How do I calculate the cost of energy (CoE) for my building?
Cost of energy is your total electricity spend divided by total consumption — a simple but essential baseline for evaluating whether solar or storage will save you money.
The cost of energy (CoE) for your building is the all-in price you pay per kilowatt-hour of electricity consumed. It's the single most important number to know before evaluating any clean energy project, because it determines how much value solar or storage can deliver.
To calculate it, take your total annual electricity cost (including all charges — energy, demand, fixed, taxes, and fees) and divide by your total annual consumption in kWh. Both numbers are on your utility bills.
CoE = Total Annual Electricity Cost ÷ Total Annual Consumption (kWh)
For example, if your building spends $120,000 per year on electricity and consumes 800,000 kWh, your CoE is $0.15/kWh.
This blended rate is more useful than just looking at the energy charge on your bill, because commercial utility bills include multiple charge types — energy charges (per kWh), demand charges (per kW of peak draw), and fixed charges — that collectively determine what you're actually paying per unit of energy.
Knowing your CoE lets you quickly benchmark solar proposals. If a PPA offers electricity at $0.10/kWh and your current CoE is $0.15/kWh, you have a rough sense of the savings. Just keep in mind that solar won't offset all charge types equally — it's most effective against energy charges and partially reduces demand charges, but doesn't affect fixed charges.