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October 15, 2014 -
Simple payback is typically calculated by dividing the annual energy savings for each project by the capital cost to replace or modify the piece of equipment. But using simple payback can make it difficult to justify large HVAC and other capital projects. By bundling a group of energy efficiency projects together, facility managers can improve the chances of getting funding.
Once no- or very low-cost energy efficiency measures have been included in the bundle, the next step involves relatively small projects that may require an engineering design or additional evaluation. One example is the installation of variable frequency drives on motors. For example, a 20 horsepower pump operating 24 hours per day for a quarter of the year (91 days) with $0.08/kWh electrical cost will incur an electrical charge of $2,890 per year, assuming a motor efficiency of 90 percent.
The installation of a variable frequency drive will allow the pump to operate at decreased the flow and pressure throughout the year. The flow will decrease at the same rate the motor speed decreases. The energy costs decrease as the cube of the flow (motor speed) decreases. If the installation of the variable frequency drive reduces the flow by 25 percent, then the resultant reduction in energy use is 58 percent. However, the reality is that approximately 50 percent energy savings will be obtained. The savings for this project is approximately $1,450 per year. Based upon RS Means, the average installed cost for a 20 horsepower pump is approximately $4,000 to $5,000 depending on location. The simple payback for this energy conservation measure is approximately 2.7 to 3.5 years.
All analyses of energy conservation project paybacks should of course be based on actual power rates paid by the facility. The impact on demand charges should also be considered.
This brief came from Andy Jones, mechanical engineer/project manager at RMF Engineering.