Buckle up: The wild ride of tightening efficiency regulations

It’s no exaggeration to say that the changes coming to space and water heating in Canada are foundational. Nor will it stop there. A series of Amendments to Canada’s Energy Efficiency Regulations will tighten minimum energy performance standards (MEPS) substantially enough to take thousands of household and commercial appliance models off the market entirely, even entire categories of equipment. When will these changes start to take effect? They already have.

Don’t feel bad if you didn’t notice, however, the timing wasn’t great.

The Energy Efficiency Act itself, which gives authority to the Regulations that are being amended, is now over 30 years old, originally passing in 1992. The original Regulations were enacted in 1995 and changed several times since, but the most recent repeal and update came in 2016, when a new regulatory framework was imposed following Canada’s commitment to the 2015 Paris Climate Accord.

The update changed all manner of outdated language and technological references. Starting in 2017 Natural Resources Canada (NRCan) began the process of drafting specific amendments to the MEPS contained in the regulations. It wasn’t until June of 2019 that what is now called Amendment 15 was finally enacted.

Losing focus

Enforcement of MEPS is based on date of equipment manufacture, but some of those dates came into play as early as January 1, 2020, such as the MEPS for household instantaneous water heaters, which were raised to 0.87 Uniform Energy Factor (UEF). Others were seen as having greater technological, logistical and practical challenges to overcome when implementing increased stringency on their MEPS.

As a result, these were slated for later dates of implementation to allow time for manufacturers, distributors, contractors, designers, engineers, inspectors and homeowners to have a chance to prepare. An example is that commercial instantaneous units were given until July 1, 2023 before they would have to meet the new MEPS of 94 per cent thermal efficiency, to allow for the much longer commercial design and construction cycle to complete existing projects without significant disruption. The market, it was thought, would start planning to use higher efficiency equipment as required, based on an expectation of when equipment would be ordered.

And then something came up. It’s easy to understand how by March 2020 we all might have taken our focus off changes to efficiency regulations that weren’t being implemented for another few years. To put it mildly, we had other things to worry about.

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Massive changes in effect

But now they’re here. In July, massive changes took effect in the equipment that can be supplied for Canadian homes and commercial spaces. In addition to the commercial instantaneous regulation mentioned above, household boilers must have a MEPS of 90 per cent Annual Fuel Utilization Efficiency (AFUE), up from 82 per cent. This means that residential noncondensing gas boilers are no longer sold in Canada.

And commercial gas storage-type water heaters, when used for new construction, must have condensing performance levels. This gets a bit confusing because of the way household and commercial equipment use different efficiency ratings, but smaller units are required to have a 0.81 UEF, and larger sizes a MEPS of 90 per cent thermal efficiency. Interestingly, NRCan chose to allow a carve out in this specific category for reduced MEPS when the equipment is being used in a retrofit application rather than new construction, reducing the “replacement” units MEPS to 0.66 UEF and 80 per cent TE respectively. No other category seems to have been cut a break like this.

Other more stringent MEPS will follow in short order. Household gas furnaces will see their MEPS increase to 90 per cent or 95 per cent AFUE, depending on the exact application, come January 1, 2024. And, very significantly, commercial gas-fired hydronic boilers will be restricted to a MEPS of 90 per cent efficiency as of January 1, 2025. That means that 16-months from now, only high-efficiency, condensing commercial gas boilers will be permissible for sale in Canada, and in this case NRCan did not allow any special exemption for retrofits or replacement applications.

Amendment 15 online for four years

If all of this seems far fetched, read the Canada Gazette, Part II, published June 12, 2019. This is where NRCan publishes its regulatory updates such as Amendment 15 and initiates the period of enforcement. It’s been published online for the last four years. The industry has just been too busy focusing on other things to give this the attention it probably deserves.

That may be unfortunate for more reasons than you think. Had we all been scrutinizing the Amendment as thoroughly as necessary, it might not have taken until now for us all to realize the wording seems to leave out a significant portion of the commercial product market, what’s typically called a domestic hot water boiler or a volume water heater (VWH).

The issue is that the wording is quite specific. Amendment 15 refers to instantaneous water heaters as being “flow-activated,” but typically VWH use a sensor in a tank to determine when to activate, not flow. It describes commercial gas boilers as those “intended for application” in a “central heating system,” but VWH are not intended for this purpose. And it describes commercial gas water heaters as “storage” products, which VWH are not.

So, did NRCan intend to leave VWH alone? When we asked them, they said they did not.

Instead, they indicated they would regulate them according to the “nominal storage volume” of the unit. Because the instantaneous regulation refers to units as having equal to or less than 10 gallons of water, and the storage heater regulation refers to a volume of not less than 20 gallons capacity, NRCan has said VWH will be regulated according to their nominal storage capacity using these definitions.

In other words, if your VWH has more than 20 gallons of water inside, it will be regulated like a storage type heater and have a MEPS of 90 per cent thermal efficiency, with an exception for retrofits. If it is between 10 and 20 gallons, it is entirely unregulated. And if it has less than 10 gallons of water inside, as of July 1 it is regulated like an instantaneous unit with a MEPS of 94 per cent thermal efficiency.

Practically speaking, very few commercial VWH have more than 10 gallons nominal volume. And since the instantaneous regulation made no exceptions for retrofits, large capacity commercial VWH that need replacement starting July 2023 probably have to be replaced with condensing equipment. Installers will have to cope with whatever installation and venting challenges that will present. Facility owners and operators likely have not had time to prepare.

To date NRCan has not published clarifying language around this interpretation of how VWH product fits into Amendment 15. In the meantime, Amendments 16 and 17 have already both been passed, and Amendments 18 and 19 are nearly finished.

Foundational changes are coming. Are you ready?

TRENDS By Bob “Hot Rod” Rohr