cfo calculator
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORIntroduction
Released on 12/18/2002
IMPORTANT NOTICE: The macros imbedded in this spreadsheet must be enabled to use this calculator. To enable the macros using Microsoft Excel 2000, 2002, or 2003
Macro > Security Level and select the "medium" (recommended) or "low" security level (not recommended as this "low" macro security option enables macros without givi
enable/disable the macros). If you are using Microsoft Excel 2007, click Developer > Macros and select Disable all macros with notification option. Note that you will need
applications after enabling the macros and reopen this worksheet. You must enable macros if and when prompted by the program upon opening. CAUTION: Macros in oth
carry harmful programming codes. Do not enable macros from sources you do not trust.
This spreadsheet is designed to work with Microsoft Excel 97 or later versions for Windows OS. It may not work properly with earlier versions. It is best viewed with 1024x7
resolution.
DISCLAIMER:ENERGY STAR does not guarantee that your project will generate the results presented herein. An investment grade audit performed by a qualified engi
required to determine the actual size of your savings opportunity.
Version 2.0 - 2010 - BETA VERSION
Developed by The Cadmus Group, Inc. and Catalyst Financial Group, Inc.,under contract with the U.S. EPA, 2009
CASH FLOW OPPORTUNITY CALCULATOR
Please send any comments to Katy Hatcher, ENERGY STAR National Manager Hatcher.Caterina@epa.
162998982.xls.ms_office/Intro
As the numbers that you will use in the calculator are your own estimates,
ENERGY STAR does not guarantee that your project will generate the results presented herein.
See full disclaimer.
mailto:[email protected]?subject=CFO%20Calculator%20Questionhttp://www.energystar.gov/index.cfm?mailto:[email protected]?subject=CFO%20Calculator%20Question -
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInstructions
ENERGY STAR
CASH FLOW OPPORTUNITY CALCULATOR v2.0
INSTRUCTIONS
HOW TO USE THIS WORKSHEET
The purpose of this spreadsheet is to help decision-makers quantify the costs of delaying an energy efficiency project by addressing three critical questions:
- How much new energy efficiency equipment can be purchased from the anticipated savings?
- Should this equipment purchase be financed now or is it better to wait and use cash from a future budget?
- Is money being lost by waiting for a lower interest rate?
The Cash Flow Opportunity Calculator spreadsheet is easy to use, intuitive, and follows the logic outlined above. It consists of 6 worksheets, including four data
tabs, an instructions tab, and a summary report tab. Each data tab addresses a specific calculation, the results of which are used in subsequent worksheets. Note
that the data entry tabs can be used independently, should you wish to use only one of the four calculations. A description of each of the data and summary
report tabs follows:
Data Entry TabThe purpose of this tab is to estimate the amount of energy waste (or potential savings) buried in your utility bills. This amount is calculated
in dollars rather than kWh or therms. This amount becomes the cornerstone of the subsequent spreadsheet calculations. You will need to know the amount of
your current energy spend (utility bills). This tool can be personalized to identify the project(s) being analyzed by enter ing your organizations name and
specifying the projects being evaluated.
Because energy is measured in different ways by different organizations, this tab presents a variety of profiles found in the Type of Analysis window (ROW 5) in
an effort to offer a selection of profiles that best suits your organization. On the Type of Analysis window, choose the de scription that best fits your project.
The User Generated Categories is a simple generic option that provides two category ROWs and the ability to create any labe ls you wish that best describe the
projects (i.e., individual addresses or groups of properties). The Benchmark Results from EPA's Portfolio Manager option allows you to input the data directly
from ENERGY STARs Portfolio Manager. Green Building Categories uses the categories directly from LEED EB. Water or Wastewater Treatment Plants
allows you to input data based on million gallons per day, and By Efficiency Project Type is technology -driven (Lighting, Heating and Cooling, Retro-
commissioning, etc.) and Manufacturing Facility allows you to input data based on production, such as pounds of product. In all instances, you can overwrite
the category names to best describe your project.
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInstructions
Estimate the percentage of the energy savings that will be realized by the energy efficiency project to be applied against your utility bills. These savings can be
leveraged by financing the project; this number becomes the source of repayment and is used in the next tab.
Investment Values TabThis tab is like a reverse financial calculator. It uses the savings estimate from the Data Entry Tab to calculate the amount of
equipment and services that could be installed and paid for using only your current and future energy savings.
Cash Flow TabHere you compare the cash flow consequences of two decision points: (1) installing the energy project now and us ing future energy savings to
cover the financing costs versus (2) postponing the installation until funds become available in a future budget. Whichever decision generates the larger Net
Present Value is generally accepted to be the better financial decision. The results of this comparison are often counter-intuitive.
Interest Rates TabThe financing that offers the lowest interest rate is not always the best deal. The lowest rate offering may not be immediately available
(typically the case with most bonds and revolving loan funds). This tab allows you to compare two different interest rate offerings by adding the impact of the
cost of delaying the installation (lost savings opportunity) caused by waiting for the lower interest rate financing. This helps calculate how long you should wait
for a lower interest rate offering before the lower interest rate becomes the more expensive financing option.
Summary TabThis tab generates a report that includes all of the information covered in the data tabs.
If you are interested in showing only one tab's results, you can use the Excels Print function to print any one page of in terest rather than printing the entire
report.
For more sheet specific instructions, please click the Help button on each tab to open the Help section under each page.
ADDITIONAL INFORMATION
ENERGY STAR Portfolio Manager
EPA developed Portfolio Manager to help businesses continually track and compare energy use for all facility types, which is critical to successful energy
management. Portfolio Manager also provides a comparative 1-to-100 rating of energy use for the following facility types:
Bank/Financial InstitutionsCourthouses
Hospitals (acute care and childrens)
Hotels and Motels
House of Worship
K-12 Schools
Medical Offices
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATOR
Instructions
Residence Halls/Dormitories
Retail Stores
Supermarkets
Warehouses (refrigerated and non-refrigerated)
Wastewater Treatment Plants
To find out more about Portfolio Manager, please visit www.energystar.gov/benchmark.
If you would like to find out if your buildings are el igible for benchmarking, please visit
http://www.energystar.gov/index.cfm?c=eligibility.bus_portfoliomanager_eligibility
If you have already benchmarked your buildings, aggregate your data from the EPA ENERGY STAR benchmarking tool into quartiles and enter them into this Cash
Flow Opportunity Calculator. (Enter total square feet and total utility expenditures for each quartile in the Data Entry worksheet.)
Internet Presentations
You can view one of our self-guided Internet presentations to learn more about this topic. Please visit
http://www.energystar.gov/index.cfm?c=business.bus_internet_presentations for more information.
IMPORTANT NOTICE & CONTACT INFORMATION
This calculator, like all of the ENERGY STAR program's products and services, is available as a public service. EPA makes no representations of its accuracy, only of
its intention. Should you have any comments, we kindly request that you notify:
Katy Hatcher, ENERGY STAR National Manager, at [email protected].
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATOR
Instructions
DETAILED INSTRUCTIONS
Section 1Data Entry Tab
This tab is where you enter basic information about your organization. The objective is to estimate the potential annual energy savings based on a simple
evaluation of your organizations profile. Note that yellow CELLs require data/information, which you provide, while blue CELLs contain formulas, which cannot
be overwritten.
1) Enter the name of your organization in CELL D4
2) In ROW 5, choose between five alternative approaches to enter the organizations data based on which scenario best describes the nature of your project. You
will notice that the table will show between 2 and 5 rows of data entry points, depending on the approach you choose.
User Generated CategoriesThis simple approach gives organizations a general picture about their energy use and potential savings. You can enter specific
property addresses or group properties together. If you are unsure how to group your properties, you might start by thinking ofthem in two categories: more
energy efficient versus less energy efficient. After all, it is usually easier to save energy in the less energy-efficient properties.
Using Benchmark Results from ENERGY STARThis is a good approach for ENERGY STAR partners using EPAs benchmarking tool, Portfolio Manager. This
approach breaks the data into four quatiles in terms of energy consumption: the bottom quartile is high energy consumers (ratings of 24 or below), the third
group is below average (ratings between 25 and 49), the second group is above average (ratings between 50 and 74), and the top group (ratings of 75 or above)
consists of the best performing buildings. The quartile-based method is a more detailed approach as it requires organizations to enter four sets of data instead of
the two sets in the User Generated Categories approach. If you have benchmarked your buildings, use this tab to enter the results into the corresponding
quartiles. If you have not completed the benchmarking exercise, you can enter your best guess for square footage and cost per square foot for each quartile.
Green Building Categories (LEED EB)Energy efficiency and indoor air quality are critical components of green building projects, and they are required by the
U.S. Green Building Council (USGBC) to obtain Leadership in Energy and Environmental Design (LEED) certification. One ongoing concern is how to pay for green
improvements. Energy and water savings (and others) may be captured from current operating budgets and used to pay for the needed equipment. This
approach gives you the opportunity to enter data in the familiar LEED categories: Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials &
Resources, and Indoor Environmental Quality.
Water or Wastewater Treatment PlantsWater and Wastewater facilities measure energy consumption in different ways, the most common being Million
Gallons per Day (MGD) for process facilities and cost per square foot for administrative buildings.
Energy Efficiency Project TypeThis option allows you to input the data and projected savings based on the type of technology being installed. The sample
categories include Retrocommissioning, Lighting, Supplemental Loads, Air Distribution Systems, and Heating and Cooling (see the ENERGY STAR Building Upgrade
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInstructions
anua or more e a s on ese ca egores, own oa a e rom p: www.energys ar.gov n ex.c m c= usness. us_upgra e_manua .
Manufacturing FacilityManufacturers often use energy intensity metrics based on a unit of production to track energy use. Common metrics include:
BTU/pound of production, BTU/part, kWh/finished product. This option allows you to use a production-based energy intensity metric for either the entire
facility or a process line for which the project is being implemented.
All category names in the Types of Analysis can be overwritten to reflect the project you are analyzing.
3) In ROW 6, Values, enter the total annual energy costs along with other supporting data (i.e., square feet, million of gallons per day, etc.) for each of your
groups.
Energy unit costs (Column F) will automatically be calculated. If you do not know your organizations details, you may populate the data fields with samplevalues by clicking on the Sample Values menu. User Defined Values option is prepared for you to enter your own values and are highlighted in yellow. You
can overwrite the sample data with actual data at any time.
The Savings Target is your best estimate of typical savings. Many organizations find that 10-20 percent savings can be obtained through behavioral
modifications and consider 20 to 35 percent as a realistic overall target for most energy efficiency projects. Enter your best guess; remember that these target
amounts can be easily changed later to reflect alternative estimates.
In all cases, enter your organizations total energy costs (Electricity, Natural Gas, Steam, Chilled Water, Fuel Oil *No.1, No.2, No.5, and/orNo.6], Coal [anthracite],
Coal [bituminous], Coke, Diesel [No.2], Propane, Liquid Propane, Kerosene, Wood, and Other) by category. When possible enter the square feet under
management by category (this may not be always appropriate, for example LEED: EB O&M categories may not be conducive to measuring in square feet and
water/wastewater facilities measure in million gallons per day).
You can personalize all of the approaches in this program by creating your own category names, which may be helpful when presenting the Cash Flow
Opportunity Calculator results to others. For example, personalized labels can reflect facility groups (i.e., North Campus or Beach Properties), addresses (i.e.,
123 Main Street or 5 Broadway), or any labels that work for your organization. These names will appear in the reports generated by the program. Simplyoverwrite the names shown in the Column labeled Category Name (Column C).
To switch between approaches, use the drop down menu labeled Select Data Source (CELL C5). You may populate this model with the sample values by clicking
on the Sample Values menu. Yellow cells indicate that data entry is required; these cells will change to white after data have been entered. Blue cells are
protected and can only be changed by modifying the input data. CAUTION: Any user-entered data will be lost when selecting the sample values.
Section 2Investment Values Tab
ROWs 5 and 6 pull forward the summary details you entered on the earlier Data Entry Tab.
This worksheet operates like a reverse financial calculator and will help you estimate the amount of equipment that could be financed with the future energy
savings.
1. In the line Assuming an interest rate of (CELL F10), enter the interest rate you think will reflect the cost of financing your project. The actual rate will depend
on whether the financing is tax-exempt or taxable, your organizations credit rating, dollar amount, and term of the transaction.
2. In the line Assuming a term of (CELL F11), enter the financing term that you think will be acceptable to your organization and a lender. Typically this will be
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATOR
Instructions
determined by the useful economic life of the equipment installed. The financing term should be longer than the simple payback of the equipment to generate a
positive cash flow.
3. In the Savings used to pay energy investments CELL F12, enter the percentage of the savings you would be willing to commit to cover the cost of financing
these energy efficiency improvements. If you are working with an Energy Services and Products Provider, you may be able to obtain a guarantee that these
savings will be realized, allowing you to use a higher percentage of the projected savings. The percentage you choose depends on the type of equipment
installed, the savings realized, political environment, etc. Most organizations use between 85 percent and 95 percent.
Push the green Calculate button to determine the amount of money that is buried in your utility bill, based on the estimates stated above, which then appears
in green (CELL E15). Bear in mind that an investment grade audit done by a qualified engineering company will be required to determine the actual size of your
opportunity. The cost of this audit can normally be included in the financing and recovered through the savings.
The projects simple payback is also shown at the bottom of the worksheet.
NOTE: The "Use Sample Values" button will reset the calculator to the sample values in CELLs F10 through F12.
Now that you know how much equipment may be acquired with your existing operating and capital budgets, the next step involves timing.
Section 3Cash Flow Tab
This spreadsheet helps quantify your decision on whether it is a better to pay as you go and wait until funds are available in future budgets or pay as you use
by financing an energy efficiency project immediately using a third-party lender and capture the savings sooner.
It is true that interest payments can be avoided altogether by including these energy projects in future capital or operating budgets. However, there is a cost of
delay to be considered when postponing these projects. This spreadsheet provides a discounted cash flow analysis to help determine the better business
decision: (a) deferring the installation until a future budget or (b) financing the installation today. Often, the energy efficiency savings lost in one year exceed the
total amount of the financing costs throughout the entire financing period.
Data Carried Forward From Earlier Worksheets
In the top left section, the Project cost (CELL G4), Interest rate (CELL G7), and Financing term (CELL G 8) are imported from the prior Investment Values
worksheet. The Simple payback of the equipment to be installed (the time it takes to recover the project cost from savings, including financing costs) is also
carried forward and entered into CELLs G5 (years) and G6 (months).
These numbers can be overwritten if you wish.
New Data Entry
In the line Year(s) postponed (CELL G9), enter the number of years the project will be delayed if you have to wait and include it in a future budget; for example,
if the project will be included in next years budget, use the number 1.
In the Project cost increase due to postponement (CELL G10), enter the percent you believe the project costs will increase (labor and material costs, lost
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInstructions
rebates, etc.) caused by delaying the project
In the line Estimated energy cost increases in Year 2 (CELL G11), enter the percent you believe your energy costs will increase next year (Year 2).
In the line Annual increase in energy costs after Year 2 (CELL G12), enter the estimated amount your energy costs will increase after next year (Year 2), in
percent.
In the line Estimated energy savings in first year (Year 1) (CELL G13), enter the percent of the savings you will be able to capture during the first year. The
amount of the savings will vary based on the installation time needed to complete the project.
You can modify all these numbers by overwriting them or start from scratch by clicking on the "Sample Values button at the top of the page.
Comparison Tables (Option AFast Track Financing vs. Option BWaiting for Cash)
The tables starting at ROW 18 represent the cash flow consequences of the two choices: Option Ainstalling today using financing, or Option Bdeferring the
installation until funding becomes available in a future years budget. The calculator allows up to 26 years of cash flows to be discounted back to their Net
Present Values for each of these options (CELLs G13 and K13), using the Interest Rate stated in CELL G7 as the discount rate for both options. Cash flows are
limited to the finance term plus one year.
The results of these Net Present Value calculations are found on ROW 15. Whichever option generates the greatest present value dollars is considered the better
financial decision.
The graph at the top right is a visual representation of the cash flow impact of deferring the installation versus financing it now. It graphically reflects the impact
of writing a big check and slowly fill in the hole with the savings over time versus using third-party financing immediately to level out the projects cash flow.
This spreadsheet is a good sensitivity analysis tool because it allows you to make what if calculations by changing the paybacks, interest rates, and terms to
ensure that your financed energy efficiency project always generates positive cash flow. It also is useful when structuring your financing should the energy
savings be insufficient to cover the repayment of the entire project. We urge you to start with the maximum financing term your organization finds acceptable
and then experiment with the average simple paybacks to leverage the energy savings fully. Slow and fast payback projects should be blended to obtain this
average number.
Section 4Interest Rates Tab
If the prior calculation confirmed that it is a better decision to finance and install now rather than wait for the availability of funds in a future budget, the next
most frequently asked question is: Should we wait for a lower interest rate (like a bond or a subsidized loan program) or finance it now at a slightly higher rate
that is readily available?
Instinct suggests that financing with the lower interest rate is the best alternative. However, to determine which finance offering represents the better deal,
additional considerations need to be addressed:
Are there any additional fees or closing costs associated with each financing alternative? For example, bonds require extensive (and expensive) legal opinions,
insurance, etc. For public sector organizations, tax-exempt lease-purchase agreements have few additional costs, but the interest rate may appear to be a little
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATOR
Instructions
higher.
Alternative financing may be immediately available. Floating a bond typically is a slow process.
In addition, public sector General Obligation bonds are considered debt (a capital budget event) and typically require voter approval. Some alternative financing
choices may be treated as non-capital budget events (i.e., tax-exempt lease-purchase agreements and performance contracts). Asking the voters to approve any
expenditure (including profitable ones) may add both real and political costs to the decision.
Opportunity Costs. By definition, delays in installing energy efficiency projects mean that the utility bills are higher than need be. Once paid to the utility, these
dollars, which could be used to pay for the financing costs, are lost forever.
The question becomes: At what point is paying a higher interest rate a better financial decision than waiting for a lower-cost financing? The Interest Rates
worksheet helps quantify this question by factoring in the energy opportunity costs.
Readily available financing means that the project can be installed immediately. The longer you wait, the more energy efficiency dollars are being lost. Holding
out for a lower interest rate often proves to be a more expensive decision than financing immediately at a higher rate.
Data Points
The following data points are pulled forward from earlier worksheets:
Interest rate of immediate financing (CELL G4), Cost of the equipment (CELL G6), Simple payback (CELLS G7 and G8), Potential annual savings (CELL G9),
Term of the financing (CELL G10)
These amounts can be overwritten.
Entering Data
Enter the Interest rate of the lower financing in CELL G5 (lower than the number entered in CELL G4.).
The "Lower rate interest savings" (CELL G11) calculates the present value benefit of entering into one interest rate financing versus another. Assuming equal
borrowing terms and starting dates, it computes how much money the lower interest rate financing will save over the higher interest rate. Because the energy
opportunity losses will accrue every month the installation is delayed, a "Break-Even Point" can be calculated by dividing the present value benefit of the lower
interest rate by the dollars lost every month the installation is delayed. The Break-Even Point (CELL G12) is expressed in months and confirms how long one can
wait before the lower interest rate costs more in real dollars. Once past the break-even point, the lower interest rate becomes the more expensive alternative.
Note the cost of waiting for one year (CELL M17) and compare this to the original project cost (CELL G6). These opportunity losses may represent a substantial
percentage of the project cost (CELL G14).
Section 5 -- Summary Tab
This calculator automatically prepares a report containing all the salient spreadsheet data. Click the "Print" button to print a copy of this report.
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInstructions
IMPORTANT NOTICE: The macros imbedded in this spreadsheet must be enabled to use this calculator. To enable the macros using Microsoft Excel 2000, 2002,
or 2003, please click on Tools > Macro > Security Level and select the "medium" (recommended) or "low" security level (not recommended as this "low" macro
security option enables macros without giving you the option to enable/disable the macros). If you are using Microsoft Excel 2007, click Developer > Macros and
select Disable all macros with notification option. Note that you will need to close all Excel applications after enabling the macros and reopen this worksheet.
You must enable macros if and when prompted by the program upon opening. CAUTION: Macros in other spreadsheets may carry harmful programming codes.
Do not enable macros from sources you do not trust.
This spreadsheet is designed to work with Microsoft Excel 97 or later versions for Windows OS. It may not work properly with earlier versions. It is best viewed
with 1024x768 pixels or higher resolution.
DISCLAIMER: ENERGY STAR does not guarantee that your project will generate the results presented herein. An investment grade audit performed by a
qualified engineering organization is required to determine the actual size of your savings opportunity.
162998982.xls.ms_office/InstructionsENERGY STAR does not guarantee that
your project will generate the results presented herein. See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORData Entry
Name
Select type of analysis
User Generated Categories SF
Annual energy
costs ($) - all fueltypes $/SF Savings target (%)
Potential annualsavings
Enter Category Name Here 0 $0 $0.00 0.00 $0
Enter Category Name Here 0 $0 $0.00 0.00 $0
Total SF
Total energycosts ($) - all fuel
types $/SFWeighted savings
target (%)Total potential
annual savings ($)
0 $0 $0.00 0.00% $0
ENERGY STAR does not guarantee that your project will generate the results presented herein. An investment grade audit performed by a qualifiedengineering organization is required to determine the actual size of your savings opportunity.
User Generated Categories - DATA ENTRY TABLE
Example organization name here
User Generated Categories
Values
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORInvestment Values
Enter Category NameHere
Enter Category NameHere
$0 $0 $0 $0 $0
$0 $0 $0 $0 $0
%
Year(s)
%
Year(s)
Month(s)
$0
$0.000
0
0Simple Payback
Consider bterm proje
Additional funds such as rebates, etc. (if available)
What Can $0,000 of Annual Savings Buy?
Assuming an interest rate of
0.0
0.00
0
Potential annual savings
Annual energy costs
Potential Annual Savings = Cash Flow Opportunity
INVESTMENT O
without increasing today's capital
$0
Assuming a term of
Savings used to pay energy/retrofit investments
Taken from operating funds, these savings could finance
energy/retrofit projects equal to
$0Project Cost
162998982.xls.ms_office/Investment Values
As the numbers that you will use in the calculator are your own estimates,
ENERGY STAR does not guarantee that your project will generate the results presented herein.
See full disclaimer.
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORCash Flow Projection
0 $
0 years
0 month(s)
0.00 %
0 years
0 years
0.00 %
0.00 %
0.00 %
0.00 %
Year Savings
Annual Cash
Flow Cumulative Cash Flow Savings Project Cost
Annual Cash
Flow Cumula
1 $0 $0 $0 $0 $0 $0
$0Net Present Value o
(Waiting for Cash)
Net Present Value of Option A
(Fast Track Financing)$0
These cash flow calculations are on a pretax basis.For purposes of this calculation, all cash f lows are being discounted at the interest rate indicated in cell G7 - financing paid monthly in arrears.
Estimated energy savings in year 1
Estimated energy cost change in year 2
Annual change in energy costs after year 2
Project Cost
including financing
Option B (Waiting for Cash)
$0
Option A (Fast Track Financing)
Project cost increase due to postponement
Interest rate
Year(s) postponed
COST OF DELAY and CASH FLOW
Project cost
Simple payback
Financing term
$0
$0
$0
$1
$1
$1
1
Cumulative Cash Flow Impact Comparison
Option A Option B Year
162998982.xls.ms_office/Cash Flow
As the numbers that you will use in the calculator are your own estimates,
ENERGY STAR does not guarantee that your project will generate the results presented herein.
See full disclaimer.
Print
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORCost of Delay
0.00 % Month
0.00 % $0
$0 1 $0 $0 $0
0 year(s) 2 $0 $0 $0
0 month(s) 3 $0 $0 $0
$0 4 $0 $0 $0
0 year(s) 5 $0 $0 $0
$0 6 $0 $0 $0
$0 /month 7 $0 $0 $0
0.0 month(s) 8 $0 $0 $0
9 $0 $0 $0
10 $0 $0 $0
11 $0 $0 $0
12 $0 $0 $0
Important Notice
Amount lost in utility bills
Lower interest rate savings*
Break-Even Point
*Lower Interest Rate Savings number is calculated by taking the NPV of the differencebetween the two monthly payments (immediate versus lower financing rates),discounted at the lower interest rate.
Term of financing
Simple payback
Amount lost inmonthly utility
bills
Lower Interestrate savings
balance at end ofmonth
Interest rate of higher financing
Lower Interestrate savingsbalance at
beginning ofmonth
COST OF DELAY - Comparative Interest Rate Analysis
Potential annual savings
Interest rate of a lower financing
Cost of the equipment
162998982.xls.ms_office/Interest Rates
As the numbers that you will use in the calculator are your own estimates,
ENERGY STAR does not guarantee that your project will generate the results presented herein.
See full disclaimer.
Printed on 8/8/2013
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ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORSummary of Results
Name:
Selected Scenario:
SF
Annual energycosts ($) - all
fuel types $/SFSavings target
(%)Potential annual
savings
0 $0 $0.00 0.0 $0
0 $0 $0.00 0.0 $0
0 $0 $0.00 0.0 $0
Total SF
Total energycosts ($) - all
fuel types $/SF
Weightedsavings target
(%)
Total potentialannual savings
($)
Total $0 0.00% $0
0.0%
0.0%
0.0%
0.0%
CASH FLOW OPPORTUNITY CALCULATORVersion 2.0 - 2010 - BETA VERSION
1. How much energy efficiency equipment can be purchased?
Installing the equipment today means that the savings begin to accrue immediately. As long as the financing costs are lower than the energy savings,positive cash flow will be created.
When funds are not readily available, a frequently asked question is whether the energy saving project should be installed immediately and financed (pay-as-we-use philosophy), or if would it be a better decision to wait until the funds become available in a future budget (pay-as-we-go philosophy). Naturally,if we wait until money is budgeted, interest payments can be avoided altogether, but we lose the savings during this waiting period. To evaluate this decision,we use a discounted net-present-value analysis of the cash flows resulting from these two decision points using the financing terms and interest rate statedabove, along with the following assumptions:
SUMMARY OF FINANCIAL CALCULATIONS: User Generated Categories
User Generated Categories
3. Is money being lost by waiting for a lower interest rate?
Example organization name here
1. How much new energy efficiency equipment can be purchased from the anticipated savings?
This information has been generated by an Excel
spreadsheet developed by ENERGY STAR
called the Cash Flow Opportunity Calculator. The purposeof the calculator is to It helps address three critical questions about installing energy efficiency projects:
Our estimates indicate that, by using 0% of estimated savings and assuming financing costs of 0% (interest) over 0 years, the energy dollars saved can payfor: $0,000 worth of equipment, with a simple payback of 0 years and 0 month(s). Note that these funds are from existing operating (utility) budgets and notfrom the capital budget.
Redirecting funds from the existing utility budget by the Savings Target number, will free up about $0,000 per year, which then can be used to finance theenergy efficiency projects.
2. Should this equipment purchase be financed now or is it better to wait and use cash from a future budget?
This section reflects the cost per square foot by building category, as follows:
0
0
0
0
0
2. Finance now or wait to include in a future budget?
(b) Energy costs will increase next year by:
(c) Energy costs will increase an average thereafter and throughout the financing period by:
(d) The project will capture the first year energy savings due to estimated construction delays by:
(a) The project costs will increase due to increased labor and material costs by:
162998982.xls.ms_office/Summary
As the numbers that you will use in the calculator are your own estimates,
ENERGY STAR does not guarantee that your project will generate the results presented herein.
See full disclaimer.
Printed on 8/8/2013 5:28 AM
Page 15 of 16
http://www.energystar.gov/index.cfm? -
8/22/2019 Cfo Calculator
16/16
ENERGY STAR CASH FLOW OPPORTUNITY CALCULATORSummary of Results
The cash flows when financing the project are estimated as follows:
Savings
1 $0 $0 $0 $0
$0
$0
Important Notice:
When comparing financing options, the speed with which the funds become available has a direct impact on the cash flows of the project. Naturally, thelonger it takes to access the funding, the more opportunity losses (unnecessary payments to the utility companies) will be incurred.
This calculation quantifies the financial benefit of the lower interest rate in Present Value dollars and then divides this benefit by the monthly opportunitylosses. The result is the number of months one can wait before the lower interest rate costs more real, Present Value dollars (the Break-Even Point).Once you pass the break-even point, the lower interest rate option becomes the more expensive transaction.
The results show the following:
If the installation is deferred for 0 year(s) (Option B), the net present value of the project after 0 years is:
Please send any comments to Katy Hatcher, ENERGY STAR National Manager [email protected].
For example, we are offered a 0% financing, which is immediately available. If we wait, we may be able to obtain financing at 0%.
This graph reflects the cumulative cash flow impactof financing the project now (Option A), versuswaiting until the funding is available in a futurebudget (Option B).
If the project is financed immediately (Option A), the net present value of the project after 0 years is:
Project Cost including financing
The net present value benefit of this lower rate (calculation is based on the obtaining funding for either financing on the same date) would be equal toapproximately $0,000. Because our project has a simple payback of 0 years and 0 months, we can wait no longer than 0.0 months, before the lower interestrate financing costs more dollars (in other words, the higher interest rate financing provides more cash!).
3. Waiting for a better interest rate
Annual Cash Flow Cumulative Cash Flow
This spreadsheet is a first step in estimating your energy efficiency opportunity and will help you determine whether or not pursuing these savings is a goodbusiness decision. It is an estimator and is not intended to provide exact, to the penny calculations. Our algorithms have been tested and will generateaccurate estimates, as long as the data entered are accurate. An investment grade audit done by a qualified engineering company will be required todetermine the actual size of your opportunity. The cost of this audit can normally be included in the financing and recovered through the savings. Higherlevel audits may be provided by qualified Service and Product Providers, or in some cases, your state energy office.
Energy efficiency projects can help prove the statement that time is money."
$0
$0
$0
$1
$1
$1
1
Cumulative Cash Flow Impact Comparison
Option A Option B Year
Year
As the numbers that you will use in the calculator are your own estimates,
mailto:[email protected]:[email protected]