BUILDING TECHNOLOGIES PROGRAM

Energy Conservation Standards Proposed Rulemakingfor Residential Heating Products

Mohammed Department of EnergyEnergy Efficiency & RResWaterDirectPoolH

January 7, 2010

EE-2006-STD-0129 COMMENT 57.3
2 | Building Technologies Program 

• Purposes

– To invite comment on the proposed energy conservatio

standards for residential water heaters, direct heating e

and pool heaters;

– To present methodologies and characterize results for 

rulemaking analyses;

– To discuss specific issues related to each analysis;– To seek input from interested parties on methodologie

assumptions, data sources, and results from the analy

– To describe the next steps.

Purpose of the Public Meeting

Overview

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3 | Building Technologies Program 

Statutory Authority – the Energy Policy an

Conservation Act (EPCA) as amended

• EPCA sets forth provisions designed to improve energy eff

various consumer products, including the three types of he

products that are subject to this rulemaking. (42 U.S.C. 629(9) and (11)) EPCA prescribes energy conservation standaeach of the three heating products. (42 U.S.C. 6295(e)(1)-(statute further directs DOE to conduct two cycles of rulemadetermine whether to amend these standards. (42 U.S.C. 6

• DOE is scheduled to publish a final rule for these products 

31, 2010, pursuant to the consent decree in State of New Yv. Bodman, and NRDC, Inc. et al. v. Bodman. 

Overview

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• Test Procedures

– DOE established test procedures for residential water heaters

heating equipment, and pool heaters in Appendix E, Appendix Appendix P to Subpart B of 10 CFR Part 430, respectively.

• Energy Conservation Standards

– Framework Document published on November 24, 2006. 71 F– Notice of Public Meeting and Availability of the Preliminary Te

Support Document published on January 13, 2009. 74 FR 164

– Notice of Proposed Rulemaking published on December 11, 2

65852.

– Final Rule scheduled to be published by March 31, 2010.

DOE Actions on Residential Heating Produc

Overview

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EPCA Directs DOE to Consider Seven Factors 

Setting Energy Conservation Standards

Factor Analysis

1. Economic impact on consumers 

and manufacturers

Life-cycle cost analysisManufacturer impact analysi

2. Lifetime operating cost savings Life-cycle cost analysis3. Total projected energy savings National impact analysis 4. Impact on utility or performance Screening analysis

Engineering analysis

5. Impact of any lessening of 

competition

Manufacturer impact analysi

6. Need for national energy conservation National impact analysis7. Other factors the Secretary considers 

relevant

Environmental assessmentUtility impact analysisEmployment impact analysis

Overview

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Proposed Amended Energy Conservation Stand

Residential Water Heaters (TSL 4)

Product Class Proposed Energy Conservation StandGas-fired Storage For tanks with a Rated Storage 

Volume at or below 60 gallons: EF = 0.675 – (0.0012 x Rated Storage Volume in gallons)

For tanks with a Volume above 6EF = 0.717 – (0.Storage Volume 

Electric Storage For tanks with a Rated Storage 

Volume at or below 80 gallons: EF = 0.96 – (0.0003 x Rated Storage Volume in gallons)

For tanks with a Volume above 8EF = 1.088 – (0Storage Volume 

Oil-fired Storage EF = 0.68 – (0.0019 x Rated Storage Volume in gGas-fired Instantaneous EF = 0.82 – (0.0019 x Rated Storage Volume in g

Proposed Standards

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Proposed Amended Energy Conservation Standards fo

Direct Heating Equipment (TSL 3) and Pool Heater

Pool Heater Product Class Proposed Energy Conservation Gas-fired Thermal Efficiency = 84%

Proposed Standards

Direct Heating Equipment Product Class Proposed 

Conserva

Gas Wall Fan with Input Capacities up to 42,000 Btu/h AFUE = 76Gas Wall Fan with Input Capacities over 42,000 Btu/h AFUE = 77Gas Wall Gravity with Input Capacities up to 27,000 Btu/h AFUE = 70Gas Wall Gravity with Input Capacities over 27,000 Btu/h up to 46, 000 Btu/h AFUE = 71Gas Wall Gravity with Input Capacities over 46,000 Btu/h AFUE = 72Gas Floor with Input Capacities up to 37,000 Btu/h AFUE = 57Gas Floor with Input Capacities over 37,000 Btu/h AFUE = 58Gas Room with Input Capacities up to 20,000 Btu/h AFUE = 62Gas Room with Input Capacities over 20,000 Btu/h up to 27,000 Btu/h AFUE = 67Gas Room with Input Capacities over 27,000 Btu/h up to 46,000 Btu/h AFUE = 68Gas Room with Input Capacities over 46,000 Btu/h AFUE = 69Gas Hearth with Input Capacities up to 20,000 Btu/h AFUE = 61Gas Hearth with Input Capacities over 20,000 Btu/h and up to 27,000 Btu/h AFUE = 66Gas Hearth with Input Capacities over 27,000 Btu/h and up to 46,000 Btu/h AFUE = 67Gas Hearth with Input Capacities over 46,000 Btu/h AFUE = 68

EE-2006-STD-0129 COMMENT 57.3
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• Opening Remarks

– At this time, DOE welcomes opening remarks from interes

on the heating products NOPR and the proposed energy cstandards for residential water heaters, direct heating equpool heaters.

Opening Remarks and Comments from Interest

Parties on the NOPR and the Proposed Energy Cons

Standards for Residential Heating Products 

Opening Remarks and Comment

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NOPR Analyses Flow Diagram

Revise Preliminary Analyses

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Compliance Date

Scope of Coverage andProduct Classes

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

EE-2006-STD-0129 COMMENT 57.3
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• DOE is analyzing the following products 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 Coverage

Overview

EE-2006-STD-0129 COMMENT 57.3
11 | Building Technologies Program 

• For the NOPR, DOE is proposing to add a definition of 

fired hearth direct heating equipment to 10 CFR Part 43

follows:

– Vented hearth heater means a vented, including freestand

recessed, zero clearance fireplace heater, a gas fireplace a gas-stove, which simulates a solid fuel fireplace and is dto furnish warm air, without ducts to the space in which it installed.

ISSUE 4. DOE seeks comment from interested parties 

proposed definition for vented hearth heaters

Scope of Coverage

Gas-fired Hearth Direct Heating Equipmen

EE-2006-STD-0129 COMMENT 57.3
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• If DOE finalizes this rulemaking as proposed for gas-fire

hearth DHE, manufacturers of these products would be to all relevant provisions, including the test procedures, standards, certification, compliance, and enforcement provisions, that currently exists for the other four types o

– These provisions are found in 10 CFR parts 430.23, 430.2

430.27, 430.32, 430.33, 430.40 through 430.49, 430.50 th430.57, 430.60 through 430.65, and 430.70 through 430.7

ISSUE 2. DOE seeks comment from interested parties 

potential burdens to manufacturers of gas-fired hear

as a result of the testing, certification, reporting, 

enforcement provisions in these sections.

Scope of Coverage

Gas-fired Hearth Direct Heating Equipmen

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Product Classes

Water Heater Product Classes

ISSUE 5. DOE seeks comment from interested parties on the 

separate product class for low-boy heaters.

ISSUE 6. DOE seeks comments from interested parties on th

approach and the need for a separate product class for ultra

water heaters.

Residential Water Heater CharacteristicsGas-Fired Storage Nominal input of 75,000 Btu/h or 

storage volume from 20 to 100 g

Oil-Fired Storage Nominal input of 105,000 Btu/h o

storage volume of 50 gallons or l

Electric Storage

Nominal input of 12 kW (40,956 less; rated storage volume from 2gallons

Gas-Fired Instantaneous 

Nominal input of over 50,000 Btu200,000 Btu/h; rated storage volugallons or less

EE-2006-STD-0129 COMMENT 57.3
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Product Classes

Water Heater Product Classes

ISSUE 8. DOE seeks comment from interested parties on the 

separate product class for heat pump water heaters. In partic

is interested in receiving comments and data on whether a h

water heater can be used as a direct replacement for an e

resistance water heater, and the types and frequency of inst

where a heat pump water heater cannot be used as a direct re

for an electric resistance water heater. 

• DOE is not proposing to create a separate product class fo

water heaters.

• Instead, DOE is treating heat pump water heaters as a des

electric storage water heaters.

– They do not provide a different utility from traditional electric r

water heaters;

– They use electricity as the primary fuel source;– They can replace traditional electric resistance storage water 

most residences, although the installation requirements may b

EE-2006-STD-0129 COMMENT 57.3
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Product Classes

Direct Heating Equipment Product Classe

ISSUE 9. DOE seeks comments from interested parties on the 

in product classes for direct heating equipment.

ISSUE 10. DOE seeks comment on the proposed product cl

gas hearth direct heating equipment.

Direct Heating Equipment Input Heating Capacity Btu/hGas Wall Fan Up to 42,000 Over 42,000 Gas Wall Gravity 

Up to 27,000 

Over 27,000 and up to 46,000 

Over 46,000 

Gas Floor Up to 37,000 Over 37,000 Gas Room 

Up to 20,000 

Over 20,000 and up to 27,000 Over 27,000 and up to 46,000 

Over 46,000 

Gas Hearth 

Up to 20,000 

Over 20,000 and up to 27,000 Over 27,000 and up to 46,000 

Over 46,000 

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NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Screening Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
17 | Building Technologies Program 

Screening Analysis

Heat Pump Water Heaters

• DOE is screening in heat pump water heater technologies 

option for improving the efficiency of electric storage water 

• Issues Associated with the Consumer Utility

– Cold Air Production

• The increased installation costs of venting cold air away from a conditione

with the increased cost of space heating for consumers who choose not t

away from the conditioned space, are accounted for in DOE’s analysis fo

percentages of consumers.

– Noise

• Water heaters are typically not installed in consumers’ bedrooms or living 

instead are usually installed in garages, closets, basements, attics, or oth

away from the living space. Thus, DOE believes that noise created by a cwould not significantly impact consumer utility.

• Production, Installation, and Servicing Issues

– DOE believes with the lead-time associated with amended st

the development of current products, it is unclear whether mawould be able to retrain installers and service technicians to i

service heat pump water heaters. 

EE-2006-STD-0129 COMMENT 57.3
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Screening Analysis

Heat Pump Water Heaters

ISSUE 11. DOE is seeking comment on the manufacturabilit

pump water heaters and the capability of manufacturers to 

production. DOE is specifically seeking comment on how lon

take, and how much it would cost, for manufacturers to con

product lines to heat pump water heaters if it were require

amended energy conservation standard. Additionally, DOE i

comment about the capability of water heater installers and s

meet the unique demands created by heat pump water heate

requesting comment about how long it would take to train ins

servicers to be able to serve the market if heat pump water he

required by an amended energy conservation standar

• DOE estimated the additional costs that would be incurred as a result 

certification requirements to install and service heat pump water heatanalyses. (See Slide 41 and 45 for additional details.)

• Given the 5-year delay for compliance and the fact that many manufa

already developing heat pump water heaters, DOE believes manufacable to convert their entire product lines before the compliance date.

EE-2006-STD-0129 COMMENT 57.3
19 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Engineering Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
20 | Building Technologies Program 

• Purpose

– To evaluate design options that improve efficiency relative 

baseline models.

– To characterize manufacturer cost-efficiency relationships 

efficiency equipment.

• General Methodology for All Three Products

1. 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-efficie

curves.

5. Scale to unanalyzed product classes.

Engineering Analysis

EE-2006-STD-0129 COMMENT 57.3
21 | Building Technologies Program 

• Several changes were made for the NOPR engineering a

– The efficiency levels analyzed for gas-fired storage and elec

water heaters were modified.

– A separate analysis was performed on ultra-low NOX gas-fir

water heaters.

– DOE further investigated heat pump water heaters.– Scaling equations for gas-fired and electric storage water he

revised and scaling methodology was updated. 

– Shipping costs were separated from manufacturer markup fo

water heaters.

Engineering Analysis

NOPR Updates for Water Heaters

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• 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 0.80 EF for the NOPR analysis.

• Intermediate Efficiency Levels

– For electric storage water heaters at 50 gallons:

• DOE is analyzing a 2.0 EF efficiency level .• DOE maintained 2.2 EF as the max-tech level.

Engineering Analysis

Gas-Fired and Electric Storage Water Heater Efficie

ISSUE 1. DOE seeks comment from interested parties on the 

efficiency levels identified for the analyses, especially those 

fired water heaters. DOE is particularly interested in com

pertaining to the maximum technologically feasible efficien

including whether the efficiency levels identified by DOE 

achieved using the technologies screened-in during the sc

analysis, and whether higher efficiencies are achievable 

technologies that were screened-in during the screening a

EE-2006-STD-0129 COMMENT 57.3
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• DOE developed a separate cost-efficiency relationship for 

NOX gas-fired water heaters.

– DOE used the same methodology as for gas-fired storage w

• Analyzed the same efficiency levels and representative rated s

(40 gallons);

• Performed teardowns and developed MPCs at each efficiency 

– DOE estimated the costs to account for differences in burne

baffling, power venting, and other changes required for ultraproducts.

– Results were used downstream in the LCC analysis and app

fraction of consumers who live in jurisdictions with ultra-low regulations.

Engineering Analysis

Ultra-Low NOX Gas-Fired Storage Water Hea

ISSUE 6. DOE seeks comments on it’s assumptions about 

NOX gas-fired storage water heaters and the manufacturer p

cost estimates.

EE-2006-STD-0129 COMMENT 57.3
24 | Building Technologies Program 

Engineering Analysis

Ultra-Low NOX Gas-Fired Storage Water Hea

Efficiency Level MPC

2008$

M

2

Baseline (EF* = 0.59**) 247 1 (EF = 0.62) 262 2 (EF = 0.63) 374 3 (EF = 0.64) 381 4 (EF = 0.65) 388 5 (EF = 0.67) N/A*** N6 – Max-Tech (EF = 0.80) 521 

* EF is energy factor.** The energy factor requirements are given for the representative rated storage volume (i.e., 40 gallons)

*** DOE assumed that manufacturers would not be able to achieve this efficiency level for ultra-low NOX pr

existing “screened-in” technologies.

EE-2006-STD-0129 COMMENT 57.3
25 | Building Technologies Program 

• Since the NOPR engineering analysis was finalized, DO

down commercially available units on the US market.

• DOE compared the commercially available units to DOE

prototype unit in the cost model.

• DOE found the commercially available units show differ

design philosophies:

– Design A is a quasi-retrofit design featuring a lightly-modified elec

storage water heater tank and shell assembly mated to a heat pu

– Design B is heavily integrated featuring a tank wrapped with the c

(foamed in place) brazed to the heat pump assembly. 

Integrated Heat Pump Water Heater Engineering U

Engineering Analysis

EE-2006-STD-0129 COMMENT 57.3
26 | Building Technologies Program 

• The commercially available units have similar efficiencie

about seven feet tall. 

• DOE found the following differences between its prototy

and the commercially available units:

– Design A uses an external heat exchanger, a water pump, a ECM 

assembly, and a much more sophisticated control system.

– Design B features a different condenser heat exchanger impleme

resistance heaters, and a shaded-pole fan motor.

– Design A and B rely on a gravity drain for condensate, feature on

motor, and have unique shipment packaging.

Integrated Heat Pump Water Heater Engineering U

Engineering Analysis

EE-2006-STD-0129 COMMENT 57.3
27 | Building Technologies Program 

• While the design strategies of the commercially availabl

differ, DOE was able to affirm its high-volume prototypicassociated MPCs in its cost model.

– DOE estimated the MPC of a prototypical unit for the NOPR prior 

teardown analysis at two efficiency levels (2.0 and 2.2). 

– DOE research suggests that both Design A and B achieve an EF 

approximately 2.0 at the representative storage volume.

– DOE's 2.0 EF prototypical unit MPC estimate is between the MPC

A and B at the representative storage volume.

Integrated Heat Pump Water Heater Engineering U

Engineering Analysis

EE-2006-STD-0129 COMMENT 57.3
28 | Building Technologies Program 

• DOE scaled costs to rated storage volumes outside of the 

“representative” storage volume to account for large variafirst costs and usage patterns of different size products.

• The scaled production costs are used in the downstream 

• DOE performed teardowns of models at rated storage vol

than the “representative” rated storage volume (i.e., 40 gagas-fired, 50 gallons for electric storage water heaters).

– These teardowns allowed DOE to determine which compone

with rated storage volume and exactly how they scale.

– Components that will change with tank size (e.g., tank dimen

wrapper dimensions, wall thicknesses, insulation thickness, rod(s), flue pipe(s)) were scaled based on teardown results.

– Components that do not change with tank size (e.g., gas val

thermostats, controls) were assumed to remain largely the sthe different storage volume sizes.

Engineering Analysis

Scaling of Manufacturer Production Costs 

for Storage Water Heaters

EE-2006-STD-0129 COMMENT 57.3
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Scaling of Manufacturer Production Costs for S

Water Heaters

Efficiency Level Gas-Fired Storage, Standard Burner

Manufacturing Production Cost

30 Gallon 50 Gallon 65 Gallon 75 G

Baseline $166 $191 $220 $21 $172 $199 $229 $22 $179 $207 $239 $23 $293 $319 $349 $34 $299 $327 $359 $35 $306 $335 $369 $36 $432 $468 $513 $5

Engineering Analysis

Efficiency Level

Electric Storage

Manufacturing Production Cost

30 Gal 40 Gallon 66 Gallon 80 Gallon 11

Baseline $109 $122 $142 $164 1 $115 $128 $150 $172 2 $118 $133 $155 $179 3 $121 $136 $158 $183 4 $128 $143 $168 $192 5 $142 $160 $188 $214 6 $512 $529 $554 $580 7 $556 $574 $601 $629 

EE-2006-STD-0129 COMMENT 57.3
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Scaling of Manufacturer Production Costs for S

Water Heaters

Efficiency Level

Oil-Fired Storage

Manufacturing Production Cost

50 Gal

Baseline $6311 $6392 $6453 $6544 $6535 $6646 $7337 $738

Engineering Analysis

ISSUE 12. DOE requests comments on its approach to sca

manufacturer production costs from the representative storag

to other storage volumes. DOE also requests comments 

estimated manufacturer production costs for storage water h

storage volumes outside of the representative volume, which 

in Chapter 5 of the heating products TSD. 

EE-2006-STD-0129 COMMENT 57.3
31 | Building Technologies Program 

• Energy efficiency equations are used to characterize the r

between rated storage volume and energy factor.

• For the NOPR analysis, DOE revised the energy efficienc

equations that were presented in the preliminary analysis 

– Review of a comprehensive water heater database created 

which includes water heater models on the market at the timanalysis (Spring 2009); and

– Results of independent EF testing performed on variety of w

across a range of efficiencies and storage volumes.

Engineering Analysis

Energy Efficiency Equations

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32 | Building Technologies Program 

Engineering Analysis

Energy Efficiency Equations – Gas-Fired Storage Wa

Efficiency Level 20 to 60 Gallons Over 60 and up to Baseline Energy Efficiency Equation EF = -0.00190(VR)+0.670EL 1 Energy Efficiency Equation EF = -0.00150(VR)+0.675 EF = -0.00190(VR)+EL 2 Energy Efficiency Equation EF = -0.00120(VR)+0.675 EF = -0.00190(VR)+EL 3 Energy Efficiency Equation EF = -0.00100(VR)+0.680 EF = -0.00190(VR)+EL 4 Energy Efficiency Equation EF = -0.00090(VR)+0.690 EF = -0.00190(VR)+EL 5 Energy Efficiency Equation EF = -0.00078(VR)+0.700 EF = -0.00190(VR)+EL 6 Energy Efficiency Equation EF = -0.00078(VR)+0.8312

EE-2006-STD-0129 COMMENT 57.3
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Engineering Analysis

Energy Efficiency Equations – Electric Storage Wat

Efficiency Level 20 to 80 Gallons Over 80 and up to Baseline Energy Efficiency Equation EF = -0.00132(VR)+0.97EL 1 Energy Efficiency Equation EF = -0.00113(VR)+0.97 EF = -0.00149(V-R)+EL 2 Energy Efficiency Equation EF = -0.00095(VR)+0.967 EF = -0.00153(VR)+EL 3 Energy Efficiency Equation EF = -0.00080(VR)+0.966 EF = -0.00155(VR)+EL 4 Energy Efficiency Equation EF = -0.00060(VR)+0.965 EF = -0.00168(VR)+EL 5 Energy Efficiency Equation EF = -0.00030(VR)+0.960 EF = -0.00190(VR)+EL 6 Energy Efficiency Equation EF = -0.00113(VR)+2.057EL 7 Energy Efficiency Equation EF = -0.00113(VR)+2.257

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Energy-Efficiency Equations (Issue # 7)

Engineering Analysis

ISSUE 7. DOE requests comments on the approach for devel

energy efficiency equations, the appropriate slope of energy 

equations at each efficiency level analyzed, and the appropria

volumes for changing the slope of the line. DOE is also intere

alternatives to the energy efficiency equations that DOE s

consider for the final rule.

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35 | Building Technologies Program 

Request for Additional Comments

Engineering Analysis

DOE invites comments on any other issues pertaining t

Engineering Analysis.

EE-2006-STD-0129 COMMENT 57.3
36 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Life-Cycle Cost and Payback Period Analyses

Revise Preliminary Analyses

Compliance

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• Markups for Product Price Determination

– To characterize the channels for how products are distribut

the manufacturer to the customer.

– To determine prices paid by customers based on manufact

selling prices for baseline and higher efficiency products.

• Energy Use Characterization–To develop energy savings estimates for selected product efficie• Life-Cycle Cost and Payback Period Analyses

– To develop the customer life-cycle cost savings and payba

for higher efficiency products.

Purpose

Life-Cycle Cost and Payback Period Analyses

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• 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 th

change in CGS.

– National distribution of sales taxes.

• Sources

– U.S. Census Bureau data (2002) from the 2002 Economic Census, Construction 

Geographic Area Series for Construction

– U.S. Census Bureau data (1997) from the 1997 Economic Census, Business Exp– Air Conditioning Contractors of America data (2005) from the Financial Analysis 

Contracting Industry

– RS Means Company Inc. data (2008) from Mechanical Cost Data - 31th Annual 

– Sales Tax Clearinghouse Inc. data (2009) from State Sales Tax Rates Along with 

Average City and County Rates

• NOPR analysis changes:

Markups for Product Price Determination

Life-Cycle Cost and Payback Period Analyses

Inputs Preliminary Analysis Changes for the Pro

Consumer Price Reported in 2007$ Reported in 2008$Sales Taxes 2006 data 2009 data

EE-2006-STD-0129 COMMENT 57.3
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Energy Use Characterization

• Method

– Water Heaters: Used RECS 2005 and applied hot water draw model to calcu

water use. Determined energy use using the water heater analysis model (W

– DHE and Pool Heaters: Used RECS and test procedure to determine energy 

• NOPR analysis changes:

Life-Cycle Cost and Payback Period Analyses

Product Class Preliminary Analysis Changes for the Pr

All Products

Based on sample from RECS 2001.Product characteristics from 2007-2008 data.

Sample updated using RECS Product characteristics updatedata (March 2009 AHRI DirecPool Heater Directory).

Gas Storage Water Heaters

Used single point RE value per efficiency level

Distribution of RE values basemodels in 2009 AHRI Directo

Electric Storage Water Heaters

Accounted for HPWH cooling effect by estimating impacts on heating/cooling loads. Single point value for heating capacity for HPWH

Accounted for the cost of venHPWH installations.Distribution of values for heatHPWH

Instantaneous Gas-Fired Water Heaters

Performance adjustment factor was constant at 8.8%.

Performance adjustment facto8.8% depending on hot water 

DHE Gas fireplaces included in the GWF DHE and GR DHE. Gas fireplaces included in the 

products class only.

Pool Heaters Used household sample from RECS 2001. Increased sample using REC

and 2005.

EE-2006-STD-0129 COMMENT 57.3
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• LCC equals consumer price plus the sum of operating costs d

a particular base year.

• Economic evaluation from the customer perspective.• Analysis implemented in an Excel® spreadsheet combined wit

Ball®.

• Analysis models the uncertainty and variability of inputs using 

simulation and probability distributions.

• Results are expressed as LCC savings (baseline minus stand

• Simple payback period (in years) is also calculated and report

analysis.

Combine Changes 

in Costs 

Installed Cost

(Customer Price + Installation Cost)

Operating Expenses

Convert to 

Present 

Value

Life-Cycle Cost and Payback Period Analyses

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• Method:

– Based on data from 2008 RS Means, consultant reports, 2001 WH 

rulemaking for OSWHs, and 1993 DHE rulemaking

• NOPR analysis changes:

Installation Costs

Life-Cycle Cost and Payback Period Analyses

Product Class Preliminary Analysis Changes for the Pr

All Products

1) National labor costs2) Installation materials and labor costs in 2007$3) No extra attic installation cost for water heaters

1) Regional labor costs2) Installation materials and 3) Accounted for added attic (GSWH, ESWH) 

Gas-Fired Storage Water Heaters

1) No space constraints costs for water heater designs with increased insulation.2) Did not account for a fraction of natural draft water heaters requiring stainless steel vent connectors.3) Average venting costs for all households. 

1) Added space constraints fraction of 1.5” and 2” insula2) Added cost of stainless sto a fraction of households. 3) Venting costs calculated household.

Electric Storage Water Heater

1) Space constraints only to conditioned space and above 2.5” insulation and above2) No HPWH venting cost

1) Adjustment to the fraction impacted by space constrai2) Cost of venting for some HPWHs that experience coo

DHE No Hearth Products Assumed hearth DHE instal

gas room DHE

EE-2006-STD-0129 COMMENT 57.3
42 | Building Technologies Program 

Heat Pump Water Heater Installation Cost

ISSUE 13. DOE seeks comment its analysis of installation cost

heaters. DOE is particularly interested in comments on its an

installation costs for heat pump water heaters.

Life-Cycle Cost and Payback Period Analyses

Installation Cost Description Assignment to Installations Installa

impacte

Additional Labor All installations 100% Closet Door Redesign (Space Constraints) 50% of indoor and heated basement 

replacement installations

16% 

Tempering Valve Addition (Space Constraints) 20% of all replacement installations 16% Condensate Pump 25% of all replacement installations 20% Venting Adder 40% of replacement installations with 

cooling load effects

10% 

Larger Drain Pan All installations 100% 

Sources: Labor cost hours and material cost from 2008 RSMeans, condensate pump from retailer web 

2001 TSDCooling Effect Approach: All HPWH households experiencing cooling load effects in the heating season 

venting adder or the extra cost for space heating is accounted in the energy use calculations.

EE-2006-STD-0129 COMMENT 57.3
43 | Building Technologies Program 

• Method: Average monthly and annual energy prices are ca

using EIA historical data and energy price trends come from 

– Water Heaters: Used average monthly energy prices

– DHE and Pool Heaters: Used average annual energy prices

• NOPR analysis changes:

Energy Prices

Life-Cycle Cost and Payback Period Analyses

Inputs Preliminary Analysis Changes for the P

Energy Prices

Electricity: Based on EIA’s 2006 Form 861 data. Natural Gas: Based on EIA’s 2006 Natural Gas Navigator. Oil: Based on EIA’s 2006 Petroleum Navigator. LPG: EIA’s 2005 State Energy Consumption, Price, and Expenditure Estimates

Electricity: Based on EIAand Form 826 data. Natural Gas: Based on Gas Navigator. Oil: Based on EIA’s 200Navigator. LPG: EIA’s 2006 State EConsumption, Price, anEstimates

Energy Price Trends

Forecasted using EIA’s AEO2008.Variability: None

Forecasted using EIA’s Variability: Regional enefor the nine census divis

EE-2006-STD-0129 COMMENT 57.3
44 | Building Technologies Program 

Maintenance Costs

• Method

– Cost of regular scheduled product maintenance – Based on data from RS Means and other sources (includin

consultant reports for GSWH, ESWH, GIWH, and PH; 2001 rulemaking for OSWHs, 1993 rulemaking for DHE)

• NOPR analysis changes:

Life-Cycle Cost and Payback Period Analyses

Inputs Preliminary Analysis Changes for the 

All Products

1) National labor costs2) Maintenance materials and labor costs in 2007$2) No storage tank water heater annual flushing maintenance cost

1) Regional labor cost2) Maintenance materin 2008$2) Applied annual fluscost to a fraction of ho

Gas-Fired Storage Water Heaters

None. Added FVIR maintena

Instantaneous Gas-Fired Water Heater

Includes annual de-liming cost to all households

Annual de-liming cost of households (75%)

EE-2006-STD-0129 COMMENT 57.3
45 | Building Technologies Program 

Repair Costs

• Method: Determines price for replacing or repairing compo

which have failed

– applicable to a fraction of households– accounts for components likely to be repaired during the lifetime 

product

• NOPR analysis changes:

Life-Cycle Cost and Payback Period Analyses

Product Class Preliminary Analysis Changes for the P

All Products

1) National labor costs2) Maintenance materials and labor costs in 2007$3) Fraction repaired based on lifetime component only.

1) Regional labor costs2) Maintenance material2008$3) Fraction of products rebased on consultant data 

Electric Storage Water Heaters

None. Added Heating Element

EE-2006-STD-0129 COMMENT 57.3
46 | Building Technologies Program 

Heat Pump Water Heater Repair and Maintenanc

ISSUE 14. DOE seeks comment on its analysis of repair and m

costs for heat pump water heaters.

Life-Cycle Cost and Payback Period Analyses

Sources: Costs – 2008 RSMeans, Fraction of installations (flushing) and labor hours - Consultant Repor

installations (evaporator) - 2001 CAC TSD (survey) and RECS2005

Sources: Labor cost (regional) from 2008 RSMeans, Material cost – consultant report, retailer web sites

consultant report, CA study, Fraction of installations (electric res element) and labor hours - Consultant 

installations (compressor & fan) - based on component lifetime

Maintenance Cost 

Component

Applicability Average 

Annual Cost

Maximum Cost % of Con

Mainte

Tank Flushing All $3 $105 2.5%* every yeEvaporator Cleaning HPWH Only $2 $122 10%** every 5 

Repair Cost 

Component

Applicability Average 

Annual Cost

Maximum Cost % of Con

Mainte

Electric Resistance Element

All $24 $123 

Compressor HPWH Only $28 $290 Evaporator Fan HPWH Only $13 $126 

EE-2006-STD-0129 COMMENT 57.3
47 | Building Technologies Program 

Product Lifetime

• Method:– DOE characterized the product lifetime using a Weibull probability distrib• NOPR analysis changes:• Results:

Life-Cycle Cost and Payback Period Analyses

Product Class Preliminary Analysis Changes for the P

Water Heaters Based on various sources including Appliance Magazine. Based on RECS equipment 

equipment stock data, and A

DHE Lifetime values from the 1993 TSD. Added Hearth DHE product 

lifetime.

PH Based on various sources including industry associations, and retailers. EERE, industry associations

and retailers to derive a lifet

Product Class Preliminary Analysis Average NOPR 

Gas-Fired Storage Water Heaters 12 Electric Storage Water Heaters 14 Oil-Fired Storage Water Heaters 9 Instantaneous Gas-Fired Water Heaters 20 Direct Heating Equipment 15 Pool Heaters 6 

EE-2006-STD-0129 COMMENT 57.3
48 | Building Technologies Program 

Discount Rates

• Method: The finance cost of raising funds to purchase major 

appliances is interpreted as either:

– the financial cost of any debt incurred to purchase equipment, – the opportunity cost of any equity used to purchase equipment

• NOPR analysis changes:• Results:

Life-Cycle Cost and Payback Period Analyses

Inputs Preliminary Analysis Changes for the 

Asset/Debt Share Allocations

Federal Reserve Board’s Survey of Consumer Finances for the years 1989, 1992, 1995, 1998, 2001, 2004

Added Federal ReservConsumer Finances 2

Debt interest rates

Federal Reserve Board’s Survey of Consumer Finances for the years 1989, 1992, 1995, 1998, 2001, 2004

Added Federal ReservConsumer Finances 2

Asset interest rates Data from 1980-2007 Updated data from 198

Housing Type Finance Cost Based On: Preliminary Ana

Mean (%) 

New Construction Mortgage 3.2 Replacements Home equity loans, Credit card, Other loans, Checking & savings accounts, Certificates of deposit, Bonds, Stocks 5.5 

EE-2006-STD-0129 COMMENT 57.3
49 | Building Technologies Program 

Product Assignment in the Base Case

• Method:

– Avoids overstating the benefits from increasing equipment efficie

showing the percentage of consumers already purchasing efficie

– Use market share by efficiency data, model databases, and ass

market shares for energy star products

• NOPR analysis changes:

Life-Cycle Cost and Payback Period Analyses

Product Class Preliminary Analysis Changes for the P

All Products

March 2008 AHRI water heaters and DHE directory, June 2007 FTC pool heater directory, 2003-2007 AHRI shipments data

March 2009 AHRI water directory, June 2008 FTdirectory, 2003-2008 AH

Gas-Fired Storage Water Heaters

Market share assumed to be 3.75% for 0.67 EF and 2.5% for 0.80 EF at 40 gallons

Market share updated to and 1% for 0.80 EF.

Electric Storage Water Heaters

Market share assumed to be 5% for 2.2 EF Market share updated to 

1% for 2.2 EF.

Oil-Fired Storage Water Heaters

March 2008 AHRI directory March 2009 AHRI direct

manufacturer market sh

DHE Hearth product market share mixed in with FWF DHE and GR DHE Added separate Hearth 

EE-2006-STD-0129 COMMENT 57.3
50 | Building Technologies Program 

Request for Additional Comments

DOE invites comments on any other issues pertaining to th

Use, Markups, and Life-Cycle Cost and Payback Period A

Life-Cycle Cost and Payback Period Analyses

EE-2006-STD-0129 COMMENT 57.3
51 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

National Impact Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
52 | Building Technologies Program 

Purpose

• Shipments Analysis

– To estimate heating product shipments over time.

• National Impact Analysis

– To estimate the National Energy Savings (NES) from heati

product energy conservation standards at different efficien

– To estimate the national economic impact on the nation (o

Present Value (NPV)) from heating product energy conservstandards at different efficiency levels.

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
53 | Building Technologies Program 

Changes to NOPR Shipments Analysis

* Hearth, Patio & Barbecue Association 

Input Preliminary Analysis Changes to Proposed RWater Heaters -Historical Shipments

1988-2007 AHRI shipments data. Updated to include 2008 

2007 Oil Heating Journal 

Water Heaters - New Construction

Used AEO2008 new housing forecasts. New housing forecast up

projections.

Water Heaters –Replacements

Considered total product stock by vintage and established the failure of the stock using retirement functions from the LCC analysis.

Retirement function updaresults.

DHE - Historical Shipments

1988-2007 data provided by AHRI. Updated to include HPBA

products, updated wall fashare 

DHE - Projections Hearth shipments part of gas fan wall and gas 

room DHE. 

Hearth DHE updated basforecasts from AEO2009

Pool Heaters -Historical Shipments

Data from 1993 TSD. Accounted for 2007-2008 

manufacturers.

Pool Heaters -Replacements

Considered total product stock by vintage and established the failure of the stock using retirement functions from the LCC analysis.

Included estimated non-rfraction of pool heaters, ufunction with new lifetime 

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
54 | Building Technologies Program 

• Shipments Forecast for Water Heaters (2015-2045):

– Two market segments:

• New construction: New housing construction forecasts multiplied by historic

shares (average market shares from 2000-2008).

• Replacements: Product retirement functions (product lifetimes) applied to p

Product stock is generated with historical shipments.

– Accounted for market growth of Gas-Fired Instantaneous Water Heate

Shipments – Water Heater Approach and Res

Gas-Fired Storage Water Heaters Gas-Fired Instantaneous W

0.01.02.03.04.05.06.0

2004 2009 2014 2019 2024 

Millions

0.01.02.03.04.05.06.0

2004 2009 2014 2019 2024 2029 2034 2039 2044

Millions

Modeled New ConstructionModeled ReplacementsHistorical Data

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
55 | Building Technologies Program 

• Shipments Forecast for Direct Heating Equipments (2013-20

– No market segmentation: Forecast is based on historical trends

• Held constant (Gas Room DHE, Gas Wall Fan DHE, Gas Wall Gravity DHE• Historical Trend (Gas Floor DHE)• Historical Shipments correlated with new constructions (proxy for economic 

DHE) 

Shipments – DHE Approach and Results

Gas Wall Fan, Gravity, Room and Floor DHE Hearth DHE

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
56 | Building Technologies Program 

• Shipments Forecast for Pool Heaters (2013-2043):

– 3 market segments:

• New housing Installations: projection based on PK historical data• First time owners: projection based on PK historical data• Replacements : Equipment retirement functions (equipment lifetimes) appl

stock. Equipment stock is generated with historical shipments. DOE also athat are not replaced.

Shipments – Pool Heater Approach and Res

Pool Heater

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
57 | Building Technologies Program 

• DOE considered Fuel Switching to gas-fired storage water 

the case of a standard that effectively requires an electric h

water heater.

Fuel Switching

National Impact Analysis

Gas-Fired Water 

Heater Efficiency 

Level 

Average Total Installed Cost 

Differential for Homes that 

Switch

Change in Electric WH S

to Switchin

New Construction R

Baseline $145 0.5% 

1 $85 0.3% 2 $77 0.2% 3 $116 0.1% 4 $104 0.1% 5 $89 0.1% 6 $2 0.0% 

EE-2006-STD-0129 COMMENT 57.3
58 | Building Technologies Program 

Fuel-Switching (Issue #15)

ISSUE15. DOE seeks comments on its approach for analyz

switching that may result from the proposed standards on wa

and the other heating products. 

In particular, DOE requests comments on:(1)DOE’s general approach, which does not involve price elast(2)DOE’s analysis of switching to gas-fired storage water heatcase of a standard that effectively requires an electric heat pumheater (3)Its conclusion that the proposed standards would not inducfrom a gas storage water heater to an electric storage water he(4)Its conclusion that the proposed standards would not inducfor gas-fired instantaneous water heaters, DHE, and pool heat

National Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
59 | Building Technologies Program 

Changes in NIA NOPR Analysis

National Impact Analysis

Inputs Preliminary Analysis Changes for the Base-Case and Standards-Case Forecasted Efficiencies

Efficiency market shares estimated for compliance year. Forecasted efficiencies remain constant except for gas and electric water heaters, which increase slightly over forecast period.

Updated efficiencestimates for comand updated gas water heaters forefficiency trends.

Energy Prices Trends AEO2008 national forecasts (to 2030) and extrapolation to 2043 (and 2045). Updated using A

forecasts.

Present Year Future expenses are discounted to 2007. Future expenses 

to 2010, when thexpected to be p

EE-2006-STD-0129 COMMENT 57.3
60 | Building Technologies Program 

Results at the Proposed Standard Level

Gas-Fired Storage W Gas-Fired Storage Water Heaters (EL 2) ater Heaters (EL 2) 

National Impact Analysis

Electric Storage Wa Electric Storage Water 

ter 

-$0.60-$0.40-$0.20

$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40

2015 2025 2035 2045

Billions of 2008 Dollars

Equipment Cost SavingsEnergy Cost SavingsMaintenance and Repair Cost Savings

-$0.60-$0.40-$0.20

$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40

2015 2025 20

Billions of 2008 Dollars

Equipment Cost SavingsEnergy Cost SavingsMaintenance and Repair Cost Savings

EE-2006-STD-0129 COMMENT 57.3
61 | Building Technologies Program 

Results at the Proposed Standard Level

Pool Heaters (EL 5) Pool Heaters (EL 5) Gas Hearth Direct Heat Gas Hearth Direct Heating 

ing 

Billions of 2008 Dollars

National Impact Analysis

-0.10-0.05

0.000.050.100.15

Billions of 2008 Dollars 2015 2025 2

-0.10-0.05

0.000.050.100.15

2015 2025 2035 2045

Billions of 2008 Dollars

Maintenance Cost SavingsEquipment Cost SavingsEnergy Cost SavingsNet Savings

EE-2006-STD-0129 COMMENT 57.3
62 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Trial Standard Levels

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
63 | Building Technologies Program 

• Purpose

– To develop a list of standard levels from which impacts are w

a proposed standard level is selected.

• Each trial standard level consists of a set of potential minimum e

levels covering all product classes, and may vary between produ

and

• NOPR analyses assess impacts for trial standard levels (not pro

• Method 

– Trial standard levels are assembled from the product classes 

the NOPR.

• Each trial standard level consists of the standard levels from eac

class that meets a certain set of criteria.

Selection of Trial Standard Levels

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
64 | Building Technologies Program 

Trial Standard Levels 1 through 4 for the NO

Electric Storage Water Heaters

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
65 | Building Technologies Program 

Trial Standard Levels 4 through 7 for the NO

Electric Storage Water Heaters

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
66 | Building Technologies Program 

Trial Standard Levels for the NOPR

Gas-fired Storage Water Heaters

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
67 | Building Technologies Program 

Trial Standard Levels for the NOPR

Oil-fired Storage Water Heaters

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
68 | Building Technologies Program 

Trial Standard Levels for the NOPR

Gas-fired Instantaneous Water Heaters

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
69 | Building Technologies Program 

Trial Standard Levels for the NOPR

Direct Heating Equipment

Trial Standard Level Wall Fan 

AFUE*

Wall Gravity 

AFUE

Floor 

AFUE

Room AFU

TSL 6 80 72 58 83 TSL 5 75 72 58 83 TSL 4 80 71 58 68 TSL 3 77 71 58 68 TSL 2 76 68 58 67 TSL 1 75 66 58 66 * AFUE = Annual Fuel Utilization Efficiency for representative capacity range analyzed.** EI = Electronic Ignition

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
70 | Building Technologies Program 

Trial Standard Levels for the NOPR

Pool Heaters

Trial Standard Level Thermal EfficiencyTSL 6 95TSL 5 86TSL 4 84TSL 3 83TSL 2 82TSL 1 81

Trial Standard Levels

EE-2006-STD-0129 COMMENT 57.3
71 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Consumer Subgroup Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
72 | Building Technologies Program 

• Purpose

– To evaluate the economic impacts of standards on consum

subgroups who may be disproportionately impacted compageneral user population.

• Method

– DOE identified seniors and low-income households that cou

disproportionately affected, and examined the impact of prostandards on these subgroups.

– DOE used the LCC spreadsheet model to determine the im

these subgroups.

• Output

– LCC savings and simple payback period (in years) for the id

customer subgroups.

– Determined that the subgroups were not disproportionately 

by the standard.

Consumer Subgroup Analysis

EE-2006-STD-0129 COMMENT 57.3
73 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Manufacturer Impact Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
74 | Building Technologies Program 

Purpose and Methodology

• Purpose

– To assess the impacts of standards on manufacturers;– To identify and estimate impacts on manufacturer sub-group

be more severely impacted than the industry as a whole; an

– To examine the direct employment impacts, manufacturing 

and the impact of cumulative regulatory burdens on the indu

• Methodology

– Analyze industry cash flow and net present value through us

Government Regulatory Impact Model (GRIM); and

– Interview manufacturers to refine inputs to the GRIM, develo

group analyses, and address qualitative issues.

Manufacturer Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
75 | Building Technologies Program 

• The MIA consists of three phases:

Manufacturer Impact Analysis Process

Industry profile

Develop strawman GRIM* Develop interview guide Interviews & industry-wide/ subgroup analyses

Assess direct employment, manufacturing capacity, and cumulative burden

Phase 2

* Government Regulatory Impact Model (GRIM)

Phase 1 Phase 3

Manufacturer Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
76 | Building Technologies Program 

• DOE used the standard NIA shipment scenario for all thre

products

– For water heaters, this scenario accounts for fuel switching a

reference instantaneous market share scenario. 

• Preservation of Return on Invested Capital - Upper Bound 

– Return on invested capital is the ratio of net operating profits 

taxes) to total invested capital.

– In the standards case, markups are set so that as invested c

increases, 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 implem

manufacturers maintain same level of operating profits (in abterms) as before standards.

Manufacturer Impact Analysis

Overview

EE-2006-STD-0129 COMMENT 57.3
77 | Building Technologies Program 

• Water Heaters

– At TSL 4, the technology used does not greatly differ from baseline 

gas-fired, electric, and oil-fired storage water heaters.

– Electric storage manufacturers may have to greatly increase insulat

but the proposed standard does not require substantial technology c

– Some manufacturers in the oil-fired industry could face substantial c

modify their existing residential lines. 

• Direct Heating Equipment

– Most traditional DHE manufacturers have existing product lines in 3 

product categories. However, manufacturers do face substantial conrelative to shipments and could discontinue product lines to lower cocosts. 

– DOE estimates the impacts on gas hearth DHE manufacturers are m

because the proposed standard could likely be met with a purchasefairly small conversion costs. 

• Pool Heaters

– The proposed standard would require most manufacturers to modify 

product lines or expand the volume of lower volume products. 

Manufacturer Impact Analysis

Summary of Results at the Proposed Standard 

EE-2006-STD-0129 COMMENT 57.3
78 | Building Technologies Program 

Water Heaters

• DOE identified five domestic small business manufacturers 

residential water heaters

– One manufacturer makes covered electric storage and gas-fi

instantaneous water heaters that exceed the proposed standa

– Three manufacture oil-fired storage water heaters but mainly 

products that are outside the scope of products covered by torulemaking.

– One manufacturer has a full line of electric storage water hea

• DOE did not examine the impacts on small water heater 

manufacturers because it found that the standards for wate

set forth in the proposed rule, if promulgated, would not hasignificant economic impact on a substantial number of sm

manufacturers

ISSUE 19. DOE seeks comment on the impacts of the propose

energy conservation standards on small manufacturers of 

water heaters.

Manufacturer Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
79 | Building Technologies Program 

• For the direct heating equipment industry, DOE identified 

small manufacturers:

– 3 traditional DHE manufacturers.– 10 hearth DHE manufacturers.

• Small DHE businesses lack the scale to afford the large co

investments, certification requirements, and the product de

required for certain amended energy conservation standar

• Adopting amended energy conservation standards at high

likely to cause some small DHE businesses to exit the ma

• Manufacturers will likely reduce the number of product fam

capacities to keep required conversion costs within manag

Manufacturer Impact Analysis

Direct Heating Equipment

EE-2006-STD-0129 COMMENT 57.3
80 | Building Technologies Program 

ISSUE 21. The impacts of the proposed amended energy co

standards on small manufacturers of traditional DHE. DOE is 

specific information regarding the potential for small manuf

traditional DHE to discontinue particular product lines as a r

proposed standard, as well as the potential economic effe

discontinuing those particular product lines would have o

manufacturers of traditional DHE.

ISSUE 22. Alternatives to the proposed amended energy co

standards for traditional DHE. Specifically, DOE is intere

information regarding alternatives that could provide signif

savings for small manufacturers while meeting DOE’s energy 

goals.

Manufacturer Impact Analysis

Direct Heating Equipment MIA Issues (Issue # 2

EE-2006-STD-0129 COMMENT 57.3
81 | Building Technologies Program 

ISSUE 23. DOE seeks comment on its characterization of typi

large gas hearth DHE manufacturers.

ISSUE 24. DOE seeks comment on the impacts of the propos

energy conservation standards on small manufacturers of gas 

Manufacturer Impact Analysis

Direct Heating Equipment MIA Issues (Issue # 2

EE-2006-STD-0129 COMMENT 57.3
82 | Building Technologies Program 

Pool Heaters

• DOE identified one domestic small business manufacture

covered residential pool heaters

– The small business manufacturer’s products exceed the sta

proposed by today’s rulemaking.

• DOE did not examine the impacts on small water heater 

manufacturers because it found that the standards for po

set forth in the proposed rule, if promulgated, would not hsignificant economic impact on a substantial number of sbusiness manufacturers

ISSUE 20. DOE seeks comment on the impacts of the pro

amended energy conservation standards on small manufa

gas-fired residential pool heaters. 

Manufacturer Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
83 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Utility Impact Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
84 | Building Technologies Program 

• Purpose

– To investigate the effects on utilities from reduced energy sal

load demand due to potential standards.

• Method

– Use National Energy Savings Results; and– Use the EIA’s National Energy Modeling System (NEMS-BT) 

DOE’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 

ranging from 0.129 to 5.28 GW in the year 2030.

• DHE: TSLs 1 through 6 resulted in very small installed generation capacit

ranging from 21 to 109 MW in the year 2030.

• Pool Heaters: TSLs 1 through 6 resulted in very small installed generation 

increases ranging from 2 to 32 MW in the year 2030.

Utility Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
85 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Employment Impact Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
86 | Building Technologies Program 

• Purpose

– To report net jobs created or eliminated nationally as a conse

new or amended energy conservation standards. Employmeninclude direct and indirect impacts.

• Method 

– Uses the Impact of Sector Energy Technologies (ImSET) mo

assess the indirect employment impacts;

– Estimate changes in employment, industry output, and wage 

the overall United States economy resulting from changes in expenditures in the various sectors of the economy;

– Estimate changes in costs and benefits using the NIA analys– Direct employment impacts are addressed in the MIA.

Employment Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
87 | Building Technologies Program 

• Output

– Change in employment in national economy, other than in the 

manufacturing sector being regulated, as a consequence of thenergy conservation standards.

• Results by Product Class

– Water Heaters

• All TSLs result in a net increase in jobs, ranging between 3,000 and 50,00

– 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 increase in jobs and TSL 6 results in a 

decrease in jobs.

Employment Impact Analysis

EE-2006-STD-0129 COMMENT 57.3
88 | Building Technologies Program 

NOPR Analyses Flow Diagram

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Environmental Assessment

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Revise Preliminary Analyses

Compliance

EE-2006-STD-0129 COMMENT 57.3
89 | Building Technologies Program 

• Purpose

– To report environmental impacts as a consequence of the amended 

conservation standards, including changes in power plant emissions

• Method

– Use National Energy Savings Results; and– Use the EIA’s National Energy Modeling System (NEMS-BT) tailored 

Building Technologies Program.

• Output

– Calculated the reduction in power plant emissions of carbon dioxide 

of nitrogen (NOX) and mercury (Hg), using the NEMS-BT computer m

– Calculated the reduction in on-site emissions (CO2 and NOX) where 

appliances are used (i.e., gas-fired water heaters and direct heating 

– Sulfur dioxide (SO2) emissions were not included due to the emissio

the Clean Air Act Amendments of 1990. Impact on SO2 emissions ch

estimated as too small to affect value of emissions allowances under 

– Monetized value of reductions in CO2, NOX, and Hg.

– Assessed impact to SO2 allowance prices.

Environmental Assessment

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NOPR Analyses Flow Diagram

Revise ANOPR Analyses

Trial Standard Levels

Consumer Subgroup Analysis

Manufacturer 

Impact 

Analysis

Utility Impact Analysis

Employment 

Impact 

Analysis

EnviroAsses

The NOPR analyses consist of revisions to the Preliminary Activities.

Framework

Document

Preliminary

Activities NOPR Final Rule Date

Regulatory Impact Analysis

EngineeringAnalysis

Life-Cycle

Cost &

Payback 

Period

Analyses

National

Impact

Analysis

Scope of 

Coverage 

and Product 

Classes

Screening Analysis

Compliance

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• Purpose

– To investigate the national impacts due to non-regulatory alter

compared 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;• Manufacturer Tax Credits;• Early Replacement; • Bulk Government Purchases; and• State Building Codes for Water Heaters.

• Method

– Modify NIA spreadsheet model to consider the above scenario

their effect on adoption of equipment at the proposed standard 

• Output

– National Energy Savings and Net Present Value of the non-re

alternatives.

Regulatory Impact Analysis

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Summary of Proposed Standards and 

Additional Considerations for the Final Rul

Public Comment

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93 | Building Technologies Program 

Proposed Amended Energy Conservation Stand

Residential Water Heaters (TSL 4)

Product Class Proposed Standard LevelGas-fired Storage For tanks with a Rated Storage 

Volume at or below 60 gallons: EF = 0.675 – (0.0012 x Rated Storage Volume in gallons)

For tanks with a Volume above 6EF = 0.717 – (0.Storage Volume 

Electric Storage For tanks with a Rated Storage 

Volume at or below 80 gallons: EF = 0.96 – (0.0003 x Rated Storage Volume in gallons)

For tanks with a Volume above 8EF = 1.088 – (0Storage Volume 

Oil-fired Storage EF = 0.68 – (0.0019 x Rated Storage Volume in gGas-fired Instantaneous EF = 0.82 – (0.0019 x Rated Storage Volume in g

Proposed Standards

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Additional Considerations for Final Rule

ISSUE 16. DOE’s consideration of TSL 6 in the final rule for r

water heaters and the associated issues DOE has identified su

heat pump water heaters.

In particular, DOE is interested in comments regarding the following surrounding 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 pump water heaters and whether 

direct replacement for traditional electric storage water heater techno5.Manufacturability of heat pump water heaters; and6.Impacts on consumer utility from heat pump water heaters. 

Public Comment

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Additional Considerations for Final Rule

ISSUE 17. DOE’s consideration of TSL 5 in the final rule for r

water heaters and the associated issues DOE has identified su

standards that effectively require different technologies for 

subsets of products.

•In particular, DOE is interested in comments regarding the possibility of man

circumventing the standard by manufacturing products at storage volumes sl

product division or discontinuing the manufacture of large-volume products ato high conversion costs for only a small portion of the market. DOE is interescomments regarding the storage volume where the product division should owhether DOE should consider other divisions for the final rule (e.g., 66 gallonor some other gallon size).•In particular, DOE is interested in receiving comments about the following iss

surrounding the consideration of TSL 5: (1) consumer acceptance; (2) installetraining; (3) product substitution (i.e., substituting multiple units at lower volum

one at a higher volume); (4) engineering resource constraints; (5) product dis(for large-volume products); and (6) manufacturing issues.

Public Comment

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Direct Heating Equipment Product Class Proposed Gas Wall Fan with Input Capacities up to 42,000 Btu/h AFUE = 76Gas Wall Fan with Input Capacities over 42,000 Btu/h AFUE = 77Gas Wall Gravity with Input Capacities up to 27,000 Btu/h AFUE = 70Gas Wall Gravity with Input Capacities over 27,000 Btu/h up to 46, 000 Btu/h AFUE = 71Gas Wall Gravity with Input Capacities over 46,000 Btu/h AFUE = 72Gas Floor with Input Capacities up to 37,000 Btu/h AFUE = 57Gas Floor with Input Capacities over 37,000 Btu/h AFUE = 58Gas Room with Input Capacities up to 20,000 Btu/h AFUE = 62Gas Room with Input Capacities over 20,000 Btu/h up to 27,000 Btu/h AFUE = 67Gas Room with Input Capacities over 27,000 Btu/h up to 46,000 Btu/h AFUE = 68Gas Room with Input Capacities over 46,000 Btu/h AFUE = 69Gas Hearth with Input Capacities up to 20,000 Btu/h AFUE = 61Gas Hearth with Input Capacities over 20,000 Btu/h and up to 27,000 Btu/h AFUE = 66Gas Hearth with Input Capacities over 27,000 Btu/h and up to 46,000 Btu/h AFUE = 67Gas Hearth with Input Capacities over 46,000 Btu/h AFUE = 68

Pool Heater Product Class Proposed StandaGas-fired Thermal Efficiency 

Proposed Standards

Proposed Amended Energy Conservation Standards fo

Direct Heating Equipment (TSL 3) and Pool Heater

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Additional TSL Considerations for NOPR

ISSUE 18. The appropriateness of TSL 4 for residential pool he

of the negative life cycle costs for a majority of consumers. In 

DOE’s consideration of other TSLs, including TSL 3, as an alte

the final standard level.

DOE invites comments on any remaining issues pertaining to 

Public Comment

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Issues on which DOE seeks comment - NOPR iss

1. The max-tech efficiency levels identified for the analyses, includ

the efficiency levels identified by DOE can be achieved using thtechnologies screened-in during the screening analysis (see seand whether higher efficiencies are achievable using technologscreened-in during the screening analysis.

2. The potential burdens to manufacturers of hearth-type DHE as 

the testing, certification, reporting, and enforcement provisions

3. EPCA’s efficiency descriptor requirements in any potential test 

revisions for electric pool heaters

4. DOE’s proposed definition for vented hearth heaters.5. DOE’s product classes for water heaters. In particular, DOE is s

comment about the need for a separate product class for low-bheaters.

6. DOE’s approach for analyzing ultra-low NOX gas-fired storage w

heaters and the need for a separate product class.

Issues for Public Comment

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Issues on which DOE seeks comment - NOPR issu

7. DOE’s approach to developing the energy efficiency equations, 

appropriate slope of energy efficiency equations at each efficienanalyzed, and the appropriate storage volumes for changing the the line. DOE is also interested in any alternative to the energy equations that DOE should consider for the final rule.

8. The need for a separate product class for heat pump water hea

Specifically, DOE is interested in receiving comments on whethpump water heater can be used as a direct replacement for an eresistance water heater, and in which instances a heat pump wacannot be used as a direct replacement for an electric resistancheater.

9. DOE’s proposed product classes for the four existing types of D10.DOE’s proposed product class divisions for gas hearth DHE.

Issues for Public Comment

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Issues on which DOE seeks comment - NOPR issu

11.The manufacturability of heat pump water heaters and the capa

manufacturers to ramp up production of heat pump water heateSpecifically, DOE is seeking comment on how long it would take magnitude of the costs for manufacturers to convert all product pump water heaters if it were required by an amended energy cstandard. In addition, DOE is seeking comment about the length 

required to retrain installers and servicers of water heaters for thinstallation and servicing of heat pump water heaters.

12.DOE’s estimated manufacturer production costs for storage wat

at storage volumes outside of the representative volume.

13.DOE’s analysis of installation costs for water heaters; DOE is pa

interested in comments on its analysis of installation costs for hwater heaters.

14.DOE’s analysis of repair and maintenance costs for heat pump 

heaters.

Issues for Public Comment

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Issues on which DOE seeks comment - NOPR issu

15.DOE’s approach for analyzing fuel switching that may result fro

proposed standards on water heaters and the other heating proparticular, DOE requests comments on its general approach, wnot involve price elasticities; its analysis of switching to gas-firewater heaters in the case of a standard that effectively requires heat pump water heater; its conclusion that the proposed standnot induce switching from a gas storage water heater to an elecwater heater; and its conclusion that the proposed standards winduce switching for gas-fired instantaneous water heaters, DH

heaters.

16.DOE’s consideration of TSL 6 in the final rule for residential wat

and the associated issues DOE has identified surrounding heat 

heaters.

17.DOE’s consideration of TSL 5 in the final rule for residential wat

and the associated issues DOE has identified surrounding staneffectively require different technologies for different subsets of 

Issues for Public Comment

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Issues on which DOE seeks comment - NOPR issu

18.The impacts of the proposed amended energy conservation standa

manufacturers of residential water heaters.

19.The impacts of the proposed amended energy conservation standa

manufacturers of gas-fired residential pool heaters.

21.The impacts of the proposed amended energy conservation standa

manufacturers of traditional DHE. DOE is interested in specific inforegarding the potential for small manufacturers of traditional DHE to particular product lines as a result of the proposed standard, as wepotential economic effect discontinuing those particular product lineon small manufacturers of traditional DHE.

22.Alternatives to the proposed amended energy conservation standa

traditional DHE. Specifically, DOE is interested in information regaralternatives that could provide significant cost-savings for small mawhile meeting DOE’s energy conservation goals.

23.DOE’s characterization of typical small and large gas hearth DHE m24.The impacts of the proposed amended energy conservation standa

manufacturers of gas hearth DHE.

Issues for Public Comment

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How to Submit Comments...

 Public Meeting – Oral comments will be captured i

transcript and become part of the public record.

 Written comments – NOPR comment period open 

February 9, 2010.Reference docket #: EE–2006–BT–STD–0129 an#: 1904–AA90.

Email: ResWaterDirectPoolHtrs@ee.doe.govMail: Ms. Brenda Edwards

U.S. Department of EnergyBuilding Technologies Program, Mailstop EE–2J1000 Independence Avenue, SW.Washington, DC 20585–0121.Telephone: (202) 586–2945.

Courier: Ms. Brenda Edwards

U.S. Department of EnergyBuilding Technologies Program950 L’Enfant Plaza, SW., 6th Floor,Washington, DC 20024.

Closing

EE-2006-STD-0129 COMMENT 57.3