Energy Awards 2026: Relief despite rising energy prices
In today’s article, we’ll be looking at a question that, at first glance, seems to have a very straightforward answer, but which, on closer inspection, offers an entirely different perspective.
The question is: How much do my energy bills amount to? How much does my energy actually cost me?
The simple answer to the question can be found by taking a look at your electricity and heating bills. But the moment energy is converted within your own four walls—whether at home or in a business—the question is no longer quite so easy to answer.
And why is this important? The most crucial aspect of this issue, in the context of energy consultancy, concerns the calculation of savings achieved through efficiency measures. However, energy passed on to tenants or subsidiaries is also a significant factor here. In simple systems, the differences between purchase prices and actual costs are minimal. However, we will discuss a few examples later in the text where these discrepancies become very clear.
This is how energy costs are made up: purchase, self-generation, transmission
The question of how energy costs are made up usually focuses on the consumer side. In other words, what components make up our energy costs? What taxes do I have to pay? What is my tariff price? And how much does the energy itself cost me?
We do not wish to go into that here, as other aspects are relevant to what we want to know. For the purposes of this article, we assume that the costs charged by our energy supplier for the supply of energy are static constraints over which we have no control.
The first cost factor is, of course, the purchase of our energy. More specifically, the purchase of final energy. Final energy is the energy supplied to the company from external sources. In other words, everything provided by the supplier at the point of delivery.
However, what we do with that energy now has a significant impact on the actual costs. My final energy can either be used directly in my systems or converted so that it can then be utilised in another form.
In the first case, useful energy is largely equivalent to final energy. Useful energy is the portion of final energy that remains available for the user’s intended purpose immediately after deducting all system losses within the installations and during distribution. This also demonstrates, however, that the conversion of final energy into useful energy—that is, the second case—has cost implications.
How much do I actually pay per kWh?
From a thermodynamic perspective, energy conversions always involve losses in the overall process. Let’s take a gas heating system as our first example. Here, natural gas is used as the final energy source. We purchase this from the supplier at a price we’ll set at 10 cents per kWh. As we have already described in a previous article, there is a chain of losses in the combustion process, from calorific value to heating value and ultimately to the efficiency of the gas boiler. Assuming that the overall efficiency of the process is 80%, we will generate 8,000 kWh of heat on an annual average from 10,000 kWh of final energy in the form of gas.
However, as the 8,000 kWh of heat costs me exactly the same as the amount of gas I’ve purchased, we’ve now arrived at a specific cost of 12.5 ct/kWh. If I now want to calculate the impact of a measure in accordance with DIN 17463 that saves 2,000 kWh of heat, this must be taken into account, as otherwise I would underestimate the effectiveness of my efficiency measure.
However, this only takes conversion losses into account. Once I start operating a plant myself, other factors come into play which, whilst they do not usually have a major impact on costs, can become extremely relevant depending on the specific plant.
Calculating energy costs in a business: from meter readings to cost analysis?
These are the running costs incurred by the system during operation. If I have a simple gas boiler, as in the example above, the costs of operation, maintenance, or repair may be so low that it is not worth considering them in detail. However, in the case of larger systems that require constant adjustment and regular maintenance, this cost factor must not be overlooked.
These costs can be spread over the whole year, provided they are known. If, in our example, we have spent around €250 on maintenance and two hours on operating the system—with the internal cost for the technician set at €45 per hour—the total cost of running the system comes to €295. With these costs, our heating price suddenly stands at 16.19 ct/kWh, which is significantly higher than the gas costs we used in our initial calculation.
Apart from the fact that I’ve miscalculated a potential energy-efficiency measure, it quickly becomes clear what the consequences are if I pass on my energy to third parties. If I estimate the costs and charge third parties a flat rate of around 15 cents per kWh, I’m losing more than one cent per kWh.
Strom und Gas, oder warum Verbrauch allein nicht reicht: Kosten vs. Energieeinsatz
In the previous example, the situation was still relatively straightforward. Things only become complicated when several conversion processes take place, which then interact with one another at different levels. One example of this is a combined heat and power plant. Here, a fuel such as natural gas is used to generate electricity and heat. However, as a combined heat and power plant, or CHP plant for short, is usually designed in such a way that it cannot supply all the electricity and heat required for operations, additional heat is generated in a boiler, and, of course, electricity is purchased from the utility company.
In a system like this, at the very least, your own energy costs are no longer transparent at all—they can no longer be easily gleaned from the bills—and are also subject to significant fluctuations.
Example: Assuming the CHP unit has the same efficiency as the boiler described earlier, I end up with an electricity and heat price of 12.5 ct/kWh. This is an unbeatably low price for electricity in particular (unless, of course, you compare it with the price of electricity from renewable sources). If I then generate 75% of my electricity myself and purchase the remaining electricity at 30 ct/kWh, I suddenly have an average annual electricity consumption of 16.9 ct/kWh. However, maintenance and servicing costs are particularly high for CHP units and add an average of around 2–3 ct/kWh to the price of electricity and heat.
If I include the cost of my electricity supply in the calculation for this measure, I might end up estimating the cost-effectiveness to be almost twice as good as it actually is.
Reducing energy costs during the energy crisis: where are the greatest opportunities for savings?
All these calculations demonstrate just how opaque a complex energy system can be, and how serious the ‘risk’ of an incorrectly performed calculation can be.
And that is by no means the end of the story when it comes to complexity. When you also have to factor in steam generation via waste heat boilers in combined heat and power plants, absorption refrigeration systems that convert heat into cold, and various heat recovery systems on top of that, this usually places a significant strain on most technical staff, who, after all, also have to keep operations running smoothly alongside these tasks.
But how can you use all this information to reduce your energy costs? To this end, we have put together a few interesting ideas from our day-to-day work that offer particularly significant potential for savings:
- PV systems: If the system is sized so that no electricity is fed into the grid, then every kWh I don’t purchase from the supplier is worth exactly what it would otherwise have cost me. In our example above, that’s 30 cents per kWh. Such PV systems therefore largely pay for themselves within 4–5 years. If I need more power without having to feed any into the grid, I can add a battery storage unit, which will of course result in a slightly longer payback period.
- Heat pumps: When properly designed, the most efficient heat generation systems can produce 3–5 kWh of heat from a single kWh of electricity, offering significant savings on energy costs, particularly when combined with a solar panel system and battery storage
- Spot market prices and heat storage: If a large heat storage tank is available, combining a heat pump with spot market prices allows the tank to be charged when prices are low or even negative, so that it is then available when prices rise again. Here too, a solar panel system can help if spot market pricing is not available.
As you can see, there are ways to significantly reduce your energy costs. Often, some measures do not involve high costs. However, it is important to analyse the overall cost structure. This forms the basis for all further decision-making.
Conclusion: How transparency regarding energy costs helps us to optimise our operations
As we now know, it is essential to have an overview of one’s own energy costs in order to analyse the cost-effectiveness of one’s own business
As we now know, having an overview of our own energy costs is essential for analysing the cost-effectiveness of our operations, and this provides us with direct insights into how we can optimise our operations.
And how do you go about it? Analysing the costs of my useful energy is often complex and requires a great deal of experience to take the right cost factors into account.
We would, of course, be happy to help you with this. Please get in touch and we can help you gain a clear understanding of your energy costs.
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