## Sunday, October 10, 2010

### Which investment would be more cost effective: energy efficient light bulbs to reduce electricity demand or wind turbines to produce electricity?

Both approaches are widely touted as good for the environment but their relative cost effectiveness is seldom compared. It can be done with simple arithmetic. Assume \$2 million is available to invest.

1. Energy efficient light bulbs. Home Depot is offering four (4) 14-watt compact fluorescent light (CFL) bulbs for \$7.97 that are claimed to provide the same light as a 60-watt incandescent light bulb, with a projected lifetime of 8000 hours.

· Assume the price is \$2 per bulb to make the arithmetic easier.

· If the bulbs were used an average of 4 hrs per day over 5 years, that would add up to 7,300 hours (365 days x 5 years x 4 hours), or less than the claimed lifetime.

· Each 14-watt CFL would save 46 watts per hour of use in lieu of a 60-watt incandescent bulb.

· Over a 5-year period (4 hours per day) electricity savings from a single bulb would be 335,800 watt-hours (46 watts x 7300 hours). 335,800 watt-hours = 335.8 kilowatt-hours (kWh).

· \$2 million could pay for 1,000,000 of the CFLs advertised by Home Depot.

Using these assumptions, 1,000,000 CFLs could save 335,800,000 kWh of electricity over 5 years.

2. Wind Turbine. The current “rule of thumb” price for a 1 Megawatt (MW) wind turbine seems to be roughly \$2 million (if installed in quantity).

· A 1 MW wind turbine operating at a generous 35% capacity factor[1] over 1 year would produce 3,066,000 kWh of electricity (1,000 kW x 8760 hours in year x 35% = 3,066,000.

· Thus, a 1 MW wind turbine operating over 20 years[2] at a 35% capacity factor could produce 61,320,000 kWh of electricity (i.e., 20 x 3,066,000 = 61,320,000).

3. Comparison: Based on these calculations:

· A \$2 million investment in a wind turbine would produce 61,320,000 kWh of electricity over a 20-year period.

· A \$2 million investment in CFLs could save 335,800,000 kWh of electricity over a 5-year period.

· Therefore, the investment in CFLs would save more than 5 times as much electricity in 5 years than the wind turbine would produce in 20 years. ( 335,800,000 divided by 61,320,000 = 5.48.)

4. Other important considerations: Electricity not used means less need for adding electric generation, transmission and distribution capacity and the economic cost and environmental impact of building and maintaining that capacity. Less cost means lower monthly electric bills.

[1] Capacity factor is determined by dividing the amount of electricity produced (in megawatt-hour – MWh or kilowatt-hours – kWh) divided by the rated capacity of a generating unit (e.g., wind turbine) x the hours in the period being measured. Thus, a 1 megawatt (1,000 kW) wind turbine that produced 3,066,000 kWh of electricity during a one year period would have a capacity factor of 35%.

[2] Wind energy advocates often assume that industrial scale wind turbines will have a useful life of 20 years though none of the type now being installed in the US has been in service anywhere near 20 years.