DOE-2 Reference Manual Version 2.1 - DOE2.com

VI.ECONOMICS PROGRAMA. INTRODUCTION1. Background.The life-cycle costing methodology used in the DOE-2 economics evaluationis based on that described in DOE Manual ERDA-76/130, "Life Cycle CostingEmphasizing Energy Conservation" (Ref. 4). These guidelines were developed inresponse to rapidly rising energy costs and the resulting need to examineexisting and proposed DOE buildings to determine what modifications would beboth cost effective and energy conserving.In the life-cycle costing method, the capital, operations, and energycosts of a building are calculated over the life-cycle of the building. Forcomparison of alternatives and retrofits, a few numbers, called "investmentstatistics," are also calculated. These statistics measure the cost-effectivenesscompared to a reference or "baseline" case.In DOE-2, cost calculations are made in both the PLANT and ECONOMICSprograms. The PLANT program calculates energy costs and plant (primary)equipment capital and operating costs. The corresponding input data areentered in PDL using the PLANT-EQUIPMENT, PLANT-COSTS, and REFERENCE-COSTSinstructions. PLANT passes the following information to ECONOMICS:a. Discount rate (%)b. Labor inflation rate (%)c. Materials inflation rate (%) specified by user in PDLd. Project lifetime (yrs)e. Labor cost ($/hr)f. Plant equipment cost ($)g. Life-cycle cost for replaCing plant equipment ($)h. Annual energy use at the site (Btu)i. Annual energy use at the source (Btu)j. Present value of energy cost for each year of the project1 ifetime ($)k. Present value of plant operating costs for each year of theproject lifetime ($)Costs for nonplant components, which can include secondary systems,insulation, control systems, solar collectors, etc., are calculated in theECONOMICS program. Cost data for these items are entered by the user in EDLusing COMPONENT-COST instructions. In the following, nonplant costs aresometimes referred to as "building costs" to distinguish them from plant costs.ECONOMICS adds plant costs and building costs to arrive at an overalllife-cycle cost. It also computes the following economic measures or"investment statistics."• Investment• Energy and non-energy cost savingsVI.l (Revised 5/81)