any of these components will drastically
affect the analysis outcome. This is
highlighted in the righthand column
of table 2, where each value has been
calculated using the ‘goal seek’ macro
within Excel that mathematically solves
each parameter in order to make the
difference between the two options zero.
Take the operator’s salary, for example:
The base case has the salary at $99,000,
and reducing it to $61,565 will make the
two NPVs identical. As the French might
say, “Zut alors!” Think of that – just
$38,000 per year is the difference in
a $51 million dollar investment.
When is the difference between the
two options economically insignificant?
Technically, when the NPVs are very close
or equal. When this is the case, I would
typically go to the first-cost parameter
to assist in the decision. In our example,
district cooling would save more than
$8.5 million in first costs. Again, I would
recommend the district cooling option
since that initial money could be invested
in other projects. Furthermore, if the
building owner can be convinced to put
a monetary value or worth to several of
the following qualitative parameters, they
may be used to tip the scales even
further, even if the NPV of the district
cooling option is higher:
• reuse of roof space for roof garden,
patio or pool area
• increased premium rentable area from
turning penthouse chiller room space
into offices or residence
• savings for not having grade or roof-
top equipment screens
• freed-up maintenance staff
• no visible plume from cooling towers
or boiler stacks
• ‘sleep-at-night’ factor for allowing
someone else to reliably meet the
building’s thermal requirements
has been left unsaid or glossed over;
so stay tuned. I think we may have more
to say on this topic in the future, either
in this column or at upcoming meetings.
Viva la “V”!

In closing, whether you are looking
at buying a new car or connecting to
a district energy system, using an NPV
analysis technique can effectively capture
all of the parameters economically over
the life of the study. As Jack Kattner
will tell you, it is not just about the
money. As an industry, we have to start
quantifying the qualitative advantages
of district energy to help level the playing
field. Let us assign some worth to the
“V”! We have covered a great deal of
ground with this topic, and a great deal

Based;in;Madison,;Wis.,
Steve Tredinnick, PE,
is;vice;president;of;energy
services;for;Syska
Hennessy;Group,;which
has;more;than;16;loca-
tions;across;the;U.S.;He
has;more;than;28;years’
experience;related;to;building;heating,;venti-
lation;and;air-conditioning;systems.;The;past
17;years;of;his;work;have;been;focused;on
district;energy;systems.;Tredinnick;is;a;gradu-
ate;of;Pennsylvania;State;University;with;a
degree;in;architectural;engineering.;A;past
IDEA;board;member;and;a;member;of
ASHRAE,;he;is;currently;immediate;past;chair
and;handbook;chair;of;ASHRAE;TC;6. 2
District;Energy;and;current;chair;of;the;Chilled
Water;Plant;Subcommittee;of;ASHRAE;TC;6. 1
Steam;and;Hydronic;Systems.;He;may;be
reached;at;stredinnick@syska.com.