Energy Cost Calculation Examples: Real-World Scenarios and Solutions

December 19, 2025 energy

Introduction #

Understanding energy cost calculations is essential for managing industrial facility expenses. While formulas are straightforward, applying them to real-world scenarios with multiple equipment, varying rates, and complex billing structures requires practical examples. This guide provides detailed, step-by-step energy cost calculations for various industrial applications, from simple single-equipment scenarios to complex multi-facility operations.

Example 1: Single Equipment Energy Cost #

Scenario #

Industrial motor:

Power: 50 HP = 37.3 kW
Operating hours: 8 hours/day, 5 days/week
Electricity rate: $0.12/kWh

Calculate monthly and annual energy costs.

Step 1: Calculate Daily Energy Consumption #

Power: 37.3 kW
Hours per day: 8 hours
Daily energy = 37.3 × 8 = 298.4 kWh

Step 2: Calculate Monthly Energy Consumption #

Daily energy: 298.4 kWh
Days per month: 22 (5 days/week × 4.4 weeks)
Monthly energy = 298.4 × 22 = 6,564.8 kWh

Step 3: Calculate Monthly Cost #

Monthly energy: 6,564.8 kWh
Rate: $0.12/kWh
Monthly cost = 6,564.8 × $0.12 = $787.78

Step 4: Calculate Annual Cost #

Monthly cost: $787.78
Months: 12
Annual cost = $787.78 × 12 = $9,453.36

Results Summary #

Parameter	Value
Daily Energy	298.4 kWh
Monthly Energy	6,564.8 kWh
Monthly Cost	$787.78
Annual Energy	78,777.6 kWh
Annual Cost	$9,453.36

Example 2: Multiple Equipment Facility #

Scenario #

Manufacturing facility with:

Motors: 200 kW, 8 hours/day, 5 days/week
Lighting: 50 kW, 12 hours/day, 6 days/week
HVAC: 100 kW, 10 hours/day, 5 days/week
Office equipment: 20 kW, 8 hours/day, 5 days/week

Electricity rate: $0.10/kWh

Calculate total monthly and annual costs.

Step 1: Calculate Energy for Each Equipment #

Motors:

Power: 200 kW
Hours: 8 hours/day × 22 days/month = 176 hours/month
Monthly energy = 200 × 176 = 35,200 kWh

Lighting:

Power: 50 kW
Hours: 12 hours/day × 26 days/month = 312 hours/month
Monthly energy = 50 × 312 = 15,600 kWh

HVAC:

Power: 100 kW
Hours: 10 hours/day × 22 days/month = 220 hours/month
Monthly energy = 100 × 220 = 22,000 kWh

Office Equipment:

Power: 20 kW
Hours: 8 hours/day × 22 days/month = 176 hours/month
Monthly energy = 20 × 176 = 3,520 kWh

Step 2: Calculate Total Monthly Energy #

Total = 35,200 + 15,600 + 22,000 + 3,520 = 76,320 kWh

Step 3: Calculate Monthly Cost #

Monthly energy: 76,320 kWh
Rate: $0.10/kWh
Monthly cost = 76,320 × $0.10 = $7,632

Step 4: Calculate Annual Cost #

Monthly cost: $7,632
Annual cost = $7,632 × 12 = $91,584

Results Summary #

Equipment	Monthly Energy (kWh)	Monthly Cost ($)
Motors	35,200	$3,520
Lighting	15,600	$1,560
HVAC	22,000	$2,200
Office	3,520	$352
Total	76,320	$7,632

Example 3: Time-of-Use Rates #

Scenario #

Facility with time-of-use rates:

Peak hours (8 AM - 6 PM): $0.15/kWh
Off-peak hours (6 PM - 8 AM): $0.08/kWh
Weekend: $0.08/kWh (all hours)

Load: 100 kW, operating 16 hours/day, 5 days/week

Calculate monthly cost.

Step 1: Calculate Operating Hours #

Weekday Peak:

Peak hours: 8 AM - 6 PM = 10 hours
Days: 5 days/week × 4.4 weeks = 22 days
Peak hours/month = 10 × 22 = 220 hours

Weekday Off-Peak:

Total weekday: 16 hours
Off-peak: 16 - 10 = 6 hours
Off-peak hours/month = 6 × 22 = 132 hours

Weekend:

Weekend hours: 16 hours/day
Weekend days: 2 days/week × 4.4 weeks = 8.8 days
Weekend hours/month = 16 × 8.8 = 140.8 hours

Step 2: Calculate Energy by Rate #

Peak Energy:

100 kW × 220 hours = 22,000 kWh

Off-Peak Energy:

100 kW × (132 + 140.8) = 27,280 kWh

Step 3: Calculate Costs #

Peak Cost:

22,000 kWh × $0.15 = $3,300

Off-Peak Cost:

27,280 kWh × $0.08 = $2,182.40

Total Monthly Cost:

$3,300 + $2,182.40 = $5,482.40

Comparison with Flat Rate #

Flat Rate ($0.10/kWh):

Total energy: 22,000 + 27,280 = 49,280 kWh
Cost: 49,280 × $0.10 = $4,928

Savings with TOU Optimization:

Current: $5,482.40
Optimized (shift to off-peak): $4,928
Potential savings: $554.40/month

Example 4: Demand Charges #

Scenario #

Facility with demand charges:

Energy: $0.10/kWh
Demand: $15/kW per month (based on peak demand)

Load profile:

Average: 500 kW
Peak: 750 kW (2 hours/month)

Calculate monthly cost.

Step 1: Calculate Energy Cost #

Average load: 500 kW
Hours: 730 hours/month (24/7 operation)
Energy: 500 × 730 = 365,000 kWh
Energy cost: 365,000 × $0.10 = $36,500

Step 2: Calculate Demand Charge #

Peak demand: 750 kW
Demand charge: $15/kW
Demand cost: 750 × $15 = $11,250

Step 3: Calculate Total Cost #

Energy cost: $36,500
Demand cost: $11,250
Total: $47,750

Step 4: Calculate Cost Breakdown #

Energy portion: $36,500 ÷ $47,750 = 76.4%
Demand portion: $11,250 ÷ $47,750 = 23.6%

Impact of Peak Reduction #

Reduce Peak to 600 kW:

New demand cost: 600 × $15 = $9,000
Savings: $11,250 - $9,000 = $2,250/month

Example 5: Energy Efficiency Savings #

Scenario #

Facility considering LED lighting upgrade:

Current: 100 × 40W fluorescent = 4,000W
Proposed: 100 × 15W LED = 1,500W
Operating: 12 hours/day, 6 days/week
Rate: $0.12/kWh

Calculate savings.

Step 1: Calculate Current Energy #

Power: 4,000W = 4 kW
Hours: 12 hours/day × 26 days/month = 312 hours/month
Monthly energy: 4 × 312 = 1,248 kWh
Monthly cost: 1,248 × $0.12 = $149.76

Step 2: Calculate New Energy #

Power: 1,500W = 1.5 kW
Hours: 312 hours/month
Monthly energy: 1.5 × 312 = 468 kWh
Monthly cost: 468 × $0.12 = $56.16

Step 3: Calculate Savings #

Monthly savings: $149.76 - $56.16 = $93.60
Annual savings: $93.60 × 12 = $1,123.20

Step 4: Calculate ROI #

Installation cost: $2,000
Annual savings: $1,123.20
Payback: $2,000 ÷ $1,123.20 = 1.78 years
ROI: ($1,123.20 - $2,000) ÷ $2,000 = -43.8% (first year)
After payback: $1,123.20/year ongoing savings

Example 6: Comprehensive Facility Analysis #

Scenario #

Manufacturing facility:

Production equipment: 300 kW, 10 hours/day, 5 days/week
HVAC: 150 kW, 12 hours/day, 5 days/week
Lighting: 80 kW, 14 hours/day, 6 days/week
Office: 30 kW, 8 hours/day, 5 days/week

Rates:

Energy: $0.11/kWh
Demand: $18/kW (peak: 500 kW)
Power factor penalty: $300/month (PF < 0.90)

Calculate total monthly cost.

Step 1: Calculate Energy Consumption #

Production:

300 kW × (10 × 22) = 66,000 kWh

HVAC:

150 kW × (12 × 22) = 39,600 kWh

Lighting:

80 kW × (14 × 26) = 29,120 kWh

Office:

30 kW × (8 × 22) = 5,280 kWh

Total Energy:

66,000 + 39,600 + 29,120 + 5,280 = 140,000 kWh

Step 2: Calculate Energy Cost #

140,000 kWh × $0.11 = $15,400

Step 3: Calculate Demand Charge #

Peak demand: 500 kW
Demand charge: $18/kW
Demand cost: 500 × $18 = $9,000

Step 4: Calculate Total Cost #

Energy: $15,400
Demand: $9,000
PF penalty: $300
Total: $24,700/month

Step 5: Cost Breakdown #

Component	Cost	Percentage
Energy	$15,400	62.3%
Demand	$9,000	36.4%
PF Penalty	$300	1.2%
Total	$24,700	100%

Energy Estimator: Use our free online calculator for quick energy cost estimation
Factory Load Calculator: Calculate total facility load
Energy Efficiency Optimization: Strategies for reducing costs

How to Calculate Industrial Energy Costs: Complete cost calculation guide
Energy Efficiency Optimization: Strategies for reducing energy costs

Frequently Asked Questions #

Q1: How do I calculate energy consumption? #

Energy (kWh) = Power (kW) × Time (hours)

Q2: How do I calculate energy cost? #

Cost ($) = Energy (kWh) × Rate ($/kWh)

Q3: What's the difference between energy and demand charges? #

Energy: Based on total consumption (kWh)
Demand: Based on peak power (kW)

Q4: How do I reduce demand charges? #

Reduce peak demand
Shift loads to off-peak
Use energy storage
Stagger equipment operation

Q5: What's the impact of power factor on costs? #

A: Low power factor:

Increases kVA demand
Higher demand charges
Utility penalties
Reduced system capacity

Q6: How do I calculate savings from efficiency improvements? #

Calculate current energy and cost
Calculate new energy and cost
Difference = savings
Compare with implementation cost

Conclusion #

These examples demonstrate practical energy cost calculations for industrial facilities. Key principles:

Calculate accurately (power × time = energy)
Account for all costs (energy, demand, penalties)
Consider rate structures (flat, TOU, demand)
Evaluate savings opportunities (efficiency, optimization)
Monitor continuously (track consumption, costs)

Use the Energy Estimator to quickly calculate energy costs, but always verify with detailed calculations for accurate budgeting and planning.

Introduction #

Example 1: Single Equipment Energy Cost #

Scenario #

Step 1: Calculate Daily Energy Consumption #

Step 2: Calculate Monthly Energy Consumption #

Step 3: Calculate Monthly Cost #

Step 4: Calculate Annual Cost #

Results Summary #

Example 2: Multiple Equipment Facility #

Scenario #

Step 1: Calculate Energy for Each Equipment #

Step 2: Calculate Total Monthly Energy #

Step 3: Calculate Monthly Cost #

Step 4: Calculate Annual Cost #

Results Summary #

Example 3: Time-of-Use Rates #

Scenario #

Step 1: Calculate Operating Hours #

Step 2: Calculate Energy by Rate #

Step 3: Calculate Costs #

Comparison with Flat Rate #

Example 4: Demand Charges #

Scenario #

Step 1: Calculate Energy Cost #

Step 2: Calculate Demand Charge #

Step 3: Calculate Total Cost #

Step 4: Calculate Cost Breakdown #

Impact of Peak Reduction #

Example 5: Energy Efficiency Savings #

Scenario #

Step 1: Calculate Current Energy #

Step 2: Calculate New Energy #

Step 3: Calculate Savings #

Step 4: Calculate ROI #

Example 6: Comprehensive Facility Analysis #

Scenario #

Step 1: Calculate Energy Consumption #

Step 2: Calculate Energy Cost #

Step 3: Calculate Demand Charge #

Step 4: Calculate Total Cost #

Step 5: Cost Breakdown #

Integration with Related Tools #

Related Articles #

Frequently Asked Questions #

Q1: How do I calculate energy consumption? #

Q2: How do I calculate energy cost? #

Q3: What's the difference between energy and demand charges? #

Q4: How do I reduce demand charges? #

Q5: What's the impact of power factor on costs? #

Q6: How do I calculate savings from efficiency improvements? #

Conclusion #

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