# Furnace Standard Analysis

Discussion Document

# Assessing and Quantifying Effects of 

# a New Furnace Standard

• Using field intelligence and thoughtful analysis – assess and quantify the effects a regional or national 

## condensing standard for natural gas furnaces could have on energy efficiency and environmental objectives .  Provide insight on the potential impact limiting customer choices for heating systems could have on overall energy usage, cost, and carbon emissions outcomes.  Provide all data, models and sources of information to DOE and other stakeholders, to gain their confidence in the analysis and demonstrate full transparency.

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## Demonstrate the need for DOE to 

## incorporate similar analyses in new minimum efficiency standard proceeding for natural gas furnaces. 

# Desired Outcome

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# Industry Commitment to EfficiencyNatural gas usage per household has decreased even as overall demand for energy has risen. This trend is due in part to installation of tighter- fitting windows and doors, better insulation, utility sponsored energy efficiency programs, and the development of increasingly more efficient natural gas appliances.

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## Residential Natural Gas Use: 

# An Efficiency Success Story

# States with Non -Volumetric

Rate Designs

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# Step 1: Enhance Field Intelligence by Engaging Builders and Contractors

• Need: A study to evaluate the potential impact a new minimum efficiency standard for natural gas furnaces could have on the distribution of heating systems and fuel types in the new construction and replacement markets.
• Objective: To gather intelligence from home builders and HVAC contractors on how they would change their approach to providing heating and water heating system proposals if a condensing standard was established for furnaces.
• Approach: D evelop, administer, collect and analyze a nationwide survey designed to capture current fuel and technology choices for heating and water heating systems as well as the anticipated fuel and technology choices under two scenarios. 1. A non - condensing furnace minimum standard 2. A condensing furnace minimum standard

78 -10 0 10 20 30 40 50 All West South Central

Pacific Mountain North West North Central East North Central Middle Atlantic New England South Atlantic East South Central Mountain South

Percentage of Change in Heating/Water Heating Systems – Gas to ElectricRegions Electric Water Heater Electric Heat Pump Electric Resistance Heat 

## Survey results i

ndicate a condensing f

urnace standard would cause a sizeable change in the type and energy source of heating and water h eating systems installed9 

## Comparison of Residential Space Heating Appliances

DOE/NAECA Efficiency 7.7 HSPF 9.0 HSPF 99 AFUE 80 AFUE 94 AFUE Full - Fuel - Cycle Energy Use per Year* 96 MMBtu 89 MMBtu 156 MMBtu 68 MMBtu 52 MMBtu CO 2 e** Emissions/Yr* 5.9 Metric Tons 5.5 Metric

Tons 9.5 Metric

Tons 4.5 Metric

Tons 3.5 Metric

Tons Annual Cost $1,119 $1,029 $1,806 $714 $544 Electric Heat Pump Electric Resistance Furnace Natural Gas Furnace

• Excludes A/C operations ** Includes greenhouse gas impact from unburned methane July 2014 version10

* Based on National Averages

# Step 2 : Analyze and Measure the Impact of Survey Results on Energy Efficiency Metrics

• Need: D emonstrate the market impact the contractor survey results would have on key energy efficiency metrics.
• Objective: To develop a credible and transparent model that quantifies the 

### potential impact on key metrics energy efficiency standards are intended to address.
• Approach: Build a “Case Study” model that incorporates key market data and findings from the builder and contractor survey as inputs. The output 

### from the model will identify the potential impact on the following metrics using furnace shipment data for a single year: 1. A nnual consumer energy costs 

### 2. A nnual source energy usage 3. A nnual CO2 emissions

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# Key Variables and Inputs Used in Impact Analysis Model Market Data
• National furnace shipments data • Regional furnace stock data • Annual consumption data for gas furnaces by furnace category and region • Annual consumption data for gas storage w ater h eaters by region • Annual consumption for electric h eat p umps, furnaces and water h eaters by region • Factors for converting site energy consumption to primary energy consumption by region • CO2 emissions factors for energy source and region 

## AGA/APGA Studies Data
• Survey results on current distribution of furnace i nstallations by category of furnace and region
• Survey results on potential c hanges in heating system i nstallations and fuel source by region
• Survey results on potential c hanges in w ater h eating system Installations and fuel source by region
• M arginal rates for e lectric and gas c onsumption b y region

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### Regions Considered in the Analysis – Based on U.S. Census Regions

## Model indicates a condensing furnace standard would increase overall energy costs* when contractor survey results are considered in the analysis

14 -$40,000 -$30,000 -$20,000 -$10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000Overall Change in Annual Energy Costs (Thousands) Change in Consumer

Energy Costs without using Survey Results

- $35.9 Million $44.9 Million

Change in Consumer Energy Costs using Survey Results

* Energy costs calculated using marginal natural gas and electricity rates.15

-$15,000 -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Change in Energy Costs without using Survey Results Change in Energy Costs using Survey Results

West South Central Mountain

North New England East South CentralMountain South Middle Atlantic
South Atlantic West North Central East North Central

Pacific (Thousands) 

### Potential Impact of a Condensing Furnace Standard on Consumer Energy Costs* By Region ($/Year)

* Energy costs calculated using marginal natural gas and electricity rates.

## Model indicates a condensing furnace standard would 

## increase source energy usage when contractor survey results are considered in the analysis

16 -4,577,695 463,844

-5,000,000 -4,000,000 -3,000,000 -2,000,000 -1,000,000 0 1,000,000Dth/Yr Change in Primary

Energy Usage without using Survey Results Change in Primary Energy Usage using Survey Results17 -2,000,000 -1,500,000 -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2,000,000 Change in Source Energy Usage without using Survey Results Change in Source Energy Usage using Survey Results West North Central

Mountain North East North

Central Middle

Atlantic New England Pacific West South Central South Atlantic East South Central Mountain

South 

### Potential Impact of a Condensing Furnace Standard on Source Energy Usage 

### By Region (Dth/Year

)

## Model indicates a condensing furnace standard would increase CO2 emissions when contractor survey results are considered in the analysis

18 - 280,618 348,589

-400,000 -300,000 -200,000 -100,000 0 100,000 200,000 300,000 400,000Tons of CO2/YR Change in CO2

E missions without using Survey Results Change in CO2 Emissions using Survey Results19 -150,000 -100,000 -50,000 0 50,000 100,000 150,000 200,000 250,000 Change in CO2 Emissions without using Survey Results Change in CO2 Emission using Survey Results

West South Central New England East

South Central Mountain

South South Atlantic Middle Atlantic Pacific Mountain

North West

North Central East

North Central 

### Potential Impact of a Condensing Furnace Standard on CO2 Emissions By Region (Tons CO2/Year)

# What We Have Learned

• Contractor and builder survey responses indicate changes in heating and water heating system choices would be expected if a national or regional condensing furnace standard was established o Two primary factors driving the change include:  First cost premiums (equipment and installation) for natural gas condensing furnaces  Installation issues (venting and condensate disposal) associated with natural gas condensing furnaces • C hanges in system choice would conflict with our commitment to: o Helping customers save money o Helping improve the efficiency of how we use energy o Helping the nation achieve the objective of lowering emissions
• It is important to understand the regional impacts of changes in system choice o Eight out of the ten regions see substantially diminished benefits and increased costs o Impacts are especially significant in northern regions of the country. 2021 

#  Contractor/Builder Survey 

# Methodology and Results  Impact Analysis Model Assumptions and Inputs  Model Outputs 

#  Solutions for Overcoming Installation Challenges  Preventing Unintended Consequences from Standard 

# Discussion

### American Gas Association

400 North Capitol St. NW Washington, DC 20001 (202) 824 - 7000

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