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# What is meant by the total cost of ownership for a transformer? How Can I estimate it?

When purchasing a transformer and even more when comparing two different solutions, the right choice is driven by economical analysis of the equipments.
Total Cost of Ownership, giving transformers cost of use along their life span including purchasing, operating and maintaining costs.
Basically some simplification can be done when comparing two different transformers with the same technology: installation, maintenance and decommissioning will generate the same cost levels and then be put out
of the comparison.

How to calculate/estimate the total cost of ownership?
The calculation has to take into consideration the evolution of the cost of energy during transformer life span. This is the interest rate to be considered as given below.
The simplified calculation formula of the Total cost of ownership becomes the following:
Where:
No Load Losses Cost (NLLC) = (1+i)^n -1 / i(1+i)^n * C * Time
Load Losses Cost (LLC) = (1+i)^n -1 / i(1+i)^n * C * Time *Load factor²
Where:
i: interest rate [%/year]
C: kWh price [USD/kWh]
Time: number of hours in a year [h/year] = 8760