Compute NPV of savings

Industrial Energy Efficiency Engineering: Energy Management

Engineering Economics Assigment

Consider the table copied for the Boise State M&V Report (2009):

Your assignment is to take two of the measures and compute the net present value of the savings

associated with each of them, computing in a number of ways.

1) First, consider the cashflow where the savings remains constant from 2009 to present with an interest

rate of 5%

2) Next, consider a cashflow where the savings were eroded by behavioral or other changes over time.

Consider a 10% erosion each year.

3) Next, consider a cashflow in which the savings are computed according to the prevailing electric and

gas rates for each year. This is a little more complicated but start with the historic prices for electricity

and natural gas in 2009. That will allow you to compute the kWh and BTU savings for each measure

(which may be somewhat different from the table). Then use the prevailing rates in the subsequent

years to create a cashflow and compute the net present value of that flow. The Energy Information

Administration 1 and the Idaho Public Utilities Commission

2 are good places to look for this information.

You can work in groups, each group will look at two measures. I took the liberty of putting the groups

together.

Group Members Measures to analyze

1 Hari and Brian 1.00 and 4.02

2 Mohammad, Abdul and Yousef 1.01 and 5.01

3 Zac and David 3.00 and 5.02

Deliverables: Each group will present their results to the class after spring break. Prepare a brief

presentation (5-10 minutes) complete with appropriate slides. Presentations will be in class on March

31 st

. Upload your slides to the Canvas site.

1 http://www.eia.gov/

2 http://www.puc.idaho.gov/