We've all heard of the star rating system for appliance efficiency but there's more! We look at how to correctly assess a refrigerator's vital statistics incorporating the time value of money using a spreadsheet approach.
Energy used per year in kWh, kWh used per cubic litre capacity versus cost are all explored. How long does it take to pay back the difference between a more expensive, more efficient fridge compared to a cheaper less efficient fridge? At what point does it make sense to purchase one fridge over another. All will be revealed!
The Equipment Energy Efficiency (E3) program is a cross jurisdictional program through which the Australian Government, states and territories and the New Zealand Government collaborate to deliver a:
It is one of a number of programs implemented by the Council of Australian Governments (COAG) Energy Council:
To reduce energy bills for households and businesses in a cost effective way by driving improvements to the energy efficiency of new appliances and equipment sold;
To improve the energy efficiency of new appliances and equipment that use energy and to also improve the energy performance of products that have an impact on energy consumption
To reduce appliance and equipment related greenhouse gas emissions through a process which complements other actions by jurisdictions.
https://www.energyrating.gov.au/about-e3-program
The star rating is about energy efficiency – that is how efficient a model is relative to other models of the same size and the more stars means more efficient – when compared to other models of the same size.
Most products are given between 1 and 6 stars. However technology keeps getting better… as does energy efficiency! This is why nowadays you’ll see some super-efficient models in shops and online with an extra row for stars, as they can have up to 10.
Tip: Always choose which size (or capacity) model you need first, then use the star rating to compare them.
So we now know how to select the best appliance for our needs or do we?
If, for example, we use the star rating system we find a fairly large variation in results because this rating system allows for a range.
When selecting an appliance there is going to be a price difference between a more efficient option, say 4.5 stars compared to a less efficient one.
But questions need to be asked:
In the above table it shows a number of fridges with the cheapest to run per litre capacity per year at $0.11 and the most expensive at $0.33.
I have selected two fridges for this example which are:
The two fridges have a similar capacity but the differences in cost to run are considerable.
We are assuming a 2% increase in electricity costs per year, $0.28/kWh and after 10 years the difference is in the order of $1,225.
To recoup the purchase price difference takes 6 years.
But is that all?
What if we decided to buy the cheaper model and do something else with the money?
For example, invest in the bank?
So what we are talking about is the time value of money.
Time taken to recoup the difference based on the more efficient fridge is 6 years.
But if we invest money at 2% interest compounded monthly at the end of 6 years we are $84.39 better off.
So which is the better fridge to purchase?
What about after 10 years?
After 10 years the calculation tells us buy the more efficient fridge
What these calculations don’t take into account is:
Also, what about higher interest rates?
In the table below I have outlined a range of interest rates from 2.5% all the way up to 7.5% Using some calculations it is possible to see when to buy a more efficient fridge from the two choices presented and when to buy the cheaper fridge and invest the difference in the bank.
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