Energy-saving device payback

Introduction

A pre-swirl duct, a propeller boss cap fin, an air lubrication system or a premium coating is sold on a percentage of fuel saved. Whether that percentage is worth the price depends on how much fuel the ship burns, what it pays for it and for its CO₂ allowances, how long the device lasts and what return the owner expects on capital. This calculator turns the claimed saving into fuel and CO₂ tonnes per year, prices them with the ETS share, subtracts maintenance and returns the simple and discounted payback, the net present value, the internal rate of return, the benefit-cost ratio and the levelized cost of each saved tonne, which can be compared directly with the fuel price.

It is for technical and commercial managers screening retrofits, for owners comparing vendor claims, and for students of engineering economics with a maritime example.

Formulas

I = capex + off-hire days × hire
S = saving % × F × sea days                        fuel saved, t/yr
benefit_t = [S p (1 + e)^(t−1) + S C_F e_EUA s] (1 − δ)^(t−1) − M
NPV = −I + Σ benefit_t / (1 + i)^t,   IRR: NPV(IRR) = 0
simple payback = I / benefit_1,   discounted payback: Σ PV reaches I (interpolated)
CRF = i (1 + i)ⁿ / ((1 + i)ⁿ − 1),   levelized cost of saved fuel = (CRF × I + M) / S

p fuel price, e fuel escalation, C_F carbon factor, e_EUA allowance price, s ETS share, δ saving degradation, M maintenance, i discount rate, n life.

Assumptions and limitations

• The saving is a fixed share of the consumption entered, declining only by the degradation rate; measured savings carry ±1–3 % absolute uncertainty.
• Benefits are fuel and ETS allowances only; FuelEU, CII, charter premiums, residual value, financing and tax are not priced.
• Annual year-end cash flows, nominal prices and rate; one currency.

Worked example

A pre-swirl device: 400 000 installed plus 3 days off-hire at 20 000, maintenance 5 000 per year, claimed saving 5 % of 30 t/day over 250 sea days, HFO at 550 per tonne escalating 2 % per year, allowances 70 per t CO₂ with 50 % of emissions in the ETS, 10-year life, 8 % discount rate.

1. Investment 460 000. Fuel saved 375 t/yr, CO₂ saved 1 168 t/yr.
2. Year 1: fuel 206 250 + allowances 40 871 − maintenance 5 000 = 242 121.
3. Simple payback 1.9 years; discounted payback about 2.1 years.
4. NPV about 1.28 million at 8 %, IRR above 50 %, benefit-cost ratio 3.8.
5. Levelized cost of saved fuel: CRF(8 %, 10) = 0.149 → (0.149 × 460 000 + 5 000)/375 = 196 per tonne against a 550 price.

Run it again at a 2.5 % saving (the low end of what monitoring usually confirms): payback 3.9 years, NPV still positive. That is the robustness test that matters.

FAQ

Related calculators

• Optimal hull cleaning interval — the recurring-cost version of the same economics.
• EU ETS and FuelEU Maritime — allowance costs and phase-in.
• CII rating — what the saving does to the rating.
• Fuel and voyage cost — the baseline consumption.
• Optimal speed under charter — the other lever on fuel cost.