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Download EBaR Excel
Companion - Check out EBar Analysis. The free Excel
Companion is a learning tool that accompanies the book. The Companion also
provides an intuitive feeling for the Monte Carlo process and the way in
which individual factors impact investment risk.
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The EBaR analysis procedures described in the
Energy Analysis area of this Web site and in more
detail in Energy Budgets at Risk: A Risk Management Approach to Energy
Purchase and Efficiency Choices (John Wiley, March 2008) can be conducted
in two ways.
1. Commercially available Monte Carlo software (see below)
can be used with the Excel procedures described in detail in the book to
conduct EBaR analysis.
2. EBaR software available from Jackson Associates provides
risk management software specifically customized for EBaR applications.
EBaR software automates the Energy Budgets at Risk process. Jackson
Associates develops weather data, historical energy prices and other information
for your facility, and conducts supporting statistical analysis described
in Energy Budgets at Risk (EBaR): A Risk Management Approach to Energy
Purchase and Efficiency Choices.
Users can immediately apply EBaR software to:
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Evaluate current energy budget risk associated with volatile energy
prices
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Conduct financial analysis of energy-efficiency projects explicitly
considering risks associated with energy prices, equipment performance, weather
and other variables
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Conduct baseline carbon emissions analysis and emissions reductions
associated with energy-efficiency projects
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Specify alternative inputs and examine the impacts on risk and
rewards
Confidently develop comprehensive financial analysis using a framework
consistent with other capital budgeting decisions used in your
organization.
Monte Carlo Analysis
The heart of the EBaR analysis process is Monte Carlo analysis. Monte
Carlo analysis is a widely used numerical computational analysis tool that
draws information from input probability distributions, applies the data
in a process, and generates an outcome distribution. Monte Carlo analysis
is an exceedingly powerful tool that is applied in virtually every field
of science, business, and social science including physics, chemistry,
transportation, medicine, sociology, psychology, economics, finance, computer
science, engineering, and many more.
Figure 1 is a simplified schematic of the EBaR Monte Carlo process.
Weather, performance and energy price are all subject to uncertainty and
represented with probability distributions. This schematic reflects three
input distributions; however, an actual EBaR analysis applies a distributional
representation for each variable subject to uncertainty.
Figure 1. Monte Carlo Analysis Schematic
A random number generator (RNG) is used to develop random draws from
the individual distributions, the inputs are processed to determine the energy
cost associated with these values of the three variables and the results
are stored in the output distribution of energy costs. The process continues
until the output distribution is completely defined.
Monte Carlo analysis is the analytical workhorse of EBaR, extracting
information from diverse input probability distributions and providing a
distribution of outputs and their probability of occurrence.
For additional information on how EBaR software can support your
energy and environmental goals, contact
Jerry Jackson
979-204-7821
e-mail
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