporting the information presented in the preliminary notice of public meeting (NOPM) and executive summary for commercial package d

boilers . This preliminary TSD reports on the preliminary activities and analyses conducted in the period preceding the notice of proposed rulemaking (NOPR) of this rulemaking.

1.2 OVERVIEW OF STANDARD S FOR COMMERCIAL PACKAGE D BOILERS

The U.S. Department of Energy ( DOE ) is initiating this rulemaking to consider amending

the e nergy conservation standards for commercial package d boilers , as required under the Energy Policy and Conservation Act (EPCA) , as amended

. EPCA defines the term “packaged boiler” to mean “a boiler that is shipped complete with heatin g equipment, mechanical draft equipment, and automatic controls; usually shipped in one or more sections.” (42 U.S.C. 6311(11)(B)) EPCA prescribed the initial minimum efficiency levels ( in terms of combustion efficiency) both for gas

- fired packaged boilers and oil

- fired packaged boilers with rated maximum input capacities of 300,000 British thermal units (Btus) or more. (42 U.S.C. 6313(a)(4)(C) and (D)) The minimum efficiency levels generally corresp ond to the levels set in the American Society of Heating, Refrigerati ng , and Air

- Conditioning Engineers (ASHRAE)/Illuminating Engineering Society (IES) Standard 90.1. a Further, EPCA provides that if ASHRAE/IES Standard 90.1 is amended with respect to packa ged boilers, then DOE shall consider amending the prescribed minimum efficiency levels. (42 U.S.C. 6313((a)(6)) In other words, when ASHRAE amends the efficiency levels for packaged boilers in Standard 90.1, DOE must adopt the new ASHRAE requirements unles s clear and convincing evidence supports a determination that adoption of a more

- stringent level would produce significant additional energy savings and would be technologically feasible and economically just ified. ( 42 U.S.C. 6313(a)(6) )

In the event that ASHRAE does not act to amend Standard 90.1 (thereby triggering DOE to conduct an amended standards rulemaking), EPCA provides an alternative statutory mechanism for initiating such review. More specifically, EPCA requires that every six years, the

Secreta ry of Energy (Secretary) shall consider amending the energy conservation standards for covered commercial equipment and shall publish either a notice of determination that those

standards do not need to be amended

, or a notice of proposed rulemaking for mo re

- stringent energy efficiency standards

. (42 U.S.C. 6313(a)(6)(C))

a For more information, see www.ashrae.org

.1-2 In 2009, DOE acted in response to an ASHRAE trigger and published a final rule amending the energy conservation standards for commercial packaged boilers to correspond to

the efficiency l evels in the most recent ASHRAE Standard 90.1

, which amended commercial package d boiler efficiency levels ( i.e. , ASHRAE Standard 90.1

- 2007). 74 FR 36312 (July 22, 2009).

In addition, EP CA prescribes test procedures for packaged boilers which are generally accepted industry testing procedures or rating procedures developed or recognized by the Air

Conditioning

, Heating and Refrigeration Institute b (A H RI) or by ASHRAE , as referenced in

ASHRAE/IES Standard 90.1. (42 U.S.C. 6314(a)(4)(A) ) Furthermore, EPCA dir ects that if an industry test procedure or rating procedure for packaged boilers is amended, then DOE shall amend the test procedure as necessary for the equipment to be consistent with the amended industry procedure. (42 U.S.C. 6314(a)(4)(B)) In addition to requiring DOE to update its test method each time the relevant industry test procedure is modified, EPCA requires that DOE conduct an evaluation of its test procedure for each covered class of equipment a t least once every seven years. (42 U.S.C. 6314(a)(1)(A)) DOE last reviewed its test procedures for commercial packaged boilers in a final rule published in the Federal Register on July 22, 2009 (77 FR 36312) , so DOE must evaluate the test procedures for this equipment not later than July 22, 2016. DOE is considering updating the test procedures for commercial packaged boilers in a separate proceeding that would occur in parallel with the energy conservation standards analysis

outlined in this TSD

. DOE aims to publish a final rule for the test proce dure rulemaking prior to completing the energy conservation standards rulemaking.

1.3 PROCESS FOR SETTING ENERGY CON S ERVATION STANDARDS

Under EPCA, when DOE is studying new or amended standards, it must consider, to the greatest extent practicable, the follo wing seven factors under 42 U.S.C. 6313(a)(6)(B)(ii) :

1) the economic impact of the standard on the manufacturers and consumers of the affected products;

2) the savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost or maintenance expense;

3) the total projected amount of energy savings likely to result directly from the imposition

of the st andard;

b EPCA refers to t he Air

- Conditioning

, and Refrigeration Institute (ARI) , which w as renamed the Air

- Conditioning, Heating, and Refrigeration Institute (AHRI) after ARI merged with the Gas Appliance Manufacturer’s Association (GAMA)

.1-3 4) any lessening of the utility or the performance of the products likely to result from the imposition of the standard;

5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from th e imposition of the standard;

6) the need for national energy conservation; and

7) other factors the Secretary considers relevant.

DOE considers participation by interested parties to be a very important part of the process for setting energy conservation standards. Through formal public notifications ( i.e.

, Federal Register notices) , DOE actively encourages the participation and interaction of all interested partie s during the comment period in each stage of the rulemaking. Beginning with the

f ramework d oc ument and during subsequent comment periods, interactions among interested partie s provide a balanced discussion of the information that is required for the standards rulemaking.

B efore DOE determines whether or not to adopt a proposed energy conservatio n standard, it must first solicit comments on the proposed standard. (42 U.S.C. 6313(a)(6)(B)(i)) Any new or amended standard must be designed to achieve significant additional conservation of energy and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)) To determine whether economic justification exists, DOE must review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the s even factors listed above. (42 U.S.C. 6313(a)(6)(B)(ii) )

After the publication of the framework document, the energy conservation standards rulemaking process typically involves three additional, formal public notices, which DOE publishes in the Federal Register . The first of the rulemaking notices is a NOPM, which is designed to publicly vet the models and tools used in the preliminary rulemaking and to facilitate public participation before the NOPR stage. The second notice is the NOPR, which presents a

discussion of c omments received in response to the NOPM and the preliminary analyses and analytical tools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these imp acts of amended energy conservation standards; and the proposed energy conservation standards for each product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s we ighting of these impacts; the amended energy conservation standards DOE is adopting for each product; and the effective dates of the amended energy conservation standards.

In September 2013 , DOE published a notice of public meeting and availability of th e framework document. 7 8 FR 54197 ( September 3 , 20 1 3 )

. The framework document, Rulemaking

Framework Document for Commercial Package d Boilers , describes the procedural and analytical approaches DOE anticipated using to evaluate the amendment of existing ene rgy1-4 conservation standards for this equipment . This document is available at: http://www.regulations.gov/#!documentDetail;D=EERE

- 2013

- BT

- STD

- 0030

- 0002

.

Subsequently, DOE held a public meeting on October 1, 2013 (“ October 2013 public meeting”) to discuss procedural and analytical approaches to the rulemaking. In addition, DOE used the public meeting to inform and facilitate involvement of interested partie s in the rulemaking process. The analytical framework presented at the public meeting described the different analyses, such as the engineering analysis and the consumer economic analyses ( i.e.

, the life

- cycle cost (LCC) and payback period (PBB) analyses), the methods proposed for conducting them, and the relationships among the various analyses.

Table 1.3.1 Rulemaking Analysis Stages

Preliminary Analyses NOPR Final Rule

Market and technology assessment Revised preliminary analyses Revised NOPR analyses

Screening analysis Consumer sub

- group analysis

Engineering analysis Manufacturer impact analysis

Energy use analysis Utility impact analysis

Markups for equipment price

determination Emissions analysis /monetization

Life

- cycle cost and payback period analysis Employment impact analysis

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer impact analysis

During the October 2013 public meeting, interested parties commented about numerous issues relating to each one of the analyses listed in Table 1.3.1 . Comments from interested parties

submitted during the framework document comment period elaborated on the issues raised during the public meeting. DOE attempted to address these issues during its preliminary analyses and summarized the comments and DOE’s responses in chapter 2 of the preliminary T SD.

As part of the information gathering and sharing process, DOE organized and held

interviews with manufacturers of the commercial package d boilers considered in this rulemaking as part of the engineering analysis. DOE selected companies that represent ed production of all types of equipment , ranging from small to large manufacturers. DOE had four objectives for these interviews: (1) solicit manufacturer feedback on the draft inputs to the engineering analysis; (2) solicit feedback on topics related to t he preliminary manufacturer impact analysis; (3) provide an opportunity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster cooperation between manufacturers and DOE.1-5 DOE incorporated the information gathered durin g the engineering interviews with manufacturers into its engineering analysis ( chapter 5) and the preliminary manufacturer impact analysis ( chapter 12). Following the publication of the preliminary analyses and the NOPM public meeting, DOE intends to hold additional meetings with manufacturers as part of the consultative process for the manufacturer impact analysis conducted during the NOPR phase of the rulemaking.

DOE developed an LCC spreadsheet that calculates the LCC and PBP at various energy efficiency levels. DOE also developed a national impact analysis spreadsheet that calculates the national energy savings (NES) and national net present values (NPVs) at vari ous energy efficiency levels. This spreadsheet includes a model that forecasts the impacts of amended energy conservation standards at various levels on equipment shipments. All of these spreadsheets are available on the DOE website for commercial package d boilers : ( http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/79 ).

1.4 STRUCTURE OF THE DOCUMENT

This preliminary TSD outlines the analytical approaches used in this rulemaking. The

TSD consists of seventeen chapters, including a n environmental assessment and a regulatory impact analysis, and appendices. The first 12 chapters of the preliminary TSD address the analyses performed for the preliminary analysis stage. Chapters 13 through 17 describe the analyses to be performed for th e NOPR stage.

Chapter 1 The i ntroduction provides an overview of standards for CPBs and describes DOE’s process for setting energy conservation standards.

Chapter 2 The a nalytical f ramework describes each preliminary analysis step, the comments received in response to the analytical approaches DOE described in the Framework Document, and DOE’s responses to those

comments.

Chapter 3 The m arket and t echnology a ssessment (MTA) characterizes the relevan t equipment markets and technology options, including prototype designs.

Chapter 4 The s creening a nalysis reviews each technology option uncovered in the

MTA to determine whether i t is technologically feasible, practicable to manufacture, install, servi ce; would adversely affect equipment utility or equipment availability, or would have adverse impacts on health and safety.

Chapter 5 The e ngineering a nalysis d evelops cost

- efficiency relationships that show a manufacturer’s cost of achieving increased e fficiency.1-6 Chapter 6 The m arkup s a nalysis estimates commercial consumer equipment prices based on market structures, and the manufacturing costs developed in the engineering analysis.

Chapter 7 The e nergy u se a nalysis determines the annual energy co nsumption of the equipment under consideration.

Chapter 8 The l ife

- c ycle c ost and p ayback p eriod a nalysis (PBP) discusses the

effects of standards on individual commercial consumers and users of the equipment and compares the LCC and PBP of equipment wit h and without higher efficiency standards.

Chapter 9 The s hipments a nalysis documents historic unit shipments and forecasts future shipments of equipment at potential energy conservation standard

levels under consideration

Chapter 10 The n ational i mpact a nalys e s (NIA) assesses the cumulative national energy savings (NES) from potential standards and the net present values (NPV) of consumer costs and savings associated with standards at different efficiency levels.

Chapter 11 The c onsumer s ubgroup a nalysis evaluates the effects of potential energy conservation standards of standards on subgroups of the population ( e.g. small businesses)

Chapter 12 The preliminary manufacturer i mpact a nalysis (MIA) assesses the potential impacts of energy conservation standards on manufacturers, such as effects on expenditures for capital conversion, marketing costs, shipments, and research and development costs.

Chapter 13 The emissions analysis examines the effects of potential energy

conservation stan dards on various airborne emissions.

Chapter 14 Monetization of e mission r eduction quantifies the anticipated benefits from potential energy conservation standards.

Chapter 15 The u tility i mpact a nalysis examines impacts of potential energy

conservation s tandards on the generation capacity of electric utilities.

Chapter 16 The e mployment i mpact a nalysis examines the effects of potential energy conservation standards on national employment.1-7 Chapter 17 The r egulatory i mpact analysis examines the national impacts of non

regulatory alternatives to mandatory energy conservation standards.

Appendix 6A Detailed Data for Equipment Price Markups

Appendix 7A Building Variables

Appendix 7B Determination of Boiler Energy Use in the L ife

- C ycle C ost Analysis

Appendix 7C Weather Station Data Mapping to RECS and CBECS Buildings

Appendix 8A User Instructions for Life

- Cycle Cost Analysis Spreadsheet for Commercial Packaged Boilers

Appendix 8B Uncertainty and Variability in the L ife

- C ycle C ost Analysis

Appendix 8C Energy Price Calculations for Commercial Packaged Boilers

Appendix 8D Installation Cost Determination for Commercial Packaged Boilers

Appendix 8E Maintenance and Repair Cost Determination for Commercial Packaged

Boilers

Appendix 8F Commercial Package d Boiler Lifetime Determination

Appendix 8G Distributions Used for Discount Rates

Appendix 8H Base Case Distribution of Efficiency Levels

Appendix 9A Relative Price Elasticity of Demand for Appliances

Appendix 9B Additional Shipments Data for Commercia l Packaged Boilers

Appendix 10A User Instructions National Impact Analysis Spreadsheet Model

Appendix 10B Full

- Fuel

- Cycle Multipliers