Tuesday, August 15, 2006

Windmill vs. New Refrigerator

Must resist urge to use the word tilting


I recently bought a Kill A Watt energy consumption measuring device, and have become an enthusiast for saving electrical power. Several co-workers have borrowed it and now have a better understanding of how they can conserve power.


In the course of my evangelism, I fell into a conversation with a co-worker who planned to buy and install a windmill on his property in New Hampshire. He feels this is a good way to both save resources and money. I asked him how much electricty he could generate, and he replied that his measurements indicated he could generate an average of 450 Watts. At $0.15 per kWh, this would be around $45 a month in energy. I asked him how much a windmill costs: $4000. How long would it last: 30 years with little maintenance.


By way of comparison, I had lent my Kill-A-Watt to another fellow, who reported back that his 15+ year old refrigerator was using $45 a month in energy. My refrigerator uses $12 a month in electricity, so this person could save $33 a month if he were only to buy as efficient a refrigerator as mine. Checking online, indicates a refrigerator should last for 15 years, and a top rated model (by Consumer Reports) such as the Whirlpool ET1FHTXMQ costs $750.


So the question is: If I had $4000 should I get a new refrigerator, or a windmill? (this thought experiment does not take into account subsidies, inflation or taxes). Interest income calculated using this online calculator.

Scenario 1 (buy windmill)
Initial investment account balance: $0
Return on energy generated: $45/month
Investment account balance after 30 years (assuming 8% return):$67513


Scenario 2: (buy $750 refrigerator and replace it again in 15 years)
Initial investment account balance: $3250
Return on energy saved: $33/month
Investment account balance after 30 years (assuming 8% return):$82571


Scenario 3: (buy neither)
Initial investment account balance: $4000
Investment account balance after 30 years (assuming 8% return):$43743


So, from a purely monetary point of view, investing in a new refrigerator is better than buying a windmill if your old refrigerator needs replacing. And if you have both an old refrigerator and an old dehumidifier, I suspect you will end up saving as much energy as a windmill generates at a fraction of the price. The guy with the bad refrigerator was also spending $60 per month on dehumidification.


The amazing thing for me is that the 50+% return you can get from buying a new refrigerator makes it such an incredibly good deal if your old refrigerator is inefficient. (Over 15 years you save $6000 in energy costs, which if invested at 8% would yield $11,500) Obviously, not everyone has such an old clunker as my co-worker. Your mileage may vary, but I highly recommend getting a Kill-A-Watt and finding out.
 
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