The Cost of Compressed Air
28 June, 2022
When discussing the cost of compressed air, it's worth mentioning that electrical energy makes up most of your operating expenses. Read this guide for more.
Life Cycle Cost of a Compressor
When investing in a compressor, the price tag is just the beginning of the story, the real cost unfolds over time. From energy use to maintenance and downtime, the Life Cycle Cost (LCC) tells the real story of what your investment will cost over time. Understanding the full financial journey of your compressor can turn a smart investment into a strategic one, with benefits that ripple through your energy bills, operational efficiency, and other variables.
What is the life cycle cost?
The life cycle cost, also know as LCC, analysis is often used as a comparison tool between different investment options, for example, for products or systems with an equivalent function. The LCC result is often used to provide guidance in issues concerning specific processes or specific product design elements. LCC analyses can also be used by companies in communication with subcontractors, with customers or with the authorities to describe their system characteristics.
The results from an LCC analysis can serve as a basis for making decisions that will minimize a product or a service's operational impact on the environment. However, LCC analysis does not offer answers to all possible questions, which is why other aspects such as quality and available technology must be examined to provide relevant background material.
Basis for LCC calculations
LCC calculations are used more and more as a tool to evaluate various investment options. Included in the LCC calculation are combined costs due to the product operating over a specific period, which include the capital expenditure, the operating cost and the maintenance service cost.
The LCC calculation is often implemented based on a planned installation or a working installation. This serves as the basis for defining requirements for a new installation. It should, however, be pointed out that an LCC calculation is often only a qualified estimate of future costs and is somewhat limited due to it being based on current knowledge of the condition of equipment condition and impacted by future evolutions in energy prices. Nor does this calculation account for any "soft" values that can be just as important, such as production safety and its subsequent costs.
Conducting an LCC calculation
Conducting an LCC calculation requires knowledge and preferably experience with other compressed air installations. Ideally, it should be a collaborative effort between the purchaser and the salesperson. Critical factors to consider include how different investment options impact production quality, production safety, subsequent investment requirements, maintenance of production machines and distribution networks, environmental impact, final product quality, and risks of downtime and rejections.
How to calculate the life cycle cost of an air compressor?
To truly understand what your compressor will cost over time, you need to look beyond the purchase price. The total life cycle cost includes three key components:
Life Cycle Costs = (Initial Investment) + (Lifetime Maintenance Costs) + (Lifetime Energy Costs)
Each of these three factors (initial investment, maintenance, and energy costs) plays a key role in the total life cycle cost of a compressor. Here's how each one impacts the bigger picture:
Initial purchase price
A lower purchase cost might seem like a great deal, but it can lead to higher expenses in the long term. Sometimes, spending more upfront pays off, especially if the compressor is more efficient and cheaper to maintain. Remember to include installation costs like wiring, piping, and foundations as part of the initial purchase price. These can vary widely depending on the model you choose.
Maintenance costs
Maintenance costs can add up, and they vary more than you might expect. From labor to replacement parts, keeping your compressor running smoothly means more than just fixing issues. It requires regular, scheduled service. Whether you manage maintenance internally or work with a local provider also affects the bottom line. And since service intervals and part lifespans differ by manufacturer, your long-term costs will depend heavily on the compressor you choose.
Energy cost
Energy efficiency isn’t just a bonus. A more efficient compressor can save you high costs in electricity each year of operation, often covering the price difference in just a few months. Over its lifetime, those energy savings could even pay back the full cost of the compressor and more.
Life Cycle Profit (LCP)
Another important concept in this context is Life Cycle Profit (LCP), which represents the earnings that can be achieved through energy recovery and reduced rejections, among other possibilities. When assessing service and maintenance costs, the expected condition of the equipment at the end of the calculation period must also be considered (i.e., whether it should be regarded as fully used or restored to its original condition). Furthermore, the calculation model must be tailored to the type of compressor involved.
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