EGEE 102
Energy Conservation and Environmental Protection

Energy Costs


It is clear now that when a unit of fuel is burned not all of it is available to the end user, and that as the furnace efficiency increases, higher amounts of heat will be available. An important question that needs to be addressed is how much it costs to buy the energy or heat to heat a place.

Fuel is usually sold in gallons or CCF or kWh. Comparing the actual cost of energy to produce a certain amount of heat for the end user would be easy if the comparison is made on an energy basis rather than on a unit basis. That is, \$/BTUs rather than \$/gal or CCF or kWh.

We can use the following formula to calculate Actual Energy Cost:

Actual Energy Cost =  Fuel Cost ( $ Unit of Fuel ) Heating Value ( MMBTUs Unit of Fuel ) × Efficiency


Let’s say we need one million BTUs to keep a place warm at a certain temperature. What would it cost to get those million BTUs from oil or gas or electricity? Let’s assume that:

Cost, efficiency, and heating value of different materials
Material Cost per unit Efficiency Heating Value
Natural Gas $6.60/MCF 90% 1,000,000 BTUs or 1.0 MM BTU/MCF
Oil $1.25/Gallon 85% 140,000 BTUs or 0.14 MM BTUs/Gallon
Electricity $0.082/kWh 97% 3412 BTUs or .003412 MM BTUs/kWh

Using the formula below, we can calculate the Actual Energy Cost.

Actual Energy Cost= Fuel Cost( $ Unit of Fuel ) HeatingValue( MMBtus Unit of Fuel )×Efficiency

Oil(in central heating system) cost= $1.25 Gal 0.14 MMBtus Gal  × 0.85 (Efficiency)  = $10.50 / MMBtu

Electrical Resistance Heat Cost = $0.082 kWh 0.003412 MMBtus kWh ×0.97(Efficiency) =$24.77/MMBtus