Energy Upgrade Payback Calculator
Find out how much swapping lights or an appliance saves a year at your state electricity rate, and how long it takes to pay for itself.
Last checked 11/10/2026. Sources: U.S. Energy Information Administration: Electric Power Monthly, Table 5.6.A.
Guide
How payback is worked out
The saving comes from the power you stop using. For each item, take the old power minus the new power, multiply by the hours it runs in a year and divide by 1,000 to get kilowatt-hours (kWh). Multiply by your electricity rate to get money. Then divide what the upgrade costs by the saving per year to get the payback.
Example. Swapping ten 50 W halogen lights for 7 W LEDs, used 3 hours a day all year, saves 10 × 43 W × 3 h × 365 days ÷ 1,000 = 470.9 kWh. At 18.16¢ per kWh that is $85.51 a year, so a $80 upgrade pays back in about 11 months, and the 10-year net saving is $775.06.
The 50 W and 7 W figures, and the $80 price, are only examples: use the wattage on your own label and your own price.
Where the electricity rate comes from
The starting rate, 18.16 cents per kWh, is the US average residential price for August 2026 from the U.S. Energy Information Administration. Your state is in the list, and your own bill is the best source: divide the electricity charges by the kWh used. See electricity rates by state.
A second example: a heat pump instead of a resistance heater
A 2 kW resistance heater used 6 hours a day for 120 days gives 1,440 kWh of heat and uses 1,440 kWh of electricity. A heat pump at a COP of 3 delivers the same heat from about 667 W, so each item draws 2,000 W and 667 W respectively. Entering 2,000 W old, 667 W new, 1 item, 6 hours and 120 days shows about 960 kWh saved a year, which is about $174 at 18.16¢ per kWh. If the heat pump costs $1,000 more than you would otherwise spend, the payback is about 5.7 years.
The COP of 3 is an editorial assumption that varies with the model and the outside temperature, and the extra cost is hypothetical. For the heat-only comparison, use the heater vs heat pump calculator.
What this does not include
- Price changes. If rates rise, the real saving rises with them; if they fall, it falls.
- Life and replacement. A longer-lasting bulb or appliance saves buying another, which is not counted.
- Heat. An old bulb or heater that warmed the room in winter was not entirely wasted, so the real winter saving can be smaller.
- The time value of money, installation labor, rebates and tax treatment.
- The daily supply charge, because it does not change with how much you use.
Common questions
How long should a payback be to be worth it?
There is no single rule. A payback shorter than the life of the new item means it saves money overall, and the 10-year net figure shows how much. A long payback may still make sense for comfort, noise or reliability.
Where do I find the power of my old item?
Look for the wattage on the bulb, the label on the back or underside of the appliance, or the specification sheet. Many appliances only use their full rating part of the time, so for those use the appliance running cost calculator first.
Why does the payback change when I change the hours?
The saving is in proportion to how long the item runs, so doubling the hours halves the payback. The table under the result shows one, two, four and eight hours a day.
Can I use this for something other than lights?
Yes, for anything where you can compare two power figures for the same job, such as a more efficient fridge or a pool pump. It does not work for items whose use changes after the swap.
What next?
- Not sure of the real power? Check what the old one costs to run. Appliance Running Cost Calculator
- Considering a heat pump? Compare running costs first. Space Heater vs Heat Pump Cost Calculator
- Doing the work yourself? Plan the materials with Handyfig