Rajesh Gupta 6/23/2014

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Dear Taylor,

In the web help (http://energycommunity.org/WebHelpPro/Demand/Demand_Cost_Analysis.htm) it is written that “The CSE value you enter should represent the annual average cost per unit of energy saved”. Does it mean entering the value of CSE in Dollars/kWh (which is calculated outside of LEAP) in the Current account and annualize capital cost in reference and mitigation scenario? It seems to me that while calculating Capital Recovery Factor (CRF) for CSE (outside of LEAP), annualization is already done as we use discount rate and amortize the capital cost. Therefore we may not need to annualize the capital cost inside LEAP, is that correct? I’m bit confused here about how to annualize a capital cost in CSE method? Thanks for considering to answer this question.

Best regards,
Rajesh

Taylor Binnington 6/23/2014
 

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Rajesh,

LEAP does not perform any kind of annualization on the costs of saved energy that you enter under Demand Costs. So, if you want the cost of saved energy to be based on the annual payments to purchase a new piece of equipment, then you should use the AnnualizedCost() function ( http://energycommunity.org/WebHelpPro/Expressions/AnnualizedCost.htm ) to calculate the annual cost for that piece of equiptment (I don't see any reason to perform this calculation outside of LEAP).

Have a quick read of this help page, which explains the CSE method further:

http://energycommunity.org/WebHelpPro/Demand/Demand_Cost_Analysis.htm

Best,

Taylor

Rajesh Gupta 6/24/2014
 

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Thanks Taylor. I think it’d be better if I provide a context for what I want to understand. For an example, I’m quoting the Freedonia exercise 4.3.3 in the LEAP training material (page 51) where the application of CSE is given: They have found the CSE value of $0.05/kWh for ‘Other Industry’ sector. At this moment, I’d like to understand if it is possible to come up with this CSE number in LEAP after having completed the demand analysis. I do have cost related data necessary for this analysis. I appreciate for your patience in answering. Thanks and regards, Rajesh

Taylor Binnington 6/24/2014
 

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Hi Rajesh,

Technically, it would be possible to calculate this cost using LEAP, after conducting a demand analysis where explicit costs have been entered for each technology, in each scenario. You would then be able to view the results for the cumulative, *real* cost (in the last scenario year) for the demand branch at which you have entered your cost information, and the cumulative energy demand (also for the last scenario year) at this same branch. Comparing these numbers to their counterparts for whichever scenario you designate as 'reference' would allow you to calculate the incremental cost of saved energy.

However, I'm not sure why you would want to do this (hence I haven't been more explicit in my instructions), since in order to calculate this figure you already would need to have entered all of the relevant data. The alternative to this data-intensive approach is to enter the average cost incurred in each year per unit of saved energy (the CSE), as you have done in Exercise 4.3.3.

Hope this helps,

Taylor