The cost will depend on a number of factors, including operating duration, utility rate structures, demand charges and additional fees. Please find below calculation methods, examples, and typical ranges for commercial and industrial customers.
kW (kilowatts) = Power (instantaneous consumption rate)
kWh (kilowatt-hours) = Energy (power × time)
Most commercial and industrial electricity bills include demand charges or capacity fees based on peak kW usage (not just billed energy)
Beyond electricity charges, utilities add transmission fees, distribution fees, taxes, and surcharges.
Base Cost Formula
Cost = Load (kW) × Hours Operated × Rate (USD per kWh)
Example: 500 kW equipment operating 10 hours at $0.12/kWh
→ 500 × 10 = 5,000 kWh → Cost = 5,000 × 0.12 = $600
Typical Commercial/Industrial Electricity Rates
Average commercial rates are approximately $0.13/kWh (13.0 cents/kWh) (varies by state/utility)
Lower rates available in some areas (e.g., industrial rates)
Example: Texas commercial rate ~9.14 cents/kWh
Actual effective rates may increase significantly due to demand charges, surcharges, and peak pricing
Examples Including Demand/Longer Duration
Below are energy cost estimates for different usage scenarios:
1. 500 kW running continuously for 1 hour
If operating 1 hour daily at 13 cents/kWh, energy cost alone is 500 × 0.13 = $65. Estimated total cost is approximately $65.
2. 500 kW running continuously for 8 hours
Operating 8 hours daily at the same electricity rate, the energy cost is 500 × 8 × 0.13 = $520. The estimated total cost is approximately $520.
3. 500 kW continuous operation for 24 hours
Operating around the clock, the energy cost is 500 × 24 × 0.13 = $1,560. The estimated total cost is approximately $1,560.
4. 500 kW, continuous operation for 30 days, 24 hours per day
Total operating time is 720 hours, with energy costs alone amounting to 500 × 720 × 0.13 = $46,800.
When factoring in demand charges and other surcharges, the total cost is projected to rise to over $50,000 to $60,000.
Demand charges may increase by 10% to 30% (or higher) depending on peak load, so actual costs in industrial settings may exceed these simplified estimates.
Adjusting for Electricity Price Fluctuations
At an electricity rate of $0.17/kWh (average residential rate):
500 kW × 1 hour = 500 kWh → $85
Calculated at this rate: 8 hours = $680, 24 hours = $2,040, 720 hours (full month) ≈ $61,200
