Energy Conservation Program: Energy Conservation Standards for Commercial Water Heating Equipment

Federal RegisterMay 31, 2016

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2014-BT-STD-0042]

RIN 1904-AD34

Energy Conservation Program: Energy Conservation Standards for Commercial Water Heating Equipment

AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Notice of proposed rulemaking and announcement of public meeting.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including commercial water heaters, hot water supply boilers, and unfired hot water storage tanks (hereinafter referred to as “commercial water heating (CWH) equipment”). EPCA also requires that every 6 years, the U.S. Department of Energy (DOE) must determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this action, DOE has tentatively concluded that there is clear and convincing evidence to support more-stringent standards for several classes of the equipment that are the subject of this rulemaking. DOE did not consider more-stringent standards in this action for commercial oil-fired storage water heaters, whose standards were recently amended. Therefore, DOE proposes amended energy conservation standards for certain commercial water heating equipment, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

Meeting:

DOE will hold a public meeting on June 6, 2016, from 1:00 p.m. to 5:00 p.m., in Washington, DC. The meeting will also be broadcast as a webinar. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

Comments:

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than August 1, 2016. See section VII, “Public Participation,” for details.

Comments regarding the likely competitive impact of the proposed standards should be sent to the Department of Justice contact listed in the

ADDRESSES

section before June 30, 2016.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Edwards to initiate the necessary procedures. Please also note that any person wishing to bring a laptop computer or tablet into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also attend the public meeting via webinar. For more information, refer to section VII, “Public Participation,” near the end of this notice.

Instructions:

Any comments submitted must identify the NOPR on Energy Conservation Standards for Commercial Water Heating Equipment, and provide docket number EERE-2014-BT-STD-0042 and/or regulatory information number (RIN) number 1904-AD34. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal:

www.regulations.gov

. Follow the instructions for submitting comments.

Email:

ComWaterHeating2014STD0042@ee.doe.gov

. Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.

Postal Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC, 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 600, Washington, DC, 20024. Telephone: (202) 586-2945. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to the Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to

Chad_S._Whiteman@omb.eop.gov

EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at

energy.standards@usdoj.gov

before June 30, 2016. Please indicate in the “Subject” line of your email the title and Docket Number of this rulemaking notice.

No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document (Public Participation).

Docket:

The docket, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

www.regulations.gov

. All documents in the docket are listed in the

www.regulations.gov

index. However, some documents listed in the index may not be publicly available, such as those containing information that is exempt from public disclosure.

A link to the docket Web page can be found at:

http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0042

. This Web page contains a link to the docket for this document on the

www.regulations.gov

site. The

www.regulations.gov

Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section VII, “Public Participation,” for further information on how to submit comments through

www.regulations.gov

FOR FURTHER INFORMATION CONTACT:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-6590. Email:

Ashley.Armstrong@ee.doe.gov

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121.

Telephone: (202) 586-9507. Email:

Eric.Stas@hq.doe.gov

For information on how to submit or review public comments and the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email:

Brenda.Edwards@ee.doe.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Rule

A. Benefits and Costs to Commercial Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for CWH Equipment

III. General Discussion

A. Compliance Dates

B. Test Procedures

C. Scope of Rulemaking

1. Commercial Water Heating Systems

2. Residential-Duty Commercial Water Heaters

3. Oil-Fired Commercial Water Heating Equipment

4. Unfired Hot Water Storage Tanks

5. Electric Instantaneous Water Heaters

6. Commercial Heat Pump Water Heaters

7. Electric Storage Water Heaters

8. Instantaneous Water Heaters and Hot Water Supply Boilers

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Commercial Consumers

b. Savings in Operating Costs Compared to Increase in Price (Life-Cycle Costs)

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

G. Public Participation

H. Revisions to Notes in Regulatory Text

I. Certification, Compliance, and Enforcement Issues

1. Rated and Measured Storage Volume

2. Maximum Standby Loss Equations

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Definitions

2. Equipment Classes

a. Storage-Type Instantaneous Water Heaters

b. Tankless Water Heaters and Hot Water Supply Boilers

c. Gas-Fired and Oil-Fired Storage Water Heaters

d. Grid-Enabled Water Heaters

e. Condensing Gas-Fired Water Heating Equipment

3. Review of the Current Market for CWH Equipment

4. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Methodology

2. Representative Equipment for Analysis

3. Efficiency Levels for Analysis

a. Baseline Efficiency Levels

b. Intermediate and Max-Tech Efficiency Levels

4. Teardown Analysis

5. Manufacturing Production Costs

6. Manufacturer Markup

7. Shipping Costs

8. Maximum Standby Loss Equations

9. Conversion of Standards to Uniform Energy Factor

D. Markups Analysis

E. Energy Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Approach

2. Life-Cycle Cost Inputs

a. Equipment Prices

b. Installation Costs

c. Annual Energy Use

d. Electricity and Natural Gas Prices

e. Maintenance Costs

f. Repair Costs

g. Equipment Lifetime

h. Discount Rate

3. Payback Period

G. Shipments Analysis

H. National Impact Analysis

1. Equipment Efficiency in the No-New-Standards Case and Standards Cases

2. National Energy Savings

3. Net Present Value

I. Commercial Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. GRIM Analysis

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Manufacturer Interviews

K. Emission Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Social Cost of Other Air Pollutants

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Commercial Consumers

a. Life-Cycle Cost and Payback Period

b. Life-Cycle Cost Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Direct Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Commercial Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

C. Proposed Standards

1. Benefits and Burdens of Trial Standard Levels Considered for CWH Equipment

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Requests To Speak and Prepared General Statements for Distribution

C. Conduct of the Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

Title III, Part C

of the Energy Policy and Conservation Act of 1975 (“EPCA” or “the Act”), Public Law 94-163 (42 U.S.C. 6311-6317, as codified), added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment,

which sets forth a variety of provisions designed to improve energy efficiency. These encompass several types of commercial heating, air-conditioning, and water heating equipment, including the classes of CWH equipment that are the subject of this rulemaking. (42 U.S.C. 6311(1)(K)) CWH equipment is also

covered under the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1 (ASHRAE Standard 90.1), “Energy Standard for Buildings Except Low-Rise Residential Buildings.”

For editorial reasons, upon codification in the U.S. Code, Part C was redesignated Part A-1.

All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015 (EEIA 2015), Public Law 114-11 (April 30, 2015).

EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, requires DOE to conduct an evaluation of its standards for CWH equipment every 6 years and to publish either a notice of determination that such standards do not need to be amended or a notice of proposed rulemaking including proposed amended standards (42 U.S.C. 6313(a)(6)(C)(i)) Pursuant to these statutory requirements, DOE initiated this rulemaking to evaluate the energy conservation standards for covered CWH equipment and to determine whether new or amended standards are warranted.

As explained in further detail in section II.B.1, DOE most recently issued a final rule amending standards for commercial oil-fired storage water heaters on June 30, 2015, which was published in the

Federal Register

on July 17, 2015. 80 FR 42614. However, for all of the other water heating equipment that is the subject of this rulemaking, DOE last issued a final rule amending standards on January 4, 2001, which was published in the

Federal Register

on January 12, 2001. 66 FR 3336.

In addition, EPCA, as amended, also requires DOE to consider amending the existing Federal energy conservation standards for certain types of listed commercial and industrial equipment (generally, commercial water heaters, commercial packaged boilers, commercial air-conditioning and heating equipment, and packaged terminal air conditioners and heat pumps) each time ASHRAE Standard 90.1 is amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the

Federal Register

an analysis of the energy savings potential of amended energy conservation standards within 180 days of the amendment of ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that DOE must adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent efficiency level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such a standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines that a more-stringent standard is appropriate under the statutory criteria, DOE must establish such more-stringent standard not later than 30 months after publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)(i))

On October 9, 2013, ASHRAE officially released ASHRAE Standard 90.1-2013, which, among other things, amended standard levels for commercial oil-fired storage water heaters greater than 105,000 Btu/h and less than 4,000 Btu/h/gal, a category of CWH equipment covered under EPCA, thereby triggering DOE's statutory obligation to promulgate an amended uniform national standard at those levels, unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE Standard 90.1 levels. Pursuant to 42 U.S.C. 6313(a)(6), DOE determined in a final rule published on July 17, 2015 (“July 2015 ASHRAE equipment final rule”) that a more-stringent thermal efficiency standard than the ASHRAE 90.1-2013 standard level for commercial oil-fired water heaters is not justified. 80 FR 42614. Therefore, DOE adopted the ASHRAE 90.1-2013 thermal efficiency standard for commercial oil-fired storage water heaters in the Code of Federal Regulations (CFR) at 10 CFR 431.110 with a compliance date of October 9, 2015.

Id.

In this NOPR, DOE proposes to maintain the standard levels for commercial oil-fired storage water heaters adopted in that final rule. For the other types of CWH equipment,

DOE was not triggered by ASHRAE action in adopting ASHRAE Standard 90.1-2013, so for those equipment classes, DOE proceeded under its 6-year-look-back authority. (42 U.S.C. 6313(a)(6)(C)(i))

Other types of CWH equipment include commercial electric storage water heaters, commercial gas-fired storage water heaters, residential-duty gas-fired storage water heaters, commercial gas-fired instantaneous water heaters and hot water supply boilers, commercial oil-fired instantaneous water heaters and hot water supply boilers, and commercial electric instantaneous water heaters. Commercial heat pump water heaters and unfired hot water storage tanks were not considered in this NOPR and energy conservations standards for these classes will be considered in a future rulemaking(s). Commercial electric instantaneous water heaters and commercial oil-fired instantaneous water heaters and hot water supply boilers were not analyzed for amended energy conservation standards in this NOPR because DOE determined amendment of standards for these classes would result in negligible energy savings. Section III.C includes further discussion on the scope of equipment classes analyzed in this NOPR.

Also relevant here, the American Energy Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012), amended EPCA to require that DOE publish a final rule establishing a uniform efficiency descriptor and accompanying test methods for covered residential water heaters and some CWH equipment. (42 U.S.C. 6295(e)(5)(B)) EPCA further requires the final rule must replace the current energy factor (for residential water heaters) and thermal efficiency and standby loss (for some commercial water heaters) metrics with a uniform efficiency descriptor. (42 U.S.C. 6295(e)(5)(C))

Pursuant to 42 U.S.C. 6295(e), on July 11, 2014, DOE published a final rule for test procedures for residential and certain commercial water heaters (“July 2014 final rule”) that, among other things, established the uniform energy factor (UEF), a revised version of the current residential energy factor metric, as the uniform efficiency descriptor required by AEMTCA. 79 FR 40542, 40578. In addition, the July 2014 final rule defined the term “residential-duty commercial water heater,” an equipment type that is subject to the new UEF metric and the corresponding UEF test procedures. 79 FR 40542, 40586-88 (July 11, 2014). DOE excludes from the UEF covered CWH equipment that is not a residential-duty commercial water heater.

Id.

Further details on the UEF metric and residential-duty commercial water heaters are discussed in section III.B of this document. For this NOPR, DOE analyzed and developed potential energy conservation standards for residential-duty commercial water heaters in terms of the current thermal efficiency and standby loss metrics because there are currently not sufficient test data for residential-duty commercial water heaters rated in UEF that DOE could use in its analyses for this NOPR. However, in a NOPR published on April 14, 2015 (“April 2015 NOPR”), DOE proposed, among other things, conversion factors from thermal efficiency and standby loss to UEF for residential-duty commercial water heaters. 80 FR 20116, 20143. DOE applied these conversion factors in converting the proposed standards for residential-duty commercial water heaters to UEF in this rulemaking. All other CWH equipment classes continue to have standards measured in terms of the thermal efficiency and standby loss metrics, with the exception of unfired hot water storage tanks, for which the energy

conservation standard is a minimum R-value requirement for tank insulation.

Pursuant to EPCA, any new or amended energy conservation standard that DOE prescribes for CWH equipment shall be designed to achieve significant additional conservation of energy that DOE determines, supported by clear and convincing evidence, is both technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)) In accordance with these and other statutory provisions discussed in this document, DOE has examined all of the CWH equipment classes (except for commercial oil-fired water heaters, which were addressed in a separate rulemaking, as noted above, and unfired hot water storage tanks, which will be examined in a separate rulemaking, as discussed in section III.C.4). Because DOE did not analyze amended energy conservations standards for unfired hot water storage tanks in this rule, DOE proposes to maintain the current R-12.5 minimum thermal insulation requirement for this class. DOE has tentatively concluded that more-stringent standards for commercial gas-fired storage water heaters, residential-duty commercial gas-fired storage water heaters, gas-fired instantaneous water heaters and hot water supply boilers, and electric storage water heaters are warranted. Accordingly, DOE is proposing amended energy conservation standards for these classes of CWH equipment. The proposed standards, if adopted, would apply to all equipment listed in Table I.1 and Table I.2 and manufactured in, or imported into, the United States on and after the compliance date of the standards (

i.e.,

3 years after the publication date of the final rule). As shown in Table I.1 and Table I.2, the proposed standards are expressed in terms of: (1) Thermal efficiency, which describes the ratio of the heat energy (Btu/h) transferred to the water flowing through the water heater to the amount of energy (Btu/h) consumed by the water heater; (2) standby loss, which is the average hourly energy, expressed in Btu per hour, required to maintain the stored water temperature; or (3) uniform energy factor, which is a uniform efficiency descriptor that replaces thermal efficiency and standby loss for residential-duty commercial water heaters.

Table I.1—Proposed Energy Conservation Standards for Commercial Water Heating Equipment Except for Residential-Duty Commercial Water Heaters

Equipment

Specifications **

Energy conservation standards *

Minimum thermal efficiency

(percent)

Maximum standby loss

Compliance date

Electric storage water heaters

All

N/A

0.84 × [0.30 + 27/V

] (

%/h

)

3 years after publication of final rule.

Gas-fired storage water heaters

All ***

0.63 × [Q/800 + 110(V

)

1/2

] (

Btu/h

)

3 years after publication of final rule.

Oil-fired storage water heaters

All ***

Q/800 + 110(V

)

1/2

(

Btu/h

)

10/09/2015 †.

Electric instantaneous water heaters

<10 gal ***

N/A

01/01/1994 †.

≥10 gal

2.30 + 67/V

(

%/h

)

01/01/1994 †.

Gas-fired instantaneous water heaters and hot water supply boilers:

Instantaneous water heaters (other than storage-type) and hot water supply boilers

<10 gal

N/A

3 years after publication of final rule.

Instantaneous water heaters (other than storage-type) and hot water supply boilers

≥10 gal

Q/800 + 110(V

)

1/2

(

Btu/h

)

3 years after publication of final rule †††.

Storage-type instantaneous water heaters ††

≥10 gal

0.63 × [Q/800 + 110(V

)

1/2

] (

Btu/h

)

3 years after publication of final rule.

Oil-fired instantaneous water heaters and hot water supply boilers:

Instantaneous water heaters and hot water supply boilers

<10 gal

N/A

10/09/2015 †

Instantaneous water heaters and hot water supply boilers

≥10 gal

Q/800 + 110(V

)

1/2

(

Btu/h

)

10/29/2003 †.

* V

is the rated volume in gallons. Q is the fuel input rate in Btu/h.

** These specifications only distinguish between classes of CWH equipment. The different classifications for consumer water heaters and commercial water heating equipment are specified by the definitions codified at 10 CFR 430.2 and 10 CFR 431.102, respectively.

*** These standards only apply to commercial water heating equipment that does not meet the definition of “residential-duty commercial water heater.” See Table I.2 for energy conservation standards proposed for residential-duty commercial water heaters.

† Amended standards for these equipment classes were not analyzed in this NOPR. Section III.C includes a discussion of the scope of equipment analyzed in this NOPR. Standards for electric instantaneous water heaters are included in EPCA. (42 U.S.C. 6313(a)(5)(D)-(E)) In this NOPR, DOE proposes to codify these standards for electric instantaneous water heaters in its regulations at 10 CFR 431.110. Further discussion of standards for electric instantaneous water heaters is included in section III.C.5.

†† DOE proposes a new equipment class for storage-type instantaneous water heaters. This class of equipment is similar to storage water heaters in design, cost, and application. However, it has a ratio of input capacity to storage volume greater than or equal to 4,000 Btu/h per gallon of water stored; therefore, it is properly classified as an instantaneous water heater by EPCA's definition at 42 U.S.C. 6311(12)(B). Because of its similarities with storage water heaters, DOE grouped these two equipment classes together in its analyses for this NOPR. Storage-type instantaneous water heaters are further discussed in section IV.A.2.a.

††† Amended standby loss standards for instantaneous gas-fired water heaters and hot water supply boilers with greater than or equal to 10 gal water stored other than storage-type instantaneous water heaters were not analyzed in this NOPR. Section III.C.8 includes a discussion of the coverage of instantaneous water heaters and hot water supply boilers in this NOPR.

Table I.2—Proposed Energy Conservation Standards for Residential-Duty Commercial Water Heaters

Equipment

Specification *

Draw pattern **

Uniform energy factor †

Compliance date

Gas-fired Storage †

>75 kBtu/h and ≤105 kBtu/h and ≤120 gal and ≤180 °F

Very Small

Low

0.4618 − (0.0010 × Vr)

0.6626 − (0.0009 × Vr)

3 years after publication of final rule.

Medium

0.6996 − (0.0007 × Vr)

3 years after publication of final rule.

High

0.7311 − (0.0006 × Vr)

3 years after publication of final rule.

Oil-fired storage

>105 kBtu/h and ≤140 kBtu/h and ≤120 gal and ≤180 °F

Very Small

Low

0.3206 − (0.0006 × V

)

0.5577 − (0.0019 × V

)

Conversion factor final rule publication date.††

Medium

0.6027 − (0.0019 × V

)

Conversion factor final rule publication date.††

High

0.5446 − (0.0018 × V

)

Conversion factor final rule publication date.††

* To be classified as a residential-duty water heater, a commercial water heater must, if requiring electricity, use single-phase external power supply, and not be designed to heat water at temperatures greater than 180 °F.

** Draw pattern is a classification of hot water use of a consumer water heater or residential-duty commercial water heater, based upon the first-hour rating. The draw pattern is determined using the Uniform Test Method for Measuring the Energy Consumption of Water Heaters in Appendix E to Subpart B of 10 CFR part 430.

† Energy conservation standards for residential-duty commercial gas-fired storage water heaters at all four draw patterns were converted from the thermal efficiency and standby loss metrics to the new UEF metric using the conversion factors proposed by DOE in the April 2015 NOPR. 80 FR 20116, 20143 (April 14, 2015). In these equations, Vr is the rated storage volume.

†† Energy conservation standards in terms of UEF for residential-duty oil-fired storage water heaters will be established in a final rule for consumer water heaters and certain commercial water heaters, along with mathematical conversion factors for determining UEF. (See Docket No. EERE-2015-BT-TP-0007)

A. Benefits and Costs to Commercial Consumers

Table I.3 presents DOE's evaluation of the economic impacts of the proposed energy conservation standards on commercial consumers of CWH equipment, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).

The average LCC savings are positive for the standards DOE is proposing in this NOPR for all CWH equipment classes considered in this document. The estimated PBP for all proposed equipment classes are also less than the projected average lifetime of each equipment class, which varies from 10 to 25 years.

The average LCC savings are measured relative to the no-new-standards-case efficiency distribution, which depicts the commercial water heating market in the compliance year in the absence of amended standard levels (see section IV.H.1 and chapter 8H of the TSD). The simple PBP, which is designed to compare specific efficiency levels for CWH equipment, is aggregate average payback measured relative to baseline CWH equipment (see section IV.F.3 and chapter 8 of the TSD).

Table I.3—Impacts of Proposed Energy Conservation Standards on Commercial Consumers of Commercial Water Heating Equipment

Equipment class

Average LCC savings

2014$

Simple

payback

period

years

Average

lifetime

years

Commercial gas-fired storage water heaters and storage-type instantaneous water heaters *

794

4.3

Residential-duty gas-fired storage water heaters

11.9

Gas-fired instantaneous water heaters and hot water supply boilers **

3,488

5.6

22.6

Tankless water heaters

1,119

Immediate †

Hot water supply boilers

4,528

6.4

Electric storage water heaters

6.5

* DOE proposes a new equipment class for storage-type instantaneous water heaters, which are similar to storage water heaters with a ratio of input capacity to storage volume greater than or equal to 4,000 Btu/h per gallon of water stored. Storage-type instantaneous water heaters are further discussed in section IV.A.2.a.

** Average LCC and PBP for the gas-fired instantaneous water heaters and hot water supply boilers class reflect use of shipment-weighted inputs to these calculated values to provide results for the class as a whole. Average lifetime of the gas-fired instantaneous water heaters and hot water supply boilers equipment class was a shipment-weighted average of the tankless water heater and hot water supply boiler lifetimes.

† Immediate payback can result from a decrease in installation cost that is greater than the incremental increase in equipment cost.

DOE's analysis of the impacts of the proposed standards on commercial consumers is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2015 to 2048). Using a real discount rate of 9.1 percent,

DOE estimates that the INPV for CWH equipment manufacturers is $176.2 million in 2014$ using DOE's current standards as a baseline. Under the proposed standards, DOE expects that the change in INPV will range from 5.0 percent to -13.3 percent, which is approximately equivalent to an increase of $8.8 million to a reduction of $23.4 million. Industry conversion costs are expected to total $29.8 million. Additional detail on DOE's calculations of INPV for CWH equipment manufacturers can be found in section V.B.2 of this NOPR and chapter 12 of the NOPR TSD. Based on DOE's interviews with CWH equipment manufacturers, DOE does not expect any plant closings or significant loss of employment to result from the proposed standards.

DOE estimated preliminary financial metrics, including the industry discount rate, based on data in Securities and Exchange Commission (SEC) filings and on industry-reviewed values published in prior water heating equipment final rules. DOE presented the preliminary financial metrics to manufacturers in manufacturer impact analysis (MIA) interviews. DOE adjusted those values based on feedback from manufacturers. The complete set of financial metrics and more detail about the methodology can be found in chapter 12 of the NOPR TSD.

C. National Benefits and Costs

All monetary values in this section are expressed in 2014 dollars and, where appropriate, are discounted to 2015 unless explicitly stated otherwise. Energy savings in this section refer to the full-fuel-cycle savings (see section IV.H for discussion). National benefits of DOE's proposed standard levels are presented as compared to the current Federal standard levels as baseline.

DOE's analyses indicate that the proposed energy conservation standards for CWH equipment would save a significant additional amount of energy. The cumulative lifetime energy savings for CWH equipment shipped in the 30-year period

(which begins in the first full year of compliance with amended standards relative to the no-new-standards case without amended standards) amount to 1.8 quadrillion British thermal units (quads

) of cumulative full-fuel-cycle energy. This is a savings of 8 percent relative to the energy use of this equipment

in the case without amended standards. More details on energy savings can be found in chapter 10 of the NOPR TSD and sections IV.H, IV.L, and V.B.3 of this document.

The 30-year analysis period is 2019-2048 for electric and gas-fired CWH equipment.

A quad is equal to 10

British thermal units (Btu).

The no-new-standards-case assumptions are described in section IV.H.1 of this notice.

The cumulative net present value (NPV) of total commercial consumer costs and savings of the proposed CWH equipment standards in 2014$ ranges from $2.26 billion (at a 7-percent discount rate) to $6.75 billion (at a 3-percent discount rate), respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased equipment costs for CWH equipment shipped in 2019-2048 discounted back to the current year (2015). Chapter 10 of the NOPR TSD provides more details on the NPV analyses.

In addition, the proposed standards would have significant environmental benefits. The energy savings are estimated to result in cumulative emission reductions (over the same period as for energy savings) of 98 million metric tons (Mt)

of carbon dioxide (CO

), 1,172 thousand tons of methane (CH

), 0.2 thousand tons of nitrous oxide (N

O), 1.6 thousand tons of sulfur dioxide (SO

), 316 thousand tons of nitrogen oxides (NO

), and 0.004 tons of mercury (Hg).

The cumulative reduction in CO

emissions through 2030 amounts to 15 Mt, which is equivalent to the emissions resulting from the annual electricity use of 2.1 million homes. More detailed emissions analysis results can be found in chapter 13 of the NOPR TSD.

A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO

are presented in short tons.

DOE calculated emissions reductions relative to the no-new-standards case, which reflects key assumptions in the

Annual Energy Outlook 2015

(

AEO 2015

) Reference case.

AEO 2015

generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014.

The value of the CO

reductions is calculated using a range of values per metric ton of CO

(otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process.

The derivation of the SCC values is discussed in section IV.L of this NOPR. Using discount rates appropriate for each set of SCC values, DOE estimates that the present monetary value of the CO

emissions reduction described above is between $0.64 and $9.11 billion, with a value of $2.99 billion using the central SCC case represented by $40.0 per metric ton in 2015.

Additionally, DOE estimates the present monetary value of the NO

emissions reduction to be from $373 million at a 7-percent discount rate to $970 million at a 3-percent discount rate.

More detailed results can be found in chapter 14 of the NOPR TSD.

Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,

Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised July 2015) (Available at:

https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf

The values only include CO

emissions; CO

equivalent emissions from other greenhouse gases are not included.

DOE estimated the monetized value of NO

emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis titled, “Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants,” published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at

www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf

.) See section IV.L.2 for further discussion. Note that the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. Note that DOE is currently investigating valuation of avoided SO

and Hg emissions.

Table I.4 summarizes the national economic benefits and costs expected to result from this NOPR's proposed standards for CWH equipment.

Table I.4—Summary of National Economic Benefits and Costs of Proposed Commercial Water Heating Equipment Energy Conservation Standards (TSL 3) *

Category

Present value

billion 2014$

Discount rate

Benefits

Commercial Consumer Operating Cost Savings

3.7

9.3

Reduction (using mean SCC at 5% discount rate) **

0.6

Reduction (using mean SCC at 3% discount rate) **

3.0

Reduction (using mean SCC at 2.5% discount rate) **

4.8

2.5

Reduction (using 95th percentile SCC at 3% discount rate) **

9.1

3 (95th percentile)

Reduction †

0.4

1.0

Total Benefits ††

7.1

13.2

Costs

Incremental Equipment Costs

1.5

2.5

Total Net Benefits

Including CO

and NO

Reduction Monetized Value †

5.6

10.7

* This table presents the costs and benefits associated with CWH equipment shipped in 2019-2048. These results include benefits to consumers that accrue after 2048 from the equipment purchased in 2019-2048. The incremental installed costs include incremental equipment cost as well as installation costs. The CO

reduction benefits are global benefits due to actions that occur nationally.

** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from the integrated assessment models, at discount rates of 5, 3, and 2.5 percent. For example, for 2015 emissions, these values are $12.2/metric ton, $40.0/metric ton, and $62.3/metric ton, in 2014$, respectively. The fourth set ($117 per metric ton in 2014$ for 2015 emissions), which represents the 95th percentile of the SCC distribution calculated using SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution. See section IV.L.1 for more details.

† The $/ton values used for NO

are described in section IV.L. DOE estimated the monetized value of NO

www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.

) See section IV.L.2 for further discussion. Note that the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.

†† Total benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate.

The benefits and costs of the proposed energy conservation standards, for CWH equipment shipped in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of: (1) The national economic value of the benefits in reduced operating costs, minus (2) the increase in equipment purchase prices and installation costs, plus (3) the value of the benefits of CO

and NO

emission reductions, all annualized.

To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (

e.g.,

2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO

reductions, for which DOE used case-specific discount rates, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period starting in the compliance year that yields the same present value.

The national operating savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing this equipment. The national operating cost savings is measured for the lifetime of CWH equipment shipped in 2019-2048.

The CO

reduction is a benefit that accrues globally due to decreased domestic energy consumption that is expected to result from this rule. Because CO

emissions have a very long residence time in the atmosphere,

the SCC values in future years reflect future CO

-emissions impacts that continue beyond 2100 through 2300.

The atmospheric lifetime of CO

is estimated to be on the order of 30-95 years. Jacobson, MZ, “Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' ”

J. Geophys. Res.

110. pp. D14105 (2005).

Estimates of annualized benefits and costs of the proposed standards (over a 30-year period) are shown in Table I.5. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction (for which DOE used a 3-percent discount rate along with the average SCC series that has a value of $40.0 per metric ton in 2015), the estimated cost of the CWH standards proposed in this document is $144 million per year in increased equipment costs, while the estimated benefits are $367 million per year in reduced equipment operating costs, $166 million per year from CO

reductions, and $37 million per year from reduced NO

emissions. In this case, the annualized net benefit amounts to $427 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that has a value of $40.0 per metric ton in 2015, the estimated cost of the CWH standards proposed in this NOPR is $141 million per year in increased equipment costs, while the benefits are $517 million per year in reduced operating costs, $166 million from CO

reductions, and $54 million in reduced NO

emissions. In this case, the

net benefit amounts to $597 million per year.

Table I.5—Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Water Heating Equipment (TSL 3)*

Discount rate

Primary estimate

Low net benefits

estimate

million 2014$/year

High net benefits

estimate

million 2014$/year

Benefits

Commercial Consumer Operating Cost Savings

367

336

411.

517

465

588.

Reduction (using mean SCC at 5% discount rate)*,**

50.

Reduction (using mean SCC at 3% discount rate)*,**

166

159

176.

Reduction (using mean SCC at 2.5% discount rate)*,**

2.5

245

234

259.

Reduction (using 95th percentile SCC at 3% discount rate)*,**

508

485

536.

Reduction†

86.

126.

Total Benefits††

7% plus CO

range

452 to 912

417 to 855

547 to 1,033.

571

530

673.

3% plus CO

range

619 to 1,079

563 to 1,001

765 to 1,251.

737

676

890.

Costs

Commercial Consumer Incremental Equipment Costs

144

147

142.

141

144

138.

Net Benefits/Costs

Total††

7% plus CO

range

308 to 768

270 to 709

406 to 892.

427

383

531.

3% plus CO

range

478 to 938

419 to 857

627 to 1,113.

597

532

752.

* This table presents the annualized costs and benefits associated with CWH equipment shipped in 2019-2048. These results include benefits to commercial consumers that accrue after 2048 from the equipment shipped in 2019-2048. The Primary, Low Benefits, and High Benefits Estimates for operating cost savings utilize projections of energy prices and building growth (leading to higher shipments) from the

AEO 2015

reference case, Low Estimate, and High Estimate, respectively. In addition, DOE used a constant price assumption as the default price projection; the cost to manufacture a given unit of higher efficiency neither increases nor decreases over time. The analysis of the price trends is described in section IV.F.2.a and appendix 10B of the NOPR TSD.

† The $/ton values used for NO

are described in section IV.L. DOE estimated the monetized value of NO

www3.epa.gov/ttnecas1/regdata/RIAs/

111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further discussion. Note that the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.

†† Total benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with a 3-percent discount rate. In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

benefits are calculated using the labeled discount rate, and those values are added to the full range of CO

values.

D. Conclusion

DOE has tentatively concluded that, based upon clear and convincing evidence, the proposed standards for the CWH equipment classes evaluated in this rulemaking represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant additional conservation of energy. DOE further notes that equipment achieving these standard levels is already commercially available for all equipment classes covered by this proposal. Based on the analytical results described in this section, DOE has tentatively concluded that the benefits of the proposed standards to the Nation (

i.e.,

energy savings, positive NPV of commercial

consumer benefits, commercial consumer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers).

DOE also considered more-stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.

II. Introduction

The following section briefly discusses the statutory authority underlying this proposal, as well as some of the relevant historical background related to the establishment of standards for CWH equipment.

A. Authority

Title III, Part C

of the Energy Policy and Conservation Act of 1975 (“EPCA” or “the Act”), Public Law 94-163 (42 U.S.C. 6311-6317, as codified), added by Public Law 95-619, Title IV, § 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve energy efficiency. These encompass several types of heating, air-conditioning, and water heating equipment, including the classes of CWH equipment that are the subject of this rulemaking.

(42 U.S.C. 6311(1)(K)) In general, this program addresses the energy efficiency of certain types of commercial and industrial equipment. Relevant provisions of the Act specifically include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labelling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316).

For editorial reasons, upon codification in the U.S. Code, Part C was redesignated Part A-1.

All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015 (EEIA 2015), Public Law 114-11 (April 30, 2015).

The initial Federal energy conservation standards and test procedures for CWH equipment were added to EPCA by the Energy Policy Act of 1992 (EPACT 1992), Public Law 102-486. (42 U.S.C. 6313(a)(5) and 42 U.S.C. 6314(a)(4)(A)) These initial CWH standards mirrored the levels and equipment classes in ASHRAE Standard 90.1-1989.

In acknowledgment of technological changes that yield energy efficiency benefits, the U.S. Congress further directed DOE through EPCA to evaluate and consider amending its energy conservation standards for certain commercial and industrial equipment (

i.e.,

specified heating, air-conditioning, and water heating equipment) each time ASHRAE Standard 90.1 is updated with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) Such review is to be conducted in accordance with the statutory procedures set forth in 42 U.S.C. 6313(a)(6)(B). Pursuant to 42 U.S.C. 6313(a)(6)(A), for CWH equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the

Federal Register

an analysis of the energy savings potential of amended energy conservation standards within 180 days of the amendment of ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that DOE must adopt amended standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent level would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines that a more-stringent standard is appropriate under the statutory criteria, DOE must establish such more-stringent standard not later than 30 months after publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)(i))

In addition, DOE notes that pursuant to the EISA 2007 amendments to EPCA, the agency must periodically review its already-established energy conservation standards for covered ASHRAE equipment and publish either a notice of proposed rulemaking with amended standards or a determination that the standards do not need to be amended. (42 U.S.C. 6313(a)(6)(C)(i)) In December 2012, this provision was further amended by AEMTCA to clarify that DOE's periodic review of ASHRAE equipment must occur “[e]very six years.” (42 U.S.C. 6313(a)(6)(C)(i)) AEMTCA also modified EPCA to specify that any amendments to the design requirements with respect to the ASHRAE equipment would trigger DOE review of the potential energy savings under 42 U.S.C. 6313(a)(6)(A)(i). AEMTCA also added a requirement that DOE must initiate a rulemaking to consider amending the energy conservation standards for any covered equipment for which more than 6 years has elapsed since the issuance of the most recent final rule establishing or amending a standard for the product as of the date of AEMTCA's enactment (

i.e.,

December 18, 2012), in which case DOE must publish either: (1) a notice of determination that the current standards do not need to be amended, or (2) a notice of proposed rulemaking containing proposed standards. (42 U.S.C. 6313(a)(6)(C)(vi))

DOE published the most recent final rule for energy conservation standards for CWH equipment on January 12, 2001 (“January 2001 final rule”), which adopted efficiency levels in ASHRAE Standard 90.1-1999. 66 FR 3336, 3356. Because more than 6 years have passed since issuance of the last final rule for CWH equipment, DOE is required to publish either a notice of determination that the current standards for these equipment types do not need to be amended, or a notice of proposed rulemaking proposing amended energy conservation standards for these equipment types.

When setting standards for the equipment addressed by this document, EPCA, as amended by AEMTCA, prescribes specific statutory criteria for DOE to consider when determining whether an amended standard level more stringent than that in ASHRAE Standard 90.1 is economically justified. See generally 42 U.S.C. 6313(a)(6)(A)-(C). First, EPCA requires that any amended standards for CWH equipment must be designed to achieve significant additional conservation of energy that DOE determines, supported by clear and convincing evidence, and be both technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)) Furthermore, DOE may not adopt any standard that would increase the maximum allowable energy use or decrease the minimum required energy efficiency of covered equipment. (42 U.S.C. 6313(a)(6)(B)(iii)(I) and (C)(i)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens by considering, to the maximum extent

practicable, the following seven statutory factors:

(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the product in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses of the products likely to result from the standard;

(3) The total projected amount of energy savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy conservation; and

(7) Other factors the Secretary considers relevant.

(42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i))

Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of covered equipment. (42 U.S.C. 6314) Specifically, EPCA requires that if a test procedure referenced in ASHRAE Standard 90.1 is updated, DOE must update its test procedure to be consistent with the amended test procedure in ASHRAE Standard 90.1, unless DOE determines that the amended test procedure is not reasonably designed to produce test results that reflect the energy efficiency, energy use, or estimated operating costs of the ASHRAE equipment during a representative average use cycle. In addition, DOE must determine that the amended test procedure is not unduly burdensome to conduct. (42 U.S.C. 6314(a)(2) and (4)) Manufacturers of covered equipment must use the prescribed DOE test procedure as the basis for certifying to DOE that their equipment complies with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of such equipment. (42 U.S.C. 6314(d)) Similarly, DOE must use these test procedures to determine whether the equipment complies with standards adopted pursuant to EPCA. The DOE test procedure for CWH equipment currently appears at 10 CFR 431.106.

EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6313(a)(6)(B)(iii)(I) and (C)(i)) Furthermore, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) and (C)(i))

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional costs 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 (and, as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure.

Additionally, EPCA specifies criteria when promulgating a standard for a type or class of covered equipment that has two or more subcategories that may justify different standard levels. DOE must specify a different standard level than that which applies generally to such type or class of equipment for any group of covered products that has the same function or intended use if DOE determines that products within such group: (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and which justifies a higher or lower standard. In determining whether a performance-related feature justifies a different standard for a group of products, DOE generally considers such factors as the utility to the commercial consumer of the feature and other factors DOE deems appropriate. In a rule prescribing such a standard, DOE includes an explanation of the basis on which such higher or lower level was established. DOE considered these criteria in the context of this rulemaking.

Other than the exceptions specified in 42 U.S.C. 6316, Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards for covered CWH equipment. (42 U.S.C. 6316(b))

B. Background

1. Current Standards

As noted above, DOE most recently amended energy conservation standards for certain CWH equipment in the July 2015 ASHRAE equipment final rule. 80 FR 42614, 42667 (July 17, 2015). The current standards for all CWH equipment classes are set forth in Table II.1.

Table II.1—Current Federal Energy Conservation Standards for CWH Equipment

Product

Size

Energy conservation standards *

Minimum thermal efficiency

(equipment

manufactured on and after

October 9, 2015) ** †

(%)

Maximum standby loss

(equipment manufactured on and after October 29, 2003) ** ††

Electric storage water heaters

All

N/A

0.30 + 27/V

(%/h)

Gas-fired storage water heaters

≤155,000 Btu/h

>155,000 Btu/h

Q/800 + 110(V

)

1/2

(Btu/h)

Q/800 + 110(V

)

1/2

(Btu/h)

Oil-fired storage water heaters

≤155,000 Btu/h

>155,000 Btu/h

80†

Q/800 + 110(V

)

1/2

(Btu/h)

Q/800 + 110(V

)

1/2

(Btu/h)

Electric instantaneous water heaters†††

<10 gal

≥10 gal

N/A

2.30 + 67/V

(%/h)

Gas-fired instantaneous water heaters and hot water supply boilers

<10 gal

≥10 gal

N/A

Q/800 + 110(V

)

1/2

(Btu/h)

Oil-fired instantaneous water heater and hot water supply boilers

<10 gal

≥10 gal

N/A

Q/800 + 110(V

)

1/2

(Btu/h)

Minimum thermal insulation

Unfired hot water storage tank

All

R-12.5

* V

is the measured storage volume, and V

is the rated volume, both in gallons. Q is the nameplate input rate in Btu/h.

** For hot water supply boilers with a capacity of less than 10 gallons: (1) The standards are mandatory for products manufactured on an after October 21, 2005 and (2) products manufactured prior to that date, and on or after October 23, 2003, must meet either the standards listed in this table or the applicable standards in Subpart E of this Part for a “commercial packaged boiler.”

† For oil-fired storage water heaters: (1) The standards are mandatory for equipment manufactured on and after October 9, 2015 and (2) equipment manufactured prior to that date must meet a minimum thermal efficiency level of 78 percent.

†† Water heaters and hot water supply boilers having more than 140 gallons of storage capacity need not meet the standby loss requirement if: (1) The tank surface area is thermally insulated to R-12.5 or more, (2) a standing pilot light is not used, and (3) for gas or oil-fired storage water heaters, they have a fire damper or fan assisted combustion.

††† Energy conservation standards for electric instantaneous water heaters are included in EPCA. (42 U.S.C. 6313(a)(5)(D)-(E)) The compliance date for these energy conservation standards is January 1, 1994. In this NOPR, DOE proposes to codify these standards for electric instantaneous water heaters in its regulations at 10 CFR 431.110. Further discussion of standards for electric instantaneous water heaters is included in section III.C.5.

2. History of Standards Rulemaking for CWH Equipment

The Energy Policy Act of 1992 (EPACT), Public Law 102-486, amended EPCA to prescribe mandatory energy conservation standards for CWH equipment, including storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. (42 U.S.C. 6313(a)(5)) These statutory energy conservation standards corresponded to the efficiency levels in ASHRAE Standard 90.1-1989.

As noted in section II.A of this document, on October 29, 1999, ASHRAE released Standard 90.1-1999, which included new efficiency levels for numerous categories of CWH equipment. DOE evaluated these new standards and subsequently amended energy conservation standards for CWH equipment in a final rule published in the

Federal Register

on January 12, 2001. 66 FR 3336. DOE adopted the levels in ASHRAE Standard 90.1-1999 for all types of CWH equipment, except for electric storage water heaters. For electric storage water heaters, the standard in ASHRAE Standard 90.1-1999 was less stringent than the standard prescribed in EPCA and, consequently, would have increased energy consumption.

Under those circumstances, DOE could not adopt the new efficiency level for electric storage water heaters in ASHRAE Standard 90.1-1999.

Id.

at 3350. In the January 2001 final rule, DOE also adopted the efficiency levels contained in the Addendum to ASHRAE Standard 90.1-1989 for hot water supply boilers, which were identical to the efficiency levels for instantaneous water heaters.

Id.

at 3356.

As noted above, ASHRAE increased the thermal efficiency level for commercial oil-fired storage water heaters greater than 105,000 Btu/h and less than 4,000 Btu/h/gal in Standard 90.1-2013, thereby triggering DOE's statutory obligation to promulgate an amended uniform national standard at those levels, unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. As a first step in this process, DOE published an energy savings analysis as a Notice of Data Availability (NODA) in the

Federal Register

on April 11, 2014. 79 FR 20114. In this NODA, DOE tentatively decided that energy savings were not significant enough to justify further analysis of increasing standards for commercial oil-fired storage water heaters beyond the standard levels in ASHRAE 90.1-2013. DOE published a notice of proposed rulemaking in the

Federal Register

on January 8, 2015, which took a consistent position vis-à-vis commercial oil-fired storage water heaters. 80 FR 1172. Subsequently, in the July 2015 ASHRAE equipment final rule, among other things, DOE adopted the standard for commercial oil-fired storage water heaters at the level set forth in ASHRAE 90.1-2013. 80 FR 42614 (July 17, 2015). This adopted standard is shown in Table II.2.

Table II.2—Federal Energy Conservation Standards for Thermal Efficiency for Commercial Oil-Fired Storage Water Heaters

Regulatory requirement

Input capacity/stored volume btu/(gal × h)

Thermal efficiency (%)

Compliance date

Previous Federal Standard

<4,000

10/29/2003.

Amended Federal Standard (ASHRAE 90.1-2013 Level)

<4,000

10/09/2015.

In addition to requiring rulemaking when triggered by ASHRAE action, EPCA also requires DOE to conduct an evaluation of its standards for CWH equipment every 6 years, and to publish either a notice of determination that such standards do not need to be amended or a notice of proposed rulemaking, including proposed amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) Pursuant to this statutory requirement, DOE initiated this rulemaking to evaluate the energy conservation standards for covered CWH equipment and to determine whether new or amended standards are warranted. As an initial step for reviewing energy conservation standards for CWH equipment, DOE published a request for information for CWH equipment on October 21, 2014 (“October 2014 RFI”). 79 FR 62899. The October 2014 request for information (RFI) solicited information from the public to help DOE determine whether more-stringent energy conservation standards for CWH equipment would result in a significant amount of additional energy savings, and whether those standards would be technologically feasible and economically justified.

Id.

at 62899-900.

DOE received a number of comments from interested parties in response to the October 2014 RFI. These commenters are identified in Table II.3. DOE considered these comments in the preparation of this NOPR. In this document, DOE addresses the relevant public comments it received in the appropriate sections.

Table II.3—Interested Parties Providing Written Comments on the CWH RFI

Name

Abbreviation

Commenter type

A.O. Smith Corporation

A.O. Smith

Bradford White Corporation

Bradford White

American Gas Association

AGA

Air-Conditioning, Heating and Refrigeration Institute

AHRI

Steffes Corporation

Steffes

Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy, Natural Resources Defense Council

Joint Advocates (including ASAP, ACEEE, and NRDC)

Edison Electric Institute

EEI

University of Michigan Plant Operations

Rheem Corporation

Rheem

National Rural Electric Cooperative Association

NRECA

* “IR”: Industry Representative; “M”: Manufacturer; “EA”: Efficiency/Environmental Advocate; “OS”: Other Stakeholder.

III. General Discussion

A. Compliance Dates

In 42 U.S.C. 6313(a), EPCA prescribes a number of compliance dates for any resulting amended standards for CWH equipment. These compliance dates vary depending on specific statutory authority under which DOE is conducting its review (

i.e.,

whether DOE is triggered by a revision to ASHRAE Standard 90.1 or whether DOE is undertaking a “6-year look back” review), and the action taken (

i.e.,

whether DOE is adopting ASHRAE Standard 90.1 levels or more-stringent levels). The discussion that follows explains the potential compliance dates as they pertain to this rulemaking.

As noted previously, EPCA requires that at least once every 6 years, DOE must review standards for covered equipment and publish either a notice of determination that standards do not need to be amended or a NOPR proposing new standards. (42 U.S.C 6313(a)(6)(C)(i)) For any NOPR published pursuant to 42 U.S.C. 6313(a)(6)(C), the final rule would apply on the date that is the later of: (1) The date 3 years after publication of the final rule establishing a new standard or (2) the date 6 years after the effective date of the current standard for a covered product. (42 U.S.C. 6313(a)(6)(C)(iv)) For the CWH equipment for which DOE is proposing amended standards, the date 3 years after the publication of the final rule would be later than the date 6 years after the effective date of the current standard. As a result, compliance with any amended energy conservation standards, if adopted by a final rule in this rulemaking, would be required beginning on the date 3 years after the publication of the final rule.

B. Test Procedures

DOE's existing test procedure for CWH equipment is specified at 10 CFR 431.106, and incorporates by reference American National Standards Institute (ANSI) Standard Z21.10.3-2011 (ANSI Z21.10.3-2011), “Gas Water Heaters, Volume III, Storage Water Heaters With Input Ratings Above 75,000 Btu Per Hour, Circulating and Instantaneous.” The test procedure provides mandatory methods for determining the thermal efficiency and standby loss of certain classes of CWH equipment. In 10 CFR 431.104, DOE provides two sources for guidance on how to determine R-value of unfired hot water storage tanks.

On October 21, 2004, DOE published a direct final rule in the

Federal Register

that adopted amended test procedures for CWH equipment. 69 FR 61974. These test procedure amendments incorporated by reference certain sections of ANSI Z21.10.3-1998, “Gas Water Heaters, Volume III, Storage Water Heaters with Input Ratings above 75,000 Btu per Hour, Circulating and Instantaneous.”

Id.

at 61983. On May 16, 2012, DOE published a final rule for certain commercial heating, air-conditioning, and water heating

equipment in the

Federal Register

that, among other things, updated the test procedures for certain CWH equipment by incorporating by reference ANSI Z21.10.3-2011. 77 FR 28928. These updates did not materially alter DOE's test procedure for CWH equipment.

AEMTCA amended EPCA to require that DOE publish a final rule establishing a uniform efficiency descriptor and accompanying test methods for covered residential water heaters and certain CWH equipment. (42 U.S.C. 6295(e)(5)(B)) The final rule must replace the current energy factor (for residential water heaters) and thermal efficiency and standby loss (for commercial water heaters) metrics with a uniform efficiency descriptor. (42 U.S.C. 6295(e)(5)(C)) AEMTCA allowed DOE to provide an exclusion from the uniform efficiency descriptor for specific categories of covered water heaters that do not have residential uses, that can be clearly described, and that are effectively rated using the current thermal efficiency and standby loss descriptors. (42 U.S.C. 6295(e)(5)(F))

EPCA further requires that, along with developing a uniform descriptor, DOE must also develop a mathematical conversion factor to translate the results based upon use of the efficiency metric under the test procedure in effect on December 18, 2012, to the new energy descriptor. (42 U.S.C. 6295(e)(5)(E)(i)) In addition, pursuant to 42 U.S.C. 6295(e)(5)(E)(ii) and (iii), the conversion factor must not affect the minimum efficiency requirements for covered water heaters, including residential-duty commercial water heaters. Furthermore, such conversions must not lead to a change in measured energy efficiency for covered residential and residential-duty commercial water heaters manufactured and tested prior to the final rule establishing the uniform efficiency descriptor.

Id.

In the July 2014 final rule, DOE interpreted these statutory requirements in 42 U.S.C. 6295(e)(5)(E) to mean that DOE must translate existing standards and ratings from the current metrics to the new metric, while maintaining the stringency of the current standards. 79 FR 40542, 40558 (July 11, 2014).

In the July 2014 final rule, DOE, among other things, established the uniform energy factor (UEF), a revised version of the current residential energy factor metric, as the uniform efficiency descriptor required by AEMTCA. 79 FR 40542, 40578-40579 (July 11, 2014). The uniform efficiency descriptor established in the July 2014 final rule only applies to commercial water heaters that meet the definition of “residential-duty commercial water heater,” which is defined as any gas-fired, electric, or oil-fired storage water heater or instantaneous commercial water heater that meets the following conditions:

(1) For models requiring electricity, uses single-phase external power supply;

(2) Is not designed to provide outlet hot water at temperatures greater than 180 °F; and

(3) Is not excluded by any of the specified limitations regarding rated input and storage volume shown in Table III.1, which reflects the table in 10 CFR 431.102.

Id.

at 40586.

Table III.1—Rated Input and Storage Volume Ranges for Non-Residential-Duty Commercial Water Heaters

Water heater type

Indicator of non-residential application

Gas-fired Storage

Rated input >105 kBtu/h; Rated storage volume >120 gallons.

Oil-fired Storage

Rated input >140 kBtu/h; Rated storage volume >120 gallons.

Electric Storage.

Rated input >12 kW; Rated storage volume >120 gallons.

Heat Pump with Storage.

Rated input >12 kW; Rated current >24 A at a rated voltage of not greater than 250 V; Rated storage volume >120 gallons.

Gas-fired Instantaneous

Rated input >200 kBtu/h; Rated storage volume >2 gallons.

Electric Instantaneous

Rated input >58.6 kW; Rated storage volume >2 gallons.

Oil-fired Instantaneous

Rated input >210 kBtu/h; Rated storage volume >2 gallons.

CWH equipment not meeting the definition of “residential-duty commercial water heater” was deemed to be sufficiently characterized by the current thermal efficiency and standby loss metrics.

In April, 2016, DOE issued a NOPR proposing to amend the test procedures for certain other CWH equipment (“2016 CWH TP NOPR”). (See Docket No. EERE-2014-BT-TP-0008). In the 2016 CWH TP NOPR, DOE proposed several changes, including: (1) Updating references of industry test standards to incorporate by reference the most recent versions of the industry standards (including updating references from ANSI Z21.10.3-2011 to ANSI Standard Z21.10.3-2015 (ANSI Z21.10.3-2015), “Gas Water Heaters, Volume III, Storage Water Heaters With Input Ratings Above 75,000 Btu Per Hour, Circulating and Instantaneous”; (2) modifying the thermal efficiency and standby loss tests for certain classes of CWH equipment to improve repeatability; (3) developing a test method for determining the efficiency of unfired hot water storage tanks in terms of a standby loss metric; (4) changing the method for setting the thermostat for storage water heaters and storage-type instantaneous water heaters; (5) clarifying the thermal efficiency and standby loss test procedures with regard to stored energy loss and manipulation of settings during efficiency testing; (6) defining “storage-type instantaneous water heaters” and modifying several definitions for consumer water heaters and commercial water heating equipment included at 10 CFR 430.2 and 10 CFR 431.102, respectively; (7) developing a test procedure for measurement of standby loss for flow-activated instantaneous water heaters; (8) establishing temperature-sensing requirements for thermal efficiency and standby loss testing of instantaneous water heaters and hot water supply boilers; (9) modifying the standby loss test procedure for instantaneous water heaters and hot water supply boilers; (10) developing a test procedure for commercial heat pump water heaters; (11) establishing a procedure for determining the fuel input rate of gas-fired and oil-fired CWH equipment and clarifying DOE's enforcement provisions regarding fuel input rate; (12) modifying several definitions included in DOE's regulations for CWH equipment at 10 CFR 431.102; (13) establishing default values for certain testing parameters to be used if these parameters are not specified in product literature or supplemental test instructions; and (14) modifying DOE's certification requirements for CWH equipment. (See EERE-2014-BT-TP-0008) Discussion of DOE's treatment of unfired hot water storage tanks and commercial heat pump water heaters with respect to energy conservation standards can be

found in sections III.C.4 and III.C.6, respectively.

For four classes of residential-duty commercial water heaters—electric storage water heaters, heat pump water heaters, gas-fired instantaneous water heaters, and oil-fired instantaneous water heaters—the input criteria established to separate residential-duty commercial water heaters and commercial water heaters are identical to those codified at 10 CFR 430.2 that separate consumer water heaters and commercial water heaters. Because these input criteria are identical, by definition, no models can be classified under these four residential-duty equipment classes. Therefore, to eliminate potential confusion, DOE proposed in the 2016 CWH TP NOPR to remove these classes from the definition for “residential-duty commercial water heater” codified at 10 CFR 431.102. (See EERE-2014-BT-TP-0008) For electric instantaneous water heaters, the rated maximum input criterion for residential-duty commercial water heaters is 58.6 kW, higher than 12 kW, which is the maximum input rate for residential electric instantaneous water heaters as defined in EPCA. (42 U.S.C. 6291(27)(B)) Therefore, there are models on the market that qualify as residential-duty commercial electric instantaneous water heaters. DOE's treatment of electric instantaneous water heaters in this rule is discussed in section III.C.5 of this document.

C. Scope of Rulemaking

In response to the 2014 RFI, DOE received several comments on the scope of this rulemaking. These comments cover specific equipment classes, as well as the improvement of overall water heating systems.

1. Commercial Water Heating Systems

The University of Michigan recommended that DOE fund research to develop best concepts for design, installation, and operation standards and codes. (UM, No. 9 at p. 3)

Additionally, Joint Advocates recommended that DOE consider that many CWH equipment systems are designed very inefficiently, citing unnecessary recirculation loops. (Joint Advocates, No. 7 at p. 2) Furthermore, the University of Michigan recommended that DOE approach the American Society of Mechanical Engineers (ASME) and ASHRAE to determine whether the scope of their existing standards can be expanded. (UM, No. 9 at p. 2)

A notation in this form provides a reference for information that is in the docket of DOE's rulemaking to develop energy conservation standards for commercial water heating equipment (Docket No. EERE-2014-BT-STD-0042, which is maintained at

http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0042

). This particular notation refers to a comment; (1) submitted by UM; (2) appearing in document number 0009; and (3) appearing on page 3 of that document.

In response, DOE notes that its Office of Energy Efficiency and Renewable Energy (EERE) already supports research and development in multiple areas of water-heating energy efficiency technology, including building codes and roadmaps for emerging water heating technologies.

In the context of this rulemaking, however, DOE must follow congressionally-mandated requirements and processes for setting standards and test procedures for CWH equipment, and DOE may not delegate its standard-setting responsibilities under the statute to ASME, ASHRAE, or any other organization. These processes are codified in the United States Code, Title 42, Chapter 77, Subchapter III, Part A—Energy Conservation Program for Consumer Products Other Than Automobiles and Part A-1—Certain Industrial Equipment. DOE notes that ASHRAE does set minimum efficiency levels for CWH equipment in ASHRAE Standard 90.1 and did recently update thermal efficiency levels for certain oil-fired CWH equipment as discussed in section II.B.2, but has not updated levels for other CWH equipment analyzed in this document within the last 6 years. DOE also notes that its energy conservation standards apply at the point of manufacture. DOE must consider energy conservation standards with respect to the CWH equipment as shipped from the manufacturer and using the statutory criteria contained in EPCA. DOE does not have authority to set standards for efficiency of installed CWH building systems.

For an overview of DOE's energy efficiency related research, see

http://energy.gov/eere/efficiency

2. Residential-Duty Commercial Water Heaters

DOE analyzed equipment classes for commercial water heaters and residential-duty commercial water heaters separately in this rulemaking. This rulemaking, therefore, includes CWH equipment classes that are covered by the UEF metric, as well as CWH equipment classes that continue to be covered by the existing thermal efficiency and standby loss metrics. However, DOE has conducted all analyses for selecting proposed standards in this document using the existing thermal efficiency and standby loss metrics, because there was no efficiency data in terms of UEF available when DOE undertook the analyses for this NOPR.

In the April 2015 NOPR, DOE proposed conversion factors to determine UEF for residential and residential-duty commercial water heaters from their current rated energy factor and thermal efficiency and standby loss values. 80 FR 20116, 20142-43 (April 14, 2015). For residential-duty commercial water heaters, conversion factors for determining UEF were proposed for the four draw patterns specified in the July 2014 test procedure final rule: high, medium, low, and very small.

Id.

at 20143. DOE then converted standard levels proposed in this NOPR for residential-duty commercial water heaters based upon the thermal efficiency and standby loss metrics to standards based upon the UEF metric, using the conversion factors proposed in the April 2015 NOPR. This conversion of standards from thermal efficiency and standby loss to UEF is described in further detail in section IV.C.9 of this NOPR.

3. Oil-Fired Commercial Water Heating Equipment

ASHRAE Standard 90.1-2013 raised the thermal efficiency level for commercial oil-fired storage water heaters from 78 percent to 80 percent. In the July 2015 ASHRAE equipment final rule, DOE adopted the ASHRAE Standard 90.1 efficiency level of 80 percent because DOE determined that there was insufficient potential for energy savings to justify further increasing the standard. 80 FR 42614 (July 17, 2015). Therefore, because thermal efficiency standards for commercial oil-fired storage water heater were just recently addressed in a separate rulemaking under the ASHRAE trigger, DOE did not consider further increasing thermal efficiency standards for commercial oil-fired storage water heaters in this rulemaking, as circumstances have not changed appreciably regarding this equipment during the intervening period. Consequently, this equipment class was not included in any of the analyses described in this document. For this NOPR, DOE also considered whether amended standby loss standards for commercial oil-fired water heaters would be warranted. DOE has tentatively concluded that a change in the maximum standby loss level would likely effect less of a change to energy consumption of oil-fired storage water heaters than would a change in the thermal efficiency. Therefore, an amended standby loss standard is

unlikely to result in significant additional energy savings. Thus, DOE has not analyzed amended standby loss standards for commercial oil-fired storage water heaters in this rulemaking. Similarly, DOE considered oil-fired instantaneous water heaters and hot water supply boilers, and did not identify any units currently on the market that would meet the DOE definition. Therefore, DOE estimates that there are very few, if any, annual shipments for this equipment class. Therefore, DOE has tentatively concluded that the energy savings possible from amended standards for such equipment is

de minimis,

and thus, did not analyze amended standards for commercial oil-fired instantaneous water heaters for this NOPR.

Issue 1:

DOE seeks comment on its tentative conclusions regarding the potential energy savings from analyzing amended standards for standby loss of commercial oil-fired storage water heaters and for thermal efficiency of commercial oil-fired instantaneous water heaters.

4. Unfired Hot Water Storage Tanks

The current Federal energy conservation standard for unfired hot water storage tanks is expressed as an R-value requirement for the tank thermal insulation. In the 2016 CWH TP NOPR, DOE proposed a new test procedure for unfired hot water storage tanks using a new standby loss metric, which would replace the current R-value requirement. (See EERE-2014-BT-TP-0008) In the October 2014 RFI, DOE stated that any amended energy conservation standards for unfired hot water storage tanks would be in terms of the metric to be established in the noted test procedure rulemaking. 79 FR 62899, 62903 (Oct. 21, 2014). Given the lack of testing data for the new metric and test procedure proposed in the 2016 CWH TP NOPR, DOE plans to consider energy conservation standards for unfired hot water storage tanks in a separate rulemaking. Therefore, DOE did not evaluate potential amendments to standards for unfired hot water storage tanks in this NOPR.

5. Electric Instantaneous Water Heaters

EPCA prescribes energy conservation standards for several classes of commercial water heating equipment manufactured on or after January 1, 1994. (42 U.S.C. 6313(a)(5)) DOE codified these standards in its regulations for commercial water heating equipment at 10 CFR 431.110. However, when codifying these standards from EPCA, DOE inadvertently omitted the standards put in place by EPCA for electric instantaneous water heaters. Specifically, for instantaneous water heaters with a storage volume of less than 10 gallons, EPCA prescribes a minimum thermal efficiency of 80 percent. For instantaneous water heaters with a storage volume of 10 gallons or more, EPCA prescribes a minimum thermal efficiency of 77 percent and a maximum standby loss, in percent/hour, of 2.30 + (67/measured volume [in gallons]). (42 U.S.C. 6313(a)(5)(D) and (E)) Although DOE's regulations at 10 CFR 431.110 do not currently include energy conservation standards for electric instantaneous water heaters, these standards prescribed in EPCA are applicable. Therefore, DOE proposes to codify these standards in its regulations at 10 CFR 431.110.

DOE received several comments on the analysis of commercial electric instantaneous water heaters. A.O. Smith stated that commercial electric instantaneous water heaters should be included in the scope of this rulemaking. (A.O. Smith, No. 2 at p. 1) Similarly, Bradford White and AHRI stated that electric instantaneous units should be included in the scope of this rulemaking, in separate equipment classes. (Bradford White, No. 3 at p. 1; AHRI, No. 5 at p. 2)

Rheem stated that electric instantaneous water heaters should not be included in the scope of this rulemaking because of the limited applications of this equipment. (Rheem, No. 10 at p. 1) Joint Advocates recommended that electric instantaneous water heaters not be included in this rulemaking, unless there is evidence of particularly inefficient models on the market. (Joint Advocates, No. 7 at p. 3)

While it is within the Department's authority to propose amended standards for electric instantaneous water heaters, DOE has tentatively concluded that there is little potential for additional energy savings from doing so. The thermal efficiency of electric instantaneous water heaters is already at nearly 100 percent due to the high efficiency of electric resistance heating elements, thus providing little reason to propose an amended standard for this equipment class. Additionally, DOE tentatively concluded that amending the standby loss standard for this class would result in minimal energy savings.

6. Commercial Heat Pump Water Heaters

A.O. Smith also stated that commercial heat pump water heaters, of add-on, integrated, air-source, and water-source categories, should be included in the scope of this rulemaking. (A.O. Smith, No. 2 at p. 1) Similarly, Bradford White, Rheem, and AHRI stated that add-on, integrated, air-source, and water-source heat pump water heaters should be included in this rulemaking. (Bradford White, No. 3 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2) Rheem also commented that integrated and add-on heat pump water heaters differ by construction, application, life-cycle cost, and energy consumption, and that both air-source and water-source heat pump water heaters are currently available on the market. AHRI also commented that electric instantaneous water heaters and heat pump water heaters should be considered as separate equipment classes, and that if integrated heat pump water heaters are not included, then units falling outside of the definition for residential heat pump water heaters will go unregulated.

Joint Advocates stated that DOE should develop a test procedure for both integrated and add-on commercial heat pump water heaters. Joint Advocates stated that such a test procedure should have low enough operating temperature conditions to gauge whether units operate in electric resistance heating mode during cold weather, and that a DOE test procedure would help grow the market by allowing for greater use of rebate programs. Joint Advocates also commented that air-source units should be included, but that inclusion of water-source units would be complicated due to varying inlet water conditions for water-source and ground-source applications. (Joint Advocates, No. 7 at p. 3)

While DOE agrees that integrated, add-on, and air-source and water-source commercial heat pump water heaters meet EPCA's definitions for commercial storage and instantaneous water heaters, DOE is not proposing amended standards for any of these classes of commercial heat pump water heaters in this NOPR. DOE has found no evidence of any commercial integrated heat pump water heaters on the market. All commercial heat pump water heaters that DOE identified as currently on the market are “add-on” units, which are designed to be paired with either an electric storage water heater or unfired hot water storage tank in the field.

As discussed in section III.B, a test procedure for commercial heat pump water heaters was proposed in the 2016 CWH TP NOPR. (See EERE-2014-BT-TP-0008) Because the test procedure has not yet been established in a final rule and there is not sufficient test data with the proposed test method for units

currently on the market, DOE plans to consider energy conservation standards for commercial heat pump water heaters in a future rulemaking.

7. Electric Storage Water Heaters

DOE did not include electric storage water heaters in the analysis of amended thermal efficiency standards. Electric storage water heaters do not currently have a thermal efficiency requirement under 10 CFR 431.110. Electric storage water heaters typically use electric resistance coils as their heating elements, which are highly efficient. The thermal efficiency of these units already approaches 100 percent. Therefore, there are no options for increasing the rated thermal efficiency of this equipment, and the impact of setting thermal efficiency energy conservation standards for these products would be negligible. However, DOE has considered amended standby loss standards for electric storage water heaters.

8. Instantaneous Water Heaters and Hot Water Supply Boilers

In its analysis of amended standby loss standards, DOE did not include instantaneous water heaters and hot waters supply boilers other than storage-type instantaneous water heaters.

Instantaneous water heaters and hot waters supply boilers other than storage-type instantaneous water heaters with greater than 10 gallons of water stored do have a standby loss requirement under 10 CFR 431.110. However, DOE did not analyze more-stringent standby loss standards for these units because it tentatively determined that such amended standards would result in minimal energy savings. DOE identified only 26 models on the market of instantaneous water heaters or hot water supply boilers with greater than 10 gallons of water stored (other than storage-type instantaneous water heaters), and 14 of the identified models have less than 15 gallons of water stored. DOE tentatively concluded that hot water supply boilers with less than 10 gallons would not have significantly different costs and benefits as compared to hot water supply boilers with greater than 10 gallons. Therefore, DOE analyzed both equipment classes of instantaneous water heaters and hot water supply boilers (less than 10 gallons and greater than 10 gallons stored volume) together for thermal efficiency standard levels in this NOPR. DOE also tentatively determined that establishing standby loss standards for instantaneous water heaters and hot water supply boilers with less than or equal to 10 gallons waters stored would result in minimal energy savings.

DOE proposed a definition for “storage-type instantaneous water heater” in the 2016 CWH TP NOPR. (See EERE-2014-BT-TP-0008) Storage-type instantaneous water heaters are discussed in section IV.A.2.a of this NOPR.

D. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that is the subject of the rulemaking. As the first step in such an analysis, DOE conducts a market and technology assessment that develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available equipment or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Additionally, DOE notes that the four screening criteria do not directly address the propriety status of design options. DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level (

i.e.,

if there are other non-proprietary technologies capable of achieving the same efficiency). Section IV.B of this document discusses the results of the screening analysis for CWH equipment, particularly the designs DOE considered, those it screened out, and those that are the basis for the trial standard levels (TSLs) in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR technical support document (TSD).

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered equipment, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for CWH equipment, using the design parameters for the most efficient products available on the market. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.3.b of this proposed rule. Chapter 5 of the NOPR TSD includes more detail on the selected max-tech efficiency levels.

E. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the classes of equipment that are the subjects of this rulemaking shipped in the 30-year period that begins in the year of compliance with amended standards (2019-2048 for gas-fired CWH equipment and electric CWH equipment).

The savings are measured over the entire lifetime of equipment shipped in the 30-year analysis period.

DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between standards and no-new-standards cases. The no-new-standards case represents a projection of energy consumption in the absence of amended mandatory energy conservation standards, and it considers market forces and policies that affect current demand for more-efficient equipment over the analysis period.

DOE also presents a sensitivity analysis that considers impacts for equipment shipped in a 9-year period.

In the past, DOE presented energy savings results for only the 30-year period that begins in the year of compliance. In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of equipment shipped in the 30-year period. DOE has chosen to modify its presentation of national energy savings to be consistent with the approach used for its national economic analysis.

DOE used its national impact analysis (NIA) spreadsheet model to estimate national energy savings (NES) from potential amended standards for commercial water heating equipment. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by equipment at the locations where they are used. For electric commercial water heaters, DOE calculates NES on an annual basis in

terms of primary energy

savings, which is the savings in the energy that is used to generate and transmit the site electricity. To calculate primary energy savings from site electricity savings, DOE derived annual conversion factors from the model used to prepare the Energy Information Administration (EIA)'s

AEO 2015.

For natural gas- and oil-fired commercial water heaters, the primary energy savings are considered equal to the site energy savings because they are supplied to the user without transformation from another form of energy.

Primary energy consumption refers to the direct use at source, or supply to users without transformation, of crude energy; that is, energy that has not been subjected to any conversion or transformation process.

In addition to primary energy savings, DOE also calculates full-fuel-cycle (FFC) energy savings. As discussed in DOE's statement of policy and notice of policy amendment, the FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

e.g.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy conservation standards. 76 FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012). For FFC energy savings, DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered equipment.

For more information, see section IV.H.2 of this document.

Natural gas and electricity were the energy types analyzed in the FFC calculations.

Issue 2:

The agency assumes no growth in equipment efficiency in absence of new standards; however, DOE requests comment on expected changes over the analysis period in market share by energy efficiency level or average shipment-weighted efficiency for the analyzed CWH equipment classes in the no-new-standards case.

2. Significance of Savings

To amend standards for commercial water heating equipment, DOE must determine with clear and convincing evidence that the standards would result in “significant” additional energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in this context to be savings that were not “genuinely trivial.” The energy savings for all of the TSLs considered in this rulemaking, including the proposed standards (presented in section V.C.1), are nontrivial. Therefore, DOE has tentatively concluded that the energy savings associated with the proposed standards in this NOPR—1.8 quads due to commercial water heating equipment shipped in 2019-2048—are “significant,” as required by 42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i).

F. Economic Justification

1. Specific Criteria

EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard for commercial water heating equipment is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) and (C)(i)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Commercial Consumers

EPCA requires DOE to consider the economic impact of a standard on manufacturers and the commercial consumers of the products subject to the standard. (42 U.S.C. 6313(a)(6)(B)(I) and (C)(i)) In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J of this NOPR. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step incorporates both a short-term impact assessment (based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation) and a long-term impact assessment (over a 30-year period).

The industry-wide impacts analyzed include: (1) Industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers (manufacturer subgroups), including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for new and amended standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

DOE also presents a sensitivity analysis that considers impacts for equipment shipped in a 9-year period, which is a proxy for the timeline in EPCA for the review of certain energy conservation standards and potential revision of and compliance with such revised standards.

For individual commercial consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For commercial consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of commercial consumers that may be affected disproportionately by a national standard.

b. Savings in Operating Costs Compared To Increase in Price (Life-Cycle Costs)

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of commercial water heating equipment compared to any increase in the price of the equipment that is likely to result from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II) and (C)(i)) DOE conducts this comparison in its LCC and PBP analysis.

The LCC is the sum of the purchase price of a piece of equipment (including installation cost and sales tax) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that commercial consumers will purchase the covered equipment in the first year of compliance with amended standards.

The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.

The LCC savings are calculated relative to a no-new-standards case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of commercial consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC analysis is discussed

in further detail in section IV.F of this NOPR.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(III) and (C)(i)) As discussed in section IV.H and chapter 10 of the NOPR TSD, DOE uses the NIA spreadsheet to project NES.

d. Lessening of Utility or Performance of Products

In establishing classes of products, and in evaluating design options and the impact of potential standard levels, DOE must consider any lessening of the utility or performance of the considered products likely to result from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(IV) and (C)(i)) Based on data available to DOE, the standards proposed in this document would not reduce the utility or performance of the CWH equipment under consideration in this rulemaking. Section IV.B of this document and Chapter 4 of the NOPR TSD provide detailed discussion on the potential impact of amended standards on equipment utility and performance.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition that is likely to result from energy conservation standards. It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of lessening of competition likely to result from a proposed standard and to transmit such determination in writing to the Secretary, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6313(a)(6)(B)(ii)(V) and (C)(i)) To assist the Attorney General in making such determination, DOE will transmit a copy of this proposed rule and the TSD to the Attorney General for review with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will publish and address the Attorney General's determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the

ADDRESSES

section for information to send comments to DOJ.

f. Need for National Energy Conservation

In considering new or amended energy conservation standards, EPCA also directs DOE to consider the need for national energy conservation. (42 U.S.C. 6313(a)(6)(B)(ii)(VII) and (C)(i)) DOE expects that the energy savings from the proposed standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity, as discussed in section IV.M.

The proposed standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE reports the emissions impacts from the proposed standards of this rulemaking, and from each TSL it considered, in sections IV.K and V.B.6 of this NOPR. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this NOPR.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII) and (C)(i)) DOE did not consider other factors for this document.

2. Rebuttable Presumption

EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for commercial consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test.

In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to commercial consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1.c of this proposed rule.

G. Public Participation

UM commented that because of the number of issues on which DOE seeks comment, only stakeholders who have staff dedicated to regulatory processes would be able to comment on all issues involved in this rulemaking. (UM, No. 9 at p. 1) UM stated that a large rulemaking like this one favors trade associations over end users who have limited means to respond. UM recommended that DOE break up the rulemaking into smaller, more manageable pieces, thereby allowing more stakeholders to provide comments. (UM, No. 9 at p. 2)

DOE notes that pursuant to EPCA requirements, DOE provides an equal opportunity for the public to provide comment in response to rulemaking notices published in the

Federal Register

or during DOE rulemaking public meetings. DOE solicits data and information throughout the rulemaking process to validate and improve its analyses. Although DOE welcomes comments on any aspect of a rulemaking notice, to better facilitate public comments, DOE clearly lists the issues on which it is particularly interested in receiving comments and views of interested parties, as shown in section VII.E of this document. All stakeholders may comment on any or all of the issues so that their relevant views are considered in DOE's analysis. Furthermore, to offer enough time for the public to respond, DOE typically provides 60 days for the public to provide comment after publication of a NOPR for energy conservation standards. Therefore, DOE believes it provides the interested public an equal opportunity and adequate time to respond to a rulemaking without being overly burdensome for commenters.

In addition, DOE disagrees with UM's assertion that its rulemaking public participation process disproportionally benefits certain groups over end users. All stakeholders' views, data, and other relevant information are taken into account in developing and implementing final regulations. DOE is also statutorily mandated to evaluate the

impact on commercial consumers that could be potentially affected by increased standards. As detailed in sections III.F.1, IV.F, and V.B.1 of this document, DOE thoroughly evaluates the impact on commercial consumers in determining whether a proposed standard is economically justified. Therefore, DOE believes comments from end users of covered equipment are equally and appropriately considered in this rulemaking.

In response to UM's comments regarding breaking the rulemaking into smaller pieces, DOE clarifies that its rulemaking notices already separate the analysis into analytical subsections as shown in sections III, IV, and V of this document. In each analytical subsection, DOE presents the applicable analytical tools, resources, and data used for the analysis. DOE also clarifies the issues pertaining to the analysis on which it seeks public comment in each subsection. Therefore, DOE views the current structure of its rulemaking notices as sufficient to allow the public to consider and provide comment on specific sections of its rulemaking. As with all rulemakings, DOE encourages stakeholder review and feedback on the analyses described in this NOPR and in the NOPR TSD.

H. Revisions to Notes in Regulatory Text

DOE proposes to modify the three notes to the table of energy conservation standards in 10 CFR 431.110. First, DOE proposes to modify the note to the table of energy conservation standards denoted by subscript “a” to maintain consistency with DOE's procedure and enforcement provisions for determining fuel input rate of gas-fired and oil-fired CWH equipment that were proposed in the 2016 CWH TP NOPR. Among these changes, DOE proposed that the fuel input rate be used to determine equipment classes and calculate the standby loss standard. (See EERE-2014-BT-TP-0008) Therefore, in this NOPR, DOE proposes to replace the term “nameplate input rate” with the term “fuel input rate.”

Additionally, DOE proposes to remove the note to the table of energy conservation standards denoted by subscript “b.” This note clarifies the compliance dates for energy conservation standards for units manufactured after 2005 and between 2003 and 2005. DOE has determined that this note is no longer needed because both of these compliance dates are over 10 years before the compliance date of standards proposed in this NOPR.

DOE also proposes to modify the note to the table of energy conservation standards denoted by subscript “c,” which establishes design requirements for water heaters and hot water supply boilers having more than 140 gallons of storage capacity that do not meet the standby loss standard. DOE proposes to replace the phrase “fire damper” with the phrase “flue damper,” because DOE believes that “flue damper” was the intended meaning, and that “fire damper” was a typographical error. DOE believes the intent of this design requirement was to require that any water heaters or hot water supply boilers greater than 140 gallons that do not meet the standby loss standard must have some device that physically restricts heat loss through the flue, either a flue damper or blower that sits atop the flue.

Issue 3:

DOE seeks comment on its proposed revisions to notes to the table of energy conservation standards in 10 CFR 431.110.

I. Certification, Compliance, and Enforcement Issues

1. Rated and Measured Storage Volume

In this NOPR, DOE proposes to make two changes to its certification, compliance, and enforcement regulations at 10 CFR Part 429. First, DOE proposes to add requirements to 10 CFR 429.44 that the rated value of storage tank volume must equal the mean of the measured storage volume of the units in the sample. There are currently no requirements from the Department limiting the amount of difference that is allowable between the tested (

i.e.,

measured) storage volume and the “rated” storage volume that is specified by the manufacturer for CWH equipment other than residential-duty commercial water heaters. In the July 2014 final rule, DOE established a requirement for residential water heaters and residential-duty commercial water heaters that requires the rated volume to be equal to the mean of the measured volumes in a sample. 79 FR 40542, 40565 (July 11, 2014).

From examination of reported data in the AHRI Directory, DOE observed that many units are rated at storage volumes above the measured storage volume. DOE's maximum standby loss equations for gas-fired and oil-fired CWH equipment are based on the rated storage volume, and the maximum standby loss increases as rated storage volume increases. DOE believes commercial consumers often look to storage volume as a key factor in choosing a storage water heater. Consequently, DOE proposes to adopt rating requirements that the rated storage volume must be equal to the mean of the values measured using DOE's test procedure. In the 2016 CWH TP NOPR, DOE proposed a test procedure for measuring the storage volume of CWH equipment that is similar to the method contained in section 5.27 of ANSI Z21.10.3-2015. (See EERE-2014-BT-TP-0008) In addition, DOE proposes to specify that for DOE-initiated testing, the mean of the measured storage volumes must be within five percent of the rated volume in order to use the rated storage volume in calculation of maximum standby loss. If the mean of the measured storage volumes is more than five percent different than the rated storage volume, then DOE proposes to use the mean of the measured values in calculation of maximum standby loss. DOE notes that similar changes were made to DOE's certification, compliance, and enforcement regulations for residential and residential-duty water heaters in the July 2014 final rule. 79 FR 40542, 40565 (July 11, 2014).

Issue 4:

DOE requests comment on its proposed changes to its certification, compliance, and enforcement regulations requiring the rated volume to be equal to the mean of the measured volumes in a sample.

2. Maximum Standby Loss Equations

As discussed in section III.I.1, DOE proposes to add requirements to 10 CFR 429.44 that the rated value of storage tank volume must equal the mean of the measured storage volumes of the units in the sample. In addition, DOE proposes to specify that for DOE-initiated testing, a tested value within 5 percent of the rated value would be a valid test result, such that the rated storage volume would then be used in downstream calculations. If the test result of the volume is invalid (

i.e.,

the measured value is more than 5 percent different than the rated value), then DOE proposed to use the measured value in determining the applicable minimum energy conservation standard and calculations within the test procedure. Specifically, the storage volume is used to calculate standby loss for CWH equipment.

To be consistent with the proposed changes to its certification, compliance, and enforcement regulations, DOE has tentatively concluded that the maximum standby loss equations for CWH equipment should be set in terms of rated volume. The current standby loss standards for water heaters differ in the storage volume metric used in calculation of the standby loss standard (rated storage volume is used for certain classes, while measured storage volume is used for others). Specifically, the

maximum standby loss equation for gas-fired and oil-fired water heaters depends on the rated storage volume of the water heater. However, the maximum standby loss equations for electric water heaters depends on the measured storage volume of the water heater. DOE notes there is often a difference between the measured and rated volumes of water heaters, as reported in data in the AHRI Directory. Therefore, DOE proposes to modify the maximum standby loss equations for electric water heaters to depend on rated volume. Specifically, DOE proposes to modify the maximum standby loss equation for electric storage water heaters as shown in the following equation.

EP31MY16.000

Additionally, DOE proposes to modify the maximum standby loss equation for electric instantaneous water heaters with storage capacity greater than or equal to ten gallons as shown in the following equation. Further discussion of energy conservation standards for electric instantaneous water heaters is included in section III.C.5.

EP31MY16.001

Issue 5:

DOE requests comment on its proposed modification of the maximum standby loss equations for electric storage and instantaneous water heaters to depend on rated volume instead of measured volume.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to CWH equipment. A separate subsection addresses each component of the analyses.

In overview, DOE used several analytical tools to estimate the impact of the standards proposed in this document. The first tool is a spreadsheet that calculates the LCC and PBP of potential amended or new energy conservation standards. The national impacts analysis (NIA) uses a second spreadsheet set that provides shipments forecasts and calculates national energy savings and net present value resulting from potential new or amended energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential new or amended standards. These three spreadsheet tools are available on the DOE Web site for this rulemaking:

https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=36

Additionally, DOE estimated the impacts on electricity demand and air emissions from utilities due to the amended energy conservation standards for CWH equipment. DOE used a version of EIA's National Energy Modeling System (NEMS) for the electricity and air emissions analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS

to prepare its

AEO,

a widely known baseline energy forecast for the United States. The version of NEMS used for appliance standards analysis, which makes minor modifications to the

AEO

version, is called NEMS-BT.

NEMS-BT accounts for the interactions among the various energy supply and demand sectors and the economy as a whole.

For more information on NEMS, refer to

The National Energy Modeling System: An Overview.

U.S. Energy Information Administration (EIA) (2009) DOE/EIA-0581(2009) (Available at:

www.eia.gov/oiaf/aeo/overview

EIA approves the use of the name “NEMS” to describe only an

AEO

version of the model without any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from

AEO

assumptions, the name “NEMS-BT” refers to the model as used here. (BT stands for DOE's Building Technologies Office.)

A. Market and Technology Assessment

For the market and technology assessment for CWH equipment, DOE gathered information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. This activity included both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include: (1) A determination of equipment classes; (2) manufacturers and industry structure; (3) types and quantities of CWH equipment sold; (4) existing efficiency programs; and (5) technologies that could improve the energy efficiency of CWH equipment. The key findings of DOE's market assessment are summarized below. Chapter 3 of the NOPR TSD provides further discussion of the market and technology assessment.

1. Definitions

EPCA includes the following categories of CWH equipment as covered industrial equipment: storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. EPCA defines a “storage water heater” as a water heater that heats and stores water internally at a thermostatically controlled temperature for use on demand. This term does not include units that heat with an input rating of 4,000 Btu per hour or more per gallon of stored water. EPCA defines an “instantaneous water heater” as a water heater that heats with an input rating of at least 4,000 Btu per hour per gallon of stored water. Lastly, EPCA defines an “unfired hot water storage tank” as a tank that is used to store water that is heated external to the tank. (42 U.S.C. 6311(12)(A)-(C))

DOE codified the following more specific definitions for CWH equipment in 10 CFR 431.102 in a final rule published in the

Federal Register

on October 21, 2004 (“October 2004 final rule”). 69 FR 61974, 61983.

In the 2016 CWH TP NOPR, DOE proposed to amend its definitions for commercial water heating equipment by changing the phrase “input rating” to “fuel input rate” for gas-fired and oil-fired equipment, in order to match DOE's proposed regulations regarding fuel input rate. (See EERE-2014-BT-TP-0008)

Specifically, DOE defined “hot water supply boiler” as a packaged boiler that is industrial equipment and that: (1) Has an input rating from 300,000 Btu/h to 12,500,000 Btu/h and of at least 4,000 Btu/h per gallon of stored water, (2) is suitable for heating potable water, and (3) has the temperature and pressure controls necessary for heating potable water for purposes other than space heating, and/or the manufacturer's product literature, product markings, product marketing, or product installation and operation instructions indicate that the boiler's intended uses include heating potable water for purposes other than space heating.

In the 2016 CWH TP NOPR, DOE proposed to amend its definition for “hot water supply boiler” by citing the definition for “packaged boiler” included in § 431.82 instead of a duplicated definition for “packaged boiler” in § 431.102, which DOE proposed to remove. (See EERE-2014-BT-TP-0008)

DOE also defined an “instantaneous water heater” as a water heater that has an input rating not less than 4,000 Btu/h per gallon of stored water, and that is industrial equipment, including products meeting this description that are designed to heat water to temperatures of 180 °F or higher.

In the 2016 CWH TP NOPR, DOE proposed to amend its definition for “instantaneous water heater” by making the following changes: (1) Removing the clause stating that products designed to heat water to temperatures of 180 °F or higher are included; (2) removing the clause “that is industrial equipment”; and (3) adding the input criteria that

separate consumer and commercial instantaneous water heaters for each energy source (

i.e.,

gas, oil, and electricity). (See EERE-2014-BT-TP-0008)

DOE defined a “storage water heater” as a water heater that heats and stores water within the appliance at a thermostatically controlled temperature for delivery on demand and that is industrial equipment, and does not include units with an input rating of 4,000 Btu/h or more per gallon of stored water.

In the 2016 CWH TP NOPR, DOE proposed to amend its definition for “storage water heater” by adding the input criteria that separate consumer and commercial storage water heaters for each energy source (

i.e.,

gas, oil, and electricity). (See EERE-2014-BT-TP-0008)

Lastly, DOE defined an “unfired hot water storage tank” as a tank used to store water that is heated externally, and that is industrial equipment.

Id.

2. Equipment Classes

When evaluating and establishing energy conservation standards, DOE generally divides covered equipment into equipment classes by the type of energy used or by capacity or other performance-related features that justify a different standard. In determining whether a performance-related feature justifies a different standard, DOE considers such factors as the utility to the commercial consumers of the feature and other factors DOE determines are appropriate.

DOE currently divides CWH equipment classes based on the energy source, equipment category (

i.e.,

storage vs. instantaneous and hot water supply boilers), and size (

i.e.,

input capacity rating and rated storage volume). Unfired hot water storage tanks are also included as a separate equipment class. Table IV.1 shows DOE's current CWH equipment classes and energy conservation standards.

Table IV.1—Current CWH Equipment Classes and Energy Conservation Standards

Equipment class

Size

Energy conservation standards *

Minimum thermal

efficiency (equipment

manufactured on and

after October 9, 2015)** †

Maximum standby

loss (equipment

manufactured on and

after October 29, 2003)** ††

Electric storage water heaters

All

N/A

0.30 + 27/V

(%/h)

Gas-fired storage water heaters

≤155,000 Btu/h

>155,000 Btu/h

80%

Q/800 + 110(V

)

1/2

(Btu/h)

Q/800 + 110(V

)

1/2

(Btu/h)

Oil-fired storage water heaters

≤155,000 Btu/h

>155,000 Btu/h

80%

†

80%

†

Q/800 + 110(V

)

1/2

(Btu/h)

Q/800 + 110(V

)

1/2

(Btu/h)

Electric instantaneous water heaters†††

<10 gal

≥10 gal

80%

77%

N/A

2.30 + 67/V

(%/h)

Gas-fired instantaneous water heaters and hot water supply boilers

<10 gal

≥10 gal

80%

N/A

Q/800 + 110(V

)

1/2

(Btu/h)

Oil-fired instantaneous water heater and hot water supply boilers

<10 gal

≥10 gal

80%

78%

N/A

Q/800 + 110(V

)

1/2

(Btu/h)

Minimum thermal insulation

Unfired hot water storage tank

All

R-12.5

is the measured storage volume, and V

is the rated volume, both in gallons. Q is the nameplate input rate in Btu/h.

For hot water supply boilers with a capacity of less than 10 gallons: (1) the standards are mandatory for products manufactured on an after October 21, 2005 and (2) products manufactured prior to that date, and on or after October 23, 2003, must meet either the standards listed in this table or the applicable standards in Subpart E of this Part for a “commercial packaged boiler.”

†

For oil-fired storage water heaters: (1) The standards are mandatory for equipment manufactured on and after October 9, 2015 and (2) equipment manufactured prior to that date must meet a minimum thermal efficiency level of 78 percent.

††

Water heaters and hot water supply boilers having more than 140 gallons of storage capacity need not meet the standby loss requirement if: (1) The tank surface area is thermally insulated to R-12.5 or more, (2) a standing pilot light is not used, and (3) for gas or oil-fired storage water heaters, they have a fire damper or fan assisted combustion.

†††

Energy conservation standards for electric instantaneous water heaters are included in EPCA. (42 U.S.C. 6313(a)(5)(D)-(E)) The compliance date for these energy conservation standards is January 1, 1994. In this NOPR, DOE proposes to codify these standards for electric instantaneous water heaters in its regulations at 10 CFR 431.110. Further discussion of standards for electric instantaneous water heaters is included in section III.C.5.

Table IV.2 presents the proposed equipment classes for CWH equipment. The following text provides additional details, discussion of comments relating to the equipment classes, proposed definitions, as well as issues on which DOE is seeking comments.

Table IV.2 Proposed CWH Equipment Classes

Equipment class

Specifications*

Electric storage water heaters

All

Gas-fired storage water heaters:

Commercial

Rated input >105 kBtu/h or rated storage volume >120 gal

Residential-Duty**

Rated input ≤105 kBtu/h and rated storage volume ≤120 gal

Oil-fired storage water heaters:

Commercial

Rated input >140 kBtu/h or rated storage volume >120 gal

Residential-Duty**

Rated input ≤140 kBtu/h and rated storage volume ≤120 gal

Electric instantaneous water heaters †, ††

<10 gal

≥10 gal

Gas-fired instantaneous water heaters and hot water supply boilers ††

Instantaneous water heaters (other than storage-type) and hot water supply boilers

<10 gal

≥10 gal

Storage-type instantaneous water heaters †††

≥10 gal

Oil-fired instantaneous water heaters and hot water supply boilers

††

<10 gal

≥10 gal

Unfired hot water storage tanks

All

* These specifications only distinguish between classes of CWH equipment. The different classifications of consumer water heaters and commercial water heating equipment are specified by the definitions codified at 10 CFR 430.2 and 10 CFR 431.102, respectively.

** In addition to the listed specifications, to be classified as a residential-duty commercial water heater, a commercial water heater must, if requiring electricity, use single-phase external power supply, and not be designed to heat water at temperatures greater than 180 °F. 79 FR 40542, 40586 (July 11, 2014).

† Energy conservation standards for electric instantaneous water heaters are included in EPCA. (42 U.S.C. 6313(a)(5)(D) (E)) In this NOPR, DOE proposes to codify these equipment classes and corresponding energy conservation standards for electric instantaneous water heaters in its regulations at 10 CFR 431.110. Further discussion of standards for electric instantaneous water heaters is included in section III.C.5.

†† To be considered an instantaneous water heater or hot water supply boiler, CWH equipment must heat greater than 4,000 Btu per gallon of water stored.

††† DOE proposes a new equipment class for storage-type instantaneous water heaters, which are similar to storage water heaters, but with a ratio of input capacity to storage volume greater than or equal to 4,000 Btu/h per gallon of water stored. DOE proposed a definition for “storage-type instantaneous water heater” in the 2016 CWH TP NOPR. (See EERE-2014-BT-TP-0008)

In the October 2014 RFI, DOE sought comment on several issues regarding the equipment class structure for CWH equipment. 79 FR 62899, 62904-09 (Oct. 21, 2014). In response, A.O. Smith, Bradford White, and AHRI all recommended that the equipment class structure be simplified by establishing the following equipment classes: (1) Commercial gas-fired water heaters and hot water supply boilers <10 gallons; (2) commercial-fired gas water heaters and hot water supply boilers ≥10 gallons; (3) commercial oil-fired water heaters and hot water supply boilers <10 gallons; and (4) commercial oil-fired water heaters and hot water supply boilers ≥10 gallons. (A.O. Smith, No. 2 at p. 1; Bradford White, No. 3 at p. 1; AHRI, No. 5 at p. 1)

DOE disagrees that the equipment class structure should be simplified in the manner the commenters suggested because commercial instantaneous water heaters and hot water supply boilers with a storage volume greater than 10 gallons would include units with significant variation in design and utility. Specifically, this equipment class currently contains both hot water supply boilers and storage-type water heaters with greater than 4,000 Btu/h per gallon of water stored, which DOE believes may require separate equipment classes for reasons detailed in the discussion immediately below. Therefore, DOE has tentatively concluded that instantaneous water heaters with a storage volume greater than 10 gallons and storage water heaters should remain in separate equipment classes.

a. Storage-Type Instantaneous Water Heaters

In the 2016 CWH TP NOPR, DOE noted that the “gas-fired instantaneous water heaters and hot water supply boilers” equipment class with a storage volume greater than or equal to 10 gallons encompasses both instantaneous water heaters and hot water supply boilers with large volume heat exchangers, as well as instantaneous water heaters with storage tanks (but with at least 4,000 Btu/h of input per gallon of water stored). (See EERE-2014-BT-TP-0008) Therefore, DOE proposed to separate these units into classes—storage-type instantaneous water heaters with greater than 4,000 Btu/h per gallon of stored water, and instantaneous water heaters (other than storage-type) and hot water supply boilers with greater than 10 gallons of stored water, with the following definition for “storage-type instantaneous water heater”:

Storage-type instantaneous water heater

means an instantaneous water heater comprising a storage tank with a submerged heat exchanger(s) or heating element(s).

It is DOE's understanding that gas-fired storage-type instantaneous water heaters are very similar to gas-fired storage water heaters, but with a higher ratio of input rating to tank volume. This higher input-volume ratio is achieved with a relatively larger heat exchanger paired with a relatively smaller tank. Increasing either the input capacity or storage volume increases the recovery capacity of the water heater. However, through a review of product literature, DOE noted no significant design differences that would warrant different energy conservation standard levels (for either thermal efficiency or standby loss) between models in these two proposed equipment classes. Therefore, DOE grouped the two equipment classes together in its analyses for this rulemaking. As a result, DOE proposes the same standard levels for commercial gas-fired storage water heaters and commercial gas-fired storage-type instantaneous water heaters.

Issue 6:

DOE requests comment on whether there are significant differences between storage water heaters and storage-type instantaneous water heaters that would justify analyzing these classes separately for amended energy conservations standards.

b. Tankless Water Heaters and Hot Water Supply Boilers

DOE notes that there are also significant differences in design and application between equipment within the “gas-fired instantaneous water heaters and hot water supply boilers” equipment class with storage volume less than 10 gallons. Specifically, DOE has identified two kinds of equipment within this class: Tankless water heaters and hot water supply boilers. From examination of equipment literature and discussion with manufacturers, DOE understands that tankless water heaters are typically used without a storage tank, flow-activated, wall-mounted, and capable of higher temperature rises. Hot water supply boilers, conversely, are typically used with a storage tank and recirculation loop, thermostatically-activated, and not wall-mounted. However, despite these differences, tankless water heaters and hot water supply boilers share basic similarities: both kinds of equipment supply hot

water in commercial applications with at least 4,000 Btu/h per gallon of stored water, and both include heat exchangers through which incoming water flows and is heated by combustion flue gases that flow around the heat exchanger tubes. Because of these basic similarities, DOE continued to group these types of equipment into a single equipment class and analyzed tankless water heaters and hot water supply boilers as two separate kinds of representative equipment for the instantaneous water heaters and hot water supply boilers equipment class for this NOPR.

Issue 7:

DOE requests comment on whether tankless water heaters and hot water supply boilers should be treated as separate equipment classes in DOE's energy conservation standards for CWH equipment and whether proposing the same standards incentivizes any switching in shipments from one equipment class to the other. Additionally, DOE requests feedback on what criteria should be used to distinguish between tankless water heaters and hot water supply boilers if separate equipment classes are established.

DOE only considered gas-fired instantaneous water heaters and hot water supply boilers with an input capacity greater than 200,000 Btu/h in its analysis, because EPCA includes gas-fired instantaneous water heaters with an input capacity less than or equal to 200,000 Btu/h in its definition of consumer “water heater.” (42 U.S.C. 6291(27)(b))

c. Gas-Fired and Oil-Fired Storage Water Heaters

A.O. Smith, Bradford White, Rheem, and AHRI commented that the current separation of commercial gas and oil storage water heaters into classes with input capacity less than or equal to 155,000 Btu/h and greater than 155,000 Btu/h is not needed, arguing that such distinction should be eliminated. (A.O. Smith, No. 2 at p. 1; Bradford White, No. 3 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2)

DOE agrees with the commenters, and proposes to consolidate commercial gas-fired and oil-fired storage equipment classes that are currently divided by input rates of 155,000 Btu/h. DOE is now proposing the following two equipment classes without an input rate distinction: (1) Gas-fired storage water heaters and (2) oil-fired storage water heaters. The input rate of 155,000 Btu/h was first used as a dividing criterion for storage water heaters in the EPACT 1992 amendments to EPCA, which mirrored the standard levels and equipment classes in ASHRAE Standard 90.1-1989. (42 U.S.C. 6313(a)(5)(B)-(C)) ASHRAE has since updated its efficiency levels for oil-fired and gas-fired storage water heaters in ASHRAE Standard 90.1-1999 by consolidating equipment classes that were divided by input rate of 155,000 Btu/h. Pursuant to requirements in EPCA, DOE adopted the increased standards in ASHRAE Standard 90.1-1999, but did not correspondingly consolidate the equipment classes above and below 155,000 Btu/h. As a result, DOE's current standards are identical for the equipment classes that are divided by input rate of 155,000 Btu/h. Therefore, DOE tentatively concluded that eliminating the dividing criterion for commercial gas-fired and oil-fired storage water heaters at 155,000 Btu/h would simplify the equipment class structure and make the structure more consistent with that in ASHRAE Standard 90.1.

d. Grid-Enabled Water Heaters

A. O. Smith, Rheem, and AHRI suggested that DOE should adopt a separate equipment class for grid-enabled electric storage water heaters. (A.O. Smith, No. 2 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 1) NRECA stated that DOE should not adopt any standards that effectively eliminate water heating technologies used for demand response and thermal storage. (NRECA, No. 11 at p. 2) Steffes recommended establishing a sub-class for grid-interactive electric storage units, due to their different operating schedules and economic considerations. (Steffes, No. 6 at p. 2)

DOE tentatively concludes that a separate equipment class for grid-enabled commercial electric storage water heaters is not warranted. First, as discussed in section III.B, there are no units in the residential-duty electric storage equipment class, as the dividing criteria for residential and commercial electric storage units match those for residential-duty and commercial electric storage units. Therefore, electric storage water heaters can only be classified as residential or commercial, and an equipment class of grid-enabled residential-duty water heaters would comprise no units. Second, for commercial electric storage water heaters, DOE only prescribes a standby loss standard. DOE does not believe an increased standby loss standard level would be likely to affect grid-enabled technology because the more-stringent standby loss level analyzed for electric storage water heaters is most commonly met by increasing insulation thickness, which would not differentially affect grid-enabled technology. Therefore, DOE is not proposing a separate equipment class for grid-enabled commercial electric storage water heaters in this rulemaking.

e. Condensing Gas-Fired Water Heating Equipment

AGA suggested that DOE should analyze commercial gas condensing and non-condensing water heaters as separate equipment classes. (AGA, No. 4 at p. 2) AGA stated that replacement of non-condensing gas water heaters with condensing gas water heaters can be problematic due to the separate venting needed and condensate disposal issues. AGA opined that the ability of non-condensing gas water heaters to be common-vented with other gas appliances into chimneys is a performance feature that justifies analyzing non-condensing and condensing gas water heaters separately. AGA also cited precedent for such a separation in analysis in the residential clothes dryer energy conservation standards rulemaking.

Regarding the separation of vented and vent-less clothes dryers into two product classes in the residential clothes dryer rulemaking as cited by AGA, DOE has found the circumstances in that rulemaking to be distinguishable from the present rulemaking. More specifically, in a direct final rule for energy conservation standards for residential clothes dryers and room air conditioners published on April 21, 2011 (“April 2011 final rule”), DOE established separate product classes for vented and vent-less clothes dryers because of the unique utility they offer consumers (

i.e.,

the ability to be installed in space-constrained locations, such as high-rise apartments and recreational vehicles, where venting dryers would be precluded entirely due to venting restrictions). 76 FR 22454, 22485. In the April 2011 final rule, ventless dryers provided that subset of consumers the utility of being able to dry their clothes at all, so it is not simply a matter of additional installation cost, as confronts us in this rulemaking for CWH equipment.

Id.

Consequently, DOE believes that such a distinction would not apply to commercial gas-fired water heaters, because all gas-fired water heaters require venting and all installations could accommodate a condensing gas water heater.

DOE reiterates that disparate equipment may have very different consumer utilities, thereby making direct comparisons difficult and potentially misleading. For instance, in the April 2011 final rule, DOE

established separate product classes for vented and ventless clothes dryers because of their unique utility to consumers, as previously discussed. But in a final rule for energy conservation standards for residential water heaters, pool heaters, and direct heating equipment published on April 16, 2010, DOE determined that water heaters that utilize heat pump technology did not need to be put in a separate product class from conventional types of hot water heaters that utilize electric resistance technology, even though water heaters utilizing heat pumps require the additional installation of a condensate drain that a hot water heater utilizing electric resistance technology does not require. 75 FR 20112, 20134-20135. DOE found that regardless of these installation factors, the heat pump water heater and the conventional water heater still had the same utility to the consumer: Providing hot water.

Id.

In both cases, DOE made its finding based on consumer type and utility type, rather than product design criteria that impact product efficiency or installation costs. These distinctions in both the consumer type and the utility type are important because, as DOE has previously pointed out, taken to the extreme, each different design could be designated a different “product class” and, therefore, require different energy conservation standards.

Tying the concept of “feature” to a specific technology would effectively lock-in the currently existing technology as the ceiling for product efficiency and eliminate DOE's ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality for the consumer. DOE is very concerned that determining features solely on product technology could undermine the Department's Appliance Standards Program. If DOE is required to maintain separate product classes to preserve less-efficient technologies, future advancements in the energy efficiency of covered products would become largely voluntary, an outcome which seems inimical to Congress's purposes and goals in enacting EPCA.

DOE tentatively concludes that both non-condensing and condensing commercial gas-fired CWH equipment provide the same hot water for use by commercial consumers. Furthermore, DOE has tentatively concluded that condensing gas-fired water heaters could replace non-condensing gas-fired water heaters in all commercial settings, although in certain instances this may lead to significant installation costs. DOE recognizes the potential increased installation costs that a proposed condensing standard might impose on some subset of consumers, and has factored such installation costs in its LCC analysis. However, the possibility that installing a non-condensing commercial water heater may be less costly than a condensing commercial water heater because of the difference in venting methods does not justify separating the two kinds of equipment. Condensing technology is discussed in more detail in the screening analysis at section IV.B, and installation costs for all equipment classes are discussed in more detail in section IV.F.2.b of this NOPR and in chapter 8 of the NOPR TSD.

Issue 8:

DOE seeks comment on its proposed equipment class structure, and whether any equipment classes are unnecessary or additional equipment classes are needed.

3. Review of the Current Market for CWH Equipment

In order to gather information needed for the market assessment for CWH equipment, DOE consulted a variety of sources, including manufacturer literature, manufacturer Web sites, the AHRI Directory of Certified Product Performance,

the California Energy Commission (CEC) Appliance Efficiency Database,

and DOE's Compliance Certification Database.

DOE used these sources to compile a database of CWH equipment that served as resource material throughout the analyses conducted for this rulemaking. This database contained the following counts of unique models: 269 commercial gas-fired storage water heaters, 67 residential-duty commercial gas-fired storage water heaters, 71 electric storage water heaters, 59 commercial gas-fired storage-type instantaneous water heaters (storage water heaters with greater than 4,000 Btu/h per gallon of stored water), 25 gas-fired tankless water heaters, 239 gas-fired hot water supply boilers, 15 commercial oil-fired storage water heaters, 5 residential-duty commercial oil-fired storage water heaters, and 4 commercial oil-fired storage-type instantaneous water heaters. No oil-fired instantaneous water heaters or hot water supply boilers were found on the market. As the database was compiled mostly from certification databases, efficiency data—standby loss and thermal efficiency for storage water heaters, thermal efficiency for instantaneous water heaters and hot water supply boilers—were available for all models considered. Chapter 3 of the NOPR TSD provides more information on the CWH equipment currently available on the market, including a full breakdown of these units into their equipment classes and graphs showing performance data.

Based on listings in the AHRI Directory last accessed in September, 2014. (Available at:

https://www.ahridirectory.org/ahridirectory/pages/home.aspx

). Standby loss data for electric storage water heaters were updated on March 17, 2015. Details of the data comprising the database used for analysis are described in Chapter 3 of the NOPR TSD.

Available at

http://www.appliances.energy.ca.gov/AdvancedSearch.aspx

Available at

https://www.regulations.doe.gov/certification-data/

4. Technology Options

As part of the market and technology assessment, DOE uses information about commercially-available technology options and prototype designs to help identify technologies the manufacturers could use to improve energy efficiency for CWH equipment. This effort produces an initial list of all the technologies that DOE believes are technologically feasible. This assessment provides the techn

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.