Variable Speed Drives for Building Services 1994-2000 (April 1994)

This study shows that some £240 million of electrical energy is wasted annually in non-domestic buildings because output devices like fans and pumps are operated at constant speed designed for the highest demand when in practice this is rarely required. However when a Variable Speed Drive (VSD) is fitted the output can vary in order to meet the capacity required, this reduces the power consumption drastically for if the speed is halved the power consumption is reduced to one eighth and the electricity bill falls similarly. The Inverter which is the most often used type of VSD for building services applications, has been subject to much development over the last 10 years and its relative cost has decreased whilst quality standards and functions have significantly improved. It’s many benefits include, eliminating the need for star delta starters, reducing the cost of cabling to the motor and allowing controlled (soft) start thereby reducing electrical demand during system start. One major advantage is where pairs of pumps and fans operate simultaneously, motors can be selected for shared duty and considerable savings in capital costs can be achieved. But despite the fact that this is a cost effective measure the number of devices being retrofitted is derisory and in fact few opportunities are being taken to install VSD in new buildings where the opportunity cost is lower.

The Inverter VSD is the best practical if not ideal solution for reducing the operating cost of motors in buildings but the opportunity is just not being grasped. We estimate that the total population of pumps, fans and other items in buildings that would benefit from variable flow control to be 3.4 million and those that when retrofitted with VSD would achieve a payback within two years, on the basis of energy savings alone, would justify an investment of £162 million. Of this, retrofitting fans would contribute the major share at £86.0 million, pumps £52.0 million and other items of equipment £24.0 million. Although the market is fragmented the breakdown of opportunities by building type does show that focusing on vertical markets can help to alleviate the problem for some 2500 acute hospitals alone have a retrofit potential of £26.0 million. This is a robust market for in addition to retrofit business which is just waiting to be taken there is also the new construction sector to convert for this is now operating at less than 10% penetration. Of course a lot of effort has been expended by VSD manufacturers and specialist drive companies to develop this market but much has failed to overcome the barriers to trade or to ensure that the "benefits message" reaches those that can influence the purchasing decision. The negative forces that act as barriers to the growth of VSD fall into one of four categories; Inadequate funds - Energy Management Low Priority, Ownership/Tenants, Confidence in Reliability and Lack of Awareness of the Benefits. During the recession because of lack of funds, emphasis has been placed on reducing first time costs, and consequently life cycle costing has not taken its rightful place. Unless therefore VSD is considered essential, it is unlikely to be installed in new projects for Energy Management and control now has a low priority particularly where the owner of the building is renting it for he has until recently had little interest in improving the energy efficiency.

Early VSD installations in the building sector did cause problems either through breakdown or harmonics being set up and causing electrical interference problems. In some of the worst cases the VSD had to be taken out and in others high maintenance costs negated any savings and this created a lack of confidence in their reliability which is still around some 6 to 10 years latter. Although very significant measures are being taken by the government to make all interested parties aware of the benefits to be derived from VSD, a sharper focus on target markets where maximum gains can be achieved is now required. All of these barriers can be overcome by implementing an appropriate marketing plan that concentrates on priority target markets. The driving forces that have developed this market so far are; Reduction in Energy Costs and Consumption, Optimum Control Over Maximum Demand, Improved Comfort Conditions and the EEO Awareness Campaign. As formidable as these forces are they cannot alone maximise the potential unless they are allowed to operate within the framework of an effective distribution network.

If the full potential of the retrofit market is to be realised then all of the various third party routes to market need to be developed. Insufficient effort has been put into developing any of these routes and therefore less than 20% presently passes through them. Manufacturers of advanced building controls and System Integrators, can play an important role in getting VSD installed on exiting plant for every time they install advanced controls there is a good chance that a VSD could be cost effective to install VSD and linking in with the BMS will provide additional benefits. EMSCO’s have a vested interest in energy conservation in buildings and provided that a payback of two years can be shown they would see VSD as a very worthwhile investment. In most cases EMSCO’s can be regarded as end user/owners and as such would have most to gain by installing VSD. We believe this route to market could grow rapidly. Where REC’s have an active interest in demand management then the contribution that VSD could provide in carrying out such a policy cannot be doubted.

We doubt whether OEM’s will provide an active route to market in the retrofit sector, apart from retrofitting compressors, where their knowledge of the operation of the equipment is rather critical, but they will play a major role in the new construction sector in the years ahead. In April 1994 approximately 50,000 sites will have the opportunity to shop around for their electricity supply. Those that can control their demand profile to match the best prices offered will benefit most and VSD can play a major part in maximising this opportunity. The key to the future development and progress of this market rests with the suppliers of VSD. Few have taken the building services market seriously and put in place adequate resources. Their preference has been the constant torque market to be found in the industrial and process control sector which is fast becoming a mature market. The building services market offers more potential to develop volume in the medium term because as this study demonstrates it has an enormous retrofit potential and a low penetration of new construction business. In the long term on the basis of global demand we believe it could become the largest market.

The signs are promising for the retrofit market grew by around 14% per annum from 1991 through to 1993 when sales reached £5.4 million. This is a very encouraging performance considering the economic conditions that prevailed during that time. The reason for this solid if not impressive growth is that the specialist suppliers, after suffering a rapid decline in business from the new construction sector since 1990, were forced to turn their attention to the retrofit market and their effort has been rewarded. We forecast that sales will reach £19.3 million by 2000 when total aggregate sales from 1994 through 2000 at £79.6 million would mean that approximately 50% of the present economic market potential would have been converted.

The economic case for installing VSD in new buildings is much stronger than retrofitting existing motors because significant savings can be made in reducing starter and cabling costs and in the case of large motors this would mean that the first time cost of VSD would be no higher. Nevertheless we expect VSD sales to the new construction sector to lag behind the retrofit market until 2000 when they will have reached approximately £20.0 million. The total sales picture built up from the combination of retrofit and new construction business shows that from a base of £9.0 million in 1993 growth at an average compounded rate of 23% will result in a market worth £39 million by the year 2000. The total cumulative market during the period will be worth £158 million. We believe this to be a conservative forecast and could well be exceeded for this is has the hallmarks of a very robust business.

proplan@iandi.ltd.uk