Selling Energy Efficiency: The Energy Engineer as Investment Advisor

ABSTRACT

This article evaluates the energy efficiency investment decisionmaking used by most organizations. A financial risk management process is shown to provide greater financial returns and less risk in selecting investment projects compared to the traditional practice of payback analysis. An example application of Energy Budgets at Risk, a value-at-risk-based energy efficiency investment analysis, is presented to illustrate the advantages of risk management analysis in evaluating energy efficiency projects. Summary risk analysis results are presented as a communication bridge between technical project engineers, chief financial officers, and other financial executives and decision-makers. The article concludes with the suggestion to expand the traditional roles of energy engineers and managers to include providing energy efficiency and budget financial risk management analysis.