Finances dictate most energy decisions and we often choose the technology that is the least cost according to some criteria. In this chapter we introduce a few criteria that are commonly used.

Learning Objectives

• Combine financial and energy quantities to create metrics usef for energy decisions.

Under what conditions does performing an energy-saving retrofit make sense to a consumer?

• What is the cost of a loan?
• How much energy is saved?
• What is the influence of local or national policy?
• What other non-economic benefits result from making buildings more efficient?

References

• Natural Capitalism chapter

Energy Metrics

• Payback period
• Cost of Conserved Energy
• Cost of Conserved Carbon
• Economic Thickness of Insulation

Cost of Conserved Energy (CCE)

This metric computes an equivalent cost for each unit of energy saved. It behaves as if we were buying the energy from the manufacturer of the equipment.

This allows for comparison to existing energy prices.

CCE = \frac{\textrm{Cost of Efficiency Measure per Year}}{\textrm{Energy Saved by Efficiency Measure per Year}}

Cost of Conserved Carbon (CCC)

This metric is similar to CCE except it computes an equivalent cost for avoided carbon.

This allows for comparison to carbon taxes or other carbon abatement options.

CCC = \frac{\textrm{Cost to Avoid Carbon per Year}}{\textrm{Amount of Carbon Avoided per Year}}