# Break-even costs: What is the maximum a measure can cost so that it pays off?

For an initial estimate of cost effectiveness, the predicted energy cost savings for a modernisation measure must be known. Using this value, one can determine how expensive the measure can be at most in order for it to pay off.

A break-even analysis determines the point at which an investment generates an economic advantage. In relation to the energy modernisation, the "break-even costs" give the maximum allowed costs for a measure that can in general be covered by the predicted energy cost savings.

The "break-even costs" can be calculated statically or dynamically. For a static calculation, the yearly energy savings as well as information about the current energy prices and the period under consideration are needed. For measures involving the shell components, assumptions regarding the efficiency of the heating system must be made. The thereby determined (static) "break-even costs" can be compared to the estimated (expected) energy-related additional costs of the measure. If the expected energy-related additional costs are lower than the break-even costs, the additional measure pays off even without an increase in energy prices.

For a dynamic calculation, the adequate target rate and the future energy price increase must also be determined.

Calculation of the break-even costs (static)

• 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 (current) savings of delivered energy 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. The current energy price can be taken as a basis for a static determination of the annual costs. Thus, the annual cost savings amount to:
Cost savings (€/a) = savings of delivered energy (kWh/a) x energy price (€/kWh)
• Step 3 – Determining the maximum permitted costs of the measure(s):
The maximal costs at which the measure/measure bundle just pays off are deter-mined ("break-even costs"). To do this, the energy cost savings determined in step 2 are multiplied by the selected period under consideration. For instance, this could be the lifetime of the measure. Details about the lifetime of frequent measures can be found in the table under the menu item Technical lifetime.
• Step 4 – Estimating the expected construction costs:
As a comparative figure, the expected construction costs for the chosen measure can be taken. Cost values from the literature or from gathering specific offers can serve as a source for this purpose. Cost functions for frequent measures have also been summarized under the menu item Examples of modernisation.
• Step 5 – Comparison and evaluation:
The calculated "break-even costs" can be compared to the expected construction costs. If the expected construction costs are lower than the “break-even costs,” the measure is economically efficient.