Simple Payback & ROI Calculator

Simple payback, NPV, and year-by-year cash flow for an HVAC efficiency investment.

Project Costs & Savings
Financial Parameters
Financial Results
Annual $ Savings (Year 1)
—
$/year
Simple Payback
—
years
NPV (Discounted)
—
$
Lifetime Savings
—
$ undiscounted
Cumulative Cash Flow by Year
YearAnnual SavingsCumulative SavingsNet PositionCumulative NPV
Inputs, results, and method — as an Excel workbook or plain CSV.

Doing this for a whole building? See this step inside a connected AIM Works project — loads, ventilation, equipment, and Design Review in one place.

Book a Demo →
About This Calculator

This calculator evaluates the financial case for an HVAC energy-efficiency investment. Enter the project cost, annual energy savings, electricity rate, any operations-and-maintenance savings, and a utility rebate, then set an analysis period and discount rate. It returns annual dollar savings, simple payback, discounted net present value (NPV), and total lifetime savings, plus a year-by-year cumulative cash-flow table.

Simple payback answers “how fast do I get my money back,” while NPV answers “is this worth more than my cost of capital over the equipment life.” Looking at both keeps a quick-payback bias from overlooking long-lived measures that compound value over time.

Formula & Method
Net costnet = project cost − rebate
Savings in year tSt = kWh × rate × (1 + e)t−1 + O&M savings
Simple paybackyears = net cost ÷ S1  (0 if a rebate covers the cost; none if S1 ≤ 0)
NPVNPV = −net cost + Σt=1..N St ÷ (1 + r)t
Lifetime savingsundiscounted = Σt=1..N St

The method uses standard life-cycle cost relationships with end-of-year cash flows: simple payback as net cost ÷ first-year savings, and NPV as the sum of each year’s savings discounted at rate r over the N-year analysis period, less the up-front net cost. Energy savings escalate at e from year 2 (year 1 is at today’s rate, the same convention as the AIM Works app’s life-cycle cost engine); O&M savings stay flat. Pair a nominal discount rate with a nominal escalation rate, or real with real. A positive NPV indicates the project earns more than the discount rate. Equipment replacement, residual value, demand charges, and taxes are not modeled.

Frequently Asked Questions
What is simple payback and how is it calculated?
Simple payback is the number of years for accumulated savings to repay the net project cost. This tool computes it as net cost divided by annual savings, where net cost is equipment cost minus any rebate, and annual savings is first-year energy savings (kWh times the electricity rate) plus operations-and-maintenance savings. If a rebate covers the whole cost the payback is immediate, and if annual savings are zero or negative the project never pays back. It ignores the time value of money, so it is a quick screen rather than a full financial measure.
How is NPV different from simple payback?
Net present value discounts each year of future savings back to today using your discount rate, treating each year’s savings as arriving at the end of that year, then subtracts the up-front net cost. Energy savings can escalate at the rate you enter, starting in year 2; O&M savings stay flat. A positive NPV means the investment beats the discount rate over the analysis period. Unlike simple payback, NPV accounts for the time value of money and the full project life, so a project with a longer payback can still have a strong positive NPV.
What payback is considered good for an HVAC efficiency project?
As a rough guide, a simple payback of five years or less is generally excellent, five to ten years is acceptable, and more than ten years is long and may need rebates or a longer-life justification. This tool flags the result in those bands. The right threshold depends on the owner, equipment life, and the cost of capital.
How do rebates and O&M savings affect the result?
A utility rebate is subtracted from the project cost, lowering the net investment and shortening payback. Operations-and-maintenance savings are added to the annual energy savings, increasing the yearly cash flow. Both improve payback and NPV, which is why capturing available incentives and maintenance reductions matters when evaluating an efficiency upgrade.
Related Tools
Energy Cost Estimator VFD Energy Savings Fan Energy Cost Chiller Size Estimator
AIM Works · launches Oct 15, 2026

Connect the calculation to the rest of the project.

AIM Works brings peak loads, ASHRAE 62.1 ventilation, equipment and plant sizing, compliance checks, Design Review, and engineering deliverables into one connected mechanical design workspace.

  • Peak loads (RTS or CLTD/CLF) and ASHRAE 62.1-2019 ventilation
  • Equipment and plant sizing against ASHRAE 90.1-2022 efficiency floors
  • Design Review that cites the check behind every finding
  • An AI co-pilot that drafts changes — you approve each one
Book a Demo →
A walkthrough first, then a 14-day free trial. No credit card.
How the calculations work →

Results are design estimates for preliminary sizing. Verify final designs against applicable codes and standards — engineering judgment and a licensed professional engineer’s review are required.