Energy Conservation Standards for
 

Residential Water Heaters, Direct Heating Equipm

and Pool Heaters
 

Preliminary Activities and Analyses
 

Public Meeting
 

Rulemaking Overview
 

Building Technologies Program
 

Office of Energy Efficiency and Renewable Energy
 

U.S. Department of Energy
 

February 9, 2009
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Purpose of the Public Meeting

� To present methodologies and characterize results for analyses to date.� To discuss specific issues related to each analysis.� To seek input from attendees on methodologies, assumptions and data sou� To describe upcoming analyses and next steps.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
The Energy Policy and Conservation Act (EPCA) dire

consider seven factors when setting energy conservati

Factor Analysis

1. Economic impact on consumers

and manufacturers

Life­cycle cost analysisManufacturer impact analysis

2. Lifetime operating cost savings Life­cycle cost analysis3. Total projected energy savings National impact analysis4. Impact on utility or performance Screening analysis

Engineering analysis

5. Impact of any lessening of competition Manufacturer impact analysis6. Need for national energy conservation National impact analysis7. Other factors the Secretary considers

relevant

Environmental assessmentUtility impact analysisEmployment impact analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Steps for the Heating Products Standards Rulem

Preliminary Activities and Analyses
 

Screening

Analysis

Engineering

Analysis

Energy UseCharacterization

Shipments

Analysis

Markups toDetermineProductPrice

Life­CycleCost andPaybackPeriod Analyses

Market &Technology

Assessment

Framework

Document

Preliminary

Activities NOPR Final Rule Effective Date

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Key Documents Describing the Preliminary Act

� Executive Summary includes:

•	 An overview of the preliminary activities and preliminary technical support document (TSD);•	 Key results of the analyses; and•	 Issues on which DOE seeks comment from interested parties.

� Chapter 2 of the preliminary TSD provides a summary of the preliminary activiti

•	 A review of the analyses conducted; and•	 A discussion of comments on the analytical Framework from interested parties and DOE’s res

comments.

� Notice of Public Meeting (NOPM) and Availability of the Preliminary TSD include

•	 Details of the public meeting for the Heating Products preliminary activities and analyses; and•	 A description of the preliminary analyses, results, and documentation available on the website 

parties to review.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Next Steps in the Standards Rulemaking: NO

Framework

Document

Preliminary

Activities NOPR Final Rule Effective Date

TrialStandardLevels

RevisePreliminaryAnalyses

Manufacturer

Impact

Analysis

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Comments from Participants

� Participants are invited to provide summary comments or statements.� Participants are invited to raise additional issues for discussion today.� Interested parties may provide comments on the preliminary analyses thro

16, 2009.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Activities Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

Energy UseCharacterization

Market andTechnology

Assessment

Screening

Analysis

Engineering

Analysis

Markups forProductPriceDetermination

Life­CycleCost andPaybackPeriod Analysis

Shipments

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Purpose
 

� Market & Technology Assessment:

•	 To characterize the residential water heater, direct heating equipment, and pool heater m

determine available product efficiencies, manufacturers, shipments by product class, and available for increasing efficiencies.

� Screening Analysis:

•	 To apply screening criteria established by DOE to determine which technologies to evalu

screen out.

� Engineering Analysis:

•	 To evaluate technologies that improve efficiency relative to the baseline units.•	 To characterize manufacturer cost­efficiency relationships for higher efficiency products.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Market Characteristics: Water Heaters
 

� Storage Water Heaters:

•	 Three major domestic manufacturers hold over 90 percent of the storage water heater ma•	 The majority of products are manufactured in the U.S. However, there are several manuf

located overseas.

•	 4.4 million gas­fired storage water heaters, 24,000 oil­fired storage water heaters, and 4.5 

storage water heaters were shipped in 2007 (2007 AHRI data).

� Instantaneous Gas­Fired Storage Water Heaters:

•	 Products are primarily manufactured overseas.•	 DOE identified five manufacturers of instantaneous gas­fired water heaters.

–	 Four of these companies are foreign­owned and operated.–	 The one domestic manufacturer is also a major storage water heater manufacturer.

•	 Over 322,000 instantaneous gas­fired water heaters were shipped in 2007 (2007 AHRI d

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Water Heaters: Product Classes
 

Nominal input of over 50,000 Btu/h up to 200,000 Btu/h

volume of 2 gallons or less Instantaneous Gas­Fired*

Tabletop Dimensions of 36 inches high, 25 inches deep, and 24 inc

Nominal input of 12 kW (40,956 Btu/h) or less; rated st

from 20 to 120 gallons Electric Storage*

Nominal input of 105,000 Btu/h or less; rated storage v

gallons or less Oil­Fired Storage*

Input of 12 kW or less; contains no more than one gallon o

4,000 Btu/h of input

Nominal input of 75,000 Btu/h or less; rated storage vo

to 100 gallons

Characteristics

Instantaneous Electric

Gas­Fired Storage*

Residential Water

Heater Type

*DOE only considered gas­fired storage, oil­fired storage, electric storage, and instantaneowater heaters in today’s rulemaking.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Market Characteristics: Direct Heating Equipm

� DOE identified eight manufacturers of direct heating equipment.

• Three of the manufacturers produce equipment in all sixteen equipment classes.• Five of the manufacturers exclusively produce fireplace products.

� At least three manufacturers produce direct heating equipment domestically� Some product classes of direct heating equipment are sold exclusively as re

products.

� Over 169,000 units were shipped in 2005 (2007 AHRI data), including fireplac

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Direct Heating Equipment: Product Classe

� These 16 product classes were established by the National Applianc

Over 18,000 up to 20,000Over 20,000 up to 27,000Over 27,000 up to 46,000Over 10,000 up to 12,000Over 12,000 up to 15,000Over 15,000 up to 19,000Over 19,000 up to 27,000Over 27,000 up to 46,000Over 46,000Up to 42,000 Gas Wall FanUp to 18,000

Gas Room

Over 37,000Up to 37,000 Gas FloorUp to 10,000

Gas Wall Gravity

Over 46,000Over 42,000

Heating Capacity (Btu/h) Direct Heating Equipment Type

Energy Conservation Act (NAECA).

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Classes 

Vented Fireplace Heaters
 

� DOE did not separate fireplace heaters into a separate product class.� DOE determined that fireplace heaters use the same fuel, function similarly 

and gas room heaters, and do not contain any performances­related featurewould affect the measurement of annual fuel utilization efficiency (AFUE) ustest procedure.

� Manufacturers test fireplace heaters with DOE’s test procedure for vented h

heating equipment in Appendix O to Subpart B of Part 430 and certify to staprovided in section 430.32(i) of 10 CFR Part 430 (Energy and Water ConservStandards: Direct Heating Equipment).

� DOE notes that the AHRI Consumers’ Directory lists fireplace heaters as eit

heaters or wall furnaces.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Classes 

Vented Fireplace Heaters
 

DOE invites comments from interested parties on the inclusion 

fireplace heaters in the existing product classes for direct h

equipment. Specifically, DOE invites comment on the modifi

the existing product classes (as shown on the next slide) to 

vented fireplace heaters. (Issue #2)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Classes fo

Vented Fireplace Heaters
 

� In response to comments, DOE proposes new descriptions to help interes

Over 18,000 up to 20,000Over 20,000 up to 27,000Over 27,000 up to 46,000Over 10,000 up to 12,000Over 12,000 up to 15,000Over 15,000 up to 19,000Over 19,000 up to 27,000Over 27,000 up to 46,000Over 46,000

Gas Wall Fan Up to 42,000

and

Gas Recessed Fan Hearth

Up to 18,000

Gas Room

and

Gas Non­Recessed Hearth

Over 37,000Up to 37,000 Gas FloorUp to 10,000

Gas Wall Gravity

and

Gas Recessed Gravity Hearth

Over 46,000Over 42,000

Heating Capacity (Btu/h) Direct Heating Equipment Type

determine which category their products would fall under:

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Class Organ

� DOE examined the relationship between AFUE and input rating for direct heati

by reviewing AHRI’s Consumers' Directory and available product literature and following:

� Gas Wall Fan­type Direct Heating Equipment:

•	 The market data demonstrate two trends between AFUE and heating capacity:

–	 For lower efficiency products (i.e., those with efficiencies ranging from 73 percent AFUE to 77 

noticed the market data generally shows increasing efficiency with increasing capacity.

–	 For higher efficiency products (i.e., those with efficiencies from 78 percent AFUE and higher), 

market data generally shows the opposite trend of decreasing efficiency with increasing capac

� Gas Wall Gravity­type Direct Heating Equipment:

•	 Manufacturers are not offering products over the entire input capacity range, so some produ

unnecessary.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Class Organ

� Gas Floor­Type Direct Heating Equipment:

•	 The AHRI directory lists only 23 models.•	 75 percent have an input capacity at or above 37,000 Btu/h, and only one product is rated w

57 percent (the Federal energy conservation standard for the higher capacity range).

•	 The existing product classes could be consolidated into one product class.

� Gas room­type direct heating equipment:

•	 The market data show a general trend of increasing AFUE with input capacity range.•	 Some input capacity ranges could be consolidated based on the distribution of models in th

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:

Direct Heating Equipment: Product Class Organiz

� Based on DOE’s review of the products in AHRI’s Consumers’ Directory, DOE pr

combine and reduce the number of product classes for each of the four product direct heating equipment as follows:

Over 27,000 up to 46,000Up to 27,000Over 27,000 up to 46,000Up to 42,000Up to 20,000Over 20,000 up to 27,000Over 42,000

Gas Wall Fan

and

Gas Recessed Fan­type Hearth

Gas Room

and

Gas Non­Recessed Hearth

Gas Floor All

Over 46,000

Gas Wall Gravity

and

Gas Recessed Gravity­type Hearth

Over 46,000

Direct Heating Equipment Type Heating Capacity (Btu/h

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Request for Comment:
 

Direct Heating Equipment: Product Class Organiz

DOE invites comments from interested parties on the consol

product classes for direct heating equipment. (Issue #

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Market Characteristics: Pool Heaters
 

� DOE identified five manufacturers of pool heaters.� All manufacturers are domestically owned and operated.� The majority of products are shipped domestically.� DOE estimated there were approximately 300,000 gas­fired pool heaters ship

based on DOE’s shipments model.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Pool Heaters: Product Class
 

Residential, Gas­Fired

Product Class Description

� DOE intends to classify all gas­fired pool heaters for residential use as one p� DOE does not intend to specify an input capacity range for residential gas­fir

heaters.

•	 EPCA does not include a specific input capacity limit when determining the scope of cover

pool heaters.

•	 EPCA defines consumer products (i.e., residential products) as:

–	 Any article...which, to any significant extent, is distributed in commerce for personal use or c

individuals... (42 U.S.C. 6291(1))

•	 Manufacturers should consider pool heaters intended for residential use (i.e., marketed fo

residence) as covered by the residential gas­fired pool heater energy conservation standainput capacity.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Market and Technolo

Pool Heaters: Product Class
 

Residential, Gas­Fired

Product Class Description

� DOE includes spa heaters within the pool heater product class.

•	 Section 321 of EPCA defines pool heaters as being capable of “heating water in swimming 

tubs, and similar applications.” (42 U.S.C. 6291(25))

•	 Spa heaters perform similar functions as pool heaters and do not include any performance 

features that would cause the energy efficiency to be different from pool heaters.

� DOE did not include electric equivalents.

• DOE currently has no test procedure to measure coefficient of performance of heat pump • Residential gas­fired pool heater energy conservation standards are based on thermal effi

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Technolo

Technology Assessment
 

� DOE identified technologies for each product covered in this rulemaking fr

following sources:

• Technical support documents from previous rulemakings;• Literature review;• Product teardowns; and• Input from interested parties.

� The full list of technologies that DOE identified can be found in Chapter 3 t

and Technology Assessment of the preliminary technical support docume

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Add­On Heat Pump Water Heaters
 

� Add­on Heat Pump Water Heaters were not considered in this rulemaking.

•	 An add­on heat pump water heater is defined as “an air­to­water heat pump designed for us

type water heater or a storage tank that is not specified or supplied by the manufacturer.” (

subpart B to appendix E)

•	 Add­on heat pump water heaters are not considered water heaters from the point of manufa•	 They are field­installed onto existing water heater installations; and•	 Add­on heat pump water heaters can not function as water heaters until they are installed o

operating storage water heater.

� Add­on Heat Pump Water Heaters do not meet the definition of water heater fr

manufacture, and therefore, are not considered in this rulemaking.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Screening Analysis Methodology

� Technologies were screened using the following criteria:

• Technological feasibility;• Practicability to manufacture, install and service;• Adverse impacts on product utility or product availability; and• Adverse impacts on health or safety.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Technologies Screened Out: Water Heater

� DOE applied the screening criteria to the gas­fired, oil­fired, electric storage a

instantaneous gas­fired water heaters considered under this rulemaking.

� DOE screened out 10 of the technologies considered in the Technology Asse

each of the water heater types.

� DOE screened in 16 technologies.� Chapter 4 the Screening Analysis includes details on the technologies DOE s

the rationale for screening those technologies out, and how each criteria was 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Request for Comment:

Screening Analysis: Heat Pump Water Heater Pre

Screening Analysis Conclusion
 

� Shipments:

• Approximately 10,000 per year (less than 1 percent).

� Incentive Programs:

• ENERGY STAR has announced Heat Pump Water Heater criteria including:

– Energy factor of 2.0 or greater;– First hour rating of 50 gallons or greater; and– Warranty for 6 years or more on sealed system.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Request for Comment:

Screening Analysis: Heat Pump Water Heater Pre

Screening Analysis Conclusion
 

� Product Announcements:

• GE’s Integral Heat Pump Water Heater in response to ENERGY STAR.

� Reliability:

• Oak Ridge National Lab (ORNL) study, May 2002.

– Units had no failures associated with compressors, evaporator fans, or power relays during th– Units had no performance degradation after more than 7,000 compressor cycles (~10 years o

• California Energy Commission (CEC) report, 2004.

– Failures during a field test: 9 out of 20 units experienced failures with the control board.– Six of those control boards were replaced entirely.– The manufacturer addressed and corrected these problems in subsequent designs.

• ORNL test, 2004.

– Five redesigned units cited in the 2004 CEC report.– New units included more robust control systems and control boards.– No units failed.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Request for Comment:
 

Screening Analysis: Heat Pump Water Heater Pre

Screening Analysis Conclusion
 

� DOE invites comments as to whether Heat Pump Water Heaters are practical 

invites comments on the following:

• Installations in confined spaces;• Air flow requirements to evaporator and impacts on conditioned space;• Impacts on small residences less than 1,000 square feet;• Installations requiring building modifications for condensate removal and air flow;• Impacts on energy efficiency as a result of installation’s air flow characteristics;• Noise; and• Condensate removal and condensate in humid climates.

� DOE seeks comments as to whether Heat Pump Water Heaters are practical t

are reliable. DOE invites comments on the following:

• Service infrastructure;• Number of skilled professionals qualified to service complex systems of Heat Pump Water • Failure modes as a result of an increase in product complexity;• Historical record of failures;• Failure rated relative to other water heaters; and• Reliability tests and studies conducted since the January 2001 Final Rule. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Request for Comment:
 

Screening Analysis: Heat Pump Water Heater Pre

Screening Analysis Conclusion
 

� DOE invites comments as to whether Heat Pump Water Heaters are practic

manufacturer. DOE invites comments on the following:

•	 Since the January 2001 Final Rule heat pump water heater sales have not exceeded on

electric storage water heaters;

•	 The manufacturing conversions associated with introducing heat pump water heater pro•	 The portion of production that would be converted to heat pump water heaters in respon

ENERGY STAR Program; and

•	 The practicability to convert manufacturing entirely to heat pump water heaters in respo

amended energy conservation standard for electric storage water heaters at a level that heat pump water heaters.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Request for Comment:
 

Screening Analysis: Heat Pump Water Heater Pre

Screening Analysis Conclusion
 

DOE invites comments from interested parties on the viab

heat pump water heaters as a technology for increasing the 

efficiency for electric storage water heaters. (Issue #

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Scr

Technologies Screened Out:

Direct Heating Equipment and Pool Heate

� Direct Heating Equipment.

•	 DOE screened out 4 of the technologies considered in the Technology Assessment for each 

fan, gas wall gravity, gas floor, and gas room direct heating equipment types.

•	 DOE screened in 13 technologies.

� Gas­Fired Pool Heaters.

•	 DOE screened out 1 of the technologies considered in the Technology Assessment for gas­fi•	 DOE screened in 5 technologies.

� Chapter 4 the Screening Analysis includes details on the technologies DOE scr

rationale for screening those technologies out, and how each criteria was appli

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Purpose of the Engineering Analysis

� Characterize the relationship between manufacturer cost and energy efficie

Downstream Ana

• Life­Cycle Cost an

Payback Period

• National Impacts• Manufacturer Imp

Analysis

Cost – Efficiency

Relationship

Incremental

Manufacturing Cost

Efficiency

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Engineering Analysis: Representative Prod

� DOE conducted the engineering analysis by first examining representative p� DOE reviewed the shipments data and considered the products with the hig

of shipments as “representative” of a product class.

� DOE distinguished representative products by:

• Storage volume for storage water heaters;• Input capacity for instantaneous gas­fired water heaters;• Input capacity for direct heating equipment; and• Input capacity for pool heaters by rated input capacity.

� DOE determined manufacturing product costs (MPCs) for each of the repres

products.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Engineering Analysis: Representative Prod

Gas Room Direct Heating Equipment Over 46,000 Btu/hInstantaneous Gas­Fired Water Heater 0 gallons (199 kBtu/h Input Capacity)Gas Wall Fan Direct Heating Equipment Over 42,000 Btu/hGas Wall Gravity Direct Heating Equipment Over 27,000 up to 46,000 Btu/hGas Floor Direct Heating Equipment Over 37,000 Btu/hGas­Fired Pool HeatersElectric Storage Water HeaterOil­Fired Storage Water HeaterGas­Fired Storage Water Heater

30 gallons250,000 Btu/h50 gallons40 gallons

Representative Products

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Engineering Analysis: Baseline Efficiency Le

� DOE determined baseline efficiency levels for each representative produc

the Federal energy conservation standards.

•	 For example, the baseline, (i.e., the Federal energy conservation standard) for gas­fire

heaters at 40 gallons (i.e., the representative storage volume) is 0.59 EF.

Gas Room Direct Heating Equipment 64 percent AFUEInstantaneous Gas­Fired Water Heater 0.62 EFGas Wall Fan Direct Heating Equipment 74 percent AFUEGas Wall Gravity Direct Heating Equipment 64 percent AFUEGas Floor Direct Heating Equipment 57 percent AFUEGas­Fired Pool HeatersElectric Storage Water HeaterOil­Fired Storage Water HeaterGas­Fired Storage Water Heater

0.53 EF78 percent thermal efficiency0.90 EF0.59 EF

Baseline Efficiency Levels

� DOE analyzed both pilot and electronic ignition for gas­fired pool heaters a

baseline design.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Engineering Analysis: Max­Tech Efficiency L

� DOE reviewed publicly available market data, product catalogs, technical 

prototype technologies to determine the efficiency levels corresponding tmaximum technology (i.e., max­tech) efficiency levels for each product cl

Gas Room Direct Heating Equipment 93 percent AFUEInstantaneous Gas­Fired Water Heater 0.92 EFGas Wall Fan Direct Heating Equipment 80 percent AFUEGas Wall Gravity Direct Heating Equipment 75 percent AFUEGas Floor Direct Heating Equipment 78 percent AFUEGas­Fired Pool HeatersElectric Storage Water HeaterOil­Fired Storage Water HeaterGas­Fired Storage Water Heater

0.68 EF95 percent thermal efficiency2.2 EF0.77 EF

Max­Tech Efficiency Levels

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
­

Engin

Efficiency­Level Approach
 

� Cost­efficiency curves were developed by DOE.

•	 Material and component costs were generated during product teardown analysis and en

model.

•	 Cost model generated manufacturing, material, labor, and overhead costs.•	 Physical teardown analysis conducted with representative products. Cost model extend

products (i.e., other capacities, efficiencies) with “virtual teardowns.”

Full

Production

Cost

Conversion

Costs

(Non Production Costs)

Manu

+ = C

� Direct material � Sales & marketing� Direct labor � Research & development� Factory overhead � Building� Depreciation � Tooling/Equipment

� Manufacturer interviews were conducted to further refine the analysis inpu

the results generated by the cost model.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Engineering Analysis Methods and Approa

Product Teardown √ √ 

Repre

Direct Heating Equipment Water Heaters

√√√√

All

Efficiency­Level Approach

Representative

√√√√

All Representative

Manufacturer InterviewsIdentification of Efficiency

Pathway

Identification of

Technologies

Market Data Gathering

Method

� DOE conducted each analysis for all products covered by the appropriate rat

or capacity range for each product class.

� DOE also conducted physical teardowns for the representative products and 

cost model to expand the analysis to all covered products.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Reverse­Engineering Methodology
 

Raw

Materials

FinishedMaterials

PurchasedParts

Selection

of Units

Physical

Teardown

Bill of

Materials

Assembly

Processes

Manufacturing

Cost

Fabrication

Processes

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Develop

Baseline

Calculate Costs

Develop

Efficiency

Pathway

Generate CostEfficiency

Curves

Cost­Efficiency Curve Development

� Define baseline specifications for each product class;� Identify efficiency levels from the baseline to the max­tech a

improving energy efficiency;

� Conduct teardown analysis for representative products at th

levels identified; and

� Generate cost­efficiency curves, which accounting for full p

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas­Fired Storage Water Heaters: Engineering Analy

(40 Gallons, Representative Rated Storage Vol

0.770.660.650.640.630.620.59

Energy

Factor

(EF)

Max­Tech Condensing, Power Vent, 2” Insulation 

5 Electronic Ignition, Power Vent, 2” Insulation 4321Baseline

Efficiency

Level

P

Electronic Ignition, Power Vent, 1.5” InsulationElectronic Ignition, Power Vent, 1” InsulationStanding Pilot, 2” InsulationStanding Pilot, 1.5” InsulationCurrent Federal Standard, Standing Pilot, 1” Insulation

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produ

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Oil­Fired Storage Water Heaters: Engineering Analys

(30 Gallons, Representative Rated Storage Vol

0.680.660.620.600.580.560.540.53

Energy

Factor

(EF)

Electronic Ignition, 1” Fiberglass Insulation, Enhanced Flue Baffles 6

Electronic Ignition, 1” Foam Insulation, Enhanced Flue Baffles Max­Tech

5 Electronic Ignition, 2.5” Foam Insulation 4321Baseline

Efficiency

Level

P

Electronic Ignition, 2” Foam InsulationElectronic Ignition, 2.5” Fiberglass InsulationElectronic Ignition, 2” Fiberglass InsulationElectronic Ignition, 1.5” Fiberglass InsulationCurrent Federal Standard, Electronic Ignition, 1”

Fiberglass Insulation

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produ

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Electric Storage Water Heaters: Engineering Analys

(50 Gallons, Representative Rated Storage Vol

2.2

0.950.940.930.920.910.90

Energy

Factor

(EF)

Max­Tech Heat Pump Water Heater 

5 4” Foam Insulation 4321Baseline

Efficiency

Level

3” Foam Insulation2.5” Foam Insulation2.25” Foam Insulation2” Foam InsulationCurrent Federal Standard, 1.5” Foam Insulation

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a prod

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:

Water Heaters: Energy­Efficiency Equation

� The current conservation standards for gas­fired and electric storage wate

characterize the relationship between energy factor (EF) and rated storage using the following energy­efficiency equations:

Electric Storage EF = 0.97 – (0.00132 X Rated Storage Vol

EF = 0.67 – (0.0019 X Rated Storage Volu

Federal Energy­Efficiency Equati

Gas­Fired Storage

Residential Water Heater Type

� DOE is considering changes to the energy­efficiency equations.� DOE is investigating these changes in response to a request submitted by 

gas­fired storage and electric storage water heaters.

� DOE chose not to investigate the energy­efficiency equation for oil­fired st

heaters.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:

Water Heaters:  Current Energy­Efficiency Equa

� In response to AHRI’s request, DOE further investigated the relationship be

and rated storage volume for gas­fired and electric storage water heaters.  

� If DOE maintains the slope of the Federal energy conservation standards a

the standard by changing the y­intercept, then the efficiencies analyzed forstorage water heaters (as an example) would take the form:

1.000.95

� Electric Storage 

Water Heaters. Curre

0.91 E0.92 E

0.90 0.93 E

0.94 E0.95 E

0.85

Energy Factor (EF)

0.80

20 30 40 50 60 70 80 90 100 110 120 

Rated Volume (Gallons)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Water Heaters:  Alternative Energy­Efficiency Eq

� As one alternative, DOE could group water heaters by model series and assign a

each model series.  DOE could then vary the slope to maximize the number of mappropriate efficiency level for the range of rated storage volumes. Additionally fwater heaters, DOE could cap the energy­efficiency equations at 0.95 EF.

1.00

� Alternative for 

Electric Storage  0.95

Water Heaters.

0.90 0.850.80
 

20 30 40 50 60 70 80 90 100 110 120
 

Rated Volume (Gallons)

Energy Factor (EF)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Water Heaters:  Alternative Energy­Efficiency Eq

� DOE could also conduct this analysis for gas­fired storage water heate

0.850.800.75

� Alternative for 

Gas­Fired Storage  0.70 

Water Heaters. 

0.65 0.600.550.500.45
 

20 30 40 50 60 70 80 90 100
 

Rated Volume (Gallons)

Energy Factor (EF)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Water Heater Testing and Teardown Analysis 

Energy­Efficiency Equation Development
 

� DOE is currently testing gas­fired and electric storage water heaters.

• DOE is conducting testing in accordance with the DOE test procedure.• DOE is implementing the same testing methods used for AHRI product certification.

� DOE is conducting testing to confirm and validate energy factors.

• DOE is conducting testing to verify EFs beyond the required two significant figures.

� DOE will then conduct a teardown analysis to determine the specific methods

manufacturers use to obtain various EFs at various gallon sizes.

• DOE will pay particular attention to amount of insulation on the top and the sides of the wat

� DOE will use this data to validate the development of energy­efficiency equati

fired and electric storage water heaters.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Water Heater Testing and Teardown Analysis 

Energy­Efficiency Equation Development
 

DOE invites comment on its approach for developing alter

energy­efficiency equations for gas­fired and electric s

water heaters. DOE also invites comments on its meth

validating the alternative energy­efficiency equations 

teardown analysis. (Issue # 7)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Instantaneous Gas­Fired Water Heaters: Engineerin

Results (199 kBtu/h, Representative Input Cap

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a prod

0.920.850.840.820.800.780.690.62

Energy

Factor

(EF)

Electronic Ignition, Power Vent, Improved Heat Exchanger Area, Direct Vent 6

Max­Tech Condensing 

Electronic Ignition, Power Vent, Improved Heat Exchanger Area 5

4321Baseline

Efficiency

Level

P

Electronic Ignition, Power Vent, Improved Heat

Exchanger Area

Electronic Ignition, Power VentElectronic Ignition, Improved Heat Exchanger AreaStanding Pilot, Improved Heat Exchanger AreaCurrent Federal Standard, Standing Pilot

Technology

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Safety Concerns for Near­Condensing Efficiency 

for Instantaneous Gas­Fired Water Heaters

DOE invites comment on the potential for safety issues 

instantaneous gas­fired water heater operating at ne

condensing efficiency levels.

� DOE included instantaneous gas­fired water heaters at near­condensing 

condensing EF levels because products were identified at these levels thcurrently available on the market. If manufacturers were faced with a potamended standard at near condensing levels for all installations, DOE incomment on:

•	 How would manufacturers change current designs to mitigate corrosive condensation 

these EF levels that may be present in some installations?

•	 How would manufacturers alter current designs of instantaneous gas­fired water heat

achieve safe operation if a potential amended standard required all installations to opnear­condensing EF levels?

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas Wall Fan­type Direct Heating Equipmen

Engineering Analysis Results
 

(Over 42,000 Btu/h, Representative Input Capacity 

8077767574

Annual Fuel

Utilization

Efficiency

(percent

AFUE)

Max­Tech Induced Draft and Electronic Ignition 321Baseline

Efficiency

Level

Electronic Ignition, 2 Speed Blower, Improved Heat

Exchanger

Electronic Ignition, Improved Heat ExchangerElectronic Ignition, 2 Speed BlowerCurrent Federal Standard, Standing Pilot

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produ

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas Wall Gravity­type Direct Heating Equipme

Engineering Analysis Results (Over 27,000 Btu/h a

46,000 Btu/h, Representative Input Capacity Ra

757271686664

Annual Fuel

Utilization

Efficiency

(percent

AFUE)

4 Electronic Ignition 

Max­Tech Induced Draft 321Baseline

Efficiency

Level

Standing Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerCurrent Federal Standard, Standing Pilot

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produ

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas Floor­type Direct Heating Equipment:

Engineering Analysis Results
 

(Over 37,000 Btu/h, Representative Input Capacity 

786562615857

Annual Fuel

Utilization

Efficiency

(percent

AFUE)

4 Improved Heat Exchanger, Electronic Ignition Max­Tech Induced Draft 321Baseline

Efficiency

Level

Standing Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerCurrent Federal Standard, Standing Pilot

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produ

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas Room­type Direct Heating Equipment

Engineering Analysis Results (Over 27,000 Btu/h a

46,000 Btu/h, Representative Input Capacity Ra

9378706867666564

Annual Fuel

Utilization

Efficiency

(percent

AFUE)

5 Electronic Ignition 

6 Induced Draft 

4 Standing Pilot, Improved Heat Exchanger 

Max­Tech Condensing 321Baseline

Efficiency

Level

Standing Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerStanding Pilot, Improved Heat ExchangerCurrent Federal Standard, Standing Pilot

Technology

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a prod

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Gas­Fired Pool Heaters: Engineering Analysis R

(250,000 Btu/h, Representative Input Capacity)

959086848382817978

Thermal

Efficiency

Sealed Combustion, Condensing, Improved Heat Exchanger Design Max­TechSealed Combustion, Condensing, Improved Heat Exchanger Design 7

5 Power Venting, Improved Heat Exchanger Design 

6 Sealed Combustion, Condensing 

4 Power Venting 3*2*1*Baseline*

Efficiency

Level

Improved Heat Exchanger Design, More Effective Insulation

(Combustion Chamber)

Improved Heat Exchanger DesignImproved Heat Exchanger DesignCurrent Federal Standard

Technology

*Technologies incorporating either a standing pilot or electronic ignition. Efficiency levels above 

include electronic ignition.
 

The MPC includes the cost of materials, labor, and direct overhead used to manufacture a produc

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Request for Comment:
 

Safety Concerns for Near­Condensing Efficiency 

for Gas­Fired Pool Heaters
 

DOE invites comment on the potential for safety issues of ga

pool heaters operating at near­condensing efficiency le

(Issue #6)

� DOE included gas­fired pool heaters at near­condensing and condensing E

because products were identified at these levels that are currently availablmarket. DOE received comments regarding safety for gas­fired pool heaterat 85 and 86 percent thermal efficiency. If manufacturers were faced with a amended standard at near condensing levels for all installations, DOE inviton:

•	 How would manufacturers change current designs to mitigate corrosive condensation fo

these thermal efficiency levels that may be present in some installations?

•	 How would manufacturers alter current designs of gas­fired pool heaters to achieve safe 

potential amended standard required all installations to operate at near­condensing therlevels?

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Engin

Manufacturer Selling Prices

� MSP accounts for the non­production costs and profit (i.e., the “manufacturer � DOE calculated MSPs for Residential Heating Products by using:

• U.S. Securities and Exchange Commission (SEC) 10­K reports; and• Feedback from engineering interviews.

� MPCs are multiplied by the manufacturer markup to determine MSPs.� MSPs are an input to the LCC analysis.

Instantaneous Gas­Fired Water Heater 1.45Direct Heating Equipment 1.38Gas­Fired Pool HeatersStorage Water Heaters

1.381.38

Manufacturer MSP Markup

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Other Issues
 

DOE invites comments and recommendations from intere

parties on any other aspects relating to the Market and Tech

Assessment, the Screening Analysis, and the Engineering A

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Preliminary Manufacturer Impact Analysis (MIA) O

� DOE conducted on­site and telephone interviews with manufacturers of:

• Residential Water Heaters;• Direct Heating Equipment; and• Pool Heaters.

� Topics included:

• Engineering analysis overview, methodology, and results;• Key Issues (as defined by manufacturer);• Current market conditions (shipments, market share, product mix, profitability);• Manufacturer sub­group analysis;• Product utility and innovation (performance vs. efficiency, design options);• Potential impacts of amended energy conservation standards (esp. conversion costs); a• Cumulative regulatory burdens (state, federal, international).

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Residential Water Heater MIA

� DOE interviewed manufacturers representing over 90 percent of the U.S. re

water heating market.

Manufacturer

Sub­Group

Analysis

ProductUtility andInnovation

Impacts ofEfficiencyStandards

Current

Market

Conditions

KeyIssues

CuReBu

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Residential Water Heater Key Issues
 

� ENERGY STAR:

•	 Requirements for water heaters issued on April 1, 2008.•	 Potential amended energy conservation standards should be low enough to allow for pr

efficiency products to be developed for ENERGY STAR certification.

� Increases in Installation Costs:

•	 Electrical connections, specific vent configurations, condensing designs, and heat pump

installation costs.

•	 Increase costs may decrease market share and increase product switching to instantan•	 The majority of instantaneous systems are manufactured overseas, which may impact d

employment.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Residential Water Heater Key Issues
 

� Increases in Shipping Costs:

•	 As insulation thicknesses increase, overall product dimensions increase.•	 As products increase in size, fewer products can be placed into shipping trailers and mo

and trucks are required.

•	 Shipping costs increase and overall prices become more sensitive to fuel prices.

� Safety Concerns at Near Condensing Levels:

•	 Corrosive condensate may form in instantaneous gas­fired water heaters for certain ins•	 Manufacturers may be unwilling to bear the risks associated with these levels and respo

manufacturing fully condensing designs.

•	 Condensing technology increases MPC significantly.•	 An instantaneous gas­fired water heater at 0.85 EF does not have an adequate safety m

between non­condensing and condensing operation for all installations.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Residential Water Heater Key Issues
 

� Fuel Switching:

•	 Fuel switching may occur if amended energy conservation standards require heat pump 

heaters.

•	 Consumers may switch to gas­fired products or repair failed units (rather than replace).•	 High costs of heat pump water heaters may make switching an affordable option and m

installation of venting and gas lines to accommodate gas­fired water heaters.

� Equipment Switching:

•	 Storage and instantaneous gas­fired water heater energy conservation standards shou

to levels where the stringency is maintained, or switching between the two product type

•	 Switching may impact domestic employment because the majority of instantaneous pro

manufactured overseas.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Direct Heating Equipment MIA

� DOE interviewed manufacturers representing the majority of the U.S. resid

direct heating equipment market.

Manufacturer

Sub­Group

Analysis

ProductUtility andInnovation

Impacts ofEfficiencyStandards

Current

Market

Conditions

KeyIssues

CuReBu

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Direct Heating Equipment Key Issues
 

� Increases in Installation Costs:

•	 Amended energy conservation standards that require electrical connections, power ven

condensate removal will increase installation costs.

•	 Higher costs may reduce market share and consumers may switch to alternative heatin•	 Some direct heating equipment is shipped as replacement products only and market sh

grow. Higher costs may reduce and eliminate market share for these replacement prod

� Derating:

•	 Manufacturers may derate products to meet energy conservation standards.•	 Manufacturers avoid changing designs so that MPC does not increase and replacemen

require consumers to make installation changes.

•	 Derating may adversely impact product utility.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Pool Heater MIA
 

� DOE interviewed manufacturers representing the majority of the U.S. resid

heating market.

Manufacturer

Sub­Group

Analysis

ProductUtility andInnovation

Impacts ofEfficiencyStandards

Current

Market

Conditions

KeyIssues

CuReBu

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Pool Heater Key Issues

� Increases in Installation Costs:

•	 Power vents, electrical connections, specific vent configurations, and condensing desig

installation costs.

•	 Complex designs may also require additional training for field technicians.•	 Manufacturers are typically burdened with providing training to field technicians.

� Product Price Increases Resulting in Declining Market:

•	 Increases in total installation cost and product complexity may discourage consumers fr

purchasing pool heaters entirely.

•	 Pool heaters are not considered a commodity, rather a luxury product.•	 A consumers decision to buy a pool heater often depends on financial status, desire of 

weather, in addition to cost.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Pool Heater Key Issues
 

� Safety Concerns at Near Condensing Levels:

•	 Corrosive condensate causes safety concerns for pool heaters operating at 85 and 86 p

thermal efficiency for certain installations.

•	 85 and 86 percent thermal efficiency do not provide safety margins between non­conde

condensing operation for all installations.

•	 Manufacturers may choose to produce fully condensing designs or not choose to produ

these levels to avoid safety issues.

•	 Condensing technology increases MPC significantly.•	 Near condensing levels may result in a loss of market share for pool heater manufactur

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Other Issues
 

DOE welcomes comments and recommendations fro

interested parties on any aspects related to the Prelimin

Manufacturer Impact Analysis.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Activities Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

Energy UseCharacterization

Market andTechnology

Assessment

Screening

Analysis

Engineering

Analysis

Markups forProductPriceDetermination

Life­CycleCost andPaybackPeriod Analysis

Shipments

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Life­Cycle Cost and Paybac

Purpose
 

� Markups for Product Price Determination:

•	 To characterize the channels for how products are distributed from the manufacturer to th•	 To determine prices paid by consumers based on manufacturer selling prices for baseline 

efficiency products.

� Energy Use Characterization:

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

� Life­Cycle Cost (LCC) and Payback Period (PBP) Analysis:

• To develop the consumer life­cycle cost savings and payback period for higher efficiency 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Lifetime

Discount Rate

Energy

Price Trend

Annual

Operating

Expense

Life­Cycle Cost and Paybac

LCC & Payback Period Analysis Flowcha

From
 

Engineering
 

Analysis
 

From Markups
 

to Determine
 

Product Price
 

Total Installed

Cost

Lifetime

Operating

Expense

Payback

Period

Manufacturer

Markup

Sales Tax

Retailer or

Distributor

Markup

Consumer

Price

Baseline

Manufacturer

Cost

Std­Level

Manufacturer

Cost

Installation

Cost

From Energy Use

Characterization

Energy

Consumption

Energy

Prices

Annual Energy

Cost

Repair Cost

Maintenance

Cost

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Life­Cycle Cost and Paybac

Method
 

� LCC equals total installed cost plus the sum of operating costs discounted t

base year.

� Economic evaluation from the consumer perspective.� Analysis models the uncertainty and variability of inputs using Monte Carlo 

probability distributions.

� Analysis implemented in an Excel® spreadsheet combined with Crystal Ball.

First Cost

(Consumer Price +

Installation Cost)

Operating

Expenses

Combine Change

in Costs

LCC Results

Convert to Present Value

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Purpose, Inputs, and Output of the Markup Ana

� Purpose:

• Determine consumer product prices based on manufacturer costs.• Characterize product distribution channels and market segments.

� Inputs:

• Manufacturer Markups.

– Engineering Analysis.

• Retailer, Distributor, Contractor, Builder Markups.

– Retailers: U.S. Census Bureau Financial Data for Household Appliance Stores.

– Distributors: U.S. Census Bureau Financial Data for Merchant Wholesalers, Machinery, Equip

– Contractors: Air­Conditioning Contractors of America HVAC financial analysis.

– Builders: U.S. Census Bureau Geographic Area Series for Construction.

� Output:

• Baseline and incremental markups.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Distribution Channels ­ Water Heaters
 

Replacement A Replacement B New Homes A New 

Manufacturer Manufacturer Manufacturer Man

Retailer Distributor Distributor Dis

Contractor Builder Co

B

Consumer Consumer Consumer Co

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Distribution Channels
 

Direct Heating Equipment Pool Heaters

Replacement New Homes Replacement Ne

Manufacturer Manufacturer Manufacturer Ma

Distributor Distributor Distributor D

Contractor Contractor Service Company Po

Builder

Consumer Consumer Consumer C

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Baseline and Incremental Markups
 

� Markups relate consumer price to cost of goods sold (CGS).� Baseline markups relate price to cost prior to a change in efficiency.

•	 Baseline markups indicate a consumer price that covers all of a retailer’s or distributor’s ex

profit.

•	 Direct labor costs (salaries, payroll, rental and occupancy) are included.

� Incremental markups relate the incremental change in consumer price to the 

change in CGS.

•	 Some costs remain constant with CGS increases.•	 Incremental markups cover only expenses that vary with CGS – in this case, expenses tha

an increase in product efficiency.

–	 For example, direct labor costs (salaries, payroll, rental and occupancy) do not vary with effic

changes in CGS.

•	 DOE assumes other operating costs and profit scale proportionally with CGS.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Average Overall Markups by Product Class

Baseline Inc

Gas­Fired Storage Water Heaters (GSWH) 2.24 Electric Storage Water Heaters (ESWH) 2.17 Oil­Fired Storage Water Heaters (OSWH) 2.22 Gas Wall Fan DHEInstantaneous Gas­Fired Water Heaters (IGWH)

2.742.35

Gas Wall Gravity DHE 2.70 Gas Floor DHE 2.64 Pool Heaters (PH)Gas Room DHE

2.272.88

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Consumer Pr

Consumer Price

� Consumer Price = Manufacturing Price x Markups.

• Manufacturing cost vs. efficiency relationships developed in the Engineering Analysis• Markups and Sales Taxes developed in the Markups to Determine Product Price

Sales Tax

Retailer or

Distributor

Markup

Consumer

Price

Baseline

Manufacturer

Selling Price

Std­Level

Manufacturer

Selling Price

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Installation Cost Approach
 

Installation costs represent the labor and materials necessary to install the ap

Installation costs were developed separately for new constructions and replace

� Water Heaters:

•	 Sources: GSWH, ESWH, and IGWH based on RS Means, expert consultations, furnace insta

OSWHs based on previous water heater rulemaking.

Larger Burner Kit xHeat Pump Additional Costs xSpace Constraints xCondensate Filter x Electrical Outlet x Drain Pan x x

Venting x x 

Basic Installation x x x 

Installation Cost Components GSWH ESWH OSWH IG

•	 Basic Installation includes:

–	 Setting up and putting in place new water heater, removal of old water heater, permit fee, remova

charge, gas and water piping, additional charge for larger water heaters (75 gallons and larger). 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Installation Cost Approach, continued

� Water Heaters, continued:

•	 Venting Cost includes:

–	 GSWH – non­stainless steel or plastic vents.–	 IGWH ­ non­stainless steel, stainless steel, or plastic vents.–	 OSWH ­ venting adder at high efficiency.

•	 ESWH Space Constraints includes adding tempering valves and removal & replacement of d•	 Heat Pump Water Heaters ­ additional installation cost includes additional labor hours and spa

� Pool Heaters:

•	 Sources: RS Means and expert consultations.•	 Basic Installation includes set­up, connecting, start­up, removing old unit, trip charge, adding 

meter to PH, polyvinyl chloride (PVC) water lines.

•	 Higher Efficiency Equipment may require additional electrical outlet, condensate drain piping

� Direct Heating Equipment:

•	 Source: 1993 DHE Technical Support Document.•	 Assumptions: Installation costs do not vary with efficiency when no electricity required.•	 Higher Efficiency Equipment may require additional electrical outlet. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Installation Cost Flowchart
 

Labor Hours

(# workers * # hours)

Labor Cost per hour

(national average)

Labor Cost

Invoice Variables Charges

Trip Hours

(# workers * # hours)

Trip Charge Cost

Replacement

Only

Material Costs

Installation Cost

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Installation Cost Determination
 

Example: Gas­Fired Storage Water Heater – Basic Installation Repla

Person2008 Bare Costs 

Description Crew Hours Mat. Labor* Equip. Trip Charge 2 Plumbers 1 $0 $47 $0 Remove Old Water Heater 2 Plumbers 1.6 $0 $75 $0 Installation 2 Plumbers 3.2 $25 $149 $0 

Totals 5.8 $25 $271 $0 

*Labor cost – National AverageSource: 2008 RSMeans Mechanical Cost Data

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
T

Total Installed Costs by Efficiency Level
 

Example: Gas­Fired Storage Water Heaters (40 gallon

$300$500$700$900

$1,100$1,300$1,500$1,700$1,900

0.59 0.61 0.63 0.65 0.67 0.69 0.71 0.73 0.75 0.77

Energy Factor (EF)

Cost (2007$)

Total Installed CostInstallation CostConsumer Price

Total Installed Costs = Consumer Price + Installation Co

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Energy Us

Selection of Household Samples
 

Example: Water Heaters
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Energy Us

Energy Consumption Calculation – All Produ

EnergyConsump

Select

Household

Assign Base Case

Product**

Load Calculation*

* PH & DHE load calculated using RECS energy use and the efficiency of existing equipmheaters used Hot Water Draw Model.
 ** Base case assignment based on estimated market share distribution at each efficiency effective date.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Energy Us

Water Heaters: Hot Water Draw Model
 

Water Heater

Tank Size

RECS Data

Household

Characteristics

HouseholdOccupants

(Number, Age)

Other Hot Water

Using

Appliances

Tem

Pa

Wea

Hot Water Use

(gal/day)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
     

Energy Us

Water Heaters: Hot Water Use Results
 

Hot Water Use Ranges

Average; Median; Box 25%­75%; Whisker: 5%­95%

11.6 9.9 10.94.7

89.6 88.

45.5 43.0 4

0

102030405060708090

100

Gas WH Electric WH Oil WH

Hot Water Use (gallons)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Hot Water Use for Instantaneous Gas­Fired Water 

� DOE assumed that a household with an instantaneous gas­fired water hea

same volume of hot water as it does with a storage­type water heater (i.e., daily). DOE seeks studies or data showing hot water use for instantaneouwater heater.

DOE invites comment on the hot water use for
 

instantaneous gas­fired water heaters. (Issue #8)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Product Assignm

� Base case product efficiency assignment accounts for the projected market 

products at different efficiency levels.

•	 Not all consumers purchase products at current minimum standard.•	 LCC analysis recognizes that consumers already purchasing products at efficiencies greate

to a prospective standard level are not impacted by the standard.

Example: Water Heaters Base Case Market Shares

Baseline

Efficiency

Level

Gas­Fired Storage Electric Storage Oil­Fired Storage

Insta 

n

0.59

EF

82%

Market

Share%

0.90

EF

54%

Market

Share%

0.53

EF

27%

Market

Share%

0.62

EF

1 0.62 7% 0.91 22% 0.54 7% 0.69 

2 0.63 2% 0.92 6% 0.56 0% 0.78 

3 0.64 1% 0.93 11% 0.58 3% 0.8 

4 0.65 2% 0.94 1% 0.6 18% 0.82 

5 0.66 3% 0.95 1% 0.62 27% 0.84 

6 0.77 2% 2.2 5% 0.66 9% 0.85 

7 0.68 9% 0.92 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Energy U

Energy Use Calculation
 

Example: Water Heaters
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Energy U

Key Energy Use Parameters
 

Example: Water Heaters
 

� Energy Use Determination based on Water Heater Analysis Model (WHAM).� Efficiency Characteristics ­ Energy Factor (EF), Recovery Efficiency (RE), Loss 

and Rated Capacity (Pon)

� Temperature conditions:

•	 Tamb (Temperature of the air surrounding the water heater) ­ based on installation location 

RECS 2001 household thermostat settings.

•	 Tin (Inlet Water Temperature) ­ based on approach developed by the NREL and whether a 

well (from RECS 2001).

•	 Ttank (Water Heater Thermostat Setpoint Temperature) ­ based on 2006 Plumbing & Mech

Contractor Survey (average 124 deg F).

� Energy Use of HPWH:

•	 Performance adjusted to account for different ambient temperatures.•	 Energy use adjusted to account for the cooling/heating impact on conditioned space.

� Energy Use of IGWH:

•	 Performance adjusted to account for field conditions ­ source: 2006 CEC Report, Measure 

Template: Tankless Gas Water Heaters (8.8 percent reduction).

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Energy Use by Instantaneous Gas­Fired Water H

� DOE calculated energy use by instantaneous gas­fired water heaters by inc

performance factor to account for the rated energy efficiency overstating tperformance.

DOE invites comment on its treatment of energy use b

instantaneous gas­fired water heaters. (Issue #9)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
E

Baseline Average Annual Energy Use Resul

Water Heaters

Electric

(kWh/y

Fuel

(MMBtu/yr)

Baseline Efficiency

Level

Gas­Fired Storage 0.59 EF 16.7 0Electric Storage 0.90 EF 0 2,703Oil­Fired Storage 0.53 EF 19.4 56Instantaneous Gas­Fired 0.62 EF 17.0 0

Direct Heating Equipment
 

Gas Wall Fan 74 percent AFUE 27.1 35

Gas Wall Gravity 64 percent AFUE 29.6 0

Gas Floor 57 percent AFUE 30.4 0

Gas Room 64 percent AFUE 22.0 0

Pool Heaters 78 percent TE 53.6 0

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Historical Energy Prices

� Electricity:

• Based on EIA Form 861 Data.

� Natural Gas:

• Based on data from EIA’s Natural Gas Navigator.

� Oil:

• Based on data from EIA’s Petroleum Navigator.

� Liquefied Petroleum Gas (LPG):

• Based on data from EIA’s State Energy Consumption, Price, and Expenditure Estimate

Note: Energy prices developed for 13 Regions: 9 Census Divisions and 4 Large States.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
AEO 2008 Energy Price Forecasts
 

Natural Gas Electricity

11.0011.5012.0012.5013.0013.5014.0014.50

2005200720092011201320152017201920212023202520272029

Year

2007$/MMBtu

High Grow thReferenceLow Grow th

9.50

10.0010.5011.0011.5012.00

2005200720092011201320152017201920

Year

cents(2007$)/kWh High 

RefeLow 

� Energy price projections to 2030 based on EIA’s Annual Energy Ou

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Repair 

Repair & Maintenance Costs ­ Key Assumptio

� Maintenance Costs (price of regular scheduled product maintenance ($/year)

Gas­Fired & Electric Storage Water

Heaters

none

Heat Pump Water Heater every 5­year preventive maintenance applicable to sOil­Fired Storage Water Heaters included in annual contract (includes repair costs)Instantaneous Gas­Fired Water Heater includes annual deliming costPool heaters & DHE every 5­year preventive maintenance.

� Repair Costs (price for replacing or repairing components which have failed)

• applicable to a fraction of households• accounts for components likely to be repaired during the lifetime of the product

Component Requiring Replacement Products Used

Pilot Ignition (Standing Pilot or Milivolt) GSWH, IGWH, DHE, P

Electronic Ignition (IID, Direct Spark, or Hot Surface) IGWH, PH, DHE, GSWPower Vent or Induced Draft Fan GSWH, IGWH, PH, DHCirculating Air Blower Motor DHE*Heat Pump Compressor & Evaporator Fan Component ESWH**

*Not applicable to Gas Wall Gravity DHE
 **No repair costs for ESWHs (except HPWH).
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Repair 

Repair/Maintenance Cost Estimation Methodo

Labor Hours to

Repair Component

(# workers * # hours)

Bare Labor Cost

per hour

(national average)

Labor Cost

Invoice Variables Charges

Trip Hours

(# workers * # hours)

Trip Charge Cost

Material Costs

Labor Markups

Material Markups

Bare Material Costs

Total Maintenance or

Repair Cost

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:

Life­Cycle Cost Analysis Inputs for Heat Pump W

Heaters
 

� DOE included installation, repair and maintenance costs for heat pump wate

based on limited data. DOE is interested in receiving data on the magnitude frequency of these costs to consumers.

DOE invites comment on its estimates of installation, repa

maintenance costs for heat pump water heaters. (Issue 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Oth

Other Inputs for LCC

� Discount Rates (Primary data source: Federal Reserve Board’s Survey of C

for the years 1989, 1992, 1995, 1998, 2001, and 2004).

Housing Type Finance Cost Based on: New Construction Mortgage Replacements Home equity loans, Credit card, Other loans, Checking & savings

accounts, Certificates of deposit, Bonds, Stocks

� Equipment Lifetime (Based on various sources including Appliance magaz

Technical Support Documents).

Product Class Minimum Average MaGas­Fired Storage Water Heaters 7 12 Electric Storage Water Heaters 6 14 Oil­Fired Storage Water Heaters 5 9 Direct Heating EquipmentInstantaneous Gas­Fired Water HeatersPool Heaters

10

3

8

15

6

20

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
­     ­    

Pre

LCC Savings and PBP Results
 

Example: Gas­Fired Storage Water Heaters, 40 gallons

6 0.77 1,782 1,489 3,271 ­307 75% 2% 22% 

5 0.66 1,536 1,753 3,288 ­324 73% 6% 22% 

4 0.65 1,519 1,790 3,309 ­343 73% 7% 20% 

3 0.64 1,506 1,829 3,335 ­368 73% 9% 18% 

2 0.63 998 1,808 2,807 116 0% 11% 89% 

1 0.62 982 1,849 2,830 95 0% 18% 82% 

Baseline 0.59 967 1,978 2,945 

­­­­ 

Net

Benefit

No

Impact

Net

Cost 

Households with Average

Savings

(2007$)

Average

LCC

Average

Operating

Cost

Average

Installed

Price

Life Cycle Cost (2007$) Life Cycle Cost Savings

Energy

Factor

Efficiency

Level

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
­     ­    

Pre

LCC Savings and PBP Results
 

Example: Electric Storage Water Heaters, 50 gallons
 

6 2.20 1,475 1,759 3,233 229 45% 5% 50% 

5 0.95 786 2,604 3,390 78 18% 6% 76% 

4 0.94 759 2,648 3,407 61 18% 7% 75% 

3 0.93 709 2,694 3,403 65 9% 18% 73% 

2 0.92 682 2,740 3,422 50 0% 23% 77% 

1 0.91 674 2,787 3,461 20 0% 46% 54% 

Baseline 0.90 662 2,836 3,498 ­­­ ­ 

Net

Benefit

No

Impact

Net

Cost 

Households with Average

Savings

(2007$)

Average

LCC

Average

Operating

Cost

Average

Installed

Price

Life Cycle Cost (2007$) Life Cycle Cost Savings

Energy

Factor

Efficiency

Level

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Other Issues
 

DOE invites comment and recommendations from
 

interested parties on any other aspects related to th

Life­Cycle Cost Analysis.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Activities Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

Energy UseCharacterization

Market andTechnology

Assessment

Screening

Analysis

Engineering

Analysis

Markups forProductPriceDetermination

Life­CycleCost andPaybackPeriod Analysis

Shipments

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
National 

Purpose
 

� Shipments Analysis:

•	 To estimate heating product shipments over time.

� National Impact Analysis:

•	 To estimate the National Energy Savings (NES) from heating product energy conservatio

different efficiency levels.

•	 To estimate the national economic impact on heating product consumers (or the Net Pres

(NPV)) from heating product energy conservation standards at different efficiency levels.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
National 

National Impact Analysis Process
 

Nation

Energy Sa

(Quad

Nation

Net Presen

(2007$, b

� National energy savings calculated for period from 2013(2015)­2043.� NPV calculated for products shipped over the same period.

ShipmentsModel

NationalEnergySavings

NationalConsumerEconomicImpacts

LCC AnalysisResults andOther Inputs

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Ship

Shipment Analysis Flowchart
 

Example: Water Heaters
 

Historical Shipments

Water Heater

Lifetime

Replacement

Shipments

Combin

Shipmen

New Home

Construction

New Home Water

Heater Saturation

New

Construction

Shipments

(For Heat Pump Water Heaters)

Total

Shipmen

Fraction G

vs. GSW

Shipmen

Shift to Gas

Water Heater

Adjusted New

Construction

Shipments

Adjuste

Combine

Shipmen

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
npu a a  ource escr p on

Ship

Shipments Model Inputs
 

Pool Heaters & DHENew Housing WH Saturations American Housing Survey 2005, RECS 2001Water HeatersNew Construction ShipmentsLifetime From Life­Cycle Cost AnalysisNew Constructions & ReplacementsForecasted New Housing Annual Energy Outlook 2008Forecasted New Construction Annual Energy Outlook 2008Historical ShipmentsShipment Distribution by Product ClassWater Heaters, Pool Heaters, DHE AHRI Data Submittal

I t D t S /D i ti

Water Heaters AHRI Data SubmittalPool Heaters P.K. Data, Inc., previous rulemaking (1993)DHE AHRI Data Submittal, AHRI Statistical Summaries, previou

(1993)

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
   

Ship

Scenarios of Market Penetration of Instantaneous G

Water Heaters
 

0%5%

10%15%20%25%30%35%40%45%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

Market Share (%)

High PenetrationScenarioReference PenetrationScenarioLow PenetrationScenario

`

� DOE modeled three scenarios of instantaneous gas­fired water heater market 

based on experience with instantaneous water heaters in Australia.

� High scenario of future market penetration assumes that the evolution of the 

percent lower per year than that seen in Australia. Medium and Low scenarios 75 percent lower, respectively.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Market Penetration of Instantaneous Gas­Fired Wat

� DOE modeled scenarios of instantaneous gas­fired water heater market pen

based on review of instantaneous gas­fired water heater market in Australia

DOE invites comment on its approach for estimating the m

penetration of instantaneous gas­fired water heaters. (Iss

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
   

   

Ship

Gas­Fired Storage and Instantaneous
 

Gas­Fired Water Heaters Historical & Modeled Sh

Gas­Fired Storage Water Heaters	 Instantaneous Gas­Fired W

0.01.02.03.04.05.06.0

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Shipments (million units) Modeled New Construction Modeled Replacements

Historical Data

0.00.20.40.60.81.01.21.41.61.82.0

2004 2009 2014 2019 2024 

Shipments (million units) 

� Accounted for new construction, replacements, and market share growth for i

gas­fired water heaters.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
      

Ship

Pool Heater Historical & Modeled Shipment

0.000.100.200.300.400.500.600.700.80

1981 1987 1993 1999 2005 2011 2017 2023 2029 2035

Shipments, million units

First Time OwnersNew Housing InstallationsModeled ReplacementsHistorical Data

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Ship

DHE Historical and Modeled Shipments
 

0.0000.0500.1000.1500.2000.2500.300

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Shipments (million)

Gas Room DHEGas Wall Gravity DHEGas Wall Fan DHEGas Floor DHE

� The rise of gas room DHE shipments in 2001 due to the addition of hearth prod

shipments.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Forecast of Direct Heating Equipment Shipme

� DOE based its shipments forecast for gas wall fan and gas wall gravity DH

during the 2002­2006 period.

� DOE held gas room DHE constant using the average shipments during the 

period.

� DOE based it shipments forecast for gas floor DHE on the downward trend 

2000­2007 period.

DOE invites feedback on this approach.
 

(Issue #12)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Ship

Fuel Switching Analysis

� Electric heat pump water heaters (HPWHs) to gas­fired storage water heate

•	 Potential for fuel switching at efficiency level corresponding to electric heat pump water 

level 6) due to increase in total installed cost.

•	 Analysis evaluates maximum fuel switching potential based on the fraction of electric sto

households for which a switch to gas­fired storage water heaters is feasible and has a locost.

•	 Preliminary assessment shows that depending on the technology (natural draft, power v

between 3.3 and 8.2 percent of the households in replacements cases may switch to gawater heaters. No switching is predicted in new construction installations.

� Gas­fired storage water heaters to electric storage water heaters:

•	 DOE did not include switching from a gas­fired to an electric storage water heater.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Ship

Request for Comment:

Fuel Switching Analysis

� DOE included fuel switching considerations for electric storage heat pump 

heaters (HPWHs) (efficiency level 6) to gas­fired storage water heaters (allefficiency levels).

� DOE did not include fuel switching from a gas­fired to an electric storage w

heater.

DOE invites comment on its fuel­switching analysis

(Issue #14)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
National 

National Impact Analysis Inputs
 

Total Installed Cost Annual weighted­average per unit values as a function of efficiency le

LCC analysis.

Repair andMaintenance Costs

Annual values are a function of efficiency level (from LCC analysis).

Annual Energy Use Annual weighted­average per unit values as a function of efficiency le

LCC analysis.

Base­CaseEfficiencies

Shipments­weighted efficiencies determined for the effective year. Baefficiency distributions from LCC analysis.

Standards­CaseForecastedEfficiencies

Roll­up scenario assumed for determining shipment­weighted efficienstandards case.Both Base­ and Standards­Case efficiencies: Frozen at the effective yethe exception of efficiencies for gas and electric water heaters.

Energy Prices Average prices and forecasted energy prices from EIA AEO2008 forec

and extrapolation to 2043.

Electricity Site­toSource ConversionFactors

Conversion factors based on marginal heat rates from NEMS correspo2007AEO. Factors vary annually and account for generation, distributtransmission losses.

Discount Rate 7 percent and 3 percent real from OMB’s Regulatory Analysis GuidelinPresent Year Future expenses are discounted to the year 2007.Rebound Effect Water Heaters – 10 percent; DHE – 15 percent; Pool Heaters – 10 perc

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:

Rebound Effect

� Based on available information, DOE used a rebound effect of 10 percent fo

heaters, 15 percent for direct heating equipment, and 10 percent for pool he

DOE invites comment on its estimates of the rebound e

for the three heating products. (Issue #15)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Baseline 0.59

Level EF

82%

BaseCase

Efficiency Levels (analyzed

1 2 3 4 

1 0.62 7% 89%2 0.63 2% 2% 91%3 0.64 1% 1% 1% 93%

4 0.65 2% 2% 2% 2% 94%

5 0.66 3% 3% 3% 3% 3% 96 0.77 2% 2% 2% 2% 2% 

Shipments­Weighted EF 0.60 0.63 0.63 0.64 0.65 0

National 

Forecasted Efficiencies
 

Efficiency

Example: Gas­Fired Storage Water Heaters

Market Shares

� Base­Case efficiency distribution from LCC analysis.

•	 Based on AHRI data submittal except gas­fired and electric storage water heaters which a

market impact from ENERGY STAR levels.

� Standards­Case efficiency distributions based on “Roll­up” scenario.

•	 Efficiencies below the standard level “roll­up” to the standard level.•	 Efficiencies above the standard level are unaffected.

� Forecasted efficiencies assumed to remain constant at effective date level, e

and ESWH.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Base­Case and Standards­Case Forecasted Effic

� DOE forecasted base­case and standards­case efficiencies for gas­fired an

storage water heaters based on market impact from ENERGY STAR levels. storage and instantaneous gas­fired water heaters as well as for DHE and pthe forecasted efficiencies remain frozen throughout the analysis period.

DOE invites comment on its methodologies for both forec

efficiencies and estimating the impact that standards hav

product efficiencies. (Issue #13)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
   

2015201720192021202320252027202920312033203520372039

National Energy Savings Results

Example: Gas­Fired Storage Water Heaters– Annual Valu

Efficiency Level 1 ­ 0.62 EF

National Impact A

National Energy Savings of Gas WH at 0.62 EF

0.000.010.020.030.040.050.060.07

Year

National Savings, Quads

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
     

     

National Impact A

Net Present Value Results
 

Example: Gas­Fired Storage Water Heaters– Annual Valu

Efficiency Level 1 ­ 0.62 EF
 

Financial Impacts of Gas WH at 0.62 EF

­$0.10

$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.80

2015 2025 2035 2045

Billions of 2007 Dollars

Equipment CostOperating Cost SavingsMaintenance and Repair CostNet Savings

Discounted Financial Impacts of Gas 

­$0.10

$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.80

2015 2025 203

Billions of 2007 Dollars

EquipOperaMainteNet S

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Natural Ga

Natural Gas Price Impacts Methodology and Re

DOE conducted an analysis of the potential impacts of water heater energyconservation standards on natural gas prices on all sectors of the economanalysis is presented to provide a base for input from interested parties on analysis DOE plans to include in the NOPR stage of the rulemaking).

� Methodology:

•	 DOE’s analysis used NEMS, which utilizes energy price elasticities to estimate the change 

would result from a change in energy demand.

•	 Two scenarios were analyzed for three water heater product classes: a) selection of cost

levels, and b) all max­tech options.

� Results:

•	 The estimated natural gas price reduction averages 0.7 cents per MMBtu for a set of cost 

levels and 2.3 cents per MMBtu for a set of max­tech efficiency levels.

� National Benefits:

•	 The estimated economy­wide savings over the period 2015–2043 has an NPV (at 7 perce

$1.0 billion (scenario a) and 3.6 billion (scenario b).

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment
 

Impact on Natural Gas Prices Resulting from E

Conservation Standards for the Three Heating Pr

� The appropriateness of considering the potential impact on natural gas price

energy conservation standards.

� The magnitude of such impacts and the extent to which these impacts shou

transfers from producers to consumers, rather than net economic benefits.

DOE invites comment on its methodologies for estimatin

impact on natural gas prices resulting from energy

conservation standards for heating products. (Issue #

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Other Issues
 

DOE invites comment and recommendations from
 

interested parties on any other aspects related to th

National Impacts Analysis.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Manufacturer

Impact

Analysis

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Trial S

Selection of Trial Standard Levels
 

� Purpose:

•	 To develop a list of potential amended standard levels from which impacts are weighed an

standard level is selected.

–	 Each trial standard level consists of a set of efficiency levels covering all product classes, an

product classes.

–	 NOPR analyses assess impacts for trial standard levels (not efficiency levels for each produ

� Method:

•	 Trial standard levels are assembled from the product classes and efficiency levels identifie

analyses.

–	 Trial standard levels cover a range of efficiencies and can include:

� Most energy efficient level (max­tech);� Efficiency level with the lowest life­cycle cost;� Efficiency level with a payback period of three years or less;

� Efficiency levels with noteworthy technologies; and� Efficiency levels that fill in large gaps.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Request for Comment:
 

Criteria for the Selection of Trial Standard Lev

� A critical part of the NOPR analysis on which DOE is seeking early guidanc

criteria used in selecting trial standard levels.

� Trial standard levels are created from combinations of efficiency levels at t

class level.

DOE requests feedback on the criteria it should use fo

basing the selection of Trial Standard Levels. (Issue #

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

Manufacturer

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Manufacturer Impact Analysis

� Purpose:

•	 To assess the impacts of standards on residential water heater, direct heating equipment an

manufacturers.

•	 To identify and estimate impacts on manufacturer sub­groups that may be more severely im

industry as a whole.

•	 To examine the impact of cumulative regulatory burdens on the industry.

� Method:

•	 Analyze industry cash flow and net present value through use of the Government Regulator

(GRIM).

•	 Interview manufacturers to refine inputs to the GRIM, develop sub­group analyses, and add

issues.

� Output:

•	 Industry Net Present Value impacts;•	 Sub­group Net Present Value impacts; and•	 Other impacts. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Manufacturer Impact Analysis Process

� The MIA consists of three phases:

Phase 1 Phase 2 Phase 3

Industryprofile

Developstraw­manGRIM*

Developinterviewguide

Interviews

& industrywide /

subgroup

analyses

Assess directemployment,competition,cumulativeburden

* Government Regulatory Impact Model (GRIM)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Screening A

Engineering A

LCC Anal

National En

Savings An

Consumer Su

Utility Imp

Environmenta

Indirect Emp

Impac

The MIA is both concurrent and coordinated with 

Manufacturer I

throughout the rulemaking process.

Phase I

Industry Profile

Phase III

Manufacturer Interviews

Revised Industry Cash Flow

Manufacturer Subgroup Analysis

Qualitative Assessment

Phase II

“Strawman” GRIM

Manufacturer Impact Analysis Other Rulemaking A

Screening An

Engineering A

LCC Analy

National Ene

Savings Ana

Consumer Su

Utility Impa

Environmental 

Indirect Emplo

Impacts

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Phase I: Industry Profile
 

� Collect financial and market information:

•	 Industry reports;•	 Company annual reports and websites;•	 Trade journals;•	 U.S. Census Bureau;•	 SEC 10­K form filings;•	 Information from the preliminary activities preceding the NOPR: manufacturer prod

markups; and manufacturer selling prices, shipments.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Phase II: Develop Straw­man GRIM
 

� The Government Regulatory Impact Model (GRIM) is an industry cash flo

that estimates the change in industry value due to the introduction of newefficiency standards.

Manufacturer Prices

Shipments

Manufacturing 

Financial Infor

Cash Flow Impacts,

Changes in Industry NPV

GRIM

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Phase II: Develop Interview Guide

� A critical aspect of the MIA involves interviews with manufacturers. An inte

to manufacturers in preparation for Phase III.

� Interview topics will include:

•	 Engineering analysis;•	 Shipments model;•	 Cost structure and financial parameters;•	 Conversion costs (capital expenditures, tooling, R&D, testing);•	 Impact of other regulations / cumulative burden;•	 Direct employment impacts;•	 Import / Export issues;•	 Consolidation / competitive impacts;•	 Replacement parts or refurbishments;•	 Impact of the standard’s effective date; and•	 Other topics important to manufacturers.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Phase III: Manufacturer Interviews

� Expected timeframe.� Time and personnel commitment for manufacturers (industry­wide GRIM, G

assumptions, subgroup analysis discussion).

� Confidentiality agreements.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Phase III: Manufacturer Subgroup Analysi

� The subgroup analysis is a more focused version of the industry­wid

analysis.

•	 Work with subgroup representatives to better understand and qualify the differen

impacts of potential amended energy conservation standards on these groups.

•	 Consider and focus on issues of importance to the subgroup, including employm

capacity utilization and cumulative burden.

•	 Review draft findings with subgroup members during development.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Request for Comment:

Cumulative Regulatory Burden

� DOE seeks to mitigate the overlapping effects on manufacturers of amended 

conservation standards and other regulatory actions affecting the same prod

� While any one regulation may not impose a significant burden on manufactu

combined effects of several impending regulations may have serious conseqsome manufacturers, groups of manufacturers, or an entire industry.

� As part of the MIA, DOE will assess the potential cumulative regulatory burde

manufacturers of residential water heaters, direct heating equipment, and po

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Manufacturer I

Request for Comment:

Cumulative Regulatory Burden

� DOE identified the following regulations that could impact manufacturers 

heating products:

•South Coast Air Quality Management District (SCAQMD) super low NOx requirements•DOE’s amended energy conservation standards for other products;•State emission requirements and other State regulations;•International energy efficiency standards;•Uniform plumbing, building, and safety codes; and•Flammable Vapor Ignition Resistant requirements.

DOE requests comment on the potential regulations

facing the heating products industry. (Issue #17)
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Request for Comment:
 

Small Business Impacts
 

� DOE identified small businesses and is interested in the potential impacts 

of amended energy conservation standards.

� DOE defines small businesses using the Small Business Administration (S

definitions.

•	 Residential heating products are matched to the North American Industry Classification 

(NAICS) code 335228, Other Major Household Appliance Manufacturing, or NAICS codHeat Equipment (except Warm Air Furnaces) Manufacturing.

•	 Small businesses under these codes are defined as 500 employees or fewer.

� Water Heaters:

•	 DOE identified two small businesses.

� Direct Heating Equipment:

•	 DOE identified three small businesses.

� Pool Heaters:

•	 DOE identified two small businesses.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Preliminary Manufacturer 

Request for Comment:
 

Small Business Impacts
 

DOE invites comments on the identification of any sm

businesses within the water heating, direct heating equip

or pool heating industries.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

Manufacturer

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Utility I

Utility Impact Analysis

� Purpose:

•	 To investigate the effects on utilities from reduced energy sales and peak load demand due 

standards.

� Method:

•	 Uses national energy savings results.•	 Uses the Energy Information Administration’s National Energy Modeling System (NEMS) ta

Building Technologies Program (NEMS­BT).

� Output:

•	 Change in energy sales and price by region.•	 Change in the mix of electricity generation.•	 Change in new capacity construction.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Manufacturer

Impact

Analysis

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Employment I

Employment Impact Analysis
 

� Purpose:

•	 To report net jobs created or eliminated nationally as a consequence of new energy conserv

� Method:

•	 Uses the ImSET tool, a spreadsheet model of the U.S. economy that focuses on 188 sector

industrial, commercial, and residential building energy use.

•	 Changes in product and energy expenditures taken from the National Impact Analysis.•	 Estimates the national employment and income effects of energy saving appliances.•	 Direct employment impacts taken from the Manufacturer Impact Analysis.

� Output:

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

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Manufacturer

Impact

Analysis

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Environment

Environmental Assessment
 

� Purpose:

•	 To report environmental impacts as a consequence of new energy conservation standards, 

in power plant emissions as well as emissions in households due to the use of gas applianc

� Method:

•	 Energy savings results taken from the National Impact Analysis.•	 Energy Information Administration’s National Energy Modeling System (NEMS) provides po

emissions.

•	 ‘In­Building’ emissions due to fossil­fuel fired appliances to be determined using emission fa•	 Economic benefits resulting from emissions reductions based on a range of monetary value

� Output:

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

–	 Power plant SO2, NOx, and mercury are effectively capped through Congressional legislation 

no emission reductions due to standards.

–	 In­building SO2 and NOx still emitted by fossil­fuel fired appliances.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
NOPR Analyses Flow Diagram
 

Framework

Document

Preliminary

Activities NOPR Final Rule

TrialStandardLevels

RevisePreliminaryAnalyses

Manufacturer

Impact

Analysis

Utility

Impact

Analysis

EnvironmentalAssessment

Employment

Impact

Analysis

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Regulatory I

Regulatory Impact Analysis
 

� Purpose:

•	 To investigate the national impacts due to non­regulatory alternatives compared with ma

conservation standards.

•	 The non­regulatory alternatives that may be considered:

–	 No new regulatory action; early replacement; prescriptive standards; consumer tax credits

credits; consumer rebates; voluntary efficiency targets; bulk government procurement.

� Method:

•	 Modify NES spreadsheet model to consider non­regulatory scenarios.

–	 Non­regulatory scenarios increase overall appliance efficiency and are modeled by modif

efficiency trend.

–	 NPV calculated for non­regulatory alternatives in the same way as for the adopted standa

� Each non­regulatory scenario will decrease national appliance operating costs and 

equipment prices.

� Output:

•	 National Energy Savings and Net Present Value of the non­regulatory alternatives.

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
Final Comments and Questions
 

DOE requests comments and invites questions from

interested parties regarding the Department of Energy

Heating Products Rulemaking.
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3
How to Submit Comments...
 

� Public Meeting – Oral comments will be captured in the transcript and bec

of the public record.

� Written comments – Preliminary Activities and Analyses comment period 

March 16, 2009. Reference docket #: EE–2006–STD–0129 and/or RIN #: 1

Email: ResWaterDirectPoolHtrs@ee.doe.govMail: Ms. Brenda Edwards

U.S. Department of EnergyBuilding Technologies Program, Mail stop EE­2JANOPR for Residential Water Heaters, Direct Heating EquipPool HeatersEE­2006­STD­01291000 Independence Avenue, SWWashington DC, 20585­0121

Courier: Ms. Brenda Edwards

U.S. Department of Energy
 Building Technologies Program
 950 L’Enfant Plaza, SW, Suite 600
 Washington, DC, 20024
 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.3