CMVP Financial Analysis & Energy Performance Contracting 3

Question 1

Under IPMVP, which M&V Option is most commonly used in whole-building energy performance contracts where all retrofit measures are implemented simultaneously?

Accepted Answer

Option C — Whole Facility

Answer

Option A — Partially Measured Retrofit Isolation

Answer

Option B — Retrofit Isolation with All Parameters Measured

Answer

Option D — Calibrated Simulation

Question 2

The discount rate used in energy project NPV calculations typically reflects:

Accepted Answer

The project owner's cost of capital or required rate of return

Answer

The local utility's avoided cost of electricity

Answer

The inflation rate for energy commodities

Answer

The ESCO's internal profit target

Question 3

Which financial metric is most useful for comparing two energy projects with different capital costs and lifespans on a per-unit-of-energy basis?

Accepted Answer

Levelized Cost of Energy (LCOE)

Answer

Simple payback period

Answer

Gross savings in kWh

Answer

First-year return on investment

Question 4

In a lease financing arrangement for an energy efficiency project, the primary advantage for the client is typically:

Accepted Answer

The client can acquire and use energy equipment without a large upfront capital outlay

Answer

The client retains full ownership of equipment from day one

Answer

Lease payments are always lower than the guaranteed energy savings

Answer

Equipment maintenance obligations are eliminated for the client

Question 5

What is the significance of the 'measurement period' in financial settlement under an EPC?

Accepted Answer

It is the agreed timeframe over which energy use data is collected to calculate and verify savings for payment

Answer

It determines the length of time the ESCO must maintain equipment under warranty

Answer

It sets the minimum contract term allowable under federal regulations

Answer

It defines the period during which the client may terminate the contract penalty-free

Question 6

An ESCO's 'savings guarantee' in a Guaranteed Savings EPC contract refers to:

Accepted Answer

A minimum level of annual energy cost savings the ESCO promises to deliver, with financial make-up if not achieved

Answer

A promise that utility rates will not increase during the contract term

Answer

A guarantee that all installed equipment will perform at rated capacity

Answer

An assurance that the project will qualify for all applicable utility rebates

Question 7

When performing cost-effectiveness analysis for an energy efficiency project intended for an EPC, which approach best accounts for interactive effects among multiple measures?

Accepted Answer

Use a whole-building energy simulation that models all measures together to capture interaction effects

Answer

Analyze each measure independently using its standalone simple payback

Answer

Sum the individual savings of each measure to obtain total project savings

Answer

Apply a standard 10% interactive effect discount to all projected savings