Estimate Costs to Implement Greenhouse Gas Mitigation Strategies for Buildings
When estimating the cost of implementing the greenhouse gas (GHG) mitigation strategies, Federal agencies should consider the life-cycle costs and savings of the efforts.
The major cost elements associated with developing and implementing a project are identified in Table 1.
Table 1. Major Costs for Project Development and Implementation
|Project planning costs||
||Type of project; previous team experience; local markets; number of stakeholders|
|Purchase cost||Cost of equipment and materials||Volume purchased, local markets, negotiating purchasing agreements; available incentives|
|Labor costs for installation||Cost to install/implement the measure||Type of project; previous experience; local labor rates; local markets; on-site characteristics such as existing systems, ongoing operations, hazardous materials|
|Energy savings||Cost per unit of energy (e.g., $/kWh,$/ kBtu) saved||Rate schedules and applicable riders for the site; type of project; projected future energy costs ; interactive effects of systems|
|Demand reduction||Applicable for measures that reduce electricity consumption during peak load periods||Rate schedules for the site; Type of project; projected power costs for the site; interactive effects of systems|
|Replacement costs||Cost to replace equipment at end of useful life (used in life cycle cost analysis of the measure)||State of existing equipment; local markets|
|Salvage value||Reuse value of equipment; value of recyclable components||State of existing equipment; local markets|
|Disposal costs||Hauling, recycling, or disposing of materials||Type of project; existence of hazardous materials|
|O&M costs||Additional net cost or savings from required maintenance of the measure||State of existing equipment; complexity of replacement equipment; locally available expertise/staff|
|Measurement & Verification (M&V) costs||Cost for metering equipment||State of existing metering systems|
|Sources: Advanced Energy Retrofit Guide for Office Buildings and Advanced Energy Retrofit Guide for Retail Buildings|
The cost elements listed above will feed economic analyses that are central to project prioritization. (See Table 2) There are a variety of potential economic analyses that can be quantified, and one or more methods may be required depending on the type of funding mechanism(s) available.
Table 2. Economic Analysis Methods
|Simple payback||Time required for cumulative savings to equal the upfront cost.|
|Net Present Value (NPV)||More complex economic evaluation method than simple payback that includes cash flows over the useful life of the project and the time value of money. NPV is one form of a life cycle cost analysis. Internal Rate of Return (IRR) The discount rate for a specific project and cash flow that would give a net present value of zero|
|Cost per Metric Tonne of GHG Abated ($/MTCO2e)||Integrating metric between cost and GHG emissions savings. Calculated by dividing the total investment in a project by the annual GHG savings.|
Table 3 summarizes Program B's economic analysis results using the Buildings GHG Mitigation Estimator. The total cost and savings estimates are based on the applicable floor area estimates established for each energy savings package in Evaluate Strategies for Buildings.
Table 3. Program B Offices Economic Results
|Site||Total Office Floor Area (KSF)||Category of Energy Savings||Total Capital Cost ($)||Total Cost Savings ($/year)||Simple Payback (years)||GHG Abatement Cost ($/MTCO2e)|
|Site 3 (Chicago)||2,200||RCx||$268,840||$278,080||1||$153|
|Site 2 (Seattle)||4,500||RCx||$412,425||$486,000||1||$167|
|Site 4 (Miami)||2,200||RCx||$336,050||$199,650||2||$221|
|Source: U.S. Department of Energy Advanced Energy Retrofit Guides|
For information on financing or funding options, see Project Funding.
- Step 1
Assess Agency Size Changes
- Step 2
Evaluate Emissions Profile
- Step 3
Evaluate Reduction Strategies
- Step 4
Estimate Implementation Costs
- Step 5
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