Do Natural Gas Rates Impact Energy Management System (EMS) Payback?

(PART 1 OF 5)

Energy Management Systems are admittedly a significant financial investment. However, we have good news: they pay for themselves! A typical ROI (return on investment) is 2-4 years.

Calculating the amount of time it will take to pay off your investment (project payback projection) is an important function in the EMS purchasing process. At some companies such as Telkonet, engineers have developed powerful, precise strategies and tools to perform energy savings analyses for potential customers. These strategies and tools are technical and sophisticated. What kinds of factors go into building an energy savings analysis? In a series of posts, we’ll discuss the factors that deeply affect ROI and those that do not as deeply as you may have thought.

Natural Gas Rates

In general, natural gas for heating has become very efficient over the years, as the rate structure is based upon a fixed-price cost for supply. So the more you use it, the less per therm it costs.

Additionally, years ago the United States became a major exporter of natural gas and that strategy will continue to drive rates down over the long term.

Furthermore, since distribution is spread out rather well across the geography of the cold and moderate temperature ranges, the result is lower than average rates in those parts of the country. So, regarding EMS payback, natural gas does not help shorten EMS payback time significantly. That said, natural gas certainly has reduced heating operating costs compared to electricity, which is  good for operational savings over the long term.

And for properties using occupancy-based thermostats combined with water source heat pumps, we’ve seen project paybacks fewer than 2 years in the cold to moderate temperature regions. In these instances, properties obtained both favorable EMS payback times and low annual heating operating costs over the long term.

Bottom Line

Natural gas rates themselves have a shallow impact on EMS payback time. Their low rates along with their high heating efficiency do, however, reduce operating costs long-term.

What other factors should an Energy Management System ROI include in its calculation? We’ll continue this discussion next time – with electricity rates!

For a robust ROI on your new energy management system, contact Telkonet representative at sales@ or 888-703-9398.