The main difference between providing a simple payback figure (typically just the capital cost divided by the annual energy cost savings) and providing NPV, ROI or IRR is that the consultant includes cash flows in the analysis. A simple payback calculation generally underestimates the true economic value of the energy efficiency investment, as it ignores other important benefits (rebates, depreciation expenses, maintenance savings, etc.). LCCA enables decision-makers to fully understand the economic justification for an integrated sustainable design.
The theoretical minimum energy use is the lowest technically possible (using today’s technology) energy use for the building, before investigating renewable energy opportunities.
Kendra Tupper and Caroline Fluhrer, ENERGY MODELING AT EACH DESIGN PHASE: STRATEGIES TO MINIMIZE DESIGN ENERGY USE