What's the Payback?
The question everyone asks about solar electricity
Introduction
How does “payback” work?
How do I get the best payback on efficiency?
How much investment in energy efficiency is necessary to substantially reduce the size of a PV system?
What else is part of my personal payback?
Smart shopping to cut initial costs
A brief word on energy efficiency opportunities
Resources
How do I get the best payback on efficiency?
It depends on how you are currently using electricity. While most people use similar appliances, the amount used from house to house can vary considerably. This is because some appliances are more efficient than others, and some get used more than others. While it makes sense to invest in a new, high efficiency refrigerator or furnace, it costs nothing to develop the habit of turning out lights and other small appliances when you're not using them. Significant savings can be achieved by changing every day behavior because these small amounts can add up quickly. So, by analyzing how you use electricity in your house, you can determine the most economical ways to reduce your consumption. The investment will range from changing your energy habits, to the costs of expensive new equipment or materials.
Using our hypothetical household again (9800 kWh per year as the baseline), the following table shows the simple payback for investing in energy efficiency. Notice that the $4,000 efficiency investment in those three major appliances will be paid back by energy savings in just under five years without any allowance for depreciation, which, if calculated, would reduce the payback further. This same efficiency investment (as noted in Table 1) also knocked over 18 years off the payback on the solar electric system!
| Cost of investment in energy efficiency measures | ||||||||
|---|---|---|---|---|---|---|---|---|
| Percentage of energy savings | 0 | $200 | $500 | $1,000 | $1,500 | $2,000 | $3,000 | $4,000 |
| 10% | 0.90 | 1.10 | 1.41 | 2.02 | 2.43 | 2.94 | 3.96 | 4.98 |
| 20% | 0.80 | 1.00 | 1.31 | 1.82 | 2.33 | 2.84 | 3.86 | 4.88 |
| 30% | 0.70 | 0.90 | 1.21 | 1.72 | 2.23 | 2.74 | 3.76 | 4.78 |
| 40% | 0.60 | 0.80 | 1.11 | 1.62 | 2.13 | 2.64 | 3.66 | 4.68 |
| 50% | 0.50 | 0.70 | 1.01 | 1.52 | 2.03 | 2.54 | 3.56 | 4.58 |
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