EcoDry distribution transformers: Economy and environment can co-exist and complement each other

An “investment” quite simply explained is the purchase of an asset with an aim to create future income or savings which are higher than the original purchase cost.

Industrial plants or large commercial and public buildings are often connected to the medium voltage distribution grid and distribution transformers form an important part of the value chain. Dry-type distribution transformers do not contain any flammable liquids and are intrinsically safe, making them an ideal choice for such installations.

ABB recently developed EcoDry transfor­mer that offers ultra-high efficiency and significantly reduces energy losses. These transformers use a core made of amorphous metal, which has a glass-like and not a crystalline structure.

Since “there’s no such thing as a free lunch”, the tag of an amorphous metal core is its higher cost case. But on the other hand the reduced energy loss yields future savings and this is a strong investment.

The investment rationale largely depends on the cost difference compared with standard transformers and on the specific electricity cost and application. Investments in industrial production lines require a short amortization time of only a few years. For equipment like distribution transformers it is more related to “infrastructure” than a specific production lines, the amortization time may be somewhat longer (eight years is a typical value). A company considers in its investment decision its cost of capital. The Weighted Average Cost of Capital (WACC) is typically used, which takes into account costs of equity and costs of third party depts. A 10% WACC is a typical value.

Knowing the difference in no-load losses, the electricity price, the industry or company specific WACC, and the time period considered, the Present Value (PV) of energy savings can be calculated.

An investment in a commercial building is a long-term investment. The building can be used for a longer period without requiring significant additional investments and the risk for the investment is lower than in case of an industrial production line. The period considered in the investment calculation is therefore longer and the WACC lower.

The PV of electricity savings is very significant and as long as the additional cost of an ultra-efficient transformer is less than the PV, the investment pays off. The CO₂ emission of power generation depends on the specific country. Taking the European electricity mix as reference[1], the electricity saved by a 1 MVA EcoDry transformer during a 20 years period is equivalent to 137’000 kg of CO₂ or the combustion of 52’000 liter of diesel.