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Scenario B: Now let’s take the same equipment replacement with a system renovation that added $1,500 to the job. Total system price is $9,000, less the $1,500 tax credit for an investment of $7,500.

If the system renovation brought the delivered efficiency to 90% CSER™ the effective EER would be 11.7. or a 6.3 EER improvement over the original delivered EER of 5.4. This would put the new annual cooling bill at $923 or roughly 46% of the original bill for an annual 54% savings of $1,077.

13 EER X .90 = 10.8 EER

11.7 EER – 5.4 EER = 6.3 EER Improvement

$2,000 Annual Cooling Cost X 54% = $1,077 Savings

$7,500 Installed Equipment Cost + $1,500 Duct Renovation - $1,500 = $7,500 net investment

$7,500 investment / $1,077 Annual Savings = 6.96 year payback

5.04 year additional life X $1,077 = $5,423 Residual Value

Based on a net cost of $7,500 the payback period would be about 7 years. After that the homeowner would get about 5 years of additional useful life at $1077 savings per year or $5,423 in value from the investment. That’s $4,038 in additional ROI for the additional $1,500 they paid to fix the duct system – about 2-1/2 times return on the additional investment over a 12 year period. That’s equivalent to getting 9% interest compounded over the 12 year period on that $1,500!

Can you think of a more secure place your customers can invest their tax credit? And this doesn’t include the inevitable increases in electric rates over the 12 year period. In addition they will have improved comfort, and a longer system life because the equipment will run as it was designed to with proper airflow and refrigerant charge.

Other Benefits

This is a very conservative example of addressing the entire system. In some cases a poor duct system will actually cause the new equipment to operate at a lower delivered efficiency than the older equipment did on that same system, as the older equipment perhaps ran less and actually was able to deliver more btus than the newer identical equipment. For example, if the replacement in Scenario A only resulted in a 1.4 EER improvement, the reduction in annual energy usage would only be 20% or $400, bringing the payback period up to 15 years. That’s 3 years beyond the equipment life expectancy. This basically shows a negative return on investment if the new equipment needed to be replaced after 12 years!

Similar calculations can apply to a heating system replacement. Instead of calculating delivered efficiency using EERs, you would calculate the differences in furnace AFUE, using the measured Heating System Efficiency Ratings (HSER™) for your system performance numbers. The added bonus not included in these calculations is that when you fix the air distribution system you get additional savings from the existing equipment that was not replaced. For example if you are installing new cooling equipment and you perform a duct system renovation, you will reduce winter consumption as will, even if you didn’t replace the furnace.

While the above examples are just for illustration purposes, it’s easy to see how reinvesting a tax credit from a high efficiency equipment purchase back into improving total system performance can be the best investment you customer could make with that money. It will return far more value, comfort and energy efficiency to your customers than just replacing the equipment. The bonus is happier customers and more dollars to your bottom line.