EGEE 102
Energy Conservation for Environmental Protection

Energy Cost Examples

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Example 1

Please watch the following 1:26 presentation about Example #1. Your old oil furnace runs at about 68% efficiency. If you buy your oil for $1.02/gal, calculate your actual cost on an MM BTU basis.

Click here to open a transcript of the Energy Cost Example #1

Energy Cost Example #1

Your old oil furnace runs at about 68% efficiency. If you buy your oil for $1.02/gal, calculate your actual cost on an MM BTU basis.

Ok, the old furnace runs at about 68% efficiency in this problem. This is 5.6 and the old furnace runs at an efficiency of E=0.68, and we have the actual cost per unit price or unit fuel which is 1.02pergallon.AndwealsoknowthecalorificvalueorheatingvalueinmillionsofBTUs.Whenyouburnonegallonofoil,weget.13millionBTUssoweapplythesameformulatogettheactualcost.Whichiscostperunitfuelwhichis1.02/gallon divided by the heating value which is 0.13 MMBTUs per gallon. We have to have the same units here. And times the efficiency here. Efficiency is 0.68. Gallons and Gallons are canceled, and we get this one as $11.50 / Million BTUs.

E = 0.68Fuel = $1.02/gal1 Gal = 0.13 MMBTUs= $1.02/gal0.13 MMBTUs/gal × 0.68=$11.50MMBTUs
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Example 2

Please watch the following 2:44 presentation about Example #2. Natural gas costs 9.74 dollars/MCF. Heating oil costs 0.99 cents/gal. The natural gas furnace runs at 90% efficiency and the oil furnace runs at 80% efficiency. Which fuel is cheaper?

Click here to open a transcript of the Energy Cost Example #2

Energy Cost Example #2

Natural gas costs 9.74/MCF.Heatingoilcosts0.99/gal. The natural gas furnace runs at 90% efficiency and the oil furnace runs at 80% efficiency. Which fuel is cheaper?

Ok. This 5.7 is an interesting problem here. We are trying to compare the prices of two fuels – Natural Gas which sells for 9.74/MCF,andwealsohaveoilthatsellsat0.99/gallon. We are trying to compare the prices of these two and choose which one is the best fuel or cheapest fuel. So we need to calculate the price per million BTUs so that we can compare these two fuels. And we also know the furnace efficiencies of each of these. Natural gas furnace efficiency is 0.9, and we know the oil furnace efficiency is 0.8; it is given. So we need to calculate the actual cost and compare the cost.

Natural gas actual cost will be cost per unit fuel, which is 9.74/MCFdividedbytheheatingvalueperunitfuel.Heatingvalueforthisonehappenstobe1.0MillionBTUsperMCF,andwehavetomultiplybytheefficiencyhereinthedenominatorwhichis0.9,sotheNaturalGaspriceturnsouttobe10.83 or $10.83 per Million BTUs (MMBTUs).

Natural Gas  $9.74MCF0.9 efficiencyNatural Gas = $9.74MCF1.0 MMBTUMCF × 0.9                    = $10.82MMBTUs

When you do similar calculation for oil here, the actual price is, per unit is 0.99pergallonhereandhowmanymillionBTUsdowegetpergallon?0.13MillionBTUs(0.13MMBTUs).Wehavedonethisbefore.Wehavetohavethesameunitshere.GallonsandgallonsandMCFandMCFhereinthiscase(naturalgas)andtimestheefficiencyis0.8.Sothepriceworksouttobe9.50 per Million BTUs. Same million BTUs would cost 10.82forNaturalGasandoilwouldbe9.50, so oil is cheaper.

Credit: © Penn State is licensed under CC BY-NC-SA 4.0(link is external)