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

 EE-RM/STD-01-350 COMMENT 164

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 

6-i 
LIST 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

 EE-RM/STD-01-350 COMMENT 164

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 OF TABLES 

Features of Baseline Models by Product Class ......................... 6-3 

Gaps in Efficiency Levels of Units Selected for Teardown ............... 6-7 

Ranking of Design Options ........................................ 6-8 

Fraction of Category III Installations by AFUE ....................... 6-10 

Cost Model Fabrication Assumptions ............................... 6-14 

Cost Model 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 of Uncertainty for Main Variable Types ....................... 6-18 

Manufacturing Parameter Ranges .................................. 6-19 

Installation Model, Non-Weatherized Gas Furnace Weighting Assumptions. 6-27 

Master Bill of Materials for All Appliance Installation Configurations ..... 6-28 

Material and Labor Cost Assumptions .............................. 6-28 

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

Installation Cost for Weatherized Gas Furnaces ..... . . . . . . . . . . . . . . . . . . 6-31 

Installation Cost for Oil-Fired Furnaces ............................. 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-Year Payback Period Using 

DOE Test Procedure ............................................ 6-39 

LIST OF FIGURES 

Probability Distribution for the Production Cost of an Equipment Sample ., 6-20 

Importance ofInput Parameters 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-fired Furnaces ................ 6-23 

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

Incremental Manufacturing Costs for Oil-fired Boilers ................. 6-24 

6-ii 
CHAPTER 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

 EE-RM/STD-01-350 COMMENT 164

CHAPTER 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 (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 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 Documentl 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 
® 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 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-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

 EE-RM/STD-01-350 COMMENT 164

.. 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 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-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 
Table 6.3.1 Features of Baseline Models b y 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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 631 .. F eatures 0 f B ase r me M d 1 b o e s )y Pdt ro ue CI ass 

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 Dnlln 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 
Generate 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

 EE-RM/STD-01-350 COMMENT 164

II Generate 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 
® 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

 EE-RM/STD-01-350 COMMENT 164

.. 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: 

e 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).2 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 
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 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.

 EE-RM/STD-01-350 COMMENT 164

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 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 horne 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 

horne 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. 

6-6 
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 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

 EE-RM/STD-01-350 COMMENT 164

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 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$. 

T a e hI 641 .. G apsm . Effi· IClency L I f U eve s 0 filS ·t SIt e ec e d ~ or T d ear own 

Product Class Units Selected for Gaps 

Teardown 

Non-Weatherized Gas Non-condensing range: Baseline model efficiency units in 

Furnaces-Base 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 

I 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 
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 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

 EE-RM/STD-01-350 COMMENT 164

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 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. 

T bi 642 R k O a e ° ° an mgo fD eSlgn ° 0 f '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 

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 III 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 
unit (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 of 96 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. Since

these 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

 EE-RM/STD-01-350 COMMENT 164

unit (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. 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 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. Since 

these 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 OAMA 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 horne 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 
Because 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 Cate gory 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

 EE-RM/STD-01-350 COMMENT 164

Because 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 

T a e bi 643 .. F ractlOn 0 fe ate gory_ III I ns t a a II f IOns b ,y 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 
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 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 Gas

Technology 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 the

numerical 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

 EE-RM/STD-01-350 COMMENT 164

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 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 Gas 

Technology 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 the 

numerical 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 
1. 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

 EE-RM/STD-01-350 COMMENT 164

1. 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: 

Indirect material: 

Fabrication labor: 

Assembly labor: 

Equipment and plant 

Purchased parts (out-sourced) plus manufactured parts 

(made in-house). 

Material used during manufacturing (e.g., welding rods, 

adhesive), but not normally considered part of the 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 of the tools) and tooling 

replacement as it wears out. 

Money allocated to pay for the building space. 

6-12 
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: 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.

 EE-RM/STD-01-350 COMMENT 164

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: 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. 

6-13 
Table 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).

 EE-RM/STD-01-350 COMMENT 164

T a e bi 6 4 4 C M d I F b . .. ost o e a ncatlOn A ssumpllOns f 

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 

Turret punch V 

Plasma cut V 

Welding Seam welding V 

Spot welding V 

Machining Machining center V 

Finishing Paint V 

Assembly Adhesive bonding V 

ToxLox V 

Press fit V 

Fixture V 

Miscellaneous assembly operation V 

Final Assembly Packaging V 

Quality assurance V 

Molding Injection mold V 

Casting Sand cast V 

Similarly, DOE made assumptions about which components manufacturers purchase 

from external suppliers (Table 6.4.5). 

6-14 
Table 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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 6 4 5 C .. os t M d I A o e ssumpllOns f on o u t source dC omponen t s 

Sub-Assembly Outsourced Components 

Blower Motor - Wheel - Capacitor 

Inducer Motor - Wheel - Capacitor 

Casing Insulation 

Circulator Circulator Pump - Motor 

Electri call Contro Is 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. 

T a e bi 646 .. G reen fi Ie ld F aCl Tt ly S ;peCI ·fi lca f IOns 

Greenfield Facility Specifications 

Production DayslY ear 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% 

ActualiDesigned Production Capacity Ratio 0.7 

Assembly Line Dedicated 

6-15 
Table 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.

 EE-RM/STD-01-350 COMMENT 164

T a e hi 647 .. G reen fi Ie ld F aCII Tt y Pdf ro uc .on C t A os ssumptlOns 

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. 

6-16 
Table 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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 648 .. A nnua IP ro d uctlOn V I o ume A ssumptlOns 

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 _ 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. 

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 IS-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 
uncharacteristically 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

 EE-RM/STD-01-350 COMMENT 164

uncharacteristically 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. 

T a e bi 649 .. D ej:?;ree 0 fU ncer t . t amry ~ or M· am V . ana bi e T l~ 'pes 

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 vanables are proVided III 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 
Table 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

 EE-RM/STD-01-350 COMMENT 164

T a e hI 6410 .. M anu f acturmg P arame t er R anges 

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 ofIndirect-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 tenninology 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 
Forecast: Model 1A Cost

1,000 Trials Frequency Chart

.031

.023

.000 ,, IAA

$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

 EE-RM/STD-01-350 COMMENT 164

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 of an 

Equipment Sample 

." 

""" ("II 

.c 

c 

('1) 

= 

~ 

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. 

mo 

Figure 6.4.2 Importance of Input Parameters for Production Costs for 

N on-Weatherized Gas Furnaces 

6-20 
6.4.5 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

 EE-RM/STD-01-350 COMMENT 164

6.4.5 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 

~ 

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 

6-21 
350 ,

300

* Heat Exchanger Area

.Heat Transfer Coefficient

Low Bound Stainless Steel

-High Bound Stainless Steel

250

100

50

0

78% 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

 EE-RM/STD-01-350 COMMENT 164

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 Incremental Manufacturing 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 Exchanger Area 

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 

6-22 
180

160

140

80

60

40-I

20

4, Heat Exchanger Area

Interrupted Ignition

Fan Atomized Burner w/2-Stage Modulation

n

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

 EE-RM/STD-01-350 COMMENT 164

180 + Heat Exchanger Area 

Interrupted Ignition 

160 . Fan Atomized Burner w/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 

• ,. • • • .-Two 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 

6-23 
1000 ,

900

800 -I

700

600

500

400

300

200

A

100

0 s i_i P '

80% 82% 84%

Heat Exchanger Area

nInterrupted 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

 EE-RM/STD-01-350 COMMENT 164

1000 

900 

800 

~ 700 

-III 600 0 

() 

"iii 500 -I: 

Gl 

E 

Gl 400 ... 

u 

.E 300 

200 

.. ;.. A 

100 

0 

___ Lj 

80% 82% 84% 

A A 

, , 

86% 88% 

AFUE (%) 

• 

. Heat Exchanger Area 

" Interrupted Ignition 

• 

,4Fan Atomized Burner w/2-Stage Modulation 

90% 92% 94% 96% 

Figure 6.4.8 Incremental Manufacturing Costs for Oil-fired Boilers 

6.5 INSTALLATION COSTS 

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. 8 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 
6.5.1 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

 EE-RM/STD-01-350 COMMENT 164

6.5.1 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. 9 

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 (NRC an) 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. 11 ,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 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 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. 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

 EE-RM/STD-01-350 COMMENT 164

" 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 relininga and orphaned water heatersb 

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 BOMs. 

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 chinmeys-an estimated 23 percent ofthe market in 2015- need to be relined 90 percent ofthe time 

to comply with the National Fuel Gas Code (source: NFGC and chinmey size analysis, Appendix C). 

b If a furnace and gas water heater are cOlIDllonly vented in a masonry chinmey, and the flIrnace 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-wail-vented water heater is necessary (source: NFGC analysis, Appendix C). 

c 1.6 story, 1,660 sf, with basement; 80 kBTU input furnace (1997 RECS data14). 

6-26 
Table 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).

 EE-RM/STD-01-350 COMMENT 164

T a bi e 651 I ° ° nsta lIt" a .on MdlN o e, on-W ea th enze ° dG as F urnace W ° h O elgl tmg A 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 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). 

6-27 
Table 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 Assum ptions

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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 652 .. M aster B'U I 0 fM a t . ena I s £ or All A .pp, r lance I ns tIl' a abon C on fi 19ura IOns 

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 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 a bi e 653 .. M atena . I an dL a betA or os ssump f IOns 

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$ 

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 ofBOMs was 96. Because some venting configurations are 

6-28 
equivalent 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.

 EE-RM/STD-01-350 COMMENT 164

equivalent 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 1. 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. 

6-29 
Table 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

 EE-RM/STD-01-350 COMMENT 164

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 between the NOPR and the SNOPR results are due to Consumer Price 

Index (CPI) indexing of material and labor costs for inflation. d 

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 6.5.5 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 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 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

 EE-RM/STD-01-350 COMMENT 164

Table 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 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 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 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-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 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 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 
The 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

 EE-RM/STD-01-350 COMMENT 164

The 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 NFP A 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 Incremental Installation 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 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 

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 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. 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 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. 5 This 

6-32 
analysis 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

 EE-RM/STD-01-350 COMMENT 164

analysis 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 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 connector type, 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 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 re1inings 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 NFP A 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 
31 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 estimate

a 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

 EE-RM/STD-01-350 COMMENT 164

31 recommendations at the upper end of the ramp. In addition, DOE revised baseline model costs 

to more accurately reflect the frequency ofre-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 fails. 4

, 16, 17, 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. 3 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 estimate 

a 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; 19,20,21 researched RSMeans literature22 for maintenance differences 

between non-condensing and condensing gas furnaces; and collected opinions from several 

furnace installation and maintenance experts.23, 24, 25,26 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 
differences 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

 EE-RM/STD-01-350 COMMENT 164

differences 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. 17• 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50 

6-35 
Table 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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 661 .. A nnua r lze dR epalr . C os t (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 - 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. 

6-36 
6.7 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

 EE-RM/STD-01-350 COMMENT 164

6.7 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: 

where: 

PAYBACK 

LlCC 

LlOC 

LlRC 

LlfC 

ilEC 

LlMC 

11 CC I1RC + I1IC 

PAYBACK = 110C = I1EC+ I1MC 

payback period (years), 

change in consumer first cost relative to baseline model ($), 

change in operating cost relative to baseline model ($/yr), 

change in retail cost relative to baseline model ($/yr), 

change in installation cost relative to baseline model ($), 

change in first-year energy cost relative to baseline model ($/yr), 

and 

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 (0)(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 
Table 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

 EE-RM/STD-01-350 COMMENT 164

T a e bi 6 7 1 F .. ue I -Effi IClency . D . 0 eSlgn .pllOns f 

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 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 

AppendixD. 

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 $13.00IMMBtu 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(0)(2)(B)(iii) of the Energy Policy and Conservation Act, 42 U.S.c. 

6295( 0 )(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 
. 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

 EE-RM/STD-01-350 COMMENT 164

· 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 Me 

(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(0)(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 
For 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.

 EE-RM/STD-01-350 COMMENT 164

For 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 ofless than three years. For weatherized gas furnaces, the 80- and 81-percent AFUE 

furnaces show payback periods ofless 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.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. 

6-40 
REFERENCES

U. S. Department of Energy, Public Workshop on the Energy Efficiency Rulemaking

Process for Residential Furnaces and Boilers, 2000. U.S. Department of Energy,. (Posted

November 05, 2001) (Last accessed September 20, 2002.)

<http://www. eren. doe.gov/buildings/codes-standards/applbrf/furnaces_boilers.html>

2. Gas Appliance Manufacturers Association (GAMA), Updated Shipment Data for

Residential Furnaces and Boilers, personal communication. April 25, 2005.

3. Jakob, F. E., J. J. Crisafulli, J. R. Menkedick, R. D. Fischer, D. B. Philips, R. L. Osbone, J.

C. Cross, G. R. Whitacre, J. G. Murray, W. J. Sheppard, D. W. DeWirth, and W. H.

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Furnaces and Boilers, Volume I and II - Appendices, September, 1994. Gas Research

Institute. AGA Laboratories, Chicago, IL. Report No. GRI-94/0175.

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submitted to Docket Number: EE-RM/STD-01-350 Shipments, April 10, 2002. GAMA.

Arlington, VA.

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8. National Fire Protection Association (NFPA), National Fuel Gas Code -2006 Edition,

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of Residential Gas Furnaces and Boilers, September 30, 2002, 2002 . Report No. GTI02/0204.

6-41

 EE-RM/STD-01-350 COMMENT 164

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Furnaces and Boilers, Volume I and II - Appendices, September, 1994. Gas Research 

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Standardfor Gas-Fired Central Furnaces, November, 2001. New York, NY. Report No. 

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6-41 
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6-42

 EE-RM/STD-01-350 COMMENT 164

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Products: Standardsfor Furnaces & Boilers, DOE Docket Number EE-RMlSTD-01-350, 

Comment No. 100, October 15, 2006. 

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Furnace, 2004. Carrier Corporation. Indianapolis, IN. 

20. Carrier Corporation, Service and Maintenance Instructions For Sizes 040-120, Series 150: 

58MSA, 4-Way Multipoise Fixed-Capacity Condensing Gas Furnace, 2004. Carrier 

Corporation. Indianapolis, IN. 

6-42 
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6-43

 EE-RM/STD-01-350 COMMENT 164

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Eastside HVAC. March 25, 2005. 

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Energy Efficiency Standards for Consumer Products: Room Air Conditioners, Water 

Heaters, Direct Heating Equipment, Mobile Home Furnaces, Kitchen Ranges and Ovens, 

Pool Heaters, Fluorescent Lamp Ballasts & Television Sets, 1993. Washington, DC Vol. 1 

of 3. Report No. DOE/EE-0009. 

29. Department Of Energy, 10 CFR Part 431 Energy Efficiency Program for Commercial and 

Industrial Equipment: Efficiency Standards for Commercial Heating, Air Conditioning 

and Water Heating Equipment; Final Rule. Federal Register, 2001. 66(9): pp. 3336-3356 

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<http://www.residential.carrier.com/products/furnaces/ gas/ comfort92 .shtml> 

6-43 
32. Carrier Corporation, Comfort 80 Gas Furnace, 2007. (Last accessed March 22, 2007.)

<http://www.residential . carrier. com/products/furnaces/gas/comfort80 .shtml>

33. Lennox Industries Inc., Product Overview: Elite Series G50 Gas Furnace, 2007. (Last

accessed March 22, 2007.) 80 percent AFUE.

<http://www.lennox.com/products/overview.asp?model=G50>

34. Lennox Industries Inc., Product Overview: Elite Series G51 Gas Furnace, 2007. (Last

accessed March 22, 2007.) 92 percent AFUE.

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