The Energy Audit 177should now be reviewed, and the actual analysis of the equipment or
operational change should be conducted. This involves determining the
costs and the benefits of the potential ECO and making a judgment on
the cost-effectiveness of that potential ECO.
Cost-effectiveness involves a judgment decision that is viewed
differently by different people and different companies. Often, Simple
Payback Period (SPP) is used to measure cost-effectiveness; most fa-
cilities want a SPP of two years or less. The SPP for an ECO is found
by taking the initial cost and dividing it by the annual savings. This
results in finding a period of time for the savings to repay the initial
investment, without using the time value of money. One other common
measure of cost-effectiveness is the discounted benefit-cost ratio. In this
method, the annual savings are discounted when they occur in future
years and are added together to find the present value of the annual
savings over a specified period of time. The benefit-cost ratio is then
calculated by dividing the present value of the savings by the initial
cost. A ratio greater than one means that the investment will more than
repay itself, even when the discounted future savings are taken into
account.
Several ECO examples are given here in order to illustrate the
relationship between the audit information obtained and the technology
and operational changes recommended to save on energy bills.
Lighting ECO
First, an ECO technology is selected, such as replacing an existing
400 watt mercury vapor lamp with a 325 watt multi-vapor metal halide
lamp when it burns out. The cost of the replacement lamp must be de-
termined. Product catalogs can be used to get typical prices for the new
lamp—about $10 more than the 400 watt mercury vapor lamp. The new
lamp is a direct screw-in replacement, and no change is needed in the
fixture or ballast. Labor cost is assumed to be the same to install either
lamp. The benefits (cost savings) must be calculated next. The power
savings is 400-325 = 75 watts. If the lamp operates for 4000 hours per
year and electric energy costs $0.075/kWh, then the savings is (.075
kW)(4000 hr/year)($0.075/kWh) = $22.50/year. This gives an SPP =
$10/$22.50/yr =.4 years, or about 5 months. This would be considered
an extremely cost-effective ECO. (For illustration purposes, ballast
wattage has been ignored, and average cost has been used to find the
savings.)