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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

EE-RM/STD-01-350 COMMENT 02EE
Market and Technology Assessment

Overview

^C) + r 1 Energy use

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

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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

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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

11 71

43%

^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

Supplier

Key:_

--► Secondary Influence$

---► Primary innuences

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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.

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Market and Technology Assessment

Table of Contents

[Characterization ofBaseline

Residential Furnaces and Boilers

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EE-RM/STD-01-350 COMMENT 02EE
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 0

1991 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

(Traney

Lennox

ITC/Carrier

Goodman

Source: U.S. Appliance Industry Magazine 2000

EE-RM/STD-01-350 COMMENT 02EE
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

NAECA I I

14000 -J 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

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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

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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

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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

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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 orlt 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

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EE-RM/STD-01-350 COMMENT 02EE
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

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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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