## , Results ofGRI/AGA Survey on Costs Associated with Installing Larger Diameter Water Heaters
DOE Rulemaking Workshop -- June 20, 2000 Washington, DC Bob Hemphill Darrell Paul GRI Battelle (773) 399-8250 (614) 424-5890 Fax: (773) 399-8170 Fax: (614) 424-5890 rhemphil@gri.org paul@battelle.org

## Impact ofLarger Diameter Water Heaters * GRI/AGA/Battelle survey ofLDCs to obtain expert judgement ofpercentage oflocations impacted by increasing

thejacket insulation ofwater heaters. * Includes impacts ofmaintaining firsthour rating, upsizing drain pans where required, and atypical water supply piping, vent connector, and/or gas supply piping modifications.



### · DOE has notincluded these cost adders in their analysis.

## GRI/AGA/Battelle Survey * When replacing existing water heaters that are located in tight spaces, new unitswith increased jacket insulation will require added installation costs in some instancesfor:

* Tempering valves on smaller replacement units

· Drain pans * Gas piping modifications

· Water supply line modifications * Vent connector modifications 

### * A surveyof gas LDCs was conducted to estimate the percentage of existing installationsthat would be affected.

## Results ofGRI/Battelle/AGA a Survey of 

## mpact ofLarger iameterTanks * Responses from 15 U.S. companies with residential customers numbering from 2,000to 5,000,000 

### * Wide geographical area: serviceterritories of companies responding cover24 states and D.C. * Single and multifamily breakdown

## Distribution ofSurvey Results

Legend: AL Ala.Gas PM Piedmont NG AT Atmos Energy PS Public Service ofN I Intermountain SC So.Conn. Gas K KN Energy SG So. Cal. Gas MC ChasMacCauley SW Southwest Gas MD Municipal Dist U UGI NJ NJ Natural Gas W Washington Gas NY NYSECSingle Family -- Floor Space Available for Retrofit 

### Water Heater Installation

Less than 24" x 24" Floor Space 24%

Greaterthan or equalto 24" x 24" Floor Space 76% S~~~~~~~~11 i111

### Single Family -- Less than24"x 24" Space for WaterHeaterbyLocation Other

2% Garage Basement 18% Laundry/Utility Room

25%

Appliance Closet 50% S~~~~~~~~~~

-

### Multi-Family -- Floor Space Available for Retrofit Water Heater Installation

Lessthan 24" x 24" FloorSpace 39% Greater thanor equalto 24" x24" Floor Space 61% S ~ ~ ~ to

### Multi-Family -- Less than 24" x 24" Space for Water Heater byLocation

............................. W..a.

te............... ........ E Other 1% Basement Garage 6% 2% 1 % Laundry/Utility Room

30%

Appliance Closet 61% S ~ ~

## Small Spaces * Installations in which tempering valves are installed on next smaller sizedwater heater in the existingtight space * A 30 gallon tankwater at 160.7 Fequalsthe same available hot water energy as a 40 gallon tank at 135 F.Likewise, a 40 gallon tank at 154.3 Fequals 50 gallon tank at 135 F. * Percentage of installations impacted = 12.3% (40+50 only) * Equipment Cost * Tempering and checkvalves = $126.92

· Labor= $ 30.00

· Total = $156.92

## Drain Pans * Assumed that all installationsthat currently require a drain pan will haveto upsizethe pan by adding 2inches tothe diameter. * Percentage of installations impacted = 13.3% * Cost breakdown * Drain Pan: 20 inch diam. (new 30 gal) =$11.37

. Drain Pan: 22 inch diam. (new 40 gal) =$11.79 * Drain Pan: 24 inch diam. (new 40 gal) =$16.68

. Drain Pain: 30 inch diam. (new 75 gal) =$27.98 

### * Impacted

· Apply to 40 and 50 gal

· Existing: total; new: difference

## Vent System Modifications

.................... eUU..........................................i 

### * Assumed vent displacement for larger diameter units required replacement of one length of straight vent connector * Percentage of installations impacted = 13.5% * Cost breakdown * Vent materials= $ 4.46

. Labor = $10.00

. Total = $14.46

## Water Supply Line Modifications * Assume that any modification tothe location of the water supply piping attached tothe water heater would require modification. * Impacts existing, no small spaces. * Percentage of installations impacted = 13.5% * Cost breakdown * Materials= $23.15

· Labor = $10.00

. Total = $33.15

## Gas Piping Drop Leg Modifications

...... u..........................................................I



### * Assumed that the cost of modifying the gas piping was included in the baseline installation cost unlessthe gas piping drop leg had to be moved due to the larger diameter water heater. * Impacts existing, with rigid. * Piping, no small spaces. * Percentage of installations impacted =8.8% • Cost breakdown

· Materials = $29.69 * Labor = $10.00

· Total = $39.69

## Pressure ReliefValve Piping Modifications forWater Heaters in Tight Spaces

* Inmost casesthe pressure reliefvalve piping arrangement has some flexibility in how it is installed. The baseline installation cost includes switching the pressure reliefvalve piping over from the old unittothe new unit. * Percentage of installations impacted = 12.2% 

### * These modifications were assumed to be included in the baseline installation costs.

### Life Cycle Costs for 2 inches ofJacket Insulation The weighted average life cycle cost (6% discountrate) for 2 inches ofwater blown foamjacket insulation was $39.33 higher than the baseline when the added installation costs associated with larger diameter water heaters were taken into account. This means that adding 2inches ofjacket insulation is noteconomicallyjustified.

## Venting Issues Associated with Higher Recovery Efficiency Gas Water Heaters

DOE Rulemaking Workshop -- June 20, 2000 Washington, DC Bob Hemphill Darrell Paul GRI Battelle (773) 399-8250 (614) 424-5890 Fax: (773) 399-8170 Fax: (614) 424-5890 rhemphil@gri.org paul@battelle.org

## Impact on the Venting Guidelines in the 

## National Fuel Gas Code (NFGC) Amargin ofsafety wasbuilt into thecurrent venting guidelines in the National Fuel Gas Code: * The current venting tables fordraft hood equipped water heaters were incorporated into the code inthe early 1960's and assumed a flue loss efficiency of78 percent (which is roughly equivalent to arecovery efficiency of76 percent). * In 1990, the minimum energy factor for gas water heaters was set at 0.54 and those unitstypically had flue loss efficiencies ofabout 78percent (orrecovery efficiencies ofabout 76percent), which is atthe valueused to derive the NFGC venting guidelines. *Raisingthe recovery efficiency ofgas water heaters above 76%, asDOE isproposing, will further reduce the safety margin thatexists in the current codes and standards.

## Venting Issues DOE's isproposing that gas water heaters with a recovery efficiency ofapproximately 78 percent are economicallyjustified. DOE assumed that these units could be vented using the current guidelines in the National Fuel Gas Code (NFGC).
All current venting tables in NFGC: Part 11 are based on a recovery efficiency for draft hood equipped appliances ofapproximately 76 percent orless. These tables were generated in the 1960s and have remained unchanged since that time. S

## Single Appliance Venting "NatMax" values inPart 11 venting tables need tobe reduced ifthe flue loss efficiency ofthebaseline water heater isincreased. In some cases, the vertical vent mayhave tobe replaced with the next larger size to properly vent the new water heater. These costs were not taken into account in DOE's analysis.

## Common Venting Two orMore Appliances "Fan Min" and "Fan Max" values in Part 11 common venting tables assumed that the fan-assisted appliance was common vented with a draft hood equipped appliance with a 78 percent flue loss efficiency. In some cases, the vent system forboth the fan-assisted appliance and the draft hood equipped appliance may have to be modified. Forinstance, masonry chimney reliners may be required, or the Type B vertical vent re-sized. DOE did not take this into account in their analysis.

### Outdoor Design Temperatures (97.5% Values, ASHRAE)
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## Vent System Modifications * It is estimated that higher recovery efficiency gas water heaters will require that single wall vent connectors be replaced by Type Bdoublewall vent connectors * Cost breakdown * Vent materials = $53.47

. Labor= $32.00

. Total = $85.47

### The Space Heating Experience When Minimum Efficiencies Were Raised

Numerous lawsuits, out ofcourt settlements, and CPSC actions have resulted from condensation and corrosion concerns ofhigher efficiency space heating equipment. The gas industry does not want "history to repeat itself' with gas water heaters.

## Design Option Markup Factors Used in the GRI/Battelle Life Cycle CostAnalyses

DOE Rulemaking Workshop -- June 20, 2000 Washington, DC Bob Hemphill Darrell Paul GRI Battelle (773) 399-8250 (614) 424-5890 Fax: (773) 399-8170 Fax: (614) 424-5890 rhemphil@gri.org paul@battelle.org

## Design Option Markup Factor

.................................................................. 

### The objective ofthis task is to derive a credible design option mark-up factor for use in the NAECA water heater rulemaking. This factor is critical in determining the consumer cost of water heater design options that DOE is considering for improving the efficiency ofgas water heaters.With DOE's low valueforthe manufacturer markup, the incremental retail price ofthe design options are lowand it is much easierto economicallyjustify design option improvements Life-Cycle CostAnalysis at6% DiscountRate

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## Cost Estimation Methodology

- 

### Tear-down analysis of 6water heaters 

### Purchased from mega-retail store inColumbus, OH

· 40 gal., 3" flue

· 40 gal., 4" flue * 40 gal., low profile * 30 gal., 3" flue

· 50 gal., 3" flue * 75 gal. 

### * Parts cataloged by material, size, features, joining methodS## Cost Estimation Methodology

........... ....................................................... 

### * Sheetmetal parts modeled using BDI Design for Manufacture: Sheetmetal Working software, Ver. 2.0.1

· Estimates obtained for purchased parts * Largest single item cost: gas valve =$22.00 

### * Assembly processes modeled using BDI Design for Assembly software, Ver. 8.2.1

## Sheetmetal Cost Assumptions Material costs: Hotrolled, low carbon steel

- $0.23/lb. Hotrolled, low carbon steel, P&O

- $0.24/lb. Cold rolled, cabinetry steel

- $0.26/lb. Cold rolled, low carbon steel, pre-paint

- $0.71/lb. Cold rolled, hot-dipped galvanized steel

- $0.30/lb. 301 stainless steel, #4 polish, 0.036" sheet

- $1.08/lb. Machine Costs: Fixed and variable rates: $20/hr.

- $70/hr. (32T

- 1000T) Part reject rate: 0.5% Shop efficiency: 85%

## Sheetmetal Cost Assumptions

· Tooling costs 

### * Die setcosts: (used to calibrate cost by required die size)

. 12" x 6" plate - $375; 24" x 12" plate - $1200 

### * Die construction time: * Blanking die - 120 hours 

### * Bending die (4simultaneous bends) - 180 hours



### · Construction rate: $70/hr. (including overhead and profit) * Operator labor rate: $30/hr.

## Process Cost Assumptions * General * Operator labor rate: $30/hr. * Manufacturing rate: 6units/min. * Assemblytool and fixture cost not considered * Software defaultvalues used for standard assembly processes (e.g., threaded fastening, spotwelding) * Automatic seam welding time

. Modified BDI formula: time =8.03 * weld length* thickness1 .26 

### * Continuous chemical cleaning line Estimated operating cost: $150/hr.

## Process Cost Assumptions * Glass coating * Coating thickness =0.020 in. * Application rate =3.5 in.3/sec.

. Material density =0.055 Ib./ in. 3 * Material cost =$0.45/lb. * Continuous furnace bake

· Estimated operating cost =$300/hr. * Continuous paint line * Estimated operating cost =$209/hr. per booth

## Process Cost Assumptions * Insulation foaming operation * Fill rate =

### 260 in.3

### /sec. (expanded volume) * Material density (expanded) =0.002 Ib./ in. 3 

### * Material cost =$1.00/lb. 

### * Cardboard packaging

. Material cost =$0.04/ft.2

## Cost ofAdditional Jacket Insulation

· Insulation material and fill time * Size of outer sheetmetal (wrapper, caps)

· Length of couplings, gas tubes, gasvalve bulb * Size of cardboard packagingBattelle Estimates ofMaterial Plus Labor Costs for Baseline Water Heaters $160.00 B Compare to GAMA $139.77 $140.00 -----.--.....----------.....--..-- i-...i......... ........ ------ j
--- AveiagiG;ien toDOE ii . . | T~ $ W W~of $87.51 $llllll ^$86.06 $ 1... W80.83ae
................. 9 $80.00 s8$60.00 $40.00 $20.00
........ 30 40 50 75 Water HeaterSize, GallonsAverage Retail Cost ofWater Heaters (FromDOE Spreadsheet LCC-Gas, June 1999) $600

- $546 $546 $5 0 0
. ........................................................................................................ ......... $400 $286 $200 -- $176..
.......................................... 

# $ 0
......... .................. .................. .................. ......... i*Z~~i

# lii i i $1oo

30 40 50 75 Water HeaterSize, GallonsBattelle Mark-UpFactor for Design Option Costing
3.91 3.0
......................................................................................... 3. 9. . 3.14
2.18 2.11 2.0 -------- 1.0 ... .... ... 0.5
........ . 0.0 30 40 50 75 Water HeaterSize, Gallons S XtInstalled Base ofWater Heaters by Size ofUnit (From GRI Technical Advisory Group, Sept. 1999) 60% 50.0% 50% 40%

- Watr H e 25.0 22.0% 20% ........................................................... 10% . ..... .................................... 3.0% 0% 30 40 50 75 WaterHeater Size, Gallons

### Average Design Option Mark-Up Factor
When the mark-up factors for different water heater sizes are averaged based on the market share percentages, the weighted-average markup factor is 2.44

### Mark-Up Factor Comparison With Previous Battelle/GRI Work Done on Water Heaters in 1991
1991 1991 1991 1991 

### Manufacturer Distributor Retailer Overall Factor Factor Factor Mark-Up 1.5 X 1.2 X 1.4 = 2.52 Thisisin excellent agreement with the current mark-up factor of2.44 derived from arigorous cost breakdown of existing units.

### Deficiencies in DOE's Methodology for Determining a Water Heater Mark-Up Factor The DOE methodology for determining residential water heater mark-up factors requires that estimates ofthe costs associated with materials, labor, marketing, facilities, other capital costs, overhead rates, etc., be assigned on a per water heater basis. Due to the business sensitivity and difficulty in accurately collecting this information, it is nearly impossible to obtain accurate estimates ofa mark-up factor based on DOE's approach. GAMA, AGA, GRI, Battelle, and others have all submitted written and oral comments to DOE outlining deficiencies in DOE's approach.

### GRI/Battelle Mark-Up Factor The GRI/Battelle mark-up factor is based only on estimates of the cost ofmaterials and labor for residential water heaters. Standard engineering procedures are used to derive these input parameters, and all underlying assumptions are explicitly documented. The derived markup factor of2.44 is in excellent agreement with amark-up factor of2.52 derived from standard business practices for manufacturers, distributors, and retailers in the water heater industry.