Energy Star Calculator

Why You Should Be Using Energy Star’s Cash Flow Opportunity Calculator

So you’ve decided that you want to implement an energy efficiency project, whether it is lighting, heating, or retro-commissioning. The problem with these projects is, although they will save you money in the long run, they are expensive up front. In order to encourage building owners to improve their energy efficiency, Energy Star has developed a tool that allows you to calculate the costs of delaying energy projects, depending on fluctuating interest rates.

What is Energy Star’s Cash Flow Opportunity Calculator?

Energy Star’s Cash Flow Opportunity Calculator allows you to enter your current “energy spend” using your monthly utility bills, which is much simpler than other tools that require you to report kilowatt hours.

You essentially have two options for starting an energy project. Either you can (a) start the project immediately and use your future energy saving to make up for the financing costs, or you can (b) wait until more funds become available and you are able to budget the project.

However, there is more to consider here. The Cash Flow Calculator allows you to consider fluctuating interest rates, so that you can make your investment at the best time.

How Does the Calculator Work?

The Calculator is made up of six Excel worksheets that help you estimate your return on investment for a given energy project. In addition to an introduction tab and detailed instructions, the Excel worksheets include tabs for data entry, investment values, cash flow, interest rates, and a detailed summary with proposed next steps.
Essentially, the tool allows you to calculate potential savings for your project, telling you the point at which waiting for a lower interest rate will become more expensive that going forth with the project with a higher rate.

Find the Sweet Spot for When to Invest in Energy Conservation Measures

Finding the lowest interest rate is not always the optimal decision. Energy Star points out that the decision to pay a high interest rate generally goes against intuition. However, building managers need to consider opportunity costs. As cited in the directions for the Calculator,

“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 financing costs, are lost forever.”

The sweet spot for when to invest in energy efficiency projects is not always easy to find, but the Energy Star Calculator helps you make a rational decision with ease. The calculator suggests exactly when you should start, and gives you an approximation of how much money you can save.

Import Your Energy Data directly from Energy Star’s Benchmarking Report.

If Energy Star has already benchmarked your buildings, there is absolutely no reason for you to not use this tool. Energy Star allows you to import data from its Portfolio Manager, essentially programming the Calculator for you.

That being said, have no fear if your buildings have not been benchmarked. The Calculator allows you to enter the size of your building and an estimated cost per square foot, based on your utility bills. This method still yields fairly accurate results.

Now you don’t have to wait in the dark, never knowing when it’s the right time to invest in an energy project. Of course, the Calculator won’t give you the real time cost of energy rates in just a few clicks, but it is a simple and free tool. We definitely recommend it!

Note: This article has summarized the use of Energy Star’s Cash Flow Opportunity Calculator. For more information about how to use it, view the detailed instructions starting in row 104 on the Instructions tab of the Excel spreadsheet.


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