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Pro Forma Model based on Lighting Projection

1. Taxes are applied to avoided costs


2. Annual energy increase is assumed to be 3 percent (see cell M12)
3. Federal marginal tax rates of 35% are assumed (cell B21)

Assumptions
Lighting Investment (Gross)
Duke Rebate per Fixture
x # of Fixtures

=Duke Rebate

Min of Allowable and Investment


x Federal Tax Rate

= 2005 Energy Policy Act Deduction

= Lighting Investment (Net Incentives)

Pro Forma Analysis

Standard Energy Use

$50.00
938
$46,900

Hours per Day (6 am - 12 am)


x Days Per Week (Mon-Sat)
x Weeks per Year
Hours of Operation per Year

330,000
$0.60
$198,000
$198,000
35%
$69,300

Area of warehouse in sqft


x Per sqft deduction
= Allowable Deduction

Lighting Investment (Gross)


+ Duke Rebate
+ 2005 Energy Policy Act Deduction

$211,473

$
$
$

Watts per unit


/Watts per kW
x Units
= Kilowatts per hour
Hours of Operation
kW per hour
= kW consumed

$211,473
(46,900)
(69,300)
95,273 (A)

Year 0

Energy Avoided, yr. 1 (kWh/year)

Year 1

Year 2

Year 3

Investment
Upgrade Cost Net of Incentives (A)
running costs
Avoided Costs
Avoided energy costs (B * C)
Avoided cost of carbon credits
Tax on avoided cost
Total Avoided Costs

$95,273
150000

$0
$0
$0
$0

Cash Flow
Cumulative cash flow

($245,273)
($245,273)

Annual Discount Rate


NPV
Net Price per Ton

10%
$334,057
($9.21)

IRR (no residual value)


5 year
7 year
10 year
20 year

Tons of carbon avoided


$ per ton of carbon pre incentive
Avoided cost of carbon credits

0
0
0
31361.894928 31361.89493 31361.89493

$120,896
$10,574
($46,014)
$85,455

$54,094
($191,179)

$124,523
$10,574
($47,284)
$87,813

$56,451
($134,729)

$128,259
$10,574
($48,591)
$90,241

$58,879
($75,849)

6%
22%
25%
26%

1,813 Tons
5.8307 $/ ton
10573.65 $/ year

Instruction for students:


1. Overall, determine and fill-in the values for each of the shaded cells in light blue
2. First, determine the total net lighting investment (item A) or net capital expenditures for this project by completing cells B11, B13, B14, B17 an

3. Second, determine the energy avoided in electrical use between the old system and the new system by completing cells G12, G13, G14, and G1
4. Third, determine the savings from energy avoidance in kilowatts per hour by completing cell M11(item B) and inserting the annual cost avoidanc
5. Then use the Excel spreadsheet to a) calculate the NPV at 10% and b) the IRR at 5 year, 7 year, 10 year and 20 year intervals.

Old System New System

18
6
52

9
6
52

5,616

2,808

456
1,000

147
1,000

938
428

938
138

5,616
428
2,402,120

2,808
138
387,184

am - 12 am)

d, yr. 1 (kWh/year)

Year 4

Carbon per kWh from grid (pounds)


/ pounds per ton
x Energy Avoided per Year (kWh/year)
x Years of Operation
= Tons of Carbon Avoided/ 20 years
Lighting Investment (Gross)
/ Tons of Carbon Avoided
=$ per ton of Carbon Pre Incentive
Lighting Investment (Net Incentives)
/ Tons of Carbon Avoided
=$ per ton of Carbon Post Incentive

2,014,937

Year 5

Year 6

$0.06 (B)
3.0%

Year 1 avoided energy cost/kWh


Annual energy cost increase

Year 7

Year 8

Year 9

Year 10

1.8
2,000
2,014,937 (C)

20
36,269

1813.442904

$211,473
36,269

$5.83
$95,273
36,269

$2.63

Year 11

Year 12

0
0
0
0
0
0
0
0
0
31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493

$132,107
$10,574
($49,938)

$136,070
$10,574
($51,325)

$140,152
$10,574
($52,754)

$144,356
$10,574
($54,226)

$148,687
$10,574
($55,741)

$153,148
$10,574
($57,302)

$157,742
$10,574
($58,911)

$162,474
$10,574
($60,567)

$167,349
$10,574
($62,273)

$92,742

$95,318

$97,972

$100,705

$103,519

$106,419

$109,405

$112,481

$115,649

$61,380
($14,469)

$63,956
$49,487

$66,610
$116,097

$69,343
$185,439

$72,158
$257,597

$75,057
$332,654

$78,043
$410,697

$81,119
$491,817

$84,288
$576,104

lls B11, B13, B14, B17 and B18. Note that the rebates help reduce the total lighting investment.

lls G12, G13, G14, and G17 (old system) and cells H12, H13, H14 and H17 (old system). This will calculate the annual avoided cost in total kilowatts /year (it
g the annual cost avoidance in kilowatts/ year (item C) into cell M17

51133

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

0
0
0
0
0
0
0
0
31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493 31361.89493

$172,369
$10,574
($64,030)

$177,540
$10,574
($65,840)

$182,866
$10,574
($67,704)

$188,352
$10,574
($69,624)

$194,003
$10,574
($71,602)

$199,823
$10,574
($73,639)

$205,818
$10,574
($75,737)

$211,992
$10,574
($77,898)

$118,913

$122,274

$125,736

$129,302

$132,975

$136,758

$140,654

$144,668

$87,551
$663,655

$90,912
$754,567

$94,374
$848,941

$97,940
$946,881

$101,613
$1,048,494

$105,396
$1,153,890

$109,292
$1,263,183

$113,306
$1,376,488

n total kilowatts /year (item C)

0.081