Freon HVAC Systems – is it Time to Replace Yours?

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New sales of freon, or HCFC-22 / R-22 refrigerant, will  be prohibited in the United States in 2020. Beginning next year, only recycled R-22 refrigerant will be available to service existing air conditioners. Most air conditioning units that are older than a decade utilize R-22. This is an emerging challenge that no multi-family, single-family or commercial property owner and operator can ignore as the new year approaches.

The situation is pressing for many large property owners and operators with hundreds or thousands of units across their property portfolio looking at strategies in late 2019 for extending the lives of their HVAC systems or replacing them. Recently, retrofitting systems so they can operate with an alternative refrigerant has emerged as an industry trend. It is a strategy, but is it the best one?

What is R-22 Refrigerant?

Let’s back up and take a look at why R-22 is reaching its end of life. R-22 is a hyrdrochlorofluorocarbon (HCFC), an organic compound of carbon, fluorine, and chlorine that is a colorless, odorless, nonflammable gas. In the early 20th century, the chemicals that make up R-22 were thought to be safe, as together they are non-toxic. HCFCs then became standard in home refrigeration and air conditioning.

Why is R-22 Being Phased Out in 2020?

Freon was deemed to be potentially harmful to the environment by the mid 1970s. Freon and other hydrofluorocarbons were found to be a key contributor to the creation of greenhouse gases.

As the concern over these ozone-depleting substances grew, an international treaty known as the Montreal Protocol was established in 1978, signed by 197 countries, and promised to eliminate the production and consumption of substances that damage the ozone, including R-22.

This was followed by EPA regulations to phase out the production and import of R-22 and other CFCs. Beginning in 2020, the chemical can no longer be produced or imported into the United States. By 2030, the EPA will destroy any remaining R-22. Over time, supply of R-22 will decline and prices may rise significantly.

What Are Alternative Options?

One emerging option is to retrofit existing HVAC systems to utilize a variety of chlorine-free alternative refrigerants that have been developed to extend the life of an older HVAC unit. While there is no refrigerant that is an exact replacement for R-22, MO99 is a popular alternative refrigerant because its cooling capacity and energy efficiency are similar to R-22.  Its lower discharge temperature also helps prolong the life of an older compressor. Some other commonly used alternative refrigerants are NU-22 and 407A.

However, retrofitting has some drawbacks. MO99 retrofit systems lose 7-9 percent of their cooling capacity. That may not sound like much, especially if it’s just one unit being replaced, but heating and cooling costs typically account for about 48%  of a building’s energy usage, so what appears to be a small loss of capacity can actually be quite significant in energy loss and the size of an energy bill.

Additionally, when a system doesn’t cool as effectively, it is more apt to break down and require regular maintenance. The savings accumulated with a retrofit to an existing unit is often lost on ongoing maintenance and repairs. Not all R-22 systems are compatible with alternative refrigerants.

Finally, one of the best options, and the one that is perhaps the most viable economically long term – for a variety of reasons – is to replace the existing systems with new, high SEER R-410A or “next generation” R-32 units.

What Impact Do Alternative Refrigerants Have on Tenant-occupied Properties?

Many property managers turn to alternative refrigerants for short term savings – replacing systems can be an intimidating upfront cost. What they often don’t realize is that over time, older systems with alternative refrigerant will will have to work harder and still produce less efficiency.

This has long-term impact on several key performance metrics.

The first and most obvious is that residents running inefficient systems harder, for longer periods of time, will lead to very high energy consumption at a given property. Multiply this by 100 and energy usage skyrockets. With a major push for residential communities to decrease carbon emissions and energy consumption, replacing old units with newer, more efficient ones can produce energy payback in under 10 years.

The second is the sometimes unexpected increase in maintenance fees across a property or portfolio or properties. When systems are running at maximum capacity, they have a tendency to break down more often, which means either more in-house maintenance people or more contractors. When more frequent breakdowns are combined with peak HVAC season, labor costs will add up quickly and SLAs will drop as contractors scramble to fix broken and malfunctioning systems.

The third is customer or resident satisfaction scores. When a resident finds their overworked AC broken on a 90+ degree week, or a furnace malfunctioning on a <32 degree day, they will complain – and if their complaint is not resolved within a reasonable time-frame they will write poor reviews and decrease the tenant satisfaction rating at a property.

At one particular property, which completed proactive maintenance before peak season, tenant satisfaction increased 20%+ vs a similar property which did not.

Combining IoT devices like smart thermostats with higher SEER systems, which use the newer 410A refrigerant, some residential communities have cut energy consumption by up to 35% and reduced greenhouse gas emissions by upwards of 60,000 KgCo2e per year.

For properties which are non-residential, the energy savings and lowered maintenance costs still have a significant impact on the bottom line.

What is The Most Efficient Action to Take, Right Now?

There’s never been a better time to invest in new HVAC equipment. Taxpayers can save $5,000 when they replace their R-22 air conditioning systems with new, up-to-date compressors. Many utility companies offer rebates for HVAC upgrades. Add the tax savings and rebates to the increased efficiency of new HVAC systems, and the ROI is clear.

For larger energy consumers like multi-family and commercial properties – asset management programs, such as one which Motili’s customers have seen great success with, catalogue all of the HVAC and hot water assets at a property or portfolio of properties and grant a property owner or operator clear visibility into the state of their HVAC and hot water building systems. In turn, this produces optimized capex project planning and budgeting.

Proactive maintenance in off-peak seasons is proven to reduce replacement and install costs by up to 25%.

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