The question to ask about a machine
When two machines do the same job, the one that uses less energy is not automatically the better buy. The more useful question is what each will cost over its whole working life, and how much of that difference energy accounts for. This article focuses on that reasoning, and in particular on payback, the most common way of expressing how quickly an efficiency premium is recovered.
Simple payback explained
Simple payback is the extra purchase cost of the efficient option divided by the yearly savings it produces. If an efficient machine costs more up front and saves a certain amount each year, payback is the number of years it takes for the savings to equal the extra cost.
A worked illustration, with entirely hypothetical numbers:
- Standard machine: average draw of 20 kW.
- Efficient machine: average draw of 18 kW.
- Operating time: 6,000 hours per year.
- Electricity price: $0.10 per kWh.
Standard energy use is 20 × 6,000 = 120,000 kWh per year. Efficient energy use is 18 × 6,000 = 108,000 kWh. The saving is 12,000 kWh, which at $0.10 equals $1,200 per year. If the efficient machine costs $6,000 more, simple payback is $6,000 ÷ $1,200 = 5 years.
If the same machines ran only 3,000 hours a year, the saving would be 6,000 kWh, or $600, and payback would stretch to 10 years. If the electricity price doubled, payback would halve. This shows how sensitive the result is to the assumptions, and it is why you should use your own figures rather than rules of thumb.
What the savings depend on
Operating hours. This is usually the biggest factor. Savings accumulate with each hour of running, so continuously operated equipment is the best candidate.
Actual load. Efficiency ratings often assume a certain load. If a machine spends most of its time at part load, what matters is its efficiency there. Equipment with good control at partial load, for example through variable speed drives, may outperform one with a higher full-load rating.
Energy price. Higher energy costs shorten payback. Prices change over time, and demand or time-of-use charges may matter in addition to the per-unit rate.
The baseline. Savings are measured against what you would otherwise have done. Comparing an efficient machine against a failing old one gives a different answer from comparing against a standard new one, because you have to buy something anyway when a unit fails.
Maintenance and condition. An efficient design that is not kept in good order loses its edge. Leaks, dirty filters and worn parts erode savings.
System context. A pump motor that is efficient while the pump is badly oversized, or a compressor that feeds a leaky distribution network, does not deliver the savings expected. Part of this is about pump efficiency and the proper matching of components to the system.
Looking beyond simple payback
Simple payback is easy to calculate but leaves things out:
- It ignores what happens after the payback period. A machine with a long life keeps saving afterward.
- It ignores the time value of money. A saving next year is worth somewhat less than a saving today.
- It ignores differences in maintenance, reliability and downtime.
- It ignores non-energy benefits such as quieter operation or better process control.
More complete methods, such as lifecycle costing or net present value, include these factors. They need assumptions about expected life, discount rates and future prices, so results should be read as ranges and not exact answers. The general thinking behind this is total cost of ownership, which applies to any purchase.
How long should payback be?
There is no single correct answer. Some businesses accept only quick paybacks because capital is tight. Others take a longer view for long-lived equipment. Safety, regulatory and reliability needs may justify an upgrade even when energy savings alone would not. It makes sense to compare each project against what else the money could do.
Checking the claims
When evaluating a supplier’s savings claims, a few questions are useful:
- What load and operating profile do the claims assume?
- What is the comparison baseline?
- Are the figures measured, calculated or estimated?
- Are installation, controls and training costs included?
- Is there a way to verify results after installation, such as submetering?
Treat generic percentages with caution. Real savings depend on your plant.
Verify after you buy
After installation, compare actual energy use against the pre-project baseline, adjusting for production levels. If savings fall short, the reasons are usually informative: run hours differ from the plan, the load is lighter than expected, or the control settings were not optimized. Measuring also builds an evidence base for your next decision.
This article is general information, not engineering or financial advice. A qualified engineer or energy auditor can evaluate specific equipment choices.