# 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 ofpurchasing and installing a water heater and operating itfor its lifetime. The analysis estimates theportion ofthe population that willbenefit from different design option combinations in terms ofreduced 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 ofeach input value using the Crystal Ball tool. Crystal Ball is an add-in program to Microsoft Excel, whichperforms the Monte Carlo calculations. The percent ofpopulation benefitting (winners) andmean LCC change are derived from these Crystal Ball runs. The results ofthe analysis are summarized in Table 1. For a complete description ofthe design options, see the Price-Efficiency Results WEB page.

1Table 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

2Introduction The life-cycle cost expressed in 1998$, reflects the costs ofowning and operating a water heater for its lifetime starting in the year 2003. We analyze various waterheater models: a "2003 baseline" design, which is what we projectwill be the standard design in 2003 in the absence of revised efficiency standards, as well as various "designoptions"- models with additions to the baseline, which represent efficiency improvements thatmight be mandated by U.S. Department of Energy (DOE) standards. These design options, which come fromthe 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, andoil. The 2003 baseline water heaters use water-blown insulation, the current leading candidate to replace HCFC-141b which is scheduled for phase-out because itdamages the ozone layer. Fora detailed discussion ofthis 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 ofdata for water heater analysis than any other survey reviewed for this study. Atotal of5222 households were selected from the RECS database for the LCC analysis. Foreach combination ofdesign options, we sample the relevant households 10,000 times. Extensive Monte Carlo analyses using Crystal Ball address uncertainty and variability invariables that make up thehouseholds. The LCC involves five modules (see the LCC calculation spreadsheets WEB page). For the variables in each ofthe five modules, we use specific strategies to characterize uncertainty and variability. In general, our analysis accounts for variability by using alarge sample ofindividual households. Household variables that are uncertain or cannot be characterized are represented by a range ofvalues. Hot WaterDrawModule Purpose:The first ofthe five modules, the Hot Water Draw Module, calculates the amount ofhot waterused by households. We used exactly the same method using Crystal Ballto 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 ofthepeople who live in ahome, the presence ofhot water-using appliances, the tank size and thermostat setpoint ofthe water heater, andthe climate in which thehome is situated. Output:The output isthe 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 wateruse as calculated by the DrawModule; thedifferences in the amounts reflect thevariations in household size.

3Table 2 Household Hot Water Use by WaterHeater Fuel Type WaterHeater Average Hot WaterUse

Fuel Type gal/day Electric 45.4 Gas-Fired 48.5 Oil-Fired 47.3 EnergyAnalysisModule Purpose: The second module in the LCC, the Energy Analysis Module, calculates how much energy ofwhat type (electricity, gas, or oil) is used in each household analyzed in the Hot Water Draw Module. We use a simplified energy equation, theWater 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 usedto determine auxiliary electricity use for fuel-fired water heaters. Output:The output is the average daily waterheater energy consumption, expressed in Btu/day, which isused in the third module. Operating CostsModule Purpose:Thethird LCC module, Operating Costs, determines the annual cost ofoperating awater heater for the same households analyzed in theprevious two modules using Crystal Ball. Operating awater 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 takingthe 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 ofsavings 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. EquipmentCostModule Purpose:The fourth module in theLCC analysis, theEquipment CostModule, calculates a consumer's cost topurchase and install awater heater using Crystal Ball. It isthe sum ofthe 4water heater'sretail 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 theEngineering Analysis (see PriceEfficiency Results WEB page), with adjustments to account forother thanthe three "typical" water heater sizes. The mark-up is determined by dividing current retail price by current manufacturers' cost forbaseline water heaters. Markup varies by size and fuel type. We determined theretail 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 installationprices. We account for sales tax and other costs consumers pay: delivery fees,permit fees, or fees for removal ofold 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 tobuy and install awater heater, expressed in dollars, which is used in the last module. LCCModule Purpose:The final step in the analysis determines the life-cycle cost for each water heater inthe sample ofRECS houses we studied. Life-cycle cost is defined as thetotal cost aconsumer pays during the lifetime ofawater 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 ofthe waterheater. The LCC analysis accounts for the method of payment (e.g., credit card, cash, etc.) and the lifetime ofthe waterheater. Future operating expenses are discounted to the time ofpurchase and summed over the water heater's lifetime. Output:Sample output ofthe LCC is graphically presented in the following figures.

LCCModule Results Figures 1 a, 1 b, and 1 c are charts showing, for each fuel type and design option combination, thepercent ofpopulation 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 ofpopulation with a given change in LCC. The bars represent the population experiencing agiven level ofsavings or cost due to the design option combination. Note that a negative change in life-cycle cost for a design option indicates abenefit, i.e., a savings. The percentages ofthe population that do and donot benefit are shown directly below the title ofthe graph. The width ofthe areas on the plots occupied by bars show the spread ofsavings inthe population. In general, the design options with higher efficiencies tend to show awider spread in the population. Figures 2a, 2b, and 2c show the resultsofsensitivity analyses for differences inLCC for the 52.5 in. insulation design option. They show therank-order correlation ofinputvariables with the incremental LCC. Variables are ordered with maximum correlations (positive or negative) on top and minimum correlations on the bottom.

Delta Lif Cycl CotofHear Trap e mpJrAd Delta Life Cycle Costof TankBottom to Baseline i189lg Insulation compared to Baseline (1998$) 99% Benefit 1% Disadarntie 98%Benefit 3% Disadvantage irrT ffu *hllrs i 6000 Ts-a---a.-..U..l-r 100% ^
. -KW~· ? fr a80% S )CC -HAic g 4000- 0e i 1 1 i ' 1
- 1 1H -te I 4 % '_I2000 L -2. ' / 20% 5 nriE u- II IpIIfi |-|-II.' l 0 PP-,,-B,--,p-r,--,-, , , 0%i = -.... = 0 0 00? 00 0, , I , ,*- oD VflCN.- r rim DLCCS|I DLCC($)

Delta LirI C Cycl x oar2.r" Inrultlon Delta Life Cycle Cost of3" 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 eoi. -H * I 2000 80% 

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Olia Llf Cycle Cast f Plafcle Tank compared to B-fseline '(1.9 27% Beneft 73% Disadvantage 

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Figure la Difference in Life-Cycle Cost by Design Option Combination forElectric Water Heaters 6SensitivityAnalysis - ElectricWater Heaters Life-Cycle Cost of2.5" InsulationWater Heater (1998$)

Annual Operating Cost in2003 of

2.5" Insulation WaterHeater 0.8472 (1998$)

Discount Rate -0.3561

Lifetimeof individualwater heaters (Years)

TotalCostto Buy and Install a2.5" 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

7Delta Llfe Cycle Coatof He Trap cmpared Delta Lire Cycle Cost o r8% RE compared to toBaseline (1998] Baseline (19986) g7T Bentfilt 3% DIsadvantage 85% Benefit 15% Disadvantage EJU- -- l mr *UU',, 5300 -Br 103c

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III 4300 80%o .> 4in- -. ; - .nn an%

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° < 5 L DLCC;S;D OLCC($)

Delta Lira Cycle Ces of 2" Insulat in Delta Life Cycle Costof2.5" Insulation olllaredto Basellne (19S61) compared to Baseline (1998$) 78 BeneFit 22% Disavantage 72% Benefit 28% Disadvantage "'_alOmCCnt'si03! O I 4000- 100% 0 ):Cc,66 ' ~II--C 3X
- 80%

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.... ', - , -- ,0 Q3 DLCCI$I DLCC($t)

Delta Lire Cycle Cos of BO9 RE clllpjredto Delta Life Cycle Cost of Side-Arm compared to Basellne (1181|1 Baseline (1998$] 73% BeneFit 27% Disadvantage 36 Benefit 65% Disadvantage )a- I nnon >,,cc ..ft wam;,=*. 0 .?nrn3.i 1% u. .. -Hna || C .. O.. 80% V -CC t. eO'i fino% o 1'CC. J| eof || '"I111- 6c-ol 4- -l

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~ 000 00 f 00nrn In -; 4 ;: ;n% DLCCI1 IDLCC()

Dealc LifeCycle Coet ar PIScle Tank Oel LifeCycle Cost of 3" Insulation COlIIparedt Biatllne (1996i) comparedto Baseline (19986) 32 Benefit 69% Disaduantage 17% Benefit 83% Disadvantage 2ECC 0\4C30 , .OC.:
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--- mr-i-,--"'--c i): - - : I Figure lb DiffereimcwtLife-Cycle Costs by DLCC<(] Design Option Combination for Gas-Fired Wat Heaters 8Sensitivity Analysis- Gas Water Heaters Life Cycle Cost of2.5" Insulation Water Heater (1998$)

Annual Operating Cost in2003of

2.5" Insulation Water Heater 0.7685 (1998$)

Total Cost toBuy and Install a2.5" Insulation Water Heater(1998$) 28

Lifetime of individualwater 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 inLife-Cycle Cost of"2.5 in. Insulation" Design Option Combination on Gas-Fired Water Heaters

9Delta Life Cycle Crt erHeac Trr p arnparad Delta Life Cycle Cost of2" Foam Insulation to Buelinr. tie1t compared to Baseline (1998$) Me BUsneinc 20% Dliravantale 18% Benefit 83% Disadvantage 

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cXC 3C'. 000 80% > .P ))CC i 3C:
_ a . eoo 960% s wr "IIrB 

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o ILL i i :- l I:LC'CeS) DLCC(S)

Delta Lira Cylel Ct o ar2.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

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-' rDCj D C mCD C DM 0 DLCCSI DLCC($)

Delta Life Crle Castof Impraved Fle Bamle Delta Life Cycle Cost of Interrupted Ignition compared to BOteline f1Ci
_ comparedto 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 L S 40CO 6803% -I)CC 41& E g i-1 4I'LI 2Er0 40% E 

### e IJLL- »f 9ll(-->]i 3 E ' a" S-''0% 3 I paapagBap-A = I I H . . I00

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. -p_ _ _i_«_p 2j~f_ _t oC0 0 oEo CDa DLCCS|l DLCC(*) Figure Ic Difference in Life-Cycle Costs by Design Option Combination for Oil-Fired WaterHeaters

10Sensitivity Analysis- Oil-fired Water Heaters LifeCycle Cost of2.5" Foam Insulation Water Heaters (1998$)

Annual Operating Cost in2003 of

2.5" Insulation Water Heater 0.6034 (1998$)

Lifetime of individual water heaters 0.5442 (Years)

Discount Rate -0.4521

Total Cost toBuy and Installa 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 inLife-Cycle Cost of"2.5 in. Insulation" Design Option Combination on Oil-Fired Water Heaters

11TrialStandard Levels Based on the requirements in the Code ofFederal Regulations, 10CFR430 Subpart C, Appendix A, Section 5(c)(3), and usingthe 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 + HeatTraps 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

12