Determine the Financial Impact of Your Energy
Saving Investment Project with
SEDAC’s Energy Project Economics Calculator
How Do I Evaluate an Energy Project?
Energy efficiency improvement projects generally require an investment of capital today in exchange for reduced operational expenses over a period of time in the future.
These savings can come in the form of:
• reduced utility bills
• reduced energy consumption
• reduced operations and maintenance costs
Review of economic indicators such as Net Present Value (NPV) and Internal Rate of Return (IRR) can help you decide if tomorrow’s savings is worth today’s investment. Examination of monthly loan payments and cash flows can establish the practical viability of an investment option.
Does the Project Make Economic Sense?
Projects are usually considered attractive if IRR > discount rate
The internal rate of return (IRR), or annual yield, is greater than the investor’s time value of money (their discount rate). AND NPV > 0
The net present value (NPV) at the desired rate of return is greater than zero, indicating that the project more than pays for itself.
The discount rate is often set at what an investor could expect to make on an alternate investment .
This calculator assumes a uniform series of monthly cash flows and no escalation of fuel costs above inflation.
