Window Film Energy Savings - Calculating Payback PeriodsPosted by Dowling Medlin on February 3rd, 2021 One with the most effective methods of property managers and energy engineers to enhance the energy efficiency of an building's envelope is to install window film. Window film makes glass more power efficient, in a far more affordable cost than new windows or other glazing improvements. Of course, there is a wide selection of energy efficiency improvements to choose from, anything from photovoltaic solar energy systems to building insulation. One in the best ways, from a financial perspective, to guage a certain energy saving technology would be to determine the payback period. The estimated payback calculation is a superb decision making tool for evaluating competing energy saving technologies. It's pretty basic - indicating how soon the cash spent be returned. How to calculate payback There are some solutions to calculate the payback of energy improvements, starting from be simple up to the relatively complex. The primary difference is together are the assumptions incorporated into the calculations. Adding assumptions and variables helps to make the calculations more complex, but sometimes is critical to have an exact estimate. The two most useful approaches to determine the payback period... 1. Simple Payback 2. Cash Flow Analysis Both methods supply a reasonable estimate from the payback without getting overly complex Simple Payback Analysis The primary benefit for simple payback analysis is that it is straightforward while still providing useful information. To calculate the easy payback, simply divide the cost with the improvement with the estimated savings to yield the payback period. For example, if you spend 0 to set up energy saving measures that save 0/year the payback is a bit over three years, 0/0 = 3.33. Energy savings after that period is pure profit. Of course, this leaves out lots of variables that may impact your realized savings. Variables like maintenance costs, energy cost increases and inflation are not looked at, however the method gets the benefit of being quick, quick and simple to comprehend. Cash Flow Analysis Cash flow analysis is the next step up regarding complexity. Taking more variables under consideration, things such as maintenance, energy cost increases and inflation, cash flow analysis provides truer picture from the payback, specially when these costs are high. This type of analysis is better finished with a spreadsheet program to simplify the calculations. To determine payback using income analysis your initial cost with the improvement is together with the estimated maintenance costs, including a quotation from a increased costs within the expected life with the improvement in addition to with a quote of your energy cost increases in the same period. For example, in examining the price associated with replacing an HVAC system using a newer, more energy-efficient system, by using a simple payback would not suffice, as HVAC systems involve regular maintenance that is needed to guarantee the life with the system. Because maintenance is very important, and subject to cost increases after a while, this should be factored into the payback calculation to present a genuine picture from the potential savings, or lack thereof. Now here are an example using window film, an energy efficiency improvement with hardly any maintenance costs connected with it. Assume a window film installation requiring an investment of 5,000 that realizes yearly savings of 8,000. With a simple payback add up to 2.29 years and without any maintenance costs you can find hardly any that will noticeably impact the payback period. Energy costs increase over the life from the window film, however, these will often lessen the payback period because savings realized will probably be in excess of the initial estimate. As far as maintenance can be involved, window film doesn't require any, but over its lifetime some replacement will likely be needed as a consequence of damaged window film as well as for upgrades linked to tenant improvements. The expense of these replacements shouldn't exceed 0.5% - 1% with the total quantity of windows in a building. Again, the impact with this on the realized savings is negligible. Here's an account that will illustrate the practicality utilizing both of these solutions to discover the payback period versus other, more advanced methods. A bag of gold was positioned on a table in the room. Two people, an engineer plus a scientist, were advised to penetrate the area and try to acquire the gold. The only rule was that each time they moved towards gold, they are able to only traveling half the rest of the distance between themselves and also the gold. The scientist chose to leave, declaring "if you can only approach half the space remaining you'll never make it happen. It's impossible." best car window tinting gold coast for the other hand simply took two steps, said, "Close enough with an engineering approximation," grabbed the gold and was gone. Payback calculations are a lot such as the example inside story. You can make more and more refinements and assumptions but inside end most with the time you'll be able to determine a workable payback using be simple payback method, which may be done around the back of your envelope. If you are able to however, and especially when there are large variable costs, use the cashflow analysis solution to factor in some of these costs. The Conclusion We live inside a world of financial restrictions, requiring solid financial reasoning to make a certain investment, and then we need to make some elementary calculations to ensure were smart about how precisely we spend our money. For maximum efficiency and effectiveness the main focus needs to be on investments offering a quick payback, which can usually be determined adequately with the straightforward payback method or, when maintenance costs are high, while using slightly more technical cash flow analysis. Both methods are useful tools for the energy manager.Like it? Share it! More by this author |