Energy mapping

Energy efficiency and profitability

Before choosing whether or not to implement an energy efficiency measure, a life-cycle calculation (LCC calculation) should be established. Exceptions can be made if the measure has a short pay-off, for around half the life of the measure. In a pay-off calculation, only the investment is divided by the reduced annual energy cost the measure gives rise to.

What should be included in the decision basis?

Energy efficiency measures should not only be considered from the perspective of reducing energy costs. In the calculation, or in the decision basis, you should also include other added values. This can be reduced maintenance, better indoor environment, better working environment, reduced environmental and climate impact, architecturally more beautiful design, modern technology that is more user-friendly, etc.

In an LCC calculation, from a strictly economic point of view, as much as possible should be included.

The most important thing to include is your calculation rate, an assessment of changes in energy prices during the life of the measure and future maintenance costs, both for the measure and if the measure is not implemented. The whole financial point of an energy efficiency measure is that energy costs and maintenance are reduced more than the cost you have for the investment, seen throughout the life of the measure.

An important input in a correctly performed profitability calculation is the cost savings. The variation of price models at the country's energy suppliers means that the cost savings for a certain energy efficiency measure also vary. A tool for calculating this has been developed within BeBo in connection with a thesis. The tool is called PRISMO. The output from PRISMO is adapted to serve as input in BeBo's Profitability Calculator. Read more on BeBo's website.

What often causes a system in a building or industry to be replaced is that maintenance costs begin to fall, ie the system's economic life is probably passed. Therefore, you should always include the reduced maintenance cost in the LCC calculation.

Choice of interest in the calculation

The calculation rate is too difficult for many to estimate. For those who have a management decision at the rate of interest rates, it is easier. For you as a private person or BRF, your interest rate on a possible loan can preferably be entered as a discount rate. You can also choose to use the interest rate you receive as a return on the capital you may have. If you count on any of these interest rates and gain profitability in the investment, it simply means that the energy efficiency measure gives a higher return, better interest rate, than you get at the bank.

The interest rate can be calculated as either real or nominal. What is different is whether inflation is taken into account, etc. or not. The most common is to calculate real, that is, the return in addition to inflation. In recent years, inflation has been close to zero and thus no great emphasis needs to be placed on this at the moment.

Assessment of future energy prices

No one knows what the energy prices will look like in 10-20 years. Historically, energy prices have increased more than other goods (consumer price index). The Energy Agency periodically makes long-term forecasts that can provide guidance. An easier and perhaps good enough assessment is to expect an energy price increase of about 2-3%. Then hopefully you are in the right range even if they swing both upwards and downwards. Also, remember that the less energy you need to buy, the less you have to worry about the energy cost!

What often causes a system in a building or industry to be replaced is that maintenance costs begin to fall, ie the system's economic life is probably passed. Therefore, you should always include the reduced maintenance cost in the LCC calculation.

spreadsheet Template

EEF plans to publish a simple template for LCC calculations here, but before that, for example, the calculations available on Belok's (Energy Agency's ordering group premises) website can be used. Go to Belok's LCC spreadsheet. Source,

Good examples of what others have done in both real estate and industry

Breakthrough in Energy Saving using Nanotechnology


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