Developing a high-performance sustainable facility is no longer a marketing gimmick. That’s what India is opening up to and is no longer a forte of environmentally conscious companies if we speak about the present situation of the country from an environment point of view. Its high time that every corporate in India opens its eyes and makes efforts for embracing clean energy technologies. It is something which the country needs and must have. It’s about our present and the future.
Gunning for a sustainable and high-performance building will always involve a participation from the clean energy technologies. This technology reduces the use of energy from conventional sources such as fossil fuels and depends more on renewable sources of energy.
One category of clean energy technologies is the CHP system or combined heat and power system. CHP comprises efficient refrigeration technologies, efficient lighting systems, ventilation heat recovery systems, variable-speed motors for compressors and ventilation fans, improved insulation, high-performance building envelopes and windows, and other existing and emerging measures. The goal here is not to reduce energy consumption but to supplement it from renewable energy sources like solar and wind etc.
Despite the shared objective of reducing conventional energy usage, important differences exist between renewable energy and energy-efficiency technologies. However, we have mentioned it here just as an indicator and details of these will be discussed in future blog posts.
Clean Energy Technology Cost Structure
There are many methods that are used to determine the economics of deploying clean energy technology, however, the most commonly used are:
- NPV or Net Present Value: NPV methods take time value of money into consideration, hence it is more convenient to determine the economics of the project.
- IRR or Internal Rate of Return: The discount rate at which the after-tax NPV is zero. The calculated IRR is examined to determine if it exceeds a minimally acceptable return, often called the hurdle rate. Unlike NPV, the IRR metric’s percentage results allow for comparisons of projects of different sizes.
- Pay Back Period: This calculation compares revenues with costs and determines the length of time that will be taken to recover the initial investment. Companies frequently calculate a simple payback period to analyze retrofit opportunities offering benefits without regard to the time value of money.
No matter which metric is used to evaluate clean energy technologies economics, the analysis typically begins by estimating the project’s capital cost, projected power output, and annual revenues, expenses, and deductions. These numbers provide a basis for developing a earnings statement, debt coverage schedule, and statement of after-tax cash flows.
In our next blog post, we will be discussing the cost of electricity and how it can be managed using clean energy technologies