CEP CEP Financial Analysis & Energy Budgeting

Question 1

Which financial metric measures the ratio of annual energy cost savings to the total investment required for an energy project?

Accepted Answer

Return on investment (ROI)

Answer

Simple payback period

Answer

Net present value (NPV)

Answer

Internal rate of return (IRR)

Question 2

In energy budgeting, what does a 'load factor' represent?

Accepted Answer

The ratio of average demand to peak demand over a period

Answer

The cost per kilowatt-hour of electricity consumed

Answer

The percentage of renewable energy in the supply mix

Answer

The transmission loss factor applied to billed energy

Question 3

Which cost component in an electricity bill is typically based on the highest 15- or 30-minute interval of demand recorded during the billing period?

Accepted Answer

Demand charge

Answer

Energy charge

Answer

Transmission charge

Answer

Fuel adjustment charge

Question 4

A company pays $0.08/kWh for energy and $12/kW for demand. If monthly usage is 500,000 kWh and peak demand is 1,200 kW, what is the total monthly bill?

Accepted Answer

$54,400

Answer

$40,000

Answer

$55,400

Answer

$60,000

Question 5

What is 'avoided cost' in the context of energy procurement financial analysis?

Accepted Answer

The cost of energy that was not purchased due to efficiency improvements

Answer

A penalty charge for exceeding contracted capacity

Answer

The hedging premium paid to lock in fixed energy prices

Answer

The cost of backup generation capacity

Question 6

Which financial instrument allows an energy buyer to lock in a fixed price for future electricity delivery while the seller assumes price risk?

Accepted Answer

Fixed-price forward contract

Answer

Energy option contract

Answer

Variable tariff agreement

Answer

Capacity market bid