CHAPTER 6. ENGINEERING ANALYSIS TABLE OF CONTENTS 6.1 INTRODUCTION .................................................... 6-1 6.2 PRODUCT CLASSES CONSIDERED .................................... 6-1 6.3 IDENTIFICATION OF BASELINE MODELS .............................. 6-2 6.4 MANUFACTURING COST ANALYSIS ................................... 6-3 6.4.1 Generation of Bills of Materials .................................... 6-4 6.4.1.1 Teardown (Reverse Engineering) Approach .................... 6-4 6.4.1.2 Modeling Approach ........................................ 6-7 6.4.2 Approach for Condensing Boilers and Mobile Home Furnaces ....... 6-11 6.4.3 Cost Model and Definitions ....................................... 6-12 6.4.3.1 Outsourcing ............................................. 6-13 6.4.3.2 Greenfield Facility Specifications ........................... 6-15 6.4.3.3 Production Volume ....................................... 6-16 6.4.3.4 Generating Production-Cost Results .......................... 6-17 6.4.4 Sensitivity Analysis ........................................... 6-18 6.4.5 Curves of Manufacturing Cost Versus Efficiency ...................... 6-21 6.5 INSTALLATION COSTS .............................................. 6-24 6.5.1 Data Sources ................................................. 6-25 6.5.2 Installation Model .............................................. 6-25 6.5.3 Non-Weatherized Gas Furnaces ................................... 6-29 6.5.4 Weatherized Gas Furnaces ....................................... 6-30 6.5.5 Mobile Home Gas Furnaces ...................................... 6-31 6.5.6 Oil-Fired Furnaces .............................................. 6-31 6.5.7 Hot-Water Gas Boilers ........................................... 6-32 6.5.8 Hot-Water Oil-fired Boilers ....................................... 6-33 6.6 MAINTENANCE AND REPAIR COST .................................. 6-34 6.6.1 Maintenance Cost .............................................. 6-34 6.6.2 Repair Cost ................................................... 6-35 6.7 ENGINEERING ANALYSIS PAYBACK PERIODS ........................ 6-37 6.7.1 Calculation of Fuel Consumption for Each Design Option ............... 6-37 6.7.2 Calculation of Electricity Consumption ............................. 6-38 6.7.3 Derivation of Fuel Costs ......................................... 6-38 6.7.4 Rebuttable Payback ............................................. 6-38 6.7.4.1 Rebuttable Payback Results ................................. 6-39 6.8 ENGINEERING SPREADSHEETS ...................................... 6-40 

### CHAPTER 6. ENGINEERINGANALYSIS TABLE OF CONTENTS 6.1 INTRODUCTION

.................................................... 6-1 6.2 PRODUCT CLASSES CONSIDERED

.................................... 6-1 6.3 IDENTIFICATION OF BASELINE MODELS

.............................. 6-2 6.4 MANUFACTURING COST ANALYSIS

................................... 6-3 6.4.1 Generation ofBills ofMaterials

.................................... 6-4 6.4.1.1 Teardown (Reverse Engineering) Approach

.................... 6-4 6.4.1.2 Modeling Approach

........................................ 6-7 6.4.2 Approach for Condensing Boilers and Mobile Home Furnaces

. . . . . . . 6-11 6.4.3 Cost Model and Definitions

....................................... 6-12 6.4.3.1 Outsourcing

............................................. 6-13 6.4.3.2 Greenfield Facility Specifications

........................... 6-15 6.4.3.3 Production Volume

....................................... 6-16 6.4.3.4 Generating Production-Cost Results

.......................... 6-17 6.4.4 Sensitivity Analysis

........................................... 6-18 6.4.5 Curves ofManufacturing Cost Versus Efficiency

...................... 6-21 6.5 INSTALLATION COSTS

.............................................. 6-24 6.5.1 Data Sources

................................................. 6-25 6.5.2 Installation Model

.............................................. 6-25 6.5.3 Non-Weatherized Gas Furnaces

................................... 6-29 6.5.4 Weatherized Gas Furnaces

....................................... 6-30 6.5.5 Mobile Home Gas Furnaces

...................................... 6-31 6.5.6 Oil-FiredFurnaces

.............................................. 6-31 6.5.7 Hot-Water Gas Boilers

........................................... 6-32 6.5.8 Hot-Water Oil-fired Boilers

....................................... 6-33 6.6 MAINTENANCE AND REPAIR COST

.................................. 6-34 6.6.1 Maintenance Cost

.............................................. 6-34 6.6.2 Repair Cost

................................................... 6-35 6.7 ENGINEERING ANALYSIS PAYBACK PERIODS

........................ 6-37 6.7.1 Calculation ofFuel Consumption for Each Design Option

............... 6-37 6.7.2 Calculation ofElectricity Consumption

............................. 6-38 6.7.3 Derivation ofFuel Costs

......................................... 6-38 6.7.4 Rebuttable Payback

............................................. 6-38 6.7.4.1 Rebuttable Payback Results

................................. 6-39 6.8 ENGINEERING SPREADSHEETS

...................................... 6-40

6-iLIST OF TABLES

Table 6.3.1 Features of Baseline Models by Product Class ......................... 6-3 Table 6.4.1 Gaps in Efficiency Levels of Units Selected for Teardown ............... 6-7 Table 6.4.2 Ranking of Design Options ........................................ 6-8 Table 6.4.3 Fraction of Category III Installations by AFUE ....................... 6-10 Table 6.4.4 Cost Model Fabrication Assumptions ............................... 6-14 Table 6.4.5 Cost Model Assumptions on Outsourced Components .................. 6-15 Table 6.4.6 Greenfield Facility Specifications .................................. 6-15 Table 6.4.7 Greenfield Facility Production Cost Assumptions ..................... 6-16 Table 6.4.8 Annual Production Volume Assumptions ............................ 6-17 Table 6.4.9 Degree of Uncertainty for Main Variable Types ....................... 6-18 Table 6.4.10 Manufacturing Parameter Ranges .................................. 6-19 Table 6.5.1 Installation Model, Non-Weatherized Gas Furnace Weighting Assumptions . 6-27 Table 6.5.2 Master Bill of Materials for All Appliance Installation Configurations ..... 6-28 Table 6.5.3 Material and Labor Cost Assumptions .............................. 6-28 Table 6.5.4 Installation Cost for Non-Weatherized Gas Furnaces ................... 6-30 Table 6.5.5 Installation Cost for Weatherized Gas Furnaces ....................... 6-31 Table 6.5.6 Installation Cost for Oil-Fired Furnaces ............................. 6-32 Table 6.5.7 Installation Cost for Hot-Water Gas-fired Boilers ...................... 6-33 Table 6.5.8 Installation Cost for Hot-Water Oil-fired Boilers ...................... 6-34 Table 6.6.1 Annualized Repair Cost (2006$) ................................... 6-36 Table 6.7.1 Table 6.7.2 Fuel-Efficiency Design Options ...................................

Efficiency Levels with Less Than Three-Year Payback Period Using 6-38
DOE Test Procedure ............................................ 6-39

LIST OF FIGURES Figure 6.4.1 Probability Distribution for the Production Cost of an Equipment Sample .. 6-20 Figure 6.4.2 Importance of Input Parameters for Production Costs for

Non-Weatherized Gas Furnaces ................................... 6-20 Figure 6.4.3 Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces ..... 6-21 Figure 6.4.4 Incremental Manufacturing Costs for Weatherized Gas Furnaces ......... 6-22 Figure 6.4.5 Incremental Manufacturing Costs for Mobile Home Furnaces ........... 6-22 Figure 6.4.6 Incremental Manufacturing Costs for Oil-fired Furnaces ................ 6-23 Figure 6.4.7 Incremental Manufacturing Costs for Gas Boilers ..................... 6-23 Figure 6.4.8 Incremental Manufacturing Costs for Oil-fired Boilers ................. 6-24 Table 6.3.1 Table 6.4.1 Table 6.4.2 Table 6.4.3 Table 6.4.4 Table 6.4.5 Table 6.4.6 Table 6.4.7 Table 6.4.8 Table 6.4.9 Table 6.4.10 Table 6.5.1 Table 6.5.2 Table 6.5.3 Table 6.5.4 Table 6.5.5 Table 6.5.6 Table 6.5.7 Table 6.5.8 Table 6.6.1 Table 6.7.1 Table 6.7.2

Figure 6.4.1 Figure 6.4.2 Figure 6.4.3 Figure 6.4.4 Figure 6.4.5 Figure 6.4.6 Figure 6.4.7 Figure 6.4.8 

### LIST OFTABLES Features ofBaseline Models by Product Class

......................... 6-3 Gaps in Efficiency Levels ofUnits Selected for Teardown

............... 6-7 Ranking ofDesign Options

........................................ 6-8 Fraction ofCategory III Installations byAFUE

....................... 6-10 Cost Model FabricationAssumptions

............................... 6-14 CostModel Assumptions on Outsourced Components

. . . . . . . . . . . . . . . . . . 6-15 Greenfield Facility Specifications

.................................. 6-15 Greenfield Facility Production Cost Assumptions

..................... 6-16 Annual Production Volume Assumptions

. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17 Degree ofUncertainty for MainVariable Types

....................... 6-18 Manufacturing ParameterRanges

.................................. 6-19 InstallationModel, Non-Weatherized Gas Furnace Weighting Assumptions. 6-27 Master Bill ofMaterials for All Appliance Installation Configurations

..... 6-28 Material and Labor CostAssumptions

.............................. 6-28 Installation Cost for Non-Weatherized Gas Furnaces

................... 6-30 Installation Cost for Weatherized Gas Furnaces

..... . . . . . . . . . . . . . . . . . . 6-31 Installation Cost for Oil-FiredFurnaces

............................. 6-32 Installation Cost for Hot-Water Gas-fired Boilers

...................... 6-33 Installation Cost for Hot-Water Oil-fired Boilers

...................... 6-34 Annualized Repair Cost (2006$)

................................... 6-36 Fuel-Efficiency Design Options

................................... 6-38 Efficiency Levels with Less Than Three-YearPayback Period Using DOE Test Procedure

............................................ 6-39


### LIST OF FIGURES Probability Distribution for the Production Cost ofan Equipment Sample ., 6-20 Importance ofInputParameters for Production Costs for Non-Weatherized Gas Furnaces

................................... 6-20 Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces

..... 6-21 Incremental Manufacturing Costs for Weatherized Gas Furnaces

......... 6-22 Incremental Manufacturing Costs for Mobile Home Furnaces

........... 6-22 Incremental Manufacturing Costs for Oil-firedFurnaces

................ 6-23 Incremental Manufacturing Costs for Gas Boilers

..................... 6-23 Incremental Manufacturing Costs for Oil-firedBoilers

................. 6-24

6-iiCHAPTER 6. ENGINEERING ANALYSIS

6.1 INTRODUCTION The engineering analysis provides an estimate for the potential energy savings that can be achieved with higher-efficiency furnaces and boilers and determines the associated increases in equipment and installation cost. This analysis relies on DOE's test procedure as the method for determining energy savings estimates and compares the costs for improved efficiency to the cost of baseline furnaces and boilers representing all product classes considered. The engineering analysis estimates the payback period for each of the design options to enable DOE to address the legally required "rebuttable" payback consideration. DOE uses the costs developed in the engineering analysis in the life-cycle cost (LCC) analysis. The baseline models for each product class provide starting points for analyzing technologies that allow for energy efficiency improvements. DOE defines a baseline model as an appliance with commonly available features and technologies that just meets the current minimum efficiency standard. For this rulemaking, DOE defined baseline models for each of the product classes with sales volumes greater than 100,000 per year. To explore how manufacturers would likely design products to meet a minimum standard, and to thoroughly understand the relationships between different equipment configurations and efficiency and cost, DOE considered various design options that could meet a given efficiency level. DOE estimated inputs to determine payback periods, which represent the time required for the increase in average total installed equipment cost to be offset by reduced annual average operating cost. DOE estimated total installed cost to the consumer through an analysis of manufacturer costs, markups, and installation costs; it estimated annual average operating costs by calculating energy consumption using the DOE test procedure, applying average energy prices, and adding annual average maintenance repair costs.
6.2 PRODUCT CLASSES CONSIDERED The Framework Document' outlined 13 classes of furnaces and boilers: ® Gas furnaces (weatherized and non-weatherized), ® Oil-fired furnaces (weatherized and non-weatherized), ® Mobile home furnaces (gas-fired and oil-fired), ® Hot-water boilers (gas-fired and oil-fired), ® Steam boilers (gas-fired and oil-fired),

6-1 

### CHAPTER 6. ENGINEERINGANALYSIS
6.1 INTRODUCTION The engineering analysis provides an estimate for the potential energy savings that canbe achieved with higher-efficiency furnaces and boilers and determines the associated increases in equipment and installation cost. This analysis relies on DOE's testprocedure as the method for determining energy savings estimates and compares the costs for improved efficiency to the cost ofbaseline furnaces andboilers representing all product classes considered. The engineering analysis estimates the paybackperiod for each ofthe design options to enable DOE to address the legally required "rebuttable"payback consideration. DOE uses the costs developed in the engineering analysis inthe life-cycle cost (LeC) analysis. The baseline models for each product class provide starting points for analyzing technologies that allow for energy efficiency improvements. DOE defines a baseline model as an appliance with commonly available features and technologies thatjustmeets the current minimum efficiency standard. For this rulemaking, DOE defined baseline models for each ofthe product classes with sales volumes greater than 100,000 peryear. To explore how manufacturers would likely design products to meet a minimum standard, and to thoroughly understand the relationships between different equipment configurations and efficiency and cost, DOE considered various design options that could meet a given efficiency level. DOE estimated inputs to determine paybackperiods, which represent the time required for the increase in average total installed equipment cost to be offsetbyreduced annual average operating cost. DOE estimated total installed cost to the consumerthrough an analysis of manufacturer costs, markups, and installation costs; it estimated annual average operating costs by calculating energy consumption using the DOE testprocedure, applying average energy prices, and adding annual average maintenance repair costs.
6.2 

### PRODUCT CLASSES CONSIDERED The Framework Documentl outlined 13 classes offurnaces andboilers:
• Gas furnaces (weatherized and non-weatherized),

.. Oil-fired furnaces (weatherized and non-weatherized), • Mobile home furnaces (gas-fired and oil-fired),

.. Hot-waterboilers (gas-fired and oil-fired), • Steam boilers (gas-fired and oil-fired),

6-1® Electric furnaces, and

® Combination space/water-heating appliances (gas-fired and oil-fired). Based on the market assessment and stakeholder comments, DOE divided these product classes into four categories, based primarily on shipment volume. The first category consists of the most widely used product class, non-weatherized gas furnaces. Non-weatherized gas furnaces have annual shipments of more than 2.5 million units. DOE's analyses considered this product class in depth. The second category consists of those remaining classes that typically have shipments ofmore than 100,000 per year: (1) weatherized gas furnaces, (2) mobile home gas furnaces, (3) oilfired furnaces, (4) hot-water gas boilers, and (5) hot-water oil-fired boilers. DOE analyzed these product classes in a similar manner to the first category, but included less detail on electricity savings and considered a smaller number of design options. The third category includes the classes that have annual shipments less than 50,000: steam gas boilers and steam oil-fired boilers. DOE did not conduct analyses on these products since they have a low and declining level of shipments.DOE also did not conduct analyses on the following product classes: weatherized oilfired furnaces, mobile home oil-fired furnaces, electric furnaces, and combination appliances. The first two classes have very low (essentially zero) shipments. DOE did not consider electric furnaces because it did not identify any significant energy savings potential (DOE found that the reports of furnace manufacturers to the FTC list the efficiency for electric furnaces with a low and a high value of 100-percent AFUE). DOE did not include combination appliances in the current analysis since a test procedure for this product class is not in place and DOE has not yet decided whether to regulate this product class.

6.3 IDENTIFICATION OF BASELINE MODELS DOE defines baseline units as appliances with commonly available features and technologies that just meet the current minimum efficiency standard. For each of the product classes in the first and second categories described above, DOE identified a baseline model. In determining the baseline model, it considered technical descriptions of the covered equipment, definitions of the product classes as described in the Framework Document, results of the market assessment, and suggestions from stakeholders. Table 6.3.1 summarizes the main features of the baseline models.

6-2 .. Electric furnaces, and " Combination space/water-heating appliances (gas-fired and oil-fired). Based on the market assessment and stakeholder comments, DOE divided these product classes into four categories, basedprimarily on shipment volume. The first category consists ofthe most widely usedproduct class, non-weatherized gas furnaces. Non-weatherized gas furnaces have annual shipments ofmore than 2.5 million units. DOE's analyses considered this product class in depth. The second category consists ofthose remaining classes that typically have shipments of more than 100,000 per year: (1) weatherized gas furnaces, (2) mobile home gas furnaces, (3) oilfired furnaces, (4) hot-water gas boilers, and (5) hot-water oil-firedboilers. DOE analyzed these product classes in a similar manner to the first category, but included less detail on electricity savings and considered a smaller number ofdesign options. The third category includes the classes that have annual shipments less than 50,000: steam gas boilers and steam oil-fired boilers. DOE did not conduct analyses onthese products since they have a low and declining level ofshipments. DOE also did not conduct analyses onthe following product classes: weatherized oilfired furnaces, mobile home oil-fired furnaces, electric furnaces, and combination appliances. The first two classes have very low (essentially zero) shipments. DOE did not consider electric furnaces because it did not identify any significant energy savings potential (DOE found that the reports offurnace manufacturers to the FTC list the efficiency for electric furnaces with a low and a high value of 100-percent AFUE). DOE did not include combination appliances in the current analysis since a test procedure for this product class is not in place and DOE has not yet decided whether to regulate this product class.

6.3 

### IDENTIFICATION OF BASELINE MODELS DOE defines baseline units as appliances with commonly available features and technologies thatjustmeetthe current minimum efficiency standard. For each ofthe product classes in the first and second categories described above, DOE identified a baseline model. In determining the baseline model, it considered technical descriptions ofthe covered equipment, definitions ofthe product classes as described in the Framework Document, results ofthe market assessment, and suggestions from stakeholders. Table 6.3.1 summarizes the main features ofthe baseline models.

6-2Table 6.3.1 Features of Baseline Models by Product Class

Product Class Input Capacity AFUE Configuration Heat Exchanger Type Ignition Draft (Btu/hr) (%) Non-Weatherized Gas 75,000 78 Upflow Clam Shell/Tubular Hot Surface Induced Furnaces Weatherized Gas 75,000 78 Horizontal Clam Shell/Tubular Hot Surface Induced Furnaces Mobile Home Gas 75,000 75 Downflow Drum Standing Pilot Natural Furnaces Oil Fired Furnaces 105,000 78 Upflow Drum Intermittent Forced Ignition Gas Hot-Water Boilers 105,000 80 N/A Sectional, Dry-base, Standing Pilot Natural Cast-iron Oil-Fired Hot-Water 140,000 80 N/A Sectional, Wet-base Intermittent Forced Boilers Cast-iron Ignition In addition to the above features, the baseline models have a blower or pump driven by a standard permanent split capacitor (PSC) induction motor.

6.4 MANUFACTURING COST ANALYSIS After assessing the available methods and taking stakeholder comments into account, DOE used reverse engineering of existing products to estimate the manufacturing cost of the baseline model and the considered design options. The reverse-engineering or teardown approach is a cost assessment based on a detailed bill of materials (BOM) for the various models. Appendix B describes the technical aspects of the approach as applied to residential furnaces and boilers. DOE applied the reverse-engineering approach in conjunction with a review of relevant literature, computer simulation, and other analytical techniques. In some cases, DOE adopted industry-supplied data. Throughout the advance notice of proposed rulemaking (ANOPR) and notice of proposed rulemaking (NOPR) analysis periods, DOE provided the Gas Appliance Manufacturers Association (GAMA), manufacturers, and other stakeholders several opportunities to review and comment on the equipment cost estimates to ensure accuracy and completeness. DOE considered comments from these stakeholders in its SNOPR analysis. In estimating production costs for each candidate efficiency level above the baseline model, DOE considered several design options that could be used to reach a given annual fuel utilization efficiency (AFUE) level. DOE determined the efficiency levels corresponding to various design option combinations using engineering calculations and manufacturer data submittals. DOE took the following steps in establishing manufacturing costs as a function of fuel efficiency:

6-3 T bi 631 F



### a e 

# .. eatures 0f 

### B 

## r M d 1 b PdtCI ase me o e s )y 

### ro ue ass ProductClass Input Capacity AFUE Configuration HeatExchangerType Ignition Draft (Btu/hr) (%) Non-Weatherized Gas 75,000 78 Upflow Clam Shell/Tubular Hot Surface Induced Furnaces Weatherized Gas 75,000 78 Horizontal Clam Shell/Tubular Hot Surface Induced Furnaces Mobile Home Gas 75,000 75 Downflow Dnlln Standing Pilot Natural Furnaces Oil-FiredFurnaces 105,000 78 Upflow Drum Intermittent Forced Ignition Gas Hot-Water Boilers 105,000 80 N/A Sectional, Dry-base, Standing Pilot Natural Cast-iron Oil-Fired Hot-Water 140,000 80 N/A Sectional, Wet-base, Intermittent Forced Boilers Cast-iron Ignition In addition to the above features, the baseline models have a blower orpump driven by a standardpermanent split capacitor (PSC) induction motor.


### 6.4 MANUFACTURING COSTANALYSIS After assessing the available methods and taking stakeholder comments into account, DOE used reverse engineering ofexisting products to estimate the manufacturing cost ofthe baseline model and the considered design options. The reverse-engineering orteardown approach is a cost assessment based on a detailed bill ofmaterials (BOM) for the various models. Appendix B describes the technical aspects ofthe approach as applied to residential furnaces andboilers. DOE applied thereverse-engineering approach in conjunction with a review ofrelevant literature, computer simulation, and other analytical techniques. In some cases, DOE adopted industry-supplied data. Throughout the advance notice ofproposedrulemaking (ANOPR) and notice ofproposed rulemaking (NOPR) analysis periods, DOE provided the Gas Appliance Manufacturers Association (GAMA), manufacturers, and other stakeholders several opportunities to review and comment onthe equipment cost estimates to ensure accuracy and completeness. DOE considered comments from these stakeholders inits SNOPR analysis. In estimating production costs for each candidate efficiency level above the baseline model, DOE considered several design options that couldbe used to reach a given annual fuel utilization efficiency (AFUE) level. DOE determined the efficiency levels corresponding to various design option combinations using engineering calculations and manufacturer data submittals. DOE tookthe following steps in establishing manufacturing costs as a function offuel efficiency:

6-3Generate BOMs for products at different efficiency levels using teardown analysis

(disassembly of units) and numerical simulations; ® Enter BOMs into a cost model, incorporating assumptions obtained through available industry data, internal expertise, visits to manufacturers, and input from stakeholders; ® Perform sensitivity analysis and cost-per-pound estimates; and ® Generate cost-efficiency data for each product class. DOE further divided each of these steps into several sub-tasks, as described in the following sections. 6.4.1 Generation of Bills of Materials A BOM is a list of all the components that comprise a given appliance. In the BOMs, DOE listed each component and provided a detailed description of its dimensions, function, and material, and information about its manufacturing and assembly process. DOE generated the BOMs by examining and disassembling (through teardown analysis) some current-market units and/or simulating design options using numerical models and creating "hypothetical" units that it costed as if they were real units. 6.4.1.1 Teardown (Reverse Engineering) Approach In the context of this analysis, the terms "reverse engineering" and "teardown" analysis solely describe the estimation of production costs by examining actual equipment or designs. The availability of a large number of residential products, with a wide range of efficiency, allowed DOE to consider most design options using a reverse-engineering approach, to establish an accurate estimate for production costs. DOE purchased and disassembled by hand the selected units, and measured, weighed, and analyzed each part. Additionally, DOE studied and reconstructed all the steps of the manufacturing processes to complete the teardown analysis. The result was a detailed BOM that DOE used as an input to the cost model. Selection of Units. During the process of selecting units for teardown, DOE considered three main questions: (1) What efficiency levels should it capture in the teardown analysis? (2) Are all potential efficiency levels and design options represented in the units on the market? (3) Which of the available units are most representative? In responding to these questions, DOE adopted the following criteria for selecting units for the teardown analysis: ® The selected products should span the full range of efficiency levels under consideration;

6-4 II Generate BOMs for products at different efficiency levels using teardown analysis (disassembly ofunits) and numerical simulations;

.. Enter BOMs into a cost model, incorporating assumptions obtained through available industry data, internal expertise, visits to manufacturers, and input from stakeholders;

.. Perform sensitivity analysis and cost-per-pound estimates; and " Generate cost-efficiency data for each product class. DOE further divided each ofthese steps into several sub-tasks, as described inthe following sections. 6.4.1 Generation ofBills ofMaterials A BOM is a list ofall the components that comprise a given appliance. Inthe BOMs, DOE listed each component andprovided a detailed description ofits dimensions, function, and material, and information about its manufacturing and assembly process. DOE generated the BOMs by examining and disassembling (through teardown analysis) some current-marketunits and/or simulating design options using numerical models and creating "hypothetical" units that it costed as ifthey were real units. 6.4.1.1 Teardown (Reverse Engineering) Approach In the context ofthis analysis, the terms "reverse engineering" and "teardown" analysis solely describe the estimation ofproduction costs by examining actual equipment or designs. The availability ofa large number ofresidential products, with a wide range ofefficiency, allowed DOE to consider most design options using a reverse-engineering approach, to establish an accurate estimate for production costs. DOEpurchased and disassembled byhand the selectedunits, and measured, weighed, and analyzed eachpart. Additionally, DOE studied and reconstructed all the steps ofthe manufacturing processes to complete the teardown analysis. The result was a detailed BOM that DOE used as an input to the cost model. 

### Selection ofUnits. During the process ofselecting units for teardown, DOE considered three main questions: (1) What efficiency levels should it capture in the teardown analysis? (2) Are all potential efficiency levels and design options represented in the units onthe market? (3) Which ofthe available units are mostrepresentative? Inresponding to these questions, DOE adopted the following criteria for selecting units for the teardown analysis: " The selectedproducts should span the full range ofefficiency levels under consideration;

6-4® Within each product class, the selected products should come from the same manufacturer and be within the same product series; ® The selected products should come from a manufacturer that has a large market share in that product class; and The selected products should have non-efficiency-related features that are the same as, or similar to, features of other products in the same class and at the same efficiency level. Additional criteria for selecting the teardown units included the following: The input capacities should be as close as possible to the baseline model capacity for each product class; The units should be manufactured in considerable volume and commonly available; and ® The units should have the most popular features and average energy consumption values.
DOE focused heavily on non-weatherized gas-fired furnaces and, therefore, selected half of the teardown units within that class

. The units selected for teardown included five nonweatherized gas-fired furnaces, one mobile home furnace , one oil-fired furnace, one weatherized gas-fired furnace, and two gas-fired hot-water boilers. Non-Weatherized Gas-Fired Furnaces. Non-weatherized gas-fired furnaces represent the vast majority of the furnace and boiler market. Therefore , DOE's teardown analysis included five models that are representative of the efficiency levels and design options available for these types of furnaces on the market. The analysis considered products in three efficiency ranges: non-condensing (between 78

-percent and 80-percent AFUE, with -68 percent of the furnace market at 80-percent AFUE), near-condensing (81-percent AFUE, < 1 percent of the market), and condensing (higher than 88-percent AFUE, -31 percent of the market).' When possible, DOE selected the least-efficient and the most

-efficient units in a given efficiency range. Thus, DOE selected three units in the non

-condensing and near-condensing ranges (low, medium, and high efficiency) and two units in the condensing range (low and high efficiency). To study the potential effects of design differences (such as tubular-versus-clamshell heat exchangers), DOE selected models made by two major manufacturers that represent significantly different designs. In this document, DOE refers to these two models as "Base Design A" and "Base Design B." Weatherized Gas Furnaces. Manufacturers of weatherized gas furnaces offer products between 78

-percent and 82.8-percent AFUE. There was one weatherized gas furnace listed in the GAMA directory at 82.8-percent AFUE, which has since been removed from the directory. The highest current efficiency for weatherized gas furnaces in the GAMA directory is 81.4- percent AFUE

. For its teardown analysis, DOE chose one representative unit from the range of 6-5 .. Within each product class, the selected products should come from the same manufacturer andbe within the same product series;

.. The selectedproducts should come from a manufacturer that has a large market share in that product class; and

.. The selected products should have non-efficiency-related features that are the same as, or similar to, features ofotherproducts in the same class and at the same efficiency level. Additional criteria for selecting the teardown units included the following:

e The input capacities shouldbe as close as possible to the baseline model capacity for each product class; " The units shouldbe manufactured in considerable volume and commonly available; and

.. The units shouldhave the mostpopular features and average energy consumption values.

DOE focused heavily on non-weatherized gas-fired furnaces and, therefore, selectedhalf ofthe teardownunits within that class. The units selected for teardown included five nonweatherized gas-fired furnaces, one mobile home furnace, one oil-fired furnace, one weatherized gas-fired furnace, and two gas-fired hot-waterboilers. 

### Non-Weatherized Gas-FiredFurnaces. Non-weatherized gas-fired furnaces represent the vast majority ofthe furnace and boilermarket. Therefore, DOE's teardown analysis included five models that are representative ofthe efficiency levels and design options available for these types offurnaces on the market. The analysis consideredproducts in three efficiencyranges: non-condensing (between 78-percent and 80-percentAFUE, with**~68** percent ofthe furnace market at 80-percentAFUE), near-condensing (81-percent AFUE, <1 percent ofthe market), and condensing (higher than 88-percentAFUE,**~31** percent ofthe market).2 Whenpossible, DOE selectedthe least-efficient and the most-efficient units in a given efficiencyrange. Thus, DOE selected three units in the non-condensing and near-condensing ranges (low, medium, and high efficiency) and two units in the condensing range (low and high efficiency). To study the potential effects ofdesign differences (such as tubular-versus-clamshell heat exchangers), DOE selected models made by two major manufacturers that represent significantly different designs. In this document, DOErefers to these two models as "Base DesignA" and "Base Design B." 

### Weatherized Gas Furnaces. Manufacturers ofweatherized gas furnaces offerproducts between 78-percent and 82.8-percent AFUE. There was one weatherized gas furnace listed in the GAMA directory at 82.8-percent AFUE, which has since been removed from the directory. The highest current efficiency for weatherized gas furnaces in the GAMA directory is 81.4- percent AFUE. For its teardown analysis, DOE chose one representative unit from the range of 6-5efficiencies currently available for the teardown analysis. Manufacturers typically sell

weatherized furnaces as "packaged" units, which means they include a furnace and an air conditioner in the same box. Contractors typically install packaged units to the exterior of a residence

. The packaged teardown unit that DOE selected had a three

-ton air-conditioner capacity, which appears to be the most common cooling capacity. Mobile Home Furnaces

. Mobile home furnace manufacturers offer products at the following efficiency levels: 75-percent, 80-percent, and 90-percent AFUE. In its teardown analysis, DOE chose a baseline efficiency level model for these products because the mobile home furnaces market currently presents a very low degree of design variability. The design differences between a 75-percent AFUE unit and a higher

-efficiency unit are straightforward (i.e., manufacturers incorporate electronic ignition, baffles, and draft inducer to achieve 80- percent AFUE, and a secondary heat exchanger to achieve 90-percent AFUE ), and DOE could effectively determine the costs of these components without performing a teardown for each efficiency level. Oil-Fired Furnaces

. Manufacturers of oil-fired furnaces typically offer products between 78-percent and 86-percent AFUE. Very few units are at the baseline model efficiency level (i.e., 78-percent AFUE), and DOE did not find a unit that is considered representative at efficiency levels lower than 81 percent

. Therefore, DOE decided to analyze one unit at an intermediate level, rather than at the baseline model level. Gas-Fired Hot-Water Boilers

. One of the major differences between gas-fired hot-water boilers and gas-fired furnaces is that, for boilers, the transition between non-condensing and condensing appliances is continuous and there is no gap in the distribution of efficiency values on the market

. Boiler models are available at virtually all efficiency levels between 80-percent and 99-percent AFUE. DOE set a value of 84-percent AFUE as the highest efficiency level for performing teardowns of gas hot-water boilers because only approximately 20 percent of models exceed this efficiency level. DOE chose one unit for teardown at 80-percent AFUE and one unit at 84- percent AFUE

. Since cast-iron sectional boilers are the most popular, DOE selected these for the teardown analysis. Condensing boilers are rare, and DOE selected none of them for the teardown analysis. Oil-Fired Hot-Water Boilers. DOE did not apply the teardown approach to oil-fired boilers. To estimate manufacturing costs of oil-fired hot-water boilers, DOE used available information from other product classes, taking advantage of similarities between gas

- and oilfired hot

-water boiler heat exchangers, and between oil-fired furnace and boiler burners. efficiencies currently available for the teardown analysis. Manufacturers typically sell weatherized furnaces as "packaged" units, which means they include a furnace and an air conditioner in the same box. Contractors typically install packaged units to the exterior ofa residence. The packagedteardown unit that DOE selectedhad a three-ton air-conditioner capacity, which appears to be the most common cooling capacity. 

### Mobile Home Furnaces. Mobile horne furnace manufacturers offerproducts at the following efficiency levels: 75-percent, 80-percent, and 90-percent AFUE. In its teardown analysis, DOE chose a baseline efficiency level model for these products because the mobile horne furnaces market currently presents a very low degree ofdesign variability. The design differences between a 75-percent AFUE unit and a higher-efficiency unit are straightforward (i.e., manufacturers incorporate electronic ignition, baffles, and draft inducerto achieve 80- percentAFUE, and a secondary heat exchangerto achieve 90-percent AFUE), and DOE could effectively determine the costs ofthese components without performing a teardown for each efficiency level. 

### Oil-FiredFurnaces. Manufacturers ofoil-fired furnaces typically offerproducts between 78-percent and 86-percent AFUE. Very few units are at the baseline model efficiency level (i.e., 78-percent AFUE), and DOE did not find a unit that is consideredrepresentative at efficiency levels lower than 81 percent. Therefore, DOE decided to analyze one unit at an intermediate level, rather than at the baseline model level. 

### Gas-FiredHot-WaterBoilers. One ofthe major differences between gas-fired hot-water boilers and gas-fired furnaces is that, for boilers, the transition between non-condensing and condensing appliances is continuous and there is no gap in the distribution ofefficiency values on the market. Boilermodels are available at virtually all efficiency levels between 80-percent and 99-percent AFUE. DOE set a value of84-percent AFUE as the highest efficiency level for performing teardowns ofgas hot-waterboilers because only approximately 20 percent ofmodels exceed this efficiency level. DOE chose one unit for teardown at 80-percentAFUE and one unit at 84- percent AFUE. Since cast-iron sectional boilers are the most popular, DOE selected these for the teardown analysis. Condensing boilers are rare, and DOE selected none ofthem for the teardown analysis. 

### Oil-FiredHot-WaterBoilers. DOE did not apply the teardown approach to oil-fired boilers. To estimate manufacturing costs ofoil-fired hot-waterboilers, DOE used available information from other product classes, taking advantage ofsimilarities between gas- and oilfired hot-waterboilerheat exchangers, and between oil-fired furnace and boilerburners.

6-66.4.1.2 Modeling Approach

The sample units DOE used in the teardown analysis do not include all possible efficiency levels or design options of each product class. Thus, DOE used a modeling approach to create BOMs for additional efficiency levels and design options. First, DOE identified efficiency levels not covered in the teardown analysis (Table 6.4.1). DOE then selected the design options most likely to be implemented by manufacturers, identified possible design modifications of existing units, and created a written description of hypothetical units. All underlying material and cost data are presented in 2006$. Table 6.4.1 Gaps in ney Levels of Units Selected for Teardown Product Class Units Selected for Gaps Teardown Non-Weatherized Gas Non-condensing range: Baseline model efficiency units in FurnacesBase Design A 1 average efficiency and the non-condensing range, units in 1 high efficiency the condensing range, units with Condensing range: modulation None Non-Weatherized Gas Non-condensing range: Higher-efficiency units in the nonFurnaces-Base Design B 1 baseline model condensing range, average-efficiency efficiency units in the condensing range, units Condensing range: with modulation 1 low efficiency and 1 high efficiency Mobile Home Gas Non-condensing range: Higher-efficiency units in the nonFurnaces 1 baseline model condensing range, condensing units efficiency Hot-Water Gas Boilers Non-condensing range: Average-efficiency units in the non1 baseline model condensing range, condensing units efficiency and 1 higher efficiency Oil-Fired Furnaces 1 baseline model Higher-efficiency units efficiency Oil-fired Hot Water None Entire product class Boilers Selection of Design Options and Efficiency Levels. The following section describes the selection of design options and efficiency levels for all product classes.

6-7 

### 6.4.1.2 Modeling Approach The sample units DOE used in the teardown analysis do not include all possible efficiency levels or design options ofeach product class. Thus, DOE used a modeling approach to create BOMs for additional efficiency levels and design options. First, DOE identified efficiency levels not covered in the teardown analysis (Table 6.4.1). DOE then selected the design options most likely to be implementedby manufacturers, identified possible design modifications ofexisting units, and created a written description ofhypothetical units. All underlying material and cost data are presented in 2006$. 

### T hI 641 G

a e 

# .. . Effi· 

### apsm IClency L I f U ·t SIt d**~** 

### T d eve s 0 filS 

### e ec e or ear own Product Class Units Selected for Gaps Teardown Non-Weatherized Gas Non-condensing range: Baseline model efficiency units in Furnaces-BaseDesignA 1 average efficiency and the non-condensing range, units in 1high efficiency the condensing range, units with Condensing range: modulation None Non-Weatherized Gas Non-condensing range: Higher-efficiency units in the nonFurnaces-BaseDesign B 1baseline model condensing range, average-efficiency efficiency units in the condensing range, units Condensing range: with modulation I low efficiency and 1high efficiency Mobile Home Gas Non-condensing range: Higher-efficiency units in the nonFurnaces 1baseline model condensing range, condensing units efficiency Hot-Water Gas Boilers Non-condensing range: Average-efficiency units inthe non1baseline model condensing range, condensing units efficiency and 1higher efficiency Oil-Fired Furnaces 1baseline model Higher-efficiency units efficiency Oil-fired Hot Water None Entire product class Boilers Selection of Design Options andEfficiencyLevels. The following section describes the selection ofdesign options and efficiency levels for all product classes.

6-7Non-weatherized Gas Furnaces. A report from the Gas Research Institute (GRI)3

provided the background information DOE used as a basis to select design options for noncondensing, non-weatherized gas furnaces. The GRI report considered a large universe of design options, and assigned a cost and efficiency improvement to each design option. Although DOE did not use this cost information in the remainder of its analysis, it used these data to select design options. Table 6.4.2 ranks the options on the basis of cost-per-one-percent of AFUE increase. Table 6.4.2 Ranking of Design Options Design Option GRI 1994 Cost* (Without Installation) AF'UE Increase $/%

AFUE Increase Improved heat-transfer coefficient $14 1.7% 8.2 Increased heat-exchanger area $40 1.7% 23.5 Derating $41 1.7% 24 High-mass heat exchanger $71 0.8% 89 Advanced burner $66 0.7% 94 Flue-gas recirculation $35 0.3% 117 Improved insulation $39 0.2% 195 Increased insulation $60 0.3% 200 Forced-draft system $20 none - * The cost shown for each design option are representative of the costs GRI estimated in 1994 and were used to rank the design options by product class for the engineering analysis. Three options-improved heat-transfer coefficient, increased heat-exchanger area, and derating-are the most cost-effective approaches for increasing AFUE. Among these three options, increased heat-exchanger area and derating are virtually identical, since they rely on the same concept (increasing the ratio of heat-exchanger area to burner input). Therefore, DOE focused on two design options for non-weatherized gas furnaces: improved heat-transfer coefficient and increased heat-exchanger area. Another design option, forced-draft system, passed the screening criteria, but DOE did not use this option in its analysis, since the GRI study indicates that forced-draft combustion systems do not appear to offer efficiency improvements comparable to an induced-draft system. DOE further considered the heat-exchanger design types. For the non-condensing range, DOE considered two different heat-exchanger design types: clamshell and tubular, indicated as "base design A" and "base design B," respectively. Since the designs present only minor cost differences, and to prevent any possible disclosure of confidential or proprietary information, DOE aggregated their costs. The majority of the manufacturers of condensing furnaces and boilers use secondary stainless-steel heat exchangers. Therefore, DOE considered condensing furnaces and boilers with stainless-steel heat exchangers in estimating the cost of a minimum-efficiency condensing
6-8 Non-weatherized Gas Furnaces. 

### A report from the Gas Research Institute (GRI)3 provided the background information DOE used as a basis to select design options for noncondensing, non-weatherized gas furnaces. The GRI report considered a large universe of design options, and assigned a cost and efficiency improvement to each design option. Although DOE did not use this cost information in the remainder ofits analysis, it used these data to select design options. Table 

### 6.4.2 ranks the options on the basis ofcost-per-one-percent ofAFUE Increase. T bi 642 R k O



### a e ° ° 

### an mgofD ° 

### 0 f 

### eSlgn 'P IOns GRI 

### 1994 Cost* 

### AFUE $/% 

### Design Option (Without Increase 

### AFUE Installation) Increase Improved heat-transfer coefficient 

### $14 1.7% 8.2 Increased heat-exchanger area 

### $40 1.7% 23.5 Derating 

### $41 1.7% 24 High-mass heat exchanger 

### $71 0.8% 89 Advancedburner 

### $66 0.7% 94 Flue-gas recirculation 

### $35 0.3% 117 Improved insulation 

### $39 0.2% 195 Increased insulation 

### $60 0.3% 200 Forced-draft system 

### $20 none 

### - 

### *The cost shown for each deSIgn optIOn are representatIve ofthe costs GRI estimated III 1994 andwere used to rank the design options by product class for the engineering analysis. 

### Three options-improvedheat-transfer coefficient, increased heat-exchanger area, and derating-are the most cost-effective approaches for increasing AFUE. Among these three options, increased heat-exchanger area and derating are virtually identical, since they rely on the same concept (increasing the ratio ofheat-exchanger area to burner input). Therefore, DOE focused on two design options for non-weatherized gas furnaces: improvedheat-transfer coefficient and increased heat-exchanger area. Another design option, forced-draft system, passed the screening criteria, but DOE did not use this option in its analysis, since the GRI study indicates that forced-draft combustion systems do not appear to offer efficiency improvements comparable to an induced-draft system. DOE further considered the heat-exchanger design types. For the non-condensing range, DOE considered two different heat-exchanger design types: clamshell and tubular, indicated as "base design A" and "base design B," respectively. Since the designs present only minor cost differences, and to prevent any possible disclosure ofconfidential or proprietary information, DOE aggregated their costs. The majority ofthe manufacturers ofcondensing furnaces and boilers use secondary stainless-steel heat exchangers. Therefore, DOE considered condensing furnaces and boilers with stainless-steel heat exchangers in estimating the cost ofa minimum-efficiency condensing
6-8unit (90-percent AFUE). To reach higher efficiency in the condensing range, DOE considered

increased heat-exchanger area, instead of an improved heat-transfer coefficient , since the latter did not seem to provide any economic or efficiency advantage (based on pressure-drop considerations and observation of available products). DOE also considered modulation as a design option. While modulating furnaces are typically known for delivering superior comfort, the modulation feature can also provide an AFUE improvement. GRI did numerical simulations to model several furnaces, in which it controlled for the burner input rate, excess air fraction, and circulating air-flow rate.' These simulations showed AFUE improvements ranging from 2.9 percent to 3.2 percent are possible using modulation with two-stage electronic controls. The report indicates that achieving this level of improvement requires a higher-efficiency electronically commutated motor (ECM) blower, control of excess air, and adjusting the circulating air flow. DOE selected efficiency levels up to 83-percent AFUE for the near-condensing range for the ANOPR, because there were products available that approach 83-percent AFUE (i.e., 82.8- percent AFUE). Subsequently, DOE decided that the potential safety hazards associated with those products at 82-percent and 83-percent AFUE, as mentioned by several stakeholders during the May 8, 2002, DOE public workshop on venting, are too high. Therefore, DOE analyzed efficiency levels up to 81-percent AFUE for the NOPR. DOE did not analyze near-condensing furnaces above 83-percent AFUE, since these have similar safety and cost issues as the 83- percent AFUE furnace. For the condensing range, DOE considered efficiency levels between 90

-percent and 96- percent AFUE . An AFUE of96 percent approaches the highest

-efficiency commercially available unit. Weatherized Gas Furnaces. DOE considered increased heat exchanger area and increased heat transfer coefficient as the two design options for weatherized gas furnaces. Sincethese units are located outdoors and condensate removal can become a significant issue at nearcondensing AFUE levels, DOE assumed the heat exchangers at 82-percent AFUE and 83-percent AFUE were made of stainless steel, specifically AL 29-4C, at these two AFUE levels. DOE also included the cost of a condensate disposal system that would function at below-freezing temperatures. DOE used the costs provided by GAMA from its survey of manufacturers4 and conducted the analysis at both the low and high points of the cost range (i.e., $78 and $320, respectively). Mobile Home Gas Furnaces. For mobile home gas furnaces, DOE investigated a combination of design options. From product literature, DOE learned that, to move from 75- percent to 80-percent AFUE, manufacturers use electronic ignition, improve the heat transfer coefficient by using baffles, and add a draft inducer. Therefore, DOE considered these options to increase efficiency from 75-percent to 80-percent AFUE.

6-9 unit (90-percent AFUE). To reach higher efficiency in the condensing range, DOE considered increasedheat-exchanger area, instead ofan improved heat-transfer coefficient, since the latter did not seem to provide any economic or efficiency advantage (based onpressure-drop considerations and observation ofavailable products). DOE also considered modulation as a design option. While modulating furnaces are typically known for delivering superior comfort, the modulation feature can also provide an AFUE improvement. OR! did numerical simulations to model several furnaces, in which it controlled for the burner input rate, excess air fraction, and circulating air-flow rate. 3 These simulations showed AFUE improvements ranging from 2.9 percent to 3.2 percent are possible using modulation with two-stage electronic controls. The report indicates that achieving this level ofimprovementrequires a higher-efficiency electronically commutated motor (ECM) blower, control ofexcess air, and adjusting the circulating air flow. DOE selected efficiency levels up to 83-percent AFUE for the near-condensingrange for the ANOPR, because there were products available that approach 83-percent AFUE (i.e., 82.8- percent AFUE). Subsequently, DOE decided that the potential safety hazards associated with those products at 82-percent and 83-percentAFUE, as mentionedby several stakeholders during the May 8, 2002, DOE public workshop onventing, are too high. Therefore, DOE analyzed efficiency levels up to 81-percentAFUE for the NOPR. DOE did not analyze near-condensing furnaces above 83-percentAFUE, since these have similar safety and cost issues as the 83- percent AFUE furnace. Forthe condensingrange, DOE considered efficiency levels between 90-percent and 96- percent AFUE. An AFUE of96percent approaches the highest-efficiency commercially available unit. Weatherized Gas Furnaces. DOE considered increased heat exchanger area and increased heat transfer coefficient as the two design options for weatherized gas furnaces. Since these units are located outdoors and condensate removal canbecome a significantissue at nearcondensing AFUE levels, DOE assumed the heat exchangers at 82-percentAFUE and 83-percent AFUE were made ofstainless steel, specificallyAL 29-4C, atthese two AFUE levels. DOE also includedthe cost ofa condensate disposal system that would function atbelow-freezing temperatures. DOE used the costs providedby OAMA from its survey ofmanufacturers4 and conductedthe analysis at both the low and high points ofthe costrange (i.e., $78 and $320, respectively). Mobile Home Gas Furnaces. Formobile horne gas furnaces, DOE investigated a combination ofdesign options. Fromproduct literature, DOE learned that, to move from 75- percent to 80-percent AFUE, manufacturers use electronic ignition, improve the heat transfer coefficientbyusing baffles, and add a draft inducer. Therefore, DOE considered these options to increase efficiency from 75-percent to 80-percent AFUE.

6-9Because products for mobile homes are not commercially available between 80-percent

and 82-percent AFUE, DOE relied on its analysis for non-weatherized furnaces and selected the least expensive design option(i.e., increased heat-exchanger area) for that product class.DOE selected efficiency levels between 75-percent and 82-percent AFUE in the noncondensing range and one level (90-percent AFUE) in the condensing range. To estimate the cost for the 90-percent AFUE level, DOE relied on an alternative approach , described in section 6.4.2. Oil-Fired Furnaces. For oil-fired furnaces, DOE considered only the increased heatexchanger-area design option. This is because improving the heat-transfer coefficient is not a common practice in the oil-fired furnace industry, due to potential smoke production. DOE considered oil-fired furnaces with efficiencies up to 85-percent AFUE. Gas Hot- Water Boilers. Review of manufacturers' product literature and analysis of the teardown units showed that manufacturers commonly improve efficiency in the non-condensing range by incorporating either electronic ignition or an improved heat-transfer coefficient (baffles), or a combination of the two. DOE also considered two-stage modulation, along with induced draft, as a possible option. Based on the models available on the market, DOE analyzed gas boilers up to 99-percent AFUE. However, to estimate the cost for condensing gas boilers, DOE relied on an alternative approach, described in section 6.4.2. For gas boilers, manufacturers' installation manuals indicate that models with AFUE less than or equal to 85 percent can be vented either vertically (through chimneys) or horizontally (using metal vents). If they are chimney vented, the equipment falls into Category I. If they are vented horizontally using metal vents, or if the AFUE is above 85 percent, the equipment is in Category I (using power vent) or Category III. In its analysis for the SNOPR, DOE used data provided by GAMA during the NOPR phase, based on a survey of manufacturers, on the fraction of installations at each AFUE level that would require Category III venting, as shown in Table 6.4.3.5 Table 6.4

.3 Fraction of Category III Installations by AFUE

AFUE Fraction 80% 0.02 81% 0.02 82% 0.10 83% 0.26 84% 0.24 85% 0.55 86% 1.00 For the fraction of installations requiring Category III venting at each AFUE level, DOE included the cost of induced

-draft technology as part of the installation cost. For example, DOE applied the cost of induced

-draft technology to the 24 percent of installations requiring Category
6-10 Because products for mobile homes are not commercially available between 80-percent and 82-percentAFUE, DOE relied on its analysis for non-weatherized furnaces and selectedthe least expensive design option(i.e., increased heat-exchanger area) for that product class. DOE selected efficiency levels between 75-percent and 82-percent AFUE in the noncondensing range and one level (90-percent AFUE) inthe condensing range. To estimate the cost for the 90-percent AFUE level, DOErelied on an alternative approach, described in section 6.4.2. Oil-FiredFurnaces. For oil-fired furnaces, DOE considered only the increasedheatexchanger-area design option. This is because improving the heat-transfer coefficient is not a commonpractice inthe oil-fired furnace industry, due to potential smoke production. DOE considered oil-fired furnaces with efficiencies up to 85-percent AFUE. Gas Hot-WaterBoilers. Review ofmanufacturers' product literature and analysis ofthe teardown units showed that manufacturers commonly improve efficiency in the non-condensing range by incorporating either electronic ignition or an improved heat-transfer coefficient (baffles), or a combination ofthe two. DOE also considered two-stage modulation, along with induced draft, as a possible option. Based onthe models available on the market, DOE analyzed gas boilers up to 99-percent AFUE. However, to estimate the cost for condensing gas boilers, DOE relied on an alternative approach, described in section 6.4.2. For gas boilers, manufacturers' installation manuals indicate that models with AFUE less than or equal to 85 percent canbe vented either vertically (through chimneys) orhorizontally (using metal vents). Ifthey are chimney vented, the equipment falls into Category I. Ifthey are vented horizontally using metal vents, or ifthe AFUE is above 85 percent, the equipment is in Category I (using powervent) or Category III. Inits analysis for the SNOPR, DOE used data providedby GAMA during the NOPRphase, based on a survey ofmanufacturers, on the fraction ofinstallations at each AFUE level that would require Category III venting, as shown in Table 6.4.3. 5 T bi 643 F



### a e 

# .. ractlOn 0fe

### ategory_III I t II f 

### b AFUE ns a a IOns ,y 

### AFUE Fraction

80% 0.02 81% 0.02 82% 0.10 83% 0.26 84% 0.24 85% 0.55 86% 1.00 Forthe fraction ofinstallations requiring Category III venting at each AFUE level, DOE included the cost ofinduced-draft technology as part ofthe installation cost. For example, DOE applied the cost ofinduced-draft technology to the 24 percent ofinstallations requiring Category
6-10III venting at 84-percent AFUE. DOE verified the GAMA data submitted from its survey of

manufacturers and DOE conducted analysis at both the low and high points of the cost range (i.e., $108.75 and $ 145.75, respectively).4 The total installation costs for hot-water gas-fired boilers are shown in Table 6.5.7. Oil-Fired Hot-Water Boilers. The main design option approach DOE considered for oilfired boilers was increased heat-exchanger area, since improving the heat transfer coefficient is not a common practice in the oil-fired boiler industry due to smoke issues. DOE also considered two-stage modulation as a possible option. DOE considered efficiency levels up to 95-percent AFUE. Building of "Hypothetical" Units and Creation of Bills of Materials. This phase of the analysis consisted of modifying the design of existing units to produce hypothetical units that perform at the desired efficiency levels. This process involved applying the selected design modifications to representative models, for which DOE obtained information through the teardown analysis or through product literature, to "build" hypothetical units. For gas furnaces, DOE used the FURNACE simulation model, provided by the GasTechnology Institute (GTI), to predict AFUE increases corresponding to the increases in heatexchanger area. The model accepts descriptions of modified units as an input and provides efficiency levels for each input. For gas boilers, DOE examined the existing product literature and analyzed the efficiency improvements associated with the selected design options; it interpolated the data when information was not available. In this product class, electronic ignition and/or addition of baffles to the heat exchanger are common ways to increase efficiency. Since manufacturers equip more units with electronic ignition at higher efficiencies, DOE assumed that a high fraction of the boilers at a high AFUE level are equipped with electronic ignition, and a smaller fraction are equipped with a set of baffles. For intermediate-efficiency levels, DOE linearly interpolated the cost of materials of a higher- and a lower-efficiency unit. For mobile home furnaces and oil-fired equipment, DOE applied heat-exchanger scaling factors to estimate the increase in the heat-exchanger area that is needed to reach a higher efficiency level. After DOE "built" the units, it disassembled and costed them as if they were real units. 6.4.2 Approach for Condensing Boilers and Mobile Home Furnaces Even after completing both the teardown analysis on representative units and thenumerical simulations, DOE still needed information for condensing boilers (both gas- and oilfired) and condensing mobile home furnaces. For these categories, which are sold in low volumes, DOE identified possible design options and used a cost-per-pound estimation methodology to estimate production costs for these products. It relied on the following five steps: 6-11 III venting at 84-percent AFUE. DOE verified the GAMA data submitted from its survey of manufacturers and DOE conducted analysis at both the low and high points ofthe costrange (i.e., $108.75 and $145.75, respectively).4 The total installation costs for hot-water gas-fired boilers are shown in Table 6.5.7. Oil-FiredHot-WaterBoilers. The main design option approach DOE considered for oilfired boilers was increased heat-exchanger area, since improving the heat transfer coefficient is not a commonpractice in the oil-firedboiler industry due to smoke issues. DOE also considered two-stage modulation as a possible option. DOE considered efficiency levels up to 95-percent AFUE.Buildingof"Hypothetical" Units and Creation of Bills of Materials. This phase ofthe analysis consisted ofmodifying the design ofexisting units to produce hypothetical units that perform at the desired efficiency levels. This process involved applying the selected design modifications to representative models, for which DOE obtained information through the teardown analysis orthrough product literature, to "build" hypothetical units. For gas furnaces, DOE used theFURNACE simulation model, providedby the Gas Technology Institute (GTI), to predict AFUE increases corresponding to the increases in heatexchanger area. The model accepts descriptions ofmodified units as an input and provides efficiency levels for each input. For gas boilers, DOE examined the existing product literature and analyzed the efficiency improvements associated with the selected design options; it interpolated the data when information was not available. In this product class, electronic ignition and/or addition ofbaffles to the heat exchanger are common ways to increase efficiency. Since manufacturers equip more units with electronic ignition at higher efficiencies, DOE assumed that a high fraction ofthe boilers at a high AFUE level are equipped with electronic ignition, and a smaller fraction are equipped with a set ofbaffles. For intermediate-efficiency levels, DOE linearly interpolated the cost ofmaterials ofa higher- and a lower-efficiencyunit. Formobile home furnaces and oil-fired equipment, DOE applied heat-exchanger scaling factors to estimate the increase in the heat-exchanger area that is needed to reach a higher efficiency level. After DOE "built" the units, it disassembled and costed them as ifthey were real units. 

### 6.4.2 Approach for Condensing Boilers andMobile Home Furnaces Even after completingboth the teardown analysis on representative units and the numerical simulations, DOE still needed information for condensing boilers (both gas- and oilfired) and condensing mobile home furnaces. Forthese categories, which are sold in low volumes, DOE identified possible design options and used a cost-per-pound estimation methodology to estimate production costs for these products. Itrelied on the following five steps: 6-111. Examine the cost per pound and the cost-per-pound trend of non-weatherized gas furnaces (the product class for which the most comprehensive information is available). 2. Find the cost per pound at various efficiency levels within the analyzed product class. 3. Determine typical shipping weights of units available on the market for the analyzed case (e.g., 90-percent AFUE mobile home furnace). 4. Create a preliminary estimate of production costs, assuming that similar designs and materials are used across the range of manufacturers. 5. Modify preliminary estimate to reflect other factors (e.g., all-stainless design). 6.4.3 Cost Model and Definitions DOE based the cost model on production activities, and divided factory costs into the following subsets: Material : Direct and indirect materials. Labor: Fabrication, assembly, indirect, and overhead (burdened) labor. Overhead: Equipment depreciation, tooling depreciation, building depreciation,

utilities, equipment maintenance, rework. Since there is a large variety of accounting systems and methods in use to monitor costs, DOE defines the above terms as follows: Direct material : Purchased parts (out-sourced) plus manufactured parts (made in-house). Indirect material : Material used during manufacturing (e.g., welding rods, adhesive), but not normally considered part of the product. Fabrication labor : Labor associated with in-house piece manufacturing. Assembly labor: Labor associated with final assembly and sub-assemblies. Equipment and plant depreciation : Money allocated to pay for initial equipment installation and replacement as the production equipment wears out. Tooling depreciation : Cost for initial tooling (including non-recurring engineering and debugging of the tools) and tooling replacement as it wears out. Building depreciation : Money allocated to pay for the building space.

6-12 

### 1. Examine the cost perpound and the cost-per-pound trend ofnon-weatherized gas furnaces (the product class for which the most comprehensive information is available). 2. Find the cost perpound at various efficiency levels within the analyzedproduct class. 3. Determine typical shipping weights ofunits available on the market for the analyzed case (e.g., 90-percent AFUE mobile home furnace). 4. Create apreliminary estimate ofproduction costs, assuming that similar designs and materials are used across the range ofmanufacturers. 5. Modify preliminary estimate to reflect other factors (e.g., all-stainless design). 6.4.3 CostModel and Definitions DOE based the cost model on production activities, and divided factory costs into the following subsets: Material: Direct and indirect materials. Labor: Fabrication, assembly, indirect, and overhead (burdened) labor. Overhead: Equipment depreciation, tooling depreciation, building depreciation, utilities, equipment maintenance, rework. Since there is a large variety ofaccounting systems and methods inuse to monitor costs, DOE defines the above terms as follows: Direct material:

Indirect material:

Fabrication labor: Assembly labor: Equipment and plant Purchasedparts (out-sourced) plus manufacturedparts (made in-house). Material used during manufacturing (e.g., welding rods, adhesive), but notnormally consideredpart ofthe product. Labor associated with in-house piece manufacturing. Labor associated with final assembly and sub-assemblies. depreciation: Money allocated to pay for initial equipment installation and replacement as the production equipment wears out. Tooling depreciation:

Building depreciation: Cost for initial tooling (including non-recurring engineering and debugging ofthe tools) and tooling replacement as itwears out. Money allocated to pay for the building space.

6-12Utilities: Electricity, gas, phone service, etc. Equipment maintenance: Money spent on yearly maintenance, both materials and labor. Indirect labor : Plant labor that scales directly, based on the number of direct workers (assembly + fabrication). Includes supervisors, technicians, and manufacturing engineering support. Overhead labor: Fixed plant labor that is spread over a number of product lines and includes accounting, quality control, shipping, receiving, floor supervisors, plant managers, office administration, and environmental health and safety. Not included are: research and development, corporate management, general administration, and maintenance labor. Rework: Labor and materials associated with correction of in-plant manufacturing defects. DOE input the cost data from all the BOMs, whether they were obtained through teardowns or numerical simulations, into the cost model, which makes use of specific assumptions to provide cost estimates. The next sections of this chapter describe the set of assumptions DOE used during this analysis. 6.4.3.1 Outsourcing DOE characterized equipment parts based on whether manufacturers purchase them from outside suppliers or fabricate them in-house. For purchased parts, DOE estimated the purchase price. For fabricated parts, DOE estimated the price of intermediate materials (e.g., tube, sheet metal) and the cost of transforming them into finished parts. Whenever possible, DOE obtained price quotes directly from suppliers or the manufacturers of the units being analyzed. For higher-efficiency equipment, DOE assumed that a standard would result in the same component purchase volume as the current baseline model. Most of the manufacturers carry out manufacturing operations in-house, as summarized in Table 6.4.4. 

### Utilities: Electricity, gas, phone service, etc. Equipment maintenance: Money spent on yearly maintenance, both materials and labor. Indirect labor: Plant labor that scales directly, based on the number of direct workers (assembly 

### +fabrication). Includes supervisors, technicians, and manufacturing engineering support. Overhead labor: Fixedplant labor that is spread over a number ofproduct lines and includes accounting, quality control, shipping, receiving, floor supervisors, plantmanagers, office administration, and environmental health and safety. Not included are: research and development, corporate management, general administration, and maintenance labor. Rework: Labor and materials associated with correction ofin-plant manufacturing defects. DOE input the cost data from all the BOMs, whether they were obtained through teardowns or numerical simulations, into the cost model, which makes use ofspecific assumptions to provide cost estimates. The next sections ofthis chapter describe the set of assumptions DOE used during this analysis. 6.4.3.1 

### Outsourcing DOE characterized equipment parts based on whether manufacturers purchase them from outside suppliers or fabricate them in-house. Forpurchasedparts, DOE estimated the purchase price. For fabricated parts, DOE estimated the price ofintermediate materials (e.g., tube, sheet metal) and the cost oftransforming them into finished parts. Wheneverpossible, DOE obtained price quotes directly from suppliers or the manufacturers ofthe units being analyzed. For higher-efficiency equipment, DOE assumed that a standard would result in the same component purchase volume as the current baseline model. Most ofthe manufacturers carry out manufacturing operations in-house, as summarized in Table 6.4.4.

6-13Table 6.4.4 Cost Model Fabrication Assumptions

Process Sub-Process In-House Outsourced Tube Forming Tube cut

Tube bend Roll form v Tube coil Sheet Metal Stamping V

Press brake Blanking V Turret punch Plasma cut Welding Seam welding

Spot welding Machining Machining center Finishing Paint Assembly Adhesive bonding
ToxLox Press fit Fixture Miscellaneous assembly operation V Final Assembly Packaging

Quality assurance Molding Injection mold V Casting Sand cast v Similarly, DOE made assumptions about which components manufacturers purchase from external suppliers (Table 6.4.5). 

### T bi 6 4 4 C M d I F b .

a e 

# .. ost o e a ncatlOn A f ssumpllOns Process Sub-Process In-House Outsourced Tube Forming Tube cut 

### V Tube bend 

### V Roll form 

### V Tube coil 

### V Sheet Metal Stamping 

### V Press brake 

### V Blanking 

### V Turretpunch 

### V Plasma cut 

### V Welding Seamwelding 

### V Spot welding 

### V Machining Machining center 

### V Finishing Paint 

### V Assembly Adhesivebonding 

### V ToxLox 

### V Press fit 

### V Fixture 

### V Miscellaneous assembly operation 

### V Final Assembly Packaging 

### V Quality assurance 

### V Molding Injectionmold 

### V Casting Sand cast 

### V Similarly, DOE made assumptions about which components manufacturers purchase from external suppliers (Table 6.4.5).

6-14Table 6.4.5 Cost Model Assumptions on Outsourced Components

Sub-Assembly Outsourced Components Blower Motor - Wheel - Capacitor Inducer Motor - Wheel - Capacitor Casing Insulation Circulator Circulator Pump - Motor Electrical/Controls Control Board - Switches - Capacitors - Transformers - Relays - Connectors Exterior Components Vent Dampers Filter Filter Fuel Control Gas Valve Assembly - Igniter - Manifold - Flame Sensor Burner Orifices - Oil Burner Heat Exchangers Refractory, Cast Iron Section Packaging Pallet - Box 6.4.3.2 Greenfield Facility Specifications To estimate production costs in the industry, DOE created a"greenfield" production facility that closely resembles a typical new facility. In this exercise, DOE theoretically built a new facility from the ground up, for the sole purpose of producing the equipment under analysis. This simplification suppressed differences among manufacturers and focused on generic aspects in plant and process that were related to efficiency. The results may, therefore, overestimate or underestimate the production costs of a particular manufacturer. However, since they were calibrated to aggregate industry data, they should be representative of the industry as a whole. DOE based the specifications and production cost assumptions for the generic greenfield facility, as shown in Tables 6.4.6 and 6.4.7, on manufacturer interviews and analysis of common industry practices. Table 6.4.6 Greenfield Facility Specifications Greenfield Facility Specifications Production Days/Year 250 Fabrication Shifts/Day 2 Assembly Shifts/Day 1 Hours per Shift 8 Press Lot Size per Day 1 Worker Downtime 20% Equipment Downtime 10% Actual/Designed Production Capacity Ratio 0.7 Assembly Line Dedicated

6-15 T bi 6 4 5 C t M d I A

a e 

# .. os o e f ssumpllOns on

# o t u sourcedC t omponen s Sub-Assembly Outsourced Components Blower Motor

- Wheel

- Capacitor Inducer Motor

- Wheel

- Capacitor Casing Insulation Circulator CirculatorPump

- Motor Electricall ControIs Control Board

- Switches

- Capacitors

- Transformers

- Relays

- Connectors Exterior Components VentDampers Filter Filter Fuel Control Gas Valve Assembly

- Igniter

- Manifold

- Flame Sensor Burner Orifices

- Oil Burner Heat Exchangers Refractory, CastIron Section Packaging Pallet

- Box 6.4.3.2 Greenfield Facility Specifications To estimate production costs inthe industry, DOE created a"greenfield" production facility that closely resembles a typical new facility. Inthis exercise, DOE theoretically built a new facility from the groundup, for the sole purpose ofproducing the equipmentunder analysis. This simplification suppressed differences among manufacturers and focused on generic aspects inplant and process that were related to efficiency. The results may, therefore, overestimate or underestimate the production costs ofa particularmanufacturer. However, since they were calibratedto aggregate industry data, they shouldberepresentative ofthe industry as a whole. DOEbased the specifications andproduction cost assumptions for the generic greenfield facility, as shown in Tables 6.4.6 and 6.4.7, on manufacturerinterviews and analysis ofcommon industry practices. 

### T bi 646 G

a e 

# .. fi ld F Tt S ·fi f reen Ie aCl ly ;peCI lca IOns Greenfield Facility Specifications Production DayslYear 250 Fabrication Shifts/Day 2 Assembly Shifts/Day 1 Hours per Shift 8 Press Lot Size perDay 1 WorkerDowntime 20% Equipment Downtime 10% ActualiDesigned Production Capacity Ratio 0.7 Assembly Line Dedicated

6-15Table 6.4.7 Greenfield Facility Production Cost Assumptions Greenfield Facility Production Cost Assumptions Capital Recovery Rate 15% Building Depreciation Period 25 Years Equipment Depreciation Period 7-20 Years (depending on which product class) Fringe Benefits Ratio 40% Direct Labor Cost Rate 14 $/hour (based on US assembly worker average and 2004$) Direct/Indirect Labor Cost Ratio 50% of direct labor Utility Cost 3% of factory cost Maintenance Cost 3% of depreciation Freight In 3% of materials cost Rework Rate 8% of manufactured material, fab labor and assembly labor Assembly Factor 1.5 (buffer for assembly-worker speed variation) Building Cost $120/square foot 2004$ 6.4.3.3 Production Volume Production volume-the number of units produced annually within a product series and using similar parts-is a very important variable in estimating manufacturing costs. DOE allocated fixed costs to a product on the basis of the production volume. Using the shipments data that GAMA provided,6 as well as assumptions about market shares for each manufacturer in each class, DOE made initial estimates of the annual production volume for each manufacturer's product family. Individual manufacturers and GAMA reviewed these estimates, and DOE subsequently modified the estimates to incorporate their comments and information. Note that these production volumes dictated how DOE assigned tooling costs on a per-unit basis, so the estimates applied to product families, not to sales of an individual product in the product line. Purchasing power for components also follows these production volumes, except in cases where the purchased part in question is a commodity item (in-shot burners, for example). In such a case, DOE assumed higher production volumes. Table 6.4.8 itemizes the assumed typical production volumes for each of the product classes under consideration. 

### T hi 647 G

a e 

## .. fi ld F Tt Pdf C t A reen Ie aCII y ro uc .on os ssumptlOns Greenfield FacilityProduction CostAssumptions Capital Recovery Rate 15% Building Depreciation Period 25 Years Equipment Depreciation Period 7-20 Years (depending on whichproduct class) Fringe Benefits Ratio 40% Direct Labor Cost Rate 14 $/hour (based onUS assembly worker average and 2004$) Direct/Indirect Labor Cost Ratio 50% ofdirect labor Utility Cost 3 % offactory cost Maintenance Cost 3% ofdepreciation Freight In 3 % ofmaterials cost Rework Rate 8% ofmanufactured material, fab labor and assembly labor Assembly Factor 1.5 (buffer for assembly-worker speed variation) Building Cost $120/square foot (2004$) 6.4.3.3 ProductionVolume Production volume-the number ofunits produced annually within a product series and using similarparts-is a very important variable in estimating manufacturing costs. DOE allocated fixed costs to a product onthe basis ofthe production volume. Using the shipments data that GAMA provided,6 as well as assumptions about market shares for each manufacturer in each class, DOE made initial estimates ofthe annual production volume for each manufacturer's product family. Individual manufacturers and GAMAreviewed these estimates, and DOE subsequently modified the estimates to incorporate their comments and information. Note that these production volumes dictated how DOE assigned tooling costs on a per-unitbasis, so the estimates applied to product families, not to sales ofan individual product in the product line. Purchasingpowerfor components also follows these production volumes, except in cases where the purchasedpart in question is a commodity item (in-shot burners, for example). In such a case, DOE assumed higherproduction volumes. Table 6.4.8 itemizes the assumed typical productionvolumes for each ofthe product classes under consideration.

6-16Table 6.4.8 Annual Production Volume Assumptions

Product Class Production Volume Non-Weatherized Gas-Fired Furnaces 100,000 Weatherized Gas-Fired Furnaces 100,000 Mobile Home Gas-Fired Furnaces 100,000 Gas-Fired Hot-Water Boilers 30,000 Oil-Fired Furnaces 5,000 Oil-Fired Hot-Water Boilers 30,000 In estimating the production costs manufacturers would likely incur if a standard were set at a given efficiency level, DOE held the production volume constant for each considered efficiency level. 6.4.3.4 Generating Production-Cost Results DOE input all of the data it had gathered into Microsoft Excel workbooks-one for each product class-that estimate the cost of fabricating the components and assembling the equipment. The workbooks contain proprietary and confidential information and are not publicly available, but the aggregated results are available to the public in the form of spreadsheets and are accessible on the Internet from DOE's Furnace and Boiler Rulemaking page: http:// www.eere.energy.gov/buildings/appliance standards/residential/ furnaces_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. The completed spreadsheets generated the production costs for the models evaluated. DOE based the cost of purchased components and most materials primarily on the ANOPR engineering analysis prices, adjusted for inflation. In the NOPR, DOE used a five-year average of material prices from years 2000 through 2004. 71 FR 59216. For the SNOPR, DOE revised the material price averages used in the cost model to include material price data from 2005 and 2006. Therefore, DOE calculated a new five-year average material price for cold rolled steel, aluminized steel, galvanized steel, painted cold rolled steel, and stainless steel. DOE used the Bureau of Labor Statistics (BLS) Producer Price Indices (PPIs) for cold rolled steel and stainless steel spanning 2002 to 2006 to calculate new averages, which incorporate inflation and the changes within each material industry. Finally, DOE adjusted all averages to 2006$ using the gross-domestic-product implicit-price deflator. DOE also created two scenarios for the material-price-sensitivity analysis: a low-bound and a high-bound scenario. DOE calculated the low-bound scenario by finding the year within the 2002-2006 time period with the lowest cost of cold rolled steel, which was 2002. DOE then used the annual prices for all other materials in 2002 and applied a 15-percent reduction to each of the raw material costs. Likewise, DOE calculated the high-bound scenario using the annual average price for each of the raw materials from 2006, when prices of raw materials were 6-17 T bi 648 A

a e 

# .. nnuaIP d ro uctlOn V I o ume AssumptlOns Product Class Production Volume Non-Weatherized Gas-Fired Furnaces 100,000 Weatherized Gas-Fired Furnaces 100,000 Mobile Home Gas-Fired Furnaces 100,000 Gas-Fired Hot-Water Boilers 30,000 Oil-Fired Furnaces 5,000 Oil-Fired Hot-Water Boilers 30,000
In estimating the production costs manufacturers would likely incur ifa standard were set at a given efficiency level, DOE held the production volume constant for each considered efficiency level. 6.4.3.4 GeneratingProduction-CostResults DOE input all ofthe data ithad gathered into Microsoft Excel workbooks-one for each product class-that estimate the cost offabricating the components and assembling the equipment. The workbooks containproprietary and confidential information and are not publicly available, butthe aggregated results are available to the public in the form of spreadsheets and are accessible on the Internet from DOE's Furnace and Boiler Rulemaking page: http://www.eere.energy.gov/buildings/appliance

_standardslresidential/ furnaces_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. The completed spreadsheets generated the production costs for the models evaluated. DOEbasedthe cost ofpurchased components andmost materials primarily onthe ANOPR engineering analysis prices, adjusted for inflation. Inthe NOPR, DOEused a five-year average ofmaterial prices from years 2000 through 2004. 71 FR 59216. Forthe SNOPR, DOE revised the material price averages used inthe cost model to include material price data from 2005 and 2006. Therefore, DOE calculated a new five-year average material price for cold rolled steel, aluminized steel, galvanized steel, painted cold rolled steel, and stainless steel. DOE used the Bureau ofLabor Statistics (BLS) ProducerPrice Indices (PPIs) for cold rolled steel and stainless steel spanning 2002 to 2006 to calculate new averages, which incorporate inflation and the changes within each material industry. Finally, DOE adjusted all averages to 2006$ using the gross-domestic-product implicit-price deflator. DOE also created two scenarios for the material-price-sensitivity analysis: a low-bound and a high-bound scenario. DOE calculated the low-bound scenario by finding the yearwithin the 2002-2006 time period with the lowest cost ofcoldrolled steel, which was 2002. DOEthen usedthe annual prices for all othermaterials in 2002 and applied a IS-percentreduction to each ofthe raw material costs. Likewise, DOE calculated the high-bound scenario using the annual average price for each ofthe raw materials from 2006, whenprices ofraw materials were 6-17uncharacteristically high. DOE expressed both the low-bound scenario and the high-bound

scenario in 2006$. DOE evaluated the results of the material-price-sensitivity analysis, using all three material-cost scenarios, in the engineering analysis and then used them as inputs for the LCC analysis. The results for the material-price-sensitivity analysis are presented in Appendix B of the TSD. 6.4.4 Sensitivity Analysis Manufacturing cost-efficiency correlations do not portray the uncertainty and variability in the assumptions. Uncertainty arises when the precise model parameters cannot be determined. Variability arises when the precise value is known but it varies among manufacturers, suppliers, or processes. To quantify the uncertainty and variability in the production-cost estimates, DOE used Crystal Ball Pro to perform Monte Carlo analyses. This kind of sensitivity analysis identifies which variables have the largest effect on cost estimates and on the accuracy of cost predictions. DOE performed the sensitivity analysis in five sequential steps: 1. Identify variable ranges, 2. Perform Monte-Carlo simulations, 3. Rank variables in order of influence on the cost results, 4. Refine assumptions (variable ranges), and 5. Perform additional simulations. In the first step, DOE assigned to each variable a degree of uncertainty. To make these assignments, DOE used industry-accepted rules, as outlined in Table 6.4.9. Table 6.4.9 Degree of Uncertainty for Main Variable T es Type of Variable* Degree of Uncertainty Quote from manufacturers or suppliers ± 10% Known discount from low-volume quote ± 20% Unknown discount from low-volume quote ± 30% Material ± 10% Uncertain equipment costs ± 20% * More details about the variables are provided in Appendix B. DOE varied the inputs to the cost model according to the specified assumptions, as shown in Table 6.4.10. Minimum and maximum ranges are given to preserve manufacturer confidentiality.

6-18 uncharacteristically high. DOE expressed both the low-bound scenario and the high-bound scenario in 2006$. DOE evaluatedthe results ofthe material-price-sensitivity analysis, using all three material-cost scenarios, in the engineering analysis andthenusedthem as inputs for the LCC analysis. The results for the material-price-sensitivity analysis are presented in Appendix B ofthe TSD. 6.4.4 SensitivityAnalysis Manufacturing cost-efficiency correlations do notportray the uncertainty and variability in the assumptions. Uncertainty arises whentheprecise modelparameters cannotbe determined. Variability arises whenthe precise value is knownbut it varies among manufacturers, suppliers, orprocesses. To quantify the uncertainty and variability inthe production-cost estimates, DOE used Crystal Ball Pro to performMonte Carlo analyses. This kind ofsensitivity analysis identifies which variables have the largest effect on cost estimates and on the accuracy ofcostpredictions. DOE performed the sensitivity analysis in five sequential steps: 1. Identify variable ranges, 2. Perform Monte-Carlo simulations, 3. Rank variables in order ofinfluence on the cost results, 4. Refine assumptions (variable ranges), and 5. Perform additional simulations. Inthe first step, DOE assigned to each variable a degree ofuncertainty. To make these assignments, DOE used industry-accepted rules, as outlined inTable 6.4.9. 

### T bi 

### 649 D

a e 

# .. ej:?;ree 0fU 

### t . t**~** 

### M· V . bi 

### T ncer amry or am ana e**l~**'pes Type ofVariable* Degree ofUncertainty Quote from manufacturers or suppliers ± 10% Known discount from low-volume quote ±20% Unknown discount from low-volume quote ±30% Material ± 10% Uncertain equipment costs ±20% 

### * More detaIls about the vanables are proVided IIIAppendIX B. DOE varied the inputs to the cost model according to the specified assumptions, as shown in Table 6.4.10. Minimum and maximum ranges are given to preserve manufacturer confidentiality.

6-18Table 6.4.10 Manufacturing Parameter Ranges

Manufacturing Parameter Min Max Unit Equipment Uptime 0.8 0.9 % Assembly Worker Downtime 0.16 0.24 % Capital Recovery Rate 0.12 0.16 % Auxiliary Equipment and Installation Cost 0.48 0.72 % Building Depreciation Life 25 30 years Tooling Depreciation 5 7 years Ratio of Walkways to Fabrication and Storage 0.264 0.396 Yearly Maintenance Ratio (% of Equipment Cost) 0.02 0.04 % Utility Cost (% of Factory Cost) 0.024 0.036 % Investment Relativity Factor 0.8 1.2 Average Depreciation Life Factor 0.8 1.2 Labor Rate Factor 0.8 1.2 Benefits Ratio 0.3 0.4 % Building Cost 50 150 $/sf Space Overhead 0.2 0.3 % Assembly Factor 1.2 1.8 Ratio of Indirect-to-Direct Laborers* 0.1 0.2 Management Span (People/Manager) 20 30 Pay Difference: Manager to Line Worker 0.8 1.2 * Table 6.4.7 refers to Direct to Indirect Labor Cost Ratio; and Table 6.4.10 refers to Direct to Indirect Labor Ratio (people); they are related by the weighted average cost/hour, utilization, etc. DOE used the former because it is more standard terminology in the industry; it used the latter because this is what is varied in the model. Once it had set the ranges, DOE carried out Monte Carlo simulations. To perform a Monte Carlo simulation analysis, Crystal Ball selects inputs randomly according to the distributions, and tracks the effect on production costs. The result is a probability distribution for the production cost of each equipment sample. Rather than predicting a single production cost, the distribution describes the likelihood that the actual production cost is equal to a predicted value. Thus, DOE can quantify the uncertainty and variability in the production cost estimates. In general, the results were normally distributed. Figure 6.4.1 illustrates a typical probability distribution for the production cost of an equipment sample.

6-19 

### T hI 6410 M

a e 

## .. f anu acturmg

### P t 

### R arame er anges Manufacturing Parameter Min Max Unit EquipmentUptime 0.8 0.9 % Assembly Worker Downtime 0.16 0.24 % Capital Recovery Rate 0.12 0.16 % Auxiliary Equipment and Installation Cost 0.48 0.72 % Building Depreciation Life 25 30 years Tooling Depreciation 5 7 years Ratio ofWalkways to Fabrication and Storage 0.264 0.396 Yearly Maintenance Ratio (% ofEquipment Cost) 0.02 0.04 % Utility Cost (% ofFactory Cost) 0.024 0.036 % InvestmentRelativity Factor 0.8 1.2 Average Depreciation Life Factor 0.8 1.2 Labor Rate Factor 0.8 1.2 Benefits Ratio 0.3 0.4 % Building Cost 50 150 $/sf Space Overhead 0.2 0.3 % Assembly Factor 1.2 1.8 Ratio ofIndirect-to-DirectLaborers* 0.1 0.2 Management Span (People/Manager) 20 30 Pay Difference: Managerto Line Worker 0.8 1.2 

### * Table 6.4.7 refers to DIrect to IndIrect Labor Cost RatIO; and Table 6.4.10 refers to DIrect to IndIrect Labor RatIo

(people); they are related by the weighted average cost/hour, utilization, etc. DOE used the former because it is more standard tenninology in the industry; itused the latter because this is what is varied in the model. Once it had set the ranges, DOE carried out Monte Carlo simulations. To perform a Monte Carlo simulation analysis, Crystal Ball selects inputs randomly according to the distributions, and tracks the effect onproduction costs. The result is a probability distribution for the production cost ofeach equipment sample. Rather thanpredicting a single production cost, the distribution describes the likelihood that the actual production cost is equal to a predicted value. Thus, DOE can quantify the uncertainty and variability inthe production cost estimates. In general, the results were normally distributed. Figure 6.4.1 illustrates a typical probability distribution for the production cost ofan equipment sample.

6-19Forecast: Model 1A Cost 1,000 Trials Frequency Chart .031

.023

.000 ,, I

### AA

$267 $273 

# obi

$279 $285 $291 ($) I Outlier 31

Figure 6.4.1 Probability Distribution for the Production Cost of an

Equipment Sample DOE performed several simulations for each product class. Figure 6.4.2 reports, for illustration purposes, the results of a sensitivity analysis of a sample Monte Carlo simulation on a model of non-weatherized gas furnaces. The tornado chart shows that the analysis is sensitive to base steel costs, labor-rate variations, and high-value components such as control boards, blower motors, and gas valves. Note that, in this case, cost is not so sensitive to production volume.

8asw1iire plrilr-weyiheri ^l Ges-Fire^I Fvlikxc° Eiwie It Iv Ily

Figure 6.4.2 Importance of Input Parameters for Production Costs for

Non-Weatherized Gas Furnaces

6-20 Forecast: Model1A Cost 1,000 Trials Frequency Chart 1 Outlier .031 31

.023 23.25

### ~ 

### .- .c .016 15.5 it::l .c Q 

# ... .008 7.75 C.

.000 0 $267 $273 $279 $285 $291 ($) 

### Figure 6.4.1 Probability Distribution for the Production Cost ofan Equipment Sample ." 

### """ ("II .c c ('1) 

# =**~**

DOE performed several simulations for each product class. Figure 6.4.2 reports, for illustrationpurposes, the results ofa sensitivity analysis ofa sample Monte Carlo simulation on a model ofnon-weatherized gas furnaces. The tornado chart shows that the analysis is sensitive to base steel costs, labor-rate variations, and high-value components such as control boards, blower motors, and gas valves. Note that, inthis case, cost is not so sensitive to production volume.

mo



### Figure 6.4.2 Importance ofInput Parameters for Production Costs for 

### Non-Weatherized Gas Furnaces

6-206.4.5 Curves of Manufacturing Cost Versus Efficiency After generating each BOM for each theoretical and teardown unit and running the cost models with the appropriate assumptions, DOE compiled the cost information it had generated for all product classes. The use of cost-per-pound estimates for boilers and mobile home furnace max-tech completed the process through which DOE generated the manufacturing costs. DOE then aggregated all of the available data to construct manufacturing cost-versus-efficiency curves (Figures 6.4.3 through 6.4.8).

800
700 ^
600 -I y 500 0 V . 400 0 E 300 0 c 200 ^
100 

## 0I' •Heat Exchanger Area JHeat Transfer Coefficient 2-Stage Modulation Continuous Modulation 78% 80% 82% 84% 86% 88% 90% 92% 94% 96% AFUE (%) Figure 6.4.3 Incremental Manufacturing Costs for Non-Weatherized Gas

Furnaces 

### 6.4.5 Curves ofManufacturing CostVersus Efficiency After generating each BOM for each theoretical and teardown unit andrunning the cost models with the appropriate assumptions, DOE compiledthe cost information it had generated for all product classes. The use ofcost-per-pound estimates for boilers and mobile home furnace max-tech completed the process through which DOE generated the manufacturing costs. DOE then aggregated all ofthe available data to construct manufacturing cost-versus-efficiency curves (Figures 6.4.3 through 6.4.8).

800
700
600**~** 1ii 500 o (.J 

## 19 400 c Q) E I!! 300 u .E 200
100 

# •



# • •

. Heat Exchanger Area

. Heat Transfer Coefficient 42-5tag9 Modulation

Continuous Modulation

### o+----**~. ~----~--~----~----~--~====~==~**  78% 80% 82% 84% 86% 88% 90% 92% 94% 96% AFUE (%) 

### Figure 6.4.3 Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces

6-21350 ,

300 * Heat Exchanger Area

.Heat Transfer Coefficient Low Bound Stainless Steel -High Bound Stainless Steel
250

100

50

078% 79% 80% 81% 82% 83% 84% AFUE (%) Figure 6.4.4 Incremental Manufacturing Costs for Weatherized Gas Furnaces

200-, 180
160 -I ^140 4-

C
40 20 0 60

+Heat Exchanger Area X12-Stage Modulation
75% 77% 79% 81% 83% 85% 87% 89% 91% AFUE (%) 93% Figure 6.4.5 Incremental Manufacturing Costs for Mobile Home Furnaces

6-22 350-------

300

250 

# e



# - In 

### <3 200 

# :s c**~** 150 e! Co) .E 100

50

0 78% • Heat Exchanger Area • Heat Transfer Coefficient A Low Bound Stainless Steel

..High Bound Stainless Steel

79% 80% 

# • 81% AFUE (0/0) 

# •

82% 

# •

83% 84% Figure 6.4.4 IncrementalManufacturing Costs for Weatherized Gas Furnaces

200 

# • 180 

# •
160 

# •

_ 140**~** 

# - In 120 0 () iii 100 

# - c Q) E 80 e! Co) .E 60 

# • 40 

# • •
20 I + Heat ExchangerArea 2-Stage Modulation I 0 75% 77% 79% 81% 83% 85% 87% 89% 91% 93% AFUE (0/0) Figure 6.4.5 Incremental Manufacturing Costs for Mobile Home Furnaces

6-22180
160
140

80
60
40-I
20 4, Heat Exchanger Area

Interrupted Ignition Fan Atomized Burner w/2-Stage Modulationn n n A

78% 79% 80% 81% 82% 83% 84% 85% 86% AFUE (%) 0

1000
900
800 700 600 500 400 300 200 100 0 i 11 80% 82% 84% 86% elmproved HX Coefficient + Electronic Ignition Two Stage Modulation + Induced Draft 88% 90% 92% 94% 96% 98% 100% AFUE (%) Figure 6.4.7 Incremental Manufacturing Costs for Gas Boilers

6-23 180 + Heat ExchangerArea Interrupted Ignition 160 . Fan Atomized Burnerw/2-Stage Modulation

140**~** 120 

# - 1/1 0 (.) 100 'iij 

# - C CI) 80 E 

### E u 60 .E 40
20 

# • 

# • • •**O+-------,------- ------,_------,_------,_------~------,_------~**  78% Figure 6.4.6

1000 900 800**~** 700



# - 1/1 600 0 0 iO 500 

# - c CI) E 400 E u .5 300 200 100

0 80% 79% 80% 81% 82% AFUE (%) 83% 84% 85% 86% Incremental Manufacturing Costs for Oil-fired Furnaces

# •

+



# • 

# • • • • 1 + lmproved HX Coefficient + Electronic Ignition I 

# • 

# ,. 

# • • 

# • .-T wo Stage Modulation + Induced Draft 82% 84% 86% 88% 90% 92% 94% 96% 98% 100% AFUE (%) Figure 6.4.7 Incremental Manufacturing Costs for Gas Boilers

6-231000 , 900 800 -I 700 600 500 400 300 200 A 100 

### 0 s i_i P ' 80% 82% 84% Heat Exchanger Area n Interrupted Ignition A Fan Atomized Burner w/2
-Stage Modulation 86% 88% 90% AFUE (%) 92% 94% Figure 6.4.8 Incremental Manufacturing Costs for Oil-fired Boilers 6.5 INSTALLATION COSTS 96%

The installation cost is the cost to the consumer for installing a furnace or a boiler; DOE does not consider it part of the retail price. The cost of installation covers all labor and material costs associated with the installation of a new unit or the replacement of an existing one. For furnaces and boilers, the installation cost is the largest single component of the total cost to the consumer. It is even larger than the equipment cost. The predominant part of the installation cost is the venting system. The American National Standards Institute (ANSI) standard Z21.47- 19937 defines four categories (I-IV) for gas-fired furnaces or boilers

. The categories are defined based on the operating pressure and temperature in the vent

. Most non-condensing equipment falls into Category I (high temperature, negative pressure), while most condensing equipment falls into Category IV (low temperature, positive pressure). For all product classes except weatherized gas furnaces and mobile home furnaces,' National Fuel Gas Code (NFGC) venting tables define the requirements for installing a Category I furnace. Category I equipment is installed according to the requirements in the NFGC venting tables.' If the steady

-state efficiency (SSE) of a non

-condensing gas furnace exceeds 83 percent, it must be vented as a Category III appliance to prevent condensation problems. A venting system for Category III equipment is installed according to manufacturer specifications

. It uses stainless steel material, and sealed joints.

6-24 1000 900 800**~** 700



# - III 600 0 () "iii 500 

# - I: Gl E 400 Gl 

## ... u .E 300 200 

# .. ;.. A 100

0 

## ___ Lj
80% 82% 84% A A 

# , , 86% 88% AFUE (%) 

# •

. Heat Exchanger Area

" Interrupted Ignition 

# •

,4Fan Atomized Burnerw/2-Stage Modulation 90% 92% 94% 96% 

### Figure 6.4.8 IncrementalManufacturing Costs for Oil-fired Boilers 6.5 INSTALLATION COSTS The installation cost is the cost to the consumerfor installing a furnace or a boiler; DOE does not consider itpart ofthe retail price. The cost ofinstallation covers all labor and material costs associated with the installation ofa newunit orthe replacement ofan existing one. For furnaces and boilers, the installation cost is the largest single component ofthe total costto the consumer. Itis even larger than the equipment cost. The predominantpart ofthe installation cost is the venting system. The American National Standards Institute (ANSI) standardZ21.47-1993 7 defines four categories (I-IV) for gas-fired furnaces orboilers. The categories are definedbased onthe operating pressure and temperature in the vent. Most non-condensing equipment falls into Category I (high temperature, negative pressure), while most condensing equipment falls into Category IV (low temperature, positive pressure). For all product classes except weatherized gas furnaces and mobile home furnaces,? National Fuel Gas Code (NFGC) venting tables define the requirements for installing a Category I furnace. Category I equipment is installed according to the requirements in the NFGC venting tables. 8 Ifthe steady-state efficiency (SSE) ofa non-condensing gas furnace exceeds 83 percent, it must be vented as a Category III appliance to prevent condensationproblems. A venting system for Category III equipment is installed according to manufacturer specifications. Ituses stainless steel material, and sealedjoints.

6-246.5.1 Data Sources Because of the importance of installation cost, DOE devoted considerable effort to establishing appropriate installation costs to use in its analysis. One source of data was a 1994 GRI report,3which GAMA supplemented in 2002 with an updated summary version of the data.' The installation costs given in the GRI report were developed from the results of a field survey sponsored by several gas utilities and conducted in 1992. These data are relatively old and, particularly for condensing furnaces, may not represent a well-established market. Differences between new and replacement installation costs may be underestimated. Further, no detailed data are available from the report. A second source was a 1999 Natural Resources Canada (NRCan) study that developed installation cost data for non-weatherized gas furnaces for four Canadian areas.10 A company that provides cost estimates for building contractors conducted the study. The NRCan study provides the most current data set available, and the data are used by Canadian government agencies and are well documented. However, there are indications that, for condensing furnaces, these data are applicable only to installations in new construction. DOE looked at other possible sources of installation costs, including data from Wisconsin from a 1999 survey of heating, ventilation, and air conditioning (HVAC) contractors.", 12 DOE did not use these data because of the very small size of the sample. Because of the incomplete coverage of the above sets of data and the importance of installation costs to the analysis, DOE created a cost model (hereafter "Installation Model") based on the RS Means13 construction-cost estimation method. Section 6.5.2 summarizes the model's main assumptions. Appendix C documents all model calculations in detail, including results that DOE used as an input to LCC analysis. 6.5.2 Installation Model Applying the RS Means methodology to a furnace or boiler installation requires a detailed description of the equipment involved, including vent length, venting material, vent type, diameter, and number of elbows. To estimate these quantities, DOE reviewed relevant research results, data submitted as comments to DOE, and manufacturer installation manuals. DOE chose representative values for an average U.S. home, and described each assumption using a distribution of values derived from available data; DOE used a Crystal Ball Monte-Carlo simulation to model the resultant cost ranges. Numerous installation configurations are possible, given site-specific venting conditions. The starting point for the model is the list of venting options detailed in the 1994 GRI report.' DOE modeled the most common installation configurations, including:

6-25 

### 6.5.1 Data Sources Because ofthe importance ofinstallation cost, DOE devoted considerable effort to establishing appropriate installation costs to use in its analysis. One source ofdata was a 1994 GRI report,3which GAMA supplemented in 2002 with an updated summary version ofthe data. 9 The installation costs given in the GRI report were developed from the results ofa field survey sponsoredby several gas utilities and conducted in 1992. These data are relatively old and, particularly for condensing furnaces, may not represent a well-established market. Differences between new and replacement installation costs may be underestimated. Further, no detailed data are available from the report. A second source was a 1999 Natural Resources Canada (NRCan) study that developed installation cost data for non-weatherized gas furnaces for four Canadian areas. 10 A company that provides cost estimates for building contractors conductedthe study. The NRCan study provides the most current data set available, and the data are usedby Canadian government agencies and are well documented. However, there are indications that, for condensing furnaces, these data are applicable only to installations in new construction. DOE looked at other possible sources ofinstallation costs, including data from Wisconsin from a 1999 survey ofheating, ventilation, and air conditioning (HVAC) contractors. 11 ,12 DOE did not use these data because ofthe very small size ofthe sample. Because ofthe incomplete coverage ofthe above sets ofdata and the importance of installation costs to the analysis, DOE created a cost model (hereafter "Installation Model") based on the RS Meansl3 construction-cost estimation method. Section 6.5.2 summarizes the model's main assumptions. Appendix C documents all model calculations in detail, including results that DOE used as an input to LCC analysis. 

### 6.5.2 Installation Model Applying the RS Means methodology to a furnace orboiler installation requires a detailed description ofthe equipment involved, including vent length, venting material, vent type, diameter, and number ofelbows. To estimate these quantities, DOEreviewed relevant research results, data submitted as comments to DOE, and manufacturer installation manuals. DOE chose representative values for an average U.S. home, and described each assumption using a distribution ofvalues derived from available data; DOE used a Crystal Ball Monte-Carlo simulation to model the resultant cost ranges. Numerous installation configurations are possible, given site-specific venting conditions. The starting point for the model is the list ofventing options detailed in the 1994 GRI report.3 DOE modeled the most common installation configurations, including:

6-25® New and replacement installations

® Single and multi-family dwellings ® Venting category: I (non-condensing), III (stainless vents), and IV (condensing) ® Vents: masonry chimneys, lined and un-lined, Type B metal or plastic polyvinyl chloride (PVC) ® Vent connectors: single-wall and double-wall ® Water heater options: gas (vented in common with furnace) and electric (isolated) • Special situations: chimney relining' and orphaned water heaters" For each appropriate combination of options, DOE created and costed a separate physical BOM. DOE then obtained the average cost for each efficiency level by weight-averaging the cost estimates of as many as 24 separate BOMB. The weight-averaging used depended on how often each combination occurs in the field, as documented in the GRI report. Some circumstances have changed since the GRI survey was performed: Masonry chimneys have been relined in increasing numbers, and double-wall connectors are more commonly used. Therefore, DOE updated the GRI values based on recent installation trends. Table 6.5.1 below summarizes DOE's estimates of the year 2015 market share of cost-significant options for non-weatherized gas furnaces. Each installation option combination is associated with a physical BOM and vent configuration. For an individual BOM, DOE estimated the quantity of materials needed to install a gas furnace in an average U.S. home.c In the Monte Carlo simulation, installation parameters are varied to take into account large and small houses, apartment complexes, multiple-story dwellings, and furnace-size variations. DOE derived the ranges in parameters from 2001 Residential Energy Consumption Survey (RECS) housing data and U.S. Census Statistics housing data.

a Unlined masonry chimneys-an estimated 23 percent of the market in 2015- need to be relined 90 percent of the time to comply with the National Fuel Gas Code (source: NFGC and chimney size analysis, Appendix Q. b If a furnace and gas water heater are commonly vented in a masonry chimney, and the furnace is replaced with a 90 percent+ AFUE unit, the water heater may be too small for the existing vent (orphaned). In this case, a relining or equivalent purchase of a new direct side-wall-vented water heater is necessary (source: NFGC analysis, Appendix Q. 1.6 story, 1,660 sf, with basement; 80 kBTU input furnace (1997 RECS data14). 6-26 " New and replacement installations " Single and multi-family dwellings " Venting category: I (non-condensing), III (stainless vents), and IV (condensing)

.. Vents: masonry chimneys, lined and un-lined, Type B metal orplastic polyvinyl chloride (PVC)

.. Vent connectors: single-wall and double-wall " Waterheater options: gas (vented in common with furnace) and electric (isolated)

.. Special situations: chimney relininga and orphaned waterheatersb
For each appropriate combination ofoptions, DOE created and costed a separate physical BOM. DOE then obtained the average cost for each efficiency level by weight-averaging the cost estimates ofas many as 24 separate BOMs.
The weight-averaging used depended onhow often each combination occurs in the field, as documented in the GRI report. Some circumstances have changed since the GRI survey was performed: Masonry chimneys have beenrelined in increasing numbers, and double-wall connectors are more commonlyused. Therefore, DOEupdated the GRI values based onrecent installationtrends. Table 6.5.1 below summarizes DOE's estimates ofthe year 2015 market share ofcost-significant options for non-weatherized gas furnaces.
Each installation option combination is associated with a physical BOM and vent configuration. For an individual BOM, DOE estimated the quantity ofmaterials needed to install a gas furnace in an average U.S. home. c Inthe Monte Carlo simulation, installation parameters are varied to take into account large and small houses, apartment complexes, multiple-story dwellings, and furnace-size variations. DOE derived the ranges inparameters from 2001 Residential Energy Consumption Survey (RECS) housing data and U.S. Census Statistics housing data.

a Unlinedmasonrychinmeys-anestimated23 percentofthemarketin2015- needtoberelined90percentofthetime to comply with the National Fuel Gas Code (source: NFGC and chinmey size analysis, Appendix C).

b Ifa furnace and gas water heater are cOlIDllonly vented in a masonry chinmey, and the flIrnace is replacedwith a 90 percent+ AFUE unit, the water heater may be too small for the existing vent (orphaned). In this case, a relining or equivalentpurchase ofa new direct side-wail-ventedwaterheateris necessary (source: NFGC analysis, Appendix C).

c 1.6 story, 1,660 sf, with basement; 80 kBTU input furnace (1997 RECS data14). 6-26Table 6.5.1 Installation Model, Non-Weatherized Gas Furnace Weighting Assumptions Class Variable 2015 Source Market Share Market New 25% Residential Furnace and Boiler

Replacement 75% Market Analysis Water Heater Gas common vented 50% 1994 GRI survey confirmed by Options Isolated electric 50% 2000 Water Heater rule Vents Unlined masonry 23% 1992 GRI survey updated (lined

Lined masonry 27% masonry was 2%) Type B metal 32% Other 18% Vent Connector Single wall 53% 1992 GRI survey updated (single

Double wall 36% wall was 73%) Other 11% Given a particular installation configuration and size, DOE created a BOM. The "master" BOM shown in Table 6.5.2 lists what DOE included in the cost estimates for all installation configurations. Items are turned on or off or multiplied by amount used, depending on the configuration. The BOM is a composite based on relevant trade literature, installation manuals, and furnace-installation-related line items found in RS Means (2003 Residential & Mechanical Cost Data). T bi 651 I

a e ° ° lIt" MdlN W th ° dG F nsta a .on o e, on- ea enze as urnace W ° h O A elgl tmg ssumptlOns Class Variable 2015 Source Market

Share Market New 25% Residential Furnace and Boiler Replacement 75% Market Analysis Water Heater Gas common vented 50% 1994 GRI survey confirmedby Options Isolated electric 50% 2000 WaterHeaterrule Vents Unlined masonry 23% 1992 GRI surveyupdated (lined Lined masonry 27% masonry was 2%) Type B metal 32% Other 18% Vent Connector Single wall 53% 1992 GRI survey updated (single Double wall 36% wall was 73%) Other 11%
Given a particular installation configuration and size, DOE created a BOM. The "master" BOM shown in Table 6.5.2 lists whatDOE included in the cost estimates for all installation configurations. Items are turned on or offormultiplied by amount used, depending onthe configuration. The BOM is a composite based onrelevant trade literature, installation manuals, and furnace-installation-related line items found in RS Means (2003 Residential & Mechanical Cost Data).

6-27Table 6.5.2 Master Bill of Materials for All Appliance Installation Configurations Category Item Description Supply Gas Piping One-foot section plus union to connect to existing piping Ducting* One return piece and one supply piece to connect to existing ductwork Furnace Installation Gas furnace-site and connect; if replacement, includes removal Electrical Hookup New or replacement thermostat + wiring-site and connect Vent Installation Type B metal vent, stainless vent, chase with liner,** or plastic vent (single or dual pipe) Vent Connector Single or double wall Relining (if necessary) Flexible two-ply aluminum liner w/connections Water Heater Vent (if present) Single or double-wall vent connector, or direct water-heater vent cost (if present) Drainage (if present) Condensate hose, drain pan, and pump (if necessary) * Indirect materials-sealants, fasteners, etc.-are assumed to be part of overhead and are excluded. ** Newly constructed masonry chimneys use a wooden chase with a two-ply flexible chimney liner and brick facade. Finally, DOE calculated costs for individual BOM line items using the material and labor assumptions listed in Table 6.5.3.
Table 6.5.3 Material and Labor Cost Assumptions Type Assumption Source

List Price - 25% (low volume contractor McMaster, Grainger, and vent Material discount) + 10% contractor markup material supplier quotes, Consumer Price Index (CPI) updated to 2006$ 52 $/Hour Crew Rates US Average, 2003 RS Means, CPI Labor updated to 2006$ I Crew Labor Time RS Means, with proxy substitutions DOE obtained the total cost for each efficiency level by weight-averaging cost estimates for 24 separate BOMs. For the three efficiency levels considered (80 percent, 81 percent, and 90 percent), the total number of BOMs was 96. Because some venting configurations are

6-28 T bi 652 M

a e 

# .. aster B'U fM t . I £ All A 

## r I tIl' C fi I 0 a ena s or .pp, lance ns a abon on 19ura IOns Category ItemDescription Supply Gas Piping One-foot sectionplus union to connect to existingpiping Ducting* One returnpiece and one supplypiece to connect to existing ductwork Furnace Installation Gas furnace-site and connect; ifreplacement, includes removal Electrical Hookup New orreplacement thermostat

### + wiring-site and connect Vent Installation TypeB metal vent, stainless vent, chase with liner,*. or plastic vent (single or dual pipe) Vent Connector Single or double wall Relining (ifnecessary) Flexible two-ply aluminum liner w/connections Water Heater Vent (ifpresent) Single or double-wall vent connector, or direct water-heater vent cost (ifpresent) Drainage (ifpresent) Condensate hose, drainpan, andpump (ifnecessary) 

### * Indirect materials-sealants, fasteners, etc.-are assumed to be part ofoverhead and are excluded. 

### ** Newly constmcted masonry chimneys use a wooden chase with a two-ply flexible chimney liner and brick facade. Finally, DOE calculated costs for individual BOM line items using the material and labor assumptions listed in Table 6.5.3.
T bi 653 M

a e 

# .. atena an a or os . I dL betA f ssump IOns Type Assumption Source ListPrice

- 25% (low volume contractor McMaster, Grainger, and vent Material discount) 

### + 10% contractor markup material supplier quotes, Consumer Price Index (CPI) updated to 2006$ 

### 52 $/Hour Crew Rates US Average, 2003 RS Means, CPI Labor updated to 2006$ CrewLabor Time RS Means, withproxy substitutions
DOE obtainedthe total cost for each efficiency level byweight-averaging cost estimates for 24 separate BOMs. Forthe three efficiency levels considered (80 percent, 81 percent, and 90 percent), the total number ofBOMs was 96. Because some venting configurations are

6-28equivalent to others , the model costs a total of 58 separate BOMs to account for all common

venting configuration combinations.
6.5.3 Non

-Weatherized Gas Furnaces For non-weatherized gas furnaces , DOE considered the data derived with the Installation Model as the most current and comprehensive available for the analysis . DOE determined that there is an additional installation cost for an 80-percent AFUE furnace relative to a baseline model (78-percent AFUE) furnace. This cost involves the need to reline some masonry chimneys and applies to single-stage as well as modulating furnaces. By investigating existing models and manufacturers' installation manuals, DOE determined that non-weatherized gas furnaces at 80-percent and 81-percent AFUE, when applied in vertical venting installations , fall into Category I. When an 81 -percent AFUE furnace replaces an 80-percent furnace, a significant fraction of installations requires an update from a single-wall to a Type-B double-wall vent connector. DOE accounted for the cost of a Type-B double-wall vent connector for all replacement installations. When applied in horizontal venting installations, furnaces at 80-percent and 81-percent AFUE are in Category III (requiring a venting system with stainless steel material and sealed joints), or in Category I using a power venter

. The cost for these two venting methods is similar. Since horizontal installations account for a negligible fraction (less than 0.1 percent) of all noncondensing furnace installations , DOE did not include this type of installation in the analysis. Condensing furnaces at 90-percent AFUE are in Category IV, for which the venting systems are mostly configured to exit a side

-wall of a dwelling and composed of plastic vent pipes. Each of the installation cost data sources provides installation cost data for condensing gas furnaces ; most account for the installation of a new vent system, resizing of the remaining common system, condensate neutralization, and condensate pumping for disposal. DOE assumed that installation costs for all condensing furnaces are similar, since available information suggests that efficiency levels higher than 90 percent do not appreciably affect the total installation cost for condensing gas furnaces. DOE included drip pans in condensing furnace installation costs (the International Fuel Gas Code requires the use of a drip pan for proper condensate drainage) and also assumed that approximately 10 percent of condensing installations will not include a combustion air pipe. Table 6.5.4 presents the installation cost by AFUE for non-weatherized gas furnaces. equivalentto others, the model costs a total of58 separate BOMs to account for all common venting configuration combinations.


### 6.5.3 Non-Weatherized Gas Furnaces Fornon-weatherized gas furnaces, DOE considered the data derived with the Installation Model as the most current and comprehensive available for the analysis. DOE determined that there is an additional installation cost for an 80-percent AFUE furnace relative to a baseline model (78-percent AFUE) furnace. This cost involves the need to reline some masonry chimneys and applies to single-stage as well as modulating furnaces. Byinvestigating existing models and manufacturers' installation manuals, DOE determined that non-weatherized gas furnaces at 80-percent and 81-percent AFUE, when applied in vertical venting installations, fall into Category 

### 1. When an 81-percent AFUE furnace replaces an 80-percent furnace, a significant fraction ofinstallations requires an update from a single-wall to a Type-B double-wall vent connector. DOE accounted for the cost ofa Type-B double-wall vent connector for all replacement installations.
When applied inhorizontal venting installations, furnaces at 80-percent and 81-percent AFUE are in Category III (requiring a venting system with stainless steel material and sealed joints), or in Category I using a power venter. The cost for these two venting methods is similar. Since horizontal installations account for a negligible fraction (less than 0.1 percent) ofall noncondensing furnace installations, DOE did not include this type ofinstallation in the analysis. Condensing furnaces at 90-percentAFUE are in Category IV, for which the venting systems are mostly configured to exit a side-wall ofa dwelling and composed ofplastic vent pipes. Each ofthe installation cost data sources provides installation cost data for condensing gas furnaces; most account for the installation ofa new vent system, resizing ofthe remaining common system, condensate neutralization, and condensate pumping for disposal. DOE assumed that installation costs for all condensing furnaces are similar, since available information suggests that efficiency levels higher than 90 percent do not appreciably affectthe total installation cost for condensing gas furnaces. DOE included drip pans in condensing furnace installation costs (the International Fuel Gas Code requires the use ofa drip pan for proper condensate drainage) and also assumed that approximately 10 percent ofcondensing installations will not include a combustion airpipe.
Table 6.5.4 presents the installation costby AFUE for non-weatherized gas furnaces.

6-29Table 6.5.4 Installation Cost for Non-Weatherized Gas Furnaces AFUE Weighted Average Cost Average Incremental Installation (2006$)* Cost- (2006$) 78% 811 80% 815 4 81% 855 44 90% 1066 255 92% 1066 255 96% 1066 255 * The costs shown are in 2006$ to coincide with the Installation Model estimates. ** Relative to 78-percent AFUE furnace.
The differences between the NOPR and the SNOPR results are due to Consumer Price Index (CPI) indexing of material and labor costs for inflation.'
6.5.4 Weatherized Gas Furnaces Weatherized gas furnaces are typically sold in "packaged units" together with an air conditioner, and are usually installed outside. These units vent flue gases directly into the surrounding air. When considering the installation of a packaged unit, it is difficult to separate the installation cost of the heating section from the installation cost of the cooling section. The installation cost accounts for the installation of the equipment only because the venting system is an integral part of the equipment. DOE estimated the installation cost for the baseline weatherized gas furnace using data from Section 400 of RSMeans Mechanical Cost Data. 13 It based the cost estimate on installation times and hourly rates of the equipment installers. Table 6.5.5 shows the details of the approach DOE used to estimate the installation cost for weatherized gas furnaces.

d DOE did not update the material prices for venting because these are purchased components (by the installer), rather than raw materials; DOE has no easy way of knowing what percentage of the finished vent pipe is raw material (versus bending, overhead, etc.). Instead, DOE CPI-indexed both material and labor costs. 6-30 

### Table 6.5.4 Installation Cost for Non-Weatherized Gas Furnaces AFUE Weighted Average Cost Average Incremental Installation (2006$)* 78% 811 80% 815 81% 855 90% 1066 92% 1066 96% 1066 

### * The costs shown are in 2006$ to coincide with the Installation Model estimates. 

### ** Relative to 78-percent AFUE furnace. 

### Cosf* (2006$)



### -- 4 44 255 255 255

The differences betweenthe NOPR and the SNOPRresults are due to Consumer Price Index (CPI) indexing ofmaterial and labor costs for inflation.d 

### 6.5.4 Weatherized Gas Furnaces Weatherized gas furnaces are typically sold in "packagedunits" together with an air conditioner, and are usually installed outside. These units vent flue gases directly into the surrounding air. When considering the installation ofa packagedunit, it is difficult to separate the installation cost ofthe heating section from the installation cost ofthe cooling section. The installation cost accounts for the installation ofthe equipment onlybecause the venting system is an integralpart ofthe equipment.
DOE estimated the installation cost for the baseline weatherized gas furnace using data from Section 400 ofRSMeans Mechanical CostData. 13 Itbasedthe cost estimate on installation times andhourly rates ofthe equipment installers. Table 6.5.5 shows the details ofthe approach DOEused to estimate the installation cost for weatherized gas furnaces.

d DOE didnotupdate the material prices for venting because these are purchased components (by the installer), rather thanraw materials; DOE has no easyway ofknowing whatpercentage ofthe finished ventpipe is rawmaterial (versus bending, overhead, etc.). Instead, DOE CPI-indexed both material and labor costs. 6-30Table 6.5.5 Installation Cost for Weatherized Gas Furnaces

Major Line # Cooling/Heating Crew Cost Daily Crew Person- Total Unit Capacity per hr Output Hours Cost (2006$) (2006$) 400 1100 36 kBtu/hr and 60 Q-5 $55.92 0.7 22.86 $1 278

kBtu/hr , The differences between the NOPR and the SNOPR results are due to CPI indexing of material and labor costs for inflation. Although limited data were available, the assumption thatinstallation cost remains mostly constant as efficiency increases seems reasonable for singlepackage systems. The increases in size and weight for more-efficient single package systems are small relative to the large size and weight of the baseline model unit.
6.5.5 Mobile Home Gas Furnaces The installation of a mobile home gas furnace is part of the assembly by the mobile home manufacturer. In DOE's analysis, the manufacturer's markup includes this installation cost for the baseline model and for an 80-percent AFUE furnace. For furnaces with AFUE of 81 percent and above, DOE developed an incremental installation cost for installing a stainless steel or a Category IV venting system. The incremental cost is $77 for 81-percent AFUE, and $57 for 90- percent AFUE. DOE determined the type of venting system required using manufacturers' installation manuals for models at different efficiency levels.
6.5.6 Oil-Fired Furnaces DOE modified the Installation Model to estimate venting costs for oil-fired furnaces. These modifications included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a northeast 2015 projection. 2. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). It shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 4. DOE estimated that Type L stainless steel relinings are necessary about 10 percent of the time. 5. DOE determined that Type L vents must be used rather than Type B vents. DOE CPI-adjusted the NOPR material and labor costs for inflation to 2006$. 6-31 Table 6.5.5 Installation Costfor Weatherized Gas Furnaces

Major Line # Cooling/Heating Crew Cost Daily Crew Person- Total

Unit Capacity per hr Output Hours Cost (2006$) (2006$) 400 1100 36 kBtu/hr and 60 Q-5 $55.92 0.7 22.86 $1,278 kBtu/hr
The differences between the NOPR and the SNOPRresults are due to CPI indexing of material and labor costs for inflation. Although limited data were available, the assumption that installation cost remains mostly constant as efficiency increases seems reasonable for singlepackage systems. The increases in size and weight for more-efficient single package systems are small relative to the large size and weight ofthe baseline model unit.
6.5.5 Mobile Home Gas Furnaces The installation ofa mobile home gas furnace is part ofthe assembly bythe mobile home manufacturer. InDOE's analysis, the manufacturer's markup includes this installation cost for the baseline model and for an 80-percent AFUE furnace. For furnaces with AFUE of81 percent and above, DOE developed an incremental installation cost for installing a stainless steel or a Category IV venting system. The incremental cost is $77 for 81-percentAFUE, and $57 for 90- percent AFUE. DOE determined the type ofventing system required using manufacturers' installation manuals for models at different efficiency levels.
6.5.6 Oil-Fired Furnaces DOE modified the Installation Model to estimate venting costs for oil-fired furnaces. These modifications included:
1. DOE changed regional weighting for vent connector type, venttype, and percentage of water heaters vented in common from a national 2015 projectionto a northeast 2015 projection. 2. DOE changed new/replacement market weighting from 25 percent175 percent to 5 percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). It shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 4. DOE estimated that Type L stainless steelrelinings are necessary about 10 percent ofthe time. 5. DOE determined that Type L vents mustbe used rather than Type B vents.
DOE CPI-adjusted the NOPRmaterial and labor costs for inflation to 2006$.
6-31The ANOPR analytical approach assumed that all installations of 83-percent AFUE or

lower efficiency equipment would be vented using Type L vents, and all installations using 84- percent AFUE or higher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach took into consideration the recommendations included in the National Fire Protection Association (NFPA) 31 standard, which allow safe venting up to 88- percent SSE (or 87-percent AFUE) depending on the vent configurations and equipment size. For the NOPR, DOE ramped the number of stainless steel vent installations from 0 percent at 80 to 82-percent AFUE to 100 percent at 86-percent AFUE. The mid-point of the ramp is 50 percent at 84-percent AFUE. This assumption accounts for the NFPA 31 recommendations at the upper end of the ramp. For the SNOPR, DOE used the same assumptions as those in the NOPR. The installation costs for oil-fired furnaces are shown in Table 6.5.6.
Table 6.5.6 Installation Cost for Oil-Fired Furnaces

AFUE Weighted-Average Cost (2006$) Incremental Installation Cost (2006$) 80-82% 575

-- 83% 891 316 84% 1,206 631 85% 1,521 946 6.5.7 Hot-Water Gas Boilers DOE also modified the Installation Model to estimate venting costs for hot-water gas boilers. Modifications (from the non-weatherized gas furnace approach) included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a 15 percent Midwest/15 percent Northwest/70 percent Northeast 2015 projection. 2. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). 4. DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 5. Labor times for gas boilers, as listed in RS Means, are too high when compared to oil boilers and oil furnaces, per conversations with the RS Means Co." As a proxy, DOE used oil boiler installation times.
In addition, DOE CPI-adjusted the material and labor costs for inflation to 2006$. For gas hot water boilers, DOE's NOPR analysis used data provided by GAMA on the fraction of installations at each efficiency level that would require Category III venting.' This
6-32 The ANOPR analytical approach assumed that all installations of83-percentAFUE or lower efficiency equipment wouldbe vented using Type L vents, and all installations using 84- percent AFUE orhigher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach took into considerationthe recommendations included in the National Fire Protection Association (NFPA) 31 standard, which allow safe venting up to 88- percent SSE (or 87-percent AFUE) depending on the vent configurations and equipment size. Forthe NOPR, DOE ramped the number ofstainless steel vent installations from 0 percent at 80 to 82-percentAFUE to 100 percent at 86-percentAFUE. The mid-point ofthe ramp is 50 percent at 84-percent AFUE. This assumption accounts for the NFPA 31 recommendations at the upper end ofthe ramp. Forthe SNOPR, DOE usedthe same assumptions as those in the NOPR. The installation costs for oil-fired furnaces are shown in Table 6.5.6.
Table 6.5.6 Installation Costfor Oil-Fired Furnaces AFUE Weighted-Average Cost IncrementalInstallation Cost (2006$) (2006$) 80-82% 575



### --

83% 891 316 84% 1,206 631 85% 1,521 946
6.5.7 Hot-Water Gas Boilers DOE also modified the InstallationModel to estimate venting costs for hot-water gas boilers. Modifications (from the non-weatherized gas furnace approach) included:
1. DOE changedregional weighting for vent connectortype, vent type, andpercentage of water heaters vented in common from a national 2015 projectionto a 15 percent Midwestl15 percent Northwest170 percent Northeast 2015 projection. 2. DOE changed newlreplacement market weighting from 25 percent175 percent to 5 

### percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based oninstallation manual reviews). 4. DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 5. Labortimes for gas boilers, as listed in RS Means, are too high when comparedto oil boilers and oil furnaces, per conversations with the RS Means CO. 15 As a proxy, DOE used oil boiler installation times.


### In addition, DOE CPI-adjusted the material and labor costs for inflation to 2006$.
For gas hot waterboilers, DOE'sNOPR analysis used data providedby GAMA on the fraction ofinstallations at each efficiency level that would require Category 

### III venting. 5 This
6-32analysis reflected current construction practices, which use Category III venting for horizontal

venting installations at all efficiency levels. For the SNOPR, DOE used the same assumptions as those in the NOPR. The installation costs for hot-water, gas-fired boilers are shown in Table 6.5.7.
Table 6.5.7 Installation Cost for Hot-Water Gas-fired Boilers AFUE Fraction that are

Category III Installations Weighted Average Cost (2006$) Incremental Installation Cost (2006$) 80-81% 0.02 1648 82% 0.10 1751 103 83% 0.26 1957 309 84% 0.24 1931 283 85% 0.55 2331 683 86% 1.00 2910 1262 91-99% n.a. 2289 641
6.5.8 Hot-Water Oil-fired Boilers DOE modified the Installation Model to estimate venting costs for hot-water oil-fired boilers. These modifications included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a northeast 2015 projection. 2. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). 4. DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 5. DOE estimated that Type L stainless steel relinings are necessary about 10 percent of the time. 6. DOE determined that Type L vents must be used rather than Type B vents. The ANOPR analytical approach assumed that all installations of 84-percent AFUE or lower efficiency equipment would be vented using Type L vents, and all installations using 85- percent AFUE or higher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach took into consideration NFPA 31 recommendations, which allow safe venting up to 88-percent SSE (or 87-percent AFUE) depending on the vent configurations and boiler size. For the NOPR, DOE ramped the number of stainless steel vent installations from 0 percent at 80 to 83-percent AFUE to 100 percent at 87-percent AFUE. The mid-point of the ramp is 50 percent at 85-percent AFUE. This assumption accounts for the NFPA
6-33 analysis reflected current construction practices, which use Category III venting for horizontal venting installations at all efficiency levels. Forthe SNOPR, DOE used the same assumptions as those in the NOPR. The installation costs for hot-water, gas-fired boilers are shown in Table 6.5.7.
Table 6.5.7 Installation Cost for Hot-Water Gas-fired Boilers AFUE Fraction that are Weighted Average Incremental Installation**Cate~ory** III Installations Cost (2006$) Cost (2006$) 80-81% 0.02 1648



### --

82% 0.10 1751 103 83% 0.26 1957 309 84% 0.24 1931 283 85% 0.55 2331 683 86% 1.00 2910 1262 91-99% n.a. 2289 641
6.5.8 Hot-Water Oil-fired Boilers DOE modified the Installation Model to estimate venting costs for hot-water oil-fired boilers. These modifications included:
1. DOE changed regional weighting for vent connectortype, vent type, and percentage of water heaters vented in common from a nationa12015 projection to a northeast 2015 projection. 2. DOE changed newlreplacement market weighting from 25 percent175 percent to 5 percent/95 percent. 3. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based oninstallation manual reviews). 4. DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. 5. DOE estimated that Type L stainless steel re1inings are necessary about 10 percent ofthe time. 6. DOE determined that Type L vents mustbe used rather than Type B vents.
The ANOPR analytical approach assumed that all installations of84-percentAFUE or lower efficiency equipment wouldbe ventedusing Type L vents, and all installations using 85- percent AFUE orhigher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach tookinto considerationNFPA 31 recommendations, which allow safe venting up to 88-percent SSE (or 87-percentAFUE) depending on the vent configurations and boiler size. Forthe NOPR, DOE ramped the number ofstainless steel vent installations from 0 percent at 80 to 83-percentAFUE to 100 percent at 87-percent AFUE. The mid-point ofthe ramp is 50 percent at 85-percent AFUE. This assumption accounts for the NFPA
6-3331 recommendations at the upper end of the ramp. In addition, DOE revised baseline model costs

to more accurately reflect the frequency of re-linings (10 percent instead of 100 percent). It CPIadjusted the material and labor costs for inflation to 2006$. The installation costs for hot-water oil boilers are shown in Table 6.5.8.
Table 6

.5.8 Installation Cost for Hot-Water Oil-fired Boilers AFUE Weighted-Average Cost Incremental Installation Cost (2006$) (2006$) 80-83% 1,547 84% 1,876 329 85% 2,204 657 86% 2,532 985 90%+ 2,289 742

6.6 MAINTENANCE AND REPAIR COST The maintenance and repair cost ($/year) includes regular maintenance and repair of a furnace or a boiler when it falls .4, 16, 11, 18 This cost covers all associated labor and material costs.
6.6.1 Maintenance Cost For non-weatherized and weatherized gas furnaces and gas boilers, DOE used the maintenance cost data provided in the 1994 GRI report.' The costs reported in this study derive from a field survey sponsored by several gas utilities that repair and service furnace and boiler equipment. The survey methodology estimated the average cost per service call as the average total service charge (parts, labor, other charges). The average total service charge is $208. The GRI study characterized maintenance frequency as a function of the equipment efficiency level. DOE used this information to estimatea maintenance frequency of once every five years for all equipment without modulation (noncondensing and condensing), and once every four years for all equipment with modulation, to account for the greater complexity of the modulation feature. DOE annualized the costs over the estimated equipment lifetime, resulting in an annual cost of $42 for equipment without modulation and $52 for equipment with modulation. DOE compared maintenance instructions for non-condensing and condensing gas furnaces from manufacturers' manuals; 11,20,2 1 researched RSMeans literature22 for maintenance differences between non-condensing and condensing gas furnaces; and collected opinions from several furnace installation and maintenance experts.zs, za, zs, 26 It found that annual maintenance contracts are not commonly applicable to condensing gas furnaces. The evaluation of the maintenance instructions, the RSMeans Maintenance Guide, and discussions with field experts did not identify 6-34 31 recommendations at the upper end ofthe ramp. In addition, DOE revised baseline model costs to more accurately reflect the frequency ofre-linings (10 percent instead of 100 percent). ItCPIadjusted the material and labor costs for inflation to 2006$. The installation costs for hot-water oil boilers are shown in Table 6.5.8.
Table 6.5.8 Installation Cost for Hot-Water Oil-fired Boilers AFUE Weighted-Average Cost IncrementalInstallation Cost (2006$) (2006$) 80-83% 1,547



### --

84% 1,876 329 85% 2,204 657 86% 2,532 985 90%+ 2,289 742

6.6 MAINTENANCE AND REPAIR COST The maintenance andrepair cost ($/year) includes regular maintenance and repair ofa furnace or a boiler when it fails. 4
, 16, 17, 18 This cost covers all associated labor and material costs.
6.6.1 Maintenance Cost Fornon-weatherized and weatherized gas furnaces and gas boilers, DOE usedthe maintenance cost data provided in the 1994 GRI report. 3 The costs reported in this study derive from a field survey sponsoredby several gas utilities thatrepair and service furnace andboiler equipment. The survey methodology estimatedthe average cost per service call as the average total service charge (parts, labor, other charges).
The average total service charge is $208. The GRI study characterized maintenance frequency as a function ofthe equipment efficiency level. DOEused this information to estimate a maintenance frequency ofonce every five years for all equipment without modulation (noncondensing and condensing), and once every four years for all equipmentwith modulation, to account for the greater complexity ofthe modulation feature. DOE annualized the costs over the estimated equipment lifetime, resulting in an annual cost of$42 for equipment without modulation and $52 for equipment with modulation.
DOE compared maintenance instructions for non-condensing and condensing gas furnaces from manufacturers' manuals; 19,20,21 researched RSMeans literature22 for maintenance differences betweennon-condensing and condensing gas furnaces; and collected opinions from several furnace installation and maintenance experts.23, 24, 25,26 Itfound that annual maintenance contracts are not commonly applicable to condensing gas furnaces. The evaluation ofthe maintenance instructions, the RSMeans Maintenance Guide, and discussions with field experts did not identify 6-34differences in maintenance requirements between condensing and non-condensing designs. Thus,

DOE used the same maintenance cost data for condensing and non-condensing furnaces, and it applied the same considerations to condensing and non-condensing gas boilers. For oil-fired furnaces and oil-fired boilers, DOE applied the results of a survey performed for its water heater standards rulemaking

.27 This survey identified the typical cost of annual service contracts applied to all oil equipment in a house

. These contracts are very common in the northeast, where most of the oil

-heating equipment is located

. The mean cost of the annual contract is $118. For mobile home furnaces, DOE adapted the results from the 1993 DOE rulemaking for this product class.28 The resulting average annual maintenance cost for mobile home furnaces at 80-82-percent AFUE is $20

. DOE included an additional maintenance cost for condensing and two-stage modulation design options. 6.6.2 Repair Cost For the SNOPR, DOE included a repair cost in addition to the maintenance cost. The repair cost is the cost to the consumer for replacing or repairing components which have failed in the equipment

. Since representative data on repair costs for furnaces and boilers were not available, DOE used a similar approach as in its 2001 central air conditioner rulemaking.29 The general assumption is that annualized repair costs are equal to one-half the equipment price divided by the average lifetime of a given product class. Since the equipment cost is higher for equipment that contains more sophisticated mechanical or electronic components , such as condensing furnaces, DOE applied a higher repair cost for these products. In the cases where there are no differences (or insignificant differences) in the mechanical or electric components, even at different efficiency levels, DOE assumed that the repair costs are the same. For example, the design of non-weatherized gas furnaces at 78-percent AFUE, 80-percent AFUE, and 81- percent AFUE differ only in the size of the heat exchanger. For these products, DOE used the equipment price of the baseline model (e.g. 78-percent AFUE) to derive the repair cost. Table 6.6.1 shows the estimated annualized repair costs for each product class. Since all equipment components are fully covered by a manufacturer warranty for five years,e DOE assumed that consumers would not incur any repair costs in the first five years. DOE applied the annualized cost beginning in the sixth year and ending in the last year of service for the equipment. For oil-fired furnaces and boilers, DOE included an annual maintenance contract, which typically includes repair of failed components. Therefore , DOE did not include a separate repair cost for these products.

e DOE examined a number of manufacturer warranties. l7, 30, 31, 32, 33, 34, 35, 36 , 37, 38, 39, 40, 41, 42, 43, 44, 45 , 46, 47, 48, 49, 50 6-35 differences in maintenance requirements between condensing and non-condensing designs. Thus, DOE usedthe same maintenance cost data for condensing and non-condensing furnaces, and it applied the same considerations to condensing and non-condensing gas boilers.
For oil-fired furnaces and oil-fired boilers, DOE applied the results ofa survey performed for its waterheater standards rulemaking. 27 This survey identified the typical cost ofannual service contracts applied to all oil equipment in a house. These contracts are very common in the northeast, where most ofthe oil-heating equipment is located. The mean cost ofthe annual contract is $118.
Formobile home furnaces, DOE adapted the results from the 1993 DOErulemaking for this product class. 28 Theresulting average annual maintenance cost for mobile home furnaces at 80-82-percentAFUE is $20. DOE included an additional maintenance cost for condensing and two-stage modulation design options.
6.6.2 Repair Cost For the SNOPR, DOE included a repair cost in addition to the maintenance cost. The repair cost is the costto the consumer for replacing orrepairing components which have failed in the equipment. Since representative data onrepair costs for furnaces andboilers were not available, DOEused a similar approach as in its 2001 central air conditioner rulemaking. 29 The general assumption is that annualizedrepair costs are equal to one-halfthe equipmentprice dividedby the average lifetime ofa givenproduct class. Since the equipment cost is higher for equipment that contains more sophisticatedmechanical or electronic components, such as condensing furnaces, DOE applied a higherrepair cost for these products. Inthe cases where there are no differences (or insignificant differences) inthe mechanical or electric components, even at different efficiency levels, DOE assumed that the repair costs are the same. For example, the design ofnon-weatherized gas furnaces at 78-percentAFUE, 80-percent AFUE, and 81- percent AFUE differ only in the size ofthe heat exchanger. Forthese products, DOEused the equipmentprice ofthe baseline model (e.g. 78-percentAFUE) to derive the repair cost. Table 6.6.1 shows the estimated annualized repair costs for eachproduct class. Since all equipment components are fully coveredby a manufacturer warranty for five years,e DOE assumed that consumers would not incur any repair costs inthe first five years. DOE applied the annualized costbeginning inthe sixth year and ending inthe last year ofservice for the equipment.
For oil-fired furnaces andboilers, DOE included an annual maintenance contract, which typically includes repair offailed components. Therefore, DOE did not include a separate repair cost for these products.

e DOE examined a number ofmanufacturer warranties. 17•30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50 6-35Table 6.6.1 Annualized Repair Cost (2006$)

Non-Weatherized Gas Furnaces 78%, 80%, 81% AFUE $30 80%, 81 % AFUE - Modulation (Two-Stage) $37 90%, 92% AFUE - Condensing $39 92% AFUE - Modulation (Two-Stage) $50 92%, 96% AFUE - Modulation (Continuous) $51 Weatherized Gas Furnaces 78%,80%,81% AFUE $71 82% AFUE $75 83%AFUE $76 Mobile Home Furnaces 75% AFUE $23 80%, 81%, 82% AFUE $26 80%, 81%, 82% AFUE - Modulation (Two-Stage) $36 90% AFUE - Condensing $31 Gas-Fired Boilers 80% AFUE $34 81% AFUE $35 81% AFUE - Modulation (Two-Stage) $38 82% AFUE $36 82% AFUE - Modulation (Two-Stage) $39 83% AFUE* $37 83% AFUE - Modulation (Two-Stage)* $40 84% AFUE* $37 84% AFUE - Modulation (Two-Stage)* $40 85% AFUE $39 85% AFUE - Modulation (Two-Stage) $42 86% AFUE $44 91% AFUE - Condensin $51 199% AFUE - Condensing $71 * Annualized repair costs for 83% and 84% AFUE for gas boilers differ slightly due to the different fraction of Category III installations (26% versus 24%) associated with these efficiency levels. 6-36 T bi 661 A

a e 

# .. r dR nnua lze . C t (2006$) epalr os Non-Weatherized Gas Furnaces 78%,80%,81% AFUE $30 80%,81% AFUE

- Modulation (Two-Stage) $37 90%,92% AFUE

- Condensing $39 92% AFUE

- Modulation (Two-Stage) $50 92%,96%AFUE

- Modulation (Continuous) $51 Weatherized Gas Furnaces 78%,80%,81% AFUE $71 82%AFUE $75 83%AFUE $76 Mobile Home Furnaces 75%AFUE $23 80%, 81 %, 82% AFUE $26 80%, 81 %, 82% AFUE

- Modulation (Two-Stage) $36 90% AFUE

- Condensing $31 Gas-Fired Boilers 80%AFUE $34 81% AFUE $35 81% AFUE

- Modulation (Two-Stage) $38 82%AFUE $36 82% AFUE

- Modulation (Two-Stage) $39 83%AFUE* $37 83% AFUE

- Modulation (Two-Stage)* $40 84%AFUE* $37 84% AFUE

- Modulation (Two-Stage)* $40 85%AFUE $39 85% AFUE

- Modulation (Two-Stage) $42 86%AFUE $44 91% AFUE

- Condensing $51 99% AFUE

- Condensing $71 * Annualized repair costs for 83% and 84% AFUE for gas boilers differ slightly due to the different fraction of Category III installations (26% versus 24%) associated with these efficiency levels. 6-366.7 ENGINEERING ANALYSIS PAYBACK PERIODS

This section describes the calculation of simple payback periods for each design option for each product class. For a given design option, the payback period expresses the amount of time required for the cumulative savings in operating cost to equal the incremental cost to the consumer of purchasing a particular design (relative to the baseline model in each instance). DOE calculated the payback period for each design option according to the following relationship:


### ACC ARC+AIC PAYBACK =

where: 

### AOC AEC+ AMC

PAYBACK = payback period (years), ACC = change in consumer first cost relative to baseline model ($), AOC = change in operating cost relative to baseline model ($/yr), ARC = change in retail cost relative to baseline model ($/yr), AIC = change in installation cost relative to baseline model ($), AEC = change in first-year energy cost relative to baseline model ($/yr),

and AMC = change in annualized maintenance and repair cost relative to

baseline model ($/yr). DOE based the energy cost on energy consumption calculated according to the DOE test procedure for furnaces and boilers. Although the LCC analysis yields a more definitive understanding of the economic impact of the design options for consumers, the payback periods reported here provide a preliminary indication of how the options may rank. DOE presents these payback periods to address the legally established "rebuttable" payback period, as calculated under the applicable test procedure. (42 U.S.C. 6295 (o)(2)(B)(iii)) 6.7.1 Calculation of Fuel Consumption for Each Design Option The calculation of fuel cost for each fuel-efficiency option begins with the fuel consumption of the baseline model in each product class. DOE considered alternative design options that yield progressively higher AFUE levels. DOE considered several design options for reaching each specific AFUE level above the baseline model, as shown in Table 6.7.1.

6-37 

### 6.7 ENGINEERINGANALYSIS PAYBACKPERIODS This section describes the calculation ofsimple paybackperiods for each design option for each product class. For a given design option, the paybackperiod expresses the amount oftime required for the cumulative savings in operating cost to equal the incremental cost to the consumer ofpurchasing a particular design (relative to the baseline model in each instance). DOE calculatedthe paybackperiod for each design option according to the following relationship:

where:
PAYBACK 

### LlCC LlOC LlRC 

### LlfC ilEC 

### LlMC 11 CC I1RC

## + I1IC PAYBACK

## = 110C 

## = I1EC+ I1MC

paybackperiod (years), change in consumer first cost relative to baseline model ($), change in operating costrelative to baseline model ($/yr), change inretail cost relative to baseline model ($/yr), change in installation cost relative to baseline model ($), change in first-year energy costrelative to baseline model ($/yr), and change in annualized maintenance and repair cost relative to baseline model ($/yr).
DOE basedthe energy cost on energy consumption calculated according to the DOE test procedure for furnaces and boilers. Although the LCC analysis yields a more definitive understanding ofthe economic impact ofthe design options for consumers, the paybackperiods reported here provide a preliminary indication ofhow the options may rank. DOE presents these paybackperiods to address the legally established "rebuttable" paybackperiod, as calculatedunder the applicable testprocedure. (42

## u.s.c. 6295 (0)(2)(B)(iii))


### 6.7.1 Calculation ofFuel Consumption for EachDesign Option The calculation offuel cost for each fuel-efficiency option begins with the fuel consumption ofthe baseline model in eachproduct class. DOE considered alternative design options that yield progressively higher AFUE levels. DOE considered several design options for reaching each specific AFUE level above the baseline model, as shown in Table 6.7.1.

6-37Table 6.7.1 Fuel-Efficient Design Options Product Class Increased HX Area Improved

Heat Transfer Coefficient Interrupted

Ignition Two-stage

Modulation Continuous

Modulation Condensing

Non-Weatherized Gas Furnaces X X X X X Weatherized Gas Furnaces X X Mobile Home Gas Furnaces X X X Oil-Fired Furnaces X X X Hot-Water Gas Boilers X X X Hot-Water Oil-Fired Boilers X X X X DOE calculated fuel consumption based on the method for calculating annual fuel energy use described in the DOE test procedure for furnaces and boilers. The details are reported in Appendix D. 6.7.2 Calculation of Electricity Consumption DOE has determined that it does not currently have the authority to regulate electricity consumption in residential furnaces and boilers. However, the furnace blower, furnace inducer fan, ignition and controls, as well as some design options (i.e., modulation) affect the fuel consumption of the appliance; therefore DOE calculated electricity consumption for completeness and accuracy. The electricity consumption of residential furnaces and boilers is represented by the annual auxiliary electrical energy (EAE) parameter, which DOE calculated and reported in kilowatt-hours per year (kWh/yr) in accordance with the DOE test procedure, paragraph 10.2.3.51 The details of the approach to calculate electricity consumption are reported in Appendix D. The EAE parameter does not include blower operation for an air conditioner during the cooling season.
6.7.3 Derivation of Fuel Costs DOE derived annual fuel costs from fuel consumption, based on residential prices of $10.57/million British thermal units (MMBtu) for natural gas and $13.00/MMBtu for residential oil. It derived annual electricity costs based on a residential price of $0.0916/kWh. These are the forecast average values for 2015 from the Energy Information Administration's Annual Energy Outlook 2007.52 6.7.4 Rebuttable Payback Section 325 (o)(2)(B)(iii) of the Energy Policy and Conservation Act, 42 U.S.C. 6295(o)(2)(B)(iii), establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that "the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy.

6-38 

### T bi 6 7 1 F I 

### Effi

.

a e 

# .. ue - IClency D . 0 f 

### eSlgn .pllOns Product Class Increased Improved Interrupted Two-stage Continuous Condensing HXArea Heat Ignition Modulation Modulation Transfer Coefficient Non-Weatherized Gas Furnaces X X X X X Weatherized Gas Furnaces X X Mobile Home Gas Furnaces X X X Oil-Fired Furnaces X X X Hot-Water Gas Boilers X X X Hot-Water Oil-Fired Boilers X X X X
DOE calculated fuel consumptionbased onthe method for calculating annual fuel energy use described in the DOE test procedure for furnaces andboilers. The details are reported in AppendixD.
6.7.2 

### Calculation ofElectricity Consumption DOE has determined that it does not currently have the authority to regulate electricity consumption in residential furnaces andboilers. However, the furnace blower, furnace inducer fan, ignition and controls, as well as some design options (i.e., modulation) affect the fuel consumption ofthe appliance; therefore DOE calculated electricity consumption for completeness and accuracy. The electricity consumption ofresidential furnaces andboilers is represented by the annual auxiliary electrical energy (EAE) parameter, which DOE calculated and reported in kilowatt-hours peryear (kWh/yr) in accordance with the DOE test procedure, paragraph 10.2.3. 51 The details ofthe approach to calculate electricity consumption are reported in Appendix D. The EAE parameter does not include blower operation for an air conditioner during the cooling season. 6.7.3 

### Derivation ofFuel Costs DOE derived annual fuel costs from fuel consumption, based onresidential prices of $10.57/million British thermal units (MMBtu) for natural gas and $13.00IMMBtu for residential oil. Itderived annual electricity costs based on a residential price of$0.0916/kWh. These are the forecast average values for 2015 from the Energy Information Administration'sAnnual Energy Outlook2007. 52
6.7.4 

### Rebuttable Payback Section 325(0)(2)(B)(iii) ofthe Energy Policy and Conservation Act, 42 U.S.c. 6295(0)(2)(B)(iii), establishes a rebuttable presumption that a standard is economicallyjustified if the Secretary finds that "the additional cost to the consumer ofpurchasing a product complying with an energy conservation standard level will be less than three times the value ofthe energy..

6-38. savings during the first year that the consumer will receive as a result of the standard, as

calculated under the applicable test procedure . . . ." To satisfy statutory rebuttable payback requirements, DOE calculated payback periods using the laboratory-based DOE test procedure. The tables presented in Appendix E provide detailed results for each option and depict the relationship between the payback period and various design options for each product class. The payback periods for some efficiency levels cannot be accurately established due to discrepancies in the algorithm for calculating the energy use in the current furnace/boiler test procedure. The energy consumption as calculated in the test procedure depends indirectly on the design heating requirement (DHR) parameter. In the current test procedure, DHR is a step function of furnace output capacity ranges QOUT. DOE observed that small changes in QOUT may assign an efficiency level to a different DHR range, with the result that more-efficient designs (at higher AFUE) may use more energy than designs represented by a lower AFUE level. Therefore, in these cases the calculation of payback period yields a negative value, because the term AEC (change in energy cost relative to baseline model) is negative. More details about this discrepancy are provided in section D.2.3 of Appendix D. 6.7.4.1 Rebuttable Payback Results As shown in Table 6.7.2, a number of efficiency levels higher than current standards satisfy the rebuttable payback requirements. Note that, in the process of setting a standard, DOE weighs many other factors in its economic justification. (42 U.S.C. 6295(o)(2)(B)(i)) Table 6.7.2 Efficiency Levels with Less Than Three-Year Payback Period Using DOE

Test Procedure Product Class Efficiency Level (AFUE) Payback (years) Non-Weatherized Gas Furnace 80% 0.8 Weatherized Gas Furnaces 80% 0.5 81% 0.8 Oil-Fired Furnaces 80% 0.1 81% 0.2 82% 0.2 Hot-Water Oil-Fired Boilers 81% 0.4 82% 0.4 83% 0.4

6-39 

### · savings during the first year that the consumer will receive as a result ofthe standard, as calculatedunder the applicable test procedure

...."
To satisfy statutoryrebuttable paybackrequirements, DOE calculatedpaybackperiods using the laboratory-based DOE test procedure. The tables presented in Appendix E provide detailed results for each option and depict the relationship between the paybackperiod and various design options for each product class.
The paybackperiods for some efficiency levels cannotbe accurately established due to discrepancies in the algorithm for calculating the energy use in the current furnace/boiler test procedure. The energy consumption as calculated in the testprocedure depends indirectly on the design heating requirement (DHR) parameter. In the current test procedure, DHR is a step function offurnace output capacity ranges QOUT' 

### DOE observed that small changes in QOUT

### may assign an efficiency level to a different DHRrange, with the result that more-efficient designs (at higher AFUE) may use more energy than designs represented by a lower AFUE level. Therefore, inthese cases the calculation ofpaybackperiod yields a negative value, because the term 

### Me (change in energy cost relative to baseline model) is negative. More details about this discrepancy are provided in section D.2.3 ofAppendix D.
6.7.4.1 Rebuttable Payback Results As shown in Table 6.7.2, a number ofefficiency levels higherthan current standards satisfy the rebuttable paybackrequirements. Note that, in the process ofsetting a standard, DOE weighs many other factors in its economicjustification. (42 U.S.c. 6295(0)(2)(B)(i))
Table 6.7.2 Efficiency Levels with Less Than Three-YearPaybackPeriod Using DOE TestProcedure Product Class Efficiency Level (AFUE) Payback (years) Non-Weatherized Gas Furnace 80% 0.8 Weatherized Gas Furnaces 80% 0.5 81% 0.8 Oil-Fired Furnaces 80% 0.1 81% 0.2 82% 0.2 Hot-Water Oil-Fired Boilers 81% 0.4 82% 0.4 83% 0.4

6-39For non-weatherized gas furnaces, the 80-percent AFUE furnace shows a payback period

of less than one year. This design level is the only one for this product class to show a payback period of less than three years. For weatherized gas furnaces, the 80- and 81-percent AFUE furnaces show payback periods of less than one year. For oil-fired furnaces, the 80-, 81-, and 82- percent AFUE furnaces show payback periods of 0.1 - 0.2 years. There is no efficiency level for mobile home furnaces and for hot-water gas boilers that shows a payback period of less than three years. Therefore, no design option satisfies the rebuttable payback assumptions for this product class. For hot-water oil-fired boilers, the payback period is 0.4 years for efficiencies up to 83-percent AFUE. DOE based all of the above payback periods on energy consumption according to the DOE test procedure. Payback periods calculated based on energy consumption in actual field conditions may differ significantly. The latter considerations are addressed in the LCC analysis; see Chapter 8 for further details.
6.8 ENGINEERING SPREADSHEETS The spreadsheet containing the calculations for the engineering analysis for all product classes is posted on the DOE website. It contains an introductory worksheet that guides the user. The spreadsheet tool containing the Installation Model is accessible on the Internet from DOE's Furnace and Boiler Rulemaking page: http:// www.eere.energy.govibuildings/appliance-standards/residential/ furnaces_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. It contains a text file that guides the user in installing and using the tool. 

### For non-weatherized gas furnaces, the 80-percent AFUE furnace shows a paybackperiod ofless than one year. This design level is the only one for this product class to show apayback period ofless than three years. For weatherized gas furnaces, the 80- and 81-percent AFUE furnaces show paybackperiods ofless than one year. For oil-fired furnaces, the 80-, 81-, and 82- percent AFUE furnaces showpayback periods of0.1

- 0.2 years. There is no efficiency level for mobile home furnaces and for hot-water gas boilers that shows a paybackperiod ofless than three years. Therefore, no design option satisfies the rebuttable payback assumptions for this product class. Forhot-water oil-firedboilers, the paybackperiod is 0.4 years for efficiencies up to 83-percent AFUE.
DOE based all ofthe above paybackperiods on energy consumption according to the DOE test procedure. Paybackperiods calculatedbased on energy consumption in actual field conditions may differ significantly. The latter considerations are addressed in the LCC analysis; see Chapter 8 for further details.
6.8 

### ENGINEERING SPREADSHEETS The spreadsheet containing the calculations for the engineering analysis for all product classes is posted on the DOE website. It

### contains an introductory worksheet that guides the user. The spreadsheettool containing the InstallationModel is accessible on the Internet from DOE's Furnace and BoilerRulemaking page: http:// www.eere.energy.govlbuildings/appliance

_standardslresidentiall furnaces

_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. It

### contains a text file that guides the user in installing and using the tool.

6-40REFERENCES

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