When Facility Executives Need HVAC Upgrades

You want to include a major HVAC renovation in the plan for this year. How do you convince an owner to complete a retrofit that the building needs? You need to demonstrate, first, how the upgrade will improve the building and, second, how this increases the value of the building for the owner.

Some managers may think it is simple to convince an owner to spend thousands of dollars on an upgrade. They assume that an owner will want to complete a project so the building remains state-of-the-art. However, most owners — institutions, for example — view the building as an asset similar to stocks or bonds. They need to see the value of the property increase as a result of their cash outlay.

A second reason commonly given by managers to owners is that the office building will operate more efficiently after the retrofit, thus reducing utility costs. However, tenants usually pay their share of the building’s operating costs based on the amount of space they occupy.

Therefore, the tenants, not the owner, will benefit from the reduced utility costs. The owner pays for the renovation at the time the work is done. The cost of the work is then amortized and passed through to the tenants over the lifetime or payback of the project. The owner will spend the money today and only recoup it over time while the tenants will experience the immediate benefit.

This is the challenge faced by a fictional facility manager we’ll call John Philips, who is responsible for the hypothetical Spencer Building. Built 10 years ago, The Spencer Building is a class A office building in a downtown market. Like many buildings in the marketplace, the 240,000 rentable square foot building is 100 percent occupied with no major leases rolling over for seven to 10 years. Philips is aware that the owner’s objective is to hold this building for at least two to five more years. Although only 10 years old, the building’s HVAC system has two problems. First, the energy management system is not state-of-the-art and does not provide the building with efficient operation and sufficient control. Second, the parts of the mechanical equipment are expensive to maintain.

Philips has recommended upgrading the EMS system and installing variable frequency drives (VFV) on major equipment motors. The upgrade of the EMS system will include new power supplies, bases, transducers, wiring and associated relays. The existing temperature sensors will be replaced and new direct digital controllers will be installed for the interior and exterior air handling units, 24 in all. Static pressure controllers, solar load sensors and control relays will also be added to the EMS, giving the operating engineers more control points to ensure tenant comfort levels and increased monitoring capability. All of the new sensors and relays will be linked by a networking cable in a user-friendly package to a desktop computer with a Pentium microprocessor, graphics card, high-speed modem, color monitor and color printer.

VFDs will be installed on all motors and pumps. VFDs provide a staged start-up of equipment, preventing “spikes,” or sharp increases in electric demand. Motor speed can also be controlled by a VFD to operate more efficiently when equipment is at part load. Other advantages to VFDs are increased equipment life, decreased maintenance costs and automatic restart of equipment after power failures.

The system upgrade was bid to five companies with the recommended vendor bidding on this work for $326,978. The vendor has also given the option of a lease of this system at $422,100 at 11 percent for 60 months. This cost includes energy accounting, bill auditing and benchmarking reports for the first year.

The economic analysis that follows is based on the upgrade package just described; however, a similar approach can be taken with any HVAC system upgrade.

Owner’s Plans

Because the building may be for sale in the next two to five years, Philips knows the owners will want an increase in value at time of sale and a quick return on investment. To prove the increase in value, Philips will rely on the income-capitalization method of appraisal. The income-capitalization method is based on the net operating income (NOI) — the result of subtracting the operating expenses from rents received. If rents go up or expenses go down, NOI increases; higher NOI means higher value.

What’s more, an HVAC retrofit may make a building more appealing to tenants than other buildings in the area, thus increasing rents. Further, a retrofit project usually decreases utility costs.

The income-capitalization method divides the income by a cap rate, defined by market conditions, to find value. Based on the NOI for the building and a cap rate of 9 percent, the current value of The Spencer Building is $50,666,666.

At the Spencer Building, occupancy is already 100 percent with no major leases expiring until the year 2015. Therefore, the upgrade will not attract new tenants so no increases in rent as a result of the project are expected.

However, if the building had vacant space and was located in a competitive market, it might have an edge in leasing over buildings with higher utility costs. A tenant pays operating expenses over a base year. A base year may be set at $10 per square foot. The tenant pays all operating expenses in excess of $10 per square foot; the owner bears the cost up to that amount. If the operating costs are $14 per square foot, the tenant is paying $4 per square foot. If the retrofit reduces costs by $0.50 per square foot, the tenants’ costs fall to $3.50 per square foot. The owner’s costs are not reduced. The benefit to the owner is that the tenant may be happy with the reduced costs and be more inclined to renew the lease.

Cutting Costs

The retrofit at the Spencer Building will reduce costs in several ways. The EMS will improve staging of equipment during start-up and shutdown schedules and increase detail of temperature sensing and automatic adjustment. The VFDs will reduce utility costs by operating at only the speed required to satisfy the comfort load; the current system provides constant volume and constant speed flow. Based on a review of the equipment and historical electrical data, energy savings are estimated at:

• EMS base system utility savings: $96,154


• VFD installation utility savings: $40,872


• Total estimated annual utility savings: $137,026


• Savings per square foot: $2.570

The system costs $326,978. As outlined above, the annual utility savings are $137,026, creating a payback period of 2.39 years. Annual utility savings will increase NOI by $137,026. This, in turn, produces an increase in value based on the income-cap method of $1,522,511. The new value of the building is $52,189,177.

Range of Benefits

Philips can present this project to the owner by citing the benefits of the upgrade. The physical improvements include:

• Improved system control through installation of state-of-the-art equipment


• Cost savings due to VFDs and improved response to temperature


• Ease of operation by use of “point and click” methods


• Reduction of engineering staff time required to program the system and to check concerns through the system rather than a physical site inspection


• Reduced maintenance cost

More important are these financial benefits:

• A payback period of less than 2.5 years


• An increase in value in excess of $1.5 million dollars


• Lower operating expenses for tenants

To win approval for capital projects, a facility manager must have two things: knowledge of the owner’s objectives and the ability to prove the improvements meet those goals. After this upgrade, the Spencer Building will have a state-of-the-art HVAC system and be worth more than before the renovation. This combination will make the building more attractive to potential purchasers. Based on the numerous benefits, the owner would probably approve this upgrade at the Spencer Building.

An Energy Upgrade Can Do More Than Just Trim Energy Costs

An energy upgrade can do more than just trim energy costs. It can help boost productivity, reduce maintenance costs and improve overall facility performance. But success is far from assured. When planning and carrying out an energy project, the facility executive must avoid common pitfalls that can doom a project before it even gets under way.

Before doing anything else, the facility executive should understand the financial aspects of the project. Most finance departments view the facility group as spenders of money rather than producers of money. An energy upgrade project can reverse that perception. Seize the opportunity to communicate the idea to the chief financial executive.

First, determine if the contemplated project is being done on a “capital” or “performance” basis. A capital project entails spending company money and needs to be budgeted accordingly. Myriad financial hurdles need to be analyzed, including costs, benefits and return on investment. Will the project involve spending company cash or will some or all portions of the project be financed? If the latter, will it be traditional financing, a capital lease or an operating lease?

The facility executive should work closely with the organization’s financial group as the project is planned. That way, the facility executive is part of a team as the financing rationale is being formulated by the accounting department.

The facility executive can expect such comments as, “Why do we have to fix or replace the lights, boiler, or HVAC systems, etc.? They work just fine.” The reason is that the project will improve the bottom line and create positive cash flow with solid return on investment. Before saying this, however, the facility executive should be well aware of the financial hurdles and return-on-investment marks that the financial officer will be using to analyze the project.

The second financing model, being used more and more in recent years, is the performance-based energy upgrade project. In that approach, the contractor or energy service company (ESCO) is compensated based on performance (with performance being measured as energy and savings), in some cases guaranteeing that energy savings will result from the upgrade initiative. These guaranteed savings are then used to pay all project costs. Generally, these projects require a long-term service agreement with the contractor to be put in place, with the guarantee validated from year to year.

Performance-based financing mechanisms can take several forms. The project capitalization value can be either on balance sheet or off balance sheet.

Of course, in a performance-based upgrade with guaranteed savings, the contractor or ESCO will charge for taking on the risk that savings will not be as high as anticipated and will have its own overhead and margins to cover. As a result, projects of this nature will generally cost more over the long term than traditional capital projects; that is, the contractor or ESCO will keep a portion of the energy savings to cover those costs, as well as the costs of planning the upgrade and installing the new equipment. A company that can fund an upgrade itself will maximize savings; if funds are available, that’s clearly the best choice. Nevertheless, a performance-based approach is often a very effective way to get energy upgrades accomplished.

There are four basic kinds of performance contractors or ESCOs: those tied to utilities, equipment vendors, mechanical and electrical contractors, or independent engineering firms (consulting/developer based). Performance contracting is a highly competitive arena with marketing sizzle and aggressive savings offerings as the norm. A performance contract can serve an organization very well if critical details in contract negotiation and financing are handled carefully.

Of course, financing is only one element that has to be considered in planning. A good project plan includes a clear statement of vision, goals, objectives and methodology, along with a simple cost-benefit schedule that describes how much money will be spent and what benefits will be achieved.

Inviting Help

Initially, the plan should be packaged as an executive-summary type report for presentation to the financial group. By labeling the first version of the plan a draft, the facility executive invites the finance department to help shape the project — a good way to build an alliance and gain buy-in before requesting formal project approval and financing.

A clear, concise plan, approximately three pages, will illustrate and highlight the financial return or savings associated to the project. In the first version, don’t include any cost-benefit analysis or return-on-investment schedules — the idea is to solicit help from the financial officer in this process and, in the best scenario, get his or her help with the project.

Because the goal is to present energy savings as revenue rather than expense, be sure to capture operational savings beyond energy costs. The project will have an operations budget that will likely be established from a previous year’s expenditure; from the perspective of a financial officer, that baseline operational budget is somewhat fixed or a given. If the facility executive can show that an upgrade will reduce this baseline operational budget, the financial reality is that the savings will go directly to the bottom line or will minimally go into an “other income” category on the balance sheet.

The secret is to not give away all of the potential savings: Some should be reserved or scheduled into an incentive or reserve fund to be used for other project initiatives that may not necessarily reduce energy costs, but may improve the business environment or facility portfolio.

There’s another reason not to build the maximum proposal savings into a proposal: Projects rarely achieve the greatest savings that seem possible on paper. If the facility executive promises that maximum level of savings — and the financial officer builds it into the budget — any shortfall could make the project a failure from a financial perspective, no matter how much money it actually saves. And the financial department will be skeptical of future proposals for energy upgrades; that will help build a bridge between the facility and finance departments, not a wall. Far better to be conservative in estimating savings, and look like a hero if the project actually does better than budgeted.

In discussions about the financial justification for an energy project, it’s important to keep life-cycle costs in a prominent place on the agenda. Many times, a good project is turned down because the financial study is based solely on first cost rather than long-term costs, including operations and maintenance expenses.

Often, a higher first cost will result in lower operating and maintenance expenses; the added expense is recouped over a very short period of time when the cost of operations and maintenance is factored in. This analysis is very easy to assemble; most equipment vendors and contractors are able to produce it.

When doing performance-based energy upgrades, the contractor will most likely promote a more efficient system that may have a higher first cost because of superior return on investment and cash flow impact. An energy project analysis that does not study the long-term operating and maintenance aspects of the improvement may very well leave money on the table. It makes good business sense to look at the project both ways, even if the final decision is to go with lower initial cost.

Because energy upgrade projects don’t happen often, it is worthwhile to consider getting an experienced outside firm involved.

A long-term perspective is also important in preparing an upgrade strategy to present to the finance department. A long-term outlook might help prevent this all-too-familiar refrain: “I did a large lighting retrofit project last year that produced great results — now if I could only get management to approve fixing my boilers, chillers, HVAC or control problems. I wish they had returns like the lighting project.”

Many energy upgrade projects focus strictly on lighting. While this approach certainly will result in a winning project, many times a great opportunity is lost because the lighting initiative isn’t integrated with other energy upgrade projects. The facility executive should consider bundling the lighting upgrade with other measures and build a larger project.

One reason this integrated approach isn’t taken, say many facility executives, is that management won’t approve more money for the other projects. But companies are sometimes willing to expand the budget if a good plan is presented with the budget ramifications for bundling, or if both a capital and performance-based budget are presented. Facility executives who do lighting work as a stand alone and then undertake other energy upgrades afterwards risk being seen by the financial side of the organization as a constant drain on capital reserves or budgets.

Control and Monitoring

When energy upgrades are not monitored and tracked, the initial savings often dwindle over time. In most cases, it’s a combination of small things: temperature set points that are overridden and never reset, or lights that are left on longer. But whatever the causes, the end results are too often the same: The absence of a verification mechanism and lack of interest in validating economies means that costs creep up.

The control and automation system in place is the most effective process for validating and monitoring performance. But that system has an even more important role: turning things off.

In simple terms, a control system comprises two types of points. Monitoring points — inputs — supply critical information regarding status and values associated with measurements; control points — outputs — signal the on-off mechanism of devices. The best way to save energy is to turn things off: shutting off lights when no one is in the room, for example, or turning air handling equipment off at proper times. While there will always be more inputs than outputs, it is important to make sure that there are enough outputs. As a rule of thumb, if less than 25 percent of the points are outputs, it’s worth taking a close look at the whole proposal to assure that it is really capable of producing significant savings.

Reshaping Perceptions

A successful energy upgrade project can bring benefits beyond energy savings. One of those benefits can be a change in the way the facility department is perceived by top management.

More and more, the facility department is expected to be a business unit as opposed to a service unit. That seems completely appropriate, given the range of contributions the facility can make to the bottom line. No matter what the title, the time has clearly come for the facility executive to be part of the top management team. But the facility executive has to take the initiative. An energy upgrade is a good place to start.

Julian Arhire is a Manager with http://DtiCorp.com – http://DtiCorp.com carries more than 35,000 HVAC products, including industrial, commercial and residential parts and equipment from Honeywell, Johnson Contols, Robertshaw, Jandy, Grundfos, Armstrong and more.

Five Factors To Energy Efficiency

One of the most popular ways of improving building energy efficiency today is through a lighting systems upgrade. New, energy-efficient lighting systems offer the potential of reducing lighting energy requirements by 35 to 50 percent, with additional savings being realized in reduced air conditioning costs as lower lighting system energy use translates into reduced cooling loads.

When considering energy-efficient lighting systems, facility executives can select from a wide range of options, including fluorescent lamps, compact fluorescent lamps, electronic ballasts, efficient fixture designs and automatic lighting controls. While each of these components is important to the overall operating efficiency of the system, none is more important than the ballast selected. Selecting the proper ballast can make the difference between a lighting system that is simply more efficient than the one it replaced, or one that is highly energy efficient.

All lighting system upgrades today involve replacement of the ballasts. In most cases, the upgrade involves moving from the older magnetic ballast to one of the newer electronic ballasts. Electronic ballasts offer improved operating efficiency over magnetic ballasts, reducing ballast energy requirements by an average of 35 percent. But not all electronic ballasts are created equal. Manufacturers have developed a number of different ballast designs with different characteristics for use in different applications. There are five major ways in which ballast selection will impact the energy performance of the lighting system. To achieve optimal performance from the new lighting system, ballasts must be carefully selected to match the needs of the space.

1. Electronic Ballast Efficiency
   
   Simply stated, electronic ballasts are significantly more energy efficient than their magnetic counterparts. As a result, the manufacture of magnetic ballasts will most likely be curtailed for general purpose lighting applications.The improvement in energy efficiency achieved by electronic ballasts comes as a result of several factors, including lower internal losses and higher operating frequencies. Magnetic ballasts suffer from core losses that are inherent in the design and operation of the ballast. Electronic ballasts operate without the need for windings and magnetic fields, thus eliminating magnetic losses completely.
   
   
   

   Electronic ballasts also operate at a higher frequency than magnetic ballasts. Magnetic ballasts operate at line frequency, 60 Hz. This means that the arc that excites the phosphors on the inside surface of the fluorescent tube is triggered 60 times each second. Electronic ballasts operate at frequencies ranging from 20 to 60 kHz. At these higher operating frequencies, the arc excites the phosphors for a longer period of time, resulting in the generation of 10 to 15 percent more light for the same energy use.

   
   

   Operating at a higher frequency also eliminates one of the most common complaints associated with fluorescent lamps: flicker. With the arc being triggered at 60 times per second with magnetic ballasts, some people can detect a flicker in the light output of the lamps. Electronic ballasts, with their higher operating frequency, completely eliminate this flicker. While the lamps are still switching on and off with the arc, the higher operating frequency makes it impossible for the eye to detect.

   
   


2. Ballast Factor
   
   
   One of the most frequently overlooked yet important items when selecting lighting system components is the ballast factor. The ballast factor is a measurement that rates the relative light output of a ballast with respect to the light output of the same lamp operated by a reference ballast. The higher the ballast factor, the higher the light output of the lamps. The lower the ballast factor, the lower the light output of the lamp and the lower the energy use of the system. The ballast factor is dependent on both the ballast selected and the lamp installed.The ballast factor of the units selected for a particular installation will significantly impact the total light output and energy use of the lighting system. While magnetic ballasts were available in a narrow range of ballast factors, between 0.925 and 0.975, electronic ballasts are available in a wide range of ballast factors — from as low as 0.73 to as high as 1.2. This allows facility executives to select ballasts that provide a wide range of light output.
   
   
   

   Consider a lighting system upgrade where fixtures with magnetic ballasts and T-12 lamps are replaced on a one-for-one basis. If the lighting levels in the existing system were adequate, simply replacing the fixtures with ones using electronic ballasts with a ballast factor of 1.0 and T-8 lamps would reduce energy use, but it would result in an increase in lighting levels. Selecting a ballast with a ballast factor of 0.88 would reduce lighting system energy use even further while maintaining the original lighting levels within the space. A higher ballast factor would increase overall lighting levels, while a lower ballast factor would reduce lighting levels and energy use.

   
   

   It should be noted that ballast factor can impact lamp life. High ballast factors generally shorten lamp life and accelerate lamp lumen depreciation. In system designs, these factors must be evaluated against the cost of having to alter the layout of the lighting fixtures.

   
   

   By selecting a ballast with the proper ballast factor rating for the lamps that will be used allows facility executives to control both light output and lighting system energy use.

   
   


3. Dimming
   
   With magnetic ballasts, dimming was an option, but it was not cost effective in most applications. Dimming controllers for magnetic ballasts were bulky, expensive and not very effective. Most systems could not reduce light output much below 50 percent of full brightness. Dimming tended to increase the problems associated with lamp flicker. Many systems required lamps to be started at full brightness, then dimmed to the desired level. As a result, most applications that required dimming yet wanted the efficiency of fluorescent lamp operation installed two separate lighting systems — one fluorescent and one incandescent.Dimming electronic ballasts have eliminated the problems associated with trying to dim magnetic ballasts. Controllers are small and inexpensive. Light output can be controlled to as low as 5 or 10 percent of full brightness. Flicker at low light levels is eliminated due to the high operating frequency of the ballasts. Costing approximately 35 to 50 percent more than conventional electronic ballasts, this new generation of electronic ballasts has made fluorescent lamp dimming practical, efficient and affordable.
   
   
   

   Most dimming electronic ballasts are controlled by a 0-10 volt DC signal from the controller. Some models make use of AC line-phase controller signals, eliminating the need for special control wiring.

   
   

   Dimming electronic ballasts can be used in any application where dimming is desirable, such as in meeting rooms. While use of dimming ballasts in these applications will save energy by eliminating the need for a separate incandescent system, the real potential for energy savings comes from applications that can make use of natural light.

   
   
   

   In spaces with even moderate areas of exterior glass, natural light is available for use in lighting the space. To be used effectively though, there must be a way to automatically sense the total light level in the space and adjust the light output of the fluorescent fixtures as the amount of natural light varies. Dimming electronic ballasts give facility executives that capability.

   
   

   The typical dimming system uses a sensor to measure the overall lighting level in the space. The sensor, connected to the dimming controller, regulates the light output of the fluorescent fixtures to keep the total light levels constant. A single controller can be connected to all dimming ballasts, or multiple controllers can be connected to individual banks of ballasts based on their distance from the glass. The result will be a decrease in lighting energy requirements of 35 to 75 percent for the typical office application.

   
   


4. Rapid-Start vs. Instant-Start
   
   Electronic ballasts, like the older magnetic ballasts, are available in two basic types: rapid-start and instant-start. Selection of the ballast type impacts overall energy use because of differences in the operation of the ballasts.All fluorescent lamps need a means of starting the lamps as well as regulating their operation once started. Rapid-start lamps have two circuits. One circuit controls normal operation of the lamp, and the second provides a low voltage to the lamp’s electrodes. This low voltage heats the electrodes to between 70 and 100 degrees Celsius in a few seconds, allowing the lamp to light. Once lit, most rapid-start ballasts continue to supply the voltage to the electrodes, resulting in an energy use of two to three watts per 40 watt lamp.
   
   
   

   Instant-start ballasts do not heat the lamp’s electrodes to start them. Instead, they temporarily apply a high voltage to the lamp that strikes the arc. Once the lamp is lit, the high voltage is turned off. As a result, energy requirements are reduced. This improvement in energy performance comes with a penalty. The use of high voltage to start the arc accelerates erosion of the emissive coating on the lamp’s cathode, decreasing lamp life. Compared to rapid-start ballasts, instant-start ballasts have a lamp life that is approximately 25 percent shorter. The more frequently the lamp is started, the shorter the lamp life.

   
   

   The decision to use a rapid-start or instant-start ballast is usually made based on the application. Applications that are switched more frequently, such as those in areas controlled by occupancy sensors, are better suited for rapid-start ballasts. Applications where lights burn for longer times per start can benefit from the energy savings produced by instant-start ballasts, without significantly reducing relamping intervals.

   
   

   A third type of electronic ballast is becoming more common: the programmed-start ballast. Programmed-start ballasts offer the energy efficiency of instant-start ballasts without sacrificing lamp life.

   
   

   Programmed-start ballasts apply a low voltage to the lamp’s electrodes for starting, like instant-start ballasts. Unlike instant-start ballasts, programmed-start ballasts turn off that voltage once the lamp is lit. By turning off the voltage, these ballasts achieve the energy efficiency of instant-start ballasts, while providing the lamp life of rapid-start ballasts. While programmed-start ballasts are relatively new, they are projected to replace most rapid-start units.

   
   
   


5. Power Factor
   
   Power factor is the ratio of active power in a circuit to apparent power. In purely resistive loads, the power factor in the circuit is 1.0. But as electrical loads are added to the circuit that are inductive, such as those from induction motors and ballasts, there is a phase shift in the circuit between the current and the voltage, and the power factor decreases. In most commercial and institutional facilities, the overall power factor is typically between 0.85 and 0.97. In industrial applications, particularly those having a large number of induction motors, it can fall to 0.75 or lower.Power factor impacts the current-carrying capacity of a circuit and the cost of electricity. Depending on the rate structure in effect for the facility, low power factor can carry a significant penalty, costing facilities thousands of dollars each month.
   
   
   

   Power factor is important when considering electronic ballasts because they can cause reductions in overall power factor by distorting the current wave shape. These distortions are measured by the unit’s total harmonic distortion (THD). The higher the THD, the greater the ballast’s impact on power factor. Correcting this distortion is difficult and expensive. Although the load drawn by a single electronic ballast is very low, given the number of ballasts that may be installed in a particular facility, their overall impact on system power factor can be significant and costly.

   
   

   Electronic ballasts that limit THD and therefore the impact on power factor tend to cost more than those with a higher THD, but their additional first costs can be quickly recovered, particularly in applications with a high-cost penalty for low power factor and a high lighting load. High THD generated by electronic ballasts and other sources can also cause problems within other electrical equipment in the facilities, such as the overheating of induction motors and interference in office equipment.

   
   

   For most applications, limiting electronic ballast THD to values of less than 20 percent will avoid problems with other equipment and low power factor. Electronic ballasts are available with THD ratings of below 10 percent for specialized applications.

HVAC Natural Gas Chillers Can Help Manage Peak-Demand Electrical Loads

Choosing a chiller system

Hybrid systems are popular because they offer choices such as gas chiller operation during peak electrical periods and standard electrical chiller usage during off-peak hours. In some instances, standard electrical chillers have not been used because of the efficient operation of the main gas-chiller system.

The process of gas absorption uses an evaporator and condenser much like conventional vapor compression units. However, instead of using a standard electrical compressor and motor, a thermal compression system is used.

Within a simplified thermal compression system, an absorber and generator are integrated along with a pumping system. An evaporator removes heat from the circulating water system to produce cool water. From the evaporator, refrigerant vapor moves to an absorber where it is compressed and absorbed into a solution, usually lithium bromide. This solution then moves to the generator where heat - either direct-fired gas or steam - is added to remove the refrigerant from the solution.

The solution then goes through heat exchangers and is returned to the absorber. The refrigerant returns to the condenser where it is liquefied and sent back to the evaporator. The entire cycle then starts over again.

Gas-fired steam absorption chillers work in much the same manner as direct-fired gas chillers. The main difference is that the heat source for the generator is usually an external gas-fired boiler system. These systems are favorable for facilities that have a boiler system already installed on site.

In addition to being either gas-fired steam absorption or direct-fired gas, chillers are categorized into two different types: Single-effect and double-effect. There is a triple-effect being developed. Single-effect, or single-stage, absorption chillers usually require low internal pressures around 20 psig to produce chilled water. Double-effect, or two-stage, absorption chillers work at a much higher pressure, around 40 to 140 psig. These chillers also have an extra generator integrated into the absorption system that increases the efficiency by about 30 percent. Double-effect chillers are currently more popular than the single-effect types.

Many direct-fired absorption chillers are dual-fuel rated. Natural gas is commonly the primary fuel, however No. 2 fuel oil can be used as an alternate. If for any reason the natural gas supply is interrupted, having the capability to use an emergency fuel may be invaluable. This fuel redundancy may be an important purchasing factor for many facility professionals.

Maintenance requirements for gas-absorption chillers are minimal. Pump seals need inspecting periodically if the pumps are not hermetically rated. In addition, scaling and sludge build-up are areas of concern with this equipment. However, automatic chiller and purge controls, along with periodic general maintenance checks, will alleviate most of these potential problems.

Equipment size can be a concern for some facilities. Typically, gas absorption chillers are larger than standard electrical chillers of the same Btu rating. Adequate space needs to be allowed for any gas chiller retrofit or new installation.

Gas-absorption chillers

One of the benefits of using gas-absorption chillers is that it produces enough heat to also activate certain dehumidification systems, which are becoming important components of HVAC systems. Molds, mildews and bacteria flourish in high-humidity conditions. Controlling humidity reduces risks to human health and ensures that sensitive manufacturing processes can be conducted. Dehumidification also increases cooling efficiency. In some instances, installing a dehumidification system can reduce a building's cooling load by as much as 50 percent.

Solid desiccant dehumidification systems remove moisture from the air by implementing a heat-activated material. Although a complete system contains many components, the main internal component is the desiccant wheel. Usually the desiccant wheel is divided into two halves. One half allows unconditioned air to enter where the air is then dried. When this half becomes saturated with moisture, it is rotated into a heated area that subsequently regenerates the desiccant in that half of the wheel. Within this rotating cycle, one half of the wheel regenerates while the other half absorbs moisture.

Absorption chillers are not the only means in which gas can be adapted to conserve electrical consumption. Gas-driven chillers are another viable means to reduce peak electrical costs. The chiller portion of this unit is really just a standard vapor compression system driven by an externally powered internal combustion engine. Typically, with this type of unit, the engine couples directly to the input shaft of a rotary-type chiller. The engine can be operated with many fuels, including natural gas, LP or diesel. Cogeneration systems are a possible addition when an external engine is used in this way. Hot water, steam, dehumidification, cooling and electricity production all use an internal combustion engine as a power source.

Although most gas chiller systems are not as well-known as the conventional electrically driven chiller systems, they are becoming more popular because of rising electrical costs. Many facility executives are experiencing lower electrical consumption since they have made the transition to gas cooling. When making gas chiller decisions, it may be a good idea to get advice from facility executives that have already made the transition. Their input and the help of qualified energy management engineers will help in making a wise energy choice.

Julian Arhire is a Manager with DtiCorp.com - DtiCorp.com carries more than 35,000 HVAC products, including industrial, commercial and residential parts and equipment from Honeywell, Johnson Contols, Robertshaw, Jandy, Grundfos, Armstrong and more.

The Best Path To Lighting And HVAC Efficiency

The building's chiller is the single biggest user of electricity in a typical facility. Add in the heating system, and the energy used to distribute the heating and cooling to the building, and it is no surprise that most successful energy management programs have focused on lighting and HVAC.

Fortunately, facility executives have many options when it comes to conserving energy in lighting and HVAC systems. By applying new lighting technology, facility executives can cut lighting energy use by an average of 30 to 50 percent, while improving the performance of the lighting system. Lamps with electronic ballasts, lighting controls, high efficiency replacements for incandescent lamps - all are being widely used in lighting system upgrade programs.

Similar improvements are being made in the operation of HVAC systems. New technologies allow facility executives to reduce the energy use of their HVAC systems by 25 to 50 percent, without sacrificing comfort or indoor air quality. High efficiency chillers, direct digital controls, energy management systems - these and other new technologies are being widely applied in building HVAC system upgrades.

Individual Projects or an Integrated Plan?

One of the biggest questions facility executives face when looking at upgrading lighting and HVAC systems is how much should they do. Some technologies offer a fast payback. Other technologies, while reducing energy use and improving the quality of the services provided to the facility, have much longer paybacks, often two or three times longer. Should facility executives focus only on those items that offer a rapid payback, or should they only be concerned with the payback for the overall upgrade program? While the available level of funding can be a limiting factor, other factors must also be considered.

Start with the reasons why the upgrade program is being implemented. Energy conservation, while a driving factor, is not the only issue. The primary purpose of any lighting or HVAC system is to meet the needs of building occupants. When looking to upgrade existing systems, facility executives must focus on the quantity and quality of light and space conditioning needed to meet those needs. Unfortunately, limiting system upgrades to items with a quick payback usually fails to take into account occupant needs. And when occupant needs are overlooked, facility executives risk jeopardizing productivity and morale to the point where tenants may move or the energy management measures that were implemented may be defeated by the occupants.

Another problem with limiting system upgrades to components with quick paybacks is the effect it has on overall system performance. Implementing quick payback projects tends to produce a series of upgrade patches.

But simply replacing the lamps does not address the issue of how much light is actually needed in the space. If the space is overlit, additional energy could have been saved by examining the lighting requirements, changing the number of fixtures installed, using a ballast with a lower ballast factor or installing lighting controls. Similarly, the original chiller may have been oversized for normal operation. Additional savings could have been achieved by installing a smaller chiller, or two smaller chillers whose operation can be staged to match the building load, or by installing a variable speed drive on the new chiller. Even more energy could have been saved by installing a high efficiency cooling tower.

Finally, programs that are implemented in a patchwork fashion are more expensive and more disruptive to building occupants. When the entire system is upgraded, all work in a given area can be performed at the same time. When the system upgrade is implemented as separate components at different times, occupants will be disrupted and finishes disturbed each time a new project is initiated.

For these reasons industry experts recommend that lighting and HVAC upgrades be implemented on a system-wide basis rather than on an individual project basis.

One at a Time?

The next question that the facility executive faces is how to implement the upgrade. Should the lighting system be upgraded before or after the HVAC system, or should those systems be upgraded at the same time? Again, funding may dictate how the program is implemented, but the close interconnections between lighting and HVAC systems suggest that the best approach to upgrading is to upgrade both at the same time.

The strongest interconnection between lighting and HVAC systems is energy use. Lighting systems introduce heat into the conditioned space. For every kilowatt of energy used by the lighting system during the air conditioning season, the HVAC system must remove one kilowatt of heat, or slightly more than 3,400 Btu. The higher the lighting load, the higher the load on the building's chillers.

Not only does this increase the cooling energy requirement for the building, but also it increases the size of the chiller required to cool the building.

A comprehensive lighting upgrade program will reduce the load on the building's chiller, lowering its energy use. If the load reduction is large enough and if the HVAC system is being upgraded at the same time, it may be possible to replace the chiller with a smaller unit, saving both installation and operating costs.

A second link between the lighting and HVAC systems is a result of the type of work that must be performed during the system upgrade construction. During a lighting system upgrade, ceilings are removed and replaced, and overhead wiring is installed and connected to new wall- mounted controls. During an HVAC system upgrade, ceilings are removed and replaced, overhead ductwork and distribution units are installed, and control wiring is run between overhead units and wall-mounted thermostats. If lighting and HVAC system upgrades are not performed at the same time, many of the construction demolition and replacement tasks must be performed twice.

A third interconnection is relatively new and is increasing in importance as facility executives move towards interoperability in building automation systems. In the past, lighting and HVAC systems were treated as independent systems despite their energy connection. Neither system could communicate with or share operating information with the other.

New building automation system designs are replacing these independent control systems with ones that are fully interoperable. In an interoperable system, conditions and control actions in one system can be shared with other components in the building automation system. For example, when the lighting system's occupancy sensors determine that a space is unoccupied and turn off the lighting system, a signal can be sent to the HVAC system directing it to reduce the airflow to that space to a minimum setting.

By performing the upgrades to the lighting and HVAC systems at the same time, facility executives can take advantage of opportunities arising from these interconnections, opportunities to further improve system performance while reducing energy use. Unfortunately, when upgraded separately, many of these opportunities are not available.

Paying for Upgrades

Upgrading lighting and HVAC systems generally is an expensive undertaking. While most well-designed and properly implemented system upgrades will pay for themselves through energy savings in five to eight years, depending on the scope of the upgrade, not all organizations can afford to pay for the upgrades up front. Rather than cut back the scope of the upgrade project, facility executives have the option of entering into a performance contract with an energy service organization.

The concept of an energy performance contract is straightforward. An outside contractor, vendor or utility pays for the energy upgrade up front, and recovers its investment over a set period of time by being paid back from the energy cost savings generated by the upgrade. There are two basic types of energy performance contracts: guaranteed savings and shared savings.

Types of Contracts

The guaranteed savings contract establishes a fixed level of energy savings from which the contractor will be reimbursed for expenses. If the energy modifications fail to achieve this guaranteed level of energy savings, the contractor absorbs the loss. If the level of savings exceeds the guaranteed level, the facility keeps the difference. Guaranteed savings contracts tend to be used more on long-term, high-dollar projects when the facility executives wants to minimize risks to the facility.

The shared savings contract establishes how the energy savings produced by the system upgrades will be divided between the contractor and the facility. How the savings are split between the contractor and facility varies from contract to contract, but most set the split at a given rate, such as 50-50 or 30-70. Shared savings contracts are more commonly used in short-term, low-dollar projects.

Energy performance contracts offer a number of advantages. Facilities do not have to invest capital up front to implement system upgrades. Regardless of the initial cost, entire upgrade programs can be implemented quickly. Both the guaranteed savings and the shared savings contracts generate a positive cash flow from their initiation. Facilities do not have to carry debt as a result of the upgrade.

They do, however, have their challenges. Energy performance contracts are more complex than other contracts, particularly if the process is being bid. All will include early termination penalties that levy costs against the facility in the event that the contract is terminated early. But the biggest challenge and the biggest risk of performance contracts comes from projecting future energy use for the facility based on its historical use. To do this, a baseline must be established. Energy use data must be collected for a three- to five-year period and normalized to correct for such factors as variations in weather, area changes within the facility, changes in use of the facility and past energy conservation efforts. Without this normalized baseline data, facility executives would not be able to determine the savings that are the result of contractor's upgrades.

Finally, facility executives must carefully evaluate both the contractor and the upgrades the contractor is proposing to perform to determine that the energy savings will not come at the expense of a quality working environment for building occupants or the long-term health of the facility and its systems.

Julian Arhire is a Manager with DtiCorp.com - DtiCorp.com carries more than 35,000 HVAC products, including industrial, commercial and residential parts and equipment from Honeywell, Johnson Contols, Robertshaw, Jandy, Grundfos, Armstrong and more.

State-Of-The-Art Design And Technology Can Meet Both Energy And Comfort Demands

The CFC phaseout has forced facility executives to take a hard look at their HVAC systems. At the same time, current technology offers significant opportunities for energy savings from the heating and cooling system, typically the second-largest energy user in commercial facilities. On top of all that, the definition of comfort has evolved rapidly over the past decade.

At one time, HVAC systems satisfied the comfort issue by simply making sure the work area was warm or cool enough for most occupants. Now, comfort is being refined to include indoor air quality and outside air exchange.

All in all, it's a tall order: The HVAC system is expected to achieve comfortable conditions for the individual and the masses in the office without harming the delicate global atmosphere. A good example is the CFC phaseout.

Facility executives have three choices: contain CFCs in existing chillers, convert existing units to alternative refrigerants or replace existing machines. Installing new high-efficiency equipment can result in significant energy savings.

Modern HVAC equipment offers improved efficiencies, which are being achieved with better motor performance and better temperature splits in the refrigerant tubes. Today's HVAC systems also offer better part-load efficiencies than older models. Multi-stack units and horizontal screws run more efficiently at part-load levels than earlier models. The economizer bundles are better than they used to be, so the systems run more efficiently.

The recent improvements in chiller efficiencies are the result of refinements in many small places. Manufacturers have done it by better designed compressors, by improving heat transfers. Every component has been reengineered.

New materials, notably plastics, offer major potential for increased HVAC advances that end up benefiting building owners and managers. New materials make units more efficient, easier to install and more corrosion resistant. HVAC systems are becoming more component oriented so they can be put in after the building is built.

Resolving IAQ via HVAC

One of the biggest challenges facing facility managers today is how to meet ASHRAE's current standard for outside air exchange. Variable air volume systems and normal applications need to be reexamined to meet ASHRAE fresh air standard.

To maintain energy efficiency and meet the new standard, multi-zone air-handling systems may need some overhauls. The normal unit has two decks -- one for warm air and one for cool. Provided air is mostly being recirculated, the two decks work effectively.

With the larger temperature differences involved with increased outside air, a neutral zone also may be needed. In a triple-deck system, the outside air is brought by the heat exchanger to that neutral point, before entering the air stream. The result is returned efficiency to the HVAC system in its heating and cooling modes.

Another promising solution is the use of dessicants to pre-condition air without mechanical cooling.

For buildings undergoing major retrofits, the building's air should be tested before renovations begin. Establish the levels of existing contaminants, if any, so that you have a point of reference. After renovations, the air quality should be retested. Periodically, additional IAQ tests should be conducted.

What should building owners do when indoor air actually is better than outside air, as often is the case in buildings located adjacent to major airports? Filtration for gaseous contaminants can play a major role in cleaning the building's air. The health care industry already is aware of the importance of air filtration in controlling the spread of airborne pathogens. But other building owners are just beginning to recognize the importance of proper filtration systems.

Custom comfort

Many advances have been made in HVAC control technology during the past decade. One of the most recent is the ability to control air flow, temperature and even air quality at individual workstations. Because of metabolism and dress in the office, women often complain that they are too cold, while men are too hot.

Advances in DDCs and control systems give us tools to get better air as well as energy conservation from HVAC systems. Everything now is automatic. We can set certain parameters for temperature and humidity with the outside air economizer.

And we can do so much more with the system to protect the health of the people inside the building. For example, if there is a fire and the smoke-detection system is activated, the HVAC controls can stop the air-handling system and start exhausting smoke from the space while alerting local fire and alarm departments.

Electronics in HVAC systems are becoming more integrated with each other: The air-handling unit knows how much is needed from it, and the chiller knows what each air handler is doing and can adjust itself accordingly.

Further refinements in HVAC system controls are on the near horizon. For example, comfort control that relies on more than the temperature to measure a space's overall comfort currently is being investigated by researchers, consulting engineers, ASHRAE and building controls manufacturers. Sophisticated comfort control sensors are being developed that will take into account not just the dry-bulb temperature of today's thermostats but also the mean radiant temperature, air velocity and humidity level.

Julian Arhire is a Manager with DtiCorp.com - DtiCorp.com carries more than 35,000 HVAC products, including industrial, commercial and residential parts and equipment from Honeywell, Johnson Contols, Robertshaw, Jandy, Grundfos, Armstrong and more.

Blueprint for Energy Cost Control

Despite the importance of planning in facility operations, too many facility executives abandon it when managing energy use. Instead, they undertake a series of uncoordinated activities that typically include equipment upgrades, system replacements and energy services contracting. In some cases, specific steps may even prove to be counterproductive. Too often, these measures simply mirror what other facility executives are doing without considering the needs of a particular facility. Implementing one "energy project of the month" after another may reduce the use of energy, but it isn't energy management.

While energy conservation measures implemented without an overall plan reduce energy use and costs, they do so with an unequal impact. Since energy conservation budgets are not unlimited, facility executives need to implement those that produce the most favorable returns in terms of energy and cost savings for a given investment in a given facility.

Another problem with not having an energy management plan is missed opportunities. One of the key elements in an energy management plan is the identification of when, where and how much energy is used in the facility. Successful programs identify big energy users and focus efforts on them. Without that step, facility executives can't know what measures will produce the best results.

Lack of an energy conservation plan also leads to uncoordinated - and often counterproductive - efforts. For example, installing high efficiency central chillers will improve the overall efficiency of the chiller plant, but under electricity deregulation, the installation of an alternative drive chiller, such as an absorption chiller or engine-driven centrifugal chiller, might reduce costs even more. Or upgrading to T8 lamps and electronic ballasts without first considering the lighting needs of the space may result in inefficiencies due to the overlighting of some areas.

Finally, lack of an energy conservation plan places the facility in a position where it must react to rather than anticipate marketplace changes in the supply and cost of energy. For example, deregulation is giving facilities the incentive to flatten electrical loads. Facility executives who have developed an energy management plan already know how their electrical loads vary with the time of day and the season of the year, so they are able to take steps to reduce load peaks.

Once the loads have been reduced, facility executives can further reduce their electrical load during periods of high rates by, for example, installing engine-driven chillers or gas-fired absorption chillers. Without an energy conservation plan already in place, facility executives would have little time to react to the changes introduced by deregulation.

A facility's energy management plan is a road map to efficiency. The plan identifies where the facility is currently in terms of energy efficiency, where the facility needs to be and how it is going to get there. To make the plan successful, it must include all three elements. Skipping one or more may save time, but it will not allow a facility executive to manage energy use.

The energy management plan also should be flexible and able to respond quickly to changes in the marketplace. As facility executives have seen over the past year, the energy industry is volatile, with electricity price spikes, heating oil shortages and price instability.

Finding Out Where You Are

Before a plan can be developed to manage energy use, the facility executive must understand how energy is used in a facility. What types of energy sources are used? How much does the facility use? When does the use take place? Where is the energy used? Why?

Understanding energy use in the facility is the first step in developing an energy management plan, but this alone does not tell facility executives where they are. A facility might be highly energy efficient, or it might be an energy hog. Without a base of comparison, the facility executive will not know where a facility stands or how much opportunity exists for improvement.

One method that can be used to help develop that understanding is benchmarking. Benchmarking compares the energy use in a given facility to the energy use of other similar facilities. Facilities can be benchmarked against published building energy use data. One source for published energy use data is the U.S. Department of Energy's Commercial Buildings Energy Consumption and Expenditures. Listing energy use on a Btu per square foot basis for a wide range of facilities in different climates, the published data can be used to show where a particular facility stands in terms of energy efficiency relative to other similar facilities.

For office buildings and K-12 school facilities, EPA's Energy Star Label for Buildings program has developed an online energy benchmarking tool. The tool takes into account differences in factors like location and hours of operation and ranks a building on a scale of 1 to 100 for energy efficiency.

Another method of benchmarking is to compare energy use in a given facility to the measured energy use in other similar facilities, particularly if those facilities are considered to be among the best in a class when it comes to energy efficiency. One must be careful, though, to compare only facilities that are truly similar. Differences in how the facility is used, the hours of operation and the energy-using systems will result in invalid comparisons.

By determining the energy use pattern for the facility and comparing it to that of other similar facilities, facility executives can determine how energy efficient their operation is and how much room exists for improvement.

Identifying Opportunities

The information gathered when identifying energy use patterns of the facility can be used to help identify energy conservation opportunities. Those patterns will show areas where energy use and costs are the highest and therefore offer the greatest potential for savings.

In identifying opportunities for energy conservation, savings estimates must be developed for each item being considered. Those estimates can be used to determine the payback for the items, allowing comparisons to be made on the basis of savings produced and return on investment.

Deregulation is generating additional opportunities for energy management and an even greater need for an energy management plan. Facility executives that have in place an energy management plan that takes into consideration the impact and requirements of electricity deregulation will be able to take advantage of the opportunities it creates. Those that don't will end up paying higher rates for electricity - often higher than they were before deregulation.

One of the key areas that must be addressed by the energy management plan under deregulation is real-time pricing. Under deregulation, electricity rates will vary by the hour based on a number of factors, including the total demand for electricity and what it costs the utility to meet that demand. As the demand increases, so will the cost of electricity. While the implementation details of how real-time pricing are still being worked out, real-time pricing's impact on the cost of energy to facilities will be significant. Already, some users have found that the cost of electricity during periods of high demand has increased by a factor of between 25 and 100.

Setting Priorities

Identifying opportunities tells a facility executive what can be done to reduce energy use but not which energy conservation activities should be completed first. Because the number of identified activities always exceeds the available funding, priorities will have to be established. There are several ways to establish priorities, including payback, load reduction factors and need.

Payback is the most common method. Although many different variations of payback calculations have been used to evaluate energy projects, all look at the expense of implementing the project and the savings that will be produced. Those that offer the highest rate of return are typically selected first for implementation.

Sometimes, producing the quickest payback is not the best way to go. In general, the greatest potential for energy savings in facilities lies in that facility's major energy-using systems: the chillers, cooling towers, boilers and lights. If large savings are needed in a short period of time, then the big systems are the ones to start with. Because of their high energy use, even relatively small improvements in operating efficiency can result in large savings. However, if the goal of the energy conservation program is to achieve the highest energy efficiency possible, then it is best to start by minimizing building loads at their source first.

Addressing building cooling loads at their source reduces the load on central equipment, such as building chillers. When it comes time to upgrade those central chillers, smaller units can be installed. Those smaller chillers will be more closely matched to the actual building cooling loads than if the chillers had been replaced before loads were reduced. Matching chiller capacity to actual cooling loads allows chillers to operate more efficiently, saving energy.

There are times when a project's payback is secondary to the need to reduce energy use. When a facility is facing a shortage or a curtailment, payback is not as important as achieving a reduction in use. For example, the past two summers have seen high demand for electricity in some regions of the country, demand so high that utilities have ordered cuts in electricity use in order to prevent possible widespread power outages. Faced with the alternative of reducing use or losing electrical service, facilities have taken steps to curtail their demand. These steps can be implemented effectively only if they have been planned ahead of time. When the utility is on the phone demanding a 5 or 10 percent reduction in electrical demand, it is too late to begin looking for electrical loads that can be reduced.

The energy management plan should include items that can be implemented in short order. These items may cause some level of disruption in operations, and they may not be fully cost effective, but in situations where significant load reductions must be rapidly achieved, they may be the only alternative to loss of service or severe economic penalties.

Most facilities have the potential to reduce energy use between 25 and 50 percent through upgrades to existing energy-using systems, changes in the way existing systems are operated and improvements in maintenance practices. Some measures will require significant investments in new equipment. Others will require simple operational changes and attention to details. But the programs that will be most effective are those that examine all options and carefully lay out a plan for managing energy use.