Work out energy audit payback instantly with clear inputs, formula shown and shareable results.
Simple payback is implementation cost divided by annual net saving, where net saving is the energy cost avoided less any increase in maintenance. It ignores the time value of money and the measure's life, so a two-year payback on equipment lasting three years is far worse than a four-year payback on equipment lasting twenty.
Simple payback
Payback years = implementation cost / (energy saving x price - maintenance change)
Return on investment
ROI % = annual net saving x 100 / implementation cost
It ignores savings after the payback point, equipment life, and discounting. Net present value or internal rate of return over the measure's life gives a far better ranking of competing measures.
Yes. Without a baseline adjusted for production, weather and occupancy, claimed savings cannot be substantiated — and unsubstantiated savings tend to disappear from the energy bill.