# Electric motors and drives: Unit economics

Why the electricity bill dwarfs a motor's price

Source page: https://www.materialinsights.org/energy/e_motors/economics/

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](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) | 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 year^[3](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) | 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 ratio^[3](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) | DOE worked example |
| **US industrial electricity price** | 8.62 US cents/kWh (2025)^[8](https://www.eia.gov/outlooks/steo/tables/pdf/7ctab.pdf) | Used in the worked example below |
| **Electricity cost per MWh of shaft work, 93% efficient motor** | About 93 USD/MWh (2025, calculated)^[8](https://www.eia.gov/outlooks/steo/tables/pdf/7ctab.pdf) | 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](https://www.energy.gov/sites/prod/files/2014/04/f15/motor_tip_sheet11.pdf) | 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](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) |
| **Purchase price** | About 1% on the same basis (calculated)^[3](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) |

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

1. [Premium Efficiency Motor Selection and Application Guide: A Handbook for Industry](https://www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf) US Department of Energy, Advanced Manufacturing Office, 2014
2. [Adjustable Speed Drive Part-Load Efficiency, Motor Systems Tip Sheet #11](https://www.energy.gov/sites/prod/files/2014/04/f15/motor_tip_sheet11.pdf) US Department of Energy, 2012
3. [Short-Term Energy Outlook, Table 7c: US regional electricity prices (October 2026)](https://www.eia.gov/outlooks/steo/tables/pdf/7ctab.pdf) US Energy Information Administration, 2026

## Other sections

- [Summary](https://www.materialinsights.org/energy/e_motors/index.md)
- [Overview](https://www.materialinsights.org/energy/e_motors/overview/index.md)
- [Correlation](https://www.materialinsights.org/energy/e_motors/correlation/index.md)
- [Science and limits](https://www.materialinsights.org/energy/e_motors/science/index.md)
- [Value chain](https://www.materialinsights.org/energy/e_motors/valuechain/index.md)
- [Engineering methods](https://www.materialinsights.org/energy/e_motors/methods/index.md)
- [Equipment and suppliers](https://www.materialinsights.org/energy/e_motors/equipment/index.md)
- [Relationships](https://www.materialinsights.org/energy/e_motors/links/index.md)