10-i

CHAPTER 10. NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1

10.2 NATIONAL ENERGY SAVINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1

10.2.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1

10.2.2 National Energy Savings Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

10.2.2.1 Annual Energy Consumption per Unit . . . . . . . . . . . . . . . . . . 10-3

10.2.2.2 Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4

10.2.2.3 Equipment Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5

10.2.2.4 National Annual Energy Consumption . . . . . . . . . . . . . . . . . . 10-5

10.2.2.5 Site-to-Source Conversion Factor . . . . . . . . . . . . . . . . . . . . . . 10-5

10.2.2.6 Summary of Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6

10.3 CONSUMER IMPACTS: NET PRESENT VALUE . . . . . . . . . . . . . . . . . . . . . . . . . 10-7

10.3.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-7

10.3.2 Net Present Value Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8

10.3.2.1 Total Annual Installed Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8

10.3.2.2 Total Annual Operating Cost Savings . . . . . . . . . . . . . . . . . . . 10-8

10.3.2.3 Discount Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-9

10.3.3 Present Value of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-9

10.3.4 Present Value of Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-10

10.4 NES AND NPV RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11

10.4.2 Results Using Three Percent Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . 10-14

10.5 NES AND NPV SPREADSHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17

LIST OF TABLES

Table 10.2.1 Trend of the Market Share of Condensing Furnaces in Total 

Shipments of Non-Weatherized Gas Furnaces ( percent) . . . . . . . . . . . . . . . . 10-4

Table 10.2.2 Base Case Forecast AFUE of Other Product Classes . . . . . . . . . . . . . . . . . . . 10-4

Table 10.2.3 NES and NPV Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6

Table 10.4.1 Cumulative National Energy Savings and Consumer Net Present 

Value for Non-Weatherized Gas Furnaces Using 7% Discount Rate . . . . . . 10-11

Table 10.4.2 Cumulative National Energy Savings and Consumer Net Present 

Value for Weatherized Gas Furnaces Using 7% Discount Rate . . . . . . . . . . 10-12

Table 10.4.3 Cumulative National Energy Savings and Consumer Net Present 

Value for Mobile Home Gas Furnaces Using 7% Discount Rate . . . . . . . . . 10-12

Table 10.4.4 Cumulative National Energy Savings and Consumer Net Present 

Value for Non-Weatherized Oil-Fired Furnaces Using 7% Discount Rate . . 10-13

Table 10.4.5 Cumulative National Energy Savings and Consumer Net Present 

Value for Hot Water Gas Boilers Using 7% Discount Rate . . . . . . . . . . . . . 10-13
10-ii

Table 10.4.6 Cumulative National Energy Savings and Consumer Net Present 

Value for Oil-Fired Boilers Using 7% Discount Rate . . . . . . . . . . . . . . . . . . 10-14

Table 10.4.7 Cumulative Consumer Net Present Value for Non-Weatherized 

Gas Furnaces Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15

Table 10.4.8 Cumulative Consumer Net Present Value for Weatherized 

Gas Furnaces Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15

Table 10.4.9 Cumulative Consumer Net Present Value for Mobile Home 

Gas Furnaces Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15

Table 10.4.10 Cumulative Consumer Net Present Value for Non-Weatherized 

Oil-fired Furnaces Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . 10-16

Table 10.4.11 Cumulative Consumer Net Present Value for Hot-Water 

Gas Boilers Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-16

Table 10.4.12 Cumulative Consumer Net Present Value for Hot-Water 

Oil-fired Boilers Using 3% Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17

LIST OF FIGURES

Figure 10.2.1 NES and NPV Process and Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2

Figure 10.3.1 Non-discounted Annual Installed Cost Increases and Annual 

Operating Cost Savings at the National Level for the 81 percent AFUE 

Non-Weatherized Gas Furnace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-10
10-1

AEC STOCK UEC = ∑ V V ⋅

NES AEC AEC y base s dard = − tan

NES NES cum y = ∑

CHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the Department’s estimation of the quantity of national energy

savings (NES) and the net value to consumers from new furnace and boiler efficiency standards. 

For specific efficiency levels in each product class, it describes: 1) cumulative NES in the

considered period (2012–2035), and 2) the net present value (NPV) of efficiency standards for

consumers, accounting for products installed in the considered period. The NPV represents the

difference between the present value of operating cost savings and increased installed costs.

Figure 10.2.1 depicts the process and inputs for calculating the above results. The

Department performed all calculations using a Microsoft Excel spreadsheet. Section 10.5

discusses access to the spreadsheets.

The Department considered standards independently for each product class, as it does not

expect any market effects between the considered product classes as a result of standards. In the

Department’s analysis, the level of efficiency improvement considered for one product class

does not affect the energy or financial impacts of the other classes.

10.2 NATIONAL ENERGY SAVINGS

10.2.1 Definition

The Department calculates annual NES as the difference between two projections: annual

energy consumption (AEC) in the base case forecast (without new standards), and AEC in a case

with new standards. Positive values of NES correspond to energy savings (i.e., national energy

consumption with standards is less than national energy consumption in the base case forecast).

Cumulative energy savings are the sum over a defined time period (2012 to 2035) of the annual

national energy savings:

The Department calculates the national annual energy consumption in each product class by

multiplying the number of existing furnaces or boilers (by vintage) by the unit energy

consumption (UEC) (also by vintage), as represented by the following equation:
10-2

Fuel Price

Forecast

Fuel Price

Elasticity,

Equipment Price

Elasticity

Gas Furnace Market

Share

Housing Starts

Forecast

Survival Function Retirements

Design Option Input from LCC:

Equipment Cost, Annual Energy

Consumption

Marginal Energy

Prices

National Operating

Costs

New

Construction

Shipments

Conversion

Rates Oil-Gas

Electric-Gas

Replacements Conversions

Total Shipments

Product Stock

National

Incremental

Equipment Cost

Discount

Rate

National Site

Energy Savings

Marginal Site to

Source

Conversion

Factors

Net Present

Value Financial

Impacts

Source Energy

Savings

Historical

Shipments

Equipment

Price Forecast

Figure 10.2.1 NES and NPV Process and Inputs

For the above expressions, DOE defines the terms as follows:
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NES = annual national energy savings (Quads),

AEC = annual national energy consumption each year (Quads), summed over

vintages of the stock, STOCKV,

STOCKV = stock of furnaces or boilers in use in U.S. homes (millions of units) of

vintage V surviving in the year for which DOE is calculating annual

energy consumption. Vintages range from 1 to approximately 30 years,

depending on the lifetime of the equipment,

UECV = annual energy consumption per furnace or boiler (million Btu for gas and

kWh for electricity). Gas and electricity consumption is converted from

site energy (kWh) to source energy (Quads) by applying a time-dependent

conversion factor, 

V = vintage (year in which a new unit was purchased), and

y = year in the forecast.

The stock of equipment is dependent on annual shipments and the lifetime of the

equipment.

10.2.2 National Energy Savings Inputs

This section describes the inputs for the determination of NES.

10.2.2.1 Annual Energy Consumption per Unit

The annual energy consumption per unit (UEC) is the site energy consumed by a furnace

or boiler per year. It includes gas (or oil) consumption and electricity consumption. The annual

gas or oil consumption is directly related to the efficiency Annual Fuel Utilization Efficiency

(AFUE) of the unit. Using the energy consumption calculations described in Chapter 7, DOE

determined the national average annual energy consumption that corresponds to each AFUE

level. The average annual electricity consumption used in the NES model is the average value

from the energy consumption calculations that correspond to each AFUE level. 

For non-weatherized gas furnaces, the NES model considers non-condensing and

condensing furnaces separately. The average current AFUE (based on data from the Gas

Appliance manufacturers Association (GAMA))1

 is approximately 80 percent for noncondensing furnaces and 93 percent for condensing types. There is a limited amount of

historical efficiency data available for furnaces, but the evidence suggests that there has been

little change since the early 1990s within non-condensing and condensing furnace types. 

Therefore, the base case forecast assumes that current efficiencies remain constant. 

The Department forecasted the share of condensing furnaces based on the average growth

rate in 1991–2000 (Table 10.2.1).
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Table 10.2.1 Trend of the Market Share of Condensing Furnaces in Total Shipments of

Non-Weatherized Gas Furnaces ( percent)

Year Share (%)

1991 20.5*

2000 23.4*

2012 27.4

2020 30.4

2030 34.6

* From GAMA1

For other product classes, there is little evidence of change in recent years in the average

AFUE. Therefore, DOE used the current average shipment-weighted efficiency of each product

class (based on data from GAMA1

) for the base case forecast (Table 10.2.2).

Table 10.2.2 Base Case Forecast AFUE of Other Product Classes

Product Class AFUE (%)

Weatherized gas furnaces 80.6

Mobile home gas furnaces 79.8

Oil-fired furnaces 81.1

Gas boilers 81.9

Oil-fired boilers 83.9

10.2.2.2 Shipments

For non-weatherized gas furnaces and mobile home gas furnaces, the Department

forecasted shipments for the standards cases as a function of installed costs. In these cases, the

increased installed cost of more-efficient gas-fired equipment causes some customers to purchase

electric rather than gas equipment. If projected shipments of gas equipment are lower in the

higher-efficiency cases, there is an increase in electric heating equipment, for which the model

accounts. For non-weatherized gas furnaces, DOE assumes that heat pumps account for 60

percent of the additional electric heating equipment purchased due to new standards, and electric

resistance furnaces account for 40 percent (based on equipment shares in homes built in

1995–1999). For mobile home gas furnaces, the assumed shares of additional electric heating

equipment purchased due to new standards are 33 percent for heat pumps and 67 percent for

electric resistance furnaces.
10-5

An extensive description of the methodology for conducting and generating the

shipments forecasts can be found in Chapter 9. 

10.2.2.3 Equipment Stock

The stock in a given year is the number of units shipped from earlier years that survive

(remain in use) in the given year. The NES spreadsheet model keeps track of the number of

units shipped each year. The Department assumed that the units have an increasing probability

of retiring as they age. The survival function is the probability of survival as a function of yearssince-purchase, which is equivalent to the percentage not replaced.

The stock of non-weatherized gas furnaces and mobile home gas furnaces under the

standards cases is slightly less than that under the base case forecast, due to the lower number of

shipments forecasted for the standards cases. The Department accounted for the accompanying

increase in the stock of electric heating equipment.

10.2.2.4 National Annual Energy Consumption

For each product class, the national energy consumption in a given year is the product of

the annual energy consumption per unit and the number of units of each vintage. This approach

accounts for differences in unit energy consumption from year to year. 

For non-weatherized gas furnaces and mobile home gas furnaces, DOE accounted for the

energy consumption by electric heating equipment used instead of gas furnaces in the standards

cases. For non-weatherized gas furnace standards cases, the annual energy consumption per

electric heating unit is based on the average heating energy consumption for RECS97 houses in

the South that were heated by gas furnaces and heat pumps.2 (The Department used houses in the

South because most of the projected shift from gas to electric equipment takes place in the

South.) For mobile home gas furnaces standards cases, the annual energy consumption per

electric heating unit is based on the average heating energy consumption for RECS97 mobile 

homes that used electric heating.

10.2.2.5 Site-to-Source Conversion Factor

In determining national annual energy consumption, DOE initially calculated the annual

energy consumption at the site. The Department then calculated primary (source) energy

consumption from site energy consumption by applying a conversion factor to account for losses

associated with the generation, transmission, and distribution of electricity and gas. The site-tosource conversion factor is the multiplicative factor used for converting site energy consumption

into primary or source energy consumption, expressed in Quads (quadrillion Btu). The

Department used annual site-to-source conversion factors based on the Lawrence Berkeley

National Laboratory (LBNL) version of the National Energy Modeling System (NEMS), which

corresponds to DOE’s Energy Information Administration (EIA’s) Annual Energy Outlook 2002

(AEO2002).3

 The factors used are marginal values, which represent the response of the system to
10-6

an incremental decrease in consumption. Natural gas losses include pipeline leakage, pumping

energy, and transportation fuel. The AEO2002 forecasts losses of about 7 percent for the natural

gas used on site, with only slight variation from year to year. For electricity, the conversion

factors vary over time, due to projected changes in generation sources (i.e., the power plant types

projected to provide electricity to the country). The Department assumed that conversion factors

remain constant at 2020 values throughout the remainder of the forecast. The Department

assumed no losses for delivery of site heating oil.

10.2.2.6 Summary of Inputs

Table 10.2.3 summarizes the inputs to the NES model. 

Table 10.2.3 NES and NPV Inputs

Parameter Data Description

Shipments Annual values from shipments model (see Chapter 9)

Effective Date of Standard 2012

Base Case Forecast Efficiencies Current market-weighted AFUE from GAMA data

Standards Case Efficiencies Established from the Life-Cycle Cost Analysis, Chapter 8

Annual Energy Consumption per Unit Annual weighted-average values are a function of efficiency level

(established from the Energy Consumption Analysis, Chapter 7)

Total Installed Cost per Unit Annual values are a function of efficiency level (established from the

Life-Cycle Cost Analysis, Chapter 8)

Energy Expense per Unit Annual values are a function of the annual energy consumption and

energy prices (established from the Life-Cycle Cost Analysis, Chapter 8)

Maintenance Cost per Unit Established from the Life-Cycle Cost Analysis, Chapter 8

Energy Prices AEO2003 forecasts through 2025; extrapolation beyond 2025

Energy Site-to-Source Conversion Marginal annual values through 2020 are from NEMS; varies yearly for

electricity to account for trends in generation mix

Discount Rate 7% and 3% real

Present Year Future monetary values are discounted to year 2001
10-7

NPV = PVS − PVC

PVS OCS DF y y = ⋅ ∑

PVC TIC DF y y = ⋅ ∑

10.3 CONSUMER IMPACTS: NET PRESENT VALUE

10.3.1 Definition

Net present value is the value in the present time of a time series of costs and savings. 

The NPV is described by the equation:

where:

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

and

PVC = present value of increased installed costs (including equipment and installation). 

PVS and PVC are determined according to the following expressions:

where:

OCS = total annual operating cost savings, 

TIC = total annual installed cost increases, 

DF = discount factor, and 

y = year for which PVS and PVC are determined. 

The Department determined PVC for each year from the effective date of the standard to 2035. 

It calculated PVS for each year from the effective date of the standard to the last year when units

purchased in 2035 are retired.

The Department calculated the NPV from the projections of national expenditures for

furnaces and boilers, including total installed cost and operating costs. The Department

calculated costs and savings as the difference between a standards case forecast and a base case

forecast (i.e., without new standards). 

The Department calculated a discount factor from the discount rate and the number of

years between the “present” (i.e., year to which the sum is being discounted) and the year in

which the costs and savings occur. The net present value is the sum over time of the discounted

net savings.
a

 A heat pump receives a 60 percent weight, reflecting its share in new homes with electric central heating. The installed

cost of the heat pump is $3668, while the installed cost of the electric furnace/central air conditioner package (40 percent

weight) is $2836.

10-8

10.3.2 Net Present Value Inputs

This section describes the inputs to the NPV calculation. 

10.3.2.1 Total Annual Installed Cost

The average installed cost for the base case forecast and each efficiency level in 2012

comes from the life-cycle cost (LCC) analysis (see Chapter 8). Because of the uncertainty

concerning future trends in furnace and boiler manufacturing, DOE assumed no change in

average real equipment costs at each efficiency level after 2012. The increase in the total annual

installed cost is equal to the difference in the per-unit total installed cost between base case

forecast and standards forecast multiplied by the shipments forecasted in a standards case. 

The total incremental cost of equipment between a standards case forecast and the base

case forecast depends on the average incremental cost of each unit, and on any changes in

shipments. For non-weatherized gas furnaces and mobile home gas furnaces, DOE accounted

for the cost of electric equipment that would be used in new homes instead of a gas furnace and

air conditioner package in the standards cases. For non-weatherized gas furnaces, DOE

compared the estimated cost of a typical gas furnace/air conditioner package ($4072) with the

weighted-average cost of a heat pump (60 percent weight) and an electric resistance furnace/air

conditioner package: ($3333).a

 Thus, using an electric heating/cooling combination instead of a

gas furnace and air conditioner package yields a savings in installed cost of $4072-3333 = $739.

For mobile home gas furnaces, DOE used a similar approach as described above. The

Department modified the above costs of electric heating and cooling equipment to account for

the smaller size of the equipment used in mobile homes. In this case, the heat pump received a

lower weight, since heat pumps are less common in mobile homes.

10.3.2.2 Total Annual Operating Cost Savings

The annual operating cost savings to consumers are equal to the difference between base

case forecast and standards case forecast, multiplied by the shipments forecasted in a standards

case. For non-weatherized gas furnaces and mobile home gas furnaces, DOE accounted for the

operating cost of additional electric heating equipment purchased instead of gas-fired equipment

in standards cases.

The savings calculation uses the marginal price for gas and electricity, which represents

the cost of the last unit of energy used, and the savings on a consumer's energy bill from
b

 Source : Office of Management and Budget’s (OMB) guidelines contained in Circular A-4, Regulatory Analysis,

September 17, 2003.

10-9

DF

r y yP = + −

1

( ) 1 ( )

consuming one fewer unit of energy. For oil, the calculation uses the average price, since data to

estimate the marginal price were not available. 

The Department determined 1998 energy prices for Residential Energy Consumption

Survey (RECS) households in the LCC analysis. To project prices out to 2025, DOE used

projections of average residential energy prices from AEO2003.4

 The Department applied the

ratio of the mean marginal energy price to the mean average energy price for the RECS

households to the average gas and electricity prices from AEO2003. For the years after 2025,

DOE applied the average annual growth rate in 2010–2025 for gas and heating oil prices and the

average annual growth rate in 2015–2025 for electricity prices. 

10.3.2.3 Discount Factor

The discount factor is the factor by which monetary values in one year are multiplied in

order to determine the present value. The discount factor (DF) is described by the equation:

where:

r = discount rate, 

y = year of the monetary value, and 

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

The Department used both a 3 percent and a 7 percent real discount rate in accordance

with the Office of Management and Budget’s (OMB) guidelines.b

The Department defines the present year to be 2001, for consistency with the year in

which the manufacturer cost data were collected.

10.3.3 Present Value of Costs

The present value of increased total installed costs is the annual difference between a

standards case forecast and the base case forecast, discounted to the present and summed for the

considered time period. 
10-10

10.3.4 Present Value of Savings

Total annual operating cost savings is the savings per unit multiplied by the number of

units of each vintage surviving in a particular year. The present value of operating cost savings

is the annual difference between the base case forecast and standards case forecast, discounted to

the present and summed.

10.3.5 Annual Costs and Savings

To illustrate the basic inputs to the NPV calculations, Figure 10.3.1 presents the nondiscounted annual installed cost increases and annual operating cost savings at the national level

for the 81 percent AFUE non-weatherized gas furnace (single-stage). The figure also shows the

net savings, which is the difference between the savings and costs for each year. The annual

equipment cost is the increase in equipment price for products purchased each year over the

period 2012–2035. The annual operating cost savings is the savings in operating costs for

products operating in each year. The NPV is the difference between the cumulative annual

discounted savings and the cumulative annual discounted costs.

Consumer Impacts of 81% AFUE Standard 

(8% of installations require Category III Systems)

-$0.4

-$0.3

-$0.2

-$0.1

$0.0

$0.1

$0.2

$0.3

$0.4

2012 2022 2032 2042 2052 2062

Billions of 2001 Dollars

Operating Cost Savings

Equipment Cost

Net Savings

Figure 10.3.1 Non-discounted Annual Installed Cost Increases and

Annual Operating Cost Savings at the National Level

for the 81 percent AFUE Non-Weatherized Gas

Furnace
10-11

10.4 NES AND NPV RESULTS

This section provides NES and NPV results for the efficiency levels considered for each

product class. The NES spreadsheet model offers a range of possible outputs, all of which

depend on the inputs used in deriving the results. The results using the default inputs are

presented in the sections below. Appendix 10.1 presents NES/NPV results using alternative

inputs for installation cost (for non-weatherized gas furnaces and gas boilers), and energy prices

(for all product classes).

10.4.1 Results Using Seven Percent Discount Rate

Table 10.4.1 shows the NES and NPV results for non-weatherized gas furnaces using the

Installation Model cost data. The results using Gas Research Institute (GRI) and Natural

Resources Canada (NRCan) cost sensitivity data are given in Appendix 10.1. For 81 percent

AFUE, results are presented for two cases which represent the most- and least cost-effective

cases at this efficiency level. The first assumes a two-stage modulating furnace that does not

require Category III venting systems. The second assumes a single-stage furnace that requires

Category III venting system in 8 percent of installations.

For non-weatherized gas furnaces, the 80 percent AFUE efficiency level shows very

small energy savings and NPV. The 81 percent AFUE efficiency level using two-stage

modulation (based on current DOE test procedure as discussed in Appendix 6.3) has energy

savings of 1.17 quad, and NPV of $0.87 billion. The 81 percent AFUE efficiency level for the

single-stage furnace has energy savings of 0.44 quad, but it has a negative NPV. The

condensing furnace efficiency levels (90 percent+ AFUE) have substantial energy savings, but

have negative NPV.

Table 10.4.1 Cumulative National Energy Savings and Consumer Net Present Value for

Non-Weatherized Gas Furnaces Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

80% 0.03 0.05

81%, 2-stage mod., no Cat. III 1.12 0.75

81%, single-stage, 8% Cat. III 0.44 -0.29

82% 0.82 -2.03

90% 4.10 -0.56

92% 4.83 -1.66

96% 7.16 -11.59
10-12

Tables 10.4.2 through 10.4.6 show the results for other product classes.

For weatherized gas furnaces, all of the efficiency levels have low but positive NES and

NPV quantities. 

For mobile home gas furnaces, all of the non-condensing efficiency levels have very low

but positive NES and NPV quantities, except for the 82 percent AFUE level, which has slightly

negative NPV. For this product class, a shift from gas to electric furnaces due to higher

equipment prices associated with higher efficiency has a negative effect on primary energy

savings. 

For oil-fired furnaces, all of the efficiency levels have low but positive NES and NPV

quantities, except for the 84 percent and 85 percent AFUE levels, which have negative NPV. 

For hot water gas boilers, the 83 percent AFUE level has NES of 0.24 quad with a

positive NPV. For the 88 percent and 99 percent AFUE levels, the NES is positive but the NPV

is negative. Results using GRI installation costs are given in Appendix 10.1.

For hot-water oil-fired boilers, the NES and NPV are very low but positive for the 80-84

percent AFUE levels. For the 86 percent and 90 percent AFUE levels, the NES is positive but

the NPV is negative.

Table 10.4.2 Cumulative National Energy Savings and Consumer Net Present Value for

Weatherized Gas Furnaces Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

80% 0.01 0.02

81% 0.08 0.07

82% 0.18 0.14

Table 10.4.3 Cumulative National Energy Savings and Consumer Net Present Value for

Mobile Home Gas Furnaces Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

80% 0.01 0.01

81% 0.02 0.01

82% 0.02 -0.01

90% -0.09 -0.38
10-13

Table 10.4.4 Cumulative National Energy Savings and Consumer Net Present Value for

Non-Weatherized Oil-Fired Furnaces Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

80% 0.005 0.01

81% 0.02 0.04

82% 0.04 0.07

83% 0.05 0.11

84% 0.07 -0.15

85% 0.09 -0.11

Table 10.4.5 Cumulative National Energy Savings and Consumer Net Present Value for

Hot Water Gas Boilers Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

80% 0.03 0.02

81% 0.09 0.10

82% 0.16 0.20

83% 0.24 0.33

88% 0.57 -0.65

99% 1.43 -1.00
10-14

Table 10.4.6 Cumulative National Energy Savings and Consumer Net Present Value for

Oil-Fired Boilers Using 7% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

81% 0.003 0.007

82% 0.01 0.02

83% 0.02 0.03

84% 0.03 0.07

86% 0.09 -0.28

90% 0.25 -0.53

10.4.2 Results Using Three Percent Discount Rate

 As mentioned above, to estimate the national impacts the Department used also a three

percent discount rate. Tables 10.4.7 through 10.4.12 provide the cumulative NPV results based

on the three percent discount rate. The NES results are not affected by using a different discount

rate.

Using a lower discount rate increases the present value of future costs and savings. In

most cases, the result is a more favorable NPV than found using a seven percent discount rate. 

For efficiency levels that have a very negative LCC impact, however, using a three percent

discount rate makes the NPV less favorable (see, e.g., the 82 percent AFUE non-weatherized gas

furnace).
10-15

Table 10.4.7 Cumulative Consumer Net Present Value for Non-Weatherized Gas

Furnaces Using 3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

80% 0.03 0.15

81%, 2-stage mod., no Cat. III 1.12 3.22

81%, single-stage, 8% Cat. III 0.44 0.06

82% 0.82 -3.08

90% 4.10 5.11

92% 4.83 3.36

96% 7.16 -14.48

Table 10.4.8 Cumulative Consumer Net Present Value for Weatherized Gas Furnaces

Using 3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

80% 0.01 0.05

81% 0.08 0.21

82% 0.18 0.43

Table 10.4.9 Cumulative Consumer Net Present Value for Mobile Home Gas Furnaces

Using 3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

80% 0.01 0.05

81% 0.02 0.03

82% 0.02 -0.01

90% -0.09 -1.00
10-16

Table 10.4.10 Cumulative Consumer Net Present Value for Non-Weatherized Oil-fired

Furnaces Using 3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

80% 0.005 0.03

81% 0.02 0.10

82% 0.04 0.19

83% 0.05 0.29

84% 0.07 -0.20

85% 0.09 -0.10

Table 10.4.11 Cumulative Consumer Net Present Value for Hot-Water Gas Boilers Using

3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

80% 0.03 0.09

81% 0.09 0.37

82% 0.16 0.70

83% 0.24 1.10

88% 0.57 -0.42

99% 1.43 0.25
10-17

Table 10.4.12 Cumulative Consumer Net Present Value for Hot-Water Oil-fired Boilers

Using 3% Discount Rate

Efficiency Level (AFUE) NES (Quads) NPV (billion 2001 $)

using 3%

81% 0.003 0.02

82% 0.01 0.05

83% 0.02 0.10

84% 0.03 0.20

86% 0.09 -0.40

90% 0.25 -0.62

10.5 NES AND NPV SPREADSHEET

It is possible to examine and reproduce the detailed results obtained in the NES and NPV

analysis using a Microsoft Excel spreadsheet available on the U.S. Department of Energy Office

of Building Technologies website at: http://www.eren.doe.gov/buildings/codes_standards/.
10-18

REFERENCES

1. Kendall, M., Appendix A - Furnace Shipments; Appendix B - Boiler. Comment # 24

submitted to Docket Number: EE-RM/STD-01-350 Shipments, April 10, 2002, GAMA. 

Arlington, VA. 

2. U.S. Department of Energy - Energy Information Administration, Residential Energy

Consumption Survey: Household Energy Consumption and Expenditures 1997, 1999. 

Washington, DC. Report No. DOE/EIA-0321(97).

<http://www.eia.doe.gov/emeu/recs/recs97/publicusefiles.html>

3. U.S. Department of Energy - Energy Information Administration, Annual Energy

Outlook 2002: With Projections Through 2020, December, 2001. Washington, DC. 

Report No. DOE/EIA-0383(2002). <http://www.eia.doe.gov/oiaf/aeo>

4. U.S. Department of Energy - Energy Information Administration, Annual Energy

Outlook 2003: With Projections Through 2025, January, 2003. Washington, DC. Report

No. DOE/EIA-0383(2003). <http://www.eia.doe.gov/oiaf/aeo>