Simple payback is the best economic parameter to illustrate

Simple payback is the best economic parameter to illustrate the complete economic value of energy efficiency measure to energy audit clients:

A) Ture

B) False

Solution

Example: you are considering a $5,000 improvement that will save $350 a year on your energy bills. To calculate the simple payback period, just divide the cost of the work by the annual savings to find the payback period in years. In this example, 5000 ÷ 350 = 14.3, so the improvement has a simple payback period of 14.3 years.

The main advantage of a simple payback calculation is that it is simple. It may not consider a variety of factors — for example, maintenance costs or energy cost inflation — but it’s quick and easy to understand.

B)false