Technology vendors tend to focus on selling "solutions" in which their respective technologies play the starring role. At times this may be an obvious ploy, but often enough it is done in good faith, but can be disastrous nevertheless, because it focuses on the strengths of the technology in isolation, and not its relevance to a building energy infrastructure.
Owners who buy such would-be solutions without properly reviewing the technology in context as an integral part of a long term energy infrastructure, rather than in a stand alone fashion, will pay dearly for such carelessness. At times it may even turn out that certain technologies are complementary from an the standpoint of energy engineering economics, when in the competitive sales process, where vendors all operate in their own silos, they are presented as competitive solutions in a way which is very misleading, unless owners have competent engineering and planning staff at their disposal. Existing incentives often make sloppy analysis worse by distorting the picture even more. Once technology commitments are made in the wrong order, it can be very expensive to undo them.
A proper financial discipline in this regard will view all such investments in the context of a strategic shift towards long term energy independence, which will be driven by the economics of energy as an asset, not a liability, and from the standpoint of producing energy, rather than consuming energy - which can only be mitigated somewhat by "energy efficiency." Moreover the building needs to be appreciated as a whole, and individual functions which are subsystems of that whole should never be analyzed in isolation, at the risk of serious capital destruction, if perceived problems of subsystems are solved without addressing the whole system as and integral energy and economic system.
A good example is very easy to find in today's market place. An apparent tradeoff decision may seem to exist between a "High Efficiency" (preferably "Energy Star" rated) hot water heater (gas or electric, depending on local rates), and either a geothermal or solar thermal hot water system. Vendors present their "solution" based on the payback periods, and their jubilant claims are enhanced further by the various incentives that are available, and predictably owners come to the wrong decisions. If a good solar or geothermal system has a 30 year life expectancy (and a 20 year warranty), during that same period, the hotwater heater may need to be replaced two or three times, and it comes with a constant and still substantial series of energy bills, all driven predominantly by the cost of fossil fuel (and delivery costs), which are rising relentlessly.
Based on payback alone the High Efficiency fossil fuel based method is likely to win. In NY, the typical situation is an old system in an apartment building which is based on a coil in a steam boiler, which is only 50% efficient as a hot water heater, and the modern high efficiency gas-fired water heaters are 95% efficient. Easy solution. However, remember, this still assumes a constant series of gas bills, and two or three replacements over the 30 year lifespan of the alternative system based on renewable energy. A geothermal system may offer 200% in system efficiency by comparison, and a solar thermal sytems may offer near infinite efficiency because the only fossil fuel bills it brings along on a recurrent basis is a little backup heat for the periods when there is no solar energy to harvest. And in both systems the harvesting problem of peak-load energy may be offset with water storage.
In short, when properly analyzed as an intramarginal investment in the building the $150K Solar or Geothermal system may end up being a better investment than the $15K high efficiency gas heater, while the payback period of the gas heater would definitely be shorter, when seen in isolation, but it comes with still recurrent and comparatively substantial energy subscription costs as well as two or three replacements over time. And the return on the more expensive system may be greater than on the cheaper fossil-fuel based solution. There may be other knock-on integration effects which further increase the value of the geothermal or solar solutions, where recurrent energy costs may be less than half or even only 10% of the gas fired alternative. It all becomes easy to understand when you see two identical buildings side by side, each with 100 apartments, and one spends $1,000 per apartment per year for Domestic Hot Water (DHW), based on the old coil in steam boiler, and the other $100, or $200 based on a renewable solution, while the third chose the lower capital investment of a simple high efficiency gas fired heater, but still ends up with bills of $500 per apartment per year. Energy independence in economic terms is thus a make or buy decision, or, to put it differently it boils down to buying free cash flow. The real issue is the resulting real estate value of the building, which is not what's on the mind of the equipment vendors. They would rather bamboozle the owners with magical payback numbers. So I keep reminding owners that they're in the real estate business, not in the hot water business, for that is where the deception starts.
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