Energy savings and resource efficiency

Business

Case study 9: Building management system

Find out how a property company using on-bill financing to finance a new building management system determined that it would be better off by about $64,000 over 15 years.

Situation

A property company owns and operates a mixed use building that includes office space and retail space. This building is served by a central air-conditioning system that is controlled by an out-dated building management system (BMS). This system is over 10 years old, no longer supported by the vendor, and does not provide a sufficient level of control to manage and optimise control strategies. It seeks to upgrade it seeks to upgrade its BMS system.

How does the energy-efficient (EE) system compare to the standard system?

Equipment type Standard EE
Cost to install ($)  $100,000  $200,000
Operation and maintenance cost ($ p.a.)  $5,000  $5,000
Electricity use (kWh p.a.)  900,000  810,000
Equipment life (years)  10  15
Electricity cost reduction in first year from EE ($)    $18,000
Simple payback period for EE (years)    15.4
Simple payback period for EE, with marginal capital1 (years)    7.7

Item  NPV 
Standard system  -$1,317,043
EE system  -$1,252,692
Difference  $64,351

Finance option selected: On-bill financing

The company is a customer of Origin Energy and decides to seek on-bill financing to finance its new Building Management System, as this results in the highest expected NPV.

 

1This is the payback period for the energy-efficient (EE) option using the difference in capital outlay between the standard and EE equipment, rather than the full capital outlay for the EE equipment.

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Page last updated: 10 December 2015