WWW.WIPRO.COM Understanding the cost of electricity The cost of electricity can only be reliably computed with knowledge of the energy used by individual appliances, the time they are used and the per unit cost of electricity. SMART ENERGY CONSUMER 1 Dr Martin Gill (PhD) Table of contents 02 Introduction 02 Energy Use 04 Cost of Energy 05 Typical domestic appliance energy use 07 Conclusion 07 References 07 About Wipro Technologies Most people would like to do something to reduce their electrical energy bill however they are unsure where to start. By using what people already know about their car’s fuel costs this paper will show how to calculate the cost of running electrical appliances. Using simple examples it explains how to calculate energy costs. This is an important starting point for people wishing to better manage their use of electricity. Introduction Even people who do not own cars are generally able to estimate the cost of fuel to drive a car a particular distance. Despite being quite similar, very few people claim to be able to estimate the cost of running their numerous electrical appliances. COMPARING THE TWO CALCULATIONS: VEHICLE ELECTRICAL APPLIANCE Energy used by the vehicle (litres per 100km) Energy used by the appliance (kWh per hour) Cost of a litre of fuel (cents per litre) Cost of a kWh of energy (cents per kWh) Distance to be driven (kilometres) How long we use the appliance (hours) This paper considers the energy used by various appliances, the cost of electrical energy and concludes with a discussion of electricity used by a range of typical domestic appliances. Energy Use The Australian Government requires all vehicle manufacturers to Figure 1: shows an example of the Australian Government’s star rating provide fuel consumption figures for new cars. These figures allow label, in this case for a clothes dryer. Energy Star rating during appliance purchases well ahead of Features and often ahead of the Cost Price. 10 Figure 1: Energy Rating Label fixed to a clothes dryer r ne di on rC Ai he sd ac ot Cl m g tio hin ry er e r te ea hin he r W as te H fre ra to r ez er 0 Se How the unit was tested 20 ra This is the figure needed to estimate running costs. 30 ge Simple visual guide. The more stars the better. 40 pa meaningfully compare appliances. Features Energy star rating 50 fr i result of standard testing of the appliance and allows customers to Cost price 60 Re be shown on major electrical appliances. The energy star rating is the Considered during purchase (%) The Australian Government also requires consumption information to as customers to compare the fuel consumption of different models. rating label is having the desired effect with customers considering the w subjecting different cars to precise test conditions. This testing enables Australian Bureau of Statistics (ABS) data shows that the energy star ish of the vehicles they purchase. Fuel consumption figures are obtained by D consumers to make informed decisions about the petrol consumption Figure 2: Customer considerations when replacing appliances (from Table 22 of 2011 ABS data) 02 The star rating indicates the efficiency of the appliance and can be used Car owners include lifetime running costs in their vehicle purchasing to compare similar appliances. Some care is still required when decisions. For example a diesel engined car uses less litres per 100 km comparing appliances of different sizes, for example a large appliance than a similarly sized car with a petrol engine. Customers are able to may be more efficient and show more stars, but still use more energy forecast the potential savings using the published fuel consumption than a smaller slightly less efficient appliance. The actual energy use figures, the distance they drive each year and the price of fuel. The measured during testing is also shown on the label, for the clothes calculation will quickly reveal if the fuel saving justifies the higher dryer in Figure 1 it is 206 kWh per year. purchase price of a car with a diesel engine. Electricity is sold in units of kilowatt-hours (abbreviated as kWh). For Exactly the same calculation applies for electrical appliances with the star now just consider the kilowatt hour to be the equivalent of a litre of rating label providing the necessary information. Here we assume that petrol. The next section discusses the cost of a kWh but currently it is the 6 star dryer costs $2000 compared to $500 for the 1 star dryer. around 25 cents. The estimated annual cost of a dryer using 206kWh Table 2 shows the lifetime costs assuming both dryers will last 10 years. per year would be $51.50 (206 x $0.25). The energy label also provides important information about how the Table 2: Lifetime cost comparison over 10 years appliance is being used. On a television it will state the number of hours per day while for the dryer label shown in Figure 1 the yearly kWh 1 star 6 star 1 load per for tnight $894 $2,144 1 load per week $1,288 $2,288 3 loads per week $2,863 $2,863 estimate applies for ‘Hot cotton program, used once per week’. If customer usage differs then the energy consumption must be adjusted. To demonstrate this adjustment we consider the clothes dryer. A large family might use their dryer three times a week, increasing the estimated annual cost to $154.50 (3 x $51.50). Another family might use a clothes line, only using the dryer once a fortnight, in this case the annual cost is $25.75 (0.5 x $51.50). Energy labels enable customers to meaningfully compare similar Table 2 reveals that for customers intending to use their clothes dryer appliances. Table 1 compares two 6kg clothes dryers , one offering a for 3 (or less) loads per week, the less efficient 1 star dryer has a lower 6 star energy rating and the other a more typical 1 star rated dryer. lifetime cost. 1 Table 1: Energy Comparison of two 6kg clothes dryers The energy rating system provides a useful reference when comparing similar appliances. Calculating the lifetime cost of ownership quickly reveals if energy savings justify the higher purchase cost of energy efficient appliances. It must be emphasised that few car owners ever achieve the fuel consumption figures stated by manufacturers. Likewise actual energy use of appliances will vary from the published figure, both with use and over time. COMPARING THE TWO CALCULATIONS: USE COST/YEAR COST/YEAR 1 load per for tnight $39.38 $14.38 1 load per week $78.75 $28.75 3 loads per week $236.25 $86.25 1 The consumption figures were taken from typical dryers listed on www.energyrating.gov.au 03 Cost of Energy usage beyond the daily allowance is charged at a higher rate. Taking a “People know the price they pay for petrol but do not know the price they are paying for electricity”. Table 3: Typical Water Tariff showing the daily allowance converted into a quarterly threshold typical water tariff from SA Water: The majority of people are familiar with the price of fuel despite the petrol price cycle occurring in Australian cities. Figure 3 shows the price Indicative daily threshold Indicative quarterly threshold cycle in Sydney for the first six months of 2012, revealing weekly price variations of 15 cents per litre. Despite these variations the majority of vehicle owners remain familiar with the current price. Many drivers constantly monitor the price, refilling when the price is lowest. Water use price 0 to 328.8 litres 0 to 30 kilo-litres $2.42 per kilo-litre 328.8 to 1424.7 litres 30 to 130 kilo-litres $3.45 per kilo-litre Above 1424.7 litres Above 130 kilo-litres $3.73 per kilo-litre 160.0 155.0 150.0 The published rates state the “Indicative daily threshold”, however 145.0 because the water meter is only read every 3 months bills are 140.0 calculated using the quarterly threshold. 135.0 130.0 Access to electricity is also considered to be a basic necessity leading 125.0 2 l-1 -Ju 01 12 -Ju 01 01 -M ay - n- 12 2 pr -1 -A 01 12 01 -M ar- 2 -1 eb -F 01 01 -Ja n- 12 electricity utilities to offer similar tariffs. Lower usage is provided at a cheaper rate, with higher prices applying for higher usage. The following shows the regulated rates offered to New South Wales customers. Figure 3: Sydney Unleaded Petrol Price Cycle (from NRMA website www.mynrma.com.au) Table 4: Regulated electricity tariff for a NSW customer While people are familiar with the highly variable cost of petrol they Rate (Including GST) generally do not know the price they are paying for electricity. Most can recall roughly what their quarterly electricity bill is but are unable Units to state how much they use each day or what rate they are paying per kWh. This is an interesting observation since both figures are shown on the quarterly electricity bill and the price of electricity is fixed. A number of factors lie behind this difference in price awareness, but Daily Charge 67.089 cents/day First 10.95 kWh per day 26.840 cents/kWh Second 10.95 kWh per day 28.060 cents/kWh Balance kWh per day 37.730 cents/kWh probably the greatest factor is the high visibility of petrol prices. Each petrol station displays the current price of petrol and the evening TV news often includes a segment highlighting the average price of petrol (often naming stations offering the cheapest petrol). Another significant difference is that while the petrol tank is filled weekly, the electricity bill What is important is the average price paid per kWh. Most people are only arrives once every three months when the majority of people only aware of their annual electricity bill so Figure 4 plots the average price per focus on the total amount, not the cost per kWh. kWh against the annual cost of electricity for the tariff shown in Table 4. Like water, electricity is seen as a basic necessity. Highly successful water conservation programs have made consumers aware that the water utility provides a daily allowance at a cheaper rate, but water 04 Average Price (c/kWh) 35 a 42Watt load (e.g. a light bulb) is used for 24hours. The wattage of many appliances is shown on the compliance label, for example: 33 31 PC Power Supply 650 Watts 29 Specifications 27 25 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Annual Electricity Bill Figure 4: Average Price of Electricity against Annual Electricity Bill for the tariff shown in Table 4 Figure 4 can be used to estimate the average price of electricity. Starting with the quarterly bill we multiply by four to estimate the Type ATX12V2.2 Maximum Power 650W Input Voltage 230V AC Input Frequency Range 50/60 Hz Approvals CE TUV FCC UL CUL C-Tick Oil filled radiator 2000 Watts annual bill. Locating this value on the horizontal axis customers use the graph to reveal the average price they are paying. For example an annual bill of $3500 means the customer is paying an average of 30c/kWh. More infrastructure is required to supply customers with higher energy use. Figure 4 shows that customers with high energy use will pay for the infrastructure through higher average prices. Figure 5: Appliance labels showing Wattage Typical domestic appliance energy use The stated wattage is the maximum for the appliance. For many appliances the actual consumption will vary widely between households depending on: Most Australian families run only one or two cars, however a recent survey found the average house contained 70 electrical appliances. Luckily only a few of these appliances contribute significantly to domestic energy costs. Until now we have encouraged thinking of buying a ‘kilowatt hour’ (kWh) of electricity as equivalent to buying a ‘litre’ of petrol. Now we need to understand the kilowatt hour in a little more detail. The • How well the appliance is maintained All these factors influence total energy use. The fig. below depicts the energy use for a typical household near Sydney using electric hot water heating. Laundry, Other, 5% Standby, 6% 6% Lights, 7% Hot Water, 31% Lifestyle, 8% relevant expression is: kWh = • How the appliance is used • The age of appliance and Wattage X Hours Appliance in use Heating and cooling, 17% Kitchen, 10% Refrigeration, 11% 1000 Customers need to know the Wattage of the appliance and how long they use the appliance. For example one kWh will be used when an appliance using 1000Watts is used for 1hour. It will also be used when Figure 6: Typical residential energy use for a Sydney family of 3 using electric water heating 05 Figure 6 highlights some of the challenges of managing electrical energy efficient bulbs should reduce total energy use by lighting to less than usage. The electric water heater is the most significant component of 25% of the current level. Unfortunately energy inefficient halogen lights the household energy use, but the customer is unaware of when it is are currently excluded. turned on and off. Storage electric water heaters use a 3kW heating Energy use for heating and cooling is much more visible. Most element and run for several hours per day (depending on the number customers choose when to run heaters and coolers. With heaters and of people in the house and how they use hot water). An electric water coolers often running for several hours per day it is important to use heater could be adding 10kWh of energy to the domestic household energy efficient solutions. For example reverse cycle air-conditioners each day without the consumer being aware. are much more efficient space heating solution than a small fan heater. There are other devices in the house which are not controlled by the The use of thermostat controlled heating can also reduce energy consumer, for example appliances which are left on all day, including consumption with the heater turning off once the area has reached the domestic refrigeration. Today 99.8% of Australian homes have at least set temperature (assuming that the thermostat is appropriately set). one fridge. The energy use of a fridge is not constant, the compressor Energy rating test results are only available for a limited number of runs intermittently to maintain the temperature and roughly once a day appliances, leaving a large number of appliances for which the a defrost cycle is run, which uses a heater element to melt built up ice. consumer has no typical information. For example desktop computers Refrigerators are included in the Australian Energy Labelling scheme can use well over 100Watts and some game controllers use close to with testing indicating modern fridges cost $100 to $200 a year. Older 200Watts. Consumers choosing to leave these devices turned on are fridges cost more to run and don’t forget many households still have a potentially adding over $200 to the annual electricity bill. drinks fridge hidden in the garage. At present there is no simple method to measure the energy Remaining household energy use is usually manually controlled. Most consumption of many appliances, meaning that consumers concerned people find it surprising that lighting contributes so much to domestic about their energy usage should use all avenues to investigate how energy use, but recall that energy use is related to the length of time much electricity is being used in and around the house. that the appliance is used, with lighting commonly used for 5 to 6 hours. Government programs encouraging the installation of energy Figure 7: Examples of annual domestic yearly energy costs $700 $200 $400 $250 $200 06 Conclusion This paper has outlined how to calculate the cost of running appliances around the home. It has shown that this requires knowledge of • the energy used by the appliance • the length of time that the appliance is used • the cost of electricity The energy labels now fitted to a number of different types of appliance are a useful reference, but customers should look beyond the simple star rating. Without the energy labels, estimating energy use is more challenging, however your energy retailer and online sources provide a useful starting point. References Australian Bureau of Statistics, Environmental Issues: Energy Use and Conservation, March 2011 NRMA website (www.nrma.com.au) E3 Equipment Energy Efficiency website (www.energyrating.gov.au) About Wipro Technologies Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company, that delivers solutions to enable its clients do business better. Wipro Technologies delivers winning business outcomes through its deep industry experience and a 360º view of “Business through Technology” – helping clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization wide commitment to sustainability. Wipro Technologies has 135,000 employees and clients across 54 countries. For information visit www.wipro.com or mail info@wipro.com 07 DO BUSINESS BETTER WWW. 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