Post by Admin on Nov 7, 2016 5:30:39 GMT
Payback of a piece of equipment assumes that there are no side-effects, no interdependencies, positive or negative with other equipment. This is seldom the case.
The magic usually is looking at the overall payback of a solution. The individual payback of a particular piece of equipment may be extremely high if it benefits the overall solution.
In practice from a financial standpoint magic happens when you combine items with a very short payback, with items with a very long payback, which otherwise could not be financed. From an overall standpoint it is important to see that the holistic approach to buildings, which would take the engineering and economics of the building into account, the best solutions normally produce eminently projects that can be easily financed, exactly be cause of this effect.
The reverse happens when people keep on making serial energy investment decisions, and cheat themselves out of doing the big ticket decisions and really create asset value in their properties. In that case, short-sightedness really means people are stealing from themselves and generating tons of sunk cost because they have blinders on, and small incremental improvements would be invalidated when the bigger picture is taken into account. Typical examples are Oil-to-Gas (OTG) conversions, tankless water heaters, and Solar PV (SPV).
Example: a harmonic filter may reduce electrical consumption 10-20% for the whole circuit. If it has a payback of one year, but it is installed with an LED retrofit, it improves (shortens) the payback of the LED retrofit, which might have been several years.
The magic usually is looking at the overall payback of a solution. The individual payback of a particular piece of equipment may be extremely high if it benefits the overall solution.
In practice from a financial standpoint magic happens when you combine items with a very short payback, with items with a very long payback, which otherwise could not be financed. From an overall standpoint it is important to see that the holistic approach to buildings, which would take the engineering and economics of the building into account, the best solutions normally produce eminently projects that can be easily financed, exactly be cause of this effect.
The reverse happens when people keep on making serial energy investment decisions, and cheat themselves out of doing the big ticket decisions and really create asset value in their properties. In that case, short-sightedness really means people are stealing from themselves and generating tons of sunk cost because they have blinders on, and small incremental improvements would be invalidated when the bigger picture is taken into account. Typical examples are Oil-to-Gas (OTG) conversions, tankless water heaters, and Solar PV (SPV).
Example: a harmonic filter may reduce electrical consumption 10-20% for the whole circuit. If it has a payback of one year, but it is installed with an LED retrofit, it improves (shortens) the payback of the LED retrofit, which might have been several years.