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 energy-efficiency 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.
Highlights
Energy-efficiency projects analyzed exclusively from the managerial perspective tend to make these projects less attractive once their hard benefits that are not trivial to quantify
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
How does a company decide between its environmental footprint or a more attractive Internal Rate of Return (IRR)? It is a challenging decision because projects can fulfill regulations and industry standards and still impact the society in different ways
Summary
Energy-efficiency projects analyzed exclusively from the managerial perspective tend to make these projects less attractive once their hard benefits that are not trivial to quantify. This article aims to discuss certain specifics, which, when added to well-known methods of financial analysis like Net Present Value (NPV) and Internal Rate of Return (IRR), make energy-efficiency projects more attractive from the financial perspective and an alternative way to base decisions with a more comprehensive approach. It quantifies qualitative aspects by considering them in the decision-making process.
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