Business case: combine tool results into one project

Method

Cash flow of each measure

CF₀ = −capex CFₜ = S × (1 − d)^(t−1) × (1 + e)^(t−1) − O × (1 + e)^(t−1), t = 1 … n

S = year-1 rand saving (all tariff components), d = yearly fall in the saving (e.g. solar degradation), e = escalation, O = year-1 change in running costs, n = life rounded to whole years.

Simple payback

Payback = capex ÷ (S − O)

Not reached when the running cost is at least the saving.

NPV and IRR

NPV = Σ CFₜ ÷ (1 + r)^t, IRR: the r at which NPV = 0

The portfolio's cash flow is the sum of the measures' by year, so its NPV is the sum of their NPVs. Same functions as every financial tool on the site.

Levelised cost of saved energy

LCSE = (capex × CRF(r, n) + O) ÷ kWh saved a year CRF(r, n) = r (1 + r)^n ÷ ((1 + r)^n − 1)

Only for measures that save kWh. Compare it with the energy rate the measure avoids.

Cost curve (MACC)

Bars sorted by LCSE; bar width = kWh saved a year; height = LCSE

The dashed line is the energy-charge saving ÷ kWh across the bars: the average energy rate avoided.

Assumptions

• Savings start in year 1 whatever the implementation time, and stop at the end of each measure's life; nothing is replaced or re-invested.
• One escalation rate applies to savings and to running costs. That is cautious on running costs (they usually rise with inflation, below tariff increases), so a measure's NPV here can differ slightly from its own tool's.
• Nominal rand, before tax, with no debt. For tax and section 12L, open the totals in the efficiency tool.
• Measures are added as entered. Two measures on the same system (for example power-factor correction and a battery, which both cut the billed kVA) may overlap; v1 warns and leaves the netting to you.
• Demand-only measures (no kWh saved) have payback, NPV and IRR but no cost per kWh, so they sit outside the cost curve.
• Data tags: a tool's outputs are calculated; a default the tools supplied is assumed; a figure you typed is estimated. If every input of a tool was left at its example values, its saving is tagged assumed. A measure takes the weakest tag among its numbers.
• The project file is plain JSON with a format name and version number. A file from a newer version of the tools is refused with a message rather than half-read.

Sources

• NREL: Simple levelized cost of energy (LCOE) calculator documentationThe capital recovery factor and the levelised-cost form used for the cost of saved energy.
• Berkeley Lab: Alan Meier and supply curves of conserved energyTreating saved energy as a resource and ranking measures cheapest first: the idea behind the cost curve.
• SARS: Interpretation Note 95, deduction for energy-efficiency savings (section 12L)Savings must be measured and verified to claim 12L: one reason every number here carries a data tag.
• Eskom: Tariffs and charges booklet 2026/27Energy, demand (kVA) and capacity charges: the parts of the bill each saving is split into.
• Engineering News: NERSA approves higher electricity increases for 2026/27Recent regulated increases, the basis for the 8% default escalation (an assumption; change it).