5-i

CHAPTER 5. ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION ........................................................................................................... 5-1

5.2 PRODUCT CLASSES CONSIDERED .......................................................................... 5-1

5.3 EFFICIENCY LEVELS................................................................................................... 5-2

5.3.1 Baseline Unit.................................................................................................................... 5-2

5.3.2 Design Options................................................................................................................. 5-3

5.3.3 Energy Efficiency Levels................................................................................................. 5-4

5.3.4 Max-Tech Efficiency Levels............................................................................................ 5-6

5.4 METHODOLOGY OVERVIEW.................................................................................... 5-6

5.5 TEARDOWN ANALYSIS.............................................................................................. 5-8

5.5.1 Selection of Units............................................................................................................. 5-8

5.5.2 Baseline Units.................................................................................................................. 5-9

5.6 COST MODEL.............................................................................................................. 5-10

5.6.1 Generation of Bills of Materials .................................................................................... 5-10

5.6.2 Structure of Spreadsheet Cost Model ............................................................................ 5-10

5.6.3 Cost Model and Definitions........................................................................................... 5-11

5.6.3.1 Cost Definitions................................................................................................. 5-11

5.6.4 Cost Model Assumptions Overview .............................................................................. 5-12

5.6.4.1 Fabrication Estimates......................................................................................... 5-12

5.6.4.2 Production Volume Assumptions...................................................................... 5-13

5.6.4.3 Factory Parameters Assumption ........................................................................ 5-13

5.6.4.4 Material Prices Assumptions............................................................................. 5-13

5.6.5 Manufacturing Production Cost..................................................................................... 5-14

5.7 COST VERSUS EFFICIENCY CURVES.................................................................... 5-15

5.8 MPC BREAKDOWN.................................................................................................... 5-18

5.9 MANUFACTURER MARKUP .................................................................................... 5-19

5.9.1 Manufacturer Markup Calculation................................................................................. 5-20

5.10 STANDBY MODE AND OFF MODE......................................................................... 5-22

5.10.1 Electric Boilers............................................................................................................... 5-23

5.10.2 Identification and Characterization of Standby Mode and Off Mode Components...... 5-24

5.10.3 Baseline Models............................................................................................................. 5-24

5.10.4 Cost-Power Consumption Results................................................................................. 5-25

5.11 ENGINEERING ANALYSIS SUMMARY OF RESULTS.......................................... 5-28

5.11.1 Summary of Results for Representative Models ........................................................... 5-28

LIST OF TABLES

Table 5.2.1 Product Classes......................................................................................................... 5-2

Table 5.3.1 Baseline Energy Efficiency Levels and Features for Residential Boilers................ 5-3

Table 5.3.2 Design Options Considered for the Engineering Analysis for Residential Boilers.. 5-4

Table 5.3.3 Efficiency Levels for Analysis for Gas-fired Hot Water Boilers ............................. 5-5
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Table 5.3.4 Efficiency Levels for Analysis for Gas-fired Steam Boilers.................................... 5-5

Table 5.3.5 Efficiency Levels for Analysis for Oil-Fired Hot Water Boilers.............................. 5-5

Table 5.3.6 Efficiency Levels for Analysis for Oil-fired Steam Boilers..................................... 5-6

Table 5.3.7 Max-tech Efficiency Levels for Residential Boilers................................................. 5-6

Table 5.4.1 Flow Diagram of Engineering Analysis Methodology............................................. 5-7

Table 5.6.1 Cost Model In-House Manufacturing Operation Assumptions.............................. 5-13

Table 5.6.2 Five Year Metal Prices (2008-2013) ...................................................................... 5-14

Table 5.7.1 Cost Efficiency Curves and Corresponding Figures............................................... 5-17

Table 5.8.1 Total Product MPC Breakdown for Residential Boilers ........................................ 5-19

Table 5.9.1 Gross Profit Margin for Residential Boiler Manufacturers.................................... 5-21

Table 5.9.2 Calculated Manufacturer Markups for Residential Boilers.................................... 5-22

Table 5.10.1 Baseline Standby Mode and Off Mode Power Consumption by Component for 

Boilers........................................................................................................................................ 5-25

Table 5.10.2 Incremental Manufacturer Production Cost Results for Gas Hot Water Boiler ... 5-26

Table 5.10.3 Incremental Manufacturer Production Cost Results for Oil Hot Water Boiler .... 5-26

Table 5.10.4 Incremental Manufacturer Production Cost Results for Gas Steam Boilers ........ 5-26

Table 5.10.5 Incremental Manufacturer Production Costs for Oil Steam Boilers..................... 5-27

Table 5.10.6 Incremental Manufacturer Production Costs for Electric Hot Water Boilers....... 5-27

Table 5.10.7 Incremental Manufacturer Production Costs for Electric Steam Boilers ............. 5-27

Table 5.11.1 MPC and MSP for Gas-Fired Hot Water Boilers (100,000 Btu/h input) ............. 5-28

Table 5.11.2 MPC and MSP for Gas-Fired Steam Boilers (100,000 Btu/h input) .................... 5-28

Table 5.11.3 MPC and MSP for Oil-Fired Hot Water Boilers (140,000 Btu/h input)............... 5-28

Table 5.11.4 MPC and MSP for Oil-Fired Steam Boilers (140,000 Btu/h input) ..................... 5-29

Table 5.11.5 MPC and MSP for Gas-Fired Hot Water Boilers Standby ................................... 5-29

Table 5.11.6 MPC and MSP for Gas-Fired Steam Boilers Standby.......................................... 5-29

Table 5.11.7 MPC and MSP for Oil-Fired Hot Water Boilers Standby .................................... 5-29

Table 5.11.8 MPC and MSP for Oil-Fired Steam Boilers Standby........................................... 5-29

Table 5.11.9 MPC and MSP for Electric Hot Water Boilers Standby....................................... 5-29

Table 5.11.10 MPC and MSP for Electric Steam Boilers Standby ........................................... 5-30

 
5-1

CHAPTER 5. ENGINEERING ANALYSIS

5.1 INTRODUCTION

The engineering analysis establishes the relationship between the manufacturer 

production cost (MPC) and the energy efficiency of residential boilers. The relationship 

between the MPC and energy efficiency, or cost efficiency relationship, serves as the basis for 

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

DOE typically structures its engineering analysis around one of three methodologies. 

These are: (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 teardowns of the product being analyzed. Deciding 

which methodology to use for the engineering analysis depends on the product, the design 

options under study, and any historical data that DOE can draw on.

DOE conducted this engineering analysis for residential boilers using a combination of 

the efficiency level and cost-assessment approaches for analysis of the AFUE efficiency levels. 

More specifically, DOE identified the efficiency levels for analysis and then used the costassessment approach to determine the manufacturing costs at those levels. Although 

manufacturers have varied designs, DOE found that the pathway for improving energy 

efficiency was relatively homogeneous, and as a result, has identified the technologies 

incorporated at each efficiency level that drive the cost and efficiency changes.

5.2 PRODUCT CLASSES CONSIDERED

When necessary, DOE divides covered products into classes by (a) the type of energy 

used; (b) the capacity of the product; or (c) any other performance-related feature that justifies 

different standard levels, such as features affecting consumer utility. (42 U.S.C. 6295(q)) DOE 

then conducts its analyses and considers establishing standards at different levels for each 

product class. 

DOE examined several possible characteristics or features that could warrant separation 

of covered products into different product classes. As noted in the framework document, DOE 

has chosen to maintain the existing product classes for residential boilers in the analysis. 10 

CFR 430.32(e)(2). The current product classes are divided by the type of energy used (fuel 

type) and by the heat transfer medium (i.e., steam or hot water) as shown in Table 5.2.1. 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 the initial analysis, DOE maintained the 

product classes established by EISA 2007.
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DOE has not included electric boilers in the initial analysis of amended AFUE 

standards. Electric boilers currently do not have an AFUE requirement under 10 CFR 

430.32(e)(2)(ii). The current DOE test procedure for determining AFUE considers nonweatherized boilers as indoor units and, thus, considers jacket heat loss as usable heat, since 

those losses would go to the heated space for an indoor unit. Therefore, DOE would not expect 

any significant energy efficiency savings as a result of setting AFUE energy conservation 

standards for these products. However, DOE has considered standby mode and off mode 

standards for electric boilers in the analysis. 

DOE did not separately analyze combination appliances that provide both space heating 

and domestic hot water to a residence in this analysis. DOE made this determination based on 

the outcome of the test procedure rulemaking. DOE has not yet adopted a test procedure to 

determine the energy efficiency of combination appliance in both space and water heating 

modes. However, federal statutes do require that combination appliances be tested and rated to 

provide efficiency ratings for the primary function. 

Table 5.2.1 Product Classes

Fuel Type Heat Transfer Medium

Gas Steam

Hot Water

Oil Steam

Hot Water

Electric Steam

Hot Water

5.3 EFFICIENCY LEVELS

For the majority of the product classes presented in section 5.2, DOE analyzed multiple 

efficiency levels and estimated the manufacturer production costs of these levels. The following 

subsections provide the full efficiency level range from the baseline efficiency level to the 

maximum technology feasible efficiency level for each product class. DOE notes that in all

cases the highest efficiency level was identified through review of available product literature 

for commercially available products. In addition, this section contains a brief description of the 

design options that are generally found in products at each efficiency level, as DOE found that 

the designs utilized were similar across manufacturers.

5.3.1 Baseline Unit

DOE selected baseline units as reference points for each product class, against which 

DOE measured changes resulting from potential amended energy conservation standards. The 

baseline unit in each product class represents the basic characteristics of products in that class. 

Typically, a baseline unit is a unit that just meets current Federal energy conservation standards 

and provides basic consumer utility. 

DOE uses the baseline unit for comparison in several phases of the analyses, including 

the engineering analysis, lifecycle cost (LCC) analysis, payback period (PBP) analysis and 
5-3

national impacts analysis (NIA). To determine energy savings that will result from an amended 

energy conservation standard, DOE compares energy use at each of the higher energy efficiency 

levels to the energy consumption of the baseline unit. Similarly, to determine the changes in 

price to the consumer that will result from an amended energy conservation standard, DOE 

compares the price of a baseline unit to the price of a unit at each higher efficiency level. Table 

5.3.1 presents the baseline energy efficiency levels for each product class of residential boilers. 

Table 5.3.1 Baseline Energy Efficiency Levels and Features for Residential Boilers

Product 

Class AFUE

Input 

Capacity 

(btu/hr)

Heat 

Exchanger Draft Design Requirements

Gas Hot 

Water 82% 100,000

Sectional, 

Dry-Base 

cast iron

Atmospheric, 

with damper

No Constant Burning 

Pilot, Automatic Means 

for Adjusting Water 

Temperature

Gas 

Steam 80% 100,000

Sectional, 

Dry-Base 

Cast Iron

Atmospheric, 

with damper No Constant Burning Pilot

Oil Hot 

Water 84% 140,000

Sectional, 

Wet-Base 

Cast Iron

Power Natural 

Draft, with 

damper

Automatic Means for 

Adjusting Temperature

Oil 

Steam 82% 140,000

Sectional, 

Wet-Base 

Cast Iron

Power Natural 

Draft, with 

damper

None

5.3.2 Design Options

Although the screening analysis (chapter 4) provided viable design options for 

improving residential boilers, DOE did not consider all technologies that passed the screening 

analysis in the engineering analysis. Based on information gathered from the teardown analysis, 

manufacturer interviews, and publicly available product literature, DOE determined which 

design options manufacturers incorporate into products and at which efficiency levels those 

design options are typically implemented. DOE also determined which design options 

manufacturers are most likely to include in future products, and used these design options in 

developing the product costs at each efficiency level. Although several design options are not 

included in the engineering analysis, DOE acknowledges that these are still viable methods to 

improve the efficiency of residential boilers. Table 5.3.2 lists the design options that DOE did 

not screen out in the screening analysis (see chapter 4) and which are included in the 

engineering analysis.
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Table 5.3.2 Design Options Considered for the Engineering Analysis for Residential Boilers

Technology 

Section

Technology Gas Fired 

Hot Water

Gas Fired 

Steam

Oil Fired 

Hot Water

Oil Fired 

Steam

Heat Exchanger 

Improvements

Condensing X X

Improve/Increased 

Heat Exchanger 

Surface Area

X X X X

Baffles X X X X

Burner Modulation X X

Draft Direct-Vent (sealed) X X X X

5.3.3 Energy Efficiency Levels

DOE conducted a survey of the residential boiler market to determine what types of 

products are currently available to consumers. For each representative product, DOE surveyed 

various manufacturers’ product offerings as well as the AHRI database to identify the efficiency 

levels that correspond to the highest number of models. By identifying the most prevalent energy 

efficiencies in the range of available products and the designs of those products, DOE was able 

to establish a technology path that manufacturers would typically use to increase the energy 

efficiency of residential boilers.

DOE established intermediate energy efficiency levels for each product class. The 

intermediate efficiency levels are representative of efficiency levels along the technology paths 

that manufacturers of residential boilers commonly use to maintain cost effective designs while 

increasing energy efficiency. DOE reviewed its database of residential boilers, manufacturer 

catalogs, and other publicly available literature to determine which efficiency levels are the most 

prevalent for each representative product class. Table 5.3.3 through Table 5.3.6 list the product 

classes and their respective intermediate energy efficiency levels.

For gas fired hot water boilers, DOE chose five efficiency levels between the baseline 

and max-tech for analysis. In order to increase the efficiency of gas-fired hot water boilers, 

manufacturers generally improve the heat transfer of the heat exchanger. Manufacturers typically 

accomplish this through the addition of baffles or through increasing the size of the heat 

exchanger. For even greater efficiency improvements, manufacturers must add an inducer vent to 

replace the natural draft, as the lower temperature flue gas has less buoyancy. Max-tech gas-fired 

hot water boilers include corrosion resistant heat exchangers that condense the flue gases in order 

to extract the greatest amount of heat. Table 5.3.3 shows the efficiency levels analyzed for gasfired hot water boilers along with the associated technology options.
5-5

Table 5.3.3 Efficiency Levels for Analysis for Gas-fired Hot Water Boilers

Efficiency Level Gas-fired HW

(AFUE)

Technology Options

EL0 82 Baseline

EL1 83 EL0+ Increased HX Area, Baffles

EL2 84 EL1+ Increased HX Area

EL3 85 EL2+ Increased HX Area

EL4 90 Condensing HX, Modulating

EL5 92 EL4+ Improved HX

EL6-Max Tech 96 EL5+ Improved HX 

For gas fired steam boilers, DOE chose one efficiency level between the baseline and 

max-tech for analysis. In order to increase the efficiency of gas-fired steam boilers, 

manufacturers generally improve the heat transfer of the heat exchanger. Manufacturers

accomplish this through the addition of baffles or through increasing the size of the heat 

exchanger. Table 5.3.4 shows the design options associated with each efficiency level for the 

representative product.

Table 5.3.4 Efficiency Levels for Analysis for Gas-fired Steam Boilers

Efficiency Level Gas-fired Steam

(AFUE)

Technology Options

EL0 80 Baseline

EL1 82 EL0+ Increased HX Area

EL2-Max Tech 83 EL1+ Increased HX Area

For oil fired hot water boilers, DOE chose two efficiency levels between the baseline and 

max-tech for analysis. In order to increase the efficiency of oil-fired hot water boilers, 

manufacturers generally improve the heat transfer of the heat exchanger through the addition of 

baffles or through increasing the size of the heat exchanger. Finally, at the max-tech oil-fired hot 

water boiler manufacturers use an improved heat exchanger design and also include a secondary 

heat exchanger that condenses the flue gases in order to extract the greatest amount of heat.

Table 5.3.5 shows the design options associated with each efficiency level for the representative 

product.

Table 5.3.5 Efficiency Levels for Analysis for Oil-Fired Hot Water Boilers

Efficiency Level Oil-fired HW

(AFUE)

Technology Options

EL0 84 Baseline

EL1 85 EL0+ Increased HX Area

EL2 86 EL1+ Increased HX Area

EL3 91 EL2+ Improved HX and 

Secondary Condensing HX

For oil fired steam boilers, DOE chose two efficiency levels between the baseline and 

max-tech for analysis. In order to increase the efficiency of oil-fired steam boilers, manufacturers 
5-6

generally improve the heat transfer of the heat exchanger. Manufacturers accomplish this 

through the addition of baffles, through increasing the size of the heat exchanger, or making the 

heat exchanger more restrictive. Table 5.3.6 shows the design options associated with each

efficiency level for the representative product.

Table 5.3.6 Efficiency Levels for Analysis for Oil-fired Steam Boilers

Efficiency Level Oil-fired Steam

(AFUE)

Technology Options

EL0 82 Baseline

EL1 84 EL0+ Increased HX Area

EL2 85 EL1+ Increased HX Area

EL3 86 EL2+ Improved HX

5.3.4 Max-Tech Efficiency Levels

As part of the engineering analysis, DOE determined the maximum technologically 

feasible improvement in energy efficiency for residential boilers as required by section 325(o) of 

EPCA. (42 U.S.C. 6295(o)) DOE conducted a survey of the residential boiler market and the 

research fields that support the market. Table 5.3.7 lists the max-tech levels DOE determined for 

this engineering analysis for residential boilers.

Table 5.3.7 Max-tech Efficiency Levels for Residential Boilers

Product Class Maximum AFUE

Gas Hot Water 96%

Gas Steam 83%

Oil Hot Water 91%*

Oil Steam 86%

* The oil hot water boiler model that is the basis for the max-tech model for the initial analysis has since been 

discontinued by the manufacturer.

5.4 METHODOLOGY OVERVIEW

This section describes the analytical methodology used in the engineering analysis. Figure 

5.4.1 shows a flow diagram of this methodology and the corresponding sections in this chapter. 

The results of the engineering analysis are cost efficiency curves for each representative product 

class.
5-7

Table 5.4.1 Flow Diagram of Engineering Analysis Methodology

DOE started by identifying in the market assessment (chapter 3) residential boilers

available on the market and the energy efficiency level associated with each. DOE also identified 

the technologies and features typically incorporated into products at the baseline level and 

various energy efficiency levels above the baseline. DOE gathered the information from the 

physical and virtual teardown analysis to create bills of materials for each product using reverse 

engineering methods (see section 5.5). DOE converted the information recorded in the BOMs to 

dollar values using a cost model computer program to calculate the MPC for products spanning 

the full range of efficiencies from the baseline to the maximum technology available. DOE also 

identified the technology or combination of technologies mainly responsible for improving the 

energy efficiency of residential boilers, as DOE found that the use of these technologies was 

relatively similar across manufacturers. 

During the preparation of the cost efficiency comparison and MPCs, DOE interviewed 

manufacturers to gain insight into the residential boiler industry and requested comments on the 

engineering approach DOE used for the analysis. DOE used the information gathered from these 

interviews to refine efficiency levels and potential technology pathways as well as assumptions 

in the cost model. DOE converted the MPCs into manufacturer selling prices (MSPs) (section

5.11) using publicly available industry financial data, along with manufacturer feedback.

Cost Model

(section 5.6)

Manufacturer 

Markup 

Analysis

(section 5.9)

Cost-Efficiency 

Curves

(Efficiency* vs 

MPC)

(section 5.7)

Engineering 

Manufacturer 

Interviews

(section5.8)

Physical

Teardown

Analysis

(section 5.5 )

Modeled

Teardown

Analysis

(section 5.5)

BOMs

(section 5.6.1)

Selling PriceEfficiency 

Relationship

(Efficiency* vs 

MSP)

(section 5.11) Efficiency Levels 

and Associated 

Design 

Pathway

(section 5.3)

Screening 

Analysis

(chapter 4)
5-8

5.5 TEARDOWN ANALYSIS

To assemble BOMs and calculate the manufacturing costs of the different components in 

residential boilers, DOE disassembled multiple residential boilers into their components and 

estimated the material and labor cost of each component. This process is referred to as a 

“physical teardown.” A supplementary method, called a “virtual teardown,” uses published 

manufacturer catalogs and supplementary component data to estimate the major physical 

differences between a product that was physically disassembled and a similar product that was 

not. The teardown analysis for the initial analysis included six physical and nine virtual 

teardowns of residential boilers. 

5.5.1 Selection of Units

When selecting units for teardowns, DOE considered three main questions: 

• What efficiency levels should be captured in the teardown analysis? 

• Are there units on the market that capture the range potential efficiency levels? 

• Which of the available units are most representative? 

In responding to these questions, DOE adopted the following criteria for selecting units 

for the teardown analysis:

• The selected products should span the full range of efficiency levels for each product 

class under consideration. 

• If possible, the selected products within each product class should come from the same 

manufacturer and be within the same product series. 

• The selected products should come primarily from manufacturers with large market share 

in that product class, although the highest efficiency products were chosen irrespective of 

manufacturer. 

• The selected products should have non-efficiency related features that are the same or 

similar to features of other products in the same class and for a range of efficiency levels. 

DOE surveyed the residential boiler industry and identified products available to 

consumers as well as prototypes developed by manufacturers’ research efforts. DOE then 

applied the aforementioned criteria and selected baseline, intermediate, and max-tech units that 

met the product descriptions, energy efficiency levels, and included the technologies identified in 

the market surveys. In several cases, DOE substituted a virtual teardown in the place of a 

physical teardown. For example, if two boilers differed only by an extra heat exchanger section, 

one was physically town down and the additional material and manufacturing cost due to the 

additional section (e.g., for the extra sheet metal if the overall size increased, and for the 

additional section) were added to the cost of the physically town down model to determine the 

MPC of the virtually town down model. 

Because the large majority of shipments of residential boilers fall into the gas fired hot 

water boiler product class, DOE focused its teardown analysis heavily on gas fired hot water 

boilers. DOE chose six available residential boilers to represent the market, and used these for 

physical teardowns in the engineering analysis. DOE did not identify the model number or 
5-9

manufacturer of the units examined during the teardown analysis because this could expose 

sensitive information about individual manufacturers’ products.

Using the data gathered from the physical teardowns, DOE characterized each component 

according to its weight, dimensions, material, quantity, and the manufacturing processes used to 

fabricate and assemble it. For supplementary virtual teardowns, DOE gathered product data such 

as dimensions, weight, and design features from publicly available manufacturer catalogs. DOE 

obtained information and data not typically found in catalogs and brochures from the physical 

teardowns of similar products or by estimations based on industry knowledge. DOE collected 

additional component information during the manufacturer interviews.

As noted earlier, for the teardown analysis of residential boilers DOE performed six

physical teardowns and five additional virtual teardowns. DOE identified and selected 

representative units across the entire range of efficiencies that are currently available to 

consumers. To the extent possible, all major efficiency levels and technologies were captured in 

the selection of models for teardown analysis. 

DOE selected the majority of the physical teardown units in the gas hot water product 

class because it has the largest number of shipments. DOE conducted physical teardowns of four 

gas hot water boilers, two of which were non-condensing cast iron boilers, and the remaining

two were condensing boilers. DOE performed an additional three virtual teardowns of gas hot 

water boilers. DOE also performed a physical teardown on one gas fired steam boiler as well as 

one oil fired hot water boiler. DOE conducted two virtual teardowns of oil hot water boilers.

DOE intends to conduct additional teardowns in the NOPR phase of the residential boiler 

rulemaking analysis in order to supplement those performed in the initial analysis. The additional 

teardowns will be used to confirm assumptions made for the virtual teardowns and will allow 

DOE to further refine its manufacturer production cost estimates.

5.5.2 Baseline Units

DOE selected baseline units for the teardown analysis to determine which technologies 

manufacturers incorporate into products to obtain energy efficiencies equal to the current Federal 

energy conservation standards. Typically, the baseline units are representative of the minimum 

technology and lowest cost product that manufacturers can produce. DOE compared the 

technology and cost of products at the baseline to those at higher energy efficiency levels. The 

efficiencies of the baseline units are described in section 5.3.1.

DOE gathered information from the physical and virtual teardowns as well as from 

published information and data to determine which features manufacturers incorporate into 

baseline units. Generally baseline boiler models have cast iron heat exchangers, are natural draft

with dampers, and have pump driven by a standard permanent split capacity (PSC) induction 

motor.
5-10

5.6 COST MODEL

5.6.1 Generation of Bills of Materials

The end result of each teardown is a structured BOM, which describes each product part 

and its relationship to the other parts in the estimated order in which manufacturers assembled 

them. The BOMs describe each fabrication and assembly operation in detail, including the type 

of equipment needed (e.g., presses, drills), process cycle times, and labor associated with each 

manufacturing step. The result is a thorough and explicit model of the production process, 

including space, conveyor, and equipment requirements by planned production level. DOE 

developed structured BOMs for each of the physical and virtual teardowns.

The BOMs incorporate all materials, components, and fasteners classified as either raw 

materials or purchased parts and assemblies. The designations as raw materials or purchased 

parts were based on DOE’s previous industry experience, recent information in trade 

publications, and discussions with original equipment manufacturers (OEMs). DOE also visited 

manufacturing plants to reinforce its understanding of the industry’s current manufacturing 

practices for residential boilers.

The price of purchased parts is estimated based on volume variable price quotations and 

detailed discussions with manufacturers and component suppliers. For fabricated parts, the prices 

of “raw” materials are estimated on the basis of 5 year averages (2008-2013) (section 5.6.4.4). 

The cost of transforming the intermediate materials into finished parts is estimated based on 

current industry pricing. DOE shared major estimates with manufacturers during manufacturer 

interviews to gain feedback on its analysis, assumptions, methodology, and initial results.

5.6.2 Structure of Spreadsheet Cost Model

DOE uses a detailed, component focused technique for calculating the manufacturing 

cost of a product (direct materials, direct labor, and the overhead costs associated with 

production). The first step in the manufacturing cost assessment was creating a complete and 

structured BOM by disassembling the units selected for teardown. The units were dismantled, 

and each part was characterized according to weight, manufacturing processes, dimensions, 

material, and quantity. The BOM incorporates all materials, components, and fasteners, as well 

as estimates of raw material and purchased part costs. Assumptions on the sourcing of parts and 

in house fabrication were based on industry experience, information in trade publications, and 

discussions with manufacturers. Interviews with manufacturers and plant visits added industry 

experience for the methodology and pricing.

After generating the BOMs from the teardown analysis, the final step was to convert this 

information into dollar values. DOE collected information on labor rates, tooling costs, raw 

material prices, and other factors. DOE assumed values for these parameters using internal 

expertise and confidential information available to DOE contractors. Although most of the 

assumptions are manufacturer specific and cannot be revealed, section 5.6.4.4 provides a 

discussion of the values used for each assumption.
5-11

DOE assigned costs of labor, materials, and overhead to each part, whether purchased or 

produced in house. DOE then aggregated single part costs into major assemblies and summarized 

these costs in a worksheet. During engineering interviews with manufacturers, DOE shared key 

estimates from the cost model and requested feedback. DOE considered all relevant information 

manufacturers gave and incorporated it into the analysis, if appropriate.

5.6.3 Cost Model and Definitions

Once DOE disassembled selected units, gathered information from manufacturer catalogs 

on additional products, and identified technologies, DOE created a manufacturing cost model to 

translate physical information into MPCs. The cost model is based on production activities and 

divides factory costs into the following categories:

• Materials: Purchased parts (e.g., gas valves, ignition modules), raw materials (e.g., cold 

rolled steel, copper tube), and indirect materials used for processing and fabrication. 

• Labor: Fabrication, assembly, indirect, and supervisor labor. Fabrication and assembly 

labor cost are burdened with benefits and supervisory costs. 

• Overhead: Equipment, tooling, and building depreciation, as well as utilities, equipment 

and tooling maintenance, insurance, and property taxes. 

5.6.3.1 Cost Definitions

Because there are many different accounting systems and methods to monitor costs, DOE 

defined the above terms as follows:

• Direct material: Purchased parts (outsourced) plus manufactured parts (made in house 

from raw materials). 

• Indirect material: Material used during manufacturing (e.g., welding rods, adhesives). 

• Fabrication labor: Labor associated with in house piece manufacturing. 

• Assembly labor: Labor associated with final assembly. 

• Indirect labor: Labor costs that scaled with fabrication and assembly labor. This included 

the cost of technicians, manufacturing engineering support, stocking, etc. that were 

assigned on a span basis. 

• Equipment and plant depreciation: Money allocated to pay for initial equipment 

installation and replacement as the production equipment wears out. 

• Tooling depreciation: Cost for initial tooling (including nonrecurring engineering and 

debugging of the tools) and tooling replacement as it wears out. 

• Building depreciation: Money allocated to pay for the building space and the conveyors 

that feed and/or make up the assembly line. 

• Utilities: Electricity, gas, telephones, etc. 

• Maintenance: Money spent on maintaining tooling and equipment. 

• Insurance: Appropriated as a function of unit cost. 

• Property Tax: Appropriated as a function as unit cost.
5-12

5.6.4 Cost Model Assumptions Overview

As discussed in the previous section, assumptions about manufacturer practices and cost 

structure played an important role in estimating the final product cost. Assumptions varied for 

specific manufacturers, depending on market position, manufacturing practices, and size.

In converting physical information about the product into cost information, DOE 

reconstructed manufacturing processes for each component using internal expertise and 

knowledge of the methods used by the industry. DOE used assumptions about manufacturing 

process parameters (e.g., equipment use, labor rates, tooling depreciation, and cost of purchased 

raw materials) to determine the value of each component. DOE then summed the values of the 

components into assembly costs and, finally, the total product cost. The product cost included the 

material, labor, and overhead costs associated with the manufacturing facility. The material costs 

included both direct and indirect materials. The labor costs included fabrication, assembly, 

indirect, direct, and supervisor labor rates, including the associated overhead.

DOE determined labor costs by the type of product manufactured at the factory. 

Overhead costs include equipment depreciation, tooling depreciation, building depreciation, 

utilities, equipment, tooling maintenance, insurance, property, and taxes.

DOE presented a draft of the cost efficiency results to manufacturers during the 

interviews, and used information from the interview to update the cost model to address 

manufacturer comments about component and material pricing and production volumes. When 

appropriate, DOE modified the cost model immediately after an interview so refined data could 

be presented to the next manufacturer. Positive feedback from manufacturers presented with 

refined data confirmed the accuracy of the changes.

The next sections discuss assumptions about outsourcing, factory parameters, production 

volumes, and material prices. When the assumptions are manufacturer specific, they are 

presented as industry averages to prevent disclosure of confidential information.

5.6.4.1 Fabrication Estimates

DOE characterized parts based on whether manufacturers purchased them from outside 

suppliers or fabricated them in house. For purchased parts, DOE estimated the purchase price. 

For fabricated parts, DOE estimated the price of raw materials (e.g., tube, sheet metal) and the 

cost of transforming them into finished parts. Whenever possible, DOE obtained price quotes 

directly from the manufacturers’ suppliers.

DOE based the manufacturing operations assumptions on internal expertise, interviews 

with manufacturers, and visits to manufacturing facilities. Table 5.6.1 presents the major 

manufacturer processes identified and developed for the spreadsheet model.
5-13

Table 5.6.1 Cost Model In-House Manufacturing Operation Assumptions

Fabrication Finishing Assembly/Joining Quality Control

Stamping/Pressing Washing Adhesive Bonding Inspection and 

Testing

Turret Punch Painting Spot Welding

Tube Forming Powder Coating Seam Welding

Brake Forming De-Burring Packaging

Cutting and Shearing Polishing

Insulating

Casting

5.6.4.2 Production Volume Assumptions

Manufacturer production volumes vary depending on several factors, including market 

share, the product produced, and whether the manufacturer produces similar products. DOE 

based production volume assumptions for residential boilers on industry knowledge and 

information obtained during manufacturer interviews.

5.6.4.3 Factory Parameters Assumption

DOE used information gathered from publicly available literature, manufacturer 

interviews, and analysis of common industry practices to formulate factory parameters for 

each type of manufacturer. DOE first made assumptions about a set of factory parameters 

before the manufacturer interviews, then revised the assumptions based comments and 

information gathered during the interviews.

5.6.4.4 Material Prices Assumptions

DOE determined the cost of raw materials using publicly available information such as 

the American Metals Market, interviews with manufacturers, and discussions with material 

suppliers. Metals used in the fabrication of residential boilers include cast iron, copper, 

aluminum, and steel. There have been drastic fluctuations in metal prices over the last few 

years; to account for these fluctuations, DOE used a 5 year average of metal prices from the 

Bureau of Labor Statistics Producer Price Indices (PPIs) spanning 2008 to 2013. Table 5.6.2

shows the 5 year average metal prices DOE used for the analysis.
5-14

Table 5.6.2 Five Year Metal Prices (2008-2013)

Metals Cost (2013 $/lb)

Cold Rolled Steel (CRS) 0.44

Aluminized CRS 0.55

Galvanized CRS 0.54

Pre-Painted CRS 0.68

Textured CRS 0.68

AL29-4C 7.07

AL29-4C tube 10.86

SS316 Tube 6.00

Plain Cu Tube, ≤ .75” OD 3.96

Plain Cu Tube, > .75” OD 3.05

Rifled Cu Tube, ≤ .75” OD 4.15

5.6.5 Manufacturing Production Cost

Once the cost estimate for each teardown unit was finalized, DOE prepared a detailed 

summary for relevant components, subassemblies, and processes. The BOM thus details all 

aspects of unit costs. DOE totaled the cost of materials, labor, and direct overhead used to 

manufacture a product in order to calculate the MPC.

Technologies used in the units subject to teardown are noted in the summary sheet of 

each cost model and the costs are estimated individually. Thus, various implementations of 

technologies can be accommodated, ranging from assemblies that are entirely purchased to 

units that are entirely made from raw materials. Therefore, hybrid assemblies, consisting of 

purchased parts and parts made on site, are also accommodated.
5-15

Figure 5.6.1 Shows the general breakdown of costs associated with manufacturing a 

product.

The full cost of the equipment is broken down into two main costs: the full production 

cost or MPC, and the nonproduction cost. The nonproduction cost is equal to the manufacturer 

markup minus profits.

Following the development of the MPCs, DOE reviewed its major cost estimates 

during interviews with residential boiler manufacturers, who provided feedback and 

validation. As a result, DOE developed MPCs for use in the subsequent analyses.

5.7 COST VERSUS EFFICIENCY CURVES

As described in section 5.4, DOE first estimated the MPC of the baseline units for each 

product class. DOE then determined the intermediate efficiency levels, up to max-tech, that 

represent the residential boiler market, and identified the MPCs for each of these intermediate 

efficiency levels. The result of the initial engineering analysis is four cost efficiency curves 

representing the product classes examined for this analysis. 

As noted in section 5.5.1, DOE developed the gas hot water cost efficiency curve by 

conducting physical teardowns of four gas hot water boilers, two of which were non-condensing 

cast iron boilers at 85% AFUE, and the remaining two were condensing boilers; one at 90% 
5-16

AFUE and one at 92% AFUE. DOE performed virtual teardowns at the 82% AFUE and 84% 

AFUE level on models in the same product lines as the 85% AFUE boilers. To obtain an 

estimate of the manufacturing cost at 83% AFUE, DOE linearly interpolated between the 82% 

AFUE and 84% AFUE levels to estimate the size increase of the heat exchanger and associated 

costs for the increased heat exchanger materials and other associated costs (e.g., larger cabinet). 

DOE also performed a virtual teardown on the max-tech model at the 96% AFUE efficiency 

level. 

DOE developed the gas steam cost-efficiency curves by relying on the similarities 

between gas fired steam and gas fired hot water boilers. DOE performed a physical teardown of 

one gas-fired steam unit at the 82% AFUE level and used available information from the gas hot 

water product class cost to determine the cost increases at various efficiency levels. 

DOE developed the oil hot water cost efficiency curve by conducting one physical 

teardown of a boiler at 86% AFUE and performing virtual teardowns at the 84% AFUE and 91% 

AFUE levels. To obtain an estimate of the manufacturer production cost at 85% AFUE, DOE 

linearly interpolated between the 84% AFUE and 86% AFUE levels to determine the amount of 

heat exchanger increase and modeled the associated changes in production cost. 

DOE developed the oil steam cost efficiency curves by relying on the similarities 

between oil hot water and oil steam boilers, as many steam boilers are similar in design to a

corresponding hot water boiler with a somewhat larger heat exchanger and a different trim kit. 

Based on a review of product literature and market data, DOE estimated the efficiency difference 

between a boiler operating in hot water mode and steam mode. DOE used available information 

from the oil hot water product class cost to determine the cost increase in its development of the 

gas steam boiler cost curves. 

Lastly, DOE considered the draft type and whether the model would have fan-assisted 

draft at a given efficiency level. DOE surveyed the market and found the percentage of models 

at each efficiency level that currently utilize a fan-assisted draft, and assumed that under 

amended standards that percentage would be unchanged. DOE then calculated the weightedaverage cost at each efficiency level based on the current distribution of models with and without 

fan-assisted draft at each efficiency level. For example, for a gas fired hot water boiler at 82% 

AFUE, 20% of models on the market include inducer fans. Therefore, DOE included the cost of 

20% of an inducer fan at that efficiency level. DOE estimated that the net cost of an inducer fan 

to be $40; this figure includes the cost of the fan assembly and mounting, minus the cost of the 

vent damper, which would likely be present on a non-fan-assisted unit but would not be needed 

on a unit with an inducer fan. 

Figure 5.7.1 through Figure 5.7.4 show the four cost efficiency curves in the form of 

energy efficiency (i.e., AFUE) versus MPC. Table 5.7.1 lists the curves and their 

corresponding figure numbers. 
5-17

Table 5.7.1 Cost Efficiency Curves and Corresponding Figures

Product Class Curve Shown in 

Gas Hot Water 5.7.1

Gas Steam 5.7.2

Oil Hot Water 5.7.3

Oil Steam 5.7.4

The results show that the cost-efficiency curves are nonlinear. As efficiency increases, 

manufacturing becomes more difficult and more costly for manufacturers. Large increases in 

costs are evident when boilers are designed for condensing operation. 

Figure 5.7.1 Gas Hot Water Cost-Efficiency Curve

Figure 5.7.2 Gas Steam Cost-Efficiency Curve

0

100

200

300

400

500

600

700

800

900

80% 82% 84% 86% 88% 90% 92% 94% 96% 98%

Incremental Cost ($)

Efficiency Level (AFUE)

0

10

20

30

40

50

60

70

80

79% 80% 81% 82% 83% 84%

Incremental Cost ($)

Efficiency Level (AFUE)
5-18

Figure 5.7.3 Oil Hot Water Cost-Efficiency Curve

Figure 5.7.4 Oil Steam Cost-Efficiency Curve

5.8 MPC BREAKDOWN

After DOE incorporated all the assumptions into the cost model, it calculated the 

production cost percentages. The product cost percentages validate the assumptions by 

comparing them to manufacturers’ actual financial data published in annual reports. DOE 

calculated the average product cost percentages by product class due to the large variations in 

production volumes, fabrication and assembly costs, and other factors that affect the calculation 

of the unit’s total MPC. Table 5.8.1 shows the different percentages for the production costs that 

0

100

200

300

400

500

600

700

800

900

83% 84% 85% 86% 87% 88% 89% 90% 91% 92%

Incremental Cost ($)

Efficiency Level (AFUE)

0

50

100

150

200

250

300

81% 82% 83% 84% 85% 86% 87%

Incremental Cost ($)

Efficiency Level (AFUE)
5-19

make up the total product MPC.

Table 5.8.1 Total Product MPC Breakdown for Residential Boilers

Percentage Cost Breakdown by Residential Boiler Type Baseline, by %

Gas Oil

Hot Water Steam Hot Water Steam

Materials 76% 76% 80% 80%

Labor 9% 11% 7% 7%

Depreciation 8% 6% 6% 6%

Overhead 7% 7% 7% 7%

5.9 MANUFACTURER MARKUP

A manufacturer markup is applied to the MPC of the product to arrive at the MSP. In 

general, the manufacturer markup should ensure that the MSP of the product is high enough to 

recover the full cost of the product (i.e., full production and nonproduction costs), and yield a 

satisfactory profit. The MSP is the price at which the manufacturer can recover all production 

and nonproduction costs and earn a profit. DOE calculated the MSP for residential boilers by 

multiplying the MPCs by the calculated manufacturer markup, which is explained below.

To meet new or amended energy conservation standards, manufacturers often introduce 

design changes to their product lines, which often result in increased MPCs. Depending on the 

competitive environment for these particular products, some or all of the increased production 

costs can be “passed through” to retailers and eventually to customers in the form of higher 

purchase prices. As production costs increase, manufacturers also typically incur additional 

overhead at the factory and corporate levels. The MSP must cover both of these contributions to 

overhead if a company is to maintain profitable. As discussed previously, overhead costs in the 

DOE model are a function of investments, material costs, labor costs, or total costs, depending 

on the overhead category. Together, materials, labor, and factory overhead make up the full 

production cost. DOE applies another multiplier to the full production cost to account for 

corporate nonproduction costs and profit. This multiplier, the nonproduction cost markup, is the 

focus of this section.

In this section, DOE presents its methodology for converting the MPCs to MSPs, which 

is done using the nonproduction cost markup (“manufacturer markup”). The manufacturer 

markup is an integral part of the overall markup, which also includes the markups in the 

distribution chain (e.g., wholesalers, distributors, retailers, contractors). The distribution chain 

markups convert MSP to retail price. The retail prices and installation costs are key inputs to the 

LCC analysis, PBP analysis, and the NIA. Using manufacturer and distribution chain markups 

and installation costs, DOE can calculate the first costs that customers would face under each 

efficiency level. DOE evaluates the tradeoff between the increase in first cost and the resulting 

operational cost savings at each efficiency level in the LCC and PBP analyses (chapter 8), and 

NIA (chapter 10).

The manufacturer markup also has an important bearing on profitability. A high markup 
5-20

under a standards scenario suggests manufacturers can pass through the increased variable costs 

and some of the capital and product conversion costs (onetime expenditures). A low markup 

implies that manufacturers will not be able to recover as much of the necessary investment in 

plant and equipment.

5.9.1 Manufacturer Markup Calculation

Publicly owned companies are required by law to disclose financial information on a 

regular basis by filing different forms with the U.S. Securities and Exchange Commission (SEC). 

The SEC form 10K, filed by companies on an annual basis, provides a comprehensive overview 

of the company’s business and financial conditions. Relevant information in the 10K reports 

includes the company’s revenues and direct and indirect costs. For the manufacturer markups, 

DOE used 10K reports from publicly owned residential boiler companies. The financial figures 

necessary for calculating the manufacturer markup are net sales, costs of sales, and gross profit. 

The income statement section of the 10K reports often lists these figures. 

DOE calculated the baseline manufacturer markups by using financial figures from 

manufacturers’ SEC 10K reports, such as the net sales (revenues) and cost of sales to calculate 

gross profit and gross profit margins. DOE used averages of the financial figures spanning 2008

to 2012 and then calculated the markups.
5-21

DOE used the following equations to calculate the gross profit and gross profit margins: 

Gross Profit = Net Sales – Cost of Sales Eq. 1

Gross Profit Margin

Gross Profit

Net Sales = Eq. 2

Table 5.9.1 contains the calculated gross profit margins for a sample of manufacturers.

Table 5.9.1 Gross Profit Margin for Residential Boiler Manufacturers

Manufacturer Financial 

Figure

Year

2012 2011 2010 2009 2008

A Net Sales 1939.3 1710.5 1489.3 1375.0 1451.3

Cost of 

Sales

1287.3 1197.9 1043.4 980.1 1077.2

Gross 

Profit

652.0 512.6 445.9 394.9 374.1

Gross 

Profit 

Margin

.34 .30 .30 .29 .26

Average Gross Profit Margin .30

B Net Sales 5100.0 4539.6 4098.8 4161.6 5826.6

Cost of 

Sales

3717.1 3262.2 2867.2 2911.0 4061.2

Gross 

Profit

1383.1 1274.7 1231.6 1250.6 1765.4

Gross 

Profit 

Margin

.27 .28 .30 .30 .30

Average Gross Profit Margin .29

C Net Sales 204.8 198.8 189.7 183.7 225.8

Cost of 

Sales

155.5 153.8 146.9 140.7 176.0

Gross 

Profit

49.3 45.1 42.8 43.0 49.8

Gross 

Profit 

Margin

.24 .23 .23 .23 .22

Average Gross Profit Margin .23 

To calculate the time average gross profit margin for each firm, DOE first summed the 

gross profit for all the years and then divided the result by the sum of the net sales for the 

same years. Each manufacturer’s nonproduction cost markup was calculated as:
5-22

 Eq. 3

After calculating the average markup for each individual manufacturer, DOE averaged 

them together based on their approximate market shares as estimated by DOE to create an 

industry-average markup.

Table 5.9.2 Calculated Manufacturer Markups for Residential Boilers

Manufacturer Manufacturer Markup

Manufacturer A 1.42

Manufacturer B 1.41

Manufacturer C 1.3

Industry Average 1.41

DOE calculated the average manufacturer market to be 1.41. In other words, 

residential boiler manufacturers, on average, sell their products to the next party in the 

distribution channel at 41 percent above the full manufacturing production cost. 

DOE acknowledges that there are numerous manufacturers of residential boilers that 

are privately held companies, companies owned through employee stock ownership plans, and 

companies owned through private stock plans. Consequently, these companies do not file SEC 

10K reports. In addition, while the publically owned companies file SEC 10K reports, the 

financial information summarized is not exclusive for the residential boiler portion of their 

business. It can include financial information from other product sectors, whose margins could 

be quite different from the residential boiler industries.

DOE considered the feedback from residential boiler manufacturers in order to 

supplement the information presented above, and after discussions with manufacturers, DOE 

determined the estimated manufacturer markup of 1.41 for the residential boiler industry is on 

an aggregate basis is appropriate. When considering manufacturer feedback related to the 

markup, DOE aggregated the feedback received from manufacturers on a market-shareweighted basis.

As noted previously, the manufacturer markup is a multiplier used in the engineering 

analysis to determine the MSPs for each of the representative product classes. DOE used a 

constant markup to reflect the MSPs of the baseline products as well as more efficient 

products. DOE took this approach because amended standards may make high efficiency 

products, which currently are considered premium products, the baseline product and thus it 

would become a commodity.

5.10 STANDBY MODE AND OFF MODE

For the standby mode and off mode analyses, DOE adopted a design-option approach, 

which allowed for the calculation of incremental costs through the addition specific design 
5-23

options to a baseline model. DOE decided on this approach because it did not have sufficient 

data to execute an efficiency-level analysis, as manufacturers typically do not rate or publish 

data on the standby mode and/or off mode energy consumption of their products. Because 

standby mode and off mode electricity consumption is not currently regulated, DOE believes 

manufacturers generally do not invest in reducing the standby and off mode electrical energy 

consumption of their products because the production cost cannot be passed onto the 

consumer because consumers currently do not value this feature highly enough to pay extra 

for it. Therefore, DOE determined that there is no basis for comparison of efficiency levels 

between products. The design-option approach, by contrast, allowed DOE to examine 

potential designs for improving the off mode energy consumption.

5.10.1 Electric Boilers

DOE analyzed the expected standby mode and off mode power consumption of an 

electric boiler by comparing it to the standby mode and off mode power consumption of a gas 

boiler. In an electric boiler, DOE found that for the same components primarily contribute to 

standby mode and off mode power consumption in the baseline design (i.e., the control 

transformer and the control board power supply).

To estimate the standby mode and off mode power consumption of electric boilers, 

DOE compared wiring diagrams, control schematics, and images of control boards of gas and 

electric boilers. DOE found that electric boilers commonly use a 40VA transformer that is 

very similar to those found in gas boilers. For the analysis of standby mode and off mode for 

electric boilers, DOE assumed that the power consumption associated with these transformers 

would be the same. Further, a DOE review of electric boilers found that other components are 

also the same as or very similar to those used in gas boilers. Therefore, DOE also assumed the 

standby consumption for these components would be the same in electric boilers as in gas 

boilers. A key difference between electric boilers and gas boilers control systems is that 

electric boilers control boards tend to be less complex because they do not require functions 

such as flame ignition and supervision or other combustion safety controls. However, electric 

boilers control boards must use relays and/or sequencers that have higher capacity ratings than 

the relays typically found in gas boilers to turn the electric boiler heating elements on 

incrementally. The elements must be activated individually to limit inrush currents and 

prevent trips of circuit breakers. DOE estimates that the additional standby mode and off mode 

power consumption associated with the use of larger relays and/or sequencers in electric 

boilers is offset by need for combustion controls in gas boilers.

As a result, DOE assumed that an electric boiler has a standby mode and off mode 

electrical consumption that is similar that of gas boiler in similar models. DOE also believes 

that the design options that were identified for reducing the standby mode and off mode power 

consumption of gas boilers (i.e., a switching mode power supply and a low loss transformer) 

will have the same impact on the standby mode and off mode power consumption of electric 

boilers. Therefore, DOE analyzed standby mode and off mode standards that were identical to 

those analyzed for gas boilers.
5-24

5.10.2 Identification and Characterization of Standby Mode and Off Mode Components

Using the design-option approach, DOE identified components that contribute to the 

standby mode and off mode energy consumption in the teardown-generated BOM used for the 

boilers that were analyzed. During the 2010 furnace and central air conditioner rulemaking, 

DOE performed measurements of standby mode and off mode electrical energy consumption 

on each of these components in accordance with the test procedure1. DOE aggregated these 

measurements, in conjunction with nominal power ratings and feedback from manufacturers 

regarding individual component’s power draw, to characterize the electrical energy use of 

each component operating in standby mode of off mode. Certain electrical components in 

residential furnaces are similar to those found in residential boilers. For these components, 

DOE assumed the measured power consumption from the furnace rulemaking would be 

representative of the component standby consumption of boilers in the analysis. DOE than 

estimated the costs of individual components based on available literature2

, volume-variable 

price quotations and detailed discussions with manufacturers. 

5.10.3 Baseline Models

The design-option approach calculates the incremental cost for products with standby 

or off mode energy consumption above a baseline model in each off mode product class 

covered in the rulemaking. In most rulemakings, the baseline is determined by the current 

Federal minimum energy conservation standard. However, because this is the first rulemaking 

to regulate the standby and off mode energy consumption of residential boilers, DOE instead 

established the baseline model for the standby mode and off mode analysis as the most 

energy-consumptive product. DOE defined and identified baseline components as those that 

consume the most electricity during standby mode and off mode operation. The most 

consumptive baseline components were then “assembled” to model the electrical system of a 

boiler with the maximum system off mode electrical energy consumption from DOE’s 

representative test data. 

DOE’s testing of 6 models of residential boilers showed standby mode power

consumption from 3.69 to 9.76 watts. Feedback from manufacturers during interviews 

confirmed this range is representative of the majority of residential boilers on the market. 

However, because DOE was only able to test a fraction of the residential boiler market, DOE 

took a conservative approach to determine the baseline level and summed the most energy 

consumptive components in each individual boiler to create the baseline model. The baseline 

boiler model contains a 40VA control transformer, user display, ECM burner motor (and 

associated controls), and linear power supply. For oil fired boilers only, the baseline model 

also included an oil-fired burner that contains an additional transformer that consumes 

additional standby power. In the residential furnace rulemaking, DOE examined and tested the 

standby power consumption of a variety of components. Certain electrical components in 

residential furnaces are similar to those found in residential boilers. In order to prevent a 

reduction in consumer utility, DOE did not consider any design options that would reduce the 

feature set of these units. The results of testing for individual components are shown in Table 

5.10.1 below. 
5-25

Table 5.10.1 Baseline Standby Mode and Off Mode Power Consumption by Component for 

Boilers

Component

Standby Mode and Off Mode Power Consumption (watts)

Gas Hot 

Water

Oil Hot 

Water

Gas Fired 

Steam

Oil Fired 

Steam

Electric 

Hot 

Water

Electric 

Steam

Transformer 4 4 4 4 4 4

ECM Burner 

Motor

3 N/A N/A N/A N/A N/A

Controls 4 4 4 4 4 4

Display 4 4 4 4 4 4

Oil Burner N/A 3 N/A 3 N/A N/A

Total (watts) 15 15 12 15 12 12

5.10.4 Cost-Power Consumption Results

The results of the engineering analysis are reported as cost-power consumption data in 

the form of power (in watts) versus MPC (in dollars). For each design option that passed the 

screening analysis (chapter 4), DOE estimated the power consumption reduction of the design 

option based on the DOE test procedure. DOE developed several sets of standby and off mode

data– two for gas, two for oil, and one for electric boilers. DOE assumed that boilers generally

do not have a seasonal off switch and therefore assumed that the standby mode and off mode 

power consumption are equal.

The methodology for developing the curves started with determining the energy use of 

baseline products. Above the baseline, DOE implemented design options based on costeffectiveness until all available technologies were employed (i.e., at the max-tech level). The 

design options considered are not all mutually exclusive so systems could incorporate multiple 

design options simultaneously, which allows for three system designs above the baseline. The 

design options included: changing from a baseline linear power supply with standard 

transformer to a linear power supply with a low loss transformer (LLTX), changing to a 

switching mode power supply (SMPS) with a standard transformer, and changing to a SMPS 

with a LLTX.
5-26

Table 5.10.2 Incremental Manufacturer Production Cost Results for Gas Hot Water Boiler

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 15 -

EL1 Linear Power Supply with 

LLTX 13.5 1.00

EL2 Switching Mode Power Supply 13.2 10.47

EL3 Switching Mode Power Supply 

with LLTX 12.5 11.12

Table 5.10.3 Incremental Manufacturer Production Cost Results for Oil Hot Water Boiler

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 15 -

EL1 Linear Power Supply with 

LLTX 13.5 1.00

EL2 Switching Mode Power 

Supply 13.2 10.47

EL3 Switching Mode Power 

Supply with LLTX 12.5 11.12

Table 5.10.4 Incremental Manufacturer Production Cost Results for Gas Steam Boilers

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 12 -

EL1 Linear Power Supply with 

LLTX 10.5 1.00

EL2 Switching Mode Power 

Supply 10.2 10.47

EL3 Switching Mode Power 

Supply with LLTX 9.5 11.12
5-27

Table 5.10.5 Incremental Manufacturer Production Costs for Oil Steam Boilers

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 15 -

EL1 Linear Power Supply with 

LLTX 13.5 1.00

EL2 Switching Mode Power 

Supply 13.2 10.47

EL3 Switching Mode Power 

Supply with LLTX 12.5 11.12

Table 5.10.6 Incremental Manufacturer Production Costs for Electric Hot Water Boilers 

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 12 -

EL1 Linear Power Supply with 

LLTX 10.5 1.00

EL2 Switching Mode Power 

Supply 10.2 10.47

EL3 Switching Mode Power 

Supply with LLTX 9.5 11.12

Table 5.10.7 Incremental Manufacturer Production Costs for Electric Steam Boilers 

Description

Standby Mode and 

Off Mode Power 

Consumption (W)

Incremental Cost

($)

Baseline Linear Power Supply 12 -

EL1 Linear Power Supply with 

LLTX 10.5 1.00

EL2 Switching Mode Power 

Supply 10.2 10.47

EL3 Switching Mode Power 

Supply with LLTX 9.5 11.12
5-28

5.11 ENGINEERING ANALYSIS SUMMARY OF RESULTS

The results from the engineering analysis are used in the LCC analysis to determine 

consumer prices for residential boilers at the efficiency levels analyzed. Using the calculated 

manufacturer markup, DOE calculated the MSPs of the residential boilers at the baseline and 

more efficient levels.

5.11.1 Summary of Results for Representative Models

Each of the MPCs and MSPs developed in the engineering analysis for the 

representative capacity are shown in Table 5.11.1 through Table 5.11.4. DOE was able to 

receive manufacturer feedback on these MPCs and MSPs during the manufacturer interviews. 

As described in section 5.9.1, the MSP for residential boilers is calculated by multiplying the 

MPC by the manufacturer markup, then adding the shipping cost. 

Table 5.11.1 MPC and MSP for Gas-Fired Hot Water Boilers (100,000 Btu/h input)

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline (AFUE=82%) $652 $919

1 (AFUE=83%) $665 $938

2 (AFUE=84%) $674 $950

3 (AFUE=85%) $714 $1,007

4 (AFUE=90%) $1,019 $1,437

5 (AFUE=92%) $1,162 $1,638

6 (AFUE=96%) $1,466 $2,068

Table 5.11.2 MPC and MSP for Gas-Fired Steam Boilers (100,000 Btu/h input)

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline (AFUE=80%) $754 $1063

1 (AFUE=82%) $772 $1088

2 (AFUE=83%) $823 $1160

Table 5.11.3 MPC and MSP for Oil-Fired Hot Water Boilers (140,000 Btu/h input)

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline (AFUE=84%) $1,255 $1,796

1 (AFUE=85%) $1,334 $1,881

2 (AFUE=86%) $1,409 $1,986

3 (AFUE=91%) $2,034 $2,868
5-29

Table 5.11.4 MPC and MSP for Oil-Fired Steam Boilers (140,000 Btu/h input)

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline (AFUE=82%) $1,274 $1,797

1 (AFUE=84%) $1,415 $1,995

2 (AFUE=85%) $1,466 $2,067

3 (AFUE=86%) $1,557 $2,195

Table 5.11.5 MPC and MSP for Gas-Fired Hot Water Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16

Table 5.11.6 MPC and MSP for Gas-Fired Steam Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16

Table 5.11.7 MPC and MSP for Oil-Fired Hot Water Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16

Table 5.11.8 MPC and MSP for Oil-Fired Steam Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16

Table 5.11.9 MPC and MSP for Electric Hot Water Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16
5-30

Table 5.11.10 MPC and MSP for Electric Steam Boilers Standby 

Efficiency Level MPC 2013$ MSP 2013$ 

Baseline 9.56 13.48

EL1 10.56 14.89

EL2 20.03 28.24

EL 3 20.68 29.16
5-31

REFERENCES

1. U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Energy 

Conservation Program for Consumer Products: Technical Support Document: Energy 

Efficiency Standards for Consumer Products: Residential Furnaces and Central Air 

Conditioners and Heat Pumps : Engineering Analysis (2010) 

<http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furn

aces_central_ac_hp_direct_final_rule_tsd.html>

2. N. Nielsen. “Loss Optimizing Low Power 50 Hz Transformers Intended for AC/DC Standby 

Power Supplies.” Applied Power Electronics Conference and Exposition, 2004. IEEE, pp. 

420–425, September 9, 2004.