energy-at-risk calculator (xls) - xcel energy: · 2016-04-10energy-at-risk calculator (xls) -...

ENERGY AT-RISK www.energypathfinder.com Financial Calculator for Energy Improvements

Project Title: Prepared for: Prepared by:

Date:

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any

intended beneficiary of the financial metrics calculated.

ENERGY AT-RISK: Financial Calculator for Energy Improvements

All Fuel & Project ParametersProject Title: 0

Prepared for: 0Prepared by: 0

Date: 12/30/99

Energy Prices and Annual Consumption for the Subject Application If any fuel type does not apply, enter "0"Electricity Natural Gas Petrol. (gal) Solid Fuels ALL

kWh therms No.2 oil tons wood FUELSPhysical units per MMBtu: 293.083 10 7.2464 0.0667 TOTAL

VALUES FOR SUBJECT APPLICATION ONLY Current delivered price per physical unit $0.0000 $0.0000 $0.0000 $0.0000 - Current annual consumption in physical units……… 0 0 0 0 - Proposed annual consumption in physical units 0 0 0 0 - Annual consumption savings in physical units……… 0 0 0 0 -

Current annual consumption in MMBtu……... 0 0 0 0 0 Proposed annual consumption in MMBtu………… 0 0 0 0 0 Annual consumption savings in MMBtu……………… 0 0 0 0 0

Current price per MMBtu…………………………… $0.0000 $0.0000 $0.0000 $0.0000 #DIV/0! Current annual energy outlay, this appli $0 $0 $0 $0 #DIV/0! Proposed annual energy outlay, this appl $0 $0 $0 $0 #DIV/0! Dollar value of annual energy savings…...………… $0 $0 $0 $0 $0

Annual Recurring Non-Energy Operating Costs and Benefits*Current Proposed

ANNUAL COSTS FOR: Application ApplicationLabor…...………………………………………………… $0 $0 $0Maintenance…...……………………………………… $0 $0 $0Other non-capital cost…...…………………… $0 $0 $0

Total annual net cost/benefit difference, non-energy non-energy items………………… $0 *Enter items here ONLY if they are budgeted to occur during each and every year over the economic life of the investment

TOTAL ANNUAL BENEFITS PROVIDED BY THE PROPOSED IMPROVEMENT, energy plus non-energy savings…………………………………………………………. $0

www.energypathfinder.com

Physical units (pull-down menu):

Net benefit (+) or cost (-)

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of the financial

metrics calculated.

http://www.energypathfinder.com/


Project Title: 0Prepared for: 0Prepared by: 0

Date: 12/30/99

Project Investment ProfileEnter Item Descriptions Undiscounted

Investor's Financial Criteria Year: (One item per line) $Value:10 1

Cost of Capital or Minimum Rate of Return (annual i%)……………………… 0.00% 2 Annual escalation factor for energy prices………………………………………. 0.00% 3

4Investor's Financial Targets 5 Simple Payback (SPB) Enter YEARS…………………………… 0.0 6 Return on Investment (ROI) Enter number in format 0% 7

8

Construction Budget Value: 9Construction and/or equipment costs $0 10Engineering & consulting fees $0 Finance origination fees $0 Revenue lost during downtime/project installation $0 Other capital cost offset subtracted from total $0 Net salvage value of old equipment $0 Value of incentive or rebate $0

TOTAL CONSTRUCTION BUDGET……………………………………… $0

Summary of One-Time Investment Outlays after Year 0 (From column at right)Total undiscounted value………………………………………………………… $0

Salvage Value of Proposed New EquipmentUndiscounted future value of new equipment, minus costs of $0

TOTAL PROPOSED INVESTMENT IN UNDISCOUNTED DOLLARS… $0

ANNUAL CAPITAL COST (PRINCIPAL + INTEREST)………… $0


ADDITIONAL ONE-TIME INVESTMENT OUTLAYS

Economic life of this investment, in years (pull-down menu)…………………………………………………….

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended

beneficiary of the financial metrics calculated.


ENERGY AT-RISK: Financial Calculator for Energy ImprovementsProject Title: 0


Date: 12/30/99

Simple PaybackWHAT IS IT: The period of time required for an investment to "pay for itself" through the annual benefit that it provides.

YOUR RESULTS: = = $0 #DIV/0!$0

STRENGTHS:

WEAKNESSES:

For example, payback achieved on the initial investment may be undone by future investment requirements.

CASH FLOW SUMMARY UNDISCOUNTED OUTLAY ANNUAL EXPENSES UNDISCOUNTED SAVINGS

YEAR ANNUAL CUMULATIVE ENERGY O&M ANNUAL CUMULATIVE0 $0 $0 $0 1 $0 $0 #DIV/0! $0 $0 $0 2 $0 $0 #DIV/0! $0 $0 $0 3 $0 $0 #DIV/0! $0 $0 $0 4 $0 $0 #DIV/0! $0 $0 $0 5 $0 $0 #DIV/0! $0 $0 $0 6 $0 $0 #DIV/0! $0 $0 $0 7 $0 $0 #DIV/0! $0 $0 $0 8 $0 $0 #DIV/0! $0 $0 $0 9 $0 $0 #DIV/0! $0 $0 $0 10 $0 $0 #DIV/0! $0 $0 $0


SIMPLE PAYBACK

TOTAL PROPOSED

INVESTMENTFIRST-YEAR

SAVINGS

• Easy to understand and calculate

• Measures TIME, not PROFITABILITY• Fails to account for benefits accruing after payback is achieved• Analysis does not isolate the impact of individual variables (energy prices, volume of energy saved, rebates, etc.)• No discounting of future dollars for time value of money.• Results are complicated if there are future investment requirements in future years.

• Fails to measure the cost of NOT doing the project

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of the financial metrics calculated.


ENERGY AT-RISK: Financial Calculator for Energy ImprovementsProject Title: 0

Prepared for: 0

Prepared by: 0Date: 12/30/99

Return on Investment (ROI)WHAT IS IT: Total project benefits described as a percentage of the investment outlay.

ROI =NOMINAL AVERAGE ANNUAL RETURN

=$0

= #DIV/0!TOTAL NOMINAL INVESTMENT $0

STRENGTHS:

WEAKNESSES:

CASH FLOW SUMMARYUNDISCOUNTED INVESTMENT OUTLAY UNDISCOUNTED SAVINGS ANNUAL

YEAR ANNUAL CUMULATIVE ANNUAL CUMULATIVE ROI0 $0 $0 $0 1 $0 $0 $0 $0 #DIV/0!2 $0 $0 $0 $0 #DIV/0!3 $0 $0 $0 $0 #DIV/0!4 $0 $0 $0 $0 #DIV/0!5 $0 $0 $0 $0 #DIV/0!6 $0 $0 $0 $0 #DIV/0!7 $0 $0 $0 $0 #DIV/0!8 $0 $0 $0 $0 #DIV/0!9 $0 $0 $0 $0 #DIV/0!

10 $0 $0 $0 $0 #DIV/0!


YOUR RESULTS:

• Easy to understand and calculate• Good for comparing the economic attractiveness of two or more projects

• Result indicates an annual average rate of return only. Note below that ROI may vary over individual years.• Per the previous point, ROI is a poor indication of risk (measure of potential variability in financial results)• Does not disccount future cash flows; $1 now is valued same as $1 ten years from now• ROI analysis is confined to the project only; contribution to overall company profitability or wealth is not measured• Analysis does not isolate the impact of individual variables (energy prices, volume of energy saved, rebates, etc.)• Fails to measure the cost of NOT doing the project

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of the financial metrics

calculated.


CASH FLOW SUMMARYCUMULATIVE

ROI

#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!


ROI analysis is confined to the project only; contribution to overall company profitability or wealth is not measuredAnalysis does not isolate the impact of individual variables (energy prices, volume of energy saved, rebates, etc.)

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of the financial metrics



Project Title: 0

Prepared for: 0


Life Cycle Cost for the Proposed AssetWHAT IS IT: The total cost of ownership, including capital, operating and energy costs.

YOUR RESULTS:Initial capital investment $0 #DIV/0!

Interest costs $0 #DIV/0!Additional investments, minus the new asset's discounted salvage value $0 #DIV/0!

Sum of annual O&M costs over 10 years $0 #DIV/0!Sum of annual energy costs over 10 years #DIV/0! #DIV/0!

TOTAL LIFE-CYCLE COST: #DIV/0! #DIV/0!

STRENGTHS:

WEAKNESSES: responsibility for life-cycle costs

Total Life-Cycle Cost = #DIV/0!


• Good for comparing total cost of ownership and operation for two or more similar-purpose projects

• Difficult to implement as a management metric: no single person or department clearly "owns"

• Other business/financial criteria may take priority over life-cycle cost • No indication of wealth created by the project or variability of profitability (risk) that it offers• Not useful for comparing the profitability of dissimilar projects• Fails to measure the cost of NOT doing the project



Initial capital investment

Interest costs

Additional investments, minus the new asset's dis-counted salvage value

Sum of annual O&M costs over 10 years

Sum of annual energy costs over 10 years



Project Title: 0

Prepared for: 0

Prepared by: 0

Date: 12/30/99

Net Present Value (NPV)WHAT IS IT: A measure of how much value the proposed project will add to the firm.

T

YOUR RESULTS: NPV = ∑ - = $0

t=1STRENGTHS:

WEAKNESSES:

CASH FLOW SUMMARYUNDISCOUNTED CASH FLOWS DISCOUNTED CASH FLOWS

CAPITAL ANNUAL NET ANNUAL CAPITAL ANNUAL NET ANNUAL NPV THRUYEAR t OUTLAYS RETURNS CASH FLOW OUTLAYS RETURNS CASH FLOW YEAR t

0 $0 $0 $0 $0 $01 $0 $0 $0 $0 $0 $0 $02 $0 $0 $0 $0 $0 $0 $03 $0 $0 $0 $0 $0 $0 $04 $0 $0 $0 $0 $0 $0 $05 $0 $0 $0 $0 $0 $0 $06 $0 $0 $0 $0 $0 $0 $07 $0 $0 $0 $0 $0 $0 $08 $0 $0 $0 $0 $0 $0 $09 $0 $0 $0 $0 $0 $0 $010 $0 $0 $0 $0 $0 $0 $0


ANNUAL CASH FLOWt CASH FLOW IN

YR0(1+r)t

• Captures the full measure of value added by the project's returns• Reflects risk by incorporating the time-value of money• Excellent tool for ranking two or more proposals for the total value they generate

• Entire calculation relies on a series of guesses about future annual returns• Analysis fails to isolate variables that can be linked to specific responsibilities• Calculation and imterpretation may be too demanding for some users• Fails to measure the cost of NOT doing the project

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of the financial metrics calculated.



Project Title: 0


Date: 12/30/99

Internal Rate of Return (IRR) CASH FLOW SUMMARY

CAPITAL UNDISCOUNTED UNDISCOUNTEDWHAT IS IT: YEAR t OUTLAYS RETURNS NET CASH FLOW

0 $0 $01 $0 $0 $0

T 2 $0 $0 $0

+ ∑ = $03 $0 $0 $04 $0 $0 $0

t=1 5 $0 $0 $06 $0 $0 $0

YOUR RESULTS: Err:5237 $0 $0 $08 $0 $0 $0

where T = the economic life of the project 9 $0 $0 $0t represents each individual year in the economic life of the project 10 $0 $0 $0

STRENGTHS:

WEAKNESSES:

NOTE


The discount rate at which an investment's future returns break even with the initial outlay. IRR is value for "r" that allows this equation to resolve to zero:

CASH OUTLAY0CASH FLOWt

(1+r)t

∑ indicates summation across all t years

• Excellent for ranking the rate of return for two or more proposals• Reflects risk by incorporating the time-value of money

• Fails to measure the absolute value of wealth created• Entire calculation relies on a series of guesses about future annual returns• Analysis fails to isolate variables that link to individual accountabilities• Calculation and imterpretation may be too demanding for some users• Fails to measure the cost of NOT doing the project

• IRR works well when interpreted in combination with NPV. • NPV is analogous to the capacity of an engine.• IRR is analogous to the efficiency of an engine.• NPV demonstrates HOW MUCH wealth an investment creates.• IRR demonstrates HOW HARD the investment works in creating wealth.

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of

the financial metrics calculated.



Project Title: 0

Prepared for: 0


Conserve-or-Buy AnalysisWHAT IS IT: This metric allows you to:

• Evaluate the cost to (1) buy excess energy and waste it, or (2) pay for a waste-reduction solution• Evaluate the cost of DOING NOTHING -- that is, the cost to reject the proposed energy improvement• Determine the maximum value that you should be willing to pay for the proposed investment

STRENGTHS:

WEAKNESSES:

PART 1: Annualized Project Cost

Total proposed undiscounted investment $0 Economic life of project…………………………. 10Cost of Capital (annual i%)……………………… 0.0%Capital recovery factor (CRF)*…………………. 0.1000

*CAPITAL RECOVERY FACTOR (CRF) = x 12

where:i = cost of capial or discount rate on future cash flows (annual rate)n =economic life (years) of the proposed energy improvement

NOTE: the calculation shown here amortizes capital recovery on a monthy basis. Monthly amortization (x 12) yields total annualized capital cost.

YOUR RESULTS: Annualized total proposed invesment………… $00 = Total proposed undiscounted investment * CRF

PART 2: Conserve-or-Buy Cost ComparisonThis compares the cost to conserve one MMBtu of energy to the cost to buy one MMBtu.

Annualized cost to save one MMBtu = Annualized Total Cost of Improvement

=$0

= #DIV/0!Annual Volume of MMBtu Saved 0

First-year price to buy each MMBtu currently being wasted = #DIV/0!

YOUR RESULTS:Cost to Conserve

=#DIV/0!

= #DIV/0!Cost to Buy #DIV/0!

*This ratio is calculated for first-year costs only. First-year ratio results are the most conservative in an inflationary environment.

The proposed project offers the investor the opportunity to:• reduce annual energy consumption by a total of 00 MMBtu

#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!


• Immediately compares the value of ACCEPTING or REJECTING the project.• Incorporates financial variables (cost of money) as well as operational variables (volume of energy)

• "Outside the box" -- very few managers are familiar with this metric in a facility management context

(i/12)*(1+i/12)n*12

[(1+i/12)n*12]-1

Conserve-or-Buy Ratio*:





Project Title: 0

Prepared for: 0


Energy At-Risk AnalysisWHAT IS IT:The breakdown of current total annual energy and O&M expenditure for the subject application.

#DIV/0! #DIV/0! = COMMITTED EXPENDITURE: This is the dollar value, at current prices, of energy and maintenance expenses that are needed to efficiently accomplish the subject activity.

#DIV/0! $0 = ANNUALIZED PROJECT COST: This is the total installed cost of the proposed improvement, expressed as an annualized equivalent.

#DIV/0! $0 = VALUE AT-RISK

ANNUAL NET CHANGE IN NON-ENERGY EXPENSES minus the ANNUALIZED PROJECT COST.

avoidable payments to the utility. This annual payment is equal to the VALUE AT-RISK.

NOTE: These are first-year values that will INCREASE as energy prices rise, and/or as the cost of capital falls.

#DIV/0! #DIV/0! + + =

NOTE:#DIV/0! $0 + = GROSS ANNUAL BENEFITS: Total value of annual benefits (energy savings

plus non-energy savings) before subtracting the annualized cost of the proposed energy solution.

COMPARE FIRST-YEAR OUTCOMES

ACCEPT REJECTPROPOSAL PROPOSAL

You GET:

You GIVE UP: $00 annualized project cost

Your NET $00 $00POSITION: annual gain annual loss


IF ACCEPTED, the proposed project provides GROSS ANNUAL ENERGY SAVINGS plus a

IF REJECTED, the investor pays an annual economic penalty in the first year in the form of

CURRENT TOTAL ANNUAL EXPENDITURE for the subject application, includes energy and maintenance.

$00 in gross annual benefits (energy savings plus net change

in non-energy costs)$0 plus the satisfaction of not

pursuing a capital project

$00 gross annual benefits minus $00 annualized capital

costs saved by NOT accepting the proposal

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any intended beneficiary of

the financial metrics calculated.

$0

$1

$1



Project Title: 0

Prepared for: 0


Break-Even AnalysisWHAT IS IT:A measure indicating the MOST that the investor should be willing to pay for the proposed energyimprovement. The annualized cost of an energy solution should be NO MORE than the value of the annualenergy waste that it eliminates. To understand the break-even calculation, consider the following:

1. The cost to CONSERVE one MMBtu should be no more than the price to BUY one MMBtu.

MAXIMUM DELIVERED UNITS OFACCEPTABLE

=PRICE PER X AVOIDED

=ANNUALIZED MMBtu of ENERGYPROJECT COST ENERGY CONSUMPTION

YOUR RESULTS: #DIV/0! = #DIV/0! X 00 MMBtu

3. To determine the maximum acceptable investment value for an energy reduction project:

IF:ANNUALIZED TOTAL PROPOSED

PROJECT COST = PROJECT X CAPITAL RECOVERY FACTORINVESTMENT

THEN:ANNUALIZED PROJECT COST

= TOTAL PROPOSED

CAPITAL RECOVERY FACTOR PROJECT INVESTMENT

AND:MAXIMUM ACCEPTABLE

ANNUALIZED PROJECT COST=

MAXIMUM ACCEPTABLECAPITAL RECOVERY FACTOR PROJECT COST

YOUR RESULTS BASED ON ENERGY SAVINGS ALONE:

=$0

= $00.1000

YOUR RESULTS BASED ENERGY & NET CHANGE IN O&M COSTS:

=$0

= $00.1000

…when the variables are as follows:0.0% = cost of capital

10 = economic life of the proposed project in years#DIV/0! = delivered price per MMBtu consumed


2. To make a meaningful comparison, evaluate both energy savings and project costs on an annualized basis. Therefore, the model for the maximum acceptable annualized project cost is as follows:

CURRENT VALUE OF ANNUAL ENERGY WASTE

MAXIMUM ACCEPTABLE INVESTMENT

MAXIMUM ACCEPTABLE INVESTMENT





Project Title: 0

Prepared for: 0


Comparison of Outcomes ACCEPT REJECTCAPITAL INVESTMENT OUTLAYS PROPOSAL PROPOSALTotal initial capital investment outlay, year 0………………………………………………… $0 $0Add any one-time additional capital outlays after year 0………………………………………………… $0 $0Less the anticipated net salvage value of the new equipment……………………………………………… $0 $0TOTAL PROPOSED CAPITAL INVESTMENT IN NOMINAL DOLLARS…………………………………… $0 $0

TOTAL ANNUAL OUTLAY FOR OPERATING THE SUBJECT APPLICATION (First-year outlay for the proposed solution) Annual expenditure for "committed" energy, put to work as intended………………………………… #DIV/0! #DIV/0! Annual outlay for energy waste…………....…………………………………………………………………… $0 $0 Annualized outlay for the energy-saving solution………………………………………………………….. $0 $0 Annual non-energy (O&M) expenses………………………………………………………………………… $0 $0 TOTAL ANNUAL OUTLAY FOR THIS APPLICATION……………………………………………………… #DIV/0! #DIV/0!

#DIV/0!…………………………#DIV/0!

VALUE AT-RISK FOR THIS APPLICATION Decision on energy at-risk (energy currently being wasted)…………………… CONSERVE BUY & WASTE Annual MMBtu consumption for this application…………………………………………………………. 0 0 Annual MMBtu at risk (consumption to be CONSERVED or WASTED)………………… 0 0 Cost per MMBtu for energy at-risk………………………………………………………………………… #DIV/0! #DIV/0! First-year outlay for energy at-risk………………………………………………………………………………. #DIV/0! #DIV/0! First-year outlay for energy plus net O&M cost difference at-risk……………………… #DIV/0! #DIV/0!

• buy and waste 00 MMBtu of energy, or • spend $00 per year to avoid purchasing 00 MMBtu of energy

TOTAL CAPITALIZED PROJECT VALUE PROVIDES "TWO PRICE TAGS":TO ACCEPT TO REJECT

$0 $0 "TO REJECT" based on first-year outlay for energy at-risk$0 $0 "TO REJECT" based on first-year outlay for energy at-risk plus net change in O&M costs

NOTE: total capitalized project value = ANNUAL OUTLAY FOR VALUE AT-RISK divided by capital recovery factor (CRF). CRF for this project = 0.1000

IF YOU ACCEPT THE PROPOSED IMPROVEMENT:#DIV/0!

The annual FREE CASH FLOW REWARD increases with the price of energy and/or as the cost of capital falls.

IF YOU REJECT THE PROPOSED IMPROVEMENT:#DIV/0!

The COST OF DOING NOTHING increases with the price of energy and/or as the cost of capital falls.

INVESTMENT CRITERIA CALCULATED TARGETSIMPLE PAYBACK: #DIV/0! n.a.

RETURN ON INVESTMENT: #DIV/0! n.a.LIFE-CYCLE COST (10 YEARS) #DIV/0!

NET PRESENT VALUE: $0INTERNAL RATE OF RETURN: Err:523

ANNUALIZED COST TO SAVE 1 MMBtu: #DIV/0!COST TO BUY 1 MMBtu: #DIV/0!


You have two choices for making an annual outlay for energy at-risk:

These financial metrics have been calculated by an estimation tool provided by Northern States Power Company - Minnesota (NSPM) and Public Service of Colorado (PSCo). NSPM and PSCo specifically disclaims any warranty, fitness, merchantability, or designation of any

intended beneficiary of the financial metrics calculated.


energy-at-risk calculator (xls) - xcel energy: · 2016-04-10energy-at-risk calculator (xls) -...

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