# insulation, estimating the payback period of additional

Use the equation below to estimate the cost effectiveness of adding insulation in terms of the "years to payback" for savings in heating costs. Years to payback is the time required for the insulation to save enough fuel from heating (at present prices) to pay for itself. A simple payback is the initial investment divided by annual savings after taxes.

The equation works only for uniform sections of the home. For example, you can estimate years to payback for a wall or several walls that have the same R-values, if you add the same amount of insulation everywhere. Ceilings, walls, or sections of walls with different R-values must be figured separately. Subtract the areas of windows and doors when estimating payback for wall insulation.

The cost of the energy source is also a key factor in determining payback. Energy prices vary widely from region to region and season to season. Other factors, such as the rate of production and inventories of fuels nationwide, can also affect local energy prices. The weather from year to year also varies, so your energy costs from year to year will vary as well. To figure the cost of energy, consult your local utility for a rate schedule, or save your energy bills and plug your specific costs into this formula:

Years to payback = (C(i) × R(1) × R(2) × E) ÷ (C(e) × [R(2) - R(1)] × HDD × 24)

To calculate the payback, you must supply the following information:

C(i) = *Cost of insulation in $/square feet*.
Collect insulation cost information; include labor, equipment, and vapor
barrier if needed.

C(e) = *Cost of energy*, expressed in $/BTU.

#2 Fuel Oil = 140,000 BTU/gallon

Electricity = 3,413 BTU/kWh

Propane = 91,600 BTU/gallon

Natural Gas = 103,000 BTU/ccf

or 100,000 BTU/therm

E = *Efficiency of the heating system*.
For gas, propane, and fuel oil systems this is the Annual Fuel Utilization
Efficiency or AFUE. Typical AFUE values are 0.6 to 0.88 for oil or propane
furnaces, and 0.7 to 0.95 for natural gas furnaces. Older systems are
usually less efficient. Use E = 1.00 for baseboard electric systems. For
heat pumps, use the Coefficient of Performance or COP for E; where E =
2.1 to 2.5 for conventional heat pumps, and E = 3.2 to 3.5 for geothermal
heat pumps.

R(1) = *Initial R-value of section*

R(2) = *Final R-value of section*

R(2) - R(1) = *R-value of additional insulation being considered*

HDD = *Heating degree days/year*. This information
can usually be obtained from your local weather station, utility, or oil
dealer.

24 = *Multiplier used to convert heating degree
days to heating hours (24 hours/day)*.

## Example

Suppose that you want to know how many years it will take to recover the cost of installing additional insulation in your attic. You are planning to increase the level of insulation from R-19 (6-inch fiberglass batts with moisture barrier on the warm side) to R-30 by adding R-11 (3.5-inch unfaced fiberglass batts). You have a gas furnace with an AFUE of 0.88. You also pay $0.87/therm for natural gas. Let's also suppose that you supply the following values for the variables in the formula.

C(i) = $0.18/square foot

C(e) = ($0.87/therm)÷(100,000 BTU/therm) = $0.0000087/BTU

E = 0.88

R(1) = 19

R(2) = 30

R(2) - R(1) = 11

HDD = 7000

By plugging the numbers into the formula, you obtain the years to payback:

Years to Payback = (C(i) × R(1) × R(2) × E) ÷ (C(e) × [R(2) - R(1)] × HDD × 24)

Years to Payback = (0.18 × 19 × 30 × 0.88) ÷ ($0.0000087 × 11 × 7000 × 24)

90.288 ÷ 16.077 = 5.62 years