Some purchasing decisions are based solely on energy savings, while others are based solely on first cost. So that a value-based purchase can be made, both first cost and operating cost need to be considered.

Table 6 shows the first cost of each chiller system. The costs are for equipment only and include contractor mark-up. The cost of each water-cooled chiller includes a cooling tower, which is required. Tower pricing includes a condenser pump, condenser piping, water-treatment equipment, and controls. The towers were valued at $92,400 ($240 per ton) each. The costs of additional refrigerant monitoring and mechanical-room ventilation are not included.

Life-cycle cost (LCC) is the total cost of owning equipment over its service life. It includes purchase, operation (including energy), maintenance, and disposal costs.4 A true LCC study is beyond the scope of this article. Likewise, the financial impacts of installation labor and materials, disposal, taxes, and saved mechanical-room space are not included.

A life-cycle study period need not be identical to the service life of equipment; in this case, a 15-year time frame was deemed suitable. (It is this author’s view that emerging technology may render major HVAC equipment obsolete long before its normal service life is over.) Resulting life-cycle operational costs include a 2-percent-per-year escalation for utility rates.

Table 7 shows first and operational costs for each chiller. As can be seen, the premium air-cooled chiller offers the lowest combination. Had the water-cooled units been judged based on chiller-only energy cost alone (water not included and first cost ignored), each may have been considered superior to the air-cooled unit in terms of overall value to the owner.