Combined Heating, Cooling & Power Handbook

Electronic Ballasts LAN Systems/Network Interfacing Control Programming/Systems Control Specular and Aluminum Reflectors Process Control T8 Lamps
Lamps Equipment Sequencing or Seasonal Operation Compact Fluorescent Lamps H A P T E R O RT Y and Relative N E Humidity Control Temperature LED Exit Sign Replacements Chiller/Boiler Optimization Control Street Light Replacements Enthalpy Control/Economizers Direct and Indirect HID Lighting Duty Cycling Task Lighting ECHNICAL Load NALYSIS Shedding New Fixture Layout Design Remote Communication Control and Monitoring Occupancy Sensors Preventative/Predictive Maintenance Daylighting Controls Equipment Performance and Energy Use Monitoring Di i C t l
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ll integrated energy and resource cost reduction programs must start with a study that identifies the opportunities and quantifies them in such a way that a scope of work can be developed and financial decisions can be made. Commonly, a two-phased study approach is used for this purpose. Prior to this, an additional third stage, or Scoping Audit, should be added to the process to initially verify if there is viable project potential. It serves to provide early screening of potential measures and leads to the determination of an overall plan of action. Upon completion of the Scoping Audit, an initial group of measures to be proposed to the host facility as the core of the project has been established. This is reviewed by the facility for comment and acceptance. Upon acceptance, the facility commits to proceed with the next phase of evaluation, which is the Preliminary Feasibility Study. This study refines the proposed group of measures and critically tests their feasibility and economics. It includes a fairly comprehensive review of the entire facility. The study team develops a full understanding of existing conditions and formulates energy resource cost reduction and facility upgrade measures that will be proposed to the facility as the basis of the eventual implementation contract. This Preliminary Feasibility Study goes beyond the standard measure categories and includes any appropriate site-specific measures in the evaluation. Once these measures are modified as needed and accepted by the facility, the study team will complete the evaluation of cost and savings through a final investment grade Detailed Feasibility Study. The technical study, or measure evaluation, process from conception to contract can be described as having three phases. 1. Scoping Audit: Identify a general approach to the facility and a core group of measures on which a resource efficiency and cost reduction program can be based so that intent can be established. 2. Preliminary Feasibility Study: Evaluate and refine the core group and any other measures to generate a reliable, quantified proposal so that a commitment can be established to proceed with a final investmentgrade study. 3. Detailed Feasibility Study: Finalize all evaluation
with detailed analysis and measurement to generate an investment-grade proposal so that capital funding commitments can be made and a contract can be executed to proceed with design or turnkey implementation. This process is flexible and can be adjusted to accommodate special conditions. For example, results of previous energy audits may be used to streamline or even eliminate the Scoping Audit and Preliminary Energy Study phases. These two analytical phases the Preliminary Feasibility Study and the Detailed Feasibility Study are to be executed sequentially. They should be based on the groundwork laid in the Scoping Audit phase and be in accordance with a Project Development Plan. This chapter presents step-by-step detail for executing a two-phased technical analysis for the purpose of developing an integrated energy and resource efficiency and cost reduction program. This is preceded by brief descriptions of the Scoping Audit and Project Development Plan processes. The technical analysis study format is presented from the perspective of an independent analytical team performing the work as would be the case with a consulting engineering firm. In practice, such a team can be fully or partially staffed by internal personnel. The team may also be part of an energy services company (ESCo) offering turnkey design-build or performance contracting services. Regardless of the source of the study team, the same basic approach would apply.
OVERVIEW OF TECHNICAL ANALYSIS STUDY PROCESSES

While the technical analysis study process may consist of one, two, or even three phases, quality studies will all generally include the same basic components. These are: Compiling all data collected during the preliminary study phase. Conducting in-depth interviews with the facility energy manager, engineers, and maintenance and operating personnel to assess the operating characteristics of existing energy systems and system improvement goals. Reviewing facility plans for other planned non-energy
Copyright 2003 by The Fairmont Press.
Combined Heating, Cooling & Power Handbook: Technologies & Applications
related capital improvements and renovations. Reviewing long-term fuel and electricity purchasing options available to the facility (this includes all viable power purchase and sales and fuel purchase options). On-site evaluation of all mechanical, electrical, and controls systems associated with targeted application opportunities. On-site direct metering. Organizing and analyzing all data collected. Computer modeling as appropriate both for specific measures and for facility-wide measure interactivity. Utility bill reconciliation analysis. Developing detailed equipment and installation budget cost estimates for each potential application. Developing budget estimates for long-term annual operations, maintenance, repair, and replacement and comparing with existing baseline annual costs. Financial analysis, including structuring of terms for payment to ensure the facility receives the optimum benefit of any grants or utility incentive payments to reduce the project implementation cost. Developing cost-effective savings verification protocols for all proposed measures.
Informational Requirements
While different types of information and different levels of accuracy will be required during different phases of the study process, the same basic types of information will be required to complete most integrated studies. Following is a representative listing of some of the basic information that is typically required. Incremental economic values must be determined for items such as: Electricity Fuel Steam or other heat sources at each thermal level (temperature) required Purchased chilled water Water use Operations and maintenance Personnel requirements, including special training Environmental permitting and emissions controls costs Cost of standby electricity (in electric generation feasibility studies) Cost of capital/debt Cost of insurance Cost/value of required or avoided floor space Downtime costs
Long-term life-cycle factors must also be integrated into the economic analysis for items such as: Cost/value of electricity (internal use and, where applicable, power sales) Fuel supply cost and contract security Escalation of energy, water, and other resources costs and operations, maintenance, and repair costs (and contracts) Replacement costs Salvage value Performance degradation Incremental capital investment costs to be integrated include: Engineering and planning costs Acquisition costs of systems to be installed Cost for modification of existing equipment Demolition and material disposal costs Utility program incentives or penalties Startup and debugging costs and cost of production downtime Permitting, development, legal, and other consulting fees The selection and utilization of tools and the assembly of information are combined in the processes of analysis described in detail below.
INITIAL DEVELOPMENT STEPS

SCOPING AUDIT
A Scoping Audit is a low-cost, brief review of a facility intended to define the energy and resource savings potential and system infrastructure upgrade requirements. It consists of a preliminary review of resource usage and cost records and a walk-through of the facility. The walkthrough may take one or two days, depending on facility size and system complexity. It should include interviews with key facility engineering and operating personnel, general observation of site conditions and major systems, and identification of known problems for which solutions should be sought. Utility rates and supply contracts, operating conditions (e.g., equipment schedules and controls), and major equipment nameplate data are compiled. Local, state, and regional factors are also considered, such as environmental regulations, weather, gas and electric supply, transmission, and distribution conditions. Figure 41-1 is a checklist of numerous efficiency and cost reduction measures that may be initially considered during the Scoping Audit, with the objective being to identify those measures that merit more detailed consider-
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ation. This list is by no means exhaustive, but provides a good start. Manufacturing and industrial process efficiency opportunities are mentioned, but a comprehensive list is not provided, as the range of process equipment and systems that may be encountered is so far reaching. Often, in addition to the core study team, experts are brought in to focus on specific processes that are beyond the expertise of the team members, though generally at a later phase in the study process. As the process advances, results are carried forward, with additional information gathered, and more rigorous analysis is performed during each development phase. Because the scoping phase sets the stage for the remainder of the project, it is wise to dedicate senior staff to conduct these audits. They have the experience to work closely with facility representatives and develop a practical plan for project development that matches the special needs of the facility. A key element of the Scoping Audit is the identification of facility goals and objectives. These are critical factors that must be identified early in the process. They become important screening criteria for review throughout the project development process. In total, the Scoping Audit allows the team to record the following facility needs and objectives through discussions with facility management: Long-range master plans for renovation, expansion, or new construction Cost reduction goals, financing preferences, investment thresholds, and risk tolerance Equipment and energy source preferences Design standards to maintain consistency with existing equipment and spare parts inventories Current operational and/or maintenance problems Equipment replacement needs dictated by age, capacity, or refrigerant phase-out plans Price and risk management objectives for the procurement of energy supplies Constraints such as reliability, safety, sound, aesthetics, historical preservation, and environmental regulations Inadequate comfort control or indoor air quality At the conclusion of the Scoping Audit, a brief report should then be developed to indicate likely areas of focus and establish an overall order of magnitude of the project opportunities. The report should also indicate particular areas of expertise required for the study. Based on Scoping Audit results and the desired level of study certainty, the time, effort, and analyst expertise requirements can be
established. Once a final budget is established and authorization to proceed is provided by the host facility, the senior member of the study team must make a realistic assessment of what can be accomplished and how, and then formulate a Project Development Plan.
PROJECT DEVELOPMENT PLAN

The technical analysis process begins with the establishment of a Project Development Plan. This plan results from the development of an understanding of the goals and objectives of the host facilitys senior management. These criteria act as needed guideposts throughout the study. Objectives may be quantitative attributes, such as percent energy cost reduction figures, replacement of old equipment, and expansion of system capacity. They may also be qualitative attributes, such as preferred fuel and technologies (e.g., renewable resources) and the desire to upgrade or replace certain systems based on potential savings or the desire to improve indoor air quality, working conditions, or overall facility reliability. Constraints are limitations to the acceptance of certain equipment and system characteristics. Constraints may include factors such as reliability requirements, desired degree of maintenance sophistication, adaptability to other facility systems, sound emission levels, or aesthetics, or may be externally imposed, such as environmental regulations or air emission credit limitations. Constraints of both qualitative and logistical nature can be useful for setting boundaries and eliminating certain measures from further consideration. The technical analysis study team should then articulate and prioritize project objectives, framed within the host facilitys goals and constraints, thus establishing the criteria that identifies the most valued system characteristics. If available, facility long-range planning documents should be reviewed in the process. Clarity in this early task of setting objectives will greatly facilitate the efficiency of screening, selection, and the eventual ranking of project opportunities. This process, well executed, will identify the measures that meet the project's objectives and best fit the facility goals. The Project Development Plan should be based on establishment of a budget for the study process. The budget will largely determine the comprehensiveness of the study and allow for designation of staffing assignments. The budgeting process should consider the study objectives, size, and complexity of the facility, potential for savings, and documentation and reporting require-
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ments. If significant investment decisions are to be made, the budget should be adequate to support a process that will produce a high level of certainty in the study results. Typically, a quality study will cost, at a minimum, a couple percent of the ultimate project implementation budget. Assuming a relationship between cost and quality, higher quality studies will mitigate project financial investment risk and also lead to reduced costs in the design phase of the project. The project plan should also indicate the schedule and requirements of the host facility. This will ensure that data is compiled and made available at the appropriate time and that access to the facility is properly arranged. Subject to feedback from facility management and subsequent modifications to the plan and its final acceptance, the study team will proceed with the next phase of the process, which is the Preliminary Feasibility (Phase I) Study.
PRELIMINARY FEASIBILITY STUDY PHASE 1

The Preliminary Feasibility Study is a comprehensive survey of the entire facility to develop a full understanding of existing conditions and identify resource cost reduction and facility upgrade opportunities that merit a more detailed evaluation. The study team should construct a simple, yet accurate, model of the facilitys primary energy systems, distribution systems, end-use systems, and the loads being served. It should gather sufficient data for a preliminary analysis of savings potential and cost, as well as locate potential metering points and areas of focus for potential detailed study. Quality work performed during this phase enables credible preliminary decision making and will improve the accuracy and efficiency of subsequent phases. Key factors identified early eliminate wasted effort in subsequent phases and expedite the entire process, while minimizing the effort and, therefore, cost of this study phase.
Lighting
Energy Management System Upgrades
Electronic Ballasts Specular and Aluminum Reflectors T8 Lamps Compact Fluorescent Lamps LED Exit Sign Replacements Street Light Replacements Direct and Indirect HID Lighting Task Lighting New Fixture Layout Design Occupancy Sensors Daylighting Controls Dimming Controls Exterior Lighting Photoelectric Controls Timed Lighting Controls
Motors/Drives
LAN Systems/Network Interfacing Control Programming/Systems Control Process Control Equipment Sequencing or Seasonal Operation Temperature and Relative Humidity Control Chiller/Boiler Optimization Control Enthalpy Control/Economizers Duty Cycling Load Shedding Remote Communication Control and Monitoring Preventative/Predictive Maintenance Equipment Performance and Energy-Use Monitoring Water and Airflow Measurement Continuous or Predictive Emissions Monitoring
Compressed Air (and Gas) Systems
Electric Variable Frequency Drives Premium-Efficiency Motor Retrofit Downsizing Oversized Motors Motor Idle Elimination Control Motor Power Factor Control Synchronous Motor Power Factor Correction Fuel/Steam Prime Mover Mechanical Drives
Electric Service Systems
Air Compressor Replacement Hybrid (Mixed) Air Compressor Systems Compressed Air Leak Elimination Programs Compressed Air Automation Systems Compressed Air End-Use Optimization Air Motors Compressed Air Storage Systems Compressed Air Drying Equipment Upgrades
Building Envelope
Energy Efficient Transformer Upgrade Primary and Secondary Selective Systems Power Factor Correction Centralized Demand Limiting Controls Power Quality, Protection, and Coordination UPS Systems Energy Monitoring and Communications Systems Multiple Electric Service Systems Solid State DC Converters Load Shedding Switchgear
Wall, Ceiling, and Floor Insulation Reglazing and Window Replacement Storm Windows Window Film Treatments Air Pressure Balancing Convection Loss Reduction/Air Sealing Vestibules/Air Curtains Roof Covers/Reflective Roof Services Vapor Barriers Thermal Shutters Interior/Exterior Shading
Figure 41-1 Checklist of Potential Efficiency and Cost Saving Measures.
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Steam and Chilled Water Distribution Systems
Air-Side Distribution Systems
Steam Distribution Pressure Controls Central Steam/Chilled Water Distribution Repairs Steam Trap Repair/Replacement Humidification System Upgrades Steam/Chilled Water Pipe Insulation Upgrade Piping System Balancing Variable Speed Pumping Primary/Secondary Loops Heat Exchanger Upgrades Radiator Upgrades Condensate System Upgrades Decentralization/Centralization Programs District Heating/Cooling Systems Seasonal Central Plant Shutdowns/Remote Units Isolate Off-Line Systems
Central Plant Supply-Side Systems
DDC System Upgrade Variable Speed Drives on Fan Motors HVAC Air Distribution Modifications Constant Volume to Variable Volume Conversions Rezoning, Zone Control, and Air Balancing Air-Side Economizer Free Cooling Applications Temperature Set Point Adjustments, Setbacks Exhaust Hood Controls and Modification Reheat Controls and Load Reduction Air-to-Air Heat Exchangers for Energy Recovery Destratification Fans Humidification/Dehumidification Damper Controls and Upgrades Clean Room Environment Control Indoor Air Quality Improvements
Energy Procurement Supply-Side Opportunities
Cogeneration-Cycle Applications Combined-Cycle or STIG-Cycle Applications Peak-Shaving Generation Applications Demand Limiting Applications Fuel Cell Applications Solar Energy Heating/Cooling Applications Photovoltaic Applications Wind Energy Conversion Systems Applications Geothermal Applications Municipal Waste and Biomass Applications Electric Battery Storage
Boiler Plant Systems
Overall Commodity Risk Management Programs Pipeline Investment and Construction Utility Bypass Submetering of Individual Buildings Natural Gas Transportation Options Interruptible Gas Purchasing Options Electric Wheeling Options Power Sales Opportunities Negotiated Competitive Electric Rate Options Interruptible Electric Service Options
Chilled Water and Refrigeration Systems
Boiler Optimization/Replacement Burner Optimization/Replacement Oxygen and Excess Air Trim Controls Boiler Fuel Switching/Dual-Fuel Capability Boiler Heat Recovery Radiant Heat Systems Fluidized Bed Systems Condensing Furnaces Boiler Auxiliary System Optimization Boiler Temperature Reset Domestic Water Heating System Optimization Emissions Control Off-Line Boiler Isolation Automated Continuous Blowdown Control Blowdown Heat Recovery Condensate System Upgrade and Optimization Feedwater Delivery Improvements Water Treatment Optimization Thermal (Hot) Energy Storage
Water Resources
Chiller Optimization Chiller Replacement Chiller Energy Source Switching Topping or Bottoming Cycle Chiller Applications Heat Recovery-Driven Chiller Applications Cooling Tower Repair/Optimization/Replacement Cooling Tower Ozone Water Treatment Systems Cooling Tower Variable Speed Fan Application Water-Side Free Cooling Applications DX Unit Replacement Direct Evaporative Cooling Refrigeration System Optimization Refrigeration System Replacement Off-Line Chiller Isolation Chilled Water/Condenser Water Reset Liquid Refrigerant Pumping Thermal (Cold) Storage Air, Water, Solar, and Geothermal Heat Pumps Desiccant Dehumidification Chilled Water System Heat Recovery
Miscellaneous Technologies
Lavatory Fixture Upgrades Low-Flow Sink Aerators and Shower Heads Sink and Shower Timer Controls Water Coolers Elimination of Once-Through Cooling Systems Waste Water Recovery Systems Laundry System Upgrades Cooling Tower Control Irrigation Optimization/Xeriscape Gray Water Systems Reverse Osmosis Demineralizing Systems Eliminate Once-Through Cooling Systems
Process Equipment Automation and Optimization Process Equipment Replacement Process Energy Recovery Systems Reduce Operating Hours for All Energy Systems Dishwashing Equipment and Practices Fuel Recovery Systems Laundry Heat Reclaim and Energy Source Switching Elevator Controls and Upgrades Incinerator Upgrades and Heat Recovery Swimming Pool Covers and Humidity Control Vending Machine Energy Reduction Plug Load Efficiency and Management Programs Alternative Fuel Vehicles
Figure 41-1 (cont.) Checklist of Potential Efficiency and Cost Saving Measures.
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Figure 41-2 summarizes the recommended approach to processing information during the preliminary study phase of the development process. The table includes a description of the information to be gathered, the work to be performed to process and analyze this information, and the results and/or deliverables produced by that work.
provide load and consumption information for sub-units, such as kitchens, boilers, chillers, cooling towers, or process equipment.
C. Utility Rates
The study team should obtain copies of the current tariff books from the utilities serving the facility. In addition to the specific rate schedule that the facility currently operates on, all potentially applicable rate schedules should be identified and entered into computer spreadsheet format to simulate how utility bills are actually calculated. This will often be necessary to determine the real impact of modifications under consideration. Certain changes could affect the overall cost of fuel or electricity for the entire facility. The study team should also conduct an evaluation of utility rebates that may be available. Advanced knowledge of the mechanics and magnitude of rebate and incentive program offerings may increase the accuracy of the screening process and alter the focus of the study. Assessments should also be made of the marginal costs of electricity, fuel, and steam from local utilities. On-site cogeneration, peak shaving, load shifting, gas transportation, and electric wheeling options should all be considered in the determination of prudently anticipated electric and fuel cost reductions. Cost reduction potential will be a function of the ability to negotiate lower rates based on the competitive options available to the facility or the savings achieved through self-generation (e.g., cogeneration, peak shaving, etc.), electric and gas brokering, or forms of utility bypass. Establishment of current and anticipated energy rates and alternative rate structures will establish a cost range within which potential measures can be screened.
DESCRIPTION STUDY
OF
PRELIMINARY FEASIBILITY
There are 9 main steps that should be executed during the Preliminary Feasibility Study phase. The following discussion describes each of these steps, including the methods, work effort, and results produced during each step of the Preliminary Feasibility Study.
STEP 1. ADVANCE DATA COLLECTION

Before the study team goes on-site, information should be collected to familiarize the team with the facility and provide guidelines for identifying measure opportunities. Advance data collection can typically be defined by four types of data:
A. Previously Completed Studies

While earlier studies may have a different focus, they often provide a source of raw and qualified data. Previous studies can be of particular value by providing information about energy system issues of special importance to the facility and by offering alternative perspectives emerging from differing analytical approaches. However, caution should be taken not to formulate pre-conceived notions prior to the analysts own site investigation.
B. Utility Information
The study team should secure monthly bills, including electricity, fuel, waste disposal, water, and sewer, for the most recent two year period. In addition to offering an aggregate picture of use and seasonal variation, a review of the bills may uncover inconsistencies, such as multiple billings or seemingly inappropriate rates. Further examination and clarification may reveal important limitations, such as an inability to combine electrical services or delivery capacity constraints. Computerized records of daily, hourly, or 15 minute demand and consumption may also be available from the electric or gas utility; they provide a deeper picture of load shape and variation patterns. The utility information compiled during this step provides the basis for on-going load analysis and aggregation work required to fully develop an integrated approach. Where available, internal submeter readings will be collected. These can
D. Site Plans and Major System Drawings

Available copies of site plans of the entire facility should be obtained and studied for the purpose of identifying the location of each area to be addressed in the study. Distribution system and central plant schematic diagrams and equipment schedules should also be obtained to provide a general understanding of those systems. Particularly valuable before embarking upon a site visit are equipment schedules for energy intensive equipment. Reduced scale floor plans are often a useful aid in preliminary study work (for example, to keep notes on locations of equipment or to assist in compiling lighting inventories). If these are available, they should be collected and distributed to the study team in advance.
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Category Utility Information
Information and Data Gathered

Two-year billing history (annual consumption and demand for electricity, fuels, purchased utilities, water); Copies of actual bills; Utility rates; Copies of the current tariff books Nameplate data, operating and/or computer trend logs and/or maintenance contracts; Known maintenance or operational problems; Pressure, flow, voltage requirements
Scope of Work Performed

Become familiar with usage patterns; Review current rates and service options; Assess marginal, incremental costs; Consider load aggregation supply-side options, such as real-time pricing, interruptible service, etc.
Results and Deliverables

Provides basis for ongoing load analysis; Graphical load profiles, energy use indices (e.g., $/kWh, $/Btu, Btu/sq.ft.); Model to simulate actual bill calculation and accurately predict utility cost savings Retrofit, replacement, or control options for efficiency improvements consistent with an overall master plan for the facility; Load reduction opportunities List of all applicable measures and first level screening for technical and financial feasibility
Equipment
Inspect equipment and gather basic model and operating data; Assess condition, reliability, ability to meet loads
Site plans, distribution system Facility Documentation schematics, mechanical
equipment schedules, control system schematics; Interviews with facility technical, operations, and maintenance personnel; Previously completed studies Field work logistics; Activity schedules; Points of contact for particular resources Long-range facility planning documents; HazMat regulations; Areas of concern List of targeted measures from Scoping Audit; All survey data; Occupancy and activity schedules
Gain general understanding of layout, configuration, and loads served; Begin to confirm accuracy of record drawings; Review and determine status of any applicable measures Develop list of buildings to be surveyed, work out access and communications Brief review for consistency with proposed measures; Identify and record potential problems Prepare measure- and site-specific screening tools; Correlation plots of loads vs. temperatures to give aggregated load profiles and seasonal operating efficiency Establish current OM&R costs; Rule of thumb installed cost estimates Parametric runs of financial model for sensitivity analysis
Facility Needs
Minimal disruptions to facility operations; Efficient use of staff time Preparation for Detailed Study by identifying logistical and environmental barriers Quickly screen cost-effective and practical measures with simple analytical techniques; Can consider more alternatives (e.g., equipment options, fuel types) Capital cost and avoided maintenance cost estimates for new equipment Identify technical and financial assumptions that most affect financial goals Space limitations, site code requirements, site logistics Modifiers to rule of thumb cost estimates
Constraints
Measure Savings
Measure Costs
OM&R records; Gross cost indicators (capacity, floor area, etc.) Preliminary cost and savings estimates; Predictions of future market values Photographs and/or sketches
Financial and Contractual
Design Issues Construction Issues
Establish physical limitations of retrofit construction
Construction-related site difficulties; Assess rigging, piping, Vendor quotes for major equipment; structural modifications, demolition, etc. Facility preferences or recommended contractors Operating conditions (controls, operating schedules, comfort, and ventilation standards) Interviews with facilities staff (all shifts), inspections, review of equipment logs
Operational Issues
Establish clear baseline and confirm with facility management
Fig. 41-2 Summary of Work Effort Preliminary Feasibility Study.
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STEP 2. PREPARATION
OF
SCREENING TOOLS
Screening tools are standardized methods of analyzing opportunities using a mixture of site-specific parameters (such as utility rates) and typical performance characteristics to narrow the field of practical measures in an efficient but reliable manner. Such tools include spreadsheet rate programs capable of quickly determining incremental costs for any change in energy or resource consumption, lighting simulations, cost databases, manual nomographs, and application-specific spreadsheet programs. The rate programs should also be capable of producing various graphs and indices of usage profiles and unit costs. Usage profile graphics are very useful in assessing characteristics such as load factor and daily, weekly, and monthly usage variation. They can also produce meaningful indices, such as cost and usage per square foot and incremental costs (e.g., $/kWh, $/Btu). This type of analysis lends itself to comparison with a database of similar type and size facilities. For large enough studies, the team may develop new tools to address particular requirements of the host or to handle multiple applications of a single technology. In any case, the study team must tailor its screening tools to the applicable conditions of the facility. Another aspect of the preparation is a marginal utility cost analysis, which will indicate the local utility's ability to flex price in competitive negotiations over cogeneration projects, peak shaving projects, fuel switching projects, and gas and electric brokering options. This will provide a sensitivity benchmark for measuring potential project economic performance. While all cost factors may not be available, a reasonably accurate assessment of utility marginal cost can be made from a review of public records. Utility decisions as to negotiated rate offerings are not necessarily driven by marginal cost alone. Therefore, the experience of other similar facilities in the same utility service territory can also provide valuable information on the anticipated behavior of a utility during such negotiations. The goal is to establish a range between current and possible future energy costs for the screening process. Current rate structure alternatives and anticipated changes in rate structures must be considered as well, since savings is commonly influenced by time-specific, incremental energy costs, not average costs. The current movement toward rate stratification and real-time pricing in electricity markets are examples of key elements that will impact the selection of technology applications. Energy rates (as well as rates for other resources, such as water and waste disposal) both cost and rate
structure should not be considered static elements. Therefore, sensitivity analyses based on extensive research of both short- and long-term market trends is a very important part of the study process, particularly when large long-term investment decisions are to be made based on the study results.
STEP 3. FIRST SITE VISIT

While it is possible for documentation and operator information to provide great detail regarding the operation and layout of a facilitys energy systems, it is necessary for the study team to become familiar with the site. Scheduling of the initial site visit should be made after the evaluation of the preliminary data collection has been completed. The site-survey data collection process should be separated into two parts: data retrieval and data validation. Upon developing a prioritized list of buildings and systems to be evaluated in the preliminary study and reviewing available utility bills, the study team should proceed with a physical site visit. At the onset, the study team should get an overview of the physical layout of the facility, work out access and communication issues, and establish a base of operations. Team members should be given assignments for buildings (or building zones), systems, and other investigation tasks and a plan should be established for daily review of findings, assembly of data, identification of problems and missing information, and realignment of tasks. During the course of the visit, whatever preliminary data was not procured in preparation for the site visit should be obtained. Making summary data assumptions too rapidly may cause time delays at a later date. It is, therefore, important to develop an early understanding of control systems, operating conditions, and schedules and to establish rapport with key facility staff. Potentially hazardous materials, such as asbestos, ammonia, halogenated hydrocarbons, PCB ballasts, and lead piping should be identified with the aid of installation documentation and facility personnel. Potential type, location, and amount of hazardous material should be estimated and recorded during the site visit for further professional investigation should the project proceed. The study team should identify areas where cost reduction may be realized by repairing, modifying, or replacing equipment or installing new equipment and facilities. The study team should identify measures that do and do not warrant further efforts and whether or not a Detailed Feasibility Study is warranted to determine technical and/or cost feasibility.
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A. Facility Equipment
The study team should review the operation, age, and condition of equipment on-site and, if available, historical and maintenance and operational records. This begins the development of perspective for the number and types of measures that may be applicable. Replacement for conservation purposes is always more financially acceptable if the equipment is a known maintenance problem or is scheduled for replacement. Determination of whether new equipment is required for replacement purposes, expansion, or simply for operating cost savings will impact the financial analysis of the potential application. The initial equipment inspection should include observation of the conditions and operations of major systems and their primary components. Examples are: Lighting systems: Lamp/ballast types, condition, efficiency, light levels, color rendition, etc. Cooling towers: Capacity, cold basin water conductivity, current load, projected load, condition of structure, fill, fan drive, water temperature (fan) controller, water chemistry controller, and hot basin water distribution. Distribution systems: Chilled water, condenser water, hot water and steam, electricity, compressed air and distribution temperatures, pressures, volumes and voltages, and control schemes for each major system. Pumps: Service, basic type, design point (head and flow), observed pressure drop, fixed speed or variable speed, method of flow control for part-load conditions. Electric motors: Efficiencies, loads, service. Boiler, chiller, and compressed air systems: equipment condition, capacity vs. maximum and minimum loads, standby capacity, leaks and losses, environmental concerns, end-use load reduction opportunities, configuration vs. optimal resource use, backup and interchangeability, energy recovery, and thermal storage. Process systems: Equipment condition, method of operation, capacity vs. current and anticipated loads, end-use reduction opportunities, and fuel substitution. Control and monitoring systems: Type of system, active control enhancements and potential for expansion to control and/or monitor new systems, compliance with current codes and standards, and existing energy management strategies. Air handling systems: Type, capacity, age, typical operating settings and positions, condition, configuration, zoning, and ability to meet loads and maintain required environmental conditions.
Unitary HVAC equipment: Equipment condition, capacity vs. maximum and minimum loads, environmental concerns, load reduction opportunities, configuration vs. optimal resource use, energy recovery, and control system improvements. The make, model, and serial number of all primary equipment under study should be obtained during the site visit. Often, the serial number is most important for larger equipment, since most manufacturers are able to supply the original design specifications of a particular unit. Copies of representative on-site logs and records of checking and testing by maintenance personnel should be obtained and reviewed to gain understanding of operations and condition. In addition to the equipment review, the study team should collect and review information on existing operations and maintenance contracts for the equipment. Compliance with current or pending equipment and operational standards and codes should also be considered. This may include, for example, air or effluent emissions, safety, and minimum outside air requirements.
B. Facility Site Plans

To the extent that they are available, accurate, and upto-date, facility drawings of the current site configuration will provide the study team with a preliminary understanding of the systems located within the facility and how they were designed to interact. These drawings also provide a basis for determining the physical limitations of retrofit construction from mechanical, electrical, civil, and architectural perspectives. System drawings and schedules that were identified but not located during site visit preparation should be located at this time. Copies of central plant, distribution, and end-use mechanical and electrical drawings and schedules should be procured for detail of the layout of the facility and how its utilities are delivered. As part of the site visit, the study team should confirm the accuracy of the record drawings in terms of actual physical layout and system configurations. Deviations from the record drawings are common and must be identified to eliminate erroneous conclusions by the study team. Open areas shown on drawings are often used by equipment installed subsequent to plan development and therefore, may not be available for expansion purposes. At this point, deviations should be identified from empirical observations or non-extensive testing procedures. Any deviations that cannot be reconciled should be targeted for more in-depth testing during the detailed study.
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During the initial site visit, special attention will be paid to those factors that will limit or eliminate the feasibility of certain application options. Space limitations, site code requirements, and site logistics are often critical factors in the determination of system viability. Early elimination of system alternatives allows for a more streamlined study focus. A fairly extensive data retrieval procedure should be employed to gauge feasibility for the maximum number of system options.
C. Interviews with Operating Personnel

Extensive interviews with knowledgeable management and front-line engineering, operating, and maintenance personnel are a critical aspect of the study process. System operators can provide valuable and timesaving detail on how and when equipment operates, the control parameters used, equipment capabilities, known problems that require solutions, and how and where operating records are kept. The personnel that have daily responsibility for the facility's systems should always be considered an invaluable source of information. Their talent and knowledge should be outwardly appreciated and respected by the analyst. It is, however, important to corroborate information provided through interviews with several persons and through review of records. For multi-shift operations, it is important to interview personnel from each shift. It should not be assumed, for example, that day shift personnel have a full understanding of night shift procedures. If the analyst wants to know about space conditions or whether banks of lights and other equipment are shutoff at night, and this data is not clearly indicated by energy management system records, the best way to find out is to meet with night shift personnel during their shift. The analyst should also seek recommendations from the operators, as well as information as to what obstacles may be encountered when considering system modifications and changes in operating procedures. Project measures that have been tried and failed in the past should be discussed with an attempt to understand why they were attempted and why they failed. These interviews should continue throughout the study process. The analyst should continually review observations with operating personnel and seek to achieve a more comprehensive understanding of how things are done at the facility and why.
STEP 4. DATA RETRIEVAL

In addition to monthly and annual load data, load characterization requires evaluation of electric demand
records. Many facilities keep a logbook on a regular schedule, which can supply this data. Review of these records with the operators and, if possible, a walk-through of data collection procedures will provide the study team with a firm understanding of the numbers and their reliability. This data is often the only available long-term data on the facility. The team should also investigate what type of record keeping is done by operations and management for energy and water use and cost. Frequently, numerous inhouse meters and settings are recorded and logged, either by shift or hour. These may include softener water flow, boiler firing rate, status of boilers and chillers, steam flow, generator output, various supply and return temperatures, fuel use, tower make-up, weather, etc. Other data to be collected includes steam balance, water balance, air balance, and other such reports, which may have been generated on a one-time or periodic basis. Other forms of historical data include recording charts (such as strip or circular charts), computer operated recording forms, or direct digital control (DDC) systems. Computer systems generally allow for storage of trend logs, which can be downloaded, to electronic media or to hard copy. If trend logs are not stored, it may be possible to develop and produce them for the period of study. Also, the utility company is a useful source of historical consumption data. Both electric and gas companies often maintain long-term hourly records of large customers; they use this data for billing and planning purposes and will generally make it available to the customer. It is important to note that any data obtained from logs or computer outputs will only be as accurate as the equipment (sensors) providing the data. Operators will often not know the accuracy of such equipment, but will depend on its repeatability. However, it is best to check current readings with good portable calibrated gauges. These readings can serve as a reference point for interpreting or adjusting previously collected data. In order to ensure accurate readings, it is essential that proper measurement protocols be followed (e.g., the distance of flow measurement sampling sensors from elbows). The best way to check temperatures and pressures, for example, is with one of each type of probe. In most cases, it is the difference between two readings that is of importance, not necessarily the actual value. Using one gauge eliminates errors resulting from two gauges being calibrated differently. If two gauges are used, the location of the gauges should be reversed after a reading to make sure that the readings do not change.
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It is important to know the magnitude of all loads in discrete time periods so they can be related to occupancy schedules, utility rate periods, and weather patterns. It is also necessary to identify peak capacity requirements and coincidence of peak demand. Operations, maintenance and repair (OM&R) records are also important data. When replacing equipment, it is necessary to determine the costs that will be avoided so that it may be compared to the costs required for maintaining the new equipment. All related operations costs should also be considered, including in-house and contracted personnel costs and material requirements, such as chemicals used for boiler or cooling tower treatment. During the site visit, it is often helpful to take photographs of all major systems, representative samples of smaller equipment, and facility layout and structural features. To check that identified application opportunities will be logistically feasible, it is necessary to identify the basic logistical components involved with any major system installations, including significant structural obstacles. In addition to collecting system data, preliminary building envelope data for walls, windows, doors, roofs, etc., should also be taken, supported by photographs and/or sketches to facilitate identification of opportunities to make improvements to the thermal properties of the building envelope. An inherent benefit of the site visit is that a record of the conditions of the building envelope will be produced and may be used by the facility as a blueprint for future facility upgrades not necessarily included in the original scope of work.
STEP 5. DATA VALIDATION

All data collected during the site visit should then be reviewed to identify any missing or inconsistent information that will need to be collected and validated during later follow-up visits. The subsequent data validation process will determine if the collected data is consistent with the findings of the study team and if the various data components are consistent with each other. Primary data should be entered into electronic format to allow for efficient review and preliminary analysis. Graphical plots of data, such as load vs. outside air temperatures, should be checked for correlation. Thermal (heat) balance and other operating standards should be reviewed for consistency with the site visit observations and with energy and other resource usage records. The facility record drawings and system schedules should also be carefully reviewed at this time. Any discrepancies that cannot be resolved should be marked for
further scrutiny and reviewed with operating personnel at the facility. At this point, an internal report should be generated to summarize the status of the preliminary study and identify the tasks to be completed during follow-up site visits. As part of the continuing load analysis and aggregation effort, the magnitude of all loads will be developed in discrete time periods so that they can be related to occupancy schedules, utility rate periods, and weather patterns. Peak load requirements and coincidence of peak demand will also be studied. All of the log and record data will be processed into load profiles in electronic format for further graphical and statistical analysis. These profiles make a valuable planning tool for facility managers and the study team should make the data files available upon request. Additionally, decisions about energy sources must be tied to the understanding of the facilitys overall heat balance. This is particularly important when considering the application of cogeneration cycles or other heat recovery technologies. A decision as to whether or not to expand or reduce low-pressure steam usage or a decision to convert an electric heating application to a thermal application (or vice versa) will greatly impact the heat sink available for effective use of recovered heat. Hence, topping cycles and other processes that use energy at its highest level of availability (lowest entropy) must be considered interactively with bottoming cycles and processes that use energy at lower levels of availability (higher entropy). A different type of example is a situation in which one is considering some type of end-use heating application (e.g., process use, water heating, etc.). If this location is being served by a central steam distribution system, converting from a steam-technology device to a direct fuel or electricity-driven device would lower the demand on the central steam system. In the case where consideration is being given to decentralize and eliminate the entire system or portions of the system, this may be an excellent opportunity. Conversely, if the system is to remain in place and is already underutilized, this conversion may adversely impact overall system efficiency by, for example, further reducing loading on boilers that are already experiencing efficiency degradation due to low-load operation.
STEP 6. FOLLOW-UP SITE WORK

During follow-up site visits, the study team should bring a list of questions derived from the data validation process and subsequent internal reports, and research answers on-site. Interviews with operating personnel should
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be conducted to finalize understanding of system operations and to resolve any discrepancies that have been identified. Measurement and testing procedures should be employed as deemed necessary by the study team so that effective application opportunity screening can be performed. At the conclusion of the follow-up site visit, a master list of application opportunities should be compiled. Each potential opportunity should be accompanied by the collected data that will be used for screening analysis.
STEP 7. APPLICATION OPPORTUNITY SCREENING PROCESS

From the master list of identified potential application opportunities (which can be based on the checklist of potential measures presented in Figure 41-1), different types of screening methodologies can be employed to qualify measures as eligible for inclusion in the detailed study. As part of the site visits, project implementation costs should also be estimated by qualified members of the study team. Once preliminary costs are established, the screening tool models developed in the preparation phase will be used to evaluate the economic performance potential of each application opportunity. Levels of certainty will vary amongst technologies and will depend on the quality of the data available during the site visits. Lighting system upgrade applications, for example, can be assessed with a fairly high degree of accuracy during the preliminary study phase. Based on record drawings or site visit take-offs, fixture counts can be established along with existing wattage. A reasonable assessment of hours of operation can be identified through interviews with operating personnel. Based on these data and the difference in wattage between existing fixtures and logical replacements, monthly usage and demand savings can be determined with reasonable accuracy. Standard cost estimates for equipment and installation can also be done in a fairly accurate, yet cost-effective manner. In contrast to lighting systems, central chilled water, steam, or hot water system upgrade programs present a broad range of complexities that tend to obviate accurate prediction of economic performance. Quantification of cost and savings is complicated by the variations in cooling or heating loads over time and the changing performance of chillers and auxiliary equipment with load and ambient conditions. With cooling systems featuring electric chillers, the structure of seasonal, time-differentiated demand-oriented utility rate schedules adds to the complication. The central plant screening process includes utility bill analysis, which will often reveal a cooling or heating
related load profile, review of operating records, and cooling or cooling degree day analysis. Discussion with operating personnel may also be extremely helpful. Ultimately, a gross estimate of effective full-load hours (EFLH) of operation can be generated and applied to an estimated average efficiency or COP for the system. With cooling systems, it is common to use the integrated part-load value (IPLV) to establish commodity usage. For electric chillers, peak demand, inclusive of ratchet effects, will significantly impact operating costs. An assessment of the peak demand on a monthly basis is therefore also important in developing reasonable estimates. Alternatively, a preliminary model of the chiller loads, systems, and equipment can be developed using the many competent building simulation software packages available. While much of the detail (e.g., metering data) required to produce highly accurate results may not yet be available, default values can be used to allow for development of reasonable estimates without a great deal of time expenditure. If simulation modeling is ultimately to be used during the Phase 2 detailed study, it may be advantageous to begin using it at this stage, thereby allowing for continual refinement as more validated data becomes available. With chiller replacements, there are also numerous options that should be initially considered, including a variety of electric chillers, fuel-fired, steam- or hot waterpowered single-effect or double-effect absorption chillers, and a variety of prime mover-driven chillers, with and without use of heat recovery. Options for use of thermal storage should also be considered. Project costing estimates should be developed with a similar level of accuracy as the savings estimates. Generalized equipment costs can be estimated based on rules of thumb for a given equipment type and capacity (e.g., $/ton, $/hp, etc.). Installation costs are modified for identified site difficulties, such as rigging, piping, and structural modifications. Preliminary estimates should also be made for projected OM&R savings and additional OM&R costs.
STEP 8. SUMMARY
OF
FINDINGS
Upon completion of the preliminary screening process, a summary table should be developed for each application opportunity. Generally, the table will include estimated capital costs and rebates, which will yield net capital costs, and estimated costs and savings for energy, OM&R, and other resource, which will yield net savings. From the net capital costs and savings figures, simple pay-
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backs can be computed for each project opportunity. Given the fast changing energy market, it is often useful to construct two sets of preliminary economic performance values: the first based on current conditions and energy supply costs and the second on rudimentary consideration of measure interactivity and future energy supply costs. The two sets of values will establish a range from which each opportunity can be judged. Based on the results of the economic performance screening process, measure recommendations can be categorized as: Likely appears to be desirable from an economic and practical standpoint and has been generally well received Marginal may be deficient in one of the criteria categories, but is strong in the others Rejected has had initial interest and support, but will clearly not pass one or more of the critical tests for implementation This summary will be the tool used in final discussions with the host facility prior to determining the proposed portfolio of measures. The facility may have overriding interest to accept or reject individual measures in the recommendations. At this point, it is important to eliminate projects that fail preliminary screening in order to reduce the cost and time associated with the detailed study phase of the process. Application opportunities that are ranked as marginal can be further scrutinized with an additional round of screening in an effort to re-categorize them as either likely or rejected. Once estimated energy savings, system life, construction costs and utility rebates, and energy price sensitivities are established, simplified life-cycle analyses will be performed as the final economic screening in the preliminary study phase. These financial analysis techniques are discussed in Chapter 42.
inspection details, determination of problem areas, and recommendations to resolve the problems. Finally, it should include a detailed breakout of qualified application opportunities, inclusive of preliminary cost and savings projections. The report should include estimates of the potential energy (e.g., Btu, kWh, kW, etc.), water, and cost savings that can be expected by implementing the recommended measures and the project implementation costs. Type, location, and amount of potentially hazardous materials (HazMat) should be documented, along with a proposed method of labeling, handling, removal, and disposal of the HazMat and associated costs. The report will include a narrative describing the proposed applications in concept, accompanied by photographs and preliminary sketches for the qualified opportunities, descriptions of the equipment to be supplied, and details and scope of work for the subsequent detailed study. The report should also include a plan and budget for proceeding with the detailed study phase. A timeline should be established for the detailed study and study team members and duties should be assigned. A list should be prepared of all remaining data to be collected. A preliminary determination of metering points, procedures, and schedules for on-site activities should also be made.
DETAILED FEASIBILITY STUDY PHASE 2

The feedback and direction provided by host facility management after review of the initial study work will help guide the study team in refining the overall project scope and limiting the focus to those measures that the facility wishes to include in the final investment-grade study or proposal. The Detailed Feasibility Study is initiated following acceptance of the Preliminary Feasibility Study and authorization to proceed with this final development phase effort. In the case of a standard plan and specification type approach to project implementation, the Detailed Feasibility Study would typically be performed by an engineering firm under contract with the host facility. It would serve first as a basis of making internal funding commitments and then as a basis of commissioning a design-engineering firm (sometimes the same firm) to develop the design and construction bid documents. In the case of many types of energy services arrangements, the Detailed Feasibility Study results in a firm proposal from an ESCo to perform a turnkey design-build project. Hence, the study must be highly detailed to allow the host facility to make a major investment commitment and to ensure that
STEP 9. PRELIMINARY STUDY REPORT

Upon completion of the screening process and organization of the summary of findings, a preliminary study report should be delivered to management detailing the study teams findings and project recommendations. The report can be used to document all significant aspects of the initial study. This may include, but not be limited to, problems under investigation, personnel contacted during the site visits, relevant information obtained from facility personnel, availability and quality of as-built drawings, maintenance records, measurements taken, equipment
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the ESCo has mitigated its own risk and can stand behind its guarantees of price and savings. Either way, the Detailed Feasibility Study should produce an investmentgrade final report. An update to the Project Development Plan is made at this stage. The Plan should now reflect the final package of measures and the associated work effort required to prepare detailed analysis of costs and savings. Having more clearly defined the overall project scope and limited the focus to opportunities that have a realistic chance of being implemented, the detailed study phase proceeds with more rigorous on-site investigation, inclusive of direct system metering, and more in-depth, precise analysis. This is followed by the development of a preliminary design, a detailed scope of work (SOW), and firm construction pricing, along with finalized energy baselines and, where applicable, final OM&R and M&V Plans.
Long-term life-cycle factors must also be integrated into the economic analysis. Incremental capital investment costs must be integrated. Figure 41-3 illustrates the depth of information gathered and processed during a Detailed Feasibility Study. It can serve as a checklist of information items to be acquired and reviewed.
MAIN ANALYTICAL COMPONENTS

The three main analytical components of a comprehensive Detailed Feasibility Study are acquisition and analysis of metered and field-collected data, computer modeling, and utility bill reconciliation. Extensive direct system metering and recording activities have a firm scientific basis, but also involve hands-on activities. It involves the practical determination of what to meter, where to meter it, how to meter it, and for how long. It involves activities such as selecting and installing probes and data acquisition systems. Examples include taping voltage and current, installing temperature probes into pipes, setting airflow measurement devices into ducts, over registers, and into exhaust hoods, and measuring power and energy, fuel flow, etc. Critical to the design and application of an effective metering process is the understanding of how the acquired data will be used. Temperatures, flows, and power requirements of equipment must be analyzed in such a manner that reveals the actual operating characteristics and resource usage of existing equipment and allows for proper sizing of new equipment, development of optimal operating strategies, and determination of associated costs and achievable savings. This process can also be extended to the development of baselines and system performance prediction tools to use for savings verification programs. The measurement process, be it baseline or postimplementation, continues for a period long enough to encompass the normal variation of the significant factors, or independent variables, which determine the loads and operation of each system. When system-specific metering techniques are used, the senior analyst will make a determination as to the duration of the metering activities. For equipment serving loads that operate consistently over time, short-term metering will be most appropriate. For systems whose loads fluctuate, such as those affected by weather, data should include the key variables that are believed to impact load variation. This data will be gathered through intermediate or even long-term metering, depending on variations, the magnitude of the project,
OVERVIEW
Following is a representative listing of some of the basic technical and financial information that will be required. This is proceeded by the discussion of the main analytical components of the Detailed Feasibility Study.
Technical Information
Technical information will be gathered, reviewed, and confirmed through observation and inspection. Missing data will be identified. Data will be used to develop engineering assumptions for analysis of energy savings. Facility management and operations information will become constraints to ensure that technology application concepts are compatible with standard facility practices and that recommended measures enhance, rather than burden, facility operations. Technical information resources include the following: Facility documentation will be reviewed and its accuracy confirmed. Operating conditions will be assessed through observation and interviews with facility staff. Operations management structure and practice will be reviewed.
Financial Information
Detailed financial information will be needed as input to the financial models. They will provide more parameters to predict life cycle costs and cash flows than are needed for simple payback evaluations. Financial data review involves the following: Incremental economic values must be determined.
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Technical Information Facility Documentation

Mechanical, electrical, and architectural drawings; Site plans and floor plans Billing histories for all metered usage (including purchased CHW, steam, and water) Utility rates (copies of the current tariff books) Records from facility-owned submeters Demand profiles, if available (24 hour demands for selected day types) Equipment inventory (e.g., from PM programs); Nameplate and manufacturers data Automation system documentation (points lists, manuals, diagrams, sequences) Previous submittal packages and equipment operating manuals Reports from previous studies Operating logs, EMS computer trend logs, maintenance records, balancing reports Space inventory by function, with location and floor area Environmental control standards (temperature/humidity, ventilation, lighting) Operating schedules (daily, weekly, seasonal hours of operation) for each space Known maintenance or operational problems; Critical deferred maintenance items Shortfalls in equipment capacity or distribution system bottlenecks HVAC control strategies (system operating schedules, setback, and reset schedules) Central equipment operations (sequencing of equipment and auxiliaries, fuel sources) Maintenance practices (standard preventative or predictive maintenance intervals) Work order scheduling systems; Staffing levels Service contracts with outside firms Long-range facility planning documents, such as a Master Plan Design standards (vendors and materials, labeling/tagging, controls compatibility) Applicable regulations and codes Operating budgets (utilities and maintenance)
Operating Conditions
Operations Management
Financial Information Incremental Operating Costs

Electricity, natural gas, purchased chilled water, other fuels Steam or other heat sources at each thermal level (temperature) required Water use Environmental permitting and emissions controls costs Cost of standby electricity (in electric generation feasibility studies) Cost of capital/debt and cost of insurance Cost/value of required or avoided floor space Reliability and redundancy requirements and associated downtime costs Technical project support (engineering, planning, commissioning, M&V costs) Costs of systems to be installed with quotes from vendors and subcontractors Energy delivery infrastructure and generation equipment Turnkey construction costs with construction management, demolition, disposal, etc. Utility program incentives or penalties Startup and debugging costs and cost of production downtime Permitting, development, legal, and other consulting fees Cost/value of electricity (internal use and, where applicable, power sales) Natural gas and fuel supply cost, contract commitment, and contract security Escalation of energy, water, and OM&R and replacement costs (and contracts) Replacement costs and salvage value Performance degradation
Capital Investment Costs
Life-Cycle Cost Factors
Fig. 41-3 Checklist of Review Items for Detailed Feasibility Study.
and the required degree of accuracy. The resultant data can be statistically analyzed to determine the effect of those independent variables on resource consumption and demand, deriving their coefficients in a multiple linear regression. Since specific metered data is gathered during a given range of operating conditions, this analytical process allows for the development of an operating performance
prediction tool to be used to reflect what the usage and demand, and therefore operating cost, would be under any given set of conditions. Examples of independent variables include weather conditions, occupancy, and process production quantity. From this, the baseline performance and usage for each system can be developed, which at any time is the original measured consumption given a set of values for the independent variables. The
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same process can be followed for establishing post-implementation performance. Computer building load, system operation, and economic analysis simulation modeling using software such as DOE-2, TRACE, or HAP is also a valuable tool in the detailed study process. It allows for interactive analysis of multiple measures and simulation of the impact of proposed and actual changes in facility-wide systems and operations over time. It also allows for rapid testing of numerous potential options for each application type under varying conditions. Simulation modeling automatically accounts for measure interactivity, time-of-use utility rates, independent variables (such as weather), and the effect of a wide range of potential system optimization strategies. Simulations of conditions that can critically affect building and equipment loads (e.g., solar, partial shading, variable schedule-dependent activities, building mass, multiple HVAC optimization strategies, etc.) are straightforward with such modeling and can be arduous and less accurate with other methods. When based on the results of field inspection and calibrated with actual metered data, modeling will allow for consistently reproducible results of the effects of long-term system changes at the facility. Utility bill reconciliation refers to the matching of analytical results, such as those provided by simulation software, with actual historical records. When adjusted for any given historical years operation, utility rates, and weather, the baseline model should be able to reproduce the actual costs shown in the historical records. If the predicted and historical results agree (i.e., 5 to 10%) for a range of facility activity, the baseline model is validated. The analyst should seek to reconcile all utilities on a monthly, annual, and peak demand basis to ensure model validity. When these three main analytical components are used together, the metered data and utility bill data provide a factual basis by which to calibrate the model so that results are fully grounded in reality. When so validated, the computer simulation model can then provide a highpowered tool capable of evaluating measures interactively to produce optimal system configurations and can rigorously analyze savings projections. Figure 41-4 provides a summary of the work required for executing the Detailed Feasibility Study. The table includes the work performed to process and analyze the technical and financial information listed in Figure 41-3, and the results and/or deliverables of that work.
DESCRIPTION STUDY
OF
DETAILED FEASIBILITY
There are 14 main steps that should be executed during the Detailed Feasibility Study phase. The following discussion describes each of these steps, including the methods, work effort, and results produced during each step of the Detailed Feasibility Study.
STEP 1. SELECTING THE APPROPRIATE ANALYTICAL TOOLS

The first step in the Detailed Feasibility Study is to select the appropriate analytical tools. While these may have been partially determined during the preliminary study phase, they must be reassessed based on the results of the Preliminary Feasibility Study. Given the complete range of analytical tools available (from simple spreadsheets to customized engineering calculations to detailed hourly simulation programs), the experience of the study team will be drawn upon to perform feasibility studies that produce efficient effort with accurate results. The level of analytical complexity and, therefore, the cost of that effort must be justified by the level of certainty achievable and the potential for savings at the facility. In some cases, the full range of activities described above is necessary, given the magnitude and complexity of the application. In other cases, such comprehensive analysis is not cost-justified and less rigorous methodologies are appropriate. If the study process requires a high cost relative to the potential savings, it may be judged inappropriate on economic grounds. Instead, use of engineering estimates, stipulated hours of operation, and many of the techniques described in the preliminary study approach are indicated. There are some standardized, menu-driven study models that may provide the most cost-effective analysis method for the feasibility study for lower cost, lower savings items. These models may have pre-set fields for entry of site-specific inputs that are supported by a series of default assumptions. Similar proprietary models, developed by analysts, are also sometimes used. The more effective versions provide numerous default values that can be overridden or modified based on the level of detail available to the study team. However, in the case of applications involving significant capital costs and savings potential, along with numerous site-specific considerations, the rigorous approach described above is usually quite cost-effective, with the results being the selection of the optimal system
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Category Utility Information
Scope of Work Performed

Graphical analysis of profiles for load management and self-generation or cogeneration opportunities; Rate review, fuel source assessment, supply options; Reconcile models to highest resolution data available, at least to monthly usage and peak demand Determine metering points, methods, and durations; Establish data analysis plan in advance (e.g., regression); Include auxiliaries (e.g., pumps); Establish equipment performance curves Verify accuracy of documentation; Refine measure concepts to reflect additional information Accommodate all planned changes into measure analysis; Review recommended measures against these requirements Evaluate compliance impact on measures; Review measures for compatibility with end-use requirements Determine optimal level of analysis effort; Develop energy analysis models (building simulations and/or custom applications); Calibrate to billing history; Supplement with metering Review construction conditions with estimators and/or subcontractors Run financial models with all first costs and recurring costs
Results and Deliverables

Fuel switching opportunities, alternative suppliers, alternative procurement strategies; Models are accurate and reflect actual usage patterns and end-use consumption
Equipment
Verified baseline usage encompassing normal load variations; Higher certainty in savings estimates
Facility Documentation Facility Needs Constraints
Improved accuracy; Better screening for feasibility; Time savings during later phases Load shape impacts will be included; measures may be altered May uncover opportunities for beneficial changes in operating strategies (e.g., pressure reductions, distribution system changes) Accurate analysis of complex measures using validated model; Based on accurate load profiles; Includes interactive effects; Complete cost savings calculations using full rate structures Preliminary estimates ( 20%) for screening and refinement Cash flow projections, including finance charges, M&V costs, OM&R savings; Construction financing, draw-down schedule Measures can be designed to meet standards; Conceptual designs and equipment selections
Measure Savings
Measure Costs Financial and Contractual
Design Issues
Review measure concepts for equipment locations, utility service, and other design feasibility issues; Review impact and test economics of emissions monitoring and controls Review measure impact; Prepare installation and commissioning budgets Estimate current and future OM&R costs; Assess personnel requirements, including training
Construction Issues
Detailed cost estimate with line item breakdown, materials, and labor by trade, plus other costs; Installation schedule OM&R savings incorporated into life-cycle cost analysis; Preliminary training plan; Analysis reflects actual operating strategies (e.g., sequencing of chiller pumps)
Operational Issues
Fig. 41-3 Summary of Work Effort for Detailed Feasibility Study.
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applications and minimization of technical and financial risk to all parties. The level of confidence achieved will also allow a smooth transition to the design and construction processes, given the wealth and accuracy of the known information. A more rigorous approach may also be beneficial to M&V efforts, since the detailed performance models may be used to extrapolate short-term metered data to longerterm savings results. When warranted, a model such as DOE-2.1 may be selected in favor of other methods, such as temperature bin calculations, for calculating building energy performance because: It is a dynamic model. It accounts for seasonal solar loads and the associated effects of building features and complex exterior shading. The contribution to cooling load from changes in relative humidity are simply accounted for. Varying hourly loads due to occupants, lighting, and equipment is done automatically. It accounts for equipment performance at varying load and outdoor weather conditions, accounting for key factors, such as part-load performance and condenser relief at outdoor air temperatures lower than design. It facilitates quick review of daily, monthly, and annual load profiles and trends for any modeled element. It facilitates evaluation of multiple, interactive measures. A complete cost/benefit evaluation will be performed to select the best tool for each proposed measure. Regardless of the type of tool selected, the analysis methodology is based on accepted industry standard engineering algorithms. These are well documented and can be made available to facility representatives for review.
STEP 2. LOAD DEVELOPMENT

Mixing and matching components and operating conditions to yield the highest possible system efficiency while providing for the necessary capacities is a creative process. It must, however, be based on accurate load characterization. Quantification of cost and savings is complicated by the structure of demand-oriented and time-of-use utility rate schedules, peak utility loads attributable to combinations of peak building loads and discretionary operational modes, variations in end-use demands over time, and the changing performance of equipment with load and ambient conditions. Quantification of concurrent extreme loads provides a
basis for definition of maximum system demand and operation ranges and, ultimately, a basis for equipment selection and operating cost analysis. Electric load characterization typically involves evaluation of utility demand interval records (usually 15 or 30 minutes) to determine electric load peaks, averages and minimums, and total annual consumption in kWh (per time-of-use billing period). Thermal load characterization typically involves evaluation of hourly loads (in Btu/h, kJ/h, or kWh/h) to define thermal energy demand maximum, minimum, average, and total annual consumption (in Btu, kJ, or kWh). This is of particular importance in the analysis of thermal storage systems, either cool storage (e.g., ice or chilled water) for space conditioning or heat storage (e.g., hot water) for domestic, process, or space conditioning. It is equally critical for evaluation of cogeneration system application alternatives that depend heavily on timing, or coincidence of electric and thermal load profiles. If equipment operates at a constant load with a constant usage, load development is fairly straightforward. The load needs to be measured and the specific hours of operation need to be identified. In the case of lighting systems, for example, load development will require accurate fixture counts, grouped by lamp-ballast combination type and by common hours of usage. When hours of operation are not known or must be verified, relatively simple longterm metering devices can often be used. An example is a light-sensitive photocell with built-in microprocessor, which is an inexpensive self-contained device that measures the run-time of a lighting fixture. Another example is an activity logger, which adds the feature of occupancy sensing, allowing for the measurement of run-time during periods of occupancy or non-occupancy. If the equipment operates intermittently or under varying loads, load development requires a more complex approach. Both the load served and resource usage requirements must be determined based on some type of simulation of actual operations or direct measurement. Note, however, that modeling or metering is complicated by the fact that systems may serve a given load (e.g., chilled water loop) with multiple chillers, pumps, and towers, or a combination of central and perimeter space conditioning. Consider the analysis of an individual measure, such as an upgrade to existing chilled water, hot water, or steam systems. The first step is to determine the end-use load (e.g., chilled water, steam, or hot water) with a high degree of certainty and the energy required to serve the load on a short-term (instantaneous) and annual basis. The first line
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of questioning in the development of usage patterns determines the nature of the load: Is it seasonal and based mainly on weather conditions (i.e., temperature, humidity, and solar loads), as would be the case with most comfort cooling or heating applications? Is it process and based mainly on production volumes? Is it heavily influenced by daily, weekly, or seasonal operating schedules? Is it process and based on internal heat gain or loss? Is it some mix of the above? The answers to these questions will enable the development of reliable modeling that will be used in both the detailed study, as well as the savings verification process. Many types of loads are influenced greatly by ambient outdoor weather conditions. This includes several factors in addition to outside air temperature such as wet-bulb temperature, wind speed and direction, insolation, and time of year. In addition, there are other factors that are independent of, or only partially related to, ambient conditions. These may include baseload internal gains, timeof-day, day-of-week, time-of-week, occupancy patterns, and process activities. Depending on the season, internal gains may comprise a significant part of the overall cooling load, particularly in facilities that do not use a large degree of outside air makeup. In considering all of these factors, the goal is to develop a prediction methodology, frequently in the form of a regression equation, that can be used on a set of data that is well defined and readily available. This usually limits the analyst to variables such as time, wet-bulb and/or drybulb temperatures, or process production rate. Once a regression analysis is performed, it is valuable to plot a graph of the residuals obtained. This residual plot shows how far each predicted value, based on the regression equation, falls from the actual data. If an error pattern does occur, it would be necessary to define the regression criteria differently or possibly look for a different shape curve for the regression. Ideally, as discussed above, modeling software should be used to develop a complete facility load profile, which will then be calibrated based on the metered-based results, as well as historical operating and utility bill records.
STEP 3. SYSTEM PERFORMANCE USAGE
AND
ENERGY
If there is an existing system serving the load, the
amount of energy (or water, lubricating oil, etc.) currently used by that equipment must be determined using empirical or metered data. In the case of essentially nonvarying systems, instantaneous metering can often be used to accurately determine system performance. For systems that operate with varying input and/or output, longer-term monitoring of current performance is the preferred method. Metering should include not only the major use of energy (or other resources), but also the various auxiliary loads necessary to support and distribute to end-use devices, such as air handlers or perimeter radiation. Extending metering procedures to all or most of the multiple-system components will enable the analyst to determine which units are operating at each load condition and any performance deviations between individual units. The resultant system performance prediction tool must encompass all the numerous variables that affect system energy (or water) usage, including weather conditions, load requirements, and current operational schedules. Once identified and plotted, total system performance data should be further separated between main equipment and auxiliary equipment usage. This process is complicated by various operating strategies that may be employed with multiple-unit systems. Interviews with operating personnel are also helpful in identifying the general operating strategy employed under various load conditions. An example would be the sequencing of chillers in a multiple chiller central cooling plant. Various options for chiller selection (capacity, type, energy source, etc.) may be available at any given loading and ambient condition. Selection and starting of pumps and cooling tower cells/fans adds another dimension. Furthermore, the input data required to determine a chiller energy performance curve includes water temperatures in and out of the chillers, flow rates through the chillers, and part-load chiller energy consumption. Some other important factors relating to actual performance include entering condenser water temperature, condenser water flow rate (assuming a water-cooled system), and chiller system operating settings. In the existing systems, some of these factors, such as condenser water flow and chilled water supply temperature, may be fixed or may be varied where load and operational parameters are based on actual conditions. As part of a proposed technology application, many of these factors may be changed due to the use of different equipment and/or implementation of new operational optimizing strategies. With a performance curve developed that includes corrections for part-load operation, as well as off-design
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chilled water use and condenser water temperatures, a basic spreadsheet format can be used to distribute actual equipment energy usage requirements under varying loads for varying periods. By assigning hours of use at each loading level, total annual energy usage can be calculated. In order to determine operating costs under varying energy rate periods, the hours need to be broken out separately for each billing time-of-use period. Total consumption, therefore, reflects the amount of energy consumed over all of the hours the system operates at each specified percentage of total capacity output. Energy using systems under consideration will have different performance characteristics under varying loads and corresponding ambient conditions. For existing equipment, this can often, but not always, be determined from metered data. For example, if the system operates under variable speeds, there may be several combinations of speed and equipment modulation that will produce the same system results. A map consisting of a series of integrated performance curves of the driver and the driven equipment can be developed to identify the optimum combination for each level of output requirement under variable conditions.
Time at Temperature and Simulation Models

If a bin method is used, with regression analysis based on outside air temperature, the best and most readily available energy analysis methodology is to use historical or standard weather data. It is important that average weather data is not used exclusively, since it would dramatically lessen the effects of extreme weather. For example, the temperature may frequently reach 100F (38C) in areas where the average temperature is 75F (24C). In the case of a chilled water system analysis, for example, use of average figures would lower the calculated peaks in both chilled water requirements and chiller power. The local weather data station, NOAA, ASHRAE, publishers of modeling software, and various equipment manufacturers are all potential sources of weather data (Typical Meteorological Year, Test Reference Year). In addition, many utilities now closely monitor weather in their service territory, which can be made available to customers. Typically, it is possible to obtain, at a minimum, 5F (about 3C) bin weather data showing the number of hours in each month during which the temperature is in the 5F bin range. In the best case, this is further split to 1F (or 0.6C) increments and also provides the time-ofday of the temperature occurrence. The best available weather data should be used to generate predictable cool-
ing and heating loads and relationships of system performance with varying loads. In addition to establishing the number of hours at each load with weather data, hours at load will be further differentiated by utility rate period when necessary. Difficulties can arise because this use of bin data results in a static representation. Analysis is complicated by the lag in a building's thermal response to changing temperature conditions. Facilities with substantial mass may experience a thermal time lag of several hours. A peak temperature at 2:00 p.m., for example, could result in a peak cooling requirement at 4:00 p.m. Conversely, as outside air temperatures are reduced, peak cooling requirements may persist for several hours due to stored internal heat gains. Facilities with high ventilation rates will be less subject to such impacts, but most facilities will experience some thermal time-constant influence. Care must be taken to evaluate the regression data to establish a level of certainty in the results. It is often necessary to make an assessment of what additional independent variables, such as facility operational or production schedules, will be used as multiple regression coefficients. Also, unless the data is already separated, it is difficult to assign hours to discrete energy rate periods. Still, this format is very useful for energy savings verification purposes. To perform more dynamic analyses, hourly computer simulation models are used. The building construction and system performance characteristics are input to the simulation model, which applies these characteristics to determine load conditions over every hour of the year. Time constants, thermal lag factors, operation and production schedules, and other influential features are modeled in such programs and the interactive effects of numerous measures are simultaneously considered. When considering multiple replacement options or other system improvements (e.g., chilled water reset), modeling, while generally more time-consuming, is quite valuable.
Auxiliary Equipment and Resource Use

The same evaluation procedure should be followed for all auxiliary equipment, such as pumps and fans that are integral to the systems operation, as well as other resources, such as water, sewer, and chemicals. It is usually necessary to treat auxiliary usage separately, because usage will not necessarily have a linear relationship with the main equipment. For example, a pump serving a compressor's coolant system may have constant usage as the system's overall load varies. Similarly, while the energy usage of a chiller, boiler, compressor, reciprocating engine, or tur-
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Technical Analysis
bine can vary significantly with the load placed on it, the auxiliary load will often remain fairly constant and/or may be affected by other factors. In the case of a cooling water system, the cooling tower fan will operate more in hotter and more humid weather to maintain temperature at a given cooling load. However, the condenser water circulating pump loading remains constant in most cases. In the case of a chiller system, if the chilled water pumps have variable speed capability and air handling units are equipped with two-way valves, pump energy usage will vary significantly with load. It is important to note that while auxiliary usage can be considered separately, there is often an interactive effect between auxiliary equipment operation and the performance of the main equipment. For example, increased cooling tower fan usage can produce lower return condenser water temperature, which in turn can improve chiller performance. The system or main and auxiliary component energy rate vs. load curves are the data necessary to determine the load imposed on the existing system for each outside air temperature (or other correlated variables). They also allow for the determination of the energy used by the total system, existing equipment, and their auxiliaries combined, to meet that load.
STEP 4. BASELINE DETERMINATION

Having developed the load shape profiles for the facility and the equipment performance characteristics of the existing systems, annual energy usage and peak demand should then be determined. This can be done with a binmethod analysis, computer simulation analysis, or both. If computer simulation modeling is used, it is critical that the assumptions used in the computer model are validated. Otherwise, the most high-powered system will still yield results that are inaccurate and of little use. The field metering and regression analysis, therefore, remain essential to the process. These provide either the direct input to the model or the method by which model assumptions are calibrated. To determine the impact on peak capacity requirements and costs, the full energy usage rate will be identified for each hour (or smaller time increment). System or building-level results must be overlaid on the facilitys total profile and differentiated by specific energy rate periods, as dictated by the loads served by a given utility meter. From this, net changes in total facility demand and the associated incremental cost can be determined. Critical to this determination is the understanding that the incremental peak demand impact is a function of
coincidental peak of all loads connected to a billing meter. If, for example, the peak capacity requirement of the system occurs at a period other than that of the facilitys peak, the incremental impact will be lower than 100% of the systems peak. If the billable demand in winter months is greater than the actual demand level due to an electric rate ratchet adjustment based on summer peak demand, then an increase in coincidental peak will not necessarily increase the billable demand in the winter months. For cogeneration system applications, the coincidental thermal and power requirements are critical aspects of the analysis. Recovered heat will have value only if it can be used when it is produced or stored for effective later use. Hour-by-hour load analysis combined with the systems performance under each load condition is, therefore, the most reliable performance prediction tool. Refer to the cogeneration system and driver selection study provided at the conclusion of Chapter 26 for an example of such a baseline analysis. The annual usage and demand for the existing system will become the baseline against which savings can be projected. The usage and demand of the systems under consideration for replacement or upgrade, or the overall facility usage and demand under consideration for on-site electric generation, will be compared to the baseline to determine the energy and demand savings projections. The baseline operating cost can be determined by entering the usage and demand by month and rate period into a utility or fuel cost rate program. Energy rates can either be programmed directly into simulation modeling, or model outputs imported to a spreadsheet rate calculation program. In either case, the annual baseline costs for the facility should be reconciled with the actual billing records. Either the billing records should be normalized to analysis conditions, or analysis outputs adjusted to the conditions experienced during the actual billing periods. In either case, if the analysis output cannot be reconciled with actual billing histories, the entire process must be reviewed, with certain assumptions recalibrated as appropriate. The goal is to develop an analytical process that can deliver reliable and reproducible results. While it may not be possible to identify all of the specific factors that resulted in a particular years energy costs (i.e., occupancy patterns, production schedules, etc.), if the monthly (or shorter duration) bills for energy and other resource costs for a given year or series of years cannot be closely reconciled with the analysis, the analysis results will generally be considered unreliable.
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STEP 5. SAVINGS ANALYSIS

Once the baseline has been determined, the same basic methodology, facility model, system model, or equipment model can then be used to determine the projected energy (and other resource) usage, demand, and operating cost for the proposed application options developed in the preliminary feasibility phase. The difference is that the performance characteristics of the proposed system(s) are substituted for the existing equipment, and changes in efficiency and operating conditions are included as part of each measure (e.g., equipment changes, space condition temperature setbacks, changes in outside air volumes, equipment modulation controls, etc.). In order to substitute the proposed equipment for the existing equipment, performance characteristics of the proposed equipment must be identified for all of the potential conditions to be experienced in the proposed operating regime. Whereas existing equipment performance can be based on actual field measurement, proposed equipment performance can usually be obtained by matching the data provided by the equipment manufacturer to the sitespecific conditions. Manufacturers data should be obtained for performance under the full range of anticipated operating conditions. These performance data plots are particularly important for equipment such as chillers and gas turbines that experience widely varying performance under different loads and ambient air conditions. With a new chiller, for example, performance data should be provided for chiller loading ranging from 10 to 100% in 10% increments with condenser water temperature held constant at temperature increments from 85F to 60F (29C to 16C) in 5 degree increments. Varying condenser water temperatures, or condenser water relief, can also be modeled with the proper manufacturers performance curves. If chilled water supply temperature is to be varied, it will be necessary to obtain performance data for operation under each anticipated chilled water supply temperature. Once the data is obtained, it will be a relatively simple interpolation process to determine the projected efficiency for any combination of load and operating conditions. These performance characteristics should be warranted by the manufacturer as part of the purchase agreement and confirmed by well-defined standards-organization testing data. Careful evaluation of the certified testing data is recommended to determine testing tolerance or margin of error allowed. It is sometimes necessary to de-rate the performance data to compensate for allowable test tolerances to ensure more accurate, risk-mitigated results. Refer
to the discussion on equipment rating standards in Chapter 33 for an example of expected performance variation. Annual operating costs for the proposed changes are determined in the same manner as with the baseline. The proposed new operating costs may be calculated for the entire facility with the new system included or on an incremental basis for a specific measure application. Operation cost savings projections are then computed by subtracting the proposed cost from the baseline costs, again on either a facility-wide or measure-specific basis. The true measure of achievable savings is the incremental change in usage and cost that results from the installation of a given measure. The value of heat recovery, for example, will be measured by the cost avoided in using recovered thermal energy (or heat) for a specific purpose, as opposed to using another source of energy for the same purpose. Most commonly, recovered heat replaces thermal energy output from some type of fuel burning equipment, usually a boiler or furnace. In these cases, the value of recovered thermal energy is equivalent to the cost of fuel energy that would have otherwise been consumed. The amount of energy displaced by recovered heat is a function of the efficiency of the displaced energy conversion equipment. Refer to Chapters 2 and 8 for detail on methods used for accounting for value of recovered heat. To properly evaluate thermal load requirements and fuel displacement potential, the thermal requirements of each end use must be accurately quantified. For example, steam may be required at numerous pressures. These requirements must be matched to available levels (for example, those that exist with extraction or back-pressure turbines). In summary, the baseline development effort provides a mechanism by which to determine the energy or resource consumption and costs with the existing systems, given a set of independent variable conditions. This is based on actual operating measurements and data, in conjunction with equipment performance models. The facility system or equipment model permits the projection of the energy or resource consumption and costs with the proposed systems. This is based on actual equipment performance data where available or on engineering calculation. By comparing the two, the net benefit of the project will be determined.
Accounting for Measure Interactivity

Inherent interactions between all facility systems impacted by the potential project should be identified and accounted for in the study. This is imperative if accurate savings are to be calculated. In and of themselves, measures may result in increases and/or decreases in resource
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Technical Analysis
use in interrelated systems. For example, decreasing lighting energy will commonly both decrease cooling load and increase heating load requirements. With an integrated multiple technology project, proposed measures will most likely impact several other proposed measures, making the analysis more complicated. Consider the example of two potential project recommendations, one which improves chiller efficiency and the other which reduces cooling load. If savings for the chiller efficiency improvement are calculated at the existing cooling load, the resultant savings will be greater than if calculated at the reduced cooling load. Alternatively, if the load reduction measure is considered with the existing chiller efficiency, the savings will be greater than if the chiller efficiency improvements are considered. If both measures are ultimately recommended, then the interactive savings will be calculated based on the chiller operating with improved efficiency and serving reduced load. Ignoring this interaction will result in overestimation of savings and, in some cases, over-sizing of new equipment. The EPA laboratory case study at the conclusion of the previous chapter is an example of this. Both heating and cooling peak demand and consumption loads were dramatically reduced. If one were to have analyzed both the chiller/heater measure and the AHU redesign measure separately, overall savings clearly would have been overstated. Moreover, far more new chiller/heater capacity would have been installed (based on the baseline loads) than was needed for the new, more efficient load profile, driving up capital costs unnecessarily and likely producing an inefficient, over-sized central plant. Similarly, the heat and steam use from a boiler plant presents similar trade-offs. For example, low-pressure steam or hot water used for process or feedwater heating can be replaced with recovered waste heat, supporting cogeneration system application potential. In the cogeneration study example provided at the conclusion of Chapter 26, the reciprocating engine generator set option relied on serving such a load with heat recovered from its cooling system. However, in the second sensitivity analysis, consideration was given to a very economical alternative process that would greatly reduce this thermal load. The result of the interactive analysis was that the expected economic performance of the reciprocating engine was reduced, making the gas turbine option more favorable. Conservation, alternative process, or heat recovery options for low-pressure steam loads can also all have a profound impact on steam turbine topping cycle applications. Such options will often prove economical in and of
themselves. However, they will also lower the turbine throughput and power generation output, representing a trade-off that might prove uneconomical when considered interactively. To properly analyze such situations, an overall facility thermal (or heat) balance must be developed and used to derive the fuel/electricity time-dependent economic benefits to the whole, rather than parts of, the facility. Consider the actual case of a Connecticut manufacturer that sought to identify the most cost-effective strategy for adding chilled water and compressed air capacity to meet expanded load and production process requirements. In this case, the baseline heat balance reflected a modest non-heating season imbalance under which steam from an existing back-pressure steam turbine-driven chiller had to be vented to allow full-load operation under peak load conditions. On the basis of the interactive technical and financial performance analysis, a back-pressure steam turbine-driven air compressor and a single-stage absorption chiller were selected. The exhaust steam was tied into the low-pressure steam distribution header and used primarily for heating in the winter and to serve the new single-stage steam absorption chiller in non-winter months. Functioning as a low-pressure steam heat sink, the added absorption chiller capacity served to balance the facilitys seasonal steam loads, eliminating the need to vent excess steam, thereby allowing the existing turbine-driven chiller and the new turbine-driven compressor to operate optimally. A separate, non-interactive analysis of the single-stage steam absorption chiller (inclusive of auxiliary components) demonstrated both higher capital and operating costs than the electric chiller option, showing it to be uneconomical. If a sufficient low-pressure steam load requirement had already existed at the facility, the investment in the toppingcycle turbine-driven air compressor would have been extremely economical, offering a simple payback of about one year. The extremely low operating cost of the steam turbine-driven air compressor results from its low actual fuelchargeable-to-power (FCP), as all rejected steam energy in the form of back-pressure steam is credited against the total steam energy input to the turbine. In this case, the facility did not have a suitable low-pressure steam baseload in place, necessitating the installation of the absorption chiller at a capital and operating cost premium. Hence, the dramatic operating cost savings with back-pressure turbine operation were only made achievable with the additional heat sink in the form of the new absorption chiller. The interactive annual operating cost savings,
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inclusive of the disadvantage with the absorption chiller, showed this to be by far the lowest operating cost option and the most cost-effective option (even with its higher capital cost) on a life-cycle basis. This project exemplifies optimization of heat and power resource use at a facility and the need for interactive analysis. It highlights, however, only one of the numerous interactive impact considerations that go into the development of an integrated energy and cost reduction project. In a case such as this, the selection of the exact capacity for both the air compressor and chiller should be made only after determining which end-use improvements are to be made. These load reductions will also result in correspondingly lower operational savings potential for the new air compressor and chiller. A broader integrated project analysis would include a series of measures designed to reduce chilled water and compressed air end-use requirements and their interactive impact on the central plant project. It would also include other end-use measures, such as a lighting system upgrade. This would lower electricity demand requirements and chilled water requirements (by reducing internal gain), while raising winter steam heating requirements. Steam distribution system improvements, such as a steam trap program, would lower steam system requirements, perhaps limiting the extent to which the heat sink would be large enough to support operation of all of the topping cycle turbines. Other distribution system optimization measures, such as variable flow chilled water pumping, would also need to be analyzed concurrently. Finally, expansion of the facilitys automated energy management system would have to be interactively analyzed. This would also likely serve to reduce steam and chilled water loads, redefining the capacity requirements. These are but several of the many end-use and distribution system measures that would be considered interactively with central plant measures in a fully comprehensive integrated energy study. Another consideration is the interactive impact of such a project on the long-term potential for on-site power generation. In this case, the increased steam baseload has made this an attractive site for application of a 10 MW gas turbine electric cogeneration system. Prior to the installation, a smaller capacity gas turbine or a reciprocating engine-based system would have been a better match with the facility load profile. The interactive analysis of electric cogeneration system economic performance potential includes consideration of opportunities to further modify the facilitys heat balance through conversion
of several additional electric processes to steam processes. Also considered would be the interactive effects of various potential utility incentive offerings and alternative electricity and gas purchasing and risk management options. To accomplish such interactive analyses with computer simulation modeling, the annual usage and demand (actual and billed for existing and proposed systems) is summarized automatically. If a series of proposed measures has been modeled, total changes in the facility will be reported on an interactive basis. To isolate the predicted savings from a given measure, an order must be established so that the impact of successive measures can be separated and evaluated on their own merit, while still considering their interactive impact on other systems. An effective way to accomplish this is to model groups of highly interactive measures together and determine the aggregate savings result. Then, in order to interactively determine the contribution of any single or subset of measures, the model is run with the single measure or subset removed. The difference in savings is then the incremental contribution of this single measure or subset of measures.
STEP 6. REFINEMENTS MEASURES
TO
SELECTED PROJECT
Commonly, more than one type of system or system configuration and control strategy are considered in an effort to develop the most effective option for a given application. Each option must be modeled and then compared with the baseline. Once these savings are compared with the budget cost estimates for each option, the most appropriate option will be selected and proposed. Finally, as discussed above, measure impact must be determined on a system-specific basis, as well as on an interactive facility-wide basis. Capacity factor and reliability of actual system operation must also be considered. Capacity or load factor is a term used to express average load as a percentage of full load in a given period. For example, if a system operates at full load for 360 hours in a month that has a total of 720 hours, the capacity factor is 50%. The efficient utilization of many systems rests largely on the capacity factor of the plant. Generally, the more hours the unit is able to run, the better the project economics. This is significantly affected by competing utility rate structures. Alternatively, the profitability of a peak shaving application depends more on strategic operation over relatively few hours. In this case, reliability is a critical factor because the system must operate consistently in peak electric demand periods
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Technical Analysis
in order to produce expected savings. When evaluating project economics, unplanned forced outages and other planned outages will be considered. When planning for and evaluating a project, one must therefore consider the expected capacity factor of the plant and the reliability of the proposed system. This includes projecting savings based on less than optimum performance, or incorporating the cost of mitigation measures such as standby capacity. Another part of energy system analysis for the facility will be to identify the reliability and redundancy requirements. This pertains not only to central systems, but also to auxiliary components such as pumps and fans. Having an extra engine on standby but only one fuel pump for both engines is an example of a vulnerability to interruption that is sometimes overlooked. If the fuel pump fails, neither engine will function. Hence, well conceived, redundancy considerations should figure largely in the equipment selection process inclusive of system auxiliary components. Installation of equipment redundancy allows for more creative operating strategies. However, it also increases project capital cost, so the benefits must be identified and carefully considered. If the intent of redundancy is exclusively to protect savings, it may not be valued as highly as if it is to meet mission critical requirements as well. An important aspect of measure refinement is the assurance that the system output is compatible with the load requirements. Heat recovery systems are particularly sensitive to this, as discussed in the Savings Analysis step. When considering use of recovered heat, it is important to identify the thermal levels (temperature) of energy that can be produced (e.g., hot water or steam) and the amount of heat available at the required temperature. It is also important to consider any modifications that can be made to existing systems to allow them to use recovered energy in the form that it is available. For example, if recovered heat is to be used to serve a process that currently uses steam, either the recovered heat must be available as steam, or the recovered heat can be made available as hot water and the process converted to operate with hot water. Processes can also be converted to operate at lower temperatures. By serving a lower temperature process, the efficiency of the heat recovery process can often be increased. The potential for conversion of process requirements becomes an important part of potential measure refinement. As part of the feasibility analysis, various options should be considered for improving the balance between
summer and winter thermal loads. Where applicable, it may be economical to increase thermal loads through added baseload applications. The application of steam turbine-driven or absorption chillers as discussed above are two of several options.
AND
STEP 7. CONSIDERATION OF ENVIRONMENTAL OTHER CODE COMPLIANCE IMPACT
Integral to the analysis of any fuel burning system is consideration of air emissions. Other environmental considerations include water usage and disposal, chemical usage and disposal, asbestos and PCB (or other HazMat) removal and disposal, fuel storage, indoor air quality, sound emissions, and refrigerant usage and disposal. The installation of a natural gas pipeline is also subject to consideration of environmental impact and associated costs. All other prevailing code compliance regulations should also be considered and project strategies should be formulated that include the limitations imposed by these regulations. Often, a more efficient or lower first cost option will be eliminated from consideration based on compliance regulations. Installation of new equipment, such as a gas turbine cogeneration system, will result in costs associated with emissions control technology and, in some cases, emissions offsets, and it may affect other equipment at the facility. It can add costs by subjecting the entire facility to certain compliance regulations or can lower costs, as might be the case in waste heat recovery displaced boiler operation. The analysis should consider what would have been the present or prudently anticipated environmental costs with and without the installation of the system under consideration. As part of the Detailed Feasibility Study, for any potential technology application that involves the installation of fuel burning equipment such as boilers, process furnaces, direct-fired absorption chillers, gas turbines, or reciprocating engines, the analyst should determine emissions control requirements and their associated costs. Emissions control economics will vary with the source type and the degree of control needed and must also relate to the current air-permit conditions at the facility. Costeffectiveness is an economic test, or screening process, to determine if an emissions control technology is beyond the scope of a particular project. To determine the cost effectiveness of a control strategy option, one must first establish uncontrolled emissions rates (i.e., base case) prior to measure implementation. With existing equipment, this can be done through equip-
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ment metering or through the use of accepted emissions standards data, such as EPAs AP-42 factors. For new equipment, the manufacturer can provide certified emissions rates. All cost factors can be expressed on an annual basis by considering the capital cost, the component replacement costs and time intervals, and the associated OM&R costs. The cost-effectiveness can then be determined by dividing the annualized cost of control by the tons (or kg) of emissions per year reduced. In a number of cases, measures can be developed which both improve operating efficiency and satisfy environmental mandates. An example is the switch from CFC-based refrigerants in older, less efficient chillers and systems to non-ozone depleting refrigerants in new, high-efficiency chillers with well-designed operating and distribution systems. The development of annualized costs is often sufficient for survey purposes. However, it is more effective to identify the year in which each cost will actually be incurred. Additionally, if continuous emissions monitoring (CEM) is required, the capital and annual operating costs must also be considered in the feasibility analysis. Determination of cost-effectiveness values is important for two reasons. First, it will allow the project team to compare various options on an equivalent basis. Second, it may provide economic relief from installing technology that is cost-prohibitive in a given situation. Air agencies may establish cost-effectiveness permitting thresholds. If the value of a control technology to be implemented exceeds the cost-effectiveness limits established by the local air agency, the facility petitioning for a permit may be able to avoid that technology and employ the next most stringent control technology. Additionally, the cost of environmental compliance may also be considered as an adjustment to the baseline operating cost in certain situations. Consider, for example, a building that is out of compliance with indoor air quality codes due to inoperable outside air dampers. A measure such as a VAV system will truly improve system efficiency. However, in the process, outside air levels will be brought up to code. This may result in excess energy being used vs. the original condition where that outside air was not being introduced and conditioned. In an absolute sense, this measure may actually increase energy usage. However, it may be appropriate to adjust the baseline calculation to reflect the energy that would have been used if the dampers were operable and brought into code compliance under the assumption that the codes need to be met regardless of whether the efficiency measure is implemented or not.
STEP 8. EVALUATING OM&R REQUIREMENTS

With the installation of any energy system, there will be a change in OM&R requirements at the facility. This change may be minor or major. If new motors, pumps, or lighting fixtures are installed, there will usually be a relatively minor, predictable impact. Generally, these produce a slight decrease in OM&R requirements when an older, more maintenance-intensive inventory of equipment is replaced with newer, less maintenance-intensive equipment. The group replacement nature of this type of retrofit allows for more controlled and predictable ongoing maintenance practices, such as group relamping. They also generally produce an initial OM&R savings as lamps and ballasts or motors are replaced midway through their replacement cycle with all new equipment. In the case of installing a prime mover for power generation or mechanical drive service, there will generally be a major change in OM&R requirements. Additional operators may be required and additional preventative maintenance and repair services will be required. Examples of additional OM&R cost factors are lubricating oil consumption, chemical treatment and effluent disposal, and periodic overhaul. In any case, the analyst should include all OM&R factors in the analysis, including anticipated future overhaul or replacement costs. OM&R requirements will be based on consideration of the intended operating duty, including not only hours of operation, but load variation and frequency of systems starting and stopping. In developing the integrated life-cycle analysis, these anticipated costs should be inserted in the years they are expected to be incurred. Long-term complete service contracts (if applicable) are included in the calculations as such. In addition to regular system maintenance costs, there may be other operation costs to be included, such as additional personnel required to operate the system and costs associated with the hiring of plant operators. The incremental cost analysis of OM&R provides a more realistic and precise view of the actual cost. For example, compare a prime mover-driven equipment application and an electric motor-driven alternative. While the prime mover will likely have a far greater OM&R cost than the electric motor, motor maintenance and overhaul are not free. Therefore, the incremental cost consists of the OM&R cost of the prime mover minus the OM&R cost of the electric motor. When analyzing multiple alternatives, the OM&R cost of each should be inserted into the analysis. When
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Technical Analysis
evaluating one alternative with respect to another, or a base case, the incremental OM&R cost can be determined by subtracting one from the other. In developing projections for OM&R costs, vendor quotes are very helpful. Even if work is to be done in-house, vendor quotes for operations, routine maintenance, and cradle-to-grave service options provide meaningful insight to market costs and consistency between options. For each system under consideration, the equipment vendor should be asked to provide a proposal for various short- and long-term OM&R options. Fuel and power management services and their associated costs require additional analysis to accurately evaluate the benefits of pipeline installation, transportation or wheeling initiatives, and end-use and central plant technology conversions to alternate fuels. These service requirements include forecasting plant usage and market conditions, negotiations and procurement arrangements, execution of curtailment strategies, managing daily volumes and storage requirements, regulatory monitoring and invoice reconciliation. Whether the facility or an outside firm provides these services, the operational costs of the various supply options must be included for analysis in their development.
options available to the facility. Complete development of on-site generation system project economics therefore will serve as a basis of electric rate negotiation process. It is important to separate the supply functions of capacity and commodity in this process. The ability to withstand interruptions to gas or electricity supply will usually allow significant reductions in operating costs. With fuel supply, this is commonly accomplished through multiple fuel source operating capability. With power purchases, this is usually accomplished with the ability to shed loads, either through a demand controls strategy or on-site generation. On-site generation capacity can, therefore, allow for elimination of capacity costs associated with the purchase of power. Interactive impacts of alternative fuel and power purchase options will also be considered. Just as a reduction in load brought about by another measure can lower the economic performance of a given measure under consideration, the reduction in fuel or power cost brought about by an alternative purchasing arrangement can lower the economic performance of a potential technology application. Therefore, savings analyses must be performed with a sensitivity toward the cost of energy with alternative fuel and power purchase options in place including long-term escalation (or de-escalation) rates.
STEP 9. EVALUATING UTILITY SUPPLY OPTIONS

Given the fast developing deregulated energy industry environment, alternative sources or arrangements for purchasing fuel and power are integral to the evaluation of long-term cost reduction opportunities in that they can significantly lower operating costs. Therefore, as part of the study process, the project team should investigate various options available for providing fully reliable fuel and electric power services to the facility at the lowest possible price. This includes evaluation of natural gas delivery infrastructure to provide gas purchase or transportation purchase, as well as retail wheeling and utility bypass, if appropriate. It also includes negotiations with the local utility, as well as any other potential power sellers on the grid. This process is integral to the evaluation of on-site electric power generation options. Accurate and objective evaluation of the economic performance of on-site generation system applications will be integral to any electric rate negotiations with the local utility or other power supplier or purchaser. Competitive energy rates will be offered almost exclusively on the basis of verifiable competitive
STEP 10. DEVELOPING
AN INTERACTIVE
SUMMARY
With the integrated approach, the facility will be viewed as a whole whose sum total of resource use is both dynamic and interactive. Therefore, when considering energy supply, central plant, and distribution system improvement options, the analyst must consider all loads being served, such as comfort conditioning or process end-uses. This front-end analysis will then be upgraded based on the loads that would be prudently anticipated once cost-effective end-use improvements are implemented. Supply-side options, such as energy source switching, energy supplier switching, utility, negotiations, or on-site power generation, should be considered interactively with respect to the anticipated central plant, distribution system, and end-use modifications. As indicated in the above discussion of measure interactivity, the project team should explore, for the purpose of understanding, the effect of each potential change on the rest of the facility. For example, when lighting systems, envelopes, air handling systems, or process applications are upgraded, or compressed air use is optimized, then
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steam, hot water, chilled water, and compressed air requirements can be significantly altered. Different capacity central plant systems may be required as a result, and the economic performance of upgrading those central systems may be changed as a result of the load changes. Conversely, when the central plant systems are upgraded, the cost of steam, hot water, chilled water, and compressed air is reduced, thereby reducing the savings potential of end-use improvements sometimes eliminating certain improvements that would have been cost-effective with the old, less economically efficient central plant systems. Supply-side improvements have a similar effect. If fuel or electricity can be purchased at a lower price, or if heat and power can be provided less expensively through an on-site cogeneration system, the economic performance of central plant and end-use upgrade programs will often be significantly altered. Given this potential for interactive impacts, all potentially beneficial project application options should be identified during the study process, inclusive of their interactive impact. Options should then be mixed and matched and considered interactively until the optimal portfolio of measures is selected. Therefore, it is necessary to develop a summary format that identifies the impact of individual measures, as well as the impact of the complete portfolio. The following is an example of a study report format that uses a series of linked spreadsheets to build an interactive survey of a portfolio of measures, many of which have interactive savings impact. The process starts by building a base case with the total energy/fuel consumption and cost and OM&R cost in the scope of the analysis. The spreadsheet design allows for the comparison of the total electric and fuel consumption and costs (plus OM&R and other resources costs) before and after each proposed measure using the energy calculation model employed by the project team. This integrated analytic framework allows calculation of cost reduction potential for each individual measure while accounting for interactive effects and eliminating the potential for double counting. 1. The first section of the spreadsheet includes the historical energy (and other resource) usage, repriced at the most current energy/fuel rates, plus OM&R costs. This provides a baseline of costs. 2. The second section is constructed to perform computations, in energy units, of changes being made by the proposed project or series of projects. This includes both increases and decreases in consumption of all resources. OM&R changes are computed on a cost basis.
3. The third section then applies the net decrease (or increase) in each source of energy and other resources used to the base case consumption and recalculates the cost of the facility total energy usage, and adds in net changes in OM&R costs. This process will then be replicated for each additional measure or group of measures by building upon what has become a revised base case. These can then be sorted in the order of measures most likely to be implemented based on cost-effectiveness or preference stated by the host facility. The spreadsheets will be repeated for each building and summed to provide a facility-wide scenario that reflects all applicable interactions. By comparing the final case to the original base case, the net resource and cost savings of the program is determined. The cost related to the impact on OM&R will be included along with energy and other resource cost savings, as well as the impact of alternative fuel and power purchasing options.
STEP 1 1. EQUIPMENT SELECTION

Having analyzed the savings potential for various measures, and having made preliminary equipment and component selections, the next step is to develop conceptual designs and select specific equipment. This allows for preparation of budget estimates for development, installation, and commissioning of each measure under consideration. From this, final measure cost-effectiveness can be evaluated. All equipment selected and/or specified and installed should satisfy the necessary requirements of the governing agencies, such as local and state codes, testing and approving agencies (UL, AGA, NFPA, ANSI, ASHRAE, ASME, etc.), and construction agencies (SMACNA, ASTM, NEC, NEMA, etc.) and should represent the highest standards of the industry. Equipment and systems should be selected that both minimize OM&R requirements and can be simply and effectively serviced. Equipment is also selected on the basis of environmental emissions characteristics, with emphasis on minimizing emission of pollutants. It is generally most cost-efficient to not favor particular manufacturers in the equipment selection process. However, customer preferences or specific request should also be considered. Equipment selection should be based on the engineering specifications required for the best performance and on economic analysis of all available models that can meet the specifications. This also encourages vendors to be creative in matching the most cost-effective equipment option to the specified performance, or suggesting alternate performance parameters that may improve
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measure economics. This process allows the purchaser to optimize price performance, since project capital cost projections are relatively accurate and minimal contingency budgeting is required. Another important selection criterion is technological obsolescence protection. It is prudent to specify only manufacturers that have demonstrated a corporate commitment to backward compatibility, i.e., that new systems will be able to operate with existing field equipment. An example is the specification of a facility EMS or systemspecific DDC controls. Building automation controls used should support open protocols such as Building Automation and Control Network (BACNet) because they provide the ability to view and operate with data of different systems from a central operators workstation, allow for interaction of data from different systems, and offer the ability to select the best products from various vendors to meet the facilitys needs over the long term. In addition, specified manufacturers should have a demonstrated commitment to supplying equipment repair and replacement parts for a minimum of ten years from the time the particular devise is no longer manufactured. This will avoid obsolescence of an otherwise usable devise due to lack of a proprietary component or part.
STEP 12. BUDGET ESTIMATES CAPITAL COST
OF INCREMENTAL
In the preliminary study phase, cost estimates will have been considered in order to screen and select several options from all possible choices. All cost components will have been developed as rough estimates, but at this point, it will be necessary to develop a firm set of installed costs for each measure still under consideration. Since the validity of the study depends as much on accurate implementation cost estimates as it does on accurate savings estimates, the preparation of budgets in the detailed study phase should be performed with the same rigor as savings estimating. Preliminary conceptual drawings should be made for the various system options. These should include footprint and height requirements and anticipated layouts for piping, conduit, exhaust flues, pumps, and other auxiliaries. Clearances for maintenance access (e.g., pulling tubes) or code requirements (e.g., around electrical equipment) should be illustrated. Access locations for bringing in the equipment or disposing of existing equipment should be identified. Structural requirements should also be identified to ensure that the weight of the new equipment could be tolerated. Utility service availability and
capacity should also be noted and included on the drawings. In addition to the drawings, a comprehensive list of all known and potential cost line items should be made for each measure. In addition to the cost of all major and auxiliary components, this includes environmental compliance related equipment and procedures inclusive of permitting and testing costs. Asbestos and PCB removal and disposal costs should also be included. Examples of other costs include insurance, the cost of lost floor space, land acquisition, and facility construction. Applicable taxes, prevailing labor wage rates, and bonding requirements should also be considered. A separate list of potential scope items which may or may not have savings associated with them, but support the system and overall infrastructure improvements, should be included as well. Once the master list is completed, budget pricing can be established based on detailed internal pricing procedures or through solicitation of contractor and vendor bids. This may be done through a formal RFP process or on a somewhat less formal basis. Regardless, it should be based on a bid package with a detailed SOW, supporting design documents, contract requirements and a bid form identifying line item cost. It should be facilitated with contractor walk-throughs of the facility. Following the contractors site visit is a question and answer forum, which provides all bidders with follow-up information. If required, SOW addenda can be issued at this time. In addition to the lump sum pricing required by the RFP, each prospective contractor should also submit the following items: Break out costs for each trade and/or task as outlined in the bid form. A brief summary of the sequence of construction, accompanied by a timeline for the proposed SOW. Identification of all subcontractors and either subcontractor pricing or an approximation of the percentage of work to be completed by subcontractors. The contractors responsibilities and processes for commissioning should be outlined. All documents, including a Contractor Qualification Statement, in the bid package should be completed and signed. After receiving bids, a series of clarifications will generally be necessary to ensure that all price items are covered. With this approach, pricing for all major items can then be based on actual quotations. These quotations will include all necessary equipment and service specifications and can then be used to confirm initial assumptions and
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estimates. For example, equipment weight and dimension data will confirm adequate access, space, and structural support where the equipment is to be installed; actual performance data will confirm assumptions used in the energy savings analysis. Bids must be carefully considered based on the quality and detail of the response, as well as the reputation and financial condition of the contractor/vendor. In addition, other bid evaluation considerations include their proposed timeline, bid exceptions, and value engineering opportunities. If one were to get a very low bid from one subcontractor and then, in turn, submit this as part of their own guaranteed firm fixed price offering, they would be exposed to liability if that contractor was unable or ultimately unwilling to execute the work at the stated price. Hence, adding in some cost contingency or using another higher bid price from a proven quality subcontractor might be a more prudent approach. An alternative, or complimentary, step is conducting an internal pricing process, based on conventional pricing programs or reference sources such as R.S. Means. While some firms have the internal estimating capabilities to do so, others may use this only as a check on the bid pricing approach. Also, use of database information from previous jobs serves as a good reference for price checking, with the understanding that conditions will, of course, differ for each application and job site. After the incremental project cost is totaled, any utility rebate and other type of available financial incentive will be subtracted to determine the net investment cost. Rebate potential will often depend on the specific equipment chosen. For example, there may be a dozen options for chiller makes and models. Each will have different efficiency and, therefore, may qualify for a different rebate. Concurrent with the development of budget estimates is the establishment of an installation schedule. This can be included in the form of a Gantt chart. While this is important with all contract vehicles, it is particularly important with performance-based contracts since savings will not begin to accrue until the measure is commissioned and because construction financing typically is arranged with finance charges accruing on the money borrowed and expended as construction progresses. The timeline will be based on a critical path method wherein each construction element is identified and carefully planned for completion on the latest possible finish date to delay finance charges while still maintaining the construction schedule. Once the budget estimates are completed, the final savings analysis can then be run for each measure alterna-
tive still under consideration. Certain attractive system alternatives or system enhancements may fail financial screening, but offer other qualitative benefits. These benefits will be identified so the options can be considered as alternates by the host facility. In cases where replaced existing equipment can be sold, its salvage value can be subtracted from the full cost of the new system. In cases where the existing equipment is in working order, but approaching the end of its useful life, considering the full cost of the new equipment would obscure the fact that replacement would be required at some point in the near future for reliable operation and, therefore, not reflect the full economic benefit of replacement. The decision to install new equipment immediately, as opposed to waiting until the end of the existing equipment's service life, will take into consideration the time-valued incremental investment cost associated with early retirement of the existing system, which will be less than the full project cost. Thorough development of design concepts and installed cost estimates during the detailed study phase will generally reduce overall design costs and minimize instances where proposed system applications are later rejected by the design team, requiring re-analysis of system alternatives. Where appropriate, design engineers should be called upon to review preliminary design concepts to confirm logistical feasibility and identify any omitted cost factors. An example is review by a structural engineer of the weight-bearing potential of a particular location selected for the installation of heavy equipment. This review may show the location to be impractical on the basis of inadequate structural support or may identify structural reinforcement requirements that will be included in the budget estimate. While these activities add to study costs, they often prove cost-effective as they can reduce design costs and minimize the need for subsequent follow-up studies. In cases where projects are proposed with firm or not-toexceed pricing following the study phase, the involvement of professional design engineering and construction estimating in the process is considered essential. A turnkey design-build contractor or ESCo has the advantage of having all or most of the required expertise in-house, avoiding the need to subcontract design and construction review during this critical phase of the project.
STEP 13. LIFE-CYCLE FINANCIAL ANALYSIS

To evaluate the sum total of project incremental costs and benefits over the life of the project for each potential
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system option, a cash flow analysis should be performed for every year of each potential measures life. Total project cash flow will be determined for each year of the project life as the sum of all measures combined. Any alternate measures, measure groups, or equipment or supply options should be analyzed individually. Integrated programs may allow for combining certain measures that in and of themselves do not necessarily satisfy the financial screening requirements. This may enable projects that are desired by the host facility, such as central plant upgrades, building envelope architectural and structural improvements, or alternative technology applications with marginal project economics to be fully funded as part of the overall integrated cost reduction program. The cash flow presentation will show total cost savings and total performance payments and will break each into its component parts. The financial analysis will be formatted to meet the host facilitys specifications. Life-cycle costing assumptions, such as escalation and discount factors, will be clearly stated so they can be reviewed. The type of financial analysis performed and the results will be largely influenced by the types of contract and funding vehicles being contemplated for project implementation. The following two chapters present detail on contract types, financial analysis techniques, and project financing options. Chapter 42 provides an introduction to basic financial analysis techniques that are widely used for project evaluation. Chapter 43 focuses on the various standardized and customized performancebased contract vehicles available for implementing an integrated energy optimization project and presents details on various conventional and non-conventional financing options that may be used to fund project implementation. These contract and financing options and analytical methods should be considered in advance by the study team so that financial results can be analyzed and reported in a format that is compatible with that of the host facility.
STEP 14. FINAL REPORT PROPOSAL
AND/OR
CONTRACT
At the conclusion of the Detailed Feasibility Study process, a final report should be delivered to management describing the study team's findings and project recommendations. The report can be used to document all significant aspects of the study. It should contain the results of the work of the project team, state the approach taken in developing each section of the proposal, discuss
all assumptions, and provide details for each proposed measure with the associated SOW. The technical proposal should contain a detailed savings analysis for each proposed measure, with full documentation, along with the proposed M&V approach where applicable. The technical sections should document the technical analysis approach, including pertinent drawings, sketches, photographs and equipment catalog cuts, to the extent needed to define the means and method of each measure. It should also address project implementation, providing sufficient detail to present the design concepts and the approach to construction, startup, OM&R, and training. The report should also include the financial analysis as discussed in the previous step so that firm commitment decisions can be made with the study serving as the basis. In the case of a turnkey design-build, performance contracting-based, or third-party ownership and operation offer, in addition to the study report, the contractor should prepare and deliver a firm price offer to the host facility. The price proposal can then provide the facility with an evaluation of the financial aspects of proposed measures from both the teams and the host facilitys perspective, proposing the implementation costs and service phase costs throughout the contract term. The financial sections should include agreed upon financial analysis techniques and, in the case of a performance-based contract, should include the amount that the contractor will guarantee in savings, discriminating between each category of savings, including energy and demand, water, and avoided OM&R and capital renewal savings. Additionally, this section should include a schedule detailing any incentives to be received over the life of the measure and the effect of such incentives on the pay-down of the principal investment. This should include a life-cycle cost analysis and the guaranteed price schedules indicating total savings, required payment to the contractor, and net savings to the host facility on an annual basis for the duration of the contract term. The proposal should also include the proposed project management team, further detail on the proposed implementation plan, and a Gantt chart indicating the project implementation schedule. Chapter 40 provides an example of project implementation Gantt Chart. Finally, it should clearly define the roles of the contractor and the host facility during the implementation and service phases of the project. If changes or adjustments are requested by the host facility, the contractor will make appropriate revisions and then typically submit a best and final offer (BAFO).
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Questions on the proposal can be answered in writing, but it is recommended that an oral presentation be made to properly review the proposal. At this presentation, the contractor can cover the results of the Detailed Feasibility Study, answer any questions, and provide an overview of the remaining steps to implementation.
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OVERVIEW OF TECHNICAL ANALYSIS STUDY PROCESSES

Copyright 2003 by The Fairmont Press.