DOE-2 Reference Manual Version 2.1 - DOE2.com

The present value of the energy cost over the project's life cycle would thenbeLCC =25Ln=l25= " 1000 (1.05)nL.J 1.10n=l1000 (14. 436 )H4,436Note that without discounting (i.e., without present-valuing), the life-cyclecost would be 25 x $1000 = $25,000.In 00E-2, non-energy costs are broken down into three categories.• First cost• Operations cost• Replacement costThe first cost is the purchase price of an item, including installation.Operations cost includes expenses, such as maintenance and overhauls requiredto keep the item in working condition. The replacement cost is the capitalcost (including installation) of replacing an item at the end of its usefullife. In 00E-2, the residual value (the fraction of remaining useful lifetimes the capital cost) of the item at the end of the analysis period is notconsidered.A primary application of 00E-2 is cost-benefit analysis of energy conservationprojects (ENCOP's). In this type of analysis, a baseline buildingis first analyzed to determine its costs and energy use. The building is thenmodified to conserve energy and run through 00E-2 again. If the baselineenergy use and cost data from the first run are entered in EDL of the secondrun (using the BASELINE instruction), then the program will assess the costeffectiveness of the ENCOP.The quantities that enter the cost effectiveness analysis are thefollowing.• Investment• Incremental investment• Cost savings• Energy savings• Savings-to-investment ratio (SIR)• Energy savings to investment ratio• ~iscounted payback period.The ENCOP investment is the sum of the life-cycle first cost and replacementcost for all plant and nonplant cost items.VI.3 (Revised 5/81)