Home/Federal/Federal Register/2021-11957

Proposed Rule2021-11957

Energy Conservation Program: Energy Conservation Standards for Unfired Hot Water Storage Tanks

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

June 10, 2021

Issuing agencies

Energy Department

Abstract

The Energy Policy and Conservation Act, as amended (EPCA), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including unfired hot water storage tanks (UFHWSTs). EPCA also requires the U.S. Department of Energy (DOE or the Department) to periodically determine whether more-stringent, amended standards would result in significant additional conservation of energy, be technologically feasible, and be economically justified. After carefully considering the available market and technical information for this equipment, DOE has tentatively concluded in this document that it lacks clear and convincing evidence that more-stringent standards for UFHWSTs would save a significant additional amount of energy and would be economically justified. As such, DOE has initially determined that energy conservation standards for UFHWSTs do not need to be amended. DOE requests comment on this notification of proposed determination (NOPD), as well as the associated analyses and results.

Full Text

<html>
<head>
<title>Federal Register, Volume 86 Issue 110 (Thursday, June 10, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 110 (Thursday, June 10, 2021)]
[Proposed Rules]
[Pages 30796-30819]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11957]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2017-BT-STD-0021]
RIN 1904-AD90

Energy Conservation Program: Energy Conservation Standards for
Unfired Hot Water Storage Tanks

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

ACTION: Notification of proposed determination and request for comment.

-----------------------------------------------------------------------

SUMMARY: The Energy Policy and Conservation Act, as amended (EPCA),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including unfired hot
water storage tanks (UFHWSTs). EPCA also requires the U.S. Department
of Energy (DOE or the Department) to periodically determine whether
more-stringent, amended standards would result in significant
additional conservation of energy, be technologically feasible, and be
economically justified. After carefully considering the available
market and technical information for this equipment, DOE has
tentatively concluded in this document that it lacks clear and
convincing evidence that more-stringent standards for UFHWSTs would
save a significant additional amount of energy and would be
economically justified. As such, DOE has initially determined that
energy conservation standards for UFHWSTs do not need to be amended.
DOE requests comment on this notification of proposed determination
(NOPD), as well as the associated analyses and results.

DATES: Meeting: DOE will hold a webinar on Tuesday, July 13, 2021, from
12:00 p.m. to 4:00 p.m. See section VII, ``Public Participation,'' for
webinar registration information, participant instructions, and
information about the capabilities available to webinar participants.
Comments: Written comments and information are requested and will
be accepted on or before August 9, 2021.

ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow
the instructions for submitting comments. Alternatively, interested
persons may submit comments by email to the following address:
<a href="/cdn-cgi/l/email-protection#2f7a4149465d4a4b6c4042424a5d4c464e4378671d1f1e187c7b6b1f1f1d1e6f4a4a014b404a01484059">[email&#160;protected]</a>. Include docket number EERE-
2017-BT-STD-0021 and/or RIN number 1904-AD90 in the subject line of the
message. Submit electric comments in WordPerfect, Microsoft Word, PDF,
or ASCII file format, and avoid the use of special characters or any
form of encryption. No telefacsimiles (faxes) will be accepted. For
detailed instructions on submitting comments and additional information
on this process, see section VII (Public Participation) of this
document.
Although DOE has routinely accepted public comment submissions
through a variety of mechanisms, including postal mail and hand
delivery/courier, the Department has found it necessary to make
temporary modifications to the comment submission process in light of
the ongoing Covid-19 pandemic. DOE is currently accepting only
electronic submissions at this time. If a commenter finds this change
poses an undue hardship, please contact Appliance Standards Program
staff at (202) 586-1445 to discuss the need for alternative
arrangements. Once the Covid-19 pandemic health emergency is resolved,
DOE anticipates resuming all of its regular options for public comment
submissions, including postal mail and hand delivery/courier.
Docket: The docket for this activity, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. All documents in the docket are
listed in the <a href="https://www.regulations.gov">https://www.regulations.gov</a> index. However, some
documents listed in the index, such as information that is exempt from
public disclosure, may not be publicly available.
The docket web page can be found at: <a href="https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0021">https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0021</a>. The docket web page contains
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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT: Ms. Catherine Rivest, 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) 586-7335. Email:
<a href="/cdn-cgi/l/email-protection#49083939252028272a2c1a3d28272d283b2d3a183c2c3a3d2026273a092c2c672d262c672e263f">[email&#160;protected]</a>.
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) 586-5827. Email: <a href="/cdn-cgi/l/email-protection#c481b6ada7ea97b0a5b784acb5eaa0aba1eaa3abb2">[email&#160;protected]</a>.
For further information on how to submit a comment or review other
public comments and the docket, contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
<a href="/cdn-cgi/l/email-protection#7f3e0f0f13161e111c1a2c0b1e111b1e0d1b0c2e0a1a0c0b1610110c3f1a1a511b101a51181009">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Determination

[[Page 30797]]

II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemakings for UFHWSTs
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Equipment Classes
2. Technology Options
3. Screening Analysis
a. Screened-Out Technologies
b. Remaining Technologies
B. Engineering Analysis
1. Efficiency Levels for Analysis
2. Representative Equipment for Analysis
3. Cost Analysis
C. Energy Use Analysis
1. Tank Thermal Loss Model
a. Tank Surface Area (Ai, j)
b. Tank Internal Water Temperature (Ti)
c. Tank Ambient Temperature (Tamb, z)
d. R-value of Insulation (Ri, j)
2. Annual Energy Use Due To UFHWST Losses
3. Additional Sources of Uncertainty
D. Life-Cycle Cost and Payback Period Analysis
1. Installation Costs
2. Annual Energy Consumption
E. Shipments Analysis
1. Stock Estimates
a. Residential Stock
b. Commercial Stock
c. Industrial Stock
2. Shipments for Replacement
3. Shipments for New Construction
4. Estimated Shipments
a. Distribution of Shipments by UFHWST Storage Volume
5. Additional Sources of Uncertainty
F. National Impact Analysis
1. Energy Efficiency Distribution in the No-New-Standards Case
2. Hot Water Supply Boiler Efficiency Trend
G. Discussion of Other Comments Received
V. Analytical Results and Conclusions
A. National Impact Analysis
1. Significance of Energy Savings
2. Net Present Value of Consumer Costs and Benefits
B. Proposed Determination
1. Technological Feasibility
2. Significant Conservation of Energy
3. Economic Justification
4. Summary
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
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. Participation in the Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Determination

Title III, Part C \1\ of EPCA,\2\ established the Energy
Conservation Program for Certain Industrial Equipment. (42 U.S.C. 6311-
6317) This equipment includes UFHWSTs, the subject of this NOPD. (42
U.S.C. 6311(1)(K))
---------------------------------------------------------------------------

\1\ For editorial reasons, upon codification in the U.S. Code,
Part C was redesignated Part A-1.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020).
---------------------------------------------------------------------------

Pursuant to EPCA, DOE is triggered to consider amending the energy
efficiency standards for certain types of commercial and industrial
equipment, including the equipment at issue in this document, whenever
the American Society of Heating, Refrigerating, and Air-Conditioning
Engineers (ASHRAE) amends the standard levels or design requirements
prescribed in ASHRAE Standard 90.1, ``Energy Standard for Buildings
Except Low-Rise Residential Buildings,'' (ASHRAE Standard 90.1). Under
a separate provision of EPCA, DOE is required to review the existing
energy conservation standards for those types of covered equipment
subject to ASHRAE Standard 90.1 every six 6 years to determine whether
those standards need to be amended. (42 U.S.C. 6313(a)(6)(A)-(C)) DOE
is conducting this review of the energy conservation standards for
UFHWSTs under EPCA's six-year-lookback authority. (42 U.S.C.
6313(a)(6)(C))
For this proposed determination, DOE analyzed UFHWSTs subject to
standards as specified in the Code of Federal Regulations (CFR) at 10
CFR 431.110. DOE first analyzed the technological feasibility of more
efficient UFHWSTs. For those UFHWSTs for which DOE determined higher
standards to be technologically feasible, DOE estimated energy savings
that would result from potential amended energy conservation standards.
DOE also considered whether potential energy conservation standards
would be economically justified. As discussed in the following
sections, DOE has initially determined that it lacks clear and
convincing evidence that amended energy conservation standards for
UFHWSTs would result in significant additional conservation of energy
or be economically justified.
Based on the results of these analyses, summarized in section V of
this document, DOE has tentatively determined that current energy
conservation standards for UFHWSTs do not need to be amended.

II. Introduction

The following section briefly discusses the statutory authority
underlying this proposed determination, as well as some of the
historical background relevant to the establishment of energy
conservation standards for UFHWSTs.

A. Authority

EPCA, Public Law 94-163 (42 U.S.C. 6291-6317, as codified), among
other things, authorizes DOE to regulate the energy efficiency of a
number of consumer products and certain industrial equipment. Title
III, Part C of EPCA, added by Public Law 95-619, Title IV, Sec. 441(a)
(42 U.S.C. 6311-6317, as codified), established the Energy Conservation
Program for Certain Industrial Equipment, which sets forth a variety of
provisions designed to improve energy efficiency. This equipment
includes UFHWSTs, the subject of this document. (42 U.S.C. 6311(1)(K))
Under EPCA, the energy conservation program consists essentially of
four parts: (1) Testing; (2) labeling; (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C.
6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C.
6315), and the authority to require information and reports from
manufacturers (42 U.S.C. 6316).
Federal energy conservation requirements for covered equipment
established under EPCA generally

[[Page 30798]]

supersede State laws and regulations concerning energy conservation
testing, labeling, and standards. (42 U.S.C. 6316(a) and (b); 42 U.S.C.
6297) DOE may, however, grant waivers of Federal preemption in limited
circumstances for particular State laws or regulations, in accordance
with the procedures and other provisions set forth under EPCA. (42
U.S.C. 6297(d); 42 U.S.C. 6316(a); 42 U.S.C. 6316(b)(2)(D))
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, by rule, published in the Federal Register
and supported by clear and convincing evidence, 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 covered 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)) In
addition, if DOE determines that a test procedure amendment is
warranted, it must publish proposed test procedures in the Federal
Register and offer the public an opportunity (of not less than 45 days
duration) to present oral and written comments on them. (42 U.S.C.
6314(b)) In contrast, if DOE determines that test procedure revisions
are not appropriate, DOE must publish in the Federal Register its
determination not to amend the test procedures. (42 U.S.C.
6314(a)(1)(A)(ii))
Manufacturers of covered equipment must use the Federal test
procedures as the basis for the following: (1) Certifying to DOE that
their equipment complies with the applicable energy conservation
standards adopted pursuant to EPCA (42 U.S.C. 6316(b); 42 U.S.C. 6296),
and (2) when making representations to the public regarding the energy
use or efficiency of such equipment. (42 U.S.C. 6314(d)) Similarly, DOE
uses these test procedures to determine whether the equipment complies
with relevant standards promulgated under EPCA. It is noted that DOE
does not prescribe a test procedure for UFHWSTs, as the current Federal
standard is an insulation design requirement of a minimum R-value of R-
12.5. 10 CFR 431.110.
EPCA contains mandatory energy conservation standards for
commercial heating, air-conditioning, and water-heating equipment. (42
U.S.C. 6313(a)) Specifically, the statute sets standards for small,
large, and very large commercial package air conditioning and heating
equipment, packaged terminal air conditioners and packaged terminal
heat pumps, warm-air furnaces, packaged boilers, storage water heaters,
instantaneous water heaters, and UFHWSTs. Id. In doing so, EPCA
established Federal energy conservation standards that generally
corresponded to the levels in the ASHRAE Standard 90.1 in effect on
October 24, 1992 (i.e., ASHRAE Standard 90.1-1989).
If ASHRAE Standard 90.1 is amended with respect to the standard
levels or design requirements applicable under that standard for
certain commercial equipment, including UFHWSTs, not later than 180
days after the amendment of the standard, DOE must publish in the
Federal Register for public comment an analysis of the energy savings
potential of amended energy efficiency standards. (42 U.S.C.
6313(a)(6)(A)(i)) 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))
To determine whether a standard is economically justified, EPCA
requires that DOE determine whether the benefits of the standard exceed
its burdens by considering, to the greatest extent practicable, the
following seven 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); 42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i))

If DOE adopts 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 the 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))
EPCA also requires that every six years DOE shall evaluate the
energy conservation standards for each class of certain covered
commercial equipment, including UFHWSTs, and publish either a notice of
determination that the standards do not need to be amended, or a notice
of proposed rulemaking (NOPR) that includes new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6313(a)(6)(C)(i)) EPCA further provides that, not later than
three years after the issuance of a final determination not to amend
standards, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6313(a)(6)(C)(iii)(II)) DOE
must make the analysis on which the determination is based publicly
available and provide an opportunity for written comment. (42 U.S.C.
6313(a)(6)(C)(ii)) Further, a determination that more- stringent
standards would: (1) Result in significant additional conservation of
energy and (2) be both technologically feasible and economically
justified must be supported by clear and convincing evidence. (42
U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)) DOE is publishing
this NOPD in satisfaction of the 6-year review requirement in EPCA,
having initially determined that DOE lacks clear and convincing
evidence that amended standards for UFHWSTs would result in significant
additional conservation of energy and be economically justified.

B. Background

1. Current Standards
The initial Federal standards for UFHWSTs, established by EPCA,
corresponded to the efficiency levels

[[Page 30799]]

contained in ASHRAE Standard 90.1-1989. On January 12, 2001, DOE
amended the standards for UFHWSTs to be equivalent to the efficiency
level in ASHRAE Standard 90.1 as revised in October 1999. 66 FR 3336
(January 2001 final rule). The January 2001 final rule established an
insulation design requirement of a minimum R-value of R-12.5 for all
UFHWSTs. 66 FR 3336, 3356 (Jan. 12, 2001). This remains the current
Federal standard (and the standard level specified in the most recent
version of ASHRAE Standard 90.1). The current standard is located at 10
CFR 431.110.
2. History of Standards Rulemakings for UFHWSTs
As noted previously, the standards for UFHWSTs were most recently
amended in the January 2001 final rule. EPCA requires DOE to evaluate
the applicable energy conservation standard for UFHWSTs every 6 years
to determine whether it needs to be amended. (42 U.S.C.
6313(a)(6)(C)(i)) Thus, DOE published a request for information (RFI)
on August 9, 2019, which identified various issues and sought to
collect data and information to inform its determination, consistent
with its obligations under EPCA, as to whether the UFHWST standards
need to be amended (the August 2019 RFI). 84 FR 39220.
DOE received five comments in response to the August 2019 RFI from
the interested parties listed in Table II.1. Discussion of the relevant
comments provided by these organizations and DOE's responses are
provided in the appropriate sections of this document.

Table II.1--Interested Parties Providing Written Comments on the August
2019 RFI
------------------------------------------------------------------------
Name Abbreviation Commenter type
------------------------------------------------------------------------
Appliance Standards Awareness ASAP and NRDC..... Efficiency
Project and Natural Resources Organizations.
Defense Council.
Air-Conditioning, Heating, & AHRI.............. Trade Association.
Refrigeration Institute.
Pacific Gas and Electric Company CA IOUs........... Investor-Owned
(PG&E), Sand Diego Gas and Utilities.
Electric (SDG&E), Southern
California Edison (SCE).
A.O. Smith Corporation.......... A.O. Smith........ Manufacturer.
Bradford White Corporation...... BWC............... Manufacturer.
------------------------------------------------------------------------

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\3\
---------------------------------------------------------------------------

\3\ The parenthetical reference provides a reference for
information located in the docket. (Docket No. EERE-2017-BT-STD-
0021, which is maintained at <a href="https://www.regulations.gov/docket?D=EERE-2017-BT-">https://www.regulations.gov/docket?D=EERE-2017-BT-</a> STD-0021). The references are arranged as
follows: (commenter name, comment docket ID number, page of that
document).
---------------------------------------------------------------------------

III. General Discussion

DOE developed this proposed determination after a review of the
UFHWST market, including product literature and product listings in the
DOE Compliance Certification Management System (CCMS) database. DOE
also considered written comments, data, and information from interested
parties that represent a variety of interests. This notice addresses
issues raised by these commenters.

A. Product Classes and Scope of Coverage

When evaluating and establishing new or amended energy conservation
standards, DOE typically divides covered equipment into equipment
classes by the type of energy used or by capacity or other performance-
related features that justify differing standards. For UFHWSTs, the
current standard at 10 CFR 431.110 is applicable to a single equipment
class covering all UFHWSTs, which is consistent with the standard and
structure in ASHRAE Standard 90.1. DOE's regulations define ``unfired
hot water storage tank'' as a tank used to store water that is heated
externally, and that is industrial equipment. 10 CFR 431.102. The scope
of coverage is discussed in further detail in section IV.A.1 of this
NOPD.

B. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a)) As
a general matter, manufacturers of covered ASHRAE equipment must use
these test procedures to certify to DOE that their equipment complies
with energy conservation standards and to quantify the efficiency of
their equipment. (42 U.S.C. 6316(b); 42 U.S.C. 6296) DOE's current
energy conservation standards for UFHWSTs are expressed in terms of a
minimum R- value for tank insulation. (See 10 CFR 431.110.)
DOE does not prescribe a test procedure for UFHWSTs; however, DOE's
regulations define ``R-value'' as the thermal resistance of insulating
material as determined using either ASTM International (ASTM) C177-13,
``Standard Test Method for Steady-State Heat Flux Measurements and
Thermal Transmission Properties by Means of the Guarded-Hot-Plate
Apparatus,'' or ASTM C518-15, ``Standard Test Method for Steady-State
Thermal Transmission Properties by Means of the Heat Flow Meter
Apparatus'' and expressed in ([deg]F ft\2\ h/Btu). 10 CFR 431.102.
In response to the August 2019 RFI, DOE received several comments
encouraging DOE to consider a performance-based test procedure for
UFHWSTs. ASAP and NRDC referenced a test procedure notice of proposed
rulemaking (NOPR) published in the Federal Register on May 9, 2016 (81
FR 28588) (May 2016 CWH TP NOPR) in which DOE proposed, among other
things, a standby loss test for UFHWSTs, and a final rule for the test
procedure for commercial water heating (CWH) equipment published in the
Federal Register on November 10, 2016 (81 FR 79261), in which DOE
suggested that it would address comments received in response to the
May 2016 CWH TP NOPR in a separate rulemaking notice. These commenters
encouraged DOE to review and finalize the performance-based test
procedure for UFHWSTs before proceeding with a UFHWST standards
rulemaking, in order to not forgo potential additional energy savings
that could come from incorporating standby losses and/or other changes
to the UFHWST test procedure. (ASAP and NRDC, No. 7 at pp. 1-2)
Similarly, the CA IOUs stated that they believe the current R-12.5
insulation requirement limits consumer choice and does not encourage
design innovation. They likewise encouraged DOE to adopt a performance-
based metric, which they believe would lead to additional energy
savings. The CA IOUs analyzed standby losses for commercial storage
water heaters in the AHRI Directory of Certified Product Performance
and noted a wide range of performance. They stated that this suggests
the potential for energy savings

[[Page 30800]]

opportunities for UFHWSTs, if storage water heater tanks are
representative of UFHWSTs. Commenting more specifically, the CA IOUs
encouraged DOE to consider the thermal losses through uninsulated
ports. (CA IOUs, No. 3 at pp. 1-3)
In contrast to these comments, BWC recommended that DOE maintain
the requirements for UFHWSTs in terms of insulation level, stating that
performance testing for UFHWSTs would be overly burdensome, especially
considering the relatively small and customized nature of the
marketplace. BWC also expressed concerns that a test procedure change,
and ultimately an energy conservation standards change, could have
anti-competitive impacts on the UFHWST market. (BWC, No. 5 at pp. 1-3)
AHRI also recommended maintaining the current prescriptive design
requirement (a minimum insulation requirement of R-12.5), rather than a
performance-based metric, stating that the prescriptive approach is
simpler. (AHRI, No. 6 at p. 2)
As discussed in section II.A of this document, DOE is publishing
this NOPD in satisfaction of the 6-year-lookback review requirement in
EPCA, which requires DOE to evaluate the energy conservation standards
for certain commercial equipment, including UFHWSTs. Under that
provision, DOE must publish either a notice of determination that the
standards do not need to be amended, or a NOPR that includes proposed
amendments to the energy conservation standards (proceeding to a final
rule, as appropriate) every six years. (42 U.S.C. 6313(a)(6)(C)(i))
Because test procedure amendments to adopt a standby loss requirement
were not finalized for UFHWSTs, for this analysis of potential amended
standards, DOE has only considered potential amended standards based on
updating the prescriptive design requirement for insulation R-value.

C. Technological Feasibility

1. General
In evaluating potential amendments to energy conservation
standards, DOE first conducts a market and technology assessment to
survey all current technology options in products on the market and
prototype designs that could improve the efficiency of the products or
equipment that are the subject of the determination. This list of
technology options for consideration is developed in consultation with
manufacturers, design engineers, and other interested parties. DOE then
conducts a screening analysis for the technologies identified, and, as
a first step, 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. See generally 10 CFR 431.4; 10 CFR part 430,
subpart C, appendix A, section 6(c)(3)(i) and 7(b)(1).
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 equipment utility or availability; (3) adverse impacts on
health or safety; and (4) unique-pathway proprietary technologies. See
generally 10 CFR 431.4; 10 CFR part 430, subpart C, appendix A,
sections 6(c)(3)(ii)-(v) and 7(b)(2)-(5). Section IV.A.3 of this
document discusses the results of the screening analysis for UFHWSTs,
particularly the designs DOE considered, those it screened out, and
those that are the basis for the standards considered in this proposed
determination.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered equipment, as part of its analysis, the Department
determines 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 UFHWSTs, using the design parameters for the most
efficient equipment available on the market or in working prototypes.
The max-tech levels that DOE determined for this analysis are described
in section IV.B of this proposed determination.

D. Energy Savings

1. Determination of Savings
For each efficiency level (EL) evaluated, DOE projected energy
savings from application of the EL to the UFHWSTs purchased in the 30-
year period that begins in the assumed year of compliance with the
potential amended standards (2025-2054). The savings are measured over
the entire lifetime of the UFHWSTs purchased in the previous 30-year
period. DOE quantified the energy savings attributable to each EL as
the difference in energy consumption between each standards case and
the no-new-standards case. The no-new-standards case represents a
projection of energy consumption that reflects how the market for
equipment would likely evolve in the absence of amended energy
conservation standards. DOE used a simplified National Impacts Analysis
(NIA) spreadsheet model to estimate national energy savings (NES) from
potential amended or new standards for UFHWSTs. The simplified NIA for
this analysis is to ascertain if potential efficiency improvements for
UFHWSTs meet the required significance of savings described in section
III.D.2 of this document; however, it does not estimate the net present
value (NPV) to the Nation of these savings that is typically performed
as part of the NIA. The simplified NIA spreadsheet model (described in
section IV.F of this document) calculates energy savings in terms of
site energy, which is the energy directly consumed by equipment at the
locations where it is used.
2. Significance of Savings
In determining whether amended standards are needed for covered
equipment addressed by ASHRAE Standard 90.1, DOE must consider whether
such standards would result in significant additional conservation of
energy.\4\ (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C.
6313(a)(6)(A)(ii)(II))
---------------------------------------------------------------------------

\4\ In setting a more-stringent standard for ASHRAE equipment,
DOE must have ``clear and convincing evidence'' that doing so
``would result in significant additional conservation of energy,''
in addition to being technologically feasible and economically
justified. 42 U.S.C. 6313(a)(6)(A)(ii)(II). This language indicates
that Congress had intended for DOE to ensure that, in addition to
the savings from the ASHRAE standards, DOE's standards would yield
additional energy savings that are significant. In DOE's view, this
statutory provision shares the requirement with the statutory
provision applicable to other covered non- ASHRAE equipment that
``significant conservation of energy'' must be present (42 U.S.C.
6295(o)(3)(B); 42 U.S.C. 6316(a)), but it must also be supported
with ``clear and convincing evidence'' to permit DOE to set a more
stringent requirement than ASHRAE.
---------------------------------------------------------------------------

EPCA defines ``energy efficiency'' as the ratio of the useful
output of services from an article of industrial equipment to the
energy use of such article, measured according to the Federal test
procedures. (42 U.S.C. 6311(3)) EPCA defines ``energy use'' as the
quantity of energy directly consumed by an article of industrial
equipment at the point of use, as measured by the Federal test
procedures. (42 U.S.C. 6311(4)) Given this context, DOE relies on site
energy as the appropriate metric for evaluating the significance of
energy savings.

[[Page 30801]]

E. Economic Justification

1. Specific Criteria
As noted previously, EPCA provides seven factors to be considered
in determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The
following sections provide an overview of each of those seven factors.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE typically conducts a manufacturer impact analysis
(MIA). In conducting a MIA, DOE uses an annual cash-flow approach to
compare the quantitative impacts between the no-new-standards and the
amended standards cases. The industry-wide impacts typically 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. However, DOE is not proposing amended standards
for UFHWSTs, and, therefore, this proposed determination would have no
cash-flow impacts on manufacturers. Accordingly, as discussed further
in section IV.G of this document, DOE did not conduct an MIA for this
NOPD.
For individual consumers, measures of economic impact include the
changes in the life-cycle cost (LCC) and payback period (PBP)
associated with new or amended standards. These measures are discussed
further in the following section. For consumers in the aggregate, DOE
also typically calculates the national net present value of the
consumer costs and benefits expected to result from particular
standards. DOE also typically evaluates the impacts of potential
standards on identifiable subgroups of consumers that may be affected
disproportionately by a standard. However, as discussed in section
V.A.2 of this document, due to significant uncertainties regarding the
costs of alterations to doorways and mechanical rooms (which may be
required in certain replacement installations in order to get an UFHWST
to its installation destination if additional insulation thickness
makes the UFHWST too large for existing structures to accommodate) and
the lack of data indicating the likelihood of such alterations being
required, any analysis conducted by DOE regarding the LCC or PBP would
be of limited value because of the lack of data and high degree of
uncertainty of the inputs to those analyses. Therefore, DOE did not
estimate the NPV of consumer costs and benefits.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(II)) DOE typically conducts this comparison in its
LCC and PBP analysis.
The LCC is the sum of the purchase price of equipment (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the equipment. The LCC analysis requires a variety of inputs, such as
equipment prices, energy consumption, energy prices, maintenance and
repair costs, equipment lifetime, and discount rates appropriate for
consumers. 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.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of more-efficient equipment 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. This type of
calculation is known as a ``simple'' payback period because it does not
take into account changes in operating expenses over time or the time
value of money (i.e., the calculation is done at an effective discount
rate of zero percent). Payback periods greater than the life of the
equipment indicate that the increased total installed cost is not
recovered by the reduced operating expenses.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the equipment in the first year of compliance with new or
amended standards. The LCC savings for the considered efficiency levels
are calculated relative to the case that reflects projected market
trends in the absence of new or amended standards. As discussed in
section IV.D of this document, DOE did not conduct an LCC and PBP
analysis for this NOPD because the lack of data and high degree of
uncertainty of the inputs to those analyses meant that the outputs
would be of little value.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for amending 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)) As
discussed in section IV.F of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
In establishing equipment classes and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Because DOE is
not proposing standards for UFHWSTs, the Department has tentatively
concluded that this proposed determination would not reduce the utility
or performance of UFHWSTs.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a proposed standard. (42 U.S.C.
6313(a)(6)(B)(ii)(V)) Because DOE is not proposing standards for
UFHWSTs, DOE did not transmit a copy of its proposed determination to
the Attorney General for anti-competitive review.
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) Because DOE has
tentatively concluded that it lacks clear and convincing evidence that
amended standards for UFHWSTs would result in significant additional
conservation of energy or be economically justified, DOE did not
conduct a utility impact analysis or emissions analysis for this NOPD.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) To
the extent DOE

[[Page 30802]]

identifies any relevant information regarding economic justification
that does not fit into the other categories described previously, DOE
could consider such information under ``other factors.''

IV. Methodology and Discussion of Related Comments

This section addresses DOE's consideration of the statutory factors
and the analyses that DOE has performed for this proposed determination
with regard to UFHWSTs. Separate subsections address each component of
the factors for DOE's consideration, as well as corresponding analyses
to the extent conducted. DOE used a spreadsheet tool to estimate the
impact of potential energy conservation standards. This spreadsheet
uses inputs from the energy use analysis and shipments projections and
calculates a simplified NES expected to result from potential energy
conservation standards.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
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 includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. DOE also conducted structured, detailed interviews with
representative manufacturers. During these interviews, DOE discussed
engineering, manufacturing, procurement, and financial topics to
validate assumptions used in its analyses, and to identify key issues
or concerns. These interviews were conducted under non-disclosure
agreements (NDAs), so DOE does not document these discussions in the
same way that it does public comments in the comment summaries and
DOE's responses throughout the rest of this document.
The subjects addressed in the market and technology assessment for
this proposed determination include: (1) A determination of the scope
and equipment classes; (2) manufacturers and industry structure; (3)
shipments information, (4) market and industry trends, and (5)
technologies or design options that could improve the energy efficiency
of UFHWSTs. The key findings of DOE's market assessment are summarized
in the following subsections.
1. Scope of Coverage and Equipment Classes
In this analysis, DOE relied on the definition of UFHWSTs in 10 CFR
431.102, which defines an UFHWST as a tank used to store water that is
heated externally, and that is industrial equipment. Any equipment
meeting the definition of an UFHWST is included in DOE's scope of
coverage. UFHWSTs are not currently divided into equipment classes
(i.e., there is a single equipment class covering all UFHWSTs).
In the August 2019 RFI, DOE requested comment on whether the
current definition of UFHWSTs requires any revisions, and whether any
sub-category divisions should be added. 84 FR 39220, 39224 (August 9,
2019). In response, BWC generally supported the definition of UFHWSTs
as presented in the August 2019 RFI (i.e., the current regulatory
definition). Similarly, BWC also stated that it does not believe any
subcategory definitions should be created and that there is not an
appropriate way to divide UFHWSTs into separate equipment classes.
(BWC, No. 5 at pp. 1-2) The CA IOUs encouraged DOE to ensure that any
revised definitions of UFHWSTs maintain the current scope of coverage,
and suggested that DOE should not consider establishing new equipment
classes that are not currently available in the market. The CA IOUs
also recommended that equipment class differentiations should be based
on performance- related features that are ``accessible to the layperson
and is based on user operation.'' \5\ (CA IOUs, No. 3 at pp. 1-3)
---------------------------------------------------------------------------

\5\ The terminology ``accessible to the layperson and is based
on user operation'' used by CA IOUs is quoted from a discussion of
product utility written by DOE in the context of differentiating
product classes in a March 12, 2015 notice of proposed rulemaking
for energy conservation standards for residential non- weatherized
gas furnaces and mobile home furnaces. 80 FR 13120, 13137. The full
document is available at: <a href="https://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0032">https://www.regulations.gov/document?D=EERE-2014-BT-STD-0031-0032</a> (Last accessed: July 22,
2020).
---------------------------------------------------------------------------

In this proposed determination, absent any indication that the
scope of UFHWSTs as currently defined would benefit from amendment, DOE
is not proposing any changes to the definition of UFHWSTs. Similarly,
because DOE does not have an indication that capacity or other
performance characteristic justifies a different standard level, and
because commenters did not provide any such indication, DOE is not
proposing to divide UFHWSTs into separate equipment classes in this
NOPD. Therefore, the analysis for this NOPD was conducted for the
existing single equipment class covering all UFHWSTs.
2. Technology Options
In the August 2019 RFI, DOE identified several technology options
that would be expected to improve the efficiency of UFHWSTs. 84 FR
39220, 39225 (August 9, 2019). These technology options were based on
manufacturer equipment literature and publicly- available technical
literature. Specifically, the technologies identified in the August
2019 RFI included the following:

<bullet> Improved insulation R-value
[cir] Increased insulation thickness
[cir] Foam insulation
[cir] Advanced insulation types
[ssquf] Aerogel
[ssquf] Vacuum panels
[ssquf] Inert gas-filled panels
<bullet> Pipe and fitting insulation
<bullet> Greater coverage of tank surface area with foam insulation
(e.g., tank bottom)
3. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial equipment or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial equipment could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on equipment utility or equipment availability. If it
is determined that a technology would have significant adverse impact
on the utility of the equipment to significant subgroups of consumers
or would result in the unavailability of any covered equipment type
with performance characteristics (including reliability), features,
sizes, capacities, and volumes that are substantially the same as
equipment generally available in the United States at the time, it will
not be considered further.
(4) Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further.
(5) Unique-Pathway Proprietary Technologies. If a design option
utilizes

[[Page 30803]]

proprietary technology that represents a unique pathway to achieving a
given efficiency level, that technology will not be considered further.
10 CFR part 430, subpart C, appendix A, sections 6(c)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the listed five criteria, it
will be excluded from further consideration in the engineering
analysis.
a. Screened-Out Technologies
In response to the August 2019 RFI, DOE received several comments
related to the suggested technology options. A.O. Smith stated that the
technologies used to increase the efficiency of UFHWSTs are limited to
changes in installation thickness, location, and materials. (A.O.
Smith, No. 8 at p. 2) BWC stated that many of the technologies listed
would be very difficult to apply to UFHWSTs due to the wide variety of
tank sizes, configurations, and fittings. Additionally, BWC stated that
the majority of the technologies identified would present significant
manufacturability issues due to the variability of tank configurations
and fittings, and that increasing insulation thickness and/or changing
to another insulating solutions could present issues with fittings that
would not occur otherwise. BWC also asserted that the technology
options listed could increase the fragility of tanks, which could cause
difficulties in moving the tanks to their final installation location.
(BWC, No. 5 at p. 2) As discussed in section IV.A of this document, DOE
also conducted interviews with manufacturers. During these interviews,
which were conducted under NDAs, manufacturers made statements similar
to those comments submitted by BWC in response to the August 2019 RFI.
In response to these comments, DOE acknowledges that requiring use
of advanced insulation types (such as vacuum panels or aerogels) could
necessitate an extremely difficult change to the UFHWST manufacturing
process due to the rigid nature of these materials and the high degree
of customization and ports on UFHWSTs. Applying these materials closely
around ports and configuring them to all tank shapes and setups (e.g.,
number of ports, port locations) may not be possible where tight
curvatures would be required and/or due to the high level of
customization of UFHWSTs. Additionally, DOE is not aware of equipment
on the market that incorporate aerogels, vacuum panels, or inert gas-
filled panels at the time of this analysis. Therefore, in the analysis
for this NOPD, DOE did not consider any advanced insulation types as a
technology option to increase the insulation R-value for UFHWSTs.
To explain what technologies are commonly used, BWC stated that
most manufacturers use polyurethane foam to achieve the minimum R-12.5
requirement, although high density fiberglass may be applied in certain
areas where it is difficult to apply foam. (BWC, No. 5 at p. 2)
Relatedly, A.O. Smith stated that certain technology options proposed
by DOE, such as insulation on tank bottoms, would be impractical to
implement because bottom mounted drain connections must be kept
accessible. (A.O. Smith, No. 8 at p. 2) AHRI commented that
technologies such as pipe insulation cannot be pre-configured by the
manufacturer for installation in the field. (AHRI, No. 6 at p. 2)
As suggested by BWC, and supported by DOE's review of publicly-
available manufacturer information, polyurethane foam is the most
commonly used type of insulation for meeting the minimum insulation
requirement, but fiberglass and/or Styrofoam are often used in specific
regions (e.g. tank tops or bottoms, or regions around ports) where
doing so could limit access to ports or be impractical to manufacture.
For its analyses, DOE has estimated energy losses based on tanks being
covered primarily with polyurethane foam, but the agency has also
included several regions with alternative insulation materials.
Therefore, DOE included a minimum amount of insulation around pipes and
fittings in its analysis of baseline equipment, but it did not consider
requiring different insulation materials in these regions. Likewise,
DOE did not consider additional insulation coverage around pipes and
fittings as a technology option for the analysis.
b. Remaining Technologies
Ultimately, after reviewing all of the proposed technologies, DOE
did not screen out improved insulation R-value due to increased
polyurethane foam thickness, so the Department included this as a
design option in the engineering analysis. DOE determined that this
technology option is technologically feasible because it only involves
an increase in thickness of the same insulation material that is
currently commonly used on UFHWSTs, and can be achieved with the same
processes that are currently being used in commercially-available
equipment or working prototypes (e.g., fabricating jackets or foaming).

B. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of UFHWSTs at different
levels of reduced heat loss (``efficiency levels'').\6\ This
relationship serves as the basis for the cost-benefit calculations for
commercial consumers, manufacturers, and the Nation. There are
typically two elements to consider in the engineering analysis; the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and the determination of equipment cost at each efficiency
level (i.e., the ``cost analysis''). In determining the performance of
higher-efficiency equipment, DOE considers technologies and design
option combinations not eliminated by the screening analysis. DOE then
typically estimates the manufacturing production cost (MPC) at the
baseline and the change in MPC associated with reducing the heat loss
of equipment above the baseline, up to the max-tech efficiency level
for each equipment class. The typical output of the engineering
analysis is a set of cost-efficiency ``curves'' that are used in
downstream analyses (i.e., the LCC and PBP analyses and the NIA).
However, for the reasons discussed in IV.B.3 of this document, the cost
analysis was not performed for this NOPD.
---------------------------------------------------------------------------

\6\ While the UFHWSTs standard addresses heat loss through
establishing a minimum level of insulation, for the purpose of this
analysis, the levels of improvement are referred to generally as
``efficiency levels.''
---------------------------------------------------------------------------

1. Efficiency Levels for Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) Relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing equipment (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market, without regard to the specific design
options used to achieve those levels). Using the design-option
approach, the efficiency levels established for the analysis are
determined through detailed engineering calculations and/or computer
simulations of the efficiency improvements resulting from
implementation of specific design

[[Page 30804]]

options that have been identified in the technology assessment. DOE may
also rely on a combination of these two approaches. In this rulemaking,
DOE is adopting a design-option approach because there are very few
models of UFHWSTs currently on the market that are marketed with higher
insulation levels than the current baseline requirement of R-12.5.
Based on its review of publicly-available equipment information and
feedback from manufacturers, DOE had tentatively determined that 2
inches of polyurethane foam insulation is needed to meet the current
insulation requirement, and DOE, therefore, considered this insulation
thickness as the baseline. As discussed in section IV.A.3 of this
document, increased polyurethane foam insulation thickness was the only
technology option that was not screened-out for this analysis, and
thus, DOE considered more-stringent efficiency levels (i.e., increased
R-value) based on varying levels of increased polyurethane foam
thickness.
In response to the August 2019 RFI, AHRI commented that there is a
diminishing return from increasing insulation thickness due to the
increasing heat transfer rate and surface area as the insulation
thickness increases. (AHRI, No. 6 at pp. 1-2) This comment was
supported by individual manufacturers during interviews with DOE.
Manufacturers stated that surface tension decreases as the foam
thickness increases, which results in the foam becoming less stable. To
counter this, less blowing agent is used and the foam becomes denser,
thereby reducing the added insulating benefit per inch of applied
insulation at thicknesses above 3 inches (if foam is applied by being
poured into a form, which is the typical application method for
polyurethane foam on jacketed UFHWSTs). Manufacturers stated that due
to the changing foam density as the insulation thickness increases, the
R-value per inch is expected to diminish as insulation thickness is
increased, especially as thickness increases beyond 3 inches. As a
result, when more than 3 inches of insulation thickness is applied, it
is unclear how much additional R-value could be achieved by continuing
to increase the thickness of the foam of jacketed UFHWSTs. Unjacketed
tanks, which are intended for outdoor installation and may not have the
same space constraints as indoor units, do not have an outer metal
jacket enclosing and protecting the foam. As a result, unjacketed tanks
can be spray-foamed in layers, which reduces the compression of the
foam and mitigates the potential for changes in foam density at
thicknesses above 3 inches. However, all UFHWSTs were considered in a
single equipment class (as discussed in section IV.A.1 of this
document), so the max-tech level for jacketed UFHWSTs was applied for
all UFHWSTs in this analysis. Furthermore, feedback from manufacturers
and DOE's previous knowledge of the UFHWST market indicated that at
least 90 percent of UFHWSTs are jacketed and intended for indoor
installation.
Therefore, DOE expects uncertainty related to the effective R-value
of insulation for insulation thicknesses above 3 inches. Because
thicknesses above 3 inches are not typically used on jacketed UFHWSTs,
the improvement in R-value as insulation thickness increases beyond 3
inches for jacketed tanks is unclear at this time. Therefore, due to
the high level of uncertainty regarding the R-value of foam insulation
with thickness greater than 3 inches, DOE has limited its analysis to
considering only up to 1 additional inch of insulation thickness above
the baseline insulation level of 2 inches, so 3 inches of foam
insulation was considered the max-tech efficiency level for UFHWSTs in
this analysis.
DOE requests data and information related to achievable R-values of
polyurethane foam insulation on jacketed UFHWSTs at thicknesses above 3
inches. DOE also seeks comment on its understanding of the difficulties
associated with applying more than 3 inches of foam to jacketed
UFHWSTs.
DOE also included one intermediate level of added insulation in its
analysis, with 0.5 inch of added insulation above the 2-inch baseline
that results in R-12.5. DOE has assumed for its analysis that
polyurethane foam has an R-value per inch of 6.25 (up to a maximum
thickness of 3 inches). The selected ELs used in the analyses for this
NOPD are shown in Table IV.1.

Table IV.1--Efficiency Levels for Representative UFHWSTs Based on
Increased Insulation
------------------------------------------------------------------------
Insulation thickness R-value of
Efficiency levels (polyurethane foam) insulation
------------------------------------------------------------------------
Baseline--EL0.................. 2 inches............ R-12.5.
EL1............................ 2.5 inches.......... R-15.625.
EL2............................ 3 inches............ R-18.75.
------------------------------------------------------------------------

DOE seeks comment on the considered efficiency levels analyzed for
UFHWSTs. Additionally, DOE seeks comment on its assumption that
polyurethane foam has an R-value per inch of 6.25, up to a maximum
thickness of 3 inches.
2. Representative Equipment for Analysis
For the engineering analysis, DOE analyzed the publicly-available
details, including storage volumes and other critical features, of
UFHWST models available on the market and conducted interviews with
manufacturers under NDAs to determine appropriate representative
equipment to analyze. In response to the August 2019 RFI, several
commenters highlighted the customized and variable nature of the UFHWST
market. (BWC, No. 5 at pp. 1-2; AHRI, No. 6 at p. 2; A.O. Smith, No. 8
at p. 1) BWC stated that it does not believe it is possible to have one
representative volume of UFHWSTs (or more in a reasonable quantity).
BWC also commented that it would be difficult to have a representative
application with associated R-value, ambient conditions, tank setpoint,
and draw patterns for UFHWSTs and suggested that DOE's analysis should
not be overly simplified if it is acknowledged that tank orientation
can affect heat losses. (BWC, No. 5 at pp. 2-3) A.O. Smith recommended
that DOE conduct its analysis using various standard models, but the
agency should keep in mind the customized nature of the UFHWST market.
(A.O. Smith, No. 8 at p. 1)
To account for the wide range of UFHWSTs on the market, DOE chose
several representative baseline units for analysis. As discussed in
section IV.C.1.c of this document, DOE also included several ambient
temperature conditions in its energy use analysis to reflect typical
installation locations (i.e., indoors in mechanical rooms or outdoors
in ``Very Hot'' and ``Hot'' regions). Although UFHWSTs can be installed
horizontally or vertically, DOE used a conservative assumption in its
energy use analysis that water temperature would remain uniformly at
140 [deg]F (as discussed in section IV.C.1.b of this document, DOE did
not consider stratification of water temperatures inside the tank and
assumed that a tank would always be full of hot water). Therefore, DOE
determined that installation orientation would not have a significant
impact on its energy use analysis results, so the Department calculated
estimated standby losses based on all tanks being vertical, because
vertical installations are the most common. The characteristics of
these representative units are listed in Table IV.2.

[[Page 30805]]

Table IV.2--Representative Tank Characteristics
----------------------------------------------------------------------------------------------------------------
Representative dimensions
Representative -------------------------------
Volume range (gal.) volume Diameter
(gal.) Height (in.) (in.)
----------------------------------------------------------------------------------------------------------------
0 to 100........................................................ 50 47 22
101 to 250...................................................... 175 65 28
251 to 500...................................................... 375 72 42
501 to 1000..................................................... 750 141 42
1001 to 2000.................................................... 1500 124 60
2001 to 5000.................................................... 3500 168 84
>5000........................................................... 5000 180 96
----------------------------------------------------------------------------------------------------------------

In response to the August 2019 RFI, BWC stated that most
manufacturers use polyurethane foam to insulate UFHWSTs, although
fiberglass may be used in certain areas or on certain tanks where it is
difficult to apply foam. (BWC, No. 5 at p. 2) As discussed in section
IV.C.1 of this document, in its energy use analysis, DOE divided the
surface area of each tank, at each EL, into several zones and assigned
a representative R-value to each zone depending on the expected
insulation type and thickness. Although most tank surfaces can be
insulated with 2 inches of polyurethane foam, it is not practical to
insulate all surfaces with polyurethane foam due to the insulation
application process or the need to retain access to certain ports. In
particular, it can be difficult to insulate the areas surrounding
fittings, manholes or handholes, and the tops or bottoms of tanks with
polyurethane foam, so DOE accounted for the use of other insulating
materials in those areas. Similarly, certain fittings and ports will
remain uninsulated due to the need to be accessible, situations for
which DOE also accounted in its analysis.
In publicly-available equipment literature, DOE observed that the
typical number of ports on UFHWSTs ranged from 5 to 11. These ports can
include an inlet port, an outlet port, a temperature sensor, a
temperature and pressure relief valve, a drain, a recirculation valve,
one or more ports for anode rods, and other custom fittings. In its
energy use analysis, DOE selected 7 ports as a representative number of
ports. DOE further assumed that a 2-inch-wide ring of fiberglass would
be placed around each port. DOE also included a small area (1.5 inches
in diameter) of uninsulated tank at each port to reflect losses through
adjoining pipes or fittings. Wherever fiberglass was modeled as the
insulation for tanks, the thickness of fiberglass was the same as the
thickness of polyurethane foam on the same tank (which for the analysis
in this NOPD, depends on the EL) because the thickness of insultation
would be uniformly constrained by the outer metal jacketing on most
UFHWSTs. The R-values for each insulation type and at each EL are shown
in Table IV.3.

Table IV.3--Insulation R-Values
----------------------------------------------------------------------------------------------------------------
Effective R-value
Material R-value per -----------------------------------------------
inch EL0 EL1 EL2
----------------------------------------------------------------------------------------------------------------
Polyurethane Foam............................... 6.25 12.5 15.625 18.75
Fiberglass...................................... 3.5 7 8.75 10.5
Bare Tank (free convective heat transfer to air) N/A 0.33 0.33 0.33
----------------------------------------------------------------------------------------------------------------

Based on feedback from manufacturers and its own review of
publicly-available materials, DOE also assumed that the tank tops would
be covered with fiberglass instead of polyurethane foam, and that an
extra maintenance access port (a 6 inch by 4 inch hand hole for tanks
with storage volumes up to 500 gallons, or a 12 inch by 16 inch manhole
for tanks with storage volumes greater than 500 gallons) would be
partially covered with fiberglass and partially bare.
DOE requests comment on the inputs and assumptions used in its
engineering analysis. In particular, DOE requests input on its choice
of representative volumes, its assumptions about the typical coverage
of various insulation materials, and its estimated R-values for each
insulation material at each EL considered.
3. Cost Analysis
The cost analysis portion of the Engineering Analysis is typically
conducted using one or a combination of cost approaches. The selection
of cost approach depends on a suite of factors, including the
availability and reliability of public information, characteristics of
the regulated equipment, and the availability and timeliness of
purchasing the equipment on the market. The cost approaches are
summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles commercially-available equipment, component-by-component, to
develop a detailed bill of materials for the equipment.
<bullet> Catalog teardowns: In lieu of physically deconstructing
equipment, DOE identifies each component using parts diagrams
(available from sources such as manufacturer websites or appliance
repair websites) to develop the bill of materials for the equipment.
<bullet> Price surveys: If a physical or catalog teardown is
infeasible (e.g., for tightly integrated equipment such as fluorescent
lamps, which are infeasible to disassemble and for which parts diagrams
are unavailable), cost-prohibitive, or otherwise impractical (e.g.
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices through distributors or other commercial
channels.
As discussed in section IV.D of this document, DOE did not conduct
a cost

[[Page 30806]]

analysis because DOE did not have the requisite inputs to develop its
LCC model with a degree of certainty that would meet the statute's
``clear and convincing'' evidentiary threshold. DOE likewise did not
expend resources to generate the cost-efficiency curve, as it is
unnecessary without an LCC model to feed into.

C. Energy Use Analysis

As discussed, UFHWSTs store hot water and do not directly consume
fuel or electricity for the purpose of heating water, so any potential
amendments to the standard would reduce standby loss of heat from the
stored water. Further, DOE currently only prescribes a minimum
insulation requirement (as opposed to a minimum efficiency requirement)
for UFHWSTs. Accordingly, the energy use analysis determines the annual
energy consumption of paired water heaters and boilers due to standby
loss of the UFHWSTs and assesses the energy savings potential of
increasing the stringency of the required insulation for UFHWSTs.
1. Tank Thermal Loss Model
For this determination, DOE adapted the thermal loss model
described in the technical support document (TSD) for the commercial
water heating energy conservation standards (ECS) NOPR published in the
Federal Register on May 31, 2016 (81 FR 34440; May 2016 CWH ECS NOPR),
with some modifications to how the tank surface areas are defined.\7\
These modifications were introduced to capture equipment performance
that results from differences in surface insulation thickness over
different areas of tank (i.e., insulation around fittings and access
ports). These differences are described in section IV.C.1.a of this
document.
---------------------------------------------------------------------------

\7\ Available at: <a href="https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016">https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016</a>, section 5.5.3 (Last accessed: April 8, 2020).
[GRAPHIC] [TIFF OMITTED] TP10JN21.013

---------------------------------------------------------------------------
Where:

Qhr, j = The hourly heat loss for the UFHWST for each efficiency
level (EL) j (Btu/hr).
i = The surface area of the cylindrical tank is divided into
different zones each indexed i.
Ai, j = The area of each zone i at each EL j(ft\2\).
Ti = The constant internal water temperature for each tank zone i
([deg]F).
Tamb,z = The ambient air temperature for each climate zone z
([deg]F).
Ri, j = The net R-value of the insulation for each zone i at each EL
j ([deg]Fl[middot]ft\2\[middot]hr/Btu).
a. Tank Surface Area (Ai, j)
As discussed in section IV.B.2 of this document, DOE used a
conservative assumption in its energy use analysis that water
temperature would remain uniformly at 140 [deg]F and did not consider
stratification of water temperatures inside the tank. Therefore,
although tanks can be installed horizontally or vertically, there is no
difference in thermal losses between these configurations, and DOE only
used vertical tanks in its analysis. The UFHWST's total external
surface area was divided into separate zones, where i is the index for
each zone. Zones represent the different areas of an UFHWST that would
have unique insulative values. These zones are described in more detail
in in section IV.B of this document.

ATankTop = When the UFHWST is oriented vertically, this represents
the tank's top surface.
AFittings = Is the sum of all uninsulated areas of the tank's
surface devoted to fittings.
AFittingInsulation = Is the sum of all insulated areas of the tank's
surfacesurrounding the (uninsulated) fittings.
AAccessPort = Is the sum of all insulated areas of the tank's
surface devoted to the tank's cleanout hand hole port or manhole.
ATankWall = When the UFHWST is oriented vertically, this represents
the tank's walls.
ATankBottom = When the UFHWST is oriented vertically, this
represents the tank's bottom surface.
b. Tank Internal Water Temperature (Ti)
For this analysis, DOE assumed that the water inside the UFHWSTs is
at a constant uniform temperature of 140 [deg]F, which is the average
water temperature required by the current Federal test procedures for
storage-type CWH equipment during standby loss testing. See generally
10 CFR 431.106; 10 CFR part 431, subpart G, appendix A, section 6; 10
CFR part 431, subpart G, Appendix B, section 5. Because UFHWSTs serve
the same function as storage-type CWH equipment in standby mode, DOE
expects that similar conditions would be appropriate for UFHWSTs as for
storage-type CWH equipment in standby mode. DOE used a conservative
assumption that internal water temperatures would remain indefinitely
at 140 [deg]F. In reality, the rate of heat loss from a UFHWST would
decrease slowly as the temperature difference between the internal
stored water and the ambient air decreased. However, because this
effect would be minimal, DOE did not consider stratification of water
temperatures inside the tank and assumed that a tank would always be
full of hot water. Therefore, DOE held the temperature T constant
across all tank zones i.
DOE requests comment on the appropriateness of its assumption
regarding the use of a constant internal water temperature of 140
[deg]F.
c. Tank Ambient Temperature (Tamb, z)
Based on feedback from manufacturers during interviews conducted
under NDA, DOE assumed that 90 percent of UFHWSTs would be installed
indoors and that the remaining 10 percent would be installed outdoors.
DOE assumed that all tanks that are installed indoors would have a
constant ambient temperature of 75 [deg]F, which is the average air
temperature required by the current Federal test procedure for storage-
type CWH equipment during standby loss testing. See generally 10 CFR
431.106; 10 CFR part 431, subpart G, appendix A, section 6; 10 CFR part
431, subpart G, Appendix B, section 5.
For the fraction of UFHWSTs that are installed in outdoor, or non-
conditioned, spaces, DOE defined each climate zone (z) and calculated
the monthly average temperatures from Typical Meteorological Year 3
(TMY3) \8\ data for the Building America climate regions 1A, 2A, and
2B.9 10 The temperatures for each region are represented by
the cities in Table IV.4. The monthly regional averages were then
weighted using the regional city populations based on data from 2018
Census.\11\
---------------------------------------------------------------------------

\8\ The TMY data sets hold hourly values of solar radiation and
meteorological elements for a 1-year period. Their intended use is
for computer simulations of solar energy conversion systems and
building systems to facilitate performance comparisons of different
system types, configurations, and locations in the United States and
its territories. Because they represent typical rather than extreme
conditions, they are not suited for designing systems to meet the
worst-case conditions occurring at a location.
\9\ Wilcox, S. and W. Marion, 2008 User's Manual for TMY3 Data
Sets, NREL/TP-581-43156 (April 2008) (Available at: <a href="https://www.nrel.gov/docs/fy08osti/43156.pdf">https://www.nrel.gov/docs/fy08osti/43156.pdf</a>).
\10\ Building America Best Practices Series, Volume 7.3, Guide
to determining climate regions by county 2015 (Available at: <a href="https://www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf">https://www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf</a>).
\11\ U.S. Census Population Estimates by County, as of 2018
(Available at: <a href="https://www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage">https://www.census.gov/data/tables/time-series/demo/popest/2010s-counties-total.html#par_textimage</a>).

[[Page 30807]]

Table IV.4--Climate Zones and Representative Cities
----------------------------------------------------------------------------------------------------------------
TMY location
Climate zone Population Representative city No.
----------------------------------------------------------------------------------------------------------------
1A........................................ 6,208,359 Miami............................... 722020
2A........................................ 38,418,718 Houston............................. 722430
2B........................................ 6,869,283 Phoenix............................. 722780
3A........................................ 43,230,951 Atlanta............................. 722190
3B--CA.................................... 29,951,605 Los Angeles......................... 722950
3B--Non CA................................ 5,546,151 Las Vegas........................... 723677
3C........................................ 8,596,694 San Francisco....................... 724940
4A........................................ 69,154,015 Baltimore........................... 724060
4B........................................ 2,245,023 Albuquerque......................... 723650
4C........................................ 9,696,610 Seattle............................. 727930
5A........................................ 70,727,419 Chicago............................. 725300
5B........................................ 13,119,013 Boulder............................. 724699
6A........................................ 17,705,715 Minneapolis......................... 726580
6B........................................ 2,650,907 Helena.............................. 727720
7......................................... 2,625,239 Duluth.............................. 727450
8......................................... 170,286 Fairbanks........................... 702610
----------------------------------------------------------------------------------------------------------------

While a UFHWST can be installed outdoors anywhere in the Nation,
for this analysis, DOE is using the assumption that these installations
will only occur in the ``Very Hot'' and ``Hot'' regions (Building
America climate zones 1A, 2A, and 2B) where the chance of overnight
freezing is very low.
Table IV.5 shows the fraction of UFHWSTs installed indoors versus
outdoors, and the monthly average ambient temperature values for each
Tamb, z.

Table IV.5--Average Monthly Ambient Temperatures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average temperature for month ([deg]F)
Climate zone/location (z) Location -----------------------------------------------------------------------------------
weight 1 2 3 4 5 6 7 8 9 10 11 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
1A..................................................... 0.012 67 70 71 75 80 82 83 82 81 79 74 69
2B..................................................... 0.075 55 60 63 75 81 93 96 93 87 77 64 53
2A..................................................... 0.013 51 55 61 69 75 81 83 83 80 69 63 55
Indoor................................................. 0.900 75 75 75 75 75 75 75 75 75 75 75 75
--------------------------------------------------------------------------------------------------------------------------------------------------------

DOE requests comment on its assumption regarding the typical
ambient temperatures for UFHWSTs installed indoors and outdoors.
DOE requests comment on its assumption that 10 percent of all
UFHWST would be installed outdoors. DOE requests information on the
typical capacities and R-values of outdoor equipment.
DOE requests comment on its assumption that outdoor installations
would be limited to climate zones 1A, 2A, and 2B. DOE requests
information or data on the fraction of installations that occur within
these, or other, climate zones.
d. R-value of Insulation (Ri, j)
The R-value of each zone i of the UFHWST is defined for each EL j
in the engineering analysis in Table IV.1 and Table IV.3 of section
IV.B of this document.
DOE requests comment on its Tank Thermal Loss Model.
2. Annual Energy Use Due to UFHWST Losses
To calculate the energy used by the boiler attributable to the heat
losses of the UFHWSTs, DOE used the following equation for each EL
listed in Table IV.1 of this document:
[GRAPHIC] [TIFF OMITTED] TP10JN21.014

Where:

EBoilj = The energy by the boiler required to maintain the water
temperature in the UFHWST at the temperature Ti at each EL j, (Btu/
yr),
Qhr, j = hourly heat loss for the UFHWST at each EL j (see section
IV.C.1, (Btu/hr) of this document), and
Boilern = average boiler efficiency (%) in year yr (defined in
section IV.F.2 of this document).
Table IV.6 presents the energy used by the boiler attributable to
the heat losses of the UFHWST at the baseline (EL 0) and each EL by
tank capacity. Table IV.7 presents the resulting energy savings at each
EL above baseline. The representative storage volumes used in this
analysis are discussed in section IV.B.2 of this document.

[[Page 30808]]

Table IV.6--Boiler Energy Use Due to UFHWST Heat Losses in 2025 (MMBtu/yr) \12\
----------------------------------------------------------------------------------------------------------------
Capacity (US gal)
EL ----------------------------------------------------------------------------
50 175 375 750 1500 3500 5000
----------------------------------------------------------------------------------------------------------------
0.................................. 1.76 2.78 4.71 8.59 11.44 21.09 25.27
1.................................. 1.55 2.39 3.97 7.32 9.63 17.45 20.80
2.................................. 1.41 2.13 3.48 6.48 8.42 15.02 17.83
----------------------------------------------------------------------------------------------------------------

Table IV.7--Savings in Boiler Energy Use Due to Reduced UFHWST Heat Losses in 2025 (MMBtu/yr)
----------------------------------------------------------------------------------------------------------------
Capacity (US gal)
EL ----------------------------------------------------------------------------
50 175 375 750 1500 3500 5000
----------------------------------------------------------------------------------------------------------------
1.................................. 0.21 0.39 0.74 1.26 1.81 3.64 4.47
2.................................. 0.35 0.64 1.23 2.10 3.02 6.07 7.44
----------------------------------------------------------------------------------------------------------------

3. Additional Sources of Uncertainty
---------------------------------------------------------------------------

\12\ The projected value for Boiler Efficiency (Boilern) is
0.922 in 2027, see section IV.F.2 of this document for more details.
---------------------------------------------------------------------------

As discussed in section IV.B.2 of this document, the inputs to
DOE's tank thermal loss model were primarily based on publicly-
available information, DOE's previous knowledge of UFHWSTs, and
feedback from manufacturers received during interviews conducted under
NDAs. To validate the model, DOE compared the results produced by the
model to results of testing previously conducted to evaluate the
performance-based test procedure proposed for UFHWSTs in the May 2016
CWH TP NOPR, which was largely based on the standby loss test procedure
for commercial storage water heaters. The proposed test procedure
included a standby loss test that would be conducted as the mean tank
water temperatures decay from 142 [deg]F to 138 [deg]F at a nominal
ambient temperature of 75 [deg]F. 81 FR 28588, 28603 (May 9, 2016).
Standby loss tests were conducted on 17 UFHWSTs with an advertised
insulation level of R-12.5 and storage volumes of 40, 80, or 120
gallons in order to gather data on whether measured standby losses were
consistent with what would be expected from tanks insulated to their
rated and/or advertised insulation levels, to assess the repeatability
and sensitivity of the proposed test procedure, and to gather data on
the potential burden in conducting the testing.
DOE used the same analytical model described in this section to
calculate the expected losses from each of these tanks, using their
measured dimensions and actual number of ports. As discussed, the
internal water temperature (140 [deg]F) and ambient air temperature (75
[deg]F) used for the analytical model were the same as the average
temperatures seen during the physical testing. The same assumptions
about insulation details (e.g., R-values for different materials and
the use of fiberglass around ports) were used as were used for the
baseline (R-12.5) units in DOE's thermal loss model. The average
predicted rate of standby losses for these tanks were 73 percent of the
measured standby losses and ranged from as low as 58 percent of the
measured losses up to 90 percent of the measured losses. Because the
estimated standby losses are significantly lower than the measured
losses, this suggests that DOE's thermal loss model undercounts the
actual standby losses that would occur in the field. Furthermore, the
wide range in calculated standby losses as compared to measured standby
losses indicates that the accuracy of the thermal loss calculations in
predicting the standby losses of a particular model will be somewhat
unpredictable, thereby adding additional uncertainty.
Furthermore, when DOE conducted standby loss tests of UFHWSTs, it
found that tanks with identical storage volumes, dimensions, number of
ports, and nominal insulation levels differed by up to 8.5 percent,
whereas DOE's model would predict the same level of standby losses for
these tanks. This finding suggests that there may be variations in the
extent of R-12.5 coverage between units, even between units from the
same manufacturer. As discussed in section IV.B.2 of this document, it
may not be practical to insulate all surfaces of UFHWSTs with
polyurethane foam due to the nature of the insulation application
process or the need to retain access to certain ports. Differences in
manufacturers' tank designs, manufacturing processes, or their
interpretations of the R-12.5 insulation requirement could lead to
variations in the amount of tank surface area that is actually
insulated with R-12.5. Therefore, tanks that appear to have the same
attributes and insulation may have different levels of standby losses
in the field. This source of potential variation in standby losses
further supports DOE's conclusion that there may be additional sources
of thermal losses that vary between tanks and that are not adequately
captured in its current thermal loss model. This variation also makes
it very difficult for DOE to characterize the representative
performance of a ``baseline'' UFHWST, or the expected performance at
any potential amended standard level, with a high degree of confidence
since there is significant variation in thermal energy losses at a
given efficiency level (R-value) that cannot be readily predicted or
otherwise accounted for in the analysis. Due to these potential
variations in insulation coverage and because DOE has not been able to
verify its thermal loss model against its physical test results, there
is significant uncertainty as to the validity of its energy use
analysis.

D. Life-Cycle Cost and Payback Period Analysis

To determine whether a standard is economically justified, EPCA
requires DOE to consider the economic impact of the standard on
manufacturers and consumers, as well as the savings in operating costs
throughout the estimated average life of the equipment compared to any
increase in price, initial charges, or maintenance expenses of the
equipment likely to result from the standard. (42 U.S.C.
6313(a)(6)(B)(ii)(I)-(II)) The effect of new or amended energy
conservation standards on individual consumers usually involves a
reduction in operating cost and an increase in purchase cost. To
evaluate the economic impacts of potential energy conservation

[[Page 30809]]

standards on individual consumers, in order to determine whether
amended standards would be economically justified, DOE typically uses
the following two metrics:
<bullet> The LCC is the total consumer expense of equipment over
the life of that equipment, consisting of total installed cost
(manufacturer selling price, distribution chain mark-ups, sales tax,
and installation costs) plus operating costs (expenses for energy use,
maintenance, and repair). To compute the operating costs, DOE discounts
future operating costs to the time of purchase and sums them over the
lifetime of the equipment.
<bullet> The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of more-efficient equipment through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE typically measures the change
in LCC relative to the LCC in the no-new-standards case, which reflects
the estimated efficiency distribution of equipment in the absence of
new or amended energy conservation standards. In contrast, the PBP for
a given efficiency level is measured relative to the baseline
equipment.
1. Installation Costs
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment. In response to the
August 2019 RFI, DOE received several comments related to installation
issues associated with UFHWSTs with increased insulation thickness. BWC
and AHRI stated that increasing the size of UFHWSTs by increasing the
thickness of required insulation will lead to difficulties getting
tanks through doorways and to their final locations in existing
mechanical rooms. (BWC, No. 5 at p. 2 and AHRI, No. 6 at p. 2)
AHRI commented that reducing the storage volume of the tank itself
is not a practical option because the most critical design feature of
UFHWSTs is their storage volume. (AHRI, No. 6 at pp. 1-2) AHRI asserted
that the predominant market for UFHWSTs are replacement installations,
and again increased insulation would lead to difficulties with
replacement because of space constraints in existing mechanical rooms.
Additionally, BWC suggested that this could potentially necessitate the
following changes: replacement of one UFHWST with two UFHWSTs, addition
of mechanical rooms, or changes to system configurations. (BWC, No. 5
at p. 2)
Feedback from manufacturer interviews conducted under NDAs also
suggests that manufacturers are very concerned that increases in
overall UFHWST dimensions due to increased insulation thickness could
require modifications to existing doorways or mechanical rooms, in
order to be able to replace existing tanks with a single tank of
similar volume, which would significantly increase installation costs.
In response to these comments from BWC and AHRI, DOE examined some
of the potential installation costs (i.e., widening doorways that lead
to the mechanical room and expanding the mechanical room itself). To
estimate the costs of expanding doorways in order to allow UFHWSTs to
pass through, DOE was able to examine the cost of door removal and
reinstallation using data for exterior and interior door installations
available in the RSMeans 2020 Estimating Handbook Online.\13\ DOE
examined the cost breakdown of installing new fire-rated doorways, both
at 3 to 4-foot, and 6 to 7-foot width ranges, as well as interior
passage doors at these same widths. For these doorway types, DOE did
not use the entire installation values cited in the literature; rather,
DOE only used the portions of the cost associated with the installation
of existing frames and doors. DOE expects that comparable costs would
be required to remove existing doors in a manner where they could be
reinstalled without the need for new equipment, so for this estimate,
the doorway installation cost were doubled to reflect both removal and
reinstallation. Under this scenario, DOE found that door removal and
reinstallation costs could potentially increase the cost of UFHWST
installation by between $280 and $1720 for every doorway requiring
modification. DOE currently has no method of determining the average
number of doorways that a UFHWST would need to pass through during the
course of installation which increases the potential range of
installation costs.
---------------------------------------------------------------------------

\13\ RSMeans Data from Gordian (2020) (Available at: <a href="https://www.rsmeansonline.com/">https://www.rsmeansonline.com/</a>) (Last Accessed: July 20, 2020). For details,
please see the following records: B20301251800: Door, single,
exterior fire door, ``A'' label, B20301252500: Door, double,
exterior fire door, ``A'' label, C10201101600: Door, interior fire
door, B20301251900: Door, double, aluminum, entrance, B20301251200:
Door, single, aluminum, entrance.
---------------------------------------------------------------------------

For this NOPD, DOE was unable to find detailed data characterizing
the costs of restructuring the mechanical room. However, DOE was able
to examine other water- heating rulemakings with equipment with water
storage characteristics where replacement installations could prove
difficult. Specifically, DOE compared the magnitude of difference
between the average, the 95th percentile, and maximum installation
costs for the following baseline equipment as a proxy for potential
customer impacts in extreme cases. DOE also does not currently have
enough data indicating the percentage of UFHWST installations that
could necessitate building modifications to get the UFHWST to its
destination in the mechanical room, if tank dimensions were increased.
However, the results in Table IV.8, while illustrative, are not
exhaustive, and they show that the potential range of increased costs
is significant, particularly for commercial equipment where the range
of potential installation costs can be greater than 50 percent than the
average in some extreme cases. It is expected that these costs would
often be unavoidable because building owners are likely unable to
substitute these tanks with tanks of alternative dimensions or volumes
to meet operational needs and fit in existing spaces.

Table IV.8--Magnitude of Potential Increase in Installation Costs
----------------------------------------------------------------------------------------------------------------
Installation cost ($) Increase over mean (%)
-------------------------------------------------------------------------------
Equipment 95th- 95th-
Mean Percentile Maximum Percentile Maximum
----------------------------------------------------------------------------------------------------------------
Commercial-Duty Gas Storage 812 1,225 2,432 51 199
Water Heater \14\..............
Residential-Duty Commercial Gas 678 1,001 2,088 48 208
Storage Water Heater \15\......
Commercial Electric Storage 1,054 1,325 1,773 26 68
Water Heater \16\..............

[[Page 30810]]

Consumer Gas-fired Storage Water 630 1,375 2,370 118 276
\17\...........................
Consumer Electric Storage Water 288 402 498 40 73
Heaters \18\...................
Consumer Oil-fired Storage Water 1,974 2,283 2,910 16 47
Heaters \19\...................
----------------------------------------------------------------------------------------------------------------

DOE recognizes that increasing installation costs can reduce, or
even eliminate, the future economic consumer benefits from a potential
new standard. Because of this, DOE tentatively agrees with the
commenters that installation costs for certain UFHWST customers could
include the removal and reinstallation of exterior and interior
doorways, and in some extreme cases, it could require the restructuring
of existing mechanical rooms to fit the new replacement equipment if
the dimensions of UFHWSTs are increased. Furthermore, DOE tentatively
agrees with the commenters that a small increase in tank dimensions in
a potential new standards case could potentially disproportionately
increase the installation costs for a fraction of consumers of
replacement equipment. While the fraction of impacted consumers is
uncertain, DOE is certain that there will be some consumers who will
experience these higher installation costs. These higher installation
costs for replacement equipment create uncertainty regarding the
positive economic benefits for a potentially significant fraction of
consumers from an amended standard for UFHWSTs.
---------------------------------------------------------------------------

\14\ U.S. Department of Energy, Energy Efficiency and Renewable
Energy Office, Energy Conservation Standards for Commercial Water
Heating Equipment, NOPR Analytical Spreadsheet: Commercial Water
Heater (CWH) Life Cycle Cost (LCC) and Payback Period Analysis
(April 20, 2016) (Available at: <a href="https://regulations.gov/document/EERE-2014-BT-STD-0042-0013">https://regulations.gov/document/EERE-2014-BT-STD-0042-0013</a>). See worksheet labelled: Forecast Cells.
\15\ Ibid.
\16\ Ibid.
\17\ U.S. Department of Energy, Energy Efficiency and Renewable
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct
Heating Equipment and Water Heaters, 2010-04-06 Final Rule
Analytical Tools (July 1, 2011) (Available at: <a href="https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148">https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148</a>). See: 2010-
03-26 Life Cycle Cost Electric Storage Water Heaters.xlsx.
\18\ U.S. Department of Energy, Energy Efficiency and Renewable
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct
Heating Equipment and Water Heaters, 2010-04-06 Final Rule
Analytical Tools (July 1, 2011) (Available at: <a href="https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148">https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148</a>). See: 2010-
03-26 Life Cycle Cost Gas-fired Storage Water Heaters.xlsx.
\19\ U.S. Department of Energy, Energy Efficiency and Renewable
Energy Office, Energy Efficiency Standards for Pool Heaters, Direct
Heating Equipment and Water Heaters, 2010-04-06 Final Rule
Analytical Tools (July 1, 2011) (Available at: <a href="https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148">https://www.regulations.gov/document?D=EERE-2006-STD-0129-0148</a>). See: 2010-
03-24 Life Cycle Cost Oil-fired Storage Water Heaters.xlsx.
---------------------------------------------------------------------------

DOE requests data and information which can be used to estimate
installation costs of UFHWSTs with modified dimensions.
DOE requests information and data characterizing the types of
buildings where installation difficulties are likely to occur and to
lead to increased installation cost, as well as the frequency with
which such installation problems may arise.
DOE requests information and data characterizing the average
installation costs for UFHWSTs at all different storage volumes.
DOE requests information and data characterizing the circumstances
that would drive the decision to potentially restructure an existing
building spaces, including doorways and mechanical rooms, when
installing a replacement UFHWST. For example, is the decision driven by
a minimum building code requirement for door openings?
2. Annual Energy Consumption
DOE typically determines the annual energy consumption for
equipment at different efficiency levels. DOE's approach to determining
the annual energy consumption of UFHWSTs is described in section IV.C
of this document. In response to the August 2019 RFI, A.O. Smith
suggested that any potential energy savings resulting from changes to
insulation thickness would be small and significantly outweighed by the
costs that would be borne by commercial customers and manufacturers.
(A.O. Smith, No. 8 at p. 2)
As discussed in section V.A.1 of this document, DOE estimates that
amended standards at the max-tech level would result in site energy
savings (i.e., realized at the source of hot water by either a water
heater or hot water supply boiler) of 0.017 quads over 30 years.
However, as discussed in section IV.C.1 of this document, even small
adjustments to several critical inputs to the model could have a large
impact on these results and could significantly alter the findings. For
example, as explained previously, the inputs to the tank thermal loss
model are primarily based on publicly-available data and information
gathered during manufacturer interviews, but as discussed earlier, the
results from this model underestimate losses as compared to those
observed during testing of UFHWSTs that was previously done to evaluate
the test procedure proposed for UFHWSTs in the May 2016 CWH TP NOPR.
These uncertainties would propagate through the cost-benefit analyses
and could potentially significantly reduce the energy savings from
amended standards. Therefore, DOE did not conduct an LCC and PBP
analysis for this NOPD.

E. Shipments Analysis

DOE uses projections of annual equipment shipments to calculate the
national impacts of potential amended or new energy conservation
standards. The shipments model takes an accounting approach in tracking
market shares of each equipment class and the vintage of units in the
stock. Stock accounting uses equipment shipments as inputs to estimate
the age distribution of in-service equipment stocks for all years.
In response to the August 2019 RFI, AHRI stated that it would
provide DOE with 2018 shipments data for UFHWST. (AHRI, No. 6 at p.1)
However, no data were received, so DOE developed its own shipments
estimates based on available data.
To project shipments and equipment stocks for 2025 through the end
of the 30-year analysis period (2054), DOE used a stock accounting
model. Future shipments are calculated based on projections in Annual
Energy Outlook 2021 (AEO 2021) (see section IV.E.3 of this document for
further details). The stock accounting model keeps track of shipments
and calculates replacement shipments based on the expected service
lifetime of UFHWSTs and a Weibull distribution that identifies a
percentage of units still in existence from a prior year that will fail
and need to be replaced in the current year.

[[Page 30811]]

AHRI and A.O. Smith both stated that the UFHWST market is very
small and often customized, and that the predominant market for UFHWSTs
is for replacement equipment. (AHRI, No. 6 at p. 2; A.O. Smith, No. 8
at pp.1) While this may be the case, DOE expects that manufacturers of
this equipment will continue to seek out new markets and that some
equipment will be sold into new construction. Therefore, the Department
developed projections for this market as described in section IV.E.3 of
this document.
DOE's approach begins with an estimate of the current stock of
UFHWSTs. DOE uses an estimate of average UFHWST lifetime to derive the
fraction of the stock that is replaced in each year. DOE then adds an
estimate of new UFHWSTs installed in each year.
1. Stock Estimates
DOE investigated each sector that is presumed to operate UFHWSTs:
Residential, commercial, and industrial. However, DOE was unable to
find clear indicators of how many UFHWST are used by any of these
sectors, so it developed sectoral stock estimates from publicly-
available data, as discussed in the paragraphs that follow.
a. Residential Stock
To estimate the stock of UFHWSTs in the residential sector, DOE
examined the Residential Energy Consumption Survey (RECS) \20\
database. Although RECS does not contain specific fields that indicate
the presence of a UFHWST, nor does RECS catalog specific water heating
technologies, DOE was able to examine the available sample for
buildings that would be likely to contain a UFHWST. DOE assumed that
such a building would be characterized as follows:
---------------------------------------------------------------------------

\20\ Presently the 2015 edition of RECs is the most recent
version. Energy Information Administration (EIA), 2015 Residential
Energy Consumption Survey (RECS) (Available at: <a href="https://www.eia.gov/consumption/residential/">https://www.eia.gov/consumption/residential/</a>) (Last accessed April 4, 2019).
---------------------------------------------------------------------------

<bullet> A building with multiple residences (TYPEHUQ = 4 and 5),
<bullet> where the hot water heater and storage tank are not in the
apartment itself (H20HEATAPT = 2), and
<bullet> where the hot water heater is of a type that is tankless,
or on-demand. (WHEATSZ = 4)
The results of a search of the RECS database using these
assumptions yielded a sample of zero buildings. Based upon these
results, DOE tentatively agrees with AHRI's statement that UFHWST are
primarily installed in industrial/commercial applications (AHRI, No. 6
at p. 2). Accordingly, DOE has tentatively concluded that the quantity
of UFHWST installed in the residential sector is minimal and should not
be considered for the purpose of this determination.
b. Commercial Stock
To estimate the stock of UFHWSTs in the commercial sector, DOE
examined the Commercial Building Energy Consumption Survey (CBECS).\21\
Although CBECS does not contain specific fields that indicate the
presence of a UFHWST, DOE was able to examine the available sample for
buildings that would be likely to contain a UFHWST. DOE assumed that
such a building would be characterized as follows:
---------------------------------------------------------------------------

\21\ Presently, the 2012 edition of CBECs is the most recent
version. Energy Information Administration (EIA), 2012 Commercial
Building Energy Consumption Survey (CBECS) (Available at: <a href="https://www.eia.gov/consumption/commercial/">https://www.eia.gov/consumption/commercial/</a>) (Last accessed April 4, 2019).
---------------------------------------------------------------------------

<bullet> A building with water heating equipment (WTHTEQ = 1), and
<bullet> Where the main heating equipment is boilers inside (or
adjacent to) the building that produce steam or hot water (MAINHT = 3).
The results of a search of the CBECS database using these
assumptions yielded a commercial sample of 325,089 buildings in 2012.
DOE could not find any data specifying the quantity of UFHWSTs per
commercial building, so for this analysis, DOE assumed one UFWHST per
building of all sizes. From this sample DOE also found that 99.2
percent of these buildings use natural gas as their primary energy
source for water heating, with the remaining 0.8 percent of buildings
using district water heating,\22\ electricity, heating oil, or other
fuels. For purpose of this analysis, DOE considered 100 percent of
commercial buildings to use natural gas to heat water.
---------------------------------------------------------------------------

\22\ ``District heating'' is an underground infrastructure asset
where thermal energy is provided to multiple buildings from a
central energy plant or plants. In this context, it would be
operated by local governments.
---------------------------------------------------------------------------

c. Industrial Stock
DOE examined the industrial data source listed in the August 2019
ECS RFI and was not able to determine an appropriate stock sample from
the highly aggregated data available.23 24 DOE understands
that UFHWSTs are used to store potable hot water for human consumption
and washing, not for industrial process water. Therefore, DOE assumed
that the need for hot water storage would be the similar across both
commercial and manufacturing sectors on a per-person basis.
---------------------------------------------------------------------------

\23\ Energy Information Administration (EIA), 2014 Manufacturing
Energy Consumption Survey (MECS) (Available at: <a href="https://www.eia.gov/consumption/manufacturing/data/2014/">https://www.eia.gov/consumption/manufacturing/data/2014/</a>) (Last accessed April 4, 2019).
\24\ Northwest Energy Efficiency Alliance, 2014 Industrial
Facilities Site Assessment: Report & Analytic Results, 2014
(Available at: <a href="https://neea.org/img/documents/2014-industrial-facilities-stock-assessment-final-report.pdf">https://neea.org/img/documents/2014-industrial-facilities-stock-assessment-final-report.pdf</a>) (Last accessed May 3,
2021).
---------------------------------------------------------------------------

To estimate the stock of industrial consumers, DOE used the number
of manufacturing employees from the 2017 census.\25\ DOE first
determined the ratio of UFHWSTs per commercial employee. DOE then used
the ratio of the employee count from the commercial sample described in
section IV.E.1.b of this document over the total number of commercial
employees to represent the number of UFHWSTs in the commercial sector
on a per-employee basis. DOE then applied this ratio to the total
number of manufacturing employees from the 2017 census to produce a
National stock estimate for the industrial sector.
---------------------------------------------------------------------------

\25\ U.S. Census Bureau, All Sectors: Summary Statistics for the
U.S., States, and Selected Geographies: 2017, Table EC1700BASIC,
2017 (Available at: <a href="https://data.census.gov/cedsci/table?q=31-33%3A%20Manufacturing&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&vintage=2017">https://data.census.gov/cedsci/table?q=31-33%3A%20Manufacturing&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&vintage=2017</a>) (Last accessed: March 27, 2020).
---------------------------------------------------------------------------

Table IV.9 presents the estimated stock of UFHWSTs in each sector,
in 2012.

Table IV.9--Estimated UFHWST Stock (2012)
------------------------------------------------------------------------
Number of
Sector units Weight (%)
------------------------------------------------------------------------
Residential................................... 0 0
Commercial.................................... 315,360 82
Industrial.................................... 71,361 18
------------------------------------------------------------------------

DOE requests comments generally regarding its stock analysis for
UFHWSTs.
DOE requests comment regarding its assumption that there would be
only one UFWHST per building.
DOE requests comment regarding its disaggregation of UFHWST stock
by sector.
DOE requests comment on its assumption that UFHWSTs are not used
for industrial process hot water storage.
2. Shipments for Replacement
For this analysis DOE was unable to locate data on average
lifetimes for UFHWSTs, and the Department likewise could not find
primary data indicating average or maximum lifetimes for UFHSWTs. DOE
understands that some of the causes of failure in other hot water
storage tanks include corrosion, sediment build-up, and mechanical

[[Page 30812]]

failures. UFHWSTs are relatively simple equipment when compared to
storage-type water heaters that include heating elements or a fossil-
fuel burner with a storage tank. The simplicity of UFHWSTs would limit
the likelihood of mechanical failure as compared to a storage-type
water heater, but they can still fail due to corrosive or sediment
build-up. Electric storage water heaters that use electric resistance
elements for heating are likewise relatively simple equipment, whereas
gas-fired storage water heaters can be more complex, because they
typically require an ignition system, burner, combustion fans (in some
cases), associated combustion controls, and flue gas venting system.
The mechanical simplicity of electric storage water heaters lends
itself to a failure mode related to the storage tank component of the
water heating package, which would be expected to be analogous to the
typical failure mode for an UFHWST. For this analysis, DOE used the
average lifetime for commercial electric storage water heaters (i.e.,
12 years) as a proxy for UFHWST lifetime. In the TSD for DOE's May 2016
CWH ECS NOPR (81 FR 34440), the average lifetime for commercial
electric hot water storage tanks was estimated to be 12 years. Based on
this average lifetime, DOE assumed an 8 percent per year replacement
rate for UFHWSTs.
DOE requests comment on its assumption of a 12-year lifetime for
UFHWSTs similar to commercial electric hot water storage tanks.
3. Shipments for New Construction
To project shipments of UFHWSTs for new construction, DOE relied on
the trends available from the AEO 2021. DOE used the Commercial
Floorspace and Macro Indicators Employment Manufacturing trends to
project new construction for the commercial and industrial sectors,
respectively.26 27 DOE estimated a saturation rate for each
equipment type using building and equipment stock values. The
saturation rate was applied in each year, yielding shipments to new
buildings.
---------------------------------------------------------------------------

\26\ U.S. Energy Information Administration, Annual Energy
Outlook (2021), Table 22, Commercial Sector Energy Consumption,
Floorspace, Equipment Efficiency, and Distributed Generation
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0</a>).
\27\ U.S. Energy Information Administration, Annual Energy
Outlook (2021), Table 23, Industrial Sector Macroeconomic Indicators
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=34-">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=34-</a> AEO2021&cases=ref2021&sourcekey=0).
---------------------------------------------------------------------------

DOE requests comment on its use of AEO 2021 trends as a scaler to
project shipments to new construction.
4. Estimated Shipments
Table IV.10 presents the estimated UFHWST shipments in selected
years.

Table IV.10--Shipments Results for UFHWSTs (Units)
------------------------------------------------------------------------
Year Shipments
------------------------------------------------------------------------
2025.................................................... 18,292
2030.................................................... 19,240
2040.................................................... 21,244
2050.................................................... 23,208
2060.................................................... 0
------------------------------------------------------------------------

a. Distribution of Shipments by UFHWST Storage Volume
Table IV.11 presents the estimated distribution of UFHWST shipments
by the storage volume ranges specified in section IV.B.2 of this
document. DOE estimated these values through examination of capacity
counts in existing trade literature and DOE's CCMS database. DOE
assumes that this distribution is static and does not change over time.

Table IV.11--Distribution of Shipments by UFHWST Storage Volume (gal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 to 100 101 to 250 251 to 500 501 to 1000 1001 to 2000 2001 to 5000
Capacity Range (percent) (percent) (percent) (percent) (percent) (percent) >5000 (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Share..................... 3 11 23 26 20 16 1
--------------------------------------------------------------------------------------------------------------------------------------------------------

DOE requests comment on its distribution of shipments by storage
volume, and on its assumption that the distribution of shipments by
storage volume does not change over time.
5. Additional Sources of Uncertainty
DOE recognizes that the market for UFHWSTs is a relatively highly
customized and low-volume shipments market. DOE's review of publicly-
available information indicates that annual shipments through 2030 will
be below 20,000 units (see the previous section for additional
details). Additionally, in response to the August 2019 RFI, BWC
submitted a list of over 200 companies which it identified as UFHWST
manufacturers, which underscores the low-volume nature of the UFHWST
industry. (BWC, No. 5 at p.2) DOE reviewed these companies and found
many to be custom fabrication/welding shops or producers of vessels for
niche industry processes such as chemical mixing or fuel storage.
Although most of the manufacturers listed by BWC may theoretically be
capable of manufacturing UFHWSTs, DOE did not find evidence that these
businesses advertise or market UFHWSTs. However, DOE was able to
confirm that some of the companies listed by BWC manufacture UFHWSTs,
and DOE included these manufacturers in its list of UFHWST
manufacturers. In total, DOE has identified 48 UFHWST manufacturers, 37
of which are small domestic manufacturers.
Due to the niche nature of this marketplace, it is difficult to
accurately predict how the market would respond to amended standards
(e.g. whether any manufacturers would face disproportionately high
conversion costs, what changes may result to the distribution of tank
sizes sold, if consumers would select different equipment to meet their
water heating needs, or whether manufacturers might consolidate or exit
the market). These uncertainties may substantially impact the findings
if DOE were to complete a full economic impact analysis of amended
standards for UFHWSTs or estimate the cost-effectiveness of a more-
stringent standard.

F. National Impact Analysis

DOE conducted an NIA that assesses the NES in terms of total site
energy savings that would be expected to result from new or amended
standards at specific efficiency levels. DOE did not assess the net
present value (NPV) of the total costs and benefits experienced by
consumers as part of the NIA because of the lack of an LCC analysis as
previously discussed. DOE calculates the NES for the potential standard
levels considered based on projections of annual equipment shipments,
along with the annual energy consumption from the energy use analysis.
For the present analysis, DOE projected the site energy savings over
the lifetime of UFHWSTs sold from 2025 through 2054.

[[Page 30813]]

DOE evaluates the effects of amended standards at the national
level by comparing a case without such standards (referred to as the
no-new-standards case) with standards-case projections that
characterize the market for each UFHWST class if DOE were to adopt
amended standards at the specified energy efficiency levels for that
class. As discussed in the subsections that follow, this analysis
requires an examination of both the efficiency of the UFHWST, as well
as the efficiency of the appliance supplying heated water to that tank.
1. Energy Efficiency Distribution in the No-New-Standards Case
DOE received limited information regarding the efficiency range of
UFHWSTs distributed in commerce in response to its request for comment
in the August 2019 ECS RFI. BWC stated that it is appropriate to assume
that for this analysis, all UFHWST have R-12.5 insulation (i.e., that
they meet the minimum R-value of 12.5 currently required by ASHRAE
90.1). (BWC, No. 5 at p. 3)
To estimate the fraction of equipment sold at or above the current
standard, DOE examined the counts and R-values of the records in its
Compliance Certification Management System (CCMS) database.\28\ DOE
found that there were a minimal number of designs that related to the
R-value efficiency levels determined in the engineering analysis, as
demonstrated by Table IV.11. However, DOE notes that the data from the
CCMS database is a count of models at a given efficiency and not a
direct reflection of the number of units shipped at that efficiency
level. When weighted as a function of shipments, the data shows that
the vast majority of shipment are at baseline, as shown in Table IV.13.
Consequently, DOE tentatively agrees with the statement from BWC and
for this analysis assumed that almost all UFHWST across all capacities
are at the baseline efficiency level, R-12.5.
---------------------------------------------------------------------------

\28\ See: <a href="https://www.regulations.doe.gov/ccms">https://www.regulations.doe.gov/ccms</a>.

Table IV.12--Fractions of Model Efficiency in CCMS
[% of records]
----------------------------------------------------------------------------------------------------------------
EL 0 EL 1 EL 2
(baseline) -------------------------------
Representative tank volume (gal.) ----------------
R-12.5 R-15.62 R-18.75
----------------------------------------------------------------------------------------------------------------
50.............................................................. 14 2 0
175............................................................. 21 1 0
375............................................................. 20 0 0
750............................................................. 18 0 0
1500............................................................ 21 0 0
3500............................................................ 2 0 0
5000............................................................ 0 0 0
----------------------------------------------------------------------------------------------------------------

Table IV.13--Fraction of Model Efficiencies as a Function of Shipments
[% of records]
----------------------------------------------------------------------------------------------------------------
EL 0 EL 1 EL 2
(baseline) -------------------------------
Representative tank volume (gal.) Weight ----------------
R-12.5 R-15.62 R-18.75
----------------------------------------------------------------------------------------------------------------
50.............................................. 0.03 3 0 0
175............................................. 0.11 10 1 0
375............................................. 0.23 23 0 0
750............................................. 0.26 26 0 0
1500............................................ 0.20 20 0 0
3500............................................ 0.16 16 0 0
5000............................................ 0.01 1 0 0
----------------------------------------------------------------------------------------------------------------

DOE requests comment regarding its applied efficiency distribution
that 99 percent of all units sold are currently at baseline (R-12.5).
2. Hot Water Supply Boiler Efficiency Trend
As stated previously, a potential standard increasing the
insulation rating of UFWHST equipment would reduce thermal losses,
which would in turn reduce the energy used by a building's hot water
supply equipment to provide hot water.\29\ Determining the impact of
reduced UFHWST losses on the connected boiler(s) requires an estimate
of the boiler efficiency. To estimate the efficiency of boiler systems,
DOE used the No-New-Standards Case (EL0) efficiency distribution data
from the May 2016 CWH ECS NOPR \30\ to calculate a single, market-
weighted, average efficiency, which is 84.4 percent in 2016. For years
beyond 2016 and future years through 2050, DOE used the AEO 2021 data
series ``Commercial: Stock Average Efficiency: Water Heating: Natural
Gas: Reference case'' to project the efficiency trend of hot-water
supply boilers.\31\ DOE assumed no increase in boiler efficiency after
2050 (i.e., the end date for the AEO 2021

[[Page 30814]]

analysis). This efficiency trend is shown in Table IV.14.
---------------------------------------------------------------------------

\29\ While there is a wide range of equipment that building
owners can use to produce hot water, for this analysis, DOE assumed
that 100 percent of all hot water is produced by a hot water supply
boiler. See section IV.E.1.b of this document for details.
\30\ Available at: <a href="https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016">https://www.regulations.gov/document?D=EERE-2014-BT-STD-0042-0016</a> (Last accessed: April 8, 2020).
\31\ U.S. Energy Information Administration, Annual Energy
Outlook (2021), Table 22, Commercial Sector Energy Consumption,
Floorspace, Equipment Efficiency, and Distributed Generation
(Available at: <a href="https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0">https://www.eia.gov/outlooks/aeo/data/browser/#/?id=32-AEO2021&cases=ref2021&sourcekey=0</a>) (Last accessed April 23,
2021).

Table IV.14--Average Stock Efficiencies of Hot-Water Supply Boilers from
2025-2050
------------------------------------------------------------------------
Year Efficiency (%)
------------------------------------------------------------------------
2025.................................................... 91.5
2030.................................................... 93.1
2035.................................................... 94.2
2040.................................................... 94.8
2045.................................................... 95.1
2050.................................................... 95.3
------------------------------------------------------------------------

G. Discussion of Other Comments Received

In response to the August 2019 RFI, DOE received several comments
in support of the current efficiency standard. BWC stated that the
current efficiency requirement (a minimum insulation value of R-12.5)
is an appropriate baseline efficiency level. (BWC, No. 5 at p. 2)
Similarly, AHRI recommended that DOE maintain the current minimum
insulation requirement of R-12.5. (AHRI, No. 6 at p. 2) BWC and A.O.
Smith also said that there have not been significant market changes
since their last energy conservation standard change and that a revised
standard would not result in significant energy savings. (BWC, No. 5 at
p. 2; and A.O. Smith, No. 8 at p. 2)
Additionally, BWC submitted comments related to the proposed
manufacturer mark-up and the distribution channels used to characterize
the UFHWST market in the August 2019 RFI. (BWC, No. 5 at p. 2) A.O.
Smith commented that the majority of UFHWSTs are sold as replacement
units and stated that major redesigns of existing product lines are
very uncommon and potentially cost-prohibitive. (A.O. Smith, No. 8 at
p. 2)
As discussed previously, certain economic analyses were not
conducted for this NOPD because it was determined they would be of
limited use due to the lack of data and high degree of uncertainty
regarding the inputs to those analyses. Furthermore, an MIA was also
not conducted because of the lack of ``clear and convincing'' evidence
that amended standards would be economically justified or result in
significant conservation of energy. If DOE later determines that
amended standards are warranted, these comments will be revisited.

V. Analytical Results and Conclusions

The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
UFHWSTs. It addresses the ELs examined by DOE and the projected site
energy savings of each of these levels. As discussed previously,
certain economic analyses were not conducted for this NOPD because it
was determined they would be of limited value due to the lack of data
and high degree of uncertainty of the inputs to those analyses.

A. National Impact Analysis

This section presents DOE's estimates of the site NES that would
result from each of the ELs considered as potential amended standards.
1. Significance of Energy Savings
To estimate the energy savings attributable to potential amended
standards for UFHWSTs, DOE compared their energy consumption under the
no-new-standards case to their anticipated energy consumption under
each EL. The savings are measured over the entire lifetime of equipment
purchased in the 30-year period that begins in the year of anticipated
compliance with amended standards (2025-2054). Table V.1 presents DOE's
projections of the site NES for each EL considered for UFHWSTs. The
savings were calculated using the approach described in section IV.C of
this document.

Table V.1--Cumulative National Energy Savings for UFHWSTs; 30 Years of
Shipments
[2025-2054]
------------------------------------------------------------------------
Efficiency level
---------------------
1 2
------------------------------------------------------------------------
Site Energy (quads)............................... 0.011 0.017
Percent Savings Over Baseline (%)................. 15% 26%
------------------------------------------------------------------------

OMB Circular A-4 \32\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this proposed
determination, DOE undertook a sensitivity analysis using 9 years,
rather than 30 years, of equipment shipments. The choice of a 9-year
period 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.\33\ The review timeframe established in
EPCA is generally not synchronized with the equipment lifetime,
equipment manufacturing cycles, or other factors specific to UFHWSTs.
Thus, such results are presented for informational purposes only and
are not indicative of any change in DOE's analytical methodology. The
NES sensitivity analysis results based on a 9-year analytical period
are presented in Table V.2. The impacts are counted over the lifetime
of UFHWSTs purchased in 2025 through 2033.
---------------------------------------------------------------------------

\32\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (Available at: <a href="https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/">https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/</a>).
\33\ Under 42 U.S.C. 6313(a)(6)(C)(i) and (iv), EPCA requires
DOE to review its standards for covered ASHRAE equipment every 6
years, and it requires a 3-year period after any new standard is
promulgated before compliance is required, except that in no case
may any new standards be required within 6 years of the compliance
date of the previous standards. If DOE makes a determination that
amended standards are not needed, it must conduct a subsequent
review within three years following such a determination. (42 U.S.C.
6313(a)(6)(C)(iii)(II)) Furthermore, if ASHRAE acts to amend ASHRAE
Standard 90.1 for any of the enumerated equipment covered by EPCA,
DOE is triggered to consider and adopt the amended ASHRAE levels,
unless the Department has clear and convincing evidence to support
more-stringent standard levels, which would result in significant
additional energy savings and be technologically feasible and
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE adopts
the amended ASHRAE levels, compliance with amended Federal energy
conservation standards would be required either two or three years
after the effective date of the ASHRAE Standard 90.1 amendments
(depending upon the equipment type in question). However, if DOE
adopts more-stringent standards pursuant to the ASHRAE trigger,
compliance with such standards would be required four years after
publication of a final rule. (42 U.S.C. 6313(a)(6)(D)) As DOE is
evaluating the need to amend the standards, the sensitivity analysis
is based on the review timeframe associated with amended standards.
While adding a 6-year review to the 3-year compliance period adds up
to 9 years, DOE notes that it may undertake reviews at any time
within the 6-year period and that the 3-year compliance date may
yield to the 6-year backstop. A 9-year analysis period may not be
appropriate given the variability that occurs in the timing of
standards reviews and the fact that for some equipment, the
compliance period may be something other than 3 years.

Table V.2--Cumulative National Energy Site Savings for UFHWSTs; 9 Years
of Shipments
[2025-2034]
------------------------------------------------------------------------
Efficiency level
---------------------
1 2
------------------------------------------------------------------------
Site Energy (quads)............................... 0.003 0.005
Percent Savings Over Baseline (%)................. 15% 26%
------------------------------------------------------------------------

2. Net Present Value of Consumer Costs and Benefits
As discussed in section IV.D of this document, increasing the size
of

[[Page 30815]]

UFHWSTs could necessitate alterations to doorways and mechanical rooms
in certain replacement installations in order to get an UFHWST to its
installation destination. Further, due to significant uncertainties
regarding the costs of these alterations and the lack of data
indicating the likelihood of such alterations being required, at this
time, DOE is unable to estimate typical installation costs of UFHWSTs.
Therefore, any analysis conducted by DOE regarding the LCC or PBP would
be of limited value because of the lack of data and high degree of
uncertainty of the inputs to those analyses, and as a result, DOE did
not estimate the NPV of consumer costs and benefits.

B. Proposed Determination

After carefully considering the comments on the August 2019 RFI and
the available data and information, DOE has tentatively determined that
the energy conservation standards for UFHWSTs do not need to be
amended, for the reasons explained in the paragraphs immediately
following. DOE will consider all comments received on this proposed
determination prior to issuing the next document in this rulemaking
proceeding.
EPCA specifies that for any commercial and industrial equipment
addressed under 42 U.S.C. 6313(a)(6)(A)(i), including UFHWSTs, DOE may
prescribe an energy conservation standard more stringent than the level
for such equipment in ASHRAE Standard 90.1 only if ``clear and
convincing evidence'' shows that a more-stringent standard would result
in significant additional conservation of energy and is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i); 42
U.S.C. 6313(a)(6)(A)(ii)(II)) The ``clear and convincing'' evidentiary
threshold applies both when DOE is triggered by ASHRAE action and when
DOE conducts a six-year- lookback rulemaking, with the latter being the
basis for the current proceeding.
Because an analysis of potential cost-effectiveness and energy
savings first require an evaluation of the relevant technology, DOE
first discusses the technological feasibility of amended standards. DOE
then evaluates the energy savings potential and cost-effectiveness of
potential amended standards.
1. Significant Conservation of Energy
EPCA also mandates that DOE consider whether amended energy
conservation standards for UFHWSTs would result in result in
significant additional conservation of energy. (42 U.S.C.
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II))
In the present case, DOE estimates that amended standards for
UFHWST would result in energy savings of 0.011 quads at EL 1 and 0.017
quads at EL 2 (the max-tech level) over a 30-year analysis period
(2025-2054), as realized by the connected hot-water supply boiler.
However, as discussed in section IV.C.3 of this document, DOE has been
unable to validate the results of the thermal loss model used for its
analysis of energy savings, and consequently, there is considerable
uncertainty regarding the accuracy and validity of the projected energy
savings generated by that calculated model. Thus, DOE has tentatively
determined that it lacks clear and convincing evidence that amended
energy conservation standards for UFHWSTs would result in significant
additional conservation of energy. (See results in Table V.1.)
2. Technological Feasibility
EPCA mandates that DOE consider whether amended energy conservation
standards for UFHWSTs would be technologically feasible. (42 U.S.C.
6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE has tentatively
determined that increasing the thickness of insulation by up to 1 inch
would improve the efficiency of UFHWSTs. As discussed in section IV.B.1
of this document, this increase in insulation thickness can be achieved
for jacketed UFHWSTs without resulting in a decrease in the insulative
properties of the foam. However, the potential for a decrease in
insulative value of foam as the thickness increases above 3 inches
thick, which results from changes in foam density, adds uncertainty to
the R-values achievable by higher levels of increased insulation
thicknesses. Increasing the thickness of insulation by up to 1 inch is
achievable with the same insulation processes currently used in
commercially-available jacketed UFHWSTs, and, therefore, would be
technologically feasible. (See section IV.A.3 of this document for
further information.) Hence, DOE has tentatively determined that
amended energy conservation standards for UFHWSTs would be
technologically feasible.
3. Economic Justification
In determining whether a standard is economically justified, the
Secretary must determine whether the benefits of the standard exceed
its burdens, considering to the greatest extent practicable the seven
statutory factors discussed previously (see section II.A of this
document). (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(I)-
(VII))
One of those seven factors is 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 that are likely to result from the
standard. (42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(B)(ii)(II))
This factor is typically assessed using the LCC and PBP analysis, as
well as the NPV. However, as discussed in sections IV.D and V.A.2 of
this document, DOE was unable to calculate the LCC, PBP, and NPV of
amended standards, because significant uncertainties in the inputs to
these analyses would result in significant uncertainties in the
results. Consequently, DOE could not develop economic analyses that
would provide ``clear and convincing'' evidence that amended standards
are economically justified.
4. Summary
Based on the reasons stated in the foregoing discussion, DOE is
proposing to determine that the energy conservation standards for
unfired hot water storage tanks do not need to be amended, having
initially determined that it lacks ``clear and convincing'' evidence
that amended standards would be economically justified or result in
significant additional conservation of energy. DOE will consider and
respond to all comments received on this proposed determination in
issuing any final determination.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

The Office of Management and Budget (OMB) has determined that this
proposed determination does not constitute a ``significant regulatory
action'' under section 3(f) of Executive Order (E.O.) 12866,
``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993).
Accordingly, this action was not subject to review under the Executive
Order by the Office of Information and Regulatory Affairs (OIRA) at
OMB.

B. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, unless the
agency certifies that the rule, if promulgated, will not have a
significant economic impact on a

[[Page 30816]]

substantial number of small entities. As required by E.O. 13272,
``Proper Consideration of Small Entities in Agency Rulemaking,'' 67 FR
53461 (August 16, 2002), DOE published procedures and policies on
February 19, 2003, to ensure that the potential impacts of its rules on
small entities are properly considered during the rulemaking process.
68 FR 7990. DOE has made its procedures and policies available on the
Office of the General Counsel's website (<a href="http://energy.gov/gc/office-general-counsel">http://energy.gov/gc/office-general-counsel</a>).
The Small Business Administration (SBA) considers a business entity
to be a small business, if, together with its affiliates, it employs
less than a threshold number of workers specified in 13 CFR part 121.
The size standards and codes are established by the 2017 North American
Industry Classification System (NAICS).
Unfired hot water storage tank manufacturers are classified under
NAICS code 333318, ``Other Commercial and Service Industry Machinery
Manufacturing.'' The SBA sets a threshold of 1,000 employees or fewer
for an entity to be considered as a small business in this category.
DOE has conducted a focused inquiry into small business manufacturers
of the equipment covered by this rulemaking. The Department used
available public information to identify potential small manufacturers.
DOE accessed the Compliance Certification Database \34\ to create a
list of companies that import or otherwise manufacture the unfired hot
water storage tanks covered by this proposal. Using these sources, DOE
identified a total of 48 distinct manufacturers of unfired hot water
storage tanks. Of these manufacturers, DOE identified 37 manufacturers
that are potential small businesses.
---------------------------------------------------------------------------

\34\ U.S. Department of Energy Compliance Certification
Management System, available at: <a href="https://www.regulations.doe.gov/ccms">https://www.regulations.doe.gov/ccms</a>.
---------------------------------------------------------------------------

DOE reviewed this proposed determination under the provisions of
the Regulatory Flexibility Act and the policies and procedures
published on February 19, 2003. Because DOE is proposing not to amend
standards for UFHWSTs, if adopted, the determination would not amend
any energy conservation standards. On the basis of the foregoing, DOE
certifies that the proposed determination, if adopted, would not have a
``significant economic impact on a substantial number of small
entities.'' Accordingly, DOE has not prepared an IRFA for this proposed
determination. DOE will transmit this certification and supporting
statement of factual basis to the Chief Counsel for Advocacy of the
Small Business Administration for review under 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

This proposed determination, which proposes to determine that
amended energy conservation standards for UFHWSTs are unneeded under
the applicable statutory criteria, would impose no new informational or
recordkeeping requirements. Accordingly, OMB clearance is not required
under the Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)

D. Review Under the National Environmental Policy Act of 1969

DOE is analyzing this proposed action in accordance with the
National Environmental Policy Act of 1969 (NEPA) and DOE's NEPA
implementing regulations (10 CFR part 1021). DOE's regulations include
a categorical exclusion for actions which are interpretations or
rulings with respect to existing regulations. 10 CFR part 1021, subpart
D, appendix A4. DOE anticipates that this action qualifies for
categorical exclusion A4 because it is an interpretation or ruling in
regard to an existing regulation and otherwise meets the requirements
for application of a categorical exclusion. See 10 CFR 1021.410. DOE
will complete its NEPA review before issuing the final action.

E. Review Under Executive Order 13132

E.O. 13132, ``Federalism,'' 64 FR 43255 (August 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have Federalism
implications. The Executive Order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive Order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have Federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this proposed determination
and has tentatively determined that it would not have a substantial
direct effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. EPCA governs
and prescribes Federal preemption of State regulations as to energy
conservation for the equipment that is the subject of this proposed
determination. States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA.
(See 42 U.S.C. 6316(a) and (b); 42 U.S.C. 6297) As this proposed
determination would not amend the standards for UFHWSTs, there is no
impact on the policymaking discretion of the States. Therefore, no
action is required by E.O. 13132.

F. Review Under Executive Order 12988

With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements: (1) Eliminate drafting errors and
ambiguity; (2) write regulations to minimize litigation; (3) provide a
clear legal standard for affected conduct rather than a general
standard, and (4) promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that Executive
agencies make every reasonable effort to ensure that the regulation:
(1) Clearly specifies the preemptive effect, if any; (2) clearly
specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms, and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires Executive agencies to review regulations
in light of applicable standards in section 3(a) and section 3(b) to
determine whether they are met, or it is unreasonable to meet one or
more of them. DOE has completed the required review and determined
that, to the extent permitted by law, this proposed determination meets
the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a

[[Page 30817]]

proposed regulatory action likely to result in a rule that may cause
the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
<a href="https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf">https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf</a>.
DOE examined this proposed determination according to UMRA and its
statement of policy and determined that the proposed determination does
not contain a Federal intergovernmental mandate, nor is it expected to
require expenditures of $100 million or more in any one year by State,
local, and Tribal governments, in the aggregate, or by the private
sector. As a result, the analytical requirements of UMRA do not apply.

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

Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This proposed determination would not have any impact on the autonomy
or integrity of the family as an institution. Accordingly, DOE has
concluded that it is not necessary to prepare a Family Policymaking
Assessment.

I. Review Under Executive Order 12630

Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
15, 1988), DOE has determined that this proposed determination would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.

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

Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review
most disseminations of information to the public under information
quality guidelines established by each agency pursuant to general
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446
(Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at: <a href="https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf">https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf</a>. DOE has
reviewed this NOPD under the OMB and DOE guidelines and has concluded
that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211

E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any proposed significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor Executive Order; and (2) is
likely to have a significant adverse effect on the supply,
distribution, or use of energy, or (3) is designated by the
Administrator of OIRA as a significant energy action. For any proposed
significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the
proposal be implemented, and of reasonable alternatives to the action
and their expected benefits on energy supply, distribution, and use.
This proposed determination, which does not propose to amend energy
conservation standards for UFHWSTs, is not a significant regulatory
action under Executive Order 12866. Moreover, it would not have a
significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as a significant energy action by
the Administrator at OIRA. Therefore, it is not a significant energy
action, and accordingly, DOE has not prepared a Statement of Energy
Effects.

L. Review Under the Information Quality Bulletin for Peer Review

On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' Id. at 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and has prepared Peer Review report pertaining
to the energy conservation standards rulemaking analyses.\35\
Generation of this report involved a rigorous, formal, and documented
evaluation using objective criteria and qualified and independent
reviewers to make a judgment as to the technical/scientific/business
merit, the actual or anticipated results, and the productivity and
management effectiveness of programs and/or projects. DOE has
determined that the peer-reviewed analytical process continues to
reflect current practice, and the Department followed that process for
considering amended energy conservation standards in the case of the
present action.
---------------------------------------------------------------------------

\35\ ``Energy Conservation Standards Rulemaking Peer Review
Report'' (2007) (Available at: <a href="https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-">https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-</a>
report-0).
---------------------------------------------------------------------------

VII. Public Participation

A. Participation in the Webinar

The time and date of the webinar are listed in the DATES section at
the beginning of this document. Webinar registration information,
participant instructions, and information about the capabilities
available to webinar participants will be published on DOE's

[[Page 30818]]

website: <a href="https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=36&action=viewlive">https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=36&action=viewlive</a>. Participants are
responsible for ensuring their systems are compatible with the webinar
software.

B. Procedure for Submitting Prepared General Statements for
Distribution

Any person who has an interest in the topics addressed in this
proposed rulemaking, or who is representative of a group or class of
persons that has an interest in these issues, may request an
opportunity to make an oral presentation at the webinar. Such persons
may submit requests to speak by email to the Appliance and Equipment
Standards Program, <a href="/cdn-cgi/l/email-protection#b7f6c7c7dbded6d9d4d2e4c3d6d9d3d6c5d3c4e6c2d2c4c3ded8d9c4f7d2d299d3d8d299d0d8c1">[email&#160;protected]</a>. Persons who
wish to speak should include with their request a computer file in
WordPerfect, Microsoft Word, PDF, or text (ASCII) file format that
briefly describes the nature of their interest in this rulemaking and
the topics they wish to discuss. Such persons should also provide a
daytime telephone number where they can be reached.
Persons requesting to speak should briefly describe the nature of
their interest in this proposed determination and provide a telephone
number for contact. DOE requests persons selected to make an oral
presentation to submit an advance copy of their statements at least two
weeks before the webinar. At its discretion, DOE may permit persons who
cannot supply an advance copy of their statement to participate, if
those persons have made advance alternative arrangements with the
Building Technologies Office. As necessary, requests to give an oral
presentation should ask for such alternative arrangements.

C. Conduct of the Webinar

DOE will designate a DOE official to preside at the webinar and may
also use a professional facilitator to aid discussion. The meeting will
not be a judicial or evidentiary-type public hearing, but DOE will
conduct it in accordance with section 336 of EPCA (42 U.S.C. 6306). A
court reporter will be present to record the proceedings and prepare a
transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the webinar. There shall not be discussion of proprietary information,
costs or prices, market share, or other commercial matters regulated by
U.S. anti-trust laws. After the webinar and until the end of the
comment period, interested parties may submit further comments on the
proceedings and any aspect of the proposed determination.
The webinar will be conducted in an informal, conference style. DOE
will present summaries of comments received before the webinar, allow
time for prepared general statements by participants, and encourage all
interested parties to share their views on issues affecting this
proposed determination. Each participant will be allowed to make a
general statement (within time limits determined by DOE), before the
discussion of specific topics. DOE will permit, as time permits, other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this proposed determination. The official
conducting the webinar will accept additional comments or questions
from those attending, as time permits. The presiding official will
announce any further procedural rules or modification of the above
procedures that may be needed for the proper conduct of the webinar.
A transcript of the webinar will be included in the docket, which
can be viewed as described in the Docket section at the beginning of
this NOPD. In addition, any person may buy a copy of the transcript
from the transcribing reporter.

D. Submission of Comments

DOE will accept comments, data, and information regarding this
proposed determination no later than the date provided in the DATES
section at the beginning of this proposed determination. Interested
parties may submit comments, data, and other information using any of
the methods described in the ADDRESSES section at the beginning of this
document.
Submitting comments via <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The <a href="https://www.regulations.gov">https://www.regulations.gov</a> web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to <a href="https://www.regulations.gov">https://www.regulations.gov</a> information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
<a href="https://www.regulations.gov">https://www.regulations.gov</a> cannot be claimed as CBI. Comments received
through the website will waive any CBI claims for the information
submitted. For information on submitting CBI, see the Confidential
Business Information section.
DOE processes submissions made through <a href="https://www.regulations.gov">https://www.regulations.gov</a>
before posting. Normally, comments will be posted within a few days of
being submitted. However, if large volumes of comments are being
processed simultaneously, your comment may not be viewable for up to
several weeks. Please keep the comment tracking number that <a href="https://www.regulations.gov">https://www.regulations.gov</a> provides after you have successfully uploaded your
comment.
Submitting comments via email. Comments and documents submitted via
email also will be posted to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you do not
want your personal contact information to be publicly viewable, do not
include it in your comment or any accompanying documents. Instead,
provide your contact information in a cover letter. Include your first
and last names, email address, telephone number, and optional mailing
address. With this instruction followed, the cover letter will not be
publicly viewable as long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. No telefacsimiles (faxes) will
be accepted.
Comments, data, and other information submitted to DOE

[[Page 30819]]

electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email two well-marked copies: One copy of the document marked
``confidential'' including all the information believed to be
confidential, and one copy of the document marked ``non-confidential''
with the information believed to be confidential deleted. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

Although DOE welcomes comments on any aspect of this proposed
determination, DOE is particularly interested in receiving comments and
views of interested parties concerning the following issues:
(1) DOE requests data and information related to achievable R-
values of polyurethane foam insulation on jacketed UFHWSTs at
thicknesses above 3 inches. DOE also seeks comment on its understanding
of the difficulties associated with applying more than 3 inches of foam
to jacketed UFHWSTs.
(2) DOE seeks comment on the considered efficiency levels analyzed
for UFHWSTs. Additionally, DOE seeks comment on its assumption that
polyurethane foam has an R-value per inch of 6.25, up to a maximum
thickness of 3 inches.
(3) DOE requests comment on the inputs and assumptions used in its
engineering analysis. In particular, DOE requests input on its choice
of representative volumes, its assumptions about the typical coverage
of various insulation materials, and its estimated R-values for each
insulation material at each EL considered.
(4) DOE requests comment on the appropriateness of its assumption
regarding the use of a constant internal water temperature of 140
[deg]F.
(5) DOE requests comment on its assumption regarding the typical
ambient temperatures for UFHWSTs installed indoors and outdoors.
(6) DOE requests comment on its assumption that 10 percent of all
UFHWST would be installed outdoors. DOE requests information on the
typical capacities and R-values of outdoor equipment.
(7) DOE requests comment on its assumption that outdoor
installations would be limited to climate zones 1A, 2A, and 2B. DOE
requests information or data on the fraction of installations that
occur within these, or other, climate zones.
(8) DOE requests comment on its Tank Thermal Loss Model.
(9) DOE requests data and information which can be used to estimate
installation costs of UFHWSTs with modified dimensions.
(10) DOE requests information and data characterizing the types of
buildings where installation difficulties are likely to occur and to
lead to increased installation cost, as well as the frequency with
which such installation problems may arise.
(11) DOE requests information and data characterizing the average
installation costs for UFHWSTs at all different storage volumes.
(12) DOE requests information and data characterizing the
circumstances that would drive the decision to potentially restructure
existing building spaces, including doorways and mechanical rooms, when
installing a replacement UFHWST. For example, is the decision driven by
a minimum building code requirement for door openings?
(13) DOE requests comments generally regarding its stock analysis
for UFHWSTs.
(14) DOE requests comment regarding its assumption that there would
be only one UFWHST per building.
(15) DOE requests comment regarding its disaggregation of UFHWST
stock by sector.
(16) DOE requests comment on its assumption that UFHWSTs are not
used for industrial process hot water storage.
(17) DOE requests comment on its assumption of a 12-year lifetime
for UFHWSTs similar to commercial electric hot water storage tanks.
(18) DOE requests comment on its use of AEO 2021 trends as a scaler
to project shipments to new construction.
(19) DOE requests comment on its distribution of shipments by
storage volume, and on its assumption that the distribution of
shipments by storage volume does not change over time.
(20) DOE requests comment regarding its applied efficiency
distribution that 99 percent of all units sold are currently at
baseline (R-12.5).

VIII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of this
notification of proposed determination.

Signing Authority

This document of the Department of Energy was signed on June 3,
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary
and Acting Assistant Secretary for Energy Efficiency and Renewable
Energy, pursuant to delegated authority from the Secretary of Energy.
That document with the original signature and date is maintained by
DOE. For administrative purposes only, and in compliance with
requirements of the Office of the Federal Register, the undersigned DOE
Federal Register Liaison Officer has been authorized to sign and submit
the document in electronic format for publication, as an official
document of the Department of Energy. This administrative process in no
way alters the legal effect of this document upon publication in the
Federal Register.

Signed in Washington, DC, on June 3, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2021-11957 Filed 6-9-21; 8:45 am]
BILLING CODE 6450-01-P

</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on June 10, 2021.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.