West / Regional Reports

Energy Rebates Make Chiller Replacement a No-Brainer

July 16, 2001
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Old chillers are energy gobblers, but in days gone by, the price of electricity was low enough that building owners put off replacement. Today, with California’s soaring utility costs, looking for ways to save energy has become one of the hottest games in town.

Then along comes Los Angeles’ Department of Water & Power (DWP) to give owners a push —cash incentives for replacing electricity-hungry chillers with new, energy-efficient models, provided they have them up and running by December 31 of this year.

By working with owners who are ready to make the chiller-replacement plunge, Los Angeles-area contractors can cash in on energy rebate programs too.



STATE INCREASES EFFICIENCY STANDARDS

“Title 24’s state-mandated standards currently call for efficiencies of .75 kW/ton or better,” says John Lockett, utility marketing representative for the DWP’s Chiller Efficiency Program. “In October, Title 24 standards will become much more stringent, dictating a minimum efficiency of .576 kW/ton for any new installation. That’s a dramatic change, since many new chillers being sold are far less efficient than this.”

“There are a bunch of large buildings in downtown LA with chillers that are 20 to 30 years old,” said Trane sales engineer Brett Gaviglio. “According to my own survey, 75% of the machines are an average of 15 years old or older.”

“Currently, the average chiller out there is running between .80 and .90,” adds Lockett. “When the new Title 24 standards are implemented, this will really influence the market. We’re not sure how these new standards will impact the chiller rebate program. What we’re telling owners is that they need to proceed with due haste under the current standards.”

As of the end of April, the DWP had 28 large commercial buildings under contract for the rebate program, totaling some $2 million in incentives.

“Title 24 has three chiller ranges,” says Lockett. “Less than 150 tons, 150 to 300 tons, and more than 300 tons. My focus has been on the larger chillers, because that’s where we find the biggest bang for the buck, but I don’t want to discourage anyone.”



AIRPORT CENTER: A CASE IN POINT

The four chillers at Airport Center, a three-building complex a few blocks from the Los Angeles International Airport, were built in 1961, 1964, and 1969. In short, they were well past their prime. “We probably would have replaced the chillers in another three or four years,” says Andy Mircovich, Airport Center’s general manager, “but with the rebates and the expected energy savings of $250,000 a year, the equipment and installation will be paid for in about two and a half years. After that, we’ll be saving a quarter of a million a year.

“With those kind of figures, I sat down with the owners, Jupiter Realty, and within five minutes they approved the chiller replacements.” “Usually with chiller replacements, you’re looking at a payback time of five to six years or more,” says Gaviglio. “Here it is less than three years. That makes a big difference.”

Chief engineer Patrick Roche was thrilled that the owners were willing to spend the money on chiller replacement. “I would put it into the budget every year, but couldn’t get them to part with the cash until this rebate came along,” he says.

Mircovich says the 860- and 725-ton chillers and one of the 400-ton chillers (the other was redundant) were “ordered, manufactured and fully installed in three to four months” and became fully operational by June 30.

“In one particular building (at Airport Center), at full load, the chiller was using 625 kW — a lot of power,” says Gaviglio. “We proposed an alternative of 392 kW. The DWP gave them $100,000 to make this efficiency improvement.”

The price of the three chillers totaled approximately $695,000, plus installation. Combined with additional rebates totaling another $115,000, the utilities paid approximately 30% of the purchase price.



REBATES RID OWNERS OF REPLACEMENT HESITANCY

“What we’ve found is that, generally, owners don’t buy the high-efficiency machines because they’re too expensive,” says Gaviglio. “But with the rebate program, they’re actually paying less for a more-efficient machine than they would have paid if they’d kept their old, less-efficient machine.

“Looking at the efficiencies alone, you have an advantage when you replace a 300-ton chiller. By the time you’re looking at a 1,000-ton machine, it’s an unstoppable advantage. And with a 1,500-ton machine, it’s a no-brainer.”

The rebate program has definitely made some projects happen that would not have gotten over the cost-deterrent hump in previous years. Though many building owners have done studies to determine that they need to replace their old chillers, and though they have wanted to go with more-efficient machines, it took the DWP’s rebate programs — as well as those offered by the gas company — to push them into action.

Gaviglio is confident that more and more owners will see the sense in replacing chillers. Some may not be ready this year because of the inconvenience of the changeout. “It takes two to four months to get a chiller and the building is without chiller capacity for one to two weeks during installation,” he says. “Unless you’ve got a lot of redundancy, it requires creativity and timing to retrofit.”

Other owners may be taking a wait-and-see attitude. If the DWP has this rebate program, it will have others. It’s not in the budget for this year, but may be added to next year’s or the year after’s wish list.

“Rebates will influence the majority of owners,” says Gaviglio. “The ones who aren’t yet ready for it this year will be ready in the next couple of years.” “The energy-savings issue isn’t new,” says sales manager Pat McGuire of Azusa, CA-based Centrifugal Technologies, Inc. “In the last 12 years, the operational efficiency of centrifugal chillers has been improving. Owners have known that ‘Gee whiz! If I change out a .85 or .9 rush kW/T chiller to .55 in kW/T yield, I’ll have 35% to 45% energy savings.’ The arithmetic is very simple. But not many people are making the capital budget allocations to do it. This rebate program gives them a little boost.”

“The life-cycle return on the investment is so high and the risk is so low, that it would be foolish not to change.”

And, one can conclude that it would also be foolish for contractors not to go after some of this rebate-fueled installation work.

Sidebar: LA DWP Energy-Efficiency Programs

Here is a list of programs offered by the Los Angeles Department of Water and Power:

1. Chiller Efficiency Program Chillers installed by December 31, 2001, are eligible for up to $850/kW reduced beyond Title 24 standards, depending upon when the installation occurs. In addition to this incentive, use of a new, high-efficiency chiller can result in electricity savings of hundreds of thousands of dollars over the chiller’s operating lifetime.

2. Thermal Energy Storage (TES) Program The TES program offers incentives of up to $600/kW of peak demand shifted for commercial and industrial customers who install TES systems that shift building cooling load from peak to off-peak. Tanks store ice or chilled water produced at night to be used for cooling during the day. In some cases, the DWP also pays the cost of feasibility studies — up to $10,000. In the long term, TES reduces building peak demand and thereby utility costs, and can also lower cooling equipment capacity requirements and initial capital costs with the downsizing of the chiller.

3. Hvac Incentives Program Both commercial and residential customers are eligible for cash incentives to tune up or replace hvac equipment. For the a/c tune-up option, the DWP picks up all but a modest co-payment: no more than $60 for commercial units and no more than $40 for residential units. Tune-ups include, but are not limited to:

  • Cleaning evaporator and condenser coils;
  • Inspecting suction line insulation; system airflow and ductwork; and supply fans, motors, and belts; and
  • Measuring and recording electrical performance of package units before and after tune-up.
  • For the new-equipment option, the DWP pays contractors incentives for installing heat pump or a/c units rated at Energy Star efficiency levels, as follows:
  • All units < 24,000 Btuh, $75/unit;
  • Heat pumps of 24,000 to120,000 Btuh, $150/ton; and
  • Other package or split a/c of 24,000 to 120,000 Btuh, $115/ton.
  • Contractors, in turn, offer owners lower equipment purchase and installation costs.

    Commercial Lighting Efficiency Offer (CLEO) For small- and medium-sized business customers, the DWP offers:

  • Cash incentives for the installation of qualifying lighting; and
  • Reduced electricity costs for improved workplace lighting, as well as reduced maintenance costs.
  • For all commercial/industrial customers, the DWP offers cash incentives of up to $600 for every peak-period kW reduced with lighting retrofits, as well as those reduced below existing Title 24 standards for new construction.

    Publication date: 07/16/2001

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