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Amortisation period: How many years does it take for the measure to pay off?

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Using the annual energy savings, the energy price, and the energy-related additional costs, it is possible to calculate how long it will take for the modernisation costs to be paid off by the savings.

The amortisation period is suitable as a criterion for evaluating the cost effectiveness of an individual measure. An essential requirement is that the amortisation period is less than the technical lifetime of the measure. The amortisation period is not suited for comparison of several investment alternatives (relative efficiency).

Amortisation can be calculated statically or dynamically. For a static calculation, the energy-related additional costs and yearly energy savings as well as information about the current energy prices are needed. The thereby determined (static) amortisation can be compared to the typical lifetime of the examined measure. Alternatively, it is possible to provide a period under consideration in which the investments are due to be amortised. For a dynamic calculation, the adequate target rate and the expected future energy price increase must also be determined.

Economic advantageousness or cost effectiveness is given if the amortisation period is less than the lifetime of the measure (e.g., amortisation period of 12 years for a lifetime of 15 years). If the armotisation period is distinctively shorter than the lifetime, an additional economic advantage is realized during the remaining residual lifetime.

calculation of static armortisation period

calculation of dynamic amortisation period

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