May 12, 2020

Recent lesson: capital planning on our commercial building pairs well with caring for a newborn—like reading, you can do it 24x7, and it's easy to start and stop 😊

Our building came with seven packaged rooftop heating/cooling units. Apart from the roof itself, this collection of systems is the highest-dollar depreciating item at the building, so I've been planning how we'll upgrade it over the long term.

A few things I've learned:

  • HVAC systems have four major cost drivers:
    • Capital cost: purchaing the units, installation, ducting
    • Planned maintenance, typically done on a schedule
    • Unplanned maintenance
    • Utility consumption (gas and electricity)
  • Assuming 20 years of service, we'll incur $750 in capital cost (depreciation) and $600 in planned maintenance annually, per unit.
    • Avoiding unplanned maintenance is critical; you'll pay a fortune getting someone out in a hurry, even more so if it's the middle of the night, over a weekend/holiday, or if parts have to be rush-ordered.
  • HVAC systems wear as a function of both age and running time (use).
    • "Use wear" happens because things wear out when run: belts, bearings, filters.
    • Age shows in two ways: technological obsolescence (new compressor types, control systems, refrigerants), and stressed metal (rust, oxidation).
  • Barring a crazy accident, system replacement is always planned (not unplanned). That means you can save up for it—you won't be "surprised".
    • In an office building/condo with many units, adjacent units provide redundancy. While less than ideal, a neighbor's continued heating provides a measure of redundancy against cracked pipes or other major structural damage from lost heat.
  • Plan replacement based on observed condition, efficiency, and technology changes.
    • Observed condition: are things working as designed, or lots of overcycling/unplanned maintenance/breakdowns? Are the metal parts (heat exchangers) starting to rust or oxidize? Other "big" things that are expensive/hard/not worth fixing?
    • Efficiency/technology: are parts still readily available? Does the system use a refrigerant (e.g. R-22) that's been banned?
    • Somewhat to my surprise, age is less important. All things equal, you should expect to replace an old unit sooner than a new one, but only because age correlates to the other reasons (e.g. wear, technology changes). The mere fact a unit is "old" doesn't warrant replacement per se.
  • Northern Illinois isn't too excited about heat pumps (yet?)
    • Many installers won't even quote them, due to the perception of poor performance in cold climates, problems defrosting, and overall complexity. Installers that will quote them charge a lot more than an equivalent replacement unit, in part because adapting a conventional ducted system to a heat pump can be a pretty substantial undertaking.
    • Newer Fujitsu models claim to work down to -20 degrees Fahrenheit without resistive heating. This may be a case where technology improvements take time to work through an industry. In any case, it seems they haven't yet hit the early majority
    • The prevailing attitude seems to be "wait and see", even though several installers I spoke to think there's no chance we'll reduce carbon emissions without reducing the use of gas-fired heat, everywhere. Suffice to say, talking to these guys didn't make me optimistic about reducing carbon emission, at least not without significant escalation in natural gas prices and/or reduction in electric rates.

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