Economic aspects of energy management

Many of the decisions made by a business are regard to energy conservation involve economic analysis. Business must make decisions that are ecumenically beneficial. The purchase of equipment or modification that results in energy conservation must be profitable long term investments.

Pay back period can be estimated to determine the feasibility of making a capital investment that Will provide energy saving, simple payback period s an indication of the amount of time it will take for an organization to recover the cost of an energy saving investment which is purchased. The formula for estimating simple pay back period is:

Payback Period = Cost of improvement (Rs)

                             Average Yearly Saving (Rs)

For example , if adding insulation to ceiling at a cost of Rs 2000/- is expected to provide a Rs. 1000/- saving each year, the simple payback pay for itself in a 2 year period.