Part of managing a business successfully is having a good understanding of—and control over—your operating expenses. A key concept related to the cost of operations is the kilowatt hour. So what exactly is a kilowatt hour, and how many kilowatt hours is your business being billed for? That first question we’ll answer here; for the answer to the second question, check your utility bill.
What is a kilowatt? What is a kilowatt hour?
A kilowatt, or kW, is a unit of power based on watts. Power is defined as “the time rate at which work is done or energy is transferred.” Therefore, watts measure the rate at which energy flows through an electrical system (essentially the rate at which it is being used). For example, a 100-watt light bulb draws 100 watts of electricity when turned on. After 10 hours of operation the 100-watt bulb will consume 1,000 watts of power, or one kilowatt. The higher the wattage, the more electricity is being consumed.Watts measure the rate at which energy flows through an electrical system (essentially the rate at which it is being used). Click To Tweet
A kilowatt hour, or kWh, measures how much energy is used over a period of time. If you left that 100-watt light bulb on for 10 hours, that would have consumed 1,000 watts, or 1 kWh of energy.
Kilowatt Hours, Joules, & BTUs:
You may have heard of other energy measurement terms, specifically joules and British thermal units or BTUs (and maybe even calories). These terms are similar in that they all measure the amount of energy being consumed. Where they differ is in the context in which they are used.
For example, a joule is a unit of energy primarily used in physics and chemistry, and a BTU is used to measure thermal (heat) energy as it applies to heating and cooling equipment (HVAC). (The term calorie was used historically to measure heat energy, though now it is defined in terms of joules, as in 1 calorie = 4.184 joules.)
All of these terms have a mathematical relationship, and one type of measurement can be converted into another:
For example, the average office electricity consumption is approximately 14 kWh/square foot; that translates to 50,400,000 joules and 47,769.98 BTUs.
Note that there is no kW to kWh conversion because they represent different quantities.
So why are the kilowatt—and the kilowatt hour—so important to your business?
Simply, because your utility company bills you according to kW and kWh. Therefore both units of measurement represent a significant operating expense for your building—one that you can control, contrary to what many business leaders might think.
Managing Your kW & kWH For Utility Bill Savings
Most U.S. utilities have complex bills consisting of numerous charges. The first slice of the bill is the transmission charge that represents the infrastructure cost of maintaining the transmission and distribution lines required to bring power to your facility. To determine this charge, a utility company will calculate your building’s maximum 15-minute power requirement over the course of a billing cycle; that kW level is then multiplied by a specific rate to determine the actual amount charged to you—this is the demand charge noted on your electric bill.
Also embedded in these transmission costs are kWh charges, which is the amount of energy that’s used throughout the billing period.
There are ways to reduce both your energy consumption and demand charge with the help of the Internet of Things (IoT). For example:
- To reduce your demand charge, you could change your facility’s HVAC operating schedule to avoid “peak hours.” Peak hours are normally established by each local electric utility, and during those hours the cost of energy is traditionally much higher than off-peak hours (sometimes as much as three or four times the normal amount). If you know it’s going to be a very hot, humid, 90-degree day, you can change the operating schedule based on the weather forecast and cool the building down earlier in the day. By taking measures to mitigate demand costs, you reduce the amount of electricity needed later, say around 2 p.m., reducing your demand charges from a potential $12/kw to $4/kw.
By some estimates, reducing your demand charge by just 5% could reduce your entire utility bill by 40% while still allowing you to maintain the comfort level of the building.
- To reduce your energy consumption, you could implement a demand control ventilation system. In many buildings, the amount of fresh air ventilation is maintained at a constant level, usually based on peak occupancy. However, most buildings aren’t at peak occupancy much of the time, which means you’re overspending on the electricity required for ventilation. Demand control ventilation regulates outside air intake to accommodate actual human occupancy and activity within the building. A smart building would have air quality sensors to measure and monitor both the building temperature and carbon dioxide (CO2) levels. (CO2 is used as a proxy for determining actual occupancy.) The system continuously reads the sensor data and, based on CO2 levels, automatically directs the air handling units to adjust the outside air intake. Being able to regulate outside air intake based on actual CO2 readings is a tremendous advantage, and reduces the amount of energy the building consumes.
Want to know more about your facility’s current electricity usage—and how you can reduce your utility bill?
If you’re looking for ways to improve your building’s performance, talk to us at Iota. We can help you take control of your energy consumption and demand using the IoT. We use smart sensors to remotely monitor and measure your building’s operations for the purpose of developing energy profiles and load signatures, and help you understand the implications of those measurements by providing analytics around the data. We’ll also make recommendations about strategies you can implement—and help you implement them—to make your operations more energy-efficient. To learn more about how you can start saving, contact us today.