Wednesday, March 30, 2016

Could Somebody Explain This To Me?

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?

2 comments:

  1. We were also told eight years ago that the landfill revenues will be between $108-$163 million by the time the landfill is full, and Mr. Buxton of the landfill oversite committee claims landFULL Day in late in 2017, so we have an anazing windfall coming our way.

    Mr. Clark's crack financial team probably
    has the answer.I am almost
    sure these numbers must be right, because the Councul would never renew the contracts of the team if we were not going to enjoy these windfalls.

    And if they are off a,couple hindred thousand here, or seventy million here or there,what is the importance of money when we have such loyal employees?

    ReplyDelete
  2. Net cost of the project breaks down to $125,642.12 per year ($471,158/3.75). The net energy *savings* (from decreased cost in electricity due to LED lights, timers and new fixtures) is $125,550 per year. It looks like a wash, but I would assume that the positive cash flow would take into consideration replaced light bulbs and fixtures over that 3.75 year time period (as they're all being replaced at once, now). I think the figures are a fair representation of the program.

    ReplyDelete

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