ASHRAE Journal - April 2009 - 43

towers. As a reference, the coefficients of performance (COP) used in the different simulations were based on the minimum requirements as per Standard 90.1-2007 and ARI 550/590-2003, Performance Rating of Water Chilling Packages Using the Vapor Compression Cycle. The energy simulations for the water-cooled chiller systems assumed a condenser-water temperature relief control scheme with two-speed tower fans that enable the condenser-water temperature to float with the load and wet-bulb temperature. Both systems had the same air-side arrangement of VAV with reheat. Annual energy use for the different systems in each city were computed, and the annual electric utility costs were calculated based on the 2007 through 2008 averaged rates per city as reported by the U.S. Energy Information Administration (EIA). Table 1 outlines the parameters used in the energy simulation model highlighting the different setpoints used. were based on an estimated useful service life of 20 years and no salvage value. The average 2008 interest rates were used. Figures 1 through 6 illustrate the consolidated results for the six selected cities in this study. Looking Beyond the Obvious Based on the previous analysis, the total cost of ownership of an air-cooled chiller system is consistently lower than that of an equivalent water-cooled chiller system in the 100 tons to 500 tons (3512 kW to 1758 kW) range. However, the gap closes as we go to the higher end of this range, especially for warmer climates. The reason is that energy cost becomes the dominant contributor versus initial cost. A generalized insight that can be drawn from this conclusion is that while energy conservation is of paramount importance, other factors weigh heavily in system selection. Factors that should be considered include local variables such as water availability, sewage disposal policies, risks associated with Installed Cost a Legionella outbreak (and the consequent system insurance After estimating the energy costs, the next step was to com- premiums or potential for litigations when using water-cooled pute the installed costs for the systems), ongoing local labor different systems, technolorates, union presence and its gies, locations, and capacities. effect on labor rates, and insurTo obtain an apples-to-apBloomsbury Business and Management Dictionary defines ance premiums. These factors ples comparison, we based our total cost of ownership as: affect the designer’s choice of costs on modular chilled-water which air-conditioning system A structured approach to calculating the costs associated systems. This enabled us to concept to specify. The labor with buying and using a product or service. Total cost of precisely cost the systems and cost is a case in point. ownership takes the purchase cost of an item into account include all applicable costs Maintenance labor cost is but also considers related costs such as ordering, delivery, involved in the air-cooled or important in deciding whether subsequent usage and maintenance, supplier costs, and water-cooled chiller setups. It to use an air-cooled or waterafter-delivery costs. Originally designed as a process for also enabled accurate estimacooled chiller system early in measuring IT expense after implementation, total cost of tion of installation costs for the the design phase of the project. ownership considers only financial expenses and excludes different capacity ranges. According to statistics pubany cost-benefit analysis.1 lished by the U.S. Department Maintenance Cost of Labor, the hourly rate for a After calculating the energy cost and the installed cost the Level 9 mechanical technician has increased from $22.58 in next step in the calculation was the actual maintenance costs for 1997 to $29.94 in 2005. That is a 32.6% increase over eight the systems, capacities, and locations for the six cities. years. In the same period, the published statistics from the DOE To accurately capture all costs involved, from the maintenance indicated that the average retail price of electricity to ultimate technicians to the water treatment costs and associated insur- customers in the commercial sector went from $0.0759 cents/ ance premiums, we based our numbers on actual maintenance kWh in 1997 to $0.0867/kWh in 2005, which is an increase of contract costs for the different systems, cities, and capacities. 14.2% (less than half the labor rate increase during the same These contracts included the yearly charges for labor includ- period). Labor cost may be more of a deciding factor than ing the impact of local unions where applicable, insurance energy cost in some cases. premiums, material costs, water-treatment costs for the coolA recent report from the International Facility Management ing towers, etc., for the 100 to 500 ton (3512 kW to 1758 kW) Association that surveyed 1,032 facility professionals across capacity ranges, and cities. North America showed that the costs of running a facility have increased by 19% since 2006 even though the average energy Adding Up consumption has decreased.3 A certain design may prove more After we had the three cost components (running energy cost, energy efficient when comparing the annual energy consumpinstalled equipment cost, and ongoing maintenance cost), the tion of the equipment, but this same system may be commanding final step was to compute the overall TCO for the combinations. much higher consumption rates when incorporating the anWe used the most relevant financial comparison tool: the nualized fringe costs of installing and maintaining the system. net present value (NPV)for the costs.2 The NPV computations The main takeaway here is that focusing only on one factor Total Cost of Ownership April 2009 ASHRAE Journal 43

ASHRAE Journal - April 2009

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