New minimum energy-efficiency standards go into effect for nearly all residential gas and electric water heaters on April 16, 2015. The set of rigorous rules are the third generation of standards the U.S. Department of Energy (DOE) has issued for the equipment under the National Appliance Energy Conservation Act of 1987 (NAECA).

While the new efficiency standards do not require manufacturers to use any specific technologies to achieve the new EF (energy factor) ratings, they’ve already necessitated a significant redesign effort from manufacturers. Additionally, the increasing unit sizes pose transportation and installation challenges that have yet to be fully understood.

Changing the Water Heater Landscape

To comply with the new standards, which were finalized in April 2010, many water heater manufacturers have already introduced all-new equipment offerings.

“For Rheem, it’s affecting our entire residential water heater platform, both on the gas and electric sides. We’ve had major redesign efforts, and we will soon offer new gas and electric products,” said Karen Meyers, vice president of government affairs, Rheem Mfg. Co. “The minimum efficiency standards are requiring the use of new technologies. So, on the gas side, for units over 55 gallons, manufacturers will employ new technologies and design approaches, including additional insulation, new tank sizes, and advanced electronics. On the large volume electric side, heat pump technology really must be used to meet the new standards.”

Ralph Perez, director of residential product management, A.O. Smith Corp., said water heaters adhering to the new minimum energy-efficiency guidelines will generally be taller, wider, and more technologically advanced than ever before.

“Electric water heaters over 55 gallons in capacity must use heat pump water-heating technology, and certain gas water heaters over 55 gallons in capacity will need to incorporate high-efficiency condensing technology,” Perez said. “To accommodate the technology and additional insulation needed to meet the 2015 standards, some units will be larger, both in height and diameter.”

Size and Installation Challenges

The size difference is likely to be the most challenging aspect for installers and wholesalers.

“The height of a new unit with the same gallon capacity as an existing unit may be 2 or more inches taller; the diameter of a new unit that has the same gallon capacity as an existing unit may be 2 or more inches wider; and, for units under 55 gallons, add a minimum of 3 or more inches when planning the space,” Perez said.

For retrofit installations where space is at a premium, like in apartments and condominiums, even a few inches can make all the difference in the world.

“That affects the wholesaler and the contractor when they’re installing what used to be a certain-size heater, especially in the cases where there is limited space,” said Chad Sanborn, product marketing manager, Bradford White Water Heaters.

“Builders are trying to squeeze every inch of space, so they’re accommodating for the old models. So, the consumer may be faced with the decision to use a smaller-capacity water heater. It’s going to be very impactful for some people.”

Chuck White, vice president of code and technical services, Plumbing-Heating-Cooling Contractors Association (PHCC), said the organization has been working hard to inform installers of the equipment changes and the challenges they may pose.

“There are many areas of the country with higher population densities where customers have a water heater in basically a utility closet, and it may be side-by-side with the furnace, so, they’re asking, ‘What do we tell folks when that happens and the new water heater is wider and taller?’ It could present installation problems,” White said. “A lot of contractors who do new construction have been talking to owners and designers to make them aware of what we used to use for utility closets, and that this water heater may be somewhat larger, which is going to have to
be considered.”

“Contractors who do new construction work should start discussing these changes with their clients now,” Perez advised. “That way, everyone is thinking about how future projects and planning budgets are designed and funded to accommodate the 2015 product choices. There will be a transition period, but, ultimately, it is much easier and more cost-effective to design for different equipment in new construction simply because one is starting with a blank canvas.

“Regarding the replacement market, there are more significant accommodations to consider,” he continued. “In many cases, new products will replace the previous products with very few adjustments. However, there are some cases where a new technology must be considered. In general, contractors should become aware of the new products and technologies so they can accurately recommend the proper product to their customer bases.”

Storage and Transportation Concerns

Transportation and storage will also be impacted by the size of the new water heaters.

“The industry’s looking at using more steel and more insulation, which means fewer units on a truck and fewer in the warehouse,” Perez said.

“A lot of the contractors have been looking at their warehousing space,” White said. “Some buy larger quantities so they don’t have to run to the supply house. They’re evaluating their storage capabilities.”

Carl Pinto, director of marketing, Bradford White, said some wholesalers or contractors may even need to change vehicles in order to fit the new units inside.

“Those heat pump water heaters are traditionally anywhere from 8-15 inches taller than their electric counterparts,” he explained. “It’s going to be about a foot taller. Ours can be laid down, but not all of them can.”

“We’re shipping a truckload of heaters today to a wholesaler,” Sanborn said. “If we had to ship a same-sized NAECA-compliant model of water heater after April, there’d fewer units on that truck. So, the shipping cost per unit goes up. From a contractor/wholesaler standpoint, bigger trucks may be needed. They can’t be laid down, so they need to be stood up. The vans or small trucks may need to be upsized.”

Cost to Comply

Though the standards aren’t yet in effect, manufacturers have already invested significant time and money in retooling, hiring, and training.

“There’s been a considerable amount of research and development involved with this to make sure Bradford White can meet those standards in a way that is least disruptive to the industry,” Pinto said. “While the government set the standards, it didn’t set the means by which we can meet the standards. We looked at the required EF numbers and developed technologies and modified products to reach those numbers. To do that in a way that was going to make the transition easy for the customers, we got transportation, storage, and installation involved. There was new tooling and new equipment required at our factory, and we had to hire additional people to develop some of these technologies. There has been a substantial investment across the company to meet the new standards.”

“The NAECA energy-efficiency standards have prompted the entire water heater industry to look at aspects of their business — from product development and manufacturing to distribution,” Perez said. “A.O. Smith may be better positioned than some due to the fact that so many of our high-efficiency water heaters already meet and surpass the new standards. Still, there are changes to be made; our manufacturing plants have been retooled, product literature is being updated, and efforts to educate our contracting partners are underway.”

Rheem has invested millions of dollars on the new platform design and on trying to address the new standards, Meyers said.

“We will soon start rolling those new platforms out to our customers,” she said.

“From that standpoint, it’s been exciting, and it has been ‘all hands on deck’ to develop these new products. When you think about water heaters, there are many different sizes and configurations you have to re-engineer to meet the federal minimum efficiency standards. It’s not just one product we have to redesign — it’s hundreds of models that have to be reconfigured, tested, and certified, and we have to take a lot more into consideration, such as replacement ability and logistical issues. We’re also taking into account feedback from our customers about what they’d like to see in our new products and factoring in things like improving installability, serviceability, and performance.”

Pinto said Bradford White supports the development of technology that saves energy and drives technological advancements, though the new standards have still been a disruption to the industry.

“Sometimes, when these decisions are made, they’re not always made with the full understanding of the ramifications to the manufacturers and installers,” Pinto said. “There will be a lot of customers who will see a disruption. The transition is certainly going to be somewhat of a challenge, hence all the educational effort we’ve been putting forth. It’s important for manufacturers and government agencies to continue to work together to make sure we’re continuing to improve upon products’ performances.”

Many in the industry are also frustrated with the DOE’s rulemaking processes regarding the test procedures for residential water heaters.

“The test procedure did need to change, and we’re supportive of some of those changes, but not all of them,” Meyers said. “And, regarding the timing — it should’ve either come out several years before, so we could’ve designed the products for that, or it should’ve come out years later, so we had time to focus on one or the other. It’s not effective until July, but, still, you know, it’s coming, and you don’t want to spend millions designing and building new water heaters to the old test procedure when you know you have a new one coming out. You want to make sure the new designs will work with the new test procedures. That’s been the wrinkle. DOE promised we’d have a conversion factor to convert products rated with the old test procedure to the new one, and it’s still not out. It has us in a little bit of a limbo. We’re working with AHRI [Air Conditioning, Heating, and Refrigeration Institute] and the DOE to hurry that process along.”

Training and Awareness

To help their employees as well as wholesalers and installers, manufacturers have invested heavily in training over the past few years and will continue to do so after the April implementation date.

“Bradford White has been educating people via webinars on and through in-person training since 2011. We really started running with it in 2012 because we knew what a disruption this would be to the industry,” Pinto said.

“For as many people as we were able to get to, there are still people today who don’t know what we’re talking about. They’re the ones we are most concerned about. They’re going to have a bit of a rude awakening when these changes become law. We’ll continue the education process, but most manufacturers have put out new models and new pricing. Pretty soon, this is going to become the new normal.”

A.O. Smith also began the education process in 2011. “We have an army of talented contractors who are fully up to speed on the new standards and will be able to walk homeowners through the changes and recommend NAECA-compliant products,” Perez said.

“A.O. Smith started educating our plumbing contractors months ago, and we’re communicating updates on a regular basis. We’ve produced a variety of informational pieces, as well: a dedicated webpage at, presentations, flyers, and videos. We’re confident our contractors and installers will be able to recommend the right products for any application.”

“At Rheem, we began developing educational information for our customers last year, and we also offered several training sessions to our customers about what to expect when the standards go into effect,” Meyers said. “This year, we’ll continue offering training courses leading up to the compliance date, and we’re communicating key NAECA-related updates to customers as milestones occur.”

PHCC has also conducted webinars to educate its contractor members on the upcoming changes and the challenges associated with transporting and installing the new equipment.

“There’s a lot of planning and awareness going on trying to make people aware that things are going to change here,” White said. “We’ve done webinars for our members, and we record them so members can go through our library of training information on demand. We work closely with manufacturers to do presentations at conferences and conventions, and they’ve been very good about going to state and local PHCC chapters for training, as needed. Manufacturers have really been stepping up to the plate and working with us to help get that information out.”

White said the topic is such a popular issue for their members that sessions on the standards are frequently filled to capacity. “It was probably the most packed session during our convention in 2013,” he said. “They were dragging in benches and chairs, and we were already in the biggest room on-site.”

Although many in the industry have been proactive about staying on top of the changes, several are still unaware, and that is a problem the industry is working hard to solve, White said.

“There are still going to be people at the end of April who say, ‘What happened?’” he said. “We’re working very hard to try to raise awareness and make sure people are informed.”

Publication date: 2/9/2015

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