Frequently Asked Questions
Q: I want to calculate the life-cycle cost of an energy efficiency improvement. What energy inflation rate should I use in my calculation?
A: Life-cycle costing allows you to accurately evaluate the costs and savings of installing an energy efficiency measure. Life-cycle costing involves analysis and comparisons of up-front cost, long-term operating costs, and possible repair costs. In order to perform the calculations, it is important to account for the energy inflation rate, or the fact that the price of energy is almost certaintly going to rise. Over the past 30 years, the average energy inflation rate has been 7.5% with inflation rates of over 20% throughout the last five years. Use 10% as the energy inflation rate while doing your calculations because that is the lowest energy inflation will realistically be over the next 30 years, though we are more likely to see energy inflation rates of 15-20% for many of the next 30 year .