Common sense management of EISA motor changes

Nov. 21, 2012
Stanton McGroarty says use Plant Services' market intelligence report to help create a solid motor strategy.

It’s no secret that the Energy Independence and Security Act of 2007 (EISA) is in effect now. The law sets efficiency standards for three-phase AC induction motors from 1 to 200 hp. The new efficiency standards require that motors manufactured after Dec. 19, 2010, conform to the NEMA Premium efficiency standards. Old motors can still be rebuilt and sold, as can new old stock of pre-EISA motors.

Energy prices are climbing faster than most other costs, so we should be able to find a financial opportunity buried in EISA. But face it, guys, when you’re operating at the three-way intersection of the law, electrical engineering, and accounting, it might be a little hard to find exactly the information we need. Manufacturers need to find their way to a solid motor strategy.

A quick review of the law, which is available at, shows that clarification isn’t going to come from there. Fortunately, Plant Services had just completed our annual “Motors and Drives Market Intelligence Report.” This survey provided a good deal of information about the amount of impact EISA and other market forces have had on the way plant managers are making their motor and drive decisions. Hopefully, the combination of this market information, the technical information available from equipment and utility vendors, and our reading of the law will help plant operations people to make sound decisions about their motor inventories.

First of all, these sources agree to some basic truths about the lifetime or lifecycle cost of an electric motor. First, the purchase cost of the motor is typically about 2% of the lifetime cost. Another 2% is the cost of maintenance on the motor. The remaining 96% of the cost of a motor is the cost of the power that drives it. Given these relationships, what are we going to optimize, the purchase cost of the motor or the efficiency with which it uses power?

Cost Standard EISA
Purchase Price       $2,000 $2,000
Maintenance Cost 2,000 2,000
EISA Upgrade = 15%   300
Annual Energy Cost (Standard)    6400  
Annual Energy Cost (EISA/Premium)   6272
Lifetime Energy Cost 96,000 94,080
Lifetime Cost $100,000 $98,380
Payback for Upgrade (Months)        28

So far, it’s a pretty easy call, isn’t it? To keep the math easy, let’s say you pay $2,000 for a motor and another $2,000 to maintain it for a lifetime of about 15 years. Meanwhile, the motor, if you use it, say, 6,000 hours a year at 75% efficiency, will cost you $96,000 in energy. That’s $6,400 a year for power.

If you’re actually computing the detailed cost and usage for a brand of motor, you’ll want to get the exact figures from your motor supplier, or you’ll have to do it again for the business case. For setting your strategy, though, these ratios will probably be close enough.

Here are the cost differences between the EISA/Premium motors and the current standard units. Purchase cost for the EISA upgraded motors is about 15% more than the cost of the old standard motors. Power consumption savings vary from about 2.5% at 5 hp to 1.6% in the 50 hp range. Again, the specific numbers for the equipment you are considering will be available from your vendor. Please use them for your business case calculations. For Table 1, we used 2%.

Note that the annual cost of energy is more than three times the cost of the motor. This is not unusual. That is why the upgrade is only a 28-month payback, well within the payback criteria for most companies.


According to the Plant Services Market Intelligence Report survey, most companies look for a payback of 6 months to 5 years for capital purchases, with 2-3 years being the most common values. It was also clear that the silo mentality isn’t dead. One reader told us, “Energy cost doesn’t come out of the maintenance budget, so we don’t see the payback.”

J. Stanton McGroarty, CMfgE, CMRP, is senior technical editor of Plant Services. He was formerly consulting manager for Strategic Asset Management International (SAMI), where he focused on project management and training for manufacturing, maintenance and reliability engineering. He has more than 30 years of manufacturing and maintenance experience in the automotive, defense, consumer products and process manufacturing industries. He holds a bachelor of science degree in mechanical engineering from the Detroit Institute of Technology and a master’s degree in management from Central Michigan University. He can be reached at [email protected] or check out his .
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The numbers used in the chart above do not include the installation cost of the new motors. The reason is that the work will probably be performed as part of normal maintenance down time, and direct replacements will usually not be major surgery. Of course this will have to be adjusted for the specific situation in your plant if it is different.

As an overall strategic policy for motors now that EISA is in full effect, you might try the following, supported, of course, by business cases in your company’s format for all major proposals:

  1. When you must replace motors, make all replacements with premium motors. There is less than a three-year payback for the premium features.
  2. If you have a significant motor inventory, see if your vendor will take them back as a down payment on premium units. There should be no restocking fee. Your less enlightened competitors will consider the old motors to be a good deal and snap them up to save the 15% under the premium units’ prices.
  3. Consider setting up a consignment arrangement for motors with a vendor who is reliable. If he takes back your old-time stock and issues a credit, this may actually show a negative cost and take some MRO inventory off your books. Don’t forget, he’s got customers ready to snap up the old stock. They’ll think they’re beating the law.
  4. If you are stuck with some old technology, install it on equipment that sees only sporadic use. Who cares how efficient the pumps on the fire wagon are, as long as they work?

Our survey results show that this strategic approach will put your firm on the cutting edge of U.S. response to EISA. The most common response to the question, “What have you done to prepare for the new electric motor standards in EISA?” was “nothing” (60%). Eighteen percent had inventoried their motors. Another 18% had begun replacing them with premium motors. And 4% planned to buy old motors through resale.

Here are a couple of web connections with more information on EISA and premium motors:

EISA is something that doesn’t happen very often. It is an environmental law that works for the planet and actually delivers a lot of the savings to the industries that do the work. Electric motors consume something like 23% of all electricity in the United States. Why not deliver these benefits and enjoy the payback?

There are additional benefits to the use of NEMA Premium efficient motors and following best practice repair procedures, as well. They include lower failure rates, current standard spare parts, higher quality insulation and bearings, and reduced waste heat and vibration. These should all add up to increased OEE. Some manufacturers also offer longer warranties on the premium units.

When you go to work on your motor strategy, please don’t forget to bring a representative of your controller’s office onboard. This approach should receive the controller’s approval, and your team will be positioned to get credit for the work.