Glossary · Energy, bills & ratings
Simple payback
Also called: payback period · simple payback period
How many years an upgrade takes to pay for itself: the cost after rebates divided by the yearly savings.
What it means
If air sealing costs $1,200 after rebates and saves $300 a year, the simple payback is four years. It's easy to understand but ignores what happens after payback, changing energy prices, maintenance, financing costs and benefits such as comfort and health.
Why it matters in an audit
Audit reports often rank upgrades by payback, so understanding its limits helps you weigh quick wins against longer-lived investments.
Typical numbers
Reference values with their sources. Your energy advisor’s report gives the figure for your own house.
| What | Value | Source |
|---|---|---|
| Formula | Payback (years) = net cost ÷ annual savings | Arithmetic |
| Worked example | $1,200 of air sealing after rebates that saves $300 a year pays back in 4 years | Arithmetic |