Simple Payback Calculation for Insulation Measures

Simple payback – the number of years it will take to recover the initial investment through energy savings, and is calculated by dividing the marginal additional cost of implementing an energy efficiency measure by the value of the annual energy savings achieved by that measure taking no account of VAT. When making this calculation, the following guidance should be used – (a) the marginal additional cost is the additional cost (materials and labour) of incorporating, for example, additional insulation, not the whole cost of the work; (b) the cost of implementing the measure should be based on prices current at the date the proposals are given to the district council and be confirmed in a report signed by a suitably qualified person; (c) the annual energy savings should be estimated using an approved energy calculation tool; and (d) for the purposes of this Technical Booklet, the energy prices that are current at the time of the application to the district council should be used when evaluating the annual energy savings. Current energy prices can be obtained from the Department of Business Energy and Industrial Strategy (BEIS).