The Formula for Energy Supply Management

Source: Trane

When customers ask for our help in analyzing their energy bill, we start by building a fundamental understanding of the influencing factors. While there are many complexities to the fees that are buried in a typical month energy bill (see our Energy Bill 101 article for more on hidden energy costs), we begin by using this simplified formula. Let’s look at each of these factors.

Energy Spend = Use × Price × Time of Use

How much electricity is consumed by the business? Since this factor is internally driven, it’s the factor that companies can most control. A kilowatt hour (kWh) is a measure of how much energy you’re using. It is a unit of measurement that equals the amount of energy you would use if you kept 1,000 watts, or a kilowatt (kW), running for an hour. . At any given moment, the demand your load is placing on the system can be measured in kilowatts. To get total usage, multiply kilowatts by the total time of usage in hours to arrive at kWh.

kWh can be reduced in two ways:

1. Improve efficiency by installing more energy-efficient equipment. HVAC systems and lighting are typically the two biggest energy consumers in a commercial building. According to a study conducted by the American Council for an Energy Efficient Economy[1], the average office building can save 18% of the building’s total energy use through the installation of smart technologies.

2. Use equipment and lighting less. Changing system scheduling and set points to better reflect business hours and occupancy trends may substantially reduce consumption without compromising comfort.