ETL 1110-1-181
12 Jan 98
(0 x 13.09).
i. Simple Payback. The first cost difference divided by the
incremental savings is the simple payback. Typically, the point at
which an alternative becomes attractive is where the simple payback is
equal to 10 years or less. Simple payback, however, does not take into
account any increases in energy costs nor any increases in interest
rates over time. Because of this, simple payback should only be used as
an initial indicator as to the selection of an alternative (the SIR
should be the decisive comparison). In Table C4 for example, the simple
payback for selecting a chiller with an efficiency of 0.65 kW/ton verses
selecting a chiller with an efficiency of 0.70 kW/ton (both operate with
an energy cost of 0.02 $/kWh) is equal to 10 years (,000 / 0).
j. Net Present Value (NPV). The first cost of a chiller minus the
total discounted savings is the NPV. In Table C4 for example, the NPV
of a chiller with an efficiency of 0.58 kW/ton operating with an energy
cost of 0.02 $/kWh is equal to ,717 (,000 - ,618 -
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,571 -
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,047 -
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,047). In comparing alternatives using NPV the alternative
with the smaller NPV is typically the one selected, however, for these
calculations the primary decision of choosing a particular alternative
is based upon the Savings-to-Investment Ratio (SIR) as defined in the
following paragraph.
k. Savings-to-Investment Ratio (SIR). The discounted savings
divided by the first cost difference is the SIR. In the example
calculations, the SIR was the value that was used to determine when one
alternative was more economical than another. The optimum alternative
is established when the SIR first exceeds the value of 1.00.
C-4. SUMMARY OF RESULTS. Figures C1 and C2 as shown on the following
pages are graphical representations of the results of these
calculations. Note in Figure C1 that the optimum efficiencies varies
significantly with EFLH and the chiller capacities. For example, the
optimum IPLV to specify for a 200 ton chiller that operates for 1,000
EFLH at 0.03 $/kWh is 0.62 whereas the optimum IPLV to specify for a 200
ton chiller that operates for 4,000 EFLH at 0.08 $/kWh is 0.58. Table
C2 is a numerical representation of the results of these calculations.
Note in Figure C2 that the optimum efficiency for all EFLHs and energy
costs is 0.58. The high efficiency chiller was alway economical because
of the demand charge factors that were included. Designers performing
economical comparisons between different efficiency liquid chillers
should always research and incorporate applicable demand charges due to
their large impact on the comparisons.
C-3
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