1 | Energy Efficiency and Renewable Energy eere.energy.gov 

### [INSERT PICTURE(S) OF PRODUCT(S)]

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## Energy Conservation Standards: Preliminary Analysis for Commercial Packaged Boilers

December 9, 2014 James Raba

Department of Energy Building Technologies Office

EERE

- 2013

- BT

- STD

- 0030 PkgdBoilers2013STD0030@ee. doe.gov2 

# Welcome

• Introductions (around the room)

• Role of the Facilitator

• “Norms”

– Speak one at a time.

– Say your name for the record

– there will be a complete transcript of this meeting.

– Be concise

– share the ‘air

- time’.

– Keep the focus here

– cell phones on silent; limit sidebar conversations.

– Webinar participants turn phone on mute; “raise your hand” to be recognized to speak.3 

# Purpose of the Public Meeting

• To present methodologies and characterize results for analyses to date.

• To discuss specific issues related to each analysis

• To seek input from attendees on methodologies, assumptions and data sources.

• To describe upcoming analyses and next steps4 

# Agenda

9:00 am

– 9:15 am Welcome; Introductions and Agenda Review

9:15 am

– 9:45 am Purpose of Public Meeting; Opening Statements; Comment Submission Instructions; and Regulatory Authority and Rulemaking Overview

9:45 am

– 10:15 am Market and Technology Assessment and Screening Analysis

10:15 am

– 10:45 am Engineering Analysis

10:45 am

– 11:00 am Break

11:00 am

– 12:00 pm Markups; Energy Use Characterization and LCC and Payback Period Analysis
12:00 pm

– 1:00 pm Lunch (on your own)
1:00 pm

– 1:30 pm LCC and Payback Period Analysis (cont.)
1:30 pm

– 2:15 pm National Impact Analysis
2:15 pm

– 2:30 pm Break
2:30 pm

– 2:45 pm Preliminary Manufacturer Impact Analysis
2:45 pm

– 3:15 pm Next Steps
3:15 pm

– 3:30 pm Closing Remarks from Interested Parties and Adjournment5 

# Housekeeping Items

– Listening Via the Webcast

• The Department of Energy is broadcasting this public meeting “live” over the Internet for interested parties who are unable to attend in person.

• All interested parties are encouraged to submit written comments after the public meeting.6 

# Opening Remarks

Meeting participants are invited to provide opening remarks or statements at this time.7 

## Issue boxes correspond to the list of issues published at the end of the Executive Summary chapter of the Preliminary Technical Support Document, available at: http ://www.regulations.gov/#! docketDetail;D=EERE

- 2013

- BT

STD

- 0030

The deadline for submitting comments is January 20, 2015

. 

# Issues for Discussion

Issue Box: DOE welcomes comments, data, and information concerning its proposed analyses for amended energy conservation standards for commercial packaged boilers.

Whether invited by an issue box or not, comments are welcome on any part of DOE’s analysis.8 

# How to Submit Comments

• In all correspondence, please include all of the following:

o Energy Conservation Standards for Commercial Packaged Boilers

o Docket Number: EERE

- 2013

- BT

- STD

- 0030

o Regulatory Identification Number (RIN): 1904

- AD01



## • Contact Information
Email: PkgdBoilers2013STD0030@ee.doe.gov

Postal Mail:
Ms. Brenda Edwards U.S. Department of Energy Building Technologies Office Mailstop EE

- 5B 1000 Independence Avenue, SW Washington, DC 20585

- 0121 

## Courier:
Ms. Brenda Edwards U.S. Department of Energy Building Technologies Office L’Enfant Plaza, SW, Suite 600 Washington, DC 20024 Telephone: (202) 586

- 29459 

# Public Meeting Slides Topics

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 710 

# Regulatory Authority

• Energy Policy and Conservation Act (EPCA) of 1975 (P.L. 94

- 163)

– Established the Energy Conservation Program for Certain Industrial Equipment



### • Energy Policy Act of 1992 (EPACT 1992), ( P.L. 102−486) amended EPCA to add commercial packaged boilers as a type of covered equipment. (42 U.S.C. 6311(1)(J) and (11)(B))

• EPCA directs DOE to consider amending existing Federal energy conservation standards for commercial packaged boilers whenever the American Society of Heating, Refrigerating, and Air

Conditioning Engineers (ASHRAE) amends the efficiency levels in Standard 90.1. (42 U.S.C. 6313(a)(6 ))

• Energy Independence and Security Act of 2007 (EISA 2007) (P.L. 110

- 140) and the American Energy Manufacturing Technical Corrections Act (AEMTCA) (P.L. 112

- 210) amended EPCA to require that every 6 years, the Secretary publish either:

– A notice of the determination that standards for the product do not need to be amended; or

– A notice of proposed rulemaking including new proposed standards (42 U.S.C. 6313(6)(C)( i ))



### • DOE last published a final rule for CPB in 2009 (74 FR 36312 (July 22, 2009)).11 

# Rulemaking Overview

– Definitions

• EPCA defines “packaged boiler” as:

– “a boiler that is shipped complete with heating equipment, mechanical draft equipment, and automatic controls; usually shipped in one or more sections.” (42 U.S.C. 6311(11)(B ))



## • DOE further defines “commercial packaged boiler” in 10 CFR 431.82

as:

– “Commercial packaged boiler” means a type of packaged low pressure boiler that is industrial equipment with a capacity, (rated maximum input) of 300,000 Btu/h or more which, to any significant extent, is distributed in commerce: (1) For heating or space conditioning applications in buildings; or (2) For service water heating in buildings but does not meet the definition of a ‘hot water supply boiler’ in [part 431 ].

– “Packaged low pressure boiler” is defined as “a packaged boiler that is: (1) A steam boiler designed to operate at or below a steam pressure of 15 psig [pounds per square inch gauge]; or (2) A hot water boiler designed to operate at or below a water pressure of 160 psig and a temperature of 250 ° F; or (3) A boiler that is designed to be capable of supplying either steam or hot water, and designed to operate under the conditions in paragraphs (1) and (2) of this definition.” (10 CFR 431.82)12 

# Rulemaking Overview

– Current Energy Efficiency Standards

*Effective March 2, 2022, energy conservation standard will be increased to a Thermal Efficiency of 79% Equipment type Subcategory Size category ( input ) Efficiency level Effective Date

Hot Water Commercial Packaged Boilers Gas

- fired ≥300,000 Btu/h and ≤2,500,000 Btu/h 80.0% E T March 2, 2012

Hot Water Commercial Packaged Boilers Gas

- fired >2,500,000 Btu/h 82.0% E C March 2, 2012

Hot Water Commercial Packaged Boilers Oil

- fired ≥300,000 Btu/h and ≤2,500,000 Btu/h 82.0% E T March 2, 2012

Hot Water Commercial Packaged Boilers Oil

- fired >2,500,000 Btu/h 84.0% E c March 2, 2012

Steam Commercial Packaged Boilers Gas

- fired

— all, except natural draft ≥300,000 Btu/h and ≤2,500,000 Btu/h 79.0% E T March 2, 2012

Steam Commercial Packaged Boilers Gas

- fired

— all, except natural draft >2,500,000 Btu/h 79.0% E T March 2, 2012

Steam Commercial Packaged Boilers Gas

- fired

— natural draft ≥300,000 Btu/h and ≤2,500,000 Btu/h 77.0% E T March 2, 2012*

Steam Commercial Packaged Boilers Gas

- fired

— natural draft >2,500,000 Btu/h 77.0% E T March 2, 2012*

Steam Commercial Packaged Boilers Oil

- fired ≥300,000 Btu/h and ≤2,500,000 Btu/h 81.0% E T March 2, 2012

Steam Commercial Packaged Boilers Oil

- fired >2,500,000 Btu/h 81.0% E T March 2, 201213 

# Rulemaking Overview

– Current Process

• DOE is considering revisions to the energy conservation standards for commercial packaged boilers under subpart E of 10 CFR Part 431.

• Notice of Public Meeting and Availability of the Framework Document Published on September 3, 2013. 78 FR 54197.

– Framework Document public meeting was held October 1, 2013.



## • Notice of Public Meeting and Availability of the Preliminary Technical Support Document published on November 20, 2014. 79 FR 69066.

– The standards preliminary analysis comment period ends January 20, 2015.



## • Preliminary analysis based on the existing test procedure under subpart E of 10 CFR Part 431

– DOE is conducting a rulemaking to update the existing test procedures for commercial packaged boilers.



## • DOE is conducting a coverage determination for natural draft CPBs.

See http ://www1.eere.energy.gov/buildings/appliance_standards / product.aspx/ productid /7414 

# Rulemaking Overview

– Timeline

Milestone Date Preliminary Analysis Publication November 20, 2014 Preliminary Analysis Public Meeting December 9, 2014

Comment Period Ends January 20, 2015 NOPR Publication (projected) July, 2015 Final Rule Publication (projected) July, 2016 2013 2016 2014 2015 2017 2018 2019 2020 Energy Conservation

Standards Timeline15 

## The Energy Policy and Conservation Act (EPCA) directs DOE to consider seven factors when setting energy conservation standards.

Factor Analysis
Economic impact on consumers and manufacturers Life

- cycle cost analysis Manufacturer impact analysis Lifetime operating cost savings Life

- cycle cost analysis
Total projected energy savings National impact analysis

Impact on utility or performance Screening analysis Engineering analysis

Impact of any lessening of competition Manufacturer impact analysis

Need for national energy conservation National impact analysis

Other factors the Secretary considers relevant Environmental assessment; Utility impact analysis; Employment impact analysis 

# Rulemaking Overview

- Analyses16 Framework Document Preliminary Analysis NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization 

# Rulemaking Overview

– Preliminary Analysis17 

# Public Meeting Slides Topics

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 718 

# Rulemaking Overview

- Market & Technology Assessment

Framework

Document Preliminary Activities NOPR Final Rule Effective Date

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses19 

# M&TA

– Purpose and Introduction

Commercial Packaged Boiler Equipment Classes†

Mechanical Draft Natural Draft

Small Gas

- Fired Hot Water Small Gas

- Fired Hot Water

Small Gas

- Fired Steam Small Gas

- Fired Steam

Small Oil

- Fired Hot Water Small Oil

- Fired Hot Water

Small Oil

- Fired Steam Small Oil

- Fired Steam
Large Gas

- Fired Hot Water Large Gas

- Fired Hot Water
Large Gas

- Fired Steam Large Gas

- Fired Steam
Large Oil

- Fired Hot Water Large Oil

- Fired Hot Water Large Oil

- Fired Steam Large Oil

- Fired Steam † Small ≥ 300,000 Btu/ hr and ≤ 2,500,000 Btu/ hr and Large > 2,500,000 Btu/ hr 

## Purpose:

• Define equipment classes

• Characterize the CPB industry

• Identify existing regulatory and voluntary energy efficiency programs

• Gather relevant market data

• Analyze market data

• Identify technology options for improving efficiency20 

# M&TA

– Scope

• Covers all “ packaged low pressure ” boilers :

– Having input capacity greater than or equal to 300,000Btu/h;

– Fired using gas (natural gas or propane) or oil;

– Capable of producing hot water, steam or both; and

– That are mechanical draft or natural draft.



## • Electric CPBs are not covered under the scope of this rulemaking.

– Efficiencies already approach 100%, so there is negligible energy saving potential.



## • DOE is conducting a coverage determination to clarify its authority to regulate natural draft CPBs.

• Standby mode and off mode energy conservation standards are not included in the scope.

– Standby mode and off

- mode energy use is only 0.02% of the total boiler annual energy use.



## • No upper limit of input capacity set for regulating CPBs.21 

# M&TA

– Sample of Market Performance Data

• Small Gas

- Fired Mechanical Draft Hot Water

76 80 84 88 92 96 100300 - 400400 - 500500 - 600600 - 700700 - 800800 - 900900 - 10001000 - 11001100 - 12001200 - 13001300 - 14001400 - 15001500 - 16001600 - 17001700 - 18001800 - 19001900 - 20002000 - 21002100 - 22002200 - 23002300 - 24002400 - 2500Average Thermal Efficiency [%]

Input Rating Category [kBtu/h] Average Thermal Efficiency Based on Input Rating

Overall thermal efficiency Condensing Boilers 6% 6%

62% 23% 3% Distribution of Boilers Based on Material of Primary Heat Exchanger Aluminum

Cast Iron

Copper

Stainless Steel
Steel

Total: 728

0 30 60 90 120 150 180

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99Number of Models

Thermal Efficiency [%] Distribution of Boilers Based on Thermal Efficiency

Other Boilers Condensing Boilers Condensing and Modulating Boilers Modulating Boilers22 

# M&TA

– Technology Assessment

Oil Gas

Fan/ Blower (Forced Draft)

Valve 

### Air MD ND Water Cold Hot

Single stage or Modulating burners 

### Vent Damper Inducer Fan

Heat Exchanger

- Multiple designs

- Single or multiple pass

- Different Materials 

### Convection and Radiation 

## Basic operation of Commercial Packaged Boilers

P Oil Pump 

### Water p ump

Atomizer23 

# M&TA

– Technology Assessment

Technology Options Considered to Improve Combustion and/or Thermal Efficiency

Jacket Insulation Optimization
Heat Exchanger Improvements: Condensing heat exchanger Increase in heat exchanger surface area Incorporation of heat exchanger surface features and internal features Flat, wavy or louvered finned HX with or without staggered fin configuration

Burner Derating

Combustion Air Preheaters

Economizers

Blow

- down Waste Heat Recovery

Premix Burner

Pulse Combustion

Low

- Pressure, Air

- Atomized Oil Burner
Integrated, High

- Efficiency Steam Boilers24 

# Market & Technology Assessment

– Issues for Comment

Issue #2: DOE seeks comment on the appropriateness of its tentative decision to classify CPBs into 16 equipment classes.25 

# Screening Analysis

Framework

Document Preliminary Activities NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization26 

# Screening Analysis

• Purpose: Screen out technology options that DOE will not consider in the engineering analysis and downstream analyses for commercial packaged boilers.



## • Approach

DOE evaluates each technology option based on the following criteria, as provided at 10 CFR Part 430, Subpart C, Appendix A, section 4(a)(4)( i )

- (iv)

– Technological feasibility

– Practicability to manufacture, install, and service

– Adverse effects on equipment utility or availability

– Adverse effects on health and safety



## • DOE will not consider a technology further if it is a proprietary technology and uses a unique pathway to achieving a higher efficiency level27 

# Screening Analysis

– Summary of Results

• Heat exchanger improvement:

− Condensing and secondary heat exchanger

− Outside surface enhancement: Micro

- fin, dimples and other surface enhancement

− Internal surface enhancement: Turbulators, corrugation, rifling, baffles

− Improvement in fin design: Wavy or louvered fin designs



### • Premix burners

• Pulse combustion

• Low

- pressure, air

- atomized burner Passed Screening Test

• Burner derating Failed Screening Test

• Jacket insulation optimization

• Combustion air preheaters

• Economizers

• Integrated, high

- efficiency steam boilers

• Blowdown waste heat recovery Passed Test

– But Not Considered*

*These technologies have negligible or no impact on thermal or combustion efficiency as measured by the current test procedure. Integrated high

- efficiency steam boiler is a combination of several different technology options. This technology does not provide any new option other than what has already been identified.28 

# Screening Analysis

– Issues for Comment

Issue #3: DOE is interested in views about the technological and economic feasibility of the technology options which successfully passed the screening analysis.29 

# Public Meeting Slides Topics

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 730 

# Engineering Analysis

Framework

Document Preliminary Activities NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization31 

# Engineering Analysis

– Introduction

• Purpose: Establish relationship between equipment price and increased efficiency.

• Results are not representative of a particular manufacturer, but instead represent an industry aggregate.

• Results will be used for other downstream analyses ( e.g. , LCC analysis, Payback period).

• Sources of Information:

– Product literature

– Trade association databases

– Manufacturer interviews

– List prices from manufacturers and contractors • Life

- Cycle Cost and Payback Period Analysis

• National Impacts Analysis

• Shipments Analysis

• Manufacturer Impact Analysis 

### Downstream Analyses Price Efficiency CurvesManufacturerSellingPrice [$]

Efficiency [%]32 

# Engineering Analysis

– Steps

Develop Baseline • Define baseline efficiency for each equipment class

• Baselines defined based on existing energy conservation standards

Establish Efficiency Levels • Identify efficiency levels between baseline and maximum (max

- tech) efficiency levels

• Selected efficiency levels are most common on market and/or capture significant technologies

Calculate Incremental Prices • Incremental prices for increased efficiency are calculated from equipment price information

• Statistical and regression modeling techniques are used to infer prices if not available and aggregate data

Generate Price Efficiency Curves • Industry average representation of incremental change in equipment price for achieving higher efficiency levels33 

# Engineering Analysis

– Baseline Models

• Baseline efficiency levels chosen that correspond to existing energy conservation standards

• Common technologies in baseline models:

• Baseline Efficiencies:

80% E T SGNDHW


### 82% E C LGNDHW


### 82% E T SONDHW


### 84% E C LONDHW



### 77% E T SGNDST


### 77% E T LGNDST


### 81% E T SONDST


### 81% E T LONDST 

### 80% E T SGMDHW


### 82% E C LGMDHW


### 82% E T SOMDHW


### 84% E C LOMDHW



### 79% E T SGMDST


### 79% E T L GMDST


### 81% E T SOMDST


### 81% E T LOMDST 

### Gas Valve

– single stage Primary Heat Exchanger Cast iron sectional, copper

- fin tube, water tube, fire tube, carbon steel Jacket I nsulation

Natural Draft Equipment Class Mechanical Draft Equipment Class

• E T : Thermal Efficiency and E C : Combustion Efficiency

• S: Small; L: Large

• G: Gas (Natural or Propane) ; O: Oil

• MD: Mechanical Draft; ND: Natural Draft;

• HW: Hot Water; ST: Steam34 

# Engineering Analysis

– Efficiency Levels

• Efficiency levels identified based on literature review, manufacturer interviews, and technology assessment

• Condensing efficiency levels considered for small and large mechanical draft hot water equipment classes

• “Max

– Tech” efficiency levels

– highest efficiency level that is commercially available

81% 82% 85% SGNDHW



### 83% 84% LGNDHW


### 83% 85% 87% SONDHW



### 85% 86% LONDHW



### 79% 80% SGNDST


### 79% 80% 81% LGNDST



### 82% 83% SONDST


### 82% 83% 85% LONDST 

### Natural Draft Equipment Class

83% 85% 87% 92% 95% 98% SGMDHW



### 84% 86% 9 4% 97% LGMDHW



### 83% 84% 87% 98% SOMDHW



### 86% 88% 97% LOMDHW



### 80% 81% 83% SGMDST



### 80% 83% L GMDST


### 83% 84% 86% SOMDST



### 83% 86% LOMDST 

### Mechanical Draft Equipment Class

Condensing Efficiency Levels35 

# Engineering Analysis

– Data Collection

• DOE collected list prices from contractors and manufacturers.

• Prices reflect the level at which the manufacturer sells the equipment to the first customer.

• Prices were spread over a range of input capacities; however, analysis prices were calculated at a single input capacity.

• This is referred to as the “representative input capacity” and is used to define a single input rating that characterizes the entire equipment class. Large (>2,500kBtu/h ) Equipment Class Small (300kBtu/h to 2,500kBtu/h) Equipment Class Representative Input Capacity

800kBtu/h 3,000kBtu/h 96% 4% Comparison of Prices Received

Mechanical Draft Natural Draft36 

# Engineering Analysis

– Methodology

• Based on the prices received, DOE has divided the methodology into 5 sections.

Methodologies Used General Approach Non

- Condensing SGMDHW and LGMDHW

Non

- Condensing SOMDHW and LOMDHW

SGMDST

SOMDST LGMDST and LOMDST

Condensing SGMDHW and LGMDHW

Condensing SOMDHW and LOMDHW

All Natural Draft Equipment Classes37 

# Engineering Analysis

– General Approach Methodology

• Some low

- efficiency boiler models had selling prices higher than high

- efficiency models, possibly due to additional features that don’t contribute to efficiency

Step 1: Equipment Classes Group boilers with prices

into equipment classes Step 2: Efficiency Levels
Determine relevant efficiency levels Step 3: Representative Capacity
Pick boilers at representative capacity, use regression if required

Step 4: Baseline Price
Determine or Calculate using regression, prices of boilers at baseline efficiency levels at the rep. capacity Step 5: Incremental Price
For each manuf. calculate incremental price Inc. price at XX eff. level

= Price at XX

– Baseline Price Step 6: Price

- Efficiency Curves Take average of incremental prices from all

manuf. for each eff. level Generate incremental price

– efficiency relationship.38 

# Engineering Analysis

– LGMDST and LOMDST Methodology

• DOE took ratio of incremental prices of LGMDHW and SGMDHW.

• Using this ratio and SGMDST and SOMDST incremental prices, DOE calculated prices for LGMDST and LOMDST.

Efficiency Level (EL) [%] Incremental Price [$] LGMDHW (L) Incremental Price [$] SGMDHW (S) Ratio [S/L]

82% Baseline Efficiency

83% 2,075 612 0.3

84% 4,343 1,271 0.3

85% 6,822 1,981 0.3

86% 9,533 2,745 0.3

87% 12,496 3,568 0.3

88% 15,736 4,454 0.3

89% 19,277 5,408 0.3 Efficiency Level (EL) [%] Incremental Price [$] SGMDST (S’) Average Ratio [S/L] Incremental Price [$]
LGMDST (S’/ Avg.Ratio )
79% Baseline Efficiency

80 % 1,060 0.3 3,534

81 % 2,243 0.3 7,475

82 % 3,560 0.3 11,866

83 % 5,025 0.3 16,750

84 % 6,653 0.3 22,176 

# AAAAAA

. RRRRRRRRRR = ∑ SS LL mm mm mmmmmm

= EE LL 11 

# NNNN NN NN oo39 

# Engineering Analysis

– Condensing SGMDHW and LGMDHW Methodology

• For small and large gas

- fired hot water condensing boilers, DOE used the methodology similar to corresponding non

- condensing models but with an added step.

• DOE grouped condensing boiler prices based on material type

• Incremental price is calculated for each material type.

• Final price

– efficiency curve is calculated by taking the average for incremental price for each efficiency level.

Efficiency Level [%] A [$] B [$] C [$]

90% X 1 

### Y 1 

### Z 1 

### 91% X 2 

### Y 2 

### Z 2 

### 92% X 3 

### Y 3 

### Z 3 

### 93% X 4 

### Y 4 

### Z 4 

### Efficiency Level [%] Mat 1. Mat 2.

90% P 1 

### =Avg.(X 1 

### ,Y 1 

### ) Z 1 

### 91% P 2 

### =Avg.(X 2 

### ,Y 2 

### ) Z 2 

### 92% P 3 

### =Avg.(X 3 

### ,Y 3 

### ) Z 3 

### 93% P 4 

### =Avg.(X 4 

### ,Y 4 

### ) Z 4 

### Efficiency Level [%] Inc. Price

90% Avg. (P 1 

### - P 1, 

### Z 1 

### - Z 1 

### )

91% Avg. (P 2 

### - P 1, 

### Z 2 

### - Z 1 

### )

92% Avg. (P 3 

### - P 1, 

### Z 3 

### - Z 1 

### )

93% Avg. (P 4 

### - P 1, 

### Z 4 

### - Z 1 

### )40 

# Engineering Analysis

– Condensing SOMDHW and LOMDHW Methodology

Thermal Efficiency [%]Incremental Price [$]

S NC : Slope NC S C : Slope C

Thermal Efficiency [%]Incremental Price [$] S 2 : Slope C

S 1 : Slope NC AAAAAA

. SSSS SS

. RRRRRRRRRR SS = SS NNNN SS



### SS 22 

### = SS 11 

### SS 

## • DOE did not have sufficient price data for oil

- fired condensing boiler models in SOMDHW and LOMDHW equipment classes.

• As a result, DOE inferred prices for condensing efficiency levels based on other equipment classes.

• DOE used the ratio of slope of the incremental price

– efficiency curve of non

- condensing and condensing efficiency levels of gas

- fired equipment class.41 

# Engineering Analysis

– Natural Draft Equipment Classes Methodology

• DOE did not receive sufficient price data for natural draft equipment classes

• DOE compared price data for similar mechanical and natural draft systems to estimate the price of removing mechanical draft components from a boiler and replacing them with natural draft components (“price differential”).

• This price differential is subtracted from mechanical draft boiler prices of appropriate equipment class to derive natural draft prices.

• Natural draft boiler incremental classes are calculated by subtracting the price of higher

- efficiency boilers from baseline in each equipment class.
Mechanical Draft Assembly (Inducer assembly, Sensors, Flue Collector , Vent Connector etc.) Natural Draft Assembly (Vent damper, Draft hood, Sensors etc.) Price Differential

Natural draft prices Mechanical draft prices Price Differential42 

# Engineering Analysis

– Summary of Methodology

To summarize the methodologies adopted:

• Methodology was chosen based on factors such as availability of prices, number of manufacturers, and type of equipment class etc.

• If DOE is not able to calculate incremental prices directly from available price data, other statistical methods are used.

Equipment Class Type of Boiler Type of Analysis

SGMDHW Non

- Condensing “General approach”

– group into equipment classes, calculate price at rep. capacity, calculate incremental prices, take average, generate price

– efficiency curve

Condensing Similar to non

- condensing analysis, additional step to group prices based on material type, calculate incremental price for each group, take average of incremental prices for each efficiency level.

LGMDHW Non

- Condensing General approach

– group into equipment classes, calculate price at rep. capacity, calculate incremental prices, take average, generate price

– efficiency curve

Condensing Similar to non

- condensing analysis, additional step to group prices based on material type, calculate incremental price for each group, take average of incremental prices for each efficiency level.43 

# Engineering Analysis

– Summary of Methodology

Equipment Class Type of Boiler Type of Analysis

SOMDHW Non

- Condensing General approach

– Similar to SGMDHW, non

- condensing analysis

SOMDHW Condensing Used slope ratio between condensing and non

- condensing incremental prices of SGMDHW equipment class Used this ratio to calculate condensing boiler incremental prices from SOMDHW non

- condensing incremental prices

LOMDHW Non

- Condensing General approach

– Similar to SGMDHW, non

- condensing analysis

Condensing Used slope ratio between condensing and non

- condensing incremental prices of SGMDHW equipment class Used this ratio to calculate condensing boiler incremental prices from LOMDHW non

- condensing incremental prices

SGMDST Non

- Condensing General approach

– Similar to SGMDHW, non

- condensing analysis

LGMDST Non

- Condensing Used incremental price ratio between SGMDHW and LGMDHW to obtain relationship between SGMDST and LGMDST

SOMDST Non

- Condensing General approach

– Similar to SGMDHW, non

- condensing analysis

LOMDST Non

- Condensing Used incremental price ratio between SGMDHW and LGMDHW to obtain relationship between SOMDST and LOMDST

All natural draft equipment classes N/A Calculated price of replacing mechanical draft components with natural draft components in a boiler Used this price differential to calculate natural draft prices by subtracting the differential from mechanical draft prices44 

# Engineering Analysis

– Sample Results

$0 $5,000 $10,000 $15,000 $20,000

79% 84% 89% 94% 99%Incremental Prices [$]

Thermal Efficiency [%] Small Gas

- Fired Mechanical Draft Hot Water

Small Gas

- fired Hot Water, ≥ 300,000 Btu/hr and ≤ 2,500,000 Btu/hr $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500

77% 79% 81% 83% 85% 87%Incremental Prices [$]

Thermal Efficiency [%] Small Gas

- Fired Natural Draft Hot Water

Small Gas

- fired Hot Water, ≥ 300,000 Btu/hr and ≤ 2,500,000 Btu/hr Product Class Efficiency Level Incremental Price Baseline Price

Small Gas

- fired Mechanical draft Hot Water, ≥ 300,000 Btu/ hr and ≤ 2,500,000 Btu/ hr 80% $0

$ 7,120 83% $1,710 85% $3,078 87% $4,665 92% $6,819 95% $11,211 98% $15,604

Small Gas

- fired Natural draft Hot Water, ≥ 300,000 Btu/ hr and ≤ 2,500,000 Btu/ hr 80% $0
$ 3,799 81% $529 82% $1,307 85% $3,07845 

# Engineering Analysis

– Issues for Comment

Issue #4: DOE requests comment about the methodology used to calculate incremental prices for increased efficiency for each equipment class.

DOE requests comment about the appropriateness of the incremental prices reported as part of the engineering analysis chapter.

DOE requests additional price

- related information, especially for natural draft boilers, which would further improve future analyses for this rulemaking.46 

# Public Meeting Slides Topics

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 747 Framework Document Preliminary Activities NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking:

Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization48 

# Markups Analysis

Purpose : The markups analysis is used to determine the cost to the commercial consumer of: (1) baseline equipment and of (2) more

- efficient equipment purchased under new energy conservation standards

. 

### Markups relate commercial consumer price to the manufacturer selling price (MSP), aka “cost of goods sold.” DOE calculated both baseline and incremental markups:

• Baseline markups relate baseline efficiency equipment MSP to direct business costs.

• Incremental markups relate the incremental change in commercial consumer price to the incremental change in MSP under new energy conservation standards ( e.g. , fixed costs such as overhead and labor do not scale up ).



### Distribution Channels : The markups depend on the type of distribution channels through which products move from manufacturers to consumers. 

### Markups were developed for the following market participants: M anufacturer, wholesaler, mechanical contractor, and general contractor.


### Sales Taxes and Wholesaler and Contractor markups were developed for each of the geographical areas in the analysis

.49 

### Input Methodology

Distribution Channels Based on stakeholder input, markups were developed for the following markets: (1) Replacements and (2) New Construction. See next slide.

Manufacturer Markup Determined in engineering analysis (Ch. 5), based on U.S. Security and Exchange Commission (SEC) 10

- K reports from publicly

- owned commercial packaged boiler manufacturing companies.

Wholesaler Markup Based on firm income statements from the HARDI 2013 Profit Report.

Mechanical Contractor Markup Based on ACCA 2005 Financial Analysis report and Plumbing and HVAC Contractors sector from the 2007 Economic Census.

General Contractor Markup Based on Commercial Building Construction sector from the 2007 Economic Census.

Sales Tax Based on 2014 Sales Tax Clearinghouse Data. 

# Markups Analysis

Methodology for Commercial Packaged Boilers50 

### Replacement 

## Distribution Channels for Commercial Packaged Boilers 

# Markups Analysis

Manufacturer Wholesaler/
Manufacturer’s Representative Mechanical Contractor Commercial Consumer

Manufacturer Wholesaler/
Manufacturer’s Representative Mechanical Contractor General Contractor Commercial Consumer Manufacturer National Account Commercial Consumer

Manufacturer National Account Commercial Consumer 

### New Construction51 

## Total Markups by Equipment Class 

# Markups Analysis

Equipment Class Baseline Markup Incremental Markup
Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 3.04 1.99

Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/ hr 2.95 1.97

Natural Draft Oil

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 3.24 2.04

Natural Draft Oil

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/ hr 2.99 1.96

Mechanical Draft Gas

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 3.35 2.07

Mechanical Draft Gas

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/ hr 3.31 2.05

Mechanical Draft Oil

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.54 2.14

Mechanical Draft Oil

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/hr 3.16 2.0052 

## Request for Comment 

# Markups Analysis

Issue #5: DOE seeks comments about whether the considered distribution channels are appropriate for commercial packaged boilers.

Issue #6: DOE seeks comments about the percentage of equipment being distributed through the different distribution channels, and whether the share of equipment through each channel varies based on equipment class or equipment capacity.

Issue #7: DOE requests comments about its proposed approach to developing estimates of future commercial packaged boiler retail prices.

Issue #8: DOE requests recent data to establish the markups and commercial consumer price for the parties involved with the distribution of the equipment.53 

# Energy Use Characterization

Purpose: To determine the annual energy consumption of commercial packaged boilers and to assess the energy savings potential of increases in efficiency. Annual energy consumption : site energy use associated with operating the equipment.

Methodology: The commercial packaged boiler annual energy use is equal to the sum of the energy used by the boiler for space heating, water heating, and any auxiliary electrical components:

EE nn nn UUUU = FF SSSS 

## + FF WW 

## + EE54 

# Energy Use Characterization

– Building Sample

Building Sample (CBECS and RECS) selection criteria:

• used a boiler as the main or secondary source of heat;

• used a heating fuel that is natural gas or fuel oil; and

• had a heating energy consumption greater than zero.55 

## Space Heating Fuel Consumption 

# Energy Use Characterization56 

## Space Heating Fuel Consumption 

# Energy Use Characterization

Annual Space Heating Fuel Consumption

Burner Operating Hours (BOH)

Building Heating Load (BHL) AAAAAAAAAAAA FF FF UUUU = BBBBBB ∗ QQ iiii



### BBBBBB = BBBBBB QQ iiii 

### × TTTT rrrrrrrrrr
, aa



### BBBBBB = EE CCCCCCCCCC 

### ∗ TTTT ee ee 

### ∗ AAAAAA s ssss 

### ∗ AAAAAA HHHHHH57 

# • Conversion between combustion efficiency and thermal efficiency

– Based on AHRI model directory

• Thermal efficiency varies with:

– Return water temperature

– Cycling

– Part

- load

• Calculate average impact for each climate zone based on weather Energy Use Characterization

Thermal Efficiency Adjustments58 

# Water Heating Energy Consumption Energy Use Characterization

• For buildings using gas fuel for space heating and water heating, it was assumed that in 50 % of these installations the boilers are also used for water heating.



### Annual Water Heating Fuel Consumption

– AAAAAAAA AAAA AAAA FF FF FFFF WW 

### accounts for the difference between TE and water heating (WH) efficiency



### Water Heating Load

‒ QQ YY
, WW 

### is equal to the annual fuel consumption for water heating based on
CBECS 2003 or RECS 2009 ( kBtu / yr ) FF WW 

### = WW
TT

− AAAA jj FF WW



### WW = QQ YYYY
, WW 

### × ( TTTT ee 

### − AAAA FF FF FF WW 

### )59 

## Electricity Consumption 

# Energy Use Characterization

Boiler Electricity C onsumption accounts for the electricity use by circulating pump, draft inducer, igniter, and auxiliary equipment such as condensate pumps.

Adj BOH 

### = adjustment factor that takes into account part

- load operation (for condensing units only ) ElecPower = power of electrical components required during boiler operation , ( kW) ElecBOH WH 

### = hours boiler provides water heating only StdbyPower = total standby power of the equipment StdbyHrs = standby hours, taking into account water heating operation during

summer EE

= BBBB SSSS 

### × AAAA BBBB 

### × EE EE EE + EE WW 

### × EE EE EE + SS SS × SS60 

### Average Annual Energy Consumption

EL Design Option Fuel Use MMBtu / yr Electricity Use kWh/ yr Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0 80% TE

- Baseline 830 342 1 81% TE 820 337 2 82% TE 810 333 3 85% TE

- Max Tech 781 321 Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/ hr 0 82% CE

- Baseline 3826 886 1 83% CE 3772 873 2 84% CE

- Max Tech 3719 861 Mechanical Draft Gas

- Fired Hot Water Commercial Packaged Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0 80% TE

- Baseline 939 746 1 83% TE 904 720 2 85% TE 882 704 3 87% TE 861 689 4 92% TE 824 990 5 95% TE 797 960 6 98% TE

- Max Tech 772 931 Mechanical Draft Gas

- Fired Hot Water Commercial Packaged Boiler >2,500,000 Btu/ hr 0 82% CE

- Baseline 3699 1306 1 84% CE 3596 1271 2 86% CE 3499 1238 3 94% CE 3182 1662 4 97% CE

- Max Tech 3069 1605 

# Energy Use Characterization61 

# Energy Use Characterization

Request for Comment

Issue #9: DOE seeks data on representative annual profiles of return water temperature, supply water temperature, and boiler percent loading.

Issue #10: DOE seeks data on what return water temperatures boilers are tested at under the test conditions prescribed by the DOE test procedure.

Issue #11: DOE seeks input on data sources that it can use to characterize the variability in annual energy consumption for commercial packaged boilers. DOE is particularly interested in field monitoring studies and data.62 

# Energy Use Characterization Request for Comment

Issue #12: DOE requests data about typical boiler sizing practices:

● How often are multiple boilers installed , instead of a single boiler , to meet the building heating load?

● How are the number of boilers determined for a particular type of building installation?

Issue #13: DOE seeks input about how boilers are controlled, particularly in multiple

- boiler installations.

Issue #14: DOE seeks historical shipment

- weighted commercial packaged boiler efficiency data and/or shipment data by efficiency bins. DOE is primarily interested in data during the last 10 years to capture the impact of the most current technologies on the boilers market.63 

# Energy Use Characterization



# Request for Comment

Issue #15: DOE requests input about the electricity use by commercial boilers that is in addition to the fuel energy use, and that should be included in the energy use analysis.

Issue #16: DOE seeks input on what fractions of hot

water commercial packaged boilers are used both for space heating and water heating.64 

## Purpose: LCC analysis uses life

- cycle cost ( LCC) and payback period ( PBP) 

## to determine the economic impact of boiler

standards on commercial consumers. Methodology:

• Life

- Cycle C ost ( LCC) is used to determine total commercial

consumer cost over the life of a product.

• Payback Period (PBP ) determines the amount of time it takes
consumers to recover the purchase price of more energy

efficient equipment through reduced operating costs

.

• The analysis uses the Crystal Ball ® 

## add

- on for MS Excel to model the uncertainty and variability of inputs using Monte Carlo approach and probability distributions. 

# LCC and Payback Period Analyses65 

## Development of LCC and PBP Inputs 

# LCC and Payback Period Analyses

Engineering Analysis

Markups to Determine Product Price

Energy Use Characterization Baseline Manufacturer Cost

Std

- Level Manufacturer Cost

Manufacturer Markup

Distributer & Contractor Markups

Sales Tax

Energy Consumption

Marginal Energy Prices Consumer Price

Installation Cost Total Installed Cost

Annual Energy Cost

Repair Cost

Maintenance Cost Annual Operating Expense

Lifetime

Discount

Rate

Energy Price Trend Lifetime Operating Expense Payback

Period Life

- Cycle Cost66 

# LCC and Payback Period Analyses
Installation Costs

Installation Costs represent the labor and material costs necessary to install the appliance. Key Components of installation cost model:

• B asic installation costs

• V enting

• Condensate removal for condensing boilers


## Sources:

• 2013 RS Means (Mechanical Cost Data)

• Manufacturer literature

• Information from experts67 

# Basic installation costs include:

• Placing and setting up boiler

• Connecting gas piping

• Connecting water piping

• Permit and removal/disposal fees LCC and Payback Period Analyses

Basic Installation Costs68 

## Boiler technology type

– Non

- condensing: typically Category I venting

• Considerations: High

- temperature flue gas, which heats the inside of the vent above the dew point to ensure that water vapor in the flue gas does
not condense

• Replacements: Reline unlined chimney, resize existing vent, reuse existing vent, or replace vent

• Material: Type B (natural draft) or stainless s teel (mechanical draft)



### – Condensing: Category IV venting

• Considerations: Water vapor in flue condenses, so the flue must resist corrosion

• Replacements: Reuse existing stainless steel vent or replace vent

• Material: Plastic ( ≤ 6 ” diameter) or stainless steel (> 6” diameter)

• Combustion air direct vent 

## Cost factors : installation type, assumed existing venting material in replacement boiler installations, and new vent material 

# LCC and Payback Period Analyses Venting69 

### • Condensate pipe: Excess condensate must be deposited in a drain.

• Condensate pump: If a drain is not near the boiler, then the condensate must be pumped to a remote drain.

• Condensate neutralizer: Neutralizes condensate before pouring into drain.

• Additional electrical outlet: Some installations with a condensate pump also require an additional electricity outlet. 

# LCC and Payback Period Analyses

Condensing Boilers: Condensate Removal

Installation Cost Description Criteria Frequency of applying criteria Pipe All installations 100%
Pump All installations 25%

Neutralizer All installations 12.5%

Electrical Outlet (additional) Fraction of i nstallations requiring a
pump 50%70 

# LCC and Payback Period Analyses
Request for Comment

Issue #22: DOE seeks input on how often plastic versus stainless steel venting is installed for condensing boilers.

Issue #23: DOE seeks input on how often boilers have direct venting, for both condensing and non

condensing boilers.

Issue #24: DOE seeks input on the fraction of stainless steel venting in existing boiler installations by efficiency. Issue #21: DOE requests data on the fractions of installations that would entail significant additional installation expenses.71 

# LCC and Payback Period Analyses


# Request for Comment

Issue #26: DOE seeks data on how often “common venting” occurs in multiple

- boiler installations; and whether commercial water heaters are commonly vented with commercial boilers. Issue #25: DOE seeks input on where boilers are typically located within different types of buildings and where the vents typically terminate. DOE is interested whether this changes by geographic region or boiler type.72 

## Repair and Maintenance 

# LCC and Payback Period Analyses

• Maintenance Cost: Routine cost to the consumer of maintaining equipment.

• Maintenance Frequency :

• Steam boilers and oil

- fired boilers: based on RS Means

• Gas

- fired hot water boilers: based on CBECS/RECS survey data

• Labor Hours/Cost : Based on 2013 RS Means Facility Repair and Maintenance

• Separate for steam vs hot water and small vs large.

• Material Cost: Based on 2013 RS Means. Condensate neutralizer for condensing boilers.

• Assumes maintenance cost is the same within each equipment class. Assumes maintenance cost for condensing boilers is higher.



### • Repair Cost: Cost of replacing or repairing components in the boiler that have failed.

• Labor Hours/Cost : Based on 2013 RS Means Facility Repair and Maintenance

• Material Cost : Based on engineering analysis and RS Means Component failure rate Repair Description Mean Failure Year Repair Rate Ignition, Controls 7.0 50% Vent Damper or Power Vent Blower 15.0 35% Heat Exchanger 20.0 17%73 

# LCC and Payback Period Analyses Request for Comment

Issue #19: DOE seeks input on how often boiler maintenance is performed by on

- site staff versus external contractors, specifically for hot water boilers versus steam boilers and small boilers versus large boilers.

Issue #20: DOE seeks input as to how often, in the event of a heat exchanger failure, the heat exchanger alone is replaced versus the entire boiler being replaced. DOE is interested in knowing whether this varies with equipment class or varies with condensing versus non

- condensing boilers. Issue #18: DOE requests comment on frequency and cost of maintenance, major repair issues, repair frequency, and repair costs for commercial packaged boilers that meet the minimum efficiency standards, as well as for higher

efficiency boilers.74 

# Lifetime LCC and Payback Period Analyses

• Definition: Age when the commercial boiler is retired from service.

• Methodology: Used published studies and typical appliance lifetime characteristics to calculate the distribution of lifetimes

• Lifetime assumed 24.8 years presented as a distribution (source references in Appendix 8

- F)75 

# LCC and Payback Period Analyses

Request for Comment

Issue #28: DOE seeks data to predict boiler lifetime, particularly for non

- condensing versus condensing boilers. Issue #27: DOE requests comments about the methodology used to determine equipment lifetimes for commercial packaged boilers.76 

# Energy Prices LCC and Payback Period Analyses

• Purpose: Develop average marginal monthly prices by geographical area.

• Methodology: Most

- current average annual energy prices by monthly price factors and marginal price factors.

• 2012 average annual energy prices by geographical area based on:

‒ Electricity Prices : EIA’s 2013 Form 826 data

‒ Natural Gas : EIA’s 2013 Natural Gas Navigator monthly

‒ Oil : EIA’s 2012 State Energy Consumption, Price, and Expenditures Estimates (SEDS)

• Monthly energy price factors by geographical area based on:

‒ Electricity Prices : EIA’s 1993

- 2012 Form 826 monthly data

‒ Natural Gas : EIA’s 1993

- 2012 Natural Gas Navigator monthly data

‒ Oil and LPG : EIA’s 2009 Short

- Term Energy Outlook 1995

- 2009 historical data

• Marginal energy price factors for electricity and natural gas by geographic areas based on EIA data.77 

# Energy Price Trends LCC and Payback Period Analyses

Example: Projected Commercial National Natural Gas Price 

### • Methodology : 2012 average monthly marginal energy prices by geographical area multiplied to projected annual energy price trends for the corresponding Census
D ivision

– 2019

- 2040 trends based on EIA’s AEO 2014 by C ensus Division

– After 2040 trends based on Federal Energy Management Program (FEMP) guidelines

5.00 7.00 9.00 11.00 13.00 15.00

2010 2020 2030 20402012$/MMBtu78 

## Discount Rates: Commercial 

# LCC and Payback Period Analyses

• Definition: Used to determine the present value of lifetime operating expenses when a piece of equipment is retired from service.

• Methodology: Calculated as the weighted average cost of capital (WACC), using the Capital Asset Pricing Model (CAPM) for different economic sectors.

• Primary data sources : Damodaran Online database of company debt and equity financing


# Request for Comment

Issue #29: DOE seeks comment about its planned approach for estimating discount rates for commercial

consumers.79 

## Base

- Case Efficiency Distribution 

# LCC and Payback Period Analyses

Definition: Base

- case product efficiency assignment reflects the projected market share of products at different efficiency levels.

• Not all consumers purchase products at the current minimum standard.

• LCC analysis recognizes that consumers already purchasing products at efficiencies greater than or equal to a prospective standard level are not impacted by the standard. Methodology: Projected commercial boiler efficiency market share in 2019 for each product class based on the share of models in each product class from trends in the AHRI certification directory from 2007 to 2014.80 

# Request for Comment LCC and Payback Period Analyses

Issue #30: DOE requests data on the efficiency distribution and on the likelihood and degree of improvement in efficiency of commercial packaged boilers in the next 5 to 10 years, as a result of market forces or industry trends (in the absence of amended energy conservation standards). Issue #17: DOE requests data to characterize the current distribution of commercial packaged boiler efficiencies in the market.81 

# LCC and PBP Analysis Results LCC and Payback Period Analyses

Example: Gas

- Fired Small Hot Water Boilers, Mechanical Draft

Efficiency Level TE Average Costs 2013$ LCC Savings ($) Payback
years Installed Cost ($) First Year’s Operating Cost

($) Lifetime Operating Cost

($) LCC ($)

0 80% 32,003 11,261 190,176 222,180 NA NA

1 83% 35,530 10,907 184,115 219,646 325 10.0

2 85% 38,353 10,685 180,326 218,680 579 11.0

3 87% 41,626 10,474 176,721 218,348 738 12.2

4 92% 45,983 10,161 171,255 217,239 1,333 12.7

5 95% 55,044 9,887 166,576 221,621 (1,612) 16.8

6 98% 64,104 9,631 162,202 226,307 (6,018) 19.782 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 783 Framework Document Preliminary Activities NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization84 

# • Shipments Analysis:

– Estimates commercial boiler shipments over analysis period.

• National Impact Analysis:

– Estimates the National Energy Savings (NES) and national economic impact on commercial boiler consumers (or the Net Present Value (NPV)) from commercial boiler energy conservation standards at different efficiency levels

. 

# Purpose National Impact Analysis85 

# Approach Shipments Analysis

Purpose: Forecast the commercial boilers that would be expected to be shipped between 2019 and 2048, both with and without amended energy conservation standards. 

## Methodology of Shipments Projections:

• New constructions: New building construction projections multiplied by new construction market saturations.

• Replacements: Equipment retirement functions (equipment lifetimes) applied to equipment stock. Equipment stock is generated with historical shipments. Demolished units are deducted from required replacements.

• New Owners: Existing buildings that acquire boilers for the first time. Includes consumers switching between boiler product classes.



## Accounted for impact of standards on shipments using price elasticities

.86 

# Shipments Model Inputs Shipments Analysis

Input Definition/Source

Historical Annual Shipments • Historical shipments of commercial packaged boilers in 2007 reported in the 2009 commercial packaged boiler final rule (used residential boiler shipments to extrapolate commercial boiler shipments)

• AHRI model data for commercial packaged boilers from 2007 to 2014

Retirement Function Based on lifetime distribution

Shipments to New Construction New construction market saturations multiplied by projected new buildings

• Saturations from CBECS 2003 and RECS 2009

• U.S. Census historical building starts data and EIA’s AEO 2014 projections

New Owners and Product Switching Product class switching based on trends in AHRI database

Price Elasticity Based on appliance shipments and household economic data during the period (1980

- 2002). See Appendix 9

- A.87 0.000 0.005 0.010 0.015 0.020 0.025 0.030 0.035 0.040 0.045 0.050

1960 1970 1980 1990 2000 2010 2020 2030 2040Shipments (million) LOMDST
SOMDST
LGMDST
SGMDST
LOMDHW
SOMDHW
LGMDHW
SGMDHW
LONDST
SONDST
LGNDST
SGNDST
LONDHW
SONDHW
LGNDHW
SGNDHW 

# Shipments Analysis

Historical and Projected Base Case Shipments by Equipment Class Projected Historical88 

# Shipments Analysis Request for Comment

Issue #31 : DOE requests input on the shipments projection methodology.

Issue #32 : DOE invites comments about the selection of appropriate economic drivers and sources of data for historical shipments and shipment

- breakdowns by equipment class.

Issue #33 : DOE seeks historical commercial packaged boiler shipments data, disaggregated by equipment class and efficiency level if available.

Issue #34 : DOE seeks input on the potential impact of amended standards on commercial packaged boiler shipments.89 

# National Impact Analysis

Purpose: Estimate the national impacts of energy conservation standards for commercial boilers shipped between 2019 and 2048

• National Energy Savings (NES): Primary energy savings

• Net Present Value (NPV) : Difference between the present value of annual energy expenditures and the present value of annual equipment expenditures. Methodology

• For each product class in each standards case :
1. Calculate per

- unit cost increase and per

- unit energy savings due to a
standard.

2. Calculate number of units (stock) in use and energy savings each year
from 2019 to 2048.

3. Combine the above to determine NES and NPV.90 

## National Energy Savings 

# National Impact Analysis

Input Method/Assumptions
Annual Energy Consumption per Unit (UEC) Derived per

- unit annual energy consumption as a function of product efficiency from Energy Use Analysis f or each equipment class.

Shipments Projected shipments for each equipment class under the base case and all standards cases.

Equipment Stock Determined the yearly stock using annual shipments and the lifetime for each equipment class.
National Annual Energy Consumption Annual energy consumption is the product of the UEC and the equipment stock.

Rebound Effect No rebound effect was assumed in the analysis.

Site

- to

- Source Conversion Factor Used for converting site energy consumption into primary or source energy consumption (from EIA’s AEO 2014/NEMS).

Full Fuel Cycle Calculated FFC energy savings using a NEMS

- based methodology (from EIA’s AEO 2014/NEMS). 

### National Energy Savings : Difference in annual energy savings (UEC multiplied by equipment stock) between base case and each standards case and summed over the analysis period.91 

# National Impact Analysis

Net Present Value

Input Method/Assumptions

Total Installed Cost Per Unit Function of product efficiency

Annual Per

- unit Savings In Operation Cost Includes costs for energy, repair, and maintenance.

Shipments Annual shipment of boilers by equipment classes
Equipment Stock Depends on shipments and lifetime

Total Annual Increases In Installed Cost Increase attributable to standard, calculated by vintage

Total Annual Operating Cost Calculated by vintage

Discount Factor Used 3% and 7% national discount rates to determine present value of future monetary values 

### • Net Present Value : Difference between the present value of energy cost savings and the present value of total installed cost increase.

• Present value of costs : Difference in installed cost between base case and each standards case discounted to the present and summed over the analysis period

• Present value of savings : Difference in operating cost savings between the base
case and each standards case from 2019 to the time when the last unit is retired92 

### • Efficiency Trend in 2019 (Assumed a “roll

- up” scenario to establish the efficiency distribution):

– Product efficiencies in the base case that did not meet the standard under consideration would “roll up” to meet the new standard level.

– All efficiency shares in the base case that were above the standard under consideration would not be affected.

• Efficiency Trend After 2019:

– Condensing boilers are projected to increase linearly, based on trends in AHRI database by product class.

– Shares of condensing efficiency levels are kept within the same proportional relationships as in 2019.

– Shares of non

- condensing efficiency levels are kept within the same proportional relationships as in 2019. 

# National Impact Analysis

Projected Efficiency Trends93 

# National Impact Analysis

Projected Condensing Boiler Market Share Trends

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2019 2024 2029 2034 2039 2044 2049Condensing market share



### SGMDHW

LGMDHW

SOMDHW

LOMDHW94 

## • DOE has published a Notice of Policy (NOP) stating its intention to incorporate full

- fuel

- cycle (FFC) metrics into the
cost

- benefit analysis. 76 FR 51281 (Aug. 18, 2011); 77 FR 49701 (Aug. 17, 2012).

• Methodology is based on the calculation of a FFC multiplier, or conversion factor, for each of the primary fuels used by the product.

• For this preliminary analysis, DOE calculated FFC energy savings using a NEMS

- based methodology (described in appendix 10B).

• Primary NES and the FFC energy savings for the considered efficiency levels reported (see Ch.10). 

# Full

- Fuel

- Cycle Analysis National Impact Analysis95 

# National Impact Analysis

Primary National Energy Savings Results (quads )

Product Class Efficiency Levels 1 2 3 4 5 6 Natural Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.001 0.004 0.026 NA NA NA

Natural Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.010 0.023 NA NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.001 0.003 0.005 NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.005 0.012 NA NA NA NA

Mechanical Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.023 0.052 0.105 0.207 0.332 0.524

Mechanical Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.039 0.145 0.570 0.875 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.006 0.017 0.059 0.201 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.011 0.037 0.136 NA NA NA96 

# National Impact Analysis

Full

- Fuel

- Cycle National Energy Savings Results (quads)

Product Class Efficiency Levels 1 2 3 4 5 6 Natural Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.001 0.005 0.029 NA NA NA

Natural Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.011 0.025 NA NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.001 0.004 0.006 NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.006 0.014 NA NA NA NA

Mechanical Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.025 0.058 0.117 0.230 0.370 0.583

Mechanical Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.044 0.161 0.634 0.975 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler
≥ 300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.007 0.020 0.069 0.235 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.013 0.044 0.159 NA NA NA97 

### Discounted at 3% (billion 2013$) 

# National Impact Analysis

Net Present Value Results

Product Class 3% Efficiency Levels 1 2 3 4 5 6 Natural Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.004 0.011 0.072 NA NA NA

Natural Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.036 0.079 NA NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.009 0.025 0.054 NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.057 0.144 NA NA NA NA

Mechanical Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.047 0.088 0.129 0.203 (0.202) (0.908)

Mechanical Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.087 0.267 0.523 1.268 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler
≥ 300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.052 0.148 0.487 0.323 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.105 0.406 0.650 NA NA NA98 

### Discounted at 7% (billion 2013$) 

# National Impact Analysis

Net Present Value Results

Product Class 7% Efficiency Levels 1 2 3 4 5 6 Natural Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.001 0.003 0.019 NA NA NA

Natural Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.014 0.030 NA NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.003 0.007 0.016 NA NA NA

Natural Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.022 0.055 NA NA NA NA

Mechanical Draft Gas

- Fired Hot Water Boiler ≥300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.007 0.006 (0.016) (0.046) (0.358) (0.861)

Mechanical Draft Gas

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.017 0.034 (0.132) 0.035 NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler
≥ 300,000 Btu/ hr and ≤2,500,000 Btu/ hr 0.013 0.037 0.117 (0.315) NA NA

Mechanical Draft Oil

- Fired Hot Water Boiler >2,500,000 Btu/ hr 0.031 0.131 0.025 NA NA NA99 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 7100 Framework Document Preliminary Activities NOPR Final Rule Effective Date 

## Steps for the Standards Rulemaking: Preliminary Activities and Analyses

Shipments

Analysis

Preliminary Manufacturer Impact Analysis Life

- Cycle Cost and Payback Period Analyses National Impact Analysis Market & Technology Assessment Screening Analysis Engineering Analysis Markups to Determine

Product Price

Energy Use Characterization101 

# Preliminary MIA

• Purpose

– The manufacturer impact analysis (MIA) identifies the impacts of energy conservation standards on manufacturers.



## • Phase 1

– DOE creates an industry profile to characterize the industry and identify important issues that require consideration.



## • Phase 2

– DOE prepares an industry cash

- flow model and an interview questionnaire to guide subsequent discussions.



## • Phase 3

– DOE interviews manufacturers and assesses the impacts of standards both quantitatively (using the Government Regulatory Impact Model) and qualitatively (impacts on competition, manufacturing capacity, direct employment, and regulatory burden).102 

# Preliminary MIA: Key Issues

• Testing Burden

– Amended standards and an altered test procedure could require CPB manufacturers to retest all models, which could strain lab resources and result in added financial burden.

– Testing is costly and logistically challenging because of the large size of most equipment and the fact that many CPBs are custom manufactured.



## • Not Many American Companies Produce Condensing Heat Exchangers for Gas

- Fired Hot Water Equipment

– Many companies in the US currently produce condensing equipment; however, most condensing heat exchangers are sourced from European or Asian companies.

– A standard level that necessitates condensing technology could require manufacturers to decide whether to continue to source heat exchangers, or develop their own production capacity, which could require investments in product development and new capital equipment.103 

# Preliminary MIA: Key Issues

• Small Business Concerns

– DOE has preliminarily identified 21 small business CPB manufacturers.

– Small business manufacturers may have fewer resources ( e.g

. , engineering, testing, capital) to adapt to amended standards, relative to larger competitors

.104 

# Issues for Comment

Issue #32 : DOE considers the impacts on certain manufacturer subgroups that have different cost structures or operate within different regulatory frameworks in the NOPR stage. **DOE requests feedback on subgroups to analyze and/or**  **characteristics appropriate for subgroup analysis.**

Issue #33 : DOE requests comment about its identification of key issues, and requests data and information which would assist in evaluating the potential impact of energy efficiency standards on manufacturers. Issue #31 : DOE conducts a regulatory flexibility analysis that examines the impact on small entities and considers alternative ways of reducing negative impacts in the NOPR stage. **DOE invites comments and information about small businesses that**  **manufacture CPBs and should be consulted**  **before the NOPR is published.** 105 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis 4 3 Engineering Analysis 1 Introduction and Overview

2 Market and Technology Assessment and Screening Analysis

Shipments and National Impact Analysis 5

Preliminary Manufacturer Impact Analysis 6

Next Steps 7106 Framework Document Preliminary Activities NOPR Final Rule Effective Date 

## Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Consumer Subgroup Analysis Manufacturer Impact Analysis Emissions Impact Analysis Utility Impact Analysis Employment Impact Analysis Regulatory Impact Analysis107 

## • Purpose:

– To develop a list of potential amended standard levels from which impacts are weighed and a proposed standard level is selected.

• Each trial standard level consists of a set of efficiency levels covering all product classes, and may vary between product classes.

• NOPR analyses assess impacts for trial standard levels (not efficiency levels for each product class).



## • Method:

– Trial standard levels are assembled from the equipment classes and efficiency levels identified in the preliminary analyses.

• Trial standard levels cover a range of efficiencies and can include:

– Most energy efficient level (max

- tech);

– Efficiency level with the lowest life

- cycle cost;

– Efficiency level with a payback period of three years or less;

– Efficiency levels with noteworthy technologies; and

– Efficiency levels that fill in large gaps. 

# Trial Standard Levels
Selection of Trial Standard Levels

ISSUE 34: DOE requests feedback on the criteria it should use for basing the selection of Trial Standard Levels.108 Revise Preliminary Analyses Consumer Subgroup Analysis Manufacturer Impact Analysis Emissions Impact Analysis Utility Impact Analysis Employment Impact Analysis Regulatory Impact Analysis Framework

Document Preliminary Activities NOPR Final Rule Effective Date 

## Next Steps in the Standards Rulemaking: NOPR109 

## • Purpose:

– Analyze the economic impacts of standards on commercial consumers
, including subgroups who may be disproportionately impacted compared with the general user population

.



## • Method:

– Refine the LCC analysis to examine the impacts for defined subgroups. 

# Consumer Subgroup Analysis

Overview

ISSUE 35: DOE requests input as to which consumer subgroups, if any, it should consider when developing standards for commercial packaged boilers.110 Framework Document Preliminary Activities NOPR Final Rule Effective Date 

## Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Consumer Subgroup Analysis Manufacturer Impact Analysis Emissions Impact Analysis Utility Impact Analysis Employment Impact Analysis Regulatory Impact Analysis111 

## • Purpose:

– Estimate emissions impacts from amended energy conservation standards for commercial packaged boilers, including changes in full

- fuel cycle (FFC) emissions

.



## • Method:

– DOE will base the emission factors for FFC on EIA’s AEO, supplemented by data from other sources.

– DOE estimates the reduction in power sector and site combustion emissions of carbon dioxide (CO 2 

### ), nitrogen oxides (NO X 

### ), sulfur dioxide (SO 2 

### ), mercury (Hg), methane (CH 4 

### ) and nitrous oxide (N 2 

### O) from potential energy conservation standards for the considered equipment

.



## • Monetization:

– DOE considers the estimated monetary benefits likely to result from the reduced emissions of CO 2 

### from the energy efficiency standards levels.

– To estimate benefits from CO 2 

### , DOE uses the Social Cost of Carbon values developed by an interagency process

. 

# Emissions Impact Analysis

Overview112 

# Emission Analysis and Emissions Monetization

Issue #36 : DOE seeks input on its plans to use NEMS

- BT to conduct the emissions analysis for the products covered by this rulemaking.

Issue #37 : Are there any other emissions factors the DOE should consider in this rulemaking?

Issue #38 : Are there other approaches to the emissions analysis that the DOE should consider? 

# Request for Comment113 

### • Purpose: Assess the overall impacts on domestic energy supplies that would result from amended energy conservation standards.

• Method:

– Uses national energy savings results.

– Uses the Energy Information Administration’s National Energy Modeling System (NEMS) tailored for DOE’s Building Technologies Program (NEMS

- BT).

• Output:

– Change in energy sales and price by region.

– Change in the mix of electricity generation.

– Change in new capacity construction

. 

# Utility Impact Analysis

Overview

Issue #39 : DOE seeks input on its plans to use NEMS

- BT to conduct the utility impact analysis.114 

### • Purpose: To report net jobs created or eliminated nationally as a consequence of amended energy conservation standards.

• Method:

– Uses the ImSET tool, a spreadsheet model of the U.S. economy that focuses on 188 sectors most relevant to building energy use.

– Changes in product and energy expenditures taken from the NIA.

– Estimates the national employment and income effects of energy saving appliances.

– Direct employment impacts taken from the MIA.

• Output: Change in employment by sector as a consequence of new standards. 

# Indirect Employment Impact Analysis
Overview

Issue #40 : DOE requests comment about its planned approach for assessing national indirect employment impacts.115 

### • Purpose:

– To investigate the national impacts due to non

- regulatory alternatives compared with mandatory energy conservation standards.

– The non

- regulatory alternatives that may be considered:

• No new regulatory action; early replacement; prescriptive standards; consumer tax credits; manufacturer tax credits; consumer rebates; voluntary efficiency targets; bulk government procurement.

• Method:

– Modify NES spreadsheet model to consider non

- regulatory scenarios.

– Non

- regulatory scenarios increase overall appliance efficiency and are modeled by modifying the base

- case efficiency trend.

– NPV calculated for non

- regulatory alternatives in the same way as for the adopted standard.

– Each non

- regulatory scenario will decrease national appliance operating costs and increase appliance equipment prices.

• Output:

– National Energy Savings and Net Present Value of the non

- regulatory alternatives. 

# Regulatory Impact Analysis
Overview116 

### Issue #41 : In general, DOE requests any additional comments and invites questions from interested parties about the Department of Energy’s Commercial Packaged Boilers Energy Conservation Standards Rulemaking. 

## Final Comments and Questions117 

# How to Submit Comments

• In all correspondence, please include all of the following:

o Energy Conservation Standards for Commercial Packaged Boilers

o Docket Number: EERE

- 2013

- BT

- STD

- 0030

o Regulatory Identification Number (RIN): 1904

- AD01



## • Contact Information

Email: PkgdBoilers2013STD0030@ee.doe.gov

Postal Mail: Ms. Brenda Edwards U.S. Department of Energy Building Technologies Office Mailstop EE

- 5B 1000 Independence Avenue, S.W. Washington, DC 20585

- 0121

Comment period ends January 20, 2015 

### Courier: Ms. Brenda Edwards U.S. Department of Energy Building Technologies Office L’Enfant Plaza, S.W., Suite 600 Washington, DC 20024 Telephone: (202) 586

- 2945