Electric motors and drives: Unit economics
Why the electricity bill dwarfs a motor's price
Why the electricity bill dwarfs a motor's price What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.A motor is cheap compared with the electricity it uses: a continuously running industrial motor can burn several times its purchase price in power every year, so efficiency and speed control dominate the economics.
Key costs
| Measure | Value | Note |
|---|---|---|
| Purchase price, new 100 hp (75 kW) premium efficiency motor | 6,250 USD (2014)3 | About 83 USD/kW (calculated); 1,800 rpm totally enclosed fan-cooled motor; DOE 2014 handbook, still the current edition |
| Annual electricity, 100 hp standard motor at 75% load, continuous | More than 530,000 kWh per year3 | Worth about USD 42,500 a year at 0.08 USD/kWh (2014) |
| Annual running cost versus price of a new premium motor | About 6.8 times ratio3 | DOE worked example |
| US industrial electricity price | 8.62 US cents/kWh (2025)8 | Used in the worked example below |
| Electricity cost per MWh of shaft work, 93% efficient motor | About 93 USD/MWh (2025, calculated)8 | 86.2 USD/MWh divided by 0.93; excludes capital and maintenance |
| Power saving from 20% speed reduction on a pump or fan | About 50%4 | Cube law for centrifugal loads with no static lift |
Where the money goes
| Item | Share or amount |
|---|---|
| Electricity over a 20-year life | About 99% of purchase-plus-energy cost in the DOE 100 hp example (calculated: 20 x USD 42,500 versus USD 6,250)3 |
| Purchase price | About 1% on the same basis (calculated)3 |
Worked example (calculated, 2025 USD): an 11 kW, 4-pole motor delivering full load for 6,000 hours a year. At IE3 minimum efficiency (91.4%) it draws 12.04 kW; at IE4 (93.3%) it draws 11.79 kW. The IE4 motor saves about 1,470 kWh a year, worth about USD 127 at the 2025 US industrial price of 8.62 cents/kWh, while the IE3 motor's annual electricity bill is about USD 6,200. If the motor drives a fan whose flow can be cut by 20% for much of the year, a variable speed drive can save far more than the efficiency upgrade, because input power falls by about half at that speed.
Sources
- Premium Efficiency Motor Selection and Application Guide: A Handbook for Industry US Department of Energy, Advanced Manufacturing Office, 2014
- Adjustable Speed Drive Part-Load Efficiency, Motor Systems Tip Sheet #11 US Department of Energy, 2012
- Short-Term Energy Outlook, Table 7c: US regional electricity prices (October 2026) US Energy Information Administration, 2026