Certified Energy Auditor Certification Certified Energy Auditor Economic Analysis and Financing Questions and Answers 2

Question 1

An energy auditor calculates that a lighting retrofit will save $12,000 annually and costs $48,000 to install. What is the simple payback period?

Accepted Answer

4 years

Answer

Simple payback period is calculated by dividing the initial cost ($48,000) by the annual savings ($12,000), which equals 4 years.

Question 2

Which financial metric accounts for the time value of money when evaluating energy conservation measures?

Accepted Answer

Net present value

Answer

Net present value (NPV) discounts future cash flows to their present value, explicitly accounting for the time value of money.

Question 3

What does a savings-to-investment ratio (SIR) greater than 1.0 indicate about an energy project?

Accepted Answer

The project's discounted savings exceed its discounted costs

Answer

An SIR greater than 1.0 means the present value of energy savings exceeds the present value of the investment costs, indicating a financially beneficial project.

Question 4

In an energy performance contract (EPC), who typically assumes the risk that projected energy savings will not be achieved?

Accepted Answer

The energy service company (ESCO)

Answer

In an EPC, the ESCO guarantees a certain level of energy savings and assumes the financial risk if those savings are not realized.

Question 5

Which financing mechanism allows a building owner to fund energy improvements through an additional charge on their property tax bill?

Accepted Answer

Property Assessed Clean Energy (PACE)

Answer

PACE financing enables property owners to fund energy upgrades through a voluntary assessment added to their property tax bill, repaid over 10-25 years.

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 2