The Investment Dilemma
Global fleets are aging, and owners are facing a difficult investment decision when it comes to new build vessels. Ships need to be emitting less CO2 otherwise carbon taxes will make them too expensive to trade but the dilemma now becomes, do owners go for a conventional ship with green technologies, aim to be alternative-fuel ready or perhaps both? Given the rapidly evolving regulatory landscape, continuing with a business-as-usual approach is no longer viable. Owners must be proactive in their commitment to fuel consumption reductions if they want to avoid over-paying in penalties and carbon taxes. If a decision is made to pursue green technology, another challenge emerges: Is it more beneficial to invest in multiple low-impact technologies that each save a small percentage of fuel, yet suffer from diminishing marginal returns, or to opt for a single, high-impact solution that offers greater fuel savings but may be harder to justify at the boardroom level?
Overcoming decision-making complexities
Making the choice to invest in a green technology at newbuild stage is not the same as when considering a retrofit. This is part of our fundamental problem. When retrofitting, it makes sense to take the technology in isolation and calculate the payback independent of the ship. However, for a newbuild, this siloed approach can be misleading. The green technology investment must be assessed in the context of the vessel as a whole. In other words, the financial assessment of the vessel should fully incorporate the technology from the start. After all, you wouldn’t calculate the payback period of a propeller or a rudder, you’d just pick the most efficient one over the lifetime of the ship.
This leads to a simplified but powerful decision-making rule:
If the payback time of the green technology alone is less than that of the vessel itself, then installing the technology will shorten the overall payback time of the asset.
This logic is broadly applicable, but the point is well illustrated using BAR Technologies’ WindWings® in the graph below.
The green trendline shows that the payback time of WindWings® is significantly less than the orange trendline, which represents the payback time of conventional vessel without WindWings®. By combining these investments, the result is the blue trendline, the payback of a newbuild vessel with WindWings® installed. It is clear that through the installation of a technologies which over the lifetime of the ship, will save a significant amount of fuel, the return on investment becomes much more favourable.
Why Payback Time Isn’t Enough: The Role of Net Present Value (NPV)
Although the previous example is focusing solely on payback time, it is imperative that NPV is not ignored in putting together a business case for a new technology. Payback measures how quickly an investment returns its initial cost but ignores the full value generated over the asset’s lifetime. This is where Net Present Value (NPV) becomes critical.
The below tables is a great example of this. Although engine power limitation systems or variable speed drives offer shorter payback periods, they ultimately generate less total value over time. WindWings®, although a higher initial investment, delivers the greatest return when considering NPV. This is represented by attaining the greatest estimated NPV. These indicative values are estimated by taking the technology in isolation, using the average marketed fuel savings
| NPV (mUSD) | |
| 37.5 m WindWings® | 2.2 |
| Engine Power Limitation (EPL) | 1.2 |
| Variable Speed Drives (VSD) | 0.4 |
For long-term investors and operators, NPV offers a more comprehensive measure of profitability by accounting for both the time value of money and the duration of benefits.
The Regulatory Boost: IMO’s GFI Framework
It’s also important to consider the positive financial impact of regulatory compliance incentives. The case studies above do not include benefits from avoiding penalties under FuelEU Maritime or IMO’s Greenhouse Gas Fuel Intensity (GFI) regulations. Including these could substantially improve the payback and NPV of any green technology investment.
For example, a handysize bulker equipped with just one 24m WindWing® will save an additional $3 million between 2028 and 2035 under current GFI projections, on top of the fuel cost savings already factored in. However, a kamsarmax with three 37.5m WindWings® would save $8 million over that same time-frame! (If you would like to find out more about how GFI is calculated and how it will affect your fleet, stay tuned, we will be publishing more about this very soon)
However, even when individual vessels show strong decarbonisation performance, current financing incentives may still be misaligned. A recent UCL Energy Institute study found that banks reward companies with strong climate credentials, but not individual low-carbon ships, when setting loan terms. This disconnect means that even highly efficient vessels like those fitted with WindWings® may not benefit from cheaper financing unless the overall company is viewed as ‘green.’ Addressing this gap will be crucial to unlocking the full economic value of ship-level innovations.
Conclusions
In an era of rising newbuild costs and escalating environmental compliance pressures, integrating green technologies into vessel design is no longer just a sustainable choice—it’s a financially strategic one.
Although such investments may increase initial capital outlay, they significantly enhance vessel economics through fuel savings, stronger NPV, and avoided penalties.
Returning to our initial question, is it better to invest in many smaller devices or one larger, more impactful one? The evidence points strongly toward the latter. A single high-performance solution like WindWings® not only delivers better returns but also simplifies decision-making.
Companies like Union Maritime are leading by example, taking decisive steps to future-proof their fleets and align with the industry’s regulatory and environmental trajectory. Those who follow suit will not only stay compliant—they’ll thrive.
Photo caption: Brands Hatch
1 https://www.ucl.ac.uk/bartlett/news/2024/sep/shipping-banks-provide-cheaper-loans-greener-shipping-companies-not-greener-ships 2 https://www.u-mas.co.uk/wp-content/uploads/2025/04/Main-report-Apr2025.pdf 3 https://www.dnv.com/maritime/publications/waps-white-paper-download/
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