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:

$$Actual\text{}Energy\text{}Cost\text{}=\text{}\frac{Fuel\text{}Cost\text{}\left(\frac{\$}{Unit\text{}of\text{}Fuel}\right)}{Heating\text{}Value\text{}\left(\frac{MMBTUs}{Unit\text{}of\text{}Fuel}\right)\text{}\times \text{}Efficiency}$$

### Example

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:

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% | 3,412 BTUs or .003412 MM BTUs/kWh |

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

$$\text{Actual Energy Cost}=\frac{\text{Fuel Cost}\left(\frac{\$}{\text{Unit of Fuel}}\right)}{\text{HeatingValue}\left(\frac{\text{MMBtus}}{\text{Unit of Fuel}}\right)\text{\xd7Efficiency}}$$

$$\text{Oil(in central heating system) cost}=\frac{\frac{\$1.25}{\overline{)Gal}}}{\frac{0.14\text{}MMBtus}{\overline{)Gal}}\text{}\times \text{}0.85\text{}\text{(Efficiency)}}\text{}=\text{}\$10.50\text{}/\text{}MMBtu$$

$$\text{Electrical Resistance Heat Cost}=\text{}\frac{\frac{\$0.082}{\overline{)kWh}}}{\frac{0.003412\text{}MMBtus}{\overline{)kWh}}\times 0.97\text{(Efficiency)}}=\$24.77/MMBtus$$