VRF Life Cycle Cost AnalysisJanuary 23, 2011Brian Thornton P.E., [email protected]

IntroductionPurpose: Discuss life cycle cost trade-offs for VRF withother HVAC systemsOutlineLife cycle cost parametersHypothetical retrofit example: VRF compared to VAV with electricreheatEnergy costMaintenanceRepair and replacementLife cycle cost and payback results2

Life Cycle Cost AnalysisPresent value P F [1/(1 i)n]P present valueF future valuei discount raten number of years in the futureTotal present value – sum of the present value of allfuture costsLife cycle cost comparisonAn alternative choice is economical if its present value is less thanthe present value of an alternativeVRF alternative compared to a conventional HVAC alternative3

Life Cycle Cost ParametersParameterValuePeriod of analysis, years15Discount rate, real3%Inflation0.9%Energy cost escalation (sourcevalue 1.0%, used generalinflation of 0.9% to simplifyanalysis)0.9%Maintenance, Repair and Replacement CostsOverhead and profit (OH&P)30%Labor Rate 55.304SourceLife of equipmentFEMP LCCparameters,(Rushing et al.2011)RS Means 2012RS Means 2012

HVAC Equipment First CostsEstimated average for major retrofit and new constructionfrom literature review and interviewsVAV with electric reheat 20/ft2CAV with gas heat* 18/ft2VRF 24/ft2ReferencesAmarnath and Blatt 2008BPA 2012bBPA 2012cEES Consulting 2011Goetzler 2007Hart and Campbell 2012Phone call with Hunter-Davisson, 4-27-12Phone call with Daikin, 4-17-12*CAV information provided but not used in life cycle cost example below5

Energy Cost Percentage ReductionEstimated average percentage reduction in energy costfor VRF compared to conventional HVAC systems basedon literature review.Primarily based on reported energy modeling; no monitoredsavings. Does not include current research on part loadCompared to VAV with electric reheatCompared to CAV with gas heat*Sources45%36%EES Consulting 2011 (references Aynur 2010, Amarnath andBlatt 2008Goetzler 2007Hart and Campbell 2012LG 2011, 2012*CAV information provided but not used in life cycle cost example below6

Example: VRF Compared to VAV Electric ReheatHypothetical existing office building, 48,000 ft2Existing system is old VAV electric reheat system withinadequate cooling capacity and duct work. Buildinginternal floor plan being changed.Retrofit project includes total replacement of existing unitsand air distribution systemCooling load is 120 tonsTwo replacement alternatives are being consideredVAV with electric reheatVRF with DOAS7

Description of Example Retrofit AlternativesRetrofit alternative 1: VAV with electric reheatFour 30 ton packaged rooftop units10 terminal units per system, 40 terminal unitsFirst cost, 21/ft2, total 1,008,800 21/ft2 is higher than 20/ft2 average assuming someadditional retrofit duct costsAssuming 10% energy cost savings relative to existing systemRetrofit alternative 2: VRFThree 30 ton VRF compressor units20 fan coil units per system, 60 terminal unitsOne 20 ton DOAS unitFirst cost, 24/ft2, total 1,152,000Assuming 45% energy cost savings relative to existing system8

Energy Cost Savings2Existing Annual Energy UsageTotal Energy UsageHeatingCoolingFansHVAC electricity totalHVAC gas totalkBtu/ft67.720. Energy CostExisting HVAC Energy CostVAV energy cost with 10% savingsVRF energy cost with 45% savingsAnnual energy cost savings /ft2 0.89 0.80 0.49 herms/ft2Total 42,561 38,305 23,408 14,896Energy usage for medium offices built 1990 to 2003, adjusted to electric reheat fromprimarily gas heat (CBECS 2003)Energy usage is national average, not at a particular climate locationEnergy cost, 0.1032/kWh, 0.99/therm, Standing Standard Project Committee 90.1VAV retrofit 10% energy savings estimated for example9

VAV Maintenance, Repair and ReplacementCost ItemsMaintenanceEconomizer maintenanceTerminal unit maintenance1Replace RTU air filtersSubtotal maintenanceRepair/ReplaceReplace fan bearings andmotorsRepair terminal units 1Replace refrigerantSubtotal repair/replaceTotalPeriod,Hours,years Qty. each111101010LaborCost40.83 184400.93 2,066Annualized estimate44049.87 2,1831.2 2,6543.3 730Cost,each 0 40 416 0 81MaterialCostCostwithPresentValueAnnual 0 240 2,861 1,600 2,686 32,063 813 9,710 3,739 44,634Year 10 1,663 0 268 2,837 3,451 1,297 7,585 2,111 2,568 965 5,644 50,2781Terminal unit repair from RS Means 2004 did not include material cost. Material costassumed to be part of unit replacement at end of 15 year life.Compressor (not fan or economizer) maintenance and repair assumed to be the samebetween the 4 VAV systems, and the 3 VRF and 1 DOAS system10

VRF Maintenance, Repair and ReplacementyearsCost ItemsMaintenanceFan coil filter changeCheck/clean fan coilcondensate systemsReplace DOAS air filtersSubtotal maintenance0.511Qty. Hours,600.25CostCost, 830 5600.25 830Annualized estimate 0Repair/Replace1Fan coil motor replacementReplace DOAS fan bearings andmotorsReplace refrigerantSubtotal repair/replaceTotal10601010143.1 10,2869.873.31 546 730 140 416 162CostCostValueAnnual 300 2,937 35,058 0 1,078 12,873 69 825 4,084 48,757Year 10 8,400 24,292 18,075 416 536 709 1,646Fan coil motors are shown as being replaced in year 10. This value may be tooshort on average for direct driven digital electrically commutated motors used formany/most of these units. Data on actual life of this equipment was not available11 528 1,225 19,828 68,584

Sources of Maintenance, Repair andReplacement CostsMost labor hours and material costs are from RS MeansFacilities Maintenance and Repair (RS Means 2004).Labor cost/hour shown under life cost analysis parameters.Material costs adjusted to 2012, 1% average inflation.Economizer maintenance from PNNL staffFan coil filter cost, RS Means 2012RTU and DOAS filter cost, annualized estimate based onArnold et al. 2005Check/clean fan coil condensate system, REHVA 2004ECM motor cost, Heschong Mahone Group et al. 2010Combined VRF and DOAS refrigerant volume estimatedas twice VAV systems refrigerant volume based on phonecall with Daikin 4-17-1212

Life Cycle Cost ResultsPresent ValueCost CategoriesVAVVRFNet Present Value,VRF-VAVHVACFirst Cost Energy Cost Maintenance 1,008,000 457,278 44,634 1,152,000 279,447 48,757 144,000- 177,830 4,123Repair/Replace 5,644 19,828Total 1,515,556 1,500,032 14,183- 15,524VRF alternative has a lower life cycle cost and is the economicalchoice in this case when considered over a 15 year period and withthe other economic parameters identifiedVRF alternative has higher maintenance, repair and replacementcosts, and the present value of those costs offsets almost 10% of thepresent value of the energy cost savings13

Payback with Energy Maintenance, Repair andReplacementFirst CostTotal withAnnualized Energy andAnnualRepair and Non-energyCostsMaintenance ReplacementAnnualEnergyCostVAV 1,008,000 38,305 3,739 473 42,516VRF 1,152,000 23,408 4,084 1,661 29,153 144,000- 14,896 345 1,188- 13,363VRF minus VAVPayback, years9.71410.8

ObservationsAnalysis of the economics of VRF systems should include looking atmaintenance, repair and replacement costsThe non-energy costs can have a material impact on the economicreturn including net present value, and effective paybackThe example presented in this report is just one case. Results forVRF compared to other system types such as constant volumesystems, or other energy efficient systems such as radiant cooling orchilled beams will differ substantially.Life cycle costs are sensitive to the economic parameters. A robustanalysis will consider the reasonable range of these parameters.Additional costs such as loans and tax impacts may also beconsidered.This type of analysis would be improved by better information on themaintenance, repair and replacement costs for VRF systemcomponents.15

ReferencesAmarnath, A. and M. Blatt (2008), “Variable Refrigerant Flow Where, Why and How.” EngineeredSystems, February 2008Arnold B.D., D.M. Matela, and A.C. Veeck (2005), “Life-Cycle Costing of Air Filtration”. ASHRAEJournal, (Vol. 47, No. 11, November 2005).BPA (2012a), “Jamestown S’Klallam Tribe Variable Refrigerant Flow System Case Study.” Portland,Oregon: Bonneville Power Administration.BPA (2012b), “Lewis County PUD Variable Refrigerant Flow Case Study.” Portland Oregon:Bonneville Power Administration. Available at technology/VRFFieldTest.cfmButler, D., J. Gräslund, J. Hogeling, E.L. Kristiansen, M. Reinikainen, G. Svensson, ed. V. Maija(2004), Chilled Beam Application Guidebook. Federation of European Heating and Air-conditioningAssociations (REHVA), Brussels, Belgium.CBECS (2003), “Commercial Buildings Energy Consumption Survey.” Washington D.C. : EnergyInformation Administration, U.S. Department of Energy. Accessed June 2012 ES Consulting (2011), Measure Summary Report: Variable Refrigerant Flow. Portland, Oregon:Bonneville Power Administration.Goetzler, B. (2007). “Variable Refrigerant Flow Systems.” ASHRAE Journal, April 2007.Hart, R and K. Campbell (2011), “VRF Application: Matching Technology with Load.” Presented atCEE Industry Partners Forum October 6, 2011, Denver Colorado.16

References cont.Heschong Mahone Group Inc., Portland Energy Conservation Inc., CTG Energetics, and TaylorEngineering (2010), “ECM Motors” presented to Nonresidential HVAC Stakeholder Meeting #2,California Statewide Utility Codes and Standards Program December 9, 2010.LG (2011), “Energy Efficiency Analysis for a Multi-Story Commercial Office Building.” Seoul, Korea:LG.LG (2012), “Variable Refrigerant Flow, Innovative Technology Can Cut Small-format Retailer’sHVAC Energy Cost by 45%.” Seoul, Korea: LG.RS Means. 2012. RSMeans Mechanical Cost Data, 35th Ed. Construction Publishers & Consultants.Norwell, Massachusetts.RS Means. 2004. Facilities Maintenance & Repair Cost Data, 35th Ed. Construction Publishers &Consultants. Norwell, Massachusetts.Rushing, A.S., J.D. Kneifel and B.C. Lippiat, Energy Price Indices and Discount Factors for LifeCycle Cost Analysis – 2011, Annual Supplement to NIST Handbook 135 and NBS SpecialPublication 709. Washington D.C.: U.S. Department of Commerce, National Institute of Standardsand Technology.17