How to Calculate ROI for Energy Monitoring Projects
Fast Answer
To calculate ROI for energy monitoring, compare the cost of implementation (hardware, software, installation) against projected savings from reduced energy consumption, improved efficiency, and compliance benefits over a set period.
Introduction
One of the most common questions manufacturers ask before investing in energy monitoring is: “What’s the return on investment?” Here’s a clear guide to calculating ROI for your project.
Q1: Why calculate ROI for energy monitoring?
ROI helps justify the investment by showing how quickly the system pays for itself through energy savings, reduced downtime, and compliance benefits.
Q2: What costs should I include?
- Hardware (meters, sensors, gateways)
- Software or portal subscription
- Installation and setup
- Training and support
Q3: What savings should I consider?
- Reduced energy consumption (typically 15–30%)
- Lower peak demand charges
- Avoided penalties for non-compliance (SECR, ESOS)
- Maintenance savings from predictive insights
Q4: How do I calculate ROI?
Use this formula:
ROI (%) = (Annual Savings – Project Cost) ÷ Project Cost × 100
Example:
- Project cost: £10,000
- Annual savings: £5,000
ROI = (5,000 – 10,000) ÷ 10,000 × 100 = 50% in Year 1
Payback period = Project Cost ÷ Annual Savings = 2 years
Q5: What’s a typical payback period?
Most energy monitoring projects pay back in 12–24 months, depending on site size and energy intensity.
Benefits of Knowing ROI
- Confident decision-making
- Easier budget approval
- Clear roadmap for scaling the solution
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FAQ Summary
How do I calculate ROI for energy monitoring?
Compare project costs against annual savings using the ROI formula.
What’s a typical ROI?
15–30% savings, with payback in 1–2 years.
Does compliance affect ROI?
Yes—avoiding penalties and meeting SECR/ESOS adds value.
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