2 ECONOMIC BALANCE APPROACH 5.

3 ECONOMIC BALANCE FOR INSULATION

DERIVATION: The economic balance for insulations is based on the common variable, the
For the simple case, where either of the two costs (fixed or direct) varies insulation thickness.
linearly with the common variable and the other varies linearly as the As the thickness of insulation increases, the fixed cost associated with the
reciprocal of the common variable, the minimum total cost occurs as follows: material cost of insulation increases linearly.
C1 = ax + b ----------------------eqn.1 For example,
where The annual fixed costs for insulating a certain steampipe installation can be
C1 is a cost, in Rs. expressed as:
x is a common variable CF = 30 S + 40 Rs. per year --------------------------------eqn.1
a and b are constants 4
C2 = c / x + d ----------------------eqn.2 Where
where S = thickness of insulation, in inches
C2 is another cost, in Rs. CF = Annual fixed cost, in Rs.
c and d are constants On the other hand, as the thickness of insulation increases, the direct cost
The total cost CT is given by: CT = C1 + C2 decreases linearly.
CT = ax + b + c / x + d ----------------------eqn.3 This is because the direct cost in insulation is the energy cost. Since the
When this is differentiated and set equal to zero, insulation of the steam pipe results in energy savings, the direct cost
dCT / dx = a – c / x2 = 0 associated with energy decreases with increase in the thickness of the
or a = c / x2 insulation.
or x2 = c / a For example,
gives x = (c / a)1/2 The annual direct cost of energy lost by providing insulation over the steam
Thus, the optimum value of the common variable ‘x’ can be determined by pipe can be expressed as:
economic balance approach. CD = 100 / S Rs. per year --------------------------------eqn.2
Where
S = thickness of insulation, in inches
CD = Annual direct cost, in Rs.
The optimum insulation thickness for economic balance over insulation can
be