Heat-Recovery Chillers: Worth the Cost?

By Jesse Cabrera, Stanley Consultants, Muscatine, Iowa January 1, 2006

Today’s thermal energy facilities are striving to provide heating services in a more cost-effective manner, and one option being considered more and more frequently is heat-recovery chillers.

But before implementing this technology, the designer should begin a detailed cost analysis to determine whether the cumulative savings in operational costs will justify the capital investment and the increased maintenance costs associated with the heat-recovery chillers and their auxiliary equipment. The first thing to do is identify all cash flows that will result from a heat-recovery project. It’s a good idea to list all costs associated with the heat recovery chillers, as well as those associated with not pursuing the heat recovery project. In other words, the economic analysis must consider the initial costs of the project as well as the annualized operational and maintenance costs associated with each alternative.

The initial costs of a heat-recovery application include those for heat-recovery chiller(s), the associated heat exchanger used for recovering heat and auxiliary equipment (i.e., pumps). Savings can also be realized via the elimination of existing hot water-generating equipment. The operational costs incurred by the heat-recovery equipment will include the additional energy required to operate the chiller in heat-recovery mode, as well as the additional pumping costs associated with using the recovered heat. Alternatively, operational savings from heat recovery will result in the reduction of fuel that would have been purchased to provide the same heating capacity.

Ideally, the operating costs for heat-recovery analysis should be determined from actual recorded data kept by plant personnel. However, if this data is not available, the operating costs are best determined using a computer model that accurately compiles hourly heating and cooling loads throughout the year. A bin-method calculation is another alternative.

Regardless of the method used for compiling the data, the procedure for calculating the operating costs is the same. It depends on the relationship between the heating and cooling loads over the full range of system loads. To calculate the energy consumption for each alternative, the output of each piece of equipment is multiplied by its efficiency to determine the energy input rate over the full range of system loads. Accordingly, this energy input rate is then multiplied by the number of hours of operation over the full range of system loads. Summing the energy input rate over the full range of system loads yields the annual energy use for each alternative. Finally, the annual operating cost for each alternative is determined by multiplying the energy use by the owner’s electrical and natural gas utility rates, including demand charges where applicable.

Once the annual costs are determined, the feasibility of implementing heat recovery can be determined by calculating the net present value of each alternative. A net present value analysis allows the owner to calculate the equivalent value of a series of cash flows. This, in turn, allows for an apples-to-apples comparison of each alternative, based upon the initial cost of the heat recovery equipment, the operating and maintenance costs and the owner’s economic criteria. Comparing the net present value of each alternative will yield the least-cost option, and that difference will indicate how long it will take for the cumulative operational savings to recover the initial investment.

Cost considerations for heat-recovery chiller applications

Chiller unit(s)

Heat exchanger

Auxiliary equipment (pumps)

Operation and maintenance