Park Thesis 2013 PDF

COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND
CONVENTIONAL HVAC SYSTEMS,

FOCUSED ON LIFE-CYCLE COST
A Thesis
Presented to
The Academic Faculty
by
JAESUK PARK
In Partial Fulfillment
of the Requirements for the Degree
Master of Science in the
School of Architecture
Georgia Institute of Technology

December 2013
COPYRIGHT 2013 BY JAESUK PARK
COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND

CONVENTIONAL HVAC SYSTEMS,
FOCUSED ON LIFE-CYCLE COST
Approved by:
Professor. Godfried Augenbroe, Advisor
Dr. Jason Brown
Date Approved: 18 November 2013
ACKNOWLEDGEMENTS
I would like to show, first and foremost, my immense gratitude to my advisor,

Professor Godfried Augenbroe. His profound and wide knowledge bolster my thesis,
introducing the right direction of this thesis and advising me to solve the critical
problems. Plus, his enthusiasm for the research and constant consideration over all
periods of my degree program has excited my passion of study.
Also, I am indebted to Dr. Sang Hoon Lee who established the rudimental basis
for this thesis. Without his astonishing dedication as a preceding researcher of this
investigation and continuous support, this thesis could not have been accomplished. In
addition to the academic support, he has helped my life in Atlanta bountiful.
Fellow students in the BT group at Georgia Tech that I want to thank are Jaeho
Yoon, Jihyun Kim, Di, Qi, etc. In addition to the BT group, I would like to thank to
Hyunkyung Lee, Yujeong Jeong, Yongcheol Lee, and Dangyoon Wie. They are the ones
who helped me enjoy a fruitful lifestyle in my period at Georgia Tech. In particularly,
Jihyun Kim provided continuous academic support and beneficial information about
living in Atlanta.
Last but not least, I would like to express my deepest appreciation to my family
and my lovely fianc, Eunbee Choi. Although my father, mother, and sister live far away,
their beliefs and considerations kept me focused on my study. Finally, no words can
express my gratitude to Eunbee. She is like my home where I love the most, where I feel
most comfortably. I want to dedicate my thesis to Eunbee.
iii
TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS
III
TABLE OF CONTENTS
IV
LIST OF TABLES
VI
LIST OF FIGURES
IX
SUMMARY
Chapter 1 INTRODUCTION
Chapter 2 LIFE CYCLE COST ANALYSIS
CONSIDERATIONS FOR LCC ANALYSIS
PRESENT VALUE
11
SUMMARY OF LIFE-CYCLE COST ANALYSIS
13
Chapter 3 CALCULATING LIFE-CYCLE COST
14
CALCULATION OF LIFE-CYCLE COST
14
SUPPLEMENTARY MEASURES OF ECONOMIC EVALUATION
15
Chapter 4 ENERGY MODELS
23
BUILDING TYPES
23
CLIMATE ZONES
25
HVAC SYSTEM MODELING
26
Chapter 5 COST DATA FOR LCC ANALYSIS
37
INITIAL INVESTMENT COST
37
OM&R COSTS AND REPLACEMENT COSTS
39
ENERGY COSTS
42
iv
COST-RELATED FACTORS
45
Chapter 6 FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS

ASSESSMENT
48
ENERGY SAVINGS
48
LCC RESULTS
51
SPECIAL CONSIDERATION FOR CONDUCTING THE LCC
57
Chapter 7 CONCLUSION
61
APPENDIX A LCC EXAMPLE
63
APPENDIX B LCC RESULTS WITH NATIONAL ENERGY PRICES
67
REFERENCES
70
LIST OF TABLES
Page
Table 1 UPV* factors adjusted for fuel price escalation
10
Table 2 Reference building types
24
Table 3 Climate zones and representative cities
26
Table 4 Summary of HVAC system of base case for each building type
27
Table 5 Results of comparison of VRF + DOAS with VRF only in Miami and Houston 31
Table 6 Results of comparison of VRF + DOAS with VRF only in Phoenix and Atlanta32
Table 7 Results of comparison of VRF + DOAS with VRF only in Las Vegas and San
Francisco
33
Table 8 Results of comparison of VRF + DOAS with VRF only in Baltimore and
Albuquerque
34
Table 9 Results of comparison of VRF + DOAS with VRF only in Seattle and Chicago 35
Table 10 Results of comparison of VRF + DOAS with VRF only in Boulder
36
Table 11 Initial investment costs of base cases per building type
38
Table 12 Incremental costs of VRF systems from other systems
38
Table 13 Initial costs of both VRF and base cases
39
Table 14 Typical OM&R costs data of VRF systems
40
Table 15 Custom price indexes (CPI)
41
Table 16 Typical OM&R costs data of base cases
41
Table 17 Annual Energy Use Intensity of electricity in kWh/m2/year for base cases
42
Table 18 Annual Energy Use Intensity of natural gas in kWh/m2/year for base cases
43
vi
Table 19 Annual Energy Use Intensity of electricity in kWh/m2/year for VRF systems 43
Table 20 Annual Energy Use Intensity of natural gas in kWh/m2/year for VRF systems
44
Table 21 Energy Prices for each climate zone
45
Table 22 City cost indexes
46
Table 23 Percentages of energy savings in HVAC consumption
49
Table 24 Percentages of energy savings in total building energy consumption
49
Table 25 Potential HVAC only energy savings from VRF systems compared to other
systems
50
Table 26 Summary of general information for LCC
51
Table 27 Total life-cycle costs of VRF systems per location
52
Table 28 Total life-cycle costs of base cases (reference buildings) per location
52
Table 29 Net savings for all building types and location
53
Table 30 Saving-to-Investment ratio for all building types and location
53
Table 31 Simple payback time for all building types and location
54
Table 32 Discounted payback time for all building types and location
54
Table 33 Averages of outputs
55
Table 34 HVAC savings of all building types
55
Table 35 Simple payback with national energy prices
57
Table 36 Net savings with national energy prices
58
Table 37 Difference in simple payback (subtracting national prices from regional prices)
58
Table 38 Differences in net savings, by subtracting constant values from various values59
vii
Table 39 Discounted payback variations depending on investment and OM&R cost

factors
60
Table 40 Saving-to-Investment variations depending on investment and OM&R cost

factors
60
Table 41 General building information for LCC
63
Table 42 Specific information of VRF system and the base case for LCC
63
Table 43 LCC calculation of VRF system
64
Table 44 LCC calculation of the base case
64
Table 45 Net saving calculation
65
Table 46 SIR calculation
65
Table 47 Cash flows, including SPB and DPB
66
Table 48 Total life-cycle costs of VRF systems with constant prices
67
Table 49 Total life-cycle costs of base cases with national prices
67
Table 50 Net savings with national prices
68
Table 51 Saving-to-Investment ratio with national prices
68
Table 52 Simple payback with national prices
69
Table 53 Discounted payback with national prices
69
viii
LIST OF FIGURES
Page
Figure 1 Buildings site energy consumption by end use in 2010
Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost
Figure 3 Concept Diagram of LCC Analysis
Figure 4 Length of study period
Figure 5 Rate of price changes for Home-related items
Figure 6 PV diagram of one-time amounts
11
Figure 7 PV diagram of annually recurring uniform amounts
12
Figure 8 PV diagram of annually recurring non-uniform amounts
12
Figure 9 PV diagram of annually recurring energy costs
13
Figure 10 Climate zone classification
25
Figure 11 VRF system diagram
28
Figure 12 VRF system modeling diagram with or without DOAS
30
Figure 13 Size modifier curve
47
ix
SUMMARY
As concern for the environment has been dramatically raised over the recent
decade, all fields have increased their efforts to reduce impact on environment. The field
of construction has responded and started to develop the building performance strategies
as well as regulations to reduce the impact on the environment. HVAC systems are
obviously one of the key factors of building energy consumption. This study investigates
the system performance and economic value of variable refrigerant flow (VRF) systems
relative to conventional HVAC systems by comparing life-cycle cost of VRF systems to
that of conventional HVAC systems.
VRF systems consist mainly of one outdoor unit and several indoor units. The
outdoor unit provides all indoor units with cooled or heated refrigerant; with these
refrigerants, each indoor unit serves one zone, delivering either heating or cooling. Due
to its special configuration, the VRF system can cool some zones and heat other zones
simultaneously.
This comparative analysis covers six building typesmedium office, standalone
retail, primary school, hotel, hospital, and apartmentin eleven climate zones1A
Miami, 2A Houston, 2B Phoenix, 3A Atlanta, 3B Las Vegas, 3C San Francisco, 4A
Baltimore, 4B Albuquerque, 4C Seattle, 5A Chicago, and 5B Boulder. Energy
simulations conducted by EnergyPlus are done for each building type in each climate
zone. Base cases for each simulation are the reference models that U.S. Department of
Energy has developed, whereas the alternative case is the same building in the same
location with a VRF system. The life-cycle cost analysis provides Net Savings, Savingto-Investment ratio, and payback years. The major findings are that the VRF system has
an average of thirty-nine percent HVAC energy consumption savings. As for the results
of the life-cycle cost analysis, the average of simple payback period is twelve years.
CHAPTER 1
INTRODUCTION
Green building is part of the larger concept of sustainable development,
characterized by Sara Parkin of British environmental initiative, as a process that
enables all people to realize their potential and improve their quality of life in ways that
protect and enhance the Earths life support systems. (Means, 2006) There is a variety of
strategies to reach the goals of the green building such as energy conscious design
strategies, changing to energy-efficient systems or materials, educating appropriate ways
of operation, etc. This study focuses on the energy consumption aspect of the buildings.
Buildings consume forty percent of total energy consumption in the United States:
consumptions of commercial and those of residential buildings are marked by nineteen
percent and twenty-two percent in 2010, respectively.1 This high portion out of total
energy consumption of buildings indicates buildings should get significant attention in
energy savings. In detail, breakdown of energy consumption of buildings is shown in
Figure 1.
Figure 1 Buildings site energy consumption by end use in 20102
Source from Building Energy Data Book of U.S. Department of Energy

Building Energy Data Book of U.S. Department of Energy
(http://buildingsdatabook.eren.doe.gov/ChapterIntro1.aspx)
2
Many energy-efficient systems tend to have a higher initial cost but consume less
energy during operation. When it comes to economic evaluation, these strategies must be
evaluated over their entire life-cycle. This study adopts life-cycle cost analysis for
comparing VRF systems to the conventional systems. Since the life-cycle cost analysis is
a straightforward method of economic analysis and evaluates entire costs through the lifecycle of the system, it is an appropriate method to compare economic effectiveness of
VRF systems to conventional HVAC systems. This is further supported by Figure 2,
which shows that the life-cycle sum of utilities, maintenance, and replacement cost of the
same order of magnitude as the initial investment.
Utilities
28%
Initial Project
Cost
58%
Maintenance
6%
Service
4% System
Replacements
4%
Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost3
(Reidy et al., 2005)
CHAPTER 2
LIFE CYCLE COST ANALYSIS
Life-cycle assessments are typically used in two distinct fields: life-cycle

assessment (LCA) and life cycle cost analysis (LCC). Life-cycle assessment (LCA)
evaluates the environmental burden of a product from the mining of the raw material used
in production and distribution, through to its use, possible reuse or recycling, and its
eventual disposal, primarily in terms of non-renewable energy and materials, pollution,
and waste. Life-cycle cost analysis (LCC) is the valuation of the total cost of ownership
of an item over its usable life, taking into account all of the costs of acquisition, operation,
maintenance, modification and disposal, for the purpose of making decisions (Nornes,
Johnson, Senior, Dunbar, & Grosse, 2005). Both assessments play a significant role in
decision making among alternatives.
In the field of construction, life-cycle cost analysis is a process of evaluating the
economic performance of a building over its entire life. Sometimes known as whole cost
accounting or total cost of ownership, LCC analysis balances initial monetary
investment with the long-term expense of owning and operating the building(Reidy et al.,
2005). In addition, it is also defined that life-cycle cost analysis is one of the most
straightforward and easily understandable methods of evaluation; it is used in all three of
these fields: building economics, value engineering, and cost engineering (Means, 2006).
Therefore, the life-cycle cost analysis method allows decision makers to consider the
whole financial picture of a project so that they can sort out the best cost efficient
alternative. In terms of comparison alternatives of green with conventional technologies,
the whole life-cycle cost is indeed an appropriate approach because a green project tends
to require more initial cost but less operation cost than typical methods. LCC analysis can
be applied to any capital investment decision in which higher initial costs are traded for
3
reduced future cost obligations. LCC analysis provides a significantly better assessment
of the long-term cost effectiveness of a project than alternative economic methods that
focus only on first costs or on operating-related costs in the short run(Fuller & Petersen,
1996). LCC analysis takes into account all costs of acquiring, operating, maintaining, and
disposing of a building or building system. The LCC concept requires that all costs and
savings be calculated over a common study period and discounted to present value before
they can be meaningfully compared(Means, 2006). Figure 3 shows the scheme of how to
calculate LCC, converting future costs to present values.
Figure 3 Concept Diagram of LCC Analysis
Considerations for LCC Analysis

Study Period
In order to perform an LCC, the choice of study period also known as life span is
important. A too long period or too short period would lead to an inappropriate result.
The study period for an LCC is the time over which the costs and benefits related to a
capital investment decision are of interest to the investor. There is no correct study period
of a project, but the same study period must be used in computing the Life-cycle cost of
each project alternative(Fuller & Petersen, 1996). The maximum study period for federal
energy and water conservation and renewable energy projects according to 10 CFR
436A4 is 25 years from the date of occupancy of a building or the date a system is taken
into service. Any lead-time for planning, design, construction, or implementation may be
added to the 25-year maximum planning/construction/implementation period and the
service period(Fuller, 2005). Figure 4 shows the length of study period, including
planning/construction period and service period. In this study, the study period is set to
20-year based on the consideration that the service life of the considered HVAC systems
is typically assumed to be 20 years.
Figure 4 Length of study period5
Code of Federal Regulations, 10 CPR 436, Subpart A, Federal Energy Management and Planning
Programs; Life Cycle Cost Methodology and Procedures
5
(Fuller & Petersen, 1996)
Discount Rate
Because of inflation and the real earning power of money, a dollar paid or
received today is not valued the same as a dollar paid or received at some future date. For
this reason, costs and savings occurring over time must be discounted. Discounting
adjusts cash flows to a common time, often the present, when an analysis is performed, or
a decision has to be made. The conversion of all costs and savings to time-equivalent
present values allows them to be added and compared in a meaningful way. To make
cash flows time-equivalent, the LCC method converts them to present values by
discounting them to a common point in time, usually the base date. The interest rate used
for discounting is a rate that reflects an investors opportunity cost of money over time,
meaning that an investor wants to achieve a return at least as high as that of her next best
investment. Hence, the discount rate represents the investors minimum acceptable rate of
return(Means, 2006).
The U.S. Department of Energy (DOE) determines each year the discount rate to
be used in the LCCA of energy conservation, water conservation, and renewable energy
projects(Fuller, 2005). This discount rate is used for calculating factors that convert
future cost amounts to present values. LCC in this study is calculated with the real
discount rate DOE has established. The discount and inflation rates for 2012 are as
follows:
Real rate (excluding general price inflation):
3.0 %
Nominal rate (including general price inflation):
3.5 %
Implied long-term average rate of inflation:
0.5%
Mathematics of Discounting
Our method of calculation follows the description laid out in the Life-cycle
Costing Manual for federal Energy Management Program(Fuller & Petersen, 1996) The
future cash amount, P! , after t years at a rate of interest, i, would be
P! = ! (1 + )!
(2.1)
Reversely, if we know the future amount, P! , at the end of t years at a rate of

interest, i, the current cash amount, ! , can be calculated according to:
!
!
! = (!!!)
!
(2.2)
The discount rate is a special type of interest rate that makes the investor
indifferent between cash amounts received at different points in time. The mathematics of
discounting is identical to the mathematics of compound interest. The discount rate, d, is
used like the interest rate, i, shown in equations 2.1 and 2.2 to find the present value, PV,
of a cash amount received or paid at a future point in time(Fuller & Petersen, 1996). Then,
present value, PV, of the future amount at the end of t years, ! , can be computed
according to the equation 2.3, the same formula as for compounded interest.
!
!
PV = (!!!)
!
(2.3)
Inflation
Inflation is a rise of the level of prices of goods in an economy over a period time
reflecting a reduction in the purchasing power. Inflation reduces the value or purchasing
power of money over time. It is a result of the gradual increase in the cost of goods and
services due to economic activity(Reidy et al., 2005). There are two approaches for
dealing with inflation in the LCC: one is to compute LCC with current dollars the other is
to calculate LCC with constant dollars. Current dollars are dollars of any one years
purchasing power, inclusive of inflation. That is, they reflect changes in the purchasing
power of the dollar from year to year. In contrast, constant dollars are dollars of uniform
purchasing power, exclusive of inflation. Constant dollars indicate what the same good or
service would cost at different times if there were no change in the general price level
no general inflation or deflationto change the purchasing power of the dollar(Fuller &
Petersen, 1996). The two methods of dealing with inflation are as follows:
Constant dollar method: estimate future costs and savings in constant dollars and
discount with a real discount rate, i.e., a discount rate that excludes inflation.
Current dollar method: estimate future costs and savings in current dollars
discount with a nominal discount rate, i.e., a discount rate that includes inflation.
The Federal Energy Management Program (FEMP) accepts the LCC calculated in
both constant dollars and current dollars, but the LCC computed in constant dollars is
preferred. These two methods result in the same present value so that they can conclude
the same result of LCC. However, the convenience of the calculation of LCC, being able
to apply the constant cost to each year, the constant dollar method is used in this study.
The constant dollar method has the advantage of not requiring an estimate of the rate of
inflation for the years in the study period; alternative financing studies are usually
performed in current dollars if the analyst wants to compare contract payments with
actual operational or energy cost savings from year to year (Fuller, 2013).
Price Escalation
Since not all item prices, especially energy price, change at the rate of the general
inflation, a rate of discount for those items should to calculate LCC would be vary in the
LCC calculation. Figure 5 shows the rate of general inflation and rate of price escalation
for the years 1970 through 1994. According to Figure 5, the rate of price change of
energy price, fuel oil, only significantly differ from the rate of the general inflation. Even
though the time period of the Figure 5 (Fuller & Petersen, 1996) is in the past, it is clear
enough to explain the deviation profile of energy price from the rate of general inflation.
RATE OF CHANGE
0.60
0.40
0.20
-0.20
-0.40
72
74
76
78
80
82
84
86
88
90
92
94
YEAR
All items
M&R
Const. Materials
Fuel oil
Figure 5 Rate of price changes for Home-related items6
Consequently, for energy-related costs, the FEMP LCC methodology requires the
use of DOE-projected real escalation rates by fuel type as published in the Annual
Supplement to Handbook 135(Fuller & Petersen, 1996). These real escalation rates and
the real DOE discount rate are used to calculate the modified uniform present value
(UPV*) factors for energy costs in FEMP LCC analyses. (Fuller, 2005) These UPV*
factors enable the energy cost that deviates from the general inflation to be converted to
the present value, based on the discounting concept. This study applies the UPV* factors
published in 2012 according to the base date of the LCC analysis. The Table 1 shows the
U.S. average UPV* factors of electricity and natural gas for both commercial and
residential use. The source of the data in the Table 1 is derived from (Rushing, Kneifel, &
Lippiatt, 2012). This source includes detailed information about how to compute these
factors.
(Fuller & Petersen, 1996)
Table 1 UPV* factors adjusted for fuel price escalation7
N
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Electricity
Residential
Commercial
0.94
0.91
1.86
1.81
2.78
2.7
3.68
3.55
4.54
4.37
5.39
5.18
6.21
5.97
7.02
6.74
7.79
7.48
8.55
8.21
9.29
8.92
10.01
9.61
10.71
10.29
11.39
10.95
12.05
11.59
12.7
12.21
13.32
12.82
13.94
13.42
14.54
14.01
15.13
14.58
15.71
15.15
16.28
15.71
16.83
16.25
17.37
16.79
17.9
17.31
18.42
17.82
18.92
18.32
19.42
18.81
19.9
19.29
20.37
19.76
(Rushing, 1992)
10
Natural Gas
Residential
Commercial
1.02
1.05
2.03
2.12
3
3.16
3.92
4.16
4.82
5.14
5.71
6.1
6.57
7.04
7.41
7.96
8.23
8.85
9.04
9.73
9.83
10.59
10.6
11.44
11.36
12.27
12.1
13.07
12.81
13.85
13.52
14.62
14.21
15.38
14.89
16.13
15.57
16.88
16.24
17.62
16.91
18.36
17.57
19.08
18.22
19.8
18.85
20.5
19.47
21.18
20.08
21.86
20.68
22.52
21.27
23.18
21.85
23.82
22.41
24.45
Present Value
Estimating a project cost during a certain period of time requires the same cash
value because cost in the future is not the same as the current cost value. Thus, future
cash amount is converted to a present value that is equivalent to the future cash amount.
There are four types of present value formula in a LCC analysis: one-time amounts,
annually recurring uniform amounts, annually recurring non-uniform amounts, and
annually recurring energy costs.
Present Value for One-time Amounts8
The single present value (SPV) factor is used to calculate the present value, PV,
of a future cash amount occurring at the end of year t, ! , given a discount rate, d.
1
(1 + )!
Present value can be calculated with the SPV factor.
PV = !
PV = ! (!,!)
Ft
SPV
PV
Figure 6 PV diagram of one-time amounts
Present Value for Annually Recurring Uniform Amounts9

The uniform present vale (UPV) factor is used to calculate the PV a series of
equal cash amounts, ! , that recur annually over a period of n years, given d.
!
PV = !
!!!
8
9
1
(1 + )! 1
=

!
(1 + )!
(1 + )!
(Fuller & Petersen, 1996) Table 3-1.

Same source as footnote 2
11
Present value can be calculated with the UPV factor.

PV = ! (!,!)
PV
UPV
A0
A0
A0
Figure 7 PV diagram of annually recurring uniform amounts
Present Value for Annually Recurring Non-uniform Amounts

The modified uniform present vale (UPV) factor is used to calculate the PV
recurring annual amounts that change from year to year at a constant escalation rate, e,
over n years, given d. The escalation rate can be positive or negative.
!
PV = !
!!!
1+ !
1+
1+
(
) = !
(1
)
1+
1+
Present value can be calculated with the UPV factor.

PV = ! (!,!,!)
PV
UPV
A1
A2
A3
Figure 8 PV diagram of annually recurring non-uniform amounts
Present Value for Annually Recurring Energy Costs (FEMP LCCA)

The FEMP UPV* factor is used to calculate the PV of annually recurring energy
costs over n years, which are assumed to change from year to year at a non-constant
escalation rate, based on DOE projections. FEMP UPV* factors are pre-calculated for the
current DOE discount rate and published in table Ba-1 through Ba-5 of the Annual
Supplement to Handbook 135.
PV = ! (!"#$%& ,!"#$ !"#$,!"#$ !"#$,!,!)
12
UPV*
PV
A2
A3
A1
Figure 9 PV diagram of annually recurring energy costs
The LCC method provides a consistent means of accounting for all costs related
to a particular building function, building system, or related project over a given study
period. In general, an LCCA is needed to demonstrate that the additional investment cost
for a project alternative is more than offset by its corresponding reduction in operating
and maintenance costs (including energy and water costs), relative to the base case. The
following are key points which should be recognized when using the LCC method for
project evaluation(Fuller & Petersen, 1996):
Choose among two or more mutually exclusive alternatives on the basis of lowest
LCC.
All alternatives must meet established minimum performance requirements.
All alternatives must be evaluated using the same base date, service date, study
period, and discount rate.
Positive cash flows (if any) must be subtracted from costs.
Effects not measured in dollars must be either insignificant, uniform across

alternatives, or accounted for in some other way.
In our comparative analysis of VRF systems, we adhere to all requirements.
Summary of Life-Cycle Cost Analysis
Discount rate, inflation, and price escalation play a major role in computing
present values for each cost, e.g. initial investment and energy prices. These present
values yield the life-cycle cost by accumulating them all.
13
CHAPTER 3
CALCULATING LIFE-CYCLE COST
Calculation of Life-cycle Cost
This study is to compare a VRF system with conventional HVAC system through
a life-cycle cost analysis (LCCA). Therefore, the required methods of measurement in
this study are life-cycle method and associated measures: Net Savings, Saving-toInvestment Ratio, and Payback. This chapter introduces how to calculate these measures
Life-cycle Cost Calculation
General Formula for LCC10
The general formula for the LCC present-value is as follows:
!
=
!!!
where
!
(1 + )!
LCC
= Total LCC in present value dollars of a given alternative,
= Sum of all relevant costs, including initial and future costs, less any
positive cash flows, occurring
10
= Number of years in the study period, and
= Discount rate used to adjust cash flows to present value.
(Fuller & Petersen, 1996) Chapter 5.
14
LCC Formula for Building-related Projects11

A simplified LCC formula for computing the LCC of energy and water
conservation projects in buildings can be stated as follows:
LCC = I + Repl Res + E + W + OM&R
where:
LCC
= Total LCC in present value dollars of a given alternative,
= Present value investment costs,
Repl
= Present value capital replacement costs,
Res
= Present value residual value less disposal costs,
= Present value energy costs,
= Present value water costs, and
OM&R= Present value non-fuel operating, maintenance, and repair costs.

Since this study is to compare HVAC system of the alternative to that of base case
and focus more on energy consumption, the other costs are simplified and omitted
because they are identical in both cases in the comparison.
Supplementary Measures of Economic Evaluation

Additional measures of economic performance can be used to determine the
comparative cost-effectiveness of capital investments. Several widely used measures are
Net Savings (NS), Saving-to-Investment Ratio (SIR), and Payback Period (PB). These
measures are meaningful only in relation to a base case and are consistent with the LCC
methodology if they use the same study period, discount rate, and escalation rates(Means,
11
Same source as footnote 4
15
2006). Since LCC analyses provide objective result of the comparison among alternatives,
supplementary measures derived from the LCC analysis supply the apparent ramification
of economic comparison.
Net Saving
The Net Savings measure is a variation of the Net Benefits (NB) measure of
economic performance of a project. The NB method measures the difference between
present-value benefits and present-value costs for a particular investment over the
designated study period. The NB measure is generally applied when positive cash flows
are intended to justify the investment in a project. The NS method is applied when
benefits occur primarily in the form of future operational cost reductions(Fuller &
Petersen, 1996).
General Formula for Net Savings12
Net savings can be calculated using individual cost differences by applying the
following general formula:
!
!:!" =
!!!
where:
!

(1 + )!
!!!
!
(1 + )!
!:!" = Net Saving, in present value dollars, of the alternative (A), relative to
the base case (BC),
12
= Savings in year t in operational costs associated with the alternative,
= Additional investment costs in year t associated with the alternative,
(Fuller & Petersen, 1996) Chapter 6.1.1
16
= Year of occurrence (where 0 is the base date),
= Discount rate, and
= Number of years in study period.
Net Savings Formula for Building-Related Projects13

A more practical NS formula for building-related projects takes advantage of
present value (SPV, UPV, and UPV*) to compute the present value of each cost category
before combining them into operation-related or investment-related cost categories:
!:!" = + + & (! + )
where
!:!"
= Net Savings, that is, operation-related savings minus additional

investment costs,
= (!" !) Savings in energy costs attributable to the alternative,
= (!" !) Savings in water costs attributable to the alternative,
OM&R
= (&!" &!) Savings in OM&R costs,
= (! !") Additional initial investment cost required for the

alternative relative to the base case,
Repl
= (! !") Additional capital replacement costs,
Res
= (! !") Additional residual value, and
Where, all amounts are in present value.
13
Same source as footnote 6, but in Chapter 6.1.2
17
Summary of Net Savings

Net Savings are adequate to compare an alternative, A, to the base case, BC, in
the their economic values during an assigned study period. When the NS value is positive,
it means the alternative is cost-efficient compared to the base case. On the contrary, if the
value is negative, the alternative is cost-inefficient relative to the base case. This cost
difference is equivalent to the cost difference between LCC of the alternative and LCC of
the base case.
Saving-to-Investment Ratio
The SIR is a measure of economic performance for a project alternative that
expresses the relationship between its savings and its increased investment cost (in
present value terms) as a ratio. It is a variation of the Benefit-to-Cost Ratio for use when
benefits occur primarily as reductions in operation-related costs. Like the NS measure,
SIR is a relative measure of performance; that is, it can only be computed with respect to
a designated base case. This means that the same base date, study period, and discount
rate must be used for both the base case and the alternative(Fuller & Petersen, 1996).
General Formula for SIR14
The general formula for the SIR is comprised of the same terms used in the
differential cost formula for the NS computation and is as follows:
!:!"
14
!
+ )!
=
!
!
!!! (1 + )!
!
!!! (1
18
where
!:!" = Ratio of PV savings to additional PV investment costs of the
alternative relative to the base case.
!
= Savings in year t in operational costs associated with the alternative,
= Additional investment costs in year t associated with the alternative,
= Year of occurrence (where 0 is the base date),
= Discount rate, and
= Number of years in study period.
SIR Formula for Building-Related Projects15

A more practical SIR formula for building-related projects is shown below.
!:!" =
+ + &
! +
where
!:!"
= Ratio of PV savings to additional PV investment costs of the

alternative relative to the base case.
= (!" !) Energy costs savings attributable to the alternative,
= (!" !) Water costs savings attributable to the alternative,
OM&R
= (&!" &!) Savings in OM&R costs,
= (! !") Additional initial investment cost required for the

alternative relative to the base case,
Repl
= (! !") Difference in capital replacement costs,
Res
= (! !") Difference in residual value, and
Where, all amounts are in present value.
15
19
Summary of SIR
An alternative can be considered cost-efficient compared to the base case when
the SIR value is higher than 1.0. The value 1.0 of SIR means no cost benefit in a assigned
study period. In other words, the savings in operation offsets the additional investment
cost with the exact same cash amounts. Thus, the SIR, greater than 1.0, represents the
equivalent conclusion to the Net Savings greater than zero does.
Payback
There are two type of the payback method frequently used in the economic
analysis: simple payback (SPB) and discounted payback (DPB). These payback methods
provide the number of year that additional investment will be fully offset by the savings
in operation. SPB, which is more frequently used, does not use discounted cash flows in
the payback calculation. In most practical applications the SPB also ignores any changes
in prices (e.g., energy price escalation) during the payback period. The acceptable SPB
for a project is also typically set at an arbitrary time period often considerably less than
its expected service period. The SPB for a project will generally be shorter than its DPB
since undiscounted cash flows are greater than their discounted counterparts (assuming a
positive discount rate). DPB is the preferred method of computing the payback
period for a project because it requires that cash flows occurring each year be
discounted to present value before accumulating them as savings and costs. If the
DPB is less than the length of the service period used in the analysis, the project is
generally cost effective(Fuller & Petersen, 1996).
20
General Formula for Payback16

The payback is the minimum number of years, y, for which
!
!!!
(! ! )
!
(1 + )!
where
y
= Minimum length of time (usually years) over which future net cash
flows have to be accumulated to offset initial investment costs,
S!
= Savings in operational costs in year t associated with a given alternative,
I!
= Initial investment costs associate with the project alternative,
I!
= Additional investment-related costs in year t, other than initial

investment costs, and
= Discount rate.
Payback Formula for Building-Related Projects 17

A formula more specific to energy and water conservation projects in buildings
can be stated as:
Minimum number of years, y, for which
!
!!!
(! + ! + &! ! + ! )
!
(1 + )!
where
16
17

21
= (!" !) Savings in energy costs in year t,
= (!" !) Savings in water costs in year t,
OM&R
= (&!" &!) Difference in OM&R costs in year t,
= (! !") Additional initial investment cost,
Repl
= (! !") Difference in capital replacement costs in

year t,
Res
= (! !") Difference in residual value in year t (usually

zero in all but the last year of the study period), and
= Discount rate.
Summary of Payback
In both general formula and formula for building-related projects, simple payback
and discounted payback are calculated; when discount rate, d, is zero, the minimum year
is considered as a simple payback, and when discount rate has a certain value, the
minimum year represents a discounted payback.
22
CHAPTER 4
ENERGY MODELS
This chapter focuses on the energy consumption component in the LCC analysis.
Energy consumptions differ by regions and building types, so selection of climate zones
and standard building types is the first step in conducting an energy consumption
assessment, e.g. through energy simulation. This chapter introduces the building types,
climate zones, and HVAC systems used in the comparative LCC analysis.
Building Types
We use DOE published reference buildings (with their published EnergyPlus
energy models) as the conventional base cases. The alternative of each base case is the
same building but now equipped with a VRF system.
The DOE reference building models represent reasonably realistic building
characteristics and construction practices. Fifteen commercial building types and one
multifamily residential building were determined by consensus between DOE, the
National Renewable Energy Laboratory, Pacific Northwest National Laboratory, and
Lawrence Berkeley National Laboratory. The purpose of these models is to represent new
and existing buildings. The reference building models are used for many types of
building research, e.g. to assess new technologies; optimize designs; analyze advanced
controls; develop energy codes and standards; and to conduct lighting, daylighting,
ventilation, and indoor air quality studies. They also provide a common starting point to
measure the progress of DOE energy efficiency goals for commercial buildings(M Deru
et al., 2011).
Since these reference models are able to represent almost seventy percent of all
commercial buildings, assigning these models as the base case for our LCC analysis
means that the results apply to a large section of building environment. This study applies
23
the LCC analysis to six types of building out of the fifteen commercial reference building
types developed by DOE. The Table 2 shows the building types used in this study.
Table 2 Reference building types
Building Type
Model
Specification
Medium Office
Office
53,630sf
3 floors
Primary School
Education
73,960sf
2 floors
Small Hotel
Lodging
43,200sf
4 floors
Standalone Retail
Retail
24,689sf
1 floor
Mid-rise Apartment
Multifamily residential
33,600sf
4 floors
Health care, inpatient

241,350sf
5 floors
Hospital
24
Climate Zones
Climate zones have been already developed by U.S. Department of Energy to be
applied for the analysis of energy efficiency. These zones were developed according to
the several criteria in order to include all types of climate in the USA. The biggest
criterion for the classification of climate zones is population because it represents the
distribution of building across the entire country. Briggs et al. (2003) developed a climate
zone classification system for DOE and ASHRAE Standard 90.1-2004 based on
SAMSON (NCDC 1993) weather data(M Deru et al., 2011).Figure 1 shows the all
classification of climate zones in the United States. Major divisions are hot, cold, warm,
and mixed climate, and subdivisions are moist, dry, and marine climate. Plus, PNNL has
developed a list of representative cities for each climate zone
Figure 10 Climate zone classification18
18
(M Deru et al., 2011) Credit: Briggs et al. [2003]; DOE [2005],
25
Since the VRF system has been shown to have no significant energy saving in the
totally heating dominant (cold) climate zone, this study targets eleven selected climate
zones and representative cities from above classifications. Selected climate zones are
shown in Table 3.
Table 3 Climate zones and representative cities
Climate Zone
Location
Characteristic
1A
Miami, Florida
Very hot and humid
2A
Houston, Texas
Hot and humid
2B
Phoenix, Arizona
Hot and dry
3A
Atlanta, Georgia
Warm and humid
3B
Las Vegas, Nevada
Warm and dry
3C
San Francisco, California
Warm and marine
4A
Baltimore, Maryland
Mixed and humid
4B
Albuquerque, New Mexico
Mixed and dry
4C
Seattle, Washington
Mixed and marine
5A
Chicago, Illinois
Cool and humid
5B
Boulder, Colorado
Cool and dry
HVAC System Modeling

This study conducts the energy simulation in order to derive energy consumption
of reference buildings and their VRF alternative. This study uses EnergyPlus as a
simulation tool and selects reference buildings modeled in EnergyPlus by DOE as base
case. EnergyPlus is a whole building energy simulation tool widely used worldwide to
predict energy consumption of a building. The simulation outcome is used to quantify
energy costs of the base case and the alternative case for each building type per
representative climate location. The current version of EnergyPlus offers a VRF system
for cooling and heating operation, but not heat recovery. A heat recovery module is in
development. Research is also underway to calibrate EnergyPlus to real world VRF
operation (FSEC 2012). In this study we have used what is currently available in
26
EnergyPlus, and have used workarounds for modeling of the outdoor air supply and
potential heat recovery. This will be discussed later.
HVAC System of Base Case
In accordance with the building types section, the reference models developed by
DOE are used as the base cases for the LCC analysis for each building type. All building
parameters required for the energy simulation are identical to the parameters in the
reference buildings, established by DOE. Detailed information are found in (M Deru et
al., 2011). Table 4 shows the summary of HVAC systems of the base cases, i.e. for each
building type.
Table 4 Summary of HVAC system of base case for each building type
Building Type
Medium
Office
Standalone
Retail
Small Hotel
Primary
School
Mid-rise
Apartment
Hospital
Reference HVAC System Type

Heating
Cooling
Furnace
PACU
Furnace
PACU
SZ CAV
ISH (Individual space

heating), Furnace
IRAC, PACU
SZ CAV
Boiler
PACU
CAV
Furnace
PACU-SS
SZ CAV
Boiler
Chiller-water cooled
CAV and VAV
where
PACU = Packaged air-conditioning unit
ISH
= Individual space heating
IRAC = Individual room air conditioner

MZ
= Multi zones
SZ
= Single zone
VAV = Variable air volume

CAV = Constant air volume
SS
Distribution
MZ VAV with
electricity reheat
= Split system
27
VRF System
Variable refrigerant flow (VRF) systems are used in this study as the alternative
for each building type. VRF systems consist mainly of a compressor unit, also known as
outdoor unit, and several indoor fan coil units. The compressor unit is normally installed
on the roof or in other suitable building attached outdoor area. It provides cooled and
heated refrigerant through relatively small piping for space cooling and space heating.
Typically, VRF systems are air-cooled systems, but they also come as water-cooled
system. Simplified diagram of the VRF system is shown in Figure 11.
VR F
Outdoor Unit
Building
Refrigerant Flow
2nd Floor
Indoor Unit
Zone 1
Off
Zone 2
Cooling
Zone 3
Cooling
1st Floor
Zone 4
Heating
Zone 7
Heating
Zone 5
Cooling
Zone 6
Off
Zone 8
Cooling
Figure 11 VRF system diagram
The major beneficial feature is to cool some zones and heat the other zones
simultaneously by transferring heat surpluses from a zone that needs cooling to a zone
that needs heating. VRF systems allow heat recovery to be applied between cooling
requiring zones and heating requiring zones with additional energy consumption. The
compressor unit uses variable refrigerant flow and is controlled by a variable-speed drive,
which may operate more efficiently than conventional compressors of similar size; the
complexity of the variable refrigerant flow compressor and controls results in
28
significantly more expensive compressor units than comparable conventional

systems(Thornton & Wagner, 2012). The indoor fan coil units can be installed on the
wall, in the ceiling, or in the wall. Fan coil units provide space cooling and heating by
recirculating inside air. Since VRF systems do not operate with an air duct system, a dual
system is required for supplying outdoor air. This is usually done with a separate HVAC
unit, commonly called a dedicated outside air system (DOAS) (Thornton & Wagner,
2012).
Enabling space cooling and heating simultaneously by trading resources between
multiple zones is the most energy efficient feature of VRF systems. This distinguished
feature can furthermore allow VRF systems to avoid over cooling or heating.
Conventional systems, such as the VAV with reheat system serving multiple zones with
high variability in internal loads, have a hard time avoiding energy inefficiency. For
instance, in the cooling season, it provides all zones with a cooled air that meets the
almost lowest temperature requirement; consequently in some zones, the supplied air
needs to be reheated to reach the set point of those zones. This procedure leads to
additional energy consumption. As for VRF system modeling, VRF systems are modeled
based on the modeling method as explained in the Engineering Reference (US DOE,
2013). In the comparative analysis, the alternative case is modeled by replacing the
conventional HVAC system by the VRF system. All other reference model parameters,
such as occupancy, lighting, plug loads, etc., are identical in base case and alternative.
Modeling outdoor air component with VRF systems in the EnergyPlus has two
options: adding DOAS to VRF systems and virtual component embedded in VRF
systems. Basically, VRF systems do not have a component that supplies outdoor air into
conditioned zones, the systems only function is to supply space heating and cooling by
circulating inside air through a fan coil unit in the zone (supplied by hot or cold
refrigerant). This implies that the VRF equipped building needs an additional system that
supplies and conditions fresh (outdoor) air. Typically, a separate dedicated outside air
29
system (DOAS) will be used. DOAS are not unique to VRF systems and are used with
many different types of systems, especially systems that do not deliver heating and
cooling using air from a central source but use water or refrigerant. This includes chilled
and hot water fan coils, WSHPs, radiant cooling and heating, and conventional split
systems(Thornton & Wagner, 2012). The current EnergyPlus, version 8.0, enables VRF
system itself to supply outdoor air, assuming VRF systems have an internal unit
conveying outdoor air into conditioned zones. Figure 12 indicates how to supply outdoor
air by the VRF system with DOAS or sole VRF system. Plus, the method that adds
DOAS to VRF systems requires a bunch of additional work. After all, if both methods
yield the same results, the method, allows VRF systems to supply outdoor air, would be
the fast way of modeling, shortening by a large amount the effort and time for modeling
the systems. Therefore, comparing one option to the other option is the prior work to
decide outdoor-air system.
Figure 12 VRF system modeling diagram with or without DOAS
This comparison analysis is done in standalone retail building type because it has
the smallest number of zones. The Table 5, Table 6, Table 7, Table 8, Table 9, and Table
10 shows the results of the comparison of VRF with DOAS and VRF only in each
assigned climate zone. Each comparative analysis includes EUI of electric heating,
electric cooling, total electricity, and gas heating.
30
Table 5 Results of comparison of VRF + DOAS with VRF only in Miami and Houston
Climate
Zones
Comparative Charts
Elec. Cooling
8
0.04
6
BTU/sf
BTU/sf
Elec. Heating
0.05
0.03
0.02
0.01
0.00
-
1 2 3 4 5 6 7 8 9 10 11 12
Month
1A
Miami
Month
Elec. Total Energy
20
Gas. Heating
0.0004
BTU/sf
0.0003
10
0.0002
0.0001
0.0000
1 2 3 4 5 6 7 8 9 10 11 12
VRF + DOAS
Month
1 2 3 4 5 6 7 8 9 10 11 12
VRF only
Month
Elec. Heating
BTU/sf
BTU/sf
2.00
1.50
1.00
0.50
0.00
9
8
6
5
3
2
-
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
2A
Houston
Elec. Total Energy
Gas. Heating
25
BTU/sf
20
15
10
5
-
1 2 3 4 5 6 7 8 9 10 11 12
VRF only
31
0.06
0.05
0.04
0.03
0.02
0.01
0.00
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
Elec. Cooling
2.50
BTU/sf
0.0005
15
BTU/sf
1 2 3 4 5 6 7 8 9 10 11 12
Month
Table 6 Results of comparison of VRF + DOAS with VRF only in Phoenix and Atlanta
Climate
Zones
Comparative Charts
Elec. Cooling
8
1.20
6
BTU/sf
BTU/sf
Elec. Heating
1.60
0.80
0.40
5
3
2
0.00
-
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
2B
Phoenix
Month

Elec. Total Energy
Gas. Heating
0.0045
15
BTU/sf
BTU/sf
20
10
5
-
0.0030
0.0015
0.0000
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
Month
VRF only

Elec. Cooling
5
3.20
4
BTU/sf
BTU/sf
Elec. Heating
4.00
2.40
1.60
0.80
3
2
1
0.00
-
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
3A
Atlanta
Elec. Total Energy

BTU/sf
BTU/sf
20
15
10
5
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Gas. Heating
1 2 3 4 5 6 7 8 9 10 11 12
Month
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
VRF only
32
Table 7 Results of comparison of VRF + DOAS with VRF only in Las Vegas and San Francisco
Climate
Zones
Comparative Charts
2.50
Elec. Heating
Elec. Cooling
1.50
BTU/sf
BTU/sf
2.00
1.00
0.50
0.00
1 2 3 4 5 6 7 8 9 10 11 12
6
5
4
3
2
1
-
1 2 3 4 5 6 7 8 9 10 11 12
Month
3B
Las Vegas
Month

Elec. Total Energy
Gas. Heating
0.05
0.04
15
BTU/sf
BTU/sf
20
10
5
0.03
0.02
0.01
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
Month
VRF only

Elec. Cooling
0.20
1.20
0.15
BTU/sf
BTU/sf
Elec. Heating
1.60
0.80
0.40
0.10
0.05
0.00
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
3C
San Francisco
12
11
11
10
10
9
9
Elec. Total Energy
0.80
BTU/sf
BTU/sf
1.00
Gas. Heating
0.60
0.40
0.20
0.00
1 2 3 4 5 6 7 8 9 10 11 12
Month
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
VRF only
33
Table 8 Results of comparison of VRF + DOAS with VRF only in Baltimore and Albuquerque
Climate
Zones
Comparative Charts
Elec. Cooling
4.50
6.00
5.00
4.00
3.00
2.00
1.00
0.00
3.60
BTU/sf
BTU/sf
Elec. Heating
2.70
1.80
0.90
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
4A
Baltimore
Elec. Total Energy
Gas. Heating
0.45
0.36
15
BTU/sf
BTU/sf
20
Month
10
5
0.27
0.18
0.09
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
Month
VRF only

Elec. Cooling
2.50
2.80
2.00
BTU/sf
BTU/sf
Elec. Heating
3.50
2.10
1.40
1.50
1.00
0.70
0.50
0.00
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
4B
Albuquerque

Elec. Total Energy
Gas. Heating
0.08
10
BTU/sf
BTU/sf
15
0.06
0.04
0.02
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
VRF only
34
Month
Table 9 Results of comparison of VRF + DOAS with VRF only in Seattle and Chicago
Climate
Zones
Comparative Charts
Elec. Cooling
0.35
1.50
0.28
BTU/sf
BTU/sf
Elec. Heating
2.00
1.00
0.50
0.21
0.14
0.07
0.00
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
4C
Seattle

Elec. Total Energy
Gas. Heating
0.012
BTU/sf
BTU/sf
4
2
-
0.009
0.006
0.003
0.000
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
Month
VRF only

Elec. Cooling
4.00
6.00
3.20
BTU/sf
BTU/sf
Elec. Heating
7.50
4.50
3.00
1.50
2.40
1.60
0.80
0.00
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
5A
Chicago
Month

Elec. Total Energy
Gas. Heating
1.20
15
BTU/sf
BTU/sf
20
10
5
-
35
0.30
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF only
0.60
0.00
1 2 3 4 5 6 7 8 9 10 11 12
VRF + DOAS
0.90
Month
Table 10 Results of comparison of VRF + DOAS with VRF only in Boulder

Climate
Zones
Comparative Charts
Elec. Cooling
2.00
4.50
1.60
BTU/sf
BTU/sf
Elec. Heating
6.00
3.00
1.50
1.20
0.80
0.40
0.00
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
Month
5B
Boulder

Elec. Total Energy
Gas. Heating
0.80
15
BTU/sf
BTU/sf
20
10
5
-
0.60
0.40
0.20
0.00
1 2 3 4 5 6 7 8 9 10 11 12
1 2 3 4 5 6 7 8 9 10 11 12
Month
VRF + DOAS
VRF only
Month
Charts in all climate zones show tiny differences in heating, cooling, and total
electricity. Some cities have almost identical profiles. However, there is a big difference
during the heating season. This is because that the sole VRF system does not use gas, for
cooling nor for heating. However, in the VRF system with DOAS case, the supply of
outdoor can apply pre-heating by gas. Even though there seems to be a big difference in
the charts of gas heating, the actual EUI values of gas heating are very minor relative to
those of electricity. Hence, the difference in gas heating is negligible in total.
Consequently, it is concluded that virtual outdoor air systems perform almost identical to
DOAS so that the modeling method, in which VRF systems includes virtual outdoor air
system, can be used all alternatives compared in this study.
36
CHAPTER 5
COST DATA FOR LCC ANALYSIS
According to the chapter 3, an LCC analysis requires initial investment costs,
energy costs, water costs, OM&R costs, and residual value of both the base case,
conventional HVAC systems, and the alternative, VRF system. Our LCC does not
include water costs. Although energy savings lead to potential water usage reductions at
the power plant generation side, these reductions are not directly visible as cost savings
for the individual building owner.
Initial Investment Cost
In LCCA studies, the cost differences between alternatives are usually important,
not the absolute costs. Initial costs therefore only need to be developed for the
components that vary between considered alternatives(Reidy et al., 2005). The initial
investment costs for this study will therefore only include the installation costs of HVAC
systems. The installation costs of HVAC systems are derived from (RS Means square
foot cost data, 2012). The cost figures in this square foot cost section were derived from
approximately 11,200 projects contained in the RSMeans database of completed
construction projects; they include the contractors overhead and profit, but do not
generally include architectural fees or land costs (Balboni & Company, 2003). Square
foot costs in the (RS Means, 2012) provide three costs: , median, and , shown in
Table 11. The 14 column shows the cost point where 25% of the projects had lower costs
and 75% had higher. The 34 column shows the cost point where 75% of the projects had
lower costs and 25% had higher. The median column shows that 50% of the projects had
lower costs and 50% had higher(Balboni & Company, 2003). Since current cost data
sources do not include cost data of VRF systems because VRF systems are new in the
United States, the initial costs of reference buildings can refer to those sources. Medium
37
costs are used for initial costs because they can be applied to different locations fairly
accurately by multiplying with location factor explained next section in this chapter.
Table 11 Initial investment costs of base cases per building type19
Types
1/4
MEDIAN
3/4
Office
13.35
16.25
19.45
Retail
12.05
15.8
33.35
School
9.65
11.9
16
Hotel
9.1
14.5
20.5
Apartment
24.5
31
43.5
Hospital
15.1
20.8
39.65
AS for the VRF system case, since more important than total initial cost is
incremental cost for the VRF system relative to the base cases (Thornton & Wagner,
2012), adding incremental costs to the initial costs of base cases, introduced in Table 11
is used to establish initial costs of VRF systems. Several preceding studies conducted to
figure out the incremental costs from the conventional systems. Table 12 shows the
incremental costs of VRF systems relative to the other systems.
Table 12 Incremental costs of VRF systems from other systems20
Chilled
Water VAV
Packaged
VAV
Notes
Source
0% to 22%
ASHRAE article, multiple sources
Goetzler, 2007
5% to 20%
Published article, various sources
Amarnath and Blatt,

2008
$2.68/ft !
Office projects, two retrofit projects,

contractor cost estimate
EES Consulting, 2011
$2/ft !
Medical clinic, cost estimate,

new construction
BPA 2012b
$3.50/ft !
Community college mixed use, VRF

retrofit actual cost compared to VAV
estimated cost
BPA 2012c
19
20
RSMeans Mechanical Cost Data 2012, 50 17

(Thornton & Wagner, 2012)
38
According to the Table 12, incremental costs vary with system type and building
characteristics. Hence, for this study, an average value of the incremental costs from
Table 12 is calculated. This average cost is in the range from $ 2.2/ft ! to $ 3/ft ! , which
matches the range of extra costs compared to the chilled water VAV. As stated in
(Thornton, 2012), since LCC analyses are to compare the difference between the base
case and the alternative, a calculated average of incremental costs can be applied to our
LCC analysis. The initial costs of the VRF system are computed by adding the
incremental costs, $ 3/ft ! , to the initial costs of the reference systems. Table 13 shows the
initial costs of both alternatives, VRF systems, and base cases buildings, that this study
utilizes for LCC.
Table 13 Initial costs of both VRF and base cases
Office
Alternative (VRF)
$/ft !
19.25
Base cases
$/ft !
16.25
Retail
18.8
15.8
School
14.9
11.9
Hotel
17.5
14.5
Apartment
34
31
Hospital
23.8
20.8
Types
OM&R Costs and Replacement Costs

According to the formula for LCC in Chapter 3, LCC analyses require OM&R
costs and replacement costs except for initial costs and residual value. Our study
accumulated OM&R costs and replacement costs and simplified them to be used as
annually recurring uniform costs.
VRF system maintenance and repair costs items are introduced in Table 14 in a
recent GSA study(Thornton & Wagner, 2012). It concerned a medium size hypothetical
39
office (48,000 ft2) for which an LCC analysis was conducted. The VRF system is
assumed to have a DOAS using a constant air volume roof top unit with gas heat.
Maintenance and repair costs for VRF system are estimated to be 0.2 $/ft2/yr (Thornton
& Wagner, 2012).
Table 14 Typical OM&R costs data of VRF systems
Maintenance Component
Frequency Years
# of Cost Event
Fan coil filter change
20
Check/clean condensate system
20
Fan coil motor replacement
10
Refrigerant replacement
10
Incremental Replacement
15
OM&R costs for the base cases are derived from existing studies. The data from
these preceding studies are calculated as dollar values at the time these studies were
conducted. Thus, they need to be converted to the dollar value of 2012 using the custom
price index (CPI) factor that the U.S. Bureau of Labor Statistics provides a CPI every
year. The CPI is a time series measure of the price level of consumer goods and services.
The cost data in a past year has to be adjusted to the current year when conducting the
LCC analysis. The accompanying calculator (to be introduced later) contains the CPI data
and converts costs data to the current year automatically (U.S. Bureau of Labor Statistics,
2013). Table 15 indicates the CPI factor used for this conversion. Both past dollar values
from the used studies and their translation to current dollar values are shown in Table 16.
40
Table 15 Custom price indexes (CPI)21
Year
CPI Factors
1983 average
99.6
1999 average
166.6
2000 average
172.2
2012 average
229.6
Table 16 Typical OM&R costs data of base cases
Study
Study year $/ft2
Converted to 2012
$/ft2
(M A Martin & Durfee, 1999)
0.20
0.27
(Michaela A Martin, Madgett, & Hughes, 2000)
0.21
0.28
ASHRAE 2012 for 16 Georgia office buildings
0.29
0.29
ASHRAE Owning and Operating Cost

Database22
0.25
0.25
Standard maintenance for a VRF system is similar to that of any DX system and
consists mainly of changing filters and cleaning coils; because there are no water pumps
to maintain or air ducts to be cleaned in a VRF system, less maintenance is required
compared to other technologies (A.Bhatia, 2011). According to this statement, the value
of the ASHRAE Owning and Operating Costa Database, $ 0.25/ft2, is used in the LCCA,
which is a bit higher than that of VRF systems.
21
Source: U.S. Department Of Labor Bureau of Labor Statistics Washington, D.C. 20212 Consumer Price
Index
22
Source from http://xp20.ashrae.org/publicdatabase/default.asp, ASHRAE Owing and Operating Cost
Database, Equipment Life/Maintenance Cost Survey, ASHRAE Research Project 1237-TRP
41
Energy Costs
Operational energy costs is the key component in the life-cycle cost of HVAC
systems. In order to establish the energy cost data for the LCC, 132 energy models, at
first, are created for the 6 building types, 11 climates zones, and 2different HVAC
systems as explained in chapter 4. These simulations provide annual energy consumption
per m! of both electricity and natural gas (kWh/m! /year.) Table 17 and Table 18 show
the outcomes of the simulations for the base cases, i.e. annual energy use intensities of
electricity and natural gas for base cases, respectively; Table 19 and Table 20 show the
results for the VRF variants.
Table 17 Annual Energy Use Intensity of electricity in kWh/m2 /year for base cases
Climate Zones
Electricity
Office
Retail
School
Hotel
Hospital
Apartment
1A
Miami, Florida
159.82
190.61
167.67
181.32
352.53
102.91
2A
Houston, Texas
156.69
173.05
151.94
166.90
337.22
91.30
2B
Phoenix, Arizona
162.09
177.53
158.67
171.88
306.56
99.11
3A
Atlanta, Georgia
146.02
151.92
135.82
155.09
317.13
82.18
3B
Las Vegas, Nevada
150.76
147.88
141.32
156.41
309.48
86.96
3C
138.73
115.21
119.93
138.11
277.64
70.15
4A
Baltimore, Maryland
151.06
143.80
129.87
148.05
313.05
76.95
4B
143.53
138.34
127.34
145.71
313.05
75.83
4C
Seattle, Washington
141.18
123.68
115.77
134.20
275.82
68.02
5A
Chicago, Illinois
154.91
139.64
125.15
146.15
300.94
74.54
5B
Boulder, Colorado
143.15
133.66
120.91
141.29
284.75
72.02
42
Table 18 Annual Energy Use Intensity of natural gas in kWh/m2 /year for base cases
Climate Zones
Natural Gas
Office
Retail
School
Hotel
Hospital
Apartment
1A
Miami, Florida
1.27
0.40
14.66
31.04
145.89
14.55
2A
Houston, Texas
1.80
20.29
26.39
40.75
166.45
25.62
2B
Phoenix, Arizona
1.39
16.14
23.10
36.40
199.86
19.85
3A
Atlanta, Georgia
3.71
43.00
38.12
49.37
162.71
34.94
3B
Las Vegas, Nevada
1.84
35.30
29.92
43.56
154.12
26.52
3C
1.86
42.44
38.66
50.43
197.56
29.46
4A
Baltimore, Maryland
7.11
82.93
60.68
61.91
194.94
52.42
4B
3.41
59.13
45.37
54.01
194.94
40.25
4C
Seattle, Washington
3.20
82.69
52.04
61.28
193.42
48.01
5A
Chicago, Illinois
13.52
124.08
83.68
75.04
207.10
74.51
5B
Boulder, Colorado
7.06
89.08
61.86
64.35
154.08
56.48
Table 19 Annual Energy Use Intensity of electricity in kWh/m2 /year for VRF systems
Climate Zones
Electricity
Office
Retail
School
Hotel
Hospital
Apartment
4,982
2,294
6,871
4,014
22,422
3,135
1A
Miami, Florida
139.93
155.57
136.37
143.20
238.60
87.48
2A
Houston, Texas
133.55
150.25
130.92
137.20
228.27
84.19
2B
Phoenix, Arizona
136.92
151.15
130.95
139.63
230.55
86.95
3A
Atlanta, Georgia
126.67
140.93
125.99
131.71
228.88
80.59
3B
Las Vegas, Nevada
129.70
140.10
125.74
133.76
217.68
80.43
3C
115.94
121.86
115.89
122.17
195.43
69.50
4A
Baltimore, Maryland
126.65
147.31
125.20
130.91
213.44
83.12
4B
123.61
135.91
121.86
127.67
209.97
77.79
4C
Seattle, Washington
119.01
133.04
118.54
124.25
199.48
76.67
5A
Chicago, Illinois
127.54
151.67
125.92
134.12
216.85
85.37
5B
Boulder, Colorado
122.47
141.50
122.08
129.02
211.31
76.71
43
Table 20 Annual Energy Use Intensity of natural gas in kWh/m2 /year for VRF systems
Climate Zones
Natural Gas
Office
Retail
School
Hotel
Hospital
Apartment
4,982
2,294
6,871
4,014
22,422
3,135
1A
Miami, Florida
1.27
0.00
13.85
30.49
22.47
22.47
2A
Houston, Texas
1.94
0.36
14.80
33.96
23.59
23.59
2B
Phoenix, Arizona
1.40
0.01
14.33
31.97
22.95
22.95
3A
Atlanta, Georgia
3.81
3.07
15.66
37.29
24.67
24.67
3B
Las Vegas, Nevada
1.97
0.21
14.96
34.37
23.72
23.72
3C
1.86
16.15
39.50
25.39
25.39
4A
Baltimore, Maryland
8.25
2.78
16.35
39.92
25.52
25.52
4B
5.26
0.39
16.22
39.42
25.36
25.36
4C
Seattle, Washington
3.24
0.03
16.63
41.28
25.96
25.96
5A
Chicago, Illinois
14.91
9.53
16.94
42.22
26.26
26.26
5B
Boulder, Colorado
9.48
4.27
16.89
42.10
61.49
61.49
Energy costs are calculated by multiplying the energy use intensity with building
floor area and energy prices for electricity and natural gas. There are two methods of
applying energy prices: one is to use constant energy prices over all states with the U.S.
average of electricity and natural gas, and the other is to apply various local energy
prices for each state. The latter method leads to more regionalized and therefore more
realistic results than the former does. This study utilizes the latter method, various energy
prices. Different unit prices of electricity and natural gas for each climate zone are shown
in Table 21 (U.S. Energy Information Administration).
44
Table 21 Energy Prices for each climate zone23
Climate Zone
Representative City
Electricity ($/KWh)
Natural Gas ($/therm)
Residential
Commercial
Residential
Commercial
1A
Miami, Florida
0.13
0.12
1.76
1.09
2A
Houston, Texas
0.11
0.1
0.96
0.72
2B
Phoenix, Arizona
0.11
0.09
1.49
0.87
3A
Atlanta, Georgia
0.11
0.11
1.54
0.94
3B
Las Vegas, Nevada
0.1
0.09
0.95
0.63
3C
0.14
0.14
1.00
0.76
4A
Baltimore, Maryland
0.12
0.12
1.29
1.05
4B
0.13
0.12
0.94
0.67
4C
Seattle, Washington
0.07
0.07
1.16
0.93
5A
Chicago, Illinois
0.11
0.1
0.95
0.82
5B
Boulder, Colorado
0.12
0.11
0.82
0.73
Cost-Related Factors
Costs vary with locations, building size, and year. According to the description
from the RS Means Square Foot Cost book, the median figures, when multiplied by the
total city construction cost index figures and then multiplied by the project size modifier,
should present a fairly accurate base figure, which should then have to be adjusted in
view of the estimators experience, local economic conditions, code requirements, and
the owners particular requirement (Balboni & Company, 2003). Thus, in order to
estimate as close to as possible to reality, this study adopts two cost-related factors: city
cost indexes and size modifier factors.
23
Sources from U.S. Energy Information Administration, http://www.eia.gov/
45
Since this study compares LCC cost between different climate zones and uses the
average costs for LCC analysis, adjusting the average costs to the specific local markets
and situations is necessary. As changes occur in local material prices, labor, rates, and
equipment rental rates, the impact of these changes should be accurately measured by the
change in the city cost index for each particular city as compared to the average
(Mossman, Babbitt, Baker, Balboni, & Chiang, 2010). The city cost indexes allow initial
investment costs and OM&R costs to be applied to the LCC analysis to obtain fairly
accurate values. Table 22 indicates the city cost indexes of representative cities, used for
this LCC analysis. The simple calculation of the cost at a specific city is as follow:

=
100
Table 22 City cost indexes
Climate Zone, Representative City

National Average
City Cost Indexes

100
1A
Miami, Florida
82.3
2A
Houston, Texas
86.2
2B
Phoenix, Arizona
88.5
3A
Atlanta, Georgia
88.5
3B
Las Vegas, Nevada
86.8
3C
123.4
4A
Baltimore, Maryland
93.3
4B
87.7
4C
Seattle, Washington
104.2
5A
Chicago, Illinois
116.6
5B
Boulder, Colorado
91.7
46
The size factors account for the fact that a the larger buildings, typically, have
lower costs per square foot. This is due mainly to the decreasing in contribution of the
exterior walls plus the economy of scale usually achievable in larger buildings (Mossman
et al., 2010). The size factor is derived by dividing the proposed building size by the
typical building, and using this ratio to find the cost multiplier value from the cost
modifier curve, illustrated in Figure 13.
Figure 13 Size modifier curve24
24
Source from (Mossman et al., 2010)
47
CHAPTER 6
FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS
ASSESSMENT
Energy Savings
With the results of simulations according to the models explained in Chapter 4,
the reference buildings equipped with conventional HVAC systems and alternative VRF
system are compared with respect to delivered energy consumptions by end energy type,
i.e. electricity and natural gas. Because VRF systems generate heat with electricity
instead of natural gas, which most reference systems use for heating, comparing savings
by end uses separately may illustrate large gaps between electricity and natural gas. In
order to perform a more appropriate comparison between VRF systems and reference
systems, source energy, also known as primary energy, is computed. Source energy
represents the total amount of raw fuel that is required to operate the building; the U.S.
Environmental Protection Agency (EPA) has determined that source energy is the most
equitable unit for evaluation (STAR, 2011). Site energy consumption in the form of
electricity and natural gas are converted into source energies multiplied by 3.34 and
1.047, respectively as derived from (STAR, 2011).
Using these factors, an overall comparison of the average savings in energy
consumption of VRF systems over conventional systems can be calculated and averaged
over all building types and locations. The resulting number is 39.6 percent, where the
average per building types over all locations ranges from 29.2 percent, in stand-alone
retail, to 59.9 percent, in hospital. The average saving in total building energy
consumption (taken over al energy consumption in the building) is 16.4 percent, where
48
average for each building types over all locations from 12.5 percent to 38.2 percent.
Percentages of energy savings for each building type are shown in Table 23 and Table 24.
Table 23 Percentages of energy savings in HVAC consumption
Climate Zone
Office
Retail
School
Hotel
Hospital
Apartment
1A Miami
32.1%
34.0%
47.9%
47.1%
57.6%
33.4%
2A Houston
40.7%
31.8%
46.9%
47.1%
61.2%
33.5%
2B Pheonix
40.1%
33.3%
52.2%
46.5%
52.1%
31.7%
3A Atlanta
42.8%
31.2%
43.2%
48.4%
55.7%
38.1%
3B Las Vegas
42.1%
27.1%
48.3%
44.7%
58.5%
37.8%
3C Sanfancisco
65.2%
18.7%
52.8%
52.6%
75.8%
37.4%
4A Baltimore
46.8%
26.2%
46.5%
46.1%
66.2%
45.1%
4B Albuquerque
46.2%
32.0%
45.9%
48.4%
68.5%
41.1%
4C Seattle
57.7%
28.7%
38.3%
44.8%
71.8%
43.4%
5A Chicago
46.5%
25.6%
47.3%
41.0%
62.4%
58.7%
5B Boulder
21.5%
32.8%
14.3%
20.0%
29.4%
31.0%
Average
43.8%
29.2%
43.9%
44.2%
59.9%
39.2%
Table 24 Percentages of energy savings in total building energy consumption
Climate Zone
Office
Retail
School
Hotel
Hospital
Apartment
1A Miami
12.4%
18.4%
18.3%
20.0%
38.3%
14.5%
2A Houston
14.7%
16.2%
15.4%
17.7%
39.5%
13.1%
2B Pheonix
15.5%
17.2%
18.4%
18.4%
35.6%
13.4%
3A Atlanta
13.1%
14.2%
11.4%
15.9%
35.7%
13.5%
3B Las Vegas
13.9%
11.8%
13.5%
15.0%
37.1%
13.4%
3C Sanfancisco
16.4%
5.2%
8.4%
12.6%
40.1%
6.2%
4A Baltimore
15.7%
12.7%
12.5%
14.4%
40.8%
18.5%
4B Albuquerque
13.4%
13.3%
10.3%
13.9%
41.8%
13.2%
4C Seattle
15.6%
11.1%
6.3%
10.6%
38.3%
11.3%
5A Chicago
16.9%
13.4%
13.3%
13.2%
38.5%
29.9%
5B Boulder
13.7%
11.6%
9.2%
11.9%
34.1%
23.2%
Average
14.7%
13.2%
12.5%
14.9%
38.2%
15.5%
49
Preceding studies similar to ours have reported a variety of saving percentages in

HVAC energy consumptions depending on building types and base cases. According to
the (Thornton & Wagner, 2012), the average energy savings over different studies
amounts to 38.3 percent; detailed information from these studies is shown in Table 25,
directly from (Thornton & Wagner, 2012).
Table 25 Potential HVAC only energy savings from VRF systems compared to other systems
Source
Chilled
Water, VAV
Hart and
Campbell, 2012
LG, 2011
36%
Goetzler, 2007
34%
EES
Consulting,
2011 - from
Aynur 2010,
Amarnath and
Blatt, 2008
33%
EES, 2011
Packaged
VAV
Pakaged
CAV
Air-Source
Heat Pump
62%
39%
49%
49%
13%
29%
33%
43%
23%
LG, 2012
55%
Average
38.3%
WaterSource Heat
Pump
As the table shows, the reported energy savings range from 13 percent to 55
percent. Our study shows similar ranges in resulting energy saving, i.e. ranging from 29.2
percent to 59.9 percent. Moreover, our average is close to the average found in other
studies.
50
LCC Results
Using the cost (adjustment) factors explained in the previous chapters, and using a
life span of 20 years, the life-cycle cost analysis generates five outputs: total life-cycle
costs in study year, net savings, simple payback, discounted payback, and saving-toinvestment ratios. A summary of the factors applying to is shown in Table 26.
Table 26 Summary of general information for LCC
Building Type
6 building types
Building Location
Climate Zone
City
Building Area
Life cycle study period
11 climate zones
According to the climate zones
According to the building types

20 years
Discount rate
Electricity unit rate
Natural gas unit rate
Typical SF
Size Factor
3.0%


According to the building types
According to the building types and sizes
Locator Factor
Additional information for the base cases and alternative VRF cases, such as
energy consumption data, generated by the EnergyPlus simulations, initial investment
costs, and simplified OM&R costs, which are embedded to LCC calculations. The results
of total life-cycle cost, net savings, simple payback, and discounted payback, are
illustrated in following tables. These results are calculated with various energy prices for
each climate zone.
51
Table 27 Total life-cycle costs of VRF systems per location

Climate Zone
Representative City
Retail
VRF System
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$2,165,140
$979,396
$2,968,324
$2,076,443
$1,194,378
$16,695,465
2A
Houston, Texas
$1,944,950
$867,224
$2,662,793
$1,887,851
$1,105,283
$14,916,714
2B
Phoenix, Arizona
$1,890,346
$826,042
$2,565,670
$1,851,073
$1,148,376
$14,424,965
3A
Atlanta, Georgia
$2,019,862
$896,478
$2,792,699
$1,985,936
$1,131,495
$15,986,280
3B
Las Vegas, Nevada
$1,822,682
$784,611
$2,479,864
$1,784,984
$1,050,940
$13,828,012
3C
$2,562,512
$1,084,815
$3,535,671
$2,535,588
$1,408,960
$19,466,357
4A
Baltimore, Maryland
$2,182,205
$991,755
$2,994,154
$2,131,878
$1,217,030
$16,564,672
4B
$2,079,757
$918,195
$2,846,047
$2,007,694
$1,167,229
$15,848,600
4C
Seattle, Washington
$1,759,309
$737,318
$2,437,828
$1,818,413
$1,068,603
$13,403,439
5A
Chicago, Illinois
$2,255,772
$1,001,940
$3,062,092
$2,241,616
$1,346,371
$17,006,860
5B
Boulder, Colorado
$2,028,436
$911,585
$2,784,025
$1,994,256
$1,150,716
$15,855,671
$2,064,634
$909,033
$2,829,924
$2,028,703
Average
Office
$1,180,853 $15,817,912
Table 28 Total life-cycle costs of base cases (reference buildings) per location
Climate Zone
Representative City
Office
Reference HVAC System (Baseline)

Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$2,254,500
$1,086,028
$3,233,909
$2,278,121
$1,231,452
$22,720,261
2A
Houston, Texas
$2,024,077
$922,657
$2,777,668
$1,997,119
$1,092,088
$19,554,890
2B
Phoenix, Arizona
$1,963,493
$883,194
$2,715,292
$1,951,509
$1,158,068
$18,314,282
3A
Atlanta, Georgia
$2,082,342
$943,731
$2,846,984
$2,083,373
$1,110,565
$20,552,415
3B
Las Vegas, Nevada
$1,869,322
$794,493
$2,524,401
$1,838,464
$1,031,766
$17,291,201
3C
$2,667,027
$1,032,563
$3,463,900
$2,571,000
$1,331,110
$24,499,391
4A
Baltimore, Maryland
$2,297,225
$1,040,935
$3,086,518
$2,220,153
$1,175,763
$22,500,242
4B
$2,159,771
$935,884
$2,850,616
$2,077,208
$1,117,002
$21,118,944
4C
Seattle, Washington
$1,760,305
$763,411
$2,379,797
$1,802,195
$1,007,165
$16,736,404
5A
Chicago, Illinois
$2,329,981
$1,025,279
$3,082,976
$2,263,651
$1,282,572
$21,237,209
5B
Boulder, Colorado
$2,093,680
$916,390
$2,751,830
$2,024,702
$1,098,346
$19,043,918
$2,136,520
$940,415
$2,883,081
$2,100,681
Average
52
$1,148,718 $20,324,469
Table 29 Net savings for all building types and location

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$89,359
$106,633
$265,586
$201,678
$37,074
$6,024,797
2A
Houston, Texas
$79,127
$55,433
$114,875
$109,268
($13,195)
$4,638,175
2B
Phoenix, Arizona
$73,147
$57,152
$149,622
$100,436
$9,692
$3,889,316
3A
Atlanta, Georgia
$62,480
$47,254
$54,285
$97,437
($20,931)
$4,566,136
3B
Las Vegas, Nevada
$46,640
$9,882
$44,538
$53,480
($19,174)
$3,463,189
3C
$104,515
($52,252)
($71,771)
$35,412
($77,850)
$5,033,034
4A
Baltimore, Maryland
$115,020
$49,179
$92,364
$88,275
($41,267)
$5,935,571
4B
$80,015
$17,689
$4,569
$69,513
($50,227)
$5,270,344
4C
Seattle, Washington
$996
$26,093
($58,031)
($16,218)
($61,437)
$3,332,965
5A
Chicago, Illinois
$74,209
$23,339
$20,884
$22,035
($63,799)
$4,230,349
5B
Boulder, Colorado
$65,244
$4,804
($32,195)
$30,446
($52,371)
$3,188,247
$71,887
$31,382
$53,157
$71,978
($32,135)
$4,506,557
Average
Table 30 Saving-to-Investment ratio for all building types and location

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
1.73
2.95
2.52
2.90
1.46
12.30
2A
Houston, Texas
1.62
1.97
1.63
1.98
0.84
9.31
2B
Phoenix, Arizona
1.56
1.97
1.80
1.88
1.11
7.78
3A
Atlanta, Georgia
1.48
1.80
1.29
1.85
0.76
8.96
3B
Las Vegas, Nevada
1.36
1.17
1.24
1.48
0.77
7.16
3C
1.57
0.36
0.73
1.22
0.36
7.30
4A
Baltimore, Maryland
1.83
1.79
1.47
1.73
0.55
10.82
4B
1.62
1.30
1.02
1.61
0.41
10.28
4C
Seattle, Washington
1.01
1.38
0.74
0.88
0.40
5.94
5A
Chicago, Illinois
1.43
1.30
1.08
1.15
0.44
6.60
5B
Boulder, Colorado
1.48
1.08
0.83
1.26
0.42
6.37
1.52
1.55
1.30
1.63
0.68
8.44
Average
53
Table 31 Simple payback time for all building types and location
Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
10
2A
Houston, Texas
17
2B
Phoenix, Arizona
13
3A
Atlanta, Georgia
10
12
19
3B
Las Vegas, Nevada
11
13
12
10
19
3C
30+
20
12
30+
4A
Baltimore, Maryland
10
25
4B
12
14
30+
4C
Seattle, Washington
15
11
20
17
30+
5A
Chicago, Illinois
10
12
14
13
29
5B
Boulder, Colorado
10
14
18
12
30+
10
12
13
10
23
Average
Table 32 Discounted payback time for all building types and location
Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
10
12
2A
Houston, Texas
11
11
25
2B
Phoenix, Arizona
11
10
17
3A
Atlanta, Georgia
12
10
15
29
3B
Las Vegas, Nevada
13
16
15
12
29
3C
11
30+
30+
15
30+
4A
Baltimore, Maryland
10
13
10
30+
4B
11
15
19
11
30+
4C
Seattle, Washington
20
14
29
24
30+
5A
Chicago, Illinois
13
15
18
17
30+
5B
Boulder, Colorado
12
18
25
15
30+
12
14
17
12
27
Average
In the calculation of payback time, we assumed the results that mark over 30
years as 30 years.
54
A summary of the findings is given below:
Since the results of the hospital case and apartment case deviate quite a bit from
the other cases, we will show the overall averages with these outlier cases
excluded. Below the averages for net savings, simple payback, discounted
payback, and saving-to-investment ratio are shown in Table 33: an average over
all building types (Avg. 1), an average that excludes the hospital (Avg. 2), and an
average that excludes both hospital and apartment values (Avg. 3).
Table 33 Averages of outputs
Output
Avg. 1
Avg. 2
Avg. 3
$ 783,804
$ 39,254
$ 57,101
Simple Payback
12 years
14 years
11 years
Discounted Payback
SIR
14 years
2.52
16 years
1.34
14 years
1.50
Net Savings
The hospital case shows a significant difference compared to the other cases as
shown in Table 34. One explanation is that the EUI of the reference hospital is
308.02 kWh/m! , which is significantly larger than the average of EUI of the other
building types, which is excluding apartment, ranges from 135.85 to 153.19
kWh/m! . This shows that the EUI of the hospital is twice as large as that of the
others. In other words, energy saving amounts are twice as higher as that of the
other building types even by applying the same percentage of energy savings.
Moreover, the energy savings in hospital is the most significant component in the
LCCA. For this reason, the results of hospital case are much better than those of
the other types.
Table 34 HVAC savings of all building types
Average
Office
Retail
School
Hotel
Hospital
Apartment
43.8%
29.2%
43.9%
44.2%
59.9%
38.2%
55
The apartment case, on the other hand, shows opposite results, as shown in Table
34. The EUI of the reference apartment is 81.81 kWh/m! , which is relatively low
compared to the other types. Even though there is 43.8 % of energy savings of
HVAC systems in apartment cases, operational costs savings cannot easily offset
the incremental investment costs. As a result, most apartment cases show the
negative values in net savings.
Simple paybacks of the reference apartment surpass 20 years in mixed or cool

climate zones. This is because of the lower EUI value and because of higher
heating loads. Given the fact that the conventional systems in the reference
apartment use natural gas for heating, and VRF systems use electricity for
heating, and given the difference between electricity price and natural gas price,
an increase in heating load negatively affect the result of LCC analysis. As a
result the reference apartment show the lower values in mixed and cool climate
zones, as compare to the other zones.
In the marine climate zone, San Francisco and Seattle, most building types show
lower values relative to the other climate zones. Since these marine climate zones
require less energy for heating and cooling, energy saving costs from VRF
systems typically cannot offset the incremental investments even though VRF
systems yield high operational energy savings by the HVAC systems around 40%.
Overall, the VRF alternatives show substantial energy savings over all building
types and locations. The reference hospital is an especially favorable case, based on the
fact that it consumes a large amount of energy, which leads to a high return on
investment.
The average of simple payback period over all building types and location is 12
years, which presents a compelling case to choose VRF over conventional system.
56
Special consideration for conducting the LCC

A framework for conducting the LCC conducted in our study is illustrated in
Appendix A. Some special considerations are summarized below.
National Energy Prices VS. Regional Prices
Most other preceding studies use the national average energy prices, i.e. nation
wide instead of regionalized energy prices. Using national energy prices provides easy
and quick process of comparisons. Electricity price of commercial and residential are
$0.101/kWh and $1.119/kWh, respectively; natural gas price of commercial and
residential are $0.813/therm and $1.068/therm, respectively.25 To see the difference
between constant prices and regional prices, simple payback and net savings with
constant prices as well as regional prices are shown bellow:
Table 35 Simple payback with national energy prices
Climate Zone
Representative City
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
10
11
2A
Houston, Texas
17
2B
Phoenix, Arizona
13
3A
Atlanta, Georgia
11
13
24
3B
Las Vegas, Nevada
10
11
11
18
3C
12
30+
22
15
30+
4A
Baltimore, Maryland
11
13
10
30+
4B
11
11
14
10
30+
4C
Seattle, Washington
11
15
24
15
30+
5A
Chicago, Illinois
10
12
14
13
30+
5B
Boulder, Colorado
11
12
17
12
30+
10
12
14
10
24
Average
25
Office
Sources from U.S. Energy Information Administration, http://www.eia.gov/
57
Table 36 Net savings with national energy prices

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$53,488
$78,114
$188,237
$147,275
$23,844
$4,646,138
2A
Houston, Texas
$72,877
$54,229
$109,484
$104,141
($12,154)
$4,655,262
2B
Phoenix, Arizona
$85,698
$61,435
$165,861
$112,855
$7,667
$3,882,232
3A
Atlanta, Georgia
$42,156
$33,148
$24,294
$73,413
($34,177)
$3,901,224
3B
Las Vegas, Nevada
$56,761
$18,054
$63,014
$65,514
($15,004)
$3,951,881
3C
$27,915
($42,746)
($92,555)
($8,232)
($80,436)
$3,866,772
4A
Baltimore, Maryland
$72,045
$22,351
$30,799
$49,059
($54,269)
$4,573,682
4B
$43,353
$23,572
$1,600
$46,701
($47,866)
$4,719,501
4C
Seattle, Washington
$45,199
($730)
($91,081)
($8,572)
($87,226)
$3,718,955
5A
Chicago, Illinois
$66,649
$16,532
$5,590
$14,545
($62,015)
$4,051,231
5B
Boulder, Colorado
$43,179
$13,112
($24,533)
$21,904
($41,714)
$2,931,675
$55,393
$25,188
$34,610
$56,237
($36,668)
$4,081,687
Average
Table 37 Difference in simple payback, by subtracting national prices from regional prices
Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
(2)
(1)
(1)
(1)
(1)
2A
Houston, Texas
2B
Phoenix, Arizona
3A
Atlanta, Georgia
(1)
(1)
(1)
(1)
(5)
3B
Las Vegas, Nevada
3C
(3)
(2)
(3)
4A
Baltimore, Maryland
(1)
(2)
(3)
(2)
4B
(2)
(1)
4C
Seattle, Washington
(4)
(4)
5A
Chicago, Illinois
5B
Boulder, Colorado
(1)
58
Table 38 Differences in net savings, by subtracting national prices from regional prices
Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
35,872
28,519
77,349
54,403
13,230
1,378,658
2A
Houston, Texas
6,250
1,205
5,391
5,128
(1,041)
(17,087)
2B
Phoenix, Arizona
(12,551)
(4,283)
(16,239)
(12,419)
2,026
7,085
3A
Atlanta, Georgia
20,324
14,106
29,991
24,024
13,247
664,911
3B
Las Vegas, Nevada
(10,121)
(8,172)
(18,476)
(12,034)
(4,170)
(488,691)
3C
76,600
(9,506)
20,784
43,643
2,587
1,166,262
4A
Baltimore, Maryland
42,975
26,828
61,565
39,215
13,002
1,361,889
4B
36,662
(5,883)
2,969
22,812
(2,361)
550,843
4C
Seattle, Washington
(44,202)
26,822
33,050
(7,646)
25,789
(385,990)
5A
Chicago, Illinois
7,560
6,806
15,293
7,490
(1,784)
179,118
5B
Boulder, Colorado
22,065
(8,308)
(7,662)
8,542
(10,657)
256,572
Numbers in the parentheses are negative numbers. In the simple payback,

negative numbers mean that the payback time calculated with national energy prices is
higher than with regional ones, which indicates the assuming a national price is more
pessimistic that using regional pricing. On the other hand, negative values in the net
savings differences indicate cases where using the national average would lead to more
optimistic results than when using regional pricing. Additional LCC results with constant
energy prices are illustrated in appendix B.
Variation of Incremental Costs and OM&R Costs
Since initial investment costs and maintenance costs are different from locations,
contractors, building types, and etc., and since different literature sources indicate a
variety of ranges, it is worthwhile to study the effect of different cost assumptions on the
resulting life-cycle costs. To do this we use the office and hotel building types in the 3A
Atlanta location as an example. The range of the incremental investment costs is from
$2/ft ! to $5/ft ! , and additional cost of OM&R range from $ 0.08/ft ! less than base cases
to $ 0.05/ft ! more than base cases. These ranges were introduced in chapter 5.
59
Table 39 Discounted payback variations depending on investment and OM&R cost factors
Incremental investment costs ($/ft ! )
OM&R
differences
($/ft ! )
-0.08
-0.05
-0.02
7
7
8
11
12
13
15
18
19
21
25
27
5
6
6
8
9
10
12
13
14
16
18
19
0
0.02
0.05
9
10
12
15
17
21
23
26
30+
30+
30+
30+
7
7
8
11
12
14
16
17
21
21
24
27
Office
Hotel
Table 40 Saving-to-Investment variations depending on investment and OM&R cost factors
Incremental investment costs ($/ft ! )
OM&R
differences
($/ft ! )
-0.08
2.43
1.62
1.22
0.97
3.00
2.00
1.50
1.20
-0.05
2.18
1.45
1.09
0.87
2.75
1.83
1.37
1.10
-0.02
2.07
1.38
1.04
0.83
2.64
1.76
1.32
1.05
1.85
1.24
0.93
0.74
2.42
1.61
1.21
0.97
0.02
1.71
1.14
0.85
0.68
2.27
1.52
1.14
0.91
0.05
1.49
1.00
0.75
0.60
2.06
1.37
1.03
0.82
Office
Hotel
When the additional investment of the office is over $4/ft ! , the discounted
payback is over 20 years, which is similar to the life span of HVAC systems. SIR values
also turn into less than 1, which means that there is no cost beneficial. According to
above tables, the marginal costs that yield the profit by choosing the VRF alternative for
the office case are $4/ft ! incremental costs with $0.02/ft ! lower OM&R costs or $3/ft !
incremental costs with $0.02/ft ! higher OM&R costs. As for the hotel case, $5/ft !
additional investment costs with $0.02/ft ! lower OM&R costs yield a benefit.
60
CHAPTER 7
CONCLUSION
A comparative analysis of VRF systems as alternative for conventional HVAC

systems is presented. This study investigates two aspects of VRF systems: efficient
energy performance and economic benefits. The analysis leads to the following
conclusions.
VRF systems reduce energy consumption for heating and cooling by an average
of 39.9 percent compared to conventional HVAC systems. All six building typesoffice,
stand-alone retail, primary school, hotel, apartment, and hospitalare simulated in
eleven climate zones. The hospital reference building yields the most noticeable energy
savings, averaged over 11 climate zones the saving is 59.9 percent. Hotel, school, and
office reference building show the similar although smaller average energy savings
around 44 percent. In terms of climate zones, energy savings are similar in most climate
zones, but VRF systems perform less efficiently in a cool and dry climate, in particular
5B Boulder, compared to the other zones.
VRF systems are also compared to conventional systems through a life-cycle cost
analysis. The LCC analysis evaluates the economic benefit of VRF systems in a study
period of 20 years, with $ 3/ft ! incremental investment costs and $0.05 lower simplified
OM&R costs at a 3% discount rate. The LCC analysis generates four economic values:
net savings, saving-to-investment ratio, simple payback, and discounted payback. The
shortest simple payback period is one year, for the hospital case. On the other hand, the
longest one is over 30 years, in the apartment case. These two opposite results are
accounted for the large difference in the amount of energy consumptions; the hospital
consumes almost four times as much as the apartment case, which also consumes less
61
than the other types. The LCC outcome confirms that when the absolute energy savings is
low, it is difficult to compensate the additional investment costs.
This study confirms what preceding research has shown, i.e. that, VRF systems
show considerable energy savings over conventional HVAC systems. It has to be
recognized that VRF systems are still poorly supported in whole building simulation
tools. Some caution is warranted in interpreting the outcomes for the VRF cases; the
results may be overly optimistic. There is a need to use the current VRF modules in
calibration exercise on real building data with installed VRF system.
Based on the economic analysis, it is evident that VRF systems can be highly
recommended for buildings that consume a large amount of energy. This is particularly
true for hospitals. Based on the currently available cost data and a simulation models,
VRF systems are also recommended for the other building types, in most climate zones
except for marine climate zones and in general in cold zones with a significant heating
requirement. VRF systems should be carefully considered in heating dominant climate
zones when being compared to systems that generate heat with natural gas.
62
APPENDIX A
LCC EXAMPLE
This appendix presents a framework of life-cycle cost calculation, including
general information, specific information for VRF system and base case, life-cycle
calculations, cash flows, net savings, and SIR.
Table 41 General building information for LCC
Building Type
Commercial
Office
53,608 sf
3A
Atlanta, Georgia
4,982 m2
Building Location
Climate Zone
City
Building Area
Life cycle study period
20 yrs
Discount rate
3.0%
Electricity unit rate

Natural gas unit rate
0.10 $/kWh
0.81 $/therm
Typical SF
20000
Size Factor
Locator Factor
Parameter
Factor
0.92
0.89
Table 42 Specific information of VRF system and the base case for LCC
VRF systems
Base case
Initial HVAC System Investment
Residual Value Factor (% of initial cost )

Energy Consumption
Electricity
Natural Gas
$1,007,837
19,324 $/ton
18.8 $/sf
0%
$847,012
16,240 $/ton
15.8 $/sf
0%
40 kBTU/sf/yr 127 kWh/m2/yr

1 kBTU/sf/yr
4 kWh/m2/yr
46 kBTU/sf/yr 146 kWh/m2/yr

1 kBTU/sf/yr
4 kWh/m2/yr
0.20 $/sf/yr
0.25 $/sf/yr
Simplified Annual OM&R Costs
63
Table 43 LCC calculation of VRF system

Type of Cost
Cost Description
Present Value
Factor
Cash Amount
One time: Initial Investment LG VRF System: Initial Investment

Replace Investment
LG VRF System: Replacement
Annually Recurring
Energy costs
Electricity
Natural Gas
Simplified Annual OM&R costs
Less Remaining Value in

20 yrs
Residual Value
Present Value
$ 820,581
1.00
$ 820,581
$ 0
0.74
$ 0
$ 63,865
$ 526
15.3
16.85
$ 977,130
$ 8,864
$ 8,730
14.44
$ 126,091
$ 0
0.55
$ 0
Total Life-Cycle Cost
1,932,666
Table 44 LCC calculation of the base case

Type of Cost
Cost Description
Cash Amount
One time: Initial Investment HVAC System: Initial Investment
Annually Recurring
Present Value
$ 689,637
1.00
$ 689,637
$ 0
0.74
$ 0
Energy costs
Electricity
Natural Gas
Non-Annually Recurring
Present Value
Factor
Simplified Annual OM&R costs
Less Remaining Value in

20 yrs
Residual Value
Total Life-Cycle Cost
$ 73,621
$ 512
15.3
16.85
$ 1,126,405
$ 8,635
$ 10,912
14.44
$ 157,614
$ 0
0.55
$ 0
$
64
1,982,291
Table 45 Net saving calculation
delta E
delta OM&R
detla I0
delta Repl
delta Res
$
$
$
$
149,046
31,523
130,944
0
-
Net Savings
49,625
Table 46 SIR calculation
Savings-to-Investment Ratio

1.38

65
Table 47 Cash flows, including SPB and DPB

energy price i ndex
energy saving
sum
d=0%
sum
d=3%
$ 2,182
$ 11,828
$ 11,483 $ 11,828
$ 11,483 $ 130,944 $ (119,116) $ (119,461)
$ 9,659 $ (13)
$ 2,182
$ 11,828
$ 11,149
$ 23,656
$ 22,632 $ 130,944 $ (107,288) $ (108,311)
$ 9,757 $ (13)
$ 2,182
$ 11,925
$ 10,914
$ 35,581
$ 33,546 $ 130,944 $ (95,362) $ (97,398)
0.99
$ 9,757 $ (13)
$ 2,182
$ 11,925
$ 10,596
$ 47,507
$ 44,141 $ 130,944 $ (83,437) $ (86,802)
1.00
1.00
$ 9,757 $ (14)
$ 2,182
$ 11,925
$ 10,287
$ 59,432
$ 54,428 $ 130,944 $ (71,512) $ (76,515)
0.99
1.01
$ 9,659 $ (14)
$ 2,182
$ 11,828
$ 9,905
$ 71,260
$ 64,334 $ 130,944 $ (59,684) $ (66,610)
0.98
1.02
$ 9,561 $ (14)
$ 2,182
$ 11,730
$ 9,538
$ 82,990
$ 73,871 $ 130,944 $ (47,954) $ (57,072)
0.99
1.03
$ 9,659 $ (14)
$ 2,182
$ 11,827
$ 9,337
$ 94,817
$ 83,208 $ 130,944 $ (36,127) $ (47,736)
0.99
1.06
$ 9,659 $ (14)
$ 2,182
$ 11,827
$ 9,064
$ 106,644
$ 92,272 $ 130,944 $ (24,300) $ (38,671)
10
0.99
1.09
$ 9,659 $ (15)
$ 2,182
$ 11,827
$ 8,800
$ 118,471
$ 101,072 $ 130,944 $ (12,473) $ (29,871)
11
1.00
1.12
$ 9,757 $ (15)
$ 2,182
$ 11,924
$ 8,614
$ 130,394
$ 109,686 $ 130,944 $ (549) $ (21,257)
12
1.00
1.14
$ 9,757 $ (15)
$ 2,182
$ 11,923
$ 8,363
$ 142,318
$ 118,049 $ 130,944 $ 11,374 $ (12,895)
13
1.00
1.15
$ 9,757 $ (16)
$ 2,182
$ 11,923
$ 8,119
$ 154,241
$ 126,168 $ 130,944 $ 23,297 $ (4,775)
14
0.99
1.17
$ 9,659 $ (16)
$ 2,182
$ 11,825
$ 7,818
$ 166,067
$ 133,986 $ 130,944 $ 35,123 $ 3,043
15
0.99
1.18
$ 9,659 $ (16)
$ 2,182
$ 11,825
$ 7,590
$ 177,892
$ 141,577 $ 130,944 $ 46,948 $ 10,633
16
0.99
1.20
$ 9,659 $ (16)
$ 2,182
$ 11,825
$ 7,369
$ 189,717
$ 148,946 $ 130,944 $ 58,773 $ 18,002
17
0.99
1.21
$ 9,659 $ (16)
$ 2,182
$ 11,825
$ 7,154
$ 201,542
$ 156,100 $ 130,944 $ 70,598 $ 25,156
18
0.99
1.22
$ 9,659 $ (17)
$ 2,182
$ 11,825
$ 6,946
$ 213,367
$ 163,046 $ 130,944 $ 82,423 $ 32,102
19
0.99
1.24
$ 9,659 $ (17)
$ 2,182
$ 11,825
$ 6,743
$ 225,191
$ 169,789 $ 130,944 $ 94,247 $ 38,845
20
0.99
1.25
$ 9,659 $ (17)
$ 2,182
$ 11,824
$ 6,547
$ 237,016
$ 176,336 $ 130,944 $ 106,072 $ 45,392
21
0.99
1.27
$ 9,659 $ (17)
$ 2,182
$ 11,824
$ 6,356
$ 248,840
$ 182,692 $ 130,944 $ 117,896 $ 51,748
22
1.00
1.30
$ 9,757 $ (18)
$ 2,182
$ 11,921
$ 6,222
$ 260,761
$ 188,914 $ 130,944 $ 129,817 $ 57,970
23
1.01
1.34
$ 9,854 $ (18)
$ 2,182
$ 12,018
$ 6,090
$ 272,779
$ 195,003 $ 130,944 $ 141,835 $ 64,059
24
1.02
1.37
$ 9,952 $ (19)
$ 2,182
$ 12,115
$ 5,960
$ 284,895
$ 200,963 $ 130,944 $ 153,951 $ 70,019
25
1.03
1.38
$ 10,049 $ (19)
$ 2,182
$ 12,213
$ 5,833
$ 297,107
$ 206,796 $ 130,944 $ 166,164 $ 75,852
26
1.04
1.41
$ 10,147 $ (19)
$ 2,182
$ 12,310
$ 5,708
$ 309,418
$ 212,504 $ 130,944 $ 178,474 $ 81,560
27
1.05
1.44
$ 10,244 $ (20)
$ 2,182
$ 12,407
$ 5,586
$ 321,825
$ 218,090 $ 130,944 $ 190,881 $ 87,146
28
1.06
1.44
$ 10,342 $ (20)
$ 2,182
$ 12,505
$ 5,466
$ 334,329
$ 223,555 $ 130,944 $ 203,386 $ 92,612
29
1.06
1.45
$ 10,342 $ (20)
$ 2,182
$ 12,505
$ 5,306
$ 346,834
$ 228,862 $ 130,944 $ 215,890 $ 97,918
30
1.06
1.47
$ 10,342 $ (20)
$ 2,182
$ 12,504
$ 5,152
$ 359,338
$ 234,013 $ 130,944 $ 228,395 $ 103,069
Year
Elec
NG
Elec
NG
0.99
1.00
$ 9,659 $ (14)
0.99
0.98
1.00
0.99
1.00
annual
OMR
Cumulative Cumulative
initial i nvest
d=0%
d=3%
Net savings
(SPB)
Net savings
(DPB)
11
13
Energy price indexes are UPV* values for LCC are introduced in order to deal
with price escalation. When the discount rate, d, is 0%, it represents simple LCC
calculation; when discount rate is 3%, LCC calculation includes price escalation with 3%
discount rate. In the net saving columns, SPB indicates simple payback, and DPB means
discounted payback. Plus, when the net saving turns into positive number is the payback
year. For this example, simple payback is 11 years; discounted payback is 13 years.
66
APPENDIX B
LCC RESULTS WITH NATIONAL ENERGY PRICES

Tables included in this appendix are related to additional comparison section in
Chapter 6. These results are calculated for nation wide energy prices; electricity price of
commercial and residential are $0.101/kWh and $1.119/kWh, respectively; natural gas
price of commercial and residential are $0.813/therm and $1.068/therm, respectively.
Table 48 Total life-cycle costs of VRF systems with constant prices
Climate Zone
Representative City
Office
Retail
VRF System
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$1,950,816
$931,568
$2,489,178
$1,641,008
$1,509,580
$12,994,438
2A
Houston, Texas
$1,947,736
$932,567
$2,485,658
$1,645,659
$1,545,265
$12,885,600
2B
Phoenix, Arizona
$1,996,914
$946,399
$2,513,719
$1,677,008
$1,584,520
$13,088,777
3A
Atlanta, Georgia
$1,925,924
$914,507
$2,466,926
$1,639,099
$1,559,582
$13,050,465
3B
Las Vegas, Nevada
$1,925,712
$900,500
$2,440,551
$1,631,113
$1,532,352
$12,566,979
3C
$2,225,830
$1,014,784
$2,808,159
$1,894,096
$1,924,024
$13,960,095
4A
Baltimore, Maryland
$1,988,543
$959,297
$2,521,894
$1,681,399
$1,636,953
$12,819,525
4B
$1,897,652
$890,674
$2,415,989
$1,611,597
$1,538,513
$12,377,176
4C
Seattle, Washington
$2,040,471
$960,279
$2,592,877
$1,740,165
$1,735,454
$12,988,366
5A
Chicago, Illinois
$2,266,586
$1,093,924
$2,827,186
$1,910,637
$1,935,749
$14,292,464
5B
Boulder, Colorado
$1,942,576
$933,187
$2,471,166
$1,659,848
$1,586,180
$13,017,360
$2,009,887
$952,517
$2,548,482
$1,702,875
Average
$1,644,379 $13,094,658
Table 49 Total life-cycle costs of base cases with national prices

Climate Zone
Representative City
Office
Reference HVAC System (Baseline)

Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$2,004,304
$1,009,682
$2,677,415
$1,788,283
$1,533,424
$17,640,576
2A
Houston, Texas
$2,020,613
$986,796
$2,595,143
$1,749,800
$1,533,111
$17,540,862
2B
Phoenix, Arizona
$2,082,612
$1,007,834
$2,679,580
$1,789,863
$1,592,186
$16,971,008
3A
Atlanta, Georgia
$1,968,080
$947,655
$2,491,221
$1,712,512
$1,525,405
$16,951,689
3B
Las Vegas, Nevada
$1,982,474
$918,554
$2,503,565
$1,696,627
$1,517,348
$16,518,860
3C
$2,253,745
$972,038
$2,715,604
$1,885,864
$1,843,588
$17,826,867
4A
Baltimore, Maryland
$2,060,589
$981,648
$2,552,694
$1,730,458
$1,582,684
$17,393,207
4B
$1,941,005
$914,245
$2,417,589
$1,658,298
$1,490,648
$17,096,677
4C
Seattle, Washington
$2,085,669
$959,549
$2,501,796
$1,731,592
$1,648,227
$16,707,321
5A
Chicago, Illinois
$2,333,234
$1,110,456
$2,832,776
$1,925,182
$1,873,734
$18,343,694
5B
Boulder, Colorado
$1,985,754
$946,299
$2,446,633
$1,681,752
$1,544,466
$15,949,035
$2,065,280
$977,705
$2,583,092
$1,759,112
Average
67
$1,607,711 $17,176,345
Table 50 Net savings with national prices

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
$53,488
$78,114
$188,237
$147,275
$23,844
$4,646,138
2A
Houston, Texas
$72,877
$54,229
$109,484
$104,141
($12,154)
$4,655,262
2B
Phoenix, Arizona
$85,698
$61,435
$165,861
$112,855
$7,667
$3,882,232
3A
Atlanta, Georgia
$42,156
$33,148
$24,294
$73,413
($34,177)
$3,901,224
3B
Las Vegas, Nevada
$56,761
$18,054
$63,014
$65,514
($15,004)
$3,951,881
3C
$27,915
($42,746)
($92,555)
($8,232)
($80,436)
$3,866,772
4A
Baltimore, Maryland
$72,045
$22,351
$30,799
$49,059
($54,269)
$4,573,682
4B
$43,353
$23,572
$1,600
$46,701
($47,866)
$4,719,501
4C
Seattle, Washington
$45,199
($730)
($91,081)
($8,572)
($87,226)
$3,718,955
5A
Chicago, Illinois
$66,649
$16,532
$5,590
$14,545
($62,015)
$4,051,231
5B
Boulder, Colorado
$43,179
$13,112
($24,533)
$21,904
($41,714)
$2,931,675
$55,393
$25,188
$34,610
$56,237
($36,668)
$4,081,687
Average
Table 51 Saving-to-Investment ratio with national prices

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
1.44
2.43
2.08
2.39
1.30
9.71
2A
Houston, Texas
1.57
1.95
1.60
1.94
0.86
9.34
2B
Phoenix, Arizona
1.65
2.05
1.88
1.99
1.09
7.77
3A
Atlanta, Georgia
1.32
1.56
1.13
1.64
0.61
7.80
3B
Las Vegas, Nevada
1.44
1.31
1.34
1.59
0.82
8.03
3C
1.15
0.48
0.65
0.95
0.33
5.84
4A
Baltimore, Maryland
1.52
1.36
1.16
1.41
0.41
8.57
4B
1.33
1.40
1.01
1.41
0.44
9.31
4C
Seattle, Washington
1.29
0.99
0.59
0.94
0.14
6.51
5A
Chicago, Illinois
1.39
1.21
1.02
1.10
0.46
6.36
5B
Boulder, Colorado
1.32
1.22
0.87
1.19
0.54
5.93
1.40
1.45
1.21
1.50
0.64
7.74
Average
68
Table 52 Simple payback with national prices

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
10
11
2A
Houston, Texas
17
2B
Phoenix, Arizona
13
3A
Atlanta, Georgia
11
13
24
3B
Las Vegas, Nevada
10
11
11
18
3C
12
30+
22
15
30+
4A
Baltimore, Maryland
11
13
10
30+
4B
11
11
14
10
30+
4C
Seattle, Washington
11
15
24
15
30+
5A
Chicago, Illinois
10
12
14
13
30+
5B
Boulder, Colorado
11
12
17
12
30+
10
12
14
10
24
Average
Table 53 Discounted payback with national prices

Climate Zone
Representative City
Office
Retail
School
Hotel
Apartment
Hospital
1A
Miami, Florida
12
14
2A
Houston, Texas
11
11
24
2B
Phoenix, Arizona
10
17
3A
Atlanta, Georgia
13
11
17
10
3B
Las Vegas, Nevada
12
14
13
11
26
3C
16
21
4A
Baltimore, Maryland
11
14
16
13
30+
4B
13
13
19
12
30+
4C
Seattle, Washington
14
20
21
30+
5A
Chicago, Illinois
13
16
19
17
30+
5B
Boulder, Colorado
13
16
23
16
30+
13
11
12
13
21
Average
69
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COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND

CONVENTIONAL HVAC SYSTEMS,

Georgia Institute of Technology

COPYRIGHT 2013 BY JAESUK PARK

COMPARATIVE ANALYSIS OF THE VRF SYSTEM AND

Date Approved: 18 November 2013

I would like to show, first and foremost, my immense gratitude to my advisor,

Chapter 2 LIFE CYCLE COST ANALYSIS

CONSIDERATIONS FOR LCC ANALYSIS

SUMMARY OF LIFE-CYCLE COST ANALYSIS

Chapter 3 CALCULATING LIFE-CYCLE COST

CALCULATION OF LIFE-CYCLE COST

SUPPLEMENTARY MEASURES OF ECONOMIC EVALUATION

Chapter 4 ENERGY MODELS

HVAC SYSTEM MODELING

Chapter 5 COST DATA FOR LCC ANALYSIS

INITIAL INVESTMENT COST

OM&R COSTS AND REPLACEMENT COSTS

Chapter 6 FINDINGS FROM LCC ANALYSIS AND ENERGY SAVINGS

SPECIAL CONSIDERATION FOR CONDUCTING THE LCC

APPENDIX A LCC EXAMPLE

APPENDIX B LCC RESULTS WITH NATIONAL ENERGY PRICES

Table 2 Reference building types

Table 3 Climate zones and representative cities

Table 11 Initial investment costs of base cases per building type

Table 12 Incremental costs of VRF systems from other systems

Table 13 Initial costs of both VRF and base cases

Table 14 Typical OM&R costs data of VRF systems

Table 15 Custom price indexes (CPI)

Table 16 Typical OM&R costs data of base cases

Table 22 City cost indexes

Table 23 Percentages of energy savings in HVAC consumption

Table 24 Percentages of energy savings in total building energy consumption

Table 26 Summary of general information for LCC

Table 27 Total life-cycle costs of VRF systems per location

Table 29 Net savings for all building types and location

Table 30 Saving-to-Investment ratio for all building types and location

Table 33 Averages of outputs

Table 34 HVAC savings of all building types

Table 35 Simple payback with national energy prices

Table 36 Net savings with national energy prices

Table 39 Discounted payback variations depending on investment and OM&R cost

Table 40 Saving-to-Investment variations depending on investment and OM&R cost

Table 41 General building information for LCC

Table 43 LCC calculation of VRF system

Table 44 LCC calculation of the base case

Table 45 Net saving calculation

Table 46 SIR calculation

Table 47 Cash flows, including SPB and DPB

Table 48 Total life-cycle costs of VRF systems with constant prices

Table 49 Total life-cycle costs of base cases with national prices

Table 50 Net savings with national prices

Table 51 Saving-to-Investment ratio with national prices

Table 52 Simple payback with national prices

Table 53 Discounted payback with national prices

Figure 2 Gates Computer Science Building 30-Year Life Cycle Cost

Figure 3 Concept Diagram of LCC Analysis

Figure 4 Length of study period

Figure 5 Rate of price changes for Home-related items

Figure 6 PV diagram of one-time amounts

Figure 7 PV diagram of annually recurring uniform amounts

Figure 8 PV diagram of annually recurring non-uniform amounts