The Parker Ranch installation in HawaiiBUILDING TECHNOLOGIES PROGRAMEnergy Conservation StandardsProposed Rulemakingfor Residential Heating ProductsMohammed KhanDepartment of EnergyEnergy Efficiency & Renewable EnergyResWaterDirectPoolHtrs@ee.doe.govJanuary 7, 20102 | Building Technologies Programeere.energy.gov• Purposes– To invite comment on the proposed energy conservationstandards for residential water heaters, direct heating equipment,and pool heaters;– To present methodologies and characterize results for thisrulemaking analyses;– To discuss specific issues related to each analysis;– To seek input from interested parties on methodologies,assumptions, data sources, andresults from the analyses; and– To describe the next steps.Purpose of the Public MeetingOverview3 | Building Technologies Programeere.energy.govStatutory Authority – the Energy Policy andConservation Act (EPCA) as amended• EPCA sets forth provisions designed to improve energy efficiency ofvarious consumer products, including the three types of heatingproducts that are subject to thisrulemaking. (42 U.S.C. 6292(a)(4),(9) and (11)) EPCA prescribesenergy conservation standards foreach of the three heating products.(42 U.S.C. 6295(e)(1)-(3)) Thestatute further directs DOE to conduct two cycles of rulemakings todetermine whether to amend thesestandards. (42 U.S.C. 6295(e)(4))• DOE is scheduled to publish a finalrule for these products by March31, 2010, pursuant to the consent decree in State of New York, et al.v. Bodman, and NRDC, Inc. et al. v. Bodman.Overview4 | Building Technologies Programeere.energy.gov• Test Procedures– DOE established test procedures for residential water heaters, directheating equipment, and pool heaters in Appendix E, Appendix O, andAppendix P to Subpart B of 10 CFR Part 430, respectively.• Energy Conservation Standards– Framework Document published on November 24, 2006. 71 FR 67825.– Notice of Public Meeting and Availability of the Preliminary TechnicalSupport Document published on January 13, 2009. 74 FR 1643.– Notice of Proposed Rulemaking published on December 11, 2009. 74 FR65852.– Final Rule scheduled to be published by March 31, 2010.DOE Actions on Residential Heating ProductsOverview5 | Building Technologies Programeere.energy.govEPCA Directs DOE to Consider Seven Factors whenSetting Energy Conservation StandardsFactorAnalysis1. Economic impact on consumersand manufacturersLife-cycle cost analysisManufacturer impact analysis2. Lifetime operating cost savingsLife-cycle cost analysis3. Total projected energy savingsNational impact analysis4. Impact on utility or performanceScreening analysisEngineering analysis5. Impact of any lessening ofcompetitionManufacturer impact analysis6. Need for national energy conservationNational impact analysis7. Other factors the Secretary considersrelevantEnvironmental assessmentUtility impact analysisEmployment impact analysisOverview6 | Building Technologies Programeere.energy.govProposed Amended Energy Conservation Standards forResidential Water Heaters (TSL 4)Product ClassProposed Energy Conservation StandardsGas-fired StorageFor tanks with a Rated StorageVolume at or below 60 gallons:EF = 0.675 – (0.0012 x RatedStorage Volume in gallons)For tanks with a Rated StorageVolume above 60 gallons:EF = 0.717 – (0.0019 x RatedStorage Volume in gallons)Electric StorageFor tanks with a Rated StorageVolume at or below 80 gallons:EF = 0.96 – (0.0003 x RatedStorage Volume in gallons)For tanks with a Rated StorageVolume above 80 gallons:EF = 1.088 – (0.0019 x RatedStorage Volume in gallons)Oil-fired StorageEF = 0.68 – (0.0019 x Rated Storage Volume in gallons)Gas-fired InstantaneousEF = 0.82 – (0.0019 x Rated Storage Volume in gallons)Proposed Standards7 | Building Technologies Programeere.energy.govProposed Amended Energy Conservation Standards for ResidentialDirect Heating Equipment (TSL 3) and Pool Heaters (TSL 4)Pool Heater Product ClassProposed Energy Conservation StandardsGas-firedThermal Efficiency = 84%Proposed StandardsDirect Heating Equipment Product ClassProposed EnergyConservation StandardsGas Wall Fan with Input Capacities up to42,000 Btu/hAFUE = 76%Gas Wall Fan with Input Capacities over 42,000 Btu/hAFUE = 77%Gas Wall Gravity with Input Capacities up to 27,000 Btu/hAFUE = 70%Gas Wall Gravity with Input Capacitiesover 27,000 Btu/h upto 46, 000 Btu/hAFUE = 71%Gas Wall Gravity with Input Capacities over 46,000 Btu/hAFUE = 72%Gas Floor with Input Capacities up to 37,000 Btu/hAFUE = 57%Gas Floor with Input Capacities over 37,000 Btu/hAFUE = 58%Gas Room with Input Capacities up to 20,000 Btu/hAFUE = 62%Gas Room with Input Capacities over20,000 Btu/h upto 27,000 Btu/hAFUE = 67%Gas Room with Input Capacities over27,000 Btu/h upto 46,000 Btu/hAFUE = 68%Gas Room with Input Capacities over 46,000 Btu/hAFUE = 69%Gas Hearth with Input Capacities up to 20,000 Btu/hAFUE = 61%Gas Hearth with Input Capacities over 20,000 Btu/hand up to 27,000 Btu/hAFUE = 66%Gas Hearth with Input Capacities over 27,000 Btu/hand up to 46,000 Btu/hAFUE = 67%Gas Hearth with Input Capacities over 46,000 Btu/hAFUE = 68%8 | Building Technologies Programeere.energy.gov• Opening Remarks– At this time, DOE welcomes opening remarks from interested partieson the heating products NOPR and the proposed energy conservationstandards for residential water heaters, direct heating equipment, andpool heaters.Opening Remarks and Comments from InterestedParties on the NOPR and the Proposed Energy ConservationStandards for Residential Heating ProductsOpening Remarks and Comment9 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramRevisePreliminaryAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleComplianceDateScope of Coverage andProduct ClassesEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysis10 | Building Technologies Programeere.energy.gov• DOE is analyzing the followingproducts in this rulemaking:– Gas-fired storage water heaters;– Electric storage water heaters;– Oil-fired storage water heaters;– Gas-fired instantaneous water heaters;– Gas-fired wall gravity direct heating equipment;– Gas-fired wall fan direct heating equipment;– Gas-fired floor direct heating equipment;– Gas-fired room direct heating equipment;– Gas-fired hearth direct heating equipment; and– Gas-fired pool heaters.Scope of CoverageOverview11 | Building Technologies Programeere.energy.gov• For the NOPR, DOE is proposing to add a definition of gasfired hearth direct heating equipment to 10 CFR Part 430.2 asfollows:– Vented hearth heater means a vented, including freestanding orrecessed, zero clearance fireplace heater, a gas fireplace insert ora gas-stove, which simulates a solid fuel fireplace and is designedto furnish warm air, without ducts to the space in which it isinstalled.ISSUE 4. DOE seeks comment from interested parties on itsproposed definition for vented hearth heaters.Scope of CoverageGas-fired Hearth Direct Heating Equipment12 | Building Technologies Programeere.energy.gov• If DOE finalizes this rulemaking as proposed for gas-firedhearth DHE, manufacturers of these products would be subjectto all relevant provisions,including the test procedures,standards, certification, compliance, and enforcementprovisions, that currently existsfor the other four types of DHE.– These provisions are found in 10 CFR parts 430.23, 430.24,430.27, 430.32, 430.33, 430.40 through 430.49, 430.50 through430.57, 430.60 through 430.65, and 430.70 through 430.75.ISSUE 2. DOE seeks comment from interested parties on thepotential burdens to manufacturers of gas-fired hearth DHEas a result of the testing, certification, reporting, andenforcement provisions in these sections.Scope of CoverageGas-fired Hearth Direct Heating Equipment13 | Building Technologies Programeere.energy.govProduct ClassesWater Heater Product ClassesISSUE 5. DOE seeks comment from interested parties on the need for aseparate product class for low-boy heaters.ISSUE 6. DOE seeks comments from interested parties on the analysisapproach and the need for a separate product class for ultra-low NOXwater heaters.Residential Water HeaterCharacteristicsGas-Fired StorageNominal input of 75,000 Btu/h or less; ratedstorage volume from20 to 100 gallonsOil-Fired StorageNominal input of 105,000Btu/h or less; ratedstorage volume of50 gallons or lessElectric StorageNominal input of 12 kW(40,956 Btu/h) orless; rated storage volume from 20 to 120gallonsGas-Fired InstantaneousNominal input of over50,000 Btu/h up to200,000 Btu/h; ratedstorage volume of 2gallons or less14 | Building Technologies Programeere.energy.govProduct ClassesWater Heater Product ClassesISSUE 8. DOE seeks comment from interested parties on the need for aseparate product class for heat pump water heaters. In particular, DOEis interested in receiving comments and data on whether a heat pumpwater heater can be used as a direct replacement for an electricresistance water heater, and the types and frequency of installationswhere a heat pump water heater cannot be used as a direct replacementfor an electric resistance water heater.• DOE is not proposing to createa separate product class for heat pumpwater heaters.• Instead, DOE is treating heat pumpwater heaters as a design option forelectric storage water heaters.– They do not provide a different utility from traditional electric resistancewater heaters;– They use electricity as the primary fuel source;– They can replace traditional electric resistance storage water heaters inmost residences, although the installation requirements may be quite costly.15 | Building Technologies Programeere.energy.govProduct ClassesDirect Heating Equipment Product ClassesISSUE 9. DOE seeks comments from interested parties on the reductionin product classes for direct heating equipment.ISSUE 10. DOE seeks comment on the proposed product classes forgas hearth direct heating equipment.Direct Heating EquipmentInput Heating CapacityBtu/hGas Wall FanUp to 42,000Over 42,000Gas Wall GravityUp to 27,000Over 27,000 and up to 46,000Over 46,000Gas FloorUp to 37,000Over 37,000Gas RoomUp to 20,000Over 20,000 and up to 27,000Over 27,000 and up to 46,000Over 46,000Gas HearthUp to 20,000Over 20,000 and up to 27,000Over 27,000 and up to 46,000Over 46,00016 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateScreening AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance17 | Building Technologies Programeere.energy.govScreening AnalysisHeat Pump Water Heaters• DOE is screening in heat pump water heater technologies as a designoption for improving the efficiency of electric storage water heaters.• Issues Associated with the Consumer Utility– Cold Air Production• The increased installation costs of venting cold air awayfrom a conditioned space, alongwith the increased cost of space heating for consumers whochoose not to vent cold airaway from the conditioned space, are accounted for in DOE’sanalysis for certainpercentages of consumers.– Noise• Water heaters are typicallynot installed in consumers’bedrooms or living spaces, butinstead are usually installedin garages, closets,basements, attics,or other locationsaway from the living space. Thus, DOE believes that noise created by a compressorwould not significantlyimpact consumer utility.• Production, Installation, and Servicing Issues– DOE believes with the lead-time associated with amended standards andthe development of current products, it is unclear whether manufacturerswould be able to retrain installers and service technicians to install andservice heat pump water heaters.18 | Building Technologies Programeere.energy.govScreening AnalysisHeat Pump Water HeatersISSUE 11. DOE is seeking comment on the manufacturability of heatpump water heaters and the capability of manufacturers to ramp upproduction. DOE is specifically seeking comment on how long it wouldtake, and how much it would cost, for manufacturers to convert allproduct lines to heat pump water heaters if it were required by anamended energy conservation standard. Additionally, DOE is seekingcomment about the capability of waterheater installers and servicers tomeet the unique demands created by heat pump water heaters. DOE isrequesting comment about how long itwould take to train installers andservicers to be able to serve the market if heat pump water heaters wererequired by an amended energy conservation standard.• DOE estimated the additional costs that would be incurred as a result of increasedcertification requirements to install and service heat pump water heaters in itsanalyses. (See Slide 41 and45 for additional details.)• Given the 5-year delay forcompliance and the fact thatmany manufacturers arealready developing heat pump water heaters, DOE believes manufacturers may beable to convert their entire product lines before the compliance date.19 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateEngineering AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance20 | Building Technologies Programeere.energy.gov• Purpose– To evaluate design options that improve efficiency relative to thebaseline models.– To characterize manufacturer cost-efficiency relationships for higherefficiency equipment.• General Methodology for All Three Products1. Select representative products to analyze.2. Develop baseline models.3. Teardown models at higher efficiency levels.4. Use a bill of materials and markups to generate cost-efficiencycurves.5. Scale to unanalyzed product classes.Engineering Analysis21 | Building Technologies Programeere.energy.gov• Several changes were made for the NOPR engineering analysis:– The efficiency levels analyzed for gas-fired storage and electric storagewater heaters were modified.– A separate analysis was performed on ultra-low NOXgas-fired storagewater heaters.– DOE further investigated heat pump water heaters.– Scaling equations for gas-fired and electric storage water heaters wererevised and scaling methodology was updated.– Shipping costs were separated from manufacturer markup for storagewater heaters.Engineering AnalysisNOPR Updates for Water Heaters22 | Building Technologies Programeere.energy.gov• Max-Tech Efficiency Levels– For gas-fired storage water heaters at 40 gallons:• DOE used a 0.77 EF for the preliminary analysis.• DOE is using a 0.80EF for the NOPR analysis.• Intermediate Efficiency Levels– For electric storage water heaters at 50 gallons:• DOE is analyzing a 2.0EF efficiency level .• DOE maintained 2.2 EF as the max-tech level.Engineering AnalysisGas-Fired and Electric Storage Water Heater Efficiency LevelsISSUE 1. DOE seeks comment from interested parties on the max-techefficiency levels identified for theanalyses, especially those for gasfired water heaters. DOE is particularly interested in commentspertaining to the maximum technologically feasible efficiency levels,including whether the efficiency levels identified by DOE can beachieved using the technologies screened-in during the screeninganalysis, and whether higher efficiencies are achievable usingtechnologies that were screened-in during the screening analysis.23 | Building Technologies Programeere.energy.gov• DOE developed a separate cost-efficiency relationship for ultra-lowNOXgas-fired water heaters.– DOE used the same methodology as for gas-fired storage water heaters.• Analyzed the same efficiency levels and representative rated storage volume(40 gallons);• Performed teardowns and developed MPCs at each efficiency level;– DOE estimated the costs to account for differences in burners, fluebaffling, power venting, and otherchanges required for ultra-low NOXproducts.– Results were used downstream in the LCC analysis and applied to thefraction of consumers who live in jurisdictions with ultra-low NOXregulations.Engineering AnalysisUltra-Low NOXGas-Fired Storage Water HeatersISSUE 6. DOE seeks comments on it’s assumptions about ultra-lowNOX gas-fired storage water heaters and the manufacturer productioncost estimates.24 | Building Technologies Programeere.energy.govEngineering AnalysisUltra-Low NOXGas-Fired Storage Water HeatersEfficiency LevelMPC2008$MSP2008$Baseline (EF* = 0.59**)2473431 (EF = 0.62)2623712 (EF = 0.63)3745093 (EF = 0.64)3815204 (EF = 0.65)3885375 (EF = 0.67)N/A***N/A***6 – Max-Tech (EF = 0.80)521710* EF is energy factor.** The energy factor requirements are given for the representative rated storage volume (i.e., 40 gallons)*** DOE assumed that manufacturerswould not be able to achieve thisefficiency level for ultra-low NOXproducts usingexisting “screened-in” technologies.25 | Building Technologies Programeere.energy.gov• Since the NOPR engineering analysis was finalized, DOE toredown commercially available units on the US market.• DOE compared the commercially available units to DOE'sprototype unit in the cost model.• DOE found the commercially available units show differentdesign philosophies:– Design A is a quasi-retrofit designfeaturing a lightly-modified electricstorage water heater tank and shellassembly mated to a heat pump.– Design B is heavily integrated featuring a tank wrapped with the condenser(foamed in place) brazed tothe heat pump assembly.Integrated Heat Pump Water Heater Engineering UpdateEngineering Analysis26 | Building Technologies Programeere.energy.gov• The commercially available units have similar efficiencies and areabout seven feet tall.• DOE found the following differencesbetween its prototypical unitand the commercially available units:– Design A uses an external heat exchanger, a water pump, a ECM blowerassembly, and a much moresophisticated control system.– Design B features a different condenserheat exchanger implementation, fewerresistance heaters, anda shaded-pole fan motor.– Design A and B rely on a gravity drain for condensate, feature only one fanmotor, and have uniqueshipment packaging.Integrated Heat Pump Water Heater Engineering UpdateEngineering Analysis27 | Building Technologies Programeere.energy.gov• While the design strategies ofthe commercially available unitsdiffer, DOE was able to affirm itshigh-volume prototypical unit andassociated MPCs in its cost model.– DOE estimated the MPC of a prototypical unit for the NOPR prior to itsteardown analysis at two efficiency levels (2.0 and 2.2).– DOE research suggests that bothDesign A and B achieve an EF ofapproximately 2.0 at the representative storage volume.– DOE's 2.0 EF prototypical unit MPC estimate is between the MPCs of DesignsA and B at the representative storage volume.Integrated Heat Pump Water Heater Engineering UpdateEngineering Analysis28 | Building Technologies Programeere.energy.gov• DOE scaled costs to rated storage volumes outside of the“representative” storage volume to account for large variations infirst costs and usage patterns ofdifferent size products.• The scaled production costs are used in the downstream analysis.• DOE performed teardowns of models at rated storage volumes otherthan the “representative” rated storage volume (i.e., 40 gallons forgas-fired, 50 gallons for electric storage water heaters).– These teardowns allowed DOE to determine which components scalewith rated storage volume and exactly how they scale.– Components that will change with tank size (e.g., tank dimensions,wrapper dimensions, wall thicknesses, insulation thickness, anoderod(s), flue pipe(s)) were scaled based on teardown results.– Components that do not change with tank size (e.g., gas valves,thermostats, controls) were assumedto remain largely the same acrossthe different storage volume sizes.Engineering AnalysisScaling of Manufacturer Production Costsfor Storage Water Heaters29 | Building Technologies Programeere.energy.govScaling of Manufacturer Production Costs for StorageWater HeatersEfficiency LevelGas-Fired Storage, Standard BurnerManufacturing Production Cost30 Gallon50 Gallon65 Gallon75 GallonBaseline$166$191$220$2371$172$199$229$2462$179$207$239$2563$293$319$349$3674$299$327$359$3765$306$335$369$3876$432$468$513$538Engineering AnalysisEfficiencyLevelElectric StorageManufacturing Production Cost30 Gal40 Gallon66 Gallon80 Gallon119 GallonBaseline$109$122$142$164$2041$115$128$150$172$2142$118$133$155$179$2223$121$136$158$183$2274$128$143$168$192$2375$142$160$188$214$2636$512$529$554$580$6287$556$574$601$629$66630 | Building Technologies Programeere.energy.govScaling of Manufacturer Production Costs for StorageWater HeatersEfficiencyLevelOil-Fired StorageManufacturing Production Cost50 GalBaseline$6311$6392$6453$6544$6535$6646$7337$738Engineering AnalysisISSUE 12. DOE requests comments on its approach to scaling themanufacturer production costs from the representative storage volumesto other storage volumes. DOE also requests comments on theestimated manufacturer production costs for storage water heaters atstorage volumes outside of the representative volume, which are shownin Chapter 5 of the heating products TSD.31 | Building Technologies Programeere.energy.gov• Energy efficiency equations are usedto characterize the relationshipbetween rated storage volume and energy factor.• For the NOPR analysis, DOE revised the energy efficiencyequations that were presented inthe preliminary analysis based on:– Review of a comprehensive water heater database created by DOE,which includes water heater models on the market at the time of theanalysis (Spring 2009); and– Results of independent EF testing performed on variety of water heatersacross a range of efficiencies and storage volumes.Engineering AnalysisEnergy Efficiency Equations32 | Building Technologies Programeere.energy.govEngineering AnalysisEnergy Efficiency Equations – Gas-Fired Storage Water HeatersEfficiency Level20 to 60 GallonsOver 60 and up to 100 GallonsBaseline Energy Efficiency EquationEF = -0.00190(VR)+0.670EL 1 Energy Efficiency EquationEF = -0.00150(VR)+0.675EF = -0.00190(VR)+0.699EL 2 Energy Efficiency EquationEF = -0.00120(VR)+0.675EF = -0.00190(VR)+0.717EL 3 Energy Efficiency EquationEF = -0.00100(VR)+0.680EF = -0.00190(VR)+0.734EL 4 Energy Efficiency EquationEF = -0.00090(VR)+0.690EF = -0.00190(VR)+0.750EL 5 Energy Efficiency EquationEF = -0.00078(VR)+0.700EF = -0.00190(VR)+0.767EL 6 Energy Efficiency EquationEF = -0.00078(VR)+0.831233 | Building Technologies Programeere.energy.govEngineering AnalysisEnergy Efficiency Equations – Electric Storage Water HeatersEfficiency Level20 to 80 GallonsOver 80 and up to 120 GallonsBaseline Energy Efficiency EquationEF = -0.00132(VR)+0.97EL 1 Energy Efficiency EquationEF = -0.00113(VR)+0.97EF = -0.00149(V-R)+0.999EL 2 Energy Efficiency EquationEF = -0.00095(VR)+0.967EF = -0.00153(VR)+1.013EL 3 Energy Efficiency EquationEF = -0.00080(VR)+0.966EF = -0.00155(VR)+1.026EL 4 Energy Efficiency EquationEF = -0.00060(VR)+0.965EF = -0.00168(VR)+1.051EL 5 Energy Efficiency EquationEF = -0.00030(VR)+0.960EF = -0.00190(VR)+1.088EL 6 Energy Efficiency EquationEF = -0.00113(VR)+2.057EL 7 Energy Efficiency EquationEF = -0.00113(VR)+2.25734 | Building Technologies Programeere.energy.govEnergy-Efficiency Equations (Issue # 7)Engineering AnalysisISSUE 7. DOE requests comments on the approach for developing theenergy efficiency equations, the appropriate slope of energy efficiencyequations at each efficiency level analyzed, and the appropriate storagevolumes for changing the slope of the line. DOE is also interested in anyalternatives to the energy efficiency equations that DOE shouldconsider for the final rule.35 | Building Technologies Programeere.energy.govRequest for Additional CommentsEngineering AnalysisDOE invites comments on any other issues pertaining to theEngineering Analysis.36 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisLife-Cycle Cost andPayback Period AnalysesRevisePreliminaryAnalysesCompliance37 | Building Technologies Programeere.energy.gov• Markups for Product Price Determination– To characterize the channels for how products are distributed fromthe manufacturer to the customer.– To determine prices paid by customers based on manufacturerselling prices for baseline and higher efficiency products.• Energy Use Characterization–To develop energy savings estimates for selected product efficiency levels.• Life-Cycle Cost and Payback Period Analyses– To develop the customer life-cycle cost savings and payback periodfor higher efficiency products.PurposeLife-Cycle Cost andPayback Period Analyses38 | Building Technologies Programeere.energy.gov• Method– Markups relate consumer price to cost of goods sold (CGS).• Baseline markups relate price to cost prior to a change in efficiency.• Incremental markups relate the incremental change in consumer price to the incrementalchange in CGS.– National distribution of sales taxes.• Sources– U.S. Census Bureaudata (2002) from the2002 Economic Census, Construction Industry SeriesandGeographic Area Seriesfor Construction– U.S. Census Bureaudata (1997) from the1997 Economic Census, Business Expenses– Air Conditioning Contractors ofAmerica data (2005) from theFinancial Analysis for the HVACRContracting Industry– RS Means Company Inc. data (2008) fromMechanical Cost Data - 31th Annual Edition– Sales Tax ClearinghouseInc. data (2009) fromState Sales Tax Rates Along with CombinedAverage City andCounty Rates• NOPR analysis changes:Markups for Product Price DeterminationLife-Cycle Cost andPayback Period AnalysesInputsPreliminary AnalysisChanges for the Proposed RuleConsumer PriceReported in 2007$Reported in 2008$Sales Taxes2006 data2009 data39 | Building Technologies Programeere.energy.govEnergy Use Characterization• Method–Water Heaters:Used RECS 2005 and applied hot water draw model tocalculate daily hotwater use. Determined energy use using the water heater analysis model (WHAM).–DHE and Pool Heaters: Used RECS and test procedure to determine energy use.• NOPR analysis changes:Life-Cycle Cost andPayback Period AnalysesProduct ClassPreliminary AnalysisChanges for the Proposed RuleAll ProductsBased on sample from RECS 2001.Product characteristics from 2007-2008 data.Sample updated using RECS 2005.Product characteristics updated tolatest availabledata (March 2009 AHRI Directory; June 2008 FTCPool Heater Directory).Gas Storage WaterHeatersUsed single point RE value perefficiency levelDistribution of RE valuesbased on number ofmodels in 2009 AHRI Directory.Electric Storage WaterHeatersAccounted for HPWHcooling effectby estimating impacts onheating/cooling loads. Single pointvalue for heating capacity for HPWHAccounted for the cost of venting for a fraction ofHPWH installations.Distribution of values for heating capacity forHPWHInstantaneous Gas-FiredWater HeatersPerformance adjustment factor wasconstant at 8.8%.Performance adjustment factor varies from 0% to8.8% depending on hot water use.DHEGas fireplaces included in the GWFDHE and GR DHE.Gas fireplaces included in the Hearth DHEproducts class only.Pool HeatersUsed household sample from RECS2001.Increased sample usingRECS 1993, 1997, 2001,and 2005.40 | Building Technologies Programeere.energy.gov• LCC equals consumer price plus the sum of operating costs discounted toa particular base year.•Economic evaluation from the customer perspective.•Analysis implemented in an Excel®spreadsheet combined with CrystalBall®.•Analysis models the uncertainty and variability of inputs using Monte Carlosimulation and probability distributions.•Results are expressed as LCC savings (baseline minus standard level).•Simple payback period (in years) isalso calculated and reported in thisanalysis.Combine Changesin CostsLCC ResultsInstalled Cost(Customer Price + Installation Cost)Operating ExpensesConvert toPresentValueLife-Cycle Cost andPayback Period Analyses41 | Building Technologies Programeere.energy.gov•Method:– Based on data from 2008 RS Means, consultant reports, 2001 WHrulemaking for OSWHs, and 1993 DHE rulemaking•NOPR analysis changes:Installation CostsLife-Cycle Cost andPayback Period AnalysesProduct ClassPreliminary AnalysisChanges for the Proposed RuleAll Products1) National labor costs2) Installation materials and labor costs in 2007$3) No extra attic installation cost for water heaters1) Regional labor costs2) Installation materials and labor costs in 2008$3) Accounted for added attic installation cost(GSWH, ESWH)Gas-Fired StorageWater Heaters1) No space constraintscosts for water heaterdesigns with increased insulation.2) Did not account for a fraction of natural draftwater heaters requiringstainless steel ventconnectors.3) Average venting costs for all households.1) Added space constraints installation cost to afraction of 1.5” and 2” insulation design2) Added cost of stainless steel vent connectorto a fraction of households.3) Venting costs calculated for each individualhousehold.Electric StorageWater Heater1) Space constraints only to conditioned spaceand above 2.5” insulation and above2) No HPWH venting cost1) Adjustment to the fraction of householdsimpacted by space constraints.2) Cost of venting for some households withHPWHs that experience cooling effect.DHENo Hearth ProductsAssumed hearth DHE installation cost similar togas room DHE42 | Building Technologies Programeere.energy.govHeat Pump Water Heater Installation CostsISSUE 13. DOE seeks comment its analysis of installation costs for waterheaters. DOE is particularly interested in comments on its analysis ofinstallation costs for heat pump water heaters.Life-Cycle Cost andPayback Period AnalysesInstallation Cost DescriptionAssignment to InstallationsInstallationsimpactedAverageCostAdditional LaborAll installations100%$69Closet Door Redesign (Space Constraints)50% of indoor and heated basementreplacement installations16%$344Tempering Valve Addition (Space Constraints)20% of all replacement installations16%$142Condensate Pump25% of all replacement installations20%$154Venting Adder40% of replacement installations withcooling load effects10%$460Larger Drain PanAll installations100%$2Sources:Labor cost hours and materialcost from 2008 RSMeans, condensate pumpfrom retailer web sites, drain pan from2001 TSDCooling Effect Approach:All HPWH households experiencing cooling load effects in the heatingseason are either assigned theventing adder or the extra cost for space heating is accounted in the energy use calculations.43 | Building Technologies Programeere.energy.gov•Method: Average monthly and annualenergy prices are calculatedusing EIA historical data and energyprice trends come from AEO 2009–Water Heaters:Used average monthly energy prices–DHE and Pool Heaters: Used average annual energy prices•NOPR analysis changes:Energy PricesLife-Cycle Cost andPayback Period AnalysesInputsPreliminary AnalysisChanges for the Proposed RuleEnergy PricesElectricity:Based on EIA’s 2006 Form 861data.Natural Gas:Based on EIA’s 2006 NaturalGas Navigator.Oil:Based on EIA’s 2006 PetroleumNavigator.LPG:EIA’s 2005 State EnergyConsumption, Price,and ExpenditureEstimatesElectricity: Based onEIA’s 2007 Form 861and Form 826 data.Natural Gas: Based onEIA’s 2007 NaturalGas Navigator.Oil:Based on EIA’s 2007 PetroleumNavigator.LPG: EIA’s 2006 State EnergyConsumption, Price,and ExpenditureEstimatesEnergy Price TrendsForecasted using EIA’s AEO2008.Variability: NoneForecasted using EIA’s AEO2009.Variability: Regional energy price forecastsfor the nine census divisions.44 | Building Technologies Programeere.energy.govMaintenance Costs• Method– Cost of regular scheduled product maintenance– Based on data from RS Means and other sources (includingconsultant reports for GSWH, ESWH, GIWH, and PH; 2001 WHrulemaking for OSWHs, 1993 rulemaking for DHE)• NOPR analysis changes:Life-Cycle Cost andPayback Period AnalysesInputsPreliminary AnalysisChanges for the Proposed RuleAll Products1) National labor costs2) Maintenance materials and labor costs in2007$2) No storage tank water heater annualflushing maintenance cost1) Regional labor costs2) Maintenance materials and labor costsin 2008$2) Applied annual flushing maintenancecost to a fraction of households (2.5%)Gas-Fired Storage WaterHeatersNone.Added FVIR maintenance cost.Instantaneous Gas-FiredWater HeaterIncludes annual de-liming cost to allhouseholdsAnnual de-liming costapplied to a fractionof households (75%)45 | Building Technologies Programeere.energy.govRepair Costs• Method: Determines price for replacing or repairing componentswhich have failed– applicable to a fraction of households– accounts for components likely to be repaired during the lifetime of theproduct• NOPR analysis changes:Life-Cycle Cost andPayback Period AnalysesProduct ClassPreliminary AnalysisChanges for the Proposed RuleAll Products1) National labor costs2) Maintenance materials and labor costs in2007$3) Fraction repaired based on lifetimecomponent only.1) Regional labor costs2) Maintenance materials and labor costs in2008$3) Fraction of products requiring repairbased on consultant data .Electric Storage WaterHeatersNone.Added Heating Element46 | Building Technologies Programeere.energy.govHeat Pump Water Heater Repair and Maintenance CostsISSUE 14. DOE seeks comment on its analysis of repair and maintenancecosts for heat pump water heaters.Life-Cycle Cost andPayback Period AnalysesSources:Costs – 2008 RSMeans, Fraction of installations (flushing) and labor hours - Consultant Report; Fraction ofinstallations (evaporator) - 2001 CAC TSD (survey) and RECS2005Sources:Labor cost(regional) from 2008 RSMeans, Material cost – consultant report, retailer web sites, Labor hours –consultant report, CA study, Fraction of installations (electric res element) and labor hours - Consultant Report, Fraction ofinstallations (compressor & fan)- based on component lifetimeMaintenance CostComponentApplicabilityAverageAnnual CostMaximum Cost% of Consumers withMaintenance CostTank FlushingAll$3$1052.5%* every yearEvaporator CleaningHPWH Only$2$12210%** every 5 yearsRepair CostComponentApplicabilityAverageAnnual CostMaximum Cost% of Consumers withMaintenance CostElectric ResistanceElementAll$24$12320%*CompressorHPWH Only$28$29010%**Evaporator FanHPWH Only$13$12610%**47 | Building Technologies Programeere.energy.govProduct Lifetime• Method:– DOE characterized the product lifetimeusing a Weibull probability distribution.• NOPR analysis changes:•Results:Life-Cycle Cost andPayback Period AnalysesProduct ClassPreliminary AnalysisChanges for the Proposed RuleWater HeatersBased on various sources includingAppliance Magazine.Based on RECS equipment age data, AHSequipment stock data, and AHRI shipments data.DHELifetime values from the 1993 TSD.Added Hearth DHE product class with the samelifetime.PHBased on various sources includingindustry associations, and retailers.EERE, industry associations, consultant report,and retailers to derive a lifetime distributionProduct ClassPreliminary Analysis AverageNOPR AverageGas-Fired Storage Water Heaters1213Electric Storage Water Heaters1413Oil-Fired Storage Water Heaters913Instantaneous Gas-Fired Water Heaters2020Direct Heating Equipment1515Pool Heaters6848 | Building Technologies Programeere.energy.govDiscount Rates• Method: The finance cost of raising funds to purchase major homeappliances is interpreted as either:–the financial cost of any debt incurred to purchase equipment, or–the opportunity cost of any equity used to purchase equipment.• NOPR analysis changes:• Results:Life-Cycle Cost andPayback Period AnalysesInputsPreliminary AnalysisChanges for the Proposed RuleAsset/Debt ShareAllocationsFederal Reserve Board’sSurvey ofConsumer Financesfor the years 1989,1992, 1995, 1998, 2001, 2004Added Federal Reserve Board’sSurvey ofConsumer Finances 2007Debt interest ratesFederal Reserve Board’sSurvey ofConsumer Financesfor the years 1989,1992, 1995, 1998, 2001, 2004Added Federal Reserve Board’sSurvey ofConsumer Finances 2007Asset interest ratesData from1980-2007Updated data from 1980-2008.Housing TypeFinance Cost Based On:Preliminary AnalysisMean (%)NOPRMean (%)New ConstructionMortgage3.23.0ReplacementsHome equity loans, Credit card, Other loans, Checking &savings accounts, Certificates of deposit, Bonds, Stocks5.54.849 | Building Technologies Programeere.energy.govProduct Assignment in the Base Case• Method:–Avoids overstating the benefits from increasing equipment efficiency byshowing the percentage ofconsumers already purchasing efficient equipment.–Use market share by efficiency data, model databases, and assume highermarket shares for energy star products• NOPR analysis changes:Life-Cycle Cost andPayback Period AnalysesProduct ClassPreliminary AnalysisChanges for the Proposed RuleAll ProductsMarch 2008 AHRI water heaters and DHEdirectory, June 2007 FTC pool heaterdirectory, 2003-2007AHRI shipments dataMarch 2009 AHRI water heaters and DHEdirectory, June 2008 FTC pool heaterdirectory, 2003-2008AHRI shipments dataGas-Fired Storage WaterHeatersMarket share assumed to be 3.75% for0.67 EF and 2.5% for 0.80 EF at 40 gallonsMarket share updated to 5.25% for 0.67 EFand 1% for 0.80 EF.Electric Storage WaterHeatersMarket share assumed to be 5% for 2.2 EFMarket share updated to 4% for 2.0 EF and1% for 2.2 EF.Oil-Fired Storage WaterHeatersMarch 2008 AHRI directoryMarch 2009 AHRI directory andmanufacturer market share inputsDHEHearth product market share mixed in withFWF DHE and GR DHEAdded separate Hearth products class50 | Building Technologies Programeere.energy.govRequest for Additional CommentsDOE invites comments on any other issues pertaining to the EnergyUse, Markups, and Life-Cycle Cost and Payback Period Analyses.Life-Cycle Cost andPayback Period Analyses51 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateNational Impact AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance52 | Building Technologies Programeere.energy.govPurpose• Shipments Analysis– To estimate heating product shipments over time.• National Impact Analysis– To estimate the National Energy Savings (NES) from heatingproduct energy conservation standards at different efficiency levels.– To estimate the national economic impact on the nation (or the NetPresent Value (NPV)) from heating product energy conservationstandards at different efficiency levels.National Impact Analysis53 | Building Technologies Programeere.energy.govChanges to NOPR Shipments Analysis* Hearth, Patio & Barbecue AssociationInputPreliminary AnalysisChanges to Proposed RuleWater Heaters -Historical Shipments1988-2007 AHRIshipments data.Updated to include 2008 AHRI and 1997-2007 Oil Heating Journal shipments dataWater Heaters - NewConstructionUsed AEO2008 new housing forecasts.New housing forecast updated with AEO2009projections.Water Heaters –ReplacementsConsidered total product stock by vintage andestablished the failure of the stock usingretirement functionsfrom the LCC analysis.Retirement function updated with new lifetimeresults.DHE - HistoricalShipments1988-2007 data provided by AHRI.Updated to include HPBA* data for hearthproducts, updated wall fan and gravity marketshareDHE - ProjectionsHearth shipments part ofgas fan wall and gasroom DHE.Hearth DHE updated based on new housingforecasts from AEO2009.Pool Heaters -Historical ShipmentsData from 1993 TSD.Accounted for 2007-2008 data frommanufacturers.Pool Heaters -ReplacementsConsidered total product stock by vintage andestablished the failure of the stock usingretirement functionsfrom the LCC analysis.Included estimated non-replacements of afraction of pool heaters, updated retirementfunction with new lifetime resultsNational Impact Analysis54 | Building Technologies Programeere.energy.gov• Shipments Forecast for Water Heaters (2015-2045):– Two market segments:• New construction: New housing construction forecasts multiplied by historical fuel marketshares (average marketshares from 2000-2008).• Replacements: Product retirement functions (product lifetimes) applied to product stock.Product stock is generated with historical shipments.– Accounted for market growth of Gas-Fired Instantaneous Water HeatersShipments – Water Heater Approach and ResultsGas-Fired Storage Water HeatersGas-Fired Instantaneous Water Heaters0.01.02.03.04.05.06.02004 2009 2014 2019 2024 2029 2034 2039 2044MillionsModeled New ConstructionModeled ReplacementsHistorical Data0.01.02.03.04.05.06.02004 2009 2014 2019 2024 2029 2034 2039 2044MillionsModeled New ConstructionModeled ReplacementsHistorical DataNational Impact Analysis55 | Building Technologies Programeere.energy.gov• Shipments Forecast for DirectHeating Equipments (2013-2043):– No market segmentation: Forecast is based on historical trends.• Held constant (Gas Room DHE, GasWall Fan DHE, Gas Wall Gravity DHE)• Historical Trend (Gas Floor DHE)• Historical Shipments correlated with new constructions (proxyfor economic growth) (HearthDHE)Shipments – DHE Approach and ResultsHearth DHEGas Wall Fan, Gravity, Room and Floor DHENational Impact Analysis56 | Building Technologies Programeere.energy.gov• Shipments Forecast for Pool Heaters (2013-2043):– 3 market segments:• New housing Installations: projection based on PK historical data• First time owners: projectionbased on PK historical data• Replacements : Equipment retirement functions (equipment lifetimes) applied to equipmentstock. Equipment stock is generated with historical shipments.DOE also accounted for unitsthat are not replaced.Shipments – Pool Heater Approach and ResultsPool HeaterNational Impact Analysis57 | Building Technologies Programeere.energy.gov• DOE considered Fuel Switching to gas-fired storage water heaters inthe case of a standard that effectively requires an electric heat pumpwater heater.Fuel SwitchingNational Impact AnalysisGas-Fired WaterHeater EfficiencyLevelAverage Total Installed CostDifferential for Homes thatSwitchChange in Electric WH Shipments dueto SwitchingNew ConstructionReplacementsBaseline$1450.5%4.6%1$850.3%2.3%2$770.2%1.7%3$1160.1%6.2%4$1040.1%5.5%5$890.1%4.5%6$20.0%0.0%58 | Building Technologies Programeere.energy.govFuel-Switching (Issue #15)ISSUE15. DOE seeks comments on its approach for analyzing fuelswitching that may result from the proposed standards on water heatersand the other heating products.In particular, DOE requests comments on:(1)DOE’s general approach, which does not involve price elasticities;(2)DOE’s analysis of switching to gas-fired storage water heaters in thecase of a standard that effectively requires an electric heat pump waterheater(3)Its conclusion that the proposedstandards would not induce switchingfrom a gas storage water heater to an electric storage water heater; and(4)Its conclusion that the proposedstandards would not induce switchingfor gas-fired instantaneous water heaters, DHE, and pool heaters.National Impact Analysis59 | Building Technologies Programeere.energy.govChanges in NIA NOPR AnalysisNational Impact AnalysisInputsPreliminary AnalysisChanges for the Proposed RuleBase-Case andStandards-CaseForecasted EfficienciesEfficiency market shares estimated forcompliance year. Forecastedefficiencies remain constant except forgas and electric water heaters, whichincrease slightly over forecast period.Updated efficiency market sharesestimates for compliance yearand updated gasand electricwater heaters forecastedefficiency trends.Energy Prices TrendsAEO2008 national forecasts (to 2030)and extrapolationto 2043 (and 2045).Updated using AEO2009 regionalforecasts.Present YearFuture expenses arediscounted to2007.Future expensesare discountedto 2010, when thefinal rule isexpected to be published.60 | Building Technologies Programeere.energy.govResults at the Proposed Standard LevelGas-Fired Storage Water Heaters (EL 2)Gas-Fired Storage Water Heaters (EL 2)National Impact AnalysisElectric Storage Water Heaters (EL 5)Electric Storage Water Heaters (EL 5)-$0.60-$0.40-$0.20$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.402015202520352045

Billions of 2008 DollarsEquipment Cost SavingsEnergy Cost SavingsMaintenance and RepairCost Savings-$0.60-$0.40-$0.20$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.402015202520352045

Billions of 2008 DollarsEquipment Cost SavingsEnergy Cost SavingsMaintenance and RepairCost Savings61 | Building Technologies Programeere.energy.govResults at the Proposed Standard LevelPool Heaters (EL 5)Pool Heaters (EL 5)Gas Hearth Direct Heating Equipment (EL 1)Gas Hearth Direct Heating Equipment (EL 1)

Billions of 2008 DollarsNational Impact Analysis-0.10-0.050.000.050.100.152015202520352045

Billions of 2008 DollarsMaintenance & Repair CostEquipment Cost SavingsEnergy Cost SavingsNet Savings-0.10-0.050.000.050.100.152015 2025 2035 2045

Billions of 2008 DollarsMaintenance Cost SavingsEquipment Cost SavingsEnergy Cost SavingsNet Savings62 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateTrial Standard LevelsEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance63 | Building Technologies Programeere.energy.gov• Purpose– To develop a list of standard levels from which impacts are weighed anda proposed standard level is selected.• Each trial standard level consists of a set of potential minimum efficiencylevels covering all product classes,and may vary between product classes;and• NOPR analyses assess impacts for trial standard levels (not product classes).• Method– Trial standard levels are assembled from the product classes identified inthe NOPR.• Each trial standard level consists ofthe standard levels from each productclass that meets a certain set of criteria.Selection of Trial Standard LevelsTrial Standard Levels64 | Building Technologies Programeere.energy.govTrial Standard Levels 1 through 4 for the NOPRElectric Storage Water HeatersTrial Standard Levels65 | Building Technologies Programeere.energy.govTrial Standard Levels 4 through 7 for the NOPRElectric Storage Water HeatersTrial Standard Levels66 | Building Technologies Programeere.energy.govTrial Standard Levels for the NOPRGas-fired Storage Water HeatersTrial Standard Levels67 | Building Technologies Programeere.energy.govTrial Standard Levels for the NOPROil-fired Storage Water HeatersTrial Standard Levels68 | Building Technologies Programeere.energy.govTrial Standard Levels for the NOPRGas-fired Instantaneous Water HeatersTrial Standard Levels69 | Building Technologies Programeere.energy.govTrial Standard Levels for the NOPRDirect Heating EquipmentTrial Standard LevelWall FanAFUE*Wall GravityAFUEFloorAFUERoom AFUEHearthAFUETSL 68072588393TSL 57572588372TSL 48071586872TSL 37771586867TSL 27668586767TSL 17566586667* AFUE = Annual Fuel Utilization Efficiency for representative capacity range analyzed.** EI = Electronic IgnitionTrial Standard Levels70 | Building Technologies Programeere.energy.govTrial Standard Levels for the NOPRPool HeatersTrial Standard LevelThermal EfficiencyTSL 695TSL 586TSL 484TSL 383TSL 282TSL 181Trial Standard Levels71 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateConsumer SubgroupAnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance72 | Building Technologies Programeere.energy.gov• Purpose– To evaluate the economic impacts of standards on consumersubgroups who may be disproportionately impacted compared with thegeneral user population.• Method– DOE identified seniors and low-income households that could bedisproportionately affected, and examined the impact of proposedstandards on these subgroups.– DOE used the LCC spreadsheet model to determine the impact onthese subgroups.• Output– LCC savings and simple payback period (in years) for the identifiedcustomer subgroups.– Determined that the subgroups were not disproportionately impactedby the standard.Consumer SubgroupAnalysis73 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateManufacturer Impact AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance74 | Building Technologies Programeere.energy.govPurpose and Methodology• Purpose– To assess the impacts of standards on manufacturers;– To identify and estimate impacts on manufacturer sub-groups that maybe more severely impacted than the industry as a whole; and– To examine the direct employment impacts, manufacturing capacity,and the impact of cumulative regulatory burdens on the industry.• Methodology– Analyze industry cash flow and net present value through use of theGovernment Regulatory Impact Model (GRIM); and– Interview manufacturers to refine inputs to the GRIM, develop subgroup analyses, and address qualitative issues.Manufacturer Impact Analysis75 | Building Technologies Programeere.energy.gov• The MIA consists of three phases:Manufacturer Impact Analysis ProcessIndustryprofileDevelop strawman GRIM*Developinterview guideInterviews &industry-wide/subgroup analysesAssess directemployment,manufacturingcapacity, andcumulative burdenFinalizeMIA resultsfor NOPRPhase 2* Government Regulatory Impact Model (GRIM)Phase 3Phase 1Manufacturer Impact Analysis76 | Building Technologies Programeere.energy.gov• DOE used the standard NIA shipment scenario for all three heatingproducts– For water heaters, this scenario accounts for fuel switching and uses thereference instantaneous market share scenario.• Preservation of Return on Invested Capital - Upper Bound Scenario– Return on invested capital is the ratio of net operating profits (aftertaxes) to total invested capital.– In the standards case, markups are set so that as invested capitalincreases, net operating profits proportionately increase.• Preservation of Operating Profit - Lower Bound Scenario– Operating profit is earnings before interest and taxes.– In the standards case, assumes once standards are implemented,manufacturers maintain same level of operating profits (in absoluteterms) as before standards.Manufacturer Impact AnalysisOverview77 | Building Technologies Programeere.energy.gov• Water Heaters– At TSL 4, the technologyused does not greatly differfrom baseline models forgas-fired, electric, and oil-fired storage water heaters.– Electric storage manufacturers may have togreatly increase insulation thickness,but the proposed standard doesnot require substantial technology changes.– Some manufacturers in theoil-fired industry could face substantial costs tomodify their existing residential lines.• Direct Heating Equipment– Most traditional DHE manufacturers haveexisting product lines in 3 of the 4product categories. However, manufacturersdo face substantial conversion costsrelative to shipments and could discontinue product lines to lower conversioncosts.– DOE estimates the impacts on gas hearth DHE manufacturers are minimizedbecause the proposed standard could likely be met with a purchased part andfairly small conversion costs.• Pool Heaters– The proposed standard would require mostmanufacturers to modify existingproduct lines or expand the volume of lower volume products.Manufacturer Impact AnalysisSummary of Results at the Proposed Standard Levels78 | Building Technologies Programeere.energy.govWater Heaters• DOE identified five domestic smallbusiness manufacturers of coveredresidential water heaters– One manufacturer makes covered electric storage and gas-firedinstantaneous water heaters thatexceed the proposed standards.– Three manufacture oil-fired storage water heaters but mainly focus onproducts that are outside the scope of products covered by today’srulemaking.– One manufacturer has a full line of electric storage water heaters.• DOE did not examine the impacts on small water heatermanufacturers because it found thatthe standards for water heatersset forth in the proposed rule, ifpromulgated, would not have asignificant economic impact on a substantial number of small businessmanufacturersISSUE19. DOE seeks comment on the impacts of the proposed amendedenergy conservation standards on small manufacturers of residentialwater heaters.Manufacturer Impact Analysis79 | Building Technologies Programeere.energy.gov• For the direct heating equipment industry, DOE identified 12 domestic,small manufacturers:– 3 traditional DHE manufacturers.– 10 hearth DHE manufacturers.• Small DHE businesses lack the scale to afford the large conversioninvestments, certification requirements, and the product developmentrequired for certain amended energy conservation standards;• Adopting amended energy conservation standards at higher TSLs islikely to cause some small DHE businesses to exit the market; and• Manufacturers will likely reducethe number of product families andcapacities to keep required conversion costs within manageable limits.Manufacturer Impact AnalysisDirect Heating Equipment80 | Building Technologies Programeere.energy.govISSUE 21. The impacts of the proposed amended energy conservationstandards on small manufacturers of traditional DHE. DOE is interested inspecific information regarding the potential for small manufacturers oftraditional DHE to discontinue particular product lines as a result of theproposed standard, as well as the potential economic effects thatdiscontinuing those particularproduct lines would have on smallmanufacturers of traditional DHE.ISSUE 22. Alternatives to the proposed amended energy conservationstandards for traditional DHE. Specifically, DOE is interested ininformation regarding alternatives that could provide significant costsavings for small manufacturers while meeting DOE’s energy conservationgoals.Manufacturer Impact AnalysisDirect Heating Equipment MIA Issues (Issue # 21 – 22)81 | Building Technologies Programeere.energy.govISSUE 23. DOE seeks comment on its characterization of typical small andlarge gas hearth DHE manufacturers.ISSUE 24. DOE seeks comment on the impacts of the proposed amendedenergy conservation standards on small manufacturers of gas hearth DHE.Manufacturer Impact AnalysisDirect Heating Equipment MIA Issues (Issue # 23 – 24)82 | Building Technologies Programeere.energy.govPool Heaters• DOE identified one domestic small business manufacturer ofcovered residential pool heaters– The small business manufacturer’s products exceed the standardsproposed by today’s rulemaking.• DOE did not examine the impacts on small water heatermanufacturers because it found thatthe standards for pool heatersset forth in the proposed rule, ifpromulgated, would not have asignificant economic impact ona substantial number of smallbusiness manufacturersISSUE 20. DOE seeks comment on the impacts of the proposedamended energy conservation standards on small manufacturers ofgas-fired residential pool heaters.Manufacturer Impact Analysis83 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateUtility Impact AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance84 | Building Technologies Programeere.energy.gov• Purpose– To investigate the effects on utilities from reduced energy sales and peakload demand due to potential standards.• Method– Use National Energy Savings Results; and– Use the EIA’s National Energy Modeling System (NEMS-BT) tailored forDOE’s Building Technologies Program.• Output– Change in electricity and gas sales and price by region;– Change in the mix of electricity generation; and– Change in installed capacity and generation.•Water Heaters: TSLs 1 through 7 resulted in installed generation capacity reductionsranging from 0.129 to 5.28 GW in the year 2030.•DHE: TSLs 1 through 6 resultedin very small installed generation capacity increasesranging from 21 to 109MW in the year 2030.•Pool Heaters: TSLs 1 through 6 resulted in very small installed generation capacityincreases ranging from 2 to 32 MWin the year 2030.Utility Impact Analysis85 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateEmployment Impact AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance86 | Building Technologies Programeere.energy.gov• Purpose– To report net jobs created or eliminated nationally as a consequence ofnew or amended energy conservation standards. Employment impactsinclude direct and indirect impacts.• Method– Uses the Impact of Sector Energy Technologies (ImSET) model toassess the indirect employment impacts;– Estimate changes in employment, industry output, and wage income inthe overall United States economy resulting from changes inexpenditures in the various sectors of the economy;– Estimate changes in costs and benefits using the NIA analysis; and– Direct employment impacts are addressed in the MIA.Employment Impact Analysis87 | Building Technologies Programeere.energy.gov• Output– Change in employment in national economy, other than in themanufacturing sector being regulated, as a consequence of the amendedenergy conservation standards.• Results by Product Class– Water Heaters• All TSLs result in a netincrease in jobs, ranging between 3,000 and 50,000 jobs.– Direct Heating Equipment• All TSLs result in a very small net increase in jobs.– Pool Heaters• TSLs 1-5 result in a very small net increasein jobs and TSL 6 results in a very small netdecrease in jobs.Employment Impact Analysis88 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateEnvironmental AssessmentEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisRevisePreliminaryAnalysesCompliance89 | Building Technologies Programeere.energy.gov• Purpose– To report environmental impacts asa consequence of the amended energyconservation standards, includingchanges in power plant emissions.• Method– Use National Energy Savings Results; and– Use the EIA’s National Energy Modeling System (NEMS-BT) tailored for DOE’sBuilding Technologies Program.• Output– Calculated the reduction in power plant emissions of carbon dioxide (CO2), oxidesof nitrogen (NOX) and mercury (Hg), using the NEMS-BT computer model.– Calculated the reductionin on-site emissions (CO2and NOX) where gasappliances are used (i.e., gas-fired water heaters and direct heating equipment)– Sulfur dioxide (SO2) emissions were not included dueto the emissions cap set bythe Clean Air Act Amendments of 1990. Impact on SO2emissions changes wasestimated as too small toaffect value of emissionsallowances under the cap.– Monetized value of reductions in CO2, NOX, and Hg.– Assessed impact to SO2allowance prices.Environmental Assessment90 | Building Technologies Programeere.energy.govNOPR Analyses Flow DiagramReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe NOPR analyses consist of revisions to the Preliminary Activities.FrameworkDocumentPreliminaryActivitiesNOPRFinalRuleDateRegulatory Impact AnalysisEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisScope ofCoverageand ProductClassesScreeningAnalysisCompliance91 | Building Technologies Programeere.energy.gov• Purpose– To investigate the national impacts due to non-regulatory alternativescompared with mandatory energy conservation standards.– The non-regulatory alternatives that DOE analyzed include:• No New Regulatory Action;• Consumer Rebates;• Commercial Customer Tax Credits;• Voluntary Energy-Efficiency Targets—ENERGY STAR;• ManufacturerTax Credits;• Early Replacement;• Bulk Government Purchases; and• State Building Codes for Water Heaters.• Method– Modify NIA spreadsheet model to consider the above scenarios and assesstheir effect on adoption of equipmentat the proposed standard levels.• Output– National Energy Savings and Net Present Value of the non-regulatoryalternatives.Regulatory Impact Analysis92 | Building Technologies Programeere.energy.govSummary of Proposed Standards andAdditional Considerations for the Final RulePublic Comment93 | Building Technologies Programeere.energy.govProposed Amended Energy Conservation Standards forResidential Water Heaters (TSL 4)Product ClassProposed Standard LevelGas-fired StorageFor tanks with a Rated StorageVolume at or below 60 gallons:EF = 0.675 – (0.0012 x RatedStorage Volume in gallons)For tanks with a Rated StorageVolume above 60 gallons:EF = 0.717 – (0.0019 x RatedStorage Volume in gallons)Electric StorageFor tanks with a Rated StorageVolume at or below 80 gallons:EF = 0.96 – (0.0003 x RatedStorage Volume in gallons)For tanks with a Rated StorageVolume above 80 gallons:EF = 1.088 – (0.0019 x RatedStorage Volume in gallons)Oil-fired StorageEF = 0.68 – (0.0019 x Rated Storage Volume in gallons)Gas-fired InstantaneousEF = 0.82 – (0.0019 x Rated Storage Volume in gallons)Proposed Standards94 | Building Technologies Programeere.energy.govAdditional Considerations for Final RuleISSUE 16. DOE’s consideration of TSL 6 in the final rule for residentialwater heaters and the associated issues DOE has identified surroundingheat pump water heaters.In particular, DOE is interested in comments regarding the following issuessurrounding heat pump water heater technology:1.Availability of heat pump water heaters;2.Installation and repair costs;3.Installer and servicer retraining required to serve the market;4.Installation issues regarding heat pumpwater heaters and whether they are adirect replacement for traditional electric storage water heater technology;5.Manufacturability of heat pump water heaters; and6.Impacts on consumer utility from heat pump water heaters.Public Comment95 | Building Technologies Programeere.energy.govAdditional Considerations for Final RuleISSUE 17. DOE’s consideration of TSL 5 in the final rule for residentialwater heaters and the associated issues DOE has identified surroundingstandards that effectively require different technologies for differentsubsets of products.•In particular, DOE is interested in commentsregarding the possibility of manufacturerscircumventing the standard by manufacturing products at storagevolumes slightly below theproduct division or discontinuing the manufacture of large-volume products all together dueto high conversion costs for only a small portion of the market. DOE is interested incomments regarding the storage volume where the product division should occur, andwhether DOE should consider other divisions forthe final rule (e.g., 66gallons, 75 gallons,or some other gallon size).•In particular, DOE is interested in receiving comments about the following issuessurrounding the consideration of TSL 5: (1) consumer acceptance; (2) installer and servicertraining; (3) product substitution (i.e., substituting multiple unitsat lower volume in place ofone at a higher volume); (4) engineering resourceconstraints; (5) product discontinuation(for large-volume products); and (6) manufacturing issues.Public Comment96 | Building Technologies Programeere.energy.govDirect Heating Equipment Product ClassProposed Standard LevelGas Wall Fan with Input Capacities up to42,000 Btu/hAFUE = 76%Gas Wall Fan with Input Capacities over 42,000 Btu/hAFUE = 77%Gas Wall Gravity with Input Capacities up to 27,000 Btu/hAFUE = 70%Gas Wall Gravity with Input Capacitiesover 27,000 Btu/h upto 46, 000 Btu/hAFUE = 71%Gas Wall Gravity with Input Capacities over 46,000 Btu/hAFUE = 72%Gas Floor with Input Capacities up to 37,000 Btu/hAFUE = 57%Gas Floor with Input Capacities over 37,000 Btu/hAFUE = 58%Gas Room with Input Capacities up to 20,000 Btu/hAFUE = 62%Gas Room with Input Capacities over20,000 Btu/h upto 27,000 Btu/hAFUE = 67%Gas Room with Input Capacities over27,000 Btu/h upto 46,000 Btu/hAFUE = 68%Gas Room with Input Capacities over 46,000 Btu/hAFUE = 69%Gas Hearth with Input Capacities up to 20,000 Btu/hAFUE = 61%Gas Hearth with Input Capacities over 20,000 Btu/hand up to 27,000 Btu/hAFUE = 66%Gas Hearth with Input Capacities over 27,000 Btu/hand up to 46,000 Btu/hAFUE = 67%Gas Hearth with Input Capacities over 46,000 Btu/hAFUE = 68%Pool Heater Product ClassProposed Standard LevelGas-firedThermal Efficiency = 84%Proposed StandardsProposed Amended Energy Conservation Standards for ResidentialDirect Heating Equipment (TSL 3) and Pool Heaters (TSL 4)97 | Building Technologies Programeere.energy.govAdditional TSL Considerations for NOPRISSUE 18. The appropriateness of TSL 4 for residential pool heaters in lightof the negative life cycle costs for a majority of consumers. In addition,DOE’s consideration of other TSLs, including TSL 3, as an alternative forthe final standard level.DOE invites comments on any remaining issues pertaining to this NOPR.Public Comment98 | Building Technologies Programeere.energy.govIssues on which DOE seeks comment - NOPR issues #1-61. The max-tech efficiency levels identified for the analyses, including whetherthe efficiency levels identified by DOE can be achieved using thetechnologies screened-in during thescreening analysis (see section IV.B),and whether higher efficiencies are achievable using technologies that werescreened-in during the screening analysis.2. The potential burdens to manufacturers of hearth-type DHE as a result ofthe testing, certification, reporting, and enforcement provisions3. EPCA’s efficiency descriptor requirements in any potential test procedurerevisions for electric pool heaters4. DOE’s proposed definition for vented hearth heaters.5. DOE’s product classes for water heaters. In particular, DOE is seekingcomment about the need for a separate product class for low-boy waterheaters.6. DOE’s approach for analyzing ultra-low NOXgas-fired storage waterheaters and the need for a separate product class.Issues for Public Comment99 | Building Technologies Programeere.energy.govIssues on which DOE seeks comment - NOPR issues #7-107. DOE’s approach to developing the energy efficiency equations, theappropriate slope of energy efficiency equations at each efficiency levelanalyzed, and the appropriate storage volumes for changing the slope ofthe line. DOE is also interested in any alternative to the energy efficiencyequations that DOE should consider for the final rule.8. The need for a separate product class for heat pump water heaters.Specifically, DOE is interested in receiving comments on whether a heatpump water heater can be used as a direct replacement for an electricresistance water heater, and in which instances a heat pump water heatercannot be used as a direct replacement for an electric resistance waterheater.9. DOE’s proposed product classes for the four existing types of DHE.10.DOE’s proposed product class divisions for gas hearth DHE.Issues for Public Comment100 | Building Technologies Programeere.energy.govIssues on which DOE seeks comment - NOPR issues #11-1411.The manufacturability of heat pump water heaters and the capability ofmanufacturers to ramp up production of heat pump water heaters.Specifically, DOE is seeking comment on how long it would take and themagnitude of the costs for manufacturers to convert all product lines to heatpump water heaters if it were required by an amended energy conservationstandard. In addition, DOE is seeking comment about the length of timerequired to retrain installers and servicers of water heaters for theinstallation and servicing of heat pump water heaters.12.DOE’s estimated manufacturer production costs for storage water heatersat storage volumes outside of the representative volume.13.DOE’s analysis of installation costs for water heaters; DOE is particularlyinterested in comments on its analysis of installation costs for heat pumpwater heaters.14.DOE’s analysis of repair and maintenance costs for heat pump waterheaters.Issues for Public Comment101 | Building Technologies Programeere.energy.govIssues on which DOE seeks comment - NOPR issues #15-1715.DOE’s approach for analyzing fuel switching that may result from theproposed standards on water heatersand the other heating products. Inparticular, DOE requests comments on its general approach, which doesnot involve price elasticities; its analysis of switching to gas-fired storagewater heaters in the case of a standard that effectively requires an electricheat pump water heater; its conclusion that the proposed standards wouldnot induce switching from a gas storage water heater to an electric storagewater heater; and its conclusion thatthe proposed standards would notinduce switching for gas-fired instantaneous water heaters, DHE, and poolheaters.16.DOE’s consideration of TSL 6 in the final rule for residential water heatersand the associated issues DOE has identified surrounding heat pump waterheaters.17.DOE’s consideration of TSL 5 in the final rule for residential water heatersand the associated issues DOE has identified surrounding standards thateffectively require different technologies for different subsets of products.Issues for Public Comment102 | Building Technologies Programeere.energy.govIssues on which DOE seeks comment - NOPR issues #18-2418.The impacts of the proposed amended energy conservation standards on smallmanufacturers of residential water heaters.19.The impacts of the proposed amended energy conservation standards on smallmanufacturers of gas-fired residential pool heaters.21.The impacts of the proposed amended energy conservation standards on smallmanufacturers of traditional DHE. DOE is interested in specific informationregarding the potential for small manufacturers of traditional DHE to discontinueparticular product lines as a result of the proposed standard, as well as thepotential economic effect discontinuingthose particular product lines would haveon small manufacturers of traditional DHE.22.Alternatives to the proposed amended energy conservation standards fortraditional DHE. Specifically, DOE isinterested in information regardingalternatives that could provide significant cost-savings for small manufacturerswhile meeting DOE’s energy conservation goals.23.DOE’s characterization of typical small and large gas hearth DHE manufacturers.24.The impacts of the proposed amended energy conservation standards on smallmanufacturers of gas hearth DHE.Issues for Public Comment103 | Building Technologies Programeere.energy.govHow to Submit Comments...Public Meeting– Oral comments will be captured in thetranscript and become part of the public record.Written comments– NOPR comment period open untilFebruary 9, 2010.Reference docket #: EE–2006–BT–STD–0129 and/or RIN#: 1904–AA90.Email: ResWaterDirectPoolHtrs@ee.doe.govMail: Ms. Brenda EdwardsU.S. Department of EnergyBuilding Technologies Program, Mailstop EE–2J1000 Independence Avenue, SW.Washington, DC 20585–0121.Telephone: (202) 586–2945.Courier: Ms. Brenda EdwardsU.S. Department of EnergyBuilding Technologies Program950 L’Enfant Plaza, SW., 6th Floor,Washington, DC 20024.Closing