Common Financial Analysis for Energy Projects

Energy efficiency of buildings in San Diego is a top priority to a few people. A company exists to create revenue and the core product is usually not improving the energy efficiency of the workplace. To communicate value to building owners and decision makers it is necessary to provide common financial analysis. Some common financial analysis formulas include the simple payback and the rate of return (ROI).

The formula for simple payback is = total project cost / annual savings.

The formula for the rate of return (ROI) is = annual savings / project cost.

Additional analysis includes (NPV) net present value. This should be applied to capital intensive projects: a chiller or boiler replacement, window replacement, and lighting.