Simple payback and NPV for an energy-saving ship retrofit.
Formula
$$ \text{Saving}\text{annual} = F\text{saved} \cdot P_\text{fuel} + C_\text{avoided} \cdot P_\text{carbon} - \text{Opex} $$
$$ \text{NPV} = -\text{Capex} + \sum_{t=1}^{N} \frac{\text{Saving}_\text{annual}}{(1 + r)^t} $$
Symbol legend
| Symbol | Meaning | Unit | Source |
|---|---|---|---|
| $Capex$ | Up-front capital cost | USD | vendor quote |
| $Opex$ | Incremental annual operating cost | USD / year | vendor quote |
| $F_\text{saved}$ | Fuel saved | t / year | engineering estimate |
| $P_\text{fuel}$ | Bunker price | USD / t | bunker index |
| $C_\text{avoided}$ | CO₂ avoided (subject to carbon price) | t / year | $F_\text{saved} \cdot C_f$ |
| $P_\text{carbon}$ | Effective EUA + FuelEU carbon price | USD / t | market |
| $r$ | Discount rate | fraction | corporate WACC |
| $N$ | Project horizon | years | project plan |
Sources
- Stopford - Maritime Economics (investment appraisal chapter).
- IMO Global MTCC Network - energy-efficient technology finance guidance.