This document defines and explains several key concepts related to energy technology project evaluation: payback period, net present value, internal rate of return, energy chain, life cycle assessment, and net energy analysis. It provides definitions and formulas for payback period, net present value, and internal rate of return. It also describes what is meant by an energy chain and gives examples. Life cycle assessment is explained as assessing environmental impacts across all stages of a product. Net energy analysis determines if the energy output of a system exceeds the energy input required from society.

1. BY
RAKESH ROUSHAN
MT/ET/10001/18
ENERGY TECHNOLOGY

2.  1. PAY BACK PERIOD
 2. NET PRESENT VALUE
 3. INTERNAL RATE OF RETURN
 4. ENERGY CHAIN
 5. LIFE CYCLE ASSESSMENT
 6. NET ENERGY ANALYSIS

3.  Pay back period is the time in which he initial
cash outflow of an investment is expected to be
recovered from the cash in flow generated by
the investment.
 It is one of the simplest investment appraisal
techniques.
 Pay back period is the time required to recover
the initial cost of investment it is the number of
it would take to get back the initial investment
made for the project.

4.  Payback period will be used to compare
projects and drive the number of years it takes
to get back to the initial investment.
 Payback period is also known as payout ad
payoff period.
 PAYBACK PERIOD =
total investment outlet/gross return per period

5.  In finance, the net present value (NPV) or net
present worth (NPW) applies to a series of cash
flows occurring at different times.
 The present value of a cash flow depends on
the interval of time between now and the cash
flow.
 It also depends on the discount rate.
 NPV accounts for the time value of money.

6.  It provides a method for evaluating and
comparing capital projects or financial
products with cash flows spread over time, as
in loans, investments, payouts from insurance
contracts plus many other applications.
 Net present value (NPV) is determined by
calculating the costs (negative cash flows) and
benefits (positive cash flows) for each period of
an investment.
 Formula-
PV= Ft/(1+d)^t
where, Ft is cost pr saving
d is discount rate

7.  The internal rate of return (IRR) is a measure of
an investment’s rate of return.
 The term internal refers to the fact that the
calculation excludes external factors, such
as inflation, the cost of capital, or
various financial risks.
 It is also called the discounted cash flow rate of
return (DCFROR).
 In the context of savings and loans, the IRR is
also called the effective interest rate.

8.  it is the discount rate at which the net present
value of future cash flows is equal to the initial
investment, and it is also the discount rate at
which the total present value of costs (negative
cash flows) equals the total.
 Uses of IRR:-
 1. Profitability of an investment
 2. Maximizing net present value
 3. Capital management
 4. Private equality

9.  The chain of the system or activities required to
ensure the supply of energy is known as
energy supply system or energy chain.
 The supply system is made up of supply sector,
the energy transformation system and the
energy consuming sector.
 The supply involves production, import, export
of fuels and change in stock levels.

10.  The transformation converts different forms of
primary energy to secondary energy for ease of
use of customers.
 Transformation, transmission and
transportation of energy involves losses.
 The final users utilises various form of energy
to meet the needs of cooling, heating, lighting
etc.

11.  Some examples of how energy can change
from one form to another. These are called
energy chains.
 When a kettle is boiled, electrical energy is
converted to heat energy.
 When a mass is dropped from a height
gravitational potential energy is converted to
kinetic energy as the mass falls and then to
sound and heat as it hits the ground.

12.  Life-cycle assessment (LCA, also known as life-
cycle analysis, eco balance, and cradle-to-grave
analysis).
 It is a technique to assess environmental
impacts associated with all the stages of a
product's life from raw material extraction
through materials processing, manufacture,
distribution, use, repair and maintenance, and
disposal or recycling.
 Designers use this process to help critique their
products.

13.  LCAs can help avoid a narrow outlook on
environmental concerns by:
 1. Compiling an inventory of relevant energy and
material inputs and environmental releases;
 2. Evaluating the potential impacts associated with
identified inputs and releases;
 3. Interpreting the results to help make a more
informed decision.
 Four main phases of life cycle assessment:
 1. Goal and scope
 2. Life cycle inventory
 3. Life cycle impact assessment
 4. Interpretation

14.  An important application of second-law
analysis is net energy analysis.
 This type of analysis is applicable only to
energy producing industries.
 its aim is to determine whether the available
work yielded to society by the system exceeds
the available work input required from the rest
of society to build, operate and maintain it, and
if so by how much.
 net energy analysis is society-oriented, not
natural-resource oriented.