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Regulatory Environment: Efficiency Issues

The efficiency standards set for today's water heating equipment trace their roots to the Energy Policy and Conservation Act (EPCA) of 1975. The 1975 act came about during the energy crisis of the 70s and in reaction to several state appliance efficiency programs. EPCA established a federal energy conservation program for major household appliances and called for setting efficiency targets. Little progress was made toward that end through EPCA, however, the act did set the stage for later legislation.

EPCA led to the National Energy Conservation and Policy Act (NECPA) of 1978, which authorized the DOE to set energy efficiency standards for 13 household appliances and products. The National Appliance Energy Conservation Act (NAECA) followed in 1987. NAECA provided a schedule for regular updates of efficiency standards and established that these standards would supersede state requirements.

The Energy Policy Act of 1992 (EPAct) soon followed NAECA and was the broadest and most extensive energy legislation enacted since the 1970s. Its goal was to reduce demand for and dependence on imported oil and improve air quality. Among its many provisions, the act mandated higher energy-efficiency standards for appliances, plumbing equipment and buildings.

In 2005, Congress enacted EPAct 2005, its first effort to address U.S. energy policy since the Energy Policy Act of 1992. Among its over 1700 pages of law, EPAct 2005 included numerous provisions to increase the supply of and reduce the demand for fossil fuels and electricity, encourage the development and commercialization of alternative energies and technologies, and provide tax incentives for energy conservation in both residential and commercial buildings.

Currently, the DOE specifies minimum acceptable efficiency standards for a variety of water heating equipment as specified in the following chart. Rather than Energy Factor (EF), commercial water heating equipment efficiency is specified in terms of thermal efficiency (ET) and maximum allowable standby loss (S). The required maximum standby loss varies by tank size. For a typical tank size of 120 gallons, the maximum allowable standby losses are 1103 Btu/h for gas and 403 Btu/h for electric.

Water Heater Efficiencies

Source: U.S. Department of Energy, 2006 Buildings Energy Data Book
U.S. Department of Energy - Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment

The thermal efficiency of pool heaters is measured according to the American National Standards Institute (ANSI) standard Z21.56-2001. Booster water heaters are tested against ANSI Z21.10.3-1998, unless otherwise requested by the manufacturer. There is dispute among the DOE, the California Energy Commission and GAMA (an association of appliance and equipment manufacturers) regarding the appropriateness of the ANSI procedures vs. ASTM's (formerly American Society for Testing and Materials) more recently adopted Standard Test Method for Performance of Booster Heaters (F2022-00).

It should be noted that DOE's minimum efficiency standards are not a yardstick for comparing various energy types. In setting its minimum efficiency standards, DOE surveys the marketplace to determine what efficiency levels are practicable and realistic, given the available technologies. Additionally, organizations such as the American Gas Association (AGA), Gas Technology Institute (GTI), GAMA and other stakeholders form alliances and work tirelessly to ensure that DOE's proposed energy efficiency standards are cost effective and fair.

Despite the apparent higher efficiencies of electric equipment over natural gas and oil equipment, especially storage water heaters, it is inappropriate to compare water heaters based only on the Energy Factor (EF) or Thermal Efficiency (ET). A more accurate measure when comparing different fuel choices is operating cost–typically natural gas water heaters heat water for less than one-half the cost of electric water heaters–and life-cycle cost which can be determined using tools designed for such comparisons. (Click here for Gas-Fired Heater Screening Tool)

In addition to its authority to mandate minimum efficiency standards for appliances, the DOE has several other tools at its disposal to encourage the use of more efficient appliances. Among these are the Energy Star program and tax incentives incorporated in EPAct 2005.