Electricity Economics: Calculating Profitability

[jas1991]

Hi,
Here's my problem statement, followed by some calculations I consider and then from som questions I'll like to be answered.

Homework Statement

The household assumes that 60% of its consumption of electricity (both energy and power) is used for heating. Calculate the relative profitability of the following three energy conservation measures:

a) Post-insulation
Gives a 20% reduction in both energy and power requirements
Cost (annuity) = NOK 2,500/year.

b) Heat pump
Offers a 50% reduction in energy requirements, but no reduction in power requirements.
Cost = NOK 2,000/year

c) Power control
Offers a 30% reduction in power requirements, but no reduction in energy requirements.
Cost = NOK 2,100/year.

Apart from this I have other values like the energy consumption ( 39040 KWh), the tariff rate from energy ( 16,4 øre/KWh) and the consumption tax (11,21 øre/KWh).

Then, at first I decided to applu the 60 % to this energy consumption and within the different cases I apply their own percentage:

a) 39040·0,6·0,2=4684,8 KWh
b) 39040·0,6·0,5=11712 KWh
c) 39040·0,6·0,3= 7027,2 KWh

But for the profitability calculation I have a "small" idea of how to calculate it:

Profitability = Energy Consumption · E ( Energy+ Power Requirements) - Initial Cost.

It could be applied for the first case, but I'm not sure if for the others should be the same, because there's one which is reduced and then we might applicate a different tax for reduction. I hope to be helped solving this questions.

Thanks in advance!

 

[Nino MMP]

Questions:1. How should I calculate the relative profitability of the energy conservation measures?2. Is there a different tax for reduction which should be applied in this case?