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     OPTIMIZING SOLAR THERMAL RESOURCE USE AT COMMERCIAL BUILDINGS


                                                        Tommy Cleveland
                                                           Thomas Pash
                                                            Henry Tsai
                                                          Laurel Varnado
                                                    North Carolina Solar Center
                                                         NCSU, Box 7401
                                                     Raleigh, NC 27695-7401




ABSTRACT

Due to limited experience with solar thermal space heating         that would be needed to serve the occupants of the building
and cooling systems in the U.S. solar industry, the costs and      year-round. It then determines the financial investment
benefits of these systems are not often well understood. This      needed for a traditional HVAC unit powered by electricity
paper provides a model to delineate financial choices for          and natural gas compared with that of a solar thermal
commercial solar thermal investments. The study also               system providing much of the domestic hot water and space
provides a sensitivity analysis of several variables including     heating, and some of the building’s space cooling needs,
system costs, escalation of energy costs, and Renewable            using current absorption chilling technology. Using
Energy Credit prices. A sensitivity analysis of each of these      respected solar thermal and building energy modeling
variables is presented independently to show the potential         software packages (RETScreen, EnergyPlus and Energy-
impact of each variable on the overall rate of return for the      10), the study charts the systems’ energy performance
system. The paper combines the results and presents three          within the commercial building, located in central North
different scenarios to show conservative, moderate, and            Carolina.
aggressive forecasts for the increasing value of solar thermal
space conditioning. The end result shows a clear economic          The second half of the study provides a comprehensive
value in these systems when sited in North Carolina.               financial analysis using a calculator previously developed
                                                                   by one of the authors, Henry Tsai. The same calculator is
                                                                   then used to conduct a sensitivity analysis of the solar
                                                                   thermal system for the following variables: cost of solar
1. INTRODUCTION                                                    thermal system, escalation of energy costs, and Renewable
                                                                   Energy Credit (REC) prices. These analyses show the
While the energy used to heat domestic hot water (DHW) in          potential impact of each variable on the overall rate of
U.S. residential and commercial buildings is significant,          return for the system.
roughly three times that amount of energy is used for space
heating and cooling in these buildings.i

This paper provides a method for analyzing the financial           2. ASSUMPTIONS
costs and benefits of solar thermal systems that serve space
conditioning needs within commercial buildings. Using a            In order to construct a reasonable scenario, the authors had
theoretical, energy-efficient office building as a model, this     to make several assumptions, both internal and external to
paper begins by assessing the amount of heating and cooling        the model.




    copyright 2010, American Solar Energy Society                      first published in the SOLAR 2010 Conference Proceedings
To begin with, we made several assumptions regarding the         Our inputs for the EnergyPlus simulation included the
actual building. We designed it to be 30% below ASHRAE           following general picture of the building:
90.1 standards, which may have hurt the financial payback
of the solar system by limiting the total HVAC energy use.               Raleigh, NC location
We reasoned that a building owner who is interested in solar             U-shaped Office building of 50,000 sq. ft. (See fig.
thermal technology would also want to build the most                      1 below.)
efficient building possible.                                             30% energy savings below ASHRAE 90.1-2004 (a
                                                                          standard option offered by DOE guidelines)
This study used several interviews with system installers                Packaged VAV with Reheat (System 5 in
and designers to determine a reasonable range of system                   ASHRAE 90.1 appendix G)
prices, both for energy efficient HVAC and solar thermal                 “Smart default” for other parameters
systems. We also tried to make practical assumptions
regarding the life of the project and annual maintenance         These inputs resulted in energy use projections within the
costs, based on knowledge of similar, real-world projects.       building for:
Other factors that may have affected our model include
                                                                         Heating system capacity (641 kBtu/hr), which
natural gas and electricity price escalations, the continued
                                                                          includes hot water usage
availability of current state and federal tax credits and
depreciation, and the availability REC markets. For these                Tons of cooling capacity required (87)
variables, we used currently available policy incentives and             Annual HVAC electricity use and annual natural
a conservative estimate in energy price escalations.                      gas use for space heating and hot water
                                                                         Monthly heating, cooling and hot water loads
This study mirrored real-world projects in that it required a
significant amount of decision-making at every step. We          We then checked these projections using Energy 10
generally tried to use conservative estimates when we did        software and found the heating and cooling loads to be
not have real projects to cite. This is also the reason we       comparable. This model building will be used to run two
provided a sensitivity analysis to correct for potential         heating and cooling scenarios – one with a traditional
variations in several of these unknown variables.                HVAC system that we call the control building and one with
                                                                 traditional HVAC system plus a solar heating and cooling
                                                                 system that we call the solar building. We designed the
                                                                 scenario so that the solar building has the same HVAC
3. METHOD                                                        system as the control building but also has an absorption
                                                                 chiller powered only by solar thermal energy.
The following is an outline of the general process we
followed to complete this study.

3.1 Construct the theoretical building and determine its
energy needs.

Based on interviews with contractors and industry
professionals familiar with this technology, we constructed
a model commercial building of 50,000 square feet. This
building serves as the sample control building for this study.
We further determined that a building of this size in North
Carolina would require a $500,000 to $750,000 initial
investment for a complete installed high efficiency variable
air volume (VAV) HVAC system. We then used the
EnergyPlus File Generation online tool to help us map out
the building. According to the website, “EnergyPlus models
heating, cooling, lighting, ventilating, and other energy
flows as well as water in buildings.”ii This generator tool is
a free service developed by the National Renewable Energy
Laboratory (NREL) and the U.S. Department of Energy              Fig. 1: Rendering of the U-Shaped Building
(DOE) to help make it easier to use and learn the
EnergyPlus calculator.




    copyright 2010, American Solar Energy Society                   first published in the SOLAR 2010 Conference Proceedings
3.2 Determine the thermal loads of absorption chiller.          water loads of the building. We then converted the
                                                                building’s monthly cooling loads to the monthly thermal
The solar cooling system we modeled is composed of a            energy input needs of an absorption chiller (assuming a
solar absorption chiller powered solely by a solar thermal      coefficient of performance (COP) of 0.7) to meet this
system. This solar thermal system also serves the space         cooling load. The monthly thermal energy needs of the
                                                                building served by an 87 ton absorption chiller are shown in
TABLE 1: MONTHLY THERMAL NEEDS                                  Table 1. It is clear that the thermal energy needs of the
                                                                absorption chiller are the dominant thermal needs of the
                                                                                                      building. Because of
                                                                                                      this, and the fact that the
                 Space     Fraction     Space        Energy    Fraction                  Fraction
                                                                                                      majority of cooling
                Heating of Annual Cooling Needed by of Annual Domestic of Annual needed is in the summer,
                 Load       Total       Load        (87 Ton)    Total     Hot Water        Total      monthly thermal needs
                Energy Thermal Energy Absorption Thermal Load (GJ) Thermal                            vary greatly between
                  (GJ)      Load         (GJ)     Chiller (GJ)  Load                       Load       winter and summer.

                                                                                                       This large monthly
  January        73.1       3.90%         12.4        17.7        1.00%           4           0.20%    variation in thermal load
  February       59.7       3.20%         16.8         24         1.30%         4         0.20%        cannot be efficiently met
                                                                                                       with a solar thermal
   March         32.3       1.70%          40         57.1        3.10%         4         0.20%        system. In order for the
                                                                                                       system to supply enough
    April        18.7       1.00%         61.9        88.4        4.80%         4         0.20%
                                                                                                       thermal energy to the
    May          4.03       0.20%         119         170         9.20%         4         0.20%        absorption chiller in the
                                                                                                       summer to warrant its 87
    June         2.36       0.10%         159        227.1       12.30%         4         0.20%        ton capacity, the solar
    July         2.21       0.10%         171        244.3       13.20%         4         0.20%        thermal system would be
                                                                                                       grossly oversized for the
   August        2.48       0.10%         200        285.7       15.40%         4         0.20%        winter thermal loads. A
 September       2.15       0.10%         133         190        10.20%         4         0.20%        redundant cooling
                                                                                                       system this large would
  October        14.4       0.80%          77         110         5.90%         4         0.20%        be an inefficient use of
                                                                                                       capital. To make
 November        31.5       1.70%         38.1        54.4        2.90%         4         0.20%
                                                                                                       efficient use of the
 December        62.4       3.40%         22.7        32.4        1.70%         4         0.20%        capital invested in the
                                                                                                       absorption chiller and
                                                                                                       solar thermal system, the
heating load by providing hot water to the hydronic coils in      absorption chiller needs to operate at near its capacity
the existing HVAC system and hot water to the domestic            during the cooling season and the solar thermal system
hot water (DWH) load. As noted, the absorption chiller is a       needs to operate near its capacity throughout the year. This
redundant cooling system to the full size HVAC system on          can be achieved by downsizing the chiller from the full
the model control building.                                       cooling peak demand of the building.

To meet this full cooling load the absorption chiller would        A simple model was built to estimate the percentage of
have to have a capacity of 87 tons; however, because the           monthly cooling load that a given capacity absorption
traditional HVAC system is sized to meet the full cooling          chiller can meet. The fraction of the monthly cooling load
demand the absorption chiller may be sized to maximize the         met by a given capacity absorption chiller was estimated as:
use of the solar thermal system. In other words, we could
down-size the absorption chiller to maximize the cost
effectiveness of the capital expense of the absorption chiller
and solar thermal system.
                                                                                          ,                 
                                                                                                 ∗
                                                                                                        
                                                                                                                    , 100%
To begin the process of sizing the absorption chiller and                             ,

solar thermal system, we took the information supplied by
EnergyPlus and determined the heating, cooling, and hot




    copyright 2010, American Solar Energy Society                      first published in the SOLAR 2010 Conference Proceedings
Where,                                                            TABLE 2: RELATIVE % OF MONTHLY AVG. LOAD

                                                                                      Thermal Load to
                                                                                        which Solar
                     ,   = monthly thermal energy demand of                          Thermal System is        Relative Size of
                           full capacity (87 tons) absorption         Month           Exposed (MWh)          Monthly Load (%)
                           chiller                                   January               26.3                    93.4%
                                                                     February              24.3                    86.4%
                              = maximum monthly thermal               March                25.9                    92.0%
                     ,
                                                                       April               30.9                   109.4%
                                energy demand of full
                                capacity (87 tons) absorption          May                 29.6                   104.9%
                                chiller (August, 285.7 GJ)             June                29.1                   103.3%
                                                                       July                29.1                   103.1%
                                                                      August               29.2                   103.4%
                              = capacity (tons) of downsized
                                                                    September              29.1                   103.1%
                               absorption chiller
                                                                     October               32.5                   115.1%
                                                                    November               25.0                    88.6%
                            = capacity (tons) of full sized         December               27.4                   97.3%
                              absorption chiller (87 tons)
                                                                  3.3 Input data into RETScreen to size solar thermal
                                                                  systems.
This is a conservative estimate of the load that a downsized
absorption chiller could meet because it assumes that the         Once the size was chosen for the solar thermal cooling
cooling requirement in the peak load month of August is           system, the amount of useful solar thermal energy supplied
always the full peak demand of 87 tons. This estimate was         to heating water, heating the space, and cooling the space
made for every month of the year for chillers from 20-60          could be calculated in RETScreen. RETScreen is an
tons, in steps of 5 tons. The results of this monthly analysis    internationally-used tool, designed “to evaluate the energy
is that a greatly downsized absorption chiller (20-40 tons)       production and savings, costs, emission reductions, financial
can meet 100% of the winter cooling load and less than half       viability and risk for various types of Renewable-energy and
of the summer cooling loads.                                      Energy-efficient Technologies (RETs).”iii The inputs we
                                                                  used included the following:
Using this adjusted chiller thermal load for a downsized
chiller, we then calculated, for each month, the total thermal            Raleigh, NC location
load to which the solar system would be exposed. The size                 Collector type (evacuated tubes)
of the absorption chiller was tested in a range from 20 tons              Collector make and model: Sunda 2-16 collectors
to 60 tons to find a size that provided a relatively flat                 Thermal load at 90 deg C
month-to-month solar thermal load, with about a 10-20%                    Relative monthly size of thermal load for all 12
increase in summer load over winter load. Also, the smaller                months (86% to 115% range)
the absorption chiller size, the more hours in the year it will           Tilt of collectors (several tested, 32 degrees
operate at its capacity and therefore maximize the use of the              selected to maximize annual output)
capital expense. On the other hand, the smaller the chiller,              Azimuth of collectors = 0 (South)
the smaller the associated solar system and the smaller the               Ratio of storage to collector area: 75 L/m2
amount of solar energy provided.
                                                                  The total thermal load was modeled at 90°C, which is much
Balancing the desire to maximize the use of the chiller and       hotter than needed for space heating or domestic hot water,
the solar system with a desire to provide a significant solar     but required for the operation of the absorption chiller.
fraction, we selected an absorption chiller of 30 tons for this   Evacuated tube panels were used as the solar thermal
study. This system size provided a desirable total (space         collectors so that the required high temperatures would be
heating, space cooling, hot water) thermal load annual            provided as efficiently as possible. Flat plate collectors may
profile. The relative percent of the monthly average load         also be used to provide these high temperatures, but this
was determined for the thermal load provided to the solar         option was not investigated in the study. Because the
thermal system each month, which ranged from 86% in               evacuated tubes are so well insulated, their output is reduced
February to 115% in October (see Table 2).




    copyright 2010, American Solar Energy Society                    first published in the SOLAR 2010 Conference Proceedings
only slightly by supplying 90°C water to all three types of         by multiplying the control gas loads by the fraction of the
loads, regardless of their temperature need.                        annual thermal load (given the downsized absorption
                                                                    chiller), provided by the solar thermal system. The
The output from the RETScreen models was the annual                 electricity savings were calculated similarly by using the
useful thermal energy production (in MWh) for solar                 control chiller electricity input and the fraction of the annual
systems with a varying number of collectors (20 to 200 in           thermal load provided by the solar thermal system.The
steps of 20 collectors). These data were used to develop            results of these savings calculations were used to produce
curves of the useful annual thermal energy provided, the            performance curves for various solar system sizes used in
natural gas savings, and the electricity savings for various        the financial model.
system sizes (see Table 3).
                                                                    4. RESULTS
Upon completion of the model inputs, RETScreen
recommends a certain number of collectors to optimize the           To determine the comparative value of a solar heating and
solar thermal system size. Fewer panels mean that more of           cooling system and a traditional HVAC system, we
the thermal load could be efficiently met with solar. More          compared the net present value (NPV) of each type of
panels mean that annual useful energy output per panel is           system on the same building. We then performed a
reduced more than may be desirable. Most of the solar               sensitivity analysis to assess the impact of a variety of
thermal cooling system price quotes we received in                  factors on the economic feasibility of each system.
interviews with installers were given in terms of dollars per
absorption chiller capacity (tonnage) and included all of the       4.1 Economic Analysis.
solar thermal system costs. However, the size of the solar
thermal systems was not indicated. The best assumption that         In creating a base analysis for installing either a traditional
may be made on the solar thermal system size associated             HVAC system or a traditional HVAC system plus a Solar
with a given absorption chiller system is that the size of the      Thermal heating and cooling system, we gathered data from
solar thermal system has been optimized. For this reason,           a variety of sources. Natural gas and electricity rates used
the optimum number of panels suggested by RETScreen                 in this analysis were obtained from the EPA’s Energy Star
was used as the nominal system size. For a 30 ton                   Program’s Target Finder for the Raleigh zip code 27695iv.
absorption chiller, 70 Sunda 2-16 collectors (a 4.1 m2              The escalation rates of both the natural gas and electricity
evacuated tube collector) were recommended by                       prices were calculated from forecasted national prices
RETScreen.                                                          obtained from the Department of Energy’s EIA website.v
                                                                    The costs related to the components of each
TABLE 3: ANALYSIS OF PANEL RANGE
 Number of       Useful Thermal                                          Fraction of        Electricity   Electricity    Total
 Sunda 2-16      Energy Provided      Gas Savings        Gas            Cooling Load         Savings       Savings      Savings
   Panels        by Solar(MWh)          (kBtu)        Savings ($)     Satisfied by Solar      (kWh)          ($)          ($)
     20                68.3             67,504           $929                0.116           10,069         $ 765       $1,694
     40               127.6            126,112          $1,735               0.217           18,811        $1,430       $3,165
     60               178.7            176,617          $2,430               0.304           26,344        $2,002       $4,432
     80               222.2            219,610          $3,022               0.378           32,757        $2,490       $5,511
    100               258.8            255,783          $3,520               0.441           38,152        $2,900       $6,419
    120               289.1            285,730          $3,932               0.492           42,619        $3,239       $7,171
    140               306.6            303,026          $4,170               0.522           45,199        $3,435       $7,605
    160               316.9            313,206          $4,310               0.540           46,718        $3,551       $7,860
    180               322.9            319,136          $4,391               0.550           47,602        $3,618       $8,009
    200               327.5            323,682          $4,454               0.558           48,280        $3,669       $8,123

We then determined the gas and electricity savings for a 30         system and installation were preliminary estimates obtained
ton absorption chiller powered solely from a solar thermal          from local contractors for the purposes of allowing a
system of various sizesmonth-by-month energy savings           reasonable range of initial investment to be determined.
calculation was made for solar system sizes ranging from 20         The range of thermal REC prices was determined using
to 200 panels. This was accomplished by using the useful            those offered by the two main electric utilities in North
thermal energy output from RETScreen to determine the               Carolina. Progress Energy’s SunSense program offers
month-by-month gas and electricity savings provided by the          Thermal RECs of $20/REC for commercial solar systems
solar system. The gas savings were calculated on this basis         sized between 1,200 to 4,000 feet (30 to 100 collectors).vi




    copyright 2010, American Solar Energy Society                      first published in the SOLAR 2010 Conference Proceedings
Duke Energy offers many different REC purchase                     Since not all cost assumptions will contribute proportionally
agreements ranging from a five year agreement payable at           to the NPV, a sensitivity analysis was used to show the
$30/Solar REC to a fifteen year agreement paid up to               impact on the total final cost by adjusting each of the cost
$46.92/Solar REC.vii Tax rates, credits and depreciation           assumptions within the specified ranges (see table 4). The
adjustments were based on current conditions, including the        cost of increasing the capacity of the solar system was
North Carolina state tax credit. Base Assumptions used for         estimated to be between $3,000 and $7,000 per panel;
this economic analysis included:                                   however, to avoid changing two variables at once a cost of
                                                                   $5,000 per panel was used when varying the capacity of the
   Electric Rate: $0.076/kWh                                      solar thermal system.
   Natural Gas Rate: $.0138/kBtu
   Electricity Annual Price Escalation Rate: 2.2%
   Natural Gas Annual Price Escalation Rate: 0.06%                TABLE 5: OVERVIEW OF NPV RESULTS
   Thermal Solar REC Price: $35/Solar REC
   Annual Operating Costs for Solar System: $1,000                               NPV of Systems with Base Case Inputs
   Annual Operating Costs for HVAC System: $1,000
                                                                                            Solar System NPV         HVAC System
   Cost per Ton of Capacity for 30-ton Absorption Chiller
    and Optimized Solar Thermal System: $13,000                            30 Year             ($700,117)               ($763,085)
   Number of Solar Panels in Optimized Solar System: 70                   20 Year             ($688,952)               ($714,809)
   Life of Project: 30 years
   Discount Rate: 3.69% (10 Year Treasury Rate)                           10 Year             ($678,713)               ($661,185)
   Inflation Rate: 1%

4.2 Discussion.                                                    The NPV of both the traditional HVAC and the combined
                                                                   traditional HVAC and solar system was calculated over a
The results are presented as an analysis of the base case
                                                                   30-year project life to determine the cost advantages and
assumptions compared against reasonable ranges as
                                                                   disadvantages of each system (See Table 5). For the
determined through personal interviews and market
                                                                   traditional HVAC system, three variables were used: system
research. Using the base case assumptions discussed above,
                                                                   cost, electricity price escalation rate, and natural gas price
the NPV of both systems becomes roughly equivalent
                                                                   escalation rate. A variance based on the assumed ranges
between years 13 and 14 of the project with the solar system
                                                                   was entered into the model and compared to the base case
having an incrementally better NPV in the remaining years.
                                                                   scenario to visually illustrate each variable’s impact on the
                                                                   total cost of the project.
TABLE 4: OVERVIEW OF ECONOMIC ASSUMPTIONS


                                    Base Case                              Low Case                          High Case

                            Price in         Escalation        Price in           Escalation         Price in        Escalation
                            Dollars             Rate           Dollars               Rate            Dollars            Rate
   Price Per KWh            $0.076             2.20%           $0.076               0.00%            $0.076            4.40%
Price of Natural Gas
                            $0.0138             0.60%          $0.0138               0.00%           $0.0138            1.20%
     per (kBtu)
HVAC System Cost           $625,000                 n/a       $500,000                n/a           $750,000              n/a
 Absorption Chiller
                               30                   n/a          30                   n/a               30                n/a
  Capacity (Tons)
  Optimum Sized
                         $13,000/ton or                    $6,000/ton                              $20,000/ton
 Solar System and                                   n/a                               n/a                                 n/a
                           $390,000                       or $180,000                              or $600,000
   Chiller Cost
 Number of Panels
                               70                   n/a          52                   n/a               88                n/a
(Sunda 2.16 Panels)
Thermal REC Price             $35               1.00%            $20                 1.00%             $50              1.00%




    copyright 2010, American Solar Energy Society                          first published in the SOLAR 2010 Conference Proceedings
Due to the large initial investment, the varying of system       additional variables that needed to be considered. The
costs had a much larger impact on the NPV than changes to        number of panels, thermal REC prices, and the cost of the
the escalation rate of natural gas and electricity costs. The    solar system per ton of chiller capacity also vary according
impact of varying each cost assumption is shown in the           to the assumed ranges.
subsequent ten-year and thirty-year snapshots. The midline
on each graph represents the base assumptions; the darker
bar represents the high case of each variable analyzed and
the lighter bar represents the low case (see Table 4). A less
negative NPV indicates a more economically compelling
project.




                                                                 Fig. 4: 10 Year Analysis of Solar System Compared to Base

                                                                 Since the solar system would be installed in addition to the
                                                                 traditional HVAC system, the combined system price is
                                                                 included in this analysis. Similarly to the HVAC system by
                                                                 itself, the cost of these two systems represent the largest
                                                                 impact on the project’s NPV.
Fig. 2: 10 Year Analysis of HVAC Compared to Base

As we get deeper into the life of the project, the impact of
natural gas and electricity prices becomes incrementally
greater on the system’s overall NPV (See fig. 3). While the
system cost is still the most important driver in total final
costs, the disparity in the level of sensitivity between the
cost of the system and natural gas and electricity prices
lessens as time goes on. If the escalation rates derived from
the EIA website for electricity and natural gas turn out to be
less conservative, natural gas and electricity prices could
become a larger factor in the later years of the project.

                                                                 Fig. 5: 30 Year Analysis of Solar System Compared to Base

                                                                 Thermal Solar RECs offered by local utilities offer a method
                                                                 of mitigating the additional initial costs associated with the
                                                                 solar heating and cooling system. These RECs, depending
                                                                 on the rate the project receives, can vary the final NPV by
                                                                 up to $100,000 over the life of the system (see fig. 5).
                                                                 Using the same electricity and natural gas price assumptions
                                                                 in the HVAC system, there is a similar effect. The future
                                                                 energy price volatility has a low impact on the overall final
                                                                 costs of the project when compared to other factors.
                                                                 However, in time, the impact gets larger in proportion to the
Fig. 3: 30 Year Analysis of HVAC Compared to Base                other variables, particularly with electricity cost.

We evaluated the solar system, including the absorption          The longer the life of the project, the better the picture
chiller, and the backup full-sized HVAC, using the same          becomes for the solar heating and cooling system. Since the
variables as the HVAC system; however, there are several         solar system represents a larger initial investment than the




    copyright 2010, American Solar Energy Society                   first published in the SOLAR 2010 Conference Proceedings
HVAC system, the incentives offered by local utilities as         electricity prices are referenced from EIA, but many factors
well as the federal and state governments have a major            are on the horizon to place upward pressure on these prices,
impact on the viability of a solar project. Since the             including stricter environmental standards and the continued
variability in each of the cost assumptions in this study is so   emergence of developing economies. Even under what we
great, each project should be evaluated on its own using site     consider conservative estimates with the initial energy costs
specific information and actual quotes from industry              and escalation rates, the NPVs demonstrate that both
professionals.                                                    technologies have a similar financial outcome in terms of a
                                                                  project decision. As evident in the sensitivity analysis, a
                                                                  competitive REC price is important in making the two
5. LIMITATIONS                                                    technologies indistinguishable as an economic decision. In
                                                                  summary, a compelling economic case can be made to
Due primarily to the lack of local expertise in the area of       choose a solar thermal system even under prevailing
solar thermal heating and cooling installation, this research     economic conditions. The continued momentum of
paper was subject to certain limitations. In comparing a          environmental policies, energy prices and technology
typical HVAC system with a solar thermal space heating,           improvements only improve the economic case for solar
cooling and DHW system, this study only investigated              thermal cooling.
specific system types as a means of comparison. We did not
consider other system alternatives, which may have                7. ACKNOWLEDGEMENTS
produced different results.                                       The authors would like to thank the following people for
                                                                  lending their time and expertise: David Simms, Vicente
The system pricing data used in the economic analysis was         Bortone, Bill Bostic, Marshall Dunlap, Joey Chorley, Greg
based on preliminary estimates from contractors and should        Rice, Sid Bendahmane and Kirk Nuss.
not be considered representative of formal quotes. There
are numerous variations unique to individual buildings that       8. REFERENCES
could play a factor in determining system costs and energy        (1) Bortone, Vicente. Johnson Controls. Phone
usage. These variations include building envelope,                Conversation. March 2, 2010.
orientation and regional climate.                                 (2) Simms, David. Lee Air Conditioning. Phone
                                                                  Conversation. March 2, 2010.
Since this model was created using North Carolina heating         (3) Tsai, Henry. Project and Technology Economics Model,
and cooling needs in a new energy efficient building, as well     March 5, 2010.
as state incentives specific to the state, the energy usage and
incentives of a comparable building in other regions may                                                                      
                                                                  i
differ. Market factors such as labor and transportation costs        U.S. Energy Information Administration, “Use of Energy
in other states may also affect system pricing. In addition,      in the U.S. Explained,” EIA,
since tax legislation is applied in a different manner to non-    http://tonto.eia.doe.gov/energyexplained/?page=us_energy_
profit organizations and government agencies, these               use
                                                                  ii
organizations may not be able to take advantage of the                U.S. Department of Energy, EnergyPlus Energy
incentives used in this analysis, which could greatly affect      Simulation Software, Energy Efficiency and Renewable
the cash flow of the model.                                       Energy, http://apps1.eere.energy.gov/buildings/energyplus/
                                                                  iii
                                                                      RETScreen International, Natural Resources Canada,
6. CONCLUSION                                                     http://www.retscreen.net/ang/home.php
                                                                  iv
                                                                      EPA Energy Star Target Finder,
The results show that solar cooling may be a financially
                                                                  http://www.energystar.gov/index.cfm?fuseaction=target_fin
feasible investment, despite the lack of widespread adoption
                                                                  der
of the technology. North Carolina provides a tax credit for       v
                                                                      US Department of Energy, Energy Information
renewable systems and, combined with the federal tax credit
                                                                  Administration, Forecasts and
and depreciation, this significantly improves the financial
                                                                  Analysis, http://www.eia.doe.gov/oiaf/forecasting.html
outlook for this type of system. The NPV for both systems         vi
                                                                      Progress Energy, Carolina's SunSense Commercial Water
may not equal out as fast as some companies are willing to
                                                                  Heating, http://www.progress-
accept, but the analysis could entice some early adopters to
                                                                  energy.com/custservice/carbusiness/efficiency/programs/sol
consider it.
                                                                  arthermal/details.asp
                                                                  vii
                                                                       Duke Energy, Duke Energy Carolinas Standard Purchase
Like many renewable energy projects, the NPV for the solar
                                                                  Offer for Renewable Energy Certificates (RECs), Duke
technology improves in conjunction with longer evaluation
                                                                  REC offer:
time frames and with higher energy price escalation. The
                                                                  http://www.duke-energy.com/pdfs/REC-Purchase-Offer.pdf
current assumed escalation rates for both natural gas and




    copyright 2010, American Solar Energy Society                      first published in the SOLAR 2010 Conference Proceedings

				
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