Info

$19,952

$43,237

$69,923

$100,076

$133,767

$357,806

$681,515

Table 43-5 15 Year Cash Flow Analysis for $1 Million Project Financed at 11% over 15 Year Term.

Table 43-5 15 Year Cash Flow Analysis for $1 Million Project Financed at 11% over 15 Year Term.

be more attractive than the prospects for greater total cumulative positive cash flow. If analyzed with no energy escalation rate, this project would still produce positive cash flow in every year. However, if analyzed with a 2% negative escalation (or savings erosion) rate, the project would produce negative cash flow by year eight. Again, this sensitivity analysis and the long-financing term requirement would indicate a marginal project.

Consider instead a slightly different set of project economics in which the same capital investment produced $200,000 in first year savings, for a simple payback of 5 instead of 6 years, and project financing was available at an interest rate of 9%. The 10 year cash flow analysis for this project, based on a more conservative negative energy savings escalation rate of 1% per year, is shown in Table

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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