Electronic Design

What's All This ROI Stuff, Anyhow? (Part 1)

Due to my recent comments on Ed Tipler's proposal (Electronic Design, April 16, p. 109) for improved efficiency of ordinary (capacitor-start) electric motors, several readers wrote to criticize, question, or doubt me. Some were very skeptical that an improvement of 20% could be achieved. They thought perhaps I was fooled by a 20% improvement in the IN-efficiency. But the data I saw indicated that a real improvement is likely. There will be considerably less amperes* flowing through the motor. Ask me for a copy of the information.

But one reader really got on my case because he thought I was confused about the return on investment (ROI) of the improved motor efficiency. He pointed out that a 20% efficiency improvement on a big amount was a big deal, and that a 20% improvement on a small matter would really be a very small deal.

I replied that I certainly agreed with that generalization. He implied that I hadn't considered the ROI, which was going to be lousy. My general comment on this was, "Do they really not teach about ROI in school?" Then I began to think that maybe they don't teach this in school. So I decided to write about this topic. Also, I sat down and computed out the actual ROI on the back of an envelope, which I had not done before. More on this later.

I recently read in my local newspaper about a Vermonter who was very proudly ecology-minded. She went out and bought a new hybrid car that got very good energy efficiency—very good mpg—AND THEN SHE DROVE IT AS LITTLE AS POSSIBLE!

How sad! If a person can drive as little as 20 or 40 miles/week, that person should buy a good old gas-guzzling car, because for that amount of driving, the mediocre mpg that person is getting is not a big deal. The best way to cut down on smog (and gas consumption) is to have people who drive many miles buy modern cars and replace their inefficient and smoggy old cars. Then, people who don't drive much should purchase these old cars cheaply. There's no point in throwing away an old car if it runs well and will also keep you dry in the rain!

(One of the cheapest ways to cut down on smog is not to decree that all new cars must have their emissions cut to nothing. Instead, buy up old smoggy cars and GIVE those drivers modern low-smog cars. This may not happen, but you have to think about what's going on. Is it reasonable to flog a car maker to spend all of its money to make cars with the lowest possible pollution emissions, while 100 such high-tech cars might not cause as much pollution as one old car? I'll let somebody else worry about that.)

This reader also observed that, rather than worrying about motors, I should consider getting a more efficient car. The savings there would be much more important, he argued. Okay, let's do some ROI computations. On average, I drive about 54 miles/day at around 27 mpg, which equals about 2 gallons. At $1.90/gallon, that costs around $3.80. If I could trade in my old car for a car that would really get 33 mpg, it sure would be nice to save 70 cents/day on gasoline. This would save me more energy costs than 11 half-horsepower motors! (And I don't even own 11 such motors.)

But what investment would I have to make to realize that savings? If I bought a good $8000 car on three-year terms, it would cost me at least $9 or $10/day. That isn't a great investment to make to save only 70 cents/day. I refuse to do it. Certainly, I can think of better places to invest my money!

But how about the environmental cost of getting a new car made? If I spend $8000 on a car, doesn't that cause some damage to the environment, with the smoke and carbon dioxide caused by steel-making and all of the scrap involved in making a new car? I really think I'm better off staying with my old car.

Additionally, the reader tried to chide me about the environmental costs. He even wanted me to count in the cost of buying a new pulley for the motor, and the environmental cost of throwing away an old pulley. But the scheme of adding a capacitor won't require any change in pulley size, so that was a specious problem.

Every month, many newspapers and magazines (as well as newsletters from your power company) recommend that we all replace old incandescent light bulbs with fluorescents. Sure. But while there are great potential savings if you replace an ordinary (incandescent) 100-W bulb with a fluorescent bulb, it would not save you any money for a terribly long time if you're replacing a bulb that's only run for a few hours per week. Next month I'll talk about ROI on electrical stuff, including Mr. Tipler's proposal. So stay tuned!

All for now. / Comments invited!
RAP / Robert A. Pease / Engineer
[email protected]—or:

Address:
Mail Stop D2597A
National Semiconductor
P.O. Box 58090
Santa Clara, CA 95052-8090

*Ask me for directions on how to find the very good Museum of Electricity, dedicated to Andre-Marie Ampere, in Polymieux, France, just 12 km northwest of Lyon.

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