EMP EMP Energy Economics & Financial Analysis

Question 1

What financial metric measures the time required for an energy investment to generate enough savings to recover its initial cost?

Accepted Answer

Simple payback period

Answer

Simple payback period divides the initial investment cost by the annual energy savings to determine how many years until the project pays for itself.

Question 2

Which of the following best describes Life Cycle Cost Analysis (LCCA) in energy management?

Accepted Answer

Assessing total ownership costs including energy, maintenance, and disposal over a project's lifespan

Answer

LCCA considers all costs—initial, operating, maintenance, and disposal—over a system's entire lifespan to support better investment decisions.

Question 3

An energy manager calculates that a lighting retrofit saves $12,000/year and costs $36,000 to install. What is the simple payback period?

Accepted Answer

3 years

Answer

$36,000 ÷ $12,000/year = 3 years simple payback period.

Question 4

What is the purpose of a Measurement and Verification (M&V) plan in an energy performance contract?

Accepted Answer

To document and confirm that energy savings have been achieved as promised

Answer

An M&V plan provides a standardized method to quantify and verify actual energy savings against baseline to ensure contractual obligations are met.

Question 5

Which discount rate concept adjusts future energy savings to reflect their value in today's dollars?

Accepted Answer

Net present value discount rate

Answer

The discount rate in NPV analysis accounts for the time value of money, converting future cash flows into present-day equivalent values.

(EMP) Energy Management Professional Practice Test