Oxygen expenditure, total life cost (TCO) accounting

In the procurement of industrial PSA oxygen generators , companies often face the following dilemma: they need to reduce initial procurement investment while also taking into account the overall cost of long-term operation of the equipment; in addition, the market offers a wide variety of functional configurations and complex parameters, making it truly difficult to select a user-friendly and practical oxygen generator.

To help companies overcome this dilemma, this article will systematically analyze the relationship between the price and functions of PSA industrial oxygen generators , and provide adaptation solutions for different operating conditions, helping companies reduce costs and increase efficiency in selecting PSA oxygen generators.

When it comes to expenditures on industrial oxygen, one should not only look at the equipment purchase price, but should also calculate the total expenditure from the perspective of total cost of ownership (TCO).

The so-called total life cycle cost refers to the total cost incurred throughout the entire process of equipment procurement, installation, operation, and disposal. It includes both the cumulative expenditure at the time of procurement and the operation and maintenance costs of the PSA oxygen generation system during long-term continuous operation (typically designed for a lifespan of around 10 years), as well as electricity consumption costs. The latter often constitutes the majority of a company's total oxygen consumption cost. Specifically;

This includes equipment purchase costs (customized based on three parameters: oxygen purity, flow rate, and pressure), transportation and installation costs, and costs for upgrading supporting facilities (plant, power distribution, pipelines, storage tanks, etc.).

In PSA oxygen generation systems , the main energy consumption for system operation comes from the air compressor; this is the largest component of the total cost of ownership (TCO) of PSA oxygen generation systems, typically accounting for 50%-70% of the total life cycle cost.

Energy consumption varies significantly between different brands of air compressors. Two air compressors with the same air production capacity, operating for 20 hours/day, 300 days/year, and a production capacity of 200 Nm³/h, can have annual electricity costs differing by tens of thousands of yuan. Therefore, it is recommended that during the procurement process, in addition to understanding the air production capacity or equipment price, you should also focus on the "unit oxygen production energy consumption" indicator. The lower this indicator, the better the system performance.

The core consumable of a PSA oxygen concentrator is zeolite molecular sieve, which typically has a lifespan of 5-8 years. Replacement costs are calculated based on the amount of zeolite molecular sieve used. In addition, air compressor filters, oil (if oil-lubricated), seals, valve assemblies, and filter sets also require regular replacement. These are all necessary expenses for maintaining efficient equipment operation and extending its lifespan. Although these costs are easily overlooked in the initial procurement phase, they are the true "key variable" that dominates later operation and maintenance costs!

For some oxygen-consuming enterprises (such as glass melting furnaces, metal smelting, and aquaculture), interrupting the oxygen supply is unacceptable, as it would cause the entire production line to shut down. Although this cost is not reflected in the equipment bill, it, in turn, requires the equipment to be sufficiently stable and reliable with a low failure rate. Only with fewer system failures will the enterprise experience fewer unplanned shutdowns throughout the year, resulting in less loss.

As equipment enters its later stages of use, it may acquire "secondary value." This means that the lifespan of the equipment can be extended by replacing core components (such as molecular sieves and air compressors), or the system can be expanded.

This situation can be achieved through a modularly designed oxygen generation system, which can extend the system's value through partial upgrades and avoid overall obsolescence.

Looking at the five types of costs above, it's easy to see that the core significance of the TCO perspective is not to deny low-price solutions, but to compare "value" and "long-term costs" on the same dimension, avoiding one-sided and isolated consideration of various factors.

After understanding the composition of TCO, the next step is to establish the relationship between "function" and "value," clarifying what problem each function configuration in the system solves and its degree of importance.

This is the fundamental function of an oxygen generation system, derived from the user's actual oxygen demand, and forms the "core baseline" of a customized oxygen generation system. It includes oxygen purity, flow rate, and pressure fluctuation control. The purchaser can verify the authenticity and accuracy of the data by reviewing actual operating data and third-party testing reports.

Variable frequency control, intelligent load matching, and low-pressure-loss pipeline design can effectively reduce system energy consumption. A common characteristic of these features is that while the initial equipment cost is relatively high, the investment can be recovered through long-term energy savings.

For companies that use large amounts of oxygen continuously for extended periods (such as factories that operate 24 hours a day), the payback period for this type of function will be shorter and it will be more valuable.