What is simple payback period?

Simple payback is the number of years it takes for annual energy savings to equal the installation cost. For example, if cavity wall insulation costs £600 and saves £180/year, the simple payback is 3.3 years. It's the easiest metric to understand but doesn't account for energy price inflation or the time value of money.

What is NPV and why does it matter?

Net Present Value (NPV) accounts for the fact that money in the future is worth less than money today (time value of money). It discounts future savings by a rate (typically 3.5% as per HM Treasury Green Book). A positive NPV means the investment is worthwhile. Energy price inflation works in favour of insulation investments as future savings become more valuable in nominal terms.

Which insulation measure has the best payback?

Loft insulation top-up (from 100mm to 300mm) has the shortest payback — typically 2-4 years at current energy prices. Cavity wall insulation pays back in 3-5 years. Floor insulation takes 10-15+ years. External wall insulation rarely pays back on energy savings alone (15-25+ years) but adds other benefits like weather protection and property value.

How much does energy inflation affect payback?

Energy price inflation significantly improves the payback of insulation. At 5% annual energy inflation, savings double in ~14 years. UK gas prices increased by an average of 7% per year over the past 20 years. With high energy inflation, even expensive measures like EWI become cost-effective over their 25-40 year lifespan.

Should I factor in grants when calculating payback?

Yes — government grants (such as the Great British Insulation Scheme or ECO4) significantly reduce the upfront cost and therefore the payback period. Some measures are fully funded for eligible households. Check GOV.UK for current schemes. Enter the net cost after grants into this calculator for an accurate payback calculation.

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Energy Payback Calculator — Insulation Investment Return

Calculate simple payback period and NPV for insulation improvements. Accounts for energy price inflation and discount rate.

Insulation Measure

Pre-fills typical savings if blank

Installation Cost

Net cost after any grants

Annual Energy Saving

From energy assessment or bills

Lifespan

25 years typical for insulation

How We Calculate This

This calculator determines the financial return on insulation investments using simple payback and Net Present Value methods.

The formula

Simple payback = Installation cost ÷ Annual saving

NPV = -Cost + Σ(Saving × (1 + inflation)^n ÷ (1 + discount)^n)

ROI = ((Total savings - Cost) ÷ Cost) × 100%

For example, CWI at £600 saving £180/year: Simple payback = 3.3 years. With 5% energy inflation and 3.5% discount over 25 years: NPV = £3,200+. Total savings = £8,600+. ROI = 1,330%.

Frequently Asked Questions

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Last updated: March 2026

All calculations are estimates. Verify with your supplier.