Cost Of Replacing Obsolete Equipment Can Help Sell HVAC Upgrade

  December 17,

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A deferred capital renewal (the cost to replace a unit in kind if the unit is beyond its useful life) analysis can help justify large HVAC and other projects. Consider the replacement of a 30-year-old water chiller. Typically, chillers installed at this time were constant speed units. Based upon ASHRAE numbers, the average service life of a water-cooled chiller is 23 years. That does not mean that, once a chiller has been in service for 23 years, the unit will fail, but rather that a plan for the chiller replacement should be in place based on that average service life. A 450-ton constant speed water-cooled chiller has been designed to have a chiller efficiency of 0.70 kW/ton, but because of the age of the equipment the chiller could be de-rated to an efficiency of 0.81 kW/ton, assuming a 0.5 percent per year degradation. A variable flow chiller unit can be selected to operate with an efficiency of 0.50 kW/ton. Based upon the unit operating at full load condition for 1,500 hours and an electric rate of $0.08/kWh, the annual savings for installing the VFD unit is approximately $16,700 per year.

The cost for the new VFD chiller system is estimated to be $250,000. This would correspond to a simple payback of close to 15 years. If the analysis included the cost to replace the unit with a constant speed chiller (assuming the cost of $203,000), the difference in capital costs is only $47,000 and the simple payback would be reduced to 2.8 years. Even if the analysis assumed that the constant speed chiller was installed with the original efficiency (0.70 kW/ton) the simple payback is still 4.3 years. Very careful calculations are required to ensure that deferred capital calculations are accurate.

It is difficult to identify the deferred capital savings in terms of simple payback when evaluating equipment that still has useful remaining life. The cost to replace the equipment cannot be simply subtracted from the cost of the energy conservation measure. However, a complete life cycle cost analysis can be completed to identify the most economical approach.

This brief came from Andy Jones, mechanical engineer/project manager at RMF Engineering.

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A deferred capital renewal (the cost to replace a unit in kind if the unit is beyond its useful life) analysis can help justify large HVAC and other projects. Consider the replacement of a 30-year-old water chiller. Typically, chillers installed at this time were constant speed units. Based upon ASHRAE numbers, the average service life of a water-cooled chiller is 23 years. That does not mean that, once a chiller has been in service for 23 years, the unit will fail, but rather that a plan for the chiller replacement should be in place based on that average service life. A 450-ton constant speed water-cooled chiller has been designed to have a chiller efficiency of 0.70 kW/ton, but because of the age of the equipment the chiller could be de-rated to an efficiency of 0.81 kW/ton, assuming a 0.5 percent per year degradation. A variable flow chiller unit can be selected to operate with an efficiency of 0.50 kW/ton. Based upon the unit operating at full load condition for 1,500 hours and an electric rate of $0.08/kWh, the annual savings for installing the VFD unit is approximately $16,700 per year.The cost for the new VFD chiller system is estimated to be $250,000. This would correspond to a simple payback of close to 15 years. If the analysis included the cost to replace the unit with a constant speed chiller (assuming the cost of $203,000), the difference in capital costs is only $47,000 and the simple payback would be reduced to 2.8 years. Even if the analysis assumed that the constant speed chiller was installed with the original efficiency (0.70 kW/ton) the simple payback is still 4.3 years. Very careful calculations are required to ensure that deferred capital calculations are accurate.It is difficult to identify the deferred capital savings in terms of simple payback when evaluating equipment that still has useful remaining life. The cost to replace the equipment cannot be simply subtracted from the cost of the energy conservation measure. However, a complete life cycle cost analysis can be completed to identify the most economical approach.This brief came from Andy Jones, mechanical engineer/project manager at RMF Engineering.

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Type of Chiller

• Air-Cooled Chillers: Generally less expensive than water-cooled chillers. The cost for a 400-ton air-cooled chiller typically ranges from $100,000 to $200,000.
• Water-Cooled Chillers: Usually more expensive due to their efficiency and complexity. Costs for a 400-ton water-cooled chiller typically range from $150,000 to $300,000.

Features and Specifications

• Additional features such as variable speed drives, advanced controls, and high-efficiency components can increase the cost.
• Customization for specific applications or higher efficiency models may also add to the cost of the chiller.

Manufacturer and Brand

• Different manufacturers offer a range of pricing based on their brand reputation, quality, and service support.

Installation Costs

• Installation costs are not included in the chiller price and can vary based on complexity, location, and additional requirements. Installation can add 10% to 30% to the overall cost of the chiller.

Additional Costs

• Maintenance Contracts: Ongoing maintenance and service contracts can also affect the total cost of ownership.
• Operational Costs: Consider energy consumption and efficiency when evaluating the total cost of ownership.

For an accurate estimate, it's best to consult with chiller suppliers or manufacturers, as they can provide quotes based on your specific needs and requirements.

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