Energy Conversion and Management 51 (2010) 538–545

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Energy Conversion and Management

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Economic assessment of Operational Energy reduction options in a houseusing Marginal Benefit and Marginal Cost: A case in Bangi, Malaysia

Wan Rahmah Mohd Zaki *, Abdul Hadi Nawawi, Sabarinah Sh AhmadFaculty of Architecture, Planning and Surveying, Universiti Teknologi MARA, 40450 Shah Alam, Malaysia

a r t i c l e i n f o a b s t r a c t

Article history:Received 19 March 2009Accepted 22 October 2009Available online 24 November 2009

Keywords:Passive ArchitectureCompact Fluorescent LightPhotovoltaic

0196-8904/$ - see front matter � 2009 Elsevier Ltd. Adoi:10.1016/j.enconman.2009.10.019

* Corresponding author. Tel.: +60 06 019 2151 021E-mail address: warazaki@yahoo.com (W.R.M. Zak

Energy Efficient (EE) appliances such as Compact Fluorescent Light (CFL) bulbs and Renewable Energy (RE),namely solar Photovoltaic (PV) can help to reduce Operational Energy (OE) in a house. In addition, a houseshould also incorporate Passive Architecture (PA) design strategies which in the hot and humid tropical cli-mate, mean avoiding direct heat gain, encouraging natural cross ventilation and optimising the abundantdaylight. Nevertheless, reducing OE must also mean economic gain to households to encourage their par-ticipation. Common economic gauges such as Return on Investment, Payback Period, Cost Benefit Analysis,Life Cycle Assessment and Life Cycle Cost are not suitable to validate OE options in households. These eco-nomic gauges approach economic assessment as an end-result on the cost side of the product and mayresult for good intention to be shelved, primarily because EE equipment and RE have high capital cost com-pared with the alternatives. On the other hand, reducing OE in houses is actually a continual progressionfrom the status quo and there is always a marginal gain in doing so. The challenge is to know how muchis the marginal benefit against the marginal cost of investing in EE and RE. In Economics, the ratio of Mar-ginal Cost (MC) and Marginal Benefits (MB) measure additional benefits of every additional costs of invest-ment at a specific level of production and consumption; and Economists suggests that effective gain andloss should be compared to the status quo, i.e., Relative Position (RP). The Economics theories of MC, MBand RP are being adapted to measure the progression of reducing OE. The living/dining area in two typesof houses: with and without PA design strategies are simulated to use conventional incandescent light bulbsand CFL as well as solar PV in lieu of the mains electricity supply. The power requirement for artificial light-ing in every case is translated into monetary value and the ratio of MB against MC for each case shows thegain or loss in investment to reduce OE in a 30-year period. The result suggests that the value of MB/MC ishigh when both houses use CFL, i.e., approximately (Ringgit Malaysia) RM2.5 gain for every RM1 cost. It isalso found that investment in solar PV benefits the most in the PA case that uses superior CFL bulbs, i.e.,approximately RM2 gain for every RM1 cost. Despite the high capital cost of EE equipment and RE, MB/MC approach seems to make economic sense for household to invest in reducing OE at certain stages.

� 2009 Elsevier Ltd. All rights reserved.

1. Introduction

1.1. Operational Energy (OE) requirement in a house

Energy consumed by a house begins during construction and itcontinues throughout the operational period. The latter is termedas Operational Energy (OE) and it is typically borne by the houseowner or the occupant. The bulk of OE in Malaysian householdsis powered by mains electricity supply. As such, it is subjected tothe price of natural energy resources such as coal, gas and petro-leum that are used to generate electricity in Malaysia [1]. Theamount of OE requirement in a house throughout its lifetime isalso determined by design decisions made at the early phase of ‘de-

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sign and construction’ stage (Fig. 1). However, the cost of OE for ahouse is hardly available for the buyer when committing to a pur-chase. House owners are only aware of building’s OE when theyhave to pay the energy bill.

Building’s OE is now a necessary element of a house becausemost items that fulfill occupant’s modern lifestyle and indoor com-fortable conditions are powered by electricity. Nonetheless, OEvaries from one property to another depending on its occupantsand house design; and it is via the latter where built environmentcan influence OE requirement in a house (Fig. 2).

1.2. Passive Architecture (PA), Energy Efficient (EE) equipment andRenewable Energy (RE)

Occupants will make personal adaptation to gain comfortwhenever the personal thermal and visual comfort is being

This can increase if house is poorly designed

Design and con-struction costincluded in house selling price

Cost (RM)

Time (year)

Operational Energy (OE) costto be borne by owner / tenant

Vacant Possession

End of Building Life

2 years 30 to 50 years

Low

High

Fig. 1. OE cost happens throughout a building’s lifetime upon occupancy.

Building Operational Energy

• Refrigerator• Rice Cooker• Water Heater• Washing Machine• Television• Radio• Iron• Vacuum Cleaner• Etc.

• Mechanical Cooling• Artificial Lighting

Influenced by life style

Indoor Comfortable Conditions

Modern Needs

Energy Efficient (EE) equipment can help to reduce the amount of energy consumption

Renewable Energy (RE) can reduce household dependency on commercially supplied energy

Influenced by building design

Energy Conservation (EC) can reduce the need for OE

within the circle of built

environment influence

effect for effect for

to serve to serve to serve

Fig. 2. Causes for OE that falls within the scope of built environment for a typical house in Malaysia.

W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545 539

compromised [2]. For example, to gain visual comfort in a dimmedroom during daytime, occupant may seek daylight from the win-dow and if this is still inadequate, he may switch on the artificiallightings. Similarly, if a room is hot, occupant may dress less andif he is still thermally uncomfortable, he may switch on the ceilingfan or air conditioning system. In both instances, poor building de-sign may result for occupant to use OE for artificial lighting andmechanical cooling. As such, designing building to be naturallycomfortable for occupant in the local climate conditions wouldhelp to reduce OE requirement.

Basically, Passive Architecture (PA) building addresses the localclimate using basic building elements, such as openings and wallsto effect for Energy Conservation (EC) and low OE. In hot and hu-mid tropical climate, PA avoids solar radiation, promote ventilationfrom the prevailing wind and ensure daylight into the building

without much reliance on mechanical cooling and artificial light-ing. A house in Malaysia can achieve these goals by making its formslender to encourage cross ventilation; elongated east–west toavoid heat gain; and with large openings on the north to capitalisefrom the abundant daylight [3]. Various terminologies are used todescribe buildings that are designed with climate and it is notablyexpressed as ‘passive’ to portray a ‘defensive’ or ‘protective’ atti-tude towards climate (Table 1). This study applies the term PassiveArchitecture; pointing the matter directly to the Architects whohold the primary responsibility in creating sustainable builtenvironment.

However, all is not lost in houses that do not fully responded toclimate factors, hereafter called non-Passive Architecture (non-PA).This is because action to reduce OE is a continual improvement

Table 1Terminologies for climatically designed buildings.

Terminology Author, year

Bioclimatic design Olgyay [2]Climatic responsive design Hyde [3]Climate sensitive design Emmanuel [4]Green building Buchanan [5]Passive solar design Zain-Ahmed et al. [6]Passive house Rohrache [7]Passive system design Szokolay [8]

540 W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545

process in a house. To reduce OE, non-PA house can use EnergyEfficient (EE) equipment and apply Renewable Energy (RE) suchas photovoltaic (PV) system that generates energy from solarpower. With awareness on energy issue, household looking for anew home may opt for PA house and use EE equipment as wellas apply RE. All of these steps will lead to household requiringlow OE and becomes less dependent on the commercially suppliedenergy as well as effect for some economic gain identified as En-ergy Savings Benefit (ESB) (Fig. 3).

1.3. Present economic gauges for Energy Savings Benefit (ESB)

ESB is a factor of expenditure at every step of the OE reductionactions in a house. For example, ESB gained from not paying anyelectricity bill due to using solar PV is a result of expenditure inRE. Similarly, Compact Fluorescent Light (CFL) gives ESB due tothe reduced need of OE. CFL bulb has high coefficient of perfor-mance and needs less energy to give the same output as incandes-cent light bulb; but it is more expensive than the conventionalproduct. Since RE and EE equipment has high capital cost, theESB needs to be justified in monetary value so as to make economicsense of this action.

Typical economic gauges used to measure the economic benefitsof a project are Cost Benefit Analysis (CBA), Life Cycle Assessment(LCA), Life Cycle Cost (LCC), Payback Period (PBP) and Return onInvestment (ROI). ROI determines whether a proposed investmentis wise, and how well it will repay the investor. It is calculated asthe ratio of the amount gained (taken as positive), or lost (taken asnegative), relative to the basis; and negative ROI indicates badinvestment. Kaldellis et al. [9] in his study of economic viability ofenergy in Greece had applied ROI and confirmed that the variationof ROI is largely depended on the capital cost. Meanwhile, PBP refersto the period of time required for the return on an investment to re-pay the sum of the original investment; shorter payback period isobviously preferable to longer payback period. Ren et al. [10] in hisstudy of economic optimisation and sensitivity analysis of PV sys-tem for residential buildings in Japan found that the increase in

Renewable Energy (RE)

Energy Efficient (EE) Equipment

Energy Conservation (EC) i.e., Passive Architecture

Operational Energy (OE)requirement in a house

reduces

reduces

reduces

redu

Fig. 3. EE equipment and EC (via Passive Archite

the capital cost of solar PV led to more PBP years. He noted that whenthe capital cost exceeded a certain amount, the investment cannever be recovered because the PBP exceeded the life time of PV sys-tem. Relating these two researches to the present high capital cost ofsolar PV and low cost of mains electricity supply, ROI and PBP showPV as a loss and not a worthwhile investment for OE reductions.

LCA measures the ‘‘eco-performances” of a given product or ser-vice throughout its lifespan from production to disposal includingall associated activities [11]. This is demonstrated in a study byStoppato [12] where LCA is applied to ascertain the amount ofmass and energy flows over the whole production process of PVstarting from silica extraction to the final panel assembling. Funda-mentally, LCA concerns large geographical and environmental con-text which is beyond house owner circle of influence that it isunlikely for a household to resume the responsibility of assessingthe application of PV at macro level. For the purpose of the paper,LCA appears unsuitable to validate the OE reduction options fromhousehold’s viewpoint.

CBA is a social-related economic gauge that assigns monetaryvalue to the public’s willingness to pay for the benefits or willing-ness to pay to avoid the costs. In this aspect, there is a high elementof value judgment in CBA assessment. Although a several research-ers applied CBA to ascertain the economic return of solar PV, thereare many others who used the tool in studies of other forms of en-ergy but later dismissed it due to several glaring issues. One of themis Bebbington et al. [13] who raised a concern on CBA that has thetendency to monetize every single item. He termed this as ‘‘como-dification” of everything. By putting price on incommensurableitems such as mankind and environment, CBA is seen to dehuma-nise and devalue them. Similar to LCA, CBA deals with macroeco-nomics that exceeds the boundary of household’s concern; henceit is an unsuitable economic gauge in the context of this paper.

LCC presents the total costs breakdown of a product throughoutits lifetime that enables owner to analyse the impact of each costitem at a specific time. LCC has a specific formula that measuresthe variation in the product components, namely: capital cost,operation and maintenance, disposable value and salvage value.However, LCC deals with one product or one action at a time, notvarious products or various actions in a process. As such, LCC isinadequate to demonstrate the multi-faceted aspects of reducingOE in a house, i.e., a continual process as well as a combinationof various interventions, simultaneously. The former is a naturalprogression for a better standard of living and the latter is a mix-ture of possible actions to reduce OE that can be afforded by house-hold. For example, in a study by Lazou and Papatsoris [14] on theeconomics of stand-alone domestic solar PV in European and Med-iterranean locations, they found that by tilting the PV module withrespect to the location’s latitude, the LCC of the system is reduced.Lazou and Papatsoris only show the eventual financial result of

Dependency on commercially supplied energy in a house

Energy Savings Benefit (ESB) for householdces

results

for

cture) reduces OE and with RE lead to ESB.

Table 2Eight stages of reducing OE in the case study.

Stage Case Type of lighting Type of power

1 Non-PA Incandescent Mains supply2 Non-PA Incandescent BIPV3 Non-PA CFL Main supply4 Non-PA CFL BIPV5 PA Incandescent Mains supply6 PA Incandescent BIPV7 PA CFL Main supply8 PA CFL BIPV

W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545 541

making an internal change to one aspect of one product only, i.e.,tilting of solar PV. Rationally, there is some form of benefit if Lazouand Papatsoris apply EE equipment in their study because thecapacity of solar PV could be reduced to match the reduction inOE requirement. However, Lazou and Papatsoris did not make suchcomparison. This is likely due to the limitation of LCC formula.

Furthermore, all of the above-described economic gauges pres-ent the final cost of investment to reduce OE but not additionalcost and benefit at every progression of investment in OE reduc-tions; hence their formulae are their limitations. They also do notview the matter from household’s perspective; being too simple(RPI, PBP and LCC) and too broad (CBA and LCA). Coupled withthe criticisms leveled at these gauges, it is believed that they arenot suitable to measure the efforts to reduce OE as a process in ahouse. Nevertheless, economic validation is an important aspectin ascertaining the credibility of OE reduction actions. Samuelsand Prasad [15] assert that sustainable-related project must giveeconomic value if it were to happen. According to them, economicaspect is a major element which influences the implementation ofsuch projects. This view is also shared by Farmer and Guy [16] whoargued for the economic sense of sustainable-related projects to beaffirmed using certain financial approaches that have a commonrobust function. This function would enable economic findings inthe precedent building to be used as a comparison tool when mak-ing investment decision in future building of similar nature. Other-wise, each similar new project with energy savings goals mustreinvent its own wheel of justification and proof [16].

1.4. Marginal Benefit (MB) and Marginal Cost (MC)

In Economics, the term Marginal Benefit (MB) and MarginalCost (MC) are commonly used to measure the efficiency of produc-tion line, i.e., how much more resources to apply for additional gainin productivity [17]. In Economics, the ‘‘right amount” of anythingis the ‘‘optimal” or ‘‘efficient” amount of things i.e., MB equals MC;and the word ‘‘marginal” is synonym to ‘‘additional” [18]. AnotherEconomics theory, ‘Relative Position’ (RP) suggests that house-holds’ decision for consumption and savings are influenced by theircomparative assessment of their accomplishments and how thesestack up against those of others [19]. Economists also suggest thatwhen making a decision, people actually think in terms of cost andbenefit at a margin because most decisions deal with making addi-tional change to what they already have, not total costs or benefits[17]. This paper intends to demonstrate the economics of reducingOE using MB, MC and RP focusing on the cost and benefit at a mar-gin as per the Economist’s viewpoint. This method benefits the ideathat reducing OE in a house is a progression from non-PA house toPA house as well as from using conventional equipment to EEequipment and RE, interchangeably. The matter is presented fromthe viewpoint of household being the main stakeholder of a house.This comparative approach enables household to see the marginaleffect at each stage of the OE reduction process. When the ratio be-tween MB and MC at any stage is more than 1, the investmentshould be worth the while to the household.

2. Methodology

2.1. Part 1: progression of reducing OE for artificial lighting in a house

To illustrate the idea presented in Sections 1.2 and 1.4, a casestudy method is applied. A living/dining area of a house is assumedto need OE for artificial lighting only. The reduction in OE is as-sumed to be in eight stages, progressing from basic to a more com-plex action (Table 2).

The initial stage 1 starts with the status quo where the living/dining area in non-PA case uses incandescent light bulb poweredby mains electricity supply. At stage 2, the mains power supplyis replaced with RE, i.e., solar PV. At the following stage 3 the incan-descent light bulb is replaced with EE light fitting, i.e., CFL but runson mains electricity supply. The last stage for the non-PA case isstage 4 where the living/dining area is equipped with both CFLand use solar PV. At stage 5, it is assumed that household in non-PA case improves its living standard by occupying a PA case whichliving/dining area has the same size and shape as per the non-PAcase. This study accepts the notion that there is no additional con-struction cost in creating a PA case, only additional design thoughtby the designers [20]. However, at stage 5, it still uses incandescentlight bulb powered by mains electricity supply. The type of lightingand power supply in stages 2, 3 and 4 in non-PA case are repeatedin stages 6, 7 and 8 for the PA case.

2.2. Part 2: daylight requirement in living/dining areas of PA and non-PA cases

The study identifies two houses that represent a PA case and anon-PA case. The former is designed with climate while the latterdoes not incorporate much of climate factors. The living/diningareas of these two cases are simulated to ensure both have thesame built parameters (Table 3). This means the room size; con-struction material; occupant; and micro climate; are constants inthe study. The amount of daylight received by these spaces is ascer-tained using internationally accredited and validated software.

The daylight readings of these two cases are compared to therecommended visual comfort by the Malaysian Standard MS1525:2007 [21] for reading and writing, i.e., 300 lux – consideringthe living/dining area has high practical use. It is assumed thatwhen the space receives daylight illuminance of 300 lux, it willnot require artificial lighting and that personal adaptation willnot involve any OE. On the other hand, when the space receivesdaylight illuminance below 300 lux, it is taken that the space needsartificial lighting; hence, occupant has to consume OE.

2.3. Part 3: calculation of Marginal Benefit (MB) and Marginal Cost(MC)

The result in Part 2 (Section 2.2) forms the basis for MC andMB. MB is basically all the benefits attributed by the design ofthe case, while MC consists of all the costs that need to be ex-pended by the household at a particular stage of the OE reductionaction (Table 4).

3. Findings

3.1. Part 1: daylight availability in the living/dining area

The daylight availability measured in the simulation is based onstandard overcast sky as defined by the CIE (Commission Interna-

Table 3The comparison of living/dining area in PA and Non-PA cases.

PA case Non-PA case

Precedent house in Bangi, Selangor (underconstruction)

Simulated elevation of the living/dining area

Simulated floor plan of the living/dining area

Design strategies for the living/dining area � North orientation� Slender form elongated east–west� Large openings on the north facade� Recessed floor plan on the north and south sides

� West orientation� Square form with concentric rooms arrangement� Medium-sized openings on all facades with undersized

shading devices� Porch at the front, for vehicle parking

Effect with regards to visual comfort � receives long period of daylight� needs less artificial lighting� results for low Operational Energy� needs less commercially supplied energy� claims Energy Savings Benefit

� receives short period of daylight� relies on artificial lighting� results for high Operational Energy� needs more commercially supplied energy

Table 4Breakdown of MB and MC for 30-year period in the case study.

Marginal Benefits (MB) Marginal Costs (MC)

MB1 Savings from consuming less mains electricity from TNB as a result of using (i) EElight bulbs, i.e., CFL; and/or (ii) making a PA house

MC1 Cost of mains electricity supply from TNB to power artificiallighting that consists of either (i) incandescent light bulb; orCFL bulb

MB2 Savings for spending less on artificial lighting as a result of (i) using EE light bulbsuch as CFL that has longer service life; and/or (ii) needing less of artificiallighting due being in a PA house

MC2 Cost of light fittings used in the living/dining area that consistsof either (i) incandescent light bulb; or (ii) CFL

MB3 Savings from not consuming mains electricity supply from TNB due to using full-fledged RE, i.e., solar PV

MC3 Cost of RE, i.e., solar PV that is needed to power (i)incandescent light bulb; and/or (ii) CFL in the living/diningarea

542 W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545

tionale d’Eclairage). The duration was approximately 12 h from7.00 a.m. to 7.00 p.m. every day and the 15th day of every monthrepresents a typical day of the month. The daylight analysis is car-ried out onto an imaginary working plane of 0.85 m high in the liv-ing/dining area to reflect the operational level.

When one-third of the living/dining area reads 300 lux of day-light, it is assumed that the occupant would still need artificiallightings in order to compensate for the insufficient illuminance

at the other two-third of the space; and in this case it is generalisedas having inadequate daylight (Fig. 4a and b). On the other hand,when two-third of the space receives daylight illuminance readingexceeding 300 lux, the living/dining area would be considered aswell-lighted and does not need artificial lighting (Fig. 4c and d).

When simulated for every 15th day of the month in a year, non-PA case had insufficient daylight and needed to rely on artificiallighting for 5–7 h during daytime, i.e., from 7.00 a.m. to 7.00

Fig. 4. (a) Inadequate daylight in non-PA case: floor plan showing illuminance reading averaged at 250 lux in the living/dining area at 9.00 a.m. on 15th June. (b) Inadequatedaylight in PA case: floor plan showing illuminance reading averaged at 50 lux in the living/dining area at 7.00 p.m. on 15th June. (c) Adequate daylight in non-PA case: roomplan showing illuminance reading averaged at 950 lux in the living/dining area at 3.00 p.m. on 15th June. (d) Adequate daylight in PA case: room plan showing illuminancereading averaged at 550 lux in the living/dining area at 3.00 p.m. on 15th June.

Table 6Costs of light bulbs, electricity and solar PV for living/dining area in non-PA case.

Non-PA case living/dining area Incandescentlights

CFL

Wattage for six units light bulbs (kW) 0.6 0.108Service life (h) 750 5000Hours of artificial lighting per year (h) 3864 3864Light replacements (times) 5.15 0.77Cost per unit (Mahlia, 2005) (RM) 1.4 18.50

W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545 543

p.m.; and additional 5 h at nighttime, i.e., after 7.00 p.m. to mid-night (Table 5). Therefore, the total amount of artificial lightingin non-PA case is 10–12 h per day.

Meanwhile, PA case had inadequate daylight for a maximum of3 h as it managed to receive adequate daylight during most part ofthe daytime. Similar to non-PA case, PA case needed 5 h of artificiallighting at nighttimes; hence relying on artificial lighting for a totalof 7–8 h per day.

Cost of six light bulbs per year (RM) 43.28 85.78Cost of six light bulbs per 30 years (RM) 1298.30 2573.42

TNB bill (for consumption below 400 kW h per month, 1st 200 kW h isRM0.218 per kW h)

Monthly power consumption (kW h) 193.2 34.78TNB bill per year (RM) 506.67 90.97TNB bill per 30 year at 1.2% tariff hike per year

(RM)17,134.67 3067.24

Solar PV (1 kW p equals to 1100 kW h annual power consumption atRM26,000 per kW p for 30 years)

Annual power consumption (kW h) 2318.40 417.31Solar PV required per 30 year (kW p) 2.11 0.38Average solar PV required per year (kW p) 0.07 0.01Cost of solar PV per 30 year (RM) 54,860.00 9880.00Average cost of solar PV per year (RM) 1828.67 329.33

3.2. Part 2: artificial lighting expenditure

Mahlia et al. [22] suggests that 18-W CFL bulb can replaceincandescent light bulb of 100-W for equivalent output. The ser-vice life of CFL bulb is 5000 h but it costs 8–17 times more thanthe price of incandescent light bulb that last about 750 h. The elec-tricity company, TNB [23] charges for domestic consumption be-low 400 kW h is RM0.218 per kW h for the first 200 kW h andRM0.345 per kW h for the following 200 kW h. For consumptionabove 400 kW h, the first 500 kW h is charged at RM0.30 perkW h and the next 100 kW h costs RM0.39 per kW h. Based onTNB record, it is assumed that the tariff hike is 12% at every10 years. The requirement of solar PV can be determined fromthe annual power consumption using artificial lighting of eachcase. Based on data recorded by PV Monitoring Centre [24] forMalaysia, it can be assumed that 1 kW p of solar PV in the casestudy can generate 1100 kW h of electricity annually for 30 yearsservice life. As such, the duration of assessment in this paper isonly 30 years. Meanwhile, the present cost of solar PV system isRM26,000 per kW p [25]. From the above data, the cost of lightfittings for incandescent light bulb and CFL as well as the TNB elec-tricity bill and cost of solar PV for the living/dining area in non-PA

Table 5Daytime and nighttime requirement of artificial lighting in non-PA and PA cases.

15th day of the month Jan. Feb. M

Non-PA case (hours of artificial lighting per day) Daytime 5 5Nighttime 5 5

Total 10 10 1

PA case (hours of artificial lighting per day) Daytime 3 3Nighttime 5 5

Total 8 8

case can be ascertained (Table 6). Similarly, the same can be de-duced for the living/dining area in PA case (Table 7).

3.3. Part 3: breakdown of Marginal Benefit (MB) and Marginal Cost(MC)

With reference to Tables 2 and 4–7 the breakdown of MB andMC can be determined for all eight stages of OE reduction options(Table 8).

ar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

5 5 6 7 7 6 5 5 6 55 5 5 5 5 5 5 5 5 5

0 10 11 12 12 11 10 10 11 10

3 3 2 2 2 2 2 2 3 35 5 5 5 5 5 5 5 5 5

8 8 7 7 7 7 7 7 8 8

Table 7Costs of light bulbs, electricity and solar PV for living/dining area in PA case.

PA case living/dining area Incandescentlights

CFL

Wattage for six units light bulbs (kW) 0.6 0.108Service life (h) 750 5000Hours of artificial lighting per year (h) 2736 2736Light replacements (times) 3.65 0.55Cost per unit (Mahlia, 2005) (RM) 1.4 18.5Cost of six light bulbs per year (RM) 30.64 60.74Cost of six light bulbs per 30 years (RM) 919.30 1822.18

TNB bill (for consumption below 400 kW h per month, 1st 200 kW h isRM0.218 per kW h)

Monthly power consumption (kW h) 136.80 24.62TNB bill per year (RM) 357.87 64.42TNB bill per 30 year at 1.2% tariff hike per year

(RM)12,065.76 2171.84

Solar PV (1 kW p equals to 1100 kW h annual power consumption atRM26,000 per kW p for 30 years)

Annual power consumption (kW h) 1641.60 295.49Solar PV required per 30 year (kW p) 1.49 0.27Average solar PV required per year (kW p) 0.05 0.01Cost of solar PV per 30 year (RM) 38 740.00 7020.00Average cost of solar PV per year (RM) 1291.33 234.00

544 W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545

4. Data analysis: ratio MB/MC

The ratio of MB and MC at each stage is being compared againstits previous stage as per the theory of RP, using the followingformula:

MB=MC ¼ ðMB1 þMB2 þMB3Þ=ðMC1 þMC2 þMC3Þ ð1Þ

Based on the description of each OE reduction stage in Table 2;breakdown of MB and MC in Table 8; and Eq. (1), the findings ofthis paper can be graphically summarised as shown in Fig. 5.

At the initial stage 1, before any OE reduction action, the MB/MCis zero because there is no gain at the status quo. As the action inlowering OE progresses, there is a certain value of MB/MC indicat-ing the monetary gain for every RM1 investment at a specific stage

Table 8Breakdown value of MB and MC for 30-year period at each stage of reducing OE in the ca

of reducing OE in the case study. The higher the MB/MC value thebetter monetary value is. Generally, for every RM1 cost, the gain inthe long term, i.e., 30 years is higher than the short term gain of1 year. This makes sense because EE lights and RE, namely CFLand solar PV, respectively, inherit high capital cost and applyingthese products is a long term investment. With reference to datafor CFL by Mahlia et al. [22], the MB/MC ratio for 30-year assess-ment is the highest when the light fittings in the living/dining areais changed from incandescent light bulb to CFL bulbs at stages 3(2.49) and 7 (2.48) in non-PA case and PA case, respectively. Thissuggests that by reducing OE using EE lights, there is a significanteconomic gain for the household regardless type of house. On theother hand, for every RM1 cost of applying solar PV at stages 2and 6, the benefit is only RM0.31 and RM0.44, respectively. Thisis because incandescent light bulb consumes high amount of OEregardless the type of case and it is not sensible to invest in solarPV to cater for such inefficient artificial lights.

Osram [26] claimed to have developed 20-W CFL bulb that lasts15,000 h but costs 13.5 times more than the equivalent 100-Wincandescent light bulb of 1000 h service life. Therefore, the studyalso considers Osram’s data that reflects latest technological devel-opment of EE lights (Fig. 5, far right column). The MB/MC resultshows that investment in solar PV has best economic gain whenusing Osram’s EE lights (stages 4 and 8) due to the superior qualityproduct that results for effective solar PV implementation.

5. Conclusion

Fundamentally, MB/MC shows that the process of reducing OEin a house that begins from the status quo gives economic benefitat certain stages and that household can see where these benefitsare. This study demonstrates that even though the cost of CFL ismore expensive than incandescent light bulb, using EE lights iseconomically beneficial to household in the long term, regardlessthe case. It is also shown that solar PV is economically beneficialafter doing PA and applying a superior EE lights such as Osram’sCFL. Unlike ROI, CBA, LCC, PBP and LCA, MB/MC captures the ideaof reducing OE as an improvement process in a house. In addition,MB/MC formula caters for the multi-intervention efforts to reduce

se study.

+NON-PA HOUSE

1

+2

+3

+4

+6

+7

+8

5+PA HOUSE +

0

0.300.310.27

00

2.512.492.35

2.001.381.22

0.420.420.42

0.480.440.39

2.492.482.34

2.031.361.21

Stage 1

Stage 8

Stage 7

Stage 6

Stage 5

Stage 4

Stage 3

Stage 2

30-year(Osram)

30-year(Mahlia)

1-year(Mahlia)

MB/MC

Stage of OE Reduction ActionTNB

PV

Incandescent

CFL

Fig. 5. Ratio of MB against MC for 1-year and 30-year periods at each OE reduction stage in the case study.

W.R.M. Zaki et al. / Energy Conversion and Management 51 (2010) 538–545 545

OE in a house which is a likely scenario. The potential of this ap-proach can be explored to include the use of using mechanicalcooling in a house and other OE reduction actions. Based on thisstudy, MB and MC is a likely economic gauge that can make eco-nomic sense of investment in EE equipment and RE in a house.

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