Here, we estimate the costs of efficiency improvement of ceiling fans using the options previously described. We estimate the cost of conserved electricity (CCE) to assess the cost-effectiveness of these efficiency improvements. Due to data constraints, we only cite costs from a few countries while estimating the CCE.
Based on data collected from industry experts, we estimate the incremental cost of efficiency improvements of motors typically used in ceiling fans. We consider two types of efficiency improvement options. First, given that BLDC motors are significantly more efficient than induction motors, we estimate the incremental cost of BLDC motors of the same size and performance specifications over the typical induction motor. Second, we consider the cost of improving the efficiency of the induction motor itself, where the efficiency improvements are smaller and less costly compared to those achieved by a BLDC motor. BLDC motors are typically more expensive when compared to induction motors primarily because of the extra cost of the controller. Note that induction motors and BLDC motors have similar material costs (excluding the BLDC motor controller). This is primarily because the extra cost of permanent magnets in a BLDC motor is compensated by reduction in costs due to less copper and steel (See Chiang 2010; Desroches and Garbesi 2011 for a detailed discussion).Desroches and Garbesi find that the global cost of materials for a 750-W induction motor (note: ceiling fan motors are typically much smaller, rated about 75 W) is about US$ 43.80, and for a BLDC motor, the material cost ranges from US$ 24.20 to US$ 36.74, as of 2011 (Desroches and Garbesi 2011). This indicates that the material cost of a smaller BLDC motor, such as what would be used in ceiling fans, should also range from a little less than to about equal to that of a comparable AC induction motor. Therefore, the incremental cost of the BLDC motor over an induction motor is essentially the cost of the controller. A BLDC motor controller is estimated to have a manufacturing cost between Indian rupees (INRs) 300–700 in India (Prayas Energy Group 2012). The same controller would cost between US$ 3.2 to US$ 22.5 in the USA (Chiang and Fairchild Semiconductor 2010). We assume the incremental cost of a BLDC motor that replaces a typical ceiling fan induction motor of 75 W to be approximately US$ 10.50 for the purposes of this paper.
The cost of manufacturing efficient ceiling fan blades in the USA is estimated to be about US$ 2.25, versus US$ 0.25 per conventional flat blade (Parker and Hibbs 2010; Parker et al. 2000). The incremental cost of manufacturing an efficient blade versus a conventional blade in India is about INR 60 for three blades, i.e., US$ 0.36 per blade. Although these appear to be significant cost increases for these components, they are not very large (~5 %) compared to the total retail price of a ceiling fan. An important point to mention in the case of efficiency improvement through blade design is that blade design and manufacturing are driven by aesthetic considerations rather than just efficiency. This is also reflected in divergent estimates of the costs of manufacturing depending on the design, material, manufacturing, and treatment/finishing processes. The significance of aesthetic considerations in blade manufacture implies that mandating more efficient blades through minimum energy performance standards (MEPS) is not likely to be a practical or desirable option. However, given that some fans may be designed to meet energy efficiency policy specifications by using more efficient blades, it is still useful to estimate the costs of efficiency improvement through more efficient blades, particularly for labeling and incentive programs. Table 4 reports these costs in dollar terms along with average numbers, which are used as the input for the cost-effectiveness calculation.
Cost of conserved electricity
This section presents the CCE in India for motor and blade improvements described above, using the efficiency assumptions discussed earlier along with corresponding cost assumptions. Two kinds of CCEs are calculated as follows: the manufacturing cost of conserved electricity (CCEm) which considers the incremental cost of the higher efficiency fan to the manufacturer and the cost to the consumer of conserved electricity (CCEc) which considers the incremental cost of the higher efficiency model to the consumer. The former metric (CCEm) is lower than the latter (CCEc) as it does not include markups or taxes. Therefore, CCEm can be used to measure the cost-effectiveness of a market transformation program, such as an upstream incentive program, while CCEc can be used to measure the cost-effectiveness of a standards program or a downstream incentive program.
As shown in Table 5 above, improved AC induction motors are the most cost effective single option, followed by BLDC motors. We also note that our cost and efficiency assumptions (and resulting CCE estimates) regarding efficiency improvement using more efficient blades are conservative and may very well be lower than those shown. This can be attributed to using cost and efficiency estimates for more efficient blades with a traditional appearance as discussed earlier rather than the most efficient blades (Parker and Hibbs 2010). Also, data on blades indicated divergent estimates of the costs of manufacturing depending on design, material, manufacturing, and treatment/finishing processes, which varied due to aesthetic considerations. Given the globally traded nature, maturity, and high contribution of material costs to the total costs of the efficiency technologies considered, cost estimates based on the data in India and the USA are likely to be a reasonable approximation of the costs in other regions. To give a picture of cost-effectiveness under various scenarios, we also present the results of a sensitivity analysis on the CCE in the next section of this article.
The cost-effectiveness analysis for other regions presented in Table 6 takes into account region-specific usage assumptions and discount rate estimates. The assumptions regarding usage are discussed in more detail later in the energy saving potential section. The assumptions regarding percent savings and incremental costs are the same as those presented earlier. This is a reasonable assumption because the percent saving numbers are the same for the same technology regardless of economy, but the costs of BLDC motors and AC induction motors are driven mainly by the cost of materials and electronics, which are part of the global market. The cost estimates for efficient blades are more uncertain because these blades may be based on proprietary designs, and blade design and manufacture are driven by aesthetic considerations rather than just efficiency. This is also reflected in divergent estimates of production costs depending on design, material, manufacturing, and treatment/finishing processes. Table 6 shows the estimate CCE for efficiency options in SEAD countries and China.
As can be seen in Table 6, improved AC induction motors are cost-effective in almost all economies, and BLDC motors and efficient blades are cost-effective in countries with higher fan usage (i.e., high unit energy consumption or UEC), such as Brazil, China, India, Indonesia, Mexico, South Africa, and the USA. Tariffs are assumed based on inputs used in LBNL’s BUENAS model and in data collected by Shah et al. (2013).Footnote 5
Sensitivity of cost-effectiveness analysis
To illustrate the cost-effectiveness of the options under varying assumptions for hours of use and cost, we present three scenarios that have different hours of use. We varied the costs of efficiency improvement from BLDC motors by calculating the CCEm using our high incremental cost estimate of $22.5 in the “high cost” scenario and our low incremental cost of $3.2 in the “low cost” scenario. These results are presented in Fig. 2, showing the CCE under the base-cost ($10.5), low-cost ($3.2), and high-cost ($22.5) scenarios. These cost estimates are in-line with the high and low estimates reported by Chiang (2010). The range of hours of use per day (4–12 h) is consistent with Boegle et al. (2010), who identify that a lower range of use is 3–5 h per day and a higher range of use of 10–16 h per day. We also use the CCEc metric discussed earlier to show the estimated impact on cost-effectiveness of moving from an upstream program to a downstream incentive or standards program. This is represented as the curve labeled “downstream” in Fig. 2. A typical tariff for India is approximately 8 cents/kWh (~4.5 INR/kWh).
The results in Fig. 2 show that, for improvements equivalent to the 50 % savings in power consumption obtainable using a BLDC motor, an upstream incentive program for ceiling fans in India is cost-effective even assuming low hours of use and high incremental costs of efficiency improvement. Other countries with high ceiling fan usage (i.e., high UEC from ceiling fans) will also find these efficiency improvements cost-effective, as discussed earlier.