ESOS Blog

Making the financial Case

December 13, 2016

Implementing Energy Saving Opportunities Newsletter No. 05

For many opportunities, a light-touch approach can be sufficient, building on the cost and saving assumptions in your ESOS assessment report. 

 

Where more detailed appraisal is required there are five commonly used techniques to help you evaluate and present the financial case for an energy saving opportunity.

  • Simple Payback Period (SPP)

  • Life-cycle cost (LCC)

  • Discounted Cash Flow (DCF)

  • Net Present Value (NPV)

  • Internal Rate of Return (IRR)

Your organisation will likely have a preference for a particular approach, so do talk to your finance department to understand which one is typically used.

 

The cost of inaction

When presenting the potential financial savings of an energy saving opportunity, you can also present them as the ‘cost of inaction’, i.e. avoidable losses generated by delaying/avoiding implementation of the energy efficiency opportunities.

 

In our next newsletter we will discuss : Prioritising Low-cost and No-cost Implementation

 

Our national team of energy engineers are ready to undertake the design, implementation, monitoring, and financing of identified energy reduction measures on your behalf.  Please contact us to register your interest.

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