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Part 3 · The kit and the money

Does it pay?

Three different figures all get called profitability, and they can give opposite answers about the same measure. This module shows which to use when, and what you must know about a house before any of them means anything.

Rohi Perlsteyn, KronwattPublished Updated

In brief

  • Payback takes no account of how long a thing lasts. That is what makes it dangerous.
  • Cost per saved kWh is compared with your price. Not with a price in a brochure.
  • The same measure saves the same heat but different money in two different houses.
  • A figure without its assumptions cannot be checked. Always write them down.
On this page
  1. Three figures all called profitability
  2. What payback hides
  3. Annuity: spreading the cost across the years
  4. The same measure, two houses, different answers
  5. What is missing from every calculation
  6. How to read a quote
  7. Check yourself

Three figures all called profitability

When somebody says a measure pays, they almost always mean one of three figures. They measure different things, and they can point in different directions.

The figure What it answers What it misses
Payback time How long until I have my money back? Everything after that day — and how long the thing lasts.
Cost per saved kWh What does it cost to avoid buying this kilowatt-hour? Nothing essential — but it requires you to choose a lifetime and an interest rate.
Total over the lifetime How much is the whole deal worth? That a krona in twenty years is not a krona today.

The second is the one energy experts use, and it is the one this module is built around. The arithmetic behind it sits in full in the guide What does a saved kilowatt-hour cost?, which shows how we worked backwards from eight published Swedish cases.

What payback hides

Payback is the investment divided by the saving per year. It is easy to calculate and easy to grasp, which is precisely why it turns up in nearly every sales conversation.

The problem only shows when two measures have the same payback. Here are two, both costing 40 000 kronor, both saving 2 000 kWh a year, at an electricity price of 2.00 kr/kWh.

40 000 ÷ (2 000 × 2,00) = 10 years, for both

Measure Lasts Payback Cost per saved kWh
A — something in the envelope 30 yrs 10 yrs 1,02 kr
B — something with electronics in it 12 yrs 10 yrs 2,01 kr
The same price, the same saving, the same payback. But A saves money for twenty years after it has paid for itself, and B barely breaks even before it must be replaced. At 2.00 kr/kWh, A clearly pays — and B does not pay at all.

Payback asks when you get your money back. It never asks what happens afterwards.

Annuity: spreading the cost across the years

The figure in the last column above comes from a single formula. It spreads the investment evenly across the years it lasts, with interest, and then divides that annual cost by the kilowatt-hours it saves.

cost per saved kWh = investment × annuity factor ÷ kWh per year

factorThe annuity factor. It depends on the interest rate and the number of years. At 3 per cent over 30 years it is 0.0510; at 3 per cent over 12 years it is 0.1005. The shorter the life, the more heavily each year weighs.
rateThe discount rate. We use 3 per cent, because it is the rate that makes eight published Swedish sets of recommended measures add up. It is not a prescribed figure — no such figure exists.

Worked through for measure B above: 40 000 × 0.1005 = 4 020 kronor a year, divided by 2 000 kWh gives 2.01 kr per saved kilowatt-hour. The electricity price was 2.00. So the measure just about breaks even, and none of that was visible in the payback.

The same measure, two houses, different answers

Here is what makes this module hard, and what sends most calculations wrong. You do not compare the cost per saved kilowatt-hour with the electricity price. You compare it with what a kilowatt-hour of heat costs in this particular house.

And that figure was worked out in the module on heat: the energy price divided by the house's annual efficiency.

The house Cost of a kWh of heat Measure A at 1.02 kr
Direct electric heating 2,00 kr Clearly pays
Ground-source, annual factor of 3 0,67 kr Does not pay
The same wall, the same insulation, the same saved kilowatt-hours of heat. But in the house with a heat pump those kilowatt-hours were already cheap to make, so there is less money to save.

What is missing from every calculation

This section is written for whoever has to explain a figure to somebody else. Every profitability calculation — ours included — rests on assumptions nobody can know. That does not make it worthless. It makes it an assumption that belongs written next to the figure.

The assumption Why it cannot be known
The energy price across the lifetimeNobody knows. This course will never claim to.
The lifetimeA choice, not a measurement. Common choices are 25 years for solar and 10 for a battery, taken from warranty terms.
The investmentA national average is a band, never a quote. Replace it with your own the moment you have one.
The saving in practiceBuildings routinely use more energy than the calculation says — the gap is usually put at 25 to 33 per cent.

The last row is the most important, and it is a reason to be careful rather than to stop calculating. Since reality deviates by a quarter or more, chasing the third decimal is pointless. A figure accurate to within ±20 per cent is enough to decide whether a measure belongs in the plan. A figure without its assumptions is not enough, however many decimals it carries.

Why our own engine refuses to hold a default lifetime

Kronwatt's calculation engine holds no built-in lifetime, and a test actively prevents anyone from adding one. The reason is that the lifetime decides the answer outright — and that it is therefore the advisor's choice, not ours.

The same stance applies to grid-service income for batteries, which we count as zero until somebody states a figure of their own. A tool that quietly chooses for you makes you harder to check.

How to read a quote

Seven questions. They are not suspicious ones — a serious installer has the answers and gives them readily. Their absence from the paperwork is the norm, not malice.

  1. What energy price is the calculation based on? If it is higher than yours, the saving is overstated.
  2. What lifetime? And does it match the warranty in the same document?
  3. Is the green deduction included, and at what rate? 15 per cent for solar and 50 for a battery since 1 July 2025, capped at 50 000 kronor per person per year.
  4. Does the calculation assume income from exported electricity? The 60 öre per kilowatt-hour tax credit was abolished on 1 January 2026. Any calculation still carrying it is too optimistic.
  5. For a heat pump: what flow temperature? That figure decides the heat factor, and therefore the entire saving.
  6. For a battery: does it assume grid-service income? That market has fallen sharply, and nobody receives the money without having signed up for it.
  7. What is the saving measured against? The house as it is today, or a house that has already had another measure done? Two measures that each save "30 per cent" do not save 60 together.

The last one is the one that most often goes wrong, including in well-meaning calculations. If you insulate first and change the heat pump afterwards, the pump has less heat left to save — and the other way round. Measures must be calculated in sequence, not separately and then added up.

Check yourself

Six questions, this time with arithmetic. This is the hardest module in the course — having to think is the point.

  1. Question 1Two measures cost the same and save the same each year. One lasts 30 years, the other 12. What does payback say?

    • It is true that it is better — but payback does not say so, and that is the whole point. It only divides the investment by the annual saving, and both of those are equal. It gives 10 years for both.

    • Exactly, and it is why the figure is dangerous on its own. The lifetime is not in the formula. Cost per saved kilowatt-hour catches it: 1.02 kr against 2.01 kr for exactly those two measures.

    • A ten-year payback is in itself neither good nor bad — it depends entirely on how long the measure lasts afterwards. The one lasting 30 years goes on saving for another twenty after it has paid for itself.

  2. Question 2A measure has a cost per saved kWh of 1.20 kr. The house has ground-source heating with an annual factor of 3, and electricity costs 2.00 kr/kWh. Does it pay?

    • It is the right comparison in the wrong house. 2.00 kr is what the electricity costs. But the house does not buy heat at 2.00 — it has a heat pump, so a kilowatt-hour of heat costs 2.00 ÷ 3 = 0.67 kr. Saving it for 1.20 is a losing trade.

    • Yes. 2.00 ÷ 3 = 0.67 kr per kilowatt-hour of heat. The measure costs 1.20 to save something that costs 0.67 to make. The very same measure in a house with direct electric heating would clearly pay — it is the house's heating system that decides, not the measure.

    • Payback adds nothing here — it is already baked in, since the cost per saved kilowatt-hour spreads the investment across the whole lifetime. What is missing is the price of a kilowatt-hour of heat in this particular house.

  3. Question 3A quote promises a 30 per cent saving from insulation and 30 per cent from a new heat pump. What do they come to together?

    • It is the most common addition in the trade, and it always overstates. The second measure works on what is left after the first: 30 per cent of the remaining 70 is 21, so together it comes to about 51 per cent — not 60.

    • Yes: 100 − 30 = 70 left, and 30 per cent of 70 is 21. Together 51. That is why measures must be calculated in sequence, and why the order matters — it changes what the second one is worth.

    • They overlap partly, not entirely. The insulation reduces how much heat the house needs; the pump makes each remaining kilowatt-hour cheaper. Both do good, but the second works on a smaller base.

  4. Question 4A calculation from 2024 shows solar paying for itself in nine years. What should you check first?

    • Yes. It was abolished on 1 January 2026. A calculation from 2024 almost certainly assumes it, and then the income from every exported kilowatt-hour is substantially overstated. That applies to calculations still circulating today.

    • Practical, but not what changes the figure. What has changed since 2024 is two rules: the tax credit for exported electricity was abolished in 2026, and the green deduction for solar fell from 20 to 15 per cent on 1 July 2025. Both make the calculation worse.

    • A profitability calculation has a use-by date, because it rests on rules that change. Two of them have changed since 2024, both in the same direction. Always ask which year the calculation was made.

  5. Question 5Why is it pointless to calculate profitability to three decimal places?

    • Customers understand more than they are given credit for, especially when the arithmetic is shown. The reason is different and harder: buildings routinely use 25 to 33 per cent more energy than the calculation says. A third decimal on a figure with that uncertainty is decoration.

    • Yes. The gap between calculated and measured energy use is usually put at 25 to 33 per cent. A figure accurate to within ±20 per cent is ample for deciding whether a measure belongs in the plan — but the assumptions must be stated alongside it.

    • The formula is exact — annuity calculation is ordinary financial mathematics. The uncertainty does not sit in the formula but in what you feed it: lifetime, rate, price and saving.

  6. Question 6You have to explain a profitability figure to a homeowner. What must travel with the figure?

    • It is courteous but not checkable. The tool says nothing about what the figure rests on. What makes a figure verifiable is four things: energy price, lifetime, rate and investment.

    • Yes — with those four, anyone can redo the calculation and see whether it holds. Without them it is an assertion. It is also why the rules for recommended measures prescribe no method: whoever writes the figure is responsible for explaining it.

    • A general caveat protects whoever writes it but does not help whoever reads it. It lets nobody redo anything. Four figures do.

Your answers live only in your browser, and vanish when you leave the page.

Sources

  1. The method and the 3.0 per cent discount rate are derived in our guide What does a saved kilowatt-hour cost?, from eight published Swedish sets of recommended measures by three independent authors. The regulations prescribe no method.
  2. The annuity factors in this module: 0.0510 at 3 per cent over 30 years, 0.1005 at 3 per cent over 12 years. Both computed with the standard formula r ÷ (1 − (1+r)−n).
  3. The gap between calculated and measured energy use, 25 to 33 per cent, and the stance that ±20 per cent accuracy is sufficient for advisory work, come from our own method notes on insulation and the building envelope.
  4. Green deduction: 15 per cent for solar and 50 for energy storage, capped at 50 000 kronor per person per calendar year. The solar rate fell from 20 to 15 per cent on 1 July 2025 through prop. 2024/25:109 and bet. 2024/25:SkU17. Skatteverket states no end date.
  5. The tax credit for micro-production, 60 öre per kilowatt-hour, was abolished on 1 January 2026. Our own calculation engine therefore values exports as the spot price plus the grid-benefit payment, and nothing else.
  6. The lifetimes of 25 years for solar and 10 years for a battery are warranty conventions, not measurements. Our engine deliberately holds no default lifetime of its own, which a test enforces.