Project Economic Evaluation

Assessing the financial impact of your retrofit is challenging in a competitive energy market.  As a consequence of the frequent errors, projects which actually meet payback thresholds are rejected and projects destined to underperform get approved.
Here are some of the common errors attributable to ESCO models:

1.	Using historic energy costs for savings valuation
A contract may have only a few months remaining and the current market rate is much lower or higher.  SAVINGS GROSSLY MISSTATED
2.	Using a simple $/kWh rate to value the project savings
One of the most common errors is valuing all kWh the same.  There are significant differences in wholesale energy costs by month and time of day.  Changes to your load profile will impact the cost suppliers bear to serve your load.  SAVINGS VASTLY MISSTATED.
3.  Failing to correctly value impact on demand
A common misperception in competitive markets is that “demand charges” were eliminated.  In the PJM region there remains a very high demand charge hidden in the energy charge, called the “Cap Tag.”  Usage reductions that occur during the periods of grid peak demand will significantly reduce energy charges.  Even in the “energy only” market in Texas, delivery charges are based on customer peak demand with an 80% demand ratchet and the 4CP demand, which is very similar to the PJM Cap Tag.  SAVINGS COMPLETELY MISSTATED.

Email us for copy of a presentation delivered recently by Verdigris Energy to a major defense contractor.  The presentation provided a high-level analysis of the implementation of a thermal energy storage system, comparing the economics of an ice system to a chilled water system.  Whether you are considering a simple retrofit, a CHP (Combined Heat and Power) project or a TES (Thermal Energy Storage) project, getting the economics right is a challenge.  

Verdigris Energy is equipped to give you the confidence to make the right choice and ensure that your energy supply strategy optimizes the results.
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