This article is no longer actively maintained. While it remains accessible for reference, exercise caution as the information within may be outdated. Use it judiciously and consider verifying its content in light of the latest developments.
The Life Cycle Cost (LCC) of ownership of a product is the sum of all the costs incurred during its lifetime:
LCC = Purchase cost + energy cost + maintenance cost + installation cost + Decommissioning cost
Academic approaches to the calculation of Life Cycle Cost can be very involved, but in practical terms it is the difference between competing options that matters. So items where there is little or no discernible difference (for example the installation or de-commissioning cost) could reasonably be ignored, as can items which might simply be unknowns (for example the cost of condition monitoring).
For an industrial induction motor, the energy cost will typically be over 90% of this whole cost, and so this should be the focus of attention, with the calculations then focussing on the price premium of a higher efficiency motor. The energy cost can be calculated using the formula:
Lifetime cost of energy = Cost of energy / kWh x load (kW) x lifetime
For a more accurate estimate, the time spent at different load factors, and the motor efficiency at each of these load points, can be used to give a more refined idea of the energy consumption.
(A short cut to estimate the new energy consumption is to simply multiply the existing estimated energy consumption by the ratio of the old:new efficiency. This gives a small under-estimate of the energy saving, but even this diminishes as the efficiency difference becomes smaller. But for a quick estimate this should be fine.)
In the extreme case of a motor running long running hours at high load, over 10 years the energy cost might be 100 times the purchase price. Life Cycle Costing of such examples show that big differences in the list price of a motor matter far less than just an apparently minor difference in motor efficiency.