CHAPTER 5 ENGINEERING ANALYSIS

TA BLE OF CONTENTS

**5.1 INTRODUCTION** 

**........................................................................................... 5­1** 

**5.2 PRODUCT**  **CLASSES..................................................................................... 5**  **­2**

**5.3 PRODUCT**  **CLASSES A**  **NALYZED.............................................................. 5­3**

**5.4 EFFICIENCY**  **LEVELS................................................................................... 5**  **­5**

**5.4 .1**  **Baseline Unit............................................................................................**  **5 ­6** 

**5.4 .2**  **Intermediate Energy**  **Efficiency Levels** 

**................................................... 5**  **­7**

**5.4 .3**  **“Max­Tech” Efficiency Levels.............................................................. 5­11**

**5.5 METHODOLOGY**  **O VERVIEW** 

**.................................................................. 5­12** 

**5.6 TEARDOWN**  **ANALYSIS............................................................................ 5­14**

**5.6 .1**  **Selection of**  **Units................................................................................... 5**  **­14**

**5.6 .2**  **Baseline Units** 

**........................................................................................ 5**  **­15**

**5.7 TECHNOLOGY**  **OPTIONS**

**............................. .............................................**  **5­19**

**5.7 .1**  **Screened­In Technologies......................................................................**  **5 ­20** 

**5.8 COST**  **MODEL**

**.............................................................................................. 5­28** 

**5.8 .1**  **Generation of**  **Bills of**  **Materials**

**............................................................ 5**  **­28**

**5.8 .2**  **Cost Structure**  **of the**  **Spreadsheet Models............................................. 5­28** 

**5.8 .3**  **Cost Model**  **and Definitions................................................................... 5­29** 

**5.8 .4**  **Cost Model**  **Assumptions Overview** 

**...................................................... 5**  **­30**

**5.8 .5**  **Manufacturing Production Cost............................................................. 5­35**

**5.9 ENGINEERING**  **MANUFACTURER I**  **NTERVIEWS................................. 5­37**

**5.9 .1**  **Key Issues Discussed............................................................................. 5­37**

**5.1 0**  **COST VERSUS**  **EFFICIENCY C**  **URVES**

**.................................................... 5­39** 

**5.1 1**  **MPC BREAKDOWN** 

**.................................................................................... 5­45** 

**5.1 2**  **MANUFACTURER M**  **ARKUP**

**.................................................................... 5­46** 

**5.1 2.1**  **Manufacturer Selling**  **Price**

**.................................................................... 5­47** 

**5.1 2.2**  **Manufacturing Markup**  **C alculation.......................................................**  **5­47**

**5.1 2.3**  **Manufacturer Financial**  **Information Sources** 

**........................................ 5**  **­47**

**5.1 3**  **ENGINEERING ANALYSIS**  **SUMMARY O**  **F RESULTS..........................**  **5 ­51** 

**5.1 4**  **SENSITIVITY ANALYSIS** 

**.......................................................................... 5­53** 

**5.1 5**  **ENERGY EF**  **FICIENCY EQ**  **UATIONS FOR**  **GAS­FIRED AND**  **ELECTRIC**

**STO RAGE**  **WATER H**  **EATERS............................................................................... 5­55**

**5.1 5.1**  **DOE’s Review**  **o f**  **the Current**  **Water Heater**  **Market............................. 5­57**

**5.1 5.2**  **Existing Federal**  **Energy Conservation**  **Standards and**  **Revised Energy** 

**Eff iciency**  **Equations Using**  **the Current**  **Energy­Efficiency Equation**  **Slope**

**.... 5**  **­59**

**5.1 5.3**  **Alternative Approach**  **for Developing**  **Revised En**  **ergy­Efficiency**

**Equ ations**  **for Gas­fired**  **and Electric**  **Storage Water**  **Heaters**

**............................ 5**  **­61**

**5.1 5.4**  **Validation of**  **the Energy­Efficiency**  **Equations for**  **Gas­fired and**  **Electric**

**St orage**  **Water Heaters** 

**....................................................................................... 5­65** 

**5­i**LIST OF TABLES

**Tab le**  **5.2.1 R**  **esidential Water**  **Heater Product**  **Classes.................................................... 5**  **­2**

**Tab le**  **5.2.2 R**  **esidential Direct**  **Heating Equipment**  **Product Classes**  **(with Revised** 

**De scriptions).................................................................................................................... 5­3** 

**Tab le**  **5.2.3 R**  **esidential Pool**  **Heaters Product**  **Classes**

**.................................................... 5**  **­3**

**Tab le**  **5.3.1 R**  **epresentative Residential**  **Water Heaters**  **as Described**  **by Storage**  **Capacity**

**an d**  **Defined by**  **Gallons**

**................................................................................................... 5**  **­4**

**Tab le**  **5.3.2 R**  **epresentative Residential**  **Direct Heating**  **Equipment Product**  **Class as** 

**De scribed**  **by Input**  **Capacity and**  **Defined by**  **British Thermal**  **Units per**  **Hour............... 5**  **­5**

**Tab le**  **5.3.3 R**  **epresentative Residential**  **Pool Heater**  **as Described**  **by Input**  **Capacity and** 

**De fined**  **by British**  **Thermal Units**  **per Hour** 

**.................................................................... 5**  **­5**

**Tab le**  **5.4.1 B**  **aseline Unit**  **EF f**  **or Water**  **Heaters**

**............................................................. 5**  **­6**

**Tab le**  **5.4.2 B**  **aseline Unit**  **AFUE for**  **Direct Heating**  **Equipment**

**.................................... 5**  **­7**

**Tab le**  **5.4.3 B**  **aseline Unit**  **Thermal Efficiency**  **for Pool**  **Heaters**

**..................................... 5**  **­7**

**Tab le**  **5.4.4 I**  **ntermediate Efficiency**  **Levels for**  **40 Gallon**  **Gas­fired Storage**  **Water**

**He aters** 

**............................................................................................................................. 5**  **­8**

**Tab le**  **5.4.5 I**  **ntermediate Efficiency**  **Levels for**  **30 Gallon**  **Oil­fired Storage**  **Water Heaters** 

**............................................................................................................................... ...........**  **5­8**

**Tab le**  **5.4.6 I**  **ntermediate Efficiency**  **Levels for**  **50 Gallon**  **Electric Storage**  **Water Heaters** 

**............................................................................................................................... ...........**  **5­9**

**Tab le**  **5.4.7 I**  **ntermediate Efficiency**  **Levels for**  **Instantaneous Gas­fired**  **Water Heaters**  **5­9**

**Tab le**  **5.4.8 I**  **ntermediate Efficiency**  **Levels for**  **Gas Wall**  **Fan­type DHE,**  **O ver**  **42,000**

**Bt u/h................................................................................................................................. 5­9** 

**Tab le**  **5.4.9 I**  **ntermediate Efficiency**  **Levels for**  **Gas Wall**  **Gravity­type DHE,**  **O ver**  **27,000**

**Bt u/h,**  **up t**  **o 46,000**  **Btu/h............................................................................................... 5**  **­10**

**Tab le**  **5.4.10 Intermediate**  **Efficiency Levels**  **for Gas**  **Floor­type DHE,**  **O ver**  **37,000 Btu/h** 

**............................................................................................................................... .........**  **5­10**

**Tab le**  **5.4.11 Intermediate**  **Efficiency Levels**  **for Gas**  **Room­type DHE,**  **O ver**  **27,000**

**Bt u/h,**  **up t**  **o 46,000**  **Btu/h............................................................................................... 5**  **­10**

**Tab le**  **5.4.12 Intermediate**  **Efficiency Levels**  **for Gas­fired**  **Pool Heaters,**  **2 50,000**  **Btu/h....**

**............................................................................................................................... ......... 5­11** 

**Tab le**  **5.4.13 “Max­Tech”**  **Efficiency Levels**  **for Water**  **Heaters**

**................................... 5**  **­12**

**Tab le**  **5.4.14 “Max­Tech”**  **Efficiency Levels**  **for Direct**  **Heating Equipment** 

**................ 5**  **­12**

**Tab le**  **5.4.15 “Max­Tech”**  **Efficiency Levels**  **for Pool**  **H eaters......................................**  **5­12**

**Tab le**  **5.6.1 M**  **arket Baseline**  **Units Characteristics**  **for Water**  **Heaters**

**.......................... 5**  **­17**

**Tab le**  **5.6.2 M**  **arket Baseline**  **Units Characteristics**  **for Direct**  **Heating Equipment.......**  **5 ­18** 

**Tab le**  **5.6.3 M**  **arket Baseline**  **Units Characteristics**  **for Pool**  **Heaters**

**............................ 5**  **­19**

**Tab le**  **5.7.1 Te**  **chnologies Considered**  **for the**  **Engineering Analysis**  **for Water**  **Heaters5­21**

**Tab le**  **5.7.2 Te**  **chnologies Considered**  **for the**  **Engineering Analysis**  **for Direct**  **Heating**

**Equ ipment...................................................................................................................... 5­21** 

**Tab le**  **5.7.3 Te**  **chnologies Considered**  **for the**  **Engineering Analysis**  **for Pool**  **Heaters**

**. 5**  **­21**

**Tab le**  **5.7.4 G**  **as­fired Storage**  **Water Heater,**  **40 Gallon................................................**  **5 ­22** 

**Tab le**  **5.7.5 O**  **il­fired Storage**  **Water Heater,**  **30 Gallon**  **with Burner**  **Assembly............ 5**  **­23**

**Tab le**  **5.7.6 El**  **ectric Storage**  **Water Heater,**  **50 gallon** 

**................................................... 5**  **­23**

**5­ii Table**  **5.7.7 I**  **nstantaneous Gas­fired**  **Water Heater,**  **0 G**  **allon, 117**  **Btu/h Input**  **Capacity**

**....**

**............................................................................................................................... ......... 5­24** 

**Tab le**  **5.7.8 G**  **as Wall**  **Fan­type DHE,**  **O ver**  **42,000 Btu/h** 

**............................................. 5**  **­24**

**Tab le**  **5.7.9 G**  **as Wall**  **Gravity­type DHE,**  **O ver**  **27,000 B**  **tu/h, up**  **t o**  **46,000 Btu/h....... 5­25** 

**Tab le**  **5.7.10 Gas**  **Floor­type DHE,**  **O ver**  **37,000 Btu/h** 

**................................................. 5**  **­26**

**Tab le**  **5.7.11 Gas**  **Room­type DHE,**  **O ver**  **27,000 Btu/h,**  **up to**  **46,000 Btu/h** 

**................ 5**  **­26**

**Tab le**  **5.7.12 Gas­fired**  **Pool Heater,**  **250,000 Btu/h** 

**...................................................... 5**  **­27**

**Tab le**  **5.8.1 C**  **ost Model**  **In­House Manufacturing**  **Operation Assumptions** 

**.................. 5**  **­31**

**Tab le**  **5.8.2 D**  **omestic Water**  **Heater Factory**  **Parameter Assumptions** 

**.......................... 5**  **­33**

**Tab le**  **5.8.3 I**  **nternational Water**  **Heater Factory**  **Parameter Assumptions** 

**..................... 5**  **­33**

**Tab le**  **5.8.4 D**  **irect Heating Equipment**  **Factory Parameter Assumptions...................... 5­33** 

**Tab le**  **5.8.5 P**  **ool Heater**  **Factory Parameter**  **Assumptions**

**............................................. 5**  **­34**

**Tab le**  **5.8.6 F**  **ive­Year Metal**  **Prices (2003**  **to 2007)** 

**...................................................... 5**  **­35**

**Tab le**  **5.8.7 M**  **ost Prevalent**  **Resin Prices**  **as of**  **December 2007** 

**.................................... 5**  **­35**

**Tab le**  **5.10.1 C**  **ost­Efficiency Curves**  **and Corresponding**  **Figures**

**................................ 5**  **­39**

**Tab le**  **5.11.1 To**  **tal Product**  **MPC Breakdown**  **for Water**  **Heaters.................................. 5­46**

**Tab le**  **5.11.2 To**  **tal Product**  **MPC Breakdown**  **for Direct**  **Heating Equipment...............**  **5 ­46** 

**Tab le**  **5.11.3 To**  **tal Product**  **MPC Breakdown**  **for Pool**  **Heaters**

**.................................... 5**  **­46**

**Tab le**  **5.12.1 G**  **ross Profit**  **Margin for**  **Residential Heating**  **Products** **Manufacturers*...** **5 ­49** 

**Tab le**  **5.12.2 C**  **alculated Manufacturer**  **Markups for**  **Residential Heating Products...... 5­50** 

**Tab le**  **5.13.1 M**  **PC and**  **MSP for**  **Gas­fired Storage**  **Water Heater,**  **40 Gallon**  **Storage**

**Vo lume........................................................................................................................... 5­51** 

**Tab le**  **5.13.2 M**  **PC and**  **MSP for**  **Oil­fired Storage**  **Water Heater,**  **32 Gallon**  **Storage**

**Vo lume**  **with Burner**  **Assembly**

**..................................................................................... 5**  **­51**

**Tab le**  **5.13.3 M**  **PC and**  **MSP for**  **Electric Storage**  **Water Heater,**  **50 gallon**  **Storage**

**Vo lume........................................................................................................................... 5­51** 

**Tab le**  **5.13.4 M**  **PC and**  **MSP for**  **Instantaneous Gas­fired**  **Water Heater,**  **0 G**  **allon Storage** 

**Vo lume,**  **199 Btu/h**  **Input Capacity** 

**................................................................................ 5­52** 

**Tab le**  **5.13.5 M**  **PC and**  **MSP for**  **Gas Wall**  **Fan­type DHE,**  **O ver**  **42,000 Btu/h**  **Input**

**Ca pacity** 

**......................................................................................................................... 5**  **­52**

**Tab le**  **5.13.6 M**  **PC and**  **MSP for**  **Gas Wall**  **Gravity­type DHE,**  **O ver**  **27,000 Btu/h**  **and up** 

**t o**  **46,000 Btu/h**  **Input Capacity...................................................................................... 5­52** 

**Tab le**  **5.13.7 M**  **PC and**  **MSP for**  **Gas Floor­type**  **DHE, O**  **ver 37,000**  **Btu/h Input**  **Capacity**

**............................................................................................................................... .........**  **5­52**

**Tab le**  **5.13.8 M**  **PC and**  **MSP for**  **Gas Room­type**  **DHE, O**  **ver 27,000**  **Btu/h and**  **up t**  **o**

**46 ,000**  **Btu/h Input**  **Capacity.......................................................................................... 5­53**

**Tab le**  **5.13.9 M**  **PC and**  **MSP for**  **Gas­fired Pool**  **Heater, 2**  **50,000 Btu/h**  **Input Capacity**  **and**

**St anding**  **Pilot................................................................................................................. 5**  **­53**

**Tab le**  **5.13.10 MPC**  **and MSP**  **for Gas­fired**  **Pool Heater,**  **250,000 Btu/h**  **Input Capacity** 

**an d**  **Electronic Ignition...................................................................................................**  **5 ­53** 

**Tab le**  **5.14.1 A**  **nnual Average**  **2007 Metal**  **Prices.......................................................... 5­54**

**Tab le**  **5.14.2 M**  **aterial Price**  **Sensitivity Results.............................................................**  **5 ­54** 

**Tab le**  **5.15.1 Ex**  **isting Federal**  **Energy Conservation**  **Standards for**  **Residential Gas­fired** 

**an d**  **Electric Storage**  **Water Heaters** 

**............................................................................... 5­56** 

**5­iii**LIST OF FIGURES

**Fi gure**  **5.5.1 F**  **low D**  **iagram of**  **Engineering Analysis**  **Methodology**

**............................. 5**  **­13**

**Fi gure**  **5.8.1 F**  **ull Production**  **Costs**

**................................................................................ 5**  **­36**

**Fi gure**  **5.10.1 M**  **anufacturer Production**  **Cost (2007$)**  **versus Energy**  **Factor for**  **Gas­fired**

**St orage**  **Water Heaters** 

**................................................................................................... 5­40** 

**Fi gure**  **5.10.2 M**  **anufacturer Production**  **Cost (2007$)**  **versus Energy**  **Factor for**  **Oil­fired**

**St orage**  **Water Heaters** 

**................................................................................................... 5­40** 

**Fi gure**  **5.10.3 M**  **anufacturer Production**  **Cost (2007$)**  **versus Energy**  **Factor for**  **Electric**

**St orage**  **Water Heaters** 

**................................................................................................... 5­41** 

**Fi gure**  **5.10.4 C**  **lose­up of**  **Resistance Heating Electric**  **Storage Water**  **Heaters............ 5­41**

**Fi gure**  **5.10.5 M**  **anufacturer Production**  **Cost (2007$)**  **versus Energy**  **Factor for** 

**In stantaneous**  **Gas­fired Water**  **Heater, 0**  **G allon,**  **199 Btu/h**  **Input Capacity.................**  **5 ­42** 

**Fi gure**  **5.10.6 M**  **anufacturer Production**  **Cost (2007$)**  **versus AFUE**  **for Gas**  **Wall Fan** 

**t ype**  **DHE, O**  **ver 42,000**  **Btu/h........................................................................................ 5**  **­42**

**Fi gure**  **5.10.7 M**  **anufacturer Production**  **Cost (2007$)**  **versus AFUE**  **for Gas**  **Wall Gravity** 

**t ype**  **DHE, O**  **ver 27,000**  **Btu/h, up**  **t o**  **46,000 Btu/h........................................................**  **5 ­43** 

**Fi gure**  **5.10.8 M**  **anufacturer Production**  **Cost (2007$)**  **versus AFUE**  **for Gas**  **Floor­type**

**DH E,**  **Over 37,000**  **Btu/h**

**............................................................................................... 5**  **­43**

**Fi gure**  **5.10.9 M**  **anufacturer Production**  **Cost (2007$)**  **versus AFUE**  **for Gas**  **Room­type**

**DH E,**  **Over 27,000**  **Btu/h, up**  **t o**  **46,000 Btu/h** 

**............................................................... 5**  **­44**

**Fi gure**  **5.10.10 Manufacturer**  **Production Cost**  **(2007$) versus**  **Thermal Efficiency**  **for**

**Ga s­fired**  **Pool Heater,**  **250,000 Btu/h............................................................................**  **5 ­45** 

**Fi gure**  **5.15.1 D**  **istribution of**  **Gas­Fired Storage**  **Water Heater**  **Models by**  **Rated Storage** 

**Vo lume........................................................................................................................... 5­57** 

**Fi gure**  **5.15.2 D**  **istribution of**  **Electric Storage**  **Water Heater**  **Models by**  **Rated Storage** 

**Vo lume........................................................................................................................... 5­58** 

**Fi gure**  **5.15.3 G**  **as­fired Storage**  **Water Heater**  **Efficiency Levels**  **Using the**  **Slope of**  **the**

**Fe deral**  **Energy Conservation**  **Standard**

**......................................................................... 5**  **­60**

**Fi gure**  **5.15.4 El**  **ectric Storage**  **Water Heater**  **Efficiency Levels**  **Using the**  **Slope of**  **the**

**Fe deral**  **Energy Conservation**  **Standard**

**......................................................................... 5**  **­61**

**Fi gure**  **5.15.5 En**  **ergy­Efficiency Equations**  **using a**  **M odified**  **Slope Based**  **the AHRI** 

**Co nsumers’**  **Directory for Gas­fired**  **Storage Water**  **Heaters......................................... 5­63**

**Fi gure**  **5.15.6 En**  **ergy­Efficiency Equations**  **using a**  **M odified**  **Slope Based**  **the AHRI** 

**Co nsumers’**  **Directory for**  **Electric Storage**  **Water Heaters............................................**  **5 ­64** 

**5­iv**5.1 INTRODUCTION

**The U.S.**  **Department of**  **Energy (DOE)**  **p erformed**  **an engineering**  **analysis to** 

**es tablish**  **the relationship**  **between the**  **manufacturer production**  **cost (MPC)**  **and the** 

**en ergy**  **efficiency of**  **residential heating**  **products, which**  **includes residential**  **water**

**he aters,**  **d irect**  **heating equipment,**  **and pool**  **heaters. The**  **relationship between**  **the MPC** 

**an d**  **energy efficiency,**  **or cost­efficiency**  **relationship, serves**  **as the**  **basis for**  **cost­benefit**

**ca lculations**  **in terms**  **of individual**  **customers, m**  **anufacturers, a**  **nd the**  **Nation. This**  **section**

**pr ovides**  **an overview**  **o f**  **the engineering**  **analysis (section**  **5.5), discusses**  **the product** 

**cl asses**  **(section 5.3),**  **establishes baseline**  **unit specifications**  **(section 5.4.1),**  **discusses**

**in cremental**  **efficiency levels**  **(section 5.4.2),**  **explains the**  **methodology used**  **during data** 

**ga thering**  **(section 5.8),**  **and discusses**  **the analysis**  **and results**  **(section 5.10).**  **DOE**

**co mpleted**  **a s**  **eparate engineering**  **analysis for**  **each of**  **the product**  **classes: residential** 

**wa ter**  **heaters, d**  **irect heating**  **equipment, and**  **pool heaters.** 

**The primary**  **inputs of**  **the engineering**  **analysis are**  **baseline information**  **from the** 

**ma rket**  **and technology**  **assessment (MTA)**  **(chapter 3)**  **and the**  **technologies from**  **the**

**sc reening**  **analysis (chapter**  **4). Additional**  **inputs include**  **cost and**  **efficiency data**  **derived**

**fr om**  **the physical**  **teardown analysis**  **and engineering**  **interviews with**  **manufacturers. Th**  **e**

**pr imary**  **output of**  **the engineering**  **analysis is**  **a s**  **et of**  **cost­efficiency curves.** 

**DO E**  **typically structures**  **its engineering**  **analysis around**  **one of**  **three**

**me thodologies:**  **(1) the**  **design­option approach,**  **which calculates**  **the incremental**  **cost of** 

**ad ding**  **specific design**  **options to**  **the baseline**  **model; (2)**  **the efficiency­level**  **approach,**

**wh ich**  **calculates the**  **relative costs**  **of achieving**  **increases in**  **energy efficiency**  **levels,**

**wi thout**  **regard to**  **the particular**  **design options**  **used to**  **achieve such**  **increases; and/or**  **(3)**

**th e**  **reverse engineering**  **cost­assessment approach,**  **which involves**  **a “**  **bottom­up”**

**ma nufacturing**  **cost assessment**  **based on**  **a d**  **etailed bill**  **of materials**  **derived from** 

**te ardowns**  **of products**  **being analyzed.**  **Deciding which**  **methodology to**  **use for**  **the**

**en gineering**  **analysis depends**  **on the**  **product, the**  **technologies under**  **study, and**  **any**

**hi storical**  **data DOE**  **can draw**  **up on.** 

**To e**  **stablish the**  **industry cost­efficiency**  **curves for**  **residential heating**  **products,**

**DO E**  **used both**  **the efficiency**  **level approach**  **to identify**  **incremental improvements**  **in**

**ef**

**ficiency for**  **each product**  **and the**  **cost­assessment approach**  **to develop**  **a cost**  **for each** 

**ef**

**ficiency level.**  **DOE identified**  **the most**  **common residential**  **heating products**  **on the** 

**ma rket**  **and determined**  **their corresponding**  **efficiency levels,**  **t he**  **component**

**sp ecifications,**  **a nd**  **the distinguishing**  **technology features**  **associated with**  **those levels.** 

**Af ter**  **identifying the**  **most common**  **products that**  **represent a**  **c ross**  **section of**  **the market,** 

**DO E**  **gathered additional**  **information using**  **reverse engineering**  **methodologies, p**  **roduct**

**in formation**  **from manufacturer**  **catalogs, a**  **nd discussions**  **with experts**  **and manufacturers** 

**of water**  **heaters, d**  **irect heating**  **equipment, and**  **pool heaters.**  **Th is**  **approach provided** 

**us eful**  **information, including**  **identification of**  **potential technology**  **paths manufacturers** 

**us e**  **to increase**  **energy efficiency.**  **DOE generated**  **a b**  **ill of**  **materials (BOM)**  **by**

**di sassembling**  **multiple manufacturers’**  **products that**  **s pan**  **a r**  **ange of**  **efficiency levels**  **for**

**ea ch**  **of the**  **three product**  **categories. Th**  **e BOMs**  **describe the**  **product in**  **detail, including** 

**5­1 all**  **manufacturing steps**  **required to**  **make and/or**  **assemble each**  **part. Subsequently,**  **DOE**

**de veloped**  **a c**  **ost model**  **that converted**  **the BOMs**  **and efficiency**  **levels into**  **MPCs. B**  **y**

**ap plying**  **derived manufacturer**  **markups to**  **the MPCs,**  **DOE calculated**  **the manufacturer** 

**se lling**  **prices (MSPs)**  **and constructed**  **industry cost­efficiency**  **curves.**

**In a**  **s ubsequent**  **life­cycle cost**  **analysis (chapter**  **8), DOE**  **used the**  **industry cost** 

**e fficiency**  **curves to**  **determine customer**  **prices for**  **each of**  **the products**  **covered under** 

**re sidential**  **heating products**  **by applying**  **the appropriate**  **distribution channel**  **markups.**

5.2 PRODUCT CLASSES

**The Energy**  **Policy and**  **Conservation Act**  **of 1975**  **(EPCA) establishes**  **energy**

**co nservation**  **standards for**  **residential heating**  **products under**  **42 United**  **States Code** 

**(U .S.C.)**  **6295(e). EPCA**  **prescribed the**  **initial set**  **of energy**  **conservation standards**  **for**

**re sidential**  **water heaters**  **in terms**  **of the**  **energy factor**  **(EF). (42**  **U.S.C. 6295(e)(1)).**  **The**

**in itial**  **energy conservation**  **standards for**  **residential direct**  **heating equipment**  **are**

**me asured**  **and expressed**  **in terms**  **of the**  **annual fuel**  **utilization efficiency**  **(AFUE). (42** 

**U.S .C.**  **6295(e)(3)) Finally,**  **the initial**  **energy conservation**  **standards for**  **residential pool** 

**he aters**  **are measured**  **and expressed**  **in terms**  **of the**  **thermal efficiency.**  **(42 U.S.C.** 

**62 95(e)(2))**  **Table 5.2.1,**  **Table 5.2.2,**  **and Table**  **5.2.3 s**  **how t**  **he product**  **classes for** 

**re sidential**  **water heaters,**  **direct heating**  **equipment, and**  **pool heaters**  **that are**  **subject to** 

**th ese**  **standards. A**  **dditionally, Table**  **5.2.2 s**  **hows the**  **potential revisions**  **to the**  **direct**

**he ating**  **equipment product**  **class descriptions**  **that DOE**  **is considering**  **to reflect**  **the**

**in clusion**  **of vented**  **hearth products**  **(see chapter**  **3, the**  **MTA).**

Ta ble 5.2.1 R esidential Water Heater Product Classes

Re sidential Water

He ater Type Ch aracteristics

**Ga s­fired**  **Storage­type Nom**  **inal input**  **of 75,000**  **Btu/h or**  **less; rated**  **storage volume** 

**fr om**  **20 to**  **100 gallons** 

**Oi l­fired**  **Storage­type Nom**  **inal input**  **of 105,000**  **Btu/h or**  **less; rated**  **storage volume** 

**of 50**  **gallons or**  **less**

**Ele ctric**  **Storage­type Nom**  **inal input**  **of 12**  **kilowatts (40,956**  **Btu/h) or**  **less; rated** 

**st orage**  **volume from**  **20 to**  **120 gallons** 

**In stantaneous**  **Gas­fired Nom**  **inal input**  **of over**  **50,000 Btu/h**  **up t**  **o 200,000**  **Btu/h;**

**ra ted**  **storage volume**  **of 2**  **g allons**  **or less** 

**5­2**Table 5.2.2 R esidential Direct Heating Equipment Product Classes (with Revised

De scriptions)

Di rect Heating Equipment Design Type Product Class, b y Input Rating (Btu/h)

**Ga s**  **Wall Fan**  **Type Up**  **to 42,000** 

**an d** 

**Ga s,**  **R ecessed,**  **Fan­Type Hearth**  **Products Ov**  **er 42,000** 

**Up to**  **10,000**

**Ov er**  **10,000 up**  **t o**  **12,000**

**Ga s**  **Wall Gravity**  **Type Ov**  **er 12,000**  **up t**  **o 15,000** 

**an d**  **Ov er**  **15,000 up**  **t o**  **19,000**

**Ga s,**  **R ecessed,**  **Gravity­Type Hearth**  **Products Ov**  **er 19,000**  **up t**  **o 27,000** 

**Ov er**  **27,000 up**  **t o**  **46,000**

**Ov er**  **46,000**

**Ga s**  **Floor Up**  **to 37,000** 

**Ov er**  **37,000**

**Up to**  **18,000**

**Ga s**  **Room Ov**  **er 18,000**  **up t**  **o 20,000** 

**an d**  **Ov er**  **20,000, up**  **t o**  **27,000**

**Ga s,**  **No n­Recessed**  **Hearth Products**  **Ov er**  **27,000 up**  **t o**  **46,000**

**Ov er**  **46,000**

Ta ble 5.2.3 R esidential Pool Heaters Product Classes

Po ol Heater Type

**Re sidential**  **Gas­fired**

5.3 PRODUCT CLASSES ANALYZED

**DO E**  **separated residential**  **water heaters,**  **d irect**  **heating equipment**  **and pool** 

**he aters**  **into product**  **classes as**  **shown in**  **the tables**  **above. Because**  **DOE formulated**  **a**

**s eparate**  **energy conservation**  **standard for**  **each product**  **class, t**  **he criteria**  **for separation** 

**in to**  **different product**  **classes are:**  **(1) energy**  **source (natural**  **gas or**  **electricity), and**  **(2)**

**ca pacity**  **or other**  **performance­related features**  **such as**  **those that**  **provide utility**  **to the** 

**co nsumer,**  **or others**  **deemed appropriate**  **by the**  **Secretary that**  **would justify**  **the**

**es tablishment**  **of a**  **s eparate**  **energy conservation**  **standard. (42**  **U.S.C. 6295**  **(q) and** 

**63 16(a))** 

**Fo r**  **the engineering**  **analysis, D**  **OE reviewed**  **all of**  **the product**  **classes of** 

**re sidential**  **water heaters**  **(storage­type and**  **instantaneous), direct**  **heating equipment,**  **and**

**po ol**  **heaters. S**  **ince the**  **storage volume**  **and input**  **capacity effect**  **the energy**  **efficiency of** 

**th e**  **products, D**  **OE examined**  **each product**  **type separately.**  **DOE chose**  **those water** 

**he aters,**  **d irect**  **heating equipment,**  **and pool**  **heater products**  **that represent**  **a c**  **ross section** 

**of the**  **residential heating**  **products market.**  **The analysis**  **of these**  **representative products** 

**an d**  **product classes**  **allowed DOE**  **to analyze**  **specific characteristics**  **that can**  **then be** 

**5­3 applied**  **to all**  **of the**  **products in**  **a r**  **ange of**  **storage and**  **input capacities,**  **w here** 

**ap propriate.** 

**Fo r**  **residential, storage­type**  **water heaters,**  **t he**  **volume of**  **the tank**  **significantly**

**im pacts**  **the energy**  **consumed. That**  **is, i**  **t takes**  **more energy**  **to heat**  **a l**  **arger volume**  **of**

**wa ter**  **from a**  **g iven**  **temperature to**  **a h**  **igher temperature.**  **Additionally, as**  **the tank**  **volume**

**in creases,**  **t he**  **tank surface**  **area increases.**  **Among other**  **factors, t**  **he heater**  **transfer rate**  **is**

**a f**  **unction of**  **surface area.**  **Therefore, for**  **a g**  **iven temperature**  **difference between**  **the**

**st ored**  **water and**  **the ambient**  **air, the**  **rate of**  **heat t**  **ransfer to**  **the ambient**  **air increases**  **as**

**th e**  **surface area**  **increases. As**  **a r**  **esult, the**  **standby losses**  **can increase.**  **This is**  **reflected**

**by DOE’s**  **existing Federal**  **energy conservation**  **standards; the**  **energy factor**  **is a**  **f unction** 

**of the**  **storage volume**  **of the**  **tank for**  **gas­fired, oil­fired,**  **and electric**  **storage water** 

**he aters.** 

**Fo r**  **analysis purposes,**  **D OE**  **examined specific**  **storage volumes**  **for gas­fired,**  **oil**

**f ired,**  **and electric**  **storage water**  **heaters (referred**  **to as**  **representative storage**  **volumes)**

**si nce**  **the energy**  **efficiency equations**  **for residential**  **water heaters**  **established by**  **EPCA**

**ar e**  **a f**  **unction of**  **the products’**  **storage volume.**  **DOE reviewed**  **the shipments**  **data**

**pr ovided**  **by AHRI**  **for today’s**  **preliminary rulemaking,**  **and found**  **the storage**  **volume**

**co rresponding**  **to the**  **highest number**  **of shipments**  **for gas­fired**  **water heaters,**  **o il­fired** 

**wa ter**  **heaters, and**  **electric water**  **heaters (see**  **chapter 3**  **o f**  **the TSD**  **f or**  **more details**  **on the** 

**sh ipments**  **data). Consequently,**  **DOE chose**  **to examine**  **these four**  **product classes**  **further.**

**Tab le**  **5.3.1 e**  **xhibits the**  **representative rated**  **storage volumes**  **for residential**  **water heaters.** 

Ta ble 5.3.1 R epresentative Residential Water Heaters as Described by Storage

Ca pacity and Defined by Gallons

Re sidential Water Heater Class Representative Storage Volume

**Ga s­fired**  **Storage­type 40**  **Gallons**

**Oi l­fired**  **Storage­type 30**  **Gallons**

**Ele ctric**  **Storage­type 50**  **Gallons**

**In stantaneous**  **Gas­fired 0**  **G allons** 

**(1 99**  **kBtu/h Input**  **Capacity)**

**On ce**  **DOE conducted**  **the primary**  **analysis on**  **the representative**  **rated storage** 

**vo lumes**  **for each**  **of the**  **product classes,**  **D OE**  **extended the**  **analysis to**  **other rated**  **storage**

**vo lumes.**  **D OE**  **conducted a**  **s imilar**  **review o**  **f shipment**  **data for**  **instantaneous gas­fired** 

**wa ter**  **heaters and**  **determined the**  **input rating**  **corresponding to**  **the highest**  **number of** 

**sh ipments**  **since storage**  **volume does**  **not vary**  **for this**  **product class.**  **F or**  **analysis**

**pu rposes**  **with regards**  **to instantaneous**  **gas­fired water**  **heaters, a**  **nalysis of**  **the 199**  **kBtu/h**

**inp ut**  **capacity applies**  **to all**  **products within**  **the product**  **class.**

**Un like**  **water heaters,**  **d irect**  **heating equipment**  **(DHE) conservation**  **standards are** 

**no t**  **determined by**  **an equation,**  **rather, they**  **are established**  **by input**  **capacity ranges.**  **D OE** 

**ex amined**  **one specific**  **input range**  **for gas**  **wall fan,**  **gas wall**  **gravity, gas**  **floor, and**  **gas**

**ro om,**  **which are**  **referred to**  **as representative**  **input rating**  **ranges. DOE**  **reviewed the**  **DHE**

**(i ncluding**  **vented hearth**  **products) shipment**  **data provided**  **by AHRI**  **for today’s** 

**pr eliminary**  **rulemaking and**  **found the**  **input rating**  **range corresponding**  **to the**  **highest**

**5­4 number**  **of shipments**  **for gas**  **wall fan,**  **gas wall**  **gravity, gas**  **floor, and**  **gas room**  **DHE.**

**Ta ble**  **5.3.2 e**  **xhibits the**  **representative rated**  **input rating**  **ranges for**  **residential direct** 

**he ating**  **equipment.**

Ta ble 5.3.2 R epresentative Residential Direct Heating Equipment Product Class as

De scribed by Input Capacity and Defined by British Thermal Units per Hour

Di rect Heating Equipment Design

Ty pe Re presentative Input Rating Range

(B tu/h)

**Ga s**  **Wall Fan**  **Ov er**  **42,000**

**Ga s**  **Wall Gravity**  **Ov er**  **27,000 up**  **t o**  **46,000**

**Ga s**  **Floor Ov**  **er 37,000** 

**Ga s**  **Room Ov**  **er 46,000** 

**Af ter**  **analysis of**  **the representative**  **product class**  **(** i.e.

**, i**  **nput rating**  **range), the** 

**an alysis**  **can be**  **applied to**  **the remaining**  **product classes**  **for each**  **residential direct** 

**he ating**  **equipment types.**  **Unlike the**  **water heaters,**  **an equation**  **is not**  **applied to**  **relate the** 

**ra nge**  **of input**  **ratings. Instead,**  **the AFUE**  **difference between**  **each input**  **rating range**  **as**

**es tablished**  **by EPCA**  **w ill**  **be maintained.**  **That is,**  **i f**  **the conservation**  **standard is**  **increased**

**by two**  **AFUE p**  **ercentage points**  **for the**  **representative product**  **class, f**  **or example,**  **the**

**co nservation**  **standards for**  **the other**  **product classes**  **within this**  **product type**  **would all** 

**ra ise**  **by two**  **AFUE p**  **ercentage points.**  **Th e**  **stringency as**  **a r**  **esult of**  **an amended**  **standard**

**is constant**  **across the**  **range of**  **inputs for**  **a g**  **iven product**  **type.**

**The re**  **is only**  **one product**  **class for**  **residential gas­fired**  **pool heaters.**  **H owever,** 

**th is**  **product class**  **covers a**  **w ide**  **range of**  **input ratings.**  **A lthough**  **within the**  **same product** 

**cl ass,**  **t he**  **variation in**  **input rating**  **is large**  **enough to**  **create variations**  **in pool**  **heater**

**de sign**  **(** e.g.

**, l**  **arge variations**  **in input**  **will vary**  **material usage**  **and MPC).**  **Therefore, DOE** 

**re viewed**  **the shipment**  **data provided**  **by AHRI**  **for today’s**  **preliminary rulemaking,**  **and**

**fo und**  **the input**  **rating corresponding**  **to the**  **highest n**  **umber of**  **shipments. Ta**  **ble 5.3.3** 

**e xhibits**  **the representative**  **input rating**  **for residential**  **gas­fired pool**  **heaters.**

Ta ble 5.3.3 R epresentative Residential Pool Heater as Described by Input Capacity

an d Defined by British Thermal Units per Hour

Re presentative Input Rating (Btu/h) Po ol Heater Type

**Re sidential**  **Gas­fired 25**  **0,000**

**The engineering**  **analysis results**  **for the**  **representative product**  **classes are**  **used in** 

**th e**  **remaining DOE**  **analyses, i**  **ncluding the**  **life­cycle cost**  **analysis and**  **the national** 

**im pact**  **analysis. D**  **OE used**  **the analytical**  **results for**  **the representative**  **product classes**  **to**

**ex amine**  **the current**  **energy­efficiency levels**  **as well**  **as the**  **impacts of**  **amended**

**st andards.** 

5.4 EFFICIENCY L EVELS

**Fo r**  **the majority**  **of the**  **product classes**  **presented in**  **section 5.3,**  **DOE analyzed** 

**mu ltiple**  **efficiency levels**  **and estimated**  **the manufacturer**  **production costs**  **of these** 

**5­5 levels.**  **Th e**  **following subsections**  **provide the**  **full efficiency**  **level range**  **from the**  **baseline**

**ef**

**ficiency level**  **to the**  **maximum technology**  **feasible efficiency**  **level for**  **each product** 

**cl ass.**  **D OE**  **notes that**  **in some**  **cases the**  **highest efficiency**  **level was**  **identified through** 

**re view**  **o f**  **available product**  **literature for**  **products commercially**  **available.**

5.4 .1 Baseline Unit

**DO E**  **selected baseline**  **units as**  **reference points**  **for each**  **product class,**  **a gainst** 

**wh ich**  **DOE measured**  **changes resulting**  **from potential**  **amended energy**  **conservation**

**st andards.**  **Th e**  **baseline unit**  **in each**  **product class**  **represents the**  **basic characteristics**  **of**

**eq uipment**  **in that**  **class. T**  **ypically, a**  **b aseline**  **unit is**  **a u**  **nit that**  **just meets**  **current Federal** 

**en ergy**  **conservation standards**  **and provides**  **basic consumer**  **utility.**

**DO E**  **used the**  **baseline units**  **in the**  **engineering analysis**  **and the**  **life­cycle­cost**

**an d**  **payback­period analysis.**  **To determine**  **energy savings**  **and changes**  **in price,**  **DOE**

**co mpared**  **each higher­energy­efficiency**  **levels with**  **the baseline**  **unit.**

**The identification**  **of baseline**  **units required**  **establishing the**  **baseline efficiency** 

**le vel.**  **Baseline units**  **for this**  **preliminary rulemaking**  **are defined**  **by the**  **current Federal** 

**mi nimum**  **energy conservation**  **standards and**  **the representative**  **characteristics for**  **each**

**pr oduct.** 

**The Federal**  **minimum energy**  **conservation standards**  **for residential**  **water heaters,** 

**as measured**  **by the**  **EF, b**  **ecame effective**  **on January**  **20, 2004.**  **(10 CFR**  **Part 430.32(d),** 

**Sub part**  **C). For**  **water heaters,**  **t he**  **representative storage**  **capacity was**  **applied to**  **the**

**en ergy­efficiency**  **equations in**  **10 CFR**  **Part 430.32(d)**  **to calculate**  **the baseline**  **unit EFs.** 

**Tab le**  **5.4.1 d**  **emonstrates the**  **baseline unit’s**  **EF f**  **or each**  **product class**  **of residential**  **water**

**he aters**  **at the**  **representative storage**  **volume.**

Ta ble 5.4.1 B aseline Unit EF for Water Heaters

Pr oduct Class Re presentative

St orage Volume Fe deral Minimum Energy

Co nservation Standards (EF)

**Ga s­fired**  **Storage Water** 

**He ater**  **40 Gallons**  **0.5 9** 

**Oi l­fired**  **Storage Water** 

**He ater**  **30 Gallons**  **0.5 3** 

**Ele ctric**  **Storage Water** 

**He ater**  **50 Gallons**  **0.9 0** 

**In stantaneous**  **Gas­fired**

**Wa ter**  **Heater 0**  **G allons**  **0.6 2** 

**The Federal**  **minimum energy**  **conservation standards**  **for residential**  **direct heating** 

**eq uipment,**  **as measured**  **by the**  **AFUE, b**  **ecame effective**  **on January**  **1, 1990**  **(10 CFR**  **part**

**43 0.32(i),**  **subpart C).**  **For direct**  **heating equipment,**  **t he**  **AFUEs c**  **orresponding to**  **the**

**re presentative**  **input ratings**  **in 10**  **CFR part**  **430.32(i) were**  **assigned the**  **baseline unit** 

**AF UEs.**  **T able**  **5.4.2 d**  **emonstrates the**  **baseline unit’s**  **A FUE**  **for each**  **product class**  **of**

**re sidential**  **direct heating**  **equipment at**  **the representative**  **input rating.** 

**5­6**Table 5.4.2 B aseline Unit AFUE for Direct Heating Equipment

Pr oduct Class Representative Input

Ca pacity Range

(B tu/h) Fe deral Minimum Energy

Co nservation Standards

(A FUE)

**Ga s**  **Wall Fan­type**  **Ov er**  **42,000 74** 

**Ga s**  **Wall Gravity** 

**t ype**  **Ov er**  **27,000 up**  **t o** 

**46 ,000**  **64**

**Ga s**  **Floor­type Ov**  **er 37,000**  **57**

**Ga s**  **Room­type Ov**  **er 27,000**  **up t**  **o**

**46 ,000**  **64**

**The Federal**  **minimum energy**  **conservation standard**  **for residential**  **pool heaters,** 

**as measured**  **by thermal**  **efficiency, b**  **ecame effective**  **on January**  **1, 1990**  **(10 CFR**  **part**

**43 0.32(k),**  **subpart C).**  **For pool**  **heaters, t**  **he thermal**  **efficiency corresponding**  **to the** 

**co nservation**  **standard established**  **in 10**  **CFR part**  **430.32(k) is**  **the baseline**  **unit thermal** 

**ef**

**ficiency. Table**  **5.4.3 d**  **emonstrates the**  **baseline unit’s**  **thermal efficiency**  **for residential** 

**ga s­fired**  **pool heaters.** 

Ta ble 5.4.3 B aseline Unit Thermal Efficiency for Pool Heaters

Pr oduct Class Re presentative Input

Ca pacity (Btu/h) Fe deral Minimum Energy

Co nservation Standards

(T hermal Efficiency)

**Ga s­fired**  **type 25**  **0,000 78**  **%**

**Fo r**  **more information**  **on the**  **characteristics of**  **each baseline**  **unit, see**  **section**

**5.6 .2.**  **The market**  **baseline units**  **identified in**  **the engineering**  **analysis represent**  **the**

**en ergy**  **efficiency and**  **cost of**  **the typical**  **minimum technology**  **products on**  **the market.** 

**DO E**  **used these**  **baseline efficiencies**  **for the**  **subsequent analyses**  **(** e.g.

**, l**  **ife­cycle cost** 

**(L CC),**  **p ayback**  **period (PBP),**  **national impact**  **analysis (NIA),**  **manufacturer impact** 

**an alysis**  **(MIA), etc).** 

5.4 .2 Intermediate Energy Efficiency Levels

**DO E**  **conducted a**  **s urvey**  **of the**  **residential heating**  **products market**  **to determine** 

**wh at**  **types of**  **products are**  **currently available**  **to consumers.**  **P articularly,**  **for each** 

**re presentative**  **product, DOE**  **surveyed all**  **of the**  **manufacturers’ product**  **offerings to** 

**id entify**  **the efficiency**  **levels corresponding**  **to the**  **highest number**  **of models.**  **B y** 

**id entifying**  **the most**  **prevalent energy**  **efficiencies in**  **the range**  **of available**  **products,**

**DO E**  **was able**  **to establish**  **a t**  **echnology path**  **for increasing**  **energy efficiency**  **that is** 

**re presentative**  **of the**  **approach that**  **manufacturers would**  **typically take.** 

**DO E**  **established intermediate**  **energy efficiency**  **levels for**  **each of**  **the product** 

**cl asses.**  **Th e**  **paths these**  **levels make**  **are representative**  **of the**  **technology paths**  **that**

**ma nufacturers**  **of residential**  **heating products**  **typically use**  **in order**  **to maintain**  **cost**

**e ffective**  **designs while**  **increasing energy**  **efficiency. DOE**  **reviewed AHRI’s**  **product**

**ce rtification**  **directory, 1**  **manufacturer catalogs,**  **a nd**  **any other**  **publicly available**  **literature**

**to determine**  **which efficiency**  **levels are**  **the most**  **prevalent for**  **each representative** 

**5­7 product**  **class. A**  **dditionally, DOE**  **associated each**  **efficiency level**  **selected with**  **a**

**p articular**  **technology, or**  **combination of**  **technologies selected**  **for the**  **preliminary**

**an alysis,**  **t hus**  **making its**  **engineering analysis**  **more transparent**  **to interested**  **parties. D**  **OE**

**se lected**  **the following**  **efficiency levels**  **to represent**  **the range**  **of available**  **products along** 

**wi th**  **one associated**  **design pathway.**  **Table 5.4.4**  **t hrough**  **Table 5.4.12**  **show the**  **product**

**cl asses**  **and their**  **respective intermediate**  **energy efficiency**  **levels.**

**Fo r**  **gas­fired storage**  **water heaters,**  **D OE**  **selected five**  **efficiency levels**  **between**

**th e**  **baseline and**  **max­tech to**  **analyze. The**  **energy factors**  **typically correspond**  **to the**  **EFs**

**mo st**  **commonly shipped**  **and having**  **the most**  **common energy­efficiency**  **characteristics.**

**DO E**  **considered these**  **efficiency levels**  **because the**  **incremental gains**  **in efficiency** 

**co rrespond**  **to common**  **techniques and**  **technologies manufacturers**  **use to**  **increase energy** 

**ef**

**ficiency. For**  **example, the**  **increases in**  **EF o**  **f the**  **first efficiency**  **level for**  **gas­fired,**

**st orage**  **water heaters**  **correspond to**  **an increase**  **in the**  **thickness of**  **insulation. For**  **gas**

**f ired**  **water heaters,**  **t he**  **lower efficiency**  **levels utilize**  **natural draft**  **and manufacturers** 

**ac hieve**  **efficiency levels**  **in the**  **upper half**  **of the**  **range by**  **utilizing electronic**  **ignition and** 

**po wer**  **vents.**

Ta ble 5.4.4 I ntermediate Efficiency Levels for 40 Gallon Gas­fired Storage Water

He aters

Ef ficiency Level En ergy Factor

**Eff iciency**  **Level 1**  **0 .62** 

**Eff iciency**  **Level 2**  **0 .63** 

**Eff iciency**  **Level 3**  **0 .64** 

**Eff iciency**  **Level 4**  **0 .65** 

**Eff iciency**  **Level 5**  **0 .66** 

**Fo r**  **oil­fired storage**  **water heaters,**  **D OE**  **selected six**  **efficiency levels**  **between the** 

**ba seline**  **and max­tech**  **to analyze.**  **The energy**  **factors correspond**  **to efficiency**  **levels**

**co mmonly**  **shipped with**  **technologies commonly**  **used by**  **manufacturers to**  **improve**

**en ergy**  **efficiency. For**  **example, manufacturers**  **achieve the**  **incremental increases**  **for**

**lo wer**  **efficiency levels**  **by adding**  **half an**  **inch of**  **insulation for**  **each efficiency**  **level to** 

**th e**  **baseline product.**  **To a**  **chieve even**  **higher efficiency**  **levels, m**  **anufacturers also**  **switch**

**fr om**  **fiberglass to**  **foam insulation**  **and can**  **include enhancements**  **to the**  **flue baffle.** 

Ta ble 5.4.5 I ntermediate Efficiency Levels for 30 Gallon Oil­fired Storage Water

He aters

Ef ficiency Level En ergy Factor

**Eff iciency**  **Level 1**  **0 .54** 

**Eff iciency**  **Level 2**  **0 .56** 

**Eff iciency**  **Level 3**  **0 .58** 

**Eff iciency**  **Level 4**  **0 .60** 

**Eff iciency**  **Level 5**  **0 .62** 

**Eff iciency**  **Level 6**  **0 .66** 

**Fo r**  **electric storage**  **water heaters,**  **D OE**  **selected five**  **efficiency levels**  **between the** 

**ba seline**  **and max­tech.**  **For water**  **heaters utilizing**  **electric resistance**  **heating,**

**5­8 manufacturers**  **typically increase**  **EF b**  **y adding**  **insulation. Each**  **efficiency level**  **shown**

**co rresponds**  **to insulation**  **thicknesses commonly**  **used by**  **manufacturers.**

Ta ble 5.4.6 I ntermediate Efficiency Levels for 50 Gallon Electric Storage Water

He aters

Ef ficiency Level En ergy Factor

**Eff iciency**  **Level 1**  **0 .91** 

**Eff iciency**  **Level 2**  **0 .92** 

**Eff iciency**  **Level 3**  **0 .93** 

**Eff iciency**  **Level 4**  **0 .94** 

**Eff iciency**  **Level 5**  **0 .95** 

**Fo r**  **instantaneous gas­fired**  **water heaters,**  **D OE**  **selected six**  **efficiency levels** 

**be tween**  **the baseline**  **and max­tech.**  **Manufacturers typically**  **produce units**  **at Efficiency** 

**Le vel**  **2 o**  **r higher.**  **Manufacturers increase**  **energy efficiency**  **primarily by**  **improving upon** 

**th e**  **heat exchanger**  **design and**  **incorporating electronic**  **ignition and**  **power vents.**  **D OE** 

**fo und**  **that power**  **vents are**  **typically found**  **in units**  **at Efficiency**  **Level 3**  **a nd**  **higher.**

Ta ble 5.4.7 I ntermediate Efficiency Levels for Instantaneous Gas­fired Water

He aters

Ef ficiency Level En ergy Factor

**Eff iciency**  **Level 1**  **0 .69** 

**Eff iciency**  **Level 2**  **0 .78** 

**Eff iciency**  **Level 3**  **0 .80** 

**Eff iciency**  **Level 4**  **0 .82** 

**Eff iciency**  **Level 5**  **0 .84** 

**Eff iciency**  **Level 6**  **0 .85** 

**DO E**  **selected three**  **efficiency levels**  **between the**  **baseline and**  **max­tech levels**  **for**

**ga s**  **wall fan­type**  **DHE to**  **analyze for**  **the preliminary**  **analysis. D**  **OE found**  **products**

**pr oduced**  **by manufacturers**  **at every**  **AFUE level**  **between the**  **baseline and**  **max­tech.**

**Ma nufactures**  **typically incorporate**  **intermittent ignition,**  **two speed**  **blowers, a**  **nd improve** 

**th e**  **heater exchanger**  **design in**  **order to**  **increase the**  **energy efficiency.**  **Manufacturers**

**in corporate**  **all three**  **of these**  **technologies in**  **order to**  **obtain Efficiency**  **Level 3.** 

Ta ble 5.4.8 I ntermediate Efficiency Levels for Gas W all Fan­type DHE, Over 42,000

Bt u/h

Ef ficiency Level AFU E

**Eff iciency**  **Level 1**  **7 5** 

**Eff iciency**  **Level 2**  **7 6** 

**Eff iciency**  **Level 3**  **7 7** 

**Fo r**  **gas wall**  **gravity­type DHE,**  **D OE**  **selected four**  **efficiency levels**  **to analyze** 

**be tween**  **the baseline**  **and max­tech.**  **These efficiency**  **levels correspond**  **to gas**  **wall**

**gr avity­type**  **DHE having**  **the most**  **shipments with**  **in this**  **product class.**  **Th e**  **two to**  **three**

**po int**  **increase in**  **AFUE b**  **etween levels**  **reflects an**  **improvement by**  **the manufacturer**  **in**

**th e**  **heat exchanger**  **design. Efficiency**  **Level 4**  **i s**  **an exception.**  **Instead, DOE**  **found that** 

**5­9 the**  **majority of**  **products increase**  **AFUE to**  **obtain Efficiency**  **Level 4**  **b y**  **including an** 

**el ectronic**  **ignition on**  **top o**  **f modifications**  **to the**  **heat exchanger**  **design.**

Ta ble 5.4.9 I ntermediate Efficiency Levels for Gas W all Gravity­type DHE, Over

27 ,000 Btu/h, up to 46,000 Btu/h

Ef ficiency Level AFU E

**Eff iciency**  **Level 1**  **6 6** 

**Eff iciency**  **Level 2**  **6 8** 

**Eff iciency**  **Level 3**  **7 1** 

**Eff iciency**  **Level 4**  **7 2** 

**DO E**  **selected four**  **gas floor­type**  **DHE intermediate**  **efficiency levels**  **to analyze** 

**fo r**  **the preliminary**  **analysis. D**  **OE found**  **that the**  **range of**  **efficiencies offered**  **by**

**ma nufacturers**  **of gas**  **floor­type DHE**  **is similar**  **to gas**  **wall gravity­type**  **DHE, w**  **ith**

**re gards**  **to the**  **incremental increases**  **in AFUE.**  **A gain,**  **DOE found**  **that manufacturers** 

**ty**

**pically increase**  **AFUE by**  **improving the**  **heat exchanger**  **design. Additionally,** 

**ma nufacturers**  **also add**  **electronic ignition**  **(in addition**  **to an**  **improving the**  **heat**

**ex changer)**  **in order**  **to obtain**  **Efficiency Level**  **4.**

Ta ble 5.4.10 Intermediate Efficiency Levels for Gas Floor­type DHE, Over 37,000

Bt u/h

Ef ficiency Level AFU E

**Eff iciency**  **Level 1**  **5 8** 

**Eff iciency**  **Level 2**  **6 1** 

**Eff iciency**  **Level 3**  **6 2** 

**Eff iciency**  **Level 4**  **6 5** 

**DO E**  **selected six**  **intermediate efficiency**  **levels between**  **the baseline**  **and max** 

**t ech**  **to analyze**  **for gas**  **room­type DHE.**  **D OE**  **found that**  **the most**  **commonly shipped** 

**pr oducts**  **follow a**  **similar increase**  **in AFUE**  **as gas**  **wall gravity**  **and floor­type**  **DHE. F**  **or**

**th e**  **first four**  **efficiency levels,**  **m anufacturers**  **increase AFUE**  **b y**  **one point**  **by improving** 

**th e**  **heat exchanger**  **design. Additionally,**  **DOE found**  **that manufacturers**  **also ship**  **models**

**wi th**  **electronic ignition**  **and induced**  **draft, and**  **these correspond**  **to Efficiency**  **Levels 5** 

**a nd**  **6.**

Ta ble 5.4.11 Intermediate Efficiency Levels for Gas R oom­type DHE, Over 27,000

Bt u/h, up to 46,000 Btu/h

Ef ficiency Level AFU E

**Eff iciency**  **Level 1**  **6 5** 

**Eff iciency**  **Level 2**  **6 6** 

**Eff iciency**  **Level 3**  **6 7** 

**Eff iciency**  **Level 4**  **6 8** 

**Eff iciency**  **Level 5**  **7 0** 

**Eff iciency**  **Level 6**  **7 8** 

**DO E**  **selected seven**  **pool heater**  **intermediate efficiency**  **levels to**  **analyze for**  **the**

**pr eliminary**  **analysis. D**  **OE also**  **reviewed product**  **literature and**  **brochures and**  **identified**

**5­10 the**  **technologies typically**  **incorporated into**  **these products.**  **D OE**  **found that** 

**ma nufacturers**  **typically achieve**  **Efficiency Levels**  **1 a**  **nd 2**  **b y**  **improving the**  **heat**

**ex changer**  **design, and**  **reach Efficiency**  **Level 3**  **b y**  **also adding**  **better insulation**  **to the** 

**co mbustion**  **chamber. For**  **Efficiency Levels**  **4, 5,**  **and 6,**  **manufacturers add**  **power vents,** 

**an d**  **at Efficiency**  **Level 7,**  **manufacturers produce**  **pool heaters**  **with condensing** 

**ope rations.** 

**DO E**  **also analyzed**  **pool heaters**  **to determine**  **which have**  **standing pilot**  **ignitions**

**an d**  **which have**  **electronic ignitions.**  **A fter**  **surveying the**  **pool heater**  **market, DOE** 

**de termined**  **that electronic**  **ignition is**  **offered in**  **products covering**  **the whole**  **range of** 

**ef**

**ficiencies, w**  **hile standing**  **pilot ignition**  **systems are**  **only offered**  **in products** 

**co rresponding**  **to the**  **first three**  **intermediate efficiency**  **levels. D**  **OE distinguished** 

**be tween**  **the two**  **ignition systems**  **because of**  **the energy**  **use difference**  **between electronic** 

**ig nition**  **and standing**  **pilot systems.**  **Th e**  **DOE test**  **procedure does**  **not account**  **for these** 

**en ergy**  **use differences**  **in the**  **thermal efficiency**  **metric. Consequently,**  **DOE developed** 

**tw o**  **baseline products**  **and two**  **efficiency pathways**  **for Efficiency**  **Levels 1**  **t hrough**  **3.**

Ta ble 5.4.12 Intermediate Efficiency Levels for Gas­fired Pool Heaters, 250,000

Bt u/h

Ef ficiency Level Th ermal Efficiency (%)

**Eff iciency**  **Level 1** ** **79**

**Eff iciency**  **Level 2** ** **81**

**Eff iciency**  **Level 3** ** **82**

**Eff iciency**  **Level 4** * **83**

**Eff iciency**  **Level 5** * **84**

**Eff iciency**  **Level 6** * **86**

**Eff iciency**  **Level 7** * **90**

***M odels**  **having electronic**  **ignition only** 

****** **Models having**  **pilot or**  **electronic ignition** 

5.4 .3 “Max­Tech” Efficiency Levels

**DO E**  **has determined**  **the maximum**  **improvement in**  **energy efficiency**  **that is** 

**te chnologically**  **feasible (“max­tech”)**  **for water**  **heaters, d**  **irect heating**  **equipment, and** 

**po ol**  **heaters, a**  **s required**  **by section**  **325(o) of**  **EPCA. (42**  **U.S.C. 6295(o)).**  **DOE**

**id entified**  **the “max­tech”**  **levels as**  **part of**  **the engineering**  **analysis. D**  **OE conducted**  **a**

**s urvey**  **of the**  **residential heating**  **products market**  **and the**  **research fields**  **that support**  **the**

**ma rket.**  **For the**  **representative product**  **within a**  **g iven**  **product class,**  **n o**  **working products,** 

**or prototypes**  **at higher**  **efficiency levels**  **are currently**  **available. Table**  **5.4.13, Table** 

**5.4 .14,**  **and Table**  **5.4.15 list**  **the “max­tech”**  **levels that**  **DOE determined**  **for this** 

**pr eliminary**  **rulemaking.**

**DO E**  **determined the**  **max­tech levels**  **for residential**  **w ater**  **heaters. F**  **or gas­fired** 

**st orage**  **water heaters,**  **D OE**  **found products**  **capable of**  **condensing operations.**  **Th e**  **most**

**ef**

**ficient oil­fired**  **storage water**  **heater identified**  **has an**  **EF o**  **f 0.68**  **and includes**  **electronic**

**ig nition,**  **foam insulation,**  **and enhanced**  **flue baffles.**  **D OE**  **found electric**  **heat pump**  **water**

**5­11 heaters**  **capable of**  **obtaining EFs**  **of 2.2.**  **Finally, DOE**  **identified instantaneous**  **gas­fired**

**wa ter**  **heaters capable**  **of condensing**  **as the**  **max­tech level.** 

Ta ble 5.4.13 “Max­Tech” Efficiency Levels for Water Heaters

Pr oduct Class Storage Volume “M ax­Tech”

Ef ficiency Level (EF)

**Ga s­fired**  **Storage**

**Wa ter**  **Heater 40**  **Gallons 0.7**  **7**

**Oi l­fired**  **Storage**

**Wa ter**  **Heater 30**  **Gallons 0.6**  **8**

**Ele ctric**  **Storage**

**Wa ter**  **Heater 50**  **Gallons 2.2** 

**Instantaneous Gas** 

**f ired**  **Water Heater**  **0 G**  **allons 0.9**  **2**

**DO E**  **identified the**  **max­tech levels**  **for residential**  **direct heating**  **equipment by** 

**su rveying**  **the current**  **market. DOE**  **identified that**  **gas wall**  **fan, wall**  **gravity, and**  **floor**

**t ype**  **DHE max­tech**  **levels are**  **all equipped**  **with induced**  **draft combustion**  **systems.**

**Ma nufacturers**  **have achieved**  **higher AFUEs**  **f or**  **gas room­type**  **DHE. D**  **OE identified** 

**ro om­type**  **products capable**  **of condensing**  **operations.**

Ta ble 5.4.14 “Max­Tech” Efficiency Levels for Direct Heating Equipment

Pr oduct Class Input Capacity

(B tu/h) “M ax­Tech”

Ef ficiency Level (AFUE)

**Ga s**  **Wall Fan­type**  **Over 42,000**  **80**

**Ga s**  **Wall Gravity** 

**t ype**  **Ov er**  **27,000 up** 

**t o**  **46,000 75** 

**Ga s**  **Floor­type Ov**  **er 37,000**  **78**

**Ga s**  **Room­type Ov**  **er 27,000**  **up**

**t o**  **46,000 93** 

**DO E**  **also surveyed**  **residential pool**  **heater products**  **a nd**  **prototypes to**  **determine**

**th e**  **maximum technology**  **available. DOE**  **identified pool**  **heater products**  **capable of** 

**co ndensing**  **operations and**  **thermal efficiencies**  **of 95**  **percent.**

Ta ble 5.4.15 “Max­Tech” Efficiency Levels for Pool Heaters

Pr oduct Class In put Capacity

(B tu/h) “M ax­Tech”

Ef ficiency Level (Thermal

Ef ficiency)

**Ga s­fired**  **type 25**  **0,000 95** 

5.5 METHODOLOGY OVERVIEW

**Thi s**  **section describes**  **the analytical**  **methodology used**  **in the**  **engineering**

**an alysis.**  **Figure 5.5.1**  **F low**  **D iagram**  **of Engineering**  **Analysis Methodology**  **shows a**  **f low** 

**di agram**  **of this**  **methodology and**  **the corresponding**  **sections in**  **this chapter.**  **The results** 

**5­12 of**  **the engineering**  **analysis are**  **cost­efficiency curves**  **for each**  **representative product** 

**cl ass.** 

**Cost Model** 

**(s ection**  **5 .8)** 

**Engineering**

**Ma nufacturer** 

**I n**  **terviews**

**( s**  **ection 5**  **.9) Physical** 

**Te ardown** 

**A n**  **alysis**

**( s**  **ection 5**  **.6) Virtual** 

**Te ardown** 

**A n**  **alysis**

**( s**  **ection 5**  **.6)**

**Selling Price** 

**E fficiency** 

**R e**  **lationship**

**( E**  **fficiency*** **v s** 

**MS P)** 

**( s**  **ection 5**  **.13)**

**Screening**

**An alysis** 

**( c**  **hapter 4**  **) Material**  **Price**

**S ensitivity** 

**A n**  **alysis**

**( s**  **ection 5**  **.14) Manufacturer** 

**Ma rkup** 

**A n**  **alysis**

**(section 5.12**  **)**

**BOMs**

**(s ection**  **5 .8.1)**  **Cost­Efficiency**

**Cu rves** 

**( E**  **fficiency*** **v s** 

**MP C)** 

**( s**  **ection 5**  **.10) Efficiency**  **Levels**

**and Associated** 

**De sign** 

**P a**  **thway**

**( s**  **ection 5**  **.7)**

***Efficiency defined**  **by either**  **energy factor**  **(EF), annual**  **fuel utilization**  **efficiency (AFUE),**  **or thermal** 

**e fficiency.** 

Figure 5.5.1 F low Diagram of Engineering Analysis Methodology

**At the**  **start of**  **the process,**  **D OE**  **identified residential**  **heating products**  **available**

**on the**  **market and**  **the energy**  **efficiency level**  **associated with**  **each. DOE**  **also identified** 

**th e**  **technologies and**  **features that**  **are typically**  **incorporated into**  **products at**  **the baseline** 

**le vel**  **and various**  **energy efficiency**  **levels above**  **the baseline.**  **N ext,**  **DOE selected** 

**pr oducts**  **for the**  **physical teardown**  **analysis that**  **corresponded to**  **the representative**  **rated**

**st orage**  **volumes and**  **input capacities.**  **D OE**  **gathered the**  **information from**  **the physical** 

**te ardown**  **analysis to**  **create a**  **b ill**  **of materials**  **(BOMs) using**  **reverse engineering**  **methods**

**(s ee**  **section 5.6).**  **DOE then**  **used the**  **physical teardown**  **analysis to**  **identify the**  **design**

**pa thways**  **manufacturers are**  **typically using**  **to increase**  **the EF**  **of residential**  **water**

**he aters,**  **t he**  **AFUE of**  **residential direct**  **heating equipment,**  **or the**  **thermal efficiency**  **of**

**re sidential**  **pool heaters.**  **DOE calculated**  **the MPC**  **for products**  **spanning the**  **full range**  **of**

**ef**

**ficiencies from**  **the baseline**  **to the**  **maximum technology**  **available at**  **various levels.** 

**DO E**  **also identified**  **each technology**  **or combination**  **of technologies,**  **i n**  **each product**  **that**

**wa s**  **responsible for**  **improving the**  **energy efficiency.**  **The cost­effectiveness**  **of each**  **of**

**th ese**  **technologies was**  **determined by**  **comparing the**  **increase in**  **MPC to**  **the increase**  **in**

**en ergy**  **efficiency. Finally,**  **DOE conducted**  **a s**  **ensitivity analysis**  **on material**  **prices to** 

**5­13 examine**  **the effect**  **of spikes**  **in metal**  **prices that**  **the heating**  **products industries**  **have**

**ex perienced**  **over the**  **past few**  **years.**

**Du ring**  **the preparation**  **of the**  **cost­efficiency comparison**  **and MPCs,**  **D OE**  **held**

**in terviews**  **with manufacturers**  **to gain**  **insight into**  **each of**  **the water**  **heating, direct** 

**he ating,**  **and pool**  **heating industries**  **and requested**  **comments on**  **the engineering**  **approach**

**DO E**  **used in**  **the analysis**  **(see section**  **5.9). DOE**  **used the**  **information gathered**  **from**

**th ese**  **interviews to**  **refine efficiency**  **levels and**  **technology pathways**  **as well**  **as**

**as sumptions**  **in the**  **cost model.**  **Next, DOE**  **converted the**  **MPCs into**  **MSPs (see**  **section**

**5.1 2)**  **using publicly**  **available water**  **heating, direct**  **heating, and**  **pool heating**  **industry**

**fi nancial**  **data, in**  **addition to**  **manufacturers’ feedback.** 

5.6 TEARDOWN A NALYSIS

**To a**  **ssemble BOMs**  **and calculate**  **the manufacturing**  **costs of**  **the different** 

**co mponents**  **in residential**  **heating products,**  **D OE**  **disassembled multiple**  **units into**  **their**

**co mponents**  **and estimated**  **the material**  **and labor**  **cost of**  **each individual**  **component. This** 

**pr ocess**  **is referred**  **to as**  **a “**  **physical teardown.”**  **A supplementary**  **method, called**  **a**

**“ virtual**  **teardown,” u**  **ses published**  **manufacturer catalogs**  **and supplementary**  **component**

**da ta**  **to estimate**  **the major**  **physical differences**  **between a**  **p roduct**  **that was**  **physically**

**di sassembled**  **and a**  **s imilar**  **product that**  **was not.**  **The teardown**  **analysis for**  **this**

**en gineering**  **analysis included**  **over 40**  **physical and**  **virtual teardowns**  **of water**  **heaters,**

**di rect**  **heating equipment,**  **and pool**  **heaters.**

5.6 .1 Selection of Units

**Du ring**  **the process**  **of selecting**  **units for**  **teardowns, D**  **OE considered**  **3 m**  **ain**

**qu estions:** 

• **W hat**  **efficiency levels**  **should be**  **captured in**  **the teardown**  **analysis?**

• **A re**  **there units**  **on the**  **market that**  **capture all**  **potential efficiency**  **levels?**

• **W hich**  **of the**  **available units**  **are most**  **representative?**

**In responding**  **to the**  **proceeding questions,**  **D OE**  **adopted the**  **following criteria**  **for**

**se lecting**  **units for**  **the teardown**  **analysis:**

• **Th e**  **selected products**  **should span**  **the full**  **range of**  **efficiency levels**  **for each** 

**pr oduct**  **class under**  **consideration;**

• **W ithin**  **each product**  **class, i**  **f possible,**  **the selected**  **products should**  **come from**  **the**

**sa me**  **manufacturer and**  **be within**  **the same**  **product series;** 

• **Th e**  **selected products**  **should primarily**  **come from**  **manufacturers with**  **large**

**ma rket**  **share in**  **that product**  **class, a**  **lthough the**  **highest efficiency**  **products were** 

**ch osen**  **irrespective of**  **manufacturer; and** 

• **Th e**  **selected products**  **should have**  **non­efficiency related**  **features that**  **are the** 

**sa me**  **or similar**  **to features**  **of other**  **products in**  **the same**  **class and**  **for a**  **r ange**  **of**

**ef**

**ficiency levels.** 

**5­14 DOE**  **surveyed the**  **residential heating**  **products industry**  **and identified**  **products**

**av ailable**  **to consumers**  **and prototypes**  **developed by**  **manufacturers’ research**  **efforts.**

**DO E**  **then applied**  **the aforementioned**  **criteria for**  **selecting baseline**  **units, i**  **ntermediate**

**ef**

**ficiency levels,**  **a nd**  **max­tech units**  **and selected**  **products for**  **the physical**  **teardown that** 

**me t**  **the product**  **description, the**  **energy efficiency**  **level, and**  **included the**  **technologies**

**id entified**  **in the**  **market surveys**  **(see sections**  **5.3, 5.4,**  **5.7). In**  **several cases,**  **DOE found** 

**in stances**  **where virtual**  **teardowns could**  **be used**  **in the**  **place of**  **a p**  **hysical teardown.**  **For**

**ex ample,**  **where two**  **water heaters**  **differed only**  **by insulation**  **thickness, o**  **ne was** 

**ph ysically**  **torn down**  **and the**  **additional material**  **and cost**  **(** i.e.

**, a**  **dditional insulation,**  **extra**

**sh eet**  **metal, longer**  **temperature and**  **pressure relief**  **valve, etc.)**  **was calculated**  **and added** 

**to the**  **first to**  **determine the**  **MPC of**  **the second.** 

**Us ing**  **the data**  **gathered from**  **the physical**  **teardowns, DOE**  **characterized each** 

**co mponent**  **according to**  **its weight,**  **dimensions, m**  **aterial, quantity,**  **and the**  **manufacturing**

**pr ocesses**  **used to**  **fabricate and**  **assemble it.**  **For supplementary**  **virtual teardowns,**  **D OE** 

**ga thered**  **product data**  **from publicly**  **available manufacturer**  **catalogs, s**  **uch as**  **dimensions,**

**we ight,**  **and design**  **features. D**  **OE obtained**  **information and**  **data not**  **typically found**  **in**

**ca talogs**  **and brochures,**  **s uch**  **as fan**  **motor details,**  **gas manifold**  **specifications, o**  **r**

**as sembly**  **details, f**  **rom the**  **physical teardowns**  **of a**  **s imilar**  **product or**  **by estimations** 

**ba sed**  **on industry**  **knowledge. DOE**  **collected additional**  **component information**  **during**

**th e**  **engineering manufacturer**  **interviews.**

**DO E**  **selected over**  **25 water**  **heaters, d**  **irect heating**  **equipment, and**  **pool heaters**  **to**

**re present**  **the market,**  **and used**  **these for**  **physical teardowns**  **in the**  **engineering analysis.** 

**DO E**  **did not**  **explicitly identify**  **the model**  **number or**  **manufacturer of**  **the units**  **it tore** 

**do wn**  **because this**  **could expose**  **sensitive information**  **about individual**  **manufacturers’**

**pr oducts.** 

5.6 .2 Baseline Units

**DO E**  **selected baseline**  **units for**  **the teardown**  **analysis to**  **determine which** 

**te chnologies**  **manufacturers incorporate**  **into products**  **i n**  **order to**  **obtain energy** 

**ef**

**ficiencies equal**  **to the**  **current Federal**  **energy conservation**  **standards. T**  **ypically, the** 

**ba seline**  **units are**  **representative of**  **the minimum**  **technology and**  **lowest costing**  **product**

**th at**  **a m**  **anufacturer can**  **produce. DOE**  **used the**  **baseline units**  **as a**  **r eference**  **point to** 

**co mpare**  **the technology**  **and cost**  **of products**  **with higher**  **energy efficiency**  **levels. Th**  **e**

**ef**

**ficiencies of**  **the baseline**  **units are**  **described in**  **section 5.4.1.** 

5.6 .2.1 Water Heater Baseline Unit Features

**DO E**  **gathered information**  **from the**  **physical and**  **virtual teardowns**  **as well**  **as**

**fr om**  **published information**  **and data**  **to determine**  **which features**  **manufacturers**

**in corporate**  **into baseline**  **units. D**  **OE also**  **identified the**  **general characteristics**  **common to** 

**al l,**  **or a**  **p ortion,**  **of product**  **types. For**  **example, all**  **storage tank**  **designs include**  **a d**  **ip**

**tub e,**  **hot water**  **outlet, and**  **a s**  **acrificial anode.**  **DOE also**  **identified the**  **operating features** 

**of the**  **baseline units.**  **F or**  **example, b**  **aseline gas­fired**  **products (**  i.e.

**, s**  **torage and** 

**5­15 instantaneous)**  **use standing**  **pilots, r**  **equire no**  **electricity, and**  **use a**  **n atural**  **draft to** 

**ve ntilate.**  **Table 5.6.1**  **s hows**  **the characteristics**  **of baseline**  **water heaters.** 

**5­16**Table 5.6.1 M arket Baseline Units Characteristics for Water HeatersProductClass**Ga s­fired** **Storage Water** **Heater O** **il­fired Storage** **Water Heater** **El ectric** **Storage Water** **Heater I** **nstantaneous Gas­fired** **Water H** **eater**

Characteristics

**St orage**  **Tank X**  **X X** 

**Foam Insulation**  **X (1”)**  **X (1.5”)** 

**Fi berglass**  **Insulation X**  **(1”)**

**Di p**  **Tube X**  **X X** 

**Cold Water**  **Inlet X** 

**H ot**  **Water Outlet**  **X X**  **X X** 

**Combustion Chamber**  **X X**  **X**

**Burner X**  **X**

**Oil­fired Power**  **Burner**

**Sy stem**  **X**

**S acrificial**  **Anode X**  **X X** 

**Flue/Flue Baffle**  **(CRS) X**  **X**

**Heat Exchanger**  **(Copper) X** 

**V ent**  **X**

**Te mperature/Pressure**  **Relief**

**Va lve**  **X X**  **X**

**Standing Pilot**  **Ignition**

**Sy stem**  **X X** 

**Burner Control**  **Thermostat X**  **X X** 

**Gas Valve**  **X X** 

**Electric Resistive**  **Heating**

**Ele ments**  **X**

**Th ermostat/Wire**  **Harness X** 

**F low**  **D etector**  **X**

**O uter**  **Case X**  **X X**  **X**

**Heat Trap**  **X X** 

**Packaging X**  **X X**  **X**

**5­17**5.6.2.2 Direct Heating Equipment Baseline Unit Features

**DO E**  **gathered information**  **from the**  **physical and**  **virtual teardowns**  **as well**  **as**

**fr om**  **published information**  **and data**  **to determine**  **which features**  **manufacturers**

**in corporate**  **into baseline**  **units. G**  **enerally, b**  **aseline direct**  **heating equipment**  **units require** 

**no electricity**  **(except where**  **a w**  **all fan­type**  **needs power**  **for the**  **fan motor),**  **use standing** 

**pi lot**  **ignition systems,**  **a nd**  **use a**  **n atural**  **draft to**  **ventilate. With**  **the exception**  **of the**  **air**

**ci rculation**  **fan of**  **a w**  **all fan­type**  **unit, direct**  **heating equipment**  **baseline products**  **differ**

**pr imarily**  **by the**  **outer casing**  **design, while**  **the method**  **of operation**  **is similar**  **for all** 

**pr oduct**  **types. Ta**  **ble 5.6.2**  **shows the**  **characteristics of**  **baseline direct**  **heating equipment.** 

Ta ble 5.6.2 M arket Baseline Units Characteristics for Direct Heating EquipmentProductClass**Ga s** **Wall Fan­type** **G as** **Wall Gravity­type** **G as** **Floor­type G** **as Room­type** 

Characteristics

**He at**  **Exchanger (ACRS)**  **X X**  **X X** 

**Room Circulation**  **Blower X** 

**S tanding**  **Pilot Ignition** 

**Sy stem**  **X X**  **X X** 

**Burner X**  **X X**  **X**

**Pilot Light**  **Sensing Control** 

**Va lve**  **X X**  **X X** 

**Combustion Chamber**  **X X**  **X X** 

**Flue X**  **X X**  **X**

**Air Intake**  **X X**  **X X** 

**Burner Control**  **Thermostat X**  **X X**  **X**

**Floor Grate**  **X**

**O uter**  **Case X**  **X X**  **X**

**Packaging X**  **X X**  **X**

5.6.2.3 Pool Heater Baseline Unit Features

**DO E**  **identified the**  **characteristics of**  **a b**  **aseline pool**  **heater. For**  **most units,**  **a**

**c opper**  **tube heat**  **exchanger is**  **located above**  **a b**  **urner assembly,**  **and units**  **are naturally** 

**dr afted.**  **DOE did**  **not specify**  **a p**  **articular ignition**  **system because**  **both electronic** 

**5­18 ignitions**  **and standing**  **pilot systems**  **exist, and**  **the technology**  **assessment determined**  **that**

**th e**  **ignition type**  **had no**  **affect on**  **the energy**  **efficiency (see**  **chapter 3,**  **MTA).**

**DO E**  **distinguished between**  **the two**  **ignition systems**  **because of**  **the energy**  **use**

**di fference**  **between electronic**  **ignition and**  **standing pilot**  **systems. Th**  **e DOE**  **test**

**pr ocedure**  **does not**  **account for**  **these differences**  **in energy**  **use in**  **the thermal**  **efficiency**

**me tric.**  **The thermal**  **efficiency descriptor**  **specified by**  **EPCA a**  **nd measured**  **by DOE’s** 

**te st**  **procedure does**  **not take**  **into account**  **the energy**  **efficiency benefits**  **of ignition** 

**so urces**  **that are**  **alternatives to**  **standing pilots**  **(** e.g.

**, e**  **lectronic ignition).**  **The thermal** 

**ef**

**ficiency descriptor**  **also does**  **not account**  **for additional**  **energy consumption**  **of a** 

**c ontinuous,**  **s tanding**  **pilot light**  **when the**  **burner is**  **off because**  **it is**  **a s**  **teady­state test** 

**pr ocedure**  **and thermal**  **efficiency is**  **determined when**  **the burner**  **is on.**  **Therefore, two** 

**ba seline**  **products were**  **established to**  **create two**  **efficiency pathways**  **so that**  **the**

**di fferences**  **in energy**  **use associated**  **with standing**  **pilots and**  **electronic ignition**  **are**

**di stinguished.** 

**Tab le**  **5.6.3 s**  **hows the**  **characteristics of**  **baseline pool**  **heater.**

Table 5.6.3 M arket Baseline Units Characteristics for Pool Heaters

Ch aracteristics

**Cold Water**  **Inlet**

**Hot Water**  **Outlet**

**Heat Exchanger**  **(Copper)**

**Ignition System**  **(Standing Pilot**  **or Electronic)** 

**Burner**

**Combustion Chamber** 

**Fl ue/Vent** 

**Ai r**  **Intake**

**Bu rner**  **Control Thermostat** 

**Ou ter**  **Case**

**Pa ckaging** 

**The residential**  **heating products**  **baseline units**  **were a**  **r eference**  **point for** 

**de termining**  **the cost­efficiency**  **relationship of**  **units with**  **higher energy**  **efficiencies. Th**  **e**

**de sign**  **features incorporated**  **into each**  **baseline unit**  **a nd**  **the method**  **of operation**  **(** i.e.

**,**

**s tanding**  **pilot, natural**  **draft) were**  **compared to**  **units with**  **higher energy**  **efficiencies to** 

**de termine**  **the change**  **in manufacturing,**  **installation, and**  **operating costs**  **(see chapter**  **8,**

**LC C**  **Analysis for**  **installation and**  **operating costs).**  **Finally, b**  **y comparing**  **design features,** 

**DO E**  **identified individual**  **technologies and**  **how e**  **ach affected**  **energy efficiency**  **and the** 

**co st­efficiency**  **relationship for**  **each unit.** 

5.7 TECHNOLOGY OPTIONS

**Tec hnology**  **options are**  **technology and**  **design changes**  **manufacturers use**  **to**

**im prove**  **product energy**  **efficiency. These**  **technologies provide**  **different ways**  **to increase** 

**pr oduct**  **energy efficiency**  **from the**  **minimum (“baseline”)**  **to the**  **market maximum** 

**5­19 (“max­tech”).**  **While DOE**  **recognizes that**  **manufacturers use**  **many different**  **technologies**

**an d**  **approaches to**  **increase the**  **energy efficiency**  **of residential**  **heating products,**  **t he** 

**pr esented**  **technologies and**  **combination of**  **technologies and**  **their ordering**  **is one** 

**po ssible**  **way manufacturers**  **could reach**  **max­tech.**

**Fo r**  **the engineering**  **analysis, D**  **OE calculated**  **the manufacturing**  **costs for**  **each**

**ef**

**ficiency level**  **between the**  **baseline and**  **max­tech at**  **each of**  **the levels**  **specified in** 

**se ction**  **5.4.2. Using**  **the teardown**  **analysis and**  **discussions with**  **manufacturers, D**  **OE**

**id entified**  **each technology**  **incorporated into**  **each energy**  **efficiency level**  **(** i.e.

**, EF** 

**, AF**  **UE, or**  **thermal efficiency),**  **and calculated**  **the individual**  **cost for**  **each efficiency**  **level.**

**DO E**  **fed the**  **designs for**  **each efficiency**  **levels and**  **the BOMs**  **into the**  **cost model**  **to**

**ca lculate**  **all the**  **MPCs, i**  **ncluding the**  **costs for**  **the baseline**  **unit and**  **each incremental** 

**ef**

**ficiency level.**  **DOE averaged**  **the costs**  **to normalize**  **the data**  **and prevent**  **exposing**

**se nsitive**  **information about**  **individual manufacturers’**  **products. O**  **nce the**  **MPC of**  **each**

**ef**

**ficiency level**  **was determined,**  **DOE calculated**  **the cost­efficiency**  **curves (see**  **section**

**5.1 0).** 

5.7 .1 Screened­In Technologies

**Se veral**  **technologies for**  **improving energy**  **efficiency of**  **residential water**  **heaters,**

**di rect**  **heating equipment,**  **and pool**  **heaters were**  **considered and**  **analyzed (see**  **chapter 3).** 

**Ad ditionally,**  **several of**  **these technologies**  **met the**  **criteria of**  **the screening**  **analysis (see** 

**ch apter**  **4) and**  **were considered**  **as viable**  **technologies for**  **improving energy**  **efficiency.**

**Ho wever,**  **DOE chose**  **to further**  **reduce the**  **list of**  **technologies developed**  **from the** 

**sc reening**  **analysis. Information**  **gathered from**  **the teardown**  **analysis, m**  **anufacturer**

**in terviews,**  **a nd**  **information gathered**  **from publicly**  **available product**  **literature was**  **used**

**to determine**  **which technologies**  **manufacturers incorporate**  **into products**  **that are** 

**cu rrently**  **available to**  **consumers so**  **that DOE**  **could represent**  **the current**  **market. DOE** 

**al so**  **determined which**  **technologies manufacturers**  **are most**  **likely to**  **include in**  **future**

**pr oducts.**  **A lthough**  **several technologies**  **are not**  **included in**  **the engineering**  **analysis,**

**DO E**  **acknowledges that**  **these are**  **still viable**  **methods to**  **improve the**  **energy efficiency**  **of**

**re sidential**  **water heaters,**  **direct heating**  **equipment, and**  **pool heaters.**  **T able**  **5.7.1, Table** 

**5.7 .2,**  **and Table**  **5.7.3 l**  **ist the**  **technologies that**  **DOE did**  **not screen**  **out in**  **the screening** 

**an alysis**  **(see chapter**  **4) and**  **which are**  **included in**  **the engineering**  **analysis.**

**5­20**Table 5.7.1 T echnologies Considered for the Engineering Analysis for Water

He aters

Te chnology Pr oduct Class

**In creased**  **Jacket Insulation**  **Ga s,**  **e lectric,**  **oil storage** 

**Fo am**  **Insulation Oi**  **l storage** 

**Im prove/Increased**  **Heat Exchanger**  **Surface Area**  **Gas, electric,**  **oil storage,**  **instantaneous**

**Enh anced**  **Flue Baffle**  **Ga s,**  **o il**  **storage**

**Di rect­Vent**  **(concentric venting)**  **In stantaneous** 

**Po wer**  **Vent Ga**  **s, o**  **il storage,**  **instantaneous**

**Ele ctronic**  **(or interrupted)**  **Ignition Ga**  **s, o**  **il storage,**  **instantaneous**

**He at**  **Pump Water**  **Heater Ele**  **ctric storage** 

**Co ndensing**  **Ga s,**  **o il**  **storage, instantaneous** 

Ta ble 5.7.2 T echnologies Considered for the Engineering Analysis for Direct

He ating Equipment

Technology

**Increased Heat**  **Exchanger Surface**  **Area**

**Direct­Vent (concentric**  **venting)**

**Electronic Ignition** 

**Induced Draft** 

**Two stage**  **and Modulating**  **Operation**

**Co ndensing** 

Table 5.7.3 T echnologies Considered for the Engineering Analysis for Pool Heaters

Technology

**Increased Heat**  **Exchanger Surface**  **Area**

**More Effective**  **Insulation (Combustion**  **Chamber)**

**Power Venting** 

**Se aled**  **Combustion**

**Co ndensing** 

**The most**  **prevalent and**  **commonly used**  **technologies to**  **ob tain**  **the intermediate** 

**an d**  **max­tech energy**  **efficiency levels**  **are described**  **below.**

5.7 .1.1 Technologies for Gas­fired Storage Water Heaters

**In order**  **to increase**  **the energy**  **efficiency of**  **gas­fired storage**  **water heaters,** 

**ma nufacturers**  **first increase**  **the thickness**  **of insulation**  **between the**  **storage tank**  **and the** 

**ou ter**  **shell. Manufacturers**  **typically add**  **up t**  **o 2**  **i nches**  **of insulation**  **to reduce**  **the amount** 

**of heat**  **loss through**  **the sides**  **of the**  **tank. Manufacturers**  **also replace**  **the standing**  **pilot**

**wi th**  **an electronic**  **ignition and**  **combine this**  **technology with**  **thicker insulation.**  **For even** 

**gr eater**  **improvements, m**  **anufacturers add**  **a p**  **ower vent**  **to replace**  **the natural**  **vent**

**ope ration.**  **An enhanced**  **flue baffle,**  **which can**  **improve the**  **heat transfer**  **rate, may**  **also b**  **e**

**in cluded**  **in a**  **d esign**  **having a**  **p ower**  **vent. Finally,**  **max­tech gas­fired**  **storage water** 

**he aters**  **include heat**  **exchangers that**  **condense the**  **flue gases**  **in order**  **to extract**  **the**

**5­21 greatest**  **amount of**  **heat. Table**  **5.7.4 s**  **hows the**  **technologies associated**  **with each** 

**ef**

**ficiency level**  **for the**  **representative product.** 

Ta ble 5.7.4 G as­fired Storage Water Heater, 40 Gallon

Ef ficiency Level (EF) Te chnology

**Ba seline**  **(EF**

**= 0.59)**  **St anding**  **Pilot and**  **1” Insulation** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.62) St**  **anding Pilot**  **and 1.5”**  **Insulation**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.63) St**  **anding Pilot**  **and 2”**  **Insulation**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.64) Ele**  **ctronic Ignition,**  **Power Vent,**  **and 1”** 

**In sulation** 

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.65) Ele**  **ctronic Ignition,**  **Power Vent**  **and 1.5”** 

**In sulation** 

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.66) Ele**  **ctronic Ignition,**  **Power Vent,**  **and 2”** 

**In sulation** 

**Eff iciency**  **Level 6** 

**– Max­Tech**  **(EF**

**= 0.77)**  **Condensing, Power**  **Vent, 2”**  **Insulation**

5.7 .1.2 Technologies for Oil­fired Storage Water Heaters

**Ene rgy**  **efficiency improvements**  **for oil­fired,**  **storage water**  **heaters are**  **similar to** 

**th ose**  **made for**  **other storage**  **water heaters.**  **By their**  **n ature**  **of operation,**  **b aseline**  **oil**

**bu rners**  **feature interrupted**  **ignition and**  **power venting.**  **No oil­fired**  **water heater**  **on the** 

**ma rket**  **features a**  **s tanding**  **pilot or**  **lacks a**  **p ower**  **vent. Increasing**  **insulation thickness**  **and**

**sw itching**  **from fiberglass**  **to less**  **conductive foam**  **reduces the**  **amount of**  **heat loss** 

**th rough**  **the tank**  **walls. A**  **dditionally, enhanced**  **flue baffles**  **can increase**  **the rate**  **of heat** 

**tr ansfer,**  **which can**  **improve energy**  **efficiency. Table**  **5 .7.5**  **shows the**  **technologies**

**in corporated**  **into oil­fired**  **storage water**  **heaters.**

**5­22**Table 5.7.5 O il­fired Storage Water Heater, 30 Gallon with Burner Assembly

Ef ficiency Level (EF) Te chnology

**Ba seline**  **(EF**

**= 0.53)**  **Ele ctronic**  **Ignition and**  **1” Fiberglass** 

**In sulation** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.54) Ele**  **ctronic Ignition**  **and 1.5”**  **Fiberglass**

**In sulation** 

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.56) Ele**  **ctronic Ignition**  **and 2”**  **Fiberglass**

**In sulation** 

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.58) Ele**  **ctronic Ignition**  **and 2.5”**  **Fiberglass**

**In sulation** 

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.60) Ele**  **ctronic Ignition**  **and 2”**  **Foam Insulation** 

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.62) Ele**  **ctronic Ignition,**  **2.5” Foam**  **Insulation**

**Eff iciency**  **Level 6**  **( EF** 

**= 0**  **.66) Ele**  **ctronic Ignition,**  **1” Fiberglass** 

**In sulation,**  **and Enhanced**  **Flue Baffles** 

**Eff iciency**  **Level 7** 

**– Max­Tech**  **(EF**

**= 0.68)**  **Electronic I**  **gnition, 1”**  **Foam Insulation,**  **and**

**Enh anced**  **Flue Baffles** 

5.7 .1.3 Technologies for Electric Storage Water Heaters

**The majority**  **of electric**  **storage water**  **heaters typically**  **heat water**  **with resistive** 

**he ating**  **elements. T**  **ypically, manufacturers**  **increase the**  **energy efficiency**  **of electric,** 

**st orage**  **water heaters**  **by increasing**  **the thickness**  **of the**  **insulation. In**  **order to**  **make**

**si gnificant**  **improvements in**  **energy efficiency,**  **manufacturers rely**  **on heat**  **pump**

**te chnology.**  **Table 5.7.6**  **s hows**  **that heat**  **pump water**  **heaters supplemented**  **by resistive** 

**he aters**  **can improve**  **the energy**  **efficiency up**  **t o**  **2.2 EF.**  **Heat pump**  **water heaters**  **are the** 

**ma ximum**  **technology available**  **for electric**  **storage water**  **heaters.**

Ta ble 5.7.6 E lectric Storage Water Heater, 50 gallon

Ef ficiency Level (EF) Te chnology

**Ba seline**  **(EF**

**= 0.90)**  **1.5 ”**  **Foam Insulation** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.91) 2”**  **Foam Insulation** 

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.92) 2.2**  **5” Foam**  **Insulation**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.93) 2.5**  **” Foam**  **Insulation**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.94) 3”**  **Foam Insulation** 

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.95) 4”**  **Foam Insulation** 

**Eff iciency**  **Level 6** 

**– Max­Tech**  **(EF**

**= 2.2)**  **He at**  **Pump W**  **ater Heater** 

5.7 .1.4 Technologies for Instantaneous Gas­fired Water Heaters

**Ma nufacturers**  **of instantaneous**  **gas­fired water**  **heaters use**  **technologies similar**  **to**

**th ose**  **used for**  **gas­fired storage**  **water heaters**  **to increase**  **energy efficiency.**  **EF i**  **s**

**im proved**  **by improving**  **the heat**  **exchanger area**  **to increase**  **the rate**  **of heat**  **transfer**

**(s imilar**  **to enhancing**  **flue baffles),**  **b y**  **replacing the**  **standing pilot**  **with an**  **electronic**

**ig nition,**  **and by**  **adding power**  **vents. A**  **dditionally, energy**  **efficiency is**  **also improved**  **by**

**in corporating**  **a d**  **irect vent**  **configuration. Finally,**  **the maximum**  **technology available**  **for**

**5­23 instantaneous**  **water heaters**  **is a**  **c ondensing**  **design. Table**  **5.7.7 s**  **hows the**  **technologies**

**in corporated**  **into instantaneous**  **gas­fired water**  **heaters.**

Ta ble 5.7.7 I nstantaneous Gas­fired Water Heater, 0 G allon, 117 Btu/h Input

Ca pacity

Ef ficiency Level (EF) Te chnology

**Ba seline**  **(EF**

**= 0.62)**  **St anding**  **Pilot**

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.69) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger**  **Area**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.78) Ele**  **ctronic Ignition**  **And Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.80) Ele**  **ctronic Ignition**  **and Power**  **Vent**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.82) Ele**  **ctronic Ignition,**  **Power Vent,**  **Improved**

**He at**  **Exchanger Area** 

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.84) Ele**  **ctronic Ignition,**  **Power Vent,**  **and**

**Im proved**  **Heat Exchanger**  **Area**

**Eff iciency**  **Level 6**  **( EF** 

**= 0**  **.85) Ele**  **ctronic Ignition,**  **Power Vent,**  **Direct**

**Ve nt,**  **and Improved**  **Heat Exchanger**  **Area**

**Eff iciency**  **Level 7** 

**– Max­Tech**  **(EF**

**= 0.92)**  **Co ndensing** 

5.7 .1.5 Technologies for Gas Wall Fan­type Direct Heating Equipment

**DO E**  **identified several**  **ways manufacturers**  **of wall**  **fan­type DHE**  **use to**  **improve**

**en ergy**  **efficiency. Typically,**  **manufacturers replace**  **the standing**  **pilot ignition**  **system**

**wi th**  **an electronic**  **system, and**  **incorporate a**  **t wo­speed**  **blower to**  **reduce motor**  **power**

**co nsumption.**  **In addition,**  **manufacturers improve**  **the heat**  **exchanger design**  **to increase** 

**th e**  **rate of**  **heat transfer.**  **Finally, manufacturers**  **reach the**  **maximum technology**  **by**

**in cluding**  **an induced**  **draft combustion**  **system to**  **increase the**  **AFUE to**  **80. Table**  **5.7.8**

**s hows**  **the technologies**  **manufacturers typically**  **include in**  **wall fan­type**  **DHE.**

T able 5.7.8 G as Wall Fan­type DHE, Over 42,000 Btu/h

Ef ficiency Level (AFUE) Te chnology

**Ba seline** 

**(A FUE** 

**= 7**  **4) St**  **anding Pilot** 

**Eff iciency**  **Level 1** 

**( AFUE** 

**= 7**  **5) In**  **termittent Ignition**  **and 2**  **S peed**  **Blower**

**Eff iciency**  **Level 2** 

**( AFUE** 

**= 7**  **6) In**  **termittent Ignition**  **and Improved**  **Heat Exchanger** 

**Eff iciency**  **Level 3** 

**( AFUE** 

**= 7**  **7) In**  **termittent Ignition,**  **2 S**  **peed Blower,**  **and Improved** 

**He at**  **Exchanger**

**Eff iciency**  **Level 4** 

**– Max­Tech** 

**(A FUE** 

**= 8**  **0) In**  **duced Draft**  **and Electronic**  **Ignition**

5.7 .1.6 Technologies for Gas Wall Gravity­type Direct Heating Equipment

**Tec hnologies**  **incorporated into**  **wall gravity­type**  **DHE a**  **t lower**  **efficiency levels** 

**ty**

**pically exclude**  **technologies involving**  **electricity. The**  **baseline units**  **do not**  **use**

**5­24 electricity,**  **so manufacturers**  **avoid adding**  **components that**  **would require**  **an electrical** 

**co nnection**  **in order**  **to remain**  **cost­effective. Instead,**  **manufacturers make**  **improvements**

**to the**  **heat exchanger**  **to increase**  **the rate**  **of heat**  **t ransfer**  **and AFUE.**  **W hen**  **heat**

**ex changer**  **improvements maximize**  **AFUE and**  **even greater**  **energy efficiencies**  **are**

**de sired,**  **manufacturers ultimately**  **add an**  **electrical connection**  **for an**  **electronic ignition.** 

**Fi nally,**  **manufacturers obtain**  **the maximum**  **efficiency with**  **an induced**  **draft system.** 

**Tab le**  **5.7.9 s**  **hows the**  **technologies incorporated**  **into w**  **all gravity­type**  **DHE.**

Ta ble 5.7.9 G as Wall Gravity­type DHE, Over 27,000 B tu/h, up to 46,000 Btu/h

Ef ficiency Level (AFUE) Te chnology

**Ba seline**  **(AFUE**

**= 6**  **4) St**  **anding Pilot** 

**Eff iciency**  **Level 1**  **( AFUE** 

**= 6**  **6) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **8) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 3**  **( AFUE** 

**= 7**  **1) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 4**  **( AFUE** 

**= 7**  **2) Ele**  **ctronic Ignition** 

**Eff iciency**  **Level 5** 

**– Max­Tech**  **(AFUE**

**=**

**7 5)**  **In duced**  **Draft**

5.7 .1.7 Technology for Gas Floor­type Direct Heating Equipment

**Ga s**  **floor­type direct**  **heating equipment**  **products are**  **typically made**  **to operate** 

**wi thout**  **the use**  **of electricity.**  **Therefore, manufacturers**  **avoid technologies**  **requiring**

**el ectrical**  **connections. H**  **owever, after**  **a c**  **ertain point,**  **it becomes**  **cost­effective to**  **add**

**el ectrical**  **components. F**  **loor­type DHE**  **technologies and**  **the pathway**  **is similar**  **to that** 

**us ed**  **for wall**  **gravity­type DHE.**  **Ta ble**  **5.7.10 shows**  **the technologies**  **manufacturers**

**ty**

**pically use**  **to improve**  **AFUE.**

**5­25**Table 5.7.10 Gas Floor­type DHE, Over 37,000 Btu/h

Ef ficiency Level (AFUE) Te chnology

**Ba seline**  **(AFUE**

**= 5**  **7) St**  **anding Pilot** 

**Eff iciency**  **Level 1**  **( AFUE** 

**= 5**  **8) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **1) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 3**  **( AFUE** 

**= 6**  **2) St**  **anding Pilot**  **and Improved**  **Heat**

**Exc hanger** 

**Eff iciency**  **Level 4**  **( AFUE** 

**= 6**  **5) Im**  **proved Heat**  **Exchanger and**  **Electronic**

**Ig nition** 

**Eff iciency**  **Level 5** 

**– Max­Tech**  **(AFUE**

**=**

**7 8)**  **In duced**  **Draft**

5.7 .1.8 Technology for Room­type Direct Heating Equipment

**Tec hnologies**  **for room­type**  **DHE are**  **similar to**  **the technologies**  **incorporated into** 

**wa ll**  **gravity­type and**  **floor­type DHE.**  **W all**  **gravity­type, floor­type,**  **and room­type** 

**pr oducts**  **have baseline**  **units and**  **operations similar**  **to each**  **other, and**  **the major** 

**di fferences**  **are only**  **in the**  **outer casing**  **and method**  **of installation,**  **therefore, their** 

**te chnology**  **pathways are**  **similar. Table**  **5.7.11 shows**  **t he**  **technologies of**  **room­type**

**DH E.**  **Room­type DHE**  **is capable**  **of a**  **h igher**  **max­tech, however.**  **DOE identified**  **room**

**t ype**  **heaters capable**  **of condensing**  **operations.**

Ta ble 5.7.11 Gas Room­type DHE, Over 27,000 Btu/h, up to 46,000 Btu/h

Ef ficiency Level (AFUE) Te chnology

**Ba seline**  **(AFUE**

**= 6**  **4) St**  **anding Pilot** 

**Eff iciency**  **Level 1**  **( AFUE** 

**= 6**  **5) Standing**  **Pilot and**  **Improved Heat**  **Exchanger**

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **6) Standing**  **Pilot and**  **Improved Heat**  **Exchanger**

**Eff iciency**  **Level 3**  **( AFUE** 

**= 6**  **7) Standing**  **Pilot and**  **Improved Heat**  **Exchanger**

**Eff iciency**  **Level 4**  **( AFUE** 

**= 6**  **8) Standing**  **Pilot and**  **Improved Heat**  **Exchanger**

**Eff iciency**  **Level 5**  **( AFUE** 

**= 7**  **0) Ele**  **ctronic Ignition** 

**Eff iciency**  **Level 6**  **( AFUE** 

**= 7**  **8) In**  **duced Draft** 

**Eff iciency**  **Level 7** 

**– Max­Tech** 

**(A FUE** 

**= 9**  **3) Co**  **ndensing**

5.7 .1.9 Technologies for Pool Heaters

**Po ol**  **heater manufacturers**  **incorporate many**  **technologies in**  **order to**  **improve the** 

**en ergy**  **efficiency of**  **pool heaters.**  **El ectronic**  **ignition, as**  **a t**  **echnology option,**  **is not** 

**in cluded**  **(see chapter**  **3, MTA)**  **because it**  **does not**  **improve the**  **thermal efficiency,**  **as**

**me asured**  **by DOE**  **test procedures.**  **However, DOE**  **identified two**  **separate baseline**  **units:**

**on e**  **that uses**  **a s**  **tanding pilot**  **and one**  **that uses**  **an electronic**  **ignition. The**  **energy**

**ef**

**ficiency of**  **a p**  **ool heater**  **incorporating a**  **s tanding**  **pilot can**  **be increased**  **by improving** 

**th e**  **heat exchanger**  **design and**  **by improving**  **the insulation**  **surrounding the**  **combustion**

**ch amber.**  **Table 5.7.12**  **shows the**  **range of**  **efficiency levels**  **covered by**  **a p**  **ool heater** 

**5­26 having**  **a s**  **tanding pilot.**  **The highest**  **thermal efficiency**  **achieved by**  **this type**  **of pool** 

**he ater**  **is shown**  **at Efficiency**  **Level 3.** 

**Po ol**  **heaters, i**  **ncluding baseline**  **units, a**  **re also**  **manufactured with**  **electronic**

**ig nitions.**  **Th is**  **type of**  **pool heater**  **is capable**  **of much**  **higher energy**  **efficiencies.**

**Ma nufacturers**  **improve the**  **energy efficiency**  **of these**  **types of**  **pool heaters**  **by improving** 

**th e**  **heat exchanger**  **design, adding**  **more effective**  **insulation around**  **the combustion** 

**ch amber,**  **adding power**  **venting, and**  **sealing the**  **combustion chamber**  **to protect**  **from**

**hi gh**  **winds. Th**  **e maximum**  **technology is**  **achieved by**  **including technologies**  **capable of** 

**co ndensing**  **operations.**

**Ele ctronic**  **ignitions are**  **typically included**  **in pool**  **heaters at**  **Efficiency Level**  **3**

**a nd**  **below w**  **hen local**  **regulations prohibit**  **the use**  **of standing**  **pilots. A**  **dditionally,**

**el ectronic**  **ignitions are**  **included in**  **products above**  **Efficiency Level**  **3 b**  **ecause an** 

**el ectrical**  **connection is**  **present. Pool**  **heaters at**  **Efficiency Level**  **4 a**  **nd above**  **utilize**

**po wer**  **vents that**  **require an**  **electrical source.**  **Therefore, DOE**  **conducted the**  **engineering**

**an alysis**  **for residential**  **pool heaters**  **with two**  **baseline models:**  **one with**  **a s**  **tanding pilot** 

**an d**  **one with**  **an electronic**  **ignition.**

Ta ble 5.7.12 Gas­fired Pool Heater, 250,000 Btu/h

Ef ficiency Level (Thermal Efficiency) Te chnology

**Ba seline**  **(Thermal Efficiency** 

**= 7**  **8)***

**Eff iciency**  **Level 1**  **( Thermal**  **Efficiency**

**= 7**  **9)*** **Improved Heat**  **Exchanger Design** 

**Eff iciency**  **Level 2**  **( Thermal**  **Efficiency**

**= 8**  **1)*** **Improved Heat**  **Exchanger Design** 

**Eff iciency**  **Level 3**  **( Thermal**  **Efficiency**

**= 8**  **2)*** **Improved Heat**  **Exchanger Design,**  **More**

**Eff ective**  **Insulation (Combustion** 

**Ch amber)** 

**Eff iciency**  **Level 4**  **( Thermal**  **Efficiency**

**= 8**  **3) Po**  **wer Venting** 

**Eff iciency**  **Level 5**  **( Thermal**  **Efficiency**

**= 8**  **4) Po**  **wer Venting,**  **Improved Heat** 

**Exc hanger**  **Design**

**Eff iciency**  **Level 6**  **( Thermal**  **Efficiency**

**= 8**  **6) Sealed**  **Combustion, Improved**  **Heat**

**Exc hanger**  **Design**

**Eff iciency**  **Level 7**  **( Thermal**  **Efficiency**

**= 9**  **0) Sealed**  **Combustion, Condensing** 

**Eff iciency**  **Level 8** 

**– Max­Tech** 

**(Th ermal**  **Efficiency**

**= 9**  **5) Se**  **aled Combustion,**  **Condensing,**

**Im proved**  **Heat Exchanger**  **Design**

***Te chnologies**  **incorporating either**  **a s**  **tanding pilot**  **o r**  **electronic ignition.**  **Efficiency Levels** 

**ab ove**  **3 i**  **nclude electronic**  **ignition.**

**DO E**  **identified the**  **technologies that**  **manufacturers typically**  **incorporate into** 

**re sidential**  **heating products.**  **D OE**  **also identified**  **what efficiency**  **levels are**  **associated**

**wi th**  **each technology,**  **or a**  **c ombination**  **of technologies.**  **N ext,**  **the technologies,**  **a long** 

**wi th**  **the BOMs,**  **w ere**  **incorporated into**  **the cost**  **model to**  **determine manufacturing**  **costs**

**at various**  **efficiency levels.**  **Th is**  **information allowed**  **DOE to**  **develop t**  **he relationship** 

**be tween**  **cost and**  **efficiency for**  **each efficiency**  **level.**

**5­27**5.8 COST MODEL

5.8 .1 Generation of Bills of Materials

**The end**  **result of**  **each teardown**  **is a**  **s tructured**  **bill o**  **f materials**  **(BOM). DOE** 

**de veloped**  **structured BOMs**  **for each**  **of the**  **physical and**  **virtual teardowns.**  **Structured**

**BO Ms**  **describe each**  **product part**  **and its**  **relationship to**  **the other**  **parts in**  **the estimated** 

**or der**  **in which**  **manufacturers assembled**  **them. The**  **BOMs describe**  **each fabrication**  **and**

**as sembly**  **operation in**  **detail, including**  **the type**  **of equipment**  **needed (**  e.g.

**, p**  **resses,**

**dr ills),**  **the process**  **cycle times,**  **a nd**  **the labor**  **associated with**  **each manufacturing**  **step.**

**The result**  **is a**  **t horough**  **and explicit**  **model of**  **the production**  **process, w**  **hich includes** 

**sp ace,**  **conveyor, and**  **equipment requirements**  **by planned**  **production level.** 

**The BOMs**  **incorporate all**  **materials, c**  **omponents, a**  **nd fasteners**  **classified as** 

**ei ther**  **raw m**  **aterials or**  **purchased parts**  **and assemblies.**  **Th e**  **classifications into**  **raw**

**ma terials**  **or purchased**  **parts were**  **based on**  **DOE’s previous**  **industry experience,**  **recent**

**in formation**  **in trade**  **publications, a**  **nd discussions**  **w ith**  **high­ and low­volume**  **original**

**eq uipment**  **manufacturers (OEMs).**  **DOE also**  **visited manufacturing**  **plants to**  **reinforce its** 

**un derstanding**  **of the**  **industry’s current**  **manufacturing practices**  **for each**  **of the**  **three**

**pr oduct**  **categories.**

**Fo r**  **purchased parts,**  **t he**  **purchase price**  **is estimated**  **based on**  **volume­variable**

**pr ice**  **quotations and**  **detailed discussions**  **with manufacturers**  **and component**  **suppliers.**

**Fo r**  **fabricated parts,**  **t he**  **prices of**  **“raw” materials**  **(** e.g.

**, t**  **ube, sheet**  **metal) are**  **estimated**

**on the**  **basis of**  **5­year averages**  **(see section**  **5.8.4.4). The**  **cost of**  **transforming the** 

**in termediate**  **materials into**  **finished parts**  **is estimated**  **based on**  **current industry**  **pricing.**

**DO E**  **shared major**  **estimates with**  **manufacturers during**  **the engineering**  **manufacturer**

**in terviews**  **to gain**  **feedback on**  **the analysis,**  **i ts**  **methodology, and**  **preliminary results.** 

5.8 .2 Cost Structure of the Spreadsheet Models

**The manufacturing**  **cost assessment**  **methodology used**  **is a**  **d etailed,**  **component**

**f ocused**  **technique for**  **calculating the**  **manufacturing cost**  **of a**  **p roduct**  **(direct materials,** 

**di rect**  **labor, and**  **the overhead**  **costs associated**  **with production).**  **The first**  **step in**  **the**

**ma nufacturing**  **cost assessment**  **was the**  **creation of**  **a c**  **omplete and**  **structured BOM**  **from**

**th e**  **disassembly of**  **the units**  **selected for**  **teardown. The**  **units were**  **dismantled, and**  **each**

**pa rt**  **was characterized**  **according to**  **weight, manufacturing**  **processes used,**  **dimensions,**

**ma terial,**  **and quantity.**  **The BOM**  **incorporates all**  **materials, c**  **omponents, a**  **nd fasters**  **with**

**es timates**  **of raw**  **m aterial**  **costs and**  **purchased part**  **c osts.**  **A ssumptions**  **on the**  **sourcing of** 

**pa rts**  **and in­house**  **fabrication were**  **based on**  **industry experience,**  **information in**  **trade**

**pub lications,**  **a nd**  **discussions with**  **manufacturers. I**  **nterview and**  **plant visits**  **were**

**co nducted**  **with manufacturers**  **to add**  **industry experience**  **on the**  **methodology and** 

**pr icing.** 

**The last**  **step was**  **to convert**  **this information**  **into dollar**  **values. To**  **perform this** 

**ta sk,**  **DOE collected**  **information on**  **labor rates,**  **t ooling**  **costs, r**  **aw m**  **aterial prices,**  **a nd** 

**ot her**  **factors. D**  **OE assumed**  **values for**  **these parameters**  **using internal**  **expertise and** 

**5­28 confidential**  **information available**  **to DOE**  **contractors. A**  **lthough most**  **of the**  **assumptions**

**ar e**  **manufacturer specific**  **and cannot**  **be revealed,**  **section 5.8.4.3**  **p rovides**  **a d**  **iscussion of** 

**th e**  **values used**  **for each**  **assumption.**

**In summary,**  **DOE assigned**  **costs of**  **labor, materials,**  **and overhead**  **to each**  **part**

**wh ether**  **purchased or**  **produced in­house.**  **DOE then**  **aggregated single­part**  **costs into** 

**ma jor**  **assemblies (**  e.g.

**, g**  **as manifold**  **assembly, combustion**  **chamber assembly,**  **heat**

**ex changer**  **assembly, controls,**  **e tc.)**  **and summarized**  **these costs**  **in a**  **w orksheet.**  **During**

**en gineering**  **interviews with**  **manufacturers, D**  **OE showed**  **key estimates**  **from the**  **cost**

**mo del**  **and asked**  **for feedback.**  **DOE considered**  **any information**  **manufacturers gave**  **that**

**wa s**  **relevant to**  **the cost**  **model and**  **incorporated it**  **i nto**  **the analysis,**  **i f**  **appropriate.**

5.8 .3 Cost Model and Definitions

**On ce**  **DOE disassembled**  **selected units,**  **gathered information**  **from manufacturer** 

**ca talogs**  **on additional**  **products, a**  **nd identified**  **technologies, D**  **OE created**  **an appropriate** 

**ma nufacturing**  **cost model**  **that could**  **translate physical**  **information into**  **MPCs. Th**  **e cost** 

**mo del**  **is based**  **on production**  **activities and**  **divides factory**  **costs into**  **the following** 

**ca tegories:** 

• **M aterials:**  **Purchased parts**  **(** i.e. **gas valves,**  **b lower**  **motors, i**  **gnition modules,**  **e tc.),** 

**ra w**  **m aterials**  **(** i.e.

**, c**  **old rolled**  **steel, copper**  **tube, etc.),**  **and indirect**  **materials that** 

**ar e**  **used for**  **processing and**  **fabrication.**

• **L abor:**  **Fabrication, assembly,**  **indirect, and**  **supervisor labor.**  **Fabrication and** 

**as sembly**  **labor cost**  **are burdened**  **with benefits**  **and supervisory**  **costs.**

• **O verhead:**  **Equipment, tooling,**  **and building**  **depreciation, as**  **well as**  **utilities,**

**eq uipment**  **and tooling**  **maintenance, insurance,**  **and property**  **taxes.**

5.8 .3.1 Cost Definitions

**Be cause**  **there are**  **many different**  **accounting systems**  **and methods**  **to monitor** 

**co sts,**  **D OE**  **defined the**  **above terms**  **as follows:** 

• **D irect**  **material: Purchased**  **parts (out­sourced)**  **plus m**  **anufactured parts**  **(made in** 

**h ouse**  **from raw**  **m aterials).** 

• **I ndirect**  **material: Material**  **used during**  **manufacturing (**  e.g.

**, w**  **elding rods,** 

**ad hesives).** 

• **F abrication**  **labor: Labor**  **associated with**  **in­house piece**  **manufacturing.**

• **A ssembly**  **labor: Labor**  **associated with**  **final assembly.** 

• **I ndirect**  **labor: Labor**  **costs that**  **scaled with**  **fabrication and**  **assembly labor.**  **This**

**in cluded**  **the cost**  **of technicians,**  **m anufacturing**  **engineering support,**  **stocking, etc.** 

**th at**  **were assigned**  **on a**  **s pan**  **basis.**

• **Eq uipment**  **and plant**  **depreciation: Money**  **allocated to**  **pay for**  **initial equipment** 

**in stallation**  **and replacement**  **as the**  **production equipment**  **wears out.** 

• **To oling**  **depreciation: Cost**  **for initial**  **tooling (including**  **non­recurring engineering** 

**an d**  **debugging of**  **the tools)**  **and tooling**  **replacement a**  **s it**  **wears out.** 

**5­29**• **Building depreciation:**  **Money allocated**  **to pay**  **for the**  **building space**  **and the** 

**co nveyors**  **that feed**  **and/or make**  **up t**  **he assembly**  **line.**

• **U tilities:**  **Electricity, gas,**  **telephones, e**  **tc.**

• **M aintenance:**  **Annual money**  **spent on**  **maintaining tooling**  **and equipment.** 

• **I nsurance:**  **Appropriated as**  **a f**  **unction of**  **unit cost.** 

• **P roperty**  **Tax: Appropriated**  **as a**  **f unction**  **as unit**  **cost.**

5.8 .4 Cost Model Assumptions Overview

**As discussed**  **in the**  **previous section,**  **assumptions about**  **manufacturer practices** 

**an d**  **cost structure**  **played an**  **important role**  **in estimating**  **the final**  **product cost.**  **Some**

**as sumptions**  **were different**  **for specific**  **manufacturers, d**  **epending on**  **their market** 

**po sition,**  **manufacturing practices,**  **and size.** 

**In converting**  **physical information**  **about the**  **product into**  **cost information,**  **DOE**

**re constructed**  **manufacturing processes**  **for each**  **component using**  **internal expertise**  **and**

**kn owledge**  **of the**  **methods used**  **by the**  **industry. DOE**  **u sed**  **assumptions regarding**  **the**

**ma nufacturing**  **process parameters**  **(** e.g.

**, e**  **quipment use,**  **labor rates,**  **t ooling**  **depreciation,**

**an d**  **cost of**  **purchased raw**  **m aterials)**  **to determine**  **the value**  **of each**  **component. DOE** 

**th en**  **summed the**  **values of**  **the components**  **into assembly**  **costs and,**  **finally, the**  **total**

**pr oduct**  **cost. The**  **product cost**  **included the**  **material, labor,**  **and overhead**  **costs associated** 

**wi th**  **the manufacturing**  **facility. The**  **material costs**  **included both**  **direct and**  **indirect**

**ma terials.**  **Th e**  **labor costs**  **included fabrication,**  **assembly, indirect,**  **direct, and**  **supervisor**

**la**

**bor rates,**  **i ncluding**  **the associated**  **overhead.**

**The labor**  **costs were**  **determined by**  **the type**  **of product**  **(water heater,**  **direct**

**he ating**  **equipment, and**  **pool heater)**  **manufactured at**  **the factory.**  **Overhead costs** 

**in cluded**  **equipment depreciation,**  **tooling depreciation,**  **b uilding**  **depreciation, utilities,** 

**eq uipment,**  **tooling maintenance,**  **insurance, p**  **roperty, a**  **nd taxes.** 

**DO E**  **p resented**  **an initial**  **draft of**  **the cost­efficiency**  **curves to**  **manufacturers**

**du ring**  **the interviews.**  **U sing**  **the information**  **gathered from**  **the interviews,**  **DOE made** 

**si gnificant**  **updates to**  **the cost**  **model to**  **address manufacturer**  **comments. Th**  **ese changes** 

**in volved**  **updating component**  **and material**  **pricing, and**  **production volumes.**  **DOE**

**ut ilized**  **a c**  **ontinuous refinement**  **process to**  **update information.**  **Changes to**  **the cost** 

**mo del**  **were made**  **immediately after**  **interviews so**  **that refined**  **data could**  **be presented**  **to**

**th e**  **next manufacturer.**  **Positive feedback**  **from manufacturers**  **presented with**  **refined data** 

**co nfirmed**  **the accuracy**  **of the**  **changes.**

**The next**  **sections discuss**  **specific assumptions**  **about outsourcing,**  **factory**

**pa rameters,**  **p roduction**  **volumes, a**  **nd material**  **prices. When**  **the assumptions**  **are**

**ma nufacturer­specific,**  **they are**  **presented as**  **industry averages**  **to prevent**  **disclosure of** 

**co nfidential**  **information.**

**5­30**5.8.4.1 Fabrication Estimates

**DO E**  **characterized parts**  **based on**  **whether manufacturers**  **purchased them**  **from**

**ou tside**  **suppliers or**  **fabricated them**  **in­house. For**  **purchased parts,**  **D OE**  **estimated the** 

**pu rchase**  **price. For**  **fabricated parts,**  **D OE**  **estimated the**  **price of**  **raw m**  **aterials (**  e.g.

**, t**  **ube,**

**sh eet**  **metal) and**  **the cost**  **of transforming**  **them into**  **finished parts.**  **W henever**  **possible,**

**DO E**  **obtained price**  **quotes directly**  **from the**  **manufacturers’ suppliers.** 

**DO E**  **b ased**  **the manufacturing**  **operations assumptions**  **o n**  **internal expertise,** 

**in terviews**  **with manufacturers,**  **a nd**  **manufacturing facilities**  **site visits.**  **Th e**  **major**

**ma nufacturer**  **processes identified**  **and developed**  **for the**  **spreadsheet model**  **are listed**  **in**

**Tab le**  **5.8.1.**

Ta ble 5.8.1 C ost Model In­House Manufacturing Operation Assumptions

Fa brication Fi nishing As sembly/Joining Quality Control

**Fixturing Wa**  **shing Ad**  **hesive Bonding**  **Inspecting and**  **Testing**

**Sta mping/Pressing**  **P a**  **inting Sp**  **ot Welding** 

**Tu rret**  **P unch**  **Po wder**  **Coating Se**  **am Welding** 

**Tu be**  **F orming**  **De ­burring**  **Pa ckaging** 

**Br ake**  **F orming**  **Po lishing** 

**Cu tting**  **a nd**  **Shearing Refrigerant**  **Charging**

**In sulating/Insulation** 

**I n** 

**jection**

**E n**  **ameling**

**Fabrication process**  **cycle times**  **were estimated**  **and entered**  **into the**  **BOM. Water** 

**he ater,**  **direct heating**  **equipment, and**  **pool heater**  **products have**  **different manufacturing** 

**pr ocesses.**  **Th ese**  **differences are**  **reflected in**  **the purchased**  **components. F**  **or some**  **of the** 

**la rger**  **subassemblies, s**  **uch as**  **burner assemblies,**  **DOE estimated**  **the purchased**  **part costs** 

**fr om**  **discussions with**  **component suppliers**  **on a**  **v olume­weighted**  **basis.**

5.8 .4.2 Production Volumes Assumptions

**A manufacturer’s**  **production volumes**  **vary depending**  **on several**  **factors,**

**in cluding**  **market share,**  **the type**  **of product**  **produced (**  i.e.

**, w**  **ater heater**  **versus pool** 

**he ater),**  **and if**  **the manufacturer**  **produces other**  **similar products**  **(** e.g.

**, c**  **ommercial**

**eq uipment,**  **b oilers,**  **f urnaces,**  **s torage**  **tanks, e**  **tc.). DOE**  **b ased**  **production volume** 

**as sumptions**  **for these**  **residential heating**  **products on**  **industry knowledge**  **and**

**en gineering**  **manufacturer interviews.** 

**Ac cording**  **to manufacturers**  **of water**  **heaters, v**  **irtually all**  **new r**  **esidential**

**co nstructions**  **use water**  **heaters to**  **heat potable**  **water. As**  **reported in**  **the MTA,** 

**ap proximately**  **1.75 million**  **single­family and**  **multi­family home**  **constructions started**  **in**

**20 06,**  **which contributed**  **to water**  **heater shipments.**  **Additionally, the**  **replacement market** 

**wa s**  **responsible for**  **a m**  **ajority of**  **the shipments,**  **w hich**  **brought the**  **total to**  **approximately**

**9.4 5**  **million shipments**  **in 2006.**  **2 As**  **reported in**  **the MTA,**  **four competitors**  **hold the** 

**ma jority**  **of the**  **water heater**  **market share.**  **Gas­fired and**  **electric storage**  **water heaters** 

**ma ke**  **up t**  **he majority**  **of the**  **market, and**  **large production**  **volumes are**  **necessary for**  **these**

**fo ur**  **companies to**  **service this**  **large demand.**  **Based on**  **the information**  **provided by** 

**5­31 manufacturers**  **and shipment**  **information provided**  **by AHRI,**  **DOE estimated**  **that a** 

**f actory**  **manufacturing gas­fired**  **and electric**  **storage water**  **heaters produces**  **an average**  **of**

**1.5 million**  **units per**  **year 3** 

**. Water**  **heater manufacturers**  **have multiple**  **facilities capable**  **of**

**th is**  **capacity that**  **collectively meet**  **the overall**  **demand.**

**The market**  **for oil­fired**  **storage water**  **heaters is**  **smaller, and**  **the factory** 

**pa rameters**  **estimated by**  **DOE reflect**  **this. F**  **ewer units**  **are purchased**  **per year**  **so factories** 

**do not**  **have large**  **volumes or**  **high rates**  **of output,**  **when compared**  **to gas­fired**  **or electric** 

**st orage**  **water heater**  **production. DOE**  **estimated that**  **a manufacturer**  **of oil­fired**  **storage**

**wa ter**  **heaters produces**  **an average**  **of 15,000**  **units per**  **year.**

**Ma nufacturers**  **of direct**  **heating equipment**  **have significantly**  **smaller production** 

**vo lumes**  **than manufacturers**  **of water**  **heaters. Th**  **e main**  **reason for**  **the low**  **production**

**vo lume**  **is that**  **the majority**  **of homes**  **in the**  **U.S. use**  **ducted heating**  **systems rather**  **than**

**di rect**  **heating methods**  **to heat**  **homes. A**  **dditionally, some**  **direct heating**  **equipment is** 

**so ld**  **primarily in**  **the replacement**  **market, floor**  **heaters for**  **example. In**  **consideration of** 

**th ese**  **factors, D**  **OE estimated**  **that a**  **m anufacturer**  **of direct**  **heating equipment**  **products**

**pr oduces**  **an average**  **of 35,000**  **units per**  **year.**

**Ma nufacturers**  **of pool**  **heaters hold**  **a u**  **nique position**  **in the**  **residential heating** 

**pr oducts**  **market because**  **their products**  **serve a**  **s mall**  **market segment**  **and are**  **considered**

**lu xury**  **items. A**  **dditionally, shipment**  **levels fluctuate**  **and are**  **dependent upon**  **the time**  **of**

**ye ar,**  **consumer preferences,**  **e conomic**  **conditions, and**  **changing regulations**  **from local** 

**go vernments.**  **F our**  **manufacturers supply**  **the majority**  **of pool**  **heaters to**  **the U.S.**  **market.**

**Ba sed**  **on information**  **provided by**  **manufacturers and**  **shipment information**  **provided by** 

**AH RI,**  **DOE estimated**  **that a**  **m anufacturer**  **of pool**  **heaters produces**  **an average**  **of 40,000** 

**un its**  **per year.** 

5.8 .4.3 Factory Parameters Assumptions

**Ma nufacturers**  **of water**  **heaters, d**  **irect heating**  **equipment, and**  **pool heaters**  **will**

**ha ve**  **different factory**  **parameters to**  **meet the**  **production volumes**  **described previously.** 

**The refore,**  **DOE used**  **information gathered**  **from publicly**  **available literature,** 

**ma nufacturer**  **interviews, and**  **analysis of**  **common industry**  **practices to**  **formulate factory** 

**pa rameters**  **for each**  **type of**  **manufacturer. DOE**  **first m**  **ade assumptions**  **about a**  **s et**  **of**

**pr eliminary**  **factory parameters**  **before the**  **manufacturer interviews.**  **D OE**  **then revised**  **the**

**as sumptions**  **using comments**  **and information**  **gathered during**  **the interviews.**  **Ta ble** 

**5.8 .2,**  **Table 5.8.3,**  **Table 5.8.4,**  **and Table**  **5.8.5 l**  **ist DOE’s**  **assumptions for**  **manufacturers**

**of water**  **heaters, d**  **irect heating**  **equipment, and**  **pool heaters.**  **Ta ble**  **5.8.3 l**  **ists assumptions** 

**fo r**  **factory parameters**  **of water**  **heater manufacturers**  **located outside**  **of the**  **U.S. It**  **was**

**im portant**  **to consider**  **this type**  **of factory**  **for water**  **heaters because**  **a p**  **ortion of**  **units,**

**pa rticularly**  **instantaneous gas­fired**  **water heaters,**  **purchased by**  **U.S. consumers**  **are**

**ma nufactured**  **outside of**  **the U.S**  **w here**  **factory parameters**  **are different,**  **as the**  **table**

**sh ows.**  **It should**  **be noted,**  **however, manufacturers**  **who utilize**  **facilities outside**  **of the** 

**U.S**

**. typically**  **still have**  **operations of**  **some level**  **(** i .e.

**, some**  **manufacturing, distribution,** 

**re search**  **and development,**  **customer service)**  **occurring within**  **the U.S.**  **DOE accounted** 

**5­32 for**  **the impact**  **on MPCs**  **in the**  **cost model**  **when both**  **domestic and**  **international**

**ope rations**  **are present.** 

Ta ble 5.8.2 D omestic Water Heater Factory Parameter Assumptions

Pa rameter Es timate

Ga s­fired and

El ectric

Ma nufacturing

Fa cility Oi l­fired

Ma nufacturing

Fa cility

**Pl ant**  **Capacity (units**  **/year) 1,5**  **00,000 50**  **,000**

**Ac tual**  **Annual Production**  **Volume (units/year)**  **1,2 50,000**  **15 ,000** 

**Fa brication**  **Labor Wages**  **($/hr) 16**  **.00 16**  **.00**

**Fr inge**  **Benefits Ratio**  **60 %**  **60 %** 

**Fo r**  **those water**  **heaters manufactured**  **outside of**  **the U.S.,**  **D OE**  **accounted for**  **the**

**di fferent**  **characteristics found**  **in these**  **manufacturing facilities.**  **International**

**ma nufacturing**  **differs from**  **domestic manufacturing**  **by capacity,**  **as Table**  **5.8.3 s**  **hows.**

**Fa cilities**  **overseas typically**  **have larger**  **capacities and**  **are able**  **to have**  **higher product** 

**ou tput.**  **This is**  **accomplished with**  **lower assembly**  **and manufacturing**  **costs because** 

**wo rker**  **wages and**  **benefits are**  **typically lower**  **than those**  **found in**  **the U.S.** 

Ta ble 5.8.3 I nternational Water Heater Factory Parameter Assumptions

Pa rameter Es timate

**Pl ant**  **Capacity (units**  **/year) 1,5**  **00,000**

**Ac tual**  **Annual Production**  **Volume (units/year)**  **1,2 50,000** 

**La bor**  **Wages ($/hr)**  **15 .50** 

**Fr inge**  **Benefits Ratio**  **50 %** 

**The direct**  **heating equipment**  **industry is**  **smaller than**  **the water**  **heater industry,** 

**an d**  **the manufacturing**  **capacities reflect**  **this characteristic,**  **as shown**  **in Table**  **5.8.4.**

**Co nsumer**  **demand for**  **direct heating**  **equipment typically**  **fluctuates over**  **the year,**  **and the** 

**ma jority**  **of shipments**  **occur during**  **the heating**  **season. During**  **the warmer**  **months, p**  **lant**

**ope rations**  **are sometimes**  **suspended entirely**  **and wage**  **workers can**  **take leave**  **for up**  **t o** 

**tw o**  **months. In**  **addition, some**  **products are**  **only sold**  **as replacement**  **units, a**  **nd this** 

**re duces**  **the production**  **volumes even**  **more, as**  **markets f**  **or a**  **p articular**  **product do**  **not**

**gr ow.**  **Floor furnaces**  **are an**  **example.**

Ta ble 5.8.4 D irect Heating Equipment Factory Parameter Assumptions

Pa rameter Es timate

**Pl ant**  **Capacity (units/year)**  **50 ,000** 

**An nual**  **Production Volume**  **(units/year) 35**  **,000**

**La bor**  **Wages ($/hr)**  **16 .00** 

**Fr inge**  **Benefits Ratio**  **50 %** 

**Po ol**  **heater manufacturing**  **capacity falls**  **between the**  **levels for**  **water heaters**  **and**

**di rect**  **heating equipment,**  **and factory**  **parameters for**  **pool heater**  **manufacturing share** 

**si milar**  **characteristics with**  **direct heating**  **equipment. Production**  **levels are**  **subject to** 

**5­33 fluctuations**  **over the**  **year as**  **the majority**  **of pool**  **h eaters**  **are shipped**  **during the**  **warmer**

**se asons**  **and when**  **pools are**  **used. In**  **addition, p**  **ool heater**  **manufacturers serve**  **a s**  **pecific**

**ma rket**  **and their**  **products are**  **considered a**  **l uxury**  **item (**  i.e.

**, u**  **nlike water**  **heaters which** 

**ar e**  **considered a**  **h ousehold**  **necessity), therefore**  **shipment levels**  **are lower**  **and sometimes** 

**de pendent**  **on consumers’**  **financial status,**  **w eather,**  **and installation**  **and maintenance** 

**co sts.** 

Ta ble 5.8.5 P ool Heater Factory Parameter Assumptions

Pa rameter Es timate

**Pl ant**  **Capacity (units/year)**  **80 ,000** 

**An nual**  **Production Volume**  **(units/year) 40**  **,000**

**La bor**  **Wages ($/hr)**  **16 .00** 

**Fr inge**  **Benefits Ratio**  **50 %** 

**The main**  **difference between**  **the assumptions**  **for all**  **o f**  **the residential**  **heating**

**pr oducts**  **is the**  **production volumes**  **and the**  **product output**  **rates. Labor**  **rates for** 

**ma nufacturers**  **of water**  **heaters differ**  **between domestic**  **and international**  **operations.**

**The se**  **rates, f**  **or both**  **foreign and**  **domestic manufacturers,**  **a re**  **based on**  **weighted**

**av erages.**  **C ertain**  **manufacturers of**  **water heaters,**  **particularly, instantaneous**  **gas­fired**

**wa ter**  **heaters, m**  **ake their**  **products in**  **foreign factories**  **where labor**  **rates are**  **less than** 

**do mestic**  **rates. F**  **oreign labor**  **rates are**  **based on**  **engineering manufacturer**  **interviews,**

**in ternal**  **expertise, and**  **industry literature**  **research. DOE**  **assumed that**  **all manufacturers** 

**of direct**  **heating equipment**  **and pool**  **heaters are**  **domestic. Domestic**  **labor rates**  **are based** 

**on published**  **labor rates**  **for the**  **HVAC manufacturing**  **industry from**  **the U.S.**  **Bureau of** 

**La bor.**  **4**

5.8.4.4 Material Prices Assumptions

**DO E**  **determined the**  **cost of**  **raw m**  **aterials using**  **publicly available**  **information**

**su ch**  **as the**  **American Metals**  **Market, 5**  **interviews with**  **manufacturers, a**  **nd direct** 

**di scussions**  **with material**  **suppliers. C**  **ommon metals**  **used in**  **the fabrication**  **of residential** 

**he ating**  **products include**  **plain cold**  **rolled steel**  **(CRS), copper**  **tubing, and**  **aluminum.**

**The re**  **have been**  **drastic fluctuations**  **in metal**  **prices over**  **the last**  **few years.**  **To a**  **ccount**

**fo r**  **these fluctuations,**  **D OE**  **used a**  **5 ­year**  **average of**  **metal prices**  **from the**  **Bureau of** 

**La bor**  **Statistics Producer**  **Price Indices**  **(PPIs) spanning**  **2003 to**  **2007 with**  **an adjustment** 

**to 2007$.**  **6 DOE**  **used the**  **PPIs for**  **copper rolling,**  **drawing, and**  **extruding and**  **steel mill** 

**pr oducts,**  **a nd**  **made the**  **adjustments to**  **2007$ using**  **the gross**  **domestic product**  **implicit**

**pr ice**  **deflator. 7**  **Table 5.8.6**  **shows the**  **5­year average**  **metal prices**  **DOE used**  **for the** 

**an alysis.** 

**5­34**Table 5.8.6 F ive­Year Metal Prices (2003 to 2007)

Me tals Co st ($/lb)

(2 007$)

**Pl ain**  **Cold Rolled**  **Steel $0**  **.36**

**Pa inted**  **CRS $0**  **.57**

**Ga lvanized**  **CRS $0**  **.43**

**Al uminized**  **CRS $0**  **.53**

**Tex tured**  **CRS $0**  **.63**

**CR S**  **Tube $0**  **.74**

**St ainless**  **Steel $2**  **.39**

**Fi n**  **Aluminum $1**  **.57**

**Pl ain**  **Copper $1**  **.52**

**Cop per**  **Tube**

**– P**  **lain $1**  **.90**

**Br ass**  **$2 .00** 

**Be tween**  **2003 and**  **2006, the**  **price of**  **steel rose**  **over 60**  **percent and**  **the price**  **of**

**cop per**  **rose over**  **140 percent.**  **DOE used**  **a 5**  **­year average**  **in material**  **prices from**  **2003 to** 

**20 07**  **to normalize**  **these drastic**  **increases to**  **some extent**  **to better**  **represent long­term** 

**ma terial**  **price averages.** 

**Fo r**  **resins used**  **in the**  **fabrication of**  **these residential**  **heating products,**  **D OE**  **used**

**cu rrent**  **resin prices**  **gathered from**  **industry research,**  **p ublicly**  **available publications**  **such**

**as Plastics**  **News, 8**  **and interviews**  **with manufacturers.**  **R esin**  **prices are**  **determined by** 

**qu antity**  **and supplier**  **(** i.e.

**, c**  **ontract specific)**  **and therefore**  **have no**  **true fixed**  **market**

**pr ice.**  **For this**  **analysis, D**  **OE used**  **market resin**  **prices current**  **as of**  **December 2007.**  **The**

**pr ices**  **of resins**  **have been**  **constantly increasing**  **and closely**  **follow petroleum**  **prices.**

**Tab le**  **5.8.7 s**  **hows the**  **current resin**  **prices used**  **in the**  **analysis.**

Ta ble 5.8.7 M ost Prevalent Resin Prices as of December 2007

Re sins Co st ($/lb) (2007$)

**Po lystyrene**  **(PS) $0**  **.63**

**Po lypropylene**  **(PP) $0**  **.55**

**Lo w**  **Density Polyethylene**  **$0 .72** 

**Po lyurethane**  **Foam (non­HCFC**  **blowing agent)**  **$1 .50** 

**PV C**  **(Hard) $0**  **.51**

5.8 .5 Manufacturing Production Cost

**On ce**  **the cost**  **estimate for**  **each teardown**  **unit was**  **finalized, a**  **d etailed**  **summary**

**wa s**  **prepared for**  **relevant components,**  **s ubassemblies,**  **and processes.**  **Th e**  **BOM thus** 

**de tails**  **all aspects**  **of unit**  **costs. D**  **OE totaled**  **the cost**  **of materials,**  **l abor,**  **and direct** 

**ov erhead**  **used to**  **manufacture a**  **p roduct**  **in order**  **to calculate**  **the manufacturing** 

**5­35 production**  **cost (MPC).**  **a Figure**  **5.8.1 s**  **hows the**  **general breakdown**  **of costs**  **associated**

**wi th**  **manufacturing a**  **p roduct.** 

Figure 5.8.1 F ull Production Costs

**The full**  **cost of**  **product is**  **broken down**  **into two**  **main costs,**  **t he**  **full production** 

**co st**  **or MPC,**  **and the**  **non­production cost.**  **The non­production**  **cost is**  **equal to**  **the**

**ma nufacturer**  **markup m**  **inus profits.** 

**Fo llowing**  **the development**  **of the**  **MPCs, D**  **OE reviewed**  **i ts**  **major cost**  **estimates**

**by conducting**  **engineering interviews**  **with residential**  **heating products**  **manufacturers.**

**DO E**  **p resented**  **the data**  **and estimates**  **to manufacturers**  **who provided**  **feedback and** 

**va lidation.**  **DOE used**  **a c**  **ontinuous refinement**  **process by**  **incorporating each** 

**ma nufacturer’s**  **feedback before**  **each set**  **of interviews.**  **A s**  **a r**  **esult, DOE**  **developed**

**MP Cs**  **for use**  **in the**  **engineering analysis**  **and subsequent**  **analyses.**

**Tec hnologies**  **used in**  **the units**  **subject to**  **teardown are**  **noted in**  **the summary** 

**sh eet**  **of each**  **cost model**  **and are**  **cost­estimated individually.**  **Thus, v**  **arious**

**im plementations**  **of technologies**  **can be**  **accommodated, ranging**  **from assemblies**  **that are** 

**en tirely**  **purchased to**  **units that**  **are entirely**  **from raw**  **m aterials.**  **H ybrid**  **assemblies,**

**co nsisting**  **of purchased**  **parts and**  **parts made**  **on site**  **are thus**  **also accommodated.** 

**a When**  **viewed from**  **the company­wide**  **perspective, the**  **sum of**  **all m**  **aterial, labor,**  **and overhead**  **costs**

**e quals**  **the c**  **ompany’s sales**  **c ost,**  **also referred**  **to a**  **s th**  **e cost**  **of goods**  **sold (**  **COGS).**

**5­ 36** 5.9 ENGINEERING MANUFACTURER I NTERVIEWS

**Thr oughout**  **the rulemaking**  **process, D**  **OE seeks**  **feedback and**  **insight from** 

**in terested**  **parties to**  **improve the**  **information used**  **in the**  **analyses. F**  **or the**  **engineering**

**an alysis,**  **D OE**  **discussed the**  **analysis assumptions**  **and e**  **stimates, c**  **ost model,**  **and**

**pr eliminary**  **cost­efficiency curves**  **with various**  **manufacturers of**  **water heaters,**  **d irect** 

**he ating**  **equipment, and**  **pool heaters.**  **D OE**  **considered all**  **the information**  **manufacturers**

**pr ovided**  **when refining**  **the cost**  **model. DOE**  **incorporated equipment**  **and manufacturing** 

**pr ocess**  **figures into**  **the analysis**  **in the**  **form of**  **averages to**  **avoid disclosing**  **sensitive**

**in formation**  **about individual**  **manufacturers’ products**  **o r**  **manufacturing processes.** 

**Be fore**  **the interviews,**  **D OE**  **gave manufacturers**  **an engineering**  **package that** 

**in cluded**  **possible questions**  **to be**  **asked during**  **the interview**  **a nd**  **a s**  **preadsheet with** 

**pr eliminary**  **assumptions, e**  **stimates, a**  **nd results**  **(cost­efficiency curves).**  **DOE asked** 

**ma nufacturers**  **to provide**  **feedback regarding**  **the representation**  **of the**  **market and**  **to**

**sup ply**  **any data**  **that could**  **improve DOE’s**  **estimates a**  **nd assumptions.**  **D OE’s**  **questions**

**in cluded**  **the following:** 

• **W hich**  **design features**  **affecting energy**  **use are**  **generally incorporated**  **into**

**“b aseline”**  **products?**

• **W hat**  **are the**  **costs of**  **attaining the**  **individual efficiency**  **levels selected?**  **How d**  **o**

**th ese**  **efficiency levels**  **correspond to**  **the various**  **technologies listed?**  **What other** 

**te chnologies**  **are used,**  **and what**  **are the**  **corresponding efficiency**  **levels?**

• **A re**  **the industry**  **manufacturing costs**  **we have**  **calculated representative**  **of your** 

**fi rm’s**  **costs for**  **new c**  **onstruction as**  **well as**  **replacement units?** 

**DO E**  **also asked**  **manufacturers to**  **supply any**  **engineering insight**  **into how** 

**ma nufacturers**  **select technologies**  **to manufacture,**  **how c**  **osts associated**  **for efficiency** 

**le vels**  **are determined,**  **the general**  **manufacturing strategies**  **used to**  **modify manufacturing** 

**pr ocesses,**  **and several**  **other questions**  **in order**  **to gain**  **insight and**  **feedback.**

5.9 .1 Key Issues Discussed

**DO E**  **conducted multiple**  **interviews with**  **manufacturers. D**  **uring these**  **interviews,**

**DO E**  **engaged the**  **manufacturers in**  **open discussions,**  **so that**  **all issues**  **regarding the** 

**he ating**  **products rulemaking**  **would be**  **discussed. In**  **addition to**  **providing comment**  **and**

**fe edback**  **regarding the**  **specific questions**  **asked by**  **DOE about**  **the engineering**  **analysis**

**an d**  **MPCs, m**  **anufacturers also**  **supplied comments**  **on a**  **r ange**  **of other**  **issues affecting**  **the**

**en gineering**  **analysis. D**  **OE compiled**  **all of**  **the issues**  **discussed by**  **manufacturers and** 

**pr esents**  **those considered**  **paramount by**  **manufacturers, c**  **ollectively. Analysis**  **of these** 

**ke y**  **issues allowed**  **DOE to**  **refine the**  **engineering analysis**  **and the**  **preliminary**

**ma nufacturer**  **impact analysis**  **(MIA) (chapter**  **12). Manufacturers**  **presented the**  **following**

**ke y**  **issues.**

**1. Recent**  **material price**  **increases and**  **the affects**  **on MPC** 

**2. Cost**  **increases caused**  **by flammable**  **vapor ignition**  **resistant (FVIR)**  **requirements**

**5­37**5.9.1.1 Recent Material Price Increases and the Affect on MPC

**Du ring**  **interviews, m**  **anufacturers commented**  **on the**  **prices DOE**  **used for**  **metal**

**ma terials**  **used in**  **heating products,**  **w hich**  **are a**  **f ive**  **year average**  **from 2003**  **to 2007.** 

**DO E’s**  **prices are**  **lower than**  **the current**  **prices because**  **the averages**  **do not**  **reflect the** 

**re cent**  **spikes in**  **material prices.**  **M anufacturers**  **commented that**  **within that**  **five year**  **time**

**fr ame,**  **and in**  **even smaller**  **periods, m**  **etal prices**  **have significantly**  **increased which**  **has**

**af**

**fected product**  **prices. According**  **to the**  **U.S. Department**  **of Labor’s**  **Bureau of**  **Labor**

**St atistics**  **and based**  **on the**  **Bureau’s producer**  **price indices,**  **t he**  **price of**  **copper has** 

**in creased**  **approximately 150**  **percent in**  **the five**  **year span,**  **and the**  **price of**  **cold rolled** 

**st eel**  **sheets and**  **strips has**  **increased approximately**  **63 percent**  **in the**  **five year**  **span.**

**Ad ditionally,**  **from 2005**  **to 2007,**  **the price**  **of copper**  **pipe and**  **tube has**  **increased**

**ap proximately**  **72 percent.**  **9**

**The material**  **price increases**  **are reflected**  **in products**  **such as**  **instantaneous water** 

**he aters,**  **f or**  **example, where**  **heat exchanger**  **improvements typically**  **increase the**  **amount**

**of copper**  **and copper**  **tubing within**  **the heat**  **exchanger design.**  **In addition,**  **p ool**  **heaters**

**ar e**  **sensitive to**  **the price**  **of copper**  **due to**  **their large**  **heat exchangers,**  **w hich**  **are made** 

**pr imarily**  **from finned­copper**  **tubing. Technologies**  **involving purchased**  **motors may**  **also**

**be influenced**  **because of**  **the significant**  **amount of**  **copper used**  **to construct**  **windings.**

**Wa ter**  **heater prices**  **may also**  **b e**  **affected by**  **prices of**  **cold rolled**  **steel (CRS).**  **Typically,**

**ef**

**ficiency improvements**  **increase the**  **amount of**  **CRS in**  **the form**  **of increased**  **flue or** 

**he at**  **exchanger size**  **and material**  **additions to**  **the flue**  **baffle.**

**Ty pically,**  **manufacture feedback**  **included MPCs**  **based on**  **current prices,**  **which**

**in clude**  **the high**  **material prices.** 

5.9 .1.2 Cost Increases Caused by Flammable Vapor Ignition Resistant (FVIR)

re quirements

**Ma nufacturers**  **commented on**  **the impacts**  **of the**  **FVIR requirements**  **on**

**ma nufacturing**  **costs. In**  **2003, manufacturers**  **were required**  **to include**  **FVIR systems**  **in**

**al l**  **30, 40,**  **and 50**  **gallon residential**  **water heaters,**  **and as**  **of 2007**  **all residential**  **water**

**he aters**  **are required**  **to be**  **FVIR compliant.**  **Manufacturers commented**  **that research**  **and**

**de velopment,**  **changes to**  **manufacturing processes,**  **and new**  **e quipment**  **were needed**  **to**

**me et**  **this new**  **r equirement.**  **Manufacturers indicated**  **that FVIR**  **systems increased**  **the**

**MP Cs**  **above the**  **level initially**  **estimated by**  **DOE.**

5 .9.1.3 Other Key Issues

**Ma nufacturers**  **also p**  **rovided the**  **following feedback**  **regarding other**  **key issues** 

**th at**  **do not**  **directly affect**  **the engineering**  **analysis, b**  **ut still**  **considered by**  **DOE for**  **this**

**pr eliminary**  **rulemaking. Chapter**  **12 presents**  **these key**  **issues in**  **detail:**

**1. State**  **and local**  **emission standards;** 

**2. ENERGY**  **S TAR**  **program for**  **water heaters;** 

**3. Increases**  **in installation**  **costs as**  **a r**  **esult of**  **amended standards;** 

**4. Packaging**  **and shipment**  **impacts as**  **a r**  **esult of**  **amended standards;** 

**5­38 5.**  **Safety concerns**  **regarding near­condensing**  **instantaneous water**  **heaters and**  **pool**

**he aters;** 

**6. Potential**  **fuel and**  **equipment switching**  **as a**  **r esult**  **o f**  **amended standards;** 

**7. Derating**  **direct heating**  **equipment and**  **impact on**  **consumers; and** 

**8. Potential**  **decrease in**  **pool heater**  **shipments as**  **a r**  **esult of**  **amended standards** 

5.1 0 COST VERSUS EFFICIENCY C URVES

**As described**  **in section**  **5.8.5, DOE**  **first estimated**  **the MPC**  **of the**  **baseline units** 

**fo r**  **each product**  **class. D**  **OE then**  **determined the**  **intermediate efficiency**  **levels up**  **t o**  **the**

**ma x­tech**  **level (described**  **by EF,**  **AFUE, o**  **r thermal**  **efficiency) that**  **represent the** 

**re sidential**  **heating products**  **market. Additionally,**  **DOE identified**  **the MPCs**  **for each**  **of**

**th ese**  **intermediate efficiency**  **levels.**

**The result**  **of the**  **engineering analysis**  **is a**  **s et**  **of cost­efficiency**  **curves. D**  **OE**

**cr eated**  **ten curves**  **representing each**  **product class**  **examined under**  **this preliminary** 

**ru lemaking.**  **For storage**  **water heaters,**  **t he**  **cost efficiency**  **curves show**  **t he**  **representative**

**ra ted**  **storage volumes**  **in addition**  **to the**  **other storage**  **volumes analyzed.**  **Figure 5.10.1** 

**t hrough**  **Figure 5.10.10**  **show t**  **he ten**  **cost­efficiency curves**  **in the**  **form of**  **energy**

**ef**

**ficiency (**  i.e.

**, E**  **F, AFUE,**  **o r**  **thermal efficiency)**  **versus MPC.**  **Table 5.10.1**  **l ists**  **the**

**cu rves**  **and their**  **corresponding figure**  **numbers.**

Ta ble 5.10.1 C ost­Efficiency Curves and Corresponding Figures

Pr oduct Class Cu rve Shown in:

**Ga s­fired**  **Storage Water**  **Heater Fi**  **gure 5.10.1** 

**O il­fired**  **Storage Water**  **Heater Fi**  **gure 5.10.2** 

**El ectric**  **Storage Water**  **Heater Fi**  **gure 5.10.3** 

**El ectric**  **Storage Water**  **Heater Close­Up**  **Fi gure**  **5.10.4**

**In stantaneous**  **Gas­fired Water**  **Heater Fi**  **gure 5.10.5** 

**G as**  **Wall Fan­type**  **DHE Fi**  **gure 5.10.6** 

**G as**  **Wall Gravity­type**  **DHE Fi**  **gure 5.10.7** 

**G as**  **Floor­type DHE**  **Fi gure**  **5.10.8**

**G as**  **Room­type DHE**  **Fi gure**  **5.10.9**

**G as­fired**  **Pool Heater**  **Fi gure**  **5.10.10**

**5­39**$500

$4 50

$ 4 00

$ 3 50

$ 3 00

32 gallons

50 gallonsMPC($)

$250 40 g allons

30 g allons $2 00

5 0 g allons

$1 50 75 g allons

$1 00

0

. 50 0

. 55 0. 60 0. 65 0. 70 0. 75 0. 80

Energy Factor (EF)

Figure 5.10.1 M anufacturer Production Cost (2007$) versus Energy Factor for Gasf ired Storage Water Heaters

$590MPC($) $580

$5 70

$ 5 60

$ 5 50

$ 5 40

$ 5 30

$ 5 20

$ 5 10

$ 5 00

0

. 45 0. 50 0. 55 0. 60 0. 65 0. 70

Energy Factor (EF)

Figure 5.10.2 M anufacturer Production Cost (2007$) versus Energy Factor for Oilf ired Storage Water Heaters

**5­40**$0 $100 $ 2 00 $ 3 00 $ 4 00 $ 5 00 $ 6 00MPC($) 50 gallons

30 gallons

40 gallons

66 gallons

75 gallons

See Close­up in

fo llowing Figure

0.75 0. 95 1. 15 1. 35 1. 55 1. 75 1. 95 2. 15 2. 35

Energy Factor (EF)

Figure 5.10.3 M anufacturer Production Cost (2007$) versus Energy Factor for

El ectric Storage Water Heaters

$100 $1 10 $ 1 20 $ 1 30 $ 1 40 $ 1 50 $ 1 60 $ 1 70 $ 1 80 $1 90 $ 2 00MPC($) 50 gallons

30 gallons

40 gallons

66 gallons

75 gallons

0.85 0. 87 0. 89 0. 91 0. 93 0. 95 0. 97 0. 99

Energy Factor (EF)

Figure 5.10.4 C lose­up of Resistance Heating Electric Storage Water Heaters

**5­41**MPC($) $700

$6 00

$5 00

$4 00

$ 3 00

$2 00

0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95

Energy Factor (EF)

Figure 5.10.5 M anufacturer Production Cost (2007$) versus Energy Factor for

In stantaneous Gas­fired Water Heater, 0 G allon, 199 Btu/h Input Capacity

$480

$4 60

$ 4 40

$ 4 20

73 74 75 76 77 78 79 80 81

Annual Fuel Utilization Efficiency (AFUE)MPC($) $400

$3 80

$ 3 60

$ 3 40

$ 3 20

$ 3 00

Figure 5.10.6 M anufacturer Production Cost (2007$) versus AFUE for Gas Wall

Fa n­type DHE, Over 42,000 Btu/h

**5­42**$150 $1 70 $ 1 90 $ 2 10 $ 2 30 $ 2 50 $ 2 70 $ 2 90 $ 3 10 $ 3 30 $ 3 50MPC($)

62 64 66 68 70 72 74 76

Annual Fuel Utilization Efficiency (AFUE)

Figure 5.10.7 M anufacturer Production Cost (2007$) versus AFUE for Gas Wall

Gr avity­type DHE, Over 27,000 Btu/h, up to 46,000 Btu/h

$480

$4 60

$ 4 40

$ 4 20

55 60 65 70 75 80

Annual Fuel Utilization Efficiency (AFUE)MPC($) $400

$3 80

$ 3 60

$ 3 40

$ 3 20

$ 3 00

Figure 5.10.8 M anufacturer Production Cost (2007$) versus AFUE for Gas Floort ype DHE, Over 37,000 Btu/h

**5­43**MPC($) $600

$5 50

$ 5 00

$ 4 50

$ 4 00

$ 3 50

$ 3 00

$ 2 50

$ 2 00

60 65 70 75 80 85 90 95

Annual Fuel Utilization Efficiency (AFUE)

Figure 5.10.9 M anufacturer Production Cost (2007$) versus AFUE for Gas Roomt ype DHE, Over 27,000 Btu/h, up to 46,000 Btu/h

**Two baselines**  **were identified**  **for residential**  **pool h**  **eaters. Th**  **e first**  **includes pool** 

**he aters**  **incorporating a**  **s tanding**  **pilot ignition**  **system in**  **their design,**  **and the**  **second**

**in cludes**  **pool heaters**  **incorporating an**  **electronic ignition**  **in their**  **designs. El**  **ectronic**

**ig nition**  **was screened**  **out and**  **was not**  **considered as**  **a technology**  **option because**  **it does** 

**no t**  **improved thermal**  **efficiency, as**  **defined by**  **DOE test**  **procedures (see**  **chapter 3,** 

**MTA ).**  **However, the**  **total energy**  **use of**  **both ignition**  **types is**  **different and**  **will be**  **used**

**in the**  **consumer economic**  **models (**  i.e.

**, t**  **he LCC**  **and the**  **PBP analysis).** 

**5­44**$400 $5 00 $ 6 00 $ 7 00 $ 8 00 $ 9 00 $ 1 ,000MPC($) Electronic Ignition

Standing Pilot

75 80 85 90 95 10 0

Thermal Efficiency (%)

Figure 5.10.10 Manufacturer Production Cost (2007$) versus Thermal Efficiency

fo r Gas­fired Pool Heater, 250,000 Btu/h

**The results**  **show t**  **hat the**  **cost­efficiency curves**  **are nonlinear.**  **As efficiency** 

**in creases,**  **m anufacturing**  **becomes more**  **difficult and**  **more costly**  **for manufacturers.** 

**La rge**  **jumps are**  **evident when**  **efficiencies approach**  **levels where**  **electronic ignition,** 

**bl ower**  **motors, p**  **ower vent,**  **and condensing**  **operation a**  **re included**  **in designs.** 

**Ad ditionally,**  **MPC increases**  **greatly when**  **heat pump**  **t echnology**  **is used**  **as an**  **alternative**

**to resistive**  **heating for**  **electric, storage**  **water heaters.** 

**The non­linear**  **relationship is**  **common with**  **all product**  **types. P**  **roducts such**  **as**

**di rect**  **heating equipment**  **and high**  **efficiency pool**  **heaters see**  **larger increases**  **in MPC** 

**du e**  **to lower**  **production volumes**  **as compared**  **to water**  **heaters.**

5.1 1 MPC BREAKDOWN

**Af ter**  **DOE incorporated**  **all of**  **the assumptions**  **into the**  **cost model,**  **the different** 

**pr oduction**  **costs percentages**  **were calculated.**  **The product**  **cost percentages**  **are used**  **as**

**va lidation**  **of the**  **assumptions by**  **comparing them**  **to manufacturers’**  **actual financial**  **data**

**th at**  **are published**  **in annual**  **reports, a**  **long with**  **feedback from**  **manufacturers during** 

**in terviews.**  **D OE**  **also used**  **these figures**  **in the**  **MIA (see**  **chapter 12).**  **DOE calculated**  **the**

**av erage**  **product costs**  **percentages by**  **product type**  **(** i.e.

**, w**  **ater heater,**  **direct heating** 

**eq uipment,**  **p ool**  **heater) as**  **well as**  **by product**  **class (**  i.e.

**, g**  **as­fired storage**  **water heater,** 

**el ectric**  **storage water**  **heater, etc.)**  **d ue**  **to the**  **large variations**  **in production**  **volumes,**

**fa**

**brication and**  **assembly costs,**  **a nd**  **other assumptions**  **that affect**  **the calculation**  **of the** 

**5­45 unit’s**  **total MPC.**  **Table 5.11.1,**  **Table 5.11.2,**  **and Table**  **5.11.3 s**  **how t**  **he different** 

**pe rcentages**  **for the**  **production costs**  **that make**  **up th**  **e total**  **product MPC.** 

Ta ble 5.11.1 T otal Product MPC B reakdown for Water Heaters

Pe rcentage Cost Breakdown by Water Heater Type

(B aseline)

Ga s­fired,

St orage

Wa ter Heater Oi l­fired,

St orage

Wa ter Heater El ectric,

St orage

Wa ter Heater Ga s­fired,

In stantaneous

Wa ter Heater

**Ma terials**  **80.4% 65**  **.8% 76**  **.9% 67**  **.8%**

**La bor**  **10 .9%**  **6.3 %**  **13 .3%**  **20 .6%** 

**De preciation**  **2.6% 13**  **.6% 2.8**  **% 3.0**  **%**

**Ov erhead**  **6.1% 14**  **.3% 7.1**  **% 8.6**  **%**

Ta ble 5.11.2 T otal Product MPC B reakdown for Direct Heating Equipment

Pe rcentage Cost Breakdown by Direct Heating Equipment Type

(B aseline)

Ga s Wall

Fa n­type Ga s Wall

Gr avity­type Ga s

Fl oor­type Ga s

Ro om­type

**Ma terials**  **57% 48**  **.8% 48**  **% 55**  **%**

**La bor**  **15.5% 12.8%**  **23 .8%**  **15 %** 

**De preciation**  **16.4% 24.4%**  **16 .9%**  **16.7%**

**Ov erhead**  **11.1% 14**  **% 11**  **.2% 13**  **%**

Ta ble 5.11.3 T otal Product MPC B reakdown for Pool Heaters

Pe rcentage Cost Breakdown

(B aseline)

Po ol Heater

**Ma terials**  **60 .5%** 

**La bor**  **15 .8%** 

**De preciation**  **12 .2%** 

**Ov erhead**  **11 .5%** 

5.1 2 MANUFACTURER M ARKUP

**To m**  **eet new**  **o r**  **amended energy**  **conservation standards,**  **m anufacturers**  **often**

**in troduce**  **design changes**  **to their**  **product lines,**  **w hich**  **often result**  **in increased**  **MPCs.**

**De pending**  **on the**  **competitive environment**  **for these**  **particular products,**  **s ome**  **or all**  **of**

**th e**  **increased production**  **costs can**  **be “passed­through”**  **from manufacturers**  **to retailers** 

**an d**  **eventually to**  **customers in**  **the form**  **of higher**  **purchase prices.**  **A s**  **production costs** 

**in crease,**  **manufacturers also**  **typically incur**  **additional overhead**  **at both**  **the factory**  **and**

**co rporate**  **levels. Th**  **e MSP**  **must cover**  **both of**  **these additional**  **contributions to**  **overhead**

**if a**  **c ompany**  **is to**  **maintain its**  **profitability. As**  **discussed previously,**  **overhead costs** 

**wi thin**  **the DOE**  **model are**  **a f**  **unction of**  **investments, material**  **costs, l**  **abor costs,**  **o r**  **total**

**co sts,**  **d epending**  **on the**  **overhead category.**  **Together, materials,**  **l abor,**  **and factory** 

**ov erhead**  **comprise the**  **full production**  **cost. DOE**  **applies another**  **multiplier to**  **the full** 

**5­46 production**  **cost to**  **account for**  **corporate non­production**  **costs and**  **profit. This**  **latter**

**mu ltiplier,**  **the non­production**  **cost markup,**  **is the**  **focus of**  **this section.** 

**In this**  **section, DOE**  **p resents**  **its methodology**  **for converting**  **the MPCs**  **to**

**ma nufacturer**  **selling prices**  **(MSPs), referred**  **to as**  **t he**  **non­production cost**  **markup**

**( “manufacturer**  **markup”). The**  **manufacturer markup**  **i s**  **an integral**  **part of**  **the overall** 

**ma rkup.**  **The overall**  **markup a**  **lso includes**  **the markups**  **in the**  **distribution chain**  **(** e.g.

**,**

**w holesalers,**  **d istributors,**  **retailers, c**  **ontractors, etc.).**  **The distribution**  **chain markups** 

**co nvert**  **MSP to**  **customer price.**  **The customer**  **prices a**  **nd installation**  **costs are**  **key inputs** 

**to the**  **LCC analysis,**  **P BP**  **analysis, and**  **the NIA.**  **Through the**  **use of**  **the manufacturer**  **and**

**di stribution**  **chain markups**  **(and installation**  **costs), DOE**  **can calculate**  **the first**  **costs that** 

**cu stomers**  **would face**  **under the**  **various efficiency**  **levels evaluated.**  **DOE evaluates**  **the**

**tr adeoff**  **between the**  **increase in**  **first cost**  **and the**  **resulting energy**  **cost savings**  **at each** 

**ef**

**ficiency level**  **in the**  **LCC and**  **PBP analyses**  **(see chapter**  **8), and**  **NIA analysis**  **(see**

**ch apter**  **10).**

**The manufacturer**  **markup also**  **has an**  **important bearing**  **on the**  **manufacturers’**

**pr ofitability.**  **A high**  **markup u**  **nder a**  **s tandards**  **scenario suggests**  **manufacturers can**  **pass**

**t hrough**  **the increased**  **variable costs**  **and some**  **of the**  **capital and**  **product conversion**  **costs**

**(t he**  **one­time expenditures).**  **A l**  **ow m**  **arkup implies**  **that manufacturers**  **will not**  **be able**  **to**

**re cover**  **as much**  **of the**  **necessary investment**  **in plant**  **and equipment.** 

5.1 2.1 Manufacturer Selling Price

**The MSP**  **is the**  **price at**  **which the**  **manufacturer can**  **recover all**  **production and** 

**no n­production**  **costs b**  **and earn**  **a p**  **rofit. DOE**  **calculated the**  **MSP for**  **water heaters,**  **d irect** 

**he ating**  **equipment, and**  **pool heaters**  **by multiplying**  **the MPCs**  **by the**  **calculated**

**ma nufacturer**  **markup, which**  **is explained**  **below.**

5.1 2.2 Manufacturing Markup Calculation

**A manufacturer**  **markup i**  **s applied**  **to the**  **MPC of**  **the product**  **to arrive**  **at the**  **MSP.**

**In general,**  **the manufacturer**  **markup s**  **hould ensure**  **that the**  **MSP of**  **the product**  **is high** 

**en ough**  **to recover**  **the full**  **cost of**  **the product**  **(** i.e.

**, f**  **ull production**  **and non­production** 

**co sts),**  **and yield**  **a s**  **atisfactory profit.** 

5.1 2.3 Manufacturer Financial Information Sources

**Pub licly**  **owned companies**  **are required**  **by law**  **t o**  **disclose financial**  **information**

**on a**  **r egular**  **basis by**  **filing different**  **forms with**  **the U.S.**  **Securities and**  **Exchange**

**Co mmission**  **(SEC). The**  **SEC f**  **orm 10­K,**  **filed by**  **companies on**  **an annual**  **basis,**

**pr ovides**  **a c**  **omprehensive overview**  **o f**  **the company’s**  **business and**  **financial conditions.** 

**Re levant**  **information in**  **the 10­K**  **reports includes**  **the company’s**  **revenues and**  **direct and** 

**in direct**  **costs. F**  **or the**  **manufacturer markups,**  **DOE used**  **10­K reports**  **from publicly** 

**ow ned**  **residential heating**  **products companies.**  **T he**  **financial figures**  **necessary for** 

**b Non­production**  **costs in**  **clude selling,**  **general, a**  **nd administration**  **(SG&A) costs,**  **the cost**  **of research**  **and**

**de velopment,**  **and in**  **terest.**

**5 ­47** **calculating the**  **manufacturer markup**  **a re**  **net sales,**  **costs of**  **sales, a**  **nd gross**  **profit. The** 

**in come**  **statement section**  **of the**  **10­K reports**  **often lists**  **these figures.** 

**DO E**  **calculated the**  **baseline manufacturer**  **markups by**  **using financial**  **figures**

**fr om**  **manufacturers’ SEC**  **1 0­K**  **reports, s**  **uch as**  **the net**  **sales (revenues)**  **and cost**  **of sales** 

**to calculate**  **gross profit**  **and gross**  **profit margins.**  **DOE used**  **averages of**  **the financial** 

**fi gures**  **spanning 2000**  **to 2006**  **and then**  **calculated the**  **markups.**

**DO E**  **used the**  **following equations**  **to calculate**  **the gross**  **profit and**  **gross profit** 

**ma rgins:** 

**Gr oss**  **Profit**

**= Ne**  **t Sales** 

**– C**  **ost of**  **Sales Eq.**  **1**

**Gross Profit** 

**Gr oss**  **Profit Margin** 

= **Net Sales**  **Eq. 2** 

**Table 5.12.1contains**  **the calculated**  **gross profit**  **margins for**  **a s**  **ample of** 

**ma nufacturers.** 

**5­48**Table 5.12.1 G ross Profit Margin for Residential Heating Products Manufacturers*

Manufacturer Financial Figure Ye ar

2 0 06 2 005 2004 2003 2002 2001 2000

Ne t S ales $ **2 ,161,300**  **1 ,698,200**  **1,653,100 1,530,700**  **1,469,100 1,151,200**  **1,247,900**

Co st o f Sales $ **1 ,697,400**  **1 ,337,200**  **1,355,100 1,232,000**  **1,169,300 948,800**  **999,800**

A G ross P rofit $ **46 3,900**  **3 52,000**  **298,000 298,700**  **299,800 202,400**  **248,100**

Gr oss P rofit M argin 21.5% 2 0.8% 18.0% 19.5% 20.4% 17.6% 19.9%

Av erage G ross Profit M argin 19.8%

Ne t S ales $ **1 58,767**  **1 38,999**  **126,940 120,165**  **128,301 130,211**  **116,002**

Co st o f Sales $ **1 30,410**  **1 14,065**  **103,320 93,713**  **100,477 98,712**  **87,235**

B G ross P rofit $ **28 ,357**  **2 4,934**  **23,620 26,452**  **27,824 31,499**  **28,767**

Gr oss P rofit M argin 17.9% 1 7.9% 18.6% 22.0% 21.7% 24.2% 24.8%

Av erage G ross Profit M argin 20.8%

Ne t S ales $ **3 ,671,100**  **3 ,366,200**  **2,982,700 2,789,900**  **2,727,400 3,119,691**  **3,247,357**

Co st o f Sales $ **2 ,515,900**  **2 ,258,200**  **1,985,200 1,846,600**  **1,861,300 2,190,041**  **2,228,046**

C G ross P rofit $ **1, 155,200**  **1 ,108,000**  **997,500 943,300**  **866,100 929,650**  **1,019,311**

Gr oss P rofit M argin 31.5% 3 2.9% 33.4% 33.8% 31.8% 29.8% 31.4%

Av erage G ross Profit M argin 32.0%

Ne t S ales $ **2 10,603**  **1 82,808**  **180,203 157,966**  **162,128 170,950** 

Co st o f Sales $ **1 54,110**  **1 37,277**  **137,008 116,185**  **116,462 123,405** 

D* * G r oss P rofit $ **56 ,493**  **4 5,531**  **43,195 41,781**  **45,666 47,545** 

Gr oss P rofit M argin 26.8% 2 4.9% 24.0% 26.4% 28.2% 27.8%

Av erage G ross Profit M argin 26.3%

Ne t S ales $ **2 ,155,225**  **2 ,131,505**  **1,563,394 1,060,303**  **932,420 882,615**  **898,247**

Co st o f Sales $ **1 ,536,675**  **1 ,517,631**  **1,114,699 771,900**  **693,720 653,135**  **642,246**

E G ross P rofit $

Gr oss Profit M argin **618,550 6**  **13,874 448,695**  **288,403 238,700**  **229,480 256,001** 

28 .7% 2 8.8% 28.7% 27.2% 25.6% 26.0% 28.5%

Av erage G ross Profit M argin 28.0%

**Note: Figures**  **in thousands**  **of dollars** 

***** **2 000,**  **2002, 2003,**  **2004, 2005,**  **and 2006**  **SEC 1**  **0­K reports.** 

****** **Data is**  **not available**  **for missing**  **years**

**To c**  **alculate the**  **time­average gross**  **profit margin**  **for each**  **firm, DOE**  **first**

**su mmed**  **the gross**  **profit for**  **all the**  **years and**  **then divided**  **the result**  **by the**  **sum of**  **the net** 

**sa les**  **for the**  **same years.**  **Each manufacturer’s**  **non­production cost**  **markup w**  **as calculated** 

**as :** 

**Eq. 3** 

**Table 5.12.2**  **s hows**  **the manufacturer**  **markups using**  **this method.** 

**5­49**Table 5.12.2 C alculated Manufacturer Markups for Residential Heating Products

Ma nufacturer Ma nufacturer Markup

**Ma nufacturer**  **A 1**  **.25**

**Ma nufacturer**  **B 1**  **.26**

**Ma nufacturer**  **C 1**  **.47**

**Ma nufacturer**  **D 1**  **.36**

**Ma nufacturer**  **E 1**  **.39**

Av erage 1.3 5

**DO E**  **calculated the**  **average manufacturer**  **market to**  **be 1.35.**  **In other**  **words,**

**re sidential**  **heating products**  **manufacturers, o**  **n average,**  **sell their**  **products to**  **the next** 

**pa rty**  **in the**  **distribution channel**  **at 35**  **percent above**  **the full**  **manufacturing production** 

**co st.** 

**DO E**  **p resented**  **the calculated**  **manufacturer markup**  **t o**  **manufacturers during**  **the**

**in terview**  **process. D**  **OE acknowledged**  **that there**  **are numerous**  **manufacturers of** 

**re sidential**  **heating products**  **that are**  **privately held**  **companies, c**  **ompanies owned**  **through**

**em ployee**  **stock ownership**  **plans, a**  **nd companies**  **owned through**  **private stock**  **plans.**

**Co nsequently,**  **these companies**  **do not**  **file SEC**  **1 0­K**  **reports. In**  **addition, while**  **the**

**pub lic**  **owned companies**  **file SEC**  **1 0­K**  **reports, t**  **he financial**  **information summarized**  **is**

**no t**  **exclusive for**  **the heating**  **products portion**  **of their**  **business. It**  **can include**  **financial**

**in formation**  **from other**  **product sectors,**  **w hose**  **margins could**  **be quite**  **different from**  **the**

**re sidential**  **heating products**  **industries.**

**The refore,**  **DOE considered**  **the feedback**  **from manufacturers**  **in order**  **to**

**sup plement**  **the information**  **presented above,**  **and refined**  **the markup**  **t o**  **better reflect**  **the**

**re sidential**  **heating products**  **market. DOE**  **determined the**  **manufacturer markup**  **f or**  **the**

**re sidential**  **storage water**  **heating, direct**  **heating equipment,**  **and pool**  **heating industries**  **to**

**be approximately**  **1.38 on**  **an aggregate**  **basis. D**  **OE calculated**  **this aggregate**  **markup b**  **y**

**we ighting**  **the feedback**  **received from**  **manufacturers on**  **a m**  **arket share**  **basis. F**  **or the** 

**in stantaneous**  **market, DOE**  **determined the**  **manufacturers of**  **these products**  **usually**

**ope rate**  **under higher**  **margins because**  **the product**  **is less**  **of a**  **c ommodity.**  **To reflect**  **the**

**di fferences**  **experienced by**  **manufacturers in**  **the instantaneous**  **water heating**  **market,**

**DO E**  **used 1.45**  **to represent**  **the manufacturer**  **markup. Instantaneous**  **water heaters**  **are**

**co nsidered**  **a p**  **remium product,**  **not a**  **c ommodity**  **product, in**  **a n**  **iche market**  **where**

**co nsumers**  **make purchases**  **based, typically,**  **on preference**  **rather than**  **first costs.** 

**The se**  **multipliers are**  **used in**  **the engineering**  **analysis to**  **determine the**  **MSPs for** 

**ea ch**  **of the**  **representative product**  **classes. D**  **OE used**  **a c**  **onstant markup**  **t o**  **reflect the** 

**MS Ps**  **of the**  **baseline products**  **as well**  **as more**  **efficient products.**  **D OE**  **took this** 

**ap proach**  **because amended**  **standards may**  **make high**  **efficiency products,**  **which**

**cu rrently**  **are considered**  **premium products,**  **t he**  **baselines and**  **commodities.**

**5­50**5.13 ENGINEERING ANALYSIS SUMMARY O F R ESULTS

**Thr oughout**  **the rulemaking**  **process, t**  **he results**  **from the**  **engineering analysis**  **are**

**us ed**  **in the**  **LCC analysis**  **to determine**  **consumer prices**  **for residential**  **heating products.** 

**Us ing**  **the calculated**  **manufacturer markup,**  **DOE calculated**  **the MSPs**  **of the** 

**re presentative**  **water heaters,**  **d irect**  **heating equipment,**  **and pool**  **heaters at**  **the baseline** 

**an d**  **more efficient**  **levels, a**  **nd listed**  **each, in**  **addition to**  **the MPCs,**  **o n**  **Table 5.13.1** 

**t hrough**  **Table 5.13.10.** 

Ta ble 5.13.1 M PC a nd MSP for Gas­fired Storage Water Heater, 40 Gallon Storage

Vo lume

Ef ficiency Level (EF) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(EF**

**= 0.59)**  **$1 60**  **$2 21** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.62) $1**  **67 $2**  **30**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.63) $1**  **75 $2**  **42**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.64) $2**  **76 $3**  **81**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.65) $2**  **83 $3**  **91**

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.66) $2**  **91 $4**  **02**

**Eff iciency**  **Level 6** 

**– Max­Tech**  **(EF**

**= 0.77)**  **$4 25**  **$5 87** 

Ta ble 5.13.2 M PC a nd MSP for Oil­fired Storage Water Heater, 32 Gallon Storage

Vo lume with Burner Assembly

Ef ficiency Level (EF) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(EF**

**= 0.53)**  **$5 10**  **$7 04** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.54) $5**  **18 $7**  **15**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.56) $5**  **29 $7**  **30**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.58) $5**  **39 $7**  **44**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.60) $5**  **34 $7**  **37**

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.62) $5**  **47 $7**  **55**

**Eff iciency**  **Level 6**  **( EF** 

**= 0**  **.66) $5**  **40 $7**  **45**

**Eff iciency**  **Level 7** 

**– Max­Tech**  **(EF**

**= 0.68)**  **$5 51**  **$7 60** 

Ta ble 5.13.3 M PC a nd MSP for Electric Storage Water Heater, 50 gallon Storage

Vo lume

Ef ficiency Level (EF) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(EF**

**= 0.90)**  **$1 22**  **$1 68** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.91) $1**  **28 $1**  **77**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.92) $1**  **32 $1**  **82**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.93) $1**  **36 $1**  **88**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.94) $1**  **44 $1**  **99**

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.95) $1**  **60 $2**  **21**

**Eff iciency**  **Level 6** 

**– Max­Tech**  **(EF**

**= 2.2)**  **$4 90**  **$6 76** 

**5­51**Table 5.13.4 M PC a nd MSP for Instantaneous Gas­fired Water Heater, 0 G allon

St orage Volume, 199 Btu/h Input Capacity

Ef ficiency Level (EF) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(EF**

**= 0.62)**  **$2 25**  **$3 26** 

**Eff iciency**  **Level 1**  **( EF** 

**= 0**  **.69) $2**  **35 $3**  **41**

**Eff iciency**  **Level 2**  **( EF** 

**= 0**  **.78) $2**  **70 $3**  **92**

**Eff iciency**  **Level 3**  **( EF** 

**= 0**  **.80) $3**  **43 $4**  **97**

**Eff iciency**  **Level 4**  **( EF** 

**= 0**  **.82) $3**  **61 $5**  **23**

**Eff iciency**  **Level 5**  **( EF** 

**= 0**  **.84) $3**  **79 $5**  **50**

**Eff iciency**  **Level 6**  **( EF** 

**= 0**  **.85) $3**  **88 $5**  **63**

**Eff iciency**  **Level 7** 

**– Max­Tech**  **(EF**

**= 0.92)**  **$6 43**  **$9 32** 

Ta ble 5.13.5 M PC a nd MSP for Gas Wall Fan­type DHE, Over 42,000 Btu/h Input

Ca pacity

Ef ficiency Level

(A FUE) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(AFUE**

**= 7**  **4) $3**  **35 $4**  **90**

**Eff iciency**  **Level 1**  **( AFUE** 

**= 7**  **5) $3**  **82 $5**  **27**

**Eff iciency**  **Level 2**  **( AFUE** 

**= 7**  **6) $3**  **96 $5**  **46**

**Eff iciency**  **Level 3**  **( AFUE** 

**= 7**  **7) $4**  **13 $5**  **70**

**Eff iciency**  **Level 4** 

**– Max­Tech**  **(AFUE**

**= 8**  **0) $468**  **$6 46** 

Ta ble 5.13.6 M PC a nd MSP for Gas Wall Gravity­type DHE, Over 27,000 Btu/h

an d up to 46,000 Btu/h Input Capacity

Ef ficiency Level

(A FUE) MPC

(2007$) MP SP

(2 007$)

**Ba seline**  **(AFUE**

**= 6**  **4) $1**  **98 $2**  **73**

**Eff iciency**  **Level 1**  **( AFUE** 

**= 6**  **6) $2**  **24 $3**  **09**

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **8) $2**  **31 $3**  **19**

**Eff iciency**  **Level 3**  **( AFUE** 

**= 7**  **1) $2**  **59 $3**  **57**

**Eff iciency**  **Level 4**  **( AFUE** 

**= 7**  **2) $2**  **84 $3**  **92**

**Eff iciency**  **Level 5** 

**– Max­Tech**  **(AFUE**

**= 7**  **5) $337**  **$4 65** 

Ta ble 5.13.7 M PC a nd MSP for Gas Floor­type DHE, Over 37,000 Btu/h Input

Ca pacity

Ef ficiency Level

(A FUE) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(AFUE**

**= 5**  **7) $3**  **38 $4**  **66**

**Eff iciency**  **Level 1**  **( AFUE** 

**= 5**  **8) $3**  **53 $4**  **87**

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **1) $3**  **68 $5**  **08**

**Eff iciency**  **Level 3**  **( AFUE** 

**= 6**  **2) $3**  **83 $5**  **29**

**Eff iciency**  **Level 4**  **( AFUE** 

**= 6**  **5) $4**  **10 $5**  **66**

**Eff iciency**  **Level 5** 

**– Max­Tech**  **(AFUE**

**= 7**  **8) $468**  **$6 46** 

**5­52**Table 5.13.8 M PC a nd MSP for Gas Room­type DHE, Over 27,000 Btu/h and up to

46 ,000 Btu/h Input Capacity

Ef ficiency Level

(A FUE) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(AFUE**

**= 6**  **4) $2**  **21 $3**  **05**

**Eff iciency**  **Level 1**  **( AFUE** 

**= 6**  **5) $2**  **37 $3**  **27**

**Eff iciency**  **Level 2**  **( AFUE** 

**= 6**  **6) $2**  **52 $3**  **48**

**Eff iciency**  **Level 3**  **( AFUE** 

**= 6**  **7) $2**  **67 $3**  **68**

**Eff iciency**  **Level 4**  **( AFUE** 

**= 6**  **8) $2**  **82 $3**  **89**

**Eff iciency**  **Level 5**  **( AFUE** 

**= 7**  **0) $3**  **07 $4**  **24**

**Eff iciency**  **Level 6**  **( AFUE** 

**= 7**  **8) $3**  **61 $4**  **98**

**Eff iciency**  **Level 7** 

**– Max­Tech**  **(AFUE**

**= 9**  **3) $552**  **$7 62** 

Ta ble 5.13.9 M PC a nd MSP for Gas­fired Pool Heater, 250,000 Btu/h Input

Ca pacity and Standing Pilot

Ef ficiency Level

(T hermal Efficiency) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(Thermal Efficiency** 

**= 7**  **8) $5**  **20 $7**  **18**

**Eff iciency**  **Level 1**  **( Thermal**  **Efficiency**

**= 7**  **9) $531**  **$7 33** 

**Eff iciency**  **Level 2**  **( Thermal**  **Efficiency**

**= 8**  **1) $544**  **$7 51** 

**Eff iciency**  **Level 3**  **( Thermal**  **Efficiency**

**= 8**  **2) $559**  **$7 71** 

Ta ble 5.13.10 MPC a nd MSP for Gas­fired Pool Heater, 250,000 Btu/h Input

Ca pacity and Electronic Ignition

Ef ficiency Level

(T hermal Efficiency) MPC

(2007$) MS P

(2 007$)

**Ba seline**  **(Thermal Efficiency** 

**= 7**  **8) $5**  **23 $7**  **22**

**Eff iciency**  **Level 1**  **( Thermal**  **Efficiency**

**= 7**  **9) $534**  **$7 37** 

**Eff iciency**  **Level 2**  **( Thermal**  **Efficiency**

**= 8**  **1) $547**  **$7 55** 

**Eff iciency**  **Level 3**  **( Thermal**  **Efficiency**

**= 8**  **2) $578**  **$7 98** 

**Eff iciency**  **Level 4**  **( Thermal**  **Efficiency**

**= 8**  **3) $648**  **$8 94** 

**Eff iciency**  **Level 5**  **( Thermal**  **Efficiency**

**= 8**  **4) $664**  **$9 16** 

**Eff iciency**  **Level 6**  **( Thermal**  **Efficiency**

**= 8**  **6) $691**  **$9 54** 

**Eff iciency**  **Level 7**  **( Thermal**  **Efficiency**

**= 9**  **0) $903**  **$1 ,246** 

**Eff iciency**  **Level 8** 

**– Max­Tech**  **(Thermal**

**Eff iciency** 

**= 9**  **5) $9**  **61 $1**  **,326**

5.1 4 SENSITIVITY A NALYSIS

**DO E**  **conducted a**  **s ensitivity**  **analysis on**  **material prices**  **to examine**  **the effect**  **of**

**sp ikes**  **in metal**  **prices that**  **the heating**  **products industries**  **have experienced**  **over the**  **past**

**fe w**  **years. Th**  **e sensitivity**  **analysis used**  **the annual**  **average 2007**  **prices for**  **various metals** 

**us ed**  **in the**  **manufacturing of**  **residential heating**  **products, s**  **hown on**  **Table 5.14.1.** 

**5­53**Table 5.14.1 A nnual Average 2007 Metal Prices

Me tals Co st ($/lb) (2007$)

Pr ice Change

(p ercent) 20 07

Pr ices 20 03 to 2007

Av erage

Pr ices

**Pl ain**  **Cold Rolled**  **Steel $0**  **.39 $0**  **.36 8.3**  **%**

**Pa inted**  **CRS $0**  **.56 $0**  **.57 ­1**  **.8%**

**Ga lvanized**  **CRS $0**  **.48 $0**  **.43 11**  **.6%**

**Al uminized**  **CRS $0**  **.60 $0**  **.53 13**  **.2%**

**Tex tured**  **CRS $0**  **.67 $0**  **.63 6.3**  **%**

**CR S**  **Tube $0**  **.77 $0**  **.74 4.1**  **%**

**St ainless**  **Steel $2**  **.46 $2**  **.39 2.9**  **%**

**Fi n**  **Aluminum $1**  **.57 $1**  **.57 0.0**  **%**

**Pl ain**  **Copper $2**  **.62 $1**  **.52 72**  **.4%**

**Cop per**  **Tube**

**– P**  **lain $3**  **.00 $1**  **.90 57**  **.9%**

**Br ass**  **$3 .00**  **$2 .00**  **50 .0%** 

**Ac cording**  **to the**  **results, t**  **he increase**  **in metal**  **prices has**  **resulted in**  **various**

**pe rcentage**  **increases in**  **normalized MPC**  **and MSP**  **over the**  **range of**  **normalized energy** 

**ef**

**ficiencies for**  **the different**  **product classes.**  **T able**  **5.14.2 s**  **hows the**  **range of**  **percent and** 

**do llar**  **increase in**  **price for**  **each product**  **class due**  **to metal**  **price increases.** 

Ta ble 5.14.2 M aterial Price Sensitivity Results

Pr oduct Type In crease in MSP

(p ercent)* In crease in MSP

(d ollar)*

**Ga s­fired**  **Storage Water**  **Heater 2.3**  **$8**

**Oi l­fired**  **Storage Water**  **Heater 0.8**  **$6**

**Ele ctric**  **Storage Water**  **Heater 3.0**  **$8**

**In stantaneous**  **Gas­fired Water**  **Heater 6.7**  **$32**

**Ga s**  **Wall Fan­type**  **DHE 1.6**  **$9**

**Ga s**  **Wall Gravity­type**  **DHE 1.5**  **$5**

**Ga s**  **Floor­type DHE**  **2.4 $13** 

**Ga s**  **Room­type DHE**  **1.5 $6** 

**Ga s­fired**  **Type Pool**  **Heater 6.0**  **$54**

***Per pound**  **average over**  **range of**  **energy efficiencies.** 

**According to**  **manufacturers, t**  **he increase**  **in copper**  **prices has**  **had a**  **s ignificant** 

**im pact**  **on manufacturing**  **costs. B**  **ecause greater**  **quantities of**  **copper are**  **used in**  **the**

**ma nufacture**  **of heat**  **exchangers and**  **other components**  **for residential**  **heating products,** 

**th e**  **sharp increase**  **in copper**  **price corresponds**  **to significant**  **increases in**  **product MSP.** 

**The sensitivity**  **analysis confirms**  **manufacturer feedback**  **and shows**  **that plain** 

**cop per**  **can affect**  **the MSPs**  **of instantaneous**  **gas­fired water**  **heaters and**  **gas­fired pool** 

**he aters.**  **Both of**  **these products**  **contain significant**  **amounts of**  **plain copper**  **in their**  **heat**

**ex changers,**  **a nd**  **achieving higher**  **energy efficiency**  **levels typically**  **involves adding**  **more**

**5­54 plain**  **copper to**  **the heat**  **exchangers. A**  **$ 1.10**  **(or about**  **a 5**  **7.9 percent)**  **increase in**  **price**

**pe r**  **pound of**  **plain copper**  **could contribute**  **to a**  **$ 32**  **(or about**  **a 6**  **.7 percent)**  **increase in** 

**pr oduct**  **MSP for**  **instantaneous gas­fired**  **water heaters.**  **A dditionally,**  **the results**  **also**

**sh ow**  **t hat**  **the 57.9**  **p ercent**  **increase in**  **price per**  **pound for**  **plain copper**  **could also** 

**co ntribute**  **to about**  **a $**  **54 (or**  **about 6.0**  **p ercent)**  **increase in**  **product MSP**  **for gas­fired** 

**po ol**  **heaters.**

**In creases**  **in cold**  **rolled steel**  **prices have**  **also contributed**  **to the**  **increases in**  **MSPs**

**of water**  **heaters and**  **direct heating**  **equipment. Water**  **heater storage**  **tanks, flues,**  **a nd**  **flue**

**ba ffles,**  **a nd**  **direct heating**  **equipment heat**  **exchangers and**  **outer cases**  **are made**  **primarily**

**fr om**  **cold rolled**  **steel. Additionally,**  **reaching higher**  **energy efficiencies**  **often increases** 

**th e**  **amount of**  **cold rolled**  **steel added**  **to these**  **products.**

**The sensitivity**  **analysis shows**  **that about**  **a $**  **0.03 (**  **or about**  **a 8**  **.3 percent)**  **increase**

**in price**  **per pound**  **of plain**  **cold rolled**  **steel could**  **contribute to**  **about a**  **$ 7**  **(or about**  **a 2**  **.1**

**percent) increase**  **in product**  **MSP for**  **storage water**  **heaters. Th**  **e sensitivity**  **analysis also** 

**sh ows**  **that the**  **8.3 p**  **ercent increase**  **in price**  **per pound**  **for plain**  **cold rolled**  **steel could** 

**al so**  **contribute to**  **about an**  **$8 (or**  **about a**  **1 .7**  **percent) increase**  **in product**  **MSP for**  **direct**

**he ating**  **equipment.**

5.1 5 ENERGY EFFICIENCY E QUATIONS FOR GAS­FIRED A ND

EL ECTRIC STORAGE WATER H EATERS

**As part**  **of the**  **engineering analysis**  **for residential**  **water heaters,**  **D OE**  **reviewed**

**th e**  **energy­efficiency equations**  **that define**  **the existing**  **Federal energy**  **conservation**

**st andards**  **for gas­fired**  **and electric**  **storage water**  **heaters. Th**  **e energy­efficiency** 

**eq uations**  **allow D**  **OE to**  **expand the**  **analysis on**  **the representative**  **rated storage**  **volume to** 

**th e**  **full range**  **of storage**  **volumes covered**  **under the**  **existing Federal**  **energy conservation** 

**st andard.**  **In the**  **following section,**  **DOE describes**  **the methodology**  **used to**  **expand the** 

**an alysis**  **conducted for**  **the representative**  **storage volumes**  **at each**  **efficiency level**  **to the** 

**fu ll**  **rated storage**  **volume ranges.** 

**DO E**  **uses energy­efficiency**  **equations to**  **characterize the**  **relationship between** 

**ra ted**  **storage volume**  **and energy**  **factor. The**  **energy­efficiency equations**  **consider the** 

**in creases**  **in standby**  **losses as**  **tank volume**  **increases. A**  **s the**  **tank storage**  **volume**

**in creases,**  **t he**  **tank surface**  **area increases.**  **Th e**  **larger surface**  **area results**  **in higher**  **heat**

**tr ansfer**  **rates that**  **result in**  **higher jacket**  **losses. Other**  **losses to**  **consider are**  **the feed** 

**th rough**  **losses as**  **well as**  **the flue**  **losses (for**  **gas­fired water**  **heaters). The**  **current energy** 

**e fficiency**  **equations show**  **t hat**  **for each**  **water heater**  **class, a**  **s the**  **rated storage**  **volume**

**in creases,**  **t he**  **minimum energy**  **factor decreases.** 

**Fo r**  **the existing**  **Federal energy**  **conservation standards,**  **t he**  **slope and**  **the intercept** 

**of each**  **energy­efficiency equation**  **are constant**  **for each**  **product class.**  **T able**  **5.15.1**

**s hows**  **the energy­efficiency**  **equations of**  **the existing**  **Federal energy**  **conservation**

**st andards**  **for gas­fired**  **and electric**  **storage water**  **heaters.**

**5­55**Table 5.15.1 E xisting Federal Energy Conservation Standards for Residential Gasf ired and Electric Storage Water Heaters

Re sidential Water Heater Class Minimum Energy Factor (EF)

**G as­Fired**  **Storage Type**  **0.6 7** 

**– (**  **0.0019 ×**  **R ated**  **Storage Volume**  **in gallons)** 

**Ele ctric**  **Storage Type**  **0.9 7** 

**– (**  **0.00132 ×**  **R ated**  **Storage Volume**  **in gallons)** 

**Fo r**  **this preliminary**  **rulemaking, DOE**  **reviewed AHRI’s**  **March 2008**  **Consumers'**

**Di rectory**  **of Certified**  **Efficiency Ratings**  **for Heating**  **and Water**  **Heating Equipment**  **and**

**de veloped**  **a d**  **atabase of**  **products that**  **includes all**  **gas­fired and**  **electric storage**  **water**

**he ater**  **models subject**  **to this**  **rulemaking. DOE**  **also reviewed**  **manufacturers’ catalogs**  **to**

**ga ther**  **information on**  **the design**  **characteristics of**  **each water**  **heater model.**  **The**

**ma nufacturers’**  **catalogs include**  **information on**  **efficiency ratings,**  **p roduct**  **series**

**de scriptions,**  **j acket**  **insulation thicknesses,**  **i gnition**  **types, a**  **nd drafting**  **methods (**  i.e.

**,**

**n atural**  **or power**  **vented drafting).** 

**DO E**  **used its**  **database and**  **additional product**  **information to**  **help characterize**  **the**

**re lationship**  **between EF**  **and rated**  **storage volume**  **of models**  **currently on**  **the market**  **for**

**ga s­fired**  **and electric**  **storage water**  **heaters. D**  **OE also**  **compared the**  **EFs and**  **rated**

**st orage**  **volumes from**  **its database**  **of products**  **to the**  **energy­efficiency equations**  **defined**

**by the**  **existing Federal**  **energy conservation**  **standards. G**  **enerally, the**  **current products** 

**de monstrate**  **a s**  **imilar trend**  **of decreasing**  **efficiency with**  **increasing rated**  **storage**

**vo lume.** 

**Ho wever,**  **as the**  **efficiency of**  **the models**  **increases, the**  **relationship between**  **the**

**EF a**  **nd rated**  **storage volume**  **does not**  **closely follow**  **the relationship**  **described by**  **the**

**cu rrent**  **Federal energy**  **conservation standards.**  **S ince**  **the January**  **2001 water**  **heater**

**ru lemaking,**  **manufacturers have**  **continued to**  **introduce storage**  **water heaters**  **with higher** 

**ef**

**ficiencies. M**  **anufacturers currently**  **offer several**  **models with**  **similar features**  **(** i.e.

**,**

**m odels**  **from the**  **same product**  **series) that**  **have the**  **same energy**  **factors, b**  **ut a**  **v ariety**  **of**

**di fferent**  **rated storage**  **volumes. In**  **theory, the**  **energy factor**  **should decrease**  **with**

**in creasing**  **storage volume**  **for a**  **g iven**  **design primarily**  **due to**  **the increases**  **in losses**  **as a** 

**r esult**  **of increased**  **tank surface**  **area. However,**  **these few**  **h igh**  **efficiency model**  **series**

**se em**  **to exhibit**  **the same**  **EF e**  **ven though**  **their rated**  **storage volumes**  **vary. There**  **are**

**se veral**  **plausible explanations,**  **i ncluding**  **the precision**  **of the**  **test procedure**  **at higher** 

**ef**

**ficiencies (**  i.e., **t he**  **number of**  **significant digits**  **reported during**  **the EF**  **calculation is**  **not**

**ad equate**  **to discern**  **differences in**  **actual values**  **of the**  **energy factors**  **of high**  **efficiency**

**st orage**  **water heaters**  **in the**  **full range**  **of storage**  **volumes), the**  **possibility for**  **small**

**de sign**  **changes that**  **are not**  **described in**  **the product**  **literature, as**  **well as**  **the possibility** 

**fo r**  **the geometry**  **of the**  **storage tanks**  **to be**  **slightly different**  **for the**  **larger rated**  **volumes,**

**wh ich**  **would affect**  **the heat**  **loss characteristics**  **of the**  **tank. To**  **f urther**  **investigate the** 

**re lationship**  **between EF**  **and rated**  **storage volume,**  **DOE reviewed**  **the current**  **market to** 

**tr y**  **and establish**  **a r**  **evised set**  **of energy­efficiency**  **equations based**  **on available**  **models**

**fo r**  **gas­fired and**  **electric storage**  **water heaters.** 

**5­56**5.15.1 DOE’s Review of the Current Water Heater Market

**DOE reviewed the gas­fired and electric storage water heaters currently listed in**

**AHRI’s Consumers’ Directory and further described in manufacturers’ catalogs to**

**examine the relationship between energy factor and rated storage volume. When**

**examining the energy­efficiency equations, DOE considered:**

� **input and feedback from interested parties;**

� **energy­efficiency potentials of screened­in technologies;**

� **standby heat loss;**

� **analysis from previous rulemakings;**

� **Federal energy conservation standards (to prevent backsliding); and**

� **energy­efficiency levels developed for this preliminary rulemaking.**

**The existing Federal energy conservation standard applies to gas­fired storage**

**water heaters ranging from 20 to 100 gallons. The majority of models in AHRI’s**

**Consumers’ Directory have rated storage volumes between 30 and 75 gallons. DOE**

**selected 40 gallons as the representative rated storage volume for this class of water**

**heater, and the corresponding energy conservation standard at 40 gallons is 0.59 EF.**

**Figure 5.15.1 shows the current Federal energy conservation standard and its relationship**

**to models currently in the AHRI Consumers’ Directory.**

0.80

0. 75

0

. 70

0

. 65

Current Standard

0.60

0. 55

0

. 50

0

. 45

2 0 3 0 40 50 60 70 80 90 100

Ra ted Volume (Gallons)

Figure 5.15.1 Distribution of Gas­Fired Storage Water Heater Models by Rated

Storage VolumeEnergy Factor (EF)

**5­57 In general, the EF decreases with rated storage volume. However, for the two** 

**most common storage volumes, 40 and 50 gallons, (and in some instances for other**

**storage volumes), DOE found that manufacturers currently offer models with similar**

**EFs. For example, between 0.60 and 0.65 EF, several 40 gallon models on the market**

**have the same EFs as several 50 gallon models in AHRI’s Consumers' Directory.**

**However, this trend does not apply over the entire range of storage volumes currently**

**offered. For example, gas­fired storage water heaters having rated storage volumes of 60**

**gallons and above appear to decrease in EF with increasing rated storage volume (as**

**shown in Figure 5.15.1).**

**The existing Federal energy conservation standard applies to electric storage**

**water heaters ranging from 20 to 120 gallons. The majority of models in AHRI’s**

**Consumers’ Directory have rated storage volumes between 30 and 120 gallons. DOE**

**selected 50 gallons as the representative rated storage volume for this class of water**

**heater, and the corresponding conservation standard at 50 gallons is 0.90 EF. Figure**

**5.15.2 shows the current Federal energy conservation standard and its relationship to** 

**models currently in the AHRI Consumers’ Directory.**

1.00

0. 95

0

. 90 Current Standard

0.85

0. 80

2 0 3 0 40 50 60 70 80 90 100 110 120

Ra ted Volume (Gallons)

Figure 5.15.2 Distribution of Electric Storage Water Heater Models by Rated

Storage Volume

**In general, DOE found that EF decreases with rated storage volume. However, for**

**electric storage water heaters ranging from 30 to 80 gallons, DOE found that**

**manufacturers produce models with similar EFs. For example, water heaters ranging**

**from 30 to 80 gallons are offered with EFs that span from the baseline to 0.95 EF,**

**regardless of the rated storage volume. However, Figure 5.15.2 suggests that this trend**Energy Factor (EF)

**5­58 does**  **not hold**  **true for**  **the entire**  **market over**  **the entire**  **range of**  **storage volumes.**  **F igure** 

**5.1 5.2**  **also demonstrates**  **that manufacturers**  **of 120**  **gallon electric**  **storage water**  **heaters**

**on ly**  **offer models**  **with EFs**  **of 0.86**  **or below.** 

5.1 5.2 Existing Federal Energy Conservation Standards and Revised EnergyE fficiency Equations Using the Current Energy­Efficiency Equation Slope

**DO E**  **examined revised**  **energy­efficiency equations**  **by expanding**  **efficiency**

**le vels**  **to a**  **f ull**  **range of**  **tank sizes**  **by using**  **the equation**  **slopes as**  **defined by**  **the existing** 

**Fe deral**  **energy conservation**  **standards. D**  **OE did**  **not alter**  **the slopes**  **for this**  **portion of** 

**th e**  **analysis, a**  **nd only**  **changed the**  **position of**  **the intercepts**  **(** i.e.

**, t**  **he point**  **that intersects** 

**ze ro**  **gallons).**

5.1 5.2.1 Gas­fired Storage Water Heaters

**Fo r**  **gas­fired storage**  **water heaters**  **DOE examined**  **six efficiency**  **levels, i**  **ncluding**

**0.6 2**  **EF, 0.63**  **EF, 0.64**  **EF, 0.65**  **EF, 0.66**  **EF, and**  **0.77 EF**  **( max­tech),**  **for the** 

**re presentative**  **40 gallons.**  **DOE then**  **expanded these**  **efficiency levels**  **to the**  **full range**  **of**

**ga llon**  **sizes (**  i.e.

**, 2**  **0 to**  **100 gallons)**  **by relating**  **EF to**  **rated volume**  **using the**  **slope of**  **the**

**Fe deral**  **energy­efficiency equation**  **(** i.e.

**, c**  **onstant slope**  **of ­0.0019).**  **Figure 5.15.3**  **s hows** 

**th e**  **revised energy­efficiency**  **equations and**  **their relationship**  **to models**  **currently in**  **the**

**AH RI**  **Consumers’ Directory.** 

**5­59**Energy Factor (EF) 0.85

0. 80

0

. 75

0

. 70 Current Standard

0. 62 EF Standard

0

. 63 EF Standard

0.65 0.64 EF Standard

0. 65 EF Standard

0

. 66 EF Standard

0.60 0.77 EF Standard

0.55

0. 50

0

. 45

2 0 30 40 50 60 70 80 90 100

Ra ted Volume (Gallons)

Figure 5.15.3 Gas­fired Storage Water Heater Efficiency Levels Using the Slope of

the Federal Energy Conservation Standard

**DOE generally found that there are products currently manufactured that meet or**

**exceed the majority of the considered efficiency levels for volume sizes ranging from 40**

**to 75 gallons. The market data suggest that the slope of the equation that defines the**

**current Federal energy conservation standard may not reflect the characteristics of the**

**entire market because there are models currently available having similar EFs with**

**different rated storage volumes. Additionally, DOE found that at small rated volumes**

**(** i.e. **, less than 30 gallons) and large rated volumes (** i.e. **, 100 gallons) manufacturers do**

**not currently offer models that would meet some of the efficiency levels that DOE is**

**considering. For example, at 100 gallons, the existing water heater market would be**

**eliminated by all of the efficiency levels being considered if equations have the same**

**slope as the current Federal energy conservation standard.**

5.15.2.2 Electric Storage Water Heaters

**For electric storage water heaters, DOE considered five efficiency levels above**

**the baseline efficiency level including levels at 0.91 EF, 0.92 EF, 0.93 EF, 0.94 EF, 0.95**

**EF, and excluded the max­tech efficiency level (** i.e. **, 2.2 EF, an integral heat pump water**

**heater, which is not currently being offered to consumers) for this portion of the analysis.**

**DOE expanded each efficiency level below the max­tech (** i.e. **, efficiency levels 0.91 to**

**0.95 EF) to the full range of rated volumes (**  i.e. **, 20 to 120 gallons) by relating EF to rated**

**volume using the slope of the Federal energy­efficiency equation (** i.e. **, a constant slope of**

**­0.00132) as shown in Figure 5.15.4.**

**5­60**Energy Factor (EF) 1.00

0. 95

Current Standard

0. 91 EF Standard

0

. 92 EF Standard

0.90 0.93 EF Standard

0. 94 EF Standard

0

. 95 EF Standard

0.85

0. 80

2 0 30 40 50 60 70 80 90 100 110 120

Ra ted Volume (Gallons)

Figure 5.15.4 Electric Storage Water Heater Efficiency Levels Using the Slope of the

Federal Energy Conservation Standard

**DOE generally found that electric storage water heaters currently manufactured**

**meet or exceed the majority of efficiency levels for volume sizes ranging from 30 to 120**

**gallons. As with gas­fired storage water heaters, the market data for electric storage water**

**heaters suggests that the slope of the equation that defines the current Federal energy**

**conservation standard may not reflect the characteristics of the entire market because**

**there are models currently available with similar EFs, while ranging in rated storage**

**volumes. Additionally, DOE found that manufacturers do not currently offer models that**

**would meet all of the energy efficiency levels DOE is considering for the full range of**

**rated storage volumes. For example, DOE found that at small rated volumes (** i.e. **, less**

**than 50 gallons) manufacturers do not currently offer models that would meet the**

**efficiency levels DOE is considering that exceed 0.95 EF.**

5.15.3 Alternative Approach for Developing Revised Energy­Efficiency Equations

for Gas­fired and Electric Storage Water Heaters

**DOE developed an alternative approach for revising the energy­efficiency**

**equations based on the database of products and four constraints. DOE applied the**

**following constraining criteria to the development process:**

• **for gas­fired water heaters, each energy­efficiency equation must include**

**units with the specified efficiency level at 40 gallon rated storage volume;**

**5­61**• **for electric**  **storage water**  **heaters, each**  **energy­efficiency equation**  **must**

**in clude**  **units with**  **the specified**  **efficiency level**  **at 50**  **gallon rated**  **storage**

**vo lume;** 

• **t he**  **energy­efficiency equations**  **cannot result**  **in a**  **s tandard**  **that falls**  **below**

**cu rrent**  **standards over**  **the entire**  **rated volume**  **range; and** 

• **f or**  **electric storage**  **water heaters,**  **t he**  **energy­efficiency equation**  **should**

**no t**  **lead to**  **a s**  **tandard greater**  **than 0.95**  **EF for**  **the 20**  **to 120**  **gallon rated** 

**vo lume**  **range.**

**DO E**  **chose this**  **approach because**  **it takes**  **into account**  **the models**  **currently**

**av ailable**  **on the**  **market, considers**  **the technologies**  **incorporated into**  **those models,**  **a nd** 

**at tempts**  **to optimize**  **the number**  **of models**  **across the**  **entire rated**  **volume range**  **that**

**wo uld**  **meet the**  **efficiency levels**  **DOE is**  **considering. Additionally,**  **the approach**  **attempts**

**to minimize**  **the number**  **of models**  **that would**  **be eliminated**  **from the**  **market by**  **the**

**ef**

**ficiency levels**  **DOE is**  **considering across**  **the entire**  **range of**  **storage volumes.**  **D OE** 

**ac complished**  **this by**  **accounting for**  **all of**  **the models**  **currently available**  **in the**  **gas­fired**

**an d**  **electric storage**  **water heater**  **markets, and**  **considered the**  **technologies incorporated** 

**in to**  **those models.**  **N ext,**  **DOE attempted**  **to identify**  **the different**  **product series**  **and the** 

**mo dels**  **that belong**  **to each**  **product series.**  **D OE**  **then assigned**  **an efficiency**  **level to**  **each**

**of these**  **series based**  **on the**  **efficiency level**  **at the**  **representative rated**  **volume. Finally,** 

**DO E**  **used the**  **assumptions outlined**  **above and**  **the data**  **points within**  **each series**  **to**

**de velop**  **a line**  **to define**  **the equation**  **for each**  **efficiency level.**  **DOE then**  **varied the**  **slope**

**of the**  **line to**  **maximize the**  **number of**  **models in**  **the series**  **that meet**  **the efficiency**  **levels**

**DO E**  **is considering**  **in the**  **full range**  **of rated**  **storage volumes.** 

**As an**  **example, for**  **electric storage**  **water heaters,**  **DOE first**  **reduced the**  **model set** 

**ch aracterized**  **by AHRI’s**  **Consumer Directory**  **(921 models)**  **to 198**  **unique models.** 

**Se cond,**  **DOE grouped**  **these 198**  **unique models**  **into 42**  **m odel**  **series. Th**  **ird, DOE** 

**as signed**  **an efficiency**  **level to**  **each of**  **these series**  **based on**  **the efficiency**  **level for**  **the 50** 

**ga llon**  **model in**  **that series.**  **F inally,**  **DOE used**  **the assumptions**  **outlined above**  **and the** 

**da ta**  **points within**  **each series**  **to develop**  **a n**  **equation for**  **each efficiency**  **level. DOE**  **then**

**va ried**  **the slope**  **of the**  **line to**  **maximize the**  **number of**  **models in**  **the series**  **that meet**  **or**

**ex ceed**  **the potential**  **energy conservation**  **standard.**

**Fi gure**  **5.15.5 i**  **llustrates the**  **energy­efficiency equations**  **using the**  **criteria**

**de veloped**  **for gas­fired**  **storage water**  **heaters, and**  **Figure 5.15.6**  **i llustrates**  **the energy** 

**e fficiency**  **equations using**  **the criteria**  **developed for**  **electric storage**  **water heaters.** 

**5­62**0.85

0. 80Energy Factor (EF) 0.75

0. 70

Current Standard

0. 62 EF Standard

0

. 63 EF Standard 0.65

0.64 EF Standard

0. 65 EF Standard

0. 66 EF Standard 0.60

0. 55

0

. 50

0

. 45

2 0 30 40 50 60 70 80 90 100

Rated Volume (Gallons)

Figure 5.15.5 Energy­Efficiency Equations using a Modified Slope Based the AHRI

Consumers’ Directory for Gas­fired Storage Water Heaters

**5­63**Energy Factor (EF) 1.00

0. 95

Current Standard

0. 91 EF Standard

0

. 92 EF Standard 0.90

0.93 EF Standard

0. 94 EF Standard

0

. 95 EF Standard

0.85

0. 80

2 0 3 0 40 50 60 70 80 90 100 110 120

Rated Volume (Gallons)

Figure 5.15.6 Energy­Efficiency Equations using a Modified Slope Based the AHRI

Consumers’ Directory for Electric Storage Water Heaters

**For gas­fired and electric storage water heaters, the energy­efficiency equations**

**and the data from AHRI’s Consumers’ Directory generally exhibits the same trend of**

**decreasing EF with increasing rated volume. Additionally, the energy­efficiency**

**equations and current market also show a similar trend where the slope caused by the**

**decreasing EF typically approaches a constant (** i.e. **, a flat line across the range of rated**

**volumes) as the efficiency levels increase. However, these energy­efficiency equations**

**eliminate the larger volume water heaters currently offered by manufacturers at the**

**higher potential amended energy conservation standards.**

**The information provided in Figure 5.15.5 and Figure 5.15.6, in addition to the**

**product database, manufacturers’ specifications, and other publicly available literature,**

**does not include all of the details regarding the specific energy­efficiency features**

**incorporated in each water heater design. Based on the extent of the information, these**

**energy­efficiency equations may represent manufacturing practices, consumer**

**preferences, and marketing efforts, while not representing the energy­efficiency potential**

**of screened­in technologies or the heat loss characteristics of the entire rated volume**

**range.**

**For example, manufacturers offer several models with similar features (** i.e.

**, models from the same product series) that are currently available on the market with the** 

**same energy factors in a variety of different rated storage volumes. The fact that water**

**heaters of different volumes can have the same EF could be a result of manufacturers**

**adding insulation (** e.g. **, to the top of the tank, to the feed throughs, etc.) or making design**

**5­64 modifications**  **that are**  **not described**  **in the**  **manufacturer catalogs**  **as rated**  **volume**

**in creases.**  **S uch**  **design changes**  **could offset**  **any increase**  **in heat**  **loss as**  **surface area** 

**in creases**  **and this**  **would alter**  **the relationship**  **between heat**  **loss (and**  **ultimately EF)**  **and**

**ra ted**  **volume for**  **that particular**  **product series.**  **M anufacturers**  **may do**  **this to**  **produce**

**pr oduct**  **lines where**  **EF i**  **s constant**  **across a**  **r ange**  **of rated**  **volumes as**  **a m**  **eans to**  **market**

**hi gh**  **efficiency water**  **heaters to**  **specific consumers.** 

**DO E**  **was not**  **able to**  **verify the**  **relationship between**  **EF a**  **nd rated**  **volume and** 

**ho w**  **i t**  **changes for**  **different rated**  **volume ranges**  **and at**  **various efficiency**  **levels based** 

**so lely**  **on AHRI**  **data or**  **publicly available**  **literature. Specifically,**  **DOE was**  **not able**  **to**

**id entify**  **the specific**  **technologies that**  **manufacturers use**  **or add**  **to water**  **heaters as**  **rated**

**vo lume**  **increases to**  **maintain the**  **same EF.**  **In addition,**  **the reporting**  **precision of**  **the test** 

**pr ocedure**  **at higher**  **efficiencies does**  **not allow**  **f or**  **the precise**  **discernment of**  **how s**  **mall**

**lo sses**  **affect EF**  **a s**  **the rated**  **storage volume**  **increases. Lastly,**  **DOE cannot**  **verify that**  **the**

**ge ometry**  **of the**  **storage tank**  **design is**  **identical through**  **the entire**  **range of**  **storage**

**vo lumes.** 

5.1 5.4 Validation of the Energy­Efficiency Equations for Gas­fired and Electric

St orage Water Heaters

**In order**  **to further**  **verify the**  **relationship between**  **EF a**  **nd rated**  **storage volume,** 

**DO E**  **is planning**  **to verify**  **the EF**  **of various**  **models c**  **urrently on**  **the market**  **through third** 

**pa rty**  **testing and**  **then to**  **teardown these**  **same models**  **t o**  **identify potential**  **geometry and** 

**de sign**  **differences. As**  **DOE p**  **reviously mentioned,**  **DOE found**  **that some**  **manufacturers**

**pr oduce**  **high efficiency**  **models of**  **gas­fired and**  **electric storage**  **water heaters**  **where the** 

**en ergy­efficiency**  **technologies remain**  **constant (**  e.g.

**, t**  **he same**  **insulation thickness)** 

**ac ross**  **a r**  **ange of**  **rated volumes**  **while maintaining**  **the same**  **EF f**  **or all**  **products. Th**  **is**

**se ems**  **contrary to**  **DOE’s understanding**  **that jacket**  **losses should**  **increase as**  **the surface** 

**ar ea**  **of the**  **tank increases**  **with rated**  **volume. Thus,**  **DOE will**  **conduct testing**  **to**

**de termine**  **if manufactures**  **would make**  **insulation improvements,**  **f or**  **example, to**  **offset**

**th e**  **increase in**  **heat loss**  **as a**  **r esult**  **of increasing**  **surface area**  **or make**  **geometric**

**mo difications**  **to the**  **tank design**  **in order**  **to obtain**  **constant EFs**  **for a**  **r ange**  **of rated** 

**vo lumes.**  **H owever,**  **the market**  **data and**  **manufacturers catalogs**  **suggest this**  **is not**  **the**

**ca se**  **for some**  **product series,**  **a nd**  **these data**  **are not**  **sufficient to**  **confirm specifically**  **how**

**ma nufacturers**  **achieve constant**  **EF. Consequently,**  **DOE p**  **lans to**  **test and**  **teardown water** 

**he ater**  **models currently**  **available on**  **the market**  **in order**  **to validate**  **its approach**  **for the** 

**de velopment**  **of the**  **energy­efficiency equations.** 

**DO E**  **investigated the**  **design changes**  **manufacturers employ**  **to improve**  **EF only** 

**fo r**  **the representative**  **gas­fired and**  **electric storage**  **water heaters**  **(** i.e.

**, 4**  **0 and**  **50 gallon** 

**pr oducts,**  **r espectively).**  **However, DOE**  **did not**  **extend the**  **teardown analysis**  **to other** 

**ra ted**  **volumes to**  **determine if**  **manufacturers use**  **the same**  **methods to**  **increase energy** 

**ef**

**ficiency across**  **the entire**  **rated volume**  **range. This**  **additional analysis**  **will allow**  **D OE** 

**to determine**  **the changes**  **manufacturers employ**  **for a**  **g iven**  **model series**  **as the**  **rated**

**st orage**  **volume of**  **the tank**  **increases.**

**5­65 DOE**  **will conduct**  **testing according**  **to the**  **water heater**  **test procedure**  **specified in** 

**ap pendix**  **E t**  **o subpart**  **B o**  **f 10**  **CFR 430**  **(the same**  **test p**  **rocedure used**  **by manufacturers** 

**to certify**  **products in**  **AHRI’s Consumers’**  **Directory) to**  **verify the**  **EF values.**  **Ideally,**

**DO E**  **would test**  **a m**  **odel series**  **with similar**  **design characteristics**  **and volumetric**  **designs**

**to isolate**  **how EF**  **changes with**  **rated storage**  **volume. DOE**  **would then**  **repeat this**  **test for** 

**a n**  **umber of**  **model series**  **at various**  **efficiencies and**  **for a**  **v ariety**  **of different** 

**ma nufacturers.**  **D OE**  **will choose**  **models to**  **test by**  **selecting product**  **series from**  **multiple**

**ma jor**  **manufacturers that**  **span the**  **range of**  **rated volumes**  **within each**  **product class**  **and**

**th at**  **span the**  **range of**  **efficiency levels.**  **A fter**  **completion of**  **testing, DOE**  **will conduct**  **a**

**t eardown**  **analysis to**  **confirm the**  **specific technologies**  **that affect**  **energy efficiency**  **and**

**th e**  **volumetric characteristics**  **of the**  **tank. DOE**  **will adjust**  **the energy­efficiency** 

**eq uations**  **based on**  **the results**  **of this**  **analysis.**

**5­66**REFERENCE

**1 G**  **AMA. Consumers’**  **Directory of**  **Certified Efficiency**  **Ratings, P**  **erformance Data** 

**Up dated**  **March 21,**  **2008. Last**  **accessed March**  **21, 2008.**  **<http://www.gamapower.org/>.**

**2 “**  5 4 th Annual Report. Statistical Review **.”** Appliance Magazine, **M ay**  **2007.**

**3 I**  **bid.**

**4 U**  **.S. Department**  **of Labor,**  **Bureau of**  **Labor Statistics,**  Wages by A rea and

Oc cupation

**. Last**  **accessed March**  **21, 2008.**  **<http://www.bls.gov/bls/blswage.htm>.**

**5 A**  **merican Metals**  **Market. Last**  **accessed March**  **21, 2008.** 

**<h ttp://www.amm.com>.** 

**6 U**  **.S. Department**  **of Labor,**  **Bureau of**  **Labor Statistics,**  P roducer Price Indices

**. La**  **st accessed**  **March 21,**  **2008. <http://www.bls.gov/ppi>.** 

**7 U**  **.S. Department**  **of Commerce,**  **Bureau Economic**  **Analysis,** Gross Domestic

Pr oduct Implicit Price Deflator

**. L**  **ast accessed**  **March 21,**  **2008.**

**<h ttps://bea.gov/bea/dn/nipaweb/TableView.asp#Mid>.** 

**8 P**  **lastic News,**  R esin Pricing

**. Last**  **accessed March**  **21, 2008.** 

**<h ttp://www.plasticsnews.com/subscriber/headlines.phtml>.** 

**9 U**  **.S. Department**  **of Labor,**  **Bureau of**  **Labor Statistics.**  P roducer Price Indexes

**. La**  **st accessed**  **March 21,**  **2008. <http://www.bls.gov/ppi/home.htm>.** 

**5­67**