# Amortisation: Dynamic calculation

**Step 1 – Determining the savings of delivered energy:**

The determination of the energy savings is independent of the chosen method of efficiency calculation. Different calculation methods are described under the menu item “Energy savings”. The result is a value in kilowatt hours per year (kWh/a).**Step 2 – Determining the energy cost savings per year:**

The energy cost savings are calculated by multiplying the savings of delivered energy determined in step 1 with the price of delivered energy per kilowatt hour. This can be determined for individual sources of delivered energy or as an average value. For grid-bound energy (e.g., gas, district heat, local heat, electricity), the kilowatt-hour-rate and the (basic-) kilowatt-rate have to be considered.

To determine the energy cost in the first year the current energy price can be used. Thus, the energy cost savings for the first year amount to:

Cost savings 1st year [€/a] = savings of delivered energy [kWh/a] • current energy price [€/kWh]

To calculate the annual energy cost savings for the subsequent years / periods, the energy price is multiplied by an annual rise of energy prices - assumed or predefined by convention:

Cost savings in period t [€/a] = savings of delivered energy [kWh/a] • current energy price [€/kWh] • (1+Pe / 100)t

with

Pe = annual rise of energy price**Step 3 – Determining the costs of the measure(s):**

The determination of the modernisation costs is independent of the chosen method of efficiency calculation. Different procedures are described under the menu item “Modernisation costs”. Cost functions for frequent measures are summarized under the menu item Examples of modernisation. One must differentiate between the full costs and the energy-related additional costs of a measure. If necessary, it should be determined whether and what costs additionally arise in terms of operation, inspection, maintenance, or repair and (partly) also for insurance.**Step 4 – Determining the amortisation period:**

In comparison with the static calculation, the dynamic calculation of the amortisation period takes into account future development of energy prices and the adequate target rate for investments. To calculate the dynamic amortisation period, the future energy cost savings (reduced by additional costs, e. g. higher operational costs. interest rates), discounted to the initial period, are summarised until the period when the return gets equal or higher than the costs of the measure. The amortisation period from a dynamic calculation will normally be longer than the period resulting from a static calculation for the same case.

The following formula can be used:

with

t_{dyn}= dynamic amortisation period [y]

j = static amortisation period [y] (investment costs [€] / cost savings first period [€/y)]

i = 1 + Pe / 100

Pe = annual rise of energy price [%]

q = 1 + p / 100

p = target rate [%]**Step 5 – Selecting the comparative figure:**

As a comparative figure, the expected lifetime (useful life) of the planned measure should be taken. The building owner or energy consultant can do this based on standards, values from literature, or on his or her own estimates. Average values for the lifetime of frequent measures can be found in the table under the menu item Boundary conditions / Technical lifetime.**Step 6 – Comparison and evaluation:**

The calculated static amortisation period can be compared to the estimated lifetime (useful life) of the measure. The measure is economically efficient if the lifetime exceeds the amortisation period. Efficiency evaluations carried out in connection with the EnEV show that even small changes in the costs of a measure can cause considerable changes in the amortisation period. Therefore, beginning with the amendment in 2009, so-called coverage deficits are indicated - often amounting to just a few euros. If these amounts would be covered e. g. by funding, the amortisation period could be reduced to an acceptable level.