Making Cents of SEER: Estimating Lifetime Savings with a Higher-SEER Air Conditioner

Authored by Mitchell Bailey, republished from Indoor Comfort News’ April 2024 issue.

In my last article, we compared the cost to run a heat pump as opposed to a 90+ furnace. In that article, we compared COP to AFUE and the cost to make a million BTU’s when using natural gas and when using electricity. The savings were pronounced, and it really pencils out for customers to switch from a gas furnace to a heat pump based on their utility rates and what it costs per therm of natural gas. What about the air conditioning side- how do we show savings comparing the old system to a new system?

Actually, we can calculate fairly accurately an approximate savings per season and then calculate the savings over the system lifetime, which for an air conditioner is 15 years. We need four things: the size of the old system, the cooling degree days for the location, the estimated SEER of the old system, and the average cost per kilowatt from the utility company. For the new system, we need the same four things. This is the formula we are going to use:

Size in BTU’s/h X Cooling Degree Days Per Season ÷ SEER X Rate/ Kilowatt ÷ 1,000 = Cost per Season

All we have to do is assemble our numbers to calculate the savings using the following to obtain those numbers.

1. Size is easy; we can get that from the model number of the equipment (for example, a D&N model number 565BJX060 is a 5-ton unit, which is 60,000 BTU’s).
   
2. The cooling degree days per year is also easy; we can look it up on the internet by going here and putting in your zip code. There is a section on this calculator to enter your location and then you will see the first set of numbers, which are the 30-year average (1961-1990); for my zip code of 95351, it is 1318 DD.
   
3. Approximate SEER of the old equipment is also easy if we know when the equipment was manufactured, and we factor in the age of the equipment based on some assumptions about the system degradation over time. Here is the formula from the Department of Housing and Community Affairs for the State of Texas on the best practices and SEER rating on older equipment. For example, if you are assessing a 16-year-old HVAC system that had an original SEER of 10, you would calculate: SEER = (10)(1-.01)16 = (10)(.99)16 = (10)*(.851458) = 8.5146 is the current SEER of the existing unit. To make it simple, I use this chart (see Figure 1) to plug in the approximate SEER of the old equipment.

4. Your kilowatt rate for the utility is also easily searchable. Here are some of the current rates depending on your utility (these are just a few of the utility companies in California; a quick search for the utility in an area only takes a few seconds):

• PG&E: $0.462/kWh
• SCE: $0.367/kWh
• SDGE: $0.424/ kWh
• SMUD: $0.146/kWh
• Modesto Irrigation District: $0.1914/kWh
• Turlock Irrigation District: $0.1693/kWh
• Merced Irrigation District: $0.2085/kWh
• Lodi Electric: $0.2154/kWh

Once we have assembled all the data, we can then calculate the cost to run the old system and then compare that to the calculated cost to run the new system. We subtract the usage with average temperatures. If it is a cooler year, the savings are less, and if the customer does not run the system like a typical homeowner, the savings are less, but the opposite holds true: if the weather is warmer than an average year, and the customer likes their home cooler, then they will save even more.

It is obvious that new equipment will save the customer money. What will give you an edge is knowing the numbers and coming up with an amount that the customer could potentially save. So take the time and get the data for your area and create a form or spreadsheet to show the savings to your customer. If you would like, you can email me for a copy of the savings sheet that I use and then modify it for your company to calculate how much the customer can save.