Calculate ROI on air flow leak detection: Annual costs vs. payback

Compressed air leaks waste thousands of dollars every year. And, investing in a solution to detect and efficiently address leaks can be costly. But, the right system and right flow meter products provides a fast return on investment while optimizing energy use and freeing up resources such as maintenance teams. 

Use the following formula to calculate the potential ROI for an air flow leak detection system based on your plant's specific needs.

Formula for ROI calculation on an air flow leak detection investment

To calculate the ROI on an investment in airflow leak detection, divide the estimated loss from air flow leaks (usually 25% of operating costs) by the amount spent on leak detection equipment. 

Below is a breakdown followed by an example. 

Total operating costs

Multiply:

• The number of compressors by
• The amount of kW each one uses by
• Total operating hours for the year (assuming all compressors run concurrently) by
• The cost per kW

Calculate losses

The industry-standard forecast is that 25% of operating costs are due to compressed air leakage. So, multiply the annual operating cost above by .25. The result is the money spent due to leaks. 

Calculate expense on equipment

Determine the air flow meters and products you need based on the number of compressors and machines they serve along with other factors. The total cost of those products is your investment. 

Calculate ROI

Divide the cost of losses due to leaks by the total expenditure. The result is the number of months it will take to recoup the money spent on the leak detection system. 

Leak detection ROI example: Medium-size manufacturing plant

Assumption

• 3 - 200 hp compressors (160 kW each)
• 10 machines
• 6800 operating hours per year
• Leaks account for 25% of annual cost

Total annual cost

Cost of losses due to leaks

ROI calculation

$15,247.50 / $65,280 X 12 = 2.8 months payback