Payback period


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payback period

[′pā‚bak ‚pir·ē·əd]
(industrial engineering)
The amount of time required for achieving an amount in profits to offset the cost of a capital expenditure, such as the cost of investment in modifications in an industrial facility for the purpose of conserving energy.

Payback period

A popular nondiscounting project selection technique used when organizations require the capital investment of a project to be recovered within a specified period; the period it takes for the stream of net cash flows to equal the initial investment. Also, a term used in the evaluation of sustainable and renewable energy options, wherein greenhouse or greenhouse intensive energy savings that the technology may enable over its useful life are assessed in relation to the embodied energy required for its manufacture. For renewable energy systems, it can also refer to the period of time over which energy cost savings derived from accessing renewable energy offset the upfront capital costs of the system.
References in periodicals archive ?
Compressor replacement was investigated and was found to improve one used unit EER by 9% and capacity by 3% with maximum payback period of 4 years.
The economic performance of the CCHP systems was evaluated with respect to annual operation costs and simple payback periods compared to the conventional system.
Payback period is a fairly elementary form of investment analysis.
This model can be used to (a) determine if a reasonable payback period can be achieved at the considered current locations and (b) investigate the feasibility of developing new facilities utilizing solar thermal arrays through using user-entered meteorological and resource data.
Variation in electricity prices demonstrates large variations in the NPV and payback period. Reduction of electricity prices has negative impact on the feasibility of the project whereas most fevarable condition is a 100% increase in electricity prices.
In the Present Worth method, the value of operating cost over the entire equipment life or selected payback period is converted to a single premium annuity or initial sum set aside to cover operating cost.
Carbon Trust Wales carried out a full survey of the site and provided a detailed business case including predicted payback periods and information on different funding options.
The average level of energy savings in realized projects is about 20% with IRR exceeding 20% and payback period of 3-5 years.
The 250,000 tonnes per year facility should be completed in 2015, with an estimated payback period of seven years.
The study found that an efficiency of up to 60% and a financial payback period as low as 4.5 years was possible for an optimised collector incorporating a 10mm thick granular aerogel cover.
"The planned payback period for the investments was 50 years on average, and up to 150 years in certain cases.