The Right Way to Evaluate HVAC Payback
HVAC, metrics, return on investment July 3, 2008
I’m Ed Sullivan, editor of Building Operating Management magazine. Today’s topic is ensuring that the CFO understands how to evaluate the payback from an HVAC upgrade.
The bottom-line impact of an HVAC retrofit isn’t always as easy to see as that of a lighting retrofit. Unless the use of a space changes, the demand for lighting will be the same after the upgrade as before. Not so with HVAC. Both heating and cooling load can vary dramatically from year to year.
Suppose the first year after the upgrade brings a hot summer or cold winter. If the reduction in energy costs is less than expected, the CFO may conclude that the upgrade was a failure.
A better course is to let the CFO know – when the project is first proposed – that the appropriate measure isn’t absolute dollars, but dollars adjusted for degree days. That’s not quite as simple an idea to sell to the CFO, but it’s hardly a difficult concept for anyone who pays home heating and cooling bills. More important, that approach helps prevent surprises when energy bills arrive.
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