178 Energy Project Financing: Resources and Strategies for Success
Motor ECO
A ventilating fan at a fiberglass boat manufacturing company has a
standard efficiency 5 hp motor that runs at full load two shifts a day, or
4160 hours per year. When this motor wears out, the company will have
an ECO of using a high efficiency motor. A high efficiency 5 hp motor
costs around $80 more to purchase than the standard efficiency motor.
The standard motor is 83% efficient and the high efficiency model is 88.5%
efficient. The cost savings is found by calculating (5 hp)(4160 hr/yr)(.746
kW/hp)(1/.83) –( 1/.885) = (1162 kWh)*($0.075) = $87.15/
year. The SPP = $80/$87.15/yr =.9 years, or about 11 months. This is also
a very attractive ECO when evaluated by this economic measure.
The discounted benefit-cost ratio can be found, once a motor life is
determined and a discount rate is selected. Companies generally have a
corporate standard for the discount rate used in determining their mea-
sures used to make investment decisions. For a 10 year assumed life,
and a 10% discount rate, the present worth factor is found as 6.144 (see
Appendix IV). The benefit-cost ratio is found as B/C = ($87.15)(6.144)/$80
= 6.7. This is an extremely attractive benefit-cost ratio!
Peak Load Control ECO
A metals fabrication plant has a large shot-blast cleaner that is used
to remove the rust from heavy steel blocks before they are machined
and welded. The cleaner shoots out a stream of small metal balls (like
shotgun pellets) to clean the metal blocks. A 150 hp motor provides the
primary motive force for this cleaner. If turned on during the first shift,
this machine requires a total electrical load of about 180 kW, which
adds directly to the peak load billed by the electric utility. At $7.02/
kW/month, this costs (180 kW)*($7.02/kW/month) = $1263.60/month.
Discussions with line operating people resulted in the information that
the need for the metal blocks was known well in advance and that the
cleaning could easily be done on the evening shift before the blocks
were needed. Based on this information, the recommended ECO is to
restrict shot-blast cleaner use to the evening shift, saving the company
$15,163.20 per year. Since there is no cost to implement this ECO, the
SPP = O; that is, the payback is immediate.
The Energy Audit Report
The next step in the energy audit process is to prepare a report
which details the final results and recommendations. The length and