EE Calculator Handbook

Introduction
The expected outcome of this tool is to provide users (whether project developers, investors, etc) with a simple analysis on the feasibility of an energy efficiency project.
Updated in November, 2020
Questions, comments, or incorrect information?
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The tool allows prospective users to insert information on the facility type, annual energy cost, equipment information and financial information. Results from the energy efficiency tool include Net Present Value, Internal rate of return, CO2 abatement cost, etc.

Although the energy efficiency calculator is a voluntary tool, it can be used as a quick indicator on the profitability of energy efficiency investments. However, the tool is limited to only electricity and does not consider financial analysis of other direct uses of energy such as furnace heating using diesel, etc.

Sections

Step 1: General Information

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Organisation

This is the name of the entity, whether a business, investment firm or government that is interested in investing or developing the Energy Efficiency Project.

Project Location

The location of the building or industry where this energy efficiency technology/ project will be implemented.

Step 2: Facility Information

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Facility Type (Res, Comm, Ind)

Select the facility type according to what activities the facility is used for, whether residential, commercial or industrial purposes.

Total Building Floor Area (sqm)

Insert the total gross floor area of the building(s) facility. This information is mainly needed for residential and commercial facility types in order to develop an Energy Cost Index but may be provided in the case of an industrial facility. 

Total Number of occupants

This is the total number of occupants within the building(s) facility. This information is mainly needed for residential and commercial facility types in order to develop an Energy Cost Index but maybe provided in the case of an industrial facility.

Annual Revenue (₦)

This is the total amount of income generated by the sale of goods or services related to the facility’s operations. It is mainly needed for industrial facilities in order to develop an Energy Cost Index but maybe provided in the case of residential and commercial facilities.

Step 3: Energy Information

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Total Annual Electricity Consumption (kWh)

This is the total number of electricity in kWh, consumed by the facility throughout the year. This electricity consumption includes all electricity consumed from the different energy resources (grid and generators). 

Annual grid electricity (kWh)

This is the total amount of electricity (kWh) consumed by the facility via the grid/DISCO throughout the year. For facilities without access to the DISCOs meter, this can be gotten by summing all kWh indicated in monthly bills from the DISCO for the period of 1 year.

Annual diesel consumption (Litres)

This is the total amount of diesel consumed (litres) by the facility for the purpose of electricity generation throughout the year. Please note that only amount of diesel used for electricity generation should be used and do not include diesel used for other processes such as direct heating.

Grid Electricity Tariff (₦/kWh)

This is the amount of money charged by the grid electricity suppliers (also known as distribution companies or DISCOs) per kWh for the supply of electricity to the facility. This tariff differs by facility type and project location. The tariff is usually indicated in the electricity bills or receipts in the case of prepaid customers.

If you are not able to get access to electricity bills, please follow the link below to know which DISCO supplies electricity to the location of the facility.

nerc.gov.ng/index.php/contact/discos

Once the respective DISCO is identified, a link to the DISCO website is available on the left side of the page where the tariff can be gotten.

Diesel Price (₦/Litre)

This is the amount of money it cost to purchase and deliver diesel to the facility. This cost differs by location as a result of the cost incurred to transport the fuel. In case you do not have access to this cost, reliable cost information can be gotten from the Nigerian Bureau of Statistics. See link to updated diesel prices (NBS) nigerianstat.gov.ng/elibrary 

Step 4: Financial Information

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Interest Rate (%)

If the total or part of the investment will be provided by external lenders such as banks or other financial institutions as loans, then insert the rate in which the lender charges for a loan/ debt investment. The rate must be expressed as an annual percentage and not monthly rates. A default value is shown here, however a more appropriate input that reflects the actual cost of capital from the lender should be used.

Debt Investment (₦)

This is the money provided by a financial institution such as a bank or any other lender for a particular period (years), specifically for developing the energy efficiency project. This is the amount of money in which the interest rate above applies to. 

Rebates / Grants / Incentives (₦)

If a sum of money is given by a government, development agency or any organisation for the purpose of developing the energy efficiency project, it should be inserted here. Note that money provided as rebates or grants are not required to be paid back.

Equity Investment (₦)

This is the money invested in the specific energy efficiency project by the sponsors or in partnership with other investors by purchasing shares which results in rights to ownership of the project.

Discount Rate (%)

This refers to the interest rate used to determine the present value of future cashflows. In case this rate is unknown, the inflation rate for Nigeria can be used. A default value representing Nigeria’s inflation rate at the time of building this tool is shown here. Please visit the Central Bank’s Website for a more updated value.

Debt Tenor (years)

This is the length of time (in years) until the debt investment such as a loan from the bank, is due. The number of Debt Tenor years should typically be lower than the equipment’s useful life in years.

Step 5: Equipment Information

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Equipment Cost (₦)

The existing equipment cost refers to the cost of the equipment to be replaced by the energy efficient alternative. This cost only focuses on the cost to purchase the existing equipment. The new equipment cost refers to the cost of the equipment or appliance that will replace the existing equipment. This cost only focuses on the cost to purchase the new equipment or appliance.

Other cost (₦)

The existing other cost refers to all related costs that would have been associated with developing and implementing the project with the old equipment or appliance. The new other cost refers to all related costs that will be associated with developing and implementing the project with the new equipment or appliance. These costs include logistics, installation, permits, etc.

Annual O&M Cost (₦)

The existing annual O&M Cost is the total cost associated with operations and maintenance for the old equipment or appliance to be replaced. The new annual O&M Cost is the total cost that will be associated with operations and maintenance for the new equipment or appliance. These costs may include routine maintenance, salaries of personnel managing the equipment during its operational years, etc. This cost should be an annual cost and not monthly. 

Annual Energy Consumption (kWh)

The existing annual energy consumption refers to the total amount of energy in kWh that is consumed the equipment to be replaced, over the duration of a year.  The new annual energy consumption refers to the total amount of energy in kWh that will be consumed by the new equipment, over the duration of a year. Please note that the kWh consumption refers to electricity only.

Equipment Useful Life (years)

The existing equipment life refers to the total number of years provided by the manufacturer which estimates how long the old equipment to be replaced is likely to remain in service. The new equipment life refers to the total number of years provided by the manufacturer which estimates how long the new equipment is likely to remain in service. 

Salvage Value Today (₦)

This is the expected monetary value of the old equipment/appliance if sold today. If no monetary value is expected, input here is 0 

Salvage Value after Operating Life (₦)

This is the expected monetary value of the new equipment/appliance if sold after its useful life. If no monetary value is expected, the value is 0

Results Information

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Blended Rate of Electricity (₦/kWh)

Once all the required information under the energy information are inserted, then the blended rate of energy is calculated. Blended rate of energy is the cost of electricity that represents a combination of grid electricity and diesel generators costs. It is a calculated value and is limited to just the costs of energy and does not consider other costs related to generating electricity such as maintenance, operations and management costs.

Return on Investment (%)

This is a metric used to measure the performance (profitability or loss) of the project. It is a calculated value

Net Present Value (₦)

This is a project evaluation metric that shows future net cash flows over a period of time from the project, in today’s value. It is a calculated value

Internal Rate of Return

This is a measure showing the expected future annual rate of return of the project investment. It is a calculated value

Discounted Payback Period (years)

This is the amount of time (in years) it takes for the investment to break even by discounting the cashflows of the project, recognising the time value of money. It is a calculated value

CO2 Offset (tonnes)

This is the amount of carbon dioxide emissions that will be reduced by implementing this project.

CO2 Abatement Cost (₦/tCO2e)

This is the cost effectiveness of the project investment in reducing CO2 emissions. A green highlighted figure indicates that the CO2 is abated at a negative cost which means the project saves money while reducing emissions. A red highlighted figure indicates vice versa. It is calculated value

kWh per sqm per year

This is an indicator for benchmarking energy use in buildings in relation to the total occupied floor area, which helps to measure performance against its past performance or compared to other similar buildings. It is a calculated value

kWh per person per year

This is an indicator for benchmarking energy use in buildings in relation to the total number of people within the building, which helps to measure performance against its past performance or compared to other similar buildings. It is a calculated value

Energy use per unit revenue (kWh/₦)

This is an indicator for benchmarking energy use in industries in relation to total revenue from production, which helps to measure performance against its past performance or compared to other similar buildings. It is a calculated value

Investment (₦)

This is the total amount of money needed for the development and implementation of the project. It is a calculated value

Annual Energy Cost (₦)

The existing annual energy cost refers to the total cost associated with delivering energy to be consumed by the equipment over the duration of the year. It is a calculated value.