On July 28, 2023, the United States Department of Energy (DOE) released over 2,000 pages of information that include a pre-published Final Rule for commercial water heater energy efficiency standards, as well as proposed rules for energy efficiency standards for both residential water heaters (published) and residential boilers, the latter of which was officially published on Aug. 14, 2023. While industry experts and various other stakeholders are still in the process of reviewing this information, below is a brief summary of DOE’s actions.

For commercial water heaters, DOE is proposing an all-condensing standard for both storage and tankless units. Specifically, commercial storage products will be required to meet or exceed a thermal efficiency (TE) of 95%, while commercial tankless products, including volume water heaters, will be required to meet or exceed a TE of 96%. Since this is a Final Rule, the Department is no longer accepting comments on this proposal and the rule will take effect once it is published in the Federal Register, which we expect in the coming days.

While the rule itself will likely be published soon, the federal Energy Policy and Conservation Act (EPCA) requires that a three-year compliance runway be given for all stakeholders to adjust to any new or updated energy efficiency standards enacted by DOE for commercial equipment. As such, the requirements described above will not take effect until sometime in fall of 2026, if they are in fact published this month.

For residential water heaters, DOE has published a proposed rule that would call for all electric storage water heaters to meet heat pump efficiencies, with the exception of some lowboy water heater models. This is coupled with an increase in minimum efficiency standards for gas storage water heaters that will largely require these products to utilize either a flue damper, or fan assistance. For gas tankless water heaters, DOE is proposing an all-condensing standard of 0.91 UEF in the medium draw bin, and 0.93 UEF in the high draw bin. Since this is only a proposed rule at this stage, DOE is continuing to accept stakeholder feedback on this proposal until September 26, 2023.

If DOE were to finalize this proposal, it is unclear as to when it would take effect. However, the Department recently agreed to a court settlement with environmental advocates to finalize the rule no later than April 30, 2024. Under EPCA, a five-year compliance runway is given to all stakeholders to adjust to any new or updated energy efficiency standards enacted by DOE on residential products. As such, one can expect any final rule issued by DOE on this matter to take effect sometime in early-to-mid 2029.

For gas-fired hot water residential boilers, DOE has published a proposed rule that would call for an all-condensing standard for these products. Specifically, these types of products would need to meet or exceed an AFUE of 95%. Separate efficiency requirements exist for steam boilers.

DOE will be accepting comments on this proposal until October 13, 2023, 60 days after the proposal was published in the Federal Register.

If DOE were to finalize this proposal, it is unclear as to when it would take effect, and unlike the proposed efficiency standards rule for residential water heaters, DOE is not under a court order to finalize the rule by a certain date. However, like the residential water heater efficiency standards rule, EPCA would provide stakeholders with a five-year compliance runway once any final rule on this matter is published in the Federal Register.

BWC’s Government and Regulatory Affairs team is in the process of evaluating all of the information that has been released by DOE on these matters and is committed to keeping our customers informed of what we are able to learn once we complete this work. In the meantime, if you have any questions about these matters, or any other government and regulatory affairs activities, please do not hesitate to contact our team at BWCGovReg@bradfordwhite.com.