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Main Menu Session #2002-1673

Case Study that Integrates Thermodynamics with Engineering Economics

David Zietlow, Ph.D., P.E. Bradley University

Abstract

This paper presents a case study that is a practical example for use in second semester thermodynamics, air conditioning or engineering economics courses. It integrates the students exposure to thermodynamics and engineering ecomomics.

There is tremendous pressure to purchase the equipment with the lowest possible initial cost. However, if energy prices increase dramatically the choice of a low initial cost system may create unbearably high operating costs which could drive the owner of the equipment out of business. This is not good for future business. The goal of this paper is to equip students with a tool they can use to make optimum choices when selecting the level of efficiency for a piece of equipment. This tool uses life cycle cost analysis applied to thermodynamic systems (thermoeconomics) as the objective function in the optimization of a chiller. Thermo-economics will help the manufacturer determine what level of efficiency is best for the market. It will help the engineer determine the appropriate sizes for the components of a system. It will help the suppliers convince the building owner whether or not the additional cost for a high efficiency system is worth the additional investment.

How do we then trade off between the coefficient of performance (COP) and the initial costs? Thermo-economics gives us a tool we can use to balance these two opposing forces and determine the optimum COP of a piece of equipment for a particular application. In this paper thermo-economics was applied to the selection of a 400 ton (1400 kW) chiller operating 2500 hours/yr. In this example an investment in a high efficiency chiller produced a rate of return of 20 %. The thermoeconomic model (return on investment analysis) was simple for ease of use and understanding. It assumed the purchasing power of the currency was constant over the life of the equipment. It did not account for salvage value, depreciation or fuel price escalation since these variables increase the complexity of the analysis and have a high degree of uncertainty. The uncertainty was addressed through the use of sensitivity and breakeven analyses. The effects of changes in seven independent variables upon the return on investment were explored. The rating of the low efficiency equipment would need to decrease below .663 kw/ton (COP=5.30) or that of the high efficiency equipment would need to increase above .627 kw/ton (COP=5.61) for the return on investment to drop below 10%. The initial investment in high efficiency equipment would need to exceed $91,000, electricity costs would need to drop below $.042/kwh, the operating time would need to drop below 1500 hours a year, the cooling load would need to drop below 240 tons(840 kW) or the life of the equipment would need to drop below 6.5 years before the high efficiency equipment will not provide an adequate return on investment

Proceedings of the 2002 American Society for Engineering Education Annual Conference & Exposition Copyright Ó 2002, American Society for Engineering Education

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Zietlow, D. (2002, June), Case Study That Integrates Thermodynamics With Engineering Economics Paper presented at 2002 Annual Conference, Montreal, Canada. 10.18260/1-2--10447