Model upgrades with financing and real savings. See debt, taxes, and cumulative outcomes. Make smarter retrofit decisions with clear yearly projections.
| Field | Example value |
|---|---|
| Retrofit cost | 150,000 |
| Soft costs | 8,000 |
| Incentives / rebates | 20,000 |
| Financed percentage | 80% |
| Annual interest rate | 10% |
| Loan term | 7 years |
| Annual energy savings (Year 1) | 32,000 |
| Annual maintenance savings | 4,500 |
| Annual extra O&M cost | 1,500 |
| Savings escalation | 3% |
| Discount rate | 12% |
| Analysis horizon | 10 years |
Most retrofits combine lender capital and owner cash. A common financed share is 70–90% of the financed base, leaving 10–30% as upfront cash. This calculator treats origination fees as part of the financed base, because fees usually increase the amount you must cover through debt or cash.
Annual debt service can temporarily reduce net benefit even when savings are strong. For example, a 7-year loan at 10% on Rs 100,000 produces an annual payment near Rs 20,550. If Year‑1 net savings are Rs 18,000, early-year cashflows are negative until the loan ends or savings escalate.
Energy and maintenance savings usually dominate outcomes. Many facilities assume 2–5% annual escalation to reflect tariff growth and operational changes. When escalation exceeds the discount rate, later years carry more influence. If escalation is 3%, Rs 30,000 in Year‑1 savings grows to about Rs 34,779 by Year 6.
NPV converts future cashflows to today’s value. In practice, commercial hurdle rates often range from 10–18% depending on risk, capital constraints, and measurement confidence. A positive NPV indicates the retrofit is expected to create value after financing, while profitability index above 1.00 signals value created per rupee invested upfront.
Simple ROI compares total net gains to the upfront cash outlay, and payback flags the first year cumulative cashflow becomes positive. IRR estimates the blended return implied by the cashflow stream; if cashflows never change sign, IRR may be unavailable. Use the chart to spot debt-heavy years and the point where cumulative performance accelerates.
For scenario testing, run three cases: conservative, expected, and optimistic. Keep incentives realistic, and use residual value only when equipment has resale or redeployment value. If taxes matter, apply an effective rate that matches your treatment. When comparing projects, align the analysis horizon with equipment life, often 8–15 years for efficiency measures.
Track measured savings quarterly to reduce uncertainty over time.
Financed base is the net project cost after incentives, plus any origination fee. The financed percentage is applied to this base to estimate the loan principal and the remaining upfront cash.
Financing shifts costs into debt service. If annual payments exceed Year‑1 net savings, early years can be negative even though long-term savings outweigh total costs over the analysis horizon.
Payback is the first year when cumulative net cashflow becomes zero or positive. It includes savings, debt service, optional simplified tax, and any end-of-horizon residual value.
Use a rate that reflects your risk and opportunity cost of capital. Many organizations test a range, such as 10–18%, to see how sensitive NPV is to financing terms and savings confidence.
IRR needs at least one sign change in the cashflows. If the cashflow series stays negative or stays positive after the initial outlay, or has multiple complex sign changes, a single IRR may not exist.
No. Tax is simplified as an effective rate applied to (gross savings minus debt service). For accounting-grade analysis, incorporate depreciation, interest deductibility, incentive timing, and your specific treatment rules.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.