2. Related concepts
Cost Behavior.
The 3 E’s Model.
Normal vs. Abnormal Consumption.
Cost Driver.
Activity Based Costing Theory.
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3. Cost Behavior
Costs Based on Level of Production:
Fixed costs: do not change within the relevant
range of production
Variable costs: are those that are incurred only
when product is made.
Mixed costs: these are costs that have both a fixed
and variable component. ( electricity cost )
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4. The 3E’s Model
Effectiveness: has to do with the actual accomplishment of goals.
Efficiency : is the attempt to fulfill the objectives of the company
while using the least amount of inputs.
Economy: is measured by looking at the cost of the resources
consumed and the value of the output delivered.
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5. Which is most important
Effectiveness or Efficiency?
If a company is Efficient but does not
accomplish what is needed
then the efforts and resources used were
wasted.
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6. Normal vs. Abnormal Consumption
Normal consumption is the level and
amount of consumption that normally
occurs .
Abnormal consumption is any
consumption in excess of this normal
expected amount of consumption.
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7. Normal Abnormal Consumption
Consumption Consumption
Non Controllable Controllable
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8. Cost Drivers and ABC Theory
Cost Drivers: Is the factor that influences the amount of the
resources that will be consumed by a particular activity.
Activity Based Costing theory
Activity-based costing (ABC) is a special costing model that identifies
activities in an organization and assigns the cost of each activity with
resources to all products and services according to the actual
consumption by each
10/2/2012 The Benefits of Energy Efficiency 8
9. Activity Based Costing Steps
1. Identifies the causal relationship between the incurrence
of cost and activities.
2. Determines the driver of activities.
3. Establishes cost pools related to individual drivers.
4. Develops costing rates.
5. Applies cost to product on the basis of resources
consumed (drivers).
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10. The Energy Pyramid
Renewable Energy
Energy Efficiency
Energy Conservation
Energy Analysis
10/2/2012 The Benefits of Energy Efficiency 10
11. A. Energy conservation : refers to efforts made to reduce
energy consumption. Energy conservation can be achieved
through increased efficient energy use, in conjunction with
decreased energy consumption and/or reduced consumption
from conventional energy sources.
B. Efficient energy use: sometimes simply called energy
efficiency, is the goal of efforts to reduce the amount of
energy required to provide products and services.
C. Renewable energy: is energy which comes from natural
resources such as sunlight, wind, rain .
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12. Analysis of Electricity Consumption - If Efficiency Rate
has been applied
MEnA Regional Offices Electrical Consumption from Jan. 2011 to June 2012
Bethlehem Hebron Jenin Nablus
Total Consumption Cost (NIS) 3577 7621 5564 2336
Average Consumption Cost 210 448 327 137
Target Reduction Percentage
Target Cost Saving (NIS) 756 2286 1669 701
Target Quantity Saving (KW/h) 1260 3811 2782 1168
Total Consumption 9021 KWH
10/2/2012 The Benefits of Energy Efficiency 12
13. Trend Analysis for Electricity Consumption
Date Cost (NIS) KW Note
11-Jan 5571 9285 Ramallah Office Electric Service01/2011
11-Feb 3501 5835 Ramallah Office Electric Service02/2011
11-Mar 4308 7181 Ramallah Office Electric Service03/2011
11-Apr 2972 4953 Ramallah Office Electric Service04/2011
11-May 2341 3902 Ramallah Office Electric Service05/2011
11-Jun 1662 2770 Ramallah Office Electric Service06/2011
11-Jul 1719 2865 Ramallah Office Electric Service07/2011
11-Aug 1642 2737 Ramallah Office Electric Service08/2011
11-Sep 2204 3673 Ramallah Office Electric Service09/2011
11-Oct 1847 3078 Ramallah Office Electric Service10/2011
11-Nov 3978 6630 Ramallah Office Electric Service11/2011
11-Dec 4581 7635 Ramallah Office Electric Service12/2011
12-Jan 7039 11732 Ramallah Office Electric Service01/2012
12-Feb 5750 9584 Ramallah Office Electric Service02/2012
12-Mar 5706 9510 Ramallah Office Electric Service03/2012
12-Apr 2916 4860 Ramallah Office Electric Service 04/2012
12-May 1988 3314 Ramallah Office Electric Service05/2012
10/2/2012 The Benefits of Energy Efficiency 13
14. Target Saving From Historical Data - If Efficiency Rate Has
Been Applied
Cost (NIS) Consumption KWH
Total Consumption Cost (NIS) 59726
Average Consumption Cost 3513 KW price= 0.6 NIS
Target Reduction Percentage
Monthly Value 1054 NIS 1757 KWH
Period Value 12648 NIS 21084 KWH
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15. Historical Data for Electricity Consumption
14000
12000
10000
8000
6000
4000
2000
0
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16. Historical Data for Electricity Consumption
16000
14000
12000
10000
8000
6000
4000
2000
0
10/2/2012 The Benefits of Energy Efficiency 16
17. Trend Analysis of Electricity Consumption Data
Month Con. Cost Con.2011 before Jun Average
11-Jun 2784
11-Jul 2841
11-Aug 2764
11-Sep 3326
11-Oct 2969
11-Nov 5100
11-Dec 5703
12-Jan 8161 6693 7427
12-Feb 6872 4623 5748
12-Mar 6828 5430 6129
12-Apr 4038 4094 4066
12-May 3110 3463 3287
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
10/2/2012 The Benefits of Energy Efficiency 17
18. Time Trend of Electricity Consumption Data after Modification
Month Horizontal Average Vertical Average Factor
11-Jun 2784 4541 0.61
11-Jul 2841 4541 0.63
11-Aug 2764 4541 0.61
11-Sep 3326 4541 0.73
11-Oct 2969 4541 0.65
11-Nov 5100 4541 1.12
11-Dec 5703 4541 1.26
12-Jan 8161 4541 1.8
12-Feb 6872 4541 1.51
12-Mar 6828 4541 1.5
12-Apr 4038 4541 0.89
12-May 3110 4541 0.68
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The Benefits of Energy Efficiency
19. Forecasting for Electricity Cost
Month weighted average Factor Estimated Cost
12-Jun 4541 0.61 2770
12-Jul 4541 0.63 2860
12-Aug 4541 0.61 2770
12-Sep 4541 0.73 3315
12-Oct 4541 0.65 2952
12-Nov 4541 1.12 5086
12-Dec 4541 1.26 5722
Total Estimated Cost 25475 (NIS)
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20. Targeted Value from Estimated Data
Cost (NIS) Consumption KWH
Total Consumption Cost (NIS) 25475
Average Consumption 3639 KW price= 0.6 NIS
When Target Reduction
30%
Percentage is Applied
Monthly Value 1092 NIS 1820 KWH
Period Value 7643 NIS 12738 KWH
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21. Estimated Cost Chart
5722
5086
3315
2860 2952
2770 2770
4005
3560
2321
1939 2002 1939 2066
1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec
Estimated Cost - with reduction factor Estimated Cost - without reduction factor
10/2/2012 The Benefits of Energy Efficiency 21
22. Reduction of Energy Consumption and Emissions
Fuel Units Kg CO2 per unit
1
Grid electricity KWH 0.5246
Electricity Efficiency Benefits in the Ministry of Environment Affairs
12738 6682
WWW.CARBONTRUST.CO.UK
HTTP://WWW.CARBONTRUST.COM/MEDIA/18223/CTL153_CONVERSION_FACTORS.PDF
10/2/2012 The Benefits of Energy Efficiency 22
23. The budget analysis and concept
Cost and Emission Variance Analysis:
Actual
Cost
Budget Cost < Zero (Favorable)
Actual
Cost
Budget Cost > Zero (Un Favorable)
10/2/2012 The Benefits of Energy Efficiency 23
24. Positioning
Positioning: is the act of designing a company’s offering
and image to occupy a distinctive place in the minds of
the target market.
The goal : is to locate the brand in the minds of
consumers to maximize the potential benefit to the
firm.
How to achieve it: Everyone in the organization should
understand the brand positioning and use it as context
for making decisions.
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25. 10/2/2012 The Benefits of Energy Efficiency 25
