77b'

LIFE-CYCLE COST RESULTS

Summary Tables

This life-cycle cost analysis (LCC) examines the economic impacts on individual

consumers from possible revisions to U.S. residential water heater energy-efficiency standards.

Life-cycle cost represents the consumer's cost of purchasing and installing a water heater and

operating it for its lifetime. The analysis estimates the portion of the population that will benefit

from different design option combinations in terms of reduced life-cycle cost. The mean life-cycle

cost change is also estimated. Negative numbers indicate a life-cycle cost decrease, which is a

benefit to consumers.

The analysis uses the Monte Carlo statistical method to calculate the life-cycle cost.

Monte Carlo analyses capture variability and uncertainty in the input variables. In this analysis,

we sample 10,000 times from a distribution of each input value using the Crystal Ball tool.

Crystal Ball is an add-in program to Microsoft Excel, which performs the Monte Carlo

calculations. The percent of population benefitting (winners) and mean LCC change are derived

from these Crystal Ball runs. The results of the analysis are summarized in Table 1. For a

complete description of the design options, see the Price-Efficiency Results WEB page.

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Table 1 Summary of Delta LCC Results

Product Design Option Sector Delta LCC

Class Mean (1998$) Percent of

Households

Benefitting

Electric Heat Traps Residential -48 98

Insulated Tank Bottom Residential -53 97

2.5" Insulation Residential -13 56

3" Insulation Residential 30 41

Plastic Tank Residential 69 27

Gas-Fired Heat Traps Residential -18 97

78% RE Residential -20 85

2" Insulation Residential -30 78

2.5" Insulation Residential -25 72

80% RE Residential 17 73

Side-Arm Residential 116 36

Plastic Tank Residential 146 32

3" Insulation Residential 245 17

Oil-Fired Heat Traps Residential -16 80

2" Insulation Residential 24 18

2.5" Insulation Residential 32 15

3" Insulation Residential 52 9

78% RE Residential 153 1

Interrupted Ignition Residential 179 2

82% RE Increased HX Area Residential 392 0.4

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Introduction

The life-cycle cost expressed in 1998$, reflects the costs of owning and operating a water

heater for its lifetime starting in the year 2003. We analyze various water heater models: a "2003

baseline" design, which is what we project will be the standard design in 2003 in the absence of

revised efficiency standards, as well as various "design options"- models with additions to the

baseline, which represent efficiency improvements that might be mandated by U.S. Department of

Energy (DOE) standards. These design options, which come from the Engineering Analysis (see

Price-Efficiency Results WEB page), are analyzed in the five modules that make up the LCC. We

consider water heaters fueled by electricity, gas, and oil. The 2003 baseline water heaters use

water-blown insulation, the current leading candidate to replace HCFC-141b which is scheduled

for phase-out because it damages the ozone layer. For a detailed discussion of this and other

technical issues, see the Price-Efficiency Results WEB page.

The analysis uses as its underlying data source the 1993 Residential Energy Consumption

Survey (RECS). RECS contains a more complete set of data for water heater analysis than any

other survey reviewed for this study. A total of 5222 households were selected from the RECS

database for the LCC analysis. For each combination of design options, we sample the relevant

households 10,000 times. Extensive Monte Carlo analyses using Crystal Ball address uncertainty

and variability in variables that make up the households.

The LCC involves five modules (see the LCC calculation spreadsheets WEB page). For

the variables in each of the five modules, we use specific strategies to characterize uncertainty and

variability. In general, our analysis accounts for variability by using a large sample of individual

households. Household variables that are uncertain or cannot be characterized are represented by

a range of values.

Hot Water Draw Module

Purpose: The first of the five modules, the Hot Water Draw Module, calculates the amount of hot

water used by households. We used exactly the same method using Crystal Ball to calculate hot

water usage for all three fuel types.

Inputs: Inputs to the module are: household and water heater characteristics, including the number

and age of the people who live in a home, the presence of hot water-using appliances, the tank size

and thermostat setpoint of the water heater, and the climate in which the home is situated.

Output: The output is the average household hot water consumption, expressed in gallons/day,

which is used in the next module. Table 2 shows, for each fuel type, the average hot water use as

calculated by the Draw Module; the differences in the amounts reflect the variations in household

size.

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EE-RM-97-900 COMMENT 77H
Table 2 Household Hot Water Use by Water Heater Fuel Type

Water Heater Average Hot Water Use

Fuel Type gal/day

Electric 45.4

Gas-Fired 48.5

Oil-Fired 47.3

Energy Analysis Module

Purpose: The second module in the LCC, the Energy Analysis Module, calculates how much

energy of what type (electricity, gas, or oil) is used in each household analyzed in the Hot Water

Draw Module. We use a simplified energy equation, the Water Heater Analysis Model (WHAM)

and Crystal Ball, to calculate the water heater energy consumption.

Inputs: Inputs to WHAM are: average daily household hot water consumption, inlet water

temperature, water heater thermostat setting, air temperature around the water heater, recovery

efficiency (RE), standby heat-loss coefficient (UA), and rated input power (Pon). The on- and offcycle energy consumption rates are used to determine auxiliary electricity use for fuel-fired water

heaters.

Output: The output is the average daily water heater energy consumption, expressed in Btu/day,

which is used in the third module.

Operating Costs Module

Purpose: The third LCC module, Operating Costs, determines the annual cost of operating a water

heater for the same households analyzed in the previous two modules using Crystal Ball. Operating

a water heater involves two costs: fuel to operate the water heater and maintenance to keep the

water heater running properly.

Inputs: Operating costs for water heaters are calculated by taking the annual energy consumption

calculated by the Energy Analysis Module and applying the average fuel cost from RECS for each

household analyzed. Future costs over the water heater lifetimes were projected using DOE's

Energy Information Agency (EIA) forecasts. The value of savings from the energy-efficiency

design options was calculated using marginal rates, which were weighted according to seasonal

water heater energy consumption.

Output: The output is the annual operating cost, expressed in $/year, which is used in the LCC

module.

Equipment Cost Module

Purpose: The fourth module in the LCC analysis, the Equipment Cost Module, calculates a

consumer's cost to purchase and install a water heater using Crystal Ball. It is the sum of the

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EE-RM-97-900 COMMENT 77H
water heater's retail price, sales tax, and installation costs. The retail price is calculated from the

manufacturer's cost multiplied by an overall markup.

Inputs: This calculation uses manufacturer's costs from the Engineering Analysis (see PriceEfficiency Results WEB page), with adjustments to account for other than the three "typical"

water heater sizes. The mark-up is determined by dividing current retail price by current

manufacturers' cost for baseline water heaters. Markup varies by size and fuel type. We

determined the retail prices from interviews with retailers, wholesalers, plumbers, contractors, and

utilities (see Water Heater Database at

http://www.eren.doe.gov/buildings/codes_standards/applbrf/waterheater.htm). We also collected

installation prices. We account for sales tax and other costs consumers pay: delivery fees, permit

fees, or fees for removal of old water heaters. Additional installation costs (e.g., for new electrical

connections or venting upgrades) for some efficiency options were also incorporated.

Output: The output is the total consumer's cost to buy and install a water heater, expressed in

dollars, which is used in the last module.

LCC Module

Purpose: The final step in the analysis determines the life-cycle cost for each water heater in the

sample of RECS houses we studied. Life-cycle cost is defined as the total cost a consumer pays

during the lifetime of a water heater, including purchase price and operating expenses. This

module also uses Crystal Ball.

Inputs: LCC is calculated by taking the equipment and annual operating costs from the previous

two modules for the lifetime of the water heater. The LCC analysis accounts for the method of

payment (e.g., credit card, cash, etc.) and the lifetime of the water heater. Future operating

expenses are discounted to the time of purchase and summed over the water heater's lifetime.

Output: Sample output of the LCC is graphically presented in the following figures.

LCC Module Results

Figures 1 a, 1 b, and 1 c are charts showing, for each fuel type and design option

combination, the percent of population with a given change in LCC. The bottom axis represents

the difference in LCC for each design option from the 2003 baseline. The square dots show the

cumulative percent of population with a given change in LCC. The bars represent the population

experiencing a given level of savings or cost due to the design option combination. Note that a

negative change in life-cycle cost for a design option indicates a benefit, i.e., a savings. The

percentages of the population that do and do not benefit are shown directly below the title of the

graph. The width of the areas on the plots occupied by bars show the spread of savings in the

population. In general, the design options with higher efficiencies tend to show a wider spread in

the population.

Figures 2a, 2b, and 2c show the results of sensitivity analyses for differences in LCC for the

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EE-RM-97-900 COMMENT 77H
2.5 in. insulation design option. They show the rank-order correlation of input variables with the

incremental LCC. Variables are ordered with maximum correlations (positive or negative) on top

and minimum correlations on the bottom.

Delta Lif Cycl Cot of Hear Trap e mpJrAd Delta Life Cycle Cost of Tank Bottom

to Baseline i189lg Insulation compared to Baseline (1998$)

99% Benefit 1% Disadarntie 98% Benefit 3% Disadvantage

irrT ffu *hllrs i 6000 Ts-a---a.-..U..l-r 100%

^ . -KW~· ? fr a80% S

)CC -HAic g 4000- 0e

i

1 1 i ' 1 - 1 1H -te I 4 '_I2000 % 

L -2. ' / 20% 5

nriE u- II |-|-II.' l IpIIfi 0 PP-,,-B,--,p-r,--,-, , , 0%i

I = -.... = ,*- , oD VflCN.- 0 0 00? 00 0, , r rim

DLCCS|I DLCC($)

Delta LirI C Cycl x oar2.r" Inrultlon Delta Life Cycle Cost of 3" Insulation

csmpared te Baseline f1988S compared to Baseline (1998$)

5% Benefit 44% Disadviirge 41% Benefit 59% Disadvantage

e.rr s..aaUUU l'li 2500 100%

* 5tcc -H * I eoi. 2000 80% E C ,JLLc -^ _ a| o 1500 60%

IJ _ 

L L ICr J *P9tUI AL '. - 3 1000 500 O 40 20% %

U.t -L = 0 I000000000 -IP --MIM r r - 000000 000'

* "|-Y ^fCN trfl, - CN C3

DLCC(SI DLCC($)

Olia Llf Cycle C ast f Plafcle Tank

compared to B-fseline '(1.9

27% Beneft 73% Disadvantage

cmr ,-ff z u' 11 . - x1* I

lii, - -

I- III ... I4 I. 

-k -- - fl l- fl -

DLCC SI

Figure la Difference in Life-Cycle Cost by Design Option Combination for Electric

Water Heaters

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EE-RM-97-900 COMMENT 77H
Sensitivity Analysis - Electric Water Heaters

Life-Cycle Cost of 2.5" Insulation Water Heater (1998$)

Annual Operating Cost in 2003 of

2.5" Insulation Water Heater 0.8472

(1998$)

Discount Rate -0.3561

Lifetime of individual water heaters

(Years)

Total Cost to Buy and Install a 2.5"

Insulation Water Heater (1998$) .

-1.00 -0.80 -0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Figure 2a Sensitivity Analysis for Difference in Life-Cycle Cost of "2.5 in. Insulation" Design

Option Combination on Electric Water Heaters

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EE-RM-97-900 COMMENT 77H
Delta Llfe Cycle C oat of He Trap c mpared Delta Lire Cycle Cost o r8% RE compared to

to Baseline (1998] Baseline (19986)

g7T Bentfilt 3% DIsadvantage 85% Benefit 15% Disadvantage

EJU- -- l mr *UU',, 5300 -Br 103c

F III , ,ll ,I',; 4300 80%o .>

4in- -. - ; .nn _ an% 

j!-4ln* P: -40x E |juu-. r , - 4uO6 

E:30 - t:O9 a, 1300 20h/

z, =. DL *V~·Y G ;fi Y *: ^S -. ' ' .. cc SO_° s °r ; 2 < L 5 

DLCC;S;D OLCC($)

Delta Lira Cycle Ces of 2" Insulat in Delta Life Cycle Cost of 2.5" Insulation

olllared to Basellne (19S61) compared to Baseline (1998$)

78 BeneFit 22% Disavantage 72% Benefit 28% Disadvantage

"'_alOmCCnt'si 03! O I 4000- 100%0

):Cc,66 ' ~II--C - 3X _ 8 0% 

3CC I-'; 2000 80% 1

2 I II- ,LO 3o s 1000 20% 

Ljh IaWw _ Y 0 uT. p.nI. -o 0%

_-f-»-/_ _ _--»-«.__DCDOO~dOCJDC~U .

I .... ', - , -- ,0 Q3

DLCCI$I DLCC($t)

Delta Lire Cycle C os of BO9 RE clllpjred to Delta Life Cycle Cost of Side-Arm compared to

Basellne (1181|1 Baseline (1998$]

73% BeneFit 27% Disadvantage 36 Benefit 65% Disadvantage

>,,cc ..ft wam;,=*. 0 .?nrn3.i )a- I nnon 1%

u. .. -Hna || C O.. .. 80%

V -

CC t. eO'i fino%

o 1'CC. J| eof || '"I111- 6c-ol -l 4- -'CC l""*"z~l~llllq |X1 . ^aOi In -; 

l iL I 4 ~ .5 U -_ -

'A - 3 - ;: ;n% 000 O N 00 f 00nrn

DLCCI1 IDLCC()

Dealc Life Cycle Coet ar PIScle Tank Oel Life Cycle Cost of 3" Insulation

COlIIparedt Biatllne (1996i) compared to Baseline (19986)

32 Benefit 69% Disaduantage 17% Benefit 83% Disadvantage

2ECC 0\4C30 , .OC.:

* I 1 411Hr |S c* i40% i

1 CC .stu fl · 111 i 20%J

I . --- L 0 ---mr-i-,--"'--c i): - - : I

Figure lb DiffereimcwtLife-Cycle Costs by DLCC<(]

Design Option Combination for Gas-Fired Wat

Heaters

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Sensitivity Analysis - Gas Water Heaters

Life Cycle Cost of 2.5" Insulation Water Heater (1998$)

Annual Operating Cost in 2003 of

2.5" Insulation Water Heater 0.7685

(1998$)

Total Cost to Buy and Install a 2.5"

Insulation Water Heater (1998$) 28

Lifetime of individual water heaters

(Years)

Discount Rate -0.3187

-1.00 -0.80 -0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Figure 2b Sensitivity Analysis for Difference in Life-Cycle Cost of "2.5 in. Insulation" Design

Option Combination on Gas-Fired Water Heaters

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EE-RM-97-900 COMMENT 77H
Delta Life Cycle C rt er Heac Trr p arnparad Delta Life Cycle Cost of 2" Foam Insulation

to Buelinr. tie1t compared to Baseline (1998$)

Me BUsneinc 20% Dliravantale 18% Benefit 83% Disadvantage

wirr - a Irnr 4000 --- 0 100%

cXC 3C'. 000 80% >

.P ))CC i 3C: _ a . eoo 960% s

wr "IIrB Ii 2500 i 0 4U o '|"' §1 [ - looon 00 0 -0

C 1 0 Ila Blm|P l | I I 0%

o ILL i :- i l

I:LC'CeS) DLCC(S)

Delta Lira Cylel Ct oar2.f" InLulIatlon Delta Life Cycle Cost of 3" Insulation

compared to Baueline f18l91 compared to Baseline (1998$)

16% BeneFit 8S6 Disadvwtale 9% Benefit 91% Disadvantage

lITr earrma l -li 2500 - - 100

wf -WI~~xi |2000) 20% |

E CC - W * 1500 - 60%

I ||Ii- i - 4l~ r 1000-| 40%

ILi -2, 3o ' - 500= 20% I ... ||I. ,'--- I H- 0 - ... I......0%

-' rDCj D C mCD C DM 0

DLCCSI DLCC($)

Delta Life Crle C ast of Impraved Fle Bamle Delta Life Cycle Cost of Interrupted Ignition

compared to BOteline f1Ci _ compared to Baseline (19986)

1% Benefit W9 Disadwartae 2% Benefit 98% Disadvantage

fflrr (I f|ig BOCO '0(%

C'11'l ' $?~~~1 'l ri 03,1 ))rCC I Rn

"II _ ' I S 40CO L 6803%

-I)CC E 41& g i-1 4 I'LI 2E r0 40% E

e IJLL- »f 9ll(-->]i 3 E ' a" S-''0% 3

I paapagBap-A = I I H . . -I00 N |a .

-p_ _ _i_«_p 2j~f_ _t oC0 CDa 0 oEo 

DLCCS|l DLCC(*)

Figure Ic Difference in Life-Cycle Costs by

Design Option Combination for Oil-Fired

Water Heaters

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EE-RM-97-900 COMMENT 77H
Sensitivity Analysis - Oil-fired Water Heaters

Life Cycle Cost of 2.5" Foam Insulation Water Heaters (1998$)

Annual Operating Cost in 2003 of

2.5" Insulation Water Heater 0.6034

(1998$)

Lifetime of individual water heaters 0.5442 (Years)

Discount Rate -0.4521

Total Cost to Buy and Install a 2.5" 0.2015

Insulation Water Heater (1998$)

-1.00 -0.80 -0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Figure 2c Sensitivity Analysis for Difference in Life-Cycle Cost of "2.5 in. Insulation" Design

Option Combination on Oil-Fired Water Heaters

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Trial Standard Levels

Based on the requirements in the Code of Federal Regulations, 10CFR430 Subpart C,

Appendix A, Section 5(c)(3), and using the Price-Efficiency and LCC results, the Department has

selected trial standard levels. These are presented in Tables 3, 4, and 5.

Table 3 Trial Standard Levels Electric Water Heaters

Trial Energy Factor Selected Design Option Combinations

Std

Level

1 .95-00132V BBaseline + Heat Traps + Insulated Tank Bottom

2 .96-.00132V |Baseline + Heat Traps + Insulated Tank Bottom + 2.5" Insulatio

3,4 .97-.00132V Baseline + Heat Traps + 3" Insulation + Plastic Tank

Table 4 Trial Standard Levels Gas-Fired Water Heaters

Trial Energy Factor Selected Design Option Combinations

Std

Level _

1 .63-.0019V Baseline + Heat Traps

2 .66-.0019V Baseline + Heat Traps + 78% RE + 2" Insulation

3 .69-.0019V Baseline + Heat Traps + 80% RE + 2.5" Insulation

4 .78-.0019V Baseline + Heat Traps + 80% RE + 2.5" Insulation + Side-Arm +

Electronic Ignition + Plastic Tank

Table 5 Trial Standard Levels Oil-Fired Water Heaters

Trial Energy Factor Selected Design Option Combinations

Std

Level

1 .60-.0019V Baseline + Heat Traps

2 1.61-.0019V Baseline + Heat Traps + 2.5" Insulation

3 .64-.0019V Baseline + Heat Traps + 3" Insulation + 78% RE

4 .67-.0019V Baseline + Heat Traps + 3" Insulation + Interrupted Ignition +

82% RE Increased HX Area

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