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    Legrand - Lightening Their (Electricity) Load, Teaching Note Spreadsheet Calculation - B5850-XLS-EnG-3

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    Soumya Ranjan Mishra
    This document presents a pro forma model for a lighting projection that analyzes the costs and savings of upgrading lighting fixtures. It calculates that the total net lighting investment after incentives is $95,273. The annual energy avoided by the new system is 2,014,937 kWh. The net present value of the project at a 10% discount rate is $334,057, and the internal rate of return is 6% over 5 years.

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    Legrand - Lightening Their (Electricity) Load, Teaching Note Spreadsheet Calculation - B5850-XLS-EnG-3

    Uploaded by

    Soumya Ranjan Mishra
    971 views10 pages
    This document presents a pro forma model for a lighting projection that analyzes the costs and savings of upgrading lighting fixtures. It calculates that the total net lighting investment after incentives is $95,273. The annual energy avoided by the new system is 2,014,937 kWh. The net present value of the project at a 10% discount rate is $334,057, and the internal rate of return is 6% over 5 years.

    Original Description:

    Legrand case solution

    Original Title

    Legrand- Lightening Their (Electricity) Load, Teaching Note Spreadsheet Calculation - B5850-XLS-EnG-3

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    This document presents a pro forma model for a lighting projection that analyzes the costs and savings of upgrading lighting fixtures. It calculates that the total net lighting investment after incentives is $95,273. The annual energy avoided by the new system is 2,014,937 kWh. The net present value of the project at a 10% discount rate is $334,057, and the internal rate of return is 6% over 5 years.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    971 views10 pages

    Legrand - Lightening Their (Electricity) Load, Teaching Note Spreadsheet Calculation - B5850-XLS-EnG-3

    Uploaded by

    Soumya Ranjan Mishra
    This document presents a pro forma model for a lighting projection that analyzes the costs and savings of upgrading lighting fixtures. It calculates that the total net lighting investment after incentives is $95,273. The annual energy avoided by the new system is 2,014,937 kWh. The net present value of the project at a 10% discount rate is $334,057, and the internal rate of return is 6% over 5 years.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 10
    At a glance
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    The pro forma analysis evaluates the financial performance of upgrading a warehouse lighting system to more efficient fixtures. It calculates costs, energy savings, cash flows, and financial metrics like NPV and IRR.

    The total net lighting investment after incentives is $95,273, as calculated in cells B11, B13, B14, B17 and B18.

    The annual energy avoided with the new lighting system is 2,014,937 kWh per year, as calculated in cells G12, G13, G14, and G17 (old system) and cells H12, H13, H14 and H17 (new system).

    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

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