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Brings you the future of water heaters with

the
Sanden SANCO2 Heat Pump Water Heater

Presented by Hudson Tognetti


1

TABLE OF CONTENTS

Executive Summary…………………………………………………………… 2

The Problem……………………………………………………………..........3-4
Identifying Solution…………………………………………………...... 4-5

Project Description …………………………………………………………….6

Cost Analysis ………………………………………………………………….. 7


Costs ……………………………………………………………………… 7
Savings ………………..………………………………………………..... 7
Returns …………………………………………………………………… 7

Assessment Strategy ………………………………………………….…..…. 8

Conclusion…………………………………………………………………...…. 8

Appendices ………………………………….……………………………..….. 9

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EXECUTIVE SUMMARY
The following Product Implementation of Heat Pump Water Heaters (HPWH) is a
proposal provided for Lovazzano Mechanical Inc. (LMI)1

PRODUCT IMPLEMENTATION
HPWH is 2-5 times more energy-efficient than conventional water heaters. Lovazzano
Mechanical Inc. should only use HPWH on all new projects to save consumers on
electricity and lower the amount of greenhouse gasses consumed by convention water
heaters. LMI should only use Sanden SANCO2 HPWH because they use a two-part
system that allows them to be easier installed into small areas like apartments. They are
the most energy-efficient product on the market.

WHO DOES THIS HELP?
The Environment
Sanden’s new HPWH uses a CO2 refrigerant and natural refrigerant that has an
extremely low Global Warming Potential (GWP), which does not deplete the ozone
layer.

Lovazzano
This product implementation will show that Lovazzano Mechanical Inc. is dedicated to
social responsibilities and will create new relationships and opportunities while
promoting customer awareness.

Consumers / Clients
Sandens HPWH will lower electricity consumption by 70% allowing customers or
clients to save on electricity bills.

1
Lovazzano Mechanical Inc. is a family owned business located in Menlo Park and they specialize “in
commercial and multi-unit residential properties. Design build and value engineering services, including
Plumbing, Fire Protection and HVAC systems

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THE PROBLEM

WHAT’S WRONG?
Lovazzano Mechanical Inc. currently uses standard water heaters in all of their new
project developments. Standard water heaters are the leading home appliance they also
consume the most amount of energy and natural gas. California homes’ natural gas
usage for home appliances is 37% from space heating, 7% cooking, 3% for cooking and
49% for water heaters. Natural gas is now responsible for two-thirds of emission in Bay
Area residences. When looking at multi-unit apartments, which LMI specializes in, the
energy consumption nearly doubles when it comes to water heating use.

The result of this consumption leads to more greenhouse gases being used. A report by
the Bay Area Air Quality Management District reported that bay area residents emit 44.3
metric tons of CO2 per household.2 As a company, we have to think about our future
and how we can lower the number of greenhouse gases being used to ensure we are
doing our part to make sure that the world is safe for the next generations. To put into
perspective; if everyone in America installed an HPWH, “approximately 140 billion
pounds of annual greenhouse gas emissions—it would be the same as taking more than
13 million vehicles off the road.”3

The problem with standard HPWH is that they require between 750 to 1000 square feet
to collect the heat from the air and move it to the water heater. The space also has to
have an ideal temperature of 40-90 degrees. Unfortunately, not every home satisfies
both requirements. There is also a higher upfront cost when installing HPWH, but in the
end, the savings from electricity will pay for itself and then some.

California is one of the leading places in sustainability and the Bay Area specifically is
prone to a sustainable future. Certain cities (Berkley, Menlo Park, and Palo Alto) are
already enforcing new construction to use HPWH. HPWH is relatively new to the market
and not many commercial and multi-residential plumbing companies know about it. To
be ahead of the industry, LMI needs to start implementing this product right away and
start designing its buildings to incorporate this new product.

By implementing this system Lovazzano Mechanical Inc. will be able to help prevent the
number of greenhouse gases being emitted and they can get around the problem that

2
Bay Area Air Quality Management District
3
All You Need to Know About Heat Pump Water Heaters | Bob Villa

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standard HPWH has by using the Sanden HWPH. HPWH is the future of water heaters
and by implementing this product they will be ahead of the industry.

IDENTIFYING A SOLUTION

Lovazzano Mechanical Inc. needs to understand the benefits of implementing the Sanden
HPWH which will solve the above issues. Incorporating the Sanden HPWH will show
customers and clients that LMI knows about the future of water heaters and the upcoming
enforcement in the Bay Area. Unlike normal HPWH, the Sanden uses a two-piece system
that will help LMI implement this system into apartments. The implementation of this
product will show that LMI cares about future generations and sustainability, which will
help LMI attract new customers.

Using the following proposed initiative is in align with the “Six Principles of Stick Ideas,”
illustrated by Chip Heath and Dan Heath.4

4
Heath and Heath (2008) Made to Stick: Why Some Ideas Survive and Others Die

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The Sanden SANCO2 HPWH is a highly energy-efficient


Simple: alternative to the traditional electric or gas water heater, its
unique system saves money, reduces greenhouse gas
emissions and eliminates the production of carbon
monoxide.

Sanden SANCO2 HPWH are the future of water heaters


Concreate: they’re like solar panels they both; save people money on
electricity, save the environment, and eligible for rebates.

Sanden is known for its dedication to sustainability and


Credible: producing high end products
.

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PROJECT DESCRIPTION
Implementation of the Sanden SANCO2 will replace the use of standard water heaters in
new multi-unit projects. Using this product will: make installation easier for LMI workers,
keep customers and clients happy with low energy consumption, save money in the end,
as well as being a sustainable and environmentally friendly product.

Product implementation
Eliminating the use of standard water heaters will force LMI to use Sanden SANCO2
HPWH, this will not affect its current supplier (WHCI and Cal Steam) relationship because
they’re already a distributor for Sanden. When a client comes to LMI, LMI will provide the
client with a product brochure showing the benefits of the Sanden SANCO2 which will
also include rebates they can use. LMI workers will need to be trained for the installation
process and the design and mechanical engineering team will have to figure out how it
will be implemented into new buildings.

• Lowers customers and client’s, electricity and gas bill
People: • Can apply for rebates (saves customer / clients more
money)
• Help create more employment through LMI
• Fastest first hour rating creating almost instant hot
water

• Don’t use synthetic refrigerant like R410A or R134A,


Planet: which impact global warming
• Uses a natural refrigerant
• Reduces the amount of natural gas being used
• Reduces green house gases
• Sustainable and environmentally friendly

• Gain new customers because LMI will be one of the


Profit: few commercial and multi-unit plumbers who know
what HPWH are and how to install them
• Become leading plumbing company who installs
HPWH
• Clients will see that LMI cares about the environment
and sustainability, increase in potential new clients

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COST ANALYSIS
The cost of the Sanden SANCO2 depends on the size of the water heater and the
amounts needed. Usually, multi-unit buildings use about 5 water heaters for 10 units. For
this example, I used the largest HPWH Sanden has and then used this data to analyze
the cost for a 50-unit building. The cost analysis is for the client because they will incur
the end cost
Cost of product needed for a 50-unit building
Product Cost per unit Rebate per unit Quantity Total
Sanden $4,325 ($1,500) 10 $28,250
SANCO2
(119 gallon)
Electrical $50 50 $2500
upgrade 30A
branch
circuit
Total Cost $30,750

Savings:
Average Water Heater Average water heater
The average water heater will run for 3 hours a day kWh Per Day: 13.5
and use 4,500-watts. Based on San Francisco
Kilowatt hour (kWh) prices of $0.20 an average
Cost Per Month: $82.13
water heater will cost $985.61 a year to run. Cost Per Year: $985.61
VS Sanden SANCO2 HPWH (119
Sanden SANCO2 HPWH gallon)
Using the same run time and same price per kWh kWh Per Day: 4.6
the Sanden will save clients $649.63 per year, and Cost Per Month: $28
clients can receive a $1,500 rebate, which will lower
the total overall cost. Cost Per Year: $335.98

Returns:
With the savings and rebates, the Sanden offers an amazing return for customers and
clients. Using this cost analysis, the Sanden HPWH will pay for itself in 4.73 years. This
amount of return makes the Sanden HPWH a no brainer for clients especially when we
factor in the sustainability aspects and how it reduces global warming.

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ASSESSMENT STRATEGY
The purpose of the initiative is to immediately implement the use of Sanden SANCO2
HPWH so LMI can have a lead in market share in HPWH installation, while also having a
long-term goal of helping the environment and building positive brand recognition. The
two ways in which success will be measured through the product implementation is
environment and clients.

Environment
Every Sanden HPWH used in the new buildings will allow us to determine how much
greenhouse gases were prevented and comparing it to normal water. This information will
be used to promote LMI’s long term initiative and show clients LMI is dedicated to
sustainability.

Clients
LMI will present clients with the benefits of the Sanden HPWH and we’ll be able to
determine if clients favor this initiative or if they prefer normal water heaters. If more than
5 clients choose normal water heaters than they can terminate the initiative. On the other
hand, if more than 5 clients do choose the Sanden HPWH, and has an increase in new
client occurred.

CONCLUSION
Lovazzano Mechanical Inc. has the opportunity to implement this product and share its
knowledge and benefits to its customers, all while helping the environment and its
customers wallets. Sanden SANCO2 is a simple, concrete, and credible solution that will
revolutionize the water heater industry. Just by having this one product implementation
we will be able to reduce greenhouse gasses, lower electricity expenses for our clients,
and gain new clients by being the go-to HPWH installer for multi-unit and commercial
buildings. Carrying out this proposal will address the triple bottom line by giving our
employees consistent work, creating a sustainable future for our loved ones and the next
generation, and increase our market share in the multi-unit and commercial plumbing
sector.

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Appendix: MEMO

TO: LMI client outreach and Purchasing manager


FROM: Lovazzano Mechanical Inc. Head Office
DATE: November 9, 2019
RE: New Product implementation

We are excited to announce our new product implementation, the Sanden SANCO2. It’s
a new type of Heat Pump Water Heater (HPWH), it’s the most energy-efficient product on
the market and it’s the only two-part system available, which allows us to implement it in
any building layout. This is great news for us because we want to be the first to the market
when it comes to installing HPWH on large multi-unit apartments. This product will show
clients that we care about the future environment as well as their future savings.

Client Outreach
I need you to create a brochure that will inform our clients about the benefits of the Sanden
SANCO2. Gather any and all information from Sanden that will help you convey how
Sanden HPWH is the most efficient HPWH and how it will reimburse them in less than 5
years, all while saving the environment from excessive green-house gas usages. In order
to be successful, the brochure needs to be concrete and simple for clients to understand.
The main messages it should convey is that: Sanden HPWH is easy to comprehend,
implement, as well as highlighting the overall cost-saving benefits.

Purchasing Manager:
You will need to contact WHCI and Cal Steam to see if Sanden is able to do bulk orders
and if so, will they be able to lower the price? Lowering the price will be beneficial because
there are higher up-front costs compared to standard water heaters. Lowering the upfront
cost will be even more attractive to skeptical clients and bring new clients in.

We only want to use the Sanden HPWH from here on out, because we want to be known
for our effort in creating a suitable and eco-friendly future and creating benefits for our
clients and community as a whole.

If you have any questions or concerns about the above procedures or implementation of
the product, please reach out directly to me.

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