Energy System Comparisons

General

Money loses value over time. That's why banks charge interest. But, money can be invested either in things that appreciate, such as real estate, or things that produce economic value, like an energy investment that saves money. The bottom-line question is, "What projects are worth pursuing and why would one project be 'better' than another?" The answer will depend on:

  • Ease of acquiring the investment money
  • Cost of the money
  • Value of the estimated outcome
  • Riskiness of the investment

While some of these elements are "tangible," others can be highly subjective.

The analyst should evaluate energy projects and other capital investments in terms of their financial worth or value. Since most capital investment alternatives differ in cost, cash flows, operating life, and risk, it can be very difficult to accurately compare alternatives. Therefore, the analyst must evaluate each alternative on some common ground. This common ground is best created by translating cash flows occurring at different times and at different risk levels into a common measure such as present value, annual equivalent amount, or future value at time "t." Once common ground has been established, the choice between projects will be far more objective.

Links to Related Topics

Building Design Issues
Building Construction Options
Cooling/Comfort
Indoor Air Quality
Electrical Distribution
Power Quality/Reliability
Energy Management Systems
Emergency Generation
Solving Operational Problems
Metering
Power For Computers
Green Buildings (LEED)
Understanding Demand