I remember 2 years ago during my postgraduate program, my Economics lecturer often analyzed how public officers determined payable tax rates from income and expense behaviours of people. We usually discussed income brackets and the basic necessities (goods & services) that most people would generally spend on and/or consume. There are a variety of perspectives to analyze in the patterns we observed but because my main interest had always been focused on the electricity market, I was curious and concerned about how to classify electricity; whether as a good or as a service.
Electricity: Commodity or Service?
Is electricity a service like unlimited wifi internet and Auto Insurance or is it a consumable good like rice and garri?
Well, electricity is really just a commodity like any other. It doesn’t seem like it but it surely is, trust me. Just as garri is generally sold in bags, electricity is generally sold in kWh. The main difference is in the rather complex way utilities dispense electricity to customers. They use electricity meters to measure the amount of electrical energy dissipated over the customer’s loads (in order words “the amount of electricity consumed”) and customers pay for exactly what the meter reads. As you would imagine, the electricity meter would have its counting unit, the same way one bag of rice has its standard dimension/size/capacity … and for a meter, 1kWh makes 1 unit.
What really is kWh?
kWh stands for Kilo Watt Hour. Kilo simply means One thousand just as Kilo-meter = 1000 meters. Watt is the S.I unit for electrical Power which is the rate at which work is done every second. Different appliances have their different capacities to do work based on their design specifications as determined by their manufacturers. All appliances perform work. For example, a microwave that can perform ‘heating’ work at the rate of 1000 joules (the unit for work) per second is said to have a load rating of 1000W which is also 1kiloWatt (1kW). Power ratings of all appliances are usually specified somewhere behind them. Below is a nameplate for an Air conditioner. See if you can determine the load rating. Hint: It’s in KW… or you can keep reading till the end to find the answer.
We all know what ‘hour’ means but it might be useful to explain why it is included in the kWh unit for electrical energy, just in case you don’t already know.
If we imagine a very crude past, before meters were devised, electricity would have been sold per time of use. So if I was an electricity provider at the time, I would determine how much it cost me to run my electricity generator and to deliver the electricity to a customer for a period of time and charge the customer at a selling price. I don’t know for sure if that’s how it was in the earlier days of the power system but it’s plausible to imagine there was a pre-metering era. In fact, before pre-paid meters in Nigeria (and in a few cases today), utilities would estimate some customers’ consumption based on the number of hours they delivered power to them and a general assumption of what appliances their kind of building has installed.
In essence, the two main factors that determine the energy consumption unit, kWh, is the level of use (in Watts) and the time of use (in hours).
Understanding your energy needs
Now that we probably understand everything about how energy is sold, let’s discuss how energy is consumed. There are many instances when we don’t run our home appliances for up to 1 hour. There is also the possibility that the microwave oven in your house is the only appliance that draws as much power as 1kW. So how do we determine ahead exactly how much energy we’d consume if they are in fractions of the standard unit? Well, the answer lies in the question; we put together all the fractions. Take for example a game console like the Playstation 3 or an Xbox 360 (they usually have similar load ratings) that is rated at 90W. In kiloWatts, 90W will mean 0.09kW. Game freaks or ‘game centres’ will run these machines for at least 8 hours a day. Video games are typically played on a visual display screen and a modern LED TV will typically consume say 50W (0.05kW)(or less) of electric power for as long as it displays those bright colorful motion pictures. I like to play video games in conducive areas and if it’s one of those days with those uncomfortable heat waves in Nigeria, I’d rather not play or have to turn on the Air Conditioner System just so I can’t give excuses for losing. The 1 HP AirCon depicted above has a power rating of 0.75kW. So if we were to assume how much we are most likely spending per day assuming these 3 observed appliances were to run continuously for 8 hours in one day, probably in a game centre, the total energy consumed will then be
(0.09 + 0.05 + 0.75)kW * 8h = 7.12kWh.
Now we can see that even though we had fun for 8 hours straight, because the total load for all appliances was not up to 1kW, the total consumption came out less than 8kWh. The same goes for when you decide to warm your food in the 1kW microwave oven for only 3 minutes (0.05 hours), the energy consumption comes down to just 0.05kWh. All these math though, whether simple or complex, is just for your understanding – your meter already takes care of it and is probably more accurate than our calculations so let’s move on.
Estimating your energy needs
The main benefit of understanding energy consumption calculations is that you can use it to simulate what you and your household might be consuming over a period of time, say a week or a month. Such estimations don’t guarantee any much accuracy (that’s why they are estimates anyway) but they can help you define budgets for your expenses. The first thing to do is to observe the patterns and their cycles. Every household individual has a pattern that is offhandedly noticed (and ignored). Typically, during the week day, from 8am, economic activities at home are lower (workers go to work, hustlers get on their hustle and students go to school). In Lagos, the time spent in traffic extends the periods of less activity at home past the general 5pm closing time for most businesses. During this period, it’s probably only the refrigerator and the freezer running at intervals (if there is power). From the time all household members get home (say from 7-9pm) till bedtime (say 10pm till midnight) that’s when electricity is probably most needed – after a hectic day, ALL Nigerians ALWAYS hope to get home to meet ‘light’. With these deductions, we can presume that Nigerian households need at least some 3 hours of evening electricity before going to bed every week. Weekends are a lot different in their consumption predictability since that’s when we have the heavier appliances like electric irons and washing machines put to use to do the laundry and several hours to spend at home running more of our electrical loads we didn’t have time for during the week. Still, weekend consumption can also be simulated with educated assumptions depending on what electrical loads you have and how much time you’d typically spend running them.
Energy Costs
Hopefully, you have been able to keep up with this long tutorial-looking article, now it’s time to talk about the money-value side of it. If you are totally dependent on the grid, one thing you need to confirm first is your electricity tariff. The tariff is how much your utility provider (NEPA/PHCN/IKEDC/EKODC, whichever one you know it as) charges you per kWh. I believe it’s currently about N22/kWh in Lagos but you shouldn’t take my word for it, just take a look at your electricity bill or just ask around. Understanding your consumption and knowing your tariff helps you balance the cost-benefit scale to meet your budget and could even direct you on ways to discipline yourself to reduce your expenses on electricity. If you have other off-grid installations like your diesel/petrol generator or solar±battery installation, your energy cost per month from their generation is typically your O&M (Operation and Maintenance) cost. This would generally include the fuelling costs and routine maintenance services. (A solar±battery installation that is bought outrightly naturally has none of these such costs but will require instalment payments if leased). For simplicity, let’s refer to the gaming scenario painted earlier and assume the electricity tariff for that building is N22/kWh, if the grid supply is reliable enough to match the 8-hour requirement of the scenario, then the total energy cost for that session will be N156.64k. On the other hand, if ‘NEPA’ is not available for such a scenario, then we would have to shift off-grid to our petrol/diesel gen. Since we are talking about running an air conditioner too, it might be a better idea to run the diesel generator because of it’s higher capacity compared to the ‘ibeta-pass-my-neighbor’ petrol gen. If we assume a diesel generator like the 17kVA we are most familiar with, it should consume about 3 litres of diesel every hour at full load… although, it should generally consume less if it’s powering only the scenario we’re looking at, say 1.5 ltrs/hour. Assuming diesel currently costs a minimum of N210 per litre at the pump, we can in fact notice, without having to finish the calculation, that running the diesel generator for just one hour of this scenario costs twice the amount needed for a reliable grid supply to accomodate the full 8-hour period.
But hey, how many game freaks are reading this? how many 17kVA gen owners are buying diesel just to play games? How many people really need up to 8 hours of electricity daily if it’s not for business purposes? How many people even need electricity more than to just power their cooling fans, phones, laptops and WiFi routers? Well, this post is getting too long and answering these questions will just mean opening Pandora’s box. However, if you’ve gained something from this so far or will like to share some further analyses or discussion on any energy-related topics, please feel free to use the comments section or simply get more info@levelocity.com.ng if you feel you need private consultation. Looking forward to hear from you.
Leave a Reply