Internal Rate Of Return Method Research Articles

MÉTODOS PARA ANÁLISE DE INVESTIMENTO: APRESENTAÇÃO TEÓRICA E PRÁTICA

This work aims to present the most commonly accepted methods for investment analysis, namely Net Present Value (NPV), Payback – with simple and discounted cash flow, Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR). Conceptually, the work presents MIRR as an evolution of IRR, aiming to correct inherent problems with IRR, such as the analysis of cash flows with sequential positive and negative peaks, where the IRR method would generate multiple rates instead of a single rate for the project. This article also introduces the concept of the Average Attractiveness Rate. The study methodology used is bibliographic research, presenting the concept, theory, and application of each method while attempting to differentiate them. In the end, a practical example with values is presented, where a manager, in deciding whether or not to invest, considers the use of investment analysis methods for decision-making regarding the trade-off.

Economic viability of decentralised battery storage systems for single-family buildings up to cross-building utilisation

Due to the great cost decrease of photovoltaics as well as battery storage, especially in the segment of decentralised home storage, the number of grid-connected battery-supported photovoltaic systems being installed in recent years is steadily increasing. However, the scientific community has intensively discussed that lithium-based battery storage systems cannot yet be operated economically in most cases. This paper addresses the level to which the cost of lithium battery storage needs to decrease in order to be economically viable. For this purpose, the economic viability of battery storage systems in single-family buildings, multi-apartment buildings and across-buildings is analysed on the basis of a linear optimisation model and the method of the internal rate of return. The utilisation of the storage system is optimised for different battery and photovoltaic capacities on the basis of generation and consumption. The internal rate of return method is used to compare the savings resulting from the reduced consumption from the electricity grid with the investment costs and the operation and maintenance costs. In order to be able to estimate the influence of the most important parameters a sensitivity analysis is also carried out. The analysis concludes that, depending on the combination of capacities of photovoltaics, battery storage and in relation to the load profile, the battery storage costs would have to drop by at least 85% in order to generate a certain predefined return over a depreciation period of 25 years. Furthermore, the more different load profiles can be covered directly with photovoltaic electricity, e.g. in a multi-apartment building or across buildings, the less electricity needs to be stored and this reduces the benefit and the utilisation of the battery storage and therefore the specific investment costs must further decrease. Another conclusion that emerges from the sensitivity analysis is that the electricity price and the spread between the electricity price and the feed-in tariff have the greatest influence on the investment costs and profitability. Due to limited space for photovoltaics and simultaneously high consumption, self-consumption is already quite high with cross-building utilisation and can no longer be increased to the necessary extent by the battery storage system, which is why the investment costs must also be lower. The novelty of this paper lies in particular in the fact that it deals with the target costs of battery storage systems in various scenarios for certain rates of return. The analyses in this paper are intended to provide a deeper understanding of the framework conditions for the economic operation of a battery storage system in the aforementioned scenarios. However, this paper does not take into account alternative sources of income other than savings on grid consumption. The possibility of time-variable (grid) tariffs, for example, is also not considered in detail in this paper and should be analysed further in future work.

The Economic Efficiencies of Investment in Biogas Plants—A Case Study of a Biogas Plant Using Waste from a Dairy Farm in Poland

High investments and low economic efficiency of agricultural biogas plants operating on farms are two of the main barriers to the development of the biogas plant sector. Identification of economic and financial problems related to the operation of such facilities allows for the reduction of entry barriers for private investors, especially farmers. The aim of this research was to analyze the economic efficiency of investing in an agricultural biogas plant operating at a dairy farm. For the analysis, the case study method was applied. The economic efficiency of investment in a biogas plant was assessed using six different cash flow options. The NPV (net present value) and IRR (internal rate of return) methods were applied to assess the economic efficiency of the investment. It was found that the investment project for an agricultural biogas plant with a capacity of 0.499 MW located at a dairy farm required a subsidy of approximately 40–60% of the value of to ensure satisfactory economic efficiency. It has been shown that a particularly important aspect in assessing the economic efficiency of an investment in an agricultural biogas plant is the use of an economic calculation that takes into account the valuation and quantification of all positive external effects of such projects.

Studi Penurunan Emisi GRK dan Analisa Ekonomi Pada Pembangkit Listrik Tenaga Surya (PLTS) Apung Tembesi 46 MWP

Based on data from the Ministry of Energy and Mineral Resources, Indonesia has abundant potential for solar power development, even with relatively low irradiation times. The implementation of solar power plants can directly mitigate the negative impact of carbon emissions caused by fossil power plants, especially coal-fired power plants. This study is aimed to calculate the carbon emission reduction from the construction of FPVPP Tembesi Batam and conduct economic analysis of FPVPP construction by considering Net Present Value (NPV), and Payback Period (PBP), and Internal Rate of Return (IRR) for PLN Batam located in Tembesi Batam Islands Indonesia. This Tembesi solar power plant will be the largest solar power plant in Batam Island which is intended to replace the role of fossil power plants. The study also analyzes the financial impact of carbon credits and renewable energy certificates that PLN Batam will obtain if it fully implements the Tembesi solar power plant. Based on the results of our study, the total carbon emission reduction due to the use of FPVPP when compared to Batam's electricity carbon emission is 67,278,560-ton CO2 in a year. The use of FPVPP in Tembesi, Batam affects the savings of primary energy payments each year and from the economic analysis using the NPV, PBP, and IRR methods, the results show that the feasibility of investing in the construction of FPVPP in Tembesi, Batam is considered feasible and profitable for PT PLN (Persero), the environment, and the scope of the Indonesian state.

Perencanaan dan Evaluasi Sistem Penyulang Ganda Sebagai Backup Power Supply PT. X

In order to meet the needs of electrical energy, PT X. receives electricity supply from PLN as the main source while the generator with a total capacity of 2.228,5 KVA as a backup electricity supply. PT X plans to procure a double feeder as a backup power supply to replace the generator set in the hope of getting a more economical backup power supply. So, the purpose of this study are analyzing the planning and technical calculations for the construction of a premium feeder, analyzing the comparisono f the use of generator setting with double feeder from economic point of view, and analyzing the comparison of the efficiency of using generator setting with the use double feeder. The method used in this study was the IRR (Internal Rate of Return) method to determine the value of the rate of return on investment while the SAIDI – SAIFI data was used to determine the reability of the feeder. The result of this research is the double feeder using MVTIC type construction. For Rp/kWh, the use of premium service, namely B3/TM customers is Rp. 1.162,78 per kWh and B2/TM Rp. 1.574,7 per kWh, while Rp/kWh generator setting is Rp. 4.003 per kWh. Meanwhile the double feeder IRR values is 44% and the generator setting is 24%. So, it is more efficient to use PLN premium service.

Analisis Kelayakan Investasi pada Proyek Perumahan Sederhana Tipe 31/60 M2

The need for housing is increasing along with the rate of population growth. Simple livable housing is an option for low-income communities in accordance with the regional minimum wage. In making investments to make housing requires a feasibility analysis so that it can assess in accordance with the company's financial capabilities so that the company does not experience losses and make profits after investing large enough funds. This study aims to analyze the feasibility of investing in the MPR 2 Type 31/60 m2 simple housing development project in the Semarang Regency area which is viewed from a financial perspective using the Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PP), and Benefit Cost Ratio (BCR) methods. Based on the research that has been done, it can be concluded in terms of the feasibility of investing in the construction of subsidized houses type 31/60 in MPR 2 housing is feasible. This can be seen from the results of the analysis with the positive NPV method of Rp.127,933,335.12 > 1, the results of the analysis with the IRR method of 9.79% > 5% (MARR), the results of the analysis with the PP method, it shows that the period of return on investment occurs for 1 year 4 days, and the results of the analysis with the BCR method of 1.018 > 1.

Research on investment project evaluation: Comparative analysis based on NPV and IRR

Whether a project is viable, determining whether a project is viable requires some metrics. The indicators that are most frequently utilized are the Net Present Value (NPV) and the internal rate of return (IRR). They are very representative and scientific. The same decision can be made by applying both in independent and non-independent projects When there are many contradictions between NPV and IRR, it is necessary to introduce new indicators to continue to judge the project, such as △IRR, incremental IRR method, modified IRR (MIRR) method, selective IRR method, payback period method, Equivalent Annual Annuity (EAA) method and static analysis method. The investment is selected by comparing the internal rate of return △IRR with the benchmark rate of return (ic) or the social discount rate. The MIRR approach determines the IRR of each scheme, compares it to ic, chooses the scheme that have IRR is larger than or the same as ic, and then determines the incremental IRR of the two neighboring schemes to make the choice. In addition to the investment payback period approach and the selective internal rate of return method. EAA method is in the comparison of investment projects, investors should choose the project with higher EAA when comparing. In the process of investment projects, different enterprises can adopt static analysis method to carry out project investment, but there are two forms of static analysis method, such as payback period method and basic income method. Using reasonable indicators and methods to evaluate the investment project, so as to select the best project.

ОБЕСПЕЧЕНИЕ КАЧЕСТВА ИНВЕСТИЦИОННЫХ ПРОЕКТОВ

The authors conduct a study of current trends in the field of ensuring the quality of investment projects, taking into account the identification of the main stage of the investment decision and its evaluation. This stage is intended to provide an answer about the feasibility of investing in the project as a whole. To implement this stage, there is a wide range of tools, including various methods for ensuring the quality of the solution, in particular, the net present value method, the internal rate of return method, the real options method, the modified internal rate of return method, and the return on investment ratio, as given in the article. Each method has advantages and disadvantages; the article also discusses examples of changes in Russian legislation in the field of project evaluation. The authors analyze practical experience in implementing investment decisions, provide the opinions of experts from among practitioners in the field of application, and analyze specific examples from the point of view of finding opportunities to ensure the quality of the implementation of an investment project.

Sorghum Sticks (Sorghum bicolor) with Added Protein Source: Dumbo Catfish Meal (Clarias gariepinus)

Purpose: The study aims to determine the combination of selected treatments in the proportion of sorghum flour: wheat and the amount of dumbo catfish meal and the financial feasibility of the sorghum stick business.
 Design/methodology/approach: The study used a Group Randomized Design (RAK) factorial pattern with factor (P) proportion of sorghum flour: wheat (P1 = 25:75, P2 = 50:50, and P3 = 75:25) and factor (K) concentration of dumbo catfish meal (K1 = 20% and K2 = 30%), with three repeats. Observations in the study include analysis of protein, fat, water, ash, total and carbohydrate levels, yield tests, developmental tests, and organoleptic tests, including preferences for colour, aroma, taste, crispness, and texture. Data processing of protein, fat, water, ash, carbohydrate, yield, and growth values is analyzed using fingerprints (ANOVA). If there is a fundamental difference, it will be continued with the Duncan test with a confidence level of 95%. Organoleptic test data uses the Friedman test. Alternative selection is done to determine the selected treatment using the Expected Value method. The Weight test method is carried out to determine the importance of the weight of each parameter. The financial feasibility of the sorghum stick business in this study uses the BEP (Break Even Point), NPV (Net Present Value), IRR (Internal Rate of Return), and PP (Payback Period) methods.
 Findings: Based on the study's results, the P1K2 treatment (proportion of sorghum flour: wheat flour 40:60 and dumbo catfish flour concentration 30%) became the selected treatment with an expectation value of 8.20. This treatment yields 74.92%, water content 12.59%, ash content 3.65%, protein content 8.99%, fat content 19.49%, carbohydrate content 55.28%, and development power 95.58%. It has a total percentage of liking for colour 96.7%, aroma 94.5%, taste 88.9%, and texture 98.9%. The results of the financial analysis of sorghum sticks are worthy of development, with BEP parameters of 20,623 packs equivalent to IDR 408,294,154.00, NPV of IDR 116,980,531.71, IRR reaching 17.79%, PP 3 years 3 months.
 Research limitations/implications: This research is specifically for the development of a sorghum stick product entrepreneurial with Added Protein Source: Dumbo Catfish Meal (Clarias gariepinus)
 Practical implications: The development of sorghum-based entrepreneurship products must continue to be promoted to continue to support food security

The Analysis of NPV and IRR and Its Alternative Methods

Based on the analysis of the net present value method and the internal rate of return method, this paper lists the pros and cons of these two different investment rules and gives some alternative approaches. With improvement and optimization, these two investment rules can be more efficient convenient, and widely used than before. This essay further enriched and developed the internal rate of return and net present value rules by analyzing the advantages and disadvantages of the measurement methods in detail. In addition, it provides implications for investors to better evaluate the corporate or project value.

Evaluasi Kelayakan Finansial Pasar Bareng Kota Malang Hasil Revitalisasi Sebagai Pasar Multifungsi

In realizing the economic growth of a region, many aspects need to be considered. One of the two aspects in realizing positive economic growth of a region is infrastructure and trade. The development of an infrastructure or project needs to cost money, moreover the project is not a small project. Therefore, there needs to be an in-depth and structured study and research before the project is funded or has been funded so as to know the prospects of the project. The study and research used an analysis of the financial feasibility study for the development of Pasar Bareng in Malang City with the aim of seeing the financial feasibility of developing Pasar Bareng. A project feasibility study has the meaning of a study that can see if the project if it gets an investment can run well and provide financial benefits. This study uses the Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit Cost Ratio (BCR) methods. The data that has been collected will be analyzed and get a project development perspective from a financial perspective. In this study there is a comparison of profit or loss obtained by looking at data from operational costs, income, and investment costs. The costs used come from maintenance and operational costs incurred during the operation of Pasar Bareng. The results of the feasibility analysis test using the Net Present Value method get a value of Rp. – 7,000,291,269,823. Then, the Benefit Cost Ratio method gets a value of Rp. 0,000,039,423,147. And the last method is the Internal Rate of Return method which gets a value of -1,373,149.77. From the results of this analysis, it can be concluded that the development of Pasar Bareng Malang City is not feasible to do.
 Key words: Feasibility Study, Pasar Bareng, Malang City.

Evaluasi Kelayakan Finansial Pasar Bareng Kota Malang Hasil Revitalisasi Sebagai Pasar Multifungsi

In realizing the economic growth of a region, many aspects need to be considered. One of the two aspects in realizing positive economic growth of a region is infrastructure and trade. The development of an infrastructure or project needs to cost money, moreover the project is not a small project. Therefore, there needs to be an in-depth and structured study and research before the project is funded or has been funded so as to know the prospects of the project. The study and research used an analysis of the financial feasibility study for the development of Pasar Bareng in Malang City with the aim of seeing the financial feasibility of developing Pasar Bareng. A project feasibility study has the meaning of a study that can see if the project if it gets an investment can run well and provide financial benefits. This study uses the Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit Cost Ratio (BCR) methods. The data that has been collected will be analyzed and get a project development perspective from a financial perspective. In this study there is a comparison of profit or loss obtained by looking at data from operational costs, income, and investment costs. The costs used come from maintenance and operational costs incurred during the operation of Pasar Bareng. The results of the feasibility analysis test using the Net Present Value method get a value of Rp. – 7,000,291,269,823. Then, the Benefit Cost Ratio method gets a value of Rp. 0,000,039,423,147. And the last method is the Internal Rate of Return method which gets a value of -1,373,149.77. From the results of this analysis, it can be concluded that the development of Pasar Bareng Malang City is not feasible to do.
 Key words: Feasibility Study, Pasar Bareng, Malang City.

PENERAPAN METODE DSS (MAUT & IRR) DALAM MENENTUKAN KELAYAKAN PENGADUAN

The research and development center for mineral and coal technology or abbreviated as Puslitbang tekMIRA is located in Bandung, West Java, which has asset management, namely the rental of rooms or buildings. In asset management, there is a complaint page if a customer has a complaint. Based on the complaint data that came in at the same time, the authors saw that there were problems that were considered to need attention, namely which complaints would be resolved first and whether or not the complaint was feasible or not to be processed. This study uses the DSS (Decision Support System) method, namely Multi Attribute Utility Theory (MAUT) and IRR (Internal Rate of Return). The MAUT method is a method that converts some importance into a numerical value from a scale of 0-1 which represents the worst and best values ​​and the final result is a ranking. While the IRR method is an indicator of the efficiency level of an investment that is used to provide an overview of whether the complaint is feasible or not to be followed up. The result of the application of this method is the feasibility of the complaint.

Theoretical and Experimental Elements of Investment Business in Romania

This paper presents a financial - economic analysis of the investments efficiency, in a double approach, both theoretical and empirical. We present and analyze in this article the investment decision in general and the financial - economic investment decision in particular. Analysis and characterization of categories of investment projects, including from economic point of view is another important aspect presented in our article. Here we present and analyze comparative, including through empirical approach, different methods of economic analysis of investment projects, such as: the method of Profitability Index (PI), Net Present Value method (NPV), Return On Investment (ROI), yield Internal Rate of Return method (IRR).

Forecasting the potential and economic feasibility of power generation using biogas from food waste in Ghana: Evidence from Accra and Kumasi

Global environmental change is driven by food production. Biogas from food waste is a better source of clean energy. Ghana’s energy strategy targets a 10% increase in renewable energy and modern biomass in the national electricity generation mix. Studies on the assessment of electricity generation potential and economic feasibility of biogas to electricity projects in Ghana’s major cities are scarcely available. This study assesses the electricity generation potential of biogas from food waste through anaerobic digestion technology. The municipal solid waste generation potential of Accra and Kumasi was estimated from 2020 to 2039. The potential theoretical methane yield from food waste was calculated using Buswell’s equation. The study analyzed anaerobic digestion projects’ economic feasibility using the total life cycle cost, net present value, investment payback period, levelized cost of energy, and internal rate of return methods. A sensitivity analysis based on two scenarios (optimistic and pessimistic) was performed to analyze the influence of changes in the composition of food waste, per capita waste generation rate, population growth rate, per capita GDP growth rate, discount rate, capacity factor, electricity generation efficiency, waste collection efficiency, and methane production potential on the economic feasibility of the projects. The main findings indicate that the amount of waste generation in Accra during the project life cycle is 899,000 t/y to 3,359,000 t/y, while that of Kumasi is 915,000 t/y to 3,159,000 t/y. The power generation potential of the project in Accra ranges from 80.43 to 300.49 GWh/y, and in Kumasi ranges from 60.63 to 209.31 GWh/y. Economically, the project is feasible in Accra and Kumasi. The net present value of the project in Accra and Kumasi is $217,800,000 and $156,100,000. The sensitivity analysis shows that the project is infeasible in all the cities with a discount rate exceeding 20%. When the discount rate exceeds 20%, the project becomes highly infeasible in Accra compared to Kumasi. This study will offer itself as scientific guidance for investment in biogas to electricity projects in Ghana’s cities.

Profitability of a hybrid heating system for a single-family house in Poland based on a heat pump and photovoltaics

The article presents an analysis of the profitability of an investment consisting of a heat pump and a photovoltaic installation located in Poland for an exemplary single-family house. The factors that have a significant impact on the profitability and payback time of such installations operating in a dual configuration are described. A simulation of profitability taking into account the legal regulations and support systems was presented. The considered case of profitability concerns a specific technical solution in which an 8 kW air / water pump was used. The pomp cooperates with a photovoltaic installation with a power of up to 10kW, operating in a discount system with an energy consumption factor of 0.8. For the purposes of this article, the DCF (discounted cash flow) method was used. Using this method, it is possible to calculate the market value of the investment with the assumed boundary criteria. A comparison of the economic efficiency of an investment can be presented using the IRR (internal rate of return) method.

Development of average of internal rate of return method

Development of average of internal rate of return method

STUDI KELAYAKAN INVESTASI PADA PROYEK PENINGKATAN STRUKTUR JALAN MALINAU – LONG ALANGO

Before investors invest their capital, an investment feasibility analysis must be carried out for what research is carried out, namely to find out the capital that must be invested at this time in the hope of getting greater profits in the future. The NPV (Net Present Value) and IRR (Internal Rate of Return) methods are methods that are often used by investors to analyze the feasibility of an investment. The formulation of the problem in this paper is How much NPV (Net Present Value) and IRR (Internal Rate of Return) on the value of the project for the Improvement of the Malinau - Long Alango Road Structure of the East Kalimantan Provincial Public Works Department in the three years of 2012? How much NPV (Net Present Value) and IRR (Internal Rate of Return) if the project investment costs are obtained from bank loans?Based on the results of the analysis and discussion that if using NPV own capital is Rp. 873,203,421, 89 and IRR, which is 10.867%> 10%. While the capital using a loan from the NPV Bank was Rp. - 743,345,869, 83 <0, and IRR obtained by 9.25% <10%. means the investment appraisal of the project for the Improvement of the Malinau-Long Alango Road Structure for the Public Works Department of the East Kalimantan Province in the three regions of 2012 is feasible to do if it uses its own capital, and vice versa if all capital obtained from loans from banks is not feasible and must be reconsidered.

Appraising Commercial Expenditure Efficiency of General Medical Education and Residency Programmes in Nigeria

Purpose: The purpose of the research is to establish the standard period taken in full recovery of cost outlays, rate of returns for general physicians and marginal returns to consultants, and appropriate profitability indices. Mixed ex-post “facto” data and primary data-sets pertaining medical education expenditure across levels and lifecycle career earnings of Nigerian physicians in public service were employed. The longitudinal secondary and primary data-set were obtained from cohorts of physicians that participated in the two stages of medical education, published programmes charges posted in brochures of some public universities’ medical schools and gazette consolidated medical salaries scheme of scale for medical workers in the public service. Method of Analysis: Break-even analysis was applied to determine minimum number of years required to fully invested capital; “elaborate (full cash flows) discounting” with internal rate of return method was used for calculation of the private and marginal rate of returns. Then, profitability ratio approach was applied to determine the level of viability of medical education across levels. Cost construction indicates that about N30 million and N69.5 million are committed as investments on general medical education and residency training of the licensed general physicians and consultant-physicians respectively. The lifecycle career earnings estimates of the general practice physicians and consultant-physicians employed in the public service worth N356 million and 814 million. Results: The break-even period for full recovery of investments in general practice physicians is 5.25 around the thirteenth years of medical education and 6.33 years for residency-trained consultants, occurring in the 21st period of this layer of vocational training respectively. Individual rate of returns on investments in general medical education of average licensed general physicians is 32 percent and 32 percent marginal rate of returns to additional investment expenditures on residency training (earnings premium of consultant-physicians). This combined rate of returns of consultant-doctors (general medicine plus residency training) is 64 percent. Net present value of cash-flows of the average general physician and consultant-doctors in Nigeria is worth N326 million and N744 million respectively. Whilst the profitability index derived from the present value of net cash-flows is 1.32 for general physicians and 1.69 for the specialist. Conclusion: The paper concludes that investments to medical education in Nigeria are worth-while; but more rewarding for residency training. Timing of education (age-range when doctors get certified) influences the earnings and rate returns to investments and value of one’s intellectual capital and net-worth (statistical financial value of life). Contribution to Knowledge: The results of assessment of individual’s expenditure efficiency in medical/higher education confirm that investment in medical education is worthwhile. The findings enhance rational decision for individuals, private sector and government organizations respectively and veritable information for policy formulation. Originality: This research is an exploratory assessment of individual participants’ spending efficiency in medical education in Nigeria and other developing country establishes tentative pay-back period of such investments, unit rates of returns across levels and profitability indices.

Electrical Power Characteristics and Economic Analysis of Distributed Generation System Using Renewable Energy: Applied to Iron and Steel Plants

The intention of this paper is to respond to the increase in electric power demand and global environmental issues in iron and steel plants. In particular, the authors studied the characteristics of the power flow from a distributed generation (DG) system connected to the electrical power system of a steel plant. In addition, the authors carried out an economic analysis of the DG system by calculating the capital investment cost that could convert the profit of the DG into a certain profit. The research was conducted based on the power system configuration and basic data of a steel plant in operation in Korea. To analyze the unconnected DG of the power system, a transmission voltage target was set, and the voltage characteristics of 22.9 and 6.6 kV systems were analyzed. The authors analyzed the connected DG system in terms of the effect of link location, power factor, and output power by case. The authors also studied the power loss variation in the output power of a DG system. Various simulations with MATLAB software and NPV (Net Present Value) and IRR (Internal Rate of Return) methods were run in an economic analysis to compare the case of not introducing an energy storage system (ESS), and the case of introducing an ESS in terms of comprehensive energy utilization. The results of the economic analysis indicated that the scenario with ESS is more economically advantageous, resulting from the peak power reduction effect and the evasion cost due to the elimination of the power generation operation of the peak load. Developed countries have established best available technology (BAT) standards and developed related practices to apply them to industrial plants, actively preparing for environmental issues in the future. In Korea and in some other countries, the application of distributed generation in conjunction with the steel plant sector will be effective for improving energy efficiency and responding to environmental issues.