Chapter 4: Research Methodology
4.4 Cost evaluation of the different house options
4.4.1 Sources of data
Like LCA, data is required for the cost evaluation of a project. Life cycle cost analyses for the Base-case building and both retrofit scenarios were performed, using both energy and non-energy cost data from the house bill of materials quantities (See Figure 4.10). It should be noted that non-energy costs of an improvement from BaseCase to other level refer to maintenance, repair and replacement of materials and components over the lifetime of the building.
Fuel quantities for the respective individual representative archetype houses were derived as output from HEM energy modelling software. The operation energy costs for each of the scenarios were calculated as the product of the energy prices and the respective fuel quantities from the HEM energy modelling software. A detailed breakdown of materials and operation costs are in Appendix 4.4.
The methodology used in calculating non-energy costs include a detailed breakdown across life cycle phases by construction materials and products, and assigning costs to each material component or product based on information from Spon’s Irish Price Books (Spon, 2008) and Spon’s Mechanical and Electrical Price Book (Spon, 2011).
These prices were adjusted to the 2005 base year of study. The costs include all labour, materials, overheads and profits required to carry out a LCCA for the Base-case and the retrofit scenarios.
167 4.4.2 Life cycle cost analysis (LCCA)
While life cycles cost analysis has been discussed in detail in Chapter 2, in this section, a detailed LCCA methodology is presented. In an LCCA, the estimation of total costs of building project alternatives can be discounted or non-discounted. The discounted LCC method takes into account first costs, including capital investment costs, purchase, and installation costs; future costs, including energy costs, operating costs, maintenance costs, capital replacement costs, financing costs; and disposal costs, over the service life of the building. In this study, the discounted LCC method involving the calculation of the net present value of a project alternative is used.
Calculation of Net Present Values (NPV) across life cycle phases
The present value (PV) of a project alternative is the cash amount received or paid at a future point in time calculated using a discount rate. Thus, the net present value (NPV) of a project alternative is the summation of all PVs to represent the life cycle cost (LCC) of the project alternative. In this study, a simplified LCC formula for calculating the LCC of an archetype of the house scenario in question is given as follows:
LCC = R + M + D + E (Equation 4.13)
R = present (real) value capital costs of energy savings components.
M = present value capital replacement costs and non-fuel operating, maintenance, and repair costs.
D = present value disposal costs.
E = present value energy costs.
In the remaining part of this section the step by step calculation of NPVs across maintenance, retrofit, operation and disassembly phases is discussed.
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The net present value (NPV) of the maintenance phase of an archetype was calculated based on the expenses for regular servicing and replacement of building systems up to their ends of lives. These include both capital replacement of heating and ventilation systems, such as boiler, mechanical ventilation and heat recovery (MVHR) as well as annual replacement of costs of (filters, photovoltaic (PV), compressor for heat pumps and loop circulating pump for ground source heat pump). The phase also incorporates yearly servicing of boiler; and scheduled repainting of the building. In order to evaluate the marginal abatement costs (MAC) for Irish domestic scale PV and SWH, Ayompe (2011) evaluated the NPV of the capital costs, operation and maintenance of the appliances using life cycle cost analysis technique.
In this study, the net present value (NPV) of the maintenance phase is the sum of PVs for all capital replacements of building systems including occasional servicing of appliances, in a given year (n) at a given discount rate (d). The net present value (NPV) of the maintenance phase is represented by equation 4.14 below.
∑
Nvm = net present value (NPV) of the maintenance phase.
n = year of occurrence.
k = last year of occurrence.
Fvm,n = present value of all capital replacements of building systems including occasional servicing of equipment in year n to last year of occurrence, k.
d = discount rate (%).
n = year of occurrence.
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The net present value (NPV) of the retrofit phase was calculated based on the cost of improving the BaseCase scenario to the level of the selected retrofit scenario in question. Using the total quantities of capital applications of materials, components and building systems, the total capital cost of retrofitting was calculated. The base year total cost of retrofit was then applied once as capital cost and discounted to last year of occurrence. The net present value (NPV) of the retrofit phase of a unit archetype of the house scenario in question can be represented by equation 4.15 below.
n n
vr
vr
F d
N =
,( 1 + )
− (Equation 4.15)Fvr = present retrofit cost discounted to present value in year n (€).
The calculation of the cost of the disassembly phase was based on the cost of detaching reusable materials, demolition of the building, and transporting all these materials to recyclers. Such costs include labour costs for crane lifting, loading, and transportation and fuel costs. The total loading for transport was calculated based on the weight of the total quantities of demolition waste generated. The base year total cost of disassembly phase was also applied once as capital cost and there was no last year of occurrence.
The net present value of the (NPV) of disassembly of a unit archetype of the house scenario in question can be represented by equation 4.16 above.
n d
v
vd
F d
N =
,( 1 + )
− (Equation 4.16)Fvd,n = present disassembly cost discounted to present value in year n (€).
The net present value of the operation phase of an archetype was calculated based on the annual operational energy costs (i.e. sum of yearly fuel costs). The net present value
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(NPV) of the operational phase of an archetype of the house scenario in question can be represented by equation 4.17 below.
∑
Nvo = is the net present value (NPV) of operation phase.
Fvo,n = present value operation energy discounted to present value in year n to last year of occurrence, k.
LCC of the population of housing at archetype level
The sum of net present values (NPVs) across life cycle phases yielded the total life cycle costs of an archetype for the house scenario in question during its life span. In summary, the calculation of the LCC of a given house scenario involves identifying and summing all present costs by the year incurred and discounting these to their present values. The life cycle cost (LCC) of a given unit archetype of the house scenario in question can be represented by equation 4.18 below.
vo
The life cycle cost of the population of housing can be estimated using archetype LCCs.
The life cycle cost of the exiting Irish housing stock across house scenarios was calculated as the sum of the product of the life cycle cost for the individual unit
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archetypes and the corresponding number of houses in the population for which the unit archetype is representative. This can be represented by equation 4.19 below.
a
N tot, stock = life cycle cost of the exiting Irish housing stock for a given house scenario Na = number of houses for which the unit archetype is representative in the housing stock.