:A 

# i Residential Furnaces and Boilers 

# MARKET AND TECHNOLOGY ASSESSMENT

Arthur D. Little, Inc. U.S. DOE Workshop on Standards for Residential Furnaces and Boilers

July 17, 2001



# rl•1 Market and Technology Assessment Table of Contents

Characterization of Baseline Residential Furnaces and Boilers

## Market and Technology Assessment Overview E nergy use ^C) + r 1 rITI Energy use for space heating is the most energy-intensive end use in the residential sector (about 6 quadrillion Btu ). The main heating fuel is natural gas.

Source: 2000 BTS Core Databook Note: Electricity consumption is primary consumption 2



## Market and Technology Assessment Overview Heating Systems More than half of the housing units in 1997 were equipped with warm-air furnaces . During the last 20 years , heat pumps and warmair furnaces have gained penetration over hydronic systems.

1978 1987

Year 

### 1997 Heat Pumps Boilers Furnaces

Unit heaters including electric baseboards make up for the remaining housing units Source: US DOE , Residential Energy Consumption Survey, 1997 3

## Market and Technology Assessment Overview Regional Differences Different regions of the country show different characteristics. Furnaces show a high penetration in the Midwest , while boilers are very commonly used in the North-East.

51% 47% Wisconsin: high penetration (90 %) condensing furnac r 71 43% 

# 11

^f'L Hot c i t : high electricity consumption (larger AC systems) Source : US Census 

## '^, Furnaces 2%

% oil appliances and hydronic heating North =East: high penetration of

4%


## Boilers 4



# /"l` Market and Technology Assessment

Overview Distribution Channels The new construction and the replacement markets show some differences in the structure of the distribution chain. [Sln le Famil Neti^r Construction Participants SingI e l=amllY Pepiacement Retrofit Parti_cpnnts

Homeowner Architect Design Homebuilder -----t Engineer Contractor -------

Distributor Manufacturer i Component Su lier Manuf. Rep. Component Su pp lier Key:_

-- ► Secondary Influence$ --- ► Primary innuences 5

## Market and Technology Assessment Overview Distribution Channels Contractors have a strong influence on the final decision in both markets . However , homebuilders play an important role in the new construction market. Roles of Key Participants New Construction Homeowner • Approves recommendations from - Homebuilders - Contractors Homebuilder • Selects system and influences vendor • Writes specifications • Primary influence on homeowner - Builds for customer Contractor • Selects vendor based on: - Meeting specification - Price - Product reliability

- Proximity/relationship with distributors • Influences system Source : ADL Interviews. Roles of Key Participants Re pie cement Homeowner • Approves recommendations • Often prefers " replacement in kind" -Very few ask about features -Only mid to higher income consider life-cycle Contractor • Selects vendor • Influences homeowner by offering:

- Products/

features alternatives -Pricing alternatives -Advice



## Market and Technology Assessment Overview Non-regulatory Efforts Many non-regulatory efforts , association and initiatives help to increase the use of high -efficiency equipment. - Energy Star program It encourages consumers to purchase appliances that meet energy conservation criteria and bear the EPA Energy Star logo. Furnaces over 90% AFUE and boilers over 85% qualify for the program. - Utilities, communities , banks , lenders , states Offer a wide variety of energy loans. 

## - Non-governmental organizations Promote the awareness, education and development of energy efficient, environmentally responsible appliances. 

## - Government agencies and regional institutions Focus on technology education, energy efficiency and energy policy research. - University Centers Foster research and educate students and policy makers on energy issues. 6

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## Market and Technology Assessment Table of Contents

[Characterization ofBaseline Residential Furnaces and Boilers

e

## Market and Technology Assessment Characterization Furnaces- General Furnaces have a very high market penetration . Total shipments have been increasing over the last ten years, even though oil-fired furnaces show a declining trend.

Year Source : GAMA Statistical Highlights 2000 

## 200 IOU E 120 80 E 40 O 01991 1994 1997 2000 Year

10



## Market and Technology Assessment Characterization Furnaces - Market Shares Five companies share 87% of the market. ",,Market Share Others

American Standard (TraneyLennox ITC/Carrier

Goodman

Source : U.S. Appliance Industry Magazine 2000

## Market and Technology Assessment Characterization Furnaces - Efficiency Most of the models currently on the market have an efficiency level lower than 85% (non
- condensing models). Three quarters of the total shipments are non- Fondensing models. 1

16000 I Non-condensing Furnaces I Condensing Furnaces 14000 -J I NAECA I I Baseline (78%) 12000 I

10000 I I

1 = 8000 1 80% is the 1 most common I 0 6000

75 76 77178 79 80 81 82 83 84 85 86 81 88 89 90 91 92 93 94 95 96 Source: GAMA database 2000 and Census 2000 AFUE Data are based on numbers of models 12



## Market and Technology Assessment Characterization Furnaces - Size The vast majority of models has a capacity of less than 150,000 Btu/hr. I 1 Improvements l in building I I envelope I I design I Increased floorspace GAMA suggested baselines (75,000 Btu/hr for gas and 105,000 Btu/hrfor oil furnaces) 

### 1®_.i I 

# II I I Average: 89,000 Btu/hr
All" 0 1 120 150 180 210 240

Capacity ( kBtu/hr) Source: GAMA database 2000 Data are based on numbers of models 13

## Market and Technology Assessment Characterization Furnaces - Electricity Consumption Electricity consumption is an important factor in the overall energy consumption of a furnace and mostly depends on the size of the blowers.

Source: GAMA Database 2000 14



## Market and Technology Assessment Characterization Furnaces - Flow Direction Models are available for different flow directions. Upflow, downflow and multiple directions are the most common configuration.

0 U 9, a, CO c
a, C no 75 Shipments -,FY 1996 ' ,^, Volume units % Share Upflow 890,783 30% Downflow 267,900 9% Horizontal 78,470 3% Quadpolse 822,792 28% Down/Horizontal 181,721 6% Up/Horizontal 687,015 23% Source: "Market for Ducted Warm Air Central Heating", BSRIA, 1997 15

## Market and Technology Assessment Characterization Furnaces - Financial Data Furnace sales exceed $1 billion, and the industry structure is similar to other high volume manufacturing industries. 'slue of , fi_ip o

rlt FY 1999 r t . a i g i n D: iiar;I Under 1Sn,txi7 Btuh output Over 150,000 Btuh output Total

"`^Av^rage finanrirt (riata' Cost of Goods Said 72% SG&AZ 16% R&D3 3% EBT4 7% Sources: U.S. Census Industrial Reports 2000, SEC 10-K annual reports. I Market share-weighted average of five company furnace divisions as a percent of division revenues. May not be typical of furnace-specific data. a Sales , general, and administration expenses Research and development expenses , Earnings from operations before income taxes 16



## Market and Technology Assessment Characterization Title


# Boilers

17

## Market and Technology Assessment Characterization Boilers - Shipments Boilers are evenly divided between gas-fired (- 60%) and oil-fired (- 40%). Unit shipments are variable and no trends are observed.

0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: GAMA Statistical Highlights 2000 Year 18



## Market and Technology Assessment Characterization Boilers - Market Shares Burnham , Weil McClain , Mestek Inc . and Slant/Fin are the leading players in the market, according to data from 1997.

- Lochinvar has the greatest share in copper boilers.

- Boiler market is largely a replacement market.

- Lack of detailed data.

Source : " US Market for Hydronic Heating and Burners", BSRIA, 1998

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