Selecting a chiller for life

The evaluation criteria used to select a chiller involve the owning costs and the operating costs. The owning costs include acquisition, installation, and replacement costs; salvage value; discount rate and financing method; and fixed or periodic costs such as insurance and property taxes. These costs are exclusive of costs associated with operating the chiller.

The performance characteristics of the selected equipment, its predicted useful service life, its hours of operation, and the loads applied, affect operating costs. Capital investment costs are firm and have an immediate effect on the project finances. Predictions of future costs and usage estimate operating costs are subject to variations depending on economic conditions. Owners and engineers tend to emphasize first-cost differences and place less significance on operating cost differences.

There are several economic analysis techniques available for a chiller purchase, but the recommended evaluation procedure, accounting for the time-value of money, is to determine estimated lifecycle costs on a “present-worth” basis. The net present value (NPV) method is superior, as it discounts all cash flows at the owner's required rate of return when evaluating mutually exclusive purchases given chiller size and project time disparities, or unequal service lives.

An important aspect of a chiller selection is analyzing its energy use for operating cash flows. Assuming a selection of a water-cooled, centrifugal chiller is required, a method to use is the chiller's relevant pressure drop and flow rate information, and its Air-Conditioning and Refrigeration Institute (ARI) integrated part load value/non-standard part load value (IPLV/NPLV) ratings. The ARI 550/590-2003: Standard for Performance Rating of Water Chilling Packages Using the Vapor Compression Cycle IPLV/NPVL ratings provide realistic off-design performance for chillers, and assists in making energy comparisons.

To illustrate, assume two 2,000-ton chillers with 25-year life expectancies operate 8,760 h/yr at $0.10/kWh; discount rate 11%; and all other items (e.g. energy cost escalation, depreciation method, maintenance costs, etc.) are equal. The manufacturers' information follows:

Use the following formulas to calculate the items necessary for a NPV comparison:

NPLV kW/ton = 1/[(0.01/A) + (0.42/B)

+ (0.45/C) + (0.12/D)]

Compressor costs

2,000 tons x (8,760 h/yr) x ($0.10/kWh)

x (NPLV kW/ton) = $/yr

Evaporator and Condenser Pumping costs

[(number ft) x (flow gpm) / (3,960 x 0.85)] x

[(0.746 kW/hp) x (8,760 h/yr) x ($0.10/kWh)] = $/yr

A NPV calculation over 25 years indicates that if Chiller 1 is selected, it would have a lifetime cost of $7.23 million, compared to Chiller 2, which would have a lifetime cost of $7.47 million. At present value (PV), Chiller 1 costs $50,541 more up front. In reviewing the cumulative lifecycle PV energy savings of operating Chiller 1, the savings of $62,804 in year 3 indicates the payback for the increase in capital expenditures occurs rather quickly. If the chillers had up-front equal costs, the energy savings would be immediate, but would not be equal to the mathematical difference of the savings if calculated using the formulas above.

The owner would need to take the difference and invest it to achieve a cash flow. The cumulative PV energy savings of operating Chiller 1 compared to Chiller 2 over 25 years is $143,300. The $240,334 is the PV difference between the two selections, taking into account all costs (not assumed equal) for this example, which is only the first cost and the energy costs carried through a 25 year NPV calculation.

A change in full or part load efficiencies can dramatically change the NPLV and operating costs. If there is a change in the NPLV for Chiller 1 to 0.507, the payback does not occur until year 17. The prediction of energy costs over a 25-year period can be a variable as anything else. The costs would be included in the NPV and discounted along with all the others equally contributed to both chillers.