Chapter 13

The Economics of Efficient Energy Use

Abstract

Economic analysis plays an important role in energy management. Various methods for determining the economic benefit of an energy efficiency project are described with illustrative examples. The methods range from simple approaches that ignore the cost of money (life-cycle cost and break-even analysis) to more complex methods that evaluate projects with different lifetimes and include escalation and the cost of money. The influence of taxes and risk are also discussed.

Keywords

Economic analysis; internal rate of return; present worth; life-cycle cost; annual cost comparison; payback period

Introduction

Rationally evaluating the economic benefits and costs of proposed energy management ...

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