Economics
Economic parameters are defined in this section to allow for annual building utility cost and lifecycle cost analysis (LCCA) calculations. Based on the economics inputs entered, the program calculates financial measures such as simple payback, lifecycle payback, net present value, and internal rate of return.
In the utilities section, utility rates for the project alternative(s) are defined. Each project alternative can be set-up with unique utility rates. In the meters section, custom meters may be defined and demand limiting controls can be configured and enabled for electricity meters. In the lifecycle section, enter the life cycle cost parameters so that an analysis can be done to calculate present day values. Lastly, in the costs section, life cycle costs are added to the project alternative.
Life-cycle costing is often used with building energy simulation in order to justify energy efficiency upgrades. Many alterative building technologies that result in energy savings cost more initially, or may cost more to maintain, than traditional solutions. In order to justify selecting these energy saving technologies, it is essential to combine both initial and future costs in the decision process. Using life cycle costs provides a framework to combine initial costs and future costs into a single combined measure, called the “present value.” Present value is a metric that combines all costs and reduces (or discounts) those costs that occur in the future. Discounting future costs is based on the principal of the time value of money.