HVAC Condition Assessments, LCCA,

& Energy Retrofit Programs

Comprehensive Energy Services, Inc
Todd Morgan JR, Account Executive
777 Longwood, FL 32750
(407) 682-1313
tmorgan@cesmechanical.com
www.cesmechanical.com

!1
 Agenda
• Overview

• What is an Energy Retrofit

Program?

• HVAC Condition Assessments

• Break

• Life Cycle Cost Analysis

• Q&A

!2
 What's in an Energy
Retrofit Program?
• HVAC Condition
Assessment
Monitoring

• Life Cycle Cost

Analysis (LCCA)

!3
 Avoid costly emergency
replacement
If your HVAC equipment is nearing its end
of life—about 12 to 15 years* —and if it
fails in the middle of the summer, you will
likely end up paying a premium to repair or
replace the unit.

Replacement unit may not have the right

features, or even be the right size,
because the need to restore air
conditioning could force you to make
short-term trade-offs.

!4
 Avoid Disrupting Business
New equipment gives you peace of
mind. With out-of-date equipment,
there’s a constant worry about when it
may break down.

Unplanned repair expenses negatively

impact your profitability and cash flow.

In addition to paying more for

emergency equipment, you have
dissatisfied customers and
employees, as well as lost sales.

!5
 Lower Replacement Costs
Replacing multiple units at the
same time spreads out fixed
costs, such as crane rental and
travel time, over several units.

Your increased purchasing

power may also lower other
costs related to equipment
purchase and installation.

!6
 Control Capital Expenditure

Planning ahead lets you

select the best equipment for
your needs. When you control
the timing of any capital
expenditure, you manage
business finances more
effectively and efficiently.

!7
 Immediate positive cash flow

With leasing, there may be no up-

front costs or down payments
required. Combined with the lower
operating costs of today’s equipment
and avoided repair costs, new
equipment could provide you with
immediate positive cash flow

!8
 HVAC Project is a
Capital Asset
The installation will likely see
several decades of service,
represents a substantial
investment, and the upfront cost
often represents only 5% of the
overall funding in terms of total
cost of ownership over 20 or
more years.

!9
 How HVAC Energy Retrofit
Programs Save You Money
• Avoid costly emergency replacement

• Lower replacement costs

• Control the timing of your capital expenditure

• Immediate positive cash flow

!10
 Energy Retrofit
Program Outcomes
• Acquiring equipment and systems that are outstandingly
durable and therefore pay off their higher initial costs with
lower operational and maintenance expenses.

• Equipment and systems with lower initial costs and

satisfactory, if not optimal, performance.

• Increase the facility’s performance (and profitability, in the

instance of the private sector) to such a degree that it
justifies the additional cost.

!11
!12
HVAC systems comprise approximately 33% of a typical
commercial building’s energy use

!13
 HVAC Condition Assessments
CES’s HVAC Condition
Assessment is a rapid visual
inspection of nine different
elements within each HVAC
system at a facility.

Using handheld Smart

Phones & Tablets, we rate
nine HVAC elements.

!14
 HVAC Condition Assessments
When field assessments are complete, the ratings are placed
into a Sequel Server (SQL) database, where the model converts
the assessed condition ratings into two useful metrics:

• System Condition
Index Rating (SCI)

• Facility Condition
Index Rating (FCI)

!15
 System Condition Index Rating
(SCI)
SCI is a benchmark to enable an
objective comparison of HVAC
systems. The higher the index,
the poorer the system condition.

CES can set targets for improved

conditions; for example, to
reduce the SCI to an acceptable
level and to have a benchmark
to measure progress or failure.

!16
 Facilities Condition Index
Rating (FCI)
The FCI provides a readily
available and valid indication of
the relative condition of a single
facility or group of Facilities.

It also enables the comparison of

conditions with other facilities or
groups of facilities. The higher the
FCI, the worse the conditions. 

!17
 Condition Assessment
Recommendations
Recommendations are prioritized based on broad
descriptive categories and are as follows:

• Program & Operational (P&O) Recommendations

• Economy & Efficiency (E&E) Recommendations

• Liability Recommendations

!18
 Program & Operational
Recommendations
P&O Recommendations are
actions necessary to support
planned maintenance and
operational requirements.

P&O recommendations
establish the core of CES’s
needs-based HVAC
maintenance program

!19
 Liability & Economy/Efficiency
Recommendations:
Liability Recommendations are
special matters requiring early
attention to remove jeopardy
through life safety, property
damage, or regulatory actions.

E&E Recommendations will

result in immediate or eventual
cost savings.

!20
 Life Cycle Cost
The Life Cycle Cost (LCC) of an asset is defined
as the total discounted dollar cost of owning,
operating, maintaining, and disposing of a
building or a building system over a period of
time, according to The National Institute of
Standards and Technology (NIST) Handbook.

!21
Break
!22
 Life Cycle Cost
Analysis (LCCA)
LCCA is especially useful when project alternatives
that fulfill the same performance requirements, but
differ with respect to initial costs and operating
costs, have to be compared in order to select the
one that maximizes net savings.

!23
 LCCA - Inputs & Results
LCCA Inputs: LCCA Results:

• Total Installed Costs • Payback Period

• Annual Operating Expense • Lifetime Operating Expense
• Lifetime • Life Cycle Cost
• Discount Rate

• Electricity Price Trend

!24
 Total Installed Costs

The total installed cost to the

customer is defined by the
equipment price and
customer price to install
equipment.

!25
 Equipment Energy
Consumption
The equipment energy
consumption is the site energy use
associated with providing space-
conditioning to the building.

The power demand is the

maximum power requirement of
the equipment (more commonly
known as the peak demand) for a
specific period of time.

!26
 Equipment Efficiency

The energy efficiency

ratio (EER) is the
efficiency descriptor
for commercial unitary
air conditioners.

!27
 Electricity Price Trends
The Energy Information
Administration’s (EIA)
Annual Energy Outlook
2003 (AEO2003) is used to
forecast electricity prices
into the future

!28
 Maintenance Costs
The maintenance cost is
associated with general
maintenance (e.g.,
checking and maintaining
refrigerant charge levels
and cleaning heat
exchanger coils.

!29
 Repair Costs
The cost associated with repairing or replacing
components that have failed.

!30
 Equipment Lifetime

The age at which

the air-conditioning
equipment is retired
from service.

!31
 Discount Rate
The rate at which future
expenditures are
discounted to establish
their present value

Cost of capital is the

weighted average of the
cost to the firm of equity
and debt financing

!32
 Simple Payback Metrics
The payback period (PBP) is the amount Simple Payback Analysis
of time it takes the consumer to recover
the assumed higher purchase expense
of more energy-efficient equipment as a
result of lower operating costs. Annual Operating Savings

Simple payback period does not take

into account changes in operating
Simple Payback Period
expense over time or the time value of
money; that is, the calculation is done at
an effective discount rate of 0 percent
Return on Investment

!33
 Life Cycle Cost Metrics
Includes long-term Life Cycle Cost Metrics
maintenance and
Net Present Savings
replacement costs.
Savings to Investment Ratio
Simple Payback
Analysis examines only Discounted Payback Period (years)
initial costs and annual
savings. Adjusted Internal Rate of Return

!34
 Net Present Value
NPV is a measure of the
investment's financial worth to the
organization, taking into account
the preference for receiving cash
flows sooner rather than later.

A positive NPV is the net gain to

the organization from making the
investment.
If an organization has two or more
investment opportunities, the
financially sound decision is to
pick the one with the greatest
NPV.
Net present value (NPV) is a measure of investment
worth that explicitly accounts for the time value of
money. NPV is computed from the stream of cash
flows resulting from the investment. Cash flows are
adjusted (or "discounted") so as to place relatively
greater value on near-term cash flows and
relatively lesser value on cash flows that are more
distant in the future.

!35
 SIR Savings to
Investment Ratio
(SIR) – this is the percent of
money recovered from the
system generation compared
to the initial investment cost
and ongoing O&M costs,
with reference to a specific
desired payback period.

!36
 Internal Rate of Return
(IRR)
Internal Rate of Return
indicates the discount
rate at which the project
becomes cost neutral.
A higher number
indicates a better
investment.

!37
 Discounted Payback
Period
Discounted Payback
Period includes long-
term maintenance and
replacement costs, and
as such represents a
more complete estimate
of the payback period
than the Simple Payback
Period.

!38
Thank You! Q&A

!39