For contractors working to improve the HVAC functionality in Class A buildings, there has never been a time with more opportunity for upgrades, retrofits, and innovative equipment replacement. Control systems are getting smarter, chillers and air handlers are becoming more inherently efficient, and overall advances in building automation system (BAS) technology are helping to create a holistic intelligence capable of learning the routines of a building and its occupants in order to orchestrate a more efficient delivery of heating and cooling resources.

The increasing focus on climate change and its resulting local legislation in cities from New York to Fort Collins, Colorado, have created specific targets and dates for carbon footprint reduction goals. Because of this, as a building’s single largest energy draw, HVAC system efficiency is now receiving more attention than ever.

In response, the HVAC industry is constantly innovating to help achieve these ambitious efficiency goals. However, as any HVAC contractor or system integrator in the commercial building sector knows, the first question a building owner or property manager is going to ask when approached with an upgrade is, “How much is this going to cost?”, and the second question is, “What’s the ROI and resale payback?”

While the answer to that first question can be a number with quite a lot of zero’s trailing behind it, the return on investment for bundled HVAC systems upgrades is significant. The challenge is convincing building owners to commit to a front-end investment. That’s why it’s important that contractors have an understanding of the various bundling strategies and the financing resources available for these types of projects, or at the very least, cultivate relationships with partners who are well versed in this increasingly important aspect of HVAC installation and maintenance.

Loyola Marymount University
Loyola Marymount University needed to upgrade its chiller plant.

Bundling equipment upgrades with the installation of an HVAC optimization system can dramatically increase the energy reduction benefit while reducing the time it takes to recoup the initial investment. One example of how bundling works is a recent collaborative project between Enerliance, a Yardi Systems company, and Trane. Loyola Marymount University needed to upgrade an outdated chiller plant. The cost savings associated with the upgrade were sizeable, but they were not enough to balance the capital investment. However, when bundled with an intelligent HVAC optimization system called LOBOS, the savings were large enough to justify the investment, and the project was given the green light. With the addition of the advanced software optimization system, the project is expected to pay for itself in a fraction of the time originally projected.

Choosing an HVAC optimization system that offers energy efficiency and automatic demand response (ADR) features can increase the overall savings to a point where the total installed costs are almost entirely covered by utility and government rebate and incentive programs. According to the U.S. Department of Energy (DOE), there is about $3.6 billion in rebate and incentive monies available annually.

A recent collaboration with the Kilroy Realty Group resulted in the optimization of six buildings within the Southern California Edison (SCE) territory amounting to around 1 million square feet that are now capable of delivering approximately 1.6 MW of ADR capacity. Because an optimization system such as LOBOS can achieve ADR curtailment goals with minimal impact on occupant comfort, real estate firms like Kilroy can thus use their buildings’ HVAC system upgrades to help them achieve their sustainability goals without significant out of pocket expense, while keeping their tenants comfortable and satisfied.

As the efforts to curtail climate change will almost certainly increase, the demand for contractors who are knowledgeable in the latest energy efficiency bundling options, have a thorough knowledge of BAS technology, and have an understanding of the kinds of financing structures available for the HVAC upgrades will likely increase as well.

Publication date: 2/2/2015

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