5

- i CHAPTER 5. ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION

................................ ................................ ................................ ........... 5

- 1

5.2 PRODUCT CLASSES CONS IDERED

................................ ................................ .......... 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 OVERV IEW

................................ ................................ .................... 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 Definiti ons

................................ ................................ ................................ . 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 EFFICIEN CY 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 Cha racterization 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

- 55

- ii Table 5.3.4 Efficiency Levels for An alysis 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 As sumptions

.............................. 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 Reside ntial 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 I ncremental Manufacturer Production Costs for Oil Steam Boilers

..................... 5

- 27

Table 5.10.6 Incremental Manufacturer Production Costs for Elect ric 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

Tabl e 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 Ele ctric Hot Water Boilers Standby

................................ ....... 5

- 29 Table 5.11.10 MPC and MSP for Electric Steam Boilers Standby

................................ ........... 5

- 305

- 1 C H APTER 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 ba sis 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 incremen tal 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

- ass essment approaches for analysis of the AFUE efficiency levels. More specifically, DOE identified the efficiency levels for analysis and then used the cost

assessment approach to determine the manufacturing costs at those levels

. Although

manufacturers hav e 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 C ONS IDERED

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 uti lity. (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

ty

pe) 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 2007.5

- 2 DOE has no t 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). T he current DOE test procedure for determining AFUE considers n on

weatherized 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 settin g AFUE energy conservation standards for these products. However, DOE has consider ed 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 domes tic hot water to a residence in this analysis

. DOE made this determination based on

the outcome o f the test procedure rulemaking. DOE has not yet adopted a test procedure to determine the energy effi ciency of combination appliance in both space and water h eating

modes . However, federal statutes do require that combination appliances be tested and rated to provide efficiency rat ings 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 identifie d 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 p roduct 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 and5

- 3 national impacts analysis (NIA). To determine energy savings that will result from an amended energy conservation standa rd, 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

compa res 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 Ba seline 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 i nformation gathered from the teardown analysis, manufacturer interviews, and publicly available product literature , DOE determine d which design options manufacturers incorporate int o 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.5

- 4 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

Baffle s 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 c onsumers . 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 esta blished 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 de signs 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 repr esentative product class. Table 5.3

. 3 t hrough Table 5.3

. 6 list the product

classes and the ir respective intermediate energy efficiency leve ls.

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 exchang er . Manufacturers typically accomplish this through the addition of baffles or through increasing the size of the heat exchanger . For even greater efficiency im provements, manufacturers must add an inducer vent to replace the natural draft, as the lower temperature flue gas has less buoyancy

. M ax

- 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 gas

fired hot water boilers along with the associated technology options

.5

- 5 Table 5.3

. 3 Efficiency Levels for Analysis for G as

- fired Hot Water Boilers Efficiency Level Gas

- fired HW (AFUE) Technology Option s

EL 0 82 Baseline

EL1 83 EL0+ Increased HX Area, Baffles

EL 2 84 EL1+ Increased H X Area

EL 3 85 EL2+ Increased HX Area

EL 4 90 Condensing HX , Modulating

EL 5 92 EL4+ Improved HX

EL 6

- 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 Option s

EL 0 80 Baseline

EL 1 82 EL0+ Increased HX Area

EL 2

- Max Tech 8 3 EL1+ Increased HX Area

For oil fired hot water boilers , DOE chose two efficiency level s 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

- f ired hot

water boiler manufacturers use an improved heat exchanger design and also include a secondary heat exchanger that condense s 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 Boi lers Efficiency Level Oil

- fired HW (AFUE) Technology Options

EL 0 84 Baseline

EL 1 85 EL0+ Increased HX Area

EL 2 86 EL1+ Increased HX Area

EL 3 91 EL2+ Improved HX and Secondary Condensing HX

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

max

- tech for analysis. In order to increase the efficiency of oil

- fired steam boilers , manufacturers5

- 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

EL 0 82 Baseline

EL 1 84 EL0+ Increased HX Area

EL 2 85 EL1+ Increased HX Area

EL 3 86 EL2+ I mproved HX

5.3.4 Max

- T ech 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 list s the max

- tech levels DOE determined for this engineering analysis for residential boilers.

Table 5.3

. 7 Max

- tech Efficiency Levels for Residential B oilers

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

p hysical and virtual teardown analysis to create bills of materials for each product using reverse engineering methods (see section 5.5 ). DOE converted the informati on 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

e nergy efficiency of residential boiler s , 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 gat hered 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 Price

Efficiency 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

manu facturer 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 ni ne 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 rang e 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

c onsumers 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 substit uted a virtual teardown in the place of a physical teardown. For example, if two boilers differed only by an extra heat exchange r 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 residentia l 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 en gineering analysis. DOE did not identify the model number or5

- 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 physica l 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, wei ght, 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 colle cted additional component information during the manufacturer interviews.

As noted earlier, f or the teardown analysis of residential boilers DOE performed six physical teardowns and five additional virtual teardowns. DOE identified and selected

representa tive 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 o f the physical teardown units i n 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 conduct ed two virtual teardowns of oil h ot water boilers.

DOE intends to conduct additional teardowns in the NOPR phase of the residen tial boiler rulemaking analysis in order to supplement th ose 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 relat ionship 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 ass ociated 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 virtu al 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 (200 8

- 201 3 ) (secti on 5.6.4.4 ). The cost of transforming the intermediate materials into finished parts is estimated based on current industry pricing. DOE shared majo r 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 manufac turing 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. T he 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 pa rt 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 t he 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 assum ed 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

ro lled 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

ass igned 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 a nd 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.

• Maintena nce : Money spent on maintaining tooling and equipment.

• Insurance : Appropriated as a function of unit cost.

• Property Tax : Appropria ted 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 abo ut 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 o verhead.

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. Whe n 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 section s 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 Es timates

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. , t ube, 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 man ufacturers, and visits to man ufacturing 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 a nd 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 iro n, 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 Pr ice Indices (PPIs) spa nning 200 8 to 20 13

. 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 (200 8

- 20 13 )

Metals Cost (2013 $ /lb )

Cold R olled 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 materi als, 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 accomm odated.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 a nd

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

5.7 COST VERSUS EFFICIEN CY CURVES

As described in section 5.4 , DOE first estimated th e 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 o f 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

c onduct ing 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 l evels 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 efficie ncy 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 i nformation 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 conduct ing one physical

teardown of a boiler at 86% AFUE and perform ing virtual t eardowns 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 asso ciated changes in production cost.

DOE developed the oil steam cost efficiency curves by rel ying 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 somew hat 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 ho t 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 weighted

average 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 o f 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

- ass isted unit but would not be needed

on a unit with an inducer fan

.

Figure 5.7

. 1 throu gh 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.

F igure 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 Boiler s 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 nonprodu ction costs), and yield a satisfactory profit. The MSP is the price at which the manufacturer can recover all production and nonproduction cost s and earn a profit. DOE calculated the MSP for residential boilers by multiplying the MPCs by the calculated man ufacturer 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 mu ltiplier, 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 a re 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 betw een 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 markup5

- 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 necessa ry 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 SE C 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 manufact urer 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 of ten 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 avera ges of the financial figures spanning 20 08

to 20 12 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 Prof it Margin Gross Prof it

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 acknowledge s 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 public ally owned companies file SEC 10K reports, the

fina ncial 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 consider ed 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 industr y is on

an a ggregate basis is appropriate

. When considering manufacturer feedback related to the markup, DOE aggregate d the feedback received from manufacturers on a market

- share

weighted basis.

As noted previously, t he 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 commodit y

.

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 design5

- 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 curre ntly 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 m ode 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 f or 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 boiler s commonly use a 40VA transformer that is very similar to those found in gas boiler s. For the analysis of sta ndby mode and off mode for

electric boiler s, DOE assumed that the power consumption associated with these transformers would be the same. Further, a DOE review of electric boiler s found that other components are also the same as or very similar to those us ed in gas boiler s . Therefore, DOE also assumed the standby consumption for these components would be the same in electric boiler s as in gas

boiler s. 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 th an the relays typically found in gas boiler s 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 standb y 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 boiler s.

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 boiler s ( 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

boiler s. Therefore, DOE analyzed standby mode and off mode standards that were identical to those analyzed for gas boiler s.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 procedure 1 . DO E 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. Certa in electrical components in

residential furnaces are similar to those found in residential boilers. For th e se components,

DOE assumed the measured power consumption from the furnace rulemaking would be representative of the component standby consumption o f boilers in the analysis

. DOE than estimated the costs of individual components based on available literature 2

, volume

- variable price quotations and detaile d 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 curr ent 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 ana lysis 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 fro m 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 deter mine 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 l inear 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 consumpti on 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 cons ider 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 b elow.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 ( w atts) 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 no t 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 d esign options based on cost

effectiveness 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 I ncremental 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 I ncremental 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 11.125

- 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 Product ion 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 11.125

- 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 boiler s 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 boiler s 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% ) $1,16 2 $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 $2,8685

- 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% ) $1,2 74 $1,7 97

1 (AFUE=84% ) $1, 415 $1,9 95

2 (AFUE=85% ) $1,4 66 $2,0 67

3 (AFUE=86%) $1,5 57 $2,1 95

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 29.165

- 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 29.165

- 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/resid ential/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.

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– 425, S eptember 9, 2004.