The energy charge refers to the price paid for the actual amount of energy consumed or supplied. For electricity, it is usually stated in cents per kilowatt-hour (cents/kWh) or in a currency per megawatt-hour. It therefore determines the consumption- or volume-dependent portion of electricity costs or revenues.
Energy charges at a glance
- The energy charge is multiplied by the amount of energy consumed or supplied.
- Depending on the contract, it may be fixed, time-dependent, or linked to an electricity market price.
- The energy charge must be distinguished from a consumption-independent fixed charge and a demand charge based on power demand.
- To optimise a site economically, the energy charge, load profile, demand charge, grid fees, and potential export revenues must be considered together.
How are costs calculated using the energy charge?
Consumption-dependent electricity costs are generally calculated based on the amount of energy and the applicable energy charge.
For example, if a company consumes 10,000 kWh of electricity at an energy charge of 20 cents/kWh, or 0.20 per kWh in the relevant currency, this results in simplified consumption-dependent costs of 2,000 currency units. Fixed charges, demand charges, and other separately billed components are not included in this calculation.
The components included in the stated energy charge depend on the contract and the respective electricity market. Under an electricity supply contract, the energy charge may include energy procurement, grid fees, levies, taxes, and other price components. However, these components may also be itemised separately.
A fixed energy charge remains unchanged during the agreed period. Time-dependent tariffs may differentiate between predefined peak and off-peak periods. With dynamic electricity tariffs, fluctuations in spot market prices, particularly those on the day-ahead or intraday markets, are reflected in the contractually defined billing intervals. In many cases, only the market-price-dependent component changes, while other price components remain constant or are billed separately.
Where is the energy charge particularly relevant?
At commercial and industrial sites, the energy charge affects the cost of the entire electricity supply. Adjusting the load profile can reduce costs if flexible loads are shifted to periods with lower prices.
For a Battery Energy Storage System (BESS), the energy charge can influence charging and discharging schedules. The BESS can be charged during lower-priced periods and used to supply local loads when electricity prices are higher, provided that the usable price difference exceeds efficiency losses, degradation costs, and other operating costs.
Volume-dependent prices are also relevant when electrical energy is exported. Whether exported energy is remunerated and at what price depends on the applicable contract and market participation model.
What limitations and requirements must be considered?
A low energy charge does not automatically result in low overall electricity costs. For example, a tariff may combine a low energy charge with a high fixed or demand charge. At C&I sites, individual load peaks can significantly affect total costs.
A reliable assessment requires time-resolved measurements, the site’s load profile, and the complete tariff structure. For dynamic tariffs, the price data applicable to the respective billing intervals must also be available. Automated optimisation requires controllable assets and suitable communication interfaces.
Flexible loads and BESS provide an economic benefit only if sufficient energy can be shifted and the achievable price difference exceeds additional losses, operating costs, and potential restrictions on asset use.
How does EcoPhi support energy-charge-based optimisation?
EcoPhi can record imported and exported energy quantities and assign them to specific time intervals. If suitable price data is provided on a project-specific basis through a supported interface, energy flows and the resulting volume-dependent costs can be evaluated together.
For dynamic tariffs, these price signals can generally be incorporated into an EMS strategy for BESS and flexible loads. The EMS can also consider other operating objectives, such as peak shaving, self-consumption optimisation, or required BESS reserves. The specific implementation depends on the available price source, data transfer method, device interfaces, and control capabilities of the respective project. Additional integration or engineering services may be required.
Energy charges summarised
The energy charge is the volume-dependent price for energy consumed or supplied. It should not be considered in isolation when assessing an electricity tariff or EMS strategy. The complete tariff structure, the site’s time-dependent load profile, and its technically usable flexibility are all decisive.
Frequently asked questions about energy charges
What is the difference between an energy charge and a fixed charge?
The energy charge depends on the amount of energy consumed. A fixed charge, by contrast, is billed independently of actual consumption.
What is the difference between an energy charge and a demand charge?
The energy charge is calculated based on the amount of energy in kWh or MWh. The demand charge is based on the highest measured or contractually agreed power demand in kW or MW.
Can the energy charge change throughout the day?
Yes. Under time-dependent or dynamic tariffs, the energy charge or its market-price-dependent component can vary throughout the day. The specific pricing method and billing interval are defined in the applicable contract.
Is a BESS worthwhile with a dynamic energy charge?
A BESS can make use of price differences between different time periods. Its economic viability depends, among other factors, on whether the usable price difference exceeds efficiency losses, degradation costs, and other operating costs.