Life-cycle costing (LCC) is used with building energy simulation in order to justify energy efficiency upgrades. Many alternative building technologies that result in energy savings cost more initially, or may cost more to maintain, than traditional solutions. In order to justify selecting these energy savings technologies, it is essential to combine both initial and future costs in the decision process. Using life-cycle costs provides a framework to combine initial costs and future costs into a single combined measure, called the “present value.” Present value is a metric that combines all costs and reduces (or discounts) those costs that occur in the future. Discounting future costs is based on the principal of the time value of money.
The calculations are based on discounting the future values according to normal life-cycle costing techniques as described in NIST Handbook 135 Life-Cycle Costing Manual for the Federal Energy Management Program.
The following is a list of life-cycle costing related data that provide a way to describe the parameters and costs associated with the life-cycle of a building or building system. These objects are organized by tabs on the Life Cycle Cost dialog:
The utility costs and first costs are used along with other current and future costs input using the Recurring costs and Non-recurring cost data and these are combined into the present value life-cycle cost metric. The Parameters object establishes the set of assumptions for the analysis along with Use price escalation (often from databases) and Use adjustment objects.
Note 1: It is important to understand that the comparison of different simulation results and their present values is not performed by EnergyPlus. Instead, EnergyPlus provides the present value calculations for a specific simulation combining the energy costs, first costs, and future costs and you need to make the comparison between the results of multiple simulations when needed.
Note 2: Life-Cycle Costing (LCC) should not be confused with Life Cycle Analysis (LCA). With LCC the result is an economic evaluation of current and future expenditures in order to make a decision on alternative investments. In LCA, the environmental impact such as equivalent CO2 production involved in the materials, delivery, manufacturing, and construction are combined with environmental impacts of the building in operation and the eventual removal of the building and is used to understand the overall environmental impact or embodied energy.
Tip: You can carry out powerful analyses to simultaneously optimise whole life cycle cost and whole life cycle environmental impact performance using DesignBuilder's optimisation tools. Choose the LCC and LCA KPIs for this sort of analysis.
The results of using the LCC analysis are included automatically in the Summary report under “Life Cycle Cost Report.” This report shows the costs and the timing of costs, often called “cash flows,” along with the present value in several different tables. The tabular results show the present value of all current and future costs.