When making choices about where to invest, financial incentives are a top priority, so what’s the true cost of investing in a new heating system? Nick Winton explains
Despite the pressing need to save money in today's tough economic climate times, it is crucial to remember that buying the cheapest kit at the offset might not save you money in the long-term.

Best value does not always equate to the cheapest capital cost; rather it is the specification that will provide long-term reliability, efficiency and economy. The lowest capital cost might seem attractive to begin with, but often leads to costly lifetime running, maintenance and replacement costs. Your best bet is to determine whether a higher initial cost is justified by reductions in future costs through whole life costing.


Applying the principles of whole life costing leads to a decision based on best lifetime value. Essentially, whole life costing is a means of comparing options and their associated cost and income streams over a period of time. Efficiency-enhancing energy systems, from air curtains to heating systems, offer a significant boost to a building's lifetime value, achieving the required functionality at a lower cost when calculated over the whole life of the equipment.

Increasing payback speed

Now, rising energy prices are increasing the speed of pay back for investing in efficiency, so there's never been a better time to upgrade.

With ever increasing energy prices and according to the Organisation for Economic Co-operation and Development (OECD), last year gas and electricity prices in the UK rose more than twice as fast as some of the countries within the European Union. Not surprisingly, saving money is a hot topic and it's time to think long term.

Taking a whole life approach means added value can be planned in.

Evaluating the lifetime costs of a heating system for long-term economic performance or profitability requires close analysis and forecast of many factors, including:

• Cost of consultancy, design and construction.
• Long-term operational costs.
• On-going maintenance costs.
• Utility costs.
• Relevant construction factors such as insulation and heat loss levels.
• Internal resources and departmental overheads.
• Risk allowances.
• Alterations should business requirements change.
• Related health and safety costs.
• Costs associated with disposal and refurbishment.

Looking beyond the purchase price can determine whether you really are getting the best deal for your money. According to government information, the most reliable indicator of value in the construction industry is the relationship between long-term costs and the benefits achieved by the end-user.

There are several important elements to whole life costing calculations and if they are incorrectly assessed, the results will be misleading. Accuracy of the cost evaluation depends on reliable information from the manufacturer - estimates of fuel consumption, heat output, anticipated warm-up time and expected heat losses, based on the size of the building and how it is used, should all be available.

Value management and value engineering techniques minimise the potential for waste and inefficiency during the life of the system and should also be taken into account. A well-designed heating system will match the heating requirements of building occupants and the shape and size of the structure. It will deliver heat where it is most needed, taking accound of the impact on the construction (eg., reducing the number of roof penetrations or eliminating ductwork) - to achieve optimum operational costs.

Cost baseline is essential

A cost baseline is essential for both completion of the heating installation and estimated operational costs over the life of the system. All costs must be included, from in-house and consultancy costs to decommissioning and disposal, risk allowance and VAT. Ideally, this total should then be benchmarked against another similar project to ensure the estimates are realistic.

In specifying the heating system, it is important to base requirements on output and functional needs. A good system design can achieve greater fuel efficiency, better performance, improved health and safety, increased productivity and less waste.

Estimates should also allow for alterations in work patterns and downsizing or expansion during the life of the system. Possible upgrades should also be taken into account.

Investment in a high quality, reliable heating product that ticks all the boxes can achieve significant savings over time. In large heating decentralisation projects, cost savings of up to 70 per cent can been achieved where old boiler and steam fed radiant panels have been replaced with energy efficient gas-fired radiant tube heating.

The most reliable heating products can last between 20 and 30 years, or even longer. A reasonable average for the purposes of whole-life calculations would be around 25 years.

Whole-life costing analysis takes the guesswork out of predicted running and maintenance costs and ensures that the relationship between cost and end-user value remains healthy. The significant financial and environmental impacts of specifying energy-efficient technology far outweigh the cost of installing one.

• The author is divisional manager of AmbiRad