Life Cycle Costing

An asset goes through many phases throughout its life cycle. For energy using assets there are additional factors to consider for the asset in each life cycle phase. 

When a system is in the planning phase for a project or new asset addition, additional information should be added to the list of data to collect. Information on the type of energy available and the type of energy the asset can use should be noted. Data on energy use over the life of the asset should be evaluated. Evaluating alternatives can be extremely beneficial when comparing asset energy use. Systems must be prepared if the new asset or project is going to require upgrades to energy providing equipment such as breaker box capacity, a new transformer, etc.

Since energy use is one of the largest expenses for many systems, using the planning period to get an idea of the amount of energy used by different options is very important. For energy using assets, the capital cost is often far outweighed by the operations costs. There are more and more options for green infrastructure which uses little or no energy to operate. These options should be considered during the planning phase. Green infrastructure will reduce rainwater flows into sewer systems, recharge aquifers, and conserve water.

A system may also benefit by analyzing alternative energy sources for some assets.  One example might be comparing the use of solar power at a remote location to having electricity run to the remote site.

During the design phase the system should do a more in-depth analysis of comparing the capital costs to operating costs for the energy using equipment. Oftentimes, the least expensive capital is also not as energy efficient as some more expensive options. Over the life of the asset, the more expensive capital expenditure may save enough money in energy consumption to make it a worthwhile investment. If assets are specified by an engineering firm or supplier, the system should ask for an energy cost comparison between similar assets.

During the construction phase the energy using assets should be inspected and tested separately from the other assets. The inspection and testing should be sufficient to ensure the system that the energy using asset will operate properly upon construction completion. Any specialized training required for the asset should be provided during this time as well. 

Energy using assets typically require regular/active operation and maintenance. Because these assets are typically used on a regular basis, maintaining spare parts for these assets is important to sustained operations. Routine maintenance is typically a necessity for these assets. This maintenance should be planned and budgeted each year. It should also be tracked to see if the budget matches the actual needs of the asset. 

The selection of when to repair, rehabilitate or replace an asset involves the consideration of the asset’s criticality including: the condition of the existing asset; the capital cost of each option; the operations and maintenance cost after the repair, rehabilitation, or replacement; the remaining useful life in each case; the decay pattern; energy use; and the impact on level of service.

• Operation and Maintenance Costs: For energy using assets, determining how much longer an asset should be maintained can be affected by the amount of energy the asset uses. Selecting a high efficiency asset versus a standard efficiency asset will lead to different costs of operation and maintenance. The costs of maintaining an asset that has been repaired could be different than the costs related to an asset that has been rehabilitated or replaced because a repair is unlikely to affect the amount of energy used whereas a rehabilitated or replaced asset might use less energy. Therefore, cost of operation should be considered when deciding when to repair an asset versus replace it.
• Energy Usage: If the asset is high priority from an energy standpoint (the asset uses a lot of energy and it is highly feasible to do something about it) it should be replaced with a more energy efficient asset. Alternatively, if the level of service includes a goal to reduce greenhouse gas emissions and the asset can be replaced by an asset that uses a renewable source of energy, replacement of the asset may be a good idea, even if this option is not the cheapest alternative.

When an energy using asset has reached the end of its life, it will require disposal. Energy using assets may require specific disposal plans or may be able to be recycled or refurbished for reuse. Oftentimes, a system may be able to sell the asset for recycling or reuse.