Strategic Planning and Management Flashcards

A hospital's energy manager is asked to quantify avoided energy costs from a recent retrofit. The correct approach is to compare actual post-retrofit consumption to:

Answer: An adjusted baseline that accounts for changes in weather, occupancy, and production

Savings must be measured against a weather- and production-adjusted baseline (M&V protocol) to isolate the retrofit's actual impact from external variables.

Which IPMVP Option (International Performance Measurement and Verification Protocol) involves stipulating certain parameters rather than measuring them, to reduce M&V costs?

Answer: Option A – Partially Measured Retrofit Isolation

Option A stipulates (assumes) certain parameters such as operating hours while measuring others, balancing accuracy with reduced monitoring costs.

What is the role of an Energy Service Company (ESCO) in a performance contract?

Answer: To guarantee that energy savings will meet or exceed the project costs over the contract term

In an energy performance contract, the ESCO guarantees measurable savings that service the project debt, transferring financial risk from the facility owner.

An energy manager is building a business case for a $2M energy project. To calculate net present value (NPV), which discount rate is most appropriate to use?

Answer: The organization's weighted average cost of capital (WACC) or minimum acceptable rate of return (MARR)

NPV analysis uses the organization's WACC or MARR to reflect the opportunity cost of capital and the required financial hurdle rate for investments.

A strategic energy management review reveals that compressed air leaks account for 30% of compressed air energy use. The best strategic classification for this finding is:

Answer: Low-cost/no-cost operational improvement with rapid payback

Compressed air leak repairs typically require minimal capital and return savings quickly, making them a high-priority, low-cost operational improvement.

In developing an organization-wide energy strategy, identifying 'significant energy uses' (SEUs) is important because:

Answer: SEUs account for the majority of energy consumption and offer the greatest savings opportunities

ISO 50001 requires organizations to identify SEUs—those consuming the most energy or offering the greatest improvement potential—to focus management attention effectively.

An energy manager is negotiating with a utility for a green tariff. The primary strategic benefit of a green tariff for a large commercial customer is:

Answer: Enabling direct procurement of renewable energy while remaining on the utility's grid

Green tariffs allow large customers to source renewable electricity through the utility, supporting sustainability goals without owning generation assets.