Let us help you avoid costly consequences of common errors
Project Economic Evaluation
Assessing the financial impact of your retrofit is challenging in a competitive energy market. As a consequence of the frequent errors, projects which actually meet payback thresholds are rejected and projects which are destined to underperform get approved. Below are some of the common errors attributable to ESO models:
-
Using historic energy costs for savings valuation
A contract may have only a few months remaining and the current market rate is much lower or higher. Savings can be grossly misstated using this approach.
-
Using a simple $/kWh rate to value the project savings
One of the most common errors is valuing all kWh the same. There are significant differences in wholesale energy costs by month and time of day. Changes to your load profile will impact the cost suppliers bear to serve your load. Savings are often vastly misstated using this technique.
-
Failing to correctly value impact on demand
A common misperception in compectitive markets is that "demand charges" were eliminated. In the PJM region, there remains a very high demand charge hidden in the energy charge, call the "Cap Tag." Usage reduction that occur during the periods of grid peak demand will significantly reduce energy charges. Even in the "energy only" market in Texas, delivery charges based on customer peak demand with an 80% demand ratchet and the 4CP demand, which is very similar to the PJM Cap Tag. Savings are usually completely misstated when these important factors are not considered.
