Energy Efficiency Initiative by Qantas Airlines

Cost Management and Analysis

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Introduction

• The electrical energy efficiency project for Qantas Airlines.

• The project is about conserving the electricity by making more use of renewable energy which is sunlight.

• Reduces Carbon emissions

Steps to Analysis

• The electricity energy consumed by offices and properties of airlines

• Initiatives that can be taken to reduce the energy consumption

• Cost of taking the initiatives (initial investment)

• Energy savings from the project over the period of time using the EBIT and (NPV of the project).

Electrical Energy consumption

• Energy consumption in lightning is calculated as follows:

Lighting benchmarks

Lighting benchmarks

Installed Power density (W/m square) 20

Hours of use of the lightning (Hours / year) 3200

Percentage utilization * 85%

KWH/m square/yr 54

• Energy consumption for the fan and Air conditions has the following benchmarks:

Air Handling benchmarks

Amount of air Handled (liters/ second per meter square

(l/m square) 4

Specific fan Power (SFP) in watts per liter/second (w

per l/s) 3

Annual hours run 3500

Fan KWH/m square/yr 42

FPC KWH/m square/yr 60

• Total Consumption of electricity per year:

Total consumption of electricity

Area in m etres square 3000

Lighting consumtion (KWH/m

square/yr) 54

Air handling (KWH/m

square/yr) 102

Total KWH per year 468000

Average Cost per unit of Electricity in NSW $0.30

per

KWH

Total cost of electricity $140,400.00

Cost of Project

• a. Initiatives and practices:

Total savings of electricity

Area in meters square 3000

Lighting saving (KWH/m square/yr) 27

Air handling saving (KWH/m square/yr) 30

Total KWH per year 171000

• b. Construct windows for free natural light entrance:

Savings in 25% of the lightning requirements

• C. Using solar shading devices:

Savings in 15% of the cooling requirements

Total savings of electricity units per year238500 KWH

Cost of electricity saved $71,550.00

NPV of the Project

Year

0 1 2 3 4 5

cash Flows:

Initial cost

(investment) ($67,450)

Savings in

electricity

(EBIT) $71,550.00 $78,705.00 $86,575.50 $95,233.05 $104,756.36

Depreciation $13,490 $13,490 $13,490 $13,490 $13,490

Total cost

savings $85,040.00 $92,195.00 $100,065.50 $108,723.05 $118,246.36

Tax on savings

@30% $25,512.00 $27,658.50 $30,019.65 $32,616.92 $35,473.91

Savings after

tax $59,528.00 $64,536.50 $70,045.85 $76,106.14 $82,772.45

Net cash flows ($67,450) $59,528.00 $64,536.50 $70,045.85 $76,106.14 $82,772.45

NPV @7.7% $213,219.67

Recommendation

The Project must be accepted because:

• NPV is More than zero.

• Reduces carbon emission and green house effect

• Enhances sustainability of environment and hence the profitability and sustainability of the organization.