Life Cycle Cost Analysis Method - HVAC-R & Solar Engineering Resource

The life-cycle cost analysis method is the most commonly accepted method to assess the economic benefits of energy conservation projects over their lifetime. Typically, the method is used to evaluate at least two alternatives of a given project (for instance, evaluate two alternatives for the installation of a new HVAC system: a VAV system or a heat pump system to condition the building). Only one alternative will be selected for implementation based on the economic analysis.

The basic procedure of the LCC method is relatively simple because it seeks to determine the relative cost-effectiveness of the various alternatives. For each alternative including the base case, the total cost is computed over the project lifetime. The cost is commonly determined using one of two approaches: the present worth or the annualized cost estimate. Then, the alternative with the lowest total cost (or LCC) is typically selected.

Using the cash flow diagram of Figure above, the LCC amount for each alternative can be computed by projecting all the costs (including costs of acquisition, installation, maintenance, and operating the energy systems related to the energy-conservation project) on either:

一个可以计算如下的单个现值数量：

这是计算能源改造项目中LCC的最常用方法。

该项目一生中的多个年度成本：

请注意，计算LCC值的两种方法是等效的。
在大多数能源效率项目中，初始投资后的年度现金流量保持不变。
在这种情况下，可以根据初始成本IC和年度成本AC来估算LCC：如下：

生命周期成本公式

例
- 解

例

A building owner has $10,000 available and has has three options to invest his money as briefly described below:

Replace the entire older boiler (including burner) with more efficient heating system. The old boiler/burner system has an efficiency of only 60 percent whereas a new boiler/burner system has an efficiency of 85 percent. The cost of this replacement is $10,000.
Replace only the burner of the old boiler. This action can increase the efficiency of the boiler/burner system to 66 percent. The cost of the burner replacement is $2,000.
什么都不做，既不代替锅炉也没有燃烧器。

Determine the best economical option for the building owner. Assume that the lifetime of the retrofit project is ten years and the discount rate is 5 percent. The boiler consumes 5,000 gallons per year at a cost of $1.20 per gallon. An annual maintenance fee of $150 is required for the boiler (independently of its age). Use the life-cycle cost analysis method to determine the best option.

解

The total cost of operating the boiler/burner system is considered for the three options. In this analysis, the salvage value of the boiler or burner is neglected. Therefore, the only annual cash flows (A) after the initial investment on a new boiler are the maintenance fee and the net savings due to higher boiler efficiency. To present the calculations for LCC analysis, it is recommended to present the results in a tabular format and proceed as shown below:

因此，期权A的生命周期成本是最低的。因此，建议建筑物所有者更换整个锅炉/燃烧器系统。

This conclusion is different from that obtained by using the simple payback analysis [indeed, the payback period for option A, relative to the base case C, is SPB(A) = ($10,000)/($1,765) = 5.66 years; and for option B, SPB(B) = ($2,000)/ ($546) = 3.66 years].

Note that if the discount rate were d = 10 percent (which is unusually high for most markets), the USPW would be equal to USPW = 6.145 and the life-cycle cost for each option will be