In budgeting for a retrofit of a single property or as part of a larger portfolio, to calculate the ROI, the dollars saved on energy costs is the numerator and the cost of the project is the denominator.

For instance if a $1000.00 investment to replace all the incandescent bulbs in your building with compact fluorescent lamps resulted in annual savings of $720.00, your equation would be 720/1000 = .72 (or 72% return).

So the formula is: Rate of Return = Annual Savings/Cost.

Try getting a 72% return on anything else these days.

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