Engineering Analysis

CHAPTER 6. ENGINEERING ANALYSIS TABLE OF CONTENTS 6.
1 6.2 6.3 6.4 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

PRODUCT CLASSES CONSIDERED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
IDENTIFICATION OF BASELINE MODELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
MANUFACTURING COST ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
6.4.1 Generation of Bills of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4
6.4.1.1 Teardown (Reverse Engineering) Approach . . . . . . . . . . . . . . . . . . . . 6-4
6.4.1.2 Modeling Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
6.4.2 Approach for Condensing Boilers and Mobile Home Furnaces . . . . . . . 6-11
6.4.3 Cost Model and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12
6.4.3.1 Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-13
6.4.3.2 Greenfield Facility Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15
6.4.3.3 Production Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16
6.4.3.4 Generating Production-Cost Results . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17
6.4.4 Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-18
6.4.5 Curves of Manufacturing Cost Versus Efficiency . . . . . . . . . . . . . . . . . . . . . . 6-21
INSTALLATION COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-24
6.5.1 Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
6.5.2 Installation Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
6.5.3 Non-Weatherized Gas Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-29
6.5.4 Weatherized Gas Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-30
6.5.5 Mobile Home Gas Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-31
6.5.6 Oil-Fired Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-31
6.5.7 Hot-Water Gas Boilers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-32
6.5.8 Hot-Water Oil-fired Boilers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-33
MAINTENANCE AND REPAIR COST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-34
6.6.1 Maintenance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-34
6.6.2 Repair Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-35
ENGINEERING ANALYSIS PAYBACK PERIODS . . . . . . . . . . . . . . . . . . . . . . . . 6-37
6.7.1 Calculation of Fuel Consumption for Each Design Option . . . . . . . . . . . . . . . 6-37
6.7.2 Calculation of Electricity Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
6.7.3 Derivation of Fuel Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
6.7.4 Rebuttable Payback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
6.7.4.1 Rebuttable Payback Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-39
ENGINEERING SPREADSHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-40
6.5
6.6
6.7
6.8
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LIST OF TABLES
Table 6.3.1 Table 6.4.1 Table 6.4.2 Table 6.4.3 Table 6.4.4 Table 6.4.5 Table 6.4.6 Table 6.4.7 Table 6.4.8 Table 6.4.9 Table 6.4.10 Table 6.5.1 Table 6.5.2 Table 6.5.3 Table 6.5.4 Table 6.5.5 Table 6.5.6 Table 6.5.7 Table 6.5.8 Table 6.6.1 Table 6.7.1 Table 6.7.2 Features of Baseline Models by Product Class . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
Gaps in Efficiency Levels of Units Selected for Teardown . . . . . . . . . . . . . . . 6-7
Ranking of Design Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-8
Fraction of Category III Installations by AFUE . . . . . . . . . . . . . . . . . . . . . . . 6-10
Cost Model Fabrication Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-14
Cost Model Assumptions on Outsourced Components . . . . . . . . . . . . . . . . . . 6-15
Greenfield Facility Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15
Greenfield Facility Production Cost Assumptions . . . . . . . . . . . . . . . . . . . . . 6-16
Annual Production Volume Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17
Degree of Uncertainty for Main Variable Types . . . . . . . . . . . . . . . . . . . . . . . 6-18
Manufacturing Parameter Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19
Installation Model, Non-Weatherized Gas Furnace Weighting Assumptions . 6-27
Master Bill of Materials for All Appliance Installation Configurations . . . . . 6-28
Material and Labor Cost Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-28
Installation Cost for Non-Weatherized Gas Furnaces . . . . . . . . . . . . . . . . . . . 6-30
Installation Cost for Weatherized Gas Furnaces . . . . . . . . . . . . . . . . . . . . . . . 6-31
Installation Cost for Oil-Fired Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-32
Installation Cost for Hot-Water Gas-fired Boilers . . . . . . . . . . . . . . . . . . . . . . 6-33
Installation Cost for Hot-Water Oil-fired Boilers . . . . . . . . . . . . . . . . . . . . . . 6-34
Annualized Repair Cost (2006$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36
Fuel-Efficiency Design Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
Efficiency Levels with Less Than Three-Year Payback Period Using
DOE Test Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-39
LIST OF FIGURES Figure 6.4.1 Figure 6.4.2 Figure 6.4.3 Figure 6.4.4 Figure 6.4.5 Figure 6.4.6 Figure 6.4.7 Figure 6.4.8 Probability Distribution for the Production Cost of an Equipment Sample . . Importance of Input Parameters for Production Costs for
Non-Weatherized Gas Furnaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces . . . . . Incremental Manufacturing Costs for Weatherized Gas Furnaces . . . . . . . . . Incremental Manufacturing Costs for Mobile Home Furnaces . . . . . . . . . . . Incremental Manufacturing Costs for Oil-fired Furnaces . . . . . . . . . . . . . . . . Incremental Manufacturing Costs for Gas Boilers . . . . . . . . . . . . . . . . . . . . . Incremental Manufacturing Costs for Oil-fired Boilers . . . . . . . . . . . . . . . . . 6-20
6-20
6-21
6-22
6-22
6-23
6-23
6-24
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CHAPTER 6. ENGINEERING ANALYSIS
6.1
INTRODUCTION
The engineering analysis provides an estimate for the potential energy savings that can be achieved with higher-efficiency furnaces and boilers and determines the associated increases in equipment and installation cost. This analysis relies on DOEs test procedure as the method for determining energy savings estimates and compares the costs for improved efficiency to the cost of baseline furnaces and boilers representing all product classes considered. The engineering analysis estimates the payback period for each of the design options to enable DOE to address the legally required rebuttable payback consideration. DOE uses the costs developed in the engineering analysis in the life-cycle cost (LCC) analysis. The baseline models for each product class provide starting points for analyzing technologies that allow for energy efficiency improvements. DOE defines a baseline model as an appliance with commonly available features and technologies that just meets the current minimum efficiency standard. For this rulemaking, DOE defined baseline models for each of the product classes with sales volumes greater than 100,000 per year. To explore how manufacturers would likely design products to meet a minimum standard, and to thoroughly understand the relationships between different equipment configurations and efficiency and cost, DOE considered various design options that could meet a given efficiency level. DOE estimated inputs to determine payback periods, which represent the time required for the increase in average total installed equipment cost to be offset by reduced annual average operating cost. DOE estimated total installed cost to the consumer through an analysis of manufacturer costs, markups, and installation costs; it estimated annual average operating costs by calculating energy consumption using the DOE test procedure, applying average energy prices, and adding annual average maintenance repair costs.
6.2
PRODUCT CLASSES CONSIDERED The Framework Document1 outlined 13 classes of furnaces and boilers:
C C C C C
Gas furnaces (weatherized and non-weatherized), Oil-fired furnaces (weatherized and non-weatherized), Mobile home furnaces (gas-fired and oil-fired), Hot-water boilers (gas-fired and oil-fired), Steam boilers (gas-fired and oil-fired),
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C C
Electric furnaces, and Combination space/water-heating appliances (gas-fired and oil-fired).
Based on the market assessment and stakeholder comments, DOE divided these product classes into four categories, based primarily on shipment volume. The first category consists of the most widely used product class, non-weatherized gas furnaces. Non-weatherized gas furnaces have annual shipments of more than 2.5 million units. DOEs analyses considered this product class in depth. The second category consists of those remaining classes that typically have shipments of more than 100,000 per year: (1) weatherized gas furnaces, (2) mobile home gas furnaces, (3) oilfired furnaces, (4) hot-water gas boilers, and (5) hot-water oil-fired boilers. DOE analyzed these product classes in a similar manner to the first category, but included less detail on electricity savings and considered a smaller number of design options. The third category includes the classes that have annual shipments less than 50,000: steam gas boilers and steam oil-fired boilers. DOE did not conduct analyses on these products since they have a low and declining level of shipments. DOE also did not conduct analyses on the following product classes: weatherized oilfired furnaces, mobile home oil-fired furnaces, electric furnaces, and combination appliances. The first two classes have very low (essentially zero) shipments. DOE did not consider electric furnaces because it did not identify any significant energy savings potential (DOE found that the reports of furnace manufacturers to the FTC list the efficiency for electric furnaces with a low and a high value of 100-percent AFUE). DOE did not include combination appliances in the current analysis since a test procedure for this product class is not in place and DOE has not yet decided whether to regulate this product class.
6.3
IDENTIFICATION OF BASELINE MODELS
DOE defines baseline units as appliances with commonly available features and technologies that just meet the current minimum efficiency standard. For each of the product classes in the first and second categories described above, DOE identified a baseline model. In determining the baseline model, it considered technical descriptions of the covered equipment, definitions of the product classes as described in the Framework Document, results of the market assessment, and suggestions from stakeholders. Table 6.3.1 summarizes the main features of the baseline models.
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Table 6.3.1
Product Class
Features of Baseline Models by Product Class

Input Capacity AFUE Configuration Heat Exchanger Type (Btu/hr) (%) 75,000 75,000 75,000 105,000 105,000 140,000 78 78 75 78 80 80 Upflow Horizontal Downflow Upflow N/A N/A Clam Shell/Tubular Clam Shell/Tubular Drum Drum Ignition Draft
Non-Weatherized Gas Furnaces Weatherized Gas Furnaces Mobile Home Gas Furnaces Oil-Fired Furnaces Gas Hot-Water Boilers Oil-Fired Hot-Water Boilers
Hot Surface Induced Hot Surface Induced Standing Pilot Natural Intermittent Ignition Forced
Sectional, Dry-base, Standing Pilot Natural Cast-iron Sectional, Wet-base, Intermittent Forced Cast-iron Ignition
In addition to the above features, the baseline models have a blower or pump driven by a standard permanent split capacitor (PSC) induction motor.
6.4
MANUFACTURING COST ANALYSIS
After assessing the available methods and taking stakeholder comments into account, DOE used reverse engineering of existing products to estimate the manufacturing cost of the baseline model and the considered design options. The reverse-engineering or teardown approach is a cost assessment based on a detailed bill of materials (BOM) for the various models. Appendix B describes the technical aspects of the approach as applied to residential furnaces and boilers. DOE applied the reverse-engineering approach in conjunction with a review of relevant literature, computer simulation, and other analytical techniques. In some cases, DOE adopted industry-supplied data. Throughout the advance notice of proposed rulemaking (ANOPR) and notice of proposed rulemaking (NOPR) analysis periods, DOE provided the Gas Appliance Manufacturers Association (GAMA), manufacturers, and other stakeholders several opportunities to review and comment on the equipment cost estimates to ensure accuracy and completeness. DOE considered comments from these stakeholders in its SNOPR analysis. In estimating production costs for each candidate efficiency level above the baseline model, DOE considered several design options that could be used to reach a given annual fuel utilization efficiency (AFUE) level. DOE determined the efficiency levels corresponding to various design option combinations using engineering calculations and manufacturer data submittals. DOE took the following steps in establishing manufacturing costs as a function of fuel efficiency:
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C C C C
Generate BOMs for products at different efficiency levels using teardown analysis (disassembly of units) and numerical simulations; Enter BOMs into a cost model, incorporating assumptions obtained through available industry data, internal expertise, visits to manufacturers, and input from stakeholders; Perform sensitivity analysis and cost-per-pound estimates; and Generate cost-efficiency data for each product class.
DOE further divided each of these steps into several sub-tasks, as described in the following sections. 6.4.1 Generation of Bills of Materials
A BOM is a list of all the components that comprise a given appliance. In the BOMs, DOE listed each component and provided a detailed description of its dimensions, function, and material, and information about its manufacturing and assembly process. DOE generated the BOMs by examining and disassembling (through teardown analysis) some current-market units and/or simulating design options using numerical models and creating hypothetical units that it costed as if they were real units. 6.4.1.1 Teardown (Reverse Engineering) Approach
In the context of this analysis, the terms reverse engineering and teardown analysis solely describe the estimation of production costs by examining actual equipment or designs. The availability of a large number of residential products, with a wide range of efficiency, allowed DOE to consider most design options using a reverse-engineering approach, to establish an accurate estimate for production costs. DOE purchased and disassembled by hand the selected units, and measured, weighed, and analyzed each part. Additionally, DOE studied and reconstructed all the steps of the manufacturing processes to complete the teardown analysis. The result was a detailed BOM that DOE used as an input to the cost model. Selection of Units. During the process of selecting units for teardown, DOE considered three main questions: (1) What efficiency levels should it capture in the teardown analysis? (2) Are all potential efficiency levels and design options represented in the units on the market? (3) Which of the available units are most representative? In responding to these questions, DOE adopted the following criteria for selecting units for the teardown analysis:
The selected products should span the full range of efficiency levels under consideration;
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C Within each product class, the selected products should come from the same
manufacturer and be within the same product series;
C The selected products should come from a manufacturer that has a large market share in that product class; and C The selected products should have non-efficiency-related features that are the same as, or similar to, features of other products in the same class and at the same efficiency level.
Additional criteria for selecting the teardown units included the following:
C The input capacities should be as close as possible to the baseline model capacity for each product class; C The units should be manufactured in considerable volume and commonly available; and C The units should have the most popular features and average energy consumption values.
DOE focused heavily on non-weatherized gas-fired furnaces and, therefore, selected half of the teardown units within that class. The units selected for teardown included five nonweatherized gas-fired furnaces, one mobile home furnace, one oil-fired furnace, one weatherized gas-fired furnace, and two gas-fired hot-water boilers. Non-Weatherized Gas-Fired Furnaces. Non-weatherized gas-fired furnaces represent the vast majority of the furnace and boiler market. Therefore, DOEs teardown analysis included five models that are representative of the efficiency levels and design options available for these types of furnaces on the market. The analysis considered products in three efficiency ranges: non-condensing (between 78-percent and 80-percent AFUE, with ~68 percent of the furnace market at 80-percent AFUE), near-condensing (81-percent AFUE, <1 percent of the market), and condensing (higher than 88-percent AFUE, ~31 percent of the market).2 When possible, DOE selected the least-efficient and the most-efficient units in a given efficiency range. Thus, DOE selected three units in the non-condensing and near-condensing ranges (low, medium, and high efficiency) and two units in the condensing range (low and high efficiency). To study the potential effects of design differences (such as tubular-versus-clamshell heat exchangers), DOE selected models made by two major manufacturers that represent significantly different designs. In this document, DOE refers to these two models as Base Design A and Base Design B. Weatherized Gas Furnaces. Manufacturers of weatherized gas furnaces offer products between 78-percent and 82.8-percent AFUE. There was one weatherized gas furnace listed in the GAMA directory at 82.8-percent AFUE, which has since been removed from the directory. The highest current efficiency for weatherized gas furnaces in the GAMA directory is 81.4percent AFUE. For its teardown analysis, DOE chose one representative unit from the range of
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efficiencies currently available for the teardown analysis. Manufacturers typically sell weatherized furnaces as packaged units, which means they include a furnace and an air conditioner in the same box. Contractors typically install packaged units to the exterior of a residence. The packaged teardown unit that DOE selected had a three-ton air-conditioner capacity, which appears to be the most common cooling capacity. Mobile Home Furnaces. Mobile home furnace manufacturers offer products at the following efficiency levels: 75-percent, 80-percent, and 90-percent AFUE. In its teardown analysis, DOE chose a baseline efficiency level model for these products because the mobile home furnaces market currently presents a very low degree of design variability. The design differences between a 75-percent AFUE unit and a higher-efficiency unit are straightforward (i.e., manufacturers incorporate electronic ignition, baffles, and draft inducer to achieve 80 percent AFUE, and a secondary heat exchanger to achieve 90-percent AFUE), and DOE could effectively determine the costs of these components without performing a teardown for each efficiency level. Oil-Fired Furnaces. Manufacturers of oil-fired furnaces typically offer products between 78-percent and 86-percent AFUE. Very few units are at the baseline model efficiency level (i.e., 78-percent AFUE), and DOE did not find a unit that is considered representative at efficiency levels lower than 81 percent. Therefore, DOE decided to analyze one unit at an intermediate level, rather than at the baseline model level. Gas-Fired Hot-Water Boilers. One of the major differences between gas-fired hot-water boilers and gas-fired furnaces is that, for boilers, the transition between non-condensing and condensing appliances is continuous and there is no gap in the distribution of efficiency values on the market. Boiler models are available at virtually all efficiency levels between 80-percent and 99-percent AFUE. DOE set a value of 84-percent AFUE as the highest efficiency level for performing teardowns of gas hot-water boilers because only approximately 20 percent of models exceed this efficiency level. DOE chose one unit for teardown at 80-percent AFUE and one unit at 84 percent AFUE. Since cast-iron sectional boilers are the most popular, DOE selected these for the teardown analysis. Condensing boilers are rare, and DOE selected none of them for the teardown analysis. Oil-Fired Hot-Water Boilers. DOE did not apply the teardown approach to oil-fired boilers. To estimate manufacturing costs of oil-fired hot-water boilers, DOE used available information from other product classes, taking advantage of similarities between gas- and oilfired hot-water boiler heat exchangers, and between oil-fired furnace and boiler burners.
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6.4.1.2
Modeling Approach
The sample units DOE used in the teardown analysis do not include all possible efficiency levels or design options of each product class. Thus, DOE used a modeling approach to create BOMs for additional efficiency levels and design options. First, DOE identified efficiency levels not covered in the teardown analysis (Table 6.4.1). DOE then selected the design options most likely to be implemented by manufacturers, identified possible design modifications of existing units, and created a written description of hypothetical units. All underlying material and cost data are presented in 2006$. Table 6.4.1 Gaps in Efficiency Levels of Units Selected for Teardown Units Selected for Teardown Non-condensing range: 1 average efficiency and 1 high efficiency Condensing range: None Non-condensing range: 1 baseline model efficiency Condensing range: 1 low efficiency and 1 high efficiency Non-condensing range: 1 baseline model efficiency Non-condensing range: 1 baseline model efficiency and 1 higher efficiency 1 baseline model efficiency None Gaps Baseline model efficiency units in the non-condensing range, units in the condensing range, units with modulation Higher-efficiency units in the noncondensing range, average-efficiency units in the condensing range, units with modulation
Product Class Non-Weatherized Gas FurnacesBase Design A
Non-Weatherized Gas FurnacesBase Design B
Mobile Home Gas Furnaces Hot-Water Gas Boilers
Higher-efficiency units in the noncondensing range, condensing units Average-efficiency units in the noncondensing range, condensing units
Oil-Fired Furnaces Oil-fired Hot Water Boilers
Higher-efficiency units Entire product class
Selection of Design Options and Efficiency Levels. The following section describes the selection of design options and efficiency levels for all product classes.
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Non-weatherized Gas Furnaces. A report from the Gas Research Institute (GRI)3 provided the background information DOE used as a basis to select design options for noncondensing, non-weatherized gas furnaces. The GRI report considered a large universe of design options, and assigned a cost and efficiency improvement to each design option. Although DOE did not use this cost information in the remainder of its analysis, it used these data to select design options. Table 6.4.2 ranks the options on the basis of cost-per-one-percent of AFUE increase. Table 6.4.2 Ranking of Design Options GRI 1994 Cost* (Without Installation) $14 $40 $41 $71 $66 $35 $39 $60 $20 AFUE Increase 1.7% 1.7% 1.7% 0.8% 0.7% 0.3% 0.2% 0.3% none $/% AFUE Increase 8.2 23.5 24 89 94 117 195 200 -
Design Option Improved heat-transfer coefficient Increased heat-exchanger area Derating High-mass heat exchanger Advanced burner Flue-gas recirculation Improved insulation Increased insulation Forced-draft system
* The cost shown for each design option are representative of the costs GRI estimated in 1994 and were used to rank the design options by product class for the engineering analysis.
Three optionsimproved heat-transfer coefficient, increased heat-exchanger area, and deratingare the most cost-effective approaches for increasing AFUE. Among these three options, increased heat-exchanger area and derating are virtually identical, since they rely on the same concept (increasing the ratio of heat-exchanger area to burner input). Therefore, DOE focused on two design options for non-weatherized gas furnaces: improved heat-transfer coefficient and increased heat-exchanger area. Another design option, forced-draft system, passed the screening criteria, but DOE did not use this option in its analysis, since the GRI study indicates that forced-draft combustion systems do not appear to offer efficiency improvements comparable to an induced-draft system. DOE further considered the heat-exchanger design types. For the non-condensing range, DOE considered two different heat-exchanger design types: clamshell and tubular, indicated as base design A and base design B, respectively. Since the designs present only minor cost differences, and to prevent any possible disclosure of confidential or proprietary information, DOE aggregated their costs. The majority of the manufacturers of condensing furnaces and boilers use secondary stainless-steel heat exchangers. Therefore, DOE considered condensing furnaces and boilers with stainless-steel heat exchangers in estimating the cost of a minimum-efficiency condensing
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unit (90-percent AFUE). To reach higher efficiency in the condensing range, DOE considered increased heat-exchanger area, instead of an improved heat-transfer coefficient, since the latter did not seem to provide any economic or efficiency advantage (based on pressure-drop considerations and observation of available products). DOE also considered modulation as a design option. While modulating furnaces are typically known for delivering superior comfort, the modulation feature can also provide an AFUE improvement. GRI did numerical simulations to model several furnaces, in which it controlled for the burner input rate, excess air fraction, and circulating air-flow rate.3 These simulations showed AFUE improvements ranging from 2.9 percent to 3.2 percent are possible using modulation with two-stage electronic controls. The report indicates that achieving this level of improvement requires a higher-efficiency electronically commutated motor (ECM) blower, control of excess air, and adjusting the circulating air flow. DOE selected efficiency levels up to 83-percent AFUE for the near-condensing range for the ANOPR, because there were products available that approach 83-percent AFUE (i.e., 82.8percent AFUE). Subsequently, DOE decided that the potential safety hazards associated with those products at 82-percent and 83-percent AFUE, as mentioned by several stakeholders during the May 8, 2002, DOE public workshop on venting, are too high. Therefore, DOE analyzed efficiency levels up to 81-percent AFUE for the NOPR. DOE did not analyze near-condensing furnaces above 83-percent AFUE, since these have similar safety and cost issues as the 83 percent AFUE furnace. For the condensing range, DOE considered efficiency levels between 90-percent and 96 percent AFUE. An AFUE of 96 percent approaches the highest-efficiency commercially available unit. Weatherized Gas Furnaces. DOE considered increased heat exchanger area and increased heat transfer coefficient as the two design options for weatherized gas furnaces. Since these units are located outdoors and condensate removal can become a significant issue at nearcondensing AFUE levels, DOE assumed the heat exchangers at 82-percent AFUE and 83-percent AFUE were made of stainless steel, specifically AL 29-4C, at these two AFUE levels. DOE also included the cost of a condensate disposal system that would function at below-freezing temperatures. DOE used the costs provided by GAMA from its survey of manufacturers4 and conducted the analysis at both the low and high points of the cost range (i.e., $78 and $320, respectively). Mobile Home Gas Furnaces. For mobile home gas furnaces, DOE investigated a combination of design options. From product literature, DOE learned that, to move from 75 percent to 80-percent AFUE, manufacturers use electronic ignition, improve the heat transfer coefficient by using baffles, and add a draft inducer. Therefore, DOE considered these options to increase efficiency from 75-percent to 80-percent AFUE.
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Because products for mobile homes are not commercially available between 80-percent and 82-percent AFUE, DOE relied on its analysis for non-weatherized furnaces and selected the least expensive design option(i.e., increased heat-exchanger area) for that product class. DOE selected efficiency levels between 75-percent and 82-percent AFUE in the noncondensing range and one level (90-percent AFUE) in the condensing range. To estimate the cost for the 90-percent AFUE level, DOE relied on an alternative approach, described in section 6.4.2. Oil-Fired Furnaces. For oil-fired furnaces, DOE considered only the increased heatexchanger-area design option. This is because improving the heat-transfer coefficient is not a common practice in the oil-fired furnace industry, due to potential smoke production. DOE considered oil-fired furnaces with efficiencies up to 85-percent AFUE. Gas Hot-Water Boilers. Review of manufacturers product literature and analysis of the teardown units showed that manufacturers commonly improve efficiency in the non-condensing range by incorporating either electronic ignition or an improved heat-transfer coefficient (baffles), or a combination of the two. DOE also considered two-stage modulation, along with induced draft, as a possible option. Based on the models available on the market, DOE analyzed gas boilers up to 99-percent AFUE. However, to estimate the cost for condensing gas boilers, DOE relied on an alternative approach, described in section 6.4.2. For gas boilers, manufacturers installation manuals indicate that models with AFUE less than or equal to 85 percent can be vented either vertically (through chimneys) or horizontally (using metal vents). If they are chimney vented, the equipment falls into Category I. If they are vented horizontally using metal vents, or if the AFUE is above 85 percent, the equipment is in Category I (using power vent) or Category III. In its analysis for the SNOPR, DOE used data provided by GAMA during the NOPR phase, based on a survey of manufacturers, on the fraction of installations at each AFUE level that would require Category III venting, as shown in Table 6.4.3.5 Table 6.4.3 Fraction of Category III Installations by AFUE AFUE 80% 81% 82% 83% 84% 85% 86%
Fraction 0.02 0.02 0.10 0.26 0.24 0.55 1.00
For the fraction of installations requiring Category III venting at each AFUE level, DOE included the cost of induced-draft technology as part of the installation cost. For example, DOE applied the cost of induced-draft technology to the 24 percent of installations requiring Category
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III venting at 84-percent AFUE. DOE verified the GAMA data submitted from its survey of manufacturers and DOE conducted analysis at both the low and high points of the cost range (i.e., $108.75 and $145.75, respectively).4 The total installation costs for hot-water gas-fired boilers are shown in Table 6.5.7. Oil-Fired Hot-Water Boilers. The main design option approach DOE considered for oilfired boilers was increased heat-exchanger area, since improving the heat transfer coefficient is not a common practice in the oil-fired boiler industry due to smoke issues. DOE also considered two-stage modulation as a possible option. DOE considered efficiency levels up to 95-percent AFUE. Building of Hypothetical Units and Creation of Bills of Materials. This phase of the analysis consisted of modifying the design of existing units to produce hypothetical units that perform at the desired efficiency levels. This process involved applying the selected design modifications to representative models, for which DOE obtained information through the teardown analysis or through product literature, to build hypothetical units. For gas furnaces, DOE used the FURNACE simulation model, provided by the Gas Technology Institute (GTI), to predict AFUE increases corresponding to the increases in heatexchanger area. The model accepts descriptions of modified units as an input and provides efficiency levels for each input. For gas boilers, DOE examined the existing product literature and analyzed the efficiency improvements associated with the selected design options; it interpolated the data when information was not available. In this product class, electronic ignition and/or addition of baffles to the heat exchanger are common ways to increase efficiency. Since manufacturers equip more units with electronic ignition at higher efficiencies, DOE assumed that a high fraction of the boilers at a high AFUE level are equipped with electronic ignition, and a smaller fraction are equipped with a set of baffles. For intermediate-efficiency levels, DOE linearly interpolated the cost of materials of a higher- and a lower-efficiency unit. For mobile home furnaces and oil-fired equipment, DOE applied heat-exchanger scaling factors to estimate the increase in the heat-exchanger area that is needed to reach a higher efficiency level. After DOE built the units, it disassembled and costed them as if they were real units. 6.4.2 Approach for Condensing Boilers and Mobile Home Furnaces Even after completing both the teardown analysis on representative units and the numerical simulations, DOE still needed information for condensing boilers (both gas- and oilfired) and condensing mobile home furnaces. For these categories, which are sold in low volumes, DOE identified possible design options and used a cost-per-pound estimation methodology to estimate production costs for these products. It relied on the following five steps:
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1. 2. 3. 4. 5.
Examine the cost per pound and the cost-per-pound trend of non-weatherized gas furnaces (the product class for which the most comprehensive information is available). Find the cost per pound at various efficiency levels within the analyzed product class. Determine typical shipping weights of units available on the market for the analyzed case (e.g., 90-percent AFUE mobile home furnace). Create a preliminary estimate of production costs, assuming that similar designs and materials are used across the range of manufacturers. Modify preliminary estimate to reflect other factors (e.g., all-stainless design).
6.4.3 Cost Model and Definitions DOE based the cost model on production activities, and divided factory costs into the following subsets: Material: Labor: Overhead: Direct and indirect materials. Fabrication, assembly, indirect, and overhead (burdened) labor. Equipment depreciation, tooling depreciation, building depreciation, utilities, equipment maintenance, rework.
Since there is a large variety of accounting systems and methods in use to monitor costs, DOE defines the above terms as follows: Direct material: Purchased parts (out-sourced) plus manufactured parts (made in-house). Material used during manufacturing (e.g., welding rods, adhesive), but not normally considered part of the product. Labor associated with in-house piece manufacturing. Labor associated with final assembly and sub-assemblies.
Indirect material:
Fabrication labor: Assembly labor:
Equipment and plant

depreciation: Money allocated to pay for initial equipment installation and
replacement as the production equipment wears out. Tooling depreciation: Cost for initial tooling (including non-recurring engineering and debugging of the tools) and tooling replacement as it wears out. Money allocated to pay for the building space.
Building depreciation:
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Utilities:
Electricity, gas, phone service, etc.
Equipment maintenance: Money spent on yearly maintenance, both materials and labor. Indirect labor: Plant labor that scales directly, based on the number of direct workers (assembly + fabrication). Includes supervisors, technicians, and manufacturing engineering support. Fixed plant labor that is spread over a number of product lines and includes accounting, quality control, shipping, receiving, floor supervisors, plant managers, office administration, and environmental health and safety. Not included are: research and development, corporate management, general administration, and maintenance labor. Labor and materials associated with correction of in-plant manufacturing defects.
Overhead labor:
Rework:
DOE input the cost data from all the BOMs, whether they were obtained through teardowns or numerical simulations, into the cost model, which makes use of specific assumptions to provide cost estimates. The next sections of this chapter describe the set of assumptions DOE used during this analysis. 6.4.3.1 Outsourcing
DOE characterized equipment parts based on whether manufacturers purchase them from outside suppliers or fabricate them in-house. For purchased parts, DOE estimated the purchase price. For fabricated parts, DOE estimated the price of intermediate materials (e.g., tube, sheet metal) and the cost of transforming them into finished parts. Whenever possible, DOE obtained price quotes directly from suppliers or the manufacturers of the units being analyzed. For higher-efficiency equipment, DOE assumed that a standard would result in the same component purchase volume as the current baseline model. Most of the manufacturers carry out manufacturing operations in-house, as summarized in Table 6.4.4.
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Table 6.4.4 Cost Model Fabrication Assumptions Process Sub-Process Tube Forming Tube cut Tube bend Roll form Tube coil Sheet Metal Stamping Press brake Blanking Turret punch Plasma cut Welding Seam welding Spot welding Machining Machining center Finishing Paint Assembly Adhesive bonding ToxLox Press fit Fixture Miscellaneous assembly operation Final Assembly Packaging Quality assurance Molding Injection mold Casting Sand cast
In-House U U U U U U U U U U U U U U U U U U U U
Outsourced
U U
Similarly, DOE made assumptions about which components manufacturers purchase from external suppliers (Table 6.4.5).
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Table 6.4.5 Cost Model Assumptions on Outsourced Components Sub-Assembly Outsourced Components Blower Motor - Wheel - Capacitor Inducer Motor - Wheel - Capacitor Casing Insulation Circulator Circulator Pump - Motor Electrical/Controls Control Board - Switches - Capacitors - Transformers - Relays Connectors Exterior Components Vent Dampers Filter Filter Fuel Control Gas Valve Assembly - Igniter - Manifold - Flame Sensor Burner Orifices - Oil Burner Heat Exchangers Refractory, Cast Iron Section Packaging Pallet - Box 6.4.3.2 Greenfield Facility Specifications
To estimate production costs in the industry, DOE created agreenfield production facility that closely resembles a typical new facility. In this exercise, DOE theoretically built a new facility from the ground up, for the sole purpose of producing the equipment under analysis. This simplification suppressed differences among manufacturers and focused on generic aspects in plant and process that were related to efficiency. The results may, therefore, overestimate or underestimate the production costs of a particular manufacturer. However, since they were calibrated to aggregate industry data, they should be representative of the industry as a whole. DOE based the specifications and production cost assumptions for the generic greenfield facility, as shown in Tables 6.4.6 and 6.4.7, on manufacturer interviews and analysis of common industry practices. Table 6.4.6 Greenfield Facility Specifications Greenfield Facility Specifications 250 2 1 8 1 20% 10% 0.7 Dedicated
Production Days/Year Fabrication Shifts/Day Assembly Shifts/Day Hours per Shift Press Lot Size per Day Worker Downtime Equipment Downtime Actual/Designed Production Capacity Ratio Assembly Line
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Table 6.4.7
Greenfield Facility Production Cost Assumptions Greenfield Facility Production Cost Assumptions Capital Recovery Rate 15% Building Depreciation Period 25 Years Equipment Depreciation Period 720 Years (depending on which product class) Fringe Benefits Ratio 40% 14 $/hour (based on US assembly worker average and Direct Labor Cost Rate 2004$) Direct/Indirect Labor Cost Ratio 50% of direct labor Utility Cost 3% of factory cost Maintenance Cost 3% of depreciation Freight In 3% of materials cost Rework Rate 8% of manufactured material, fab labor and assembly labor Assembly Factor 1.5 (buffer for assembly-worker speed variation) Building Cost $120/square foot (2004$) 6.4.3.3 Production Volume
Production volumethe number of units produced annually within a product series and using similar partsis a very important variable in estimating manufacturing costs. DOE allocated fixed costs to a product on the basis of the production volume. Using the shipments data that GAMA provided,6 as well as assumptions about market shares for each manufacturer in each class, DOE made initial estimates of the annual production volume for each manufacturers product family. Individual manufacturers and GAMA reviewed these estimates, and DOE subsequently modified the estimates to incorporate their comments and information. Note that these production volumes dictated how DOE assigned tooling costs on a per-unit basis, so the estimates applied to product families, not to sales of an individual product in the product line. Purchasing power for components also follows these production volumes, except in cases where the purchased part in question is a commodity item (in-shot burners, for example). In such a case, DOE assumed higher production volumes. Table 6.4.8 itemizes the assumed typical production volumes for each of the product classes under consideration.
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Table 6.4.8 Annual Production Volume Assumptions Product Class Non-Weatherized Gas-Fired Furnaces Weatherized Gas-Fired Furnaces Mobile Home Gas-Fired Furnaces Gas-Fired Hot-Water Boilers Oil-Fired Furnaces Oil-Fired Hot-Water Boilers
Production Volume 100,000 100,000 100,000 30,000 5,000 30,000
In estimating the production costs manufacturers would likely incur if a standard were set at a given efficiency level, DOE held the production volume constant for each considered efficiency level. 6.4.3.4 Generating Production-Cost Results
DOE input all of the data it had gathered into Microsoft Excel workbooksone for each product classthat estimate the cost of fabricating the components and assembling the equipment. The workbooks contain proprietary and confidential information and are not publicly available, but the aggregated results are available to the public in the form of spreadsheets and are accessible on the Internet from DOE's Furnace and Boiler Rulemaking page: http:// www.eere.energy.gov/buildings/appliance_standards/residential/ furnaces_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. The completed spreadsheets generated the production costs for the models evaluated. DOE based the cost of purchased components and most materials primarily on the ANOPR engineering analysis prices, adjusted for inflation. In the NOPR, DOE used a five-year average of material prices from years 2000 through 2004. 71 FR 59216. For the SNOPR, DOE revised the material price averages used in the cost model to include material price data from 2005 and 2006. Therefore, DOE calculated a new five-year average material price for cold rolled steel, aluminized steel, galvanized steel, painted cold rolled steel, and stainless steel. DOE used the Bureau of Labor Statistics (BLS) Producer Price Indices (PPIs) for cold rolled steel and stainless steel spanning 2002 to 2006 to calculate new averages, which incorporate inflation and the changes within each material industry. Finally, DOE adjusted all averages to 2006$ using the gross-domestic-product implicit-price deflator. DOE also created two scenarios for the material-price-sensitivity analysis: a low-bound and a high-bound scenario. DOE calculated the low-bound scenario by finding the year within the 20022006 time period with the lowest cost of cold rolled steel, which was 2002. DOE then used the annual prices for all other materials in 2002 and applied a 15-percent reduction to each of the raw material costs. Likewise, DOE calculated the high-bound scenario using the annual average price for each of the raw materials from 2006, when prices of raw materials were
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uncharacteristically high. DOE expressed both the low-bound scenario and the high-bound scenario in 2006$. DOE evaluated the results of the material-price-sensitivity analysis, using all three material-cost scenarios, in the engineering analysis and then used them as inputs for the LCC analysis. The results for the material-price-sensitivity analysis are presented in Appendix B of the TSD. 6.4.4 Sensitivity Analysis Manufacturing cost-efficiency correlations do not portray the uncertainty and variability in the assumptions. Uncertainty arises when the precise model parameters cannot be determined. Variability arises when the precise value is known but it varies among manufacturers, suppliers, or processes. To quantify the uncertainty and variability in the production-cost estimates, DOE used Crystal Ball Pro to perform Monte Carlo analyses. This kind of sensitivity analysis identifies which variables have the largest effect on cost estimates and on the accuracy of cost predictions. DOE performed the sensitivity analysis in five sequential steps: 1. 2. 3. 4. 5. Identify variable ranges, Perform Monte-Carlo simulations, Rank variables in order of influence on the cost results, Refine assumptions (variable ranges), and Perform additional simulations.
In the first step, DOE assigned to each variable a degree of uncertainty. To make these assignments, DOE used industry-accepted rules, as outlined in Table 6.4.9. Table 6.4.9 Degree of Uncertainty for Main Variable Types Type of Variable* Degree of Uncertainty Quote from manufacturers or suppliers 10% Known discount from low-volume quote 20% Unknown discount from low-volume quote 30% Material 10% Uncertain equipment costs 20%
* More details about the variables are provided in Appendix B.
DOE varied the inputs to the cost model according to the specified assumptions, as shown in Table 6.4.10. Minimum and maximum ranges are given to preserve manufacturer confidentiality.
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Table 6.4.10 Manufacturing Parameter Ranges Manufacturing Parameter Equipment Uptime Assembly Worker Downtime Capital Recovery Rate Auxiliary Equipment and Installation Cost Building Depreciation Life Tooling Depreciation Ratio of Walkways to Fabrication and Storage Yearly Maintenance Ratio (% of Equipment Cost) Utility Cost (% of Factory Cost) Investment Relativity Factor Average Depreciation Life Factor Labor Rate Factor Benefits Ratio Building Cost Space Overhead Assembly Factor Ratio of Indirect-to-Direct Laborers* Management Span (People/Manager) Pay Difference: Manager to Line Worker
Min 0.8 0.16 0.12 0.48 25 5 0.264 0.02 0.024 0.8 0.8 0.8 0.3 50 0.2 1.2 0.1 20 0.8
Max 0.9 0.24 0.16 0.72 30 7 0.396 0.04 0.036 1.2 1.2 1.2 0.4 150 0.3 1.8 0.2 30 1.2
Unit % % % % years years % %
% $/sf %
* Table 6.4.7 refers to Direct to Indirect Labor Cost Ratio; and Table 6.4.10 refers to Direct to Indirect Labor Ratio (people); they are related by the weighted average cost/hour, utilization, etc. DOE used the former because it is more standard terminology in the industry; it used the latter because this is what is varied in the model.
Once it had set the ranges, DOE carried out Monte Carlo simulations. To perform a Monte Carlo simulation analysis, Crystal Ball selects inputs randomly according to the distributions, and tracks the effect on production costs. The result is a probability distribution for the production cost of each equipment sample. Rather than predicting a single production cost, the distribution describes the likelihood that the actual production cost is equal to a predicted value. Thus, DOE can quantify the uncertainty and variability in the production cost estimates. In general, the results were normally distributed. Figure 6.4.1 illustrates a typical probability distribution for the production cost of an equipment sample.
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Forecast: Model 1A Cost 1,000 Trials

.031
Frequency Chart
1 Outlier
31
.023
23.25
.016
15.5
.008
7.75
.000
$267 $312.50 $273 $319.38 $279 $326.25 $285 $333.13 $291 $340.00
($)
Figure 6.4.1 Probability Distribution for the Production Cost of an Equipment Sample DOE performed several simulations for each product class. Figure 6.4.2 reports, for illustration purposes, the results of a sensitivity analysis of a sample Monte Carlo simulation on a model of non-weatherized gas furnaces. The tornado chart shows that the analysis is sensitive to base steel costs, labor-rate variations, and high-value components such as control boards, blower motors, and gas valves. Note that, in this case, cost is not so sensitive to production volume.
Baseline Non-weatherized Gas-Fired Furnace Sensitiv ity
$300 $310 $320 $330 $340 $350 $360 $370 $380
HV Steel Cost
Labor Rate Factor (%) Dow nside Upside HV Control Board Cost
Blow er Motor Cost
Gas Valve Cost
Gas Furnace PVol
Dow ntime (%)
Freight Cost($/cu ft):
Invest. Relativity Factor (%)
Figure 6.4.2 Importance of Input Parameters for Production Costs for Non-Weatherized Gas Furnaces
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6.4.5 Curves of Manufacturing Cost Versus Efficiency After generating each BOM for each theoretical and teardown unit and running the cost models with the appropriate assumptions, DOE compiled the cost information it had generated for all product classes. The use of cost-per-pound estimates for boilers and mobile home furnace max-tech completed the process through which DOE generated the manufacturing costs. DOE then aggregated all of the available data to construct manufacturing cost-versus-efficiency curves (Figures 6.4.3 through 6.4.8).
800 700 600
Incremental Cost ($)
500 400 300 200

Heat Exchanger Area
100 0 78%
Heat Transfer Coefficient 2-Stage Modulation Continuous Modulation
80%
82%
84%
86%
88%
90%
92%
94%
96%
AFUE (%)
Figure 6.4.3 Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces
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350
Heat Exchanger Area Heat Transfer Coefficient
300
Low Bound Stainless Steel High Bound Stainless Steel
250
200
150
100
50
0 78%
79%
80%
81%
82%
83%
84%
AFUE (%)
Figure 6.4.4 Incremental Manufacturing Costs for Weatherized Gas Furnaces

200 180 160
140 120 100

80
60
40
20
0 75%
Heat Exchanger Area 2-Stage Modulation
77%
79%
81%
83%
85%
87%
89%
91%
93%
AFUE (%)
Figure 6.4.5 Incremental Manufacturing Costs for Mobile Home Furnaces
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180 160 140
Heat Exchanger Area Interrupted Ignition Fan Atomized Burner w/2-Stage Modulation
120 100
80
60
40
20
0 78%
79%
80%
81%
82%
83%
84%
85%
86%
AFUE (%)
Figure 6.4.6 Incremental Manufacturing Costs for Oil-fired Furnaces

1000
900
800
700
600
500
400
300
200
100
0 80%
Improved HX Coefficient + Electronic Ignition Two Stage Modulation + Induced Draft
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
AFUE (%)
Figure 6.4.7 Incremental Manufacturing Costs for Gas Boilers
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1000
900
800
700
600
500
400
300
200
Heat Exchanger Area
100
0 80%
Interrupted Ignition Fan Atomized Burner w/2-Stage Modulation
82%
84%
86%
88%
90%
92%
94%
96%
AFUE (%)
Figure 6.4.8 Incremental Manufacturing Costs for Oil-fired Boilers 6.5 INSTALLATION COSTS
The installation cost is the cost to the consumer for installing a furnace or a boiler; DOE does not consider it part of the retail price. The cost of installation covers all labor and material costs associated with the installation of a new unit or the replacement of an existing one. For furnaces and boilers, the installation cost is the largest single component of the total cost to the consumer. It is even larger than the equipment cost. The predominant part of the installation cost is the venting system. The American National Standards Institute (ANSI) standard Z21.47-19937 defines four categories (IIV) for gas-fired furnaces or boilers. The categories are defined based on the operating pressure and temperature in the vent. Most non-condensing equipment falls into Category I (high temperature, negative pressure), while most condensing equipment falls into Category IV (low temperature, positive pressure). For all product classes except weatherized gas furnaces and mobile home furnaces,7 National Fuel Gas Code (NFGC) venting tables define the requirements for installing a Category I furnace. Category I equipment is installed according to the requirements in the NFGC venting tables.8 If the steady-state efficiency (SSE) of a non-condensing gas furnace exceeds 83 percent, it must be vented as a Category III appliance to prevent condensation problems. A venting system for Category III equipment is installed according to manufacturer specifications. It uses stainless steel material, and sealed joints.
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6.5.1 Data Sources Because of the importance of installation cost, DOE devoted considerable effort to establishing appropriate installation costs to use in its analysis. One source of data was a 1994 GRI report,3which GAMA supplemented in 2002 with an updated summary version of the data.9 The installation costs given in the GRI report were developed from the results of a field survey sponsored by several gas utilities and conducted in 1992. These data are relatively old and, particularly for condensing furnaces, may not represent a well-established market. Differences between new and replacement installation costs may be underestimated. Further, no detailed data are available from the report. A second source was a 1999 Natural Resources Canada (NRCan) study that developed installation cost data for non-weatherized gas furnaces for four Canadian areas.10 A company that provides cost estimates for building contractors conducted the study. The NRCan study provides the most current data set available, and the data are used by Canadian government agencies and are well documented. However, there are indications that, for condensing furnaces, these data are applicable only to installations in new construction. DOE looked at other possible sources of installation costs, including data from Wisconsin from a 1999 survey of heating, ventilation, and air conditioning (HVAC) contractors.11, 12 DOE did not use these data because of the very small size of the sample. Because of the incomplete coverage of the above sets of data and the importance of installation costs to the analysis, DOE created a cost model (hereafter Installation Model) based on the RS Means13 construction-cost estimation method. Section 6.5.2 summarizes the models main assumptions. Appendix C documents all model calculations in detail, including results that DOE used as an input to LCC analysis. 6.5.2 Installation Model Applying the RS Means methodology to a furnace or boiler installation requires a detailed description of the equipment involved, including vent length, venting material, vent type, diameter, and number of elbows. To estimate these quantities, DOE reviewed relevant research results, data submitted as comments to DOE, and manufacturer installation manuals. DOE chose representative values for an average U.S. home, and described each assumption using a distribution of values derived from available data; DOE used a Crystal Ball Monte-Carlo simulation to model the resultant cost ranges. Numerous installation configurations are possible, given site-specific venting conditions. The starting point for the model is the list of venting options detailed in the 1994 GRI report.3 DOE modeled the most common installation configurations, including:
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C C C C C C C
New and replacement installations Single and multi-family dwellings Venting category: I (non-condensing), III (stainless vents), and IV (condensing) Vents: masonry chimneys, lined and un-lined, Type B metal or plastic polyvinyl chloride (PVC)
Vent connectors: single-wall and double-wall
Water heater options: gas (vented in common with furnace) and electric (isolated)
Special situations: chimney relininga and orphaned water heatersb
For each appropriate combination of options, DOE created and costed a separate physical BOM. DOE then obtained the average cost for each efficiency level by weight-averaging the cost estimates of as many as 24 separate BOMs. The weight-averaging used depended on how often each combination occurs in the field, as documented in the GRI report. Some circumstances have changed since the GRI survey was performed: Masonry chimneys have been relined in increasing numbers, and double-wall connectors are more commonly used. Therefore, DOE updated the GRI values based on recent installation trends. Table 6.5.1 below summarizes DOEs estimates of the year 2015 market share of cost-significant options for non-weatherized gas furnaces. Each installation option combination is associated with a physical BOM and vent configuration. For an individual BOM, DOE estimated the quantity of materials needed to install a gas furnace in an average U.S. home.c In the Monte Carlo simulation, installation parameters are varied to take into account large and small houses, apartment complexes, multiple-story dwellings, and furnace-size variations. DOE derived the ranges in parameters from 2001 Residential Energy Consumption Survey (RECS) housing data and U.S. Census Statistics housing data.
Unlined masonry chimneysan estimated 23 percent of the market in 2015 need to be relined 90 percent of the time to comply with the National Fuel Gas Code (source: NFGC and chimney size analysis, Appendix C). If a furnace and gas water heater are commonly vented in a masonry chimney, and the furnace is replaced with a 90 percent+ AFUE unit, the water heater may be too small for the existing vent (orphaned). In this case, a relining or equivalent purchase of a new direct side-wall-vented water heater is necessary (source: NFGC analysis, Appendix C).
c b
1.6 story, 1,660 sf, with basement; 80 kBTU input furnace (1997 RECS data14). 6-26
Table 6.5.1 Class
Installation Model, Non-Weatherized Gas Furnace Weighting Assumptions Variable 2015 Market Share 25% 75% 50% 50% 23% 27% 32% 18% 53% 36% 11% Source
Market Water Heater Options Vents
New Replacement Gas common vented Isolated electric Unlined masonry Lined masonry Type B metal Other Single wall Double wall Other
Residential Furnace and Boiler Market Analysis 1994 GRI survey confirmed by 2000 Water Heater rule 1992 GRI survey updated (lined masonry was 2%)
Vent Connector
1992 GRI survey updated (single wall was 73%)
Given a particular installation configuration and size, DOE created a BOM. The master BOM shown in Table 6.5.2 lists what DOE included in the cost estimates for all installation configurations. Items are turned on or off or multiplied by amount used, depending on the configuration. The BOM is a composite based on relevant trade literature, installation manuals, and furnace-installation-related line items found in RS Means (2003 Residential & Mechanical Cost Data).
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Table 6.5.2
Master Bill of Materials for All Appliance Installation Configurations Category Item Description One-foot section plus union to connect to existing piping One return piece and one supply piece to connect to existing ductwork Gas furnacesite and connect; if replacement, includes removal New or replacement thermostat + wiringsite and connect Type B metal vent, stainless vent, chase with liner,** or plastic vent (single or dual pipe) Single or double wall Flexible two-ply aluminum liner w/connections Single or double-wall vent connector, or direct water-heater vent cost (if present) Condensate hose, drain pan, and pump (if necessary)
Supply Gas Piping Ducting* Furnace Installation Electrical Hookup Vent Installation Vent Connector Relining (if necessary) Water Heater Vent (if present) Drainage (if present)
* Indirect materialssealants, fasteners, etc.are assumed to be part of overhead and are excluded. ** Newly constructed masonry chimneys use a wooden chase with a two-ply flexible chimney liner and brick facade.
Finally, DOE calculated costs for individual BOM line items using the material and labor assumptions listed in Table 6.5.3. Table 6.5.3 Type Material Material and Labor Cost Assumptions Assumption List Price 25% (low volume contractor discount) + 10% contractor markup 52 $/Hour Crew Rates Labor Crew Labor Time Source McMaster, Grainger, and vent material supplier quotes, Consumer Price Index (CPI) updated to 2006$ US Average, 2003 RS Means, CPI updated to 2006$ RS Means, with proxy substitutions
DOE obtained the total cost for each efficiency level by weight-averaging cost estimates for 24 separate BOMs. For the three efficiency levels considered (80 percent, 81 percent, and 90 percent), the total number of BOMs was 96. Because some venting configurations are
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equivalent to others, the model costs a total of 58 separate BOMs to account for all common venting configuration combinations. 6.5.3 Non-Weatherized Gas Furnaces For non-weatherized gas furnaces, DOE considered the data derived with the Installation Model as the most current and comprehensive available for the analysis. DOE determined that there is an additional installation cost for an 80-percent AFUE furnace relative to a baseline model (78-percent AFUE) furnace. This cost involves the need to reline some masonry chimneys and applies to single-stage as well as modulating furnaces. By investigating existing models and manufacturers installation manuals, DOE determined that non-weatherized gas furnaces at 80-percent and 81-percent AFUE, when applied in vertical venting installations, fall into Category I. When an 81-percent AFUE furnace replaces an 80-percent furnace, a significant fraction of installations requires an update from a single-wall to a Type-B double-wall vent connector. DOE accounted for the cost of a Type-B double-wall vent connector for all replacement installations. When applied in horizontal venting installations, furnaces at 80-percent and 81-percent AFUE are in Category III (requiring a venting system with stainless steel material and sealed joints), or in Category I using a power venter. The cost for these two venting methods is similar. Since horizontal installations account for a negligible fraction (less than 0.1 percent) of all noncondensing furnace installations, DOE did not include this type of installation in the analysis. Condensing furnaces at 90-percent AFUE are in Category IV, for which the venting systems are mostly configured to exit a side-wall of a dwelling and composed of plastic vent pipes. Each of the installation cost data sources provides installation cost data for condensing gas furnaces; most account for the installation of a new vent system, resizing of the remaining common system, condensate neutralization, and condensate pumping for disposal. DOE assumed that installation costs for all condensing furnaces are similar, since available information suggests that efficiency levels higher than 90 percent do not appreciably affect the total installation cost for condensing gas furnaces. DOE included drip pans in condensing furnace installation costs (the International Fuel Gas Code requires the use of a drip pan for proper condensate drainage) and also assumed that approximately 10 percent of condensing installations will not include a combustion air pipe. Table 6.5.4 presents the installation cost by AFUE for non-weatherized gas furnaces.
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Table 6.5.4 AFUE 78% 80%

81%
90% 92%
96%
Installation Cost for Non-Weatherized Gas Furnaces Weighted Average Cost (2006$)* 811
815 855 1066 1066 1066 Average Incremental Installation Cost** (2006$) -4
44 255
255
255
* The costs shown are in 2006$ to coincide with the Installation Model estimates. ** Relative to 78-percent AFUE furnace.
The differences between the NOPR and the SNOPR results are due to Consumer Price Index (CPI) indexing of material and labor costs for inflation.d 6.5.4 Weatherized Gas Furnaces Weatherized gas furnaces are typically sold in packaged units together with an air conditioner, and are usually installed outside. These units vent flue gases directly into the surrounding air. When considering the installation of a packaged unit, it is difficult to separate the installation cost of the heating section from the installation cost of the cooling section. The installation cost accounts for the installation of the equipment only because the venting system is an integral part of the equipment. DOE estimated the installation cost for the baseline weatherized gas furnace using data from Section 400 of RSMeans Mechanical Cost Data.13 It based the cost estimate on installation times and hourly rates of the equipment installers. Table 6.5.5 shows the details of the approach DOE used to estimate the installation cost for weatherized gas furnaces.
DOE did not update the material prices for venting because these are purchased components (by the installer), rather than raw materials; DOE has no easy way of knowing what percentage of the finished vent pipe is raw material (versus bending, overhead, etc.). Instead, DOE CPI-indexed both material and labor costs. 6-30
Table 6.5.5 Installation Cost for Weatherized Gas Furnaces Major Line # Cooling/Heating Crew Cost Daily Crew PersonCapacity per hr Output Hours Unit (2006$) 400 1100 36 kBtu/hr and 60 kBtu/hr Q5 $55.92 0.7 22.86
Total Cost (2006$) $1,278
The differences between the NOPR and the SNOPR results are due to CPI indexing of material and labor costs for inflation. Although limited data were available, the assumption that installation cost remains mostly constant as efficiency increases seems reasonable for singlepackage systems. The increases in size and weight for more-efficient single package systems are small relative to the large size and weight of the baseline model unit. 6.5.5 Mobile Home Gas Furnaces The installation of a mobile home gas furnace is part of the assembly by the mobile home manufacturer. In DOEs analysis, the manufacturers markup includes this installation cost for the baseline model and for an 80-percent AFUE furnace. For furnaces with AFUE of 81 percent and above, DOE developed an incremental installation cost for installing a stainless steel or a Category IV venting system. The incremental cost is $77 for 81-percent AFUE, and $57 for 90 percent AFUE. DOE determined the type of venting system required using manufacturers installation manuals for models at different efficiency levels. 6.5.6 Oil-Fired Furnaces DOE modified the Installation Model to estimate venting costs for oil-fired furnaces. These modifications included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a northeast 2015 projection. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). It shifted appliance capacity to reflect 2001 RECS data and larger size equipment. DOE estimated that Type L stainless steel relinings are necessary about 10 percent of the time. DOE determined that Type L vents must be used rather than Type B vents. DOE CPI-adjusted the NOPR material and labor costs for inflation to 2006$.
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2. 3.
4. 5.
The ANOPR analytical approach assumed that all installations of 83-percent AFUE or lower efficiency equipment would be vented using Type L vents, and all installations using 84 percent AFUE or higher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach took into consideration the recommendations included in the National Fire Protection Association (NFPA) 31 standard, which allow safe venting up to 88 percent SSE (or 87-percent AFUE) depending on the vent configurations and equipment size. For the NOPR, DOE ramped the number of stainless steel vent installations from 0 percent at 80 to 82-percent AFUE to 100 percent at 86-percent AFUE. The mid-point of the ramp is 50 percent at 84-percent AFUE. This assumption accounts for the NFPA 31 recommendations at the upper end of the ramp. For the SNOPR, DOE used the same assumptions as those in the NOPR. The installation costs for oil-fired furnaces are shown in Table 6.5.6. Table 6.5.6 Installation Cost for Oil-Fired Furnaces AFUE Weighted-Average Cost (2006$) 8082% 575 83% 891 84% 1,206 85% 1,521 6.5.7 Hot-Water Gas Boilers DOE also modified the Installation Model to estimate venting costs for hot-water gas boilers. Modifications (from the non-weatherized gas furnace approach) included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a 15 percent Midwest/15 percent Northwest/70 percent Northeast 2015 projection. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. Labor times for gas boilers, as listed in RS Means, are too high when compared to oil boilers and oil furnaces, per conversations with the RS Means Co.15 As a proxy, DOE used oil boiler installation times. In addition, DOE CPI-adjusted the material and labor costs for inflation to 2006$. For gas hot water boilers, DOEs NOPR analysis used data provided by GAMA on the fraction of installations at each efficiency level that would require Category III venting.5 This
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Incremental Installation Cost (2006$) -316 631 946
2. 3. 4. 5.
analysis reflected current construction practices, which use Category III venting for horizontal venting installations at all efficiency levels. For the SNOPR, DOE used the same assumptions as those in the NOPR. The installation costs for hot-water, gas-fired boilers are shown in Table 6.5.7. Table 6.5.7 AFUE 80-81% 82% 83% 84% 85% 86% 91-99% Installation Cost for Hot-Water Gas-fired Boilers Fraction that are Weighted Average Category III Installations Cost (2006$) 0.02 1648 0.10 1751 0.26 1957 0.24 1931 0.55 2331 1.00 2910 n.a. 2289
Incremental Installation Cost (2006$) -103 309 283 683 1262 641
6.5.8 Hot-Water Oil-fired Boilers DOE modified the Installation Model to estimate venting costs for hot-water oil-fired boilers. These modifications included: 1. DOE changed regional weighting for vent connector type, vent type, and percentage of water heaters vented in common from a national 2015 projection to a northeast 2015 projection. DOE changed new/replacement market weighting from 25 percent/75 percent to 5 percent/95 percent. DOE increased vent and vent connector diameters by one inch to allow for larger capacity flows (based on installation manual reviews). DOE shifted appliance capacity to reflect 2001 RECS data and larger size equipment. DOE estimated that Type L stainless steel relinings are necessary about 10 percent of the time. DOE determined that Type L vents must be used rather than Type B vents.
2. 3. 4. 5. 6.
The ANOPR analytical approach assumed that all installations of 84-percent AFUE or lower efficiency equipment would be vented using Type L vents, and all installations using 85 percent AFUE or higher efficiency equipment would be vented using 316-grade stainless steel vent systems. The NOPR approach took into consideration NFPA 31 recommendations, which allow safe venting up to 88-percent SSE (or 87-percent AFUE) depending on the vent configurations and boiler size. For the NOPR, DOE ramped the number of stainless steel vent installations from 0 percent at 80 to 83-percent AFUE to 100 percent at 87-percent AFUE. The mid-point of the ramp is 50 percent at 85-percent AFUE. This assumption accounts for the NFPA
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31 recommendations at the upper end of the ramp. In addition, DOE revised baseline model costs to more accurately reflect the frequency of re-linings (10 percent instead of 100 percent). It CPIadjusted the material and labor costs for inflation to 2006$. The installation costs for hot-water oil boilers are shown in Table 6.5.8. Table 6.5.8 Installation Cost for Hot-Water Oil-fired Boilers AFUE Weighted-Average Cost Incremental Installation Cost (2006$) (2006$) 8083% 1,547 -84% 1,876 329 85% 2,204 657 86% 2,532 985 90%+ 2,289 742
6.6
MAINTENANCE AND REPAIR COST
The maintenance and repair cost ($/year) includes regular maintenance and repair of a furnace or a boiler when it fails.4, 16, 17, 18 This cost covers all associated labor and material costs. 6.6.1 Maintenance Cost For non-weatherized and weatherized gas furnaces and gas boilers, DOE used the maintenance cost data provided in the 1994 GRI report.3 The costs reported in this study derive from a field survey sponsored by several gas utilities that repair and service furnace and boiler equipment. The survey methodology estimated the average cost per service call as the average total service charge (parts, labor, other charges). The average total service charge is $208. The GRI study characterized maintenance frequency as a function of the equipment efficiency level. DOE used this information to estimate a maintenance frequency of once every five years for all equipment without modulation (non condensing and condensing), and once every four years for all equipment with modulation, to account for the greater complexity of the modulation feature. DOE annualized the costs over the estimated equipment lifetime, resulting in an annual cost of $42 for equipment without modulation and $52 for equipment with modulation. DOE compared maintenance instructions for non-condensing and condensing gas furnaces from manufacturers' manuals;19, 20, 21 researched RSMeans literature22 for maintenance differences between non-condensing and condensing gas furnaces; and collected opinions from several furnace installation and maintenance experts.23, 24, 25, 26 It found that annual maintenance contracts are not commonly applicable to condensing gas furnaces. The evaluation of the maintenance instructions, the RSMeans Maintenance Guide, and discussions with field experts did not identify
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differences in maintenance requirements between condensing and non-condensing designs. Thus, DOE used the same maintenance cost data for condensing and non-condensing furnaces, and it applied the same considerations to condensing and non-condensing gas boilers. For oil-fired furnaces and oil-fired boilers, DOE applied the results of a survey performed for its water heater standards rulemaking.27 This survey identified the typical cost of annual service contracts applied to all oil equipment in a house. These contracts are very common in the northeast, where most of the oil-heating equipment is located. The mean cost of the annual contract is $118. For mobile home furnaces, DOE adapted the results from the 1993 DOE rulemaking for this product class.28 The resulting average annual maintenance cost for mobile home furnaces at 8082-percent AFUE is $20. DOE included an additional maintenance cost for condensing and two-stage modulation design options. 6.6.2 Repair Cost
For the SNOPR, DOE included a repair cost in addition to the maintenance cost. The repair cost is the cost to the consumer for replacing or repairing components which have failed in the equipment. Since representative data on repair costs for furnaces and boilers were not available, DOE used a similar approach as in its 2001 central air conditioner rulemaking.29 The general assumption is that annualized repair costs are equal to one-half the equipment price divided by the average lifetime of a given product class. Since the equipment cost is higher for equipment that contains more sophisticated mechanical or electronic components, such as condensing furnaces, DOE applied a higher repair cost for these products. In the cases where there are no differences (or insignificant differences) in the mechanical or electric components, even at different efficiency levels, DOE assumed that the repair costs are the same. For example, the design of non-weatherized gas furnaces at 78-percent AFUE, 80-percent AFUE, and 81 percent AFUE differ only in the size of the heat exchanger. For these products, DOE used the equipment price of the baseline model (e.g. 78-percent AFUE) to derive the repair cost. Table 6.6.1 shows the estimated annualized repair costs for each product class. Since all equipment components are fully covered by a manufacturer warranty for five years,e DOE assumed that consumers would not incur any repair costs in the first five years. DOE applied the annualized cost beginning in the sixth year and ending in the last year of service for the equipment. For oil-fired furnaces and boilers, DOE included an annual maintenance contract, which typically includes repair of failed components. Therefore, DOE did not include a separate repair cost for these products.
DOE examined a number of manufacturer warranties.17, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50 6-35
Table 6.6.1 Annualized Repair Cost (2006$) Non-Weatherized Gas Furnaces

78%, 80%, 81% AFUE 80%, 81% AFUE - Modulation (Two-Stage) 90%, 92% AFUE - Condensing 92% AFUE - Modulation (Two-Stage) 92%, 96% AFUE - Modulation (Continuous) $30 $37 $39 $50 $51
Weatherized Gas Furnaces

78%, 80%, 81% AFUE 82% AFUE 83% AFUE $71 $75 $76
Mobile Home Furnaces

75% AFUE 80%, 81%, 82% AFUE 80%, 81%, 82% AFUE - Modulation (Two-Stage) 90% AFUE - Condensing $23 $26 $36 $31
Gas-Fired Boilers
80% AFUE 81% AFUE 81% AFUE - Modulation (Two-Stage) 82% AFUE 82% AFUE - Modulation (Two-Stage) 83% AFUE* 83% AFUE - Modulation (Two-Stage)* 84% AFUE* 84% AFUE - Modulation (Two-Stage)* 85% AFUE 85% AFUE - Modulation (Two-Stage) 86% AFUE 91% AFUE - Condensing 99% AFUE - Condensing $34 $35 $38 $36 $39 $37 $40 $37 $40 $39 $42 $44 $51 $71
* Annualized repair costs for 83% and 84% AFUE for gas boilers differ slightly due to the different fraction of Category III installations (26% versus 24%) associated with these efficiency levels. 6-36
6.7
ENGINEERING ANALYSIS PAYBACK PERIODS
This section describes the calculation of simple payback periods for each design option for each product class. For a given design option, the payback period expresses the amount of time required for the cumulative savings in operating cost to equal the incremental cost to the consumer of purchasing a particular design (relative to the baseline model in each instance). DOE calculated the payback period for each design option according to the following relationship:
PAYBACK =
where: PAYBACK )CC )OC )RC )IC )EC = = = = = = =
CC RC + IC = OC EC + MC
)MC
payback period (years), change in consumer first cost relative to baseline model ($), change in operating cost relative to baseline model ($/yr), change in retail cost relative to baseline model ($/yr), change in installation cost relative to baseline model ($), change in first-year energy cost relative to baseline model ($/yr), and change in annualized maintenance and repair cost relative to baseline model ($/yr).
DOE based the energy cost on energy consumption calculated according to the DOE test procedure for furnaces and boilers. Although the LCC analysis yields a more definitive understanding of the economic impact of the design options for consumers, the payback periods reported here provide a preliminary indication of how the options may rank. DOE presents these payback periods to address the legally established rebuttable payback period, as calculated under the applicable test procedure. (42 U.S.C. 6295 (o)(2)(B)(iii)) 6.7.1 Calculation of Fuel Consumption for Each Design Option The calculation of fuel cost for each fuel-efficiency option begins with the fuel consumption of the baseline model in each product class. DOE considered alternative design options that yield progressively higher AFUE levels. DOE considered several design options for reaching each specific AFUE level above the baseline model, as shown in Table 6.7.1.
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Table 6.7.1
Fuel-Efficiency Design Options

Increased HX Area Improved Interrupted Two-stage Continuous Condensing Ignition Modulation Modulation Heat Transfer Coefficient X X X X X X X X X X X X X X X
Product Class
Non-Weatherized Gas Furnaces Weatherized Gas Furnaces Mobile Home Gas Furnaces Oil-Fired Furnaces Hot-Water Gas Boilers Hot-Water Oil-Fired Boilers
X X X X X
DOE calculated fuel consumption based on the method for calculating annual fuel energy use described in the DOE test procedure for furnaces and boilers. The details are reported in Appendix D. 6.7.2 Calculation of Electricity Consumption
DOE has determined that it does not currently have the authority to regulate electricity consumption in residential furnaces and boilers. However, the furnace blower, furnace inducer fan, ignition and controls, as well as some design options (i.e., modulation) affect the fuel consumption of the appliance; therefore DOE calculated electricity consumption for completeness and accuracy. The electricity consumption of residential furnaces and boilers is represented by the annual auxiliary electrical energy (EAE) parameter, which DOE calculated and reported in kilowatt-hours per year (kWh/yr) in accordance with the DOE test procedure, paragraph 10.2.3.51 The details of the approach to calculate electricity consumption are reported in Appendix D. The EAE parameter does not include blower operation for an air conditioner during the cooling season. 6.7.3 Derivation of Fuel Costs DOE derived annual fuel costs from fuel consumption, based on residential prices of $10.57/million British thermal units (MMBtu) for natural gas and $13.00/MMBtu for residential oil. It derived annual electricity costs based on a residential price of $0.0916/kWh. These are the forecast average values for 2015 from the Energy Information Administrations Annual Energy Outlook 2007.52 6.7.4 Rebuttable Payback Section 325(o)(2)(B)(iii) of the Energy Policy and Conservation Act, 42 U.S.C. 6295(o)(2)(B)(iii), establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy. .
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. savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure . . . . To satisfy statutory rebuttable payback requirements, DOE calculated payback periods using the laboratory-based DOE test procedure. The tables presented in Appendix E provide detailed results for each option and depict the relationship between the payback period and various design options for each product class. The payback periods for some efficiency levels cannot be accurately established due to discrepancies in the algorithm for calculating the energy use in the current furnace/boiler test procedure. The energy consumption as calculated in the test procedure depends indirectly on the design heating requirement (DHR) parameter. In the current test procedure, DHR is a step function of furnace output capacity ranges QOUT. DOE observed that small changes in QOUT may assign an efficiency level to a different DHR range, with the result that more-efficient designs (at higher AFUE) may use more energy than designs represented by a lower AFUE level. Therefore, in these cases the calculation of payback period yields a negative value, because the term )EC (change in energy cost relative to baseline model) is negative. More details about this discrepancy are provided in section D.2.3 of Appendix D. 6.7.4.1 Rebuttable Payback Results
As shown in Table 6.7.2, a number of efficiency levels higher than current standards satisfy the rebuttable payback requirements. Note that, in the process of setting a standard, DOE weighs many other factors in its economic justification. (42 U.S.C. 6295(o)(2)(B)(i)) Table 6.7.2 Efficiency Levels with Less Than Three-Year Payback Period Using DOE Test Procedure Efficiency Level (AFUE) 80% 80% 81% Oil-Fired Furnaces 80% 81% 82% Hot-Water Oil-Fired Boilers 81% 82% 83% Payback (years) 0.8 0.5 0.8 0.1 0.2 0.2 0.4 0.4 0.4
Product Class Non-Weatherized Gas Furnace Weatherized Gas Furnaces
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For non-weatherized gas furnaces, the 80-percent AFUE furnace shows a payback period of less than one year. This design level is the only one for this product class to show a payback period of less than three years. For weatherized gas furnaces, the 80- and 81-percent AFUE furnaces show payback periods of less than one year. For oil-fired furnaces, the 80-, 81-, and 82 percent AFUE furnaces show payback periods of 0.1 - 0.2 years. There is no efficiency level for mobile home furnaces and for hot-water gas boilers that shows a payback period of less than three years. Therefore, no design option satisfies the rebuttable payback assumptions for this product class. For hot-water oil-fired boilers, the payback period is 0.4 years for efficiencies up to 83-percent AFUE. DOE based all of the above payback periods on energy consumption according to the DOE test procedure. Payback periods calculated based on energy consumption in actual field conditions may differ significantly. The latter considerations are addressed in the LCC analysis; see Chapter 8 for further details. 6.8 ENGINEERING SPREADSHEETS
The spreadsheet containing the calculations for the engineering analysis for all product classes is posted on the DOE website. It contains an introductory worksheet that guides the user. The spreadsheet tool containing the Installation Model is accessible on the Internet from DOE's Furnace and Boiler Rulemaking page: http:// www.eere.energy.gov/buildings/appliance_standards/residential/ furnaces_boilers.html. From that page, follow the links to the Final Rule and then to the Analytical Tools. It contains a text file that guides the user in installing and using the tool.
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Engineering Analysis

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CHAPTER 6. ENGINEERING ANALYSIS TABLE OF CONTENTS 6.

1 6.2 6.3 6.4 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

CHAPTER 6. ENGINEERING ANALYSIS

Electric furnaces, and Combination space/water-heating appliances (gas-fired and oil-fired).

IDENTIFICATION OF BASELINE MODELS

Features of Baseline Models by Product Class

MANUFACTURING COST ANALYSIS

Product Class Non-Weatherized Gas FurnacesBase Design A

Non-Weatherized Gas FurnacesBase Design B

Mobile Home Gas Furnaces Hot-Water Gas Boilers

Oil-Fired Furnaces Oil-fired Hot Water Boilers

Higher-efficiency units Entire product class

Fraction 0.02 0.02 0.10 0.26 0.24 0.55 1.00

Fabrication labor: Assembly labor:

Equipment and plant

Electricity, gas, phone service, etc.

Production Volume 100,000 100,000 100,000 30,000 5,000 30,000

Unit % % % % years years % %

Forecast: Model 1A Cost 1,000 Trials

Blow er Motor Cost

Gas Valve Cost

Gas Furnace PVol

Dow ntime (%)

Freight Cost($/cu ft):

Invest. Relativity Factor (%)

Incremental Cost ($)

500 400 300 200

Heat Transfer Coefficient 2-Stage Modulation Continuous Modulation

Figure 6.4.3 Incremental Manufacturing Costs for Non-Weatherized Gas Furnaces

Heat Exchanger Area Heat Transfer Coefficient

Low Bound Stainless Steel High Bound Stainless Steel

Incremental Cost ($)

Figure 6.4.4 Incremental Manufacturing Costs for Weatherized Gas Furnaces

Incremental Cost ($)

140 120 100

Figure 6.4.5 Incremental Manufacturing Costs for Mobile Home Furnaces

180 160 140

Incremental Cost ($)

Figure 6.4.6 Incremental Manufacturing Costs for Oil-fired Furnaces

Incremental Cost ($)

Figure 6.4.7 Incremental Manufacturing Costs for Gas Boilers

Incremental Cost ($)

Heat Exchanger Area

Interrupted Ignition Fan Atomized Burner w/2-Stage Modulation

Table 6.5.1 Class

Market Water Heater Options Vents

1992 GRI survey updated (single wall was 73%)

Table 6.5.4 AFUE 78% 80%

Total Cost (2006$) $1,278

Incremental Installation Cost (2006$) -316 631 946

MAINTENANCE AND REPAIR COST

Table 6.6.1 Annualized Repair Cost (2006$) Non-Weatherized Gas Furnaces

Weatherized Gas Furnaces

Mobile Home Furnaces

ENGINEERING ANALYSIS PAYBACK PERIODS

Fuel-Efficiency Design Options

Product Class Non-Weatherized Gas Furnace Weatherized Gas Furnaces

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