Turn an energy audit into an implementation sequence
An energy audit may recommend lighting, premium-efficiency motors, variable-speed drives, boiler heat recovery, compressed-air leak repair, HVAC controls, and several smaller operational measures at the same time.
A list of capital costs and savings rates does not, by itself, show what should be funded first.
The fastest-payback measure may not create the most value over the study period, and the best individual ranking may not produce the best package under a fixed budget.
This calculator puts up to eight measures on one study period and one discount-rate basis.
It estimates first-year savings, net initial investment, audit-style and adjusted simple payback, discounted payback, net present value, savings-to-investment ratio, internal rate of return, annual cash flow, and sensitivity to savings and energy price.
It also enumerates every possible subset and identifies the highest-NPV package that fits the available implementation budget.
The result is a screening and investment-committee aid, not a substitute for detailed engineering, binding quotations, measurement and verification, tax advice, or accounting policy.
Why one payback number is not enough
Audit-style versus adjusted simple payback
The Korea Energy Agency performance page describes investment payback as investment divided by expected savings value.
The calculator preserves that public formula as an audit cross-check using gross investment and first-year gross energy savings.
It separately shows adjusted simple payback using net initial investment after confirmed support and downtime, divided by savings after the annual maintenance-cost change.
A large gap between the two is a prompt to reconcile scope rather than choose the more attractive number.
NPV and discounted payback
Net present value discounts future savings, maintenance changes, and residual value to the analysis date.
Discounted payback reports when cumulative discounted cash flow recovers the net initial investment.
These measures retain timing and useful-life information that simple payback omits, so they are more suitable for comparing alternatives on a common economic basis.
SIR for constrained funding
The savings-to-investment ratio divides the present value of benefits by the present value of costs.
A value above 1 means discounted benefits exceed discounted costs under the entered assumptions.
SIR is useful as a capital-efficiency indicator, but choosing only the highest ratio can leave budget unused and sacrifice total value.
The package optimizer therefore maximizes total NPV first, then uses SIR and lower investment as tie-breakers.
IRR as a supporting metric
Internal rate of return is the rate at which the entered cash-flow stream has zero NPV.
For a conventional initial outflow followed by savings, it can be compared with an approved hurdle rate.
If the cash flow does not change sign or no solution exists in the supported range, the calculator returns no IRR instead of manufacturing a misleading result.
Evidence to collect before entering numbers
Reliable screening begins with consistent evidence and an explicit baseline.
Keep the source date, owner, units, and scope for every material input so reviewers can reproduce the estimate when tariffs, quotations, or production plans change.
- Collect at least twelve recent months of electricity, gas, or fuel bills together with production volume, operating hours, weather normalization, and known shutdowns.
- Extract each measure’s baseline consumption, expected savings rate, estimated savings quantity, investment, useful life, and calculation assumptions from the audit report.
- Reconcile supplier quotations for equipment, installation, commissioning, removal, controls integration, training, contingency, and applicable taxes.
- Estimate installation downtime with an internally approved approach, such as expected lost contribution margin rather than gross revenue.
- Attribute support only when the measure, eligible cost, amount, and award or contract status are documented in writing.
- Enter additional service contracts and consumables as a positive maintenance change, and substantiated avoided maintenance as a negative change.
- Document technical dependencies and overlapping savings before measures are treated as independent candidates in the budget optimizer.
How to use the calculator
- Set one economic basis
Apply the same study period, energy-price escalation, maintenance escalation, and discount rate to every measure.
Keep nominal cash flows with a nominal discount rate, or real cash flows with a real rate, according to the organization’s approved policy.
- Normalize implementation scope
Start with gross implementation investment, add installation downtime, and subtract only confirmed support attributable to that measure.
Align tax treatment and ancillary-work coverage across quotations before comparing them.
- Use one energy unit within each measure
Baseline quantity, measured savings, and unit price must use the same unit, such as kWh, Nm³, liters, GJ, or toe.
A measured savings entry above zero overrides the baseline multiplied by the audit savings rate.
- Model life and residual value conservatively
Savings stop at the earlier of useful-life end and study-period end.
Enter residual value only when a recoverable amount at that endpoint is supportable, and do not use it merely to improve NPV.
- Review rankings, package, and sensitivity together
Compare individual results with the selected package, remaining budget, annual cash flow, and downside cases.
If one uncertain input reverses the decision, improve the meter data, quotation, or operating assumption before approval.
Calculation sequence and formulas
Applied annual savings equals measured or verified savings when that value is above zero.
Otherwise, it equals baseline annual energy use multiplied by the audit savings rate.
First-year gross energy savings equals the applied quantity multiplied by the effective marginal energy price, and first-year net savings subtracts the annual maintenance-cost change.
A negative maintenance entry therefore represents an avoided cost and increases net savings.
Energy audit measure economic formulas and interpretation| Metric | Calculation concept | Decision use |
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| Net initial investment | Gross implementation investment + downtime cost − confirmed support | The result is floored at zero and used by the budget constraint.
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| Audit-style payback | Gross investment ÷ first-year gross energy savings | Provides a transparent cross-check with the published KEA formula.
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| Adjusted simple payback | Net initial investment ÷ first-year net savings | Adds support, downtime, and maintenance scope without discounting.
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| NPV | Present value of benefits − present value of costs | A positive value adds economic value under the entered hurdle rate.
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| SIR | Present value of benefits ÷ present value of costs | Supports capital-efficiency comparison when funding is constrained.
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| Discounted payback | Interpolated year when discounted cumulative cash flow reaches zero | Shows recovery timing after recognizing the time value of money.
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Each year’s energy savings follows the entered energy-price change, while maintenance cost follows its own escalation input.
Annual net cash flow equals energy savings minus maintenance change plus residual value in the endpoint year, and each amount is discounted to the analysis date.
The measure’s service period is the shorter of useful life and the common study period.
If two measures change the same load, their standalone savings cannot safely be added without an interaction model or a revised combined baseline.
Read the illustrative factory example
The initial values are fictional and exist only to demonstrate the workflow.
They compare LED lighting, premium-efficiency motors with drives, and boiler heat recovery over ten years.
The English calculator uses independent USD examples rather than converting the Korean defaults, so neither set should be interpreted as a market quotation or program benchmark.
Illustrative English calculator inputs| Illustrative measure | Gross investment | Baseline | Savings rate | What it illustrates |
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| LED lighting retrofit | $50,000 | 500,000 kWh | 35% | Avoided maintenance is entered as a negative annual change.
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| Motors and variable-speed drives | $80,000 | 600,000 kWh | 18% | Downtime and additional service cost expand the investment scope.
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| Boiler heat recovery | $120,000 | 350,000 Nm³ | 12% | A separate fuel unit and unit price remain independent of electricity.
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Conservative case
Savings quantity and price are both reduced by the selected sensitivity percentage.
This is a deterministic stress case, not a probability of loss.
Base case
The entered audit, metering, quotation, and price assumptions are used without adjustment.
Update the case whenever its evidence changes.
Optimistic case
Savings quantity and price are both increased by the sensitivity percentage.
Do not justify approval solely with this upside case.
Korean legal and program boundary
This calculator is available in English, but its regulatory references describe South Korea.
Article 32 of the current Energy Use Rationalization Act provides the basis for energy audits, audit cycles, cost support, and further rules on audit scope and method.
Article 25 provides a support basis for energy service company activities.
Neither provision automatically confirms a capital subsidy for a particular user or measure.
Audit-fee support is not equipment support
The Korea Energy Agency notice posted on May 11, 2026 described a second-round industrial audit assistance program for eligible small and medium enterprises using at least 300 toe but less than 2,000 toe.
The notice described up to KRW 5 million and 100% support for the audit fee under that program.
It did not automatically subsidize implementation capital for lighting, motors, boilers, or other measures.
Enter implementation support only when attribution and status are evidenced for the specific measure.
- Energy Use Rationalization Act, Article 32 is the official current-law source used for the audit boundary.
- Energy Use Rationalization Act, Article 25 is the official current-law source used for the energy service company boundary.
- Korea Energy Agency energy audit overview explains that an audit identifies losses, improvement measures, and their economics.
- Korea Energy Agency audit performance page publishes the simple investment-payback relationship used for the cross-check.
- 2026 second-round industrial audit assistance notice is the official source for the dated eligibility and audit-fee description.
- NIST Handbook 135e2025 supports a common study period and discount rate, discounted life-cycle amounts, and careful use of SIR and payback in project evaluation.
Inputs that commonly distort the decision
Using an average bill rate as avoided cost
A total bill divided by total consumption can mix demand charges, blocks, taxes, fixed fees, and seasonal terms.
Use an evidenced marginal energy price that reflects the charges actually avoided by the measure, in the same unit as the savings quantity.
Adding overlapping savings
If an HVAC scheduling measure reduces run hours before a chiller replacement, the replacement no longer sees the original baseline.
Model the sequence or verify a combined savings quantity instead of summing both standalone estimates.
Extending savings beyond useful life
The calculator stops savings after the entered useful life.
A longer study that assumes replacement should include replacement capital, the successor asset’s performance, and an appropriate endpoint value rather than silently extending the first asset.
Treating an application as a confirmed award
Eligibility, an open application window, budget availability, and reimbursement conditions are not certain cash inflows.
Keep a before-support case and subtract only a documented award or contractual discount attributable to the measure.
Ignoring implementation constraints
The optimizer treats candidates as independently selectable and uses only the net-investment budget constraint.
Safety, outage windows, technical prerequisites, procurement lead time, staffing, product quality, and decarbonization commitments remain outside the mathematical selection and require a separate gate.
Frequently asked questions
Should the shortest-payback measure always go first
No.
Safety, compliance, reliability, production quality, and carbon targets may dominate, and even an economics-only decision can favor a longer-payback measure with greater NPV or a better budget package.
What happens when both measured savings and an audit savings rate are entered
A measured or verified annual savings quantity above zero takes priority.
When it is zero, the calculator uses baseline annual consumption multiplied by the audit savings rate, allowing the two evidence paths to remain visible.
How should avoided maintenance be entered
Enter it as a negative annual maintenance-cost change.
For example, verified annual avoided service cost of $2,000 is entered as −2,000, while a new annual service contract of $1,000 is entered as positive 1,000.
Which discount rate should be used
Use an approved organizational hurdle rate or capital policy when one exists.
Confirm with finance that nominal cash flows use a nominal discount rate and constant-price cash flows use a real rate, with treatment consistent across every candidate.
What if confirmed support exceeds implementation cost
Net initial investment is floored at zero and the calculator issues a warning.
Recheck eligible cost, required cost share, tax treatment, measure attribution, payment timing, and reimbursement conditions because the input may combine unlike scopes.
Does positive NPV guarantee the savings
No.
NPV is conditional on the entered baseline, operating profile, savings quantity, marginal price, life, cost, and discount rate, so commissioning and a measurement-and-verification plan are still required.
Is the optimized package the final construction plan
No.
It is the highest-NPV subset under the entered net-investment budget and independence assumptions, while outage scheduling, engineering dependencies, safety, quality, procurement, and management priorities require separate review.
Replace the illustration with traceable project evidence
Rename each candidate and replace every fictional input with the audit report, recent bills, meter data, quotations, and approved financial assumptions.
Save the base, downside, and upside outputs with the review package, and assign an owner to validate any input that can reverse the ranking.
The Korean legal sources, public formula, and dated program notice were checked on August 15, 2026, so confirm the latest official text and current program terms before applying or investing.