CEM Strategic Planning and Management 2 — Questions and Answers
Question 1: Which financial metric measures the percentage return on an energy project relative to its initial investment cost?
- Simple payback period
- Return on investment (ROI) (Correct answer)
- Net present value (NPV)
- Internal rate of return (IRR)
Correct answer: Return on investment (ROI)
ROI expresses profit or savings as a percentage of the initial investment, making it easy to compare projects of different scales.
Question 2: A company sets an energy reduction target of 20% over 5 years. What type of planning document should govern this commitment?
- Capital expenditure budget
- Energy management plan (EMP) (Correct answer)
- Operations and maintenance manual
- Safety management plan
Correct answer: Energy management plan (EMP)
An Energy Management Plan (EMP) formally documents targets, strategies, timelines, and responsibilities for achieving energy reduction goals.
Question 3: In strategic energy management, a 'baseline' is primarily used to:
- Set the minimum acceptable equipment efficiency rating
- Establish a reference point for measuring energy performance improvement (Correct answer)
- Define the maximum allowable energy spend per quarter
- Identify the lowest-cost energy supplier in the market
Correct answer: Establish a reference point for measuring energy performance improvement
A baseline represents historical energy use under defined conditions and serves as the reference against which savings are measured.
Question 4: Which framework is most commonly used to align an organization's energy strategy with its overall business objectives?
- SWOT analysis
- ISO 50001 energy management system (Correct answer)
- OSHA 1910 safety standards
- EPA ENERGY STAR portfolio manager
Correct answer: ISO 50001 energy management system
ISO 50001 provides a systematic framework for integrating energy management into an organization's overall management processes and business goals.
Question 5: When prioritizing energy projects using an energy audit report, which criterion is typically weighted most heavily in the initial screening?
- Aesthetic improvement to the facility
- Simple payback period (Correct answer)
- Vendor reputation score
- Employee satisfaction impact
Correct answer: Simple payback period
Simple payback period quickly filters projects by how fast they recover their investment, making it the most commonly used initial screening metric.
Question 6: An energy manager discovers that a manufacturing plant's peak demand charges account for 40% of the utility bill. The best strategic response is to:
- Switch entirely to renewable energy sources
- Implement demand response and load-shifting strategies (Correct answer)
- Increase compressed air system pressure
- Replace all lighting with LEDs immediately
Correct answer: Implement demand response and load-shifting strategies
Demand response and load-shifting directly target peak demand charges by redistributing or curtailing loads during peak billing periods.
Question 7: What is the primary purpose of an energy policy statement at the executive level?
- To specify the technical details of equipment upgrades
- To demonstrate senior management commitment and set organizational energy goals (Correct answer)
- To serve as the formal bid document for energy service companies
- To replace the energy audit as the primary assessment tool
Correct answer: To demonstrate senior management commitment and set organizational energy goals
An executive energy policy statement signals top-level commitment, establishes organizational priorities, and provides the mandate for energy management activities.
CEM Strategic Planning and Management 2
Which financial metric measures the percentage return on an energy project relative to its initial investment cost?