This article is part of a series of selected ESG case studies submitted by participants in the 2017 GRESB Real Estate Assessment.
Good business decisions combined with good sustainability choices generates costs savings, reduces energy and GHG, and provides our tenants with more efficient and reliable equipment.
Purpose of the project
The purpose of installing high efficiency HVAC is three-fold. The first purpose is to consistently maintain conditions for the comfort and health of our tenants by utilizing quality and reliable high efficiency HVAC equipment that uses new and/or improved technology in compressors, motor control, evaporator and condenser coil design and controls. The second purpose is to obtain sustainability benefits by changing equipment over from R22 refrigerant to R410A which is a more environmentally friendly refrigerant and to reduce energy usage along with reduction in greenhouse gases. The third purpose is to align good business decisions with good sustainability choices.
The approach used identifies older (ranging from 15+ to 20+ years based upon the type of HVAC equipment) less efficient HVAC equipment which includes, water source heat pumps, split systems, package systems, water cooled and air cooled chillers and budget for high efficiency replacements as part of our green capital expenditure budget process. Also, if there are unexpected failures of HVAC equipment, the approach is to evaluate the age and efficiency level of the existing equipment and replace the equipment with higher efficiency HVAC based upon cost, performance and payback for the premium cost of the high efficiency equipment. Our approach is to utilize the cost and payback of the premium for high efficiency in making decisions regarding repairing an inefficient older HVAC unit or installing new low efficiency unit. In each case there is a sunk material and labor cost for repair or install of low efficiency units that needs to be accounted for when evaluating the benefit of high efficiency equipment. The methodology we use for the financial aspect is Pay Back (years) = (Cost of High Efficiency HVAC minus Cost to Maintain or Replace with Low Efficiency HVAC ) / (Annual Saving due to Increased Efficiency).
The HVAC high efficiency equipment replacement project were applied using two methods: (1) by identifying planned replacements as part of our 2016 annual budget process which were released for bid and approval by HCP and (2) by applying high efficiency replacements for any unbudgeted needs where equipment failed in lieu of repairing old inefficient equipment. The implementation took place throughout 2016 as needs arose and as budgeted projects were released for implementation. The equipment was replaced in common areas and tenant spaces in our healthcare buildings in the HCP portfolio.
147 HVAC projects were implemented including 74 water source heat pumps, 58 split-system and package units, 3 chiller and 5 cooling towers and 7 commercial rooftop package units, totaling 379 individual equipment pieces. Estimated annual savings was $275,358 and premium efficiency cost was $721,448, yielding an ROI of 38.2% and a payback of 2.6 years. Annual energy reduction was 2970 Mwh. Estimated annual reduction in GHGs was 1525 metric tonnes of CO2e. Over the past 4 years, we have implemented 499 of these projects, yielding reductions of approximately 9,488 MWh in energy and 4,873 metric tonnes of CO2e.
This case study was submitted by HCP Inc.