Environmental Accounting Snapshot SAE CIRCUITS Company Profile Location: Boulder, CO Size: 80 employees Annual Revenues: over $6 million Business: Manufacturer of double-sided and multi-layer printed circuit boards for supply to fabricators. Industry Sector: Electronics Capital Investments Study of replacing the ventilation system in the facility's plating area. Two options for replacement were analyzed: (1) a system with single-speed motors and (2) a system with dual-speed motors. Business Benefits For option (1) the 15 year net present value (NPV) is -- $171,782. For option (2) the 15 year NPV is -- $143,424. Note that although the NPV of both options is negative, the NPV of option (2) is $28,358 greater than that of option (1). Why Was Project Performed? SAE Circuits Inc. has been in business since 1972 and is located in Boulder, Colorado. The firm manufactures double-sided and multi-layer printed circuit boards for supply to fabricators. Since beginning as a regional supplier, SAE Circuits has expanded to national sales and is beginning to sell internationally. The firm produced nearly 980,000 boards in 1994 and over 1,300,000 in 1995. SAE Circuits has 80 employees, runs multiple shifts in its 32,000 square foot facility, and has annual sales of over $6 million. In 1983, SAE Circuits started an active environmental and safety program dedicated to improving productivity and efficiency through pollution prevention and energy efficiency projects and has built on this program by completing such projects each year. SAE Circuits is a partner in the DOE Climate Wise program. Project Description SAE Circuits has also participated in the DOE Energy Conservation/Pollution Prevention Assistance for Industry program. A 1995 assessment performed by Colorado State University (CSU) helped SAE Circuits personnel identify a number of pollution prevention and energy efficiency projects that offered increased production capacity through improved processes and employee productivity at lower cost. The project analyzed here is the replacement of the process ventilation system in the plating area. SAE Circuits' existing ventilation system in the wet process area dated to the initial construction of the facility. Since then, production had increased substantially and ventilation loads exceeded the system's capacity. The system provided 4,500 cubic feet per minute (cfm) of exhaust, while the make-up air system replenished the area with 5,400 cfm of fresh air. This exhaust shortfall caused a positive pressure within the plating area, which at times allowed fumes to migrate throughout the facility. The assessment indicated that ammonium chloride (NH4Cl) vapor concentrations in the wet process area exceeded regulatory standards by 50% at times. SAE Circuits additionally found that NH4Cl had begun to cause serious corrosion to the electrical equipment in an adjoining room. SAE Circuits undertook the installation of a new process ventilation system, consisting of a 16,000 cfm exhaust system and a 14,000 cfm make-up air system, plus a positive pressure system for the adjacent electrical equipment room. The system is designed to be able to accommodate a central air scrubber to remove pollutants from the exhaust air if emissions standards become more stringent in the future. The make-up and exhaust fans should be kept running at all times, but during non-production hours the needed capacity is only about 5,000 cfm. Thus designers recommended the purchase of more expensive dual-speed motors to save on electricity and make-up air heating during non-work hours. The dual-speed motors collectively cost $7,200 more than the single-speed motors originally considered. Analysis The initial investment costs of the two options differ only in the higher cost of the dual-speed motors (plus sales tax). The investment cost for the basic system (option 1) has an equipment cost of $115,395. For the dual-speed system (option 2), the equipment cost is $122,775. For both systems, the labor costs associated with planning, engineering, and installation come to $65,620, and the construction permit adds a cost of $7,800. To keep the existing (inadequate) system would entail an investment of $8,055 to replace the old motors. Annual operating costs of the basic system (option 1) are $21,577 for utilities to heat the make-up air and operate the motors. The dual-speed motors (option 2) have much lower operating costs during non-work hours, lowering annual operating costs to $15,097. The annual utility operating costs for the existing (inadequate) system are $8,135. Replacing the existing system would remove a variety of continuing costs in the future. First, the company estimated that further corrosion of electrical and other equipment could cost up to $5,000 per year. Second, as production increased, indoor concentrations of NH4Cl and other pollutants would increase as well, eventually triggering regulatory action. Third, high indoor pollutant concentrations threatened worker health and would reduce productivity. Financial Parameters The analysis uses a discount rate of 11.7 percent, an inflation rate of 3 percent, a net tax rate of 39 percent, and double declining balance depreciation over a seven year period. Financial Results The 15 year NPV of option (1) is -- $171,782. For option (2), the 15 year NPV is -- $143,424. Although the NPV of both options is negative, the company managers decided to make the invest in option (2), which has an NPV $28,358 greater than that of option (1) for an additional investment of $7,200. The primary reason was to allow SAE Circuits to expand production while maintaining compliance. Contact Deborah Savage, Tellus Institute, 617-266-5400. Source Performance Technologies, Inc., Process Energy Audit: SAE Circuits Colorado, Inc. For Public Service Company of Colorado. 1996. Savage, Deborah, and David Miller, "Workshop on Innovative Financing Results". Originally presented at the "Energy Efficiency & Pollution Prevention" conference sponsored by the Department of Energy. Denver CO, January 23, 1997. DISCLAIMER: This database presents a number of case studies developed in recent years by a diverse group of organizations. The concepts, terms, and approaches represented throughout the database represent many different philosophies and means of applying environmental accounting principles and don't necessarily reflect the position or views of the US Environmental Protection Agency. Through production of this database, the EPA is presenting many different possible approaches to environmental accounting without intending to endorse any one. http://www.epa.gov/opptintr/acctg/casestudy.htm Revised: 04/09/98