THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES*

By W. SZWANDER, El.Engr. (Warsaw), Member.

{The paper was first received 13th March, and in revised form \4th September, 1944. // was read before the TRANSMISSION SECTION
Uth December, 1944.)
SUMMARY
The overall annual cost ca (in ) of operating a transformer can
The object of the paper is to outline a simple and comprehensive be expressed as follows:
procedure for the practical application of the principles determining
ca = CR/100 + pW + gL/240 . . . . (1)
the economic selection of transformers. If some degree of uniformity
could be achieved in these calculations it would be of great advantage where C = first cost of transformer, in ,
to all concerned. Two aspects of the problem are considered: the
R = total rate of capital and depreciation charges, %,
relatively simple one relating to the purchase of transformers, and the
W total actual maximum demand of losses, in kW,
much more complex one dealing with the designing of transformers to
L = total actual annual energy loss sustained in the
satisfy specific economic requirements in individual cases. The
transformer, in kWh, and
formulae developed are supplemented by practical information on the
p,
q
represent
the power tariff at the place where the transselection of the correct values for the requisite coefficients. A statistiformer is situated, p being the maximum demand
cal survey is made of methods used hitherto by different buyers of
rate in /kW per annum and q the unit rate in
transformers for the capitalization of the transformer losses. Finally,
pence/kWh.
approximate values of the coefficients In the formulae for the capitalization of losses are suggested, which may be used in the absence of
In this expression the maintenance costs and any adminismore precise information.
trative charges are omitted, since they may be regarded as
practically independent of design and of the cost of the transformers.
The investment cost Cc (in ) of a transformer, including the
(1) INTRODUCTION
Although transformers represent a class of electrical apparatus capitalized value of the losses, is expressed by
with comparatively high efficiencies, the cost of the energy lost
C c = C + CL=C+{pJY
f $1/240)100//J
. (2)
in them is quite considerable. During a period of service of
The term C/., representing the capitalized value of the losses, is
5 to 10 years this loss can in certain cases equal the first cost of
installing a transformer. The selection of a transformer should the capital which, at an annual rate of capital charges equal to R,
therefore take into account not only its initial cost, but also will give an annual expenditure equal to the actual cost of the
the inherent power losses. Though recently more consideration transformer losses.
The total rate of the annual capital charges R is the sum of
is being given to these losses, there is still a lack of uniformity
in the methods used for their calculation. It would thus appear three components: the annual interest rate r,-, the insurance and
of value to review the principles of such calculation in order tax rate r, (the value of this item is so small that in comparing
to suggest a standard method of loss calculation on which an costs it can be safely neglected), and the annual depreciation
economic choice could be based when ordering a transformer. rate rd; thus:
To facilitate the practical application of the procedure outlined
(3)
in the paper, the derivation of all formulae used and the more
The annual depreciation rate rd represents equal annual paycomplex aspects of the problem are given in the three appendices
ments to a sinking fund, such that during the assumed useful life
in Section 10.
<2) ANNUAL OPERATING COST OF A TRANSFORMER; INVESTMENT COST, INCLUDING CAPITALIZED VALUE OF
LOSSES
For an economic comparison of transformers of the same
rating, but with different losses and different costs, such transformers being intended to work under identical conditions, one
of the two following methods can be used:
(a) The overall annual cost of operating the transformers can
be compared; this cost to cover the total capital and
depreciation charges and the annual cost of the transformer losses.
(b) The investment cost of the transformers can be compared
after adding the capitalized values of the transformer
losses over the probable life of the transformers.
These two methods are equivalent in application and validity.
They are normally both described as performing a "capitalization of the transformer losses," although only the second method
can be strictly described as such.
Transmission Section paper.

4
6
8
Interest Rate (rc)%

Fig. 1.Annual depreciation rate (rd) for different times of raising

the sinking fund (n years), and at different rates of compound
interest (rc).

[125]

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

126

of the transformer (// years) a capital will be raised equal to the

first cost of the transformer, the deposits in the meantime bearing
compound interest at the rate i\, which may or may not be the
same as iy
la
o/
\
r -_.
d
(1 ) /v/100)"
1 /o
If, after // years, the transformer is to have a salvage value of
r/%, the rate of depreciation rd must be:
(100

d)

100

>\,
(1 I rJlOOf

where Wc = copper loss in kW, at full rated load,

u ratio of actual peak load to transformer rating,
z "load loss-factor" referred to the actual annual load
period of 8160y hours, and to the peak value of
the load. A precise definition and the physical
meaning of this "load loss-factor" are given in
Section 10.1.
For practical application the following empirical values of the
. "load loss-factor" z may be used:

I
Load factor /

The values of the rate of depreciation rd calculated by

formula (4) for zero salvage value, are represented by the curves
in Fig. 1, which permits easy interpolation. More exact figures
for a limited number of cases are given for convenience in the
following table.
TABLE OF ANNUAL RATE OF DEPRECIATION rd

(%)

(Sinking Fund)

..

10

0-8

Power factor at
peak load

10
0-8
0-6
0-4
0-2
00

0-6

04

0-2

00

0 055
0-107
0-148
0-177
0 194
0-200

0000
0000
0-000
0000
0-000
0-000

Load loss-factor c

1-000
1-000
1-000
1-000
1-000
1-000

0-660
0-710
0-750
0-778
0-794
0-800

0-400
0-472
0-528
0-568
0-592
0-600

0 195
0-269
0-326
0-367
0-392
0-400

Compound interest rate (rr) when raising sinking fund

Assumed
useful life
of plant
(ri) years

10
15
20
25
30
40

3"o

31/

5%

4"o

6%

7%

These values are plotted in Fig. 2; from the curves intermediate

values can be read.

Percentage annual depreciation rate (r(i) for zero salvage value after
n years

9-13
5-78
4-12
3-12
2-46
1-66

8-93
5-58
3-91
2-93
2-28
1-48

8-72
5-38
3-72
2-74
2-10
1-33

8-52
5-18
3-54
2-57
1-94
1-18

8-33
4-99
3-36
2-40
1-78
105

8-14
4-81
319
2-24
1-64
0-93

7-95
4-63
3-02
2-09
1-50
0-83

7-59
4-30
2-72
1-82
1-26
0-65

7-24
3-98
2-44
1-58
1-06
0-50

Percentage annual depreciation rate (r,,) for 10% salvage value after
i
j years

10
15
20
25
30
40

8-22
5-20
3-71
2-81
2-22
1-49

8-04
5-02
3-52
2-64
2-06
1-33

7-85
4-84
3-35
2-47
1-89
1-20

7-67
4-66
3-19
2-31
1-75
106

7-50
4-49
3-02
216
1-60
0-94

7-33
4-33
2-87
2-02
1-48
0-84

7-16
4-17
2-72
1-88
1-35
0-75

6-84
3-87
2-45
1-64
114
0-58

6-52
3-58
2-20
1-42
0-96
0-45

The reciprocal of the overall rate~of capital charges, i.e. the

term 100//? in formula (2), is sometimes called the capitalization
factor, the capitalized value of the losses being obtained by
multiplying the annual cost of the losses by this term.
(3) VALUATION OF TRANSFORMER IRON AND COPPER
LOSSES
If a transformer has Wt kW iron loss, and it is excited for
8 760v hours per annum (v being the fraction of the year during
which the transformer is connected), and if the energy charges
amount to p per annum per kW of maximum demand plus
q pence per unit, the annual cost of the iron loss cai in will be:
4 8

-'- 36-5yq)

(5)

The total no-load losses of the transformer should in this

instance be substituted for the iron loss Wx.
Similarly, the annual cost of the copper loss cac in can be
expressed as:
36-5zyq)
(6)

04
00
Load Factor I

0-8

10

Fig. 2.Values of load loss-factor z, for various load-factors /, and

various power-factor values at peak load, with the reactive component of the load assumed constant throughout the load
variations.
Instead of expression (1) for the overall annual cost of operating
a transformer, the following expression is now more convenient
to use:
ca = CRJ100 f- WiKi + WLKC . . . . (7)
where the constants Kt and Kc, represent expressions in equations (5) and (6), as follows:
#, = (/>+ 36-5)?)
Kc = u2(p + 36- Szyq)

(8)
.

(9>

In the same way, expression (2) for the investment cost of the

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

transformer, including the capitalized value of the losses, can be

modified to:

C, - C -f- Q. = C +

iKi + WCKC)

(10)

(4) CONSIDERATION OF SYSTEM LOSSES DUE TO

TRANSFORMER MAGNETIZING CURRENT
AND TRANSFORMER REGULATION
Transformer magnetizing current and transformer regulation
have little influence on the subject under discussion, and in most
practical calculations they are neglected. A brief discussion will
show why they are omitted in these calculations.
Apart from being the source of loss of power in the transformer, as represented by the total iron loss plus the winding
copper loss due to the excitation current, the magnetizing current
also causes some additional copper loss in the wKble primary
system between the generators and the transformers. The
transformer magnetizing current, being largely a reactive current,
causes a decrease of power factor throughout the system; this
calls for higher current ratings of all elements in the system
between the power source and the transformer, and this in its
turn increases the capital expenditure for the whole system. The
time during which the additional loss caused by the magnetizing
current is incurred is the same as that for the transformer iron
loss, and this additional loss can therefore be included by suitably
increasing thefiguresfor the iron loss. Precise evaluation is not
possible in the majority of practical cases.
Where the power tariff includes a power-factor clause or an
additional charge for the reactive units (kVArh), the cost due to
a deterioration of the power factor in the system can be roughly
assessed. The additional loss referred to, and its cost, can
however be safely neglected, since in most cases it will not be
more than a few per cent of the iron loss of the transformer.
Incidentally, it should be noted that occasionally the expression
"capitalization of the magnetizing current" is incorrectly used,
capitalization of the transformer iron loss being really meant.
Sometimes a definition of the cost of transformer regulation is
attempted on the assumption that the voltage drop in the transformer causes a decrease in the actual power delivered to the
consumer. This procedure is not correct, because the loads are
seldom of the constant-impedance type but are usually of the mixed
constant-impedance and constant-power type. Moreover, the
voltage at the load should be regarded as a quality feature of the
power delivered, and therefore must be kept constant within
more or less narrow limits, irrespective of the degree of regulation of the transformers. In principle, the only coirect approach to the problem of capitalization of transformer regulation
would be to compare the increase in the first cost of the transformer, when designed with a lower degree of regulation, with
the admissible economies on copper sections of the transmission
lines, or with the economies feasible on any other voltageregulating equipment, the magnitude of such economies being
determined by the need for keeping the voltage constant at the
load. The above method, though perfectly sound in theory,
would be difficult and complicated to apply in practice.
In general, the selection of transformers on the basis of a
capitalization of their operating costs depends on a knowledge of
the relationship between the cost of the transformer and such of
its characteristics as losses, magnetizing current and regulation,
which determine the components of these operating costs. It is
already difficult to establish this relation in regard to the iron
and copper losses alone, so that it is quite impossible to derive any
expression of transformer cost as a function of the four interdependent variables: copper and iron losses, magnetizing current,
and regulation. Any such attempt would, moreover, introduce
an unnecessary complication, since a correct evaluation of the

127

iron and the copper losses alone is already sufficient to give

satisfactory results in all practical cases.
(5) PRACTICAL APPLICATION OF THE PRINCIPLE OF
CONSIDERING TRANSFORMER LOSSES WHEN SELECTING
OR DESIGNING A TRANSFORMER
The economic choice of a transformer most suitable for
operation at a given point of a system can be based on a calculation of either its annual operating cost [equation (7)] or its
initial cost, including the capitalized value of the losses [equation (10)]. In both methods the constants R, p, q, v, //, /, z,
determining the capital charges, the power tariff and the load
characteristics, must be known or estimated. As these constants
can have different values, transformers of different characteristics must be selected not only for different systems, but also
for different positions in the same system, since the load characteristics and the power cost vary from point to point in a system
on passing from the generator to the consumer. Since the
use of the annual operating cost and the use of the initial cost
including the capitalized losses are equivalent, reference will
hereafter be made only to the first of these.
A purchaser of a transformer has merely to calculate the
annual operating cost ca for all the transformers quoted [using
equation (7)] and to accept the tender for which this cost is the
lowest. It is tacitly assumed here that, apart from cost and
losses, all the transformers are otherwise equivalent.
The task of the transformer manufacturer is usually more involved. A theoretically rigid solution of the problem will be
indicated here, which, though at first appearing complex, leads
finally to quite simple rules susceptible of easy application in
practice. If, with his inquiry, a customer has supplied the values
of all the coefficients (/?, p, q, v, u, /, z) he intends to apply when
comparing competitive tenders, the transformer manufacturer
will endeavour to offer a transformer design which will give the
lowest possible annual operating cost as calculated from the
customer's coefficients. This, of course, does not necessarily
mean the lowest selling price.
If the coefficients R, p, q, y, u, I, z, are constant for any particular case, the total annual operating cost of a transformer is a
function of three variables; i.e.:
ca = F{(C, Wh Wc)
(11)
These three variables are not independent, for the first cost of
the transformer (C) is itself a function of the iron and copper
losses; i.e.:
(12)
C = F2{Wh Wc)
Function (12) must be known if an exact solution of the
problem of economic design of a transformer is required. It can
be represented graphically by curves of the type shown in Fig. 3.
(Note: The curves in Fig. 3 and in the subsequent Figures are
based on approximate data, and are intended only as illustrations; no numerical values given in them should be used in
practical calculations; in particular, the prices of transformers
are only assumed values and do not represent current prices, being
roughly those ruling before the war.) It is convenient in practice
to replace one of the three variables, namely the copper-loss
figure, by the loss-ratio figure (WCIW{), which transforms the
curves in Fig. 3 to those in Fig. 4 or 5. The method of
plotting transformer price against iron loss for constant lossratios, used in Fig. 5, offers certain advantages, which will appear
in the sequel. It should be noted that the curves in Figs. 3, 4
and 5 have been extended over very wide ranges for all parameters, and far beyond normal practical values; this has been
necessary to make further deductions more illustrative. The
families of curves in Figs. 3, 4 and 5 are of course equivalent,
and from any one of these the two others can be easily deduced.

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128

SZWANDER: THE VALUATION AND CAPITALIZATION OFTRANSFORMER LOSSES

Loss Ration Wi
2015 10
5 31 25 2O 15

200
200

Transformer
100 kVA_
11 kV
3-phase
50C/S

50

100
Iron Loss
Fig. 3.Transformer prices for various loss values.

Transformer IOOkVA.llkV
3-phajse, 50c/$

160

Fig. 5.Transformer prices for various loss ratios and iron-loss values.

(Transformer Price C)
100%126 5

42
Transformer
100 kVA, UkV. 3-phase,50c/s

0
150%
100
Iron Lo&s Wt
Fig. 4.Transformer prices for various loss ratios and iron-loss values.
50

Having expressed function (12) by one of the above families

of curves, the total annual cost of the transformer can be
calculated from equation (7) for different points of the curves
C = F2(WhWc) or C = F2(Wh WJW^. Curves of the total
annual operating costs can then be drawn; these again can be
plotted for different constant loss-ratio values or transformer
prices, the iron-loss or the transformer prices being plotted along
the abscissa as in Figs. 6, 7 and 8. These families of curves have

50

100
Iron Loss ?%
Fig. 6.Annual operating cost of transformer.

150

one feature in common, a double minimum, namely one minimum operating cost for each curve drawn for a constant loss ratio
or transformer price, and among these minima a specific minimum corresponding to one definite loss ratio or price. This last

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

Transformer 100kVA.11 kV,

3-phase, 50c/s

5/kW

0-4d./KWh

09
0535
0322
6% pa.

Iron Loss
Fig. 7. -Annual operating cost of transformer.

129

not easy to apply in practice, because complete information on

the price variation of transformers, as represented in Figs. 3, 4
and 5, is usually not readily obtainable, particularly if a wide
range of values is to be considered. Some indication of the
variations of transformer prices may be obtained by selecting
transformers with reduced losses, i.e. by underrunning relatively
larger units. This method is described in Section 10.2 (the curves
in Figs. 3, 4 and 5 have been partly deduced by this method).
The laborious analysis entailed by the above method may be
avoided by relying on two fundamental rules governing the variations of the annual operating cost of a transformer. A knowledge
of the general trends of these variations, indicated by the shapes
and relative positions of the curves in Figs. 6, 7 and 8, is helpful
in applying these rules. The two rules, discussed in detail in
Section 10.3, are as follows: (a) the minimum annual cost of the
losses in a transformer occurs when the annual costs of the iron
and of the copper losses are equal, and (b) the minimum total annual operating cost of a transformer is obtained when the annual
cost of the total losses is in a certain given ratio to the annual
capital charges; in most practical cases the economic ratio of
the cost of the losses to the capital cost is between 2 and 2 5,
being about 2-5 in the example represented in Figs. 6, 7 and 8.
Rule (a) leads directly to the economic loss ratio for the given
conditions of operation as defined by the values of the constants
p, q, v, u, I, z [equation (35) in Section 10.3], namely:

f^A
V Wj/Opt

P + 36-5^

u2(p + 36-5zyq)

Thus only the curve in Fig. 5 for the above ratio is needed for
calculating the corresponding curve in Fig. 8, this last curve being
the lowest and its minimum giving the solution required. Without the information embodied in Fig. 5, the trial-and-error
method must be used, with the aid of the second rule. For a
tentative design with the desired loss ratio, the annual capital
cost should be compared with the cost of the losses. If the
ratio of these two costs does not correspond
to that required by the second rule, at least
Transformer 100 kVA. 11 kV, 3-phase, 50 c/s.
an obvious indication will be obtained of what
p-5/kW 9=0-4d./kWh y-1 w-0 9
modifications in design are necessary to
#
Loss Ratio approach the requirements of the most economic design.
Wc:Wi
No conclusions can be drawn from Figs. 6, 7
and 8 on the rate of increase of the annual
operating cost on a deviation of the price of
the transformer, and the loss ratio, etc., from
their optimum values. This rate of increase
will depend largely on the values of the constants R, p, q, y, u, I, z, whereas the shape of
the different curves in Figs. 6, 7 and 8
obviously depends on the scales used in
plotting them.
An important point to note in connection
with the above analysis is that in function (12)
and in Figs. 3, 4 and 5 representing this function, the price and the loss variations have
been assumed as being due only to dimensional
changes in designs; no such factors as the use
of different materials (aluminium in place of
copper, or different grades of steel, etc.), or
different manufacturing and overall costs have
been taken into account. Hence, the minimum
value of the transformer operating cost
applies for the price variations as given, e.g.,
200
100
125
175
150
by the data in Fig. 5. If different materials
Transformer Price
can be used in construction or the manufaccx
turing and overall costs can be modified, a
Fig. 8.Annual operating cost of transformer.]

value, representing the overall lowest annual operating cost, will

indicate the parameters (price and loss values) of the most
economic transformer design. In Figs. 6, 7 and 8 a curve is
drawn through the minima of the individual curves, the lowest
point of this curve being the solution required.
This method, while offering a theoretically rigid solution, is
43
42

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130

SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

different solution may be found for the most economic transformer design; this must be checked by using data suitably
modified from those in Fig. 5, and proceeding as before.
In the example analysed in Figs. 3-8, the point corresponding
to the most economic transformer design is indicated by K on
all curves, while the point S corresponds to the standard design
for the given case, i.e. to 100% price and loss values, and a
3 1 loss ratio. Reference lines drawn at the bottom of Fig. 5
allow the total loss figures for different designs to be read off,
and thus the corresponding efficiencies to be calculated.
(6) INFLUENCE OF VARIOUS CONSTANTS
For a given relationship between the initial transformer cost
and its losses, e.g. of the type represented by the curves of
Figs. 3, 4 or 5, the most economic choice of a transformer, as
represented by Figs. 6-8, can be made only if the coefficients
R, p, q, y, u, I, z, are assumed constant. It will therefore be instructive to examine, at least qualitatively, how variations in the
values of these coefficients will affect economic selection for a
given price/loss relationship for the transformer.
With other values unchanged, an increase in the total rate of
the capital charges R, i.e. an increase in the interest rate and/or a
decrease in the assumed life of the transformer, will displace the
optimum point K in Figs. 6-8 towards the comparatively cheaper
transformer designs, i.e. towards those having higher losses; this
results from the requirement that there shall be a definite ratio
between the annual capital charges and the cost of the losses.
The same requirement shifts the economic choice of a transformer
towards cheaper designs also with decreases in the power tariff
(factors p and q): in the time the transformer is excited during
the year (>); in the load factor / and therefore in the load lossfactor z; and in the ratio u of the actual peak load to the transformer rating. The changes in the values of /, z, it, besides
affecting the economic selection of specific total losses and of
the transformer price related with this figure, also influence the
choice of the most economic ratio of copper to iron losses. With
each of these constants equal to unity, the kW loss figures for
iron and for copper should be equal; if the values of /, z, u
decrease, the copper loss must become greater than the iron loss
so as always to fulfil the condition of equality between the annual
costs of the two types of loss.
With the loss ratio determined by /, z and w, as well as by
p and q, the total loss is proportional to the iron loss. The value
of the latter at which the annual operating cost is an optimum,
i.e. for the point K in Figs. 6 and 7, will depend on the ratio of the
interest charged on capital R to the power tariff: the higher this
ratio, the higher the iron-loss figure for the optimum design of
transformer.
In view of the wide range of numerical values which the factors
R, P, q, X, it, I, z, can assume in practice, and with the price/loss
relationship depending on the transformer type and size, as well
as on the transformer manufacturer and on general economic
conditions, such as the costs of raw materials and of labour, etc.,
it is neither practicable nor possible to establish a numerical relationship between the most economical loss value and the ratio
^/(P* <?) For a given price/loss relationship, the above dependence could theoretically be represented diagrammatically
in the manner shown in Fig. 9.
(7) CURRENT PRACTICE OF TRANSFORMER USERS FOR
CAPITALIZATION OF LOSSES
For the capitalization of losses, transformer users in this
country and abroad mostly favour equation (7) for calculating
the annual cost of operating.
In 10 cases out of the 25 examined, the three coefficients in
equation (7) were given directly. The coefficients of equation (10)

Curves for various energy

tariffs (curve*2*for
energy cost lower than
curve V, etc.)
Total Economic Transformer Loss
Curves for various values
of loss-ratio (or of the
combination of values
urve V for lower lossratio, orforhigher values
of V a n d /".than
curve "a".
Fig. 9
for the total investment cost, including the capitalized loss values,
were given in only three cases. In 16 cases auxiliary data
referring to the load factor, the power tariff, the capital interest,
etc., were given; this allowed the coefficients in either of the two
formulae to be deduced, but in four of these cases it was indicated
that the capitalized value of the losses had to be considered. In
two cases the copper losses were neglected. In most cases the
load factor was given, though in a few it was the actual load lossfactor. A simplified representation of the daily load curve was
given in some cases to permit the load factor to be estimated.
The interest rate on capital varied between 3-5 and 10%, 4%
being the most frequent. The assumed life of the transformers
was 20 years in nearly all cases. A good average value for the
total capital charges may be taken as 8% per annum. The load
factors varied between 0 25 and 1 0, with an average around 0 4.
The greatest variations were found in the power tariffs with m.d.
rates from 0 to 5-7 per kW and with unit rates from 0 1 to
l-8d./kWh. In some cases a different unit rate was used for
the copper and iron losses to allow for the fact that the copper
losses occur mainly during the peak-load periods; in general,
this is taken care of by the two-part tariff. Owing to the wide
variations in power costs, the factors Kt and Kc in equation (7)
showed very wide variations: Kt between 3-13 and 66 per kW
of iron loss, and Kc between 0-78 (or even zero) and 26-2
per kW of copper loss.
(8) CONCLUSIONS AND RECOMMENDATIONS
Of the two equivalent methods available for making an economic selection of transformers, namely the comparison of the total
annual operating costs and that of the total investment cost including the capitalized value of the transformer losses, the first
method is the more popular and appears to be the more comprehensive. It may be applied in the form of equation (7) and
will give accurate results if the values of the constants R, p, q,
y, u, z (or /), are properly chosen. To compare several transformers having different prices and losses, it is sufficient to calculate the annual operating cost for each case, using equation (7).
The more complicated problem of finding the most economic
design of transformer to meet given operating conditions is
analysed in detail in Section 5; the main practical conclusions
reached are that the economic choice of the loss ratio of the
transformer must be such as to ensure that the annual costs of
the iron loss and of the copper loss will be the same, the
total losses for the transformer being fixed by the condition that
the total annual cost of the losses shall be about 2-5 times the
total annual capital cost.
The values of the constants R, p, q, y, u, I and z, vary between

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

131

wide limits, but the data for their determination are as a rule (10) BOGH, A.: "Valuation of Annual Losses of Conveiter and
easily obtainable. The following approximate values of the
Traasformer Stations by Means of Load Curves," World
constants of equation (7) are suggested for estimating purposes,
Power Conference, 1930, Paper No. 331.
these applying to current conditions in this country:
(11) BOLTON, D. J.: "The Economic Rating of Motors and Trans(a) For large transformers in power stations and main subformers," Journal I.E.E., 1944, 91, Part II, p. 195.
stations :
ca 0 08C } 10 Wi I - 4 8 Wc
. . per annum (14)
(10) APPENDICES
with (approximately) p 3 per kW, q 0-2d./kWh, y = 1,
(10.1) Valuation of Copper Losses

it

0-9, I

0-5, ?-0-29, R = 8%.

(/>) For large industrial transformers and for transformers in

secondary substations:
ca 0-08C ! 12Wi \3-8IVc . . per annum (15)
with (approximately) p = 4 per kW, q = 0-3d./kWh, y 0-8,
w - 0-9, / 0-4, z - 0195, i ? - 8 % .
(<) For medium and small industrial transformers and for
distribution transformers:
per annum (16)
ca~- 008C I
with (approximately)/? 5 per kW, q -= 0-4d./kWh, y = 0-8,
u = 09,l
0-4, z = 0-1955 R= 8%.
(d) For small transformers with power rates corresponding to
retail lighting tariffs:
per annum (17)
ra=---0-08C
with (approximately) p = 10 per kW, q = ld./kWh, y = 1,
// = 0-9, /~=0-3, z - 0 - 1 1 5 , J? = 8%.
In spite of the obvious accuracy and simplicity of the methods
described for the capitalization of transformer losses, their use
so far has been very limited. In many cases the difficulty of
obtaining sufficient capital for investment purposes has made it
necessary to choose the cheapest transformers, although it is
realized that their overall operating costs will not be the lowest.
In other cases, the advantages of selecting transformers on the
basis of lowest operating costs are not sufficiently appreciated,
and a preference is shown for an apparently cheaper apparatus.
It is hoped that the present analysis of the practical aspects of
the problem will encourage the economic selection of transformers and the more frequent application of sound economic
criteria when purchasing transformers.

(1)
(2)

(3)
(4)
(5)
(6)
(7)
(8)
(9)

(Referring to Section 3)
When the load on a transformer (or on any other electrical
equipment having copper losses) varies over a period 7", e.g. in
the manner shown in Fig. 10A, the total copper losses during this
period can be expressed as:
Lc = zwcpT kWh
(18)
where wcp is the copper loss in kW corresponding to the peak N.p
of the variable load, and z is the "load loss-factor." The value
of this factor is defined from the above as:
wctdt

ifdt

N?dt

(19)
1JT or
wcpT or
cp
where wct, f,, N,, are the instantaneous values at a time / of the
copper loss, the current and the load respectively, and Jp is the
current at peak load.
When the actual load curve is known, e.g. as in Fig. 10A, the
load loss-factor z can always be evaluated by drawing the curve
of the squares of the loads (Fig. 10B) and calculating the ratio of

Time
T 8760 hr O
t
Time
T
(9) BIBLIOGRAPHY
LENARD, P.: " L'evaluation et la capitalisation des pertes
Fig. 1 0 A
Fig. 10B
dans les transformateurs," International Conference on
Large High-Tension Electric Systems, 1937,1, Paper 101. the surface under the curve to the surface of the rectangle Np2T.
WOI.F, M.: "Die Berechnung der elektrischen Verluste bei This is correct only with a constant power factor throughout the
schwankenden Lastverhaltnissen in Netzen und Energie- period of load changes; otherwise a kVA or a current curve must
wandlern auf Grund von Erfahrungswerten," Elektro- be used in place of the kW load curve.
technische Zeitschrift, 1931, 52, p. 1267; 1932, 53, p. 1005. In most practical cases, either the actual or the anticipated load
VIDMAR, M.: "Der wirtschaftliche Aufbau des Transforma- curves are not available, or the method indicated for determining
tors," Elektrotechnik und Maschinenbau, 1933, 51, p. 69. the load loss-factor is considered too laborious. The load is then
VIDMAR, M.: "Le probleme economique dans la con- characterized by its load factor / only, this being the ratio of the
struction des transformateurs," Comptes rendus du actual power consumption (kWh) during the period T to the
congres international d'electricite, Paris, 1932, 5, p. 977. product of the peak load and the period T:
THIESSEN, W.: "Berechnung und Bewertung von UmspanT
nerverlusten," Elektrizitdtswirtschaft, 1935, 34, p. 765.
N,dt
SANDOR, L.: "Calculation of capitalization of transformer
(20)
1
=
losses," Elektrotechnika, 1941, 34, pp. 19, 26 (in HunNpT
garian).
In other words / is the ratio of the mean load during the period
BOLTON, D. J.: "Electrical Engineering Economics,"2nd ed.,
T to the peak load Np.
1936, chap. 9 (Chapman and Hall, Ltd.).
For calculating the copper losses a relation must be established
REED, E. G.: "The Essentials of Transformer Practice,"
between the load loss-factor z and the load factor /. For a given
2nd ed., 1927, chaps. 23-25 (Chapman and Hall, Ltd.).
WILD, E. E.: "Transformers," 1940, chap. 9, pp. 7-10 value of/, z can assume different values between the two extremes
of zmax = / and zm,-n I2, depending on the shape of the load
(Blackie and Sons, Ltd.).

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132

SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

curve. The maximum value of z corresponds to a constant load

equal to Np during the time / T, and the minimum value to a
constant load INp during the time T; in both .cases the load
factor / is the same. An analysis of many actual load curves
with different load factors and for different supply undertakings,
as well as for different points in the same system, indicates that
the load loss-factor for given load-factor values varies within
only very narrow limits. A load loss-factor value can hence be
allocated to every load-factor value with an accuracy sufficient
for all practical purposes. Different values of z have been given
by various authors; the following figures by M. Wolf (see
Reference No. 2) appear to be the most recent:

the duration of the load and its peak value, and z' the annual
load loss-factor for the copper watt-loss at the rated load.
The load factor / as used for the evaluation of transformer
losses must always be determined for the load on the transformer
itself, for there may be a great difference between the load factor
of the whole system and that of any individual transformer.
(10.2) Underrunning as a Means for the Economic Selection of
Transformers
(Referring to Section 5)
Usually the price variations for a transformer with iron and
copper losses varying independently over a sufficiently wide

Load factor /

1 0

0 9

0- 8

0- 7

0 6

0 5

0 4

0- 3

0- 2

0 1

0 0

Load loss-factor z..

1 0

0 815

0- 66

0- 525

0 40

0 29

0 195

0- 115

0- 055

0 02

0 0

The factor /, and hence also the factor z in the above table,
are deduced from kW loads; as a result these values of z can be
used only when the power factor of the load remains constant
during the period of load variations. This does not hold in
most practical cases, so that it becomes advisable to simulate
actual conditions more closely, namely by assuming that under
a varying load the reactive component of the load remains constant. The values of z, depending on the power factor during
the peak load, are then those given in the table in Section 3 and
in Fig. 2 (these values are also taken from Wolf's paper). It
should be noted that when the power factor is constant throughout load variations, values of z must be taken corresponding to
unity power factor at peak load in Fig. 2 and in the Table in
Section 3.
Incidentally, the load loss-factor z is equal to the square of the
product of the load factor / and the form factor / of the loadcurve,/being the ratio of the r.m.s. value of the load curve (NB)
to its mean value (NM)'>
z = l2/2
(21)
This can be proved by a further transformation of equation
(19), thus:
T

N2dt
=

^o

NT

-Nj^
N

_
^Np'J

^NMy

The load loss-factor z can hence also be obtained from empirical data interrelating / and /.
Sometimes empirical formulae are used giving the relationship
between z and /, e.g. the following expression:
z = 0-2/ +0-8/2
(22)
The results obtained may be close enough to the empirical figures
quoted above, provided the power factor can be assumed constant. Otherwise, better results will be obtained by using the
values of z in the Table in Section 3.
The factors / and z always refer to the actual duration T of
the load and to its peak value Np. When calculating the copper
losses, it is usual to extend the calculation over a period of one
year (8 760 hours) and to use the copper watt-loss Wc corresponding to the nominal rating P of the transformer, thus:
T = 8 760^ hours
. . . . .
(23)
(24)
NP uP kilowatts
(25)
Whence
wcp = u2Wc
giving the copper losses as:
Lc = 8 160zu2Wcy = 8 76Oz'Wc . . kWh (26)
where z' = zu2y, z being the actual load loss-factor referred to

range, are not easy to obtain. The selection of the most economic transformer is then partly possible by considering a series
of transformers of similar design but of different ratings. The
transformers in a series usually have a constant copper/iron
loss ratio, at least over a narrow range about the kVA figure for
which the transformer is to be chosen. The prices for a standard
series of transformers can be easily obtained. The object of the
present method is to reduce the losses in a transformer by using
a design from the standard series, but with a rating higher than
normally corresponding to the anticipated maximum load.
If the working load is N{ kVA, the direct choice of a transformer from the standard series would give a rating Pl N{ kVA,
with full-load copper loss of Wcl and iron loss of Wix kW.
Assume that a higher rating is selected, namely P2 = */>, kVA;
its full-load losses will be Wc2 and Wi2 respectively. Owing to
similarity in design, the loss ratio will be the same in the two
cases, thus:
Wcl/Wn = Wc2/Wi2 = constant . . . (27)
The transformer of rating P2 will have to work only on a maximum load of N1 kVA, i.e.
N^Pi^PJx

(28)

The copper loss corresponding to the maximum load Nl will

be Wc2/x2, the iron loss remaining unchanged at Wi2. The iron
loss can be 'reduced by decreasing the flux density in the core,
for instance by increasing the number of turns on both windings
by, say, -y/m times; in this modified transformer of rating
P'2 = P2kVA, the number of turns will be t'2 = t2\/m.
This
y/m reduction in flux density will reduce the iron loss m times,
thus:
W(2 = Wnlm
(29)
To keep the dimensions of the transformer, and therefore the
price, unchanged, the -y/m increase in turns must be accompanied by a similar decrease in the copper sections. The resistance of the windings will therefore increase (\Zm)(-\/m) = m
times. Finally, the copper loss of the transformer of rating P2
on load Ni will be:
(30)
while the loss ratio will be:
. (Wc2/Wi2) =

(3D

If this new transformer is to have an unchanged loss ratio,

then m2/x2 = 1, hence m x; i.e. increasing the transformer
rating x times makes it necessary to increase the number of turns
y/x times. This modified transformer of rating P2, on maximum load Nlt will have the same efficiency as the transformer

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

of rating P2, on full rated load, i.e. larger than the transformer
of rating P{ = Nx.
If a change of the loss ratio is also required:

K2lW;2={\ln).{WclIWi2)

= {\lnXWcXIWi{).

133

<C

250

. (32)

then
m2lx2~]/n or x = m. \/n
. . . (33)
For every value of the coefficient n chosen, different, interrelated values of m and x are possible.
The practical application of this method will be illustrated by
an example. Fig. 11 gives prices, efficiencies, and iron and

200

250

97 - "

Standard Transformers
3-phage. 50c/s
II kV
H.:ty-31-constan1

Wc

200

08

05

Fig. 12
Wi

150

100

200

kVA
Fig. 11

It is important to note that the above method is limited to

the use of transformers whose frames are larger than standard.
Applying the method to smaller frames to get cheaper transformers with larger losses would not be reasonable, not only
out of consideration of the cooling conditions, but also because
with the increase in flux densities the iron losses would increase
more rapidly than the square of the flux density; the increase in
the magnetizing current would also become prohibitive.

300

(10.3) Rules for the Economic Selection of Transformer-Loss

Values
(Referring to Section 5)

copper losses for a standard series of 3-phase, 11-kV transformers

(10.3.1) The losses in a transformer can be expressed apbetween 100 and 300 kVA with a loss ratio of 3- \. In Fig. 12
curves are computed from the data in Fig. 11, in which the price proximately as follows:
of the transformer is plotted against the iron loss for different
Wc = m{n kW and IV, --= m 2 E 2 kW
constant loss ratios. The data in Fig. 12 refer to a 100-kVA
load. Point A is for the standard design without underrunning where m{ and m2 are constants. For a transformer of a given
(Pi = ^ 1 0 0 kVA). Other points for the same loss ratio are kVA output, N, / = m3N, hence W ^ = mvm2P-E^ = mxm^nlNobtained by assuming underrunning and the condition x = m; = constant = m4. According to equations (5) and (6), the
thus at point B: ^ = P'2 = 150kVA;;c = 150/100= l-5;m = x annual cost of the total losses will be:
- 1 - 5 . From Fig. 11, for P 2 = 1 5 0 k V A , J^ 2 = 0 > 87kW,
36-5.V?)
ca = cai
the price C2 = 163-4, and Wi2 = Wi2/m = 0-87/1-5 = 0-58,
the last two figures being the co-ordinates of point B in Fig. 12.
The curves for other loss ratios are obtained by using the
Since Wc = mJlV,: ca = msWt + w6w4/W^-. To arrive at
relation x
mVn; e.g. for the loss ratio 2-5, = 3 1/2-5
the minimum value of ca: dcJdW{ ~ m5 m6m^W^ = 0;
----- 1 -24. Other values for m give further points of the curve, with m = W W we obtain finally:
4
c
h
e.g. for m - 1-25, JC = 1-25 VI-24 = 1 -393; P'2 = P2 = 1-393
x 100=139-3kVA. From Fig. 11,^-2 = 0-81 kW,C 2 =156,
m6We
(34)
and W[2 - 0-81/1 -25 = 0-65 kW, the last two figures being the
co-ordinates of point C in Fig. 12. As a check on the above: i.e. for the annual cost of total losses to be a minimum the annual
Wc2 = 2-55 (from Fig. 11), W' = 1-25 x 2-55/1-392 = 1-64 cost of the iron loss must be equal to that of the copper loss.
The above also determines the most economic loss ratio of the
kW, and 1-64/0-65 = 2-5.
The set of curves in Fig. 12, similar to those in Fig. 5, maybe transformer:
used to find the most economic size of transformer for given
36-5yg)
(35)
working conditions.

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SZWANDER: THE VALUATION AND CAPITALIZATION OF TRANSFORMER LOSSES

134

In the particular case of unity load factor and hence with

z = 1, and with u 1, we get WL ~ Wf, the well-known condition for the optimum efficiency of a transformer; the
instantaneous and annual efficiencies are, of course, equal with
unity load factor.
(10.3.2) The most economic ratio of annual cost of total
losses to annual capital charges can be found as follows:
The total annual running cost of a transformer is: ca n^C
I n2W, where C is the first cost, W is the total losses, and nx
and n2 are constants. To obtain the most economic solution,
some changes will have to be made in the design of the transformer; these will reduce the losses with an increase in price, or
vice versa. The changes in design can be characterized by a
factor r, defined below, and certain variations in price and losses
by the powers s and -- t affixed to this factor. The annual cost
22
of the modified design will then be:

A
w /

c'a = nxCr" -- n2Wr~'

whence the condition for {c'a)min can be obtained as follows:

dr

or

,-i-i

^o

(36)

i.e. the total annual cost of the losses ought to be equal to s/t
times the annual capital charges.
M. Vidmar (Reference 3) assumes an increase of r times
in all the linear dimensions of a transformer as a means of
design change, and further that such increase will raise the price
of the transformer in proportion to the third power of r (i.e. s = 3),
whereas the losses will decrease inversely with r (i.e. / = 1).
Therefore s\t 3. Actually Vidmar's assumption of the increase in transformer cost is exaggerated through not taking into
account all the dimensions depending only on the voltage rating,
and all the supplementary items of approximately constant cost.
A value of s between 2 and 2-5 would seem to be more correct.
Evidence of this can be found by making use of the method of
underrunning transformers as described in Section 10.2.
Taking r as the coefficient of increase of transformer rating
in comparison with the standard rating, corresponding to the
load, when underrunning the transformer, the prices for the
standard series shown in Fig. 11 increase as /*, i.e. s = \,
whereas for diminution of the losses it is easily found that / lies
between and | . In Fig. 13, curve 1 gives the total losses for
the different kVA ratings of the standard series of transformers
in the example taken. Curve 2 gives the losses when underrunning r times the transformers with the nominal load of 100kVA;
by a suitable change in the number of turns the losses are reduced
to W\r. Curves 3 and 4 are also shown; these pass through the
point r --= 1, Wlr = 1VU for Nt = 100 kVA, and satisfy the relations Wfr ~ WJr'< and W/r = WJr} respectively, thus showing that the value of / does lie between i and | . .
The values of the coefficients s and / determining the law of
variation of transformer cost and losses will be different for
different transformer designs and makes, and in a strict analysis
they ought to be specially determined for each case. The ratio
sit, however, will not vary very much, and for all practical purposes it can be safely taken as between 2 and 2-5; in the above
example, with s = i and t -= 1/4-5, it is 2-25.

t
\

1OO

200

300 kVA

Fig. 13
Additional evidence can be provided by considering a particular series of standard transformers of 50, 75, 100, 150
and 200 kVA, in which the weights of active materials are
540, 700, 890, 1160 and 13601b, i.e. the weights increase
as 1 : 1-3 : 1-65 : 2-15 : 2-52. The increase in linear dimensions would be the cube root of these values, namely
1 : 109 : 1-18 : 1-29 : 1-36. Pre-war prices were 93, 110,
126, 163 and 190, i.e. they increased in the proportion
1 : 1 18 : 1 36 : 1 75 : 2-05. Taking the increase of the linear
dimensions as / times, and the price increase as rs times,
values of s are 1 8, 1 85, 2- 2, 2- 34. The total losses are 1 56,
2-12, 2-64, 3-56, 4 50 kW, i.e. they are in a proportion
of 1 : 1-36 : 1-69 : 2-28 : 2-88. When underrunning the
transformers these losses will change in the proportion
50/50 : 50/75 : 50/100 : 50/150 : 50/200; they will then be as
1 : 0-9 :0-82 :0-76 :0-72; if this is to be defined by
i--', t will be 1-2,

1-2,

109,

1 0 7 , making the ratios

s/t

1 5 : 1 54 : 2 0 : 2 2. The lower values are not typical, because

they refer to comparatively small kVA ratings.
It is worth noting that sit cannot equal unity as in Kelvin's
law, where:
A = aC + bW\ A' = aCx + bW/x; dA'/dx = aC bWlx* - 0,
This case of equality between loss cost and capital charges
applies only when the price grows proportionally and the losses
decrease inversely with some coefficient x, which is not true of
transformers.

DISCUSSION BEFORE THE TRANSMISSION SECTION, 13TH DECEMBER, 1944

Mr. G. F. Kennedy: Through a wealth of mathematical
formulae, the author has arrived at two important conclusions.
One is that in considering the merits of two transformers the
annual costs of the copper losses should more or less equal the

annual cost of thefixedloss, and the other is that the total annual
cost of losses should be about 2-5 times the total capital charges
on the transformer. These two points should considerably
simplify the consideration of transformer tender prices. There

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