Ranking Energy Retrofit Measures: A Worked Comparison of Five Options

One budget, five candidate measures, and an illustrative calculation showing which deliver first and which depend entirely on how the building is used.

Owners rarely have the budget to do everything at once, so the useful question is not which measures save energy but which order to do them in. Ranking by simple payback is crude and still far better than ranking by enthusiasm. The illustrative example below takes one building, one budget, and five measures, and shows how the ranking actually falls out.

The situation

An owner of a 4,000 square metre commercial building in Riyadh has an illustrative budget of SAR 600,000 for energy work and a current annual electricity cost of SAR 920,000. Five measures are on the table: controls and scheduling, chiller plant optimisation, lighting replacement, roof insulation improvement, and window film on the west and south elevations. The task is to rank them and decide what the budget buys first.

Assumptions (illustrative)

• Baseline annual electricity cost: SAR 920,000, of which cooling is assumed to be 62 per cent.
• Measure A, controls and scheduling review: illustrative cost SAR 45,000, assumed saving 6 per cent of total.
• Measure B, chiller optimisation and sequencing: illustrative cost SAR 120,000, assumed saving 8 per cent of cooling.
• Measure C, lighting replacement: illustrative cost SAR 310,000, assumed saving SAR 74,000 per year.
• Measure D, additional roof insulation: illustrative cost SAR 240,000, assumed saving 4 per cent of cooling.
• Measure E, solar control window film: illustrative cost SAR 165,000, assumed saving 5 per cent of cooling.

Step 1: Convert each measure to an annual saving in riyals

Cooling cost is 920,000 multiplied by 0.62, which is SAR 570,400. Measure A saves 920,000 multiplied by 0.06, which is SAR 55,200. Measure B saves 570,400 multiplied by 0.08, which is SAR 45,632. Measure C saves SAR 74,000. Measure D saves 570,400 multiplied by 0.04, which is SAR 22,816. Measure E saves 570,400 multiplied by 0.05, which is SAR 28,520.

Expressing every measure in the same unit is the whole trick. Percentages of different baselines are not comparable, and suppliers naturally quote against whichever baseline flatters their product.

Step 2: Calculate simple payback for each

Measure A: 45,000 divided by 55,200 is 0.8 years. Measure B: 120,000 divided by 45,632 is 2.6 years. Measure C: 310,000 divided by 74,000 is 4.2 years. Measure D: 240,000 divided by 22,816 is 10.5 years. Measure E: 165,000 divided by 28,520 is 5.8 years.

The ranking is A, B, C, E, D. Controls win by a distance because they cost little and address waste rather than inefficiency, and roof insulation is last on payback despite being the measure owners most often ask about first.

Step 3: Allocate the budget in rank order

A at 45,000 plus B at 120,000 plus C at 310,000 totals SAR 475,000, leaving SAR 125,000 of the budget unspent. Measure E at 165,000 does not fit, so the remainder is held.

The first three measures consume 79 per cent of the budget and deliver SAR 174,832 of annual saving, a blended payback of 2.7 years. The unspent balance is a legitimate outcome rather than a failure to spend.

Step 4: Check the interaction between measures

Lighting replacement removes heat from the space, reducing the cooling baseline. If cooling cost falls by about 3 per cent after Measure C, the saving from Measure B drops from SAR 45,632 to roughly SAR 44,263, and the savings from D and E fall similarly.

Savings are not additive. Each measure shrinks the baseline the next one acts on, so a list of measures totalling 30 per cent will not deliver 30 per cent. Sequence matters and the model should be rerun after each stage.

Step 5: Test the assumption that drives the ranking

If the controls review finds the building is already well scheduled, Measure A might save 2 per cent rather than 6, which is SAR 18,400 and a payback of 2.4 years. It still ranks first, but the headline saving falls by SAR 36,800.

The controls saving is the most uncertain number in the set because it depends on how much waste exists today. This is an argument for measuring before committing, not for skipping the measure.

Step 6: Decide what the unspent balance should do

Holding SAR 125,000 to verify the first three measures through metered data costs one year of the SAR 28,520 that Measure E would have produced, which is a known price for better information.

Verification is worth buying when the next measure has a long payback. If the measured results come in below forecast, that balance funds correction rather than a second disappointing project.

What changes the answer

• If the building operates fewer hours than assumed, control measures lose value faster than fabric measures.
• If the chillers are near the end of their life, optimisation becomes a weaker investment than planned replacement.
• If the roof is due for replacement anyway, insulation becomes far cheaper because the access cost is already being paid.
• If electricity pricing for the customer category changes, every payback shifts in proportion while capital costs do not.
• If occupancy rises, the cooling baseline grows and measures acting on cooling improve relative to lighting.

What the numbers tell you

• Express every candidate measure as riyals saved per year before comparing anything.
• Expect controls and operational measures to rank ahead of fabric measures on payback in most occupied buildings.
• Do fabric work when the access cost is already being paid for another reason, because that changes the ranking.
• Rerun the model after each completed measure, since each one shrinks the baseline for the next.
• Buy measurement before buying the long payback measures, as the information usually costs less than the mistake.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

Domira works on buildings that already exist: surveying what is installed, specifying the systems that have to be replaced, and running maintenance and refurbishment work around the people using the property. Tell Domira which asset you are responsible for and we will say what we would inspect first.