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Cost Effective

Cost effective

Overall, the lifetime savings from new standards outweigh the incremental upfront costs by a ratio of 4 to 1. For many products, the incremental cost to meet the potential standard level is very low or even zero. For other products, the incremental cost is significant. In all cases, however, the incremental cost is paid back through the savings well within the lifetime of the affected product. The potential standards for all the products are cost-effective, as indicated by a benefit/cost (B/C) ratio of 1 or higher.

  • Overall, the savings from new standards outweigh the incremental upfront costs by a ratio of 4.1 to 1. Setting aside those products with no incremental cost, benefit cost ratios range from a low of 1.2 (unit heaters, battery chargers, and pumps) to a high of 18 (automatic ice makers).
  • The average simple payback is 3.3 years – in other words, on average, the additional upfront cost is earned in lower utility bills in 3.3 years. Simple paybacks range from zero years (for standards with no incremental costs) to ten years for some long-lived products such as unit heaters.
  • A few products (electric water heaters, boilers, unit heaters) have large incremental costs relative to the price of a baseline product. Although each of these standards is cost-effective as indicated by a benefit cost ratio greater than one, it may be difficult to advance these new standards if incremental costs do not fall because of the upfront cost impacts.

 

For more details, see pages 18-20 of The Efficiency Boom report

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