Energy Cost & Simple Payback Calculator
Estimate equipment electricity consumption and cost, compare an improved operating condition, and calculate annual savings and simple payback for a proposed efficiency project.
Enter operating data
Use measured average input power for comparable operating periods, not motor nameplate power alone.
Enter tariff and project cost on the same currency basis; include applicable tariff components separately where material.
Results
Current annual energy— kWh
Improved annual energy— kWh
Annual energy saved— kWh
Annual cost saved—
Current annual cost—
Improved annual cost—
Energy reduction—%
Simple payback— years
Currency is intentionally generic: enter the tariff and project cost in the same currency basis.
Formulas used
Annual energy (kWh) = input power (kW) × operating hours/day × operating days/year
Annual cost = annual energy × electricity tariff
Annual savings = (current annual energy − improved annual energy) × tariff
Energy reduction (%) = annual energy saved ÷ current annual energy × 100
Simple payback (years) = project cost ÷ annual cost savings
Worked example
A 30 kW load operates 16 hours/day for 300 days/year. An improvement reduces average input power to 25 kW. At a tariff of 0.45 per kWh and project cost of 12,000:
| Metric | Approximate result |
|---|---|
| Current annual energy | 144,000 kWh |
| Improved annual energy | 120,000 kWh |
| Annual energy saved | 24,000 kWh |
| Energy reduction | 16.67% |
| Current annual cost | 64,800 |
| Improved annual cost | 54,000 |
| Annual cost saved | 10,800 |
| Simple payback | 1.11 years |
Use the result carefully
- The current and improved cases use the same operating hours and days and therefore assume equivalent production or useful service. Calculate the cases separately when schedules or output differ.
- Use measured average input power where possible instead of motor or equipment nameplate ratings.
- Use realistic operating hours and production patterns; annualized savings are only as good as the operating baseline.
- For variable-load equipment, compare representative logged kW or kWh before and after the change.
- Include demand charges, maintenance savings, financing, degradation, escalation and downtime separately when they materially affect a business case.
- Simple payback is not the same as lifecycle cost, NPV or IRR.
Engineering limitation: This is a preliminary energy-analysis tool, not a guaranteed savings model. Validate proposed savings using calibrated measurements, a representative baseline, applicable tariff structure, OEM/design data and competent engineering review before approving expenditure or changing operating settings.
Related learning
Energy Opportunity & Baseline WorksheetDocument the evidence, assumptions, approval and post-change verification behind this estimate.Three-Phase Power CalculatorEstimate electrical input power from measured three-phase values.VFD FundamentalsUnderstand where variable-speed control can change equipment energy use.Professional PPM ChecklistBuild measurable inspection tasks around equipment condition and performance.
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