Energy Management
Marginal Energy Costs
Contact Libba Bowling for specific costs.
Marginal Electricity Costs are used to more accurately estimate cost
variation when energy use is either increased or conserved. They are
calculated by taking actual energy use (kWh) and demand (kW) for
each month, and then recalculating the bill with 1 kWh less or 1 kW
less. Marginal electricity costs are mostly a function of the
specific electric rate used by the electric provider. And how and
when you use electricity. Marginal costs are not necessarily related
to the size of the electric bill or the average cost.
How to use marginal cost to estimate enery cost savings:
For example, if a lighting project saves 100,000 kWh per year and
reduces the peak power demand by 11.4 kW, annual cost savings are
calculated as follows:
Assumed Marginal Electricity Cost = $0.03 per kWh
Assumed Marginal Demand Cost = $10 per kW per month
Annual Energy Savings = 100,000kWh
Peak Demand Savings = 11.4 kW
Cost Savings
= 100,000 kWh x $03/kWH + 11.4 kW x $10/kw-mnth x 12 Months/year
= $3000 annual electric savings + $1,368 annual demand savings
= $4,368 per year projected direct cost savings to the University
