How Much Does It Cost to Electrify Your Equipment to Achieve Net-Zero Carbon Emissions?

We discussed in our previous article how to prepare successful net-zero carbon emissions strategy for an organization and we mentioned that to achieve this target, you need to buy green power or offset your unavoidable carbon emissions. In this article we will discuss what will be the cost of electrifying the equipment in the facility if you buy green power and in particular electrifying the space heating equipment.

The space heating for commercial buildings is usually provided by either gas boiler or by electric heat pump chiller. The boiler is ambient independent in which it provides constant heating to the building regardless of the ambient temperature. On contrary, the heat pump chiller is ambient dependant and its heating capacity degrade with lower ambient temperature. Therefore, many experts recommend to keep a boiler as a backup for the heat pump chiller or oversize the heat pump chiller to cope with the lower ambient temperature that might occur during the winter season. However, for the purpose of reducing the carbon emissions and achieve your target of net-zero carbon emissions, the heat pump chiller is the best option that can replace the gas boiler if you buy green power.

Therefore, what will be the cost implication by replacing a gas boiler with a heat pump chiller. To give the building owners indication about this cost implication, we have done quick calculations to estimate this cost implication for a mid-size building that runs 24 hours a day, 7 days a week such as hotel, hospital or aged care facility. We have done our calculations for three major cities in Australia (Melbourne, Sydney and Canberra) and we assumed that this building is located in the CBD of each of these cities. We have obtained the energy prices for the CBD’s of these three cities from the website of one of the energy retailers and they are summarized in the table below:

The green power on average is more expensive than the normal power by around 5 cents and therefore, we have added 5 cents to the above electricity prices for Melbourne and Sydney but we haven’t added anything for Canberra electricity price because Canberra Government has already supply the whole city with green power.

We have used in our calculations the Heating Degree Days (HDD) method to estimate the energy consumption. The HDD for the above three cities have been obtained from AIRAH (Australian Institute of Refrigeration, Airconditioning and Heating) Handbook. We have obtained the budgetary price for the heating equipment from the equipment suppliers.

The table below summarizes our calculations results for this study:

Based on the above table, we can discuss the following points:

  • Melbourne and Canberra have more EFLH compared to Sydney because they have colder weather.
  • The boiler has the same efficiency for all the cities but the heat pump chiller efficiency (COP) depends on the design winter temperature and therefore, the Sydney chiller will be the most efficient (i.e. highest COP).
  • The energy consumption is related to the design winter temperature in which Canberra has the most energy consumption and the most carbon emissions from the gas.
  • The annual energy cost for the heat pump chiller for both Melbourne and Canberra is higher than the boiler annual energy cost, while the chiller energy cost for Sydney is lower than the boiler energy cost. This is mainly because Sydney has better chiller COP because of the warner weather during winter compared to Melbourne and Canberra. Another reason is that Sydney gas price is higher compared to Melbourne gas price. Therefore, for Sydney, it is a win-win situation in which the building owner can achieve net-zero carbon emissions by electrifying the equipment and in the same time reduce their energy consumption cost.
  • The price of the heat pump chiller is way more than the boiler price and therefore, the building owner should allow higher capital cost for replacing a boiler with heat pump chiller than replacing a boiler with another new boiler. Also, the maintenance cost of the heat pump chiller is relatively higher than the boiler maintenance cost due to more moving parts. You can also note that because of the low ambient in Canberra, the chiller price is higher because it requires bigger chiller to meet the same capacity.
  • If the capital cost of the heat pump chiller is high and the building owner don’t have a budget for it, then they can offset the boiler carbon emissions by buying carbon credits. Assuming the cost of the tonne CO2-emissions is $20, then the building owner in Melbourne for example, will pay annually 227 x $20 = $4,540 for offsetting this 227 tonnes CO2-emmissions. Note that this CO2 offsetting cost is an annual cost in addition to the gas cost consumed by the boiler. Therefore, a feasibility study should be done to decide on which option is more economic (i.e. replacing the boiler with heat pump chiller or offsetting the boiler carbon emissions).
  • Finally, we have used constant heating capacity of 500 kW for all the cities to provide apple to apple comparison but note that the size of the building will be different from city to city for the same heating capacity due to the difference in the design winter temperature.

If you need help to decide on which option is more economic and beneficial to you in your journey for net-zero carbon emissions, then please don’t hesitate to contact us.

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