5 star-rated appliances may only trim your energy costs
1 min read . Updated: 02 May 2023, 10:41 PM IST
PremiumDemand for energy efficient appliances is rising as people look to reduce their electricity bills. Salespeople are promoting 5-star labelled air conditioning units as they consume up to 25% less energy than lower-rated models. Although these units cost more, they can help users save money over time. However, a study by the Centre for Science and Environment has found that during peak summer temperatures a 5-star AC can consume up to 28% more power.
Searing temperatures and soaring electricity bills. That’s what you can expect in the summers, unless you are vacationing in cooler climes. For most people, the hefty power bills are a source of serious concern, especially if they are using air-conditioners (ACs). It’s no wonder then that demand for electrical appliances that consume less power is rising. And, shops that sell these appliances also understand this.
So, if you were to go shopping for an AC these days, the salesperson will try and impress upon you the latest model that can help lower your power bills. “You will save up to 25% on your electricity bill," a salesperson in a leading retail chain of consumer electronics told Mint. No, this is not because of any recent path-breaking innovation in the energy efficiency space. Instead, the salesperson showcases an AC that is labelled 5 star by the Bureau of Energy Efficiency (BEE), and it is more energy efficient compared to those rated lower. But, here’s the caveat: the 5 star- labelled AC is costlier by ₹9,000 when compared to a 3 star rated model with similar features.
Also, the salesman’s pitch is incorrect because buying a 5 star-rated AC does not cut down the electricity bills by 25%. Rather, the appliance will consume 25% less power compared to, say, a 3 star-rated one.
BEE introduced star labelling of electrical appliances, including televisions, refrigerators, geysers, fans and tubelights, in 2006 to enable consumers to choose these appliances based on their energy efficiency. The appliances are given star ratings ranging between 1 and 5, with 5 star denoting lowest power consumption. Further, the BEE label on each product also gives an approximate idea of how much power is consumed by the appliance. This information can come in handy for a quick cost analysis of how much you will be billed in using the appliance. Those purchasing appliances online can look up the labelling information on the BEE mobile application.
Cost benefit
With higher star ratings, the upfront purchase price of the appliance also increases. The difference in price can be anywhere between 10-25% for different appliances. For instance, a 3 star 1.5 ton Daikin AC is priced at ₹39,490, whereas a 5 star variant of a similar product is priced at ₹48,890, a mark-up of about 24%. The star labelling of each product will show the difference in power consumption by the respective ACs, but it doesn’t clearly demonstrate the cost-saving one can expect by shelling out an extra ₹9,400 upfront.
It’s true that a higher-rated appliance will consume less power and, thereby, result in fewer electricity units consumed in a month, but the purchase will truly be economically beneficial for you only if the savings on the cost of running the appliance offsets the extra price paid at the time of purchase over a period of time. Mint did some number crunching to find out how long it usually takes to offset the purchase costs and the net savings you can expect over the life of the appliance (see graphic).
In our example, a 5 star AC consumes 2.8 units less than a 3 star AC in a day when it is run for an average of eight hours. In a month, this adds up to 84 units. Assuming an average tariff of ₹5 per unit, your monthly savings will stand at ₹420. In Delhi, ACs are typically run for about six months through summer, so the annual savings (six months of running time) will come to about ₹2,560. At this rate, it would take three years and nine months to offset the extra upfront cost.
But consider this. A Bengaluru resident does not use an AC for more than 45 days collectively in a year. At Bengaluru’s average electricity tariff rate of ₹6.6 per unit, the annual savings comes to only about ₹830, which would mean that the user will take about 11 years 6 months (assuming all factors remain unchanged) to recover the extra upfront cost. Doesn’t sound like a good deal, right?
On the flip side, a resident of Mumbai will be able to achieve a breakeven sooner than someone in Delhi because AC usage in Mumbai is higher given the city’s year-round humid climate and the electricity tariff there is also significantly higher, at about ₹8 per unit. In the above example, a Mumbai resident can easily recover the upfront cost in 18 to 30 months if the AC is used for five to eight months in a year. Essentially, in less than three years of purchasing the AC, you will start saving about 25% annually on AC running costs alone.
Two inferences can be made. One, if you live in a city with a notably high power tariff, you will do better by using high rated appliances. Two, cost saving by using a 5 star labelled appliance compounds with higher consumption. This also means that your overall electricity bill will be slashed significantly if you include 5 star labelled variants of those electronic goods that require mandatory higher consumption in a household, such as a fan, tube light or fridge.Moreover, the difference in upfront cost of smaller appliances is so thin that opting for a higher rated one may not pinch too much upfront. For instance, a 5 star 215-litre fridge costs only about ₹3,500 extra compared to a 3 star one in Mumbai. The annual saving in this comparison is about ₹4,480 annually, which means that not only do you recover the upfront cost within one year but also start saving on power bills from the first year itself (see graphic).
It should be noted that the calculations taken above are indicative as there are other variables that may affect the final power consumption of appliances. For instance, a study by the Centre for Science and Environment (CSE) has noted that during peak summers, when temperatures hover between 40 degrees Celsius and 50 degrees Celsius, a 5 star AC can start consuming 10-28% more power than its declared capacity. This may affect people living in the northern states as it is common for temperatures to rise above 40 degrees Celsius during May and June in this region.
Similarly, with effect from January 2020, BEE has mandated all AC manufacturers that the default temperature of all ACs be set to 24 degrees Celsius. This mandate came after studies found that every 1% increase in temperature saves about 6% electricity. This means that just buying a 5 star AC won’t be enough to save on energy if you intend to use it at lower temperatures of 22 degrees Celsius or below. In fact, the CSE study observed that the performance of a 5-star rated AC becomes equivalent to that of a 2 star or even 3 star rated AC when the temperature is lowered to 20 degrees Celsius.
Apart from the star rating of 1 to 5, each appliance’s efficiency parameter has a range that further widens the scope of power saving. For eg, energy efficiency ratio, or EER, is the parameter for ACs and it ranges between 4.5-6 for 5 star ACs. Picking a model with a higher EER will result in extra savings for you.