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New Federal Efficiency Standards for Residential Furnaces and Boilers: Researchers Estimate Potential Impacts

Seventy percent of U.S. homes have furnaces, and 11 percent have boilers; space-heating equipment accounts for more than 70 percent of gas consumption and 90 percent of oil consumption in the U.S. residential sector. In view of these statistics, the U.S. Department of Energy (DOE) in 2002 initiated an update of the current minimum energy-efficiency standard for furnaces and boilers, which was established in 1992. A team of researchers from the Energy Efficiency Standards (EES) Group of the Environmental Energy Technologies Division (EETD) at Lawrence Berkeley National Laboratory (Berkeley Lab) carried out much of DOE's analysis of the potential impacts of the updated standards. Under the leadership of Alex Lekov and Jim Lutz, the team participated in the rulemaking process, which included a number of workshops with stakeholders to discuss the analysis and key issues affecting it. Based on the EES team's analysis, DOE published an Advance Notice of Proposed Rulemaking (ANOPR) in the Federal Register in July 2004.

Furnace and Boiler Technology

For statutory purposes, residential furnaces are defined as having a heat-input rate of less than 225,000 British Thermal Units (Btus) per hour. Residential boilers are defined as having a heat-input rate of less than 300,000 Btu/h. Residential furnaces supply heated air through ductwork to interior spaces. Residential boilers are pressure-vessel heat exchangers made of cast-iron, steel, aluminum, or copper and designed to burn fossil fuels and transfer the released heat to a suitable medium such as water (in water boilers) or water and steam (in steam boilers).

Annual fuel utilization efficiency (AFUE) is the measure of the annual operating efficiency, under dynamic conditions, of a furnace or boiler. AFUE is measured under laboratory conditions using a DOE test procedure. The 1992 efficiency standards specify the following AFUEs for residential space heating equipment:

  • gas- and oil-fired furnaces-78 percent,
  • manufactured home furnaces-75 percent,
  • hot-water boilers-80 percent, and
  • steam boilers-75 percent.

Most new furnaces and boilers have higher AFUEs than required by the 1992 standard. New furnaces generally fit into one of two general efficiency categories: non-condensing furnaces with AFUEs of 80 to 82 percent or condensing furnaces with AFUEs at or greater than 90 percent. Most new hot-water boilers have AFUEs of 80 to 84 percent.

Product Classes

For statutory purposes, residential furnaces and boilers are divided into several product classes that may be subject to different efficiency standards. For the current update of efficiency standards, DOE considered the following product classes: weatherized and non-weatherized gas furnaces, non-weatherized oil-fired furnaces, mobile-home gas furnaces, and gas- and oil-fired hot-water boilers. Non-weatherized gas furnaces have by far the largest sales among these classes (approximately 2.6 million units in 2000), so the EES team gave the most attention to this class.

Analyses

The EES team's work for the ANOPR:

  • Assessed the market and technology,
  • Screened technology options,
  • Assessed the cost and efficiency of technology options,
  • Determined the energy consumption of alternative designs in actual homes,
  • Calculated life-cycle cost (LCC) and payback period for actual households,
  • Projected future shipments (installations), and
  • Calculated national energy savings and net present value.

The team also analyzed options for improving the efficiency of furnace and boiler electricity use, but these were not included in the ANOPR because DOE determined that it does not have authority to set efficiency standards that include furnace electricity use. The ANOPR analysis did, however, account for the effects of fuel-saving options and electricity consumption.

Key Issues

Analysis of furnace and boiler standards is complicated because installation cost, which is the second largest single component of total consumer cost (after lifetime energy costs), varies considerably depending on the type of venting system required to prevent condensation and ensure safe operation of the equipment. For non-condensing furnaces, a key task facing the EES team was to estimate the percentage of installations that are likely to require a stainless-steel, Category-III venting system, which is considerably more expensive than a conventional (Category-I) system. For furnaces that utilize single-stage controls-currently the most common type-the EES team estimated that eight percent of installations at 81-percent AFUE and 40 percent of installations at 82-percent AFUE would require a Category-III venting system. However, for 81-percent AFUE, current installation practices indicate that furnaces that use two-stage modulating control would not require this expensive type of venting. Better understanding of the actual installation costs associated with 81-percent AFUE gas furnaces is a key factor in determining whether a more stringent standard (than the current 78-percent AFUE) would be cost effective.

Key Findings

Key measures that DOE considers in determining whether new standards are justified include the cumulative National Energy Savings (NES) and the Net Present Value (NPV) of consumer costs and benefits for equipment installed in the period between 2012 and 2035, the average LCC savings from purchasing and operating a more efficient appliance, the percentage share of households purchasing an appliance that would have a positive or a negative LCC impact, and the median payback period for the higher cost of a more efficient appliance.

For each product class, Table 1 shows key results for the highest efficiency level that has a positive NPV, using either a seven-percent or a three-percent real discount rate. The largest national energy savings come from the standards for non-weatherized gas furnaces, followed by those for hot-water gas boilers and weatherized gas furnaces. These three product classes also have the highest projected shipment volumes. Figure 2 shows the LCC cost savings for different design options.

Table 1. Projected impacts of standards at highest efficiency level with positive NPV.

  Non-weatherized gas furnace* Weatherized gas furnace Mobile home gas furnace Non-weatherized oil furnace Hot-water gas boiler Hot-water oil boiler
AFUE (%) 81(A) 81(B) 82 81 83 83 83
National energy savings (quads) 1.12 0.44 0.18 0.02 0.05 0.24 0.03
Net present value (billion 2001 $)              
7% real discount rate 0.75 -0.29 0.14 0.01 0.11 0.33 0.07
3% real discount rate 3.22 0.06 0.43 0.03 0.29 1.10 0.20
Average LCC savings ($) $62 $-3 $56 $115 $203 $215 $79
Households with net LCC benefits (%) 41% 45% 77% 85% 75% 79% 39%
Households with no net LCC impact (%) 27% 27% 20% 5% 22% 15% 61%
Households with net LCC cost (%) 32% 29% 3% 10% 3% 6% 0%
Median payback period (years) 7.6 8.8 2.1 4.2 0.3 2.5 0.7

*A = furnace using single-stage modulating controls (no Category-III venting system required)
B = furnace using two-stage control (8% of installations require Category-III venting system).

For non-weatherized gas furnaces, an AFUE standard of 81 percent has a clearly positive NPV only for a furnace using two-stage modulating controls. With this type of furnace, 41 percent of households would experience LCC savings, 27 percent would experience no change, and 32 percent would experience an increase in LCC. The results for a furnace using two-stage modulating controls are based on energy consumption calculated using the current DOE test procedure. This procedure differs from the proposed revision of the relevant American Society of Heating, Refrigeration, and Air-Conditioning Engineers (ASHRAE) standard, which indicates that the energy savings from two-stage modulation may be less than those calculated using the DOE test procedure.

Outlook

In July 2004 DOE posted the ANOPR and the ANOPR technical support document on its website for residential furnaces and boilers. Under direction from DOE, the EES team will review and consider stakeholder comments as it revises the analysis and conducts new analyses of impacts on manufacturers, utilities, employment, and emissions of air pollutants and carbon dioxide. The updated analysis will account for proposed changes to the furnace test procedure. If DOE concludes that new standards are justified, they would take effect in 2012.

Figure showing the life-cycle costs savings for non-weatherized gas furnaces.

Figure 1 shows the range of life-cycle cost (LCC) savings for non-weatherized gas furnaces. The average baseline LCC for this product class is $9,800 (the average total installed cost is $2,000, average operating cost is $600, discounted over a 20-year lifetime at 6.3% real) For each design option, the top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have LCC savings above this value. The "whiskers"at the bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the average LCC savings for each design option. For condensing design options such as 90 percent AFUE and 92-percent AFUE, the wide range of LCC savings reflects the differences across regions of the country.

— Alex Lekov, James Lutz, Steve Meyers

For more information, contact:

  • Alex Lekov
  • (510) 486-6849; Fax (510) 486-6996

This work was supported by the Office of Building Technologies of the U.S. Department of Energy.

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