Conservation “savings” don’t seem to add up.
Yesterday I was looking at the second issue of “Celebrating Southbridge”, the Town Manager’s newsletter.
On page two there was an article describing the town’s program to replace all non-efficient lighting in town buildings. The program is underwritten by an “incentive contribution” from the National Grid Energy Initiatives Municipals program.
I’ve reprinted the article below so that I can refer to it in the following commentary.
Now the article says that the program will cost $471,158, net of the incentive contribution. The program will be financed at a rate of 0%. So, my first question is “Over how many years is that cost financed?”
The article says that the annual energy savings will be $125,550 for a payback period of 3.75 years. That’s all well and good. However the article goes on to say that “The project has a net monthly positive cash flow of $1,039, cost versus electric savings.”
That amounts to $12,468 per year. Where does the remaining $113,082 in “energy savings” come from? At a net positive cash flow of $12,468 per year the payback period is 37.79 years – not 3.75 years. That’s a difference of over ten times.
Could somebody explain this discrepancy to me?