1 | Building Technologies Program eere.energy.gov The Parker Ranch installation in Hawaii 

# BUILDING TECHNOLOGIES PROGRAM

Preliminary Analysis Public Meeting on Energy 

## Conservation Standards for Residential Furnace Fans Mohammed Khan

Department of Energy Energy Efficiency & Renewable Energy Mohammed.Khan@ee.doe.gov

July 27, 20122 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • Introductions

• Role of the Facilitator

• Ground Rules (norms)

– Listen as an ally

– Use short, succinct statements

– keep to the point

– Hold sidebar conversations outside the room

– Focus on issues, not personalities



## – One person speak at a time (raise hand to be recognized; state your name for the record)

– Set cell phones to silent/vibrate



# • Housekeeping Items 

# Welcome3 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • The Department is broadcasting this meeting live over the Internet.



# • DOE is providing the webcast to accommodate interested parties who are unable to attend the public meeting in person.

• The web broadcast allows interested parties to listen in and view the presentation slides.

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

# Listening Via the Webcast4 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • 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 steps.

Interested parties who contacted DOE to request an opportunity to issue an opening statement may do so now. 

# Purpose of the Public Meeting5 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • Comments concerning each issue are welcome.

• Participants are invited to raise additional issues for 

# discussion today.

• Interested parties may provide comments on the preliminary analyses through September 10, 2012. Issue Box: Throughout this presentation, specific issues will be brought up for discussion on slides such as this, with identifying numbers corresponding to those in the Executive Summary of the TSD

. 

# Comments from Interested Parties6 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

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

– Energy Conservation Standards for Residential Furnace Fans

– Docket Number: EERE

- 2010

- BT

- STD

- 0011

– Regulatory Identification Number (RIN): 1904

– AC22



## • Contact Information

Comment period closes: 

## September 10, 2012 Postal Mail : 

### Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program Mailstop EE

- 2J 1000 Independence Avenue, S.W. Washington, DC 20585

- 0121 Courier : 

### Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program 950 L’Enfant Plaza, S.W., 6 th 

### Floor Washington, DC 20024 Telephone: (202) 586

- 2945 

# Comments From Interested Parties

Email : 

# FurnFans

- 2010

- STD

- 0011@ee.doe.gov7 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 78 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Introduction and Overview Regulatory Authority



# Energy Policy and Conservation Act (EPCA) of 1975 (Public Law 94

- 163 ), as amended by the Energy Policy Act (EPACT) of 2005 (Public Law 109

- 58) and the Energy Independence and Security Act of 2007 (Public Law 110

- 140)

• “...not later than December 31, 2013, the Secretary shall consider and prescribe energy conservation standards or energy use standards for electricity used for purposes of 

# circulating air through duct work.” (42 U.S.C. 6295(f)(4)(D ))

• “ Any new or amended energy conservation standard adopted after July 1, 2010, shall address standby mode and off mode energy use pursuant to 42 U.S.C. 6295(o ). ” (42 U.S.C. 6295( gg )(3))9 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## DOE has no current energy conservation standard or test procedure for residential furnace fans. 

# Introduction and Overview Regulatory History

• Test Procedure

– DOE is developing a test procedure in a parallel rulemaking.

– DOE published test procedure NOPR on May 15, 2012.

– DOE held the test procedure NOPR public meeting on June 15, 2012.

– The test procedure NOPR comment period ends July 30, 2012.



## • Energy Conservation Standard

– DOE published the Notice of Public Meeting and Availability of the Framework 

### Document on June 3, 2010.

– DOE held the Framework Document public meeting on June 18, 2010.

– DOE published the Notice of Public Meeting and Availability of the Preliminary Technical Support Document on July 10, 2012

– The test preliminary analysis comment period ends September 10, 2012.



## • DOE conducted the preliminary analysis on the basis of the test procedure proposed in the test procedure NOPR. 77 FR 28674, May 15, 201210 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## FER = ( Operating Hour s x 

## × Power Consumptio n x 

## )

x = rated modes 

## Operating Hour s x x = rated modes 

## × ( Maximum Airflow ) × 1000

• FER for non

- hydronic air handler f urnace f ans :

FER = CH × E

max + HH × E heat + CCH × E circ ( CH + HH + CCH ) × Q max × 1000



### • Integrated FER (IFER) for hydronic air handlers, which includes standby and off mode:

IFE R hydronic = CH × E max + HH × E heat + CCH × E circ + SBH × E SB + ( OH × E OFF ) ( CH + HH + CCH + SBH + OH ) × Q max × 1000 

# Introduction and Overview Proposed Rating Metric Summary

The proposed Fan Efficiency Rating (FER) is the estimated annual 

## electrical energy consumption normalized by the annual rated operating hours and the airflow in the maximum airflow

- control setting.11 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

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

Factor Analysis

1. Economic impact on consumers 

### and manufacturers Life

- cycle cost analysis 

### Manufacturer impact analysis

2. Lifetime operating cost savings Life

- cycle cost analysis

3. Total projected energy savings National impact analysis

4. Impact on utility or performance Screening analysis Engineering analysis
5. Impact of any lessening of competition Manufacturer impact analysis

6. Need for national energy conservation National impact analysis



### 7. Other factors the Secretary considers relevant 

### Environmental assessment Utility impact analysis Employment impact analysis 

# Introduction and Overview Energy Conservation Standards Rulemaking12 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization 

# Introduction and Overview Energy Conservation Standards Rulemaking13 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • The Executive Summary, which includes:

– An overview of the preliminary activities and preliminary technical support document (TSD);

– Key results of the analyses; and

– Issues on which DOE seeks comment from interested parties.



## • Chapter 2 of the preliminary TSD provides a summary of the preliminary activities and includes:

– A review of the analyses conducted; and

– A discussion of comments on the framework document from interested parties and DOE’s responses to those comments.



## • Notice of Public Meeting (NOPM) and Availability of the Preliminary TSD includes:

– Details of the public meeting for the preliminary activities and analyses; and

– A description of the preliminary analyses, results, and documentation available on the website for interested parties to review. 

## The following are key documents that describe the Preliminary Analysis activities: 

# Introduction and Overview Energy Conservation Standards Rulemaking14 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 715 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization16 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

DOE tentatively defines a “furnace fan” as any electrically powered device used in residential HVAC products for the purpose of circulating air through duct work.

• DOE recognizes that a significant number of products may fit its broad interpretation of the statutory language and resulting definition.

• The boxes outlined in red represent key HVAC products that include a furnace fan.
HVAC System

Weatherized / Packaged Unit17 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

The provisional scope of coverage includes furnace fans that are 

## integrated in 63 % of furnaces, air conditioners, and air handling units that include furnace fans.

Key

Considered in this rulemaking.



### Not considered in this rulemaking.18 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Proposed Key Product Classes (per this Rulemaking)

Non

- Weatherized, Non

- Condensing Gas Furnace Fan (NWG

- NC)

Non

- weatherized, Condensing Gas Furnace Fan (NWG

- C)
Weatherized Gas Furnace Fan (WG

- NC)

Non

- weatherized Oil, Non

- Condensing Furnace Fan (NWO

- NC)

Non

- weatherized Electric Furnace / Modular Blower Fan (NWEF/NWMB)

Heat/Cool Hydronic Air Handler Fan (HAH

- HC)

Manufactured Home Non

- Weatherized Gas, Non

- Condensing Furnace Fan (MH

- NWG

- NC)

Manufactured Home Non

- Weatherized Gas, Condensing Furnace Fan (MH

- NWG

- C)
Manufactured Home Electric Furnace/ Modular Blower Fan (MH

- EF/MB) 

# Market and Technology Assessment

DOE identified nine key product classes that represent most of the energy use associated with furnace fans considered in the analysis.

DOE differentiated product classes by application and internal structure.19 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

DOE identified 12 additional product classes that represent significantly fewer shipments and significantly less energy use.

• For the preliminary analysis, DOE grouped each non

- key product class with a key product class to which it is closely related in application and fan performance

- related internal structure (i.e. the primary criteria used to differentiate between product classes ).

• DOE assigned the baseline FER or IFER and analysis results of each key product class to the non

- key product classes with which it is grouped.

• Continuing with this approach in the NOPR would result in a proposed efficiency level for each additional product class that is 

## equivalent to the proposed efficiency level for the key product class with which it is grouped.20 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov

Proposed Key Product Classes (per this Rulemaking) Proposed Additional Product Classes (per this Rulemaking)

Weatherized Gas Furnace Fan (WG

- NC) Weatherized, Non

- Condensing Oil Furnace Fan (WO

- NC)

Weatherized Electric Furnace/Modular Blower Fan (WEF/WMB)
Manufactured Home Weatherized Gas Furnace Fan (MH

- WG)
Manufactured Home Weatherized Oil Furnace Fan (MH

- WO)

Manufactured Home Weatherized Electric Furnace/Modular Blower Fan (MH

- WEF/WMB)

Non

- weatherized Oil, Non

- Condensing Furnace Fan (NWO

NC) Non

- Weatherized, Condensing Oil Furnace Fan (NWO

- C)

Manufactured Home Non

- Weatherized Oil Furnace Fan (MH

NWO)

Heat/Cool Hydronic Air Handler Fan (HAH

- HC) Heat

- Only Hydronic Air Handler Fan (HAH

- H)

Hydronic Air Handler Fan with Coil (HAH

- C)

Manufactured Home Heat/Cool Hydronic Air Handler Fan (MH

- HAH

- HC)

Manufactured Home Heat

- Only Hydronic Air Handler Fan (MH

- HAH

- H)

Manufactured Home Hydronic Air Handler Fan with Coil (MH

HAH

- C) 

# Market and Technology Assessment

DOE grouped each non

- key product class with a key product class to which it is closely related in application and internal structure.21 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

Request for Comment

– Additional Product Classes

Additional Product Classes: DOE requests comment on the methodology for differentiating product classes and the resulting 9 key product classes.

DOE also seeks comment and data regarding the market for the 12 additional product classes and their expected energy performance. Specifically, DOE requests historical and future 

## shipment data and energy performance data to estimate FER

or IFER. Issue 122 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

DOE found that the top seven gas furnace manufacturers represent 99% of the market . The top 10 oil furnace manufacturers represent over 90% of the market.

Source: Appliance Magazine. Gas Furnace Market Share 2008

Carrier 32%

Goodman 15% Lennox 13% Trane 13% Rheem 12% York 9% Nordyne 5% Others

1%



## The CAC and heat pump market share distribution is comparable to that of the gas furnace market. At Least 10% Market Share Less than 10%

Market Share

• Lennox

• Thermo Pride

• ECR International • Adams

• Bard

• Boyertown

• Crown Boiler

• EFM

• Kerr

• Newmac Oil Furnace Market Share 2008

Source: Public Information and Manufacturer Feedback23 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Market and Technology Assessment

As a result of the technology a ssessment, DOE identified nine technology options.

Technology Options Brief Description Inverter technology (PSC motors) Motor controls used to extend the airflow range and flexibility of PSC motors.

X13 fan motors Constant

- torque, permanent magnet motors, that are more efficient and have a wider airflow range than PSC motors.

ECM fan motors Constant

- airflow, permanent magnet motors, that add to the efficiency and airflow

- range benefits of X13 motors.

Backward

- inclined impellers Impellers with backward facing inclined blades that can be more efficient than conventional forward

- curved impellers.

Toroidal transformer (standby and off mode product classes) A toroidal transformer has an annular core made of very tightly

- wound, grain

oriented, silicon steel ribbons. Operates more efficiently than conventional laminated core power transformers. Switching mode power supply (standby and off mode product classes) A more efficient solid

- state power supply alternative to a conventional transformer

- based power supply.

Fan housing design modifications Optimizing the shape of the fan housing to increase efficiency.

Airflow path design Modifying the HVAC product envelope or elements in the airflow path, such as the heat exchanger, to reduce internal static pressure. ECM control relay (standby and off mode product classes) Using a control relay on an ECM to disconnect the motor to further reduce a system’s off mode power consumption.24 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Screening Analysis

Screening Analysis Methodology

• Technologies were screened using the following criteria:

– Technological feasibility

– Practicability to manufacture, install and service



## – Impacts on product utility or product availability

– Impacts on health or safety.25 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Screening Analysis

DOE screened out three technology options.

• DOE retained six technology options for further engineering analysis.

• Chapter 4, Screening Analysis, of the preliminary TSD provides additional detail on the screening analysis. Technology Option Need more data Impacts

thermal performance Impacts

product utility

Fan housing design modifications X

Airflow path design X X ECM control relay (standby and off modes) X26 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Screening Analysis

DOE considered six technology options.

1. Inverter motor controls (for PSC motors)
2. X13 fan motors 3. ECM fan motors (Multi

- staging)
4. Backward

- inclined impellers
5. Toroidal transformer* 6. Switching mode power supply*

*Standby and off mode technology options27 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 728 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization29 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

In the Engineering Analysis, DOE evaluated technologies that reduce furnace fan electrical consumption and characterized the relationship between manufacturer cost and energy consumption reduction.

Downstream Analyses

• Life

- Cycle Cost and Payback Period

• National Impacts

• Shipments Analysis

• Manufacturer Impact Analysis Output: Cost

– Efficiency Relationship Incremental Manufacturing Cost



### Energy Consumption30 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

DOE incorporated information from the following sources in the Engineering Analysis.

Appliance Magazine, AHRI, GAMA

Manufacturer interviews

Product teardowns & manufacturing cost modeling

Product energy testing31 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

DOE acquired units for testing and teardowns to assist in developing FER values and cost models.

Units • 26 units

• 6 manufacturers represented

• 800 to 2,200 nominal airflow capacity

Technology Variations • Motor Type: PSC, constant

- torque brushless

permanent magnet (X13) , constant

- volume brushless permanent magnet ( ECM)

• Airflow Capacity (800

- 2,200 CFM)

• Heat Exchanger Type (Clamshell, Tubular, Drum, Hydronic )

• Non

- condensing / Condensing

• Fan Housing Design (Standard, Proprietary)32 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



## • Define baseline specifications for each product class;

• Identify design options from the baseline to the max

- tech as a pathway for improving energy efficiency;

• Conduct teardown analysis for representative products spanning the range of efficiency levels considered; and

• Generate cost

- efficiency curves, which account for full production costs. 

# The cost

- efficiency curve is developed in four steps.

Develop Baseline

Calculate Costs Develop Efficiency Pathway

Generate Cost

Efficiency Curves 

# Engineering Analysis33 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# DOE selected baseline models typical of the least

- efficient furnace fans used in commercially available residential HVAC models. 

# Engineering Analysis

Across all product classes, a baseline furnace fan includes :

• A PSC motor with 3 or fewer airflow

- control settings.

• A forward

- curved impeller.



## • A standard, sheet

- metal fan housing.

• A linear power supply. (Standby and off mode product classes).

• A laminated core power transformer. (Standby and off mode product classes).34 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## DOE reviewed information from publicly

- available product literature and 

## FER values calculated from test data to determine baseline FER ratings. 

# Engineering Analysis

Key Product Class Baseline FER (W/1000 cfm ) Baseline

IFER (W/1000 cfm ) Baseline

Standby Watts

Non

- weatherized, Non

- condensing Gas Furnace Fan 380

- - 

### Non

- weatherized, Condensing Gas Furnace Fan 393

- - 

### Weatherized Gas Furnace Fan 333

- - 

### Non

- Weatherized Oil Furnace Fan 333

- - 

### Electric Furnace / Modular Blower Fan 312

- - 

### Manufactured Home Non

- weatherized, Non

condensing Gas Furnace Fan 295

- -



### Manufactured Home Non

- weatherized, Condensing Gas Furnace Fan 319

- -



### Manufactured Home Electric Furnace / Modular Blower Fan 243

- -


### Hydronic Air Handler Fan (Heat/Cool)

- 

### 107 1135 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • DOE determined average percentage reductions in FER for each efficiency level and applied these reductions to all product classes.

– DOE found that manufacturers use similar components and design paths to improve efficiency across all product classes that DOE is examining.

– DOE does not expect the percentage reduction in FER associated with each design option, whether commercially available or prototype, to differ across product classes.



## • DOE based the reductions in FER associated with commercialized technologies on measurements or publicly available performance information.

• DOE based the FER reductions associated with prototype technologies on research reports that included performance data

. 

# Engineering Analysis

Each efficiency level above the baseline is defined by the specific 

## design option used to achieve it.36 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## DOE assigned percentage reductions in FER to each EL to obtain FER values for intermediate ELs. DOE also assigned a reduction in standby watts for the two standby design options (EL6 and EL7). 

# Engineering Analysis

Efficiency Level Design Option Percent Reduction in FER from Baseline Percent

Reduction in FER from Previous EL Reduction in

Standby Power from Baseline (Watts)

1 Improved PSC 2%

- NA

2 Inverter

- Driven PSC 10%

- NA

3 X13 45%

- NA

4 ECM and Multi

- Staging 59%

- NA

5 (non

- hydronic

max - tech) Premium ECM and

Multi

- Staging + Backward

- Inclined Impeller - 10% NA

Hydronic 6 Switching Mode Power

Supply - - 1

Hydronic 7 ( hydronic max tech) Toroidal Transformer

- - 1


## A premium ECM motor is narrower and operates at higher RPM, which is characteristic of the motor paired with the backward

- inclined prototype.37 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# For all product classes except hydronic air handler fan classes, DOE analyzed four efficiency levels in addition to the baseline and the max - tech. 

# Engineering Analysis

Efficiency Level NWG

NC NWG

C MH

NWG

NC MH

NWG

C NWO

NC WG EF

/ MB MH

- EF

/ MB Baseline 380 393 295 319 333 333 312 243
1

– Improved PSC 371 384 288 312 326 326 305 238
2

– PSC + Inv. 344 356 267 289 301 301 282 220
3

– X13 209 216 162 175 183 183 171 133
4

– ECM / MS 158 163 122 132 138 138 129 101 5

– Premium ECM / MS + BI Impeller (max tech) 142 147 110 119 124 124 116 90.838 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# For furnace fans used in hydronic air handlers, DOE considered two additional efficiency levels (EL6 and EL7) that are associated with design options that reduce standby and off mode energy consumption. 

# Engineering Analysis

Efficiency Level IFER (W/1000 cfm )
Baseline 107 1

– Improved PSC 105 2

– PSC + Inverter 97.1 3

– X13 58.9 4

– ECM / Multi

- staging 40.2 5

– Premium ECM / Multi

- Staging + BI Impeller 36.2 6

– Switching Mode PS 35.5 7

– Toroidal Transformer (Max tech) 34.839 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Rating Metrics and Capacity

Rating Metrics: DOE requests comments on the assumption that the proposed rating metrics, FER and IFER, will not be dependent on capacity because they are normalized by airflow in the maximum airflow

- capacity setting, which is dictated by the heating or cooling capacity of the HVAC product. Issue 240 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Manufacturing cost models were developed by DOE as part of the efficiency

- level approach.

• Bills of material were generated during product teardown analysis and entered into the cost model.

• Cost model generated manufacturing, material, labor, and overhead costs.



## • Physical teardown analysis conducted with representative products.

• Preliminary m anufacturer interviews conducted to further refine the analysis inputs and the results generated by the cost model 

# Engineering Analysis

Raw Materials

Finished Materials Purchased Parts Physical Teardown Selection of Units

Fabrication Processes Bill of

Materials

Assembly Processes

Manufacturing Cost41 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Structure/Classification of Manufacturing Costs 

# Engineering Analysis

Full Cost of Product

Non

- Production Cost **

Selling General

& Admin. R & D Interest Full Production Cost *

Direct Labor Direct

Material Overhead

Indirect labor

Indirect material

Maintenance

Depreciation

Taxes

Insurance related to assets Market research

Advertising
POS promotion

Sales person compensation & travel

Logistics

- Warehousing

- Delivery

- Record keeping Costs of service & staff units

General corporate costs

– comp., etc.

* Tax Reform Act of 1986 essentially requires companies to measure cost of goods sold as the full production cost of the goods sold. ** In a company’s income statement, many of these costs are reported as a lump sum, under SG&A. Costs associated with efforts to find new or improved products or production processes Costs of

borrowing funds42 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

The costs used in the engineering analysis represent the cost of the furnace fan and not the cost of the entire HVAC product.

• The following components are included in the MPC estimates:

– F an motor and integrated controls

– P rimary control board

– Impeller

– Fan housing

– C omponents used to direct or guide airflow



## • For reference, furnace fans comprise of approximately 10% of the total HVAC product cost.43 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

DOE separated furnace fan product classes into high

- volume and low

volume product classes to account for factors that impact manufacturers ’ production costs and purchasing power, such as:

• Some products are produced at volumes significantly larger than others.

• S ome manufacturers offer most types of the HVAC products, while others focus on niches

.

• High

- volume manufacturers operating in lower

- volume adjacent markets are expected to have purchased part price efficiencies consistent with their higher overall purchasing volume.

• Low

- volume operations were modeled as having lower production volumes and fewer shifts per day.



## High Volume

• Non

- weatherized Gas Furnaces

• Weatherized Gas Furnaces

• Electric Furnaces / Modular Blowers 

## Low Volume

• Oil Furnaces

• Hydronic Air Handlers44 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## DOE used a design option approach to estimate the cost of 

## technologies not commercially available in furnace fan applications. 

# Engineering Analysis

Efficiency Level Design Option High Volume MPC Low Volume

MPC Efficiency

Level 2 Inverter Controls for PSC Motor $12 $ 16 2

5 Premium ECM / Multi

- Staging + Backward

- Curved Impeller $ 107 $122 5

6 Switching Mode Power Supply NA* $7 6
7 Toroidal Transformer NA* $11 7

* Standby mode consumption is not covered in this rulemaking for high volume products.



### • DOE estimated the cost of an inverter by reverse engineering an inverter that can be 

### used in furnace fan applications. ( Varidigm VSM

- CA2)

• DOE used a 10% markup on the estimated cost for an ECM as the added cost for a premium ECM motor.

• DOE used photographs and specifications found in research reports to determined cost model inputs to estimate the MPC of the backward

- curved impeller to be $12.00 and $12.32 for high volume and low volume products, respectively.

• The MPC estimates for efficiency levels 6 and 7 are the same as those used in the direct final rule engineering analysis for HVAC products. 76 FR 3740845 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Inverter

- Driven PSC Fan Motors

Inverter

- Driven PSC Fan Motors: DOE seeks comment on inverter

- driven PSC fan motors and requests data regarding their energy performance and costs

.

Issue 346 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Engineering Analysis Results 

# Engineering Analysis

Efficiency Level Baseline EL1 EL2 EL3 EL4 EL5

Design Option

- Improved PSC PSC + Inverter X13 ECM +Multi

Stage Premium ECM

+ Multi

- Stage + BI Impeller MPC 

### $ 69 $ 71 $ 81 $ 92 $161 $ 176

FER Values

NWG

- NC 

### 380 371 344 209 158 142

NWG

- C 

### 393 384 356 216 163 147

MH

- NWG

- NC 

### 295 288 267 162 122 110

MH

- NWG

- C 

### 319 312 289 175 132 119

WG 

### 333 326 301 183 138 124

EF/MB 

### 312 305 282 171 129 116

MH

- EF/MB 

### 243 238 220 133 101 90.8 

## Cost

- Efficiency Results for High

- Volume Key Product Classes47 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Cost-Efficiency Results for High-Volume Key Product Classes

$60 $80 $100 $120 $140 $160 $180

80 120 160 200 240 280 320 360 400MPC



### FER (W/1000 cfm) NWG-NC

NWG-C

WG

MH-NWG-NC

MH-NWG-C EF/MB MH-EF/MB48 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Cost

- Efficiency Results for Low

- Volume Key Product Classes Efficiency Level Baseline EL1 EL2 EL3 EL4 EL5 EL6 EL7

Design Option Improved PSC PSC +

Inverter X13 ECM +Multi

Stage Premium

ECM + Multi

Stage + BI Impeller Switch

Mode PS Toroidal

XFMR

MPC 

### $ 84 $ 91 $ 101 $ 122 $ 191 $ 206 $ 214 $ 225

FER / IFER Values

NWO

- NC 

### 333 326 301 183 138 124 N/A N/A

HAH

- HC 

### 107 105 97.1 58.9 40.2 36.2 35.5 34.849 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Cost

- Efficiency Results for Low

- Volume Key Product Classes

$60 $80 $100 $120 $140 $160 $180 $200 $220 $240

0 50 100 150 200 250 300 350 MPC



### Oil FER (W/1000 cfm ) Hydronic IFER (W/1000 cfm ) O-NC

HAH-HC50 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Fan Motor Turndown Ratio

Fan Motor Turndown Ratio: DOE seeks comment on the typical turndown ratios that can be achieved technically and in practice by each motor technology 

## ( i.e. , baseline PSC, improved PSC, inverter

- driven PSC, constant

- torque ECM, and constant

- airflow ECM ). Issue 4 • The turndown ratio is the ratio of minimum motor speed to the maximum motor speed.

• DOE has preliminarily found that high

- efficiency motors on average have lower turndown ratios (i.e., a wider range of achievable speeds).51 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Proprietary Brushless Permanent Magnet Motor Technology

ECM Technology: DOE seeks comment on the validity of its premise that alternative motor technologies can achieve comparable performance (turndown ratios and efficiency) at comparable cost to the brushless permanent magnet motor technologies offered by Regal Beloit.

DOE also seeks comment on the validity of its assumption 

## that these alternative motor technologies will become increasingly available

. Issue 552 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– High

- Efficiency Fan Motor Control Costs

Fan Motor Control Costs: DOE requests comments on whether more costly primary control boards are required to be paired with higher

- efficiency motors

.

Issue 653 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Backward

- Inclined Impellers

Backward

- Inclined Impellers: DOE seeks comment on the expected efficiency improvements across the range of operating conditions in residential applications.

DOE seeks comment on which operating conditions result in favorable and unfavorable performance for furnace fans that use backward

- inclined impellers

. DOE seeks comment on whether design modifications or specialized components, such as fan motors with unique specifications ( e.g ., high RPM), are necessary to implement backward

- inclined impellers.



### DOE seeks comment on whether backward

- inclined impellers are incompatible with the designs or components currently used in furnace fans

.

DOE seeks comment on whether use of backward

- inclined impellers could impact product offerings.

DOE seeks comment on the potential costs associated with implementing backward

inclined impellers

. Issue 754 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Airflow Path Design

Airflow Path Design: DOE seeks comment on airflow path design changes that could result in improved airflow efficiency.

DOE seeks comment on the expected cost and efficiency improvement of airflow path design improvements.



## DOE seeks comment or data on the expected tradeoffs between airflow efficiency and thermal efficiency for design changes. Issue 855 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Engineering Analysis

Request for Comment

– Other Issues

Other issues: DOE invites comments and recommendations from interested parties on any other aspects relating to the Market and Technology Assessment, the Screening Analysis, and the Engineering Analysis.56 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 757 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization58 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Markups for Product Price Determination:

– To characterize the channels for how products are distributed from the manufacturer to the consumer.

– To determine prices paid by consumers based on manufacturer selling prices for baseline and higher efficiency products.



## • Energy Use Characterization:

– To develop energy consumption savings estimates for selected product efficiency levels.



## • Life

- Cycle Cost (LCC) and Payback Period (PBP) Analyses:

– To develop the consumer life

- cycle cost savings and payback period for higher efficiency products. 

# Markups, Energy Use Characterization, LCC and Payback Period Analyses
Purpose59 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# LCC & Payback Period Analyses Flowchart 

# Markups, Energy Use Characterization, LCC and Payback Period Analyses

Baseline Manufacturer Cost Engineering Analysis Std

- Level Manufacturer Cost

Manufacturer Markup
Markups to Determine Product Price Distributer & Contractor Markups

Sales Tax

Energy Use Characterization Energy Consumption

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

Cost60 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Markups relate consumer price to cost of goods sold (CGS).



## • Baseline and Incremental markups:

– Baseline markups relate direct business costs of products to baseline efficiency

– Incremental markups relate the incremental change in consumer price to the incremental change in CGS.



## • Regional Markups developed for each of the geographical areas in the analysis.



## • Sources:

– Manufacturer markups : See engineering analysis



### – Wholesaler and mechanical contractor markups : Firm income statements from the HARDI 2011 Profit Report and from the ACCA 2005 Financial Analysis

– General contractor markups : Residential Building Construction sector financial data from the 2007 Economic Census

– Manufactured home manufacturer and contractor markups : Manufactured Home (Mobile Home) Manufacturing sector and All Other Specialty Trade Contractors sector financial data from the 2007 Economic Census

– Sales taxes : 2011 Sales Tax Clearinghouse Data 

# Markups Analysis

Approach61 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Replacement (Non

- Manufactured and Manufactured Homes)

• New Construction

– Non

- Manufactured Homes (Non

- MH)

– Manufactured Homes (MH)



# Distribution Channels for Residential Furnace Fans Equipment 

# Markups Analysis

Manufacturer Wholesaler Mechanical Contractor Consumer

Manufacturer Wholesaler Mechanical Contractor General Contractor Consumer

Manufacturer Manufactured Home Manufacturer Manufactured Home Contractor Consumer62 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Markups Analysis

In the preliminary analysis, DOE did not consider a distribution channel for replacing furnace fans included in already installed equipment. DOE requests comments whether this channel merits inclusion, and, if so, what would be an appropriate assumption for its market share. Issue 9 

# Request for Comment

– Distribution Channel and Market Share of Furnace Fans63 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Average Markups for Market Participants 

# Markups Analysis

Non

- MH MH
Baseline Incr. Baseline Incr.

Manufacturer 1.35 1.30

Wholesaler (replacement for MH) 1.36 1.11 1.36 1.11

Mechanical Contractor (replacement) 1.55 1.23 1.55 1.23

Mechanical Contractor (new construction) 1.44 1.15

-
General Contractor (new construction) 1.48 1.34

-

MH Manufacturer ( new construction)

- 1.41 1.28

MH Contractor ( new construction)

- 1.61 1.31

Sales Tax 1.07164 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Average Markups by Product Class 

# Markups Analysis

Product Class Baseline Markup Incremental

Markup

Non

- Weatherized, Non

- Condensing Gas Furnace Fan (NWG

- NC) 2.49 1.59

Non

- weatherized, Condensing Gas Furnace Fan (NWG

- C) 2.45 1.54

Weatherized Gas Furnace Fan (WG

- NC) 2.46 1.57

Non

- weatherized Oil, Non

- Condensing Furnace Fan (NWO

- NC) 2.30 1.46

Non

- weatherized Electric Furnace / Modular Blower Fan (NWEF/NWMB) 2.41 1.54

MH Non

- Weatherized Gas, Non

- Condensing Furnace Fan (MH

- NWG

- NC) 3.04 2.35

MH Non

- Weatherized Gas, Condensing Furnace Fan (MH

- NWG

- C) 2.96 2.29

Manufactured Home Electric Furnace/ Modular Blower Fan (MH

- EF/MB) 2.95 2.28

Heat/Cool Hydronic Air Handler Fan (HAH

- HC) 2.62 1.6565 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Markups Analysis

Request for Comment

– Other Issues

DOE invites comments and recommendations from interested parties on any other aspects related to the Markups Analysis.66 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Annual energy consumption and energy prices used to calculate annual energy costs



# Overview 

# Energy Use Characterization

Energy Consumption

Energy Prices Annual Energy Cost 

## – Annual energy consumption is the site energy use associated with operating the product.

– Energy prices are the prices consumers pay for energy (electricity, gas or oil).

– Multiplying annual energy consumption by energy prices yields the annual energy cost.67 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Furnace Fan (FF) annual energy use equals the sum of the energy used at each operating mode

– heating, cooling, and constant circulation:

– Furnace Fan Operating Hours is determined using RECS 2005 heating and cooling data, furnace fan on

- time ratios, and adjustment factors

– Furnace Fan Power is determined using furnace fan performance and the system curve for each household



## • Analysis also accounts for the impact of more efficient furnace fans on the overall energy use of the households space conditioning equipment 

# Methodology for Energy Use Determination 

# Energy Use Characterization68 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Household Sample 

# Energy Use Characterization

*RECS Selection : (1) Central furnace is the main or secondary source of heat (2) Only one housing unit is heated (3) Heating energy consumption greater than zero (4) Heating fuel type is natural gas, LPG, electricity , and non

- MH fuel oil

** Has gas water heater & household square footage < 2000 sq ft House has a Furnace Fan?* RECS 2005 House Sample NWG

- C

NWG

- NC

WG

EF/MB NWO

- NC

MH

- NWG

- C

MH

- NWG

- NC

MH

- EF/MB HAH

- HC

Out of Sample Oil South Region

Other Criteria** Has CAC

South Region No Yes Non

MH

MH Elec

Gas House & Heating Fuel Type ?

Elec Gas69 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Energy Use Characterization

Energy Use Determination Methodology

FER Efficiency levels Fan Performance Curves Mfr. Product Lit. &Test Data

System Curves Field Studies

RECS 2005 Data

Heating/Cooling Load Adjustments

Constant Fan Operation Field Data Heating & Cooling Fan Operating Hours

Operating Hours Power

Household Furnace Fan Energy Use Impact on Furnace/AC Energy Use

Constant Fan Operating Hours70 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Fan Power Determination 

# Energy Use Characterization71 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# System Curve Derivation Energy Use Characterization

• DOE characterized the system curve by assigning External Static Pressure (ESP) value at the maximum cooling airflow operating mode

• DOE compiled over 1300 field ESP measurements from 27 studies that included furnace fans in single family and manufactured homes in different US regions

• ESP value used for defining the household system curve is determined by assigning a distribution of ESPs depending on the product class and whether the household has a central air conditioner

Product Class Household has Central AC Average

ESP (in. w.c .) NWG

- NC; NWG

- C; NWO

- NC; EF/MB; HAH

- HC Yes 0.73 No 0.52 WG Yes 0.52

MH

- NWG

- NC; MH

- NWG

- C; MH

- EF/MB Yes 0.37 No 0.1772 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Fan Performance Curves Derivation

Deriving Adjustment Factors for Fan Performance Curves to match FER values at each efficiency level

Fan Performance Curves for all product classes and furnace fan sizes Generate Average Fan Performance Curves (Source: mfr literature & test data) 

# Energy Use Characterization

9 product classes X 7 Fan Sizes (1, 1.5, 2, 2.5, 3, 3.5, 4, 5 AC Ton) X 6 Furnace Fan Design Options X 2 Performance Curves (Airflow & Power)
= 756 Furnace Fan Performance Curves73 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Fan Performance (CFM vs. ESP)

Heating Mode 

# Energy Use Characterization

Example: Non

- Weatherized (Non

- Condensing) Gas Furnace Fan, 3

- Ton74 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Fan Performance (Watts/CFM and Watts vs. ESP) Heating Mode

Example: Non

- Weatherized (Non

- Condensing) Gas Furnace Fan, 3

- Ton 

# Energy Use Characterization75 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## Adjustment Factor ( AdjFactor ) to account for:

• Building shell efficiency: Change in heating load based on the difference in 

## physical size and shell attributes for homes in the future (AEO 2012 data)

• Average climate conditions : Adjust RECS 2005 energy use data for differences with most recent 10

- year NOAA climate data

• Secondary HVAC energy use: Subtracted s econdary heating or cooling equipment from RECS 2005 heating/cooling energy use data

• Motor heat: Accounted for impact of heat produced by the motor on heating/cooling operating hours 

# Operating Hours

– Heating and Cooling Mode 

# Energy Use Characterization76 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Operating Hours

– Constant Fan Mode

How Often is Constant Circulation Fan Used? 

### Combined Data from Studies 

### Estimated North and

South

- Hot Dry Region Fractions for LCC Analysis 

### Estimated South

Hot Humid Region Fractions for LCC Analysis # of HHs Pct. (%)

No constant fan 69 68% 84% 97% Year

- round 14 14% 7% 1% During heating season 4 4% 2% 0.4% During cooling season 4 4% 2% 0.4% Other (some constant fan) 10 10% 5% 1% Total 101 100% 100% 100% 

## • Based on fan constant circulation use studies conducted in Wisconsin and Minnesota.

• DOE adjustments for national sample ( compared to studies ):

– South Hot Humid region

- 10 percent of population using constant circulation (i.e. 3.1 percent compared to 31 percent in the studies).

– For the rest of the country (North and South Hot Dry regions)

- 50 percent of population using constant circulation (i.e. 15.5 percent compared to 31 percent in the studies). 

# Energy Use Characterization77 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Energy Use Characterization

Request for Comment

– Continuous

- Circulation Operation

DOE requests comments on its characterization of use of continuous circulation, and information that would support use of alternative assumptions. Issue 1078 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Impact on HVAC with More Efficient Furnace Fans 

# Energy Use Characterization

• Effects on Furnace and Central AC Energy Use during Heating/Cooling Operation

– During Heating Operation: More efficient furnace fans produce less heat which requires more heating operation (Note: additional electricity use by other furnace components is also accounted for).

– During Cooling Operation: More efficient furnace fans produce less heat which requires less cooling operation



## • Effects on Furnace Standby Energy Use

– For all products other than hydronic air handlers : D ifference in power consumption between the baseline efficiency level (EL 0) and the rest : for EL1 and EL2 = 0 watt; while for EL3 and above = 3 watts.

– For hydronic air handlers: Integrated metric (IFER) includes standby and off mode electrical energy consumption79 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Summary of Results

Efficiency Level NWG

- NC NWG

- C

Annual Electricity Use (kWh) Electricity

Use Savings (kWh) Additional

Fuel Use ( MMBtu ) Annual

Electricity Use (kWh) Electricity

Use Savings (kWh) Additional

Fuel Use ( MMBtu )

Baseline (PSC) 798 NA NA 768 NA NA Improved PSC 784 13 0.00 736 32 0.00 PSC w/ Controls 779 19

- 0.04 643 125

- 0.03
X13 508 290 0.28 421 347 0.39 ECM + Multi

- Stage 532 265 0.33 410 357 0.44 ECM + BC Impeller 478 319 0.36 372 396 0.48 

### (Non

- Weatherized Gas Furnace Fan, Non

- Condensing & Condensing) 

# Energy Use Characterization80 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Energy Use Characterization

Request for

– Comment Other Issues

DOE invites comments and recommendations on any other aspects related to the Energy Use Characterization.81 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • LCC equals total installed cost plus the sum of operating expenses discounted to a base year (2018).

• Economic evaluation performed from the consumer perspective.

• Analysis models the uncertainty and variability of inputs using Monte Carlo approach and probability distributions.

• Analysis implemented in an Excel ® 

## spreadsheet combined with Crystal Ball. ® 

# Life Cycle Cost and Payback Period Analysis Method 

# LCC and Payback Period Analyses

Total Installed Cost

Annual Operating Expense

Lifetime

Discount Rate

Energy Price Trend Lifetime Operating Expense Payback Period Life

- Cycle

Cost82 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Consumer Price = Manufacturing Cost x Markups x Sales Tax

– Manufacturing cost

– from Engineering Analysis

– Markups and Sales Taxes

– from Markups Analysis 

# Determination of Consumer Price 

# LCC and Payback Period Analyses

Baseline Manufacturer Cost

Std

- Level Manufacturer Cost

Manufacturer Markup

Retailer or Distributer Markup

Sales Tax Consumer Price83 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Installation Costs Approach

• Definition: Installation costs represent the labor and materials necessary to install the appliance

• Method: Furnace fan installed in the furnace in the factory require no additional installation cost at the home

– Exception: A fraction of X13 and ECM furnace fan installations will require up to an hour of extra labor at startup to check and adjust airflow 

# LCC and Payback Period Analyses84 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Energy Prices 

# LCC and Payback Period Analyses

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

• Methodology: Multiply most current average annual energy prices by monthly price factors and marginal price factors.

– 2010 average annual energy prices by geographical area based on:

o Electricity Prices : EIA’s 2010 Form 826 data

o Natural Gas : EIA’s 2010 Natural Gas Navigator monthly

o Oil and LPG : EIA’s 2010 State Energy Data System (SEDS)

– Monthly energy price factors by geographical area based on:

o Electricity Prices : EIA’s 1990

- 2010 Form 826 monthly data

o Natural Gas : EIA’s 1989

- 2010 Natural Gas Navigator monthly data

o Oil and LPG : EIA’s 2009 Short Term Energy Outlook 1995

- 2009 historical data

– Marginal energy price factors for electricity and natural gas by 9 census divisions and 4 large states based on RECS 2005 billing data.85 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Energy Price Trends 

# LCC and Payback Period Analyses

10.6 10.7 10.8 10.9 11.0 11.1 11.2 11.3 11.4 11.5 11.6

2010 2015 2020 2025 2030 2035 2010¢/kWh

Year Reference



### Example: National Electricity Price Projection (Reference Case) 

## • Methodology: 2010 average monthly marginal energy prices by geographical area multiplied to projected annual energy price trends for the corresponding census division

– 2018

- 2035 trends based on EIA’s AEO 2012 Early Release by census division

– After 2035 trends based on Federal Energy Management Program (FEMP) guidelines86 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Repair and Maintenance 

# LCC and Payback Period Analyses

• Repair Cost:

– Definition: Cost of replacing or repairing components in the furnace fan that have failed.

– Methodology: Repair occurs if fan motor lifetime is less than furnace equipment lifetime.

o Failure Year

: Fan motor lifetime (expressed in operating hours) divided by furnace fan annual operating hours.

o Labor Hours/Cost : Based on 2012 RS Means Facility Repair and Maintenance and 2012 RS Means Residential Construction Data.

o Material Cost

: Based on engineering and markups analysis.



## • Maintenance Cost:

– Definition: Routine cost to the consumer of maintaining components in the furnace fan.

– Methodology: A ssumes blower checking as part of r egular equipment maintenance.

o Maintenance Frequency : Based on Decision Analysts, 2008 American Home Comfort Study reporting the maintenance frequency for HVAC equipment.

o Labor Hours/Cost : Based on 2012 RS Means Facility Repair and Maintenance and 2012 RS Means Residential Construction Data.

o Material Cost

: None

.87 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Lifetime 

# LCC and Payback Period Analyses

Product Class Average Lifetime (years) NWG

- NC and NWG

- C 23.6 NWO

- NC 26.5
MH

- NWG

- NC and MH

- NWG

- C 18.7 EF/MB (as well as WG, MH

- EF/MB, and HAH

- HC) 18.0 

## • Definition: Age when the furnace fan is retired from service.



## • Methodology: Assumed furnace fan lifetime equals furnace equipment lifetime.

– For NWG

- NC, NWG

- C and NWO

- NC: Characterized the product lifetime based on an analysis of furnace lifetimes in the field using a combination of shipments data, RECS data on the age of the furnaces in the surveyed homes, and historical AHS data on the total installed furnace stock.

– For MH

- NWG

- NC, MH

- NWG

- C, and EF/MB: C haracterized the product lifetime based on a consumer survey ( Decision Analysts, 2004

- 2008 American Home Comfort Study ), which reports equipment lifetime.

– For WGF, MH

- EF/MB, and HAH

- HC: A ssumed the same lifetime distribution as EF/MB.88 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Discount Rates 

# LCC and Payback Period Analyses

Housing Type Finance Cost Based on: Mean (%)
New Construction Mortgage 3.0 Replacements Home equity loans, Credit card, Other loans, Checking & savings accounts, Certificates of deposit, Bonds, Stocks 5.0 

## • Definition: DOE uses the discount rate to determine the present value of lifetime operating expenses when a product is retired from service.

• Methodology: DOE derives the discount rates from estimates of the “finance cost” to purchase residential products using the Federal Reserve Board’s Survey of Consumer Finances . The finance cost can be interpreted as:

– The financial cost of any debt incurred to purchase products (such as interest charges on debt), or

– The opportunity cost of any equity used to purchase products (such as interest earnings 

### on household equity).



## • Primary data sources: Federal Reserve Board’s Survey of Consumer Finances for the years 1989, 1992, 1995, 1998, 2001, 2004, and 2007.89 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Product Assignment in the Base Case 

# 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 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 furnace fan efficiency market share in 2018 for each product class based on:

– Historical Data : Sales of furnace fan by efficiency and by product class is not available. Historical data suggest that the market share of ECMs rose from 10 percent to 30 percent within the last five years.

– Market Share Projection for PSC motors : Assumed market share

– 50% baseline; 50% improved PSC furnace motors; and 0% for PSC with controls.



### – Market Share Projection for ECM motors : Calculated for each product class by using the fraction of models with ECMs and assuming it equals 2018 market (45%).

– Market Share in Replacement/New Construction : Share of ECM fans in furnace fan equipment replacements is 3.7 times higher than the share in new homes (source: Canadian survey, 2003).90 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# LCC and Payback Period Analyses

Request for Comment

– Base

- Case Furnace Fan Efficiency Distributions

DOE requests comments on its estimate of the base

- case efficiency distribution of furnace fans in 2018 and data that might support use of different assumptions.

Issue 1291 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# LCC and PBP Analysis Results 

# LCC and Payback Period Analyses

Example: Non

- Weatherized, Condensing Gas Furnace Fan

CSL Technology

Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Median Payback Period (years) Average Installed Cost Average

Lifetime Operating Cost Average

LCC Average

Savings (2011$) % Households with

Net Cost No Impact Net

Benefit

0 Baseline (PSC) 241 1,292 1,533 N/A 0 100 0 N/A

1 Improved PSC 246 1,242 1,488 10 20 76 4 0.8

2 PSC w/ Controls 265 1,095 1,361 65 35 53 12 5.3

3 X13 306 840 1,146 169 13 53 33 5.2

4 ECM + Multi

- Stage 459 884 1,344 34 54 33 13 22.8

5 ECM + BC Impeller 491 836 1,327 51 71 0 29 17.392 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# LCC and Payback Period Analyses

Request for Comment

– Other Issues

DOE invites comments and recommendations on any other aspects related to the Life

- Cycle Cost Analysis.93 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 794 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization95 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • Shipments Analysis:

– To estimate residential furnace fan shipments over analysis period.



# • National Impact Analysis:

– To estimate the National Energy Savings (NES) from residential furnace fan energy conservation standards at different efficiency levels.

– To estimate the national economic impact on residential furnace fan consumers (or the Net Present Value (NPV)) from energy conservation standards at different efficiency levels.



# Purpose 

# National Impact Analysis96 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# National Impact Analysis Process

• National energy savings calculated for period from 2018

- 2047.

• NPV calculated for products shipped over the same period. 

# National Impact Analysis

Shipments Model LCC Analysis Results and Other Inputs National Energy Savings National

Consumer Economic Impacts National Energy Savings (Quads)

National Net Present Value (2011 $, billion) 

### Inputs

Process Results97 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Approach 

# Shipments Analysis

• Assumes furnace fans are shipped pre

- installed in furnace fan equipment.

• Shipments Projections by Market:

• New construction: New housing construction projections multiplied by historical market shares.

• Replacements: Product retirement functions (product lifetimes) applied to product stock. Product stock is generated with historical shipments.

• New Owners: Existing buildings that acquire furnaces for the first time. Includes consumers switching between furnace fan product classes.



# • Projected shipments done separately by region.

• Accounted for impact of standards on shipments using price elasticities

.98 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Shipments Analysis Flowchart 

# Shipments Analysis

New Installations Average Residential Furnace Fan Saturation New Housing Starts

Replacement Shipments Annual Shipments

Residential Furnace Fan Lifetime Total Shipments New Owners Historical New Owner Shipment Data99 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Shipments Model Inputs 

# Shipments Analysis

Historical Shipments Shipments derived from:

• AHRI historical shipments, 1972

- 2009, disaggregated into (1) NWGF and MHGF, (2) OF, and (3) WGF (estimated from AC packaged units)

• AHRI 1972

- 2009 historical shipments by efficiency was used to separate condensing vs. non

- condensing NWGF shipments

• Census MHGF new construction data, MHGF lifetime, AHS saturation data used to disaggregate NWGF and MHGF historical shipments

• For EF, DOE’s 2011 furnace standards rulemaking historical shipments

• For hydronic air handlers, DOE estimated that they represented less than 1% of the total furnace market. Replacement Shipments Furnace fan replaced with same furnace fan product class (also accounts for the housing units demolished). Shipments to New Housing New construction market saturations multiplied by projected new housing units based on:

• Saturations from Characteristics of New Housing data, U.S. Census Bureau

• U.S. Census historical housing starts data and EIA’s AEO2011 projections Shipments to New Owners and Adjustment for Product Switching New owners of products, plus adjustment for switching between different product classes

• Projected shipments developed by estimating the average new owner shipments in the past 3

- 5 years, and projecting this quantity into the future

• Includes households switching between non

- condensing and condensing product classes Projected Condensing and Non

- Condensing Market Shares All NWGF and MHGF furnaces shipments in the north from 2013 onward assumed to be condensing furnaces (in the South region, based on historical information, analysis projects

some market increase of condensing furnaces)100 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Shipments Model Inputs: Historical Shipments 

# Shipments Analysis

Historical Shipments of HVAC Products with Furnace Fans101 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Base Case Shipments 

# Shipments Analysis

Historic & Projected Base Case Shipments of Furnace Fans by Product Class 5 .0 ,---------------------------

4.0 

### +---- _.f.



# - I/) c

. MHEF .2 3 .0 E . MHGF c



# - I/) • MHGFn c



# - C CI> 2. 0 E Q.**~** CI)

<0 1

. 0 <.>

-. . NWG F c 0



# - I/)

. NWGFn c 

### :z: 0.0 1 99 0 1 995 2 000 2 00 5 2 010 2 01 5 2 0 2 0 2 0 25 2 0 3 0 2 0 35 2 040 2 0 45102 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# Base Case and Standard Cases Shipments 

# Shipments Analysis

Projected Shipments of Furnaces Fans in the Base Case and Standards Cases 5.0 ,--------------------------------------------------------------**~** III 4. 5 t: .2

E - Base**~** I/) - CS L1



# -**~** 4.0 ----er- CS L 2 E a.**~** - CS L 3 (f)

--- CS L4 3

. 5**CS 5** 

3. 0 +--------.--------,--------,-------,,-------,--------.--------, 20 1 5 202 0 2025 20 3 0 2035 20 40 20 4 5 205 0103 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



# National Impact Analysis Inputs 

# National Impact Analysis

Annual Energy Consumption per Unit (UEC) For each product class, DOE derived per

- unit annual energy consumption as a function of product efficiency.

Shipments DOE projected shipments for each product class under the base case and all standards cases. Equipment Stock DOE determined the yearly stock using annual shipments and the lifetime for each product class National Annual Energy Consumption Annual energy consumption is the product of the UEC and the equipment stock.

Rebound Effect DOE used a 2009 Wisconsin field study to estimate the rebound effect under a standard requiring ECM furnace fans. DOE calculated a separate rebound effect for the north and for the south regions based on the expected increase of constant circulation fan use (20% in the North and 10% in the South).

Site

- to

- Source Conversion Factor The site

- to

- source conversion factor is a factor used for converting site energy consumption into primary or source energy consumption.104 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# National Impact Analysis

Request for Comment

– Rebound Effect

DOE requests comments on the reasonableness of the values that it used to characterize this rebound effect.

Issue 11105 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# National Impact Analysis

Projected ECM Market Share after 2018

Based on historical data estimates (10% in 2006 and 30% in 2010) and projected market share for 2018 (45%)106 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# National Impact Analysis

Request for Comment

– Furnace Fan Efficiency Trends in the Absence of Standards

DOE requests comments on the reasonableness of its approach and information that would support use of alternative assumptions.

Issue 13107 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## (quads) 

# National Impact Analysis

National Energy Savings Results

Key Product Class Candidate Standard Level

1 2 3 4 5 6 7
Improved PSC PSC w/

Controls X13 ECM ECM + BC Impeller Switching

Mode Power Supply Toroidal

Transformer

1 NWG

- NC 0.022 0.061 0.725 0.624 0.850

2 NWG

- C 0.041 0.265 0.623 0.611 0.911

3 WG 0.002 0.019 0.122 0.143 0.200

4 NWO

- NC 0.004 0.032 0.042 0.045 0.051

5 EF/MB 0.003

- 0.005 0.102 0.085 0.162

6 MH

- NWG

- NC 0.001 0.010 0.018 0.024 0.026

7 MH

- NWG

- C 0.001 0.008 0.010 0.017 0.019

8 MH

- EF/MB 0.000 0.007 0.013 0.023 0.031

9 HAH

- HC 0.000 0.000 0.016 0.030 0.034 0.037 0.039108 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## Discounted at 3 and 7 Percent (billion 2011$) 

# National Impact Analysis

Net Present Value Results

Key Product Class Candidate Standard Level

1 2 3 4 5 6 7 Improved PSC PSC w/

Controls X13 ECM ECM + BC Impeller Switching

Mode Power Supply Toroidal

Transformer

3% 7% 3% 7% 3% 7% 3% 7% 3% 7% 3% 7% 3% 7%

1 NWG

- NC 0.110 0.036 0.048

- 0.034 4.462 1.553 0.551

- 0.278 1.395

- 0.077

2 NWG

- C 0.254 0.095 1.559 0.564 4.449 1.618 0.089

- 0.505 0.944

- 0.392

3 WG 0.006 0.002 0.083 0.027 0.842 0.340 0.382 0.081 0.581 0.131

4 NWO

- NC 0.023 0.007 0.204 0.070 0.135 0.035

- 0.038

- 0.049

- 0.058

- 0.063

5 EF/MB 0.010 0.003

- 0.118

- 0.059 0.601 0.229

- 0.558

- 0.343

- 0.406

- 0.329

6 MH

- NWG

- NC 0.003 0.001 0.021 0.004 0.044 0.011

- 0.060

- 0.049

- 0.066

- 0.054

7 MH

- NWG

- C 0.005 0.002 0.035 0.013 0.046 0.016

- 0.103

- 0.067

- 0.124

- 0.080

8 MH

- EF/MB

- 0.001

- 0.001 0.009

- 0.001 0.038 0.009

- 0.093

- 0.072

- 0.046

- 0.055

9 HAH

- HC 0.000 0.000

- 0.023

- 0.012 0.091 0.031 0.112 0.028 0.132 0.034 0.149 0.040 0.144 0.036109 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • 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 51282 (Aug. 18, 2011).



# • 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 10

- B).

• Primary NES and the FFC energy savings for the 

# considered CSLs can be found in Ch 10, Section 10.5.2.

Full Fuel Cycle Analysis 

# National Impact Analysis110 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# National Impact Analysis

Request for Comment

– Full Fuel

- Cycle Energy Savings

DOE welcomes comments on its approach to derive FFC conversion factors. Issue 14111 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# National Impact Analysis

Request for Comment

– Other Issues

DOE invites comments and recommendations on any other aspects related to the National Impact Analysis.112 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 7113 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 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 Characterization114 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • DOE is aware of 11 small business manufacturers associated with the products anticipated to be affected by this rulemaking.

• DOE conducted on

- site and telephone interviews with manufacturers.

• Interview topics included:

– Engineering analysis overview, methodology, and results;

– Key issues (as defined by manufacturer);

– Current market conditions (shipments, market share, product mix, profitability);

– Potential impacts of new energy conservation standards (esp. conversion costs); and

– Cumulative regulatory burdens (state, federal, international). 

# Preliminary Manufacturer Impact Analysis

Preliminary Manufacturer Impact Analysis (MIA) Overview115 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Preliminary Manufacturer Impact Analysis
Key Issues

• Higher upfront costs for consumers

– Higher initial costs could lead to consumers switching to less efficient products.

– Higher initial costs may also push consumers to repair rather than replace units.



## • Conversion costs

– Stringent standards may require significant capital conversion costs.



## • Reduced innovation

– A new furnace fan standard would take resources away from the development of new products.

– A higher standard on furnace fans places new constraints on manufacturers and may limit options for maximizing system efficiency.116 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Preliminary Manufacturer Impact Analysis

Request for Comment: 

# Other Issues

DOE requests comment on its identification of key issues and requests data that can assist in evaluating the potential impact of standards on manufacturers.117 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# Public Meeting Agenda

Markups, Energy Use Characterization, LCC and Payback Period Analysis



### National Impact Analysis 3

4 2

Engineering Analysis 1 Introduction and Overview

Market and Technology Assessment and Screening Analysis

5



### Preliminary Manufacturer Impact Analysis 6

Next Steps 7118 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis119 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis120 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • 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 product 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 Levels121 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • A critical part of the NOPR analysis on which DOE is seeking early guidance is the criteria used in selecting trial standard levels.

• Trial standard levels are created from combinations of efficiency levels at the product class level. 

# Issues

Request for Comment: 

# Criteria for the Selection of Trial Standard Levels

DOE requests feedback on the criteria it should use for basing

the selection of Trial Standard Levels.122 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis123 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Purpose:

– To assess the impacts of standards on residential furnace fan manufacturers.

– To identify and estimate impacts on manufacturer sub

- groups that may be more severely impacted than the industry as a whole.



## • Method:

– Analyze industry cash flow and net present value through use of the Government Regulatory Impact Model (GRIM).

– Interview manufacturers to refine inputs to the GRIM, develop sub

- group analyses, and address qualitative issues.



## • Output:

– Industry Net Present Value impacts;



### – Sub

- group Net Present Value impacts; and

– Other impacts 

# Manufacturer Impact Analysis

Manufacturer Impact Analysis124 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • The MIA consists of three phases:



# Manufacturer Impact Analysis Process

* Government Regulatory Impact Model (GRIM) Phase 3 Phase 1 

# Manufacturer Impact Analysis

Industry profile Develop

“ Strawman ” GRIM* Develop

interview guide Interviews &

industry

- wide / subgroup analyses Assess direct

employment, competition, cumulative burden Finalize MIA results for NOPR 

### Phase 2125 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis126 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

# • Purpose:

– To investigate the effects on utilities from reduced energy sales and peak load demand due to potential 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

Utility Impact Analysis127 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis128 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Purpose:

– To report net jobs created or eliminated nationally as a consequence of new energy conservation standards.



## • Method:

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

– Changes in product and energy expenditures taken from the National Impact Analysis.

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

– Direct employment impacts taken from the Manufacturer Impact Analysis.



## • Output:

– Change in employment by sector as a consequence of new standards. 

# Employment Impact Analysis

Employment Impact Analysis129 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis130 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • Purpose:

– To report environmental impacts as a consequence of new energy conservation standards, including changes in power plant emissions as well as emissions in households due to the use of gas appliances.



## • Method:

– Energy savings results taken from the National Impact Analysis.

– Energy Information Administration’s National Energy Modeling System (NEMS) provides power

- plant emissions.

– ‘In

- Building’ emissions due to fossil

- fuel fired appliances to be determined using emission factors.

– Economic benefits resulting from emissions reductions based on a range of monetary values.



## • Output:

– Estimate of national emission reductions of SO2, NOx , mercury and CO2.

– Power plant SO2, NOx , and mercury are effectively capped through Congressional legislation resulting in little to no emission reductions due to standards.

– In

- building CO2, SO2 and NOx still emitted by fossil

- fuel fired appliances. 

# Environmental Assessment

Environmental Assessment131 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov Framework Document Preliminary

Activities NOPR Final Rule Effective

Date 

# Next Steps in the Standards Rulemaking: NOPR

Revise Preliminary Analyses Trial

Standard Levels Manufacturer

Impact Analysis Utility

Impact Analysis Employment

Impact Analysis Environ

-

mental Assessment Regulatory

Impact Analysis132 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov 

## • 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

Regulatory Impact Analysis133 | Residential Furnace Fan Energy Conservation Standards eere.energy.gov



## DOE requests comments and invites questions from interested parties regarding the Department of Energy’s Residential Furnace Fans Energy Conservation Standards Rulemaking.



# Final Comments and Questions