Understanding The Cost Of Electricity

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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
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How the unit was tested
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This is the figure needed
to estimate running costs.
30
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Simple visual guide.
The more stars the better.
40
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meaningfully compare appliances.
Features
Energy star rating
50
fr i
result of standard testing of the appliance and allows customers to
Cost price
60
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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
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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
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07
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