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Project Payback

Here are some guidelines and questions you can ask to help you choose the contractor best qualified for your project:

You should:

  • Obtain bids from more than one contractor.

  • Have the contractor show you they are licensed, insured and can produce a certificate for refrigerant handling if needed.

  • Have the contractor provide examples of quality work and names of customers for reference.

  • Have a clear written agreement with all the work listed in detail. All products, their model number and efficiency ratings should be listed.

  • Ask for explanation of all warranty documentation and have the contractor help with submitting the warranty information.

The contractor should:

  • Be able to show you a layout of where the equipment will be installed.

  • Determine the size of your equipment using Manual J or an equivalent calculation method.

  • Held you determine an estimate of what your payback will be.

  • Explain the benefits of routine maintenance.

  • Be able to check refrigerant charge using the proper tools.

  • Diagnose or repair your duct system, if necessary.

  • State the scheduled start and completion date.

  • Inspect the work carefully to make sure there are no safety issues.

  • Test the system to make sure it is working properly.

  • Be able to provide an AHRI (Air Conditioning, Heating and Refrigerant Institute) number or Certificate of Product Performance, which helps ensure the technician installed a properly matched system.

Calculating Cost and Savings

How fast your energy efficiency project or heating/cooling system investment pays back the initial cost indicates cost effectiveness. Two common ways of gauging a project’s possible worth is simple payback and life-cycle cost.

Simple payback = Cost Difference/Savings

Example: Your old heating system just failed and your home uses 75 million BTUs of heat each season. You are considering installing a 95% efficient propane furnace andit will use 862 gallons of propane for heating at $1.90 = $1,637.80 per year. This system will cost you $3,600. You are also considering buying a 95% efficient propane furnace with an Energy Star-rated air source heat pump, and plenum heater to go on our off-peak program which has a rate of 5.5 cents per kWh. This system costs will cost you $9,500 up front, but figuring in the cooperative’s rebate for qualifying components, it costs you $8,600. Your heating costs with this system will be $929.70. Your simple payback for choosing the off-peak system would be 7 years.

Simple payback is useful for showing you how long it will take to pay back your initial investment.

Life-cycle cost

Another way of figuring out a good investment is life-cycle cost, which takes time into account.

Example: You have a heating system that last 15 years and costs $1,500 a year in heating expenses for a total lifetime cost of $22,500 not factoring in maintenance. You can purchase a new system for $5,000 that also lasts 15 years, but only costs $900 a year in heating expenses for a total cost of $18,500. Since replacing the heating system is less expensive over the long run, it makes sense to replace it.

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