8-i

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION ........................................................................................................... 8-1

8.1.2 General Approach for Life-Cycle Cost and Payback Period Analysis............................ 8-1

8.1.3 Overview of Life-Cycle Cost and Payback Period Analysis Inputs................................ 8-2

8.1.4 Use of Commercial Building Energy Consumption Survey and Residential 

Energy Consumption Survey in Life-Cycle Cost and Payback Period Analysis............. 8-5

8.2 LIFE-CYCLE COST ANALYSIS INPUTS.................................................................... 8-6

8.2.2 Total Installed Cost Inputs............................................................................................... 8-6

8.2.2.1 Manufacturer Costs........................................................................................ 8-7

8.2.2.2 Markups ......................................................................................................... 8-9

8.2.2.3 Total Commercial Consumer Price.............................................................. 8-11

8.2.2.4 Future Equipment Prices.............................................................................. 8-14

8.2.2.5 Installation Cost ........................................................................................... 8-15

8.2.2.6 Total Installed Cost...................................................................................... 8-16

8.2.3 Operating Cost Inputs.................................................................................................... 8-18

8.2.3.1 Annual Energy Use Savings ........................................................................ 8-19

8.2.3.2 Energy Prices............................................................................................... 8-19

8.2.3.3 Energy Price Trends..................................................................................... 8-25

8.2.3.4 Repair Cost................................................................................................... 8-26

8.2.3.5 Maintenance Cost......................................................................................... 8-28

8.2.3.6 Lifetime........................................................................................................ 8-30

8.2.3.7 Discount Rates............................................................................................. 8-31

8.2.3.8 Compliance Date of Standard ...................................................................... 8-39

8.2.3.9 Base Case Distribution of Efficiency Levels............................................... 8-39

8.3 PAYBACK PERIOD INPUTS...................................................................................... 8-41

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS...................................... 8-42

8.4.2 Natural Draft Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-43

8.4.3 Natural Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-44

8.4.4 Natural Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-46

8.4.5 Natural Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-48

8.4.6 Natural Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr.................................................................................................. 8-50

8.4.7 Natural Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr...... 8-52

8.4.8 Natural Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr.................................................................................................. 8-54

8.4.9 Natural Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr....... 8-56
8-ii

8.4.10 Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-58

8.4.11 Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-60

8.4.12 Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-62

8.4.13 Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-64

8.4.14 Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-66

8.4.15 Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-68

8.4.16 Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr ...................................................................................... 8-70

8.4.17 Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 

Btu/hr ............................................................................................................................. 8-72

8.5 REBUTTABLE PAYBACK PERIOD.......................................................................... 8-74

8.5.2 Inputs.............................................................................................................................. 8-74

8.5.3 Results............................................................................................................................ 8-74

LIST OF TABLES

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP 

Analysis................................................................................................................ 8-4

Table 8.2.1 Manufacturer Production Cost for Commercial Packaged Boilers by 

Efficiency Level................................................................................................... 8-7

Table 8.2.2 Summary of National Average Markups on Commercial Packaged Boilers .... 8-10

Table 8.2.3 Overall Markup for Commercial Packaged Boilers by Equipment Class ......... 8-11

Table 8.2.4 Average Commercial Consumer Price for Commercial Packaged Boilers 

(2013$)............................................................................................................... 8-12

Table 8.2.5 Average Total Installed Cost for Commercial Packaged Boilers (2013$) ........ 8-17

Table 8.2.6 Average Commercial Electricity Prices in 2012................................................ 8-19

Table 8.2.7 Average Residential Electricity Prices in 2012 ................................................. 8-20

Table 8.2.8 Average Commercial Natural Gas Prices in 2012 ............................................. 8-21

Table 8.2.9 Average Residential Natural Gas Prices in 2012............................................... 8-22

Table 8.2.10 Average Commercial Fuel Oil Prices in 2012 ................................................... 8-23

Table 8.2.11 Average Residential Fuel Oil Prices in 2012..................................................... 8-24

Table 8.2.12 Annualized Repair Cost for Commercial Packaged Boilers (2013$)................ 8-26

Table 8.2.13 Annualized Maintenance Cost for Commercial Packaged Boilers (2013$)...... 8-28

Table 8.2.14 Lifetime Parameters for Commercial Packaged Boilers.................................... 8-31

Table 8.2.15 Risk-free rate and equity risk premium, 2004 – 2013 ....................................... 8-33

Table 8.2.16 Weighted Average Cost of Capital for Sectors that Purchase Boilers............... 8-34

Table 8.2.17 Definitions of Income Groups ........................................................................... 8-35

Table 8.2.18 Types of Household Debt and Equity by Percentage Shares (%)...................... 8-36
8-iii

Table 8.2.19 Data Used to Calculate Real Effective Mortgage Rates.................................... 8-37

Table 8.2.20 Average Real Effective Interest Rates for Household Debt .............................. 8-37

Table 8.2.21 Average Nominal and Real Interest Rates for Household Equity ..................... 8-38

Table 8.2.22 Average Real Effective Discount....................................................................... 8-39

Table 8.2.23 Base-Case Market Shares in 2019 by Efficiency Level for Commercial 

Packaged Boilers................................................................................................ 8-40

Table 8.4.1 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-43

Table 8.4.2 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr .......................................................................... 8-43

Table 8.4.3 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr ................. 8-45

Table 8.4.4 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ................................................................................................................. 8-45

Table 8.4.5 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-47

Table 8.4.6 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr .......................................................................... 8-47

Table 8.4.7 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr ................. 8-49

Table 8.4.8 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr ................................................................................................................. 8-49

Table 8.4.9 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-51

Table 8.4.10 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr...................................................................................... 8-51

Table 8.4.11 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Steam Commercial Packaged Boilers >2,500,000 Btu/hr........................ 8-53

Table 8.4.12 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr....... 8-53

Table 8.4.13 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-55

Table 8.4.14 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr...................................................................................... 8-55
8-iv

Table 8.4.15 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Steam Commercial Packaged Boilers >2,500,000 Btu/hr........................ 8-57

Table 8.4.16 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr........ 8-57

Table 8.4.17 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr ............................................................................................ 8-59

Table 8.4.18 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers ≥

300,000 Btu/hr and ≤2,500,000 Btu/hr ............................................................ 8-59

Table 8.4.19 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr.......... 8-61

Table 8.4.20 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers 

>2,500,000 Btu/hr.............................................................................................. 8-61

Table 8.4.21 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr ............................................................................................ 8-63

Table 8.4.22 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥

300,000 Btu/hr and ≤2,500,000 Btu/hr ............................................................ 8-63

Table 8.4.23 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr........... 8-65

Table 8.4.24 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers 

>2,500,000 Btu/hr.............................................................................................. 8-65

Table 8.4.25 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-67

Table 8.4.26 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers ≥

300,000 Btu/hr and ≤2,500,000 Btu/hr ............................................................ 8-67

Table 8.4.27 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr ................ 8-69

Table 8.4.28 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers 

>2,500,000 Btu/hr.............................................................................................. 8-69

Table 8.4.29 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤

2,500,000 Btu/hr ................................................................................................ 8-71

Table 8.4.30 LCC Savings Relative to the Base Case Efficiency Distribution for

Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers ≥

300,000 Btu/hr and ≤2,500,000 Btu/hr ............................................................ 8-71
8-v

Table 8.4.31 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr ................. 8-72

Table 8.4.32 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers 

>2,500,000 Btu/hr.............................................................................................. 8-73

Table 8.5.1 Rebuttable Payback Period for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr ........ 8-74

Table 8.5.2 Rebuttable Payback Period for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-75

Table 8.5.3 Rebuttable Payback Period for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-75

Table 8.5.4 Rebuttable Payback Period for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-75

Table 8.5.5 Rebuttable Payback Period for Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr ........ 8-75

Table 8.5.6 Rebuttable Payback Period for Natural Draft Gas-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-75

Table 8.5.7 Rebuttable Payback Period for Natural Draft Oil-Fired Steam Commercial 

Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr ........................... 8-75

Table 8.5.8 Rebuttable Payback Period for Natural Draft Oil-Fired Steam Commercial 

Packaged Boilers >2,500,000 Btu/hr ................................................................. 8-76

Table 8.5.9 Rebuttable Payback Period for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr ........ 8-76

Table 8.5.10 Rebuttable Payback Period for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-76

Table 8.5.11 Rebuttable Payback Period for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-76

Table 8.5.12 Rebuttable Payback Period for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-77

Table 8.5.13 Rebuttable Payback Period for Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr ........ 8-77

Table 8.5.14 Rebuttable Payback Period for Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-77

Table 8.5.15 Rebuttable Payback Period for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-77

Table 8.5.16 Rebuttable Payback Period for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-77

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ....................... 8-4

Figure 8.2.1 Historical Deflated Producer Price Indexes for Cast Iron Water-Heating 

Boilers and Steel Water-Heating Boilers........................................................... 8-14

Figure 8.2.2 Deflated Iron and Steel Mills PPI from 1965 to 2013 ....................................... 8-15
8-vi

Figure 8.2.3 Projected National Commercial Energy Prices.................................................. 8-25

Figure 8.2.4 Projected National Residential Energy Prices ................................................... 8-26

Figure 8.4.1 Distribution of LCC Savings for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-44

Figure 8.4.2 Distribution of LCC Savings for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-46

Figure 8.4.3 Distribution of LCC Savings for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-48

Figure 8.4.4 Distribution of LCC Savings for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-50

Figure 8.4.5 Distribution of LCC Savings for Natural Draft Gas-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-52

Figure 8.4.6 Distribution of LCC Savings for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-54

Figure 8.4.7 Distribution of LCC Savings for Natural Draft Oil-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-56

Figure 8.4.8 Distribution of LCC Savings for Natural Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-58

Figure 8.4.9 Distribution of LCC Savings for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-60

Figure 8.4.10 Distribution of LCC Savings for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-62

Figure 8.4.11 Distribution of LCC Savings for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-64

Figure 8.4.12 Distribution of LCC Savings for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-66

Figure 8.4.13 Distribution of LCC Savings for Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-68

Figure 8.4.14 Distribution of LCC Savings for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-70

Figure 8.4.15 Distribution of LCC Savings for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr....... 8-72

Figure 8.4.16 Distribution of LCC Savings for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr ............................................ 8-73
8-1

CHAPTER 8. LIFE-CYCLE COST AND PAYPACK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of amended standards on individual commercial consumers usually includes a 

reduction in operating cost and an increase in purchase cost. This chapter describes two metrics 

used in the analysis to determine the economic impact of standards on individual commercial

consumers.

• LCC (life-cycle cost) is the total consumer cost of an appliance or product, generally over 

the life of the appliance or product. The LCC calculation includes total installed cost 

(equipment manufacturer selling price, distribution chain markups, sales tax, and 

installation costs), operating costs (energy, repair, and maintenance costs), equipment 

lifetime, and discount rate. Future operating costs are discounted to the time of purchase 

and summed over the lifetime of the appliance or product.

• Payback period (PBP) measures the amount of time it takes commercial consumers to 

recover the assumed higher purchase price of more energy-efficient equipment through 

reduced operating costs.

The U.S. Department of Energy (DOE) conducts the LCC and PBP analysis using a 

spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a 

commercially available software program), the LCC and PBP model generates a Monte Carlo 

simulation to perform the analysis by incorporating uncertainty and variability considerations in 

certain of the key parameters as discussed further in section 8.1.2.

Inputs to the LCC and PBP analysis of commercial packaged boiler equipment are 

discussed in sections 8.2 and 8.3, respectively. Results for each metric are presented in section 

8.4. Key variables and calculations are presented for each metric. The calculations discussed here 

were performed with a series of Microsoft Excelspreadsheets that are accessible over the Internet 

(www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=87).

Details of the spreadsheets and instructions for using them are discussed in appendix 8-A.

8.1.2 General Approach for Life-Cycle Cost and Payback Period Analysis

Recognizing that each commercial building using boilers is unique, DOE analyzes 

variability and uncertainty through LCC and PBP probability calculations addressed here for a 

representative sample of individual commercial buildings and households. The results are 

expressed as the number of buildings experiencing economic impacts of different magnitudes. 

The LCC and PBP model was developed using Microsoft Excel spreadsheets combined with 

Crystal Ball. The LCC and PBP analysis explicitly model both the uncertainty and the variability 

in the model’s inputs using Monte Carlo simulation and probability distributions (see appendix 

8-B).
8-2

The LCC analysis uses the estimated energy use for each commercial packaged boiler

unit as described in the energy use analysis in chapter 7 of the Technical Support Document

(TSD). Energy use of commercial packaged boilers is sensitive to climate and therefore varies by 

location within the United States. Aside from energy use, other important factors influencing the 

LCC and PBP analysis include energy prices, installation costs, equipment distribution markups, 

and sales taxes.

A certain fraction of commercial packaged boilers is used for commercial applications. 

This fraction determines the frequency at which the model’s sampling process will select an item 

from the commercial category.

As mentioned previously, DOE generates LCC and PBP results as probability 

distributions using a simulation based on Monte Carlo analysis methods, in which certain key 

inputs to the analysis consist of probability distributions rather than single-point values.

Therefore, the outcomes of the Monte Carlo analysis can also be expressed as probability 

distributions. As a result, the Monte Carlo analysis produces a range of LCC and PBP results. A 

distinct advantage of this type of approach is that DOE can identify the percentage of 

commercial consumers achieving LCC savings or attaining certain PBP values due to an 

increased efficiency level, in addition to the average LCC savings or average PBP for that 

efficiency level.

The LCC and PBP results are displayed as distributions of impacts compared to a base

case. The base case efficiency is for 2019 and reflects the expected distribution of efficiency 

levels by equipment class. 

8.1.3 Overview of Life-Cycle Cost and Payback Period Analysis Inputs

The LCC is the total commercial consumer cost over the life of the equipment, including 

purchase price (including retail markups, sales taxes, and installation costs) and operating cost 

(including costs for repair, maintenance, and energy). Future operating costs are discounted to 

the time of purchase and summed over the lifetime of the equipment. The PBP is the increase in 

purchase cost of higher efficiency equipment divided by the change in annual operating cost of 

the equipment. It represents the number of years that it will take the commercial consumer to 

recover the increased purchase cost through decreased operating costs. In the PBP calculation, 

future costs are not discounted.

Inputs to the LCC and PBP analysis are categorized as: (1) inputs for establishing the 

purchase cost, otherwise known as the total installed cost; and (2) inputs for calculating the 

operating cost (i.e., energy, maintenance, and repair costs).

The primary inputs for establishing the total installed cost are:

• Baseline manufacturer selling price: The baseline manufacturer selling price (MSP) is 

the price charged by the manufacturer to a wholesaler for equipment meeting existing 

minimum efficiency (or baseline) standards. It includes a markup that converts the cost of 

production (i.e., the manufacturer cost) to the MSP.
8-3

• Standard-level manufacturer selling price increase: The standard-level MSP is the 

incremental change in MSP associated with producing equipment at each of the higher 

efficiency standard levels. 

• Markups and sales tax: Markups and sales tax are the wholesaler and contractor margins 

and state and local retail sales taxes associated with converting the MSP to a commercial 

consumer price. 

• Installation cost: Installation cost is the cost to the commercial consumer of installing the 

equipment. The installation cost represents all costs required to install the equipment but 

does not include the marked-up commercial consumer equipment price. The installation 

cost includes labor, overhead, and any miscellaneous materials and parts. 

The primary inputs for calculating the operating cost are:

• Equipment energy consumption: The equipment energy consumption is the site energy 

use associated with the use of the boiler to provide space conditioning to the building.

• Energy Prices: Electricity, natural gas, liquid petroleum gas (LPG), and fuel oil prices are 

determined using average monthly energy prices.

• Electricity, natural gas, and fuel oil price trends: The Energy Information 

Administration’s (EIA’s) Annual Energy Outlook 2014 (AEO 2014) is used to forecast 

energy prices into the future.1 For the results presented in this chapter, DOE uses the 

AEO 2014 Reference case to forecast future energy prices.

• Maintenance costs: The labor and material costs associated with maintaining the 

operation of the equipment.

• Repair costs: The labor and material costs associated with repairing or replacing 

components that have failed.

• Lifetime: The age at which the boiler is retired from service.

• Discount rate: The rate at which future costs and savings are discounted to establish their 

present value.

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating 

cost inputs for the calculation of the LCC and PBP. 
8-4

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and 

PBP

Table 8.1.1 provides descriptions of the various inputs to the calculation of the LCC and 

PBP. As noted earlier, most of the inputs are characterized by probability distributions that 

capture variability in the input variables. 

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP 

Analysis

Inputs Description

Affecting Installed Costs

Equipment Price

Derives MSP for boiler units at different heating input capacities (from the 

engineering analysis) and multiplied by wholesaler markups and contractor 

markups plus sales tax (from markups analysis). Uses the probability 

distribution for the different markups to describe their variability. 

Installation Cost

Includes installation labor derived from 2013 RS Means Facilities Construction 

Cost Data. Overhead and materials costs and profits are assumed to be included 

in the contractor’s markup. Thus, the total installed cost equals the commercial 

consumer equipment price (manufacturer cost multiplied by the various 

markups plus sales tax) plus the installation cost. 

Affecting Operating Costs

Annual Energy Use

Annual energy use includes electricity and natural gas or fuel oil used by a 

commercial packaged boiler providing space heating and water heating in either 

commercial or residential buildings. The energy use analysis provides estimates 

of the distribution of annual energy consumption for boilers at the efficiency 

standard levels considered.

Manufacturer Sales 

Price Standard i= 1...n

Manufacturer Sales 

Price Standard i= 1...n

Installation Costs Installation Costs

Repair Costs Repair Costs Lifetimes Lifetimes

Annual Maintenance

Electricity 

Consumption Electricity 

Consumption

Manufacturer Base 

Price

Total Installed Cost 

(Std i –Base)

Manufacturer Base 

Price

Contractor Markups

Wholesaler/ 

Distributor Markup

Electricity Prices

Equipment Prices

Sales Tax

Manufacturer Selling 

Price (Base)

Installation Costs

Manufacturer Selling 

Price Standard i= 1...n

Electricity 

Consumption Annual Energy Costs

Annual Maintenance

Repair Costs

Annual Operating 

Cost (Std i - Base)

Payback 

Period

Discount Rate

Lifetimes

Lifetime 

Operating 

Cost (Std 

i – Base)

Lifecycle 

Cost

Annual Maintenance 

Costs

Manufacturer Sales 

Price Standard i= 1...n

Manufacturer Sales 

Price Standard i= 1...n

Installation Costs Installation Costs

Repair Costs Repair Costs Lifetimes Lifetimes

Annual Maintenance

Electricity 

Consumption Electricity 

Consumption

Manufacturer Base 

Price

Total Installed Cost 

(Std i –Base)

Manufacturer Base 

Price

Contractor Markups

Wholesaler/ 

Distributor Markup

Electricity Prices

Equipment Prices

Sales Tax

Manufacturer Selling 

Price (Base)

Installation Costs

Manufacturer Selling 

Price Standard i= 1...n

Electricity 

Consumption Annual Energy Costs

Annual Maintenance

Repair Costs

Annual Operating 

Cost (Std i - Base)

Payback 

Period

Discount Rate

Lifetimes

Lifetime 

Operating 

Cost (Std 

i – Base)

Lifecycle 

Cost

Annual Maintenance 

Costs

Energy

Consumption

Energy Prices
8-5

Energy Efficiency

Rated thermal efficiency and combustion efficiency are the efficiency 

descriptors for commercial packaged boilers. At each efficiency level, the rated

thermal efficiency is adjusted based on assumed operating conditions. The 

adjusted thermal efficiency is used to determine the annual energy consumption 

associated with each considered efficiency level.

Energy Prices

Costs are calculated for CBECS 2003 buildings from monthly marginal average 

electricity and natural gas or fuel oil prices in each of 9 divisions in CBECS 

2003. Commercial prices are escalated by the AEO 2014 forecasts to estimate 

future electricity prices. Escalation is performed at the census division level.

Costs are calculated for RECS 2009 households from monthly marginal average 

electricity and natural gas or fuel oil prices in each of 30 states and groups of 

states in RECS 2009.a Residential prices are escalated by the AEO 2014

forecasts to estimate future electricity prices. Escalation is performed at the 

census division level and aggregated to the regions used in the study.

Maintenance Cost

The cost associated with maintaining the operation of the equipment (e.g., 

checking blower). Annual maintenance cost does not change as a function of 

MSP.

Repair Cost

Estimates the annualized repair cost for baseline efficiency boiler equipment, 

based on costs of major repair (such as heat exchanger replacement), from a 

variety of published sources. It is assumed that repair costs would vary for

higher efficiency levels.

Affecting Present Value of Annual Operating Cost Savings

Equipment Lifetime Uses the probability distribution of lifetimes developed for boilers. 

Discount Rate

Mean real discount rates ranging from 4.90 percent to 5.96 percent for various 

classes of commercial consumers based on financial data from Damodaran

Online valuation database (see section 8.2.3.7 for details). Probability 

distributions are used for the discount rates.

Date Compliance is 

Required 2019 (generally 3 years after the “effective date,” as published in the final rule)

All of the inputs depicted in Figure 8.1.1 and summarized in Table 8.1.1 are discussed in 

section 8.2.

8.1.4 Use of Commercial Building Energy Consumption Survey and Residential Energy 

Consumption Survey in Life-Cycle Cost and Payback Period Analysis

The LCC and PBP calculations detailed here are for a representative sample of individual 

boiler users. The commercial packaged boilers are assumed to be installed both in commercial

and residential buildings.

As explained in chapter 7, the Energy Information Administration’s (EIA’s) 2003 

Commercial Building Energy Consumption Survey (CBECS 2003) serves as the basis for 

 a RECS 2009 provides 27 regions (also called reportable domains). The 27th region originally included Oregon, 

Washington, Alaska, and Hawaii. Alaska and Hawaii were subdivided into separate regions (28 and 29, 

respectively), based on cooling and heating degree days. In addition, region 14 originally included West Virginia, 

which has been disaggregated into region 30 based on cooling and heating degree days. See Appendix 7-A for more 

details.
8-6

determining the representative commercial sample, while EIA’s 2009 Residential Energy 

Consumption Survey (RECS 2009) serves as the basis for determining the representative 

residential sample.2,3 CBECS collects energy-related data for commercial buildings in the United 

States. CBECS 2003 includes data from 5,215 buildings representing 4.9 million buildings. 

RECS collects energy-related data for occupied primary housing units in the United States. 

RECS 2009 includes data from 12,083 housing units that represent almost 113.6 million

households. 

Appendix 7-A presents the variables used and their definitions, as well as further 

information about the derivation of the household and building samples.

8.2 LIFE-CYCLE COST ANALYSIS INPUTS

Life-cycle cost is the total commercial consumer cost over the life of equipment, 

including purchase cost and operating costs (which are composed of costs for energy, 

maintenance, and repair). Future operating costs are discounted to the time of purchase and 

summed over the lifetime of the equipment. Life-cycle cost is defined by the following equation:

Eq. 8.1

Where:

LCC = life-cycle cost ($),

IC = total installed cost ($),

∑ = sum over the lifetime, from year 1 to year N, 

where N = lifetime of equipment (years),

OC = operating cost ($),

r = discount rate, and

t = year for which operating cost is being determined.

DOE expresses all the costs in 2013$. Total installed cost, operating cost, lifetime, and 

discount rate are discussed in the following sections. In the LCC analysis, the year of equipment

purchase is assumed to be 2019, the assumed effective date of energy conservation standards for 

commercial packaged boilers.

8.2.2 Total Installed Cost Inputs

The total installed cost to the consumer is defined by the following equation:

Eq. 8.2

Where:

EQP = equipment price ($) (i.e., commercial consumer price for the equipment only), and

∑=

= + +

N

t

t

t LCC IC OC r

1

/(1 )

IC = EQP + INST
8-7

INST = installation cost ($) (i.e., the cost for labor and materials).

The equipment price is based on the distribution channel through which the commercial 

consumer purchases the equipment. As discussed in chapter 6, DOE defines two major 

distribution channels for units installed in new construction to describe how the equipment

passes from the manufacturer to the commercial consumer. In the first distribution channel, the 

manufacturer sells the equipment to a wholesaler or manufacturer’s representative, who sells to a 

mechanical contractor who is hired by a general contractor. The general contractor purchases and 

installs the equipment on behalf of the commercial consumer and adds its markup to the 

mechanical contractor’s price. Replacement equipment follows the same distribution channel, 

except that there is no general contractor. Instead, the mechanical contractor takes on the general 

contractor’s function. In the second distribution channel, the commercial consumer purchases the 

boiler directly from the manufacturer through a national account.

The remainder of this section provides information about the variables DOE uses to 

calculate the total installed cost for commercial packaged boiler equipment.

8.2.2.1 Manufacturer Costs

DOE develops the manufacturer costs for boilers as described in chapter 5, Engineering 

Analysis. The manufacturer costs at each efficiency level are shown in Table 8.2.1.

Table 8.2.1 Manufacturer Production Cost for Commercial Packaged Boilers by 

Efficiency Level 

Equipment Class Efficiency Level Manufacturer 

Production 

Cost

Incremental 

Cost

2013$ 2013$

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $3,799 -

81% TE $4,328 $529 

82% TE $5,106 $1,307 

85% TE - Max Tech $6,877 $3,078 

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $16,898 -

83% CE $18,973 $2,075 

84% CE - Max Tech $21,241 $4,343 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $5,486 -

83% TE $5,881 $395 

85% TE $8,767 $3,282 

87% TE - Max Tech $9,139 $3,654 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $15,845 -

85% CE $18,145 $2,300 

86% CE - Max Tech $19,984 $4,138 

Natural Draft Gas-Fired Steam 77% TE - Baseline $3,215 -
8-8

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

79% TE $4,815 $1,601 

80% TE - Max Tech $5,875 $2,661 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

77% TE - Baseline $5,248 -

79% TE $9,107 $3,858 

80% TE $12,640 $7,392 

81% TE - Max Tech $16,582 $11,334 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $5,286 -

82% TE $6,332 $1,046 

83% TE - Max Tech $7,490 $2,204 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $7,998 -

82% TE $10,963 $2,966 

83% TE $14,247 $6,250 

85% TE - Max Tech $21,889 $13,892 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $7,120 -

83% TE $8,830 $1,710 

85% TE $10,198 $3,078 

87% TE $11,785 $4,665 

92% TE $13,939 $6,819 

95% TE $18,331 $11,211 

98% TE - Max Tech $22,724 $15,604 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $22,256 -

84% CE $26,599 $4,343 

86% CE $31,789 $9,533 

94% CE $54,040 $31,784 

97% CE - Max Tech $58,148 $35,892 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $8,806 -

83% TE $9,620 $815 

84% TE $10,435 $1,629 

87% TE $12,879 $4,073 

98% TE - Max Tech $27,749 $18,944 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $21,203 -

86% CE $26,551 $5,348 

88% CE $29,662 $8,459 

97% CE - Max Tech $68,838 $47,635 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

79% TE - Baseline $8,136 -

80% TE $9,196 $1,060 

81% TE $10,379 $2,243 

83% TE - Max Tech $13,161 $5,025 

Mechanical Draft Gas-Fired Steam 79% TE - Baseline $14,464 -
8-9

Commercial Packaged Boiler 

>2,500,000 Btu/hr

80% TE $17,998 $3,534 

83% TE - Max Tech $31,214 $16,750 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $8,607 -

83% TE $10,811 $2,204 

84% TE $12,092 $3,485 

86% TE - Max Tech $15,068 $6,461 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $13,355 -

83% TE $19,605 $6,250 

86% TE - Max Tech $31,671 $18,316 

To capture variations in manufacturer production costs, DOE derives manufactured cost 

adders for different boiler input capacities. 

8.2.2.2 Markups

For a given distribution channel, the overall markup is the value determined by 

multiplying all the associated markups and the applicable sales tax together to arrive at a single 

overall distribution chain markup value. The overall markup is multiplied times the baseline or 

standard-compliant manufacturer cost to arrive at the price paid by the commercial consumer. 

Because there are baseline and incremental markups associated with the wholesaler and 

mechanical contractor, the overall markup is also divided into a baseline markup (i.e., a markup 

used to convert the baseline manufacturer price into a commercial consumer price) and an 

incremental markup (i.e., a markup used to convert a standard-compliant manufacturer cost 

increase due to an efficiency increase into an incremental commercial consumer price). Markups 

can differ depending on whether the equipment is being purchased for a new construction 

installation or is being purchased to replace existing equipment. DOE develops the overall 

baseline markups and incremental markups for both new construction and replacement 

applications as a part of the markups analysis (chapter 6).

Based on the percentages of the market attributed to each distribution channel, Table 

8.2.2 displays the national weighted-average baseline and incremental markups and their 

associated components for commercial packaged boilers.
8-10

Table 8.2.2 Summary of National Average Markups on Commercial Packaged Boilers

Because the relative importance of new construction and replacements in total shipments 

varies among the equipment classes, the total markup varies as well (Table 8.2.3).

Replacement New Construction

Baseline 

Markup

Incremental 

Markup

National 

Account: 

Baseline/ 

Incr. MU 

Baseline 

Markup

Incremental 

Markup

National 

Account: 

Baseline/ 

Incr. MU 

Manufacturer 1.41 1.41

Wholesaler/Manufacturer’s 

Representative 1.36 1.10 1.36/1.10 1.36 1.10 1.36/1.10

Mechanical Contractor 1.53 1.22 - 1.44 1.16 -

General Contractor 

(commercial/residential) - - - 1.33/1.48 1.21/1.34 -

Sales Tax 1.07 - - 1.07

Overall Markup 

(commercial/residential) 3.15 2.04 2.06/1.66 3.69/4.10 2.17/2.40 2.06/1.66
8-11

Table 8.2.3 Overall Markup for Commercial Packaged Boilers by Equipment Class

Equipment Class Baseline 

Markup

Incremental 

Markup

Natural Draft Gas-Fired Hot Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.08 2.01

Natural Draft Gas-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr 2.97 1.97

Natural Draft Oil-Fired Hot Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.39 2.09

Natural Draft Oil-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr 3.04 1.98

Natural Draft Gas-Fired Steam Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.04 1.99

Natural Draft Gas-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr 2.98 1.97

Natural Draft Oil-Fired Steam Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.06 1.98

Natural Draft Oil-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr 2.99 1.97

Mechanical Draft Gas-Fired Hot Water Commercial Packaged 

Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.30 2.06

Mechanical Draft Gas-Fired Hot Water Commercial Packaged 

Boiler >2,500,000 Btu/hr 3.30 2.05

Mechanical Draft Oil-Fired Hot Water Commercial Packaged 

Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.41 2.09

Mechanical Draft Oil-Fired Hot Water Commercial Packaged 

Boiler >2,500,000 Btu/hr 3.10 1.99

Mechanical Draft Gas-Fired Steam Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.04 1.99

Mechanical Draft Gas-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr 2.98 1.97

Mechanical Draft Oil-Fired Steam Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr 3.06 1.98

Mechanical Draft Oil-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr 2.99 1.97

8.2.2.3 Total Commercial Consumer Price

DOE derives the commercial consumer equipment price for the baseline equipment by 

taking the equipment of the baseline manufacturer cost and the baseline overall markup 

(including the sales tax). For each efficiency level above the baseline, DOE derives the 

commercial consumer equipment price by taking baseline equipment commercial consumer price

and adding to it the equipment of the incremental manufacturer cost and the incremental overall 
8-12

markup (including the sales tax). Markups and sales taxes can take on a variety of values, 

depending on location, so the resulting total installed cost for a particular efficiency level is 

represented by a distribution of values.

Table 8.2.4 presents the average commercial consumer equipment price for each boiler

equipment class at each efficiency level examined.

Table 8.2.4 Average Commercial Consumer Price for Commercial Packaged Boilers

(2013$)

Equipment Class Efficiency Level

Average 

Consumer 

Price 

Incremental 

Cost

2013$ 2013$

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $11,701 -

81% TE $12,761 $1,060 

82% TE $14,322 $2,622 

85% TE - Max Tech $17,875 $6,175 

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $50,248 -

83% CE $54,342 $4,094 

84% CE - Max Tech $58,818 $8,570 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $18,591 -

83% TE $19,415 $825 

85% TE $25,443 $6,853 

87% TE - Max Tech $26,220 $7,629 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $48,173 -

85% CE $52,719 $4,546 

86% CE - Max Tech $56,353 $8,180 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

77% TE - Baseline $9,767 -

79% TE $12,960 $3,193 

80% TE - Max Tech $15,074 $5,307 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

77% TE - Baseline $15,615 -

79% TE $23,220 $7,605 

80% TE $30,185 $14,570 

81% TE - Max Tech $37,954 $22,338 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $16,167 -

82% TE $18,238 $2,071 

83% TE - Max Tech $20,531 $4,364 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $23,922 -

82% TE $29,755 $5,833 

83% TE $36,214 $12,291 
8-13

85% TE - Max Tech $51,243 $27,321 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $23,467 -

83% TE $26,994 $3,527 

85% TE $29,817 $6,350 

87% TE $33,090 $9,623 

92% TE $37,532 $14,065 

95% TE $46,592 $23,125 

98% TE - Max Tech $55,653 $32,186 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $73,365 -

84% CE $82,277 $8,912 

86% CE $92,928 $19,564 

94% CE $138,594 $65,229 

97% CE - Max Tech $147,024 $73,659 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $30,063 -

83% TE $31,769 $1,705 

84% TE $33,474 $3,410 

87% TE $38,589 $8,526 

98% TE - Max Tech $69,715 $39,651 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $65,768 -

86% CE $76,425 $10,657 

88% CE $82,624 $16,857 

97% CE - Max Tech $160,691 $94,923 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

79% TE - Baseline $24,721 -

80% TE $26,836 $2,115 

81% TE $29,195 $4,474 

83% TE - Max Tech $34,745 $10,024 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

79% TE - Baseline $43,032 -

80% TE $49,998 $6,965 

83% TE - Max Tech $76,048 $33,016 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $26,307 -

83% TE $30,669 $4,362 

84% TE $33,203 $6,896 

86% TE - Max Tech $39,090 $12,784 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $39,963 -

83% TE $52,256 $12,293 

86% TE - Max Tech $75,990 $36,027 
8-14

8.2.2.4 Future Equipment Prices

DOE examines the historical producer price index (PPI) data for cast iron water-heating 

boilers from 1999-2013 and steel water-heating boilers from 1980 to 2013 (discontinued between 

1987 and 1993) from the Bureau of Labor Statistics’ (BLS).b The PPI data reflect nominal 

prices, adjusted for equipment quality changes. The inflation-adjusted (deflated) price indexes

for cast iron water-heating boilers and steel water-heating boilers are calculated by dividing the 

PPI series by the Gross Domestic Equipment Chained Price Index (see Figure 8.2.1).

Figure 8.2.1 Historical Deflated Producer Price Indexes for Cast Iron

Water-Heating Boilers and Steel Water-Heating Boilers

In Figure 8.2.1, both cast iron water-heating boiler PPI and steel water-heating boiler PPI 

show strongly rising trends starting from early 2000s ‒ a strong correlation with the historical 

price index for iron and steel mills (see Figure 8.2.2).c The rise in iron and steel PPI between 

2003 and 2008 is primarily a result of large demand for such commodities from rapid 

industrialization in China, India, and other emerging economies. Prior to 2003, the inflationadjusted PPI for iron and steel mills was in a long downtrend that began in the early 1980s. The

limited historical PPI for steel heating boilers also shows that the steel water-heating boilers 

likely had a downward price trend during the same period of time. The recent trend in iron and 

steel PPI could be a start of a return to a declining trend, but there is not enough data to be sure.

 b Cast iron heating boiler PPI series ID: PCU 3334143334141; Steel heating boiler PPI series ID: PCU 

3334143334145; www.bls.gov/ppi/ c Iron and steel mills PPI series ID: PCU331110331110; www.bls.gov/ppi/
8-15

Figure 8.2.2 Deflated Iron and Steel Mills PPI from 1965 to 2013

Given the pattern in iron and steel prices, DOE is not confident that extrapolating the 

trend in the PPI for cast iron water-heating boilers or steel water-heating boilers would provide a 

sound projection. Nor is DOE confident that the recent downward trend in iron and steel prices 

will continue in the future. Given the uncertainty, DOE applies a constant price trend to the 

manufacturer selling price (in real dollars) of commercial packaged boilers. See appendix 10-C 

for details on alternative equipment price trends.

8.2.2.5 Installation Cost

DOE’s analysis of installation costs accounts for regional differences in labor costs. DOE 

estimates the installation costs at each considered efficiency level using a variety of sources, 

including RS Means 2013 Facilities Construction Cost Data, manufacturer literature, and 

information from expert consultants.4 For a detailed discussion of the development of installation 

costs, see appendix 8-D.

The installation cost is the cost to the commercial consumer of installing the boiler. The 

cost of installation covers all labor and material costs associated with the replacement of an

existing boiler or the installation of a boiler in a new building, removal of the existing boiler, and 

any applicable permit fees. Higher-efficiency boilers may require additional installation costs. 

DOE’s analysis estimates specific installation costs for each sample building based on 

distributions of some installation parameters (such as vent length) and building characteristics 

given in CBECS 2003.
8-16

DOE gives separate consideration to the cost of installing condensing gas and oil boilers

in replacement cases and in new buildings. DOE conducts a detailed analysis of installation costs 

when a non-condensing boiler is replaced with a condensing boiler, with particular attention to 

venting and condensate removal issues in replacement applications.

DOE estimates basic installation costs applicable both to replacement and new buildings. 

These costs, which apply to all boilers, include putting in place and setting up the boiler, gas or 

oil piping, water piping, permits, and removal or disposal fees.

For replacement installations, DOE includes a number of additional costs (“adders”) for 

a fraction of the sample buildings. For natural draft boilers, the additional costs include vent 

resizing, chimney relining, and a new combustion air venting. For non-condensing mechanical 

draft boilers, the additional costs include stainless-steel venting when it is not already present 

and a new combustion air venting. Condensing mechanical-draft boiler cost adders include new 

stainless steel or plastic venting when stainless steel venting is not already present, new 

combustion air venting, and condensate removal.

DOE also includes adders for new construction installations. For natural draft boilers, 

generally a new flue vent (Type B metal) and a combustion air vent for direct-vent installations 

are the only adders. For non-condensing mechanical draft boilers, the adders generally include a 

new flue vent (stainless steel) and combustion air venting for direct-vent installations. For 

condensing boilers the adders include a new flue vent (stainless steel or plastic), a combustion air 

vent for direct-vent installations, and condensate removal.

8.2.2.6 Total Installed Cost

The total installed cost is the sum of the equipment price and the installation cost. MSPs, 

markups, and sales taxes all can take on a variety of values, depending on location, so the 

resulting total installed cost for a particular efficiency level will not be a single-point value, but 

rather a distribution of values. Table 8.2.5 presents the average total installed cost for each 

commercial packaged boiler equipment class at each efficiency level examined. 
8-17

Table 8.2.5 Average Total Installed Cost for Commercial Packaged Boilers (2013$)

Equipment Class Efficiency Level

Total Installed 

Cost

Incremental 

Cost

2013$ 2013$

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

80% TE - Baseline $17,667 -

81% TE $18,727 $1,060 

82% TE $20,289 $2,622 

85% TE - Max Tech $23,842 $6,175 

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $64,850 -

83% CE $68,944 $4,094 

84% CE - Max Tech $73,420 $8,570 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

82% TE - Baseline $24,657 -

83% TE $25,482 $825 

85% TE $31,510 $6,853 

87% TE - Max Tech $32,287 $7,629 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $58,768 -

85% CE $63,313 $4,546 

86% CE - Max Tech $66,948 $8,180 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

77% TE - Baseline $16,470 -

79% TE $19,663 $3,193 

80% TE - Max Tech $21,778 $5,307 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

77% TE - Baseline $33,212 -

79% TE $40,816 $7,605 

80% TE $47,781 $14,570 

81% TE - Max Tech $55,550 $22,338 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

81% TE - Baseline $21,337 -

82% TE $23,408 $2,071 

83% TE - Max Tech $25,701 $4,364 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $32,858 -

82% TE $38,691 $5,833 

83% TE $45,149 $12,291 

85% TE - Max Tech $60,179 $27,321 

Mechanical Draft Gas-Fired Hot 

Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

80% TE - Baseline $32,003 -

83% TE $35,530 $3,527 

85% TE $38,353 $6,350 

87% TE $41,626 $9,623 

92% TE $45,983 $13,980 

95% TE $55,044 $23,040 
8-18

98% TE - Max Tech $64,104 $32,101 

Mechanical Draft Gas-Fired Hot 

Water Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $93,310 -

84% CE $102,222 $8,912 

86% CE $112,873 $19,564 

94% CE $160,414 $67,104 

97% CE - Max Tech $168,844 $75,534 

Mechanical Draft Oil-Fired Hot 

Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

82% TE - Baseline $38,850 -

83% TE $40,555 $1,705 

84% TE $42,260 $3,410 

87% TE $47,376 $8,526 

98% TE - Max Tech $79,076 $40,226 

Mechanical Draft Oil-Fired Hot 

Water Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $78,625 -

86% CE $89,283 $10,657 

88% CE $95,482 $16,857 

97% CE - Max Tech $175,491 $96,865 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

79% TE - Baseline $33,196 -

80% TE $35,311 $2,115 

81% TE $37,669 $4,474 

83% TE - Max Tech $43,220 $10,024 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

79% TE - Baseline $61,565 -

80% TE $68,530 $6,965 

83% TE - Max Tech $94,581 $33,016 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

81% TE - Baseline $34,120 -

83% TE $38,482 $4,362 

84% TE $41,017 $6,896 

86% TE - Max Tech $46,904 $12,784 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $53,182 -

83% TE $65,475 $12,293 

86% TE - Max Tech $89,209 $36,027 

8.2.3 Operating Cost Inputs

DOE defines the operating cost by the following equation:

OC = EC+ RC+ MC

Eq. 8.3

Where:

OC = operating cost ($), 

EC = energy cost associated with operating the equipment ($),
8-19

RC = repair cost associated with component failure ($), and

MC = annual maintenance cost for maintaining equipment operation ($).

The remainder of this section provides information about the variables that DOE uses to 

calculate the operating cost for commercial packaged boilers. The annual energy costs of the 

equipment are computed from energy consumption per unit for the baseline and standardcompliant cases (efficiency level 2, 3, and so on), combined with the energy prices. Equipment

lifetime, discount rate, and compliance date of the standard are required for determining the 

operating cost and for establishing the operating cost present value. 

8.2.3.1 Annual Energy Use Savings

For each key equipment class, DOE calculates the annual energy use savings for each 

sample building at each efficiency level as described in chapter 7. Because it is unlikely that 

users of commercial packaged boilers may use a higher efficiency boiler more than a baseline 

one, DOE does not include a (direct) rebound effect in its analyses.

8.2.3.2 Energy Prices

DOE derives average monthly energy prices for a number of geographic areas in the 

United States using the latest data from EIA and monthly energy price factors that it develops. 

The process then assigns an appropriate energy prices to each commercial building and 

household in the sample, depending on its type (commercial or residential), and its location.

EIA Data. DOE derives 2012 annual electricity prices from EIA Form 826 data.

5 The 

EIA Form 826 data include energy prices by State. DOE calculates annual electricity prices for 

each CBECS region or RECS region by averaging monthly energy prices by State to get State 

electricity prices. For areas with more than one State, DOE weights each State’s average price by 

its number of buildings in 2019. Table 8.2.6 and Table 8.2.7 show the electricity prices by region

for commercial and residential sectors, respectively. (See appendix 8-C for more details.)

Table 8.2.6 Average Commercial Electricity Prices in 2012

Region Code Census Division

Commercial 

Electricity Prices

2013$/kWh

1 New England $0.14

2 Middle Atlantic $0.13

3 East North Central $0.10

4 West North Central $0.09

5 South Atlantic $0.09

6 East South Central $0.10

7 West South Central $0.08

8 Mountain $0.09

9 Pacific $0.13
8-20

Table 8.2.7 Average Residential Electricity Prices in 2012

Region 

Code Geographic Area

Residential 

Electricity Prices

2013$/kWh

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $0.17 

2 Massachusetts $0.15 

3 New York $0.18 

4 New Jersey $0.16 

5 Pennsylvania $0.13 

6 Illinois $0.12 

7 Indiana, Ohio $0.12 

8 Michigan $0.14 

9 Wisconsin $0.13 

10 Iowa, Minnesota, North Dakota, South Dakota $0.11 

11 Kansas, Nebraska $0.11 

12 Missouri $0.10 

13 Virginia $0.11 

14 Delaware, District of Columbia, Maryland $0.13 

15 Georgia $0.11 

16 North Carolina, South Carolina $0.11 

17 Florida $0.12 

18 Alabama, Kentucky, Mississippi $0.11 

19 Tennessee $0.10 

20 Arkansas, Louisiana, Oklahoma $0.09 

21 Texas $0.11 

22 Colorado $0.12 

23 Idaho, Montana, Utah, Wyoming $0.10 

24 Arizona $0.11 

25 Nevada, New Mexico $0.12 

26 California $0.15 

27 Oregon, Washington $0.09 

28 Alaska $0.18 

29 Hawaii $0.38 

30 West Virginia $0.10 

DOE obtaines the data for natural gas prices from EIA’s Natural Gas Navigator, which 

includes monthly natural gas prices by State for residential, commercial, and industrial 

commercial consumers.6 For areas with more than one State, DOE weights each State’s average 

price by its number of households in 2019. Table 8.2.8 and Table 8.2.9 show the natural gas 

prices by region for commercial and residential sectors, respectively. (See appendix 8-C for more 

details.) 
8-21

Table 8.2.8 Average Commercial Natural Gas Prices in 2012

Region 

Code Census Division

Commercial 

Gas Prices

2013$/MMBtu

1 New England $10.26 

2 Middle Atlantic $8.64 

3 East North Central $8.59 

4 West North Central $8.05 

5 South Atlantic $9.64 

6 East South Central $9.35 

7 West South Central $7.26 

8 Mountain $7.93 

9 Pacific $8.61 
8-22

Table 8.2.9 Average Residential Natural Gas Prices in 2012

Region Code Geographic Area

Residential 

Gas Prices

2013$/MMBtu

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $16.09 

2 Massachusetts $13.24 

3 New York $14.50 

4 New Jersey $11.92 

5 Pennsylvania $14.01 

6 Illinois $10.12 

7 Indiana, Ohio $13.80 

8 Michigan $12.15 

9 Wisconsin $10.10 

10 Iowa, Minnesota, North Dakota, South Dakota $9.69 

11 Kansas, Nebraska $11.89 

12 Missouri $16.62 

13 Virginia $14.71 

14 Delaware, District of Columbia, Maryland $14.51 

15 Georgia $18.57 

16 North Carolina, South Carolina $15.91 

17 Florida $18.90 

18 Alabama, Kentucky, Mississippi $14.49 

19 Tennessee $12.10 

20 Arkansas, Louisiana, Oklahoma $13.65 

21 Texas $12.25 

22 Colorado $9.61 

23 Idaho, Montana, Utah, Wyoming $8.89 

24 Arizona $17.62 

25 Nevada, New Mexico $10.80 

26 California $9.25

27 Oregon, Washington $12.32

28 Alaska $8.68

29 Hawaii $52.40 

30 West Virginia $12.94 

DOE collects 2012 average commercial fuel oil prices from EIA’s State Energy 

Consumption, Price, and Expenditure Estimates (SEDS).

7 SEDS includes annual fuel oil prices 

for residential, commercial, industrial, and transportation consumers by state. For areas with 

more than one State, DOE weights each State’s average price by its number of buildings. Table 

8.2.10 and Table 8.2.11 show the fuel oil prices by region for commercial and residential sectors, 

respectively. Appendix 8-C includes more details.
8-23

Table 8.2.10 Average Commercial Fuel Oil Prices in 2012

Region 

Code Census Division

Commercial Oil 

Prices

2013$/MMBtu

1 New England $26.51 

2 Middle Atlantic $25.71 

3 East North Central $24.74 

4 West North Central $24.98 

5 South Atlantic $24.76 

6 East South Central $24.97 

7 West South Central $24.89 

8 Mountain $25.38 

9 Pacific $25.95 
8-24

Table 8.2.11 Average Residential Fuel Oil Prices in 2012

Region 

Code Geographic Area

Residential Oil 

Prices

2013$/MMBtu

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $28.93 

2 Massachusetts $29.03 

3 New York $28.84 

4 New Jersey $30.17 

5 Pennsylvania $29.99 

6 Illinois $27.45 

7 Indiana, Ohio $27.40 

8 Michigan $27.39 

9 Wisconsin $27.13 

10 Iowa, Minnesota, North Dakota, South Dakota $27.45 

11 Kansas, Nebraska $27.39 

12 Missouri $26.94 

13 Virginia $27.13 

14 Delaware, District of Columbia, Maryland $29.68 

15 Georgia $26.88 

16 North Carolina, South Carolina $27.17 

17 Florida $27.39 

18 Alabama, Kentucky, Mississippi $25.97 

19 Tennessee $27.65 

20 Arkansas, Louisiana, Oklahoma $25.73 

21 Texas $25.44 

22 Colorado $25.88 

23 Idaho, Montana, Utah, Wyoming $26.37 

24 Arizona $29.79 

25 Nevada, New Mexico $27.86 

26 California $29.97 

27 Oregon, Washington $29.11 

28 Alaska $27.95 

29 Hawaii $29.07 

30 West Virginia $27.39 
8-25

Monthly Prices. To determine monthly prices for use in the analysis, DOE develops

monthly energy price factors for each fuel based on long-term price data. See appendix 8-C for a 

description of the method. DOE multiplies the annual prices shown in the previous tables by the 

monthly price factors for each fuel to derive prices for each month.

Electricity and Natural Gas Marginal Prices. Monthly electricity and natural gas prices 

are adjusted using seasonal marginal price factors to determine monthly marginal electricity and 

natural gas prices. These marginal energy prices are used to determine the cost to the commercial 

consumer of the change in energy consumed. For a detailed discussion of the development of 

marginal energy price factors, see appendix 8-C.

Building Energy Price Adjustment Factor. CBECS 2003 and RECS 2009 report the 

total annual consumption and expenditure of each energy use type. To take into account that 

building energy prices vary inside a geographical area, DOE develops an adjustment factor based 

on the reported average energy price in CBECS 2003 and RECS 2009 for each building divided 

by the average energy price in the geographical region in CBECS 2003 and RECS 2009. This 

factor is then multiplied times the monthly price developed above to determine the building 

energy price. Appendix 8-C includes more details.

8.2.3.3 Energy Price Trends

To arrive at prices in future years, DOE multiplies the prices described in the preceding 

section by the forecasts of annual average price changes in EIA’s AEO 2014.

1 Figure 8.2.3 and 

Figure 8.2.4 show the national commercial and residential energy price trends. To estimate the 

trend after 2040, DOE uses the average rate of change during 2030–2040. 

DOE applies the projected energy price for each of the nine census divisions to each 

building in the sample based on the building’s location. Appendix 8-C includes more details.

Figure 8.2.3 Projected National Commercial Energy Prices
8-26

Figure 8.2.4 Projected National Residential Energy Prices

8.2.3.4 Repair Cost

The repair cost is the cost to the commercial consumer for replacing or repairing 

components in the commercial packaged boiler that have failed (such as the ignition, controls, 

heat exchanger, mechanical vent damper, or power vent blower). The repair costs at each 

considered efficiency level are based on 2013 RS Means Facilities Maintenance and Repair 

Data8

. DOE accounts for regional differences in labor costs. The failure year distribution was 

assumed to be a Weibull function for each component. The mean failure year for each 

component is based on RS Means and a report by the Gas Research Institute (GRI).

9 DOE 

assumes that all boilers have a one year warranty for parts and labor and a ten-year warranty on 

the heat exchanger. For a detailed discussion of the development of repair costs, see appendix 8-

E.

Table 8.2.12 shows the annualized repair cost estimates for each equipment class.

Table 8.2.12 Annualized Repair Cost for Commercial Packaged Boilers (2013$)

Equipment Class Efficiency Level

Annualized 

Repair Cost

Incremental 

Cost

2013$ 2013$

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $76.14 -

81% TE $77.19 $1.04 

82% TE $78.72 $2.58 

85% TE - Max Tech $82.23 $6.08 

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $198.42 -

83% CE $202.44 $4.02 

84% CE - Max Tech $206.84 $8.42 

Natural Draft Oil-Fired Hot Water 82% TE - Baseline $48.55 -
8-27

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

83% TE $49.36 $0.81 

85% TE $55.29 $6.74 

87% TE - Max Tech $56.05 $7.50 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $78.89 -

85% CE $83.36 $4.47 

86% CE - Max Tech $86.93 $8.04 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

77% TE - Baseline $75.91 -

79% TE $79.06 $3.15 

80% TE - Max Tech $81.14 $5.23 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

77% TE - Baseline $167.40 -

79% TE $174.88 $7.48 

80% TE $181.74 $14.34 

81% TE - Max Tech $189.38 $21.98 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $45.44 -

82% TE $47.48 $2.04 

83% TE - Max Tech $49.74 $4.29 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $56.71 -

82% TE $62.46 $5.75 

83% TE $68.82 $12.11 

85% TE - Max Tech $83.64 $26.93 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $87.86 -

83% TE $91.34 $3.48 

85% TE $94.13 $6.27 

87% TE $97.36 $9.50 

92% TE $101.74 $13.88 

95% TE $110.68 $22.82 

98% TE - Max Tech $119.63 $31.77 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $219.10 -

84% CE $227.87 $8.77 

86% CE $238.35 $19.25 

94% CE $283.29 $64.19 

97% CE - Max Tech $291.59 $72.49 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $61.75 -

83% TE $63.43 $1.68 

84% TE $65.11 $3.36 

87% TE $70.15 $8.41 

98% TE - Max Tech $100.84 $39.09 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

84% CE - Baseline $97.47 -

86% CE $107.94 $10.47 
8-28

>2,500,000 Btu/hr 88% CE $114.04 $16.57 

97% CE - Max Tech $190.76 $93.29 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

79% TE - Baseline $92.76 -

80% TE $94.84 $2.08 

81% TE $97.16 $4.40 

83% TE - Max Tech $102.61 $9.86 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

79% TE - Baseline $196.21 -

80% TE $203.07 $6.86 

83% TE - Max Tech $228.72 $32.51 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $57.29 -

83% TE $61.57 $4.29 

84% TE $64.07 $6.78 

86% TE - Max Tech $69.86 $12.57 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $74.67 -

83% TE $86.78 $12.10 

86% TE - Max Tech $110.14 $35.47 

8.2.3.5 Maintenance Cost

The maintenance cost is the routine cost to the commercial consumer of maintaining 

equipment operation. The maintenance cost depends on boiler capacity and heating medium (hot 

water or steam). Within an equipment class, DOE assumes that the maintenance cost is the same 

at all non-condensing efficiency levels, and that the maintenance cost at condensing efficiency 

levels is slightly higher.

Labor hours and costs for annual maintenance are estimated using RS Means data. The 

frequency with which the maintenance occurs is derived from RS Means 2013 Facilities 

Maintenance and Repair Data on the frequency with which owners of different types of boilers

perform maintenance. For a detailed discussion of the development of maintenance costs, see 

appendix 8-E.

Table 8.2.13 Annualized Maintenance Cost for Commercial Packaged Boilers (2013$)

Equipment Class Efficiency Level Annualized 

Maintenance 

Cost

Incremental 

Cost

2013$ 2013$

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $1,445 -

81% TE $1,445 $0 

82% TE $1,445 $0 

85% TE - Max Tech $1,445 $0 

Natural Draft Gas-Fired Hot Water 82% CE - Baseline $2,506 -
8

-29

Commercial Packaged Boiler 

>2,500,000 Btu/hr

83% CE $2,506 $0 

84% CE - Max Tech $2,506 $0 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $2,152 -

83% TE $2,152 $0 

85% TE $2,152 $0 

87% TE - Max Tech $2,152 $0 

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $3,014 -

85% CE $3,014 $0 

86% CE - Max Tech $3,014 $0 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

77% TE - Baseline $2,300 -

79% TE $2,300 $0 

80% TE - Max Tech $2,300 $0 

Natural Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

77% TE - Baseline $3,012 -

79% TE $3,012 $0 

80% TE $3,012 $0 

81% TE - Max Tech $3,012 $0 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $2,501 -

82% TE $2,501 $0 

83% TE - Max Tech $2,501 $0 

Natural Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $3,511 -

82% TE $3,511 $0 

83% TE $3,511 $0 

85% TE - Max Tech $3,511 $0 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

80% TE - Baseline $1,446 -

83% TE $1,446 $0 

85% TE $1,446 $0 

87% TE $1,446 $0 

92% TE $1,471 $24 

95% TE $1,471 $24 

98% TE - Max Tech $1,471 $24 

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

82% CE - Baseline $2,505 -

84% CE $2,505 $0 

86% CE $2,505 $0 

94% CE $2,532 $27 

97% CE - Max Tech $2,532 $27 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

82% TE - Baseline $2,139 -

83% TE $2,139 $0 

84% TE $2,139 $0 

87% TE $2,139 $0 
8-30

98% TE - Max Tech $2,171 $32 

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

84% CE - Baseline $2,927 -

86% CE $2,927 $0 

88% CE $2,927 $0 

97% CE - Max Tech $2,958 $31 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

79% TE - Baseline $2,293 -

80% TE $2,293 $0 

81% TE $2,293 $0 

83% TE - Max Tech $2,293 $0 

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

79% TE - Baseline $2,999 -

80% TE $2,999 $0 

83% TE - Max Tech $2,999 $0 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

81% TE - Baseline $2,481 -

83% TE $2,481 $0 

84% TE $2,481 $0 

86% TE - Max Tech $2,481 $0 

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler 

>2,500,000 Btu/hr

81% TE - Baseline $3,510 -

83% TE $3,510 $0 

86% TE - Max Tech $3,510 $0 

8.2.3.6 Lifetime

DOE defines lifetime as the age when an appliance is retired from service. DOE uses

national survey data, published studies, and projections based on manufacturer shipment data to 

calculate the distribution of commercial packaged boiler lifetimes.d For a detailed discussion of 

the development of boiler lifetime, see appendix 8-F.

Table 8.2.14 shows the Weibull distribution parameters alpha, beta and the location. DOE 

assumes that the lifetime of a commercial packaged boiler is the same across the different 

equipment classes and efficiency levels.

 d See appendix 8-F for a list of the studies used.
8-31

Table 8.2.14 Lifetime Parameters for Commercial Packaged Boilers

Equipment Class Weibull Parameters

Alpha (scale) Beta (shape) Location (delay)

Commercial Packaged Boilers 26.91 2.34 1.00

8.2.3.7 Discount Rates

The discount rate is the rate at which future expenditures and savings are discounted to 

establish their present value. DOE estimates discount rates separately for commercial and 

residential end users. For commercial end users, DOE calculates commercial discount rates as 

the weighted average cost of capital (WACC), using the Capital Asset Pricing Model (CAPM). 

For residential end users, DOE calculates discount rates as the weighted average real interest rate 

across consumer debt and equity holdings.

Discount Rates for Commercial Applications

The commercial discount rate is the rate at which future operating costs are discounted to 

establish their present value in the LCC analysis. The discount rate value is applied in the LCC 

to future year energy costs and non-energy operations and maintenance costs to calculate the 

estimated net life-cycle cost of products of various efficiency levels and life-cycle cost savings as 

compared to the baseline for a representative sample of commercial end users.

DOE’s method views the purchase of a higher efficiency appliance as an investment that 

yields a stream of energy cost savings. DOE derives the discount rates for the LCC analysis by 

estimating the cost of capital for companies that purchase commercial packaged boilers. The 

weighted average cost of capital (WACC) is commonly used to estimate the present value of cash 

flows to be derived from a typical company project or investment. Most companies use both debt and 

equity capital to fund investments, so their cost of capital is the weighted average of the cost to the 

firm of equity and debt financing, as estimated from financial data for publicly traded firms in 

the sectors that purchase boilers.10

Damodaran Online is a widely used source of information about company debt and 

equity financing for most types of firms, and was the primary source of data for this analysis.11

Detailed sectors included in the Damondaran Online database are assigned to the aggregate 

categories of: retail, property management, medical, industrial, lodging, office, and other.

DOE estimates the cost of equity using the capital asset pricing model (CAPM). 12 The 

CAPM assumes that the cost of equity (ke) for a particular company is proportional to the 

systematic risk faced by that company, where high risk is associated with a high cost of equity 

and low risk is associated with a low cost of equity. The systematic risk facing a firm is 

determined by several variables: the risk coefficient of the firm (β), the expected return on riskfree assets (Rf), and the equity risk premium (ERP). The risk coefficient of the firm indicates the 

risk associated with that firm relative to the price variability in the stock market. The expected 

return on risk-free assets is defined by the yield on long-term government bonds. The ERP
8-32

represents the difference between the expected stock market return and the risk-free rate. The 

cost of equity financing is estimated using the following equation, where the variables are 

defined as above:

k R ( ERP) e = f + β ×

Eq. 8.4

Where:

ke = cost of equity,

Rf = expected return on risk-free assets,

β = risk coefficient of the firm, and

ERP = equity risk premium.

Several parameters of the cost of capital equations can vary substantially over time, and 

therefore the estimates can vary with the time period over which data is selected and the 

technical details of the data averaging method. For guidance on the time period for selecting and 

averaging data for key parameters and the averaging method, DOE uses Federal Reserve 

methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve 

uses a forty-year period for calculating discount rate averages, utilizes the gross domestic 

product price deflator for estimating inflation, and considers the best method for determining the 

risk free rate as one where “the time horizon of the investor is matched with the term of the riskfree security.”13 

By taking a forty-year geometric average of Federal Reserve data on annual nominal 

returns for 10-year Treasury bills, DOE estimates the following risk free rates for 2004‒2013 

(Table 8.2.16).14 DOE also estimates the ERP by calculating the difference between risk-free rate 

and stock market returns for the same time period, as estimated using Damodaran Online data on 

the historical return to stocks.15
8-33

Table 8.2.15 Risk-free rate and equity risk premium, 2004 – 2013 

Year Risk-free rate (%) ERP (%)

2004 7.10% 3.25%

2005 7.11% 3.68%

2006 7.10% 3.49%

2007 7.08% 3.36%

2008 7.01% 2.40%

2009 6.88% 3.07%

2010 6.74% 3.23%

2011 6.61% 2.94%

2012 6.41% 3.99%

2013 6.24% 5.30%

The cost of debt financing (kd) is the interest rate paid on money borrowed by a company. 

The cost of debt is estimated by adding a risk adjustment factor (Ra) to the risk-free rate. This 

risk adjustment factor depends on the variability of stock returns represented by standard 

deviations in stock prices. So for firm i, the cost of debt financing is:

kdi = Rf + Rai

Eq. 8.5

Where:

kd = cost of debt financing for firm, i,

Rf = expected return on risk-free assets, and

Rai = risk adjustment factor to risk-free rate for firm, i. 

DOE estimates the WACC using the following equation:

e e d wd WACC = k ×w + k ×

Eq. 8.6

Where:

WACC = weighted average cost of capital,

we = proportion of equity financing, and

wd = proportion of debt financing.

By adjusting for the influence of inflation, DOE estimates the real weighted average cost 

of capital, or discount rate, for each company. DOE then aggregates the company real weighted 
8-34

average costs of capital to estimate the discount rate for each of the ownership types in the 

commercial packaged boilers analysis.

Table 8.2.16 shows the average WACC values for the major sectors that purchase 

commercial packaged boilers. While WACC values for any sector may trend higher or lower 

over substantial periods of time, these values represent a cost of capital that is averaged over 

major business cycles. 

Table 8.2.16 Weighted Average Cost of Capital for Sectors that Purchase Boilers

Sector Real Weighted Average 

Cost of Capital (%)

Standard 

Deviation (%)

Retail 5.00% 1.07%

Property 5.12% 0.90%

Medical 4.97% 0.92%

Industrial 5.23% 1.18%

Lodging 5.96% 1.65%

Food Service 4.90% 0.95%

Office 5.08% 1.28%

Other 5.04% 1.07%

Discount Rates for Residential Applications

The discount rate is the rate at which future savings and expenditures are discounted to 

establish their present value. DOE uses publicly available data (the Federal Reserve Board’s 

Survey of Consumer Finances) to estimate a consumer’s opportunity cost of funds related to 

appliance energy cost savings and maintenance costs. The discount rate value is applied in the 

LCC to future year energy cost savings and non-energy operations and maintenance costs in 

order to present the estimated net life-cycle cost and life-cycle cost savings. DOE notes that the 

discount rate used in the LCC analysis is distinct from an implicit discount rate, as it is not used 

to model consumer purchase decisions. The opportunity cost of funds in this case may include 

interest payments on debt and interest returns on assets.

DOE estimates separate discount rate distributions for six income groups, which are 

divided based on income percentile as reported in the Federal Reserve Board’s Survey of 

Consumer Finances (see Table 8.2.17).

16 This disaggregation reflects the fact that low and high 

income consumers tend to have substantially different shares of debt and asset types, as well as 

facing different rates on debts and assets. Summaries of shares and rates presented in this 

chapter are averages across the entire population.
8-35

Table 8.2.17 Definitions of Income Groups 

Income Group Percentile of Income

1 1st to 20th

2 21st to 40th

3 41st to 60th

4 61st to 80th

5 81st to 90th

6 91th to 99th

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, and 2010.

Shares of Debt and Asset Classes 

DOE’s approach involves identifying all relevant household debt or asset classes to 

approximate a commercial consumer’s opportunity cost of funds related to appliance energy cost 

savings and maintenance costs. The approach assumes that in the long term, consumers are likely

to draw from or add to their collection of debt and asset holdings approximately in proportion to 

their current holdings when future expenditures are required or future savings accumulate. DOE 

has included several previously excluded debt types (i.e., vehicle and education loans, 

mortgages, all forms of home equity loan) in order to better account for all of the options 

available to consumers.

The average share of total debt plus equity and the associated rate of each asset and debt 

type are used to calculate a weighted average discount rate for each Federal Reserve Board’s 

Survey of Consumer Finances (SCF) household (Table 8.2.18). The household-level discount 

rates are then aggregated to form discount rate distributions for each of the six income groups. 

Note that previously DOE performed aggregation of asset and debt types over households by 

summing the dollar value across all households and then calculating shares. Weighting by dollar 

value gave disproportionate influence to the asset and debt shares and rates of higher income 

consumers. DOE has shifted to a household-level weighting to more accurately reflect the 

average consumer in each income group.

DOE estimates the average percentage shares of the various types of debt and equity 

using data from the SCFs for 1995, 1998, 2001, 2004, 2007, and 2010.e DOE derives the 

household-weighted mean percentages of each source of financing throughout the 5 years 

surveyed. DOE posits that these long-term averages are most appropriate to use in its analysis. 

 e Note that two older versions of the SCF are also available (1989 and 1992); these surveys are not used in this 

analysis because they do not provide all of the necessary types of data (e.g., credit card interest rates, etc). DOE 

feels that the 15-year span covered by the six surveys included is sufficiently representative of recent debt and 

equity shares and interest rates.
8-36

Table 8.2.18 Types of Household Debt and Equity by Percentage Shares (%)

Type of Debt or Equity

Income Group

1 2 3 4 5 6

Debt:

Mortgage 18.9% 24.1% 33.1% 38.1% 39.3% 25.0%

Home equity loan 3.1% 3.3% 2.6% 3.6% 4.5% 7.2%

Credit card 15.3% 13.0% 11.8% 8.7% 6.0% 2.7%

Other installment loan 25.1% 20.6% 17.3% 13.2% 9.6% 4.7%

Other residential loan 0.7% 0.6% 0.6% 0.7% 1.0% 1.2%

Other line of credit 1.6% 1.5% 1.3% 1.5% 2.1% 1.8%

Equity:

Savings account 18.5% 16.0% 12.7% 10.6% 10.4% 7.9%

Money market account 3.6% 4.5% 4.0% 4.5% 5.0% 8.6%

Certificate of deposit 7.0% 7.8% 5.5% 5.0% 4.4% 4.2%

Savings bond 1.8% 1.7% 1.9% 2.2% 1.7% 1.1%

Bonds 0.2% 0.4% 0.5% 0.7% 0.8% 3.8%

Stocks 2.3% 3.1% 4.4% 5.7% 7.6% 15.8%

Mutual funds 2.1% 3.5% 4.3% 5.7% 7.6% 15.9%

Total 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, and 2010.

Rates for Types of Debt 

DOE estimates interest rates associated with each type of debt. The source for interest 

rates for mortgages, loans, credit cards, and lines of credit was the SCF for 1995, 1998, 2001, 

2004, 2007, and 2010, which associates an interest rate with each type of debt for each 

household in the survey. 

In calculating effective interest rates for home equity loans and mortgages, DOE 

accounted for the fact that interest on both such loans is tax deductible (Table 8.2.19). This rate 

corresponds to the interest rate after deduction of mortgage interest for income tax purposes and 

after adjusting for inflation (using the Fisher formula).f

 For example, a 6-percent nominal 

mortgage rate has an effective nominal rate of 5.5-percent for a household at the 25-percent 

marginal tax rate. When adjusted for an inflation rate of 2-percent, the effective real rate 

becomes 2.45-percent.

 f Fisher formula is given by: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)] – 1.
8-37

Table 8.2.19 Data Used to Calculate Real Effective Mortgage Rates

Year Mortgage Interest Rates in Selected Years (%)

Average Nominal 

Interest Rate

Inflation Rate17 Applicable Marginal 

Tax Rate18

Average Real Effective 

Interest Rate

1995 8.2 2.83 24.2 3.3

1998 7.9 1.56 25.0 4.3

2001 7.6 2.85 24.2 2.8

2004 6.2 2.66 20.9 2.2

2007 6.3 2.85 20.6 2.1

2010 5.7 1.64 20.0 2.9

Table 8.2.20 shows the household-weighted average effective real rates in each year and 

the mean rate across years. Because the interest rates for each type of household debt reflect 

economic conditions throughout numerous years and various phases of economic growth and 

recession, they are expected to be representative of rates in effect in 2019.

Table 8.2.20 Average Real Effective Interest Rates for Household Debt

Type of Debt

Income Group

1 2 3 4 5 6

Mortgage 6.6% 6.2% 6.1% 5.2% 5.0% 4.0%

Home equity loan 7.0% 6.9% 6.7% 5.9% 5.7% 4.3%

Credit card 15.2% 15.0% 14.5% 14.2% 14.0% 14.5%

Other installment loan 10.8% 10.3% 9.9% 9.4% 8.7% 8.6%

Other residential loan 9.8% 10.2% 8.9% 8.2% 7.7% 7.4%

Other line of credit 9.1% 10.9% 9.6% 8.8% 7.4% 6.1%

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, and 2010.

Rates for Types of Assets 

No similar rate data are available from the SCF for classes of assets, so DOE has derived 

asset interest rates from various sources of national historical data (1983-2013). The interest rates 

associated with certificates of deposit, savings bonds, and bonds (AAA corporate bonds)19, 20, 21

have been collected from Federal Reserve Board time-series data. Rates on money market 

accounts are from Cost of Savings Index data.22 Rates on savings accounts have been estimated 

as one half of the rate for money market accounts, in view of recent differentials between the 

return to each of these assets. The rates for stocks are the annual returns on the Standard and 

Poor’s.15 Rates for mutual funds are a weighted average of the stock rates (two-thirds weight) 

and the bond rates (one-third weight) in each year. DOE assumes rates on checking accounts to 

be zero.
8-38

DOE adjusts the nominal rates to real rates using the annual inflation rate for each year. 

Average nominal and real interest rates for the classes of household assets are listed in Table 

8.2.21. Because the interest and return rates for each type of asset reflect economic conditions 

throughout numerous years, they are expected to be representative of rates that may be in effect 

in 2019. For each type, DOE develops a distribution of rates, as shown in appendix 8-F.

Table 8.2.21 Average Nominal and Real Interest Rates for Household Equity 

Type of Equity Average Real Rate 

%

Savings accounts 1.0

Money market accounts 1.9 

Certificates of deposit 1.9 

Savings bonds 3.4 

Bonds 4.2 

Stocks 9.4 

Mutual funds 7.4 

Discount Rate Calculation and Summary

Using the asset and debt data discussed above, DOE calculates discount rate distributions 

for each income group as follows. First, DOE calculates the discount rate for each consumer in 

each of the six versions of the SCF, using the following formula:

DDi = �Shaaai,j

j

× R i,j

Eq. 8.7

Where:

DDi = discount rate for consumer i,

Shaaai,j = share of asset or debt type j for consumer i, and

R i,j = real interest rate or rate of return of asset or debt type j for consumer i.

The rate for each debt type is drawn from the SCF data for each household. The rate for 

each asset type is drawn from the distributions described above. 

Once the real discount rate is estimated for each commercial consumer, DOE compiles

the distribution of discount rates in each survey by income group by calculating the proportion of 

consumers with discount rates in bins of 1 percent increments, ranging from 0-1 percent to 

greater than 30-percent. Giving equal weight to each survey, DOE compiles the six-survey 

distribution of discount rates. 

Table 8.2.22 presents the average real effective discount rate and its standard deviation 

for each of the six income groups. To account for variation among households, DOE samples a 
8-39

rate for each RECS household from the distributions for the appropriate income group. (RECS 

provides household income data.) Appendix 8-F presents the full probability distributions for 

each income group that DOE uses in the LCC and PBP analysis. 

Table 8.2.22 Average Real Effective Discount 

Income Group Discount Rate (%)

1 4.85

2 5.12

3 4.75

4 4.04

5 3.80

6 3.57

Overall Average 4.49

8.2.3.8 Compliance Date of Standard

Pursuant to 42 U.S.C. 6313(a)(6)(C), the compliance date of any new energy efficiency 

standard for commercial packaged boilers is generally 2 years after the final rule is published. 

Consistent with its published regulatory agenda, DOE assumes that the final rule would be issued 

in 2017 and that, therefore, the new standards would require compliance beginning in 2019. 

DOE calculates the LCC and PBP for all commercial consumers as if they each would purchase 

a new boiler in 2019.

8.2.3.9 Base Case Distribution of Efficiency Levels

To estimate the market shares of the different efficiency levels in each commercial 

packaged boiler equipment class beginning in 2019, DOE develops data on the share of models 

in each equipment class based on the AHRI certification directory (see Table 8.2.23).

23 DOE 

analyzes the equipment directories from 2007 to 2014 and identifies efficiency trends that are

then projected forward to 2019. For a detailed discussion of the development of base case 

distributions, see appendix 8-H.
8-40

Table 8.2.23 Base-Case Market Shares in 2019 by Efficiency Level for Commercial 

Packaged Boilers

Equipment Class Efficiency 

Level

Design Option Fraction of 

Models

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 80% TE - Baseline 16%

1 81% TE 17%

2 82% TE 62%

3 85% TE - Max Tech 5%

Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 82% CE - Baseline 79%

1 83% CE 19%

2 84% CE - Max Tech 3%

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 82% TE - Baseline 55%

1 83% TE 20%

2 85% TE 18%

3 87% TE - Max Tech 6%

Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 84% CE - Baseline 51%

1 85% CE 30%

2 86% CE - Max Tech 19%

Natural Draft Gas-Fired Steam Commercial 

Packaged Boiler ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

0 77% TE - Baseline 70%

1 79% TE 20%

2 80% TE - Max Tech 10%

Natural Draft Gas-Fired Steam Commercial 

Packaged Boiler >2,500,000 Btu/hr

0 77% TE - Baseline 43%

1 79% TE 37%

2 80% TE 13%

3 81% TE - Max Tech 6%

Natural Draft Oil-Fired Steam Commercial 

Packaged Boiler ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

0 81% TE - Baseline 48%

1 82% TE 41%

2 83% TE - Max Tech 11%

Natural Draft Oil-Fired Steam Commercial 

Packaged Boiler >2,500,000 Btu/hr

0 81% TE - Baseline 35%

1 82% TE 21%

2 83% TE 39%

3 85% TE - Max Tech 5%

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 80% TE - Baseline 12%

1 83% TE 12%

2 85% TE 22%

3 87% TE 6%

4 92% TE 16%

5 95% TE 26%

6 98% TE - Max Tech 6%
8-41

Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 82% CE - Baseline 17%

1 84% CE 30%

2 86% CE 13%

3 94% CE 36%

4 97% CE - Max Tech 4%

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 82% TE - Baseline 28%

1 83% TE 25%

2 84% TE 15%

3 87% TE 22%

4 98% TE - Max Tech 9%

Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 84% CE - Baseline 31%

1 86% CE 48%

2 88% CE 15%

3 97% CE - Max Tech 6%

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 79% TE - Baseline 19%

1 80% TE 47%

2 81% TE 23%

3 83% TE - Max Tech 11%

Mechanical Draft Gas-Fired Steam 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 79% TE - Baseline 20%

1 80% TE 43%

2 83% TE - Max Tech 37%

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

0 81% TE - Baseline 32%

1 83% TE 54%

2 84% TE 10%

3 86% TE - Max Tech 5%

Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boiler >2,500,000 

Btu/hr

0 81% TE - Baseline 45%

1 83% TE 31%

2 86% TE - Max Tech 24%

8.3 PAYBACK PERIOD INPUTS

The PBP is the amount of time it takes the commercial consumer to recover the assumed 

higher purchase cost of more energy-efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in first year annual operating expenditures.

The equation for PBP is:

PBP =∆IC/∆OC

Eq. 8.8

Where:
8-42

PBP = payback period in years,

∆ IC = difference in the total installed cost between the more efficient standard-level equipment 

(efficiency levels 2, 3, etc.) and the baseline efficiency equipment, and

∆OC = difference in first year annual operating costs.

Payback periods are expressed in years. Payback periods can be greater than the life of 

the equipment if the increased total installed cost of the more efficient equipment is not 

recovered fast enough in reduced operating costs.

DOE also calculates a rebuttable PBP, which is the time it takes the commercial 

consumer to recover the assumed higher purchase cost of more energy-efficient equipment as a 

result of lower energy costs. Numerically, the rebuttable PBP is the ratio of the increase in 

purchase cost (i.e., from a less efficient design to a more efficient design) to the decrease in 

annual energy expenditures; that is, the difference in first year annual energy cost as calculated 

from the DOE test procedure. The calculation excludes repair costs and maintenance costs. 

The data inputs to PBP are the total installed cost of the equipment to the commercial 

consumer for each efficiency level and the annual (first year) operating costs for each efficiency 

level. The inputs to the total installed cost are the equipment price and the installation cost. The 

inputs to the operating costs are the annual energy cost, the annual repair cost, and the annual 

maintenance cost (or, in the case of rebuttable PBP, only the annual energy cost). The PBP uses 

the same inputs as the LCC analysis, except that electricity price trends are not required. Since 

the PBP is a “simple” payback, the required electricity cost is only for the year in which a new 

efficient standard is to take effect—in this case, 2019. 

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS

As discussed previously, DOE’s approach for conducting the LCC and PBP analysis 

relies on developing samples of buildings that use each of the considered equipment. DOE also 

uses probability distributions to characterize the uncertainty in many of the inputs to the analysis.

DOE used a Monte Carlo simulation technique to perform the LCC and PBP calculations on the 

buildings in the sample. 

LCC and PBP calculations are performed 10,000 times on the sample of buildings

established for each commercial packaged boiler. Each LCC and PBP calculation is performed 

on a single building that is selected from the sample of the commercial users. The selection of a 

building is based on its sample weight (i.e., how representative a particular building is of other 

building in the distribution—either regionally or nationally), as described in chapter 7. Each 

LCC and PBP calculation is also sampled from the probability distributions that DOE develops

to characterize many of the inputs to the analysis.

To evaluate the net economic impact of potential amended energy conservation standards 

on commercial consumers of commercial packaged boilers, DOE conducts LCC and PBP 

analyses for each TSL. In general, higher-efficiency equipment would potentially affect 

commercial consumers in two ways: (1) purchase price would increase, and (2) annual operating 
8-43

costs would decrease. Inputs used for calculating the LCC and PBP include total installed costs 

(i.e., equipment price plus installation costs) and operating costs (i.e., annual energy savings, 

energy prices, energy price trends, repair costs, and maintenance costs). The LCC calculation 

also uses equipment lifetime and a discount rate.

National LCC and PBP results are presented below. 

8.4.2 Natural Draft Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr

Table 8.4.1 and Table 8.4.2 show the LCC and PBP results for all efficiency levels 

considered for natural draft gas-fired hot water commercial packaged boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr. In Table 8.4.1, the simple payback is measured relative to the baseline 

equipment. In Table 8.4.2, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

Table 8.4.1 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 80% $17,667 $10,108 $169,645 $187,315 NA 24.8

1 81% $18,727 $10,003 $167,852 $186,582 10.1 24.8

2 82% $20,289 $9,900 $166,105 $186,397 12.6 24.8

3 85% $23,842 $9,608 $161,126 $184,970 12.3 24.8

Note: The results for each TSL are calculated assuming that all consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

Table 8.4.2 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 80% 0% NA

1 81% 7% $116

2 82% 20% $172

3 85% 52% $1,546

* The calculation includes buildings with zero LCC savings (no impact).
8-44

Figure 8.4.1 shows the range of LCC savings for the efficiency levels considered for 

natural draft gas-fired hot water commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have lifecycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 

Figure 8.4.1 Distribution of LCC Savings for Natural Draft Gas-Fired Hot 

Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.3 Natural Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft gas-fired hot water commercial packaged boilers >2,500,000 Btu/hr.

In Table 8.4.2, the simple payback is measured relative to the baseline equipment. In Table 8.4.3, 

the LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Natural Draft Gas-Fired Hot Water Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-45

Table 8.4.3 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr 

Efficiency 

Level CE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 82% $64,850 $40,873 $663,770 $728,623 NA 24.8

1 83% $68,944 $40,358 $655,318 $724,265 7.9 24.8

2 84% $73,420 $39,857 $647,101 $720,524 8.4 24.8

Note: The results for each TSL are calculated assuming that all consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

Table 8.4.4 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr 

Efficiency 

Level CE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 82% 0% NA

1 83% 33% $3,411

2 84% 43% $7,045

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.3 shows the range of LCC savings for the efficiency levels considered for 

natural draft gas-fired hot water commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 
8-46

Figure 8.4.2 Distribution of LCC Savings for Natural Draft Gas-Fired Hot 

Water Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.4 Natural Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft oil-fired hot water commercial packaged boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline 

equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

-10000

0

10000

20000

30000

40000

50000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Natural Draft Gas-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-47

Table 8.4.5 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr 

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 82% $24,657 $16,776 $296,662 $321,319 NA 24.8

1 83% $25,482 $16,590 $293,300 $318,783 4.4 24.8

2 85% $31,510 $16,233 $286,827 $318,337 12.6 24.8

3 87% $32,287 $15,893 $280,668 $312,954 8.6 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.6 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr 

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 82% 0% NA

1 83% 18% $1,412

2 85% 42% $1,754

3 87% 38% $6,825

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.5 shows the range of LCC savings for the efficiency levels considered for

natural draft oil-fired hot water commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have life-cycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 
8-48

Figure 8.4.3 Distribution of LCC Savings for Natural Draft Oil-Fired Hot 

Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.5 Natural Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft oil-fired hot water commercial packaged boilers >2,500,000 Btu/hr.

In Table 8.4.2, the simple payback is measured relative to the baseline product. In Table 8.4.3, 

the LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

-10000

0

10000

20000

30000

40000

50000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Natural Draft Oil-Fired Hot Water Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-49

Table 8.4.7 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr 

Efficiency 

Level CE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 84% $58,768 $54,376 $930,759 $989,549 NA 24.8

1 85% $63,313 $53,741 $919,762 $983,097 7.2 24.8

2 86% $66,948 $53,122 $909,033 $976,004 6.5 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.8 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr 

Efficiency 

Level CE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 84% 0% NA

1 85% 23% $3,393

2 86% 35% $9,093

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.7 show the range of LCC savings for the efficiency levels considered for 

natural draft oil-fired hot water commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 
8-50

Figure 8.4.4 Distribution of LCC Savings for Natural Draft Oil-Fired Hot 

Water Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.6 Natural Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft gas-fired steam commercial packaged boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline 

product. In Table 8.4.3, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

-20000

-10000

0

10000

20000

30000

40000

50000

60000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Natural Draft Oil-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-51

Table 8.4.9 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 77% $16,470 $10,193 $169,891 $186,361 NA 24.8

1 78% $19,663 $9,996 $166,482 $186,145 16.2 24.8

2 80% $21,778 $9,901 $164,846 $186,623 18.2 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.10 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 77% 0% NA

1 78% 43% $154

2 80% 62% -$283

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.9 shows the range of LCC savings for the efficiency levels considered for 

natural draft gas-fired steam commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have life-cycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 
8-52

Figure 8.4.5 Distribution of LCC Savings for Natural Draft Gas-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

8.4.7 Natural Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft gas-fired steam commercial packaged boilers >2,500,000 Btu/hr. In 

Table 8.4.2, the simple payback is measured relative to the baseline product. In Table 8.4.3, the 

LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

-6000

-4000

-2000

0

2000

4000

6000

8000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Natural Draft Gas-Fired Steam Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-53

Table 8.4.11 Average LCC and PBP Results by Efficiency Level for Natural Draft GasFired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 77% $33,212 $43,563 $715,670 $748,876 NA 24.8

1 79% $40,816 $42,520 $698,333 $739,143 7.3 24.8

2 80% $47,781 $42,019 $690,011 $737,785 9.4 24.8

3 81% $55,550 $41,531 $681,908 $737,450 11.0 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.12 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 77% 0% NA

1 79% 15% $4,378

2 80% 41% $5,478

2 81% 53% $5,811

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.11 shows the range of LCC savings for the efficiency levels considered for 

natural draft gas-fired steam commercial packaged boilers >2,500,000 Btu/hr. For each standard

level, the top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The 

bar at the middle of the box indicates the median; 50 percent of the buildings have life-cycle cost 

savings above this value. The “whiskers” at the bottom and the top of the box indicate the 5th and 

95th percentiles. The small box shows the average LCC savings for each standard level. 
8-54

Figure 8.4.6 Distribution of LCC Savings for Natural Draft Gas-Fired Hot 

Water Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.8 Natural Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft oil-fired steam commercial packaged boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline 

equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

-20000

-10000

0

10000

20000

30000

40000

50000

60000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Natural Draft Gas-Fired Steam Commercial Packaged Boiler >2,500,000 

Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-55

Table 8.4.13 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 81% $21,337 $22,030 $381,613 $402,950 NA 24.8

1 82% $23,408 $21,779 $377,162 $400,570 8.2 24.8

2 83% $25,701 $21,534 $372,824 $398,525 8.8 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.14 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 81% 0% NA

1 82% 13% $1,187

2 83% 28% $3,020

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.13 shows the range of LCC savings for the efficiency levels considered for 

natural draft oil-fired steam commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have life-cycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 
8-56

Figure 8.4.7 Distribution of LCC Savings for Natural Draft Oil-Fired Steam 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

8.4.9 Natural Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for natural draft oil-fired steam commercial packaged boilers >2,500,000 Btu/hr. In 

Table 8.4.2, the simple payback is measured relative to the baseline equipment. In Table 8.4.3, 

the LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

-4000

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Natural Draft Oil-Fired Steam Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-57

Table 8.4.15 Average LCC and PBP Results by Efficiency Level for Natural Draft OilFired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 81% $32,858 $68,351 $1,208,257 $1,241,113 NA 24.8

1 82% $38,691 $67,514 $1,193,298 $1,231,987 7.0 24.8

2 83% $45,149 $66,699 $1,178,720 $1,223,867 7.4 24.8

3 85% $60,179 $65,128 $1,150,651 $1,210,829 8.5 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.16 LCC Savings Relative to the Base Case Efficiency Distribution for Natural 

Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 81% 0% NA

1 82% 12% $3,221

2 83% 20% $7,739

3 85% 36% $20,147

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.15 shows the range of LCC savings for the efficiency levels considered for 

natural draft oil-fired steam commercial packaged boilers >2,500,000 Btu/hr. For each standard

level, the top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The 

bar at the middle of the box indicates the median; 50 percent of the buildings have life-cycle cost 

savings above this value. The “whiskers” at the bottom and the top of the box indicate the 5th and 

95th percentiles. The small box shows the average LCC savings for each standard level. 
8-58

Figure 8.4.8 Distribution of LCC Savings for Natural Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.10 Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.2 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft gas-fired hot water commercial packaged boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the 

baseline equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case 

efficiency distribution in the compliance year (2019). 

-40000

-20000

0

20000

40000

60000

80000

100000

120000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Natural Draft Oil-Fired Steam Commercial Packaged Boiler >2,500,000 

Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-59

Table 8.4.17 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 80% $32,003 $11,261 $190,176 $222,180 NA 24.8

1 83% $35,530 $10,907 $184,115 $219,646 10.0 24.8

2 85% $38,353 $10,685 $180,326 $218,680 11.0 24.8

3 87% $41,626 $10,474 $176,721 $218,348 12.2 24.8

4 92% $45,983 $10,161 $171,255 $217,239 12.7 24.8

5 95% $55,044 $9,887 $166,576 $221,621 16.8 24.8

6 98% $64,104 $9,631 $162,202 $226,307 19.7 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.18 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers

≥300,000 Btu/hr and ≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 80% 0% NA

1 83% 5% $325

2 85% 13% $579

3 87% 28% $738

4 92% 31% $1,333

5 95% 51% -$1,612

6 98% 78% -$6,018

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.17 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft gas-fired hot water commercial packaged boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th

and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 

percent of the buildings have lifecycle cost savings above this value. The “whiskers” at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. 
8-60

Figure 8.4.9 Distribution of LCC Savings for Mechanical Draft Gas-Fired 

Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.11 Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft gas-fired hot water commercial packaged boilers >2,500,000 

Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline equipment. In 

Table 8.4.3, the LCC savings are measured relative to the base-case efficiency distribution in the 

compliance year (2019). 

-30000

-20000

-10000

0

10000

20000

30000

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-61

Table 8.4.19 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level CE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 82% $93,310 $39,859 $652,402 $745,439 NA 24.8

1 84% $102,222 $38,864 $635,944 $737,866 9.0 24.8

2 86% $112,873 $37,924 $620,379 $732,920 10.1 24.8

3 94% $160,414 $34,939 $570,772 $730,715 13.6 24.8

4 97% $168,844 $33,843 $552,643 $720,990 12.6 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.20 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boilers

>2,500,000 Btu/hr

Efficiency 

Level CE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 82% 0% NA

1 84% 8% $1,295

2 86% 26% $3,781

3 94% 40% $5,542

4 97% 53% $14,928

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.19 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft gas-fired hot water commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 
8-62

Figure 8.4.10 Distribution of LCC Savings for Mechanical Draft Gas-Fired 

Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.12 Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft oil-fired hot water commercial packaged boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the 

baseline equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case 

efficiency distribution in the compliance year (2019). 

-100000

-50000

0

50000

100000

150000

200000

Level 1 Level 2 Level 3 Level 4

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Gas-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-63

Table 8.4.21 Average LCC and PBP Results by Efficiency Level for Mechanical Draft OilFired Hot Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 82% $38,850 $18,682 $327,718 $366,567 NA 24.8

1 83% $40,555 $18,472 $323,957 $364,512 8.1 24.8

2 84% $42,260 $18,267 $320,291 $362,551 8.2 24.8

3 87% $47,376 $17,683 $309,823 $357,199 8.5 24.8

4 98% $79,076 $16,160 $282,186 $361,262 16.0 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.22 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers

≥300,000 Btu/hr and ≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 82% 0% NA

1 83% 11% $567

2 84% 21% $1,613

3 87% 27% $5,294

4 98% 58% $1,497

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.21 shows the range of LCC savings for the efficiency levels considered for

mechanical draft oil-fired hot water commercial packaged boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th

and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 

percent of the buildings have life-cycle cost savings above this value. The “whiskers” at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. 
8-64

Figure 8.4.11 Distribution of LCC Savings for Mechanical Draft Oil-Fired Hot 

Water Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.13 Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers >2,500,000 

Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft oil-fired hot water commercial packaged boilers >2,500,000 

Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline equipment. In 

Table 8.4.3, the LCC savings are measured relative to the base-case efficiency distribution in the 

compliance year (2019). 

-60000

-40000

-20000

0

20000

40000

60000

80000

100000

Level 1 Level 2 Level 3 Level 4

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boiler 

≥300,000 Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-65

Table 8.4.23 Average LCC and PBP Results by Efficiency Level for Mechanical Draft OilFired Hot Water Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level CE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 84% $78,625 $53,218 $897,961 $976,621 NA 24.8

1 86% $89,283 $51,991 $877,006 $966,326 8.7 24.8

2 88% $95,482 $50,821 $857,051 $952,571 7.0 24.8

3 97% $175,491 $47,356 $797,883 $973,429 16.5 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.24 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boilers

>2,500,000 Btu/hr

Efficiency 

Level CE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 84% 0% NA

1 86% 15% $3,249

2 88% 35% $14,205

3 97% 59% -$5,304

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.23 show the range of LCC savings for the efficiency levels considered for 

mechanical draft oil-fired hot water commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 
8-66

Figure 8.4.12 Distribution of LCC Savings for Mechanical Draft Oil-Fired Hot 

Water Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.14 Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft gas-fired steam commercial packaged boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline 

equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

-150000

-100000

-50000

0

50000

100000

150000

200000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Oil-Fired Hot Water Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-67

Table 8.4.25 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 79% $33,196 $10,266 $170,602 $203,798 NA 24.8

1 80% $35,311 $10,169 $168,926 $204,236 21.8 24.8

2 81% $37,669 $10,075 $167,294 $204,963 23.4 24.8

3 83% $43,220 $9,894 $164,154 $207,374 26.9 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.26 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 79% 0% NA

1 80% 14% -$71

2 81% 51% -$538

3 83% 75% -$2,699

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.25 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft gas-fired steam commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have life-cycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 
8-68

Figure 8.4.13 Distribution of LCC Savings for Mechanical Draft Gas-Fired 

Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.15 Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 

Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft gas-fired steam commercial packaged boilers >2,500,000 Btu/hr.

In Table 8.4.2, the simple payback is measured relative to the baseline equipment. In Table 8.4.3, 

the LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Gas-Fired Steam Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-69

Table 8.4.27 Average LCC and PBP Results by Efficiency Level for Mechanical Draft 

Gas-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 79% $61,565 $42,270 $696,081 $757,638 NA 24.8

1 80% $68,530 $41,772 $687,778 $756,301 14.0 24.8

2 83% $94,581 $40,355 $664,147 $758,718 17.2 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.28 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Gas-Fired Steam Commercial Packaged Boilers >2,500,000 

Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 79% 0% NA

1 80% 12% $323

2 83% 44% -$1,115

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.27 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft gas-fired steam commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 
8-70

Figure 8.4.14 Distribution of LCC Savings for Mechanical Draft Oil-Fired 

Steam Commercial Packaged Boilers >2,500,000 Btu/hr

8.4.16 Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft oil-fired steam commercial packaged boilers ≥300,000 Btu/hr 

and ≤2,500,000 Btu/hr. In Table 8.4.2, the simple payback is measured relative to the baseline 

equipment. In Table 8.4.3, the LCC savings are measured relative to the base-case efficiency 

distribution in the compliance year (2019). 

-30000

-20000

-10000

0

10000

20000

30000

40000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Gas-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-71

Table 8.4.29 Average LCC and PBP Results by Efficiency Level for Mechanical Draft OilFired Steam Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating Cost

Lifetime 

Operating 

Cost

LCC

0 81% $34,120 $21,834 $375,338 $409,458 NA 24.8

1 83% $38,482 $21,343 $366,704 $405,187 8.9 24.8

2 84% $41,017 $21,107 $362,550 $403,567 9.5 24.8

3 86% $46,904 $20,651 $354,547 $401,451 10.8 24.8

Note: The results for each TSL are calculated assuming that all commercial consumers use equipment with that 

efficiency level. The PBP is measured relative to the baseline equipment. 

Table 8.4.30 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 81% 0% NA

1 83% 10% $1,391

2 84% 31% $2,779

3 86% 40% $4,801

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.29 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft oil-fired steam commercial packaged boilers ≥300,000 Btu/hr and ≤2,500,000 

Btu/hr. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

buildings have life-cycle cost savings above this value. The “whiskers” at the bottom and the top 

of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for 

each standard level. 
8-72

Figure 8.4.15 Distribution of LCC Savings for Mechanical Draft Oil-Fired 

Steam Commercial Packaged Boilers ≥300,000 Btu/hr and 

≤2,500,000 Btu/hr

8.4.17 Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Table 8.4.2 and Table 8.4.3 show the LCC and PBP results for all efficiency levels 

considered for mechanical draft oil-fired steam commercial packaged boilers >2,500,000 Btu/hr.

In Table 8.4.2, the simple payback is measured relative to the baseline equipment. In Table 8.4.3, 

the LCC savings are measured relative to the base-case efficiency distribution in the compliance 

year (2019). 

Table 8.4.31 Average LCC and PBP Results by Efficiency Level for Mechanical Draft OilFired Steam Commercial Packaged Boilers >2,500,000 Btu/hr

Efficiency 

Level TE

Average Costs

Simple 

Payback 

years

Average 

Lifetime 

years

2013$

Installed 

Cost

First Year’s 

Operating 

Cost

Lifetime 

Operating 

Cost

LCC

0 81% $53,182 $68,537 $1,211,161 $1,264,342 NA 24.8

1 83% $65,475 $66,879 $1,181,552 $1,247,026 7.4 24.8

2 86% $89,209 $64,546 $1,139,864 $1,229,072 9.0 24.8

Note: The results for each TSL are calculated assuming that all consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

-10000

-5000

0

5000

10000

15000

20000

25000

30000

Level 1 Level 2 Level 3

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Oil-Fired Steam Commercial Packaged Boiler ≥300,000 

Btu/hr and ≤2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-73

Table 8.4.32 LCC Savings Relative to the Base Case Efficiency Distribution for 

Mechanical Draft Oil-Fired Steam Commercial Packaged Boilers >2,500,000 

Btu/hr

Efficiency 

Level TE

Life-Cycle Cost Savings

% of Consumers that Experience Net Cost Average Savings* 

2013$

0 81% 0% NA

1 83% 16% $7,801

2 86% 29% $21,617

* The calculation includes buildings with zero LCC savings (no impact).

Figure 8.4.31 shows the range of LCC savings for the efficiency levels considered for 

mechanical draft oil-fired steam commercial packaged boilers >2,500,000 Btu/hr. For each 

standard level, the top and the bottom of the box indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings

have life-cycle cost savings above this value. The “whiskers” at the bottom and the top of the 

box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each 

standard level. 

Figure 8.4.16 Distribution of LCC Savings for Mechanical Draft Oil-Fired 

Steam Commercial Packaged Boilers >2,500,000 Btu/hr

-60000

-40000

-20000

0

20000

40000

60000

80000

100000

120000

140000

Level 1 Level 2

Average LCC Savings 2013$

Efficiency Level

Mechanical Draft Oil-Fired Steam Commercial Packaged Boiler 

>2,500,000 Btu/hr (National) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-74

8.5 REBUTTABLE PAYBACK PERIOD

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption 

that an energy efficiency standard is economically justified if the additional equipment costs 

attributed to the standard are less than three times the value of the first-year energy cost savings. 

(42 U.S.C. §6295 (o)(2)(B)(iii))

The basic equation for rebuttable PBP is the same as that shown for the PBP in section 

8.3. Unlike the analyses described in section 8.3, however, the rebuttable PBP is not based on the 

use of building samples and probability distributions, and it is based not on distributions but on 

discrete single-point values. For example, whereas DOE uses a probability distribution of energy 

prices in the distributional PBP analysis, it uses only the national average energy price to 

determine the rebuttable PBP.

8.5.2 Inputs

Inputs for the rebuttable PBP differ from the distribution PBP in that the calculation uses 

discrete values, rather than distributions. Note that for the calculation of distribution PBP, 

because inputs for the determination of total installed cost were based on single-point values, 

only the variability and/or uncertainty in the inputs for determining operating cost contributed to 

variability in the distribution PBPs. The following summarizes the single-point values that DOE 

used in determining the rebuttable PBP: 

• Manufacturing costs, markups, sales taxes, and installation costs were all based on the 

single-point values used in the distributional LCC and PBP analysis.

• Energy prices were based on national average values for the year that new standards 

will take effect.

• An average discount rate or lifetime is not required in the rebuttable PBP calculation.

• The effective date of the standard is assumed to be 2019. 

8.5.3 Results

DOE calculated rebuttable PBPs for each standard level relative to the distribution of 

equipment energy efficiencies estimated for the base case. Table 8.5.1 through Table 8.5.16

present the rebuttable PBPs for commercial packaged boilers.

Table 8.5.1 Rebuttable Payback Period for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr

EL Description Rebuttable Payback Period 

years

1 81% TE 5.7

2 82% TE 7.1

3 85% TE - Max Tech 6.9
8-75

Table 8.5.2 Rebuttable Payback Period for Natural Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr 

EL Description Rebuttable Payback Period 

years

1 83% CE 24.2

2 84% CE - Max Tech 25.7

Table 8.5.3 Rebuttable Payback Period for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 

EL Description Rebuttable Payback Period 

years

1 83% TE 4.8

2 85% TE 13.7

3 87% TE - Max Tech 9.4

Table 8.5.4 Rebuttable Payback Period for Natural Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr

EL Description Rebuttable Payback Period 

years

1 85% CE 25.8

2 86% CE - Max Tech 23.5

Table 8.5.5 Rebuttable Payback Period for Natural Draft Gas-Fired Steam Commercial 

Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr

EL Description Rebuttable Payback Period 

years

1 79% TE 8.5

2 80% TE - Max Tech 9.6

Table 8.5.6 Rebuttable Payback Period for Natural Draft Gas-Fired Steam Commercial 

Packaged Boilers >2,500,000 Btu/hr 

EL Description Rebuttable Payback Period 

years

1 79% TE 19.9

2 80% TE 25.7

3 81% TE - Max Tech 30.0

Table 8.5.7 Rebuttable Payback Period for Natural Draft Oil-Fired Steam Commercial 

Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 

EL Description Rebuttable Payback Period 

years

1 82% TE 10.9

2 83% TE - Max Tech 11.6
8-76

Table 8.5.8 Rebuttable Payback Period for Natural Draft Oil-Fired Steam Commercial 

Packaged Boilers >2,500,000 Btu/hr

EL Description Rebuttable Payback Period 

years

1 82% TE 31.8

2 83% TE 33.9

3 85% TE - Max Tech 38.6

Table 8.5.9 Rebuttable Payback Period for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr

EL Description Rebuttable Payback Period 

years

1 83% TE 7.6

2 85% TE 8.4

3 87% TE 9.3

4 92% TE 8.4

5 95% TE 11.5

6 98% TE - Max Tech 13.7

Table 8.5.10 Rebuttable Payback Period for Mechanical Draft Gas-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr

EL Technology Option Rebuttable Payback Period 

years

1 84% CE 24.2

2 86% CE 27.2

3 94% CE 34.4

4 97% CE - Max Tech 31.8

Table 8.5.11 Rebuttable Payback Period for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 

EL Technology Option Rebuttable Payback Period 

years

1 83% TE 11.3

2 84% TE 11.5

3 87% TE 11.9

4 98% TE - Max Tech 19.8
8-77

Table 8.5.12 Rebuttable Payback Period for Mechanical Draft Oil-Fired Hot Water 

Commercial Packaged Boilers >2,500,000 Btu/hr

EL Technology Option Rebuttable Payback Period 

years

1 86% CE 30.7

2 88% CE 24.9

3 97% CE - Max Tech 48.8

Table 8.5.13 Rebuttable Payback Period for Mechanical Draft Gas-Fired Steam

Commercial Packaged Boiler ≥300,000 Btu/hr and ≤2,500,000 Btu/hr

EL Technology Option Rebuttable Payback Period 

years

1 80% TE 11.4

2 81% TE 12.2

3 83% TE - Max Tech 14.0

Table 8.5.14 Rebuttable Payback Period for Mechanical Draft Gas-Fired Steam

Commercial Packaged Boilers >2,500,000 Btu/hr 

EL Technology Option Rebuttable Payback Period 

years

1 80% TE 36.2

2 83% TE - Max Tech 44.5

Table 8.5.15 Rebuttable Payback Period for Mechanical Draft Oil-Fired Steam

Commercial Packaged Boilers ≥300,000 Btu/hr and ≤2,500,000 Btu/hr 

EL Technology Option Rebuttable Payback Period 

years

1 83% TE 12.1

2 84% TE 12.9

3 86% TE - Max Tech 14.7

Table 8.5.16 Rebuttable Payback Period for Mechanical Draft Oil-Fired Steam 

Commercial Packaged Boilers >2,500,000 Btu/hr

EL Technology Option Rebuttable Payback Period 

years

1 83% TE 33.9

2 86% TE - Max Tech 41.1
8-78

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