Why I am not replacing my energy guzzling freezer with an energy efficient one

I’ve had a 200 litre upright freezer for 12 years that consumes (at current costs) around $173  of electricity per year.

Question: should I upgrade to a more energy efficient one?

The answer is no. The attached spreadsheet (click here) explains why. 

The sunk cost concept is crucial to such a calculation.

I have calculated that (at current price) the freezer has cost me around $2800 to date. However, that is totally immaterial to a decision to continue with it or replace it.

The real problem is that energy efficient feezers are still around 2-3 times costlier than less energy efficient ones. 

The sunk cost concept is crucial to such a calculation.

Plus discounting future costs appropriately (I’ve used 4 per cent discount)

Replacing my freezer never becomes viable in my lifetime – at current capital cost of replacement.

It has already worked for 12 years. I expect it will die sometime in the next 20 years, when I should buy a more efficient one. 

Over the years, I expect t be able to generate energy at home, thereby lowering my energy costs significantly.

DECISION: DO NOT CHANGE. 

Of course, if I want to increase freezer capacity from 200 to 300 litres or more, I should consider a new freezer. But so long as the job is being done adequately by a 200 litre freezer (in addition to the fridge – which I do intend replacing soon) I should not be attracted by the promise of greater energy efficiency.

EXTERNALITIES

Some externalities may arise from this decision, that I do not factor into my private calculation. But that’s not my business to consider. Should someone subsidise me by around $1000, I MAY consider replacing my freezer. But then the society MUST gain at least $1000 (plus administrative costs) in real benefits for that subsidy to be even remotely a viable policy.

EFFECT OF THE AUSTRALIAN PENSION SCHEME

Let me add that the Australian pension scheme is a MAJOR determinant of my decision to replace the freezer. The more I save (by not buying a new freezer today, say), the more the cash I have at the end of age 67, and that has a direct and significant affect on the pension that I’d be eligible for.

It would be in my interest to – towards age 67 – to sink a LOT of capital into the most expensive and energy efficient gadgets, so I can get the following double benefit:

a) extra pension

b) much lower energy costs.

To that extent, the pension scheme acts as a direct subsidy for energy efficiency. 

Since I should therefore replace the freezer by age 67, it may be in my interest to replace it even earlier (provided the various trade offs involved work out – e.g. life of freezer, etc.).

ADDENDUM

Some reading material (I’ve not reviewed the material and do not endorse it: just some alternative views).

1) Life Cycle Optimization of Household Refrigerator-Freezer Replacement

2) SHOULD I BUY A NEW ENERGY EFFICIENT FRIDGE-FREEZER?

3) How Do You Know if Your Refrigerator Needs Replacing? Five Key Signs