FA modelling allows one to objectively assess the pros and cons of an EE or waste min investment. Often, decisions can be based on emotions or instinct, not hard-facts. Our FA model allows one to calculate: payback, NPV, IRR, “risk”, CO2 mitigation etc across a diverse set of opportunities. From this, the Management team can select and prioritize those that meet its investment criteria.
Refinements to the model include:
- “Marginal costs” v total costs (if you have to make an investment because it’s legally required or business critical, what are the over-and-above elements for the EE/ waste-min element of the investment?)
- High energy inflation (particularly where energy subsidies are being phased out), or
- Attributing a value to the CO2 avoidance – either a “social” cost or a real value through EU ETS, CRC or JI/CDM.
This basic model has been used for EBRD work in Urals (see main menu for information on the Urals), UNIDO Energy work in Iran (see main menu for information on Iran) and others. It has also been adopted and used by colleagues elsewhere.