Return on Investment (ROI) is a measure of the gain (preferably) or loss generated relative to the amount of money that was invested. ROI is typically expressed as a percentage and is generally used for financial decisions, examining the profitability of a company, or comparing different investments. It can also be used to evaluate a project or process improvement to decide whether spending money on a project makes sense. The formula is shown below-
A negative ROI says the project would result in an overall loss of money
An ROI at zero is neither a loss or gain scenario
A positive ROI is a beneficial result, and the larger the value the greater the gain
Example – installing a Super Air Nozzles (14 SCFM compressed air consumption) in place of 1/4″ open pipe (33 SCFM of air consumption consumption) . Using the Cost Savings Calculator on the EXAIR website, model 1100 nozzle will save $1,710 in energy costs. The model 1100 nozzle costs $42, assuming a $5 compression fitting and $45 in labor to install, the result is a Cost of Investment of $92.00. The ROI calculation for Year one is-
ROI = 1,759% – a very large and positive value. Payback time is only 13 working days!
If you have questions regarding ROI and need help in determining the gain and cost from invest values for a project that includes an EXAIR Intelligent Compressed Air® Product, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.
If you have a stock portfolio, or even a retirement account, you’ve likely heard the term “return on investment.” It basically tells you how hard your money is working for you, and, the higher, the better.
The term is also used to determine the financial benefits associated with the use of more efficient products than you’re using right now:
The cost of operating industrial pumps, air compressors, and a variety of industrial rotating equipment, can be greatly reduced by using variable frequency drive systems that sense the demand and change the motor’s speed (and hence power consumption) accordingly. These systems are not cheap, but the reduction in operating costs is often quite noticeable.
At home, installing energy efficient windows (spoiler alert: your builder probably used the cheapest ones he could find…mine sure did) or upgrading appliances & HVAC can cost a pretty penny, but you’ll also see your electric bill go down.
EXAIR Corporation has a worldwide reputation for providing highly efficient compressed air products for industry. Our Engineering Department has a company-wide reputation for being data fanatics…which is key to allowing us to provide our customers with ample information to make the best choices to optimize your use of your compressed air.
It’s not hard at all to calculate your potential savings from the use of an engineered compressed air product, assuming you know how much air your current device is using. If not, we can tell you if you can send it in for Efficiency Lab testing (free and fast; call me to find out more.) Here’s an example for a VERY typical situation: replacing an open copper tube blow off with an EXAIR Super Air Nozzle:
A 1/4″ copper tube uses 33 SCFM @80psig
A Model 1100 Super Air Nozzle uses 14 SCFM @80psig
33 SCFM X 60 min/hour X 8 hours/day X 5 days/week X 52 weeks/year = 4,118,400 SCF
14 SCFM X 60 min/hour X 8 hours/day X 5 days/week X 52 weeks/year = 1,747,200 SCF
4,118,400 – 1,747,200 = 2,371,200 Standard Cubic Feet of compressed air savings
If you know your facility’s cost of compressed air generation, you can calculate the monetary savings. If not, we can get a good estimate via a thumbrule used by the U.S. Department of Energy that says it typically costs $0.25 to generate 1,000 SCF of compressed air:
In 2019, the cost of a Model 1100 Zinc Aluminum Super Air Nozzle is $41.00. Daily savings (not counting weekends) is:
$592.80 ÷ 260 days (5 days/week X 52 weeks/year) = $2.28 daily savings
Meaning the payoff time for the $41.00 investment in the Model 1100 is:
$41.00 ÷ $2.28 = 17.9 days
Or…just over three weeks. Now that I’ve shown you the math, I’d like to introduce you to the EXAIR Cost Savings Calculator. Just enter the data, and it’ll check your math (because I know you’re going to do the math anyway, just like I would.) It even does the ROI for you too.
If you’d like to find out more about how – and how fast – EXAIR Intelligent Compressed Air Products can pay off for you, give me a call.
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When EXAIR started to manufacture compressed air products, we created a culture in making high quality products that are safe, effective, and efficient. Being leaders in this industry, we created a program, the Efficiency Lab, to compare blow-off devices with EXAIR products in noise levels, flow requirements, and force measurements. With calibrated test equipment, we compare the data in a qualified report to share with our customers. This information can be helpful to determine the total amount of air savings and safety improvements that EXAIR products can offer.
In conjunction with the Efficiency Lab, we created a Cost Savings Calculator. It is a quick way to view payback periods and annual savings when using EXAIR products. As an example, I used a 1” Flat Super Air Nozzle, model 1126, and compared it to a 1/8” open pipe. (The reason behind the comparison is that the model 1126 can screw onto the end of the 1/8” NPT pipe.) With an operation of 24 hours/day for 250 days a year, the amount of air used by an 1/8” open pipe is near 70 SCFM (1,981 SLPM) at 80 PSIG (5.5 Bar). The model 1126 has an air consumption of 10.5 SCFM (297 SLPM) at 80 PSIG (5.5 Bar). By putting the information in the Cost Savings Calculator, it determined that the ROI was in 2.1 days. The annual savings was $5,355 USD per year. Imagine if you replaced ten blow-off spots in your facility, the amount of money that could be saved. Here is the worksheet below:
The people that started to notice the savings were the utility companies that make electricity. Depending on your location, electrical suppliers initiated a rebate program to use engineered nozzles in your facility. Similar to other energy saving rebates, like LED light bulbs and high efficiency furnaces, the electrical providers notice a big savings when using EXAIR products. If you qualify, the total cost to purchase and implement the EXAIR Super Air Nozzles are reduced.(Even if a rebate program has not been implemented in your area, the idea of saving energy and compressed air makes it very profitable and environmentally sound in changing over to EXAIR products).
To see if your utility offers rebates on compressed air optimizations, go to the DSIRE database. This database is easy to search and informative.
For Example, here in Ohio Duke Energy has a Prescriptive Incentive Program for its customers. The Prescriptive Incentive Program makes it easy for Duke Energy customers to receive an incentive for their natural gas and electric energy efficiency projects. Prescriptive Incentives are energy efficient measures paid per-unit, reimbursing the customer up to the total cost (including materials and labor) after the measures have been installed. See the image below for their incentives for using Engineered Nozzles;
To discuss your application and how an EXAIR Intelligent Compressed Air Product can help your process and save you money, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.