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 SAVINGS ............................................................................... 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 Inputs 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 Residential Applications in 2020......................................................... 10-2

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

Cases in Commercial 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$).................................................................................. 10-15
10-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 GasFired 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 OilFired 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 ................................................................................................................... 10-11
10-1

CHAPTER 10. NATIONAL IMPACT ANALYSES

10.1 INTRODUCTION

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

considered for residential boilers. 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 appendix 10-A.

The NIA model incorporates the shipments model that DOE used to project future 

purchases of residential boilers. 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 energy 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 developed a distribution of efficiencies in 

the base and standards cases for 2020 (the assumed compliance date for new standards), 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 efficiency 

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 oilfired 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 Level

Market Share (percent)

Base Case Efficiency Level (EL)

1 2 3 4 5 6

Gas-Fired 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-Fired 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-Fired 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-Fired 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 9.6 100
10-3

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-Fired 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-Fired 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-Fired 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-Fired 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 Projected 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 oilfired 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-fired hot water boilers. 

DOE estimated that there would be some growth in the overall market share of condensing gasfired 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 GasFired Hot Water Residential Boilers

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 boiler market share goes to 100 percent in 

0%

10%

20%

30%

40%

50%

60%

70%

2010 2020 2030 2040 2050

Condensing HWGB market share
10-5

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 appendix 8-H. 

Figure 10.2.3 Projection of Base Case Efficiency Distribution of New Units for OilFired Hot Water Residential Boilers

0%

20%

40%

60%

80%

100%

Base case efficiency distribution

2010 2015 2020 2025 2030 2035 2040 2045

EL0 EL1 EL2 EL3
10-6

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

Water Residential Boilers

For standards cases 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 boilers (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 SAVINGS

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

boilers under the considered ELs or standards cases.

10.3.1 Definition

DOE calculates annual NES as the difference between two projections: the base case 

(without new standards) and a standards case (with new standards). The calculation of annual 

nation energy savings (NESy) 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 2050

Condensing HWOB market share

NES y = AECnatl−base AECnatl−std

_
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 following 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, STOCKV,

NESy = national annual energy savings (quads),

NEScum = national cumulative energy savings (quads),

STOCKV = stock of product (millions of units) of vintage V that survive in the year for which 

DOE calculated annual energy consumption,

UECV = annual energy consumption per product in kilowatt-hours (kWh); electricity 

consumption is converted from site energy to power plant energy (quads) by applying a timedependent 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 that a 

fraction of residential boilers (7%) are shipped to commercial buildings. The 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 (STOCKV),

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

• power plant primary energy use factor (src_conv).

NEScum = ∑NES y

= ∑ V ×UECV AEC STOCK
10-8

10.3.2.1 Annual Energy Consumption 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 presents the base case and standards case shipment-weighted annual UECs 

for gas-fired hot water residential boilers, 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 shows the energy use of residential boilers associated with higher-efficiencies. 

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-Fired 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-Fired 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-Fired 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-Fired 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 also from AEO 2013. 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 Adjustment 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 2045

Factor = 1 at 2020

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2010 2015 2020 2025 2030 2035 2040 2045

Factor = 1 at 2020
10-10

10.3.2.2 Shipments

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

cases (see chapter 9). Several factors impact projected 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 to forego product purchases. 

Consequently, shipments projected under the standards cases are lower than under the base case. 

DOE believes it would be inappropriate to count energy savings that result from reduced 

shipments due to standards. Therefore, DOE did 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 number 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 ×UECV AEC STOCK
10-11

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. DOE 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 2013 (AEO 2013).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 2040 (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 fullfuel-cycle by encompassing the energy consumed in extracting, processing, and transporting or 

distributing primary fuels, which we refer to as “upstream” activities, DOE developed multipliers

using the data and projections generated by the National Energy Modeling System (NEMS) used 

for AEO 2013. The AEO provides 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 2045

Source Btu/Site Wh
10-12

information 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 shows the upstream energy multipliers used for residential boilers 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 Upstream Energy Multipliers (Based on AEO 2013)

2020 2025 2030 2035 2040 2045 2050

Electricity 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 expressions:

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 

NPV PVS PVC _ =

PVS =∑OCSy × DFy

PVC = ∑TICy × DFy
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, STOCKV,

TIC = total annual increase in installed cost each year summed over vintages of the product 

stock, STOCKV,

DF =discount factor in each year,

STOCKV = stock of product (millions of units) of vintage V that survive in the year for which 

DOE calculated annual energy consumption,

UOCSV = annual per-unit savings in operating cost,

UTICV = annual total per-unit increase in installed cost,

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

y = year 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 present 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

2049. DOE determined the PVS for each year from the compliance date of the standard until the 

year when units purchased in 2020−2049 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” (2013, 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 the inputs to DOE’s calculation of the NPV of costs and savings.

• Total installed cost per unit,

• annual per-unit savings in operation cost,

• shipments,

OCS y = ∑STOCKV ×UOCSV

TICy = ∑STOCKV ×UTICV
10-14

• product stock (STOCKV),

• 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 perunit installed cost (difference between base case and standards case) multiplied by the shipments 

projected for each EL. 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 EL 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 used standardscase shipments to calculate savings in operating cost. 

10.4.2.1 Total Installed 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 standards cases. Table 10.4.1 shows the average installed cost of residential boilers 

in 2020 for the base and standards cases for the four product classes with the largest 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-Fired Hot Water Boiler $5,955 $5,969 $5,973 $6,044 $6,357 $6,536 $7,109 

Gas-Fired Steam Boiler $5,429 $5,439 $5,558 

Oil-Fired Hot Water Boiler $7,465 $7,516 $7,621 $9,030 

Oil-Fired 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 appropriate energy price. 

DOE considered operating costs 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 efficiency. 

Energy prices and trends 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 

AEO2013

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 and standards cases 

presented in section 10.2, combined with the repair and maintenance costs presented in chapter 

8, to estimate the per-unit average repair and maintenance costs under the base and standards 

cases. 

Table 10.4.2 shows the average operating cost of residential boilers 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 Standards Cases (2012$)

Product Class Base Case Efficiency levels

1 2 3 4 5 6

Gas-Fired Hot Water Boiler $713 $711 $710 $707 $696 $691 $665 

Gas-Fired Steam Boiler $722 $720 $712 

Oil-Fired Hot Water Boiler $1,885 $1,881 $1,870 $1,804 

Oil-Fired 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 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 the specific section for each product class in chapter 9 for further 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 cost 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 standard 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 operating 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 candidate 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 ELs. The take-back in energy consumption associated with the rebound effect 

TIC = ∑STOCKV ×UTICV

OCS = ∑STOCKV ×UOCSV
10-17

provides consumers with increased value (e.g., enhanced comfort associated with use of constant 

circulation). DOE believes that, if it were able 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 

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

Although DOE used consumer discount rates to determine the life-cycle cost of 

residential boilers (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 Present Value of Increased Installed Cost

The present value 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 considering the installation of units (from the compliance date of 

standards, 2020, through 2049). 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 standards case.

10.4.2.8 Present Value of Savings

The present value of annual savings in operating cost is the difference between the 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 standards 

( y yp ) _

( 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 energy savings that DOE calculated for each of the ELs

analyzed for residential boilers (see Table 10.5.1 for primary energy savings and Table 10.5.2 for 

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

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 ELs 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-Fired Hot Water Boiler 0.019 0.049 0.089 0.296 0.389 0.808 

Gas-Fired Steam Boiler 0.005 0.021 

Oil-Fired Hot Water Boiler 0.013 0.049 0.270 

Oil-Fired 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-Fired Hot Water Boiler 0.022 0.054 0.101 0.348 0.448 0.907 

Gas-Fired Steam Boiler 0.005 0.023 

Oil-Fired Hot Water Boiler 0.015 0.055 0.322 

Oil-Fired Steam Boiler 0.005 0.011 0.019 
10-19

Table 10.5.3 Standby, Primary National Energy Savings for Residential Boilers 

(quads)

Product Class Efficiency Levels

1 2 3

Gas-Fired Hot Water Boiler 0.00646 0.00775 0.01076

Gas-Fired Steam Boiler 0.00090 0.00108 0.00150

Oil-Fired Hot Water Boiler 0.00362 0.00434 0.00603

Oil-Fired 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-Fired Hot Water Boiler 0.00671 0.00806 0.01119

Gas-Fired Steam Boiler 0.00094 0.00112 0.00156

Oil-Fired Hot Water Boiler 0.00376 0.00451 0.00627

Oil-Fired 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

This section provides results of calculating the NPV for each candidate standard level 

considered for residential boilers. 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 as, 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 negative 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-Fired Hot Water Boiler 0.108 0.344 0.420 0.902 1.084 2.637

Gas-Fired Steam Boiler 0.035 0.115

Oil-Fired Hot Water Boiler 0.106 0.448 1.261

Oil-Fired 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-Fired Hot Water Boiler 0.028 0.105 0.088 0.069 0.026 0.203

Gas-Fired Steam Boiler 0.011 0.028

Oil-Fired Hot Water Boiler 0.020 0.104 -0.039

Oil-Fired 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-Fired Hot Water Boiler 0.078 0.028 0.063

Gas-Fired Steam Boiler 0.011 0.005 0.010

Oil-Fired Hot Water Boiler 0.050 0.026 0.049

Oil-Fired 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-Fired Hot Water Boiler 0.032 0.005 0.019

Gas-Fired Steam Boiler 0.005 0.001 0.003

Oil-Fired Hot Water Boiler 0.021 0.007 0.017

Oil-Fired 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 0.000
10-21

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, 2003) (Last accessed April, 2005.) 

<http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf>