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There are significant energy savings available to organisations who invest in energy efficient facilities, processes, assets and equipment. However, often traditional capital budgeting practices and accounting procedures do not prioritise energy efficiency if it is considered to be a discretionary investment or if it is difficult for the organisation to account for benefits through reduced operating costs.
This topic discusses some of the barriers to investing in energy efficiency, introduces some techniques to help budgeting for capital investment and describes the key financial appraisal techniques that can be used.
Financial analysis techniques may include simple payback, net present value (NPV) or internal rate of return (IRR) and would normally depend on the organisation’s financial accounting policies.
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