NISTIR 6806 Project-Oriented Life-Cycle Costing Workshop for Energy Conservation in Buildings Sieglinde K. Fuller Amy S. Rushing Gene M. Meyer U.S. DEPARTMENT OF ...
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Amy S. Rushing
Office of Applied Economics
Gene M. Meyer
Kansas State University
September 2001 Sponsored by:
Building and Fire Research Laboratory Th
e Federal Energy Management Program
echnology U.S. Department of Energy
Gaithersburg, MD 20899 Washington, DC 20585
Economist, Office of Applied Economics
Building and Fire Research Laboratory
National Institute of Standards and Technology
Dr. Fuller joined NIST’s Office of Applied Economics in 1979. Her areas of expertise include
benefit-cost analysis, economic impact studies, and the pricing of publicly supplied goods and
services. As project leader of the NIST/DOE collaborative effort to promote energy and water
conservation, she has been involved in developing
techniques, workshops, instructional materials,
and computer software for calculating the life-cycle costs and benefits of energy and water
conservation projects in buildings, in accordance with federal legislation. She has participated in
Ms. Rushing programs in C++ and Java. She is also proficient in HTML and web site design. In
capital investment decisions
energy and water cons
projects in buildings
xii
The workshop begins with a review of the LCC pr
inciples that are the subject of the Basic LCC
Workshop. The elements of performing a life-cycle cost evaluation are explained. Emphasis is placed
on clarifying those issues that often confuse practitioners. Issues include why it is necessary to adjust
cash flows for the time-value of money and how to do it, how to estimate costs and savings, and how
to handle inflation. Students are shown, step-by-ste
xiii
The energy crisis of the 1970’s, higher energy prices, and environmental concerns focused our
attention on the critical need to include energy conservation as a major performance objective in the
design or rehabilitation of buildings. In the last three decades, the Federal Government, as owner and
operator of over a half-million buildings and the nation’s largest user of energy, has played a
leadership role in improving the energy efficiency of our nation’s building stock. Through energy
The manual is intended as both an in-class wor
kbook and as a future source of reference and
review. It is divided into seven modules by subject matter. The subject matter is discussed by
way of sample analyses performed in BLCC5, th
e windowed version of the NIST LCC software.
At the end of Module A, there is a summary of th
e LCC principles reviewed in the first lecture.
For all other modules an exercise is provided to
reinforce the material discussed in the lecture
and to give students hands-on experience with
BLCC5. Students are encouraged to work in
small groups when solving these classroom exercise
s. The solution to each classroom exercise is
included at the end of each corresponding module in the form of BLCC5 reports.
$
Costs
Total Life-Cycle Cost is Minimized
Energy Efficiency
Dollars
Total LCC
Net Savings are Maximized
Energy Efficiency
Dollars
Incremental Savin
s Equal
Incremental Costs
0.5
1.5
2.5
3.5
4.5
Energy Efficiency
Dollars
Investment
Acquisition costs
–
Replacement costs
–
Year 1 2 3 4 n
Year 1 2 3 4 5 6 7 n
15
15
30
is the equivalent value to an investor, as of the base date, of a cash
discounting adjusts for the investor’s time-value of
money.
Residual
Value
Investment
OM&R Costs -Contract Costs
1
(1)Single present value (SPV) factor for one-time amounts
(2)Uniform present value (UPV) factor for uniform annual
whereA
(3)Modified uniform present value (UPV*) factor for
by year
(t,d)
(n,d)
PV = F
(d=3.3, n=10)
of $1,000 over 10 years, when this cost is expected to escalateat
(d=3.3, n=10, e=2%)
DOE discount rate of 3.3% (tableBa-4, Annual Supplement to
(d=3.3, n=10,electr., industrial, region 4)
www.eren.doe.gov -Technical Assistance -Analytical
Inflation:rate of increase of the general
Escalation:rate of increase in the price of
Differential escalation:rate of increase in
Constant dollars:dollars of
Current dollars:dollars of purchasing power of year in
Use a real discount rate (excluding inflation).
Comparing LCCsof Alternative
Maximum 25-year service period
Location:Federal Building, Washington, DC;
Discount rate: 2001 FEMP discount rate: 3.3% real
Fuel type:Electricity
Price:$0.08/kWh, local rate as of base date
Rate type: Commercial
Useful life:20 years
Study period:20 years
Base date:June 2001
$103,000Initial investment costs
$ 12,000Replacement cost for fan at the end of year 12
$ 3,500Residual value at the end of the 20-year
$ 20,000Annual electricity costs (250,000 kWh at
06 07 08 09 10 11 12
Initial investment$103,0
00Base datealready in
$12,00012SPV
Residual value($3,500)
20SPV
$20,000annualUPV
OM&R$7,000annualUPV
Total LCC
$101,290
$ 3,700 Residual value at the end of the 20-year study
Initial investment cost$
110,000Base datealready in
$12,50012SPV
Residual value($3,700
20SPV
$13,000annualUPV
OM&R$8,000annualUPV
Total LCC
LCC of Base Case :$470,387
LCC of Alternative:$401,161
Accept /Rejectyeslowest LCC
Optimal Performanceyeslowest LCC
Optimal System/Designyeslowest LCC
Project Priorityno---
Accept /Rejectyes 0 / 0
Optimal Performanceyesmaximize
Optimal System/Designyesmaximize
Project Priorityno---
SIR=
PV Operational savings = PV O&Mcosts
-PV O&Mcosts
Investment costs = PV investment
-PVinvestment
(110,000 + 8,462 -1,931) -(103,000 + 8,124 -1,827)
SIR=
(259,800 + 101,290) -(168,870 + 115,760)
SIR=
Accept /Rejectyes 1 / 1
Optimal Performanceno---
Optimal System/Designno---
Project Priorityyesdescending
Accept /Rejectyes d / d
Optimal Performanceno---
Optimal System/Designno---
Project Priorityyesdescending
I
t
n
1
0
Base-year OM&R savings: -$1000
Accept /Rejectyes
≤/ ≥proj.life Optimal Performanceno---
Optimal System/Designno---
Project Priorityno---
second half at service date
$51,500
Cap.repl.
0103
1822
$51,5001
Capital replacement (fan)$12,00014SPV
Residual value ($3,500)22SPV
$20,000annual
UPV
22-2
OM&R$7,000annualUPV
22-2
Total LCC
1st Installment at
$51,5002$48,256
$55,0001
Capital replacement (fan)$12,50014SPV
Residual value ($3,700
)22SPV
$13,000annual
UPV
22-2
OM&R$8,000annualUPV
22-2
Total LCC
1st Installment at
$55,0002$51,535
SIR=
Attic Insulation
Supplement to Handbook 135
Four-function calculator
Note:These problems are inte
7055
6703
800
Selection of Heating System
Select the residential heating syst
em with the lower life-cycle co
Fuel oil price: $1.12/gallon ($8.00/MBtu)
Natural gas price: $0.80/therm($8.00/MBtu)
Rate type:Residential
Location: Midwest (Region 2)
Discount rate: 3.3%
Base date/service date: June 2001
Study Period: 15 years
Initial cost:$4,500$5,000
Annual maintenance cost $100$75
Annual efficiency (average) 82%83%
Expected life (years) 1515
Residual value$500$1,000
NS =
NS =
8,922
9602
7055
12,150
9,372
564
LCC = Initial Cost + PV energy +
PV maintenance -PV residual value
x 11.68) -($500 x 0.614)
00 + $1,168 -$307
LCC =
Gas Furnace:
x 11.68) -($1,000 x 0.614)
,896 + $876 -$614
LCC =
SIR = $ 596
SIR =3.09
new building design) the base case may be the design with the lowest first cost or the minimum level
of performance that satisfies building code requirements.
The graph in slide A-5 is typical of energy c
onservation investments. It compares the owning
and operating costs associated with a wide range
of energy efficiency levels for a building
system (e.g., exterior wall insulation or air cond
itioner efficiency). Generally, as the level of
energy efficiency increases, the initial cost incr
eases at an increasing rate. Lower levels of
efficiency can generally be achieved at low co
st, but as the efficiency level is increased,
structural, mechanical, or design modificati
ons must be made to accommodate the added
components. This quickly adds to the initial cost
. For example, to increase the effective thermal
resistance value of a wall, the wall thickness must
be increased or a more costly type of
insulation must be used; or, in th
more costly compressors are necessary to increas
e energy efficiency. For some systems, such as
fossil-fired furnaces, there are practical limits to th
e extent to which efficiency can be increased,
causing the investment cost curve to bend sharply upwards.
The operating cost curve in the graph shows that as the energy efficiency of the system is increased,
energy consumption is decreased, but at a decreasing rate. In fact, energy consumption is generally
inversely proportional to energy efficiency so that additional units of improvement generate less
savings than the ones before. For example, increasing the thermal resistance value of attic insulation
from R-30 to R-40 only saves about 18 percent as much energy as increasing the level from R-10 to
The total cost curve is the vertical summation of the investment cost and operating cost associated
with any level of energy efficiency.
The lowest point on the total cost curve, Q
Optimal system selection
refers to the problem of selecting the most cost-effective system type
for a particular application. System selection can directly impact the energy performance of a
building. Examples include the choice of the heating and cooling system types for a building
(e.g., electric heat pump or gas furnace with electric air conditioning), wall design (e.g., masonry
or wood frame), or even insulation type (e.g., rigid foam or mineral wool).
Optimal combination of interdependent projects
refers to the problem of selecting two or
more building systems at the same time, recognizing that the implementation of one system will
have significant effects on the energy savings potential of the other, and vice-versa. For
example, installing a high-efficiency furnace will reduce the energy savings potential of storm
windows, while installing storm windows will reduce the energy savings potential of installing a
high-efficiency furnace.
Prioritization of independent projects
is required when a number of cost-effective energy
conservation investments have been identified but not enough funding is available to implement
all of these projects. Economic analysis allows the ranking of these projects in decreasing order
The basic steps in an LCC analysis are to
- identify the alternatives under consideration,
- specify the data requirements and establish assumptions,
- estimate the costs in dollars,
- adjust costs for time value of money,
- compute total LCC for each alternative, and
- choose the alternative with the lowest total life-cycle cost.
Depending on the circumstances, you may also want to calculate supplementary measures of
economic performance, perform an uncertainty assessment, and add a narrative describing non-
economic issues. All of these steps will be covered during the workshop.
Relevant effects
To make a decision about economic efficiency, it is important to measure the economic
consequences of alternatives. Data requirements for making an economic decision are not the same
as those for keeping an accounting system. For an LCC analysis, you need, in general,
costs that change
from one alternative to another. Costs that remain the same do not decrease or
increase the life-cycle costs of an alternative relative to the base case and thus need not be included.
Because collecting cost data can be expensive, you want to focus on collecting those data which are
likely to have a
on the life-cycle costs of an alternative. You do not want to spend
your limited resources on collecting data that have little impact.
Do not include "sunk" costs
in your analysis. Sunk costs are those costs that have already been
incurred and cannot be avoided by future decisions. Only amounts that can be changed by the
decision need to be included in the analysis.
Non-tangible costs
are costs or benefits that cannot easily be expressed in dollar amounts. Even
though they cannot be explicitly included in an LCC analysis, their effects should be described in a
narrative so that they will not be overlooked when making a decision.
Life-cycle costs typically include
investment-related costs
and
operational costs
. Acquisition
costs, including costs for planning, design, and cons
truction, are investment-related, as are residual
values such as resale value, salvage value, or disposal costs. Under the FEMP rule, capital
replacement costs are also defined as investment-related. Energy costs, maintenance costs, and
repair costs are considered operational costs, that is, non-investment-related costs. This definition is
useful when computing economic measures that evaluate long-run savings in operational costs in
relation to total capital investment costs.
Some of the costs included in an LCC analysis are
annually recurring
, such as energy, and routine
maintenance and repair costs.
Non-annually recurring
costs are those that may occur only one time
during the life-cycle, such as acquisition costs and residual values, or several times, such as
replacement costs. This definition is needed for choosing the appropriate discount factors used to
In a third classification, acquisition costs are designated as
and all other costs as
, a useful classification both for selecting disc
ount factors and for relating initial investment
All costs included in the analysis are expressed in
. These base-year amounts will
be multiplied by
discount factors
that incorporate the discount rate and any applicable escalation
Energy and water costs
Special criteria apply to energy costs in analyses of conservation measures considered for federal
Current prices
NBS Special Publication 709. These projections are also included in the NIST BLCC computer
programs.
In 1995 water conservation was added to energy conservation as a designated goal for
the Federal Energy Management Program. No special water usage/disposal escalation rates are
projected by DOE.
dollar. The following five terms will be used in
the discussion of how to handle inflation in life-
A rise in the general price level, tantamount to a decline in the general
Increase in the price of a particular commodity, such as energy.
general inflation to assure that sufficient funding will be appropriated in future years to cover actual
Identifying critical inputs:
It is important to know which of the uncertain input parameters have the
greatest effect on LCC results. To identify the criti
cal inputs, simply increase the value of each of
them in turn by a certain percentage and, holding all others constant, recalculate the economic
measure to be tested. The higher the percentage change in outcome for a given change in input value,
Estimating the range of results:
To arrive at an estimate of the upper and lower bounds of an
economic measure, it can be recalculated using the lowest and highest likely estimates of its input
variables, corresponding to the most optimistic or pessimistic scenarios.
Cash flows are discounted from the
end of the year
. (In analyses of military construction
projects, cash flows are discounted from the middle of the year.)
For reasons of consistency, the FEMP rule prescrib
es the use of present-value analysis for evaluating
energy- and water-related projects. All future dollar amounts should be
discounted to the base date
of the project. Note that “present-value” amounts are not the same as constant dollar amounts as of
the base date, since the latter do not reflect the time value of money.
The FEMP LCC method uses
local energy and water prices at the building site
in calculating the
of the energy or water consumed by a building or building system. Local energy
and water prices should reflect the type of rate charged (residential, commercial, or industrial),
(windowed version of BLCC4)
Overview -BLCC5
name, location, analyst, comment, discounting
water consumption and cost data
–
Go to Help -Creating and Editing Data Files -for
•
•
fuel type
Annually RecurringNon-Annually Recurring
Annually RecurringNon-Annually Recurring
input data listing
–
http://www.eren.doe.gov/femp --Technical
Assistance –Analytical Software Tools
Location:Office building in Maryland
Existing:3 -700kBtuoil-fired boilers
oil price $1.20/gallon ($8.57MBtu)
Proposal: 3 -700kBtugas/oil-fired boilers
gas price $1.00/therm($10.00MBtu)
Annual heat load = 2,065MBtu
Study period = 15 years
FEMP LCC discount rate = 3.3%
existing
existing
existing
IC= initial cost
AL= annual load
Eff= seasonal efficiency
P= energy price ($/MBtu)
UPV* = modified uniform present value
(commercial, region 3, oilor gas)
FR= residual value factor
SP= study period
Calculate LCC of new boilers using both gas and oil.
gas/oil
-IC x RF xSPV
new(gas)
-$45,000 x 0.5 x 0.614
= $301,958
-$45,000 x 0.5 x 0.614
= $253,571
(15,oil,S,com)
(15,oil,S,com) -
(15,oil,S,com) -
-IC
-IC
-IC
boiler 3
boiler 2
boiler 1
(kBtu)
boiler 3
boiler 2
boiler 1
new(i)
new
+AL
existing
y(i),oil,S,com
+AL
15,oil,S,com -UPV*
-IC
new(i)
xSPV
new(1)
+1,704/0.60 x $8.57 x 0.0
+ 1,704/0.83 x $8.57 x (10.43 –0.0)
new(2)
+345/0.60 x $8.57 x 1.68
+ 345/0.83 x $8.57 x (10.43 –1.68)
new(3)
+15/0.60 x $8.57 x 3.23
+ 15/0.83 x $8.57 x (10.43 –3.23)
-IC x RF xSPV
-$30,000 x 0.5 x 0.614
Study period:15 years
FEMP discount rate:3.3%
Oil price:$1.20/gallon, 140,000 Btu/gallon
Gas price:$1.00/therm, 100,000 Btu/therm
Case 1:Existing 3 -700 kBtuoil-fired boilers
Case 2: New 3 -700 kBtugas/oil-fired boilers
Case 3: New 3 -700 kBtugas/oil-fired boilers
Alternative 1 –Existing Oil-Fired Boilers
Alternative 2 –Gas/Oil Boilers Burning Oil,
heat load on the building is 2,06
5MBtudistributed over the three boile
rs. #2 oil has a heating valueof
costs $1.20 per gallon.
decided she cannot afford toreplace all three at the same time. Her
schedule is to replace one boiler now, a
ages one boiler on until it can no lo
installed as the lead boiler.
Compare the life-cycle cost of th
assume a 30-year life for the new boilers. The base da
te is specified as June 2001. Use the end-of-year
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
C-29
April 1, 2010 1 year 0 months
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
Alternative: Phased Boiler Replacement
18,950.0 Therm
Utility Rebate:
Industrial/Commercial boiler
Commercial
Maryland
C-30
June 1, 2001 2
ears 0 months
June 1, 2003 2 years 0 months
June 1, 2005 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1 year 0 months
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1 year 0 months
April 1, 2031 Remaining
Installed in year 1
Initial Cost (base-
C-31
Cost Ad
Years/Months (from Date) Date
Portion
June 1, 2001
Installed at end of year two.
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2003
Installed at end of year 4
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2005
C-32
NIST BLCC 5.0-01: Comparative Analysis
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise C2.xml
Thu Sep 20 10:44:20 EDT 2001
Maryland
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
Gene Meyer
Phased Boiler Replacement Versus
Base Case of Do Nothing
15 years 0 months(June 1, 2001 through May 31, 2016)
Comparison of Present-Value Costs
Base Case Alternative Savin
s from Alternative
$0 $42,231 -$42,231
$312,870 $228,639 $84,231
Energy Demand Charges
$0 $0 $0
Energy Utility Rebates
$0 $0 $0
$0 $0 $0
Recurring and Non-Recurrin
OM&R Costs
$0 $0 $0
$0 $0 $0
$0 -$15,670 $15,670
------------------------------------
$312,870 $212,969 $99,901
------------------------------------
$312,870 $255,200 $57,670
C-33
back occurs in
Units are not the same for each ener
savin
Energy
Consumption-----Life-Cycle
Type
Savings
Savings
Distillate Fuel Oil (#1, #2)
3,729.1 MBtu 1,792.3 MBtu 1,936.8 MBtu 29,047.7 MBtu
Energy
Emissions-----Life-Cycle
Type
Distillate Fuel Oil (#1, #2)
270,643.67 kg 130,079.04 kg 140,564.63 kg 2,108,180.79 kg
1,935.98 kg 930.49 kg 1,005.49 kg 15,080.33 kg
243.96 kg 117.26 kg 126.71 kg 1,900.37 kg
Total:
270,643.67 kg 130,079.04 kg 140,564.63 kg 2,108,180.79 kg
1,935.98 kg 930.49 kg 1,005.49 kg 15,080.33 kg
243.96 kg 117.26 kg 126.71 kg 1,900.37 kg
PROBLEM STATEMENT
The existing facility, an 8100 sq. ft. governme
nt office building in Virginia, provides
administrative space, counseling rooms,
and research areas. Over time, the increased use of devices such
as individual work stations and printers has increased the cool
requirements at the building. The building is currently cooled
which require frequent maint
consume excessive amounts of energy. On very hot days there are
complaints about uncomfortably
high temperatures in the buildin
building is heated by electric baseboard heating.
Options
Maintain Existing System
With the current maintenance sc
hedule, the present heating and cooling system
could be kept functional for another 20 years.
Install DX Split System
Install new “split-system”air-conditioning unit and associated elem
ents required to provide ade
stallation
will provide a new air distribution system for th
e building, with central air conditioning throughout.
Perform an LCC analysis to de
termine which of the available options results
in the lowest life-cycle cost. Perform
sensitivity analysis for those of the uncertain variables that
have the greatest impact on LCC, in this case initial
1.Analyze the outcome
s, assuming that
a)you will keep the existing system if its LCC
is lower than theLCCsof the alternatives, or
b)you have already decided
oneof the possible two alternatives.
2.Perform sensitivity analysis by varying ini
tial investment costsand electricity prices.
Base Date: June 2001
Study period: 21 years
Implementation Period: 1 year
Service Date:June 2002
Initial cost:$0
Energy consumption:290,000 kWh/yr
Energy price:$0.08711/kWh, industrial
Ann.-recurr. OM&R costs:$1,050, increasing at 2%/yr
Non-ann.rec. OM&R costs:$5,000 in 3-year intervals through
Expected system life:20 years
Initial cost:$210,000
Energy consumption:120,330 kWh/yr
Energy price:$0.08711/kWh, industrial
Ann.-recurr. OM&R costs:$530
Non-ann.rec. OM&R costs:$6,300 in yrs. 5, 10, 15
Capital replacement cost:$31,130 in year 15
Expected system life:20 years
Initial cost:$265,000
Energy consumption:112,000 kWh/yr
Energy price:$0.08711/kWh, industrial
Ann.-recurr. OM&R costs:$126
Non-ann.rec. OM&R costs:$950 in yrs 3, 9, 15, 18
Expected system life:20 years
DX Split System -Cash Flow
01 02 03 04
05 06 07 08
09 10 11 12 … 17
BD SD
Residual
Base Date
Ex. S.DX SS
LCCs-Optional Replacement
Ex. SystemDX SS CPC
Investment 0-$210,000-$265,000
Replacement costs--18,517 -
Residual Value-10,549 -
Total Inv. Costs-$217,969-$265,000
PV energy costs $333,102194,887204,456
PV OM&R costs39,25718,36934,864
Total Operat’lCosts $213,257 $239,320
LCCs-Mandatory Replacement
CostsSavings
DX SS CPCfrom alternative
Investment $210,000 $265,000-$ 55,000
Replacement costs 18,517 -18,517
Residual Value-10,549 --10,549
Total Inv. Costs $217,968 $265,000-$47,032
PV energy costs 138,214134,1419,568
PV OM&R costs20,8884,39316,495
Total Operat’l Costs $159,102$138,534 $ 26,063
LCCsof AC Systems (cont.)
If replacement is optional, Existing System has lowest LCC.
Central Plant Connection is not
Change in energy prices, investment or OM&R costs.
Change in heating and cooling requirements, timing, and other
Uncertain Input10% Increase in $ in %
Energy price/kWh $0.0958$13,788 3.7% *
Investment cost231,00021,000 5.6% *
AR OM&R cost 583755 0.2%
NAR OM&Rcost 6,9301,334 0.4%
Sensitivity of Net Savings to Investment Costs
-300,000
-200,000
-100,000
100,000
200,000
300,000
-50-25-100+10+25+50
Percent Change
Net Savings ($)
Central Plant Connection
DX Split System
Existing System
Sensitivity of Net Savings to Electricity Price
-150,000
-100,000
-50,000
50,000
100,000
150,000
-50-25-100+10+25+50
Percent Change
PV Net Savings ($)
Central Plant Conn.
DX Split System
Existing System
-Use cost phasing of initial investment cost.
-Use residual value factor of 15%.
-Use indexing to postpone energy and OM&R costs.
-Include energy costs and OM&R costs of the
-Increase electricity costs for DX Split System by
PP CP Conn. -Cash Flow
05 06 07
0809 ... 14 15 16
17 18 19 20 21
Value
PP CP Conn.
DX SS CP PPCP Hi-E DX SS
Investment cost$210,000
Replacement costs$ 18,517
$ 0$ 0$ 18,517
Residual value-$ 10,549 $
0 -$ 17,088 -$ 10,549
Energy costs$138,214 $128,
OM&R costs$ 20,888 $ 4,393
Total PV LCC$377,070 $398,039
–
June 1, 2002 Remainin
April 1, 2002 1
April 1, 2003 1
April 1, 2006 1
April 1, 2007 1
D-39
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1 year 0 months
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
$1,050
Annual Rate of Increase:
Factor
June 1, 2002 Remainin
3 years 0 months
D-40
Annual Rate of Increase:
6 years 0 months
Annual Rate of Increase:
9 years 0 months
Annual Rate of Increase:
12 years 0 months
Annual Rate of Increase:
15 years 0 months
Annual Rate of Increase:
18 years 0 months
Annual Rate of Increase:
Install split-system central AC unit, with new air distribution system
120,330.0 kWh
Utility Rebate:
Virginia
Industrial
Virginia
June 1, 2002 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
D-41
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1 year 0 months
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
15 years 0 months
Annual Rate Of Increase:
D-42
$530
Annual Rate of Increase:
Factor
June 1, 2002 Remainin
5 years 0 months
Annual Rate of Increase:
10 years 0 months
Annual Rate of Increase:
15 years 0 months
Annual Rate of Increase:
Install piping network to connect officebuilding to central chilled water plant
112,000.0 kWh
Utility Rebate:
Virginia
Industrial
Virginia
Usage Index
June 1, 2002 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
D-43
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1 year 0 months
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Years/Months (from Date) Date
Portion
June 1, 2001
$126
Annual Rate of Increase:
Factor
June 1, 2002 Remainin
3 years 0 months
Annual Rate of Increase:
D-44
9 years 0 months
Annual Rate of Increase:
15 years 0 months
Annual Rate of Increase:
18 years 0 months
Annual Rate of Increase:
June 1, 2002 3 years 0 months
June 1, 2005 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
D-45
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1 year 0 months
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
290,000.0 kWh
Utility Rebate:
Virginia
Industrial
Virginia
June 1, 2002 3
ears 0 months
June 1, 2005 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1 year 0 months
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
D-46
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1 year 0 months
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Years/Months (from Date) Date
Portion
June 1, 2004
$126
Annual Rate of Increase:
Factor
June 1, 2002 3
ears 0 months
June 1, 2005 Remaining
$1,050
Annual Rate of Increase:
Factor
June 1, 2002 3
ears 0 months
D-47
June 1, 2005 Remaining
6 years 0 months
Annual Rate of Increase:
12 years 0 months
Annual Rate of Increase:
18 years 0 months
Annual Rate of Increase:
Alternative: DX Split System w/higher E-cost
Install split-system central AC unit. Sensitivity
Analysis with 35% increase in energy costs
162,446.0 kWh
Utility Rebate:
Virginia
Industrial
Virginia
June 1, 2002 Remainin
Escalation
April 1, 2001 1 year 0 months
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
D-48
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1 year 0 months
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
15 years 0 months
Annual Rate Of Increase:
D-49
5 years 0 months
Annual Rate of Increase:
10 years 0 months
Annual Rate of Increase:
15 years 0 months
Annual Rate of Increase:
D-50
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise D2.xml
Thu Sep 20 11:18:23 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Virginia
Analyst:
Provide economical and effective
air conditioning for the family hous
June 1,2001
21 years 0 months (June 1, 2001 through May 31, 2022)
(Shown in Ascending Order of Initial Cost, * = Lowest LCC)
Initial Cost (PV) Life C
cle Cost (PV)
Postponed Central Plant Connection
DX Split System
DX Split System w/higher E-cost
D-51
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise D2.xml
Thu Sep 20 11:20:22 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Virginia
Analyst:
Provide economical and effective
air conditioning for the family
21 years 0 months (June 1, 2001 through May 31, 2022)
Discount and Escalation Rates are REAL (exclusive of general inflation)
Present Value Annual Value
Initial Cost
Energy Utility Rebates
Recurrin
OM&R Costs
Less Remaining Value
------------------------
Present Value Annual Value
Initial Cost
Energy Utility Rebates
D-52
Recurrin
OM&R Costs
Less Remaining Value
------------------------
Present Value Annual Value
Initial Cost
Energy Utility Rebates
Recurrin
OM&R Costs
Less Remaining Value
------------------------
Present Value Annual Value
Initial Cost
Energy Utility Rebates
Recurrin
OM&R Costs
Less Remaining Value
------------------------
D-53
Alternative: DX Split System w/higher E-cost
Present Value Annual Value
Initial Cost
Energy Utility Rebates
Recurrin
OM&R Costs
Less Remaining Value
------------------------
D-54
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise D2.xml
Thu Sep 20 11:21:33 EDT 2001
Virginia
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
Provide economical and effective
air conditioning for the family
21 years 0 months(June 1, 2001 through May 31, 2022)
Comparison of Present-Value Costs
Base Case
Alternative
Savings from Alternative
Energy Demand Charges
Energy Utility Rebates
Recurring and Non-Recurring OM&R Costs
D-55
Energy
-----Average
Consumption-----
Type
Alternative
Savings
Savings
989.5 MBtu
410.6 MBtu
578.9 MBtu
11,577.2 MBtu
D-56
Energy
Emissions-----
Type
Total:
compare LCCsof capital investments and
Prosand Consof ChillerReplacement
CHILLER REPLACEMENT:
Significant maintenance (buildin
g engineer needed on site)
convenient or impractical
Not subject to contract renewal negotiations --less uncertainty
CHILLED WATER CONTRACT:
Negligible maintenance
Flexible capacity
Higher reliability; no down time for maintenance
230 Ton Chiller Replacement
vs. Chilled Water Contract
Capacity (demand) charges:
Monthly capacity charge = $13.00/ton
Current-dollar analysis using DOE
discount rate and inflationrate
from Annual Supplement to
(390,000 ton-hrs@$0.07)$27,300
Assumes 2.7% annual CPI increase, base
d on inflation assumptionin ASHB135.
Based on DOE industrial gas price escalati
on rates for region 3with 2.7% inflation.
(390,000 ton-hrs@$0.07)$27,300
Assumes 2.7% annual CPI increase, base
d on inflation assumptionin ASHB135.
Based on DOE industrial gas price escalati
on rates for region 3with 2.7% inflation.
Present
27,500
2,100
10,000
5,000
35,000
1.00
7.89
8.40
8.40
8.40
0.723
$350,000
216,975
17,640
84,000
42,000
(25,305)
Initial Cost
less needed refurbishment. $175,000 -$140,000 = $35,000
Present
27,500
2,100
10,000
5,000
140,000
0.723
151,250
12,747
60,700
30,350
73,080
(91,350)
Initial Cost
Residual value (year 20)
$489,827
SPV* for year 10 (2.7% inflation)
UPV* for 20 years -UPV* for 10 years
SPV* for year 20 (2.7% inflation)
PV 10-year chiller replacement at year 11
$1,066,882
+489,827
have differing
PROBLEM STATEMENT
The building energy coordinator has reviewed th
e analysis and has concl
uded that given present
natural gas prices and DOE projections for energy
escalation, itis cost-effective to enter into a
However, he is concerned about the changing pri
ce and availability of natural gas resulting from
decreasing supplies and a national trend towards
summer peak electrical generation using natural
April 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1 year 0 months
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1 year 0 months
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Water: Make-up water
Price/Unit Units/Year
2,100.0 ThousGal $1.00000
0.0 ThousGal $0.00000
0.0 ThousGal $0.000000.0 ThousGal $0.00000
e Cost Escalation
April 1, 2001 Remainin
Disposal Cost Escalation
April 1, 2001 Remainin
April 1, 2001 Remainin
April 1, 2001 Remainin
Initial Cost (base-
2.7%
Years/Months (from Date) Date
Portion
April 1, 2001
Annual Rate of Increase:
Factor
April 1, 2001 Remainin
$5,000
Annual Rate of Increase:
Factor
April 1, 2001 Remainin
Alternative: Purchase Chilled water
0.0 kWh
Utility Rebate:
U.S. Average
Industrial
April 1, 2001 Remainin
Escalation
April 1, 2001 Remainin
0.0 kWh
Utility Rebate:
U.S. Average
Industrial
April 1, 2001 Remainin
From Date Duration Escalation
9,555.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 Remainin
Escalation
April 1, 2001 Remainin
17,745.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 Remainin
Escalation
April 1, 2001 Remainin
Initial Cost (base-
2.7%
Years/Months (from Date) Date
Portion
April 1, 2001
NIST BLCC 5.0-01: Input Data Listing
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise E3.xml
Thu Sep 20 11:51:03 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
GMM
Purchase chilled water for 10 years and then chiller versus purchase chilled water for 20
April 1, 2001
April 1, 2001
20 years 0 months (April 1, 2001 through March 31, 2021)
Convention:
Discount and Escalation Rates are NOMINAL (inclusive of general inflation)
Alternative: Chilled water and then chiller
0.0 kWh
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Escalation
April 1, 2001 Remainin
9,555.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1 year 0 months
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
0.0 kWh
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Escalation
April 1, 2001 Remainin
17,745.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Escalation
April 1, 2001 Remainin
450,000.0 kWh
Utility Rebate:
Industrial
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1 year 0 months
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Water: Make-up water
Units/Year Price/Unit Units/Year Price/Unit
2,100.0 L $1.00000 0.0 L $0.00000
0.0 L $0.00000 0.0 L $0.00000
e Cost Escalation
April 1, 2001 Remainin
Disposal Cost Escalation
April 1, 2001 Remainin
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
April 1, 2001 Remainin
Initial Cost (base-
2.7%
Years/Months (from Date) Date
Portion
April 1, 2001
Initial Cost (base-
2.7%
Years/Months (from Date) Date
Portion
April 1, 2011
Annual Rate of Increase:
Factor
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
$5,000
Annual Rate of Increase:
Factor
April 1, 2001 10
ears 0 months
April 1, 2011 Remaining
Alternative: 20 Year Chilled Water
0.0 kWh
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 20
ears 0 months
April 1, 2021 Remaining
Escalation
April 1, 2001 Remainin
9,555.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
Usage Index
April 1, 2001 20
ears 0 months
April 1, 2021 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1 year 0 months
April 1, 2030 1
April 1, 2031 Remaining
0.0 kWh
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 20
ears 0 months
April 1, 2021 Remaining
Escalation
April 1, 2001 Remainin
17,745.0 Therm
Utility Rebate:
Industrial Boiler, uncontrolled
Industrial
April 1, 2001 20
ears 0 months
April 1, 2021 Remaining
Escalation
April 1, 2001 Remainin
Initial Cost (base-
2.7%
Years/Months (from Date) Date
Portion
April 1, 2001
Convention:
Discount and Escalation Rates are NOMINAL (inclusive of general inflation)
Alternative: Chilled water and then chiller
Initial Capital Costs for All Components:
Component: Purchase chilled water for 10 years
Cost
April 1, 2001
100% $10,000
Total (for Component)
Yearly Cost
April 1, 2011
100% $456,832
Total (for Component)
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
0.0 kWh $0.00000 $0 $7,176 $0
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
4,777.5 Therm $1.00000 $4,778 $0 $0
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
0.0 kWh $0.00000 $0 $10,764 $0
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
8,872.5 Therm $1.00000 $8,872 $0 $0
(base-year dollars)
Annual Usage Price/Unit Annual Co
st Annual Demand Annual Rebate
225,000.0 kWh $0.05000 $11,250 $2,500 $0
Water Costs: Make-up water
(base-year dollars)
e Annual Usa
e Annual Disposal Avera
Units/Year Price/Unit Units/Year
Summer Rates
1,050.0 L $1.00000 0.0 L $0.00000 $1,050
0.0 L $0.00000 0.0 L $0.00000 $0
Present Value Annual Value
Initial Capital Costs
Energy Costs
Energy Demand Charges
Energy Utility Rebates
------------------------
Component: Purchase chilled water for 10
------------------------
Component: Purchase chilled water for 10
$0$0
------------------------
Residual Value of Original Capital Components
Component: Purchase chilled water for 10
------------------------
Component: Purchase chilled water for 10
$0$0
------------------------
0.00 kg 0.00 kg
0.00 kg 0.00 kg
0.00 kg 0.00 kg
25,236.45 kg 504,659.81 kg
203.67 kg 4,072.76 kg
29.74 kg 594.78 kg
Capacity - CPI ad
0.00 kg 0.00 kg
0.00 kg 0.00 kg
0.00 kg 0.00 kg
46,867.68 kg 937,225.37 kg
378.24 kg 7,563.70 kg
55.24 kg 1,104.60 kg
218,094.01 kg 4,361,283.00 kg
664.29 kg 13,284.00 kg
657.00 kg 13,138.20 kg
Total:
290,198.14 kg 5,803,168.18kg
1,246.19 kg 24,920.47 kg
741.98 kg 14,837.59 kg
Alternative: 20 Year Chilled Water
Initial Capital Costs for All Components:
Component: Copy of: Purchase chilled water for 10 years
Cost
April 1, 2001
100% $10,000
Total (for Component)
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
0.0 kWh $0.00000 $0 $14,352 $0
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
9,555.0 Therm $1.00000 $9,555 $0 $0
(base-year dollars)
e Price/Unit Annual Cost
Annual Demand Annual Rebate
0.0 kWh $0.00000 $0 $21,528 $0
(base-year dollars)
Price/Unit Annual Cost A
nnual Demand Annual Rebate
17,745.0 Therm $1.00000 $17,745 $0 $0
Present Value Annual Value
Initial Capital Costs
Energy Costs
Energy Demand Charges
Energy Utility Rebates
$0$0
------------------------
Component: Cop
of: Purchase chilled water for 10
------------------------
Component: Cop
of: Purchase chilled water for 10
------------------------
Residual Value of Original Capital Components
Component: Cop
of: Purchase chilled water for 10
------------------------
Component: Cop
of: Purchase chilled water for 10
------------------------
0.00 kg 0.00 kg
0.00 kg 0.00 kg
0.00 kg 0.00 kg
50,472.89 kg 1,009,319.63 kg
407.33 kg 8,145.53 kg
59.49 kg 1,189.57 kg
Copy of: Capacity - CPI ad
0.00 kg 0.00 kg
0.00 kg 0.00 kg
0.00 kg 0.00 kg
93,735.37 kg 1,874,450.74 kg
756.47 kg 15,127.41 kg
110.48 kg 2,209.20 kg
Total:
144,208.26 kg 2,883,770.36 kg
1,163.81 kg 23,272.94 kg
169.96 kg 3,398.77 kg
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise E3.xml
Thu Sep 20 11:54:01 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
GMM
Purchase chilled water for 10 years and then chiller versus purchase chilled water for 20 years
April 1, 2001
ril 1, 2001
20 years 0 months(April 1, 2001 through March 31, 2021)
Convention:
Comparison of Present-Value Costs
Base Case Alternative Savings from Alternative
$262,979 $10,000 $252,979
$336,857 $371,605 -$34,747
Energy Demand Charges
$313,579 $475,072 -$161,492
Energy Utility Rebates
$0 $0 $0
$12,753 $0 $12,753
Recurring and Non-Recurrin
OM&R Costs
$91,089 $0 $91,089
$0 $0 $0
-$18,285 $0 -$18,285
------------------------------------
$735,993 $846,676 -$110,683
------------------------------------
$998,972 $856,676 $142,296
ener
pe not the same, can't report ener
savin
Energy
Consumption-----Life-Cycle
Type
Savings
Savings
767.7 MBtu 0.0 MBtu 767.7 MBtu 15,352.5 MBtu
1,365.0 MBtu 2,730.0 MBtu -1,365.0 MBtu -27,296.4 MBtu
Energy
Type
218,094.01 kg 0.00 kg 218,094.01 kg 4,361,283.00 kg
664.29 kg 0.00 kg 664.29 kg 13,284.00 kg
657.00 kg 0.00 kg 657.00 kg 13,138.20 kg
72,104.13 kg 144,208.26 kg -72,104.13 kg -1,441,885.18 kg
581.90 kg 1,163.81 kg -581.90 kg -11,636.47 kg
84.98 kg 169.96 kg -84.98 kg -1,699.39 kg
Total:
290,198.14 kg 144,208.26 kg 145,989.88 kg 2,919,397.82 kg
1,246.19 kg 1,163.81 kg 82.39 kg 1,647.53 kg
741.98 kg 169.96 kg 572.02 kg 11,438.81 kg
Perform LCCAsfor individual ECMs.
Management and administration
Measurement and verification
Evaluation of ESPC Contract
PROBLEM STATEMENT
possibility of financing, through an Energy Sa
vings Performance Contract, an upgrade of the
facility’s hot water system and other energy cons
ECMsin Training Facility, Jefferson, TN
Base date: June 2001
Implementation period: 1 year
Service date:June 2002
Contract period: 20 years
Study period: 25 years
Initial cost:$0
Energy consumption:4,584,396 kWh/yr
Energy price:$0.04324/kWh, commercial
AR OM&R costs:$18,300
Expected system life:25 years
Initial cost paid by agency:$29,283
Total capital costs financed:$1,133,217
Annual contract costs:
Debt service:$109,856, fixed
Performance period expenses:$7,047, increasing at 2.7%
pre-impl. period:Electricity: 4,584,396 kWh/yr
post-impl. period:Natural Gas: 109,780 therms
pre-impl. period:$18,300
contract period:included in contract payments
post-contract period:$4,871
Expected system life:25 years
residual value:4%
Study
2345678N
Contract Payments
Occupancy or Full
System Operation
Energy Savings
period
period
Lowest LCC
(non-discounted)
Annual Total Savings
(non-discounted)
Annualized PV LCC
Annualized PV LCC
–
Financing Solar Water Heating System
for A U.S. Coast Guard Base
PROBLEM STATEMENT
The U.S. Coast Guard (CG) in Honolulu is seeking to evaluate th
efeasibility of utility financing
to replace an existing electri
c resistance water
heating system with a solar water heating system for 280 residenc
es. To maintain the existing system, CG is planning to replac
eheater tanks at
the rate of 28 tanks per year (assuming a 10-year useful life),
Annual electricity cost:
Years 6, 11, and 16:$23,760 for anode replacements
Annually recurring OM&R costs:
$32,220 for tank replacements, at the rate of 28 tanks per year,assuming a 10-year tank life
Alternative 1: Solar Water Heating System Financed through Utility Contract
Contract term:10 years, beginning one year from base date
Loan payments: $123,833 per year during contract term, fixed
Administrative costs:$1,000 per year during contract
term, increasing at the rate of inflation
Oversight costs:$1,800 at contract date
Annual electricity cost:
15% (=$150,000) down payment at base date
Year 11: $30,000 for replac
Year 11:$230,400 for replacing tanks
Year 16:$18,580 for replacing valves, residual value 73%
Annually recurring OM&R costs:
$7,600 for routine maintenan
ce, included in loan
payment during contract term
June 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1 year 0 months
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1 year 0 months
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost Paid By Agency (base-
Initial Cost Financed (base-year $):
2.7%
Years/Months (from Date) Date
Portion
June 1, 2001
6 years 0 months
Annual Rate Of Increase:
Annual Rate Of Increase:
June 1, 2002 Remaining
Alternative: Solar Water Heating System
stem will be financed
through a utility contract
Annual Rate of Increase:
Factor
June 1, 2001 1 year 0 months
June 1, 2002 10
ears 0 months
June 1, 2012 Remaining
$1,000
Annual Rate of Increase:
Factor
June 1, 2001 1 year 0 months
June 1, 2002 10
ears 0 months
June 1, 2012 Remaining
1 year 0 months
Annual Rate of Increase:
542,000.0 kWh
Utility Rebate:
Industrial
June 1, 2001 1
June 1, 2002 Remaining
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost Paid By Agency (base-
Initial Cost Financed (base-year $):
2.7%
Years/Months (from Date) Date
Portion
June 1, 2001
11 years 0 months
Annual Rate Of Increase:
ears 0 months
June 1, 2012 Remaining
Cost
100% $0
Total (for Component)
(base-year dollars)
Initial Capital Costs for All Components:
$0
Initial Cost Financed
$0
(base-year dollars)
Price/Unit Annual Cost A
nnual Demand Annual Rebate
2,826,331.5 kWh $0.05000 $141,317 $0 $0
Present Value Annual Value
Initial Capital Costs Paid By Agency
------------------------
Energy Costs
Energy Demand Charges
Energy Utility Rebates
------------------------
------------------------
------------------------
Residual Value of Original Capital Components
------------------------
------------------------
Name Annual
2,206,103.08 kg 44,116,021.53 kg
3,883.12 kg 77,651.78 kg
4,182.29 kg 83,634.39 kg
Total:
2,206,103.08 kg 44,116,021.53 kg
3,883.12 kg 77,651.78 kg
4,182.29 kg 83,634.39 kg
Alternative: Solar Water Heating System
Initial Capital Costs for All Components:
Cost
100% $150,000
Total (for Component)
(base-year dollars)
Initial Capital Costs for All Components:
Initial Cost Financed
(base-year dollars)
Annual Usage Price/Unit Annual Co
st Annual Demand Annual Rebate
514,914.8 kWh $0.05000 $25,746 $0 $0
Present Value Annual Value
Initial Capital Costs Paid By Agency
------------------------
Energy Costs
Energy Demand Charges
Energy Utility Rebates
------------------------
------------------------
------------------------
Residual Value of Original Capital Components
------------------------
------------------------
Name Annual
401,918.61 kg 8,037,271.82 kg
707.45 kg 14,146.98 kg
761.95 kg 15,236.92 kg
Total:
401,918.61 kg 8,037,271.82 kg
707.45 kg 14,146.98 kg
761.95 kg 15,236.92 kg
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise F2.xml
Thu Sep 20 13:52:25 EDT 2001
Analysis Type:
Analyst:
Evaluate feasibility of replacing electric resistance wa
ter heating system with solar system financed
20 years 0 months(June 1, 2001 through May 31, 2021)
Comparison of Present-Value Costs
Base Case Alternative Savin
s from Alternative
$0 $150,000 -$150,000
Recurring and Non-Recurrin
Contract Costs
$0 $865,527 -$865,527
$1,560,685 $284,333 $1,276,352
Energy Demand Charges
$0 $0 $0
Energy Utility Rebates
$0 $0 $0
$0 $0 $0
$435,177 $40,834 $394,343
$50,312 $193,243 -$142,931
-$2,483 -$7,086 $4,603
------------------------------------
$2,043,691 $1,376,852 $666,840
------------------------------------
$2,043,691 $1,526,852 $516,840
$1,670,694
$1,153,855
Contract Costs Ener
Costs Total Operation
al Costs Total Costs
$0 $0 $0 -$150,000
-$126,736 $119,101 $153,081 $26,345
-$124,916 $119,827 $154,726 $29,810
-$124,945 $117,330 $153,171 $28,225
-$124,975 $114,938 $151,746 $26,771
-$125,006 $111,293 $149,094 $24,087
-$125,038 $110,474 $149,298 $52,137
-$125,070 $111,931 $151,802 $26,732
-$125,104 $113,206 $154,153 $29,049
-$125,138 $114,985 $157,037 $31,898
-$125,173 $117,256 $160,445 $35,272
$0 $120,728 $154,620 -$162,607
$0 $125,149 $159,956 $159,956
$0 $128,856 $164,601 $164,601
$0 $132,697 $169,410 $169,410
$0 $137,561 $175,265 $175,265
$0 $141,095 $179,816 $187,750
$0 $144,760 $184,526 $184,526
$0 $149,834 $190,675 $190,675
$0 $154,396 $196,336 $211,347
Energy
Consumption-----Life-Cycle
Type
Savings
Savings
2,826,331.5 kWh 514,914.8 kWh 2,311,416.6 kWh 46,222,004.1 kWh
Energy
Consumption-----Life-Cycle
Type
Savings
Savings
9,643.8 MBtu 1,757.0 MBtu 7,886.9 MBtu 157,716.0 MBtu
Energy
Type
2,206,103.08 kg 401,918.61 kg 1,804,184.46 kg 36,078,749.71 kg
3,883.12 kg 707.45 kg 3,175.67 kg 63,504.80 kg
4,182.29 kg 761.95 kg 3,420.34 kg 68,397.47 kg
Total:
2,206,103.08 kg 401,918.61 kg 1,804,184.46 kg 36,078,749.71 kg
3,883.12 kg 707.45 kg 3,175.67 kg 63,504.80 kg
4,182.29 kg 761.95 kg 3,420.34 kg 68,397.47 kg
Water Conservation
A military barracks at Fort Meade,
MD, housing 200 enlisted men,uses
800,000 gallons of water per
, $5.00/1000 gallons sewer charge. This barracks is
scheduled to be replaced with a new barracks in se
ven years. A water conservation project is proposed
that will reduce usage and disposal
by 25% at an initial cost of$5,0
increase by an average of 5%/year
Using BLCC5, compute the life-cycle water-related cost
As energy manager of a federal research facility,
you are taskedwith replacing the existing 1000-ton
replaced to eliminate CFC usage.
You have submitted technical specifi
and asked for bid responses which are to include the
following cost and energy-related data: first cost,
annual energy costs based on current electricity costs,
manufacturers must calculate annual energy usage
and peak energyusage for their system using a
ng an existinglighting system in an office building
with a new lighting/daylightingsystem financed thro
ugh a utility contract. The existing lighting system
is expected to be operational for another 15
years. Use BLCC5 to perform an LCC analysis.
Project Information
Location:Arizona
Base Date:June 2001
Study Period:15 years
Contract Term:10 years
Discount Rate:6.1%
Annual Rate of Inflation:2.7%
Discounting Convention:end-of-year
Base Case
Initial Investment Cost:0
Energy Type:Electricity
Annual Usage:1,082,633 kWh
Price:$0.04600/kWh, commercial
Annual Demand Charge:$30,105
Annual OM&R costs:$5,600
Amount Borrowed:$390,480
Expected Life:20 years
Residual Value Factor:25%
Annual Contract Paym
ent:$62,000, fixed
Energy Type:Electricity
Annual Usage:206,911 kWh
Price:$0.04600/kWh, commercial
Annual Demand Charge:$3,311
Annual OM&R:$0 during contract term
$3,000 in years 11 through 15
Lease Versus Buy Decision (BLCC4 Exercise)
NIST BLCC 5.0-01: Input Data Listing
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\p
G1.xml
Thu Sep 20 14:08:19 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Maryland
Analyst:
Military Barracks at Fort Meade, MD
7 years 0 months (June 1, 2001 through May 31, 2008)
Convention:
Discount and Escalation Rates are REAL (exclusive of general inflation)
Price/Unit Units/Year
800.0 ThousGal $4.00000 800.0 ThousGal $5.00000
0.0 ThousGal $0.00000 0.0 ThousGal $0.00000
e Cost Escalation
June 1, 2001 Remainin
Disposal Cost Escalation
June 1, 2001 Remainin
June 1, 2001 5
ears 0 months
June 1, 2006 Remaining
June 1, 2001 5
ears 0 months
June 1, 2006 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
Alternative: Water Project
Price/Unit Units/Year
600.0 ThousGal $4.00000 600.0 ThousGal $5.00000
0.0 ThousGal $0.00000 0.0 ThousGal $0.00000
e Cost Escalation
June 1, 2001 Remainin
Disposal Cost Escalation
June 1, 2001 Remainin
June 1, 2001 5
ears 0 months
June 1, 2006 Remaining
June 1, 2001 5
ears 0 months
June 1, 2006 Remaining
Initial Cost (base-
G-10
Years/Months (from Date) Date
Portion
June 1, 2001
G-11
NIST BLCC 5.0-01: Comparative Analysis
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise G1.xml
Thu Sep 20 14:10:47 EDT 2001
Maryland
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
Military Barracks at Fort Meade, MD
7 years 0 months(June 1, 2001 through May 31, 2008)
Convention:
Comparison of Present-Value Costs
Base Case AlternativeSavin
s from Alternative
$0 $5,000 -$5,000
$0 $0 $0
Energy Demand Charges
$0 $0 $0
Energy Utility Rebates
$0 $0$0
$45,450 $34,088 $11,363
Recurring and Non-Recurrin
OM&R Costs
$0 $0 $0
$0 $0 $0
$0 $0 $0
------------------------------------
$45,450 $34,088 $11,363
------------------------------------
$45,450 $39,088 $6,363
G-12
2.27
back occurs in
G-13
NIST BLCC 5.0-01: Input Data Listing
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\p
G2.xml
Thu Sep 20 14:23:51 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
June1, 2001
25 years 0 months (June 1, 2001 through May 31, 2026)
Convention:
Discount and Escalation Rates are REAL (exclusive of general inflation)
Alternative: Best Freeze
3,125,407.0 kWh
Utility Rebate:
Industrial
June 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
G-14
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1 year 0 months
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
1 year 0 months
Annual Rate of Increase:
2 years 0 months
Annual Rate of Increase:
3 years 0 months
G-15
Annual Rate of Increase:
4 years 0 months
Annual Rate of Increase:
5 years 0 months
Annual Rate of Increase:
6 years 0 months
Annual Rate of Increase:
7 years 0 months
Annual Rate of Increase:
8 years 0 months
Annual Rate of Increase:
9 years 0 months
Annual Rate of Increase:
10 years 0 months
Annual Rate of Increase:
2,984,564.0 kWh
Utility Rebate:
Industrial
G-16
June 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
G-17
Years/Months (from Date) Date
Portion
June 1, 2001
1 year 0 months
Annual Rate of Increase:
2 years 0 months
Annual Rate of Increase:
3 years 0 months
Annual Rate of Increase:
4 years 0 months
Annual Rate of Increase:
5 years 0 months
Annual Rate of Increase:
6 years 0 months
Annual Rate of Increase:
7 years 0 months
Annual Rate of Increase:
8 years 0 months
Annual Rate of Increase:
9 years 0 months
Annual Rate of Increase:
G-18
10 years 0 months
Annual Rate of Increase:
2,728,486.0 kWh
Utility Rebate:
Industrial
June 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1 year 0 months
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
G-19
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Initial Cost (base-
Years/Months (from Date) Date
Portion
June 1, 2001
1 year 0 months
Annual Rate of Increase:
2 years 0 months
Annual Rate of Increase:
3 years 0 months
Annual Rate of Increase:
4 years 0 months
Annual Rate of Increase:
5 years 0 months
Annual Rate of Increase:
6 years 0 months
Annual Rate of Increase:
G-20
7 years 0 months
Annual Rate of Increase:
8 years 0 months
Annual Rate of Increase:
9 years 0 months
Annual Rate of Increase:
10 years 0 months
Annual Rate of Increase:
G-21
NIST BLCC 5.0-01: Summary LCC
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\p
G2.xml
Thu Sep 20 14:28:42 EDT 2001
Analysis Type:
Federal Analysis, Agency-Funded Project
Analyst:
25 years 0 months (June 1, 2001 through May 31, 2026)
Convention:
Discount and Escalation Rates are REAL (exclusive of general inflation)
Alternative: Best Freeze
Present Value Annual Value
Initial Cost
Energy Utility Rebates
$0$0
Recurrin
OM&R Costs
Less Remaining Value
------------------------
Present Value Annual Value
Initial Cost
Energy Utility Rebates
G-22
Recurrin
OM&R Costs
Less Remaining Value
------------------------
Present Value Annual Value
Initial Cost
Energy Utility Rebates
Recurrin
OM&R Costs
Less Remaining Value
------------------------
G-23
NIST BLCC 5.0-01: Input Data Listing
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
File Name:
C:\Program Files\BLCC5\proj
ects\Class Exercise G3.xml
Thu Sep 20 14:31:20 EDT 2001
Analysis Type:
Arizona
Analyst:
Replace existing lighting system with
new system financed through a utility
15 years 0 months (June 1, 2001 through May 31, 2016)
Convention:
Discount and Escalation Rates are NOMINAL (inclusive of general inflation)
Base Case: Keep existing system for remaining 15 years of its useful life.
1,082,633.0 kWh
Utility Rebate:
Arizona
Commercial
Arizona
June 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1
April 1, 2007 1
April 1, 2008 1
G-24
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1 year 0 months
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Keep existing system for the remain
ing 15 years of its useful life.
Initial Cost Paid By Agency (base-
Initial Cost Financed (base-year $):
2.7%
Years/Months (from Date) Date
Portion
June 1, 2001
$5,600
Annual Rate of Increase:
Factor
June 1, 2001 Remainin
G-25
ears 0 months
June 1, 2011 Remaining
206,911.0 kWh
Utility Rebate:
Arizona
Commercial
Arizona
June 1, 2001 Remainin
Escalation
April 1, 2001 1
April 1, 2002 1
April 1, 2003 1
April 1, 2004 1
April 1, 2005 1
April 1, 2006 1 year 0 months
April 1, 2007 1
April 1, 2008 1
April 1, 2009 1
April 1, 2010 1
April 1, 2011 1
April 1, 2012 1
April 1, 2013 1
April 1, 2014 1
April 1, 2015 1
April 1, 2016 1
April 1, 2017 1
April 1, 2018 1
April 1, 2019 1
April 1, 2020 1
April 1, 2021 1
G-26
April 1, 2022 1
April 1, 2023 1
April 1, 2024 1
April 1, 2025 1 year 0 months
April 1, 2026 1
April 1, 2027 1
April 1, 2028 1
April 1, 2029 1
April 1, 2030 1
April 1, 2031 Remaining
Install new lighting/daylighting system financed through UC contract
Initial Cost Paid By Agency (base-
Initial Cost Financed (base-year $):
2.7%
Years/Months (from Date) Date
Portion
June 1, 2001
$3,000
Annual Rate of Increase:
Factor
June 1, 2001 10
ears 0 months
June 1, 2011 Remaining
G-27
NIST BLCC 5.0-01: Comparative Analysis
Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A
Convention:
Comparison of Present-Value Costs
Base Case Alternative Savin
s from Alternative
$0 $0 $0
Recurring and Non-Recurrin
Contract Costs
$0 $454,492 -$454,492
$488,520 $93,365 $395,155
Energy Demand Charges
$295,313 $32,479 $262,834
Energy Utility Rebates
$0 $0 $0
$0 $0 $0
$65,432 $9,847 $55,585
$0 $0 $0
$0 -$59,988 $59,988
------------------------------------
$849,264 $530,195 $319,070
------------------------------------
$849,264 $530,195 $319,070
G-28
Contract Costs Ener
Costs Total Operation
al Costs Total Costs
-$62,000 $66,707 $72,457 $10,457
-$62,000 $66,682 $72,588 $10,588
-$62,000 $67,374 $73,439 $11,439
-$62,000 $66,526 $72,755 $10,755
-$62,000 $65,923 $72,320 $10,320
-$62,000 $64,710 $71,280 $9,280
-$62,000 $64,906 $71,653 $9,653
-$62,000 $65,909 $72,839 $10,839
-$62,000 $66,709 $73,825 $11,825
-$62,000 $67,993 $75,302 $13,302
$0 $69,327 $72,812 $72,812
$0 $71,443 $75,022 $75,022
$0 $74,159 $77,834 $77,834
$0 $76,336 $80,111 $80,111
$0 $78,712 $82,589 $228,159
Energy
Consumption-----Life-Cycle
Type
Savings
Savings
1,082,633.0 kWh 206,911.0 kWh 875,722.0 kWh 13,134,031.8 kWh
Energy
Consumption-----Life-Cycle
Type
Alternative Savings
Savings
3,694.1 MBtu 706.0 MBtu 2,988.1 MBtu 44,815.2 MBtu
G-29
Energy
Emissions-----Life-Cycle
Type
881,777.18 kg 168,523.77 kg 713,253.41 kg 10,697,336.55 kg
1,080.53 kg 206.51 kg 874.02 kg 13,108.51 kg
2,880.63 kg 550.54 kg 2,330.09 kg 34,946.56 kg
Total:
881,777.18 kg 168,523.77 kg 713,253.41 kg 10,697,336.55 kg
1,080.53 kg 206.51 kg 874.02 kg 13,108.51 kg
2,880.63 kg 550.54 kg 2,330.09 kg 34,946.56 kg
G-30
G-31
G-32
British Thermal Units
Department of Defense
Department of Energy
Discounted Payback
Energy Conservation Measure
Energy Services Company
Energy Savings Performance Contract
Federal Energy Management Programs
Life-Cycle Costs or Life-Cycle Costing
Total Life-Cycle Costs
Utility Contract or Utility Energy Services Contract
Uniform Present Value (Factor)
Modified Uniform Present Value (Factor)
The time period proposed by the contractor for repaying the loan provided to a Government
agency to implement energy savings measures. It begins at the contract award date and
includes the Installation Period and the Energy Savings Performance Period.
The average annual rate at which the phased-in cost of a capital component is adjusted to its
value in any year of the Planning/Construction/Installation Period. The Cost Adjustment
The sum of interest payments and principal payments which comprise or are part of the
Contract Payment to an ESCO or UC.
That portion of the charge for electric service based on the plant and equipment costs
associated with supplying the electricity consumed.
The difference in the costs of an Alternative Building System and the Base Case.
Formulas based upon one dollar of value and an assumed Discount Rate and time.
An expression of a mathematical relationship which enables the conversion of dollars at a
given point in time to their equivalent amount at some other point in time.
The rate of interest, reflecting the investor's Time Value of Money (or opportunity cost), that
is used in Discount Formulas or to select Discount Factors which in turn are used to convert
("discount") Cash Flows to a common time. Real Discount Rates reflect Time Value of
Money apart from changes in the purchasing power of the dollar and are used to discount
Constant Dollar Cash Flows; Nominal Discount Rates include changes in the purchasing
The time required for the cumulative savings from an investment to pay back the Investment
Costs and other accrued costs, taking into account the Time Value of Money.
A technique for converting Cash Flows occurring over time to time-equivalent values, at a
common point in time, adjusting for the Time Value of Money.
That period of time over which a Building or Building System is considered to be the lowest-
cost alternative for satisfying a particular need.
Defined as the installation of new equipment/facilities, modification, or alteration of existing
government equipment/facilities, or revised operations and maintenance procedures to reduce
energy consumption of facilities/energy systems.
The annual cost of fuel or energy used to operate a building or building system, as billed by
the utility or supplier (including Demand Charges, if any). Energy Costs are incurred during
the Service Period only. Energy consumed in the construction or installation of a new
building or building system is not included in this cost.
Contracts authorized by the Energy Policy Act of 1992 (EPACT), which offer alternative
financing of energy and water efficiency improvements in federal buildings and allow the
The period from the date of contract award to the date all contracted energy conservation
measures are operational and accepted by the agency. Installation period may also be referred
Nonmutually Exclusive Projects
Projects where the acceptance of one alternative does not preclude the acceptance of the
others. Examples are wall insulation and ceiling insulation.
Costs that are not uniformly incurred annually over the Study Period.
Labor and material costs required for routine upkeep, repair, and operation, exclusive of
energy costs.
Nonmutually Exclusive Projects
Projects where the acceptance of one does not preclude the acceptance of the others.
Examples are wall insulation and ceiling insulation. (For contrast, see Mutually Exclusive.)
May include management/administration costs, operation and maintenance costs, repair and
replacement costs, measurement and verification costs, permits and licenses costs, insurance
costs, property taxes, and other costs (e.g., "margin"), which may be paid by agency or
included in the Contract Payment proposed by ESCO or UC.
The period beginning with the Base Date and continuing up to the Service Date, during
which only Initial Investment Costs are incurred.
fuels of which there is a limited supply). Renewable sources of energy include wind energy,
geothermal energy, hydroelectric energy, photovoltaic and solar energy, biomass, and waste.
adjustment to a common time basis is necessary to take into account not only the real earning
potential over time, but also price inflation or deflation.
The discount factor used to convert uniform annual values to a time-equivalent Present
The period of time over which a Building or Building System continues to generate benefits
PURPOSE: It is our objective to present a useful and effective training course. You are the final authority on
RESPONSES
(Check the response closest to your opinion)
Strongly
Agree
Agree
N/A
a. was well organized
b. was good quality
a. was a reasonable length
b. was worth recommending to others
c. contributed to my knowledge and skills
d. accomplished announced purpose
a. Subject was thoroughly covered
b. Course expectations, requirements, and
objectives were made clear
d. Time in class was spent effectively
a. were comfortable
c. were appropriate for this course
a. were prepared for class
c. made course a worthwhile learning
COURSE EVALUAT
ION (Continued)
UATION (Check your opinion)
8. WOULD YOU ADD OR EMPHASIZE ANY SU
COURSE SESSIONS?
no If "yes," list these areas and give your reasons:
OURSE, WHAT ADDITIONAL RELATED
TRAINING SHOULD BE MADE AVAILABLE?
11. OTHER COMMENTS. PLEASE MAKE ANY COMMENTS RELATIVE TO
Disclaimer
Table of Contents..............................................................................................................
.............iii
Acknowledgements...............................................................................................................
.......viii
Instructor Profiles............................................................................................................
..............ix
Workshop Objectives............................................................................................................
.........xi
Workshop Overview..............................................................................................................
.......xii
Workshop Agenda................................................................................................................
.......xiii
Introduction...................................................................................................................
ative Financing Contracts.........................................................F-1
Exercise F1....................................................................................................................
...........F-5
Class Exercise F2..............................................................................................................
.....F-24
Solution to Class Exercise F2.................................................................................................F
Module G: Class Examples......................................................................................................
..G-1
Class Exercise G1..............................................................................................................
......G-2
Class Exercise G2..............................................................................................................
......G-3
Class Exercise G3..............................................................................................................
......G-5
Class Exercise G4..............................................................................................................
......G-7
Solution to Class Exercise G1.................................................................................................G
Solution to Class Exercise G2...............................................................................................G-1
Solution to Class Exercise G3...............................................................................................G-2
Solution to Class Exercise G4...............................................................................................G-3
Economic Measures of Evaluation and Their Uses.................................................................EM-1
Acronyms.......................................................................................................................
...........AC-1
Glossary.......................................................................................................................
.............GL-1
Course Evaluation..............................................................................................................
.......CE-1
vii
The latest versions of BLCC5 and BLCC4, associated programs, and user guides can be downloaded
from the DOE/FEMP web site at
.doe.gov/femp
(click on icon Technical Assistance and go to Analytical Software
viii
The authors are grateful to Dr. Robert Chapman and to Dr. Saul Gass for their review of this manual.
Thanks are also due to the many workshop participants whose comments have been helpful in
Ms. Rushing programs in C++ and Java. She is also proficient in HTML and web site design. In
capital investment decisions
energy and water cons
xii
inciples that are the subject of the Basic LCC
Workshop. The elements of performing a life-cycle cost evaluation are explained. Emphasis is placed
on clarifying those issues that often confuse practitioners. Issues include why it is necessary to adjust
cash flows for the time-value of money and how to do it, how to estimate costs and savings, and how
to handle inflation. Students are shown, step-by-ste
xiii
The manual is intended as both an in-class wor
review. It is divided into seven modules by s
ubject matter. The subject matter is discussed by
way of sample analyses performed in BLCC5, th
a summary of the LCC principles reviewed in the first lecture.
For all other modules an exercise is provided to
reinforce the material discussed in the lecture
small groups when solving these classroom exerci
ses. The solution to each classroom exercise is
included at the end of each corresponding module in the form of BLCC5 reports.
Federal Energy Management Program
Amy S. Rushing
Office of Applied Economics
Gene M. Meyer
September 2001Sponsored by:
Building and Fire Research LaboratoryThe
Federal Energy Management Program
TechnologyU.S. Department of Energy
Gaithersburg, MD 20899Washington, DC 20585
Disclaimer
Table of Contents..............................................................................................................
.............iii
Acknowledgements...............................................................................................................
.......viii
Instructor Profiles............................................................................................................
..............ix
Workshop Objectives............................................................................................................
.........xi
Workshop Overview..............................................................................................................
.......xii
Workshop Agenda................................................................................................................
.......xiii
Introduction...................................................................................................................
ative Financing Contracts.........................................................F-1
Exercise F1....................................................................................................................
...........F-5
Class Exercise F2..............................................................................................................
.....F-24
Solution to Class Exercise F2.................................................................................................F
Module G: Class Examples......................................................................................................
..G-1
Class Exercise G1..............................................................................................................
......G-2
Class Exercise G2..............................................................................................................
......G-3
Class Exercise G3..............................................................................................................
......G-5
Class Exercise G4..............................................................................................................
......G-7
Solution to Class Exercise G1.................................................................................................G
Solution to Class Exercise G2...............................................................................................G-1
Solution to Class Exercise G3...............................................................................................G-2
Solution to Class Exercise G4...............................................................................................G-3
Economic Measures of Evaluation and Their Uses.................................................................EM-1
Acronyms.......................................................................................................................
...........AC-1
Glossary.......................................................................................................................
.............GL-1
Course Evaluation..............................................................................................................
.......CE-1
This student manual for the
Project-Oriented Life-Cycle Costing Workshop for Energy Conservation
in Buildings
is a workbook for a two-day course on life-cycle costing developed by the National
Institute of Standards and Technology (NIST) for the U.S. Department of Energy (DOE), Federal
Energy Management Program (FEMP). The methodology and procedures in this manual are
consistent with 10 CFR Part 436A and its amendments, which provide guidelines for the economic
analysis of investments in energy and water cons
ervation and renewable energy projects for federal
discount factors and energy price projections that underly the discount factor tables in the
Annual Supplement. Use the latest BLCC versions, which are available at the DOE web site
The BLCC5 program is a windowed version of the DOS-based BLCC4. It is programmed in Java,
uses an xml file format, and is thus platform-independent. The BLCC5 User’s Guide is part of its
Help system. BLCC5 has two modules:
(1)Module for Agency-Funded Projects
for LCC analyses of projects funded from direct appropriations.
(2)Module for Financed Projects
for LCC analyses of projects financed through ESPC or Utility Contracts as authorized by
Other user-specific modules now in BLCC4 (e.g., for MILCON analyses, OMB analyses, and
private-sector analyses, including taxes) will be transferred to BLCC5 as funding becomes available.
NIST BLCC programs provide comprehensive economic analysis capabilities for the evaluation of
proposed capital investments that are expected to reduce the long-term operating costs of buildings
and building systems. They compute the LCC for project alternatives, compare project alternatives in
vii
The latest versions of BLCC5 and BLCC4, associated programs, and user guides can be downloaded
from the DOE/FEMP web site at
.doe.gov/femp
(click on icon Technical Assistance and go to Analytical Software
viii
The authors are grateful to Dr. Robert Chapman and to Dr. Saul Gass for their review of this manual.
Thanks are also due to the many workshop participants whose comments have been helpful in
Economist, Office of Applied Economics
Dr. Fuller joined NIST’s Office of Applied Economics in 1979. Her areas of expertise include
benefit-cost analysis, economic impact studies, and the pricing of publicly supplied goods and
services. As project leader of the NIST/DOE collaborative effort to promote energy and water
conservation, she has been involved in developing
techniques, workshops, instructional materials,
and computer software for calculating the life-cycle costs and benefits of energy and water
conservation projects in buildings, in accordance with federal legislation. She has participated in
Ms. Rushing programs in C++ and Java. She is also proficient in HTML and web site design. In
capital investment decisions
energy and water cons
xii
The workshop begins with a review of the LCC pr
inciples that are the subject of the Basic LCC
Workshop. The elements of performing a life-cycle cost evaluation are explained. Emphasis is placed
on clarifying those issues that often confuse practitioners. Issues include why it is necessary to adjust
cash flows for the time-value of money and how to do it, how to estimate costs and savings, and how
to handle inflation. Students are shown, step-by-ste
xiii
The energy crisis of the 1970s, higher energy prices, and environmental concerns focused our
attention on the critical need to include energy conservation as a major performance objective in the
design or rehabilitation of buildings. In the last three decades, the Federal Government, as owner and
operator of over a half-million buildings and the nation’s largest user of energy, has played a
leadership role in improving the energy efficiency of our nation’s building stock. Through energy
The manual is intended as both an in-class wor
kbook and as a future source of reference and
review. It is divided into seven modules by s
ubject matter. The subject matter is discussed by
way of sample analyses performed in BLCC5, th
e windowed version of the NIST LCC software.
At the end of Module A, there is
a summary of the LCC principles reviewed in the first lecture.
For all other modules an exercise is provided to
reinforce the material discussed in the lecture
and to give students hands-on experience with
BLCC5. Students are encouraged to work in
small groups when solving these classroom exerci
ses. The solution to each classroom exercise is
included at the end of each corresponding module in the form of BLCC5 reports.
new building design) the base case may be the design with the lowest first cost or the minimum level
of performance that satisfies building code requirements.
The graph in slide A-5 is typi
cal of energy conservation investments. It compares the owning
and operating costs associated with a wide range
of energy efficiency levels for a building
system (e.g., exterior wall insulation or air cond
itioner efficiency). Generally, as the level of
energy efficiency increases, the initial cost incr
eases at an increasing rate. Lower levels of
efficiency can generally be achieved at low co
st, but as the efficiency level is increased,
structural, mechanical, or design modificati
ons must be made to accommodate the added
components. This quickly adds to the initial cost
. For example, to increase the effective thermal
resistance value of a wall, the wall thickness must be increased or a more costly type of
insulation must be used; or, in the case of air c
more costly compressors are necessary to increas
e energy efficiency. For some systems, such as
fossil-fired furnaces, there are practical limits to th
e extent to which efficiency can be increased,
causing the investment cost curve to bend sharply upwards.
The operating cost curve in the graph shows that as the energy efficiency of the system is increased,
energy consumption is decreased, but at a decreasing rate. In fact, energy consumption is generally
inversely proportional to energy efficiency so that additional units of improvement generate less
savings than the ones before. For example, increasing the thermal resistance value of attic insulation
from R-30 to R-40 only saves about 18 % as much energy as increasing the level from R-10 to R-20.
The total cost curve is the vertical summation of the investment cost and operating cost associated
with any level of energy efficiency.
The lowest point on the total cost curve, Q
Optimal system selection
refers to the problem of selecting the most cost-effective system type
for a particular application. System selection can directly impact the energy performance of a
building. Examples include the choice of the heating and cooling system types for a building
(e.g., electric heat pump or gas furnace with electric air conditioning), wall design (e.g., masonry
or wood frame), or even insulation type (e.g., rigid foam or mineral wool).
Optimal combination of interdependent projects
refers to the problem of selecting two or
more building systems at the same time, recognizing that the implementation of one system will
have significant effects on the energy savings potential of the other, and vice-versa. For
example, installing a high-efficiency furnace will reduce the energy savings potential of storm
windows, while installing storm windows will reduce the energy savings potential of installing a
high-efficiency furnace.
Prioritization of independent projects
is required when a number of cost-effective energy
conservation investments have been identified but not enough funding is available to implement
all of these projects. Economic analysis allows the ranking of these projects in decreasing order
The basic steps in an LCC analysis are to
-identify the alternatives under consideration,
-specify the data requirements and establish assumptions,
-estimate the costs in dollars,
-adjust costs for time value of money,
-compute total LCC for each alternative, and
-choose the alternative with the lowest total life-cycle cost.
Depending on the circumstances, you may also want to calculate supplementary measures of
economic performance, perform an uncertainty assessment, and add a narrative describing non-
economic issues. All of these steps will be covered during the workshop.
To make a decision about economic efficiency, it is important to measure the economic
consequences of alternatives. Data requirements for making an economic decision are not the same
as those for keeping an accounting system. For an LCC analysis, you need, in general,
evaluate only
costs that change
from one alternative to another. Costs that remain the same do not decrease or
increase the life-cycle costs of an alternative relative to the base case and thus need not be included.
Because collecting cost data can be expensive, you want to focus on collecting those data which are
likely to have a
on the life-cycle costs of an alternative. You do not want to spend
your limited resources on collecting data that have little impact.
Do not include "sunk" costs
in your analysis. Sunk costs are those costs that have already been
incurred and cannot be avoided by future decisions. Only amounts that can be changed by the
decision need to be included in the analysis.
Non-tangible costs
are costs or benefits that cannot easily be expressed in dollar amounts. Even
though they cannot be explicitly included in an LCC analysis, their effects should be described in a
narrative so that they will not be overlooked when making a decision.
Life-cycle costs typically include
investment-related costs
and
operational costs
. Acquisition
costs, including costs for planning, design, and cons
truction, are investment-related, as are residual
values such as resale value, salvage value, or disposal costs. Under the FEMP rule, capital
replacement costs are also defined as investment-related. Energy costs, maintenance costs, and
repair costs are considered operational costs, that is, non-investment-related costs. This definition is
useful when computing economic measures that evaluate long-run savings in operational costs in
relation to total capital investment costs.
Some of the costs included in an LCC analysis are
annually recurring
, such as energy, and routine
maintenance and repair costs.
Non-annually recurring
costs are those that may occur only one time
during the life-cycle, such as acquisition costs and residual values, or several times, such as
replacement costs. This definition is needed for choosing the appropriate discount factors used to
In a third classification, acquisition costs are designated as
and all other costs as
, a useful classification both for selecting di
scount factors and for relating initial investment
All costs included in the analysis are expressed in
. These base-year amounts will
be multiplied by
discount factors
that incorporate the discount rate and any applicable escalation
Energy and water costs
Special criteria apply to energy costs in analyses of conservation measures considered for federal
Current prices
NBS Special Publication 709. These projections are also included in the NIST BLCC computer
programs.
In 1995 water conservation was added to energy conservation as a designated goal for
the Federal Energy Management Program. No special water usage/disposal escalation rates are
projected by DOE.
A-30
Location:Federal building, Washington, DC;
Discount rate: 2001 FEMP discount rate: 3.3% real
Fuel type:Electricity
Price:$0.08/kWh, local rate as of base date
Rate type: Commercial
Useful life:20 years
Study period:20 years
Base date:June 2001
A-31
$103,000Initial investment costs
$ 12,000Replacement cost for fan at the end of year 12
$ 3,500Residual value at the end of the 20-year
$ 20,000Annual electricity costs (250,000 kWh at
A-34
A-30
Location:Federal building, Washington, DC;
Discount rate: 2001 FEMP discount rate: 3.3% real
Fuel type:Electricity
Price:$0.08/kWh, local rate as of base date
Rate type: Commercial
Useful life:20 years
Study period:20 years
Base date:June 2001
A-31
$103,000Initial investment costs
$ 12,000Replacement cost for fan at the end of year 12
$ 3,500Residual value at the end of the 20-year
$ 20,000Annual electricity costs (250,000 kWh at
A-32
Electricity
Base Date
Fan replacement
A-33
Initial investment$103,000Base datealready in
present value
Capital replacement
(fan)
$12,00012SPV
Residual value
($3,500)
20SPV
Electricity
$20,000annualUPV
OM&R$7,000annualUPV
Total LCC
($1,827)
A-34
escalation and discount rates
–
www.eren.doe.gov/femp -- Technical Assistance –
Analytical Software Tools
G-2
Water Conservation
A military barracks at Fort
Meade, MD, housing 200 enlisted men,
uses 800,000 gallons of water per
year at a cost of $4.00/1000 ga
llons of use plus $5.00/1000 gallo
ns sewer charge. This barracks is
scheduled to be replaced with a
new barracks in seven years. A wa
ter conservation project is proposed
that will reduce usag
e and disposal by 25 %
at an initial cost of $5,
000 and which will not have
ilding life. All of the
project components have a
average of 5 %/year over general in
During the last two
years of the barracks’ life, the occupancy level (and thus
water consumption) is expe
cted to be half of the
e mid-year discounting convention.
Using BLCC5, compute the life-cycle
water-related costs before and af
G-3
Chiller Replacement
As energy manager of a federal
e tasked with replaci
chiller, which has an expected rema
replaced to eliminate CFC usage.
You have submitted technical specif
and asked for bid responses which are
to include the following cost and
energy-related data: first cost,
annual energy costs based on current
outsourcing,
LCCAs,
include inflation adjustments.
Careful Analysis
230 Ton Chiller Replacement in
Federal Building in Texa
s vs. Chilled Water Contract
Dollar Analysis?
inflation adjustment for all costs.
escalation rates for different costs.
Base Date
Discount
Factor
Present
Value
$350,000
27,500
2,100
10,000
5,000
35,000
1.00
8.40
8.40
8.40
0.723
$350,000
216,975
17,640
84,000
42,000
(25,305)
Initial cost
Annual electric cCost
Annual make-up water
Annual in-house labor
Annual service contract
Residual value (year 10) *
$685,310
Total PV Cost
10-Year Analysis
PV 10-year chiller replacement cost
PV 10-year chilled water contract cost
PV 20-year chiller replacement cost
PV 20-year chilled water contract cost
PV 10-year contract with chiller replacement at year 11
PV 10-year chilled water contract cost
PV 10-year chiller replacement at year 11
509,112
$1,066,882
856,362
$509,112
and Escalation Rates
OM&R Costs
Replace Chiller Alternative
Alternative
have differing
escalation rates
Purchase Chilled Water Alternative
CHILLER REPLACEMENT:
High initial investment cost
Significant maintenance (buildin
Fixed output capacity
convenient or impractical
Performance degradation over time
negotiations -- less uncertainty
CHILLED WATER CONTRACT:
Flexible contract length
Low initial cost
Negligible maintenance
wn time for maintenance
Careful Analysis
230 Ton Chiller Replacement in
Federal Building in Texa
s vs. Chilled Water Contract
Contract life negotiable:
Monthly capacity charge = $13.00/ton
Excess capacity charge = $13.00/ton
Excess capacity “r
Current-dollar analysis using DOE di
scount rate and inflation rate
Nominal discount rate = 6.1%, Inflation rate = 2.7%
from Annual Supplement to
(390,000 ton-hs@$0.07)$27,300
Assumes 2.7% annual CPI increase, based
tion in ASHB135.
Based on DOE industrial gas price escalati
on rates for region 3 with 2.7% inflation.
(390,000 ton-hs@$0.07) $27,300
Assumes 2.7% annual CPI increase, based
tion in ASHB135.
Based on DOE industrial gas price escalati
on rates for region 3 with 2.7% inflation.
Present
27,500
2,100
10,000
5,000
35,000
1.00
7.89
8.40
8.40
8.40
0.723
$350,000
216,975
17,640
84,000
42,000
(25,305)
Annual in-house labor
10-Year Analysis
less needed refurbishment. $175,000 - $140,000 = $35,000
Present
27,500
2,100
10,000
5,000
140,000
175,000
0.723
151,250
12,747
60,700
30,350
73,080
(91,350)
Annual in-house labor
Scheduled refurbishment (year 10)
SPV* for year 10 (2.7% inflation)
UPV* for 20 years
- UPV* for 10 years
SPV* for year 20
(2.7% inflation)
PV 10-year chiller replacement cost
PV 10-year chilled water contract cost
PV 20-year chiller replacement cost
PV 20-year chilled water contract cost
PV 10-year contract with chiller replacement at year 11
PV 10-year chilled water contract cost
PV 10-year chiller replacement at year 11
$509,112
have differing
escalation rates
PROBLEM STATEMENT
The building energy coordinator ha
s reviewed the analysis and ha
s concluded that given present
natural gas prices and DOE projections for energy
escalation, it is cost-eff
ective to enter into a
contract to purchase chilled-water.
However, he is concerned about the changing pr
ice and availability of
decreasing supplies and a national trend towards su
mmer peak electrical
The manager of the buildings is still unce
rtain about leaving the supply of chille
d water up to a third party. He has
asked you to compare
the life-cycle cost of purchasi
ng chilled water for a 20-year pe
riod versus purchasing chilled
water for 10 years and then buying a chiller.
To purchase chilled water for 10 years and th
en purchase a chiller has the following costs:
Purchase chilled water contract cost = $10,000
Purchase chiller in year 10 = $350,000
First 10 years
80, of which 40 % is not adjusted
and 60 % is adjusted for inflation.
which 35 % is adjusted for ch
anging natural gas prices and
Energy costs for 450,000 kWh at $0.
05 per kWh plus $5,000 demand char
ges, both adjusted for changing
electricity prices.
Make-up water costs of $2,100 an
nually, adjusted for inflation.
In-house labor of $2,100 annually.
Service contract of $5,000 annually.
The chiller residual value af
ter 10 years of use and needing a refurbishm
ent will be $350,000/
2 –$140,000 = $35,000 or
ten percent.
Acquisition and debt service
O&M *
Repair and replacement*
Energy costs
* Capitalization of traditional
–
Each individual project should be cost-effective.
–
EO 13123 allows bundling of non-cost-effective
ECMs with those that generate high NS.
–
Bundling does not guarantee maximization of NS
–
Analysts must account for interaction among
–
Energy consumption of different combinations
needs to be recalculated.
Acquisition and debt service
O&M *
Repair and replacement*
Energy costs
* Capitalization of traditional
–
EO 13123 allows bundling of non-cost-effective
Bundling does not guarantee maximization of NS
–
Evaluation of ESPC Contract
PROBLEM STATEMENT
rson Training Facility in Tennessee has been investigating the
possibility of financing, through
an Energy Savings Performance Cont
ract, an upgrade of the facility’s
conservation measures. In colla
boration with an ESCO, she has
Project Oriented Life Cycle Costing Workshop For Energy