Recognising and avoiding calculation errors
One may perform either a gross or net efficiency calculation using either real or nominal interest rates. This must however be determined consistently both for the expenses and for the benefit in order to avoid incorrect results! This also applies to calculations with or without VAT.
In order to recognise and avoid errors when evaluating the economic advantageous-ness of measures based on the methods of economic calculation, it is recommended to check the procedure for evaluating expenses and benefits. Among other things, this should be identical on both sides in relation to the following aspects:
- Gross or net: From the perspective of a private owner, it is always useful to in-clude VAT.
- Nominal or real values: The real interest rate is given by subtracting the inflation rate from a nominal interest rate (Example: 5% nominal interest and 2% inflation results in 3% real interest). When using discounting interest rates and energy price increase factors, either nominal or a real calculation are applicable. However, the procedure must be consistent.
- Net energy, delivered energy or primary energy: Allocation of energy costs is only possible if the consumption of delivered energy and the individual energy sources (oil, gas, wood, etc.) are known.
- Weather adjustment: For the efficiency calculation, the average climatic condi-tions for the location should be taken into account. When controlling for success of the actually realised energy savings, a weather adjustment should be carried out. The Climate Correction Factors of the German Weather Service (DWD) (only in german) allow for a conversion of the heating energy consumption for a specific period in a specific postal code area to the long-time average conditions at the reference location of Potsdam (which also represents the standard conditions for demand calculations according to EnEV).
- Costs of the saved kilowatt hour: The costs can be related to delivered or net energy. When determining the costs for the consumed kilowatt hour, the procedure must be identical. In general, a relation to delivered energy is recommended.
Accounting for and conversion of units
Incorrect handling of units may lead to serious calculation errors! Input values and conditions for the economic calculation have different units. This must absolutely be taken into account, and the units must be converted accordingly:
Kilowatt hour (kWh) versus liter (l)/cubic meter (m³): The savings of delivered energy are generally given in kilowatt hours. The energy cost account statement can be given in kilowatt hours (electricity, district heat) or in other units (gas, oil) depending on the energy source. Conversion takes place using the Energy sources table .
For natural gas, different accounting methods of the supplier (net or gross calorific value) and, if necessary, also the so-called conversion factor for conversion from cubikmeters to kilowatt hours must be taken into account in order to account for the difference in pressure and temperature of the delivered and measured gas in relation to the so-called standard conditions.
- Cent versus euro: If necessary, differences concerning the savings should be accounted for. The energy price is generally given in cents, whereas the energy cost savings are given in euros.
- Square meter or total area: If the predicted savings of delivered energy is given per square meter, this must be multiplied with the total area in order to determine the total savings.
- Areas: Area values must be differentiated; they may apply to m² of component surface, m² of living space or m² of energy reference area according to EnEV.
- Year or period under consideration: Generally, the end energy savings are giv-en per year. Depending on the method of calculation, the savings applying to the entire period under consideration may be needed.
Static or dynamic efficiency calculation
Unlike dynamic procedures, static procedures forego interest and compound interest. Dynamic procedures are more complex and are better suited for a realistic evaluation of long-term investments in the building.
The advantages of the static procedures lie in the simple operation and the relatively low need for information. Well-known procedures are, e.g., the comparable profits or the cost comparison calculation, the profitability comparison calculation, and the (static) amortization calculation. However, these procedures generally don’t provide a sufficient basis for evaluating investment decisions because they do not account for interest and compound interest effects. This is the crucial advantage of dynamic procedures compared to the static procedures. Dynamic procedures are for instance the net present value method and the annuity method.