EMP Energy Economics & Financial Analysis Flashcards
6 cards from real EMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 EMP Energy Economics & Financial Analysis flashcards as text
What financial metric measures the time required for an energy investment to generate enough savings to recover its initial cost?
Answer: Simple payback period
Simple payback period divides the initial investment cost by the annual energy savings to determine how many years until the project pays for itself.
Which of the following best describes Life Cycle Cost Analysis (LCCA) in energy management?
Answer: Assessing total ownership costs including energy, maintenance, and disposal over a project's lifespan
LCCA considers all costs—initial, operating, maintenance, and disposal—over a system's entire lifespan to support better investment decisions.
An energy manager calculates that a lighting retrofit saves $12,000/year and costs $36,000 to install. What is the simple payback period?
Answer: 3 years
$36,000 ÷ $12,000/year = 3 years simple payback period.
What is the purpose of a Measurement and Verification (M&V) plan in an energy performance contract?
Answer: To document and confirm that energy savings have been achieved as promised
An M&V plan provides a standardized method to quantify and verify actual energy savings against baseline to ensure contractual obligations are met.
Which discount rate concept adjusts future energy savings to reflect their value in today's dollars?
Answer: Net present value discount rate
The discount rate in NPV analysis accounts for the time value of money, converting future cash flows into present-day equivalent values.
What does an Energy Performance Contract (EPC) guarantee?
Answer: A minimum level of energy savings over the contract term
In an EPC, an Energy Service Company (ESCO) guarantees a defined level of energy savings, assuming financial risk if savings targets are not met.