Economic Considerations [1]

An understanding of the economics involved in energy management is important in making decisions at both the engineering and management levels. An economic evaluation should be developed for every proposed energy project and/or undertaking. If the project is not beneŸcial, it should obviously not be pursued; the earlier such a project can be identiŸed, the fewer are the resources that will be wasted. Economics also plays a role in setting many state and federal energy and environmental regulations. The extent of this role varies with the type of regulation. For some types of regulations, cost is explicitly used in determining their stringency. This use may involve a balancing of: costs and impacts; costs and dollar valuation of beneŸts; or impacts and economic consequences of costs, i.e., a cost effective analysis.