Energy Upgrade Payback Calculator

Efficiency upgrades are sold on comfort and marketed on payback, and the payback depends heavily on an assumption nobody states: what energy will cost in future. A saving that looks like eight years at today's prices is considerably shorter if prices rise, and considerably longer if they fall.

This projects the saving forward with an energy price assumption you set, so the payback reflects your view of prices rather than an installer's.

The calculation

Each year saving = first-year saving × (1 + energy inflation) raised to the year number. Those are accumulated until they exceed the cost, which gives the payback year, and summed across your chosen period for the total.

Worked example

Spending 6,000 to save 700 a year, with energy prices rising 5% annually: the cumulative saving passes 6,000 during year 8. Over ten years the total saved is about 8,805, a net gain of 2,805 — and the first-year return alone is 11.7%, which is well above what the same money earns in a deposit account.

Insulation before generation

Reducing demand almost always pays back faster than producing energy, and it is cheaper to install. Draught-proofing, loft and cavity insulation and heating controls usually return their cost in a handful of years; the glamorous measures rarely do.

Frequently asked questions