Economic analysis of energy upgrades based on tolerable capital cost

To evaluate the economic feasibility of energy efficiency or renewable energy upgrades, a variety of tests are used such as payback period, cost-benefit ratio, and return on investment. All of these tests require an estimate of the capital cost of the upgrade. However, it is not always possible to reliably estimate the capital cost of a potential energy upgrade. To deal with such situations, an alternative approach is proposed that involves the calculation of the tolerable capital cost (TCC) of the upgrade. The use of the TCC approach to evaluate economic feasibility is demonstrated with a case study involving photovoltaic panel installations in Canadian houses.

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