Calculating the “Real” Cost of Ownership for Transformers

By Thomas Patzner and Wendell Leisinger Schneider Electric, Nashville, Tenn. March 1, 2009

View the full story , including all images and figures, in our monthly digital edition

Specifying a transformer is often a balancing act—you want it to be both energy-efficient and cost-effective to operate, but you also have to take the client’s budget into account, as well as the total costs of ownership over the building’s lifetime.

In recent years there has been some confusion in the marketplace due to mixed messages about energy-efficient transformers and their viability for commercial building projects. The National Electric Manufacturers Association (NEMA) chose a 24-hr average loading of 35% for its TP1 transformer standard in 1996, an energy-efficiency level that was subsequently adopted by the U.S. Dept. of Energy (DOE) for the Energy Policy Act of 2005. However, the current ASHRAE design guide for K-12 school buildings recommends specifying transformers that are 30% more efficient than TP1.


Title 10 of the Code of Federal Regulations , Part 431, Subpart K-Distribution Transformers, contains the current energy conservation requirements for distribution transformers, including definitions, test procedures, and energy conservation standards and their effective dates. These standards are the minimum requirements, however; some engineers consider higher energy-efficiency levels for certain applications. This may be due in part to the ASHRAE design guide for K-12 school buildings, which asserts “energy-efficient transformers that are 30% more efficient than the minimum TP1 are classified by DOE as CSL-3,” and “energy-efficient transformers should be specified using DOE’s CSL-3 Standard as the basis.”

According to DOE officials, CSL-3 (or Candidate Standard Level 3) is not a recognized efficiency standard but an intermediate efficiency level used during the rulemaking process. Moreover, the energy conservation requirements for distribution transformers are set forth in the Code of Federal Regulations.

Some transformer manufacturers have extrapolated the ASHRAE design guide to create 75 kVA devices that have 30% less energy losses at 35% loading. The energy-efficiency characteristics of these products might make them enticing, but their purchase price can be several times the cost of a TP1 device. Many times, these transformers are accompanied by complex, computer-based tools that calculate the cost of ownership based on many variables, including the published price of the device, and not the purchase price.

To act on the best interests of the client, the engineer should augment results from a manufacturer’s tool with simple formulas to quickly calculate overall cost of ownership with the use of a calculator.

One such formula calculates core and coil losses at load levels throughout a day:

Coil loss at load level

+ core loss

= total energy loss/hr

Note: Coil loss at load level = full load losses x (load level) 2

For example, consider the following 24-hr loading scenario for a 75 kVA three-phase TP1 transformer with a core loss of 258 W (see Table 1) and full load losses of 2,467 W, compared to a 75 kVA three-phase transformer built to be 30% more energy-efficient, with a core loss of 170 W and full load losses of 1,978 W (see Table 2).

The annual cost to operate easily can be calculated by multiplying the results of the data presented in Tables 1 and 2 by a national average utility rate of 9.21 cents/kWh (see Table 3).

The annual operating cost savings differential of about $95 for the more energy-efficient transformer can be alluring. However, the engineer must weigh this information against other factors that comprise total cost of ownership, as presented in Table 4, which assumes a 33-yr life expectancy of the building.

Thus, even though a given transformer has 30% lower energy losses than its TP1-rated counterpart, the overall cost of ownership is significantly higher for the building owner over the building’s life expectancy. Plus, the annual $95 cost savings accrued by the more energy-efficient transformer will cover only about $3,100, or 62% of the premium paid. (Note: Additional cost of ownership methodologies are available from the DOE.


The best rule of thumb when considering what type of LV transformer to specify is to gather as much input as possible from multiple sources. This includes talking to the customer to understand its energy-efficiency goals, and to transformer manufacturers to ascertain if products are available to meet those needs. Augmenting that information with the results of overall cost of ownership formulas will give a good snapshot of the customer’s lifecycle costs.

Some building owners will not flinch at the increased cost of ownership of a device that’s substantially more energy-efficient than a TP1 device; they simply want the most energy-efficient building possible. However, most building owners look to shave as much cost as possible to achieve an acceptable return on investment for their building. It’s the engineer’s role to help the customer balance sustainability with its available budget, and specify accordingly.

Loading scenario
Formula/Energy losses per hour
Daily totals

0% loading
0 + 258 = .258 kWh
.258 x 10 hr =(10 total hours) 2.58 kWh

10% loading
2,467 x .1 x .1 = 24.67 W + 258 W =
.2827 x 3 hr =(3 total hours) .2827 kWh 0.85 kWh

40% loading
2,467 x .4 x .4 = 394.72 W + 258 W =
.6527 x 9 hr =(9 total hours) .6527 kWh 5.87 kWh

15% loading
2,467 x .15 x .15 = 55.51 W + 258 W =
.3135 x 2 hr =(2 total hours) .3135 kWh 0.63 kWh

Sum of daily totals
9.9 kWh

Annual totals
3,624.23 kWh(365 days)

Loading scenario
Formula/Energy losses per hour
Daily totals

0% loading
0 W + 170 W = .170 kWh
.170 x 10 hr =(10 total hours) 1.70 kWh

10% loading
1,978 x .1 x .1 = 19.78 W + 170 W =
.1898 x 3 hr =(3 total hours) .1898 kWh 0.57 kWh

40% loading
1,978 x .4 x .4 = 316.48 W + 170 W =
4865 x 9 hr =(9 total hours) .4865 kWh . 4.38 kWh

15% loading
1,978 x .15 x .15 = 44.50 W + 170 W =
.2145 x 2 hr =(2 total hours) .2145 kWh 0.43 kWh

Sum of daily totals
7.1 kWh

Annual totals
2,591.50 kWh(365 days)

75 kVA transformer type
Energy losses/day
Energy losses/yr
Annual cost to operate

9.9 kWh
3,624.23 kWh

30% more energy-efficient
7.1 kWh
2,591.50 kWh

2.8 watts
1,032.73 kWh

30% more energy efficient

Purchase price

Cost of transformer energy losses (over life of device)


Cost of ownership (over life of device)

Author Information

Patzner is a staff product specialist, LV Transformer Business. He has worked for Schneider Electric for more than 15 years in the transformer business. He graduated in 1992 from Marquette University with a B.S. in electrical engineering.

Leisinger is customer segment manager for consulting engineers for Schneider Electric. He has a B.S. in mechanical engineering from Iowa State University.