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    Find Value with Practical Energy Evaluations

    Dec. 1, 2006
    img src="/images/archive/44226roundtable_00000020157.jpg" width="99" height="126" border="0" align="right"At first glance, energy evaluations for existing
    At first glance, energy evaluations for existing HVAC systems seem to be a nebulous and sometimes confusing service. Simply put, however, an energy evaluation is the process of identifying and evaluating projects that can reduce a client's energy consumption to determine if they will provide a suitable return on investment (ROI).

    If deployed properly, the energy evaluation can be a key component of the Design/Build contractor's arsenal, as it represents a real win-win scenario. For the client, a viable energy conservation measure (ECM) will reduce their annual operating costs, and provide a "feel-good" factor that can provide benefit in various ways. For the Design/Build contractor, ECMs and the evaluation process can improve client relationships, grow revenue in existing clients, and open doors for new clients.

    The intent of this article is to present a practical process for evaluating ECMs. It also describes very important "soft" issues that are either difficult or impossible to quantify through calculations or software. If these issues, including impact on occupant productivity and morale, system complexity, and maintenance aren't properly considered, it could permanently damage the client relationship.

    The Practical Process

    1. Find out the why and what
      The first step is to determine why the customer wishes to embark on this process, and what their judgment of success will be. Is the motivation to be good corporate citizens, reducing CO2 emissions, or is it in response to a senior management request? Is the client looking for projects that deliver a 20% ROI, or have they been told to reduce annual energy costs by 15% over the next two years? The answer to these will affect how you proceed.
    2. Brainstorming
      Successful brainstorming will produce a list of all possibly viable ECMs. Led by the Design/Build contractor, brainstorming can often be completed in one meeting. Those present should include various members of the contractor's and client's staffs with backgrounds in engineering, construction, and maintenance.
    3. Paring down the list
      During this step, each measure from the brainstorming list should be evaluated using experience-based metrics for installation and operating costs. If the ECM still appears to be viable, then it should proceed to the next step. If not, then it should be discarded.
    4. Preliminary evaluation
      During this phase, predicted energy savings are evaluated using simplified methods such as hourly bin data, full-load hours, and levelized utility rates. While installation costs can still be rough budgets, the analysis should now also consider available rebates.
    5. Investment grade evaluation
      If an ECM has made it to this step, then it warrants a detailed analysis using realistic data. As such, installation costs should be based on firm pricing. Energy savings must be precisely estimated, which will often require computer-based simulation and the use of real-world operating hours, and detailed utility rate information on-peak, off-peak, consumption, demand, etc. By considering available rebates and possible third-party grants, the client should now possess sufficient information to determine whether the ECM is a prudent investment.

    Soft Costs
    There is a little-known ECM that could revolutionize the industry. It's widely applicable, relatively simple, inexpensive to deploy, and will significantly reduce annual operating costs. Despite the above, not many are recommending this: Turn off all lights and HVAC systems permanently.

    While it's perfectly clear that no one would recommend this ECM, it would meet the prescriptive investment criterion for most energy evaluations. So, what's wrong? The answer is that a truly valuable energy evaluation considers more than first cost and annual operating expense. It's a realistic and responsible effort that will provide a client with recommendations that make sense.

    Impacts on Occupants
    Can large energy savings justify a small degree of occupant discomfort?

    We can evaluate this question by way of example. Allowing for a maximum occupancy according to building code, we can expect roughly 665 people in a 100,000 sq. ft. space. While the salary costs will vary significantly between geographical region, company, and position, it wouldn't be unreasonable to assume that, on average, each employee costs the company $50,000 (including salary, benefits, etc.). Simple math reveals a total employee-burdened cost of just over $33 million per year, or just over $330 per square foot. Depending upon your perspective, that may seem high or low, but when compared with typical utility costs between $1.50 and $3.50 per square foot, $330 is obviously astronomical. The employees cost at least 100 times the cost of building utilities.

    Assume that a facility is at the upper end of the operational cost range at $3.50 per square foot, and that new management decides to fix the problem. The facility energy director and a world-class team of energy consultants develop a foolproof, justifiable plan that over three years cuts operating costs in half. As such, at the end of year three, the facility is operating at $1.75 per square foot. Unfortunately, over this same period, management noticed increasing comfort complaints. Was it worth it?

    Is it conceivable that discomfort could produce 10 minutes of hand-warming in a day? Perhaps 10 minutes to get some fresh air, or to complain to a co-worker? Despite the new energy savings, which resulted in an annual windfall of $175,000, 10 minutes a day in lost productivity would cost the company almost $700,000. In addition, what would the long-term impact be should occupant morale decline?

    System Complexity
    In general, the more complex a system is, the less likely it will work as predicted on paper. Clearly, attention to detail during engineering and installation, followed by diligent commissioning, could result in proper operation on day one. But how about day 1,000?

    Inevitably, complicated systems or intricate control strategies will tend to be simplified over time, and won't produce the energy reduction that was originally predicted. The rule of 1,000/1 is always a good check — knowing your client, and their personnel, is it realistic to expect that the ECM will be working on day 1,000 the same as it was on day one?

    Maintenance Costs
    The cost of proper maintenance is an issue that can be easily overlooked — sometimes underselling the benefit of the project. For example, if a fume hood VAV retrofit project has been proposed, which would manifold 50 exhaust fans into a single header and use a single exhaust fan, this would significantly reduce the ongoing maintenance costs of the system. Quantitatively, if each of the smaller fans warrant one hour per quarter for miscellaneous preventive maintenance tasks, and the larger fan requires four hours per quarter, this could lead to a man-power reduction of 184 hours per year. This example undersells an ECM, but often the opposite mistake is made.

    In summary, it's crucial to remember that the goals of an energy evaluation are not achieved with a comprehensive list of potential projects or by submitting a large binder with pounds of paper to justify a fee — especially if the same list can be obtained from any one of numerous textbooks. The goal needs to be value, which is the efficient development and presentation of projects that are truly justifiable for the specific application based on soft costs, first cost, and predicted energy savings. Judged very simply— would you buy this project if it were your personal money at stake?

    Don Newell, P.E., C.E.M., is a senior project engineer with EMCOR Services/Trimech Corporation. He is a LEED Accredited Professional, and is also certified as a testing and balancing supervisor, as well as a buildings commissioning administrator by NEBB. Don can be reached at [email protected].

    Give us your feedback on this article at [email protected]

    Commercial Contracting Roundtable

    This article is based on the presentation, Practical Energy Evaluations, which Don Newell gave at the 2006 Commercial

    Contracting Roundtable, held in Atlanta, Oct. 25-26. The Commercial Contracting Roundtable, which also incorporates the Design/Build Seminar, is co-sponsored by the Air Conditioning Contractors of America (ACCA) and Contracting Business magazine.

    This year's roundtable featured 15 business management and technical sessions specifically tailored for commercial HVAC and Design/Build contractors.

    For more information about the 2007 Commercial Contracting Roundtable, contact Richard Ware at ACCA, 703/824-8843, or visit www.contractingroundtable.com.