Energy Advisor

Information by State  Print version   In This Section Assessing the Cost Effectiveness of Energy Efficiency   Energy Advisor   Payback Period   Payback Period Calculation   Payback Period - Example 1   Payback Period - Example 2   Key Points to Consider   Other Methods to Assess Cost Effectiveness

HUD has published guidelines to help grantees and owners of single and multi-family housing save energy and money when rehabilitating a property. Publications such as the HUD Rehabilitation Energy Advisor highlight:

• How property owners using HUD program funding can increase the energy efficiency of their residential properties,
• Describe recommended energy measures and
• Explain how energy conservation can be cost effective.

HUD guidebooks also provide worksheets to help determine the savings from new energy efficiency measures.

Most often, the cost of replacing the new energy efficiency equipment is covered through the savings in using the new equipment (within a specified timeframe). The amount of time (i.e. years) that it takes for the energy cost savings to equal or exceed the cost of purchasing and installing the energy efficiency method is known as the payback period. The shorter the payback period, the more attractive the energy efficiency upgrade is to the homeowner.

An upgrade is considered cost effective if its payback period is less than a given timeframe. According to the Energy Conservation for Housing - A Workbook, the timeframe is usually 15 years. Therefore, based on the HUD workbook, any energy efficiency measure with a payback of 15 years or less is considered to be cost effective, as long as the payback period is not greater than the useful life of the energy efficiency measure.