Variable Refrigerant Flow (VRF) Systems

An alternative HVAC system which provides significant energy savings & individual comfort control

2

Proprietary & Confidential

Saves > 30% of HVAC energy usage compared to traditional HVAC equipment– Typical ROI of < 10 years– Most attractive when compared to oil or electric

systems

Lower installation, maintenance, and lifecycle costs than traditional HVAC equipment– Manufacturers provide installation supervision,

commissioning, and warranties• Effectively removes owner liability

Lighter weight than chilled-water systems – Reduces load on roof

Proven technology overseas, underdeveloped in US– ≥ 35% market share in China & EU, < 10% market

share in US

Multiple benefits of VRF systems (1 of 2)

(1) LG, 2012. “Innovative Technology Can Cut Small-format Retailer’s HVAC Energy Cost by 45%”Graphic source: NYSERDA: Replacing Steam Heat with Variable Refrigerant Flow Heat Pumps

(1)

Projected % Energy Cost Savings for VRF Conversions in New York State

66%

43%

54%

32%

0%

10%

20%

30%

40%

50%

60%

70%

Oil Steam to VRF

Gas Steamto VRF

Oil Steam to VRF

Gas Steam to VRF

Upstate NY Downstate NY

(comparable savings in other states depend on energy costs, rebates, etc.)

3

Proprietary & Confidential

Little to no duct space needed – only 2-3 pipes– Improved aesthetics of building exterior– Can repurpose otherwise unusable attic / basement space– Removes need for window AC units– New buildings need less above-ceiling space– Increased design flexibility for contractors / installers

Helps obtain LEED and ENERGY STAR® certification, Green Globes requirements– Occupant satisfaction & health increases

• Quieter systems• Less chance for mold growth with no ducts

– Can deliver accurate reports on individual room / occupant energy usages• Allows for more accurate charging of tenants,

opportunity to increase marketability, rent price, M&V

Financing for VRF systems is available for $0 upfront to the building owner

– PACE or other financing options should be considered

Multiple benefits of VRF systems (2 of 2)

Picture source: Fujitsu General

Water or refrigerant-based fluid is delivered via piping to fan coil / air handling units in each zone from an outdoor unit, providing heating and cooling – Uses individual sensors / controls in each room

Standard system is Heat Pump System– Cannot simultaneously heat and cool– Individual room temperature variances

Advanced system is Heat Recovery System– Can simultaneously heat and cool– Captures wasted energy from one room to be

used in another– Increased initial cost from Heat Pump system

Certain outdoor units can connect up to 50 rooms– Wall, floor, or ceiling mount options for each room

May need a DOAS depending on zoning and regulations

How does VRF work?

Picture source: Mitsubishi Electric, Heat Recovery System 4

Proprietary & Confidential

5

Proprietary & Confidential

Any building with varying heating / cooling demands in different zones such as:

– Office buildings• Mitsubishi Electric Cooling & Heating Office Case Study

– Schools• Mitsubishi Electric Cooling & Heating School Case Study

– Hotels• Mitsubishi Electric Cooling & Heating Hotel Case Study

– Multi-family housing• LG High-Rise Housing Case Study

– Retail • LG Retail Case Study

Where should VRF systems be implemented?

Picture source: http://www.mitsubishipro.com/

6

Proprietary & Confidential

High upfront cost– Can be ~5-20% more expensive than

traditional systems– Estimated initial cost of VRF system ~$15-20 /

ft2 (as of June, 2014) in New York– Limited amount of manufacturers

• Less competition = more expensive units

Many contractors are unfamiliar with systems

Not as effective in large one-room buildings, such as gymnasiums and churches

Potential drawbacks to VRF systems

(1) NYSERDA . Subject to change. Please only use as a base-case, rule of thumb scenario. Every install cost will vary.

DrawbackDrawback Rebuttal

May have comparable cost to other systems when looking at total cost including all infrastructure and construction / installation– Financing options and state / federal rebates

keep VRF systems fairly competitive • New York has rebates for up to $0.16/kWh

for energy efficiency upgrades

Slowly improving & educating the market

Can still be applicable and has been successfully installed in these building types

(1)

7

Proprietary & Confidential

Start recruiting VRF professionals(Example: Mitsubishi Electric Cooling & Heating certified contractor list)

Obtain multiple quotes from contractors / manufacturers to realize your best options– Helps to …

• Determine best system size, placement, etc.• Find financing options• Capture appropriate rebates and financial

incentives• Receive assistance installing and submitting

all legal paperwork• Procure M&V which can be guaranteed after

installation

Most of the largest manufacturers require contractor / installer training:

Daikin – Daikin training details Danfoss – Danfoss training details Fujitsu – Fujitsu training details Johnson Controls – JCI training details Lennox – Lennox training details LG – LG training details Mitsubishi – Mitsubishi training details Samsung – Samsung training details Trane – Trane training details

How to get involved

8

Proprietary & Confidential

VRF is a relatively new technology in the U.S.– Quickly gaining traction among manufacturers and

contractors

Can be applicable to nearly all building types and situations

Fairly attractive ROI for a type of HVAC system

Increased occupant satisfaction can be a main selling point

State incentives and attractive financing options will ultimately make this technology competitive, allowing for more installations– May be less enticing option as incentives and financing

are eliminated, should consider installation sooner rather than later

Concluding remarks

Picture source: achrnews.com

For more information, email us at info@eereports.comAnd visit our site eereports.com

Appendices

Dedicated Outdoor Air Systems (DOAS)– Systems which brings in fresh air to improve air quality without sacrificing energy efficiency

Heating, Venting, Air Conditioning, Refrigeration (HVACR) Systems– Basic systems to help regulate temperature and comfort of a building

Leadership in Energy & Environmental Design (LEED)– Standardized certification for energy efficient and sustainable buildings,

developed and issued by the US Green Building Council (USGBC)

Measurement & Verification (M&V)– Procedures to ensure that the energy conservation measure implemented works as was projected

and to quantify actual energy and cost savings• Energy efficient products, renewables, BMS reformatted etc.

Return on Investment (ROI), Payback– ROI is a snapshot of the profitability of a project, adjusted for the size of investment in the project

• Often a rate of return on money invested in project– Payback is a quantifiable number (typically years) for how long a project takes to become profitable

Terminology and quick references

Picture source: Shutterstock 11

Proprietary & Confidential