Energy-Efficiency Economics as a Resource for Energy Planning

Open Journal of Energy Efficiency, 2013, 2, 22-28 doi:10.4236/ojee.2013.21004 Published Online March 2013 (http://www.scirp.org/journal/ojee) Energy-Efficiency Economics as a Resource for Energy Planning G64 6 Fabio Correa Leite, Decio Cicone Jr., Luiz Claudio Ribeiro Galvão, Miguel Edgar Morales Udaeta Energy Group of Electric Energy and Automation Engineering Department, Polytechnic School, University of São Paulo, São Paulo, Brazil Email: udaeta@pea.usp.br, udaeta@iee.usp.br Received January 14, 2013; revised February 15, 2013; accepted March 7, 2013 ABSTRACT The objective of this work is a multi-criteria decision-making assessment that aims to facilitate the Energy-Efficiency Economics, introducing the Analytic Hierarchy Process (AHP) as part of power-system planning tool for an energyefficiency application. It addresses to include qualitative aspects in the decision-making agendas of energy-efficiency projects. The manuscript details the limitations of non-rigorous financial analysis and proposes an alternative for including energy-efficiency measures in discussions pertaining to the financial opportunities available to any investor, and it presents the methodology that supports the qualitative aspects and the software package used to execute this methodology. As case study a complete example including a sensitivity analysis is presented. Keywords: Energy Conservation; Energy Planning; Power Economics; Analytic Hierarchy Process (AHP) translate business major subjective goals into an organized 1. Introduction and repeatable decision-making process? Energy-efficiency projects analyzed exclusively from the Project managers, capital leaders and engineering mamanagerial perspective tend to make these projects less nagers have to make project decisions all the time. Some attractive once their hard benefits that are not trivial to decisions are as comprehensive as whether to build a quantify. Energy that is not spent is particularly difficult to LEED office building or an ordinary one. This could never measure and investors require a wide range of inforhappen without committed leadership on the part of the mation to decide where to invest his capital and long- term organization. Or the simple choice of a high-effi- ciency benefits are not always represented in the financial motor rather than a standard one involves an addi- tional indicators. “The acquisition of resources for investment is capital investment, which, if not supported by top often limited, and managers tend to favor a company’s management, can lead to unpleasant disputes. core business while deteriorating secondary functions, The consideration of non-monetary aspects in an including energy” [1]. investment decision through AHP is a possibility to help Medium and large companies not rarely have mission decision-makers choose energy-efficient and environstatements that can be as vague as: operate safely, respect mentally friendly projects through a standardized process. the environment and increase shareholder value. This is In this sense, it is proposed a way of analyzing energytheir way to communicate to the employees, company’s efficiency projects in terms of similar parameters to any owners and society what drives their goals. Meanwhile, other expansion, acquisition or fusion project, including, investment decisions are still based on traditional methin addition, elements that are not part of the traditional ods and a subjective ingredient: the decision maker’s own decision-making process, such as qualitative factors used beliefs. From that perspective, how does a company decide in the AHP. between its environmental footprint or a more attractive This article aims to discuss certain specifics, which, IRR? It is a challenging decision because pro- jects can when added to well-known methods of financial analysis fulfill regulations and industry standards and still impact like Net Present Value (NPV) and Internal Rate of Return the society in different ways. Regulations are not perfect, (IRR), make energy-efficiency projects more attractive and one project is supposedly less harmless to the from the financial perspective and an alternative way to environment than the other. Then the question is: how to base decisions with a more comprehensive approach. Ac- Copyright © 2013 SciRes. OJEE