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Energy Efficiency – The 5th fuel

Energy Efficiency – The 5th fuel

By Eric H Coffin, P.E., C.E.M.

President Green Energy Engineering

Monday, November 20, 2017

Author’s note – The first edition of this paper appeared in the January 2018 issue of the Florida Engineering Society (FES) “Energy” magazine on page 13. The author is thankful to FES for permission to include this second edition (some clarifying edits) on the Green Energy Engineering website. If the reader is interested in obtaining answers to their specific home, but does not want to perform all the calculations shown below, they can forward the raw electric billing data and a $20 check (made payable to Green Engineering Inc.,) to Eric Coffin 4737 Dolphin Cay Lane South Unit #B108, St. Petersburg, Florida 33711-4671. The author will then perform the analysis and provide the homeowner with a report outlining the financial options.

First came coal, then petroleum, then nuclear, and then alternative energy. The new kid on the block (5th fuel[1]) is downstream of the electric utility and is called energy efficiency[2]. This is a large and mostly untapped method of reducing greenhouse gases, by considering the life cycle cost of energy consuming equipment and applying existing energy-efficient technologies. While the initial capital cost of more efficient equipment may be higher, this is more than made up in reduced reoccurring fuel cost.

Consider the traveling salesperson that puts 300 miles on their car each week and buys $4 per gallon gasoline. By trading in that 13 mpg for a new 35 mpg they could save over $3,000 per year. Air conditioners also have a “mpg” and it is called Energy Efficiency Ratio (EER) and is defined as BTU per hour of enjoyed cooling divided by watts of electricity painfully purchased at an outside temperature of 95ºF. This paper will show how you, the payer of electric bills, can make an informed a/c purchasing decision that will yield a better rate of return than enjoyed by the famous investor Warren Buffett.

According to the July 7, 2008 issue of Forbes Magazine, “The Case for Efficiency” there was a 46% drop in U.S. energy intensity between 1975 and 2005 that did not come from giant plants but instead “zillions of tiny pieces imperceptible to the untrained eye, energy efficiency gets little respect.”

A similar story comes from the January 17, 2015 issue of The Economist magazine entitled “Invisible Fuel.” Eleven members of the International Energy Agency, including U.S. and European countries, saved 1.4 billion tonnes of oil in 2011, worth $753 billion. They go on to say “The cheapest and cleanest energy choice of all is not to waste it.”

A 2010 McKinsey & Company report entitled “Energy efficiency: A compelling global resource” states that “Globally, energy efficiency represents about 40% of the greenhouse gas reduction potential that can be realized at a cost of less than €60 per metric ton of carbon dioxide equivalent. In many cases, it is an extremely attractive upfront investment that pays for itself over time…”

You also can be one of those “zillions of tiny pieces” by looking around your home. Your air conditioner is the largest consumer of electricity in your home accounting for approximately [3] 65% of your annual electric bill. In this paper we will lay out the steps to determine if that old a/c should be replaced with an energy efficient unit. By doing so you may be able to save money, obtain a great investment, and reduce your carbon footprint.   DSCN9579

Step one is to collect 12 or more months of your electric bills.  You may have saved the paper bill or you may need to go online to your local utility and retrieve them.   Take note of the total kWh consumption and enter the values into a spreadsheet.  Ensure that you are looking at the total kWh and not just the first step of what may be a tiered bill.  Also enter the total monies paid and you will notice that there are a host of charges including customer charge, demand, energy, conservation cost recover, taxes, fees, etc.  Table 1 to the right is an example for my kWh and dollars and yours should look the same.  You can also divide the monthly money by the kWh to obtain the overall $/kWh which will be higher than the listed electric tariff due to all the add-on taxes.  

Step two is to plot the data. Plot both the kWh by month and you should have a kWh curve that looks like graph 1 .  

Also plot the dollar curve as shown in graph 2. We all know that the summer bill is quite large and this graphically shows the summer peak.  

If you now choose the minimum value and draw a straight line across the bottom you should have a graph that looks similar to chart 3.  The assumption here is that March is a mild month with no heating or air conditioning.  This base load is the usage under the blue line and is comprised of water heater, dishwasher, refrigerator, lights, washer and dryer, etc.  Note the green shaded area that represents a/c which is required for 4,000 to 6,000 hours of the 8,760 hours (24 hours per day x 365 days =8,760 hours per year) in a year here in Florida.  Also notice the low values for Jan, Feb, and Dec which is heating and shows just how mild our winters are.

Step three is to read your air conditioner name plate (see photo to right) and find the tonnage of the unit such as 3 tons or 36,000 BTU per hour. Also find the mpg or in this case the EER or SEER rating. EER is known as the energy efficiency rating and has been around for many years.


At a constant outdoor condenser temperature of 95°F SEER, or Seasonal Energy Efficiency Rating, is similar except it uses a range of various temperatures for the outdoor condenser that make up a cooling season. One can convert between the two as follows. EER = 0.875 * SEER


Step four is to add together the kWh (of air conditioning) identified by the green hash marks under the kWh curve by subtracting the constant base load (represented by the blue line) from the actual peak load (represented by the red line). Only add together the cooling season. This will yield the kWh consumed in the a/c season which in this case is 19,751 kWh or 19,751,000 watt hours. Some calculations are required to uncover some important information.

The wattage draw of this 3 ton example a/c unit is (12,000 BTU/ton * 3 tons) / (8 BTU/hour / watt) = 4,500 watts.

The actual hours of a/c use is = 19,751,000 watt hours / 4,500 watts = 4,389 hours.

The dollars for operating this example a/c unit is 19,751 kWh * $0.1612 $/kWh = $3,183.

The carbon footprint is 40,425 kWh * 1.35 #/year of CO2/kWh = 54,574 pounds of CO2 annually.

Step five is to obtain bids and EER ratings on new units and calculate your new operating cost. This example is for a 3 ton unit with an EER of 14.

The new wattage draw is (12,000 BTU/ton * 3 tons) / (14 BTU/hour / watt) = 2,571 watts.

The new a/c consumption is 2,571 watts / 1,000 watts / kW * 4,389 hours = 11,284 kWh.
The new operating cost is (2,571 watts/1000 watts/kW) * 4,389 hours * $0.1612/kWh = $1,819

The savings are $3,183 - $1,819 = $1,364 per year.

The original annual kWh consumption was 40,425.

The new consumption is 40,425 total – 19,751 old a/c + 11,284 new a/c = 31,958 kWh.

The new carbon footprint is 31,958 kWh * 1.35 #/year of CO2/kWh = 43,143 pounds of CO2/y.

This yields a savings of 54,574 – 43,143 = 11,431 pounds of CO2 annually.

You should construct a table as follows with the bid price and the new calculated cost and annual savings. Note that the EER of 14 has an annual savings of $1,364 (this will be used below).




The above calculations can be input to a spreadsheet and before and after dollar curves can be created for the year, such as shown in Chart 4. The area between the red and green curve represents the dollars saved by installing a more efficient a/c unit. These savings are the 5th fuel, aka energy efficiency, that I introduced in the beginning. The homeowner enjoys the dollar savings and the electric utility burns less fuel.


Step Six is to determine the rate of return on this investment. This can be done by using the uniform series present worth equation shown here.



A = annual savings
P = the total installed cost (note this is the unknown we are seeking)
N = the number of years
i = the interest rate

If you program this uniform series present worth equation into your spreadsheet you can work backwards towards your allowed total installed cost, or P, in the above equation. For instance, using the annual savings calculated above, a ten-year life, and a desired 10% return on investment….one could spend up to $8,381 on a new EER 14 a/c unit.

If, however, you wanted a 15% return on your money…one could spend up to $6,845.


If you were Warren Buffett and would only accept 20% on your hard-earned cash…one could spend up to $5,718.

By calculating different EER values you can create different annual savings and arrive at different total installed costs. Use this family of savings data to select the best bid and I would suggest at least three bids, (and more are better). The bids should include items such as: equipment, installation, permits, removal and proper disposal of old unit, Freon, and start-up, a new air handler if required, duct work upgrades, thermostat, electrical wiring, circuit breaker, etc. Compare the details of the bids to ensure that you are comparing apples to apples. Some contractors will only quote equipment and a/c installation and ignore any electrical wire cost so as to avoid a high bid, and also to avoid running new wires through walls and attic.

The following table is a summary of the before and after results of upgrading to a more energy efficient EER14 air conditioner using our typical 3 ton unit.  

As you can see from this summary there are impressive savings across the board and the percent savings indicate the power of the 5th fuel.  For those of us in the power plant business we know that increasing boiler / steam turbine efficiency is hard, expensive and yields results of less than 1%.

To recap from the introduction, we have seen that energy efficiency is the 5th fuel as it allows for considerable reduction in the burning of oil, coal, natural gas, etc. Air conditioning is a very well-known technology and efficiency improvements are introduced each year as the government requires ever better energy STAR ratings. We have shown that the higher initial capital cost pays a better return than your bank without the risk of a stock market fall and this short paper is easy to read compared to the hundreds of annual reports that Warren Buffett reads looking for value. This air conditioner evaluation process has allowed you, the homeowner, some insight into just what a great investment you have outside your home in those bushes.

PS – For you hard core engineers looking for a work place application consider that the above analysis can also be performed on large industrial motors, pumps, boilers, turbines, and other large energy consuming equipment.

20090502-SCK_5432Eric Coffin, P.E. graduated from the University of South Florida in 1978 with a BS in Mechanical Engineering. He specialized in thermodynamics, fluids, and process control. He has experience in Electric Utility, Large Industrial and Heavy Commercial markets. Eric is the founder and president of Green Energy Engineering in St. Petersburg, Florida where he specializes in energy and financial studies for large energy consuming plants around the world. He can be reached at




[1] The 5th Fuel term was first coined by American physicist Amory Lovins in the mid 1980s .  Dr. Lovins is co-founder, chairman, and chief scientist of the Rocky Mountain Institute an independent, entrepreneurial, nonprofit think-and-do tank that implements transformational energy and resource efficiency, chiefly in the private sector.

[2] The term “Energy Efficiency Gap” was first coined by Eric Hirst and Marilny Brown in their 1990 paper “Closing the efficiency gap: barriers to the efficient use of energy.”  Dr. Brown is a professor in the School of Public Policy at Georgia Tech and her research papers can be found

[3] See for a breakdown of appliance usage.