Market Characterization of Commercial Gas Boilers

1
Market Characterization of Commercial Gas Boilers

• CEE January 2008 Program Meeting
• Natural Gas Committee

2
Background

• Defined as having an input capacity between
  300,000 and 8,000,000 Btu per hour
• Space heating accounts for approximately 66 of
  commercial boiler demand. Hot water accounts for
  most of the rest
• 23 CEE members currently running programs

3
Energy Use

• In 2003, boiler systems heated 31.5 or 20.4
  billion square feet of commercial floor space
• 85 of commercial boilers, or 63 of
  boiler-heated commercial floor space use natural
  gas.
• Use between 230 and 602 trillion Btu of natural
  gas annually

4
Testing Methods

• At least two different testing methods used to
  rate commercial boiler efficiency
• In the GAMA database, 1486 models are performance
  tested by either ANSI (51) or IBR (49)
• In addition to these two tests, AERCO has
  proposed a new standard

5
Current Market

• High efficiency ( 85 TE) has gone from 5-15 of
  sales in 2002 to 50-60 of sales in 2007
• Gas and oil market was estimated by industry
  interview to be 40,000-85,000 units and rapidly
  moving toward higher efficiency
• Another estimate of 79,602 gas-fired boilers

6
Sales Data

• GAMA shipment data reports only on cast-iron
  boilers, but shows 11,000 units (with heat
  output of greater than 250,000 btu) sold annually
• The 2001 CEE study used the 1998 BSRIA U.S.
  Boiler survey data to estimate commercial
  gas-fired boiler sales at 20,675

7
Condensing Boilers

• 2001 CEE study estimated condensing boilers to be
  2 of the total boiler market, or 750 units
• It is now estimated that 2,200 out of 11,000
  units are condensing boilers, making up 20-25 of
  the commercial boiler market
• The market has transformed faster than predicted
  and mfx expect this trend to continue

8
Manufacturers and Trades

• No one trade organization lists all manufacturers
  sales
• Over 50 manufacturers
• GAMA lists 24 manufacturers and ABMA lists 24
  without very much crossover

9
Distribution Channels
10
Commercial Boiler Inventory by Unit Capacity
11
Boiler Inventory by Building Type
12
Natural Breakpoints in Commercial Boiler
Performance
13
Updated Estimated Savings Based on 2001 CEE Study
Assumptions
14
Estimated National Fuel Savings Assuming 72
Existing Efficiency
15
Technological Challenges

• Whole system approach critical to improving
  efficiency
• Maintaining a low return water temperature
  (85-100 degrees F) will improve performance
• The rapid introduction of new technologies is
  perceived by industry to be outpacing installer
  training

16
Market Barriers and Solutions

• Barriers
• First cost
• Split Incentive
• Solutions
• Rebate programs
• Tax credits
• Building owner and installer education

17
Conclusions

• Condensing boilers are a growing portion of the
  market
• 2 different efficiency test methods reported
• No one trade organization lists all mfx sales
• Installation and system design are important to
  achieving efficiency in field

18
Extra
19
The CEE Market Study examines potential energy
savings from three perspectives

• 1) a price update of the savings estimate done in
  the 2001 CEE study
• 2) national energy savings potential assuming the
  full transformation of the existing stock,
  operating at 72 TE, to condensing technology at
  90 TE and
• 3) recent program evaluations and case studies
  from member rebate programs.

20
Market Barriers First Cost

• Corrosive-resistant materials, greater
  insulation, sophisticated controls, and new
  installation techniques are used.
• High efficiency, condensing commercial boilers
  alone costs 50-70 more than a conventional unit.

21
Market Barriers Split Incentives

• Owner-occupied buildings are nearly twice as
  likely to have an upgrade as non-owner occupied.
• The owner is usually responsible for the upfront
  costs, but does not receive the benefit of
  savings on the energy bill. The non-owner will
  benefit from the savings, but has little
  incentive to commit to the high upfront costs
  with paybacks and lifetimes that will likely
  exceed their lease.

22
Market Barriers Technical Requirements

• Condensing boilers have different installation
  requirements. The rapid introduction of new
  technologies/boilers is perceived by industry to
  be outpacing contractor/installer training.
• A HVAC industry panel at Comfort Tech 2007 noted
  a change in the distribution channel is on the
  horizon given the new demand for quality
  installation and the complex installation
  requirements of high efficiency equipment

23
Market Solutions Rebate Programs

• Industry interviews found manufacturers
  recognizing the role rebates have played in
  transforming the market
• Most rebates are flat and linked to efficiency
  level however, a few organizations offer per
  mmbtu saved rebates.

24
Market Solutions Tax Credits

• The Energy Policy Act of 2005 (EPACT 2005)
  provides a federal tax deduction of up to 1.80
  per square foot is available to owners or
  designers of new or existing commercial buildings
  that save at least 50 of the heating and cooling
  energy of a building that meets ASHRAE Standard
  90.1-2001.
• Partial deductions of up to .60 per square foot
  can be taken for measures affecting any one of
  three building systems the building envelope,
  lighting, or heating and cooling systems.
• The credits are available for systems placed in
  service from January 1, 2006 through December
  31, 2008.