8

- i CHAPTER 8

. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

................................ ................................ ................................ ........... 8

- 1

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analyses

........................... 8

- 1

8.1.2 Overview of Life

- Cycle Cost and Payback Period Analyses Inputs

............................... 8

- 2

8.1.3 Use of Residential Energy Consumption Survey in Life

- Cycle Cost and Payback Period Analysis

................................ ................................ ................................ ................ 8

- 5

8.2 LIFE

- CYCLE COST ANALYSIS INPUTS

................................ ................................ .... 8

- 6

8.2.1 Total Installed Cost Inputs

................................ ................................ ............................... 8

- 7

8.2.1.1 Manufacturer Costs

................................ ................................ ........................ 8

- 7

8.2.1.2 Markups

................................ ................................ ................................ ......... 8

- 8

8.2.1.3 Total Consumer Price

................................ ................................ .................. 8

- 10

8.2.1.4 Future Product Prices

................................ ................................ ................... 8

- 11

8.2.1.5 Installation Cost

................................ ................................ ........................... 8

- 13

8.2.1.6 Total Installed Cost

................................ ................................ ...................... 8

- 13

8.2.2 Operating Cost Inputs

................................ ................................ ................................ .... 8

- 14

8.2.2.1 Annual Energy Use Savings

................................ ................................ ........ 8

- 15

8.2.2.2 Energy Prices

................................ ................................ ............................... 8

- 16

8.2.2.3 Energy Price Trends

................................ ................................ ..................... 8

- 21

8.2.2.4 Repair Cost

................................ ................................ ................................ ... 8

- 21

8.2.2.5 Ma intenance Cost

................................ ................................ ......................... 8

- 23

8.2.2.6 Lifetime

................................ ................................ ................................ ........ 8

- 23

8.2.2.7 Discount Rate

................................ ................................ ............................... 8

- 24

8.2.2.8 Compliance Date of Standard

................................ ................................ ...... 8

- 28

8.2.2.9 Base Case Distribution of Efficiency Levels

................................ ............... 8

- 28

8.2.2.10 Avoiding Double

- Counting Savings Accounted for in Air Conditioner Standards Rulemaking

................................ ................................ ................. 8

- 29

8.3 PAYBACK PERIOD INPUT S

................................ ................................ ...................... 8

- 30

8.4 LCC AND PBP RESULTS

................................ ................................ ............................ 8

- 3 1

8.4.1 Non

- Weatherized, Non

- Condensing Gas Furnace Fans

................................ ................ 8

- 31

8.4.2 Non

- Weatherized, Condensing Gas Furnace Fans

................................ ........................ 8

- 34

8.4.3 Weatherized Gas Furnace Fans

................................ ................................ ...................... 8

- 36

8.4.4 Oil Furnace Fans

................................ ................................ ................................ ............ 8

- 38

8.4.5 Electric Furnace Fans

................................ ................................ ................................ ..... 8

- 40

8.4.6 Manufactured Home Non

- Weatherized, Non

- Condensing Gas Furnace Fans

.............. 8

- 42

8.4.7 Manufactured Home Non

- Weatherized, Condensing Gas Furnace Fans

...................... 8

- 44

8.4.8 Manufactured Home Electric Furnace/Modular Blower Fans

................................ ....... 8

- 46

8.4.9 Hydronic Air Handler F ans

................................ ................................ ............................ 8

- 498

- ii LIST OF TABLES

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP Analysis

................................ ................................ ................................ ................ 8

- 4

Table 8.2.1 Manufacturer Production Cost for Non

- Hydronic Furnace Fans by Efficiency Level

................................ ................................ ................................ ... 8

- 8

Table 8.2.2 Manufacturer Production Cost for Hydronic Furnace Fans by Efficiency

Level

................................ ................................ ................................ .................... 8

- 8

Table 8.2.3 National Average Baseline Markups

................................ ................................ ... 8

- 9

Table 8.2.4 National Average Incremental Markups

................................ .............................. 8

- 9

Table 8.2.5 Overall Markup for Furnace Fans by Product Class

................................ .......... 8

- 10

Table 8.2.6 Total Consumer Price for Furnace Fans Used in HVAC Products Other than Hydronic Air Handlers (2011$)

................................ ................................ . 8

- 11

Table 8.2.7 Total Consumer Price for Furnace Fans Used in Hydronic Air Handlers (2011$)

................................ ................................ ................................ ............... 8

- 11

Table 8.2.8 Total Installed Cost for Furnace Fans Used in HVAC Products Other than Hydronic Air Handlers (2011$)

................................ ................................ ......... 8

- 14

Table 8.2.9 Total Installed Cost for Furnace Fans Used in Hydronic Air Handlers (2011$)

................................ ................................ ................................ ............... 8

- 14

Table 8.2.10 Average Residential Electricity Prices in 2010

................................ ................. 8

- 17

Table 8.2.11 Average Residential Natural Gas Prices in 2010

................................ ............... 8

- 18

Table 8.2.12 Average Residential LPG Prices in 2010

................................ ........................... 8

- 19

Table 8.2.13 Average Residential Fuel Oil Prices in 2010

................................ ..................... 8

- 20

Table 8.2.14 Annualized Repair Cost for Furnace Fans Used in HVAC Products Other than Hydronic Air Handlers (2011$)

................................ ................................ . 8

- 22

Table 8.2.15 Annualized Repair Cost for Furnace Fans Used in Hydronic Air Handlers (2011$)

................................ ................................ ................................ ............... 8

- 22

Table 8.2.16 Lifetime Parameters for Furnace Fans

................................ ............................... 8

- 23

Table 8.2.17 Types of Household Debt and Equity by Percentage Shares

............................. 8

- 25

Table 8.2.18 Average Nominal Interest Rates for Household Debt

................................ ....... 8

- 25

Table 8.2.19 Average Real Effective Interest Rates for Household Debt

.............................. 8

- 26

Table 8.2.20 Average Nominal and Real Interest Rates for Household Equity

..................... 8

- 26

Table 8.2.21 Average Interest on Household Debt and Equity

................................ .............. 8

- 27

Table 8.2.22 Data Used to Calculate Real Effective Mortgage Rates

................................ .... 8

- 28

Table 8.2.23 Base Case Market Shares (2018) by Efficiency Level for Fans in Non

Weatherized Gas Furnaces

................................ ................................ ................. 8

- 29

Table 8.4.1 Non

- Weatherized, Non

- Condensing Gas Furnace Fans: LCC and PBP

Results

................................ ................................ ................................ ................ 8

- 32

Table 8.4.2 Rebuttable Payback Period for Non

- Weatherized, Non

- Condensing Gas

Furnace Fans

................................ ................................ ................................ ...... 8

- 34

Table 8.4.3 Non

- Weatherized, Condensing Gas Furnace Fan: LCC and P BP Results

........ 8

- 34

Table 8.4.4 Rebuttable Payback Period for Non

- Weatherized, Condensing Gas

Furnace Fans

................................ ................................ ................................ ...... 8

- 36

Table 8.4.5 Weatherized Gas Furnace Fan: LCC and PBP Results

................................ ...... 8

- 36

Table 8.4.6 Rebuttable Payback Period for Weatherized Gas Furnace Fans

........................ 8

- 388

- iii Table 8.4.7 Oil Furnace Fan: LCC and PBP Results

................................ ............................ 8

- 38

Table 8.4.8 Rebuttable Payback Period for Oil Furnace Fan

................................ ................ 8

- 40

Table 8.4.9 Electric Furnace/Modular Blower Fan: L CC and PBP Results

......................... 8

- 40

Table 8.4.10 Rebuttable Payback Period for Electric Furnace/Modular Blower Fan

............. 8

- 42

Table 8.4.11 Manufactured Home Non

- Weatherized, Non

- Condensing Gas Furnace

Fans: LCC and PBP Results

................................ ................................ .............. 8

- 42

Table 8.4.12 Rebuttable Payback Period for Manufactured Home Non

- Weatherized,

Non

- Condensing Gas Furnace Fans

................................ ................................ ... 8

- 44

Table 8.4.13 Manufactured Home Non

- Weatherized, Condensing Gas Furnace Fans:

LCC and PBP Results

................................ ................................ ........................ 8

- 44

Table 8.4.14 Rebuttable Payback Period for Manufactured Home Non

- Weatherized, Condensing Gas Furnace Fans

................................ ................................ ........... 8

- 46

Table 8.4.15 Manufactured Home Electric Furnace/Module Blower Fans: LCC and

PBP Results

................................ ................................ ................................ ........ 8

- 47

Table 8.4.16 Rebuttable Payback Period for Manufactured Home Electric

Furnace/Modular Blower Fans

................................ ................................ .......... 8

- 49

Table 8.4.17 Hydronic Air Handler Fan (Heat/Cool): LCC and PBP Results

........................ 8

- 49

Table 8.4.18 Rebuttable Pa yback Period for Hydronic Air Handler Fan (Heat/Cool)

........... 8

- 51

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP

....................... 8

- 4 Figure 8.2.1 Historical Nominal and Deflated Producer Price Indexe s for Integral Horsepower Motors and Generators Manufacturing

................................ ......... 8

- 12 Figure 8.2.2 Electricity Price Forecast

................................ ................................ ................... 8

- 21 Figure 8.4.1 Distribution of LCC Savings for Non

- Weatherized, Non

- Condensing Gas

Furnace Fans

................................ ................................ ................................ ...... 8

- 33 Figure 8.4.2 Distributions of PBP for Non

- Weatherized, Non

- Condensing Gas Furnace

Fans

................................ ................................ ................................ .................... 8

- 33 Figure 8.4.3 Distribution of LCC Savings for Non

- Weatherized, Condensing Gas

Furnace Fans

................................ ................................ ................................ ...... 8

- 35 Figure 8.4.4 Distributions of PBP for Non

- Weatherized, Condensing Gas Furnace Fans

.... 8

- 35 Figure 8.4.5 Distribution of LCC Savings for Weatherized Gas Furnace Fans

..................... 8

- 37 Figure 8.4.6 Distributions of PBP for Weatherized Gas Furnace Fans

................................ .. 8

- 37 Figure 8.4.7 Distribution of LCC Savings for Oil Furnace Fans

................................ ........... 8

- 39 Figure 8.4.8 Distributions of PBP for Oil Furnace Fans

................................ ........................ 8

- 39 Figure 8.4.9 Distribution of LCC Savings for Electric Furnace Fans

................................ .... 8

- 41 Figure 8.4.10 Distributions of PBP for Electric Furnace Fans

................................ ................. 8

- 41 Figure 8.4.11 Distribution of LCC Savings for Manufactured Home Non

- Weatherized,

Non

- Condensing Gas Furnace Fans

................................ ................................ ... 8

- 43 Figure 8.4.12 Distributions of PBP for Manufactured Home, Non

- Weatherized, Non

Condensing Gas Furnace Fans

................................ ................................ ........... 8

- 43 Figure 8.4.13 Distribution of LCC Savings for Manufactured Home Non

- Weatherized, Condensing Gas Furnace Fans

................................ ................................ ........... 8

- 458

- iv Figure 8.4.14 Distributions of PBP for Manufactured Home Non

- Weatherized, Condensing Gas Furnace Fans

................................ ................................ ........... 8

- 46 Figure 8.4.15 Distribution of LCC Savings for Manufactured Home Electric

Furnace/Modular Blower Fans

................................ ................................ .......... 8

- 48 Figure 8.4.16 Distributions of PBP for Manufactured Home Electric Furnace/Modular

Blower Fans

................................ ................................ ................................ ....... 8

- 48 Figure 8.4.17 Distribution of LCC Savings for Hydronic Air Handler Fans

........................... 8

- 50 Figure 8.4.18 Distributions of PBP for Hydronic Air Handler Fans

................................ ........ 8

- 508

- 1 CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of amended standards on individual customers usually includes a reduction in operating cost and an increase in purchase cost. This chapter describes two metri cs used in the analysis to determine the economic impact of standards on individual residential consumers

.

**•** Life

- cycle cost (LCC) is the total customer cost over the life of an appliance or product, including purchase costs and operating costs (which in turn include maintenance, repair, and energy costs). Future operating costs are discounted to the time of purchase and summed over the lifetime of the appliance or product.

**•** Payback period (PBP) measures the amount of time it takes customers to recover the assumed higher purchase price of more energy

- efficient products through reduced operating costs.

The U.S. Department of Energy (DOE) conducted the LCC and PBP analysis using a spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a commercially available software program), the LCC and PBP model generates a Monte Carlo simulation to perform the analysis by incorporating uncertainty and variability considerations in certain of the key parameters as discussed below.

Inputs to the LCC and PBP analysis of furnace fan products are discussed in sections 8.2 and 8.3 respectively. Results for each metric are presented in section 8.4 . Key variables and calculations are presented for each metric. The calculations discussed here were performed with

a series of Microsoft Excel spreadsheets that are accessible o ver the Internet ( http://www1.eere.energy.gov/buildings/appliance_standards/residential/furnace_fans.html ).

Details of the spreadsheets and instructions for using them are discussed in appendix 8

- A.

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analyses

In recognition of the fact that each building using furnace fans is unique, variability and uncertainty are analyzed by performing the LCC and PBP calculations detailed here for a representative sample of individual households and commercial build ings. The results are expressed as the number of buildings experiencing economic impacts of different magnitudes. The LCC and PBP model was developed using Microsoft Excel spreadsheets combined with Crystal Ball. The LCC and PBP analysis explicitly model b oth the uncertainty and the variability in the model’s inputs using Monte Carlo simulation and probability distributions.

The LCC analysis used the estimated energy use for each furnace fan unit as described in the energy use characterization analysis in c hapter 7 of the preliminary technical support document ( TSD ) . Energy use of furnace fans is sensitive to climate and therefore varies by location within the United States. An important feature of the LCC and PBP analysis is that it has

been conducted at bo th the regional and national level. Aside from energy use, other important8

- 2 factors influencing the LCC and PBP analysis include energy prices, installation costs, product distribution markups, and sales tax es

. At both the n ational and the regional level, the LCC spreadsheets explicitly modeled both the uncertainty and the variability in the model’s inputs, using probability distributions based on the shipment of products to different regions of the

country.

As mentioned above, DOE generated LCC and PBP results as probability distributions using a simulation based on Monte Carlo analysis methods, in which certain key inputs to the analysis consist of probability distributions rather than single

- point values. Therefore, the

outcomes of the Monte Carlo analysis can also be expressed as probability distributions. As a result, the Monte Carlo analysis produces a range of LCC and PBP results. A distinct advantage of this type of approach is that DOE can identify the percentage of customers achieving LCC

sa vings or attaining certain PBP values due to an increased efficiency level, in addition to the average LCC savings or average PBP for that efficiency level.

The LCC and PBP results are displayed as distributions of impacts compared to a market

baseline. As described in chapter 7, the market baseline efficiency level is for 201 8 and is defined as a mix of furnace fan efficiency levels reflecting the current distribution of efficiency levels purchased by product class. Results are presented at the end of this chapter. A variety of graphic displays can be created to illustrate the implications of the analysis. Examples of graphic displays are (1) a cumulative probability distribution showing the percentage of furnace fan product in U.S. residential and commerci al buildings that would experience a net LCC savings, and (2) a cumulative frequency chart depicting variation in PBP for each furnace fan efficiency

level considered.

8.1.2 Overview of Life

- Cycle Cost and Payback Period Analyses Inputs

The LCC is the total cust omer cost over the life of the product, including purchase price (including retail markups, sales taxes, and installation costs), and operating cost (including repair costs, maintenance costs, and energy cost). Future operating costs are discounted to the time of purchase and summed over the lifetime of the product. The PBP is the increase in purchase cost of a higher efficiency product divided by the change in annual operating cost (as a result of lower energy consumption) of the product. It represents the number of years that it will take the customer to recover the increased purchase cost through decreased operating costs. In the calculation of PBP, future costs are not discounted.

Inputs to the LCC and PBP analysis are categorized as follows: (1) inputs for establishing the purchase cost, otherwise known as the total installed cost; and (2) inputs for calculating the operating cost ( i.e. , energy, maintenance, and repair costs).

The primary inputs for establishing the total installed cost are:

**•** Baseline man ufacturer selling price : The baseline manufacturer selling price (MSP) is the price charged by the manufacturer to either a wholesaler or customer for product meeting existing minimum efficiency (or baseline) standards. The MSP includes a markup that conve rts the cost of production ( i.e. , the manufacturer cost) to a MSP.8

- 3 **•** Standard

- level manufacturer selling price increase : The standard

- level MSP is the incremental change in MSP associated with producing product at each of the higher

standard levels.

**•** Markups and sales tax : Markups and sales tax are the wholesaler and contractor margins and state and local retail sales taxes associated with converting the MSP to a customer price.

**•** Installation cost : Installation cost is the cost to the customer of installing t he product. The installation cost represents all costs required to install the product but does not include the

marked

- up customer product price. The installation cost includes labor, overhead, and any miscellaneous materials and parts. Thus, the total ins talled cost equals the customer product price plus the installation price.

The primary inputs for calculating the operating cost are:

**•** Product energy consumption : The product energy consumption is the site energy use

associated with the use of the furnace f an units to provide space conditioning to the building.

**•** Energy Prices : Electricity, natural gas, liquid petroleum gas (LPG), and fuel oil prices are determined using average monthly energy prices.

**•** Electricity, natural gas, and fuel oil price trends : The En ergy Information Administration’s (EIA’s) Annual Energy Outlook 201 2 ( AEO 201 2 ) is used to forecast electricity prices into the future. 1 For the results presented in this chapter, DOE used the

AEO 201 2 reference case to forecast future energy prices.

**•** Maintenance costs : The labor and material costs associated with maintaining the operation of the product ( e.g. , cleaning heat exchanger coils and drain pans, changing air filters).

**•** Repair costs : The labor and material costs associated with repairing or rep lacing components that have failed.

**•** Lifetime : The age at which the central air conditioner and furnace product is retired from

service.

**•** Discount rate : The rate at which future costs are discounted to establish their present

value. Figure 8.1.1 graphically depicts the relationships between the installed cost and operating cost inputs for the calculation of the LCC and PBP.8

- 4 Figure 8.1.1 Flow Diagram of Inputs for the Determination of

LCC and PBP

Table 8.1.1 provides descriptions of the various inputs to the calculation of the LCC and PBP. As noted earlier, most of the inputs are characterized by probability distributions that capture variability in the input variables.

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP Analysis
Inputs Description Affecting Installed Costs

Product Price Derived MSP for furnace fan units at different heating and air conditioning input capacities (from the engineering analysis) and multiplied by wholesaler markups and contractor markups plus sales tax (from markups analysis). Used the probability distribution for the different mar kups to describe their variability.

Installation Cost Includes installation labor derived from RS Means CostWorks 2012 and RS

Means Residential Cost Data 2012 . Overhead and materials costs and profits are assumed to be included in the contractor’s markup. Thus, the total installed cost equals the consumer product price (manufacturer cost multiplied by the various markups plus sales tax) plus the installation co st. Affecting Operating Costs Annual Energy Use See chapter 7.

Energy Efficiency The fan efficiency ratio (FER) is the efficiency descriptor for furnaces fan. Furnace and air conditioning test procedure algorithms as well as furnace fan performance characteristics are used to determine the annual energy consumption associated with a particular standard level. Energy Prices For residential furnace fan equipment customers, costs were calculated for Manufacturer Sales

Price Standard i= 1

... n

Manufacturer Sales

Price Standard i= 1

... n

Installation Costs Installation Costs

Repair Costs

Repair Costs Lifetimes Lifetimes Annual Maintenance Electricity Consumption

Electricity Consumption

Manufacturer Base

Price

Total Installed Cost (Std i

– Base) Manufacturer Base

Price

Contractor Markups Wholesaler/

Distributor Markup

Electricity Prices Equipment Prices

Sales Tax

Manufacturer Selling Price (Base)

Installation Costs Manufacturer Selling

Price Standard i= 1

... n

Electricity Consumption Annual Energy Costs

Annual Maintenance

Repair Costs Annual Operating Cost (Std i

- Base) Payback

Period

Discount Rate

Lifetimes Lifetime Operating Cost (Std

i

– Base) Lifecycle

Cost

Annual Maintenance

Costs Manufacturer Sales

Price Standard i= 1

... n

Manufacturer Sales

Price Standard i= 1

... n

Installation Costs Installation Costs

Repair Costs

Repair Costs Lifetimes Lifetimes Annual Maintenance Electricity Consumption

Electricity Consumption

Manufacturer Base

Price

Total Installed Cost (Std i

– Base) Manufacturer Base

Price

Contractor Markups Wholesaler/

Distributor Markup

Electricity Prices Equipment Prices

Sales Tax

Manufacturer Selling Price (Base)

Installation Costs Manufacturer Selling

Price Standard i= 1

... n

Electricity Consumption Annual Energy Costs

Annual Maintenance

Repair Costs Annual Operating Cost (Std i

- Base) Payback

Period

Discount Rate

Lifetimes Lifetime Operating Cost (Std

i

– Base) Lifecycle

Cost

Annual Maintenance

Costs8

- 5 RECS 2005 households from monthly marginal average el ectricity and natural gas, LPG, or fuel oil prices in each 27 states and groups of states in RECS 2009. Residential prices were escalated by the AEO 2012 forecasts to estimate the future electricity prices. Escalation was performed at the census division l evel and aggregated to the regions used in the study.

Maintenance Cost The cost associated with maintaining the operation of the product ( e.g. , checking blower). Annual maintenance cost does not change as a function of

MSP.

Repair Cost Estimated the annualized repair cost for baseline efficiency furnace product, based on costs of major repair (motor replacement), from a variety of published sources. It is assumed that repair costs would vary in direct proportion with the MSP at higher efficiency level s, because it generally costs more to replace components that are more efficient. Affecting Present Value of Annual Operating Cost Savings

Product Lifetime Used the probability distribution of lifetimes developed for furnaces.

Discount Rate Mean real discount rates ranging from 0 percent to 10.7 percent for various

classes of residential customers based on Federal Reserve Board’s Survey of

Consumer Finances . Probability distributions are assumed for the discount

rates.

Date Standards

Become Effective 2018 (5 years after expected publication of the final rule)

All of the inputs depicted in Figure 8.1.1 and summarized in Table 8.1.1 ar e discussed in

sections 8.2 and 8.3.

8.1.3 Use of Residential Energy Consumption Survey in Life

- Cycle Cost and Payback

Period Analysis

The LCC and PBP calculations detailed here are for a representative sample of individual

h ouseholds and commercial buildings. All furnace equipment is assumed to be for residential buildings.

T he 2005 RECS 2 serves as the basis for determining the representative sample. The 2005 RECS is based on a sample of 4,382 households that were surveyed for information on their housing units, energy consumption and expenditures, stock of e nergy

- consuming appliances, and

energy

- related behavior. Information was also collected on certain demographic and economic characteristics of household members. The information collected represents all households

nationwide

— approximately 111 million. RECS is conducted every 3 years with data collected directly from energy end users. The RECS consists of three parts:

**•** Personal interviews with households for information about energy used, how it is used,

energy

- using appliances, structural features, energy ef ficiency measures, and demographic characteristics of the household.

**•** Telephone interviews with rental agents for households that have any of their energy use included in their rent. This information augments information collected from those8

- 6 households that may not be knowledgeable about the fuels used for space heating or water heating.

**•** Mail questionnaires sent to energy suppliers (after obtaining permission from households) to collect the actual billing data on energy consumption and expenditures.

Of the 4,382 households surveyed in the 2005 RECS, 1,726 households representing 41.0% of the housing population have a gas furnace (non

- weatherized or weatherized), 576 representing 16.1% of the housing population have a n electric furnace, 109 representing 2.3% of the housing population have a manufactured home gas furnace, 150 representing 2.5% of the housing population have an oil

- fired furnace , and 68 representing 1.9% of the housing population have a manufactured home electric furnace a

Of the inputs necessary for the LCC and PBP analysis, there are three inputs that are based on data from the 2005 RECS: (1) space

- conditioning annual energy consumption (RECS

based), (2) pr oduct efficiency, and (3) average electricity price. All of these inputs are used in determining the operating cost. With the exception of product efficiency, each household in RECS with a furnace has a unique value for the space

- conditioning annual energy consumption, the average electricity price, and the marginal electricity price. In other words, the annual energy consumption and average electricity price associated with a particular RECS household are not uncertain and are, therefore, not expressed wit h probability distributions. Although those three input variables are not uncertain, they are extremely variable. Due to the large number of households considered in the LCC and PBP analysis (almost 2,000 for furnaces), the range of annual energy use, average electricity price, and m arginal electricity price is quite large. Thus, although the above three input variables are not uncertain for any particular household, their variability across all households contributes significantly to the range of LCCs and PBPs calculated for any part icular standard level. . Using the households i n RECS that utilize each type of furnace, LCC and PBP analysis are performed on a household

- by

- household basis to determine whether an increase in the minimum efficiency standard is economically justified. Each RECS household has an associated household we ight representing the number of

similar households in the nation.

8.2 LIFE

- CYCLE COST ANALYSIS INPUTS

Life

- cycle cost is the total customer cost over the life of a product, including purchase cost and operating costs (which are composed of energy costs, maintenance costs, and repair costs). Future oper ating costs are discounted to the time of purchase and summed over the lifetime of the product. Life

- cycle cost is defined by the following equation:

Eq. 8.2

. 1

Where:

a RECS does not provide a direct way of determining which households are using hydronic air handlers. 

# ∑

**=** 

### + **+ =**  N

t t

t 

### r OC IC LCC

1 

### ) 1 /(8

- 7 LCC = life

- cycle cost ($),

IC = total in stalled cost ($), ∑ = sum over the lifetime, from year 1 to year N, where N = lifetime of product (years),

OC = operating cost ($),

r = discount rate, and

t = year for which operating cost is being determined.

DOE expresses all the costs in 2011$. To tal installed cost, operating cost, lifetime, and discount rate are discussed in the following sections. In the LCC analysis, the year of product purchase is assumed to be 201 8, the effective date of the energy conservation standards for

furnace fans.

8.2.1 Tota l Installed Cost Inputs

The total installed cost to the customer is defined by the following equation:

Eq. 8.2

. 2

Where:

EQP = product price ($) ( i.e. , customer price for the product only), and

INST = installation cost or the customer price to install product ($) ( i.e. , the cost for labor and materials).

The product price is based on the distribution channel through which the customer purchases the product. As discussed in chapter 6, Markups for Produc t Price Determination,

DOE defined one major distribution channel f or new units to describe how the product passes

from the manufacturer to the customer: the manufacturer sells the product to a wholesaler or distributor

, who sells to a mechanical contracto r hired by a general contractor. The general contractor purchases and installs the product on behalf of the customer and adds its markup to the mechanical contractor’s price. Replacement products follow the same distribution channel, except that there is n o general contractor. Instead, the mechanical contractor takes on the general

contractor’s function.

The remainder of this section provides information about the variables DOE used to

calculate the total installed cost for fur nace fan products.

8.2.1.1 Manufacture r Costs

DOE developed the manufacturer costs for furnace fans as described in chapter 5, Engineering Analysis. The manufacturer costs at each efficiency level are shown in Table 8.2.1

and Table 8.2.2

. INST EQP IC **+ =** 8

- 8 Table 8.2.1 Manufacturer Production Cost for Non

- Hydronic Furnace Fans by Efficiency Level
Efficiency Level Total Cost (2011$) Incremental Cost (2011$)

0 Baseline PSC $69 N / A

1 Improved PSC $71 $ 3

2 PSC w/controls $80 $ 1 6

3 X13 $9 2 $ 31

4 Electronically

commutated motor (ECM) + Multi

- Stage $ 1 61 $ 124

5 ECM w/ backward

curved (BC) Impeller $ 1 76 $ 144

Table 8.2.2 Manufacturer Production Cost for Hydronic Furnace Fans by Efficiency

Level
Efficiency Level Total Cost (2011$) Incremental Cost (2011$)

0 Baseline PSC $84 N / A

1 Improved PSC $ 91 $ 9

2 PSC w/controls $ 101 $2 2

3 X13 $ 122 $ 50

4 ECM + Multi

- Stage $1 91 $ 144

5 ECM w/BC Impeller $ 206 $1 65

6 Switching mode power supply $ 213 $1 75

7 Toroidal Transformer $ 225 $1 89

8.2.1.2 Markup s

For a given distribution channel, the overall markup is the value determined by multiplying all the associated markups a nd the applicable sales tax together to arrive at a single overall distribution chain markup value. The overall markup is multiplied times the baseline or

standard

- compliant MSP (including transportation) to arrive at the price paid by the customer.

Becau se there are baseline and incremental markups associated with the wholesaler and mechanical contractor, the overall markup is also divided into a baseline markup ( i.e. , a markup used to convert the baseline manufacturer price into a customer price) and an incremental markup ( i.e. , a markup used to convert a standard

- compliant MSP increase due to an efficiency increase into an incremental customer price). Markups can differ depending on whether the product is being purchased for a new construction installati on or is being purchased to replace an existing product. DOE developed the overall baseline markups and incremental markups for both new construction and replacement applications as a part of the markups analysis (chapter 6 of the TSD).

Based on the percen tages of the market attributed to each distribution channel

, Table

8.2.3 and Table 8.2.4 display the weighted

- average overall markups and their associated components for th e baseline and incremental markups, respectively.8

- 9 Table 8.2.3 National Average Baseline Markup s

Factor New

Construction Application Replacement Application

Wholesale Markup 1.362 1.362

Mechanical Contractor Markup 1.280 1.380

General Contractor Markup 1.480 N / A*

Sales Tax 1.073 1.073 Total Markup 2.767 2.016 * General contractors do not appear in the replacements

distribution channel

Table 8.2.4 National Average Incremental Markups

Factor New

Construction Application Replacement Application

Wholesale Markup 1.091 1.091

Mechanical Contractor Markup 1.024 1.104

General Contractor Markup 1.347 N / A*

Sales Tax 1.073 1.073 Total Markup 1.614 1.292 * General contractors do not appear in the replacements

distribution channel

Because the relative importance of new construction and replacements in total shipments varies among the product classes, the total markup varies as well ( Table 8.2.5 ).8

- 10 Table 8.2.5 Overall Markup for Furnace Fans by Product Class

Product Class Baseline Markup Incremental Markup

Non

- W eatherized, Non

- C ondensing Gas

Furnaces 2.49 1.59

Non

- W eatherized, Condensing Gas

Furnaces 2.45 1.54

Weatherized Gas Furnace 2.46 1.57

Oil Furnace 2.30 1.46

Electric Furnace / Modular Blower 2.41 1.54

Manufactured Home Non

- W eatherized,

Non

- C ondensing Gas Furnaces 3.04 2.35

Manufactured Home Non

- W eatherized, Condensing Gas Furnaces 2.96 2.29

Manufactured Home Electric Furnace

/Modular Blower 2.95 2.28

Hydr on ic Air Handler (Heat/Cool) 2.62 1.65

8.2.1.3 Total Consumer Price

DOE derived the consumer product price for the efficiency levels above the baseline by taking the product of the baseline manufacturer cost and the baseline markup index (including the sales tax) and adding to it the product of the incremental manufacturer cost and the incremental markup index (including the sales tax). Markups and the sales tax all can take on a variety of values, depending on location, so the resulting total installed cost for a par ticular efficiency level will not be a single

- point value, but rather a distribution of values.

Table 8.2.6 and Table 8.2.7 present the consumer product price for each furnace product class at each efficiency level examined.8

- 11 Table 8.2.6 Total Consumer Price for Furnace Fans U sed in HVAC Products Other

than Hydronic Air Handlers ( 2 01 1$ )
Efficiency Level
Key Product Class 0 1 2 3 4 5

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM +
Multi

Stage ECM +

Backward

- curved Impeller

Non

- weatherized, Non

condensing Gas Furnace

Fan $236 $240 $261 $290 $437 $470

Non

- weatherized, Condensing Gas Furnace

Fan $241 $246 $265 $303 $447 $478

Weatherized Gas Furnace

Fan $237 $241 $261 $295 $441 $473

Oil Furnace Fan $313 $327 $345 $433 $560 $590

Electric Furnace / Modular

Blower Fan $207 $211 $231 $232 $379 $411

Manufactured Home Non

weatherized, Non

condensing Gas Furnace

Fan $218 $224 $278 $313 $524 $554

Manufactured Home Non

weatherized, Condensing

Gas Furnace Fan $237 $243 $284 $317 $523 $564

Manufactured Home

Electric Furnace / Modular

Blower Fan $177 $183 $253 $286 $491 $495

Table 8.2.7 Total Consumer Price for Furnace F ans U sed in Hydronic Air Handlers (2011$)
Efficiency Level
Key Product

Class 0 1 2 3 4 5 6 7

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM

+
Multi

- Stage ECM +

Backward

- curved Impeller Switching

Mode

Power Supply Toroidal

Transformer

Hydronic Air

Handler Fan (Heat/Cool) $230 $246 $291 $338 $492 $513 $518 $543

8.2.1.4 Future Product Prices

In DOE’s 2011 heating, ventilati n g , and air conditioning ( HVAC ) standards rulemaking, it derived a forecast of future furnace prices based on an analysis of the historic trend in the8

- 12 producer price index ( PPI ) for furnaces. DOE believes that using the same trend for furnace fans would not be appropriate, however, as t he fan does not make up a major part of the total cost of a furnace. Because the fan motor is the most important component of the furnace fan, DOE believes that historic prices of electric motors provide a more reasonable basis for considering

trends in th e price of furnace fans.

DOE developed data on historic prices of electric motors in its preliminary analysis of

standards for electric motors. DOE obtained historical PPI data for i ntegral horsepower motors and generators manufacturing spanning the time period 1969

- 2010 from the Bureau of Labor Statistics’ (BLS). b

Figure 8.2.1 The PPI data reflect nominal prices, adjusted for product quality changes. An

inflation

- adjusted (deflated) price index for i ntegral horsepower motors and generators manufacturing was calculated by dividing the PPI series by the Gross Domestic Product Chained

Price Inde x (see ).

Figure 8.2.1 Historical Nominal and Deflated Producer Price Indexes for Integral Horsepower Motors and Generators Manufacturing

From the mid

- 1970s to 2005, the deflated price index for electric m otors was roughly flat. Since then, the index has risen sharply, primarily due to rising prices of copper and steel products that are used in motors

. The rising prices for copper and steel products were primarily a result of strong demand from China and ot her emerging economies. Given the slowdown in

b Series ID PCU3353123353123; http://www.bls.gov/ppi/8

- 13 global economic activity in 2011, DOE believes that the extent to which the trends of the past five years will continue is very uncertain. DOE performed an exponential fit on the deflated price

index for electr ic motors, but the R 2 was relatively low (0.5). DOE also considered the experience curve approach, in which an experience rate parameter is derived using two historical

data series on price and cumulative production , but the time series for historical ship ments was not long enough for a robust analysis.

Given the above considerations, DOE decided to use constant prices as the default price assumption to project future motor prices. DOE used the same assumption in its preliminary analysis for furnace fans . Thus, prices forecast for the LCC and PBP analysis are equal to the 2011 values for each efficiency level in each product class.

8.2.1.5 Installation Cost

Because the furnace fan is installed in the furnace in the factory, there is generally no

additional insta llation cost at the home. However, ECM furnace fan design may require

additional installation costs. DOE assumed that a fraction of the ECM furnace fan installations will require up to an hour of extra labor at startup to check and adjust airflow.

DOE’s analysis of installation costs accounts for regional differences in labor costs. DOE estimated the installation costs using a variety of sources, including RS Means CostWorks 2012, manufacturer literature, and information from expert consultants. For a det ailed discussion of the development of installation costs , see appendix 8

- D

, Installation, Repair, and Maintenance Cost

Calculations.

8.2.1.6 Total Installed Cost

T he total installed cost is the sum of the product price and the installation cost. DOE

derived the consumer product price for any given efficiency level by taking the product of the baseline MSP and the baseline markup index (including the sales tax) and adding to it the product of the incremental MSP and the incremental markup index (including the sale s tax). MSPs, markups, and the sales tax all can take on a variety of values, depending on location, so the resulting total installed cost for a particular efficiency level will not be a single

- point value,

but rather a distribution of values

Table 8.2.8 and Table 8.2.9 present the consumer product price for each furnace pro duct class at each efficiency level examined.8

- 14 Table 8.2.8 Total Installed Cost for Furnace Fans U sed in HVAC Products Other

than Hydronic Air Handlers ( 2011$ )
Efficiency Level
Key Product Class 0 1 2 3 4 5

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM +
Multi

Stage ECM +

Backward

- curved Impeller

Non

- weatherized, Non

condensing Gas Furnace

Fan $236 $240 $261 $293 $448 $480

Non

- weatherized, Condensing Gas Furnace

Fan $241 $246 $265 $306 $459 $491

Weatherized Gas Furnace

Fan $237 $241 $261 $297 $451 $483

Oil Furnace Fan $313 $327 $345 $437 $577 $607

Electric Furnace / Modular

Blower Fan $207 $211 $231 $235 $388 $420

Manufactured Home Non

weatherized, Non

condensing Gas Furnace

Fan $218 $224 $278 $314 $531 $561

Manufactured Home Non

weatherized, Condensing

Gas Furnace Fan $237 $243 $284 $319 $531 $572

Manufactured Home

Electric Furnace / Modular

Blower Fan $177 $183 $253 $287 $497 $501

Table 8.2.9 Total Installed Cost for Furnace F ans U sed in Hydronic Air Handlers (2011$)
Efficiency Level
Key Product

Class 0 1 2 3 4 5 6 7

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM

+
Multi

- Stage ECM +

Backwar

d

- curved Impeller Switching

Mode

Power Supply Toroidal

Transformer

Hydronic Air

Handler Fan (Heat/Cool) $230 $246 $291 $341 $504 $525 $531 $555

8.2.2 Operating Cost Inputs

DOE defined the operating cost by the following equation:8

- 15 OC = EC+ RC+ MC Eq. 8.2

. 3

Where:

OC = operating cost ($)

, EC = energy cost associated with operating the product ($),

RC = repair cost associated with component failure ($), and

MC = annual maintenance cost for maintaining product operation ($).

The remainder of this section provides information about the variables that DOE used to calculate the operating cost for furnace products. The annual energy costs of the product are computed from energy consumption per unit for the baseline and standard

- compliant cases (efficiency level 2, 3, etc.), combined with the energy prices. Product lifetime, discount rate, and compliance date of the s tandard are required for determining the operating cost and for establishing the operating cost present value.

8.2.2.1 Annual Energy Use Savings

For each key product class, DOE calculated the annual energy use savings for each sample household at each efficiency level as described in chapter 7. DOE accounted for additional energy use required for space heating due to more

- efficient furnace fans, as well as reduction in energy use required for air conditioning.

DOE considered the possibility that some consumers may us e a higher

- efficiency furnace

fan more than a baseline furnace fan , thereby negating some or all of the energy savings from the

more

- efficient fan. Such change in behavior when operating costs decline is known as a rebound

effect.

DOE reviewed an evaluation report from Wisconsin c that indicates that a considerable number of homeowners who purchase ECM furnaces significantly increase the frequency with which they operate their furnace fan subsequent to the installation of the ECM furnace . To

estimat e a rebound effect that would apply to the national household sample, DOE calculated a separate rebound effect for the north and for the south regions based on the expected increase of

con stant circulation fan use that can be expected for ECM furnaces.

The take

- back in energy consumption associated with the rebound effect provides consumers with increased value (e.g., enhanced comfort associated with use of constant
circulation ). DOE believes that, if it were able to monetize the increased value to consu mers of the rebound effect, this value would be similar in value to the foregone energy savings. Therefore, the economic impacts on consumers with or without the rebound effect, as measured in the LCC analysis, are the same.

c State of Wisconsin, Public Service Commission of Wisconsin, Focus on Energy Evaluation Semiannual Report, Final: April 8, 2009

. http://www.focusonenergy.com/files/Document_Management_System/Evaluation/semiannualreport18monthcontrac tperiodfinalrevisedoctober192009_evaluationreport.pdf8

- 1 6 8.2.2.2 Energy Prices

DOE derived ave rage monthly energy prices for a number of geographic areas in the

United States u sing the latest data from EIA and monthly energy price factors that it developed

. DOE assigned an appropriate price to each household in the sample, depending on its location

.

EIA Data

. DOE derived 20 10 annual electricity prices from EIA Form 8 26 data

. 3 The

EIA Form 8 26 data include energy prices by S tate

. DOE calculated annual electricity prices for

each geographical area by aver aging monthly energy prices by State to get S tate electricity prices

. For areas with more than one State, DOE weight ed each S tate ’s average price by its

number of households

. Table 8.2.10 shows the average prices for each geographic area.

DOE obtained the data for natural gas pr ice s from EIA’s Natural Gas Navigator

, 4 which includes monthly natural gas prices by S tate for residential, commercial, and industrial

customers. For areas with more than one State, DOE weight ed each State ’s average price by its

number of households

. Table 8.2.11 displays the 2010 annual natural gas prices.8

- 17 Table 8.2.10 Average Residential Electricity Prices in 20 10

Geographic Area 2011$/kWh

Connecticut, Maine, New Hampshire, Rhode Island, Vermont $0.178

Massachusetts $0.151

New York $0.193

New Jersey $0.170

Pennsylvania $0.131

Illinois $0.119

Indiana, Ohio $0.111

Michigan $0.128

Wisconsin $0.131

Iowa, Minnesota, North Dakota, South Dakota $0.106

Kansas, Nebraska $0.099

Missouri $0.094

Virginia $0.108

Delaware, District of Columbia, Maryland, West Virginia $0.135

Georgia $0.103

North Carolina, South Carolina $0.106

Florida $0.118

Alabama, Kentucky, Mississippi $0.101

Tennessee $0.096

Arkansas, Louisiana, Oklahoma $0.093

Texas $0.120

Colorado $0.114

Idaho, Montana, Utah, Wyoming $0.089

Arizona $0.111

Nevada, New Mexico $0.120

California $0.152

Oregon, Washington $0.086

Alaska $0.168

Hawaii $0.2908

- 18 Table 8.2.11 Average Residential Natural Gas Prices in 2010

Geographic Area 2011$/MMBtu
Connecticut, Maine, New Hampshire, Rhode Island, Vermont $16.94

Massachusetts $14.96

New York $15.94

New Jersey $13.71
Pennsylvania $15.11

Illinois $11.68

Indiana, Ohio $13.42
Michigan $12.58

Wisconsin $11.28

Iowa, Minnesota, North Dakota, South

Dakota $10.24

Kansas, Nebraska $12.66

Missouri $16.78
Virginia $15.96
Delaware, District of Columbia, Maryland, West Virginia $15.57

Georgia $19.63

North Carolina, South Carolina $18.14

Florida $19.67
Alabama, Kentucky, Mississippi $14.93

Tennessee $13.69

Arkansas, Louisiana, Oklahoma $15.07

Texas $13.16

Colorado $9.07
Idaho, Montana, Utah, Wyoming $9.12

Arizona $18.03

Nevada, New Mexico $12.37

California $10.06
Oregon, Washington $13.09

Alaska $9.27

Hawaii $44.90

DOE collected 20 10 average LPG prices from EIA’s 20 10 State Energy Consumption, Price, and Expenditures Estimates (SEDS). 5 SEDS includes annual LPG prices for residential, commercial, industrial , and transportation consumers by s tate. For areas with more than one State, DOE weight ed each State ’s average price by its number of households

. See Table 8.2.12

.8

- 19 Table 8.2.12 Average Residential LPG Prices in 2010

Geographic Area 2011$/MMBtu
Connecticut, Maine, New Hampshire, Rhode Island, Vermont $32.51

Massachusetts $35.63

New York $31.92

New Jersey $35.37
Pennsylvania $31.09

Illinois $21.42

Indiana, Ohio $24.96
Michigan $23.66

Wisconsin $20.47

Iowa, Minnesota, North Dakota, South Dakota $20.28

Kansas, Nebraska $20.14

Missouri $21.04
Virginia $31.30
Delaware, District of Columbia, Maryland, West Virginia $32.38

Georgia $26.71

North Carolina, South Carolina $30.42

Florida $37.29
Alabama, Kentucky, Mississippi $26.86

Tennessee $28.03

Arkansas, Louisiana, Oklahoma $26.38

Texas $28.75

Colorado $23.16
Idaho, Montana, Utah, Wyoming $23.92

Arizona $32.40

Nevada, New Mexico $29.65

California $31.42
Oregon, Washington $26.77

Alaska $35.37

Hawaii $58.88

DOE collected 20 10 average fuel oil prices from EIA’s SEDS. 5 SEDS includes annual

fuel oil prices for residential, commercial, industrial, and transportation consumers by s tate . For areas with more than one State, DOE weight ed each State ’s average price by its number of

households

. See Table 8.2.13

.8

- 20 Table 8.2.13 Average Residential Fuel Oil P rices in 2010

Geographic Area 2011$/MMBtu

Connecticut, Maine, New Hampshire, Rhode Island, Vermont $21.67

Massachusetts $22.52

New York $23.00

New Jersey $23.66

Pennsylvania $21.92

Illinois $21.72

Indiana, Ohio $20.97

Michigan $20.95

Wisconsin $20.38

Iowa, Minnesota, North Dakota, South Dakota $19.79

Kansas, Nebraska $20.09

Missouri $19.75

Virginia $20.47

Delaware, District of Columbia, Maryland, West Virginia $22.59

Georgia $20.55

North Carolina, South Carolina $20.91

Florida $20.94

Alabama, Kentucky, Mississippi $18.67

Tennessee $20.28

Arkansas, Louisiana, Oklahoma $18.46

Texas $18.06

Colorado $19.89

Idaho, Montana, Utah, Wyoming $20.50

Arizona $23.42

Nevada, New Mexico $20.90

California $23.78

Oregon, Washington $22.81

Alaska $21.95

Hawaii $22.85



### Month l y Prices

. To determine monthly prices for use in the analysis, DOE developed monthly energy price factors for each fuel based on long

- term price data

. S ee appendix 8

- B

, Monthly En ergy Price Factor Calculations for description of the method. DOE multiplied the annual prices shown in the above tables by the monthly price factors for each fuel to derive prices for each month.



### Electrici ty and N atural G as M arginal P rices . E lectricity and natural gas prices were adjusted using seasonal marginal price factors to come up with monthly marginal electricity and8

- 21 natural gas prices. For a detailed discussion of the development of marginal energy price factors,

see app endix 8

- C , Seasonal Margin al Energy Price Factor Calculations.

8.2.2.3 Energy Price Trend s

DOE used price forecasts by the EIA to estimate future trends in energy prices. To arrive at prices in future years, it multiplied the prices described in the preceding section by the forecast of annual average price changes in EIA’s AEO 2 01 2 Early Release

. 6 Figure 8.2.2 shows the national residential electricity price trend. To estimate the trend after 2035, DOE followed past guidelines provided to the Federal Energy Management Program (FEMP) by EIA and used the average rate of change during 2020

– 2035 for electricity, natural gas, and LPG.

DOE us ed AEO 20 1 2 Reference Case scenarios for the nine census divisions

. DOE applied the applied the energy p rice forecast for each of the nine census divisions to each

household in the sample based on the household ’ s location

.

Figure 8.2.2 Electricity Price Forecast

8.2.2.4 Repair Cost

The repair cost is the cost to the consumer for replacing or repairing components in the

furnace fan that ha ve failed. DOE included motor replacement as a repair cost for a fraction of

furnace fans. To estimate rates of motor failure, DOE developed a distribution of fan motor lifetime (expressed in operating hours) by motor size using data fr om DOE’s analysis for small

electric motors

. d

d http://www1.eere.energy.gov/building s/appliance_standards/commercial/sem_finalrule_tsd.html DOE then paired these data with the calculated number of annual operating hours for each sample furnace. Motor costs were based on costs developed in the engineering 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 20352010¢/kWh

Year Reference8

- 22 analysis and the replacement markups develop ed in the markup analysis

. DOE assumed that the motor cost does not apply if motor failure occurs during the furnace warranty period.

The repair costs at each considered efficiency level were based on 2010 R S Means Facility Repair and Maintenance Data . DOE account s for regional differences in labor costs. For a detailed discussion of the development of repair costs , see appendix 8

- D

, Installation, Repair,

and Maintenance Cost Calculations.

Table 8.2.14 and Table 8.2.15 show the annualized repair cost estimates for each product

class.

Table 8.2.14 Annualized Repair Cost for Furnace Fans U sed in HVAC Products Other

than Hydronic Air Handlers ( 2011$ )
Key Product Class Efficiency Level

0 1 2 3 4 5

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM +
Multi

Stage ECM +

Backward

- curved Impeller

Non

- weatherized, Non

condensing Gas Furnace Fan $13 $13 $14 $15 $20 $21

Non

- weatherized, Condensing

Gas Furnace Fan $13 $13 $14 $15 $20 $20

Weatherized Gas Furnace Fan $15 $16 $16 $18 $23 $25

Oil Furnace Fan $15 $16 $16 $18 $23 $24

Electric Furnace / Modular

Blower Fan $14 $14 $15 $15 $21 $22

Manufactured Home Non

weatherized, Non

- condensing

Gas Furnace Fan $12 $12 $13 $14 $19 $20

Manufactured Home Non

weatherized, Condensing Gas

Furnace Fan $13 $13 $14 $15 $20 $20

Manufactured Home Electric

Furnace / Modular Blower Fan $12 $12 $14 $15 $21 $21

Table 8.2.15 Annualized Repair Cost for Furnace F ans U sed in Hydronic Air

Handlers (2011$)
Efficiency Level
Key Product

Class 0 1 2 3 4 5 6 7

Baseline

PSC Improved

PSC PSC w/

Controls X13 ECM

+
Multi

- Stage ECM +

Backward

- curved Impeller Switching

Mode Power Supply Toroidal

Transformer

Hydronic Air

Handler Fan (Heat/Cool) $17 $17 $19 $20 $26 $27 $27 $288

- 23 8.2.2.5 Maintenance Cost

The maintenance cost is the routine cost to the consumer of maintaining equipment operation

. The regular furnace maintenance generally includes checking the furnace fan. DOE assumes that this maintenance cost is the same at all efficiency levels.

L abor hours and costs for annual maintenance was estimated using RS Means data . The frequency with which the maintenance occurs was derived from a consumer survey 7 on the frequency with which owners of different types of furnaces perform maintenance. For a detailed discussion of the development of maintenance costs , see appendix 8

- D

.

8.2.2.6 Lifetime

DOE define s lifetime as the age when a product is retired from service. F ur nace fan

lifetimes are considered to be equivalent to furnace lifetimes, so DOE modeled furnace fan

lifetime based on estimated furnace lifetime s, which were developed for the recent furnace

standards rulemaking. e

Table 8. 2.16 In that analysis, DOE used national survey data, along with manufacturer shipment data, to calculate the distribution of furnace lifetimes. For a detailed discussion of the development of furnace fan lifetime , see appendix 8

- E

, Furnace Fan Lifetime Determination

.

shows the minimum, median, and average lifetime, as well as the Weibull distribution parameters alpha and beta for each product class

. DOE assumed that the lifetime of a

fan is the sa me at different efficiency levels.

Table 8.2.16 Lifetime Parameters for Furnace Fans

Product Class Weibull Parameters

Minimum

years Median

years Average

years Alpha (scale) Beta (shape)

Non

- Weatherized Gas Furnace Fans (Condensing and Non

- Condensing) 1 22.6 23.6 26.7 2.218

Manufactured Home Gas Furnace Fans (Condensing and Non

- Condensing) 1 16.9 18.7 21.0 1.682

Oil

- Fired Furnace Fans 1 26.3 26.5 29.7 3.019

Weatherized Gas Furnace Fans;

Electric Furnace /Modular Blower Fans;

Manufactured Home Electric

Furnace /Modular Blower Fans; Hydronic Air Handlers 1 17.3 18.0 20.3 2.255

e http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_cac_hp_direct_final_ru

le.html8

- 24 8.2.2.7 Discount Rate

The discount rate is the rate at which future expenditures are discounted to establish their present value. DOE derived the discount rates for the LCC analysis by estimating the cost of capital for individuals and companies that purchase furnace fan produc ts

.

In the case of individual households, the financing of purchasing products installed in

new homes is different from the financing of appliances bought directly by consumers (i.e. , as a replacement for a failed unit or as a new purchase for an existing household that does not already own the appliance). Thus, DOE used different discount rates for these residential purchases.



### Discount Rates for Replacement Products Purchased by Existing Households

Households use various methods to finance the purchase of major appliances. In principle, one could estimate the interest rates on the actual financing vehicles used to purchase appliances. However, the frequency with which each financing vehicle is used to purchase an appliance is unknown.

DOE’s approach invol ved identifying all possible debt or asset classes that might be used to purchase the considered appliances, including household assets that might be affected indirectly. f

8 DOE excluded debt from primary mortgages and the equity of assets considered non

liq uid (such as retirement accounts), because those financing methods are unlikely to be used by households in existing housing to purchase appliances. DOE estimated the average percentage
shares of the various types of debt and equity in the average U.S. hou sehold using data from the

Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001,
2004, and 2007. Table 8.2.17 shows the average percentages of each considered type of debt or equity. DOE derived the mean percentages of each source of financing for the 7 years surveyed.

f An indirect effect would arise if a household sold assets in order to pay off a loan or credit card debt that might

have been used to finance the appliance purchase.8

- 25 Table 8.2.17 Types of Household Debt and Equ ity by Percentage Shares

Type of Debt or Equity Distribution

%

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loan 4.3 4.5 2.7 2.8 2.8 4.4 4.6 3.7

Credit card 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1

Other installment loan 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.6

Other residential loan 4.4 6.9 5.2 4.3 3.1 5.8 7.1 5.3

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.5

Checking account 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.4

Savings or money market

account 19.2 18.8 14.0 12.8 14.2 15.1 13.0 15.3

Certificate of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 8.6

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 1.4

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 9.5

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 29.0

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 18.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

DOE also estimated interest or return rates associated with each type of equity and debt. The source for interest rates for loans, credit cards, and lines of credit was the Federal Reserve

Board’s Survey of Consumer Finances ( SCF ) for 1989, 1992, 1995, 1998, 200 1, 2004, and 2007.

Table 8.2.18 shows the average nominal rates in each year and the inflation factors used to

calculate real rates. DOE calculated effective inter est rates for home equity loans in a similar manner as for mortgage rates, because interest on both such loans is tax deductible. Table 8.2.19 shows the average eff ective real rates in each year and the mean rate across years. Because the interest rates for each type of household debt reflect economic conditions throughout numerous years, they are expected to be representative of rat es that may be in effect in 2018

.

Table 8.2.18 Average Nominal Interest Rates for Household Debt

Type of Debt Average Nominal Interest Rate

%

1989 1992 1995 1998 2001 2004 2007 Mean
Home equity loan 11.5 9.6 9.6 9.8 8.7 5.7 6.3 7.9

Credit card*

- - 14.2 14.5 14.2 11.7 7.9 9.0

Other installment loan 9.0 7.8 9.3 7.8 8.7 7.4 12.6 13.4

Other residential loan 8.8 7.6 7.7 7.7 7.5 6.0 10.4 8.6

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 6.3 7.4

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85

--

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

* No data on interest rates available for credit cards in 1989 or 1992.8

- 26 Table 8.2.19 Average Real Effective Interest Rates for Household Debt

Type of Debt Average Real Effective Interest Rate

%

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loan 3.8 4.3 4.4 5.8 3.8 1.9 2.1 3.0

Credit card*

- - 11.0 12.7 11.1 9.1 3.3 3.9

Other installment loan 4.9 5.8 7.0 6.6 6.1 5.4 9.7 10.7

Other residential loan 4.0 4.7 4.8 6.0 4.6 3.3 5.8 6.0

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 3.4 4.4

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

* No data on interest rates available for credit cards in 1989 or 1992.

No similar rate data are available from the SCF for classes of assets, so the Department

derived that information from national historical data. The interest rates associated with

certificates of deposit, 9 savings bonds, 10 and bonds (AAA corporate bonds) 11 were collected

from Federal R eserve Board time

- series data for 1977

– 20 11

. DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts came from Cost of Savings Index data covering 1984

– 20 11

. 12 The rates for stocks are the annual returns on the Standard and

Poor’s 500 for 1977

– 200 11

. 13 Rates for mutual funds are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight) in each year for 1977

– 20 11 . DOE adjusted the nominal rates to real rates using the annual inflation rate for each year. Average

nominal and real interest rates for the classes of household assets are listed in Table 8.2.20

. Becaus e the interest and return rates for each type of asset reflect economic conditions throughout numerous years, they are expected to be representative of rat es that may be in effect

in 201 8

.

Table 8.2.20 Average Nominal and Real Interest Rates for Household Equity

Type of Equity Average

Nominal Rate

% Average Real

Rate

%

Checking account

- 0.0

Savings and money market accounts 5. 1 2. 1

Certificate of deposit 6. 1 2. 0

Savings bond 7. 4 3.3

Bonds 8. 2 4. 0

Stocks 11. 8 7. 6

Mutual funds 10. 4 6.1

Table 8.2.21 summarizes the mean real effective rates of each type of equity or debt.

DOE determined the average percentage of each type of debt and asset using SCF data for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Each year of SCF data provides the percent age s of debts and assets for U.S. households. DOE averaged those percentages for the 7 years of survey8

- 27 data to arrive at the percentages shown in Table 8.2.21 . The average rate across all types of household debt and equity, weighted by the percentages of each type, is 5.0 percent

.

Table 8.2.21 Average Interest on Household Debt and E quity

Type of Debt or Equity Average Percentage of Household Debt plus Equity

% * Mean Effective Real Rate

% **

Home equity loan 3.7 3.9

Credit card 2.1 10.7

Other installment loan 1.6 6.0

Other residential loan 5.3 4.4

Other line of credit 0.5 8.8

Checking account 4.4 0.0

Savings and money market account 15.3 2. 1

Certificate of deposit 8.6 2. 0

Savings bond 1.4 3.3

Bonds 9.5 4. 0

Stocks 29.0 7. 6

Mutual funds 18.6 6.1

Total/weighted

- average discount rate 100.0 5.0

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, tax deduction of interest.

DOE developed a normal probability distribution of interest rates for each asset type by using the mean value and standard deviation from the distribution. To account for variation among households, DOE sampled a rate for each household from the distributi ons for the appropriate asset class. Appendix 8

- F presents the probability distribution s for each class that

DOE used in the LCC and PBP analysis

.



### Discount Rates for Products Installed in New Housing

Appliances installed in new homes (“new

- housing appliances”) are purchased as part of the home, which is almost always financed with a mortgage loan. DOE estimated discount rates

for new

- housing appliances using the effective real (after

- inflation) mortgage rate for homebuyers. This rate corresponds to the interest rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation (using the Fisher formula). g

The data sources DOE used for mortgage interest rates were the SCF in 1989, 1992, 1995, 1998, 2001, 200 4 , and 2007. Using the appropriate SCF data for each year, DO E adjusted For example, a 6% nominal mortgage rate has an effective nominal rate of 4.5% for a household at the 25% marginal tax rate. When adjusted for an inflation rate of 2%, the effective real rate becomes

2.45%.

g Fisher formula is given b y: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)]

– 1.8

- 28 the mortgage interest rate for each relevant household in the SCF for mortgage tax deduction and inflation (see Table 8.2.22 ). In cases where the effect ive interest rate is equal to or below the inflation rate (resulting in a negative real interest rate), DOE set the real effective interest rate to

zero.

The average nominal mortgage rate carried by homeowners in these 6 years was 7.9%.

As the mortgage rat es carried by households in these years were established over a range of time, DOE believes they are representative of rates that may apply when amended standards take

effect. After adjusting for inflation and interest tax deduction, effective real interes t rates on mortgages across the six surveys averaged 3.0%.

Table 8.2.22 Data Used to Calculate Real Effective Mortgage Rates

Year Mortgage Interest Rates in Selected Years

%

Average Nominal

Interest Rate Inflation Rate 14 Marginal Tax Rate Applicable to Mortgage

Interest 15 Average Real

Effective Interest Rate

1989 9.7 4.82 24.3 2.4

1992 9.1 3.01 23.4 3.8

1995 8.2 2.83 24.1 3.3

1998 7.9 1.56 23.9 4.4

2001 7.6 2.85 22.9 2.9

2004 6.2 2.66 20.6 2.2

2007 6.3 2.85 21.6 2.1

Average 7.9 3.0

To account for variation among households, DOE sampled a rate for each household in the RECS samples from a distribution of mortgage rates. DOE developed the distribution based

on the SCF data

. Appendix 8

- F presents the probability distribution that DOE used in the LCC and PBP analysis

.

8.2.2.8 Compliance Date of Standard

Pursuant to 42 U.S.C. 6295( m ), the compliance date of any new energy efficiency

standard for furnace fans is 5 years after the final rule is published. Consistent with its published regulatory agenda, DOE assumed that the final rule would be issued in 2013 and that, therefore,

the new standards would require compliance in 2018. DOE calculated the LCC and PBP for all consumers as if they each would purchase a new furnace fan in 2018.

8.2.2.9 Base Case Distribution of Efficiency Levels

DOE did not have access to sales data describing the actual distribution of efficiencies in current sales of furnaces, nor was specific information provided by industry for this analysis. DOE found very limited historical data upon which to estimate either current shares or recent trends. To start, DOE used Rheem’s comment, statin g that the market share for ECM motors has

increased from 10 percent to 30 percent within the last five years. 16 To estimate the market share8

- 29 for ECM motors in 2018, DOE developed data on the share of models in each product class that are ECM design. h

The market shares of each of the three ECM fan efficiency level s we re derived from data on number of models. No such data were available for the PSC fan efficiency levels, so DOE assumed that half of shipments are at the baseline level and half are impr oved PSC fans. There are currently no models of PSC with controls design, so DOE assumed zero market share. DOE believes that the c urrent number of models is a reasonable indication of where the market may be in several years. The resulting estimate for 2018 is a 45 percent share

for ECM fans out of the overall market for furnace fans. This level is consistent with the

historical tren d.

DOE made separate estimate s of the ECM fan market shares in replacements and new

homes us ing data from a Canadian survey in 2003

. 17 The survey indicated that the market share

of ECM fans in replacement applications was 3.7 times higher than the share in new homes.

Table 8.2.23 shows the market shares that were used in the LCC and PBP analysis for

non

- weatherized gas furnaces . The market shares used for the other key product classes may be

found in the sheet “ Base Case Fan Efficiency ” in the furnace fan LCC spreadsheet posted on the

DOE web site.

Table 8.2.23 Base Case Market Shares (2018) by Efficiency Leve l for Fans in Non

Weatherized Gas Furnaces

Efficiency Level Non

- Condensing Condensing

Replacements (%) New Homes (%) Replacements (%) New Homes (%)

Baseline PSC 34 46 18 41 Improved PSC 34 46 18 41

PSC w/controls 0 0 0 0

X13 14 4 26 7 ECM, variable speed 18 5 39 11 ECM w/BC impeller 0 0 0 0

8.2.2.10 Avoiding Double

- Counting Savings Accounted for in Air Conditioner

Standards Rulemaking

T he fan electricity used for cooling operation or heat pump heating operation is part of the SEER and HSPF ratings for air conditioners and heat pumps. In the recent HVAC rulemaking, i

h DOE used the AHRI Directory of Certified Furnace Equipment as well as manufacturer product literature. the standard adopted by DOE accounted for savings from higher

- efficiency central

i

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_f inal_rule_tsd.html8

- 30 air conditioners (CAC) and heat pumps (HP) (above SEER 14) that incorporate an ECM fan. DOE has taken steps to avo id also counting those energy savings in this rulemaking for furnace

fans.

DOE used the same base case efficiency distribution of CAC and HP efficiencies in this analysis as it used in the HVAC rulemaking. In the household sample, those households assigned a CAC or HP at 15 SEER or above would already have an ECM fan. This situation is reflected in

the base case efficiency distribution used for furnace fans. Since the energy savings from the considered fan efficiency levels are measured relative to the base case efficiencies, any savings reported here are over and above those counted in the CAC and HP rulemaking.

8.3 PAYBACK PERIOD INPUT S

Th e PBP is the amount of time it takes the customer to recover the assumed higher purchase cost of more energy

- efficient equi pment as a result of lower operating costs. Numerically, the PBP is the ratio of the increase in purchase cost ( i.e ., from a less efficient design to a more efficient design) to the decrease in annual operating expenditures. This type of

calculation is known as a “simple” payback period, because i t does not take into account changes

in the operating cost value of money.

The equation for PBP is:

PBP = ∆ IC/ ∆ O C Eq. 8.3

. 1

W here:

PB P = payback period in years,

∆ IC = difference in the total installed cost between the more efficient standard

- level equipment (efficiency levels 2, 3, etc.) and the baseline efficiency equipment,

and

∆OC = difference in first year annual operating costs.

Payback periods are expressed in years. Payback periods greater than the life of the equipment mean that the increased total installed cost of the more efficient equipment is not recovered fast enough in reduced operating costs.

DOE also calculates a rebuttable PBP, which is the time it t akes the consumer to recover the assumed higher purchase cost of more energy

- efficient equipment as a result of lower energy costs. Numerically, the rebuttable PBP is the ratio of the increase in purchase cost (i.e., from a less efficient design to a more efficient design) to the decrease in annual energy expenditure s; that is, the difference in first year annual energy cost as calculated from the DOE test procedure. The calculation excludes repair costs and maintenance costs.

The data inputs to PBP are the total installed cost of the equipment to the customer for

e ach efficiency level and the annual (first year) operating costs for each efficiency level. The inputs to the total installed cost are the equipment price and the installation cost. The inputs to the operating costs are the annual energy cost, the annual r epair cost, and the annual maintenance8

- 31 cost (or

, in the case of rebuttable PBP, only the annual energy cost) . The PBP uses the same inputs as the LCC analysis, except that electricity price trends and discount rates are not required. Since the PBP is a “si mple” (undiscounted) payback, the required electricity cost is only for the year in which a new efficient standard is to take effect

— in this case, 201 8 . The electricity price used in the PBP calculation was the price projected for 201 8 . Discount rates are

not used in the PBP calculation.

8.4 LCC AND PBP RESULTS

As discussed previously

, DOE’s approach for conducting the LCC and PBP analysis relied on developing samples of households that use each of the products. DOE also characterized the uncertainty of many o f the inputs to the analysis with probability distributions. DOE used a Monte Carlo simulation technique to perform the LCC and PBP calculations on the households in the sample. For each set of sample households using the equipment in each product class, D OE calculated the average LCC and LCC savings and the median and average PBP for each of the efficiency levels. These efficiency levels are also referred to as candidate standard levels (CSLs).

DOE calculated LCC savings and PBPs relative to the base case equipment that it assigned to the households. In some cases, DOE assigned base case equipment that is more

efficient than the baseline and some of the CSLs. For that reason, in those cases the average LCC impacts are not

LCC and PBP calculations were perform ed 10,000 times on the sample of households established for each residential product. Each LCC and PBP calculation was performed on a single household that was selected from the sample of the residential users. The selection of a

household was based on its sample weight ( i.e. , how representative a particular household is of

other households in the distribution

— either regionally or nationally) in the 2005 RECS Public Use Sample, as described in chapter 7 of the TSD. Each LCC and PBP calculation also sampled from the probability distributions that DOE developed to characterize many of the inputs to the analysis. equal to the difference between the LCC of a specific CSL and the LCC of the

base line product

. DOE calculated the average LCC savings and the median PBP values by excluding the households that are not impacted by a standard at a given efficiency level.

Based on the Monte Carlo simulations that DOE performed, for each standard level, DOE calculated the share of households receiving a net LCC benefit, a net LCC cost, and no impact. DOE considered a household to receive no impact at a given standard level if DOE assigned it base case equipment whose efficiency is the same as, or is more than, the CSL.

8.4.1 Non

- Weatherized, Non

- C ondensing Gas Furnace Fans

Table 8.4.1 shows the LCC and PBP results for non

- weatherized, non

- condensing gas

furnace fans.8

- 32 Table 8.4.1 Non

- W eatherized, Non

- C ondensing Gas Furnace Fan s : LCC and PBP

Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Baseline (PSC) 236 1,354 1,590 N/A 0 100 0 N/A

1 Improved

PSC 240 1,333 1,573 6 33 63 4 1.2

2 PSC w/

Controls 261 1,312 1,573 7 61 26 13 8.8

3 X13 293 967 1,260 240 24 26 50 3.7

4 ECM +
Multi

- Stage 448 1,056 1,503 31 64 15 21 20.5

5 ECM +

Backward

C urved Impeller 480 984 1,463 71 67 0 33 15.9

Figure 8.4.1 show s the range of LCC savings for the efficiency levels considered for non

weatherized, non

- condensing gas furnace fans

. For each standard level, the top and the bottom of

the box indicate t he 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have lifecycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 33 Figure 8.4.1 Distribution of LCC Savings for Non

- Weatherized,

Non

- C ondensing Gas Furnace Fans

Figure 8.4.2 show the range of PBPs for all efficiency levels considered for non

weatherized, non

- condensing gas furnace fans.

Figure 8.4.2 Distributions of PB P for Non

- Weatherized, Non

C ondensing Gas Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.2

. - 600 - 400 - 200 0 200 400 600 800 1000 1200 1400

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level NWGF (Non

- condensing) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 20 40 60 80 100 120 140 160 180 200

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level NWGF (Non

- condensing) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 34 Table 8.4.2 Rebuttable Payback Period for Non

- Weatherized, Non

- C ondensing Gas

Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 2.2

2 PSC w/ Controls 3.2

3 X13 1.3

4 ECM (Variable Speed) 4.8

5 ECM + Backward

- curved Impeller 5.1

8.4.2 Non

- Weatherized, Condensing Gas Furnace Fans

Table 8.4.3 shows the LCC and PBP results for non

- weatherized, condensing gas furnace

fans.

Table 8.4.3 Non

- Weatherized , Condensing Gas Furnace Fan: LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (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 +

Backward

C urved Impeller 491 836 1,327 51 71 0 29 17.3

Figure 8.4.3 show s the range of LCC savings for the efficiency levels considered for non

weatherized

, condensing gas furnace fans

. For each standard level, the top and the bottom of the

box indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th percen tiles. The small box shows the average LCC savings for each standard level.8

- 35 Figure 8.4.3 Distribution of LCC Savings for Non

- Weatherized, Condensing Gas Furnace Fans

Figure 8.4.4 show the range of PBPs for all efficiency levels considered for non

weatherized, condensing gas furnace fans.

Figure 8.4.4 Distributions of PB P for Non

- Weatherized, Condensing Gas Furnace Fans - 600 - 400 - 200 0 200 400 600 800

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level NWGF (Condensing) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 20 40 60 80 100 120 140 160 180

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level NWGF (Condensing) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 36 The rebuttable PBP for each efficiency level is shown in Table 8.4.4

.

Table 8.4.4 Rebuttable Payback Period for Non

- Weatherized, Condensing Gas Furnace

Fans

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 2.1

2 PSC w/ Controls 3.0

3 X13 1.2

4 ECM (Variable Speed) 4.5

5 ECM + Backward

- curved Impeller 4.7

8.4.3 Weatherized Gas Furnace Fans

Table 8.4.5 shows the LCC and PBP results for weatherized gas furnace fans.

Table 8.4.5 Weatherized Gas Furnace Fan: LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 237 1,243 1,480 N/A 0 100 0 N/A

1 Improved

PSC 241 1,233 1,474 1 25 72 3 1.9

2 PSC w/

Controls 261 1,180 1,441 18 37 44 19 4.0

3 X13 297 820 1,117 203 7 44 49 2.6

4 ECM +
Multi

- Stage 451 814 1,264 102 37 32 30 10.1

5 ECM +

Backward

C urved Impeller 483 751 1,234 133 48 0 51 9.4

Figure 8.4.5 show s the range of LCC savings for the efficiency levels considered for weatherized gas furnace fans

. For each standard level, the top and the bottom of the box indicate

the 75 th and 25 th per centiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the8

- 37 bottom and the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.

Figure 8.4.5 Distribution of LCC Savings for Weatherized Gas

Furnace Fans

Figure 8.4.6 show s the range of PBPs for all efficiency levels considered for weatherized gas furnace fans.

Figure 8.4.6 Distributions of PBP for Weatherized Gas Furnace

Fans - 400 - 200 0 200 400 600 800 1000

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level WGF Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 10 20 30 40 50 60 70 80 90

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level WGF Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 38 The rebuttable PBP for each efficiency level is shown in Table 8.4.6

.

Table 8.4.6 Rebuttable Payback Period for Weatherized Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 2.8

2 PSC w/ Controls 3.5

3 X13 1.5

4 ECM (Variable Speed) 5.4

5 ECM + Backward

- curved Impeller 5.7

8.4.4 Oil Furnace Fans

Table 8.4.7 shows the LCC and PBP results for oil furnace fans.

Table 8.4.7 Oil Furnace Fan: LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 313 1,327 1,640 N/A 0 100 0 N/A

1 Improved

PSC 327 1,261 1,588 19 30 65 5 1.5

2 PSC w/

Controls 345 1,037 1,382 156 59 29 11 2.5

3 X13 437 1,005 1,442 111 56 29 15 9.6

4 ECM +
Multi

- Stage 577 1,059 1,636

- 29 63 29 8 19.1

5 ECM +

Backward

C urved Impeller 607 1,040 1,647

- 40 85 0 15 15.4

Figure 8.4.7 show the range of LCC savings for the efficiency levels considered for oil

furnace fans

. For each standard level, the top and the bottom of the box indicate the 75 th and 25 th
percentiles, res pectively. The bar at the middle of the box indicates the median; 50 percent of the

households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the8

- 39 top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.

Figure 8.4.7 Distribution of LCC Savings for Oil Furnace Fans

Figure 8.4.8 show the range of PBPs for all efficiency levels considered for oil furnace

fans.

Figure 8.4.8 Distributions of PBP for Oil Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.8

. - 1000

- 800 - 600 - 400 - 200 0 200 400 600 800

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level OF Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 50 100 150 200 250 300

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level OF Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 40 Table 8.4.8 Rebuttable Payback Period for Oil Furnace Fan

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 9.1

2 PSC w/ Controls 4.6

3 X13 2.3

4 ECM (Variable Speed) 5.8

5 ECM + Backward

- curved Impeller 6.0

8.4.5 Electric Furnace Fans

Table 8.4.9 shows the LCC and PBP results for electric furnace /modular blower fans.

Table 8.4.9 Electric Furnace/Modular Blower Fan: LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 207 827 1,034 N/A 0 100 0 N/A

1 Improved

PSC 211 817 1,028 1 23 74 3 3.8

2 PSC w/

Controls 231 829 1,060

- 17 44 48 7 4.5

3 X13 235 629 864 88 16 48 35 1.9

4 ECM +
Multi

- Stage 388 680 1,069

- 53 56 33 11 18.5

5 ECM +

Backward

C urved Impeller 420 635 1,054

- 38 71 0 29 14.3

Figure 8.4.9 show the range of LCC savings for the efficiency levels considered for

electric furnace fans

. For each standard level, the top and the bottom of the box indicate the 75 th

and 25 th percentiles , respectively. The bar at the middle of the box indicates the median; 50 percent of the households have lifecycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 41 Figure 8.4.9 Distribution of LCC Savings for Electric Furnace

Fans

Figure 8.4.10 show s the range of PBPs for all efficiency levels considered for electric

furnace fans.

Figure 8.4.10 Distributions of PB P for Electric Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.10

. - 400 - 300 - 200 - 100 0 100 200 300 400 500

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level EF Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 20 40 60 80 100 120 140 160 180

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level EF Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 42 Table 8.4.10 Rebuttable Payback Period for Electric Furnace/Modular Blower Fan

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 2.8

2 PSC w/ Controls 3.7

3 X13 1.6

4 ECM (Variable Speed) 5.6

5 ECM + Backward

- curved Impeller 6.0

8.4.6 Manufactured Home Non

- W eatherized, Non

- C ondensing Gas Furnace Fans

Table 8.4.11 shows the LCC and PBP results for manufactured home non

- weatherized,

non

- condensing gas furnace fans.

Table 8.4.11 Manufactured Home Non

- W eatherized, Non

- C ondensing Gas Furnace

Fan s : LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 218 742 961 N/A 0 100 0 N/A

1 Improved

PSC 224 724 948 6 44 50 5 1.6

2 PSC w/

Controls 278 637 915 39 71 0 28 13.5

3 X13 314 567 881 74 60 0 39 9.3

4 ECM +
Multi

- Stage 531 536 1,067

- 112 85 0 15 24.4

5 ECM +

Backward

C urved Impeller 561 518 1,079

- 124 84 0 16 23.7

Figure 8.4.11 show s the range of LCC savings for the efficiency levels considered for

manufactured home non

- weatherized

, non

- condensing gas furnace fans

. For each standard level, the top and the bottom of the box indicate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and

95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 43 Figure 8.4.11 Distribution of LCC Savings for Manufactured

Home Non

- W eatherized, Non

- C ondensing Gas

Furnace Fans

Figure 8.4.12 show s the range of PBPs for all efficiency levels considered for

manufactured home non

- weatherized

, non

- condensing gas furnace fans.

Figure 8.4.12 Distributions of PB P for Manufactured Home, Non

W eatherized, No n

- C ondensing Gas Furnace Fans - 800 - 600 - 400 - 200 0 200 400 600 800

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level MHGF (Non

- condensing) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 20 40 60 80 100 120 140 160 180 200

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level MHGF (Non

- condensing) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 44 The rebuttable PBP for each efficiency level is shown in Table 8.4.12

.

Table 8.4.12 Rebuttable Payback Period for Manufactured Home Non

- W eatherized, Non

C ondensing Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 4.1

2 PSC w/ Controls 5.8

3 X13 2.4

4 ECM (Variable Speed) 8.7

5 ECM + Backward

- curved Impeller 9.3

8.4.7 Manufactured Home Non

- W eatherized, Condensing Gas Furnace Fans

Table 8.4.13 shows the LCC and PBP results for manufactured home non

- weatherized, condensing gas furnace fans.

Table 8.4.13 Manufactured Home Non

- W eatherized, Condensing Gas Furnace Fan s : LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 237 778 1,015 N/A 0 100 0 N/A

1 Improved

PSC 243 743 985 10 28 67 5 1.0

2 PSC w/

Controls 284 616 900 66 43 34 24 10.2

3 X13 319 554 873 85 38 34 28 8.3

4 ECM +
Multi

- Stage 531 537 1,068

- 110 89 0 11 35.0

5 ECM +

Backward

C urved Impeller 572 525 1,098

- 140 89 0 11 36.3

Figure 8.4.13 shows the range of LCC savings for the efficiency levels considered for

manufactured home non

- weatherized, condensing gas furnace fans

. For each standard level, the top and the bottom of the box indicate the 75 th and 25 th percentiles, respectively. The bar at the8

- 45 middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 t h and 95 th
percentiles. The small box shows the average LCC savings for each standard level.

Figure 8.4.13 Distribution of LCC Savings for Manufactured

Home Non

- W eatherized, Condensing Gas Furnace

Fans

Figure 8.4.14 show s the range of PBPs for all efficiency levels considered for

manufactured home non

- weatherized, condensing gas furnace fans. - 500 - 400 - 300 - 200 - 100 0 100 200 300 400 500

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level MHGF (Condensing) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 46 Figure 8.4.14 Distributions of PB P for Manufactured Home Non

W eatherized, Condensing Gas Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.14

.

Table 8.4.14 Rebuttable Payback Period for Manufactured Home Non

- W eatherized, Condensing Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 4.0

2 PSC w/ Controls 5.3

3 X13 2.2

4 ECM (Variable Speed) 7.9

5 ECM + Backward

- curved Impeller 8.4

8.4.8 Manufactured Home Electric Furnace/Modular Blower Fans

Table 8.4.15 shows the LCC and PBP results for manufactured home electric

furnace/modular blower fans. 0 50 100 150 200 250

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level MHGF (Condensing) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 47 Table 8.4.15 Manufactured Home Electric Furnace/Module Blower Fan s : LCC and

PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Baseline (PSC) 177 733 910 N/A 0 100 0 N/A

1 Improved

PSC 183 731 914

- 2 29 69 2 5.1

2 PSC w/

Controls 253 643 896 8 39 37 24 9.7

3 X13 287 541 829 53 27 37 35 7.4

4 ECM +
Multi

- Stage 497 489 986

- 66 57 25 17 17.1

5 ECM +

Backward

C urved Impeller 501 454 956

- 36 59 0 40 11.3

Figure 8.4.15 shows the range of LCC savings for the efficiency levels considered for

manufactured home electric furnace/modular blower fans

. For each standard level, the top and

the bottom of the box indi cate the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th
percentiles. The small box shows the average LCC savings for each standard level.8

- 4 8 Figure 8.4.15 Distribution of LCC Savings for Manufactured

Home Electric Furnace/Modular Blower Fans

Figure 8.4.16 shows the range of PBPs for all efficiency levels considered for

manufactured home electric furnace/modular blower fans.

Figure 8.4.16 Distributions of PB P for Manufactured Home

Electric Furnace/Modular Blower Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.16

. - 500 - 400 - 300 - 200 - 100 0 100 200 300 400 500

Level 1 Level 2 Level 3 Level 4 Level 5Average LCC Savings (2011$)

Efficiency Level MHEF Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 20 40 60 80 100 120

Level 1 Level 2 Level 3 Level 4 Level 5Average PBB (years)

Efficiency Level MHEF Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 49 Table 8.4.16 Rebuttable Payback Period for Manufactured Home Electric

Furnace/Modular Blower Fans

Effici ency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 5.5

2 PSC w/ Controls 6.9

3 X13 2.8

4 ECM (Variable Speed) 10.3

5 ECM + Backward

- curved Impeller 10.9

8.4.9 Hydronic Air Handler Fans

Table 8.4.17 shows the LCC and PBP results for hydronic air handler fans.

Table 8.4.17 Hydronic Air Handler Fan (Heat/Cool): LCC and PBP Results

CSL Technology Option Life

- Cycle Cost (2011$) Life

- Cycle Cost Savings Payback

Period (years)

Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings (2011$) % Households with

Median Net

Cost No Impact Net

Benefit

0 Basel ine (PSC) 230 1,284 1,515 N/A 0 100 0 N/A

1 Improved

PSC 246 1,268 1,514 0 28 69 3 14.7

2 PSC w/

Controls 291 1,288 1,579

- 39 53 38 8 11.4

3 X13 341 897 1,237 176 21 38 40 5.2

4 ECM +
Multi

- Stage 504 704 1,208 200 37 22 40 9.1

5 ECM +

Backward

C urved Impeller 525 658 1,183 225 47 0 53 8.1

6 Switching

mode Power Supply 531 629 1,160 249 35 0 65 6.8

7 Toroidal

Transformer 555 613 1,168 240 39 0 61 7.8

Figure 8.4.17 shows the range of LCC savings for the efficiency levels considered for hydronic air handler fans

. For each standard level, the top and the bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 508

- 50 percent of the households have life

- cycle cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5 th and 95 th percentiles. Th e small box shows the average LCC savings for each standard level.

Figure 8.4.17 Distribution of LCC Savings for Hydronic Air

Handler Fans

Figure 8.4.18 show s the range of PBPs for all efficiency levels considered for hydronic

air handler fans.

Figure 8.4.18 Distributions of PBP for Hydronic Air Handler Fans - 600 - 400 - 200 0 200 400 600 800 1000 1200 1400 1600

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7Average LCC Savings (2011$)

Efficiency Level HF Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average

0 10 20 30 40 50 60 70 80 90 100

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7Average PBB (years)

Efficiency Level HF Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 51 The rebuttable PBP for each efficiency level is shown in Table 8.4.18

.

Table 8.4.18 Rebuttable Payback Period for Hydronic Air Handler Fan (Heat/Cool)

Efficiency Level Technology Option Rebuttable Payback Period years
1 Improved PSC 7.7

2 PSC w/ Controls 3.6

3 X13 1.7

4 ECM (Variable Speed) 3.5

5 ECM + Backward

- curved Impeller 3.8

6 Switching Mode Power Supply 4.0

7 Toroidal Transformer 4.38

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