# Energy efficiency labels Vs Prize tags: why are both important

– Energy efficiency labels –

If you have recently bought a home appliance like a dishwasher or a washing machine you most probably know

If not, you must know that the energy efficiency labels aim to be a clear and simple indication of the energy efficiency of product at the point of purchase.

The ratings on the energy efficiency labels go from A+++ to D (A+++ being the most efficient and D the least efficient).

Those ratings are defined by the EU for each type of appliance (e.g. fridge, tumble drier,…) through a number of different tests and criteria. This means the ratings can only be compared between one type of appliance (e.g. fridge to fridge).

– Prize tags –

And, well, when it comes to the prize tag, the more efficient the appliance the bigger the prize will be. This is because the energy efficient appliances use less electricity and water than those less efficient appliances.

– The dilemma –

The dilemma is: Is it really worth to buy a more expensive but also more efficient appliance or should I buy the less efficient but more economic appliance?

The answer is: Depends on how high the prize tag is.

Let’s have a detailed look.

## Buying and energy efficient appliance: Payback period

You have to choose between two fridges:

– Fridge A: It uses 252 kWh per year and it has a prize tag of 899 euro

– Fridge B: It uses 174 kWh per year and it has a prize tag of 1159 euro

Fridge B it is more efficient but also 260 euro more expensive that Fridge A so, which one do you choose?

The only way to make an informed decision is to figure out how much electricity you would be saving per year by choosing fridge B, and then calculating how many years it will take for those savings to compensate the initial extra 260 euro.

We know that we are paying 0,217 euro per kWh (do you know what a kWh is?) so for us that means that

Fridge A will have a yearly electricity bill cost of  252 x 0,217 = 54,7 euro

– Fridge B will have a yearly electricity bill cost of  174 x 0,217 = 37,8 euro

For us, there is a difference of 16,9 euro per year on electricity cost between the A+++ and the A++ fridge.

That means that if we buy the A+++ we will be paying an extra 260 euro but we will be recovering that amount due to the lower electricity bill within 260/16,9 = 15,4 years…

Well, in this case the payback period it is far too long because nowadays a fridge does not last 15 years.

That means that for us it makes more sense to buy the cheaper and less efficient fridge.

## Conclusion

– Cost –

From the cost perspective, you really need to know how much you are paying per kWh before making an informed decision.

Do not just buy the more efficient but more expensive appliance by assuming that lower energy or water consumption will compensate for the higher prize tag.

– Environmental impact –

From the environmental perspective, of course that it would make more sense to buy the most efficient appliance but here comes into play the prize tag.

The appliances manufacturers and the distributors need to make sure that the prize tag it is reasonable.

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What do you think? Have you bought an energy efficient appliance recently? If so, what is you experience?

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