tures. These variables are highly dependent on equipment loca- tion and local programs.
The calculator produces a project payback and a ten year IRR (internal rate of return). IRR is a very useful metric when consid- ering the best way to allocate discretionary investment dollars by allowing various investment types to be compared side-by-side as simple expected investment yields.
Using the provided tools to evaluate the ROI of HVAC equipment, it is realized that upgraded HVAC and energy saving systems often provide the highest ROI. Using these steps to evaluate in- vestment options, the lodging and building management industry should better understand how upgrading HVAC systems is a wor- thy means to reduce energy consumption and costs, and make guests more comfortable. n
HVAC technology used, the ROI calculation follows the same phi- losophy.
Variable speed blowers, which provide quiet and efficient operation, are a simple HVAC upgrade with energy savings that exceed initial cost. A sim- ple calculation to determine the payback period on a variable speed blower upgrade would consider:
• variable speed blower upgrade cost • energy cost • hours of use per day
Assuming the variable speed blower uses 80 percent of the energy that the older blower used, energy savings of about $7,300 a year for a 17,000-square-foot facility would be expected. To calculate the simple payback period, divide the installed system cost by the yearly-expected sav- ings, which provides the number of years it would take for the investment to pay for itself. The ad- ditional years of the product life multiplied by the yearly savings are increased profits on the facil- ity’s bottom line in the form of reduced expenses.
Economic Calculators to Evaluate ROI Many HVAC equipment manufacturers have de- veloped sophisticated ROI calculators. These cal- culators generally are very accurate and trustwor- thy if the customer is aware of the assumptions used in the calculations and agrees they are rea- sonable. It is necessary for decision makers to re- view and agree with the assumptions used in pay- back and ROI calculations to ensure the expected cost savings will be realized.
Capstone Turbine Corporation’s proprietary Eco- nomic Calculator models fuel cost; costs and sav- ings as total installed cost; operation and mainte- nance cost; energy and heat savings due to onsite generation; and value added for reliability.
Additionally, this calculator can incorporate invest- ment tax credits, emissions credits, depreciation tax benefits, and various electric rate tariff struc-
PAGE 14 | Winter 2011 | Lodging Engineer Click here to purchase JOIN NOW! http://www.nahle.org/Join
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