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COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND CONVENTIONAL HVAC SYSTEMS, FOCUSED ON LIFE-CYCLE COST

A Thesis Presented to The Academic Faculty

by

JAESUK PARK

In Partial Fulfillment of the Requirements for the Degree Master of Science in the School of Architecture

Georgia Institute of Technology December 2013

COPYRIGHT 2013 BY JAESUK PARK

COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND CONVENTIONAL HVAC SYSTEMS, FOCUSED ON LIFE-CYCLE COST

Approved by: Professor. Godfried Augenbroe, Advisor School of Architecture Georgia Institute of Technology Dr. Jason Brown School of Architecture Georgia Institute of Technology

Date Approved: 18 November 2013

ACKNOWLEDGEMENTS

I would like to show, first and foremost, my immense gratitude to my advisor, Professor Godfried Augenbroe. His profound and wide knowledge bolster my thesis, introducing the right direction of this thesis and advising me to solve the critical problems. Plus, his enthusiasm for the research and constant consideration over all periods of my degree program has excited my passion of study. Also, I am indebted to Dr. Sang Hoon Lee who established the rudimental basis for this thesis. Without his astonishing dedication as a preceding researcher of this investigation and continuous support, this thesis could not have been accomplished. In addition to the academic support, he has helped my life in Atlanta bountiful. Fellow students in the BT group at Georgia Tech that I want to thank are Jaeho Yoon, Jihyun Kim, Di, Qi, etc. In addition to the BT group, I would like to thank to Hyunkyung Lee, Yujeong Jeong, Yongcheol Lee, and Dangyoon Wie. They are the ones who helped me enjoy a fruitful lifestyle in my period at Georgia Tech. In particularly, Jihyun Kim provided continuous academic support and beneficial information about living in Atlanta. Last but not least, I would like to express my deepest appreciation to my family and my lovely fiancé, Eunbee Choi. Although my father, mother, and sister live far away, their beliefs and considerations kept me focused on my study. Finally, no words can express my gratitude to Eunbee. She is like my home where I love the most, where I feel most comfortably. I want to dedicate my thesis to Eunbee.

iii

TABLE OF CONTENTS Page ACKNOWLEDGEMENTS

III  

TABLE OF CONTENTS

IV  

LIST OF TABLES

VI  

LIST OF FIGURES

IX  

SUMMARY

X  

Chapter  1 INTRODUCTION

1  

Chapter  2 LIFE CYCLE COST ANALYSIS

3  

CONSIDERATIONS FOR LCC ANALYSIS

5  

PRESENT VALUE

11  

SUMMARY OF LIFE-CYCLE COST ANALYSIS

13  

Chapter  3 CALCULATING LIFE-CYCLE COST

14  

CALCULATION OF LIFE-CYCLE COST

14  

SUPPLEMENTARY MEASURES OF ECONOMIC EVALUATION

15  

Chapter  4 ENERGY MODELS

23  

BUILDING TYPES

23  

CLIMATE ZONES

25  

HVAC SYSTEM MODELING

26  

Chapter  5 COST DATA FOR LCC ANALYSIS

37  

INITIAL INVESTMENT COST

37  

OM&R COSTS AND REPLACEMENT COSTS

39  

ENERGY COSTS

42  

iv

COST-RELATED FACTORS

45  

Chapter  6 FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS ASSESSMENT

48  

ENERGY SAVINGS

48  

LCC RESULTS

51  

SPECIAL CONSIDERATION FOR CONDUCTING THE LCC

57  

Chapter  7 CONCLUSION

61  

APPENDIX  A LCC EXAMPLE

63  

APPENDIX  B LCC RESULTS WITH NATIONAL ENERGY PRICES

67  

REFERENCES

70  

v

LIST OF TABLES Page Table 1 UPV* factors adjusted for fuel price escalation

10  

Table 2 Reference building types

24  

Table 3 Climate zones and representative cities

26  

Table 4 Summary of HVAC system of base case for each building type

27  

Table 5 Results of comparison of VRF + DOAS with VRF only in Miami and Houston 31   Table 6 Results of comparison of VRF + DOAS with VRF only in Phoenix and Atlanta32   Table 7 Results of comparison of VRF + DOAS with VRF only in Las Vegas and San Francisco

33  

Table 8 Results of comparison of VRF + DOAS with VRF only in Baltimore and Albuquerque

34  

Table 9 Results of comparison of VRF + DOAS with VRF only in Seattle and Chicago 35   Table 10 Results of comparison of VRF + DOAS with VRF only in Boulder

36  

Table 11 Initial investment costs of base cases per building type

38  

Table 12 Incremental costs of VRF systems from other systems

38  

Table 13 Initial costs of both VRF and base cases

39  

Table 14 Typical OM&R costs data of VRF systems

40  

Table 15 Custom price indexes (CPI)

41  

Table 16 Typical OM&R costs data of base cases

41  

Table 17 Annual Energy Use Intensity of electricity in kWh/m2/year for base cases

42  

Table 18 Annual Energy Use Intensity of natural gas in kWh/m2/year for base cases

43  

vi

Table 19 Annual Energy Use Intensity of electricity in kWh/m2/year for VRF systems 43   Table 20 Annual Energy Use Intensity of natural gas in kWh/m2/year for VRF systems 44   Table 21 Energy Prices for each climate zone

45  

Table 22 City cost indexes

46  

Table 23 Percentages of energy savings in HVAC consumption

49  

Table 24 Percentages of energy savings in total building energy consumption

49  

Table 25 Potential HVAC only energy savings from VRF systems compared to other systems

50  

Table 26 Summary of general information for LCC

51  

Table 27 Total life-cycle costs of VRF systems per location

52  

Table 28 Total life-cycle costs of base cases (reference buildings) per location

52  

Table 29 Net savings for all building types and location

53  

Table 30 Saving-to-Investment ratio for all building types and location

53  

Table 31 Simple payback time for all building types and location

54  

Table 32 Discounted payback time for all building types and location

54  

Table 33 Averages of outputs

55  

Table 34 HVAC savings of all building types

55  

Table 35 Simple payback with national energy prices

57  

Table 36 Net savings with national energy prices

58  

Table 37 Difference in simple payback (subtracting national prices from regional prices) 58   Table 38 Differences in net savings, by subtracting constant values from various values59  

vii

Table 39 Discounted payback variations depending on investment and OM&R cost factors

60  

Table 40 Saving-to-Investment variations depending on investment and OM&R cost factors

60  

Table 41 General building information for LCC

63  

Table 42 Specific information of VRF system and the base case for LCC

63  

Table 43 LCC calculation of VRF system

64  

Table 44 LCC calculation of the base case

64  

Table 45 Net saving calculation

65  

Table 46 SIR calculation

65  

Table 47 Cash flows, including SPB and DPB

66  

Table 48 Total life-cycle costs of VRF systems with constant prices

67  

Table 49 Total life-cycle costs of base cases with national prices

67  

Table 50 Net savings with national prices

68  

Table 51 Saving-to-Investment ratio with national prices

68  

Table 52 Simple payback with national prices

69  

Table 53 Discounted payback with national prices

69  

viii

LIST OF FIGURES Page Figure 1 Buildings site energy consumption by end use in 2010

1  

Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost

2  

Figure 3 Concept Diagram of LCC Analysis

4  

Figure 4 Length of study period

5  

Figure 5 Rate of price changes for Home-related items

9  

Figure 6 PV diagram of one-time amounts

11  

Figure 7 PV diagram of annually recurring uniform amounts

12  

Figure 8 PV diagram of annually recurring non-uniform amounts

12  

Figure 9 PV diagram of annually recurring energy costs

13  

Figure 10 Climate zone classification

25  

Figure 11 VRF system diagram

28  

Figure 12 VRF system modeling diagram with or without DOAS

30  

Figure 13 Size modifier curve

47  

ix

SUMMARY

As concern for the environment has been dramatically raised over the recent decade, all fields have increased their efforts to reduce impact on environment. The field of construction has responded and started to develop the building performance strategies as well as regulations to reduce the impact on the environment. HVAC systems are obviously one of the key factors of building energy consumption. This study investigates the system performance and economic value of variable refrigerant flow (VRF) systems relative to conventional HVAC systems by comparing life-cycle cost of VRF systems to that of conventional HVAC systems. VRF systems consist mainly of one outdoor unit and several indoor units. The outdoor unit provides all indoor units with cooled or heated refrigerant; with these refrigerants, each indoor unit serves one zone, delivering either heating or cooling. Due to its special configuration, the VRF system can cool some zones and heat other zones simultaneously. This comparative analysis covers six building types—medium office, standalone retail, primary school, hotel, hospital, and apartment—in eleven climate zones—1A Miami, 2A Houston, 2B Phoenix, 3A Atlanta, 3B Las Vegas, 3C San Francisco, 4A Baltimore, 4B Albuquerque, 4C Seattle, 5A Chicago, and 5B Boulder. Energy simulations conducted by EnergyPlus are done for each building type in each climate zone. Base cases for each simulation are the reference models that U.S. Department of Energy has developed, whereas the alternative case is the same building in the same location with a VRF system. The life-cycle cost analysis provides Net Savings, Savingto-Investment ratio, and payback years. The major findings are that the VRF system has an average of thirty-nine percent HVAC energy consumption savings. As for the results of the life-cycle cost analysis, the average of simple payback period is twelve years.

x

CHAPTER 1 INTRODUCTION Green building is part of the larger concept of “sustainable development,” characterized by Sara Parkin of British environmental initiative, as “a process that enables all people to realize their potential and improve their quality of life in ways that protect and enhance the Earth’s life support systems.” (Means, 2006) There is a variety of strategies to reach the goals of the green building such as energy conscious design strategies, changing to energy-efficient systems or materials, educating appropriate ways of operation, etc. This study focuses on the energy consumption aspect of the buildings. Buildings consume forty percent of total energy consumption in the United States: consumptions of commercial and those of residential buildings are marked by nineteen percent and twenty-two percent in 2010, respectively.1 This high portion out of total energy consumption of buildings indicates buildings should get significant attention in energy savings. In detail, breakdown of energy consumption of buildings is shown in Figure 1.

Figure 1 Buildings site energy consumption by end use in 20102

1

Source from Building Energy Data Book of U.S. Department of Energy Building Energy Data Book of U.S. Department of Energy (http://buildingsdatabook.eren.doe.gov/ChapterIntro1.aspx) 2

1

Many energy-efficient systems tend to have a higher initial cost but consume less energy during operation. When it comes to economic evaluation, these strategies must be evaluated over their entire life-cycle. This study adopts life-cycle cost analysis for comparing VRF systems to the conventional systems. Since the life-cycle cost analysis is a straightforward method of economic analysis and evaluates entire costs through the lifecycle of the system, it is an appropriate method to compare economic effectiveness of VRF systems to conventional HVAC systems. This is further supported by Figure 2, which shows that the life-cycle sum of utilities, maintenance, and replacement cost of the same order of magnitude as the initial investment.

Utilities   28%  

Initial  Project   Cost   58%  

Maintenance   6%   Service   4%   System   Replacements   4%  

Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost3

3

(Reidy et al., 2005)

2

CHAPTER 2 LIFE CYCLE COST ANALYSIS

Life-cycle assessments are typically used in two distinct fields: life-cycle assessment (LCA) and life cycle cost analysis (LCC). Life-cycle assessment (LCA) evaluates the environmental burden of a product from the mining of the raw material used in production and distribution, through to its use, possible reuse or recycling, and its eventual disposal, primarily in terms of non-renewable energy and materials, pollution, and waste. Life-cycle cost analysis (LCC) is the valuation of the total cost of ownership of an item over its usable life, taking into account all of the costs of acquisition, operation, maintenance, modification and disposal, for the purpose of making decisions (Nornes, Johnson, Senior, Dunbar, & Grosse, 2005). Both assessments play a significant role in decision making among alternatives. In the field of construction, life-cycle cost analysis is a process of evaluating the economic performance of a building over its entire life. Sometimes known as “whole cost accounting” or “total cost of ownership”, LCC analysis balances initial monetary investment with the long-term expense of owning and operating the building(Reidy et al., 2005). In addition, it is also defined that life-cycle cost analysis is one of the most straightforward and easily understandable methods of evaluation; it is used in all three of these fields: building economics, value engineering, and cost engineering (Means, 2006). Therefore, the life-cycle cost analysis method allows decision makers to consider the whole financial picture of a project so that they can sort out the best cost efficient alternative. In terms of comparison alternatives of green with conventional technologies, the whole life-cycle cost is indeed an appropriate approach because a green project tends to require more initial cost but less operation cost than typical methods. LCC analysis can be applied to any capital investment decision in which higher initial costs are traded for 3

reduced future cost obligations. LCC analysis provides a significantly better assessment of the long-term cost effectiveness of a project than alternative economic methods that focus only on first costs or on operating-related costs in the short run(Fuller & Petersen, 1996). LCC analysis takes into account all costs of acquiring, operating, maintaining, and disposing of a building or building system. The LCC concept requires that all costs and savings be calculated over a common study period and discounted to present value before they can be meaningfully compared(Means, 2006). Figure 3 shows the scheme of how to calculate LCC, converting future costs to present values.

Figure 3 Concept Diagram of LCC Analysis

4

Considerations for LCC Analysis Study Period In order to perform an LCC, the choice of study period also known as life span is important. A too long period or too short period would lead to an inappropriate result. The study period for an LCC is the time over which the costs and benefits related to a capital investment decision are of interest to the investor. There is no correct study period of a project, but the same study period must be used in computing the Life-cycle cost of each project alternative(Fuller & Petersen, 1996). The maximum study period for federal energy and water conservation and renewable energy projects according to 10 CFR 436A4 is 25 years from the date of occupancy of a building or the date a system is taken into service. Any lead-time for planning, design, construction, or implementation may be added to the 25-year maximum planning/construction/implementation period and the service period(Fuller, 2005). Figure 4 shows the length of study period, including planning/construction period and service period. In this study, the study period is set to 20-year based on the consideration that the service life of the considered HVAC systems is typically assumed to be 20 years.

Figure 4 Length of study period5

4

Code of Federal Regulations, 10 CPR 436, Subpart A, Federal Energy Management and Planning Programs; Life Cycle Cost Methodology and Procedures 5 (Fuller & Petersen, 1996)

5

Discount Rate “Because of inflation and the real earning power of money, a dollar paid or received today is not valued the same as a dollar paid or received at some future date. For this reason, costs and savings occurring over time must be “discounted.” Discounting adjusts cash flows to a common time, often the present, when an analysis is performed, or a decision has to be made. The conversion of all costs and savings to time-equivalent “present values” allows them to be added and compared in a meaningful way. To make cash flows time-equivalent, the LCC method converts them to present values by discounting them to a common point in time, usually the base date. The interest rate used for discounting is a rate that reflects an investor’s opportunity cost of money over time, meaning that an investor wants to achieve a return at least as high as that of her next best investment. Hence, the discount rate represents the investor’s minimum acceptable rate of return(Means, 2006).” The U.S. Department of Energy (DOE) determines each year the discount rate to be used in the LCCA of energy conservation, water conservation, and renewable energy projects(Fuller, 2005). This discount rate is used for calculating factors that convert future cost amounts to present values. LCC in this study is calculated with the real discount rate DOE has established. The discount and inflation rates for 2012 are as follows: Real rate (excluding general price inflation):

3.0 %

Nominal rate (including general price inflation):

3.5 %

Implied long-term average rate of inflation:

0.5%

Mathematics of Discounting Our method of calculation follows the description laid out in the “Life-cycle Costing Manual for federal Energy Management Program(Fuller & Petersen, 1996)” The future cash amount,  P! , after t years at a rate of interest, i, would be

6

P! = 𝑃! (1 + 𝑖)!

(2.1)

Reversely, if we know the future amount,  P! , at the end of t years at a rate of interest, i, the current cash amount,  𝑃! , can be calculated according to: !

! 𝑃! =   (!!!) !

(2.2)

The discount rate is a special type of interest rate that makes the investor indifferent between cash amounts received at different points in time. The mathematics of discounting is identical to the mathematics of compound interest. The discount rate, d, is used like the interest rate, i, shown in equations 2.1 and 2.2 to find the present value, PV, of a cash amount received or paid at a future point in time(Fuller & Petersen, 1996). Then, present value, PV, of the future amount at the end of t years, 𝐹! , can be computed according to the equation 2.3, the same formula as for compounded interest. !

! PV =   (!!!) !

(2.3)

Inflation Inflation is a rise of the level of prices of goods in an economy over a period time reflecting a reduction in the purchasing power. Inflation reduces the value or purchasing power of money over time. It is a result of the gradual increase in the cost of goods and services due to economic activity(Reidy et al., 2005). There are two approaches for dealing with inflation in the LCC: one is to compute LCC with current dollars the other is to calculate LCC with constant dollars. Current dollars are dollars of any one year’s purchasing power, inclusive of inflation. That is, they reflect changes in the purchasing power of the dollar from year to year. In contrast, constant dollars are dollars of uniform purchasing power, exclusive of inflation. Constant dollars indicate what the same good or service would cost at different times if there were no change in the general price level—

7

no general inflation or deflation—to change the purchasing power of the dollar(Fuller & Petersen, 1996). The two methods of dealing with inflation are as follows: •

Constant dollar method: estimate future costs and savings in constant dollars and discount with a “real” discount rate, i.e., a discount rate that excludes inflation.

•

Current dollar method: estimate future costs and savings in current dollars discount with a “nominal” discount rate, i.e., a discount rate that includes inflation. The Federal Energy Management Program (FEMP) accepts the LCC calculated in

both constant dollars and current dollars, but the LCC computed in constant dollars is preferred. These two methods result in the same present value so that they can conclude the same result of LCC. However, the convenience of the calculation of LCC, being able to apply the constant cost to each year, the constant dollar method is used in this study. The constant dollar method has the advantage of not requiring an estimate of the rate of inflation for the years in the study period; alternative financing studies are usually performed in current dollars if the analyst wants to compare contract payments with actual operational or energy cost savings from year to year (Fuller, 2013).

Price Escalation Since not all item prices, especially energy price, change at the rate of the general inflation, a rate of discount for those items should to calculate LCC would be vary in the LCC calculation. Figure 5 shows the rate of general inflation and rate of price escalation for the years 1970 through 1994. According to Figure 5, the rate of price change of energy price, fuel oil, only significantly differ from the rate of the general inflation. Even though the time period of the Figure 5 (Fuller & Petersen, 1996) is in the past, it is clear enough to explain the deviation profile of energy price from the rate of general inflation.

8

RATE OF CHANGE

0.60

0.40

0.20

0

-0.20 -0.40 72

74

76

78

80

82

84

86

88

90

92

94

YEAR All items

M&R

Const. Materials

Fuel oil

Figure 5 Rate of price changes for Home-related items6

Consequently, for energy-related costs, the FEMP LCC methodology requires the use of DOE-projected real escalation rates by fuel type as published in the Annual Supplement to Handbook 135(Fuller & Petersen, 1996). These real escalation rates and the real DOE discount rate are used to calculate the “modified uniform present value (UPV*) factors” for energy costs in FEMP LCC analyses. (Fuller, 2005) These UPV* factors enable the energy cost that deviates from the general inflation to be converted to the present value, based on the discounting concept. This study applies the UPV* factors published in 2012 according to the base date of the LCC analysis. The Table 1 shows the U.S. average UPV* factors of electricity and natural gas for both commercial and residential use. The source of the data in the Table 1 is derived from (Rushing, Kneifel, & Lippiatt, 2012). This source includes detailed information about how to compute these factors.

6

(Fuller & Petersen, 1996)

9

Table 1 UPV* factors adjusted for fuel price escalation7

N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

7

Electricity Residential Commercial 0.94 0.91 1.86 1.81 2.78 2.7 3.68 3.55 4.54 4.37 5.39 5.18 6.21 5.97 7.02 6.74 7.79 7.48 8.55 8.21 9.29 8.92 10.01 9.61 10.71 10.29 11.39 10.95 12.05 11.59 12.7 12.21 13.32 12.82 13.94 13.42 14.54 14.01 15.13 14.58 15.71 15.15 16.28 15.71 16.83 16.25 17.37 16.79 17.9 17.31 18.42 17.82 18.92 18.32 19.42 18.81 19.9 19.29 20.37 19.76

(Rushing, 1992)

10

Natural Gas Residential Commercial 1.02 1.05 2.03 2.12 3 3.16 3.92 4.16 4.82 5.14 5.71 6.1 6.57 7.04 7.41 7.96 8.23 8.85 9.04 9.73 9.83 10.59 10.6 11.44 11.36 12.27 12.1 13.07 12.81 13.85 13.52 14.62 14.21 15.38 14.89 16.13 15.57 16.88 16.24 17.62 16.91 18.36 17.57 19.08 18.22 19.8 18.85 20.5 19.47 21.18 20.08 21.86 20.68 22.52 21.27 23.18 21.85 23.82 22.41 24.45

Present Value Estimating a project cost during a certain period of time requires the same cash value because cost in the future is not the same as the current cost value. Thus, future cash amount is converted to a present value that is equivalent to the future cash amount. There are four types of present value formula in a LCC analysis: one-time amounts, annually recurring uniform amounts, annually recurring non-uniform amounts, and annually recurring energy costs. Present Value for One-time Amounts8 The single present value (SPV) factor is used to calculate the present value, PV, of a future cash amount occurring at the end of year t, 𝐹! , given a discount rate, d. 1 (1 + 𝑑)! Present value can be calculated with the SPV factor. PV =   𝐹!  ×  

PV =   𝐹!  ×  𝑆𝑃𝑉(!,!) Ft SPV

PV

Figure 6 PV diagram of one-time amounts

Present Value for Annually Recurring Uniform Amounts9 The uniform present vale (UPV) factor is used to calculate the PV a series of equal cash amounts, 𝐴! , that recur annually over a period of n years, given d. !

PV =   𝐴!  ×   !!!

8 9

1 (1 + 𝑑)! − 1 =   𝐴  ×     ! (1 + 𝑑)! 𝑑(1 + 𝑑)!

(Fuller & Petersen, 1996) Table 3-1. Same source as footnote 2

11

Present value can be calculated with the UPV factor. PV =   𝐴!  ×  𝑈𝑃𝑉(!,!) PV

UPV A0

A0

A0

Figure 7 PV diagram of annually recurring uniform amounts

Present Value for Annually Recurring Non-uniform Amounts The modified uniform present vale (UPV) factor is used to calculate the PV recurring annual amounts that change from year to year at a constant escalation rate, e, over n years, given d. The escalation rate can be positive or negative. !

PV =   𝐴!  ×   !!!

!

1+𝑒 ! 1+𝑒 1+𝑒 ( ) =   𝐴! (1 −   )   1+𝑑 𝑑−𝑒 1+𝑑

Present value can be calculated with the UPV factor. PV =   𝐴!  ×  𝑈𝑃𝑉(!,!,!) PV

UPV A1

A2

A3

Figure 8 PV diagram of annually recurring non-uniform amounts

Present Value for Annually Recurring Energy Costs (FEMP LCCA) The FEMP UPV* factor is used to calculate the PV of annually recurring energy costs over n years, which are assumed to change from year to year at a non-constant escalation rate, based on DOE projections. FEMP UPV* factors are pre-calculated for the current DOE discount rate and published in table Ba-1 through Ba-5 of the Annual Supplement to Handbook 135. PV =   𝐴!  ×  𝑈𝑃𝑉 ∗ (!"#$%&  ,!"#$  !"#$,!"#$  !"#$,!,!) 12

UPV*

PV

A2

A3

A1 Figure 9 PV diagram of annually recurring energy costs

The LCC method provides a consistent means of accounting for all costs related to a particular building function, building system, or related project over a given study period. In general, an LCCA is needed to demonstrate that the additional investment cost for a project alternative is more than offset by its corresponding reduction in operating and maintenance costs (including energy and water costs), relative to the base case. The following are key points which should be recognized when using the LCC method for project evaluation(Fuller & Petersen, 1996): •

Choose among two or more mutually exclusive alternatives on the basis of lowest LCC.

•

All alternatives must meet established minimum performance requirements.

•

All alternatives must be evaluated using the same base date, service date, study period, and discount rate.

•

Positive cash flows (if any) must be subtracted from costs.

•

Effects not measured in dollars must be either insignificant, uniform across alternatives, or accounted for in some other way. In our comparative analysis of VRF systems, we adhere to all requirements. Summary of Life-Cycle Cost Analysis Discount rate, inflation, and price escalation play a major role in computing

present values for each cost, e.g. initial investment and energy prices. These present values yield the life-cycle cost by accumulating them all.

13

CHAPTER 3 CALCULATING LIFE-CYCLE COST Calculation of Life-cycle Cost This study is to compare a VRF system with conventional HVAC system through a life-cycle cost analysis (LCCA). Therefore, the required methods of measurement in this study are life-cycle method and associated measures: Net Savings, Saving-toInvestment Ratio, and Payback. This chapter introduces how to calculate these measures Life-cycle Cost Calculation General Formula for LCC10 The general formula for the LCC present-value is as follows: !

𝐿𝐶𝐶 =   !!!

where

𝐶! (1 + 𝑑)!

LCC

= Total LCC in present value dollars of a given alternative,

𝐶!

= Sum of all relevant costs, including initial and future costs, less any positive cash flows, occurring

10

N

= Number of years in the study period, and

d

= Discount rate used to adjust cash flows to present value.

(Fuller & Petersen, 1996) Chapter 5.

14

LCC Formula for Building-related Projects11 A simplified LCC formula for computing the LCC of energy and water conservation projects in buildings can be stated as follows: LCC = I + Repl – Res + E + W + OM&R where: LCC

= Total LCC in present value dollars of a given alternative,

I

= Present value investment costs,

Repl

= Present value capital replacement costs,

Res

= Present value residual value less disposal costs,

E

= Present value energy costs,

W

= Present value water costs, and

OM&R= Present value non-fuel operating, maintenance, and repair costs. Since this study is to compare HVAC system of the alternative to that of base case and focus more on energy consumption, the other costs are simplified and omitted because they are identical in both cases in the comparison.

Supplementary Measures of Economic Evaluation Additional measures of economic performance can be used to determine the comparative cost-effectiveness of capital investments. Several widely used measures are Net Savings (NS), Saving-to-Investment Ratio (SIR), and Payback Period (PB). These measures are meaningful only in relation to a base case and are consistent with the LCC methodology if they use the same study period, discount rate, and escalation rates(Means,

11

Same source as footnote 4

15

2006). Since LCC analyses provide objective result of the comparison among alternatives, supplementary measures derived from the LCC analysis supply the apparent ramification of economic comparison.

Net Saving The Net Savings measure is a variation of the Net Benefits (NB) measure of economic performance of a project. The NB method measures the difference between present-value benefits and present-value costs for a particular investment over the designated study period. The NB measure is generally applied when positive cash flows are intended to justify the investment in a project. The NS method is applied when benefits occur primarily in the form of future operational cost reductions(Fuller & Petersen, 1996). General Formula for Net Savings12 Net savings can be calculated using individual cost differences by applying the following general formula: !

𝑁𝑆!:!" =   !!!

where:

𝑆! −   (1 + 𝑑)!

!

!!!

𝛥𝐼! (1 + 𝑑)!

𝑁𝑆!:!" = Net Saving, in present value dollars, of the alternative (A), relative to the base case (BC),

12

𝑆!

= Savings in year t in operational costs associated with the alternative,

𝛥𝐼!

= Additional investment costs in year t associated with the alternative,

(Fuller & Petersen, 1996) Chapter 6.1.1

16

t

= Year of occurrence (where 0 is the base date),

d

= Discount rate, and

N

= Number of years in study period.

Net Savings Formula for Building-Related Projects13 A more practical NS formula for building-related projects takes advantage of present value (SPV, UPV, and UPV*) to compute the present value of each cost category before combining them into operation-related or investment-related cost categories: 𝑁𝑆!:!" = 𝛥𝐸 +  𝛥𝑊 +  𝛥𝑂𝑀&𝑅 − (𝛥𝐼! +  𝛥𝑃𝑒𝑝𝑙 −  𝛥𝑅𝑒𝑠) where 𝑁𝑆!:!"

= Net Savings, that is, operation-related savings minus additional investment costs,

ΔE

= (𝐸!" −   𝐸!) Savings in energy costs attributable to the alternative,

ΔW

= (𝑊!" −   𝑊!) Savings in water costs attributable to the alternative,

ΔOM&R

= (𝑂𝑀&𝑅!" −   𝑂𝑀&𝑅!) Savings in OM&R costs,

𝛥𝐼!

= (𝐼! −   𝐼!") Additional initial investment cost required for the alternative relative to the base case,

ΔRepl

= (𝑅𝑒𝑝𝑙! −   𝑅𝑒𝑝𝑙!") Additional capital replacement costs,

ΔRes

= (𝑅𝑒𝑠! −   𝑅𝑒𝑠!") Additional residual value, and

Where, all amounts are in present value.

13

Same source as footnote 6, but in Chapter 6.1.2

17

Summary of Net Savings Net Savings are adequate to compare an alternative, A, to the base case, BC, in the their economic values during an assigned study period. When the NS value is positive, it means the alternative is cost-efficient compared to the base case. On the contrary, if the value is negative, the alternative is cost-inefficient relative to the base case. This cost difference is equivalent to the cost difference between LCC of the alternative and LCC of the base case.

Saving-to-Investment Ratio The SIR is a measure of economic performance for a project alternative that expresses the relationship between its savings and its increased investment cost (in present value terms) as a ratio. It is a variation of the Benefit-to-Cost Ratio for use when benefits occur primarily as reductions in operation-related costs. Like the NS measure, SIR is a relative measure of performance; that is, it can only be computed with respect to a designated base case. This means that the same base date, study period, and discount rate must be used for both the base case and the alternative(Fuller & Petersen, 1996). General Formula for SIR14 The general formula for the SIR is comprised of the same terms used in the differential cost formula for the NS computation and is as follows:

𝑆𝐼𝑅!:!"

14

𝑆! + 𝑑)! =   𝛥𝐼! ! !!! (1 + 𝑑)! ! !!! (1

(Fuller & Petersen, 1996) Chapter 6.2.1

18

where 𝑆𝐼𝑅!:!" = Ratio of PV savings to additional PV investment costs of the alternative relative to the base case. 𝑆!

= Savings in year t in operational costs associated with the alternative,

𝛥𝐼!

= Additional investment costs in year t associated with the alternative,

t

= Year of occurrence (where 0 is the base date),

d

= Discount rate, and

N

= Number of years in study period.

SIR Formula for Building-Related Projects15 A more practical SIR formula for building-related projects is shown below. 𝑆𝐼𝑅!:!" =  

𝛥𝐸 +  𝛥𝑊 +  𝛥𝑂𝑀&𝑅 𝛥𝐼! +  𝛥𝑅𝑒𝑝𝑙 −  𝛥𝑅𝑒𝑠

where 𝑆𝐼𝑅!:!"

= Ratio of PV savings to additional PV investment costs of the alternative relative to the base case.

ΔE

= (𝐸!" −   𝐸!) Energy costs savings attributable to the alternative,

ΔW

= (𝑊!" −   𝑊!) Water costs savings attributable to the alternative,

ΔOM&R

= (𝑂𝑀&𝑅!" −   𝑂𝑀&𝑅!) Savings in OM&R costs,

𝛥𝐼!

= (𝐼! −   𝐼!") Additional initial investment cost required for the alternative relative to the base case,

ΔRepl

= (𝑅𝑒𝑝𝑙! −   𝑅𝑒𝑝𝑙!") Difference in capital replacement costs,

ΔRes

= (𝑅𝑒𝑠! −   𝑅𝑒𝑠!") Difference in residual value, and

Where, all amounts are in present value.

15

(Fuller & Petersen, 1996) Chapter 6.2.2

19

Summary of SIR An alternative can be considered cost-efficient compared to the base case when the SIR value is higher than 1.0. The value 1.0 of SIR means no cost benefit in a assigned study period. In other words, the savings in operation offsets the additional investment cost with the exact same cash amounts. Thus, the SIR, greater than 1.0, represents the equivalent conclusion to the Net Savings greater than zero does.

Payback There are two type of the payback method frequently used in the economic analysis: simple payback (SPB) and discounted payback (DPB). These payback methods provide the number of year that additional investment will be fully offset by the savings in operation. SPB, which is more frequently used, does not use discounted cash flows in the payback calculation. In most practical applications the SPB also ignores any changes in prices (e.g., energy price escalation) during the payback period. The acceptable SPB for a project is also typically set at an arbitrary time period often considerably less than its expected service period. The SPB for a project will generally be shorter than its DPB since undiscounted cash flows are greater than their discounted counterparts (assuming a positive discount rate). DPB is the preferred method of computing the payback

period for a project because it requires that cash flows occurring each year be discounted to present value before accumulating them as savings and costs. If the DPB is less than the length of the service period used in the analysis, the project is generally cost effective(Fuller & Petersen, 1996).

20

General Formula for Payback16 The payback is the minimum number of years, y, for which !

!!!

(𝑆! − Δ𝐼! )   ≥  Δ𝐼! (1 + 𝑑)!

where y

= Minimum length of time (usually years) over which future net cash flows have to be accumulated to offset initial investment costs,

S!

= Savings in operational costs in year t associated with a given alternative,

ΔI!

= Initial investment costs associate with the project alternative,

ΔI!

= Additional investment-related costs in year t, other than initial investment costs, and

d

= Discount rate.

Payback Formula for Building-Related Projects 17 A formula more specific to energy and water conservation projects in buildings can be stated as: Minimum number of years, y, for which !

!!!

(𝛥𝐸! +   𝛥𝑊! +  𝛥𝑂𝑀&𝑅! −  𝛥𝑅𝑒𝑝𝑙! +  𝛥𝑅𝑒𝑠! )   ≥   𝛥𝐼! (1 + 𝑑)!

where

16 17

(Fuller & Petersen, 1996) Chapter 6.4.1 (Fuller & Petersen, 1996) Chapter 6.2.2

21

ΔE

= (𝐸!" −   𝐸!) Savings in energy costs in year t,

ΔW

= (𝑊!" −   𝑊!) Savings in water costs in year t,

ΔOM&R

= (𝑂𝑀&𝑅!" −   𝑂𝑀&𝑅!) Difference in OM&R costs in year t,

𝛥𝐼!

= (𝐼! −   𝐼!") Additional initial investment cost,

ΔRepl

= (𝑅𝑒𝑝𝑙! −   𝑅𝑒𝑝𝑙!") Difference in capital replacement costs in year t,

ΔRes

= (𝑅𝑒𝑠! −   𝑅𝑒𝑠!") Difference in residual value in year t (usually zero in all but the last year of the study period), and

d

= Discount rate.

Summary of Payback In both general formula and formula for building-related projects, simple payback and discounted payback are calculated; when discount rate, d, is zero, the minimum year is considered as a simple payback, and when discount rate has a certain value, the minimum year represents a discounted payback.

22

CHAPTER 4 ENERGY MODELS This chapter focuses on the energy consumption component in the LCC analysis. Energy consumptions differ by regions and building types, so selection of climate zones and standard building types is the first step in conducting an energy consumption assessment, e.g. through energy simulation. This chapter introduces the building types, climate zones, and HVAC systems used in the comparative LCC analysis. Building Types We use DOE published reference buildings (with their published EnergyPlus energy models) as the conventional base cases. The alternative of each base case is the same building but now equipped with a VRF system. The DOE reference building models represent reasonably realistic building characteristics and construction practices. Fifteen commercial building types and one multifamily residential building were determined by consensus between DOE, the National Renewable Energy Laboratory, Pacific Northwest National Laboratory, and Lawrence Berkeley National Laboratory. The purpose of these models is to represent new and existing buildings. The reference building models are used for many types of building research, e.g. to assess new technologies; optimize designs; analyze advanced controls; develop energy codes and standards; and to conduct lighting, daylighting, ventilation, and indoor air quality studies. They also provide a common starting point to measure the progress of DOE energy efficiency goals for commercial buildings(M Deru et al., 2011). Since these reference models are able to represent almost seventy percent of all commercial buildings, assigning these models as the base case for our LCC analysis means that the results apply to a large section of building environment. This study applies

23

the LCC analysis to six types of building out of the fifteen commercial reference building types developed by DOE. The Table 2 shows the building types used in this study. Table 2 Reference building types

Building Type

Model

Specification

Medium Office

Office 53,630sf 3 floors

Primary School

Education 73,960sf 2 floors

Small Hotel

Lodging 43,200sf 4 floors

Standalone Retail

Retail 24,689sf 1 floor

Mid-rise Apartment

Multifamily residential 33,600sf 4 floors

Health care, inpatient 241,350sf 5 floors

Hospital

24

Climate Zones Climate zones have been already developed by U.S. Department of Energy to be applied for the analysis of energy efficiency. These zones were developed according to the several criteria in order to include all types of climate in the USA. The biggest criterion for the classification of climate zones is population because it represents the distribution of building across the entire country. Briggs et al. (2003) developed a climate zone classification system for DOE and ASHRAE Standard 90.1-2004 based on SAMSON (NCDC 1993) weather data(M Deru et al., 2011).Figure 1 shows the all classification of climate zones in the United States. Major divisions are hot, cold, warm, and mixed climate, and subdivisions are moist, dry, and marine climate. Plus, PNNL has developed a list of representative cities for each climate zone

Figure 10 Climate zone classification18

18

(M Deru et al., 2011) Credit: Briggs et al. [2003]; DOE [2005],

25

Since the VRF system has been shown to have no significant energy saving in the totally heating dominant (cold) climate zone, this study targets eleven selected climate zones and representative cities from above classifications. Selected climate zones are shown in Table 3. Table 3 Climate zones and representative cities

Climate  Zone  

Location  

Characteristic  

1A  

Miami,  Florida  

Very  hot  and  humid  

2A  

Houston,  Texas  

Hot  and  humid  

2B  

Phoenix,  Arizona  

Hot  and  dry  

3A  

Atlanta,  Georgia  

Warm  and  humid  

3B  

Las  Vegas,  Nevada  

Warm  and  dry  

3C  

San  Francisco,  California  

Warm  and  marine  

4A  

Baltimore,  Maryland  

Mixed  and  humid  

4B  

Albuquerque,  New  Mexico  

Mixed  and  dry  

4C  

Seattle,  Washington  

Mixed  and  marine  

5A  

Chicago,  Illinois  

Cool  and  humid  

5B  

Boulder,  Colorado  

Cool  and  dry  

HVAC System Modeling This study conducts the energy simulation in order to derive energy consumption of reference buildings and their VRF alternative. This study uses EnergyPlus as a simulation tool and selects reference buildings modeled in EnergyPlus by DOE as base case. EnergyPlus is a whole building energy simulation tool widely used worldwide to predict energy consumption of a building. The simulation outcome is used to quantify energy costs of the base case and the alternative case for each building type per representative climate location. The current version of EnergyPlus offers a VRF system for cooling and heating operation, but not heat recovery. A heat recovery module is in development. Research is also underway to calibrate EnergyPlus to real world VRF operation (FSEC 2012). In this study we have used what is currently available in

26

EnergyPlus, and have used workarounds for modeling of the outdoor air supply and potential heat recovery. This will be discussed later. HVAC System of Base Case In accordance with the building types section, the reference models developed by DOE are used as the base cases for the LCC analysis for each building type. All building parameters required for the energy simulation are identical to the parameters in the reference buildings, established by DOE. Detailed information are found in (M Deru et al., 2011). Table 4 shows the summary of HVAC systems of the base cases, i.e. for each building type. Table 4 Summary of HVAC system of base case for each building type

Building Type Medium Office Standalone Retail Small Hotel Primary School Mid-rise Apartment Hospital

Reference HVAC System Type Heating Cooling Furnace

PACU

Furnace

PACU

SZ CAV

ISH (Individual space heating), Furnace

IRAC, PACU

SZ CAV

Boiler

PACU

CAV

Furnace

PACU-SS

SZ CAV

Boiler

Chiller-water cooled

CAV and VAV

where PACU = Packaged air-conditioning unit ISH

= Individual space heating

IRAC = Individual room air conditioner MZ

= Multi zones

SZ

= Single zone

VAV = Variable air volume CAV = Constant air volume SS

Distribution MZ VAV with electricity reheat

= Split system

27

VRF System Variable refrigerant flow (VRF) systems are used in this study as the alternative for each building type. VRF systems consist mainly of a compressor unit, also known as outdoor unit, and several indoor fan coil units. The compressor unit is normally installed on the roof or in other suitable building attached outdoor area. It provides cooled and heated refrigerant through relatively small piping for space cooling and space heating. Typically, VRF systems are air-cooled systems, but they also come as water-cooled system. Simplified diagram of the VRF system is shown in Figure 11. VR F Outdoor  Unit Building

Refrigerant  Flow

2nd  Floor Indoor  Unit Zone  1 Off

Zone  2 Cooling

Zone  3 Cooling

1st  Floor

Zone  4 Heating

Zone  7 Heating

Zone  5 Cooling

Zone  6 Off

Zone  8 Cooling

Figure 11 VRF system diagram

The major beneficial feature is to cool some zones and heat the other zones simultaneously by transferring heat surpluses from a zone that needs cooling to a zone that needs heating. VRF systems allow heat recovery to be applied between cooling requiring zones and heating requiring zones with additional energy consumption. The compressor unit uses variable refrigerant flow and is controlled by a variable-speed drive, which may operate more efficiently than conventional compressors of similar size; the complexity of the variable refrigerant flow compressor and controls results in

28

significantly more expensive compressor units than comparable conventional systems(Thornton & Wagner, 2012). The indoor fan coil units can be installed on the wall, in the ceiling, or in the wall. Fan coil units provide space cooling and heating by recirculating inside air. Since VRF systems do not operate with an air duct system, a dual system is required for supplying outdoor air. This is usually done with a separate HVAC unit, commonly called a dedicated outside air system (DOAS) (Thornton & Wagner, 2012). Enabling space cooling and heating simultaneously by trading resources between multiple zones is the most energy efficient feature of VRF systems. This distinguished feature can furthermore allow VRF systems to avoid over cooling or heating. Conventional systems, such as the VAV with reheat system serving multiple zones with high variability in internal loads, have a hard time avoiding energy inefficiency. For instance, in the cooling season, it provides all zones with a cooled air that meets the almost lowest temperature requirement; consequently in some zones, the supplied air needs to be reheated to reach the set point of those zones. This procedure leads to additional energy consumption. As for VRF system modeling, VRF systems are modeled based on the modeling method as explained in the Engineering Reference (US DOE, 2013). In the comparative analysis, the alternative case is modeled by replacing the conventional HVAC system by the VRF system. All other reference model parameters, such as occupancy, lighting, plug loads, etc., are identical in base case and alternative. Modeling outdoor air component with VRF systems in the EnergyPlus has two options: adding DOAS to VRF systems and virtual component embedded in VRF systems. Basically, VRF systems do not have a component that supplies outdoor air into conditioned zones, the systems only function is to supply space heating and cooling by circulating inside air through a fan coil unit in the zone (supplied by hot or cold refrigerant). This implies that the VRF equipped building needs an additional system that supplies and conditions fresh (outdoor) air. Typically, a separate dedicated outside air 29

system (DOAS) will be used. DOAS are not unique to VRF systems and are used with many different types of systems, especially systems that do not deliver heating and cooling using air from a central source but use water or refrigerant. This includes chilled and hot water fan coils, WSHPs, radiant cooling and heating, and conventional split systems(Thornton & Wagner, 2012). The current EnergyPlus, version 8.0, enables VRF system itself to supply outdoor air, assuming VRF systems have an internal unit conveying outdoor air into conditioned zones. Figure 12 indicates how to supply outdoor air by the VRF system with DOAS or sole VRF system. Plus, the method that adds DOAS to VRF systems requires a bunch of additional work. After all, if both methods yield the same results, the method, allows VRF systems to supply outdoor air, would be the fast way of modeling, shortening by a large amount the effort and time for modeling the systems. Therefore, comparing one option to the other option is the prior work to decide outdoor-air system.

Figure 12 VRF system modeling diagram with or without DOAS

This comparison analysis is done in standalone retail building type because it has the smallest number of zones. The Table 5, Table 6, Table 7, Table 8, Table 9, and Table 10 shows the results of the comparison of VRF with DOAS and VRF only in each assigned climate zone. Each comparative analysis includes EUI of electric heating, electric cooling, total electricity, and gas heating. 30

 

Table 5 Results of comparison of VRF + DOAS with VRF only in Miami and Houston Climate   Zones  

Comparative  Charts   Elec.  Cooling    8    

0.04  

 6     BTU/sf  

BTU/sf  

Elec.  Heating   0.05   0.03  

 5    

0.02  

 3    

0.01  

 2    

0.00  

 -­‐     1   2   3   4   5   6   7   8   9   10   11   12   Month  

1A   Miami  

Month  

 

Elec.  Total  Energy    

 20    

Gas.  Heating   0.0004  

BTU/sf  

0.0003  

 10    

0.0002  

 5    

0.0001  

 -­‐    

0.0000  

1   2   3   4   5   6   7   8   9   10  11  12   VRF  +  DOAS  

Month  

1   2   3   4   5   6   7   8   9   10  11  12  

VRF  only  

Month  

 

Elec.  Heating  

BTU/sf  

BTU/sf  

2.00   1.50   1.00   0.50   0.00  

 9      8      6      5      3      2      -­‐    

1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10   11   12  

Month  

Month  

2A   Houston  

 

 

Elec.  Total  Energy    

Gas.  Heating  

 25     BTU/sf  

 20      15      10      5      -­‐     1   2   3   4   5   6   7   8   9   10  11  12   VRF  only  

31

0.06   0.05   0.04   0.03   0.02   0.01   0.00   1   2   3   4   5   6   7   8   9   10   11   12  

Month   VRF  +  DOAS  

 

Elec.  Cooling  

2.50  

BTU/sf  

 

0.0005  

 15    

BTU/sf  

1   2   3   4   5   6   7   8   9   10   11   12  

Month  

 

 

Table 6 Results of comparison of VRF + DOAS with VRF only in Phoenix and Atlanta Climate   Zones  

Comparative  Charts   Elec.  Cooling    8    

1.20  

 6     BTU/sf  

BTU/sf  

Elec.  Heating   1.60  

0.80   0.40  

 5      3      2    

0.00  

 -­‐     1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

2B   Phoenix  

Month  

  Elec.  Total  Energy    

Gas.  Heating   0.0045  

 15    

BTU/sf  

BTU/sf  

 20    

 

 10      5      -­‐    

0.0030   0.0015   0.0000  

1   2   3   4   5   6   7   8   9   10   11   12  

1   2   3   4   5   6   7   8   9   10   11   12  

Month   VRF  +  DOAS  

Month  

VRF  only  

 

  Elec.  Cooling    5    

3.20  

 4     BTU/sf  

BTU/sf  

Elec.  Heating   4.00   2.40   1.60   0.80  

 3      2      1    

0.00  

 -­‐     1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

Month  

3A   Atlanta  

 

 

Elec.  Total  Energy     BTU/sf  

BTU/sf  

 20      15      10      5    

0.60   0.50   0.40   0.30   0.20   0.10   0.00  

Gas.  Heating  

1   2   3   4   5   6   7   8   9   10  11  12  

 -­‐    

Month  

1   2   3   4   5   6   7   8   9   10   11   12   Month   VRF  +  DOAS  

VRF  only  

 

32

 

 

Table 7 Results of comparison of VRF + DOAS with VRF only in Las Vegas and San Francisco Climate   Zones  

Comparative  Charts   2.50  

Elec.  Heating  

Elec.  Cooling  

1.50  

BTU/sf  

BTU/sf  

2.00   1.00   0.50   0.00   1   2   3   4   5   6   7   8   9   10  11  12  

 6      5      4      3      2      1      -­‐     1   2   3   4   5   6   7   8   9   10  11  12  

Month  

3B   Las  Vegas  

Month  

  Elec.  Total  Energy    

Gas.  Heating   0.05   0.04  

 15     BTU/sf  

BTU/sf  

 20    

 

 10      5    

0.03   0.02   0.01  

 -­‐    

0.00  

1   2   3   4   5   6   7   8   9   10   11   12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  +  DOAS  

Month  

VRF  only  

 

  Elec.  Cooling   0.20  

1.20  

0.15  

BTU/sf  

BTU/sf  

Elec.  Heating   1.60  

0.80   0.40  

0.10   0.05  

0.00  

0.00   1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

Month  

3C   San  Francisco  

 

 

 12      11      11      10      10      9      9    

Elec.  Total  Energy    

0.80   BTU/sf  

BTU/sf  

1.00  

Gas.  Heating  

0.60   0.40   0.20   0.00   1   2   3   4   5   6   7   8   9   10  11  12   Month  

1   2   3   4   5   6   7   8   9   10   11   12   Month   VRF  +  DOAS  

VRF  only  

 

33

 

 

Table 8 Results of comparison of VRF + DOAS with VRF only in Baltimore and Albuquerque Climate   Zones  

Comparative  Charts   Elec.  Cooling   4.50  

6.00   5.00   4.00   3.00   2.00   1.00   0.00  

3.60   BTU/sf  

BTU/sf  

Elec.  Heating  

2.70   1.80   0.90   0.00   1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12   Month  

4A   Baltimore  

 

Elec.  Total  Energy    

Gas.  Heating   0.45   0.36  

 15    

BTU/sf  

BTU/sf  

 20    

Month  

 

 10      5    

0.27   0.18   0.09  

 -­‐    

0.00  

1   2   3   4   5   6   7   8   9   10   11   12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  +  DOAS  

Month  

VRF  only  

 

  Elec.  Cooling   2.50  

2.80  

2.00   BTU/sf  

BTU/sf  

Elec.  Heating   3.50   2.10   1.40  

1.50   1.00  

0.70  

0.50  

0.00  

0.00   1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

Month  

4B   Albuquerque  

  Elec.  Total  Energy    

Gas.  Heating   0.08  

 10    

BTU/sf  

BTU/sf  

 15    

 

 5    

0.06   0.04   0.02  

 -­‐    

0.00  

1   2   3   4   5   6   7   8   9   10   11   12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  +  DOAS  

VRF  only  

 

34

Month  

 

 

Table 9 Results of comparison of VRF + DOAS with VRF only in Seattle and Chicago Climate   Zones  

Comparative  Charts   Elec.  Cooling   0.35  

1.50  

0.28   BTU/sf  

BTU/sf  

Elec.  Heating   2.00  

1.00   0.50  

0.21   0.14   0.07   0.00  

0.00  

1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

Month  

4C   Seattle  

  Elec.  Total  Energy    

Gas.  Heating   0.012  

 6    

BTU/sf  

BTU/sf  

 8    

 

 4      2      -­‐    

0.009   0.006   0.003   0.000  

1   2   3   4   5   6   7   8   9   10   11   12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  +  DOAS  

Month  

VRF  only  

 

  Elec.  Cooling   4.00  

6.00  

3.20   BTU/sf  

BTU/sf  

Elec.  Heating   7.50   4.50   3.00   1.50  

2.40   1.60   0.80  

0.00  

0.00   1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

5A   Chicago  

Month  

  Elec.  Total  Energy    

Gas.  Heating   1.20  

 15    

BTU/sf  

BTU/sf  

 20    

 

 10      5      -­‐    

35

0.30   1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  only  

0.60  

0.00  

1   2   3   4   5   6   7   8   9   10  11  12   VRF  +  DOAS  

0.90  

Month  

 

 

Table 10 Results of comparison of VRF + DOAS with VRF only in Boulder Climate   Zones  

Comparative  Charts   Elec.  Cooling   2.00  

4.50  

1.60   BTU/sf  

BTU/sf  

Elec.  Heating   6.00  

3.00   1.50  

1.20   0.80   0.40  

0.00  

0.00   1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month  

Month  

5B   Boulder  

  Elec.  Total  Energy    

Gas.  Heating   0.80  

 15    

BTU/sf  

BTU/sf  

 20    

 

 10      5      -­‐    

0.60   0.40   0.20   0.00  

1   2   3   4   5   6   7   8   9   10  11  12  

1   2   3   4   5   6   7   8   9   10  11  12  

Month   VRF  +  DOAS  

VRF  only  

Month  

 

Charts in all climate zones show tiny differences in heating, cooling, and total electricity. Some cities have almost identical profiles. However, there is a big difference during the heating season. This is because that the sole VRF system does not use gas, for cooling nor for heating. However, in the VRF system with DOAS case, the supply of outdoor can apply pre-heating by gas. Even though there seems to be a big difference in the charts of gas heating, the actual EUI values of gas heating are very minor relative to those of electricity. Hence, the difference in gas heating is negligible in total. Consequently, it is concluded that virtual outdoor air systems perform almost identical to DOAS so that the modeling method, in which VRF systems includes virtual outdoor air system, can be used all alternatives compared in this study.

36

 

CHAPTER 5 COST DATA FOR LCC ANALYSIS According to the chapter 3, an LCC analysis requires initial investment costs, energy costs, water costs, OM&R costs, and residual value of both the base case, conventional HVAC systems, and the alternative, VRF system. Our LCC does not include water costs. Although energy savings lead to potential water usage reductions at the power plant generation side, these reductions are not directly visible as cost savings for the individual building owner. Initial Investment Cost In LCCA studies, the cost differences between alternatives are usually important, not the absolute costs. Initial costs therefore only need to be developed for the components that vary between considered alternatives(Reidy et al., 2005). The initial investment costs for this study will therefore only include the installation costs of HVAC systems. The installation costs of HVAC systems are derived from (RS Means square foot cost data, 2012). The cost figures in this square foot cost section were derived from approximately 11,200 projects contained in the RSMeans database of completed construction projects; they include the contractor’s overhead and profit, but do not generally include architectural fees or land costs (Balboni & Company, 2003). Square foot costs in the (RS Means, 2012) provide three costs: ¼, median, and ¾, shown in Table 11. The 1⁄4 column shows the cost point where 25% of the projects had lower costs and 75% had higher. The 3⁄4 column shows the cost point where 75% of the projects had lower costs and 25% had higher. The median column shows that 50% of the projects had lower costs and 50% had higher(Balboni & Company, 2003). Since current cost data sources do not include cost data of VRF systems because VRF systems are new in the United States, the initial costs of reference buildings can refer to those sources. Medium

37

costs are used for initial costs because they can be applied to different locations fairly accurately by multiplying with location factor explained next section in this chapter. Table 11 Initial investment costs of base cases per building type19

Types

1/4

MEDIAN

3/4

Office

13.35

16.25

19.45

Retail

12.05

15.8

33.35

School

9.65

11.9

16

Hotel

9.1

14.5

20.5

Apartment

24.5

31

43.5

Hospital

15.1

20.8

39.65

AS for the VRF system case, since more important than total initial cost is incremental cost for the VRF system relative to the base cases (Thornton & Wagner, 2012), adding incremental costs to the initial costs of base cases, introduced in Table 11 is used to establish initial costs of VRF systems. Several preceding studies conducted to figure out the incremental costs from the conventional systems. Table 12 shows the incremental costs of VRF systems relative to the other systems. Table 12 Incremental costs of VRF systems from other systems20

Chilled Water VAV

Packaged VAV

Notes

Source

0% to 22%

-

ASHRAE article, multiple sources

Goetzler, 2007

5% to 20%

-

Published article, various sources

Amarnath and Blatt, 2008

-

$2.68/ft !

Office projects, two retrofit projects, contractor cost estimate

EES Consulting, 2011

-

$2/ft !

Medical clinic, cost estimate, new construction

BPA 2012b

-

$3.50/ft !

Community college mixed use, VRF retrofit actual cost compared to VAV estimated cost

BPA 2012c

19 20

RSMeans Mechanical Cost Data 2012, 50 17 (Thornton & Wagner, 2012)

38

According to the Table 12, incremental costs vary with system type and building characteristics. Hence, for this study, an average value of the incremental costs from Table 12 is calculated. This average cost is in the range from $ 2.2/ft ! to $ 3/ft ! , which matches the range of extra costs compared to the chilled water VAV. As stated in (Thornton, 2012), since LCC analyses are to compare the difference between the base case and the alternative, a calculated average of incremental costs can be applied to our LCC analysis. The initial costs of the VRF system are computed by adding the incremental costs, $ 3/ft ! , to the initial costs of the reference systems. Table 13 shows the initial costs of both alternatives, VRF systems, and base cases buildings, that this study utilizes for LCC. Table 13 Initial costs of both VRF and base cases

Office

Alternative (VRF) $/ft ! 19.25

Base cases $/ft ! 16.25

Retail

18.8

15.8

School

14.9

11.9

Hotel

17.5

14.5

Apartment

34

31

Hospital

23.8

20.8

Types

OM&R Costs and Replacement Costs According to the formula for LCC in Chapter 3, LCC analyses require OM&R costs and replacement costs except for initial costs and residual value. Our study accumulated OM&R costs and replacement costs and simplified them to be used as annually recurring uniform costs. VRF system maintenance and repair costs items are introduced in Table 14 in a recent GSA study(Thornton & Wagner, 2012). It concerned a medium size hypothetical

39

office (48,000 ft2) for which an LCC analysis was conducted. The VRF system is assumed to have a DOAS using a constant air volume roof top unit with gas heat. Maintenance and repair costs for VRF system are estimated to be 0.2 $/ft2/yr (Thornton & Wagner, 2012).

Table 14 Typical OM&R costs data of VRF systems

Maintenance Component

Frequency Years

# of Cost Event

Fan coil filter change

1

20

Check/clean condensate system

1

20

Fan coil motor replacement

10

1

Refrigerant replacement

10

1

Incremental Replacement

15

1

OM&R costs for the base cases are derived from existing studies. The data from these preceding studies are calculated as dollar values at the time these studies were conducted. Thus, they need to be converted to the dollar value of 2012 using the custom price index (CPI) factor that the U.S. Bureau of Labor Statistics provides a CPI every year. The CPI is a time series measure of the price level of consumer goods and services. The cost data in a past year has to be adjusted to the current year when conducting the LCC analysis. The accompanying calculator (to be introduced later) contains the CPI data and converts costs data to the current year automatically (U.S. Bureau of Labor Statistics, 2013). Table 15 indicates the CPI factor used for this conversion. Both past dollar values from the used studies and their translation to current dollar values are shown in Table 16.

40

Table 15 Custom price indexes (CPI)21

Year

CPI Factors

1983 average

99.6

1999 average

166.6

2000 average

172.2

2012 average

229.6

Table 16 Typical OM&R costs data of base cases

Study

Study year $/ft2

Converted to 2012 $/ft2

(M A Martin & Durfee, 1999)

0.20

0.27

(Michaela A Martin, Madgett, & Hughes, 2000)

0.21

0.28

ASHRAE 2012 for 16 Georgia office buildings

0.29

0.29

ASHRAE Owning and Operating Cost Database22

0.25

0.25

Standard maintenance for a VRF system is similar to that of any DX system and consists mainly of changing filters and cleaning coils; because there are no water pumps to maintain or air ducts to be cleaned in a VRF system, less maintenance is required compared to other technologies (A.Bhatia, 2011). According to this statement, the value of the ASHRAE Owning and Operating Costa Database, $ 0.25/ft2, is used in the LCCA, which is a bit higher than that of VRF systems.

21

Source: U.S. Department Of Labor Bureau of Labor Statistics Washington, D.C. 20212 Consumer Price Index 22 Source from http://xp20.ashrae.org/publicdatabase/default.asp, ASHRAE Owing and Operating Cost Database, Equipment Life/Maintenance Cost Survey, ASHRAE Research Project 1237-TRP

41

Energy Costs Operational energy costs is the key component in the life-cycle cost of HVAC systems. In order to establish the energy cost data for the LCC, 132 energy models, at first, are created for the 6 building types, 11 climates zones, and 2different HVAC systems as explained in chapter 4. These simulations provide annual energy consumption per m! of both electricity and natural gas (kWh/m! /year.) Table 17 and Table 18 show the outcomes of the simulations for the base cases, i.e. annual energy use intensities of electricity and natural gas for base cases, respectively; Table 19 and Table 20 show the results for the VRF variants.

Table 17 Annual Energy Use Intensity of electricity in kWh/m2 /year for base cases Climate Zones

Electricity Office

Retail

School

Hotel

Hospital

Apartment

1A

Miami, Florida

159.82

190.61

167.67

181.32

352.53

102.91

2A

Houston, Texas

156.69

173.05

151.94

166.90

337.22

91.30

2B

Phoenix, Arizona

162.09

177.53

158.67

171.88

306.56

99.11

3A

Atlanta, Georgia

146.02

151.92

135.82

155.09

317.13

82.18

3B

Las Vegas, Nevada

150.76

147.88

141.32

156.41

309.48

86.96

3C

San Francisco, California

138.73

115.21

119.93

138.11

277.64

70.15

4A

Baltimore, Maryland

151.06

143.80

129.87

148.05

313.05

76.95

4B

Albuquerque, New Mexico

143.53

138.34

127.34

145.71

313.05

75.83

4C

Seattle, Washington

141.18

123.68

115.77

134.20

275.82

68.02

5A

Chicago, Illinois

154.91

139.64

125.15

146.15

300.94

74.54

5B

Boulder, Colorado

143.15

133.66

120.91

141.29

284.75

72.02

42

Table 18 Annual Energy Use Intensity of natural gas in kWh/m2 /year for base cases Climate Zones

Natural Gas Office

Retail

School

Hotel

Hospital

Apartment

1A

Miami, Florida

1.27

0.40

14.66

31.04

145.89

14.55

2A

Houston, Texas

1.80

20.29

26.39

40.75

166.45

25.62

2B

Phoenix, Arizona

1.39

16.14

23.10

36.40

199.86

19.85

3A

Atlanta, Georgia

3.71

43.00

38.12

49.37

162.71

34.94

3B

Las Vegas, Nevada

1.84

35.30

29.92

43.56

154.12

26.52

3C

San Francisco, California

1.86

42.44

38.66

50.43

197.56

29.46

4A

Baltimore, Maryland

7.11

82.93

60.68

61.91

194.94

52.42

4B

Albuquerque, New Mexico

3.41

59.13

45.37

54.01

194.94

40.25

4C

Seattle, Washington

3.20

82.69

52.04

61.28

193.42

48.01

5A

Chicago, Illinois

13.52

124.08

83.68

75.04

207.10

74.51

5B

Boulder, Colorado

7.06

89.08

61.86

64.35

154.08

56.48

Table 19 Annual Energy Use Intensity of electricity in kWh/m2 /year for VRF systems Climate Zones

Electricity Office

Retail

School

Hotel

Hospital

Apartment

4,982

2,294

6,871

4,014

22,422

3,135

1A

Miami, Florida

139.93

155.57

136.37

143.20

238.60

87.48

2A

Houston, Texas

133.55

150.25

130.92

137.20

228.27

84.19

2B

Phoenix, Arizona

136.92

151.15

130.95

139.63

230.55

86.95

3A

Atlanta, Georgia

126.67

140.93

125.99

131.71

228.88

80.59

3B

Las Vegas, Nevada

129.70

140.10

125.74

133.76

217.68

80.43

3C

San Francisco, California

115.94

121.86

115.89

122.17

195.43

69.50

4A

Baltimore, Maryland

126.65

147.31

125.20

130.91

213.44

83.12

4B

Albuquerque, New Mexico

123.61

135.91

121.86

127.67

209.97

77.79

4C

Seattle, Washington

119.01

133.04

118.54

124.25

199.48

76.67

5A

Chicago, Illinois

127.54

151.67

125.92

134.12

216.85

85.37

5B

Boulder, Colorado

122.47

141.50

122.08

129.02

211.31

76.71

43

Table 20 Annual Energy Use Intensity of natural gas in kWh/m2 /year for VRF systems Climate Zones

Natural Gas Office

Retail

School

Hotel

Hospital

Apartment

4,982

2,294

6,871

4,014

22,422

3,135

1A

Miami, Florida

1.27

0.00

13.85

30.49

22.47

22.47

2A

Houston, Texas

1.94

0.36

14.80

33.96

23.59

23.59

2B

Phoenix, Arizona

1.40

0.01

14.33

31.97

22.95

22.95

3A

Atlanta, Georgia

3.81

3.07

15.66

37.29

24.67

24.67

3B

Las Vegas, Nevada

1.97

0.21

14.96

34.37

23.72

23.72

3C

San Francisco, California

1.86

16.15

39.50

25.39

25.39

4A

Baltimore, Maryland

8.25

2.78

16.35

39.92

25.52

25.52

4B

Albuquerque, New Mexico

5.26

0.39

16.22

39.42

25.36

25.36

4C

Seattle, Washington

3.24

0.03

16.63

41.28

25.96

25.96

5A

Chicago, Illinois

14.91

9.53

16.94

42.22

26.26

26.26

5B

Boulder, Colorado

9.48

4.27

16.89

42.10

61.49

61.49

-

Energy costs are calculated by multiplying the energy use intensity with building floor area and energy prices for electricity and natural gas. There are two methods of applying energy prices: one is to use constant energy prices over all states with the U.S. average of electricity and natural gas, and the other is to apply various “local” energy prices for each state. The latter method leads to more regionalized and therefore more realistic results than the former does. This study utilizes the latter method, various energy prices. Different unit prices of electricity and natural gas for each climate zone are shown in Table 21 (U.S. Energy Information Administration).

44

Table 21 Energy Prices for each climate zone23

Climate Zone Representative City

Electricity ($/KWh)

Natural Gas ($/therm)

Residential

Commercial

Residential

Commercial

1A

Miami, Florida

0.13

0.12

1.76

1.09

2A

Houston, Texas

0.11

0.1

0.96

0.72

2B

Phoenix, Arizona

0.11

0.09

1.49

0.87

3A

Atlanta, Georgia

0.11

0.11

1.54

0.94

3B

Las Vegas, Nevada

0.1

0.09

0.95

0.63

3C

San Francisco, California

0.14

0.14

1.00

0.76

4A

Baltimore, Maryland

0.12

0.12

1.29

1.05

4B

Albuquerque, New Mexico

0.13

0.12

0.94

0.67

4C

Seattle, Washington

0.07

0.07

1.16

0.93

5A

Chicago, Illinois

0.11

0.1

0.95

0.82

5B

Boulder, Colorado

0.12

0.11

0.82

0.73

Cost-Related Factors Costs vary with locations, building size, and year. According to the description from the RS Means Square Foot Cost book, the median figures, when multiplied by the total city construction cost index figures and then multiplied by the project size modifier, should present a fairly accurate base figure, which should then have to be adjusted in view of the estimator’s experience, local economic conditions, code requirements, and the owner’s particular requirement (Balboni & Company, 2003). Thus, in order to estimate as close to as possible to reality, this study adopts two cost-related factors: city cost indexes and size modifier factors.

23

Sources from U.S. Energy Information Administration, http://www.eia.gov/

45

Since this study compares LCC cost between different climate zones and uses the average costs for LCC analysis, adjusting the average costs to the specific local markets and situations is necessary. As changes occur in local material prices, labor, rates, and equipment rental rates, the impact of these changes should be accurately measured by the change in the city cost index for each particular city as compared to the average (Mossman, Babbitt, Baker, Balboni, & Chiang, 2010). The city cost indexes allow initial investment costs and OM&R costs to be applied to the LCC analysis to obtain fairly accurate values. Table 22 indicates the city cost indexes of representative cities, used for this LCC analysis. The simple calculation of the cost at a specific city is as follow: 𝐼𝑛𝑑𝑒𝑥  𝑓𝑜𝑟  𝑐𝑖𝑡𝑦  𝐴  𝑋  𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙  𝑎𝑣𝑒𝑟𝑎𝑔𝑒  𝑐𝑜𝑠𝑡 = 𝐶𝑜𝑠𝑡  𝑖𝑛  𝑐𝑖𝑡𝑦  𝐴 100

Table 22 City cost indexes

Climate Zone, Representative City National Average

City Cost Indexes 100

1A

Miami, Florida

82.3

2A

Houston, Texas

86.2

2B

Phoenix, Arizona

88.5

3A

Atlanta, Georgia

88.5

3B

Las Vegas, Nevada

86.8

3C

San Francisco, California

123.4

4A

Baltimore, Maryland

93.3

4B

Albuquerque, New Mexico

87.7

4C

Seattle, Washington

104.2

5A

Chicago, Illinois

116.6

5B

Boulder, Colorado

91.7

46

The size factors account for the fact that a the larger buildings, typically, have lower costs per square foot. This is due mainly to the decreasing in contribution of the exterior walls plus the economy of scale usually achievable in larger buildings (Mossman et al., 2010). The size factor is derived by dividing the proposed building size by the typical building, and using this ratio to find the cost multiplier value from the cost modifier curve, illustrated in Figure 13.

Figure 13 Size modifier curve24

24

Source from (Mossman et al., 2010)

47

CHAPTER 6 FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS ASSESSMENT

Energy Savings With the results of simulations according to the models explained in Chapter 4, the reference buildings equipped with conventional HVAC systems and alternative VRF system are compared with respect to delivered energy consumptions by end energy type, i.e. electricity and natural gas. Because VRF systems generate heat with electricity instead of natural gas, which most reference systems use for heating, comparing savings by end uses separately may illustrate large gaps between electricity and natural gas. In order to perform a more appropriate comparison between VRF systems and reference systems, source energy, also known as primary energy, is computed. Source energy represents the total amount of raw fuel that is required to operate the building; the U.S. Environmental Protection Agency (EPA) has determined that source energy is the most equitable unit for evaluation (STAR, 2011). Site energy consumption in the form of electricity and natural gas are converted into source energies multiplied by 3.34 and 1.047, respectively as derived from (STAR, 2011). Using these factors, an overall comparison of the average savings in energy consumption of VRF systems over conventional systems can be calculated and averaged over all building types and locations. The resulting number is 39.6 percent, where the average per building types over all locations ranges from 29.2 percent, in stand-alone retail, to 59.9 percent, in hospital. The average saving in total building energy consumption (taken over al energy consumption in the building) is 16.4 percent, where

48

average for each building types over all locations from 12.5 percent to 38.2 percent. Percentages of energy savings for each building type are shown in Table 23 and Table 24. Table 23 Percentages of energy savings in HVAC consumption

Climate Zone

Office

Retail

School

Hotel

Hospital

Apartment

1A Miami

32.1%

34.0%

47.9%

47.1%

57.6%

33.4%

2A Houston

40.7%

31.8%

46.9%

47.1%

61.2%

33.5%

2B Pheonix

40.1%

33.3%

52.2%

46.5%

52.1%

31.7%

3A Atlanta

42.8%

31.2%

43.2%

48.4%

55.7%

38.1%

3B Las Vegas

42.1%

27.1%

48.3%

44.7%

58.5%

37.8%

3C Sanfancisco

65.2%

18.7%

52.8%

52.6%

75.8%

37.4%

4A Baltimore

46.8%

26.2%

46.5%

46.1%

66.2%

45.1%

4B Albuquerque

46.2%

32.0%

45.9%

48.4%

68.5%

41.1%

4C Seattle

57.7%

28.7%

38.3%

44.8%

71.8%

43.4%

5A Chicago

46.5%

25.6%

47.3%

41.0%

62.4%

58.7%

5B Boulder

21.5%

32.8%

14.3%

20.0%

29.4%

31.0%

Average

43.8%

29.2%

43.9%

44.2%

59.9%

39.2%

Table 24 Percentages of energy savings in total building energy consumption

Climate Zone

Office

Retail

School

Hotel

Hospital

Apartment

1A Miami

12.4%

18.4%

18.3%

20.0%

38.3%

14.5%

2A Houston

14.7%

16.2%

15.4%

17.7%

39.5%

13.1%

2B Pheonix

15.5%

17.2%

18.4%

18.4%

35.6%

13.4%

3A Atlanta

13.1%

14.2%

11.4%

15.9%

35.7%

13.5%

3B Las Vegas

13.9%

11.8%

13.5%

15.0%

37.1%

13.4%

3C Sanfancisco

16.4%

5.2%

8.4%

12.6%

40.1%

6.2%

4A Baltimore

15.7%

12.7%

12.5%

14.4%

40.8%

18.5%

4B Albuquerque

13.4%

13.3%

10.3%

13.9%

41.8%

13.2%

4C Seattle

15.6%

11.1%

6.3%

10.6%

38.3%

11.3%

5A Chicago

16.9%

13.4%

13.3%

13.2%

38.5%

29.9%

5B Boulder

13.7%

11.6%

9.2%

11.9%

34.1%

23.2%

Average

14.7%

13.2%

12.5%

14.9%

38.2%

15.5%

49

Preceding studies similar to ours have reported a variety of saving percentages in HVAC energy consumptions depending on building types and base cases. According to the (Thornton & Wagner, 2012), the average energy savings over different studies amounts to 38.3 percent; detailed information from these studies is shown in Table 25, directly from (Thornton & Wagner, 2012). Table 25 Potential HVAC only energy savings from VRF systems compared to other systems

Source

Chilled Water, VAV

Hart and Campbell, 2012 LG, 2011

36%

Goetzler, 2007

34%

EES Consulting, 2011 - from Aynur 2010, Amarnath and Blatt, 2008

33%

EES, 2011

Packaged VAV

Pakaged CAV

Air-Source Heat Pump

62%

39%

49%

49%

13%

29%

33%

43%

23%

LG, 2012

55%

Average

38.3%

WaterSource Heat Pump

As the table shows, the reported energy savings range from 13 percent to 55 percent. Our study shows similar ranges in resulting energy saving, i.e. ranging from 29.2 percent to 59.9 percent. Moreover, our average is close to the average found in other studies.

50

LCC Results Using the cost (adjustment) factors explained in the previous chapters, and using a life span of 20 years, the life-cycle cost analysis generates five outputs: total life-cycle costs in study year, net savings, simple payback, discounted payback, and saving-toinvestment ratios. A summary of the factors applying to is shown in Table 26. Table 26 Summary of general information for LCC

Building Type

6 building types

Building Location Climate Zone City Building Area Life cycle study period

11 climate zones According to the climate zones According to the building types        

20 years

Discount rate Electricity unit rate Natural gas unit rate Typical SF Size Factor

3.0%            

According to the climate zones According to the climate zones According to the building types According to the building types and sizes

Locator Factor

According to the climate zones

Additional information for the base cases and alternative VRF cases, such as energy consumption data, generated by the EnergyPlus simulations, initial investment costs, and simplified OM&R costs, which are embedded to LCC calculations. The results of total life-cycle cost, net savings, simple payback, and discounted payback, are illustrated in following tables. These results are calculated with various energy prices for each climate zone.

51

Table 27 Total life-cycle costs of VRF systems per location Climate Zone Representative City

Retail

VRF System School Hotel

Apartment

Hospital

1A

Miami, Florida

$2,165,140

$979,396

$2,968,324

$2,076,443

$1,194,378

$16,695,465

2A

Houston, Texas

$1,944,950

$867,224

$2,662,793

$1,887,851

$1,105,283

$14,916,714

2B

Phoenix, Arizona

$1,890,346

$826,042

$2,565,670

$1,851,073

$1,148,376

$14,424,965

3A

Atlanta, Georgia

$2,019,862

$896,478

$2,792,699

$1,985,936

$1,131,495

$15,986,280

3B

Las Vegas, Nevada

$1,822,682

$784,611

$2,479,864

$1,784,984

$1,050,940

$13,828,012

3C

San Francisco, California

$2,562,512

$1,084,815

$3,535,671

$2,535,588

$1,408,960

$19,466,357

4A

Baltimore, Maryland

$2,182,205

$991,755

$2,994,154

$2,131,878

$1,217,030

$16,564,672

4B

Albuquerque, New Mexico

$2,079,757

$918,195

$2,846,047

$2,007,694

$1,167,229

$15,848,600

4C

Seattle, Washington

$1,759,309

$737,318

$2,437,828

$1,818,413

$1,068,603

$13,403,439

5A

Chicago, Illinois

$2,255,772

$1,001,940

$3,062,092

$2,241,616

$1,346,371

$17,006,860

5B

Boulder, Colorado

$2,028,436

$911,585

$2,784,025

$1,994,256

$1,150,716

$15,855,671

$2,064,634

$909,033

$2,829,924

$2,028,703

Average

Office

$1,180,853 $15,817,912

Table 28 Total life-cycle costs of base cases (reference buildings) per location Climate Zone Representative City

Office

Reference HVAC System (Baseline) Retail School Hotel Apartment

Hospital

1A

Miami, Florida

$2,254,500

$1,086,028

$3,233,909

$2,278,121

$1,231,452

$22,720,261

2A

Houston, Texas

$2,024,077

$922,657

$2,777,668

$1,997,119

$1,092,088

$19,554,890

2B

Phoenix, Arizona

$1,963,493

$883,194

$2,715,292

$1,951,509

$1,158,068

$18,314,282

3A

Atlanta, Georgia

$2,082,342

$943,731

$2,846,984

$2,083,373

$1,110,565

$20,552,415

3B

Las Vegas, Nevada

$1,869,322

$794,493

$2,524,401

$1,838,464

$1,031,766

$17,291,201

3C

San Francisco, California

$2,667,027

$1,032,563

$3,463,900

$2,571,000

$1,331,110

$24,499,391

4A

Baltimore, Maryland

$2,297,225

$1,040,935

$3,086,518

$2,220,153

$1,175,763

$22,500,242

4B

Albuquerque, New Mexico

$2,159,771

$935,884

$2,850,616

$2,077,208

$1,117,002

$21,118,944

4C

Seattle, Washington

$1,760,305

$763,411

$2,379,797

$1,802,195

$1,007,165

$16,736,404

5A

Chicago, Illinois

$2,329,981

$1,025,279

$3,082,976

$2,263,651

$1,282,572

$21,237,209

5B

Boulder, Colorado

$2,093,680

$916,390

$2,751,830

$2,024,702

$1,098,346

$19,043,918

$2,136,520

$940,415

$2,883,081

$2,100,681

Average

52

$1,148,718 $20,324,469

Table 29 Net savings for all building types and location Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

$89,359

$106,633

$265,586

$201,678

$37,074

$6,024,797

2A

Houston, Texas

$79,127

$55,433

$114,875

$109,268

($13,195)

$4,638,175

2B

Phoenix, Arizona

$73,147

$57,152

$149,622

$100,436

$9,692

$3,889,316

3A

Atlanta, Georgia

$62,480

$47,254

$54,285

$97,437

($20,931)

$4,566,136

3B

Las Vegas, Nevada

$46,640

$9,882

$44,538

$53,480

($19,174)

$3,463,189

3C

San Francisco, California

$104,515

($52,252)

($71,771)

$35,412

($77,850)

$5,033,034

4A

Baltimore, Maryland

$115,020

$49,179

$92,364

$88,275

($41,267)

$5,935,571

4B

Albuquerque, New Mexico

$80,015

$17,689

$4,569

$69,513

($50,227)

$5,270,344

4C

Seattle, Washington

$996

$26,093

($58,031)

($16,218)

($61,437)

$3,332,965

5A

Chicago, Illinois

$74,209

$23,339

$20,884

$22,035

($63,799)

$4,230,349

5B

Boulder, Colorado

$65,244

$4,804

($32,195)

$30,446

($52,371)

$3,188,247

$71,887

$31,382

$53,157

$71,978

($32,135)

$4,506,557

Average

Table 30 Saving-to-Investment ratio for all building types and location Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

1.73

2.95

2.52

2.90

1.46

12.30

2A

Houston, Texas

1.62

1.97

1.63

1.98

0.84

9.31

2B

Phoenix, Arizona

1.56

1.97

1.80

1.88

1.11

7.78

3A

Atlanta, Georgia

1.48

1.80

1.29

1.85

0.76

8.96

3B

Las Vegas, Nevada

1.36

1.17

1.24

1.48

0.77

7.16

3C

San Francisco, California

1.57

0.36

0.73

1.22

0.36

7.30

4A

Baltimore, Maryland

1.83

1.79

1.47

1.73

0.55

10.82

4B

Albuquerque, New Mexico

1.62

1.30

1.02

1.61

0.41

10.28

4C

Seattle, Washington

1.01

1.38

0.74

0.88

0.40

5.94

5A

Chicago, Illinois

1.43

1.30

1.08

1.15

0.44

6.60

5B

Boulder, Colorado

1.48

1.08

0.83

1.26

0.42

6.37

1.52

1.55

1.30

1.63

0.68

8.44

Average

53

Table 31 Simple payback time for all building types and location Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

8

5

6

5

10

1

2A

Houston, Texas

9

7

9

7

17

1

2B

Phoenix, Arizona

9

7

8

8

13

2

3A

Atlanta, Georgia

10

8

12

8

19

1

3B

Las Vegas, Nevada

11

13

12

10

19

2

3C

San Francisco, California

9

30+

20

12

30+

2

4A

Baltimore, Maryland

8

9

10

8

25

1

4B

Albuquerque, New Mexico

9

12

14

9

30+

1

4C

Seattle, Washington

15

11

20

17

30+

2

5A

Chicago, Illinois

10

12

14

13

29

2

5B

Boulder, Colorado

10

14

18

12

30+

2

10

12

13

10

23

2

Average

Table 32 Discounted payback time for all building types and location Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

10

5

6

5

12

1

2A

Houston, Texas

11

9

11

8

25

1

2B

Phoenix, Arizona

11

9

10

9

17

2

3A

Atlanta, Georgia

12

10

15

9

29

1

3B

Las Vegas, Nevada

13

16

15

12

29

2

3C

San Francisco, California

11

30+

30+

15

30+

2

4A

Baltimore, Maryland

9

10

13

10

30+

1

4B

Albuquerque, New Mexico

11

15

19

11

30+

1

4C

Seattle, Washington

20

14

29

24

30+

2

5A

Chicago, Illinois

13

15

18

17

30+

2

5B

Boulder, Colorado

12

18

25

15

30+

2

12

14

17

12

27

2

Average

In the calculation of payback time, we assumed the results that mark over 30 years as 30 years.

54

A summary of the findings is given below: •

Since the results of the hospital case and apartment case deviate quite a bit from the other cases, we will show the overall averages with these outlier cases excluded. Below the averages for net savings, simple payback, discounted payback, and saving-to-investment ratio are shown in Table 33: an average over all building types (Avg. 1), an average that excludes the hospital (Avg. 2), and an average that excludes both hospital and apartment values (Avg. 3). Table 33 Averages of outputs

Output

Avg. 1

Avg. 2

Avg. 3

$ 783,804

$ 39,254

$ 57,101

Simple Payback

12 years

14 years

11 years

Discounted Payback SIR

14 years 2.52

16 years 1.34

14 years 1.50

Net Savings

•

The hospital case shows a significant difference compared to the other cases as shown in Table 34. One explanation is that the EUI of the reference hospital is 308.02 kWh/m! , which is significantly larger than the average of EUI of the other building types, which is excluding apartment, ranges from 135.85 to 153.19 kWh/m! . This shows that the EUI of the hospital is twice as large as that of the others. In other words, energy saving amounts are twice as higher as that of the other building types even by applying the same percentage of energy savings. Moreover, the energy savings in hospital is the most significant component in the LCCA. For this reason, the results of hospital case are much better than those of the other types. Table 34 HVAC savings of all building types

Average

Office

Retail

School

Hotel

Hospital

Apartment

43.8%

29.2%

43.9%

44.2%

59.9%

38.2%

55

•

The apartment case, on the other hand, shows opposite results, as shown in Table 34. The EUI of the reference apartment is 81.81 kWh/m! , which is relatively low compared to the other types. Even though there is 43.8 % of energy savings of HVAC systems in apartment cases, operational costs savings cannot easily offset the incremental investment costs. As a result, most apartment cases show the negative values in net savings.

•

Simple paybacks of the reference apartment surpass 20 years in mixed or cool climate zones. This is because of the lower EUI value and because of higher heating loads. Given the fact that the conventional systems in the reference apartment use natural gas for heating, and VRF systems use electricity for heating, and given the difference between electricity price and natural gas price, an increase in heating load negatively affect the result of LCC analysis. As a result the reference apartment show the lower values in mixed and cool climate zones, as compare to the other zones.

•

In the marine climate zone, San Francisco and Seattle, most building types show lower values relative to the other climate zones. Since these marine climate zones require less energy for heating and cooling, energy saving costs from VRF systems typically cannot offset the incremental investments even though VRF systems yield high operational energy savings by the HVAC systems around 40%. Overall, the VRF alternatives show substantial energy savings over all building

types and locations. The reference hospital is an especially favorable case, based on the fact that it consumes a large amount of energy, which leads to a high return on investment. The average of simple payback period over all building types and location is 12 years, which presents a compelling case to choose VRF over conventional system.

56

Special consideration for conducting the LCC A framework for conducting the LCC conducted in our study is illustrated in Appendix A. Some special considerations are summarized below. National Energy Prices VS. Regional Prices Most other preceding studies use the national average energy prices, i.e. nation wide instead of regionalized energy prices. Using national energy prices provides easy and quick process of comparisons. Electricity price of commercial and residential are $0.101/kWh and $1.119/kWh, respectively; natural gas price of commercial and residential are $0.813/therm and $1.068/therm, respectively.25 To see the difference between constant prices and regional prices, simple payback and net savings with constant prices as well as regional prices are shown bellow: Table 35 Simple payback with national energy prices Climate Zone Representative City

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

10

6

7

6

11

1

2A

Houston, Texas

9

7

9

7

17

1

2B

Phoenix, Arizona

8

7

7

7

13

1

3A

Atlanta, Georgia

11

9

13

9

24

1

3B

Las Vegas, Nevada

10

11

11

9

18

1

3C

San Francisco, California

12

30+

22

15

30+

2

4A

Baltimore, Maryland

9

11

13

10

30+

1

4B

Albuquerque, New Mexico

11

11

14

10

30+

1

4C

Seattle, Washington

11

15

24

15

30+

2

5A

Chicago, Illinois

10

12

14

13

30+

2

5B

Boulder, Colorado

11

12

17

12

30+

2

10

12

14

10

24

1

Average

25

Office

Sources from U.S. Energy Information Administration, http://www.eia.gov/

57

Table 36 Net savings with national energy prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

$53,488

$78,114

$188,237

$147,275

$23,844

$4,646,138

2A

Houston, Texas

$72,877

$54,229

$109,484

$104,141

($12,154)

$4,655,262

2B

Phoenix, Arizona

$85,698

$61,435

$165,861

$112,855

$7,667

$3,882,232

3A

Atlanta, Georgia

$42,156

$33,148

$24,294

$73,413

($34,177)

$3,901,224

3B

Las Vegas, Nevada

$56,761

$18,054

$63,014

$65,514

($15,004)

$3,951,881

3C

San Francisco, California

$27,915

($42,746)

($92,555)

($8,232)

($80,436)

$3,866,772

4A

Baltimore, Maryland

$72,045

$22,351

$30,799

$49,059

($54,269)

$4,573,682

4B

Albuquerque, New Mexico

$43,353

$23,572

$1,600

$46,701

($47,866)

$4,719,501

4C

Seattle, Washington

$45,199

($730)

($91,081)

($8,572)

($87,226)

$3,718,955

5A

Chicago, Illinois

$66,649

$16,532

$5,590

$14,545

($62,015)

$4,051,231

5B

Boulder, Colorado

$43,179

$13,112

($24,533)

$21,904

($41,714)

$2,931,675

$55,393

$25,188

$34,610

$56,237

($36,668)

$4,081,687

Average

Table 37 Difference in simple payback, by subtracting national prices from regional prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

(2)

(1)

(1)

(1)

(1)

-

2A

Houston, Texas

-

-

-

-

-

-

2B

Phoenix, Arizona

1

-

1

1

-

1

3A

Atlanta, Georgia

(1)

(1)

(1)

(1)

(5)

-

3B

Las Vegas, Nevada

1

2

1

1

1

1

3C

San Francisco, California

(3)

-

(2)

(3)

-

-

4A

Baltimore, Maryland

(1)

(2)

(3)

(2)

-

-

4B

Albuquerque, New Mexico

(2)

1

0

(1)

-

-

4C

Seattle, Washington

4

(4)

(4)

2

-

-

5A

Chicago, Illinois

-

-

-

-

-

-

5B

Boulder, Colorado

(1)

2

1

-

-

-

58

Table 38 Differences in net savings, by subtracting national prices from regional prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

35,872

28,519

77,349

54,403

13,230

1,378,658

2A

Houston, Texas

6,250

1,205

5,391

5,128

(1,041)

(17,087)

2B

Phoenix, Arizona

(12,551)

(4,283)

(16,239)

(12,419)

2,026

7,085

3A

Atlanta, Georgia

20,324

14,106

29,991

24,024

13,247

664,911

3B

Las Vegas, Nevada

(10,121)

(8,172)

(18,476)

(12,034)

(4,170)

(488,691)

3C

San Francisco, California

76,600

(9,506)

20,784

43,643

2,587

1,166,262

4A

Baltimore, Maryland

42,975

26,828

61,565

39,215

13,002

1,361,889

4B

Albuquerque, New Mexico

36,662

(5,883)

2,969

22,812

(2,361)

550,843

4C

Seattle, Washington

(44,202)

26,822

33,050

(7,646)

25,789

(385,990)

5A

Chicago, Illinois

7,560

6,806

15,293

7,490

(1,784)

179,118

5B

Boulder, Colorado

22,065

(8,308)

(7,662)

8,542

(10,657)

256,572

Numbers in the parentheses are negative numbers. In the simple payback, negative numbers mean that the payback time calculated with national energy prices is higher than with regional ones, which indicates the assuming a national price is more pessimistic that using regional pricing. On the other hand, negative values in the net savings differences indicate cases where using the national average would lead to more optimistic results than when using regional pricing. Additional LCC results with constant energy prices are illustrated in appendix B. Variation of Incremental Costs and OM&R Costs Since initial investment costs and maintenance costs are different from locations, contractors, building types, and etc., and since different literature sources indicate a variety of ranges, it is worthwhile to study the effect of different cost assumptions on the resulting life-cycle costs. To do this we use the office and hotel building types in the 3A Atlanta location as an example. The range of the incremental investment costs is from $2/ft ! to $5/ft ! , and additional cost of OM&R range from $ 0.08/ft ! less than base cases to $ 0.05/ft ! more than base cases. These ranges were introduced in chapter 5.

59

Table 39 Discounted payback variations depending on investment and OM&R cost factors

Incremental  investment  costs  ($/ft ! )  

OM&R   differences   ($/ft ! )  

2  

3  

4  

5  

2  

3  

4  

5  

-­‐0.08   -­‐0.05   -­‐0.02  

7   7   8  

11   12   13  

15   18   19  

21   25   27  

5   6   6  

8   9   10  

12   13   14  

16   18   19  

0   0.02   0.05  

9   10   12  

15   17   21  

23   26   30+  

30+   30+   30+  

7   7   8  

11   12   14  

16   17   21  

21   24   27  

Office  

Hotel  

Table 40 Saving-to-Investment variations depending on investment and OM&R cost factors

Incremental  investment  costs  ($/ft ! )  

OM&R   differences   ($/ft ! )  

2  

3  

4  

5  

2  

3  

4  

5  

-­‐0.08  

2.43  

1.62  

1.22  

0.97  

3.00  

2.00  

1.50  

1.20  

-­‐0.05  

2.18  

1.45  

1.09  

0.87  

2.75  

1.83  

1.37  

1.10  

-­‐0.02  

2.07  

1.38  

1.04  

0.83  

2.64  

1.76  

1.32  

1.05  

 0    

1.85  

1.24  

0.93  

0.74  

2.42  

1.61  

1.21  

0.97  

 0.02    

1.71  

1.14  

0.85  

0.68  

2.27  

1.52  

1.14  

0.91  

 0.05    

1.49  

1.00  

0.75  

0.60  

2.06  

1.37  

1.03  

0.82  

Office  

Hotel  

When the additional investment of the office is over $4/ft ! , the discounted payback is over 20 years, which is similar to the life span of HVAC systems. SIR values also turn into less than 1, which means that there is no cost beneficial. According to above tables, the marginal costs that yield the profit by choosing the VRF alternative for the office case are $4/ft ! incremental costs with $0.02/ft ! lower OM&R costs or $3/ft ! incremental costs with $0.02/ft ! higher OM&R costs. As for the hotel case, $5/ft ! additional investment costs with $0.02/ft ! lower OM&R costs yield a benefit.

60

CHAPTER 7 CONCLUSION

A comparative analysis of VRF systems as alternative for conventional HVAC systems is presented. This study investigates two aspects of VRF systems: efficient energy performance and economic benefits. The analysis leads to the following conclusions. VRF systems reduce energy consumption for heating and cooling by an average of 39.9 percent compared to conventional HVAC systems. All six building types—office, stand-alone retail, primary school, hotel, apartment, and hospital—are simulated in eleven climate zones. The hospital reference building yields the most noticeable energy savings, averaged over 11 climate zones the saving is 59.9 percent. Hotel, school, and office reference building show the similar although smaller average energy savings around 44 percent. In terms of climate zones, energy savings are similar in most climate zones, but VRF systems perform less efficiently in a cool and dry climate, in particular 5B Boulder, compared to the other zones. VRF systems are also compared to conventional systems through a life-cycle cost analysis. The LCC analysis evaluates the economic benefit of VRF systems in a study period of 20 years, with $ 3/ft ! incremental investment costs and $0.05 lower simplified OM&R costs at a 3% discount rate. The LCC analysis generates four economic values: net savings, saving-to-investment ratio, simple payback, and discounted payback. The shortest simple payback period is one year, for the hospital case. On the other hand, the longest one is over 30 years, in the apartment case. These two opposite results are accounted for the large difference in the amount of energy consumptions; the hospital consumes almost four times as much as the apartment case, which also consumes less

61

than the other types. The LCC outcome confirms that when the absolute energy savings is low, it is difficult to compensate the additional investment costs. This study confirms what preceding research has shown, i.e. that, VRF systems show considerable energy savings over conventional HVAC systems. It has to be recognized that VRF systems are still poorly supported in whole building simulation tools. Some caution is warranted in interpreting the outcomes for the VRF cases; the results may be overly optimistic. There is a need to use the current VRF modules in calibration exercise on real building data with installed VRF system. Based on the economic analysis, it is evident that VRF systems can be highly recommended for buildings that consume a large amount of energy. This is particularly true for hospitals. Based on the currently available cost data and a simulation models, VRF systems are also recommended for the other building types, in most climate zones except for marine climate zones and in general in cold zones with a significant heating requirement. VRF systems should be carefully considered in heating dominant climate zones when being compared to systems that generate heat with natural gas.

62

APPENDIX A

LCC EXAMPLE This appendix presents a framework of life-cycle cost calculation, including general information, specific information for VRF system and base case, life-cycle calculations, cash flows, net savings, and SIR. Table 41 General building information for LCC Building Type

Commercial

Office

53,608 sf

3A Atlanta, Georgia 4,982 m2

Building Location Climate Zone City Building Area Life cycle study period

20 yrs

Discount rate

3.0%

Electricity unit rate Natural gas unit rate

0.10 $/kWh 0.81 $/therm Typical SF 20000

Size Factor Locator Factor

Parameter

Factor 0.92 0.89

Table 42 Specific information of VRF system and the base case for LCC VRF systems Base case

Initial HVAC System Investment

Residual Value Factor (% of initial cost ) Energy Consumption

Electricity Natural Gas

$1,007,837 19,324 $/ton

18.8 $/sf

0%

$847,012 16,240 $/ton

15.8 $/sf

0%

40 kBTU/sf/yr 127 kWh/m2/yr 1 kBTU/sf/yr 4 kWh/m2/yr

46 kBTU/sf/yr 146 kWh/m2/yr 1 kBTU/sf/yr 4 kWh/m2/yr

0.20 $/sf/yr

0.25 $/sf/yr

Simplified Annual OM&R Costs

63

Table 43 LCC calculation of VRF system Type of Cost

Cost Description

Present Value Factor

Cash Amount

One time: Initial Investment LG VRF System: Initial Investment Replace Investment

LG VRF System: Replacement

Annually Recurring

Energy costs Electricity Natural Gas Simplified Annual OM&R costs

Less Remaining Value in 20 yrs Residual Value

Present Value

$ 820,581

1.00

$ 820,581

$ 0

0.74

$ 0

$ 63,865 $ 526

15.3 16.85

$ 977,130 $ 8,864

$ 8,730

14.44

$ 126,091

$ 0

0.55

$ 0

Total Life-Cycle Cost

$

1,932,666

Table 44 LCC calculation of the base case Type of Cost

Cost Description

Cash Amount

One time: Initial Investment HVAC System: Initial Investment

Annually Recurring

Present Value

$ 689,637

1.00

$ 689,637

$ 0

0.74

$ 0

Energy costs Electricity Natural Gas

Non-Annually Recurring

Present Value Factor

Simplified Annual OM&R costs

Less Remaining Value in 20 yrs Residual Value Total Life-Cycle Cost

$ 73,621 $ 512

15.3 16.85

$ 1,126,405 $ 8,635

$ 10,912

14.44

$ 157,614

$ 0

0.55

$ 0 $

64

1,982,291

Table 45 Net saving calculation

     

   

   

 

 

   

delta E delta OM&R detla I0 delta Repl delta Res

$ $ $ $

149,046 31,523 130,944 0 -

Net Savings

$

49,625

   

   

Table 46 SIR calculation

     

   

   

 

 

Savings-to-Investment Ratio    

   

1.38    

65

Table 47 Cash flows, including SPB and DPB energy  price  i ndex

energy  saving

sum   d=0%

sum   d=3%

$    2,182

$    11,828

$    11,483 $                11,828

$    11,483 $                130,944 $            (119,116) $            (119,461)

$      9,659 $                (13)

$    2,182

$    11,828

$    11,149

$    23,656

$    22,632 $                130,944 $            (107,288) $            (108,311)

$      9,757 $                (13)

$    2,182

$    11,925

$    10,914

$    35,581

$    33,546 $                130,944 $                (95,362) $                (97,398)

0.99

$      9,757 $                (13)

$    2,182

$    11,925

$    10,596

$    47,507

$    44,141 $                130,944 $                (83,437) $                (86,802)

1.00

1.00

$      9,757 $                (14)

$    2,182

$    11,925

$    10,287

$    59,432

$    54,428 $                130,944 $                (71,512) $                (76,515)

6

0.99

1.01

$      9,659 $                (14)

$    2,182

$    11,828

$    9,905

$    71,260

$    64,334 $                130,944 $                (59,684) $                (66,610)

7

0.98

1.02

$      9,561 $                (14)

$    2,182

$    11,730

$    9,538

$    82,990

$    73,871 $                130,944 $                (47,954) $                (57,072)

8

0.99

1.03

$      9,659 $                (14)

$    2,182

$    11,827

$    9,337

$    94,817

$    83,208 $                130,944 $                (36,127) $                (47,736)

9

0.99

1.06

$      9,659 $                (14)

$    2,182

$    11,827

$    9,064

$    106,644

$    92,272 $                130,944 $                (24,300) $                (38,671)

10

0.99

1.09

$      9,659 $                (15)

$    2,182

$    11,827

$    8,800

$    118,471

$    101,072 $                130,944 $                (12,473) $                (29,871)

11

1.00

1.12

$      9,757 $                (15)

$    2,182

$    11,924

$    8,614

$    130,394

$    109,686 $                130,944 $                            (549) $                (21,257)

12

1.00

1.14

$      9,757 $                (15)

$    2,182

$    11,923

$    8,363

$    142,318

$    118,049 $                130,944 $                    11,374 $                (12,895)

13

1.00

1.15

$      9,757 $                (16)

$    2,182

$    11,923

$    8,119

$    154,241

$    126,168 $                130,944 $                    23,297 $                    (4,775)

14

0.99

1.17

$      9,659 $                (16)

$    2,182

$    11,825

$    7,818

$    166,067

$    133,986 $                130,944 $                    35,123 $                        3,043

15

0.99

1.18

$      9,659 $                (16)

$    2,182

$    11,825

$    7,590

$    177,892

$    141,577 $                130,944 $                    46,948 $                    10,633

16

0.99

1.20

$      9,659 $                (16)

$    2,182

$    11,825

$    7,369

$    189,717

$    148,946 $                130,944 $                    58,773 $                    18,002

17

0.99

1.21

$      9,659 $                (16)

$    2,182

$    11,825

$    7,154

$    201,542

$    156,100 $                130,944 $                    70,598 $                    25,156

18

0.99

1.22

$      9,659 $                (17)

$    2,182

$    11,825

$    6,946

$    213,367

$    163,046 $                130,944 $                    82,423 $                    32,102

19

0.99

1.24

$      9,659 $                (17)

$    2,182

$    11,825

$    6,743

$    225,191

$    169,789 $                130,944 $                    94,247 $                    38,845

20

0.99

1.25

$      9,659 $                (17)

$    2,182

$    11,824

$    6,547

$    237,016

$    176,336 $                130,944 $              106,072 $                    45,392

21

0.99

1.27

$      9,659 $                (17)

$    2,182

$    11,824

$    6,356

$    248,840

$    182,692 $                130,944 $              117,896 $                    51,748

22

1.00

1.30

$      9,757 $                (18)

$    2,182

$    11,921

$    6,222

$    260,761

$    188,914 $                130,944 $              129,817 $                    57,970

23

1.01

1.34

$      9,854 $                (18)

$    2,182

$    12,018

$    6,090

$    272,779

$    195,003 $                130,944 $              141,835 $                    64,059

24

1.02

1.37

$      9,952 $                (19)

$    2,182

$    12,115

$    5,960

$    284,895

$    200,963 $                130,944 $              153,951 $                    70,019

25

1.03

1.38

$  10,049 $                (19)

$    2,182

$    12,213

$    5,833

$    297,107

$    206,796 $                130,944 $              166,164 $                    75,852

26

1.04

1.41

$  10,147 $                (19)

$    2,182

$    12,310

$    5,708

$    309,418

$    212,504 $                130,944 $              178,474 $                    81,560

27

1.05

1.44

$  10,244 $                (20)

$    2,182

$    12,407

$    5,586

$    321,825

$    218,090 $                130,944 $              190,881 $                    87,146

28

1.06

1.44

$  10,342 $                (20)

$    2,182

$    12,505

$    5,466

$    334,329

$    223,555 $                130,944 $              203,386 $                    92,612

29

1.06

1.45

$  10,342 $                (20)

$    2,182

$    12,505

$    5,306

$    346,834

$    228,862 $                130,944 $              215,890 $                    97,918

30

1.06

1.47

$  10,342 $                (20)

$    2,182

$    12,504

$    5,152

$    359,338

$    234,013 $                130,944 $              228,395 $              103,069

Year

Elec

NG

Elec

NG

1

0.99

1.00

$      9,659 $                (14)

2

0.99

0.98

3

1.00

0.99

4

1.00

5

annual   OMR

Cumulative   Cumulative   initial  i nvest d=0% d=3%

Net  savings (SPB)

Net  savings (DPB)

11

13

Energy price indexes are UPV* values for LCC are introduced in order to deal with price escalation. When the discount rate, d, is 0%, it represents simple LCC calculation; when discount rate is 3%, LCC calculation includes price escalation with 3% discount rate. In the net saving columns, SPB indicates simple payback, and DPB means discounted payback. Plus, when the net saving turns into positive number is the payback year. For this example, simple payback is 11 years; discounted payback is 13 years.

66

APPENDIX B

LCC RESULTS WITH NATIONAL ENERGY PRICES Tables included in this appendix are related to additional comparison section in Chapter 6. These results are calculated for nation wide energy prices; electricity price of commercial and residential are $0.101/kWh and $1.119/kWh, respectively; natural gas price of commercial and residential are $0.813/therm and $1.068/therm, respectively. Table 48 Total life-cycle costs of VRF systems with constant prices Climate Zone Representative City

Office

Retail

VRF System School Hotel

Apartment

Hospital

1A

Miami, Florida

$1,950,816

$931,568

$2,489,178

$1,641,008

$1,509,580

$12,994,438

2A

Houston, Texas

$1,947,736

$932,567

$2,485,658

$1,645,659

$1,545,265

$12,885,600

2B

Phoenix, Arizona

$1,996,914

$946,399

$2,513,719

$1,677,008

$1,584,520

$13,088,777

3A

Atlanta, Georgia

$1,925,924

$914,507

$2,466,926

$1,639,099

$1,559,582

$13,050,465

3B

Las Vegas, Nevada

$1,925,712

$900,500

$2,440,551

$1,631,113

$1,532,352

$12,566,979

3C

San Francisco, California

$2,225,830

$1,014,784

$2,808,159

$1,894,096

$1,924,024

$13,960,095

4A

Baltimore, Maryland

$1,988,543

$959,297

$2,521,894

$1,681,399

$1,636,953

$12,819,525

4B

Albuquerque, New Mexico

$1,897,652

$890,674

$2,415,989

$1,611,597

$1,538,513

$12,377,176

4C

Seattle, Washington

$2,040,471

$960,279

$2,592,877

$1,740,165

$1,735,454

$12,988,366

5A

Chicago, Illinois

$2,266,586

$1,093,924

$2,827,186

$1,910,637

$1,935,749

$14,292,464

5B

Boulder, Colorado

$1,942,576

$933,187

$2,471,166

$1,659,848

$1,586,180

$13,017,360

$2,009,887

$952,517

$2,548,482

$1,702,875

Average

$1,644,379 $13,094,658

Table 49 Total life-cycle costs of base cases with national prices Climate Zone Representative City

Office

Reference HVAC System (Baseline) Retail School Hotel Apartment

Hospital

1A

Miami, Florida

$2,004,304

$1,009,682

$2,677,415

$1,788,283

$1,533,424

$17,640,576

2A

Houston, Texas

$2,020,613

$986,796

$2,595,143

$1,749,800

$1,533,111

$17,540,862

2B

Phoenix, Arizona

$2,082,612

$1,007,834

$2,679,580

$1,789,863

$1,592,186

$16,971,008

3A

Atlanta, Georgia

$1,968,080

$947,655

$2,491,221

$1,712,512

$1,525,405

$16,951,689

3B

Las Vegas, Nevada

$1,982,474

$918,554

$2,503,565

$1,696,627

$1,517,348

$16,518,860

3C

San Francisco, California

$2,253,745

$972,038

$2,715,604

$1,885,864

$1,843,588

$17,826,867

4A

Baltimore, Maryland

$2,060,589

$981,648

$2,552,694

$1,730,458

$1,582,684

$17,393,207

4B

Albuquerque, New Mexico

$1,941,005

$914,245

$2,417,589

$1,658,298

$1,490,648

$17,096,677

4C

Seattle, Washington

$2,085,669

$959,549

$2,501,796

$1,731,592

$1,648,227

$16,707,321

5A

Chicago, Illinois

$2,333,234

$1,110,456

$2,832,776

$1,925,182

$1,873,734

$18,343,694

5B

Boulder, Colorado

$1,985,754

$946,299

$2,446,633

$1,681,752

$1,544,466

$15,949,035

$2,065,280

$977,705

$2,583,092

$1,759,112

Average

67

$1,607,711 $17,176,345

Table 50 Net savings with national prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

$53,488

$78,114

$188,237

$147,275

$23,844

$4,646,138

2A

Houston, Texas

$72,877

$54,229

$109,484

$104,141

($12,154)

$4,655,262

2B

Phoenix, Arizona

$85,698

$61,435

$165,861

$112,855

$7,667

$3,882,232

3A

Atlanta, Georgia

$42,156

$33,148

$24,294

$73,413

($34,177)

$3,901,224

3B

Las Vegas, Nevada

$56,761

$18,054

$63,014

$65,514

($15,004)

$3,951,881

3C

San Francisco, California

$27,915

($42,746)

($92,555)

($8,232)

($80,436)

$3,866,772

4A

Baltimore, Maryland

$72,045

$22,351

$30,799

$49,059

($54,269)

$4,573,682

4B

Albuquerque, New Mexico

$43,353

$23,572

$1,600

$46,701

($47,866)

$4,719,501

4C

Seattle, Washington

$45,199

($730)

($91,081)

($8,572)

($87,226)

$3,718,955

5A

Chicago, Illinois

$66,649

$16,532

$5,590

$14,545

($62,015)

$4,051,231

5B

Boulder, Colorado

$43,179

$13,112

($24,533)

$21,904

($41,714)

$2,931,675

$55,393

$25,188

$34,610

$56,237

($36,668)

$4,081,687

Average

Table 51 Saving-to-Investment ratio with national prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

1.44

2.43

2.08

2.39

1.30

9.71

2A

Houston, Texas

1.57

1.95

1.60

1.94

0.86

9.34

2B

Phoenix, Arizona

1.65

2.05

1.88

1.99

1.09

7.77

3A

Atlanta, Georgia

1.32

1.56

1.13

1.64

0.61

7.80

3B

Las Vegas, Nevada

1.44

1.31

1.34

1.59

0.82

8.03

3C

San Francisco, California

1.15

0.48

0.65

0.95

0.33

5.84

4A

Baltimore, Maryland

1.52

1.36

1.16

1.41

0.41

8.57

4B

Albuquerque, New Mexico

1.33

1.40

1.01

1.41

0.44

9.31

4C

Seattle, Washington

1.29

0.99

0.59

0.94

0.14

6.51

5A

Chicago, Illinois

1.39

1.21

1.02

1.10

0.46

6.36

5B

Boulder, Colorado

1.32

1.22

0.87

1.19

0.54

5.93

1.40

1.45

1.21

1.50

0.64

7.74

Average

68

Table 52 Simple payback with national prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

10

6

7

6

11

1

2A

Houston, Texas

9

7

9

7

17

1

2B

Phoenix, Arizona

8

7

7

7

13

1

3A

Atlanta, Georgia

11

9

13

9

24

1

3B

Las Vegas, Nevada

10

11

11

9

18

1

3C

San Francisco, California

12

30+

22

15

30+

2

4A

Baltimore, Maryland

9

11

13

10

30+

1

4B

Albuquerque, New Mexico

11

11

14

10

30+

1

4C

Seattle, Washington

11

15

24

15

30+

2

5A

Chicago, Illinois

10

12

14

13

30+

2

5B

Boulder, Colorado

11

12

17

12

30+

2

10

12

14

10

24

1

Average

Table 53 Discounted payback with national prices Climate Zone Representative City

Office

Retail

School

Hotel

Apartment

Hospital

1A

Miami, Florida

12

6

8

7

14

1

2A

Houston, Texas

11

8

11

8

24

1

2B

Phoenix, Arizona

10

8

9

8

17

2

3A

Atlanta, Georgia

13

11

17

10

0

2

3B

Las Vegas, Nevada

12

14

13

11

26

1

3C

San Francisco, California

16

0

0

21

0

2

4A

Baltimore, Maryland

11

14

16

13

30+

1

4B

Albuquerque, New Mexico

13

13

19

12

30+

1

4C

Seattle, Washington

14

20

0

21

30+

2

5A

Chicago, Illinois

13

16

19

17

30+

2

5B

Boulder, Colorado

13

16

23

16

30+

2

13

11

12

13

21

2

Average

69

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