Gas Furnace Guideline

Gui

delin

e Gas FurnacesSouthern California Gas Company

New Buildings Institute

Advanced Design Guideline Series

New Buildings InstituteNovember, 1998

II SOCALGAS/NBI ADVANCED DESIGN GUIDELINES

Acknowledgments

This Advanced Design Guideline was developed by the NewBuildings Institute for the Southern California Gas Company,contract P13311, part of SoCalGas’ Third Party InitiativesProgram for 1998. Project managers for SoCalGas includedTaimin Tang, Lilia Villarreal and James Green.

This project was managed by the New Buildings Institute,Douglas Mahone, Executive Director.

Subcontractors on this project were:

Heschong Mahone Group:Catherine Chappell, Project Manager,Jon McHugh, Nehemiah Stone, and Kalpana Kuttaiah

Eskinder Berhanu Associates

The Expert Advisory Panel, which reviewed and advised theproject, included: Gary Nowakowski, Gas Research Institute;William Saulino, American Gas Cooling Center, Inc.; DavidGoldstein, Natural Resources Defense Council; Tamy Ben-Ezra; Peter Schwartz, LAS & Assoc.; Jeffrey Johnson, NewBuildings Institute

GAS FURNACES GUIDELINE III

Table of Contents

CHAPTER 1: PREFACE ..................................................1

CHAPTER 2: DESCRIPTION............................................3A. Heating Efficiency ...............................................3B. Furnace Types......................................................3

Natural Draft Furnace ..........................................4Fan-Assisted Combustion Furnace ......................4Direct Vent Furnace.............................................4Condensing Furnace ............................................4Pulse Combustion Furnace ..................................5

C. Furnace Venting...................................................5Venting Categories ..............................................5Automatic Vent Dampers ....................................6

D. Limitations...........................................................6

CHAPTER 3: HISTORY AND STATUS...............................7A. Efficiency Ratings................................................7B. Energy Efficiency Standards................................7C. Other Standards ...................................................8D. Condensing Furnace Manufacturers ....................8

Bryant ..................................................................8Heil ......................................................................8Lennox.................................................................8Thermopride ........................................................8Trane....................................................................8

CHAPTER 4: ANALYSIS ..................................................9A. Overview .............................................................9B. Energy Savings ....................................................9C. Cost Effectiveness .............................................10

CHAPTER 5: DESIGN ANALYSIS GRAPHS ....................11A. Using the Furnace Graphs..................................11

Annual Energy Cost Savings Graphs .................11Normalized Energy Cost Graphs .......................11Cost Effectiveness Graphs .................................12

B. Energy Cost Savings Graphs .............................1390% Efficient, Condensing Furnaces.................13

C. Cost Effectiveness Graphs .................................2090% Efficient, Condensing Furnaces.................20

CHAPTER 6: BIBLIOGRAPHY .......................................29

CHAPTER 7: APPENDIX ...............................................31A. Building Type Descriptions ...............................31B. Summary of Utility Rates ..................................33C. Scalar Ratio and SIR..........................................34

Scalar Ratios Simplified ....................................34Selecting a Scalar Ratio .....................................35Savings to Investment Ratios (SIRs)..................35Advanced Economic Analysis ...........................36

List of Figures

Figure 1. Upstream Fan-Assisted CombustionFurnace........................................................ 4

Figure 2 - Downstream Fan-Assisted CombustionFurnace........................................................ 4

Figure 3. Furnace Categories ....................................... 6Figure 4 – Typical AFUE values................................... 7Figure 5 – Warm Air Gas Furnace Minimum

Efficiency Requirements .............................. 8Figure 6 - Building Type and Size ................................. 9Figure 7 - Cities used for Heating Analysis .................. 9Figure 8 - Energy Savings for Medium Office, 80%

vs. 90% Efficient Furnace.......................... 13Figure 9 - Energy Savings for Sit Down Restaurant,

80% vs. 90% Efficient Furnace ................. 14Figure 10 - Energy Savings for Fast Food Restaurant,

80% vs. 90% Efficient Furnace ................. 15Figure 11 - Energy Savings for Small Retail, 80%

vs. 90% Efficient Furnace.......................... 16Figure 12 - Energy Savings for School, 80% vs.

90% Efficient Furnace............................... 17Figure 13 - Energy Savings for Medical Clinic,

80% vs. 90% Efficient Furnace ................. 18Figure 14 - SIR for 90% vs. 80% Furnace .................. 20Figure 15 - Savings to Investment Ratio for Medium

Office, 80% vs. 90% Efficient Furnace...... 22Figure 16 - Savings to Investment Ratio for

Sit Down Restaurant, 80% vs. 90%Efficient Furnace ....................................... 23

Figure 17 - Savings to Investment Ratio forFast Food Restaurant, 80% vs. 90%Efficient Furnace ....................................... 24

Figure 18 - Savings to Investment Ratio for SmallRetail, 80% vs. 90% Efficient Furnace...... 25

Figure 19 - Savings to Investment Ratio for School,80% vs. 90% Efficient Furnace ................. 26

Figure 20 - Savings to Investment Ratio for, MedicalClinic 80% vs. 90% Efficient Furnace....... 27

Figure 21 - Example Present Worth Calculation ........ 35Figure 22 - Range of Typical Scalars.......................... 37Figure 23 - Variable Effects on Scalar........................ 37

GAS FURNACES GUIDELINE 1

These Guidelines have been developed by the NewBuildings Institute in cooperation with SouthernCalifornia Gas Company to assist program planners,evaluators and designers make informed decision on thecost-effectiveness of energy saving measures. Thisguideline deals specifically with gas furnaces. Theseguidelines are intended to be a step toward acomprehensive approach to design specifications.

This Design Guideline is based on careful evaluationand analysis of high efficiency gas furnaces to determinewhen the measure is appropriate, how it is bestimplemented, how cost effective it is, and how its energysavings are described. These Guidelines describeefficiency measures that are more advanced thanstandard practice, yet still cost effective in all, or selectmarkets. Design Guidelines are used by individuals andorganizations interested in making buildings moreenergy efficient. They provide the technical basis fordefining efficiency measures used in individual buildingprojects, in voluntary energy efficiency programs, and inmarket transformation programs.

It should be remembered that this Guideline documentdeals primarily with the comparison of a singleefficiency measure and its baseline. This means that theanalysis assumes that all other features of the buildingare fixed. This is done primarily for clarity of theanalysis, and allows one to focus on the advantages andeconomics of the single measure.

In reality, most new building design situations involvemultiple energy efficiency options. The costeffectiveness of one measure is often influenced by othermeasures. For example, increases in building envelopeinsulation can often reduce HVAC loads enough toreduce the sizing requirements for the heating andcooling equipment. It is not uncommon for the costsavings from smaller equipment to offset increasedinsulation costs.

It is beyond the scope of this Guideline to attempt toaddress the interactions between measures, especiallybecause these interactions can cover a huge range ofoptions depending on the climate, the local energy costs,the building, and its systems. Nevertheless, the NewBuildings Institute recommends that building designersgive careful consideration to measure interactions and tointegrated systems design. This Guideline can providethe starting point by providing insight into theperformance of one measure.

CHAPTER 1: PREFACE


Warm air furnaces are designed to heat air toapproximately 130°F for space conditioning. This warmair is distributed to zones requiring heating via a supplyfan and duct work. This kind of heating is called forcedair heating as contrasted with hydronic, or radiantheating systems. Warm air heating in many commercialbuildings is provided by the furnace section of unitaryheating and cooling equipment (rooftop units). As isdiscussed in this report, premium efficiency furnaces arenot available in unitary equipment, thus most of ourcomparisons revolve around the furnace type thatcurrently is manufactured with high efficiency options –the stand-alone furnace.

Stand-alone furnace sizes are typically 40 kBtu/h to 140kBtu/h. They are typically designed for residential use.However, these furnaces are often used in commercialenvironments and multiple units can be used to providegreater capacity.

Furnaces are designed for several different fuels,including various types of fuel gas, various grades offuel oil, and electricity. A furnace is typically designedfor only one fuel type and cannot burn other fuels. Somefurnace designs can be adapted to burn gas, LPG, oil orcoal. Other designs allow for burner conversion fordifferent fuels.

This guideline covers gas furnaces only, since gas iscertainly the most prevalent fuel used in furnaces in theUnited States.

A. Heating EfficiencyThe overall efficiency of the furnace is gross outputenergy divided by input energy. The overall efficiency isaffected by four basic factors:

Combustion efficiency

Standby losses

Cycling losses

Heat transfer

Combustion Efficiency, or Thermal Efficiency, isoutput energy minus stack loss energy, divided by inputenergy, and describes how well the furnace is able toburn the fuel and transfer this heat.

Standby Losses can include the following:

exterior surface losses

interior surface losses

standing pilot losses

Exterior surface losses are the losses of heat viaradiation and convection from the surface of the furnace.These losses are typically small (0.5% or less). Interiorsurface losses are the largest heat loss mechanism fornatural draft gas furnaces. When the furnace is cyclingon and off, there is air movement over the heat transfersurfaces even when the furnace is off. Air movement isinduced by a combination of stack and wind velocityeffects. These losses can be reduced by using a stackdamper. Furnaces with fan assisted combustion have lessoff-cycle losses because the higher pressure dropthrough the furnace limits airflow when the fan is off.Interior surface losses on forced draft furnaces resultfrom the “purge cycle” - emptying the combustionchamber of gases before initiating firing.

A standing pilot can consume as much as 2,000 Btu/hr.This form of heat loss is being eliminated by thewidespread replacement of standing pilots withelectronic ignition. With an electronic ignitions, a sparkor hot surface igniter lights an intermittent pilot light,which in turn lights the gas burner. The 1996 ASHRAESystems Handbook reports a 16% energy savings fromreplacing a natural draft furnace and standing pilot witha fan assisted furnace and electronic ignition.

Cycling Losses occur during periods of non-uniformoperation. When a furnace is first cycled on, the interiorsurfaces of the furnace are cooler and steady-statecombustion conditions are not developed. Some of thefuel will not be completely burned under these non-equilibrium conditions, temporarily resulting in lowercombustion efficiency.

Heat transfer from the hot combustion gases to thecooler heat exchange surface results from radiation andconvection. Convection can be enhanced by increasingturbulence via the shape of combustion gas passages orthe addition of inserts such as turbulators. Heat transfercan also be increased by increasing the size of the heatexchange surface through the use of additional fins onthe gas side of the heat exchanger.

B. Furnace TypesGas-fired furnaces use a natural-draft or a fan-assistedcombustion system.

The minimum allowable thermal efficiency for centralfurnaces is 80%. Natural-draft and fan-assistedcombustion furnaces typically have an 80% thermal

CHAPTER 2: DESCRIPTION


4 SOCALGAS/NBI ADVANCED DESIGN GUIDELINES

efficiency. Condensing furnaces have efficiencies over90%. Most furnace manufacturers have either 80%efficient furnaces or condensing furnaces, with littleproduct in between.

Natural Draft FurnaceNatural draft furnaces rely on buoyancy forces to induceair into the combustion chamber and combustion gasesout of the flue. Natural draft furnaces are fairly simplewith few moving parts and thus easy to maintain.

Fan-Assisted Combustion FurnaceMany furnaces now incorporate fan-assisted combustioninto their design to improve efficiency. Fan-assistedcombustion furnaces use a blower to force or induce thecombustion products through the furnace. The blowermay be located either upstream or downstream from theheat exchanger.

With the upstream configuration, as shown in Figure 1,the fan blows the combustion air into the heatexchanger. This type of furnace is also called forceddraft, power burner, power combustion and pressurefired furnace.

Figure 1. Upstream Fan-Assisted Combustion Furnace

A downstream configuration has the blower on theexhaust side of the heat exchanger. These systems areknown as induced draft and power vent furnaces.

Figure 2 - Downstream Fan-Assisted CombustionFurnace

The efficiency of standard forced draft furnaces, can beincreased by adding extra passes to the combustion heatexchanger. The number of passes and increasedefficiency are limited by the amount of heat that can beextracted. It is critical not to remove so much heat as tocondense the flue gases.

Direct Vent FurnaceDirect vent furnaces, also called sealed combustionfurnaces, draw combustion air directly from outsidethrough a venting system. Sealed combustion is a way toprevent furnaces from inducing infiltration into abuilding and to more carefully control the combustionprocess. Direct vent furnaces may have either natural-draft or fan-assisted combustion. An added advantage isthat the threat of carbon monoxide poisoning ofoccupants is mostly eliminated. Direct vent systems arewell suited for combustion air pre-heating; thecombustion intake air is drawn in through an outer pipethat surrounds the flue duct. On a standard furnace, apre-heater can save as much as 9% of annual heatingenergy.

Condensing FurnaceCondensing furnaces differ from conventional furnacesin that they recover waste heat from their exhaust gasesthat would otherwise be lost to the atmosphere. This isachieved through the use of an enlarged heat exchangersurface, which extracts sensible heat and, under certainconditions, extracts the latent heat from the water vaporwhich is generated during combustion.

Condensing furnaces have the following advantages:



♦ More efficient than conventional furnaces

♦ Up to 15% reduction in fuel costs

♦ Production of less CO2, sulfur and nitrogen oxides.

The principal component of natural gas is methane(CH4). The difference between Methane’s HigherHeating Value (Gross Caloric Value) of 23,875 Btu/lband its Lower Heating Value (Net Caloric Value) of21,495 is the 2,380 Btu/lb (10%) of contained in thelatent heat of vaporization. This latent heat content isnot released again unless the combustion gas iscondensed. Thus, condensing furnaces areapproximately 10% more efficient than efficient non-condensing furnaces.

Condensing furnaces have an acidic (pH around 3.8)condensate that requires disposal. In most areas, thiscondensate can be sent to a drain or discharged outsideuntreated. Sometimes treatment is required. This can beas simple as draining the condensate through limestonegravel before sending it down the drain. Sometimes thetype of drain is specified - allowing condensate in castiron and plastic drains but not in galvanized drains. Ifthe trap is only serving the condensate load, a trapprimer, a device to keep the trap full of water, will likelybe required. Other jurisdictions can have more stringentrequirements, checking with your local buildingdepartment is recommended.

Pulse Combustion FurnaceOne form of condensing furnace is the “pulsecombustion” furnace. Pulse combustors have thefollowing advantages:

♦ Reduces energy costs by operating at highefficiency with low standby losses

♦ Low nitrogen oxide emissions

♦ Combustion air fan energy consumption is virtuallyeliminated.

The combustion process for a pulse combustion furnaceis unlike all the other types of furnaces in that duringfiring the combustion is not a continuous equilibriumreaction but burns of discrete “charges” of gas/airmixtures in rapid succession, similar to the firingprocess in an automobile engine.

A combustion fan, used only for initial charge, draws inboth air and gas, which mix and are then ignited by aspark. The combustion of the fuel air mixture createspressure waves at sonic velocity, which drives the flowof combustion gases out of the combustion chamber, and

across the heat transfer surfaces to the end of the exitpipe.

The cooling and momentum of the combustion gasescreates suction in the combustion chamber, which drawsin a fresh charge of air and gas. Because of the resonantdesign of the combustion chamber and the exit pipe,when the pressure wave reaches the end of the exit pipeit is partially reflected back toward the combustionchamber where the new charge of air and gas is ignitedby residual heat.

The turbulent flow in pulse furnaces produces high heattransfer rates compared to furnaces that have a“smoother” or laminar airflow, which creates aninsulating air layer (boundary layer) between the hotcombustion gas and the heat exchanger surface.

Lennox is currently the only furnace manufacturer usingpulse combustion for condensing furnaces. The othermanufacturers are using an extended heat transfersurface to extract the latent heat. In some models, thecondensing furnace is the same as the standard furnacewith an additional secondary heat exchanger. Most ofthe condensing furnaces use an induced draftcombustion air fan, which maintains a negative pressureon the furnace heat exchanger where as the Pulse systemexerts positive and negative pressures on the heatexchanger.

C. Furnace VentingWhen comparing the costs of condensing and non-condensing gas furnaces, the costs of removing the stackgases should be considered. The combustion gases froma condensing furnace are cooler than non-condensingfurnaces but contain corrosive condensate.

Venting CategoriesANSI/AGA Standard Z21.47 classifies central furnacesventing systems as shown in Figure 3. They arecategorized by vent pressure, temperature above dewpoint, and steady-state efficiency. Essentially theventing systems are categorized by the vent pressure,and whether they are condensing or not. Category II andIV typically uses PVC pipe. Category I and III ventingwill typically use double wall metal pipe.

Different jurisdictions will have different furnaceventing requirements. Therefore, familiarity with localrequirements is important before designing a spaceheating system.



Category VentPressure

Temperatureabovedew-point

SteadyStateEfficiency

I non-positive

≥ 140°F < 83%

II non-positive

< 140°F > 83%

III positive ≥ 140°F < 83%

IV positive < 140°F > 83%

Figure 3. Furnace Categories

Automatic Vent DampersNatural draft furnaces rely on buoyancy forces to drawin combustion air and to exhaust combustion gases.However, when the furnace is not firing, these samebuoyancy effects are removing heat from the furnaceheat exchanger and increasing building exfiltration. Useof a draft damper reduces these losses by closing theflue when the furnace is not firing. Fan assisted furnacesdo not need draft dampers because their combustionpassages are more resistive to the free flow of air.

D. LimitationsMost of the condensing furnaces currently available areprimarily suited for the residential market. This createsa market barrier to greater use of condensing furnaces incommercial air-conditioned buildings.

In many commercial buildings that use furnaces forheating, the furnace is a section in a unitary packagedunit (roof top unit). There are no cooling/gas heatingpackaged units with a high efficiency heating option.Typical packaged rooftop units have furnace combustionefficiencies around 80%. The high-efficiencydesignation of unitary equipment applies strictly tocooling efficiency.

Carrier Corp. is currently involved with initial testing ofa packaged HVAC unit with a condensing furnace.Whether this goes to market depends on cost andexpected market share.

The popularity of rooftop units is primarily due tosimplifications for designers, owners and maintenancestaff. Packaged rooftop units are designed andmanufactured so that the equipment units are properlymatched, safety and code concerns are addressed,installation is less labor intensive and repair is

simplified. The current alternative to rooftop units forcommercial buildings with both cooling and heatingloads is a furnace with a split system cooling coil.

Thus we do not think gas energy savings alone willinduce construction specifiers to call for a condensingfurnace with a split system cooling coil. If cost-effectiveness of condensing furnaces exceed programcriteria, an appropriate target for a markettransformation program promoting condensing furnaceswould be to induce the manufacturers of rooftop units tooffer a condensing furnace option to their product line ofrooftop units.

Energy codes may have driven out any productdifferentiation on the lower end of the market and anyfurther non-condensing efficiency improvements mayhave a similar cost as the condensing furnace whileproviding less energy savings.


A. Efficiency RatingsBecause there are many ways to characterize theefficiency of furnaces, it has become necessary toestablish consistent, published measurements. There arevarious definitions of efficiency including

♦ Steady-State Efficiency, and

♦ Annual Fuel Utilization Efficiency

Steady-state efficiency is the furnace efficiency underequilibrium conditions.

Annual fuel utilization efficiency (AFUE) represents thepart-load efficiency at the average outdoor temperatureand load of a furnace installed in the United States. Thisvalue is useful for comparing different furnaces, but isnot meant to represent actual efficiency. Federal lawrequires manufacturers of furnaces to use AFUE asdetermined using the isolated combustion systemmethod to rate efficiency.

The AFUE of a furnace may be improved by using:

♦ combustion air pre-heater.

♦ flue damper

♦ intermittent ignition device (electronic ignition)

The table in Figure 4 gives AFUE values for differentfurnace types1.

1 P. 28.6, 1996 ASHRAE Systems and Equipment Handbook

AFUE,%

Type of Gas Furnace Indoor ICS*

Natural-draft withintermittent ignition andauto vent damper

78.0 68.5

Fan-assistedcombustion withstanding pilot orintermittent ignition

80.0 78.0

Same as above, exceptwith improved heattransfer

82.0 80.0

Direct vent, fan-assistedcombustion, andintermittent ignition

80.0 78.0

Fan-assistedcombustion (induced-draft)

80.0 78.0

Condensing 93.0+ 91.0+

*Isolated combustion system.

Figure 4 – Typical AFUE values

B. Energy Efficiency StandardsDifferent minimum efficiencies are required for differentfurnace types and sizes. Small furnaces are ratedaccording to AFUE, while large units are rated bythermal efficiency. The table in Figure 5 summarizesminimum furnace efficiency levels, in either Et, thermalefficiency or Ec, combustion efficiency. The currentefficiency levels are from the ASHRAE/IESNA 90.1energy code. The proposed efficiencies for Jan. 2001 arefrom the revised 90.1 code designated ASHRAE/IESNA90.1R. The table shows that changes in furnace thermalefficiency are not likely to be mandated by energycodes. However the proposed efficiency standardsreduce the standby losses on the larger furnaces.

CHAPTER 3: HISTORY AND STATUS

CHAPTER 3: HISTORY AND STATUS


Size(InputRating)

CurrentEfficiency

ProposedEfficiency as ofJan. 2001

<225MBH

AFUE ≥78% or

Et ≥80%

AFUE ≥78% or

Et ≥80%

>225MBH

Et ≥80% maxcap.

Et ≥78% at min.cap.

Ec ≥80%

Intermittentignition, Fluedamper or powerventing, SL≤0.75%

Figure 5 – Warm Air Gas Furnace Minimum EfficiencyRequirements

C. Other StandardsThe following list summarizes other important standardsthat apply to central gas furnaces installed in the UnitedStates:

♦ ANSI/AGA Z21.47-93 - Gas Fired CentralFurnaces

♦ ANSI/AGA Z21.64-90 - Direct-Vent CentralFurnaces

♦ ANSI/AGA Z21.66-88 - Automatic Vent DamperDevices for Use with Gas-Fired Appliances

♦ ANSI/AGA Z21.47-93 Gas Fired Central Furnaces

♦ ANSIZ223.1-1996/NFPA 54 National Fuel GasCode

♦ ANSI/ASHRAE 103-1993 - Method of Testing forAnnual Fuel Utilization Efficiency ResidentialCentral Furnaces and Boilers

♦ 10CFR430Appendix N - Uniform Test Method forMeasuring the Energy Consumption of Furnaces

D. Condensing FurnaceManufacturersThis section provides information on severalmanufacturers of condensing furnaces. The standarddesignation that manufacturers use for system capacity is“MBH,” which means the same thing as “kBtu”;thousands of Btus per hour.

BryantBryant has at least two lines of condensing furnaces, thePlus 90i or the Model 355 MAV with an AFUE of 96%and the Plus 90 or model 340 MAV. These units comein sizes with input ratings from 40 MBH to 120 MBH.

HeilHeil offers 4 lines of condensing furnaces all with inputgas ratings having a range of models from 50 MBH to125 MBH. The highest efficiency model, NTVM, has anAFUE of 94%. The NTPM and NTGM lines haveAFUE’s of 92% and the NTCG models have a 90%AFUE.

LennoxLennox manufactures both pulse and fan-assistedcombustion condensing furnaces. The Pulse 21 and 21Vare the pulse combustion lines and offer models up to140 kBtu/h input rating. The Elite 90 and Dimensionlines are condensing, but not pulse.

ThermoprideThermopride offers condensing and non-condensingfurnaces. The condensing furnaces, the CHB-50 toCHB-125 have gas input ratings of 50 MBH to 125MBH and seasonal efficiencies (AFUE) ofapproximately 93%.

TraneTrane carries two lines of similar condensing furnacesthe XV90 furnace has a variable speed blower while theXE 90 has a multi-speed blower. The XV90 offersfurnaces from 56 MBH to 111 MBH output ratings witha a seasonal efficiency (isolated combustion systemAFUE) of 93%. The XE model ranges from 37 MBH to111 MBH output rating and have a slightly lowerefficiency AFUE = 92%.


A. OverviewA high thermal efficiency level of 90% was compared tothe base efficiency of 80%. The 90% efficiencyrepresents a condensing furnace. Efficiency ratings forcondensing furnaces range from 87% to 95%. The 90%efficiency rating was selected as a conservative basis forestimating savings.

This analysis is structured to provide “typical” valuesthat can be used as a screening tool during schematicdesign of a building or as guidance on equipmentefficiency issues for voluntary programs or markettransformation programs. The results of a detailedenergy and rates analysis, for six building types in tencities, have been distilled down to a series of graphs.

The selected cities and buildings are representative ofthe range of climates and building occupancies wherewarm air ducted furnaces would be used. The economicanalysis is of course dependent upon gas rates. Theresults are graphed for a range of gas rates. Buildingdescriptions and city specific utility rates are provided inthe Appendix.

Both energy savings and cost-effectiveness werecalculated. The energy savings metric is presented intwo ways:

♦ Annual energy cost savings ($/yr)

♦ Normalized energy cost savings ($/yr perMBH capacity)

The normalized graphs, in the following chapter, allowthe user to expand these results to different sizeequipment.

The cost-effectiveness metric is the Savings toInvestment Ratio (SIR), which is the Life Cycle Cost(LCC) savings divided by the incremental measure cost.The measure is assumed to be cost-effective if the SIR isgreater than 1.0.

B. Energy SavingsThe high efficiency furnace measure was analyzed forthe six (6) building types shown in Figure 6. The rangeof capacities represents the variation in heating load forthe cities analyzed.

Bldg. Type Size(Sq Ft)

Capacity(MBH)

Medium Office 49,000 640 - 905

Sit-down Restaurant 9,060 1,275 - 1,828

Fast FoodRestaurant

2,000 325 – 525

Medical Clinic 49,000 738 - 969

Small Retail 9,600 483 - 779

School 50,000 2,275 – 3,339

Figure 6 - Building Type and Size

Annual heating loads were calculated for each buildingtype from a detailed energy simulation using DOE-2.1E.The models provide comprehensive data on energy useand savings. The building models were modified foreach location to be compliant with the applicablebuilding energy code.

The cities were selected for varying HDD (heatingdegree days) as shown in Figure 7. The graphs in thefollowing chapter present the energy savings for each ofthese cities for a range of marginal gas prices. The graphlegend corresponds to the abbreviations for each of thecities, as shown in the table.

City HDD65

Miami (Mia) 200

San Diego (SD) 1256

Phoenix (Phnx) 1350

Los Angeles (LA) 1458

Riverside (River) 1861

Fort Worth (FW) 2304

Atlanta (Atl) 2991

San Francisco (SF) 3016

Washington D.C. (DC) 4707

Chicago (Chic) 6536

Figure 7 - Cities used for Heating Analysis

CHAPTER 4: ANALYSIS

CHAPTER 4: ANALYSIS


The graphs present the annual energy cost savingsversus the marginal cost of gas, in dollars per therm.The marginal gas cost, which provides the incrementalenergy cost, is calculated as energy cost savings, indollars, divided by energy savings in therms. Themarginal cost accounts for varying gas rates that mayapply based on total usage.

To make best use of these graphs it is important tounderstand what was not included in the analysis as wellas what was. Maintenance issues could affect theeconomic efficiency of gas furnaces in a split systemversus packaged system configuration. However, thereare too many variables and the additional complicationwould not have increased the clarity or accuracy of theanalysis. The economic effects of maintenancecontingencies within one configuration are likelyinsignificant with high efficiency furnaces versus thebase case.

Another basic assumption in this analysis is that the costeffectiveness comparison of options is being made at thetime of new construction. In a retrofit application,existing supply, venting or distribution equipment cansignificantly shift the incremental cost of condensingfurnaces versus standard efficiency furnaces.

C. Cost EffectivenessCost effectiveness is based on the calculation of theSavings to Investment Ratio (SIR), which is defined asthe Life Cycle Cost (LCC) savings, in dollars, dividedby the incremental measure cost per unit capacity, indollars per MBH capacity, as shown in the followingequation:

SIRLCC Savings

Incremental Cost=

The SIR uses an investment model over the life of theequipment rather than the simplistic and short rangeperspective of simple payback.

The LCC savings describe the present worth of theenergy cost savings over the life of the investment. If theLCC savings are greater than the incremental cost, thenthe SIR will be greater than one and the measure isassumed to be cost effective.

Savings to Investment Ratios (SIR’s) indicate the costeffectiveness of the equipment selection depending uponseveral factors including:

♦ building type,

♦ equipment,

♦ climate,

♦ utility rate, and

♦ scalar ratio.

The scalar ratio is a single term that combines discountrate, period of analysis, and fuel escalation. A scalarratio is a mathematical simplification of life cyclecosting (LCC) analysis. The first year savings aremultiplied by the scalar to arrive at the life cyclesavings. In technical terms, the scalar ratio representsthe series present worth multiplier. A more detaileddescription of the scalar ratio is provided in theAppendix.

Different scalars have been used to evaluate the cost-effectiveness based on different economic assumptions.Typical values of the scalar are in the 8 to 16 range.This approach has the virtue that different life cyclecosting criteria, and different scalars may be applied tothe results.


A. Using the Furnace GraphsThe following pages contain families of graphs thatdescribe the performance of high efficiency furnaces ina variety of cities and building types. As described inChapter 4, these graphs were developed from DOE-2.1Eruns for representative prototype buildings using theactual utility rate structures currently published for eachof the cities. The graphs can save the reader a great dealof analysis work, and can provide good informationabout when and where high efficiency furnaces can becost effective.

Each of the lines on the graphs represents the energysavings potential of the prototype building in one of theten cities studied. Markers on each line indicate thecurrent local gas rate for each of the cities selected. Byfollowing the line on the graph the results can beextrapolated to different gas rates.

Annual Energy Cost Savings GraphsThe top graph in Figure 8 is typical of the annual energycost savings graphs. This particular one is for themedium office building prototype.

The horizontal x-axis of this graph is the marginal costof gas, in dollars per therm. Marginal cost is the costcharged, under the local utility rate structure, for thosetherms that are saved by the higher efficiency furnace,and so it does not include the utility basic servicecharges or other charges that are common to bothscenarios.

The vertical y-axis shows the annual energy costsavings, in dollars per year, between the 80% baseefficiency case and the 90% efficient condensingfurnace.

For example, Los Angeles is represented by a hollowcircle marker. In this example, the prototype mediumoffice building in Los Angeles has a marginal gas cost ofapproximately $0.53 per therm, and a high efficiencycondensing furnace would save approximately$200/year compared to a base efficiency furnace.

The slope of the line represents the rate of change inannual energy cost savings for each increment ordecrement in the marginal cost of gas. In the LosAngeles example, if gas were to increase to $0.60 pertherm, the cost savings would increase to approximately$230 per year.

The cases shown on this graph can also be used toestimate savings for other cities with comparableclimates. For example, the Chicago line would also bereasonably representative of Milwaukee, Detroit orOmaha. The gas costs in these other locations may bedifferent than Chicago, but by entering the graph at thex-axis value that represents the costs in the otherlocation, an estimate of the savings can be obtained.

Normalized Energy Cost GraphsThe bottom graph in Figure 8 is typical of thenormalized energy cost graphs. Unlike the annualenergy savings cost graphs, which are specific to thefurnace sizes of the prototype buildings in each city,these have been normalized to show annual dollarsavings per unit of furnace capacity, in thousands ofBtus per hour (MBH). This makes them a bit moreabstract, but also makes them more universal. Thesegraphs can be used to estimate the furnace savings fordifferent size furnaces and buildings for differentbuilding types.

For example, a 90% efficiency furnace installed in amedium office in Los Angeles, with a marginal gas costof about $0.53 per therm, would save about $0.27 of gascosts per year per MBH of furnace capacity. A 1,000MBH capacity furnace would save about $0.27 x 1,000= $270 per year in energy costs compared to a heatingsystem with an 80% efficient furnace. A building in aclimate similar to Los Angeles, but with a marginal costof $0.60 per therm, would save about $0.31/yr per MBHcapacity. For a 1,000 MBH heating system, this wouldtranslate to $0.31 x 1,000 = $310 per year in costsavings. For a building with a larger heating load andtherefore a larger heating system, 3,000 MBH, thesavings would be $0.31 x 3,000 = $930 per year.

The city lines higher up on the graph indicate locationsof higher furnace loads and hence higher savingspotential. Because of the upward slope of the lines,savings increase as the marginal cost increases. As withthe previous set of graphs, the markers on each lineshow the actual marginal cost and savings for the cities.

CHAPTER 5: DESIGN ANALYSIS GRAPHS



Cost Effectiveness GraphsThis section presents the cost effectiveness, or SIR,graphs developed for various gas rates and locations.

The graphs in Figure 15 are typical of the savings-to-investment ratio (SIR) graphs. These graphs describethe cost effectiveness of high efficiency furnaces on alife cycle costing basis.

The SIR is used as the figure of merit for costeffectiveness, as described in Chapter 4. It is the ratioof the life cycle cost (LCC) savings to the incrementalfirst cost of a high efficiency furnace, as shown in thefollowing equation:

SIRLCC Savings

Incremental Cost=

If the LCC savings are greater than the incremental cost,then the SIR will be greater than one and the investmentis a sound one. Thus, any point on the graph that isabove the 1.00 point on the vertical axis is a goodinvestment.

Calculating the LCC savings can seem complicated toanybody unfamiliar with present worth analysisprinciples. It involves several variables, including thelifetime of the investment, the rate of increase in energycosts, and the rate of economic inflation. These factorshave been combined into a single numeric parametercalled the scalar ratio, or “scalar,” as described inChapter 4.

For each of the SIR graphs, particular scalar andincremental equipment values are used. Figure 15presents the SIR graphs for a medium office with anincremental equipment cost of $7.50/MBH. Threegraphs are presented in this figure, for scalars of 8, 12,and 16.

Each graph enables one to quickly determine the citieswhere the high efficiency furnace is currently costeffective. If the marker for the city is above the 1.00SIR line, it’s cost effective. If the marker is not quiteover the 1.00 line, then one can see how much of anincrease in marginal gas cost would be needed to bring itover the line.

For example, if one was examining a furnaceinstallation, using a scalar of 12, in a medium office inLos Angeles, the SIR would be 0.49, which is not costeffective.

As with the previous graphs, one can also apply thesegraphs to other cities by selecting one of the ten citieswhose climate conditions are most similar and movingto the point on the line that corresponds to the gas costsin the other city.

These graphs can be adjusted for different incrementalequipment costs. For example, the graphs in Figure 15are based on an incremental cost of $7.50/MBH. Thisvalue is the denominator of the SIR values plotted on thegraphs. If the incremental cost for an installation wereinstead $15/MB, assuming a scalar of 12, then the SIRvalue from the graph would be adjusted to reflect thenew cost. In this example, an SIR value of 0.43 fromthe graph would be multiplied by 7.5/15 to arrive at anadjusted SIR of 0.21. If, instead, the incremental costwas $2.50/MBH, the adjustment factor would be7.5/2.5, for an adjusted SIR of 1.29. The adjustmentfactor will always have a numerator of 7.5 and adenominator of the new incremental equipment cost, indollars per MBH capacity, as shown in the followingequation:

The following pages contain the full set of graphsdescribing high efficiency furnaces and theirapplicability in different building types and cities, withdifferent energy and equipment costs, and differenteconomic criteria.

Actual

graphgraphActual Cost

CostSIRSIR ×=



B. Energy Cost Savings Graphs

90% Efficient, Condensing FurnacesThe following charts show the savings associated withthe 90% efficient furnace compared to a standard 80%efficient furnace, by building type. Efficiency ratings forcondensing furnaces range from 87% to 96%. The 90%efficiency rating was selected as a conservative basis forestimating savings. Actual savings will vary based onthe actual efficiency. As a general rule, the increase insavings will be proportional to the increase in efficiency.

Figure 8 - Energy Savings for Medium Office, 80% vs. 90% Efficient Furnace

Energy Cost Savings for Medium Office 90% vs. 80% Eff. Furnace

$0

$100

$200

$300

$400

$500

$600

$700

$800

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1

Marginal Cost of Gas ($/therms)

An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r) LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for Medium Office 90% vs. 80% Eff. Furnace

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC



Figure 9 - Energy Savings for Sit Down Restaurant, 80% vs. 90% Efficient Furnace

Energy Cost Savings for Sit Down Restaurant 90% vs. 80% Eff. Furnace

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r) LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for Sit Down Restaurant 90% vs. 80% Eff. Furnace

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC



Figure 10 - Energy Savings for Fast Food Restaurant, 80% vs. 90% Efficient Furnace

Energy Cost Savings for Fast Food 90% vs. 80% Eff. Furnace

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r) LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for Fast Food 90% vs. 80% Eff Furnace

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC



Figure 11 - Energy Savings for Small Retail, 80% vs. 90% Efficient Furnace

Energy Cost Savings for Small Retail 90% vs. 80% Eff. Furnace

$0

$100

$200

$300

$400

$500

$600

$700

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r) LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for Small Retail 90% vs. 80% Eff. Furnace

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC



Figure 12 - Energy Savings for School, 80% vs. 90% Efficient Furnace

Energy Cost Savings for School 90% vs. 80% Eff. Furnace

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r) LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for School 90% vs. 80% Eff. Furnace

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC



Figure 13 - Energy Savings for Medical Clinic, 80% vs. 90% Efficient Furnace

Energy Cost Savings for Medical Clinic 90% vs. 80% Eff. Furnace

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


An

nu

al E

ner

gy

Co

st S

avin

gs

($/y

r)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC

Normalized Energy Cost Savings for Medical Clinic 90% vs. 80% Eff. Furnace

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1


No

rmal

ized

En

erg

y C

ost

S

avin

gs

($/y

r/M

BH

Cap

)

LA

SD

River

SF

Phnx

FW

Mia

Atl

Chic

DC





C. Cost Effectiveness Graphs

90% Efficient, Condensing FurnacesThe following graphs show the SIR for a condensingfurnace (90%) compared to a standard 80% efficientfurnace, using an incremental equipment cost of$2.50/MBH furnace capacity, for an 8, 12 and 16 scalar,respectively.

Figure 14 - SIR for 90% vs. 80% Furnace

Bldg. Marg. Type Gas Rate 8 12 16Medium Los Angeles 0.53 0.29 0.43 0.57Office San Diego 0.77 0.35 0.52 0.69

Riverside 0.52 0.26 0.39 0.52San Francisco 0.59 0.46 0.68 0.91Phoenix 0.63 0.26 0.39 0.52Fort Worth 0.17 0.11 0.16 0.21Miami 0.93 0.10 0.14 0.19Atlanta 0.59 0.28 0.42 0.56Chicago 0.38 0.36 0.54 0.73Baltimore (Wash D.C.) 0.84 0.64 0.96 1.28

Sit Down Los Angeles 0.39 0.37 0.56 1.12Restaurant San Diego 0.50 0.44 0.67 1.33


Fast Food Los Angeles 0.40 0.77 1.16 1.54Restaurant San Diego 0.49 0.96 1.44 1.93


ScalarLocation



Figure 14 (continued) - SIR for 90% vs. 80% Furnace

Bldg. Marg. Type Gas Rate 8 12 16Small Los Angeles 0.75 0.05 0.08 0.11Retail San Diego 0.75 0.04 0.05 0.07


School Los Angeles 0.55 0.03 0.05 0.07San Diego 0.79 0.03 0.05 0.07Riverside 0.54 0.04 0.06 0.08San Francisco 0.61 0.13 0.19 0.26Phoenix 0.63 0.04 0.06 0.08Fort Worth 0.16 0.04 0.06 0.08Miami 1.00 0.01 0.01 0.01Atlanta 0.57 0.18 0.27 0.36Chicago 0.38 0.32 0.47 0.63Baltimore (Wash D.C.) 0.85 0.50 0.75 1.01

Medical Los Angeles 0.40 0.71 1.06 1.42Clinic San Diego 0.49 0.77 1.16 1.55


LocationScalar



Figure 15 - Savings to Investment Ratio for Medium Office, 80% vs. 90% Efficient Furnace

Medium Office, 90% Eff. Condensing Furnace, based on a Scalar of 8, & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C

Medium Office, 90% Eff. Condensing Furnace, based on a Scalar of 12,& incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C

Medium Office, 90% Eff. Condensing Furnace, based on a Scalar of 16, & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C



Figure 16 - Savings to Investment Ratio for Sit Down Restaurant, 80% vs. 90% Efficient Furnace

Restaurant, 90% Eff. Condensing Furnace, based on a Scalar of 8 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C



Figure 17 - Savings to Investment Ratio for Fast Food Restaurant, 80% vs. 90% Efficient Furnace

Fast Food, 90% Eff. Condensing Furnace, based on a Scalar of 8 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity)

LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C



Figure 18 - Savings to Investment Ratio for Small Retail, 80% vs. 90% Efficient Furnace

Small Retail, 90% Eff. Condensing Furnace, based on a Scalar of 8 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C



Figure 19 - Savings to Investment Ratio for School, 80% vs. 90% Efficient Furnace

School, 90% Eff. Condensing Furnace, based on a Scalar of 8 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity)

LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C



Figure 20 - Savings to Investment Ratio for, Medical Clinic 80% vs. 90% Efficient Furnace

Clinic, 90% Eff. Condensing Furnace, based on a Scalar of 8 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C

Clinic, 90% Eff. Condensing Furnace, based on a Scalar of 12 & incremental equipment cost of $7.5/MBH capacity

0.00

1.00

2.00

3.00

4.00

0.3 0.5 0.7 0.9 1.1


SIR

(L

CC

Sav

ing

s/In

crem

enta

l E

qu

ip. C

ost

/MB

H C

apac

ity) LA

SD

R iver

SF

P hnx

FW

M ia

A tl

C hic

D C


ASHRAE 1996. Systems & Equipment Handbook,Chapter 28

Hewett, Lobenstein, Nathan and Krauss, 1996. BaselineMarket Conditions for Efficient Commercial AndIndustrial Gas Technologies,1996 ACEEE SummerStudy Proceedings

Pacific Northwest National Laboratory, (PNNL), July1996. Analysis of Commercial Space-Conditioning andStorage Water-Heating Equipment Efficiencies.

.

CHAPTER 6: BIBLIOGRAPHY


A. Building Type Descriptions1. Medium Office Building

This building is a 49,000 sq. ft., 3-story structure made of precastexterior concrete panels. The glass is36% of the wall area on all sides andis vertical. (The original building hadsloped glass on the lower level. - isthis comment of any significance,other than historical interest?)Occupancy is 330 people, 5 days aweek plus half-day on Saturday, noneon Sundays or holidays. The HVACsystem has three powered inductionunits serving each floor separately,with variable-air-volume (VAV) airhandling units on the roof. The chilleris DX air cooled and the heating is bya gas-fired hot water generator.

2. Large Office BuildingThis structure is a hexagonal shaped38-story office building with 18,000sq. ft. per floor (total of 684,000 sq.ft.). Construction is steel frame withlimestone cladding. The glass area onthe SE and NW sides is about 50%,with the other four sides having 15%glass. The building is occupied from8AM to 6PM weekdays, 10%occupied during the same hours onSaturday and unoccupied Sundays andholidays. The HVAC systems aresplit into a core VAV system and aperimeter VAV system with reheatcoils for the perimeter only. Thechillers are centrifugal and heating issupplied by gas-fired hot watergenerators.

3. Retail StoreThe retail store is a high qualitydepartment store located in a shoppingmall. It is a 2-story masonry structureof 164,200 sq. ft. with 82% of thefloor area devoted to merchandisingand office and 18% devoted to storageand stock preparation. There is verylittle glass except for entry doors.External loads from the three sides of

the building in thermal contact withthe rest of the mall, are neglected.Operating hours are 10AM to 10PM,6 days a week and 10AM to 6PMSundays and holidays. The HVACsystems are constant volume variabletemperature (CVVT) served bycentrifugal chillers and gas-fired hotwater generators.

4. Strip RetailThe strip store is a typical 9,600 sq. ft.end unit of a street mall with oneportion of one side connected toanother store. It is a slab-on-gradebuilding of wood frame constructionwith display windows on the west andsouth walls. The west windows areshaded by a canopy, but on the southside there is no shading. The glazingon the west and south exposures isabout 35% of the wall area. The storeis open for business 10AM to 10PM,6 days a week and from 10AM to6PM on Sundays and holidays. TheHVAC system is a rooftop packagedVAV unit with DX air cooledcondensing unit. The heating is by agas-fired hot water generator.

5. HospitalThe building is a 4-story, 272,200 sq.ft., 348-bed hospital. It is of facebrick construction. There are multipletypes of HVAC systems such as dualduct, 4-pipe induction, reheat constantvolume, 4-pipe fan coil and CVVT.These units are all served by hermeticcentrifugal chillers and gas-fired hotwater generators.

6. Junior High SchoolThe junior high school is a 50,000 sq.ft. building with combinationauditorium/recreation space, multi-purpose rooms, and classrooms. Theclassroom section is 2-stories high.Walls are constructed of face brickand stucco. The building is modeledwith CVVT units with centrifugalchiller and gas-fired heaters.

CHAPTER 7: APPENDIX

CHAPTER 7: APPENDIX


7. HotelThis 350 room hotel is a medium sizeconvention-type facility with 10 floorstotaling 315,000 sq. ft. The spaceutilization divides as follows: 65%guest rooms, 30% public areas such aslobby, restaurants and meeting rooms,and 5% service area. The building is70% glass on the west, 50% on theeast and less than 10% on the southand north. Construction is ofreinforced concrete. The HVACsystem is a mix of VAV and CVVT inthe public areas, with 4-pipe fan coilunits in the guest rooms and CVVTfor makeup air units supplyingventilation air to the corridors forguest room bathrooms.

8. Full Service RestaurantThis full service restaurant is openfrom 7AM to 12 midnight all daysincluding holidays. The building is a1-story brick structure with 9,060 sq.ft. of floor space with a main diningarea for 240 people and a lounge areafor 60 people. The HVAC systemincludes a multi-zone unit serving thepublic areas and a CVVT unit servingthe kitchen area. Makeup airrequirements are about 65% of thetotal supply air. The primary coolingis provided by two reciprocatingchillers with air cooled condensers.Heating is from two hot watergenerators.

9. Fast Food RestaurantThe fast food restaurant is atypicalmajor chain design with foodpreparation, food storage and foodservice and dining areas. Therestaurant is a single floor, 2,000square foot building with wood frameconstruction, brick veneer, and a built-up roof. The restaurant has 4 five-tonDX packaged rooftop units with150,000 Btuh input gas heating each.Windows are present on the north,south, and west walls. Floor-to-roofheight is 12 feet. Maximumoccupancy is 81 persons. Typicalperiods of occupancy are from 5AMto midnight, 7 days per week.

CHAPTER 7: APPENDIX


B. Summary of Utility Rates

Summary of Gas Utility Rates Used

Minimum Maximum

City Utility Rate Name Rate Type (Therms/Mo) (Therms/Mo)

Chicago NiCor 4 General Service 0 No Limit

Washington DC Washington Gas Light 2 General Service 0 No Limit

Dallas/Ft. Worth Lone Star Gas General Service General Service 0 No Limit

Los Angeles City So. Cal. Gas GN-10 General Service 0 <20800

GN-20 General Service 20800 No Limit

G-AC Air Conditioning 0 No Limit

Riverside So. Cal. Gas GN-10 General Service 0 <20800


G-AC Air Conditioning 0 No Limit

San Diego San Diego G & E GN-1 General Service 0 <20800


San Francisco Pacific G & E G-NR1 General Service 0 <20800

G-NR2 General Service 20800 No Limit

Atlanta Atlanta Gas Light G-11 General Service 0 <2000 th/day

G-11 AC Air Conditioning 0 <2000 th/day

G-12 Heating Only 0 <2000 th/day

G-13 LLF General Service 0 <5000 th/day

G-13 AC LLF Air Conditioning 0 <5000 th/day

Phoenix Southwest Gas CG-25 Small General Service 0 600

CG-25 Medium General Service >600 15000

CG-25 Large General Service >15000 No Limit

CG-40 Air Conditioning 0 No Limit

Miami Peoples Gas SGS General Service 0 108

GS General Service >108 2708

GSLV-1 General Service >2708 54166

GSLV-2 General Service >54166 No Limit

Rider LE Air Conditioning 0 No Limit

CHAPTER 7: APPENDIX


C. Scalar Ratio and SIRThroughout the Guidelines, the terms scalar ratio andSIR (savings to investment ratio) are used to describethe economic analysis of measures. A scalar ratio is amathematical simplification of life cycle costing (LCC)analysis. An SIR compares the life cycle savings to theinitial investment. An LCC analysis is preferable to asimple payback analysis, because it enables a morerealistic assessment of all the costs and savings to beexpected over the life of an investment. While LCCanalysis can be quite complicated and difficult tounderstand, a scalar ratio and an SIR are relativelysimple to use. This discussion explains their meaningand derivation, and provides some guidance on how touse them in better understanding the analysis graphs inthese Guidelines.

Scalar Ratios SimplifiedIn technical terms, the scalar ratio represents the seriespresent worth multiplier. This can be understood byassuming a simple situation: an initial investment in anenergy efficiency measure, followed by a series ofannual energy savings realized during the lifetime of themeasure. The annual energy costs are assumed toescalate at a steady rate over the years and an annualmaintenance cost, when included, is assumed to escalateat a different steady rate. Once the included costs andsavings are laid out over the life of the investment, eachyear’s net savings is discounted back to present dollars,and the resulting present worth values are summed toarrive at the life cycle energy savings. This number isthen divided by the net savings for the first year, toobtain the scalar ratio. Once the scalar ratio isdetermined, it can be applied to other investmentscenarios that share the same economic rates of energycost and maintenance cost escalation. One simplycalculates the first year’s energy savings and multipliesit by the scalar ratio to obtain the net present worth ofthe savings.

The process of discounting these future dollars back topresent dollars is a straightforward calculation (mostspreadsheets have built-in present worth functions). Thepresent worth of a future dollar earned (or saved) is afunction of the number of years in the future that thedollar is earned, and of the discount rate. The discountrate may be thought of as the interest rate one wouldearn if the first cost dollars were put into a reliableinvestment, or as the minimum rate of return onedemands from investments. If the investment is a goodone, the present worth of the discounted savings willexceed the cost of the investment. If the present worth

of savings does not exceed the investment cost, then theinvestment will not provide the minimum rate of returnand could be better spent on another investment.

Of course, in the case where the net cost of the higherefficiency equipment is lower than that of the base caseequipment, any positive present worth of energy savingsindicates a sound investment. In some cases moreefficient equipment allows downsizing of otherequipment in the building, such as the electrical loadcenter and service drop. These savings can besignificant enough to offset the incremental cost of themore efficient equipment, resulting in a lower overallfirst cost. To be conservative, in the development ofthese Guidelines, we have ignored these potential relatedsavings.

Likewise, maintenance costs were not included becausethere are too many variables and the additionalcomplication would not have increased the clarity oraccuracy of the analysis.

Figure 21 shows a simple spreadsheet illustrating howthis basic scenario would be calculated. In the example,the first year’s savings are $1,051. The annual energysavings escalate at 4% per year, and the annualmaintenance costs escalate at 2% per year. If yousimply add up these costs after five years, you willexpect to save $5,734. The discounted present worth iscalculated using the spreadsheet’s net present value(NPV) function using the string of annual totals and thediscount rate. If the discount rate is 15%, these savingshave a present worth of $3,799, which is 3.6 times thefirst year’s savings (scalar ratio = 3.6). If the initialinvestment to achieve these savings was less than$3,799, then it meets the investment criteria and willprovide a rate of return greater than 15%. On the otherhand, if the discount rate is 3%, the present worth of thesavings is $5,239 and the scalar ratio is 5.0. Investorswith high discount rates have higher expectations fortheir returns on investment, and are therefore lesswilling to invest in efficiency measures that have lowersavings. On the other hand, public agencies and mostindividuals have lower discount rates and accept lowerrates of return in exchange for reliable returns. Adiscount rate of 3% in this example yields a scalar ratioof 5.0 and indicates that a substantially higher initialinvestment of $5,239 could be justified.

CHAPTER 7: APPENDIX


Selecting a Scalar RatioTo use the cost-effectiveness analysis graphs in thisGuideline, one must select a scalar ratio by deciding onthe economic conditions for their efficiency investments.The example discussed here has been rather simplistic,and the five-year analysis period is quite short for mostenergy efficiency measures. In selecting a scalar, usersshould decide on at least the following:

♦ Period of Analysis - This is the number ofyears the energy efficiency investment isexpected to provide savings. Some userswill have a long-term perspective, and willchoose a period of analysis thatapproaches the expected life of themeasure. For long life measures, such asbuilding insulation, the period of analysismay be thirty years or more. Formechanical system measures, the periodmay be fifteen years. Other users maychoose a shorter analysis period becausethey are interested in their personal costsand benefits and are not expecting to holdthe property for a long time. Public policyagencies setting energy codes may choosea societal perspective, based on theprinciple that building investmentsimpinge on the environment and theeconomy for a longer period of time, andso may select a long period of analysis.

♦ Discount Rate - This is the real rate ofreturn that would be expected from anassured investment. A rate of returnoffered by an investment instrument is theinvestment’s nominal interest rate andmust be adjusted, by the loss in real valuethat inflation causes, to arrive at the realinterest rate. Nominal discount rates mustlikewise be adjusted for inflation to find

the real discount rate. In order to simplifythe analysis, we assumed a zero inflationrate, which then makes the nominal andreal discount rates the same. As discussedin the example above, different kinds ofpeople may have different expectations. Alower end interest rate (and discount rate)might be the rate of return expected fromsavings account or a money market fund(2% - 4%). An upper end might be therate of return that an aggressive investorexpects to produce with his money (10% -20%), although it is difficult to argue thatthis represents an “assured investment.”Another way to think of the real discountrate is the real rate of return that competinginvestments must provide in order tochange the choice of investments that theorganization makes.

The table in Figure 22 shows a range of typical scalars.It presents the resulting scalars for 8, 15 and 30-yearstudy periods, discount rates ranging from 0% to 15%and escalation rates ranging from 0% to 6%.

Savings to Investment Ratios (SIRs)An extension of the present worth and scalar concepts isthe Savings to Investment Ratio (SIR). As indicatedabove, one is interested in both the incremental first costof an investment (how much more it costs than the basecase) and in the present worth of its cost savings. TheSIR provides a simple way to compare the two: dividethe present worth of the savings by the incremental firstcost (or its present worth if the investment extends overtime). If this ratio is greater than one, then thediscounted savings are greater than the first cost, and thereturn on investment will be greater than the discountrate. The cost-effectiveness analysis graphs presented inthis Guideline use the SIR on the vertical axis. Thus anypoints on the curves that lie above an SIR value of oneare deemed to be cost effective.

Year: 1 2 3 4 5Energy Savings (escalated 4%/yr); $1,200 $1,248 $1,298 $1,350 $1,404

Maint. costs (escalated 2%/yr): ($150) ($153) ($156) ($159) ($162)Annual totals: $1,051 $1,097 $1,145 $1,195 $1,246

( Sum of Annual totals: $5,734 )

Discounted Present Worth: $3,799 / $1,051 = Scalar: 3.6 (15% discount rate)

Discounted Present Worth: $5,239 / $1,051 = Scalar: 5.0 (3% discount rate)

Figure 21 - Example Present Worth Calculation

CHAPTER 7: APPENDIX


Advanced Economic AnalysisThe economic analysis could be more elaborate than theexamples discussed here, of course, and could accountfor more factors. For example, there could be othermaintenance costs that recur every few years, the energycost escalation factors could be non-linear, or the taxdeductions for the operating and maintenance costscould be included. In addition, the first costs could bespread out over the years as loan payments and interestcost deductions. All of these costs would be discountedback to present dollar values and summed to arrive atthe net present value, which compares the life cyclecosts to the life cycle savings1.

Analysis for different purposes will include bothdifferent types of inputs as well as varying levels for theinput types chosen. For example, while a commercialbuilding owner is likely to be interested in the economicimpacts within a relatively short time frame, e.g., 8-10years, a state energy office is likely to be moreconcerned with the societal economic impacts over amuch longer term, like 30 years for residential energycodes. A business owner, who is looking at energyefficiency investments relative to other business uses ofher capital, might also feel that a discount rate of 15%reflects her value for future energy savings. On theother hand, an energy efficiency program planner orenergy code developer could justify a 0% discount rateas representative of the future value of resource savings.

The table in Figure 23 provides guidance on selectingbetween the range of potential scalars.

A more comprehensive economic analysis might alsoconsider measure interactions and analyze the impacts ofnumerous building elements as a system. For example,increasing the level of roof insulation can lead to theability to downsize the cooling equipment. Selection ofa gas chiller could potentially allow the downsizing ofthe electric service drop and load center for the building.The analysis in this Guideline did not include suchsynergies because of the complication of identifyingsituations in which the additional savings could beexpected.

Appendix section A described the base case buildingsthat were used in the analysis for these Guidelines. Amore comprehensive, targeted analysis would begin withan examination of these building descriptions todetermine whether they are representative of the locationof interest. The building design can greatly increase or

1 For a more in-depth description, see Plant Engineers and Managers

Guide to Energy Conservation, by Albert Thumann, Fairmont

Press, Lilburn, GA 1989.

decrease the cost effectiveness of various measures. Forexample, a base case office building with effectivedaylighting, reducing internal gains from lightingsystems, and high performance glazing on the south, eastand west, may have a small enough cooling load thathigh efficiency equipment will be less cost effective.

Finally, it is assumed in this analysis that a decisionabout the cost effectiveness of options is being made atthe time of new construction. For program designersfocusing on retrofit applications of these technologies,additional first costs will need to be included. This isless of an issue when the change-out is due to equipmentfailure and replacement is required. In the case ofreplacements for equipment that is still functioning, theincremental first cost will be the full cost of the newequipment minus the salvage value of the equipmentremoved. Obviously, the energy savings must be ofmuch greater value to justify replacing equipment beforethe end of its useful life.

As this discussion illustrates, a thorough economicanalysis of energy efficiency investments can requireconsiderable thought and calculation. The scalar andSIR approach used throughout these Guidelines providea convenient method for simplifying the economicanalysis task. For many purposes, this will be sufficient,provided the decision-makers who will be relying on thisanalysis understand its limitations.

CHAPTER 7: APPENDIX


Scalars for 8 year period Scalars for 15 year period Scalars for 30 year period

Escalation rates Escalation rates Escalation rates

DiscountRates 0% 2% 4% 6% 0% 2% 4% 6% 0% 2% 4% 6%

0% 8.0 8.8 9.6 10.5 15.0 17.6 20.8 24.7 30.0 41.4 58.3 83.8

3% 7.0 7.7 8.4 9.1 11.9 13.9 16.2 19.0 19.6 25.9 35.0 48.3

5% 6.5 7.0 7.7 8.4 10.4 12.0 13.9 16.2 15.4 19.8 26.0 34.9

7% 6.0 6.5 7.1 7.7 9.1 10.4 12.0 13.9 12.4 15.5 19.9 26.0

9% 5.5 6.0 6.5 7.1 8.1 9.2 10.5 12.1 10.3 12.6 15.7 20.0

11% 5.1 5.6 6.0 6.5 7.2 8.1 9.3 10.6 8.7 10.4 12.8 15.9

13% 4.8 5.2 5.6 6.1 6.5 7.3 8.2 9.3 7.5 8.8 10.6 12.9

15% 4.5 4.8 5.2 5.6 5.8 6.5 7.4 8.3 6.6 7.6 9.0 10.8

Figure 22 - Range of Typical Scalars

INPUT IF INPUT: THEN SCALAR TENDS TO:

Measure Life Increases Increase

Discount Rate Increases Decrease

Energy Cost Escalation Rate Increases Increase

Maintenance Escalation Rate Increases Decrease

Inflation Rate Increases Decrease

Mortgage Interest Rate Increases Decrease

Tax Advantage Increases Increase

Figure 23 - Variable Effects on Scalar

Documents

Gas Furnace Guideline