Certified Energy Auditor Certification Certified Energy Auditor Economic Analysis and Financing Questions and Answers 3

Question 1

What is the internal rate of return (IRR) for an energy project?

Accepted Answer

The discount rate at which the net present value equals zero

Answer

The IRR is the discount rate that makes the net present value of all project cash flows equal to zero, representing the project's effective rate of return.

Question 2

A utility offers a $0.15/kWh rebate for verified electricity savings from an energy retrofit. If the project saves 200,000 kWh annually, what is the one-time rebate amount?

Accepted Answer

$30,000

Answer

The rebate equals $0.15/kWh multiplied by 200,000 kWh, which equals $30,000.

Question 3

Which factor most significantly affects the discount rate used in a federal energy project life-cycle cost analysis?

Accepted Answer

The current real rate of return on Treasury securities

Answer

Federal energy project analyses per 10 CFR 436 use a discount rate based on the real rate of return on long-term Treasury securities, published annually by NIST.

Question 4

What is the primary advantage of on-bill financing for energy efficiency upgrades?

Accepted Answer

It allows repayment through the existing utility bill with no upfront capital

Answer

On-bill financing allows building owners to repay energy improvement costs through their regular utility bill, removing the barrier of large upfront capital requirements.

Question 5

When comparing two energy conservation measures with different useful lives, which analytical approach provides the most valid economic comparison?

Accepted Answer

Use annualized life-cycle costs to normalize for different lifespans

Answer

Annualizing life-cycle costs converts total costs over different lifespans into equivalent annual amounts, enabling a fair comparison between measures with unequal useful lives.

Certified Energy Auditor Certification Practice Test

Certified Energy Auditor Certification Practice Test

Certified Energy Auditor Certification Certified Energy Auditor Economic Analysis and Financing Questions and Answers 3