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 INPUT S

................................ ................................ ...................... 8

- 41

8.4 LIFE

- CYCLE COST AND PAYBA CK 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

- 568

- 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 Draf t Gas

- Fired Hot Water Commercial Packaged Boilers >2,500,000
Btu/hr

................................ ................................ ................................ ............................. 8

- 60

8.4.12 Mechanical Draft Oil

- Fired Hot Water Commercial P ackaged 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 P ERIOD

................................ ................................ .......... 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

Ta ble 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

- 368

- iii Table 8.2.19 Data Used to Calculate Real Effective Mortgage Rates

................................ .... 8

- 37

Ta ble 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 Sh ares 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 Gas

Fired 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 Gas

Fired 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 Oil

Fired 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 Oil

Fired 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 Gas

Fired Steam Commercial Packaged Boil ers ≥ 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 Nat ural

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 Gas

Fired 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 Oil

Fired 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

- 558

- iv Table 8.4.15 Average LCC and PBP Results by Efficiency Level for Natural Draft Oil

Fired 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 Pack aged 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 Ho t 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/h r 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 Wate r Commercial Packaged Boilers >2,500,000 Btu/hr

........... 8

- 65
Table 8.4.24 LCC Savings Relative to the Base Case Efficiency Distribution f or 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

- 718

- 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
Tabl e 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 ≤ 2,5 00,000 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
Commerci al Packaged Boilers >2,500,000 Btu/hr

................................ ............ 8

- 76
Table 8.5.11 Rebuttable Payback Period for Mechanical Draft Oil

- Fired Hot Water

Commer cial 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

L IST 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

- 158

- vi Figure 8.2.3 Projected Nat ional 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 a nd ≤ 2,500,000 Btu/hr

....... 8

- 48 Figure 8.4.4 Distribution of LCC Savings for Natural Draft Oil

- Fired Hot Water Commercial Packaged Boile rs >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
Commercia l 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 a nd ≤ 2,500,000 Btu/hr

....... 8

- 72 Figure 8.4.16 Distribution of LCC Savings for Mechanical Draft Oil

- Fired Steam Commercial Packaged Boile rs >2,500,000 Btu/hr

................................ ............ 8

- 738

- 1 CHAPTER 8. LIFE

- CYCLE COST AND PAYPACK PERIOD ANALY SIS

8.1 INTRODUCTION

The effect of amended standards on individual commercial consumer s usually includes a reduction in operating cost and an increase in purchase cost. This chapter describes two metrics used in the analysis to determine th e 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 includ es 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 disco unted 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 consumer s to recover the assumed higher purchase price of more energy

- efficient equipment through

r educed operating costs.

The U.S. Department of Energy (DOE) conduct s 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 genera tes 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 Excel spreadsheets that are accessible over the Internet ( www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=87 ).

Details of the spreadsheets and instruct ions for using th em are discussed in appendix 8

- A.

8.1.2 General Approach for Life

- Cycle Cost and Payback Period Analys i s

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 bu ildings 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 use s the estimated energy use for each commercial packaged boiler
unit as descri bed 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 tax es

.

A certain fraction of commercial packaged boiler s 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 generate s 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 L CC and PBP results. A distinct advantage of this type of approach is that DOE can identify the percentage of
commercial consumer s achieving LCC savings or attaining certain PBP values due to an increased efficiency level, in addition to the average LCC sav ings or average PBP for that efficiency level.

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

case

. T he base case efficiency is for 2019 and reflect s the expected distribution of efficiency levels by equipment class.

8.1.3 Overview of Life

- Cycle Cost and Payback Period Analys i s 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 (includ ing 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 th e increase in purchase cost of higher efficiency equipment divided by the change in an nual 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 t he 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 : In stallation 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 i ncludes 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 p rovide 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 201 4 ( AEO 201 4 ) is used to forecast energy prices into the future. 1 For the results presented in this chapter, DOE use s the

AEO 201 4 R eference case to forecast future energy prices.

• Maintenance costs : The labor and material costs asso ciated 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 Derive s 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). Use s the probability distribution for the different markups to describe their variability.

Installation Cost Includes installation labor derived from 201 3 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 Prices8

- 5 Energy Efficiency Rated t hermal e fficienc y and c ombustion e fficiency are the efficiency descriptor s for commercial packaged boilers

. At each efficiency level, the rated

t hermal 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 201 4 forecasts to estimate future electricity prices. Escalation is performed at the census division level.

C osts are calculated for RECS 2009 households from monthly marginal average electricity and natural gas or fuel oil prices in each of 30 states and grou ps of
states in RECS 2009. a Residential prices are escalated by the AEO 201 4 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 Estimate s 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 Use s the probability distribution of lifetimes developed for boiler s

.

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 ar e 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 boiler s are assumed to be installed both i n commercial
and residential buildings.

As explained in chapter 7, t he 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 27 th region originally include d Oregon, Washington , Alaska, and Hawaii. Alaska and Hawaii we re subdivided into separate regions (28 and 29, respectively), based on cooling and heating degree days. In addition, region 14 originally include d 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 include s data from 5,215 buildings representing 4 .9 million buildings. RECS collects energy

- related da ta for occupied primary housing units in the United States.
RECS 2009 include s 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 a bout 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 c on s u mer 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 

### r OC IC LCC

1 

### ) 1 /(

INST EQP IC + =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 define s two major
distribution channel s 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 cont ractor who is hired by a general contractor. The general contractor purchases a nd
installs the equipment on behalf of the commercial consumer and adds its markup to the mechanical contractor’s price. Replacement equipment follow s 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 use s to
calculate the total installed cost for commer cial packaged boiler equipment

.

8.2.2.1 Manufacturer Costs

DOE develop s 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

T o capture variations in manufacturer production costs, DOE derive s manufactured cost
adders for different boiler input capacit ies

.

8.2.2.2 Markup s

For a given distribution channel, the overall markup is the value determined by multiplying all the associated markups a nd 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 th e equipment is being purchased for a new construction installation or is being purchased to replace existing equipment . DOE develop s the overall baseline markups and incremental markups for both new construction and replacement applications as a part of th e markups analysis (chapter 6).

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

, Table

8.2.2 display s 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 2.06/1.668

- 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 >2,500,00 0 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 derive s 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 derive s the
commercial con sumer equipment price by taking baseline equipment commercial consumer price and adding to it the equipment of the incremental manufacturer cost and the incremental overall8

- 12 markup (including the sales tax). Markups and sales tax es 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 prese nts 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 Boiler s ( 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 $12,2918

- 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 $36,0278

- 14 8.2.2.4 Future Equipment Prices

DOE examine s the historical producer price index ( PPI ) data for cast iron water

- heating
boilers from 19 99

- 201 3 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 index es for cast iron water

- heating boilers and steel water

- heating boilers are calculated by dividing the
PPI seri es 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 trend s starting from early 2000s ‒ a strong correlation with the historical price index for iron and steel mills (see Figure 8.2.2 ). c T h e rise in iron and steel PPI between
2003 and 2008 is primarily a result of large demand for such commodities from rapid
industrialization in Chin a, India

, and other emerging economies. Prior to 2003 , the inflation

adjusted 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 show s that the steel water

- heating boilers likely had a downward price trend during the same period of time. T he 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 33341 43334141; 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 1 965 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 appl ies a constant price trend to the manufacturer selling price (in real dollars) of commercial packaged boilers. See appendix 10

- C
for d etails 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
estimate s 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 a ppendix 8

- D

.

The installation co st 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 existin g boiler, and

any applicable permit fees. Higher

- efficiency boiler s may require additional installation costs. DOE’s analysis estimate s 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 g ives separate consideration to the cost of installing condensing gas and oil boilers

in replacement cases and in new buildings

. DOE conduct s 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 estimate s basic installation costs applicable both to replacement and new building s

. These costs, which apply to all boilers , include putting in place and setting up the boiler , gas or oil piping, water piping, permit s , and removal or disposal fees

.

For replacement installations , DOE include s 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 vent ing

. F or non

- condensing mechanical
draft boilers

, the additional costs include stainless

- steel venting when it is not already present
and a new combustion air vent ing . Condensing mechanical

- draft boiler cost adders include new stainless steel or plastic venting when stainless steel venting is not already present, new
combustion air vent ing , and condensate removal.

DOE also include s 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 on ly adder s . For non

- condensing mechanical draft boiler s, the adders generally include a new flue vent ( stainless steel ) and combustion air vent ing for direct

- vent installations . For condensing boilers the adders include a n ew flue vent (stainless steel or plastic), a combustion air
vent for direct

- vent installations, and co ndensate removal.

8.2.2.6 Total Installed Cost

T he total installed cost is the sum of the equipment price and the installation cost. MSPs, markups, and sales tax es all can take on a variety of va lues, 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 present s 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 Boiler s ( 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 $23,0408

- 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 define s 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 use s to calculate the operating cost for commercial packaged boiler s

. The annual energy costs of the equipment are computed from energy consumptio n per unit for the baseline and standard

compliant 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 calculate s 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 us e a higher efficiency boiler more than a basel ine

one, DOE d oes not include a (direct) rebound effect in its analyses

.

8.2.3.2 Energy Prices

DOE derive s average monthly energy prices for a number of geographic areas in the
United States u sing the latest data from EIA and monthly energy price factors that it develop s

. The process then assigns an appropriate energy price s to each commercial building and
household in the sample, depending on its type ( commercial or residential )

, and its location.

EIA Data

. DOE derive s 2012 annual electricity prices from EIA Form 8 26 data

. 5 The

EIA Form 8 26 data include energy prices by S tate

. DOE calculate s annual electricity prices for
each CBECS region or RECS region by aver aging monthly energy prices by State to get S tate electricity prices

. For areas with more than one State, DOE weigh ts each S tate ’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 201 2

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 $0.138

- 20 Table 8.2.7 Average Residential Electricity Prices in 20 1 2

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 obtaine s the data for natural gas price s 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 weight s 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 residentia l sectors, respectively

. (See appendix 8

- C for more
details

. )8

- 21 Table 8.2.8 Average Commercial Natural Gas Prices in 201 2

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 $8.618

- 22 Table 8.2.9 Average Residential Natural Gas Prices in 201 2

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 collect s 20 1 2 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 tr ansportation consumers by s tate . For areas with more than one State, DOE weight s 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 $25.958

- 24 Table 8.2.11 Average Residential Fuel Oil Prices in 201 2

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 $27.398

- 25 Month l y Prices

. To determine monthly prices for use in the analysis, DOE develop s monthly energy price factors for each fuel based on long

- term price data

. S ee appendix 8

- C for a description of the method. DOE multiplie s the annua l prices shown in the previous tables by the monthly price factors for each fuel to derive prices for each month.

Electrici ty and N atural G as M arginal P rices

. Monthly e lectricity 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 discus sion 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 develop s 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 multiplie s the prices described in the preceding section by the forecast s 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 trend s

. To estimate the
trend after 2040 , DOE use s the average rate of change during 2030

– 20 40

.

DOE applie s 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 Price s8

- 26 Figure 8.2.4 Projected National Residential Energy Price s

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 ha ve 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 201 3 RS Means Facilit ies Maintenance and Repair

Data 8 . 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

assume s 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 show s the annualized repair cost estimates for each equipment class.

Table 8.2.12 Annualized Repair Cost for Commercial Packaged Boiler s (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 $10.478

- 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 assume s 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.

L abor 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 Boiler s (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 $08

- 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 define s lifetime as the age when an appliance is retired from service. DOE use s 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

assume s that the lifetime of a commercial pac kaged boiler is the same across the different equipment classes and efficiency level s

.

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 Rate s

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

t o 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 commer cial 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 derive s the discount rates for the LCC analysis by estimating the cost of capital for companies that purchas e commercial packaged boiler s. 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 inve stments, 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 estimate s the cost of equi ty using the capital asset pricing model (CAPM). 12 The CAPM assumes that the cost of equity ( k

e ) 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 fir m (β), the expected return on risk

free assets ( R

f ), 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 as sets is defined by the yield on long

- term government bonds. The ERP8

- 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
d efined as above: 

# ( ) ERP R k

f

e 

## × + = β

Eq. 8

. 4
Where:

k

e = cost of equity,

R

f = 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 use s 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 g ross 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 risk

free security.” 13

By taking a forty

- year geometric average of Federal Reserve data on annual nominal
returns for 10

- year Treasury bills, DOE estimate s the following risk free rates for 2004

‒ 201 3 ( Table 8.2.16 ). 14 DOE also estimate s the ERP by calculating the difference between risk

- free rate

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

the historical return to stocks. 158

- 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 ( k d

) is the interest rate paid on money borrowed by a company. The cost of debt is estimated by adding a risk adjustment factor ( R
a ) to the risk

- free rate. This risk adjustment factor depends on the variability of stock returns represented by standard
deviations in st ock prices. So for firm i , the cost of debt financing is:

ai f di R R k + = Eq. 8

. 5
Where:

k

d = cost of debt financing for firm, i

, R

f = expected return on risk

- free assets, and

R ai = risk adjustment factor to risk

- free rate for firm, i

.

DOE estimates the WACC using the following equation:

d d e e 

### w k w k WACC × + × = Eq. 8

. 6
Where:

WACC = weighted average cost of capital,

w e = proportion of equity financing, and

w d = 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 weighted8

- 34 average cos ts of capital to estimate the discount rate for each of the ownership types in the commercial packaged boiler s analysis.

Table 8.2.16 shows the average WACC values for the major sectors that purchase commercial packaged boiler s. 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

Sect or 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 Finance s) to estima te 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 t he 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 t his 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

Cons umer Finance s (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. Summari es 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 1 st to 20 th

2 21 st to 40 th

3 41 st to 60 th

4 61 st to 80 th

5 81 st to 90 th

6 91 th to 99 th

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 involve s identifying all relevant household debt or asset classes to approximate a commercial con sumer’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 proportio n to their current holdings when future expenditures are required or future savings acc umulate. 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 Finan ces (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 estimate s the average percentage shares of the various types of debt and equity using data from the SCF s for 1995, 1998, 2001, 2004, 2007, and 2010. e DOE derive s 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 estimate s 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 ea ch 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 o f 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 Rate 17 Applicable Marginal

Tax Rate 18 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 hous ehold 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 fro m 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 (on e

- third weight) in each year. DOE assume s rates on checking accounts to
be zero.8

- 38 DOE adjust s 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 lis ted 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 re presentative of rates that may be in effect in 2019. For each type, DOE develop s 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 calculate s discount rate distributions for each income group as follows. First, DOE calculate s the discount rate for each consumer in
each of the six versions of the SCF , using the following formula:

DD i = � S h aaa i

, j

j × R i

, j

Eq. 8

. 7
Where:

DD i = discount rate for consumer i

, S h aaa i

, 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 compile s the distribution of discount rates in e ach 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 compile s 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 vari ation among households, DOE sample s a8

- 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 use s 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 boiler s is generally 2 years after the final rule is published. Consistent with its published regulatory agenda, DOE assume s that the final rule would be issued
in 201 7 and that, therefore, the new standards would require compliance beginning in 2019

. DOE calculate s the LCC and PBP for all commercial consumer s 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 share s of the different efficiency levels in each commercial packaged boiler equipment class beginning in 2019 , DOE develop s data on the share of models in each equipment class based on the AHRI certification directory (see Table 8.2.23 )

. 23 DOE analyze s the equipment directories from 2007 to 2014 and identifie s efficiency trends that are then projected forward to 2019. For a de tailed 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 INPUT S

Th e 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/ ∆ O C 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 ene rgy 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, 20 19

.

8.4 LIFE

- CYCLE COST AND PAYBA CK PERIOD RESULTS

As discussed previously

, DOE’s approach for conducting the LCC an d PBP analysis
relie s on developing samples of buildings that use each of the considered equipment

. DOE also

use s probability distributions to characterize the uncertainty in many of the inputs to the analysis. DOE used a Monte Carlo simulation technique t o 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 i s performed on a single bu ilding that i s selected from the sample of the commercial users. The selection of a building i s 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 develop s to characterize many of the inputs to the analysis.

To evaluate the net economic impact of potential amended energy conservation s tandards on commercial consumers of commercial packaged boilers, DOE conduct s 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) a nnual operating8

- 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 cos ts, 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 Boiler s ≥ 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 boiler s ≥ 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 Gas

Fired Hot Water Commercial Packaged Boiler s ≥ 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 Boiler s ≥ 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 building s with zero LCC savings (no impact).8

- 44 Figure 8.4.1 show s the range of LCC savings for the efficiency levels considered for natural draft gas

- fired hot water commercial packaged boiler s ≥ 300,000 Btu/hr and ≤ 2,500,000
Btu/hr

. For each standard level, the top and the bottom of the box indicate the 75 th and 25 th
percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings have lifecycle cost sa vings above this value. The “ whiskers ” at the bottom and the top
of the box indicate the 5 th and 95 th 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 Boiler s ≥ 300,000 Btu/hr and

≤ 2,500,000 Btu/hr

8.4.3 Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler s >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 boiler s > 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 3Average 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

average8

- 45 Table 8.4.3 Average LCC and PBP Results by Efficiency Level for Natural Draft Gas

Fired Hot Water Commercial Packaged Boiler s > 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 Boiler s >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 building s with zero LCC savings (no impact).

Figure 8.4.3 show s 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 t he bottom of the box indicate the 75 th and 25 th 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 5 th and 95 th 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 Boiler s >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 boiler s ≥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 2Average 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

average8

- 47 Table 8.4.5 Average LCC and PBP Results by Efficiency Level for Natural Draft Oil

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 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 building s with zero LCC savings (no impact).

Figure 8.4.5 show s the range of LCC savings for the efficiency levels considered for
natural draft oil

- fired hot water commercial packaged b oilers ≥300,000 Btu/hr and ≤2,500,000
Btu/hr

. For each standard level, the top and the bottom of the box indicate the 75 th and 25 th
percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the buildings have life

- cycl e cost savings above this value. The “ whiskers ” at the bottom and the top
of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for
each standard level.8

- 48 Figure 8.4.3 Distribution of LCC Savings for N atural 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 pack aged boiler s >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 3Average 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

average8

- 49 Table 8.4.7 Average LCC and PBP Results by Efficiency Level for Natural Draft Oil

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 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 building s 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 75 th and 25 th 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 5 th and 95 th 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 boiler s ≥ 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 2Average 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

average8

- 51 Table 8.4.9 Average LCC and PBP Results by Efficiency Level for Natural Draft Gas

Fired Steam Commercial Packaged Boilers ≥ 300,000 B tu/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 building s with zero LCC savings (no impact).

Figure 8.4.9 show s 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 75 th and 25 th
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 5 th and 95 th 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 Dra ft 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 boiler s > 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 2Average 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

average8

- 53 Table 8.4.11 Average LCC and PBP Results by Efficiency Level for Natural Draft Gas

Fired Steam Commercial Package d 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 building s with zero LCC savings (no impact).

Figure 8.4.11 show s 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 75 th and 25 th 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 5 th and

95 th 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 boiler s ≥ 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 3Average 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

average8

- 55 Table 8.4.13 Average LCC and PBP Results by Efficiency Level for Natural Draft Oil

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 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 building s with zero LCC savings (no impact).

Figure 8.4.13 show s 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 75 th and 25 th
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 5 th and 95 th 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 Dra ft 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 b oiler s >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 saving s 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 2Average 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

average8

- 57 Table 8.4.15 Average LCC and PBP Results by Efficiency Level for Natural Draft Oil

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 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 building s with zero LCC savings (no impact).

Figure 8.4.15 show s 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 75 th and 25 th 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 5 th and

95 th 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 boiler s ≥ 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 3Average 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

average8

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

Gas

- Fired Hot Water Commercial Packaged Boiler s ≥ 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 Boiler s ≥ 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 building s with zero LCC savings (no impact).

Figure 8.4.17 show s the range of LCC savings for the efficiency levels considered for
mechanical draft gas

- fired hot water commercial packaged boiler s ≥ 300,000 Btu/hr and

≤ 2,500,000 Btu/hr

. For each standard level, the top and the bottom of the box indicate the 75 th

and 25 th 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 5 th and 95 th 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 Boiler s ≥ 300,000 Btu /hr and

≤ 2,500,000 Btu/hr

8.4.11 Mechanical Draft Gas

- Fired Hot Water Commercial Packaged Boiler s >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 boiler s > 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 LC C 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 6Average 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

average8

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

Gas

- Fired Hot Water Commercial Packaged Boiler s > 2,500,000 Btu/hr

Efficiency

Lev el 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 Boiler s

> 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 building s with zero LCC savings (no impact).

Figure 8.4.19 show s 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 an d the bottom of the box indicate the 75 th and 25 th 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 5 th and 95 th 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 Boiler s >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 package d boiler s ≥ 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 saving s 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 4Average 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

average8

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

Fired Hot Water Commercial Packaged Boiler s ≥ 300,000 Btu/hr and

≤ 2,500,000 Btu/hr

Ef ficiency

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 Boiler s ≥ 300,000 Btu/h r 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 building s with zero LCC savings (no impact).

Figure 8.4.21 show s 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 standa rd level, the top and the bottom of the box indicate the 75 th

and 25 th 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 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 64 Figure 8.4.11 D istribution of LCC Savings for M echanical 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 package d boiler s > 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 4Average 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

average8

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

Fired Hot Water Commercial Packaged Boiler s > 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 Boiler s

> 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 building s 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 75 th and 25 th 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 valu e. The “whiskers” at the bottom and the top of the
box indicate the 5 th and 95 th 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 dr aft gas

- fired steam commercial packaged boiler s ≥ 300,000 Btu/hr
and ≤ 2,500,000 Btu/hr

. In Table 8.4.2 , the simple payback is measured relative to the baseline equi pment

. 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 3Average 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

average8

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

Gas

- Fired Steam Commercial Packaged Boiler s ≥ 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 Boiler s ≥ 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 building s with zero LCC savings (no impact).

Figure 8.4.25 show s 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 75 th and 25 th
percentiles, respectively. The bar at the middle of th e 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 5 th and 95 th 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 boiler s > 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 savi ngs 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 3Average 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

average8

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

Gas

- Fired Steam Commercial Packaged Boiler s > 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 Boiler s > 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 building s with zero LCC savings (no impact).

Figure 8.4.27 show s 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 75 th and 25 th 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
bo x indicate the 5 th and 95 th 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 Ste am 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 boiler s ≥ 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 saving s 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 2Average 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

average8

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

Fired Steam Commercial Packaged Boiler s ≥ 300,000 Btu/hr and ≤ 2,500,000

Btu/hr

Effici ency 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 Boiler s ≥ 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 building s with zero LCC savings (no impact).

Figure 8.4.29 show s 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 75 th and 25 th
percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the
bui ldings have life

- cycle cost savings above this value. The “whiskers” at the bottom and the top
of the box indicate the 5 th and 95 th 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 boiler s > 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 savi ngs 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 Oil

Fired Steam Commercial Packaged Boiler s > 2,500,000 Btu/hr

Efficiency

Level TE Aver age 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 3Average 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

average8

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

Mechanical Draft Oil

- Fired Steam Commercial Packaged Boiler s > 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 building s with zero LCC savings (no impact).

Figure 8.4.31 show s 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 th e bottom of the box indicate the 75 th and 25 th 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 5 th and 95 th 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 2Average 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

average8

- 74 8.5 REBUTTABLE PAYBACK P ERIOD

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption that an energy efficiency standard is economically justified if the addit ional 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, wh ereas 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 o f 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. Th e 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.

• E nergy 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 throu gh Table 8.5.16 present the rebuttable PBPs for commercial packaged boiler s.

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 6.98

- 75 Table 8.5.2 Rebuttable Payback Period for Natural Draft Gas

- Fired Hot Water Commercial Packaged Boiler s >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 Boiler s >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 11.68

- 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 Boiler s >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 19.88

- 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 Boiler s >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 41.18

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