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

Transcription

1 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

2 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

3 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

4 TABLE OF CONTENTS Page ACKNOWLEDGEMENTS TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES SUMMARY Chapter 1 INTRODUCTION Chapter 2 LIFE CYCLE COST ANALYSIS CONSIDERATIONS FOR LCC ANALYSIS PRESENT VALUE SUMMARY OF LIFE-CYCLE COST ANALYSIS Chapter 3 CALCULATING LIFE-CYCLE COST CALCULATION OF LIFE-CYCLE COST SUPPLEMENTARY MEASURES OF ECONOMIC EVALUATION Chapter 4 ENERGY MODELS BUILDING TYPES CLIMATE ZONES HVAC SYSTEM MODELING Chapter 5 COST DATA FOR LCC ANALYSIS INITIAL INVESTMENT COST OM&R COSTS AND REPLACEMENT COSTS ENERGY COSTS III IV VI IX X iv

5 COST-RELATED FACTORS 45 Chapter 6 FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS ASSESSMENT ENERGY SAVINGS LCC RESULTS SPECIAL CONSIDERATION FOR CONDUCTING THE LCC Chapter 7 CONCLUSION APPENDIX A LCC EXAMPLE APPENDIX B LCC RESULTS WITH NATIONAL ENERGY PRICES REFERENCES v

6 LIST OF TABLES Page Table 1 UPV* factors adjusted for fuel price escalation Table 2 Reference building types Table 3 Climate zones and representative cities Table 4 Summary of HVAC system of base case for each building type 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 Table 11 Initial investment costs of base cases per building type Table 12 Incremental costs of VRF systems from other systems Table 13 Initial costs of both VRF and base cases Table 14 Typical OM&R costs data of VRF systems Table 15 Custom price indexes (CPI) Table 16 Typical OM&R costs data of base cases Table 17 Annual Energy Use Intensity of electricity in kwh/m2/year for base cases Table 18 Annual Energy Use Intensity of natural gas in kwh/m2/year for base cases vi

7 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 Table 22 City cost indexes Table 23 Percentages of energy savings in HVAC consumption Table 24 Percentages of energy savings in total building energy consumption Table 25 Potential HVAC only energy savings from VRF systems compared to other systems Table 26 Summary of general information for LCC Table 27 Total life-cycle costs of VRF systems per location Table 28 Total life-cycle costs of base cases (reference buildings) per location Table 29 Net savings for all building types and location Table 30 Saving-to-Investment ratio for all building types and location Table 31 Simple payback time for all building types and location Table 32 Discounted payback time for all building types and location Table 33 Averages of outputs Table 34 HVAC savings of all building types Table 35 Simple payback with national energy prices Table 36 Net savings with national energy prices Table 37 Difference in simple payback (subtracting national prices from regional prices) Table 38 Differences in net savings, by subtracting constant values from various values59 58 vii

8 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 Table 41 General building information for LCC Table 42 Specific information of VRF system and the base case for LCC Table 43 LCC calculation of VRF system Table 44 LCC calculation of the base case Table 45 Net saving calculation Table 46 SIR calculation Table 47 Cash flows, including SPB and DPB Table 48 Total life-cycle costs of VRF systems with constant prices Table 49 Total life-cycle costs of base cases with national prices Table 50 Net savings with national prices Table 51 Saving-to-Investment ratio with national prices Table 52 Simple payback with national prices Table 53 Discounted payback with national prices viii

9 LIST OF FIGURES Page Figure 1 Buildings site energy consumption by end use in 2010 Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost Figure 3 Concept Diagram of LCC Analysis Figure 4 Length of study period Figure 5 Rate of price changes for Home-related items Figure 6 PV diagram of one-time amounts Figure 7 PV diagram of annually recurring uniform amounts Figure 8 PV diagram of annually recurring non-uniform amounts Figure 9 PV diagram of annually recurring energy costs Figure 10 Climate zone classification Figure 11 VRF system diagram Figure 12 VRF system modeling diagram with or without DOAS Figure 13 Size modifier curve ix

10 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

11 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 Source from Building Energy Data Book of U.S. Department of Energy 2 Building Energy Data Book of U.S. Department of Energy ( 1

12 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 Cost 3 3 (Reidy et al., 2005) 2

13 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

14 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

15 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 436A 4 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 period 5 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

16 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

17 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

18 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 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

19 0.60 RATE OF CHANGE YEAR All items M&R Const. Materials Fuel oil Figure 5 Rate of price changes for Home-related items 6 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

20 Table 1 UPV* factors adjusted for fuel price escalation 7 N Electricity Natural Gas Residential Commercial Residential Commercial (Rushing, 1992) 10

21 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 Amounts 8 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 PV = F! (1 + d)! Present value can be calculated with the SPV factor. PV PV = F! SPV (!,!) SPV Ft Figure 6 PV diagram of one-time amounts Present Value for Annually Recurring Uniform Amounts 9 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!!!!! 1 (1 + d)! = A! (1 + d)! 1 d(1 + d)! 8 (Fuller & Petersen, 1996) Table Same source as footnote 2 11

22 Present value can be calculated with the UPV factor. PV PV = A! UPV (!,!) 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 + d )! = A! 1 + e d e (1 1 + e 1 + d! ) Present value can be calculated with the UPV factor. PV PV = A! UPV (!,!,!) UPV A2 A1 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

23 PV UPV* 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

24 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-to- Investment Ratio, and Payback. This chapter introduces how to calculate these measures Life-cycle Cost Calculation General Formula for LCC 10 The general formula for the LCC present-value is as follows: where LCC =! C!!!! (1 + d)! LCC C! = Total LCC in present value dollars of a given alternative, = Sum of all relevant costs, including initial and future costs, less any positive cash flows, occurring N d = Number of years in the study period, and = Discount rate used to adjust cash flows to present value. 10 (Fuller & Petersen, 1996) Chapter 5. 14

25 LCC Formula for Building-related Projects 11 A simplified LCC formula for computing the LCC of energy and water conservation projects in buildings can be stated as follows: where: LCC I Repl Res E W LCC = I + Repl Res + E + W + OM&R = Total LCC in present value dollars of a given alternative, = Present value investment costs, = Present value capital replacement costs, = Present value residual value less disposal costs, = Present value energy costs, = 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

26 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 Savings 12 Net savings can be calculated using individual cost differences by applying the following general formula: where: NS!:!" =! S!!!! (1 + d)!!!!! ΔI! (1 + d)! NS!:!" = Net Saving, in present value dollars, of the alternative (A), relative to the base case (BC), S! ΔI! = Savings in year t in operational costs associated with the alternative, = Additional investment costs in year t associated with the alternative, 12 (Fuller & Petersen, 1996) Chapter

27 t d N = Year of occurrence (where 0 is the base date), = Discount rate, and = Number of years in study period. Net Savings Formula for Building-Related Projects 13 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 ΔW ΔOM&R ΔI! = (E!" E!) Savings in energy costs attributable to the alternative, = (W!" W!) Savings in water costs attributable to the alternative, = (OM&R!" OM&R!) Savings in OM&R costs, = (I! I!") Additional initial investment cost required for the alternative relative to the base case, ΔRepl ΔRes = (Repl! Repl!") Additional capital replacement costs, = (Res! Res!") Additional residual value, and Where, all amounts are in present value. 13 Same source as footnote 6, but in Chapter

28 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 SIR 14 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!:!" =!!!!!!!! S! (1 + d)! ΔI! (1 + d)! 14 (Fuller & Petersen, 1996) Chapter

29 where SIR!:!" = Ratio of PV savings to additional PV investment costs of the alternative relative to the base case. S! ΔI! t d N = Savings in year t in operational costs associated with the alternative, = Additional investment costs in year t associated with the alternative, = Year of occurrence (where 0 is the base date), = Discount rate, and = Number of years in study period. SIR Formula for Building-Related Projects 15 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 ΔW ΔOM&R ΔI! = (E!" E!) Energy costs savings attributable to the alternative, = (W!" W!) Water costs savings attributable to the alternative, = (OM&R!" OM&R!) Savings in OM&R costs, = (I! I!") Additional initial investment cost required for the alternative relative to the base case, ΔRepl ΔRes = (Repl! Repl!") Difference in capital replacement costs, = (Res! Res!") Difference in residual value, and Where, all amounts are in present value. 15 (Fuller & Petersen, 1996) Chapter

30 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

31 General Formula for Payback 16 The payback is the minimum number of years, y, for which!!!! (S! ΔI! ) (1 + d)! ΔI! where y = Minimum length of time (usually years) over which future net cash flows have to be accumulated to offset initial investment costs, S! ΔI! ΔI! = Savings in operational costs in year t associated with a given alternative, = Initial investment costs associate with the project alternative, = 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! ) (1 + d)! ΔI! where 16 (Fuller & Petersen, 1996) Chapter (Fuller & Petersen, 1996) Chapter

32 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! ΔRepl = (I! I!") Additional initial investment cost, = (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

33 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

34 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

35 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 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 classification (M Deru et al., 2011) Credit: Briggs et al. [2003]; DOE [2005], 25

36 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

37 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 Reference HVAC System Type Heating Cooling Distribution Medium Office Furnace PACU Standalone Retail Furnace PACU SZ CAV Small Hotel Primary School Mid-rise Apartment Hospital where ISH (Individual space heating), Furnace IRAC, PACU MZ VAV with electricity reheat SZ CAV Boiler PACU CAV Furnace PACU-SS SZ CAV Boiler Chiller-water cooled CAV and VAV PACU = Packaged air-conditioning unit ISH = Individual space heating IRAC = Individual room air conditioner MZ SZ = Multi zones = Single zone VAV = Variable air volume CAV = Constant air volume SS = Split system 27

38 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 2nd Floor Refrigerant Flow 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

39 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

40 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

41 Table 5 Results of comparison of VRF + DOAS with VRF only in Miami and Houston Climate Zones Comparative Charts 1A Miami Elec. Heating Elec. Cooling Elec. Total Energy Gas. Heating VRF + DOAS VRF only 2A Houston Elec. Heating Elec. Total Energy VRF + DOAS VRF only Elec. Cooling Gas. Heating 31

42 Climate Zones Table 6 Results of comparison of VRF + DOAS with VRF only in Phoenix and Atlanta Comparative Charts 2B Phoenix Elec. Heating Elec. Total Energy Elec. Cooling Gas. Heating VRF + DOAS VRF only Elec. Heating 5 Elec. Cooling A Atlanta Elec. Total Energy VRF + DOAS VRF only Gas. Heating 32

43 Table 7 Results of comparison of VRF + DOAS with VRF only in Las Vegas and San Francisco Climate Zones Comparative Charts 3B Las Vegas Elec. Heating Elec. Total Energy VRF + DOAS VRF only Elec. Cooling Gas. Heating 1.60 Elec. Heating 0.20 Elec. Cooling C San Francisco Elec. Total Energy VRF + DOAS VRF only Gas. Heating 33

44 Table 8 Results of comparison of VRF + DOAS with VRF only in Baltimore and Albuquerque Climate Zones Comparative Charts 4A Baltimore Elec. Heating Elec. Total Energy VRF + DOAS VRF only Elec. Cooling Gas. Heating 4B Albuquerque Elec. Heating Elec. Total Energy Elec. Cooling Gas. Heating VRF + DOAS VRF only 34

45 Table 9 Results of comparison of VRF + DOAS with VRF only in Seattle and Chicago Climate Zones Comparative Charts 4C Seattle Elec. Heating Elec. Total Energy Elec. Cooling Gas. Heating VRF + DOAS VRF only A Chicago Elec. Heating Elec. Cooling 20 Elec. Total Energy 1.20 Gas. Heating VRF + DOAS VRF only