Financial Calculator
for Energy Conservation Projects

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Simple Payback, Missed Opportunity Cost, Net Present Value and Internal Rate of Return Please hover on the small RHT logos for additional information.

Description of the Energy Efficiency Measure (EEM)

EEM Life and Up-Front Cost
	Enter the number of years that the measure is expected to produce savings, and the gross up-front cost.

Life of the EEM:	years
Gross Up-Front Cost of the EEM: $	dollars

EEM Annual Energy Savings
	Enter the anticipated dollar amount of annual energy savings for the first year.   Also select anticipated energy price increase percentage.

First Year Savings: $

Energy Price Inflation: 0% per year 1% per year 2% per year 3% per year 4% per year 5% per year 6% per year 7% per year 8% per year 9% per year 10% per year

EEM Incentives and Tax Credits
	Enter the estimated utility incentives and tax credits.

Estimated Electrical Utility Incentive: $	dollars
Estimated Natural Gas Utility Incentive: $	dollars
Estimated State Tax Credit: $	dollars
Estimated Federal Tax Credit: $	dollars

EEM Annual Operation and Maintenance (O&M) Cost Impact
	Enter a positive amount if annual O&M costs will increase due to this EEM, or a negative amount if they will decrease.   Also select estimated percentage of how fast O&M costs might increase in future years.

Operating Cost Impact: $	Operating Cost Inflation: 0% per year 1% per year 2% per year 3% per year 4% per year 5% per year 6% per year
Discount Rate
Select the anticipated interest rate if capital is invested in an alternate investment to this energy efficiency measure. NOTE: This input is only used for the net present value calculation, not for the internal rate of return.
Discount Rate: 1% per year 1.5% per year 2% per year 2.5% per year 3% per year 3.5% per year 4% per year 4.5% per year 5% per year 5.5% per year 6% per year 6.5% per year 7% per year 7.5% per year 8% per year 8.5% per year 9% per year 9.5% per year 10% per year 11% per year 12% per year 13% per year 14% per year 15% per year 16% per year 17% per year 18% per year 19% per year
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Simple Payback (years):

Missed Opportunity Cost: $

Net Up-Front Cost of the EEM: $

Net Present Value (NPV): $

Internal Rate of Return (IRR):

The financial performance of an EEM can often be improved with monetary incentives available from private and public utility companies, non-profit companies, and Federal and State governments.   Incentives can take the form of cash or tax credits.   Accelerated depreciation (MACRS) may also help.   Please contact RHT Energy Solutions for additional information.

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Notes:

Simple payback is the number of years it will take an EEM to pay for itself due to annual energy savings alone.   It is the EEM cost divided by the first full year of energy cost savings.

The Missed Opportunity Cost is the sum of the estimated energy cost savings over the life of the EEM.   This is the gross amount of energy cost savings that would not be received if the EEM is not implemented.

The Net Up-Front Cost of the EEM is the Gross Up-Front Cost of the EEM minus the utility company incentives and tax credits.

If the Net Present Value (NPV) is greater than zero, it is an indicator of how much monetary value an EEM adds to the firm.   In financial theory, if there is a choice between two mutually exclusive alternatives, the one yielding the higher NPV should be selected.

The Internal Rate of Return (IRR) can be compared against the rates of returns or interest rates of alternative investments, such as stocks, bonds, certificates of deposit, etc.

Disclaimer: The calculations and information on this page are provided for general estimation only.   Please consult RHT Energy Solutions and an accounting professional to determine the exact financials of any particular energy conservation project.

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Please call (541) 770-5884 or email info@rhtenergy.com for complete information.