Simple payback is a misleading financial ratio. Conventional wisdom says that short payback is a sign of a better project. Wrong. Getting your money back is not a goal of an investment. The goal of investment is to make invested money make more money with minimum risk. Simple payback does not even consider risk of [...]
Every time I hear somebody say "project saved $12,345.67" I look if person's nose has grown a bit. Obviously such person does not understand the first thing about savings: energy savings is an avoided consumption, consumption that did not happen, nobody can measure something that did not happened. Energy savings are never exact, always [...]
When assessing energy savings, the use of math is not a substitute to engineering common sense. Math is an enhancement tool: if engineer has made in error – math will not correct it; math will make it bigger. Never mind calculations, statistical analysis or even artificial intelligence, if result does not make engineering sense [...]
When a baseline built over a certain period has R2=95%, it means that baseline formula accurately predicts actual consumption in 95% of cases within this period. This does NOT mean that there were no changes during this period. The wrongly predicted 5% of data points may be measurement noise or data collection error or [...]
Calculating energy savings results is keeping like golf score. If you ever been on the green, understanding the meaning of CUSUM is trivial. Baseline - how machine is supposed to work or worked before retrofit - is a par. CUSUM - a cumulative sum of deviations from baseline - is score. If CUSUM is above [...]
To M&V or not to M&V - this is the question If you are in charge of energy at your manufacturing or commercial facility, you are likely to be addressed by vendors with various energy efficiency improvements proposals. It can be a more efficient machine or a tune-up or an addition to your existing system. [...]
A proper answer to this seemingly simple question is nothing but simple. Proper measurement and verification of achieved savings is a key factor when calculating payback period, IRR for an investment into energy efficiency project and any other in-company ratio. Effectively, M&V may mean a difference between energy efficiency project being named [...]
