A company has a 100 kW transformer that is connected to the power supply and swi

Question

A company has a 100 kW transformer that is connected to the power supply and switched

on all the time. The core loss of the transformer is approximately 4% of the rated capacity

at no load if the transformer is on. Assuming that the electricity costs are 25 cents per kWh,

the average building use is 160 hours/month and the average month has 720 hrs,

i) Estimate the annual cost savings from installing a switch that would energise the

transformer only when the building is being used.

ii) If the initial purchase and installation cost of the switch is $500, determine the

payback period using simple payback analysis.

Explanation / Answer

1) The rated capacity of the transformer at no load is 100kW. The losses amount to 4% of this value when ON, i.e. 4KW. Out of 720 hours in a month, only 160 hours are being utilized, which means 720-160 hours are wasted i.e. 560 hours. Each of this 560 hours, we have a 4KW loss. Thus, the total energy loss = 4KW x 560 = 2240 KW-hrs. Thus, total cost savings would be 25cents x 2240KW-Hrs = $ 560 per month. i.e. $ 6720 annual savings.

2) Monthly cost savings = $ 560. Therefore daily savings = 560/30 = $ 18.67.

To get back $ 500, we need to use the switch for 500/18.67 days = 27 days approx = payback period.

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