How to calculate the energy payback time when investing in new equipment.

If you are considering investing in new technology in your house with a view to saving money on your energy bill, you should do the calculations to make sure it is really worth doing. Here are some simple steps to deducing if it worth doing on cost grounds alone.

1. Find out the power consumption of the device in kilowatts (kW).
2. Estimate how long the device will be used for each day.
3. Multiply the power consumption by the number of hours, to get the energy use per day in kilowatt hours (kWh).
4. Multiply this by the number of days in a year (365).
5. This will then give you the energy use of the device for the year.
6. Repeat the above with the old device you are replacing.
7. Subtract the new device energy use from the old device energy use.
8. Calculate the cost of this energy, For example the average UK cost of electricity is abot 12p per kWh, in the US it is about the same in cents. The average UK gas price is about 3p per kWh, there is a full listing on http://www.confusedaboutenergy.com
9. So all you do now is multiply the cost of the saved energy by the cost per unit.
10. Don’t forget to get the units right, 12 cents is 0.12 dollars.
11. The final step to estimating a payback time is to divide the cost of the new device by the financial value of the energy saving per year.

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As an example
You are buying a new refrigerator, and the power consumption of the old unit is 0.05
kW, a refrigerator is on all day, so its energy consumption is 0.1 x 24 hours, giving 1.2 kWh, it is on all year, so for the year this is 438 kWh, with an electricity cost of 0.12 Pounds (use your currency unit, e.g. Dollars or Euros), this would cost 52.6 pound per year to operate.
The new fridge power consumption is 0.04kW, and using the same method, this costs 42.05 pounds per year to operate, so the cost saving per year in energy bills is 52.6 - 42.06 = 10.54 pounds. If the fridge costs 200 pounds then on purely energy cost grounds the investment will take 19 years to pay back.

You can also use this method to calculate whether it is worth buying the more expensive energy saving model. We should all try to save energy, but manufacturers charge an unnecessary premium for the energy efficient badge, and are often deceiving customers making them spend much more for little energy saving gain. Forewarned is forearmed!


**Some Assumptions:-
The old equipment is discarded,
Does not consider maintenance costs,
Excludes finance and alternative investment considerations

Question Time last night with Monty Don and the crowd did anyone watch it. It never ceases to frustrate me the nonsense talked about climate change.

The UK is aiming to reduce our 1990 CO2 emission by 12.5% by 2010 by all sorts or techniques and by 26% by 2020, we are apparently ahead of Kyoto targets at the moment. Fantastic, but what is the point, if other large territories are doing the opposite? To put this into context it will take about six months for China to wipe out all UK reductions that are planned for the next ten years, take a look at the graph below which makes the point I think. China will build another two Coal fired power stations and neutralise what we have done. "But we are giving a lead to the world" is often the counter to this argument, well maybe?

http://www.confusedaboutenergy.co.uk/index.php/world-energy-issues/energy-consumption-worldwide

Interestingly the labour MP made the only valid point and that was that Obama will make a big difference to all of this. Interestingly the biggest difference the UK and the USA will make in the short term is that in a recessional world, manufacture and consumption will reduce and this will have a much larger effect on CO2 emissions than any great planned strategies.

And another thing! The UK adds bio fuels grown in Brazil from sugar cane to boost its “local” green credentials, but how can surplanting food crops or forest make and sense in a global context.

http://www.confusedaboutenergy.co.uk/index.php/world-energy-issues/oil-from-crops

from my calculations we should all be burning wood pellets to keep warm, they are fairly cheap and their net carbon dioxide emissions are the lowest. The problem is that if we all switched we would run out of trees and the price would go up!
http://confusedaboutenergy.co.uk/index.php/world-energy-issues

This is one of my all time energy favourites. It was seriously suggested that if you put a windmill on the top of a car, and then drive the car, the turbine will rotate, generate electricity, which would then drive the car.

I would welcome contributions to the site explaining what is wrong with this as a concept.

This also inspired my picture

Here are two true and seemingly contradictory statements:-

1. Electrically powered cars produce less CO2 than gasoline powered cars
2. By driving an electrically powered car you will produce more CO2 than if you drive a gasoline powered car

But which statement is true? Well they both are true. Read More?

It is fairly obvious that hot water pipes and hot water storage cylinders should be insulated to prevent heat loss. Newer cylinders already have insulation pre fitted, but if your tank is un-insulated then according to the Energy Savings Trust by fitting a hot water jacket you will save about £40 per year. Your savings would be even more however if you regularly use an electrical immersion heater, since it costs a lot more to heat water with electricity.
Given that a new thick jacket (75mm) for a hot water tank costs about £12, it should pay for itself in less than six months. Even upgrading and old thinner jacket, is worth considering and will pay back the investment in about 2 years.
This energy/money saving measure is almost a must do. Even if you are renting off a landlord who is too tight fisted to put a jacket on the cylinder, you could buy one and take it with you when you leave!
Insulating hot water pipes will save you less, possibly £10 per year but DIY installation is very easy and materials will only cost about £10. So it will only take a year to payback this investment.

I spent some time talking to someone the other day who considered my attitude to ground source heat pumps maddening. They were concerned mostly with the “green” angle. In most circumstances on cost grounds it can easily be shown that they make little sense unless you are using the most expensive form of heating, for example electricity or bottled gas, see below chart. A plumber friend , field trained by Worcester Bosch, thought them justifiable with fairly expensive LPG, but still the numbers just do not stack up.




For those who do not know if you put one unit (1kWh) of electrical energy into a ground source heat pump, you will be able to get 4 kWh of heat out of the ground. This is absolutely true, BUT the electrical energy used to power the pump costs 4 times the gas energy you might ordinarily heat your house with, so what have you gained? If you consider that they cost £12,000, or $20,000 to install, then you are unlikely to pay back the investment, ever! If you are electrically heated however they are worth it.

There is a “green angle” to this technology. You would be forgiven for thinking that by using a ground source heat pump you will emit 4 times less CO2 with this technology, but this is also untrue. The bigger picture has to be considered. This would only be true if your electrical power were 100% generated by non carbon emitting power stations, and this is certainly not the case. In fact by using a ground source heat pump you will emit about 2.2 times less CO2, which is environmentally good, but can you afford the investment and the slow payback.

I think the Grants from government need to be much better to help us financially justify installing this technology.

Almost all energy savings related internet sites focus on carbon emission and how much carbon dioxide (CO2) you are generating and how much CO2 emission you will prevent by changing what you do.

Our new purchase choices are also often driven by the energy claims of manufacturer’s and by the EU or US energy labelling systems that you see by law on various products.

We believe this focus is wrong, you can end up buying very expensive equipment based on the premise that the product is less damaging to the environment than a competitors’ product. Or you can invest in an expensive technology to reduce CO2 emission where e the investment might have been more wisely deployed elsewhere in your household.

For example the most efficient washer on the market might save £20 a year on your electricity bill but may have cost you and extra £200 to buy, would that £200 have been better deployed insulating your loft?

As another example investing in a wind power if you live in the Shetlands is probably wiser than buying solar panels, but where is the comparative evidence for this?

We are committed to providing information on how to cost effectively reduce energy costs and how best to deploy you financial resources if you wish to invest in new equipment in your household, either as a replacement or as new technology to reduce your environmental impact. Please feel free to look at www.confusedaboutenergy.co.uk and comment and contibute, we are open minded and want to get to the truth.