All ACs are sized keeping the hottest day in mind, even though they may be used across seasons and at varied temperatures. And thus during most of the days, the air conditioners are oversized (slightly to extremely). In an oversized AC, the heat coming from the room is not sufficient to convert low-pressure refrigerant liquid back to gas (Thermal Saturation Point). The electricity then used by the compressor goes waste as the refrigerant is already in liquid form. The Energy Saver detect occurrence of this Thermodynamic Saturation state and switch off the compressor thus avoiding electricity wastage.
What’s the role of Thermostat then?
Thermostat works by sensing just the room temperature and operates compressor based on that, but it does not consider the energy levels in the AC. Post the thermal saturation point, the AC already has enough stored energy to remove the heat from the room and any excess electricity used by the compressor goes waste.
How much electricity can this device save?
An experiment conducted by students of IIT Bombay observed 35-40% savings on an air conditioner in their test conditions (source: http://students.iitk.ac.in/ge3/Energy%20audit.pdf).
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