Commercial Gas Cooling: An Investment Opportunity

The use of natural gas cooling equipment, such as engine-driven chillers for air conditioning commercial buildings, is known to provide operating cost savings over conventional electric chillers in many regions of the country. To be an economically viable alternative, business managers normally require that the actual savings from using gas cooling must be sufficient to pay back the higher first cost premium of gas chillers in a time period usually not exceeding three years. Simple payback analysis alone does not provide the financial information necessary to make optimal long term investment decisions for central cooling plant improvements. To provide a complete picture of alternative investments, simple payback results can be effectively used in conjunction with other financial criteria such as return on investment, internal rate of return, and net present value. When evaluated in these terms, projects with even four to five year payback often exceed industry financial returns on investment and internal rate of return. This article examines four case studies to demonstrate that this often does occur.