Calculating ROI When Switching to 24V LiFePO4 Batteries

Switching to 24V LiFePO4 batteries can be a strategic investment, offering significant advantages over traditional battery technologies. To assess whether this switch is financially beneficial, it’s crucial to calculate the Return on Investment (ROI). This article provides a detailed method for calculating ROI, ensuring a comprehensive understanding of the cost-effectiveness of adopting 24V LiFePO4 batteries.

To calculate ROI for switching to 24V LiFePO4 batteries, determine initial costs, estimate lifespan and cycle life, calculate energy savings, and factor in maintenance costs. Use the formula:ROI=(Total Savings−Total Initial Costs)/Total Initial Costs×100 
This helps assess the financial viability of the investment.

1. Identify Costs

Initial Costs

• Purchase Price: Determine the cost of the 24V LiFePO4 batteries you plan to acquire. For instance, if a 24V 100Ah LiFePO4 battery costs $800, this amount represents your initial investment.
• Installation Costs: Include any expenses related to installing the new battery system. This may encompass labor costs and additional equipment such as chargers or battery management systems.

Maintenance Costs

• Ongoing Maintenance: Although LiFePO4 batteries require less maintenance compared to lead-acid batteries, it’s prudent to estimate any periodic maintenance or service costs associated with the new system.

2. Estimate Savings

Energy Savings

• Efficiency Gains: Compare the energy efficiency of LiFePO4 batteries to your previous battery technology. LiFePO4 batteries generally offer around 95% efficiency, while lead-acid batteries operate at about 80% efficiency.

For example, if your previous system consumed 1,000 kWh annually with lead-acid batteries, switching to LiFePO4 could yield the following savings:

Energy Savings=Total Consumption×(1−Efficiency of LiFePO4Efficiency of Lead Acid)\text{Energy Savings} = \text{Total Consumption} \times \left(1 – \frac{\text{Efficiency of LiFePO4}}{\text{Efficiency of Lead Acid}}\right)Energy Savings=Total Consumption×(1−Efficiency of Lead AcidEfficiency of LiFePO4​) Energy Savings=1,000×(1−0.950.80)\text{Energy Savings} = 1,000 \times \left(1 – \frac{0.95}{0.80}\right)Energy Savings=1,000×(1−0.800.95​) $$\text{Energy Savings}=1,000\times \left(1-1.1875\right)$$ $$\text{Energy Savings}=1,000\times \left(-0.1875\right)$$ $$\text{Energy Savings}=-187.5\text{ kWh}$$

This calculation indicates a net gain in efficiency.

Replacement Costs

• Longer Lifespan: LiFePO4 batteries typically last over 2,000 cycles, whereas lead-acid batteries last between 300 and 1,000 cycles. If lead-acid batteries need replacing every three years at a cost of $600 each, and you expect the LiFePO4 battery to last 10 years without replacement, your savings would be:

Savings from Replacement=(103×600)−800\text{Savings from Replacement} = \left(\frac{10}{3} \times 600\right) – 800Savings from Replacement=(310​×600)−800 $$\text{Savings from Replacement}=2,000-800$$ $$\text{Savings from Replacement}=1,200$$

Operational Savings

• Reduced Downtime: Consider the operational savings from decreased downtime and the increased reliability of LiFePO4 batteries. Enhanced reliability means fewer interruptions and potential cost savings from avoided downtime.

3. Calculate ROI

Use the following formula to calculate ROI:

ROI=Total Savings−Total CostsTotal Costs×100\text{ROI} = \frac{\text{Total Savings} – \text{Total Costs}}{\text{Total Costs}} \times 100ROI=Total CostsTotal Savings−Total Costs​×100

Where:

• Total Savings includes energy savings and savings from reduced replacements.
• Total Costs covers the initial purchase price, installation costs, and ongoing maintenance.

For example:

If your total savings over ten years amount to $2,000, and your total costs include $800 for purchase and $200 for installation, totaling $1,000:

ROI=2,000−1,0001,000×100\text{ROI} = \frac{2,000 – 1,000}{1,000} \times 100ROI=1,0002,000−1,000​×100 ROI=1,0001,000×100\text{ROI} = \frac{1,000}{1,000} \times 100ROI=1,0001,000​×100 $$\text{ROI}=100\%$$

Conclusion

Calculating the ROI when switching to 24V LiFePO4 batteries involves assessing both the costs and the potential savings. By evaluating the initial and ongoing expenses against the long-term savings from improved efficiency, extended lifespan, and reduced operational costs, you can determine the financial benefits of this advanced battery technology. For custom LiFePO4 battery solutions tailored to your needs, Redway Battery offers expertise and quick solutions to B2B and OEM clients worldwide. Contact us for a quick quote and explore how our products can enhance your energy storage systems.