10

- i CHAPTER 10 . NATIONAL IMPACT ANALYSES

TABLE OF CONTENTS

10.1 INTRODUCTION

................................ ................................ ................................ ......... 10

- 1

10.2 PROJECTED EFFICIENCY TRENDS

................................ ................................ ......... 10

- 1

10.2.1 Base and Standards Case Efficiencies in 2020

................................ .............................. 10

- 1

10.2.2 Projected Efficiency Trends After 2020

................................ ................................ ........ 10

- 3

10.3 NATIONAL ENERGY SAVI NGS

................................ ................................ ............... 10

- 6

10.3.1 Definition

................................ ................................ ................................ ....................... 10

- 6

10.3.2 Inputs to Calculation

................................ ................................ ................................ ...... 10

- 7

10 .3.2.1 Annual Energy Consumption per Unit

................................ ........................ 10

- 8

10.3.2.2 Shipments

................................ ................................ ................................ ... 10

- 10

10.3.2.3 Equipment Stock

................................ ................................ ........................ 10

- 10

10.3.2.4 Annual Energy Consumption

................................ ................................ ..... 10

- 10

10.3.2.5 Site

- to

- Power Plant Energy Use Factor

................................ ..................... 10

- 11

10.3.2.1 Full

- Fuel

- Cycle Energy Factors

................................ ................................ . 10

- 11

10.4 NET PRESENT VALUE OF CONSUMER BENEFITS

................................ ............ 10

- 12

10.4.1 Definition

................................ ................................ ................................ ..................... 10

- 12

10.4.2 Input s to Calculation

................................ ................................ ................................ .... 10

- 13

10.4.2.1 Total Installed Cost per Unit

................................ ................................ ...... 10

- 14

10.4.2.2 Annual Operating Cost per Unit

................................ ................................ 10

- 15

10.4.2.3 Equipment Stock

................................ ................................ ........................ 10

- 16

10.4.2.4 Increases in Total Annual Installed Cost

................................ ................... 10

- 16

10.4.2.5 Savings in Total Annual Operating Cost

................................ ................... 10

- 16

10.4.2.6 Discount Factor

................................ ................................ .......................... 10

- 17

10.4.2.7 Present Value of Increased Installed Cost

................................ ................. 10

- 17

10.4.2.8 Present Value of Savings

................................ ................................ ........... 10

- 17

10.5 RESULTS

................................ ................................ ................................ .................... 10

- 18

10.5.1 National Energy Savings

................................ ................................ .............................. 10

- 18

10.5.2 Net Present Value of Consumer Benefit

................................ ................................ ...... 10

- 19

LIST OF TABLES

Table 10.2.1 Residential Boilers: Efficiency Distributions for the Base and Standards

Cases in Resident ial Applications in 2020

................................ ......................... 10

- 2

Table 10.2.2 Residential Boilers: Efficiency Distributions for the Base and Standards

Cases in Commerc ial Applications in 2020

................................ ....................... 10

- 3

Table 10.3.1 Average Annual Boiler Energy Use for the Base and Standards Cases in

2020

................................ ................................ ................................ .................... 10

- 8

Table 10.3.2 Upstream Energy Multipliers (Based on AEO 2013)

................................ ...... 10

- 12

Table 10.4.1 Average Installed Cost of Residential Boilers in 2020 for the Base and Standards Cases (2012$)

................................ ................................ .................. 10

- 1510

- ii Table 10.4.2 Average Annual Operating Cost of Residential Boilers in 2020 for the Base and Standards Cases (2012$)

................................ ................................ .. 10

- 16

Table 10.5.1 Primary National Energy Savings for Residential Boilers (quads)

................. 10

- 18

Table 10.5.2 Full

- Fuel

- Cycle National Energy Savings for Residential Boilers (quads)

..... 10

- 18

Table 10.5.3 Standby, Primary National Energy Savings for Residential Boilers (quads)

.. 10

- 19

Table 10.5.4 Standby, Full

- Fuel

- Cycle National Energy Savings for Residential Boilers (quads)

................................ ................................ ................................ .............. 10

- 19

Table 10.5.5 Net Present Value of Consumer Benefit for Residential Boilers, Discounted at 3 Percent (billion 2012$)

................................ .......................... 10

- 20

Table 10.5.6 Net Present Value of Consumer Benefit for Residential Boilers, Discounted at 7 Percent (billion 2012$)

................................ .......................... 10

- 20

Table 10.5.7 Standby, Net Present Value of Consumer Benefit for Residential Boilers, Discounted at 3 Percent (million 2012$)

................................ ......................... 10

- 20

Table 10.5.8 Standby, Net Present Value of Consumer Benefit for Residential Boilers, Discounted at 7 Percent (million 2012$)

................................ ......................... 10

- 20

LIST OF FIGURES

Figure 10.2.1 Projection of Base Case Efficiency Distribution of New Units for Gas

Fired Hot Water Residential Boilers

................................ ................................ .. 10

- 4 Figure 10.2.2 Projection of Base Case Market Share for Condensing Gas

- Fired Hot

Water Residential Boilers

................................ ................................ .................. 10

- 4 Figure 10.2.3 Projection of Base Case Efficiency Distribution of New Units for Oil

Fired Hot Water Residential Boilers

................................ ................................ .. 10

- 5 Figure 10.2.4 Projection of Base Case Market Share for Condensing Oil

- Fired Hot

Water Residential Boilers

................................ ................................ .................. 10

- 6 Figure 10.3.1 Combined Adjustment Factor for Residential Boilers’ Energy Use in

Residential Sector

................................ ................................ .............................. 10

- 9 Figure 10.3.2 Projection of Residential Boilers’ Energy Use Trend in Commercial

Sector

................................ ................................ ................................ ................. 10

- 9 Figure 10.3.3 Site

- to

- Power Plant Energy Use Factor for Residential Boiler Electricity

Use

................................ ................................ ................................ ................... 10

- 1110-1 CHAPTER 10. NATIONAL IMPACT ANAL YSES

10.1 INTRODUCTION

This chapter examines selected national impacts attributable to each efficien cy level ( EL )

considered for residential boiler s. The results presented here include: (1) national energy savings (NES); (2) operating cost savings; (3) increased total installed costs; and (4) the net present value (NPV) of the difference between the value of operating cost savings and increased total installed

costs.

The calculations were performed using a Microsoft Excel spreadsheet model, which is

accessible on the Internet ( http://www1.eere.energy. gov/buildings/appliance_standards/rulemaking.aspx?ruleid=62 ) . The spreadsheet model, termed the National Impact Analysis (NIA) model, calculates energy savings and NPV for the nation. Details regarding and instructions for using the NIA model are provided

in a ppendix 10

- A.

The NIA model incorporates the shipments model that DOE used to project future purchases of residential boiler s. Chapter 9 includes an analysis of consumers’ sensitivities to total installed cost, operating expense, and income (otherwise known as elasticities), and how DOE captured those elasticities within the NIA model.

10.2 PROJECTED EFFICIENCY TRENDS

A key component of the NIA is the ene rgy efficiency of boilers projected over time for the base case (without new standards) and for each of the standards cases (with potential new standards).

10.2.1 Base and Standards Case Efficiencies in 2020

For each residential boiler product class, DOE develop ed a distribution of efficiencies in

the base and standards case s for 2020 (the assumed compliance date for new standa rds), as described in chapter 8 . In each standards case, DOE assumed a “roll

- up” scenario to establish the efficiency distribution for 2020 . Product efficiencies in the base case that did not meet the standard under consideration would “roll up” to meet the new standard level. All efficienc y shares in the base case that were above the standard under consideration would not be affected.

Table 10.2.1 and Table 10.2.2 present the efficiency distributions for the base case and standards

cases for gas

- fired hot water boilers, gas

- fired steam boilers, oil

- fired hot water boilers, and oil

fired steam boilers used in residential applications and commercial applications

, respectively

. Each standards case refers to a standard at the corresponding efficiency level. For example, EL 1 refers to the case with a standard at efficiency level 1.10-2 Table 10.2.1 Residential Boilers: Efficiency Distributions for the Base and Standards

Cases in Residential Applications in 2020

Efficiency Le vel Market Share (percent)

Base Case Efficiency Level (EL)

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler

0 82% AFUE

- Baseline 18.1

1 83% AFUE

- Increased HX Area 10.2 28.4

2 84% AFUE

- Increased HX Area 11.8 11.8 40.1

3 85% AFUE

- Increased HX Area 10.0 10.0 10.0 50.1

4 90% AFUE

- Condensing Baseline 17.4 17.4 17.4 17.4 67.5

5 92% AFUE

- Increased HX Area 24.5 24.5 24.5 24.5 24.5 92.0

6 96% AFUE

- Max Tech 8.0 8.0 8.0 8.0 8.0 8.0 100

Gas

- F ired Steam Boiler

0 80% AFUE

- Baseline 13.1

1 82% AFUE

- Increased HX Area 75.9 89.0

2 83% AFUE

- Max Tech 11.0 11.0 100

Oil

- F ired Hot Water Boiler

0 84% AFUE

- Baseline 17.0

1 85% AFUE

- Increased HX Area 31.3 48.3

2 86% AFUE

- Increased HX Area 39.5 39.5 87.8

3 91% AFUE

- Condensing (Max Tech) 12.2 12.2 12.2 100

Oil

- F ired Steam Boiler

0 82% AFUE

- Baseline 28.0

1 84% AFUE

- Increased HX Area 35.1 63.2

2 85% AFUE

- Increased HX Area 27.2 27.2 90.4

3 86% AFUE

- Max Tech 9.6 9.6 9.6 10010-3 Table 10.2.2 Residential Boilers: Efficiency Distributions for the Base and Standards Cases in Commercial Applications in 2020

Efficiency Level Market Share (percent)

Base Case Efficiency Level (EL)

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler

0 82% AFUE

- Baseline 18.5

1 83% AFUE

- Increased HX Area 6.7 25.2

2 84% AFUE

- Increased HX Area 8.7 8.7 33.9

3 85% AFUE

- Increased HX Area 8.7 8.7 8.7 42.6

4 90% AFUE

- Condensing Baseline 21.2 21.2 21.2 21.2 63.9

5 92% AFUE

- Increased HX Area 28.1 28.1 28.1 28.1 28.1 92

6 96% AFUE

- Max Tech 8.0 8.0 8.0 8.0 8.0 8.0 100

Gas

- F ired Steam Boiler

0 80% AFUE

- Baseline 14.8

1 82% AFUE

- Increased HX Area 74.5 89.3

2 83% AFUE

- Max Tech 10.7 10.7 100

Oil

- F ired Hot Water Boiler

0 84% AFUE

- Baseline 19.6

1 85% AFUE

- Increased HX Area 31.0 50.6

2 86% AFUE

- Increased HX Area 37.6 37.6 88.2

3 91% AFUE

- Condensing (Max Tech) 11.8 11.8 11.8 100

Oil

- F ired Steam Boiler

0 82% AFUE

- Baseline 31.6

1 84% AFUE

- Increased HX Area 33.2 64.8

2 85% AFUE

- Increased HX Area 25.8 25.8 90.6

3 86% AFUE

- Max Tech 9.4 9.4 9.4 100

10.2.2 Project ed Efficiency Trends After 2020

Figure 10.2. 1 shows the shares of gas

- fired hot water boilers at each EL. The shares of the three condensing ELs and the four non

- condensing ELs are kept in the same proportional relationship as in 2020. DOE estimated that the market shares of condensing gas

- fired and oil

fired steam boilers will be negligible during the period of analysis (2020

- 2049). The implementation of Energy Star’s new performance criteria will gradually improve the boiler efficiency and increase the market shares of condensing gas

- fired and oil

- f ired hot water boilers. DOE estimated that there would be some growth in the overall market share of condensing gas

fired hot water residential boilers, from 44.4 percent in 2020 to 62.7 percent in 2049 ( Figure

10.2.2 ). Details on how these efficiency trends were developed are in appendix 8

- H.10-4 Figure 10.2.1 Projection of Base Case Efficiency Distribution of New Units for Gas

Fired Hot Water Residential Boile rs

Figure 10.2.2 Projection of Base Case Market Share for Condensing Gas

- Fired Hot

Water Residential Boilers

For standards cases 1 through 3, DOE applied the above described efficiency trend for the condensing boiler market share. The difference between these standards cases and the base

case is in the market shares of the various non

- condensing boiler designs (ELs 0 through 3) . For standard cases 4 through 6, the overall condensing boil er market share goes to 100 percent in 

### 0% 10% 20% 30% 40% 50% 60% 70%

2010 2020 2030 2040 2050Condensing HWGB market share10-5 2020 and remains at that level. The shares of the specific condensing boiler designs (ELs 4 through 6) remain at the levels shown in the tables above.

Figure 10.2.3 shows the shares of oil

- fired hot water boilers at each EL. The shares of the

three non

- condensing ELs are kept in the same proportional relationship as in 2020. DOE estimated growth in the overall market share of condensing oil

- fired hot water residential boilers

from 6.6 percent in 2020 to 13.1 percent by 2049 ( Figure 10.2.3 ). Details on how these efficiency trends were developed are in a ppendix 8

- H.

Figure 10.2.3 Projection of Base Case Efficiency Distribution of New Units for Oil

Fired Hot Water Residential Boilers 0% 20% 40% 60% 80% 100%

2010 2015 2020 2025 2030 2035 2040 2045Base case efficiency distribution

EL0 EL1 EL2 EL310-6 Figure 10.2.4 Projection of Base Case Market Share for Condens ing Oil

- Fired Hot

Water Residential Boilers

For standards case s 1 and 2, DOE applied the above described efficiency trend for the condensing boiler market share (EL 3) . The difference between these standards cases and the

base case is in the market shares of the non

- condensing boiler s (ELs 0 through 2) . For standard case 3, the condensing boiler market share goes to 100 percent in 2020 and remains at that level.

10.3 NATIONAL ENERGY SAVI NGS

This section describes DOE’s calculation of national energy savings (NES) for residential

boilers under the considered EL s or standards cases.

10.3.1 Definition

DOE calculates annual NES as the difference between two projections: the base case (without new st andards) and a standards case (with new standards). The calculation of annual nation energy savings ( NES y ) are represented by the following expression :

Eq. 10

. 1

Cumulative energy savings are the sum of each annual NES over the lifetime of products shipped in the period that extends from a standard’s assumed compliance date for 30 years. This calculation is represented by the following equation: 

### 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

2010 2020 2030 2040 2050Condensing HWOB market share

std natl base natl y AEC AEC NES

− − = _10-7 Eq. 10

. 2

DOE calculated AEC by multiplying the number or stock of a given product (by vintage) by its unit energy consumption (also by vintage). The calculation of the national and each regional AEC is represented by the foll owing equation:

Eq. 10

. 3

Where:

AEC = annual energy consumption each year for the Nation in quadrillion British thermal units (Btus) , or quads

, summed over vintages of the product stock, STOCK V , NES y = national annual energy savings (quads)

, NES

cum = national cumulative energy savings (quads)

, STOCK V = stock of product (millions of units) of vintage V that survive in the year for which DOE calculated annual energy consumption

, UEC V = annual energy consum ption per product in kilowatt

- hours (kWh); electricity consumption is converted from site energy to power plant energy (quads) by applying a time

dependent conversion factor

, natl = designates the quantity corresponding to the Nation

, base = designates the quantity corresponding to the base case

, std = designates the quantity corresponding to the standards case

, y = year in the projection

,

cum = cumulative over the projection period

, and

V = year in which the product was purchased as a new unit.

The stock of equipment depends on annual shipments and the lifetime of the given product. As described in chapter 9, DOE projected shipments for the base case and each

standards case. Based on the user samples in the LCC and PBP analysis, DOE estimated th at a fraction of residential boilers (7%) are shipped to commercial buildings. T he national energy saving from residential boilers in the standard cases includes the saving from both residential and

commercial boiler users.

10.3.2 Inputs to Calculation

The inputs for calculating national energy savings are:

• average annual energy consumption per unit ( UEC ),

• shipments,

• product stock ( STOCK V ),

• annual energy consumption for the Nation ( AEC ), and

• power plant primary energy use factor ( src_conv ). 

# ∑

= y cum NES NES



# ∑ × = V V UEC STOCK AEC10-8 10.3.2.1 Annual Energy Consumpt ion per Unit

For each product class, DOE presented the per

- unit annual energy consumption as a function of product efficiency in chapter 7 , Energy Use Analysis . Because the per

- unit annual energy consumption is directly dependent on efficiency, DOE used the shipments

- weighted energy efficiency of the base and standards cases presented in section 10.2 , along with the annual energy use data presented in chapters 7 and 8, to estimate the shipment

- weighted average annual

per

- unit energy consumption (UEC) under the base and standards cases.

Table 10.3.1 present s the base case and standards case shipment

- weighted annual UECs

for gas

- fired hot water residential boiler s , gas steam residential boilers, oil

- fired hot water

residential boilers and oil steam residential boilers in 2020 (the assumed effective date of

amended standards). The values are a weighted average for residential and commercial boiler

users. The table show s the energy use of residential boiler s associate d with higher

- efficienc ies

. The values after 2020 change according to the projected efficiency trends in each case

.

Table 10.3.1 Average Annual Boiler Energy Use for the Base and Standards Cases in

2020

Product Class Base Case Efficiency levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler
Average Annual Fuel Use (MMBtu/yr) 73.3 73.2 73.0 72.7 71.2 70.7 68.0

Average Annual Elec Use (kWh/yr) 233.5 234.3 233.7 237.7 264.9 262.9 259.5

Gas

- F ired Steam Boiler
Average Annual Fuel Use (MMBtu/yr) 74.8 74.6 73.8

Average Annual Elec Use (kWh/yr) 135.2 135.3 135.7

Oil

- F ired Hot Water Boiler
Average Annual Fuel Use (MMBtu/yr) 71.5 71.3 70.9 68.3

Average Annual Elec Use (kWh/yr) 232.6 231.4 228.6 250.4

Oil

- F ired Steam Boiler
Average Annual Fuel Use (MMBtu/yr) 74.0 73.5 72.9 72.2

Average Annual Elec Use (kWh/yr) 210.5 209.8 207.5 208.1

The results in the above tables are not adjusted for the impact of the rebound effect discussed in chapter 8 . In the NIA model, DOE applied a rebound effect of 20 percent (see chapter 7 explains why this value was chosen).

DOE also considered the effects of changes in climate and building shell efficiency on residential boilers’ energy use. The climate adjustment factor is based on the forecast of heating degree days (HDD) from AEO 2013 , which shows a declining trend due to warmer weather. The building shell efficiency factor is al so from AEO 201 3. For both factors, DOE applied regional weights to make the factors specific to residential and commercial users of residential boilers.10-9 Figure 10.3.1 and Figure 10.3.2 show the combined adjustment factor for boiler energy use in the residential sector and commercial sectors, respectively.

Figure 10.3.1 Combined Adjustme nt Factor for Residential Boilers’ Energy Use in

Residential Sector

Figure 10.3.2 Projection of Residential Boilers’ Energy Use Trend in Commercial

Sector 0.0 0.2 0.4 0.6 0.8 1.0 1.2

2010 2015 2020 2025 2030 2035 2040 2045Factor = 1 at 2020

0.0 0.2 0.4 0.6 0.8 1.0 1.2

2010 2015 2020 2025 2030 2035 2040 2045Factor = 1 at 202010-10 10.3.2.2 Shipments

DOE project ed shipments for each product class under the base case and all standards

cases (see chapter 9) . Several factors impact project ed shipments, including total installed costs, operating cost, household income, and equipment lifetime. As noted earlier, the increased total installed cost of more efficient products causes some customers t o forego product purchases. Consequently, shipments projected under the standards cases are lower than under the base case.

DOE believes it would be in appropri ate to count energy savings that result from red uced shipments due to standards . Therefore, DOE d id not calculate annual energy consumption for the base case using the base case shipments projection . Instead, for each comparison of a standards case with the base case, DOE used shipments associated with that particular standards case. As a result, all of the calculated energy savings are due to higher energy efficiency in the standards

case.

10.3.2.3 Equipment Stock

The stock of product in any given year depends on annual shipments and the lifetime of a given product class. The NIA model keeps track of the numb er of units shipped each year. The lifetime of a unit determines how many units shipped in previous years survive in the given year. DOE assumes that products have an increasing probability of retiring as they age. The probability of survival as a function of years since purchase is termed the survival function. Refer to chapter 8 for further details on the survival functions that DOE used in its analysis.

10.3.2.4 Annual Energy Consumption

For each product class, DOE calculated the total national site ( i.e. , the energy consumed at the household or establishment) annual energy consumption (AEC). Annual energy consumption is the product of the AEC per unit ( also termed the unit energy consumption (UEC) ) and the number of units of each vintage. This method accounts for differences in UEC from year to year. The equation for determining annual energy consumption, presented in section

10.3.1

, is repeated here

. 

# ∑ × = V V UEC STOCK AEC10-11 10.3.2.5 Site

- to

- Power Plant Energy Use Factor

DOE calculates primary energy savings (power plant consumption) from site energy savings by applying a factor to account for losses associated with the generation, transmission, and distribution of electricity. DO E derived annual average site

- to

- power plant factors based on the version of the National Energy Modeling System (NEMS) that corresponds to Energy Information Administration (EIA’s) Annual Energy Outlook 201 3 ( AEO 201 3 ). 1 The factors change over time in response to projected changes in the types of power plants projected to provide electricity to the country. Figure 10.3.3 shows the site

- to

- power plant factors from 2020

to 2040 . For years after 20 40 (the last year in the AEO ), DOE maintained the 2040 value

.

Figure 10.3.3 Site

- to

- Power Plant Energy Use Factor for Residential Boiler Electricity

Use

10.3.2.1 Full

- Fuel

- Cycle Energy Factors

The full

- fuel

- cycle (FFC) measure includes point

- of

- use (site) energy, the energy losses associated with generation, transmission, and distribution of electricity, and the energy consumed in extracting, processing, and transporting or distributing primary fuels. To complete the full

fuel

- cycle by encompassing the energy consumed in extracting, processing, and transporting or distributing primary fuels, which we refer to as “upstream” activities, DOE devel oped multipliers using the data and projections generated by the National Energy Modeling System (NEMS) used

for AEO 201 3

. T he AEO provide s extensive information about the energy system, including projections of future oil, natural gas and coal supply, energy use for oil and gas field and refinery operations, and fuel consumption and emissions related to electric power production. This 

### 8.1 8.2 8.3 8.4 8.5 8.6

2015 2020 2025 2030 2035 2040 2045Source Btu/Site Wh10-12 inform ation can be used to define a set of parameters representing the energy intensity of energy production. The method used to calculate FFC energy multipliers is described in appendix 10

- B.

Table 10.3.2 s hows the upstream energy multipliers used for residential boiler s for selected years. The multipliers are applied to site energy. For years after 2040 (the last year in

the AEO ), DOE maintained the 2040 value

.

Table 10.3.2 Upst ream Energy Multipliers (Based on AEO 2013)

2020 2025 2030 2035 2040 2045 2050

Elec tricity 1.041 1.040 1.040 1.041 1.040 1.040 1.040

Natural Gas 1.101 1.100 1.098 1.099 1.100 1.100 1.100

Petroleum Fuels 1.140 1.148 1.158 1.166 1.168 1.168 1.168

10.4 NET PRESENT VALUE OF CONSUMER BENEFITS

10.4.1 Definition

The NPV is the value in the present of a time

- series of costs and savings. The NPV is described by the equation:

Eq. 10

. 4

Where:

PVS = present value of savings in operating cost (including costs for energy, repair, and maintenance)

, and

PVC = present value of increase in total installed cost (including costs for equipment and installation).

DOE determined the PVS and PVC according to the following exp ressions :

Eq. 10

. 5

Eq. 10

. 6

DOE calculated the total annual savings in operating cost by multiplying the number or stock of a given product (by vintage) by its per

- unit operating cost savings (also by vintage). DOE calculated the total annual increase in installed cost by multiplying the number or stock of a 

### PVC PVS NPV

_ 

### =



## ∑

y y DF OCS PVS × =



## ∑

y y DF TIC PVC × =10-13 given product (by vintage) by its per

- unit total installed cost increase (also by vintage). Total annual savings in operating cost and increases in installed cost are calculated using the following equations.

Eq. 10

. 7

Eq. 10

. 8

Where:

OCS = total annual savings in operating cost each year summed over vintages of the product stock, STOCK V , TIC = total annual increase in installed cost each year summed over vintages of the product stock, STOCK V , DF = discount factor in each year

, STOCK V = stock of product (millions of units) of vintage V that survive in the year for which DOE calculated annual energy consumption

, UOCS V = annual per

- unit savings in operating cost

, UTIC V = annual total per

- unit increase in installed cost

, V = year in which the product was purchased as a new unit

, and

y = y ear in the projection

.

As mentioned in section 10.3.1 , DOE estimated that a fraction of residential boilers (7%)

are shipped to commercial buildings. The net pre sent value of consumer benefits in the standard

cases includes the benefits from both residential and commercial boiler users.

DOE determined the PVC for each year from the compliance date of the standard through

20 49 . DOE determined the PVS for each yea r from the compliance date of the standard until the year when units purchased in 2020− 20 49 retire. DOE calculated costs and savings as the

difference between each standards case and the base case.

DOE calculated a discount factor from the discount rate and the number of years between the “present” ( 201 3 , the year to which the sum is being discounted) and the year in which the costs and savings occur. The NPV is the sum over time of the discounted net savings.

10.4.2 Inputs to Calculation

Listed below are t he inputs to DOE’s calculati on of the NPV of costs and savings.

• Total installed cost per unit,

• annual per

- unit savings in operation cost,

• shipments, 

## ∑

V V y UOCS STOCK OCS × =



## ∑

V V y UTIC STOCK TIC × =10-14 • product stock ( STOCK V ),

• total annual increases in installed cost ( TIC ),

• total annual operating cost ( OCS ),

• discount factor ( DF ),

• present value of costs ( PVC ), and

• present value of savings ( PVS ).

The total annual increase in installed cost is equal to the annual change in the total per

unit installed cost (difference between base case and standards case) multiplied by the shipments projected for each E L . As with calculating energy savings, DOE did not use base

- case shipments to calculate total annual installed costs for all of the product classes. DOE used the projected shipments and stock for each E L to calculate costs.

The annual operating cost includes energy , repair, and maintenance costs. The total

annual savings in operating cost are equal to the change in the annual operating costs (difference between base case and standards case) per unit multiplied by the shipments projected for each candidate standard level. As with calculating total annual installed costs, DOE use d standards

case shipments to calculate savings in operating cost.

10.4.2.1 Total Insta lled Cost per Unit

DOE described the total per

- unit installed cost for each product class as a function of product efficiency in chapter 8 , Life

- Cycle Cost and Payback Period Analysis . Because the total

per

- unit annual installed cost depends directly on efficiency, DOE used the shipments

- weighted efficiencies for the base and standards cases, combined with the total installed cost presented in chapter 8, to estimate the shipments

- weighted total per

- unit average annual installed cost under

the base and sta ndards cases. Table 10.4.1 shows the average installed cost of residential boiler s in 2020 for the base and standards cases for the four product classes with the la rgest market

shares.

For reasons discussed in chapter 8 (section 8.2.1.4), DOE used a constant price assumption for the default projection in the NIA. To investigate the impact of different equipment price projections on the consumer net present value (NPV) for different efficiency levels, DOE also considered two alternative price trends

. Details on how these alternative price trends were developed are in appendix 10

- C, which also presents the results of the sensitivity analysis.10-15 Table 10.4.1 Average Installed Cost of Residential Boilers in 2020 for the Base and Standards Cases (2012$)

Product Class Base Case Efficiency levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler $5,955 $5,969 $5,973 $6,044 $6,357 $6,536 $7,109

Gas

- F ired Steam Boiler $5,429 $5,439 $5,558

Oil

- F ired Hot Water Boiler $7,465 $7,516 $7,621 $9,030

Oil

- F ired Steam Boiler $7,215 $7,295 $7,371 $7,536

10.4.2.2 Annual Operating Cost per Unit

The per

- unit annual operating cost includes costs for energy, repair, and maintenance. DOE determined the per

- unit annual savings in energy costs by multiplying the per

- unit annual savings in energy consumption developed for each product class by the appro priate energy price.

DOE considered operating cost s separately for residential and commercial boiler users.

Estimates of the per

- unit annual energy consumption for the base case and each standards case were presented in section 10.3.1.1 . DOE projected the per

- unit annual energy consumption

for the base case for all product classes by applying a growth trend in ef ficiency.

Energy prices and tre nds in energy prices are described in chapter 8. DOE projected energy prices based on annual changes in residential and commercial energy prices in EIA’s

AEO201 3 1 reference case scenario

.

DOE described the total per

- unit repair and maintenance costs for each product class as a function of product efficiency in chapter 8. Because the per

- unit repair and maintenance costs depend directly on efficiency, DOE used the efficiencies for the base a nd standards cases presented in section 10.2 , combined with the repair and maintenance costs presented in chapter 8, to estimate the per

- unit averag e repair and maintenance costs under the base and standards

cases.

Table 10.4.2 shows the average operating cost of residential boiler s in 2020 for the base

and standards cases for the four product classes with the largest market shares. The operating costs change over time, depending on change in annual energy use and energy prices.10-16 Table 10.4.2 Average Annual Operating Cost of Residential Boilers in 2020 for the

Base and St andards Cases (2012$)

Product Class Base Case Efficiency levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler $713 $711 $710 $707 $696 $691 $665

Gas

- F ired Steam Boiler $722 $720 $712

Oil

- F ired Hot Water Boiler $1,885 $1,881 $1,870 $1,804

Oil

- F ired Steam Boiler $1,937 $1,924 $1,909 $1,890

10.4.2.3 Equipment Stock

The stock of product in any given year depends on annual shipments and the lifetime of a given product class. The NIA model keeps track of the number of units shipped each year. The lifetime of a unit determines how many units shipped in previous years survive in the given yea r. DOE assumes that products have an increasing probability of retiring as they age. The probability of survival as a function of years since purchase is termed the survival function. Refer to the specific section for each product class in chapter 9 for fu rther details on the survival functions that DOE used in its analysis.

10.4.2.4 Increases in Total Annual Installed Cost

The increase in total annual installed cost for a product under any given standards case is the product of the increase in total installed c ost per unit attributable to the standard and the number of units of each vintage. This method accounts for differences in total installed cost from year to year. The equation for determining the total annual installed cost increase for a given

candidate s tandard level is:

Eq. 10

. 9

10.4.2.5 Savings in Total Annual Operating Cost

The savings in total annual operating cost for any given candidate standards level is the product of the annual per

- unit savings in operati ng cost attributable to the standard and the number of units of each vintage. This method accounts for the year

- to

- year differences in annual operating cost savings. The equation for determining the total annual savings in operating cost for a given candid ate standard level, which was presented in section 10.4.1

, is repeated here.

As previously discussed, DOE applied a rebound effect to adjust its estimates of energy savings from EL s . The take

- back in energy consumption associated with the rebound effect 

## ∑

V V UTIC STOCK TIC × =



## ∑

V V UOCS STOCK OCS × =10-17 provides consumers with increased value (e.g., enhanced comfort associated with use of constant circulation). DOE believes that, if it were ab le to monetize the increased value to consumers of the rebound effect, this value would be similar in value to the foregone energy savings. Therefore, the economic impacts on consumers with or without the rebound effect are the same, so DOE does not adjust operating cost savings in the NIA.

10.4.2.6 Discount Factor

DOE multiplied monetary values in future years by a discount factor to determine the present value. The discount factor (DF) is described by the equation:

Eq. 10

. 10

Where:

r = discount rate,

y = year of the monetary value, and

y

P = year in which the present value is being determined.

Although DOE used consumer discount rates to determine the life

- cycle cost of

residential boiler s (chapter 8), it used national discount rates to calculate national NPV. DOE estimated NPV using both a 3

- percent and a 7

- percent real discount rate, in accordance with the Office of Management and Budget’s guidance to Federal agencies on the development of regulatory analysis, particularly section E therein: Identifying and Measuring Benefits and

Costs

. 2 DOE defined the present year as 2013.

10.4.2.7 Prese nt Value of Increased Installed Cost

The present va lue of increased installed cost is the difference between installation cost in each standards case and the base case discounted to the present and summed throughout the period over which DOE is considerin g the installation of units (from the compliance date of standards, 2020 , through 204 9 ). DOE calculated annual increases in installed cost as the difference in total installed cost for new equipment purchased each year, multiplied by the shipments in the s tandards case.

10.4.2.8 Present Value of Savings

The present value of annual savings in operating cost is the difference between t he base

case and each standards case discounted to the present and summed throughout the period from the compliance date, 2020 , to the time when the last unit installed in 2020− 2049 is retired from

service.

Savings represent decreases in operating cost (including electricity, repair, and maintenance) associated with the more energy efficient equipment purchased in each standard s ) yp y (

_ ) r ( DF

+ 1 1

=10-18 case compared to the base case. Total annual savings in operating cost are the savings per unit multiplied by the number of units of each vintage that survive in a particular year.

10.5 RESULTS

10.5.1 National Energy Savings

This section provides the national en ergy savings that DOE calculated for each of the ELs analyzed for residential boiler s (see Table 10.5.1 for primary energy savings and Tab le 10.5.2 for

full

- fuel cycle energy savings ; in the case of standby and off mode results, see Table 10.5.3 f or primary energy savings and Table 10.5.4 for full

- fuel cycle energy savings ) . DOE based the inputs to the NIA model on weighted

- average values, producing results that are discrete point values, rather than a distribution of values such as is generated by the life

- cycle cost and payback period analysis. The energy savings reported for EL s 2 and above reflect application of a

rebound effect.

Table 10.5.1 Primary National Energy Savings for Residential Boilers (quads)

Product Class Efficiency Levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler 0.019 0.049 0.089 0.296 0.389 0.808

Gas

- F ired Steam Boiler 0.005 0.021

Oil

- F ired Hot Water Boiler 0.013 0.049 0.270

Oil

- F ired Steam Boiler 0.005 0.010 0.017

Table 10.5.2 Full

- Fuel

- Cycle National Energy Savings for Residential Boilers (quads)

Product Class Efficiency Levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler 0.022 0.054 0.101 0.348 0.448 0.907

Gas

- F ired Steam Boiler 0.005 0.023

Oil

- F ired Hot Water Boiler 0.015 0.055 0.322

Oil

- F ired Steam Boiler 0.005 0.011 0.01910-19 Table 10.5.3 Standby, Primary National Energy Savings for Residential Boilers (quads)

Product Class Efficiency Levels

1 2 3

Gas

- F ired Hot Water Boiler 0.00646 0.00775 0.01076

Gas

- F ired Steam Boiler 0.00090 0.00108 0.00150

Oil

- F ired Hot Water Boiler 0.00362 0.00434 0.00603

Oil

- F ired Steam Boiler 0.00042 0.00050 0.00070

Electric Hot Water Boiler 0.00042 0.00050 0.00070

Electric Steam Boiler 0.00005 0.00006 0.00008

Table 10.5.4 Standby, Full

- Fuel

- Cycle National Energy Savings for Residential Boilers (quads)

Product Class Efficiency Levels

1 2 3

Gas

- F ired Hot Water Boiler 0.00671 0.00806 0.01119

Gas

- F ired Steam Boiler 0.00094 0.00112 0.00156

Oil

- F ired Hot Water Boiler 0.00376 0.00451 0.00627

Oil

- F ired Steam Boiler 0.00044 0.00052 0.00073

Electric Hot Water Boiler 0.00044 0.00052 0.00073

Electric Steam Boiler 0.00005 0.00006 0.00009

10.5.2 Net Present Value of Consumer Benefit

Th is section provide s results of calculating the NPV for each candidate standard level

considered for residential boiler s. Results, which are cumulative, are shown as the discounted dollar value of the net savings (see Table 10.5.5 for NPV results with a 3% discount rate applied

and Table 10.5.6 for 7% discount rate , as well a s, for standby results Table 10.5.7 for 3%

discount rate and Table 10.5.8 for 7% discount rate ) . DOE based the inputs to the NIA model on weighted

- average values, yielding results that are discrete point values, rather than a distribution of values such as produced by the life

- cycle cost and payback period analyses. A negativ e NPV indicates that the costs of a standard at a given efficiency level exceed the savings.10-20 Table 10.5.5 Net Present Value of Consumer Benefit for Residential Boilers

, Discounted at 3 Percent (billion 2012$)

Product Class Efficiency Levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler 0.108 0.344 0.420 0.902 1.084 2.637

Gas

- F ired Steam Boiler 0.035 0.115

Oil

- F ired Hot Water Boiler 0.106 0.448 1.261

Oil

- F ired Steam Boiler 0.056 0.118 0.192

Table 10.5.6 Net Present Value of Consumer Benefit for Residential Boilers

, Discounted at 7 Percent (billion 2012$ )

Product Class Efficiency Levels

1 2 3 4 5 6

Gas

- F ired Hot Water Boiler 0.028 0.105 0.088 0.069 0.026 0.203

Gas

- F ired Steam Boiler 0.011 0.028

Oil

- F ired Hot Water Boiler 0.020 0.104

- 0.039

Oil

- F ired Steam Boiler 0.016 0.035 0.054

Table 10.5.7 Standby, Net Present Value of Consumer Benefit for Residential Boilers

, Discounted at 3 Percent ( billion 2012$)

Product Class Efficiency Levels

1 2 3

Gas

- F ired Hot Water Boiler 0.078 0.028 0.063

Gas

- F ired Steam Boiler 0.011 0.005 0.010

Oil

- F ired Hot Water Boiler 0.050 0.026 0.049

Oil

- F ired Steam Boiler 0.006 0.003 0.006

Electric Hot Water Boiler 0.003 0.000 0.002

Electric Steam Boiler 0.000 0.000 0.000

Table 10.5.8 Standby, Net Present Value of Consumer Benefit for Residential Boilers

, Discounted at 7 Percent ( billion 2012$)

Product Class Efficiency Levels

1 2 3

Gas

- F ired Hot Water Boiler 0.032 0.005 0.019

Gas

- F ired Steam Boiler 0.005 0.001 0.003

Oil

- F ired Hot Water Boiler 0.021 0.007 0.017

Oil

- F ired Steam Boiler 0.002 0.001 0.002

Electric Hot Water Boiler 0.001 0.000 0.000

Electric Steam Boiler 0.000 0.000 0.00010-21 REFERENCES

1. Energy Information Administration, Annual Energy Outlook 2013 with Projections to

2040 , 2013. Washington, DC. < http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf >

2. U.S. Office of Management and Budget, Circular A

- 4: Regulatory Analysis, 2003. (Posted September 17, 20 03) (Last accessed April, 2005.)

< http://www.whitehouse.gov/omb/circulars/a004/a

- 4.pdf >