From the monthly archives: July 2008

Saving energy

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Woodstock wrote about the Green Dilemma earlier this week.   I thought I’d pick off a couple of cases and work through the math parts to determine if savings would really be economic savings.

Case 1: consider my 15 year-old Kitchenaid top-freezer with an ice maker.  The Kitchenaid Marketing Literature says the technology has improved:

if you’re still using a refrigerator manufactured before 1993, you could save nearly $100 a year in utility bills by buying a KitchenAid built-in refrigerator.

The problem: this spectacular built-in appliance starts at $4,500, making the economic incentive a  non-starter.

Let’s look at something comparable, a 20.6 cubic foot Sears Kenmore with an ice maker, available about $30 less than I paid for my existing refrigerator in 1993.  According to the Energy Star Calculator, the annual cost of electricity for my existing refrigerator is $97.93, assuming it uses 933KWh per year.  The brand new Kenmore uses an estimated 432KWh per year, which would cost $45.34 for the electricity.  Its annual savings is $52.59.  The return on investment:

$839.99 / $52.59 savings/year = 15.97 years

And for comparison:  2008 New Refrigerator – 1993 Old Refrigerator = 15 years.

Conclusion: it’s not worth replacing until my existing refrigerator gives up the ghost. I would first try fixing my fridgeif I could find the parts at a price I was willing to pay.

Case 2: Consider the options for a more efficient car.   My 2002 Subaru Impreza station wagon has an estimated fuel economy of 19 – 25 mpg.  In practice, it’s more like 22 (city) to 30 (highway).  A 2008 Toyota Prius fares 48 (city)/45 (highway).    Let’s assume the average rating and calculate the annual cost in gasoline, using today’s price:

Prius: 5,300 miles/year / 46 miles/gallon = 115 gallons/year

Subaru: 5,300 miles/year / 22 miles/gallon (we’re being pessimistic) = 241 gallons/year

Savings = (241 g/y – 115 g/y) * $4.399/g = $553/year

If someone were to give me a Prius, I would drive it.  But as that’s not likely to happen, I’d need to buy one.  They’re in high demand, so dealers are applying ADP onto the price.  The cheapest I found (and probably sold by now) was $24,234.  On top of that would be tax (8.9%), title, license, rust undercoating, muffler bearings, digital radiator, flux capacitor and sound proofing.  Let’s just round up to $27,000.

Assuming the annual gas savings of $553 holds, it would take 47 years to break even:

$27,000 / $553/year = 48.82 years

It’s easy to consider some other assumptions:

  • I get $10,000 trade-in value on my car (sold to a Hummer driver): break even is 30.7 years.
  • I drove the national average of 12,000 miles per year instead of my paltry 5,300 (which is, like, five  Susan Dennis years).  Annual savings is now $1,252/year.   Break-even for scenario 1 is 21.5 years.  Break-even for the trade-in scenario is 13.58 years.
  • I buy the used 2003 Prius model with 65,147 miles on it for $18,995 and sell my existing car for $10k.  At the original mileage rate, it’s 16.2 years to break even.  ($18995-$10000)/$553 = 16.26.
  • Same case, but I drive the national average of 12,000 miles per year.  Breakeven is now 7.18 years.

Conclusion: it’s not worth replacing until my existing car gives up the ghost. And even then, the Prius is difficult to justify with my assumptions.  (Ted: I also tried the beauteous Honda Goldwing Touring motorcycle at 37mpg.  Any other recommendations?)   One option that makes sense is a Vespa. At about $5k new — and tricked out with leftover flame decals — it gets 75 mpg. I can take the $5k leftover and buy another couple of bicycles and a tandem.