Commercial Space Heating Equipment Market

Transcription

1 Topical Re Commercial Space Heating Equipment Market Prepared by: Ducker Research Company, Inc. Bloomfield Hills,Michigan Gas Research Institute Commercial Business Unit May 1997

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3 COMMERCIAL SPACE HEATING EQUIPMENT MARKET Prepared by: Ann Manix Matthew McElhattan Polly McGreevy Ducker Research Company, Inc Telegraph Road Bloomfield Mills, MI Prepared for: Gas Research Institute Contract No Peter Payne Principal Product Manager Commercial Space Heating and Controls May 1997

4 GRI DISCLAIMER LEGAL NOTICE This report was prepared by Ducker Research Company, Inc. as an account of work sponsored by the Gas Research Institute (GRI). Neither GRI, members of GRI, nor any person acting on behalf of either: a: Makes any warranty or representation, express or implied, with respect to the accuracy, completeness, or usefulness of the information contained in this report, or that the use of any apparatus, method, or process disclosed in this report may not infringe privately owned rights; or b: Assumes any liability with respect to the use of, or for damages resulting from the use of, any information, apparatus, method, or process disclosed in this report.

5 I Commercial Space Heating Equi pment Market I I L 5. FUNDING NUMBERS GRI Contract Number tJ Matthew McElhattan Ducker Research Company, Inc Telegraph Road Bloomfield Hills, MI Gas Research lnst i tute 8600 West Bryn Mawr Avenue Chicago, IL PERFORMING ORGANIZATION REPORT NUMBER 10. SPONSORING /MONITORING AGENCY REPORT NUMBER Space heating in commercial buildings is a very complex and diversified market. Published data is generally unavailable that define and assess equipment categories and market segments. The purpose of this study is to collect and consolidate space heating equipment sales and installation data in the commercial sector. Specific information reported includes: - Market size of space heating equipment supplied to the commercial sector by capacity and efficiency (current and historic). - Average equipment installed cost per BTU - Equipment sales distribution within geographic regions - Estimates of product life, frequency and cost of repair - Profiles of manufacturers supplying space heating equipment to the commercial sector - Identification of emerging trends in equipment selection and specificatior I Commercial space heating equipment Unclassi f ied Uncl assi f i ed

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7 TABLE OF CONTENTS Section I IV. Description m e... Objectives of the Study 1... Study Methodology.. 2 Commercial Space Heating Market... Characteristics 5 Analysis by Key Equipment Category... 6 Furnaces Boilers Unit Heaters Year Round Packaged Packaged, Make- Up Air Units.. District Stem Appendix: Supplier ProJiles

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9 I. OBJECTIVES OF THE STUDY o Market size of equipment supplied to commercial space heating market by capacity and efficiency (1 995 and historic shipments) D Within geographic regions, product life, frequency and cost of repair o Average equipment installed cost per BTU o District steam usage in terms of major use locations and fuel type o Evaluate barriers to entry of district steam in terms of gas conversion o Profile of manufacturers supplying equipment to commercial space heating industry o Detail current purchase/specification decision in equipment selection - key factors, decision makers, manufacturer evaluation process o Identify emerging trends in equipment selection and specification

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11 11. STUDY METHODOLOGY Members of the Ducker Research staff, including project managers and principals of the firm, conduct all interviews. o Long-distance telephone and personal interviews were conducted with the following respondent types: Engineers, specifiers Equipment manufacturers Distributors Mechanical contractors Trade associations and industry experts 0 Secondary information available from several sources including: GAMA, AH, ABMA, Government census reports Analysis required of secondary data and validity tests completed through primary research o North and South regions are defined by climate: North indicates metropolitan areas including Chicago, Minneapolis, and New York City, South indicates cities including Atlanta, Dallas, and Phoenix o Repair frequency, repair cost, useful life and installed cost are derived from telephone and personal interviews with the following: HVAC contractors Manufacturers Commercial and industrial end users (including hospitals, office buildings, and educational facilities) u Repair costs are based on annual maintenance costs: the information gathered is based on fair sampling and is not statistically valid o Manufacturers of commercial space heating equipment are highly fragmented with little or no knowledge of their competing equipment or products

12 Studv Methodology (continued) o Data collection across the equipment categories has never been formally consolidated with various associations only reporting segmented informalities Multi-Faceted Approach to Market Size Exhibit I

13 Definitions CornrnerciaLlResidential Commercial spa ce heating equipment is defined by application, packaging, and h eating capacitylsize. The following criteria were used to define various types of commercial equipment: All equipment capacities are given in output ratings Furnaces: Duct furnaces defined as those 150,000 BTU and above for gas fired and 225,000 BTU for oil fired Warm air furnaces include all units 229,000 BTU and above Boilers: Commercial units defined as over 249,000 BTU; includes cast iron, steel and copper Unit Heaters: Heat Pumps: Year Round: Packaged Make-up Units: All unit heaters shipped to commercial/industrial applications Commercial applications of packaged and split systems begin at 65,000 BTU All packaged terminal heat pump sizes used in commercial applications Commercial applications of packaged and split systems begin at 65,000 BTU All packaged make-up air units are used strictly in commercial/industria1 applications

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15 111. COMMERCIAL SPACE HEATING MARKET CHARACTERISTICS The market for commercial space heating is mature in the equipment areas of boilers, unit heaters and furnaces. Categories of growth include packaged terminal heat pumps and packaged make-up air units Gas is the primary fuel used in commercial space heating, accounting for 67 percent of the total in BTU Hydronic heat dominates with heat pump making inroads (often can be combined with boilers) Mechanical contractors are looking much more to systems solutions and considering the entire energy package Many of the traditional rules of thumb regarding the specifying of gas may be challenged since cooling is primarily electric Much equipment is custom designed, does not fit readily into industry market sizes Industry participants are satisfied with incorrect tracking of shipments within respective industries Table 1 Gas Equipment Type Duct Furnaces Warm Air Furnaces Unit Heaters Boilers Year Round Pkgd Units Heat Pumps Packaged Make-up Air Units Total (1) Assumes same operating duty cycle for all equipment types (2) Assumes 90 Btuh /CFM Electricity accounts for 18 percent. Oil accounts for 14percent. Total heating capacity sold in 1995: 168 billion BTUs.

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17 IV. ANALYSIS BY KEY EQUIPMENT CATEGORY zntroduction: FURNACES e Used in large warehouses, stadiums and factories to turn room air over 1.5 to 3 times per hour o Air turnover units reduce the stack effect of rising air and create a uniform temperature from floor to ceiling, thereby reducing heat loss and eliminate condensation that forms on stored material o Estimated 30 percent energy savings compared to unit heaters and infra-red heat sources o Growing segment in commercial and industrial space heating Duct Furnaces Table 2 Gus Duct Furnaces Size MbtuH 1995 Product life Repair frequency 15 years Repair cost $ years 15 years 17 years 17 years 2.3 years 2.3 years 2.6 years 2.6 years Repair frequency Repair cost I I I I 18 years 18 years 18 years 20 years I I I I 2.3 years 2 years 2.6 years 2.6 years Avg. Installed Cost/1000 BTU Southern $10.50 Note: No oilfired in the South.

18 Analysis by Key Equipment Category (continued) 1 FURNACES Table 3 Duct Furnaces (continued) I Oil Duct Furnaces I I Size MBtuH I Shipments Above450 I Total Southern: I Product life I N/A I N/A I NIA I Repair cost N/A N/A NIA Avg. Installed CosU1000 BTU Northern $8.00 $6.00 $6.00 Note: No oiljired in the South.

19 Analysis by Key Equipment Category (continued) L FURNACES Exhibit I1 Duct Furnaces Supplier Market Share Others Sterling Reznor nits

20 Analysis by Key Equipment Category (continued) 1 FURNACES Table 4 Warm Air Furnaces - Oil Northern: I I - Product life 22 years 22 years 20 years Repair 1.8 years 1.8 years 1.5 years frequency Repair cost $325 $450 $500 "Southern: I I Product life NIA N/A N/A Repair N/A N/A N/A frequency Repair cost N/A N/A N/A *No oilfired in the South.

21 Analysis by Key Equipment Category (continued) 1 FURNACES Table 5 Warm Air Furnaces - Gas Shipments Total Northern: ,955 2,245 12,200 Product life 20 years 20 years Repair frequency 2 years 2 years Repair cost $250 $425 I Southern: Product life 22 years 22 years Repair frequency Repair cost Avg. Installed Cost/1000 BTU: Northern: 1 $11.00 Southern: 2.5 years $225 I 2.5 years $375

22 Analysis by Key Equipment Category (continued) FURNACES Exhibit I11 Warm Air Furnaces Supplier Market Share

23 Analysis by Key Equipment Category (continued) BOILERS (Greater than 249,000 BTUH Outpuf) Introduction: Total market for commercial boilers in space heating has remained constant at near 30,000 units Nearly 75 percent of market is replacement 65 percent of boiler market is gas fired BurnharnKewanee just introduced a copper tube boiler which will add credibility to that market Most commercial steel boilers are fire tube and copper boilers are finned water tube (fire tube boilers have flue gases and combustion inside the tube and water tube boilers have water in the tube and the combustion takes place outside) Market Size and Assumptions: Commercial S~ace Heatins - Boiler Shipments Table 6 Castkon Gas: 10,500 CastAron Oil: 9,500 Steel: Gas 3,000 Steel: Oil 1,000 I Steel: Dual fuel I 2,000 C 6,400 Copper: Gas 1 TOTAL I 32,400

24 Analysis by Key Equipment Cate~orv (continued) BOILERS (Greater than 249,000 BTUH Output) Current Euuipment and Process: Exhibit IV I 1 Fuel Source Boiler P m 0"tpuf ( e Cast iron boilers produce hot water and low pressure steam o Cast iron boilers are assembled on site (bolted segments) o Steel boilers produce hot water and high and low pressure steam e Steel boilers are shop assembled, ready for placing on foundation n Copper boilers are lightweight and ideal for rooftops and where space is restricted o Copper boilers have faster recovery compared to cast iron and steel

25 Analysis by Key Equiament Category (continued) BOILERS (Greater than 249,000 BTUH Outpuf) Cast Iron - Oil Fired Table 7 I 1 Shipments ,549 1,550 & above Northern: Product life 21 years 25 years 30 years 30 years Repair 1.7 years 1.8 years 1.8 years 2.1 years frequency Repair cost $2,330 $2,480 $2,550 $2,700 Southern: Product life 30 years 38 years 44 years 44 years Repair 1.4 yeas 1.4 years 1.5 years 1.9 years frequency Repair cost $2,530 $2,550 $2,700 $2,890

26 Analysis by Key Equipment Cateeory (continued) BOILERS (Greater than 249,000 BTUH Output) Cast Iron - Gas Fired Table 8 Size MBtuH Shipments Northern: Product life Repair frequency Repair cost Southern: Product life Repair frequency Repair cost 19 years 25 years 28 years 31 years 2.2 years 2.2 years 2.3 years 2.5 years 28 years 30 years 33 years 40 years 1.4 years 1.4 years 1.6 years 2.0 years Avg. Installed Cost/1000 BTU:

27 Analysis by Key Equipment Category (continued) BOILERS (Greater than 249,000 BTUH Output) Copper - Gas Fired Table 9 Product life 14 years 14 years 16 years 15 years Repair 2.5 years 2.5 years 1.5 years 1.5 years frequency* Repair cost $140 $250 $300 $550 I Southern: Product life I I I I r- Repair cost 1 $150 1 $200 1 $220 / $500 / Avg. Installed $14.00 $12.00 $9.00 $8.00 Cost/lOOO BTU. *Most copper boilers are atmospheric which are less expensive than boilers with power burners.

28 Analvsis by Kev Equipment Cate~orv (continued) BOILERS (Greater than 249,000 BTUH Output) Steel - Oil Fired Table 10 *Includes an additional 30percent to reflect dual fuel boilers

29 Analysis by Key Equipment Categ;ow (continued) BOILERS (Greater than 249,000 BTUH Outpui) Steel - Gas Fired Table 11 I Northern: I I Product life vears vears I wars vears I Avg. Installed *Includes an additional 30percent to reflect dual fuel boilers

30 Analysis by Key Equipment Category (continued) BOILERS (Greater than 249,000 BTUH Outpuf) Exhibit V Enera, - Source Boiler Tv~e Gas (I 0,500) Oil (9,500) Electricity Water (14,000) Steam (6,000) o Gas and oil have remained nearly 50/50 in past ten years with swings related to spot prices o Oil used exclusively in New York and especially Long Island o Water produced more than steam - last time they were equivalent was in 1984 Energ-v Source Gas (3,000) Oil I, 000) Dual Fuel (2,000) Boiler Tv~e Ou@ut Water (3,000) Steam (3,000) Exhibit VI I

31 Analysis by Key Equipment Category (continued) BOILERS (Greater than 249,000 BTUH Oulput) Exhibit VII Suppliers Unit Shippers - hers:

32 Analysis by Key Equipment Category (continued) UNIT HEATERS Current Equipment: Fuel Type: o Unit heaters are ductless, self-contained units with a heat source and air mover inside an enclosure 3 Propeller types (fan) account for 95 percent of all unit heaters, while 5 percent are blower types a 80 percent of total unit heaters sold in North America in 1995 were gas-fired a Electric units are used where heating requirements are under 100,000 BTUH o Oil unit heaters are used only where oil is a sensible fuel option (Northeastern U.S.)

33 Analysis by Key Equipment Category (continued) UNIT HEATERS Gas Unit Heaters Gravity-Vent, Standard Efficiency (78% - 82%) Table 12 I Northern: I Product life 1 18years 1 18years 1 18years 1 19years I 19years 1 21years I Repair I 1.7 years 1 2 years 1 2 years 1 2 years 1 2 years. 1 2 years I frequency Repair cost $150 S 160 $160 $160 $170 $170 Southern: Product life 22 years 24 years 24 years 25 years 25 years 25 years Repair 2.2 years 2.2 years 2.2 years 2.5 years 2.5 years 2.5 years frequency Repair cost $140 $140 $145 $150 $150 $150

34 Analysis by Key Eauipment Category (continued) UNIT HEATERS Gas Unit Heaters Separated Combustion (78% - 83%) Table 13 Northern: Product life 20 years 20 years 22 years 22 years 22 years 26 years Repair 1.8 years 1.8 years 2 years 2 years 2.5 years 2.5 years frequency Repair cost $160 I $160 $170 $1 85 $185 $185 Southern: I I -- Product life 22 years 22 years 24 years 25 years 25 years 26 years Repair 1.9 years 1.9 years 2.3 years 2.5 years 2.6 years 2.6 years frequency Repair cost $145 $150 $155 $165 $165 $1 80 I I

35 Analysis by Key Equipment Category (continued) UNIT HEATERS Gas Unit Heaters Power Vent, Higher Efficiency (80% - 83%) Table 14 I Southern: I I Product life 24 years Repair 2.2 years freauencv Repair cost $150 I Avg. Installed Cost/1000 BTU: 24 years 2.3 years $ years 2.3 years $ years 2.5 years $ years 2.5 years 25 years 2.6 years $165 $165

36 Analysis by Key Equipment Category (continued) UNIT HEATERS Gas Unit Heaters Pulse Combustion, High Eff~ciency (90% - 95%) Table 15 Repair cost $200 $225 $225 $240 $250 $250 I Southern: I Product life 20 years 20 years 23 years 23 years 23 years 25 years Repair 1.5 years 2 years 2 years 2 years 2.2 years 2.2 years frequency Repair cost $180 $180 $2 10 $210 $250 $250 I Avg. Installed Cost11000 BTU: I

37 Analysis by Key Equipment Category (continued) UNIT HEATERS Electric and Oil Fired I I Electric Unit Heaters I Oil Unit Heaters I I I Size MBtuH I Size MBtuH I IS0 and I Total ,650 I 13,400 I ,250 I -- Northern: I Product life 14 years 15 years Repair frequency Repair cost 1 years $90 I 1 years $ years 1.3 years $ years 1 years $ years 1 year $ years 1.2 years $650 Southern: Product life Repair frequency Repair cost 15 years 1.3 years $75 15 years 1.3 years $ years 1 year $275 N A NA N A NA NA NA NA NA NA Note: Oilfired units are not used in the southern regions.

38 Analysis by Key Equigment Category (continued) UNIT HEATERS Rfarket Share Electricity Efficiency Types far Gas Unit jfenters Exhibit IX Separstcd Combustion 'lise

39 Analysis bv Key Equipment Categorv (continued) UNIT HEATERS Fuel Use for Unit Heaters Exhibit X

40 Analysis Bv Kev Equipment Category (continued) Introduction: o Growing segment of commercial heating. Contractors, specifiers are finding creative new ways to install units e Heat pump usage no longer restricted to the South Gas fired heat pumps in infancy stage of residential market. Units up to 7.5 tons cooling available with out heating for light commercial usage a Package terminal heat pump market size growing significantly each year e Heat pump units are tracked by cooling capacities. Heating capacities vary depending on outside temperature, and equipment options. Typical ranges are from 50% of cooling to 140% of cooling. Table 17 Air Sourced - Split (Heating capacities range porn 50% to 140% of cooling depending on equipment options) , ,590 Northern: Product life Repair frequency Repair cost 16 years 2 years $120 I Southern: I I Product life Repair frequency Repair cost Avg. Installed CostI1000 BTU: 14 years 1.5 years $ years 1.4 years $ years 1.2 years $ years 1.2 years $ years 1 year $320 I Northern: / $ $ $ I I

41 Analvsis BY Key Equipment Category (continued) Air Sourced - Packaged Table 18 (Heating capacities range fiom 50% to 140% of cooling depending on equipment options) Avg. Installed Cost/1000 BTU: I

42 Analysis By Key Equipment Categow (continued) Table 19 Water Sourced {Ground-Sourced, Geothermal, Other Non- Water-Loop Svstems) (Heating capacities range porn 105% to 150% of cooling depending on equipment options) Southern: Product life 1 15 vears 1 16 vears 1 18 vears I Repair frequency 2.2 years 1.7 years 1.7 years Repair cost $120 $290 $480 Avg. Installed Cost/1000 BTU: Northern: 1 $ $ I $84.00 I Southern: 1 $ $ $

43 Anaiysis By Kev Equipment Category (continued) I HEATPUMPS I Table 20 Water Sourced (Water-Loop, "California-Loop" Type) (Heating capacities rangejfom 105% to 150% of cooling depending on equipment options) Avg. Installed Cost BTU:

44 Analvsis By Key Equipment Cateeory (continued) Packaged Terminal Table 21 (Heating capacities rangeporn 75% to 180% of cooling depending on equipment options) Northern: Product life Repair frequency 10.5 years 3 years Repair cost $75 Southern: Product life Repair frequency years 2.5 years Repair cost $90 Avg. Installed CostI1000 BTU: I Northern: $120 I I

45 Analysis By Kev Equipment Categorv (continued) I HEATPUMPS I Exhibit XI York McQ Lennox

46 Analysis Bv Kev Equipment Category (continued) YEAR ROUND PACKAGED Introduction: o Year round units contain sources of heating and cooling and an air handler in a single packaged, roof-top unit e 146,580 year round units above 65,000 BTUH shipped in 1995 o Year round units are either: Gas heating, electric cooling Electric heating, electric cooling a Very mature product segment in commercial space heating YACs tracked by cooling capacity. Heating capacities will vary - typically two or three options of heating for each cooling size. Gas heating capacities range from % of cooling capacity. Electric heating capacities range from % of cooling capacity. Table 22 Gas Heating, Electric Cooling (Heating capacities range from 50% to 250% of cooling depending on equipment options)

47 Analysis By Key Equipment Category (continued) YEAR ROUND PACKAGED Electric Heating, Electric Cooling Table 23 (Heating capacities range fiom 50% to 250% of cooling depending on equipment options)

48 Analvsis Bv Kev Equipment Category (continued) YEAR ROUND PACKAGED Exhibit XI1 Others* *Others include Sanyo, IWifsubishi, efc

49 Analvsis Bv Key Equipment Category (continued) I PACKAGED, MAKE-UP AIR UNITS I Introduction: o Growth being driven by ASHRAE 62 - both new and retrofit o Many players and highly fragmented o Size is driven by external static pressure and air required o Two types of units: indirect and direct e General equipment package includes fan, burner, weather hood, turning elbow and sub-base structure Indirect Units Stainless steel Furnace Heat exchanger Fewer safety controls than direct Direct Units Straight flame Gas driven 100 percent efficient with a rating of 94 percent 60 to 80 percent efficient Applications: Sleeping quarters Nursing homes School gymnasiums Applications: Industrial facilities Paint booths Commercial

50 Analysis By Key Equipment Categoy (continued) PACKAGED, MAKE-UP AIR UNITS Direct Fired Table 24 Size CFM - Northern: Product life 12years I 14 years 14 years I Repair frequency 2-4ly ear 2-4/y ear 4lyear Repair cost $90 $105 $125 Repair cost $75 I $100 I $1 10 I Avg. Installed Cost per CFM: I I Northern: I

51 Analysis By Key Eauipment Category (continued) I PACKAGED, MAKE-UP AIR UNITS Indirect Fired Table 25 I Shipments 1 8,000-28, , ,000 1 Total Southern: Product life 18 years 20 years 20 years Repair frequency I 2/year 4/y ear 4/year Repair cost I $125 I $150 1 $150 I Avg. Installed Cost per CFM: Northern: $2.10 $1.80 $1.60 Southern: $1.95 $1.60 $1.60 o Includes packaged, dedicated units not covered under heaters and duct haces D Manufacturers include Applied Air (Mestek), Hastings, and Weatherrite

52 Analysis Bv Key Equipment Cateeow (continued) PACKAGED, MAKE-UP AIR UNITS Exhibit XI11

53 DISTRICT STEAM Summary of District Steam Users a Large complexes that are located in densely populated areas and near a control district energy plant District heating and cooling is a growing as more cities are now recognizing the inherent energy efficiency and cost savings of district energy. They are installing new smaller systems or expanding older systems Ownership of systems have become diverse: investor-owned combined utilities, municipal systems and independent district heating and cooling utilities 61 TO date, 80 cities have operational steam systems. Few are new, most are retrofit a The primary users of district steam: Universities (2,000) Military systems (300) Hospital complexes (2,000) Other systems such as government and industrials buildings o Large facilities find that it is cost effective to buy steam imd avoid huge boiler complexes, maintenance, replacement equipment and high insurance costs o Buildings larger than 20 stories that require larger heating systems have a cost advantage by supplying heat via district steam

54 District Steam (continued) Fuel for District Steam Production Exhibit XIV i Purchased I oil United States. Comparative Pricing of Steam, Electric and Gas - By Region - The graphs on the following pages detail energy costs for selected regions across the o Rates for steam energy include all applicable taxes and fuel rates o Rates for gas and electric energy in the examples do not include any of the following charges: Sales tax Customer charge rates Voltage charge Interruptible rates Any additional fuel charges The above charges vary from contract to contract. However, an average premium of 5% to 10% for gas and electric energy covers these costs

55 District Steam (continued) Exhibit XV Comparative Pricing of Steam, Electric and Gas bv Region - East - Cost mnlb Steam Costl Cost/ Costl I to 5 MCF 6 to 10 MCF Over 10 MCF Gas Small Large Commercial Commercial (Less than (Over 25,000 kwh) 25,000 kwh) Electric

56 District Steam (continued) Comparative Pricing of Steam, Electric and Gas bv Region - Midwest - Exhibit XVI Steam I Minneapolis, MN Gas m St. Lods, MO

57 District Steam (continued) Exhibit XVII Comparative Pricing of Steam, Electric and Gas bv Region - South -

58 District Steam (continued) Comparative Pricin~ of Steam, Electric and Gas by Region - West - Exhibit XVIII Gas i Seattle, WA

59 District Steam (continued) Where Gas May Lose to Steam or District Energv Building owners that have to retrofit chillers for non-cfc may choose to hook up to district cooling and heating Mega-systems that contract with metropolitan area rapid transit systems, metropolitan redevelopment projects and city water department projects. Specifically, any type of project that involves ground penetration provides opportunity to lay pipe at substantially reduced costs Micro systems are being created to serve a small number of end users confined to a small geographical area. Small plants or "hubs" utilize existing underground tunnels or above ground skywalks to stretch piping Outsourcing decisions that force companies to dismantle physical plant departments and shut down boilers With the deregulation of electricity, the trend to outsource non-core services and the cost of replacing huge boilers, chillers and furnaces, district steam and energy is ripe for expansion District energy has been steadily growing and is building momentum as an industry. The message is penetrating that by converting to district energy cooling systems buildings can slash energy costs by as much as 30 percent Any facility that is concerned about preserving space (especially first owner of building) will be attracted to district stedenergy to avoid boiler plants, etc. Whv Convert to Gas Equipment from District Steam? a Smaller complexes are converting over to gas due to the rising costs of steam a Steam utilities are passing along price to customers for under-capacity of current facilities that produce steam. In New York, steam is two times the price of oil and 40 percent higher than gas Second ownership of commercial buildings converting over to gas. Trend of first owner is to avoid cost and space allocation for boilers and furnaces to contract for steam and many of these systems now need to be replaced

60 District Steam (continued) Barriers to Converting to Gas from Steam o Space - facilities using district steam are usually large complexes which would require large boilers or multiple buildings for boilers spread out among the use areas, the cost of appliances, repairs, maintenance staff may prohibit the conversion sa Maintenance staff is eliminated with district steam o Price of fuel o Savings on insurance costs with avoidance of boilers, furnaces and maintenance staff Future Prospects for Gas as it Relates to District Steam n Prospects for large gas burning engine generators is good. Exhaust emissions are 75 to 95 percent less NO, than engines of 15 years ago o Burning natural gas produces significantly lower levels of COz than oil or coal o Gas turbine technology is becoming extremely efficient. There is an industry opinion that there is a large market in district steam for gas turbine engines a As gas now produces cleaner exhaust, district steam systems could use gas to produce exhaust and make thermal energy out of this a With district cooling, the electricity demand can be significantly decreased by using gas fired turbine engines to create chilled water a Smaller packaged co-generated units are utilized in modular installations. This assists businesses who do not want to have venture capital up front until guarantee of customers in building

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63 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Burn hamlkewanee Lancaster, Pennsylvania PO Box 3205 Lancaster, PA Tel: (717) Fax: (71 7) Contact: R. Coons, VP Sales and Marketing Corporate in formation: BurnhamIKewanee Corporation, founded in 1856, is a leading producer of steel and cast iron boilers and related heating equipment for residential, commercial, and industrial applications. Burnham has three operating groups: Burnham Commercial Steel Boilers, New York Boilers Company, and Kewanee Manufacturing. These companies manufacture residential and commercial boilers and other commercial products. The Burnhdewanee Company recently introduced copper boilers to their product offering. Total sale revenues for 1995 are an estimated $144 million with commercial space heating accounting for an estimated $50 million. Products, marketing, and distribution: Burnham manufactures gas boilers, dual fuel combustion boilers, indirect-fired water heaters, radiators, radiant base boards, ductless split-system air conditioners, heat pumps and multi-zone air conditioners. Burnham's cast-iron gas boiler has an AFUE of 86% and utilizes a draft-induced fan and extended heat exchanger surface. Their steel boilers feature a large water capacity to allow for optional tankless heater operation. The new "Evolution" line of copper-fin boilers feature 88% efficiency and are available in sizes from 250,000 to 2,000,000 BTU (input). Commercial space heating: Burnham's commercial space heating involvement is primarily in boilers and hydronic components. I BurnhamlKewwannee Commercial Space Heating Products Heat Pump

64 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Carrier Corporation Syracuse, New York (Public, unit of United Technologies Corp.) Carrier Parkway P.O. Box 4808 Syracuse, NY Tel: (3 15) Fax: (3 15) Contact: J. Dudas, Vice President (commercial products) Corporate in formation: Carrier Corporation is a subsidiary of United Technologies Corporation, employs 28,000, and has annual sales revenue of $1.1 billion. Carrier is one of the largest manufacturers of HVAC equipment worldwide. Products, marketing, and distribution: Carrier produces heating and air conditioning equipment for residential, commercial, and industrial applications. Carrier's air conditioning line is comprehensive, including small room units through 50 ton packaged roof top units. Their heating line includes gas and oil central warm air furnaces, boilers, and heat pumps. Carrier products are sold through distributors. Commercial space heating: Carrier's involvement in the commercial space heating market is extensive. Year-round units and heat pumps are available in many commercial sizes (5-50 tons), along with make-up air units, and unit heaters. Carrier Corporation Commercial Space Heating Products I Make-up Air Unit Duct Furnace

65 Cleaver-Brooks Milwaukee, Wisconsin GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry P.O. Box 421 Milwaukee, WI Phone: (414) Fax: (414) Contact: R. McNally, Sr. VP (Public, subsidiary of Aqua-Chem) Corporate in formation: Cleaver-Brooks manufactures packaged boilers and hydronic accessory equipment for residential and commercial use, and commercial/industria1 incineration equipment. Cleaver-Brooks is a unit of Aqua-Chem which produces water treatment equipment, and has annual sales revenue of $183 million. Products, marketing, and distribution: Cleaver-Brooks manufactures boiler systems from light commercial sizes through multi-million BTU units for industry. They also produce hydronic accessory equipment for large industrial installations. Cleaver-Brooks distributes primarily through manufacturer representatives and HVAC contractor-distributors. Commercial space heating: Cleaver-Brooks is extremely involved in hydronic commercial space heating. They currently hold 30 percent of the commercial boiler market, and are driven by research and development in hydronic technology. Cleaver-Brooks Boiler Products Residential

66 Lennox Industries, Inc. Dallas, Pexas (Private, est. 1904) GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Lake Park Blvd. PO Box Dallas, TX Tel: (214) Fax: (2 14) Contact: John W. Norris, Jr. (C.O.B., Sales) Corporate in formation: Lennox Industries is one of the top five HVAC manufacturers in the U.S. market and one of the top two privately owned HVAC manufacturers. Lennox is the parent company of Armstrong Air Conditioning, Heatcraft (both the refrigeration and heat transfer divisions), and also operates under the Magic Chef and Lennox brand names. Total sales revenue for 1995 are estimated at $1.1 billion (all divisions combined). The company employs around 6,000 in its U.S. operations comprised of 8 factories, 40 warehouses, and 50 branch offices. Products, marketing, and distribution: Lennox is well established in the heating market under the Lennox brand and has a strong presence in the air conditioning market under the Armstrong brand. Lennox manufactures central furnaces, air conditioners, heat pumps, and humidifiers. Lennox's market strategy is based on the advancement of technology in terms of energy efficiencies and cost. Lennox was an early leader in pulse h ace technology, as well as being the first to introduce a 15.0 SEER air conditioner. Lennox sells through a network of distributors. Commercial Space Heating Lennox and Armstrong are major producers of heat pumps and year-round air conditioners in light commercial sizes. Also, Lennox produces a line of unit heaters including a super high efficiency pulse type unit. Lennox Commercial Space Heating Products Unit Heaters

67 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry McQuay International Minneapolis, Minnesota (Private, unit of McQuay-AAF Incorporated) Industrial Park Boulevard Minneapolis, MN Tel: (612) Fax: (612) Contact: A. Bell, Vice President (sales) Corporate information: McQuay International (formerly SnyderGeneral) is privately owned, employs 6,000 in 17 U.S. facilities, and has annual sales revenue of $1 billion. Over the past twenty five years, McQuay has expanded by acquiring companies including Westinghouse Air Conditioning and Arco Comfort Products Company, as well as several component manufacturers. Recently, McQuay became affiliated with Hong Leong Group Malaysia. McQuay's sister company, AAF, produces air filtration systems and environmental products. Products, marketing, and distribution: McQuay manufactures residential, light commercial, commercial, and industrial HVAC equipment. Residential heating and cooling lines are marketed under several brand names including ArcoAire. The commercial lines are sold under the McQuay name through manufacturer representatives. Commercial space heating: McQuay's involvement in the commercial space heating market includes the following products: heat pumps (aidair and water source), packaged year-round units, and unit heaters (hydronic). McQuay International Commercial Space Heating Products Make-up Air Unit Unit Heater

68 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry MesteklSterling, Inc. Westfield, Massachusetts (Public, Sterling is subsidiary of Mestek, Inc.) 260 North Elm Street Westfield, MA Tel: (413) Fax: (413) Contact: William Rafferty, Sr. VP of Marketing (sales) Corporate in formation: MestekISterling was founded in 1946 as the Sterling Radiator Company to produce finned-tube radiators. Through a succession of mergers and acquisitions the company has expanded to include 23 operations including Hydrothem, a major hydronics manufacturer. This past year, Mestek acquired National Northeast Corp., Koldwave, Cox Heating, Rowe Machinery, and MegaFlex Inc. Annual sales revenue exceeds $245 million for all divisions. Products, marketing, and distribution: Mestek produces finned-tube radiation, cast iron boilers, roof-top units, steam and hot water unit heaters and convectors, vertical air turn over furnaces (VATO), high temperature fans and blowers, air curtain heating equipment, air coolers and exhaust systems, cooling equipment and coil handling equipment. Commercial space heating: Sterling manufactures products for the commercial space heating market including unit heaters, duct furnaces, roof-top fwnaces, and finned-tube products. Hydrotherm manufactures boilers. Applied Air manufactures vertical air turn over units, and gas and oil-fired roof-top air handler units. Sterling also manufactures unit heaters for Dayton (sold by Grainger) and Trane. Mestek Incorporated Commercial Space Heating Products Warm Air Furnaces 1 Duct Furnaces 1

69 Modine Manufacturing Racine, Wisconsin (Public) GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry 1500 DeKoven Avenue Racine, WI Tel: (800) Fax: (414) Contact: J. D. Louks, Field Sales Manager Corporate information: Modine is a public company, operates 22 US. manufacturing facilities, employs 7,500 worldwide, and has annual sales revenue of $1 billion (all divisions combined). The HVAC division annual sales revenue is $75 million. Products, marketing, and distribution: The Modine HVAC division manufactures complete lines of commercial and industrial space heating equipment including unit heaters, duct furnaces, and make-up air units. Products are sold through distributors and contractors. Commercial Space Heating: Modine's focus is commercial space heating. Unit heaters and duct furnaces are available in all fuel types (gas, electric, oil, hydronic), efficiency ranges (gas only), and many commercial/industria1 sizes ( MBH gas, 0-50 kw electric). Packaged make-up air units are available in the 2,000 to 18,000 CFM range. Modine Manufacturing Products Duct Furnaces

70 Reznor Memphis, Tennessee GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry 1555 Lynfield Road Memphis, TN Tel: (41 2) Fax: (412) Contact: John Pas, Marketing1 Engineering Corporate in formation: Reznor designs and manufactures a complete line of heating and ventilating systems, utilizing gas, hot waterlsteam and electric heat sources. Reznor was founded in 1808 with the invention of the Reznor Reflector Heater with luminous gas flame burner by George Reznor. Its immediate success resulted in rapid growth of the company and Renor remains one of the leaders in the field. Reznor's headquarters and manufacturing plant are located in Mercer, Pennsylvania. This plant has both standard and custom built equipment along with laboratories for research and development and test facilities. Reznor also has a complete quality control and inspection program. Commercial space heating: Reznor manufactures unit heaters, gas duct furnaces, gas infra-red heaters, direct fired make up air, roof top evaporating cooling modules, and heavy duty pre-engineered systems. Reznor focuses on commercial space heating and enjoys large shares of the unit heater and duct fiunace markets. Reznor's unit heater and duct hrnace line is comprehensive, offering many commercial heating capacities, efficiency ranges, and fuel types (gas, electric, and oil). Reznor Commercial Space Heating Products Duct Furnaces

71 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Rheem Manufacturing Company Fort Smith, Arkansas (Private, subsidiary of Pace Industries) 5600 Old Greenwood Road Fort Smith, AR Phone: (50 1) Fax: (501) Contact: W. A. Lux, Vice President (marketing) Corporate in formation: Rheem-Ruud is a subsidiary of Paloma Industries, and operates under four divisions (two HVAC, one air conditioning, and one water heating) and owns Raypak. Since being acquired by Paloma, Rheem-Ruud has expanded their manufacturing facilities and built a new research facility. Products, marketing, and distribution: Rheem-Ruud manufactures HVAC equipment for residential, light commercial, and commercial applications. Products include gas, oil, and electric furnaces, air conditioners, heat pumps, and water heaters. Rheem-Ruud products are sold exclusively through authorized dealers and contractors. Commercial Space Heating: Rheem-Ruud manufactures a complete line of heat pumps and year-round air conditioners in light commercial sizes ranging from 5 to 20 tons. Rkeem Manufacturing Products Commercial Water Heaters I Year-Round Units

72 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Trane La Crosse, Wisconsin (Public, unit of American Standard, Inc.) 3600 Parnmel Creek Trane Unitary Products Group La Crosse, WI Troup Highway Tel: (608) Tyler, TX Fax: (608) Tel: (903) Internet: Contact: C. Kissel, Executive Vice Contact: F. Kautz, Vice President (sales) President Corporate in formation: The Trane Company is a subsidiary of American Standard, Inc., employs 10,000 in 11 manufacturing plants around the U.S., and has annual sales revenue of $1-8 billion. Trane is one of the largest HVAC manufacturers in the world. Trane's success is due in part to their commitment to research and technological advancement. Products, marketing, and distribution: Trane has a comprehensive line of heating and cooling equipment divided among three divisions: Trane Company, Trane Unitary Products Group (Tyler, Texas), and Trane Commercial Systems Group (La Crosse, Wisconsin). Trane's HVAC products range from PTACs and PTHPs through multi-thousand tonnage chiller systems. The first division produces residential and specialty equipment such as room air conditioners, PTACs, and air cleaners. The Commercial Systems Group produces chillers, condensers, and associated central plant equipment. The Unitary Products Group manufactures unitary systems including packaged and year-round roof top units. Trane products are primarily distributed through manufacturer's representatives. Commercial space heating: Trane manufactures packaged year-round rooftops, heat pumps, a line of packaged cooling units for use with hydronic heat (remote boiler), make-up air units, duct furnaces, and unit heaters. Trane's commercial space heating shipments are shown below: f ram Commercial Space Heating Products Unit Heater Duct Furnace

73 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry Michigan City, Indiana (Public, unit of United Dominion Company) 500 Blaine Street Michigan city, IN Phone: (21 9) Fax: (219) Contact: T. 0. May, VP Sales and Marketing Corporate in formation: Weil-McLain was founded in 1881 as a plumbing and heating product distributor, and rapidly grew into a manufacturer of boilers for both residential and commercial use. Weil-McLain was acquired by The Marley Company in 1980 and then by United Dominion Company. United Dominion employs nearly 12,000 worldwide and has an annual sales revenue of $2.1 billion. Products, marketing, and distribution: Weil-McLain manufactures gas boilers for water or steam heating systems, electric boilers for hot water or steam heating, baseboard radiators, forced air heat exchangers and indirect-fired water heaters. Commercial space heating: Weil-McLain is one of the top three boiler manufacturers in the commercial space heating market. Weil-McLain Commercial Space Heating Products! Water Heaters Other

74 GRI - Profiles of Key Manufacturers in the Commercial Space Heating Industry York International Corporation York, Pennsylvania (Public) 63 1 South Richland Avenue York, PA Phone: (7 17) Fax: (7 17) Contact: Joseph D. Smith, Vice President Corporate in formation: York International Corporation is publicly owned, employs 19,000 worldwide, and had annual sales revenue of $2.9 billion in 1995 (a 21 % increase from 1994). York operates several divisions including commercial, residential, and refrigeration systems. Overall, commercial systems accounted for 46% of York's business in 1995, while residential and refrigeration products accounted for 32% and 22% respectively. Products, marketing, and distribution: York manufactures air conditioners, heat pumps, furnaces, and compressors (the Bristol Compressor division) for residential and commercial HVAC systems. York also produces air handling systems and is currently focusing on indoor air quality (IAQ) systems for commercial and industrial applications. Commercial Space Heating: York's main products in commercial space heating include light commercial (5 to 30 ton) yearround units, heat pumps, and air handlers. York International's Commercial Space Heating Products Air Handling

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