The Implications of a Commercial HVAC Retrofit versus an HVAC Replacement

Many owners of restaurants, retail stores, office buildings and supermarkets are facing a significant choice today when it comes to their HVAC systems. Is it more cost-effective to do an HVAC retrofit on your aging, inefficient system to get it back into prime operating condition or should you replace it with a brand new high-efficiency unit? Unfortunately, there is no easy answer to the HVAC retrofit question nor is there a one-size-fits-all solution. Each business owner must make his or her own decision based on the unique characteristics of their business, their HVAC equipment and their finances.

Fortunately, Taper can provide information and expertise to help guide that decision-making process. By objectively outlining the advantages and disadvantages of each option for the individual business owner, Taper can present an unbiased analysis that will recommend the choice that offers the greatest benefit to your particular business. In some cases, a choice may not exist since retrofits can only be performed on specific types of HVAC equipment; in other cases, the equipment may be so old that replacement parts are no longer available. Taper’s energy efficiency consultants can determine if your equipment is capable of being retrofitted and, if so, can help you decide if retrofitting is the better choice.

A business owner weighing the issue of retrofit versus replacement must consider a number of factors with perhaps the most important being:

  • The cost of each option
  • The energy savings produced
  • Disruption to business activities

Commercial HVAC equipment generally has a life expectancy of anywhere from 15 to 30 years, depending on the brand of the equipment, the climate in which it’s used and how well it is maintained. But no matter how well it is maintained, it will ultimately have to be replaced. In virtually all cases, the cost of a full replacement is going to be greater than that of a retrofit. The differential will vary based on the type and size of the equipment, the nature of the business and the physical characteristics of the building. However, a retrofit can often be done at a fraction of the cost of a full replacement while achieving the same result of improving efficiency and reducing energy bills.

As HVAC systems get older, they lose efficiency, perform less effectively and often require more service calls. The result is higher electric and repair bills for the business owner and less comfort for employees and customers. In addition, advances in HVAC technology over the past decade make even the best systems installed 10 or more years ago practically obsolete. An aging HVAC system can benefit greatly from an infusion of new technology. In fact, that’s essentially the definition of a retrofit: Integrating new components into an older system.

Retrofitting can be a more cost-effective alternative to full replacement for improving an HVAC system’s efficiency and performance. The cost of a full system replacement can be daunting. It is a major capital expense for most businesses that often must be budgeted for well in advance. Although utility and government energy efficiency programs may offer attractive financing options for new high-efficiency HVAC systems, it still requires the business owner to go into debt in order to afford the upgrade. The replacement of an HVAC system may also compete with other priorities for a business’ capital that may have a greater impact on the operations on the company, like a new interior design for a retail store or new cooking equipment for a restaurant.

The cost of a replacement HVAC system can’t be measured only in the price of the equipment. As a business owner, you need to be aware of how a major renovation to your climate control system is going to impact your ability to conduct business during the replacement process. Will your business be able to stay open while the old equipment is dismantled and removed, and a new HVAC unit is installed? Can your business function without heat or air conditioning, and for how long? Are there health or safety risks involved in having employees or customers in the building without proper temperature control or ventilation? Losing customer sales because your business is closed or losing productivity because your employees are unable to work are expenses that must be added to the cost of an HVAC replacement.

The location of the HVAC system also presents considerations in the retrofit versus replacement debate. A rooftop system, for example, may require the rental of a crane to remove the system from the rooftop and hoist the new unit into place. A basement system may have to be dismantled piece by piece – and the new system installed the same way – to navigate the narrow passageways and doors in a building’s lower levels.

Businesses change over time – they grow larger; they add employees; they move things around; they change their operations, hours and processes. The point is that the HVAC system which was ideally suited to the way your business functioned in the 1990s may not be as suitable today as additions, renovations and other changes to your business alter the heating and cooling needs of interior spaces. For example, an area that had once been used for storage may now be offices, requiring adjustments to temperature control and airflow. Retrofitting your HVAC system gives you the opportunity to adapt your system to your business’ changing needs.

Retrofitting also avoids the temptation that business owners may have to simply replace their building’s old HVAC system with exactly the same model because they’re familiar and comfortable with the equipment. This type of in-kind replacement can be the easiest thing for a business owner to do but doesn’t recognize that changes in the building like those noted above may make the case for the installation of a system that can adapt to those changes.

At the end of the day, though, the desired result is maximized energy savings. Whether it’s a retrofit or a full replacement, the option that offers the greatest reduction in energy consumption for each dollar invested is the option that will deliver the best results for your business. And since rebates for efficiency upgrades are based on projected energy savings, the rebate you receive will not be affected by the method you choose to produce those savings.

Heating and cooling represent the single largest energy expense for many businesses — and changing the equipment that regulates temperature and airflow throughout the business can be an expensive proposition. When options are available on how best to achieve maximum energy savings, the experts at Taper can be trusted to provide an objective analysis of those options and recommend the one that offers the greatest benefit to your business.