A higher-SEER unit uses less energy. The annual savings come from the efficiency ratio between old and new; dividing the upgrade cost by savings gives the payback years.
The example
$1,200 old, SEER 10 → 16.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 1200 × (1−10/16) | — |
| 3 | Annual saving | → $450 |
The formula
The formula:
How it works
How it works:
- Energy use scales inversely with SEER — new use = old × (old_SEER / new_SEER).
- Annual saving = old cost × (1 − old_SEER / new_SEER).
- Payback years = upgrade cost ÷ annual saving.
- Add rebates by subtracting them from the upgrade cost before dividing.
SEER savings shrink as the baseline rises. Going from SEER 10 to 16 saves a lot (the old unit was a hog); going from 16 to 20 saves far less, because the efficiency ratio is what matters, not the SEER points. So the payback on a high-efficiency upgrade is great when replacing an old clunker and weak when the existing unit is already decent. Always compute payback against the actual old SEER, net of rebates.
Try it: interactive demo
Old annual cost, old SEER, new SEER, upgrade cost.
Variations
Payback years
Cost ÷ saving:
New annual cost
After upgrade:
With rebate
Net cost:
Pitfalls & errors
Inverse with SEER. Use the ratio old/new, not the point difference.
Real old SEER. Payback depends on the actual existing efficiency.
Net of rebates. Subtract rebates from upgrade cost first.
Practice workbook
Frequently asked questions
How do I calculate SEER energy savings in Excel?
What's the payback period?
Why do savings shrink at high SEER?
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